Supreme Court New South Wales Medium Neutral Citation: George v Webb & ors [2011] NSWSC 1608 Hearing dates: 28 & 29 November 2011 Decision date: 20 December 2011 Jurisdiction: Equity Division Before: Ward J Decision: Judgment for the plaintiff on claim against first and second defendants for equitable compensation for breach of Quistclose trust and against third defendant for accessorial liability in respect of that breach of trust; claim against first and second defendants not an apportionable claim for purposes of statutory proportionate liability regime; judgment for cross-claimants on cross-claim against third defendant for misleading and deceptive conduct in breach of Fair Trading Act. Catchwords: EQUITY - TRUSTS - whether moneys paid into firm of solicitors' trust account was held on express trust for plaintiff as it was only to be used for a prescribed purpose - whether trust was breached by payment out of trust account of moneys for purposes other than prescribed purpose - whether plaintiff entitled to equitable compensation - whether third defendant liable as an accessory to breach of express trust or breach of Quistclose trust under the first and/or second limbs of Barnes v Addy - consideration of Quistclose trust - HELD - express trust in favour of plaintiff - breach of trust established - plaintiff entitled to equitable compensation - third defendant liable for receiving and becoming chargeable with trust property and for knowing assistance in breach of trust - TORTS - NEGLIGENCE - duty of care - whether firm of solicitors, as trustees under Quistclose trust owed plaintiff a duty of care in relation to moneys held in trust account and whether that duty has been breached - HELD - had this issue arisen breach of duty of care would have been established - CONTRACT - whether contract between plaintiff and third defendant and if so whether third defendant is liable to repay moneys pursuant to frustration of contract or on a failure of consideration - HELD - contract established between plaintiff and third defendant - had this issue arisen third defendant would have been liable on total failure of consideration or on frustration of contract - PROPORTIONATE LIABILITY - whether claim for equitable compensation for breach of trust is an apportionable claim pursuant to Part 4 of the Civil Liability Act 2002 (NSW) - HELD - liability for breach of trust where that liability not predicated on failure to take reasonable care is not an apportionable claim - FAIR TRADING ACT - whether cross-defendant liable for misleading and deceptive conduct - HELD liable to indemnify for loss caused by misrepresentation that funds were beneficially his - EQUITABLE CONTRIBUTION - whether power to order unequal contribution between concurrent wrongdoers - HELD - equitable contribution had it arisen in this case should be pro rata Legislation Cited: Civil Liability Act 2002 (NSW) Civil Procedure Act 2005 (NSW) Fair Trading Act 1987 (NSW) Fair Trading Amendment (Australian Consumer Law) Act 2010 (NSW) Law Reform (Miscellaneous Provisions) Act 1946 (NSW) Cases Cited: Acohs Pty Ltd v RA Bashford Consulting Pty Ltd (1997) 144 ALR 528 Albion Insurance Company Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342 Armstrong v Commissioner of Stamp Duties (1967) 69 SR (NSW) 38 Australasian Conference Association Ltd v Mainline Constructions Pty Ltd (In liq) (1978) 141 CLR 335 Baden Delvaux & Lecuit v Societe Generalepour Favoriser le Development du Commerce [1992] 4 All ER 161; [1993] 1 WLR 509 Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567 Barnes v Addy (1874) LR 9 Ch App 244 Bell Group Ltd (in liq) v Westpac Banking Corporation [No 9] [2008] WASC 239; (2008) 225 FLR 1 Bialkower v Acohs Pty Ltd & RA Bashford Consulting Pty Ltd (1998) 83 FCR 1; 154 ALR 534 Burke v LFOT Pty Limited [2002] HCA 17; (2002) 209 CLR 282 Chandra v Perpetual Trustees Victoria Ltd [2007] NSWSC 694; (2007) ANZ ConvR 481 Commonwealth Bank of Australia v Witherow [2006] VSCA 45 Consul Development Pty Ltd v DPC Estates Pty Ltd [1975] HCA 8; (1975) 132 CLR 373 Dartberg Pty Ltd v Wealthcare Financial Planning Pty Ltd [2007] FCA 1216; (2007) 164 FCR 450 Degiorgio v Dunn [No 2] [2005] NSWSC 3; (2005) 62 NSWLR 284 Dering v Winchelsea (1787) 1 Cox Eq Cas 318 Duke Group Ltd (In Liq) v Pilmer [1998] SASC 6529; (1998) 27 ACSR 1 El Ajou v Dollar Land Holdings plc [1994] 2 All ER 685 Equiticorp Finance Ltd (in liq) v Bank of New Zealand (1993) 32 NSWLR 50 Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89 Fico v O 'Leary [2004] WASC 215 Flack v Chairperson, National Crime Authority (1997) 80 FCR 137; 150 ALR 153 Freeman & Lockyer (a firm) v Buckhurst Park Properties (Mangal) Limited [1964] 2 QB 480; 1 All ER 630 Georges v Wieland [2009] NSWSC 733 Grupo Torras SA v Al-Sabah [No 5] [1999] CLC 1469 Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41 In the matter of Travel House of Australia Pty Ltd; Browne v The Deputy Commissioner of Taxation (unreported, Supreme Court of Victoria, Murray J, 1978) James Hardie & Co v Wyong Shire Council [2000] NSWCA 107; (2000) 48 NSWLR 679 Jones v Dunkel (1959) 101 CLR 298 Jones v Mortgage Acceptance Nominees Ltd (1996) 63 FCR 418 Knight v Knight (1840) 3 Beav 148 Koorootang Nominees Pty Ltd v Australia and New Zealand Banking Group Ltd [1998] 3 VR 166 Macquarie Bank Ltd v Sixty-Fourth Throne Pty Ltd [1998] 3 VR 133 Mahoney v McManus [1981] HCA 54; (1981) 180 CLR 370 Main Road Property Group Pty Ltd v Pelligra & Sons Pty Ltd [2010] VSC 5 McLean v Discount & Finance Limited (1939) 64 CLR 312 McManus RE Pty Ltd v Ward [2009] NSWSC 440; (2009) 74 NSWLR 662 Morgan Equipment Company v Rodgers (1993) 32 NSWLR 467 New Cap Reinsurance Corporation Ltd v General Cologne Re Australia Ltd [2004] NSWSC 781 Payne v Parker [1976] 1 NSWLR 191 Pearsons Barristers and Solicitors v Avison [2009] VSCA 54; (2009) 1 ASTLR 417 Peter Cox Investments Pty Ltd (in liq) v International Air Transport Association [1999] FCA 27; (1999) 161 ALR 105 Pilmer v The Duke Group Ltd (In Liq) [2001] HCA 31; (2001) 207 CLR 165 Re Armstrong (1960) VR 202 Re Associated Securities Ltd and the Companies Act [1981] 1 NSWLR 742 Re Elizabethan Theatre Trust, Lord v Commonwealth Bank of Australia (1991) 30 FCR 491 Re EVTR; Gilbert v Barber [1987] BCLC 646 Re Miles; Ex parte National Australia Bank Ltd v Official Receiver in Bankruptcy (1988) 85 ALR 216 Re Wall; Ex parte Official Receiver v Kemmis (1979) 25 ALR 615 Reinhold v New South Wales Lotteries Corporation (No 2) [2008] NSWSC 187 Roxborough v Rothmans of Pall Mall Australia Ltd [1999] FCA 1535; (1999) 167 ALR 326 Salvo v New Tel Ltd [2005] NSWCA 281 Selangor United Rubber Estates Ltd v Craddock [No 3] [1968] 2 All ER 1073 Sky Channel Pty Ltd v Tszyu [No 2] [2000] NSWSC 1150 Spangaro v Corporate Investment Australia Funds Management Ltd [2003] FCA 1025; (2003) 54 ATR 241 Syrimi v Hinds (1996) 6 NTLR 1 Twinsectra v Yardley [2002] UKHL 12; 2 AC 164 Vella v Permanent Mortgages Pty Ltd [2008] NSWSC 505 Walker v Corboy (1990) 19 NSWLR 382 Walsh Bay Developments Pty Ltd v Federal Commissioner of Taxation (1995) 130 ALR 415 Walsh v Permanent Trustee Australia Ltd (1996) 21 ACSR 213 Wickman Tools v Schuler AG [1974] AC 235 Wright v Atkyns (1823) Turn & R 143 Texts Cited: Gummow, WMC 'Equity: Too Successful?' (2003) 77 Australian Law Journal 30 Gurr, A, 'Accessory Liability and Contribution, Release and Apportionment' (2010) 34, Melbourne University Law Review Ford and Lee, Principles of the Law of Trusts Harpum, C 'The Stranger as Constructive Trustee (Part 1)' (1996) Law Quarterly Review Heydon, JD, Cross On Evidence (online edn) Heydon and Leeming, Jacobs' Law of Trusts in Australia (7th edn) Meagher, Gummow and Lehane, Equity Doctrine and Remedies (4th edn) Mukerjea, S, 'Proportionate Liability for Economic Loss: The Story So Far' (2008) 19 Insurance Law Journal 279 Swadling, W (ed) The Quistclose Trust: Critical Essays (2004) Vann, V, 'Equity and proportionate liability', (2007) 1 Journal of Equity 199 Young, Croft and Smith, On Equity (2009) Category: Principal judgment Parties: Jane Anne George (Plaintiff) Lewis James Webb (First Defendant) Dennis Patrick Grogan (Second Defendant) Martin Geoffrey Burke (Third Defendant) Representation: Counsel J C Kelly SC (Plaintiff) I Griscti (First and Second Defendants) J Young (Third Defendant) Solicitors Uther Webster & Evans (Plaintiff) Gilchrist Connell (First and Second Defendants) Diamond Conway (Third Defendant) File Number(s): 09/291563 Judgment 1HER HONOUR : These proceedings involve claims in relation to moneys disbursed out of a trust account maintained by a firm of solicitors (Grogan Webb) otherwise than for the purpose for which the plaintiff, Mrs Jane George, contends those moneys were to be paid. 2There is no doubt that a sum of $150,000 was paid into the trust account of Grogan Webb on 13 October 2008. Mrs George effected the transfer. Those moneys came from a joint account held in the names of Mrs George and her husband (Mr Peter George), though there had earlier been deposited into that account moneys in excess of the amount so transferred drawn from a separate account in Mrs George's sole name. Mrs George contends that the moneys were paid into the solicitors' trust account upon terms that those moneys were to be held on trust for her and used for the purposes of an investment referred to broadly as the Elderslie/Allco HIT acquisition. 3The 13 October 2008 email, pursuant to which Mr George notified the first defendant (one of the partners of Grogan Webb) that his wife would that afternoon be transferring the money to that account, advised Mr Webb that the moneys were "to be used for" the Elderslie/Allco HIT acquisition and were "to be distributed at the direction of Martin Burke", the third defendant. It is alleged that this gave rise to what is commonly referred to as a Quistclose or purpose trust. 4It is not disputed that Mr Burke (who describes his occupation as a salesman) and Mr George, a former director of Elderslie Finance Corporation Pty Ltd, had been in discussion from some time in August/September 2008 as to a proposal by Mr Burke that the latter be involved in the proposed acquisition (by a consortium of investors then being co-ordinated by Mr Burke) of assets of two companies then in receivership or administration (Elderslie and Allco HIT Ltd). 5There is a dispute as to the precise agreement ultimately reached on 13 October 2008 between Mr Burke and Mr George in relation to the proposed acquisition (and as to whether the latter was acting as agent for his wife in reaching such an agreement). It was following this meeting that the moneys were transferred to the Grogan Webb trust account. This was at either Mr Burke's suggestion or at his request. 6Grogan Webb had acted for Mr Burke, and companies associated with him, for many years and was, as at October 2008, so acting on at least two matters - a dispute as to unpaid private school fees in relation to Mr Burke's children's education and a dispute between a company associated with Mr Burke, Mymurra Pty Limited, and a regional Aboriginal Land Council. The firm had not previously acted for Mr and Mrs George (nor does it accept that it acted for either of them in relation to the transaction pursuant to which funds were deposited into the firm's trust account in October 2008.) 7For Mrs George, it is contended that it was agreed with Mr Burke (that agreement being made by her husband acting as her agent) that the funds would be deposited in the Grogan Webb trust account on the basis that they would be available to be used (and only to be used) in the event that there was a successful acquisition of the Elderslie/Allco HIT assets. 8In para [4] of the Amended Statement of Claim, it is alleged that the oral agreement so reached included terms that: (a) Mr Burke would continue negotiations which were then underway with a view to arranging a consortium of investors, who would seek to acquire through an entity yet to be formed part or all of the assets of Elderslie and Allco HIT; (b) in the event that the consortium of investors, could be found and in the event that it succeeded in making the proposed acquisition within a reasonable time, Mrs George would contribute $150,000 towards the funds to be used in the proposed acquisition; (c) in consideration for the contribution of $150,000, to be made only in the event that the proposed acquisition proceeded within a reasonable time, Mrs George would be the holder of a 2% equity interest in the entity to be formed for the proposed acquisition; (d) pending the proposed acquisition, payment of $150,000, as a demonstration of "his" [sic] commitment to the proposed acquisition, would be paid into a trust account held by the solicitors for Mr Burke and paid out only for the purpose of the proposed acquisition; (e) the sum of $150,000 would be paid out of the trust account at the direction of Mr Burke but only for the purpose of the proposed acquisition; and (f) the said sum would, upon payment out of the trust account for the purpose of the acquisition, constitute Mrs George's contribution to proposed acquisition. 9Certain implied terms were pleaded in [5], namely (a) that the said sum would not become part of the assets of and would not be at the free disposal of Mr Burke but used exclusively by him for the purpose of the proposed acquisition and (b) that in the event that the proposed acquisition failed or was unable to proceed within a reasonable time the said sum would be repaid to Mrs George by Mr Burke; those terms being said to be implied as a matter of law. 10It is not disputed that Mr Burke offered Mr George the opportunity to acquire a percentage of Mr Burke's "share" of equity (referred to in submissions for Mr Burke as the "expected equity") in what was described loosely as the 'consortium'. Having regard to the evidence of both Mr Burke and Mr George, in my view that can only sensibly be understood as a percentage of the share that Mr Burke was to take in the proposed joint venture (and, since the intention at the time was that the acquisition of the Elderslie/Allco HIT assets was to be through a new company then proposed to be formed, presumably the share of equity there contemplated was a shareholding in that company), it being impossible (other than in the world of Shylock) to take a "share" of a consortium of investors as such - it could only be a share of whatever interest those investors had in the project or the vehicle through which the project was to be pursued by them. 11Mr Burke's position is that once the sum payable for that share ($150,000) was paid into the Grogan Webb trust account it became his property absolutely (which he was then free to disburse as he wished), whether or not the Elderslie/Allco HIT asset acquisition proceeded or any vehicle for the implementation of the venture was established, and there was no obligation to refund that sum if the acquisition did not proceed. 12The day after the funds were received into the Grogan Webb trust account Mr Burke authorised the distribution of those funds to various entities and for various purposes (the bulk of which was expended for payment of his children's then outstanding school fees with the balance used to pay Grogan Webb's fees incurred in other matters, to pay a debt owed by Mr Burke to another company (FCT) and for payment to a company of which Mr Burke had then only recently become the sole shareholder and director, Cadorna). It is not suggested that any of the money was disbursed for purposes directly or indirectly associated with the Elderslie/Allco HIT acquisition. Indeed no such acquisition (whether by the proposed consortium members or by the proposed, but never incorporated, corporate vehicle) has ever transpired. 13The first and second defendants (the two solicitors practising in partnership as Grogan Webb) submit that the real dispute (in which they say they are caught in the middle) is a dispute between Mrs George (and/or her husband) and Mr Burke, on the basis that they simply received and disbursed the funds in question on the understanding (derived from Mr Burke) that those funds belonged to Mr Burke. 14The principal claim against Grogan Webb is for breach of trust (as pleaded in the Amended Statement of Claim at [10] - [19]). There is an alternative claim in negligence (pleaded at [37] - [40]) on the basis that Grogan Webb owed Mrs George a duty of care (by reason of the fact that it held her money in trust) and that this duty was breached when Grogan Webb paid the money away pursuant to a direction from Mr Burke which was self-evidently for a purpose other than the Elderslie/Allco HIT acquisition. During the hearing, it was conceded by Senior Counsel for Mrs George (Mr J C Kelly SC) that the alternative claim in negligence was predicated on the existence of a trust in respect of the funds in question (and pressed only if there were to be a finding that there was a trust but that there had not been a breach of trust). Counsel for Grogan Webb (Mr I Griscti) in turn in effect conceded that, if a purpose trust were found to have been established, then little could be said against the proposition that the payment out of the funds by Grogan Webb as it did was in breach of that trust. 15Some time after the proceedings had been commenced (a delay to which Counsel appearing for Mr Burke, Mr J Young, attributes some significance), Mrs George amended her pleadings and joined Mr Burke as the third defendant. The claim against Mr Burke is principally a claim of accessorial liability arising out of his alleged knowing receipt of the trust funds (at the time he directed the funds to be paid to settle his personal debts) and alleged knowing assistance in Grogan Webb's breach of trust (by giving the direction for payment of the funds in the manner he did) (as pleaded in the Amended Statement of Claim at [19A] - [19D]). In addition, there are alternative claims in contract against Mr Burke based on an implied promise to repay the $150,000 in the event that the Elderslie/Allco HIT acquisition did not proceed, for frustration of contract and for a total failure of consideration (as pleaded in the Amended Statement of Claim at [45] - [52]), as well as a further alternative claim against Mr Burke for breach of trust (in the event that it be held that a Quistclose trust for repayment by Mr Burke arose at the time the direction was given). 16The first and second defendants (to whom I will refer collectively as Grogan Webb) have raised a defence of apportionment under Part 4 of the Civil Liability Act 2002 (NSW), on the basis that if they are liable to Mrs George and there is a finding that their liability arises from a failure to take reasonable care, then the action is an apportionable claim within the meaning of s 34(1) of that Act and that Mr Burke is a concurrent wrongdoer within the meaning of s 34(2) of the Act. Mr Griscti submits that while Mr Burke might be an excluded wrongdoer (if there were to be a finding that his liability arose from a fraudulent or intentional act), the partners of Grogan Webb are not excluded wrongdoers as they were not intentionally the cause of the loss. Mr Griscti submits that if Mrs George's version of events is accepted, then any apportionment ought to be on the basis that responsibility for the loss lies substantially with Mr Burke - submitting that Mr Burke has manipulated a misappropriation of funds and the substantial proportion of blame is attributable to him (referring in this regard to Chandra v Perpetual Trustees Victoria Ltd [2007] NSWSC 694 ; (2007) ANZ ConvR 481 and Vella v Permanent Mortgages Pty Ltd [2008] NSWSC 505 .) 17Grogan Webb has cross-claimed against Mr Burke for damages for misleading and deceptive conduct in breach of s 42 of the Fair Trading Act (NSW) 1987; for restitution (on the basis that moneys were paid out of the solicitors' trust account for Mr Burke's benefit under the mistaken belief that Mr Burke was entitled to the moneys); and for equitable contribution (it being submitted that such contribution may be assessed on a proportionate basis). Mr Griscti has confirmed that this cross-claim is of relevance only if (as ultimately I have found to be the case) Grogan Webb were to be found to be liable to Mrs George and the finding of liability is such that this is not an apportionable claim under the Civil Liability Act . Further, Mr Griscti approached the matter on the basis that if George Webb succeeds on the misleading and deceptive claim, it may not be necessary to consider the alternative claims in restitution or for equitable contribution. 18As noted above, Mr Burke contends that the arrangement he reached in relation to the Elderslie/Allco HIT acquisition was an arrangement reached with Mr George (and thus that Mrs George has no standing to bring the claims against him in these proceedings). In any event, Mr Burke contends (in essence) that the arrangement was one whereby what was being acquired was a percentage of the equity that he expected to acquire ('a share of Burke') in a vehicle to be established to hold certain assets of the Elderslie/Allco HIT Group if negotiations then ongoing for their purchase came to fruition (referred to by Mr Young in the course of submissions variously as a purchase of the "expected equity" and as the purchase of an "option" to participate in a venture that might or might not eventuate), in cognisance of the risk that this "equity" might not materialise. What was thus said to be 'acquired' seems to have been no more than an opportunity. 19Mr Young confirmed that Mr Burke's primary position was that Mr George (not his wife) had purchased an option and had paid $150,000 for the "benefit of a share in the acquisition if and when it arose and if the acquisition did not occur that was at his risk". He submits that this is consistent with what the funds were in fact used for - it being said that they were expended "in the normal course of Mr Burke's business ... as an individual consultant". (This being the somewhat unconvincing explanation, in my view, as to why expenditure on personal expenses could be working capital). The emphasis placed on the concept of working capital arises because it is Mr Burke's contention that there was an agreement that the funds to acquire his share in the equity were, in effect, released to him unconditionally in advance of the establishment of the investment or acquisition vehicle (and in advance of the acquisition of the assets) so that he could use those funds for working capital (and that he offered a discount for the price of his share on that basis). 20It is therefore said for Mr Burke that there was no frustration of contract or failure of consideration (and no obligation on Mr Burke to repay any part of the sum expended by Mr (or Mrs) George as the case may be) when the acquisition of the Elderslie/Allco HIT assets failed to eventuate (and even though there was no new company formed for the purpose of acquisition of those assets and no equity as such in any established joint venture). The arrangement was said to be one whereby Mr George made the payment in question knowing that it was at "risk [of] loss" but with a corresponding prospect of a substantial "gain" or "upside" if the "equity" eventuated. (In this regard, Mr George accepted in cross-examination that the proposal was for the acquisition of a "small equity in a substantial acquisition" (T 26.16) and with the potential to receive consultancy fees, but did not accept that the arrangement was one whereby a (not insubstantial) sum was paid for nothing more than an opportunity to participate in the consortium or the project of the consortium that being described by him, graphically, as "buying thin air" - T 31.11). 21The expression "Elderslie/Allco HIT acquisition" seemed to be used in this proceeding in two different senses from time to time: as a reference to the proposed acquisition of the assets of the companies in question and as a reference to the acquisition of a share of the 'expected equity' in the venture pursuant to which it was proposed that those assets be acquired. I have used the expression in the former sense but conscious of the fact that the parties may have used it in one or other of the two senses. 22Mr Young contends that there was no breach of trust by Grogan Webb (since the funds when paid into the trust account were the property of Mr Burke and able to be released on his direction for whatever purpose he chose) and hence that it follows that there can be no accessorial liability on the part of Mr Burke. (Insofar as it was submitted in the course of argument by Mr Young that the terms of the trust were clear (and the funds were disbursed in accordance with those terms), as I understand it his client's primary position is that the funds were never held on trust for Mr or Mrs George but rather that they were (at all times from receipt into the trust account) funds belonging absolutely and unconditionally to Mr Burke.) 23As to the cross-claim, it is submitted by Mr Young that the communications between Mr Burke and Grogan Webb were at all times consistent with the terms of the agreement that Mr Burke contends came into existence and hence that Mr Burke did not engage in misleading conduct and there was no mistake in the way the funds were distributed by Grogan Webb. He further contends that even if there has been misleading or deceptive conduct on Mr Burke's part (in representing to Grogan Webb that the moneys were his to do with whatever he wished) there was no reliance on that representation and that the cause of the payment out of the trust fund of the moneys (on this hypothesis in breach of trust) was a mistake on the part of Mr Webb in reading the relevant email. Issues 24The following were agreed (as between Mrs George and Grogan Webb) to be the issues for determination in these proceedings (there being no demur from Mr Young in this regard): (i) whether the $150,000 paid into the trust account of Grogan Webb on 13 October 2008 was held on trust for Mrs George pursuant to an express trust for the purpose of funding the Elderslie/Allco HIT acquisition; (ii) whether Grogan Webb breached that trust by paying away the $150,000 for purposes other than funding the Elderslie/Allco HIT acquisition; (iii) whether Grogan Webb is liable to restore the fund of $150,000 plus interest by way of equitable compensation for breach of trust; (iv) in the alternative, whether Grogan Webb owed Mrs George a duty of care in relation to the trust fund; breached that duty; and is liable for common law damages in the sum of $150,000 plus interest; (v) whether Mr Burke is liable, under the first and/or second limbs of Barnes v Addy, as an accessory to the breach of trust by Grogan Webb or is liable for breach of a Quistclose trust for repayment of the fund arising upon the failure of the purpose of the express trust; (vi) in the alternative to (v), whether Mr Burke is liable to repay the $150,000 plus interest pursuant to: (a)an implied term of an agreement [with Mrs George] that the fund would be repaid upon failure of the Elderslie/Allco HIT acquisition; (b)frustration of an agreement [with Mrs George] under which the $150,000 was paid into trust for the purpose of the Elderslie/Allco HIT acquisition; or (c)by reason of a total failure of consideration under that agreement. (vii) whether the claim for breach of trust (and any accessorial liability for such a breach) is an apportionable claim for the purpose of Part 4 of the Civil Liability Act 2002 ; (viii) if the answer to (vii) is in the affirmative, what is a just apportionment of any liability between the defendants for Mrs George's loss; and (ix) whether Mr Burke is liable to indemnify Grogan Webb in respect of part or all of any liability the firm may have to Mrs George by reason of: (a)misleading and deceptive conduct, (b)restitution, or (c)equitable contribution. Summary 25For the reasons set out below, I am of the view that the above questions should be answered as follows: (i) the $150,000 paid into the trust account of Grogan Webb on 13 October 2008 was held on trust for Mrs George, namely an express trust that it was to be used for the purpose of funding the Elderslie/Allco HIT acquisition (by which I mean the proposed acquisition of certain of the assets of those companies) albeit that the moneys were able to be disbursed for those purposes in accordance with directions from Mr Burke (I consider that any direction by Mr Burke for the funds to be used for other purposes would have been a fraud on the power given to him to direct the use of the funds); (ii) Grogan Webb breached that trust by paying out the $150,000 for purposes other than the funding of the Elderslie/Allco HIT acquisition; (even had the trust been no more than a trust to hold the moneys to be used for the purposes of the acquisition of a 2% equity interest in whatever vehicle was established to acquire the Elderslie/Allco HIT assets, there would still have been a breach of trust in that the moneys were paid out otherwise than for those purposes - as must be the case where the vehicle in question had never been formed and there was nothing at that stage to acquire and the moneys were paid for school fees and the like); (iii) Grogan Webb is liable to restore to Mrs George the fund of $150,000 plus interest (quantified as at 28 November 2011 at $41,953.77 on the basis of interest at the RBA cash rate + 4% pursuant to s 100 of the Civil Procedure Act 2005 (NSW)) by way of equitable compensation for breach of trust; (iv) in light of the above findings, it is not necessary to address the alternative claim in negligence; suffice it to say that the finding that the funds were held on trust for Mrs George would in my view have sustained a finding that there had been a breach of a duty of care in relation to the trust fund in view of the failure by Grogan Webb to make any enquiry of Mrs George as to the payment out of the funds on the giving by Mr Burke of directions for the payment of moneys for purposes so obviously outside the purposes of the Elderslie/Allco HIT acquisition (such as the outstanding school fees or legal fees referable to other unrelated matters); (v) Mr Burke is liable, under both limbs of Barnes v Addy, as an accessory to the breach of trust by Grogan Webb, for the repayment of the funds knowingly received by him or paid out for his benefit at his direction and having thereby knowingly assisted in a breach of trust; (vi) in light of the finding in (v), it is not necessary to consider this issue; however, had it arisen I would have found that there was an agreement between Mr Burke and Mrs George (her husband acting as her disclosed agent in this regard) pursuant to which she agreed to pay $150,000 to invest in the acquisition of the Elderslie/Allco HIT assets (that investment to be by means of the acquisition of a 2% "equity" in the acquisition vehicle), and to allow the funds for that investment to be held by Mr Burke's solicitors in advance of the acquisition and to be available for use in the acquisition of the assets at Mr Burke's direction; that there was a total failure of consideration for that agreement and/or it was frustrated when the Elderslie/Allco HIT assets were sold elsewhere or were otherwise unable to be acquired at the time when the acquisition vehicle had not been established) and therefore that Mr Burke was liable to repay the $150,000 plus interest to Mrs George; (I would not have found that there was an implied term for the repayment of the funds in the event that the acquisition did not proceed - although that would have been the practical result in accordance with the above findings); (vii) the liability that Grogan Webb bears for breach of trust (and the accessorial liability of Mr Burke for such a breach) is not an apportionable claim for the purpose of Part 4 of the Civil Liability Act 2002 since that liability is not predicated on (and does not arise from) a failure to take reasonable care (and the fact that an alternative claim in negligence would have been a liability arising from a failure to take reasonable care is not to the point as it is not pressed in the context of the finding I have made on the principal claim); (viii) had the answer to (vii) been otherwise, I would have considered that a just apportionment of any liability between the respective defendants for Mrs George's loss would have been in the order of 60% on the part of Grogan Webb (though as an intentional and hence excluded wrongdoer Mr Burke would remain liable for the full amount of the loss - subject of course to the practical rider that the plaintiff could not recover more than its loss), on the basis that although Mr Burke precipitated the events leading up to the loss by issuing the direction, the ultimate cause of the loss was the payment out of the funds for purposes unconnected with the acquisition of the Elderslie/Allco HIT assets without any enquiry as to the validity of the direction given by Mr Burke to do so; and (ix) Mr Burke is liable to indemnify Grogan Webb, in respect of all of the liability that Grogan Webb has to Mrs George, by way of damages for misleading and deceptive conduct in breach of the Fair Trading Act (Mr Webb having acted on the direction to pay, and read the email authorisation from Mr George, in reliance on Mr Burke's earlier representation that the funds were his); had such a claim not succeeded I would have found on the facts that Mr Burke was liable in restitution to Grogan Webb having been unjustly enriched by the payment at his direction and on his behalf of funds under a mistaken belief induced by him that he was the beneficial owner of those funds; had the claim fallen to be dealt with by way of a claim for equitable contribution, I would have been inclined to the view that the appropriate order would be for a pro rata contribution having regard to the weight of authority as to the question whether there is power to award unequal contribution on the application of the principles of equitable contribution; finally, I am not satisfied that Mr Burke would have had a principal liability as trustee for breach of trust as I am not satisfied that a separate Quistclose trust arose at the time of the giving of the direction by him to Grogan Webb; Background Facts 26The first defendant (Mr Webb) has known Mr Burke for over 15 years. During that time Mr Webb and his firm have acted for Mr Burke and for companies with which he is associated in various matters. Mr Burke, in cross-examination, explained the basis on which Mr Webb had so acted over the years as being one under which fees were paid from time to time as and when funds were available (T D2 21.26) (as a quid pro quo for which he says he referred clients from time to time to Grogan Webb). (As the respective days transcript is not numbered consecutively, I refer to the second day of transcript as T D2 for convenience.) 27Mr Burke also gave evidence that from time to time he had made use of the firm's resources (and it would seem its trust account) in effect as an administrative convenience for the deposit of funds that the firm then paid out on Mr Burke's behalf or at his direction (though, as I understand it, this was not necessarily related to particular matters in which the firm was engaged at that time); this being Mr Burke's explanation as to why on his case the $150,000 was paid into the solicitors' trust account and not direct to him (T D2 25.17). 28As at mid 2008, Mr Webb was in regular contact with Mr Burke on a number of ongoing matters. At least one of those matters was a claim against Mr Burke for outstanding private school fees of around $85,000 (in respect of which proceedings had been threatened, if not by then already instituted, by the school). Another was a substantial dispute between a company associated with Mr Burke (Mymurra Pty Ltd) and the Karuah Local Aboriginal Land Council (in which by early 2009 there was litigation on foot, since Mr Webb's evidence was that he was in court on that very matter when an email from Mr George in February 2009 complaining as to matters in relation to the funds deposited in Grogan Webb's trust account was received in his office). Mr Webb knew at the time that Mr Burke was short of funds (T 45.26). 29Mr George is a former director of Elderslie Finance. That company was placed into receivership in July 2008. Mr George has since been placed into bankruptcy (in December 2009, on his own petition, following a dispute as to legal fees claimed by Elderslie's lawyers in connection with an unrelated matter). Mr George accepted (at T 26.41) that he was in severe financial straits from February 2009 to the end of that year, though he did not consider bankruptcy to be 'on the cards' until about September 2009 (T 27). 30Mr Burke says that, during the course of 2008, he had discussions with various people in relation to the proposed formation of a consortium of investors for the purpose of acquiring assets of Elderslie (including a loan book said to have been valued at somewhere in the order of $700m) as well as certain assets of the Allco group which was then also in financial difficulty (the latter assets being referred to as the Allco HIT assets). As noted above, I refer to the proposed acquisition in general terms as the "Elderslie/Allco HIT acquisition" (but do so bearing in mind that Mr Burke contends that the term as used in the critical 13 October 2008 communication has a different meaning). 31Mr Burke deposes that he had a number of ongoing daily discussions with a business associate, Mr Neil Youren (who, according to Mr Burke, played a large role in the proposed acquisition and was responsible, to the exclusion of Mr Burke, for the arrangements in relation to the funding of the acquisition T D2 22.18), concerning the proposed acquisition and the structure and ownership of the proposed new company that would be used to acquire the assets and that Mr Youren proposed that Mr Burke take a 30% share of the new company with the balance to be held by Mr Youren and other members of "the syndicate". 32I interpose to note that Mr Burke had a tendency to refer in his evidence to the consortium as if it had some separate legal existence or was a separate legal entity but, when I clarified this with him at T D2 27.13 it became apparent that he was simply referring to the group of potential investors (the membership of which group was by no means fixed as at the relevant times). 33Mr Burke was introduced to Mr George in August 2008 by a Mr John Garrett (who was called by the plaintiff to give evidence in the proceedings but not cross-examined by the defendants). Mr George had had a close business relationship with Mr Garrett for a number of years (T 23.7/10) but had not dealt with Mr Burke prior to the events in question. (The fact that there was no longstanding relationship between Mr George and Mr Burke is said by Mr Kelly to make it more likely that the subsequent payment of moneys into the Grogan Webb trust account was done so as to ensure that the moneys were kept secure until applied for the purposes nominated, rather than to be applied on a broader basis. I agree that this is a more plausible view of events than that either Mr or Mrs George was knowingly paying a not inconsiderable sum unconditionally for Mr Burke's benefit on the basis of no written documentation to acquire an 'equity' or interest that on no version of events then existed in any concrete form (and hence that being an interest that even if, as Mr George said in evidence, he believed already existed, there was no step taken to effect its transfer). At best, what was being acquired, on Mr Burke's version of events, was the benefit of a promise (as to the enforceability of which there might well be thought to have been an issue) by him that if and when he acquired an interest in a venture to be set up for the acquisition of the Elderslie/Allco HIT assets he would make 2% of that interest available for Mr or Mrs George). 34Mr Garrett was one of the persons Mr Burke identified as being part of the consortium at least for some period (and it seems, by reference to the notes made at the 13 October meeting with Mr George, that even as Iate as mid-October 2008, Mr Burke was suggesting that Mr Garrett might play a consulting role with the 'new company'). 35According to Mr Burke, the "preferred acquisition strategy evolved" during September 2008 and the "strategic intention" was then for a new company to be formed to acquire the assets of Elderslie from the receiver and that Allco HIT would be separately acquired by the new company. (This is one of the few parts of Mr Burke's evidence that Mr Kelly invites me to accept as correct.). There was no formal arrangement ever put in place between the members of the proposed consortium (that term, as noted above, being used by Mr Burke to refer to a disparate group of potential investors); nor was any new company ever formed for the purposes of the proposed acquisition. Mr Burke has deposed that: "The new company was never required to be formed as the receiver of Elderslie entered into an agreement with another party for the sale of the Elderslie businesses and assets" (at [38] of his affidavit). Any 'share' of the equity or 'expected equity' of Mr Burke in the consortium must have been a reference to a share of whatever interest Mr Burke might ultimately have acquired when the arrangements between consortium members were finalised (say, by the establishment of the new company that Mr Burke considered was the preferred acquisition strategy or by some form of joint venture). 36There were discussions in September/October 2008 between Mr Burke and Mr George in relation to the proposed Elderslie/Allco HIT acquisition. As noted earlier, it seems not to be in dispute that Mr Burke invited Mr George to participate or invest in that acquisition on the basis that Mr George could acquire from Mr Burke part of Mr Burke's "equity" or "expected equity" in the venture to be undertaken by the consortium. (There is a discrepancy between Mr George's recollection that Mr Burke was to have a 15% equity in the venture and Mr Burke's recollection that it was to be 30% but, other than suggesting that one or other of the witness' recollections is not wholly reliable, nothing turns on this.) I interpose to note that while Mr Burke says that the arrangement he proposed was that Mr George acquire 2% of his (Mr Burke's) equity, he confirmed that in fact what he was proposing was not 2% of 30% (or 2% of 15%, whichever be the case) but 2% of the total investment of the consortium members in the acquisition of the assets (ie 28% or 13% respectively); that 2% to be made available by Mr Burke taking 2% less than he would otherwise have taken in the venture. 37Mr George concedes that from February 2009 he was in some personal financial difficulty (due, as noted, to a dispute as to fees claimed against him by Elderslie's then lawyers). It is not clear whether that was the case in late 2008, a fact that could be of potential relevance insofar as if he were then it might be more likely that any investment in the proposed acquisition would have been by way of the use of his wife's funds. In any event, it is accepted by both Mr George and Mr Burke that in their discussions in late 2008 there was reference to moneys in Mrs George's account (though Mr Burke claims that Mr George told him it was 'his' money sitting in that account - T 71). 38At T 28.43, Mr George accepted in cross-examination that he wanted to 'get in on the ground floor' with a small equity investment to achieve potential substantial future benefit. At T 29, Mr George said that he thought the 2% was of the total 'consortium' and at T 29.25 that he thought Mr Burke already had that percentage in the consortium. Pausing there, it seems to me that it would be consistent with an agreement to acquire an existing share in a vehicle that was itself to acquire certain assets that there would be a risk for the investor in that the assets might not ultimately be acquired by the said vehicle (and hence the value of the interest in that vehicle might not emerge) but it is by no means clear that there would be a risk that moneys paid to enable the purchase of those assets would be at risk, since logically if the assets were not acquired then the money to purchase them would not have been expended. Even if the risk was that the investor would buy a share of the investment or acquisition vehicle that might not later be worth that share (because not all the underlying assets were acquired), this does not arise in the current situation where no acquisition vehicle has ever been established. Mr George's understanding that there was already an interest available to be acquired in the 'consortium' is therefore not necessarily inconsistent with the claim presently made. Nor is it necessarily inconsistent with the complaint later made to the Law Society that money had been paid but no share of the assets was obtained (nor with the email from Mr George to Mr Burke withdrawing from the investment as Mr George no longer wanted to be part of the consortium). All those matters seem to be predicated on an interest actually being acquired for the payment of the not insubstantial sum deposited in the solicitors' trust account, as opposed to the suggestion that no more was acquired than an opportunity. 39Both Mr and Mrs George say that the discussions Mr George had with Mr Burke were on Mr George's behalf. Mrs George deposed that it was not unusual for her to seek her husband's advice in relation to her investments. She asserted that she had authorised her husband to negotiate on her behalf (and appears to have relied on him throughout not only in the dealings with Mr Burke but also with Grogan Webb when later seeking the return of the moneys transferred to that firm's trust account), though her evidence as to what was said or done so as to account to such authorisation indicates that this was largely manifested by her (on her evidence habitual) acquiescence in decisions taken by him. (Mr Burke had no direct business dealings with Mrs George, though he admits that he was twice introduced to Mrs George when visiting Mr George.) 40Mrs George said in oral evidence given in chief at T 8.29 that: ... I think at one point [during the first meeting at her home] Mr Burke said was I going to join the meeting but I didn't. I just served coffee because Peter does all my negotiating for me and looks after my monies 41In cross-examination by Mr Young, Mrs George said that the negotiation was done on her behalf because "It was my money and Peter often negotiated investments for me on my behalf" (T 8.47) and that "It was my investment because it was my money" (T 9.7). 42Mr Garrett (who, as noted above, Mr Burke acknowledges was initially one of the proposed members of the "consortium") deposes to a conversation with Mr Burke in about September 2008 in which he says Mr Burke informed him that he had approached Mr George to see if he would invest $150,000 in the acquisition vehicle in return for a share allotment and had offered Mr George an ongoing consultancy. (This is consistent with Mr George's evidence that there was an initial meeting in about August or September 2008 and with Mr George's evidence as to the proposed investment. Mr George deposed, in a passage which I read not as to the truth of the communication or probative of the terms of the agreement with Mr Burke but as indicative of Mr George's state of mind or understanding at the time and subject to relevance, that he had told Mr Garrett "If we go ahead it will be Jane's investment".) (Mr Burke accepts, however, that when the issue was raised in early 2009, Mr George's demand was to "get the money back to my wife", which is consistent with that being Mr George's understanding of the arrangement. Mr Burke's position at this stage does not seem to have been to deny that the moneys had been invested by Mrs George. 43Mr Garrett (in a passage of the affidavit similarly read as to the fact of what was communicated to him and not as to the truth of the communication) says that when he asked Mr Burke how he would do this (ie provide the interest in the acquisition vehicle) when the receiver had not yet accepted their offer for the assets, Mr Burke said: I will get them to put the money into my solicitor's trust account and then when we have the deal done and the shares allotted the money can be released to the new entity. 44The making of such a statement to Mr Garrett by Mr Burke was not challenged in cross-examination on behalf of Mr Burke and is consistent with what Mr George says was the basis on which Mr Burke had suggested to him that the funds should be transferred into the Grogan Webb trust account. It is also consistent with the communication to Grogan Webb when the funds were in due course paid into the solicitors' account. (Mr Burke in the witness box took issue with Mr Garrett's account of the conversation, but had read the latter's affidavit and had apparently chosen not to dispute it in his affidavit evidence.) Whether or not what Mr Burke had told Mr Garrett was true, I accept that this was the way in which Mr Burke himself had described events to at least one other potential consortium member at the time. 45(Mr Garrett's affidavit also deposes to his reaction when he heard from Mr Burke in February 2009 that the latter had issued an authority to Grogan Webb and drawn down the funds or some of the funds to pay Mymurra's debts - that being that the payment was improper. There was an objection taken to the relevance of this evidence and while it is consistent with Mr Garrett's understanding of what Mr Burke had told him the previous year as to the basis on which the money was to be paid into the Grogan Webb account, I do not consider it probative as to what was agreed at the relevant meeting. Mr Kelly relies on Mr George's conversation with Mr Garrett after the event as Mr George's understanding of the transaction and state of mind at the time (that it was an investment by his wife, Jane, and that the sum was to be held pending a share allotment in the investment or acquisition vehicle) (such that it cannot be said that this is something raised for the first time when proceedings were commenced) and (and Mr Young does not object to the use for this latter purpose) to counter the suggestion put to Mr George in cross-examination that he had no grievance at all in relation to the transaction so far as Mr Burke was concerned. I read this subject to relevance, noting that the subjective understanding of the terms of contract is not the issue in determining what the contract (and its terms) was. By the same token, I accept that Mr Burke's response to Mr Garrett (that he was allowed to draw down the funds at his direction because he was giving Mr George 2% of his interest in the acquisition vehicle) is consistent with the position taken in the proceedings before me (though not with what he communicated to Mr Garrett in 2008).) 46The relevant discussions between Mr Burke and Mr George in October 2008 (after the initial meeting at Mr George's home in about August or September 2008) took place in a coffee shop in the central business district of Sydney, Mr Burke having no business premises from which he then operated. The first of those coffee shop discussions took place on 9 October 2008; the second, on 13 October 2008. (Although Mr Burke says that there were a number of meetings at which the acquisition was discussed, these are the only two meetings on which reliance seems to be placed for the agreement then said to have been reached between the respective parties.) 47Mr George says that in the course of the first coffee shop discussion on 9 October 2008 he told Mr Burke that he did not have any money of his own (because Elderslie had "wiped him out") but that his wife had some savings that she might be prepared to use and that, if his wife were to invest her funds, then he would want a consultancy contract as well (para [11] of Mr George's affidavit of 5 May 2010). (This is consistent with the evidence that Mrs George did maintain a separate bank account at that time, from which funds had been transferred in July 2008 to the joint account, albeit at a time before any discussion with Mr Burke as to this particular investment.) Mr Burke, on the other hand, says that Mr George told him that it was 'his' money in his wife's account. It was not, however, put to Mrs George that she was holding funds belonging to her husband in her separate account. 48Mr George says that on that occasion (9 October) Mr Burke said that he was associated with the principal of Monash Capital Group (Mr Neil Youren) and that the two were putting together a consortium (to acquire the Elderslie/Allco HIT assets) and aiming to be one of the biggest finance companies in Australia in three to five years. (No evidence was adduced from Mr Youren to contradict Mr George's understanding of the proposed acquisition or to corroborate Mr Burke's version of events, from which Mr Kelly invites me to draw a Jones v Dunkel inference. I refer to this later. ) Mr George says that Mr Burke offered him up to 3% of Mr Burke's "proposed holding" and had said he was willing to sell to him at $150,000 per one percentage. 49Mr Burke, in contrast, says that at that meeting he told Mr George that he wanted him to be involved with the "reworking" of the Elderslie assets and that he was offering him "a lifeline in the new company" (something Mr George emphatically denies); that his equity in the new company would be 30% and that, if Mr George was interested, the cost for a one percent share would be $150,000 (and for a 2 percent share $300,000). At [17] of his affidavit, he says that he made a file note "during the discussion" and he annexes a copy of what he says is a true copy of that note. He describes that in his affidavit as a "composite file note of my discussions with Mr George on 9 and 13 October 2008". He identifies in that paragraph the words that he says recorded the discussion on 9 October and those which recorded the following meeting. (In the witness box his evidence was inconsistent with this, at least to the extent of what words he then said had been written on the note after 9 October 2008.) (I refer to this as the composite note. It is one of three relevant handwritten notes of Mr Burke.) 50At the second coffee shop meeting on 13 October (during part of which Mr George believes Mr Youren was present, something which Mr Burke denies but which Mr Youren was not called to contradict), Mr George says that there was a discussion as to the proposed consortium and as to the negotiations for the acquisition of the assets, during which Mr Burke made notes on a foolscap notepad ([15]). Mr George says that at this meeting he told Mr Burke that in principle his wife would be interested but that "we would need to know a lot more about who is actually in the consortium, what the equity and debt structure is going to be and what will be the final assets to be acquired", to which he says that Mr Burke responded by saying that the position was "fluid" and that what he was offering was "part of my 15% equity in the consortium". (Mr Burke says that his equity was proposed to be 30% but he agrees that what he was offering at that time was a percentage of his 'equity', whatever that percentage that might ultimately have been.) 51Relevantly, in the context of providing an explanation for the payment of the money in advance of the acquisition, Mr George says that Mr Burke said to him "Elderslie alone is a great deal, so we need to be ready with the cash, so we can act quickly when the time comes" and that he hoped to be in a position in the next 10 days or so to give him a written heads of agreement but that he needed to know "who is in and who is out" and that there had to be some trust. 52Mr George then says that he said to Mr Burke: I appreciate a decision has to be made, but I have nothing to rely upon and you can hardly expect me to give you a cheque for $150,000, without something in writing to which he says that Mr Burke responded: I don't expect you to, but I am asking you to put the funds into my solicitor's trust account for the acquisition of the Elderslie Allco HIT assets at my direction, pending the successful acquisition by the consortium. Neil [accepted to be a reference to Mr Neil Youren] and I need to be sure, the money is there to complete the purchase and we don't want to be in a position where we sign a Contract and then have people changing their minds and pulling out at the last minute". 53It was put to Mr George in cross-examination that the comma in front of word "pending" in the above paragraph was misplaced and that the intent of the communication was that the money was to be paid "and could be used pending the acquisition" not "held pending the successful acquisition". Mr George said he would not have thought the comma made much difference. (Mr Burke, for his part, denied using the words "pending the successful acquisition by the consortium" at all.) 54Where there is affidavit evidence of an oral conversation, the placement of punctuation (such as a comma), assuming that not solely be for grammatical purposes, can surely be no more than (at most) a reflection of the witness' recollection of the emphasis placed on words used, or pauses, in the conversation in question (even assuming that the witness has deliberately placed the punctuation in that fashion, as opposed to it being inserted in the typing of the affidavit or otherwise). Mr George's evidence in the witness box suggests he did not consciously place the comma at this point in the paragraph. Therefore, it seems to me that I can place no weight on the placement of the comma (though in passing I note that the discussion was reminiscent of the account in Lynne Truss' book "Eats, Shoots and Leaves - The Zero Tolerance Approach to Punctuation" (Profile Books Ltd 2003) of the would-be Irish insurrectionist, Sir Roger Casement reputed (somewhat inaccurately) to have been "hanged on a comma" - pp 99-101 - a warning as to the need for accuracy in punctuation). 55Mr Burke at T 23.48 D2 said that the agreement he had reached was one "between Peter and myself a share of my equity it had nothing to do with the consortium. That was the agreement reached" (in re-examination). 56Mr George says that in response to the above request he said to Mr Burke words to the effect: "I understand this is not a normal acquisition and I can appreciate your problem. On the basis that the funds go into the solicitor's trust account to be used only for the Elderslie/Allco HIT acquisition at your direction, I think is safe enough" and referred to the interest he would be losing while the money was in that account (to which he says Mr Burke responded that he could keep the interest earned in the trust account). 57He also says that he told Mr Burke that he would speak to his wife and that, if she agreed, he would get his wife to put her money in the account later that day. On Mr George's version of events, therefore, he made it clear that any investment would be with his wife's money. 58Mr George says that Mr Burke wrote out his solicitor's name and trust account details on a piece of paper that he gave to him and that Mr Burke wrote down on the reverse of that page details of what had been discussed. He also says that Mr Burke wrote down the instructions to be given to the solicitor as to what the funds were for and that he, Mr George, said "Make sure it is clear, that the monies are for the Elderslie/Allco acquisition". I refer to this file note (Exhibit D) as the original note (since what was tendered was an original, not a copy, of the note). 59Mr George, at T 31.1 denied that there was any mention of option and said "I was putting money away in a trust account to purchase the assets of Allco HIT and Elderslie". He also denied that the payment was made and in the risk/gain scenario described at T 31.7, saying at T 31.11 that "you actually have to get the consortium together before it could be valuable". 60Mr Burke's recollection of the meeting is that it lasted approximately 30 minutes and that the discussion included Mr George's acquisition of a share of "my equity in the new company to be formed to acquire the Elderslie assets". There was no reference in Mr Burke's account of the conversation to the acquisition of an option as such. He says that he told Mr George he would outline the details "again" and said "As I have already proposed, you will have 2 percent of Burke for $300,000". 61Mr Burke says that when Mr George said he was interested but "I only have $200,000 sitting in my wife's trust account and this is all I can use" (something, I might add, that is inconsistent with the fact that it was a sum of $315,000 that had been transferred in July 2008 to the joint account), he then offered Mr George 2 percent of his equity for $150,000 and said that "This discount is on the condition that this $150,000 is used by me for my working capital " (my emphasis). He says that he referred to Mr George working in the new company as a consultant and that he had said that "The risk is that the whole deal falls over and you could lose the $150,000 but the upside is huge. The reason for offering you the 2 percent for $150,000 is because it allows you to have equity and not use all of your $200,000. This way forward will give you equity and consultancy fees". 62He also says that when Mr George said "I am happy, we have a deal", he told Mr George he was "more than happy to commit this to writing" but that the latter said "No, I have gotten to know you and the way you do business. Your hand is more than good enough for me". (I interpose to note that the last statement attributed to Mr George seems to me extraordinary if it is suggested that Mr George was in a position to form an opinion as to the way Mr Burke did business off the back of such limited dealings to that stage - making Mr Burke's version of the conversation somewhat implausible in this regard.) 63Mr Burke says that he made a file note "during our discussion on 13 October 2008" and that at page 2 (of the annexures to his affidavit) is a true copy of that file note ([20]). I refer to this as the replica file note (because, as will be shortly be seen, I consider that the evidence points to this note having been created at some time after the 13 October meeting in an apparent attempt at replication of the original note). 64Mr Burke says that the discussion continued with him stating that he wanted the money transferred into Grogan Webb's trust account; Mr George asking for the details; and he then telephoning Mr Webb at 11.15am. He says that Mr Webb's account of the conversation (at [7] of the latter's affidavit) accurately records their discussion. 65There was a dispute as to whether the agreement for the payment of the funds into the solicitors trust account was reached before the call made to Mr Webb or after. At T 33, Mr George says that it was before. It was put to him by Mr Young that the timeline was that agreement was reached then a request for funds to be put into account and then the call was made to Mr Webb and the wording of the direction was given. Mr George did not accept this. As it is, on that aspect of the matter (ie at what particular point the call was placed to Mr Webb during the 13 October 2008 meeting, the precise timeline does not seem to me to be critical). 66Mr Webb's account in [7] of his affidavit (which Mr Burke adopts as an accurate record) was that Mr Burke said "I have done a deal to sell part of my interest in the Allco deal. Peter George, who was involved in Elderslie, is going to buy part of my interest for $150,000. He can pay that to you", to which Mr Webb's response is said to have been "It's your money?" and when the answer to that from Mr Burke was yes Mr Webb says that he said: "OK, then he just needs to give me a direction in writing saying that I can deal with the funds as directed by you" (Mr Webb further deposes that Mr Burke then said to him "OK I'll speak to him. I've already given him your trust account details"). 67Pausing there, although Mr Burke says that Mr Webb's affidavit accurately records the discussion, there is an obvious inconsistency between the two at least as to when this conversation occurred. Mr Webb, in his affidavit, puts this discussion at around 11/12 October. He says that his understanding at the time was that the entity had been set up and that the payment was for a share of the entity (and that when he received the email on 13 October it was consistent with what he had been told by Mr Burke and did not alter his understanding). Mr Burke, on the other hand, says he did not have Mr Webb's account details with him at the meeting on 13 October and that he phoned on 13 October to obtain them. Yet, according to Mr Webb, when Mr Burke rang him (prior to 13 October) he said he had already given Mr George those details. Again, nothing appears to turn on the timing of this conversation other than to cause some doubt as to the reliability of the witnesses' recollection of events. 68What is significant, however, is the import of the question "It's your money?" followed, on Mr Webb's account of the conversation, by an immediate request for an authorisation as to Mr Burke's ability to direct the disbursement of funds out of the account. 69Mr Kelly submits that the relevance of the question as to whether the money (on any version of the timing of the conversation yet to have been transferred to Grogan Webb's account) was Mr Burke's own money and the request then made by Mr Webb for a direction from the payer of the money, is that the latter must indicate an appreciation that the money belonged to someone else. It is submitted (and it must logically be the case) that if the money being transferred to Grogan Webb's account was (or would, on receipt, be) Mr Burke's money to which he was unconditionally and absolutely entitled (as is the case put by Mr Burke) then there would be no need for any such direction and the giving of such a direction would be otiose. I accept the force of this submission. 70Mr Webb's explanation for this in cross-examination was that he wanted to be sure that he was authorised to disburse the money at Mr Burke's direction. 71At T 47 Mr Webb accepted that he knew the purchase had not happened as at 13 October, but suggested that this was because Mr Burke had not received the money (T 47.7). He said at T 47 24 "I asked him that [is it your money] to determine whether he had the right to tell me how the moneys could be drawn". (Pausing there, one would have thought that what was necessary on that understanding of the matter was ask for confirmation that the money paid in was for Mr Burke's absolute benefit.) Put to him (at T 48) that if it was Mr Burke's money there was no rational explanation for a direction - Mr Webb reiterated that his view as to why direction needed. I accept this as a genuine attempt to explain his then thought processes but it remains the case that logically a request for such a direction is inconsistent with the moneys in that account belonging to Mr Burke unconditionally. 72At T 50.18, Mr Webb said he knew from his client that the acquisition of assets had not taken place but was of the view that moneys were being paid for "acquisition of a share of what Mr Burke had - was working on but was not necessarily to be used in the future. It was monies that he had earned to that time". 73I accept that the request by Mr Webb for a direction as to the disbursement of the funds may have been as a matter of more abundant caution in order to prevent any issue later arising as to Mr Webb's ability to act on those instructions in the disbursement of the funds out of the trust account, but if so then the logical confirmation to be sought from the party paying in the funds would be that these were moneys belonging to Mr Burke (say, as payment for an acquisition that had already taken place) and that the payer had no interest in those funds or perhaps that these were moneys being paid in for the benefit of Mr Burke. The immediate request for a direction to pay from the payer, when on Mr Webb's account of the conversation he was being told it was Mr Burke's money, seems to me logically to cast doubt on the proposition that the arrangement as put to Mr Webb was one under which Mr Burke was to be beneficially entitled to those moneys as and from receipt of the moneys in the trust account. It makes it more likely in my view that any deal that had been done for the acquisition of Mr Burke's interest was appreciated by Mr Burke as being one that would be finalised at some point in the future (hence the need to have an authorisation from the payer if the moneys were to be distributed in advance of that acquisition). Therefore, whether or not the words "to be used for the Elderslie/Allco HIT acquisition" were properly to be understood as referring to the acquisition of Mr Burke's "share" in the consortium (or, put more precisely, an interest in the acquiring vehicle or joint venture) or to the acquisition of the assets themselves, the request for the authorisation in question (and its provision by Mr George at the request of Mr Burke)is inconsistent with a belief that the moneys were moneys in which Mr Burke would have an unconditional beneficial interest on receipt into the trust account. 74Mr Burke says that, during the discussion on 13 October, after he had rung Mr Webb, he said to Mr George: Lewis said that's fine, he's given me his trust account details. What he needs is for you to email him an authority for him to disburse funds to Martin Burke . I will write down what's required. (my emphasis) 75He says in his affidavit that he then wrote out the documents exhibited to Mr George's affidavit (ie the original note) and then completed the composite file note. 76The portion of the composite file note that Mr Burke says in his affidavit recorded the discussion on 13 October 2008 reads as follows: $150K - 2% of new entity banked into G&W Trust Ac/t & email authority to disburse to Burke etc/working capital - discounted from $300K * letter to P George / Risk:Loss 150: GAIN [with an arrow there pointing upwards] *consultant - salary/incentive options etc *Property & assets side of business [ followed by a reference to a name and phone number and the words "call to make apt" ] 77In the witness box Mr Burke was asked to highlight the words on the composite note that were written on 13 October 2008. The words emboldened above are the only words that Mr Burke highlighted as having been written on 13 October 2008. He then said that the words not highlighted on the note were added on 8 October (by which I accept he meant 9 October) (T 42) ie the highlighted words that I have emboldened above were the only words added after that 9 October meeting. I sought to clarify with Mr Burke whether what he was in fact saying was that all words not highlighted by him on the note were written during the first coffee shop meeting (on 9 October) and he said that was so. With respect that cannot possibly be the case given that "banked into G&W Trust" were not highlighted. Moreover, given the interpolation of the highlighted words with the remaining words it makes no sense that the bottom half of the note was written at different times. 78Exhibit D is the original note (that Mr Burke agreed was the document he gave to Mr George at the conclusion of the meeting on 13 October 2008). On one side of the page is a roughly drawn diagrammatic representation of the assets proposed to be acquired (with values attributed to various but not all of the assets) and a list of people whose roles are designated in the note as respectively the Chair/CEO/MD; directors and a list of consultants (namely the initials of each of Mr George, Mr Garrett and Mr Burke), with the words "salary and share options" written. The note further records the following "$150k" and "2%" with an arrow pointing therefrom to the words "Solicitors Trust" and the word "Equity". This part of the note bears the hallmarks of a document written off and on during the course of a discussion (with words circled or boxed, arrows, incomplete notes and what were described by Mr Kelly colloquially as squiggles). At the foot of that page were the solicitor's details (firm name, Mr Webb's name; telephone number and trust account details) in neater handwriting. 79On the reverse of the note was the following (also in Mr Burke's handwriting): $150K INTO TRUST ACT [ which I assume to be an abbreviation of the word "account" ] Letter to [ first defendant's name and firm details ] "We confirm funds to your account to be used with the Elderslie/Allco HIT Acquisition. The funds are to be distributed at the direction of Martin Burke [ followed by email details for Mr Webb and cc to an email address identified as that of Mr Burke ] 80Significantly, there is no reference in the original note to "working capital" or to the use of the funds for Mr Burke's working capital; nor is there any reference to the risk/gain of the investment; nor to there being a discount from the $300,000 (whether that be a discount for the right to have immediate use of the money, as now contended, or otherwise). 81The replica file note (that Mr Burke says in his affidavit he made "during the discussion" on 13 October 2008 and as to which he gave conflicting and confusing evidence in the witness box but which he ultimately conceded in cross-examination was written afterwards as a record or update of the discussion after that meeting) on its face contains a similar diagrammatic representation of the assets and the persons to be involved in the company as contained in the original note but includes more detail of Mr Burke's position ("equity 30%") and the words: $ 150K = 1% 300K = 2% etc P.G = 2% of Burke Jenny has $200K in account upside Agreed $150K = 2% = working capital. 82There is an arrow from the figure equity 30% to "PG = 2% of Burke" and an arrow from the bottom 2% figure to the initials P.G. 83In the course of cross-examination as to those three notes (the composite note that Mr Burke says recorded matters discussed at the 13 October meeting and was completed at that time; the original note handed to Mr George at the meeting which both parties accept was written at that time; and the replica note that Mr Burke in his affidavit says he made during the meeting), Mr Burke became somewhat confused. 84For example, at T D2 8.1, he said of the words "$150,000" and "2%" with the arrow to the words "solicitors trust" in the original note "Well it was [added] then [13 October 2008] or added the day before or continuing to scribble around that, whether it was done previous or that day" and then could not recall when those words were added note (in circumstances where it makes no sense that this part of the note would have been written before the meeting and it could not have been written after the meeting as the original note was given at that time to Mr George). Later, at T D2 15, Mr Burke accepted that there was no truth in the suggestion that any part of the original note was written at any earlier date. 85At T D2 10.30, Mr Burke said of the replica note that it was "done at that time" (ie the meeting of 13 October 2008) and at T 10.43 that it was quite possible that the note was written as Mr George speaking (when Mr Burke wrote Jenny instead of Jane to refer to Mrs George) and said "whether I did it then or later in my discussions but that is wen it was discussed of the $200,000 on account. Whether it was done specifically at that time or later I can't recall ... [there were] many meetings where this was discussed", seemingly focussing on when things were discussed not when the notes recording the alleged discussions were made (and he further agreed that there were not in fact many meeting after this where the $200,000 figure was discussed). 86At T 13.28, Mr Burke suggested that parts of composite note were written contemporaneously with the conversation on 13 October 2008 and then at T 14.11 he said that there were 2 file notes written on that date. He said that there was one expanded one from the 8 th (meaning the meeting of 9 October) (ie the composite note) and then there was another on 13 October (T 13.38) but was not sure at T 14.8 if the original note was done on 13 October or not. At T 11.19 Mr Burke had denied that the replica note was composed in its entirety after 13 October but later accepted that on its face the replica note appeared to have been written after 13 October (T 15.11), asserting confidently at T 18.36 that the replica note is an "exact update" of what happened in the discussion and at T 18.36 that it is an "exact record of what we had discussed". 87While I accept that some of the apparent confusion might be explicable by reference to the time that has elapsed and the pressure of what was described as very vigorous cross-examination, Mr Young stressing that this was not a memory test, there were nevertheless some glaring inconsistencies between Mr Burke's explanation of events and the notes themselves. Furthermore, on one version of his evidence, Mr Burke was claiming to have written three notes during the meeting - two of which appear to record very similar things (the original and replica notes), which seems to me quite implausible. I discuss Mr Burke's credit in due course. Suffice it for present purposes to say that it seemed to me that Mr Burke's confusion is not explicable solely by reference to the pressures of cross-examination (and I say that with no disrespect to Mr Kelly's cross-examination) but that it is due in no small part to the implausibility of what he was seeking to contend (namely that all three notes were written or partially written during the 13 October meeting and that part of the original note handed over at the meeting contained material added the day before). 88At least part of the composite note must have been written after the 13 October meeting (though it could logically have been written on the same day) since it refers to moneys "banked" into the Grogan Webb trust account and this did not occur until after the meeting. It is therefore obvious that the composite note contains material in the second half that was added to the note after the 13 October meeting (something inconsistent with Mr Burke's evidence in the witness box when he was asked to highlight those parts of the note added after the 9 October meeting and he did not highlight the whole of the bottom half of the note). 89Leaving aside my real doubts as to the accuracy of Mr Burke's recollection of when parts of the material were added to the composite note, it is equally (if not more so) difficult to accept that the replica note was written contemporaneously with the discussion at the 13 October meeting (apart from the unlikely scenario that this would involve Mr Burke simultaneously writing two separate notes) because there is nothing to suggest that Mr George forgot his own wife's name when speaking to Mr Burke nor would one expect a person writing down points as matters were discussed to write down a different name (Jenny) from that being spoken at the time (which was presumably Jane), (especially as the names seem sufficiently dissimilar from an acoustic perspective as to be unlikely in my opinion to have been misheard or confused as spoken). (Mr Burke had already met and been introduced to Mrs George by that stage but I do not suggest that this would not preclude a later mistake as to her name.) 90It seems to me far more likely that the replica note was written at a later date than that it was written (as Mr Burke deposed under oath in his affidavit that it was) during the discussion and Mr Burke ultimately accepted this. I accept that there might be an innocent explanation for this - for example, it may well have been that Mr Burke (having handed to Mr George the actual note of the discussion) later wanted for his own records to have a copy of what he recalled. However, that is not what Mr Burke's evidence was (at least initially in his affidavit - since in the witness box his evidence on that matter was inconsistent and confused) as to the time the note was taken. Moreover, it is hard to see why there would be a need for such a note if the composite note had also by then been completed to include reference to the 13 October meeting. (The fact that the replica note seems to have been written in an attempt to replicate the format in which the note was given to Mr George could in my view support the inference that not only was this done at a later stage but that it was drafted, or concocted to use Mr Kelly's description, to suggest that it had in fact been written at the meeting itself - but it does not seem to me necessary to make any finding as to this). As for the composite note, as already that seems unlikely to have been completed at the 13 October meeting as it refers in the past tense to money banked into the solicitors' account. 91Whatever Mr Burke's motivation in this regard, it seems to me clear that both the completion of the composite note and the creation of the replica note occurred after the 13 October meeting (rather than during the meeting itself). 92The absence of any reference to "working capital" on the original note given to Mr George is in my view telling; as is the absence of any reference to "Risk/Gain" or to a "discounted" price. If there had been a discussion about the use of the funds for working capital during the meeting then there seems no logical explanation why that would not have been recorded in the original note (particularly given the significance it appears to have assumed in Mr Burke's mind - he having said that he formed the view that the money would be his own and available to be spent for personal purposes during that very meeting). That, coupled with the generally unconvincing nature of Mr Burke's responses when questioned as to these notes (and I say that without drawing any adverse inference from the confusion on his part in the witness box as to whether the first coffee shop meeting was on 8 or 9 October), leads me to the conclusion that the composite and replica notes both contain additions which were either an ex post facto attempt (or concoction) by Mr Burke to put forward a basis on which it might be suggested that the disbursement of funds for his personal benefit had been authorised at the meeting or (at best) a gloss that Mr Burke now seeks to put on what was discussed and/or agreed at the meeting. 93I regard the only reliable record of what happened at that meeting (bearing in mind that it may well not be complete in any event) as being the contemporaneous note handed to Mr George (ie the original note). To the extent that Mr Burke's evidence of what was said at the meeting departs from that recorded in the original note (and particularly as to the three additional matters I have identified above), I view it with great caution and prefer the evidence of events as gleaned from the original note. (Furthermore, I regard Mr Burke's attempt to explain the creation of the notes as unpersuasive and this, together with his apparent inability to recall much of the events about which he was cross-examined, leads me to treat his evidence as a whole with scepticism.) 94On 13 October 2008, at 1.47pm Mr Webb received the critical email from Mr George (ie the email on which the establishment of the express trust fundamentally depends), the subject field of which reads "Elderslie/AIco HIT Acquisition". It was in the following terms: I refer to my meeting with Martin Burke this morning and as part of the terms we agreed I confirm that my wife, Jane George, will this afternoon transfer $150,000 to your trust account, [xxx] to be used for the Elderslie/AIco HIT acquisition. The funds are to be distributed at the direction of Martin Burke. 95It is to be noted that the wording of the email to Mr Webb differed slightly from that in Mr Burke's note. Mr George agreed in the witness box that this was deliberate on his part. Apart from the references to terms said to have been agreed with Mr Burke and to the transfer being by Mr George's wife, those not being contained in the original note, the email also says that the funds are to be used "for" not "with" the Elderslie/Allco HIT acquisition. 96The opposing parties emphasise different parts of this very short email. Emphasis is placed by Mrs George on the words "to be used for the Elderslie/AIco HIT acquisition" in the above email; emphasis is placed by the defendants on the words "The funds are to be distributed at the direction of Martin Burke". (Emphasis is further placed by Mr Burke on the words "as part of the terms we agreed", as indicating an agreement between Mr George and himself (ie not an agreement with Mrs George).) It was also noted in the course of argument that the email is prospective in its terms, referring to a transfer that "will" be made that afternoon not a transfer that had happened or was then happening. 97At 2.31 pm on that same day, the sum of $150,000 was telegraphically transferred from a bank account held in the joint names of Mr and of Mrs George to the Grogan Webb Trust Account. Mrs George says that she caused the transfer to be made and there is no dispute as to this. 98Grogan Webb's trust account ledger records show that a file was opened in the name of Mr Burke (as client) with the matter described as "Elderslie/Alco" and the funds were recorded as having been received from Jane George "On account of monies received on behalf of client". In his affidavit, Mr Webb said that he opened the file in Mr Burke's name and advised his accounts person that the funds received should be held to his account. Mr Webb in cross-examination said that the opening of the file was an office requirement and confirmed that the client on whose account the moneys had been received was Mr Burke but that he, Mr Webb, was not acting on the Elderslie/Allco matter. 99On 14 October 2008, Mr Burke gave directions to Grogan Webb to draw from the $150,000 amounts of up to $95,000 to pay the outstanding private school fees (and legal fees apparently owing to the school in respect of its claim against Mr Burke for unpaid fees); an unspecified amount to FCT Limited (which Mr Webb thought was a company to which Mr Burke owed a debt - T 53); $35,000 to Cadorna Pty Limited (of which Mr Burke was sole director and shareholder as from 16 April 2008); and the balance to be held by Grogan Webb and applied towards outstanding legal fees in relation to current matters on Mr Burke's behalf and on behalf of Mr Burke's company, Mymurra (for whom Grogan Webb was acting in the dispute with the Karuah Local Aboriginal Land Council). 100For completeness, I note that Mymurra was subsequently wound up in insolvency on 23 March 2009 (D2, T18.40) following the issue of statutory demands by the Aboriginal Land Council at the end of 2008 (and apparently despite the execution of an affidavit from Mr Youren as to his belief in its solvency). (One of the shareholders of Mymurra was Cotlaw Pty Limited, a company in which the partners of Grogan Webb were interested. Mr Burke, who was initially unable in the witness box to recall who the shareholders of Cotlaw were, explained this as being a carried interest in appreciation for the solicitors' services. He was at pains to emphasise that there was nothing wrong with such a situation and nor did Mr Kelly suggest that it was. However, as I apprehend it, reliance is placed on this as indicative of the close relationship between Mr Burke and at least the first defendant if not both the first and second defendants. Mr Griscti submits that nothing can be taken from this and notes that the Cotlaw association was not put to Mr Webb - although the shareholding seems to be a matter of public record on the ASIC register.) 101In his evidence, Mr Burke said that he made the decision to transfer the moneys out during the course of the meeting on 13 October 2008. He accepts that he did not tell Mr George what he proposed to do with the money in question. He was adamant that there was no need to do so (because it was "his" own money, the agreement being that he would accept a discounted amount for his 'equity' in order to be able to use the funds immediately as his working capital). 102Payments were made out of the $150,000 held in the trust account as follows: (a)$85,952.74 to Marist Brothers St Josephs College on 15 October 2008; (a)$14,099.91, $3,010.30 and $825 to Grogan Webb on account of fees on 17 October 2008; (b)$35,000 to Cadorna Pty Limited (a company associated with Mr Burke) on 17 October 2008; (c)$2,500 to Marist Brothers St Josephs on 17 October 2008; (d)$4,503.86 to an unidentified payee on 17 October 2008; and (e)$4,108.19 by way of "Transfer Funds" to an unidentified transferee, on 22 October 2008. 103By 22 October 2008, the $150,000 sum had been fully expended. There can be no sensible suggestion that the bulk of the payments made out of the $150,000 were in any way associated with the Elderslie/Allco HIT acquisition (even assuming that some of them, such as the Cadorna payment, might have in some sense represented use of the funds as part of Mr Burke's personal 'working capital'). From his answer at T 53.48, it seems that Mr Webb was aware at the time that at least the bulk of the payments had nothing to do with the acquisition of Elderslie/Allco HIT assets. 104At T D2 8.18, Mr Burke said that it was possible, but he did not recall, that he had written any more notes after 13 October 2008 but then said he had not added to the original note beyond the meeting on 13 October (T D2 9.9). 105Although there was a suggestion in the notes created by Mr Burke after the relevant meeting (and in both Mr Burke's evidence and submissions put on his behalf) that the agreement between Mr George and Mr Burke contemplated or permitted the use of the transferred funds for "working capital purposes" (in advance of the acquisition of assets on behalf of the consortium members), even if that was part of the arrangement between the parties (and I do not accept that it was) it does not seem to me that it can seriously be suggested that payment of the moneys in the fashion in which they were disbursed could be described as being by way of working capital for the then proposed acquisition. (At best it might be said that, by using this money for his personal or company debts, Mr Burke was freeing up other moneys for use as working capital for the proposed acquisition - but even then there is no evidence of any moneys so spent and it seems to me that this would be a tortured construction even of the arrangement for which Mr Burke contends.) Mr Young, during the course of submissions, seemed to put forward a cascading set of submissions as to the import of the "working capital" reference in the replica note but ultimately (by reference to the response to the transcript reference schedule prepared by Mrs George) Mr Burke's position seems to have been that, whether it was used as working capital or not, this money belonged to him absolutely from the time it was paid and he had no obligation to transfer any asset or any share of equity in the proposed joint venture unless and until the acquisition went ahead. 106Reliance is placed by Mr Kelly on the evidence of Mr Garrett as being consistent with the intention of Mr and Mrs George being that the $150,000 be held in trust for the purpose of being used to fund the Elderslie/Allco HIT acquisition (and for no other purpose). As noted earlier, Mr Garrett says that, during the course of a conversation about the proposed $150,000 investment prior to the 13 October 2008 meeting, Mr Burke had said to him "I will get them to put the money into my solicitor's trust account and then when we have the deal done and the shares allotted the money can be released". 107No trust account receipt was issued to Mrs George (or to Mr George) for the moneys. (Mr Webb says that a receipt was prepared - T 54.42. It is not clear if it was ever forwarded to Mr Burke.) Nor, it seems, was there any enquiry by the Georges as to the use of the funds or the retention of the moneys until early the following year. (Mr Burke deposed that in the period after October 2008 there were discussions with Mr George as to the proposed acquisition and that nothing "negative" was said by Mr George about it.) 108In January 2009, Mr George sent an email to Mr Webb referring to his 13 October email "and the deposit of $150,000 made by my wife into your trust account" and stating that " We have just realized that we have not received any acknowledgement and wish to make sure that you received the funds" (my emphasis). Mr George asked Mr Webb to confirm that he had received the funds and as to the interest accruing (which is consistent with Mr George's account of the conversation with Mr Burke in which he says the latter said he could have the interest earned on the funds in the trust account). On 29 January 2009, Mr George forwarded to Mr Webb a copy of that email, having noted that the email had been incorrectly addressed (though noting that it had not been returned by the mail server). Mr George asked Mr Webb to let him know the situation and gave him his mobile phone number. Assuming that the lack of response to the first email was that it had not been received due to the incorrect address, there was nevertheless no response by Mr Webb to the second email (and there is no suggestion that this email was not received in the ordinary course). 109Mr Griscti emphasises that Mrs George was not the author of that email correspondence. I accept that this email correspondence was issued in Mr George's name, though note that the evidence was that they used a joint email address - T 16.28. However, it is written in terms that include his wife ("We have just realized ...") and it seems to me that little can be drawn from this in circumstances where, on the evidence of Mr George (corroborated to at least some extent by Mr Burke's own notes), Mr George was speaking and/or acting on his wife's behalf in relation to any investment she (or they jointly) decided should be made of her money. 110In late February, there was further correspondence with Grogan Webb. An email was sent on 24 February 2009 from Mr George's email address (which he says is an address also used by his wife) to Mr Webb. The email was sent in the name of Mrs George, advising that she required "the return of the funds at her direction", and enclosing an initial direction to pay a small amount of those to a third party. (A copy of that letter and direction, signed by Mrs George, was sent by mail to Grogan Webb at around the same time). The Georges received an automated "out of office" response to the email sent in February. Perhaps ironically, Mr Webb's evidence in the witness box that he was in Court on the Mymurra litigation with Mr Burke that day. He accepted that he had spoken to Mr Burke about the email. He says that he asked Mr Burke to contact Mr George. 111On Mr Webb's account of the circumstances in which the moneys were received into and paid out of his trust account, one would assume that he would have been concerned that the payer of the moneys that his longstanding client had claimed were his was now asserting a right to them. Mr Webb's explanation for the fact that he sought instructions from Mr Burke before responding to the queries raised by Mr George and his wife was that this was because Mr Burke was the one who had given the instructions and "he should let me know" what had happened. (Mr Kelly says that Mr Webb already knew what had happened to the moneys so there was no need to speak to Mr Burke and suggests that this was an attempt to withhold information as to what had happened to the moneys - something denied by Mr Webb at T 59.24). 112I accept that Mr Webb had no telephone or address details at the outset for the Georges but he did have their email address (and by early 2009 when they queried the matter he was in receipt of a mobile telephone number). Therefore the fact that Mr Webb deferred responding to the enquiry until after he had sought instructions from Mr Burke suggests that he was seeking an explanation as to more than the manner in which the funds had been distributed but as to why Mr Burke had said he was entitled to do so - in light of the issue that had been raised by Mr George. 113Mr Webb says that he asked Mr Burke to contact Mr George in relation to the query that had been raised in respect of the moneys. At T 56.48, he said that the conversation with Mr Burke was as follows: I said to him I've received an email in relation to the monies that were [disbursed] in October, what is the position, what's going on can you please talk to Mr George. I believed that everything was fine. 114Mr Burke seems to have made contact with Mr George as requested, at least insofar as there seems to have been a meeting arranged between the two (which Mr Burke then apparently cancelled due to the ongoing court matter). Reference to this was made in an email sent by Mr George to Mr Burke on 25 February 2009, referring to a business proposal and forecast he had received apparently forwarded on by Mr Burke from Mr Youren (from which Mr George says he realised that the HIT transaction was no longer being considered) and saying: This is a long way from the Elderslie/Allco business concept that was originally discussed and not one with which fits into my future plans. I wish you and Neil every success. Now that Elderslie has been sold, I think the opportunity to set up the kind of finance company I was envisaging is past. Accordingly, I have requested the return of the funds held in the Grogan & Webb Trust Account. I am sorry this opportunity to do business together has not come off, but doubtless there will be others. 115Pausing there, the wording of this email is consistent with there being an arrangement directly between Mr George himself and Mr Burke, at least insofar as Mr George is writing in the first person (and speaking of the finance company that he was envisaging). However, it is also consistent with the discussion as to business opportunities being referable to an agreement under which Mr George was to have the opportunity to engage in the new business if he or his wife invested in the consortium (and I therefore do not read this as meaning that the only possible agreement was one between Mr George in his own right and Mr Burke). 116Mr George accepts that by the time that the email was sent in February to Mr Burke he had formed the view that the investment had changed from the form that he had originally made the investment (T 18.41) and that it was not a good investment anymore (T 18.46). However, it seems to me that Mr George's reasons for deciding he did not want to proceed in the consortium are irrelevant in circumstances where no share in any consortium vehicle was ever acquired by him or provided to him or his wife. (Had there been an interest actually acquired then it may well not have been open to Mrs George or her husband to withdraw from the consortium even though they were unhappy with the investment - but the matter never proceeded to such a point). 117After a further email sent to Mr Webb on 25 February 2009, advising that the matter would be referred to the Office of the legal Commissioner, and in which complaint was made as to the firm's inability to issue a receipt or monthly statement of account (again consistent with a belief that the funds were retained on his wife's behalf), Mr George says that he received a telephone call from Mr Webb in which he said that he would send an email explanation and that he understood that Mr Burke would call him as well. That email explanation, relevantly, was as follows: I confirm that I act on behalf of Martin Burke who in October of last year instructed me that he had assigned to you a 2% share in the Elderslie/Alco HIT acquisition Entity for an amount of $150,000 and that you would be depositing those monies into my Trust account to be used at his direction. Your email to me of the 13 th October 2008 confirmed that "the funds are to be distributed at the direction of Mr Burke" and I subsequently distributed those funds in accordance with his written direction. I have requested Mr Burke to contact you to confirm these details. 118The statement that "I act on behalf of Martin Burke ....", if intended to convey that Mr Webb was acting for Mr Burke in relation to the assignment of the 2% share in the said acquisition entity or on the acquisition itself, would seem rather disingenuous but in any event, insofar as it conveys that Mr Webb's understanding was that this was a payment into his trust account representing the payment of consideration for some assignment that had already taken place, it would seem inconsistent with the perceived need for any authorisation by Mr George that Mr Burke could direct the disbursement of the funds and it makes incomprehensible in my view the instruction in the 13 October email that the funds were "to be used for the Elderslie/Alco HIT acquisition". If they were Mr Burke's funds then it stands to reason that they could have been used in any way he wished. 119Mr Kelly suggests that the response to Mr George was not fully frank in that Mr Webb did not identify how the funds had been disbursed when that was a matter within his own knowledge (and instead had simply stated that the funds had been distributed in accordance with Mr Burke's written direction). It can certainly be said that the response was not as forthcoming as it might have been, particularly when Mr Webb knew how the funds had been distributed. Mr Webb's response when that was put to him was "well that was the position that I was repeating what I was instructed had happened and he requested me to give him some information and that was my response". What Mr Webb was thereby acknowledging, it seems, is that his response to Mr Burke was simply a repetition of the response Mr Burke had instructed him to make. That is illustrated by the reference in the email to the 2% share, since there is nothing in Mr Webb's affidavit to suggest that Mr Webb had been told at the outset that the "deal" which had been done with Mr George involved acquisition of a 2% interest. Pressed as to this in cross-examination, Mr Webb was unable to recall what he knew or had been advised in October 2008 in that regard (see T 58.17 where he suggested that he had been advised of this in October and that was his belief in October but then at T 58.26 where he could not recall whether he knew or had been advised that this was a 2% share and said he had received information in February from Mr Burke and so had written the email. 120Mr George's response to this email was, among other things, to note that he had not received any share or ownership documentation from Mr Burke on the acquisition and that, as Elderslie had been sold to a separate entity, there could be no such acquisition (making it clear what Mr George understood by the acquisition in question - ie that he was to have ownership of the interest in the corporate vehicle established to acquire the Elderslie/Allco HIT assets). 121Mr Young submits that it is relevant that no written complaint or demand was made against Mr Burke at that stage; there being simply a demand for the return of the money deposited with Grogan Webb (and a complaint, the content of which I refer to in due course, by the Georges to the Law Society in relation to Grogan Webb's conduct). With respect, that seems to me to be consistent with the understanding of Mr and Mrs George being that the money that had been deposited into the Grogan Webb trust account remained Mrs George's money and was held by Grogan Webb pursuant to the terms of the email sent prior to the transfer of the moneys. (There is no indication that either Mr Webb or Mr Burke had by then told the Georges what had happened to those funds - Mr Burke quite confidently asserting in the witness box that there had been no need to tell Mr George at the 13 October meeting what the funds were to be used for or after that meeting what had happened to the funds.) In any event, the evidence shows that there was complaint made direct to Mr Burke at this time (Mr Young relying on this as "bullying" conduct). 122What happened next was a complaint to the Law Society. Mr Young places reliance on the content of the statement of complaint to the Law Society that was lodged on 1 March 2009 as being inconsistent in part with the evidence now put by the Georges as to the matters in issue. The complaint (Ex 2) was signed by Mr George but identified his wife as the complainant. A refund of trust funds was expressly sought (which meets the suggestion that the complaint was not as to a trust at that stage). Five matters are noted by Mr Young as being inconsistent with the present claim. 123First, the complaint suggested that Mr Webb had acted for Mr and Mrs George jointly and it appears to be accepted that there was no such retainer. (As to this, it seems to me that this is probably no more than a lay description of the relationship pursuant to which Grogan Webb held moneys in a trust account placed there by Mrs George - in other words, it is consistent with an understanding that the firm or Mr Webb had some responsibility to Mr and Mrs George in relation to the holding of the funds in question.) 124Second, the summary of complaint says that the payment was securing the minimum 2% equity share for Mrs George "or her Nominee", though it is accepted that there was no reference in the discussion to a nominee (T 23.37). (However, to the extent Mrs George had made the investment or it was made on her behalf then it would presumably (absent some requirement that the interest be retained in her name personally) have been open to her to nominate someone in whose name the interest should be acquired, therefore I place no weight on this perceived inconsistency.) 125Third, the complaint refers to the grant of a consultancy service agreement with the "Consortium" "on reasonable market rates" though there is no reference to reasonable market rates in the affidavit. Mr George says that this was discussed, although there is no reference to it in his affidavit. However, the complaint makes clear that the final terms of the consultancy agreement were yet to be agreed and hence the assertion that it was to be on reasonable market terms can be read, in effect, as an assertion by Mr George. 126Fourth, the complaint refers to the payment into the trust account as a "show of goodwill and part payment deposit" while the final form and value of the consortium was agreed but does not refer to it as a payment on trust While Mr George accepts that characterisation of the document - T 24.31 - the complaint form itself seeks a return of trust funds as noted above. Moreover, if the proper characterisation of the stipulations placed on the disbursement of funds in the account is that this caused those funds to be impressed with a purpose trust then the fact that the complaint did not refer to it as such is not in my view conclusive and does not amount to any kind of admission against interest. The assertion that the payment was a show of goodwill is consistent with Mr George's evidence that Mr Burke asked for a demonstration of his commitment in that regard. The suggestion that it was a part payment is less readily explicable (that seemingly being tied to the final value of the consortium) but ultimately I think nothing turns on this. 127Finally, the complaint refers to the payment being on condition that the funds were to be returned if the transaction did not come to fruition in a form acceptable to Mr George (whereas the pleading alleges that the funds were to be returned if it did not come to fruition within a reasonable time). In cross-examination, Mr George accepted that the former formulation was purporting to reserve to himself a right of refusal. That seems to me consistent with Mr George saying in the email to Mr Burke that he (or his wife) was not happy with the changed form of the investment and requiring the refund of the funds. As to the latter formulation, Mr George says that he thought it was obvious that if the transaction did not proceed the money would be repaid (T 17.7). Mr Griscti submits that there is no basis to imply a term to that effect (and applying the business efficacy test I am inclined to agree). 128In June 2009, a formal letter of demand was sent to Mr Burke by Mr George, signed by Mrs George and in late November 2009, these proceedings were commenced. The sole defendants at that stage were the partners of Grogan Webb and the claim was for breach of trust in relation to the trust account. (Mr George says that this was on the basis of legal advice - T 27.38.) Mr Burke was joined as a party to these proceedings in March 2011. Mr Young submits that this highlights that the only factual matter that connects Mrs George to the $150,000 and its payment to Grogan Webb is that she transferred the money to their trust account and that it was Mr George who contracted with Mr Burke as principal. I do not accept that such an inference should be drawn. The claim for breach of trust is not inconsistent with the claims now sought to be made against Mr Burke and there may (as in any litigation) be a number of reasons why a party would choose not to pursue all possible defendants (in this case not the least being, perhaps, Mr Burke's financial position whatever that might be). Credit 129Before turning to the issues for determination, I consider the submissions made as to the credit of the respective witnesses. Not surprisingly perhaps, given the issues in the present case, the opposing parties each invite me to disbelieve the version of events put by the other and attack (to a greater or lesser degree) the credit of the other. 130After the close of the hearing I had the benefit of a schedule from Mr Kelly containing transcript references to the passages relied upon as to credit (the transcript not having been available during the hearing). The defendants were then in a position to respond thereto or make reference to other passages to the transcript on which they too relied. Mr Griscti objects in general terms that there is material in the schedule that goes beyond the leave granted, perhaps by its reference to the documentary evidence. However, it seems to me that the schedule deals with credit issues by reference to the transcript and is within the scope of the leave granted. In any event, the defendants have had the opportunity to respond to it (and have done so). Mr Burke 131Mr Kelly submits that Mr Burke was not a truthful witness and that his evidence should not be accepted unless it is an admission against interest. 132Mr Kelly identified the following parts of Mr Burke's evidence as those upon which reliance could be placed as an admission against his interest. 133First, it is contended that Mr Burke has (at T 75-76) admitted what is, in substance, the plaintiff's case, when he agreed that the intended use of the funds (in the sense of the purpose for which they were placed in the trust account) was for the Elderslie/Allco HIT acquisition. I do not set out the whole of the exchange relied upon but note that it included the following: Q. You agree that the intended use of this fund of money in the sense of the purpose for which it was placed in the trust account was for it to be used for the Elderslie Alco HIT acquisition? A. Yes. Q. Meaning an acquisition by the company yet to be formed? A. Yes. Q. If and when it was formed? A. It was to be used for the acquisition of the assets of Alco HIT and also Elderslie. Q. By the company? A. By a company, Newco, to be formed. Q. By the company to be formed? A. Mm-hmm. Q. And that's consistent with the acquisition strategy that you speak of in your affidavit? A. Mm-hmm, yes. Q. But the money was not to be used for any purpose other than the acquisition of the Elderslie Alco HIT assets by the Newco when it was formed? A. It was to be used for that particular project, yes. 134As to this, Mr Young submits that this (as he submits is also the fact that the new company was not formed, to which reference is made in (b) below) is entirely consistent with the terms of the agreement that Mr Burke contends was reached on 13 October 2008, namely that the funds were to be "released" to Mr Burke to "be used for the acquisition of the assets of Alco HIT and also Elderslie" (T 76). In saying this, Mr Young submits that this does not mean that the funds were to be used only for the purpose of buying the shares in the new company but that the concept of the acquisition was broader and permitted the use of the funds by Mr Burke "for the purpose of the acquisition of the assets of Alco HIT and Elderslie by Newco". 135I accept that the admission is not one that limits the agreement to one where the use of funds was only to be for the purposes of acquiring shares in a new company. However, what is crystal clear in the above exchange is that Mr Burke accepted that the use of the money was to be for the acquisition of the assets by the proposed new company and for the purposes of the particular project. On no stretch of the imagination would that encompass use of the funds by Mr Burke "for his daily expenses" (as it is conceded that he used them) (and which in his response to Mr Kelly's transcript reference schedule Mr Young still maintains was encompassed within the agreement reached). 136Furthermore, this exchange makes very clear, in my view, that although the payment of $150,000 was for the intended acquisition of a 2% "equity" in the consortium (if there be such a thing) or in the joint venture (whether through share ownership or otherwise), the payment of the funds at that stage (in advance of the establishment of the joint venture as such) was to enable the acquisition of the assets in question (consistent with what Mr George says was Mr Burke's concern - that he have the funds available for that purpose if he needed to move quickly). The above concession seems to me to acknowledge that the reference to "Elderslie/Allco HIT acquisition" in the critical email could only have been understood by Messrs George and Burke to refer to a prospective acquisition of actual assets of the companies (not the acquisition, prospective or otherwise, of Mr or Mrs George's share in the venture). 137As to the balance of the matters where it is said that Mr Burke made admissions against interest and can be accepted on those admissions, Mr Kelly relies on the following evidence from Mr Burke: (a) at T 76.45 he acknowledged that the relationship between Mr George and himself was "a relationship built on trust"; (b) at T 68.26-35 he agreed that the new company was never formed and the assets not acquired (something Mr Young submits is consistent with the agreement as contended for by Mr Burke - but which, if the agreement is as Mr and Mrs George contend (as so found), must be an admission as to the failure of consideration for the payment in question); (c) at T 72.29-47 he agreed that, notwithstanding the relationship of trust and the (conceded) intended purpose of the investment, he had decided to take the $150,000 and use it for his own purposes during the course of his discussion with Mr George on 13 October 2008; (d) at T 74.3 he said that during the course of the day on 13 October 2008, it his plan "evolved" that if he got the $150,000 he would spend it on the outstanding school fees; (e) at T 74.49, he accepted that he had "decided that once the money had been parted from Mr George [he would] do whatever [he] liked with it"; (f) at T 75.1, he agreed that he did not tell Mr George he intended to do whatever he liked with the money; (g) at various points in the transcript he agreed that when Mr George found out from Mr Webb (via the email of 26 February 2009) that the funds had been distributed there had been heated discussions in which Mr George accused Mr Burke of misconduct: T 78.49 - that he was a crook; T 80.20 - that he had taken the money in the trust account for his own use and had demanded that the money be restored to the trust account; T 80.18-40 - that he had been fraudulent and demanded the return of the money, relevantly, Mr Burke said that Mr George had said: Q. And he said "Don't you understand no one goes into business with someone they don't trust. If you don't get the money back to my wife in the next 48 hours I'm going to the Law Society and the Fraud Squad", don't you remember that? A. Yes he did say that. Q. Peter George interrupted you and said "Martin you astound me, you're just not listening, you're mad. Just get the money back into your solicitor's trust account. If you don't then you will have to take the consequences of your action. I've nothing more to say to you". That's what he said? A. He said to me "Get the money back to my wife. You're a crook" and then there was a few other words that were used. 138In relation to the above transcript references (other than (b), the response to which I have already considered above), it is submitted by Mr Young that the transcript references referred to above at (c) - (e) are again consistent with what occurred at the 13 October meeting and the agreement as contended for by Mr Burke. Mr Young points to the evidence in re-examination given by Mr Burke at (T 26.11) as to his decision to have the money disbursed on his own behalf rather than for the purposes of the Allco acquisition: A. The original discussion with Mr George was for 2% of my equity of the 30% which equated to $300,000. When Mr George came back to me and he said that he's got $200,000 of his money sitting in Jane's trust account, I then discussed with him that not to use all of his $200,000. And that is what Mr George had given me the impression that is all he had, and to give him the opportunity to go forward I suggested that we do the 2% for 150 K, and those funds to be used, as discussed with Mr George, to be used as working capital by me, and that is the reason why I suggested they go for full payment of accounts. and at T 26.36: Q. You also gave an answer in relation to a same series of questions where you said, "The funds were to be used at my direction because of the agreement in relation to the discounted equity position"? A. Exactly. Q. What did you mean by "discounted equity position"? A. It was discounted from $300,000 for the 2% to 150,000 for the 2%. 139Mr Young submits that the transcript reference referred to at paragraph (f) above was clarified in re-examination at T 26.28: Q. You were asked questions about not telling Mr George that the funds were disbursed in the way they were disbursed, and you said that there was no need to have that discussion with Mr George. What did you mean by that? A. We reached an agreement. All the pieces had been put together. We reached an agreement, and there was no point discussing over the details of the disbursement of the funds. We reached agreement it would be used for my working capital and that was it . (my emphasis) 140The so called clarification by Mr Burke in re-examination amounted to little more than a re-assertion of Mr Burke's position which was that (whatever may have been the understanding up to that meeting) at the 13 October 2008 meeting a deal was done whereby, in consideration for a "discount" on the price of investment in the consortium or the project, Mr George would allow the use (in advance of the acquisition) by Mr Burke of the funds invested for the purposes of working capital. The difficulty with this is that the only evidence in support of the proposition is Mr Burke's evidence of alleged oral statements to that effect (which I am not able to accept without corroboration) and reference to working capital in notes that I find were created after the meeting and are not consistent with the note prepared at the meeting. 141The reference to working capital, I consider to be no more than an ex post facto attempt to justify what on its fact is a use of the moneys for purposes wholly unrelated to the acquisition to t he acquisition. 142Insofar as the matter raised at the transcript reference at (g) above, Mr Young submits that Mr George's threat to refer the matter to the fraud squad was an attempt to bully Mr Burke (T 51.33). He submits that support for this can be found in the fact that the threats to report Mr Burke to the fraud squad was never acted upon (T 51.38), no communication was had with Mr Burke for three further months thereafter (T 21.30ff) and proceedings were not commenced against Mr Burke for over two years (T28.3) but in any event says that Mr Burke made no admission as to misconduct. In that regard, as I understand it the admission that Mr Kelly seeks to draw from this last piece of evidence is that it cannot be said that Mr George did not make any complaint against Mr Burke (as had been asserted in the submissions made for Mr Burke) prior to the commencement of the proceedings - in fact he had done so. I accept that submission and I do not accept that Mr George's threat to contact the fraud squad can be dismissed as simply an attempt to bully Mr Burke into paying moneys that Mr George did not genuinely believe had wrongly been paid out at Mr Burke's direction and for the latter's benefit contrary to the agreement he contends was reached on 13 October 2008. 143Mr Kelly further submits that Mr Burke's evidence was disingenuous in relation to other matters, including the proposition that Mr George agreed that Mr Burke could have the use of the $150,000 as his personal "working capital" and spend it in ways which had nothing to do with the Elderslie/Allco HIT acquisition (including the payment of school fees and outstanding bills of costs incurred by Mymurra), a proposition that I have already rejected as implausible. In this regard, Mr Kelly submits that at T66.42-47.9 Mr Burke "pretended" that there may have been an occasion (which he could no longer remember) when he informed Mr George that he had spent $85,000 of the $150,000 on school fees. Mr Kelly submits (and given the evidence of the heated discussions when Mr George says he first became aware of the expenditure of the funds, I accept) the probability is that had Mr Burke previously mentioned any such intention, Mr George would have been furious (and Mr Burke would have been left in no doubt as to the occasion). Q. What I'd like to suggest is that you deliberately kept Mr George in the dark about what you had done with the money in the trust account at all times after 13 October? A. Not correct. Q. Really? When did you first tell him that you'd spent 85,000 of this money on school fees? A. I can't recall. Q. You can't recall? Is that a truthful answer? A. Yes. It is, Mr Kelly. Q. Really? A. Mm-hmm. Q. You might have told him on some day that you spent 85,000 of this 150,000 of your school fees but you can't remember? A.That's correct. 144Mr Young submits that this response is again generally consistent with the fact that Mr Burke was entitled to the funds absolutely and suggests that the question asked (as to when Mr Burke told Mr George he had spent the money) was an unfair question and liable to confuse Mr Burke because it assumed that Mr Burke had told Mr George at all (whereas the Statement of Claim shows that Mr George did not know for some very considerable time). With respect, I do not consider the question posed of Mr Burke (in the context of the preceding exchanges) to be unfair. Mr Burke had denied the proposition that he had deliberately kept Mr George in the dark about the expenditure of the moneys. That denial could surely only mean one of two things - either that Mr Burke was asserting that he had told Mr George about the expenditure of the moneys (in which case the question as to when he had first told Mr George of the money spent on school fees is hardly unfair) or that he was denying no more than that he had kept Mr George in the dark deliberately. Either way, it was a simple matter for Mr Burke to say in response to the relevant question that he had never told Mr George about the expenditure on the school fees. 145Mr Burke's response that he could not recall was consistent with many instances in cross-examination where he was similarly unable to recall events. When given an opportunity to correct any mistaken response on this occasion he accepted that the position was that he might have told Mr George about the school fees but he could not remember. The likelihood that he did so seems to me to be so small as to make this response one that could properly be characterised as disingenuous. 146That said, I do not place any particular weight on this answer in assessing Mr Burke's credit. More relevant, it seems to me, is the general manner in which Mr Burke seemed in the witness box to seek to avoid answering questions or committing himself to any particular position by professing an inability to recall what had been said or done and, a matter to which I next turn, the preparation of the composite and replica file notes. 147Mr Kelly submits that Mr Burke falsified documents (namely his file notes of the 13 October 2008 meeting), intending to obtain a dishonest advantage by pretending that those documents were a contemporaneous record of events which occurred. Insofar as it is submitted that Exhibit D is the only genuine note taken by Mr Burke during his conversation with Mr George at the coffee shop on 13 October 2008, I agree that this is the conclusion to be drawn (for the reasons set out earlier). That does not necessarily mean that the composite and replica file notes were concoctions for the purpose of obtaining a dishonest advantage , since it seems to me not implausible that (having handed over his only copy of the note taken at the meeting) Mr Burke might have wished for honest reasons to create a note of what had been discussed. The composite note would be consistent with such a genuine purpose. On its face, it purports to be no more than a summary of the discussion. The replica note is harder to explain - first, because there seems to be no logical need for a second record to be created of the discussion in circumstances where the discussion was recorded on the composite note (conversely, if the replica note was created first there is no need for the notes to be added to the composite note) and, second, because Mr Burke deposes to having taken this note during the discussion on 13 October 2008 (which seems to me to be inconsistent with the manner in which Mr Young now seeks to characterise the note). 148Mr Young ascribes what he appears to concede are the "apparent inconsistencies and errors" in relation to the evidence in respect of these notes as matters arising solely out of Mr Burke's confusion. He submits that Mr Burke was neither dishonest nor misleading. The concoction of evidence is denied. He submits that the history of the documents is generally consistent with Mr Burke's evidence (and in this regard I accept that the description at least of the composite note in the affidavit is broadly consistent with some of Mr Burke's oral evidence - though the exercise during cross-examination in which he highlighted parts of the note to identify the time at which those parts were written was not and that remained the case even though I did intervene during the course of cross-examination in order to dispel any confusion on Mr Burke's part in that regard). 149Mr Young describes the replica note as a "testament to Mr Burke's frankness and honesty, albeit affected by confusion". It is frankly hard to see how this could be the case. If this were a testament to Mr Burke's frankness and honesty, he would not have deposed to its creation during the meeting on 13 October 2008, something I find cannot plausibly have been the case. Mr Young submits that the document is clearly an attempt by Mr Burke to write out his recollection of the events of 13 October based on the document handed to Mr George. I agree (but again I note that this is an explanation wholly inconsistent with Mr Burke's affidavit evidence as to how the document was created). 150Mr Young points out that Mr George had already served his evidence (including the exhibit of the original note) by the time Mr Burke made reference to this document in his affidavit and draws from this that Mr Burke's inclusion of the replica note "was patently not an attempt to mislead the Court into believing [the original note] did not exist" since it obviously did. 151Mr Young submits that the replica note was Mr Burke's ex post facto record of what occurred and that (as Mr Burke was not asked whether the document was prepared after the proceedings were commenced, or months after the events rather than being questioned as to whether this was prepared "a couple of weeks later?", the precise details of which Mr Burke could not recall - T 15.43ff), there is no evidence of a recent concoction, only the preparation of a document some time shortly after the event. He submits that what is of importance is that Mr Burke repeatedly said it was "consistent with what the discussion was" (see T 12.9). 152I have discussed earlier the reasons for my conclusion that the original note is the most reliable contemporaneous record of the discussion on 13 October 2008. I remain of that view. I consider that the replica note bears the hallmarks of a document created after the event by Mr Burke in order to bolster a particular version of events (the references to 'working capital' and distribution to 'Burke' in particular seem to me to be an attempt to justify what Mr Burke had by then most likely already done, namely to arrange the distribution of the funds for his own benefit). 153I agree that there is nothing to indicate whether this note was written before or after Mr George had taken issue with the disbursements out of the trust account but that does not seem to me to be the point. The relevant matter is that the only reference to what seems now to be a critical plank in Mr Burke's ex post facto justification of what was done is to be found in documents created after the event but purporting to represent a discussion before the event and not consistent with the actual note taken during the discussion. 154I accept that Mr Burke's evidence in the witness box was marked by prevarication and poor memory. In this regard Mr Kelly points to the following: (a) At T D2 7.50 - 8.2, Mr Burke says he cannot remember writing $150,000 and 2% on the original note on 13 October and as he spoke to Mr George and suggests, contrary to his evidence at T D2 7.16-18 where he says the notes were made as he spoke with Mr George, that it may have been on the previous day. (b) At T D2 8.18, Mr Burke concedes that, after the 13 October meeting, it was 'possible' that he wrote up some more notes, but does not recall (though Mr Kelly points out that his own affidavit speaks of adding notes to the composite note. (c) At [20] of his affidavit, Mr Burke says the replica note is a true copy of the notes he made 'during' his discussion on 13 October. Mr Kelly submits that this evidence is patently false; it must in my view at the very least be mistaken and it is inconsistent with the explanation now given for the document by Mr Burke through his counsel. Reference is also made by Mr Kelly to the evidence at T D2 21 and 7.30 he says that "Jenny has $200,000" was written on the replica note on 13 October as he spoke to Mr George. (d) At T D2 9.34, Mr Burke suggests that it is possible that the $150,000, 2% and solicitor's trust account could have been written after 13 October; at T D2 11.12 he concedes that there was only ever one discussion in which Mr George agreed his wife would make an investment of $150,000 and that was on the 13 th ; at T D2 13 .28 and 38 he suggests that parts of the composite note were written on 13 October (which, as Mr Kelly points out, if correct means that three contemporaneous notes were written on that occasion). (e) At T D2 14.31 Mr Burke at first denied that the original note was written on 13 October: Q. You wrote these notes as you spoke with Mr George on 13th and gave him the notes with the address Grogan & Webb bank account details and the matter on the following p 59: Including your draft confirmation to Mr Webb. That is what you did, isn't it? A. No it's not. Q. You gave the document to Mr George? A. Yes. Q. And he took it away with him? A. Yes. Q. I will show you the document: That document is entirely in your hand writing? A. Yes. Q. It was entirely written by you on 13 October? A. Yes. Q. In the presence of Mr George? A. Yes. Q. And you gave it to him to take away from the meeting. A.Yes, obviously, yes? Q. There is no truth in the suggestion that some part of it was written on any earlier date? A. Correct. (f) At T D2 15.31-49, Mr Kelly says that Mr Burke conceded that the replica note was composed after he decided to use the $150,000 for his own purposes and sought to explain that fact away with a disingenuous suggestion that it was justified by some later conversation with Mr George: Q. Go to page 107. That is a document that you put together upon some date in order to mirror the earlier document I suggest? A. It would appear to be yes Q. To which you have added: "Generally has 200 K in account "and the following words: "Agreed 150 K equals 2 percent equals working capital "? A. Yes. Q. You put that in afterwards? A. Yes. Q. There being no such conversation about working capital in the actual meeting that took place before Mr George? A. Yes, there was. Q. What is your explanation for there being no reference to any working capital in the document that has just begun gone into evidence? A. I don't know the answer to that. Why it wasn't discussed, put on writing. I don't know - beg your pardon. Q. You were the man with the pen in hand? A. That's correct. Q. You put that document at p 107 together, after you had decided to use the 150 thousand for your own purposes? A. No I did not. Q. When do you say you put it together? A. It is one of the many discussions that I have had with Peter George, following 13th. Q. Give us the date? A. I don't recall a specific date. Q. A couple of weeks later? A. I don't recall. There was many meetings that we had. Q. Do you recall if it was between 11.15 am on 13 October and 14 October when you gave a direction to Mr Webb to pay the school fees? A. I would think not no. (g) Exhibit E (the highlighted version of the note) is also said to provide strong support for a finding that Mr Burke concocted the replica note; it being said to be "improbable to the point of being surreal" that Mr Burke inserted parts of sentences and phrases in the document and nor does it make any sense to suggest that the words below 'assets & property' which are not highlighted could have been written on the earlier meeting (of 9 October); those words include "banked into G&W Trust Ac/t + email authority", which did not happen until 13 October. [I agree that the highlighting on this document does not make sense, but even though, from the bench, I observed the witness take some time with the highlighting and to have highlighted different parts not in any apparent sequential order and thus he seemed to have read carefully the document before complying with Mr Kelly's request that he highlight the portions added after 9 October leaving unhighlighted anything there as at the earlier date, I am left with the impression that the witness was confused in so doing and that this was not an attempt to mislead the court as to the contents of that document.] 155Mr Kelly submits that Mr Burke prevaricated and dissembled on a variety of matters, feigning an absence of recollection of events that it is submitted he could not have forgotten (such as whether he had retained solicitors on the dispute as to outstanding school fees - T 73.19); and asking for definitions of terms used in the questions he was asked (such as asking for a definition of "them" at T 69.1-14 when asked if he was "promoting amongst - as many people as you could - interest in them investing monies in the proposition that you attempting to sell?"). 156In this context, Mr Kelly notes that nowhere in his affidavit does Mr Burke take issue with anything Mr Garrett attributed to Mr Burke in their conversation in September 2008 (including the conversation in [10] of Mr Burke's affidavit), on which Mr Garrett was not cross examined, and yet sought in the witness box to suggest that he did take issue with it. Mr Kelly points to the exchange at T 71.46 and then T 72.9-24: Q. But nowhere in your affidavit do you take issue with anything that Mr Garrett has said, I suggest? A. Correct. ... Q. So is this right, that as I read something out you'll decide then and there if you want to agree with it or not, is that your position? A. No. Q. You have read his affidavit before? A. Some time ago yes, not recently. Q. Yes, and you take no issue with any of it in your affidavit? A. I can't recall whether I took issue or not. Q. It's the case, isn't it, that you said to Mr Garrett that I'll get them, referring to Mr and Mrs George, to put the money into my solicitor's trust account and then when we have the deal done and the shares allotted the money can be released to the new entity? A. I wouldn't have said that to Mr Garrett. 157I also note that there was a discrepancy (as noted above) between Mr Burke's evidence and that of Mr Webb as to the timing of the conversation in which Mr Webb was informed about the "deal" done with Mr George and as to what was said in that conversation as to the acquisition (the latter being of more significance than the former), those also going to the reliability or otherwise of Mr Burke's recollection of events. As to the second of those matters, Mr Burke said at T 83.30 says that he did not say to Mr Webb that the acquisition had in any sense gone ahead as at 13 October, which seems to be inconsistent with Mr Webb's recollection of events as to his awareness of the deal. (I also note that Mr Burke agreed at T 84.22 that he had "pretended" to Mr Webb that he had sold something to Mr George when speaking with him on telephone but am not convinced that this was an intentional admission on Mr Burke's part.) 158Mr Young submits that the transcript references referred to by Mr Kelly are not, on a fair reading, instances of prevarication or dissemblance but represent the best attempts by Mr Burke to answer questions under very vigorous cross examination; and that he answered them entirely consistent with his case. In that regard, I formed the view from my observation of Mr Burke in the witness box (and before the schedule of transcript references had arrived) that he had a tendency to prevaricate (seeking the definition or clarification of questions that when pressed he did not seem to have any real difficulty understanding) and that he either has a poor memory (which was in effect conceded by Mr Burke at T 73.41) or was making very little attempt at times to remember what had happened in the course of the events leading up to the dispute. 159On various occasions Mr Burke asked for question to be defined or repeated (occasionally answering anyway without the need for further clarification or in circumstances where the call for the term to be defined, such as what was meant by 'them' in a question referring to the proposed investors), such as at T 66.23-32; T 68.39; and T 69.3. On other occasions he appeared to resort to a cannot recall answer (T 60.50; T 67.9; T 68.11; T 72.17). 160On the whole, therefore, I consider Mr Kelly's characterisation of Mr Burke's evidence to be fair. 161In relation to the failure to take issue with the evidence of Mr Garrett, Mr Young submits that given that the evidence has been admitted on the basis only that it is evidence that certain communications occurred (T 36.41ff), it is not capable of bearing in any significant way on any fact in issue. It is submitted that what Mr Garrett said at [16] cannot bear on what was agreed between Mr George and Mr Burke, when Mr Garrett was not a party to the oral discussions. Mr Young emphasises that Mr Garrett had and has a "close working relationship with Mr Garrett (T 23.1-10). In this regard, I accept that the evidence was admitted only on a particular basis. However, that does not address the point that Mr Burke, who prepared his affidavit at a time well before any evidentiary rulings were made, had apparently chosen not to respond at all to this evidence. I accept Mr Garrett's evidence that Mr Burke said those things to him. I agree that that does not provide direct evidence of what was agreed between Mr Burke and Mr George. (However, if that was not what was agreed then the fact that Mr Burke told Mr Garrett (a potential consortium member) something quite different would not reflect well on Mr Burke's credit.) 162Mr Young further submits that the statement attributed to Mr Burke by Mr Garrett at [10] is no more than consistent with what the agreement was "shaping up to be" at that time, noting that it was not until the meeting on 13 October that the agreement "firmed" to be one where the funds were to be released. Mr Young submits that whatever Mr Garrett knew or had been told as to the final terms of the agreement, he had not heard about it from Mr Burke. 163I consider that the failure of Mr Burke to contradict Mr Garrett's evidence at an earlier point in time (given that Mr Garrett's version of the conversation was not challenged in cross-examination), detracts from the weight I could put on Mr Burke's evidence in the witness box disputing that conversation. As to whether the 13 October meeting led to a "firming up" of the agreement which resulted in an entitlement on the part of Mr Burke to disburse for his own benefit the funds paid by Mrs George, ultimately I find the version of events put forward by Mr George the more credible even leaving aside the evidence of what Mr Burke said to Mr Garrett. 164In conclusion, I consider that Mr Burke's evidence was on the whole unreliable and I prefer that of Mr George where there is an inconsistency. Mr Webb 165Unlike Mr Burke, it is not submitted that Mr Webb is a dishonest witness. However, it is submitted by Mr Kelly that he is not a reliable witness and again that his evidence should not be accepted unless it is an admission against interest. Mr Griscti invites me to reject the above submissions. He maintains that the matters to which Mr Kelly points (and to which I refer below) do not provide a cogent basis for the submission that Mr Webb was not a reliable witness or that his evidence should not be accepted unless it is an admission against interest. I accept Mr Griscti's submission in this regard. 166Mr Kelly submits that Mr Webb's evidence contains a number of major contradictions, contrasting the evidence at T 49.44-50.17 (that Mr Webb had read the email of 13 October, saw the words "to be used for" (expressed in the future tense) and knew that the acquisition of the Elderslie or Allco assets had not taken place) and the evidence at T 57.40-49, when challenged about his email to Mr George on 26 February 2009, (where he denied knowing that the Elderslie/Allco HIT acquisition had not gone ahead). 167In that regard, Mr Griscti submits that there is no contradiction between the evidence at T49.44-50.17 and that at T57.40-49; the first, being evidence of Mr Webb's understanding at the time he received the email in October 2008 and the latter being evidence of his state of knowledge when he sent the email on 26 February 2009. It is submitted that it is not unusual, let alone a matter relevant to Mr Webb's credit, that Mr Webb should have been unaware of what may or may not have transpired regarding the acquisition over the intervening period of more than four months. I accept that the questions were directed to two different periods of time and that there was not a direct contradiction between those pieces of evidence. 168Mr Kelly also submits that there was a shifting of ground insofar as Mr Webb (when it was put to him that the words of the 13 October email made it perfectly plain that the purpose for which the moneys were to be used was the acquisition of the Elderslie/Allco HIT acquisition) claimed an understanding that "the monies that were being paid to me was to buy a share of what Mr Burke had - was working on but was not necessarily to be used in the future. It was monies that he had earned at that time" (T 50.25), which it is said is inconsistent with his later evidence that the monies were to be used in the future for the stipulated purpose (reference being made to the evidence at T 50.9-51.16). Mr Kelly submits that no solicitor with 30 years' experience in commercial practice, who had read and understood the email in the manner Mr Webb conceded, could honestly believe that the $150,000 "was a payment for a share of Mr Burke's part of the deal" (when the email said it was to be used for an acquisition). 169Mr Griscti maintains that this submission assumes that the only way to interpret the 13 October email is the way Mrs George contends it should be interpreted and that there has been no shifting of ground by Mr Webb. Rather, it is said that he always understood that the payment by Mr George was for part of Mr Burke's interest (reference being made to [7] and [8] of his affidavit and T50.2-32, 51.15-38). 170I accept that on the face of the email alone all that could be discerned (by someone not privy to the discussions between Mr George and Mr Burke) was that it was for an acquisition, although I consider that in context it would be read as for an acquisition yet to be completed. The terms used seem to me to be inconsistent with it being payment for something already acquired (if that had been the case it would have been simple to say, in effect, here is the purchase price for the share I have acquired in whatever it was that could be said already to exist or here is my money for the option I have acquired to gain an interest in future assets). However, I accept that what was the subject matter of the Elderslie/Allco HIT acquisition was not identified on the face of the email. There is scope for the reference to an "acquisition" to be read as meaning either an acquisition of an interest in the new company or investment/acquisition vehicle to be established for the purposes of the proposed project or venture (ie part of the proposed equity to which Mr Burke expected to become entitled when the new company was established), which would be future property since no company or other vehicle then existed, or the acquisition (by that company or the consortium members directly) of the Elderslie/Allco HIT assets. (What I cannot accept is that the email would reasonably be read as referring to the grant of an option to Mr or Mrs George or as payment of an option fee of some kind for an opportunity to participate in some future investment vehicle.) However, in either case the email was in my opinion referring to an incomplete acquisition for which the funds were to be used. 171I am prepared to accept Mr Webb's evidence that he read the email (in circumstances where Mr Burke had told him about a deal that had been done and he presumably read the email with that in his mind) as conveying that the payment in was of funds to which Mr Burke was entitled as part of some earlier acquisition (although his explanation that it was moneys earned for services provided is inconsistent with such a reading) but that does not alter my conclusion that the wording of the email imposed a clear requirement that the funds were to be used for the purposes of a specific acquisition (and not other extraneous purposes such as payment of school fees). 172I accept that the terms of the conversation in [7] of Mr Webb's affidavit are inconsistent with the evidence of both Mr Burke and Mr George as to the conversation in which Mr Webb's account details were obtained (the former both putting this as during the 13 October conversation; the latter as this having occurred one or two days previously). I put this down to a mistake (and given that it is as to a matter that no doubt would not have assumed much importance in a busy solicitor's mind at the time and it does not appear that any file note was taken of the conversation, I would not draw any adverse credit inference from this). 173Mr Kelly submits that the conversation itself suggests that the money had already arrived because Mr Webb puts the question, "It's your money?" to Mr Burke, which it is said makes no sense in a context in which no money had arrived and may never have arrived in the event that Mrs George decided not to go ahead with the investment. I do not accept that this is necessarily illogical - it is consistent with Mr Webb being told that money is to arrive and wanting to know how he would be authorised to deal with the money when (and if) it did arrive. 174I do not accept that any finding adverse to Mr Webb's credit should be made. Mr George 175Mr Young submits that the evidence of Mr George was in many instances itself vague, self-serving and unreliable. He points in this regard to a number of matters. First, as to the demand made on Mr Webb. At T19.37ff, it was put to Mr George that on the case his wife was advancing the appropriate thing to have been done at the time the investment had changed (ie when it was realised that the acquisition of the Elderslie/Allco assets was not possible) would be to ask Mr Burke to give a direction for the return of the money, to which Mr George agreed but then responded that this is what he thought he was doing: A. But can I just - on reading it I understand now what you're trying to say. I think I do. I was telling Mr Burke that this transaction wasn't going ahead and that I wanted to ask for the money back on behalf of my wife. 176However, it does not seem to me that this follows as a matter of logic. If the moneys were, as Mr George says they were, paid into the trust account in advance of the acquisition of the Elderslie/Allco HIT assets and for the purpose of being so used, then it is consistent with the allegation that the moneys until then were held by Mr Webb on trust for Mrs George for her to demand the moneys back from him. The position vis a vis Mr Burke, on that scenario, would have been to advise him that as the acquisition of a 2% interest in a consortium to purchase the said assets could no longer eventuate, the agreement to acquire a 2% interest must have come or should be brought to an end. This is wholly consistent with what Mr George did. 177Mr Young further says that the evidence given by Mr George as to the reason for the direction to pay that was issued to Mr Webb (ie to pay some $32,000 to a third party) was vague (T21.5ff). I accept that it was. However, the direction itself made it clear that the money was directed to be paid to a third party and the relevance of the question as to the purpose for that direction was not made clear to me. 178It was also suggested that Mr George had invented evidence as to attempts to contact Mr Burke (at T21.33) after the email about the money, when all that Mr George had said was as follows: Q. Indeed, you made no written communication with Mr Burke after the email at page 69 for many months about the money, correct? A. After February 25th when I told him that I didn't want to go ahead I don't think there was any other written correspondence. I did actually try to contact him on the phone but other than that, no. Q. And are you saying that you telephoned him and he didn't return your calls? A. No, I'm just saying that I don't believe that we managed to make contact Q. You didn't try to, did you? A. Yes, I think I did. Q. Well, have you indicated anywhere in your affidavit any instance prior to June 2009 where you contacted Mr Burke? A. I think after the last conversation I put in my affidavit, whatever date that was that was the last time I spoke with him. 179I accept that an assertion that an attempt was made to telephone Mr Burke (that rests solely on Mr George's say so about which he was not sure when pressed) does not take the matter very far, but I do not accept that the failure to refer to this in Mr George's affidavit reflects adversely on his evidence. 180Mr Young maintains that serious questions arise as to the reliability of Mr George's evidence. I disagree. I found him to be a considered witness and I do not consider the exchange extracted above reflects on his reliability or credibility. 181Assessing the credibility of Mr George as against Mr Burke, for the reasons indicated above where there is inconsistency, I prefer Mr George's version of events as the more credible. Mr Youren 182Finally, when considering the position of the respective witnesses I note that one person from whom nothing was heard was Mr Youren, the person with whom Mr Burke was negotiating the formation of the proposed consortium and the acquisition of the Elderslie/Allco HIT assets and on his own evidence in ongoing daily contact during the latter part of 2008. Mr Youren was not called by Mr Burke to give evidence, although Mr Burke suggested no reason that he would not available to give evidence. In closing submissions it was suggested that a Jones v Dunkel inference could be drawn in that regard. 183The editors of Cross describe the failure to call non-party witnesses as the sixth and most difficult aspect of the rule in Jones v Dunkel . They refer to the explanation given by Glass JA in Payne v Parker [1976] 1 NSWLR 191 at 201-2, that this condition: ... is also described as existing where it would be natural for one party to produce the witness, or the witness would be expected to be available to one party rather than the other, or where the circumstances excuse one party from calling the witness, but require the other party to call him, or where he might be regarded as in the camp of one party, so as to make it unrealistic for the other party to call him, or where the witness' knowledge may be regarded as the knowledge of one party rather than the other, or where his absence should be regarded as adverse to the case of one party rather than the other: ibid. It has been observed that the higher the missing witness stands in the confidence of one party, the more reason there will be for thinking that his knowledge is available to that party rather than to his adversary . 184Glass JA in Payne said: Under other formulations, the condition is made out when the witness is presumably able to put a true complexion on the facts, might have proved the contrary would have a close knowledge of the facts, or where it appears that he had knowledge. I would think it insufficient to meet the requirements of principle that one party merely claims that the missing witness has knowledge, or that, upon the evidence, he may have knowledge. Unless, upon the evidence, the tribunal of fact is entitled to conclude that he probably would have knowledge, there would seem to be no basis for any adverse deduction from the failure to call him. 185Any Jones v Dunkel inference would have to have been considered in the light of any other evidence the availability of a Jones v Dunkel inference not precluding the making of a favourable finding based on other available evidence or inferences to be drawn therefrom - Flack v Chairperson, National Crime Authority (1997) 80 FCR 137 at 148-0; 150 ALR 153 at 164). 186Mr Kelly submits that what Mr Youren's evidence is relevant to is an important issue in the proceedings, namely whether Mr Burke ever had anything to sell. It is submitted that the failure to call Mr Youren (who Mr George said was present at one or more of the earlier meetings) would justify a finding that the subject matter of the proposed transaction was illusory. 187Mr Young submits that those meetings are irrelevant to the agreement alleged (on the basis that in relation to the 13 October meeting it is not said that Mr Youren was present at the relevant time). 188Having regard to Mr Burke's evidence as to Mr Youren's involvement in the proposed acquisition and his association with Mr Youren, it might be expected that Mr Youren would have been in a position to give evidence to illuminate not only the nature of the proposed joint venture (and hence what interest if any that Mr Burke may have had to sell) but also aspects of the funding of the transaction that might have shed light on the credibility of what Mr Burke had said to Mr George in that regard. Insofar as Mr Burke dismissed a question as to the funding arrangements by reference to Mr Youren's involvement, this is impossible to test in the absence of evidence from Mr Youren. 189That said, it is not suggested that Mr Youren had any direct knowledge of the arrangements between Mr Burke and Mr George and I draw no adverse inference from the failure to call him. Indeed, it is not necessary for me to do so in circumstances where it seems to me from the evidence already before me that the so-called 'expected equity' was illusory in the sense that there was nothing at that stage to be acquired (thin air in the words of Mr George). Determination of issues 190Turning to the respective issues to be determined, I note as follows: (i) Was there a Quistclose trust in relation to the $150,000? 191The decision in Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567 is authority for the proposition that where money has been paid to another for a specific purpose, such that there can be said that there is a trust for that purpose, then where that purpose has not been fulfilled and the funds have not been applied to that specific purpose a trust may be impressed upon those funds in favour of the payer. 192In Jacobs' Law of Trusts (7th edn) (at [1206]), the principle is outlined as follows: It has now been long established that if a person lends money to another on terms that it will be applied towards a specified purpose, and it becomes impossible so to apply the money, it will be held by the latter on an express or a resulting trust for the former. Thus in Barclays Bank Ltd v Quistclose Investments Ltd the House of Lords held that money advanced by a creditor to a company for the purposes of enabling the latter to pay a dividend was held on trust for the creditor when the liquidation of the company frustrated any possibility of paying a dividend. 193In Quistclose , Lord Wilberforce said (at 580-582): There is surely no difficulty in recognising the co-existence in one transaction of legal and equitable rights and remedies: when the money is advanced, the lender acquires an equitable right to see that it is applied for the primary designated purpose (see Re Rogers where both Lindley and Kay LJJ explicitly recognised this): when the purpose has been carried out (ie, the debt paid) the lender has his remedy against the borrower in debt: if the primary purpose cannot be carried out, the question arises if a secondary purpose (ie, repayment to the lender) has been agreed, expressly or by implication: if it has, the remedies of equity may be invoked to give effect to it, if it has not (and the money is intended to fall within the general fund of the debtor's assets) then there is the appropriate remedy for recovery of a loan. I can appreciate no reason why the flexible interplay of law and equity cannot let in these practical arrangements, and other variations if desired: it would be to the discredit of both systems if they could not. In the present case the intention to create a secondary trust for the benefit of the lenders, to arise if the primary trust, to pay the dividend, could not be carried out, is clear and I can find no reason why the law should not give effect to it. (my emphasis) 194Thus it was found that a necessary consequence of the mutual intention of the parties to create an arrangement which gave rise to a 'primary' trust (whereby money was lent by one party to the other for a specific purpose), was that if the specific purpose could not be realised for any reason, the money was held on a 'secondary' trust in favour of the lender. As Heydon and Leeming state in Jacobs' Law of Trusts in Australia (at [214]) what was there found was an "intention ... to create a secondary trust for the benefit of the lender to arise if the primary trust, to pay the dividend, could not be carried out". 195If one looks to Lord Wilberforce's requirement for mutual intention between the parties, it would seem that, on its face, the Quistclose trust is a form of express trust. If construed as an orthodox express trust, this would mean that, where A lends money to B for a specific purpose, if A only has an absence of intention to benefit B, but no actual intention that the money should be held beneficially for him/herself until the specific purpose is realised, then no express trust can be held to exist in A's favour. If there is any uncertainty as to intention, there will be no express trust ( Jacobs' Law of Trusts at [306]). 196In Re Elizabethan Theatre Trust, Lord v Commonwealth Bank of Australia , (1991) 30 FCR 491, at 502-503; (1991) 161 ALR 105, Gummow J (in the Federal Court as his Honour then was) explained Lord Wilberforce's characterisation of the circumstances giving rise to a Quistclose trust as leading to the conclusion that the trust that arises in such cases is an express trust with two limitations (rather than an express trust in favour of the intended payee, namely the beneficiary under the primary trust, and a resulting trust in favour of the original payer arising by reason of the incomplete disposition). (See also Peter Cox Investments Pty Ltd (In liq) v International Air Transport Association (1991) 161 ALR 105, at [32]-[39]). 197Gummow J went on to say that on either characterisation Quistclose had a beneficial interest (although not at all relevant times an exclusive beneficial interest) in the money in question and was not merely in the position of a lender with the benefit of a promise to repay, (nor was Quistclose a settlor who had fully settled a fund upon other parties and did so not retain for itself a beneficial interest sufficient for it to ensure performance of the trust) noting that: But the essential reason the insolvency law did not strike at the transaction in question in Quistclose was that the moneys represented by the cheque drawn by Quistclose in favour of Rolls Razor and banked in the special account of Rolls Razor never at any stage became the beneficial property of Rolls Razor. It acquired no more than what Dixon J called a dry legal interest: see Commissioner for Stamp Duties (NSW) v Perpetual Trustee Co Ltd , supra, at 510. On its part, Quistclose had both a contractual right to repayment out of the general assets of Rolls Razor, as a general creditor, and the beneficial interest in a fund, whether by way of resulting trust or as the second limb of an express trust . (my emphasis) 198Gibbs ACJ in Australasian Conference Association Ltd v Mainline Constructions Pty Ltd (In liq) (1978) 141 CLR 335, at 353 considered that the decision in Quistclose was authority for the following proposition: ... that where money is advanced by A to B, with the mutual intention that it should not become part of the assets of B, but should be used exclusively for a specific purpose , there will be implied (at least in the absence of an indication of a contrary intention) a stipulation that if the purpose fails the money will be repaid, and the arrangement will give rise to a relationship of a fiduciary character, or trust. (my emphasis) 199The Quistclose principle is not limited in its application to money paid for the purpose of discharging debts but can apply where the funds are to be applied for other purposes. In Re EVTR [1987] BCLC 646, for example, money was lent to buy equipment and in Re Associated Securities Ltd and the Companies Act [1981] 1 NSWLR 742, the money was lent to subscribe for shares. Nor does it seem necessarily to be limited to cases where the money was lent to the recipient as opposed to money paid to the recipient for particular purposes (say, as is the case on my view of the evidence in this case, in anticipation of a proposed acquisition). 200In EVTR , where funds were advanced for the sole purpose of purchasing equipment and the company was placed into receivership before the equipment arrived (but after part of the money had been used to pay the deposit), the Court held that the receiver could not retain the returned deposit money and those funds were required to be returned to the lender. Dillon J said "On Quistclose principles, a resulting trust in favour of the provider of the money arises when money is provided for a particular purpose only, and that purpose fails". 201In Re Miles; Ex parte National Australia Bank Ltd v Official Receiver in Bankruptcy (1988-89) 85 ALR 216, Pincus J was of the opinion that the decision in Quistclose was of limited application and that it would not be right to apply the Quistclose principle "beyond the field defined by the House of Lords" (at p221), being the "actual payment of money by the party claiming to be the beneficiary of a resulting trust, for the purpose of discharge of debts by the payee, that purpose having failed". In Peter Cox Investments , however, O'Loughlin J (at [39]) was of a different view from that expressed by Pincus J and stated: With respect, this seems to me to be an unnecessarily restrictive approach. I favour the view that Quistclose merely stands as authority for the proposition that an apparent debtor-creditor relationship can incorporate a trust relationship when such a trust relationship accords with the mutual intentions of the parties. This, I think, is a reflection of the views of Gummow J in Re Australian Elizabethan Theatre Trust. 202I consider later in the reasons (when considering accessorial liability) the significance, if any, of the question whether the Quistclose trust is an express trust or some form of constructive trust. For present purposes, however, it is important to note that in Re Australian Elizabethan Theatre, Gummow J went on to say (at 692) that it would be an error to treat the references to "purpose" by Lord Wilberforce in Quistclose (and by Gibbs ACJ in Australasian Conference Association , at 353) as characterising an express trust which did not have to satisfy the ordinary requirements for any private (as distinct from public) trust. Those requirements include the three certainties of intention, subject-matter and objects. 203As with the determination of the existence and scope of an express trust that (unlike a Quistclose trust) is not said to arise from the purpose for which moneys are paid over, the question as to the existence of any Quistclose trust must be answered by reference to intention. The relevant intention is to be inferred from the language employed by the parties in question (per Gummow J in Elizabethan Theatre Trust, at 502-505; Re Wall ; Ex parte Official Receiver v Kemmis (1979) 25 ALR 615, at 624-5 ). For that purpose the Court is entitled to look into the nature of the transaction and the circumstances of the relevant parties and their relationship ( Walker v Corboy (1990) 19 NSWLR 382; Re Australian Elizabethan Theatre Trust, at 503). 204Spigelman CJ summarised the relevant principles bearing on the formation of an express trust in Mario Salvo v New Tel Ltd [2005] NSWCA 281 at [33], as follows: It is well established that an intention to create an express trust can be inferred from the full range of relevant circumstances, including the nature of the transaction and the construction of the words used. (See Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107 at 120; Walker v Corboy (1990) 19 NSWLR 382 esp at 395-399; Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (In Liq) (2000) 202 CLR 588 at [34]; Tito v Waddell (No 2) [1977] Ch 106 at 211. The relevant case law has been summarised by Campbell J in Commonwealth v Booker International Pty Ltd [2002] NSWSC 292 at [34]-[45].) There are cases in which it is pertinent to consider the mutual intention of the parties to a transaction. (See Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567 at 580B; Australasian Conference Association Ltd v Mainline Constructions Pty Ltd (In liq) (1978) 141 CLR 335 at 353; Re Australian Elizabethan Theatre Trust; Lord v Commonwealth Bank of Australia (1991) 30 FCR 491 at 502-503; Re Goldcorp Exchange Ltd; Kensington v Liggett [1995] 1 AC 74 at 100.) 205His Honour referred, at [34], with approval to the passage from the judgment of Gummow J in Re Australian Elizabethan Theatre Trust at 503 that: The relevant intention is to be inferred from the language employed by the parties in question and to that end the court may look also to the nature of the transaction and the relevant circumstances attending the relationship between them: Walker v Corboy (1990) 19 NSWLR 382; Scott, The Law of Trusts , 4th ed, 1987, s25.2. There is no need for particular caution in drawing the inference that a trust was intended: Bahr v Nicolay (No 2) (1988) 164 CLR 604 at 618-19. However, it also is important to appreciate both the flexibility of the institution of the express trust and the range of equitable institutions which fall short of but have some of the characteristics of a trust. 206In On Equity (Young, Smith and Croft, LawBook Co, 2009 , at [6.1020]), the learned authors note that: Cases in this area will often depend on a close analysis of the facts, and in particular, whether the person who provided the money annexed a trust or equitable obligation that it was only to be used for the nominated purpose. The mutual intention of the parties and "the essence" of their bargain will be important . A trust will not necessarily arise just because a lender inquires into the purpose for which a loan is sought and money is paid over for that particular purpose. (my emphasis) 207Pausing there, when reference is made to the mutual intention of the parties and the essence of their bargain, this seems to be in the context of payments made in circumstances where the bargain as such is between payer and payee (hence the reference to enquiry by the lender as to the purpose for which the loan was sought). Here, the antecedent bargain is that which was reached on 13 October 2008 between Mr George (whether or not acting as agent for his wife) and Mr Burke. It is not suggested that Mr Webb was privy to that bargain (although on his own evidence he was made aware by Mr Burke that some form of arrangement had been reached with Mr George and in summary terms the nature of that transaction). 208In those circumstances, as between Mrs George (the payer of the money) and Mr Webb (into whose trust account the money was transferred) it would seem that the relevant intention is that of Mrs George as evidenced by the email from her husband in which Mr Webb was informed of the basis of the payment and instructed as to the purpose for which the moneys were to be used (ie to ask whether the person who provided the money annexed to it a trust or equitable obligation, in the words of the authors of On Equity ). In Mario Salvo , at [49] Spigelman CJ noted that: In this case, as in EVTR, it was the intention of the supplier of funds , relevantly the Appellants, that the money was to be applied and applied only for a specific purpose (ie the purchase of the equipment in EVTR or the Digiplus acquisition in the present case). The money was applied towards a deposit in partial fulfilment of the purpose which was not fulfilled (ie the failure of the equipment purchase in EVTR or the Digiplus acquisition in the present case). The return of the deposit in each case meant that the beneficial interest in the funds of the supplier became an express trust of the deposit in the hands of the recipient. (my emphasis) 209In Re Australian Elizabethan Theatre Trust , Gummow J said: The question as to the existence of any express trust will always have to be answered by reference to intention. An example of that basic proposition at work in this court is the decision of Lockhart J in Re Wall; Ex parte Official Receiver v Kemmis (1979) 25 ALR 615 at 624-5. Ordinarily, the relevant intention is that of the alleged settlor, but where the subject matter of the trust is contractual rights against the settlor, conferred by the settlor upon the alleged trustee, the objective (or "purpose") of the transaction being to benefit third parties, it may be appropriate to look to the mutual intention of settlor and trustee . This is consistent with the approach by Deane J to a similar question in Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 80 ALR 574 ; 165 CLR 107 at 149, but cf Mason CJ, Wilson J at 121. At all events, and as I have said, in Quistclose, supra, at 580, Lord Wilberforce looked to "the mutual intention" of Quistclose and Rolls Razor and to "the essence" of their bargain. (my emphasis) 210In the present case, the relevant intention as to the creation of the trust must be that of the party in the position of the settlor of the trust (Mrs George or her husband acting on her behalf). Where there is no contractual arrangement between the settlor and the alleged trustee, the intention of the latter must be irrelevant. 211ln Twinsectra v Yardley [2002] 2 AC 164 , Lord Millett (at 185), indicated that a Quistclose trust does not arise simply because money is paid because of an assumption as to how it will be spent (ie absent an obligation to spend it in that manner and where the recipient is otherwise able freely to dispose of the funds). Lord Millett affirmed the import of the parties' intention in determining the existence or otherwise of the trust (there, in the case of a loan): A Quistclose trust does not necessarily arise merely because money is paid for a particular purpose. A lender will often inquire into the purpose for which a loan is sought in order to decide whether he would be justified in making it. He may be said to lend the money for the purpose in question, but this is not enough to create a trust; once lent the money is at the free disposal of the borrower. Similarly payments in advance for goods or services are paid for a particular purpose, but such payments do not ordinarily create a trust. The money is intended to be at the free disposal of the supplier and may be used as part of his cash flow. Commercial life would be impossible if this were not the case. The question in every case is whether the parties intended the money to be at the free disposal of the recipient (see Re Goldcorp Exchange Ltd (in receivership) [1994] 2 All ER 806 at 823, [1995] 1 AC 74 at 100 per Lord Mustill). His freedom to dispose of the money is necessarily excluded by an arrangement that the money shall be used exclusively for the stated purpose, for as Lord Wilberforce observed in the Quistclose case: A necessary consequence from this, by a process simply of interpretation, must be that if, for any reason, [the purpose could not be carried out], the money was to be returned to [the lender]: the word "only" or "exclusively" can have no other meaning or effect. (See [1968] 3 All ER 651 at 654, [1970] AC 567 at 580.) 212In McManus RE Pty Ltd v Ward [2009] NSWSC 440, Palmer J (at [25]) noted that whether the moneys had been kept separate from other moneys could be relevant, saying: In cases where no express or clearly implicit intention to create a trust is shown, such as where the parties give no actual thought to the matter, whether or not there was an intention that the subject monies be kept separate from the other general monies of the recipient is often decisive of the question whether the recipient is a trustee or merely a debtor: see, for example Henry v Hammond [1913] 2 KB 515, at 531; Walker v Corboy (1990) 19 NSWLR 382, at 397 to 398; Salvo (supra) at [38]; Re Australian Elizabethan Theatre Trust (1991) 30 FCR 491, at 505 to 506. If the borrower in Quistclose had not set up a special and separate account to receive the loan moneys in order to pay a dividend, and if the lender had paid the moneys into the borrower's overdraft account, it would have been impossible, on the other facts of the case, to deduce a common intention that the moneys were to be held on trust until the purpose of the loan was achieved. 213In Peter Cox Investments , O'Loughlin J indicated some of the factual circumstances which might lead a court to find in favour of the existence of such a trust (from [49]), those being whether the relationship between each client and the company was a routine commercial transaction epitomising the business that the company conducted (noting that the courts are reluctant to introduce trusts into such commercial transactions, referring to Walker v Corboy , at 390 per Clarke JA and at 398 per Meagher JA); the existence of discrete evidence pointing to the existence of a mutual intention of the parties to create a trust; evidence as to an agreement or directions or instructions having been given as to how and in what manner the moneys were to be held or applied; other objective indicators, such as how the recipient and alleged trustee have dealt with the funds in question (for example, whether those funds are deposited in a general bank account, which would tend against the finding of a trust, this being a factor seen as important in the decision of Barrett J in Georges & anor v Peter Wieland & ors [2009] NSWSC 733 (at [32]) and Spigelman CJ in Mario Salvo , at [38])); and whether there exists any obligation (statutory or contractual) requiring the recipient separately to account for the paid moneys. 214It is clear that the onus of proof lies on those who assert that a trust was created ( Peter Cox Investments, at [49]; Re Armstrong (1960) VR 202; In the matter of Travel House of Australia Pty Ltd; Browne v The Deputy Commissioner of Taxation ( Murray J, Supreme Court of Victoria, 1978, unreported). 215In the present case, there is no uncertainty as to the subject matter of the trust (it is the sum deposited by Mrs George). The question is whether the intention to create a trust, and the object of the trust (ie the purpose for which the money was to be used, is sufficiently clear). 216In On Equity , at [6.180]) the "three certainties" are as described in Knight v Knight (1840) 3 Beav 148, at 172-173; (1840) 49 ER 58, at 68, where Lord Langdale MR stated: As a general rule, it has been laid down, that when property is given absolutely to any person, and the same person is, by the giver who has power to command, recommended, or entreated, or wished, to dispose of that property in favour of another, the recommendation, entreaty, or wish shall be held to create a trust. First, if the words are so used, that upon the whole they ought to be construed as imperative; Secondly, if the subject of the recommendation or wish be certain; and Thirdly, if the objects or persons intended to have the benefit of the recommendation or wish be also certain. or as described in Wright v Atkyns (1823) Turn & R, at 157; (1823) ER 1051, at 1056: In order to determine whether the trust is a trust this Court will interfere with, it is matter of observation, First, that the words must be imperative, that the words are imperative in this case there can be no doubt; Secondly, that the subject must be certain, and that brings me to the question what is meant by the words "the property"; and Thirdly, that the object must be as certain as the subject, and then the question will be, whether the words "my family" have as much of the quality of certainty, as this species of trust requires. 217In the present case, the intention on the part of the payer that the moneys were to be held in the solicitors' trust account and used for a particular purpose are clear: the moneys were paid into a solicitors' trust account and were to be "used for the Elderslie/Allco HIT acquisition" (and in the absence of consent to some other use it would follow in my view that they could be used only for that acquisition whether or not that was expressly stated - though I note the significance attributed to the use of words such as "only" or "exclusively" in the authorities noted above). 218This is apparent in my opinion from the terms of the email of 13 October 2008. It contemplated the payment of the $150,000 into the Grogan Webb trust account. It does not seem to me to have been necessary for it to be said that this was to be held "on trust". (Mr George says at T 17.22 that he used the term trust account assuming that the money would be held on trust in a trust account.) 219Payment into a trust account (and, in particular, a trust account maintained by a solicitor who is bound by the rules and regulations imposed by the Law Society in relation to the control of such accounts including the separation of such funds) seems to me to be sufficient to indicate an intention that the moneys be dealt with as trust moneys. (Had the moneys been paid as the purchase price owing to Mr Burke in his personal capacity then one would have expected the email to make that clear and it would not then have been necessary for there to be any authorisation given by Mrs George for him to direct the disbursement of the funds - indeed that would be otiose.) 220Insofar as Mr Kelly submits that the intention to create a trust may also be proved by reference to the conversation between Mr George and Mr Burke on 13 October 2008; the nature of the underlying transaction; and the conversation between Mr Burke and Mr Garrett, issue is taken with this proposition by Mr Young. Mr Young submits that it is only the email itself which can be taken into account for this purpose. 221If the enquiry turns (in the case of a payment in of the kind made in the present circumstances, ie into a solicitors' trust account where there is an obligation to keep the funds notionally separate from other client funds and where they would be separate from office funds held in a general office account) on the intention of the payer as discerned from the communication(s) pursuant to which the payment is made (which is the thrust of Mr Young's submission) then I consider the email (coupled with the fact of payment at Mrs George's direction into the solicitors' trust account) to be sufficiently clear to give rise to a purpose trust. 222I accept that the email authorises the solicitors to disburse the moneys at the direction of Mr Burke. However, I do not accept that the email read as a whole gives Mr Burke an unfettered discretion in that regard. The limitation is plain - the moneys are "to be used" for a particular transaction. Any direction given by Mr Burke for the disbursement of moneys otherwise than for that transaction would not satisfy the purpose for which the moneys are said to be deposited into the solicitors' trust account. 223If the position is (contrary to Mr Young's submissions) to be tested also by reference to the mutual intention of the parties to the antecedent arrangement pursuant to which the moneys were paid into the account (Mr George, whether or not on behalf of his wife, and Mr Burke), then I consider that this leads to the same conclusion. As noted already, I prefer the evidence of Mr George to that of Mr Burke where there is an inconsistency as to the arrangement which was struck between them. In so doing, I place weight on the original note of the 13 October meeting rather than the notes later prepared by Mr Burke and I consider that Mr George's evidence is more consistent with the terms of the email sent to Mr Webb. 224Mr Garrett's evidence (which was unchallenged) is that Mr Burke advised him of the nature of the deal that was done with Mr George and the reason for the deposit of funds into the solicitors' trust account. That is consistent with Mr George's evidence. I am not persuaded that there was a fundamental change that occurred in the 13 October meeting. 225I find that the moneys were paid by Mrs George on the basis of the representation made by Mr Burke to her husband that they were to be used for the purposes of the Elderslie/Allco HIT acquisition (which Mr Burke accepts was the proposed acquisition by a company to be formed of the Elderslie/Allco HIT assets for the purposes of this particular project) not for Mr Burke's absolute benefit in advance of that acquisition nor for his personal working capital pending such an acquisition. 226I consider that the informality with which the money was paid into Grogan Webb's trust account (on no more than an oral agreement with Mr Burke) is inconsistent with the likelihood that the understanding at that time was that what was transferred was the beneficial ownership of the money by Mr Burke at that time. Insofar as reliance is placed by Mr Young on the extent of Mr George's business experience, it seems to me that this makes it unlikely that Mr George would have committed his or his wife's funds solely on the basis of a handshake and hence to make it more likely that Mr George understood that the money would be safely held in the solicitor's trust account (and hence on trust) pending the completion of the acquisition. T 18.19, Mr George said: What I agreed with Mr Burke is shown here ... I put the funds for the purpose of acquiring an interest in a consortium which was to acquire the assets of Elderslie/Allco HIT 227I accept that this is couched as a personal investment and that Mr George spoke in similar terms elsewhere in his affidavit. However, I understood this evidence to be consistent with he having made the relevant decisions but the couple having agreed that the investment was to be with his wife's funds and in her name; and that this was made known to Mr Burke. I regard Mr Burke's attempted justification of the commercial logic of the arrangement for which he contends as dubious when the only documentation that refers to it is in the form of self-serving references in post-dated notes. 228I accept that the arrangement between the parties (other than Mr Webb of course) was for the subject of the investment to be a 2% interest or equity in the proposed joint venture (using that term in a neutral fashion) but I do not consider that to be inconsistent with the statement that the funds so provided (in advance of the transfer to Mrs George of the investment she was said to be acquiring with her moneys) were to be used for the purposes of the acquisition of the assets of Elderslie/Allco HIT (in the sense that Mr George was told that the consortium members were being asked to provide funds to enable the acquisition of the assets and would have a percentage equity in the new company to be established for that purpose). 229What I do not accept is that the evidence establishes an agreement that either Mr George or Mrs George would pay $150,000 for the (undocumented) opportunity (or option) that he or she might one day have a share of some kind in a corporate vehicle or other entity that might acquire assets (notwithstanding that those assets might have enormous value) (which is what Mr Burke's "expected equity" amounts to in the end). I consider Mr George's words to have had the ring of truth when he suggested it would be commercial nonsense to pay $150,000 for "thin air". 230I accept that the underlying transaction was the provision of funds to be used to make an acquisition (whether they were to be so used to meet expenses in relation to the acquisition or for the assets themselves seems to me to be immaterial), which did not proceed and that this case is one that is analogous to the $750,000 transaction in Mario Salvo where an express trust was found to have arisen. 231In Mario Salvo , Spigelman CJ said [36] - [37]: In determining the intention of the parties in this case, the existence of the express trust under cl 4.2(b) of the Subscription Agreement is, of course, the starting point. It is most unlikely that the relevant parties, i.e. New Tel and the Appellants, would authorise the disposition of funds so held on any basis other than the retention of a beneficial interest on the part of the Appellants. There is nothing in the evidence to suggest that anyone intended that the Investors' beneficial interest in the funds had been transmogrified into a mere debt. The original purpose to be served by keeping the funds identifiable and separate was to ensure their return if the transaction did not go ahead. The transfer to HDY did add a level of risk, however the original purpose remained. (I do not intend by the use of the word "purpose" to identify a distinct species of express trust. See Jacobs Law of Trusts in Australia 6th ed, Butterworths, Sydney, 1997 [214] at p15; Re Australian Elizabethan Theatre Trust supra at 502, commenting on the use of the word "purpose" in Quistclose.) Equity has often intervened to ensure that funds advanced for a particular purpose are not applied otherwise. (See e.g. Re Rogers; Holland v Hannen (1891) Morr 243 at 248; Edwards v Glyn (1859) 2 El & El 29; 121 ER 12 at 50-51; Re Drucker; Ex parte Basden [1902] 2 KB 55; Re Watson (1912) 107 LT 96 at 183.) 232Mr Griscti contends, however, that in order to succeed Mrs George must first demonstrate that the $150,000 was her property (pointing to the fact that Exhibit A identifies that the funds were in fact transferred from a joint account held by Mr and Mrs George). It seems clear that the funds in question were drawn from funds earlier transferred to that account in July 2008 from an account in Mrs George's name. The evidence is that Mr George was in personal financial difficulties at that time so that the likelihood that the funds were sourced from elsewhere is low. Mr and Mrs George between them seem to have organised their personal finances with a degree of separation, at least to the extent that Mrs George maintained a separate bank account. 233I accept that, as between the two, the funds used for the investment were acknowledged to be Mrs George's personal funds and the email to Mr Webb (as well as the discussions between Mr George and Mr Burke and the later communications seeking the return of the funds) is consistent with that. There was no reason for Mr George to have made express note in the email to Mr Webb that the money would be paid in by his wife, if it were not to be her investment. Moreover, the replica note itself seems to acknowledge that the funds were to come from Mrs George (wrongly referred to as Jenny). I do not accept Mr Burke's evidence that the moneys in Mrs George's account were described by Mr George as his moneys. 234It makes commercial sense that Mrs George might wish her investments to be separate from those of her husband if (as seems to have been the case) his financial investments were not doing well. 235As to the intention to create a trust, Mr Griscti refers to the statement in On Equity that: While it is the subjective intention that is critical, it is frequently ascertained by drawing an inference from objective circumstances. Those circumstances include that nature of the transaction and the construction of any words used, the relationship of the parties and, where relevant, commercial necessity. 236In that context, Mr Griscti places weight on the following matters: (i)that Mr George exercised his own mind as to the content of and drafted the 13 October email; (ii)that Mr George was an experienced businessman (over 30 years); had been in the finance industry for some 10 years and had been involved in many trust arrangements; (iii)that Mr George agreed that he had included in the email matters he considered were important (from which it is submitted it can be inferred that matters that were not included he either considered to be unimportant or he did not give them thought at the time); (iv)that the email did not state that the funds were to be held on trust; (v)that the email did not specify that the funds were to be used solely in the event that the Elderslie/Allco HIT acquisition proceeded; (vi)that the email did not state that the funds were to be kept in a separate account, pending use in the Elderslie/Allco HIT acquisition; (vii)that the email did not state that the funds were to be returned in the event the acquisition did not proceed; (viii)that the email did not provide any contact details (other than its email address) for either Mr or Mrs Burke; (ix)that no reference was made to accrual of interest; (x)that no details of an account for any repayment were provided; (xi)that there was nothing in the email consistent with an ongoing relationship between either Mr or Mrs George and Mr Webb; and (xii)that the email contains an unqualified statement that the funds are to be distributed at the direction of Mr George. 237Mr Griscti further notes that Mr Burke's evidence is that the deal was that Mr Burke was purchasing a 2% share in any acquisition together with an agreement that Mr George would be retained as a consultant and that Mr Burke had he told Mr Webb (in the 13 October telephone conversation while at a meeting with Mr George) that the funds received would be the property of Mr Burke. (Insofar as reliance is placed on the fact that the latter conversation occurred during the course of the meeting with Mr George, there seems to be no suggestion that he heard Mr Webb's end of the conversation or indeed that he was privy to the actual conversation itself as opposed to being told about it after it took place in the course of the meeting.) 238Mr Griscti concedes (though Mr Young does not) that in hindsight this deal might seem "uncommercial". (That strikes me as a fair concession, indeed it might be thought to be a remarkable understatement.) However, it is said that the potential rewards were substantial and investment in opportunities necessarily involves a degree of risk. (In that regard, the risk/gain portions of Mr Burke's post-meeting notes seem to me to be self-serving in the extreme and I do not accept that they reflected what was actually discussed.) I accept that it is open to parties (subject to the relief might be available in cases of undue influence or unconscionable conduct or the like) to enter into what might be regarded in the ordinary course as uncommercial arrangements. Nevertheless, if they do so in terms that do not make it clear that such an uncommercial arrangement was intended then the court may more readily incline to an interpretation of the relevant events or a construction of the relevant contract that accords with commercial sense. Lord Reid in Wickman Tools v Schuler A.G. [1974] AC 250 at 251, in considering a question of contract construction said that "The fact that a particular construction leads to a very unreasonable result must be a relevant consideration. The more unreasonable the result the more unlikely it is that the parties can have intended it, and if they do intend it the more necessary it is that they shall make their intention abundantly clear." At p 255, Lord Morris of Borth-y-Gest similarly noted that while "business men are free to make what contracts they choose ... unless the terms of their agreement are clear a court will not be disposed to accept that they have agreed something utterly fantastic". 239Here, when the claims of Mr Burke are properly understood, he is suggesting that a payment of $150,000 was made (to which he immediately became absolute entitled and could use for any purpose whatsoever) in effect as an option fee in return for which Mr George received the (undocumented) opportunity to obtain a 2% equity in a company yet to be formed and which it was hoped would acquire assets of considerable value at some time in the future. It seems to me far more credible that the payment of funds into the solicitors' trust account for the purposes of a proposed future acquisition of assets was one under which the funds to be held only to be used if any when that acquisition took place. 240Pointing to the particular matters on which reliance is placed by Mr Griscti, I am not persuaded that these lead to the conclusion that the words "to be used for the Elderslie Allco HIT transaction" serve no purpose other than to identify the 'matter' for which the moneys are being deposited nor do I accept that they lead to the conclusion that this was money paid for the acquisition of an existing interest of Mr Burke in some venture. I read the email as consistent with an intention that the moneys were to be held in the trust account for the purposes of use in the identified particular transaction (and no other). I am not persuaded on the evidence that the arrangement was one pursuant to which Mr Burke was at liberty to treat the fund as if it were his own. 241The fact that the funds were paid into a solicitor's trust account is consistent with an intention that the fund be kept separate from other funds until its use for the stated purpose. I do not consider it necessary that the email state that the funds were to be held "on trust". It seems to me implicit in the payment of funds into a solicitor's trust account that they must be held subject to particular requirements and regulations and are not at the ready disposal of the solicitor in question. As to the fact that the email does not state that they are "solely" to be used for the acquisition or that they are to be returned in the event that the Elderslie/Allco HIT acquisition did not proceed, it seems to me that the former follows implicitly from the limitation that they are to be used in a particular way (and hence not for some other purpose) and as to the latter I consider that it is implicit in the arrangement that if the purpose fails and they have been paid to the account only for that purpose then the party entitled to the funds (which on this hypothesis could only be the payer) is able to call for their return. In that context, the direction to pay that Mrs George sent in February 2009 is (contrary to the submissions made by Mr Young) in my view wholly consistent with the arrangement pursuant to which it is said that the trust has arisen. This can be tested by asking what would have happened had the funds remained in the account at the time that the acquisition proved to be impossible to proceed (because the assets had been sold to another purchaser). It surely could not have been open to Grogan Webb to refuse then to return those funds to Mrs George. 242Mr Kelly submits (and I accept) that it is no answer to the claim for equitable compensation for breach of trust that Mr Webb asked Mr Burke whether it was the latter's money and was told that it was, since the use to which the trust funds could be applied was stated on the face of the email (and did not include the payment of school fees, let alone payment of any fees which may have been due to Grogan Webb). 243Mr Gristci submits that the requirement that the funds are to be used "for the Elderslie/AIco HIT acquisition" does not disclose a certainty of intention to create a trust since the statement is equally consistent with the position contended by Mr Burke (namely that the $150,000 was an investment in return for a share of the venture). It is submitted that the reference to the "acquisition" can readily be understood as a reference to an existing business venture the object of which was the acquisition of the Elderslie/AIIco assets. Further it is submitted that the unqualified statement that followed (that the funds are to be distributed at the direction of Mr Burke), contradicts the case asserted by Mrs George and is evidence that there was not an intention to create a trust. He notes that there was no stated condition that the funds were to be released only on the written direction of Mr George or Mrs George, or that the funds were only to be released as payment of consideration for the equity but, rather, says that the instruction was in the broadest of terms (which Mr Griscti submits is consistent with payment to Mr Burke unconditionally). 244There is in my view a distinction to be drawn between whether the evidence discloses with sufficient certainty an intention to create a trust and whether the terms of that trust are sufficiently clear. 245It seems to me that there is no doubt that the intention of the payment into the trust account was that the money was to be disbursed for the purposes of the "Elderslie/Allco HIT acquisition". It also seems to me to be established that, as between Mr George and Mr Burke, it was understood that the Elderslie/Allco HIT acquisition was a reference to the acquisition of some or more of the assets of the Elderslie/Allco HIT companies. The email on its face seems to assume that Mr Webb knows what that acquisition was to involve (and that would not necessarily be an unreasonable assumption since on Mr George's version of the conversation Mr Burke had suggested that the money be paid into his solicitor's trust account and held there until released when the deal for the acquisition of assets proceeded). 246It is submitted that a trust could not be imposed over the use of the moneys if that would leave Mr Webb uncertain as to how he could, consistently with that trust, disburse them. However, the answer to that seems to me to be that if there were any doubt in Mr Webb's mind as to what the Elderslie/Allco HIT acquisition was at the time the moneys were received into the account then that was a matter that should have been raised with Mr and Mrs George. 247It might be said that the authorisation permitting Mr Burke to direct the disbursement of the funds was intended to overcome any issue in that regard and, indeed, had the funds been paid out on Mr Burke's direction for expenses that on their face were referable to the Elderslie/Allco HIT acquisition then it might well be that Grogan Webb would have a basis for asserting that there had been no breach of trust. However, here the moneys were paid out for expenses wholly unrelated on any possible view of events to anything that could fall within the description "Elderslie/Allco HIT acquisition". 248Mr Griscti seeks to explain the references to the acquisition in the email as being some kind of administrative way of enabling Grogan Webb to identify the funds as those belonging to Mr Burke when they arrived in the trust account. He places weight on the fact that the initial direction sought by Mr Bourke was for the funds to be identified by reference to the matter "with" not "for" the Elderslie/Allco HIT acquisition. 249Mr Griscti submits that there is no significance in the use of the future tense in the phrase "to be used for the Elderslie/AIco HIT acquisition" in the 13 October email and, in particular, that these words did not necessarily identify that the purpose of the transfer of funds was the basis asserted in these proceedings by Mrs George. This is put on the basis that as the email was written when the funds had not yet been transferred any arrangement which was to occur was necessarily in the future (that is, when the transfer of funds occurred). It was submitted that the phrase that the funds are "to be used for the Elderslie/AIco HIT acquisition" is plausibly understood as meaning - "when the funds arrive they are to be allocated to Mr Burke in return for my interest in the Elderslie/AIco HIT acquisition" and that the reasonableness of this understanding is confirmed by the unqualified words in the following paragraph: "The funds are to be directed at the direction of Martin Burke". The difficulty I have with this proposition is that there is nothing on the email itself to indicate that any acquisition had occurred at that stage such that it might be obvious to a reader that this was money in payment of the consideration for something already received (and if so the direction is otiose). I accept that Mr Webb may well have understood this to be the import of the email but that is attributable to his discussion with Mr Webb not to anything emanating from Mr or Mrs George. 250It seems commercially unlikely that there would have been no documentation of any kind if this were being treated as a concluded transaction and in any event Mr Webb did not seek anything other than a direction that Mr Burke could direct the disbursement of the funds for use for the purposes of the acquisition. If the money had been payment for something already acquired, the words "to be used for" would not have been necessary. An experienced businessman such as Mr George would surely then have said words to the effect : ' my wife has (or I have) purchased an interest in the consortium from Mr Burke and here is the payment'. The email goes nowhere near any such statement and is inconsistent with it insofar as it includes the direction. 251Insofar as it is submitted that the imposition of a trust in these circumstances this casts an unreasonable onus on Mr Webb to satisfy himself (whenever a direction was made by Mr Burke) that the funds were being properly directed to be disbursed, it seems to me that there are two answers (noting that it is not to the point that the trustee's task may be an onerous one, since that is the consequence of accepting the position of trustee): first, that it was always open to Mr Webb to say (if there was uncertainty as to when the funds could be disbursed despite the authority given to Mr Burke) that the firm was not prepared to retain the funds in its trust account (whereupon they would then have to be refunded to Mrs George) or to ask for a clear direction as to what were the permitted disbursement. What I cannot accept is that payment of school fees could seriously have been thought to be for the purposes of the proposed acquisition. 252I find that the funds paid to Grogan Webb were impressed with a trust, that being that they were to be held and paid out (albeit at the direction, properly issued, of Mr Burke) for the purposes of the Elderslie/Allco HIT acquisition (and by that, having regard to the underlying agreement between Mr George and Mr Burke, whether or not that was for Mrs George as principal, was meant for the purposes of acquiring one or more of the assets of those companies for the purposes of the particular project then being contemplated - as Mr Burke conceded in the witness box). (ii) Was there a breach of trust by the payment out of the $150,000 for purposes other than funding the Elderslie/Allco HIT acquisition? 253The fact that Mr Webb did not consider that when the sum of $150,000 was paid into his firm's trust account it was being held on trust for the sole purpose of being used in the event that the Elderslie/Allco HIT acquisition went ahead is no answer to the breach of trust claim if, as I find is the case, the funds were disbursed contrary to the purposes for which the trust was impressed. Mr Griscti did not seek to argue otherwise. I find that there has been a breach of trust as alleged. (iii) Claim for equitable compensation for breach of trust 254There is no basis suggested on which equitable compensation should not be paid in light of the above findings and, subject to consideration of the apportionment defence, I will so order. (iv) Claim in negligence 255Mr Griscti notes that there was no retainer between Mrs George and Grogan Webb and that the negligence claim can therefore only be based on the premise that the deposit of $150,000 created an express trust. Mr Kelly in effect conceded as such. 256Nevertheless, such a finding of trust having been made, it does not seem to be disputed that a duty to take reasonable care in the exercise of the trustees' duties would arise. I consider that the failure by Grogan Webb to make any enquiries of Mr or Mrs George (once the direction to pay school fees and other expenses clearly unrelated to the purposes of the Elderslie/Allco HIT acquisition was received) as to whether the disbursement was in fact authorised would sustain a finding that there had been a breach of the duty to take reasonable care in the discharge of their duties as trustees (and, as discussed later, this would be an apportionable claim for the purposes of the proportionate liability regime). 257However, as I understand it, Mrs George's principal claim is her claim for equitable compensation to restore the trust fund to her. If so, it is not necessary to say anything further on the negligence claim. (It is, of course, open to a party to elect which of alternative causes of action is to be pursued to judgment. In light of the submissions on the apportionable claim point it is my understanding that faced with such an election Mrs George will pursue the principal claim. Mr Kelly submitted as much during the course of argument.) (v) Accessorial liability or liability for breach of trust on the part of Mr Burke 258The element of knowledge required to make out a claim for knowing receipt (the first limb of Barnes v Addy (1874) LR 9 Ch App 244 at 251-252 was recently considered by the High Court in Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89 (at [177]-[178]). The High Court affirmed that the requisite degree of knowledge is that falling within one of the first four categories enumerated in Baden Delvaux and as adopted in Consul Development Pty Ltd v DPC Estates Pty Ltd [1975] HCA 8; (1975) 132 CLR 373, at 376-377; 398; 412), namely (i) actual knowledge; (ii) wilfully shutting one's eyes to the obvious; (iii) wilfully and recklessly failing to make such inquiries as an honest and reasonable person would make; (iv) knowledge of circumstances which would indicate the facts to an honest and reasonable person. 259That test has been applied in various knowing receipt cases ( Equiticorp Finance Ltd (in liq) v Bank of New Zealand (1993) 32 NSWLR 50; Macquarie Bank Ltd v Sixty-Fourth Throne Pty Ltd [1998] 3 VR 133, at 163-164; Koorootang Nominees Pty Ltd v Australia and New Zealand Banking Group Ltd [1998] 3 VR 166; Spangaro v Corporate Investment Australia Funds Management Ltd (2003) 54 ATR 241; [2003] FCA 1025, at [60]). 260In the case of accessorial liability for knowing assistance (the second limb of Barnes v Addy ), the third party must have assisted in a breach of trust or fiduciary obligation with knowledge of a 'dishonest and fraudulent design' on the part of the trustee or fiduciary (knowledge being required in the sense considered above). Mere knowledge of facts which would have put a reasonable person on inquiry will not attract liability. The requirement that the third party must have participated in a dishonest and fraudulent design, requires conduct which is 'morally reprehensible'. Dishonesty is not used in the sense of criminal conduct or actual fraud in the common law sense. Nevertheless, it seems clear that what is required is more than a mere breach of duty. ( Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373, 397-8 per Gibbs J as his Honour then was, citing Selangor United Rubber Estates Ltd v Craddock [No 3] [1968] 2 All ER 1073; The Bell Group Ltd (in liq) v Westpac Banking Corporation [No 9] (2008) 225 FLR 1, at 531 per Owen J.) 261Mr Kelly notes that expropriating a trust fund is a paradigm example of dishonest design for the purpose of the second limb of Barnes v Addy , referring to Farah v Say-Dee ; Consul Development; and El Ajou v Dollar Land Holdings plc [1994] 2 All ER 685 at 700. 262The third party's conduct must have had more than a minimal causative effect on the breach ( Bell at 551), though it appears that it is not necessary to determine the exact causal significance of the assistance on the breach to the loss sustained ( Grupo TorrasSA vAl-Sabah [No 5] [1999] CLC 1469, 1667. Nor is it necessary that the third party has received trust property or otherwise profited from the transaction in question. 263Accessorial liability for knowing receipt/assistance renders the third party jointly and severally liable with defaulting trustees and fiduciaries to pay equitable compensation for any loss suffered by the beneficiaries as a result of the breach. In New Cap Reinsurance Corporation Ltd v General Cologne Re Australia Ltd [2004] NSWSC 781 at [34], Young CJ in Eq (as his Honour then was) referred to the observation in Ford and Lee "that the accessory is jointly and severally liable with the principal malefactor to pay the amount of equitable compensation required to restore the trust fund". Equitable compensation is calculated by reference to the amount necessary to restore the beneficiaries to the position in which they would have been had the breach had not occurred. 264Mr Griscti submits that as this liability derived solely from the allegation of a breach by Grogan Webb of an alleged express trust of which Mrs George was the beneficiary, the accessorial liability claim fails if there was no such express trust or, even if there was, if Mrs George was not the beneficiary. However, for the reasons set out earlier the derivative claim does not fail on that basis. 265In considering the question of accessorial liability, the nature of a Quistclose trust has some relevance, given that there has been some academic criticism as to whether accessorial liability may or should arise for breach of duties as a constructive as opposed to actual trustee. 266It has not been authoritatively settled as to whether or when a resulting or express trust will result upon the application of the Quistclose principles. In Mario Salvo & 2 Ors v New Tel Limited [2005] NSWCA 281, Spigelman CJ and Young CJ in Eq (as his Honour then was) were of the view that an express trust was created (at [53]; [96]), whereas Handley JA was of the view that a "resulting trust seems to accord more closely with the realities" (at [78]). The issue was further discussed by Justice Young from [84] and has been the subject of consideration in papers by Penner J., 'Lord Millett's Analysis', at 50 and Chambers R., 'Restrictions on the use of money', at 82 in Swadling W., (ed) The Quistclose Trust: Critical Essays Hart Publishing, 2004. 267Swadling, writing on the fiction of constructive trusts and advocating the view that such terminology is not helpful, comments as follows on the issues to which this gives rise in the context of the imposition of a Quistclose trust: A further mistake stemming from the idea that the constructive trust is a genuine one lies in the notion that persons who assist persons to commit breaches of their 'duties' as constructive trustees can be liable as accessories to that breach of trust. The decision of the House of Lords in Twinsectra Ltd v Yardley is a prime example, for there a third party was thought to be potentially liable for dishonestly assisting a breach of a Quistclose trust, arguably a species of constructive trust. The same mistake was made in Fiztalan-Howard (Norfolk) v Hibbert in which Tomlinson J thought it possible for liability to be incurred by assisting a breach of a Chase Manhattan constructive trust. Fortunately, his lordship found no such trust on the facts of the case, but the question should not have been entertained in the first place. 268In Mario Salvo Spigelman CJ said at [32]: In my opinion, the present is a case such as that determined to exist in Bahr v Nicolay (No 2) (1988) 164 CLR 604, where Mason CJ and Dawson J said at 618-619: If the inference to be draw is that the parties intended to create or protect an interest in a third party and the trust relationship is the appropriate means of creating or protecting that interest or of giving effect to the intention, then there is no reason why in a given case an intention to create a trust should not be inferred. The present is such a case. The trust is an express, not a constructive, trust. 269His Honour expressed the view at [47] that: It is not necessary to determine whether the analysis in English cases of a resulting trust applies in Australia. (See also Twinsectra Ltd v Yardley [2002] 2 AC 164 at [100].) The circumstances in which a trust should be classified as presumed, resulting or constructive are not the subject of any authoritative determination. (See the references set out in Robb Evans v European Bank Ltd (2004) 61 NSWLR 75 at [112]-[116].) 270His Honour further noted at [51] that: Here, the beneficial interest was similarly kept from New Tel. In my opinion, at all relevant times, the Investors retained a beneficial interest in the funds - although it was not an exclusive beneficial interest. At no time did the money become the beneficial property of New Tel. 271The analysis by Gummow J in Australian Elizabethan , to which I have referred to above has been referred to with approval in various subsequent Australian decisions and represents the dominant view in this country of the nature of the Quistclose trust. In Roxborough v Rothmans of Pall Mall Australia Ltd (1999) 167 ALR 326, Hill and Lehane JJ, in the Full Court of the Federal Court, said (at 346) that: Excessive weight, we think, should not be given to the use of the term "constructive" to describe the trust. It is notorious that there has for a long time been considerable fluidity in the classification of trusts; there has, particularly, been a good deal of argument as to the correct classification of the Quistclose trust, discussed by Gummow J in the passage in Australian Elizabethan Theatre Trust to which we have referred. The trust of which both Learned Hand J and Mason CJ speak is one which arises where a payment is made with the intention (or "on the footing") that it is to be applied for a particular purpose: that is what gives rise to the trust. But that is precisely the form of trust recognised by Quistclose, which, as Gummow J demonstrates, is properly to be described as an express trust (it arises because of the express intention of the payer in making the payment) and a trust of that kind attaches from the outset to the particular sum paid. ( The Full Court's reasoning on this issue was not doubted on appeal to the High Court (2001) 185 ALR 335). 272Further, in Walsh Bay Developments Pty Ltd v Federal Commissioner of Taxation (1995) 130 ALR 415, Beaumont and Sackville JJ, also in the Full Court of the Federal Court, said (at 425) that: As Gummow J observed in Re Australian Elizabethan Theatre Trust; Lord v Commonwealth Bank of Australia (1991) 30 FCR 491 at 500 ; 102 ALR 681, Lord Wilberforce's approach suggests that there was an express trust in Quistclose with two limbs, viz, a "primary" trust in favour of those entitled to the dividend and a "secondary" trust if the primary purpose failed. There is room for debate as to the precise beneficiary under the "primary" trust and as to when and why the so-called "purpose" fails: see P J Millett, "The Quistclose Trust: Who Enforces It?" (1985) 101 LQR 269, esp at 290; C E F Rickett, "Different Views on the Scope of the Quistclose Analysis: English and Antipodean Insights" (1991) 107 LQR 608. But it is clear from the analysis of Lord Wilberforce that Rolls Razer never acquired a beneficial interest in the moneys advanced by Quistclose; it acquired no more than a bare legal interest as trustee: Re Elizabethan Trust , at FCR 501. In the end, the existence of an express trust must always be a matter of intention: Re Elizabethan Trust , at 502. 273In Peter Cox Investments , O'Loughlin J stated (at 117) that: In my opinion, the decision of the House of Lords in Quistclose has been followed in Australia and I should follow it; the contentious area is the extent to which that decision may operate. As to that, I propose to stay within the parameters that are to be found in the remarks of Gummow J in Re Australian Elizabethan Theatre Trust . 274In his chapter entitled 'Lord Millett's Analysis' (contained in Swadling (ed) The Quistclose Trust: Critical Essays (2004) 41 - 66), James Penner summarises Lord Millett's analysis of the Quistclose trust (at 42 - 43): A, the provider of the funds, never relinquishes the beneficial ownership of the trust property until the recipient, B, applies the money in line with the instructions A gives, e.g. to pay a dividend (as in Quistclose ) or to purchase new equipment (as in Re EVTR [1987] BCLC 646), and, until such time, B holds it on trust for A. The disposal of the money is properly accomplished when B exercises his power as legal owner of the property and carries out A's direction to spend the money as A instructs; that terminates the trust, for the subject matter of the trust has been fully disposed of in compliance with A's instructions, i.e. properly disposed of not in breach of trust. When B has done this, B may become A's debtor for an equivalent sum plus interest if there is also a contract between them so specifying, though, as Lord Millett has rightly insisted, there is no necessity that a transfer of property from A to B on trust for A subject to a power in B to distribute the trust property according to instructions given by A only arise in the context of commercial loan arrangements. B must follow (or at least must not violate) A's instructions, and by using the money for a purpose not instructed or allowed by A, B would commit a breach of trust as well as a breach of contract where there is one. This analysis is clearly attractive. It is simple and straightforward, and the trust as characterised operates on conventional principles of trust law; it also assimilates the Quistclose trust to the extremely common trust upon which purchasers and mortgagees transfer funds to solicitors so that the latter may complete a purchase of land, a variant of which arose in Twinsectra itself. 275Penner then goes on to consider the correctness of Lord Millett's characterisation of the Quistclose trust as a resulting trust. He states (at 50 - 56) that: This departure [from the view that] the Quistclose trust was clearly characterised as one based on the parties' actual intentions is a source of considerable worry. It is important to note that on Lord Millett's analysis, the impossibility of B carrying out A's instruction does not give rise to what Megarry VC dubbed an 'automatic resulting trust' in Re Vandervell's Trust (No 2) [1974] Ch 269 at 294, which would properly describe the 'secondary trust' that would arise upon the failure of a purpose trust. According to Lord Millett's analysis, which is approved of here, the beneficial interest remains with A throughout. Nor could the trust properly be called a 'presumed' or 'presumed intention' resulting trust under the second category identified by Megarry VC in Vandervell, for in no case has A ever been identified as having the beneficial interest on the basis of the evidentiary longstop to which the presumption of resulting trust is applied. Therefore, according to the orthodox classification of resulting trusts, there is no 'resulting' trust at all in Quistclose cases. A's beneficial ownership is intended from the first - he takes that interest as the intended beneficiary under the bare trust or nomineeship. His continuing interest until the money is properly applied or returned to him is never his as the result of the operation of a resulting trust, automatic or presumed. Lord Millett, however, holds the Quistclose trust to be 'an entirely orthodox example of the kind of default trust known as a resulting trust. The lender pays the money to the borrower by way of loan, but he does not part with the entire beneficial interest in the money, and in so far as he does not it is held on a resulting trust for the lender from the outset.' ( Twinsectra at 192 - 193) ... Whether the Quistclose trust is express or arises by operation of law, the structure of the trust and its operation are the same. Lord Millett himself said: I do not think that subtle distinctions should be made between "true" Quistclose trusts and trusts which are merely analogous to them. It depends on how widely or narrowly you choose to define the Quistclose trust. There is clearly a wide range of situations in which the parties enter into a commercial arrangement which permits one party to have a limited use of the other's money for a stated purpose, is not free to apply it for any other purpose, and must return it if for any reason the purpose cannot be carried out. The arrangement between the purchaser's solicitor and the purchaser's mortgagee is an example of just such an arrangement. All such arrangements should if possible be susceptible to the same analysis. ... If the trust arises by operation of law on the court finding that A did not intend B to take the transferred property beneficially, then a Quistclose trust will arise in any case of a loan where A insists that B use the money only for a stated purpose in terms which seem to indicate that the money is 'not at the free disposal of' B. If a resulting trust arises by operation of law in response to the absence of intention, it is not clear how any of the traditional requirements for express trust (the 'three certainties' of intention, subject-matter and objects), which might otherwise constrain a finding of trust, are presumed to be relevant, for these concern the intentional creation of trusts, and not trusts arising by operation of law. Therefore, A need have no intention that the money is to be held for him beneficially (i.e. no intention to create a trust), no intention that the funds are to be held separate from B's own, and no genuine application of the test of certainty of objects. Rather, in circumstances where the court finds a resulting trust arising by operation of law on the basis only that A did not intend B to take a beneficial interest-in the sense that A did not want the funds to be at B's free disposal-the court itself must devise a workable trust which reflects as best it can its determination to preserve in A a beneficial interest in some property, whether the property received by B or some traceable substitute. ... This approach is a recipe for a largely unfettered discretion in the court to find trusts in commercial circumstances on flimsy evidence about what might have been absent to A's mind, as opposed to determining the true intentions of the parties. And once we escape any requirement that the court find a genuine intention on the part of A that the beneficial interest in the property is to remain his until properly applied by B, it seems difficult not to conclude, despite Lord Millett's claim that loans granted with a purpose for the money should typically be seen as sounding only in contract, that any loan which is expressed to be used only for a stated purpose should give rise to a Quistclose trust, for expressing that sort of restriction is tantamount to saying the money is not to be at B's free disposal. 276In Twinsectra, Lord Millett considered the analysis of Gummow J in Re Australian Elizabethan, but did not comment on his Honour's characterisation of the Quistclose trust as an express trust with two limitations (as opposed to a resulting trust in favour of the lender). Rather, he noted (at [80]) that: Gummow J saw nothing special in the Quistclose trust, regarding it as essentially a security device to protect the lender against other creditors of the borrower pending the application of the money for the sated purpose. and went on to observe (at [81]) that: On this analysis, the Quistclose trust is a simple commercial arrangement akin (as Professor Bridge observes) to a retention of title clause (though with a different object) which enables the borrower to have recourse to the lender's money for a particular purpose without entrenching on the lender's property rights more than necessary to enable the purpose to be achieved. The money remains the property of the lender unless and until it is applied in accordance with his directions, and insofar as it is not so applied it must be returned to him. I am disposed, perhaps pre-disposed, to think that this is the only analysis which is consistent both with orthodox trust law and with commercial reality. Before reaching a concluded view that it should be adopted, however, I must consider the alternatives. 277In Mario Salvo , Spigelman CJ (agreeing with the primary judge) determined that two express trusts - amounting to a Quistclose trust - had been created in the circumstances and found it was not necessary to determine "whether the analysis in English cases of a resulting trust applies in Australia" (citing Twinsectra ) (at [47]). Handley JA agreed that a noted (at [76] - [77]): Nothing appears to turn in this case on whether that trust was an express trust or a resulting trust. In Quistclose Investments Ltd v Rolls Razor Ltd [1970] AC 567 , 580 Lord Wilberforce characterised the trust in that case as an express trust because the agreement that the funds "will only be used to meet the dividend" meant in his view that "if, for any reason, the dividend could not be paid, the money was to be returned". In his view there was a primary trust for the creditors and if that failed a secondary trust in favour of the lender (582). However in Re Australian Elizabethan Theatre Trust (1991) 30 FCR 491 Gummow J evidently thought that the trust in favour of the lender in the Quistclose case was a resulting trust (above at 500, 501, 502) and in Twinsectra Ltd v Yardley [2002] 2 AC 164 , 192-3, Lord Millett said: I would ... hold the Quistclose trust to be an entirely orthodox example of the kind of default trust known as a resulting trust. The lender pays the money to the borrower by way of loan, but he does not part with the entire beneficial interest in the money, and in so far as he does not it is held on a resulting trust for the lender from the outset ... it is the borrower who has a very limited use of the money, being obliged to apply it for the stated purpose or return it. He has no beneficial interest in the money, which remains throughout in the lender ... When the purpose fails, the money is returnable to the lender, not under some new trust in his favour which only comes into being on the failure of the purpose, but because the resulting trust in his favour is no longer subject to any power on the part of the borrower to make use of the money. 278It therefore appears that the difficulty may lie in the terminology. That is, that what Gummow J would classify as a "default trust" (an express trust), Lord Millett would classify as a "resulting trust". Gummow J, writing extracurially in 'Equity: Too Successful?' (2003) 77 Australian Law Journal 30, suggests that there is futility in the debate (at 37, footnotes omitted): The Quistclose trust also occasioned rather fruitless debate over a priori classification of what, after all, is not some new institution in the law. The statute law of insolvency has provided a stimulus to the advancement of moneys in various ways, but with an objective of protecting them if the objective of the advance miscarries. The subsequent course of authority has borne out a reluctance, despite what was suggested in much of the writing and some of the decisions, to treat the Quistclose trust as some new legal institution. Rather, the Quistclose trust provides instances of the particular operation of principle upon the facts as found. Here again there has been a risk that equity will be too successful. 279Further, in Jacobs' Law of Trusts , Heydon and Leeming note (at [215]) that: ... while there is a terminological difference between the Australian and English authorities, there are indications that it is little more than that. In the Twinsectra case, Lord Millett cited Gummow J's reasons in Re Australian Elizabethan with approval, and agreed that 'orthodox trust law' was to be applied, while in Re Crown Forestry Rental Trust ([2004] 3 NZLR 157 at [41]), his Lordship referred to a distinction between 'express' and 'implied' resulting trusts. To the extent that there is any substantive difference of approach, it may lie in the greater readiness on the part of Australian courts to discern an intention to create a trust. ... as Mr Turner has observed, the decisions can be reconciled with principle by adopting an approach whereby: ... a resulting trust can arise where a disponor expresses no intention where beneficial ownership of surplus assets will be located in the event that the primary purpose of the disposition cannot be carried out, and that express trust takes over where there is intention that the remaining beneficial interest should lie with the disponor. This is an approach which treats the boundaries between express and resulting trusts in the ordinary way and, with respect, gives appropriate recognition to the role of the inferred express trust ((2005) 33 ABLR 392 at 396). 280In Re Australian Elizabethan, Gummow J stated (at 503): In Quistclose, the debate was whether that material disclosed a trust ... or merely a loan; no other result was suggested. But the facts in such cases are susceptible of infinite variation and the trust is a supple instrument ... the borrower would hold the moneys borrowed as trustee of an express trust for the lender, subject to a mandate for the lender to use the fund to pay the creditors. On that footing, there would be but one trust, created to give the lender security for its rescue operation of the financially unhealthy borrower, but not to render the creditors beneficiaries under any trust. ... where the lender has a distinct interest of his own in seeing that the money is applied to pay the creditors of the borrower, the borrower will be obliged, at the suit of the lender, to make these payments; if the creditors are notified by the lenders of the arrangements between the lender and the borrower, this may amount to an assignment to them of the lender's rights against the borrower, thereby giving the creditors an equitable interest in the fund, in place of that of the lender. It also is to be borne in mind, as I have said, that dealings between two parties may give rise to equitable rights in a third party, falling short of those of a beneficiary against a trustee. ... They include equitable charges and liens and equitable personal obligations ... In this field, the legal system in truth teems with established norms, and there is scarcely the need for another, dignified as the Quistclose trust. To speak of a Quistclose trust as if it were a new legal institution rather than an example of the particular operation of principle upon the facts as found is to set the listener or reader off on a false path. 281Finally, in On Equity, Young, Croft and Smith conclude that: The exact nature of the Quistclose trust is really only of academic interest, but the debate is one that intrigues some academic lawyers. The better view is that there is nothing special in theory about a Quistclose trust; it is merely an illustration of a person paying over money to which an obligation is attached, and the purpose failing ... 282I consider that the weight of authority in this jurisdiction is that the Quistclose trust is an express trust. If so, then there seems to be no reason not to apply the accessorial liability principles in Barnes v Addy to such a trust (particularly in a case where, as here, the alleged accessory not only knew of the express purpose trust for which the moneys were to be held by the trustee but was instrumental in putting those arrangements in place and knew the purpose for which the funds were permitted to be used). 283I find that Mr Burke is liable as an accessory, having knowingly received (through the means of issuing directions for distribution of funds for his personal benefit) the trust moneys and having knowingly assisted in the wrongful expropriation of the trust fund. I do not suggest actual fraud on the part of the solicitors but I consider that the payment out of the funds inconsistently with the purposes for which they were to be applied (and so obviously so) is more than a mere breach of trust. (vi) Contractual or other liability on the part of Mr Burke 284The alternative claims that are based on the existence of a contract between Mrs George and Mr Burke therefore do not arise for determination but as they were argued I deal with those briefly. 285The first issue raised in this regard is the standing of Mrs George to sue upon the alleged agreement. Mr Burke claims that the only agreement was one reached with Mr George as principal. Mr Young submits that if anyone is the appropriate plaintiff, it is the trustee in bankruptcy and that the proceedings are incompetent. I disagree. 286Mr Young points out that Mr George gives no evidence as to any discussions with his wife about the arrangement save for reference to his wife saying words to the effect "Lets go ahead" ([17]) and that Mrs George in cross examination simply asserted that the basis upon which her husband was acting on her behalf was that it was 'her money' (when in fact it was drawn from the joint loan account). He also suggests that it is relevant to note that the subject matter of the transaction was not to her benefit (although if the investment had been of value it is not clear why that would be so). Insofar as the acquisition was an investment it cannot be assumed that Mrs George would have gained no benefit from the investment and, if Mr George was indeed in personal financial difficulty then there might well be a practical reason why she might wish to maintain her own separate investments rather than to invest money jointly with her husband. (In that regard, I note that there has been no suggestion that Mr George's trustee in bankruptcy had asserted any interest in the present claim.) 287At the outset, I accept that Mr George in the course of his cross-examination on occasion referred to the investment in terms referable to it being his personal investment ("I put funds" - T 18.19; T 18.42 "it had changed from that I had originally made the investment"). That has given me some pause but ultimately I formed the view that this was consistent with Mr George being the person within the marriage who habitually made the relevant investment decision on behalf of the couple and on behalf of Mrs George (consistent with her evidence). I place greater weight on the email that made it clear that Mrs George was the party transferring the funds in question. 288Diplock LJ in Freeman & Lockyer (a firm) v Buckhurst Park Properties (Mangal) Limited [1964] 2 QB 480, at 503; [1964] 1 All ER 630; [1964] 2 WLR 618, in an oft-quoted passage, outlined what is necessary to give rise to a situation of ostensible authority, namely a representation made by the principal which is intended to be and in fact acted upon by the third party that the agent has authority to enter into a contract on behalf of the principal of a kind within the scope of the agent's apparent authority. 289Bowstead & Reynolds on Agency note that agreement between principal and agent may be implied in a case where one party has conducted himself towards another in such a way that it is reasonable for that other to infer from that conduct assent to an agency relationship ([2-030]) and that consent to an agency relationship can be inferred from the parties' conduct (2-033). Here Mrs George asserts that she authorised her husband to deal with her investments on her behalf. Unless she is to be disbelieved on her oath, a manifestation of authority would be sufficient to confer authority on him (such as, one might think, permitting him to deal with others in relation to the investment of her moneys. In a domestic relationship it might be unusual to expect any formal authority of that kind. Further, where the agent (in this case Mr George) has purported to act on the principal's behalf, then even if he had no actual authority to do so, it would be open in certain circumstances to the principal to ratify that act as if originally done with the principal's authority; ratification being described generally as equivalent to antecedent authority (see discussion on ratification in Bowstead from 2-047ff). 290It seems to me that the facts disclose three possibilities in relation to the agreement concluded on 13 October 2008: (i) first, that the agreement was one (as Mr Burke contends) between Mr George and Mr Burke that Mr George would invest his own moneys (or moneys he held jointly with his wife) on his own behalf in return for a 2% equity in the vehicle to be set up for the acquisition as well as a potential consultancy arrangement of some kind; (ii) second, an agreement between Mr George and Mr Burke (after the former had made clear that he had no personal funds to invest) that the former would procure his wife to invest some of her moneys in the project in return for the acquisition (by Mrs George) of an interest in the consortium vehicle and a potential consultancy arrangement for Mr George's benefit (on which scenario the payment of the moneys to Grogan Webb's trust account would arguably constitute Mrs George's acceptance of the investment arrangement and bring into force an agreement between her and Mr Burke); and (iii) third, an agreement (as contended by Mrs George) between Mr George and Mr Burke under which Mr George, as disclosed agent for his wife, agreed that she would acquire the investment interest referred to above, and she ratified that agreement by paying in the funds to the Grogan Webb account (or, at the latest, when demanding their refund and commencing proceedings). 291Of those three scenarios, the emphasis placed in the 13 October email (copied to Mr Burke) is consistent with the second and third scenario but not the first. Mr George's subjective understanding of the contractual arrangement is of course not determinative (except for the limited relevance it may bear when assessing whether the acts taken by him thereafter were consistent with the arrangement for which he contends). 292To the extent that there was no formal authorisation by Mrs George of her husband to negotiate on her behalf, but he held himself out to Mr Burke as speaking on her behalf, it would be open to her to ratify any agreements purportedly entered into on her behalf (and by commencing these proceedings it seems clear that she has done so). 293Had this question been necessary to determine I would have held that there was a contract between Mrs George and Mr Burke (either entered into on her behalf by her husband and later ratified by her conduct in commencing the proceedings if not before, or which came into existence when she manifested her acceptance of the investment offer made to her through her husband by Mr Burke and paid the funds to Grogan Webb's trust account). 294What then was the content of the agreement? Mr Young submits out that Mr George has given at least three different versions of the alleged agreement: the first, that which is set out in his letter to the Law Society (Ex 2) (where he says he made a payment as a show of goodwill and "part-payment of deposit", Mr Young emphasising the reference to a "part-payment"), to be returned "in the event the transaction did not come to fruition in a form acceptable to Mr George"; the second, set out in his affidavit and reflected in the Amended Statement of Claim at [4(c), (where it is alleged that the payment was to be returned if the proposed acquisition did not proceed "within a reasonable time", with no mention of it being in a form acceptable to Mr George; and the third, being that given by Mr George in oral evidence (the effect of which was that disbursement of the funds was to be limited only by its use for expenses associated with the acquisition, and was not only for payment for actual equity). (Mr Young submits that the last version of the agreement is capable of giving rise to an allegation that the funds were disbursed for other purposes but that this is not the pleaded case; rather, the pleaded case of breach is that the funds were disbursed at all.) 295Mr Young also notes that there might on the evidence have even been a fourth version of events in that Mr George said in oral evidence that 'he already thought Mr Burke held an equity' (a statement said to be quite contrary to his pleaded case). 296It is submitted by Mr Young that whichever of the three versions is considered, it is inherently unlikely to be correct since each suffers from the difficulty that there was never any discussion about the return of the money if the acquisition did not proceed (as conceded by Mr George who said that it was assumed). Mr Young submits that if this is the case then Mrs George must rely upon the existence of an implied term as to the return of the funds and that this is a term which is by no means so obvious that it goes without saying. He contends that it is equally plausible that, as contended for by Mr Burke, if the acquisition did not proceed the money was to be retained by Mr Burke. 297With respect, if the parties entered into an agreement for the acquisition of an interest in the proposed venture (whether by way of a shareholding in a company to be formed or some other form of interest) and no such share or interest was ever transferred by Mr Burke (or ever came into existence in order to be able to be transferred), then the lack of an express term for the return of the consideration paid for the acquisition of that interest would not seem to me to preclude recovery. It would seem to me that a case based on failure of consideration would be highly likely to succeed in that event. Moreover unless the beneficial entitlement in the moneys passed on transfer to Mr Burke in advance of any transfer of the interest being acquired by such a payment, then an implied term for the refund would hardly be necessary as the funds would continue to belong to Mrs George. 298I have already noted the significance sought to be placed on the fact that Mr George took no action against Mr Burke until March 2011 (Mr Young suggesting that his version of events should be seen to have been seen implausible or inaccurate). For the reasons set out earlier, I do not believe that such a conclusion follows. 299Mr Young poses the rhetorical question as to why, if Mr Burke were indeed a 'crook' and a liar as he has been painted, he would volunteer the use of a trust account for the deposit of the moneys (which would inevitably create a transparent paper trail of the alleged fraud and would embroil Mr Webb in the events). I accept that, whether couched as a suggestion or a requires, on both version of the relevant conversation the trust account option was one proffered by Mr Burke. Mr Young submits that if Mr Burke had been a 'crook', he could have just offered a written contract and then taken the money anyway and there would have been no need to offer the use of his solicitor's trust account. (That suffers from the logical difficulty that if it was the use of the trust account that persuaded Mr George to part with his funds an alternative option might not have been as successful; moreover, it also assumes that Mr Burke contemplated that Mr George might learn of the disbursement of the funds whereas, had the transaction proceeded, it might be that the early payment out of funds for school fees would not have come to Mr George's attention.) The possibility of other scenarios highlights the risk of posing rhetorical questions of this kind, since it inevitable invites judicial speculation as to those possibilities. I accept that those possibilities were not put to Mr Burke and simply note that if the argument is that there is no other rational explanation for what Mr Burke is said to have done - even on the hypothesis that he is a crook - then I do not accept that is the case. 300The agreement contended for by Mr Burke is said to be supported by contemporaneous documents and corroborative witnesses and to be highly plausible. Unfortunately I agree with neither proposition. As to the contemporaneous notes, Mr Young relies upon the original note as recording the discussion to the effect that, with the $150,000, Mr George would be buying himself a right to a 2% equity and a 'salary' and 'options'; and to the replica note (that refers to that equity and to the opportunity to be a 'consultant' with 'salary' and 'incentive options', and there describes the 'gain' or the 'upside'. The difficulty I have is that I have no confidence that two of the so-called contemporaneous notes accurately record what was said in the discussions at the relevant meeting. 301In submissions the agreement was said to be one whereby, if Mr George were to pay the money to Mr Burke for use as working capital then Mr George would receive the 2% share (previously offered at a price of $300,000, for the discounted amount of $150,000) (Mr Burke's affidavit [15] and [16]. However, insofar as weight is placed in the confirmation of this in a contemporaneous note (the replica note), that is one the accuracy of which I doubt. 302It was submitted by Mr Young that this was a very attractive deal for Mr George and that Mr George potentially stood to gain a small equity in a very substantial asset; to obtain a way back in to a business he had lost, and about which he knew a great deal; and a way back into the industry. However, in circumstances where it is accepted that he was in financial difficulty, the likelihood that he would risk what money he or his wife had available for investment on an investment of this kind (described by him as 'thin air') seems unlikely. 303Mr Young nevertheless characterises this as a further instance of Mr George being "at a low end after Elderslie collapsed when [he], was vulnerable and [his] confidence was down" ([56]), noting that if in hindsight this was a poor choice it was one in respect f which there was no allegation that the agreement was obtained by fraud, duress or misleading conduct, or that there was any unconscionability. Mr Young submits that the position is simply that "Mr George decided to take a risk to get back on his feet. It was a gamble but it failed." 304I accept Mr George's evidence as to the content of the discussions in relation to the investment. I consider that the plaintiff has established that the agreement was one in which she agreed to invest the sum of $150,000 in return for a 2% share in the vehicle that was to be set up to acquire the Elderslie/Allco HIT assets. I reject the suggestion that all that was agreed was for her to have the option to participate in some future joint venture. No such share was ever transferred to her. Therefore, had this question fallen for determination I would have held that there had been a total failure of consideration for the payment that was made. Further, insofar as the joint venture was to acquire assets that are not available for acquisition as they have been sold elsewhere (and Mr Burke himself conceded that there was no point in establishing the proposed company in those circumstances - and seemingly there is no intention to do so) I consider that the contract has been frustrated. 305As to the provision of the funds in advance for the purposes of those funds being used for the purposes of the acquisition, similarly that purpose is not longer capable of fulfilment and in those circumstances there would in my view be no basis on which Mr Burke could resist a call for the refund of those moneys. (However, I accept that it would not necessarily be the case that business efficacy of the contract would require the implication of a term for the refund of the moneys in that event). (vii) Is there an apportionable claim? 306Grogan Webb have invoked, in defence to the claims made against them, the proportionate liability provisions of the Civil Liability Act . As noted by Barrett J in Reinhold v New South Wales Lotteries Corporation (No 2) [2008] NSWSC 187, the proportionate liability provisions of the Civil Liability Act have made significant changes to the law, reshaping the solidary liability available under older statutory schemes concerning concurrent liability (such as s 5 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW)) into a regime where concurrent wrongdoers are separately liable for that amount that reflects a proportion of the plaintiff's loss or damage and extending the class of claims different covered by the proportionate liability regime beyond actions in tort. 307Part 4 of the Civil Liability Act applies, relevantly, to claims for economic loss "in an action for damages (whether in contract, tort or otherwise) arising from a failure to take reasonable care" (or for contravention of s 42 of the Fair Trading Act 1987). Relevantly, s 34(1) and (2) provide that: 34(1) This Part applies to the following claims (apportionable claims): (a) a claim for economic loss or damage to property in an action for damages (whether in contract, tort or otherwise) arising from a failure to take reasonable care, but not including any claim arising out of personal injury, (b) a claim for economic loss or damage to property in an action for damages under the Fair Trading Act 1987 for a contravention of section 42 of that Act. ... (2) In this Part, a concurrent wrongdoer, in relation to a claim, is a person who is one of two or more persons whose acts or omissions (or act or omission) caused, independently of each other or jointly, the damage or loss that is the subject of the claim. 308Pursuant to s 34A, certain concurrent wrongdoers do not have the benefit of apportionment, those being excluded concurrent wrongdoers who either intended to cause the economic loss or damage to property that is the subject of the claim or fraudulently caused the economic loss or damage to property that is the subject of the claim (or where the civil liability of the concurrent wrongdoer is otherwise of a kind excluded by s 3B). Pursuant to s 34A(3), the liability of any other concurrent wrongdoer who is not an excluded concurrent wrongdoer is to be determined in accordance with the proportionate liability provisions. (Mr Griscti submits that the first and second defendants are not excluded concurrent wrongdoers within the meaning of s 34A of the Act and that there was no intention to cause the alleged economic loss. He notes that Mr Webb's evidence is that he thought he was acting in accordance with the directions provided on behalf of Mrs George (by Mr Burke). He submits that even if Mr Burke is an excluded concurrent wrongdoer this has no bearing on the position of Grogan Webb.) 309Pursuant to s 35 of the Act, there is proportionate liability for apportionable claims, such that: (1) In any proceedings involving an apportionable claim: (a) the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of the defendant's responsibility for the damage or loss, and (b) the court may give judgment against the defendant for not more than that amount. (2) If the proceedings involve both an apportionable claim and a claim that is not an apportionable claim: (a) liability for the apportionable claim is to be determined in accordance with the provisions of this Part, and (b) liability for the other claim is to be determined in accordance with the legal rules, if any, that (apart from this Part) are relevant. (3) In apportioning responsibility between defendants in the proceedings: (a) the court is to exclude that proportion of the damage or loss in relation to which the plaintiff is contributorily negligent under any relevant law, and (b) the court may have regard to the comparative responsibility of any concurrent wrongdoer who is not a party to the proceedings. (4) This section applies in proceedings involving an apportionable claim whether or not all concurrent wrongdoers are parties to the proceedings. (5) A reference in this Part to a defendant in proceedings includes any person joined as a defendant or other party in the proceedings (except as a plaintiff) whether joined under this Part, under rules of court or otherwise. ... 310Section 36 provides that contribution is not recoverable from a defendant against whom judgment is given under Part 4 as a concurrent wrongdoer in relation to an apportionable claim and such a defendant cannot be required to indemnify any such wrongdoer. 311Therefore, in the circumstances of the present case, for a claim against Grogan Webb to be an apportionable claim under s 34(1) of the Civil Liability Act, it is necessary that it be a claim for economic loss in an action for damages (whether in contract, tort or otherwise) arising from a failure to take reasonable care. 312"Economic loss" is not defined but would surely include a claim in respect of the loss suffered by the disbursement of funds held on trust for Mrs George. As to what is meant by a claim in damages, in Commonwealth Bank of Australia v Witherow [2006] VSCA 45, Maxwell P (considering the operation of the equivalent proportionate liability provisions in Victoria) held that this required a claim in damages as such and not a claim that for example in debt. Under the Civil Liability Act , the definition of "damages" includes any form of monetary compensation. It has been suggested that this could therefore include equitable compensation (see the article by Dr Vicki Vann, Equity and Proportionate liability, (2007) 1 Journal of Equity 199, 210-11, to which reference was made in Reinhold and the article by Ms Alison Gurr, Accessory Liability and Contribution, Release and Apportionment, Melbourne University Law Review vol 34 2010). 313Ms Gurr notes that in other contexts "damages" have been interpreted to include equitable compensation (referring to Walsh v Permanent Trustee Australia Ltd (1996) 21 ACSR 213, 215-16 and the observation in Degorgiou v Dunn [No 2] (2005) 62 NSWLR 284, 290 at [213] by Barrett J that equitable compensation is sometimes referred to as a species of damages). 314Dr Vann suggests that the term 'damages' is likely to be interpreted strictly (referring to Witherow) and notes that: Many claims in equity are not for a predetermined amount. Some, however, may be able to be characterised as the monetary equivalent of property's worth, such as claims where rescission is no longer available because the subject property has been sold. Such a claim may not be a claim for 'damages'. Alternatively, it can be argued that many equitable claims seek 'specific performance' of the duty owed. The courts may possibly be prepared to exclude all equitable actions on the basis that claims for equitable relief are not claims for damages; however, the very clear formulation 'any form of monetary compensation' would make such a construction difficult. 315Dr Vann postulates a distinction in this regard between breaches of trust that call for the performance of the trust and breaches of trust that call for compensation. She notes that if a trustee causes damage to a trust fund, he or she can be called upon to repair the damage (and this would be compensation and would prima facie be covered by the term 'monetary compensation') but queries whether in the case of "substitutive compensation" (a monetary equivalent to property of which a person has been deprived or denied) this is appropriate. 316Here, the claim is expressed to be a claim for equitable compensation to restore to the beneficiary the trust funds paid out contrary to the terms of the trust. Mrs George seeks the recovery of the funds she deposited in the solicitors' trust account and interest on those funds. I consider that, having regard to the definition of "damages" in the Act, the words "in an action for damages" encompass the claims for equitable compensation that have been made. 317The critical issue in the present proceedings (for the defence based on an apportionable claim) is whether the claim against Grogan Webb (or the accessorial claim against Mr Burke) is one arising from a failure of Grogan Webb to take reasonable care. (Mr Burke clearly is a concurrent wrongdoer; the only question being whether the exclusion provision in s 34(1A) deprives Mr Burke of the benefit of apportionment (s 34A); in this regard Mr Griscti asserts that the evidence will not establish that Mr Webb intended to cause the alleged loss or that he caused the loss fraudulently.) 318Considering the requirement that the relevant liability must be one for economic loss arising from a failure to take reasonable care, in the context of claims for apportionment of liability (or contribution) between defaulting trustees and knowing assistants in that default, Ms Gurr notes that there are at least two possible interpretations of the requirement that loss must have arisen from a failure to take reasonable care: first, that it may refer only to a breach of an express duty to take care (such as a trustee's express duty to exercise reasonable care when administering a trust) or, second, that it may also include the equitable duty of care owed by some fiduciaries, such as directors. (She queries whether, if it includes the latter, third parties can be accessories for assisting in or inducing such a breach - see discussion at p 514). In particular, reference is made by Ms Gurr to the suggestion by Sandip Mukerjea, " Proportionate Liability for Economic Loss: The Story So Far " (2008) 19 Insurance Law Journal 279, 280-4, that, at a minimum, the proportionate liability provisions apply to a breach of an equitable duty of care. 319Reference is also made by Ms Gurr to dicta in two Victorian cases in this regard. First, the observation in obiter by Buchanan JA in Pearsons Barristers and Solicitors v Avison [2009] VSCA 54 (27 March 2009) [30] that "Although the point need not be decided, I doubt that a claim for breach of trust, albeit one seeking equitable compensation, falls within the description in s 24AF(1) of the Wrongs Act as 'arising from a failure to take reasonable care'" and, second, the view expressed by Croft J in Main Road Property Group Pty Ltd v Pelligra & Sons Pty Ltd [2010] VSC 5 at [29], that it was 'arguable' that the claimed breaches of fiduciary duties were apportionable claims for the purposes of the Victorian Wrongs Act. 320Mr Kelly submits that the claims for breach of trust by Grogan Webb and the accessorial liability of Mr Burke do not arise from a failure to take reasonable care within the meaning of s 34(1)(a) of the Civil Liability Act , rather that they arise from a breach of trust and are therefore not apportionable claims. (Alternatively, it is submitted that the breach of trust and accessorial liability claims are excluded from the operation of Part 4 by s 34A(a) and/or (b) because they arise out of intentional acts in which trust property was wilfully expropriated and/or an equitable fraud on the power to deal with trust funds.) 321In this regard, Mr Griscti emphasises that there is a claim on the pleadings (not abandoned) in negligence (and of course this must clearly be a claim that if sustained would arise from a finding that there had been a failure to take reasonable care). In Reinhold , Barrett J considering the threshold question as to whether the proportionate liability regime created by Pt 4 of the Civil Liability Act 2002 applied to the liability of the defendants in relation to the cancellation of the lottery ticket in question, said at [18]-[22]: There was some debate before me about the construction of Pt 4 of the Civil Liability Act and the fact that its provisions are, in terms, concerned with "claims", not liability as such. But I am of the opinion that the several references to "claims" are references to determined or decided claims that have been established as sources of liability. ... It seems to me clear that a person will be a "concurrent wrongdoer" only if the court makes findings about the existence of "loss or damage" and about which acts or omissions "caused" the loss or damage. It is only when those findings are made that it is possible to identify, as contemplated by s 34(2), each person whose acts or omissions, as found, "caused" the "loss or damage", as found. At that point, and not before, a person can be seen to be a "concurrent wrongdoer". The relevant "claim" - that is, the claim in relation to which the identified person is a "concurrent wrongdoer" - can only be the claim in respect of which the findings concerning loss or damage and causation are made. That claim is, of necessity, a claim already litigated, not a pending or foreshadowed claim. Its nature and content (and, therefore, its status under s 34(1)) will be discoverable by looking at the findings that cause it to be determined as it is determined. If, on those findings, it is seen that the loss or damage (as established in "an action for damages") arose from a failure to take reasonable care and did not arise out of personal injury, the case will be within s 34(1)(a); and if it is seen that there was a contravention of s 42 of the Fair Trading Act, the case will be within s 34(1)(b). In either such case, the already litigated "claim" will be an "apportionable claim" because of s 34(1) and, if, on the findings made, the acts or omissions of several persons "caused" the "damage or loss" as found, the persons will be "concurrent wrongdoers". The need to know the outcome of the claim in order to apply Pt 4 is emphasised by s 34 A. The operation of that section - and, therefore, the ambit of Pt 4 as a whole - depends on the ability to know, among other things, whether a person "intended to cause" or "fraudulently caused" the "loss or damage that is the subject of the claim". These things can be judged only after the loss or damage and its causes have been identified through a process of fact finding and analysis. Viewed in prospect and in its pending state, a claim might allege an intentional or fraudulent act or omission, but it is impossible to say, at that point, whether any loss or damage was caused and, if it was, what caused it - in particular, whether it was intentionally caused or fraudulently caused. On this basis, the nature of a "claim", for the purposes of Pt 4, will be determined by what the court has decided in the case, not by what might be prayed or pleaded in an initiating process or points of claim. In short, "claim" refers to a claim as proved and established, not a claim as made or advanced. 322His Honour noted that this approach accorded with that taken by Middleton J to the analogous Victorian legislation in Dartberg and that the decision of Bryson AJ in Chandra v Perpetual Trustees Victoria Ltd [2007] NSWSC 694 ; (2007) ANZ ConvR 481 reflected the same approach. In Chandra, Bryson AJ proceeded on the basis (at [110] and [111]) that the question of "concurrent wrongdoer" status was to be addressed and determined by reference to findings as to liability and causation already made in the proceedings. 323In Dartberg Pty Ltd v Wealthcare Financial Planning Pty Ltd (2007) 164 FCR 450, 458, Middleton J said (at [30]): Where a claim brought by an applicant does not have as one of its necessary elements any allegation of failing to take reasonable care, an additional enquiry into the failure to take reasonable care may become relevant in the course of a trial to determine the application of Pt IVAA. Even though the claims in this proceeding themselves do not rely upon any plea of negligence or a "failure to take reasonable care" in a strict sense, a failure to take reasonable care may form part of the allegations or the evidence that is tendered in the proceedings. At the end of the trial, after hearing all the evidence, it may be found that Pt IVAA applies. 324Barrett J concluded in Reinhold that "a claim may properly be regarded as one "arising from a failure to take reasonable care" if, "at the end of the trial", the evidence warrants a finding to that effect and regardless of the absence of "any plea of negligence or a 'failure to take reasonable care'". The nature of the claim, for the purposes of Pt 4, is to be judged in the light of the findings made and is not determined by the words in which it is framed." and said at [31]-[32]: There is good reason in policy to take this approach. The clear objective of Pt 3 is to abolish "solidary liability" under which all defendants found guilty of relevant breach are jointly and severally required to meet an undissected verdict. The provisions reflect legislative views about allocation of risk as between plaintiffs and defendants. The New South Wales Attorney-General in office at the time of the enactment of Pt 3 made this clear when he said of the new provisions: [I]n cases of negligence not involving personal injury, considerations of prejudice to plaintiffs weigh less strongly than the value of limiting liability of defendants according to their share of responsibility, and as a consequence the CLA(PR) Bill proposes in Part 4 the introduction of proportionate liability in the context of economic loss and property damage. (The Honourable Robert Debus MP, "Tort Law Reform in New South Wales: State and Federal Interactions" (2002) 8 UNSW L Rev 13). The provisions of Pt 4 are compulsory. They change substantive rights, so that a plaintiff's ability to obtain an adjudication of joint and several liability is removed where the circumstances are of the type to which the alternative regime of proportionate liability is applied. A case no doubt needs to be pleaded and proved by one or more defendants so as to engage the statutory provisions. But it will be the findings ultimately made that determine whether the statutory conditions compelling the court to adopt the proportionate approach are satisfied. 325In my view, irrespective of the fact that the failure to take reasonable care may have contributed to or been the underlying cause of the conduct that amounted to the relevant breach of trust, the principal liability here is a liability for breach of trust by the payment out of the funds other than in accordance with the express purpose trust on which they were held. This breach of trust would have occurred (and the liability arises) whether or not there had been a failure on the part of the solicitors to take sufficient care in complying with the directions that were given to them. Therefore I consider that the liability, as found, is not one predicated on or arising from a failure to take reasonable care and this is not an apportionable claim. I consider below what the position would have been had my conclusion been otherwise. (viii) if there is an apportionable claim, what is a just apportionment of any liability between the defendants 326Mr Griscti submits that if Mrs George succeeds then it follows on any view that Mr Burke has been the primary cause of her loss since it was he who negotiated with Mr George with the result that a deal was struck for the payment of $150,000; he who arranged for Mr George to pay the money into the Grogan & Webb trust account; he who instructed Mr Webb that the funds were his property; and he who directed the funds to be disbursed for purposes other than the acquisition. 327Mr Kelly submits, to the contrary, that if it is necessary for Mrs George to fall back on the negligence and contract claims, then by operation of s 35 of the Act, Grogan Webb and Burke are liable for the same loss and damage in such proportion as the Court considers just having regard to the extent of their responsibility and that, as the fund was in a solicitor's trust account, the solicitor had overall legal responsibility for the fund and the power to ensure that moneys were not paid away in breach of trust (no matter what Mr Burke may have said in order to encourage the payment of their fees from trust, as well as his other debts), the major causal and legal responsibility for any apportionable loss lies with Grogan Webb and there should be judgment accordingly (with Grogan Webb left to recover their loss from Burke, at their own expense, on the cross claim). 328When assessing the appropriate contribution under the proportionate liability legislation, reference it seems that the discretion is not limited to considering the 'responsibility' of each party for the loss ( Reinhold at [57]-[58]); what may also be taken into account is whether the concurrent wrongdoer has profited from its actions which caused the loss. Here, Mr Burke has clearly benefited from the payments out (though to a lesser extent so has Grogan Webb in the satisfaction of its claim for its fees against Mr Burke). 329In Reinhold , when considering the approach to apportionment, Barrett J said at [60] - [61] that: Because the legislature has seen fit to adopt in s 35(1)(a) of the Civil Liability Act a form of words concerning apportionment which is almost indistinguishable from that which has long been used in statutes concerning contributory negligence and contribution among tortfeasors, I consider it appropriate to follow approaches to the meaning of those words developed and sanctioned by appellate courts. I therefore approach the matter before me on the basis that my principal task is to make findings about (a) the degree of departure from the standard of care of the reasonable man, as regards the causative conduct of Lotteries and the Newsagents; and (b) the relative importance of the acts of Lotteries and the Newsagents in causing the economic loss suffered by Mr Reinhold, making a comparative examination of the whole conduct of each of Lotteries and the Newsagents in relation to the circumstances in which the loss was sustained. I also approach the matter on the basis that, if either party has profited from its own actions causative of the plaintiff's loss and the other is or will be out of pocket, that imbalance can and should be brought into account as an element of the respective degrees of responsibility. 330In Vella , Young CJ in Eq (as his Honour then was) says at [578]: The operation of s 35 was considered by Palmer J in Yates, where his Honour stated at [94]: How the Court is to assess what is 'just' is not explained. The Court must exercise a large discretionary judgment founded upon the facts proved in each particular case. The principles upon which the Court will exercise this discretionary judgment will come to be developed on a case-by-case basis. However, it seems clear enough that the policy of Pt IV is that a wrongdoer who is, in a real and pragmatic sense, more to blame for the loss than another wrongdoer should bear more of the liability. This calls for the exercise of the same kind of judgment as the Court exercises in apportioning responsibility as between a defendant sued in tort for negligence and a plaintiff who, by his or her own negligence, has been partly responsible for the injury. 331There has been academic commentary as to the responsibility those assisting in a breach of trust should bear. In her article, Ms Gurr refers, for example, to the suggestion by Charles Harpum writing in " The Stranger as Constructive Trustee (Part 1) " (1996) Law Quarterly Review that someone knowingly inducing such a breach should bear the primary responsibility for any ensuing loss except if the trustees were parties to a fraudulently induced breach of trust (in which case it is suggested that the trustees may be equally accountable). Ms Gurr refers in this regard to Syrimi v Hinds (1996) 6 NTLR 1 as perhaps reflecting the ultimate responsibility for the loss. Further, it is noted that Professor Finn (as his Honour then was) writing " The Liability of Third Parties for Knowing Receipt or Assistance: 'Should Not My Loss Be Your Loss ?'" in Donovan W M Waters (ed), Equity, Fiduciaries and Trusts 1993 (Carswell, 1993) 195, at 212-17, has suggested that third parties' degree of participation in the wrongdoing should be weighed against their level of knowledge. 332Had the issue of apportionment arisen (and noting that, as an excluded wrongdoer in light of the conduct I have found on his part in intentionally causing the loss to be suffered, Mr Burke would be liable for the whole of the loss without any reduction), I would have balanced on the one hand the fact that had it not been for the payment out by Grogan Webb the direction of Mr Burke would have caused no loss (and thus the final point at which the loss could have been avoided was the point at which Grogan Webb bears ultimate responsibility) and that if one looks at the standard of care expected of a trustee, the failure to make enquiries when a direction so obviously outside the expressly stated purpose was received seems to be a not insignificant departure against the fact, on the other hand, that Mr Burke appears to have been the architect of the arrangements pursuant to which the funds were distributed contrary to the intent of Mrs George and that he obtained the benefit of the distribution of the funds (though Grogan Webb also did to an extent in the sense that the claim against Mr Burke for fees was thereby discharged, in circumstances where they knew he was otherwise short of funds). Recognising that this is largely a discretionary judgment and balancing those factors, in the end I would have held that the proportionate liability to be borne by Grogan Webb was 60%. (ix) Cross-claim by Grogan Webb 333Mr Griscti submits that, with regard to the misleading and deceptive conduct claim, the substance of the relevant representations are admitted by Mr Burke in his defence to cross claim (referring to [5] and [12]) and confirmed in evidence that he instructed Mr Webb that the $150,000 was his property. Hence, it is said that if, in fact, the agreement reached between Mr George and Mr Burke was that the funds were to be held on trust, the representations were misleading and deceptive. I agree. 334The Fair Trading Amendment (Australian Consumer Law) Act 2010 No 107 contains the relevant transitional provisions: 16 (1) Subject to the other provisions of this Part and the regulations, this Act, as in force before the commencement of the ACL, continues to apply to: (a) acts or omissions that occurred before that commencement, and (b) direct commerce contracts (within the meaning of Division 3 of Part 4 before its repeal by the amending Act) entered into before that commencement, and (c) other contracts entered into before that commencement, and (d) a lay-by (within the meaning of section 60E before its repeal by the amending Act) entered into before that commencement. (2) Section 101 of the ACL does not apply in relation to services to the extent that they were supplied before the commencement of the ACL. (3) The reference in section 224 (2) (c) of the ACL to proceedings under Chapter 4 or Part 5-2 includes a reference to proceedings commenced before the commencement of the ACL: (a) under or in relation to Part VC or VI of the Trade Practices Act 1974 of the Commonwealth, or (b) under Part 6 of this Act. 335It is submitted, and I accept, that the relevant representations were made in trade or commerce. Mr Young, however, submits that Mr Webb has suffered no loss as a result of any such representation because the cause of his loss was his misreading of the email, not any earlier oral representation as to whether the funds belonged to Mr Burke. In that regard, it seems to me that Mr Webb's reading of the email was necessarily affected by the understanding he had as to the transaction between Mr Burke and Mr George (based on his discussion with the former) namely that Mr Burke had done a deal with the latter. Thus it seems to me that the oral representation was a cause of the loss sustained by Grogan Webb. I accept that Mr Webb relied on Mr Burke's representation that the funds belonged to him when distributing the funds as directed and hence that Grogan Webb having incurred a liability as a result of the distribution of the funds in circumstances where those actions were undertaken by reason of the alleged misleading and deceptive conduct, Grogan Webb is entitled to be indemnified by Mr Burke for the amounts now payable by Grogan Webb to Mrs George. 336Alternatively, the claim is based on restitution: namely that Mr Burke, having had the benefit of the funds that were paid under a mistaken belief that there was authorisation to do so, are recoverable from him. Again, it is unnecessary for me to determine this issue but had it arisen I would have considered that it would be unjust for Mr Burke to retain the enrichment represented by the discharge of his debts in circumstances where that occurred as a result of the mistaken belief (induced by him) that he had a beneficial entitlement to the money and could direct its disbursement unfettered by the express limitations placed on its use by Mrs George. 337Finally, it is submitted that if there is a liability to Mrs George, then the actions of both Grogan Webb and Mr Burke have caused the same loss, namely the disbursement of the alleged trust funds, and Grogan Webb are entitled to equitable contribution from Mr Burke. 338In Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41, 97 Mason J noted that the rules in relation to accessorial liability reflect equity's preoccupation with protecting beneficiaries, who are vulnerable to abuse by the fiduciary due to the fiduciary's special opportunity to exercise power or discretion to the detriment of that other person and that they are intended to deter third parties from assisting or inducing breaches of trust. In Jacobs' Law of Trusts [2117]), it is suggested that the rules developed in equity for contribution as between trustees liable for breach of trust may also be applied to contribution claims as between defaulting trustees and those knowingly assisting in the breach of trust. 339Insofar as Grogan Webb has sought as against Mr Burke contribution in equity, a right to contribution generally arises where a wrongdoer pays more than his or her share of a judgment in satisfaction of a common obligation ( Albion Insurance Co Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342 at 350-1). However, there is debate as to whether that contribution can be other than equal. 340Equitable contribution is available where two parties have an obligation or liability to make good the one loss ( Albion per Kitto J, at 350). In Albion , his Honour noted that persons who are under co-ordinate liabilities to make good the one loss must share the burden for that loss pro rata. His Honour made reference to the statement in Dering v Winchelsea (1787) 1 Cox Eq Cas 318, at 321 that contribution is 'bottomed and fixed on general principles of justice'. The liability to contribute arises where one party has paid or is liable to bear more than that party's fair share of the loss. Giles JA in James Hardie & Co v Wyong Shire Council (2000) 48 NSWLR 679: What underlies the notion is not a common liability to be sued but a common risk the burden of which should, if it falls unequally, be adjusted. 341The prima face position is that in such a case each co-obligor should contribute equally ( Armstrong v Commissioner of Stamp Duties (1967) 69 SR (NSW) 38, at 43), reflecting, it is said, the maxim that equality is equity. See for example Fico v O 'Leary [2004] WASC 215 (11 October 2004) [247]-[248], where Heenan J applied the principle of equal contribution and Sky Channel Pty Ltd v Tszyu [No 2] [2000] NSWSC 1150 where Young J (as his Honour then was) dismissed an argument in favour of proportionate contribution. 342Meagher, Gummow & Lehane in Equity Doctrine and Remedies, 4th ed, Butterworths, 2002, suggest that there cannot be an unequal or proportionate contribution ordered, having said (at [10-055]) that the fact that parties must be equally liable for the same obligations underlies the inability to apportion liability between them other than equally (contrary to cases of contribution between tortfeasors pursuant to statute). In On Equity , the authors suggest that this may be possible though the cases in which it would occur would be rare. The authors note that the person upon whom a disproportionate burden has fallen may look to the other for contribution (citing McLean v Discount & Finance Limited , at 341) such that no one who owes a common obligation pays more than his or her share of the burden (citing Burke v LFOT Pty Limited (2002) 209 CLR 282, at 289); preferring the term "common obligation" to "co-ordinate liability" (as referred to by McHugh J in Burke ). 343What is emphasised by the authors of On Equity is that equality in this context means "proportional" contribution - either equal or proportionate where the amount of liability is different (referring to Burke and Mahony v McManus (1981) 180 CLR 30, at 38). Reference is made in particular to the dicta of Kirby J (in his dissenting opinion in Burke ) as to rateable proportions where the degree of culpability is unequal (at 324-326). The authors go on to note, however, that the court will not lightly depart from its rule of equal contribution. 344In Burke , Kirby J stated (from [174]): In cases of unequal culpability, a question arises as to whether equitable doctrine has moved on so as to recognise (as statutory entitlements to contribution have done) that a court ordering contribution may apportion the contribution of the co-obligors in a just and proportionate way. Observations favourable to this possibility have been made in Australian courts. The weight of authority, and perhaps the history of contribution to this time, appear to be against unequal apportionments. Given the purpose and character of contribution as an equitable remedy, I am unconvinced that, as a matter of principle, rateable apportionment in differing amounts is alien to the notion of contribution. I incline to the view that equity aids "the ascertainment of what would be a just contribution". If unequal contributions could be ordered, proportionate to the differing responsibilities of the co-obligors, that facility could, in some circumstances, solve the types of argument that were advanced for Mr Burke in this appeal. It would permit adjustment of contributions by reference to considerations such as culpability, causation and notions of unjust enrichment. Any other view will tend, in particular cases, to produce artificial and unjust outcomes. It would effectively reserve contribution to cases of exact equivalence in the responsibilities of co-obligors. In life, such exact equivalence will often be missing. It would be artificial, for example, for equity to provide contribution in cases of exact equivalence but to deny it where, say, it would be just and equitable to apportion 40, 30, or 10 per cent of the common obligation to one or more co-obligors. If some, but not all, co-obligors are insured, or entitled to an enforceable personal guarantee, equity has not withheld relief by way of contribution. If double insurance is not for precisely the same risks, but each policy covers the particular loss in question, contribution may be ordered. If insurance of the same risks exists but for different limits, contribution is available. Where two guarantors have promised to redeem a debt, but the exposure of one is subject to an applicable cap or limitation, it is unpersuasive to say that equity cannot fashion a rateable contribution. Statute now permits it. And equity, like the common law, now operates in a universe of statute. In my view, equity may therefore sometimes partake of relevant characteristics adopted by analogy from statute. Equitable remedies, such as contribution, should be developed by the courts to meet new and modern needs. In developing equitable principles to fit the modern world, courts, including this Court, should look beyond the exposition of the principles in old cases or texts that necessarily reflect the often rigid legal environment and judicial disposition of past times. Instead, they should search for the underlying purpose of the old rule: concepts, not detail. Equitable remedies need to be fashioned to meet new and changing circumstances. Contribution is one such remedy. Our admiration of equity's past is best expressed by being alert to assure its present operation and future relevance. In this case it is not necessary to go further down this path. With the primary judge and the majority in the second Full Court, I am of the view that LFOT's misrepresentations and Mr Burke's negligence were each effective causes of Hanave's loss. Accordingly, "an equal apportionment appears a rational conclusion". (footnotes omitted) 345The observations favourable to the possibility that a court may apportion the contribution of the co-obligors unequal proportions, to which reference was made by Kirby J in Burke , are as follows. 346In Jones v Mortgage Acceptance Nominees (1996) 63 FCR 418, at 422; (1996) 142 ALR 561, Davies J stated (at 564 - 565): The principle of contribution as enunciated in Albion Insurance , requires that there be a common or coordinate obligation. See also Smith v Cock [1911] AC 317 at 326 and Meagher, Gummow and Lehane, Equity: Doctrines and Remedies , para 1006. In the present case, such an obligation exists for all the respondents who are liable and Mr Bester, who is liable as a cross-respondent, have been found to have contributed to the loss suffered by the applicants and for which the applicants are to receive a sum by way of damages or equitable compensation. This common or coordinate liability is not destroyed by the fact that the applicants chose to frame their claim against Mr Done by reference to his fiduciary duty rather than by reference to his duty of care or by reason of the fact that the applicants, who had originally joined Mr Bester as a respondent, discontinued against him and chose to call him as a witness. Matters such as this do not affect the essential character of the obligation. Common law and equity earlier refused relief by way of contribution in a case such as this not because of the absence of a common or coordinate obligation but because it was considered, as a matter of principle, that such relief should not be granted to wrongdoers. In this the common law and equity followed Roman law. Spence, Equitable Jurisdiction of the Court of Chancery , American ed, 1846, vol 1, pp 663-4 put the matter thus: By the Roman law no action could be brought by one wrongdoer against another, in respect of a tortious Act, in which both had been engaged: `` Si duo dolo malo fecerint invicem de dolo non agent '', Dig iv 3.36. This doctrine was adopted by the Court of Chancery ( ``Fraus non est fallere fallentem '', Cary, p 18), and it has been considered as a sufficient answer to a claim for contribution by one wrongdoer against another: Attorney-General v Wilson 1 Craig & P 28; Pearson v Skelton 1 Mees & Wels 504; Merryweather v Nixon 8 TR 186. Now that the principle enunciated in the cases mentioned in that passage, particularly Merryweather v Nixon , has been abrogated by statute, and the justice of an order for contribution has been recognised, there should remain no bar to the application of the general law of contribution to a case such as the present. Thus, if there be a technical problem with the word ``liable'' where it first appears in s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act, and I think there is not, there is no cogent reason why equity should not aid the identification of the tortfeasors who ought to contribute and the ascertainment of what would be a just contribution. That is precisely what equity did when, because of problems arising from procedural rules and the non-joinder of parties in common law actions, an appropriate order as to contribution could not be made by a common law court: see Spence, p 663. I was not referred to any final judgment in the Federal Court where a like issue has been considered. However, in Re La Rosa; Ex parte Norgard v Rodpat Nominees Pty Ltd (1991) 31 FCR 83 ; 104 ALR 237; Trade Practices Commission v Manfal Pty Ltd (No 3) (1991) 33 FCR 382 ; 105 ALR 520; Dorrough v Bank of Melbourne Ltd (1995) ATPR 46-152 and Austotel Management Pty Ltd v Jamieson (1996) ATPR 41-454, judges of this court held that the general law of contribution may apply to cases of this kind. As Lee J said in Manfal at FCR 385 ALR 523: The categories of rights of contribution are not closed ... Where there is a community of interest between parties in respect of a matter of liability and the delivery of a benefit to one of those parties by the enforcement of the burden of that liability against the others, a right of contribution may arise. It follows that I am satisfied that Mr Done is entitled to an order for contribution under s 5(1) of the Law Reform (Miscellaneous Provisions) Act and that, if I were wrong in that view, Mr Done would be entitled to contribution under the principles of the common law and of equity. 347In Acohs Pty Ltd v RA Bashford Consulting ; (1997) 144 ALR 528 Merkel J held that such apportionment under the general law of contribution was available (referring to Albion Insurance and Jones v Mortgage Acceptance Nominees) . There, Merkel J stated (at 22 - 23): The Court has a wide discretion to make appropriate orders for contribution between wrongdoers to ensure that each party liable in respect of the same damage makes a just contribution by paying a proper share towards discharging the common obligation: see Albion Insurance Company Ltd v Government Insurance Office of New South Wales (1969) 121 CLR 342 at 350-1 per Kitto J and Jones v Mortgage Acceptance Nominees Ltd (1996) 142 ALR 561 at 563-5 per Davies J. On the facts I have found, I am satisfied that Bialkower was the primary, but not the sole, cause of the breach of s52 by RMS and RMC. McCann misunderstood the information initially communicated by Bialkower and failed to adopt Bialkower's suggestion that Infosafe not be mentioned in the item. Bialkower had the opportunity, but failed, to correct McCann's misunderstanding when the proposed article was facsimiled to him. In these circumstances I am satisfied that RMS and RMC are entitled to a substantial contribution from Bialkower in respect of the damages and any costs awarded against them in relation to Acohs' Application. In my view that contribution should be 60%. 348On appeal in Bialkower v Acohs Pty Ltd & RA Bashford Consulting Pty Ltd (1998) 83 FCR 1; (1998) 154 ALR 534; (1998) 41 IPR 33, t he Full Federal Court (Beaumont, Hill and Sundberg JJ), upheld the rateable apportionment which had been made by the primary judge but did so under the Wrongs Act 1958 (Vic) . The Full Court stated (at 545); The general law doctrine of contribution requires that the parties between whom it takes place be under coordinate liabilities to make good the one loss. Coordinate liabilities are those which stem from a common obligation. We agree with Davies J in Jones that joint tortfeasors were earlier refused relief by way of contribution, not because of the absence of a common or coordinate obligation, but because it was thought that such relief should not be granted to wrongdoers. We need not decide whether the principle of contribution is limited to cases where there is a common obligation or a coordinate liability, or whether contribution can be ordered in any case where the circumstances give rise to an equity in favour of a person who has suffered a loss because of an act intended to benefit others: see Cummings v Lewis (1993) 41 FCR 559 at 592-9. It is not necessary in order that liabilities be coordinate or common that parties be jointly liable. The liability may be joint, joint and several or several: Dering v Lord Winchelsea (1787) 1 Cox Eq Cas 318; Meagher, Gummow and Lehane, Equity - Doctrines and Remedies (3rd ed, 1992) pp 289-90. It is sufficient if two people are both liable in respect of the one loss, even if they are liable on different causes of action: Street v Retravision (NSW) Pty Ltd (1995) 135 ALR 168 at 176; Jones at 564. There is no contribution between persons each liable in respect of a distinct portion of the one obligation. They do not share their obligation in respect of the same subject matter. The position is otherwise where persons are liable upon the whole of an obligation but with a limitation upon the quantum recoverable. Where the limitation in amount differs between the obligors, each is liable to contribute rateably according to his undertaking: see Ellesmere Brewery Co v Cooper [1896] 1 QB 75 and Retravision at 177. One difference between contribution at law and in equity was that at law an obligor could not maintain an action until he had actually paid more than his just proportion. Equity, however, acted quia timet, and ordered contribution upon entry of a judgment against the plaintiff for the debt or liability concerned, even though the judgment was unsatisfied: see Albion at 351. 349In Bialkower , while the Full Court reserved the question as to what would be the position under the common law, it made the following obiter observations, questioning the power of a court to award apportionment unequally (at 546): However, despite the observation of Davies J in Jones at 565 that he could see no reason why equity "should not aid ... the ascertainment of what would be a just contribution", we doubt whether the general law of contribution authorises an apportionment such as that made by the primary judge. Contribution is "founded on equality" ( Albion at 351), though it is true that "equality" in the maxim "equity is equality" is not literal equality, but proportionate equality: Re Steel (dec'd) [1979] Ch 218 at 225-6. Equality was the basis of the doctrine of contribution between trustees liable to make good a breach of trust: Jacobs' Law of Trusts in Australia (6th ed, 1997) p 644. If one paid more than his share he could claim contribution from the others. In exceptional cases the rule of equal contribution was replaced by a right on the part of one trustee to obtain an indemnity from the others. But, according to Snell , until the intervention of statute (Civil Liability (Contribution) Act 1978 (UK) ss 1(1), 6(1) and 7(3)) there was no intermediate position between these two extremes: Snell's Equity (29th ed, 1990) p 296. And see Jacobs at 644. The matter was not argued before us, and since the apportionment can be supported by s 23B of the Wrongs Act, we need not decide the issue, which will be a live one in jurisdictions such as New South Wales which do not have a provision such as s 23B. (emphasis added) 350In Duke Group Ltd (In Liq) v Pilmer (1998) 27 ACSR 1, at 495-496. at 495-496, the primary judge ordered contribution in unequal portions (from 383); the proceedings against Quilty and Singleton and the first defendants claim indemnity or contribution by reason of breach of fiduciary and statutory duties. The same basis of claim is also made against Harold Abbott, Lee-Steere and Somes as well as a claim in negligence, it being alleged that they were in breach of a duty of care to the first defendants. No proceedings for indemnity or contribution have been instituted by any of the director defendants against the first defendants. It has been seen that the claims against the director defendants for breach of fiduciary and statutory duties involve conduct which is clearly tortious even though the conduct of Quilty and Singleton has not been categorised in that way. An example is that all of the director defendants are alleged to have been in breach of the duty to exercise a reasonable degree of care and diligence in the exercise of their powers and the discharge of their duties. However, they are duties which the director defendants owed to Kia Ora, not to Nelson Wheeler Perth. ... [his Honour then made findings regarding the proportional liability as between the defendants] ... Section 25 of the Wrongs Act 1935 (SA) provides for contribution between joint tort-feasors, which is an apt description of the first defendants and the director defendants. However, there is no allegation of any liability in tort against Quilty and Singleton. Also, there is no allegation of liability in tort on the part of Harold Abbott, Lee-Steere and Somes to the plaintiff. Nonetheless, there has been no suggestion that the first defendants are not entitled to contribution from the director defendants as a matter of law. Their conduct clearly constitutes a tort and s 25 provides for contribution where damage is suffered by any person as a result of a tort. It is appropriate to categorise all of the director defendants as tort-feasors. On that basis, I apportion responsibility for the loss sustained by the plaintiff as indicated and the first defendants are entitled to contribution accordingly. As far as I can determine, the director defendants have not formally sought contribution from the first defendants or from each other through reciprocal proceedings. I give liberty to each of them to apply in case they seek any order or judgment against the first defendants or any of the others of them to which, at this stage, they are entitled. 351This order was subject to a separate appeal, a point noted by the High Court in Pilmer v Duke Group Ltd (In Liq) [2001] HCA 31; 207 CLR 165; (2001) 75 ALJR 1067; 180 ALR 249, at 298-299, although the issue whether unequal apportionment may be made for equitable contribution was not discussed, and it was noted that in that case, any unequal apportionment was done under the Wrongs Act 1935 (SA). 352Ms Gurr, in her article referred to above, notes that there is some scope to argue for a proportionate approach to determining contribution claims involving accessories on the grounds that the equal contribution principle developed out of different relationships and is a rebuttable presumption (see p 497); contrasting the position of accessories to defaulting trustees with that of co-insurers and co-sureties whose liability arises because of their coverage of risk and referring to Morgan Equipment Co v Rodgers (1993) 32 NSWLR 467,477 (Giles JA) as an authority which suggests that the equal contribution rule is a rebuttable presumption. 353Insofar as there is a right of indemnity under general equitable principles of contribution where one wrongdoer has been induced by another to act wrongfully ( Burke at 294), this would provide Grogan Webb with another avenue for indemnity from Mr Burke for having assisted in (and on Mr Webb's evidence induced) a breach of their obligations as trustee. 354In the present case, the claim for equitable contribution arises because there has been a finding of liability on the part of Grogan Webb and that such liability is not an apportionable claim. In the circumstances, there is no need to determine the issue as to equitable contribution as I have found a liability on the part of Mr Burke to indemnify Grogan Webb for the full amount of the loss on the basis that this was caused by reliance on his misleading and deceptive representation as to his beneficial entitlement to the moneys in the trust account. Had it arisen, I would have applied the principle that the loss should be apportioned pro rata. Conclusion 355For the reasons set out above I find for Mrs George on her principal claim against Grogan Webb and on her claim for compensation having regard to the accessorial liability of Mr Burke in relation thereto. I find for Grogan Webb on its claim against Mr Burke for misleading and deceptive conduct. I make the following orders: 1. As against the first and second defendants an order that they pay equitable compensation for breach of trust by reason of the payment out of the funds held by them and impressed with an express purpose trust in the sum of $150,000 to the plaintiff plus interest up to and including 28 November 2011 at $41,953.77 and thereafter to the date of judgment at the applicable RBA cash rate + 4% pursuant to s 100 of the Civil Procedure Act 2005 (NSW)). 2. As against the third defendant an order that he is liable to pay to the plaintiff equitable compensation the sum of $150,000 plus interest as calculated in 1 above, under the accessorial liability principles in Barnes v Addy . 3. On the cross-claim order that the third defendant/cross-defendant indemnify the cross-claimants for the sums payable to the plaintiff in accordance with order 1 above. 356I consider that costs should follow the event. Subject to any submissions as to costs I will so order. ********** 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 December 2011