Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Lardis v Lakis [2018] NSWCA 113 Hearing dates: 21 July 2017 Decision date: 24 May 2018 Before: Macfarlan JA at [1]; Meagher JA at [2]; White JA at [74] Decision: Appeal dismissed with costs. Catchwords: REAL PROPERTY – voidable dispositions – intent to defraud creditors – Conveyancing Act 1919 (NSW), s 37A – where husband transferred 49% interest in residential property to wife for stated nominal consideration – whether sufficient evidence of motive to justify finding of intent EVIDENCE – witness evidence – cross examination – rule in Browne v Dunn – where no cross examination directed to credibility as distinct from reliability of witness' evidence – whether sufficient challenge to accuracy and reliability of witness' version of events – whether primary judge permitted to reject evidence of witness Legislation Cited: Conveyancing Act 1919 (NSW), s 37A Supreme Court (Corporations) Rules 1999 (NSW), r 2.4 Cases Cited: Broughton v B & B Group Investments Pty Ltd [2017] VSCA 227 Browne v Dunn (1894) 6 R 67 Cannane v J Cannane Pty Ltd (In Liq) (1998) 192 CLR 557; [1998] HCA 26 Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 11 Marcolongo v Chen (2011) 242 CLR 546; [2011] HCA 3 MWJ v The Queen [2005] HCA 74; (2005) 80 ALJR 329 Regal Castings Ltd v Lightbody [2009] 2 NZLR 433 Texts Cited: JD Heydon, Cross on Evidence, (8th Aust ed 2010, LexisNexis) Category: Principal judgment Parties: Athena Lardis (Appellant) Edward Lakis (First Respondent) Amazon Pest Control Pty Ltd (in liq) (Second Respondent) Michael Victor Lardis (Third Respondent) Representation: Counsel: C Birch SC, B DeBuse (Appellant) R Newlinds SC, N Bender (First and Second Respondents) Solicitors: McGrath Dicembre & Co (Appellant) Clayton Utz (First and Second Respondents) File Number(s): 2017/145647 Decision under appeal Court or tribunal: Supreme Court Jurisdiction: Equity Citation: [2017] NSWSC 321 Date of Decision: 31 March 2017 Before: Sackar J File Number(s): 2016/256494 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Headnote [This headnote is not to be read as part of the decision] The third respondent transferred a 49% interest in a residential property (previously held as joint tenants) to the appellant (his wife) apparently for a nominal consideration in January 2013. In 2016, he was ordered to account to the second respondent (a company of which he had been a director and shareholder) in relation to claims assigned to the first respondent (the other director and shareholder of the second respondent). The first and second respondents then sought a declaration that the earlier transfer was voidable under Conveyancing Act 1919 (NSW), s 37A(1) as a voluntary transaction to defraud creditors. In her defence, the appellant alleged that her husband had agreed to transfer the property, when his dispute with the first and second respondents arose, in return for her agreeing to the use of their property as security for an advance of monies to meet legal and other expenses from the dispute. The appellant and third respondent gave evidence of the fact of that agreement being communicated to a solicitor in about April or May 2012. That solicitor gave evidence of that fact being communicated in February 2012. The primary judge found that the appellant and first respondent only agreed to the transfer in about September 2012, after the property had been mortgaged and they had become aware of the real risk of impending indebtedness arising out of imminent litigation with the first and second respondents. On that basis, his Honour declared the transfer void and made consequential orders to have the property reconveyed. The appellant appeals against that relief. Held (Meagher JA, Macfarlan and White JJA agreeing), dismissing the appeal: Meagher JA, Macfarlan and White JJA agreeing: i. The primary judge had a sound basis for rejecting the solicitor's evidence as to events five years earlier, which was not supported by any contemporaneous documents, inconsistent with some of those documents, not easily reconciled with the objective facts and not consistent with the evidence of the appellant and third respondent: at [61]. ii. It was not necessary for the evidence to establish or the primary judge to find that the apprehended likely claims would exceed the value of the third respondent's net assets otherwise available to creditors; the fact of the claims against the third respondent, as well as a potential liability for legal costs, both in the winding up and any subsequent proceedings, was sufficient evidence of motive to justify the finding made: at [72]. White JA: iii. Having regard to the limited scope of the cross-examination of the solicitor, the findings that cast doubt on the veracity as distinct from the reliability of his evidence were not open to the primary judge and unfair to the witness, but that conclusion does not affect the fate of the appeal: at [77]. Judgment 1. MACFARLAN JA: I agree with Meagher JA. MEAGHER JA: Introduction 1. The ultimate issue in this appeal is whether the transfer from the third respondent (Mr Lardis) to the appellant (Mrs Lardis) of a 49% interest in their residential property in Dolls Point was a voidable alienation of property with intent to defraud creditors within Conveyancing Act 1919 (NSW), s 37A(1). The primary judge (Sackar J) held that it was: Edward Ted Lakis and Anor v Michael Victor Lardis and Anor [2017] NSWSC 321. In a subsequent judgment, his Honour declared that transfer to be void and made consequential orders to have the property reconveyed: [2017] NSWSC 561. 2. That relief was sought by the first respondent (Mr Lakis) and the second respondent (Amazon), a trading company of which Mr Lardis and Mr Lakis had been directors and equal shareholders. On the application of Mr Lakis, Black J ordered that Amazon be wound up in December 2012: In the matter of Amazon Pest Control Pty Ltd [2012] NSWSC 1568. The transfer between Mr and Mrs Lardis, previously owners as joint tenants, was registered in late January 2013. Each of the directors later took an assignment of Amazon's claims against the other for breach of directors' duties. In proceedings to enforce those assigned claims, Mr Lardis was ordered by Young AJA to account to Amazon for $1,090,076.24 plus interest: Re Amazon Pest Control Pty Ltd [2016] NSWSC 609. That amount was amended under the slip rule to $1,069,125.73 plus interest: Re Amazon Pest Control Pty Ltd (No 2) [2016] NSWSC 1590. Seven days later, Mr Lardis was declared bankrupt on his own petition. 3. The registered transfer included an acknowledgment by Mrs Lardis of having received a nominal consideration of $1 for the conveyance. In her defence, she alleged that the transfer was pursuant to an agreement with her husband made "at or about the time the dispute between Mr. Lakis and Mr. Lardis arose", which could refer to a time as early as December 2011. Specifically, the transfer was alleged to have been made in return for her "agreeing to the use of the Dolls Point property as security for the advance of monies to Mr. Lardis to meet legal and other expenses" arising from that dispute. Furthermore, she alleged that the transfer was made to her "in good faith and without notice of any intention to defeat creditors". 4. Mr and Mrs Lardis gave evidence that agreement was reached in about April or May 2012 and communicated at that time to their solicitors, Pryor Tzannes & Wallis Solicitors (PTW). The primary judge rejected that evidence, and the evidence of Mr Macaulay of PTW that the arrangement was communicated to him in late February 2012. His Honour found that Mr and Mrs Lardis first agreed to the transfer in about September 2012, after the property had been mortgaged to the National Australia Bank (NAB) and after they had become "aware of the real risk of impending indebtedness arising out of the now imminent litigation [with Mr Lakis] …, and the possibility of being pursued by Amazon regarding allegations of impropriety that had been raised": Judgment [293], [377]–[379]. Mrs Lardis appeals against those findings and the conclusions drawn from them. Statutory provision 1. The issue between the parties arises under Conveyancing Act, s 37A, which provides: 37A Voluntary alienation to defraud creditors voidable (1) Save as provided in this section, every alienation of property, made whether before or after the commencement of the Conveyancing (Amendment) Act 1930, with intent to defraud creditors, shall be voidable at the instance of any person thereby prejudiced. (2) This section does not affect the law of bankruptcy for the time being in force. (3) This section does not extend to any estate or interest in property alienated to a purchaser in good faith not having, at the time of the alienation, notice of the intent to defraud creditors. 1. Whether an alienation of property is made with intent to defraud creditors is a question of fact to be determined in all the circumstances. The requisite intent is "an intention to hinder, delay or defeat creditors", as distinct from an animus towards or motive of causing harm to creditors: Regal Castings Ltd v Lightbody [2009] 2 NZLR 433 at 456–457 (Blanchard and Wilson JJ), adopted in Marcolongo v Chen (2011) 242 CLR 546; [2011] HCA 3 at [32] (French CJ, Gummow, Crennan and Bell JJ). Absent direct evidence, that mental state may be inferred where the hindrance, delay or defeat of creditors is the necessary consequence of a voluntary settlement. To that extent, the absence of consideration is prima facie evidence of an intent to defraud creditors: Marcolongo at [25], citing JD Heydon, Cross on Evidence, (8th Aust ed 2010, LexisNexis) at 121 [1600]. Background facts The dispute between Mr Lardis and Mr Lakis 1. From May 2000, Mr Lardis and Mr Lakis were the equal shareholders and directors of Amazon, which operated a pest control business. In about 2007, they jointly purchased a property at Rosebery from which Amazon carried on business. On 8 December 2011, a solicitor for Mr Lardis (Mr Anderson) wrote to Mr Lakis that his client believed Amazon to be "unable to pay its debts as they fall due" and intended to have it wound up. The following day, a solicitor for Mr Lakis (Mr Spackman) wrote to Mr Lardis demanding an undertaking to refrain from having an administrator or liquidator appointed and Mr Lardis' consent to a review of Amazon's books by a forensic accountant. The letter also alleged that Mr Lardis had withdrawn money from Amazon's bank account and intended to divert Amazon's business to his newly registered company, Amazon Pest Management Pty Ltd. It concluded with a reservation of Mr Lakis' rights in respect of further action against Mr Lardis including "an action against you personally for damages as a result of any breach of your fiduciary duties". 2. Mr Lardis deposed that his relationship with Mr Lakis had so deteriorated by about March or April 2012 that they were not speaking, and each was obtaining legal advice as to his respective rights. Mr Lardis sought advice from PTW, a firm in which Mr Macaulay was a partner. He also deposed to having received a letter from Mr Lakis' lawyers in April or May 2012 advising that they proposed to place Amazon into liquidation. That letter was not in evidence. 3. On 29 May, PTW issued an invoice to Mr Lardis in respect of $1,320 in fees for "Our Professional Costs of acting including taking instructions and advising you in relation to company issues from April to May 2012". According to Mr Lardis' affidavit, the content of that advice included that he could oppose Mr Lakis' application to wind up Amazon on the basis of it being solvent; that he could continue to operate the business and pay Mr Lakis his entitlements on a weekly or monthly basis; and that his legal costs would be approximately $100,000 to $150,000. Mr and Mrs Lardis maintained that their agreement concerning the Dolls Point property was reached following this advice. 4. On 15 May, PTW sent Mr Lakis an email alleging that he had "unilaterally instructed the company accountants, Gertos Saville and Katos, to perform significant auditing/forensic investigation work in relation to the accounts of [Amazon] for the past 5 years". The email indicated that Mr Lardis did not object to that work on condition that Mr Lakis was solely responsible for its cost, estimated at up to $40,000. 5. Mr Lardis purported to call a directors' meeting of Amazon for 4 June. The meeting was allegedly adjourned for lack of a quorum. On the following day, in an email to Mr Spackman, Mr Koops of PTW indicated that, if the directors did not meet, they would be deadlocked and a court-appointed administrator could be necessary. That email continued: 6 Perhaps it would be more appropriate for Mr Lakis to put his offer on the table. From our clients perspective the Company has no value without him working in it and accordingly he does not propose to offer Mr Lakis anything for it. To put that in context in 2010 Mr Lardis performed over 1600 jobs whereas Mr Lakis performed 37 (approximately one weeks full time work) but received the same remuneration. This massive discrepancy continued in 2011 and 2012. 7 In the context of an exit from the Company it is also necessary to consider the property [at Rosebery], which is owned by the Directors as tenants in common. Our client has indicated he would like to sell his share to Mr Lakis, pursuant to an independent valuation or alternatively have the property put up for sale as a matter of urgency. He is not interested in buying Mr Lakis share or trading his share for an increased share in the Company. 1. On 29 June, a new solicitor for Mr Lakis (Mr Webster) wrote to Mr Lardis directly on a without prejudice basis. The letter included what was described as "a final offer prior to commencing proceedings … to obtain the appointment of [a] liquidator of the company", under which Mr Lardis would pay Mr Lakis $250,000 (or transfer his half share in the Rosebery property) in exchange for Mr Lakis' share in the company and resignation as director and secretary. The response from PTW on 4 July denied that Amazon had any financial difficulties justifying its liquidation and sought another offer. 2. On 17 July, Mr Webster filed an application in the Supreme Court for Amazon to be wound up under Corporations Act, s 461(1)(k) and a liquidator to be appointed. That application joined Amazon, Mr Lardis and Amazon Pest Management Pty Ltd and was apparently supported by an affidavit of Mr Lakis, which is not in evidence. Mr Lardis instructed PTW to defend the application. Further affidavit evidence was filed by both parties. None of those affidavits are in evidence. 3. On 18 October, Mr Webster wrote to PTW as follows: It has come to our client's attention that your client has been actively transferring or seeking to transfer his whole interest or the majority of his interest in properties held by him and his wife, being [properties in Sydenham and Dolls Point]. In particular, our client instructs us that Mr Lardis is setting up or has set up a unit trust and is refinancing with NAB, to effect his disposition. 1. The letter demanded Mr Lardis undertake not to deal with those properties until the resolution of the dispute. On 25 October, Mr Macaulay communicated his client's refusal to give such an undertaking, and asserted: Arrangements by our client concerning the refinance of [properties at Sydneyham and Dolls Point] were put in place and in train for over 12 months and well before these proceedings were commenced and have nothing to do with these Court proceedings. 1. After hearing the application on 7 November, Black J ordered on 14 December 2012 that Amazon be wound up and Stewart Free be appointed its liquidator, but stayed those orders until 24 January 2013. His Honour's judgment included the following: 9 Mr Lakis gave evidence, which was admitted as evidence of his understanding only, that various personal expenses of Mr Lardis had been paid from the Company's accounts totalling $76,370.49 and that there had been no reconciliation of those expenditures. On the other hand, Mr Lardis gave evidence that all payments for personal expenses were fully disclosed to the Company's accountants. I cannot accept that evidence, given the extent to which such expenses were misdescribed as disclosed by the evidence to which I will refer below. Mr Lardis also gave evidence of his understanding that the Company's accountants have reconciled all personal expenses. Again, it is clear from Mr Lardis' cross-examination that that is not the case. … 16 In my view, the steps taken by Mr Lardis to acquire another business [carried on under the name Pesthelp], take control of the mobile phone previously used by the Company and take control of bookings of work are such that an inference must be drawn that there is a significant probability that work which would otherwise be performed by the Company has been or will be diverted to other entities if no relief is ordered in these proceedings. 1. The transfer of the Dolls Point property was first lodged for registration around 6 December 2012 and registered on 29 January 2013. 2. On 25 July 2013, Mr Lakis took an assignment of Amazon's claims against Mr Lardis for breach of directors' obligations under the Corporations Act. On 8 April 2014, Mr Lardis took an assignment of Amazon's rights to pursue Mr Lakis: cf Judgment [60]. 3. In March 2015, Mr Lakis and Mr Lardis brought separate proceedings in the Supreme Court to enforce their respective assigned rights. On 12 May 2016, Young AJA delivered a judgment in those proceedings, which made adverse findings against both parties. They included that Mr Lardis instructed Amazon's bookkeeper to misdescribe expenses to which Black J had referred (at [64]–[66]) and that, between 2008 and 2012, Mr Lardis collected $861,076.55 in cash which was not deposited in Amazon's bank account (at [85], [88]). Having found both Mr Lardis and Mr Lakis liable to account to Amazon, his Honour invited short minutes of order in accordance with the judgment. On 1 September, he ordered that Amazon be paid $1,090,076.24 plus interest by Mr Lardis and $30,000 by Mr Lakis. On 8 September, a trustee in bankruptcy was appointed over Mr Lardis' estate. Dealings with the Dolls Point property 1. Mr and Mrs Lardis purchased the Dolls Point property as joint tenants in 2002 for $1,180,000. They deposed to having previously acquired other properties, including one in St Peters for $156,000 in 1997 and another in Sydenham for $240,000 in 1998 or 1999. The St Peters property was sold in about 2000. As at early May 2012, a mortgage over the Dolls Point property secured a debt of $708,000 and another over the Sydenham property secured a debt of $287,000, each to the Commonwealth Bank of Australia (CBA). 2. A "refinance" of the Sydenham property is the subject of an unsigned (and probably unsent) costs agreement between PTW and Mr and Mrs Lardis generated on about 1 March 2012: Judgment [328]. Mr Lardis' evidence was that the loan application to the NAB was made on his behalf by a finance consultant, Mr Kaloudis, who also advised that the Sydenham property should be transferred to a unit trust. On 30 March 2012, Mr and Mrs Lardis were appointed directors of Elounda Holdings Pty Ltd (Elounda) (identified in later documents as the trustee of a unit trust). On 15 May, Mr and Mrs Lardis signed two loan applications to the NAB, both nominating "To Refinance" as the loan type. One was for an unspecified amount, and the other for $480,000. Mortgages over the Dolls Point and Sydenham properties were nominated as security for each. On 20 June 2012, Mr and Mrs Lardis executed discharge/refinance authorities in respect of three loan accounts with the Commonwealth Bank. 3. On 9 July, Mr Kaloudis emailed a NAB employee (Ms Kumar) annexing what appear to be the 2010 and 2011 tax returns for Amazon and Mr Lardis. Ms Kumar replied, asking "Why does he want to change the loans to the trust name…underlying cause" and seeking information on Amazon and Mr and Mrs Lardis. (The former reference is apparently to Elounda and the $480,000 loan applied for by Mr and Mrs Lardis and involving the Sydenham property.) Mr Kaloudis responded the next day specifying "Asset Protection" as the "underlying cause" and noting Mr Lardis' role in Amazon and Mrs Lardis' casual work as a beauty therapist. 4. NAB approved two loans on 18 July 2012. The first was for $1,220,000 to Mr and Mrs Lardis directly and secured by a mortgage over the Dolls Point property. (The amount secured under the existing CBA mortgage was about $700,000.) The second was for $480,000 to Elounda as trustee for the Lardis Holdings Unit Trust and secured by a mortgage over the Sydenham property. (The amount secured under the existing CBA mortgage was about $289,000.) The first of these approved loans proceeded; the second did not. 5. However, a further loan to Mr and Mrs Lardis on the same terms was offered by the NAB on 19 October and accepted on 1 November 2012. That loan was secured by a mortgage over the Sydneham property. Each of the then-current NAB mortgages secured all moneys owing by Mr Lardis to that bank. The proceeds of the first loan were paid as to $963,417 on 7 August to discharge the CBA debts and as to $256,370 on 13 August into accounts of Mr and Mrs Lardis. Mr Lardis used part of those moneys to fund the acquisition of the separate pest control business, Pesthelp, on 17 August 2012. 6. The earliest documentary reference to a transfer of any part of Mr Lardis' interest in the Dolls Point property to Mrs Lardis is in an email exchange between a PTW solicitor (Ms Hsu) and Ms Kumar of the NAB. On 5 September 2012, Ms Hsu wrote an email to Ms Kumar which included the following: In relation to 4 Skinners Ave, Dolls Point Michael would like to transfer the majority of interest to his wife Athina so that the result would be Michael holding 1% and Athina 99% as tenants in common. Michael would like to get this done as soon as possible so could you please provide a list of mortgagee's requirements and proposed timeframe to complete this transfer? 1. On 11 September, apparently having received no response, Ms Hsu wrote to Ms Kumar again: I refer to my email below. Could you please advise the bank's requirements as soon as possible? Thanks for your prompt attention to this matter. 1. Ms Kumar responded, requesting a copy of the transfer. On 9 October, Ms Hsu asked Ms Kumar to clarify whether NAB or her firm would attend to a valuation of the property and stamping of the transfer. NAB responded that PTW would need to do so. The next day, Ms Hsu emailed Mr Lardis, having made tentative arrangements for a valuation to be undertaken on 15 October. Two minutes later, Mr Lardis responded: Yes go ahead I need this done asap. Just let me know what time and I will meet him there. 1. On 15 October, the Dolls Point property was valued at $1,500,000 for stamp duty purposes. On 19 October, NAB offered Mr and Mrs Lardis home loans for $280,000 and $200,000 otherwise on the same terms as earlier offered to Elounda. In particular, it required a mortgage over the Sydenham property, which was executed on 1 November. As is noted above, that mortgage secured all moneys owing by Mr and Mrs Lardis to NAB. 2. On 2 November, Ms Hsu wrote to Mr Lardis concerning the Dolls Point Property: We note that the Property is currently held by you and your wife Athina as joint tenants. We confirm your instructions that you wish to transfer 49% of your interest to your wife where you will hold 1% and Athina will hold 99% as tenants in common. We confirm our previous advice that there are not stamp duty exemptions available for this type of transfer. The stamp duty based on 49% of $1,500,000.00 is $28,585.00. 1. Sometime before 28 November, the transfer was signed by Mr and Mrs Lardis. It was then lodged for registration. Following a requisition and request for NAB to produce the certificate of title, the transfer was re-lodged on 24 January 2013 and registered on 29 January. The proceedings below The cases as pleaded and conducted 1. Mr Lakis' case was that, after Amazon was wound up and Black J had made adverse findings as to Mr Lardis' conduct (14 December 2012), Mr Lardis decided to put his share of the Dolls Point property beyond the reach of his creditors by transferring it to his wife for no consideration. That alienation being voluntary on its face and its natural consequence being to defeat his present or future creditors were said to justify an inference that Mr Lardis had thereby intended to defraud those creditors: Cannane v J Cannane Pty Ltd (In Liq) (1998) 192 CLR 557; [1998] HCA 26 at [13]–[14] (Brennan CJ and McHugh J); Marcolongo at [24]–[26]. 2. The other circumstances relied on as supporting that conclusion (pleaded in paras 3 to 8 of the amended statement of claim) were the making of the winding up application; Amazon's claims against Mr Lardis in relation to the following matters as found by Black J and as facts; and the substantial likelihood of those claims being pursued and resulting in a liability of Mr Lardis to Amazon: (i) there was a dispute between Mr Lakis and Mr Lardis as to whether a payment of $100,000 was for the benefit of Mr Lardis or of Amazon (Black J Judgment, [7]); (ii) Mr Lardis had paid personal expenses from Amazon's accounts, including in relation to Mr Lardis's personal credit card account and his children's school and orthodontist fees, which payments were misdescribed in Amazon's accounts as legitimate business expenses (Black J Judgment, [10]-[11]); (iii) Mr Lakis understood the sum of the personal expenses paid for the benefit of Mr Lardis was $76,370.49 (Black J Judgment, [9]); (iv) Mr Lardis's evidence that the personal expense payments were fully disclosed to Amazon's accountants was not to be accepted (Black J Judgment, [9]); (v) "the extent of payment of personal expenses from [Amazon] and the misdescription of those expenses in [Amazon's] financial records are matter that frustrate the commercially sensible operations of the Company and would also warrant a lack of confidence in the conduct and management of its affairs" (Black J Judgment, [21]); (vi) "an inference must be drawn that there is a significant probability that work which would otherwise be performed by [Amazon] has been or will be diverted [by Mr Lardis] to other entities if no relief is ordered in these proceedings" (Black J Judgment, [16]); 1. As Mrs Lardis emphasises on this appeal, those matters did not include that, as was found by Young AJA, Mr Lardis did not account to Amazon for cash of $861,076 received for work it had undertaken. 2. Mrs Lardis' defence had two parts: first, that the matters relied on were insufficient to establish the requisite intent to defraud on the part of Mr Lardis, and that she shared that intent; and secondly, that a legally enforceable agreement to transfer Mr Lardis' 49% interest to her was made in about February and May 2012. Mrs Lardis maintained that, in consideration of the transfer of that interest, she consented to the raising of additional moneys, approximately $750,000, on the security of the Dolls Point property and to make those moneys available to Mr Lardis. The asserted intention was that the transfer occur simultaneously with the further advance of moneys but that the transfer was delayed in being processed by the solicitors for the parties. 3. In response, Mr Lakis maintained that the version of events put forward by Mr and Mrs Lardis was "not credible" and that Mr Macaulay's evidence did not corroborate their case "principally because of timing differences between his evidence and that of Mr and Mrs Lardis". The primary judge's findings 1. Standing in the way of Mr Lakis' case as opened was the fact of Ms Hsu's email of 5 September 2012 which referred to the transfer of a 49% interest. His case could, however, accommodate that evidence if the intention recorded in the email was recently formed and thus did not support Mrs Lardis' case that an arrangement was made before the NAB loan was drawn down in early August 2012. Mrs Lardis' case met that difficulty by maintaining the alleged agreement was made in April or May 2012, or if Mr Macaulay's evidence was accepted on or before 28 February 2012. 2. Addressing that case, the primary judge summarised his findings at Judgment [293] and [294] as follows: [293] … I do not accept an agreement to transfer the Dolls Point Property was reached in early 2012, be that February or April/May 2012. I am satisfied such an arrangement to transfer did not and could not have taken place until at the very earliest September 2012, independent of any agreement to refinance the Dolls Point Property. [294] Further, I am satisfied the arrangement whereby Mr Lardis ultimately transferred the 49% interest in the Dolls Point Property to Mrs Lardis was arranged jointly by them in September, after the winding up proceedings had commenced in July and were under way by early September, and several weeks after the monies the subject of the refinancing had been credited to their bank account. I am also satisfied they both relevantly intended by the transfer to put their family home beyond Mr Lakis to avoid any adverse consequences of the winding up proceedings and any claims regarding Mr Lardis' misuse of company monies that might be pursued as a result of any judgment against Mr Lardis in favour of Amazon and Mr Lakis in that litigation, including the costs. 1. His Honour's reasoning for those conclusions is at Judgment [301] to [398]. The structure of that reasoning appears at Judgment [300]: [300] … First, I will make some general remarks about my impression of the witnesses. Then, I will address in detail the key conversations and events - some contested and some accepted - leading up to the ultimate transfer of 49% interest in the Dolls Point Property, and explain why, in my view, when considered in light of the differing witness accounts and contemporaneous records or more remarkably the lack thereof, the Second Defendant's version of events is unconvincing. Finally, I will examine the failure of the Second Defendant to call main participants in the key events. This combination of inconsistencies, uncorroborated assertions, and implausible and incomplete explanations in my mind leaves me satisfied the Second Defendant's version of events is contrived and unacceptable. 1. The primary judge was critical of the evidence of each of the three witnesses, and in particular Mr Macaulay whose evidence was relied on as providing independent support for Mrs Lardis' case. At Judgment [337], his Honour concluded in relation to that evidence: [337] Taking the most generous view of Mr Macaulay's evidence I am satisfied he was mistaken about the times when he said he first saw Mr and Mrs Lardis and received instructions from them on the Dolls Point Property Transfer. Mr Macaulay's attempts to rely on material that does exist (the Costs Agreement) and material that does not exist [lead] me to conclude Mr Macaulay's evidence on the February meetings cannot be accepted as evidence corroborating an agreement between Mr and Mrs Lardis to transfer the Dolls Point Property in early 2012. 1. Ultimately, the primary judge was satisfied: [397] … Mr Lardis, together with Mrs Lardis first applied their minds to the question of the transfer of Mr Lardis' interest in Dolls Point to Mrs Lardis in or about early September galvanised by the progress and imminence of the litigation and the fear of the real possibility of adverse consequences. 1. The primary judge was also satisfied that Mr Lardis transferred the 49% interest in the Dolls Point property to the appellant with an intent to defraud, hinder or delay his prospective creditors, including Amazon and Mr Lakis. His Honour's conclusions in that respect are at [411] and [412] (extracted in [64] below). Issues in the appeal 1. The four central issues raised by the grounds of appeal are: 1. Whether there was a legally enforceable agreement made in the first part of 2012 whereby Mr Lardis agreed to transfer a 49% interest in the Dolls Point property to Mrs Lardis in return for her permitting further moneys to be raised by mortgage over that property (grounds 7, 8(a)) and whether in addressing that issue the primary judge erred in rejecting the evidence of Mr Macaulay (grounds 4, 5 and 6); 2. Whether in transferring that 49% interest, Mr Lardis intended to defraud his creditors (grounds 1, 2, 3 and 9); 3. Whether Mrs Lardis had established a defence under s 37A(3) (grounds 8 and 9); and 4. If there was a binding agreement between Mr and Mrs Lardis, when the relevant alienation occurred (ground 10). 1. It is convenient to address these issues in the order they appear above and to commence with the grounds concerning the rejection of Mr Macaulay's evidence. The rejection of Mr Macaulay's evidence (grounds 4, 5 and 6) Mrs Lardis' submissions 1. Mrs Lardis submits that Mr Macaulay's evidence, if accepted, would substantially corroborate her case. However, in the event that this Court concludes that the primary judge did not err in rejecting Mr Macaulay's evidence, she makes no submission challenging the primary judge's rejection of her and her husband's evidence, which was based in part on adverse findings as to their credibility. 2. The rejection of Mr Macaulay's evidence is challenged on two bases, both of which place some reliance on the rule in Browne v Dunn (1894) 6 R 67 at 70–71 (Lord Herschell LC). In essence, that "rule of professional practice" requires that a party "give appropriate notice to the other party, and any of that party's witnesses, of any imputation that the former intends to make against either of the latter about his or her conduct relevant to the case, or a party's or a witness' credit": MWJ v The Queen [2005] HCA 74; (2005) 80 ALJR 329 at [38] (Gummow, Kirby and Callinan JJ). 3. One corollary of this rule is that trial judges generally must refrain from making adverse findings as to the credibility of parties and witnesses absent cross examination directed to the frankness or completeness of their evidence: MWJ at [39]; Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 11 at [67], [74], [75] (Heydon, Crennan and Bell JJ). On the basis that the cross examination did not permit any adverse findings as to Mr Macaulay's credibility (as distinct from reliability), Mrs Lardis submits that the primary judge could not reject his evidence without positing a more plausible explanation for its having been given than that Mr Macaulay was simply mistaken. In support of this submission, she refers to several observations by the primary judge, not as impermissible credibility findings relied on to support the rejection of Mr Macaulay's evidence, but to illustrate the want of good reasons for that conclusion. Those observations include that Mr Macaulay was purporting "to describe a series of events which are better explained by an overarching self-serving purpose rather than an intention let alone an ability accurately to recreate the past" (Judgment [303]); giving answers which were "clearly designed to purport to corroborate his apparent ability to remember particular events in the absence of any contemporaneous records" (Judgment [304]); and "acting as an advocate" in explaining his ability to recall events in mid and late February 2012 (Judgment [323]). 4. Another corollary of the rule is that the absence of cross examination on a matter about which a witness has given evidence "will often be a very good reason for accepting the witness's evidence upon that matter": Broughton v B & B Group Investments Pty Ltd [2017] VSCA 227 at [108], [110] (Kyrou, Ferguson and McLeish JJA). In purported reliance on this basis, Mrs Lardis submits that the cross examiner's forensic choice to put to Mr Macaulay only that he was mistaken as to the timing of conversations with Mr and Mrs Lardis left unchallenged that those conversations occurred at a later time, that being consistent with the evidence of Mr and Mrs Lardis. The primary judge is said to have erred in rejecting Mr Macaulay's evidence as to his receipt of those instructions at any time. It is convenient first to deal with this argument, which requires consideration of the cross examination. The cross examination in context 1. Mr Macaulay's affidavit evidence referred to a meeting on 28 February 2012 at which he received instructions about the transfer and opened a file; a conversation with Mr Lardis in or around March in which he was told that Mr Lardis would speak to the NAB about its requirements for a transfer to be put in place; a conversation with Mr Lardis in about May 2012 when he was told of the NAB's requirement that he retain at least one percent; and a conversation with Mr Lardis in late August 2012 in which Mr Macaulay was instructed to organise the transfer with the NAB. He recalled being advised in the March conversation that Mrs Lardis only agreed to her husband using moneys secured against the Dolls Point property for business reasons "if he transferred to her his interest in [that] family home". And he deposed that, following the August 2012 telephone conversation, Ms Hsu was directed to prepare and complete the necessary documents and to liaise with the NAB for the purpose of doing so. 2. Mr Lakis' written opening, served before the cross examination of Mr Macaulay, asserted that Mr and Mrs Lardis' version of events was "not credible" and not corroborated by Mr Macaulay's evidence. Mrs Lardis' affidavit evidence included that PTW had been instructed in June or July 2012 in relation to the transfer of the 49% interest, but did not refer to any direct conversation with Mr Macaulay concerning this arrangement. Mr Lardis' affidavit evidence referred to two communications with Mr Macaulay: a conference in April or May 2012 in which he requested that Mr Macaulay prepare the paperwork to enable a transfer of his interest; and a conversation in late August 2012 in which he asked Mr Macaulay "what's happened about me transferring my 49% in the Dolls Point property to Athena as we discussed some time ago" and was told that Mr Macaulay would "get someone on it and get them to call you". 3. The cross examination of Mr Macaulay was commendably short. Early on, the cross examiner referred to the unsigned costs agreement, which in terms only concerned a "refinance" of the Sydenham property. Mr Macaulay indicated that at some stage the matter "became a refinance and transfer". The following exchange then occurred between counsel and Mr Macaulay: Q. And that is entirely consistent with a series of instructions being received. Firstly, some instructions in March or April that there's going to be a refinance, correct, and later on, some instructions that there's going to be a transfer after the refinance? A. That could be. Q. If that's the series of events that the document trail shows, doesn't that cast real doubt on the dates that you're recalling the discussions in paragraph 9 and 10, and indeed 14? A. No. Q. Don't you think what really happened – and isn't this what your file tells us – is that initially in April, May, you received instructions to do a refinance? Secondly, your firm carried out work on that refinance to the point where the bank actually advanced the money, and thirdly, that some time in early September, your firm then received instructions to do the transfer, and carried out those instructions? A. The – my answer to the first proposition, which was that – the first limb of your question, which was that we received instructions to do the refinance in April or May is no, and I can tell from the file that it was opened on the 28th of – of – of February, there's no question about that whatsoever. This document that you're talking about was produced – and I can tell who the author of it was – on the system. It was produced on 1 March. But my answer to the second part of your proposition, that we're subsequently, a – a refinance happened is clearly yes. And the – your third proposition was that – was that that would lead you to believe that the transfer instructions came later, and I say the answer to that is no. 1. The cross examiner drew the witness' attention to the absence of any contemporaneous document that might corroborate his version of events, and in doing so pointed out that with the benefit of any such documents "no-one could accuse you of having a muddled up memory". At the conclusion of the cross examination, it was put to the witness that "in light of everything we've looked at … it's certainly likely that you've just got the dates mucked up", to which Mr Macaulay responded "no". 2. Mrs Lardis' counsel sought to re-examine Mr Macaulay as to the conversations he deposed to having had with Mr Lardis in March, May and late August 2012. The conversations in March and May concerned refinancing with the NAB and, in that context, also contained reference to the transfer of Mr Lardis' interest in the Dolls Point property. Questioning on that subject was rejected as not arising. In the exchange with the primary judge which followed, Mrs Lardis' counsel submitted that, if it was to be suggested that those conversations did not occur in March, May and August but at some later time, the witness had not been "appropriately challenged". The challenge to Mr Macaulay's version of events 1. In the exchange extracted at [51] above, the cross examiner put to Mr Lardis "what really happened" according to Mr Lakis, namely that instructions to do a "refinance" were received in April or May but instructions to do the "transfer" were only received (and carried out by PTW) in early September. The cross examiner's "second" proposition — that the NAB advanced money at some time between May and the end of August — was not controversial. The "third" was contested by Mr Macaulay and thereafter challenged as based only on memory; not supported by any contemporaneous note of his, any instructions prepared for the assistance of Mr Koops, or any record of Mr Koops of instructions received by him; and, ultimately, as mistaken. In a limited respect, Mr Macaulay was also cross examined as to what had occurred in late August 2012. He was shown Ms Hsu's email of 5 September and agreed that he had nothing to do "with whatever it was that prompted the sending" of that email. 2. Mr Lakis' account of "what really happened" was anchored to two contemporaneous documents produced by PTW: the unsigned costs agreement and the email of 5 September 2012. That version of events in no way denied that conversations before September may have addressed the refinance. But it was plainly inconsistent with there having been any reference to the transfer of the Dolls Point property in those conversations. Mr Macaulay's reformulation of the "third proposition" as that "the transfer instructions came later" confirms that he recognised as much. 3. It follows that the first challenge to his Honour's rejection of Mr Macaulay's evidence is not made out. It was open to the primary judge to reject his evidence as establishing that the subject of a transfer of the Dolls Point property was raised at any time before early September 2012; and that he had any direct involvement in the receipt or implementation of any instructions from Mr Lardis in September 2012. The rejection of Mr Macaulay's evidence 1. The primary judge found that Mr Macaulay's evidence was "mistaken": Judgment [337], [342]. Although his Honour made some observations consistent with having formed an adverse view as to Mr Macaulay's credibility, it is not said that those observations played a role in his Honour's decision to reject the evidence, thereby giving rise to a denial of procedural fairness: cf Kuhl at [75]. Rather, the challenge is that the primary judge did not have a sufficient basis for rejecting Mr Macaulay's evidence as being (merely) mistaken, relying on a "lack of notes and vagueness and matters of that sort". 2. The primary judge's reasons for rejecting Mr Macaulay's version of events were not limited in the way suggested by Mrs Lardis' submissions. Those reasons (between Judgment [300] and [398]) included not only that no contemporaneous record supported Mr Macaulay's evidence but, more significantly, that the contemporaneous material was inconsistent with it. The unsigned costs agreement was concerned only with the refinance of the Sydenham property and contained no reference to any transfer of that or the Dolls Point property. The email of 5 September 2012 made no reference to any earlier instructions to transfer or failure to act on any such instructions. Indeed, it rather suggests that the instructions to transfer had only recently been received. Ms Hsu's email of 11 September 2012 was not consistent with the NAB having earlier advised its requirements as mortgagee for the completion of the transfer. And Ms Hsu's email to Mr Lardis of 2 November 2012 confirming his instructions did not suggest "old instructions belatedly implemented": Judgment [383]. 3. Furthermore, the sense of urgency in Ms Hsu's emails of 5 and 11 September 2012 was confirmed in Mr Lardis' valuation email of 15 October 2012. Given the absence of any evidence of complaint on the part of Mr and Mrs Lardis for PTW not having executed instructions earlier, that urgency is wholly consistent with the "recent nature" of the instructions confirmed by the email of 2 November: Judgment [382], [383]. In the face of Mr Macaulay's acceptance in cross examination that he had nothing to do with the 5 September 2012 email, it was reasonably to be inferred that Ms Hsu received those instructions from Mr Lardis: Judgment [367]. 4. His Honour's remaining reasons included the following. First, there were no corroborating records of Mr Koops and Ms Hsu of PTW, each of whom acted for Mr and Mrs Lardis from late February or early March 2012 and neither of whom was called: Judgment [388]–[391]. Secondly, Mr Macaulay's version of events was not consistent with the evidence of Mr and Mrs Lardis as to the timing and subject matter of meetings or conversations in the period from April to August 2012. Thirdly, Mr Macaulay's version of events was not easily reconciled with the objective facts established in relation to Mr and Mrs Lardis' dealings with the NAB via Mr Kaloudis. The initial loan applications were made on their behalf in May 2012. There is no reference in those applications or in any other NAB documents to the transfer of Mr Lardis' interest in the Dolls Point property. At some stage before 9 July 2012, Elounda became the applicant for the loan to be secured by mortgage over the Sydenham property. A consequence of that loan not proceeding was that the surplus generated by the refinance of the Dolls Point property in August 2012 was about $256,000 and not the $750,000 referred to in Mrs Lardis' evidence (see [36] above). Finally, the erroneous assertion in Mr Macaulay's letter of 25 October 2012 that the relevant financing arrangements were "put in place and in train for over twelve months" (see [16] above) raised doubts as to the reliability of Mr Macaulay's recollection: Judgment [333]. 5. Ultimately, the primary judge had to assess the probative value of Mr Macaulay's evidence concerning events which occurred up to five years earlier. That evidence was not supported by any contemporaneous documents; it was inconsistent with some of those documents; it was not easily reconciled with the objective facts; and it was not consistent with the evidence of Mr and Mrs Lardis. These considerations provided a sound basis for the rejection of his evidence and the primary judge did not err in doing so. Defence under s 37A(3) (grounds 7, 8, 9 and 10) 1. If the primary judge did not err in rejecting Mr Macaulay's evidence, Mrs Lardis does not contend that his conclusion that there was no legally enforceable agreement should be overturned. It follows that the challenge made by grounds 7, 8 and 9 should be dismissed. In the absence of an ultimate finding favourable to Mrs Lardis as to there being a binding agreement, ground 10 does not arise and cannot sensibly be determined. Mr Lardis' intent to defraud creditors (grounds 1, 2, 3 and 9) 1. The primary judge's reasons for finding that Mr Lardis transferred a 49% interest in the Dolls Point property with intent to defraud his prospective creditors are summarised at Judgment [411] and [412]. The earlier references in Judgment [2] and [410] to that intent being directed to "prospective creditors of Amazon including Mr Lakis" are to be understood as mistaken and plainly intended to refer to "creditors of Mr Lardis". That is so having regard to the pleaded issue and the balance of his Honour's reasons: see, for example, amended statement of claim para 11(b) and Judgment [140], [294], [414]. 2. His Honour's findings at Judgment [411], [412] and [414] are: [411] I do not accept the Second Defendant's characterisation of the Plaintiffs' case as largely relying on the decision of Black J on 14 December and events that followed to claim the 49% Dolls Point Property Transfer was in response to the orders of Black J. This is not correct. The pleaded factual context put forward by the Plaintiffs commences with the filing of the application for winding up proceedings on 17 July 2012 (ASOC [3]-[4]). Further, as the case developed, virtually the entirety of 2012 was the subject of examination by all the parties, with the 5 September email being a particular focus. The Second Defendant engaged in a similarly wide examination of events that allegedly transpired across 2012, which is obvious from her case in chief. [412] Likewise, I do not accept the Second Defendant's contention neither Mr nor Mrs Lardis could have apprehended the likelihood claims could be pursued against Mr Lardis in favour of Amazon (see, for example Defendant's Final Submissions [14]-[15], [30]). As early as 9 December 2011 Mr Lardis was aware Mr Lakis wanted to appoint forensic accountants to review Amazon's books. By late 2011/early 2012 Mr Lardis noted both he and Mr Lakis were obtaining legal advice concerning their respective rights (ML1 [41]-[46]).The depth of ill feeling between the former partners was such that any form of conciliation was off the table. By early September Mr and Mrs Lardis were well aware of the progression of the litigation, with the timetable set in court on 28 August 2012. Mrs Lardis well understood her husband could be liable for costs (T48/15-25), and agreed that one asset which she knew would be protected if the court case went wrong was the Dolls Point Property (T55/15-35). Mr Lardis also understood serious allegations he had inappropriately taken money from Amazon were being made (T98/15-20) and there was a risk if the winding up proceedings did not go well he may have to pay money (T97/45-50). In other words, both Mr and Mrs Lardis understood by, at the latest September 2012, the likelihood of indebtedness arising out of the winding up proceedings and litigation that could follow, as a real possibility. […] [414] The Plaintiffs, again in my view correctly, submit by the second half of November 2012 Mr Lardis was well aware of all the allegations raised before Black J. Further, by the time of the hearing before Black J on 7 November 2012, the likelihood of further litigation was real, as was the risk of the Dolls Point Property being the subject of impending and significant recovery claims by Amazon and Mr Lakis. 1. Mrs Lardis makes four challenges to these findings: 1. That they went beyond Mr Lakis' pleaded case (see [33] above), being based on a finding that the claims which Mr Lardis apprehended as likely to be made included those determined by Young AJA's findings in May 2016 (see [20] above) (grounds 1(a), 1(c) and 3) 2. That the only liability found to have been apprehended by Mr Lardis if the winding up proceedings did not go well was the liability to pay legal costs, which was insufficient to justify a conclusion of intent to defraud (ground 1(b)); 3. That the finding in Judgment [414] that Mr Lardis was aware by the time of the hearing before Black J that there was a "real" likelihood of further litigation and risk of the Dolls Point property being the subject of "significant" recovery claims was unsupported by evidence (ground 2); and 4. That the primary judge erred in not making a determination as to the amount of any potential indebtedness apprehended by Mr Lardis being "substantial", that being a necessary step in concluding that he had the relevant intention when transferring his interest in the property (ground 1(d)). No findings beyond the pleaded case 1. It is uncontroversial that Mr Lakis' pleaded case did not include that the potential claims the making of which Mr Lardis apprehended included those for the failure to account which was the subject of Young AJA's judgment. That matter was neither pleaded, nor the subject of cross examination of Mr Lardis. Accordingly, the primary judge was not permitted to take it into account. 2. Nor did his Honour do so. In support of her submission to the contrary, Mrs Lardis refers to Judgment [294], [314], [315], [398], [411] and [412]. Each of these paragraphs other than [411] and [412] contains findings expressed in very general terms as to Mr Lardis' knowledge of "adverse" financial consequences that might arise from the dispute and winding-up proceedings concerning Amazon. None identifies the specific financial consequences on which the primary judge's conclusion was based. The first sentence in [411], however, draws a distinction between the fact of the decision of Black J and the inferences which might be drawn concerning Mr Lardis' likely understanding in the period from July 2012 based only on Black J's findings. But neither [411] nor [412] reveals any reliance upon the later findings of Young AJA as justifying similar inferential reasoning with respect to Mr Lardis' apprehension of other claims. Findings not limited to costs of winding up proceedings 1. At Judgment [412], the primary judge found that both Mr and Mrs Lardis understood that there was a likelihood of future indebtedness arising out of litigation which followed the winding-up proceedings. It was submitted before the primary judge that the only risk that Mr Lardis had in mind from the adverse outcome of the winding up proceedings was that he be ordered to pay Mr Lakis' costs. The primary judge was justified in rejecting that submission. At Judgment [412], his Honour refers to the letter from Mr Lakis' solicitors of 9 December 2011 (see [8] above). That letter made plain at the outset that there was a real possibility of claims against Mr Lardis personally for damages arising out of his withdrawal or use of company funds. In addition, his Honour referred to Mr Lardis' concession in cross examination that he appreciated that "serious allegations" had been made, namely that he had inappropriately taken money from the company to which he was not entitled. Evidence supporting inference of likelihood of further claims 1. Mrs Lardis challenges the finding in Judgment [414] that by mid-November 2012 Mr Lardis was well aware of the allegations raised before Black J by contending that it was not supported by evidence. That argument should be rejected. Three aspects of the evidence justified such a finding. First, the letter of 9 December 2011 (see [8] above) threatened personal claims based on Mr Lardis' misapplication of moneys from Amazon's bank account "over the past several months". That allegation involved similar conduct to that found by Black J (see item (ii) in [33] above). Secondly, the winding-up application was supported by an affidavit of Mr Lakis. Although that affidavit was not in evidence, the primary judge was entitled to assume that the affidavit complied with Supreme Court (Corporations) Rules 1999 (NSW), r 2.4 by stating the facts said to support the application for winding up and thus to infer that a correspondence between the matters found by Black J and those in the affidavit. That the affidavit did so is also consistent with the content of PTW's letter of 24 July 2012, by which Mr Lardis maintained that the "various allegations made by Mr Lakis are completely untrue and this will ultimately be borne out by comprehensive factual evidence given by Mr Lardis, evidence prepared by the company accountants and documents to which Mr Lakis is a witness". Thirdly, in cross examination Mr Lardis accepted that by September 2012 he knew "that there were serious allegations that [he] had inappropriately taken money from the company" to which he was not entitled. He also identified those as the allegations "Black J actually accepted". Apprehended liability not for a substantial sum 1. It is submitted that the potential future indebtedness of Mr Lardis to Amazon or Mr Lakis was not established to be sufficiently "substantial" to justify a finding of intent to defraud. This argument falls to be considered in circumstances where the necessary consequence of the voluntary transfer was to prevent future creditors from having access to the asset transferred and the circumstances do not suggest any plausible explanation for that transfer other than a desire to protect the asset from Mr Lardis' creditors, the primary judge having correctly rejected Mrs Lardis' contention that it had occurred pursuant to a bona fide agreement. 2. In that context, the primary judge's findings at Judgment [412] provide sufficient support for the conclusion reached. The position as found by Black J, which could be inferred to be known by Mr Lardis in the period after July 2012 included his failure to disclose fully to Amazon's accountants payments made on account of his personal expenses. That left open the likelihood of there being further claims beyond those then understood by Mr Lakis (see [33] above). In addition, Black J's findings included as a "significant probability" that work which would otherwise have been performed by Amazon had been diverted by Mr Lardis to entities he controlled. 3. It was not necessary for the evidence to establish or the primary judge to find that the apprehended likely claims would exceed the value of Mr Lardis' net assets otherwise available to creditors. The fact of these claims, as well as a potential liability for legal costs, both in the winding up and any subsequent proceedings, was sufficient evidence of motive to justify the finding made. Conclusion 1. In the result, Mrs Lardis has failed in her challenges to the rejection of her case that there was a binding arrangement for transfer and that the evidence did not support the finding of intent to defraud. It follows in my view that the appeal should be dismissed with costs. 2. WHITE JA: I have had the advantage of reading in draft the reasons for judgment of Meagher JA. 3. I agree with Meagher JA for the reasons his Honour gives at [57] – [61] that the primary judge's rejection of Mr Macaulay's evidence should not be overturned on appeal. 4. The primary judge not only rejected the reliability of Mr Macaulay's evidence, but made findings that went close to rejecting the veracity of that evidence. Some of those findings are referred to by Meagher JA at [47]. Another finding (at judgment [331]) was that Mr Macaulay's reliance on the 1 March Refinancing Costs Agreement questioned the veracity of his narrative as a whole. At judgment [342] the primary judge found that Mr Macaulay was "at best" mistaken as to the timing of further discussions with Mr Lardis regarding the transfer, thereby insinuating that Mr Macaulay's evidence was not merely mistaken, but untruthful. 5. The primary judge was not required to accept Mr Macaulay's evidence. His finding (at judgment [337]) that Mr Macaulay was mistaken about the times when he first saw Mr and Mrs Lardis and received instructions from them on the Dolls Point property transfer, was open to him. In my view the further findings that cast doubt on the veracity as distinct from the reliability of Mr Macaulay's evidence were not open to the primary judge having regard to the limited scope of cross-examination. They were unfair to Mr Macaulay. That conclusion does not affect the fate of the appeal. 6. Subject to the above, I agree with the reasons of Meagher JA and with the orders his Honour proposes. ********** 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: 24 May 2018