Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Enterprise ICT Pty Ltd v Pham (No 2) [2018] NSWCA 185 Hearing dates: 1 August 2018 Date of orders: 15 August 2018 Decision date: 15 August 2018 Before: Basten JA; Meagher JA; Emmett AJA Decision: 1. Dismiss paragraph 2 of the appellants' notice of motion dated 24 July 2018. 2. Dismiss the amended notice of appeal. 3. Order the appellants pay the first and second respondents' and the third respondent's costs of the appeal, including the notice of motion. Catchwords: LAND LAW – Torrens title – exceptions to indefeasibility – fraud – where purchasers seek specific performance of contract for sale of land – where vendor then transfers land to company of which his brother was sole director purportedly in accordance with consent judgment obtained by another, related company upon non-repayment of alleged secured loan – whether secured loan existed – whether fraud brought home to transferee company CIVIL PROCEDURE – Court of Appeal – application to receive additional evidence – where expert reports available at or could have obtained before trial Legislation Cited: Duties Act 1997 (NSW), s 13 Real Property Act 1900 (NSW), ss 42, 74J Supreme Court Act 1970 (NSW), s 75A Uniform Civil Procedure Rules 2005 (NSW), r 35.2 Cases Cited: Akins v National Australia Bank (1994) 34 NSWLR 155 Assets Co v Mere Roihi [1905] AC 176 Chesterfield v Janssen (1751) 2 Ves Sen 125; 28 ER 82 Collins v Godefroy (1831) 1 B & Ad 951; 109 ER 1040 Hamilton v Whitehead (1988) 166 CLR 121 Sharp v Rangott (2008) 167 FCR 225 Tesco Ltd v Nattrass [1972] AC 153 Tjiong v Tjiong [2012] NSWCA 201 Waimiha Sawmilling Co v Waione Timber Co [1926] AC 101 Texts Cited: JD Heydon, Cross on Evidence, (11th ed 2017, LexisNexis) Category: Principal judgment Parties: Enterprise ICT Pty Ltd (First Appellant) Robert Sebie (Second Appellant) Andy Voung Duc Pham (First Respondent) Thi Huong Giang Pham (Second Respondent) Nadine Musabwasoni (Third Respondent) Representation: R Sebie (self-represented and with leave for First Appellant) Counsel: B Zipser (First and Second Respondents) A Duc (Third Respondent) Solicitors: Bui Lawyers (First and Second Respondents) Remington & Co (Third Respondent) File Number(s): 2017/172378 Decision under appeal Court or tribunal: Supreme Court Jurisdiction: Equity Division Citation: [2017] NSWSC 583; [2017] NSWSC 446 Date of Decision: 15 May 2017; 26 April 2017 Before: Pembroke J File Number(s): 2015/325044 [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 second appellant (the vendor) agreed to sell a residential property to the first and second respondents (the purchasers). He failed to complete, purportedly because he was unable to discharge a loan given in 2005 by a company owned and controlled by members of his immediate family (the lending company). In response to requests for evidence supporting the loan's existence, he sent the purchasers a document dated 5 September 2005, entitled "Secured Loan Agreement" and apparently executed by himself and the lending company. However, the version of that document produced by the purchasers referred to 2010 legislation; the vendor, relying on a different version that omitted that reference, alleged that the purchasers had fabricated their version. The purchasers then commenced a proceeding for specific performance, joining the lending company, and lodged a caveat, which was recorded as lapsed after the vendor falsely declared that a lapsing notice had been served on the purchasers. At the vendor's instigation, the lending company then commenced a proceeding against him for possession of the property, alleging default on the 2005 loan. Possession was granted under consent orders. Both the proceeding and those orders were supported by affidavits of the second appellant's brother (the vendor's brother), as "general manager" of the company. The lending company then agreed by deed to transfer the property to the first appellant (the transferee company), a recently incorporated company of which the vendor's brother was the sole director. No monies were exchanged for the transfer. At that time, an order of the Federal Circuit Court – obtained by the third respondent (the vendor's ex-wife) in divorce proceedings – restrained the vendor from dealing with the property. Nevertheless, a transfer from him to the transferee company was registered. The transfer was signed by the vendor's brother on behalf of the transferee. Upon discovering these events, the purchasers lodged a fresh caveat over the property and, upon being served with a lapsing notice from the transferee company, they commenced a proceeding against it. The two proceedings by the purchasers were consolidated, and the vendor's ex-wife was joined as a defendant. The matter came before the primary judge (Pembroke J), who found that the version of the "Secured Loan Agreement" produced by the purchasers was fabricated, and sent, by the vendor. His Honour concluded that the transfer from the vendor to the transferee company was liable to be set aside as fraudulent within Real Property Act 1900 (NSW), s 42, and that the purchasers were entitled to specific performance and compensation for rent incurred from the contractual date of completion. The vendor and transferee company appeal from that decision. Held (Basten and Meagher JJA and Emmett AJA), dismissing the appeal: i. The primary judge's finding as to the "Secured Loan Agreement" was supported by his unchallenged assessment of the vendor as "incapable of telling the truth", the email correspondence between the purchasers' solicitor and the vendor, and the inherent implausibility of the vendor's account of fabrication by the purchasers: at [14], [15]. ii. Where a company's sole director and representative in a transfer has given knowingly false evidence in support of a proceeding and consent orders underlying that transfer, the company has actual knowledge of fraud for the purposes of Real Property Act 1900 (NSW), s 42 and an equitable claim to have the transfer set aside: at [9], [23], [27]. Tesco Ltd v Nattrass [1972] AC 153; Hamilton v Whitehead (1988) 166 CLR 121 applied. iii. The requirement of "special grounds" to receive further evidence on appeal following a trial on the merits was not satisfied in relation to either: expert reports which were available at, or could have been obtained before, trial and the probative value of which depended on unexpressed assumptions and qualifications; or an affidavit annexing a document which could not in the circumstances be assumed to be unavailable at trial or authentic: at [18]–[21]. Akins v National Australia Bank (1994) 34 NSWLR 155; Tjiong v Tjiong [2012] NSWCA 201 applied. iv. Assuming that a trial judge in civil proceedings has power to call a witness without both parties' consent, he or she would not be obligated to exercise that power by a party's unexplained suggestion that evidence of the potential witness is important: at [34]. Judgment 1. THE COURT: This appeal is from orders setting aside as fraudulent a transfer of land to a company – in purported discharge of a secured loan from another, related company – and, in turn, specifically enforcing a contract of sale in respect of that land against the transferor. The issues are principally directed to the existence of that secured loan and the transferee company's complicity in the asserted fraud. Background 1. On 29 October 2014, the second appellant, Robert Sebie, contracted to sell a residential property in Chiswick to the first and second respondents, Mr and Mrs Pham. He did so some months after his former wife, Ms Musabwasoni, had applied to the Federal Circuit Court for relief under the Family Law Act 1975 (Cth) including an order for exclusive occupation of that property. But he failed to complete the agreement on the stipulated date, 3 December 2014. 2. One reason proffered for his not completing was an asserted inability to discharge a loan from ENA Development Pty Ltd (ENA) made to assist the purchase of the property in 2005. At that time, the sole director of that company had been Robert Sebie, followed by his sister, Ms Gayed, for four months in 2007, and his mother, Rose Sebie, thereafter. Its sole shareholder was Ms Gayed throughout. In February 2014, ENA lodged a caveat describing its interest as an "unsecured loan provided for the purchase for the above land in the consideration of $1,379,315 on the 15/09/2005". In February 2015, and in response to Mr and Mrs Pham's requests for evidence supporting the existence of the alleged loan, Robert Sebie sent documents by email, including a copy of a secured loan agreement apparently signed by himself and an employee of ENA, Ms Nassif. 3. On 23 February 2015, Mr and Mrs Pham commenced a proceeding for specific performance, in which caveators, including ENA, were initially joined but subsequently removed. Mr and Mrs Pham also lodged their own caveat over the property, which was recorded as lapsed under Real Property Act 1900 (NSW), s 74J(4) due to their non-response to a lapsing notice that Robert Sebie falsely declared to have been served on Mrs Pham on 19 June 2015. Also, at the instigation of Robert Sebie and unknown to Mr and Mrs Pham, in May 2015, ENA instituted a separate proceeding against him for possession of the property, alleging that he had defaulted on the 2005 loan. That proceeding was determined by consent orders, pursuant to which ENA would take possession of the property from Robert Sebie for consideration including the satisfaction of the alleged debt and discharge of an existing mortgage to the Commonwealth Bank. Both the proceeding and the consent orders were supported by affidavits of Robert Sebie's brother, Richard Sebie, as "general manager" of ENA. 4. Seemingly on the assumption that those orders conferred title, not merely possession, ENA then agreed by "deed of arrangement" to transfer the property to the first appellant (Enterprise ICT), a recently incorporated company of which Richard Sebie was the sole director and Ms Gayed, the sole shareholder. The deed recorded that ENA "obtained possession of this property as full and final settlement for the money loan against the property" and that "no monies will be exchanged for the transfer, due to [the] identical shareholding" of the two companies. On the same day, 20 July 2015, and notwithstanding an order of the Federal Circuit Court restraining Robert Sebie from dealing with the property, a transfer from him to Enterprise ICT was lodged for registration. That transfer, signed by Richard Sebie for the transferee, contained an acknowledgment by the transferor of receipt of consideration of $2,040,000, which was never in fact paid. Upon discovering these events in October 2015, Mr and Mrs Pham lodged a fresh caveat over the property and, upon being served with a lapsing notice from Enterprise ICT, they commenced a proceeding against that company on 5 November 2015. 5. The two proceedings brought by Mr and Mrs Pham were consolidated, and Ms Musabwasoni was joined as a defendant. The matter then came before the primary judge (Pembroke J), who concluded that the transfer from Robert Sebie to Enterprise ICT was liable to be set aside as fraudulent within Real Property Act, s 42, and that Mr and Mrs Pham were entitled to specific performance and compensation for rent incurred from the contractual date of completion: Pham v Enterprise ICT Pty Ltd [2017] NSWSC 446. After hearing further submissions, his Honour then made the following orders (Pham v Enterprise ICT Pty Ltd (No 2) [2017] NSWSC 583): (1) Declaration that the transfer of lot 2 in DP 241738, known as 11 Tutt Crescent, Chiswick (the Property), from the third defendant to the first defendant (Enterprise ICT Pty Ltd) registered on 10 August 2015 dealing number AJ713539 was fraudulent, and that the title of the first defendant in the Property is defeasible for fraud, within the meaning of ss 42 and 43 of the Real Property Act 1900. (2) Order that the Property vests in the third defendant (Robert Sebie). (3) Order that the Registrar General: (a) cancel the existing folio of the register for the Property; (b) create a new folio of the register for the Property; (c) issue a new certificate of title for the Property, recording Robert Sebie as the registered proprietor. (4) Order that Enterprise ICT Pty Ltd forthwith deliver, or cause to be delivered, to the Registrar General the existing certificate of title for the Property. (5) Declaration that the plaintiffs have an equitable interest in the Property pursuant to the contract for the sale of land dated 29 October 2014 between the third defendant as vendor and the plaintiffs as purchasers (the Contract). (6) Order that the third defendant specifically perform the Contract insofar as it remains to be performed, including by the execution of all necessary documents and the taking of all necessary steps. (7) Order that the Registrar in Equity be authorised, in default of the third defendant's compliance with Order (6), to execute all such documents and take all such steps in the name of the third defendant as may be necessary to ensure the performance and completion of the Contract. (8) Order that, within 14 days of the date of these orders, and in order to facilitate the obtaining of finance by the plaintiffs to complete the Contract, the first and third defendants provide access to the Property to the plaintiffs and their duly authorised agents, once only, for a period of up to four hours at a mutually agreed time. (9) I vacate any previous costs orders and order that the first and third defendants pay the plaintiffs' costs of Supreme Court proceedings 2015/325044 on an indemnity basis. (10) I vacate any previous costs orders and order that the first and third defendants pay the plaintiffs' costs of Supreme Court proceedings 2015/056505: (a) on the ordinary basis up to 20 July 2015; and (b) thereafter on an indemnity basis. (11) Order that the Registrar in Equity: (a) fix a time and place for completion of the Contract; and (b) enquire into and certify the sum which, upon completion of the Contract, is payable by the plaintiffs having regard to all appropriate adjustments, subject to such further set off in favour of the plaintiffs, as may be determined, representing the amount of costs payable to them as a result of Orders (9) and (10) above; (c) be authorised to make such payments and give such ancillary directions as may be necessary to facilitate the completion of the Contract and the discharge of any encumbrances on the title to the Property. (12) Order that the plaintiffs pay the sum so certified into the Supreme Court to be held pending: (a) the determination of the amount of costs in Orders (9) and (10) above; and (b) the determination by the Family Court of Australia of the amount, if any, of the second defendant's claim against the net proceeds of sale of the Property, after the set off of an amount for the plaintiffs' costs. (13) I dispense with service on Rose Sebie of an application to remove Caveat No AM326605 registered on the title to the Property. (14) I order that the caveat be removed forthwith. (15) I order that, prior to completion of the Contract, the first and third defendants and Rose Sebie be restrained from lodging, or causing to be lodged, any further caveat or dealing in respect of the Property. (16) I order the second defendant to take all appropriate steps, within 21 days of the date of these orders, to withdraw, or have the Court revoke, Order 1 of the Consent Orders originally made on 25 June 2015 in the Federal Circuit Court of Australia. (17) I list the proceedings for mention before the Registrar in Equity on 15 June 2017. (18) I order that these orders be entered forthwith. 1. Enterprise ICT and Robert Sebie appeal against those orders. Although they did not join Ms Musabwasoni to their appeal, at the hearing, they did not oppose her joinder as third respondent. The amended notice of appeal contains seven grounds. It is supported by amended written submissions dated 28 July 2018 and signed by Robert and Richard Sebie, the latter on behalf of Enterprise ICT, and by oral submissions by Robert Sebie on his own behalf and, with leave, on behalf of Enterprise ICT. In addition, on 7 August 2018, Richard Sebie provided nine pages of "Supplementary Submissions" (and 52 pages of annexures) by email, purportedly in accordance with a grant of leave "to write your honours addressing some points which I couldn't bring forward at the hearing". In fact, the appellants were only granted leave to submit a note with a page reference showing the alleged tender of an affidavit of Mr Jemmott dated 22 September 2016. 2. For the reasons that follow, none of the grounds are made out. Moreover, as intimated in argument, we would not accede to the appellants' informal application to enlarge those grounds so as to sustain paragraphs in their written submissions, there being no adequate explanation for the failure to seek further amendment of the grounds earlier. In any event, upon examination, neither the amended written submissions nor the supplementary submissions demonstrate any material error in the decision below. Fraud (grounds 3 and 4) 1. Grounds 3 and 4 challenge the primary judge's holding at Judgment [56] that "[t]he designed object of the transfer [to Enterprise ICT] was to cheat the plaintiffs of their existing rights" and thus "fraudulent" within Real Property Act, s 42. The terms of his Honour's conclusion accord with the advice of the Privy Council in Waimiha Sawmilling Co v Waione Timber Co [1926] AC 101 at 106–107. Insofar as such a fraud was "brought home" to Enterprise ICT or its agents, including Richard Sebie, the Torrens legislation did not free that company's title as registered proprietor from Mr and Mrs Pham's prior interest under their contract of sale with Robert Sebie: Assets Co v Mere Roihi [1905] AC 176 at 210. In turn, the same fraud on Mr and Mrs Pham provided an equitable basis for setting the transfer aside: see Chesterfield v Janssen (1751) 2 Ves Sen 125 at 156; 28 ER 82 at 100 (Lord Hardwicke LC). 2. These generally expressed grounds were particularised by reference to grounds 5, 6 and 7, which assert specific errors in fact-finding and are addressed below. However, the appellants also made other submissions, directly in support of grounds 3 and 4, seeking to impugn the primary judge's finding that Robert Sebie and ENA did not enter a secured loan agreement in 2005 as alleged. Those submissions should be addressed first. 3. As noted at Judgment [52], the issue before the primary judge was not whether any loan arrangement ever existed between Robert Sebie and ENA, but whether the parties executed a secured loan agreement in 2005 in the form used to justify ENA's judgment for possession and the subsequent transfer to Enterprise ICT. There was evidence (namely, Mr Kumar's report, which became Exhibit 3) that bank cheques were required to settle Robert Sebie's initial acquisition of the property (including cheques for $803,777.52, $893,711.83 and $85,594) and that those cheques were "purchased" using funds drawn from an ENA investment account (except for $403,777.52 of the $803,777.52 cheque). The total of the funds so applied was $1,379,315, the amount claimed by ENA in its caveat lodged in June 2014 (see [3] above). However, in three places, that caveat described the interest claimed by ENA as related to an "unsecured loan", and that form was signed by Robert Sebie both as registered proprietor of the land consenting to the interest claimed and as witness to the statutory declaration of Mr Gogos in his nominated capacity as "manager" of ENA. 4. It was in response to this discrepancy that Mr and Mrs Pham's solicitors sought evidence of any secured loan agreement between Robert Sebie and ENA. What followed that request is both controversial and significant to the resolution of this issue. On Mr and Mrs Pham's case, they received an email from Robert Sebie sent on 11 February 2015 at 3:34 pm (also copied to their solicitor, Mr Bui), which attached a letter from ENA and a document entitled "Secured Loan Agreement", dated 5 September 2005 but referring to the National Credit Code of 2010. All now accept that this document was not genuine and that the various signatures on it are forged. On Robert Sebie's case, that email was not sent by him. Instead, he claims to have sent an email on 10 February at 11:37 pm, attaching another document entitled "Secured Loan Agreement" and dated 5 September 2005, which omits the reference to the Code and is said to contain genuine signatures. At first instance and on appeal, Robert Sebie's position was that Mr Pham (or perhaps someone on his behalf) "fabricated and falsely created" the 11 February email and attachments, presumably to concoct an apparent fraud by him. 5. The primary judge's central findings on this dispute were as follows: 36 I referred earlier to the documents that accompanied the 11 February email from Mr Sebie and the questions which they raised, which were set out in the letter dated 12 February from the plaintiffs' solicitors. Mr Sebie accepted that these documents were not genuine but contended that he did not send the 11 February email. I do not accept his evidence. It is obvious that the email was genuine, that it was sent and that it was received. There is no other explanation for the responsive later dated 12 February from the plaintiffs' solicitors, which clearly responds to the 11 February email and its attached documents. 37 No one other than Robert Sebie could have sent the 11 February email. Mr Sebie's improbable evidence was that he actually sent, on the previous evening 10 February, a different email with almost identical text but with different documents attached. I do not accept that any such email was sent to Mr Pham. On the morning of 13 February, Mr Sebie responded to the letter dated 12 February from Mr Pham's solicitors. This supports the conclusion that Mr Sebie sent the 11 February email. If he had not sent it, the content of his 13 February email would have been quite different. I am satisfied that Robert Sebie, probably shortly before 11 February 2015, created the alleged secured loan agreement and the alleged 10 February 2015 letter from ENA Development, which went with his 11 February email. Not only did he create those documents but he persisted in his evidence knowing that he was not telling the truth. 38 The 10 February email which Mr Sebie contends he sent included a different version of the secured loan agreement and a different version of the letter from ENA Development addressed to 'Whom it May Concern'. I do not accept that those documents are genuine. Indeed, neither are the documents that were attached to the 11 February email. But the documents attached to the 10 February email were designed to overcome the obvious queries that arose in relation to the 11 February email and its accompanying documents. 1. These findings are supported by the following matters, to which the primary judge referred without any demonstrated error. First, and obviously, his Honour was entitled to reject Robert Sebie's account, which Mr Pham denied, given his assessment of the former as someone who was "incapable of telling the truth" (Judgment [3]) – an assessment that is neither challenged nor inconsistent with any incontrovertible fact, uncontested testimony or obvious probability. Secondly, whereas the email propounded by Robert Sebie was only sent to Mr Pham, the one on which Mr and Mrs Pham relied was also copied to their solicitor. Mr Bui's letter of 12 February, which referred amongst other things to the National Credit Code, is consistent with his clients' account. (Absent an allegation of fraud put to Mr Bui, who was available but not cross examined, or an explanation of how Mr and Mr Pham could have convinced their solicitor of their receipt of a fabricated email, his letter is also inconsistent with Robert Sebie's account.) Thirdly, Robert Sebie's email of 13 February, responding to Mr Bui's letter, does not take issue with any of the statements in that letter referring to an email and its attachment which, according to Robert Sebie, were never sent. In relation to this last point, Robert Sebie does seek to challenge the authenticity of that 13 February email, by reference to further experts reports sought to be adduced on appeal. However, for reasons given below (at [18]–[20]), his application to adduce that evidence must be dismissed. 2. What is more, Robert Sebie's account is inherently implausible. The two versions of the Secured Loan Agreement differ in respects other than those already mentioned, including the text and formatting of the first and second pages. Most significantly, the location of the ENA company seal on the first page of each is different, though in both it overlaps with the text. It is not obvious – and the evidence does not explain – how, or indeed why, Mr or Mrs Pham (or someone on their behalf) might have so altered the version allegedly sent to them (as a PDF) late on 10 February, in time for their solicitor to respond on 12 February. The supplementary submissions assert that "an IT expert" stated to Robert Sebie that "someone with a little Photoshop experience" could achieve that result (and mentioned that "the court system is behind with what is really happening in the real world of technology"). Needless to say, this was a matter for expert evidence led at the trial; the appellants' position could not be legitimately advanced by hearsay statements about the supposed views of an unidentified expert proffered in further submissions filed without leave after the hearing of the appeal. 3. The only evidence before the primary judge as to the authenticity of the supposed emails on 10 and 11 February was that of Mr Aaron Harrington, an information technical engineer. His report addressed whether particular emails from Robert Sebie to Mr Pham were "dispatched and delivered", including that said to have been sent at 11:37 pm on 10 February 2015. To enable him to do so, Mr Harrington apparently had remote access to Robert Sebie's computer on 18 July 2016, and he relevantly concluded that this email was sent at its "time stamp as listed". The primary judge considered this evidence but gave it no weight in circumstances where it was served late, producing the result that Mr and Mrs Pham were not in a position to respond and their counsel not in a position to cross-examine with the benefit of expert assistance. More importantly, his Honour concluded that it was "impossible to know what instructions, or potentially manipulated documents, Mr Sebie gave to Mr Harrington which may have led to his conclusion that the email was genuine": Judgment [46], [47]. Having read that report, and sought to understand it, we agree with this last observation. Had this evidence been made available earlier, the Court would have been in a position to require production of the computer and other records of each of the parties for examination, either by a court-appointed expert or by experts retained by each of the parties. 4. For the sake of completeness, we note the supplementary submission that counsel for the respondents, Mr Zipser, "provided key evidence on behalf of the Phams" and so "should have provided an affidavit to support his evidence, … been available to be cross-examined as a witness" and "withdraw[n] as counsel". The short answer to this submission is that Mr Zipser did not give evidence in the trial. Although emails annexed to Mr Pham's affidavit were forwarded from Mr Zipser's email account, no objection to their form was taken at trial. Nor is that form shown to be material to any issue in the appeal. Further evidence (notice of motion, para 2) 1. By para 2 of his notice of motion dated 24 July 2018, Robert Sebie sought to adduce further evidence in the appeal to prove that the email of 10 February 2015 was sent by him and received by Mr Pham. Contrary to an assertion in Robert Sebie's supplementary submissions, that application was not "allowed" by the presiding judge; it was adjourned for determination in the appeal: Enterprise ICT Pty Ltd v Pham (No 1) [2018] NSWCA 180 at [35(4)]. The proposed evidence consists of an affidavit of Albert David affirmed on 12 December 2017, and three experts' reports: the first by Mr Sam Sarkis and annexed to his affidavit sworn 21 August 2016; the second by Mr Charlton Wilson dated 29 January 2018; and the third by Dr Allan Watt dated 8 February 2018. Although the notice of motion referred to Civil Procedure Act 2005 (NSW), s 67, the only relevant source of power to receive such evidence is Supreme Court Act 1970 (NSW), s 75A(7). As the trial was on the merits and none of the proposed evidence is directed to matters occurring after the trial, that power may only be exercised if there are "special grounds": sub-s (8), (9). For the following reasons, and in accordance with the principles summarised in Tjiong v Tjiong [2012] NSWCA 201 at [165]–[169], that requirement is not satisfied. 2. As to the expert material, Mr Sarkis' affidavit was served in late August 2016 without the report attached. The report itself was not served until early March 2017, a month before the trial commenced. Although Mr Harrington's affidavit and report were served in the same way, that affidavit was read, and he was subject to short cross-examination by telephone. By contrast, Robert Sebie decided not to read and rely on Mr Sarkis' affidavit, following the primary judge's suggestion that it was essentially repetitive of what was said by Mr Harrington and would not "serve any useful purpose". As this affidavit was available, but not relied on, at trial and it is not likely to be decisive of this first factual issue in the appeal, the application to rely on it should be rejected. 3. Similar considerations apply to the reports of Mr Wilson and Dr Watt, which were obtained more than eight months after judgment was delivered. First, there is no reason why that evidence could not have been obtained before the trial. Had that occurred, the expert issues arising could have been addressed in the manner suggested above (at [16]). Secondly, the appellants plainly turned their minds to the significance of such evidence, secured the affidavits of Mr Harrington and Mr Sarkis, and only relied on the affidavit of the former. They should not be permitted to revisit that forensic decision. Finally, the probative value of this evidence, like that of Mr Harrington, depends wholly on the assumptions underlying, and qualifications to, the opinions expressed, which cannot be identified from a reading of the report. That is particularly so in circumstances where the evidence does not involve an examination of any of Mr Pham's electronic records. Robert Sebie did not address the Court about these questions, including in his supplementary submissions as to fresh evidence, and we are not satisfied that there is a "high degree of probability" that this evidence would have led to a different result: cf Akins v National Australia Bank (1994) 34 NSWLR 155 at 160. The application to adduce this further evidence should also be rejected. 4. In the remaining affidavit, Mr David alleges that, in his capacity as a Justice of the Peace, he witnessed the signing by Rose Sebie and Robert Sebie of a document entitled "Loan (Heads of Agreement).", dated 31 August 2005 and annexed. The affidavit was apparently served on 10 February 2018 and filed on 25 March 2018. Its covering page is incomplete. The annexure – a deed supposedly providing for a secured loan – appears not to have been produced in response to any notice to produce or subpoena: see Judgment [54]–[55]. The appellants never referred to any "heads of agreement" in the argument before the primary judge. In light of those unexplained circumstances, and the allegations and findings of fabrication in this matter, we are not prepared to assume that these materials were unavailable at trial or that they are authentic. Accordingly, we reject the application to adduce further evidence. 5. Finally, the supplementary submissions also refer to an affidavit of Richard Sebie dated 19 April 2017 and allegedly handed up by then-counsel for Enterprise ICT on the same date (the fourth day of the trial hearing), immediately before he withdrew. Annexure "C" to the affidavit is identified in para 5 as "a true copy of ENA Development Pty Ltd financial records and articles of association". Yet annexure "C" includes another copy of the recently introduced "Loan (Heads of Agreement)." The discrepancy is nowhere explained. In the circumstances, we would not accept Robert Sebie's submission that this, or any, affidavit including that annexure was handed up at trial. Enterprise ICT's knowledge (ground 5) 1. As Richard Sebie was the sole director of Enterprise ICT and its representative in the transfer, his knowledge of, or participation in, the fraud initiated by his brother was necessary and sufficient for that fraud to be brought home to the company: Tesco Supermarkets Ltd v Nattrass [1972] AC 153 at 170 (Lord Reid), 199 (Lord Diplock); Hamilton v Whitehead (1988) 166 CLR 121 at 127 (Mason CJ, Wilson and Toohey JJ). The primary judge's findings concerning Richard Sebie are summarised at Judgment [57]: Richard Sebie shared his brother's intention to defeat the plaintiffs claim. At the very least, he was recklessly indifferent to their rights and did his brother's bidding, knowing that there was no secured loan agreement. ENA Development's statement of claim seeking possession of the Chiswick land from Robert Sebie, was a dishonest artifice. And Richard Sebie knew it. He signed it twice. And he performed an essential role in ensuring that the land was transferred to Enterprise ICT – and out of the hands of the plaintiffs and his brother's former wife. He signed an affidavit of service on his brother, a consent order dated 16 June 2015, a notice of motion seeking default judgment with affidavit in support, another consent order dated 2 July 2015, a transfer of land of the same date and a 'deed of arrangement' dated 20 July 2015. 1. In that passage, the primary judge made two findings in fairly general terms as to Richard Sebie's knowledge: first, that he "did his brother's bidding, knowing there was no secured loan agreement"; and, secondly, that he "knew" that ENA's proceeding for possession supporting the transfer "was a dishonest artifice". Each of those findings was sufficient in the circumstances to establish the company's liability. The first is expressly challenged. The second, although related, is not. Nevertheless, it should also be considered in light of the challenge to the first. 2. In May and June 2015, Richard Sebie swore two affidavits on behalf of ENA. By the first, he stated that, having had access to its books and records "in relation to the debts and secured loan", he believed the allegations of fact in the statement of claim – including that the loan was evidenced by a written agreement dated 5 September 2005 – were true. The second was sworn in support of ENA's application for consent judgment. In addition to containing non sequiturs, grammatical errors and instructions to the prospective deponent for completing it, this affidavit included a statement that ENA's claim for possession arose from Robert Sebie's default in repaying money due under "the Secure Loan" (sic). 3. In reality, Richard Sebie could not have honestly made those assertions of fact and belief. In his cross-examination, he accepted that at no time did he have any personal knowledge of a secured loan agreement made in September 2005; that before December 2015 he had no involvement in ENA's affairs, apart from paying some invoices at the behest of his elderly mother; and that he could not say why he was described in the first affidavit above as ENA's "general manager". 4. Richard Sebie thus gave, and must have appreciated that he had given, knowingly false evidence as to his knowledge and belief in support of ENA's commencement of the proceeding and judgment for possession. That prompted the primary judge's finding at Judgment [57] that ENA's claim was a "dishonest artifice" of which Richard Sebie knew. On Richard Sebie's own evidence, that artifice was material to the completion of the transfer to Enterprise ICT. Specifically, in his affidavit in this proceeding, he maintained that he had presumed, at the time of the transfer, that, "as ENA had a court order, they thought they had the authority to transfer the Chiswick property to which entity as they liked"; "if this was not the case", he continued, he "would of not accepted to take delivery of the property" (sic). Accordingly, Enterprise ICT, through Richard Sebie, had actual knowledge of the fraud underlying its receipt of the property. 5. That conclusion makes it unnecessary to decide whether the primary judge erred in inferring that Richard Sebie affirmatively knew that no secured loan agreement existed, as distinct from having no basis for believing that it did exist. That inference finds support in Richard Sebie's willingness to profess personal knowledge of the loan agreement in circumstances where, had it in fact existed, someone else with personal knowledge could quite easily have said so. 6. The same circumstances provide an answer to a written submission of the appellants, going beyond the seven grounds of appeal, that at the time of the transfer Enterprise ICT did not have knowledge of Mr and Mrs Pham's interest because their caveat had been removed by Robert Sebie. This argument overlooks ENA's initial joinder to the specific performance proceeding and Richard Sebie's presence in court on 12 June 2015, giving instructions to the solicitor and barrister representing ENA. Given those circumstances, Enterprise ICT must have been aware, through Richard Sebie, that the pleading in that proceeding alleged lodgement of a caveat by Mr and Mrs Pham to protect their interest as purchasers. Absence of consideration (ground 6) 1. Ground 6 seems to challenge the finding at Judgment [10] that the transfer to Enterprise ICT was "for no consideration". In support of this ground, the appellants submit that "[t]he undisputed evidence was to the effect that Enterprise ICT paid about $97,690 as stamp duty (+ $10 chq fee for total of $97,700) on the transfer of the property from Robert Sebie to Enterprise ICT". That may be so. Indeed, the primary judge noted the payment of stamp duty at Judgment [35] (although, in a harmless typographical error, the amount was recorded as $87,690). 2. Regardless, this ground has no merit. First, the obligation to pay stamp duty is imposed on the transferee: Duties Act 1997 (NSW), s 13. Accordingly, the undertaking to perform, or performance of, that existing legal duty is not consideration in the sense relevant to formation of an enforceable contract: Collins v Godefroy (1831) 1 B & Ad 951; 109 ER 1040. Secondly, understood in context, this finding was plainly directed to the fact (acknowledged by the deed between ENA and Enterprise ICT) that "no monies [were] exchanged for the transfer, due to [the] identical shareholding" of those companies. Thirdly, the absence of consideration was not necessary for the primary judge's orders, which rested on the fraud perpetrated by Robert Sebie and Enterprise ICT and the contract between Robert Sebie and Mr and Mrs Pham. Ms Nassif's evidence (ground 7) 1. Ground 7 challenges the finding at Judgment [50] that Ms Nassif's evidence was "of no utility". That evidence consisted of an affidavit affirmed on 15 June 2016 and testimony given by telephone on the second day of the hearing. In her affidavit, Ms Nassif alleged that she had witnessed Robert Sebie's signature on "a document" on or about 2 September 2005; that she had witnessed the signatures of Ms Sebie, Ms Gayed and Robert Sebie on another "document" on or about 5 September 2005; and that she had not witnessed another "document" purporting to bear her signature and details and shown to her in about June 2018. The documents to which those allegations referred (annexed and marked "A", "B" and "C", respectively) were each one page in length and contained nothing more than a completed signature panel. Annexure "B" was said to be the third, and signature, page of the Secured Loan Agreement emailed to Mr Pham at 11:37 pm on 10 February 2015. 2. The primary judge dismissed Ms Nassif's evidence as of no assistance principally because it said nothing as to the nature or content of the document to which each signature page was supposedly attached. In a case where there were allegations and counter-allegations as to the fabrication of documents, that conclusion was sound. The appellants sought to cure this deficiency by relying on a further affidavit of Ms Nassif said to have been made on 10 June 2015, which annexed full copies of three signed documents. No formal application to lead further evidence was made in respect of this affidavit, and any such application would have failed in view of the absence of any sensible explanation for why two affidavits might have been prepared before the trial and only the second, and apparently less complete, relied on. Procedural fairness (grounds 1 and 2) 1. Grounds 1 and 2 may be addressed shortly. The former alleges that "the court denied [Robert Sebie] procedural fairness by refusing to call a further witness or witnesses in the court proceedings". It thus presupposes the controversial proposition that a trial judge in a civil case has power to call witnesses absent the consent of both parties: see JD Heydon, Cross on Evidence, (11th ed 2017, LexisNexis) at 581 [17080]. Even if such a power exists, the appellants identify no circumstance justifying the extraordinary conclusion that the primary judge was bound to exercise it without having been invited to do so: cf Sharp v Rangott (2008) 167 FCR 225 at [4]–[5] (Gray and North JJ), [75] (Besanko J). The unexplained suggestion by Robert Sebie, on the last day of the hearing and after the conclusion of evidence, that evidence of his father, Mr Ramzy Sebie, was "critical", though not earlier produced, did not obligate the primary judge to call, or grant leave for any party to call, that potential witness. 2. The latter ground alleges a denial of procedural fairness in the primary judge's refusal "to receive the affidavit of Rose Sebie". The ground seems to refer to the following exchange on the third day of the hearing: HIS HONOUR: If she's got dementia then it probably makes her affidavit extremely unreliable ... Mr Sebie, we had a discussion two days ago and you informed me that you did not wish to require your mother to attend court. I would not be prepared to receive her affidavit without her attending for cross-examination. [ROBERT SEBIE]: Certainly. I understand. 1. Mr and Mrs Pham were entitled to, and did, require the attendance for cross-examination of all witnesses on whose affidavits Robert Sebie proposed to rely: Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 35.2(1). Their notice of that requirement is not said to have been unreasonable. Accordingly, unless the court ordered otherwise, Ms Sebie's affidavit was not to be used: UCPR, r 35.2(3). Especially given Robert Sebie's earlier acceptance that his mother's evidence had limited importance, any exercise of the discretion not to make such an order did not miscarry. Conclusion 1. Accordingly, the Court makes the following orders: 1. Dismiss paragraph 2 of the appellants' notice of motion dated 24 July 2018. 2. Dismiss the amended notice of appeal. 3. Order the appellants pay the first and second respondents' and the third respondent's costs of the appeal, including the notice of motion. ********** 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: 15 August 2018