Supreme Court New South Wales Medium Neutral Citation: In the matter of Tresdar Pty Ltd [2019] NSWSC 179 Hearing dates: 4–6 & 8 February 2019 Date of orders: 01 March 2019 Decision date: 01 March 2019 Jurisdiction: Equity - Corporations List Before: Rees J Decision: Judgment for the Plaintiff. Orders at [159]. Catchwords: EQUITY — Trusts and trustees — Express trusts — Intention to create — Original beneficiary deceased — Claim by successor in title — No evidence of words spoken — Admissibility of conduct subsequent to declaration of trust — Conduct of parties consistent only with existence of trust. EVIDENCE — Hearsay — Exceptions — First-hand hearsay exceptions — Civil proceedings where maker unavailable — Document containing a representation that another representation made to its author — Document admitted as evidence that representation made — s 63(2) of the Evidence Act 1995 (NSW) applied. EVIDENCE — Standard of proof — Civil cases — Allegation of fraud — Whether fraud necessary to prove — s 140 of the Evidence Act 1995 (NSW) applied. CORPORATIONS — Shares — Share certificate — Prima facie evidence of title — Books of company — Prima facie evidence — Where presumptions displaced. Legislation Cited: Evidence Act 1995 (NSW), ss 55(1), 62(1), 63, 136, 140 Corporations Legislation Amendment Act 2003 (Cth), Schedule 1 First Corporate Law Simplification Act 1995 (Cth), Schedule 3 Company Law Review Act 1998 (Cth), s 114 Companies Act 1981 (Cth), ss 255A, 256 Corporations Act 2001 (Cth), ss 169(5A), 176, 1070C(2), 1072H, 1305, 1311(1) Companies (New South Wales) Code 1981 (NSW), s 33(1) Civil Procedure Act 2005 (NSW), s 94 Cases Cited: Australian Securities and Investments Commission v Rich [2009] NSWSC 1229 Bahr v Nicolay (No 2) (1988) 164 CLR 604 Briginshaw v Briginshaw (1938) 60 CLR 336 Buffrey v Buffrey [2006] NSWSC 1349 Byrnes v Kendle (2011) 243 CLR 253 Calverley v Green (1984) 155 CLR 242 Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353 Gooley v Motasea Pty Ltd [2015] NSWCA 31 Hyhonie Holdings Pty Ltd v Leroy [2004] NSWCA 72 In the matter of Civil & Civic Infrastructure Pty Ltd [2015] NSWSC 770 In the matter of DJG Equities Pty Ltd [2014] NSWSC 36 In the matter of NL Mercantile Group Pty Ltd [2018] NSWSC 1337 In the matter of Pulse Interactive Pty Limited (in liquidation) [2019] NSWSC 22 In the matter of Shot One Pty Ltd (in liquidation) [2017] VSC 741 at [243]-[244] Korda v Australian Executor Trustees (SA) Limited (2015) 255 CLR 62 Legal Services Board v Gillespie-Jones (2013) 249 CLR 493 Livingspring Pty Ltd v Kliger Partners (2008) 20 VR 377 Maddocks v DJE Constructions Pty Ltd (1982) 148 CLR 104 McEvoy v McEvoy [2012] NSWSC 1494 Neat Holdings Pty Limited v Karajan Holdings Pty Limited (1992) 110 ALR 449; [1992] HCA 66 Owens v Lofthouse [2007] FCA 1968 Reitano v Reitano [2012] NSWSC 1127 Sio v The Queen (2016) 259 CLR 47; [2016] HCA 32 Stillisano v Adami [2010] SASC 351 Strang v Strang [2009] NSWSC 760 Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd (2009) 258 ALR 598; [2009] NSWSC 769 Trident General Insurance Co Ltd v McNeice Bros Pty Ltd (1988) 165 CLR 107 Trustees of the Property of Cummins v Cummins (2006) 227 CLR 278 Whitton v Regis Towers Real Estate Pty Ltd (2007) 161 FCR 20; [2007] FCAFC 125 Texts Cited: Jacobs' Law of Trusts in Australia (Heydon and Leeming, LexisNexis Butterworths, 8th ed, 2016) Category: Principal judgment Parties: Brendan Leonard Samuels in his own right and in his capacity as trustee of the deceased estate of Fleur Samuels (Plaintiff) John Powell Keefe (First Defendant) Tresdar Pty Limited ACN 003 225 536 (Second Defendant) Representation: Counsel: P.S. Braham SC with M.A. Karam (Plaintiff) L. Rich (First Defendant) Solicitors: Keith Redenbach Legal (Plaintiff) Banki Haddock Fiora (First Defendant) File Number(s): 2017/384519 Publication restriction: Nil Judgment 1. HER HONOUR: The plaintiff, Brendan Samuels, seeks a declaration that the share held by the first defendant, John Keefe, in the second defendant, Tresdar Pty Ltd, is held on trust for Mr Samuels. He seeks consequential orders that Mr Keefe transfer the share to him and repay $171,000 in dividends with interest. Brendan Samuels contends that, when Tresdar was incorporated in 1987 and one share was issued to his father, Paul Samuels, and the other to Mr Keefe, that Mr Keefe held his share on trust for Paul Samuels. Mr Keefe opposes the relief sought and says that he is a beneficial owner of the share. 2. Tresdar's principal asset is a commercial property at Units 1 to 6, 74 to 78 Darley Street, Mona Vale (Darley Street), which was estimated to be worth $4.3 million in 2012. Tresdar's main income is rent from this property. ADMISSIBILITY OF EVIDENCE 1. Two issues arose with respect of the admissibility of evidence which I will deal with at the outset. I promised more eloquent reasons in respect of the former, and was wrong in respect of the latter. Admissibility of evidence after alleged creation of trust 1. It is pleaded that, in or about February 1987, Mr Keefe agreed with Paul Samuels to hold his share on trust for Paul Samuels and his successors, and that the agreement was express. Beyond this, Brendan Samuels was unable to provide particulars of the express trust. This is unsurprising, given that Paul Samuels died in 2012 and Brendan Samuels was aged 15 when the alleged trust was created. Brendan Samuels relied upon the subsequent conduct of Paul Samuels and others as being consistent only with such a trust. By his pleading, Brendan Samuels listed the conduct on which he intended to so rely. 2. Mr Keefe objected to the admission of any evidence which post-dated the allocation of a share to Mr Keefe in Tresdar in 1987, unless that evidence was an admission by him against interest. Mr Keefe submitted that such evidence was not relevant as required by section 55(1) of the Evidence Act 1995 (NSW), that is, evidence that "if it were accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding." It seems to me that evidence of the conduct and communications of Paul Samuels or others post-1987 fulfils the definition in section 55(1) as, if he, or others, acted consistently or inconsistently with the existence of the trust, this rationally affects the assessment of the probability of the existence of the trust. 3. Mr Keefe's objection was, in truth, based upon Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353, a resulting trust case, where the Court was considering the admissibility of evidence to rebut the presumption of advancement. At 365: The presumption [of advancement] can be rebutted or qualified by evidence which manifests an intention to the contrary. Apart from admissions, the only evidence that is relevant and admissible comprises the acts and declarations of the parties before or at the time of the purchase (in this case before or at the time of the acquisition of the shares by allotment) or so immediately thereafter as to constitute a part of the transaction. This was followed in Calverley v Green (1984) 155 CLR 242. Of course, in resulting trust cases, the Court is concerned to ascertain the intention of the settlor of the trust at the time when the trust was brought into existence. A declaration of intention cannot be made at a later point in time to, retrospectively, create a resulting trust. 1. The High Court considered the passage from Charles Marshall in Trustees of the Property of Cummins v Cummins (2006) 227 CLR 278, noting at [65]: However, as Malayan Credit Ltd v Jack Chia-MPH Ltd [1986] AC 549 at 559-560 illustrates, whilst evidence of subsequent statements of intention, not being admissions against interest, are inadmissible, evidence of facts as to subsequent dealings and of surrounding circumstances of the transaction may be received: White and Tudor's Leading Cases in Equity (9th ed (1928) Vol 2) page 882. The Court considered that if evidence was limited to the date at which the asset was purchased, it "would produce a distorted and artificial result, at odds with practical and commercial realities": at [67]. 1. Statements to like effect can be found in Hyhonie Holdings Pty Ltd v Leroy [2004] NSWCA 72 at [46] (Hodgson JA, Mason P and Handley JA agreeing); Buffrey v Buffrey [2006] NSWSC 1349 per Palmer J at [14]; Owens v Lofthouse [2007] FCA 1968 at [51] (Weinberg J); Strang v Strang [2009] NSWSC 760 at [68] (Nicholas J); Stillisano v Adami [2010] SASC 351 at [70] (White J); and McEvoy v McEvoy [2012] NSWSC 1494 per Pembroke J at [3]. 2. As such, the Court may have regard to events which occurred after the alleged creation of a trust as either confirming or denying the existence of the trust. Indeed, Mr Keefe's affidavits and exhibits were replete with material post-dating the incorporation of Tresdar, on which he relied to establish that there was no express trust but, rather, he and Paul Samuels had conducted themselves consistent only with him being a beneficial shareholder at all times. Section 63 and second-hand documentary hearsay 1. In 1988, Paul and Fleur Samuels separated. Their solicitors corresponded in an effort to reach a property settlement. Two of the letters from Paul Samuels' solicitors contained representations that, in the first letter, Paul Samuels had paid for Darley Street (which, as I understand it, Mr Keefe accepts) and, in the second letter, that Paul Samuels owned all of the shares in Tresdar. Paul Samuels and his solicitor, Michael Clarke, have both died. Mr Keefe objected to the admissibility of the correspondence as second-hand hearsay and submitted that the letters should be rejected or, alternatively, limited under section 136 of Evidence Act 1995 (NSW). 2. The letters were not business records, having been prepared in contemplation of legal proceedings. Paul Samuels and his solicitor, Mr Clarke, are both dead. The plaintiff sought an order under section 63 of the Evidence Act 1995 (NSW), which provides: 63 Exception: civil proceedings if maker not available (1) This section applies in a civil proceeding if a person who made a previous representation is not available to give evidence about an asserted fact. (2) The hearsay rule does not apply to: (a) evidence of the representation that is given by a person who saw, heard or otherwise perceived the representation being made, or (b) a document so far as it contains the representation, or another representation to which it is reasonably necessary to refer in order to understand the representation. 1. Mr Keefe objected to an order being made under section 63 as the notice provisions had not been complied with and it caused him prejudice as he could not test the veracity of the letters. In circumstances where Mr Keefe was aware of the letters from service of the plaintiff's evidence in 2017 and 2018, and where both parties are affected by the passage of time and the death of key witnesses, I was prepared to waive compliance with the notice requirements pursuant to section 67(4) of the Evidence Act. 2. Section 62(1) defines previous representation as "a previous representation that was made by a person who had personal knowledge of an asserted fact", thereby limiting section 63 to first-hand hearsay. Having reviewed the section more carefully since the hearing, it seems to me that the representation which Paul Samuels made to Mr Clarke is the asserted fact. Mr Clarke's letter is a document containing a representation as to that asserted fact. As Mr Clarke is not available, the effect of section 63 is that the document is admissible to prove the asserted fact, which is that Paul Samuels made the representation. It cannot be used to prove the underlying truth of the representation: per Barrett J in Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd (2009) 258 ALR 598; [2009] NSWSC 769 at [42], see also Sio v The Queen (2016) 259 CLR 47; [2016] HCA 32 at 63-64, per curiam, as to how the asserted fact is to be identified for the purposes of first-hand hearsay exceptions. In light of this, I revoke my earlier ruling admitting these letters without limitation and instead admit the letters as evidence of what Paul Samuels told his solicitor, and not as to truth of what he told his solicitor. Facts 1. The task of finding facts in this matter was made more difficult by the following matters: 1. Key witnesses have died. Paul Samuels died in 2012. Fleur Samuels died in 2016. Paul Samuels' solicitor, Michael Clarke, has died. For several key events, the only living witness is Mr Keefe. 2. Some documents were missing. Many of the documents were old, dating from the 1980s and may have been missing through the effluxion of time, although other documents from that era remained. 3. Many of the transactions were recorded by hand in journals by Paul Samuels, his bookkeeper or Mr Keefe. Many of the transactions were between related companies. One bank account was used to effect transactions involving more than one company. The journals are not easy to understand without the assistance of Paul Samuels or his bookkeeper. Credibility of witnesses 1. Brendan Samuels was briefly cross-examined. He answered questions openly and honestly. The plaintiff read affidavits deposed by Fleur Samuels' solicitor, David Carson, and a long-time tenant of Darley Street, Matthew Green. Neither was required for cross-examination. Their evidence was consistent with other contemporaneous evidence and I have no reason to doubt what they said. 2. David Rose, Brendan Samuels' accountant, was cross-examined at length on his calculations of how much money Mr Keefe has withdrawn from Tresdar and other Paul Samuels' companies based on general ledgers and Tresdar's recent bank statements. Mr Rose was challenged on the correctness of his calculations, and it became apparent that Mr Rose did not have all of the bank statements which were in evidence at the hearing available to him when he prepared the document. This readily explains whatever limitations there may have been in his calculations. How much money Mr Keefe has withdrawn from Tresdar and other companies is not relevant to an issue in these proceedings, nor Mr Rose's calculations, nor his credit, but I have no reason to doubt his integrity. 3. Mr Keefe read an affidavit of Brian Currie, who was not required for cross-examination. Mr Currie worked for Mr Keefe's firm, J.P. Keefe & Co, from late 1985 to November 1989. There was only Mr Currie and Mr Keefe in the practice. Mr Currie was then a young accountant and described Mr Keefe as his mentor. In 2008, Mr Currie resumed his connection with Mr Keefe, who brought him clients from J.P. Keefe & Co who wished to continue to stay with Mr Keefe rather than the firm to which Mr Keefe had sold his practice. These clients included Paul Samuels' companies and Tresdar. Since 2010, Mr Keefe has subleased office space from Mr Currie from which Mr Keefe has worked four days a week. Mr Currie deposed to a conversation with Mr Keefe about the establishment of Tresdar, in an affidavit prepared 31 years after the event. I attach little weight to Mr Currie's recollection of the 1987 conversation, given the length of time between the conversation and the affidavit. I am cautious about his untested evidence given his close affiliation with Mr Keefe. 4. Mr Keefe is a retired chartered accountant. Mr Keefe is an intelligent man who gave, initially at least, precise and fair answers, indicating that he was well-prepared for the hearing and had a good recall of dates and figures. However, when pressed on his answers, Mr Keefe became evasive, gave inconsistent answers and, on occasion, speeches. Whilst Mr Keefe was able to give precise answers in respect of some matters which occurred in the 1980s, when pressed on improbable answers he retreated to saying that he did not understand or had not kept records, hadn't looked at all of the records and that it was a long time ago. Mr Keefe was evasive in the face of documents which he prepared. Mr Keefe failed to make reasonable concessions. Mr Keefe was an unsatisfactory witness. His answers were often non-responsive. Mr Keefe's evidence was so unlikely on enough occasions that I am not prepared to accept his evidence unless it is corroborated by contemporaneous documents, another reliable witness or is against his own interest. Paul Samuels and Mr Keefe 1. Paul Samuels was a successful businessman who operated his business through a number of companies referred to collectively as "the Brookfield Group". In 1971, Paul and his wife Fleur Samuels had a son, Brendan Samuels, who was their only child. 2. In about 1981, Mr Keefe became Paul Samuels' accountant. On 1 June 1981, Mr Keefe became the company secretary of companies in the Brookfield Group. Mr Keefe gave accounting, financial and tax advice to Paul Samuels. Mr Keefe described the tasks he undertook for Paul Samuels as follows: I acted as a business advisor to him, and as his agent in connection with his business interests. I held his power of attorney and was a signatory on his business cheque accounts, including during the 1980s and 1990s when Paul [Samuels] ordinarily spent a significant period of time, around 3 to 5 months of each year in the UK and Europe… 1. Mr Keefe said that, "[a]s Paul's advisor", he assisted Paul Samuels to: 1. sell his interest in "Eurocars Mazda", a car dealership, including dealing with complex issues in relation to his motor dealer's licence; 2. broker a deal between Paul Samuels and the purchaser of the Eurocars business in relation to a commercial development on land owned by Paul Samuels' company, Brookfield Properties Pty Ltd, in St Leonards; 3. locate an appropriate site, advising as to the appropriate business structure and assisting with gaining approval for, and in the construction of, Wakefield Park Motor Racing Circuit, which required significant dealings with government departments, the Confederation of Australian Motor Sport, the NSW Minister for Sport, Goulburn Council and insurers; 4. manage Paul Samuels Racing Pty Ltd, which imported racing tyres and provided mechanical services to race car owners; and 5. provide general advice and assistance. 1. Mr Keefe said that Paul Samuels introduced Mr Keefe to others as his confidant and counsellor. Mr Keefe said that he believed Paul Samuels called him that "because of how much he depended on me for advice in his business affairs. He was continually discussing things with, and bouncing ideas off, me." 2. Mr Keefe estimated that, from 1981 to 2006, some 10 to 15 per cent of his accounting business was for Paul Samuels or his companies. Mr Keefe charged Paul Samuels an annual fee, rather than charging him on an hourly basis. Mr Keefe says he did not render an invoice, and was not otherwise paid for any of the work which he undertook as company secretary or director in Paul Samuels' companies but only charged for accountancy work. However, it seems to me that a more accurate description is that Mr Keefe provided a range of accounting and business services to Paul Samuels, for which he charged an annual fee. In return for that fee, Mr Keefe provided accounting services through his firm but also attended to a range of other tasks. There is no evidence as to what the annual fee was but, presumably, Mr Keefe negotiated a fee which he was prepared to accept in return for the wide range of services provided to Paul Samuels. It seems unlikely that Mr Keefe would have continued to provide those services over the 25 years or more of their association unless that was so. 3. Mr Currie recalls that Mr Keefe and Paul Samuels had a unique relationship amongst the clients of the firm. Mr Keefe and Paul Samuels met at J. P. Keefe & Co's offices about once every two months and they regularly enjoyed lunch together. Mr Keefe and his family were often invited to Paul Samuels' home. Mr Keefe agreed that he occupied a position of trust and confidence in respect of Paul and Fleur Samuels. This was clearly so. Accounting records for the Brookfield Group 1. So far as the accounts of the Brookfield Group are concerned, Mr Keefe said that Paul Samuels and he recorded the transactions of the companies in handwritten journals. Mr Samuels or his bookkeeper, Patricia Ball, entered transactions into a cash book or an "Investments" journal. Where necessary, Mr Keefe prepared a handwritten journal entry to correctly record the transactions. At the end of the financial year, relevant information was entered on a software package from which financial statements were prepared. 2. Three journals are in evidence: the cashbooks for "Tresdar Pty Ltd" and "Bolton Grange Pty Ltd"; and the "Investments" journal. No journal book survives for Wybrown Pty Ltd, which is probably not surprising as the company was deregistered in 1992. The "Investments" journal is the most useful and contains, essentially, two sets of records: 1. Page 1 lists bank accounts operated by the Brookfield Group together with the page numbers within the journal where records for each bank account are to be found. If one turns to the identified pages within the journals, one finds records in respect of transactions on that bank account. The records note whether the deposit or withdrawal was for Paul Samuels or which company in the Brookfield Group, to what the transaction related, details of interest rates, and the running balance of the bank account. 2. Page 1 also contains a list of mortgage finance provided by the Brookfield Group, with a reference to where records in respect of each mortgage may be found in the journal. Those pages contained detailed notes of the borrower, the purpose of the loan, the security, the interest rate and changes in rate, further advances, repayments and final discharge of the mortgage. 1. Whilst the records may not accord with accounting standards, the records appear comprehensive and detailed. An investment in Wybrown Pty Ltd and two motels? 1. In August 1981, another company was added to the Brookfield Group. A shelf company, Wybrown Pty Ltd, was incorporated on 30 June 1981. On 5 August 1981, Paul Samuels and Mr Keefe became directors and Mr Keefe became the secretary of the company. The company had one share, which was issued to Bolton Grange Pty Ltd, company in the Brookfield Group. 2. Mr Keefe says that this initial share allocation to Bolton Grange was an error. According to Mr Keefe, Paul Samuels and Mr Keefe agreed to invest in property together and Wybrown was set up for this purpose. Mr Keefe says this was consistent with Mr Keefe's other business activities, being property investment, a petrol station, a travel agency and a car dealership. 3. Either way, by December 1982, the annual return of Wybrown recorded that the share capital of the company had been increased to three shares, and allocated as follows: 1. two shares held by Paul Samuels, and 2. one share held by Samben Pty Ltd. Samben was the trustee company for Mr Keefe's family trust. The beneficiaries of that trust were Mr Keefe, his wife (then Janet Keefe), children and grandchildren. 1. Mr Keefe says that he and Paul Samuels agreed to invest in property in proportions of one-third by Mr Keefe and two-thirds by Paul Samuels, and that in early 1982 they deposited funds into a bank account which Mr Keefe opened in Wybrown's name. Mr Keefe says he deposited $20,000 and Paul Samuels deposited $40,000 into the bank account before attending an auction in St Ives to bid on a property. They were not the successful bidders. 2. There is no record in the "Investments" journal in 1982 of Paul Samuels or his companies withdrawing or investing $40,000 for this purpose, or withdrawing or investing $40,000 at all. I do not accept that a bank account was opened for Wybrown in the manner described by Mr Keefe. 3. On 30 March 1987, Wybrown purchased a motel at 46 Malvern Avenue, Manly called "Bombora" for $170,000. Mr Keefe said that the deposit was paid in the following manner, … Paul and I went to the real estate agent's office and gave him a signed contract with a 10% deposit in a bank cheque, which we had withdrawn from the money we had put into the Wybrown account earlier. However, according to the "Investments" journal, on 17 February 1983, Paul Samuels lent $17,000 to Wybrown for the deposit. The monies were drawn from a bank account in the name of Paul Samuels at United Permanent Building Society. I do not accept that the deposit was paid from a Wybrown bank account in the manner described by Mr Keefe. 1. The remaining $153,000 of the purchase price for "Bombora" was paid as follows: 1. A loan was $60,000 was obtained, secured by a mortgage registered over the property. 2. Of the remaining $93,000 of the purchase price, on 29 March 1983, Paul Samuels lent a further $74,000 to Wybrown for the balance of the purchase price, drawn from the same United Permanent Building Society account. This leaves $19,000 of the purchase price unaccounted for, which may have been Mr Keefe's contribution. 1. In the weeks after completion of the purchase of "Bombora", on 13 April 1984 Paul Samuels made further loans to Wybrown of $3,852.25 and $1,564.70 and, on 21 April 1983, a further loan of $5,000. Given the timing and uneven amount of the first and second loans, it seems likely that these loans were to pay for stamp duty and disbursements on the purchase. The third loan likely provided working capital for Wybrown and the motel. 2. On 30 November 1983, Wybrown purchased another motel at 19 Pacific Street, Manly called "Greentrees" for $315,000. "Greentrees" was across the road from "Bombora". The acquisition of "Greentrees" was funded by the Brookfield Group, as follows: 1. On 20 October 1983, the "Investments" journal records a loan from Paul Samuels to Wybrown of $30,000 for the deposit. 2. On 28 November 1983, the "Investments" journal records a further loan from Paul Samuels to Wybrown of $100,000 for the balance of the purchase price. 3. A journal entry on 30 June 1984 in the journal for Bolton Grange records a loan of $200,000 to Wybrown that year. This more than covered the remaining $185,000 to complete the purchase together with incidental expenses such as stamp duty and legal costs. 1. On 2 March 1987, the "Investments" journal records a further loan from Brookfield Investments to Wybrown of $10,000. 2. Mr Keefe says that he spent a considerable amount of time working at the motels and did not charge Paul Samuels for this work, "because I was a part-owner of the business and it was my way of contributing to the business and to the growth of my investment." Mr Currie deposed that Mr Keefe was involved in Wybrown, completing paycheques and payslips for staff, preparing bank deposit documents for Wybrown's rental income and writing and signing cheques to Wybrown's suppliers and tradespeople. According to Mr Currie, Mr Keefe spoke with Wybrown's staff, bank officers, real estate agents, solicitors and others involved in Wybrown's affairs. Every Thursday morning Mr Keefe went to the motels to do the pays and cheques and speak to the manager. 3. Mr Keefe and Mr Currie's description of the role which Mr Keefe played in the business affairs of Wybrown is consistent with the range of services which Mr Keefe provided to Paul Samuels and his companies, and for which he charged an annual fee. As I have said earlier, I do not accept that the annual fee was limited to accounting services provided by J.P. Keefe & Co. 4. I conclude that Mr Keefe likely contributed $20,000 to Wybrown. The evidence which supports this is: 1. the shareholding of Wybrown includes one share allocated to Samben Pty Ltd; and 2. some $19,000 of the purchase price of "Bombora" is not otherwise accounted for the "Investments" journal. 1. However, whatever discussions Mr Keefe and Paul Samuels had as to their respective contributions to an investment in a property at St Ives did not align with how the investment in motels proceeded 5 years later. Paul Samuels contributed some 95 per cent of the monies to acquire the motels. An investment in Tresdar Pty Ltd and Darley Street? 1. Mr Keefe says that in about December 1986 or January 1987, Paul Samuels and he decided to dissolve Wybrown and set up a new vehicle for future purchases. 2. Mr Currie says that when Tresdar was incorporated, Mr Keefe told Mr Currie that Paul Samuels and he were going to sell the motels and buy a commercial property that didn't require so much staff interaction. They were going to set up a new company for this property purchase. Mr Currie recalled this conversation in an affidavit sworn on 24 August 2018, that is, 31 years later. For reasons earlier given, I attach little weight to Mr Currie's recollection of the 1987 conversation, which, in any event, did not include any statement by Mr Keefe as to how the shares in the new company would be allocated or held. 3. On 13 January 1987, a shelf company, Tresdar Pty Ltd, was incorporated. On 3 February 1987, having purchased the shelf company: 1. Mr Samuels was recorded in the company register as a director and shareholder of one ordinary share. 2. Mr Keefe was recorded as a director, secretary and shareholder of one ordinary share. 1. Mr Keefe says that he put his share in Tresdar in his name, rather than the name of Samben, as he had made a decision to separate from his wife but had not yet done so. I didn't want the share to be held in the name of Samben because of the state of my relationship with Janet, my desire to keep this investment separate from her, and because I was not confident that she would sign any documents that needed to be signed in order for Samben to hold the share in Tresdar. This explanation does not make sense. If Mr Keefe was contemplating separating from his wife, the fact that the share was held in his name would certainly have the result that it would be an asset that would form part of the marital pool of assets whenever he did decide to separate from his wife. Putting the share in his name, rather than in the name of Samben, did nothing to remove the share from his wife's grasp. Nor did John Keefe separate from his wife Janet until August 1988, some eighteen months after the incorporation of Tresdar Pty Ltd. I do not accept Mr Keefe's evidence on this point. Mr Keefe later denied his earlier evidence as well. 1. Tresdar purchased Lots 1, 2 and 3, Darley Road, Mona Vale for $741,100. Mr Keefe accepts that the acquisition was wholly funded by loans advanced by a company in the Brookfield Group, Brookfield Investments, to Tresdar. This is, in any event, apparent from the journals maintained by Paul Samuels and other contemporaneous documents. 2. The first transaction was the purchase of Lot 3, Darley Road for $230,000 on 10 April 1987. 1. On 3 February 1987, the very first handwritten entry was made in the Tresdar cash book, recording monies advanced by Brookfield Investments to Tresdar to pay a deposit on Lot 3, Darley Street, Mona Vale of $23,000 together with additional funds advanced to pay for formation expenses, solicitors' fees and stamp duty. A corresponding entry is to be found in the "Investments" journal. 2. On 18 March 1987, the "Investments" journal records a loan from Brookfield Properties to "Brookfield Investments (Tresdar)" of $208,000 for the balance of the purchase of Lot 3, Darley Street, Mona Vale. The settlement statement for the completion of the purchase confirms that the purchase price was $230,000 of which a deposit of $23,000 had been paid leaving $207,000 together with adjustments and stamp duty of $6,541.50. 1. The second transaction was the purchase of Lots 1 and 2, Darley Road for $511,100 on 4 May 1987. 1. On 13 April 1987, the "Investments" journal records a loan from Brookfield Properties to Brookfield Investments of $51,000 for the deposit and, on 23 April 1987, a further $19,000 for the stamp duty and disbursements. 2. On 1 May 1987, the "Investments" journal records further loans from Brookfield Properties to Brookfield Investments of $460,000 for the balance of the purchase price and a further loan from Brookfield Investments to Tresdar of $10,000 for the Darley Street, Mona Vale purchase. The settlement sheet and transfer, prepared by Tresdar's solicitors, confirms that these monies comprised the whole of the purchase price of Lots 1 and 2 together with associated expenses. Sale of motels 1. In May 1987, Wybrown found a buyer for both motels. On 1 May 1987, the "Investments" journal records the receipt of $50,000 by Wybrown as "deposit from sale of motels". The funds were deposited at the National Australia Bank. 2. On 16 July 1987, the sale of the motels was completed and the mortgage of $60,000 was discharged. On 23 July 1987, the "Investments" journal records: 1. the receipt of $78,000 by Wybrown, being "part proceeds" of sale of the motels; and 2. a further receipt by Bolton Grange in the amount of $246,643.52, also described as "part proceeds sale of motels". These funds, together with the $50,000 earlier received by Wybrown, were together placed on term deposit on 24 August 1987 at the National Australia Bank (National Australia Bank account). To the combined term deposit were added further deposits by Brookfield Investments and Brookfield Motor Co until the balance of the account reached $1,189,643.52. Paul Samuels intermingled the funds. 1. Curiously, the Transfer recorded a sale price of $250,000, which was considerably less than the $485,000 expended to acquire the motels in 1983. A journal entry made by Mr Keefe in Bolton Grange's journal at the end of the financial year ended 30 June 1988 recorded that, in addition to the deposit of $246,643.52 to Bolton Grange, vendor finance had been provided by Brookfield Investments of $208,000. If each of the amounts recorded in the journals are added together, then the total amount received for the sale of the motels, either in cash or vendor finance or to discharge the mortgage, amounted to $642,643. It also delivered a profit of some $150,000 to Wybrown above the monies spent in acquiring the motels in 1983. 2. Mr Keefe recalls that the motels were sold for approximately $800,000 and says, whilst the Transfer records a sale price of $250,000, the residual of the purchase price was paid separately to the purchase of the land by way of a purchase of the goodwill of the businesses. When asked to explain why the Transfer for the sale of the motels apparently significantly understated the sale price, Mr Keefe gave answers which were guarded and unclear in circumstances where he could be expected to know what had happened. 3. In support of the attribution of an $800,000 sale price, Mr Keefe pointed to the on-sale of the motels two years later for $1 million. I find this explanation unlikely for two reasons: 1. However the monies were characterised by the parties to the transaction, Paul Samuels' record-keeping was such that I would expect to find it recorded somewhere, and it is not. I note that monies paid to Wybrown on 1 May 1987 and 23 July 1987 were recorded in the "Investments" journal by Paul Samuels. 2. In respect of the on-sale in 1989, "Bombora" sold for $850,000, far in excess of the $170,000 which Wybrown paid for it in 1983. Against this, "Greentrees" sold for $150,000, which was less than the $315,000 paid by Wybrown in 1983. Many reasons may explain the substantially increased or reduced price of a property, including that the motel had been substantially improved or deteriorated, or that a site had development potential. The on-sale of the properties doesn't persuade me to depart from the contemporaneous accounting records nor accept Mr Keefe's evidence as to the sale price of the motels in 1987. 1. I note that Mr Keefe says that he agreed with Paul Samuels to set up a new company to buy the Darley Street property as any profits held by Wybrown were not subject to capital gains tax. Mr Keefe says that he then suggested to Paul Samuels that the new company "should be 50/50 because of the work and time I've put in over the years." Paul Samuels apparently agreed with this. Whilst it is correct that any capital gain on resale of the motels was not subject to capital gains tax, the motels having been purchased before the introduction of that tax in 1985, in fact there was no capital gains tax, as, according to the Transfer, Wybrown lost money on the sale of the motels. I suppose this may not have been apparent to Mr Keefe and Paul Samuels at the time it is suggested that they had this conversation. Otherwise, it would not have been a valid justification for forming a new company. 2. According to the journal for Bolton Grange for the year ended 30 June 1988, the deposit of $246,643.52 and the vendor finance of $208,000 were applied to repay the $200,000 loan from Bolton Grange to Wybrown; Paul Samuels' loan, then totalling $239,643.52; and further loans of $5,000 loan from The Brookfield Motor Co and $10,000 from Brookfield Investments. 3. On 10 November 1987, $100,000 of a term deposit at the Commonwealth Trading Bank in the name of Bolton Grange was attributed to Wybrown. The description in the "Investments" journal was "repaid to Wybrown Pty Ltd", which suggests it was the repayment of a loan by Wybrown to Bolton Grange. The $100,000 earned $1,000 interest. On 9 February 1988, the Commonwealth Trading Bank term deposit, now totalling $101,000 of Wybrown's funds, was withdrawn from the Commonwealth Trading Bank and, together with Bolton Grange funds of $822,600, deposited to the National Australia Bank account, bringing the balance of that account to $2,034,743.52. Paul Samuels intermingled Wybrown's funds with the Brookfield Group. 4. On 24 April 1989, $101,000 of the National Australia Bank account was recorded in the "Investments" journal as having been withdrawn by Wybrown "to the deposit of Brookfield Investments". Thereafter, Brookfield Investments appears to have used the monies as its own, according to the ensuing entries in the "Investments" journal. In particular, the $101,000 was exhausted within 3 months in the following transactions: 24 April 1989 $31,000 withdrawn … to cheque account Brookfield Investments 16 May 1989 $35,000 withdrawn (debit PMS loan account – Sierra) 22 May 1989 $40,000 deposit by Brookfield Investments 18 July 1989 $100,000 withdrawn: Brookfield Investments $10,000; Bolton Grange $15,000; Tresdar $65,000; The Brookfield Motor Co $5,000, Paul Samuels Racing $5,000. 1. That is, Paul Samuels treated Wybrown's funds as those of the Brookfield Group, whether it was the $50,000 deposit, the $78,000 paid to Wybrown on completion or the $100,000 repaid to Wybrown plus $1,000 interest. I think what this indicates is that, whatever contribution Samben made to Wybrown, it was not considered necessary to pay any portion of the proceeds of sale to Samben. Likely this was because, overall, Samben's contribution was so minimal that it was considered unnecessary or Samben has been reimbursed other than from the proceeds of sale. 2. Mr Keefe says that the proceeds of sale of the motels were used to: 1. discharge the mortgage, 2. repay the loans owing to Paul Samuels and his related companies "to the extent to which they had not been repaid out of the income of the businesses"; 3. refund Paul Samuels and Mr Keefe's initial investments in Wybrown; and 4. the balance used "to reduce the loan Tresdar had taken out to purchase a property at Darley Street", following which "Wybrown was liquidated." Mr Keefe said, "Paul and I did not withdraw any funds from Wybrown during its operation apart from those that were needed to operate the motel businesses and to repay the loans Paul had made through his companies." 1. Certainly, the mortgage was discharged, and the loans owing to Paul Samuels and his related companies were repaid. There is no accounting record of refunding Paul Samuels' initial investment of $40,000 in Wybrown, nor any evidence that Paul Samuels made such an investment. There is no evidence that Wybrown re-paid $20,000 to Samben. Nor is there any accounting evidence that the profit on the motels was used to reduce Tresdar's loans from Brookfield Investments. Nor, so far as the records reveal, was Wybrown liquidated. Mr Keefe said "We actually liquidated Wybrown. Yes. It was formally liquidated" but when it was pointed out that there was no record of it on the historical company search said "… it would have been, not with a liquidator. It was just done in house. … You could self-liquidate a company at that point, it was a procedural thing your Honour." 2. Importantly, the surviving accounts do not record any repayment of loans to Paul Samuels or his companies from the income of the motels. The loans stood unabated at the date of sale of the motels and were fully repaid at that time. I think this a "slip" by Mr Keefe. Given that there is no record that Samben's $20,000 investment in Wybrown was repaid from the proceeds of sale of the motels, nor reinvested in Tresdar, I think it is more likely that Samben's initial $20,000 investment was repaid out of the income of the motels, which I note were managed by Mr Keefe. 3. Mr Keefe's explanation of the money flows following sale of the motels is not corroborated by the available records. Mr Keefe variously said that "there were no records" in relation to a matter but then said "it's in here" referring to the accounts in a general way. Mr Keefe also said that one third of the profit of Wybrown on liquidation was transferred to Tresdar to acquire Darley Street. However, Mr Keefe said Wybrown was liquidated in 1992, after the motels had been bought and sold. Then he suggested that Wybrown's contribution comprised payments made to Brookfield Investments or Bolton Grange after the sale of the motels, whilst the "Investments" journal suggests that this was repayment of loan accounts. Mr Keefe estimated that Samben contributed about $350,000 to Tresdar in this manner, "In that order, somewhere there". There was no basis to say this and I do not accept his evidence on this subject. 4. In July, August and September 1988, Brookfield Investments lent $268,737.34 to Tresdar to pay for construction of a building at Darley Street. Mr Keefe says he was involved in the management of Darley Street, although there was no contemporaneous evidence of this. Mr Currie deposes, however, that he saw Mr Keefe preparing Tresdar's cashbook and taking telephone calls from banking offices, insurance brokers and solicitors in relation to Darley Street. Mr Currie said Mr Keefe attended Darley Street about twice a month to meet with insurance brokers, town planners, the Council and the builder. None of this necessarily means that Mr Keefe held a beneficial interest in Tresdar. Rather, it seems to me that Mr Keefe continued to provide a wide range of accounting and business services to Paul Samuels, which were covered by his annual fee. Paul and Fleur Samuels separate 1. In 1988, Paul and Fleur Samuels separated. On 19 September 1988, Mr Samuels' solicitor wrote to Fleur Samuels' solicitor confirming that an amicable property settlement had been tentatively agreed, subject to the approval of Fleur Samuels' solicitor. In his letter, after describing the joint assets of the couple, Paul Samuels' solicitor stated: (emphasis added) Assets owned in Mr Samuels and company names … Darley Street, Mona Vale in the name of Tresdar Pty Ltd. Value $1.8 millon. … we understand that all properties, irrespective of the registered owners, were purchased by our client with his own money earned over the years… Paul Samuels represented that he alone had paid for Darley Street. This is consistent with the "Investments" journal and other available contemporaneous documents, which do not record any contribution by Mr Keefe or Samben, either directly or indirectly via Wybrown. Fleur Samuels' solicitor responded, asking for further funds to be settled by Paul Samuels for Brendan Samuels' benefit. Paul Samuels did not agree. That was the end of correspondence for the time being. 1. In 1989, Brookfield Investments lent $585,000 to Tresdar to pay for construction at Darley Street. 2. In 1990, Mr Keefe married again and, with his wife Catherine Keefe, formed a new trustee company, Baycot Pty Ltd as trustee of the Keefe Family Settlement. The Deed of Settlement was amended to delete Janet Keefe as a beneficiary and insert Catherine Keefe. Brookfield Properties went into liquidation. The liquidation ceased on 13 July 1990 and the company was deregistered on 4 January 1991. Annual returns 1. For the years ended 31 December 1987, 1988 and 1989, Tresdar lodged annual returns with the National Companies and Securities Commission, reporting the office holders and shareholders of the company. Each return reported that Paul Samuels and Mr Keefe held one share each. Each return was signed by Paul Samuels. The returns were lodged by J.P. Keefe & Co, Chartered Accountants. 2. In January 1991, Paul Samuels signed the annual return for Tresdar for the financial year ended 30 June 1990 to be lodged with the Australian Securities Commission. The form of the annual return had changed and required further information to be provided in respect of shareholdings, being whether the share was fully paid and beneficially owned. The annual return reported as follows: No. of shares held Beneficially owned (y/n) Paul Samuels 1 Y John Keefe 1 Y N The initial recording of Mr Keefe's share in Tresdar as being beneficially owned was written over in handwriting "N". The annual return was signed by Paul Samuels. The form was lodged by J.P. Keefe & Co. The handwritten correction made to Mr Keefe's shareholding was most likely made by Paul Samuels at the time he signed the annual return. 1. Since then, Mr Keefe's shareholding in Tresdar has been reported to be non-beneficially owned in annual returns lodged by J P Keefe & Co for the financial years ended 30 June 1991, 1992, 1993, 1994, 1995, 1996, 1997, 1998, 1999, 2000, 2001 and 2002. All returns up to and including 1998 were signed by Paul Samuels. All annual returns were prepared by Mr Keefe's firm. After 2002, annual returns were not required and were not lodged: Corporations Legislation Amendment Act 2003 (Cth), Schedule 1. 2. Mr Keefe explains this admission against interest variously by saying: 1. The annual return was prepared by somebody in his firm without his knowledge or supervision. This seems unlikely. His firm comprised himself, his wife, another accountant and an assistant bookkeeper. It is also unlikely that Mr Keefe did not take an interest in the company, given that, on his case, he was a 50% beneficial owner in the company which owned valuable property. 2. Mr Keefe did, in fact, hold the share non-beneficially because he held it on behalf of his family trust. 1. These explanations do not sit well together, nor with Mr Keefe's earlier explanation that, when Tresdar was incorporated, Mr Keefe did not record his share in the name of Samben as he was contemplated separating from his wife and did not wish to bring his interest in Tresdar within the ambit of family law proceedings. 2. Mr Keefe says that by 1990, a new trustee company had been established, Baycot, and he considered himself to hold the share in Tresdar on trust for that company. Whilst this is possible, it is curious why Mr Keefe did not transfer his share in Tresdar to Baycot, or otherwise formalise matters by a declaration of trust, once his family law proceedings with his first wife were finalised in about 1990. A half share in Tresdar was, obviously enough, a valuable asset and, on Mr Keefe's evidence, an asset of his family trust. Renewed property settlement negotiations between Paul and Fleur Samuels 1. In April 1991, negotiations between Paul Samuels and Fleur Samuels resumed. Paul Samuels' solicitor wrote to Fleur Samuels' solicitor saying that a property settlement had been agreed in which inter alia Paul Samuels proposed that he would keep the companies. 2. It is at about this time that Mr Keefe prepared a handwritten document since found amongst Fleur Samuels' papers, entitled "The Brookfield Group of Companies". The document records details in respect of several companies, including: BROOKFIELD PROPERTIES P/L — PMS BROOKFIELD INVESTMENTS PL Liquidated TRESDAR P/L — PMS 2 ORD WYBROWN P/L — PMS 2 ORD SAMBEN P/L 1 ORD Property Sold 1. The document can be dated to about this time by reason of the companies it refers to, and those which it does not. 1. The document does not refer to Wakefield Park Motor Racing Circuit Pty Ltd, which was incorporated on 1 November 1991. 2. The document refers to Brookfield Properties Pty Ltd as having been liquidated. That liquidation ceased on 13 July 1990. The company was deregistered on 4 January 1991. 3. The document refers to Wybrown Pty Ltd, which is crossed out and the words written "Property Sold". The motels were sold on 16 July 1987. Wybrown Pty Ltd was deregistered on 10 July 1992. By reason of these matters, the document was likely prepared in late 1990 or early 1991. As the correspondence between Fleur and Paul Samuels' solicitors abated in November 1988, and resumed in April 1991, I think it is most likely that the document was prepared after April 1991 and before Fleur Samuels' solicitor retained a valuer on 23 October 1991 to assess the current market value of properties owned by Paul Samuels' various companies, including Darley Street. 1. The important thing to note about the document, in Mr Keefe's handwriting, is that he records Paul Samuels as owning two ordinary shares in Tresdar. That is, Mr Keefe did not suggest that Mr Keefe beneficially owned the share which was in his name. This is a powerful admission against interest. 2. On 1 November 1991, Wakefield Park Motor Racing Circuit Pty Ltd was incorporated. Paul Samuels and John Carter were directors and Sue Carter was the secretary. The company had 1000 issued shares. It was not until the Annual Return for 1996 that it was reported that 500 shares were owned by Latoni Pty Ltd, Mr and Mrs Carter's company. The remaining shares were owned by Paul Samuels Racing Pty Ltd. 3. On 11 November 1991, Fleur Samuels' solicitor wrote to Paul Samuels' solicitor, forwarding the valuation of the properties. Negotiations appear to have ceased again at this point. 4. In April 1994, Fleur Samuels' solicitor wrote to Bedford Titley Chartered Accountants, seeking their assistance to understand the company structure of the Brookfield Group so as to assess how much Paul Samuels was worth. Fleur Samuels' solicitor listed the real property owned by the companies in the Brookfield Group, including Darley Street, which had been valued in 1991 at $2.2 million. Fleur Samuels' solicitor advised: Mr Samuels' accountant is John Keefe of Keefe & Co. Apparently he now works from home but can be contacted on [these phone numbers]. In due course you will no doubt need to contact him but I think we should discuss matters first. He is also Mrs Samuels' accountant. Matters do not appear to have progressed further at this time. 1. Two years later, in August 1996, Fleur Samuels wrote to new solicitors, Corrs Chambers Westgarth, enclosing a signed fee agreement and cheque, saying, "Thank you for taking on this mess!" Mrs Samuels enclosed a number of documents, including a handwritten document, "Brookfield Group Share Structure". The handwriting was that of Mr Keefe. The document listed companies within the Brookfield Group and the shareholders of each company. Of the six companies listed, the following two are important: TRESDAR PTY LTD P.M. Samuels 1 ORD J.P. Keefe (held for PM Samuels) 1 ORD WAKEFIELD PARK MOTOR RACING CIRCUIT PTY LTD All Shares and Units held by Paul Samuels Racing Pty Ltd (1993/94) 1. The important thing to note is that Mr Keefe, in his handwriting, recorded that he held his share in Tresdar for Paul Samuels. This is a powerful admission against interest. 2. Mr Keefe deposed that, before preparing this document, he had spoken to Paul Samuels, who said that Mr Keefe should provide Fleur Samuels with whatever information she sought, … however I think you should keep your and John Carter's names out of it for the moment. I don't want either of you getting caught up in this. I don't want to be up for your legal costs as well as my own. Mr Keefe said that he had represented to Fleur Samuels that his share in Tresdar was held on trust for Paul Samuels because of Paul Samuels' request. 1. It is unusual for someone, in discussions about a property settlement following the end of their marriage, to intentionally overstate their assets. Tresdar was worth some $2.2 million at the time. If Mr Keefe was entitled to 50 per cent of the company, then Paul Samuels' interest in Tresdar was worth $1.1 million. As amicable as Paul Samuels' negotiations with Fleur Samuels were, I reject the hypothesis that Paul Samuels overstated his assets by $1.1 million in order to save legal costs which Mr Keefe may incur if he was drawn into the dispute. This would have been false economy indeed. Nor was there any suggestion at any time in the correspondence between Fleur and Paul Samuels' respective solicitors that either intended to commence legal proceedings in the Family Court. Any prospect of incurring legal costs to third parties embroiled in such proceedings would have been remote. 2. Mr Keefe says, at Paul Samuels' request, that he likewise did not disclose John Carter's interest in Wakefield Park Motor Racing Circuit but recorded that all of the shares in Wakefield Park Motor Racing Circuit were held by Paul Samuels Racing. Mr Keefe's evidence does not bear close scrutiny. According to the historical company search of Wakefield Park Motor Racing Circuit, Mr Carter's company did not own half of the shares in Paul Samuels Racing until the 1996 return. It seems likely that Paul Samuels did own all the shares in the company until then. The reference to "(1993/94)" in Mr Keefe's handwritten note is, I think, a clarification by Mr Keefe that, at the relevant time for the purposes of the property settlement between Paul and Fleur Samuels, Mr Samuels' company owned all of the share capital of Wakefield Park Motor Racing Circuit but that position had changed by the preparation of the handwritten note in August 1996, by which time, Mr Carter had become a 50 per cent shareholder in the company. 3. Mr Keefe points to his description of the share ownership of Wakefield Park Motor Racing Circuit as corroborative of his account that Paul Samuels asked him to hide Paul Samuels' interest in Tresdar because, Mr Keefe says, the document also hid Mr Carter's interest in Wakefield Park Motor Racing Circuit. The plaintiff submitted that this was an opportunistic lie by Mr Keefe. I agree. 4. Mr Keefe also sought to explain the document entitled "The Brookfield Group of Companies", which I have found was prepared in 1991, which did not refer to Wakefield Park Motor Racing Circuit as also referable to Paul Samuels' instruction to keep Mr Keefe and Mr Carter out of it. However, that document was likely prepared about five years before Mr Keefe says that Paul Samuels told him to lie about the nature of Mr Keefe's ownership of the share in Tresdar. It does not record Mr Carter's interest in Wakefield Park Motor Racing Circuit Pty Ltd because that company did not exist at the time the document was prepared and, in any event, Mr Carter does not appear to have acquired an interest in that company until about 1996. Further, that document correctly records Samben's shareholding in Wybrown. It appears to me that Mr Keefe's recording of his share ownership in Tresdar was likely correct at the time he made the note in 1996. That is, Mr Keefe held his share in Tresdar for Paul Samuels. 5. On 3 October 1996, Mr Keefe sent Fleur Samuels a letter as follows: Dear Fleur, As you are aware I act as the accountant for Paul Samuels, Fleur Samuels, Brendan Samuels and the Brookfield Group of Companies. In the pending Family Law proceedings, you have asked me to prepare certain accounting information for yourself and the Brookfield Group, to be presented to you and your legal advisers. As I have previously mentioned to you my professional advice could be seen as coming from someone who has a potential conflict of professional interest. All Accounts, taxation estimates or recommendations will be prepared and given with the view of being totally objective. However, I invited you to have an independent accountant review any of my work and would make myself available to assist a review in any way. I suggest that you discuss this letter with you independent legal adviser in order to be advised as to your appropriate course of action. Mr Keefe says that the letter was prepared based on advice he had obtained from the Institute of Chartered Accountants, because he believed he had a conflict of interest. 1. Apparently attached to the letter was a document, "Brookfield Group of Companies as at 30 June 1996". Mr Keefe denied preparing this document, or that it was attached to his letter. He said the typeface was different to that used in his office and it was not the sort of document that he prepared. However, I think the document was attached to Mr Keefe's letter for the following reasons: 1. The original letter was tendered and the perforations and holes on the top left-hand corner of the letter and document indicate that it was, at least, kept together by reason of staple holes and a spike mark as well as a coffee stain which is on the letter and soaked through to the attached document. 2. An index to Fleur Samuels' documents includes "Letter dated 3 October 1996 from J.P. Keefe & Co to F. Samuels enclosing Schedule of Brookfield Group of Companies as at 30 June 1996". This index was found amongst Fleur Samuels' papers after she died. 1. Whether it was enclosed with the letter or not does not matter much as Mr Keefe agreed that the document "Brookfield Group of Companies" bore his handwriting, adding the directors of each of the companies referred to in the document. It would appear, therefore, that Mr Keefe reviewed and annotated the document and was thereby aware of its contents and took no steps to correct it. Importantly, the document stated (emphasis added): Tresdar Pty Ltd – Shareholders P.M. Samuels 1 ORD share J.P. Keefe (held in trust for P.M. Samuels) 1 ORD share Property Darley Street Mona Vale (Post 1985) Wakefield Park Unit Trust – Unit holders Paul Samuels Racing Pty Ltd 870,000 Units Latoni Pty Ltd (for J.E. Carter) 130,000 Units Property Wakefield Park Motor Racing Circuit (Post 1985) As such, it seems to me that this document was correct at the time it was prepared and accepted by Mr Keefe as correct. In the document, Mr Keefe is recorded as holding his share in Tresdar "in trust for P.M. Samuels". This is a powerful admission against interest. 1. On 18 October 1996, Paul Samuels' solicitor wrote to Fleur Samuels' solicitor, enclosing details of Paul Samuels' personal assets including company assets, together with a summary of the shareholdings for the companies. Amongst the company assets listed was: … 3. Tresdar Pty Limited 76 Darley Street Mona Vale. Nett income $220,276.00 per annum – value 2.2 million. … 5. Paul Samuels Racing Pty Limited – Wakefield Motor Racing Circuit at Goulburn – Purchsed [sic] as vacant land for $130,000.00 – now valued at 1.5 million. Mortgage to State Bank for $250,000.00 and 13% of shares in unit trust owned by John Carter therefore Samuels net equity in this property $1,087,500.00. … Total Real Estate Value of both individual property and company properties $6,332,500.00. 1. Paul Samuels' solicitor gave details of "Shares Various Companies" including (emphasis added): Tresdar Pty Limited – all shares basically owned by husband. … Paul Samuels Racing Pty Limited owns 87% of Wakefield Park Unit Trust. Paul Samuels thereby represented to his former wife that he owned all of the shares in Tresdar. Paul Samuels is unlikely to have made that representation unless he thought it was the case. This letter was consistent with the schedule attached to Mr Keefe's letter to Fleur Samuels two week earlier. That is, Paul Samuels basically owned all of the shares in Tresdar. 1. Unsurprisingly, Fleur Samuels' advisers proceeded on the basis that Paul Samuels beneficially owned all of the shares of Tresdar: 1. Fleur Samuels' solicitors included the value of Darley Street as an asset of the husband in a worksheet found in Fleur Samuels' papers. 2. In May 1997, Bedford Titley Chartered Accountants provided a draft net asset valuation to Corrs Chambers Westgarth, which proceeded on the basis that Paul Samuels owned and controlled Tresdar whilst recognising that the Wakefield Park Unit Trust was partly owned by John Carter. Darley Road was valued at $2,318,700. 1. In July 1997, Fleur Samuels asked Bedford Titley Chartered Accountants to attempt to quantify her percentage shareholding and capital entitlement within the Brookfield Group. The accountant prepared a diagram depicting the Brookfield Group structure and shareholdings. In respect of Tresdar, the accountant recorded that Mr Samuels owned one ordinary share and Mr Keefe owned the other "ATF P. Samuels". This was consistent with the information which had been provided to Fleur Samuels by Mr Keefe and Paul Samuels. It is also consistent with the annual returns for Tresdar which had been lodged by J.P. Keefe & Co for the 8 preceding years and continued to be lodged by J.P. Keefe & Co for the next 5 years. New constitution 1. The requirement for two directors was removed by Schedule 3 of the First Corporate Law Simplification Act 1995 (Cth) which took effect in October 1995. The requirement for two members was removed by section 114 of the Company Law Review Act 1998 (Cth), which commenced in July 1998 and permitted companies to have a minimum of one member. 2. On 7 February 2002, Craig Conner of J.P. Keefe & Co sent a request to "Computerised Shelf Companies" to convert Tresdar to a single-director company. "Please note that the conversion is for the directors only, not the members nor the secretaries." On 8 February 2002, Computerised Shelf Companies replied to Mr Keefe directly, confirming his instruction "for conversion to a sole member/director company" and enclosed the necessary documents. 3. On 8 February 2002, Tresdar held an Extraordinary General Meeting at which it amended its constitution to include the ability to have only member or one director. Mr Keefe resigned as a director, leaving Paul Samuels as the sole director. On 21 February 2002, J.P. Keefe & Co sent a cheque to pay Computerised Shelf Companies for its services, noting that Tresdar had been converted "to a single-director company". The letter was signed by Mr Conner. The correspondence is consistent by instructions from Mr Conner to change Tresdar to a one-director company, but also with instructions from Mr Keefe to change it to a sole director and member company. Tresdar adopted a constitution which permitted both. 4. Mr Keefe submitted that the fact that, in 2002, Mr Samuels left the shareholders at two, notwithstanding that the new constitution allowed to him to reduce it to one, is consistent with the fact that Mr Keefe held a beneficial interest in half of the company. Brendan Samuels submitted that this point is neutral as it would have been a simple matter for Paul Samuels at any time to reduce the shareholding to one if he so wished. 5. Mr Keefe says he agreed to resign as a director because he had pressing family obligations at the time. Mr Keefe says he nonetheless remained involved in the management and business of Tresdar, as a beneficial shareholder might do. Loans to Mr Keefe 1. From time to time, Mr Keefe borrowed monies from Fleur Samuels, Paul Samuels and his companies including: 1. In 1995, Brookfield Investments lent $30,000 to Mr Keefe. 2. In 1999, Mr Keefe borrowed $100,000 from Brookfield Investments, which loan was increased by $40,000 and repaid in 2001. 3. In about 2001, Mr Keefe and Craig Conner, who worked for J.P. Keefe and Co, borrowed $162,000 from Brookfield Investments to acquire shares. Paul Samuels kept detailed records of the advances, interest calculations, repayments, changes in the interest rate, further advances and final repayment in the "Investments" journal. The loans were usually secured by a mortgage. The detailed accounting by Paul Samuels indicates that the loans were made on an arms-length, commercial basis. 1. In March 2003, Tresdar entered into a loan facility agreement with Mr Keefe in respect of a loan of $110,000 for a deposit on Mr Keefe's home at 42 Carranya Road, Riverview. The 9 page agreement was prepared by solicitors. Mr Keefe was obliged to repay the monies over four years at 7 per cent interest and to reduce the principal by at least $25,000 a year. In May 2003, Tresdar and Mr Keefe entered into a second loan facility agreement, for a further $330,000 to purchase his home. The agreement was, again, prepared by solicitors, and contained like terms. 2. The loans were secured by a registered mortgage. The mortgage conditions comprised nine pages. Three pages of Paul Samuels' "Investments" journal record each repayment over the ensuing years. On the face of it, the loans by Tresdar to Mr Keefe were on an arms-length, commercial basis, and the repayment of the loans was monitored in the same way by Paul Samuels. 3. On 16 January 2007, Brookfield Investments lent $900,000 to Mr Keefe for a new home. The "Investments" journal, again, contains detailed accounting in respect of this loan and its repayment. Interest was charged at 8 per cent per annum. The "Investments" journal refers to a mortgage. 4. On 5 March 2010, Mr Keefe's solicitor, David Jackson & Associates, wrote to Paul Samuels' solicitor, B Bilinsky & Co, in respect of the pending sale of 42 Carranya Road, Riverview by Mr Keefe, which was subject to a mortgage in favour of Brookfield Investments. Paul Samuels' solicitor authorised Mr Keefe's solicitor to act as Paul Samuels' agent on settlement provided that the monies were banked into Brookfield Investments' account on the day of settlement, and enclosed the Certificate of Title and mortgage, a discharge of mortgage, a deed of guarantee and indemnity provided by Mr Keefe, a bank deposit slip and an invoice for the fees of Paul Samuels' solicitor. This was, on the face of it, an entirely arms-length transaction. 5. In contrast, Mr Keefe agreed that loans between Mr Samuels' companies were simply entered into the cash book, with no loan documents prepared and no interest charged. Mr Keefe explained that he acquiesced to Paul Samuels borrowing money from Tresdar in this fashion because, "I saw this as an opportunity to give [Paul] something back". I consider this to be a lie. 6. In 2006, Mr Keefe sold his accounting firm to H.W. Rowan Miller & Co but continued to provide work on a consultancy basis. Mr Keefe continued to visit Paul Samuels. Paul Samuels' will 1. On 15 August 2006, Paul Samuels made his last Will, appointing Mr Keefe as executor and trustee. This reflected the trusted position which Mr Keefe held in Paul Samuels' life. 2. Paul Samuels' Will contained the following clauses: 3. I GIVE DEVISE AND BEQUEATH to my wife FLEUR SAMUELS: (a) one half of the shares owned by me in Brookfield Investments Pty Limited, Bolton Grange Pty Limited, The Brookfield Motor Company Pty Limited, Paul Samuels Racing Pty Limited and Tresdar Pty Limited (hereinafter known as "the Brookfield Group") … 4. I GIVE to my son BRENDAN LEONARD SAMUELS: (a) the remaining one half of the shares held by me in the Brookfield Group; … 1. Paul Samuels' description is consistent with an understanding on his part that he was entitled to both shares in Tresdar, as he could not otherwise conveniently bequeath half of a single share to Fleur Samuels and the other half to Brendan Samuels without cancelling and reissuing the share capital of the company. Rather, Paul Samuels' Will is consistent with an intention to leave one share to Fleur Samuels and the other share to Brendan Samuels. 2. In about 2009, Mr Currie was preparing the company statements and told Mr Keefe that he was listed as holding his share in Tresdar non-beneficially. Apparently, Mr Keefe said that he did that because he wanted to keep Tresdar out of the divorce case with his first wife. Mr Keefe did not accept that he told Mr Currie this, and agreed that such a statement would have been untrue. Paul Samuels is terminally ill 1. By mid-2011, Paul Samuels was terminally ill with cancer. He looked into selling Darley Street. In July, September and October 2011, Paul Samuels received a series of emails from a real estate agent as to how best to sell the property and attaching a draft sales agency agreement. The real estate agent did not include Mr Keefe in these emails, which is consistent with Paul Samuels being identified by the real estate agent as the only person with whom he had to deal in respect of the sale of Darley Street. 2. In August 2011, Mr Keefe was appointed as a director to four companies in the Brookfield Group, including Tresdar. 3. In October 2011, Mr Samuels sent an email to the tenants of the Darley Street advising that he was terminally ill and was deciding whether to sell the property. Mr Samuels said he had explored various ways to sell the building, including giving the tenants an opportunity to buy their unit, but had accepted the advice of the real estate agent to sell the building as a whole. If the building did not sell, then Paul Samuels proposed that the tenants form a committee to attend to repairs to the building rather than appointing a managing agent, saying: I have had a fruitful discussion with Melanie at Onboard Industries who has offered to head up a "tenants committee" who would look into any repair etc ie leaking taps etc, obtain a quote, or if under say $250.00 or thereabouts, proceed with the work, and have the invoice sent to my accountant for payment. This is a simplified way we could keep the building on course. Certainly there may be times when each of you may have to pull his/her weight but the saving in costs to you will more than make up for a little time and effort. 1. The fact that Mr Samuels referred to Mr Keefe as his accountant, without embellishment, in this email, is consistent with the fact that that was the only role which Mr Keefe had in respect of Darley Street. Mr Keefe was not a half-owner in the building. If Mr Keefe was a beneficial ownership of 50 per cent of Darley Street, I expect that Mr Samuels would have included Mr Keefe in his rather novel suggestion as to how the building should be managed after his death. 2. In November and December 2011 and January 2012, Paul Samuels continued to email the real estate agent as to buyer interest in Darley Street and, ultimately, withdrew the property from sale due to lack of interest. Mr Keefe was not a party to any of these emails. One would expect him to have been a party if he was a half-owner of the property. 3. On 18 January 2012, Paul Samuels emailed the tenants again, this time copied to Mr Keefe, informing them that he had withdrawn Darley Street from market. Mr Samuels proposed that a tenants' committee oversee the operation of the building going forward, noting: The Committee will have the authority to incur normal maintenance expenses of say up to $350.00 or as decided without reference to the Company's Accountant, anything over this suggested figure would have to be approved by the Company's Accountant details as follows. Mr JP Keefe, JP Keefe and Co., suite 19, 1st floor 71 Penshurst Street, Willoughby NSW 2068. POSTAL ADDRESS is PO Box 18 WILLOUGHBY NSW. Telephone … [and] email [provided]. Paul Samuels also provided details of Tresdar's solicitor in respect of leasing matters. From this, and surrounding emails (Mr Samuels was emailing others about an order of service and his burial), it is clear that Paul Samuels did not expect to live very long and was providing the tenants with the information they needed to continue to maintain the building after he died. It was necessary, in the proposed method of building management, for the tenants to have Mr Keefe's contact details as he was to approve expenditure above $350 as "the Company's accountant". If Mr Keefe was a half-owner of Darley Street, now would have been a likely time for Paul Samuels to have introduced him to the tenants as such. 1. Contrary to these emails, Mr Keefe says that he agreed with Paul Samuels to sell Darley Street and "we listed" the property for sale, then agreed to withdraw it from the market, and that Mr Keefe caused it to be removed from the market. This is inconsistent with the contemporaneous documents which indicate that Mr Keefe had no role in either decision. 2. Matthew Green, a tenant at Darley Street property since 1996, deposed that he only ever dealt with Paul Samuels and understood that he was the sole landlord. He met Mr Keefe on a few occasions: Paul Samuels introduced Mr Keefe as his accountant and friend. It was never suggested by Mr Samuels or Mr Keefe that Mr Keefe was a co-owner in the property. I accept Mr Green's evidence, which is consistent with these emails. 3. On 17 February 2012, Brendan Samuels was appointed as a director of companies in the Brookfield Group including Tresdar. 4. In May 2012, a meeting of directors was held for the Brookfield Group, attended by Paul Samuels and Mr Keefe. Brendan Samuels, also a director, was not present at the meeting, nor was he aware of it. The minutes record: Due to the ill health of Mr P M Samuels it was resolved that Mr J P Keefe will be appointed as the Group Managing Director as and when Mr Samuels no longer has legal capacity. It was resolved that Mr Keefe be given the power to invest and change investments in the Group freely and this power includes the right to invest in loans whether secured or unsecured and whether with or without interest or in non-income producing assets. It was resolved that Mr Keefe will be employed by the Group in either a Professional or employed capacity (at his discretion) and be remunerated or paid a salary package in the same matter as Mr Samuels has been paid. Mr Keefe be empowered to declare Dividends from the Group to be paid to the Shareholders in accordance with the Companies' articles. That this appointment is to continue with the purpose of continuing the day to day running of the Companies, and at the same time introduce Mr B L Samuels to the ongoing operations of the Group. Paul Samuels was then in palliative care and on strong painkillers. Brendan Samuels observed that Paul Samuels was frequently sleepy and dazed. Whether Paul Samuels had capacity at the time of signing the minutes of meeting on 15 May 2012 is not an issue in these proceedings, nor whether the resolution was valid. 1. On 22 June 2012, Paul Samuels died. Drawings and dividends 1. On 16 July 2012, Mr Keefe began to draw monies from Tresdar and make payments to himself, including for school fees. This was the first time, in the 25 year history of Tresdar, that Mr Keefe proceeded to do so. Also, for the first time, Tresdar began to declare dividends. For the financial years ended 30 June 2012 to 30 June 2017, Tresdar paid dividends to Mr Keefe and Mr Samuels totalling $171,000 each. 2. Mr Keefe retained his solicitors, David Jackson & Associates, to act on the application for a grant of probate for the estate of Paul Samuel. On 13 September 2012, Mr Keefe provided David Jackson & Associates with a statement of assets of the Estate, noting that the value of Tresdar at the date of Mr Samuels' death was $5,701,796, but: Estate PM Samuels 1 Share $2,850,898. By this, Mr Keefe suggested that he was entitled to the other share beneficially, then worth some $2,850,000. This representation was inconsistent with Mr Keefe's representations to Fleur Samuels on this subject in 1991 and 1996, and the annual returns prepared by Mr Keefe's firm from 1990 to 2002. 1. On 30 September 2012, Mr Keefe swore an affidavit as executor of Paul Samuels' Estate annexing an inventory of property including one ordinary share in Tresdar. Mr Samuels' estate was estimated to be worth more than $13 million. 2. On 9 October 2012, Brendan Samuels emailed the tenants of the Darley Street property, copied to Mr Keefe and Fleur Samuels, referring to a recent meeting at which Brendan Samuels had introduced his mother, Fleur, and John Keefe, "both have been silent partners since the block was commissioned." In making this statement, Brendan Samuels says that he was not previously aware of the details of the arrangements in respect of Tresdar, and Mr Keefe agreed that the description in the email was "consistent with what I had informed him and Fleur of in late 2012." 3. On 24 October 2012, a Grant of Probate was made in respect of the Estate of Paul Samuels. Fleur Samuels queries Mr Keefe's shareholding 1. On 26 October 2012, Fleur Samuels, then living in a retirement village, called her solicitor, David Carson. On 29 October 2012, Mr Carson sent Fleur Samuels a company search for Tresdar, which he had obtained on the day of Fleur Samuels' call. The company search recorded Mr Keefe's share as non-beneficially owned, which is still the position recorded today in ASIC's records. In a letter, Mr Carson summarised the information in the company search, including that Paul Samuels and John Keefe were each recorded as holding one ordinary share, noting: (emphasis added) The share held by John Keefe is acknowledged by him to be held in trust and as you have advised, you understand that he held his share in trust for Paul. With the passing of Paul, his shareholding in the company will now pass to the beneficiaries under the terms of his Will. According to Mr Carson's fee note, after sending the letter he had a "subsequent telephone attendance with [Fleur Samuels] to discuss further". 1. It appears that, although Mr Keefe was by this time representing that he held his share in Tresdar beneficially, this did not accord with Fleur Samuels' understanding and she sought to clarify the position with her solicitor. The ASIC records accorded with Fleur Samuels' understanding, which was the same as what Mr Keefe had told her in the 1990s. 2. Fleur Samuels, having taken the trouble to speak to her solicitor about the nature of Mr Keefe's shareholding in Tresdar can, I think, have been expected to do something with that information. Brendan Samuels did not discuss this matter with his mother at the time. I think it is likely that Fleur Samuels spoke to Mr Keefe about it, as he had been her accountant for many years and, as is clear from her dealings with Mr Keefe in respect of the property settlement with Paul Samuels, she had no difficulty approaching Mr Keefe. I note that Mr Keefe described Fleur Samuels as a very competent person who was a director of, and shareholder in, most of the companies in the Brookfield Group and was provided each year with annual accounts and an update. 3. Mr Keefe deposes that, in late 2012, he met with Fleur and Brendan Samuels, and prepared a handwritten document listing the assets that they would receive from Paul Samuels' Estate. The document contains notes about the history of Wybrown and Tresdar, and sets out various assets, including the assets of Tresdar which then totalled some $6 million, with a note that 50 per cent would be paid to Fleur and Brendan Samuels. Brendan Samuels said that he never met with both Mr Keefe and Fleur Samuels at the same time, and does not recall having seen the document. Given that Mr Keefe says he prepared this document in late 2012, which is when I think it is likely that Fleur Samuels would have raised the nature of Mr Keefe's shareholding in Tresdar with him, the document is consistent with Mr Keefe again representing to Fleur Samuels that he was entitled to 50 per cent of Tresdar beneficially. 4. On 4 December 2012, David Jackson & Associates wrote to Paul Samuels' solicitor, B Bilinsky & Co. The letter is not in evidence. On 6 December 2012, B Bilinksy & Co replied, in a letter headed "Tresdar", enclosing 13 documents including certificates of title, leases, mortgages, loan facility agreements with Mr Keefe and an original stamped unregistered mortgage from Mr Keefe to Tresdar. Attached to the letter was a list of 52 files held by the solicitor. Whilst I do not have the letter of 4 December 2012, it is apparent from B Bilinsky & Co's letter of 6 December 2012 and a further letter from B Bilinsky & Co of 1 June 2015, that Mr Keefe was requesting Tresdar records from Paul Samuels' solicitor. As executor, Mr Keefe was entitled to the documents. But given his familiarity with Tresdar's business, why did Mr Keefe apparently call for a list of files held by Paul Samuels' solicitor, and why did he specifically call for Tresdar documents? It is consistent with an effort by Mr Keefe to ascertain whether there were any records which might contradict his September 2012 assertion that he was beneficially entitled to the share in Tresdar, which assertion Fleur Samuel likely challenged in about November 2012. As it turned, the oldest file held by B Bilinsky & Co was from 2001, that is, 14 years after Tresdar was incorporated. 5. In January 2013, Catherine Keefe became a secretary of Tresdar. In February 2013, Tresdar purchased 24 Lord Street, Roseville (Lord Street), together with Mr and Mrs Keefe, for $2 million. Tresdar had an eight-tenth share of this property. Brendan Samuels denies that Mr Keefe told him that Mr Keefe intended to buy the property using Tresdar funds. 6. In August 2013, Paul Samuels' share in Tresdar was transferred to Brendan Samuels. Mr Keefe explained that this transfer was sufficient to distribute the Estate in accordance with Paul Samuels' Will because, in August 2012, Fleur Samuels apparently asked him to transfer her interest in Paul's estate directly to Brendan. This conversation, if it occurred, is more likely to have happened in late 2012 after Fleur Samuels met with Mr Keefe to discuss what she and Brendan would receive from the Estate, and Mr Keefe told her that together they were only entitled to one share. 7. Mr Keefe has, from 2013 to 2015, renovated Lord Street at a cost of $2 million paid for by Tresdar. On 16 December 2015, Mr and Mrs Keefe purchased Tresdar's share in Lord Street for $2.2 million, funded by a shareholder loan from Tresdar. The propriety of these transactions is not in issue in these proceedings and I need not consider them further. 8. In June 2016, Fleur Samuels died, leaving her estate to Brendan Samuels. Mr Keefe continued to occupy a position of trust as Fleur Samuels appointed Mr Keefe as her alternate executor. By November 2016, Fleur's estate had been administered. 9. Mr Keefe said that, from March 2014 to December 2016, he had made eleven deposits to Tresdar totalling $405,000 repaying a loan from the company. The relevance of this is not clear. In any event, a notice to produce was served on Mr Keefe seeking production of bank statements and other primary documents showing the source of these funds. In answer, Mr Keefe produced three bank statements which recorded six of these deposits only, totalling $245,000. What the statements also record is that, often, shortly before or soon after the deposit was made, funds were transferred from Tresdar's account to Mr Keefe's account, often in excess of the deposit that had been made. For example, in October 2016, $6,000 was transferred from Mr Keefe's bank account to Tresdar on 6 October 2016, but on 28 October 2016 $5,000 was transferred back and on 31 October 2016 a further $3,000 was transferred back. Taking these additional drawings into account, the net loan repayments supported by bank statements were $218,000. Brendan Samuels makes enquiries 1. In late 2016, Brendan Samuels engaged David Rose of Vincents Accountants to provide independent accounting advice in relation to his interest in the Brookfield Group, including Tresdar. It appears to have been prompted by an attempt to register a mortgage over the Lord Street property to secure the loan which bought out Tresdar's interest in the property. 2. On 28 February 2017, a ledger entry was made in the accounts of Tresdar, "Bring back JPK Property Loan as advised" in the sum of $1.85 million. 3. On 19 April 2017, Brendan and Michelle Samuels met with Mr Rose and Mr Keefe. Mr Keefe said that he only then became aware that his share in Tresdar was recorded as being held non-beneficially. This is unlikely in circumstances where Mr Keefe's office prepared the annual returns for Tresdar for many years, noting the shareholding as non-beneficial. It is inconsistent with Mr Currie's evidence that he raised the matter with Mr Keefe in 2009. Mr Keefe maintained to those at the meeting that he held his share in Tresdar beneficially. 4. Following the meeting, Brendan Samuels and his wife searched all of the records which they held, including Fleur Samuels' papers, to ascertain why the ASIC register recorded Mr Keefe as holding his share non-beneficially. Amongst Fleur Samuels' papers were the records I have already set out in this judgment dating from the 1990s. 5. On 15 May 2017, Mr Rose attended a second meeting with Brendan Samuels, Mr Keefe and Mr Currie. Mr Rose's note records: I asked where funds came from to acquire the property Tresdar acquired. John advised that Paul and he owned a company called Wybrown and that the hotels it owned where [sic] sold and proceeds were put into Tresdar … it was agreed between Paul and himself that the balance up between the parties would take place on sale of Darley St. … John advised that Paul had said he was not going to leave you anything to him in his will but we have owned this together and this is how you are going to get the benefit … John said to be careful what stones you un turn [sic] when looking into matters. 1. In May 2017, Brendan Samuels uplifted a number of documents, including the share register for Tresdar. On 18 May 2017, after a third meeting with Mr Keefe at which he maintained that he had always held his share in Tresdar beneficially, Brendan Samuels asked Mr Keefe to cease any transactions in relation to any of the companies including Tresdar. Mr Keefe replied that, as he owned 50 per cent of Tresdar, Brendan Samuels had no authority to serve such a notice on him, and expressed disappointment that Brendan Samuels had "wrongly taken files and permanent records from the company office. All you had to do was ask for these documents and they would have been freely given to you, as has everything that you have asked for." Given the paucity of remaining records in respect of Tresdar, such a reprimand was disingenuous. Brendan Samuels retained a solicitor, who sought information from Mr Keefe as to the basis of his claim to be a beneficial shareholder in Tresdar. Mr Keefe replied in his capacity as managing director of Tresdar, maintaining that he was so entitled, without elaboration. Mr Keefe retained solicitors. In December 2017, these proceedings were commenced. Significance of share register and certificate 1. Mr Keefe relies on the fact that the company register records Mr Keefe and Paul Samuels as each holding one share and makes no reference to the share being held non-beneficially by him. This presumption does not get Mr Keefe very far in this case, where Mr Keefe says that in fact he held the share on trust, not for Paul Samuels, but for Mr Keefe's family trust. 2. The parties agree that the share certificate is prima facie evidence that Mr Keefe is the owner of the share: section 255A of the Companies Act 1981 (Cth), now section 1070C(2) of the Corporations Act 2001 (Cth). 3. Further, section 256 of the Companies Act 1981 (now section 169(5A) of the Corporations Act) provided that the register must indicate any shares that a member does not hold beneficially. Section 1072H requires that any non-beneficial ownership of shares must be notified to the company and on the transfer of a share from, say, the persons who incorporated the shelf company to Mr Keefe. It is an offence under s 1311(1) for such notification not to be given. The absence of notification on the transfer to Mr Keefe, and on the share register of Tresdar, is prima facie evidence that Mr Keefe is the beneficial owner of the share. Further, section 176 of the Act provides that: In the absence of evidence to the contrary, a register kept under this Chapter is proof of the matters shown in the register under this Chapter. 1. Here, we have evidence to the contrary. As Austin J explained the application of section 1305 in Australian Securities and Investments Commission v Rich [2009] NSWSC 1229 at [397]-[398]: [397] Section 1305(1) does not make the company's books conclusive evidence of the matters they contain, in the sense of requiring the tribunal of fact to make a finding in terms of the content of the books in the absence of proof to the contrary by the opposing party. The books are prima facie evidence of the matters stated in them, but the weight of that evidence is to be measured in accordance with the common sense of the tribunal of fact (Phipson on Evidence, 16th edn (2005), at [7–17]). [398] In my view it would be open to the tribunal of fact to find that the prima facie evidence constituted by the company's books is outweighed by other evidence (including evidence adduced by the proponent of the books, even if the opponent does not give evidence about them); or by some quality or characteristic of the books themselves, even if there is no other evidence. In particular, if a book has the appearance of a draft or (being electronic) has a file title indicating that it is a draft, that alone may be sufficient (all other things being equal) for the tribunal of fact to reject the book as evidence of the matter stated in it, notwithstanding that the book is prima facie evidence of that matter; a fortiori if, in addition to having the appearance of a draft, the book contains inconsistencies or ambiguities or the matter otherwise demands explanation. See also Whitton v Regis Towers Real Estate Pty Ltd (2007) 161 FCR 20; [2007] FCAFC 125; Livingspring Pty Ltd v Kliger Partners (2008) 20 VR 377; In the matter of Shot One Pty Ltd (in liquidation) [2017] VSC 741 at [243]-[244]; In the matter of Pulse Interactive Pty Limited (in liquidation) [2019] NSWSC 22. 1. Mr Keefe submits that the primacy of the company's share register is not affected by, and is not subordinate to, the annual returns: Gooley v Motasea Pty Ltd [2015] NSWCA 31; Maddocks v DJE Constructions Pty Ltd (1982) 148 CLR 104; In the matter of NL Mercantile Group Pty Ltd [2018] NSWSC 1337; In the matter of DJG Equities Pty Ltd [2014] NSWSC 36; In the matter of Civil & Civic Infrastructure Pty Ltd [2015] NSWSC 770. Assuming that to be so, it does not address the significance of the annual returns in this case. The annual returns evidence an understanding on the part of Paul Samuels and, likely also Mr Keefe, that Mr Keefe's ownership of the share was non-beneficial. When taken together with the other evidence relied upon by Brendan Samuels, it may lead to the conclusion that the prima facie evidence presented by the share register is outweighed by other evidence such that a declaration of trust is warranted. Express trust 1. The parties agreed that, to establish an express trust, the plaintiff must prove that the parties intended that Mr Keefe would hold the share on trust. However, Mr Keefe submitted that intention can only be established by reference to the words used by the settlor, and as there is no evidence of any words spoken or written at the time, the plaintiff fails: Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107 per Mason CJ and Wilson J at 121; Byrnes v Kendle (2011) 243 CLR 253 per Heydon and Crennan JJ at [105] and [114]; Korda v Australian Executor Trustees (SA) Limited (2015) 255 CLR 62 per French CJ at [3] and [11]. 2. Intention, in trusts as in contract, crime, tort and other fields of human endeavour, may be established by reference to words or conduct. Perhaps this is most succinctly explained in Jacobs' Law of Trusts in Australia (Heydon and Leeming, LexisNexis Butterworths, 8th ed, 2016) at [5-02]: (emphasis added) A court cannot hold that an express trust exists unless it is satisfied that there was an intention to create such a trust. The question will be whether there is language or conduct which shows a sufficiently clear intention to create such a trust. No formal or technical words are required; any apt expression of intention will do. The conclusion that the intention existed may be drawn as an inference from the available evidence. In order to infer intention, the court may look to the nature of the transaction and the whole of the circumstances attending the relationship between the parties and known to them, including commercial necessity. … 1. As earlier canvassed, subsequent conduct can be just as much an indicator of the coming into existence of a trust as it may be of the existence of a contract: Cummins v Cummins; Reitano v Reitano [2012] NSWSC 1127 at [25]. 2. Once there is certainty of intention to create a trust, then the consequence is explained in Bahr v Nicolay (No 2) (1988) 164 CLR 604 at 618-619 per Mason CJ and Dawson J: If the inference to be drawn is that the parties intended to create or protect an interest in a third party and the trust relationship is the appropriate means of creating or protecting that interest or of giving effect to the intention, then there is no reason in a given case an intention to create a trust should not be inferred. The present is just such a case. The trust is an express, not a constructive, trust. See also Legal Services Board v Gillespie-Jones (2013) 249 CLR 493 at 525, [118] per Bell, Gageler and Keane JJ. 1. In this case, Brendan Samuels submits that the only reason that Mr Keefe held a share in Tresdar was that section 33(1) of the Companies (New South Wales) Code 1981 (NSW) at the time required that there be at least two shareholders of any company. I agree. The substantial evidence over 25 years from 1987 to 2012 is consistent only with Mr Keefe holding his share in Tresdar for Paul Samuels. To summarise what I have endeavoured to set out in detail already: 1. Mr Keefe was Paul Samuels' accountant. In that capacity, Mr Keefe obtained a shelf company, Tresdar, to be the purchaser of Darley Street. 2. Paul Samuels paid the whole of the purchase price for Darley Street. The motels owned by Wybrown had not been sold before Darley Street was purchased. Any profit on the sale of the motels was not available to fund the purchase of Darley Street. Nor is there any contemporaneous evidence that Samben's contribution to Wybrown, or Samben's portion of any profit on the sale of the motels, made its way to Tresdar, or into the Brookfield Group to repay Tresdar's loans from the Brookfield Group to fund the purchase of Darley Street. 3. Annual returns prepared by Mr Keefe's firm from 1990 to 2002 (12 years) noted that Mr Keefe held his share in Tresdar non-beneficially. Eight of these returns were signed by Paul Samuels, the first of which bore a handwritten correction confirming the non-beneficial nature of Mr Keefe's interest in the share. Mr Keefe was likely aware of these returns, given the very small number of people in the firm and his interest in Paul Samuels' companies and Tresdar in particular. 4. In 1988, Paul Samuels represented to Fleur Samuels that he had paid for Darley Street with his own money. It was not in Paul Samuels' interests at the time to overstate his interest in Darley Street in the context of a family law property settlement. 5. In about 1991, Mr Keefe represented to Fleur Samuels that Paul Samuels was entitled to both shares in Tresdar. 6. In 1996, Mr Keefe represented to Fleur Samuels that Mr Keefe held his share in Tresdar for Paul Samuels and, later that year, that he held the share "in trust" for Paul Samuels. 7. In 1996, Paul Samuels represented to Fleur Samuels that he "basically owned" all Tresdar shares. Again, it was not in Paul Samuels' interests at the time to over-state his interest in Tresdar in the context of a family law property settlement. 8. Whilst Tresdar made interest-free loans to Paul Samuels and the Brookfield Group without documentation, Tresdar made loans to Mr Keefe on a commercial, arms-length basis which indicates that Mr Keefe was not a beneficial owner of his share. 9. Paul Samuels' last Will was consistent with an understanding by him that he was entitled to bequeath two shares in Tresdar, not one. 10. Paul Samuels' dealings with real estate agents and tenants in respect of the potential sale of Darley Street, and how the building should be managed after his death, is only consistent with Paul Samuels being the beneficial owner of the whole of the share capital of Tresdar, and that Mr Keefe was only the accountant. 11. Mr Keefe only asserted a beneficial interest in the share after Paul Samuels had died. 12. Mr Keefe only conducted himself as if he held a beneficial interest in the share after Paul Samuels had died. 1. This was strong evidence, including admissions by Mr Keefe in contemporaneous documents. The inference to be drawn is that the parties intended to protect Paul Samuels' interest in the share held by Mr Keefe. A trust relationship is the most appropriate means to protect that interest and give effect to that intention. An intention to create a trust may be inferred from the evidence before the Court. Such a trust is express. 2. Mr Keefe submits that Brendan Samuels bears a heavy onus in establishing the necessary intention as the allegation is tantamount to fraud, referring to section 140, Evidence Act 1995 (NSW); Dixon J in Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-362; Neat Holdings Pty Limited v Karajan Holdings Pty Limited (1992) 110 ALR 449; [1992] HCA 66 and like authorities. Whilst it is not necessary to find fraud before granting the relief sought, I am comfortably satisfied that Mr Keefe's actions were fraudulent. Having now examined the records closely, I consider that Mr Keefe lied in his evidence, both in his affidavit and orally, in a manner that was calculated, brazen and apparently unstoppable. 3. Mr Keefe deposed that he believed that Brendan Samuels had personal problems with alcohol and drug abuse, and no experience running a business or company. Brendan Samuels accepted that he had had alcohol abuse issues in the past, which he was working through at the time with the support of his wife and that, before Paul Samuels' death, Brendan had no experience in running a company or a business. It seems to me that Mr Keefe would have perceived Brendan Samuels as someone who was unsophisticated in matters of business, distracted with other concerns, and unlikely to challenge Mr Keefe's assertion of a beneficial interest in Tresdar. In his affidavit, Mr Keefe also referred to Brendan Samuels in derogatory terms which suggested to me that Mr Keefe did not think highly of Brendan Samuels. It seems to me that Mr Keefe likely also thought that Brendan Samuels did not deserve to inherit his father's wealth or would not notice if some of it was diverted. Mr Keefe was wrong. Relief 1. Brendan Samuels is entitled to the relief sought. 2. Mr Keefe says that a substantial injustice will be caused to him if the Court grants the relief sought as the conduct of the affairs of Tresdar, including making any payments to or on behalf of Mr Keefe since the death of Paul Samuels in June 2012, has been undertaken with the agreement or knowledge or consent of Brendan Samuels. Further, Mr Keefe says that he has made financial and non-financial contributions to the management of Tresdar and its assets, and to Wybrown and its assets, over a period of 37 years. To grant the relief would unjustly deny Mr Keefe the benefit of those contributions. 3. I do not accept that injustice will arise. Mr Keefe has significantly abused a position of trust. To the extent that Brendan Samuels acquiesced in the payment of dividends to Mr Keefe, it was because Mr Keefe lied to Brendan Samuels and, at the time, Brendan Samuels trusted him as had his parents before him. Nor do I accept that Mr Keefe made financial and non-financial contributions to the management of Tresdar for which he was not remunerated by his annual fee. The asserted financial contribution is inconsistent with the available accounting material. The asserted non-financial contribution is at odds with the contemporaneous emails in respect of the sale and management of Darley Street. Whatever financial contribution Mr Keefe made to Wybrown was slight and likely recompensed at the time. 4. Brendan Samuels sought interest on a compound basis to reflect Mr Keefe's wrongdoing. Mr Keefe objected to this on the basis that the pleading sought interest but did not specifically say "compound" interest. Whilst I find that the basis for awarding compound interest is made out, I propose to award simple interest only in deference to any disadvantage that Mr Keefe may suffer otherwise by reason of any pleading deficiency. ORDERS 1. The Court: 1. Declares that the share held by the first defendant in the second defendant, Tresdar Pty Ltd ACN 003 225 536 (Share) is held on trust for the plaintiff. 2. Orders the first defendant to execute and deliver up to the solicitors for the plaintiff the Share transfer specifying 'NIL' consideration at Exhibit 10 (Transfer) in registrable form by no later than 28 days from the date of delivery of judgment. 3. Orders that, pursuant to section 94 of the Civil Procedure Act 2005 (NSW), the Registrar in Equity is authorised, in default of compliance with order 2, and on application of the plaintiff, to execute the Transfer in favour of the plaintiff. 4. Orders the first defendant to pay $171,000 to the plaintiff on account of dividends received by him, together with interest of $43,606.41. 5. Order the first defendant to pay the plaintiff's costs. ********** Amendments 08 March 2019 - [147] and [148] - Typographical corrections. Case name added to cover sheet. 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: 08 March 2019