Supreme Court New South Wales Medium Neutral Citation: Akierman Holdings Pty Ltd v Akerman [2019] NSWSC 1486 Hearing dates: 6, 7, 9, 13 November 2018; 13, 14 December 2018; 17 April 2019 Date of orders: 31 October 2019 Decision date: 31 October 2019 Jurisdiction: Equity - Corporations List Before: Parker J Decision: See [359]. Catchwords: CORPORATIONS — Directors and officers — Authority and powers – appointment of managing director by purported resolution of sole director - articles did not provide for sole director – appointment not valid – resolution approving of director's remuneration not valid – payment of legal fees on behalf of company not valid. CONTRACTS — Formation — Agreement – informal oral agreement for sale of Company property – parties contemplated later execution of formal documents – oral agreement not enforceable. CONTRACTS — Formation — Agreement – informal written agreements contemplated later execution of formal document but otherwise unqualified and specific in terms – immediately binding if entered with authority. CORPORATIONS — Directors and officers — Authority – Unanimous Assent – where one share held on trust by estate and transfer not registered until some time later – application of doctrine – informed consent. CORPORATIONS — Directors and officers — Authority – entry into agreements for sale of land absent proper authority – party likely unaware he lacked proper authority – party a solicitor and likely aware Company's articles must be changed to facilitate sole directorship – validation of agreement to sell Company's share of property under s 1322 refused. CORPORATIONS — Membership — Register — Rectification of register – rectification of share register – share held on trust – transfer from beneficiary's estate belatedly recorded in Company's register – transfer recorded as occurring on date omission discovered not prior date of intended transfer – evidentiary purpose of Company register – rectification granted to accord with parties' intent to transfer all shares from beneficiary's estate. Legislation Cited: Companies Act 1961 (NSW), Schedule 4, Table A, rr 70, 73, 76, 79, 84, 86 Corporations Act 2001 (Cth) ss 126, 127, 169, 178A, 201A, 1317H, 1317S, 1318, 1322 First Corporate Law Simplification Act 1995, sch 4 item 25 Uniform Civil Procedure Rules 2005 (NSW) r 31.13 Cases Cited: Angas Law Services Pty Ltd v Carabelas (2005) 226 CLR 507 Bamford v Bamford [1970] Ch 212 Brick & Pipe Industries Ltd v Occidental Life Nominees Pty Ltd [1992] 2 VR 279 Coomber v Coomber [1911] 1 Ch 723 Grant v John Grant & Sons Pty Ltd (1950) 82 CLR 1 Hall v Busst (1960) 104 CLR 206; [1960] HCA 84 Hall v Poolman [2007] NSWSC 1330 Herrman v Simon (1990) 4 ACSR 81 Hill v Newth (2014) 17 BPR 32,787; [2014] NSWSC 298 Masters v Cameron (1954) 91 CLR 353; [1954] HCA 72 Multinational Gas and Petrochemical Co v Multinational Gas and Petrochemical Services Ltd [1983] 1 Ch 258 MYT Engineering Pty Ltd v Mulcon Pty Ltd (1999) 195 CLR 636 Re Compaction Systems Pty Ltd [1976] 2 NSWLR 477 Re Duomatic Ltd [1969] 2 Ch 365 Re Horsley & Weight Ltd [1982] Ch 442 Salomon v Salomon & Co Ltd [1897] AC 22 Sinclair Scott & Co Ltd v Naughton (1929) 43 CLR 310 Union Bank of Australia v Harrison, Jones & Devlin Ltd (1910) 11 CLR 492 Winthrop Investments Ltd v Winns Ltd [1975] 2 NSWLR 666 Texts Cited: J D Heydon, Heydon on Contract: The General Part (2019, Lawbook Co.) at [3.170] J D Heydon, M J Leeming and P G Turner, Meagher Gummow and Lehane's Equity: Doctrines and Remedies (5th ed, 2015, LexisNexis Butterworths Australia) at [5-015] Category: Principal judgment Parties: Akierman Holdings Pty Ltd (Plaintiff) Steven Akerman (Defendant) Cross-claim Steven Akerman (Cross-claimant) Akierman Holdings Pty Ltd (First Cross-defendant) Emilia Marr (Second Cross-defendant) Gillian Dar (Third Cross-defendant) Representation: Counsel: G Curtin SC/E Cowpe (Plaintiff/ First and Third Cross-Defendants) S Goodman SC/N Kabilafkas (Defendant/Cross-Claimant) Solicitors: Harris Freidman Lawyers (Plaintiff/First and Third Cross-Defendants) Rankin Ellison Lawyers (Defendant/Cross-claimant) Submitting appearance: James Tuite & Associates Lawyers (Second Cross-Defendant) File Number(s): 2015/323943 Publication restriction: Nil Judgment 1. These proceedings concern the affairs of Akierman Holdings Pty Ltd ("Akierman Holdings" or "the Company"). It is a family company which was established almost fifty years ago as a vehicle for holding property investments. The Company now belongs to a brother and sister who have fallen out over the steps taken to liquidate its property holdings. 2. The Company was established by an immigrant couple, David Henry (known as Henry) Akierman and Jana (also known as Jane) Akierman. Over time, the Akiermans built up a portfolio of properties in Sydney's eastern suburbs. 3. Some of the Akiermans' property ventures were undertaken with another couple, Wilem (known as Bill) Markovitz and Emilia (or Emelka) Markovitz. The Markovitzes also used the surname Marr. Mrs Akierman was Mrs Marr's sister. In some cases shares of the properties were held by the Company or Mrs Akierman personally. Other properties were held in a company owned by the Akiermans and the Marrs. 4. The Akiermans had two children, Steven Akerman (he changed his surname so as to drop the "i") and Gillian Dar. Mr Akerman is a solicitor whose firm is called Sowden Akerman. Ms Dar is a primary school teacher. 5. On the death of Jana Akierman (who had become the sole owner of the family property interests following the death of Henry Akierman) Mr Akerman and Ms Dar inherited her estate in equal shares. They were also their mother's executors. Initially they worked together co-operatively to realise the estate. They decided to divide up the family's investments and go their separate ways financially. The process began in 2004 or 2005. It was a lengthy one and the sale of the properties was only completed in 2015. In the meantime, in December 2009, Ms Dar fell out with Mr Akerman. She accused him of cheating her and others, and since then they have been estranged. 6. During Mrs Akierman's lifetime, she and Mr Akerman had been the directors of the Company. Following her death, Mr Akerman was left as the only director of the Company. He continued to direct the Company's affairs, acting as if he was entitled to act as sole director. But he was not; the Company's articles did not provide for sole directorship. 7. These proceedings are mainly concerned with the steps taken to dispose of the Company's interests in two properties in Miller Street, Bondi. The properties were an apartment building at number 9 and a pair of semi-detached houses at numbers 5 and 7. The Company owned a quarter share of each property. Between them, the Marrs held a half share and the remaining quarter share was owned during her lifetime by Mrs Akierman. On her death, a one-eighth share passed to each of Mr Akerman and Ms Dar. 8. According to Mr Akerman, in May 2005 he agreed with Ms Dar and the Marrs to buy the seven-eighths of 9 Miller Street which he did not already own, and he similarly agreed to buy the other seven-eighths of 5 and 7 Miller Street in February 2007. Ms Dar was paid the agreed prices for her shares of the two properties. The Marrs were also paid out for number 9, and Mr Akerman made arrangements satisfactory to them to pay them out for numbers 5 and 7. 9. The sales were completed, and the transfers registered, in March 2010 (some shares of the properties were transferred into the names of members of Mr Akerman's family but this is not important for the purposes of the case). The sale and transfer of the Company's shares were effected on its behalf by Mr Akerman, purporting to act as sole director. 10. The sale prices for the Company's shares in the properties did not reflect their market value as at March 2010. Instead they reflected prices struck at the time of the earlier alleged agreements. Payment (or at least payment of the amount Mr Akerman considered to be due) was eventually made in April 2013. 11. The property valuation evidence in this case was undertaken in April 2018. The evidence showed that there was a strong run up in property values over the six years or so prior to 2018, particularly after about 2012. Mr Akerman and his family have benefited greatly from this market exuberance. On the valuations presented in this case, by April 2018, 9 Miller Street had increased in value by about 160% over the 2005 price. Numbers 5 and 7 Miller Street had increased by about 130% over the 2007 price. Issues for determination 1. Ms Dar does not complain about the sale of her own shares of the Miller Street properties. But she says that no agreement, or at least no enforceable agreement, was reached in 2005 and 2007 concerning the sale of the Company's shares of the properties. Her contention is that the later transfer of the Company's shares in the properties was improper. 2. Ms Dar makes two other complaints. The first concerns a payment of $180,000 in director's fees (together with a superannuation contribution of $16,200) which Mr Akerman took out of the Company in about April 2013. The second complaint concerns a payment of $85,000 for fees charged by Mr Akerman's firm and by counsel retained by his firm, purportedly on behalf of the Company. Ms Dar contends that these payments were improper. In particular, she contends that the legal fees were incurred in Mr Akerman's interests not the Company's. 3. In July 2014, Ms Dar commenced proceedings in this Court seeking leave to bring a derivative action in the name of the Company against Mr Akerman for breaches of his duties as director of the Company. Leave was granted by Black J in September 2015. The present proceedings, in which the Company is plaintiff and Mr Akerman is the defendant, were commenced in November 2015. 4. Initially the relief claimed on behalf of the Company included the reversal of the transfers of its shares in the two properties. That claim has not been pursued and the Company's claim is now limited to a claim for compensation under statute (Corporations Act 2001 (Cth), s 1317H) or in equity. 5. The hearing took place before me in three stages. The first stage spanned four days in November last year. There were two further days of hearing in December. The parties then presented their closing submissions in April this year. 6. Ms Dar contends that the sale and transfer of the Company's shares of the Miller Street properties, and the payment of the disputed director's fees and legal bills, was contrary to the interests of the Company and a breach of Mr Akerman's duties as a director. Mr Akerman disputes this. He also contends that, in effecting the transfers of the Company's shares of the Miller Street properties in March 2010, he was only giving effect to agreements which had previously been reached. Mr Akerman contends that the Company was contractually bound to transfer the properties at the prices for which they were transferred. Accordingly, he could not be in breach of his duties by giving effect to the transactions. 7. Initially the only allegation on behalf of the Company was that Mr Akerman had breached his director's duties. But as a result of amendments foreshadowed in the course of the November hearings, the additional point was taken that Mr Akerman lacked authority to act on the Company's behalf. 8. Mr Akerman relied by way of defence on the doctrine of unanimous assent, among other things. His contention was that Ms Dar and he had agreed on the transactions with the result that any lack of authority on his part as director, and any question of breach of his duties, did not arise. 9. The Company contested this defence on various grounds. One was a technical one concerning the Company's shareholding. One of the shares in the Company had been held by Mrs Marr as trustee for Mrs Akierman. In the ordinary course, this share should have been transferred out of Mrs Marr's name as part of the realisation of Mrs Akierman's estate. Mr Akerman took steps to have this done in February 2005. But in fact the transfer was not recorded in the Company's share register until September 2011. The Company contended that, as a result, the doctrine of unanimous assent could not apply. At the relevant times Mrs Marr was a shareholder and even if (contrary to the Company's contentions) Ms Dar had agreed to the transactions in question, Mrs Marr had not. 10. This provoked a cross-claim, filed in December 2018, under which Mr Akerman sought rectification of the Company's share register so as to record the transfer out of Mrs Marr's name as having occurred in February 2005. Mrs Marr, who was joined as a cross-defendant, did not appear or contest the relief. But the Company and Ms Dar did resist it. The cross-claim also sought relief under the Corporations Act, s 1322, validating any unauthorised transactions. 11. Mr Akerman also relied on a limitation defence to the claims for breach of fiduciary duty concerning the transfer of 9 Miller Street. On behalf of Ms Dar, a reply was filed alleging fraudulent concealment. Finally, should all other defences fail, Mr Akerman sought orders under Corporations Act, s 1317S and s 1318, exonerating him from liability for breach of duty. 12. At the end of the hearing in April, it became clear that the assessment of any compensation or damages to which the Company might be entitled was more complex than had first been appreciated, and would require further calculations, and possibly further evidence and submissions. The parties agreed that I should deal only with the liability issues as a matter of principle, and defer all questions of quantum. Summary and analysis of evidence Witnesses 1. Ms Dar was the only lay witness in the Company's case. Two affidavits from her, one in chief and one in reply, were read. She was cross-examined and her credit was challenged. 2. Mr Akerman was the principal witness for the defence. Six affidavits from him were read. His cross-examination extended over two days. His credit too was challenged. 3. Evidence was also led in the defence case from Stephen Guthrie, who was the Company's accountant from 2009 onwards. He was briefly cross-examined. 4. Evidence from the Marrs might have assisted in the resolution of some of the disputed factual issues in the case. But neither party called evidence from them. On the face of it, they were in neither party's camp. Neither party suggested that any adverse inference should be drawn against the other in this regard. The lack of evidence from them is neutral. 5. Expert evidence was led from David Bryan Bird and Gregory Wiese. Mr Bird is a valuer who was called by the Company. He gave evidence about the value of the properties the subject of the proceedings. He was briefly cross-examined. Mr Wiese is an accountant who was retained for Mr Akerman. He presented calculations, on various different scenarios, of the damages claimed on the Company's behalf. He was not cross-examined. In the light of the parties' agreement to defer the assessment of quantum, it is not necessary to refer to the expert evidence any further in this judgment. Ms Dar's testimony 1. Ms Dar holds degrees in psychology and early childhood education. She has worked primarily as a pre-school teacher. She does not appear to have been a director of any of the Akierman family companies, or, so far as the evidence goes, any other companies. But she does seem to have participated from time to time in some of the Akierman family property ventures. She has also been involved in at least twenty property transactions in Australia and abroad on her own account. 2. The evidence makes it clear that Ms Dar strongly dislikes Mr Akerman. That dislike has been open since the rupture in their relationship in December 2009. But Ms Dar said in her evidence that she had never liked or trusted her brother even before that. It seems that she has always resented what she perceives as favouritism towards him by their parents. 3. Ms Dar has done very well out of the assets which were built up by her parents. Directly and indirectly she has already received more than $5 million from her mother's estate. More than $7 million is held by the Company, of which (subject to payment of capital gains tax) she will receive half. 4. As already noted, Ms Dar makes no complaint about the sale of her own shares of the properties in question. No doubt that is because she recognises that she agreed to the prices struck at the time, and is bound by those agreements. For reasons which I give in more detail below, I am satisfied Ms Dar also agreed to the sale of the Company's shares of the properties at prices which reflected the prices which she agreed to accept for her shares. Whether the Company is bound by Ms Dar's agreements is, of course, another question; but on my findings, on a commercial level, Ms Dar was happy with the prices at the time. 5. The amount claimed in these proceedings for the allegedly wrongful sale of the Company's shares in the properties is about $3.6 million, but half of any compensation which Mr Akerman might have to pay would, after deduction of costs, go back to him as a half shareholder in the Company. The potential benefit to Ms Dar from the proceedings is large in absolute terms, but it is not so imposing in the context of the family assets as a whole, or when compared with the unchallenged gains Mr Akerman has received from increases in the property market. Regrettably, I think that this litigation is motivated, at least in part, by jealousy and spite on Ms Dar's part. I think that Ms Dar's attitude towards her brother has probably coloured her evidence. 6. Of itself, this would be enough to make me cautious about accepting Ms Dar's evidence, particularly of conversations which occurred many years before this litigation took place. But there is more. As will be seen, I have rejected Ms Dar's evidence on a number of points. I thought her belated denials in cross-examination of matters she had not denied in her affidavit were particularly unconvincing. Overall, I approach her evidence with scepticism. Mr Akerman's testimony 1. Mr Akerman has practised as a solicitor since 1976. His practice has encompassed conveyancing (including the transactions which are the subject of these proceedings); commercial litigation, leasing disputes; personal injury litigation; professional negligence; and taxation matters. 2. Mr Akerman professed surprise at Ms Dar's evidence that she had never liked or trusted him, even before December 2009. He said that he thought they had a warm and cordial relationship, and referred to apparently affectionate post cards and messages he had received from Ms Dar over the years. He did say however that she became colder towards him after he declined to get involved in a childcare venture she suggested to him in about March 2007. His evidence on this subject was not challenged and I accept it. 3. But it was clear that since December 2009, Ms Dar's antipathy to Mr Akerman has been reciprocated by him. At the time Mr Akerman gave evidence in November 2018, his wife was gravely ill. Mr Akerman and Ms Dar were involved in a spat outside the court room, the details of which I will not go into. Mr Akerman's resentment at having to answer the allegations his sister made against him, especially at such a time of tribulation, was plain for all to see. 4. As with Ms Dar, this was not the only difficulty for Mr Akerman's credibility. As will be seen, there are a number of points where I disbelieve his testimony. At best, I think his enmity towards his sister led him to exaggerate his evidence. As I will shortly describe, the genuineness of some of the documents that he produced as evidence in the case is under a cloud. These are serious failings in any witness, but they are particularly serious for a solicitor. The most that can be said in his favour is that he must have been under great strain at the trial and in the end I do not accept all of the charges against him by Ms Dar. But I still lack confidence in his evidence and I approach it with caution. Mr Akerman's file notes 1. In evidence as part of Mr Akerman's case were twenty-one file notes. These file notes were only produced at a late stage of the preparation of the affidavit evidence and their genuineness was questioned. This became a significant issue in the case. 2. Mr Akerman's earliest affidavit account of the transactions, the subject of the proceedings, was contained in the affidavit which was sworn in early April 2015 for the purposes of the leave application. The affidavit made no mention of the disputed file notes. 3. Mr Akerman's next affidavit was his main affidavit in answer to the claim in these proceedings. This affidavit was sworn in August 2017 in response to an affidavit made by Ms Dar in July the previous year. The affidavit recorded the shareholding of the family companies and a detailed account of the sale of the properties, but also made no mention of the disputed file notes. 4. The notes were first mentioned in an affidavit Mr Akerman swore at the end of October 2017. The affidavit annexed the notes and gave an account of how they had been prepared. Mr Akerman said that he drafted some file notes by hand and typed others. Where file notes had been handwritten, they were occasionally typed up by his employees and the original note discarded. 5. On Mr Akerman's account, the files of his dealings with Mrs Akierman's estate and the Company's affairs had been dismantled. This was actually after he first received a solicitor's letter on behalf of Ms Dar in December 2011. He said that there were or might be some remaining file notes but they could not be found despite a thorough search. 6. Naturally, when he gave evidence at the trial, Mr Akerman was pressed in cross-examination about why the notes had not been produced at an earlier stage of the proceedings, and in particular why he had not annexed them to his August 2017 affidavit. Mr Akerman said in response that he had provided copies of the documents to his solicitors, the implication being that they had decided not to include them. This was challenged by counsel for Ms Dar. That afternoon counsel foreshadowed calling evidence from Snezana Vojvodic and Cherrie Homer who were the solicitors acting for Mr Akerman at the time (he subsequently changed firms and was at the trial represented by a new firm). 7. The following day Mr Akerman altered his account. He said that he could not recall whether he had provided the notes to the solicitors or not. In cross-examination, counsel for Ms Dar returned to the topic and, at the outset of counsel's questions, the following exchange took place: Q. Those file notes annexed or exhibited to your October 2017 affidavit are they inventions by you? A. Yes. 1. This evidence appeared to come as a surprise to those in the court room. Counsel for Ms Dar did not probe further. Instead, counsel pressed forward with questions concerning Mr Akerman's provision of documents to his solicitors: Q. Is it the case that you did not give them to your solicitors prior to the preparation of your April 2015 affidavit? A. Sorry repeat that? Q. Is it the case that you did not give those file notes to your solicitors for the preparation of your April 2015 affidavit? A. The ones that are annexed to the affidavit? Q. The ones annexed to your October 2017 affidavit? A. I can't recall specifically what documents I gave them. I have something in the order of 100 cartons of documents, numerous documents were‑‑ HIS HONOUR: I think you've answered the question. Q. As of today you have no recollection whether or not you gave the file notes annexed to your October 2017 affidavit to your legal advisors who prepared your April 2015 affidavit. Is that correct? A. I have no recollection of providing the specific documents to my legal advisors. I have a very distinct recollection of providing vast amounts of documents. I can't tell you what each and every one of them were. Q. Do you have any recollection of providing the file notes annexed to your October 2017 affidavit to your legal advisors who prepared your April 2015 affidavit? A. No I don't have any recollection of providing those specific documents. Nor do I recall what the other documents were. 1. Mr Akerman was asked in re-examination about his agreement that the notes were an "invention". He gave the following evidence: Q. Mr Akerman, you were asked earlier today whether the file notes annexed to your 31 October 2017 affidavit were inventions of yours. What did you understand by the expression "inventions of yours"? A. Was I the author or creator of those documents. 1. Ms Vojvodic and Ms Homer were called later that day. Their evidence was that had the notes been provided to them they would have considered them important. This evidence was obviously correct, and they were not challenged on it. 2. Counsel for Ms Dar submitted that I should not be satisfied that the notes were contemporaneous. Counsel attacked the credibility of Mr Akerman's evidence on the subject, especially his initial evidence that he had provided the documents to his former solicitors. 3. Counsel's submissions had considerable force. I have no hesitation in rejecting Mr Akerman's evidence about providing the notes to his solicitors. I accept counsel's submission that Mr Akerman made up this evidence and later modified his position to say that he could not recall because it was obvious that what he initially said could not be sustained. This reflects very poorly on his credit. 4. Given their provenance the notes can only be treated with suspicion. But there are two factors which, to my mind, tend to qualify that suspicion. 5. First, the notes are not confined to the disputed conversations with Ms Dar. They also purport to record conversations with accountants and with Mr Marr. The notes of this type tend to be plausible and consistent with contemporaneous correspondence, and none of them was specifically challenged. Of course it would have been possible for Mr Akerman to have produced notes of such conversations after the event. But that would have been a very elaborate exercise; it is hard to see why Mr Akerman would have bothered to create notes dealing in detail with the matters that were peripheral to the litigation if the notes were only created to shore up his affidavit. 6. The second point is that the notes are not entirely self-serving. As will be seen, in some instances Mr Akerman gave oral accounts of the relevant conversations. Where this is the case, the notes and Mr Akerman's affidavit agree reasonably well with each other. This suggests that the affidavit was prepared by reference to the notes or the notes were prepared by reference to the affidavit. But in some instances the note is less favourable to Mr Akerman than his affidavit account of the conversation. 7. It is easy to see how that could have happened if the notes were produced first and Mr Akerman had used them to prepare his affidavit, embroidering details which were not recorded in the notes. But it is difficult to see why, if the notes were created afterwards, Mr Akerman would have created a note which did not support his affidavit account. Counsel for the Company acknowledged the force of this, but observed that Mr Akerman could have made mistakes in producing the notes. While that is a possibility, I do not think it is a very likely explanation. It seems to me much more likely that the notes in fact existed and were used by Mr Akerman to prepare his affidavit. 8. What this point underlines is that the notes undoubtedly represent a recollection of Mr Akerman's. Even if they were not contemporaneous, they would still be of some value as a later attempt by Mr Akerman to recollect and record what had transpired. Even so, the fact that they are typed means also that even if parts of them were produced contemporaneously, other material might have been introduced later. Because of the murky circumstances surrounding their provenance, I treat them with caution. I do not think that they can automatically be accepted as having been contemporaneous, or all contemporaneous. They need to be analysed document-by-document for reliability. But with those limitations, they are still significant evidence in the case. Chronology of key events 1. Incorporation of the Company and issue of shares: The Company was incorporated in June 1972. There were two subscribers to the Memorandum of Association, Henry Akierman and Jana Akierman, with one share each. 2. No contrary provision being made in the Memorandum of Association, the Company's Articles of Association adopted the regulations set out in Table A in the Companies Act 1961 (NSW), Schedule 4. It appears that the regulations were later supplemented by two special resolutions in December 1972 and a further special resolution in May 1974. The special resolutions of December 1972 are not in evidence. 3. The Company's share register shows that the shares issued to Henry and Jana Akierman on incorporation were preference shares. In October 1972 a further share was issued to Mrs Marr. This was an ordinary share. At the same time Mrs Marr executed a declaration of trust over that share in favour of Jana Akierman. The declaration of trust continued: AND I HEREBY COVENANT AND AGREE that at any time here-after if called upon so to do by the said JANE AKIERMAN I will execute all such documents and do all such things as shall be necessary to enable the said Share to be transferred on the books of the Company hereunder mentioned into the name of the said JANE AKIERMAN or her nominee AND I HEREBY FURTHER ACKNOWLEDGE that the purchase money for the said Share was supplied by the said JANE AKIERMAN and that I have this day executed a transfer of the said Share which I agree the said JANE AKIERMAN shall be at liberty to complete in her favour or in favour of any other person or persons and at any time hereafter to lodge for registration with the Company the said transfer AND I HEREBY REQUEST the Company hereunder mentioned and the Directors thereof to register the said transfer as and when presented to it for registration … 1. Two months later, in December 1972, there was a further share issue. The Company issued nine more ordinary shares to Jana Akierman, taking the number of issued ordinary shares to ten. The Company also issued 7,998 more preference shares to Henry Akierman, taking the number of issued preference shares to 8,000. 2. In May 1974 a special resolution was passed altering the Company's share structure. The articles were amended to create three classes of share: ordinary shares; cumulative preference shares class A (which represented the 8,000 cumulative preference shares then on issue); and cumulative preference shares class B. On the following day, the Company issued 100,000 class B preference shares to Henry Akierman. 3. Initial officers of the Company: The Table A regulations provided in conventional form for the appointment, removal and remuneration of directors; the powers and duties of directors; proceedings of directors (regulations 79 to 90); and the appointment, remuneration and powers of a managing director (regulations 91 to 93). Regulation 63 provided that the numbers of the directors and the names of the first directors should be determined in writing by the subscribers of the Memorandum of Association or a majority of them. Regulation 67 provided that the members of the Company might, by ordinary resolution, increase or reduce the number of directors. 4. The Company's register of directors, managers and secretaries is in evidence. It records that Henry and Jana Akierman were appointed as directors of the Company on incorporation in June 1972. It also shows Henry Akierman as having been appointed as manager and Jana Akierman as having been appointed as secretary on the same date. 5. Death of Henry Akierman and management of the Company thereafter: In June 1974, Henry Akierman died. In evidence are two minutes of directors' meetings held following his death. The first was held on 10 June and the second on 29 June. 6. The 10 June minute recorded Jana Akierman and Dr Eric Resler as being present (Dr Resler was apparently the Company's accountant, but was recorded as attending as secretary) and Steven Akerman attending by invitation. The minute recorded the death of Henry Akierman on 2 June and a resolution that Steven Akerman be appointed to the board. 7. The 29 June minute recorded Jana Akierman and Steven Akerman as being present with Jana Akierman as chairman. It recorded the following resolution: IT WAS RESOLVED to accept the resignation of JANE AKIERMAN as a Working Director of the Company and to appoint as from the date hereof STEVEN AKIERMAN at a Salary to be determined in the subsequent year. 1. The minute went on to provide for the payment of a gratuity to Jana Akierman in recognition of Henry Akierman having "died whilst in the service of this Company" and also for her to be paid a retirement allowance on retirement as a Working Director of the Company. Both the gratuity and the retirement allowance were largely paid out of a superannuation fund which had apparently been established by the Company. 2. The Table A regulations do not provide for a person to be appointed as a "Working Director" of the Company. Table A regulation 91 provides in the usual way for one of the directors to be appointed as Managing Director, but this cannot be equated with "Working Director", if only because there could only be one Managing Director and it appears that both Henry Akierman and Jana Akierman had been Working Directors. The office of Working Director was probably created in the additional regulations adopted as a result of the December 1972 special resolutions, which are not in evidence. Presumably, designation as a Working Director was a means of providing superannuation benefits, and perhaps other remuneration, to directors who were involved in managing the Company's business. 3. Henry Akierman's shares in the Company were inherited by Jana Akierman. After June 1974, Mrs Akierman and Mr Akerman continued as directors of the Company until Mrs Akierman's death in September 2001. No further directors were appointed and no change was made to the articles of Association. 4. Property holdings of the Company: Before Mrs Akierman's death, the three properties in Miller Street Bondi had been (along with a unit block in Liverpool Street Dover Heights) the subject of a partnership between Mrs Akierman; the Company; Mr Marr and Mrs Marr. The partnership was known as "Miller Street Partnership". Each partner had a one-quarter share. The properties were registered in the names of the partners accordingly. 5. There was another partnership known as "A&M Leasing Partnership" which did not own real estate, but acted as a property management agent for some of the properties. 6. The Company also owned a block consisting of two flats in Murriverie Road Bondi and a half share in a property consisting of twelve flats and two shops in Gardeners Road, Kingsford. The other half of the Kingsford property was held by Wilfers Developments Pty Ltd, a company controlled by the Marrs. 7. In addition, Mrs Akierman held a fifty per cent share in two other companies, Akmar Investments Pty Ltd and Akmar Developments Pty Ltd. The other fifty per cent was held by the Marrs. Akmar Investments owned a property in Fletcher Street, Bondi. Akmar Developments did not own property, but acted as a management entity. 8. At the time of Mrs Akierman's death, the Company's accountants were a firm known as Selingers Chartered Accountants. They were responsible for preparing the accounts of the partnerships and of the companies Akierman Holdings, Akmar Investments and Akmar Developments. Selingers did not act for Mr Akerman or Ms Dar. Mr Akerman had his own accountants who looked after his personal affairs. So did Ms Dar. 9. Administration of Mrs Akierman's estate: Mrs Akierman's will had been made in 1976. The will appointed Mr Akerman and Ms Dar as Mrs Akierman's executors. Apart from legacies of $5,000 to three of her nephews and nieces (which Mr Akerman and Ms Dar voluntarily increased to $10,000), the estate was divided equally between Mr Akerman and Ms Dar. Mr Akerman said in his affidavit that he and Ms Dar worked closely together as executors. They jointly decided on the funeral arrangements and the erection of a gravestone and went through Mrs Akierman's personal effects, donating some to charity and dividing the others. Ms Dar did not dispute this evidence. 10. Mr Akerman said in his affidavit that following Mrs Akierman's death he had a conversation with Ms Dar about what to do with the partnerships and the companies. He said that Ms Dar proposed that financially they go their separate ways and sell the assets. Mr Akerman said that he agreed and obtained the Marrs' agreement by speaking to Mr Marr. Ms Dar said she could not recall this conversation but did not dispute that she wanted to go her separate way financially. 11. In early 2002 Ms Dar began seeking appraisals for the Miller Street, Fletcher Street and Dover Heights properties. But for reasons which are not fully explained in the evidence, the administration of the estate was protracted and ultimately took more than three years. During this period the properties remained unsold, and indeed they remained registered in Mrs Akierman's name. So did the shares in the Company, Akmar Investments and Akmar Developments which had been registered in her name. 12. Strictly speaking, the effect of Mrs Akierman's death had been to dissolve the Miller Street Partnership. But the Partnership was treated as continuing, with Mr Akerman and Ms Dar being substituted as equal (one-eighth) holders of Mrs Akierman's interest. The properties were managed and the accounts prepared on this basis. 13. The sale of the properties would of course leave the companies with cash representing their shares of the proceeds. It appears to have been contemplated that the companies would be liquidated and Mrs Akierman's shares in them distributed to Mr Akerman and Ms Dar. A note of Mr Akerman's dated November 2004 records a conference between Mr Selinger, Mr Akerman and Ms Dar at which Mr Selinger advised that this was the only tax-effective course. 14. Mrs Akierman's death left Mr Akerman as the only director of the Company. Legislation in 1995 (First Corporate Law Simplification Act 1995, sch 4 item 25; see now Corporations Act, s 201A) had permitted single-director companies. But this legislation did not automatically allow existing companies whose articles required that they have at least two directors (as the Company's did) to operate as single-director companies. For the Company to take advantage of this it would have needed a change to its articles. No-one seems to have noticed this. Instead, Mr Akerman simply carried on as if he were the director of a single-director company. 15. Transfer of estate's share of partnership properties to Mr Akerman and Ms Dar: The transmission of Mrs Akierman's personal shares in the partnership properties to Mr Akerman and Ms Dar was eventually effected by registration in December 2004. The result so far as properties in which the Company had an interest, was as follows: Property Dar interest Akerman interest Company interest Marrs' interest 5 Miller St Bondi 12.5% 12.5% 25% 50% 7 Miller St Bondi 12.5% 12.5% 25% 50% 9 Miller St Bondi 12.5% 12.5% 25% 50% 121 Murriverie Rd North Bondi - - 100% - 65 Liverpool St Dover Heights 12.5% 12.5% 25% 50% 30 Gardeners Rd, Kingsford - - 50% 50% 1. Transfer of estate's shares in companies to Mr Akerman and Ms Dar: Mrs Akierman's shares in Akmar Investments and Akmar Developments were to pass to Mr Akerman and Ms Dar, leaving them each with one quarter of the shares in each company (the other shares were, it will be recalled, held by the Marrs). This was straightforward. Mr Akerman and Ms Dar were also to receive Mrs Akierman's shares in the Company. This proved to be somewhat more complicated. 2. As already noted, Mrs Akierman was at her death the holder of nine of the ten ordinary shares issued by the Company (the tenth share being held by her sister, Mrs Marr, on trust for her in accordance with the 1972 declaration of trust). Mrs Akierman also held all of the 8,000 A class preference shares and the 100,000 B class preference shares. 3. The original list of assets attached to the application for probate of Mrs Akierman's will showed Mrs Akierman as holding nine ordinary shares in the Company. In August 2004 Mr Akerman wrote to Selingers pointing out the omission and stating it would be necessary to obtain an amended grant of probate to reflect the additional share held for her by Mrs Marr. One of Mr Akerman's notes of his November 2004 conference with Mr Selinger and Ms Dar (see at [78]) noted that the share had to be transferred from Mrs Marr to the estate. 4. Share transfer forms were drawn up, signed and dated 10 December 2004. On that day or shortly afterwards the transfers were stamped. Fresh share certificates were also issued, bearing the date 10 December, to Mr Akerman and Ms Dar. There was no difficulty with the preference shares where Mrs Akierman had previously been registered as the holder of all of the shares which would be transferred. But there was a complication with the ordinary shares. At this stage, the share owned by Mrs Marr remained in her name, and the share register showed Mrs Akierman as the holder of only nine of the ordinary shares. 5. The transfer forms for the ordinary shares were for a total of ten shares, five for Mr Akerman and five for Ms Dar. But consistently with the then state of the Company's share register, the fresh share certificates which were issued covered only the nine shares registered in Mrs Akierman's name. Five were allocated to Mr Akerman and four to Ms Dar. 6. In February 2005 Mr Akerman took steps to formalise the transfer of Mrs Marr's share. I analyse the evidence in more detail below. For present purposes it is enough to say that Mrs Marr had previously (in accordance with her 1972 declaration of trust) signed a transfer form in blank for the share. The form was completed, apparently by Mr Akerman, and dated 10 February. It was stamped on the same day. 7. By letter dated 25 February 2005 Mr Akerman wrote to Selingers enclosing completed and stamped transfers for the shares in the Company, Akmar Investments and Akmar Developments. For the ordinary shares in the Company, Mr Akerman included the two transfers dated 10 December 2004 (which, it will be recalled, were for 5 shares each) and the transfer of Mrs Marr's share. He said: Please note that this share is included in the Transfers of the five shares each to Steven Akerman and Gillian Dar set out above. That is, the 9 shares held by the deceased together with the one share now transferred to the estate by Emilia Markowic have been transferred equally to Steven Akerman and Gillian Dar. 1. Mr Akerman's letter ended: Please confirm that the company records have been amended and provide us with written confirmation of all share holdings in each company. We would be obliged if you would provide us with your response as soon as possible. 1. There is no written confirmation or response from Selingers in evidence. Nevertheless, a few weeks later, on 11 March, Mr Akerman wrote to Ms Dar concerning the status of the estate. The letter stated that specified numbers of shares in the Company, Akmar Investments and Akmar Developments "have been transferred to you" and stated that copies of the transfers were enclosed. So far as the Company was concerned, the share holdings specified were 5 ordinary shares, 4,000 A class preference shares and 50,000 B class preference shares. 2. In evidence is a copy of an ASIC form 484 signed by Mr Akerman notifying the new shareholdings in the Company. The form identified Selingers as the lodging party and was dated 29 March 2005. It recorded the transfer of the nine shares registered in Mrs Akierman's name to Mr Akerman (as to five) and Ms Dar (as to four) as having occurred on 10 December 2004 and their names as having been entered on the register of the Company on the same date. It recorded the transfer of Mrs Marr's share to Ms Dar as having occurred, and Ms Dar's name having been entered on the register, on 29 March 2005. Also in evidence is a share certificate for the share in Ms Dar's name bearing the same date. 3. Presumably the form was signed by Mr Akerman on the basis that Selingers would attend to its lodgement with ASIC. In fact, apparently due to an oversight by Selingers, the form was not lodged and the Company's share register was not altered. This does not seem to have been discovered until September 2011 (see [136]-[137] below). 4. Attempt to sell Miller Street properties and agreement concerning 9 Miller Street: In early 2005, Mr Akerman, Ms Dar and the Marrs agreed to list the Miller Street and the Dover Heights properties for sale. Ms Dar sounded out several real estate agents. Eventually she and Mr Akerman settled on Ray White Real Estate. 5. The agency agreement with Ray White for the Miller Street properties is in evidence. The agreement was completed in the names of all four owners of the Miller Street properties (the Marrs, Mr Akerman, Ms Dar and the Company). It was signed by Mr Akerman, Ms Dar and the Marrs. The agreement was dated April 2005 and provided for an exclusive agency for the period until June. The solicitor for the agreement was Sowden Akerman. 6. Ray White undertook a marketing campaign which culminated in an auction on 18 May 2005. Numbers 5 and 7 were passed in. The highest bid for number 9 was $5 million. The bidder made it clear that the amount would not be increased and number 9 was also passed in. 7. Following the auction there was a meeting at the Marrs' house attended by the Marrs; Mr Akerman and his wife Susan; Ms Dar and her daughter Hannah. What happened at that meeting and immediately afterwards is the subject of dispute but it is common ground that agreement was reached for Mr Akerman to purchase at least the Marrs' and Ms Dar's shares of 9 Miller Street for $3.125 million (62.5% of $5 million). Mr Akerman claims, and Ms Dar disputes, that it was also agreed that Mr Akerman would buy the Company's share as well, for $1.25 million (25% of $5 million). 8. It seems that the conveyancing for the sale was complicated by the fact that the Marrs held their undivided half share of the property as tenants in common, but had been issued with separate share certificates. A file note from Mr Akerman's office shows that within two days of the agreement, on 20 May, Mr Akerman asked a member of his staff to get advice from the Land Titles Office on how to effect the registration of the transfer of the Marrs' interest. 9. It is clear that the parties always contemplated that formal contracts would be drawn up to reflect the sales. But they did not want to do so immediately, so as to avoid having to pay commission to their agent. Mr Akerman also wanted until February the following year to obtain the necessary finance, to which Ms Dar and the Marrs agreed. 10. In evidence is a one page document purporting to be an agreement between Mr Akerman and the Company (signed by Mr Akerman purportedly on the Company's behalf) for the sale of the Company's share of 9 Miller Street for $1.25 million. The document is dated 1 July 2005. There are questions about its genuineness, which I deal with as part of the factual issues below. 11. Formal contracts and transfers were later drawn up and signed to effect the sale of the Marrs', Ms Dar's and the Company's shares of 9 Miller Street. I deal with this in more detail below. The contracts were stamped and the transfers lodged, in the case of the Marrs, in February 2006; in the case of Ms Dar, in June 2007; and in the case of the Company, in March 2010. But Mr Akerman claimed the contracts and transfers were actually drawn up, and sent to the different vendors (in the case of the Company, a copy being sent to Ms Dar) in about July 2005. I deal with this as part of resolving the disputed issues of fact below. 12. Mr Akerman has second thoughts about winding up the Company: As already noted, Selingers' advice, at least as at November 2004, appears to have been that the Company, along with Akmar Investments and Akmar Developments, should be wound up once the properties in its name had been sold. But it seems that Mr Akerman thought that it would, or at least might, be better for him to buy Ms Dar's shares in the Company instead. Presumably he was hoping to avoid stamp duty on the transfer of the Company's shares of the properties it owned. 13. The evidence does not reveal when Mr Akerman first came up with this idea. But it was either in or before December 2005 when Mr Akerman had two meetings with Mr Ramesh Chandra of Selingers. Among the matters referred to was the sale of 9 Miller Street. On 23 December Mr Akerman wrote to Mr Chandra stating that he wished, subject to tax and stamp duty questions, to purchase Ms Dar's interest in the Company and thereby acquire the Murriverie Road property and the Company's share of 9 Miller Street. The Company's shares of 5 and 7 Miller Street and of the Kingsford property were not mentioned; it seems the plan at that stage was that they would be sold. The Dover Heights property had already been sold to an external buyer in September 2005, following an auction in June. 14. Transfer of the Marrs' and Ms Dar's shares of 9 Miller Street: In February 2006, Mr Akerman moved to complete his purchase of the Marrs' and Ms Dar's shares of 9 Miller Street. Receipts in evidence record that the purchase monies were paid on 4 February. From that point, Mr Akerman assumed control of the property. He received the income and paid for the outgoings. He also undertook extensive renovations (at his own expense). Ultimately these spanned the next eleven years. 15. There was a delay between the payment of the purchase monies and the registration of the transfers. In April 2006, Mr Akerman wrote to a valuer seeking a valuation of the Marrs' share of the property for stamp duty purposes. Stamp duty was paid on the Marrs' contracts, apparently, on 16 May (the date is hard to read). The contracts were dated, apparently in Mr Akerman's handwriting, 4 February. The Marrs' transfers were lodged on 19 May. 16. The transfer of Ms Dar's share was delayed even further. Mr Akerman explained this as an oversight by his office. Ms Dar's contract was not stamped, and her transfer was not registered, until September 2007. The contract bears the handwritten date, apparently inserted by Mr Akerman, of 29 June 2007. How this date came to be inserted was not explained in the evidence. It may be that the date was selected so as to create the impression, for stamp duty purposes, that less than three months had elapsed between the signing of the contract and its lodgement for registration on 25 September. 17. Continued consideration of purchase of Ms Dar's shares in the Company by Mr Akerman: Meanwhile, in March 2006 the idea of Mr Akerman buying Ms Dar's shares in the Company was taken up with another accountant at Selingers, Mr Roger Ellinson. According to Mr Akerman's file notes there was a meeting between himself, Ms Dar and Mr Ellinson, after which Mr Akerman and Ms Dar agreed to look into it. Mr Akerman wrote to Mr Ellinson later in the month asking whether there were tax benefits from purchasing the shares in the Company. He also asked whether the tax liabilities on liquidation could be reduced or delayed while still obtaining access to the moneys in the meantime. 18. Mr Ellinson responded by suggesting a meeting, but also asked for Selingers' outstanding fees to be paid in the meantime. No fees appear to have been paid, and no meeting appears to have taken place. In August, Ms Dar wrote saying that she and Mr Akerman had decided to wind up all the companies. But it seems that she had misunderstood Mr Akerman; as subsequent correspondence shows, he was still interested in the idea of buying her shares in the Company. Mr Ellinson's response to Ms Dar was that there should be a meeting and the outstanding fees should be paid. 19. Further attempt to sell 5 and 7 Miller Street and agreements of 28 February 2007: Meanwhile, the Murriverie Road and Fletcher Street properties were sold to external buyers; the Murriverie Road sale being completed in December 2006 and the Fletcher Street sale being completed in February 2007. In late 2006 or early 2007 it was decided between Mr Akerman, Ms Dar and the Marrs to make another attempt to sell 5 and 7 Miller Street. The parties signed an agency agreement with Laing+Simmons Double Bay in January 2007. That agreement provided for an exclusive agency period commencing on 19 January and ending on 27 March. Sowden Akerman was nominated as the vendors' solicitor. 20. On 28 February Mr Akerman and Ms Dar discussed the sale of 5 and 7 Miller Street. There is some dispute about the detail of what was said, but the upshot was that they agreed that the properties should be withdrawn from sale and the shares of Ms Dar, the Marrs and the Company sold to Mr Akerman instead. The Marrs (who were consulted by telephone) also agreed. For the purposes of the sale, the value of the properties as a whole was agreed at $1.508 million. The Marrs were to receive half of this amount ($754,000); the Company one quarter ($377,000) and Ms Dar one eighth ($188,500). 21. On the same day, two one page agreements concerning 5 and 7 Miller Street were drawn up and signed by Mr Akerman and Ms Dar. One provided for the sale of Ms Dar's share of the properties to Mr Akerman. The other concerned the sale of the Company's share. I refer to these agreements, and the evidence about the oral discussion which preceded them, in more detail when dealing with the factual issues in the case, below. On the following day, 1 March, Mr Akerman wrote to the agent with instructions that the properties were to be withdrawn from sale. 22. The one page agreements concerning Ms Dar's and the Company's shares provided that formal contracts would be entered into once the exclusive agency period had expired, and completion would occur six weeks after that. The same arrangement seems to have been agreed by Mr Akerman with the Marrs. But payment was not necessarily to be made on completion. Instead, it was agreed between Mr Akerman and the Marrs that he would pay them on the liquidation of Akmar Investments. The one page agreements concerning Ms Dar's share and the Company's share provided that Mr Akerman could defer payment for those shares until the liquidation of the Company. 23. Subsequently, a contract and transfer was prepared for each property reflecting the sale to Mr Akerman of seven-eighths of the property (being the combined shares of the Marrs, Ms Dar and the Company) at the agreed price. The contracts and transfers were signed by the Marrs, Ms Dar and Mr Akerman (for the Company) as vendor. They were eventually stamped, and the transfers lodged for registration, in March 2010 (see below). There is a dispute about when they were drawn up and signed. I deal with this dispute when considering the factual issues below. 24. Unlike 9 Miller Street, Mr Akerman does not seem to have taken control of the properties on his own account. Rent received from them continued to be deposited into the A&M Leasing Partnership account until March 2010 when title to the properties was transferred. 25. Cohen & Krass replace Selingers as the accountants for the companies and partnerships: There is no evidence of a meeting taking place (or of Selingers' fees being paid) after August 2006. It seems that both Mr Akerman and Ms Dar had become dissatisfied with Selingers. In March 2007, presumably with Mr Marr's agreement, the retainer for the companies and trusts was transferred to another accountant, Mr Gary Marx. His firm was called Cohen & Krass. 26. Payment of Ms Dar and supplementary agreement concerning deferred settlement payments: Mr Akerman apparently decided to pay Ms Dar for her share of numbers 5 and 7, rather than waiting for the winding up of the Company. There is no direct evidence to fix the date of payment, but it seems to have occurred by mid-2007. 27. The one page agreements for the sale of the Company's shares of the Miller Street properties had provided that if Mr Akerman elected to defer payment until the winding up of the Company, he would pay interest at the bill rate paid by the Commonwealth Bank of Australia on the Company's deposits. According to Mr Akerman, in or around late July 2007 he and Ms Dar agreed to amend this arrangement so as to provide that Mr Akerman would pay the greater of the CBA deposit rate and the net income received from the properties. In evidence is a one page written agreement, described as a supplementary agreement, to this effect. The document was signed by Mr Akerman on his own behalf and also purportedly on behalf of the Company. It bears the date 1 August 2007. 28. Ms Dar had of course signed the earlier one page agreement concerning 5 and 7 Miller Street. But, as already noted, her evidence was that she had never agreed to the original one page agreement concerning 9 Miller Street. She also denied that she had agreed to the terms recorded in the supplementary agreement. 29. ADP Prosperity appointed as accountant for the companies and the partnerships: Meanwhile, Mr Akerman had become dissatisfied with Cohen & Krass' performance as the accountants for the companies and the partnerships. According to a note of Mr Akerman's dated August 2007, Ms Dar and Mr Marr were also dissatisfied. Mr Marr canvassed the possibility of his own accountant, Mr Ross Phillips, doing the work. The note records that Mr Akerman thought he would probably go along with this but Ms Dar's approval would be needed. 30. Eventually, in June 2008, Mr Akerman met Mr Phillips to discuss his firm, ADP Prosperity, taking over the accounting work for the companies and the partnerships. A few weeks later, ADP Prosperity was formally retained. 31. In November 2008 the necessary resolution was passed to wind up Akmar Investments. Mr Marr and Mr Akerman were appointed as the liquidators. But little other progress seems to have been made in the months after July. In January 2009 Mr Akerman wrote to Mr Phillips to complain. Mr Akerman also stated that since June 2008 he had been waiting for advice on the most tax-effective way to realise the Company's property holdings. He said that as a result the Kingsford property and all other assets remained "in limbo". 32. By May 2009 nothing further seems to have happened and Mr Akerman met with Mr Marr to discuss the delays. His file note of that meeting records Mr Marr's agreement that they terminate Mr Phillip's retainer. Ms Dar appears to have held the same views. But the correspondence between Mr Phillips and Mr Akerman continued on into September. 33. Mr Akerman briefs another accountant: At the end of September 2009 Mr Guthrie became involved for the first time. He contacted Mr Akerman to advise that he had newly been appointed as a director of ADP (there is no evidence of any further involvement by Mr Phillips and it seems that Mr Guthrie had taken over the account). 34. Mr Guthrie sought a meeting to discuss the work which Mr Phillips had been asked to do, and Mr Akerman's concerns about the liquidation of Akmar Investments. He also sought payment of ADP's outstanding fees, which totalled $39,000. 35. About ten days later, Mr Akerman responded. He enclosed copies of his correspondence with Mr Phillips about the liquidation and the need to obtain advice on the way in which to dispose of the remaining assets. On the latter question he added: As to Akierman Holdings Pty Ltd, Ross Phillips was informed at our first meeting in June 2008 that the relevant parties had agreed to terms pertaining to the purchase/sale of specified properties. In the absence of an advice from Ross Phillips those transactions could not be completed. If, as I consider it likely, one or more of the parties renege on the agreement on the grounds that they were not completed within a reasonable time, your firm will be held responsible for the loss incurred which we anticipate will be substantial. In that event, the quantum of your claim for fees will pale into insignificance. 1. In his reply, Mr Guthrie stated that he was in a position to provide the necessary advice concerning the realisation of the Company's assets, but would need a meeting to discuss Mr Akerman's plans. He also sought $16,000 in fees be paid in advance of providing the advice, which he said related to other work and was not in dispute. 2. Mr Akerman did not want to proceed in this way. Instead he wanted to obtain the assistance of a new tax accountant, Ms Margaret Gosper. In November 2009 Mr Akerman wrote to Ms Gosper, enclosing a summary of the "Akerman Group" financial affairs. His letter stated: Jana held all shares in Akierman Holdings P/L which have now been transferred to Steven and Gillian equally. 1. One of Mr Akerman's file notes records a conversation between Mr Akerman and Ms Gosper on 2 December. The note reads: She strongly advises against buying Gillian's shares. That will only result in postponing paying the tax. Tax will have to be paid at some stage. Government can change the rules at any time and increase amount of tax payable. She has seen many serious fights within families over this kind of issue especially how much tax the vendor of the shares should allow when working out the purchase price for the shares. She says to sell off Kingsford, wind up all companies, finalise sales and transfers of Miller St properties, pay all tax assessed. That way everyone can move along with their lives. 1. Breakdown in relationship between Mr Akerman and Ms Dar: Later on 2 December Mr Akerman and Ms Dar spoke. One of Mr Akerman's file notes purports to be a record of the conversation, and its accuracy was not disputed. According to the note, he reported on Ms Gosper's advice, saying that the liquidation of Akmar Investments would be completed soon, he would pay out the Marrs and this would leave only the Company to be paid. He said that he wanted to complete the transfers, and she was content with that. It would then be necessary to sell the Kingsford property. 2. At this point, according to the note, Ms Dar referred to Mr Guthrie's reply to Mr Akerman, and accused him of being the cause of all the delay. The note records her saying "I have a theory why you have done this but I hope I am wrong." Mr Akerman denied that the delay was his fault, and the conversation descended into recrimination. Mr Akerman said he had heard that Ms Dar was saying he had engaged in all sorts of illegal or criminal conduct towards herself, the Marrs and the companies, and she should not repeat those statements. 3. The conversation ended on this note and marked the final rupture in the relationship between Mr Akerman and Ms Dar. Thereafter they communicated only in writing or in the presence of accountants or lawyers. 4. Mr Guthrie takes over as accountant: Although Mr Akerman wished to terminate ADP's retainer, that did not happen. Mr Guthrie remained as the accountant for the companies and partnerships, in which capacity he dealt with both Mr Akerman and Ms Dar separately. 5. Completion of purchases of Miller Street properties: In March 2010 Mr Akerman moved to complete the transfer of the remaining shares in the Miller Street properties. These were the seven-eighths shares of numbers 5 and 7 (representing the Marrs', Ms Dar's and the Company's shares) and the Company's one-quarter share of number 9. The contracts for numbers 5 and 7 were stamped on 17 March, and the contract for number 9 was stamped on 19 March. The transfers appear to have been lodged for registration on 19 March. 6. Although stamped in March, the contract bore earlier dates which had been inserted by hand. The contract for numbers 5 and 7 were dated 17 December 2009 and 4 January 2010 respectively. The contract for number 9 was dated 19 January. As already noted, Mr Akerman said that the contracts and transfers had in fact been prepared and signed much earlier, and I deal with this below. 7. The Marrs appear to have been paid out for their share of 5 and 7 Miller Street at around this time. The A&M Leasing Partnership was dissolved. But no payment was made by Mr Akerman to the Company for its share of the Miller Street properties. Of course, the winding up of the Company had not yet been put in train, so on the terms of the one page agreements, Mr Akerman was entitled to continue to defer payment. 8. Correspondence up until May, which I refer to in more detail below, shows that both Mr Guthrie and Ms Dar thought that the Company still held one quarter of 5 and 7 Miller Street. It was not clear from the evidence when they learned of the sale. 9. The winding up of Akmar Investments was completed, and it was de-registered, by late October 2010. Akmar Developments had also been put into liquidation and its winding up was completed in June. But this still left the Company, which still owned the Kingsford property. Mr Akerman and Ms Dar could not agree about the sale of the property or the liquidation of the Company. The debate (conducted through hostile correspondence between Mr Akerman and Ms Dar, and occasional communications with Mr Guthrie) dragged on inconclusively. 10. Registration of transfer of shares in the Company: In September 2011 the Company's share register was belatedly updated by ADP so as to record the transfer of Mrs Akierman's and Mrs Marr's shares in the Company to Mr Akerman and Ms Dar. The transfer date was shown as 20 September. At the same time, a form 484 recording the transfers was lodged with ASIC. The form also showed the transfer as having been effected on 20 September. 11. Presumably this happened as a result of the discovery that the earlier instructions to Selingers had not been acted upon and the earlier form 484 had not been registered. But there was no direct evidence of this, and no explanation for why the transfer was not recorded as happening on 10 February 2005, the date of the instructions to Selingers. 12. Ms Dar retains lawyers: In early December 2011, Mr Adam Stack, acting for Ms Dar, wrote a solicitor's letter to Mr Akerman. The letter stated that Ms Dar was not consulted about the transfer of the Company's shares in the Miller Street properties, and requested copies of the agreements, transfers and further documents recording the transactions, in addition to similar documents for the Murriverie Road and Kingsford properties. In response, Mr Akerman purported, as sole director of the Company, to retain himself (as Sowden Akerman) to represent the Company and briefed Mr Michael Cashion SC. Mr Akerman then replied to Mr Stack denying any wrongdoing and the debate continued. 13. Payment to the Company concerning Miller Street properties: In April 2013 Mr Akerman paid the sum of $2.2 million to the Company. This amount represented payment for the Company's shares in the Miller Street properties in accordance with the one page agreements and formal contracts, together with rental income for 9 Miller Street for the years 2007 to 2010, and $382,000 for interest. 14. Disputed director's fees: The parties agree that in the financial year ended 30 June 2013 the Company paid $180,000 to Mr Akerman by way of director's fees, together with a superannuation contribution on account of those fees of $16,200. Of the $180,000, the amount of $123,000 was paid in April as part of a round-robin of cheques which in effect operated as a set-off against the $2.2 million payment by Mr Akerman to the Company. The evidence does not identify when the balance was paid. 15. The basis for these payments was a purported resolution of the Company dated 1 March 2013 and signed by Mr Akerman as director. It stated: RESOLUTION OF SOLE DIRECTOR OF AKIERMAN HOLDINGS PTY LTD A.C.N 001 021 754 It was RESOLVED to pay Steven Akerman, the managing director of the company, an annual salary/fee of $30,000.00 plus the minimum compulsory superannuation guarantee contribution as remuneration for carrying out the duties of the managing director. The salary/fee is to be paid for each year from 1 July 2001. The managing director may, in his discretion, resolve to pay the salary/fee for the previous years by a single payment or instalment payments. 1. Disputed legal fees: In evidence are fee notes issued by Mr Cashion for advising on the response to Mr Stack's correspondence from early 2012, which total $15,000. It is agreed that these fees were paid by the Company, apparently in the year ended 30 June 2012. 2. The other disputed payment of legal fees was made in April, also as part of the round-robin of cheques associated with the $2.2 million payment. It was a payment to Sowden Akerman of $69,300. The payment was supported by a one page Sowden Akerman invoice which referred to work on the proposed liquidation of the Company, the proposed sale of the Kingsford property, and responding to "various claims by G Dar". Factual issues 1. In the rest of this section of the judgment, I refer to the evidence on some of the key factual aspects of the case in more detail. In doing so, I resolve the factual issues in dispute between the parties. Payment of Director's fees 1. In evidence are extracts from the Company's financial accounts from June 1980 to June 1991. The accounts record annual payments to Mrs Akierman described as "director's fees" and to Ms Dar described in earlier years as "director's fees" and later years "management fees". Also recorded are two payments to Mr Akerman in 1983 and 1985, described as "director's fees". 2. On Mr Akerman's account, after Mrs Akierman's death in 2001 and several times in the period up to 2009, he proposed to Ms Dar that he be paid a director's fee for time spent on Company affairs, and Ms Dar expressed no objection. According to Mr Akerman, this conversation followed an earlier conversation with Mrs Akierman before her death, in which she agreed that the Company would compensate him for past and future work once its financial position improved. 3. Mr Akerman's version of the alleged conversation with Ms Dar was: Me: I am spending quote a lot of time on company matters such as dealing with the accountants regarding the loan accounts and tax issues, managing the company's investments, dealing with everything relating to realising the assets in addition to the usual requirements of companies. I propose to pay a director's fee to me for my time since 2001 and ongoing. I will speak with the accountants to determine a reasonable fee. Gillian: I have no problem with that. 1. In her affidavit evidence, Ms Dar denied that she was informed or consented to payment of fees to Mr Akerman or in general, directors of the Company. 2. In his defence, Mr Akerman contended that the payments of director's fees to Mrs Akierman, Ms Dar and himself between 1983 and 1991 gave rise to an "implied agreement" that he would receive reasonable remuneration for his services as de facto managing director. But on the evidence, only two director's fee payments were made to Mr Akerman between 1980 and 2012. Both were made before Mrs Akierman died. 3. Although the evidence shows more regular payments to Mrs Akierman, from 1980 to 1991, the pattern is not uniform and there is no evidence that such payments continued between 1992 and her death in September 2001. In my view the evidence falls short of establishing any discernible pattern at all, let alone a pattern which is clear and specific enough to compel an implication (or perhaps an inference is what was meant) about payment of fees to Mr Akerman from 2001 onwards. 4. Mr Akerman's account of the supposed conversations with Ms Dar is difficult to accept. Mr Akerman did not strike me as the sort of person who would make a deal which would entitle him to substantial sums of money and then fail to take advantage of it. Given Ms Dar's denial and Mr Akerman's lack of credibility, I am not satisfied that any such conversations ever took place. Mr Akerman as sole director and secretary of the Company 1. It will be recalled that Mr Akerman raised an estoppel defence to the claim of a lack of authority. The defence was based on an alleged discussion between Mr Akerman, Ms Dar and Mr Selinger some time after Mrs Akierman's death. He also claimed that he regularly discussed the Company's affairs with Ms Dar. Mr Akerman's version of the alleged discussion with Mr Selinger and Ms Dar was: Mr Selinger: The law does not require that the Company have more than one director. Unless you want to appoint another director, it might facilitate the work and transactions required to be done if Steven continued as the sole director. Gillian: I'm happy to go along with your suggestion. Mr Selinger: I will prepare a document to the effect that the Company resolved to have one director and that a quorum of one director and one shareholder is required for meetings and resolutions. Gillian: We are the only shareholders. We discuss most things between us on the phone. Do we have to get together for meetings and comply with all rules? Mr Selinger: You can agree to dispense with many of the formalities. 1. Ms Dar denied recollection of this conversation and disputed that she and Mr Akerman regularly discussed Company affairs. According to Ms Dar, she and Mr Akerman conversed "where necessary" and in an ad hoc, rather than regular, fashion. On her account, Mr Akerman sought her approval about the sale of properties in an equally ad hoc manner. She said: …I agree that Steven sought my views and approval in connection with steps and transactions relating to the financial affairs of the Company including the sale of properties, however, there were also many occasions when he did not… …Steven did not consult me when he and his family purported to pay for the Company's interests in the Miller Street Properties. Steven has not sought my views or approval in connection with the affairs of the Company for some years now. 1. Mr Akerman's account of the supposed discussion with Mr Selinger raises more questions than it answers. There is no evidence of Mr Selinger preparing the "document" which he supposedly said would allow the Company to be operated by Mr Akerman as sole director, or of Mr Akerman following this up. Furthermore, Mr Selinger supposedly advised that Mr Akerman and Ms Dar could dispense with "many of" the formalities, but did not identify what formalities could not be dispensed with. 2. In fact the problems go even deeper. As recounted by Mr Akerman, Mr Selinger's advice was simply wrong. Had it been decided that the Company would continue under Mr Akerman's sole directorship, it would have been necessary to alter the Articles of Association, rather than simply pass a resolution. What this underlines is how strange it is to suppose that Mr Selinger, who was not a lawyer, would have been advising Mr Akerman, who was, on legal questions and on the drafting of legal documents. 3. In my opinion the conversation as alleged is inherently incredible. Given that it is disputed by Ms Dar, I am not prepared to accept that any such conversation took place. 4. Mr Akerman's evidence of having regular discussions with Ms Dar does not take the matter any further. If anything, the fact that he did consult her militates against any finding of some sort of delegation of authority to him to act on his own, at least in commercially significant matters. Distribution of shares in the Company to Mr Akerman and Ms Dar 1. I have already referred to the share transfers for the ordinary shares which were completed and stamped in December 2004 and February 2005. There were three of them: one for one share from Ms Dar to the estate, dated 10 February 2005, and two, each for five shares, from the estate to Mr Akerman and Ms Dar. 2. The transfers were in evidence. The transfer form for Mrs Marr's share was an older-style one. It was completed (apparently in Mr Akerman's handwriting) in favour of "estate Jana Akierman". At the foot of the form, before the space for signatures, were the printed words "As witness our hands the ….. day of ……… 19…." The date was completed, in Mr Akerman's handwriting, as 10 February 2005. It was signed by Mrs Marr as transferor and by Mr Akerman as transferee. Both signatures were witnessed. 3. The transfer was stamped in the nominal amount of $10. This was appropriate for a transfer pursuant to an existing trust arrangement. But it appears that duty had never been paid on the original declaration of trust. In the course of the trial, when this was pointed out, counsel for Mr Akerman gave on his behalf the usual undertaking under UCPR, r 31.13. 4. The two transfer forms for transferring five shares each to Mr Akerman and Ms Dar were in more modern form. Both were signed by Mr Akerman and Ms Dar as executors of Mrs Akierman's estate as transferor, and by Mr Akerman, or Ms Dar, as the case required, as transferee. The transfers were dated (in Mr Akerman's handwriting) 10 December 2004. 5. As already noted, the application to rectify the Company's share register was raised by way of amendment in the course of the hearing. The supplementary affidavits from Mr Akerman and Mr Guthrie filed in support of the application were uninformative. Mr Akerman only annexed the transfer forms and correspondence from 2004-2005 to which I have referred. Mr Guthrie only annexed the Company's share register, the transfers and the form 484 which was lodged in 2011. Neither affidavit contained any explanation of the surrounding events in 2004-2005 or 2011. 6. Mr Akerman was briefly cross-examined on the issue. Mr Guthrie was not asked about it. 7. The cross-examination of Mr Akerman focused on the mismatch between the transfers to himself and Ms Dar dated 10 December 2004 (which totalled ten shares) and the other documents showing that at the time one of the shares was still registered in the name of Mrs Marr and only nine were registered in Mrs Akierman's name. It was put to Mr Akerman that he knew on 10 December that the estate did not have "ten ordinary shares" to transfer. Mr Akerman said that he believed that including the share from Mrs Marr, the estate held ten shares. He said that he had received the transfer, as signed by Mrs Marr, well before December 2004, although he only dated it on 10 February 2005 when (he said) he was asked to do so on taking it to the Office of State Revenue to have it stamped. 8. Counsel may have been correct in saying that, as at 10 December 2004, only nine ordinary shares were available for transfer if that was a reference to the state of the register on that date. But it is quite clear that at all times Mrs Marr's share was seen as belonging to the estate and the transfer of that share to the estate, or in accordance with its direction, was a formality. I see no reason to doubt Mr Akerman's evidence that the transfer had already been signed in December 2004. There was a delay of two months or so in having the transfer stamped but no point was taken about that by counsel for Ms Dar. 9. As already noted, there is no evidence of any response to Mr Akerman's request to Selingers in his letter of 25 February 2005, to confirm the shareholdings in the Company. Nor did the evidence explain why, when the mission to register the transfers was belatedly discovered, the registration date was recorded in the Company's register, and reported to ASIC, as September 2011. But it is quite clear that Mr Akerman intended the transfers to be effective in 2004-2005, that the relevant documents were signed at the time, and that Mr Akerman relied upon Selingers to affect their recording in the Company's share register and their notification to ASIC. It is equally clear that Ms Dar was aware of this but left it to Mr Akerman to effect the details. Agreement to purchase 9 Miller Street 1. Mr Akerman's case: On Mr Akerman's account, after the auction on 18 May 2005, he reached agreement with the Marrs and Ms Dar that he would purchase 9 Miller Street for about $4.7 million. This took place in several stages. Mr Akerman recounted the initial conversation with Ms Dar as follows: Me: The bidding for 9 Miller has stopped at $5 million. Do you want to sell it to the highest bidder for that price? Gillian: The agent told us that we would be lucky to get to $5 million. I think that's the market value. I don't want this to drag on forever. I want it sold tonight if possible. I will sell it for that price unless you want to buy it for $5 million. Me: I will phone Bill and discuss it with him. He has said he was interested in buying it. 1. Mr Akerman's conversation with Mr Marr was said to be: Me: 9 Miller has been passed in at $5 million. Are you interested in buying the property or do you wish to sell it to the highest bidder? I will go along with either course. Gillian says that she is happy to sell it to me for $5 million. Bill: I was interested in the property at a price but, no, I don't want to buy it for that money. I agree with Gillian to sell it to you. If you don't want it, then if you have a buyer there now for $5 million, I will sell it. Me: We should all meet now at your house to discuss this. 1. A meeting was said to have taken place later that day between himself, Ms Dar and the Marrs, with Mrs Akerman and Hannah Marr also present. Mr Akerman recounted a discussion to the following effect: Gillian: The highest bid for 9 Miller was $5 million. Bill and I would like $5 million clear for the whole property. There is no agent's commission payable if we sell the property to you more than a month after the auction. We want to delay entering into a contract until after that time. We want you to also pay the vendor duty. Me: A few minutes ago you offered it to me for $5 million. You would have to pay the agent about $55,000.00 if it was sold today to the highest bidder or anyone else. You would also be liable for vendor duty of about $106,000.00. Now you're saying you want me to pay well in excess of $5 million to cover all of that? Bill: Yes that's what we want. Me: Okay. I agree to those terms. All up, 7/8ths of $5 million plus stamp duty and vendor duty is about $4.7 million plus other fees. I will need a little time to arrange the finance. Is settlement next February ok? Gillian & Bill: That is fine by me. 1. As to the preparation of the contract, Mr Akerman recounted the following conversation: Me: Which lawyer is going to prepare the contract? Bill: We can use the contract which you prepared for the auction. The contract would be much the same as what you prepared for the auction. There is no need to start all over again. I can see no reason why we should spend more on lawyer's fees when the work has already been done. Gillian: I agree. Me: I will get a contract to you when the agency agreement expires. I want you to have your own solicitors go over the contract. 1. Mr Akerman's account then turned to a conversation with Ms Dar: 80. At that meeting Gillian and I then had a discussion between ourselves as to the payment of the purchase price to the Company during which we said words to the following effect: Me: Do you want me to pay the money for Akierman Holdings' share when you and Bill are paid or when the company is wound up? Gillian: Since we can't access the money until Akierman Holdings is wound up I am quite happy for you to pay it when all the properties have been sold and the company is wound up. If you pay the money now it would go into a bank account and earn interest. I think that it's only fair that you pay the same interest rate as the bank would pay to Akierman Holdings on a term deposit. Me: I agree but it doesn't make much difference to me. If I take a loan from the Commonwealth bank and pay out the purchase price to the company now, the company will earn interest on that money. I will be entitled to 50% of the interest earned. If I defer payment until the company is wound up, I don't have to borrow now but I will have to pay interest at settlement when I will be entitled to 50% of the interest. Because of my business relationship with the bank, I can get about a 1% reduction on a loan interest rate. I also can get about 1% higher rate on term deposits and bills. I will try to persuade the Commonwealth Bank to give Akierman Holdings a higher rate of interest. So the cost of borrowing from the bank now and paying interest to the bank or deferring payment until later and paying the interest to the company and getting back half of the interest earned by the company in either case, the result is pretty much the same. Gillian: The accountants say that we can't access the money until we wind up Akierman Holdings so you might as well pay it at that stage. I'm happy if you pay the same rate of interest as the bank would pay on the purchase money if it was paid in by you and invested in a bank bill. There is no extra benefit to me either way whether you pay the purchase money now and it earns interest or you pay it when we wind up Akierman Holdings and you pay the same amount of interest. If you can get a higher interest rate from the bank then I would, of course, be better off than with the ordinary rate. Me: I just want to make sure that you are okay with all of this? Do you have any problem with me buying the property? You own a share in the property and you have half of the company and I believe you are entitled to express your opinion. Are you happy about the price? Gillian: Yes. I'd like you to buy the property, it would be good to keep the property in our family. I am happy with the price and for you to buy on those terms. You know that I would say if I objected to anything. I'm glad that another property has now been sold. Unfortunately, the semis didn't get sold but we can now move to the next property to sell. I'm interested in Fletcher Street and I hope you'll help me with that. Me: I can't speak for Bill but, as far as I'm concerned. I'll sell it to you without going to auction but you'll need to agree upon a price with Bill. I'd be happy to see you buy it. 1. Purported Company minute dated 18 May 2005: In evidence is a purported minute of the Company dated 18 May 2005 which reflects these events. The minute was signed by Mr Akerman and stated: 9.00pm PRESENT STEVEN AKERMAN GILLIAN DAR CHAIRMAN STEVEN AKERMAN was elected to chair the meeting The director of the company has passed a resolution that the company agrees to sell its interest in 9 Miller Street Bondi to Steven Akerman or his nominee for the sum of $1,250,000.00. The purchaser may pay the purchase price when Akierman Holdings Pty Ltd is wound up. The chairman reported that the minutes of the previous meeting had been signed as a true record of that meeting. It was RESOLVED that the minutes be signed as a true record of the proceedings of the meeting. There being no further business the meeting was declared closed. 1. One page agreement dated 1 July 2005: Also in evidence is a one page typewritten document purporting to be an agreement between the Company and Mr Akerman concerning the sale of 9 Miller Street. The operative provisions of the document are: Agreement made between Steven Akerman ("SA") and Akierman Holdings Pty Ltd ("AH"). The parties agree as follows: AH will sell to SA or his nominees its 25% interest in property at 9 Miller Street Bondi, on the following terms: 1. Purchase price $1,250,000.00 2. Contract to be in the form as provided by Sowden Akerman, Solicitors to Bauer & Serrao Pty Ltd for auction in February 2005 and may be varied as agreed to give effect to the agreement between the parties. 3. Contract to be entered into on an agreed date in February 2006. 4. The settlement is to take place six weeks after exchange of contracts. 5. AH agrees that SA is entitled to extend the completion date and pay the purchase price within 7 days after the liquidation or winding up of AH. If SA so extends the completion date, SA shall pay to AH at settlement, in addition to the purchase price, interest on the unpaid amount of the purchase price from the date settlement should have taken place until the date of payment of the purchase price. Interest shall be calculated at the rate paid by Commonwealth Bank of Australia on one month security bills for amounts equivalent to the unpaid purchase price. The applicable interest rate is that paid by Commonwealth Bank of Australia during the period of time that the purchase price remains unpaid. 1. The document is signed twice by Mr Akerman, once for the Company and once for himself. According to Mr Akerman, he gave the document to Ms Dar in about July 2005 together with copies of the contracts for sale for 9 Miller Street. 2. Ms Dar's evidence: In her affidavit, Ms Dar did not dispute all of Mr Akerman's evidence about the sale of 9 Miller Street. She did not deny Mr Akerman's account of the general course of events on 18 May. Nor did she deny that both she and the Marrs agreed to sell their shares of the property for a proportionate share of $5 million. What Ms Dar did deny was that there was any conversation about the sale of the Company's share; but she said: However, I assumed Steven would want to purchase that interest at some stage in the future after the tax position became clearer. 1. Ms Dar also denied having received the 1 July agreement. Her evidence was that she first saw the agreement when it was provided to her solicitor in correspondence about the proceedings in August 2014. 2. Mr Akerman's later instructions to the accountants: Counsel for the Company submitted that Mr Akerman's instructions to the Company's accountants between 2005 and 2009 contradicted his evidence on the disputed issues. In counsel's submission, that correspondence made it clear that, right up to December 2009, Mr Akerman had not made up his mind whether he wanted to purchase the Company's share in the property or Ms Dar's share in the Company. 3. The earliest evidence of this sort is an email from Mr Akerman to Mr Chandra of Selingers on 23 December 2005 (see [101] above). Mr Akerman said: … I am purchasing the interest of Gillian Dar and W & E Marr in the property at 9 Miller Street, Bondi. As you are aware, 25% of this property is owned by Akierman Holdings Pty Ltd. Subject to the tax and stamp duty implications, I wish to purchase Gillian's shares in Akierman Holdings Pty Ltd thereby acquiring the interest of Akierman Holdings Pty Ltd in 9 Miller Street, Bondi and 121 Murriverie Road, Bondi. 1. There were various later communications from Mr Akerman to similar effect. These included statements to Mr Ellinson in March 2006 and to Mr Phillips in July 2008. 2. Ms Dar's emails to Mr Guthrie: For their part, counsel for Mr Akerman referred to email correspondence between Ms Dar and Mr Guthrie in 2010 which, they submitted, showed that Ms Dar was aware of, and had accepted, the sale of the Company's share of 9 Miller Street. The first of these was an email from Ms Dar to Mr Guthrie on 27 January, which stated: I have lost hundreds of thousands of dollars by selling the properties 9 Miller St Bondi and Murriverie Road several years ago and not receiving monies from the sales. I have no intention of making the same mistake. 1. Counsel submitted that the reference to selling the properties had to be a reference to selling the Company's interest in the properties. In cross-examination, Ms Dar maintained that the reference was to her interest alone. The difficulty with this is that she had no interest in the Murriverie Road property, which was in its entirety owned by the Company. So far as her interest in 9 Miller Street was concerned, the delay in paying for her individual share was only 8 months, which could hardly account for "hundreds of thousands of dollars". 2. Counsel also relied on what Ms Dar said to Mr Guthrie in May 2010: I sold him my personal share [of 9 Miller Street], which I received the money for, and my Akierman Holdings share which I have not. I sold him my personal share of 5 & 7 Miller Street, which he paid for. We have a one page agreement. As far as you and I am aware, this share has not been transferred legally. The company Akierman Holdings still has 25% of those properties which I have ½ of that. I will be disputing the price of that and will be demanding the market price from whoever buys it. … ● 9 Miller Street – The company still holds 25% of this property. Again I presume that you wish to transfer this to one of your personal entities. This will need to be reflected at the current market value. 1. On 18 June 2010 Ms Dar wrote to Mr Guthrie: I was not aware that he needs to pay present market price for the 25% Akierman Holdings shares in 9 Miller Street. He 'bought' this property for $5 million in May 2005. How does that work? 1. Conclusions: The starting point, in my view, is that the probabilities favour Mr Akerman's account. The parties were contemplating the sale of the whole property; it was never suggested that the Company's quarter interest would be held back. I do not think it would have made commercial sense for Ms Dar to have accepted the sale of her share in the property calculated by reference to $5 million, but to have held out for the Company to receive more. Nor would it have made any commercial sense for Mr Akerman to buy the property on this basis. 2. I think this point is reinforced by comparing what happened with the sale of 5 and 7 Miller Street. There can be no dispute that Ms Dar agreed to the sale of the Company's shares in those properties to Mr Akerman. The transactions were similar, right down to the parties' unattractive arrangement to delay signing the contracts so as to avoid (as they thought) having to pay commission. There seems no reason to single out the Company's share in 9 Miller Street for retention. 3. Next it is convenient to consider the one page agreement. For reasons given below, I am satisfied the document had been brought into existence by April 2008 at the latest. But once that is accepted, it becomes probable that the document was relatively contemporaneous. It spoke of February 2006 as the future settlement date. It would have been a remarkable, and pointless, act of fraud to have prepared it after that date but before April 2008. 4. This does not mean that the one page agreement was actually drawn up and signed on 1 July 2005. The equivalent one page agreement for 5 and 7 Miller Street was prepared as soon as oral agreement had been reached between Mr Akerman and Ms Dar. So too, allegedly, was the supplementary agreement dated 1 August 2007. There is nothing in the evidence which explains why the 2005 agreement would have been drawn up and signed more than six weeks after the meeting on 18 May. 5. It will be recalled that Mr Akerman claimed that it was in about July 2005 that he drew up the contract and transfer which were later (in March 2010) stamped and registered. If that were true, it would be hard to understand what the point of preparing the one page agreement at about the same time would have been. For reasons I give below, however, I disbelieve Mr Akerman on this point. 6. That being so, it may be that the agreement was actually prepared in late 2005 or early 2006. At that time the formal contracts and transfers for Ms Dar's and the Marrs' shares of the property would have been in preparation, or at least contemplation. At the same time Mr Akerman would have known that the completion of the purchase of the Company's share would be delayed until a decision was made about whether to buy Ms Dar's shares in the Company instead. 7. In the end, it is not necessary to reach a firm conclusion on this. Even if the agreement was not prepared until early 2006, it was still relatively contemporaneous. It seems to me to be unlikely that Mr Akerman would have gone to the trouble of producing a wholly fictitious document at that point. 8. Similar considerations apply to the purported minute of 18 May. I am not convinced that it records some sort of formal meeting of the Company. There was no evidence to suggest that it was Mr Akerman's and Ms Dar's practice to have formal, minuted, meetings of such a type. No other minutes from the Company were produced. Nor was there any evidence to establish the contemporaneity of the document. There was no evidence, for instance, about how minutes of the Company were kept or by whom. 9. In these circumstances, the minute has no special evidentiary value. It has no more and no less credibility than Mr Akerman's file notes. But it was not suggested to Mr Akerman in cross-examination that the minute was false, and I am reluctant to conclude it is wholly fictitious. I think it gives some support to Mr Akerman's case. 10. But it is necessary now to consider the submission from counsel for the Company that Mr Akerman's account is contrary to the instructions he gave the accountants. Counsel for Mr Akerman relied in particular on Mr Akerman's statement in a letter to Mr Phillips of ADP in July 2008 about the settlement of 9 Miller Street having been deferred. Counsel submitted that this was inconsistent with Mr Akerman's evidence that a binding agreement had been reached. I do not agree. Mr Akerman may only have used the term "settlement" in the loose sense of meaning that the contracts had not yet been prepared. 11. It is true that his later correspondence with the accountants shows that Mr Akerman continued to explore the possibility of purchasing Ms Dar's shares in the Company. But I think the answer to counsel's submission is found in the note of 6 March 2006 where Mr Akerman said: It may be simply a difference in the mechanical process of transferring the title for the same consideration but with a benefit of less stamp duty and deferral of tax. After receiving advice, if we come to conclusion that the idea is not worth pursuing, we just proceed with the contract as per the agreement and then wind up the company and pay all taxes. 1. It is significant that this note refers to proceeding with the contract "as per the agreement". I have, on balance, accepted that the one page agreement dated 1 July 2005 had probably been prepared by early 2006, but the formal contract had not been. Such a state of affairs fits very well with the note. 2. Finally, I was not impressed with Ms Dar's evidence under cross-examination on this point. I think that Ms Dar's email correspondence with Mr Guthrie in 2010 supports the conclusion that an informal agreement was reached in May 2005 for Mr Akerman to buy the Company's interest in 9 Miller Street for twenty-five per cent of $5 million. I found Ms Dar's attempt to deny this particularly unpersuasive. 3. But the email does not go any further towards confirming the one page agreement dated 1 July 2005. The use of inverted commas makes the reference to Mr Akerman having bought 9 Miller Street ambiguous. Ms Dar may simply have been referring to the informal agreement. The email does not prove that she was aware at the time of the one page written agreement. I am not prepared to accept Mr Akerman's evidence that the contract was drawn up and seen by Ms Dar when it was prepared. Contracts and transfers for Marrs' and Ms Dar's shares of 9 Miller Street 1. Three contracts were prepared, one each for Mr Marr, Mrs Marr and Ms Dar. Each contract was signed by the vendor. Transfers were also prepared and signed by each vendor. 2. The evidence does not identify exactly when the contracts and transfers were drawn up and signed. In his affidavit, Mr Akerman said that it was done about July 2005. Ms Dar denied receiving a draft contract and could not recall the time at which Mr Akerman provided the documents necessary to transfer her share of 9 Miller. 3. Each of the contracts was prepared using a Law Society 2000 Edition Standard Form of Contract. A set of standard conditions consisting of twenty-nine clauses was also prepared for each contract. The attachments to the contract included a survey plan dated April 2005; a Section 317A Certificate also dated April 2005; and a list of tenancies. Presumably these were taken from the contract which had been prepared for the abortive sale. Sowden Akerman was shown as acting for the purchaser and no one was shown as acting for the vendor. 4. I am not satisfied that the contracts and transfers were drawn up and signed as early as July 2005 as Mr Akerman claimed. I think it is equally if not more likely that they were produced in 2006, shortly before the completion of the purchase of the Marrs' share. I deal with the date of preparation of the formal contract for the Company's share of the property below. Written agreement dated 28 February 2007 concerning the Company's share of 5 and 7 Miller Street 1. As already noted, two one page agreements concerning 5 and 7 Miller Street were drawn up, signed and dated on 28 February 2007. One related to Ms Dar's interest. The typewritten part stated: Agreement made between Steven Akerman ("SA") and Gillian Dar ("GD") GD will sell to SA or his nominees her 12.5% interest in properties at 5 and 7 Miller Street Bondi, on the following terms: 1. Purchase price $188,528.00 2. Contract to be in the form as provided by Sowden Akerman, Solicitors to Laing & Simmons, Double Bay for proposed auction. 3. Contract to be entered into on 28 March 2007 or immediately following the expiration of the Agency Selling Agreement with Laing & Simmons, whichever is the later. 4. The settlement is to take place six weeks after exchange of contracts. 5. SA has discretion to pay the purchase price at the settlement date or upon the winding up of Akierman Holdigns Pty Ltd. If the purchase price is paid on the winding up of Akierman Holdings Pty Ltd SA will pay to GD interest on the purchase price from the date settlement should have taken place pursuant to the contract until the date of payment at the rate paid by Commonwealth Bank of Australia on the security bills held by Akierman Holdings Pty Ltd with the Commonwealth Bank. Dated: Gillian Dar Steven Akerman Hannah Dar 1. This document was signed by Mr Akerman and Ms Dar and dated (in Mr Akerman's handwriting) 28 February 2007. It was also signed by Hannah Dar. 2. The other agreement concerned the Company's share of the properties. The typewritten part stated: Agreement made between Steven Akerman ("SA") and Akierman Holdings Pty Ltd ("AH") The parties agree as follows: AH will sell to SA or his nominees its 25% interest in properties at 5 & 7 Miller Street Bondi, on the following terms: 1. Purchase price $377,056.00 2. Contract to be in the form as provided by Sowden Akerman, Solicitors to Laing & Simmons, Double Bay for proposed auction. 3. Contract to be entered into on 28 March, 2007 or immediately following the expiration of the Agency Selling Agreement with Laing & Simmons, whichever is the later. 4. The settlement is to take place six weeks after exchange of contracts. 5. SA has discretion to pay the purchase price at the settlement date or upon the winding up of Akierman Holdings Pty. Ltd. If the purchase price is paid on the winding up of Akierman Holdings Pty. Ltd. SA will pay to AH interest on the purchase price from the date settlement should have taken place pursuant to the contract until the date of payment at the rate paid by Commonwealth Bank of Australia on the security bills held by Akierman Holdings Pty. Ltd. with the Commonwealth Bank. Dated: Akierman Holdings Pty Ltd Steven Akerman 1. The document was signed by Ms Dar over the name of the Company, and by Mr Akerman over his name. It bears the date (in Mr Akerman's handwriting) of 28 February 2007. 2. On the same date a document was prepared concerning the Kingsford property and signed by her. It was handwritten, apparently by Ms Dar. It stated: I Gillian Dar as Director shareholder of Akierman Holdings Pty Ltd agree to sell the interest of Akierman Holdings in 30 Gardeners Rd Kingsford for 2 million (clear of agents commission) within the next 3 months. G Dar 28/2/2007 1. Mr Akerman's account of his conversation with Ms Dar which resulted in the one page agreements began in the following way: On or about 27 February 2007, Gillian telephoned me and we had a discussion to the following effect: Gillian: The agent has received an offer of $1,525,000.00 for both 5 & 7 Miller Street. That figure is what the agent estimated in his agreement. I have spoken to Bill and Emilia and we are happy to sell for that price. We have agreed to offer both properties to you for that price less the commission payable to the agent as there won't be any commission if we don't proceed with the agent. What do you think? Me: Let me give it some thought. I will let you know shortly. If I don't want it, I will go along with the three of you and accept the agent's buyer. I think that is the market price. Either way, we can then move to sell the next property. Gillian: I would like you to buy these properties as I wanted you to buy 9 Miller Street. It would be good to retain them in the family. 1. In her reply affidavit, Ms Dar only denied part of Mr Akerman's account. She responded: I deny saying to Steven on or about 27 February 2007 "as I wanted you to buy 9 Miller Street". 1. Later parts of Mr Akerman's account were responded to in the same way. Ms Dar only denied the parts of Mr Akerman's account which referred back to the agreement concerning 9 Miller Street. 2. But when it came to the one page agreements, Ms Dar said: Steven and I had not discussed the sale of the Company's in 5-7 Miller Street and I did not at any stage appreciate that the document at page 324 of Exhibit SA-1 recorded an agreement to transfer the company's interest in 5-7 Miller Street to Steven. … Although I accept that my signature appears on the document … I do not know why I signed for the Company. I was not (and have never been) a director of the Company and I had never been invited to sign any other document to show "my approval" of any decision made by the Company. 1. In cross-examination, counsel for Mr Akerman took up the fact that Ms Dar only denied the references to the 9 Miller Street agreement in Mr Akerman's affidavit. Ms Dar then claimed that she actually meant to deny the whole of Mr Akerman's account. 2. I found Ms Dar's evidence on this issue very unconvincing. On her own account, she disliked and distrusted her brother. She did sign the agreements which clearly provided for the sale of her, and the Company's, shares in the properties. I am satisfied that she did in fact agree to both sales. I reject her belated attempt to deny the whole of the conversation recounted by Mr Akerman. In fact, given my finding on 9 Miller Street, I think the conversation recounted by Mr Akerman, including the references to 9 Miller Street, is likely to be substantially true. Contracts and transfers for 5 and 7 Miller Street 1. The formal contracts for 5 and 7 Miller Street were similar in form to those used for the Marrs' and Ms Dar's shares of 9 Miller Street. But there were some differences. One was that the 5 and 7 Miller Street contracts were prepared using the 2005 edition of the Law Society of NSW Standard Form of Contract for the Sale of Land, rather than the 2000 edition. Special condition clause 12 dealt with settlement. It provided: Notwithstanding anything herein contained the Vendor agrees that Purchaser is entitled to extend the completion date and pay the purchase price within 7 days after the liquidation or winding up of Akmar Investments Pty Ltd. 1. The signature blocks on the contracts are substantially the same. They bear the signatures of the Marrs, Ms Dar and Mr Akerman as Vendors. 2. The signature blocks on the transfers for 5 and 7 Miller Street are also substantially the same as each other. That for number 7 Miller Street is reproduced below. The three signatures on the right hand side under each other are those of Mr Marr, Mrs Marr and Ms Dar (at the bottom). To their right are the initials of (I assume) a witness who was not identified in the evidence. 1. Mr Akerman's evidence was that the contracts were prepared and signed not long after 28 February 2007. He said: The contract had been prepared by my firm for an auction…the contracts were not going to change and other than insertion of the names and the price and I think one condition about settlement, the contracts essentially were identical to those that had been prepared in anticipation of the auction… 1. In her affidavit, Ms Dar did not directly deny this. She said she could not remember when she received the contracts and transfers for 5 and 7 Miller Street. But in cross-examination she positively denied receiving copies of the contracts. Her evidence was that Mr Akerman only provided one page. The exchange was as follows: Q. You received this document from Steven at some point, didn't you? A. Yes, the document or that page? Q. The document? A. The whole document, no. Q. Is it your evidence that you only received that one page? A. Yes. Q. Do you say that anywhere in your affidavit? A. I'm not sure, I don't know. Q. But looking just at the one page for the moment, this was a document that you signed? A. Yes. 1. I reminded Ms Dar that she ought give evidence of events as she recalled them, and continued as follows: Q. If you don't recall how many pages this document was when you signed it or where or when, say so? A. Okay, I do ‑ sorry, I recall it was one page. 1. Counsel pressed on, but Ms Dar maintained that she did not receive the contract or transfer in full or obtain legal advice prior to signing it. 2. Again I found the change in Ms Dar's position unimpressive. On balance I accept Mr Akerman's evidence that the contracts and transfers were prepared and signed on behalf of the transferees in 2007. As will be seen, the evidence demonstrates that the documents were already in existence by April 2008. It is highly unlikely that Ms Dar would have signed them in January 2010 when she had fallen out with Mr Akerman. The precise date of preparation does not need to be determined. Written supplementary agreement dated 1 August 2007 1. The one page supplementary agreement dated 1 August 2007 was signed by Mr Akerman both for himself and the Company. The operative provisions were: A. SA agreed to purchase and AH agreed to sell to SA or his nominees its 25% interest in properties at 9 Miller Street Bondi for the price of $1,250,000.00 and its 25% interest in 5 & 7 Miller Street Bondi for the price of $377,056.00. In addition to the terms set out in agreements dated 1 July 2005 and 28 February 2007, the parties now further agree as follows: 1. SA has the discretion to pay the purchase price at any time up to the winding up of AH. If the purchase price for 9 Miller Street Bondi is paid later than 1 March 2006 and the purchase price for 5 & 7 Miller Street Bondi is paid later than 1 July 2007, SA will pay to AH whichever is the greater of (i) interest on the balance of the unpaid purchase price from the dates mentioned in this clause until the date of payment of the purchase price or (ii) the net rent received for the properties for that period. The amount of interest payable by SA will be calculated by applying to the amount of the unpaid purchase price the rate paid by Commonwealth Bank of Australia on the security bills held by Akierman Holdings Pty. Ltd. with the Commonwealth Bank for the period from the said dates until payment of the purchase price. Net rent means the rent paid by tenants of the properties after deduction of all expenses incurred in respect of the properties. 1. Mr Akerman gave evidence that he prepared the "Supplementary Agreement" on 1 August to record the agreement reached with Ms Dar on about 28 July, and provided a copy to her within several weeks. 2. Ms Dar denied having received a copy or been made aware of its contents. She also denied any prior oral agreement. 3. As will be seen, the evidence establishes that this document had been brought into existence by April 2008 at the latest. I see no reason to doubt that it was drawn up and signed on or about the date it bears. I am also satisfied that it does reflect some sort of agreement with Ms Dar. An agreement to pay rent, if it exceeded the interest, was actually contrary to Mr Akerman's interests. There was no point in faking it. Whether the document was actually sent to Ms Dar as Mr Akerman claimed does not need to be decided. Events surrounding land tax issue, April 2008 1. In April 2008 Ms Dar received a series of land tax assessments for the 2006 and 2007 financial years. These assessments included assessments for 5, 7 and 9 Miller Street for the 2006, 2007 and 2008 years. Ms Dar consulted Mr Akerman about these assessments. 2. In his affidavit Mr Akerman gave the following account of his conversation with Ms Dar: On 16 April 2008 I had a telephone conversation to the following effect with Gillian: Me: I've looked at your land tax assessments. My office overlooked lodging the transfer of your interest in 9 Miller Street until September 2007. However, that should [not?] have come up in the Land Tax records for land owned by you as at 31 December 2007. You already have a copy of the contract and transfer but I will give you another copy of them and the registration details. You should lodge a land tax variation application as you should not have been charged for land tax. Gillian: Have the other transfers been lodged? Maybe that is why I have been charged. Has Bill also been charged for land tax? Me: I haven't heard from Bill but I'm sure if he has been charged land tax he or his accountant would have let me know. The Marr's transfers were done in 2006. The transfer from Akierman Holdings won't be registered until the company is wound up. Gillian: What about the semis? You paid me for them. Why am I still being charged land tax? Me: You, the Marrs and Akierman Holdings are on the one contract and transfer. You're the only one who has been paid. Those transfers haven't been registered because the sales haven't been settled. The money isn't due to be paid until Akmar Investments is wound up and the Fletcher Street money is released. You and I have the agreement documents to buy your share and that loan agreement document when I paid you the money but as no transfers have been registered, the land tax records will still show you as an owner. You could apply for a variation but it's not an area in which I have any expertise. You have all the documents. Gillian: I will speak to my accountant and let you know. In the meantime, please let me have another copy of all the contracts and other documents so that I can show him everything. Me: I will get them to you as soon as possible. 1. Ms Dar's response in her affidavit in reply was: In April 2008 I was not aware that the Company had sold its interest in any of the Miller Street Properties. 1. One of the disputed file notes by Mr Akerman purports to be a record of the conversation. The note states: We overlooked lodging her transfer of 9 Miller St until September 2007. … Akierman Holdings transfer not lodged/registered – will be done when company wound up. … Transfers will be registered when sale is settled after Akmar Investments wound up. … Contract and transfer and reg'n inf GD to SA 9 Miller Contract and transfer for 5 & 7 Miller Agreement 1.7.05 Agreement 28.2.07 Agreement 1.8.07 1. The note supports Mr Akerman's affidavit account, to the extent that it records the contracts and transfers for numbers 5 and 7 Miller Street as already being in existence in April 2008. It also records that the three handwritten agreements between the Company and Mr Akerman were then in existence. In this I think it is probably reliable and I should accept it. The note agrees well with that part of the conversation between Ms Dar and Mr Akerman which is not in dispute. Its credibility is enhanced by the fact that it does not support Mr Akerman's claim that the contract for 9 Miller Street was then in existence, an issue which I discuss in further detail below. Contract and transfer for the Company's share in 9 Miller Street 1. The formal contract for the sale of the Company's share of 9 Miller Street used the Law Society of NSW 2005 Standard Edition. It also contained attachments dating from 2007 and special conditions consisting of twelve clauses. 2. Mr Akerman's evidence was that he prepared this contract at the same time as the contracts for the purchases of the Marrs' and Ms Dar's interest in 9 Miller Street. This was disputed by Ms Dar who said that she had never seen the contract, nor been informed (by Mr Akerman or otherwise) that Mr Akerman had prepared the contract. 3. I reject Mr Akerman's evidence on this point. If the contract had been created at the same time as the contract for the sale of the Marrs' and Ms Dar's shares of 9 Miller Street, the 2000 edition, rather than the 2005 edition, would have been used, as it was for those contracts. The special conditions prepared for those contracts would have also been used. Furthermore, if the contract had been produced at this time, there would have been no need to produce the one page agreement dated 1 July 2005. There was no evidence that any equivalent one page agreement was produced for the purchase of Ms Dar's share of 9 Miller Street. 4. In fact, once it is accepted that the contract was not in existence in April 2008, it seems likely that it would have been created shortly before it was stamped and the transfer was registered in March 2010. In all events, I am not satisfied that the contract was drawn up and signed by Mr Akerman before that point. Rectification of the Company's share register 1. The cross-claim filed for Mr Akerman pleaded that he, Ms Dar and Mrs Marr had a collective intention, as from 10 February 2005, "that legal ownership of the ordinary shares in the Company be transferred", as to Mrs Marr's share, from her to Mr Akerman and Ms Dar as executors of Mrs Akierman's estate; and then, as to all ten shares from the estate to Mr Akerman and Ms Dar as beneficiaries. The cross-claim went on to plead that the three of them had done all things necessary to give effect to that intention, and the Company's share register ought to be rectified accordingly. 2. As already noted, Mrs Marr did not oppose the cross-claim. But defences were filed for Ms Dar and the Company putting the pleaded allegations in issue by not admitting them. In final submissions, counsel for the Company opposed the rectification sought on both substantive and discretionary grounds. 3. Counsel's first argument was that there was "a serious question of fact" as to who the shareholders of the Company were at the relevant time. Counsel submitted that on 10 December 2004 the estate held only nine shares in the Company. The submission continued that it could not be determined whether Ms Dar received five shares and Mr Akerman four, or vice versa; "and the transfers were therefore void". 4. Table A regulation 20 provides: Subject to these regulations any member may transfer all or any of his shares by instrument in writing in any usual or common form or in any other form which the directors may approve. The instrument shall be executed by or on behalf of both the transferor and the transferee; and the transferor shall remain the holder of the shares transferred until the transfer is registered and the name of the transferee is entered in the register of members in respect thereof. 1. This provision clearly means that the entitlement to exercise rights attached to the share under the Company's constitution, such as voting rights, follows the registered holder, rather than the beneficial owner, of the shares. But what the present application seeks is to have the date of the transfer of the shares, as recorded in the Company's share register, modified. It is therefore necessary to consider what the Company was required to record in the register in this regard, and the legal effect of that particular record. 2. The contents of a company's share register are prescribed by the Corporations Act, s 169. That provision is mainly concerned with recording the shareholders' current particulars. These include the identifying numbers and share certificate numbers, if any, of the shares held: s 169(3)(e). The only relevant historical information about a shareholder which must be recorded is the date that the shareholder was entered on the register: s 169(1)(b). 3. There is thus no direct requirement for the register to contain historical details for each allotment or transfer of shares. But in order to keep track of the individual shares, it is conventional to maintain allotment and transfer journals which do so, and to include those details in the register, so that, for each shareholder, one can see when and from whom that shareholder's shares were acquired. That is what has been done in the Company's case. 4. There is nothing to stop a company maintaining a register which contains more information than it is statutorily required to keep. Indeed, as I have said, the approach reflects longstanding practice. An additional justification for it is that the dates of allotments and transfers of shares must be notified to ASIC (Corporations Act, s 178A(1)) – as was to be done in this case by lodging a form 484 – and it is obviously desirable that the Company should have its own formal record of the information which is supposed to be recorded in ASIC's registers. 5. At first sight the requirement in s 169(1)(b) that the register record "the date on which the entry of the member's name in the register is made" refers to the date of the actual entry in the register rather than the date of the underlying transaction. But it is conventional for the allotment and transfer journals, and thus the historical details which they generate in the register, to be based on the date of the transaction itself, and again this is the practice which has been followed in the Company's register. 6. The reason for the practice is clear. Under the general law, a transfer of property is complete, and property passes, when the transfer is executed by both parties. It usually takes some time to lodge a share transfer (it may, as in this case, need to be stamped in the meantime) and it may then take further time for the transfer to be recorded in the company's records. It would not be logical for the date of transfer recorded in the register to depend upon the vagaries of when the transfer was lodged and when it was recorded. Again the practice is consistent with ASIC's lodgement regime, which requires the date of the actual transfer to be notified: Corporations Act, ss 169(1)(b); 178A(1)(b)(i). 7. The system for recording share allotments and transfers in a company's share register thus differs from the Torrens Title system for the transfer of land. It is not a system of "title by registration". The very fact that the Act recognises a power in the Court to rectify the register, which may involve the Court changing dates recorded in the register after the event, shows that this is so. The registration of share ownership is evidentiary. It reflects (or should reflect) proprietary rights to the company's shares under the general law which exist antecedently to recordings in the share register. 8. I should repeat that this analysis is limited to the recording of historical information about shareholdings in the register. The exercise of rights under the company's constitution does depend, at least usually, on registration, and in that sense may be analogous to "title by registration". But this is a different matter and does not arise in this case. 9. On my findings, it is clear that what was intended overall was to transfer the nine shares registered to Mrs Akierman, and the share held by Mrs Marr, totalling ten shares, to Mr Akerman and Ms Dar, with each to receive five. But it is necessary to analyse the intent of the different parties (meaning, of course, their intent as objectively determined) separately, and with more precision. 10. The execution of the share transfers dated 10 December 2004 manifested an intention on the part of Mr Akerman and Ms Dar as executors of Mrs Akierman's estate to transfer ten ordinary shares to themselves as beneficiaries, with each receiving five. It also manifested an intention on the part of Mr Akerman and Ms Dar to accept those transfers. 11. Mrs Marr's objective intent is manifested by the declaration of trust. It was to transfer the share to Mrs Akierman, or to any person nominated by her, as and when Mrs Akierman chose to make the transfer. Before December 2004 (on my findings, long before December 2004) Mrs Marr had done all that was necessary to effect that intention by signing the transfer in blank and handing it over. In doing so she clearly gave authority (which was express in the declaration of trust anyway) to Mrs Akierman to complete the transfer form so as to give effect to any transfer she (Mrs Akierman) might later decide to make. The authority given by Mrs Marr to Mrs Akierman inured to the benefit of her estate on her death. By the time of the events which are relevant for the purpose of these proceedings, Mrs Marr had in effect dropped out of the picture. 12. On my findings, Mrs Marr's signed transfer was held in the Company's, or the estate's, records as at 10 December 2004. Where there are more than one executors, their authority to bind the estate is several not joint: Union Bank of Australia v Harrison, Jones & Devlin Ltd (1910) 11 CLR 492 at 499, 508. Mr Akerman could therefore, on his own and without prior reference to Ms Dar, exercise the authority originally given by Mrs Marr to Mrs Akierman to transfer the share. In any event Ms Dar by her conduct effectively authorised him to effect the relevant transfers on the estate's behalf. But it was not until Mr Akerman, as executor, signed the transfer form as transferee that there was an objective manifestation of the exercise of the authority. The transfer took effect at that point. Mr Akerman may have signed the transfer before it was stamped 10 February 2005 but there is no evidence which would fix the date. The Court must therefore proceed on the basis that the transfer took effect on 10 February. 13. In these circumstances, I do not think that the fact that on 10 December the transfers for ten shares were signed but only nine shares were then registered in Mrs Akierman's name invalidates anything. The estate's intention to transfer ten shares was manifest by that date and the means of doing so were in the estate's hands, albeit that the transfer form for the tenth share may not have been signed by that point. In my view the estate's intention is properly construed as having been to give effect to the transfer of nine shares immediately with the tenth to follow once the transfer from Mrs Marr was signed. It was open to Mr Akerman as executor to choose, as he did, that he would get five of the nine immediately transferred shares and Ms Dar four. 14. It follows, in my view, that the transfers took effect in the following way. On 10 December 2004 five shares were transferred from the estate to Mr Akerman and four to Ms Dar. On 10 February 2005 the remaining share was transferred from Mrs Marr to the estate and then to Ms Dar. 15. If I am wrong in this view, and there was some obstacle to transferring the nine shares registered in Mrs Akierman's name until the tenth had been transferred to the estate, the proper construction of the estate's intention would have been to give effect to the transaction as soon as that became possible. That would mean that the transfers would all have taken effect on 10 February 2005. 16. Table A regulations 20 to 23 gave the directors of the Company control of the registration process. In particular, regulation 22 gave power to the directors to decline to register any transfer. By forwarding the transfers to Selingers on 25 February with instructions to register them, Mr Akerman purported to exercise the directors' powers. For reasons given below, he had no actual authority to do so. But his actions clearly reflected a joint intention on the part of himself and Ms Dar, so as to bring the doctrine of unanimous assent (also discussed below) into play. If it were necessary to fix the date on which the Company approved the transfers and determined to enter them in its register, that date would have been 25 February 2005. After that point, the only remaining task was the ministerial task of making the entries. 17. The evidence shows that two relevant mistakes were made. First, Selingers failed to record the transfers after they were instructed to do so on 25 February 2005. But this error in itself was not relevant to rectification. If Selingers had discovered the omissions earlier, they could (and in my view should) have recorded the transfers as from December 2004 and February 2005. The problem arises, because when the omission was identified in September 2011, the transfers were recorded in the Company's share register as having taken place at that time. 18. On the question of discretion, counsel for the Company relied upon the judgment of Fullagar J in Grant v John Grant & Sons Pty Ltd (1950) 82 CLR 1 at 50-52. Counsel argued, based on this judgment, that the person claiming rectification must show that he or she has some equity which the court will protect, and rectification will not be granted if the practical advantages of doing so have not been demonstrated. Counsel submitted that Mr Akerman had not explained the delay in seeking rectification. They also submitted that Mr Akerman's purpose in seeking relief was "furthering his own interests in his self-dealings". 19. It is true that no direct explanation was provided of how the mistakes to which I have referred were made. But it is clear that Mr Akerman believed that Selingers had updated the register in accordance with his instructions in February 2005 (and told Ms Dar so). Presumably the need to update the register was overlooked by Selingers and lay undiscovered until 2011, and the further problem created by making the September 2011 entries did not become apparent until the argument about the application of the doctrine of unanimous assent arose at the trial. It would have been better if there had been direct evidence of this, but counsel for the Company had ample opportunity to explore the matter through cross-examination of Mr Akerman and Mr Guthrie had they chosen to do so. 20. As will be seen, in my view the rectification of the register is not ultimately determinative in the application of the doctrine of unanimous assent. That is because I consider that the effect of the relevant entries in the register is only evidentiary. But even if the entries had substantive effect, that would not affect the statutory purpose. The register is supposed to be accurate. On my conclusions, the date recorded for the share transfers (September 2011) is incorrect. That is, of itself, a sufficient reason to order rectification. 21. Nothing in Fullagar J's judgment in Grant is to the contrary. Indeed his Honour states (at 51) that a shareholder is prima facie entitled to rectification if he or she establishes that a name has been wrongly included in, or wrongly omitted from, the register. 22. In my view Mr Akerman's motivation in seeking rectification, and the effect on the outcome of other claims in the litigation if rectification is granted, are irrelevant. Having reached the conclusion that the register is inaccurate, the Court should correct that state of affairs. The Court should not shrink from doing so because of some concern that the recording of the proper facts in the register might create some collateral advantage or disadvantage for one or other of the parties. 23. Probably, the Company could itself rectify the register so as to reflect my conclusions on when the transfers of the shares in the Company took effect. But the issue has become controversial and it is therefore desirable for the Court to step in and make a rectification order. 24. The orders sought in the cross-claim are to rectify the register as from 29 March 2005 (the date of the notification to ASIC). I am concerned with the rectification of the Company's share register, not with the rectification of any records of ASIC. In the light of my conclusions, the order will provide for rectification as to nine shares from 10 December 2004, and as to one share from 10 February 2005. I will deal with the effect of the rectification on the application of the doctrine of unanimous assent when I consider that doctrine below. Sale and transfer of the Company's share of 9 Miller Street 1. As already stated, the Company's case against Mr Akerman was initially based on breach of fiduciary duty. The claim focused on Mr Akerman's conduct in completing the sale of the Company's share of the property in 2010 to himself or members of his family, at a price struck in May 2005. Of course the value of the properties had greatly increased between May 2005 and 2010. 2. Anticipating that Mr Akerman would respond by relying on the earlier oral agreement made on 18 May 2005 and the one page written agreement dated July 2005, the Company also complained that in 2010 Mr Akerman failed to obtain independent legal advice on the Company's behalf. The contention was that those earlier agreements were invalid or ineffective, and independent legal advice obtained in the interests of the Company in 2010 would have revealed that. Furthermore, if and to the extent that those agreements were valid and enforceable, they too were said to have been in breach of Mr Akerman's fiduciary duty. In particular, complaint was made about the failure to provide in a way more favourable to the Company for the potential increase in the price before settlement and for the failure to provide for security. 3. Equity imposes fiduciary duties on the exercise of legal powers. A claim for breach of fiduciary duty for the allegedly improper exercise of a fiduciary power, such as the power of a company director, presupposes that the action in question is valid at law. In the present case there is no question of applying the indoor management rule in favour of an outsider. If the purported exercise of power by Mr Akerman was invalid, no question of breach of fiduciary duty can arise. 4. This was accepted by the Company's legal representatives after it was pointed out by the Court and resulted in the amendments to which I have already referred, which claimed that Mr Akerman had no authority to contract on the Company's behalf to sell the property or to execute the transfer. Logically, I must deal with these claims first. 5. There is another reason why it is desirable to consider Mr Akerman's authority before embarking on the claim for breach of fiduciary duty. Where a power is conferred, the scope and content of any fiduciary duty attaching to that power always depends critically on the circumstances in which it is conferred: Coomber v Coomber [1911] 1 Ch 723 at 728–9 quoted in J D Heydon, M J Leeming and P G Turner, Meagher Gummow and Lehane's Equity: Doctrines and Remedies (5th ed, 2015, LexisNexis Butterworths Australia) at [5-015]. One of those circumstances is of course the precise terms of the power. 6. Accordingly, I will proceed by first considering Mr Akerman's authority under the articles of association to act on the Company's behalf. In doing so, I will consider his contention that the Company is estopped by its conduct from relying on any lack of authority following from the fact that the Company's articles were never amended so as to permit the Company to operate as a single director company. I will also consider Mr Akerman's application for the Court to cure any lack of authority by making an order under s 1322. 7. I will next consider the application of the doctrine of unanimous assent. Then I will consider, to the extent necessary, breach of fiduciary duty. Finally, I will deal with any limitation defences, or s 1317S/1318 applications, which come in to play. But before doing so, I must address the Company's contentions that the 2005 agreements were, even if authorised, of no legal effect. Legal effectiveness of oral agreement of 18 May 2005 1. I have found that Ms Dar did in fact agree with Mr Akerman on 18 May for the Company to sell its share of the property to him for 25 per cent of $5 million ($1.25 million). Counsel for the Company, however, submitted that even if I made such a finding, I should conclude that any such agreement was legally ineffective. 2. It is well accepted that in New South Wales the parties to transactions involving the sale and purchase of land are assumed not to intend to be legally bound until and unless a formal written contract is brought into existence and executed. Thus an informal oral agreement is not just unenforceable under the Statute of Frauds (Conveyancing Act 1919, s 54A); it is generally treated by the Courts as not giving rise to contractual relations at all: Hill v Newth (2014) 17 BPR 32,787; [2014] NSWSC 298 at [12]-[13]. 3. There is no reason to view the present case differently. Clearly it was contemplated by all parties to the agreement on 18 May 2005 that formal contracts would later be executed, as indeed they were. There is nothing to suggest that some special arrangement was made between Mr Akerman and Ms Dar that the sale from the Company to Mr Akerman would be immediately binding, even before a contract was executed. All of the indications are the other way. The agreement was informal and lacking in detail. In my view it was not effective as an enforceable contract. Legal effectiveness of written agreement dated 1 July 2005 1. I have found that the one page agreement between Mr Akerman and the Company which is dated 1 July 2005 was in existence by April 2008. While it may in fact have been brought into existence after 1 July 2005, its genuineness is established. But counsel submitted that I should find that, even so, it was not of contractual effect. 2. There are important differences between the written agreement and the earlier oral agreement of 18 May. In the first place, it was a document in the form of a contractual agreement between Mr Akerman and the Company, and signed (or purportedly signed) on behalf of both of them. On the face of it, the document represented an attempt to record a contractual agreement, and there was nothing in it to say that it was intended to be otherwise than contractually enforceable. Although lacking in detail, it did identify the property being sold and the price. It also identified what the terms of the contract would be, namely, the same terms as those which had been drawn up in the contract prepared by Sowden Akerman for the purpose of the auction sale. This was sufficient to specify all of the terms necessary to create a binding and enforceable contract for the sale of a parcel of land: Hall v Busst (1960) 104 CLR 206 at 222. 3. The written document did contemplate the execution of a formal document in due course. But that does not necessarily mean it was not immediately binding. Parties may contract on the basis that they are immediately bound but the terms of their contract will be stated, in fuller detail, in a later document: Masters v Cameron (1954) 91 CLR 353 at 360-361. Or they may agree to be bound in terms intending that they will bring in to existence a document containing different terms: Sinclair Scott & Co Ltd v Naughton (1929) 43 CLR 310 at 317 per Knox CJ, Rich and Dixon JJ; see also J D Heydon, Heydon on Contract: The General Part (2019, Lawbook Co.) at [3.170]. 4. The agreement was expressed in unqualified terms. In my view, if Mr Akerman did have authority to enter into it on behalf of the Company, it would have been immediately binding. Authority as director 1. I have already referred in general terms to the provisions of Table A concerning the directorship of the Company. The key provision is regulation 73, which provides: The business of the company shall be managed by the directors, who may pay all expenses incurred in promoting and registering the company, and may exercise all such powers of the company as are not, by the Act or by these regulations, required to be exercised by the company in general meeting, subject, nevertheless, to any of these regulations, to the provisions of the Act, and to such regulations, being not inconsistent with the aforesaid regulations or provisions, as may be prescribed by the company in general meeting; but no regulation made by the company in general meeting shall invalidate any prior act of the directors which would have been valid if that regulation had not been made. 1. Regulation 76 permits the directors by power of attorney to appoint any person or persons to act on the Company's behalf. Regulation 86 permits the directors to delegate any of their powers to committees of directors which may consist of a single director. Where, as in the usual case, the directors exercise the powers of the Company themselves, regulation 79 provides: The directors may meet together for the despatch of business adjourn and otherwise regulate their meetings as they think fit. 1. Regulation 80 provides that matters arising at any meeting should be decided by a majority of votes, but regulation 81 provides: A director shall note vote in respect of any contract or proposed contract with the company in which he is interested, or any matter arising thereout, and if he does so vote his vote shall not be counted. 1. The death or incapacity of a director is dealt with by Article 84: The continuing directors may act notwithstanding any vacancy in their body, but if and so long as their number is reduced below the number fixed by or pursuant to the regulations of the company as the necessary quorum of directors, the continuing directors or director may act for the purpose of increasing the number of directors to that number or of summoning a general meeting of the company, but for no other purpose. 1. The Corporations Act now makes specific provision for a company's entry into a contract. Sections 126 and 127 relevantly provide: 126 Agent exercising a company's power to make contracts (1) A company's power to make, vary, ratify or discharge a contract may be exercised by an individual acting with the company's express or implied authority and on behalf of the company. The power may be exercised without using a common seal. (2) This section does not affect the operation of a law that requires a particular procedure to be complied with in relation to the contract. 127 Execution of documents (including deeds) by the company itself (1) A company may execute a document without using a common seal if the document is signed by: (a) 2 directors of the company; or (b) a director and a company secretary of the company; or (c) for a proprietary company that has a sole director who is also the sole company secretary—that director. (2) … (3) A company may execute a document as a deed if the document is expressed to be executed as a deed and is executed in accordance with subsection (1) or (2). (4) This section does not limit the ways in which a company may execute a document (including a deed). 1. It was faintly argued by counsel for Mr Akerman that the June 1974 resolution appointing him as a Working Director enabled him to act on his own. As I understood the submission, the appointment in effect made him managing director. 2. I am not sure that, even if Mr Akerman had been validly appointed as managing director at a time when the Company had two directors, Mrs Akierman's death would have enabled him to continue as a sole director. Under the Table A regulations, a managing director is in effect the delegate of the board of directors as a whole. The effect of regulation 84 is that upon Mrs Akierman's death, the directors lost their power of management of the Company's business and Mr Akerman as the surviving director was only empowered to act so as to fill the vacancy or convene a general meeting of the Company. It seems strange to think that, in that event, he could nevertheless have continued as managing director even though his principal, the board of directors as a group, had lost the power to manage the Company, and indeed, even the power to remove him. But it is not necessary to consider this any further. I have already explained why I consider that the appointment as a Working Director cannot be equated with appointment as managing director under the Articles. 3. It follows that, on the face of it, Mr Akerman had no authority to execute the agreement dated 1 July 2005. He was not a validly appointed sole director of the Company for the purposes of s 127(2)(c) of the Corporations Act, because the Company's articles did not provide for such an office. He was not acting with the Company's express or implied authority for the purpose of s 126(1) because his authority as the surviving director did not extend to management of the Company's business. He did not otherwise have authority under the Company's articles. The same conclusions apply to Mr Akerman's purported execution on the Company's behalf of the formal contract and the RPA transfer in 2010. Estoppel 1. On my findings the alleged representations by Mr Selinger (and allegedly concurred in by Ms Dar) that Mr Akerman could act as a sole director have not been established. In any event, the claim in these proceedings is being made by the Company and it would be necessary to demonstrate that there was an estoppel binding on the Company before it could have any effect. Mr Selinger had no authority to make any relevant representations on the Company's behalf. Nor did Ms Dar (I leave out of account the application of the doctrine of unanimous assent, which I discuss below). The estoppel defence fails. Unanimous assent 1. On my findings, Ms Dar did agree orally with Mr Akerman on 18 May 2005 for him to buy the Company's share of 9 Miller Street for $1.25 million. But I have concluded that that agreement, even if authorised, did not have any legal effect. It follows that even if the doctrine of unanimous assent applied to the agreement, it would not assist Mr Akerman in these proceedings. 2. The one page written agreement dated 1 July 2005 is in a different position. I have concluded that, if entered into with the Company's authority, it would have had legal effect. But the agreement was drawn up, and signed, by Mr Akerman. I am not satisfied that Ms Dar knew about the agreement or approved it at the time. 3. It might be said that the written agreement only reflects the (unenforceable) oral agreement previously made with Ms Dar. But the differences between the two are significant. The agreement identified the terms of the contract and provided for other essential elements of the conveyance. It is that which led me to the conclusion that it satisfied the requirements of a binding legal contract for the sale of 9 Miller Street. On my findings, those elements were not part of the oral agreement on 18 May, and were not otherwise the subject of agreement, even informally, between Mr Akerman and Ms Dar, before the document was signed by Mr Akerman. In effect, Mr Akerman prepared the document relying (incorrectly as it happens) on his supposed authority as sole director. Ms Dar was never invited to assent to it at all. 4. I have not overlooked the fact that, on my findings, a copy of the agreement was sent to Ms Dar in 2008. She does not appear to have taken any steps to protest against the document, although she was not asked whether she even read it. In any event it was not argued that this could be taken as assent for the purposes of the doctrine. 5. Similar considerations apply to the formal contract and transfer later prepared by Mr Akerman. I am not satisfied that Ms Dar ever saw these documents, let alone agreed to their content, before Mr Akerman used them so as to effect the transfer. Again, Mr Akerman appears to have relied on his supposed authority as sole director. 6. For these reasons, there was no unanimous assent to any relevant contract concerning 9 Miller Street. It is unnecessary to consider the other objections which counsel for the Company put forward to the application of the doctrine so far as 9 Miller Street is concerned. Application under s 1322 1. Mr Akerman's application to have the Court validate the sale and transfer of the Company's share of 9 Miller Street is made under s 1322(4)(a), which provides: (4) Subject to the following provisions of this section but without limiting the generality of any other provision of this Act, the Court may, on application by any interested person, make all or any of the following orders, either unconditionally or subject to such conditions as the Court imposes: (a) an order declaring that any act, matter or thing purporting to have been done, or any proceeding purporting to have been instituted or taken, under this Act or in relation to a corporation is not invalid by reason of any contravention of a provision of this Act or a provision of the constitution of a corporation; 1. The parties agree that the Court has power to make an order overcoming Mr Akerman's lack of authority to execute the contract and the transfer. But before the Court can exercise that power, one of the three alternative conditions imposed by s 1322(6)(a) must be satisfied. These are: (i) that the act, matter or thing, or the proceeding, referred to in [s 1322 (4)(a)] is essentially of a procedural nature; (ii) that the person or persons concerned in or party to the contravention or failure acted honestly; or (iii) that it is just and equitable that the order be made; 1. The Court must also be satisfied, under s 1322(6)(c), that "no substantial injustice has been or is likely to be caused to any person". 2. Counsel for Mr Akerman contended that each of these conditions was satisfied. In counsel's submission, the invalidity involved only a procedural irregularity; Mr Akerman acted honestly; it is just and equitable to make a validating order; and there is no substantial injustice. 3. In asking whether the irregularity was "essentially procedural in nature" the Court must I think focus on why it is that the purported action of the Company, which the application seeks to validate, was invalid. In this case, the invalidity arose from Mr Akerman's lack of authority. Counsel for Mr Akerman referred, in support of their submission, to s 1322(1)(b)(i), which provides: (b) a reference to a procedural irregularity includes a reference to: (i) the absence of a quorum at a meeting of a corporation, at a meeting of directors or creditors of a corporation, at a joint meeting of creditors and members of a corporation or at a meeting of members of a registered scheme; and 1. In my view, this submission only reinforces the conclusion that the "irregularity" in the present case was not "essentially procedural". No doubt it would have been possible to convene a meeting so as to cure, in some way or other, Mr Akerman's lack of authority. The most obvious way would have been to pass a special resolution to vary the articles so as to permit the Company to operate as a single director company. That would hardly have been a simple matter. But in any event, there never was any such purported meeting. I am not even satisfied that if such a meeting had been properly convened, Ms Dar would have voted in favour of the necessary resolutions. In my view Mr Akerman's lack of authority was not merely something that was "essentially procedural". It was a fundamental defect in the corporate governance of the Company. 2. The next question is whether Mr Akerman acted "honestly" for the purposes of s 1322(6)(b)(ii). I do not think that Mr Akerman acted with actual knowledge of his lack of authority. He was probably simply unaware of it. There was no conscious wrongdoing. 3. But acting without conscious wrongdoing is not necessarily the same thing as acting "honestly" for the purpose of the Corporations Act. In an application under s 1317S or s 1318, which likewise require that the person concerned has acted "honestly", it has been said that carelessness or imprudence at a level that negates the performance of the duty in question may exclude relief: Hall v Poolman [2007] NSWSC 1330 at [325]. If, in an application under s 1322(4)(a), the irregularity in question results from gross negligence in the conduct of the company's affairs on the part of an applicant for relief, that may negate "honesty" for the purposes of s 1322(6)(b)(ii). But it is not necessary for the purposes of this judgment to consider this further. 4. Even if Mr Akerman acted honestly in the present case, I do not think he acted reasonably. He was a director of the Company for more than twenty-five years before his mother died. Another four years or so then passed before he signed the one page agreement for the sale of the Company's share of 9 Miller Street. He had ample opportunity to familiarise himself with the Company's articles of association. 5. Furthermore, Mr Akerman was in practice as a solicitor for almost twenty years before the change in the law which permitted sole director companies. The fact that a company which had been incorporated before the 1995 changes could not automatically operate as sole director company, but required a change to its articles if it was to do so, should have been (and should still be) part of the basic knowledge of a competent solicitor carrying on a practice of the type Mr Akerman was conducting. 6. I have already indicated that I do not accept Mr Akerman's evidence about what Mr Selinger supposedly told him concerning the Company operating under his sole directorship. But even if Mr Akerman had been told that by Mr Selinger, it would have been no excuse. Mr Selinger was not legally qualified and Mr Akerman was. 7. Mr Akerman therefore has only himself to blame for his inability to enforce the agreement against the Company. And validation of the transaction would not be to the Company's advantage; rather, it would preserve for Mr Akerman the benefit of acquiring the Company's property for less than it is now worth. At best, this benefit would be a windfall to Mr Akerman, but less charitable characterisations are possible. 8. In these circumstances, I think that to validate the agreement would not be "just and equitable" for the purposes of s 1322(6)(a)(iii), and, further, that it would involve "substantial injustice" for the purposes of s 1322(6)(c). The latter conclusion means that the order cannot be made. If I am wrong in my view, then I would in any event refuse the application as a matter of discretion, essentially for the reasons I have given. These conclusions make it unnecessary to determine whether Mr Akerman acted "honestly" for the purposes of s 1322(6)(a)(ii). 9. The case for approving the execution of the contract and transfer in March 2010 is appreciably weaker. By that stage Mr Akerman had fallen out with Ms Dar. The value of the Company's share had increased above its 2005 value. It would have been obvious to Mr Akerman that if he sought Ms Dar's co-operation to effect the sale at that point, she would try to thwart it. He chose instead to rely upon his supposed authority as sole director. There would be no justification for rewarding his conduct by validating the transaction. For these reasons, I reject Mr Akerman's application for relief under s 1322(4)(a). Conclusions 1. I thus conclude that the sale and transfer of 9 Miller Street to Mr Akerman and his family was never validly authorised by the Company. It is unnecessary to consider the allegations of breach of fiduciary duty as they do not arise for decision. Sale and transfer of the Company's shares of 5 and 7 Miller Street Legal effect of one page agreement dated 28 February 2007 1. I have already considered and rejected the submission from counsel for the Company that the one page agreement dated 1 July 2005 was insufficient to give rise to immediately binding contractual obligations, even if authorised. The agreement dated 28 February 2007 had relevantly the same features. It identified the property, the price and the terms of the contract which were to be entered into. In my view, if executed with the Company's authority, the agreement was a binding one. Authority as director 1. For the purposes of the authority issue, the one page agreement, the contract and the transfer of the Company's shares in 5 and 7 Miller Street had the same relevant features as the equivalent documents for the sale and transfer of 9 Miller Street. Mr Akerman lacked authority under the articles as sole director of the Company to enter into the agreements on the Company's behalf. Unanimous assent 1. There is however an important difference between the 5 and 7 Miller Street instruments and the 9 Miller Street instruments when it comes to the doctrine of unanimous assent. The 9 Miller Street instruments were all signed by Mr Akerman only. The 5 and 7 Miller Street instruments were signed by Ms Dar as well. This potentially brings the doctrine of unanimous assent into play. The doctrine was stated in broad terms by Lord Davey in Salomon v Salomon & Co Ltd [1897] AC 22 where he said (at 57) : … the company is bound in a matter intra vires by the unanimous agreement of its members. 1. An especially well-known statement of the doctrine is that of Buckley J in Re Duomatic Ltd [1969] 2 Ch 365. Indeed the doctrine is frequently referred to as the "Duomatic principle". The case concerned payments to directors of a company which, under its articles of association, should have been approved by the shareholders in a general meeting. There were no formal resolutions but all the shareholders were aware of the payments and assented to them. His Lordship stated the principle in more particular terms than those used by Lord Davey. He said (at 373): … where it can be shown that all shareholders who have a right to attend and vote at a general meeting of the company assent to some matter which a general meeting of the company could carry into effect, that assent is as binding as a resolution in general meeting would be. 1. Counsel for the Company contended that the doctrine did not save the sale and transfer of 5 and 7 Miller Street. Counsel advanced four arguments. First, they submitted that the doctrine did not extend to circumstances of the present type. It was said to be a doctrine which was (in general terms) limited to formalities and did not allow the shareholders to assume functions which were conferred on the directors under the Articles. Second, counsel argued that the doctrine could not apply in any event, because at the relevant time, Mrs Marr was still registered as a shareholder of the Company and she had never assented to the transactions. Third, counsel submitted that the doctrine required "full and informed consent" on Ms Dar's part. Counsel submitted that even if Ms Dar did assent to the transactions, any such assent was not a fully informed one. Fourth, counsel argued that on the facts, Ms Dar did not consent to the transaction, or if she did, the eventual form of the transaction did not reflect her assent. 2. Scope of doctrine: In Herrman v Simon (1990) 4 ACSR 81 Meagher JA said (at 83.20): What is that principle? That principle is I think this: where it can be shown that all shareholders having a right to attend and vote at a general meeting of a company assent with full knowledge and consent to some matter which a general meeting of the company could carry into effect, that assent is as binding as a resolution in general meeting would be. In other words, it is a doctrine dispensing with the consumptive effect for formalities. It is a doctrine that formalities may be disregarded if they have been waived by all shareholders acting in concert who want the same substantial result. 1. In the first part of this passage, his Honour states the principle in the same terms which were used by Buckley J in Duomatic. But he then adds that the doctrine is concerned with disregarding "formalities". Further on (at 83.43) he describes it as "really only a principle of waiver". 2. Others, however, have expressed the doctrine in different, and potentially wider, terms. Some of the authorities (including Herrman v Simon) were reviewed by Ormiston J in Brick & Pipe Industries Ltd v Occidental Life Nominees Pty Ltd [1992] 2 VR 279 at 314-318. His Honour observed that when Buckley J, then Buckley LJ, referred to the doctrine in Re Horsley & Weight Ltd [1982] Ch 442 at 454, he did not use his own earlier formulation from Duomatic, but instead stated the doctrine in accordance with Lord Davey's simpler principle. In his own reasoning, Ormiston J likewise fell back on Lord Davey's statement. 3. The High Court considered the doctrine in MYT Engineering Pty Ltd v Mulcon Pty Ltd (1999) 195 CLR 636 at 649 [24]. That case concerned the execution of a deed of company arrangement. The company's shares were owned by two individuals, who were also its directors. One of the individuals verbally authorised the other (who was also the secretary) to execute the deed, and he purported to do so by affixing the common seal and signing the document. The company's articles, however, required any document to which the seal was affixed to be signed by a director and countersigned by another director (or secretary). 4. On the assumption that the deed of company arrangement was governed by the rules applicable to ordinary contracts, the High Court held that the company had validly executed the deed despite the failure to comply with the articles. The Court explained this by saying that, as all the corporators had agreed that the deed should be executed, there was "no separate question" about whether the company had assented. The Court cited the judgments of Buckley J in Duomatic and of Ormiston J in Brick & Pipe. 5. MYT does not confine the doctrine to "formalities" or to actions which can be taken by the shareholders in general meeting. In the later decision of Angas Law Services Pty Ltd v Carabelas (2005) 226 CLR 507 at 519 [24], Gleeson CJ & Heydon J (with whom the other members of the Court agreed) referred to the doctrine in the terms stated by Buckley J in Duomatic. But the case concerned a claim for breach of director's duties under statute, and the application of the doctrine was not directly relevant. 6. In the end, it is not necessary for me decide what the limits of the doctrine are, as a matter of authority. That is because I think that the narrower, or at least the more particular, statement of principle in Duomatic applies in any event. 7. Counsel submitted that to apply the doctrine in the present case would allow the shareholders of the Company to usurp functions allocated, under the Company's Articles of Association, to the directors. But I do not think this is correct. Regulation 73 confers a general power on the directors to manage the Company's business, but this is subject to such regulations and limitations as the general meeting may impose. It would have been open in the present case for the shareholders in general meeting to have resolved, under regulation 73, to exempt the proposed sale of 5 and 7 Miller Street from the directors' general power to manage the Company's business. The shareholders could then have resolved to have the Company effect the sale and to authorise Mr Akerman, Ms Dar or anyone else to execute the relevant documents on its behalf. This principle, as stated in Duomatic, thus applies. 8. Effect of Mrs Marr still being registered as shareholder: In support of their argument that the doctrine could not apply because Mrs Marr was still registered as a shareholder at the relevant times, counsel for the Company referred to Re Compaction Systems Pty Ltd [1976] 2 NSWLR 477. The company in that case had two classes of shares, "A" class and "B" class. Only the "A" class shares had voting rights. All of the shares were owned by one shareholder, Omnico, except for one "B" class share held by an individual called McDonald. A general meeting was convened for the purpose of considering a resolution to wind the company up. Omnico purported, as "the only shareholder" in the company, to dispense with the notice requirements for the convening of the meeting, and the resolution was then passed. 9. Bowen CJ in Eq held that, although he was not entitled to vote, Mr McDonald was entitled to receive notice and attend the meeting. Counsel for the liquidator, however, argued that the resolution was valid under the doctrine of unanimous assent for two reasons. First, Mr McDonald was said to hold his share as nominee or constructive trustee for Omnico, so that it was the beneficial owner of all of the shares in the company. Second, counsel argued that Omnico was the owner of all of the voting shares in the company. Each of these circumstances, counsel argued, was sufficient to attract the doctrine. 10. It is the first argument which is relevant for present purposes. Bowen CJ in Eq noted that no authority had been cited in support of it and "as at present advised" he was not persuaded of its correctness. 11. But in the present case, Mrs Marr was not merely holding a share as trustee (or even as bare trustee) for someone else. She had executed a transfer of the share, and the transfer had been accepted by Mr Akerman (on behalf of the estate) as transferee. The transaction was complete. Also, although this may not necessarily be essential, the decision had been made to register the transfer and only ministerial steps were required to do so. 12. It is not necessary for me to decide whether I should, as a matter of authority, follow the somewhat tentative decision of Bowen CJ in Eq. The circumstances of the present case are different. I was not referred to any authority governing those circumstances, and I must therefore decide the point on principle. 13. It was not suggested that the unanimous assent doctrine was excluded because of the circumstance that Mrs Akierman's shares had not been registered in the name of her executors. That would have been artificial in the extreme. Why, then, should the doctrine be excluded because the transfer of Mrs Marr's share had not been registered? 14. I have already explained that the ownership of shares in a company, as distinct from the exercise of rights attached to those shares, such as the right to vote, is not determined by registration. The recording of ownership in the register is evidentiary. In my view, consistently with this analysis, the unanimous assent doctrine should be applied on the basis of the transfers sent for registration by Mr Akerman in February 2005, albeit that registration had not then been effected. 15. I think this conclusion is reinforced by practical considerations. The hypothesis on which the Duomatic principle operates is that the transaction in question could have been effected by the shareholders in general meeting. In the present case, the relevant transaction took place more than eighteen months after the transfers, making Mr Akerman and Ms Dar the shareholders of the Company, had been sent for registration. Both of them believed that the transfers had been registered. Had it been thought necessary to confer a formal meeting of shareholders, the probability is that it would have been conducted on the assumption that the shareholders were Mr Akerman and Ms Dar. In the event (less likely, it seems to me) that someone had thought it necessary to check the register, the mistake would have been discovered and rectified so as to allow the meeting to take place on that basis. In such circumstances, it seems to me that it would be quite unrealistic for the Court to refuse to apply the doctrine. 16. This reasoning does not depend in any way upon the making of the rectification order. That is because I consider that the only effect of such an order is evidentiary. But if I am wrong in my view, and ownership for the purposes of the doctrine depends upon registration, then the rectification, once made, will relate back so as to operate from a date before the sale and transfer transactions took place. On either view, therefore, the doctrine applies notwithstanding the fact that at the time of the transaction Mrs Marr remained on the register. 17. Fully informed consent: In support of their submission that fully informed consent from Ms Dar was required, counsel for the Company relied on the Court of Appeal decision in Winthrop Investments Ltd v Winns Ltd [1975] 2 NSWLR 666. In that case the Court of Appeal followed the earlier decision of the English Court of Appeal Bamford v Bamford [1970] Ch 212. Each case involved a takeover where the directors of the target company responded by making an issue of fresh shares. In each case the issue was later ratified by an ordinary resolution of the shareholders of the target company. In each case the bidder challenged the share issue on the ground that it had been actuated by an improper purpose. 18. In Bamford, the English Court of Appeal decided that even if the directors had acted in bad faith and for an improper purpose in making the share issue, it was not void, but only voidable. The Court went on to say that it had been open to the directors to obtain absolution for any breach of duty on their part by obtaining a resolution of the shareholders waiving the breach and approving the issue. If a majority of the shareholders had given their fully informed consent, the bidder could not complain. In Winthrop, the Court of Appeal adopted the same view of the law. But the Court found in that case that the shareholders' resolution was invalid because the directors had failed to make a full disclosure of the relevant facts. 19. Counsel argued that the facts of the present case were relevantly the same as in Winthrop. Counsel argued that Mr Akerman had failed to make full disclosure of the potential benefits to him of the transaction. In particular, counsel submitted that he had failed to disclose the "likely" or "anticipated" increase in the value of the property. 20. The Bamford line of cases concerns ratification of a transaction as a cure for any invalidity resulting from breach of fiduciary duty on the part of the directors. The ratification may be prospective as well as retrospective (see Winthrop at 681 [E]). But the focus is on a breach of duty, not on a lack of power. In Angas Law Services (above at [316]) at 518-519 [24] Gleeson CJ & Heydon J referred to the Duomatic authorities and the Bamford authorities as "two related but distinct lines of authority". 21. Implicit in what Gleeson CJ & Heydon J said is that the two principles may overlap in some cases. An example is the decision of the English Court of Appeal in Multinational Gas and Petrochemical Co v Multinational Gas and Petrochemical Services Ltd [1983] 1 Ch 258. That case concerned the affairs of a company which had been formed by three international oil companies for the purpose of trading. The board of directors consisted of nominees of the oil company shareholders, each director acting subject to the prior direction or subsequent approval of the shareholder which had nominated him. The company went into liquidation, and the liquidator sought to bring an action in its name as plaintiff against the directors (and, vicariously, the oil companies) on the ground that some of the transactions the directors had caused the company to enter into had been improvident. Lawton LJ said (at 269): … when the oil companies acting together required the plaintiff's directors to make decisions or approved what had already been done, what they did or approved became the plaintiff's acts and were binding on it: see by way of examples Attorney-General for Canada v Standard Trust Co of New York [1911] AC 498; In re Express Engineering Works Ltd [1920] 1 Ch 466 and In re Horsley & Weight Ltd [1982] Ch 442. When approving whatever their nominee directors had done, the oil companies were not, as the plaintiff submitted, relinquishing any causes of action which the plaintiff might have had against its directors. When the oil companies, as shareholders, approved what the plaintiff's directors had done there was no cause of action because at that time there was no damage. What the oil companies were doing was adopting the directors' acts and as shareholders, in agreement with each other, making those acts the plaintiff's acts. 1. The distinction between the two principles appears clearly from this passage. The shareholders could have resolved to waive any breaches of duty by the directors and approve the transactions. Provided full and proper disclosure had been made, this would only have required a majority resolution. The result would have been a prospective ratification in accordance with the Bamford principle. But Lawton LJ's analysis went further. Because the shareholders had in effect unanimously agreed on the transactions, they became the transactions of the company and no question of breach of duty could arise. The same point was made by Dillon LJ (see at 289). 2. Where ratification or validation of conduct which would otherwise be a breach of fiduciary duty is in issue, it is natural to use the language of fully informed consent. That is what equity requires in the case of a fiduciary who seeks to be absolved, prospectively or retrospectively, from the consequences of a breach of fiduciary duty. But it is less clear that the same concept necessarily applies where the shareholders of a company give effect by unanimous approval, to a contract which would otherwise be invalid because of failure to comply with a provision of the company's constitution. Arguably, the question of disclosure in the latter class of case should be judged on the same principles which apply to the enforceability of ordinary contracts. But it is not necessary to pursue this further. 3. In the present case, the one page agreement of February 2007 clearly provided for settlement to be delayed, at Mr Akerman's option, until the liquidation of the Company. Mr Akerman, of course, did not know what would happen to property values in the future. There is no evidence that he had any greater knowledge about the future value of the properties than Ms Dar. The potential for a benefit to Mr Akerman if the property value increased in the meantime was obvious. In my view, all matters of substance were disclosed to Ms Dar. I reject the submission that the disclosure was inadequate. 4. Adequacy of consent: As already noted, there can be no dispute that Ms Dar consented to the terms of the one page agreement of 28 February 2007. She did not dispute, or at least did not credibly dispute, Mr Akerman's account of the meeting which resulted in the document being signed. And, of course, she signed the document itself. No question of misrepresentation or mistake arises. 5. When she signed the agreement, Ms Dar signed on behalf of the Company. The parties knew she was not a director of the Company, but was a shareholder. This conclusion is confirmed by the handwritten document concerning the sale of the Kingsford property she signed on the same occasion. The objective interpretation is clear. Mr Akerman agreed to the transaction. So did Ms Dar. Both parties then agreed that Ms Dar should sign the agreement so as to signify the Company's assent. In my view, a case such as the present is precisely the sort of case where the doctrine should apply. 6. The execution of the contract and the transfer were somewhat different. Ms Dar signed both documents as a vendor, but did not do so expressly on behalf of the Company. Mr Akerman also signed the documents as a vendor, and he had no other interest as vendor apart from his role in the Company. Indeed, the transfer expressly provided for execution on behalf of the Company, which was signed by Mr Akerman. Ms Dar was a party to both the contract and the transfer in her own right, as an owner of a one-eighth share of the properties. Her signature does not necessarily have to be read as a signature on behalf of the Company as well. 7. In Brick & Pipe the unanimous assent issue concerned the execution of a guarantee by a company in a corporate group. The company in question was a wholly owned subsidiary of another company in the group, called Arnsberg. Ormiston J concluded that it would be unrealistic to say that Arnsberg had not consented to the guarantee. His Honour took a number of factors into account, but one of them was that Arnsberg was itself a party to, and executed, the same instrument of guarantee (see at 42). 8. In my view, the same conclusion applies here. Apart from the fact that Ms Dar was a party to, and signed, both the formal contract and the RPA transfer, she had previously signed the one page agreement on the Company's behalf. I think it would be unrealistic to say that she did not assent to the sale and transfer of the Company's share in the properties. 9. In view of these conclusions, the difference in the wording between the February 2007 one page agreement and the later formal contract does not matter. But in any event, I do not accept that any such distinction is important. The critical question is whether the transfer was binding on the Company. The one page agreement of February 2007 was sufficient to support the transfer at the price stated and in my view that is enough. 10. For these reasons, I conclude that the sale and transfer of 5 and 7 Miller Street is sustained by the doctrine of unanimous assent. It is unnecessary to consider the application of s 1322(4)(a). Conclusions 1. As a result of my conclusion concerning the doctrine of unanimous consent, the transaction was directly approved by the Company itself. No question of breach of director's duties therefore arises. 2. In any event, had it been necessary to consider the question, I would not have concluded that the transaction involved any breach of fiduciary duty. For the reasons I have already given, the essential terms of the transaction were disclosed to the only other person with an interest in the Company, namely Ms Dar. 3. The Company's claim concerning the sale and transfer of numbers 5 and 7 Miller Street fails. Director's fees 1. I have already set out the terms of the resolution upon which Mr Akerman relied in 2013 to support the payment of director's fees. That resolution purported to rely upon Mr Akerman's authority as sole director. For reasons I have given, he had no such authority. The resolution was invalid for this reason alone. 2. In any event, Table A regulation 70 provides: The remuneration of the directors shall from time to time be determined by the company in general meeting. That remuneration shall be deemed to accrue from day to day. The directors may also be paid all travelling, hotel, and other expenses properly incurred by them in attending and returning from meetings of the directors or any committee of the directors or general meetings of the company or in connection with the business of the company. 1. It is quite clear that, even if Mr Akerman had been validly appointed as sole director of the Company, that would not have justified the resolution. Under regulation 70 it was for the shareholders in general meeting to determine the remuneration of directors. I doubt that the power would permit the retrospective creation of an entitlement to fees as Mr Akerman sought to do, but that does not need to be pursued. The purported resolution by Mr Akerman was plainly invalid. 2. In Duomatic, Buckley J found that some of the payments to directors, the subject of that case, were not sustained by the doctrine of unanimous assent. An application was made to have the Court validate the payments. Buckley LJ said: Directors must, I think, take the trouble to discover just what their rights and obligations are, and if they draw on account of remuneration to which they are not entitled in anticipation of its being voted to them in the future, then normally the director could not be said to be acting reasonably and ought not to be excused. 1. The same observations apply here. Indeed I think they apply with increased force because Mr Akerman, as a lawyer, had no excuse at all for being unaware of what the articles provided. 2. I have already concluded that Mr Akerman's lack of authority to effect the sale and transfer of the Miller Street properties was not "essentially procedural" (s 1322(6)(a)(i)). That conclusion applies with greater force to Mr Akerman's attempt to give himself an entitlement to director's fees. 3. When Mr Akerman passed the purported resolution, his relationship with Ms Dar had broken down. She would never have agreed to pay him director's fees and he would have been well aware of that. Arguably, his failure to comply with the Company's Articles of Association was so flagrant that he did not act "honestly" for the purpose of s 1322(6)(a)(ii). But I do not need to decide this. 4. Validation of the resolution would not be "just and equitable" (s 1322(6)(a)(iii)). Indeed, I think it would involve "substantial injustice" for the purposes of s 1322(6)(c). And even if the requirements of s 1322(6) were satisfied, I would still, in the exercise of my discretion, refuse to make the orders sought. 5. It is thus unnecessary to consider the allegations of breach of duty by Mr Akerman in paying the director's fees. The payments were unauthorised and invalid for that reason alone. Legal fees 1. Any entitlement that Mr Akerman had to bill the Company for work due by his firm depended upon the validity of his firm's retainer by the Company. Mr Cashion SC was retained by Mr Akerman's firm and had no direct entitlement to payment of his fees from the Company. Again, the payment of his fees by the Company depended on the validity of Sowden Akerman's retainer. 2. In purporting to retain his firm to act for the Company, Mr Akerman relied upon his supposed authority as sole director. For reasons I have already given, he had no such authority. His application to validate the payments (or the retainer) must be refused for essentially the same reasons as I have given for refusing his application concerning the director's fees. The payments were unauthorised and invalid. Conclusions and orders 1. I have concluded that: (1) the Company's register of members should be rectified so as to show: (a) the transfer on 10 December 2004 of five ordinary shares, 4000 class A preference shares and 50,000 class B preference shares from the estate of Mrs Akierman to Mr Akerman and four ordinary shares, 4000 class A preference shares and 50,000 class B preference shares to Ms Dar; (b) the transfer on 10 February 2005 of one ordinary share from Mrs Marr to the estate and then to Ms Dar; (2) the Company's claim with respect to the sale and transfer of the Company's shares of 5 and 7 Miller Street fails; but (3) the Company's claims with respect to the sale and transfer of the Company's share of 9 Miller Street, the payment of the disputed director's fees and the payment of the disputed legal fees succeeds on the basis of lack of authority. 1. Given the agreement between the parties, they will need to consider how they wish to proceed with determining the financial consequences of my findings. Although the claim has been put on the basis of compensation (or alternatively damages) it may be that the appropriate principles to apply are those of restitution. I will adjourn the proceedings for a short time to allow the parties to consider this judgment and propose a way forward. 2. The order of the Court is: 1. Order that the proceedings be adjourned for 7 days or such other period as may be arranged with my Associate for directions on the conduct of any further hearing and presentation of any further submissions required to finalise the proceedings in the light of this judgment. ********** 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: 13 November 2019