Brown v Tavern Operator Pty Ltd [2018] NSWSC 1290 | Case summary

Brown v Tavern Operator Pty Ltd [2018] NSWSC 1290 | Case summary | Zoe

[4]

Poker machine entitlements

The Nixons took steps over a period of time to acquire poker machine licences (or "entitlements") in order to be able to operate poker machines on the hotel premises. Greg has deposed ([24], Greg's first affidavit) that from approximately 2005 onwards Tavern Operator had made applications to the relevant authority (then the Casino Liquor & Gaming Control Authority) (Gaming Authority) for the grant of poker machine entitlements ([25], Greg's first affidavit).
The reason for this was to improve or secure the profitability of the business. Greg deposed ([24], Greg's first affidavit) that: During the years that Tavern Operator operated the hotel, I came to the view that if the hotel was to be profitable, the company needed to own and operate poker machines on the premises.
Similarly, Bronwyn's evidence was that as at the beginning of 2006 the business was not profitable (see [23], Bronwyn's first affidavit) and she considered that having poker machines in operation at the property was necessary for the long term profitability of the business ([26], Bronwyn's first affidavit).
It is fair to say that there was somewhat conflicting evidence in cross-examination of each of Greg and Bronwyn as to the viability of the hotel business if poker machine entitlements could not be obtained. In cross-examination, for example, Greg's evidence was, in effect, that the statement extracted at [22] above should be read as "if the hotel was to be more viable" rather than "if the hotel was to be profitable" (my emphasis) (see T 404.37-T 405.30). However, there is no dispute that at the relevant time in 2012 the Nixons were keen to secure such entitlements. Nor is there any dispute that it was considered valuable for such entitlements to be attached to a hotel business (as indeed was Ron's view - see his evidence at T 265.41-45) and that it was contemplated that the operation of the poker machines would provide a further income stream to the business; such that the sooner the machines became operable the sooner the profits of the business would increase.
Bronwyn's evidence was that in 2009 she and Greg submitted further plans for extension of the property to Council for approval ([26]).
On or about 9 or 10 August 2011, the Gaming Authority notified the Nixons of its approval for an allocation of a poker machine entitlement not to exceed 10 machines ([30], Greg's first affidavit; [30] Bronwyn's first affidavit). Greg deposed that the approval for poker machines was to expire on 26 July 2013 ([30], Greg's first affidavit).
The Nixons each deposed to the basis on which such entitlements operate having regard to the regulatory regime then in place in relation to poker machines in New South Wales. In particular, approval was issued permitting the acquisition of five "blocks" of poker machine entitlements (one "block" being three poker machine licences) and there was a requirement that, out of a "block", one licence was to be forfeited or relinquished to the Gaming Authority; so that out of each "block" the business would retain two poker machine licences ([30], Bronwyn's first affidavit; [31], Greg's first affidavit). (See also the letter of approval dated 7 August 2011 at CB 849.) Thus, approval for five "blocks" would translate to authorisation to obtain 10 (not 15) poker machine licences.
A condition of the approval was that for each of two years an annual sum of $25,000 had to be contributed to nominated charities - on or before 15 June 2012 and 15 June 2013 - or the entitlements were lost ([32], Bronwyn's first affidavit; [32], Greg's first affidavit).
Greg deposed that, at the time that the Gaming Authority granted the certificate of gaming entitlement, the cost of purchasing an entitlement to a "block" of two machines (i.e., the two machines for which licences would be retained after one of the three entitlements had been relinquished) was about $198,000 including GST ([31], Greg's first affidavit). That cost increased during the period in question. The cost of acquiring the actual poker machines was additional to the cost of the poker machine entitlements.

[6]

Attempts to obtain finance in late 2011

In about September 2011, the building work had progressed to the point where the builder was owed approximately $210,000 ([33], Greg's first affidavit). There was at that stage still the $500,000 loan facility from ANZ, not fully drawn down as referred to above, secured by a first mortgage over the Menangle property.
Greg deposed that Bronwyn approached a number of banks to borrow funds using the property as security (including ANZ and Westpac) but that the banks would not provide any further finance ([34], Greg's first affidavit); and that, at about that time, Mr Ralph Radovic and/or his son Danny introduced Greg to Mr Ron Cooper, a finance broker operating through Diore Pty Ltd ([35], Greg's first affidavit; [34(a)], Bronwyn's first affidavit). Greg said that he and Bronwyn spoke to Mr Cooper in an attempt to obtain finance to pay Tavern Operator's creditors (principally the builder) and to purchase the poker machine entitlements ([35], Greg's first affidavit).
Bronwyn similarly deposed that around September 2011 she and Greg visited the major banks seeking additional finance but were not successful and that they then approached second tier lenders through mortgage brokers ([33]). At [34], she deposed that between September 2011 and May 2012 enquiries were made to five lenders - some of those being unsuccessful (see (b)-(c)) and one of which resulted in an offer that was not accepted by the Nixons (see (e)).
At [35], Bronwyn deposed that it was crucial for the future of the business that funds be obtained to make the annual payments of $25,000 and purchase blocks of poker machines before the entitlements granted expired ([35]).
As at 31 October 2011 (see CB 300), Mr Cooper advised the Nixons that he had two private offers (of finance apparently of around $1 million), to which Bronwyn responded with concern as to the indicated interest rate and said: I still think Greg and this business has a lot of scope to look at other avenues. Ralph [Radovic] cannot finish our projects until he gets paid (and we understand this) so we will make arrangements based on this situation. And postpone all further functions[.] What we would like to happen right now is just to pay the $287,000 left on ralphs bill to finish the extension. Do your private lenders want to add this financial situation to their portfolio[.]
Pausing here, it can be seen from this email exchange that the Nixons' stated position at the time was not that it was critical for them at that stage to obtain the whole amount of funding to acquire the poker machine entitlements and machines, rather, a sum of around $287,000 would suffice. Presumably, in that event, the ANZ facility would have been further drawn down to pay the Nixons' other immediate debts.
Greg has deposed that in about November 2011, an attempt was made through Mr Cooper to obtain finance with GP Mortgage Group (see [36], Greg's first affidavit) and then there was discussion as to a possible borrowing involving Baccus Investment Group (Baccus) and Bleier Mortgage Corporation Pty Ltd (Bleier) (see [36], Greg's first affidavit). (The relationship between Baccus and Bleier was not made entirely clear, though I note that the two entities apparently shared the same address (comparing the addresses on the document at CB 302).)
A Mandate To Act in favour of Global Capital Corporation Pty Ltd (Global Capital), bearing an issue date of 3 November 2011, was signed by Greg on behalf of Tavern Operator on 15 December 2011, appointing Global Capital exclusively and irrevocably to provide services to obtain a finance facility in an amount of up to $1.06 million or up to 30% of the value of the security for a period of up to 12 months (see CB 348). The Mandate To Act provided for a facilitation fee of $23,320 (incl of GST) or 2% of the loan amount and for the charging of a cancellation fee (100% of the facilitation fee) in the event that the borrower decided not to proceed for whatever reason, after the lender had issued mortgage documents.
By email on 20 December 2011, Mr Cooper sought information from the Nixons "to move the approval ahead" (see CB 299).
An Indicative Loan Offer issued by Bleier for a loan advance in the amount of the lesser of $1 million and 29% of valuation for a term of 12 months at an interest rate of $13.55% pa fixed interest only and on security of a first mortgage over the Menangle property (the property at that stage already being subject to the mortgage in favour of ANZ) was made to Tavern Operator on 30 January 2012 (CB 304). This indicative offer was forwarded via "Global Capital Commercial" - presumably a trading name for Global Capital, though nothing turns on this (see CB 303). By letter of the same date it seems that the indicative offer had been forwarded to Bleier by Baccus (see CB 302).
By February 2012, Mr Cooper advised the Nixons that he had "exhausted everyone and every institution" and that the attached indicative offer (which seems to be a reference to the 30 January offer procured through "Global Capital Commercial" referred to at [42] above) was all that he could come up with (see CB 301). (A tax invoice for the facilitation fee was issued on 21 March 2012 "in anticipation of settlement of" the Bleier loan facility - see CB 357).
That offer (the Bleier offer) was not acceptable to the Nixons. This led, in due course, to a claim by Global Capital for payment of the cancellation fee provided for under the Mandate to Act (see [46] below).

[10]

Position as at April/May 2012

The position prior to the initial discussions with Ron and the Brown interests in May 2012, as conceded in the Nixons' closing written submissions (at [10]), was thus that: As at April 2012, the Nixons and their hotel operation were burdened by debt, and there were a number of payments to creditors, and contributions to charities, which required immediate attention[.]
Those debts included: an amount owing to the Australian Taxation Office (ATO) of around $31,000; an amount due for repayment to ANZ of $17,000 in respect of the short term loan that had been taken out by Bronwyn on 23 April 2012; an amount of at least $150,000 owing to the builder (Mr Radovic or his company, RE Property Group) for the 2011 building works; and debts to family and friends of around $42,000. The Nixons also needed to make payments before 15 June 2012 to the two nominated charities of funds totalling $25,000 (or else they faced losing the poker machine entitlements); and (though this was not included in the list of debts provided for in the subsequent Heads of Agreement) there was also the claim made by Global Capital in April 2012 for payment in respect of a $22,000 cancellation fee on its Mandate to Act (see [46] above).
In contemplation at that time (though not yet payable) were the future costs not only of acquiring the poker machine entitlements (which had increased to about $200,000-$220,000 a "block" as at May 2012, according to Greg, and for which a sum of around $1 million - $1.3 million was thought to be required) but also of acquiring the poker machines themselves. This explains the fact that the Nixons were approaching financiers at that stage for finance of around $1 - $1.3 million, though their pressing debts were not of that order.
I raise that at this stage because a submission was made for James to the effect that there was a lack of equity in the Menangle property at the time at which the discussions commenced in relation to financial assistance from the Brown interests (see, for example, the submissions at T 545.20ff). As I understand it, this is said to explain why (as a commercial proposition) the Nixons would have been prepared to give James a 50% share in the property and business in exchange for no more than a short term loan of around $200,000 (and, perhaps, for assistance to procure further funding - I say "perhaps" because Ron was adamant in the witness box that the deal was for James to have a 50% interest once the payments were made, without more - see T 272.32; T 272.49.)
So, for example, Ron's evidence was that: A. Well, I thought at the time the place was worth about one and a half million. This was my personal estimate. I knew they had about 700,000, so that brought it to 700,000. I knew if I put 200 in then I'd be getting a return of about 350 for my 200 and that was with my 200 included, 350 back so my opinion is, at that time when I entered into that agreement that I was to gain about $150,000 and Jimmy, talking on Jimmy's behalf, not me personally. That was my thoughts at the time. [T 266.50ff] and: A. I thought it was an attractive deal. Like I said to you before, at the time that I entered into that, I thought our share would be about 350,000 for the 200, so I want to make it clear that this wasn't about a million dollar property at the time that we entered into that deal. This is six, seven years ago. The Nixons owed a lot of money to a lot of people so the margin was very small when we entered into that deal. [T 267.44]
However, the submission based on the level of equity that the Nixon interests then had in the Menangle property must be put into context. As at April/May 2012, not all of the amounts included in James' calculation as to the debts of the business were then due and payable (in particular, the future cost of acquisition of the poker machine entitlements and of the machines themselves was not a debt payable at that stage). The debts that were pressing were in a much smaller compass (as set out at [49] above).
James himself disavowed having any view at the time as to what the deal was worth, placing his trust in his father's assessment of the opportunity: A. At the time I didn't think it was - it was extremely valuable. Just the way as said in the affidavits they were just floating with their head above the water. I - I couldn't put a number on it. As I said I was just - I was under instructions from my father who said it was a good investment so I took his word that was a good investment. And I - that's the way I ran with it. [my emphasis] Q. Did you talk to your father about what he thought the value of this hotel was? A. No. Q. Never? A. It - it never came up in topic and exact figure. He - well, he goes, I - he goes, "That's a good" - he always said, "This is a good opportunity for you, you should take it." And there was never - no conversation of how much do you think it's worth to me. My - my upbringing is if my dad tells me something is good for me I - that's - I take that as foolproof I assume. (T 115.25-.39)
Another submission that seems somewhat to have overstated the position was the written submission made for James that the Nixons "have a history of entering binding agreements then later looking for ways to avoid them or needing someone to help them out: the ANZ debts, the ATO liabilities, an inability to secure the poker machines, the debt to the builder, the inability to repay family and friends, the inability to secure funding from any sources", which was not supported by the evidence and was not ultimately pressed in oral submissions.
What is, however, supported by the evidence is that the Nixons were seeking funding at around this time from a number of banks and mezzanine funders; and they either had not been successful on those applications or they had not accepted the terms on which funds had been offered to them, as the case may be in relation to the various potential lenders.

[11]

Initial discussions

It was in the above context that in around May 2012, there were discussions between one or both of the Nixons and one or both of James and Ron, about the possibility of the provision of financial assistance to the Nixons. The precise chronology of the earlier discussions was not the subject of consistent evidence (as I explain below).
Greg's account of the way in which he first came to discuss financial issues with Ron is that, at the time (i.e., in around May 2012), Ron's step-daughter (James' step-sister) was working at the hotel at the Menangle property. Greg says that she facilitated the introduction to Ron ([41], Greg's first affidavit), whom Greg had met on one or two previous occasions when Ron had been at the property as a guest at functions ([42], Greg's first affidavit). Greg's account (that the meeting with Ron was facilitated by Ron's step-daughter) is consistent with that of Ron (see [12] of Ron's affidavit affirmed 3 November 2016), though Ron also suggests that another person made a similar approach to him (see [17] of Ron's affidavit).
In contrast, in his first affidavit sworn 25 November 2015 (in support of his initial application for interlocutory relief) James deposed that it was he who was approached by Greg and Bronwyn, who asked if he would be willing to invest money into the business (see [11]). This discrepancy might perhaps have been explicable if James was here referring to the first conversation he had with the Nixons (i.e., after the Nixons had been introduced to Ron as a potential financier), consistent with Ron's evidence that it was he, Ron, who had first raised the prospect of the provision of finance with James before James met with the Nixons. However, in the witness box James did not suggest this was the explanation for the discrepancy; rather, he accepted that the evidence at [11] of his first affidavit was incorrect (see T 55.15-19) and that he was aware at the time he swore the first affidavit that it was his father (not him) who was approached by the Nixons to invest in the hotel and business (see T 58.37-T 59.19).
Leaving aside differences in recollection as to the precise order in, and dates on, which the initial discussions in early May 2012 took place, what is not disputed is that early in the course of discussions with the Browns the Nixons were introduced to Mr Lambrinos, a financial advisor and former accountant (described by Ron in his first affidavit at [24] as a business contact but by Mr Lambrinos himself as a friend, and with whom on any view of the evidence Ron had had a long acquaintance). Mr Lambrinos' evidence is that he first met Ron in 2001 and that they became friends and kept in contact over the years (see [17]-[18] of his affidavit).
Bronwyn deposed that in or about early May 2012, she and Greg met with Ron and she was introduced to Mr Lambrinos for the first time; and that at that meeting she and Greg largely talked about the financial situation of the business and the need for finance (see [43]-[44] of Bronwyn's first affidavit).
Mr Lambrinos says that Ron attended his residence on 7 May 2012 to speak with him about a potential client and spoke with him about "a guy who owns the Menangle Hotel" who was trying to obtain finance and "not having much luck", asking Mr Lambrinos if he wanted to meet him and see if he could help him out (at [21] of Mr Lambrinos' affidavit). (If this is accurate then it follows that the initial meeting between Ron and Greg in which financial assistance was discussed must have been on or before 7 May 2012; followed on 10 May 2012 by the meeting at which Mr Lambrinos was first introduced to the Nixons.)

[12]

Ron's account of the first conversation with Greg

Ron's account in his first affidavit ([18]-[19]) is that in the first conversation he had (in around mid-2012) at the Menangle property, Greg told him that he was in trouble financially; that people were putting caveats on his properties for debts he owed them; and that he was around $200,000 in debt and was about to lose everything. Ron says that Greg asked if Ron would be interested in investing in the hotel. According to Ron, he said that he did not have the motivation but that his son James might want to get involved and it might be a good opportunity for him to get started in the industry ([18] of Ron's first affidavit). Suffice it to say that at least part of what Ron says he was told by Greg in this first account of the first conversation - in particular, the reference to people putting caveats on the properties - is not able to be reconciled with the objective chronology of events. The earliest that there is a reference in the evidence to the possibility that a caveat has been lodged occurs at the end of May 2012 whereas Ron's first discussion with Greg must have taken place in early May 2012 (see [106] below).
In his reply affidavit (affirmed 7 June 2017), Ron gave a more detailed account of the conversation that he had with Greg on this occasion (see [13], reply affidavit). In that affidavit he also recalls that he telephoned Mr Lambrinos, after speaking with James about that meeting (see [17], reply affidavit).
Going back to Ron's first affidavit, there he deposed that at the first meeting he and Greg scheduled to meet at the property about 3 days later at approximately 7 pm (Ron's first affidavit at [19]). In his reply affidavit at [13], he deposes that Greg asked him to "come back tomorrow". In any event, Ron has deposed that he returned to the property the following day (see Ron's first affidavit at [21]) and met with both Greg and Bronwyn; that he told them "I am prepared to lend the $200,000 to James and he will then pass the money on to you if we reach agreement", and that Greg said the Nixons were prepared to give James a half share in the property and business in exchange for the $200,000 they needed. Ron deposed (at [21] of his first affidavit) that at that meeting there was the following conversation: Greg: Bronwyn and I have discussed this at length and we are prepared to give James a half share in the property and business in exchange for the $200,000 we need. [Ron]: I'm sure James will be happy with that. We'll need to see a solicitor to have the agreement put in writing. Greg: That is fine, but we can't wait for that to happen to get the money as we are in serious need to [sic] the money.
Ron's evidence is that he thought this was "an attractive deal" (T 267.44). He said he was very surprised at the offer of a half share (he had apparently been hoping for a quarter share) and that after the meeting he said to James "we need to move on this" (T 267.31-36).

[13]

10 May 2012

Mr Lambrinos' evidence is that Ron organised a meeting with the Nixons on 10 May 2012 at the Menangle property, which he (Mr Lambrinos) attended with Ron. In evidence there are various pages from Mr Lambrinos' electronic diary, one of which lists a meeting on 10 May 2012 "Ron with Greg" with a reference to "Horse & Jockey hotel Menangle" (CB 748).
Mr Lambrinos gave evidence that at the 10 May 2012 meeting, Greg told him about his financial situation at that time (see [23] of Mr Lambrinos' affidavit), including the debts that were owing and that they had an offer from Baccus Finance but that it was not enough money for them and they needed more. He said that Ron and Greg "entered into a discussion about financing some of the debts, to reduce the mounting pressure on Greg to repay them as soon as possible" and that Greg said: I can't wait any longer; I have to pay these bills right away. Danny [Radovic] has already threatened me and said he won't wait another day. to which Ron's response was that his son, Jimmy, could help with paying some of the debts and "get some of the pressure off". Mr Lambrinos says that Ron said "[w]e can arrange to have all of these people paid; and then you can pay us back once Dominic has refinanced the Hotel" and "[i]n return Jimmy will own 50% of the hotel same as you and Bronwyn"; and that Greg said he and Bronwyn would agree to this "if you can pay all of these people as soon as possible" (Mr Lambrinos' affidavit at [24]). Mr Lambrinos deposed that he said he had taken some notes and that he would prepare a draft heads of agreement "to summarise all of the potential possibilities discussed today" and "[y]ou can get a solicitor to draw it up formally later, after you have finalised the deal" ([24]).
In his first affidavit, Ron did not depose to a 10 May 2012 meeting. However, in his reply affidavit (at [19]) Ron referred to his first affidavit at [24]-[27], and corrected the number of meetings which had taken place. Ron corrected that evidence after having reviewed Greg's affidavit and having "phoned Dominic in order to verify dates that various meetings took place". In that reply affidavit, Ron deposes to meetings which occurred on 10 May 2012 (at the property, with himself, the Nixons and Mr Lambrinos), 22 May 2012 (at the property) and 19 June 2012 (at the offices of Mr Moloney, with himself, the Nixons, James and Mr Lambrinos) ([19]-[20], Ron's reply affidavit). (That list leaves out the 14 May 2012 meeting to which Greg has deposed - see [47] of Greg's first affidavit - and to which I will come shortly.)
Ron deposes (at [24] of his reply affidavit) that on 10 May 2012 there was a meeting with himself, Greg, Bronwyn and Mr Lambrinos at the property; and that at the meeting he said: "Greg, Bronwyn and James have come to an agreement. James is going to invest $200,000 in the business with Greg and Bronwyn and Greg and Bronwyn and going to give James a half share in the business and property". Ron deposes that Greg then gave details of the debts which were owed by the Nixons, and emphasised that the Nixons needed the money quickly, as the builder was pressing for payment; and Ron said he would talk to his lawyer to organise a formal agreement. Ron deposed that Mr Lambrinos said he would need some more information from the Nixons about the hotel operations, including its finances.

[15]

14 May 2012

Both Greg and Bronwyn give evidence of a meeting on 14 May 2012 in the parlour room at the property, attended by the Nixons, Ron, James and Mr Lambrinos (this being the first occasion on which they say they had met James) (Greg's first affidavit, [47]; Bronwyn's first affidavit, [45], which does not refer to a date, but which Bronwyn there identifies to be the first time she met James). This appears to be the meeting referred to by James at [16]-[18] of his first affidavit and; [7] of his reply affidavit (although he does not attribute a date to that meeting). Mr Lambrinos does not give evidence of a meeting on 14 May 2012; nor does Ron.
Greg's evidence (at [47] of Greg's first affidavit) was that at this meeting James said "My father said I may be able to help you"; that Mr Lambrinos asked a number of questions about the business generally and their financial needs; and that he, Greg, said: We have always been travelling just with our heads above water. Most of the money we are making we have put back in the business, expanding and purchasing equipment or by expanding the facilities in the marquees or the building extensions. At the moment, we particularly need money to finance the poker machines. Unless we make a donation to the nominated charities of $25,000 before 15 June 2012 we will lose our whole entitlement. Getting the poker machines is the main reason we are here. … We have been approved for an entitlement to 10 poker machines. If we can purchase these 10 we can still apply for up to 30 machines but we want to initially acquire at least a block.
Greg says that he said they needed over a million dollars to buy the machines and that Bronwyn outlined their debts and wrote down some figures on a piece of paper; and that Mr Lambrinos said that they were going to use "Jimmy's P&L's" and that "with Ron's backing we can arrange those funds for you". Relevantly, apart from the debts, he says Bronwyn said that they would need at least $1.3 million to purchase the 10 machines. He also says that Ron said he wanted to look after his son's interest and set him up for the future and that he, Greg, said: Ok well if you are going to pay all these debts and put $1.3 million into the business then we are happy to give you half.
Bronwyn's evidence is broadly consistent with that of Greg (see [45]-[47]) although she says she was not present during the whole of the meeting. Bronwyn has deposed that at that meeting Mr Lambrinos said that Ron had some money and would put money in the business but wanted something in return to get his money back; and Ron said he had money to draw on and would like to set James up ([45], Bronwyn's first affidavit). Bronwyn said she wrote on a piece of paper the amounts they needed (see CB 665). She recalled that Mr Lambrinos drew a diagram of a proposed trust structure if James took a half share in the business and property. She said that this was the first time she recalls learning that James might obtain a half share in the business and property ([47], Bronwyn's first affidavit).
As already noted, Ron does not depose to a meeting on 14 May 2012 but in any event Ron denies that Greg said to him the words extracted at [75] above and says (at [25] of Ron's reply affidavit) that he "would not have agreed to fund his hotel with this amount of money". (See also his evidence in the witness box at T 307.50). Ron was adamant that this was not a loan (T 306); and that "it was one million percent not a loan; one million percent" - T 307.46).
Pausing here, Ron's first account of the conversation in which a half share was discussed (see [65] above) was that it was during a conversation when only he and the Nixons were present (and that after the meeting he then conveyed this to James - telling him they should move on it - and to Mr Lambrinos). Thus although Ron's evidence is not consistent with the evidence of Greg and Bronwyn as to there being a 14 May 2012 meeting with James and Mr Lambrinos at the Menangle property; their evidence is consistent with a final decision as to the making of a loan not having been made at the early meeting(s) that Ron attended.
According to James, in his second (but first main) affidavit sworn 3 November 2016, he had a conversation with his father before he first met the Nixons ([13]) about them offering a share of the hotel for $200,000 and then a conversation with his father ([15]) in which his father said the Nixons were prepared to give him a 50% share in the property and the business. He says that his first meeting with the Nixons (at which Ron was present) was "[a] few days to maybe a week" later and there was then a conversation (see [16]) to the effect: [Ron]: I'm prepared to lend the $200,000 to Jimmy so that he can enter into the agreement with you. We've spoken about what you're prepared to offer and he's happy with that if that is still the deal? Greg: Yes. Bronwyn and I have talked at length and we're prepared to give a half share in the business and the property. We really need the money quickly to pay some debts. How quickly can you get the funds? [James]: Dad and I are working on that. I'd like an agreement prepared, so we'll get back to you when we talk to our solicitor to arrange the agreements. Greg: I'm not sure we can wait for that. We need to pay the debts urgently. [James]: Well send me a list of who needs to be paid so I can make payment directly. Greg: We can go through it and give you the details.
James deposes that he, Ron and the Nixons "went through some paperwork" which the Nixons provided; they formulated a list of who he needed to pay; and it was agreed that he would pay the sums listed in Recital F to the Deed dated 21 September 2012 (i.e., the September Deed) (see [17]). Those sums did not include any amount for the Australian Tax Office debt - and hence this evidence is inconsistent with the Heads of Agreement signed in May 2012 in which provision was made for payment of this debt (see [94]ff below). Coupled with the lack of reference in James' first two affidavits to the Heads of Agreement, and the admitted error in relation to the months of the year in which the initial payments were made - see [314] below - this strongly suggests that in the preparation of this affidavit James was here engaged in a process of reconstruction based on what appeared in the September Deed without reference to what had earlier been agreed in the Heads of Agreement. In those circumstances I cannot accept that the sums referred to in this paragraph of his November 2016 affidavit were based on his memory alone rather than by reference to the September Deed - cf the tenor of his evidence at T 102.5-8).
As noted, James' affidavit of 3 November 2016 makes no mention of the Heads of Agreement document, nor does he mention any meeting with Mr Lambrinos before the moneys were advanced by him. Indeed, he deposes to the moneys having been paid in September or October 2016 [sic] (at [20]), after $200,000 was transferred from his father to his account in September 2016 [sic]. The references to "2016" rather than "2012" are obviously in error and James said as much in the witness box (T 97.50; 98.16). I draw nothing from this. However, the error in the months in or around which the moneys were paid is less readily explained - and the making of the very same error by both Ron and James strongly suggests that there was discussion between them as to the timing of the relevant events when their affidavits were being prepared (a matter I refer to in due course at [319] below, when addressing the witnesses' credibility).
In his affidavit of 3 November 2016, Ron deposed that he had borrowed $200,000 from ANZ as he was intending on renovating his house; that it took approximately a week for the funds to be released to him; that they were released to him in or around September or October 2012; and that he transferred that amount shortly after to James' bank account (see [28]-[30], Ron's first affidavit).
By final submissions at the hearing, it was made clear by Counsel appearing for James (T 534.10ff) that it was no part of James' case that moneys had been paid to the Nixons in or after September 2012 (and, indeed, James accepted in the witness box that no moneys were paid by either of the Browns after the end of June 2012). Hence it is no part of James' case that the payment of these moneys amounted to consideration for the provisions in the September Deed. The error by both Ron and James in the months in which they first deposed that the payments had been made - around September/October - as opposed to when it is clear that they were in fact made - in May and then in June - is a matter to which the Nixons point when making submissions on the credibility of both Ron and James in these proceedings.
It was apparent from Ron's evidence in the witness box that he considered it a good deal to acquire a half interest in the property and business for around $200,000 (see T 267.29; T 335.45-336.6), although as earlier noted he was at pains to explain that the equity in the property was not as high at that stage and hence his argument that the acquisition represented a return of around $150,000 on his $200,000 investment - see T 267.44) and that he saw this as a good opportunity to set his son, James, up in the business (see, for example, T 286.30 as to his willingness to "back" his son). James also gave evidence to the effect that his father saw it as a good opportunity, as noted above (see [54] above).
Ron regarded the provision of any further finance for the business as something that would happen once James was a half owner and that it would not involve a personal contribution by James (T 286.10) and indeed his evidence (spoken with the ring of truth) was that "We were home and hosed in our minds once we paid all the debts" (T 315.32). Similarly, James considered that any obligation in relation to further financing would arise only once he was a half share owner (T 70.14) and even then only if the hotel business could not procure its own finance - see T 72.14: Q. And that you were supposed to arrange having put extra security in either from your own resources or your associates under 3G [of the Heads of Agreement], do you agree with that? A. My recollection was if the pub couldn't, on it's [sic] own merit - once I was a shareholder - that I'll try and use means of my own.

[17]

22 May 2012 meeting

It is not disputed that there was a meeting on 22 May 2012, attended by the Nixons, Ron, James and Mr Lambrinos, at which a document entitled "Heads of Agreement" was provided to the Nixons. Mr Lambrinos had drafted the Heads of Agreement. I set out the contents of that document in due course - see [94]ff below. There is nothing to suggest that the Nixons saw that document before the meeting (and the Nixons say they did not: Greg's first affidavit at [55]; Bronwyn's first affidavit at [48]); nor is there any evidence that they sought legal or accounting advice before they signed that document.
Bronwyn deposed that Mr Lambrinos said that he had put the Heads of Agreement together and that "Ron won't hand over any money until this is signed" ([48]). She recalls that Mr Lambrinos read through the Heads of Agreement line by line, stopping at certain points to provide additional explanation; and she has deposed that at cl 3(g) he stopped and wrote on a piece of paper the assets held personally by James (see CB 666) ([49], Bronwyn's first affidavit). Greg similarly deposed (at [55] of his first affidavit) that Mr Lambrinos pointed out aspects of the document as they read through it. No one suggests that James took a leading role in the discussion as to the terms of the proposed Heads of Agreement and it is telling in my opinion that James even referred to himself in the witness box as having been under his father's instructions (see above at [54]).
The Nixons say that there was discussion about the order of payment of debts and that Mr Lambrinos advised on the possible use of a unit trust structure.
There are differing recollections between the Browns and Mr Lambrinos, on the one hand, and the Nixons, on the other, as to whether it was proposed at that meeting that more formal documentation would be required. Greg says he did not know whether further documentation was required until they received an email from Mr Lambrinos on 31 May 2012 and that he thought the reference to "more formal documentation" was a reference to legal documents to implement the steps envisaged by the Heads of Agreement. Each of Ron, James and Mr Lambrinos states that they discussed this at the meeting on 22 May 2012.
Greg deposes (at [56] of his first affidavit) that during the course of the 22 May 2012 meeting, there was a conversation to the following effect: [Lambrinos]: I've done a Heads of Agreement that will formalise the terms of your agreement. [Greg] This is like everything we need. Bronwyn: This is great. So, once we sign this when will we receive the initial payments? Because it is really important that we get this money soon as we need to pay ANZ in the next few days, not to mention the money we need to pay to the charities otherwise we will lose the poker machine entitlements. Ron: We will get it to you in time.
Ron denies that the conversation set out at [56] of Greg's first affidavit (extracted at [91] above) occurred. He says that at the meeting there was a conversation in which Mr Lambrinos said "This document will give Ron and James peace of mind so they will release the funds to you. In the meantime, we will arrange for Patrick [Moloney] to draw up a final agreement"; and that he told Mr Lambrinos to show Mr Moloney the Heads of Agreement "so he knows what to do when preparing the agreement" ([31], Ron's reply affidavit). Ron's evidence was that he had never heard of a heads of agreement before this (T 271.30ff).
The Nixons concede that, in circumstances where the Browns were about to expend up to about $200,000 in resolving their short-term debts, further documentation was likely to be in the Browns' contemplation, but argue that, given the later email of 31 May 2012 in which Mr Lambrinos advised the Nixons that further documentation was required, nothing turns on the dispute as to whether this was discussed at the meeting itself.

[18]

Heads of Agreement dated 22 May 2012

The Heads of Agreement (CB 343) was signed on 22 May 2012 by James and the Nixons (the latter in both their personal capacities and on behalf of Tavern Operator). The parties to the signed Heads of Agreement were identified as the Nixons "and their associated entities" (together defined as "Menangle House"), on the one hand, and James "and his authorised nominees", on the other hand (cl 1). Clause 2, headed "[a]pplication" contained statements that the Heads of Agreement related "to the forwarding of monies by JIB [James] to Menangle House" (cl 2(a)) and "to the transfer of interests by Menangle House to JIB" (cl 2(b)), in each case as set out below.
Clause 3 then set out a list of undertakings by James, as follows: a) JIB agrees to pay Danny Radovic (the Builder) a sum of $150,000 on the execution of this Heads of Agreement. b) JIB agrees to pay Danny Radovic the balance of monies owed on the refinance of the property (discussed further hereunder). c) JIB agrees to pay the ANZ bank an amount of $17,000 (TBC) to extinguish the temporary overdraft provided by the bank on the execution of this Heads of Agreement. d) JIB agrees to pay the Australian Taxation Office outstanding taxes of $31,000 (TBC) on execution of this Heads of Agreement. e) JIB agrees to pay $25,000 as a charity contribution being a condition for the new poker machine licenses [sic] before the 15th of June 2012. f) JIB agrees to pay amounts owing to family and friends of $42,000 on the refinance of the property (discussed further hereunder). g) JIB agrees to arrange finance for the refinance of the hotel on the basis of the net assets available to him personally and through associated entities and guarantors. h) The first tranche of finance will be procured on the basis of $500,000 refinance to ANZ, plus a further $350,000 to repay all outstanding loans to JIB, family and friends and the builder. i) The second tranche of finance will be procured on the basis of $200,000 for poker machine entitlements (or thereabouts). j) The third tranche of finance will be procured on the basis of $500,000 to acquire the balance of 5 poker machines (or thereabouts). k) The final tranche of finance will be procured on the basis of $600,000 to acquire the final balance of 5 poker machines (or thereabouts).
Clause 4 set out the undertakings of the Nixon interests as follows: a) Menangle House agrees to appoint JIB as an equal shareholder and co-director of the Tavern operator Pty Limited. b) Menangle House agrees that it will amend the Trust Deed to include the interests of JIB to participate as a beneficiary of the Tallis Trading Trust. c) The property owned by Bronwyn Nixon personally will be transferred in equal portion to JIB or his nominee entity. d) Stamp Duty on the transfer will be paid through the availability of funds from point 3h above. e) The transfer will be conducted after properly considering the effects of Capital Gains Tax.
I consider in due course the proper construction to be placed on this document (see [359]-[369] below). Suffice it to note that for James it is emphasised that the only temporal condition on the transfer occurring (see cl 4(e)) was that it be after property consideration of the effects of capital gains tax (see T 548).

[21]

Claim by Global Capital and threatened caveat over the property

On 27 May 2012, Mr Cooper sent an email to the Nixons attaching "past correspondence regarding the payment of a fee for the services of Global Capital" (that being the 19 April 2012 letter demanding payment of the cancellation fee under the signed Mandate to Act - CB 347). Mr Cooper stated in the email (CB 346) that: This was put on hold when you indicated that you would proceed with the loan. As you have now decided (again) to not proceed with the loan, the demand is once again made for the payment of the fee in terms of the signed mandate, a copy of which is also attached. Would you please attend to payment as soon as practicable, to avoid any further legal action and consequences attached thereto.
On 30 May 2012, Greg sent an email to Mr Lambrinos, stating "Subject previous lenders. I Don't know if you have some time tomorrow for advise [sic] on the direction to go" (see CB 349).
Mr Lambrinos responded to that email on 31 May 2012 at around 6.58/6.59am (see CB 350; 752) in an email to the Nixons, copied to an email address seemingly connected with the Brown interests (since it corresponds to the name of the corporate entity at one stage suggested to be a party to the September Deed in place of James), and most likely James, since there was evidence that Ron did not have an email address. Mr Lambrinos thanked the Nixons "for [their] advise [sic] and suggestion" (it is not clear to what advice/suggestion Mr Lambrinos was there referring) and stated that at the present time he was working on: The Solicitor - Patrick Moloney in formulating a more formal document between us which reflects the heads of agreement we signed. - Patrick Moloney in legalising the steps in that Heads of Agreement[.]
In that email, Mr Lambrinos also set out what was to be done the following week, namely: lodgement of a new application for finance "with our recommended lenders for the higher amount"; speaking to ANZ "about our arrangement with a view that they will come to the party"; and lodgement of an application for poker machine licence finance. Mr Lambrinos indicated that he would be happy to meet with the Nixons and James the following week (though his work life would be distracted as "we are moving into our new office next week") and suggested a meeting the following Tuesday morning (i.e., 5 June 2012) at his new Pyrmont office (CB 350; 752).
On 31 May 2012, at 10.09am, Mr Cooper again sent Greg an email in relation to the facilitation (or cancellation) fee demanded by Global Capital (CB 352), this time attaching "the original invoice issued at the time settlement of your loan was anticipated" and stating that the amount remained payable on demand, going on to state: Please attend to payment expeditiously to avoid any further legal action being undertaken. In the interim we advise that a caveat has been lodged against your property to protect our interests. This appears to be the first reference (at least in the documents I have seen) to the lodgement of a caveat over the Menangle property (cf the account given by Ron of the first conversation in which he says Greg referred to caveats being lodged on the property - see [63] above); and it does not appear that a caveat had actually been lodged at that stage - it certainly had not been registered on the title by then (see [108] below).
On the same day, by email sent at 12.14pm, Greg forwarded to Mr Lambrinos the 27 May 2012 communication from Mr Cooper and attached documents, referring to this as "info being sent to me from previous lenders" (CB 353). At 12.15pm (CB 356) Greg forwarded to Mr Lambrinos the 31 May 2012 email from Mr Cooper.
There is in evidence (CB 359) a copy of a caveat by Global Capital (dealing number AH19230) claiming an interest in the Menangle property in the following terms "Global Capital Corporation Pty Ltd is lodging a Caveat against unpaid fees" by virtue of the instrument identified as the Mandate to Act dated 15 December 2011 and by virtue of the following fact "[b]y written consent of the Registered Proprietor". The statutory declaration subscribed by the managing director of Global Capital is dated 20 May 2012 and the caveat is certified by a Justice of the Peace on 30 May 2012. It appears to have been stamped for duty on 25 June 2012, with a "substitute dealing" imprint dated 26 June 2012. It appears only to have been registered on the title on 2 July 2012 (see CB 363) (there being no prior caveat recorded on the title). The existence of the caveat was the subject of a notification to Bronwyn by the Registrar-General by letter dated 3 July 2012 (see CB 358). Thus, as at the middle of May 2012, it seems to have been incorrect for Mr Cooper to assert that the caveat had been lodged and there is no evidence of any threat to lodge a caveat by anyone before this.
Pausing here, the Nixons say that the "concern" in this regard was as to the impact of the caveat on whether the refinancing obligations under the Heads of Agreement were to be capable of performance (and the Brown interests point to this as supporting their contention that James was not personally to be the borrower - see T 548.6-30). Mr Lambrinos, on the other hand, was apparently concerned that a caveat might affect "our transfer" - see his later email of 15 June 2012 to Mr Moloney - Exhibit 1, referred to at [144] below.
On 1 June 2012, Mr Lambrinos sent an email to Mr Cooper (copied to the Nixons) in relation to the caveat (CB 362), in which he stated that: I have been passed your name from the 'Nixons' as one of my clients [which must in context be a reference to James] is in the process of acquiring a half interest in the hotel as well as funding some of their more immediate creditor responsibilities. [my emphasis] I have read you [sic] engagement and believe that we may be better suited to meet and come to an arrangement which will avoid the trouble of managing this issue through the courts. I am in the process of procuring finance for my client (as well as the Nixons) however it may well be that you [sic] finance source could still be used albeit with some minor changes. [my emphasis] I note that my client [in context this appears to be a reference to James but seems more likely to be a reference to Ron] has however engaged his solicitor to assist the Nixons in the removal of the caveat on the basis that recent court precedents no longer empowers [sic] brokers to place caveats for unpaid commissions (this has also been a problem for my firm).

[22]

Preparation of draft deed

As noted above, Mr Moloney first received instructions to draft a "more formal agreement reflecting the Heads of Agreement" on about 22 May 2012. There is evidence that, at least from 1 June 2012, Mr Lambrinos was pressing Mr Moloney for production of that draft.
On 1 June 2012 Mr Moloney received a message from someone at his office asking that he telephone Mr Lambrinos (see CB 811). Mr Moloney has deposed to a telephone conversation with Mr Lambrinos that day in which Mr Lambrinos asked for an "update" as to "how [he was] traveling [sic] preparing a formal agreement between the parties relating to this transaction" ([10]). Mr Moloney's evidence is that he had not yet had an opportunity to commence the documents and that he asked whether he should be liaising with Mr Lambrinos or with James. Mr Moloney says that Mr Lambrinos said: "Patrick it is fine to get any instructions from me. I am very familiar with the transaction. I am part of the negotiations and as such I am right across the detail" ([10]). Mr Moloney said that he would need some confirmation "as we travel forward" from James; and in the meantime sought details as to whether the transaction was to be in James' own name or in a corporate entity. He says that Mr Lambrinos told him that he was in the process of setting up a vehicle for James to undertake the transaction and that it was likely to be a trust structure with a corporate trustee ([10]) (something which supports the Nixons' account that Mr Lambrinos had advised at the meeting of 22 May 2012 as to the possible use of a unit trust structure - see [89] above).
By email on 4 June 2012, Mr Lambrinos advised Mr Moloney that "Jim hasn't set up a company as yet but will do so this week, which will be his investment vehicle in both the land and the pub", providing details in relation to the property and the business, and stating that he would call Mr Moloney Wednesday "to see how it's going" (CB 755; 812). Mr Lambrinos' diary has an entry for "Menangle House" on Wednesday 5 June 2012, with no further detail (CB 756).
On 6 June 2012, by an internal email within the firm, Mr Moloney was requested to call Mr Lambrinos and was advised that Mr Lambrinos wanted to know how the contract for the Browns was going and that Mr Lambrinos was meeting them that day (i.e., 6 June 2012) at 10.30 (CB 814).
It appears from the contemporaneous documents that at some time on or around 7 June 2012 (perhaps at the meeting that had apparently been scheduled on 6 June 2012), Ron indicated to Mr Lambrinos that he was prepared to act as guarantor for any further financing (see T 300.32-301.1). That is certainly what Mr Lambrinos seems to have understood to be the case. That conclusion can be drawn from an exchange of emails between Mr Cooper and Mr Lambrinos on 7 June 2012 (Exhibits 4 and 5). Mr Cooper, referring to "our discussion yesterday" emailed Mr Lambrinos to ask for information "so that I can have a discussion with Global prior to us catching up". In that email (Exhibit 4) he stated: • I think you calculated that they need a further $350k to install pokies and do some further renovations. Is this correct? • I need the financial information of the father, ie A&L details plus P & L to support the position of increased borrowings • Confirm the father is guarantor. [my emphasis] • Details of the company/trust that will be purchasing an interest in the hotel. • I think you said 15 poker machines will be installed. Please confirm. • Confirm one year interest only.
Mr Lambrinos' response to those questions by email on 10 June 2012 (the response in each case appearing under the bulleted item as set out above), to the extent that it appears from Exhibit 5 which is obviously incomplete, was: • I thought another $300,000 would do it, however in hindsight I think it may be wise to borrow and prepay the 1 year interest up front to avoid any possibility of any arguments. This would take the facility to $1.45m • This [the financial information of the father] will be provided in due course after we can get some feedback from the funder • Confirmed [i.e., that the father is guarantor] [my emphasis] • There will be a holding entity which will be one director and shareholder company. I am awaiting for his solicitor to provide these details. This can be arranged with in a day if need to. • Initially there will only be 5 poker machines with another 5 in 12 months. The acquisition of the second 5 poker machines is not set in stone and we can buy them with our own working capital if the market is good.
Ron accepted in the witness box that he was prepared to act as guarantor (T 309.47; 310.50) though he could not recall having ever provided details of his assets and liabilities to Mr Lambrinos; and Mr Lambrinos accepted in the witness box that he was waiting for the funder's position to be known before provision of such information. Mr Lambrinos also agreed (T 171.26) that he would not have made a statement confirming Ron would be guarantor unless he had those instructions from Ron.
On 10 June 2012, Mr Lambrinos sent Mr Moloney an email, copied to what seems to be James' email address, (CB 815) stating: Further to providing you wit [sic] the original Heads of Agreement and the additional information you requested, I have been asked to try to get a draft contract for Jim Brown's acquisition for 50% of the Menangle Hotel - I have left a several message [sic] for you last week. Please let me know if you can help in this regard as Jim has complied with the payment of his obligations and feels that the executed Heads of Agreement may not be sufficient and therefore without an executed contract maybe hanging in the wind. Please call me at your earliest opportunity to discuss the above.
I interpose to note that, by that stage, the only payment James had in fact made was $17,000 to ANZ. Hence the proposition that by then he had complied with "payment of his obligations" appears to be somewhat of an overstatement. Nevertheless, James' evidence in the witness box made clear that Ron was "stressed" and "nervous" at the relevant times at not having a signed document see, e.g. T 80.4; T 83.41).

[23]

Payment to the two charities on 14 June 2012

On 14 June 2012, Ron gave Greg two $12,500 cheques payable to the two nominated charities - see the receipts issued in favour of the Menangle House Horse & Jockey Inn, each dated 14 June 2012 (CB 365-366). See also the letter from LAS Lawyers (Mr Dion Manca of which firm having been retained by the Nixons to assist in the process of acquiring the poker machine entitlements) to what was then the Independent Liquor and Gaming Authority (at CB 846), referring to the payments being to ensure the preservation of the poker machine entitlements.
Ron also deposes to a conversation with the Nixons around the time that the payment to the charities was made in which he says that he referred to James as now being a part owner and said that James would need to start paying back to Ron the $200,000 that he had borrowed from him, so that James would be needing to receive payments from the business to cover this ([34], Ron's first affidavit). It may be that Ron is here referring to the conversation which the Nixons put as occurring in late June 2012 (see [158]ff below), at about the time that payment was made to meet debts to the builder, in which they say Ron demanded the repayment of the moneys that James had advanced, plus interest.
At [54] of her first affidavit, Bronwyn deposes to a conversation with Ron on 14 June 2012 when he came to the office and handed two cheques for the charities. She says that she told him that Mr Cooper had put a caveat on the property and that Ron advised her to "use my solicitor", Mr Moloney, who would "sort it out". She says that Ron also said that "Before I give you any further money I will need to get security otherwise my accountant will be unhappy with me" ([54]). (That accords with Ron's evidence in the witness box, namely that his "goal from the beginning" was to obtain security for the $200,000 (see T 319), by which he seems to have meant a binding document to secure to James a half interest in the property and business.)

[24]

Draft versions of the deed

Between June and August 2012, Mr Moloney prepared a number of drafts of a deed in relation to the arrangements between the Nixons and, variously, James or an entity to be controlled by James. The Nixons' evidence is that they were not provided with any of the draft deeds prepared by Mr Moloney over the period from June to September 2012. (Hence Counsel for James argues that changes to the drafts leading up to the September Deed cannot be any reason for the Nixons to have signed the document on 21 September 2012.)
For James it is argued (and I accept) that those drafts are not relevant to the construction of the final signed version of the deed dated 21 September 2012. The drafts were not, however, tendered for that purpose. Rather, the Nixons rely on the course of preparation of the various draft deeds as being relevant to the determination of what occurred on 21 September 2012 when the September Deed was signed (and as going to the credit or reliability of the accounts given by the Brown witnesses in relation to the September meeting - see from [216] below). They also rely on the various iterations of the drafts in support of their assertion that the final version of the deed was not prepared by Mr Moloney.
What is apparent from the communications in evidence from Mr Lambrinos to Mr Moloney in that period is that there was some pressure being placed on Mr Moloney by Mr Lambrinos (reportedly at the behest of Ron, though Ron himself denied being frustrated at the delay - see T 289.60; cf James' own evidence at T 80.4; T 83.41 and elsewhere that his father was stressed at the delay in the documentation being finalised) for Mr Moloney to attend to the preparation of the deed (consistent with a concern by Ron to have the formal deed completed as a matter of urgency). Ron himself deposed that he wanted a formal document drawn up by Mr Moloney (see [30] of his reply affidavit; T 296.30).
Ron's evidence in that regard is that he left the task of dealing with the draft documents to Mr Lambrinos to sort out (T 296.44) and he agreed "pretty much a hundred percent" that he took no interest in the drafts of the deed and that all he wanted was the final agreement which recorded what had been agreed with the Nixons (T 296.35).
At T 295.26, there was the following exchange: Q. You were concerned that without formal documentation, if something went wrong you may not end up with getting that money back, weren't you? A. I was concerned about getting the money back but I was extra-concerned that there wasn't anything in writing about Jimmy getting half-share of it. Q. Yes. But all through June and July, Jimmy was only going to get a half‑share of it if he not only brought that sum of money to the table, the roughly $200,000, but also other financial accommodation-- A. Mm-hmm. Q. --to the table to get his half-share. Do you agree? A. Agree. Q. Did you ever see a copy of that draft of the deed, do you think? A. No, I can't recall seeing that one. Q. If Mr Lambrinos was given a copy of it, right, you would have expected him to speak to you about it and see whether you agreed with it. Do you agree? A. As stupid as it sounds, not necessarily. Q. Really? A Yeah, Dominic takes it upon himself to, you know, put things, you know, draw things up and put things in writing and, yeah, as long as I'm not signing that's when I'll be reading it Q. I'm sorry, I don't understand that last bit. A. I would read something like this and if I was going to sign it - if this was the official document, then I would read it and sign it. If he said to me, "I've got a draft deed," I would be like, "Okay." Well, at that time, like I say, as silly as sounds, I would be like, "When do we sign it?" Q. Is really what you're saying that you would rely on Mr Lambrinos to make changes which may or may not be with your authority to a document like this? A. While he's in draft mode, yeah. [my emphasis] Q. You see, Mr Brown, just tell her Honour how you think you were going to get to the final draft of a document without your input? A. My understanding of it from the get‑go was that we would get a formal agreement signed - prepared by Patrick Moloney, and the lead up to it I left to Dominic and Patrick Moloney.
If that evidence is to be believed, Ron was prepared to accept whatever Mr Lambrinos told him was the final document.
The various drafts of the September Deed that are in evidence are as follows: June 2012 draft (CB 824); 3 July 2012 draft (CB 837); August 2012 draft (Exhibit 8).
A copy of the September Deed dated 21 September 2012 but bearing only the signatures of the Nixons (and post-it notes) is at CB 670. Copies of the document signed by the Nixons and James (and purportedly witnessed by Lana) are at CB 374; 928. The original signed September Deed bearing Lana's signature as witness is Exhibit F. Other than the addition of Lana's signature purportedly as witness and the absence of the post-it notes, the documents at CB 670, 374 and 928 are identical - i.e., the typed content of those deeds is the same. The content of those documents does, however, differ in significant respects from the earlier drafts.
It is relevant to consider in context the various iterations of those deeds.

[25]

June 2012 draft (CB 824)

As noted above, on 10 June 2012 (a Sunday), Mr Lambrinos had sent an email to Mr Moloney asking him to call him at the earliest opportunity.
The first draft deed was prepared by Mr Moloney and forwarded (in Word format) to Mr Lambrinos on 15 June 2012 under cover of an email stating "Please see attached draft deed as discussed" (Exhibit 2). (It appears that this email was re-sent - and there is at least one version of the email in which it appears that the attachment is a PDF version of the document - see CB 758.) The copy draft that was sent to Mr Lambrinos at that time appears at CB 824 (see Mr Moloney's affidavit at [14]). (The significance of the draft being forwarded in Word format is said to be that it would then have been capable of being edited by Mr Lambrinos without Mr Moloney's assistance: see defendants' written submissions at [74].)
The draft deed bore the words "made on the …. day of June, 2012" (presumably in contemplation that it would be executed in June) and contained various requests for information such as for advice as to the name of the "Brown Company" which was to be a party to the deed.
Recitals A-E in this first draft deed are the same as those appearing in the final signed version of the document (see CB 378) to which I refer in due course (see [212]ff below).
Relevantly, Recital F in this (the first) draft differed from the final version. It commenced "The Brown Company has paid" (whereas the final version contains the words "Brown has caused to be paid"). Recital F(a) named "Danny Radovic [please advise correct identity of builder]" (which was changed by the time of the final version to R.E. Property Group Pty Ltd (see also cl 1).
Recital F and cl 1 in this first draft included reference (at (c)) to a payment of $31,000 to the "Australiana [sic] Taxation Office" (which amount it is conceded was not ever paid by James and which is not included in the final version). At Recital F (d) and cl 1(d) in this version there is a request "please advise identity of charity". In the final version, references to "Brown" replace references to "the Brown Company".
The differences between this first draft and the later versions obviously reflect the incompleteness of the instructions Mr Moloney had at that stage and the mere fact that there were later changes to those instructions as the drafting of the deed progressed is unremarkable. However, it is of some significance (as noted earlier) that James' affidavit of 3 November 2016 made no reference to the agreement to pay the ATO debt, which is recorded both in the Heads of Agreement and which appears in the first version of the draft deed.
More significantly, Recital G in the first draft reads as follows: G. Each of Gregory Nixon, Bronwyn Tallis and the Tallis Trading Trust have requested the Brown Company to procure certain financial accommodations and loans to assist in the refinance of the ANZ Loan and Mortgage and the operation of the Hotel and Function Business. whereas the final version of the deed provided in Recital G that: G. Each of Gregory Nixon, Bronwyn Tallis and the Tallis Trading Trust agree and acknowledge that a one-half interest and share in Menangle House and the Hotel & Function Business represents a fair and reasonable consideration for the amounts paid by Brown pursuant to the terms of this Deed.
After cl 1 (Acknowledgement of Payments), cl 2 of this first draft of the deed was headed "Further Payments" (a clause wholly missing from the final version) and provided as follows: 2. By [please advise date] the Brown Company shall: (a) negotiate with Danny Radovic [please advise correct entity] to ascertain the balance owing with respect to the provision of building and constructions works at Menangle House; (b) pay Danny Radovic [please advise correct entity] any amount that is ascertained to be owing in respect of sub-paragraph (a) above; and (c) pay to the following investors or creditors amounts invested in respect of Menangle House and/or the Hotel and Function Business: (i) [please advise identity of family and friends and amounts owed]. (ii) [this was left blank in the draft deed]
Similarly, the first draft included cll 3 and 4, under the heading "Funding", which were wholly missing from the final version, as follows: 3. By [please advise date] the Brown Company shall procure the following financial accommodations or loans from a bank, financial institution or other private lender: (a) sufficient funds to repay the ANZ Loan and Mortgage; and (b) sufficient funds to repay the Brown Company all amounts advanced at the request of Gregory Nixon, Bronwyn Tallis and the Tallis Trading Trust as identified in clause 1 above and any other monies advanced pursuant to the terms of this Deed. 4. The Brown Company shall secure the following further financial approvals and/or financial accommodations from a bank, financial institution or private lender: (a) By [please advise date] the sum of $200,000.00 to be utilised by [please advise entity] to purchase gaming machine entitlements; (b) By [please advise date] the sum of $500,000.00 to be utilised by [please advise entity] to purchase further gaming machine entitlements; (a) By [please advise date] the sum of $600,000.00 to be utilised by [please advise entity] to purchase further gaming machine entitlements.
In this first draft of the deed, the obligations in relation to the transfer of interests in the Menangle property and the hotel and function business (cl 5) were to arise "[u]pon compliance by the Brown Company of [sic] its obligations arising to [please advise which obligations]" each of the Nixon interests should complete certain steps, including the transfer of a one-half share in the property. (In the final version, cl 2, the obligation was to arise "upon execution of this Deed".) Moreover, the obligations themselves were worded differently in some respect (and are more extensive in the final version).
There is no material difference between the subsequent provisions of this draft deed and the final version.

[29]

19 June 2012

There was a meeting on 19 June 2012 at about 11am at Mr Moloney's offices (see Mr Moloney's affidavit at [15]). In attendance at that meeting with Mr Moloney were Mr Lambrinos, Ron, James and the Nixons. Ron agrees that a meeting occurred on 19 June 2012 at Mr Moloney's offices attended by the Nixons, James, Mr Lambrinos and himself ([37], Ron's reply affidavit).
Mr Moloney could not recall who arranged that meeting. Mr Lambrinos sent an email to Bronwyn on 17 June 2012 confirming details of Mr Moloney's office (which suggests that Mr Lambrinos was involved in arranging the meeting) but does not appear to have attached the draft deed to that email (CB 759). Mr Lambrinos' electronic diary has an entry for that meeting (CB 760).
The Nixons say that there were two basic topics of conversation at this meeting: the draft deed and the issue about the caveat. As to the former, the Nixons say that the draft deed was not provided to them at the meeting on 19 June 2012 and that that there was no discussion at that meeting that in exchange for the approximate sum of $200,000 that James would obtain half the Menangle property and business. As to the latter, Mr Moloney denies that discussions took place about a caveat on the title at that meeting (see [29]). He says that any conversations about a caveat took place much later (in around December 2012).
Mr Moloney's recollection of the discussions that took place at that meeting includes that he referred to "a deed with [sic] evidences the agreement between you and Jim Brown" and that he said to the Nixons "I have prepared a draft of that deed although I am not sure whether that has been circulated to you at this time". He does not say that he provided a copy of the then draft deed to the Nixons at that time. He says he sought information from the Nixons and that there was a discussion about information in relation to various donations to charity ([18]-[19], Mr Moloney's affidavit).
Mr Moloney could not recall the precise terms of the discussions in which he says information was supplied to him by the Nixons. He says that he advised the Nixons that: … Because of the nature of the transaction and that it involves a transfer it will be necessary for you to obtain your own legal advice. I need to make it clear that I am acting on behalf of Jim and/or his company. I cannot act for both parties. ([18])
Neither Greg nor Bronwyn recalls any such advice (see [61] of Greg's reply affidavit; [41] of Bronwyn's reply affidavit).
Mr Moloney also recalls that he said "I know that Jim is anxious to have this deed finalised"; and said that he was "receiving pressure from my end to have this completed" (see [18] of Mr Moloney's affidavit).
Bronwyn says that at that meeting Mr Lambrinos asked Mr Moloney if he could help get rid of the caveat that had been placed on the property; and Mr Lambrinos also told Mr Moloney that they had to "work out how the Browns coming on board is going to be structured" ([58], Bronwyn's first affidavit). Bronwyn deposed that, although the structure of the business relationship following on from the Heads of Agreement was "briefly touched on", she did not recall a discussion about drawing up a more formal document than the Heads of Agreement, and says that nothing was said about any kind of security for the payments that had already been made pursuant to the Heads of Agreement ([59]).

[31]

Payment for the builder/demand by Ron for repayment of the "loan"

The Nixons say that in late June 2012, there was a meeting with Ron in the parlour room at the Menangle property. Greg has deposed (at [74], Greg's first affidavit) that Ron said that he needed to organise a cheque for the builder and asked who it should be made out to; and that Bronwyn said it should be made out to RE Property Group, to which Ron responded that he would get a bank cheque organised and drop it in in the next few days.
Greg says that towards the end of the meeting Ron said that he would be in each week "to collect my $1,000"; that he, Greg, asked him what he meant; and that Ron said "interest on the money" and that "I need something for my money invested"; to which Bronwyn said that was ridiculous and "That is more than 20% interest. We can't pay that. We gave you half the property. We have an agreement" ([74]). He says that Ron became visibly agitated and began to leave the room and that, when he and Bronwyn followed him out to his car, he said "Do you want my money or not?"
Bronwyn deposes that in late June or early July she was in the parlour room with Greg and Ron and there was a conversation in which Ron said: "You and Greg go about running your business. You will only see me at the end of each week to collect my $1000". She says that Greg said "What is that for? You are already getting enough" and Ron responded "My interest" and she said words to the effect "That's crazy. That is more than 20% interest and much more than we are paying at the moment. The business does not have that money available. We can't pay it". She also deposes that Ron started walking to the door to his car out front and yelled at them "Do you want my money or not" ([62], Bronwyn's first affidavit).
Greg then deposes to a conversation on around 30 June 2012 when he says Ron arrived at the property and gave him the cheque for $150,000 made out to the builder. He says that they had a conversation as to what the interest was about and why; and that Ron said that he had to borrow the money from elsewhere and had to pay someone else interest "so I need to get something". Greg says that he became concerned that Ron and James might not advance any further moneys under the Heads of Agreement; and that, after a discussion, he agreed to pay $1,650 per month (see [75], Greg's first affidavit).
Bronwyn says she was not present at that conversation and that she only realised that money was being paid to Ron when she later saw a cheque butt for the payment around mid-August 2012 ([63], Bronwyn's first affidavit). She says that Greg said to her that it was just interest and "We will sort it out later. Just let's keep everybody happy. We've got to go forward we can't go backyards [sic]. We will lose the poker machines" ([63]).
It is not disputed that, by 9 February 2015, the Nixons had made 35 instalment payments totalling somewhere around $219,453.
Ron deposes in his first affidavit to a conversation with Greg at the property in which Greg said that they were struggling with the payment of $1,000 per week (see at [49]). He says it was agreed that the payments be $1,650 per month. He also deposes to a conversation ([52], Ron's first affidavit) with Greg in which he says that Greg said, in response to Ron's question as to how the Nixons were going to use subsequent borrowings from the bank, words to the effect: We want to talk to James about the money he put into the business. We still need to pay him $160,000. Would you be happy to accept $100,000 from this loan? We really need the rest of the money now to buy the machines.
At [52] of his reply affidavit, Ron denies that he and Greg ever had any conversations regarding interest.
The Nixons argue that there is a coincidence of timing between Ron's demand for the repayment of the loan and other documents which suggest that Ron had decided by then not to proceed with the arrangement (see T 571.5-571.15) (see [188]; [194] below; Exhibits 4 and 5). However, on their timing of events it would seem that the demand for moneys by Ron was made in late June or early July and the only evidence intimating that Ron had decided not to progress with the transaction was in mid-August, so the perceived coincidence in timing may be more apparent than real.

[32]

3 July draft deed (CB 837)

On 2 July 2012, Mr Moloney received another message to call Mr Lambrinos. The message (which is an email to Mr Moloney from someone else in his firm) was in the following terms: Subject: PLS CALL DOMINIC LAMBRINOS SAYS RON BROWN IS VERY UPSET AND HAS ASKED HIM TO GET THE CONTRACT OR FIND ANOTHER LAWYER DOMINIC SAYS IF WE NEED INFORMATION TO COMPLETE THE CONTRACT TO ASK, OTHERWISE NEEDS THE CONTRACT ASAP. ASKS THAT YOU CALL The Nixons submit that, from this, it should be inferred that Ron was becoming increasingly frustrated with the delay in preparing the transaction documentation. (They seem to accept that this is inconsistent with the submission that the demand for repayment of the loan in late June 2012 indicated a decision by Ron not to proceed with the deal but argue that after the Heads of Agreement the parties were proceeding down parallel paths - the Browns trying to formulate the agreement in a formal way with the assistance of Mr Lambrinos and Mr Moloney; and the Nixons expecting the finance to come through, - and that in August 2012 the transaction seemed to unravel with Ron demanding repayment of money and Mr Lambrinos saying to others that for personal reasons the Browns were "pulling out of the acquisition of the half-share" (see T 563.1ff).) The Nixons also point to the fact that Mr Lambrinos then proceeded to start organising finance without any reference to James and James took no steps to advance the Heads of Agreement at all thereafter (T 563.30ff).
Ron denies any such frustration at the time (T 289.20) although James' evidence supports the view that Ron was stressed and nervous at the delay in finalisation of the documents (T 81.4; T 83.41; T 91.11); and denies having ever made a decision to pull out of the deal.
On 2 July 2012, Mr Lambrinos wrote to the Nixons seeking details of their solicitor "so that Patrick can commence communications with him" and advising that he was commencing "liaisons with Blier" that week (CB 367; 762). Greg in due course provided his solicitor's details by email on 4 July 2012 by forwarding a copy of an email from Mr Manca (CB 763) (see [180] below).
Mr Moloney's evidence is that, based upon the information supplied to him at the meeting on 19 June 2012 and thereafter by Mr Lambrinos, he produced a further version of the draft deed (see CB 837) and forwarded that to Mr Lambrinos, with a covering letter dated 3 July 2012 (see CB 835), identifying the outstanding information.
Included in the documents exhibited to Mr Moloney's affidavit is a schedule which on its face appears to set out instructions as to the draft deed (CB 830). Mr Moloney's evidence was that he did not prepare this schedule. It is not clear whether these are the instructions that Mr Moloney says he received before the 19 June 2012 meeting or whether they are instructions received from Mr Lambrinos after the meeting but nothing turns on this. (Mr Lambrinos' evidence is that he prepared a schedule some time after 29 June 2012, in which case this is probably that schedule.) Whatever its date, the Nixons say that the inference should be drawn that the schedule was prepared after discussions with James and Ron (and that would seem to me to be a reasonable inference to be drawn, given that the schedule relates to changes in relation to matters relating to the Browns - although there is of course the possibility that Mr Lambrinos was on a "frolic of his own" in this regard or, consistent with Ron's evidence, that he was given the latitude to negotiate the terms of the deed himself).
The schedule (CB 830) includes the following matters: as to "the Brown Company" - it is said "Trying to register JB Royal Enterprises Pty Limited" and noting that a named accountant had been engaged to do this; as to Recital F - to remove "©" [sic; scil; (c)] "as the ATO debt remains outstanding"; as to Recital G - "Should say: … have requested the Brown Company to assist with procuring certain financial accommodations and loans as well as provide its aggregated expertise to assist with the refinance and operation of the Hotel".
Other requested changes included:

Section 1(c) - to remove reference to the ATO payment;
Section 2(b) - to say "[w]here possible arrange to pay Danny any amount that is ascertained to be owed in respect of sub-paragraph 9(a) above [sic] from any refinance obtained";
Section 2(c) - to say "Where possible pay the following creditors amounts paid to the business above from any refinance obtained" indicating that a list was to be advised from Greg;
Section 3 - a request was made "to please exclude any date commitment here as this process is out of our hands"; and that this should say "The Brown Company will engage a third party to procure loan funds from a bank, financial institution or private lender";
Section 4 - to say "The Brown Company will engage a third party to procure additional loan funds from a bank, financial institution or private lender to assist with the acquisition of the first 5 poker machine licences and machines";
Section 5 - there was a query as to whether, given the above changes, "do we still need to stipulate which sections need to be complied with?".

The 3 July version of the draft deed (CB 837) (which was sent in PDF form to Mr Lambrinos) now included the name of what had generically been referred to as the "Brown Company" from the previous draft (it was now identified, in accordance with the schedule above as "JB Royal Enterprises Pty Ltd" but with a request for its ACN and address) and broadly made the changes identified in the schedule referred to above but also included other changes not referred to in the schedule.
So, for example, Recital G was amended to read as follows: G. Each of Gregory Nixon, Bronwyn Tallis and the Tallis Trading Trust have requested Royal Enterprises to procure certain financial accommodations and loans as well as providing its expertise to assist [in the refinance of the ANZ Loan and Mortgage and the] with the refinance and operation of the Hotel and Function Business. [amendments as italicised] [words in brackets are words which appeared in the draft emailed on 15 June, and been deleted in this draft]
Clauses 2-4 in this draft are as follows: 2. Royal Enterprises shall [note there is now no date contemplated by which this is to be done]: (a) negotiate with Danny Radovic [please advise correct entity] to ascertain the balance owing with respect to the provision of building and constructions works at Menangle House; (b) use its best endeavours, having regard to available resources, to pay Danny Radovic [please advise correct entity] any amount that is ascertained to be owing in respect of sub-paragraph (a) above. [(c) has been deleted; amendments to this clause as italicised] 3. As and from the date of this Deed, Royal Enterprises shall use its best endeavours and engage any necessary consultant with a view to procuring the following financial accommodations or loans from a bank, financial institution or other private lender: (a) sufficient funds to repay the ANZ Loan and Mortgage; and (b) sufficient funds to repay Royal Enterprises all amounts advanced at the request of Gregory Nixon, Bronwyn Tallis and the Tallis Trading Trust as identified in clause 1 above and any other monies advanced pursuant to the terms of this Deed. 4. Royal Enterprises shall secure the following further financial approvals and/or financial accommodations from a bank, financial institution or private lender: (a) By [please advise date] the sum of $200,000.00 to be utilised by [please advise entity] to purchase gaming machine entitlements; (b) By [please advise date] the sum of $500,000.00 to be utilised by [please advise entity] to purchase further gaming machine entitlements; (a) By [please advise date] the sum of $600,000.00 to be utilised by [please advise entity] to purchase further gaming machine entitlements.
Clause 5 in this second draft was amended to read "Upon execution of this Deed" in place of "Upon compliance by the Brown Company of its obligations pursuant to [please advise which obligations]".
In the covering letter to Mr Lambrinos (CB 835), Mr Moloney wrote, among other things: 4. We have not yet made any changes to paragraph 4 of the enclosed draft Deed. As we understand the position, the parties were to give consideration as to whether they would apply to increase the principal sum of the loan, which has apparently been approved through Blier Mortgage Corporation. At this stage, we are unsure as to what approach the parties wish to take with respect to funding. Obviously that will affect the terms of the draft Deed.

[33]

Further communications in July 2012

On 4 July 2012, as already adverted to ([169] above), Greg advised Mr Lambrinos that his solicitor was Dion Manca at LAS Lawyers (CB 763-764). Mr Lambrinos says he thought that he passed those details on to Mr Moloney but there was no material produced by Mr Moloney in affidavit or under subpoena confirming receipt of this information (and Mr Moloney's evidence in the witness box that he would ordinarily communicate with a party's solicitors and forward documents to the solicitors if he knew solicitors were acting (T 44.18) suggests he was not provided with the information).
On the basis of this, James emphasises that throughout the time that the discussions were occurring the Nixons had available to them the services of a law firm that specialised in liquor licensing and that they could have gone to others if they chose (and that they could have sought advice on the day of the 21 September 2012 meeting itself).
On 10 July 2012, Greg sent an email to Mr Lambrinos asking for "any news with finance", referring to Global and "Bleirer" [sic]; in response to which, on the same day, Mr Lambrinos wrote that he was meeting with Global and Bleier that week (CB 368).
On 16 July 2012, Mr Lambrinos sent an email to the Nixons attaching "the new proposed structure" for their consideration and comments and suggesting that they could discuss this the following morning before 10am (CB 369).
The proposed new structure (CB 370) showed James as a 50% owner, with Bronwyn the other 50% owner, of the Menangle property; James as a co-director (but not shareholder) of Tavern Operator; JB Royal Enterprises Pty Limited (of which James is shown as director and shareholder), in its capacity as trustee for a discretionary trust (JB Royal Trust) as a shareholder of Tavern Operator; and JB Royal Trust as a new beneficiary of the Tallis Trust.
On 17 July 2012, Mr Lambrinos sent an email to Mr Moloney providing information that had been requested by him (CB 843), including the name and ACN of James' new company, and attaching a final group structure. The email advised that: 4. It appears that the Blier [sic] loan for $1m will remain in place and that Jim will arrange for a further $500,000 from separate sources to make the sum of $1.5m as agreed in principle with the incumbent owners.
On 17 July 2012, the Nixons met with their accountants and the following day they advised Mr Lambrinos they had met with the accountant to go through the new structure. Greg sought to set up a meeting with Lambrinos later that week (CB 768).

[35]

Suggestion that Ron decided in mid-August 2012 not to proceed with arrangement for "purchase" of half of the hotel

On 14 August 2012, Mr Lambrinos sent an email to a Mr Brian Boyd (at Global Capital) (Exhibit 7), in which he stated: I confirm on behalf of the client that they wish to proceed with the transaction and have advised their solicitors of the same (please see below) [that being a reference to a message forwarded by Mr Lambrinos in which the contact details of Mr Manca at LAS Lawyers appeared]. The delay was because my client was going to purchase half the hotel however for personal reasons the transaction was terminated. [my emphasis] PI [Mr Lambrinos says this is a typographical error and should read "I"] will be assisting the client with the finance to ensure it goes smoothly.
The Nixons submit that this is a contemporaneous business record that demonstrates the intention of Ron and/or James at the time it was made. The Nixons submit that it should be inferred that somewhere about 14 August 2012 Ron (or the Brown interests) abandoned the proposed transaction to purchase a half-share in the Menangle property (although they point out that this was not disclosed to them at the time). It is submitted that Mr Lambrinos would have had to have received instructions from James or Ron to have made this statement to a third party (see T 563.50) and that Mr Lambrinos' evidence should be accepted in this regard (see for example T 171.26 where Mr Lambrinos accepted that to make the statements in relation to Ron being a guarantor without instructions from Ron; and see also at T 170.1 - both those admittedly being in a different context).
Ron and James denied that any such decision to terminate the deed occurred (see Ron's evidence, emphatically given, at T 304.35, T 305.50; James' evidence at T 89.29-90.10). The only explanation that seemed to be suggested for the making of such a statement by Mr Lambrinos, if it were not to have been made on instructions, (although I accept that this suggestion was made in a different context) was the suggestion by Ron that Mr Lambrinos might on occasion simply have taken it upon himself to write things as some form of leverage with the brokers or otherwise (see for example Ron's evidence at T 310; and see also at T 295.42-49). Mr Lambrinos did not recall the email and did not remember seeing it (T 195.48). He did not recall a decision to Ron to terminate the transaction to acquire half the hotel (T 196.20).
It is further submitted for the Nixons that it can be inferred that the reason that James or Ron wished to withdraw from the transaction was that Ron was no longer prepared to offer a guarantee as security. Ron, to the contrary, was adamant that he was always willing to back James.

[37]

August communications in relation to proposed finance

On 20 August 2012 (at 10am) Mr Cooper sent an email to Mr Lambrinos stating that "I have heard that the Menagle [sic] deal is back on, however, am I correct in understanding that the new partner is no longer involved? If that is the case where to now? Is it going to go ahead?" (Exhibit 9). No response to this email seems to be in evidence but on the same and the following day two indicative letters of offer were sent through to the Nixon interests.
One, sent on 20 August 2012, was an offer from Eclipse Prudent Mortgage Corporation Ltd (Eclipse) (see Exhibit 10). This offer of finance did not indicate any security being offered by the Browns, and is addressed to Tavern Operator. (The Nixons submit that the text of this document supports the assertion in the email of Mr Lambrinos to Mr Boyd that the Browns had terminated the deal.) The other, sent on 21 August 2012, was a similar letter of offer by Winchester O'Rourke (CB 773). (The Nixons submit that this also supports the assertion that the Browns had terminated the deal for the acquisition of the half interest in the property.) With respect to both these letters of offer, Mr Lambrinos accepts that the offers would have followed an application by him in which he specified that the only security would be provided by the Nixons and not the Browns.
On 22 August 2012, Mr Lambrinos sent the Nixons an email suggesting a meeting to explain and compare both offers (CB 770). There is nothing to suggest that the Browns were to be involved in that discussion. The Nixons submit that this demonstrates that the Brown interests had decided to terminate the purchase of the half share in the property as they were no longer involved in providing the refinance which they had promised under the Heads of Agreement. (See also the email from Mr Lambrinos to Greg on 22 August 2012 in relation to the Winchester O'Rourke indicative letter of offer (CB 771), which similarly makes no reference to any involvement of the Browns.)
Mr Lambrinos says the proposed 22 August meeting never occurred, but that instead he communicated with the Nixons by email about the offers ([54], Mr Lambrinos' affidavit). James, however, points to the making of these two offers as the provision of assistance by the Browns' "professionals" in relation to the provision of finance (and, in effect, as evidence of him complying with the agreement to "arrange finance").

[38]

Late August 2012 communications in relation to threatened winding up proceedings

On 29 August 2012, Mr Lambrinos sent an email to Mr Moloney advising that "[i]t would appear that Global is about to commence winding up proceedings against the hotel and it's [sic] sponsors [in context, a reference to the Nixons] and Ron's loan has still not been recorded or secured in any way", and stating that "Unfortunately this is now urgent and should be secured tomorrow" and asking if Mr Moloney would be able to do it in the morning (CB 853). There is no record of any response to that email. Ron did not recall giving instructions for the sending of that communication (T 315.48) and said that "It was my opinion that after we paid the 200,000 that all the debts were clear. I had no concerns of the company being winded up" (T 315.28).
The Nixons submit that the letters of offer from Eclipse and Winchester O'Rourke and the failure to respond to, or to correct the assumption in, the letter (that is, that Ron's loan had "still not been recorded or secured in any way"), or to advance any oral evidence that the question was answered in the negative, comfortably supports the conclusion that by this date the Browns had terminated the proposal to acquire a half interest in the business and property. As already noted, Ron denied that that decision had been made (T 304.41ff); and James' evidence was that he did not recall it (T 89.31-89.49).
On 30 August 2012, Mr Lambrinos sent an email to Mr Cooper, referring to an SMS received the previous night, and noting that "I am no more than an adviser in this transaction engaged by my client, in order to assist Greg Nixon and Bronwyn Tallis". By reference to the second-last sentence of the email, it is clear that the client to whom Mr Lambrinos was there referring was Ron, not James.
From the content of the email (CB 372), it appears that this was in response to an email by Mr Cooper recommending that the Radovics "move to wind them up" (presumably a reference to Tavern Operator). The email raised issues as to the validity of the Bleier loan offer (by reference to an assertion that the lender did not have an Australian Financial Services Licence to allow the funding of pubs/hotels), referring to Mr Moloney as "my client's solicitor … who is also assisting [the Nixons]"; and stated Mr Lambrinos' belief that it would be advantageous to have the caveat withdrawn (noting that "it is somewhat difficult to procure a loan with a Caveat in place, even a minor one").
In the email, Mr Lambrinos disclaimed any authority to make the approach he was there suggesting (i.e., that the caveat be withdrawn); stated that if Mr Cooper and Global were open to the suggestion he would recommend payment of "some of these fees"; and advised that Ron would like to take up this matter with Mr Cooper personally and that Ron had indicated to Mr Lambrinos that he would endeavour to contact Mr Cooper in the next few days. The disclaimer of authority in this email suggests that Mr Lambrinos was careful at least in some contexts to indicate in some circumstances where he was stating matters without authority. I could find no other instance of a disclaimer authority by Mr Lambrinos in the documents.
The response to this from Mr Cooper (CB 371), on 31 August 2012, was to say that he had referred the matter to Global (Capital) and that he had "no idea who Ron Brown is and why I'd need to speak to him". He also said that he referred the deal to Global and he had not met nor spoken to "Blier".
Mr Lambrinos then responded, the same day, (CB 371; 778) to say, among other things: My client Ron Brown is also assisting Greg & Bronwyn and he is the one who arranged the temporary loan of some $200k, of which half of it went to pay off your client [presumably a reference to Mr Radovic or RE Property] in the first place. [my emphasis] Obviously he [i.e., Ron] doesn't want anyone winding up the business where money was lent to without speaking to them first; which is understandable.
The Nixons point to the description by Mr Lambrinos in this email of the moneys advanced by the Browns as a "loan". Ron, however, was adamant in the witness box (one million percent) that there was no loan (by which he must be referring to a loan from him to the Nixons) (T 315.8-315.14). James deposed that at no time in the course of his dealings with Greg and Bronwyn had he ever discussed or agreed that the money he paid out to third parties on their behalf was a loan ([28]) (although, of course, the Heads of Agreement does contemplate that he will be repaid "outstanding loans" from the further finance contemplated in cl 3(h); and his submissions suggest that there was good consideration passing to the Nixons by reason of him not calling in the outstanding amounts - see below at [499]).

[40]

September 2012 amendment to name of contracting party in draft deed

Mr Moloney has deposed that on 6 September 2012 he received a copy of the discretionary trust deed for the JB Royal Trust and other documents from Mr Lambrinos (see [23], Mr Moloney's affidavit). He deposes to a telephone conversation with Mr Lambrinos on 6 September 2012, in which he says he advised Mr Lambrinos that there were significant concerns that the structure would not achieve what Mr Lambrinos expected. He deposes that Mr Lambrinos said: Patrick we need to get this sorted out as soon as possible. There is now a real problem with the finance company who was originally going to provide funding, Global. They have placed a caveat on the title and they are threatening winding up proceedings. Jim (James Brown) and Ron (Ron Brown) have made significant advances and they do not have a final deed reflecting the terms of the agreement. They are most concerned about this issue.
Mr Moloney also says he discussed in that conversation the need to deal separately with the caveat and winding up issue (see [24]). The outcome of that discussion, he says, is that he was instructed that unless he heard back from Mr Lambrinos the deed should be finalised by putting James back "in the principal".
Mr Moloney says that on 7 September 2012 he amended the terms of the draft deed so as to include James as the contracting party on his own behalf and changed references from "JB Royal Enterprises Pty Ltd" to "James Brown" ([26]). Significantly, Mr Moloney does not depose to having made any further amendments to the draft deed on (or at any time after) that date. He deposes that once he had undertaken those amendments he forwarded the deed to Mr Lambrinos. There is not a copy of any correspondence forwarding that deed to Mr Lambrinos nor is there any copy of the draft deed as forwarded.
I note that it is agreed that when Mr Moloney's files were produced on subpoena there was no copy in the material so produced of the draft deed in the form that was ultimately signed by the Nixons (see Exhibit 17). That gives rise to the obvious inference that Mr Moloney did not make the final changes to the document that was signed at the 21 September meeting (since one would expect a prudent solicitor to retain the final version drafted of such a document on his or her file or in some electronic form - and particularly if that document were being provided to a client for execution purposes, as Ron suggests - see [228] below).

[41]

September Deed as signed

I will set out the different accounts of the 21 September 2012 meeting in due course. First, I note the relevant terms of the document that was signed at that meeting (Exhibit F).
The recitals to the September Deed recorded, among other things, the following: E. Gregory Nixon, Bronwyn Tallis and the Tallis Trading Trust have incurred certain debts and liabilities in connection with Menangle House and the Hotel and Function Business that they could not pay or discharge and have requested that Brown pay their debts. F. Brown has caused to be paid the following debts and liabilities at the request of Gregory Nixon, Bronwyn Tallis and Tallis Trading Trust: (a) $150,000.00 to R.E. Property Group Pty. Ltd. (b) $17,000.00 to the ANZ Bank; (c) $12,500.00 to Mission Australia South West Youth Services, Campbelltown; and (d) $12,500.00 to St. Vincent de Paul St. Marys Mayfield Day Recovery Centre, Campbelltown. G. Each of Gregory Nixon, Bronwyn Tallis and the Tallis Trading Trust agree and acknowledge that a one-half interest and share in Menangle House and the Hotel & Function Business represents a fair and reasonable consideration for the amounts paid by Brown pursuant to the terms of this Deed. H. In consideration for the payments provided by Brown, each of Gregory Nixon, Bronwyn Tallis and the Tallis Trading Trust shall cause a one-half share in Menangle House and in the Hotel and Function Business to be transferred to Brown.
"Brown" is defined earlier in the deed as "James Ian Brown". The operative provisions of the September Deed include (see cl 1) an acknowledgment by each of Greg, Bronwyn and the Tallis Trading Trust (to which I will refer collectively as the Nixon interests) that the payments there specified (being the same as those referred to in recital E) "have been made on their behalf by Brown".
Clause 2 contains the agreement on the part of the Nixon interests to the transfer of interests in the Menangle property and business. It provides that this is to occur upon execution of the deed. Clause 3 provides that any stamp duty or tax liability that may arise as a consequence of the transactions or the transfer of interests in property, issuing of shares or units shall be paid by "the Hotel and Function Business". Clause 4 contains various general provisions including an entire agreement provision (cl 4.7) and a representation and warranty by each party that they have obtained independent legal and financial advice concerning the subject matter of the deed and have executed the deed "on their own free will and without compulsion" (cl 4.8).

[44]

James' account

James gives no detailed account of the 21 September 2012 meeting in his first affidavit sworn 25 November 2015 (in support of his application for interlocutory relief), deposing simply to: his entry into the deed and its terms ([12]-[17]); the other documents "given" to him at around the time he was given the deed ([18]); seeing Bronwyn sign the Real Property Act transfer form at the same time as executing the Deed; that after receiving the deed signed by the Nixon interests and the minutes of meeting and transfer form he considered himself to be a "silent partner" in the business conducted by Tavern Operator; and that he had contact with Greg approximately five to six times per year ([20]) (which Greg denies).
In James' second affidavit, sworn 3 November 2016, in which he provides a more detailed account of the events in question, James gives the following account of the 21 September 2012 meeting.
James deposes that he went to the Menangle property at about 9.30am with Ron and Lana ([21]) (in the witness box he said it was around the 9am or 9.30am mark - see T 108.1); that they went upstairs to the office "which is an old building/historical barn that has been outfitted with an office upstairs"; that Ron said they were there "to pick up the paper work for Jimmy's agreement"; and that Greg or Bronwyn said "Yes we know and we have it here all ready for you" ([21]).
James could not recall who, out of Greg or Bronwyn, produced the documents; he said that Bronwyn signed first and Greg straight after her; and he said that either Greg or Bronwyn said that "It needs to be witnessed. There's no one else around. Lana will you witness?", to which Lana replied yes; and that he then observed Lana sign the deed and transfer documents ([21]). He says that after a couple of minutes' "chit chat" he, Ron and Lana left with the documents ([22]). He says that after that meeting he attended the offices of Mr Moloney and signed the deed in the presence of Mr Moloney who then also signed the deed as witness ([23]).
James makes no reference to Bronwyn leaving the room to take any photocopies of the signed documents or making any photocopies in the course of the meeting. Annexed to James' second affidavit are copies of the documents which he says were signed at the meeting. Relevantly, those documents do not have copies of any post it arrow notes on them; and Lana's signature crosses through the signature block in places (making it unlikely that the copies retained by the Nixons could have been copies from which Lana's signature had somehow been whited out or erased).
In James' reply affidavit sworn 8 June 2017, responding to the affidavits of Greg and Bronwyn, James provides further information as to the events in question. He deposed that on either 20 or 21 September 2012 (he says he cannot now recall the exact date) he received a telephone call from Greg where Greg said to him "Could you please let your Dad know that he documents he dropped off a few weeks ago are ready for him to pick up"; and that he telephoned Ron and arranged with him to collect the documents either that same day or the following morning (see [20]-[21]).
Among other things in the Nixons' accounts of the meeting, James denies that: Mr Lambrinos was in attendance at the meeting ([32]; [45]); that no one present at the meeting witnessed Greg and Bronwyn's signatures ([36]); and that Greg did not time to read the documents or carefully consider what they meant (saying "I understand that Greg had been in possession of the documents for several weeks" ([37]). He maintains that Lana was present at the meeting ([45]).
The suggestion that Greg had been in possession of the documents for several weeks cannot possibly be correct, given that Mr Moloney's evidence was that he made amendments to the deed on 7 September 2012. At best it is an exaggeration. At most, if Mr Moloney's evidence is accepted (and I do accept it) Greg could have had the September Deed for two weeks and then only if he received it as soon as Mr Moloney edited it (leaving aside the difficulty on James' account as to when the more substantive amendments to the previous version of the draft deed were made and by whom).

[45]

Ron's account

In Ron's 3 November 2016 affidavit, he deposed that in or around September 2012 he was provided with a copy of the deed setting out the terms of the agreements for his review, together with a transfer, resolution of shareholders and minutes of meeting of shareholders ([36]). He deposed that he "cannot now recall whether Patrick [Mr Moloney] sent these documents to me directly or I received them from Dominic [Mr Lambrinos], who had been involved in dealing with Patrick" ([36]). He deposed (at [37]) that "[s]hortly after receiving" the deed and other documents he had a conversation with Greg in which Greg said words to the effect: I have the contract. I'll get my lawyer to look over it, but I'm comfortable with how things have gone so far, so it shouldn't be a problem. I'll be in touch.
Ron says in that affidavit that, "[h]aving reviewed the Deed to refresh [his] memory", on or around 21 September 2012 at about 9.30am James, Lana and he went to the Menangle property and met with the Nixons; that Greg said words to the effect "We have all of the documents here and we're ready to sign them"; that he observed a bundle of documents on the table in front of where Greg was sitting; that he observed both Greg and Bronwyn sign the documents; and that both Lana and James were with him when he observed the Nixons sign the documents ([38]-[40]).
Ron also deposes that after the documents were signed they had a conversation in which he said that the deed and transfer needed to be witnessed and asked if there was anyone around who could do that; that Bronwyn said "No one has turned up yet. I was down in the bar area around 5 minutes ago and no one was there" and that Ron then suggested that Lana witness them and Greg said "[t]hat's fine" ([41]). He says that he observed Lana sign on page 5 of the deed and complete her name and address ([42]).
Ron gave evidence in his reply affidavit of 7 June 2017, deposing (for the first time) that approximately two weeks prior to the 21 September 2012 meeting he attended Mr Moloney's office in Sydney and collected copies of the deed, transfer and share transfer ([57]). He deposes that Mr Moloney said "I will email a copy to Greg and Bronwyn as well as James and Dom" ([57]). (There is no evidence of any such email and Mr Moloney neither deposes to the collection of the documents by Ron nor to the conversation that Ron says took place.)
At [58] of his reply affidavit, Ron says that on that same afternoon (i.e., on the same day that he collected the documents from Mr Moloney) he attended the Menangle property and delivered the documents to Greg and Bronwyn. In particular, he says he met Greg out the front of the property and said words to the effect "Here is the deed and transfer documents for you to review. When would you like me to pick them up" and that Greg said "Let me ring my lawyer to make an appointment to go through the documents" and they agreed that two weeks would be "plenty". In Ron's first affidavit there is no statement to the effect that the documents were handed to Greg two weeks before the 21 September 2012 meeting or as to the conversation that he deposes in his reply affidavit took place on handing over the documents.
In his reply affidavit, Ron then deposes that on or around 20 September 2012 he received a telephone call from James who said that Greg had called and said they could pick up the deed that morning. His account of the 21 September meeting is broadly the same as James' account. He adds that James came to his house early that morning and that he, Lana and James drove to the property and when they arrived they walked to the office "which is an old barn with an office located upstairs"; that Greg was sitting in a chair behind the desk and Bronwyn was standing; and that he observed a bundle of documents on the table in front of where Greg was sitting (see [59]-[63]). He says that Greg said "We have all of the documents here. We're ready to sign them" ([63]). Ron denied that Mr Lambrinos was present at the meeting ([79]; [89]); denied that Bronwyn met them in the office, saying that Greg and Bronwyn were both present in the office "when Jimmy and I arrived" (I note that the phrase "Jimmy and I" makes no mention here of Lana) (see [80]). Ron denied that Lana was not present at the meeting ([88]).
In cross-examination, as to the suggestion that Bronwyn at any stage left the room to sign the documents, Ron denied this.
See the exchanges from T 381.14-383.24: Q. You don't recall Bronwyn ever leaving the office with the documents after she and Greg had signed them. Is that right? A. I don't recall that, no. Q. The fact is, I want to suggest to you that after she and Greg signed them, she took a photocopy of them in the form that they took at the time they departed the premises. All right? A. Why ‑ why would Bronwyn leave the office to make a photocopy? She's in the office. Q. You didn't see her take a photocopy in the office, did you? A. No. Q. You see, I want to suggest to you that this meeting actually took place down in Taber's Restaurant rather than the offices you depose. A. You - you've said this since I've been sitting in this chair, and it is a fabricated story that did not happen. Q. And I want to suggest to you that after Bronwyn and Greg signed the documents, she departed the room, photocopied them, and brought them back in the form that they were when they had been signed by Bronwyn and Greg. Right? A. I've told you before, that meeting did not happen. Q. Do you recall there being little signed stickers on the documents? A. No, I don't recall that. Q. They weren't there? A. I don't recall that. … Q. That is the form in which the deed was in when she came back from the photocopier, all right? A. I don't know. There was ‑ she never come back from the photocopy when I was anywhere near her. Q. And she didn't photocopy anything while you were there, did she? A. No. Q. That is the form in which she gave it, I suggest, to Mr Lambrinos. A. That's one million per cent not true. Q. And that you were with Mr Lambrinos when that happened. A. That's just completely made up. Q. I want to take you to 675. A. Yep. Q. And that is a document which was signed on 21 September 2012. You see that? A. Yeah. Yep. Q. And that is the form in which she handed that ‑ that's the form it was when she came back from the photocopier, all right? A. She never went to a photocopier while I was in that room. [my emphasis] Q. Yes? A. Their office, when Lana witnesses the signatures. Q. You never lost sight of either Greg Nixon or Bronwyn during this period where these documents were being signed on 21 September 2012, did you? A. In that office where me, Lana, and James were, I can't recall her ever walking out of the room. [my emphasis] Q. My question was different, you never lost sight of either - on your account, you never lost sight‑‑ A. Are you talking about the real meeting or the one‑‑ Q. Well, the account that you give‑‑ A. I'm sort of a bit confused about‑‑ Q. Okay‑‑ A. Because you're telling me a scenario is happening and then you're taking me back to‑‑ Q. Listen. A. Can you just listen to me for a second? I just want to explain how I'm dealing with this. You're telling me about a scenario of a meeting that I wasn't at and then you're sort of switching back to, "Well, you were there with Bronwyn, and that she go." I'm not sure if I'm answering a question to what I call a fabricated meeting that she is going out and signing documents or are we talking about where the deed was really signed and did she leave that office.
My observation was that, while Ron made some play in the last of the above exchange, of the confusion between the "real meeting" and the "fabricated meeting", what Ron showed no confusion about was his denial of the proposition that Bronwyn had at any stage left the room to make a photocopy of the documents the Nixons had signed. (This is an instance, I might add, of Ron being somewhat aggressive in the witness box.)

[46]

Lana's account

Lana's account of the 21 September 2012 meeting in her affidavit affirmed 3 November 2016 is that at about 9.30am she, James and Ron attended at Menangle House and met with the Nixons ([5]); that on arrival they walked over to an old barn house which had been transformed into an upstairs office/loft; that they went upstairs and were met by Greg and Bronwyn ([6]); that there was a conversation in which Ron asked "Have you got the paperwork ready?" and Greg said "Yes we do. All that has to be done is to sign them" ([8]); that she then observed Greg and Bronwyn sign the deed ([9]); and that, following the signing of the deed there was a conversation to similar effect as that to which Ron had deposed (see [10]); and that she then signed her name on p 5 of the deed and printed her name and address ([11]).
In the witness box, she was not able to recall whether there were post-it notes on the documents when she signed them, but she was adamant that she had witnessed the documents. At times it appeared that she was arguing from the fact that her signature was on the document that she must have been there and witnessed the document being signed (for example, at T 134.23: "If I've witnessed it, it [the signature on the right of the witness block] was definitely there"; and at T 135.10: "If I witnessed the signature on 139 and the signature now is - I know is Bronwyn's signature, if I've witnessed that I've definitely seen her sign that") but I suspect that was simply Lana's mode of answering questions not some form of syllogistic reasoning.
Relevantly, Lana was also adamant that Bronwyn had not taken the documents out of the room to be photocopied. At T 136.22-136.28, there was the following exchange: Q. Do you recall whether Bronwyn ever left the room after the signing of the documents? A. I recall them all being there the whole time, the four of them. Q. Do you recall Bronwyn taking a copy of the documents? A. All I can remember is that we all signed the document. Where they went from there I have no idea. and at T 137.38ff: Q. At any time at this meeting did you see Bronwyn leave the room with the documents on your account? A. I couldn't say. Q. I want to suggest to you that just before Mr Brown took the documents away and after Bronwyn and Greg Nixon had signed the documents that Bronwyn Nixon went and took a photocopy of the documents that were there to be signed. I want you to make that assumption. In other words she and her husband had signed the documents and when that was complete she took a photocopy of them. All right. A. That never happened. [T 137.42]
At T 138.36-138.48, this issue was again raised, Lana having been shown the critical documents (which she denied having seen): Q. Now, I want to suggest to you that Bronwyn Nixon, after she had executed the documents, went and took a photocopy and gave them to Ron Brown‑‑ A. Okay. Q. ‑‑in this form. A. Mm-hmm. Q. Do you understand? A. Yes. Q. If that be correct, do you accept your evidence cannot be correct? A. No, because no one left the room with the documents. When I seen them sign - I sign straight after.
In cross-examination, Lana also volunteered for the first time additional details of a conversation she said occurred at the meeting (T 136.30-136.39): Q. The documents were handed to Ron weren't they? A. I have no idea. Like I said I don't recall where they went from there. All I remember, I only went there purely to - I actually had no reason to be there, I just went along with them. And upon having no‑one being able to witness the signature they suggested that I witnessed it. And it was actually when I witnessed it I made the joke and said to them, "I hope I don't end up in court." And here I am. So - but I was - they actually did ask if someone downstairs could sign as a witness being that I'm Ron's wife and Jimmy's stepmother. And someone suggested in the room that I was able to sign it so that's when I said, "All right, I'll sign it, just as long as I don't end up in court. Ha ha."
That account also had the hallmarks of an attempt to bolster her assertion that she was present at the meeting when the document was signed. It was also something volunteered by Ron (see T 376.9-376.13) (despite not appearing in either of his affidavits), which suggests to me that this was something discussed between the two at some stage after their affidavits were made.

[48]

Greg's account

According to Greg, he received a call on around 19 September 2012 from Mr Lambrinos who requested a meeting with the Nixons, Ron and him on 21 September 2012 and did not specify the purpose of the meeting ([84], Greg's first affidavit). He says that he, Ron and Mr Lambrinos met at about 9am on 21 September 2012 in the restaurant at the property which was closed at the time; that neither James nor Lana was present at any time during the meeting; and that Bronwyn joined Ron, Mr Lambrinos and him during the course of the meeting ([87]).
On Greg's account (see [88]), before Bronwyn joined the meeting, Mr Lambrinos opened a black document folder and produced a document that he handed to him; it was the first time Greg had ever seen the document; Ron said "It's a document that I need you to sign before I give you any more money" and that the following was also said: Dominic said: Don't worry. It's a document we need signed, it's just as security for the money we have given you and if anything goes wrong in the future. Ron said: It's just going to be put in a drawer. No one will know anything about it. Dominic said: Could you please have Bronwyn join us.
Greg says that he telephoned the office and asked Bronwyn to come into the restaurant; that he met her on a veranda outside the restaurant (not having the document with him) and explained to her what Ron and Mr Lambrinos had said ([89]). He says that when they went back inside the restaurant there was the following conversation ([90]): Ron said: As I mentioned to Greg, it's just a document that no one will see. It will go into a drawer. It's just to secure the money we have given you. … [Greg] said: Shouldn't we get some legal advice? Dominic said: Getting legal advice will just complicate everything and slow everything down for months. Ron said: We are not going to give you any more money if you do not sign the document.
Greg says that at the time he signed the document there were no other signatures on it "and we were directed by Dominic to put our signatures where some 'sign-it' notes were attached". He did not recall whether the document was dated on the front page. He saw Bronwyn then sign it. He says no one present at the meeting witnessed their signatures after they had signed the document. (See [92]-[93].)
Greg says that Mr Lambrinos then placed another three documents in front of him; that he glanced briefly at them (but did not have time to read them carefully or consider what they meant); that he saw they related to James receiving one share in Tavern Operator and that he signed the documents and left them on the table. He saw Bronwyn sign a number of the documents but was not sure whether she signed them all ([94]).
Greg says that Bronwyn then picked up all the documents and said that she was going to make a copy of them; and that as she was moving to leave the restaurant he asked who was going to witness their signatures and Ron said "Don't worry about it. I'll take them with me and get Lana to sign them later" ([95]).
Exhibited to Greg's affidavit are copies of the photocopies of the documents made by Bronwyn (see CB 374-386; and CB 670-682, exhibited to Bronwyn's affidavit). Relevantly, those copies show the signatures of each of the Nixons on the September Deed (which bears a date on the front page that Greg identified as being in Bronwyn's handwriting), no signatures by any witness, and "post-it" notes with arrows pointing to the signature block for each of the Nixons and Tavern Operator. Similarly, post-it notes appear on the other documents (resolution of shareholders of Tavern Operator, minute of meeting of shareholders of Tavern Operator, Real Property Act transfer of a one half interest in the land, and forms in relation to changes to company details) all of which were undated.

[49]

Bronwyn's account

Bronwyn deposes to a visit from Ralph Radovic early in the morning of 21 September 2012 and to hearing him shouting ([66], Bronwyn's first affidavit). She says that a few hours later Greg telephoned her and said that Mr Lambrinos and Ron were there and had some documents that they wanted them (the Nixons) to sign ([67]). She deposes that Greg met her on the way to the restaurant building and said Mr Lambrinos "has got some security documents to sign before they give us any more money" and that Greg said "We have to go forward" ([68]).
Bronwyn deposes that the meeting took placed in the restaurant (at Table 11 near the fireplace); that Mr Lambrinos and Ron were there ([69]); that there were documents on the table as she sat down; that both Mr Lambrinos and Ron referred to them as security documents (Ron saying "This is the security documents I was talking about for my money in case anything goes wrong") ([70]); and that Ron said: This is going to be put in a drawer. No one will know about it except for my solicitor, you and Greg. I will only use it if I don't get my money back".
She says that Ron said "Dominic is working on the finance" and that Mr Lambrinos said "And Ron is working on getting his money back from his investment" (which she understood to be a reference to money that Ron had tied up in an investment with a friend of his) ([70]-[71]).
Bronwyn says that Mr Lambrinos did not go through the documents; that she saw Greg sign them at the place indicated by the post-it notes and then Mr Lambrinos took the documents and gave them to her. She says that she did not read them and that Mr Lambrinos said "Just sign where indicated" and she did ([73]-[74]).
Bronwyn says that James and Mr Moloney were not present at that meeting and that Lana was not present at the time she signed the documents and did not witness her signing the documents ([75]). At [76], Bronwyn deposes that after they had signed the documents she took them to the office (about a three minute walk from the restaurant) and that when she got to the office she dated the front page of the document "purporting to be a deed" and made only one copy of the documents. She believes that she left the photocopied documents in the office. She says (at [77]) that on her way back she "came across" Mr Lambrinos outside the restaurant (and handed him the original documents) and that he said: You could get a solicitor to have a look at it if you want. But rather than complicate things, better to keep it simple.

[59]

Alleged discussions about James' entitlements

In his oral evidence in cross-examination James maintained that he had followed up his entitlements under the September Deed on numerous occasions. The evidence he gave on this topic was vague in the extreme; and to appreciate its flavour I set out the following exchanges: Q. Yes. Between September 2012 and April 2015, right, you took no step to try and register the transfer title to the land in to your name, did you? A. I deny that. There was multiple occasions that I talked to Gorgon - sorry, to Greg about the transfer, but he always said the business can't afford to pay the stamp duty so please, like, hold off, hold off. [112.3] … Q. Can I suggest that those conversations took place in about and after about March 2015? A. I believe that they took place a lot earlier than that. That was a common point made every time we talked, that I wanted to submit the transfer, but I was always met with, "The business can't afford the stamp duty," which I understood and I tried to be lenient with, and then it just kept going on and on and on. Q. How much was the stamp duty? A. I'm not sure, but I'm pretty sure it was a large sum, not an exact amount. It could have been north of 150 grand, I think it was. [T 113.9] … Q. The idea was that once the moneys were repaid the deed would no longer have any effect. Do you agree with that? A. I do not agree with that. Q. In fact what's happened is that you've held onto this documentation despite the repayment of the money and when you found out that the hotel was for sale you approached Greg Nixon to try and extract half the value of the hotel based on this deed, didn't you? A. I deny that. If I'm implying your question correctly, you're saying that there was no communication ever until the sale of the property and then I just turned up and said I want my half. In layman's terms, is that what you're asking me? Q. Close to it. A. Yeah, I deny that. Q. And that somewhere about March 2015 you became aware through discussions with Greg that he was looking to try and sell the business. A. I had conversations with Greg on a few different occasions about moving forward and the possibility of selling the pub. Q. I want to suggest to you that those discussions took place after March 2015. A. The exact dates are not known to me but there was definitely conversations before that. Q. I want to suggest to you that there were no discussions between you and Greg between September 2012 and about March or April 2015. A. I deny that. On multiple occasions I visited the premises and talked to Greg, very informal, usually just at the bar or he'd meet me in the car park. It was just a friendly chat back and forth. [my emphasis] Q. And that in fact what happened was that you didn't have these discussions with Greg about the payment of stamp duty on the transfer until after about March 2015? A. Again, exact dates I cannot comment on to my recollection. But I did have multiple conversations about that exact point. And it - it was shortly after the - when the deed was signed to say September. From September 2012 on I had multiple conversations with Greg on that - on that topic. … A. Again, there was multiple conversations but in writing I think if I'm not mistaken the lawyer at the time requested that, I'm not sure of dates as I was getting no response. Q. Tell us what the conversations were that you had where you asked for financial reports from Greg Nixon? A. We had conversations stretching over the period of time from day one to when the lawyers got involved. All communications stopped after that. And we had multiple conversations and it wasn't just in regards to specific things like you're asking. We talked about Melbourne Cup Day, you know what I mean, a lot of general chit chat and that in those conversations that arose. Q. Are you saying that in these conversations that you requested financial reports on how the business was going? A. There's - there was conversations where Dominic was requesting them and I approached Greg and said, "We need to get them to him." Q. Sorry, just say that again. A. There were financial documents from the quarterly BAS and all of that and so forth were requested multiple times for finance from them. [I interpose to note that Mr Lambrinos gave no such evidence.] Q. That was before September 2012 is that right? A. It - it was ongoing. In my recollection, again for specific dates, I am not sure but we had multiple conversations about that, as in to get everything in order for the business to grow, for the business to be healthy. Q. Sorry, so after 21 September 2012, you had conversations where you asked for the quarterly BASs. Is that right? A. There was conversations where that arose, yes. Q. And what about other financial documents like tax returns? Did you ever ask Greg in these conversations for tax returns? A. I cannot recollect if I was specifically asking for that document, for a tax return document. Q. What other documents do you say you were asking for? A. Just in conversation, the general, you know, where everything is for what you require, the books. The way I speak obviously is not very formal and it was always just like, "Oh, I need to look at the books." You know what I mean? The books need to be opened so we can see how it's running and all that because it's one thing to say it's running great but paper says another thing. [my emphasis] Q. Yes, absolutely. Look, I appreciate your interest in these issues, right, but this was an interest which you started having immediately after 21 September 2012, didn't you? A. Well, I, again, specific exact dates, where the conversations took place‑‑ Q. Forget about dates. Just what about sequence? A. It's hard to forget about dates when you keep saying 21 September though. That's where the confusion is. Q. Well, 21 September was the date‑‑ A. Of the deed. Q. ‑which on your case you became a half‑owner in this property, right? A. Correct. Q. And more importantly a half‑owner in this business. A. Correct. Q. Right? And did you form the view that from that date that being a half‑owner you might be found liable for some of the company debts? Did you form that view? A. I was worried about if we got in trouble with tax. If you owe too much tax and stuff like that, that was always, that, tax is always a concern. Q. In other words, if they weren't paying the tax, you may be found liable? A. Yes. Q. And also I take it not unnaturally that you could find yourself in a situation where you could lose your investment? A. Well, that is correct. If things went south, I've heard stories of the tax man coming in and seizing all assets. Q. And seizing your assets? A. Correct. Q. And you not unnaturally held these views because you say you considered yourself a half‑owner from that time, do you agree? A. Correct. Q. And I've asked you now a couple of times as to the details as to when these conversations took place and can you give me even to, say, a quarter, right, a quarter of the year, four quarters in the year, right? When was the first time you made a request to see a BAS document? A. As I stated before, there was no specific document I requested. There was a general term of, "Can we open up the books and look at the books?" which in my mind I guess you would assume that those documents would be, "Can you open the books?" so that's how I intended that statement, I guess. Q. Well, when I first asked you this question you said that Mr Lambrinos said to you that you need to get hold of the documents including the BASs. A. I said Mr Lambrinos requested them of Menangle..(not transcribable [House?])..as, if I keep talking that it's us as in me, Greg and Bronwyn, we're all in the same team and obviously we're here disputing that but that's what I mean about Mr Dominic Lambrinos. Q. But did you actually have a conversation with Lambrinos yourself about getting access to the BAS statements A. To my recollection, as I said, the conversation was, "We need to open the books." There was no direct - exactly how you're wording your thing, direct, it was more, "We need to look at the books. Get this books. Like, we need to open the books. We need to see the books." That was just, that was the conversation. Q. Because this was important, wasn't it? A. Well, from Dominic's standpoint, of course, because he's the finance guy. That's his be all and end all, I assume, in his industry. Q. And you say this took place after 21 September 2012? A. Again, I don't know exact dates but that conversation did happen. Q. In terms of sequence, it was after you became a half‑owner in this property. Is that correct? A. Again, exact dates, I cannot recollect exact dates. Q. You keep saying that. I'm talking about sequence. This was at a time when you say you were a part‑owner of this business, correct? A. That conversation took place sometime. It's to my recollection. Q. And in terms of opening the books, you can' tell her Honour any date on which this conversation took place? A. No, I cannot, your Honour. I do not recollect any specific dates. Q. How many times do you think you asked between September 2012 and April 2015? A. To put a number on it, half a dozen times, maybe. There was always questions about opening up the books and I don't think I ever viewed the books until even my lawyer, my first lawyer on this whole process requested it. He had to send them a letter. Q. So half a dozen times? A. Give or take one or two. I assume that's a rough estimate. Q. So it might've been as low as four and it might've been as high as eight. Is that what you're saying? A. That could be correct. Q. And where did these conversations take place, Mr Brown? A. As I said before, most of my conversations with Greg, and it was usually with Greg, Bronwyn was always busy in the office or so forth but most of my dealings was with Greg himself and as I said, they were very informal. Could be at a table, at the bar, in the car park, wherever. It was just general. There was no structure, it wasn't a meeting as in sit down and, you know? It was just chitchat, it was just guys talking. [my emphasis] Q. Do it the best you can today. Tell her Honour the words that you would say to Greg. A. In those conversations Q. Yes. A. Your Honour, in those conversations it was just general chitchat. Greg was a football player back in the day so it was all football talk, events they had on at the pubs and then in the conversation it was, "Well, I need to see the opening of the books." In regards to I said before, that would mean that all the bookkeeping, the day‑to‑days, I guess, of the business is what I intend from opening the books and that was generally mostly our conversations. [my emphasis] Q. And what were the words that Greg would say to you? A. He was engaging obviously in the football talk and the events they're having on and he had a, sorry for a lack of a better expression but like a bit of wind in his sails. He was a bit excited about certain things and when it came to stuff like that he's like, "Yeah, no worries." Obviously not to his exact words but like, "Yeah, no worries, mate." Q. "Yeah, no worries, mate," what? A. That's, in our, the way I speak, like, "Yeah, no worries, mate," that's like, "Yeah, all right, we'll look into that." That's, I don't talk in a formal manner obviously and this whole environment is not what I'm from in lack of better words, to say that. Q. So you took away from that that he would open the books for you? A. That he would make efforts, yes. Q. And so then when you went away from that conference or that meeting‑‑ A. As I said again, I wouldn't call it a meeting. It was just two‑‑ Q. You wouldn't call it a meeting? A. ‑it was two blokes talking in a pub and dressed, like, I think a few occasions I had shorts and thongs on. Like, there was no formality. I would even go as far as, like, it wasn't a professionalism. [my emphasis] Q. Okay, but you'd agree that it was a very important topic of conversation for you? A. For all involved. Q. For you to see the books? A. Yes.

[60]

April 2015

James deposes to instructions that he gave his solicitor in about April 2015 as to lodgement of notice of his appointment as a director and in relation to the allocation to him of shares in Tavern Operator; to request immediate access to the books and records; and current financial statements; and, on 4 June 2015 to request the stamp duty in respect of the transfer of the property and nomination of a director to Tavern Operator (see [21]-24] of his first affidavit).
By letter dated 21 April 2015, lawyers acting for James wrote to Tavern Operator, referring to the September Deed and demanding: immediate access to the books and records of Tavern Operator and the Tallis Trading Trust; provision of current financial statements for the period ended 31 March 2015; stamp duty in respect of the deed and transfer in respect of the one half interest in respect of the Menangle property; and a response to that demand by close of business the following day (CB 71).
On 22 April 2015, it appears that James lodged the application to change company details in relation to Tavern Operator (see CB 73), the form being rejected by ASIC as not having been completed correctly (the corporate key for the company being incomplete or missing and the date of change not having been provided).
During June 2015, there was communication between Greg and James in relation to James' position, on which James relies as confirmation by Greg of James' interest in the Menangle property and the business. In particular, reliance is placed by James on a chain of three emails between 5 and 24 June 2015 (CB 727-728). In the first of those emails, dated 5 June 2015, Greg advised: [Friday 5 June, 2015] Hi Jimmy, To let you know where we are at: Figures ... We have a possible interested party through Manenti Quinlan Hotel Brokers. A possible interested party through real estate broker - Narellan Now we have received these figures we intend to pass them on with other relative information for a perspective sale asking figure will be over five and a half million … Ive [sic] just received another letter from Farrar Lawyers demanding stamp duty. If we have to go down this path, one the business does not have the money and two it will undo everything we have just spent the last 6 months doing it may possibly scare off any buyers. Can you let me know a [sic] soon as possible if I need to pay attention to this letter or continue on trying to get an outcome for both of us which I feel is not far away now. Otherwise without going into a legal mind field [sic] the only other alternative I can offer you is I have a possible investor who Ive [sic] been talking with who would come on board wanting to fund the pokies. He is un aware [sic] of a third party. If I can work out a deal with him can I ask how much would it take for you to be happy to walk away from this situation. [my emphasis] [CB 702]
Interposed (and not part of the chain of emails at CB 727-728) is a separate email on 7 June from Greg to James (but the evidence is that this was in fact typed and sent by Bronwyn) stating "Have you spoken to your DAD because he gave me his word he only kept the document we didn't pay it" (CB 702). Logically, this only makes sense if the word "if" is included before the words "we didn't pay it". (This is relied on - and I accept this characterisation - as a relatively contemporaneous communication from the Nixons as to the September Deed only having been said to be "security" against the risk that Ron's loan was not repaid.)
The second of the three emails in the email chain referred to above was a response from James, as follows: [Tuesday, 9 June 2015] Hi Greg, ... As we discussed last time we had met I am very motivated to sell my half of the business. If you have an interested party to buy me out or if you yourself want to buy me out then we will have to discuss the process of sale and go from there. Again last time we met you were very motivated as well to sell the hole [sic] property/buisness [sic] yourself. So I ask what avenue do you want to go down Greg. If you want to sell the entire business as a hole [sic] then let's move forward and work on that. If you want to buy me out then I will be more than accommodating to try and help all involved for a favourable outcome whilst achieving that also. ... Kind regards, Jimmy Brown
The third email in the chain is an email dated 24 June 2015 from Greg: [24 June 2015] Hi Jimmy Quick up date. Investor coming in hasn't developed. There are still some interested parties in purchasing the property but no one really showing their hand. So I am setting a date in early September to go to Auction. Am currently appointing an agent. I feel this is the easiest way to do things with also giving us a dead line and a conclusion. Will keep you informed. Greg Nixon, Menangle House, Horse & Jockey Inn
There was further correspondence from James' solicitors pressing for the stamp duty (CB 74; 75), and then, by letter dated 7 July 2015 (CB 76) reference was made to a discussion between Greg and James (two weeks earlier) in which it is said that Greg stated that the property would be listed for auction on 3 September 2015. James' lawyers there asserted James' entitlement to a half interest in the Menangle property said to have been "transferred to [James] on 22 September 2012". On the same date the commencement of proceedings was threatened (see CB 78).
James then lodged a caveat dated 7 July 2015 on the title to the Menangle property, claiming an interest in half the legal estate by virtue of the September Deed (CB 79). (That caveat lapsed following the issue of a lapsing notice - James contends that the lapsing notice was not properly served on him. A second caveat was then lodged by James.)
By email on 8 July 2015, Greg responded to James' solicitor: Seeking advice and will have your information as soon as possible along with the information and balance sheet of where the business stands. (CB 81)
On 10 July 2015, Greg responded to a further email from James' solicitor pressing for the provision of information requested by close of business that day, as follows (CB 82): Information with [sic] your request is with accountants.
At that point it appears that solicitors became involved in the matter for one or more of the Nixon interests (see CB 88). Greg's evidence is that he was reluctant to involve himself in a legal dispute, especially with the proposed sale and finance.
By letter dated 14 September 2015, James' solicitors wrote to Gibson Howlin Lawyers (the solicitors for the Nixon interests) setting out James' position (see CB 90), asserting that by the September Deed James "became entitled to", among other things, a one half share of the Menangle property and one half of the issued shares in Tavern Operator. There was further correspondence in that regard on 23 September 2015 (see CB 94).

[63]

Issues

James, in his points of claim filed on 8 March 2016 (at [32]-[35]), claims declarations that, as and from 21 September 2012 he became: a one-half beneficial owner of the Menangle property, a one-half beneficial owner of all issued shares in the paid up capital of Tavern Operator, and a one-half beneficiary of the Tallis Trading Trust; and he seeks a consequential order that Bronwyn pay him for his one-half share of the Menangle property. That relief is claimed in reliance on the written agreement allegedly entered into by deed on 21 September 2012. No claim is made by James based on the Heads of Agreement.
James no longer presses the claim made in his points of claim (at [36]) for an account to be taken of Greg's directorship of Tavern Operator from 21 September 2016 (see his final written submissions at [1]; T 532.45).
The issues raised by the amended points of defence filed by the Nixon interests on 24 June 2016 go to: whether the September Deed was executed as a deed; whether the September Deed constitutes the whole of the agreement between the parties; whether there was an oral representation by Ron, acting as James' agent, that any document signed by any of the Nixon interests on or about 21 September 2012 was to be used only as security for the repayment to James of the sums of money referred to in cl 1 of the September Deed (and interest); and whether any agreement made on or about 21 September 2012 was supported by good consideration passing from the plaintiff to any of the defendants. It is contended that if any agreement between the parties came into existence on or about 21 September 2012, it was in substance a mortgage over the real and personal property belonging to one or more of the Nixon interests to secure repayment of the principal and interest in respect of the sum of $192,000.
The reply by James to the amended points of defence, filed 2 August 2016, pleads, inter alia, denials that Ron made any oral representations or was acting as James' agent; and assertions that the deed "having been executed as a deed" did not require consideration but, notwithstanding this, that James did provide valuable consideration for the covenants in the deed and that the documents were witnessed by Lana. As to the contention that the signatures were witnessed, in the reply it is stated (though there was no affidavit evidence to this effect by any of the witnesses) that: …shortly prior to Ms Beynon [Lana] witnessing the signatures, the Father [Ron] raised whether Ms Tallis [Bronwyn] had any objection to Ms Beynon witnessing the documents and Ms Tallis said words to the effect "You can always trust a woman, I have no problem with the document being witnessed by Lana"[.] [2(c)]
The Nixon interests' cross-claim, filed 29 June 2016, seeks relief by way of declarations that the relevant documents are void ab initio or have been avoided by the cross-claimants or are voidable and ought be avoided; orders for the September Deed to be avoided and the various documents cancelled or declared void ab initio. It raises issues as to the making of alleged representations by Ron and Mr Lambrinos (that are said to have been made as agents for James and to be false and fraudulent to the knowledge of Ron and Mr Lambrinos at the time each was made), misleading or deceptive conduct within the meaning of s 18 of the Australian Consumer Law or unconscionable conduct within the meaning of s 21(1)(b) of the Australian Consumer Law. Those allegations are denied.

[65]

Credit

James submits that the only witnesses with nothing depending on the outcome of these proceedings are Ron, Lana, Mr Lambrinos and Mr Moloney and he contends that all of those witnesses support his case.
That submission ignores, however, the close involvement of Ron in the matter (on Ron's own evidence this was because he wanted to set James up in business) and the fact that Mr Lambrinos was clearly regarded by both James and Ron as acting on their behalf in documenting the transaction (it being basically left to him, according to Ron, to provide instructions to Mr Moloney in relation to the drafts; and, according to James, he being someone who made requests of the Nixons on his behalf at least in relation to the "opening of the books").
Moreover, it is by no means the case that Mr Moloney's evidence unequivocally provides support for James' contentions (for example, he accepted the possibility that he had not drafted various documents and said that some did not look as if he had drafted them; and he gives no evidence as to matters that might corroborate the assertions made by Ron as to the collection of the September documents from him).
As for the Nixons, James submits that Greg was a witness who made appropriate concessions and was thoughtful in his answers; and that Greg's evidence should be accepted except where his evidence conflicts with the witnesses in James' case. He argues that Bronwyn's evidence should not be accepted other than where it is corroborated, on the basis that she was a witness who was often confused and could not directly respond to many questions.
The Nixons, on the other hand, argue that the evidence of witnesses in James' case had the following features: inconsistency; inability to explain the existence of the copies of documents made by Bronwyn (namely those to which I have referred as the critical documents); a tendency to advocate a position or opinion rather than to answer a question; and a tendency to elide a question by giving an answer which best suits the witness' position.
The Nixons make submissions critical of the credit of each of the Browns and of Mr Lambrinos, pointing to: the inconsistencies in the different iterations of the Browns' affidavit evidence; the admission by James that certain evidence in his first main affidavit (the 3 November 2016 affidavit) was false and known by him to be false at the time he made his affidavit; the evidence of discussions between various of the Brown witnesses (not Mr Moloney) as to the matters the subject of the proceedings when they came to prepare their affidavits or reply affidavits; and, in the case of Mr Lambrinos, his lack of candour as to previous criminal conduct relating to an attempt to obtain a financial advantage by fraud or deception (involving the falsification of documents).

[66]

My assessment of the witnesses

At the outset I note that where the veracity of part of a witness' evidence is not accepted (or is in doubt), a careful assessment of the rest of that evidence is required in order to determine its honesty and reliability (per Handley JA in Malco Engineering Pty Limited v Ferreira & ors (1994) 10 NSWCCR 117 - that being a case where a finding of perjury had been made on one part of the evidence), though this does not mean that the balance of that witness' testimony can never be accepted without corroboration (Heydon JA, as his Honour then was, in Makita (Aust) Pty Limited v Sprowles (2001) 52 NSWLR 705, at 719; [2001] NSWCA 305).
The Nixons argue that any false evidence that is found to have been given must be assessed in the context of the whole of the evidence in that (putting aside issues of credit) the falsehood remains relevant to a fact in issue. This is emphasised in the context that the central fact in issue is what occurred on 21 September 2012. It is submitted, and I accept, that any false evidence of any of the key witnesses is likely to be highly significant to the resolution of that key matter. Counsel for James quite properly conceded that if I were not to accept the Brown witnesses on the issues as to the photocopying of the critical documents then that must affect their credit (see T 537.32).
Also relevant to note at the outset is the difficulty that arises from the fact that there were discussions amongst the Browns and between one or more of them and Mr Lambrinos as to matters relating to their recollection of events. Ron, in his reply affidavit, made clear he had spoken with Mr Lambrinos to verify dates (and that he had changed or corrected his evidence accordingly); James said there would have been conversations as to the events of 21 September 2012 with his father "to [his] recollection" (see T 97.16); Lana recalled that there had been discussion in the family generally in relation to the events in question. Moreover, it was James who forwarded the rough outline of Ron's evidence to the solicitors acting for him (Exhibit J) and he thus had opportunity to consider his father's version of events at a time when his own affidavit was being prepared.
Where there is the appearance of, or an inference may be drawn as to, collusion between witnesses in question, it is well recognised that this may diminish the weight or credit accorded to the evidence of those witnesses (see, for example, Macquarie Developments Pty Limited v Forrester [2005] NSWSC 674 at [90] per Palmer J; Seamez (Australia) Pty Ltd v McLaughlin [1999] NSWSC 9).
In Seamez (Australia) Pty Ltd v McLaughlin, Sperling J explained the reasons for this (in circumstances where his Honour was satisfied, having regard to a high degree of similarity in content, detail, terminology and sequence, particularly in relation to conversations, between the affidavits of three witnesses, that their affidavits could not have come into existence without direct or indirect collaboration) (at [40]): … [A]cceptance of one of the three accounts of the events … means not only that the other two are not genuinely recollected, independent accounts. It also means that the authors of those other accounts have misstated the way in which their respective accounts came into existence, and seriously so. The credit of the others would then be worthless.
In Day v Perisher Blue Pty Ltd (2005) 62 NSWLR 731; [2005] NSWCA 110, the Court of Appeal (Sheller JA, with whom McColl JA and Windeyer J agreed) similarly pointed to the process by which evidence is taken being seriously undermined where witnesses had discussed their evidence with other witnesses. There Sheller JA identified the risk in what had been done (a teleconference with witnesses discussing amongst themselves the evidence that they would give) as being that "evidence of one about a particular matter which was in fact true might be overborne by what that witness heard several others say which, as it happened, was not true" ([30]).
Here there is direct evidence (from various of the Brown witnesses themselves) as to discussion in relation to the preparation of their matters. Ron, for example, revised his evidence as to the number of meetings after having discussed the sequence of meetings with Mr Lambrinos. While it cannot be said that he misstated in his reply affidavit the way in which his revised account came into existence (he having disclosed the fact that he did so following a telephone conversation with Mr Lambrinos), at the very least, it casts doubt on the independence of his recollection of events as set out in his reply affidavit.
There is an obvious risk that evidence about matters relevant to issues critical to the determination of the case (such as how and when the September documents were provided to the Nixons and who was at the 21 September 2012 meeting), about which either nothing was said in the initial affidavits or about which a deponent initially deposed to having no recollection, and evidence proffered for the first time in the witness box (as to the desire of Lana not to end up in Court), has been coloured (unconsciously or otherwise) by discussion amongst the witnesses.

[67]

James and Ron

I deal with the main Brown family witnesses (James and Ron) together because much of the criticism of their evidence is common to both. The Nixons point, among other things, to the fact that both sought the protection of a certificate under s 128 of the Evidence Act 1995 (NSW) in relation to questions as to their knowledge that particular statements in their affidavits were false at the time the affidavits were made.
Both Ron and James, in their November 2016 affidavits placed the time at which the (only) payments were made to the Nixons as being in around September or October; whereas it is clear on the documents (and is conceded by them) that the payments were made much earlier. James' repeated reliance in the witness box on the fact that he used the word "around" does not assist him when the actual payments were made in May and in June. As a matter of common parlance, "around" September surely would not be regarded as referring to some 4-5 months prior to that.
The Nixons submit that it is abundantly clear that James is prepared to give false information in an affidavit knowing it to be false at the time of swearing it (referring to his acceptance in cross-examination to that effect in relation to what was said at [11] of his first affidavit - see T 58.47); and they say that the same criticism can be made of Ron's evidence (though he did not accept that he knew any evidence to be false at the time the affidavit was made - see T 350.39ff).
In the "rough outline" of his evidence that was prepared by Ron and submitted to James' lawyers by James in September 2016 (Exhibit J) it is clear that what Ron was there recalling was that the payments were made before the September Deed was signed.
It is noted that there is no explanation for the fact that two months after Ron's initial account of the payments having been made at an earlier time both he and James deposed in their November affidavits to the payments having been made after execution of the September Deed.
It is submitted by the Nixons that, somewhere between 21 September 2016 (when Ron's "rough outline" was forwarded to the solicitors) and the swearing of James' and Ron's affidavits in November 2016, both Ron and James sought to advance an account which shifted from an accurate statement as to when the funds were paid (May 2012) to a false statement as to when the funds were paid (September/October 2012); and that the obvious inference is that the shift in text (and the assertion that the payments were made in September/October 2012) was because they became aware that it might benefit them to assert that the payments were made after entry into the September Deed i.e., to support an argument that there was consideration for the agreement contained in the September Deed (in the event that it was not validly executed as a deed).
I would not draw the inference that the depositions by Ron and James as to the timing of the payments contained in their November 2016 affidavits (now conceded to be incorrect) were part of a concerted attempt to mislead the Court as to when the payments were made (so as to benefit James' case by connecting them to the making of the September Deed). However, I do consider that the common mistake demonstrates not only the general unreliability in their recollection of events at that time (as does the correction by Ron in his reply affidavit as to the number and sequence of the meetings he attended) but also the likelihood that their version of events was a product of discussion between them.
That casts doubt on the reliability of Ron's subsequent recollection of conversations and events to which he did not depose in his earlier affidavit. Similar criticism can be made of James' evidence in this regard.
That unreliability can be illustrated by reference to the fact that, although Ron initially deposed that he did not recall how the September documents came to be provided to the Nixons, by the time of his reply affidavit he was able to recall not only that he had picked the documents up from Mr Moloney's office but he had delivered them to Greg and conversations with Greg and James in relation thereto. I am sceptical, to say the least, about the fortuitous recollection in 2017 of conversations and events of which there was no mention in the November 2016 affidavits (and, indeed, where Ron in his November 2016 affidavit had expressly disavowed an ability to recall how the documents came to be in the Nixons' possession).
As to my observations of each of James and Ron in the witness box, I comment as follows.
It was submitted for James that he was a thoughtful witness who gave direct answers and did not seek to avoid any issues. Certainly, I consider that James gave relatively direct answers in cross-examination, though as the cross-examination wore on he became more discursive (such as in relation to the football league chitchat when he says he discussed the opening of the books with Greg) and at times he appeared to struggle with the concepts (such as his evidence about lack of knowledge of caveats). He gave his evidence in a relatively laconic and down to earth manner, with some hesitation at times in expressing himself. As to James being a thoughtful witness, that was not immediately apparent. He did not (as, for example, Bronwyn did) appear to pause for thought in answering questions. He continually professed a lack of recollection as to exact or specific dates (see the extracts at [274] above and his attempted justification for the September/October 2012 error by reference to his inability to recall "100%" specific dates) (see T 98.26; T 97.45); and he adverted on a number of occasions to his youthfulness at the time of the transaction (22 years old) (see for example at T 116.9; T 124.1) when pressed on matters relating to business acumen or his understanding as to caveats and the like. James' comment to the effect that "anything is possible", when maintaining a lack of recollection at one point, struck me as a genuine comment (T 109.47) but in effect it highlighted the limits of James' actual recollection of events.
I have little doubt from the tenor of his answers that James deferred to his father, Ron, in relation to the transaction; that he trusted to his father to look out for his best interests; that he did what his father recommended or told him to do in relation to the deal; and that he basically left it to his father (and through him Mr Lambrinos) to make decisions as to what was done. I consider it highly likely that James' understanding of the overall transaction at the time (and probably also even now) was heavily influenced by the view Ron took of the arrangements.
Ron's view of the transaction, as became clear in the course of his cross-examination, was that James was to become a half owner of the hotel simply on the provision of the short term finance to enable the Nixons to pay the then pressing debts. Ron was adamant that this was not a loan by him to the Nixons, but a loan by him to James which was to be repaid to him (i.e., to Ron) out of the business of which James was then to be the half owner. James' view of the transaction is broadly the same. The provision in the Heads of Agreement in relation to further finance was not accepted by Ron or James as imposing any obligation on James to make a personal capital contribution to the business. Moreover, Ron seems to have considered that any obligation on the part of James to procure further funding was only to arise once James was a half owner of the business. Similarly, James seems to have considered that he was only required to do anything to assist with the procuring of finance if the company (once he was the half owner) was unable to do so. It is telling that the amendments to the draft deed watered down and ultimately removed any obligation at all in that regard.
That view of the transaction does not accord with the understanding Mr Moloney seems to have had of his initial instructions (by reference to the deed as initially drafted) and, even accepting the Browns' version of events, this does not ever seem to have been clearly explained to the Nixons (and would of itself provide a basis for concluding that it is now unconscionable for the Browns to seek to take advantage of that situation).
It is also inconsistent with the Nixons' evidence that James was to be given a half share of the business and property if he provided the finance to clear the immediate debts and put something like $1.3m into the business (a far more plausible scenario). Nevertheless, if the Browns were of the understanding that all James had to do in order to acquire a half share of the business and property was to provide some short term finance (and, perhaps, to introduce and make available to the Nixons the services of Ron's financial adviser and solicitor) it would certainly explain why Ron seems to have thought this was a very good deal (almost, one might think, a deal too good to be true); why he would have been anxious to formalise it quickly and was pressing for it to be documented in a formal agreement (as opposed to relying simply on the Heads of Agreement drafted by Mr Lambrinos), and why he is so obviously irate at the Nixons' resistance to James' claims.
As to Ron's evidence, the longer the cross-examination wore on the more he exhibited a tendency to become assertive and argumentative (as can be seen from some of the transcript extracted earlier - see for example at T 307; and in the references to "real" and "fabricated" meetings). There were at least two instances where he directed his answers, somewhat forcefully, towards the Nixons at the back of the courtroom (see T 334.29-334.30; 336.11-336.27). Ron's behaviour in that regard certainly makes credible the evidence of the Nixons as to the demands earlier made of them and the aggressive behaviours they say Ron displayed. I accept that Ron has a very firm belief in the righteousness of his (or James') cause - it simply does not make it more likely that his recollection of events is correct (particularly given that on his own account he basically abdicated responsibility for the settling of the terms of the September Deed to Mr Lambrinos and on James' other account he was "under instructions" from his father).
In cross-examination, Ron displayed a tendency towards exaggeration: for example, in the evidence he gave (for the first time in the witness box) that there were hundreds of pens in the room in which the September Deed was signed (by way of explanation for the fact that Lana had signed the document in a different colour pen from that used by the Nixons) and in the way he sought to emphasise things in terms that described them as "one million percent" true or untrue.
While I take little from his exaggeration and tendency to argue his own case, I regard the incremental proffering of evidence as to the events in question (from the first affidavit to the reply affidavit to the new details that ultimately emerged in cross-examination) as bearing the hallmarks of reconstruction and an attempt to bolster the account of events on which James' case rests. That casts real doubt on the overall reliability of Ron's evidence.

[68]

Lana

For James, it is submitted that Lana was a direct witness whose evidence was not challenged in a meaningful way. The Nixons, in their submissions, did not suggest that her evidence should be rejected for any reason other than its inconsistency with the evidence they say should be accepted.
I accept that Lana gave her evidence in a direct fashion. Her somewhat rueful (and in hindsight prescient) account (given, I might add, for the first time in the witness box) that at the time she was asked to witness the documents she made a comment to the effect that she did not want to end up in Court (see T 136.30-136.39) rang true to me. That said, such a comment might more understandably have been made if what she was being asked to do back in September 2012 was to append her signature as a witness to documents that she had not witnessed in the first place (since she might well have had an apprehension that by so doing she might expose herself to criticism).
Ultimately, I cannot accept Lana's evidence of what occurred on 21 September 2012 because it is inconsistent with the coming into existence of the critical documents (as I explain in due course). And the difficulty that flows from that is that the detail proffered by her of a meeting that I simply cannot accept she attended leaves me to conclude that this is no more than invention in an attempt to bolster the evidence of her partner and his son. It may be that she has convinced herself (having been privy to family discussion over the period) as to her account of events, but I cannot accept her evidence as credible. It is not necessary here to make any finding of intentional dishonesty in this regard. It is simply sufficient to say that I do not believe her account of events as it does not accord with the contemporaneous documents (and, in particular, the critical documents), and I am satisfied on the application of the Briginshaw standard that her evidence as to the 21 September 2012 meeting should be rejected.

[69]

Mr Lambrinos

As already noted, James submits that Mr Lambrinos has no interest in the outcome of the matter. James also submits that Mr Lambrinos gave clear evidence both as to how the September Deed and documents came into existence and that he was not at the 21 September 2012 meeting.
The Nixons submit that, relevant to the assessment of Mr Lambrinos' credit, is the fact that he has previously been convicted of fraud (relating to the falsification of documents attempting to secure a financial benefit for himself or his family). The evidence of Mr Lambrinos' prior offence is not relied on as any form of tendency evidence. Rather, its relevance is said to lie in the fact that in his affidavit in the present proceedings he set out details of his skill, experience, and (it is said) his good standing in the community, but did not refer to his previous offence. It is submitted that it was open to Mr Lambrinos to leave his skill, experience and good standing out of his affidavit and simply depose as to the events of 2012; and that, by including material relevant to his good standing, and failing to disclose his prior offence of dishonesty, he has sought to mislead both the Court and the Nixons.
Certainly, in cross-examination Mr Lambrinos did not initially volunteer the fact of his conviction, when he was taken through the chronology of his professional or business career as set out in his affidavit. When challenged on this, Mr Lambrinos' response was, in effect, that he had not been directly asked about this (see T 221.6-221.13). There is perhaps some force to this observation (in that he was not directly questioned as to his criminal convictions), though he was certainly asked about what he was doing in that period and he did not volunteer anything about this. It is understandable that Mr Lambrinos would not wish to revisit the events in question (he certainly showed some emotion in the witness box during the cross-examination on this topic). However, the fact remains that the omission of this from the chronology set out in his affidavit did present a misleading view of his overall career and past character.
The Nixons submit that it is open to make a finding that Mr Lambrinos is the sort of person who would engage in an exercise of deceit for financial reward or benefit. It is not necessary for present purposes to make any such finding. At least on one occasion in the past Mr Lambrinos was obviously prepared to engage in such conduct - his plea of guilty to the fraud charges establishes this. However, I am not persuaded that this means that in the present instance he was prepared to do so (and I note that it is not suggested that he stood to obtain any personal benefit out of any attempt to deceive the Nixons into signing the September Deed).
As a witness, Mr Lambrinos presented somewhat hesitantly and, at least by the time he had been cross-examined as to his criminal conviction, he looked very uncomfortable in the witness box. He seemed increasingly to take refuge in a lack of recollection about matters or in bare disagreements with propositions. Thus a number of his responses were to the effect that he did not recall matters happening or discussions or conversations put to him, without further elaboration (see for example from T 244ff), though he did not always exclude the possibility that certain conversations could have taken place (see T 244.45; T 245.46) and on at least one occasion he accepted that a contemporaneous email suggested that a discussion that he did not now recall would have happened (see T 250.8).
Relevantly, in terms of the assessment of his evidence, it was clear that Mr Lambrinos' affidavit evidence did not present a complete picture of what had occurred over the relevant period: he did not, for example, make any reference in his affidavit to the correspondence in which he suggested to Mr Boyd of Global Capital that the transaction for the purchase of a half interest in the hotel by his client was not going to proceed for personal reasons (Exhibit 7) (nor was he at first even able in the witness box to recall Mr Boyd when that name was put to him - T 195.8); he did not recall any conversation with Ron about him no longer wishing to proceed with the transaction (T 194.40; T 199.28), though that is something he had clearly conveyed to Mr Cooper; and his reference to the diary entry on 21 September 2012 (which he said "indicates that I was elsewhere on that date" - T 246.16) was singularly uninformative.
Pressed on the basis on which he had prepared documents for the purpose of preparing his affidavit or later for production under a subpoena that had been issued to him, Mr Lambrinos' explanation was that in his office Gmail account all emails were in the one database (T 197.9); that there were hundreds of thousands of emails (T 197.15); and that he generally entered searches of people's names (such as the Nixons, James, Mr Moloney and Mr Cooper) (see T 197.50ff) but that he did not recall dealing with Mr Boyd at all so he did not include him in the search (T 197.44). When further pressed he said he searched for documents relating to Menangle House using a dot com dot au address but could not recall how he had searched for documents relating to Menangle Hotel and could not explain why the email to Mr Boyd had not come to his attention (see T 198.50-199.22); nor why the email at Exhibit 9 would not have come to his attention when he carried out a search for emails by reference to Mr Cooper's name (see T 204.5). He gave a garbled, and to my recollection rather flustered, response to whether he would have recognised that the email which is Exhibit 9 was an important and relevant document to the present dispute (see T 204.10).
In all, I certainly could not be confident that Mr Lambrinos' recollection of events in relation to the transaction was at all reliable. Ironically, perhaps, if Ron's assessment of Mr Lambrinos were to be correct (that he is the kind of person who might make statements without necessarily having instructions, perhaps in order to obtain leverage with brokers when he is sourcing money - see T 310.42-311.21), then that hardly stands as testimony to his integrity or his credibility as a witness.

[75]

James' submissions

James characterises the Heads of Agreement as confirming that James was "investing" in the assets the subject of that agreement (the Menangle property, Tavern Operator and business). The submission made for James is that: Unlike a loan, but much like an investment, the funds were advanced without security proffered. The investment terms were then confirmed in the Deed. James paid the funds earlier to accommodate the Defendants' dire financial position.
James points in this regard to the communication from Greg, in the period between agreement being reached and the funds clearing the Nixons' debts, following up the "investment" in these terms: Hi Dominic Re: Investors Have we had any news. I'm in the office all day.
James' position, as I understand it, is that the consideration he provided for such an acquisition or investment was the making of short term advances together with the obligation to provide assistance in procuring funding for the business (but not funding personally from him by way of any capital contribution by him). On James' view of the agreement, beyond the amount of the initial advances (which were in due course to be repaid to him) he was not obliged personally to provide any finance - rather, he was to procure it for the Nixons (or the company) in effect in the role of broker and the Nixons (or the company - in which he was to be a shareholder) would be liable to repay the said further borrowings.
It was submitted for James that the documents signed by the Nixons were clear and not confusing, noting that in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52 (at [40]) the High Court said: The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transactions.
James submits that the core of the agreement was always clear and that the Heads of the Agreement and the September Deed sit together when the following matters are noted: first, that James paid the pressing debts; second that "[h]is engaged broker", Easy Biz Finance, procured funding for the business; and, third, that the business was progressing in the ordinary course.
It is submitted that: Although the entity changed from James' company to James, the agreement always involved a 50% interest in the Property and structure of the Business in exchange for interim payments facilitating loans and advising. There was not any discussion of James paying for his interest in the Property and the structure of the Business.
Insofar as the Nixons maintained throughout cross-examination that the deal was always the Heads of Agreement, James points out that the only temporal restriction the Heads of Agreement placed on the transfers to James was the making of the capital gains tax calculations referred to in cl 4(e) (see CB 343).
It is submitted that the question whether James was to be the borrower himself, or was to arrange finance for the Nixons, under the Heads of Agreement can be tested by reference to the following matters: the unlikelihood that the Nixons would trust their business of 17 years (nine with the hotel) to the ability of a 22 year old's assets (which they knew to be in the order of $110,000 and personal assets) or to Ron's guarantee (because they had taken no steps to ensure Ron had the relevant assets to permit it to progress). It is submitted that it makes sense that the Nixons were trusting the future of their enterprise to the one set of assets and liabilities they knew, namely, their own (referring to Greg's evidence at T 426.1-12).
For James, it is further submitted that the Nixons' case in effect requires it to be accepted that he was willing to make an interest free loan (noting his obligation to repay his own loan from Ron) with no security to an enterprise "professing, and proven, to be a terrible credit risk". He argues that this is unrealistic and should be rejected. James' contention is that the Nixons should be taken to have considered that half of a viable business (and no further physical threats for payment - from the builder) was preferable to all of a worthless enterprise; and that this is why the Nixons entered the formal, documented bargain (i.e., the September Deed).
For James, it is contended that at numerous times when Bronwyn asked Greg if the agreed deal was advantageous to them Greg's immediate response was that it was necessary to their interests and they had to proceed; that at all times the Nixons had solicitors available to them from whom advice could have been sought; and that the significant, if not primary, concerns for the Nixons were to pay the charities $25,000 by 15 June 2012, to remove pressure from the builder, and to pay out the ANZ overdraft by 23 May 2012 (all of which it is said James' involvement permitted to occur).

[76]

Determination

Turning to the terms of the Heads of Agreement, it is clear that what was there provided for was that James was to pay certain debts immediately (i.e., on execution of the Heads of Agreement), namely $150,000 to the builder (cl 3(a)), an amount of $17,000 (to be confirmed) to ANZ (cl 3(c)), and $31,000 to the ATO (cl 3(d)); those totalling $198,000. He was to pay the required contribution of $25,000 to the two charities in respect of the poker machine entitlements before 15 June 2012 (cl 3(e)). In total, therefore, the Heads of Agreement provided for him to pay a total of $223,000, some of it immediately and some by 15 June 2012. (There is no dispute that James never actually paid any amount in respect of the ATO debt.)
Under the Heads of Agreement, James was also to "arrange finance for the refinance of the hotel" (cl 3(g)). Certain amounts were to be paid by James "on the refinance of the property" - the (unquantified) balance of moneys payable to the builder (cl 3(b)) and amounts owing to family and friends of $42,000 (cl 3(f)).
As to the construction of the Heads of Agreement, the submission for James that the terms were clear and not confusing is difficult to accept. On the face of the document, there is ambiguity as to what was objectively intended by the agreement that James was "to arrange finance". It could mean that James was to procure finance from another entity or entities for the benefit of the Nixons or for the benefit of the hotel business - in effect as a broker, with the borrowing obligation to be assumed by the Nixon interests; or it could mean that James was personally to borrow the moneys and for those moneys then to be provided to the Nixons or the business either by way of finance (i.e., James on-lending those amounts to the company) or as James' contribution to the business (as some form of "buy-in" or capital contribution).
The reference to James arranging finance "on the basis of the net assets available to him personally" (on which the Nixons place some emphasis) suggests that James was himself to be the borrower; the reference to "and through associated entities and guarantors" might be consistent with either a personal borrowing or a procuring of finance to the "business" as borrower. If the refinance was to be procured for the Nixons, or their company, as borrowers, then the concept of James agreeing to pay amounts out of the refinance is meaningless. Hence there is a tension between the agreement provided for in cll 3(b) and (f) and the obligation under cl 3(h) if that is construed as no more than James providing some kind of brokerage role.
What is clear is that it was contemplated that finance was to be "procured" in tranches: the first tranche (of $850,000) was to refinance the existing ANZ loan (of $500,000), with a further $350,000 to repay "all outstanding loans" to James, family and friends and the builder (see cl 3(h)). That explains the reference in cl 3(b) and (f) to payments being made "on the refinance of the property (discussed further hereunder)".
As at the date of the Heads of Agreement there was no outstanding loan payable to James. Therefore what seems here to be contemplated is that the first tranche of finance to be "arranged" by James was to be used in part to pay the balance of moneys owing to the builder (RE Property Group), to repay amounts owing to family and friends of the Nixons ($42,000) and to repay James the amounts (totalling $198,000) that he was obliged to pay on execution of the Heads of Agreement and perhaps the $25,000 payable by James in relation to the charity donations (which is suggestive of those amounts being paid by James by way of a short term loan). That, however, does not make sense of the provisions for James to pay the amounts in relation to family and friends and the balance of the builder's moneys on the refinance of the property unless James was to be the borrower in respect of that amount.
The three further tranches of finance were to be applied as follows: $200,000 (second tranche) for "poker machine entitlements (or thereabouts)"; $500,000 (third tranche) "to acquire the balance of 5 poker machines (or thereabouts)"; and $600,000 (final tranche) "to acquire the final balance of poker machine entitlements (or thereabouts)".
To the extent that what James was agreeing in the Heads of Agreement to do was to provide short term finance that was to be repayable out of borrowings later to be procured or arranged by him for the business (and which the business itself was required to repay) then the consideration for the undertakings in cl 4 (i.e., for the transfer to James of half ownership of the business, land and company) was in effect no more than the benefit of that short term finance and some form of brokerage or facilitative role on his part. It was suggested in the course of the hearing that once James owned half the business then he would have had some responsibility for half of the debts of the business including those relating to the refinance (see Ron's evidence at T 272.36; T 275.38) - that, however, would depend on the terms of the refinance (shareholders not necessarily being personally liable for the company's debts in all cases). Ron, however, was adamant that once the initial payments were made, James was to be a half owner of the property (T 275.38-275.41): A. It was of our opinion when we signed this or James signed this that once James become half owner and once it was transferred half into his name then he would be able to continue to have the finance prepared to help with the hotel.
In any event, what is relevant here is the lack of certainty as to what was actually being promised (something perhaps not surprising given that the Heads of Agreement were drafted by a non-lawyer and one, who, according to Mr Moloney at least, had a tendency to confuse legal concepts).
It is not suggested that that there was not a common intention that the Heads of Agreement were to be binding (James expressly accepts the binding nature of the document T 542.17; the Nixons accept that they acted on the basis that it was effective and that there was part performance of the Heads of Agreement that would have given rise to an estoppel argument had they later denied its binding nature T 562.13ff). Indeed, the Nixons' position as I understand it is that this is the only agreement that was binding on them (and they explain their later conduct in, among other things, consulting with James as to the eventual sale of the Menangle property or updating him as to the financing for the business, as being consistent with their understanding that he might have had an entitlement, or claim to have an entitlement, under the Heads of Agreement).
That said, James does not bring any claim in these proceedings based on the Heads of Agreement (something that was accepted by his Counsel (T 545.7)). His claims are squarely based on the September Deed, whether enforceable as a deed or as a written agreement supported by good consideration.

[78]

The critical documents

The critical documents bear the relevant distinguishing features that on them there can be seen post-it arrow notes (pointing to the signature lines at each of the places where the documents were signed by one or other of the Nixons) and there are unbroken dotted lines at the relevant places for the witness' signature. This indicates that the photocopies must have been made before Lana's signature was appended to the documents (since it is difficult to see how Lana's signature, which goes through the dotted lines in various places, could readily have been obliterated from the document before the copies were made). (Counsel for James fairly conceded as much when he indicated that he had been unable to come up with an explanation as to how the photocopies could have been taken without removing part of the words (T 536.28).)
James argues that on the day the September Deed and associated documents were signed Greg and Bronwyn "took time for a conclave, discussed the proposal and agreed to proceed"; but he does not suggest that this occurred after the documents were signed by the Nixons in his presence and before Lana appended her signature on the documents. He also maintains that the Nixons (and Lana) were not rushed into signing the documents (that, however, rather depends on when the documents were provided to them).
The difficulty for James' case is that the critical documents could not be in the form in which they now appear if significant aspects of the evidence of the Brown witnesses as to what occurred the September meeting are correct. It is not contended that more than one set of the documents was signed by the Nixons at the meeting. The evidence of James, Ron and Lana, in essence, is that they saw both Greg and Bronwyn sign the September documents; there was a conversation as to who would witness the documents and the agreement was that Lana would do so; and that Lana then signed the documents as witness. Ron and Lana were adamant that Bronwyn did not take the signed documents out of the room to copy them at any time during the meeting.
If, as was postulated in the course of argument, the September documents had been provided to the Nixons in advance of the meeting (as was Ron's evidence but only by the time of his reply affidavit) and had been signed and then photocopied by the Nixons at a time before the meeting, then the Brown witnesses could not have seen the Nixons signing the documents at the meeting (because on that theory of the case the documents would already have been signed before the commencement of the meeting).
True it is that if the documents were provided to the Nixons in advance of the meeting they might have taken a copy of the documents and then signed and photocopied that second set of documents before bringing into the meeting the unsigned set of documents and signing that set of documents in the presence of those at the meeting. But, apart from the fact that there would seem no logical reason so to do, this scenario was not put to either of the Nixons in cross-examination. It was put to them that they had taken photocopies of the documents before the meeting but not that they had signed and photocopied one set of those documents before the meeting and then proceeded to bring and sign a fresh set of documents in the meeting itself.
Counsel for James conceded that if the markings on the document at CB 674 were created at the same time as the document at CB 932, then they could only have been photocopied after the meeting - see T 535.47.
The significance I attach to this is that the Brown witnesses (particularly Ron and James) were adamant that their version of events at the 21 September 2012 meeting was correct. The fact that, logically, their accounts must be incorrect at least in one respect (having regard to the existence of the critical documents), necessarily casts doubt on the balance of their respective accounts of the relevant events (and as much was conceded by Counsel for James - T 537.32).
I do not, however, rely only on that discrepancy in coming to the conclusion that the Nixons' account of the meeting is, on the balance of probabilities, the most likely to be correct.

[79]

Substantive changes between penultimate and final versions of the document

It is significant in my opinion that the September Deed, as ultimately signed, is in substantially different form (by reference to the changed Recital G and the deletion of the original cll 2-4) from the August 2012 version of the deed (Exhibit 8). Mr Moloney's evidence is that on 7 September 2012 he changed the name of the contracting party to James and made consequential changes. He gave no evidence to suggest that he made any more substantive documents at that time (i.e. the time of the changes to Recital G and the deletion of the original version of cll 2-4), nor is there anything to point to him having done so.
In particular: there are no written instructions (such as were made in relation to earlier changes as seen in the Schedule) for such changes; there was no request by Mr Moloney for information or advice by him as to the subject matter of those changes (as, for example, was the case when the 3 July 2012 letter was sent by him); there is no evidence of any email or other communication from Mr Moloney forwarding a further amended draft deed with changes of that kind to Mr Lambrinos or anyone else (as was the case with the first draft of the deed); and, most significantly, no copy was produced by Mr Moloney on subpoena, or annexed to his affidavit, of such a document (which one might expect would still be on his firm's computer system and retrievable in some form if Mr Moloney had in fact made the changes to put the deed in the form it was in when ultimately signed).
Moreover, it might be expected that Mr Moloney (having on his own evidence earlier been careful to advise the Nixons that he was not acting for them and they should obtain independent legal advice), had he made these changes to the documents, would have realised (as he accepted in the witness box) that the import of the changes was to water down (significantly in my opinion) the benefit to the Nixons of the transaction contemplated in earlier drafts of the September Deed (because there was no longer any obligation on the part of James to do anything at all to assist in or procure or arrange further funding for the business) and Mr Moloney might therefore have been expected to take steps to ensure that the change was brought to the Nixons' attention.
It might also have been of concern to a solicitor making amendments of that kind to the deed that the only consideration recorded in the deed was clearly past consideration (an issue that one might think would have given pause for thought notwithstanding that the execution of the document as a deed would ordinarily have provided sufficient consideration at common law for the enforcement of the agreement as a deed).
Furthermore, the acknowledgement as to the fairness and reasonableness of the consideration being provided for those amounts (self-serving from the perspective of James as it clearly is) would take the matter only so far if there were to be a dispute in relation thereto. The changes might well have caused a solicitor to have concern as to whether there was indeed scope for an argument as to the prudence (or otherwise) of the transaction from the Nixons' point of view.
Finally, it would surely have been obvious to a careful solicitor (and there was no suggestion that Mr Moloney did not take care in the drafting of the documents and the advice he gave in connection with the documents), that the new Recital G was in its terms incorrect, since no amounts had been paid by James "pursuant to the terms of this Deed". The only amounts paid by (or on behalf of) James were those paid following entry into the Heads of Agreement - at a time when the deed had either not yet been drafted (such as the payments made on 23 May 2012 and 14 June 2012) or after the initial draft of the deed but before the substantive changes to the deed as signed (such as the payment in respect of sums owing to the builder on about 30 June 2012).

[81]

Lack of any evidence from Mr Moloney as to the changes

Mr Moloney made no statement in his affidavit that he had drafted the documents comprising Exhibit F and Exhibit H; nor that he had received instructions to do so. Taken to the signed version of the September Deed (at CB 929), while he did not accept that he was quite confident that he did not draft that document, he accepted that it was possible that the version containing the redrafted Recitals G and H were not drafted by him. He accepted that he had not said in his affidavit that he was tasked with preparing any shareholders minutes or resolutions with respect to the sale and that it was possible that he did not draft documents meeting that description. He was not sure but did not think he had seen the documents at CB 675 and 676 before and either did not think or did not believe that he had drafted those documents. He said that he might have prepared the transfer (at CB 677), though accepting that that it was possible that he had not done so; the possibility that he had done so being put on the basis that his usual practice would be to prepare the documents necessary to effect the transfer (if dealing with such a transaction): A. My only recollection of it is that I - it would have been my practise [sic] at the time to prepare the documents necessary to give effect to the transfer. That's what I'm basing my answer on. Q. You're talking about your usual practise [sic] in other transactions‑‑ A. Yes. Q. ‑‑would be to prepare documents like this? A. Correct. Q. But you can't say whether you prepared this one can you? A. No, not with certainty. Q. If we go to 678, is that a document that you've seen before? A. I can't say that I've seen it before. My answer would be the same, is that my usual practice to prepare the documents necessary to give effect the underlying transaction.
In effect, other than confirming that his firm did utilise code documents for electronic storage with footer details of the kind appearing on CB 675, he was unable further to assist as to whether he had in fact drafted the various documents to which he was taken (and his initial reaction to many was that he did not think so) (see T 46-48). I accept that evidence. It seems to me unlikely (there being no record of instructions to do so or of copies of those documents on his files; nor any evidence that he forwarded those documents to anyone) that Mr Moloney produced any execution copies of the various September documents.

[82]

Finding as to who drafted the final version of the September Deed

Having regard to all of the above, I find, on the balance of probabilities, that Mr Moloney did not make the changes to Recital G and the deletion of cll 2-4 from the draft that preceded the version of the September Deed that was signed at the September 2012 meeting; and that those changes were instead made by Mr Lambrinos, to whom a Word format version of the document had previously been sent.
In this regard, I consider it significant that Mr Lambrinos had played an active role in the giving of instructions in relation to the draft deed; he had experience with documents as an accountant and financial adviser; Ron on his own account was prepared to leave it to him to tell him when the draft was ready to be signed; and there is no suggestion that either Ron or James was in a position to make those amendments to the documents himself. The Nixons submit that Ron did not have the capacity or education to draft the documents (Ron himself made reference in the witness box to his limited education - see T 290.15; and James more than once emphasised his own commercial inexperience); and note that no evidence was adduced in James' case of any other person who drafted the documents.
The Nixons argue that, at the time of the redrafting of the September Deed, both Ron and Mr Lambrinos were of the view that the moneys that had been advanced were "a loan to be repaid"; yet the recitals to the September Deed record the transfer of the one-half interest in the property and business as being "fair and reasonable consideration for the amounts paid by Brown pursuant to the terms of this Deed". It is submitted that this characterisation of the transaction demonstrates that the author of the document was deploying legal concepts that were incoherent: first, the moneys had not been paid pursuant to the terms of the deed - they had already been paid pursuant to the Heads of Agreement; and, second, the language demonstrates confusion between the concepts of consideration for a purchase, on the one hand, and an advance by way of loan, on the other. Although Ron denied having made a "loan" to the Nixons, it is certainly the case that by an early stage in the chronology of events he was placing pressure on the Nixons to ensure the repayment to him of the moneys he had advanced to James.
I note Mr Moloney's comments about Mr Lambrinos' instructions (there talking about an email of 18 June 2012) (T 41.22): Q. But you see, Mr Lambrinos was now characterising the payment of the $200,000 odd as a loan to the hotel. Do you agree? A. That's the way he's expressed it, yes. Q. Whereas previously and up until that point, the funds had been advanced as part of the consideration for the acquisition for a half share in the loan. Do you agree with that? A. Half share in the property or the loan? Q. Sorry, a half share of the property, the business. A. Correct. Q. To that extent, you recognised that the deed that you had prepared no longer reflected the nature of the underlying agreement. Do you agree with that? A. No, I don't. Do you want me to explain why? Q. Well, off you go. A. Mr Lambrinos uses all sorts of language and he has all sorts of theories about the law and what have you, so I interpreted this as being an urgent email asking me to hurry up and do the transaction. I didn't recognise it as a change in instructions. [my emphasis]
I have concluded that it was Mr Lambrinos who drafted the changes to Recital G and cll 2-4 in the September Deed to which I have referred above. I do so, conscious that Mr Lambrinos denied this, in circumstances where I consider that there is no other logical explanation for the amendments to have come into existence at that time (having concluded that Mr Moloney did not make those amendments).
As to the balance of the documents, I accept that Mr Moloney may have drafted them but if he did so then, having regard to their incompleteness, I do not accept that he provided them to any of the Brown parties as being a version ready for execution. In other words, if he gave those documents to one or other of the Brown parties, I find that he did so as drafts.

[83]

How did the documents come to be at the 21 September 2012 meeting?

As to how the documents came to be at the 21 September 2012 meeting, I do not accept Ron's (belated) evidence that he collected them from Mr Moloney two weeks before the 21 September 2012 meeting and then delivered them to Greg at the Menangle property.
Mr Moloney gave no evidence to that effect nor did he produce any record from his firm that made reference to such an attendance on Ron. Moreover, not only there was no mention of this in Ron's first affidavit, in his first affidavit Ron deposed that he could not then recall how the documents were provided to him. The explanation for the rather fortuitous recovery of his memory in the period from 3 November 2016 to 7 June 2017 (after the first affidavits of the Nixons had been filed, raising issues as to the execution of the documents) was not made clear.
I consider that Ron's later affidavit (after discussions had taken place between he and Mr Lambrinos in relation to the sequence of meetings and after discussions had taken place with James and Lana as to the events in dispute) has all the hallmarks of a convenient reconstruction of events to explain what otherwise might have appeared to have been akin to an ambush of the Nixons (i.e., the presentation to the Nixons of the (significantly amended) documents for the first time at the 21 September 2012 meeting with a demand that they sign the documents - meaning that there was little or no opportunity to consider the documents in detail or to obtain independent advice as to their contents). The fact that the Nixons had not seen earlier drafts of the deed is not here to the point. The September Deed itself dramatically changed the transaction as provided for under the only earlier document they had seen - the Heads of Agreement - and there is nothing to suggest that this was drawn to the Nixons' attention.
I find, on the balance of probabilities, that the final version of the document as signed by the Nixons on 21 September 2012 incorporated changes drafted not by Mr Moloney but by Mr Lambrinos; and that Ron's account of collecting the documents from Mr Moloney and providing them to Greg two weeks before the meeting cannot be accepted and must be rejected.

[85]

Who was at the meeting?

The conclusion that Mr Lambrinos must have made the final drafting changes is also of significance when considering the dispute as to who was at the meeting because it is necessary to consider how the documents came to be at the meeting if (as I have found) they were not provided to Greg (or the Nixons) in advance of the meeting. The most likely explanation is that Mr Lambrinos brought the documents to the 21 September 2012 meeting himself (since there is no evidence that he sent or delivered the documents to either James or Ron prior to the meeting).
That, of course, is contrary to the evidence that Mr Lambrinos gave to the effect that he did not attend the meeting (and to some extent inconsistent with his electronic diary entry for that day). I say "to some extent" because there was no information whatsoever as to the nature of the entry there recorded: whether it related to a telephone conversation or a meeting and, if the latter, where the meeting was to take place; nor any information as to the person there named. Mr Lambrinos gave no account of what was the subject of the meeting or telephone conversation; or even as to whether the meeting or telephone conversation went ahead at the time scheduled or at all. There is insufficient information from the electronic diary entry alone to enable me to conclude that I should not draw the inference (from the matters referred to above) that, having most likely been the author of the changes incorporated in the final version of the September Deed, it was Mr Lambrinos who brought the deed to the 21 September 2012 meeting and who therefore was present at the meeting (as the Nixons have contended).
It is submitted for James that if Mr Lambrinos had been at the meeting (as the Nixons contend) he could have witnessed the documents and the fact that he did not confirms that it was Lana who witnessed the documents. I not accept the logic of that submission. The fact that Mr Lambrinos did not witness the documents (whether he was present at the meeting or not) does not confirm that Lana did so at the meeting. The form of the critical documents as they appear in the evidence, as I have already explained, belies that suggestion. Nor does the fact that Mr Lambrinos did not witness the documents establish that he was not at the meeting. There may be other explanations for this. Not least, he may been reluctant to witness the documents having regard to his previous conviction for falsification of documents. (And the fact that he did not do so might equally be explicable by the fact that it was not intended that they be immediately binding but, rather, that they were to be held as some form of "security".)
I accept that such a conclusion is contrary to the sworn evidence of not only Mr Lambrinos but also of James, Ron and Lana and that it necessarily involves finding the very detailed accounts given by the Brown family members to be incorrect. However, in that regard it is pertinent to note the well-recognised caution as to acceptance of witnesses who have discussed amongst themselves their evidence in advance (as is admitted has here been the case).
Acceptance of the Nixons' evidence that Mr Lambrinos was present at the meeting on 21 September 2012 leads me to reject the evidence of the Browns that James and Lana were at the meeting. Since each of the Browns was adamant that James and Lana (but not Mr Lambrinos) were at the meeting, it follows that I cannot accept that evidence once I have concluded that Mr Lambrinos is most likely to have been there. The accounts were presented in effect as a binary choice - it was not suggested that Ron, James and Lana might each have been mistaken as to Mr Lambrinos' presence or might simply have forgotten that he was there.
I find, on the balance of probabilities (and to the level of persuasion required on the application of the Briginshaw standard), that the persons in attendance at the 21 September 2012 meeting with the Nixons were Ron and Mr Lambrinos (and that neither James nor Lana was there).

[86]

Conclusion that Lana did not witness the documents

It follows from the above, and would in any event follow from my conclusion as to the critical documents alone, that Lana's signature as witness was not appended to the documents at the time they were signed. (It is also likely that she would not have been an eligible witness to the signing of the Real Property Act transfer form, as the evidence - not challenged - of the Nixons was that they first met her on about 17 June 2012 and therefore Lana had not known Bronwyn for more than 12 months before 21 September 2012 and she gave no evidence of having sighted identifying documentation at the time she witnessed Bronwyn's signature - see s 117 of the Real Property Act.)
The Nixons note that every signature on the documents made by Greg and Bronwyn was in black pen whereas the signature of Lana was in blue pen. They note that none of James, Ron or Lana gave evidence in his or her initial affidavits to the effect that Lana used a different pen to that of Greg or Bronwyn and that the first suggestion that this had occurred was in the evidence of Ron (at T 380.03ff). It is submitted that there was no reason for Lana to pick up another pen, if the documents were offered to her with the black pen the Nixons had used; and that the inference should be drawn that the suggestion that the Nixons signed the document, and then Lana selected another pen to sign the document, is a recent fabrication.
It is not necessary to make any findings in that regard. I do not base my finding as to when Lana signed the relevant documents (i.e., that she did not do so at the meeting but did so at a later point) on the fact that a different colour pen was used by Lana when she did so. Rather, I have drawn that conclusion from the fact that I conclude that Lana was not present at the meeting on 21 September 2012. As already noted, on Lana's version of events, the critical documents could not have come into existence.
It is not necessary to consider whether it would have been sufficient for Lana to have appended her signature later to the documents (having been present when the documents were signed and having physically witnessed the signing) because I am not satisfied that Lana was present at the time the documents were signed. (But in any event, for the reasons I set out later in relation to the submission that Ron was a competent witness, had that issue arisen in relation to Lana I would have concluded that it was not sufficient.)
That gives rise to a legal issue raised by the submission made for James that whether Lana validly attested the September Deed is immaterial because Ron was there at the signing and observed (i.e., physically witnessed) them being signed and has now attested in his affidavit to being the case. That issue is whether it is necessary (for satisfaction of the formalities for a valid deed) for the witness to append his or her signature to the deed at the time it is signed. I consider this in due course after I have completed my findings in relation to the 21 September 2012 meeting.

[87]

Commerciality of the September Deed

The Nixons submit (and I agree) that the changes to the September Deed (both from the earlier drafts and, relevantly, from the Heads of Agreement) were significant in that they removed any further obligation on James to provide any additional benefit to the Nixon interests; the effect of which was substantially to improve the commercial position of James. In particular, it is submitted that, seen in context, the amendment removed two of the major benefits which the Nixons were expecting (i.e., for James to provide expertise and further finance; or, alternatively, to provide a capital contribution). At least in relation to the funding that is clear from the text of the changes. Whether it was anticipated that there would be a major benefit to the Nixons from the provision of James' expertise - in circumstances where this was to be an opportunity to set him up in business and it is not apparent that he had any relevant expertise - is perhaps a moot point, but nothing turns on this.
The Nixons say that, despite the true value of a half interest in the property and business at that time being at least $1.5 million, what the September Deed provided for was the transfer to James of that half interest in consideration for the "purported" loan of $192,000 from the Browns. They argue that the adjustment of obligations under the redrafted deed was so extensive that it conferred no commercial advantage to the Nixons. It is submitted that it is glaringly improbable that the Nixons would have agreed to convey a half interest in their valuable property and undertaking (recently enhanced by the acquisition of the poker machines) for the sum of $200,000.
The Nixons submit that either James or Ron and Mr Lambrinos recognised that the transaction set out in the deed presented on 21 September 2012 was so vastly different to the Heads of Agreement that if the Nixons sought legal advice or read the document, they would not sign it (there being no reason for them to take on a partner in a valuable business for a contribution of $200,000 and to pay the stamp duty); that in order for the document to be signed, they would need Mr Lambrinos to convince the Nixons to sign the document; and that: To this end, they had to formulate a ruse. That ruse was to rely on the Nixons' inherent fair mindedness and proffer the documents as security for payments made by Ron and for which he had no security in the event the Tavern ran into financial difficulty. Ron needed to use Lambrinos to get the documents signed because the Nixons trusted him.
For James, it is argued that further benefit was provided to the Nixons (being the assistance of James' mortgage broker and solicitor to their advantage) at no cost, and that the Nixons "ultimately benefited by turning a losing business on the cusp of winding up into a profitable sale". James points to the acceptance by the Nixons in cross-examination that they had not caused the professionals (i.e., Mr Lambrinos and Mr Moloney) to become involved and that they had benefited from the involvement of those professionals. However, that assistance is not part of the arrangements provided for under the September Deed as signed - since by then the provisions in relation to assistance with or arrangements for further funding - cll 2-4 - had been wholly removed.
James emphasises that the court does not weigh the commerciality of the agreement (referring to Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd [2008] NSWCA 5, at [27]-[38], per Basten JA (Giles & Tobias JJA agreeing)); and that it has been recognised that business commonsense is a topic on which reasonable minds may differ (referring to Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181; [2001] HCA 70 at [43] per Gleeson CJ, Gummow and Hayne JJ) and bad bargains are not of themselves "unbusinesslike"' (referring to Lindsay-Owen v Winton Partners Funds Management Pty Ltd [2017] NSWCA 78 at [20] per Payne JA).
I accept that the Court does not weigh the commerciality of the transaction; but whether the transaction set out in the September Deed made commercial sense as at the time it was signed is not the issue (other than insofar as it supports the conclusion that the deed was presented to the Nixons for execution as "security" and was to be put into a drawer - an issue I deal with in due course). Suffice it to note that, in its final form, it is difficult to see any benefit whatsoever to the Nixons from entering into such an arrangement at the time that they signed the document.

[89]

Post contractual conduct

I note that both parties point to the other side's post contractual conduct as relevant to determining whether there was an agreement (see Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61 at [25] per Heydon JA, as his Honour then was).
James relies on the following matters as indicating conduct of the Nixons which tends to confirm the agreement encompassed in the September Deed: that there are no contemporaneous records disputing James' claim or otherwise confirming the "put in a drawer" version for which the Nixons contend; that Greg confirmed James' interest in the Menangle property and the business on a number of occasions (there referring to the emails between 5 and 24 June 2015 - see above at [278]-[281]); that when James asked for information about the business, Greg never responded to the effect that James had no interest and therefore no right to this information; and that the Nixons ultimately benefited "because they had a long suffering enterprise with significant commercial pressure, but they got through the tough period, because of James, and went on to a profitable sale". James emphasises that it was not until 2015 that the Nixons communicated to James that they did not consider the written terms as binding
The Nixons, on the other hand, point to the fact that they made lump sum payments to Ron up to and including February 2015 (arguing that it is not without significance that the payments ceased after almost $220,000 had been paid to one or other of James or Ron). It is submitted that these payments are conduct that is consistent with a loan; and inconsistent with consideration having been paid for a one-half share in the land and business.
The Nixons argue (and I agree) that James' evidence as to his proprietorial activity after the meeting on 21 September 2012 is wholly unsupported by any contemporaneous documentation and is entirely unconvincing. They say that James did not involve himself in the management of the business; he did not attend any meetings and did not work in the business; and, insofar as he says that he asked to see the books as he was concerned about his exposure to potential tax office liability, they argue that his conduct is inconsistent with his evidence. It is submitted, and I accept, that James' evidence (that he was promised access to them, but never saw the books and never took any step formally to assert the rights he perceived that he had until after April 2015) should be rejected.
I consider that James' account of conversations in which he asked Greg for access to the books of the business is inherently implausible. It is not supported by any contemporaneous documents. (And, I might add, there is no reason why Mr Lambrinos, who had been so involved in the deal at the relevant time, could not have made an approach to the Nixons for access to relevant financial or business records on James' behalf, had it been the Brown interests' understanding of the deal, after the execution of the September Deed, that James was immediately a half owner of the property and business). I reject James' account of events in that regard.

[90]

Making of alleged representations - cross-claim

I turn next to the making of the alleged representations, as pleaded in the cross-claim.
The pleaded statements and representations at the 21 September 2012 meeting on which reliance is placed for the misleading or deceptive conduct claim were to the effect that:

Ron represented to Greg: not to worry about the RE Property Group claim [the facilitation fee claim] which would be "sorted out"; and that he was "working" on the provision of moneys to purchase poker machines for the business ([40] of the cross-claim);
Ron said to Greg that he required the "document" (the set of four September documents) to be signed before he would provide any more money to the business on behalf of James ([42] of the cross-claim);
Mr Lambrinos said to Greg that the Nixons should not worry and the document was just a security for the moneys already paid by or on behalf of James in case anything went wrong in the future ([43] of the cross-claim);
Ron said to Greg that the document would "just be put in a drawer" and that he would give the document to his solicitor and no one would know about it ([44] of the cross-claim);
Ron, after Bronwyn joined the meeting, said to Bronwyn that: no one would see the document they were discussing; the document would just go into a drawer; the document would be security for any moneys to be advanced to the Nixons; no one would know about the document except Ron's solicitor and the Nixons; and he would only use the document if he did not get his money back ([45] of the cross-claim); and
Mr Lambrinos said, in response to a question whether the Nixons should get some legal advice, that it would just complicate everything and slow everything down ([46] of the cross-claim).

It is alleged that those representations and statements were made by Ron and Mr Lambrinos as agents for James and for his benefit and were false and fraudulent to the knowledge of Ron and Mr Lambrinos at the time each of them was made ([55] of the cross-claim); that they were made with the intention of inducing the Nixons to execute the documents and thus of procuring the benefits purportedly conferred on James by those documents ([56] of the cross-claim); and that, acting in reliance upon them, the Nixons signed the September documents ([50] of the cross-claim).
For James it is submitted that it is implausible that commercially sophisticated people (as he so characterises the Nixons) would arm someone with all the legal documents to transfer half of their property and business, and bind themselves by deed to do so, on the "mere verbal assurance" that the documents would all "sit in the drawer".
James points to other matters from which he submits that the alleged representations could not have been made: first, that it is said they were made in the presence of Mr Lambrinos, whose diary is said to show that he was not at the 21 September 2012 meeting; second, that the representations are not recorded in any contemporaneous material, despite how significant they are said to be; third, that the making of the alleged representations was only raised in June 2015; and finally, that they contradict Greg's conduct and dealings with James following the execution of the September Deed.
As to the first of those matters, I have already concluded that, on the balance of probabilities, Mr Lambrinos was at the 21 September 2012 meeting. As to the second, I accept that there is no contemporaneous record of the alleged representations but I note that there was a relatively prompt complaint that was raised by Bronwyn after the attempt was made by James to rely on the documents in order to register a transfer of the shares into his name (see the email of 7 June 2015), which is consistent with her evidence that Ron represented to the Nixons that the documents would only be used if there was a default. As to the third, I accept that the issue of the alleged representations was not raised until June 2015 but that is not inconsistent with an understanding by the Nixons that the documents were to be "put into a drawer" until there had been full repayment of the amount advanced by Ron (with interest), since that only occurred in about February 2015. Finally, as to the perceived contradiction between the making of the representations, on the one hand, and Greg's conduct and dealings with James following the execution of the September Deed, on the other, the highest that this rises is that Greg did not disabuse James at an earlier stage of the suggestion that James had some sort of interest in the ownership or business of the hotel. However, in my opinion that is equally consistent with Greg (or the Nixons collectively) having an understanding that they had entered into a binding Heads of Agreement under which James might be able to assert an entitlement to an interest in the business at some stage.
James argues that the alleged representations make no sense in that: they relate to Ron but the documents are for James; there was no loan from Ron to the Nixons so no security was available "let alone needed"; the evidence of the Nixons is that they considered, right up to 9am on 21 September 2012, that there was no relevant loan from Ron (which understanding is said to contradict the Nixons' version of the 21 September meeting); the documents provided no security in any event; and in fact the documents moved James to the bottom of any list on an insolvency. It was submitted in closing written submissions that, if the representation was that the documents were to sit in a drawer, it would surely make sense for the Nixons to keep the documents in their drawer but in oral submissions Counsel for James accepted that if the documents were to be kept "as security" it would make more sense for the party having the benefit of the security to retain custody of them (see T 557.27).
As to the first of those matters, it is clear from the outset of the discussions between the Nixons and the Browns in 2012 that Ron was looking at this as a means of setting James up in business and that, in essence, he was prepared to assist in the provision of funds to be advanced to the Nixons in order to benefit his son. Therefore, the fact that the documents related to James (not Ron) does not seem to me to detract from the likelihood that representations of the kind alleged were made by Ron.
As to the proposition that there was no loan from Ron to the Nixons, such that no security was needed by Ron, this is inconsistent with Ron's demand for (and acceptance of) the repayments of interest and principal in respect of the moneys that had been advanced in May/June 2012.
The Browns seem to characterise these repayments either as repayments (to James) of the advances made by or on behalf of James and just channelled directly to Ron (in effect as a payment by James to Ron in respect of the loan from Ron to James) or as being distributions to James out of the business of which James was part owner (but again paid directly to Ron in effect as a repayment by James of moneys advanced to him by his father). However, it was Ron who pressed for payments to be made by the Nixons (whether or not he said - which he denies - that this was for "interest") and the fact is that, over the period from 2012 to 2015, the Nixons did pay directly to Ron the whole of the moneys that had been advanced by or on behalf of James shortly after the execution of the Heads of Agreement.
It is said that on the face of the documents they could not have been security - creating no mortgage or charge or secured interest and only creating "an equity interest" (see T 557.50-558.2).
However, in the context explained above, it makes sense that, as at September 2012, Ron was seeking some "security" for the moneys he had advanced in the sense of something that would assure him that he would be repaid. The concept of holding the transfer documents as "security" makes sense if the notion of "security" is that of something to provide an incentive for the Nixons to repay all of the moneys advanced (i.e., something to hold over their heads as an adverse consequence if they failed to make the repayments).
The submission that this would provide no security for James, on the basis that he would go to the bottom of the list on any insolvency, seems to me to miss the point that it was Ron who it is said was requiring "security" for the repayment of moneys that he had advanced. In that context if the Nixons were concerned to hold onto the entirety of their business they would have a very real incentive to make the repayments to Ron.
James submits that the Nixons "with their business sophistication, ability to say no when a deal didn't suit them, use of legal advisors, knowledge of the more formal document that was to occur, and limited exposure to Dominic [Lambrinos] and the alleged aggression of Ron on 30 June 2014 regarding money" would not have signed the documents if they did not represent the total of the arrangement.
As I have made clear earlier, and without intending any disrespect to them, the Nixons did not present in the witness box as commercially sophisticated business people, nor does the fact that they had operated a business for some time (and that Bronwyn had run a physiotherapy practice before that) make it so. Indeed the fact that the hotel business was in financial difficulties in 2011/2012 might suggest that they were not as commercially astute as others might have been. More to the point, the fact that they signed the Heads of Agreement without seeking legal advice (and later the September Deed without, on any view of the matter, careful consideration or independent legal advice) points strongly against them being commercially sophisticated and it certainly does not lead me to conclude that they signed the documents at the 21 September 2012 meeting because the documents represented the whole of the arrangement between James and them.
James argues that if the representations were made the Nixons would have sought the documents back once the 9 February 2015 payment was made, yet they did not do so. I do not consider that the fact that the Nixons did not demand the documents back once the advances had been repaid is of much assistance to James. As noted above, it is consistent with the Nixons having had the understanding that the Heads of Agreement was a binding agreement under which James might have some entitlement in relation to the business. Moreover, as soon as it became clear that James was attempting to rely on the signed ASIC form, Bronwyn complained to James that this was inconsistent with Ron's word (see the email of 7 June 2015).
Finally, James argues that even if the representations were made, there was no authority to bind James by them. James says that there is no evidence of James having given Ron and Mr Lambrinos authority to negotiate terms beyond the written document signed as the September Deed; and that no agency relationship can be imposed by apparent or ostensible authority.
Leaving aside for the moment the issue of authority, I consider that the statement attributed by Greg to Ron to the effect that he required the document(s) to be signed before he would provide any more money to the business rings true. There seems no doubt that Ron was pressing from June 2012 for there to be a document put in place to "formalise" the arrangement (see Mr Lambrinos' communications with Mr Moloney to which I have referred above) and Ron himself said that the goal from the beginning was for there to be security.
As to the alleged statements that the document (or documents) would just be put into a drawer and were just "security" (which the Nixons understood to mean that the documents would not be used unless something went wrong or unless there was default in repayment of the moneys that Ron had lent to James (to advance to them) or might lend in the future - which is the thrust of the understanding pleaded in the cross-claim at [43]-[45]), I do not accept the submission for James that these representations would have made no sense (for the reasons which I have outlined above).
One matter that points towards the making of representations that the documents would only be used as security and would be kept in a drawer, in my opinion, is the incompleteness of at least some of the documents when they were presented for signing. The ASIC form was undated and incomplete when signed. The minutes of meeting and the resolution for the transfer of shares were similarly undated. The Real Property Act transfer form was undated and incomplete (and in a material way such that the form cannot sensibly be understood to have been issued by Mr Moloney as an execution copy).
It is submitted for James that even if the Nixons' contention that the September Deed was not dated is accepted, that fact does not affect its validity (relying on Brown v lnnovatorOne Plc [2012] EWHC 1321 at [365] per Hamblen J). However, to my mind, the state of the documents when presented by Ron or Mr Lambrinos for execution by the Nixon interests is a clear indication that they were not intended immediately to be binding, which is consistent with the making of a representation to the Nixons that the documents were only to be put into a drawer and used as "security".
The above, together with my general conclusions as to the unreliability of the Browns' evidence (arising in particular from, but not only because of, the fact that on their evidence there is no logical explanation as to how the critical documents came into existence), leads me to conclude that the Nixons' account of the 21 September 2012 meeting should be preferred to that of the Browns.
I find that the statements and representations to the effect pleaded in the cross-claim were made by Ron and Mr Lambrinos respectively; and I consider the only logical inference is that the Nixons relied on those representations in signing the documents that they signed on 21 September 2012.
As to the issue of agency, that being a mixed question of fact and law (see Gippsreal Ltd v Melbourne Linh Son Buddhist Society Inc [2016] VSC 324 at [86]; Liao v State of New South Wales [2014] NSWCA 71 at [262]; Crane v The Mission to Seafarers Newcastle Incorporated [2018] NSWSC 429 at [41]), I have dealt with the factual matters on which it is based and I consider in due course what conclusions should be drawn therefrom.

[92]

Attestation

I turn now to consider whether the September Deed is enforceable as a deed. It was common ground that it is not a deed unless the requirements in s 38(1) of the Conveyancing Act 1919 (NSW) were met (I set out s 38(1) below). In particular, this issue arises in the context where I have found that Lana, the purported witness to the Nixons' signatures, was not present at the execution of the September Deed by the Nixons. The submission was made for James that, even if (as I have found) Lana did not witness the signing of the September Deed, the signing of it by the Nixons was nonetheless physically witnessed by Ron, who is not a party to the deed and who has attested in his affidavit evidence to the fact that he witnessed the execution by the Nixons. In this context, it is relevant to note that the Nixons do not deny that they signed the September Deed at the meeting in Ron's presence.
In the course of oral closing submissions, the above attestation issue having arisen, I drew the parties' attention to the decision of Edelman J, then sitting in the Supreme Court of Western Australia, in Netglory Pty Ltd v Caratti [2013] WASC 364. There, his Honour considered the formalities required of a deed for the purposes of s 9 of the Property Law Act 1969 (WA) (the WA Act) in circumstances where the signature of a witness was inserted years after the witness claimed to have been present and to have witnessed the signing.
As his Honour had concluded (at [84]) that the documents in question had not been witnessed, and therefore were not deeds and could not be enforced as deeds, the subsequent discussion concerning whether (if the document had been witnessed) that witnessing ought to have been contemporaneous with its execution is obiter, but it nonetheless contains a thorough exposition of the authorities and is of considerable value here. His Honour went on to consider the formalities required of a deed under the WA Act as to attestation.
Section 9 of the WA Act, which his Honour noted had implemented dramatic reforms to the law of property ([88]) provided as follows: 9. Formalities of deed (1) Every deed, whether or not affecting property - (a) shall be signed by the party to be bound thereby; and (b) shall be attested by at least one witness not being a party to the deed but no particular form of words is required for the attestation. (2) It is not necessary to seal any deed except in the case of a deed executed by a corporation under its common or official seal. (3) Formal delivery and indenting are not necessary in any case. (4) Every instrument expressed or purporting to be an indenture or a deed or an agreement under seal and which is executed as required by this section has the same effect as a deed duly executed in accordance with the law in force immediately prior to the coming into operation of this Act.
Edelman J concluded, having had regard to the legislative intent (revealed by the language of the provision and its history, purpose and context) as well as to judicial decisions on the New South Wales equivalent to the section (s 38(1) of the Conveyancing Act (the NSW Act), with which we are here concerned) and other authority, that any failure to comply with the requirements of s 9(1)(b) of the Property Law Act had the effect that the relevant documents were not deeds (see [125]).
His Honour then considered (and rejected) a submission to the effect that the requirement for attestation meant simply that the witness must be present at the signature of the party to be bound but did not require that the witness sign to signify that presence; and hence that no written signature was required of the attesting witness. Having regard to various authorities, his Honour considered that the meaning of attestation as articulated in Norton on Deeds (Robert Morrison and Hugh Goolden, Norton on Deeds (2nd ed, 1928, Sweet & Maxwell), ought be uncontroversial ([144]), citing the following passage: Attestation means "that one or more persons are present at the time of the execution for that purpose" (i.e. for the purpose of attesting the execution) "and that as evidence thereof they sign the attestation clause, stating such execution" ... The witness must sign as witness and for the purpose of attesting the execution ... and consequently a party to the deed cannot be a witness. [emphasis omitted]
His Honour also noted the statement by Hely J in HCK China Investments Ltd v Solar Honest Ltd [1999] FCA 1156; 165 ALR 680 to the effect that attestation ordinarily requires that a person is present at the time of execution of a document for the purpose of attesting the execution "and as evidence thereof signs the document"; and gave as another modern example the decision of Ellison v Vukicevic (1986) 7 NSWLR 104, where Young J (as his Honour then was) held that a document executed when the purported witness not present was not a deed.
A further issue considered by Edelman J was whether attestation was required at the time of signature. His Honour concluded (at [156]) that, as a matter of principle, the approach of the majority in Wright v Wakeford (1812) 4 Taunt 213; 128 ER 310 (Court of Common Pleas, the case having been directed from the Court of Chancery: see (1811) 4 Ves Jun 455; 34 ER 176) should be preferred, namely that the attestation required to constitute a due and effectual exercise by deed of the power there in question (a trust power for the sale of land) "ought to make a part of the same transaction with the signing and sealing … such being the usual and common way of attesting the execution of all instruments requiring attestation" (see [153]). His Honour noted that s 9 was enacted against, and ought to be interpreted as incorporating this historical understanding of the meaning of attestation (see [160]).
Hence the relevant documents in that case did not satisfy the formalities required of a deed.
In the present case, the statutory provision is s 38 of the NSW Act, which, relevantly, provides that: 38 SIGNATURE AND ATTESTATION (1) Every deed, whether or not affecting property, shall be signed as well as sealed, and shall be attested by at least one witness not being a party to the deed; but no particular form of words shall be requisite for the attestation. (1A) for the purposes of subsection (1), but without prejudice to any other method of signing, a deed is sufficiently signed by a person if: (a) by the direction and in the presence of that person the deed is signed in the name of that person by another person, (b) the signature is attested by a person who is not a party or signatory (except by way of attestation) to the deed, and (c) the person attesting the signature certifies in his or her attestation that he or she is a prescribed witness and that the signature was affixed by the direction and in the presence of the person whose signature it purports to be. … (3) Every instrument expressed to be an indenture or a deed, or to be sealed, which is signed and attested in accordance with this section, shall be deemed to be sealed.
Counsel for James sought to draw a distinction between the present case and that considered by Edelman J in Netglory, on the basis that the equivalent provision in Western Australia did not include a provision corresponding to s 38(1A); and pointed to the fact that s 38(1A) is without prejudice to any other method of signing (i.e., is facultative not mandatory). However, sub-s (1A) says nothing about the meaning of attestation for the purposes of s 38 of the legislation here applicable. Counsel also drew attention to the decision in Shah v Shah [2001] 3 WLR 31; [2002] QB 35; [2001] 4 All ER 138; [2001] EWCA Civ 527, which I consider below.

[93]

Determination on the issue of attestation

Prior to the intervention of statute, there was no requirement that a deed be either signed or attested. A deed was "a writing or instrument, written on paper, or parchment, sealed and delivered, to prove and testify the agreement of the parties, whose deed it is, to the things contained in the deed" (Edward Hilliard (ed), Sheppard's Touchstone of Common Assurances (7th ed, 1820, J & WT Clarke), 50).
In Norton on Deeds (cited above), at 7, the authors note: Signing is not necessary to make a deed valid as such at common law, nor, contrary to Blackstone's opinion, Com. Bk. II, c. 20 (2nd ed., p. 305), by the Statute of Frauds (29 Car. 2, c. 3). "But whether the parties to the deed write in the end their names or set to their marks, as it is commonly used, it matters not at all (as I think) for that is not meant where it is said that every deed ought to have writing": Termes de la Ley, s.v. "Fait"; Preston in Shep. Touch. 56; Shep. Touch. 60; 3 Prest. Abst. 61… and at 24, as to attestation, they write: Attestation of the signature, sealing or delivery of the deed is not necessary to make a deed as such valid: Co. Litt. 6 a, 7 a, 7 b; Bl. Com. Bk. II, c. 20 (8th ed.,p 307); Goddard's Case (1583), 2 Rep. 4 b, at p. 5 a; Garrett v Lister (1662), 1 Lev. 25; but of course in practice it should never be omitted, and in the case of many instruments attestation is required by law.
See also Gerald Dworkin, Odgers' Construction of Deeds and Statutes (5th ed, 1967, Sweet & Maxwell), 13-14; R.A. Donnell (ed),Gibson's Conveyancing (21st ed, 1980, Eastern Press Ltd), 198; Peter Butt, Land Law (6th ed, 2010, Lawbook Co), [19-115]. In Victoria there is still no requirement that a deed be witnessed (see Nicholas Seddon, Seddon on Deeds (2015, Federation Press), 50-51; Property Law Act 1958 (Vic), s 73).
Thus, as Edelman J noted in Netglory at [124]: At common law there was no particular requirement for attestation. But attestation could be required by statute or by a power of appointment.
Section 38(1) of the NSW Act has altered the common law requirements for the execution of a deed by adding the requirements that the deed be signed and that it be attested by a witness (Land Law, [19-117]).
It is well-accepted that non-compliance with the requirements of s 38(1) prevents a document from being a deed (see, e.g., Mostyn v Mostyn (1989) 16 NSWLR 635, 639; and Netglory at [95]-[121]). The plaintiff did not submit to the contrary. However, the question as to which there is less authority and about which there is some divergence of opinion in the authorities and in academic writing, is the meaning of the requirement that the deed "shall be attested", and in particular whether it requires that the witness affix his or her signature at the same time that the signature so being witnessed is affixed. This is relevant in the present case because, although I accept that Ron witnessed the signing by the Nixons of the September Deed, he did not affix his signature to it (either then or afterwards).
As to the meaning of "attestation", attestation means that one or more persons present at the execution, for the purpose of attesting it, signs the attestation clause: see the passage already set out (above at [453]) from Norton on Deeds.
I have already referred to Ellison v Vukicevic, to which Edelman J referred for the proposition that the attesting witness must be present at the time of the execution. There, Young J (as his Honour then was) said (at 112): It was put by the plaintiff that the present deed is not a deed because if I accept, as I have, the plaintiff's version of the execution of the deed Mr Hocking, who purported to witness the plaintiff's signature, was not present at the time of execution. … The formalities of a deed are set out in the Conveyancing Act, 1919, s 38, which probably reproduce in most part the pre-existing law, and these requirements include one, that the deed must be attested by a person who is not a party to the deed. Although the word "attested" is not defined in the statute in Wickham v Marquis of Bath (1865) LR 1 Eq 17 at 24 Lord Romilly discussed the question of attestation under the general law and said: … It means, as I understand it, that one or more persons are present at the time of the execution for that purpose, and that as evidence thereof they sign the attestation clause, stating such execution.
Here, that question does not arise because Ron was present at the signing. The question is whether he was required to affix his signature at witness at the time the deed was signed.
In Netglory, Edelman J considered a number of nineteenth-century authorities (some concerning attestation of instruments other than deeds), which suggest that the affixing of the witness' signature ought to occur at the same time as the execution witnessed: Wright v Wakeford (Court of Common Pleas); Doe on the Demise of Mansfield v Peach (1814) 2 M & S 576; 105 ER 496; and Doe on the demises of John Hotchkiss and his wife Mary v Pearce (1815) 6 Taunt 402; 128 ER 1090.
His Honour observed (at [156]) that modern authority as to the timing of the statutory requirement of attestation was very limited, going on to conclude (for the reasons set out at [156]-[169] that s 9 of the WA Act should be interpreted as requiring contemporaneous attestation. Before considering those authorities, I note that the possibility of a contrary conclusion was adverted to by Professor Butt (Land Law, [19-118]), by reference to a New Zealand decision to which it appears Edelman J's attention was not drawn in Netglory, namely Deacon v Auckland District Land Registrar (1910) 30 NZLR 369. Professor Butt observes at [19-118]: The witnesses must be present when the deed is executed, though it appears that a witness can add his or her actual signature at a later time. [Deacon v Auckland District Land Registrar (1910) 30 NZLR 369 at 377; Kerr v Meates (1991) ANZ ConvR 110.] [one footnote omitted] [emphasis added]
In Deacon v Auckland District Land Registrar, Edwards J concluded that a witness could add his signature to a deed more than thirty years after its execution. Edwards J acknowledged the authority of Wright v Wakeford, but distinguished it, concluding that it should be limited to the execution of powers.
In the Deacon case, Paora Tuhaere, (as one joint tenant), and Paora Tuhaere and Te Keeni Tangaroa (jointly owning the other half of the land as joint tenants of the whole), were owners of a parcel of land at Kaipara. By a deed dated 29 September 1876, the joint tenants conveyed the entirety of their estate and interest in the land to Walter Lee. The deed was valid in all respects but one. The Native Land Act 1873 (NZ) required that "instruments of disposition of land by Natives" be attested by a "male, adult, credible witness". Some years later, an application was brought by the present owner and occupier of the land seeking to oblige the District Land Registrar to bring the land under the provisions of the Land Transfer Act 1908 (NZ). One of the Registrar's reasons for refusing so to do was the missing attestation in the conveyance to Lee.
An affidavit was filed by the solicitor (Mr Armstrong) who prepared the Lee conveyance, in which he attested that he was present with the Magistrate who attested the deed, for the purpose of witnessing and attesting the execution of it; and that his failure to attest the signatures was "purely inadvertent".
After dealing with another objection raised by the Registrar, not presently relevant, Edwards J said (commencing at 375): The conveyance in present form, although it could not be put forward as passing the legal estate, is good as a contract. … If Paora Tuhaere and Te Keeni Tangaroa, or some person claiming under them, were to bring an action against the applicant [Deacon] to recover possession of the land in question, could they succeed in such an action? Plainly they could not…
As to the question of the solicitor's evidence, his Honour said (at 375): I have considered whether or not Mr Armstrong can now properly attest the execution of the deed, and so complete the deed that it can be put forward as passing the legal estate. There is a dearth of authority upon the matter, but I have come to the conclusion that he can. [emphasis added]
In coming to that conclusion (that the witnessing could be supplemented at a much later date - there thirty-four years), Edwards J expressly distinguished Wright v Wakeford, on which Edelman J relied in Netglory. Edwards J concluded that Wright v Wakeford was "not to be extended" and was, in any event, distinguishable (at 376), saying (at 377) that the reasoning in Wright v Wakeford applied "only to the execution of powers". Edwards J explained this as follows: There, if the power is not well executed, no equity is created. The whole execution is simply nugatory; and it certainly does seem strange if, after the death of the party executing the power, while the attempted execution is still nugatory, it can be rendered effectual. This does not apply to such a case as the present, in which the estate has passed in equity, and the defect simply affects the dry legal estate. [emphasis added]
His Honour went on to say (at 377): It certainly has not been the usual and common way of executing deeds, that the attestation by the witness should be simultaneous with the signature by the party. … To quote the words of Lord Mansfield in Wright v Wakeford: I know no rule or case which requires that the attestation should be immediately written at the time of the execution of the instrument, or within any particular limited time after its execution; and therefore, so long as the witnesses live and remember the transaction, they may, I think, properly write or sign their attestation, and unless there is some element of fraud in the case they must be presumed fairly to do so.
Edwards J held that the solicitor could attest the deed and that the District Land Registrar ought to be satisfied and bring the land under the Act.
As a matter of precedent, neither Deacon v Auckland District Land Registrar nor Netglory is strictly binding on me. Having considered the reasoning in both decisions, I consider that the latter should be preferred. The matters to which Edelman J refers in relation to the purpose, scope and context of the attestation requirement, are in my view persuasive as a matter of statutory construction.
Nor do I consider that Netglory should be distinguished on the basis of differences between the WA Act and the NSW Act. In my view there are no material differences between the provisions. The New South Wales provision (s 38(1) of the Conveyancing Act) and the WA Act (s 9(1) of the Property Law Act) are relevantly the same. In the interests of completeness, however, I note the differences are as follows. The New South Wales provision does not dispense with the requirement that a deed be sealed, providing (in s 38(1)) that a deed is to be "signed as well as sealed". However, by s 38(3), an instrument which is "expressed to be an indenture or a deed, or to be sealed" is, by the operation of that sub-section, "deemed to be sealed". Therefore, physical sealing has been replaced, in New South Wales, by the use of a verbal expression in the instrument.
By contrast, s 9 of the WA Act has dispensed with sealing entirely, providing, in s 9(2), that: (2) It is not necessary to seal any deed except in the case of a deed executed by a corporation under its common or official seal.
As Counsel for James pointed out in the course of closing submissions, the other difference is that the WA Act does not have an equivalent of s 38(1A) and (1B) of the New South Wales Act. Those sub-sections have no equivalent in the WA Act, or indeed in other Australian jurisdictions.
Section 38(1A) provides that a deed may be sufficiently signed by a person if, by the direction and in the presence of that person, the deed is signed in the name of that person by another person; if the signature is attested by a person who is not a party or signatory (except by way of attestation) to the deed; and the person attesting certifies that he or she is a prescribed witness and that the signature was affixed by the direction and in the presence of the person whose signature it purports to be.
Section 38(1B) provides that a deed is sufficiently signed by a person if that person affixes his or her mark to the deed; the affixing mark is attested by a person who is not a party or signatory (except by way of attestation) to the deed; and the person attesting certifies that, before the mark was affixed, he or she explained the nature and effect of the deed to the person making the mark, and he or she believed, at the time the mark was affixed, that the person making the mark understood the explanation.
The introduction of s 38(1A) and (1B) was described, on the occasion of the introducing the Conveyancing (Amendment) Bill 1976 (NSW)into the Legislative Assembly, as a measure to "extend the facilities for executing deeds in the case of persons who, by reason of illiteracy or physical incapacity, are unable to sign documents" (New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 14 September 1976 at 804).
On the occasion of the second reading of the Bill in the Legislative Assembly, the Minister for Lands said in relation to s 38(1A) and (1B) (New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 30 September 1976 at 1295): These new provisions deal with the execution of deeds either by the disposing party affixing his mark - the attesting witness having explained the effect of the deed to him - or by the disposing party directing some other person to write the party's name. The new provisions give to this course the same effect as if the disposing party had himself executed the deed. In each of the foregoing cases, a safeguard is introduced in that the witness who attests the execution of the deed must amplify his certificate of attestation in the manner directed by the new provisions.
In their terms s 38(1A) and (1B) are facultative provisions permitting a person who is unable to sign a document to execute a deed. They provide alternative ways in which a deed might be executed. They were not utilised in this case. They do not appear to me to affect how the phrase "shall be attested" in s 38(1) should be interpreted nor do they provide a basis for distinguishing the reasoning in Netglory.
In closing submissions it was briefly suggested by Counsel for James that, if there was a defect in the attestation of the defendants' signatures, the defendants might nonetheless be estopped from denying the validity of the deed. Reference was made in that regard to Shah v Shah, to which Edelman J referred in Netglory.
In that case, the plaintiff, by arrangement with the third and fourth defendants, who were executives of a Kenyan Bank (Reliance), transferred £1.5 million to a bank account operated by Reliance on 20 August 1998. Reliance was to repay to the plaintiff £1.665 million the following April, but was placed under statutory management before that time. In an attempt to recover the plaintiff's funds, the plaintiff's solicitor, Mr Anup Shah, made an agreement with the third and fourth defendants for the latter to repay personally £1.5 million to the plaintiff.
Those negotiations took place in a public hotel. The third and fourth defendant took away the draft deed and later returned the deed, it on its face having been executed by them, with their signatures attested by a Mr Jaydeep Patel. By that deed, the third and fourth defendants "jointly and severally agreed to pay the sum of £1.5 m".
When the plaintiff later sued on the deed, it emerged that the deed had not in fact been signed in Mr Patel's presence. The trial judge found that it was brought to Mr Patel after the third and fourth defendants had signed it.
Both the trial judge and in due course the Court of Appeal of England and Wales held that the plaintiff was entitled to sue on the deed. In the Court of Appeal (Pill LJ) concluded ([2002] QB 35 at [13]) that: The delivery of the document constituted an unambiguous representation of fact that it was a deed. Mr Anup Shah acted reasonably in relying upon that representation …
Shah v Shah does not, in my opinion, assist James here. Unlike the position in Shah v Shah, Ron (who for the purpose of this argument is now propounded by James as a witness), did not affix his signature to the document at all. Hence the delivery of the signed (but not formally witnessed) September Deed could not have constituted an unambiguous representation by the Nixons that it was in fact a deed. While on any view of events the Nixons signed the document at the 21 September 2012 meeting, it came into the possession of James (who I have found was not at the meeting) through either Ron or Mr Lambrinos. Any understanding which James may have gleaned, through Ron or Mr Lambrinos, as to the validity of its execution cannot have been as a result of any representation conveyed to him by the Nixons merely by reason of delivery of the document.
True it is that by signing the September Deed and providing it to either Ron to Mr Lambrinos, the Nixons may be said to have represented to James, as a reasonable reader of the deed that they had either read and approved the contents of the deed and were agreeing to its terms (or willing to take the chance of being bound by its contents) as explained in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (at [45]): It should not be overlooked that to sign a document known and intended to affect legal relations is an act which itself ordinarily conveys a representation to a reasonable reader of the document. The representation is that the person who signs either has read and approved the contents of the document or is willing to take the chance of being bound by those contents, as Latham CJ put it, whatever they might be. That representation is even stronger where the signature appears below a perfectly legible written request to read the document before signing it.
However, there can have been no representation by the Nixons as to the validity of the document as a deed in circumstances where I have found that, in the form in which it was provided to James (through either Ron or Mr Lambrinos, neither of whom James accepts was his agent for the purpose of the negotiations in relation to the execution of that document at the 21 September 2012 meeting), it did not bear the signature of any witness. (Nor would the provision of documents that, if completed correctly, would have armed James with the ability to take a transfer of the relevant interest in the property and business convey any such representation.)
Having regard to the accepted elements of an estoppel by conduct, I am not persuaded in this case any representation was made by the Nixons, or that the Nixons in any other way induced an assumption on the part of James, in relation to the validity of the September Deed. All facts relating to the validity of execution of the September Deed which were within the Nixons' knowledge were (on the face of the document) also within James' knowledge.
Therefore, having considered the authorities referred to by Edelman J in Netglory, I would, with respect, concur with his Honour's conclusion that what is required for there to be the necessary attestation is that the witness (here, Ron) present at the time of execution of the relevant document, must sign the document at the time as witness for the purpose of attesting the execution and hence, I find that Ron not having done so at the time, the document to which I have referred in these reasons as the September Deed was not executed in compliance with the formalities for execution of a deed and is not enforceable as a deed.

[94]

Is the September Deed nonetheless enforceable as an agreement?

That brings me to the next issue, which is whether (leaving aside for the moment the claims of misleading or deceptive and unconscionable conduct) the agreement comprised in the "deed" is still enforceable as a binding agreement between the parties supported by good consideration.
James argues that if the September Deed is found not to have been executed as a deed, it remains binding for three reasons.
First, that good consideration has passed. The consideration here relied upon is threefold: first, the Nixons engaging with, and allowing, Mr Lambrinos and Mr Moloney to advise and assist the business; second, the Nixons permitting James and his associates to seek to secure further funding for the business; and, third, the Nixons continuing the association with the Browns. It is submitted by James that Greg accepted this had value. Further, it is submitted that permitting a debtor to make payments, on an already lent amount, on a schedule that suits them is good consideration (MWB Business Exchange Centres Ltd v Rock Advertising Ltd [2016] 3 WLR 1519; [2016] EWCA Civ 553). It is said that James' willingness to continue with the situation, when he could have taken steps immediately to call in the $192,000 already lent, is good consideration (referring to Musumeci v Winadell Pty Ltd (1994) 34 NSWLR 723 per Santow J; Silver v Dome Resources NL [2007] NSWSC 455 at [121]-[137]; 62 ACSR 539 per Hamilton J, affirmed on appeal in Dome Resources NL v Silver (2008) 72 NSWLR 693; [2008] NSWCA 322).
Second, it is submitted that the Nixons have accepted the September Deed by their later conduct (referring to Brown v Brown (1905) 5 SR (NSW) 146). The conduct here referred to is: the acknowledgment of James' interest; discussing the business and the property with James, including the sale options and how to pay out James for his interest; engaging with, and allowing, Mr Lambrinos and Mr Moloney to advise and assist the business; and permitting James and his associates to solve the pressure from the creditors.
Third, it is said that, once the written terms were provided and the Nixons did not expressly reject them, the Nixons' conduct in later taking the benefit of them confirms their acceptance (referring to Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523, at 528-531 per Kirby P and at 534-535 per McHugh JA (Empirnall); which it is said applies whether or not an estoppel is pleaded or relied on; and see also Airways Corporation of New Zealand Ltd v Geyserland Airways Ltd [1996] 1 NZLR 116).
Thus it is submitted that, even if (which James denies) the September Deed it was not validly executed as a deed, the agreement contained in it binds the Nixons as a contract.

[95]

Determination as to enforcement of the September Deed not as a deed but as an agreement

As to the first of the arguments raised by James in relation to the issue of consideration, there is a disconformity here between the terms of the Heads of Agreement and the terms of the September Deed. It is obvious on the face of the September Deed that the consideration there specified for the promises made by the Nixon interests is, at best, past consideration (the making of some - not all, since the ATO payment was not made - of the payments for which provision was made in the Heads of Agreement) and, if read literally, an illusory consideration (the making of payments "pursuant to the terms of this Deed" - since the September Deed made no provision for any such payments to be made). Unlike the Heads of Agreement, the September Deed made no provision whatsoever obliging James to arrange (or even to use his best endeavours to arrange) further funding in relation to the business. This was one of the significant changes made in the version of the document that was presented to the Nixons for signing on 21 September 2012.
Therefore, the fact that James may have "permitted" the Nixons to make use of the services of Ron's financial advisor or solicitor (and there was nothing to suggest that this was at a cost to James or to Ron - indeed the position of Mr Lambrinos seems to have been that he regarded the assistance he provided in 2013/2014 as for the purposes of the Nixon interests directly, since he submitted an engagement letter to them not to Ron or James) does not amount to the provision of consideration for the promises contained on the part of the Nixons under the terms of the September Deed.
Pausing here, I note that at one point it seemed to be suggested that the procuring by Mr Lambrinos of indicative letters of offer amounted to satisfaction of the obligation in the Heads of Agreement for James to "arrange finance". It seems likely to me that this obligation would be understood as being to "arrange finance on satisfactory terms". It hardly seems likely that James could have satisfied that obligation by procuring, say, minimal finance on extortionate rates (an extreme example but it illustrates my point here). In any event, the loan offers obtained by Mr Lambrinos were ones that pre-dated the September Deed and hence would have been past consideration by the time of the deed and, as already noted, the September Deed itself made no provision for consideration of this kind.
Similarly, the suggestion that James' conduct in not calling immediately or at an earlier time for the repayment of his contribution of around $200,000 amounts to sufficient consideration for the promises made in the September Deed is problematic since there is no obligation under the terms of the September Deed for the Nixons to repay that amount. The terms of the Heads of Agreement contemplated, as I have noted earlier, the repayment of outstanding loans to James but that was to be out of the further finance that James was to arrange. He did not ever personally arrange such finance - indeed he had little to do with the business at all (apart from the alleged informal conversations in the pub or the car park of the hotel to which I have earlier referred). Insofar as it is suggested that Mr Lambrinos did so on James' behalf (as opposed to Mr Lambrinos doing so, following the Browns' introduction of Mr Lambrinos to the Nixons, on the Nixons' behalf), I am not persuaded that this is the proper construction to put on the events that occurred but in any event as noted above Mr Lambrinos himself did not manage to obtain finance on terms that were satisfactory to the Nixons (out of which they might under the Heads of Agreement have been obliged to repay James for the initial payments) and the conduct of the parties after June/July 2012 (when the Nixons commenced to make repayments direct to Ron or for his benefit) suggests that the deal by that stage had been changed (at Ron's behest).
Accordingly, I find that the September Deed, if not enforceable as a deed, is not supported by good consideration and is not enforceable as a written agreement.
As to the submission that the Nixons have accepted the September Deed by their later conduct, the difficulty is that the conduct on which James relies for such a submission is not unequivocally referable to the September Deed. Some of it (the conduct in allowing Mr Lambrinos and Mr Moloney to give them advice and assistance to the business) cannot be linked to any term of the September Deed having regard to the changes to the document that I have found were most likely to have been made by Mr Lambrinos. As to the submission that the Nixons permitted James and his associates to "solve the pressure from the creditors", other than in relation to the removal of the Global Capital caveat, this was well before the signing of the 21 September Deed and the circumstances in which the caveat was withdrawn are consistent with Mr Moloney acting for Bronwyn in her own right. The conduct of Greg in not rejecting outright any request of the kind that James says was made for the "opening of the books" or later in relation to the proposed sale of the property is consistent with the Nixons having an understanding that James might be in a position to assert an entitlement under the Heads of Agreement and is not unequivocally referable to the September Deed.
Finally, the third submission (based on Empirnall) also fails having regard to the content of the document as ultimately signed. The Nixons did not in any relevant sense take the benefit (or thereby confirm acceptance) of the terms of the September Deed, for the reasons discussed above.
I therefore find that the agreement recorded in the September Deed is not a contract binding the Nixons.

[97]

Misleading or deceptive conduct

Again, strictly speaking it is not necessary to consider the Nixons' claims based on misleading or deceptive conduct in light of the conclusions I have reached in relation to the enforceability of the September Deed and the existence of any agreement binding on the parties in the terms recorded therein. However, in the event that my conclusions in that regard were to be incorrect, I proceed to consider this issue.
Section 18 of the Australian Consumer Law provides that: A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
The Nixons note that the expression "trade or commerce" has been broadly interpreted (citing the statement in Russell Miller, Miller's Australian Competition and Consumer Law Annotated 2016 (38th ed, 2016, Thomson Reuters) at [1.4.135]; and Re Ku-ring-gai Co-operative Building Society (No 12) Ltd (1978) 36 FLR 134 per Deane J (at 167)).
It is submitted that the course of dealings between the Nixon interests and the Brown interests in respect of the purported loan or sale of an interest in the business and real estate have occurred in trade or commerce; that this was a commercial transaction, not a transaction of a domestic nature.
As to the circumstances leading up to the execution of the September Deed, it is submitted that, shortly after it was executed (unbeknownst to them), the Browns (presumably here they attribute Ron's conduct to James since only the latter was party to the Heads of Agreement) began resiling from the terms of the Heads of Agreement, with the obligations and timing of those obligations imposed on James being eroded to some extent as each draft of the Deed (not seen by the Nixons) was prepared by Mr Moloney on the instructions of Mr Lambrinos acting on behalf of the Browns.
It is said that, on or about 14 August 2012, the Browns decided to abandon the agreement altogether - the Nixons surmise that this was because Ron was no longer prepared to be guarantor or because of the risk of a caveat being placed on the property by Global might make the refinancing too difficult or risky or for some other reason; and that the Browns then sought to re-characterise the amounts given by them to the Nixons as a short-term loan repayable with interest and were solely concerned thereafter (with the assistance of Mr Lambrinos) to ensure that their outstanding moneys were somehow secured.
In the circumstances, the Nixons submit that on the balance of probabilities Ron and Mr Lambrinos made the representations alleged at the meeting of 21 September 2012 (including, inter alia, that the documents were "security" documents and to be "put in the drawer and only used if the loan was not repaid"). It is submitted that such representations were misleading or deceptive; and that the representations were relied upon by the Nixons, in the absence of any independent legal advice, and by virtue of the trust they reposed in Mr Lambrinos, who by that time was advising the Nixons. It is submitted that the representations induced the Nixons to execute the September Deed and related documents which they would not otherwise have executed but for the representations.
I have already made findings as to the making of the alleged statements and representations; and concluded that an inference should be drawn as to the reliance by the Nixons on those representations (above at [424]-[446]). The question remaining is whether those representations were misleading or deceptive.
James submits that there is nothing misleading or deceptive "from the position in which the Defendants sat" that would found any relief. To the extent that the alleged representations relate to the use to be made of the documents (i.e., that they were to be "put in a drawer"), he notes that they are statements of intention and that, unless they are established to have been made fraudulently or dishonestly they cannot found a case in misrepresentation (James v Australia and New Zealand Banking Group Ltd (1986) 64 ALR 347). There was initially a submission that no fraud had been pleaded but in the course of oral argument it appeared to be accepted by Counsel for James that the pleading at [55] of the cross-claim would encompass such an allegation. Whether or not it had been properly particularised (and I do not understand that issue to have been raised at any time prior to the hearing - at least not in a context where the issue would have been the subject of a ruling), there can have been no doubt on James' part as to what was being alleged in this context.
In circumstances where I have found otherwise for the Nixons, it is not necessary to go further and make positive findings of fraud or dishonesty.
Senior Counsel for the Nixons submitted that there are only two real alternatives (if, as James contends, the September Deed was a voluntary agreement reflected in its terms): either the September Deed was sought as "security" for the payments (in which case it is accepted by the Nixons that there is no fraud) or the September Deed was presented to the Nixons as security for the payments but with the intention of using it and related documents to have an immediate interest in the property and business (in which case it is contended this amounts to fraud) (see T 575 30ff).
In other words it is submitted for the Nixons that the asserted falsity or fraud only comes into play in the event that there is a finding (contrary to the Nixons' version of events) that, at the time of signing the documents, the Brown parties intended to use them to register the half share of the business and land. In that event what is argued is that Ron induced the Nixons' signature on the basis that the documents would be held as security for the sums of money that Ron had effected until repayment, and therefore, if he did so in circumstances where Ron and James were actually intending on effecting a transfer of title to the land and business, then the signatures were procured by fraud.
In considering those submissions I turn first to the issue of agency.

[98]

Agency

As already noted, it is argued for James that any representations made by Ron (or Mr Lambrinos) were made without actual authority; and that there is no basis for a finding of ostensible authority.
James emphasises that there is no evidence of him giving (or of Ron or Mr Lambrinos accepting) actual authority to go outside of the terms of the September Deed. It is submitted that there is thus no actual authority in the sense explained in Equiticorp Finance Ltd (in liq) v Bank of New Zealand (1993) 32 NSWLR 50 per Clarke and Cripps JJA at 132; 11 ACSR 642; 11 ACLC 952 (i.e., where a principal grants, and an agent accepts, authority for the agent to perform specific tasks on behalf of the principal). (Of course, on James' case any representations that must have been made by Ron at the 21 September 2012 meeting were made in his presence and one might then conclude that if he did not dissent therefrom he could be taken to have adopted or acquiesced therein. However, I have concluded that the attendees at this meeting were Ron and Mr Lambrinos, not James, so no question of his adoption of, or acquiescence in, any such representations would arise.)
As to the question of apparent authority, it is submitted that the test set out in Freeman & Lockyer (a firm) v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480 (at 506 per Diplock LJ) (accepted in Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd (1975) 133 CLR 72; [1975] HCA 49 and in Northside Developments Pty Ltd v Registrar-General (1990) 170 CLR 146; [1990] HCA 32) is not here satisfied: there being no evidence of a representation made to the Nixons that either Ron or Mr Lambrinos had authority to enter on James' behalf into a contract of the kind sought to be enforced and no evidence that either was a person who had actual authority in that regard.
A further argument put against there being any apparent authority is that the alleged representations are in direct conflict with the written terms of the September Deed, resolution, minute and transfer. It is submitted that, on the application of the Briginshaw standard, the evidence needed to authorise someone to override considered, legible and legally significant documents would be high and that this weighs further against finding any relevant agency.
Turning to determine this issue, I accept that there is no evidence of actual authority being conferred by James on either Ron or Mr Lambrinos in relation to the negotiation of any terms beyond those in the September Deed or as to the use to be made of the September Deed.
As to the question of ostensible authority, this involves a legal relationship between principal and contractor, to which the agent is not a party (referring to Freeman & Lockyer (a firm) v Buckhurst Park Properties (Mangal) Ltd at 502; and see Harvey v State of New South Wales [2006] NSWSC 1436 at [59] per Johnson J).
In Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; [2004] HCA 35, Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ said at [36] and [38] (footnotes omitted): … It is not enough that the representation should come from the officer alone. Whether the representation is general, or related specifically to the particular transaction, it must come from the principal, the company. That does not mean that the conduct of the officer is irrelevant to the representation, but the company's conduct must be the source of the representation. In many cases the representational conduct commonly takes the form of the setting up of an organisational structure consistent with the company's constitution. That structure presents to outsiders a complex of appearances as to authority. The assurance with which outsiders deal with a company is more often than not based, not upon inquiry, or positive statement, but upon an assumption that company officers have the authority that people in their respective positions would ordinarily be expected to have. In the ordinary case, however, it is necessary, in order to decide whether there has been a holding out by a principal, to consider the principal's conduct as a whole. … A kind of representation that often arises in business dealings is one which flows from equipping an officer of a company with a certain title, status and facilities. In Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd, for example, the court spoke of the representation that might flow from supplying a particular person with 'a blank order form, thus arming him with a document which, when he signed it, would bear the hallmark of authenticity' ((1975) 133 CLR 72 at 80; 7 ALR 527 at 533). The reference to corporate administrative procedures under which an officer is armed with a document to which he or she can, by signature, impart an appearance of authenticity is a reminder of the wider principle of estoppel which may be relevant to a question of ostensible authority (Northside Developments Pty Ltd v Registrar-General (1990) 170 CLR 146 at 200; 93 ALR 385 at 422; 2 ACSR 161 at 198 per Dawson J, CLR 212; ALR 430-1; ACSR 206-7 per Gaudron J). The holding out might result from permitting a person to act in a certain manner without taking proper safeguards against misrepresentation.
Thus, for there to be a finding of ostensible authority, it would be necessary for the putative principal (here, James) in some fashion to have held out to the Nixons that Ron and Mr Lambrinos were authorised to negotiate on his behalf and were authorised, in effect, to make representations that would be binding on him. The holding out need not have been by a direct communication to the Nixons. It might, for example, have arisen out of some conduct or omission on James' part.
On the facts of the present case, the manner in which the deal was done supports the conclusion that James left it to Mr Lambrinos to deal with Mr Moloney and left it to Mr Lambrinos and/or his father to decide the terms on which the arrangement with the Nixons would proceed. Had it been necessary to determine I would have been of the view that, by largely leaving it to Mr Lambrinos to deal with the Nixons (and to instruct Mr Moloney as to the terms of the documentation), knowing that Mr Lambrinos was so doing and not intervening in any way to suggest that Mr Lambrinos was acting without his authority, and acting (as he said he did) "under instructions" from his father Ron, James held Mr Lambrinos out as being authorised to provide instructions on his behalf in relation to the documentation of the transaction.
True it is that the Nixons were not privy to the correspondence between Mr Lambrinos and Mr Moloney and hence that cannot amount to a holding out to them, but James attended the 22 May 2012 and 19 June 2012 meetings (the second being with both Mr Lambrinos and Mr Moloney). He left it to Mr Lambrinos (at the first of those meetings) to go through and explain the Heads of Agreement to the Nixons and (at the second of those meetings) to convey instructions to Mr Moloney (in the Nixons' presence) that realistically could only have come from James or Ron (unless Mr Lambrinos was on a "frolic of his own" - something suggested as a possibility by Ron's evidence to which I have already referred but not put to Mr Lambrinos). I certainly consider that at the 22 May 2012 meeting James, by leaving it to Mr Lambrinos to explain the document, held him out as someone authorised to act on James' behalf. I am satisfied that this amounts to a sufficient holding out by James of authority for the purpose of Mr Lambrinos later making representations, binding on James, to the 21 Nixons in the September 2012 meeting as to the execution of the September Deed and what was to be done with it. To the extent that satisfaction to a higher standard (in accordance with Briginshaw) is required in order to find that Mr Lambrinos' ostensible authority extended to the making of representations to override the deed, I have that level of satisfaction.
As to the position in relation to Ron, I have little doubt that the Nixons were left by James with the understanding that Ron was the decision maker in relation to the transaction the subject of the Heads of Agreement and, in due course, the September Deed. They had discussions first with Ron; he made it clear to them that he did not want to be directly involved but that he considered it would be a good opportunity for his son; and he then introduced them to James and to Mr Lambrinos. James himself does not appear to have taken any active role independently of his father. It was clear that the funds (or at least the bulk of the funds) advanced following execution of the Heads of Agreement came from Ron (albeit on James' behalf). James' own evidence supports the conclusion that he sat back and left it to his father to "call the shots", so to speak; and he was aware that Ron had demanded repayment of the initial payments from the Nixons. In so doing, at the meetings that took place with the Nixons, I consider that James held out Ron as being the ultimate decision maker and as having authority to commit him to whatever Ron represented in relation to the documentation of the agreement by which James was to acquire an interest in the Menangle property and business.
My conclusion is that, in a practical sense, the Nixons were left with the understanding that the arrangement in relation to the overall transaction was one the terms of which were being determined by Ron but for James' ultimate benefit and that Mr Lambrinos was the person authorised on the Browns' behalf to document the transaction and ultimately arrange for the execution of the relevant documents. Accordingly, had it been necessary to determine then I would have found that representations made by Ron and/or Mr Lambrinos at that meeting (in James' absence) to put pressure on the Nixons to sign the documents were made with James' ostensible authority.
However, in circumstances where I am not satisfied on the balance of probabilities (and having regard to the need to apply the Briginshaw standard for any findings of fraud) that Ron and Mr Lambrinos at the time intended to do otherwise than to use the September Deed and related documents as "security" (in the sense of an earnest for performance) for the repayment of the moneys that had been advanced by Ron to James for the making of the initial payments, then had I concluded otherwise on the issue as to the enforceability of the September Deed (as a deed or as a written agreement), I would not have found that there was misleading or deceptive conduct on the part of James.
Thus I have found that the representations as to the putting of the documents in a drawer were made to the Nixons and I accept that the Nixons signed the documents in reliance on those representations and on the basis that they were required to do so if the arrangements (which they understood to be the arrangements under the Heads of Agreement) in relation to the hotel and business were to proceed. But I do not find that the representations were misleading or deceptive at the time they were made. In other words, I do not accept that there was a concerted plan at the time on the part of Ron and Mr Lambrinos to procure the signing of the documents at the time on one basis with the intent to use the documents for a different purpose (particularly since if that had been the case it is difficult to see why steps would not have been taken at an earlier stage to put the documents in registrable form or to give the requisite notice to ASIC). Rather, I consider it more likely that the attempt to rely on the signed September documents, once the sale of the hotel and business appeared a likely possibility, was an opportunistic use of documents that had been obtained for a different purpose. That brings me to the unconscionable conduct claim.

[99]

Unconscionable conduct

Section 21(1)(b) of the Australian Consumer Law provides: (1) A person must not, in trade or commerce, in connection with: (a) ...; or (b) the acquisition or possible acquisition of goods for services from a person (other than a listed public company), engage in conduct that is, in all the circumstances, unconscionable.
The Nixons submit that the conduct of James (himself and by Ron and Mr Lambrinos as his agents) was conduct in connection with the acquisition by James of an interest in real and personal property and therefore an acquisition of a service within the meaning of s 2 and s 21(1)(b) of the Australian Consumer Law.
Insofar as the unconscionable conduct claim is based on conduct of Ron and Mr Lambrinos as agents of James, the same conclusion reached above (as to the finding that they had ostensible authority to bind James to the relevant representations) here applies.
Insofar as it is based on James' own conduct, the proposition is that it is unconscionable for James now to seek to enforce the September Deed and procure for himself the benefits conferred on him under the purported deed or otherwise to rely on the other documents signed at the September 2012 meeting in circumstances where the representation as to use of the documents as security only if the "loan" was not repaid had been made i.e., having regard to the circumstances in which the September documents were executed.
James argued that the deal itself was not unconscionable, noting that "unconscionable" in the Australian Consumer Law is not the equivalent of "fair" or "just" (AG (NSW) v World Best Holdings Ltd (2005) 63 NSWLR 557; [2005] NSWCA 261 per Spigelman CJ); nor is it to be based on the particular judge's personal intuitive assertions or idiosyncratic notions of commercial morality (see Australian Competition & Consumer Commission v Woolworths Ltd [2016] FCA 1472 per Yates J), and that the existence, and use, of a disparity in bargaining power does not of itself enliven ss 21 and 22 of the Australian Consumer Law (see Paciocco v Australia and New Zealand Banking Group Ltd (2016) 258 CLR 525; [2016] HCA 28 at [293] per Keane J).
It is said that here there was no disparity of bargaining power, no complex contractual terms, no impact on third parties, no breach of contract by the signing of the deed that followed negotiations in which the Nixons were legally represented (in contrast, by way of example, to the circumstances considered in Australian Securities and Investments Commission v National Exchange Pty Ltd (2005) 148 FCR 132; [2005] FCAFC 226).
James argues that the Nixons are "sophisticated and informed". He argues that there was a "detailed but clear" legal agreement with the Nixons. It is submitted that: All that occurred here was the offer to the commercial sophisticated Defendants of the Deed, that recorded their bargain and permitted the continued involvement of James, which the Defendants were free to sign or not. They chose, after a "conclave" together, to sign. They never objected. They never raised any issues prior to the Advice Recreation. They merely procured James' involvement in the Business and, as a result, survived the nadir of the financial woes. The result was the later sale of a viable concern.
As noted earlier, James places weight on the fact that there is an entire agreement clause, arguing that where there is an entire agreement clause the Court cannot look to pre-contractual negotiations to determine the terms of the agreement (see Damien v JKAM Investments Pty Ltd [2015] NSWCA 368 at [26] per Tobias AJA (Gleeson & Simpson JJA agreeing)).
James notes that the Nixons had a solicitor throughout the relevant period, being LAS Lawyers (CB:762-763); and they accepted that they could have gone to other solicitors or professionals as they thought necessary. It is submitted that their interests were always sufficiently protected.
The Nixons rely on the representations referred to above to argue that it would be unconscionable, given the basis on which the Nixons executed the September Deed, and the fact that the loan has been repaid with interest by the Nixons, to allow James to enforce the documents for another unintended purpose, namely to give him a 50% the interest in the Menangle property and business.
In relation to the alleged unconscionability, the Nixons also refer to the following matters that I consider support their argument that reliance on the documents executed in September 2012 would be unconscionable: that they were not given an opportunity to obtain independent legal advice or even a reasonable time to read the documents; that Mr Lambrinos, being a person in whom the Nixons reposed their trust, was present and made some of the misleading or deceptive representations so as to induce them to execute the September Deed; and that the consideration sought to be paid by James for the acquisition of his 50% interest (namely a loan of $200,000 repayable with interest) is manifestly inadequate given the real estate on a stand-alone basis was valued at $3.5 million on 14 August 2008, at $2.1 million in 2012 (for business), and was sold for $4.950 million in 2015 (both real estate and business).
It is submitted that it is unconscionable for James now to deploy the documents obtained on 21 September 2012 contrary to the representations that were made to the Nixons.

[100]

Determination

Again, this issue strictly does not arise given the conclusions I have reached on the other issues. However, for completeness, I address this issue briefly as follows.
In Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199; [2001] HCA 63 at [99], Gummow and Haynes JJ quoted with approval the following statement by French J in Australian Competition & Consumer Commission v C G Berbatis Holdings Pty Ltd (2000) 96 FCR 491 at 498; [2000] FCA 2: The fundamental principle according to which equity acts is that a party having a legal right shall not be permitted to exercise it in such a way that the exercise amounts to unconscionable conduct .... So it can be said that the overriding aim of all equitable principle is the prevention of unconscionable behaviour - a term which can be seen to encompass duress, undue influence and "unconscionable dealing as such" ...
Had it been necessary to determine, I would have concluded that there was unconscionable conduct in the presentation to the Nixons of a deed containing a substantially amended agreement from that comprised by the Heads of Agreement (those amendments being to their disadvantage and to James' very clear advantage - insofar as they removed any obligation on him to arrange further finance and purported to give him an entitlement to the transfer of a half share of the property and business, on execution of the deed, for nothing other than the past consideration in the way of a short term loan) with, in effect, a demand that they sign the document there and then. There is no suggestion that those amendments were explained in any way to the Nixons and I accept their evidence that they were told just to sign and were discouraged from seeking legal advice in relation thereto.
I do not accept that the Nixons were commercially sophisticated business people. Their very conduct on 21 September 2012 belies that proposition. By that stage, whatever the dire state or otherwise of their financial position as at the time of the Heads of Agreement, the urgency of the pressing debts had well and truly dissipated. Moreover, to the extent that the Nixons were wishing to rely on the promise of further funding being arranged (which was contained in the Heads of Agreement) there was an obvious disparity of bargaining power between them and the Brown interests.
That situation is compounded by the representations that were made to the Nixons as to the use of the documents they were being told there and then to sign. There is something inherently unpalatable about the enforcement by James of documents signed by the Nixon interests in reliance on representations made by his father and his financial adviser to the effect that they would not be relied upon otherwise than if there were default in the repayment of advances that have now long since been repaid. Even if James were not aware of the position at the time, to my mind to allow him now to take advantage of that conduct (whether or not that conduct was by Ron and Mr Lambrinos acting as his agents at the time) in the absence of any evidence that James relied to his detriment on the September Deed and other documents having been signed by the Nixons on 21 September 2012, would amount to unconscionable conduct, and I would have granted relief in effect to preclude James from relying on those documents or seeking to enforce them.
Accordingly, had it been necessary to reach a final conclusion on this issue, I would have found for the Nixons that it is unconscionable for James now to seek to enforce the September Deed and to assert benefits under the related documents.

Parties

Applicant/Plaintiff:

Brown

Respondent/Defendant:

Tavern Operator Pty Ltd

Legislation Cited (9)

(NZ) Property Law Act 1958(Vic)

Australian Consumer Law (Competition and Consumer Act 2010(Cth)

Competition and Consumer Act 2010(Cth)

Conveyancing Act 1919(NSW)

Corporations Act 2001(Cth)

Evidence Act 1995(NSW)

Property Law Act 1969(WA)

Real Property Act 1900(NSW)

Property Law Act 1958(Vic)

Cases Cited (51)

63 NSWLR 557; [2005] NSWCA 261 Airways Corporation of New Zealand Ltd v Geyserland Airways Ltd [1996] 1 NZLR 116 Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199; [2001] HCA 63 Australian Competition & Consumer Commission v C G Berbatis Holdings Pty Ltd (2000) 96 FCR 491; [2000] FCA 2 Australian Competition & Consumer Commission v Woolworths Ltd [2016] FCA 1472 Australian Securities and Investments Commission v National Exchange Pty Ltd (2005) 148 FCR 132; [2005] FCAFC 226 Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61 Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 Brown v Brown (1905) 5 SR (NSW) 146 Brown v lnnovatorOne Plc [2012] EWHC 1321 Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd (1975) 133 CLR 72; [1975] HCA 49 Crane v The Mission to Seafarers Newcastle Incorporated [2018] NSWSC 429 Damien v JKAM Investments Pty Ltd [2015] NSWCA 368 Day v Perisher Blue Pty Ltd (2005) 62 NSWLR 731; [2005] NSWCA 110 Deacon v Auckland District Land Registrar (1910) 30 NZLR 369 Doe on the Demise of Mansfield v Peach (1814) 2 M & S 576; 105 ER 496 Doe on the demises of John Hotchkiss and his wife Mary v Pearce (1815) 6 Taunt 402; 128 ER 1090 Dome Resources NL v Silver (2008) 72 NSWLR 693; [2008] NSWCA 322 Ellison v Vukicevic (1986) 7 NSWLR 104 Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523 Equiticorp Finance Ltd (in liq) v Bank of New Zealand (1993) 32 NSWLR 50; 11 ACSR 642; 11 ACLC 952 Freeman & Lockyer (a firm) v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480 Gippsreal Ltd v Melbourne Linh Son Buddhist Society Inc [2016] VSC 324 Harvey v State of New South Wales [2006] NSWSC 1436 HCK China Investments Ltd v Solar Honest Ltd [1999] FCA 1156; 165 ALR 680 James v Australia and New Zealand Banking Group Ltd (1986) 64 ALR 347 Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd [2008] NSWCA 5 Liao v State of New South Wales [2014] NSWCA 71 Lindsay-Owen v Winton Partners Funds Management Pty Ltd [2017] NSWCA 78 Macquarie Developments Pty Limited v Forrester [2005] NSWSC 674 Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181; [2001] HCA 70 Makita (Aust) Pty Limited v Sprowles (2001) 52 NSWLR 705; [2001] NSWCA 305 Malco Engineering Pty Limited v Ferreira & ors (1994) 10 NSWCCR 117 Mostyn v Mostyn (1989) 16 NSWLR 635 Musumeci v Winadell Pty Ltd (1994) 34 NSWLR 723 MWB Business Exchange Centres Ltd v Rock Advertising Ltd [2016] 3 WLR 1519; [2016] EWCA Civ 553 Netglory Pty Ltd v Caratti [2013] WASC 364 Northside Developments Pty Ltd v Registrar-General (1990) 170 CLR 146; [1990] HCA 32 Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; [2004] HCA 35 Paciocco v Australia and New Zealand Banking Group Ltd (2016) 258 CLR 525; [2016] HCA 28 Re Ku-ring-gai Co-operative Building Society (No 12) Ltd (1978) 36 FLR 134 Seamez (Australia) Pty Ltd v McLaughlin [1999] NSWSC 9 Shah v Shah [2001] 3 WLR 31; [2002] QB 35; [2001] 4 All ER 138; [2001] EWCA Civ 527 Silver v Dome Resources NL [2007] NSWSC 455; 62 ACSR 539 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52 Wright v Wakeford (1811) 4 Ves Jun 455; 34 ER 176 (Court of Chancery); (1812) 4 Taunt 213; 128 ER 310 (Court of Common Pleas) Texts Cited: Edward Hilliard (ed), Sheppard's Touchstone of Common Assurances (7th ed, 1820, J & WT Clarke) Gerald Dworkin, Odgers' Construction of Deeds and Statutes (5th ed, 1967, Sweet & Maxwell) New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 30 September 1976 New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 14 September 1976 Nicholas Seddon, Seddon on Deeds (2015, Federation Press) Norton on Deeds (Robert Morrison and Hugh Goolden, Norton on Deeds (2nd ed, 1928, Sweet & Maxwell) Peter Butt, Land Law (6th ed, 2010, Lawbook Co) R.A. Donnell (ed),Gibson's Conveyancing (21st ed, 1980, Eastern Press Ltd) Russell Miller, Miller's Australian Competition and Consumer Law Annotated 2016 (38th ed, 2016, Thomson Reuters) Category: Principal judgment Parties: James Ian Brown (Plaintiff) Tavern Operator Pty Ltd (First Defendant) Gregory John Nixon (Second Defendant) Bronwyn Megan Tallis (Third Defendant) Representation: Counsel: M Bennett (Plaintiff) J Morris SC with AJ O'Brien (Defendants)

Cited By (5)

Broadway Plaza Investments Pty Ltd v Broadway Plaza Pty Ltd In the matter of Combined Projects

Heriot Pty Ltd v Choe

Robertson v McCann

Sergio Andres Chocron v Mina Onkoud

Wheatley v Kavanagh

Brown v Tavern Operator Pty Ltd

At a glance

Court

Decision date

Before

Source

Judgment (103 paragraphs)

Parties

Legislation Cited (9)

Cases Cited (51)

Cited By (5)