Edward Ted Lakis and Anor v Michael Victor Lardis and Anor - [2017] NSWSC 321 - NSWSC 2017 case summary — Zoe

NSWNSWSC

Edward Ted Lakis and Anor v Michael Victor Lardis and Anor

[2017] NSWSC 321

Supreme Court of NSW|2017-02-02|Before: Sackar J

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At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2017-02-02

Before

Sackar J

Catchwords

Richardson v Cummins (1951) 15 ABC 185 Re Trautwein

Source

Original judgment source is linked above.

Catchwords

Richardson v Cummins (1951) 15 ABC 185 Re Trautwein

Judgment (42 paragraphs)

[1]

Background facts

In or around May 2000, Mr Lakis and Mr Lardis each became 50% shareholders and directors in Amazon, a pest control business.
From about December 2011, a dispute arose between Mr Lakis and Mr Lardis as to the future and management of Amazon. On 8 December 2011, Mr Lardis, through his then solicitors Denis M. Anderson, informed Mr Lakis he intended to wind up Amazon (CB1/91).
In reply, on 9 December 2011, Mr Lakis, through his then solicitors Robinson Legal, requested Mr Lardis refrain from taking further steps to wind up Amazon, so as to allow a forensic accountant to review Amazon's books and records. In making these requests, Mr Lakis alleged Mr Lardis had withdrawn money from Amazon funds without explanation over the previous months, and intended to divert Amazon's business to a new company Mr Lardis had registered on 3 November 2011 called Amazon Pest Management Pty Limited (CB1/92).
Sometime between late February and May 2012, the Second Defendant alleges an agreement was reached where Mr Lardis would transfer his interest (at this point being all of his 50% interest) in the Dolls Point Property to Mrs Lardis, and Mrs Lardis would allow Mr Lardis to use loan monies for his own use (50% Dolls Point Property Transfer). This assertion is disputed in proceedings.
On 28 February 2012, a Mr Robert Macaulay, partner at Pryzor Tzannes & Wallis Solicitors (PTW) met with the Defendants for a second time that month. On this second occasion he alleged the Defendants instructed PTW on the 50% Dolls Point Property Transfer, as well as indicating their plans to refinance the Dolls Point Property and an investment property at 41 George St, St Peters (Sydenham Property) (Affidavit of Mr Macaulay 1 December 2016 (RM) [9]). PTW allegedly opened a file for the Defendants at about this time (RM [12]). No documentary evidence was produced to reflect these assertions, and the Plaintiffs dispute the timing of these assertions in the proceedings.

[3]

Background to s 37A

Section 37A of the Conveyancing Act provides: 37A Voluntary alienation to defraud creditors voidable (1) Save as provided in this section, every alienation of property, made whether before or after the commencement of the Conveyancing (Amendment) Act 1930, with intent to defraud creditors, shall be voidable at the instance of any person thereby prejudiced. (2) This section does not affect the law of bankruptcy for the time being in force. (3) This section does not extend to any estate or interest in property alienated to a purchaser in good faith not having, at the time of the alienation, notice of the intent to defraud creditors.
The statutory lineage of s 37A dates back to 1571 with the Fraudulent Conveyances Act 1571 (Eng) (13 Eliz I, c 5) (Elizabethan Statute). The Elizabethan Statute was replaced in England by s 172 of the Law of Property Act 1925 (UK) which reproduced in substance the Elizabethan Statute. Section 172 was then adopted with different wording but to similar effect across Australian States and Territories. In NSW, this meant the introduction of s 37A to the Conveyancing Act under the Conveyancing (Amendment) Act 1930 (NSW). Other legislative provisions in Australia are also sourced from the Elizabethan Statute, such as s 121 Bankruptcy Act. For a more complete legislative history of s 37A, see Marcolongo v Chen (2011) 242 CLR 546 (Marcolongo v Chen) at [12]-[17].
The purpose of the Elizabethan Statute was to protect creditors in an increasingly commercialised England where fraudulent conveyances were becoming commonplace. The Court of the Star Chamber captured this climate in Twyne's Case (1601) 76 ER 809 at 815-816: And because fraud and deceit abound in these days more than in former times, it was revolved in this case by the whole Court, that all statutes made against fraud should be liberally and beneficially expounded to suppress fraud.
The Elizabethan Statute in its modern formulations (including s 37A), has continued to be construed liberally to serve its intended purpose of protecting creditors' rights: see, for example, Marcolongo v Chen at [20] and Langdon v Gruber [2001] NSWSC 276 at [58] per Austin J (Langdon v Gruber).

[4]

Section 37A Conveyancing Act - Meaning of 'alienation'

The term 'alienation' has been rooted in s 37A since the section's inception. The Elizabethan Statute is styled as "An Act against fraudulent deeds, alienations, etc." and the long title opens with: "For the avoiding and abolishing of feign, covinous and fraudulent feoffments, gifts, grants, alienations, conveyances, bonds, suits, judgments and executions, as well as of lands and tenements, as of goods and chattels…"
In Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 (Cardile v LED Builders) at [65], the plurality (Gaudron, McHugh, Gummow and Callinan JJ) held alienation "is a parting with property and includes a parting with some interest in the property" (citing Re Cummins; Richardson v Cummins (1951) 15 ABC 185; In re Symon; Public Trustee v Symon [1944] SASR 102). The plurality went on to note at [67]: 67 Alienation is the transfer of value from one person to another (Ord Forrest Pty Ltd v Federal Commissioner of Taxation (1974) 130 CLR 124 at 142). It is usually understood as applying only to a transfer of property effected by the action of the transferor, as distinct from a transfer by involuntary operation of law (Australian Trade Commission v Film Funding & Management Pty Ltd (1989) 24 FCR 595 at 613).
It is worth noting 'property' under the Conveyancing Act is defined broadly to include "real and personal property"; s 7 Conveyancing Act.
In Re Symon; Public Trustee v Symon [1944] SASR 102 (Re Symon) at 108, Mayo J considered alienation to be the: act or series of acts of alienating, and taking place wherever the owner of land or of an interest therein, so acts to divest himself of his interest or lesser interest and to vest the same in another person.
Examples of the "series of acts" which may form part of an 'alienation' include the execution of the transfer followed by the lodgement, or court orders which require a transfer to be executed.
In Singh v Singh [2009] WASCA 53, while considering the meaning of 'alienation' under the Western Australian analogue of s 37A (s 87 Property Law Act 1969 (WA)), Pullin JA (with whom Martin CJ and Newnes AJA agreed) held at [60] the execution of the transfer of land and subsequent lodgement of the transfer at the Titles Office were "steps which amounted to the alienation".
Green v Schneller [2002] NSWSC 671 involved the transfer of property executed following Local Court orders. Barrett J, as he then was, in considering whether consent orders formed part of the alienation process, summarised the relevant authorities at [28]: [28] It is necessary now to say a few words about the meaning of "alienation" in s 37A. It is, in my view, synonymous with "transfer" in the analogous Bankruptcy Act provision, with the result that the following observation of Tamberlin J in Mateo v Official Receiver in Bankruptcy (2002) 188 ALR 667, above, at [24], is relevant: In my view, the "transfer" in this matter consisted of the whole transaction ranging from the signing of the consent orders on 18 April 2000 through to the completion of the transfer of the interest on or about 10 August 2000. There is no basis on which to isolate the making of the consent orders from the "transfer" which took place and rely only on the formal instrument of transfer. This is consistent with the approach taken by Hodgson CJ in Eq in Silvera v Savic, above, at [78]: In my opinion, the "alienation" in this case was the whole process of obtaining the Local Court order and the consequent transfer; and it is that whole alienation that is made voidable by s 37A.
Barrett J ultimately found at [29] the consent orders did not form part of the alienation since it was not a step instigated or made by the property owner undergoing the alienation.

[5]

Section 37A Conveyancing Act - Meaning of 'intent to defraud'

The most recent High Court authority on when parties have manifested intention such that a transaction is liable to be set aside pursuant to s 37A is Marcolongo v Chen. In that case, the plurality (French CJ, Gummow, Crennan and Bell JJ) construed s 37A liberally, holding "defraud" to mean "delay, hinder or [otherwise] defraud," and a desire on the part of the debtor that creditors suffer loss or a purpose of causing loss need not be demonstrated for intent to be made out (at [19]-[20] and [32]).
After considering the provenance of s 37A, the plurality went on to say at [32]-[34]: 32. …Mrs Marcolongo correctly relies upon a statement by Blanchard and Wilson JJ when considering the comparable New Zealand legislation (Property Law Act 1952 (NZ), s 60, now replaced by sub-pt 6 of Pt 6 (ss 344 to 350) of the Property Law Act 2007 (NZ)) in Regal Castings Ltd v Lightbody [2009] 2 NZLR 433 at 456-457. Their Honours said that it was unnecessary to show that the debtor wanted creditors to suffer a loss or that the debtor had a purpose of causing loss: it was necessary to show the existence of an intention to hinder, delay or defeat creditors and in that sense to show that accordingly the debtor had acted dishonestly. Mrs Marcolongo correctly relies also upon the observation by Russell LJ when considering s 172 of the 1925 Act in Lloyds Bank Ltd v Marcan [1973] 1 WLR 1387 at 1390-1391; [1973] 3 All ER 754 at 759-760. His Lordship said: "I am not sure what is meant by a perfectly innocent defeat, hindrance or delay. It must be remembered that in every case under this section the debtor has done something which in law he has power and is entitled to do: otherwise it would never reach the section. If he disposes of an asset which would be available to his creditors with the intention of prejudicing them by putting it, or its worth, beyond their reach, he is in the ordinary case acting in a fashion not honest in the context of the relationship of debtor and creditor. And in cases of voluntary disposition that intention may be inferred … The intention of Mr Marcan is perfectly plain: the lease to his wife was designed expressly to deprive the bank of the ability to obtain the vacant possession to which the bank plainly attributed value, and to diminish to that extent the strength of the bank's position as creditor. To take that action at that juncture, in my judgment, was, in the context of relationship of debtor and creditor, less than honest: it was sharp practice, and not the less so because he was advised that he had power to grant the lease. It was, in my judgment, a transaction made with intent to defraud the bank within s 172, and would have been within the [Elizabethan Statute]." 33. To that may be added the statement in the joint reasons of the Court in Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 at 162 [173]: "As a matter of ordinary understanding, and as reflected in the criminal law in Australia (Macleod v The Queen (2003) 214 CLR 230 at 242 [36]-[37]), a person may have acted dishonestly, judged by the standards of ordinary, decent people, without appreciating that the act in question was dishonest by those standards. Further, as early as 1801, Sir William Grant MR stigmatised those who 'shut their eyes' against the receipt of unwelcome information (Hill v Simpson (1801) 7 Ves Jr 153 at 170 [32 ER 63 at 69]. See further May v Chapman and Gurney (1847) 16 M & W 355 at 361 [153 ER 1225 at 1228]; Jones v Gordon (1877) 2 App Cas 616 at 625, 628-629, 635; English and Scottish Mercantile Investment Co Ltd v Brunton [1892] 2 QB 700 at 707-708)." 34. Lym relied upon the references by Brennan CJ and McHugh J in Cannane v J Cannane Pty Ltd (In liq) (1998) 192 CLR 557 at 565-566 [10]-[12] to "the onus of proving an actual intent". But their Honours were adding the word "actual" as a periphrasis to emphasise that, while the existence of the intent might be inferred from the evidence, it was to be found as a fact. With Gaudron J and Gummow J, Brennan CJ and McHugh J concluded that the facts of Cannane did not support the drawing of such an inference ((1998) 192 CLR 557 at 568 [17], 572 [31]-[32], 579-580 [58]).
It is not necessary, for the purposes of s 37A, there be actual proof the alienator had in his or her mind an intention to defraud creditors; the court can attribute to the alienator the requisite fraudulent intent if, from all the surrounding circumstances, it appears the effect might be expected to be, or has in fact been, to defeat creditors; Re Trautwein; Richardson v Trautwein (1944) 14 ABC 61 at 75 per Clyne J, cited with approval by the Full Court of the Federal Court of Australia in PT Garuda Indonesia Ltd v Grellman (1992) 35 FCR 515 at 523.
The relevant intention need not be a predominant or sole intention; Marcolongo v Chen at [57] and [58]. A transfer may be done with a number of intents in mind; Barton v The Deputy Federal Commissioner of Taxation (1974) 131 CLR 370 at 375 per Stephen J.
Further, it is not necessary to show the alienator acted dishonestly in wanting creditors to suffer loss. Rather, the dishonesty follows from proof of an existence of any intention to hinder, delay or defeat creditors; Marcolongo v Chen at [32], approving the findings in Regal Castings Ltd v Lightbody [2009] 2 NZLR 433 at 456-457 per Blanchard and Wilson JJ.
The Plaintiff bears the onus of proof of intent to defraud. However, as explained in Marcolongo v Chen at [24]-[25], the evidentiary onus may shift where the alienation is voluntary and made in certain circumstances which give rise to an inference of intent to defraud: Nevertheless, the nineteenth century cases did support a related distinction bearing upon the sufficiency of proof in these cases. The effect of the decisions was summed up as follows in the treatment under the title "Fraudulent and Voidable Conveyances" in the first edition of Halsbury's Laws of England ((1911), vol 15, p 84, para 173): In an action to set aside an alienation under the statute the onus of proof of actual fraud on the part of the grantor, and that the grantee was privy to the intent, rests upon the Plaintiff where the alienation is for valuable consideration (a) (In re Johnson; Golden v Gillam (1881) 20 Ch D 389 at 394; Re Cranston; Ex parte Cranston (1892) 9 Morr 160; Re Tetley; Ex parte Jeffrey (1896) 3 Mans 226 at 233; In re Hirth; Ex parte Trustee [1899] 1 QB 612 at 620; In re Holland; Gregg v Holland [1902] 2 Ch 360; In re Reis; Ex parte Clough [1904] 2 KB 769). Where, however, the alienation is voluntary, then on proof that the grantor was at the time of its execution contemplating his entry upon a hazardous business (b) (Mackay v Douglas (1872) LR 14 Eq 106), or that the natural consequence of the alienation was to delay, hinder, or defraud creditors (c) (Freeman v Pope (1870) LR 5 Ch App 538; Ex parte Mercer; In re Wise (1886) 17 QBD 290; In re Holland; Gregg v Holland [1902] 2 Ch 360; see Re Tetley; Ex parte Jeffrey (1896) 3 Mans 226), or that the circumstances under which the alienation was effected bore one of the indications or badges of fraud hereafter mentioned (d) (see Halsbury's Laws of England, 1st ed (1911) vol 15, pp 84-87, paras 174-177), the onus of upholding the alienation is imposed on the Defendants. The two leading authorities given in footnote (c) to this passage are Freeman v Pope ((1870) LR 5 Ch App 538) and Ex parte Mercer; In re Wise ((1886) 17 QBD 290). However, neither case concerned a transaction cast in the form of a contract for sale of property. Rather, each transaction was a voluntary settlement of property, which was set aside in the first case but not in the second. 25 The point sought to be made in the text of Halsbury attached to footnote (c) may be expressed by saying that it would be the duty of the judge to direct a jury that they might infer an intention by the settlor to defeat or delay creditors, even in the absence of direct evidence of that intention, where this outcome was the necessary consequence of a voluntary settlement (cf Williams v Lloyd (1934) 50 CLR 341 at 360-361). In this way, it was easier to infer a dishonest intention if the conveyance were voluntary than if it were made for consideration (cf Lloyds Bank Ltd v Marcan [1973] 1 WLR 1387 at 1392; [1973] 3 All ER 754 at 761). Evidence that the conveyance was voluntary does not replace the requirement of proof of intent by a distinct category where constructive fraud, with notions of constructive knowledge or notice as understood in equity, would suffice for the application of s 37A[80]. Rather, the evidence is that species which has sufficient weight to entitle the fact finder to decide an issue (here the necessary intent) in favour of the moving party, although the fact finder is not obliged to do so and other evidence given may be decisive to the contrary (see Cross on Evidence, 8th Aust ed (2010), p 121 [1600]).
Further, in Cannane v J Cannane Pty Ltd (in liq) (1998) 192 CLR 557, Brennan CJ and McHugh J said at [12] an inference of an intention to defraud creditors may be drawn where a disposition results in a "subtraction of assets" available for payment of creditors: Although the party impugning the disposition of property must show an actual intent to defraud creditors at the time of the disposition, the intent may be inferred (Noakes v Harvy Holmes & Son (1979) 37 FLR 5 at 10; 26 ALR 297 at 303) from the making of a disposition which, to adopt the words of Lord Hatherley LC in Freeman v Pope (1870) 5 Ch App 538 at 541, "subtracts from the property which is the proper fund for the payment of [the] debts, an amount without which the debts cannot be paid". The "proper fund" may consist in assets out of which future creditors as well as present creditors would be entitled to be paid a dividend in respect of what is owing to them. Therefore a subtraction of assets which, but for the impugned disposition, would be available to meet the claims of present and future creditors is material from which an inference of intent to defraud those creditors might be drawn. Whether that inference should be drawn depends upon all the circumstances of the case.
In Agusta Pty Ltd v Provident Capital Ltd [2012] NSWCA 26 at [105], Sackville AJA (with whom Campbell JA agreed) considered it: may be possible in a particular case to demonstrate that an alienation of property was made with the intent to defraud creditors even where the effect of the alienation is not to hinder, delay or defraud creditors (my emphasis)

[6]

Section 37A Conveyancing Act - Meaning of 'creditors'

'Creditors' for the purpose of s 37A includes future, contingent or prospective creditors; Trustees of Cummins v Cummins (2006) 227 CLR 278 at 291 (referring to s 121 Bankruptcy Act but equally applicable to s 37A); Ingram v Y Twelve [2013] NSWSC 1777 at [107].
The wide reach of the term 'creditors' spawns from the preamble of the Elizabethan Statute which declares the object of the Statute to be for the protection of creditors and "others". As observed by Fortesque M.R, in Taylor v Jones 2 Atk. 600 when considering the Elizabethan Statute preamble: The words others seems to be inserted to take in all manner of persons, as well as creditors after, as before the settlement, whose debts should be defrauded…The words of the statute, therefore, seem to be so general in order to take in all persons who shall be any ways hindered or delayed.
In line with the broad construction of 'creditors', there is clear authority the alienator does not need to be indebted or insolvent at the time of the transfer for s 37A to be enlivened. Lord Hardwick at 481 in Stileman v Ashdown (1742) 2 Atk. 477 said: It is not necessary that a man should actually be indebted at the time he enters into a voluntary settlement to make it fraudulent; for if a man does it with a view to his being indebted at a future time, it is equally fraudulent, and ought to be set aside.
However, there is no clear authority on how real, definite and impending the risk of being indebted sometime in the future must be. Stephen J (with whom Menzies and Gibbs JJ agreed) in Barton v The Deputy Federal Commissioner of Taxation (1974) 131 CLR 370 noted at 374 there must be "awareness of an impending liability" or a belief in "some impending indebtedness." While these comments were in relation to s 121 Bankruptcy Act, they are it seems equally applicable to s 37A; see, for example, PT Garuda Indonesia Ltd v Grellman (1992) 35 FCR 515 at 522.
Sackville J adopted similar language to Stephen J in a further bankruptcy case, Prentice v Cummins (No 5) (2002) 124 FCR 67 at 91, stating: A fortiori, a transferor may have the requisite purpose if assets are given away at a time when he or she is aware of an impending liability, but one which has not yet crystallised into an existing indebtedness: Barton v Deputy Commissioner of Taxation at 374 per Stephen J (where the impending liability related to a taxation debt which would come into existence only once an assessment had issued).
Austin J at [58] in Langdon v Gruber found a "claim likely to mature into a debt in the immediate or foreseeable future" may suffice for s 37A: [58] At the time when Mr Gruber executed the transfer of his interest in the Ramsgate property, and at the time of lodgement and registration of the transfer, Ms Langdon was not his creditor. She became a creditor only when judgment was entered in her favour, more than a year later. This raises the question whether a transfer made with intent to defraud a person who subsequently becomes a creditor falls within s37A. In my opinion, the section applies in such a situation. It is not necessary to take a particularly liberal construction to reach that conclusion, as long as one bears in mind the purpose of the section. Here the transfer was of Mr Gruber's only significant asset, and he executed it at a time when he expected the hearing of the Canadian civil proceedings to be imminent. He had been advised by his Canadian barrister not to attempt a defence of the proceedings because it would be futile. Therefore, there was a strong likelihood (and he understood that there was a strong likelihood) that a verdict would be entered against him in the relatively near future. If, in such circumstances, Mr Gruber transferred his interest in the property in order to remove it from the reach of Ms Langdon, it would be no distortion of the statutory language to say that he did so with the intention of defrauding her in her capacity as a creditor. The section does not literally require that the persons intended to be defrauded must all be creditors at the time of the transfer. To impose that construction on the statutory language would be to remove from its scope a situation falling squarely within the legislative policy and the object of the section. It is enough, in other words, that the intention is to defraud a person whose claim is likely to mature into a debt in the immediate or foreseeable future. (my emphasis)
When dealing with a transfer potentially on the eve of litigation, the remarks in May on Fraudulent and Voluntary Conveyances, 3rd ed. (1908) (May on Fraudulent and Voluntary Conveyances) at p. 48 are instructive: A voluntary conveyance pendente lite, or by a person against whom an action for damages, & c., is pending, and which he must have known would probably go against him, is always open to an imputation of fraud, though at the time of the settlement he was not in debt; unless the pending action is a claim for damages, of a very speculative character, and the probability of substantial damages is slight.
There are a number of earlier 'pendente lite' cases which examine the parameters of when legal proceedings on foot - or soon to be on foot - at the time of a transfer may lead to an intent to defraud creditors. In Ex parte Mercer, in re Wise (1883) 17 Q.B.D 290 (Ex parte Mercer, in re Wise), the Court of Appeal held the Defendant had no intent to defraud, despite making a voluntary post-nuptial settlement of a legacy of £500 directly after being served with a writ in action for breach of promise of marriage. Lindley L.J observed at 301: …I also believe he was speaking the truth and that he thought the action for breach of promise would come to nothing. At all events, the result of it was in the highest degree speculative; he was not then indebted to the Plaintiff but she had made a claim against him which might or might not result in damages.
The Divisional Court in Ex Parte Mercer, in re Wise (whose decision was upheld by the Court of Appeal) distinguished the case from Barling v Bishopp (1860) 29 Beav. 417 (Barling v Bishopp). In the latter case, the Defendant executed a deed of voluntary conveyance of land to his daughter a fortnight after notice of a trial in the action of trespass and 17 days before the trial commenced. Romilly, M.R. held the deed was void, noting at 421: Every man knows that he cannot go to law without incurring some expense. This deed was to provide for the worst which might happen, by conveying away his property beforehand. The grantor and the Defendant have given no explanation, I am of the opinion that the effect of the deed was to defeat persons who might become his creditors, and was executed in favour of his daughter, who it is clear would not allow her father to starve. ... I am of opinion that it is a necessary inference to be drawn from the facts and dates, that this deed was executed with a view to defeating persons who might become his creditors, in consequence of acts done by him.
Barling v Bishopp was relied upon in a more recent case before the Supreme Court of Norfolk Island, Smith v Edward [2006] NFSC 11. The case concerned Plaintiffs injured by a motor vehicle driven by the Defendant. Several months after the accident, and just over two weeks after the Plaintiffs' solictors requested the Defendant's insurance details, the Defendant transferred real property to his nephew for $1.00 consideration, and the nephew granted the Defendant life estate in the property. The Plaintiffs brought an application under the Statute of Elizabeth, which was still in force for Norfolk Island. Kiefel J, as she then was, at [5]-[6] made reference to the Plaintiffs' reliance on Barling v Bishopp, and found the conveyance ought to be set aside: The Plaintiffs have also drawn my attention to the decision in Barling v Bishopp (1860) 29 BEAV 417; 54 ER 689 which dealt with the question whether a transfer was void under the statute because the Plaintiff in proceedings, which had not been heard and determined, was not a creditor at the time of the conveyance. The statute was held to apply because the Defendant was taken to know that any legal action involves expense. In the present case the first Defendant was on notice of the Plaintiffs' proposed proceedings and it may readily be inferred that the conveyance was made as a response to that notice. There would appear to be no other reasonable inference open and the first Defendant has not availed himself of any opportunity to put forward any other explanation. The transfer could not be said to be for valuable consideration, given the value of the land and the conveyance of the life interest. The result intended by the first Defendant is patently obvious.
In the NSW cases of Silvera v Savic (1999) 46 NSWLR 124 and Langdon v Gruber, transfers of property were set aside for intent to defraud creditors, where proceedings for unliquidated damages had commenced but not yet been tried.

[8]

Intention to create legal relations in oral agreements

For an agreement - either oral or in writing - to be binding, the parties must manifest an intention to create legal intentions. This requires making an objective assessment of the state of affairs between the parties as distinct from the identification of any subjective reservation or intention; Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 at [25].
The nature of this objective assessment when it comes to oral agreements was reiterated by Hammerschlag J in John Holland Pty Limited v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451 at [94]: [94] Where a party seeks to rely upon spoken words as a foundation for a cause of action, including a cause of action based on a contract, the conversation must be proved to the reasonable satisfaction of the court which means that the court must feel an actual persuasion of its occurrence or its existence. Moreover, in the case of contract, the court must be persuaded that any consensus reached was capable of forming a binding contract and was intended by the parties to be legally binding. In the absence of some reliable contemporaneous record or other satisfactory corroboration, a party may face serious difficulties of proof. Such reasonable satisfaction is not a state of mind that is obtained or established independently of the nature and consequences of the fact or facts to be proved. The seriousness of an allegation made, inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question of whether the issue has been proved to the reasonable satisfaction of the court. Reasonable satisfaction should not be produced by inexact proofs, indefinite testimony, or indirect inferences: see Briginshaw v Briginshaw (1938) 60 CLR 336 at 362; Helton v Allen (1940) 63 CLR 691 at 712; Rejfek v McElroy (1965) 112 CLR 517 at 521; Watson v Foxman (1995) 49 NSWLR 315 at 319.
Formal language of offer and acceptance is not required for a contract to be formed: see Ashton v Pratt [2015] NSWCA 12 at [80] per Bathurst CJ, citing Vroon BV v Foster's Brewing Group Ltd [1994] VR 32 at 79.
The commercial context and parties' previous dealings are relevant to determining whether a binding agreement has come into existence between the parties; Pavlovic v Universal Music Australia Pty Limited (2015) 90 NSWLR 605 at [15] (per Bathurst CJ), [72], [84] (per Beazley P), [162] (per Meagher JA); Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 548; Toyota Motor Corporation Australia Ltd v Ken Morgan Motors Pty Ltd [1994] 2 VR 106 at 138. It is also appropriate to consider the object of the transaction between the parties; Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at [22] (per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ); Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [40]; International Air Transport Association v Ansett Australia Holdings Ltd (2008) 82 ALJR 419 at [8] (per Gleeson CJ).
As Bathurst CJ explained in Pavlovic v Universal Music Australia Pty Limited (2015) 90 NSWLR 605 at [15]: It is well established that the question of whether the parties intended to bind themselves to a contract is to be determined objectively, having regard to the intention disclosed by the language the parties have employed: Masters v Cameron [1954] HCA 72; 91 CLR 353 at 362. In cases such as the present, which do not depend on the construction of a single document, what is involved is the objective determination of the question from the communications between the parties in their context and the parties' dealings over the time leading up to the making of the alleged contract. This involves consideration of the subject matter of the communications: Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 550. As was said by Mahoney JA and McHugh JA in Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309, that includes consideration of what the parties said or wrote (at 334, 337).
Oral contracts for the transfer of property will also need to be supported by valuable consideration, be certain in terms and comply with the Statute of Frauds requirement (as rendered applicable by ss 23C and 54A of the Conveyancing Act); Sharp v Anderson (1994) 6 BPR 97,510 at 7.

[10]

Credit of the witnesses

As will appear later in my judgment, a number of credit issues arose for determination.
In principle, a trial judge is not restricted in his or her assessment of a witness; he or she is not bound to accept all or any of that which the witness attests to. O'Loughlin J collected the authorities in Cubillo v Commonwealth (No 2) (2000) 103 FCR 1 at [118]-[123].
However, although judges are entitled to reject part or the whole of a witness's evidence, even if there has been no cross examination it is of course incumbent upon them to provide reasons for doing so. In any case where credibility is an important issue, the judge must give sufficient reasons so as to demonstrate he or she has not failed to use or has not palpably misused his or her advantage of first hand exposure in observing the witness; Beale v Government Insurance Office of NSW [1997] 48 NSWLR 430 at 445 per Meagher JA. Judges as do juries need to act reasonably and not perversely and capriciously in relation to accepting or rejecting a witness's testimony; Christmas v Nicol Bros. Pty Ltd and Anor (1941) 41 NSWSR 317 at 322 per Jordan CJ; State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (In Liq) and Others (1999) 160 ALR 588 at 617 per Kirby J.
Further, in making assessments of credibility, trial judges should exercise restraint in drawing inferences too willingly from the demeanour of witnesses as they present in court. Primary deference should instead be given to contemporaneous documents. As noted by Gleeson CJ, Gummow and Kirby JJ in Fox v Percy (2003) 214 CLR 118 at [30]-[31]: 30. It is true, as McHugh J has pointed out, that for a very long time judges in appellate courts have given as a reason for appellate deference to the decision of a trial judge, the assessment of the appearance of witnesses as they give their testimony that is possible at trial and normally impossible in as appellate court. However, it is equally true that, for almost as long, other judges have cautioned against the dangers of too readily drawing conclusions about truthfulness and reliability solely or mainly from the appearance of witnesses. Thus, in 1924 Atkin LJ observed in Société d'Avances Commerciales (Société Anonyme Egyptienne) v Merchants' Marine Insurance Co (The "Palitana"): "... I think that an ounce of intrinsic merit or demerit in the evidence, that is to say, the value of the comparison of evidence with known facts, is worth pounds of demeanour." 31. Further, in recent years, judges have become more aware of scientific research that has cast doubt on the ability of judges (or anyone else) to tell truth from falsehood accurately on the basis of such appearances. Considerations such as these have encouraged judges, both at trial and on appeal, to limit their reliance on the appearances of witnesses and to reason to their conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events. This does not eliminate the established principles about witness credibility.
Whilst it is simplistic and arguably erroneous for a trial judge solely to be influenced in his or her findings by contemporaneous documents, they will often have an extremely potent part to play in that process, especially when they were created against interest. If they appear of course to be self-serving they may need to be viewed with some care. Effective cross examination also will play an important part in assisting a judge to come to a view about the facts especially when inconsistencies are exposed which are not capable of rational explanation. In any fact finding exercise however a judge must always be astute in particular when drawing inferences carefully to distinguish in his or her mind between what is a reasonable inference as opposed to what may amount to no more than mere speculation; Jones v Sutherland Shire Council [1979] 2 NSWLR 206 at 222 per Samuels JA.
The rule in Browne v Dunn (1893) 6 R 67 (Browne v Dunn) may also be relevant to how a judge might assess a witness's credibility. In this jurisdiction Hunt J subjected the rule in Browne v Dunn to his typically lucid analysis in Allied Pastoral Holdings Pty Ltd v Cmr of Taxation (Cth) [1983] 1 NSWLR 1 (Allied Pastoral) and concluded at 26: I remain of the opinion that, unless notice has already clearly been given of the cross examiner's intention to rely upon such matters, it is necessary to put to an opponent's witness in cross examination the nature of the case upon which it is proposed to rely in contradiction of his evidence, particularly where that case relies upon inferences to be drawn from other evidence in the proceedings.
In Markem Corp v Zipher Ltd [2005] RPC 31 at 785-786 the Court of Appeal in the United Kingdom (comprising Kennedy, Mummery and Jacob LJJ) reemphasised the principle articulated in Browne v Dunn and approved Hunt J's analysis in Allied Pastoral: 56. But there is a second ground which we consider first, namely that procedural fairness not only to the parties but to the witnesses requires that if their evidence were to be disbelieved they must be given a fair opportunity to deal with the allegation. 57. Prior to the hearing before us, we drew the attention of the parties to the decisions of the House of Lords in Browne v Dunn(1894) 6 R 67 and the Australian case of Allied Pastoral Holdings v FCT(1983) 44 ALR 607. One member of the court was aware that Australian practitioners were very alive to the rule in Browne v Dunn (so also, he has ascertained, are Canadian practitioners). The case reference and the Pastoral Holdings decision were supplied to him through the helpfulness of Justice Heerey of the Australian Federal Court. 58. Browne v Dunn is only reported in a very obscure set of reports. Probably for that reason it is not as well-known to practitioners here as it should be although it is cited in Halsbury for the following proposition: Where the court is to be asked to disbelieve a witness, the witness should be cross examined; and failure to cross examine a witness on some material part of his evidence or at all, may be treated as an acceptance of the truth of that part or the whole of his evidence
Nonetheless, as noted by the Court of Appeal of the Supreme Court of New South Wales in Toben v Nationwide News Pty Ltd [2016] NSWCA 296 (comprising of Meagher, Ward and Payne JJA) at [58] Browne v Dunn is "a rule of fairness," which may not extend to all evidence that is not cross examined. In Browne v Dunn, Lord Herschell noted at 71: … Of course I do not deny for a moment that there are cases in which that notice has been so distinctly and unmistakably given, and the point upon which he is impeached, and is to be impeached, is so manifest, that it is not necessary to waste time in putting questions to him upon it. All I am saying is that it will not do to impeach the credibility of a witness upon a matter on which he has not had any opportunity of giving an explanation by reason of there having been no suggestion whatever in the course of the case that his story is not accepted.
Lord Herschell's views were echoed by Tobias and McColl JJA in Ali v Nationwide News Pty Ltd [2008] NSWCA 183 at [112]: There can be no doubt that where factual evidence is not cross examined upon, prima facie it should be accepted. However, it ought not necessarily be accepted where, as Tobias JA said in Multiplex, there is a credible body of evidence of a substantial character in direct contradiction of the non cross examined evidence. In the present case there is no such body of evidence. (my emphasis)
The observations of McLelland CJ in Equity in Watson v Foxman (1995) 49 NSWLR 315 at 318-319 should also be at the forefront of judge's assessments of witnesses recalling oral conversations: Where, in civil proceedings, a party alleges that the conduct of another was misleading or deceptive, or likely to mislead or deceive (which I will compendiously described as "misleading") within the meaning of s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act), it is ordinarily necessary for that party to prove to the reasonable satisfaction of the court: (1) what the alleged conduct was; and (2) circumstances which rendered the conduct misleading. Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances. In many cases (but not all) the question whether spoken words were misleading may depend upon what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience. … Considerations of the above kinds can pose serious difficulties of proof for a party relying upon spoken words as the foundation of a causes of action based on s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act), in the absence of some reliable contemporaneous record or other satisfactory corroboration. … What I have said above as to the cause of action based on s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act) is equally applicable, mutatis mutandis, to the causes of action based on contract and on equitable estoppel (with the added requirements, in the case of contract that any consensus reached was capable of forming a binding contract and was intended by the parties to be legally binding, and in the case of equitable estoppel that any representation alleged was clear and unequivocal and was relied on to the substantial detriment of the representee). (my emphasis)
There are a raft of difficulties in cases based on perception and reliance on spoken words, some of which have been alluded to by the then Chief Justice Spigelman, in "Truth and the Law" (2011) 85 (11) Australian Law Journal 746 (at 756-759), and in cases such as Pennimpede v Pennimpede [2009] NSWSC 85 at [29] per Bryson AJ and Murtagh v Murtagh [2013] NSWSC 926 at [105]-[109] per Hallen J. These difficulties are only amplified by the passage of time.
The rule in Jones v Dunkel (1959) 101 CLR 298 (Jones v Dunkel) may also play a role in the assessment of the probability of a witness being accepted. The Jones v Dunkel rule is a particular application of the general principle in the law of evidence that "all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted"; Blatch v Archer (1774) 1 Cowp 63 at [65] per Lord Mansfield. The statement of the rule in J D Heydon, Cross on Evidence, 9th ed (2013) LexisNexis Butterworths at [1215] was approved in R v Navarolli (2009) 194 A Crim R 96 by Muir JA at [2]: [2] What is known as the Rule in Jones v Dunkel is summarised in Cross on Evidence (Aust ed) as follows: First, that unexplained failure by a party to give evidence, to call witnesses, or to tender documents or other evidence or produce particular material to an expert witness may (not must) in appropriate circumstances lead to an inference that the uncalled evidence or missing material would not have assisted that party's case.
The rule can operate against a party who bears the onus of proof and against a party who does not; Ho v Powell (2001) 51 NSWLR 572 at [16] per Hodgson JA (with whom Beazley JA agreed).
The plurality (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ) in ASIC v Hellicar (2012) 247 CLR 345 (ASIC v Hellicar) at [165]-[167] discussed the application of the rule in Jones v Dunkel: 165. Disputed questions of fact must be decided by a court according to the evidence that the parties adduce, not according to some speculation about what other evidence might possibly have been led. Principles governing the onus and standard of proof must faithfully be applied. And there are cases where demonstration that other evidence could have been, but was not, called may properly be taken to account in determining whether a party has proved its case to the requisite standard. But both the circumstances in which that may be done and the way in which the absence of evidence may be taken to account are confined by known and accepted principles which do not permit the course taken by the Court of Appeal of discounting the cogency of the evidence tendered by ASIC. 166. Lord Mansfield's dictum in Blatch v Archer (1774) 1 Cowp 63 at 65 [98 ER 969 at 970 that "[i]t is certainly a maxim that all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted" is not to be understood as countenancing any departure from any of these rules. Indeed, in Blatch v Archer itself, Lord Mansfield concluded (1 Cowp 63 at 65 [98 ER 969 at 970) that the maxim was not engaged for "it would have been very improper to have called" the person whose account of events was not available to the court. 167. This Court's decision in Jones v Dunkel is a particular and vivid example of the principles that govern how the demonstration that other evidence could have been called, but was not, may be used. The essential facts of the case, though well known, should be restated. The personal representative of a driver who had died in a collision with another vehicle brought an action for damages on her own behalf and on behalf of the deceased driver's dependants. The Plaintiffs' case depended upon demonstration that the other driver's negligence was a cause of the accident. The Plaintiff sought to demonstrate negligence by having the tribunal of fact (in that case a jury) infer from facts concerning the road and the two vehicles involved that the collision had occurred when the Defendant's vehicle was on the wrong side of the road. One of the Defendants, the surviving driver, did not give evidence at the trial. The Court divided about whether the inference which the Plaintiff sought to have the jury draw about where the collision occurred was an inference that was open on the evidence. But the Court held (Jones v Dunkel (1959) 101 CLR 298 at 308 per Kitto J; see also at 312 per Menzies J; at 320-321 per Windeyer J.) "that any inference favourable to the Plaintiff for which there was ground in the evidence might be more confidently drawn when a person presumably able to put the true complexion on the facts relied on as the ground for the inference has not been called as a witness by the Defendant and the evidence provides no sufficient explanation of his absence."
Heydon J, in a separate judgment in ASIC v Hellicar at [232] made clear the rule in Jones v Dunkel does not extend to allowing inferences to be positively drawn that the absent witness's evidence would have adversely affected the party who failed to call the witness: …As the Court of Appeal said, two consequences can flow from the unexplained failure of a party to call a witness whom that party would be expected to call. One is that the trier of fact may infer that the evidence of the absent witness would not assist the case of that party. The other is that the trier of fact may draw an inference unfavourable to that party with greater confidence. But Jones v Dunkel does not enable the trier of fact to infer that the evidence of the absent witness would have been positively adverse to that party (HML v The Queen (2008) 235 CLR 334 at 437-438 [302]-[303]; Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361 at 385 [64]).
Another issue related to credit is the reaction (or lack thereof) of witnesses, and especially principal witnesses, to important events.
It is well established remaining silent when speech could have been expected, or failing to raise a matter in correspondence where the relationship between the parties is such that a particular reply might be expected, may amount to an admission, and is at least relevant evidence; Young v Tibbits (1912) 14 CLR 114 at 122 per Griffith CJ and 128 per Barton J; Lustre Hosiery Ltd v York (1935) 54 CLR 134 at 143 per Rich, Dixon, Evatt and McTiernan JJ; Shaddock & Associates Pty Ltd v Parramatta City Council (No 1) (1981) 150 CLR 225 at 230 per Gibbs CJ; Thomas v Hollier (1984) 156 CLR 152 at 157 per Gibbs CJ.
Not only may a failure to complain be instructive for determining whether a party relied on certain conduct (see, for example, Jones v Acfold Investments Pty Ltd (1984) 6 FCR 512 at 521-522 per Sheppard, Morling and Spender JJ (Full Fed Court) and Civoken Pty Ltd & Anor v Madden Grove Developments Pty Ltd & Ors [2006] VSC 283), but it may also adversely affect the credibility of a witness.
In Textralian Enterprises v Perpetual Trustees (Victoria) Ltd [2000] NSWCA 176, Heydon JA as he then was observed at [85]: There were other grounds for the trial judge's conclusions about Mr Slattery's credibility. In many places he did appear argumentative, evasive and prone to volunteer material not responsive to the question. Under cross examination he sometimes gave potentially important evidence which would appropriately have appeared in his affidavits if it proceeded from genuine recollection. Mr Slattery also appeared to lack genuine recollection in other respects and to be defensive about answering without first having access to whatever document might help. In addition, there was a substantial lack of credibility in his assigning to the cinema centre and food court representations, whatever the detail of what was said, a central role in view of his years of failure to complain about non-compliance with them despite the many occasions on which it would have been appropriate to - not only 23 February 1993 (after Mr Slattery noticed disparities between the letter of offer and Mr Levin's representations), not only occasions when LLPM's pre-contractual and contractual documentation ought to have stimulated some statement about the representations, but also the many post-contractual occasions when Mr Slattery was remonstrating with LLPM about what he saw as its role in the losses which the shop was suffering. (my emphasis)
With these legal principles in mind, I will now turn to the parties' submissions on the law.

[13]

Plaintiffs' submission: 29 January 2013, 21 November 2012, or, in the alternative, from early months of 2012 to 29 January 2013

The Plaintiffs' primary case is the alienation occurred at the registration of the transfer on 29 January 2013, or, at the earliest, 21 November 2012. In the alternative, the Plaintiffs submit even if the Second Defendant's interpretation of 'alienation' is accepted, the crucial date for ascertaining intent is at any time within that alienation period.
The Plaintiffs rely on the exposition of 'alienation' in Cardile v LED Builders Pty to support the proposition in written submissions that 29 January 2013 is the correct date of alienation. The date of registration of the transfer is the date in which the "parting of property" legally takes place as at no point prior to this date did Mrs Lardis have any interest sufficient to justify an order for specific performance in her favour (Plaintiff's Final Submissions [2]; Plaintiffs' Additional Final Submissions [9]). In oral submissions, the Plaintiffs also conceded, at the earliest, the alienation may have taken place on 21 November 2012 when the transfer appears to be signed by the relevant parties (T128/45-50).
The Plaintiffs submit this finding is consistent with the authorities cited by the Second Defendant. Silvera v Savic, Mateo v Official Trustee and Green v Scheller were all cases where the transfer of property took place pursuant to court orders. It was therefore appropriate in those cases for the court to consider the making of the court orders as part of the alienation, since those orders amounted to the transfer of equitable interest in the property (Plaintiffs' Additional Final Submissions [10]-[11]).
The Plaintiffs submit any purported oral agreement between the Defendants cannot be considered in similar terms to the court orders in the above cases, since no equitable interest was conveyed due to the absence of writing. The fact the Second Defendant seeks to rely on s 54A only confirms this point by highlighting Mrs Lardis could not enforce any oral agreement in a suit for specific performance, and any other conclusion would offend the Statute of Frauds (Plaintiffs' Additional Final Submissions [13]).
In light of this, the Plaintiffs' primary case is the only date in which a parting with property can be properly conceived as taking place is the date of registration of the Dolls Point Property Transfer, namely 29 January 2013, or, in the alternative, 21 November 2012 when the Dolls Point Property Transfer appeared to be signed.
In the further alternative, the Plaintiffs submit - even on the Second Defendant's view that alienation is a multi-step process in this case spanning over many months - the crucial date for ascertaining an intent for the purpose of s 37A can be at "any time within that period". On these grounds, the date of 'alienation' relying on the Second Defendant's characterisation makes no difference to the outcome of the case as all that is needed is for the Plaintiffs to show at some point during the alienation (including on 29 January 2013), Mr Lardis had an intent to defraud creditors (Plaintiffs' Additional Final Submissions [5]-[6]).

[15]

Plaintiffs' submission

The Plaintiffs rely on several grounds in submitting the 49% Dolls Point Property Transfer was done by Mr Lardis with the intention of putting his interest in the matrimonial home beyond the reach of his creditors and potential creditors, including Amazon at the time of the alienation (Amended Statement of Claim, (ASOC) [11], Plaintiffs' Opening Submissions [21]).
First, as early as 9 December 2011, when Mr Lakis' solicitors informed Mr Lardis he was wanting to appoint forensic accountants to review Amazon's books and records, the dispute with Mr Lakis "loomed on the horizon" (Plaintiffs' Additional Final Submissions [7]).
Second the Plaintiffs plead Mr and Mrs Lardis, by at the latest 17 July 2012, being the date the application for the winding up proceedings was filed, were aware Amazon had claims against Mr Lardis and that there was a substantial likelihood such claims would be pursued and result in a judgment against Mr Lardis in favour of Amazon (ASOC [5]).
By 5 September when an agreement for the 49% Dolls Point Property Transfer was first documented in Ms Hsu's email, the Defendants were aware Mr Lardis' assets may be at risk as a result of the winding up proceedings which had been given a timetable by the court on 28 August 2012 (Plaintiffs' Additional Final Submissions [7]).
The risk of this outcome was at the least made clear by 18 October 2012, when Mr Lakis requested Mr Lardis refrain from the Dolls Point Property transfer as it was an attempt by Mr Lardis to prevent recovery by Amazon and Mr Lakis (Plaintiffs' Additional Final Submissions [7]).
Finally, by the time of the lodgement and registration of the 49% Dolls Point Property Transfer (being the relevant date of the alienation), the Defendants were aware of Black J's findings on Mr Lardis' misappropriation of company money, knew a liquidator had been appointed to Amazon, and were obliged to investigate those matters and Mr Lardis' liability to pay Mr Lakis' costs of the winding up proceedings (Plaintiffs' Additional Final Submissions [7]).
Based on this timeline of events, the Plaintiffs submit at the very latest by 29 January 2013, a purpose, and "most likely the only purpose," of the 49% Dolls Point Property Transfer was to quarantine the property from Mr Lardis' creditors, including Amazon (Plaintiffs' Additional Final Submissions [8]). Further, even if the court were to find the alienation occurred in early 2012, the Defendants were aware of an impending dispute at that time and intended to insulate the Dolls Point Property from that dispute.
The Plaintiffs submit the Second Defendant's claim the 49% Dolls Point Property Transfer was to secure further finance for Mr Lardis is "a construct devised by Mr and Mrs Lardis as part of their attempt to shield the Dolls Point Property from Amazon" (Plaintiffs' Additional Final Submissions [18]).
The Plaintiffs support this with detailed submissions (Plaintiffs' Loan Submissions) highlighting the loan money secured over the Dolls Point Property (being $256,370.41 once $963,417 was paid to the CBA to discharge mortgages over both the Dolls Point and Sydenham Property) was not for the exclusive sole benefit of Mr Lardis, but rather for an array of expenses such as the purchase of the Pesthelp business, interest repayments to the NAB, personal expenses such as school fees, loans to Pesthelp Holdings and, to a limited extent, legal fees (Plaintiffs' Loan Submissions [11]-[23]). Further, the Plaintiffs submit there is no evidence the money used to pay for legal fees was solely for the dispute with Mr Lakis, and may have related to a string of legal work the Lardis' had engaged PTW to undertake (Plaintiffs' Loan Submissions [20]). The Plaintiffs rely on this evidence to dispute the Second Defendant's contention the 49% Dolls Point Property Transfer was predicated on Mrs Lardis agreeing to refinance the Dolls Point Property so Mr Lardis could use it for his expenses, including legal costs for proceedings against Mr Lakis.
In the alternative, the Plaintiffs submit even if the Dolls Point Property Transfer occurred because it was the only way Mrs Lardis would allow money to be borrowed against the Dolls Point Property to fund the winding up proceedings, the intended effect was still to shield the Dolls Point Property from Mr Lardis' creditors (Plaintiffs' Opening Submissions [25]).

[16]

Defendant's submissions

The Second Defendant submits the only intent of the Dolls Point Property Transfer was to raise further finance so Mr Lardis had money available to expend as he saw fit, including payment of legal fees and expenses incurred in the development of a new business. The 49% Dolls Point Property Transfer is therefore characterised as interlinked with the refinancing or "dependent upon the extension of loan monies" (Defendant's Final Submissions [10]).
The Second Defendant contends the only terms upon which Mrs Lardis was prepared to consent to an additional loan being secured over the Dolls Point Property so Mr Lardis could pay his expenses was for Mrs Lardis to be transferred the 49% interest in the Dolls Point Property. As noted in the Defendant's Opening Submissions at [26]: "Mr Lardis' need for money, and the terms upon which his wife was prepared to consent to support a loan for the bank, were the reasons for the transfer."
The Second Defendant relies on the loan secured over the Dolls Point Property as evidence of this arrangement. The Second Defendant submits the documents surrounding the home loan applications of May 2012 and subsequent loan approval and mortgage on the Dolls Point Property "are consistent with Ms. Lardis' understanding she was being asked to agree to an advance against her home that increased her indebtedness and as a result reduced her equity accept [sic] to the extent that she had in return 49% of her husbands interest" (Defendant's Additional Final Submissions [24]); see also Defendant's Opening Submissions [23]-[25]). Further, the Second Defendant relies on affidavit evidence which "indicates that the transfer was associated with the advancement of further monies" (Defendant's Final Submissions [7]).
The Second Defendant disputes the Plaintiffs' case an intent of the Dolls Point Property Transfer was to put the Dolls Point Property beyond the reach of creditors, on the grounds Mr Lardis did not apprehend at the time of the transfer the Dolls Point Property may be at risk of being exposed to creditors.
The Second Defendant claims Mr Lardis was not aware at the time of the transfer he could have been adjudged liable for a sum as significant as the $1,090,076.24 (plus interest) he was ordered to pay following the judgment of Young AJA, and that the 49% Dolls Point Property Transfer was not a response to the orders of Black J. The reasons given in support of this include: 1. steps to affect the transfer such as the 5 September email, the valuation and the forwarding of the transfer from PTW to their registration service all predated the orders of Black J; 2. the only litigation being contemplated in 2012 was the winding up proceedings, not proceedings concerning the liability of Mr Lardis; 3. both Mr Lardis and Mr Lakis had allegations of misappropriation directed at them; 4. the allegations were confirmed by Black J in December 2012 where Mr Lardis is found to have misappropriated a relatively modest $76,370.49; 5. the debt which caused Mr Lardis to become bankrupt was not incurred until 2016; and (Defendant's Opening Submissions [11]; Defendant's Final Submissions [3]).
Further, the Second Defendant rejects the Plaintiffs' case the refinancing occurred at a time when the Lardis' had no intention to carry out the 49% or 50% Dolls Point Property Transfer, noting "there was no pressing need" for substantial monies to be drawn in May 2012 against the family home (Defendant's Final Submissions [18]).

[19]

Plaintiffs' submission

The Plaintiffs submit s 37A(3) is not enlivened as Mrs Lardis had notice of the intention for the Dolls Point Property Transfer to defraud creditors at all relevant times (Plaintiffs' Opening Submissions [26]; Plaintiffs' Additional Final Submissions [3]).
By late March/April when Mr and Mrs Lardis contend they reached the agreement for the Dolls Point Property Transfer, Mrs Lardis conceded she was concerned her house be kept "safe from any consequences that might flow, good bad or indifferent, from the court case" (T54/5-8) and admitted the Transfer "removed your house from any involvement, as you saw it, in litigation" (T54/17-19) (Plaintiffs' Additional Final Submissions [7]).
Further, Mrs Lardis was privy to all the events which also put Mr Lardis on notice of the Dolls Point Property being the subject of recovery claims by Amazon and Mr Lakis. The Plaintiffs submit just like Mr Lardis, Mrs Lardis knew this was a potential outcome of the winding up proceedings when a timetable for those proceedings was set on 28 August 2012. Mrs Lardis knew Mr Lakis was concerned the Dolls Point Property Transfer was to shield the Dolls Point Property from potential creditors by 18 October 2012. Finally, by 24 or 29 January 2013, Mrs Lardis knew of Black J's findings, including those relating to Mr Lardis' misappropriation of funds, Mr Lardis' liability to pay costs, and the appointment of a liquidator for Amazon (Plaintiffs' Additional Final Submissions [7]).
In addition to having notice of the intent to defraud, the Plaintiffs' submit Mrs Lardis was also not a purchaser under s 37A(3) as she did not pay consideration for the Dolls Point Property. The Plaintiffs' maintain the only agreement relating to the Dolls Point Property Transfer was the transfer itself, with consideration of $1.00 (T134/25-30).
The Plaintiffs submit on the Second Defendant's case, the maximum consideration paid by Mrs Lardis was $256,370.14, not $720,000.000 as that is the amount of the loan monies secured over both the Dolls Point Property and the Sydenham Property (Plaintiffs' Loan Submissions [7], [10]). In any case, the Plaintiffs submit the $256,370.14 cannot be properly characterised as consideration. First, the evidence shows the loan money was not used by Mr Lardis for his own benefit, but rather for the benefit of the Lardis family (Plaintiffs' Final Submissions [18]). Furthermore, there is no evidence to support the Second Defendant's contention that amounts paid from the loan money secured over the Dolls Point Property to the NAB by way of interest were accounted for by Pesthelp Holdings as Mrs Lardis' wages (Plaintiffs' Loan Submissions [15]).

[24]

Evidence of Mrs Athena Lardis

Mrs Lardis swore two affidavits one dated 25 October 2016 (AL1), the other 20 December 2016 (AL2).
Mrs Lardis was born in 1973 and completed the Higher School Certificate in 1990. After school she worked as a beautician. She and her husband married in 1994 (AL1 [3]-[5]).
Initially she and her husband lived in a house in Miranda which she designed and decorated. Between 1997 and 1999 they purchased investment properties in St Peters and Sydenham (AL1 [7]-[13]).
They lived in the Miranda property until about mid 2002 and sold it and purchased their current home at 4 Skinners Avenue, Dolls Point. They paid $1.180 million for Dolls Point. For the purposes of purchasing the property they obtained a mortgage from the Australian Wholesale Lending Mortgages Pty Limited in the sum of $600,000 (AL1 [14]-[15]).
When their second child Terri started high school Mrs Lardis returned to working as a beauty therapist (AL1 [16]).
She and her husband have known Mr and Mrs Lakis as family for many years. From about 2000 she and her husband socialised almost every second weekend with Mr Lakis and his wife. His wife Cassie is a godmother to the Lardis' daughter. Eventually Mr Lardis and Mr Lakis went into partnership in a venture which became known as Amazon Pest Control Pty Ltd. They bought a property at Gardiners Road Rosebery to use as headquarters for the Amazon business. In 2008 they further invested in a gymnasium in Kensington. Mrs Lardis and her husband borrowed approximately $120,000 to invest in the Kensington gym which was secured against the Dolls Point Property (AL1 [17]-[25]).
Relations soured between the two families in late 2011. The gymnasium had turned out to be unsuccessful and it is by no means clear whether Mr and Mrs Lardis ever got their investment back. Mrs asserted there was a dispute between other persons involved in the Kensington gym and Mr Lakis and no monies were ever received by she and/or her husband from that business as promised (AL1 [26]-[28]).
She asserted by possibly late 2011 her husband became concerned Mr Lakis was bribing people to get pest control work. Her husband told her he did not want any longer to be involved with Mr Lakis and wanted to split up the business. Mrs Lardis asserted there were numerous conversations in late 2011 and early 2012 in which the parties discussed the break up of the Amazon business (AL1 [29]-[31]).
By early 2012 the parties ceased any form of social contact and it appears from that point if not earlier neither side regarded the other as friends (AL1 [32]-[33]).
Mr Lardis and Mr Lakis unsuccessfully had attempted to resolve their differences concerning Amazon and Mr Lakis was wanting to liquidate Amazon (AL1 [34]).
Mrs Lardis asserted in February/March 2012 she had a conversation with her husband during which he discussed his ongoing dispute with Mr Lakis and how it could turn into a legal fight which the lawyers indicated could be expensive and he would need to borrow money to pay legal costs. He said he might also have to start up a new business because he was not getting any money out of Amazon. Mrs Lardis stated she was concerned about using the Dolls Point Property as security to raise money for the court case and she wanted nothing to do with the dispute between her husband and Mr Lakis (AL1 [35]-[37]).
Mrs Lardis further asserted in early 2012 she had a conversation with her husband during which time she suggested he simply liquidate Amazon and start again. She said he told her the lawyers had in turn informed him he has a "strong case and I should win." She said she responded by saying she did not want to get involved in a fight between her husband and Mr Lakis. Her husband responded by saying he thought there was no option but to sell the Sydenham house (an investment property) because the Rosebery property had been purchased for the use of the business and could not be sold until some agreement was reached (AL1 [38]).
Mrs Lardis then said she consulted her parents whose advice she relied upon and discussed "numerous options" with her husband including selling the Sydenham Property and/or how the business might be split and he could start again (AL1 [39]).
She said she told her husband she would not agree to selling the Sydenham Property as that had been put aside for their children and she would not agree just because he wanted to have a fight with Mr Lakis. She said her husband responded yet again by saying the lawyers were confident he would win the case. Mrs Lardis said (by implication in early 2012) her husband suggested she could buy his half of the house and he could then use the money for the court case or whatever else he needed to start a new business or "anything else." Mrs Lardis asserted she agreed her husband could obtain as much as the bank would lend for his share as long as in return the house was transferred to her (AL1 [39]).
Mrs Lardis then asserted she and her husband began negotiations with NAB to obtain a loan so her husband could buy her out (AL1 [40]).
Mrs Lardis believed it was in April/May 2012 that her husband first engaged PTW to advise him concerning the dispute with Amazon (AL1 [41]).
She said in June 2012 her husband told her the bank would lend $735,000 but he had to have "one share" in the house. He explained the situation by suggesting he could only transfer 49% of the house so she would own 99% and he would keep 1% and then the bank would lend $735,000 "which I will use to fight Ted in court and if I have to start up another business." Mrs Lardis asserted she continued to request 100% of the home be transferred to her but her husband indicated the bank would not agree to a loan on that basis. Again she said she asked her husband why he wanted to pursue the matter against Mr Lakis and not simply move on to which her husband responded the lawyers had told him he could not lose. She said at this meeting she accepted if that was the only way things could be progressed she would agree (AL1 [42]-[43]).
She suggested at the end of June 2012 she and her husband had a conversation about an offer Mr Lakis had made to sell his share in Amazon (which included the Rosebery property) for $250,000. However Mr Lardis indicated to his wife he did not want to pursue that option (AL1 [44]). She asserted NAB agreed to lend them the loan money as long as Mr Lardis held a 1% interest in the property (AL1 [45]).
Mrs Lardis asserted on 19 July 2012 she received a letter from NAB approving a loan of $1.22 million to be secured over the Dolls Point Property. She said she and her husband attended the NAB offices at Wetherill Park to sign mortgage documents. She further said on 13 August 2012 the bank credited she and her husband's bank account with loan monies of $735,000 (AL1 [49]-[51]).
Mrs Lardis said at the end of August or early September she asked her husband to have "the lawyers" send her a letter confirming his 49% had been transferred to her. Mr Lardis told his wife he would ring the lawyers the next day (AL1 [53]).
She said the next day her husband informed her the lawyers did not have any paperwork for the transfer and they had forgotten to do it. She asserted she wanted this done as soon as possible because the money had already been provided (AL1 [54]).
Mrs Lardis said in October 2012 PTW engaged a valuer to prepare a valuation for the Dolls Point Property. The valuation provided was dated 15 October 2012. In November 2012 she and her husband attended PTW's offices and met with a Miss Tina Hsu. They executed the transfer and her husband provided a cheque for stamp duty in the sum of $28,585 (AL1 [55]-[56]).
The balance of her affidavit dealt with subsequent business dealings between herself and her husband. This received minimal attention during the trial and I do not propose to deal with those matters.
Mrs Lardis swore a further affidavit of 1 December 2016. This affidavit was prepared following the production of documents by NAB pursuant to subpoenas issued to them. Mrs Lardis said having reviewed the documents it refreshed her recollection to the point that she was able to give some further detail about the application to NAB (AL2 [3]).
She said on 15 May 2012 she and her husband signed home loan applications in order to borrow $1.7 million to refinance the existing mortgage to the CBA over the Dolls Point Property and the mortgage over the Sydenham Property and a further sum of $720,000 "for me to acquire Michael's 49% interest in the Dolls Point Property" (AL2 [4]).
She said NAB used the monies to discharge the two CBA mortgages and credited the balance into the bank account ending with the number 8842. The amount credited was $256,370.40 (AL2 [9]-[10]).
She said on 19 October 2012 she received a letter from NAB approving a home loan of $480,000 in her name only. She said her husband received a total of $736,370.14 from NAB loan monies for the purchase by herself of his 49% interest in the Dolls Point Property. She further said the monies deposited into various accounts were used solely in "by Michael and in consideration for Michael's 49% interest in the Dolls Point Property." Further she said her husband was in total control of how the monies were expended (AL2 [11]-[16]).
In cross examination Mrs Lardis accepted in 2016 she and her husband required at least $160,000 per annum in order to meet ordinary living expenses (T17/5). She agreed those monies in 2016 came via her husband's new pest control company (Pesthelp) having obtained a line of credit from NAB and supported by security over Dolls Point (T17/40-50).
Mrs Lardis said her weekly wage paid the mortgage payments on the Dolls Point Property (T19/10-35).
Mrs Lardis however agreed her husband was responsible for the financial affairs of the family (T22/40-45).
It was put to Mrs Lardis it was wrong to suggest the $735,000 was used by her husband to meet his legal costs and other expenses relating to the proceedings. Mrs Lardis simply indicated she wanted nothing to do with Mr Lakis and she stood by her evidence indicating as far as she was concerned her husband could do what he wanted with the monies which were raised including pursuing litigation against Mr Lakis (T27/10-45).
Mrs Lardis said in substance the arrangement was her husband would take the equity in the property and she would pay the interest only loan (T33/45-50).
Mrs Lardis agreed there was nothing in her affidavit about paying the mortgage payments out of her wages but she had a verbal agreement to that effect (T36/15-20).
It was put to Mrs Lardis at the time the conversations took place (in March or April 2012) she had no form of employment so therefore she could not agree to paying the mortgage payments. She asserted she did have a job at the time in her mother's salon and she was also freelancing by doing makeup on weekends and she was also subcontracted to a cosmetic company (T36/40-50-T37/1-15).
Mrs Lardis said she signed documents for the purposes of the application to NAB, but she did not fill them out (T37/30-45). She asserted she had no knowledge of the content of the forms because she did not read the documents before she signed them (T38/1-10). She asserted the application was organised by a broker and her husband but her husband would have known at the time how much she was earning (T38/15-30).
Mrs Lardis accepted she knew at the time part of the monies advanced ($97,000) were advanced to buy the Pesthelp business (T38/40-45).
Mrs Lardis also agreed part of the monies were used to pay school fees for which she and her husband were jointly liable (T41/20-30).
In March or April 2012 Mrs Lardis would not agree she was concerned about exposing the Dolls Point Property to any liability in connection with Amazon. She was not worried because nothing had happened. It was only that her husband wanted money and she wanted nothing to do with Amazon or Mr Lakis (T42/15-30).
She was asked whether in March or April 2012 she was concerned about using the Dolls Point Property as security to raise money for her husband's court case against Mr Lakis. She responded by saying she wanted nothing to do with Mr Lakis and/or she was not concerned because her main concern was she did not want any involvement with Mr Lakis. She was taken to paragraph 37 (Affidavit of 25 October 2016) in which she had expressed her concern about using the Dolls Point Property as security to raise money for her husband's court case. Having had her attention drawn to paragraph 37 she indicated she might "possibly" want to change her evidence (T44/5-44).
Mrs Lardis accepted not many people would wish to go to court voluntarily (T46/35-40). She explained her concern about the Dolls Point Property that it would be "silly" just to remortgage and waste money on a court case and she did not want extra debt as the result of the court case (T47/5-19).
She asserted she did not know what would be involved in a court case but she did know there was a chance the result of the court case might be that her husband was ordered to pay some money to Mr Lakis. She understood there could be costs awarded against her husband and "bad things" happen in court cases one of which was her husband might end up having to pay money to Mr Lakis. She denied however she was concerned about any orders from the court (T48/10-45).
She denied again she was worried about losing the Dolls Point Property. Rather, it was that she did not want her husband to go into litigation with Mr Lakis. She agreed she was better off if monies were to be raised against Dolls Point for the court case if the property was in her own name and she owned it (T49/35-50). She believed even if something had gone wrong her husband had other assets which he could sell if needed. In her own mind she was better off owing all the money to the bank because she had "my house".
Mrs Lardis asserted she was unconcerned the house was mortgaged to the extent it was because it was her house and she was paying off the debt (T50/25-50). She asserted there were no creditors at the time she came to the arrangement with her husband and further asserted she did not know what a creditor was in 2012 (T51/5-12). Mrs Lardis agreed however the effect of the transaction was to remove her house from any involvement in the litigation which she wanted nothing to do with (T54/10-35).
Mrs Lardis agreed one asset that would definitely not be involved if the court case went wrong was the Dolls Point Property (T55/15-35).
Mrs Lardis recalled telling Mr Macaulay to attend to the transfer of the property before September 2012. Mrs Lardis said there were some general discussions with Mr Macaulay "earlier in the year". Mrs Lardis could not remember whether it was in March or April 2012 she told Mr Macaulay to put in place the transaction that she asserted she agreed with her husband. She asserted she spoke to Mr Macaulay about what was going to happen (T57/5-15).
Mrs Lardis denied she spoke to Mr Macaulay for the first time about the transfer of her husband's interest after the monies were advanced (T58/1-10).
So far as the mortgage broker and the bank were concerned she simply signed documents without having any dealings with the broker or any explanation from the bank (T58/25-50).
She did not believe Mr Macaulay had done anything wrong and that the time lapse in attending to the transaction was simply the way lawyers worked. There was possibly a mistake made in not doing it earlier (T59/20-35). She did not complain because she thought these things just took time to attend to. She could not give any explanation as to why the consideration on the transfer was $1.00 (T60/1-7). Mrs Lardis asserted she did not notice the $1.00 consideration (T62/5-25).
She agreed in August or September she would have been aware of the court case and the possibility of a hearing date (T64/30-50).
It was put to Mrs Lardis explicitly that her evidence about a deal with her husband in March/April was made up. She denied that (T65/45-50). Mrs Lardis continued to reiterate the discussions concerning the transfer and other things were commenced in early 2012 (T66/25-35).

[25]

Evidence of Mr Michael Lardis

Mr Lardis swore two affidavits one dated 25 October 2016 (ML1) the other 20 December 2016 (ML2).
Mr Michael Lardis was born on 15 May 1971. He completed high school at the Sylvania High Secondary School in about 1988 and took a TAFE course in electrical engineering. At that point he was in full time employment at Comalco (ML1 [3]-[6]).
In 1993 he commenced as an employee of a pest control company called Sure Kill at Woollahra. He remained there for about twelve months until he got his licence as a pest controller. In about 1994 he commenced his own business known as 'Strike Back Pest Control' which he continued until about 2000 when he entered into an arrangement with Mr Lakis. They jointly commenced operating the business known as Amazon Pest Control (ML1 [8]-[10]).
Mr Lardis had met Mr Lakis in about 1990 through his wife and they became friends and decided they would go into business together. At the time Mr Lardis asserted Mr Lakis had no experience in the pest control industry and he had to train him. Prior to this arrangement Mr Lakis had worked for his parents cleaning company Arcadia Pacific Group (ML1 [24]-[26]).
Over time Mr Lardis and his family and Mr Lakis and his family regularly socialised and their families became good friends (ML1 [27]).
In 2007 Mr Lardis and Mr Lakis purchased a property together at 368 Gardeners Road Rosebery which was used as the headquarters of the Amazon business (ML1 [28]).
In about 2008 both partners decided they would borrow money and on lend it to Amazon which in turn would acquire an interest in a gymnasium in Kensington. It was agreed Mr Lakis would work in the gymnasium and Amazon would share in the profits derived from the operation of that business. To that end Mr Lardis alleged he borrowed approximately $120,000 which in turn he loaned to Amazon which in turn was used to acquire an interest in the gymnasium (ML1 [29]-[31]).
In 2008 as the result of a conversation with Mr Lakis, Mr Lardis said he discovered Mr Lakis had been regularly paying an employee of one of Amazon's clients to ensure a continuation of work from that client. Mr Lardis said he was shocked and expressed his unhappiness to Mr Lakis about the arrangement. Mr Lardis asserted Mr Lakis promised it would not happen again (ML1 [32]-[38]).
Work then dried up from the particular client concerned. In 2011 however the client put out to tender its pest control requirements. Mr Lakis indicated to Mr Lardis he wanted to tender for the project but Mr Lardis said he wanted nothing to do with the tender. Further Mr Lardis indicated to Mr Lakis in the circumstances it would be better if they split up the business dividing the clients amongst them (ML1 [39]-[40]).
Following this conversation Mr Lakis' wife spoke to Mr Lardis and indicated she was opposed to any splitting of the business. Mr Lardis asserted during this period (late 2011, early 2012) the relationship between himself and Mr Lakis deteriorated to the point where they were no longer speaking to each other and each was obtaining legal advice concerning their respective rights (ML1 [41]-[46]).
Mr Lardis said in April/May 2012 he received a letter from Mr Lakis' lawyers advising they proposed to place Amazon in liquidation. As a result Mr Lardis said he obtained advice from PTW. He asserted he obtained an assessment of costs "to conduct the matter" and was told it would be in the vicinity of $100,000 to $150,000 in order to oppose the application to liquidate Amazon (ML1 [48]).
At around the same time Mr Lardis asserted he had a conversation with his wife in which he told her about the advice he had obtained and the likely cost of proceedings. He said she indicated to him she did not want anything to do with the proceedings and he should just walk away. He indicated to his wife he was not prepared to do that. He told her he had worked hard to build up the business and he told his wife the lawyers had indicated he had "great case" (ML1 [51]).
Discussions between them ensued about mortgaging the Dolls Point Property for the purposes of raising money he said for the fight between himself and Mr Lakis (ML1 [52]).
In late April/May 2012 he said had a further conversation with his wife indicating to her that he needed to get money for lawyers for which again she indicated she did not wish the house to be mortgaged "any more". Mr Lardis asserted it was in one of these conversations he said they should go to the bank and borrow as much as they could and she could give him the money for his share in the house which would be transferred to her. Mr Lardis alleged she agreed to this proposition at that point (ML1 [53]).
In April/May 2012 Mr Lardis alleged he attended PTW's offices and had a conference with Mr Macaulay. He asserted he told Mr Macaulay about the arrangement with his wife and Dolls Point would be mortgaged to raise funds and he would transfer his interest in the property to his wife. He also said he told Mr Macaulay he was making enquiries with NAB about getting a loan (ML1 [54]).
Mr Lardis said during the course of making enquiries with NAB he informed the bank he would be selling his share of the property to his wife who would be liable for the loan (ML1 [55]).
Thereafter Mr Lardis asserted he had a conversation with his wife in which he told her although the bank would lend $735,000 they would not lend it to her if he transferred all of his interest in the property to her as her income was insufficient to meet the mortgage payments and he needed to have at least "one share" in the property. In that event he would transfer only 49% so "we" can borrow the money. Mr Lardis said he told his wife although he would only hold 1% he would pay the stamp duty for the transfer. As a result of the discussion he asserted a loan application was made in his and his wife's name (ML1 [55]-[57).
Mr Lardis asserted sometime in July he was informed NAB had approved an interest only loan to himself and his wife and monies would be made available by way of a line of credit. On 19 July 2012 he received a letter from NAB confirming the loan. A few days later he and his wife attended the bank's premises at Wetherill Park to sign the relevant documents. Monies were deposited into his bank account on 13 August 2012 (ML1 [58]-[59]).
Mr Lardis asserted over the next few months he drew upon those monies to pay legal costs and purchase a pest control business known as Pesthelp for the sum of $95,000. He also used part of the monies to acquire assets for the new business such as motor vehicles and equipment (ML1 [63]-[64]).
In late August 2012 Mr Lardis said he had a conversation with his wife in which she asked him whether the lawyers had yet transferred 49% to her. He said he told his wife he thought it had been done but he would ring up and find out what had happened (ML1 [65]).
The next day he asserted he spoke to a "Moushumi" (Ms Kumar) from NAB to enquire whether the 49% had been transferred "as agreed". He was informed the bank had received nothing from his solicitors. He thereafter telephoned Mr Macaulay and asked what had happened, to which Mr Macaulay indicated he would get somebody "on it" (ML1 [66]-[67]).
On 1 November 2012 he received an email from a Miss Tina Hsu, solicitor from PTW advising him about the drafting of various documents. On 1 November 2012 he drew from the loan monies a sum of $28,565 for the stamp duty and delivered the cheque to Messrs PTW (ML1 [68]-[69]).
Mr Lardis said at some point he attended PTW's offices to sign the transfer documents (ML1 [70]).
As the result of orders made in December 2012 in proceedings before Black J he sought to reach an agreement with Mr Lakis about costs. He was unable to do so and in the end was ordered to pay $106,262.58 in costs (ML1 [74]-[78]).
Mr Lardis then addressed the events which post-date the registration of the 49% Dolls Point Property Transfer. Again as these events played little if any role in the running of the trial I do not propose to deal with the detail of them.
Mr Lardis swore a further affidavit of 1 December 2016. This affidavit was prepared after documents were obtained from NAB.
Mr Lardis indicated for the purposes of applying for the home loans with NAB he had sought the assistance of Mr George Kaloudis a finance consultant and/or broker (ML2 [5]).
Mr Lardis also asserted on 15 May 2012 he and his wife signed home loan applications in part for the purposes of paying him the balance of loan monies which his wife had agreed to make available in return for his 49% interest in the Dolls Point Property (ML2 [7]).
He then addressed a number of financial matters many of which played no part again in the running of the trial and again for that reason I do not propose to deal with the detail of them (ML2 [8]).
Mr Lardis was cross examined. He agreed he considered the Dolls Point Property his family home and always has done and he paid no rent or licence fee in relation to his occupation of it.
He agreed by March of April 2012 the relationship between him and Mr Lakis had broken down. He did not want to be in business with him anymore and he thought he was dishonest (T70/5-11). He had no intention at that time of ever paying any money to him for anything to do with the Amazon business (T70/15-19).
Mr Lardis acknowledged in two judgments of the court it had been determined he had taken money from a company without authority. He did not totally accept those findings, but he denied he had every intention of doing everything he could to prevent Amazon recovering judgment against him (T70/30-50).
He denied there was any connection between him becoming a bankrupt and transferring his half interest in the Dolls Point Property to his wife (T71/1-5). He denied the main purpose of transferring his interest in the Dolls Point Property to his wife was preventing it from becoming available to pay Mr Lakis or Amazon (T71/13-15).
He asserted in April or May he was thinking any legal costs in relation to any litigation between himself and Mr Lakis could be "huge" (T74/33-39).
Further he agreed at the time he suggested the Dolls Point Property be used as security to raise money so he could conduct litigation against Mr Lakis even though his wife did not want him to go ahead with the litigation (T75/10-33). The arrangement however between Mr Lardis and his wife did not happen "straight away," it happened over a few conversations (T75/42-44). Mr Lardis said although his wife wanted nothing to do with Mr Lakis ultimately was persuaded the Dolls Point Property could be used to raise monies for Mr Lardis to litigate if needs be (T76/15-21).
Mr Lardis denied the conversations with his wife early in 2012 were in the context of whether or not he could raise money to buy Mr Lakis' shareholding (T77/10-15). Mr Lardis further asserted in April or May 2012 he asked Mr Macaulay to prepare the necessary paperwork so his interest in the house could be transferred to his wife. He said it could have been a little earlier but it was certainly around that time (T77/29-39). He denied the first time he had asked Mr Macaulay to attend to the paperwork was in the first week of September 2012 (T77/40-44).
He agreed he and his wife signed an application on 15 May 2012 with NAB. He asserted he told the bank about the arrangement to transfer his interest in the property to his wife (T78/35-T79/15).
Mr Lardis asserted he never made any application to CBA to restructure his facilities but rather went to NAB because "we went through a broker" (T81/4-15). He also asserted he told the broker (a Mr Kaloudis) about the arrangement with his wife to transfer his share in the property to her (T81/15-25). Mr Lardis denied ever instructing the broker to inform the bank part of his motivation in refinancing was asset protection (T82/15-24). In any event the transfer of assets to an entity such as family trust never happened (T82/45-50).
Mr Lardis agreed at some point during 2012 he became aware Mr Lardis was threatening to wind up Amazon. He wanted to oppose such an application and he understood it might cost him some money (T83/40-50). He was however confident he would win the case and he said it never crossed his mind to take any course in order to protect his assets (T84/5-15).
Mr Lardis agreed both the Dolls Point Property and the Sydenham Property were mortgaged and they were treated as separate loans (T86/1-6).
Mr Lardis agreed some of the monies raised ($97,000) were used to buy a new business (T88/45-50). Mr Lardis also asserted his wife's wage from the new business was used to pay the interest payment in relation to the monies borrowed over Dolls Point (T89/1-7). She received different amounts each week but they would either be paid out of the business (Pesthelp) or from the line of credit if Pesthelp could not afford to pay (T92/25-35). Mr Lardis agreed he was still a customer at NAB but he was not sure whether the person he dealt with worked at the bank any more (T93/30-50).
Mr Lardis said he made an enquiry of Mr Macaulay's firm in the first week of September as to what was happening with the documentation concerning the transfer of the property (T94/39-41). He agreed this was at the point when the court case was underway (T94/43-50). Mr Lardis rejected this was the first time he told Mr Macaulay about the arrangement with his wife (T95/15-20).
Mr Lardis denied he was pursuing Mr Macaulay because he knew the court case was coming on (T96/15-24). It was put directly to Mr Lardis the conversation he asserted took place in April/May did not occur then. He rejected that proposition (T96/40-50).
Mr Lardis agreed there was a risk if the court case did not go well he might end up having to pay Mr Lakis some money which he did not want to do (T97/44-50). Mr Lardis also agreed by September at least he knew there were serious allegations made about him allegedly taking money from the company. However he denied he thought there was a risk at some stage he might be ordered to pay that money (T98/10-44).
Mr Lardis agreed at the time he and his wife signed the transfer he believed his wife was paying a considerable sum of money for that transfer ($750,000 odd) and it was obvious the document had got the arrangement completely wrong because the consideration was never $1.00 (T101/25-44). Mr Lardis denied again his motive in transferring his interest was to protect the family home from adverse financial consequences (T103/33-36).
Mr Lardis denied he made up the story of asserting the discussions with his wife about the transfer of his interest to her took place early in 2012 whereas in fact that happened for the first time in September (T104/10-25).

[26]

Evidence of Mr Robert Macaulay

Mr Macaulay swore one affidavit dated 1 December 2016 (RM).
Mr Macaulay is a partner of PTW. He said shortly before 28 February 2012, he met Mr and Mrs Lardis for the first time. He believed they were referred to him by their accountant (RM [4]).
He also said at the first meeting he was broadly informed about ongoing problems between the business owners of Amazon. Mr Lardis was one of those owners and he was informed there was a view at the time it was desirable one or other of the owners buy the other out. He recalled Mrs Lardis was "vehemently opposed" to her husband either staying in the business or paying the other partner out. Mr Macaulay recalled Mrs Lardis making some disparaging remarks about Mr Lakis, how he had ripped off her and her husband and as a result they had lost a lot of money in the gymnasium enterprise (RM [5]-[6]).
Mr Macaulay gained the understanding Mr Lardis wanted to borrow money against their properties to buy Mr Lakis out of the business however his wife was "absolutely and vehemently" against such a proposition. Mr Macaulay said he sent Mr and Mrs Lardis away to consider their position and return if they were in a position to give joint instructions. Mr Macaulay recalled on 28 February 2012 he again met with Mr and Mrs Lardis at which point they gave him, he said, joint instructions that they had agreed if Mr Lardis was going to use monies secured against their property for business reasons Mrs Lardis would agree to him doing so only if he transferred to her his interest in the family home. They would jointly refinance both their family home at Dolls Point and an investment property which had no available equity and PTW should act for both of them in relation to the refinance and transfer. Mr Macaulay further recalled Mrs Lardis telling him she wanted nothing to do with Mr Lakis however she was prepared to allow their home at Dolls Point to be used as security for some of the borrowing on the basis he transferred his interest to her. She indicated further she would not sign a loan agreement unless he signed over half of the house to her (RM [7]-[11]).
Mr Macaulay said "we opened a file" that day "for the transfer" (RM [12]).
Mr Macaulay said PTW prepared a standardised refinance costs agreement on 1 March 2012 in relation to "this matter" (RM [13]).
Mr Macaulay recalled a further conversation in March in which Mr Lardis told him he and his wife were going to refinance with NAB but his wife was still insistent he had to transfer his interest in the property. Mr Lardis said he would make some initial enquiries with NAB and would let Mr Macaulay know the details and contact people so the transfer could be put in place (RM [14]).
In or about May 2012 he was again contacted he said by Mr Lardis. Mr Lardis told Mr Macaulay he had been in contact with NAB and they required he stay on title so Mrs Lardis agreed to Mr Lardis remaining "1% on title and we can now proceed with the transfer of all but 1%". Mr Macaulay indicated Mr Lardis should have NAB contact him with their requirements and then documents could be prepared and completed accordingly (RM [15]).
Mr Macaulay said in August 2012 he received a telephone call from Mr Lardis who indicated NAB had approved the loan and "can you now proceed with the transfer with the NAB". Mr Macaulay said he would. After this phone call Mr Macaulay asserted a Ms Tina Hsu, an employed solicitor at PTW, was directed to prepare and complete the necessary documents. Mr Macaulay said on 11 December 2012 PTW sent a letter to NAB enclosing documents to meet NAB's requirements to complete the transfer (RM [17]-[20]).
On 1 August, PTW accepted instructions to act for Mr Lardis in respect of the court proceedings for the winding up of Amazon. On the same day a file was opened in the matter. An appearance was filed on 3 August 2012 (RM [22]-[24]).
Mr Macaulay indicated he advised Mr Lardis there was a reasonable basis for him to oppose the application to wind up and he had reasonable prospects of success (RM [29]).
The hearing before Black J took place on 7 November 2012 with his Honour giving judgment on 14 December 2012 in which he ordered Amazon be wound up. An order was also made Mr Lardis pay Mr Lakis' costs of the proceedings. Costs could not be agreed and a taxation occurred. Mr Macaulay said Mr Lardis paid outstanding costs in full including the fees rendered by PTW (RM [30]-[32]).
Mr Macaulay was cross examined. He would not agree the conversations he deposed to in relation to the transfer of Mr Lardis' interest in the Dolls Point Property were in the context of a discussion about Mr Lardis potentially raising money to buy Mr Lakis out (T111/30-40).
Mr Macaulay believed a transfer of Mr Lardis' interest in the property to his wife was part of the refinance and part of the discussion in February 2012. He agreed however he did not make a note of the discussion on or about 28 February. He also agreed he did not send a letter confirming those instructions (T112/10-25).
Mr Macaulay agreed the costs agreement bore the date 1 March and it would have been prepared under the supervision of a Mr Rolph Koops, an employed solicitor in the property section of the firm (T113/10-15).
Mr Macaulay agreed if it be correct he had received instructions to transfer Mr Lardis' interest in the property to his wife as part of a refinance of the property it would be expected those instructions would be recorded in the basic work section of the cost disclosure document (T113/20-24). Mr Macaulay also accepted on the face of the description in the costs agreement it was a simple refinance of a mortgage on the property. Notwithstanding that he did not doubt his recollection as to receiving particular instructions (T113/30-36).
When asked if he could explain why there was no internal note as to the instruction he indicated he did not do property law and others within the firm were already involved with Mr Lardis (T113/40-53).
Mr Macaulay accepted the internal documentation at PTW could be consistent with initial instructions in March/April to the effect there would be a refinance followed by later instructions that there was going to be a transfer after the refinance (T114/35-41). As a result it was put to Mr Macaulay he did receive instructions in April/May in relation to the refinance and then received later instructions on the transfer of Mrs Lardis' interest. Mr Macaulay responded that the file was opened on 28 February, the costs agreement was produced on 1 March and he agreed there was subsequently a refinance but he would not agree it was later instructions which led to the transfer (T115/1-15).
Mr Macaulay said the Lardis' had become somewhat of a fixture in the office. He was not directly involved with them until he was instructed later in the year in respect of the litigation but he did recall that during the conversation with Mr and Mrs Lardis there were allegations of inappropriate and/or corrupt conduct so far as the company was concerned. That was one of the reasons why it "so memorable". Another reason it was "so memorable" was Mrs Lardis was "vehemently violently expressive about her desire to rid their family of contact with Ted Lakis". Mr Macaulay said he understood there were two reasons for that, first the potential for her husband to go to gaol because of what Amazon had been doing and secondly Mrs Lardis had formed the view Mr Lakis had been ripping them off. In particular Mr Macaulay said "there was a - a number of things going on and to suggest - I mean to say that she was a vehement and expressive about it is an understatement. It was memorable because she was - frankly, I have never had anyone in our offices who was so emotional a - about a matter or certain circumstances" (T115/25-T116/5).
Mr Macaulay also said one of his partners was accosted by some bikies outside the office who indicated they had been sent by Mr Lakis.
Mr Macaulay indicated in the early part of 2012 he was not involved with Mr and Mrs Lardis on a day to day basis having seen them and taken instructions he referred the property matter to the relevant part of his firm (T117/10-20).
Mr Macaulay agreed he took no note of the conference and one of the reasons he did not was because of the type of allegations that were made. He was concerned about writing down what could amount to an admission (T118/13-46).
Mr Macaulay however agreed nothing he had been told about corruption or possible corruption prevented him from making a diary note about the instructions to transfer the property (T119/34-40). Mr Macaulay asserted after he took instructions and directed a file be opened he went and saw Mr Koops upstairs and "told him about the scope of the instructions" (T120/40-45).
Mr Macaulay agreed in September 2012 it was never suggested to him he had received instructions in February 2012 which had not been complied with. He agreed no one ever complained. Mr Macaulay agreed Mr Lardis was a client who, if he was not happy, would say so (T122/10-50). Mr Macaulay did not recall speaking to Mrs Lardis about the matter. Neither Mr Koops nor Ms Hsu told Mr Macaulay Mr or Mrs Lardis had complained to them (T123/9-11).

[27]

Consideration of the facts

Before coming to a consideration of the legal issues in the case I propose to record my impression of the witnesses and my findings on the salient factual issues.
At the core of the Second Defendant's case is that an alleged agreement was reached between Mr and Mrs Lardis (on their evidence) at the latest in April/May 2012 (or if I accept Mr Macaulay's evidence, on or before 28 February 2012) to the effect Mrs Lardis agreed to facilitate a refinancing of their existing debt with CBA to enable her husband to free up monies for the purposes of paying legal costs in relation to the possible winding up proceedings. In return Mr and Mrs Lardis agreed Mr Lardis would transfer initially half, but because of a request of NAB, a 49% interest in the Dolls Point Property to Mrs Lardis.
For reasons which follow, I do not accept an agreement to transfer the Dolls Point Property was reached in early 2012, be that February or April/May 2012. I am satisfied such an arrangement to transfer did not and could not have taken place until at the very earliest September 2012, independent of any agreement to refinance the Dolls Point Property.
Further, I am satisfied the arrangement whereby Mr Lardis ultimately transferred the 49% interest in the Dolls Point Property to Mrs Lardis was arranged jointly by them in September, after the winding up proceedings had commenced in July and were under way by early September, and several weeks after the monies the subject of the refinancing had been credited to their bank account. I am also satisfied they both relevantly intended by the transfer to put their family home beyond Mr Lakis to avoid any adverse consequences of the winding up proceedings and any claims regarding Mr Lardis' misuse of company monies that might be pursued as a result of any judgment against Mr Lardis in favour of Amazon and Mr Lakis in that litigation, including the costs.
I have reached these findings for numerous reasons, all of which I will expand upon in detail below.

[28]

Limits on findings

As I have already observed, although judges are entitled to reject part or the whole of a witness's evidence even where there has been no cross examination, it is of course incumbent upon them to provide reasons for doing so.
As I have also said, where factual evidence is not cross examined upon, prima facie, it should be accepted. However where there is a credible body of evidence of a substantial character in direct contradiction to the material not cross examined upon, the evidence need not be accepted.
The forensic strategy adopted by the Plaintiffs in cross examination was a little on the ambiguous side. Mr and Mrs Lardis were directly challenged on whether certain of the relevant conversations they alleged they had took place at all. Indeed it was put to both of them they were making their evidence up (T54/50-T55/36-45 (Mrs Lardis), and T96/40-50, T104/10-25 (Mr Lardis)).
In the case however of Mr Macaulay, the cross examiner did not suggest the conversations he gave evidence about did not take place at all but rather did not take place with Mr Macaulay when, and in the terms, he asserted they did. In other words Mr Macaulay was mistaken in his recollection (T113/30-40, T114/45-T115/5, T123/15-20), and the conversations regarding the refinancing were purely in the context of wanting to buy Mr Lakis out (T111/30-40, T131/30-40). In reality, by putting to Mr and Mrs Lardis they were relevantly making up their stories, the cross examiner was suggesting, in my view, so was Mr Macaulay, but this was by implication only as it was not put expressly.
With this in mind, I will now descend into the detail of my reasoning why the Second Defendant's case in particular cannot be accepted. First, I will make some general remarks about my impression of the witnesses. Then, I will address in detail the key conversations and events - some contested and some accepted - leading up to the ultimate transfer of 49% interest in the Dolls Point Property, and explain why, in my view, when considered in light of the differing witness accounts and contemporaneous records or more remarkably the lack thereof, the Second Defendant's version of events is unconvincing. Finally, I will examine the failure of the Second Defendant to call main participants in the key events. This combination of inconsistencies, uncorroborated assertions, and implausible and incomplete explanations in my mind leaves me satisfied the Second Defendant's version of events is contrived and unacceptable.

[29]

Impression of the witnesses

As I have stated, I found none of the Second Defendant's three witnesses acceptable. On their face, their affidavits purport to corroborate the existence of the agreement contended for in this case having been forged in early 2012. However when examined carefully in context, each of their various affidavits is based purely upon recollections four years after the event without a shred of relevant underlying contemporaneous support.
Their inconsistent affidavits and their evidence in cross examination, juxtaposed against what does exist by way of contemporaneous record but more importantly what does not exist, raises serious questions as to each witness's apparent ability to recreate the various events in part in its true light. Crucially the various persons each witness had dealings with apart from each other, had not, it seems, made any or any relevant record purporting to corroborate anything relevantly deposed to by the witnesses.
My impression of each of the three witnesses is their evidence was contrived to achieve an end result. Each witness purports to describe a series of events which are better explained by an overarching self-serving purpose rather than an intention let alone an ability accurately to recreate the past. The details of these inconsistencies and uncorroborated accounts are exposed upon an examination of their specific narratives.
Further, to my observation, the witnesses gave their evidence like advocates arguing a cause. That observation was I regret to say particularly apt in the case of Mr Macaulay, who unimpressively gave a number of non-responsive answers, many of which included details not previously included in his affidavit, and which were clearly designed to purport to corroborate his apparent ability to remember particular events in the absence of any contemporaneous records. He impressed me as a lawyer wanting to argue his client's case and one who was extremely anxious to impress upon the court the reasons why his nominating particular dates for his meetings were so indelibly imprinted on his mind.
As Mr Macaulay's cross examination unfolded, it became apparent he had omitted to mention a number of details in his affidavit sworn just two months before the proceedings. Such omissions include mention of any sort of "peripheral involvement" with the Lardis', of surrounding circumstances which allegedly helped him pin point the 28 February meeting, of referring the matter on to Mr Koops immediately following instructions in February, of a secretary drafting the Costs Agreement, and of the assertion he did not personally direct Ms Hsu to send the 5 September email. Oversight on details so important to his narrative raises serious questions about Mr Macaulay's credibility as a reliable historian.
Mr Macaulay's apparent authority as someone with knowledge of the relevant transfer in question was particularly undermined by his self-confessed "peripheral involvement at the start for me" with the Lardis' (T115/25-30), and insistence he did not deal with them on a "day to day basis" (T117/10-20). Beyond the unsigned and probably unsent Costs Agreement of 1 March, Mr Macaulay's name does not seem to appear again in any correspondence until 25 October 2012 in which Mr Macaulay purports to act for Mr Lardis in the Supreme Court Proceedings. Prior to this, it appears on the evidence Mr Koops, along with other PTW lawyers such as a Mr Graham Wilks, Mr Tolly Saivanidis and Ms Hsu were the relevant people at PTW dealing with the Lardis'.
Even in relation to the winding up proceedings, Mr Macaulay on the evidence does not appear to play a significant role. The only two PTW persons nominated to accept service of the process in the winding up proceedings as at 24 July 2012 are Mr Saivanidis and unsurprisingly Mr Koops (CB1/296), and the PTW lawyer nominated as having appeared before the Registrar upon the return date of the proceedings was Mr Wilks (CB2/379). Further on 18 September Mr Lakis' solicitor, Websters corresponded with Mr Wilks in relation to the proceedings (CB2/386-388). Mr Macaulay is neither mentioned nor copied in on that correspondence. At the top of Websters' letter there are three references as follows: TK, RK and TH. Leaving TK to one side the other two are presumably Mr Koops and Ms Hsu. There is no reference to a RM, which would presumably be Mr Macaulay's reference. The same applies to the email from Websters dated 18 October 2012 (CB2/408-409).
Finally, on 29 January 2013 when PTW informed Mr and Mrs Lardis the transfer of the property had been completed, the correspondence is from Ms Hsu with Mr Koops copied in (CB2/501).
Therefore, on the evidence, if the correspondence is a guide, Mr Macaulay did not play a prominent role acting for Mr and/or Mrs Lardis. Such tangential involvement serves to further undercut Mr Macaulay's authority as a witness in my view who can attest in detail to the conversations and events that gave rise to the 49% Dolls Point Property Transfer.

[30]

The facts - an overview

My overall view of the facts is as follows. Over the years, the Lardis and Lakis families had become very close. Mrs Lardis had known Mrs Lakis and her parents for over 40 years and Mrs Lakis was the godmother of the Lardis' daughter. Mr Lardis and Mr Lakis had befriended each other through Mrs Lardis' connection from around 1990, so much so that by around 2000 the two decided to go into business together, in the context of their corporate vehicle, Amazon.
However, from late 2011, Mr Lardis and Mr Lakis were at loggerheads. Each had accused the other of impropriety of some kind or other, and each had threatened to have Amazon wound up.
By early 2012 Mrs Lardis had come firmly to the view she wanted nothing to do with the Lakis family, and wanted her husband to terminate all association, be it social or commercial, with Mr Lakis. Mr Lardis however needed no encouragement, he felt likewise.
In early 2012, the only apparent source of real income for them, or so it seems, had been Amazon. What I am satisfied consumed them in the early part of 2012 was the refinancing of their facilities with CBA and working out the best way to maintain their lifestyle in light of their current and impending financial predicament. Although they appear to have discussed various options with PTW, for example whether to interpose a trust into the arrangement (CB1/193), in the end they opted for a simple refinancing with NAB with the assistance of the financial broker, Mr Kaloudis. This allowed them to pay out their existing facilities with CBA and have some available cash for private school fees, household expenses and for Mr Lardis to be able to meet legal fees that may arise from the dispute with Amazon, as well as re-establish himself in his own pest control business. In this sense, I am satisfied, the sole trigger and catalyst of the refinancing was Amazon coming to an end, and had nothing to do with the transfer of the Dolls Point Property.
By the middle of the year, although they had financially moved on, Mr Lakis had commenced the winding up proceedings on 17 July as it turns out almost to the day when NAB approved their new facilities. Now Mr and Mrs Lardis, who had contemplated this as a possibility, had to face the reality of a court case in which they might come off second best. Despite her protestations to the contrary (T42/15-35, T48/15-25), Mrs Lardis, and as well as her husband, were, I am satisfied, fearful of adverse consequences arising from the impending dispute concerning Amazon, including the risk their family home would be exposed.
By early September the case was accelerating in tempo and a hearing date was soon to be fixed. I am satisfied only at this stage, between them, Mr and Mrs Lardis decided to take their family home for all relevant purposes out of the equation and shield it from any adverse financial consequences arising from the winding up proceedings, including the real possibility of being pursued by Amazon and Mr Lakis in particular. This decision, reflected in Ms Hsu's 5 September email, set in motion the 49% transfer of the Dolls Point Property, culminating in the registration of the transfer on 29 January 2013.
Having made those preliminary remarks I will now address in detail the key events and conversations these witnesses alleged formed part of the lead up to the 49% Dolls Point Property Transfer.

[31]

Early 2012: Alleged initial instructions to PTW regarding the transfer

The witnesses present differing accounts of when PTW was first instructed to act on the transfer of the Dolls Point Property, none of which in my view can be accepted. Early February meetings
Without so much as an appointment diary, Mr Macaulay places 28 February 2012 as the date in which the Lardis' give him joint instructions on the transfer of Mr Lardis' 50% interest in the Dolls Point Property to Mrs Lardis. The structure of his affidavit at [9]-[13] is after an initial February meeting with the Lardis where he instructed them to return with joint instructions, he then received joint instructions from the Lardis' to act on the transfer as part of the refinance of the Dolls Point Property on 28 February, a file was then opened for the transfer, followed by a standardised refinance Costs Agreement on 1 March 2012. There are numerous issues with their purported series of events.
In the absence of contemporaneous records to support his recollection, and in the face of equivocal reasoning in his cross examination, Mr Macaulay's proposed reasons for being able to provide what he described as "a vivid recollection" (T116/45-50) of the terms and tenor of conversations years before in the February meetings are inacceptable.
Perhaps because he had no contemporaneous records to fall back on, he was at pains to give the impression he could provide detail of the historical context in which events took place so as to add some verisimilitude to his recitation of the various events (T115/25-50-T116/1-6). When challenged in cross examination on his recollection of the February meetings, Mr Macaulay, in vintage argumentative style, traversed across seemingly unrelated and a novel series of events as to why he had such a good recollection.
First, Mr Macaulay recollects Mr Lardis going into some detail about inappropriate corrupt conduct concerning Mr Lakis, including bribes, which stuck with Mr Macaulay because he had a separate private ICAC matter he was dealing with. However, Mr Macaulay had to accept nothing discussed about possible corruption or ICAC prevented him making a diary note about his instructions on the transfer (T119/35-40). Secondly, he recalls never having anyone as emotional as Mrs Lardis in the office before. She was "vehemently expressive, violently expressive" about Mr Lakis who had ripped them off and might be the cause of her husband going to gaol (T115/35-45). Lastly, a partner of his was accosted by some bikies outside the office apparently sent by Mr Lakis.
Apart from the mention briefly of Mrs Lardis in his affidavit, none of these matters had previously been mentioned by Mr Macaulay.
I acknowledge it is not uncommon for witnesses on occasions credibly to point to circumstances which assist the witness explain an ability to recall certain events. However my impression of Mr Macaulay was he was acting as an advocate when he gave those answers. For him to have omitted from his affidavit the very reason why he could so vividly recall events smacks of contrivance.
Further, Mr Macaulay's failure to take any diary note at least in relation to the instructions relating to the so-called transfer of Mr Lardis' interest is in my view inexplicable. When challenged as to why he did not create a note confirming his instructions, he said first it was not his matter and he referred it on to people (in particular a Mr Koops) who was a specialist property lawyer. He "orally briefed them" (referring to the team of people who did property law). His conversation with Mr Koops was also not the product of any record by him or seemingly of Mr Koops, and does also not appear in his affidavit. Again I find that inexplicable and implausible.
Mr Macaulay's assertion a file was opened on 28 February for the transfer of the Dolls Point Property (RM [12]) has no corroboration beyond his assertion. He repeats the assertion on multiple occasions in cross examination that a file was opened, although he does not go as far as in his affidavit to say the file was opened in relation to the transfer of the Dolls Point Property. Rather, he just relies on the alleged opening of a file to support his recollection of the 28 February meeting (T115/5-10, T116/40-45, T117/10-20).
While the issue was not challenged in cross examination, there is no evidence beyond Mr Macaulay's assertion of any file being opened at PTW on 28 February and more particularly and pertinently, no evidence of a file being opened on 28 February regarding the Dolls Point Property Transfer as asserted by Mr Macaulay in his affidavit. If such evidence did exist, it would be a fundamental corroboration of Mr Macaulay's evidence regarding the February meeting, and the Second Defendant's case as a whole. Mr Macaulay himself notes the importance of the file opening, stating in cross examination "the date of the file opening is entirely relevant" and "I was not involved with them on a day to day basis. And so that file opening date very accurately pin point the date of my taking instructions in the matter, and that conversation" (T117/10-20). With no record of such a file opening produced in court, serious doubt is raised in my mind about the accuracy of Mr Macaulay's assertions. The doubt does not end there.
The only existing contemporaneous document around this time cited by Mr Macaulay to further support his recollection is the 1 March Refinancing Costs Agreement (T115/5-10). On its face, Mr Macaulay's evidence purports to suggest the Costs Agreement corroborates the alleged instructions of 28 February 2012 (T115/5-15). Indeed, in his affidavit Mr Macaulay goes as far as saying after a file was allegedly opened for the transfer, the Costs Agreement was prepared "in relation to this matter" (RM [13]), suggesting the 1 March Refinancing Costs Agreement was prepared in relation to the transfer. On the evidence, this is patently not so.
The Costs Agreement - on top of being unsigned and probably unsent - makes no reference to the refinance of the Dolls Point Property, nor, importantly, to the transfer of the Dolls Point Property (CB1/94-98). Without any contemporary records to suggest otherwise, the 1 March Refinancing Costs Agreement is a standardised agreement for a simple refinancing of the Sydenham Property. Mr Macaulay indeed conceded in cross examination when one looks at the Costs Agreement in detail, it appears as the cross examiner put it "nothing more and nothing less than a vanilla remortgage, refinance of the property" (T113/25-35).
Mr Macaulay said the Costs Agreement would have been prepared under the supervision of Mr Rolf Koops (to whom he allegedly gave the oral briefing) (T113/10-15), notwithstanding the Costs Agreement purports to be from Mr Macaulay and Mr Tolly Saivanidis. Based on the content of the Costs Agreement, it seems Mr Koops either did not understand he was doing anything other than assist on a simple refinance, and a refinance in relation to Sydenham, not Dolls Point, or, in fact, was never instructed to anything other than the Sydenham Property refinance. There is no evidence Mr Koops did any work on the refinance which is perhaps understandable. That work was performed by Mr Kaloudis in conjunction with Ms Kumar at NAB.
Mr Macaulay attempted to explain this clear disconnect between the Costs Agreement and what his alleged instructions were by volunteering (for the first time) he had checked with the author of the document, a Ms Winnie Chung, secretary at PTW and a software issue meant she could only select refinance as the default field (T114/20-30). Such an explanation is unacceptable. His efforts of enquiry, and by implication only recent enquiry, underscore his lack of real intimacy with the matter and disclose his desire to become a sleuth to find out what in fact had happened, as opposed to behaving with neutrality, like a witness. Further, this explanation is uncorroborated by any other evidence, including Mr Macaulay's own affidavit where he neglects to even address the fact the Costs Agreement only pertained to the refinancing of the Sydenham Property, instead referencing it as straight up evidence of a costs agreement for the refinancing and transfer of the Dolls Point Property.
In the absence of any contemporaneous documents to the contrary, the 1 March Refinancing Costs Agreement can only be seen as evidence of a discussion between PTW and the Lardis' to refinance the Sydenham Property. Mr Macaulay's reliance on the 1 March Refinancing Costs Agreement therefore exposes his evidence as nothing more, at best, as a recollection based on memory alone of events over four years ago, and questions the veracity of his narrative as a whole.
As will be expanded upon below, the earliest documentary evidence of PTW engaging in the Dolls Point Property Transfer is the 5 September email and correspondence that follows. Further, while this again was not pressed in cross examination, in Volume 6 of the Court Book (part of exhibit P1, being the entirety of the Court Book; see T126/30-50) labelled "PT&W tax invoices and statements" there is a tax invoice dated 4 December 2012 for the "Lardis Transfer to Property: 4 Skinners Street, Dolls Point" (CB6/1619). In the 'Combined Matter Ledger' that follows this invoice, there appears to be no earlier reference to the Dolls Point Property Transfer before 4 December 2012. While this ledger is for Melidoni Pty Limited and not Mr and Mrs Lardis as clients, there is not a trace of evidence of a similar kind dating back to before 5 September, let alone to February 2012. Thus, Mr Macaulay's attempt to present his evidence on the February meetings as corroborated by contemporary documents is fraught with errors, and plainly inaccurate.
A further inconsistency casting strong doubt over Mr Macaulay's recollection of the February meetings is the letter sent by him and Mr Wilks on 25 October 2012 (CB2/422). Following the email from Websters on 18 October 2012 (CB2/408) asking PTW to have Mr Lardis undertake to refrain from transferring any of his interest in the Dolls Point or Sydenham Properties, or transferring any other assets, Mr Macaulay responds arrangements concerning the refinance of the Sydenham and Dolls Point Property were "put in place and in train for over 12 months."
The Plaintiffs raised Mr Macaulay's response in closing, noting his failure to make any reference to the transfer arrangements addressed in the 18 October email, and instead focus on the refinancing, should be viewed as "some sort of consciousness of guilt," and recognition the transfer arrangements were only recently implemented (T138/1-20). The Plaintiffs also put to Mr Lardis that this letter was written on instruction, which Mr Lardis denied (T106/1-5). However, what is perhaps more telling about the 25 October letter, although not raised by the Plaintiffs nor put to Mr Macaulay, is that on no view of the evidence could Mr Macaulay's assertion the refinancing arrangements had been in place for "over 12 months" be correct. This would take discussions with the Lardis' back to October 2011, or even earlier. There is no evidence from any of the witnesses or from any contemporaneous records to suggest the Lardis' instructed PTW in October 2011 or earlier to put in place the refinancing arrangements which were not implemented until May 2012. This additional uncorroborated assertion from Mr Macaulay, again not included in his affidavit, further undermines the reliability of his recollections on the February meetings.
Finally and unsurprisingly given the complete absence of corroborating material, neither Mr nor Mrs Lardis identify any meeting, let alone two meetings, occurring with Mr Macaulay in February 2012. Further, the Defendants do not corroborate the detailed series of events set out by Mr Macaulay regarding the initial meetings with PTW. Neither Mr nor Mrs Lardis ever refer to any general meeting concerning various matters including the refinancing of the Dolls Point Property that precedes the meeting with Mr Macaulay where express instructions were given to act on the 50% Dolls Point Property Transfer.
I am satisfied Mr Macaulay advanced his argumentative evidence for two forensic purposes. First and implausibly in my view to explain in part why did not make any diary note(s) of the February meetings (T118/10-15). Second, to appear to have a reason to corroborate his recollection. No doubt and perhaps with best intentions he was attempting to assist his clients in what was obviously a very difficult predicament. But for a solicitor, let alone a litigator not to make contemporaneous notes, and for his firm not to be able to produce any documentation at all to corroborate instructions he said he obtained is of considerable significance.
Taking the most generous view of Mr Macaulay's evidence I am satisfied he was mistaken about the times when he said he first saw Mr and Mrs Lardis and received instructions from them on the Dolls Point Property Transfer. Mr Macaulay's attempts to rely on material that does exist (the Costs Agreement) and material that does not exist leave me to conclude Mr Macaulay's evidence on the February meetings cannot be accepted as evidence corroborating an agreement between Mr and Mrs Lardis to transfer the Dolls Point Property in early 2012. March conversation
I also find the accounts of the alleged conversations between the Lardis' and Mr Macaulay in March 2012 implausible. Neither of course made any contemporaneous notes, kept any emails or, it seems, kept any appointment diary.
In his affidavit Mr Macaulay asserted in or around March Mr Lardis telephoned him and told him he would liaise with the bank about the requirements for the transfer of his interest in the property (RM [14]). There is no diary note of Mr Macaulay in relation to this conversation.
Mr Macaulay was not challenged on this point, but what is further unclear is why Mr Macaulay was being contacted by Mr Lardis, or why Mr Macaulay did not direct Mr Lardis on to Mr Koops, who Mr Macaulay had already apparently already transferred or in his words "palmed" (T114/5-10) the matter to in February with the "intention that he [Mr Koops] would do whatever was necessary from there on" with the matter (T114/40-45). Such a conversation is also at odds with Mr Macaulay's claim he only had peripheral and not "day to day" involvement with the Lardis', at least at the start (T115/25-30, T117/10-20). Of course he had only met Mr and Mrs Lardis for the first time in February 2012 (RM [4]).
Further, Mr Lardis does not corroborate this March conversation, making no reference to it in his affidavits or cross examination. Mrs Lardis, on the other hand, asserted in cross examination she and her husband spoke to Mr Macaulay in March or April but somewhat oddly she could not remember if they actually instructed him to attend to the transfer of the Dolls Point Property (T57/10-15).
The vagueness surrounding any March discussions of the transfer, and confusion as to why Mr Macaulay and not Mr Koops would have been dealing with the transfer, supports my view Mr Macaulay was, at best, mistaken as to the timing of further discussions with Mr Lardis regarding the transfer. April, May or June instructions
Mr Lardis recalls April or May 2012 as when he first gave Mr Macaulay instructions to prepare the transfer of, at this point, 50% interest in the Dolls Point Property from him to Mrs Lardis. On what he said, in either a telephone call or a meeting, Mr Lardis told Mr Macaulay the only way he could raise money to pay legal costs would be to mortgage the family home and his wife would not agree to mortgage the house unless he transferred his interest to her. He asked Mr Macaulay to attend to the paperwork and he would make enquiries of NAB about getting a loan (ML1 [54]). In cross examination he thought that conversation might have occurred a little earlier but it was around that time (T77/35-40).
Again there is no diary note of Mr Macaulay in relation to this conversation and it is clearly at odds with Mr Macaulay's recollection.
Mrs Lardis in her affidavit (AL1 [45]) appears to indicate the first time instructions were given to PTW to act on the transfer of her husband's interest in Dolls Point was at the end of June 2012. There is no mention by her as to who was given those instructions. There is no note within PTW on the evidence supporting such an assertion, nor any reasoning by Mrs Lardis as to why she could place the instructions at this date.
These dissonant and at times equivocal accounts of when the Lardis' first instructed PTW to act on the Dolls Point Property transfer (either for a 50% or a 49% transfer) further leave me satisfied no discussion, let alone any agreement, concerning the transfer, occurred in the first half of 2012.

[33]

April/May: Alleged decision to change from 50% to 49% transfer

At some point, there is alleged to be a decision to transfer Mr Lardis' 49% interest in the Dolls Point Property, rather than 50%, so Mr Lardis retained 1% and Mrs Lardis held 99%. The Defendants allege this occurred around the time of the loan applications, in April or Mary 2012. The Defendants also point to the loan application concerning the Dolls Point Property as evidence of the alleged arrangement where Mrs Lardis agreed to the loan in return for the 49% Dolls Point Property Transfer (Defendant's Final Submissions [7], [18]).
First, no contemporary records of there ever being a 50% Dolls Point Property Transfer. Secondly, there are no contemporary records of there ever being a change from the 50% to the 49% Dolls Point Property Transfer. This includes no records of Mr Kaloudis negotiating the transfer with NAB despite being the point of contact between the Lardis' and NAB, and no records from NAB regarding the transfer at this time, despite allegedly being the very people responsible for the change.
Mr Lardis asserted in about April or May 2012 he, it seems personally, made enquiries with NAB about the transfer of his interest in the Dolls Point Property. Importantly, he alleged during these enquiries, as well as discussing how much he could generally borrow, he was informed by the bank they required him to retain at least "one share" in the property as his wife's income was said to be insufficient to service an increase in loan facilities (ML1 [55]).
There is no diary note or document in evidence from NAB indicating the bank ever imposed such a requirement, at any time. There is also no evidence from the time of NAB enquiring about Mrs Lardis' income, and no such disclosure of Mrs Lardis' income in the 15 May loan applications. The only document in evidence in which any enquiry was made by NAB as to Mrs Lardis' income is an email from a Ms Kumar and Mr Kaloudis dated 9 July, some months after Mr Lardis said the bank imposed the 49% requirement. The email simply enquires as to whether Mrs Lardis had any income. If Mr Lardis' assertions are correct, then it is difficult to make sense of the bank enquiring as to Mrs Lardis' income months after it allegedly required Mr Lardis to retain the 1% because of Mrs Lardis' income.
In addition, and very importantly, there is also no support for the proposition Mr Lardis ever had any direct contact with NAB. Mr Lardis notes in relation to the NAB loan that "we went through a broker and he organised it with the NAB" (T81/10-15). Consistent with this, all the evidence suggests contact was via the broker Mr Kaloudis. The familiar tone of the correspondence between Mr Kaloudis and Ms Kumar, evident in the use of first names and informal salutations, infers the two were dealing with each other on a regular basis. In this context, and also because Mr Lardis was not a client of NAB, it is odd Mr Lardis would have intervened in the matter. Further there is no record it seems of Mr Kaloudis where NAB imposed such a requirement. As against the contemporaneous documents this evidence of his alleged direct contact with NAB in my view is simply fanciful, as is the suggestion the 1% requirement was ever imposed by the NAB.
Mr Lardis asserted (ML1 [56]) in about April/May 2012 after his discussions with NAB he told his wife he needed to keep 1% of the Dolls Point Property. Mrs Lardis on the other hand gives no evidence of this conversation occurring between herself and her husband in April/May 2012. Instead she asserted her husband did not tell her the bank required him to keep 1% as part of the terms of the loan until the end June 2012 (AL1 [42]). I am not satisfied Mr and Mrs Lardis had this conversation with each other or, in Mr Lardis' case, with NAB.
Mr and Mrs Lardis in their second affidavits and in almost identical terms stated they had reviewed documents which had been produced by NAB and asserted the review had refreshed their recollections on the 49% Dolls Point Property, and, for Mr Lardis, "my dealings" with NAB (ML2 [4] and AL2 [3]-[4]). Each asserted they recalled the purpose of the loan was to borrow monies for the "49%" interest and/or transfer in the Dolls Point Property. It is accepted the applications were made with the assistance of Mr Kaloudis, the finance broker and were signed by each of Mr and Mrs Lardis on 15 May 2012 (CB1/118).
Mr Macaulay asserted in or about May 2012 Mr Lardis contacted him to tell him NAB required him to keep 1% so Mr Lardis now wanted PTW to proceed with the transfer but only for 49% not 50%. Mr Macaulay said he told Mr Lardis to have NAB to contact PTW with their requirements so documents could be prepared. On the evidence, Mr Lardis never contacted NAB and NAB never contacted PTW. Mr Macaulay asserted this May conversation took place in a phone call between himself and Mr Lardis (RM [15]). I am not satisfied the conversation did or could have taken place in May 2012. As I have said I am not satisfied NAB ever imposed such a requirement. In addition the first mention of the retention as it were of the 1% is in Ms Hsu's email of 5 September and she attributes the request to Mr Lardis, not NAB.
This material fortifies my view Mr and Mrs Lardis have contrived their evidence as to reaching an agreement on the 49% Dolls Point Property from Transfer. I am also satisfied Mr Macaulay is mistaken about ever being told retaining 1% was a requirement of the loan applications.

[34]

15 May: The loan applications

Further, I am satisfied contrary to the claims of the Defendants, the loan applications were made with no consideration of any transfer of interest in the Dolls Point Property to Mrs Lardis. No loan application document or document created internally at NAB or any document created by Mr Kaloudis during this period makes any mention of a transfer of Mr Lardis' interest to his wife. There is simply no document Mr and Mrs Lardis reviewed on the evidence which made any mention of a transfer, 49% or otherwise, during this period.
This is consistent with my view the loan applications were made out of necessity given the financial circumstances the Lardis' had found themselves in by early 2012 where Amazon was no longer a source of income and litigation was a real possibility. By early 2012, both Mr and Mrs Lardis were intent on severing ties with Mr Lakis, and with Mr Lardis purporting to not wanting to buy Mr Lakis out (T77/10-20, CB1/130-131), the reality was Amazon was going to come to an end, as was their cash flow from that source. Mrs Lardis worked from time to time as a beautician, working occasionally for her mother who owned a beauty salon, and freelancing on weekends. There is no way of actually knowing her income since no direct evidence of income or tax returns was provided, and certainly none ever disclosed to NAB, however it is clear, I am satisfied, she was not economically independent, and Amazon had, until early 2012, been the main source of money for her and the Lardis family.
Thus when Amazon stopped being a reliable source of cash flow, the Lardis' needed to look elsewhere, particularly with the potential added cost of legal fees which were likely to arise from the escalating dispute with Amazon. The Plaintiffs submitted in closing that the sole or one of the objectives of the loan applications was to continue life as usual without any risk at all that the Amazon dispute could infringe or impact upon their day-to-day activities (T132/35-45). I am satisfied on the evidence that this is a correct characterisation of the situation.
I am satisfied this is the context in which the refinancing was arranged. I do not accept the refinancing was some sort of quid pro quo arrangement where in return for Mrs Lardis agreeing to allow Mr Lardis to use funds from refinancing the Dolls Point Property, she received a 49% interest in the Dolls Point Property. The refinancing was for the benefit of the Lardis family as a whole, as it was the only means by which Mr and Mrs Lardis could continue to support their lifestyle in the wake of legal proceedings broiling and Amazon cash flow ceasing. In this context, I am satisfied the May refinancing was arranged entirely separately of the 49% Dolls Point Property Transfer first documented in early September, and Mrs Lardis needed little enticement to agree to the refinancing arrangement in those circumstances.

[35]

August/September: PTW affecting the transfer

Mr and Mrs Lardis both alleged PTW was further contacted about carrying out the transfer in around August 2012. Mr Lardis asserted in late August, after his wife asked him what was occurring with the transfer of the 49%, he had a telephone conversation with Ms Kumar to see what NAB had done in relation to the transfer of his interests. Mr Lardis asserted Ms Kumar said she had received nothing from the lawyers to which Mr Lardis said he would chase them up (ML1 [66]). There is no record of NAB on the purported conversation with Ms Kumar. Mr Lardis asserted he then rang Mr Macaulay asking what had happened to the transfer, and Mr Macaulay told him "I'll get someone on it and get them to call you" (ML1 [66]-[67]). Mr Lardis does not go on to explain if and/or who called him from PTW following Mr Macaulay's assurance.
Mrs Lardis said in late August/early September she asked Mr Lardis if he could obtain a letter from the lawyers confirming the transfer of his 49% interest to her. Mrs Lardis recalls Mr Lardis said he would call the next day. There was no mention by Mrs Lardis of Mr Lardis saying he first had to contact NAB, as Mr Lardis alleged he did. Mrs Lardis alleged the next day Mr Macaulay told Mrs Lardis the lawyers had forgotten and they were then attending to the paperwork (AL1 [53]-[54]). Mr Lardis does not mention in his affidavit ever being told by PTW they had forgotten to attend to the transfer.
Mr Macaulay said nothing in his affidavit about being contacted by Mr Lardis to ask the status of the transfer, nor is there any communication from Mr Lardis to PTW, and no internal diary note of PTW. Instead, Mr Macaulay stated in late August 2012 Mr Lardis informed him over the telephone NAB had approved the loan and so he could now proceed to affect the transfer (RM 16]). However the NAB approval had already been communicated by letter of 19 July to Mr and Mr Lardis, presumably to the knowledge of Mr Kaloudis.
On this evidence, it is not clear whether Mr Macaulay said PTW would get someone to act on the transfer (as per Mr Lardis' account), PTW had forgotten about the transfer (as per Mrs Lardis' account), or PTW was only then given instructions to proceed with the 49% transfer (as per Mr Macaulay's account). Further, it is not clear whether NAB was ever contacted by Mr Lardis. In the face of these inconsistencies, the narrative propounded by Mr and Mrs Lardis and/or Mr Macaulay is improbable in my view and I do not accept it.
Mr Macaulay (RM [1]) asserted following his conversation with Mr Lardis in late August, Ms Hsu "was directed" to prepare the transfer documents, again with notes to support any such contention. It is clear however from his evidence in cross examination Mr Macaulay had nothing to do with the 5 September email Ms Hsu sent out, notwithstanding the impression created in his affidavit (RM [17]) (TT121/50-122/5). He agrees Ms Hsu was under the supervision of Mr Koops, but asserted in cross examination he wasn't sure if Mr Koops was working at PTW in September 2012 (T121/35-40). If Mr Macaulay did in fact take the call from Mr Lardis, but he did not personally direct Ms Hsu to send the 5 September email actioning the transfer, nor does he remember asking Mr Koops to direct her on the email, there is no explanation on the evidence as to how Ms Hsu, or perhaps Mr Koops, ended up with the directions to send the 5 September email. The only reasonable inference that can be drawn is Mr Lardis instructed and requested Ms Hsu to implement the 49% Dolls Point Property Transfer at that time.
Further, Mr Macaulay taking the call from Mr Lardis is again totally at odds with Mr Macaulay having referred this matter to Mr Koops in February. There is simply no explanation as to why Mr Koops is not contacted or why Mr Lardis made contract with Mr Macaulay, especially in light of Mr Macaulay's "peripheral involvement" with the Lardis'. Mr Koops was, it seems, at PTW in September 2012 as he is referenced to in correspondence in 2013 in connection with the transfer (CB2/501).
In addition to these significant discrepancies in accounts, there are several other considerations which make it implausible in my view PTW was contacted again in late August/early September to affect a transfer they had been instructed to implement and had been the subject of an agreement between the Defendants in early 2012.
First, the email sent by Ms Hsu to Ms Kumar on 5 September to NAB (CB2/378) differs markedly from that which would be expected if what Mr Macaulay, or Mr and Mr Lardis said was true.
The terms of the email are obviously important, first, because on the email's face, it is contrary to an account the bank required Mr Lardis to retain 1% in the Dolls Point Property so he could only transfer a 49% interest. The terms of the email do not suggest what was being spoken about was an NAB requirement. Rather the email purports on its face to indicate it was indeed a request, and an urgent one at that, by Mr Lardis. The terminology in my view of Ms Hsu's email is odd if NAB had previously known about the arrangement and had already made it a requirement of the refinance. Further one would expect Ms Hsu had been instructed by Mr Lardis (with whom she had been in contact with since early 2012) and if what she said reflected those instructions no mention is made of an already existing requirement. There was no change in personnel from NAB's position throughout 2012. Ms Kumar appears at all times as the point of contact at NAB.
One would have expected some record from NAB that it had previously set the requirement which their client/new customer was expected to comply with as part of the refinancing. In addition the second sentence of the email insofar as it purports to explain what the consequence would be of the transfer is suggestive of novelty. It is as I have said a letter in very odd terms if it were simply the regurgitation of an old request of an institution which had long ago not only agreed but imposed the very requirement and now seemingly sought once again. The only requirement NAB would appear to have requested was an up to date valuation to be paid for by Mr Lardis (CB2/393-396).
Further, such a request and the tone of the email as a whole is at odds with Mr Lardis having previously agreed with NAB and having instructed PTW accordingly on the Dolls Point Property transfer. There is no suggestion by PTW of any fault on their behalf for not acting on a transfer they were allegedly instructed on some months ago.
Last the statement "Michael would like to get this done as soon as possible" in the email betrays a sense of urgency not seen in any correspondence prior to September. Such a tone is consistent with the Lardis' becoming increasingly anxious about possible adverse consequences in the winding up proceedings, and eager to shield their family home from such consequences.
In addition to this correspondence, what is also remarkable if the Second Defendant's case were to be accepted, is that up until 5 September 2012, there is no record of Mr or Mrs Lardis making contact with PTW as to the Dolls Point Property Transfer. According to their version of facts, in early 2012 they gave instructions for their agreement to be implemented. Months and months went by before the transfer was ultimately prepared and implemented. Even if the transfer was contingent on first ensuring the loan over the Dolls Point Property was secured, over a month went by without the Lardis' turning their minds to the transfer of the Property.
Their failure in my view plausibly to explain why they did not complain bitterly, given the significance of such an agreement, is telling. A tepid or desultory enquiry, if that is in fact what occurred, is hardly a plausible reaction in the circumstances. Mrs Lardis in her evidence said she was not "cranky" at PTW for the time lapse, she "just thought that's how they work. It just takes a while for these things to happen" (T59/25-35). In my view I cannot accept that as truthful evidence. Neither she nor her husband were it seems bashful about their rights and yet the manner in which they purported to explain their reaction to PTW or NAB's rather indifferent attitude towards their wishes was, in my view, implausible. As Mr Macaulay agreed, Mr Lardis was a client who would make a complaint if he was not content (T122/10-50). I do not accept prior to early September 2012 either Mr or Mrs Lardis made any contact with PTW to enquire what was happening.
The failure to complain, together with the tone and terms of the 5 September email, the total absence of any contemporaneous documents preceding this email that make any reference to the Dolls Point Property Transfer (be it 49% or 50%), and the inconsistent accounts of the witnesses make it clear, in my view, that late August/early September 2012 was the first time the Lardis' agreed on and instructed PTW on the transfer of the Dolls Point Property.
I am also firmly of the view such an agreement can only be explained by the Lardis' fear of adverse consequences arising out of the winding up proceedings. Just over a week before the 5 September email, on 28 August 2012, Mr Lardis had appeared in the Supreme Court of New South Wales for a timetable to be set for the winding up proceedings. Further, on the eve of the 5 September email, on 4 September Mr Lardis attended a conference with Mr M. Cleary (Counsel), Mr Koops and most likely Mr Wilks "to discuss Ted Lakis Supreme Court company wind-up application" and work on affidavit of Mr Lardis (CB6/1670). It is reasonable to infer discussion took place at this conference about the litigation and preparation for it, and Mr and Mrs Lardis, I am satisfied, were aware of the real risk of impending indebtedness arising out of the now imminent litigation if it ended adversely, and the possibility of being pursued by Amazon regarding allegations of impropriety that had been raised.
Against this backdrop, I am satisfied not only was early September the first time PTW was instructed by the Lardis' to act on the 49% Dolls Point Property Transfer, but the instructions were provoked by the progress of the litigation and desire to protect the Dolls Point Property from the adverse consequences of the litigation by placing it beyond the reach of Mr Lakis in particular.
For completeness, it was put explicitly to Mr Lardis (T77/40-45, T104/15-20) and Mrs Lardis (T55/40-45), that early September was the first time the Defendants agreed upon a transfer of the Dolls Point Property and accordingly instructed PTW to act on it. They denied this but I reject their denials.

[36]

September - 29 January: The transfer process

The events following the 5 September email further confirm in my mind the Lardis' only agreed upon, and instructed PTW on the 49% Dolls Point Property Transfer in early September 2012, and that the transfer was out of fear of the risk of adverse consequences of the winding up proceedings.
First, the correspondence that follows from the 5 September 2012 email continues to be tinged with a similar sense of urgency. Repeating her claim "Michael would like this done as soon as possible" in her 5 September email, on 11 September, Ms Hsu sent a follow up email to Ms Kumar asking her to advise on the bank's requirements "as soon as possible" (CB2/381). Further on 10 October when Ms Hsu sends an email asking Mr Lardis if he was happy to proceed with the NAB valuer (CB2/397), Mr Lardis replies two minutes later saying "Yes go ahead I need this done asap" (CB2/398-399).
The recent nature of the instructions to act on the 49% Dolls Point Property Transfer is, in my view, also reflected in the 1 November email, where Ms Hsu, referring to the valuation of Dolls Point, confirms with Mr and Mrs Lardis the instructions that "you wish to transfer 49% of your interest to your wife where you will hold 1% and Athina will hold 99% as tenants in common" (CB2/443-446). The terms and tone of this email do not suggest, in my view, old instructions belatedly implemented.
This correspondence sits consistently with the 5 September 2012 email, and reinforces my view the 49% Dolls Point Property Transfer was only agreed upon and instigated in early September 2012, and then driven by a sudden urgency for the very purpose of protecting the Dolls Point Property from the imminent litigation and putting it beyond the reach of Mr Lakis at the least.
As set out in the background facts, following the timetable set by the Supreme Court on 28 August 2012, there was a directions hearing for the winding up proceedings (17 September 2012), the winding up proceedings commenced (7 November 2012), judgment was then handed down (14 December 2012), and a liquidator was appointed to Amazon (24 January 2013). Concurrently, following Mr Lardis' approval of the NAB valuation (10 October 2012), the valuation of the Dolls Point Property was obtained (2 November 2012), and the transfer was executed (most likely on 21 November), signed (28 November) and lodged with the LPI (24 January 2013) and registered on (29 January 2013). I am satisfied the proximity of the winding up proceedings and the 49% Dolls Point Property Transfer serves to fortify my view the two were intimately linked, with the transfer carried out for the sole purpose of shielding the Dolls Point Property from adverse consequences arising from the winding up proceedings.
I also note I am not convinced any valuable consideration was exchanged for the 49% Dolls Point Property Transfer, notwithstanding the payment of stamp duty. The choice of the $1.00 consideration on the transfer form dated 24 January 2013 (CB2/493) bears no accurate reflection of the transaction as the Second Defendant would have it, but, I believe, does accurately reflect the transaction that transpired. The 49% Dolls Point Property Transfer, instigated in early September 2012, was independent of and carried out with a different intent to the refinancing of the Dolls Point Property, being the intent to put the Dolls Point Property beyond the reach of Mr Lakis in particular.

[37]

Failure to call witnesses

The failure on the part of the Second Defendant to call any of Mr Koops, Ms Hsu, Mr Kaloudis and/or Ms Kumar left a large part of the Second Defendant's case uncorroborated. Indeed, it only fortified the negative impact of the contemporaneous materials that did exist.
With respect the PTW lawyers, it appears every relevant person within the firm, at least between February and September 2012, suffered from scriveners palsy. None kept a contemporaneous diary note of seemingly anything in relation to Mr and Mrs Lardis particularly in relation to the alleged relationship concerning the transfer. In the absence of contemporaneous records one would expect from a functioning law firm, it would have been instructive to hear from the lawyers who had engaged with the Lardis' regarding the refinancing and the transfer, namely Mr Koops and Ms Hsu.
Ms Hsu appears to have acted for the Lardis' as early as 29 February 2012 in relation to a loan agreement concerning a Titan Fitness (Coogee) (CB6/1630) and on the evidence is largely in charge of the transfer of the Dolls Point Property matter come September 2012, at times with Mr Saivanidis. Further, Ms Hsu was of course the author of the 5 September email that first records evidence of the Dolls Point Property Transfer.
Mr Koops appears to have acted for the Lardis' as early as 9 March 2012 (CB6/1621). Mr Koops may have even been involved earlier, based on Mr Macaulay's assertion members of the PTW property team already had "at least one other matter on foot" with the Lardis' at the time of the alleged 28 February meeting (T113/40-50), and was acting for Mr Lardis as early as 24 May 2012 in the dispute regarding Amazon (CB1/124-125). Further, Mr Koops was, according to Mr Macaulay, the lawyer who received the critical instructions on 28 February 2012 to act on the transfer of the Dolls Point Property, yet failed to act on those instructions and ensure they were reflected in any costs agreement.
Further, on 29 January 2013, Ms Hsu and a copied in Mr Koops are the lawyers who inform Mr and Mrs Lardis the transfer of the property was complete. The flow on effect of Mr Koops and Ms Hsu not being called in all the circumstances has an impact on in my view on the position of Mr Macaulay. The failure to call Mr Macaulay's professional colleagues who were intimately involved with Mr Lardis on his version of events suggests they could not have assisted Mr and Mrs Lardis' narrative.
Mr Kaloudis as broker delivered services for some months in early 2012, and appears to be the prime actor conversing on behalf of the Lardis' with NAB to affect the refinancing arrangements. Further, according to Mr Lardis, Mr Kaloudis was aware of the transfer of the Dolls Point Property at the time he was arranging the refinancing (T81/20-23).
Ms Kumar was similarly involved in the events leading up to the Dolls Point Property transfer, being the banker at NAB who acted on the loan applications, allegedly knew about the transfer arrangement by Mr Lardis at the time of the loan applications (T79/5-10), was most likely the person at NAB (if anyone) who required the transfer arrangement change from a 50% to a 49% transfer, allegedly told Mr Lardis in late August that NAB had not received paperwork from PTW, and who conversed with Ms Hsu from September 2012 to help affect the transfer from the bank's side.
I am of the view it is open to me to infer that if called, none of these witnesses could have assisted in corroborating Mr Lardis and for that matter Mrs Lardis' version of events and the alleged agreement said to have been forged in early 2012. This otherwise fortifies my view of the non-existence of the alleged agreement between Mr and Mrs Lardis regarding the transfer of the Dolls Point Property in early 2012.

[38]

Conclusion on facts

In summary I do not accept the evidence of Mr and Mrs Lardis that they came to the agreement to transfer the Dolls Point Property in the early part of 2012 as alleged, let alone as part an arrangement where Mrs Lardis would agree to the refinancing, and where NAB allegedly imposed the 1% requirement.
I can accept they discussed the refinancing of their facilities and retained Mr Kaloudis to arrange that for them. However, I do not accept the Lardis' made any legally binding or other arrangement prior to the refinancing being implemented which made, as between themselves, the refinancing contingent upon the transfer by Mr Lardis of the whole of his interest or 49% of the interest in Dolls Point Property to his wife. As I have stated, I am satisfied the refinancing was the natural and probable consequence of life after Amazon for the Lardis'. In response to the Defendant's Final Submissions, the drying up of Amazon cash flow explains why Mrs Lardis consented to "such a substantial amount of money being drawn down against the family home" (Defendant's Final Submissions [18]). It follows then, that I cannot accept the Second Defendant's submissions the monies purportedly advanced to Mr Lardis under the refinancing were in return for the 49% Dolls Point Property Transfer to Mrs Lardis.
On the basis of my analysis above I am satisfied Mr Lardis, together with Mrs Lardis first applied their minds to the question of the transfer of Mr Lardis' interest in Dolls Point to Mrs Lardis in or about early September galvanised by the progress and imminence of the litigation and the fear of the real possibility of adverse consequences.
I am further satisfied while it may have been Mr Lardis' initiative to hold on to the 1%, Mrs Lardis was not only privy, but critical, to the formation of the entire arrangement to remove the family home, as she saw it, from the reach of Mr Lakis at the very least as a result of the risk of adverse consequences flowing from the winding up proceedings.

[39]

The relevant alienation of property

As I have already discussed s 37A confers jurisdiction on the court to avoid an alienation of property. The jurisdiction is enlivened where the alienation is made with the requisite intent which is to be assessed at the time of the relevant alienation.
A debate which took place before me is what is or should constitute the relevant alienation. In short my findings exclude any agreement as alleged. I shall return to this.
The High Court in Cardile v LED Builders at [65] confirmed the notion of "alienation" in the section means a parting with property and includes a parting with some interest in that property. It is accepted however not every agreement that relates to property is necessarily an alienation or an undertaking to alienate.
As is clear from the above there are competing positions in relation to what is the relevant alienation. Importantly of course having made my findings of fact at least on my appreciation of the situation any arrangement between Mr and Mrs Lardis by which he transferred the 49% interest in the Dolls Point Property did not emerge until early September and then in the context of litigation, long after the refinancing had been affected. The arrangement, as it was made then, did not manifest itself in writing until at least the signing of the transfer in November 2012 or perhaps the better view the registration transfer itself In January 2013. Even then the transfer is a nominal consideration rather than valuable consideration and therefore on the face of the documentation the transfer was a voluntary one. In the circumstances I consider that to be more realistic assessment of the facts.
It is submitted by the Plaintiffs, which I consider to be the preferable view, until registration on 29 January 2013 of the executed transfer no equitable interest in the property was conveyed prior to the date of registration. It is submitted by the Plaintiffs, again in my view correctly and consistent with Cardile, the relevant alienation was on 29 January.
So far as the transfer documents were concerned it is tolerably clear these were prepared for the first time on 1 November 2012. Mrs Lardis accepted in her affidavit she attended the offices of PTW "some time in November 2012".
The Plaintiffs submit it is possible the transfer was executed at the meeting on 21 November, however suggests the more likely date is that it was signed on 28 November. This is not really controversial. It was thereafter lodged on 24 January 2014 and registered on 29 January. As I have already indicated, I am satisfied the Plaintiffs are correct in placing the relevant alienation at this date.
The Second Defendant submits the relevant alienation extended from the time of asserted oral agreement in early 2012 until the time when the registration of the transfer occurred. I do not accept that is an appropriate analysis of the legal position.
The Second Defendant relies upon a number of cases to support the proposition the "alienation" covered a wide period. On my findings this analysis is not really tenable. Properly understood however I do not think those authorities support that proposition. The particular cases referred to in the Second Defendant's Additional Final Submissions ([2]-[22]) all include court orders of one sort or another. The equitable interests so identified in those cases stem from particular orders of courts in the various circumstances. The relevant transfer clearly arose first at the time of the orders on the basis the making of the orders amounted to a transfer of an equitable interest in the respective property. That is consistent with the principle namely the making of a court order requiring conveyance of a property creates a right to performance in hands of the transferee and could be so enforced. Understood in that way those authorities are entirely consistent with Cardile v LED Builders to which I have already referred.
Here of course there is no court order. In any event in my view the arrangement I have found in September could not create any binding contractual or other enforceable equitable interest.
I am therefore satisfied the 29 January 2013 is the relevant date of alienation for the purposes of s 37A.

[40]

Intent to defraud, hinder or delay and notice of intent

I am satisfied Mr Lardis transferred a 49% interest in the Dolls Point Property with an intent to defraud, hinder or delay prospective creditors of Amazon, including Mr Lakis. Further, I am satisfied Mrs Lardis was not just on notice of this intent, but shared this intent with her husband.
I do not accept the Second Defendant's characterisation of the Plaintiffs' case as largely relying on the decision of Black J on 14 December and events that followed to claim the 49% Dolls Point Property Transfer was in response to the orders of Black J. This is not correct. The pleaded factual context put forward by the Plaintiffs commences with the filing of the application for winding up proceedings on 17 July 2012 (ASOC [3]-[4]). Further, as the case developed, virtually the entirety of 2012 was the subject of examination by all the parties, with the 5 September email being a particular focus. The Second Defendant engaged in a similarly wide examination of events that allegedly transpired across 2012, which is obvious from her case in chief.
Likewise, I do not accept the Second Defendant's contention neither Mr nor Mrs Lardis could have apprehended the likelihood claims could be pursued against Mr Lardis in favour of Amazon (see, for example Defendant's Final Submissions [14]-[15], [30]). As early as 9 December 2011 Mr Lardis was aware Mr Lakis wanted to appoint forensic accountants to review Amazon's books. By late 2011/early 2012 Mr Lardis noted both he and Mr Lakis were obtaining legal advice concerning their respective rights (ML1 [41]-[46]).The depth of ill feeling between the former partners was such that any form of conciliation was off the table. By early September Mr and Mrs Lardis were well aware of the progression of the litigation, with the timetable set in court on 28 August 2012. Mrs Lardis well understood her husband could be liable for costs (T48/15-25), and agreed that one asset which she knew would be protected if the court case went wrong was the Dolls Point Property (T55/15-35). Mr Lardis also understood serious allegations he had inappropriately taken money from Amazon were being made (T98/15-20) and there was a risk if the winding up proceedings did not go well he may have to pay money (T97/45-50). In other words, both Mr and Mrs Lardis understood by, at the latest September 2012, the likelihood of indebtedness arising out of the winding up proceedings and litigation that could follow, as a real possibility.
When Mr Lardis spoke to Ms Hsu, which it appears he did just prior to September 5, I am satisfied he clearly must have done so with his wife' knowledge and agreement. Mr Lardis' anxiety as I have already remarked in September is clearly a direct response to the litigation.
The Plaintiffs, again in my view correctly, submit by the second half of November 2012 Mr Lardis was well aware of all the allegations raised before Black J. Further, by the time of the hearing before Black J on 7 November 2012, the likelihood of further litigation was real, as was the risk of the Dolls Point Property being the subject of impending and significant recovery claims by Amazon and Mr Lakis.
As I have said, by early September 2012, and certainly by the date of the registration of the transfer on 29 January, Mr and Mrs Lardis in my view both intended one purpose of the transaction, indeed I am satisfied the only purpose, was to protect the Dolls Point Property from Mr Lakis at the very least. This was so plainly a joint enterprise on their part for that purpose.
For these reasons, I am satisfied the 49% Dolls Point Property Transfer is voidable under s 37A, and the Second Defendant has failed to satisfy me the elements of s 37A(3) have been made out.

Parties

Applicant/Plaintiff:

Edward Ted Lakis and Anor

Respondent/Defendant:

Michael Victor Lardis and Anor

Legislation Cited (7)

Conveyancing (Amendment) Act 1930(NSW)

Trade Practices Act 1974(Cth)

Conveyancing Act 1919(NSW)

Bankruptcy Act 1924(Cth)

Property Law Act 1969(WA)

Corporations Act 2001(Cth)

Bankruptcy Act 1966(Cth)

Cases Cited (59)

Pavlovic v Universal Music Australia Pty Limited (2015) 90 NSWLR 605 Pennimpede v Pennimpede [2009] NSWSC 85 Prentice v Cummins (No 5) (2002) 124 FCR 67 PT Garuda Indonesia Ltd v Grellman (1992) 35 FCR 515 R v Navarolli (2009) 194 A Crim R 96 Re Amazon Pest Control Pty Ltd [2016] NSWSC 609 Re Cummins; Richardson v Cummins (1951) 15 ABC 185 Re Trautwein; Richardson v Trautwein (1944) 14 ABC 61 Regal Castings Ltd v Lightbody [2009] 2 NZLR 433 Shaddock & Associates Pty Ltd v Parramatta City Council (No 1) (1981) 150 CLR 225 Sharp v Anderson (1994) 6 BPR 97,510 Silvera v Savic (1999) 46 NSWLR 124 Singh v Singh [2009] WASCA 53 Smith v Edward [2006] NFSC 11 State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (In Liq) and Others (1999) 160 ALR 588 Stileman v Ashdown (1742) 2 Atk. 477 Taylor v Jones 2 Atk. 600 Textralian Enterprises v Perpetual Trustees (Victoria) Ltd [2000] NSWCA 176 Thomas v Hollier (1984) 156 CLR 152 Toben v Nationwide News Pty Ltd [2016] NSWCA 296 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 Toyota Motor Corporation Australia Ltd v Ken Morgan Motors Pty Ltd [1994] 2 VR 106 Trustees of Cummins v Cummins (2006) 227 CLR 278 Twyne's Case (1601) 76 ER 809 Watson v Foxman (1995) 49 NSWLR 315 Wentworth v. Rogers & Anor. [2004] NSWCA 430 Young v Tibbits (1912) 14 CLR 114 Texts Cited: J D Heydon, Cross on Evidence, 9th ed (2013) LexisNexis Butterworths Henry May, May on Fraudulent and Voluntary Conveyances, 3rd ed. (1908) Hon JJ Spigelman AC, "Truth and the Law" (2011) 85 (11) Australian Law Journal 746 Category: Principal judgment Parties: Edward Ted Lakis (First Plaintiff) Amazon Pest Control Pty Ltd (In Liq) ACN 092 833 531 (Second Plaintiff) Michael Victor Lardis (First Defendant) Athena Lardis (Second Defendant) Representation: Counsel: R Newlinds SC, N Bender (Plaintiffs) C Birch SC, B De Buse (Second Defendant)

[2006] VSC 283

[2009] WASCA 53

(2012) 247 CLR 345

(1988) 18 NSWLR 540

(1974) 131 CLR 370

(1998) 192 CLR 557

(1999) 198 CLR 380

(2000) 103 FCR 1

(2002) 209 CLR 95

(2003) 214 CLR 118

(2001) 51 NSWLR 572

(2008) 82 ALJR 419