EQUITY - Fiduciary duties - Breach - Rule in Barnes v Addy - Whether liability of fiduciaries and knowing assistants is joint and several - Whether Civil Procedure Act 2005

Incorporation of AKA Civil - June 2010

1. Banq arranged the incorporation of AKA Civil in June 2010, with its registered office being the Banq Address from 6 July 2011 (Ex K at 10975).

Incorporation of Reliance Cleaning - July 2010

1. Reliance Cleaning was incorporated on 23 July 2010, with Peter Abboud and Scott Crabbe as its directors. Its registered office was the Banq Address (Ex K at 33967). Banq was the registered tax agent for Reliance Cleaning (Ex K at 31701). The signatories to its bank accounts were Peter Abboud, Ivana Cassaniti and Fred Khalil (Scott Crabbe, though a director, was not a signatory to the bank account). The plaintiffs say that it is to be inferred that Peter Abboud was the controlling director of Reliance Cleaning (see below).
2. As to the business of Reliance Cleaning, there have been conflicting explanations. Fred Khalil's evidence to the ATO (to which I refer in due course - see Ex 18) was that Reliance Cleaning "only did tendering … and invoicing" and that all the "physical work" (by which I understand him to mean cleaning work) was done in "RC Group" (and Fred Khalil asserted in his affidavit sworn 25 March 2019 at [15] that RCG CBD was a labour hire company which was engaged to provide accounting staff to Banq). Peter Abboud, to the contrary, advised the Office of State Revenue in June 2014 (in response to an enquiry in relation to a different entity - see below) that RCG CBD was not a labour hire company and in his affidavit in these Proceedings he deposed that RCG CBD operated a commercial cleaning business and sub-contracted work from Reliance Cleaning.
3. Email communications to which I refer in due course suggest that various of the Reliance Cleaning or RC Group entities were referred to and used interchangeably by Banq personnel. Relevantly, the plaintiffs note that labour hire expenses were not reflected in Banq's financial records.

Incorporation of Wenman Brimak - August 2010

1. Wenman Brimak was incorporated on 13 August 2010. The Former Banq Address, and then subsequently the Banq Address, was the registered office of Wenman Brimak, from its incorporation until to 2 April 2014 (Ex K at 31662). Banq was the tax agent for Wenman Brimak (Ex K at 31683).

Incorporation of GFP Holdings - 12 October 2010

1. GFP Holdings was incorporated on 12 October 2010, with Fred Khalil as its director. Ivana Cassaniti was recorded as its sole director from 8 August 2013. As above, it acquired the premises occupied by Banq in Punchbowl (the Banq Address). The funds invested in the acquisition and establishment of the new Banq offices in 2011 by GFP Holdings came from Ivana Cassaniti/Givana (as to 60%) and also F&K Khalil (a company associated with Fred Khalil) and Peter Abboud (as to 40%) (Ivana Cassaniti's affidavit sworn 28 June 2019 at [9]). This split presumably reflects the differential shareholding as between Givana, F&K Khalil, and Peter Abboud in Banq.

Incorporation of MAL Land Group - 20 October 2010

1. MAL Land Group was incorporated on 20 October 2010, with Michael Abou-Antoun as the sole director, company secretary and shareholder and its registered office from 19 April 2012 being the Banq Address (Ex K at 50606).

Incorporation of Givana Prestige- 29 November 2010

1. Givana Prestige was incorporated on 29 November 2010 with Ivana Cassaniti as its sole director, secretary and company shareholder. Its registered office upon incorporation was the Former Banq Address and from 6 July 2011, the Banq Address (Ex K at 72946).

Incorporation of Rackforce - 4 February 2011

1. Rackforce (then known as Fina Fries Pty Ltd) was incorporated on 4 February 2011, with Frank Criniti as its sole director, secretary and shareholder, until Frank Scuteri replaced him on 22 September 2011. Its registered office on incorporation was the Former Banq Address, and then the Banq Address from 6 July 2011.

Incorporation of Earth Civil - 25 May 2011

1. As noted above, Earth Civil was incorporated on 25 May 2011, with Michael Abou-Antoun as its sole director, secretary and shareholder. The Former Banq Address was its registered office from incorporation until 7 July 2011 and then the Banq Address until 7 July 2013 (Ex K at 10878). The plaintiffs say that Earth Civil was a purported "employer" company - see below.

Incorporation of AKA NSW - 25 May 2011

1. On 25 May 2011, AKA NSW was also incorporated, again this being arranged through Banq. Its sole director and secretary was Michael Abou-Antoun and its registered office was the Former Banq Address incorporation and the Banq Address from 8 July 2011 (Ex K at 11185). From 2011, AKA NSW invoiced clients and AKA Civil paid subcontractors.

Incorporation of Diamondwish - 15 July 2011

1. On 15 July 2011, Diamondwish was incorporated, with Frank Criniti as its sole director, secretary and shareholder until 16 March 2012 when Christopher Cherry was appointed to replace him. The ASIC Form effecting this change was signed 16 March 2012 and lodged on 19 March 2012 (Ex K at 72942-72945). The registered office of Diamondwish from incorporation was the Banq Address.

Impugned Diamondwish transactions - August 2011

1. The impugned Diamondwish transactions (see above) commenced from about August 2011.

Criniti company emails - September 2011

1. On 30 September 2011 there was an email chain passing between Vanessa Scuteri (an employee of Frank Criniti, working in the payroll section of the group), Frank Criniti, Peter Abboud, Fred Khalil and Gino Cassaniti, in which Vanessa Scuteri writes that she spoke with Peter Abboud and he said, "I will have to ask Gino for the stuff because you haven't told him yet or have not confirmed this" (see Peter Abboud's affidavit sworn on 22 March 2019, Annexure A; Ex K at 14566). The plaintiffs point to the fact that, when Frank Criniti suggested in this email chain that it "100% can't continue", Gino Cassaniti responded stating "Frank just want to talk to you about so you all listen and follow my advice". The plaintiffs rely on this as demonstrating the extent of Gino Cassaniti's control over the Criniti companies at this time. (It is certainly inconsistent with any disavowal by Gino Cassaniti of involvement through Banq in the business affairs of his clients - here, the Criniti Companies; and it is also relevant insofar as it illustrates Peter Abboud's deferral to Gino Cassaniti for instructions.) Gino Cassaniti's signature in these emails identifies his role as an "[a]ccountant" at Banq.

Impugned AKA Civil/AKA NSW transactions from about November 2011

1. The impugned AKA Civil/AKA NSW transactions (see above) commenced from about November 2011. (The plaintiffs say that those transactions were orchestrated by Peter Abboud and Fred Khalil who told Andre Abou-Antoun that they would utilise Bluemine for the AKA transactions - see below).

Banq Accountants wound up - December 2011

1. Banq Accountants was wound up on 20 December 2011 (but, as above, its business appears effectively to have been assumed by Banq following its incorporation in July 2009).

Diamondwish and Rackforce payments - December 2011 to January 2012

1. Between 16 December 2011 and 22 December 2011 Rackforce received cash deposits and payments from Crinz totalling $316,626 (see Table 9.1). On 23 December 2011, Rackforce paid $316,185 to Diamondwish. Diamondwish paid to Givana Prestige the sum of $316,185 (Table 7.1). On 16 December 2011, Rackforce paid Givana Prestige the sum of $653,933 and on 30 December 2011, a further sum of $499,950 being a total of $1,153,833 (Table 9.1). On 9 January 2012, Givana Prestige paid Diamondwish $330,056.71. On 10 January 2012, Diamondwish paid $330,000 to Auswide. At this time (December 2011 to January 2012), Ivana Cassaniti was the sole director, company secretary and shareholder of Givana Prestige.

Givana Prestige change of director - January 2012

1. The ASIC company extract for Givana Prestige records that David Rizk was appointed a director of Givana Prestige on 18 January 2012 and ceased as a director on 10 May 2012 (Ex K at 72946). The Form 484 for Givana Prestige was lodged on 23 February 2012 (Ex K at 70209). The plaintiffs say that it was backdated purportedly to show that Ivana Cassaniti's directorship ceased on 18 January 2012.
2. Frank Criniti gave evidence (at T 522.36-523.30) to the effect that David Rizk was his personal assistant; that he and Gino Cassaniti asked David Rizk to become a director of Givana Prestige (which is what occurred); that David Rizk then expressed to Frank Criniti that his (i.e., David Rizk's) father was not happy about him being a director of Givana Prestige and he asked to be removed, and that Frank Criniti advised Gino Cassaniti, who said he would sort it out. Frank Criniti gave evidence that David Rizk had no involvement in the management of Givana Prestige (T 523.31-37). Frank Criniti's evidence was corroborated by David Rizk in his evidence in chief (T 904.41-905.31). The plaintiffs again rely on this as evidence of Gino Cassaniti's involvement. (Gino Cassaniti points to inconsistency in the evidence as to how David Rizk came to be appointed - see below.)

Incorporation of Ignite Promotions - January 2012

1. Ignite Promotions was incorporated on 25 January 2012. The Banq Address was, for the period 25 January 2012 to 2 April 2014, the registered office for Ignite Promotions (Ex K at 32163). Banq was the tax agent for Ignite Promotions (Ex K at 32171).

Incorporation of The Great Brothers - January 2012

1. The Great Brothers was incorporated on 16 January 2012 with the Banq Address as its registered office (Ex K at 50396). Michael, Andre and Laurance Abou-Antoun are recorded as company director and secretary from 16 January 2012. From 19 April 2013, Laurance Abou-Antoun remained as sole director and secretary.

Renewal of Givana Prestige's motor dealer's licence - February 2012

1. On 7 February 2012, Ivana Cassaniti signed a declaration, purportedly as the director of Givana Prestige, for the renewal of Givana Prestige's motor dealer's licence. I note that this occurred after the date on which the Form 484 later lodged (23 February 2012) with ASIC records Ivana Cassaniti as having ceased as a director of the company (i.e. on 18 January 2012). (The plaintiffs say that Ivana Cassaniti renewed the licence as the director of Givana Prestige in full knowledge and understanding of her actions in that capacity; and that her evidence that the signatures on those forms may not have been hers was false - see at T 1166-1168 (see below).)
2. On 9 February 2012 the licence renewal was lodged (Ex K at 74716). The document declares Ivana Cassaniti the director of Givana Prestige (Ex K at 74717). A lay comparison of the signatures on the 2010 application and the 2012 licence renewal suggest they are very similar (see at 74720 and 74713). The declaration contained the following certification: I certify that the particulars and answers given in relation to this annual statement are correct and complete and during the last 12 months the licensee has genuinely carried on the business to which this licence relates…
3. There is evidence to the effect that Givana Prestige commenced purchasing vehicles from Auswide on 6 January 2012 (see Aris Zafiriou's affidavit sworn 21 March 2017 at [52(b)]).

Change of director of Rackforce - March 2012

1. On 15 March 2012, Christopher Cherry replaced Frank Scuteri as director of Rackforce.

Change of registered office of LAM Haulage - April 2012

1. From 9 April 2012, LAM Haulage's registered office was the Banq Address

Change of director of Auswide - May 2012

1. Aloeseiafi Faanoi replaced Frank Criniti as sole director and company secretary of Auswide on 21 May 2012 (who it will be remembered had been appointed director of Zagoonda shortly prior to its liquidation).

Change of director of Givana Prestige - May 2012

1. On 10 May 2012, Frank Criniti became the sole director and secretary of Givana Prestige. (Pausing here, this is some months after Givana Prestige had commenced purchasing vehicles from Auswide.) Frank Criniti's evidence was that Gino Cassaniti told him that he had this company and that the purpose of it being put into his (Frank Criniti's) hands was that "[Auswide] had too much debts. The cars have to be moved out properly and transferred into Givana Prestige" in order to "continue buying and selling vehicles for tax saving purposes" and operating a motor vehicle business (at T 521.25-35; 522.25-34). Gino Cassaniti's Counsel cross-examined Frank Criniti in effect on the basis that Givana Prestige was indeed Gino Cassaniti's (inactive) company. Frank Criniti's evidence (see below) is that Gino Cassaniti directed that Auswide be shut down.
2. There was cross-examination by Gino Cassaniti's Counsel to suggest that Auswide was shut down because Frank Criniti was incurring too much expenditure on luxury car purchases - Frank Criniti's retort in effect was that Gino Cassaniti and his family members or associates had also been acquiring vehicles through Auswide (see below). Nothing here turns on the precise nature of the vehicle transactions, save to note that on either version of events it would appear that Gino Cassaniti was involved in the circumstances in which Frank Criniti took control of Givana Prestige (which appears inconsistent with Gino Cassaniti having little involvement in the affairs of Banq or associated companies at the time).

Incorporation of RCG CBD - 16 May 2012

1. RCG CBD was incorporated on 16 May 2012, with its directors and shareholders on incorporation being recorded as Gino Cassaniti and George Khalil (though George Khalil purportedly ceased as a director that same day).

Incorporation of Involved Recruitment - 16 May 2012

1. On the same day that RCG CBD was incorporated, Involved Recruitment was also incorporated, with George Said, George Khalil and Gino Cassaniti as its directors (although George Said and George Khalil purportedly ceased as directors on that same day).

Referral of Tanya and Michael Borg to Banq - 2012

1. By 2012, Michael Borg had been carrying on an excavation and demolition business for a few years through Mikhael Antoun Pty Ltd (later named Demolition) and Excavation (formerly named Borg Civil Pty Ltd). He was 23 years old. His wife, Tanya Borg was 20 years old (and her Counsel emphasise that she was then working three jobs (at doctors' surgeries and at a sports store), taking care of their children, and studying commerce and business).
2. By 2012, various items of equipment had been purchased for use in the business of Excavation. The equipment was recorded in the books of Excavation as assets of Excavation but the Borg Parties say (and Tanya Borg's understanding was) that the items of equipment were in fact owned or had been paid for by Michael Borg personally. (It is submitted by the Borg Parties that this accords with common experience, especially in circumstances where a business is commenced before a company's incorporation.) I have referred above to the Loan Agreement dated 3 July 2008 which records that Michael Borg intended to advance $2 million to Excavation (Ex 21).
3. In 2012, Tanya Borg and Michael Borg were referred to Banq (by a Charlie Musket). They attended a meeting in early to mid 2012, at which Tanya Borg met Fred Khalil for the first time. (The Borg Parties say that, contrary to the plaintiffs' submissions at [460], there has never been any evidence from Tanya Borg in relation to Peter Abboud or his involvement in any transactions pertaining to the Borg Parties.)

Advice given to Tanya Borg and Michael Borg by Fred Khalil

1. Tanya Borg's evidence is that Fred Khalil advised the Borgs that a new company would be set up called Borg Civil Australia Pty Ltd to operate the business going forward; that all assets would be transferred to a new company as trustee, called Borg Family; that the employees would be put in a company called Borg (NSW); that Tanya Borg would be the director of Borg Family; and that Fred Khalil would take care of it all.
2. The Borg Parties emphasise that, on Tanya Borg's evidence, there was no advice given by Fred Khalil (or by anyone else) to Tanya Borg or Michael Borg as to any tax benefits from the restructure that was proposed (cf plaintiffs' submissions at [602] and [603]). It is said that this is a further distinction between the position of the Borg Parties and that of other defendants (such as Frank Criniti and the AKA Parties) in respect of whom the plaintiffs allege that tax advice was given.

Incorporation of Borg Family and Borg Civil - 21 May 2012

1. Borg Family was incorporated on 21 May 2012. The Banq Address was its registered office from incorporation until 6 April 2017 (see ASIC extract, Ex K at 33973). The Borg Parties say that it is and has been since its incorporation the holding company of the assets (such as trucks), which are used by Borg Civil in its business. Tanya Borg was its director from 21 May 2012 until 21 April 2017, when Michael Borg became its director.
2. Borg Family is the corporate trustee of the Borg Family Trust. The trust deed for the Borg Family Trust was signed on 21 May 2012 by: Tanya Borg as the director and secretary of Borg Family; Michael Borg as the appointor; and Gino Cassaniti (witnessed by Fred Khalil) as settlor of the trust (Tanya Borg's affidavit sworn 4 December 2018; Ex K at 36575-36598). (The Borg Parties say that, absent any evidence connecting the Borg Parties to Gino Cassaniti in 2012 and having regard to Tanya Borg's evidence that she did not meet Gino Cassaniti until 2014, this document is of no assistance to the plaintiffs in proving that Gino Cassaniti advised the Borg Parties at the relevant time (cf the plaintiffs' submissions at [468]).)
3. Borg Civil was incorporated on the same day and from then carried on business in the area of excavation and haulage (Ex K at 33976). On incorporation (and at all times since then) its director and secretary was Michael Borg. In 2015, Borg Civil Finance Pty Ltd replaced Michael Borg as the company's sole shareholder. From incorporation until 27 February 2017 (when its registered office became that of its new accountants), Borg Civil's registered address was the Banq Address.
4. Banq was the registered tax agent for both Borg Family and Borg Civil (Ex K at 34153-34154).

Transfer of equipment

1. Tanya Borg's deposed in her affidavit sworn 4 December 2018 at [32] that, shortly after Borg Family's incorporation, Fred Khalil advised her that "your accountant has recorded the equipment as being owned by the Company (Excavation) not Michael. I will work out the best way to transfer the property to the new company".
2. In fact, the Borg Parties say that the evidence shows that the correct position was different to Fred Khalil's initial understanding. It is said that it is probable that Fred Khalil initially did not know of Michael Borg's loans to Excavation for the purchase of the equipment (referring to the Loan Agreement dated 3 July 2008). It is said that Fred Khalil's later appreciation that any transaction to effect a transfer of assets from Excavation to Borg Family would need to involve the accounting of those moneys to Michael Borg evidently complicated any such transaction; and it is submitted that this appreciation no doubt motivated Fred Khalil in due course to advise the Borg Parties to change course in effecting the transfer of assets (see below).

Incorporation of Bluemine - 7 June 2012

1. Bluemine was incorporated on 7 June 2012, with its sole director and secretary being Andrew Barsa (the cousin of Peter Abboud and Michael Abboud), who ceased those positions when Gino Cassaniti was appointed on 1 April 2013 (see Form 484 dated 1 April 2013 and lodged with ASIC on 20 July 2013, Ex K at 51467). As noted above, the plaintiffs contend that Gino Cassaniti was a deemed or shadow director of Bluemine from 2012.
2. Bluemine was incorporated (according to Andrew Barsa) on the advice of Peter Abboud for the purported purpose of purchasing trucks from a company (Jian Holdings) associated with George Abboud. (The plaintiffs' allegations in relation to the proposed vehicle purchases are dealt with in [221(d)] of the Bluemine third further amended statement of claim.) The evidence of Andrew Barsa was that the vehicles were used in the business of an associated entity, Sydney Sand and Soil Pty Ltd (Sydney Sand and Soil).

Bluemine purchase of vehicles from Jian Holdings - June 2012

1. It is said by the relevant defendants that the purchase (of three trucks and trailers from Jian Holdings) occurred by way of a transfer of $590,000 from Banq to Bluemine and then from Bluemine to Banq on 25 June 2012. Tax invoices were issued by Jian Holdings to Bluemine in respect of the purported sale of these vehicles. Bluemine claimed a GST credit in respect of the transaction by way of a BAS return prepared by Peter Abboud. (The plaintiffs emphasise that no commercial explanation for the payments being effected in this way was given.)
2. The plaintiffs maintain that Peter Abboud used Bluemine to lodge a BAS with the ATO and obtain a GST refund for the purported sale and purchase of the vehicles from Jian Holdings. The plaintiffs say that the obvious inference is that the purported invoices issued by Jian Holdings were false (complaint is made - see below - as to the lack of reference to false invoices in any pleading).
3. The position taken by Michael Abboud and Jillian Edwards (when they were still defendants in the Proceedings and had filed brief outlines of written submissions) was that the transfer of the vehicles from Jian Holdings to Bluemine was done at the direction of George Abboud; that the funds which were required to enable the vehicles to be purchased in the first place had been lent to Tepall Pty Ltd (Tepall) by George Abboud, which loan or loans(s) remained unpaid. The submission there made was that there must have been some consideration payable to acquire the vehicles and that that consideration was simply to meet the unpaid loan owing to George Abboud; and that when two of the vehicles were ultimately sold, the sale proceeds "flowed back" to Abboud family members; and the third truck was transferred to Jola Holdings (which it is said was liable to repay the loan to George Abboud). (It was said that this was part of the divorce settlement between Jillian Edwards and George Abboud.) I note those submissions simply for completeness, as those former parties did not play any active role in the proceedings.

Earth Civil change of director - July 2012

1. By a form dated 1 January 2013 but lodged with ASIC on 28 May 2013, Gino Cassaniti was recorded as sole director, secretary and shareholder of Earth Civil from 1 July 2012. (It is noted that Gino Cassaniti denies that he was the sole director and shareholder of Earth Civil from 1 July 2012).

Excavation change of tax agent and director - July 2012

1. On 16 July 2012, Banq became the tax agent for Excavation, until its winding up on 6 March 2013 (Ex K at 33733).
2. On 31 July 2012, Aloeseiafi Faanoi became Excavation's director.

Valuation of equipment used by Excavation - August 2012

1. On 17 August 2012, Hymans Asset Management (Hymans), a third-party valuer, issued a valuation report of Excavation (the Hymans Report) (Ex 20, Tab 9). The Hymans Report predates the issuing of the various Recipient Created Tax Invoices (RCTIs), the transfers to RCG CBD and the payments to Excavation which are here impugned (see below).
2. Relevantly, Tanya Borg's evidence is that the Borg Parties were advised by Fred Khalil to obtain a valuation of Excavation's equipment, namely that Fred Khalil told Tanya Borg that "before it is transferred, you need a valuation. I will organise that for you but it will cost around 10 thousand" (Tanya Borg's affidavit sworn 4 December 2018 at [33]). The Hymans Report states that it was "prepared and on behalf of Fred Khalil" (which corroborates Tanya Borg's evidence above).
3. The Hymans Report valued Excavation's assets at $1,440,500 (encumbered). Appendix A to that valuation listed and valued (excl of GST) the assets which were transferred from Excavation to Borg Family. The Borg Parties note that the Hymans Report's authenticity or date of issue was not challenged.
4. Tanya Borg deposed (at [34]) that, after the Hymans Report was obtained, Fred Khalil told her "I have the valuation, I can structure those payments, I have a company called RCG, I can use that to make the payments to the old company [i.e., presumably Excavation]".

Jian Holdings change of director - August 2012

1. On 16 August 2012, Aloeseiafi Faanoi replaced Jillian Abboud as sole director and secretary of Jian Holdings.

Excavation change of name - September 2012

1. On 24 September 2012, Fred Khalil caused Borg Civil Pty Ltd's name to be changed to "Excavation Pty Ltd" (Ex K at 34052). (As to the plaintiffs' complaint (in their submissions at [1131]) that Tanya Borg was silent as to the reasons for the name change, the Borg Parties submit that those facts are irrelevant to the issues in dispute in this proceeding and Tanya Borg was not cross-examined about it by the plaintiffs.)

Jian Holdings wound up - October 2012

1. On 26 October 2012, shortly after the transfer of the vehicles from Jian Holdings to Bluemine, Jian Holdings was wound up pursuant to a creditors' voluntary winding up. Jian Holdings did not remit the equivalent GST purportedly collected from Bluemine to the ATO.

Impugned Reliance Cleaning payments - July 2012 to May 2013

1. In the period from July 2012 to May 2013, Reliance Cleaning (of which Peter Abboud was a director), made 64 payments to RCG CBD, totalling $1,618,254.35 (Table 3.11). The plaintiffs say that there was no genuine commercial documentation recording any of those transactions and that Reliance Cleaning was just another of the conspirators' "invoicing companies".

Kamikaze to RCG CBD payments - July 2012 to May 2013

1. At [198] of the RCG CBD third further amended statement of claim, the plaintiffs claim that in the period from 31 July 2012 to 21 May 2013, Kamikaze made payments to RCG CBD totalling $364,656.20 (as identified in Schedule C). The ASIC company extract for Kamikaze identifies that at the time of the payments from Kamikaze to RCG CBD, Fred Khalil was the sole director and company secretary of Kamikaze. KTDH Pty Ltd (KTDH) is the sole shareholder of Kamikaze (Ex K at 31902). At [33] of his affidavit sworn 25 March 2019, Fred Khalil attests that he earned $568,350 from Kamikaze that was paid from KTDH to Sivasli (Fred Khalil being the sole director, secretary and shareholder of Sivasli). The plaintiffs point to the absence of any explanation in Fred Khalil's affidavit for either the payments by Kamikaze to RCG CBD or from RCG CBD to Sivasli identified above.

Payments in and out of Earth Civil - September 2012 to May 2013

1. Between September 2012 and May 2013, Andre Abou-Antoun caused AKA Civil to deposit approximately $965,000 in Earth Civil's bank account. Over the same period, Andre Abou-Antoun and Michael Abou-Antoun withdrew approximately $965,000 cash from Earth Civil (see Tables 1.1 to 1.3 of the plaintiffs' submissions). (The plaintiffs say that there is clear evidence of Gino Cassaniti's direct involvement in the payments in and out of Earth Civil - see below.)

RCG CBD to Banq payments - September 2012 to May 2013

1. In the period from 10 September 2012 to 30 May 2013, RCG CBD made payments to Banq totalling $920,415.00 (see Table 3.2).

RCTIs issued by Borg Family - 25 September 2012

1. On 25 September 2012, a number of RCTIs were issued by Borg Family.
2. First, RCTI numbered one was issued, directed to Excavation and describing the relevant item as "Truck Loader-Bobcat-T870-2012" for $92,000 (excl GST). The value ascribed to that item was said to be consistent with the value set out in the Hymans Report. That item was recorded on Borg Family's General Ledger as a purchase from "BORGCIVIL"; and "BORGCIVIL" was listed as a trade creditor in relation to that item.
3. Second, RCTI numbered two was issued. It was directed to Excavation and described the relevant item as "Skid Steer Loader-Takouchi-TL-150 High Flow" for $43,000 (excl GST). The value ascribed to that item was consistent with the value set out in the Hymans Report. That item was recorded on Borg Family's General Ledger as a purchase from "BORGCIVIL"; and "BORGCIVIL" was listed as a trade creditor in relation to that item.
4. Third, RCTI numbered three was issued. The document in evidence does not bear a description, but its GST-exclusive value matches the value of the "Skid Steer Loader-S185 Turbo", which the Borg Parties note matches item 3 of Appendix A to the Hymans Report with the same description. (It is noted that there was no challenge to Tanya Borg's evidence (at [17] of her affidavit sworn 27 February 2020). The Borg Parties say that it should be accepted that RCTI numbered three was issued in relation to the purchase of the "Skid Steer Loader-S185 Turbo". That item was recorded on Borg Family's General Ledger as a purchase from "BORGCIVIL"; and "BORGCIVIL" was listed as a trade creditor in relation to that item.
5. Pausing here, the Borg Parties complain that the plaintiffs have made submissions in relation to the RCTIs, which have not been pleaded and they oppose the expansion of the plaintiff' case in this regard. In any event, they say that the question in this case is not whether Borg Family was or was not able to issue RCTIs or whether the better course would have been for Excavation to issue invoices; rather, the question is a narrow one (namely, whether the issuing of RCTIs provides any support for the claim that Borg Family's transfers to and from RCG CBD were part of the implementation of the Scheme Recommendation - and they say that it does not). It is said that the RCTIs were in fact issued on or about the dates they bear and that they generally accorded with a valuation obtained from an independent valuer.

First of the impugned transfers to and from RCG CBD - 25 September 2012

1. In September and October 2012 four payments were made (see Table 3.5) amounting to $585,000 by Borg Family and Borg Civil to RCG CBD and then by RCG CBD of $580,000 to Borg Family.
2. On 25 September 2012, the same day as the RCTIs were issued, the sum of $185,000 was transferred to RCG CBD. RCG CBD's bank statement records the description for that payment as "BORG CIVIL PTY LTD" (Excavation's original name). The amount was recorded as comprised by three amounts matching RCTIs 1-3 in Borg Family's General Ledger (although the Borg Parties accept that those records appear to be incorrect in light of the payments later made to Excavation). The transfer of $185,000 was recorded in the General Ledger as a loan.
3. On the same day, $185,000 was transferred by RCG CBD to Borg Family's account.
4. It was put to Tanya Borg in cross-examination that the return of these funds was not a "refund", a proposition with which she agreed. However, the Borg Parties say that the characterisation of those moneys (and the other moneys transferred by RCG CBD to Borg Family) as a "refund" by the witness is immaterial in circumstances where she had given evidence that the moneys would be returned to Borg Family. The Borg Parties submit that the fact that the payments made by Borg Family to RCG CBD were returned is not in question, but that the correct characterisation of the payment is important. It is submitted that the more likely explanation is that the payments were made to RCG CBD to effect a transaction as explained by Tanya Borg, but that the transaction failed.
5. The Borg Parties note that the plaintiffs rely heavily on the entries concerning the $185,000 in Borg Family's General Ledger. The Borg Parties say that those entries are the only records that correlate with the contention that the $185,000 remained the only payment for the items in RCTIs 1-3 (which forms the factual basis for the plaintiffs' contention that that transaction was made pursuant to the Scheme Recommendation). The Borg Parties accept (as did Tanya Borg in her evidence) that at the time that the payment of $185,000 was made it was in respect of RCTIs 1- 3 (which they say was based on Fred Khalil's advice). However, I foreshadow that the Borg Parties contend the factual analysis does not end here, and consideration must be had to what they refer to as the "change of course" following the September/October 2012 transfers.

Second of the impugned transfers to and from RCG CBD - 28 September 2012

1. On 28 September 2012, the sum of $180,000 was transferred to RCG CBD. RCG CBD's bank statements record that payment as bearing the description "BORG CIVIL PTY LTD". That payment is not recorded in any of the BAS returns lodged by Borg Family (which is relied upon by the Borg Parties as undermining the contention that BAS returns were lodged by reference to the payments to RCG CBD). It was recorded in the General Ledger as a loan.
2. Pausing here, the plaintiffs submit (at [1140]), that Tanya Borg's uncertainty about a particular note on the General Ledger as to this $180,000 payment (which note the Borg Parties point out Tanya Borg did not make) was "not a genuine answer". The Borg Parties point out that Tanya Borg gave evidence as to her belief that the payments from Borg Family were for repayment of loans which Excavation owed to Michael Borg, for example at T 1307.5-10: I believe we purchased assets from Excavation, that's what the payments from Borg family were, and the repayments back for the repayment - Michael directed in that way for the repayment of loans which Excavation owed to him, because he bought the assets. So, I'm not too sure what thing - because, like I said, we didn't do these entries on here. They weren't looked after by us, but from my understanding of how it happened, was just so, for a loan to Michael.
3. The Borg Parties say that there is no explanation as to the reason why the plaintiffs maintain that that answer was not "genuine"; no explanation as to why that proposition was not put to her; no evidence from anyone as to what the correct characterisation of the payment ought to have been, or indeed, why any of that matters. It is said that that assertion against Tanya Borg should be rejected, especially when it was not put to her in cross-examination.

Demolition wound up - October 2012

1. Demolition was wound up on 26 October 2012. Less than three months prior to its winding up, Aloeseiafi Faanoi replaced Andre Abou-Antoun as the sole director of Demolition on 8 August 2012. I note the ASIC Record states Gino Cassaniti became director on 15 September 2012 until 13 June 2013 but also records the company being externally administered as of 26 October 2012 (Ex K at 11210).

RCTIs - October 2012

1. On 1 October 2012, RCTIs numbered 14, 33 and 35 were issued by Borg Family.
2. RCTI numbered 33 was directed to Excavation and described the relevant item as "Earthmover-V1055-5B" for $41,240.96 (excl GST) (Ex 20, Tab 17). The value ascribed to that item was slightly lower than the value set out in the valuation report. That item was recorded on Borg Family's General Ledger as a purchase from "BORGCIVIL".
3. RCTI numbered 35 was directed to Excavation. It described the relevant item as "Truck-Powerslat 7700" for $67,994.74 (excl GST) (Ex 20, Tab 18). The value ascribed to that item was slightly lower than the value set out in the valuation report. That item was recorded on Borg Family's General Ledger as a purchase from "BORGCIVIL".
4. RCTI numbered 14 was directed to Excavation. It described the relevant item of equipment as a "Road Roller YZK10A" for $90,933.55 (excl GST). That item is recorded on Borg Family's General Ledger as a purchase from "Borg Civil Pty Ltd".

Transfers to and from RCG CBD - October 2012

1. On 3 October 2012, RCG CBD transferred $75,000 to Borg Family (Ex 20, Tab 19). That amount is recorded as a loan on Borg Family's bank account, RCG CBD's account and on Borg Family's General Ledger.
2. On 5 October 2012, $220,000 was transferred to RCG CBD (Ex 20, Tab 19). RCG CBD's bank statements record that payment on 8 October 2012 as bearing the description "BORG CIVIL PTY LTD" (Ex 20, Tab 20). That transfer is recorded as "RCG" in the General Ledger.
3. There is reference to the amount of $220,186.18 for RCTIs numbered 14, 33 and 35. However, the Borg Parties note that that the amount set out on a document dated 8 October 2012 from NAB matches the amounts set out in the General Ledger (Ex 20, Tab 21).
4. On 10 October 2012, the sum of $320,000 was transferred by RCG CBD to Borg Family (Ex 20, Tab 22). That amount was described in the General Ledger as a "RTGS" (a reference to a same-day transfer). It was recorded as a loan. That was the final transfer between RCG CBD and Borg Family.
5. The Borg Parties say that, contrary to the submission at [212(e)] of the plaintiffs' submissions, the total of the transfers from Borg Family to RCG CBD in the period 15 September 2012 to 10 October 2012 was $585,000. It is noted that $580,000 was not transferred to Borg Civil, as claimed at [212(e)] of the plaintiffs' submissions. The Borg Parties also submit the plaintiffs' submission at [212(e)] is inconsistent with their pleadings at [189] of the RCG CBD third further amended statement of claim and the bank statements in evidence.

"Change of course" - November 2012

1. As foreshadowed above, the Borg Parties say that it appears to have been after the payment on 10 October 2012 that a change of course was adopted in relation to the payments for the equipment. In this regard, they point to Tanya Borg's evidence that, Fred Khalil told her (Tanya Borg's affidavit sworn 4 December 2018 at [44]): I think we need to do something else regarding the payment for the old Borg Civil [i.e., Excavation] assets, I will think about it and get back to you.
2. It is said by the Borg Parties that the October transfers were recognised as a "dead end" as a means of effecting Fred Khalil's advice. It is submitted that the reason for that change of course (not explained by Fred Khalil) is likely to be that (when faced with effecting a multi-party transaction involving Borg Family, Excavation and Michael Borg), Fred Khalil considered that the payments should be made directly to Excavation, which is ultimately what happened. In effect, it is said by the Borg Parties that Borg Family was advised to re-do the transactions; and that it did so.
3. From 2 November 2012 onwards, and it is said consistently with the above, the Borg Parties say that Borg Family started making payments "anew" for all of the assets that Excavation transferred to it, including the assets set out in RCTIs 1-3 above. It is submitted that this is the finding that best accords with the documents and with the whole of the evidence, including the communications with the ATO (cf plaintiffs' submissions [1178]-[1184]).
4. The Borg Parties again pose a rhetorical question, namely as to why (having regard to the above sequence of events) if the Borg Parties were motivated to partake in a dishonest design as alleged, they changed course at this juncture; and stopped after a few payments to RCG CBD only to proceed to pay moneys directly to Excavation; i.e., it is suggested that there is no reason for them to have limited their dishonesty and not proceeded to pay all of the RCTIs to RCG CBD.

Borg Family's 2012/2013 BASs and Tax Return

1. It is relevant at this point to note the timing of the BAS returns for Borg Family, and its tax return, in the context of the payments made to Excavation. The Borg Parties note that the Borg Family lodged its BAS on the accrual bases and, in accordance with the RCTIs, it issued rather than in accordance with any payments made by it to RCG CBD (cf plaintiffs' submission at [483]).

September 2012 quarterly BAS - lodged 2 November 2012

1. Borg Family's quarterly BAS return for the period from 1 July 2012 to 30 September 2012 claimed $216,600 in capital purchases, for the $185,000 payment from Borg Family to RCG CBD on 25 September 2012 and an invoice for $31,600 to Capital Hill Motors (cf plaintiffs' submissions at [665(a)]). The total GST on purchases was $19,782. The claim resulted in a GST refund of $14,665 to Borg Family (Ex K at 34390; Ex W at 13B). The plaintiffs note that the BAS lodged is consistent with the entries in the Borg Family General Ledger.
2. This BAS was first lodged on 2 November 2012 contemporaneously with the first of the series of the payments from Borg Family to Excavation. (Pausing here I note that the Table at Schedule 4 to the Borg Parties' submissions lists and breaks down each of the BAS returns lodged by Borg Family and supports their submission that they were lodged by reference to the RCTIs and not the moneys transferred to RCG CBD.)

October 2012 BAS - lodged 2 November 2012

1. The October 2012 monthly BAS return claimed the sum of $220,186.18 in capital purchases (the total of the RCTIs 14, 33 and 35). The plaintiffs note that this includes the $220,000 payment from Borg Family to RCG CBD on 8 October 2012. The Borg Parties note that the amount claimed matches the amount in the NAB document dated 8 October 2020. The total GST on purchases was $20,017. The claim resulted in a GST refund of $20,017 which was paid to Borg Family (Ex K at 34391; Ex W at 13B). Again, the plaintiffs note that the BAS lodged is consistent with the entries in the Borg Family General Ledger (Ex W at 29-33). That BAS was lodged on 2 November 2012, which is after the date of the NAB letter.

October 2012 to December 2012 quarterly BAS - lodged 8 February 2013

1. A quarterly BAS for the period October 2012 to December 2012 was lodged by BF first on 8 February 2013 (after the payment of cheques 8, 9, 10 and 11), which claimed $642,639.50 in capital purchases (including a purchase of a Toyota Hilux, not from Excavation, for $57,439.50). The balance of that BAS was referable to RCTIs 17, 25, 26, 27, 28, 29, 30, 31, 32, 33, 36, 37 and 38 issued to Excavation. The total of capital purchases claimed was the rounded figure of $642,640. The net credits amounted to $57,922.

November 2012 monthly BAS - lodged 10 December 2012

1. A monthly BAS for November 2012 was lodged by Borg Family on 10 December 2012 (after the payment of cheques 8, 9, 10 and 11 and 15), which claimed $624,250 in capital purchases, which included one purchase totalling $44,000 (paid for in three payments) that do not relate to Excavation. The balance of that BAS was referable to RCTIs, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22 and 23 issued to Excavation. The total of capital purchases claimed was the rounded figure of $624,250. The net credits amounted to $56,900.

Borg Family payment of $810,000 to Excavation - November/December 2012

1. The Borg Parties note that, in the period from 2 November 2012 to 11 December 2012, Borg Family drew four cheques in favour of Excavation in the total amount of $810,000. Each of the transactions is recorded as having been made on Borg Family's bank account statements and on Excavation's bank account statements (see Ex 22).

RCTIs - 1 November 2012

1. On 1 November 2012, further RCTIs (numbered 4-23) were issued to Excavation. (They are listed in Schedule 1 to the Borg Parties' submissions.)

State Wide Design to RCG CBD to Statewide Printing payments - November 2012 to March 2012

1. From 15 November 2012 to 7 March 2012, State Wide Design made four payments to RCG CBD, totalling $491,961.71. From 16 November 2012 to 13 March 2013, RCG CBD made five payments to Statewide Printing (that is, the payment of $83,811.27 on 16 November 2012, $94,900 on 19 November 2012, $136,363 on 7 March 2013, $56,800 on 11 March 2013 and $75,349 on 13 March 2013) totalling $447,223.27 (exactly ten-elevenths of the amount paid in) (see Table 3.4).
2. The only invoices produced by Statewide Printing (in answer to a notice to produce issued on 20 June 2017) were: an RCG CBD invoice numbered #00001121 in the amount of $92,192.40 (Ex K at 36379) and an RCG CBD invoice numbered #0001202 in the amount of $104,405.31, both for "Management fees" (Ex K at 36380; see also notice to produce, Ex K at 36372).
3. Further, on 13 and 15 November 2012, Peter Abboud sent emails to Mario Sande, with the subject RCG CBD Invoices - State Wide Design, requesting part payment of the invoices (Ex K at 36381): MARIO PLEASE PAY YOUR BILLS … Mario can you please part pay to start with. Thanks
4. On 15 November 2012, Mario Sande forwarded the email chain from Peter Abboud to Marie Catalano with attachments "Inv00001202.pdf", "Inv00001121.pdf" and "Inv00001009.pdf".
5. In respect to those invoices and payments, Mario Sande's evidence was that: the amount of the payment was determined on each occasion by Banq (T 778.30) from one of Gino Cassaniti, Fred Khalil or Peter Abboud (T 779.5); he would receive an invoice via fax, email or it would be dropped off to him in person from the accounting firm (T 778.33-38); and payments were on occasion prompted by Peter Abboud (T 779.33-780.19).
6. At the relevant time, according to the ASIC register, Gino Cassaniti was the director of RCG CBD. However, the plaintiffs submit that George Khalil was a director of RCG CBD and acted as the director from 16 May 2012 (from incorporation) until 28 May 2013 when the Form 484 was lodged notifying ASIC of the change in directorship (Ex K at 31691-31693). George Khalil was the sole signatory and the controller of the RCG CBD bank account (Ex K at 31543-31544).
7. The plaintiffs say that the five payments from RCG CBD to Statewide Printing could only have occurred with the knowledge and concurrence of George Khalil as to every element of the transaction, including their purpose. In particular, it is said that George Khalil must have known the reason the payment from State Wide Design was coming in and that it was to be paid on to Statewide Printing minus the 10% fee which occurred in accordance with the Scheme Recommendation and the conspiracy. The plaintiffs say that George Khalil must have known that the transactions with Statewide Printing involved $44,744.44 being kept by RCG CBD to look like 10% GST (which they say he knew would not be paid on to the Commissioner).

RCG CBD to Kito Investments payments - November 2012 to May 2013

1. The RCG CBD third further amended statement of claim states at [171] that payments by RCG CBD to Kito Investments occurred from 20 November 2012 to 13 May 2013 totalling $140,000, some of which came into RCG CBD from Reliance Cleaning (Tables 3.11 and 3.14). As far as the liquidator has been able to ascertain, Kito Investments provided no benefit to RCG CBD for those payments. The ASIC company extract for Kito Investments shows that its sole director and company secretary is Fred Khalil's wife, Katherine Khalil (Ex K at 30253).

Bluemine emails re AKA invoices - November 2012 to May 2013

1. On 27 November 2012, an email was sent from bluemineptyltd@gmail.com email to Andre Abou-Antoun attaching invoices to AKA NSW and AKA Civil (#AKAC/001 for $467,500; #AKAN/001 for $330,000 and #AKAN/002 for $652,825; #AKAN/003 for $767,760.99 and #AKAN/004 for $529,731.39) for "Management./Supervision charges". The email stated, "Hi Andre can you please pay the bills attached" (Ex K at 56338).
2. On 6 December 2012, Komel Kohli (signed off as an accounts manager of AKA Civil) sent an email to bluemineptyltd@gmail.com, copying Andre Abou-Antoun and Peter Abboud, attaching a remittance from AKA NSW in the sum of $529,731.39 on that date (Ex K at 56348).
3. On 11 December 2012, Komel Kohli sent an email to Peter Abboud, copying Andre Abou-Antoun, attaching a remittance from AKA NSW for $652,825.83 on that date (Ex K at 56350).
4. On 14 December 2012, Peter Abboud sent an email to Andre Abou-Antoun with the subject heading "BLUEMINE LAST INVOICE" requesting that Andre Abou-Antoun pay the last invoice to a different Bluemine account, stating that there had been a change of account (Ex K at 56347). An email was sent from bluemineptyltd@gmail.com later on the same day requesting Andre Abou-Antoun to "fix the last attached invoice" (Ex K at 56345).
5. On 17 December 2012, Komel Kohli sent an email to Peter Abboud, copying Andre Abou-Antoun, attaching a remittance from AKA NSW for $500,000 on that date (Ex K at 56352).
6. On 17 January 2013, Komel Kohli sent an email to Peter Abboud copying Andre and Michael Abou-Antoun attaching a remittance from AKA NSW for $267,760.99, stating (Ex K at 36354-56355): Good Morning Peter, Please find attached the remittance for inv #AKAN/003 You are requested to put the amount back in the following account: Account Name: Lam Haulage Pty Ltd…
7. On 20 March 2013, an email was sent from bluemineptyltd@gmail.com to Andre Abou-Antoun and Komel Kohli, stating "hi guys please pay attached" attaching three invoices to AKA Civil from Bluemine (#AKAC/003 for $333,500; #AKAC/004 for $428,000 and #AKAC/002 for $342,500), again all for "Management./Supervision charges" (Ex K at 56360-56363).
8. On 18 April 2013, Komel Kohli sent an email to "blue mine", copied to Andre and Michael Abou-Antoun, attaching a remittance of the same date from AKA Civil for $342,500 (Ex K at 56364).
9. On 1 May 2013, Komel Kohli sent an email to Peter Abboud, again copied to Andre and Michael Abou-Antoun, attaching a remittance from AKA Civil for $333,500 on 1 May 2013, stating (Ex K at 56356): Hi Peter, Please find attached the remittance for Inv #AKAC/003. We want that money back asap in the following account: Account name: AKA NSW Pty Ltd…

Bluemine to Thailand payments - November 2012 to February 2013

1. In the period from 28 November 2012 to 7 February 2013, Bluemine made three transfers to Thailand totalling $48,090.00 (Thailand payments) (Table 5.7).

RCTIs - December 2012

1. On 11 December 2012, further RCTIs (numbered 25-30) were issued to Excavation. They are listed in Schedule 2 to the Borg Parties' submissions.

RCG CBD to Sivasli payments - December 2012 to May 2013

1. The RCG CBD third further amended statement of claim states at [44] and [166] that from 19 December 2012 to 14 May 2013, RCG CBD paid to Sivasli the total sum of $201,000, some of which came into RCG CBD from Involved Recruitment (Tables 3.10 and 3.13). The ASIC company extract for Sivasli shows that Turkel Fidel was the director and secretary of Sivasli from 2 June 2011 to 18 December 2012 (Ex K at 30250). From 18 December 2012, Fred Khalil was the sole director, company secretary and shareholder of Sivasli. The plaintiffs note that the first payment from RCG CBD to Sivasli, of $100,000, occurred on 19 December 2012 (the day after Fred Khalil's appointment).
2. Sivasli, in its defence filed in the RCG CBD Proceeding (at [15]), admits receiving the payments and particularises that the payments received were payments owed by the plaintiff company and were paid to the defendant as directed. The plaintiffs point out that Fred Khalil did not give or adduce any evidence in support of that pleading; and say that there is no evidence that RCG CBD "owed" Sivasli anything.

Diamondwish transaction involving Elle Barikhan - December 2012

1. The impugned payments made from and to Diamondwish and Rackforce are identified at Tables 7.1 to 7.7 and 9.1 to 9.2, respectively, of the plaintiffs' submissions. One of the impugned Diamondwish and RCG CBD transactions (on which the plaintiffs place some emphasis) involves a payment on 21 December 2012 by RCG CBD to Diamondwish of $250,000; which was followed by a payment on 24 December 2012 by Diamondwish of $250,000 to Elle Barikhan (pleaded at [110] of the Diamondwish second further amended statement of claim) (see Table 7.4 of the plaintiffs' submissions).
2. Frank Criniti's evidence about this payment was that this occurred because Gino Cassaniti said to him (Frank Criniti) that he wanted to pay money to Barikhan but "then Gino didn't want to do it and said I had to do it, and this was the way it had to be done" and that "[i]t was done between Gino, Elle and a transaction from the Accounts Department at Head Office" (see at T 514). (The plaintiffs say that that payment could not have occurred without the knowledge and authority of George Khalil as the sole signatory to the bank account of RCG CBD and that it is to be inferred that the payment was to the benefit of Gino Cassaniti given that he was the sole shareholder of RCG CBD which paid the money to Diamondwish three days before the payment to Elle Barikhan. The plaintiffs describe this as "money laundering par excellence".)

Borg Family pays a further $200,000 to Excavation - December 2012

1. On 20 December 2012, Borg Family drew a further cheque in favour of Excavation in the total amount of $200,000, which was recorded on Borg Family's bank account statement.
2. The Borg Parties note that, as at 20 December 2012, a total of $1,041,609.27 (incl GST) in RCTIs had been issued and Borg Family had paid Excavation $1,010,000 by way of cheque (and had arranged $220,186 in asset finance).

Further RCTIs - December 2012

1. On 21 December 2012, further RCTIs (numbered 31-38) were issued to Excavation, which are listed in Schedule 3 to the Borg Parties' submissions. The total of RCTIs is $1,570,636.

AKA Parties and Bluemine payments - December 2012 to May 2013

1. AKA Civil and AKA NSW paid $3,851,818 to Bluemine between December 2012 and May 2013. During the same period, Bluemine paid $3,800,719 to the AKA Parties (i.e., MAL Land Group, LAM Haulage and The Great Brothers) (see Table 5.2).

RCG CBD to LFC Holdings payments - December 2012 to January 2013

1. Between 31 December 2012 and 9 January 2013, RCG CBD made payments to LFC Holdings (Peter Abboud was the sole shareholder, director and secretary of LFC Holdings) totalling $52,020. The plaintiffs note that there is no explanation for those transactions (and no record of any agreement between RCG CBD and LFC Holdings in relation to those transactions).
2. As to two of those payments (on 31 December 2012 and 8 January 2013) amounting to $45,910, the plaintiffs note that Peter Abboud did not address them in his affidavit sworn in these Proceedings.

Borg Family pays a further $150,000 to Excavation - 7 January 2013

1. On 7 January 2013, Borg Family drew a further cheque in favour of Excavation in the total amount of $150,000, which was recorded on Borg Family's bank account statement.

HCC Commercial Cleaning to RCG CBD to Investmint payments - January 2013

1. The RCG CBD third further amended statement of claim at [211] states that, on 23 January 2013 HCC Commercial Cleaning paid to RCG CBD $13,200; and on 24 January 2013 RCG CBD paid the same amount to Investmint (Table 3.6). The ASIC company extract for Investmint shows that, at the time of the HCC Commercial Cleaning payment, Fred Khalil was Investmint's sole director, secretary and shareholder, having been appointed to those positions on 5 October 2011 and ceasing on 19 February 2014 (Ex K at 53088).

Wenman Parties transactions - January 2013 to March 2013

1. Ignite Promotions made payments to RCG CBD in the period from 30 January 2013 to 6 March 2013, totalling $781,955. In the period from 5 February 2013 to 7 March 2013, RCG CBD made payments to Wenman Brimak totalling $710,868.20 (that is, the payment of $81,818.19 on 5 February 2013, $100,000 on 7 February 2013, $100,000 on 21 February 2013, $81,818.19 on 22 February 2013, $181818.19 on 28 February 2013 and $165,413.63 on 7 March 2013) (this being exactly ten-elevenths of $781,955) (see Table 3.3). The plaintiffs say that these transactions form part of the carousel of payments between Blackrock, Ignite Promotions, RCG CBD and Wenman Brimak.
2. There is in evidence an email dated 7 December 2012 from Vipul Parekh to Peter Abboud headed "Invoices for Ignite Promotions; From RCG CBD P/L" (Ex K at 36321). On 9 January 2013, Peter Abboud sent an email to Brenda Louwen of Ignite Promotions and Elias Nassar (director of Blackrock Media), with attachments "inv107.pdf, Ignite Inv0300914.pdf", in which email Peter Abboud writes: …. Can you please pay the attached when you have money in account. From Blackrock to ignite to invoices attached. Elias knows about this if you want to clarify.
3. The plaintiffs point to two tax invoices (#03009124 and #0000107) from RCG CBD to Ignite Promotions dated 30 June 2012 and 30 September 2012 for the total sum of $710,868.18 that are both described as for "labour hire" (Ex K at 36323-36324).
4. Further, there are four tax invoices from Ignite Promotions to Blackrock Media dated 30 January 2013, 20 February 2012, 27 February 2012 and 6 March 2012 for the total sum of $784,955 that are all described as for "[c]onsulting" (see Ex K at 36266-36269).
5. Blackrock Media recorded in its General Ledger as a cash disbursement (i.e., as a purchase) the sums it paid to Ignite Promotions (Ex K at 36280). Similarly, Ignite Promotions recorded as purchases the sums it paid to RCG CBD and Bluemine and recorded as cash receipts the sums it was paid by Blackrock Media (Ex K at 36332 to 33). The plaintiffs say that recording those transactions as purchases was false and that it is to be inferred that the reason they were recorded as purchases was part of an accounting process whereby they would be claimed as deductible expenses (noting that they were claimed as tax deductions).
6. The plaintiffs say that the RCG CBD payments to the Wenman Parties could only have occurred with the knowledge and concurrence of George Khalil as to every element of the transactions, including their purpose.

Winding up of Excavation - 27 February 2013

1. On 27 February 2013, Excavation was placed under external administration by way of a creditors' voluntary winding up, at which time Aloeseiafi Faanoi was the sole director (Ex K at 34052). Tanya Borg says the winding up occurred after all of Excavation's assets were transferred to Borg Family on Fred Khalil's advice.
2. A subsequent claim by Excavation's liquidators, Ozem Kassem and Jason Tang, was resolved as between the parties. The Borg Parties say (and I accept) that this is a neutral consideration.
3. The plaintiffs say that the liquidator's report (Ex V) records that the explanation provided by Michael Borg (a former defendant who did not give evidence in these Proceedings) at the time of Excavation's winding up was that Excavation transferred the equipment to Borg Family at his direction in consideration for, or in forgiveness of, a debt owed to him. The plaintiffs note that Borg Family's ledgers record that it paid for the equipment. The plaintiffs say that those ledgers were false; and that Borg Family did not pay for the equipment. (This issue relates to the impugned RCG CBD payments - see above). The plaintiffs note that Borg Family's ledgers were prepared and or reviewed by Banq; that Banq prepared the Borg Parties' taxation returns; and that Fred Khalil's evidence was that Gino Cassaniti "oversaw" the accounts (and taxation returns) prepared for clients. I refer in due course to Tanya Borg's evidence in cross-examination as to these transactions.
4. Complaint is made by the Borg Parties that the plaintiffs' submissions (at [1188] to [1190]), and all of the other submissions concerning the insolvency of Excavation, ought to have been, but were not, anticipated by pleadings. It is noted that the elements of the so-called Scheme Recommendation pleaded in the RCG CBD third further amended statement of claim at [148] do not involve the winding up of any entity other than RCG CBD. (Further, complaint is made that it was not put to Tanya Borg in cross-examination that Aloeseiafi Faanoi's appointment was part of any arrangement with Gino Cassaniti or Fred Khalil or that it was improper; nor did the plaintiffs cross-examine Tanya Borg more broadly in relation to Excavation's liquidation and winding up. The Borg Parties contend that the plaintiffs needed to do so if they wished to assert that Tanya Borg was relevantly engaged in impropriety in relation thereto.)
5. Tanya Borg's evidence was that she (and Michael Borg) first met Gino Cassaniti in 2014 after Borg Family received a letter from Ozem Kassem as one of the liquidators of Excavation.

Winding up of Auswide - March 2013

1. Liquidators (Ozem Kassem and Jason Tang) were appointed in a creditors' voluntary winding up of Auswide on 26 March 2013, prior to which its sole director and company secretary was Aloeseiafi Faanoi (Ex K at 72082).

Reliance Cleaning - use of Banq server/personnel - April 2013

1. By email 9 April 2013, Vipul Parekh (a Banq employee described in this email as the accounts supervisor for Reliance Cleaning) advised Khai Nguyen and Michael Chidiac at Compbiz (an entity which I understand to be an IT support contractor used by Banq) (which email was copied to Peter Abboud and Fred Khalil) of a request to change email "hosting" for all Reliance email accounts and to use the Banq server (Ex K at 38534). Michael Chidiac was a director of Compbiz. By the time of the subsequent liquidation of Compbiz in February 2014, Michael Chidiac had been succeeded as director by George Khalil.
2. It appears that the requested change of email "hosting" was duly put in place. On 18 April 2013, (Ex K at 38532) George Khalil sent an email (using the georgek@banq.com.au email address), in which he signed off as the "Operations Manager" at Reliance Cleaning (forwarding the email chain on to Debbie Akkawi (an employee of Reliance Cleaning (see ATO interview, Ex K at 33968) and the director of Reliance Cleaning for one day on 23 July 2010 (ASIC record, Ex K at 33968)). The plaintiffs point to various email communications by one or more of the Banq personnel relating to one or more of the Reliance Cleaning, RC Group Aust or similarly named entities or in which Banq personnel (including George Khalil) were identified as having an administrative or managerial role in those entities (see below).

Borg Civil $33,000 cheque - 24 May 2013

1. On 24 May 2013, Borg Civil Australia drew a cheque for $33,000. The Borg Parties note the contemporaneous documentary evidence: the cheque butt numbered 000418; the contents of the remittance advice, which records "418" as the "Payment number"; and the contents of the General Ledger, which also refers to the number "418". It is noted that: the cheque butt records the payee as "Banq Accountants"; all of Borg Civil Australia's documents consistently record "Banq Accountants" as the payee consistently with the cheque butt; and the payment reference number is "418", which is the cheque number.
2. As to the payments made by Borg Family and Borg Civil to RCG CBD in the period from 25 September 2012 to 24 May 2013 totalling $618,000 and the payments from RCG to Borg Family in the period from 25 September 2012 to 10 October 2012 in the sum of $580,000, the plaintiffs say that when those payments were occurring in relation to Borg Family (that is, the payment of $185,000 on 25 September 2012, $75,000 on 3 October 2012 and $320,000 on 10 October 2012) they could only have occurred with the knowledge and concurrence of George Khalil as to every element of the transaction including their purpose.
3. The plaintiffs say that George Khalil must have known the reason the payment from Borg Family/Borg Civil was coming in and that it was to be paid to Borg Family, and that occurred in accordance with the Scheme Recommendation and the conspiracy. The plaintiffs say that George Khalil must have known that the transactions with Borg Parties involved $33,000 being kept by RCG CBD.

ATO warning of intended debt collection action re Earth Civil - June 2013

1. An ATO file note for Earth Civil records that, on 13 June 2013, an officer of the ATO spoke with a receptionist at Banq and left a message for Earth Civil's Tax Agent regarding an impending enforcement garnishee (Ex K at 10314). It further records that on 19 June 2013, a warning of intended debt collection action was issued to Earth Civil in respect of an amount of $160,076 (see also Ex K at 10305). The plaintiffs note that this was shortly after (on Andre Abou-Antoun's evidence) Gino Cassaniti had instructed him to withdraw $200,000 from Earth Civil's bank account on 28 May 2013. The plaintiffs say that Gino Cassaniti must have known of the debt of $160,076 to the ATO at that time. The plaintiffs submit that this was paying Earth Civil's money away with the intent that the debt to the ATO would not be paid; that this was fraudulent and to the prejudice of Earth Civil's economic right or interest.

Bluemine invoice to Ignite Promotions - June 2013

1. Bluemine issued an invoice to Ignite Promotions (#13033103) dated 31 March 2013 in the amount of $385,880.00 for "Labour Hire" (the copy in evidence bearing the annotation "Paid 25/6/13") (Ex K at 56219). On 19 June 2013, Peter Abboud sent an email (Ex K at 56218) to Brenda Louwen headed "FW: Emailing: Ignite" with an attachment "ignite.pdf" (apparently being the Bluemine 31 March 2013 invoice). On 25 June 2013, Ignite Promotions paid Bluemine $385,880. The following day (26 June 2013), Bluemine paid Wenman Brimak the sum of $350,835. On 27 June 2013, the sum of $35,045 was paid to Banq (see [140(b)] of the Bluemine third further amended statement of claim). (Elias Nassar disavows the provision of any labour hire services by Bluemine to Ignite Promotions.)

Email chain re execution of documents for company liquidations - 28 June 2013

1. On 28 June 2013, there was an email chain (on which the plaintiffs place emphasis) between Steven Bazouni, of Cor Cordis (a firm of accountants), Gino Cassaniti and Alison Hanna of Banq (Fred Khalil's personal assistant) between 2.56 pm and 3.26 pm, relating to the proposed voluntary liquidations of, amongst others, RCG CBD and Involved Recruitment.
2. The first email, chronologically in the chain, with the subject header "Re: Proposed Creditors Voluntary Liquidations RE: RCG CBD PTY LTD, EARTH CIVIL AUSTRAILIA PTY LTD, INVOLVED RECRUITMENT PTY LTD AND CHARLIE AND SON ELECTIRACAL [sic] CONTRACTING PTY LTD" stated (Ex K at 56557): Hi Gino, I have provided the appointment documents for the above companies to BPS Recovery, however a few pages were missing your signature. I've attached copies of the documents requiring execution before the liquidations can be started. Could you please sign the attached documents and return them to me via email as soon as possible. BPS Recovery are looking to have the jobs started on Monday so your prompt attention would be greatly appreciated. Thanks in advance. Please feel free to contact me if there are any further queries in relation to this matter. Regards, Steven Bazouni Senior Accountant Cor Cordis
3. The subject line of the second email from Gino Cassaniti (incorporating his personal logo) to Alison Hanna (Fred Khalil's personal assistant) read "FW: Proposed Creditors Voluntary Liquidations". There was no message. The email bears the Banq logo with the signature line "Gino Cassaniti - Accountant" (Ex K at 56569).
4. The third email in the chain (again with the subject header "RE: Proposed Creditors Voluntary Liquidations") contained pdf attachments, being documents created on 28 June 2013, and stated (Ex K at 56569): Hi Steven, Please find attached the signed pages as requested. Have a great weekend.
5. The plaintiffs place weight on the above communications (see in due course) as belying Gino Cassaniti's denial that he signed the liquidation documents.

Winding up of companies

1. The plaintiffs place emphasis on the fact that, broadly speaking, the modus operandi for the winding up of the Insolvent Companies and corporate Scheme Participants and/or associated entities was that: the companies had a change of director (a so-called "jump-on" director) shortly before being wound up; Banq selected the new directors (who were often directors of otherwise unrelated companies whose only common link was Banq); and Banq lodged the Form 484 recording the change (often seemingly backdated). (The plaintiffs point to Frank Criniti's evidence in this regard to the effect that Gino Cassaniti advised him that the way to extinguish liabilities was to appoint a dummy director and wind up the company.) Further, the plaintiffs say that in each case there is a striking coincidence and similarity of the putative creditors' claims in the winding up of the Insolvent Companies, noting that, other than for the ATO, there was no particularisation of claims provided to the liquidator, the claims were for significant rounded sums, and all the claims were rejected by the liquidator.
2. The plaintiffs say that, in the case of each of the Insolvent Companies, Gino Cassaniti was indirectly a purported creditor in that (contrary to his assertions in his affidavit) Banq (of which he was a principal) and GTO Holdings (of which he was a director) lodged proofs of debt for alleged unpaid invoices (see, for example, Table D.4 and Table D.5).
3. At the relevant creditors' meetings (such as for Diamondwish on 12 September 2013), Fred Khalil was the proxy holder for all creditors other than the ATO (see the liquidator's affidavit sworn 8 February 2017 at [22]). It is noted that Gino Cassaniti's signature appears on the proxies for himself and for GTO Holdings for the relevant meetings relating to Diamondwish and Rackforce Ex K at 70413, 70415). It is also noted that, other than the ATO, all of the creditors' claims were rejected by the liquidator for lack of substantiation (see the liquidator's affidavit sworn 7 June 2018 at [7])).
4. In his affidavit sworn 11 April 2019 (at [13]), Gino Cassaniti deposes to the effect that he had a conversation with someone at Banq in May or June 2013 during the course of which he told that person that he thought he would go bankrupt and that that person asked him to be a director of some of that person's clients' companies for a short period of time. (The logic of becoming a director of a company shortly before anticipated entry into bankruptcy is presumably akin to that apparently underlying the concept of "jump-on" directors (i.e., to provide some protection for the "real" directors by putting in place someone without assets to meet any liabilities as a director - but this is supposition).)
5. Gino Cassaniti has asserted: (at [15] of his affidavit) that he was not asked to sign and did not sign consents for directorship of RCG CBD, Bluemine, Earth Civil or Involved Recruitment; (at [17]-[23]) that he did not act as a director of or manage the affairs of those companies, did not agree to become a shareholder of those companies and did not resolve to place the companies in liquidation; and that he was not owed money by those companies and did not sign any proofs of debt or creditors' proxy for any of those companies. (I refer in due course to the expert evidence as to documents purportedly signed by Gino Cassaniti, which in general does not support Gino Cassaniti's assertions denying the authenticity of his signatures on these documents.)

Winding up of Earth Civil, RCG CBD and Involved Recruitment - 28 June 2013

1. Each of Earth Civil, RCG CBD and Involved Recruitment was wound up on 28 June 2013 by way of a creditors' voluntary winding up commenced by resolution of Gino Cassaniti.
2. On 28 May 2013, one month before Earth Civil, RCG CBD and Involved Recruitment were wound up, a Form 484 recording a change of company details was lodged for each company which had purportedly been signed by Gino Cassaniti on 1 January 2013 (Earth Civil, Ex K at 10241; RCG CBD, Ex K at 31691; Involved Recruitment, Ex K at 59393).
3. As to Earth Civil, the Form 484 recorded that Michael Abou-Antoun had ceased to be the sole director and shareholder on 1 July 2012 and that Gino Cassaniti was appointed a director and became the sole shareholder on the same day. The ASIC extract for Earth Civil records the effective date of those changes as being 1 January 2013 (Ex K at 10239).
4. As to RCG CBD, the Form 484 recorded that George Khalil had been appointed and ceased to be a director on 16 May 2012 and Gino Cassaniti had been appointed a director since 16 May 2012. The ASIC extract for RCG CBD records the effective date of those changes as being 16 May 2012 (Ex K at 30237).
5. The plaintiffs rely on Gino Cassaniti's signature, as a director, on the resolution appointing Mitchell Ball as the liquidator of Earth Civil and RCG CBD as constituting an admission by Gino Cassaniti that he was a director of each of Earth Civil and RCG CBD (Ex K at 14129, 55825). It is said that this, coupled with the filing of the Form 484 for each company, either by Gino Cassaniti or with his consent or knowledge may be relied upon to infer that Gino was a director of Earth Civil and RCG CBD from 16 May 2012 (see Gino's affidavit sworn 11 April 2019 at [13]). It is said that this independent evidence supports the ASIC records' prima facie position to that effect.
6. As to Involved Recruitment, the purported creditors of the company included Gino Cassaniti in the amount of $75,000 and Banq in the amount of $150,000 (Ex K at 33358). The plaintiffs emphasise that the resolution was signed by Gino Cassaniti. It is noted that this was one of the documents that was forwarded on his behalf to the liquidator on 28 June 2013 by email, and that he now asserts was not signed by him and that his signature was a forgery.
7. On 3 July 2013, the ATO lodged a formal Proof of Debt in the amount of $446,973, being the running balance account deficit debt in respect of BAS amounts as at 28 June 2013 for Involved Recruitment (Ex K at 33379-33382).
8. On 4 July 2013, Fred Khalil was appointed the proxy for Gino Cassaniti and Banq with respect to their Proofs of Debt against Involved Recruitment (Ex K at 33363-33366).

Borg Family Trust's income tax return - 30 June 2013

1. Borg Family claimed tax depreciation expenses in the Trust's income tax return for the year ending 30 June 2013 in relation to the machinery and equipment said to have been purchased by way of the payments between Borg Family and RCG CBD. The Borg Family Financial Statements for the year ended 30 June 2013 contain a depreciation schedule (Ex W at 43-44). The first three items in the schedule include the equipment transferred as a result of the $185,000 payment from Borg Family to RCG CBD as recorded in the Borg Family Ledger (Ex W at 9) and the RCTI (created by Borg Family) at (Ex W at 5-7). The total depreciation of $144,176 is claimed in the company's income tax return for the year ending 30 June 2013 (Ex W at 50) which is signed by Tanya Borg (Ex W at 54). The plaintiffs say that those taxation records were false (see below).
2. Pausing here, I note that Counsel for the Borg Parties points out that, in cross-examination, the liquidator confirmed that Borg Family never claimed any input tax credits in relation to the impugned payments (see T 245-246).

Meeting of creditors of Earth Civil - 9 July 2013

1. A meeting of creditors of Earth Civil was held on 9 July 2013 (Ex K at 11653). The minutes record that Fred Khalil attended the meeting by telephone as proxy for Gino Cassaniti and Banq. The minutes further note that, after discussion about the status of the books and records of the company, Fred Khalil undertook to deliver books and records of the company "in his possession" to the liquidator's office "in short order" (Ex K at 11655).

Liquidator requests company records of Involved Recruitment - August 2013

1. On 8 August 2013, the liquidator wrote to Gino Cassaniti in relation to Involved Recruitment requiring provision of, or confirmation that he did not have, company records other than the BAS for the period from 1 April 2012 to 31 March 2013; a payroll activity summary for financial year ending 30 June 2013; and employee PAYG summaries for the financial year ending 30 June 2013, which the liquidator had already been provided (Ex K at 33472).
2. Subsequently, on 21 February 2014, the liquidator of Involved Recruitment wrote to Gino Cassaniti providing him with a formal notice to deliver books and records to the liquidator and answer a questionnaire for the directors and officers of Involved Recruitment (Ex K at 33466). The liquidator's evidence is that, other than the documents identified above, he was not provided with any further books and records of Involved Recruitment; and that "the company has failed to keep financial records which correctly record and explain the company's transactions and financial position and performance … or provide to me any of the Expected Financial Records" (liquidator's affidavit sworn 7 June 2018 at [95]).

Winding up of Bluemine, Rackforce and Diamondwish - August 2013

1. Each of Bluemine, Diamondwish and Rackforce was wound up on 26 August 2013.
2. Bluemine was wound up pursuant to a resolution by Gino Cassaniti as its sole director.
3. Christopher Cherry was the sole director of Rackforce and Diamondwish when they were wound up.
4. Relevantly, Frank Criniti's evidence as to Christopher Cherry's appointment as a director (at T 532.12-28) was to the effect that he had never met Mr Cherry and was unaware of Mr Cherry ever conducting business for Diamondwish. Frank Criniti recalled having a discussion with someone at Banq about a new director.
5. Christopher Cherry's evidence (at T 902.7-903.13), which corroborates that of Frank Criniti, was to the effect that he had no role at Diamondwish or Rackforce; he never carried out any duties for Diamondwish or Rackforce; he did not know who Frank Criniti was; and he could not recall how he came to be a director of Diamondwish or Rackforce.

Gino Cassaniti ceases consulting - December 2013

1. Gino Cassaniti says he ceased acting as a consultant to Banq in December 2013 (Gino Cassaniti's affidavit sworn 11 April 2019 at [30]).

Bankruptcy of Gino Cassaniti - March 2014

1. On 18 March 2014, Gino Cassaniti became bankrupt (and he was not discharged from bankruptcy until March 2017). The proof of debt lodged by the Commissioner in respect of Gino Cassaniti's bankruptcy was in the sum of $1,126,241.19.

Liquidator's requests for books and records

1. As adverted to above, after the liquidator's appointment to the Insolvent Companies, requests were made for books and records of the company. I have referred above to the limited material produced. Reliance is placed on the lack of records as giving rise to the deemed insolvency of the companies (see T 156) (see below at [2528]).

Response to Office of State Revenue (OSR) enquiry - June 2014

1. In an email to the OSR on 12 June 2014, in relation to a payroll taxation audit of another entity (Melhem Civil Pty Ltd) (Ex K at 38757), Peter Abboud attached contractor invoices for Bluemine and RCG CBD and, in his reply to comments (in red), Peter Abboud stated that RCG CBD was not a labour hire company (Ex K at 38758): Please note RCG CBD Pty Ltd is not Labour Hire Company - Its contractor removing Contaminated ENM material - Invoice attached. [Emphasis as per plaintiffs' submissions]

Borg Family $15,000 payment to Bluemine for a truck - 30 June 2014

1. It is noted that, more than a year after the $33,000 cheque was drawn, a payment of $15,000 was made by Borg Family to Bluemine on 30 June 2014 (cf plaintiffs' submissions [441], it is said that the payment was not made on 30 July 2013). The Borg Parties say that (contrary to the incorrect assertion at plaintiffs' submissions [221(e)]), the amount of the payment from Borg Family to Bluemine has always been $15,000 and never in dispute.

Issue of s 353-10 notices - August 2016

1. A s 353-10 Notice dated 5 August 2016 was issued by the ATO to Reliance Cleaning (Ex K at 31702). Relevantly, at Sch B of the s 353-10 Notice, the ATO requested (for the financial years ending 30 June 2013, 2014 and 2015): at item one, "all contract(s) and agreement(s) that you have with RCG CBD Pty Ltd or their associate(s)"; and at item three, "all documents relating to the services provided by persons on behalf of, or as part of an agreement with RCG CBD Pty Ltd, including contracts, agreements and records of work performed by these persons including but not limited to timesheets" (Ex K at 31704).
2. In response to the ATO, by letter dated 6 October 2016, Brown Wright Stein (who acted, amongst others, for Banq, Reliance Cleaning and RCG CBD) advised that there were no documents within the possession, power or control of Reliance Cleaning (Ex K at 31706). However, Brown Wright Stein did provide a number (44) of invoices purporting to be from RCG CBD to Reliance Cleaning for "labour hire services" (Ex K at 31713-31756). The plaintiffs contend that these are false invoices, created for appearances, pointing among other things to the fact that the invoice numbers appear to be simply dates in reverse and that the details for RCG CBD and the address of Reliance Cleaning are those of Banq. It is noted that no such invoices were provided by Banq when sought by the liquidator in 2013; yet in October 2016, Brown Wright Stein were apparently provided with such invoices by Banq. The plaintiffs' position is that these RCG CBD invoices to Reliance Cleaning are 2016 reconstructions from RCG CBD's bank transactions and are false.
3. In response to question 6 of the s 353-10 Notice which queried Reliance Cleaning's employees, Brown Wright Stein advised that there was one employee (Chirag Rathi) (Ex K at 31707). As to whom from RCG CBD provided services (question 4 of the s 353-10 Notice), Reliance's response was that it had not been able to locate the records or information to respond to that question. The QBE certificate of currency for workers compensation insurance annexed to the Brown Wright Stein letter stated that Reliance Cleaning had six employees with $100,000 in wages. (The plaintiffs say that this demonstrates that, at all relevant times, RCG CBD carried on no legitimate business, and that the purported RCG CBD invoices in evidence in these Proceedings are false.)

Winding up of Reliance Cleaning - September 2017

1. Reliance Cleaning was wound up on 5 September 2017, in circumstances where a new director, Hussein El-Massri, had been appointed three months prior thereto, on 10 July 2017 (Ex K at 33968).

Winding up of Banq - 18 July 2018

1. Banq was wound up by the ATO on 18 July 2018, with a debt of $617,248 owing to the ATO. Hussein El-Massri was the sole director and secretary on the ASIC Record at the time (Ex K at 33963).

ATO interviews - 2018

1. Tendered in evidence were transcripts of compulsory ATO examinations conducted with various of the defendants (including, relevantly, Peter Abboud - Ex 17, and Fred Khalil - Ex 18). As noted above, objection was initially taken (by the AKA Parties) to the tender of those transcripts (see T 32) based, in the case of Andre Abou-Antoun, on the accusatorial process and privilege against self-incrimination. The plaintiffs sought to tender the transcripts as business records of the ATO. I provisionally admitted Fred Khalil's and Peter Abboud's ATO transcripts, subject to relevance (see T 61, 63). Ultimately, an agreement was reached whereby the unredacted transcripts were admitted without objection and without qualification (see Exs 17-18; T 1429) (albeit with some reservation as to any relevant objections). I provisionally admitted portions of Andre Abou-Antoun's transcript (Ex P, O); and portions of Andrew Barsa's transcript (Ex E). As to George Said's transcript, I admitted portions of his transcript dated 3 June 2019 (Ex U) without provisional qualification, as admissions against interest as detailed in, In the matters of Earth Civil Australia Pty Ltd, RCG CBD Pty Ltd, Bluemine Pty Ltd, Diamondwish Pty Ltd and Rackforce Pty Ltd (all in liq) [2020] NSWSC 293 (Earth Civil 23 March 2020 Judgment). Further, other portions of interview transcripts with George Said were only provisionally admitted pending a hearsay ruling (Ex Q, R - see T 1021). Mr Robertson's request, I noted in the hearing that so much of Ex R which is finally admitted would be the subject of a s 87(7) certificate (T 1024).

Application for special purpose liquidator - 2019

1. In 2019, after the Proceedings had been fixed for hearing, an application was made by the AKA Parties for the appointment of a special purpose liquidator (in order to consider or pursue an objection to the tax assessments) (see In the matter of Bluemine Pty Ltd (in liq) [2019] NSWSC 1474 (In the matter of Bluemine)).
2. Black J, in rejecting that application said (at [11]), that he doubted that the offer of the AKA Parties and Gino Cassaniti of $125,000 was sufficient to fund the special purpose liquidator's investigation of the basis for an objection. At [17], [21], his Honour identified the fundamental difficulty that: [17] However, the difficulty of that course is that the Applicants' unwillingness to confirm the factual basis of the objection which they wish to have the special purpose liquidator put, or offer evidence to support it in this application, would deprive the special purpose liquidator of the matters which might support the very objection that they sought to have made. It is, of course, one thing for the Applicants to reserve their position, so far as a defence of substantial civil proceedings is concerned, subject to their obligations under s 56 of the Civil Procedure Act 2005 (NSW). It is, however, quite another thing to reserve their position, and at the same time to submit that a particular version of events should be assumed, without evidence, by a special purpose liquidator who is tasked to lodge an objection on the basis of it. … [21] It seems to me that that submission turns on a false premise. It was, of course, always open to the Applicants, or indeed the Eleventh Defendant, to seek to establish their account of the true character of the transactions in this application, so as to show that they were in fact a sham, so that there was a proper basis for the special purpose liquidators to bring the objection which they sought to have then brought on that basis, rather than approaching the application on a hypothetical basis. I accept that, for strategic reasons, they may have preferred not to adopt that approach, and that that choice may have been a rational one in the relevant circumstances. It does not follow, however, that they did not have the opportunity to establish the relevant facts that would be available to a special purpose liquidator, in bringing the objection, in order to allow an assessment of whether that objection was properly brought and whether it had a prospect of success. That is not, in my view, any lack of opportunity, but a choice made in the relevant circumstances to adopt one approach and not another.
3. I refer to his Honour's reasons not for any fact-finding purpose (noting s 91 of the Evidence Act), but because it forms part of the factual context to the submissions here made by the AKA Parties (and others) in relation to the causation defences.

Pleaded claims

1. It is important at this point to note how the plaintiffs' claims are pleaded, not least because of the defendants' insistence that the plaintiffs be held to their pleadings, but also because there was much criticism made as to the pleaded case (see below).

Scheme

1. The pleading of the Scheme, and that the Scheme and Gino Cassaniti's participation in the Scheme constituted a breach of various directors' duties of a fiduciary nature in which various defendants knowingly assisted, followed a common structure in the respective Proceedings, which I will address by reference to the pleading in the Bluemine Proceeding.
2. Before turning to the pleading, however, I note that the alleged breaches of fiduciary duty in the respective Proceedings are identified as having been made: in the Earth Civil Proceeding, by Gino Cassaniti; in the RCG CBD Proceeding, by Gino Cassaniti and George Khalil; in the Bluemine Proceeding, by Gino Cassaniti (not Andrew Barsa, the other director); in the Diamondwish Proceeding, by Frank Criniti; and in the Rackforce Proceeding, by Frank Criniti.
3. The pleaded Scheme comprises: the alleged Primary Conspirators (at [102]-[106]); the alleged Scheme Participants, including their characterisation as either Receiving or Paying Participants (at [107]-[130]).
4. The "primary conspiracy" (at [131]), which it is alleged existed during 2012 to 2013, is pleaded as a conspiracy "to defraud and injure companies" and "to engage in dishonest and fraudulent transactions with an intention to defraud and injure such companies" and "to defraud the … Commissioner of Taxation". (Pausing here, I note that Ivana Cassaniti emphasises the difference between the potential consequence of conducting a tax avoidance scheme and the purpose or intention of such a scheme. I will return to the difference between purpose and effect in due course. I simply here note that one would ordinarily be expected to intend the natural consequences of one's actions - and hence there may in practical terms be little distinction at least if the effect was one that might be expected to follow in the ordinary course from the acts in question.)
5. As to the alleged Scheme Recommendation, it is alleged that, in late 2012 to May 2013, the Primary Conspirators recommended or represented to the Scheme Participants that, if the Scheme Participants entered into transactions, the Paying Participants could claim GST credits and expense deductions, and thereby reduce their taxable income (see at [137]).
6. At [215], it is alleged that "[b]y implementing the Scheme Recommendation, Discobell and Banq knowingly participated in dishonest and fraudulent conduct, and knowingly assisted in dishonest and fraudulent conduct".
7. As to the purpose and effect of the Scheme, it is pleaded (at [225(i)]) that a "purpose and effect" of the Scheme was "to render Bluemine insolvent and unable to discharge its taxation liabilities due to the… Commissioner".
8. At [227] and [260], it is pleaded that: because the Receiving Participants received moneys from Bluemine, they caused Bluemine to lose those funds (Ivana Cassaniti says that this is despite the very basis of the scheme being that Bluemine had no entitlement to receive any funds); by paying money into Bluemine, the Paying Participants caused Bluemine to be exposed to a risk of an audit and a risk of assessments by the Commissioner which reviewed activity statement amounts, determined income tax liability, imposed a penalty and/or general interest charge (which, it is said by Ivana Cassaniti, presumably would only arise if the Commissioner did not discover or work out that the payments were a sham and not intended to be treated as real income by Bluemine); "by reason of the matters in paragraphs 1 to 241 above", each of the Scheme Participants is liable for the whole of Bluemine's loss.
9. The duties of the fiduciary (Gino Cassaniti) are pleaded at [239]. The particulars of fiduciary duties and trust are particularised as: (a) including a duty not to permit the interests of any of Fred Khalil, Banq and the Scheme Participants to conflict with the interests of Bluemine; (b) a duty not to allow the duties which he owed as the director to Bluemine to conflict directly or indirectly with his own interests personally or with interests of each and all of Fred Khalil, Banq and the Scheme Participants; (c) a duty not to derive a benefit, directly or indirectly, for any one or more of Fred Khalil, Banq and the Scheme Participants from information acquired or acts done as a director of Bluemine; (d) a duty not to allow or cause the interests of Bluemine to be affected adversely; and (e) a duty not to allow or cause the dissipation of Bluemine's assets other than for genuine commercial obligations.
10. As to the alleged dishonest breaches of duty by the fiduciary, it is alleged that (at [240]-[241]): [240] From July 2012 to May 2013, by … implementing or facilitating or permitting the transactions Cassaniti was in breach of his fiduciary duties and duties as trustee to Bluemine. Particulars The matters pleaded and particularised at paras 1 to 239 above … and in causing or permitting Bluemine to enter into the transactions, Cassaniti breached his duties. … [241] The breaches of fiduciary duty and trust by Cassaniti as pleaded at paragraph 240 above were dishonest and fraudulent against Bluemine, the Commonwealth and the Commissioner.
11. The claims for accessorial liability (based on the second limb Barnes v Addy) with regard to every impugned transaction in the respective proceeding are made, identifying: in the Earth Civil Proceeding, Gino Cassaniti as director fiduciary, and Fred Khalil, George Khalil and Peter Abboud, as accessories; in the RCG CBD Proceeding, Gino Cassaniti, as director fiduciary, and Fred Khalil, George Khalil and Peter Abboud, as accessories; in the Bluemine Proceeding, Gino Cassaniti as director fiduciary and Fred Khalil, George Khalil and Peter Abboud, as accessories; in the Diamondwish Proceeding, Frank Criniti, as director fiduciary, and Gino Cassaniti, Fred Khalil, George Khalil and Peter Abboud, as accessories; and in the Rackforce Proceeding, Frank Criniti, as director fiduciary, and Gino Cassaniti, Fred Khalil, George Khalil and Peter Abboud as accessories.
12. Further claims of accessorial liability are made against the Scheme Participants limited to the respective transactions claimed against them, as follows: in the Earth Civil Proceeding, Michael Abou-Antoun, AKA Civil, AKA NSW; in the RCG CBD Proceeding, Sivasli, Borg Family, Tanya Borg, Borg Civil, Michael Borg, Kamikaze Teppanyaki, George Said, Scott Crabbe and John Haddad; in the Bluemine Proceeding, LAM Haulage, MAL Land, The Great Brothers, Andre Abou-Antoun, Michael Abou-Antoun, AKA Civil, AKA NSW, John Haddad, Borg Family, Tanya Borg, George Said, Ivana Cassaniti and Discobell; in the Diamondwish Proceeding, Ivana Cassaniti; and in the Rackforce Proceeding, Ivana Cassaniti.
13. The pleading of knowing assistance in a breach of fiduciary duties by Gino Cassaniti is relevantly that (at [242]-[244]): [242] In the premises, the primary conspirators, namely Banq, Cassaniti, Faouzi Khalil, George Khalil and Peter Abboud, and the Scheme Participants in implementing the Scheme Recommendation and participating in their respective transactions identified at paragraphs 138 to 224 above: (a) assisted Cassaniti in his dishonest and fraudulent actions referred to in paragraph 240 above; (b) did so with the knowledge of the dishonest and fraudulent breaches of duty by Cassaniti, in that the primary conspirators and the Scheme Participants (concerning their respective pleadings as pleaded above): (i) had actual knowledge of the dishonest and fraudulent breaches of duty by Cassaniti; (ii) alternatively, wilfully shut their eyes to the dishonest and fraudulent breaches of duty by Cassaniti which were obvious; (iii) alternatively, wilfully and recklessly failed to make such enquiries as an honest and reasonable person would make with respect to the existence of the duties and to the breaches of duty by Cassaniti; (iv) alternatively, had knowledge of circumstances which would indicate to an honest and reasonable person the existence of the duties and that Cassaniti was acting dishonestly and fraudulently and in breach of those duties. … [244] Further or in the alternative, each of Faouzi Khalil, George Khalil, Peter Abboud and Banq and the Scheme Participants, (concerning their respective transactions as pleaded above) were knowingly concerned in, or a party to the breaches by Cassaniti, referred to in paragraph 240 above in that they: (a) had actual knowledge of the breaches by Cassaniti; (b) alternatively, wilfully shut their eyes to the dishonest and fraudulent breaches by Cassaniti which was obvious; (c) alternatively, wilfully and recklessly failed to make such enquiries as an honest and reasonable person would make with respect to the breaches by Cassaniti; (d) alternatively, had knowledge of circumstances which would indicate to an honest and reasonable person that Cassaniti was acting in breach of his duties. Particulars The plaintiffs repeat and rely on the matters pleaded and particularised at paragraphs 1 to 241 above. (emphasis added)
14. The relevant assistance is pleaded (at [242]) to be the implementation of the Scheme Recommendation and participating in their respective transactions; and the relevant knowledge of the Scheme Participants is limited to "their respective transactions as pleaded above".
15. At [246], it is pleaded that the Scheme Participants (concerning their respective transactions) aided, abetted, counselled or procured Gino Cassaniti's breaches by: as to the Paying Participants, in making their payments (which Ivana Cassaniti says suggests that the relevant conduct by the Paying Participants is confined to that conduct only and only those transactions); as to the Receiving Participants, in receiving their payments (which Ivana Cassaniti says suggests that the relevant conduct by the Receiving Participants is confined to that conduct only and those transactions); allowing Fred Khalil and Peter Abboud to lodge fictitious tax returns for the Scheme Participants (a proposition that it is said does not apply at all to Ivana Cassaniti because there is no suggestion that Discobell or Givana Prestige filed false tax returns); the absence of any documentation concerning the Bluemine transactions (an allegation as to a state of affairs that it is said could not be said to be conduct on the part of the Scheme Participants at all, let alone assistance to Gino Cassaniti to breach his duties).
16. At [248], the alleged statutory duty of care is said to arise out of the matters up to [133]. (Ivana Cassaniti says that this presumably arises simply on the basis of the allegation that Gino Cassaniti was a director of Bluemine; and it is presumed that the duty is said to be owed to Bluemine.)
17. At [249], it is pleaded that Gino Cassaniti breached this duty, the particulars of breach referring back to [228] to [235] and [239] to [241]. It is then alleged that each Scheme Participant was knowingly concerned in Gino Cassaniti's breach of this duty of care and diligence (at [250]). The pleadings of the statutory duty of good faith and the statutory duty not improperly to use the position as director effectively mirror the pleading of the statutory duty of care.
18. The monetary claims made against Gino Cassaniti and the other alleged co- conspirators are: 1. in the Earth Civil Proceeding, $965,000 for Directors Payments, $1,122,680.34 for liability to the Commissioner and $82,652.39 for costs of winding up; 2. in the RCG CBD Proceeding, $7,451,586.12 for assets and money paid away, $6,209,097.72 for liability to the Commissioner and $254,962.32 for costs of winding up; 3. in the Bluemine Proceeding, $6,167,594 for assets paid away, $5,138,203.36 for liability to the Commissioner and $235,611.62 for costs of winding up; 4. in the Diamondwish Proceeding, $7,960,774.08 for assets paid away, $1,439,573.61 for liability to the Commissioner and $241,882.98 for costs of winding up; 5. in the Rackforce Proceeding, $10,926,471.64 for assets paid away, $3,626,578.95 for liability to the Commissioner and $201,474.32 for costs of winding up.

Uncommercial transactions and money had and received claims

1. The plaintiffs say that each of the impugned transactions occurred without authority of the respective Insolvent Company. They point out that no defendant has sought to make out a positive case for authority of the relevant company in respect of any transaction; nor (except Tanya Borg) that any transaction was for a genuine commercial reason.
2. In addition, it is submitted that the corporations were insolvent at all relevant times. It is said that the transactions involving Michael Abou-Antoun in the Earth Civil Proceeding and Sivasli in the RCG CBD Proceeding, and involving MAL Land Group, LAM Haulage and The Great Brothers in the Bluemine Proceeding, were uncommercial and insolvent transactions, occurred within two years of the relation-back day, and were voidable. As a result, against each of the recipient defendants identified above, the plaintiffs seek orders pursuant to s 588FF(1) of the Corporations Act for payment of sums equivalent to the sums paid away by the respective Insolvent Company, for each relevant transaction.
3. It is said that the transactions identified above, together with the payments by RCG CBD to Borg Family of $580,000, were all without authority, to volunteers, and the plaintiffs are entitled to orders that equivalent sums be paid to the respective plaintiffs on the basis of unjust enrichment/money had and received.

Defendants' criticisms of pleadings

1. The defendants made various complaints as to the pleadings which I set out here.

Ivana Cassaniti's submissions on the pleadings

1. For Ivana Cassaniti, it is said that the Scheme Recommendation is a key plank in the plaintiffs' case because it is the only basis upon which the plaintiffs can contend that the alleged Scheme, involving different clients, was one unified scheme rather than a series of unconnected attempts by clients of Banq to avoid paying income tax. It is contended by Ivana Cassaniti that the pleading of the Scheme Recommendation exposes a lacuna in the plaintiffs' case; namely, that, although it is explained how the Scheme Participants become involved in the Scheme, by being told about the Scheme Recommendations (thereby satisfying the knowledge requirement), and then that the Scheme Participants then entered into transactions pursuant to the Scheme Recommendation (thereby satisfying the assistance requirement) (see, for example, Bluemine's third further amended statement of claim at [141]), there is no pleading as to how the Paying Participants and Receiving Participants become part of the Scheme, at least with knowledge of the Scheme. It is noted that there is an allegation that "all material times" various defendants were directors or corporate defendants and were the "directing will and mind of those respective companies" (see at [236]) but it is said that this does not suffice as a basis for pleading that Paying Participants and Receiving Participants had knowledge of the Scheme; and in particular, by reason of a Scheme Recommendation having been made to them.
2. As to [225], criticism is made by Ivana Cassaniti that no attempt is made to distinguish between what the purposes of the Scheme might have been and what the effects of the Scheme might have been; a distinction said to be of importance when addressing the question of knowledge.
3. Complaint is made by Ivana Cassaniti (and echoed by various of the defendants) that the plaintiffs' pleadings do not have a bright line that separates the operation of a scheme and the breaches of duty, with the consequence that the two concepts are intermingled which, it is said, introduces a significant level of obscurity to the duties case. So, for example, in the Bluemine Proceeding, it is noted that in respect of each of the breaches of duty pleaded at [239], [248], [252] and [256], it is alleged that Gino Cassaniti owed the duty by reason of all the matters pleaded in relation to the Scheme itself (i.e., up to [133]). Ivana Cassaniti says that it is necessary to draw a line between the Scheme and the breaches of duty because the claims based on breaches of duty require the identification of the relevant conduct of Gino Cassaniti, as a director of the relevant company, that it is said to be in breach of his duties, and then to examine how it is said that Ivana Cassaniti assisted in that breach, rather than to approach the matter in a broad-brush manner.
4. Ivana Cassaniti notes that the first duty of Gino Cassaniti relied upon is that of a constructive trustee (at [239]). It is said by Ivana Cassaniti that there is a problem of circularity with this pleaded breach; in that it is pleaded (at [240]) that, by making the Scheme Recommendation and by implementing the transactions contemplated by the Scheme Recommendation, Gino Cassaniti was in breach of his duties as a constructive trustee but that it does not appear to plead how Gino Cassaniti could have been the constructive trustee of Bluemine (or any funds) but for the making of the Scheme Recommendation and by implementing transactions pursuant to it. (emphasis added)
5. Ivana Cassaniti says that the series of allegations following the claim that Gino Cassaniti's breach of duty and trust was dishonest and fraudulent against Bluemine (at [241]), suffer from further difficulties.
6. As to the allegation (at [242]), that each of the Primary Conspirators and the Scheme Participants assisted Gino Cassaniti in his dishonest and fraudulent actions (that is, the making of the Scheme Recommendation and by implementing, facilitating or permitting the transactions) with knowledge that Gino Cassaniti's breaches (of trust and duty) were dishonest and fraudulent. Ivana Cassaniti says that this presumably excludes Gino Cassaniti as a Primary Conspirator (i.e., as I understand it, that it cannot be intended to say that Gino Cassaniti was assisting himself).
7. Complaint is made that the pleading (while referring back to previous paragraphs) does not explain how Gino Cassaniti failed to act with care and diligence as a director of Bluemine (bearing in mind that the plaintiffs' case is that Bluemine was incorporated for the purpose of implementing the Scheme and its controlling mind was Gino Cassaniti). It is said that if the plaintiffs' case is accepted, it is difficult to see how any of Gino Cassaniti's conduct lacked due care and diligence unless it is suggested that the Scheme could have been conducted in such a way as not to have given rise to any tax avoidance penalties or, perhaps, by not allowing the Scheme to be detected. Complaint is made that there is no attempt in the pleading to identify conduct on the part of any Scheme Participant which is said to have assisted Gino Cassaniti in his breach of this duty; nor is there any attempt to identify specifically the facts said to constitute the breach of the duty of care of which it is alleged the Scheme Participants had knowledge (beyond referring back to [1]-[241] and [244]-[246]).
8. Complaint is made that it is not possible to identify what specific conduct by Ivana Cassaniti caused her to be involved in Gino Cassaniti's breach or how it could be said that she had knowledge of that breach. The same complaint is made of the pleading of the statutory duty of good faith and the statutory duty not to use improperly the position as director.

Khalil defendants' submissions on the pleadings

1. The Khalil defendants note the observation in Breen v Williams (1996) 186 CLR 71; [1996] HCA 57 (Breen v Williams) at [41] per Gaudron and McHugh JJ that, beyond the proscriptive obligations not to obtain any unauthorised benefit from the fiduciary relationship and not to be in a position of conflict, the law in this country does not impose positive legal duties on the fiduciary to act in the interests of the person to whom the fiduciary duty is owed. They submit that, therefore, liability for a fiduciary, under Barnes v Addy, arises only in cases of breach of those proscriptive obligations (referring also to Pilmer v Duke Group Ltd (in liq) (2001) 207 CLR 165; [2001] HCA 31 (Pilmer v Duke Group) at [74]).
2. The Khalil defendants say that the pleading by the plaintiffs of the duties owed by the fiduciaries of each of the Insolvent Companies, which is in similar terms across the respective Proceedings (see RCG CBD Proceeding at [233], Bluemine Proceeding at [239], Rackforce Proceeding at [95], Diamondwish Proceeding at [186] and Earth Civil Proceeding at [74]), is in ambiguous terms (and not wholly reconcilable with the three fiduciary duties identified in BCI Finances v Binetter by Gleeson J at [260]).
3. In particular, by reference to the pleading in the Bluemine Proceeding (at [239]), the Khalil defendants say that: the duty alleged at (a) (not to permit the interests of others to conflict with the interests of Bluemine) is not a fiduciary duty; the duty alleged at (b), although it includes the "conflict rule" as identified in BCI Finances v Binetter, is expanded to a duty not to allow the interests of others to conflict with the duties owed by Gino Cassaniti to Bluemine (which is not an obligation of a director); the duty alleged at (c) is said to be a duty not to derive a benefit "for" another from information acquired or acts done by Gino Cassaniti as a director of Bluemine; the duty alleged at (d) is said to be a dual duty not to allow the "interests" of Bluemine to be adversely affected, nor to permit any detriment to Bluemine, for Gino Cassaniti benefit "in his capacity as director" or for the benefit of another; and the duty alleged at (e) is not to allow dissipation of the company's assets other than for genuine commercial obligations.
4. The breaches of fiduciary duty in the Bluemine Proceeding (at [240]) are said to be the making of the Scheme Recommendation and implementing "the transactions". The Khalil defendants say that the balance of the particulars to [240] (after the reference to the whole of the matters pleaded in the preceding paragraphs) refer to matters which do not obviously fall within the pleaded duties and are not particulars of the breaches alleged.
5. The Khalil defendants say that none of the duties pleaded is a fiduciary duty nor are the breaches of duty properly pleaded or particularized. Here, reference is made to what was said in Farah Constructions (at [170]), notably, that an allegation of knowing participation in a dishonest design is "an allegation the seriousness of which means that it ought to have been pleaded and particularised, and the assessment required by Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 (Briginshaw) kept in mind".

Peter Abboud's submissions on the pleadings

1. Complaint is made in the submissions for Peter Abboud that there has been an intermingling (causing confusion) in the plaintiffs' case as to the allegations of conspiracy, on the one hand, and of the dishonest and fraudulent Scheme, on the other. Peter Abboud adopts the criticisms made by each of Ivana Cassaniti and the Khalil defendants in respect of the pleaded claims.

The Borg Parties' submissions on the pleadings

1. As to the pleaded case against them the Borg Parties broadly adopt and the criticisms made by Ivana Cassaniti and the AKA Parties. They complain as to the impermissible expansion of the plaintiffs' case, for example, to tie the plaintiffs' allegations against the Borg Parties with allegations made against others; and say that reliance by the plaintiffs on the "footsteps in the sand" approach should not be allowed.
2. It is said that the pleaded case against the Borg Parties in the RCG CBD Proceeding falls within a narrow compass, noting that it is alleged that Borg Family on the one hand and RCG CBD on the other made three back to back payments between late 25 September 2012 and 8 October 2012; and that, separately, Borg Civil Australia made a payment to RCG CBD of $33,000 on 23 May 2013 (RCG CBD third further amended statement of claim at [190]). It is said that the gist of the plaintiffs' case is that Borg Family entered into, and performed, the transactions complained of "by arrangement with RCG's director Cassaniti pursuant to the Scheme Recommendation" (at [191]). It is said that Gino Cassaniti's central role in Borg Family's alleged misconduct is confirmed in the RCG CBD third further amended statement of claim at [192], where it is alleged that Gino Cassaniti was at all material times acting on behalf of himself and the other primary conspirators. Likewise, it is said that the RCG CBD pleading at [193] expressly identifies Gino Cassaniti as the beneficiary of Borg Family's conduct. It is said that it is no part of the plaintiffs' pleaded case (apropos the Borg Parties) that Fred Khalil was, in this context, acting as Gino Cassaniti's agent or his accessory.
3. It is said that the pleaded case in the Bluemine Proceeding is even narrower and concerns only one payment in the amount of $15,000 from Borg Family to Bluemine (Bluemine third further amended statement of claim at [200(a)]). The plaintiffs claim this transaction also took place "by arrangement with" Gino Cassaniti (at [201]). It is claimed that payment was not part of a "genuine commercial transaction".
4. The Borg Parties emphasise that there is no pleading that: Fred Khalil owed either RCG CBD or Bluemine any fiduciary obligations; that Fred Khalil breached any such obligations; or that any of the Borg Parties was knowingly concerned in or assisted Fred Khalil in any of those breaches; nor is there any pleading that Gino Cassaniti dealt with the Borg Parties through Fred Khalil as an intermediary.
5. It is said that the case on accessorial liability was even more confined by the plaintiffs' oral opening, namely that each of the Scheme Participants is liable for knowingly participating in dishonest and fraudulent conduct (i.e., in knowingly assisting Gino Cassaniti in his dishonest and fraudulent conduct to defraud (the Insolvent Company)) and for dishonestly assisting Gino Cassaniti in his breaches of fiduciary duties (T 117). It is said that the opening further limited the plaintiffs' case in that it was said that the equitable claims in relation to all defendants are for breach of fiduciary duty by the co-conspirators or accessorial involvement as pleaded at [238] and that "whilst we have used expressions of fraud against scheme participants we maintain that but it's equitable fraud against the scheme participants. We've never said a scheme participant was involved in a conspiracy. We've said five people are involved in the conspiracy, everybody else has been has engaged in conduct which in equity makes them an accessory to that misconduct. That's the nature of the case" (T 117; 179-180). The Borg Parties repeat and adopt the submission made at [75] of Ivana Cassaniti's submissions in relation to the ultimate scope of the plaintiffs' case.
6. Reference is made by the Borg Parties to the obligations of a party alleging serious misconduct as re-stated in Nadinic v Drinkwater (2017) 94 NSWLR 518; [2017] NSWCA 114 (Nadinic) at [45]-[46] per Leeming J (with whom Beazley P, as Her Excellency then was, agreed). It is noted that the need to plead fraud precisely reflects the fundamental requirements for the fair trial of the allegations (see the plurality in Forrest v Australian Securities and Investments Commission (2012) 247 CLR 486; [2012] HCA 39 (Forrest v ASIC) at [25]). The Borg Parties say that a corollary of this that the plaintiffs are bound by their pleaded case; and that, consistently with this: a trial judge is not entitled to decide the case on the basis of fraudulent conduct that had not been alleged or put to the party (Nadinic at [155]); and the seriousness of the finding of fraud does not permit of other than a specific finding that the fraud has in fact occurred (Sgro v Australian Associated Motor Insurers Ltd (2015) 91 NSWLR 325; [2015] NSWCA 262 at [54]).
7. It is said that it is not open to the plaintiffs to assert, against the pleading principles referred to above, that the misconduct was perpetrated in a manner not pleaded. It is acknowledged that, in some cases, a judgment need not be precisely within the scope of the "particulars" alleged in a pleading, so long as judgment is given on the causes of action pleaded (Dare v Pulham (1982) 148 CLR 658; [1982] HCA 70 at [6]); and that a fair amount of tolerance can be justified so long as the circumstances are such that all parties to the action have had fair notice of what will be determined (Stefanovski v Digital Central Australia (Assets) Pty Ltd [2018] FCAFC 31 (Stefanovski) at [65]). However, it is said that this tolerance may not be allowed where, as here, a party has indicated that it will hold the other party to its pleaded case (see Stefanovski at [74]). It is said that this reflects the fundamental principle stated by the plurality in Forrest v ASIC.
8. The Borg Parties emphasise that the case they have to meet is conditioned upon breaches of duty allegedly committed by Gino Cassaniti, and by him alone. It is said that in a case where liability is in part conditioned upon the conduct of a principal offender, the plaintiffs are bound by their pleadings as to who that offender was and what he or she did; and that the plaintiffs cannot, sub silentio, expand their case by alleging quite separate breaches by another (say, here, Fred Khalil).
9. It is said that no unfairness to the plaintiffs arises from this position; noting that Tanya Borg deposed to her dealings with Fred Khalil, and her lack of dealings with Gino Cassaniti, in her affidavit sworn 4 December 2018. Hence, it is submitted that the plaintiffs were put on notice at that time that their pleaded case depended upon their falsifying Tanya Borg's evidence that she had not dealt with Gino Cassaniti until mid 2014. It is said that, despite this, the plaintiffs did not amend their case by asserting that Fred Khalil was acting in furtherance of the primary conspiracy; and it was not put to Tanya Borg in cross-examination that her evidence as to when she met Gino Cassaniti was false. It is said that no document or other form of objective evidence falsifies what she says in this regard.
10. It is noted that on day four of the trial, immediately after the conclusion of the plaintiffs' oral opening, the Borg Parties made it clear that they would hold the plaintiffs to their pleaded case (see T 177). It is said that at no stage was there any departure from that position, whether by agreement or otherwise (see Stefanovski at [65]) and accordingly, the plaintiffs may not now run a case that is outside the strictures of their pleadings.
11. As to the impugned transactions pleaded against the Borg Parties (see [190] of the RCG CBD third further amended statement of claim), the Borg Parties emphasise that, unlike the transactions involving all of the other so-called Scheme Participants, the payments at [190] are only between Borg Family and RCG CBD (and do not involve any other party). The Borg Parties place emphasis on this distinction (and suggest that the concepts of "carousel" payments, "round robin" payments and "in and out payments" are inapt in relation to the impugned transactions as they relate to the Borg Parties).
12. Complaint is made that the plaintiffs plead no details of the alleged "arrangement" between the Borg Parties and Gino Cassaniti in relation to the impugned transactions (see at [191] of the Bluemine third further amended statement of claim), the Borg Parties drawing a distinction here between the existence of an arrangement and its alleged connection with the Scheme Recommendation. They say that no evidence of the alleged arrangement has been adduced. (See also at [192] where the "arrangement" allegedly between Borg Family and Gino Cassaniti in furtherance of the primary conspiracy is identified in particular (b) as the primary conspiracy pleaded in [142] and its application to RCG CBD pleaded at [148].)
13. As to the particulars of the allegation at [191], (that transactions were "entered into and performed" by Borg Family by "arrangement" with Gino Cassaniti pursuant to the Scheme Recommendation), the Borg Parties say that these are incongruent with the pleaded claim at [190]. First, that particular (b) does not go any further than to say that Gino Cassaniti approved the transactions (i.e., not that his approval was part of the "Scheme Recommendation" or a broader arrangement between Gino Cassaniti and the Borg Parties). Second, that even if the transactions were not genuine (as per particulars (c) and (d)), which is denied by the Borg Parties, what is missing is the exposition of the alleged "arrangement" between Gino Cassaniti and the Borg Parties (or any of them) and the connection between that "arrangement" and the transactions of which complaint is made. The Borg Parties say that those elements are central to the plaintiffs' claims and that neither is pleaded nor proved.
14. As to the allegation at [192] of the RCG CBD third further amended statement of claim that Gino Cassaniti was acting on his own behalf and on behalf of the other "primary conspirators", as adverted to above, the Borg Parties note that there is no pleading that Fred Khalil was acting on behalf of Gino Cassaniti (relevant in circumstances where there is a lack of evidence of dealings with Gino Cassaniti himself) (and they note that the pleading at [239] is limited in scope and directed, insofar as the Borg Parties are concerned, to the preparation or lodgement of tax returns).
15. It is said by the Borg Parties that, even if the claims made by the plaintiffs as to involvement by the Borg Parties in any conspiracy had subsisted, the allegation in particular (b) to [192] fails because there is no evidence that there was any such arrangement between Gino Cassaniti and Borg Family (or any other one of the Borg Parties) (noting that the plaintiffs here seek inferences to be drawn to that effect).
16. Finally, complaint is made that at [193] it is alleged that, by implementing the Scheme Recommendation (noting that there is no pleading as to how the Scheme Recommendation was implemented by Borg Family and Borg Civil Australia other than [190]) and by entering into any "arrangement" with Gino Cassaniti, Borg Family and Borg Civil "knowingly participated" in "dishonest and fraudulent conduct" and "knowingly assisted" Gino Cassaniti in "dishonest and fraudulent conduct".
17. Insofar as [232] of the RCG CBD third further amended statement of claim pleads both participation and assistance in relation to the conspiracy to defraud and the alleged breaches by Gino Cassaniti of his fiduciary obligations, the Borg Parties say that the former cannot subsist given that the plaintiffs do not contend that Gino Cassaniti either directly dealt with the Borg Parties or did so through an agent. (Pausing here, knowing assistance in relation to a conspiracy need not necessarily be directly with the relevant conspirator - here Gino Cassaniti. The more relevant complaint seems to be that there was no advice given by Gino Cassaniti to the Borg Parties, which goes to their knowledge of the alleged Scheme.) As to the pleading in relation to knowledge or assistance (see at [236] and [238]) complaint is made that there is no proper articulation of the knowledge that it is alleged that each of the Borg Parties had. It is noted that the RCG CBD pleading at [240] was superseded by the plaintiffs' oral opening.
18. The Borg Parties say that, it appears from the plaintiffs' submissions that only the allegation at [255(b)] (that the payments by RCG CBD to Borg Family amounting to $580,000 occurred without RCG CBD's authorisation) of the RCG CBD pleading is now pressed.
19. Insofar as the pleadings as to the conspiracy and the Scheme Recommendation (as against the Borg Parties) rest on the allegation that RCG CBD received "income", which was then disbursed leaving it unable to pay its tax obligations, the Borg Parties say that the RCG CBD third further amended statement of claim is silent as to how any of the moneys received by RCG CBD, especially from Borg Family or Borg Civil, constituted "income" in its hands and that there is no evidence to demonstrate that this was the case. Insofar as the Commissioner (or RCG CBD) may have treated the transfers to RCG CBD as income does not, the Borg Parties say, make that the case for present purposes (especially, it is said, because the Borg Parties have no standing to challenge or otherwise object to the default assessments).
20. The Borg Parties note that it is pleaded in the RCG CBD third further amended statement of claim (at [145]-[147]) that RCG CBD was utilised by all of the Primary Conspirators (including Fred Khalil) as a vehicle for the primary conspiracy; and that the Scheme Recommendation as pleaded at [148] involves a number of different groupings of parties (the Scheme Participants, including all of the Borg Parties (see at [123]-[126]); the Receiving Participants, including Borg Family; and the Paying Participants, including Borg Family and Borg Civil Australia). It is noted that, uniquely, Borg Family is both a Paying Participant and a Receiving Participant.
21. The Borg Parties say that the discrete transactions (the payments of $33,000 and $15,000) cannot sensibly be said to fit the Scheme Recommendation or the primary conspiracy, given that, as to the first, there is no repayment of those moneys; and as to the second, the payment was to Bluemine for a truck Borg Family purchased.
22. Insofar as the pleading asserts that entry into certain transactions (identified at [148(b)-(c)] of the RCG CBD pleading) would permit the reduction of taxable income and/or otherwise benefit the Scheme Participants, the Borg Parties emphasise that Borg Family lodged its BAS on the accrual basis. It is said that there is, therefore, a disconnect between the Scheme Recommendation, as pleaded, and the nature of Borg Family's accounting. It is said that, on an accrual basis, the claiming of GST credits could not, and would not, be conditioned upon the making of any payments to RCG CBD; and hence, that the payments between RCG CBD and Borg Family were unnecessary for the latter to claim its deductions. Further, it is said that any transfers to or from RCG CBD could not possibly bear any causal connection between the alleged breaches by Gino Cassaniti of his obligations and any benefit or gain to the Borg Parties.
23. The Borg Parties emphasise that the RCG CBD pleading at [148(a)] is that each of the Primary Conspirators, including Fred Khalil, represented to the Borg Parties that RCG CBD was incorporated and utilised at least by them. It is said by the Borg Parties that that positive allegation of fact (which is not expressed as an alternative to the other sub-paragraphs of [148]) is inconsistent with the allegations in the plaintiffs' RCG CBD reply to the effect that Fred Khalil had no authority from RCG CBD to enter into the arrangement pleaded in the RCG CBD defence.
24. In any event, the Borg Parties say that if moneys were transferred to RCG CBD from Borg Family based on representations from a person who had no authority to make them, then those moneys ought to have been returned to Borg Family because RCG CBD had no right to keep them. It is said that, for as long as RCG CBD had those moneys in its possession, it held them on trust for Borg Family.
25. As to the allegations in [148(a)] to [148(k)] of the RCG CBD third further amended statement of claim, the Borg Parties say that they fall into two groups: first, the allegations that involve RCG CBD issuing allegedly false invoices (see 148, (d), (e), (g) and (h)), none of which allegations, it is said, can apply to any of the Borg Parties because there has never been any claim that RCG CBD issued any invoices to Borg Family; and, second, the allegations in 148, part of (b), (f), and (i) to (k), which it is said are more narrow in scope and may apply to the Borg Parties. It is again noted that there has never been any allegation that the Borg Parties issued any "false" or "fictitious" tax invoices or were otherwise party to any "invoicing" arrangements (as described in the plaintiffs' submissions at, for example, [243], [478], [489], [705]).
26. The Borg Parties say that the allegations in the plaintiffs' submissions of falsity as to the issuing of RCTIs are ambiguous because it is unclear whether they are contentions as to the authenticity of the documents or whether they are new factual contentions to the effect that the issuing of RCTIs by Borg Family was an indicium of the so-called Scheme Representation. It is said that if these contentions are evidentiary, then they fail because the plaintiffs have never challenged the authenticity of those documents; whereas if they are posited as a new indicium of the Scheme Recommendation, then they should be rejected because they have never been pleaded. Indeed, Mr Afshar, appearing for the Borg Parties, criticised the pleadings during the hearing on the basis that the allegations made by the plaintiffs in opening submissions (see T 131) of falsely created invoices and Borg Family not lawfully being able to issue RCTIs were not pleaded (T 177).
27. Finally, insofar as there is reference in the plaintiffs' submissions (at [872]) to what is said to be a "Vehicle Scheme", the Borg Parties point out that this is a term not defined in the pleadings (nor in the plaintiffs' submissions).

Gino Cassaniti's submissions on the pleadings

1. Gino Cassaniti adopts the submissions on pleadings made by the other defendants.

Plaintiffs' response to defendants' criticism of pleadings

1. In response to the defendants' contentions as to adequacy of the pleadings and inconsistencies in the pleadings, in their closing submissions the plaintiffs confirm that the primary cause of action pleaded against each defendant (accessory) is that the fiduciary, acting dishonestly, was in breach of fiduciary duty; and that the accessory knowingly assisted in that breach (i.e., a second limb Barnes v Addy claim) (not a first limb Barnes v Addy claim), pointing by way of example to the pleading in the Bluemine third further amended statement at [239]-[242] (extracted above).
2. The plaintiffs say that the whole of the pleading before [239] is of facts that the plaintiffs contend against each defendant. It is said that it was made plain in opening that the pleadings were directed at defendants in respect of the specific transactions in which they were involved. The plaintiffs say that the issue now is simply whether those causes of action have been made out on the evidence and within the pleaded causes of action, particulars, openings and conduct of the trial (i.e., not whether the plaintiffs have established every fact in their pleading; rather, whether the plaintiffs have established sufficient facts).
3. By way of example, the plaintiffs refer to [242], the thrust of which they say is the participation by Scheme Participants in the respective transactions referable to each of the Scheme Participants. It is said that, if participation is established on the evidence, then that is proof of sufficient essential facts to enliven the cause of action, whether or not the plaintiffs have established a Scheme Recommendation or its implementation. Reference is made in this context to what was said in Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609; [2014] NSWCA 266 (Hasler v Singtel Optus) as to the elements required to prove a claim based on the second limb of Barnes v Addy (and to Lewis Securities v Carter per Emmett AJA at [185]-[186]). The plaintiffs point out that in Hasler v Singtel Optus there was no pleaded contention that the fiduciary's conduct was dishonest and fraudulent (at [38]) nor was this contended in the plaintiff's opening or in the statement of real issues in dispute given to the primary judge (see the reasons at [45]); and that it was not until final addresses that such a contention was raised ([48]); but nevertheless, the primary judge held that the plaintiff succeeded against an accessory on the second limb of Barnes v Addy (and that finding was upheld on appeal, referring to what was said by Leeming JA (with whom Barrett and Gleeson JJA agreed) from [38]ff; and at [49]-[52]). The plaintiffs also refer to Leeming JA's reasons (at [130]-[131], [139]) as to the requisite knowledge of a party against whom a second limb Barnes v Addy claim is made, noting his Honour's observation at [75] that equity intervenes to hold liable a third party who "merely assists" a breach of fiduciary duty (with the requisite knowledge) "in order to deter conduct which directly undermines the high standards required of fiduciaries".
4. The plaintiffs say that the defendants' submissions in the present Proceedings have erroneously sought to elevate pleadings to the equivalent of a mathematical equation; and have then contended for the plaintiffs' failure to prove all that has been pleaded against them. Reference is made to HIH Insurance Ltd (in liq) v Adler [2007] NSWSC 633 (HIH v Adler) at [50]-[51] per Einstein J for the proposition that it is not necessary (for a finding of knowing involvement in a contravention) that the accessory have knowledge of the contravenor's intentions and every aspect of the contravention; rather, there need only be knowledge of the essential facts.
5. The plaintiffs here say that the pleadings have identified for the defendants the full factual case that is alleged against each of them, respectively. It is submitted that (upon consideration of the pleadings, opening and conduct of the trial) all accessory defendants must have understood that they faced a second limb Barnes v Addy case; and hence, that the issue now is whether the plaintiffs proved: a breach of fiduciary duty; a dishonest and fraudulent design by the fiduciary; participation in that misconduct by the relevant defendant (whilst not inducing it or procuring it), i.e., that the defendant's activities show that the defendant assisted in, or facilitated, or furthered, that breach; and the defendant's knowledge of the misconduct within one of the four Baden Delvaux categories of knowledge as stated in Farah Constructions (see Hasler v Singtel Optus at [130]). Reliance is placed in particular on what was said by Leeming JA in Hasler v Singtel Optus at [139], namely that on conventional principles liability arises "without more" (original emphasis) than circumstances where the third party accessory knows the "essential facts" constituting what is a prima facie dishonest breach of duty by the fiduciary in which the they are participating "without more" (original emphasis) because the defendant has "studiously" avoided making such enquiries as an honest and reasonable person would and/or has wilfully shut his or her eyes to the obvious.
6. As to Ivana Cassaniti's submission at [27] in relation to the plaintiffs' pleaded case, and in answer to the various defendants' attribution of knowledge point, the plaintiffs rely on Beach Petroleum NL v Johnson (1993) 115 ALR 411; [1993] 43 FCR 1 (Beach Petroleum) at 574 per von Doussa J; namely, that the knowledge of a person is not imputed to a corporation where that person's knowledge is an element of his or her fraud against the corporation (Beach Petroleum NL v Abbott Tout Russell Kennedy (1999) 48 NSWLR 1; [1999] NSWCA 408 (Beach Petroleum v Abbott Tout)). It is noted that in Aequitas Ltd v AEFC Leasing Pty Ltd [2001] NSWSC 14; (2001) 19 ACLC 1,006 at [306], Austin J stated that the criteria of fraud in Beach Petroleum is capable of including equitable fraud arising out of breach of duty, at least where the fiduciary's conduct is morally reprehensible.
7. Regarding Givana Prestige and Discobell, the plaintiffs maintain that the fiduciary's breaches of duty were as pleaded in the respective pleadings (Diamondwish second further amended statement of claim; Rackforce third further amended statement of claim).
8. It is noted that at [186] of the Diamondwish pleading (wherein Frank Criniti is the relevant fiduciary), the duties pleaded included: the duty not to permit the interests of others to conflict with the interests of Diamondwish; the duty not to allow the fiduciary's duties to Diamondwish to conflict with his own interests with interests of others; and the duty not to allow dissipation of Diamondwish's assets, other than for genuine commercial obligations. At [187], breaches of those duties are pleaded; for example: causing or permitting Diamondwish to enter into the transactions; causing or permitting Diamondwish's assets to be dissipated without any genuine commercial obligation to do so. At [188] it is pleaded that the fiduciary's breaches were dishonest and fraudulent.
9. Similar allegations are made in the Rackforce Proceeding (see at [95]-[97]). There are similar allegations pleaded in the Bluemine Proceeding.

Procedural issues - Applications for amendment of defences

1. The hearing commenced on 3 February 2020. During the course of the hearing, the defendants made two separate sets of amendment applications: first, applications to amend their defences to raise issues of causation and a failure to mitigate (the causation/mitigation defences); and second, applications to raise a plea based on the import of the releases granted to particular defendants (or, in the case of Andrew Barsa, the apparent abandonment of claims against a defendant) (the joint release defences).

Causation/mitigation defences

1. As to the applications to amend defences to plead causation/mitigation, the impetus for this came with an application made on 11 February 2020 by the AKA Parties (then followed by similar applications by the other defendants) for leave to rely upon amended defences. The proposed amendments were to the effect, first (the causation defence), that the plaintiffs (and not the AKA Parties) had caused any loss arising from the taxation debts assessed against the Insolvent Companies by, in effect, the liquidator failing or refusing to take any steps towards lodging tax returns or objecting to the default assessments under Pt IVC of the Taxation Administration Act (a course then open in relation to the lodgment of objections until at least 24 November 2020, that being four years from the date of the default assessments); and, second, that the plaintiffs had failed to mitigate their loss (the mitigation defence) and that the plaintiffs are otherwise disentitled from recovering any loss on equitable grounds. The same particulars were relied upon for both the proposed causation and mitigation defence.
2. It was said that the causation argument turned on the bifurcated nature of tax recovery as against contesting an assessment (the AKA Parties here citing Federal Commissioner of Taxation v Futuris Corporation Ltd (2008) 237 CLR 146; [2008] HCA 32 (Futuris)). I consider this in more detail in due course. However, in essence, what is said is that until a challenge to the assessment has been abandoned or finally determined it must be considered by the Commissioner that the causal link between the Scheme alleged in the present proceeding and the alleged loss has been broken by the failure of the liquidator to object to the assessments. (Pausing here, ultimately it seemed to me that this was an argument about failure to mitigate; not about causation per se.)
3. (A further amendment was also sought by the AKA Parties by way of a contingent claim to any funds recoverable by Bluemine from the AKA Parties (the contingent defence) but it is not necessary here to address this.)
4. The AKA Parties contended that there had been no delay in raising those defences, having regard to the fact that, on 12 February 2019, Rees J had made orders by consent to the effect that the AKA Parties were not required to plead to certain matters. The relevant orders made on 12 February 2019 included the following: In proceedings no. 2016/194955 (the Earth Civil proceedings): (1) The 1st, 7th and 8th defendants to file and serve verified defences by 25 February 2019, but are not required, on the basis of the privilege against self-incrimination, to comply with rules 14.14 and 15.1 of the Uniform Civil Procedure Rules 2005 (NSW) in pleading to the following paragraphs in the Further Amended Statement of Claim…. (1A) Rule 14.23(3)(c) be dispensed with in relation to the paragraphs of the Further Amended Statement of Claim identified in Order 1, for the purpose of the defences of the 1st, 7th and 8th defendants. In proceedings no. 2016/256135 (the Bluemine proceedings): …. (1) The 3rd, 4th, 5th, 20th, 21st, 23rd and 24th defendants to file and serve verified defences by 25 February 2019, but are not required, on the basis of the privilege against self-incrimination, to comply with rules 14.14 and 15.1 of the Uniform Civil Procedure Rules 2005 (NSW) in pleading to the following paragraphs in the Second Further Amended Statement of Claim…. (1A) Rule 14.23(3)(c) be dispensed with in relation to the paragraphs of the Second Further Amended Statement of Claim identified in Order 1, for the purpose of the defences of the 3rd, 4th, 5th, 20th, 21st, 23rd and 24th defendants.
5. The context in which the consent orders were made on 12 February 2019 was that the AKA Parties had filed (on 2 September 2018) an amended interlocutory process in the Bluemine Proceeding, seeking orders, inter alia, that: the 20th defendant (Andre Abou-Antoun) and the 21st defendant (Michael Abou-Antoun) in the Bluemine Proceeding be excused from pleading to particular specified paragraphs of the further amended statement of claim; and that the 3rd, 4th, 5th, 23rd and 24th defendants (the AKA Parties which were the corporate defendants) be excused from pleading to any paragraphs of the plaintiffs' further amended statement of claim that would incriminate Andre and Michael Abou-Antoun. Similar orders were sought in relation to the Earth Civil Proceeding.
6. The AKA Parties maintained that, on a proper construction of the 12 February 2019 consent orders, each of the proposed defences fell within the ambit of those consent orders. They submitted that, even if wrong on the proper construction of the 12 February 2019 consent orders, there was no relevant delay in circumstances where their opening submissions, filed and served on the plaintiffs on 5 December 2019, foreshadowed the possibility that they would choose to run a positive case after close of the plaintiffs' case.
7. In essence, the AKA Parties contended (and said this was the basis on which the consent orders were made by Rees J) that the ordinary requirements that the AKA Parties positively plead to matters pleaded by the plaintiffs in the Proceedings had been dispensed with in each of the Proceedings on the basis of the privilege against self-incrimination. It was submitted that, consistent with authorities where leave has been granted to defendants to withhold expressing a positive defence on the grounds of self-incrimination privilege, any prejudice to the plaintiffs was alleviated by way of leave to adduce evidence in reply (and it was said that this was an incident of procedure where self-incrimination privilege arises on the pleadings).
8. The AKA Parties maintained that amendment of the defences to include such defences would not require the hearing dates to be vacated; rather, that the plaintiffs could continue their case unimpeded and then adduce any necessary evidence in a case in reply.
9. In the course of submissions, Counsel for the AKA Parties accepted that no claim for failure to mitigate had been pleaded (T 213); and quite fairly accepted that such a pleading would not have offended against any self-incrimination privilege (T 219). Counsel for the AKA Parties confirmed that they did not run a "positive case" that the impugned transactions were genuine (T 219).
10. Ultimately, the submission of the AKA Parties was that they were not required to plead to the causation issue until the close of the plaintiffs' case but they accepted that the position was not the same as to a failure to mitigate argument (see T 215-217).
11. Various of the defendants indicated their intention to make similar applications (see at T 230-231, Counsel for the Borg Parties also foreshadowed seeking leave to amend in relation to causation).
12. When the application for amendment to plead the causation/mitigation defences was argued at the hearing, complaint was made for the plaintiffs that none of the defendants had pleaded that the liquidator ought to have considered whether or not to appeal or object to the assessments; and raised an issue of procedural fairness in this regard (see at T 293-294).
13. The plaintiffs argued that, for the liquidator to mount a challenge to the assessments, the liquidator would have to demonstrate that all of the transactions were shams (see T 218) in circumstances where the defence of those who advocated for a challenge was that the transactions were not a sham. It was said that, on the application for the appointment of a special purpose liquidator before Black J, his Honour had considered that it was an impossible position to assess the prospects of such a challenge to the assessments where the persons who have the knowledge of whether circumstances existed for such a challenge are denying that those circumstances exist (T 218).
14. Counsel for the AKA Parties maintained that they do not have to show the transactions a sham in order to establish the basis for an objection; rather, it was submitted that the Commissioner has the requisite information and that under s 166 of the legislation is bound to use all information in determining the objection (T 218). That, however, seems to me to conflate whether a causation/mitigation defence would be established, not whether it should be permitted to be run at the stage of the hearing at which it was first raised. Indeed, in the course of argument, Counsel for the AKA Parties agreed that it would be incumbent on them, if the causation/mitigation defences were allowed to be pleaded, to prove on the balance of probabilities that, had an objection been lodged, it would have been allowed under s 14ZY(1A) of the Taxation Administration Act (T 427).
15. Further, in relation to the significance of the application that had unsuccessfully been made to Black J for the appointment of a special purpose liquidator, various of the defendants noted that they had not been privy to (or in some cases aware of) that application.
16. There was debate during the hearing as to the pleading deficiencies perceived by the plaintiffs in the proposed amended defences dealing with the causation/mitigation issues and, for the reasons discussed in the course of submissions, I considered that those had considerable force.
17. Ultimately, I accepted that, insofar as the defences (and not all did) contained a denial on the issue of causation of loss, then I would permit an amendment of the defences to plead (subject to the pleading issues raised in argument) the facts on which that denial was based but I was not prepared to give leave at the by then late stage of the matter to permit the mitigation defence to be raised. That was in circumstances where no positive defence of that kind had previously been foreshadowed (see, for example, what was said in Anderson v ASIC (2012) 297 ALR 546; [2012] QCA 301 by the Court of Appeal in Queensland (McMurdo J, with whom Holmes JA, as her Honour then was, and White JA agreed), dealing with a claim for common law privilege (at [37]), as to the provision of at least a skeleton indication of what is intended to be pleaded.
18. It seemed to me that notification to the liquidator of the positive case that a defendant was reserving its position to bring at the close of the plaintiffs' case (while in the interim maintaining the privilege against self-incrimination) would avoid an ambush in that regard (at least if accompanied by an articulation of the facts on which such a case might be run).
19. I was not prepared to allow the amended pleading of the causation defence in the form in which it had been provided; and I was not prepared to allow the mitigation defence in circumstances where that could have been pleaded at a much earlier stage without infringing the privilege against self-incrimination. I accepted the liquidator's submission that to run such a case at the stage it was raised would require an adjournment to allow the liquidator to meet that newly raised factual case.
20. In that context, I had regard to the principles in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27 as to amendment of pleadings (including that costs are not a panacea for all ills - see at [99]) and to the admonition by the High Court in UBS AG v Tyne (2018) 265 CLR 77; [2018] HCA 45 as to the public interest in the due administration of justice; and the numerous decisions that have made clear that one does not litigate by ambush (see for example White v Overland [2001] FCA 1333; Australian Securities and Investments Commission v Rich (2009) 236 FLR 1; [2009] NSWSC 1229 (ASIC v Rich) at [168]-[169] per Austin J) and the statutory overriding purpose of the just, quick and cheap resolution of the real issues in dispute (see s 56 of the Civil Procedure Act 2005 (NSW) (Civil Procedure Act)) noting that the matter had been set down in April 2019 for an eight week hearing commencing in February 2020.
21. As to the distinction between a plea of failure to mitigate and a denial of causation of loss, I add the following to the oral observations I made during the course of debate on the amendment application insofar as it related to the mitigation defence.
22. It is well understood, when taking into account the assessment of damages that a failure to mitigate ensures the defendant is only liable for the portion of the plaintiff's loss caused by the defendant's breach (see Chand v Commonwealth Bank of Australia [2015] NSWCA 181 (Chand) at [181]; Sotiros Shipping Inc and Aeco Maritime SA v Sameiet Solholt [1983] 1 Lloyd's Rep 605 (The Soholt)).
23. At first instance in Chand, Robb J had noted (in obiter) that the standard of conduct required by the plaintiff following the defendant's breach was the same whether it was approached as a question of causation (novus actus interveniens) or mitigation, being a standard of reasonableness (Chand v Commonwealth Bank of Australia [2014] NSWSC 708 at [389]; Chand at [58]). Whether the issue is dealt with as a novus actus interveniens or as a failure to mitigate may impact how damages are assessed (see Halsbury's Laws of Australia, vol 135, at [25], [740]). A novus actus interveniens limits the plaintiff to a recovery of nominal damages; whereas a failure to mitigate results in a reduction of damages.
24. As I noted in Chand, in Koch Marine Inc v D'Amica Societa di Navigazione ARL [1980] 1 Lloyd's Rep 75, Goff J characterised three aspects of mitigation (non-recovery for avoidable loss; recovery for loss incurred in reasonable attempts to avoid loss; and non-recovery for avoided loss), all as ultimately aspects of the principle of causation. In Chand, without addressing that proposition, it was concluded that the defendant's liability for prospective loss was correctly analysed by, first, considering whether a breach caused a particular loss and, second, addressing whether there had been a failure to mitigate (see Chand at [184]) (reference being there made to the order in which it is suggested such issues should fall for consideration in H McGregor, McGregor on Damages (19th ed 2014, Sweet & Maxwell) at [6-013]). If, as a matter of legal rather than factual causation, no loss has been caused by the relevant breach (such as where the sole effective cause was found to be some other act or event) then the question of mitigation would not arise.
25. That illustrates the need to plead the positive facts relied upon for a failure to mitigate defence. In circumstances where such a pleading had not here been addressed by the respective defendants (and where there would have been procedural unfairness for it to be raised at the stage that the issue was eventually canvassed), I refused leave to amend to plead a failure to mitigate (as opposed to the existing causation argument - since that went to the fact of what had or had not happened not the reasonableness of the liquidator's conduct in that regard).
26. Ultimately, therefore, I gave leave for the filing of the amended defence limited to the allegations in relation to [25] and directing that that be filed and that there be provision of particulars by close of business on 17 February 2020 (T 450). I made it clear that, insofar as the position of the AKA parties in relation to the non‑pleading of a positive case of failure to mitigate was based on a concern that this would impinge upon the privilege against self‑incrimination, the dismissal of the application for leave to amend would not preclude the raising of the making of an application at the close of the plaintiffs' case in relation to any matter that it is said could not have been pleaded without impinging upon the privilege against self‑incrimination. In that regard, I gave leave to the AKA parties to amend their defence in order to contain a contingent pleading by which causation is denied.

Joint release defence

1. As to the second set of amendment applications, the impetus for this came from an application by Ivana Cassaniti, after she had retained Mr Cook SC to act in the Proceedings.
2. The context in which this application arose was that, on 30 June 2017, 27 August 2018, 3 October 2018 and in December 2018, the plaintiffs entered into a number of Deeds of Settlement and Release with various defendants in the Bluemine Proceeding, including defendants alleged to have been Scheme Participants (the Bluemine Deeds) (see Ex 28). Pursuant to the Bluemine Deeds, moneys were paid and notices of discontinuance or consent orders for the dismissal of the Proceedings have been filed in respect of the relevant defendants.
3. On 19 February 2019, Stevenson J delivered judgment in Edgewater Homes (see below).
4. On 10 April 2019, the plaintiffs entered into a further Bluemine Deed with another Scheme Participant (Laurance Abou-Antoun), pursuant to which moneys were paid and a notice of discontinuance was filed.
5. In January 2020, Gino Cassaniti issued a notice to produce for inspection seeking the production by the plaintiffs of, inter alia, deeds relating to settlements with defendants in each of the five Proceedings, including the Bluemine Proceeding (see T 22.13). Ivana Cassaniti also sought inspection of the settlement deeds by issuing a notice to produce on 16 January 2020. The plaintiffs resisted the production of those deeds, including by challenging the relevance of the request and by claiming privilege against production.
6. On 29 January 2020, the plaintiffs filed a notice of motion seeking to set aside, inter alia, parts of a notice to produce seeking confidential settlement deeds.
7. On 3 February 2020, at the commencement of the hearing, after debate as to the application to set aside the notice to produce, directions were made that documents in answer to Gino Cassaniti's notice to produce in relation to the settlement deeds be produced into court at 9 am on 7 February 2020 and that access to those documents be restricted, subject to further order, to the legal representatives for the defendants (T 21.35-22.19).
8. On 20 March 2020, as adverted to above, Senior Counsel for Ivana Cassaniti (who had only inspected the deeds of release that day) raised in Court the issue as to the import of the release of joint and several liability by reference to the Edgewater Homes decision and foreshadowed an application for leave to amend Ivana Cassaniti's defence to plead that she had been released of her alleged liability to the plaintiffs by reason of a deed of release entered into by the plaintiffs (on the basis of the principles discussed in Edgewater Homes - see T 1430 onwards).
9. That led to a cascade of similar applications, each of which was opposed by the plaintiffs. Among other things, the plaintiffs argued that the ratio of Edgewater Homes is not that the liability of a fiduciary and an accessory is joint and several and that, therefore, release of one releases them all; noting that his Honour expressly said (at [32]) that it was not necessary to resolve that "vexed question". Further, insofar as his Honour went on (at [32]-[36]) to consider and then apply the so-called "acting in concert" exception (to the general rule that release of one whose liability is joint and several releases all) as expounded in Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; [2012] FCAFC 6 (Grimaldi v Chameleon Mining), the plaintiffs contended that for the defendants to rely on this it would be necessary for them to plead (which the proposed amended defences did not do) facts and circumstances giving rise to the exception and that this would amount to an impermissible pleading of contradictory facts and (given the way in which the defences had been conducted to date) would amount to an attempt both to approbate and reprobate. It was said that, in light of the pleaded denial of conduct amounting to the alleged conspiracy, this would be impermissible (reference being made to r 14.18 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) and to Issitch v Worrell (2000) 172 ALR 586; [2000] FCA 477 at [32] per Drummond J (with whom Spender and Katz JJ agreed)). (The defendants denied that the proposed amended pleading required them to do so.)
10. After the filing of affidavits from the respective legal representatives for the defendants as to the circumstances in which the application was made (in effect that they only became aware of the Edgewater Homes decision after it was brought to their attention by Mr Cook SC) and after cross-examination of those legal representatives, I granted leave for the amendment application.
11. I did so, in summary, for the following reasons.
12. I accepted that there had been no deliberate delay in the making of the application to raise such defences and that an explanation had been proffered by the respective legal representatives for the fact that the defence had not been raised earlier. I considered that it was, other than perhaps as to the abandonment argument in relation to Andrew Barsa, solely a question of law (and any prejudice in the issue being raised late could be met by time for evidence in response) and that it was in the interests of justice that the defence be able to be raised because, if successful, it would mean in effect that the defendants were being prosecuted for a claim from which they had been released as a matter of law; and that any judgment against them in those circumstances would be a miscarriage of justice.
13. I accepted that the factual basis of the defence was of narrow compass (limited to the Settlement Deeds and perhaps the communications in relation to the proposed claim against Andrew Barsa); and the defendants said that no further evidence would be introduced to support the defence, save for the tender of the deeds themselves (and any evidence that the plaintiffs may seek to adduce to prove that the releases have not become operative - liberty in that regard was exercised by the plaintiffs and I read, over the objection of Counsel for Ivana Cassaniti, the affidavit of Mr Narayan explaining the circumstances in which the claim was ultimately not pressed against Andrew Barsa, though he had been named as a defendant in the Bluemine Proceeding). It was noted that the legal argument might be complex but that such complexity would have existed had the defence been raised earlier.
14. As to costs, it was generally accepted that if the amendment were allowed, then the ordinary consequence would follow that the defendants should pay the costs thrown away by the amendment. (Ivana Cassaniti foreshadowed an application for a different order were it to be the case that the plaintiffs were not unaware of the possible application of the principle in Edgewater to these Proceedings before 20 March 2020, in which case it was said that she would argue that the plaintiffs should be ordered to pay costs and on the indemnity scale. I did not entertain that application; not least because there was no basis to form the view that any forensic decision of the kind such an application appeared to contemplate had been made.) Otherwise, it was said that, apart from the costs of the application to amend, which if unsuccessfully opposed by the plaintiffs should be borne by the plaintiffs (Bendigo and Adelaide Bank Ltd v Russo (No 3) [2017] NSWSC 566 at [21]-[24] per Bellew J), it was not apparent what costs might have been wasted.
15. Ultimately, I reserved the question of costs in the orders dated 2 April 2020 which granted leave to the defendants to file amended defences to include the joint release defence.
16. I consider below the merits of the causation and joint release defences.

Jones v Dunkel - Relevant principles

1. Jones v Dunkel inferences are here sought to be drawn in the context where the Primary Conspirators) have not made themselves available for cross-examination and have not explained matters peculiarly within their knowledge in their affidavit evidence, and, in the case of various other defendants, where they have not given an explanation of matters otherwise within their knowledge. It is to be noted that this is in the context of Proceedings involving allegations of equitable fraud and dishonesty (and where various of the witnesses who did make themselves available for cross-examination sought and obtained certificates under s 128 of the Evidence Act to preserve privilege against self-incrimination).
2. One of the rationales for the drawing of a Jones v Dunkel inference in a civil trial is that, where there is a reasonable expectation that a party will give or call relevant evidence, it is open to conclude that the failure of a party or someone in that party's "camp" to give such evidence leads rationally to an inference that the evidence would not assist the party's case (see RPS v R (2000) 199 CLR 620; [2000] HCA 3 (RPS v R) at [26] per Gaudron ACJ, Gummow, Kirby and Hayne JJ); whereas it is recognised that "it will seldom, if ever be reasonable to expect that the accused in a criminal trial would be expected to give evidence" (RPS v R at [27]) (for reasons of prosecutorial burden and a presumption of innocence). Hence, a Jones v Dunkel inference is generally not available in a criminal trial.
3. This distinction between civil proceedings and criminal trials in this regard continues to hold even in civil proceedings involving serious allegations such as to attract the considerations adverted to in Briginshaw and s 140(2) of the Evidence Act.
4. This issue has most commonly arisen in civil penalty proceedings. In Adler v Australian Securities and Investments Commission (2003) 179 FLR 1; [2003] NSWCA 131 (Adler v ASIC), Giles JA (with whom Mason P and Beazley JA, as Her Excellency then was, agreed), noting that proceedings for civil penalties do not share the same fundamental features as a criminal trial (see at [658]), concluded (at [660]-[661]) that it was open for Jones v Dunkel inferences to be drawn in civil penalty proceedings. See also Adams v Director of Fair Work Building Industry Inspectorate (2017) 258 FCR 257; [2017] FCAFC 228 at [147] per North, Dowsett and Rares JJ. There is no reason in principle why that reasoning ought not apply to civil proceedings in which fraud or equitable fraud is alleged (and see the obiter observations of Rein J in Hudak v Adams (2013) 17 BPR 32,289; [2013] NSWSC 1464 in this regard).
5. No adverse inference may be drawn from a claim of privilege (see Wentworth v Lloyd (1864) 10 HL Cas 589; 11 ER 1154). However, there is a distinction between a failure to answer a question upon the invocation of privilege, and a failure to adduce evidence at all. Lee J adverted to that distinction in Pappas v New World Oil Developments (1993) 43 FCR 594 at 595, when noting that: Of course, the failure to adduce evidence on central issues on which the witness may be expected to give evidence will permit a court to be satisfied that inferences adverse to the case of that party may be properly drawn notwithstanding that the ground for refusal to provide the evidence may be rooted in the privilege against self incrimination.
6. That distinction was later adopted by Warren J (as her Honour then was) in Australian Securities and Investments Commission v ABC Fund Managers Ltd (2001) 39 ACSR 443; [2001] VSC 383 (ASIC v ABC Fund Managers) at [109] and by Sackar J in Sturt v Farran (Bishop of Newcastle) [2012] NSWSC 400 at [383]. Similarly, the Court of Appeal of Victoria (Redlich, Santamaria and Kyrou JJA) in Chong & Neale v CC Containers Pty Ltd (2015) 49 VR 402; [2015] VSCA 137 (Chong), referring to both of those authorities, framed the distinction thus at [218]: 218. … no adverse inference may be drawn from the refusal of a witness to answer a question on the ground that the answer may, or would, tend to incriminate the witness. But we are not presently concerned with the application of the principle that no adverse inference as to the credit of a witness may be drawn as a result of their exercise of the privilege to refuse to answer questions, but with the quite distinct issue of the inferences that may properly be drawn as result of the absence of evidence from that witness.
7. In Patrick Stevedores Holdings Pty Ltd v Construction, Forestry, Maritime, Mining and Energy Union (2019) 286 IR 52; [2019] FCA 451, Lee J referred to the Court of Appeal's decision in Chong. His Honour noted that, in Chong, the party that had not given evidence had made an express claim to the privilege against self-incrimination (and the penalty privilege). Whilst there was no express claim for privilege in the case that was before Lee J, his Honour explained that this was "not really to the point" (at [22]). Referring again to Chong, his Honour concluded (at [24]) that: 24. … their Honours observed that although no adverse inference may be drawn from the refusal of a witness to answer a question on the ground that the answer may, or would, tend to incriminate the witness, what the Court was concerned with was something quite different and logically distinct: the inferences that may properly be drawn as a result of the absence of evidence from that witness. The Court referred to a number of cases, including the consideration of the issue by Gilmour J in Australian Securities and Investments Commission v Fortescue Metals Group Ltd (No 5) [2009] FCA 1586; (2009) 264 ALR 201 at 224 [96], where his Honour explained that nothing had been said by the High Court that would extend the general proscription in criminal trials against engaging in inferential Jones v Dunkel reasoning to civil penalty proceedings: see also Australian Securities and Investments Commission v Geary [2018] VSCA 103; (2018) 126 ACSR 310 (Ferguson CJ, Weinberg JA and Sifris AJA) at 345-346 [233]-[235]. (emphasis in original)
8. From the above authorities it can therefore be seen that: first, there is a recognition of the basal rule that no adverse inference can be drawn from a refusal to answer a question where the reason for that refusal is an invocation of the privilege against self-incrimination; second, that there is a distinction between such a case and where there is a failure to adduce evidence on a particular issue (an inference may be drawn that such evidence would not have assisted the party's case, even though it might be supposed that the reason for the failure was likely that the evidence might tend to incriminate the party); and, third, that the distinction continues to apply where the party has failed to give any evidence at all.
9. Of course, the mere fact that a Jones v Dunkel inference may be available in cases where fraud is alleged, does not necessarily mean that such an inference should be drawn in any particular case (see, as illustrative of that proposition, Stevenson J's decision in Poole v Chubb Insurance Co of Australia Ltd [2014] NSWSC 1832 at [99]).
10. The plaintiffs here emphasise that the relevant facts are peculiarly within the knowledge of the relevant defendants or that the defendants have greater means to produce evidence relating to those facts. In those circumstances, they emphasise what was said by Gleeson J in BCI Finances v Binetter at [122]-[132]; the plaintiffs here invoking the evidential burden or onus of adducing evidence there arising to which reference was made in Krstic v Brindley [2006] NSWSC 1414 (Krstic v Brindley) at [26] per Campbell J. Gleeson J also referred in that regard, among other authorities, to Hampton Court Ltd v Crooks (1957) 97 CLR 367; [1957] HCA 28 (Hampton Court v Crooks) at 375; Tyco Australia Pty Ltd v Optus Networks Pty Ltd [2004] NSWCA 333 (Tyco Australia v Optus Networks) at [121] per Handley JA; Parker v Paton (1941) 41 SR (NSW) 237 (Parker v Paton) at 243; Ex parte Ferguson; Re Alexander (1944) 45 SR (NSW) 64 (Ex parte Ferguson) at 67, 70; United Group Resources Pty Ltd v Calabro (No 5) (2011) 198 FCR 514; [2011] FCA 1408 at [75]-[76] per McKerracher J.
11. The plaintiffs also here invoke the principles of evidence to which Gillard J referred in Li v The Herald and Weekly Times Pty Ltd (2007) Aust Torts Reports 81-887; [2007] VSC 109 at [306]ff. Gillard J there recognised that where the conduct of a litigant evinces a lack of faith in their case or consciousness of a weak cause (such as by a failure to produce a particular witness or document or the like), there is a rule (based upon common sense and life's experiences), that this conduct creates a "discrediting circumstance" that may enable "a link in the reasoning process to an adverse conclusion against the litigant".
12. As to the proof of fraud by circumstantial evidence, the plaintiffs point to what was said by the Court of Appeal in Sharma v Insurance Australia Ltd t/as NRMA Insurance [2017] NSWCA 307 at [17]-[19] per Meagher JA (with whom Macfarlan JA and Sackville AJA agreed).
13. Finally, I note that the defendants here emphasise (and the plaintiffs, I might add, accept) that in cases where serious allegations of the present kind (of equitable fraud and dishonesty, or which may expose defendants to criminal liability or a civil penalty) are made, the evidence must be assessed in accordance with the principle stated by Dixon J, as his Honour then was, in Briginshaw (at 361-362), namely that proof to reasonable satisfaction should not be produced by, inter alia, inexact proofs or indirect inferences (see, for example, Nadinic at [47]); Farah Constructions at [170]; and s 140 of the Evidence Act). Emphasis is placed by various of the defendants on the need for the feeling of an actual persuasion before the occurrence or existence of a fact can be found (the Borg Parties, for example, referring to what was said by Emmett J (sitting in the Federal Court as his Honour then was) in Warner v Hung; Re Bellpac Pty Ltd (recs and mgrs apptd) (in liq) (No 2) (2011) 297 ALR 56; [2011] FCA 1123 at [48]; and the observations of Kunc J in Chetwynd v Rose [2020] NSWSC 111 at [159]-[161], including the caution sounded by Basten JA (with whom Handley AJA agreed) in Sangha v Baxter (2009) 52 MVR 492; [2009] NSWCA 78 at [155]-[156] against global credibility findings.
14. Further, before approaching the evidence of the particular witnesses, I note that in Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 11 (Kuhl v Zurich Financial Services) the High Court (Heydon, Crennan and Bell JJ) said (at [62]), that to conclude that a party-witness is reluctant to say what happened is to conclude that the party-witness is deliberately failing to comply with the duty to tell the whole truth; and emphasised that this is a serious conclusion to reach. The High Court said at [64], contrasting the position with a Jones v Dunkel inference where a witness is not called, that a finding that evidence was deliberately withheld by a party-witness operated as an implied admission in that it could be inferred that the evidence was withheld "in breach of the witness' duty to tell the whole truth in answer to the question, because the plaintiff [party-witness] was conscious that success in the litigation would be rendered impossible or less likely if the material withheld were revealed". The High Court noted that a litigant who enters the witness box is under a positive duty to tell the whole truth in answer to the questions asked. The Court went on to say that two conditions should be satisfied before a party-witness is criticised for deliberately withholding the truth: first, that reasons must be given for concluding that the truth has been deliberately withheld; and, second, that the party-witness must have been given an opportunity to deal with the criticism (see at [67]). See also Lorrimar v Serco Sodexo Defence Services Pty Ltd [2014] NSWCA 371 (Lorrimar) at [101], [104] per McColl JA (with whom Macfarlan JA and Tobias AJA agreed), where it was noted that the obligation to do so stemmed from the rule in Browne v Dunn (1893) 6 R 67 at 70-71 per Lord Herschell LC.
15. This is relevant having regard to the various defendants' submissions to the effect that pleaded facts were not put to the respective defendant(s) in cross-examination. The plaintiffs submit that, where a defendant has categorically denied all involvement or has denied involvement except on a particular limited basis (which is shown to be false), coupled with the plaintiffs' case which is fully known and contested, the plaintiffs were not required to cross-examine. Reference is made in this context to Seymour v ABC (1977) 19 NSWLR 219 (Seymour v ABC) at 224F per Glass JA (with whom Reynolds JA agreed) and at 235F, 236D and 237C per Mahoney JA. Reference is also made to Trade Practices Commission v Mobil Oil Australia Ltd (1984) 55 ALR 527, where Toohey J in the Federal Court said (at 539-540) that a witness who contends "absolutely no recollection" of a conversation need not be taken through it by Counsel.
16. By way of example, the plaintiffs note that, in the present Proceedings, Ivana Cassaniti (knowing that the plaintiffs were seeking to make out their case on the basis of inferences to be drawn against her) denied that she had any involvement in or knowledge of the transactions and denied that she authorised, delegated or allowed any transactions for both Givana Prestige and Discobell. The plaintiffs say that it was not necessary for Ivana Cassaniti to be taken to facts which were alleged against her upon inference (other than the fact of transactions) because of her complete denial of involvement; and, further, that when the evidence did establish her knowledge and involvement in the transactions, Ivana Cassaniti was left with no defence case as pleaded or upon her evidence.
17. As to Tanya Borg, the plaintiffs make similar submissions. It is said that she too was aware of the case that was sought to be made upon inference; and that Tanya Borg's evidence and version of the events leaves no true explanation from her for these transactions, and that it is no answer to the plaintiffs' inferential case. It is said that, except for the occurrence of bank transactions, Tanya Borg's response was a denial of the plaintiffs' factual case based on inference. Again, the plaintiffs say that they were not required to cross-examine through a series of questions to elicit negative answers from her regarding every element rolled up in her pleading of denial (citing Seymour v ABC). It is said that Tanya Borg was fully aware of the case being put before her and she chose those parts to which she wished to respond to in her evidence (and those to which she did not wish to respond).
18. I consider in due course the findings in respect of which inferences were sought to be drawn from the failure of various of the witnesses (such as Gino Cassaniti) to give any evidence as to events that were peculiarly within his knowledge. Generally speaking, I consider that such inferences should here be drawn (since the evidence adduced by the plaintiffs called for an explanation from the missing witnesses as to matters within their knowledge). However, I bear in mind that such an inference does not permit a conclusion that the evidence if called would be positively damaging to the missing witnesses' case - it simply means that I can more confidently draw an inference otherwise open on the evidence. As to Ivana Cassaniti and Tanya Borg, however, they did make themselves available for cross-examination and, while I do not suggest that the plaintiffs wee required to cross-examine regarding every element encompassed by their denials of involvement, I do consider that the fact that they deposed to their recollection of events (even if not about all aspects of the transactions) is to be taken into account in determining whether any adverse inference should be drawn from the fact that particular aspects were not there addressed. That is particularly relevant where some of the transactions (for example Ivana Cassaniti's signature on various documents) go back for some years and may well not have been readily to mind. In any event I consider this in due course when considering their evidence.

Mitchell Ball

1. The liquidator, Mr Ball, gave evidence and was cross-examined by various of the defendants (largely, but not wholly, to go to issues ultimately raised by the amended causation defences).
2. Reliance is placed (see in due course below) by Gino Cassaniti on the liquidator's evidence (see at T 187) of his understanding as to the concept of "jump-on" directors and (at T 189) his assumption as to the purpose of such "jump-on" directors; it being noted that (at T 191) the liquidator agreed that it was possible that the purpose of "jump-on" directors was to protect existing directors.
3. At T 200, the liquidator accepted that the damages for loss from breach of fiduciary duty were calculated by reference to the tax assessments. At T 205, the liquidator said that he did not think that he had found any invoices issued by Bluemine to any of the defendant companies. At T 208-209, the liquidator accepted that the Commissioner had assessed money coming into the particular companies as assessable income and money out as non-deductible expenditure. It was accepted by the liquidator that the Commissioner had issued assessments without having received any contentions made by Bluemine. Reference was made to the paucity of company books and records (see at T 211). The reasons for the Commissioner's determinations were admitted subject to relevance (s 136) as going to the Commissioner's process in issuing assessments not for the findings contained therein (Ex E).
4. The liquidator denied that it was his responsibility (as liquidator) to ensure that tax returns were lodged by the relevant insolvent company but accepted that there was a responsibility to ensure compliance with tax obligations (T 220-221). At T 221, the liquidator said that he had thought about the possibility of objection to tax assessment and dismissed it because he had no reason to doubt the veracity of Commissioner's assessment (and had no books and records to contemplate it). The liquidator agreed that, by March 2017, he had the affidavit from Aris Zafiriou (then an ATO officer) from which he drew the inference that Bluemine did not earn the moneys it had received from paying entities; and the liquidator accepted (at T 221) that it appeared "paradoxical" that the Commissioner's assessment was on the basis of revenue earnt but that the information known to him was such that his view was that there was no basis for the money to be paid (and therefore, arguably the paying company could have claimed the money back). The liquidator accepted that no further enquiries were made beyond that about the assessments.
5. I accept that the liquidator gave evidence honestly and made appropriate concessions. There is no reason to doubt his professionalism or competence.

ATO officers

1. Each of Aris Zafiriou (now a former ATO officer), who while an ATO officer had deposed to various matters such as the relevant ASIC records, the investigations that had been carried out, and the provenance of documents, and George Khouri (a current ATO officer, who is a senior technical leader in the debt section and who also gave evidence as to similar matters) was cross-examined.
2. The evidence of Mr Zafiriou and Mr Khouri (each of whom has had considerable experience as debt recovery officers within the ATO but no qualifications in tax) simply proves the provenance of the documents before the Court. The Khalil defendants point to the fact that, although both gave evidence that the material tendered came from a much greater body of material which was obtained by the ATO in the course of the tax audit of Banq, neither was able to identify the criteria by which the documents were identified as relevant to the Proceedings. Nothing, however, seems to turn on this criticism made by the Khalil defendants.
3. No doubt was cast on the credibility of the liquidator, nor of the ATO officers who gave evidence. Mr Khouri's responsibility was in relation to debt recovery but not the determination of technical issues as to assessability (and he confirmed that he has no qualifications in law or accounting) (T 281). There is no reason to think that any of them was not giving evidence honestly and to the best of his ability; nor that their conduct in the course of the liquidation and investigation was anything other than competent and professional.

Gino Cassaniti

1. Gino Cassaniti's evidence, as contained in his affidavits sworn 11 April 2019 and 28 June 2019, is broadly as follows.
2. Gino Cassaniti deposed that: in around 2008, he formed Banq Accountants with Fred Khalil and Ivana Cassaniti ([4]); Fred Khalil and Peter Abboud were "equity partners" in the venture ([5]); Gino Cassaniti was involved in litigation with his cousin which consumed a lot of time and money for approximately four years, and at that time Banq Accountants was falling behind with remittances to the ATO ([8]); in June 2011, Banq was formed with Ivana Cassaniti, Fred Khalil and Peter Abboud with shareholdings being commensurate with the money invested in the venture ([10]); Ivana Cassaniti had children in 2010, 2012 and 2014 at which time she "stopped doing accounting altogether" ([11]); by May or June 2013 Gino Cassaniti resolved to go bankrupt as he could no longer deal with the ATO ([13]); at that time, he accepted an oral invitation from "someone" at Banq to "become a director of some of my clients' companies for a short time" ([13]) although he never heard anything further about that ([14]); in December 2013, he ceased consulting for Banq ([30]); on 18 March 2014, he was made bankrupt and was subsequently discharged from bankruptcy on 18 March 2017; if there was a Scheme, he did not know of the Scheme as alleged, did not promote the Scheme as alleged, and has not received any payments from the Scheme ([36]).
3. In relation to each of RCG CBD, Bluemine and Earth Civil (of each of which he is alleged to have been director at the time of the resolution to enter a creditors' voluntary winding up) (and also Involved Recruitment), Gino Cassaniti (see his affidavit sworn 11 April 2019): denies that he acted as a director of the company or managed the companies' affairs ([17], [37(IX)]; says that he did not act or agree to act as their secretary; says he did not agree to become a shareholder; says that he did not sign any transfers of shares; and that he did not authorise the lodgement of ASIC Form 484s for the companies notifying ASIC of changes to officeholders or shareholders ([20]); denies that he met as a shareholder of any of the companies or resolved by special resolution or otherwise to place any of the companies in liquidation and denies signing any minutes of any special resolutions that any of the companies go into liquidation ([21]); asserts that all of the liquidation documents contain forgeries of his signature; that he did not sign any of them and did not authorise anybody else to sign any of the documents on his behalf ([25]); and asserts that he has "never signed documents in anything like the way these forgeries present" ([26]); denies preparing or signing a Report as to Affairs for the companies; denies signing a proof of debt; and denies signing any proxies for a creditors' meeting.
4. As adverted to above, Gino Cassaniti maintains that (on the documents put into evidence by the plaintiffs) 138 of his purported signatures are forgeries (at [25]; Ex K at 56764-56774). Gino Cassaniti retained a handwriting expert, Clifford Hobden, who concluded in his report dated 17 June 2019 (Ex K at 96640) that there was "qualified support" for the proposition that 32 questioned signatures (Q1-6) were not genuine compared to the 36 specimen signatures (S1-19). See, however, the later joint expert report (Ex T), which casts serious doubt on that conclusion and which does not support Gino Cassaniti's denials.
5. The plaintiffs say that the evidence given by Gino Cassaniti in his affidavit sworn 11 April 2019 at [21], [25]-[26] (see above) was false; and that Gino Cassaniti lied in a most calculated way. It is said that clear proof of this is to be found in Gino Cassaniti's own email, and other emails from his office on his behalf (referring to the email chain on 28 June 2013 referred to above in which Gino Cassaniti's signature on the winding up documents was sought - and shortly thereafter provided). The plaintiffs say that, from the text of the email chain, it is apparent that these documents were sent to Gino Cassaniti to sign; and that he signed them and caused Alison Hanna (Fred Khalil's personal assistant) to return them.
6. Insofar as Gino Cassaniti denied that he signed them, and asserted that his signatures were forged, the plaintiffs say that his denials are lies because: the subject matter of the correspondence was the proposed creditors' voluntary liquidation of five companies including Earth Civil, RCG CBD and Involved Recruitment; Cor Cordis had already provided appointment documents for those companies to BPS Recovery (the liquidator's firm); some of the appointment documents had not been signed and were attached to the email for Gino Cassaniti to sign so the jobs would be able to commence the following Monday; and, approximately half an hour after receiving the email, Gino Cassaniti forwarded the email to Alison Hanna and she in turn forwarded an email to Steven Bazouni, two minutes later, attaching signed pages "as requested" (i.e., signed by Gino Cassaniti). It is said that, by an examination of the signatures in question and comparison of his admitted signatures as assembled in the expert reports, it can be concluded that the allegedly forged signatures are authentic.
7. The plaintiffs contend that, in the absence of evidence supporting the assertion that Gino Cassaniti's signatures were forgeries and in the face of evidence showing that he did in fact sign and return documents for the purposes of implementing the creditors' voluntary liquidations for Earth Civil, RCG CBD and Involved Recruitment, none of Gino Cassaniti's contentions (including those in relation to Bluemine documents) can be believed. Further, it is submitted that the evidence demonstrates a disposition on the part of Gino Cassaniti to lie about anything that he thought would implicate him in the Scheme; and to lie to hide his misconduct. It is said that these lies more readily enable a finding of his propensity to lie, and that he had a deep consciousness of the weakness of his defences in these Proceedings.
8. Pausing here, I accept the joint experts' conclusions as to the impugned signatures (which was not sought to be challenged in cross-examination). Therefore, I cannot accept Gino Cassaniti's asserted denials as to the authenticity of those signatures or his authorisation of those documents. While that does not mean that all of his asserted denials of involvement in Banq, including his role in relation to directorships or the like in respect of the Insolvent Companies and other relevant entities, should necessarily be disbelieved, it does cast serious doubt on Gino Cassaniti's denials of involvement in the winding up of the Insolvent Companies. Moreover, those denials are belied not just by Gino Cassaniti's signature on the various winding up documents but also by evidence from numerous clients as to his role in Banq (to which I refer in due course); and it means that I exercise a great deal of caution before accepting any of his assertions at face value.

Fred Khalil

1. In his record of interview with the ATO (Ex 18), Fred Khalil was asked as to his role in the formation of Banq. He said that he became a director of Banq (and that Ivana Cassaniti was not) because "[w]ell, that's how I wanted it to be". Fred Khalil said that "maybe" he had discussed this with Ivana Cassaniti; and then, as to discussions that he had with Ivana Cassaniti leading up to the start of the new company and the business at Punchbowl (i.e., Banq), he said (at 12): Khalil: Well, Banq Accountants and Advisors, I'm the director. The shareholders - the shareholders; do you want me to go through that? At the time we would have decided that arrangement. Me being a director, I was the - I was the manager. I was the person responsible. I was the tax agent. And really that's pretty much it. It speaks for itself.
2. In his ATO record of interview, Fred Khalil said that he agreed in 2011 that Ivana Cassaniti would be employed by the company (Banq) and would be paid a wage.
3. In relation to Gino Cassaniti's involvement, Fred Khalil agreed that Gino Cassaniti started at Banq in 2011. He described Gino Cassaniti's role at that stage as follows (at 14): Khalil: ... So if a client has a legal matter, he would be dealing with the city, because I couldn't - don't have time to drive to the city much. He would - he would - if the clients had any - some clients would call him and they would ask him questions - consult clients. Not really much with their tax affairs, but more the business, the running of the business. That's what he was doing much. Mainly if clients had issues with lawyers, if they had specific issues, he would go to the lawyer with them. A lot of clients sometimes had issues to do whether it's internally or externally.
4. Fred Khalil agreed that the only work that he was aware of Gino Cassaniti doing for Banq, starting from 2011, was assisting clients with their legal matters and providing business consultancy services to clients. Asked whether he was supervising Gino Cassaniti's work, Fred Khalil said (at 14): Khalil: Only when it came to the tax side. If there was anything - so I was the accountant for the client and his consulting work, if it was in relation to tax, which if there was anything in relation to tax, yes, I was.
5. Fred Khalil said that, in relation to Gino Cassaniti's consulting work, he would not really know what he was doing. Fred Khalil also said (and Gino Cassaniti places significance on this), when asked whether the above work arrangement continued from 2011, that it changed, Fred Khalil saying that Gino Cassaniti had personal issues to do with his health; that he was unstable and going through depression; and that he had "still got very big issues" (15-16).
6. As I note in due course, I place some weight on Fred Khalil's description (in his ATO interview) of his role at Banq as indicating that his involvement was as a principal of the company. However, it is also apparent from that evidence that Gino Cassaniti had an involvement in the provision of tax advice at least from the incorporation of Banq until 2011 (and I place less weight on the organisational chart prepared by Fred Khalil at the time of the ATO interview, depicting him at the apex of the organisational structure - see below, which strikes me as consistent with his portrayal of his own role as more significant than it seems to have been at least in relation to certain of the Banq clients such as Frank Criniti and the Nassar entities).
7. In his ATO interview (at 21.40), Fred Khalil indicated that the businesses that he had been operating included Banq, Kamikaze Teppanyaki and Reliance Cleaning. As to the role of Reliance Cleaning, Fred Khalil said (at 23.30) (inconsistently with Peter Abboud's evidence to which I refer in due course): Well, RC Group was - Reliance was running itself as an invoicing company, so Reliance was actually - sorry - RC Group was actually doing the work for Reliance, for Reliance Cleaning Group. So Reliance only did tendering, which I helped with, and invoicing. So the physical work was done in RC Group, so if the work was done in RC Group then they should be paying for the labour. With the restaurant, the manager I paid directly from Kamikaze, and any - I think I had one or two people on the books there. And then any - it was for supervision purposes. I could not physically supervise everyone, so I got a labour company. Most of the employees decides what I had internally was the ones I was managing, so those five or six on the list are really the only ones that went through RC that was under my supervision. So the work conducted in Reliance was not - I wasn't conducting the supervision or employing or hiring or doing anything. So Reliance was receiving the fee. Sorry, RC was receiving the fee, Reliance was, I think from memory, making a commission on the fee and all this hiring, supervising, firing, work was conducted under RC.
8. Fred Khalil was unable to explain why RCG CBD had paid Banq the sum of $1,224,336.21 (and was seemingly not even prepared to concede that it was a very large sum of money to Banq) (Ex 18 at 88.40-89.04). However, Fred Khalil did confirm (at 89.23-26) that Banq was not providing accounting services to RCG CBD "worth anywhere near" the amounts that had been paid to Banq.
9. Pausing here, the confusion apparent in Fred Khalil's answers extracted above as to the role of the respective companies is to my mind telling. It bespeaks of a lack of any genuine distinction between the companies that Fred Khalil could not give a consistent account of Reliance Cleaning's role (and that of RC Group Aust).
10. As to the winding up of the Insolvent Companies, Fred Khalil deposed in his affidavit sworn 25 March 2019 (much of which was read as assertion) to the effect that, in respect of each of the Insolvent Companies, Gino Cassaniti asked him to assist with the preparation of the necessary paperwork and/or to meet with the liquidator to prepare the necessary documents (including, for example, in the case of Rackforce the statement of affairs); and that Gino Cassaniti or the client provided a list of creditors who gave proxies for him to attend creditors' meetings which he did (as to Earth Civil, see [43]; as to RCG CBD, see [47]; as to Bluemine, see [44]; as to Diamondwish, see [40]; and as to Rackforce, see [35]-[37]). As noted above, Gino Cassaniti denies this.
11. Ultimately, in the absence of Fred Khalil from the witness box, I am left to assess the plausibility of his assertions having regard to the evidence as a whole, including what was said in the ATO examinations.

Peter Abboud

1. As to Bluemine, in his ATO interview at 38.34-35 (Ex 17), Peter Abboud said that his cousin, Andrew Barsa, (who is recorded on ASIC records as a director of Bluemine for the period from 7 June 2012 to 1 April 2013 (Ex K at 50379), always reported to him about everything that went on. However, somewhat inconsistently with this, Peter Abboud also seemed to accept that Andrew Barsa controlled Bluemine at least to the extent that he accepted that he was a director of the company.
2. At 39.8-18 in his ATO interview, Peter Abboud said that Bluemine was incorporated upon his advice, and the advice of Fred Khalil, to purchase trucks from an entity owned by George and his ex-wife (Jian Holdings), saying that: Q. So did you give advice to Andrew about incorporating Bluemine in order to purchase the trucks? A. He [Barsa] would have said, "For me to buy the trucks, what would you recommend I do?" I would say, "Set up a company," but at the end of the day everything runs through Fred as well because Fred - ultimately he would go to Fred as well, Fred being a family member. It's not just myself.
3. Asked about his involvement in the sale of the trucks from Jian Holdings to Bluemine, Peter Abboud said in his ATO interview that (at 46, 50): A. Jillian was a bit sour with George. And basically I said to Andrew, "I will transfer some money to you" - which is Bluemine - "then transfer it" - then he transferred it on to Jian for the money. Then Fred kicked up a stink about it and said, "No, I don't want to do that - get the money. And they can collect whatever they're owed out of the sale of the trucks", which is the money that they owe - they were owed. So that's - that's what my recollection is of that - of that. Q. So just run that through me - run that past me again, please. A. I'm a signatory in - on the accounts. Right. Q. You're a signatory on which account? A. On multiple accounts. Q. Right. Go on. A. Basically I - Andrew Barsa said, "I want to sell these trucks - I want to buy these trucks". I said, "Jill wants the money and needs the money. The family needs the money because it's their money that they've put into it". So I transferred out of - Fred said - without - obviously without speaking to Fred about it. And Fred said, "Return the money immediately". So the - the money I know went to I think to the - the company they purchased it off. Then I called Jill and I said, "Jill, the money shouldn't be - can you return the money to where it came from?" And - and that - I think that's what happened. That's from a rough memory because we're talking a couple of years ago now. Was it a couple of years ago? A couple of years ago now. So I said, "Out of - okay. Andrew, agree out of the - the sale of the trucks to pay Jill back". … Q. And what - what discussion, if any, did you have with Mr Khalil before you transferred the $590,000 to Bluemine? A. Nothing. We had a fight over it. Q. And on what basis did you consider it was within your authority to make that transfer to Bluemine? A. I'm a signatory. Q. Well, just because you're a signatory to the account doesn't mean that you're authorised to transfer the money, does it? A. Well, yes. He gave me a slap on the chin about that.
4. Peter Abboud confirmed in his ATO interview that "the trucks were purchased under Bluemine", which he seems to have regarded as Andrew Barsa's company (saying, "Bluemine, which is my cousin, Andrew Barsa" - at 37.33) and that Andrew Barsa purchased the trucks because he wanted to hold the trucks for George "because they were really close at the time, but now there's no relationship any more". He then suggested that Andrew "thought he could make a little bit of money on the trucks" saying that, "knowing him, he likes to have a look around and see whether he can get his hand on a bit of profit here and there…" (at 37).
5. As to the payment of $20,000 into Peter Abboud's LFC Holdings' bank account, Peter Abboud said that this was money that Andrew Barsa sent to him to pay George Abboud money (that George said he was owed), saying that (at 40): A. Because my brother would just call me every second day - just me, "Can you send me money?" Okay. Where's his money? And that's why. He had a big tiff with Andrew. They don't talk. They still don't talk. Q. So the $20,000 - - - A. At that one point, yes. Q. So once you received the $20,000 from Andrew Barsa, what did you do with it? A. Probably sent it overseas. I can't remember. I know there's entries - I know there's transactions to Thailand that I sent money overseas. That was for George's money.
6. Peter Abboud was unclear whether Bluemine had any source of income or cash aside from the proceeds of the sale of the trucks, saying that this was possible and that he thought "Andrew Barsa got involved with people in - in the civil game" (at 47).
7. In Peter Abboud's affidavit sworn 22 March 2019 (at [62]) he admitted that he prepared the first BAS for Bluemine (insofar as he deposed that "except for the first BAS, I was not involved in the preparation of any Business Activity Statements for Bluemine"). In his ATO interview, he said that he did not generate any accounting records for the company as a result of acquiring the trucks but that he assisted "him" (in the context, Andrew Barsa) with preparing "a BAS report or something" (Ex 17 at 48). Peter Abboud said in his ATO interview that he prepared multiple BASs for a lot of clients at a lot of companies and could not remember a specific one but that he did have a memory of preparing the BAS following on from the acquisition of the trucks.
8. Asked how a proper or lawful input tax credit claim could be made when Bluemine did not pay Jian Holdings for the trucks, Peter Abboud said that it "was an acquisition" and that "it could have been paid via loan agreement". Tellingly, there was the following exchange (Ex 17 at 48-49): Q. Do you say that Bluemine is entitled to claim an input tax credit on a purchase of the trucks if it didn't actually pay cash and entered into a loan agreement? A. I prepared it that way. Fred finalises every BAS that gets submitted via Banq Accountants and Advisors. (emphasis added)
9. The plaintiffs point out that the BAS involving the truck acquisition and the payment of $590,000 was the first BAS for Bluemine (i.e. the one that Peter Abboud admitted preparing) (see Aris Zafiriou's affidavit sworn 9 March 2017 at [109]. (The plaintiffs say that the BAS was false in relation to this transaction.)
10. Peter Abboud was a signatory to the bank accounts of both Bluemine and Banq (indeed he said in his ATO interview that he was a signatory to multiple accounts). In his ATO interview, when asked about payments from Bluemine to Banq, Peter Abboud accepted (at 53) that he would possibly have known at the time that Bluemine had transferred $508,600 to Banq but was not aware of an invoice having been issued by Banq to Bluemine for that amount. He accepted that the value of any accounting work done by Banq (for Bluemine) was worth nowhere near the amount of $806,000 (the total amount transferred to Bluemine between February and July 2013) (at 53).
11. Peter Abboud accepted (at 49-50) that there would be no other reason (other than the sale of the trucks from Jian Holdings to Bluemine discussed above) for Banq to be paying the sum of $590,000 to Bluemine; that he had not had any discussion with Fred Khalil before the money was transferred to Bluemine; and that "[w]e had a fight over it". Asked on what basis he considered it to be within his authority to make that transfer to Bluemine, he said simply "I'm a signatory" but later agreed that being a signatory to the account did not mean that he was authorised to transfer the money and that "he [in context Fred Khalil] gave me a slap on the chin about it". He said that he did not enter into any agreement with Bluemine on behalf of Banq as to how that money was to be treated but that after the transfer there was a loan agreement (at 51).
12. As to the Bluemine Thailand payments, Peter Abboud's evidence in his record of interview with the ATO was that those payments were made to his brother, George Abboud (see Ex 17 at 41.30-40, 43.40); that there were multiple transactions going overseas "to pay him back" and "[t]o pay for his lifestyle"; and that Andrew Barsa had told him about them and that he, Peter Abboud had assisted in transferring the moneys to Thailand.
13. As to the payments made by RCG CBD, in his interview with the ATO Peter Abboud confirmed (Ex 17 at 24.29-36) that there was no reason (other than payments to him for the work he was doing at Banq) for him to be receiving payments from RCG CBD. In particular, he said that he had never lent money to RCG CBD or Reliance Cleaning. He said that, other than salary (paid by the labour hire companies) and salary from Banq, and a $125,000 bonus (at 14), he received no other remuneration directly or indirectly from the work he did at Banq and that he had no arrangement whereby a company in which he had an interest was paid a management fee for his work.
14. Inconsistently with that evidence, when, questioned as to payments to LFC Holdings, Peter Abboud said (see Ex 17 at 14.16-15.3 and 15.40-45) that "LFC Holdings just invoices for management fees"; and, when asked what LFC Holdings managed (i.e., for what it was invoicing), Peter Abboud said that "[i]t was just an arrangement, say, this is my wage plus management fees type", saying: A. It was - at one stage it was issuing invoices to Banq Accountants and Advisors and that was for - not - I wouldn't call it a management fee, it's possibly called a - like a bonus or an extra. I - there was no real name to it. It was just.
15. Challenged with the inconsistency in his evidence as to whether there was an arrangement whereby a company associated with him was paid management fees by Banq, Peter Abboud's explanation was that he had completely forgotten about it but that he was using LFC Holdings "at one stage a couple of years ago to invoice management fees" (at 15.1). He said (at 15.40): A. … I was getting paid through labour hire firms and I was getting paid additional amounts through LFC Holdings. I can't remember which dates. Then I started working for Banq Accountants and Advisors and I got paid 52 grand a year. Then I got paid a bonus. It's pretty straightforward.
16. In respect to payments made to LFC Holdings, Peter Abboud said (Ex 17 at 16.7-28) that funds were paid periodically into LFC Holdings but that there was one lump sum bonus payment. His evidence was that LFC Holdings periodically issued invoices to Banq for a management fee; and that it issued the invoices in timing with the payments.
17. At 19.10-34, particularly in respect to payments from RCG CBD, Peter Abboud's evidence was that LFC Holdings did not do any business with any of the labour hire companies that he had been associated with; and that none of the labour hire companies with which he had been associated owed LFC Holdings any money. There was the following exchange (at 19): Q. Is there any reason for any of the labour hire companies you've been associated with to have paid LFC Holdings money? A. There would have been for work that was done for Banq Accountants if it was paid. Q. But why would a labour hire company be paying LFC Holdings for work you have done for Banq Accountants and Advisors? A. Because it was probably the - it was probably part of my wage or a bonus or something from - I might have to go back and have a look at it, so. Q. Well, tell me now what you remember about arrangements between labour hire companies and LFC Holdings Proprietary Limited. A. Arrangements? Well, it should have been paid to me personally but it was paid to LFC if there was any payments made. So I just had two - I had LFC Holdings, which was an account, and I had my personal account. And sometimes the payments were being paid to LFC Holdings. Q. So has LFC Holdings Proprietary Limited or the trust of which it is the trustee ever lodged a tax return? A. Ever lodged a tax return? No, pending.
18. In relation to RCG CBD, Peter Abboud could not recall that Banq did any accounting work for RCG CBD; nor could he remember doing some of that work himself. He agreed that the value of any accounting work that Banq did for RCG CBD would be nowhere near the value of $1.2 million (at 57). He could not recall whether he was a signatory on the RCG CBD account (at 56).
19. As is the case with each of Gino Cassaniti, Fred Khalil and George Khalil (none of whom made himself available to be cross-examined), I can only assess Peter Abboud's evidence based on the documentary records and the other evidence as to events that occurred at the time. I consider in due course the submissions made as to what inferences should be drawn from his (and their) failure to make himself available for cross-examination.

Andre Abou-Antoun

1. Andre Abou-Antoun was examined in chief (and at times, with leave, cross-examined) by the plaintiffs by reference to statements he had made in his ATO interview. Andre Abou-Antoun gave evidence that he and his brother, Michael Abou-Antoun decided to change the accountants for their business to Banq and they got in touch with Fred Khalil at Banq (T 623.25).
2. From 2011 onwards, Andre Abou-Antoun was the General Manager of AKA Civil and AKA NSW and held that position during the period that the impugned transactions occurred (2012-2013) (T 618.23-45). His evidence was that Michael Abou-Antoun was also involved in the conduct of the business in AKA Civil and AKA NSW during that period (T 619.1-6).

Andre Abou-Antoun - ATO interview

1. In respect of Earth Civil, Andre Abou-Antoun's evidence in his ATO interviews on 31 May 2018 and 31 July 2018 was to the effect that: payments by AKA Civil and AKA NSW to Earth Civil were made because Gino Cassaniti advised them to make those payment to Earth Civil; the purpose of these payments was to obtain tax deductions, and this was communicated to him by Gino Cassaniti; that Gino Cassaniti "basically said just transfer the money and then take the money out of the account after it was transferred"; and that the money withdrawn from Earth Civil was used to pay for salary and wages of the AKA Group, in cash; however, he was unable to provide any substantiation for his claim, admitting that there were no records available in relation to the alleged payment of wages.
2. In respect of Bluemine, Andre Abou-Antoun's evidence to the ATO was to the effect that: Peter Abboud and Fred Khalil advised AKA that they had a company called Bluemine, that they managed and controlled and that they could arrange inflated invoices and exaggerated invoices to be issued to AKA and then they would return the money less a 2.5% fee; that from what he recalled that recommendation was made in person in their office; and that the recommendation was adopted by him on the basis that the two tax components of the Scheme were that AKA would claim income tax deductions and GST credits and the AKA Parties would save 30% of the tax they had to pay. He accepted in that interview that the tax benefit that was explained to him was the ability to claim a deduction on the income of the AKA entities for amounts being paid to Bluemine; and that he was told that Bluemine had an ability to issue inflated or exaggerated invoices.

Andre Abou-Antoun - cross-examination

1. At T 635.24-31, Andre Abou-Antoun confirmed that the advice to set up the companies and to transfer funds between AKA Civil and AKA NSW came from Banq, going back to "the initial explanation" of Peter Abboud. At T 637.7-15, Andre Abou-Antoun's evidence was that, in relation to large payments between AKA entities and Earth Civil, he would approve them but said that "when the payment actually gets paid that's to the discretion of the accountant and he makes that call based on when it's due, the due date on the invoice". Andre Abou-Antoun's evidence (at T 639.2-18), as to payments in and out of the AKA companies, was that directions for those payments were being given by Banq; and that within Banq, those directions were given by Peter Abboud and Fred Khalil. At T 640.22-641.5, Andre Abou-Antoun said that it was Fred Khalil or Peter Abboud from Banq who would tell him to make bank transfers.
2. At T 642.6-37, T 647.49-648.16, Andre Abou-Antoun initially confirmed the evidence he gave at the ATO interview on 31 May 2018 as to: the advice given by Peter Abboud and Fred Khalil (that they had a company called Bluemine that they managed and controlled and that they could arrange inflated and exaggerated invoices - although at 648.15, Andre Abou-Antoun said that "they were not saying inflated invoices, that's something that we came to learn afterwards"); that they could provide a valuable opportunity to the AKA entities; that he understood that they were explaining to him that if he participated in the transactions in the way advised, namely inflated invoices and the round robin with money being paid away and then returned less a fee, that there would be a "tax benefit" to the companies (T 655.16-31), and that they would be "saving tax, the primary tax and - and the GST" (T 671.27-39); and that (at T 666.29) the 2.5% fee (payable to Banq) was great value relative to the tax benefits that the AKA companies would be receiving.
3. At T 660.34-48, Andre Abou-Antoun accepted that what happened concerning the payments to Bluemine was that: first, Bluemine issued invoices to AKA Civil and AKA NSW and those two companies paid money to Bluemine; then in relation to that payment Bluemine would make a payment to one of the AKA related companies (MAL Land Group, Great Brothers, LAM Haulage); and that in his mind what was happening at that time, in accordance with the arrangement that Peter Abboud and Fred Khalil had put to him, was that the money that was being paid away by AKA Civil and AKA NSW was coming back into the group. The plaintiffs point out that Andre Abou-Antoun further acknowledged that the money would always come back (T 660.50-661.2).
4. As to Andre Abou-Antoun's involvement with those at Banq, Andre Abou-Antoun's evidence was that, after the initial "Yellow Pages" advice, he saw Gino Cassaniti from time to time when he visited the office "but never really dealt with him"; that if he bumped into him it was "hey how you're going that was it … [and] [h]e was out the door" (T 758); and that, by a couple of years after he had met Gino Cassaniti, Gino Cassaniti was not providing any advice to him or his company. Andre Abou-Antoun's evidence was that he dealt more with Fred Khalil and Peter Abboud.
5. At T 676.35, Andre Abou-Antoun gave evidence that up until anywhere between 2013 or 2015, the person dealing with the BAS returns in his organisation was Peter Abboud, see the following: Q. And who at the accountants was doing that? A. Over the course of seven/eight years, it started with Peter Abboud, and then in or around, say, 2016 or 2015 - I'm sorry, probably even earlier, I'm not sure. 2000 - probably, sorry, '13 or '14 - anywhere between '13 and '15, it was more Devong(?) at their company, and that would be - and when I say that, I mean they will take our books and records, and they'd prepare the BASs. Q. That's Devong Shar you were referring to? A. Correct, yes.
6. Peter Abboud further gave evidence (at T 676.45) that this mostly happened at Banq's office and sometimes they would attend AKA's offices. Either way, he said that Banq had TeamViewer (which I understand to be a remote access software) and complete access to AKA's MYOB and that they would "log in sometimes and just take the information out"; and that Banq suggested and installed this (i.e. TeamViewer) (T 676.48). The plaintiffs place emphasis on Andre Abou-Antoun's evidence that Banq had access to the AKA companies' MYOB file and that "I did see on our computer - on Komel's computer, and Dylan's computer, in fact - TeamViewer popping up, where Banq Accountants were requesting access to our MYOB, and us granting them access" (at T 734).
7. At T 678.42-680.40, it was put to Andre Abou-Antoun by Senior Counsel for the plaintiffs that the answer he gave in his ATO interview that what Gino Cassaniti "basically said" was "just transfer the money and, then take the money out of the account after it was transferred" was true. Andre Abou-Antoun responded that "[i]t's true from what I was told at the time" and later, "it's not true". The plaintiffs say that, while Andre Abou-Antoun tried in the course of his evidence in this Court to resile from his answer to the ATO (by suggesting that he was not told that but that it was in fact what his brother had told him), this (and the "longwinded nonsensical explanation" of what he meant by the use of the word "us"), was dissembling on Andre Abou-Antoun's part. The plaintiffs say that Andre Abou-Antoun's evidence to the ATO was the truth and that is what Gino Cassaniti told him.
8. Questioned as to his knowledge that the money paid to Earth Civil would be paid away immediately after it was transferred, Andre Abou-Antoun's evidence was that "[w]e got advice to withdraw the money out of the account of Earth Civil" (T 706). He then said that he did not know before it happened that the money that was being paid into Earth Civil would almost immediately be taken out (and added that, when he withdrew the money, it was not immediate) (at T 706.1-20). At T 678.1-9, Andre Abou-Antoun said he recalled withdrawing the money but not why the payments were made by AKA Civil to Earth Civil but then added (before being interrupted by objection from Counsel) that "it was - it was a device that Gino Cassaniti and Fred Khalil -". As to the withdrawal of cash by Andre Abou-Antoun out of Earth Civil's bank account from time to time, Andre Abou-Antoun's evidence was that he personally took the cash but the money was then paid back in wages; however, he then agreed that the money was taken home and put in the safe (T 684.30).
9. Andre Abou-Antoun denied (at T 705.16-49) that he knew that the tax invoices and benefits claimed by AKA NSW were false. He denied that he knew in 2012 that if he paid GST on purchases on the one hand and collected GST on purchases paid to him on the other, then those payments would be set off against each other in the return to the ATO. Andre Abou-Antoun said that he had "absolutely no idea" that the full amount of the Bluemine invoices for (purported) management services would be expressed in the returns to the ATO as the true expenditure of the companies; and denied that he knew that those invoices would be expressed to the ATO as true expenditures of the company when he knew that to be false.
10. Andre Abou-Antoun denied that his understanding of the arrangement between his companies and Banq was that Banq was to make savings on GST and income tax (T 676.15). The plaintiffs say that it is implausible for Andre Abou-Antoun to deny his understanding that there were tax benefits given his answers (at T 655.1-5) to the effect that he had agreed, at the time of the ATO interview, that Fred Khalil and Peter Abboud indicated there was an ability to reduce drastically the taxable income of the AKA entities by using Bluemine. Insofar as (at T 655.31), Andre Abou-Antoun said that his answer in the ATO interview (to the effect that the tax benefit explained to him was the ability to claim a deduction on the income of the AKA entities for those amounts being paid to Bluemine) was not true and that the benefits had not been explained to him (T 676.25), the plaintiffs maintain, to the contrary, that his evidence to the ATO was true. It is said that Andre Abou-Antoun's explanations (at T 656.16 and T 656.30) that he was very confused are not believable. (It is noted that Andre Abou-Antoun went so far as to assert that there were parts missing from the ATO transcript of interview, which is also said to be false - see T 656.45-657.5).
11. Further, the plaintiffs say that it is clear from the evidence (at T 671.33-45) that Andre Abou-Antoun knew and expected that the AKA group would be saving tax and GST; and that his subsequent answer that "it was more of an answer that I gathered from a combination of professionals that were giving me advice at the time about what happened" was dissembling (at T 671.48). It is said that, Andre Abou-Antoun's attempted explanation that the reason his answer in the ATO interview was wrong, was because he thought the purpose of the arrangement with Bluemine was only to invest in property (at T 672.13-673.46). The plaintiffs say that that evidence was false. Further, the plaintiffs say that that evidence does not explain why Andre Abou-Antoun did not understand at the time of the arrangement that there was a tax and GST benefit flowing to the AKA Parties from the arrangement (as he had admitted in the ATO interview). In essence, it is said that Andre Abou-Antoun simply sought to avoid the question by attempting to talk about another issue.
12. When giving evidence about the veracity or falsity of the Bluemine invoices (see Ex K at 56339-56343), Andre Abou-Antoun accepted that the claims that were in the invoices from Bluemine for management or supervision services "were fake and fabricated … because no services were ever provided by Bluemine" to AKA Civil or AKA NSW, but qualified that by saying "except for AKA transferring the money to Bluemine to purchase a property" (T 653.10-15; see also T 688.18-690.45). When asked again later if he agreed that the same description on a particular invoice was false, Andre Abou-Antoun answered first, by saying "only that we were purchasing properties" and, second, by saying "I agree now, yes" (emphasis added). The plaintiffs say that those answers demonstrate Andre Abou-Antoun's knowledge that the invoices were false; and that his denials of knowledge of exaggerated and false invoices are false.
13. Further, it is said that (at T 653) Andre Abou-Antoun's lack of memory regarding the answer in the ATO interview that, of all the invoices from Bluemine, there had only been one service provided of one kind (and that it was for a "very, very, very small amount") should not be believed (see also T 660.21-32). It is noted that, in response to questioning in the ATO interview as to how many invoices might be accurate in relation to services provided by Bluemine, Andre Abou-Antoun responded that "it could be just one" (see Ex O at 79; T 660). It is said that, in cross-examination, he sought to downplay this answer by claiming it was an estimate (T 660.25). It is noted that Andre Abou-Antoun went on to say (at T 660.33) that his view had not changed from then until the day of his evidence, and that it was a "very, very, very small amount".
14. When asked why he would approve a payment when he knew no management or supervision service had been provided, Andre Abou-Antoun responded (at T 689.49) that he approved it because it was a means for them to purchase property and he was advised by the accountants that Banq would send an invoice, they would pay the invoice to Bluemine and then Bluemine would pay the money to an AKA-related entity which was purchasing the property, and that "it was as simple as that" (see at T 690.7-45). The plaintiffs say that, having already admitted that he knew Bluemine did not provide any management or supervision services, Andre Abou-Antoun's explanation should be regarded as a deliberate attempt to hide the truth.
15. At T 651-652, Andre Abou-Antoun variously said that: he had not understood questions being asked of him or the particular question asked of him at the time of the ATO interview, namely, "the attraction of what they were promoting, you tell me if I'm wrong about this, is what they were saying was this entity, Bluemine, provides an opportunity for AKA Civil and AKA NSW to make payments to claim tax deductions" (see Ex O at 59); he did not understand the question because he was very confused; on a number of occasions he mentioned to the questioner that he was drained and needed a break; this was because it was going for eight or nine hours and he was basically facing seven or eight people looking at him on the other side of the desk and he thought that he had to answer the questions, so he was basically just giving answers to assist himself to get out of there. The plaintiffs say that Andre Abou-Antoun was dissembling (at T 653.25-654.36) when he sought to suggest that basically the transfer of the money to Bluemine was in order to purchase property and that there were some other very small services; and when he sought to characterise documents evidencing the transfer or money flow from AKA to Bluemine and then from Bluemine to the properties (or the company purchasing properties) as an answer to the question about Bluemine issuing false invoices. It is submitted that, when looking at the transcript in context, that was a diversionary answer rather than an answer to a question which he pretended not to understand. It is said that it was equally dissembling when Andre Abou-Antoun said that the only benefit that the AKA entities were receiving was the benefit of purchasing a property in St Marys.
16. The plaintiffs say that it is clear from the ATO record of interview that the suggestion that the interview had been going for eight or nine hours was a gross exaggeration, noting that the point at which this question was being asked was only partway through the relevant interview. Insofar as Andre Abou-Antoun sought to say that his answers in the ATO interview were not correct because he did not understand the question, the plaintiffs say that Andre Abou-Antoun's answer at T 652.29-34 (that he now understood that the invoices provided to him were exaggerated or inflated but that he did not understand that at the time) should not be believed.
17. The plaintiffs say that the tenor of Andre Abou-Antoun's evidence (at T 658.25-48) was that: the arrangement involved Bluemine issuing invoices to AKA entities; that would always occur before the money flowed to Bluemine; that they did supply some service; and although he did not say anything to the tax officers at the time about the purchase of property, the reason he did not was that although he had the opportunity to tell them if that was the fact, he felt there was no reason to provide that explanation because they weren't the questions they were asking him about. The plaintiffs say that this evidence is unbelievable and is false.
18. At T 692.17-24, Andre Abou-Antoun's evidence was that he expected that 2.5% of the gross amount ($652,825.83) of the Bluemine invoice to AKA Civil would be deducted for the accountants (see Ex K at 56341). Similarly, he accepted (at T 693.39) that of the amount of $500,000 that AKA NSW paid to Bluemine, Great Brothers received $487,535; and, Bluemine paid to RCG CBD $12,465 which was exactly 2.5% of $500,000 (see Bluemine third further amended statement of claim at [160]). Andre Abou-Antoun did not know who RCG CBD was, but he accepted that it was associated with Gino Cassaniti and that the 2.5% fee went out to Banq or people associated with Banq (at T 694.10-19). It is said that Andre Abou-Antoun gave dissembling answers about his knowledge of whether or not and how much Banq charged as a fee for this arrangement (see at T 661.35-667, 666.29 cf T 667.7 and T 667.19). The plaintiffs say that Andre Abou-Antoun evidence that he misunderstood the question at the time (as to whether Banq indicated that the 2.5% was great value relative to the tax benefits), is unbelievable in the context of the ATO interview as recorded in the ATO transcript.

Andre Abou-Antoun's credit

1. The plaintiffs say that Andre Abou-Antoun was: an unsatisfactory witness; that he was not frank; and that his demeanour in the witness box (described as feigning intense concentration by shutting his eyes for every question) was entirely contrived. As indicated above, the plaintiffs submit that in a number of instances Andre Abou-Antoun was lying in the witness box. They submit that, to the extent that Andre Abou-Antoun's evidence in the witness box was contrary to the evidence he gave during the ATO interviews, the latter is to be believed in its entirety and his evidence in the witness box is not to be believed.
2. The plaintiffs say that Andre Abou-Antoun admitted far more candidly to the ATO than he did to the court that: he was aware that the transactions were entered into on the advice of the Primary Conspirators; the transactions were not genuine; there were no genuine commercial documents; there were no services provided; and the purpose for entering into the transactions was to obtain tax and other benefits for AKA companies and for himself.
3. It is said that Andre Abou-Antoun's evidence of the advice given by Peter Abboud and Fred Khalil is the archetypal Scheme Recommendation pleaded by the plaintiffs; and that transactions in Earth Civil and Bluemine in which the AKA Parties were involved were the very round-robin of payments of which complaint is here made.
4. Andre Abou-Antoun's evidence was that he was unaware that the actions of AKA Parties in performing the transaction complained of by the plaintiffs was unlawful at the time. The plaintiffs say that evidence should not be believed. It is said that he was aware that no services were being provided, the invoices were false and inflated and his companies were making claims for tax deductions and claims for GST credits when they were not entitled to do so; that his conduct was dishonest; and that an honest and reasonable person would have been aware that that conduct was dishonest.
5. The AKA Parties, to the contrary, submit that, viewed as a whole and considered in context, the evidence given by Andre Abou-Antoun both in Court and during his interviews with the ATO is in substance consistent; and that no adverse credit findings should be made against him. They have prepared a comparison of his evidence at the ATO interview and his evidence in Court in this regard.
6. In particular, it is submitted by the AKA Parties that Andre Abou-Antoun was not dishonest in his evidence as to the purpose of the various transactions being related to a property purchase; nor as to his evidence that he only discovered certain essential elements of the "conspiracy" after the fact (from conversations with his brother Michael Abou-Antoun, with accountants and advisers and with the ATO, including during the two days of compulsory interviews under s 353-10 of Schedule 1 of the Taxation Administration Act on 31 May 2018 and 31 July 2018). Further, it is submitted that ultimately very little weight should be given to the ATO transcripts.
7. My impression of Andre Abou-Antoun in the witness box was that he was very nervous and stressed. Of course, that does not necessarily indicate some sort of consciousness of guilt. Many witnesses are stressed when giving evidence (and indeed it would appear from the ATO transcript that Andre Abou-Antoun was similarly stressed when examined by the ATO). That said, even accepting that Andre About-Antoun was confused at times during the course of his evidence in this Court, the account or explanation that he gave in the witness box as to his answers in his ATO interview (such as the length of time that the interview had been going on for at the time he gave certain answers) was implausible; and his evidence in the witness box was itself confused. He was an inconsistent and unreliable witness.
8. In that regard, I have carefully reviewed the schedules prepared by the AKA Parties to accompany their submissions as to the context in which questions and answers were put to Andre Abou-Antoun both at the time of the ATO interview and the giving of his evidence in the witness box; and the submissions made in relation thereto. I accept that there was potential for Andre Abou-Antoun's recollection of events to have been affected not just by the passage of time but also by the advice he has been given over time (no doubt with the benefit of hindsight) as to what occurred in relation to the impugned transactions.
9. However, I place weight on the fact that, in at least one answer given at the time of the ATO interview, he made clear that he was doing his best to give his recollection or memory of events at the time (see Ex O, 31 May 2018 interview at 60), saying that: During the - and I'm answering this to the best of my memory on what I remember back then - during the course of - of the period of time they told us this company can also issue you with an inflated invoice, we could pay the invoice and then the money would come back to one of our companies and there would be a tax benefit. I didn't understand how - what - what the tax benefit was or whatever. I trusted what they told me at that point and I didn't think it was a big deal at all.
10. That is inconsistent with the submissions here made to the effect that Andre Abou-Antoun's memory has been tainted by what he has since been told by others, such as his accounting advisers, as to what in fact occurred. Moreover, Andre Abou-Antoun's evidence to the ATO as to the advice that was given at the time (or his understanding of that advice) and as to the invoicing arrangements rings true insofar as it is consistent with the evidence of others (such as Frank Criniti, in particular, but also Mario Sande and Elias Nassar).
11. Andre Abou-Antoun's insistence on the aim of purchasing property as a reason for the payment arrangements (not proffered at the time of the ATO interview), while I do not say is dishonest, nevertheless smacks of an ex post facto justification for what occurred at the time (and could itself be a product of the very timing issue which is relied upon by the AKA Parties as explaining away the evidence given by him to the ATO). I have little difficulty accepting that the Abou-Antoun brothers (or perhaps just Andre Abou-Antoun) were contemplating property acquisitions (the name MAL Land Group suggests as much). However, I have difficulty accepting the suggestion that all of the impugned payments were related to property transactions (and the justification for the carousel payments as being related to property purchases is implausible). Thus, I treat Andre Abou-Antoun's evidence with no little degree of caution.

Michael Abou-Antoun

1. Michael Abou-Antoun has not adduced any evidence. The plaintiffs say that the obvious inference is that there is nothing he could have given evidence about that would have assisted him in defending the plaintiffs' claim. In particular, it is noted that Michael Abou-Antoun does not seek to provide any commercial justification for any of the transactions involving the AKA Parties. The plaintiffs say that it is to be inferred that, regarding the transactions involving the AKA Parties, Michael Abou-Antoun (and also Andre Abou-Antoun) knew (within one or more of the first four categories of Baden Delvaux knowledge) of and assisted the fiduciary's (Gino Cassaniti) dishonest actions. I consider this in due course.

Ivana Cassaniti

1. Ivana Cassaniti swore two affidavits, on 11 April 2019 and in reply on 28 June 2019, before swearing a third affidavit (which it is said clarified and corrected her earlier affidavits) on 3 March 2020. The significant differences between Ivana Cassaniti's earlier affidavits and her latest affidavit went to her role in the formation and business of Banq.
2. Ivana Cassaniti's affidavit evidence, filed prior to the commencement of the hearing and before her 3 March 2020 affidavit, was, in summary, that: she began working "as an accountant" in 2005 at a firm owned by Gino Cassaniti's cousin (CAP Accounting) (Ivana Cassaniti's affidavit sworn 11 April 2019 at [2]); in around 2008 she "assisted" in forming Banq Accountants (through the company Givana Prestige) (at [6]); that she had a 66.6% share in Banq Accountants (at [7]); that at the time of the formation of Banq Accountants she "funded the entire initial set up" and used all her funds to fit out and furnish the office premises "while Gino introduced the clientele"; and that she personally used credit cards and borrowed funds from family and friends to "fund the initial start up", estimating this to be around $250,000 ([8]); between 2008 and April 2010 she was involved in the running of the business and engaged in "accounting work" ([9]); Gino Cassaniti was primarily involved in introducing new clients to the firm ([8], [10]); following the birth of her first child, from around April 2010, she was focused on her child and was unable to be, and was no longer, involved in the management of the Banq Accountants' business ([13]-[14]).
3. Ivana Cassaniti further deposed that: in 2011, she formed Banq, with Fred Khalil and Peter Abboud (Ivana Cassaniti's affidavit sworn 11 April 2019 at [16]); from 1 July 2011 to 9 November 2016, she was an equity partner; her interest was through Givana, which held a 60% shareholding in Banq; GFP Holdings, of which Fred Khalil was the director, was incorporated to acquire the Banq premises at Punchbowl (Ivana Cassaniti's affidavit sworn 28 June 2019 at [8]-[9]); she funded approximately 60% of the costs to acquire the Punchbowl premises and Fred Khalil and Peter Abboud contributed 40% of the costs; Fred Khalil was a 30% shareholder and Peter Abboud a 10% shareholder and that they were both considered equity partners in the firm (28 June 2019 affidavit at 18).
4. Ivana Cassaniti deposed that in 2011 to 2012 she did not attend the office much at all as she was taking care of her children (11 April 2019 affidavit at [17]); and that when Banq was set up, she ceased to do "any accounting work" and, for that reason, she was never a director. Ivana Cassaniti deposed that her role, at its highest, was limited to one or two days a week undertaking administrative work as a "silent partner" (28 June 2019 affidavit at 24-(d)).
5. Ivana Cassaniti deposed that: in or about 1 July 2014 Givana's shares were reduced to 50% (28 June 2019 affidavit at 10); dividend payments from the business were paid 50% Givana, 25% to Fred Khalil and 25% to Peter Abboud (28 June 2019 affidavit at 18); Fred Khalil handed the day to day activities of the business (28 June 2019 at 10); and Fred Khalil and Peter Abboud operated all the bank accounts (although all three shareholders were appointed signatories) (28 June 2019 affidavit at 10).
6. Ivana Cassaniti denied that Gino Cassaniti was ever a major shareholder of Banq; she deposed that her shares were held by Givana as trustee for the Givana Family Trust and that she was a major shareholder (see her 28 June 2019 affidavit at 10, 13). In her 3 March 2020 affidavit, Ivana Cassaniti said that her assistance in forming Banq Accountants was limited to helping Gino Cassaniti borrow money from their friends and family; and she deposed that her 66% interest in Banq Accountants was held jointly with Gino Cassaniti. In cross-examination, she confirmed that she regarded herself as the 60% owner of Banq (T 1120.40-1121.2 and see T 1131.32-35).
7. In her affidavit sworn 3 March 2020, Ivana Cassaniti deposed (at [6], which was read as an assertion subject to weight), and at ([2], [8] and [10]) that: her involvement in the running of Banq was limited to providing basic bookkeeping services only (preparing bank reconciliations and collecting Banq's debts); and that she never maintained, managed or reviewed transactions or the work of others beyond bookkeeping. (For Ivana Cassaniti is it said that she was not challenged when she said in cross-examination that she was unable to prepare a profit and loss statement or a balance sheet.) The plaintiffs say that Ivana Cassaniti's denial (at T 1115.28-49) of having ever worked as an accountant (including when she worked at CAP Accounting) is not to be believed, noting that it is contrary to the evidence of Gino Cassaniti at [2] of his affidavit sworn 11 April 2019.
8. In cross-examination by the plaintiffs, Ivana Cassaniti confirmed that her evidence (contrary to her first affidavit) was that she had previously worked at Banq Accountants and Banq as a bookkeeper (and not as an accountant) (T 1115). Her evidence was that: from 2010, she had little involvement with the business of Banq because of her family commitments; that she was getting a wage but was not working or was doing "very minimal work"; and that she was at home (T 1116-1117). Ivana Cassaniti deposed that Givana Prestige did not receive 60% of the profits of the respective Banq companies (saying that she had seen her bank statements and would have noticed had Givana Prestige received 60% of the profits earned by Banq) (T 1116-1117); and that she did not draw any profits from the business and only received a wage (T 1118).
9. At T 1148, Ivana Cassaniti denied that she wanted to know the profit from the business of Banq (saying, tellingly, "[m]aybe my husband wanted to know what the profit was but not me"), on the basis that she was at home looking after her children; and said that she had "absolutely no idea" of Banq's profit in 2013.
10. Ivana Cassaniti denied that she instructed Peter Abboud to make transfers out of accounts from time to time (T 1118-1119), saying that it was not necessary for her to do so as Peter Abboud was a signatory of the account. She then accepted that it was possible that she might have instructed Peter Abboud to make a transfer from the trust account because she had a daily limit of $20,000 so that if it were to be exceeded "somebody else would have to sign off on it". However, she denied that one of the reasons that she gave Peter Abboud instructions from time to time was that she wished payments to be made to other companies unknown to Peter Abboud. At T 1120ff, Ivana Cassaniti denied that she had ever instructed Peter Abboud to make payments to suppliers of companies that were creditors of Banq; but accepted that she might have instructed them from time to time.
11. Ivana Cassaniti denied that, by reason of her majority ownership in Banq, she "called the shots" (T 1121.5) and denied that she was the person at Banq that was actually in charge of transferring moneys between the various companies (T 1125). Her evidence was that, in the period from 2011 to 2014, she was at home and so did not know whether Gino Cassaniti and Fred Khalil approved clients' tax returns in that period (T 1125.45-50).
12. Ivana Cassaniti denied that Gino Cassaniti was the senior person in the firm up until his bankruptcy but accepted that Gino Cassaniti was the person who introduced clients to the firm (T 1125.20-30). She was adamant that she had very little to do with Banq's business from 2010 and that she was at home.
13. During cross-examination (at T 1118.36-47), Ivana Cassaniti accepted that she was a signatory to two bank accounts of Banq (its general business account and its trust account) (not, as I understand her evidence, the Banq Maximiser account) and that she "might have done some" bank reconciliations during the years 2011 to 2013 (T 1119.40-45). (At Table F of the plaintiffs' closing submissions is a schedule prepared by the plaintiffs of bank accounts on which Ivana Cassaniti was a signatory.) Ivana Cassaniti denied that she was aware that from 2011 to 2013 Banq would make substantial payments or transfers of money out of its bank accounts (T 1118).
14. In relation to Givana Prestige, Ivana Cassaniti's evidence in her first affidavit was that: it was set up in around 2009/10 to hold a car dealership licence at which time the company was dormant (11 April 2019 affidavit at [12]); no business was undertaken while she was a director ([12]); in 2009, she met Frank Criniti through Gino Cassaniti but she had no real involvement with him other than socially ([11]); in late 2011, Givana Prestige was taken over by Frank Criniti so that he could operate a car dealership business (18]); from sometime in late 2011 she did not have anything to do with the company ([20]); and she did not authorise or allow any transaction to take place relating to Givana Prestige ([22]). (It emerged during Ivana Cassaniti's cross-examination by Peter Abboud's solicitor, that a bank account had been opened by Gino Cassaniti on behalf of the company, and that Ivana Cassaniti had apparently sent some emails to the bank to effect some of the transfers from that account (see below).) Ivana Cassaniti's evidence was that she transferred the shares to Frank Criniti for nothing following Gino's request, as the company had no income or money and therefore no worth (11 April 2019 affidavit at [18]).
15. In relation to the Givana Prestige transactions (see at T 1150-1151), Ivana Cassaniti denied knowledge of the payments totalling $969,185, itemised in the Diamondwish pleadings. She agreed that she was the only signatory to the Givana Prestige bank account in 2011 but did not accept that bank account transactions out of that account could not occur without her authorisation (T 1150.35-40). Her evidence in that regard was that she had no explanation for how a bank account transaction by payment out could have occurred without her authorisation but was adamant that "I know that I couldn't, there is no chance that I could have transferred this amount of money" (for the reasons that, first, she said she had no idea that the money came in and, second, that she had a $20,000 daily transfer limit so she needed permission from the bank for anything over $20,000).
16. Ivana Cassaniti accepted that she could organise an "RTGS" (i.e., a transfer directly through the bank), and could not explain how someone not a signatory to the account could do so, but she was adamant that she had not authorised the payment in question out of Givana Prestige's bank account. Ivana Cassaniti gave similar evidence as to the other impugned payments made to Givana Prestige's account in December 2011 and March 2012 (T 1154, T 1161). She did not recall receiving Givana Prestige's bank statements but accepted that it was possible that she did (T 1154).
17. Cross-examined about the circumstances when she ceased to be a director of Givana Prestige (see T 1164), Ivana Cassaniti's evidence was that her understanding was that at some point Frank Criniti was to take over the company. Tellingly, she points to Gino Cassaniti's role in this, saying: A. I remember Gino incorporating the company saying, can you sign to be a director/ shareholder. I remember that the company just sat there, did nothing, and then he said to me, Frank wants this company, can we just give it to him because we've done nothing with it anyway. That's all I remember. … Q. What do you mean that Frank was taking over? A. Frank wanted a company and we had this company sitting around and Gino said to me, Frank needs a company, just give him Givana Prestige, it does nothing anyway. It's one nothing and that's all I know.
18. Ivana Cassaniti accepted that at the time she was a director of the company she regarded herself as having the responsibilities as a director of the company, but her response then was that the company did nothing (T 1165.25-30). She said that at the time she was a director the company did not operate a bank account. Her evidence was that the purpose of incorporating the company was to trade in luxury motor vehicles (on the basis that that was why Gino Cassaniti had asked her to incorporate the company and be the director and shareholder) but that under her directorship the company did not trade.
19. I have referred above to the cross-examination of Ivana Cassaniti by Peter Abboud's solicitor, in which her attention was drawn to a bundle of emails apparently sent from her Banq email address in December 2011 to January 2012 to instruct Givana Prestige to make certain of the impugned transactions (see at T 1191-1192). Senior Counsel for Ivana Cassaniti described this as an ambush. Ivana Cassaniti accepted that the emails came from her email address but her evidence was that she did not recall sending the emails (which included an email requesting transfer of moneys from Givana Prestige to Auswide). Ivana Cassaniti was adamant that she had never denied that she could transfer moneys out of the account but said that she could not transfer by logging in; and that she did not recall contacting the bank on those days. Ivana Cassaniti suggested that the emails could have been sent by "anybody in the office jumping on [her] computer" (T1192.9). (Pausing here, that evidence is lent credence by the existence of at least one email in which Gino Cassaniti appears to have sent instructions to the bank purportedly on behalf of his wife.)
20. In re-examination (see T 1199-1200), Ivana Cassaniti accepted (having looked at the documents overnight) that they appeared to have come from her email address; and said that it was possible that she had sent them (but she did not remember doing so). Her evidence was that if she had requested those transfers it could only have been that someone had directed her to do so (T 1201).
21. Ivana Cassaniti said that she had no recollection as to the opening of the Givana Prestige bank account; her only explanation for the opening of that account being that somebody had asked her to do so. Similarly, she had no recollection as to the closing of the account (simply speculating that Gino Cassaniti may have asked her to do so - T 1203.30).
22. As to her acceptance in cross-examination that she may have "instructed" Peter Abboud to do certain things, Ivana Cassaniti said that by "instructed" she meant asked and her evidence was that she had not ever been in a position to command Peter Abboud to do anything (T 1203-1204).
23. In her affidavit sworn 3 March 2020 at [12], in respect to the Givana Prestige bank account with account number ending in #4642 (see also Ex S), Ivana Cassaniti said that she was not aware that this account existed until these Proceedings commenced.
24. Ivana Cassaniti denied any knowledge of the impugned payments into or out of Givana Prestige (see, for example, at T 1150.20; T 1158.37; T 1160.16; T 1161.1; T 1161.14; T 1161.16; T 1162.7). She appeared to accept (at T 1162.16) that a transfer by RTGS required her authorisation; and agreed (at T 1163.25) that if she was the only signatory to the account then she was probably the only person who could sign a cheque on the account but added that "[t]hat doesn't mean I recall signing it or knowing anything about it". (Ivana Cassaniti also made the comment, at T 1164.5, that there were a few "Givana" companies.)
25. In relation to Discobell, Ivana Cassaniti's evidence in her first affidavit was that: it was set up to invest in a Criniti restaurant in Castle Hill (being a restaurant related to Frank Criniti) ([21]); Ivana Cassaniti authorised "some transactions in the investment in Criniti Castle Hill", referencing a bank statement of Discobell showing certain transactions (albeit that those were in respect of a different account from that in which the impugned Discobell transaction occurred) ([23]); and that the transactions attributed to Discobell in the pleadings were not authorised by Ivana Cassaniti nor did she have knowledge of those transactions ([24]).
26. In her 3 March 2020 affidavit, Ivana Cassaniti deposed that she was only aware of the bank account annexed to her April 2019 affidavit because it was one of the Discobell accounts to which she had internet access (at [14]). Ivana Cassaniti there corrected her earlier evidence and deposed that, having looked at the transactions more carefully, she did not believe that she had authorised any of those transactions (contrary to her earlier belief). Ivana Cassaniti explained in her 3 March 2020 affidavit that, since the Proceedings commenced, she became aware that she was the signatory on other Discobell accounts but that she has no recollection of those accounts or the circumstances under which she became a signatory ([14]).
27. In relation to the $155,000 Discobell transaction (see at T 1138), Ivana Cassaniti said she had no idea what that payment was about and denied that she knew that this amount was coming to Banq through her company (Discobell) at the time. She said: A. Number one, I wasn't at the office to know anything about, and I didn't even know about Bluemine. Number two, Discobell had more than one account, one bank account. I only had access to one bank account, I only knew of one. So the Discobell account that this transfer happened from, the 155, I didn't have access to this account. Q. You didn't have access to that account? A. No, I didn't even know it existed.
28. Ivana Cassaniti accepted (T 1141-1142) that she was a signatory to the Consolidated Wealth bank account and to the Discobell bank account but maintained her denial that she knew anything about the $155,000 transaction.

Ivana Cassaniti's credit

1. The plaintiffs submit that Ivana Cassaniti was a vacillating and unsatisfactory witness, pointing in particular to two matters said clearly to demonstrate this. First, Ivana Cassaniti's attempt in her third affidavit to "clarify" matters in her first two affidavits. It is noted that all purported "clarifications" were exculpatory. It is said that no explanation was even attempted as to how any matters in her first two affidavits (prepared by her solicitors) came to be in error (i.e., whether her instructions were misunderstood or that she did not carefully read and consider the contents of those affidavits). It is noted that the second affidavit was prepared in answer to affidavits of other witnesses, paragraph by paragraph, and reveals pointed consideration and responses. Second, Ivana Cassaniti's denial of knowledge of the banking transactions of Givana Prestige. It is said that the emails in Ex 15 reveal the extent and gravity of her dissembling in her answers in cross-examination. The plaintiffs submit that her evidence (where it is contested) should not be accepted unless it is independently corroborated.
2. The plaintiffs maintain that Ivana Cassaniti was a very active participant in the transactions of Discobell and Givana Prestige, respectively, regarding Bluemine and Diamondwish; and that, if any of the relevant transactions were genuine, Ivana Cassaniti has had every opportunity to explain that. They say that, instead, in her cross-examination Ivana Cassaniti "embarked upon a course of denials, absence of recall, dissembling and lies", particularly regarding Givana Prestige, but no less so regarding Discobell's transactions.
3. The plaintiffs say that Ivana Cassaniti was an unsatisfactory witness; that she was not frank; that she feigned not remembering; that she falsely sought to rely on non-involvement in the business of Banq; and that she lied. It is submitted that Ivana Cassaniti gave false evidence about alleged non-involvement in the Givana Prestige transactions when, on the whole of the evidence now available, it was clear that she was in fact involved in those transactions. It is noted that Ivana Cassaniti denied any knowledge of the payments by Diamondwish to Givana Prestige of $969,185 (see T 1150.20) those payments being at a time when Ivana Cassaniti was the sole director and sole signatory to the Givana Prestige bank account. It is submitted that Ivana Cassaniti was fully aware of, but deliberately failed to reveal, the true basis of each payment in and each payment out of Givana Prestige; and that she knew that the transactions in their entirety were for no benefit of Diamondwish. The plaintiffs point to the absence of any genuine commercial documentation for the transactions.
4. The plaintiffs say that Ivana Cassaniti's evidence to the effect that Givana Prestige was a dormant company and did not trade while she was a director was false (see below re the licence renewal).
5. The plaintiffs say that Ivana Cassaniti's denials of knowledge of Givana Prestige's banking transactions, that it conducted no business, and that she did not "authorise, delegate or allow any transactions to take place relating to Givana Prestige" were, on the evidence, patently false to her knowledge. The plaintiffs accuse Ivana Cassaniti of having lied to the Court.
6. It is said that, contrary to her express denials, Ex 15 contains email instructions from Ivana Cassaniti to an NAB bank officer to make transactions about which she has denied any knowledge. The emails contain: the 19 December 2011 transfer from Givana Prestige to Auswide of $68,964.60; the 20 December 2011 transfer from Givana Prestige to Auswide of $653,898; the 6 January 2012 transfer from Givana Prestige to Auswide of $363,000; the 9 January 2012 transfer from Givana Prestige to Auswide of $122,943.29; the 9 January 2012 transfer from Givana Prestige to Diamondwish of $330,056.71; and the 17 January 2012 transfer from Givana Prestige to GR Munoz of $60,000).
7. The plaintiffs point to the comments of a personal nature appearing in some of the emails to NAB as indicating that it was Ivana Cassaniti making those communications and giving those instructions and they say that it is not open to Ivana Cassaniti to deny that.
8. The plaintiffs say that Ivana Cassaniti would not have instructed those payments out of Givana Prestige in the absence of knowledge of the payments being made into Givana Prestige, and that she must have known at all relevant times that the account had sufficient funds for the bank to make the transfers that she was requesting. The plaintiffs contend that Ivana Cassaniti undoubtedly knew the sources of the funds paid in (including from Rackforce).
9. As to the attack on her credit in relation to the NAB bank emails (Ex 15), for Ivana Cassaniti it is accepted that this called into question the reliability of Ivana Cassaniti's evidence that she had not carried out any of the Givana Prestige transactions before Frank Criniti took over the company. However, it is submitted that ultimately her credit was vindicated. It is emphasised that she did not deny sending the emails - rather, her evidence was that she did not recall doing so but that she accepted that on their face the emails came from her email address.
10. It is said that Ivana Cassaniti's evidence had always been that she had no recollection of making any of the transactions from the Givana Prestige and it is submitted that, given that it was more than eight years after the event that she swore her first affidavit and nine years after the event that she was cross-examined about this, it would be surprising if her evidence were otherwise. It is said that Ivana Cassaniti properly accepted that it was possible that she sent them; and that the tenor of her evidence (that she never regarded the money that came into Givana Prestige as hers, but Frank Criniti's, and that she had no involvement in making the transactions) was later corroborated by the production of contemporaneous documents by Ivana Cassaniti, called for after her cross-examination (see Ex 16); including an email from Gino Cassaniti to the NAB asking for the bank account to be opened for Givana Prestige (into which email Ivana Cassaniti was not copied). It is said that this corroborated Ivana Cassaniti's evidence that she had no recollection of opening a bank account for Givana Prestige, but if she was involved, somebody would have asked her to do so.
11. Further, it is noted that amongst Ex 16 were emails from Gino Cassaniti to the bank in which he asked for large transfers to be made, which are the subject of the Givana Prestige Transactions, on the account, notwithstanding that he was not a signatory. It is said that these emails make it clear that Ivana Cassaniti's role (assuming that she sent the emails that appear to have come from her office computer) was no more than an administrative one in making payments that others had asked her to make without any knowledge of what the payments were for, beyond that it had to do with Frank Criniti's motor dealership (which understanding it is said was also confirmed by Ex 16 which contained an email from Frank Criniti requesting the Givana Prestige logo on 15 December 2011 from Fred Khalil and Gino Cassaniti).
12. For Ivana Cassaniti, it is submitted that the documents in Ex16 also explain Ivana Cassaniti's lack of recollection about the Givana Prestige bank account and transactions before she was shown the documents in Ex 15. It is said that, not herself having opened the account, and the account having been conducted at times by Gino Cassaniti, and otherwise in relation to transactions concerning Frank Criniti's business interests, it was natural that Ivana Cassaniti should hold the view that, because Givana Prestige had never traded and was a dormant company, it could not have had a bank account nor could she therefore have authorised transactions on such a bank account.
13. In Ivana Cassaniti's reply submissions, responding to the serious allegations made by the plaintiffs against Ivana Cassaniti's credit based on the emails in Ex 15, it is said that (even if it is assumed against Ivana Cassaniti that the emails in Ex 15 show, objectively, both that she was aware of the account and that she authorised the transactions referred to in the emails) there is a significant leap between concluding that her evidence is incorrect and concluding that she deliberately lied in giving that evidence.
14. Ivana Cassaniti argues that there is room to debate what is meant by "authorise, delegate, or allow any transaction to take place relating to Givana Prestige Pty Ltd" (the wording in Ivana Cassaniti's 11 April 2019 affidavit at [22]) and whether Ivana Cassaniti's involvement in sending the emails shows that she was relevantly "aware" of any particular bank account. However, even on the assumption that the emails show that Ivana Cassaniti's affidavit evidence was incorrect, it is submitted that there is the obvious possibility that in her evidence some eight and nine years after the events, Ivana Cassaniti's recollection was simply unreliable; and that the explanation that Givana Prestige was dormant and never traded provides an obvious explanation as to why Ivana Cassaniti might, wrongly, conclude that the company never had a bank account. It is said that, given that Ivana Cassaniti was a signatory on a number of accounts over a number of years, her recollection as to this particular account would be remarkable unless she were given documents to refresh her memory.
15. Further, it is submitted that, if Ivana Cassaniti's evidence was a deliberate lie, then it was a significant gamble for her to give that evidence if, as matters turned out, there were contemporaneous documents to show that she was the signatory on the account and had given the bank emailed instructions to make transfers on the account; all the more so if those contemporaneous documents would be in the possession of a third party (NAB) and subject to a subpoena from the plaintiffs (as in fact occurred).
16. It is submitted that Ivana Cassaniti's imperfect recollection of these emails, more than eight years earlier, does not point to her deliberately lying to the Court. It is said that is no attempt by the plaintiffs to grapple with the fact that the contemporaneous documents showed that Gino Cassaniti, alone, was responsible for the account being opened in December 2011 and that he himself caused emails to be sent to NAB requiring transactions on the account, notwithstanding that he was not a signatory. Both of these matters are said to provide an explanation as to why Ivana Cassaniti held the view that she was not aware of the account and did not authorise transactions on the account.
17. For Ivana Cassaniti, it is submitted that her credit was not impeached in the cross-examination by Senior Counsel for the plaintiffs: that she answered all questions directly and did not attempt to avoid the questions put to her. It is said that Ivana Cassaniti made appropriate concessions and did not blindly challenge everything put to her.
18. It is accepted that, in assessing Ivana Cassaniti's credit, a distinction must be drawn between the evidence she gives in relation to her husband, on the one hand, and on other matters, on the other hand. In relation to the former, it is accepted that, as Ivana Cassaniti is the wife of Gino Cassaniti, any exculpatory evidence she might give in respect of her husband would be treated with some caution (particularly where her original evidence sought to distance Gino Cassaniti from the business, though it is said that it is to her credit that she corrected and clarified that evidence before making herself available for cross-examination).
19. However, it is said that Ivana Cassaniti's evidence that she had no knowledge at all of a Scheme or any breaches of duty should be accepted (and that it should be accepted that if she did play any role in facilitating the Scheme, she did so unwittingly). It is said that there is no contrary evidence that points to the fact that Ivana Cassaniti did have the requisite knowledge; and it is noted that those whose interests are served by suggesting that Ivana Cassaniti played a significant role in the running of Banq did not make themselves available to be cross-examined.

Ruling as to credit

1. I considered Ivana Cassaniti to be a credible witness. Her account of events (particularly that her role in Banq was only an administrative one) is consistent with her lack of professional qualifications as an accountant; and with the recollection of Frank Criniti that she did not have an office but sat, in effect, "with the office girls". It is quite plausible that Ivana Cassaniti held the roles that she did, as director or shareholder of companies associated with Banq, at the direction of Gino Cassaniti (whether, at the outset, for the purpose of asset protection on his part or, later, because he was a bankrupt). It is in my opinion significant that none of the Banq clients has suggested that Ivana Cassaniti gave any tax or business advice as to the structuring of companies or the like; her role being consistently described in terms of administrative tasks (such as chasing debtors or reconciling accounts) and even the evidence as to authorisation of transactions appears to have been to facilitate the transactions rather than to approve entry into the transactions. It seems to me to be telling that Ivana Cassaniti (as per her evidence in relation to "handing over" Givana Prestige) was apparently content to act on her husband's instructions or directions as to what was to be done in relation to one or more of the companies with which she was associated.
2. I do not accept that Ivana Cassaniti was lying in the witness box as to her role in the relevant companies. It is plausible that she did not recall the email communications in relation to banking directions; that she did not recall all of the bank accounts on which she was a signatory; and that she did not recall the signing of a licence renewal application in relation to a company in respect of which it is not suggested she personally carried on any motor vehicle dealership transactions. Ivana Cassaniti's evidence in the witness box (and it is not insignificant that, unlike her husband, she made herself available to be cross-examined) was given in a calm and unflustered way - even when she was shown documents inconsistent with her recollection of events; and I accept that Ivana Cassaniti made appropriate concessions. Moreover, her evidence is significant in that it squarely points to Gino Cassaniti having a more significant role in Banq than he accepts he did - and hence, ultimately, she did not seek to shield him in that regard. I considered Ivana Cassaniti to be a truthful witness, albeit with an imperfect recollection of events (which would not be surprising if she was mainly acting on the direction of her husband).

Tanya Borg

1. Tanya Borg attested (at [24] of her affidavit sworn 4 December 2018), that in or around 2012, she and her husband, Michael Borg, were referred to Banq and met with Fred Khalil. During the course of her cross-examination, Tanya Borg was unable to give any useful recollection of the participation she or Michel Borg had at that meeting (see T 1383.19-40).
2. At [48] of her affidavit sworn 4 December 2018, Tanya Borg deposed that "Fred and other employees at Banq, provided more than accounting advice in that they were also business advisors and were involved in our industry. They also assisted with things like workers compensation, audits, client audits, client and industry contacts and payroll tax matters. Eventually, Fred also recommended to us that we outsource our workers to various companies controlled by him". Tanya Borg's evidence was that Borg Civil became very reliant on the advice of Fred Khalil and Banq (at [49]).
3. Tanya Borg deposed (at [75] of her affidavit sworn 4 December 2018) that the backup file for MYOB was sent to Banq and that she understood that Banq "made any changes or adjustments they thought necessary". In her second affidavit sworn 27 February 2020, Tanya Borg (at [13]) deposed that: In the period early to mid 2012 to 2016, the accounting records of BCA [Borg Civil] and BF [Borg Family] were maintained by Banq Accountants, who were BCA's and BF's taxation agents and advisors. In the course of BCA's and BF's business, Banq regularly requested the BCA and BF MYOB file so that they could record entries and complete the reconciliation. For that reason, I believe that some of the entries were completed by the principals and employees of Banq Accountants.
4. This is corroborated to an extent by reference to an email exhibited to Tanya Borg's affidavit sworn 27 February 2020 in which Tanya Borg asks of Banq, whether it had finished with the Borg Family MYOB and, if so, could the new version be sent through to her.
5. Tanya Borg's evidence in cross-examination was that: she was aware that the transactions (transferring the equipment from Excavations to Borg Family) were intended to appear to be arms-length; Excavation was indebted to her husband Michael Borg for the equipment (he had originally purchased the equipment which had been transferred to Excavation and there was a purported loan agreement between Michael Borg and Excavations evidencing the debt); the reason that Borg Family did not pay Excavation directly for the equipment was that it had been advised to do it through RCG CBD by Fred Khalil; Fred Khalil was the one who could explain it, but she did not understand why the transfer had been done that way (T 1384-1386). Asked in cross-examination, why Borg Family did not simply pay Excavation for the equipment Tanya Borg was unable to explain why the transaction was done the way that it was; conceded that the purpose of getting an independent valuation for the equipment was to establish an arms-length transaction (but then said she did not know what an arms-length transaction was). In response to questioning about the loan in detail, Tanya Borg said "Fred should be able to tell you that, because he looked after that" (T 1386.1-5).
6. As to Tanya Borg's evidence, the plaintiffs point out that Tanya Borg had almost completed her accountancy training at the time of the relevant events and that, by the time of giving evidence, she had then at least 6 years' experience as a trained accountant; and that she was held out as such in the business that she conducted with her husband, Michael Borg. It is submitted by the plaintiffs that her contentions that she had only superficial knowledge of taxation principles (income tax, GST) and of basic accounting systems (cash book, ledgers, profit and loss) are not to be believed.
7. The plaintiffs say that Tanya Borg was seeking to distance herself as far as possible from the real basis for the transactions (by contending that it was all on Fred Khalil's advice and that she did not understand what was happening), and from the accounting records which the plaintiffs say demonstrate that: the purported arrangement involving RCG CBD was never fulfilled; and the taxation (GST and depreciation) treatments were false, including the receipt of GST refunds for supposed (but to her knowledge false) entitling expenditure.
8. In that regard, it is submitted that any person conducting basic business transactions has everyday experience of the formats and purpose of invoices, both as between traders and also for GST purposes (that a creditor vendor issues invoices to the debtor, the debtor makes the payment including GST, and the creditor pays the GST element on to the ATO). It is said that Tanya Borg would not genuinely deal with questions in cross-examination about the use of RCTIs. The plaintiffs contend that it was obvious that (to Tanya Borg's knowledge) supposed GST payments by Borg Family would never be paid on to the ATO, yet: Borg Family claimed and received "refunds" for those GST payments; the full "invoice" payment including GST was paid not to the supplier/creditor but to a third party (RCG CBD); and RCG CBD then paid an equivalent sum to Borg Family.
9. The plaintiffs point out that an RCTI scheme can only operate between traders in a group, pursuant to a prescribed agreement, and in circumstances where, ultimately, the GST element will be paid to the ATO. It is said that Tanya Borg could not have genuinely believed that Borg Family could lawfully issue RCTIs, as it did in these transactions.
10. It is noted that Tanya Borg in her affidavit is silent as to why Excavation was wound up or the advice Fred Khalil gave her and Michael Borg concerning the need for the name change or the need to liquidate Excavation.
11. The plaintiffs accuse Tanya Borg of obfuscation in her evidence as to her dealings with Fred Khalil.
12. In particular, it is noted that Tanya Borg's evidence is that she never enquired of Fred Khalil as to whether any of the money had been paid by RCG CBD to Excavation (T 1366.41). Tanya Borg did not agree with the proposition that this was because she did not expect it to be paid to Excavation (T 1366.43). Tanya Borg said that she did not know if there was evidence of payments going to Michael (T 1368.2). The plaintiffs say that Tanya Borg's evidence (at T 1368.3-20 - that "You need to ask Fred. I don't know") was obfuscation. It is noted that, after an objection and when the question was restated by me as being that she "is not aware of any Borg Family repayment to Michael", Tanya Borg answered as follows "[i]n this time, no" (T 1369.1-17).
13. When asked why Borg Family had not simply paid $585,000 to Excavation, Tanya Borg's response was that "Fred instructed us to do it with this" (see at T 1369.26) (a response characterised by the plaintiffs as being her "stock defensive response"). When asked about the $575,000 being paid by RCG CBD to Borg Family, it is said that Tanya Borg avoided giving a direct answer ("[t]o be honest we didn't question it. He was advising us ..." - see at T 1369.37-41) and then (at T 1370.7) that she adopted her "standard fall-back position", when saying that "I honestly did not understand the transaction".
14. Complaint is made that Tanya Borg would not at first give an answer to the simple question as to whether any procedure "or system" was set up for payments of money to Michael Borg (at T 1370.9-27, her answer was "I don't know. I was just advised that there was - obviously Michael was going to get paid"). The plaintiffs say that the question was straightforward and simple for a qualified accountant to answer but that Tanya Borg again obfuscated. Further, as to her statement that "obviously Michael was going to be paid", the plaintiffs point out that this did not happen (and they say that Tanya Borg plainly knew that). The plaintiffs note that, repeatedly, Tanya Borg said that "Fred instructed" what was to be done (see for example at T 1369.26).
15. It is said that another disingenuous response throughout Tanya Borg's evidence was that she did not understand the transaction, or that she did not understand the questions about the transaction. The plaintiffs emphasise this in the context of her 4 December 2018 affidavit in which she deposed at [34]-[35] that: 34. At some stage after that, Fred said, "I have the valuation, I can structure those payments, I have a company called RCG, I can use that to make the payments to the old company". 35. I did not completely understand what was being proposed but I understood that money would be paid to RCG and that money was to be held by RCG to pay money to Excavation. The money would be returned to repay monies owed to Michael. (Emphasis added as per submissions)
16. The plaintiffs say that, having understood that much, it was evasive and disingenuous for Tanya Borg repeatedly to contend in the cross-examination that she did not understand the transaction, when all she was being asked was whether payments had been made to Michael Borg and whether she had enquired as to that (referring, for example, to T 1370.7).
17. The plaintiffs say that Fred's "advice" (T 1369-70) that she said in her affidavit that she understood (i.e., that money would be paid to RCG CBD and held by it to pay money to Excavation and then the money would be returned to pay moneys owed to Michael Borg - see at [35] of her first affidavit), was not followed. It is submitted that Tanya Borg's "practised response" that "it was on Fred's advice" falls down because no payments were made to Excavation, the money was not "returned" and there was no repayment to Michael Borg.
18. The plaintiffs say that Tanya Borg's evidence as to the Excavation transaction demonstrates that Banq was pivotal in orchestrating a scheme which included extracting assets from a company about to be wound up, without payment for those assets. It is noted that neither Gino Cassaniti nor Fred Khalil gave evidence about this matter and that the Borg Parties did not seek to cross-examine or subpoena either of them. The plaintiffs say that it is to be inferred that any such evidence would not have been favourable to the Borg Parties.
19. The Borg Parties, to the contrary, contend that Tanya Borg's evidence was coherent, cogent, measured and should be accepted as truthful.
20. In particular, it is said that, in cross-examination, Tanya Borg's demeanour was not one of evasion or argumentation; that she refuted directly (rather than unduly defensively) the questions put to her, making concessions wherever appropriate; and that she deposed honestly and cogently to her knowledge and understanding of the impugned transactions. It is said that Tanya Borg's evidence of the course of events (including the change in approach advised by Fred Khalil and subsequent payments to Excavation) is supported by the documents in evidence (including by cheque butts) and the logic of events; and that the plaintiffs' assertions in relation to her credit ought to be rejected.
21. The Borg Parties refer to three matters that they say point strongly to the veracity of Tanya Borg's evidence.
22. First, that the plaintiffs largely focused attention on three transactions which occurred in a context of a larger number of payments that are not in any way impugned by the plaintiffs. It is said that the relevant transactions were justified by Fred Khalil by reference to what is said to be an unexceptional form of asset preservation (namely, separating ownership of the assets from the risk of business loss by the imposition of a company, in this case Borg Family), pointing to the evidence as to Fred Khalil's advice that the "structure" of the Borg business entities was wrong and that he would set it up for her. It is said by the Borg Parties that the transactions that occurred immediately after the impugned payments (a sale of assets by reference to a valuation undertaken by a reputable valuer (Hymans), which cost about $10,000) point to a pattern of lawful and unexceptionable conduct. The Borg Parties argue that there is nothing to explain why, if (as the plaintiffs allege) the Borg Parties were motivated by a desire to defraud the Commonwealth, they would not have been similarly motivated to enter into other such transactions (noting that it is common ground that there were no further impugned transactions). It is said that this anomaly is all the more curious when the costs of participating in the alleged Scheme outweighed the benefits.
23. Second, as explained further below, that Borg Family had its tax assessed on the accrual basis, which it is said supports the Borg Parties' defences and Tanya Borg's evidence.
24. Third, that Tanya Borg was at the relevant time a young woman, with a number of jobs and a young family, and who (while studying commerce and business) gave evidence that her focus on the day to day was on "customer relationship" and invoicing (T 1385). It is said to be objectively likely, in these circumstances, that Tanya Borg placed reliance on Fred Khalil; and equally likely that such reliance, in her circumstances, would make her more trusting and less questioning than might otherwise be expected. In other words, it is said that conduct which might bespeak knowing involvement in a breach of fiduciary duty is, in this case, equally consistent with trusting reliance on a professional adviser (a fortiori, where the underlying transaction is unexceptional - i.e., invoking a corporate shield to protect the family assets).
25. The Borg Parties say that it is incorrect for the plaintiffs to contend that Tanya Borg provided no explanation of the transactions (cf the plaintiffs' submissions, for example, at [662]-[664]; [1163]). It is noted that Tanya Borg made herself available for cross-examination and gave extensive explanations as to the circumstances in which the RCG CBD transfers took place and what happened next. It is said that, when looked at in its entirety, the facts in this case (as set out in the chronology of events above) are only rationally consistent with Tanya Borg's explanation of the way that events unfolded. In particular, the Borg Parties say that the assertion that Borg Family paid nothing to Excavation does not withstand the force of the primary documents (cf the plaintiffs' submissions at [1163]).
26. As to the attack on Tanya Borg's credit based on her denials as to her knowledge and understanding of the effect of the transfers to and from RCG CBD, it is noted that Tanya Borg's evidence was that (while she was clear about the overall purpose of the restructure and was aware of the fact that RCG CBD was to hold the moneys it was paid to pay money to Excavation) she did not know the reason why moneys had been paid to RCG CBD or its taxation or other consequences (see for example at T 1384.36). It is said that Tanya Borg was not shaken as to that important distinction; and it is submitted that the fact that she maintained that position even where she was presented with opportunities to adopt self-serving suggestions made to her by Fred Khalil's Counsel (see below), vindicates her credit.
27. As to criticisms by the plaintiffs concerning Tanya Borg's credit, where those criticisms were not put to her in cross-examination (and to which she was not given an opportunity to respond) reference is made to what was said in Kuhl v Zurich Financial Services at [62]-[64] per Heydon, Crennan and Bell JJ (reference also being made to Lorrimar at [101], [104]).
28. The Borg Parties say that, in the circumstances, Tanya Borg's evidence would be accepted as genuine and truthful; as would be Tanya Borg's explanation of the transactions between Borg Family and Excavation, especially given that it is supported by the primary documents in evidence and the logic of events.

Ruling as to Tanya Borg's credit

1. While I accept that there is force in the criticism that Tanya Borg adopted a standard defensive answer (to the effect that everything was done on Fred Khalil's advice), I considered her to be genuine in her lack of any real understanding of the reason behind the impugned transactions. (To my mind, that assists the plaintiffs' overall case insofar as they maintain that there was no genuine commercial purpose to the transactions - hence, it is unsurprising that Tanya Borg would be unable to proffer an explanation for them.)
2. My impression of Tanya Borg as a witness was that she was genuinely confused or at cross-purposes at times in cross-examination, and that she became frustrated at what she clearly perceived to be a lack of understanding or appreciation of what she saw as her very limited role in the transactions. See, for example, the following, in the course of cross-examination by Fred Khalil's Counsel (T 1385.40-1386.4): Q. You understood that by the transferring of the assets across from [Excavation] to the new company, that it was necessary to either pay Michael out of [Excavation] and some point or transfer the debt from one company to the other; isn't that right? A. Yes, there is a loan, yes. Q. That's right. So, there was a credit of the loan account to - I withdraw that - there would have been a debit to the loan account in [Excavation] and a credit for the loan account - A. I didn't look after that side of it. I don't know. I can't stress that enough to you guys. Youse aren't understanding. I didn't look after the entries. Fred should be able to tell you that, because he looked after that.
3. Overall, I considered Tanya Borg's evidence not to be implausible; and more likely to reflect an inadequate or superficial understanding of the accounting and tax treatment of the transactions than an attempt to misrepresent the transactions.

Mario Sande (Statewide Parties)

1. Mario Sande was part of an associated group of Scheme Participants (including former defendants Statewide Printing, State Wide Design, Richard Attard and Michael Sande) referred to as the Statewide Parties. It is said that Mario Sande was the controlling mind and will of Statewide Printing and State Wide Design (by reference to ASIC extracts, Ex K at 30247 and 32166, and his own evidence at T 766.40 and T 767.15).
2. Mario Sande's evidence was to the effect that: in 2012 and 2013 he variously dealt with Peter Abboud, Fred Khalil and Gino Cassaniti (T 770.20-35); Banq was the external accountant for Statewide Printing and State Wide Design; Banq did annual accounts, profit and loss statements, tax returns, quarterly GST returns and were the Statewide Printing Group and State Wide Design & Print's corporate tax agents (T 769.15-769.46; Ex K at 31684, 32172); and Banq had access to the companies' MYOB system (T 769.45-50).
3. Mario Sande's evidence, in relation to the impugned Statewide transactions from November 2012 was to the effect that one of Peter Abboud, Fred Khalil or Gino Cassaniti advised him to open another bank account to implement those transactions (at T 776.28-T 776.40). At T 777.11-16, Mario Sande's evidence was that, he was advised by Banq as to all the payments when they were made and the amount that was to be paid.
4. In relation to the transactions identified in the RCG CBD third further amended statement of claim at [144.7]-[144.7.3.3], Mario Sande confirmed (at T 784.50-T 785.10) as correct his previous answer at the examination hearing before Registrar Hedge to the effect that the payments were going around in a circle and that this was done as advised by Banq Accountants.
5. In relation to various invoices and payments, Mario Sande's evidence was to the effect that: the amount of the payment was determined on each occasion by Banq Accountants (T 778.30) from one of Gino Cassaniti, Fred Khalil or Peter Abboud (T 779.5); he would receive an invoice via fax or sometimes via email or it would be dropped off to him in person from the accounting firm (T 778.33-38); payments were on occasion prompted by Peter Abboud (T 779.33-780.19); no services were provided by RCG CBD to State Wide Design and Statewide Printing for invoices that it received (T 779.16-31); and further that there was no agreement between either of State Wide Design or Statewide Printing and RCG CBD for the provision of any services (T 785.16-20). The plaintiffs say that Gino Cassaniti organised the payments for these transactions, just as he said he would.
6. Mario Sande's evidence, in respect to the tax benefits that his companies received (at T 777.18-778.27) was that he now knew that the transactions that would be entered into the accounts as legitimate transactions were not in fact legitimate transactions but that he did "not really" know this back at the relevant time (he said "I didn't understand what I was doing or the actual tax laws" and as to what he knew about how the GST scheme was working, he said "I knew something but I didn't really look into it"). In the verified defence filed for the Statewide companies, it was pleaded that Banq advised and represented that, if the Statewide companies entered a series of transactions, they could "legitimately and legally" channel payments of money between them; and Mario Sande confirmed that he was told that (at T 776.19-4). Consistent with this, when asked what the advice was that he was given, Mario Sande's responded, "[j]ust to channel legitimately channel my money from company A to company B" (at T 776.4-6).
7. Pausing here, insofar as Banq clients received advice that the invoicing arrangements (entered into, some were told, for tax minimisation purposes) were legitimate or lawful, on one view it might be said that they were not on notice of any dishonest design in that regard (and the imprimatur of such advice coming from professional advisers might fortify such a conclusion - see, for example, Turner v O'Bryan-Turner [2021] NSWSC 5 at [234]). However, the plaintiffs argue (and I accept) that where the defendants knew that invoices were being rendered for services that were not genuinely being provided (such as supervision services or management services) then they cannot have understood the transactions to be legitimate (and they refer to what was said by Leeming JA in Hasler v Singtel Optus at [139] in this context). Mario Sande's evidence (that he "knew something" but did not really look into it) reeks of wilful blindness in this regard.
8. Mario Sande gave evidence (at T 767.25-768.6) to the effect that Statewide Printing did not really trade but in 2012 to 2013 it did receive income; and that income was "only from invoicing. From the payment I made, that's it". Mario Sande further agreed (at T 768.23-25) that the only income Statewide Printing received was dealing with the matters involving Banq.
9. The plaintiffs say that, in circumstances where Gino Cassaniti was a principal of Banq and Mario Sande recalled having some meetings with him about the Scheme (although he could not remember what he discussed with Gino Cassaniti), the overall tenor of Mario Sande's evidence makes it clear that Gino Cassaniti was involved in these accounting systems for the implementation of the Scheme.
10. Mario Sande's evidence was that, in relation to the arrangement between his two companies and Banq, there would be a fee deducted and he agreed that in every case it was about 10% (T 783.15-20); that if State Wide Design made the payment, what would later come back was that amount of money less a fee (T 783.32-36).
11. The plaintiffs say that the payments (recorded in Table 3.4 of their closing submissions) demonstrate that the fee to which Mario Sande referred in his evidence amounted to eleven-tenths of the amount that was returned from the carousel of payments between his companies and RCG CBD.
12. There were no adverse submissions made in respect of Mario Sande's credit (cf the Scheme Participants who remained active parties and in respect of whom it was submitted that there was a clear interest in exculpating themselves and inculpating others). For completeness, I note that although Mario Sande was unable to say with certainty who, of the three accountants at Banq, had given him the relevant advice as to the bank transactions, or as to who he would deal with at Banq, I accept that he had a genuine recollection as to the substance of the advice that he was given.

Frank Criniti

1. Frank Criniti was a defendant in the Diamondwish and Rackforce Proceedings and director of the various Criniti companies. The plaintiffs discontinued their claims against him by a settlement reached in advance of the hearing. Frank Criniti gave evidence in the plaintiffs' case under compulsion of a subpoena; and was subject to cross-examination.
2. Frank Criniti's evidence was to the effect that Banq implemented the systems that the Criniti companies utilised. At T 464.14-24, he said that it was "[a]lways the three of them, Fred, Gino, or - Fred, Gino or Peter Abboud. Quite frequently they would attend to train the payroll officers and the accounting team that they established downstairs and yeah, that was - that was mainly more Fred and Peter that would do that sort of-". In respect to payroll, Frank Criniti said (at T 493.14-24) that "[w]hatever payroll done they done according to the directions of Peter Abboud, Gino Cassaniti, Fred Khalil, Banq Accountants. They - the system was set up by them and taught to whoever was in payroll to do accordingly to what they were told to do". Further, he gave evidence (at T 463.23-40) that for the first two or three years since he began with Banq Accountants in 2009, Banq did everything in the sense of hiring someone in-house for them and he assumed they were doing BAS returns. Frank Criniti's evidence was that it was something that he did not talk to them about at that time as it was something he was not really interested in or understood. Frank Criniti recalled during that period signing numerous papers provided to him by Gino Cassaniti (T 463.40-50).
3. At T 505.30-506.37, Frank Criniti explained that the training by Banq commenced immediately and continued throughout the years 2011, 2012 and 2013. Specifically, he said that Banq trained Vanessa Scuteri and Tarun Shah. As to Vanessa Scuteri, who was in Criniti's payroll department, Frank Criniti said that Banq trained her on how to do all the wages and, he believed, as to the cash banking procedures.
4. Frank Criniti's evidence (at T 464.35-465.30) was that Tarun Shah was employed by his companies after Peter Abboud and Gino Cassaniti told him that they needed someone in-house and that they had the right guy that was working for a labour hire company who was great. Frank Criniti's evidence was that they wanted to get Tarun Shah over to work for Frank Criniti's company so that they could cope with the job; that they suggested Tarun Shah; and that Frank Criniti had never met him before he was employed (as Frank Criniti was overseas at the time). Frank Criniti was not entirely sure in which of his companies Tarun Shah had been employed (see at T 465.09-21, T 579.21-29) (perhaps not surprising when one considers the plethora of Criniti companies incorporated through the auspices of Banq). Frank Criniti said that Banq trained Tarun Shah to deal with payments of bills and to liaise with Banq "when it was tax time, when it was payment time for new fit outs for new restaurants, disbursements of like funds, where they needed to go and be received, how many things needed to be paid, where they needed to be paid from". Frank Criniti said that the company had investors at the time "[b]eing Banq Accountants" and that funds would be coming in and "Tarun would be looking after all that and paying the builders, [and that] it started to change up where the payments will be made from different accounts" (T 506.21-37).
5. At T 468.40, Frank Criniti gave evidence that Banq had in effect total involvement in the accounting of the companies that he described as being the trading, asset holding and labour hire companies that were like a spider web (T 466.45-467.6). His evidence was that Gino Cassaniti, Fred Khalil and Peter Abboud set up the whole structure and that they would engage constantly with accounts and payroll, communicating back and forth on how everything had to be done (at T 469.11-34). His evidence was that the people from Banq were in contact with his Accounts Department daily (at T 470.25).
6. In respect of payments out of Diamondwish (pleaded at [100]-[168] of the second further amended statement of claim in the Diamondwish Proceeding), to which Frank Criniti was taken in cross-examination at T 478.43-485.45, Frank Criniti's evidence at (T 508.35-509.9) was that the usual practice when a payment was to be made out of Diamondwish was that it would always be done under the instruction of Gino Cassaniti; and that the same applied for Rackforce. He said that, for both companies, "[w]e would seek advice for payments as it was that was a normal trend and we would be directed to which accounts are supposed to be paid from, for what" (T 509.1-5).
7. Significantly, to my mind, Frank Criniti did not know what Diamondwish's business was (T 508.10). His evidence was that those entities were set up by Banq (T 499.50, T 501.37, T 503.40 and T 505.23).
8. Frank Criniti's evidence about the appointment of Christopher Cherry as director of Diamondwish (on 16 March 2012) was that he had never met Christopher Cherry in his life; that as far as he was aware Christopher Cherry had nothing at all to do with the conduct of any aspect of the business of Diamondwish; and that he had had a discussion with somebody at Banq about a new director but he did not know who the director was or the director's name (at T 532.12-28). (For Gino Cassaniti, it is said that neither did Christopher Cherry know the name Gino Cassaniti - see below; though, as I say in due course, the reliability of Christopher Cherry's recollection is moot - not least because of his admitted heavy drug problem at the time.)
9. As to the payment on 21 December 2012 by RCG CBD of $250,000 to Diamondwish and then by Diamondwish to Elle Barikhan of $250,000 on 24 December 2012 (at which time Gino Cassaniti was a director of RCG CBD), Frank Criniti's evidence (at T 514.8-39) was to the effect that: Gino Cassaniti said that he needed Frank Criniti to make this payment (on behalf of Gino Cassaniti) to Elle Barikhan in South Africa where they were mining diamonds. Frank Criniti said that Gino Cassaniti would have told him where the payment had to come from and that was how it was done. Frank Criniti's evidence was to the effect that Gino Cassaniti said to him that he wanted to pay money to Barikhan but "then Gino didn't want to do it and said I had to do it, and this was the way it had to be done. It was done between Gino, Elle and a transaction from the Accounts Department at Head Office" (T 514.20).
10. Frank Criniti was taken through each of the transactions pleaded in the Diamondwish and Rackforce statements of claim during his examination in chief. At T 516.49-517.15, Frank Criniti gave evidence to the effect that Diamondwish gave nothing in return and received no benefits for the payments in and out of Diamondwish ([100]-[168] second further amended statement of claim; plaintiffs' closing submissions at Tables 7.1 to 7.7). Similarly, at T 533.15-534.43, he gave evidence to the effect that Rackforce gave nothing in return and received no benefits for the payments in and out of Rackforce ([76]-[77] of the third further amended statement of claim; plaintiffs' closing submissions at Tables 9.1 and 9.2). Frank Criniti denied that Rackforce had ever provided or received any management services (see T 534.23-27). (See also his evidence at T 511.06-20, T 516.49-517.14 in relation to Diamondwish; T 534.35-43, T 535.25-37 in relation to Rackforce.) Frank Criniti's evidence was that those payments were determined by Banq (see at T 518.30).
11. The plaintiffs accept that payments for fit-out and the like (see, for example, the reference to Tarun Shah looking after the payments for new fit outs - T 506.21-37) are usual within a restaurant business but note that Diamondwish and Rackforce were never engaged in that (or any other) business.
12. Frank Criniti admitted that he was well aware that Diamondwish and Rackforce would likely have taxation obligations, including liabilities for income tax, PAYG and GST; and Frank Criniti gave evidence that he "worked … out eventually" that, as a result of the transactions undertaken in relation to Diamondwish and Rackforce, those companies would have to be liquidated when they could not pay their tax debts. Frank Criniti accepted that the purpose of the payments in and out of Diamondwish and Rackforce (which he insisted were transactions "under my instruction and advice that that was the best thing to do for the company"), and his personal purpose in those transactions, was to enable him and persons and other companies associated with him to obtain tax benefits, that is to get cash generated by his businesses to him and to others tax free. He accepted that he knew that those activities were not honest (T 535-536).
13. Frank Criniti's evidence concerning the winding up of Zagoonda (at T 497.26-32, T 498.22-28) was that: A. So, when I went to Gino it was stated that whatever had happened in - with the previous accountant there was certain liabilities or certain accounting issues that needed to be rectified and he would - he had a plan on what to do and he basically took control and said that he had to change the name to Zagoonda because if he didn't it would appear in the newspaper that it was Criniti's that went into liquidation, perhaps. … A. I remember there was something along the lines of the old accountant has done something wrong and moving forward there needs to be a director that is implemented and then backdated for the amount of $5,000. Once the director is implemented then the debt of the company is calculated and 10% of that debt has to be paid to the liquidator.
14. Frank Criniti's reference to the backdating of documents was highlighted when Gino Cassaniti's Counsel cross-examined Frank Criniti about Zagoonda (to the effect that it ceased operations in December 2008 before Frank Criniti had met Gino Cassaniti). Taken to that chronology, Frank Criniti said (genuinely, to my observation) (at T 548.10): Q. Before you met my client? A. Well when your client backdated the director‑‑ Q. No, no, no ‑ don't ‑ I'm asking if‑‑ A. No because that what we always used to say he used to do.
15. The plaintiffs submit that corroborative evidence of the above answer is to be found on an examination of the relevant ASIC extract (Ex K at 72191) and Form 484 (Ex S) in relation to Zagoonda (see chronology of events above at [249]). The plaintiffs point out that Mohamad Irshad Rosunally, who was the director of Zagoonda when it was wound up on 5 January 2010, was also a director of another unrelated company whose creditor's voluntary winding up commenced in January 2010 and whose registered office was the Banq Address (see Aris Zafiriou's affidavit sworn 21 March 2017, Annexure B). It is noted that Frank Criniti did not know the directors appointed to various of the Criniti companies (including Aloeseiafi Faanoi) before they were appointed, and that the common link was Banq.
16. Frank Criniti's evidence as to the establishment or operations of Auswide and Peter Abboud's involvement therein was that Gino Cassaniti had said that Auswide was "to buy and sell motor vehicles and that the reason it was to be done that way was to save money on luxury car tax" (at T 520.10-23). Frank Criniti said that Gino Cassaniti explained that "you're allowed to buy - with a wholesaler licence you're allowed to exceed a certain amount of purchasing vehicles in that year. If you don't have a wholesale licence you - I think there's a limit on your monthly purchase of cars and you have to pay stamp duty" (T 520.15-20). Frank Criniti said that (at T 520.42-521.02): A. It started with Gino obtaining the licence for this company, the vehicle licence, at the Department of Fair Trading. And then it went from there to just buying and selling vehicles, I guess, as it did, and when you purchased a vehicle you would call your finance broker and do a deal on a car and he would then require to speak to - like to - I guess you needed to get all like tax returns or accounts and he would always work with Peter Abboud. Him and Peter Abboud, obviously, became - because there was quite a few in and out vehicles they became like - they developed a relationship going back and forth.
17. In his evidence in chief, Frank Criniti also gave evidence about various round robin transactions between Auswide and Givana and involving his "Glen" bank account (a bank account in relation to his home mortgage) as to the purchase of a Rolls Royce (at T 528.24-29 and T 530.43-59).
18. Again at T 567.37-568.10, Frank Criniti gave evidence that in about December 2011 Gino Cassaniti wanted to shut down Auswide and to transfer the licence to Givana Prestige (Frank Criniti saying that "Gino wanted to shut down Auswide and backdate the director and sell everything from Auswide to Givana so it was done properly and then to transfer the licence from Auswide to Givana"). Cross-examined by Gino Cassaniti's Counsel (at T 560.45-561.7) as to the transfer of everything from Auswide to Givana Prestige, Frank Criniti was adamant that this was organised by Gino Cassaniti; and, as to the transfer of the dealer's licence, that the whole thing was Gino Cassaniti's doing. Frank Criniti said "[t]hat's why he [Gino Cassaniti] purchased personal vehicles for himself under Givana Prestige".
19. Frank Criniti did not accept the proposition that it was he who wanted to "get rid of Auswide" and that Gino Cassaniti said he had a company that was inactive (to which the dealings licence could be transferred) (T 560.50-561.10). (Pausing there, strictly speaking Givana Prestige was not Gino Cassaniti's company. Ivana Cassaniti was the sole director. The question as put by his Counsel seems to assume Gino Cassaniti's control over that company of which he was not a director consistent with the plaintiffs' assertions as to his control over various of the corporate entities of which he was not recorded as director.)
20. Frank Criniti accepted (T 561.9-17) that there was a time when he was buying and selling vehicles (through Givana Prestige, as I understand it) and said that the funds in that account were from the sale or purchase of the vehicles. Frank Criniti accepted that the purpose of Givana Prestige (at T 522.27-31) was "to continue buying and selling vehicles for tax saving purposes and….Operating a motor vehicle business"; and he said (at T 521.25-34): A. The best I can is like saying two to three years after Gino said that the director [of Auswide] had to be changed. The director had to be backdated. The company had too much debts. The cars have to be moved out properly and transferred into Givana Prestige. He had a company already setup under his name and his wife's name, being Givana for Gino and Ivana, and that's the - it would be done properly because there would be a barrister that would sign off on it and it's not against the law, but Auswide could not afford itself and whatever the date was I remember there was ..(not transcribable).. they'd, again, find a director for $5,000 and whatever the date was 10% of the debt goes to the liquidator. That's the truth.
21. The plaintiffs refer to the liquidation of Auswide as illustrative of what they describe as Gino Cassaniti's propensity to treat companies as "convenient expendable tools" rather than dealing with them as separate legal entities with attendant obligations (referring to Frank Criniti's evidence at T 521.21-34).
22. Frank Criniti denied that he was making any transfers or deposits between the respective companies. Frank Criniti confirmed that he had "visual" over the accounts but said that Vanessa Scuteri (in payroll) and Tarun Shah (in accounts) logged into internet banking using his login details, which he provided to them (T 509.10-26). He accepted (at T 509.31-38) that he had ultimate control over who could log in to the bank accounts of Diamondwish and Rackforce, which he said was "the ultimate control to hand it over to them yes correct".
23. In relation to Discobell, Frank Criniti said (at T 565.38-42): Q. […] Ivana Cassaniti became an investor in the Castle Hill business through Discobell Pty Ltd is that right? A. So, whether it was Ivana or - they used to just put names wherever they wanted, I guess. I never dealt with Ivana for that actual investment communication. It was Gino, Fred and Peter, predominantly Gino.

Frank Criniti's credit

1. The plaintiffs say that Frank Criniti's evidence should be accepted for the following reasons: that Gino Cassaniti did not give any evidence to the contrary; that, in cross-examining Frank Criniti, Gino Cassaniti's Counsel relied on the fact that Gino and Frank had not met before 2009; that Gino Cassaniti's Counsel did not suggest to Frank Criniti that his explanation of how Gino Cassaniti orchestrated the change of directorship before they met was untrue; and that Frank Criniti's explanation conforms with the evidence recorded on the Form 484 showing that it must have been backdated because the date on which it was purportedly signed by Fred Khalil, was (as put by Gino's Counsel in cross-examination) before Frank Criniti had met Gino Cassaniti. It is noted that no evidence was led by any of the defendants explaining why the Form 484 was not lodged for nearly a year after it was signed and that it was common for Form 484s lodged by Banq not to be lodged until a considerable time after the forms had purportedly been signed.
2. Gino Cassaniti, to the contrary, says that Frank Criniti's evidence in the plaintiffs' case must be scrutinised with the utmost care on account that: it was given with the benefit of a certificate against self-incrimination; he was originally a defendant in the Proceedings, together with his immediate family (mother, brother, former wife, his in-laws), and more remote family and friends; he was assessed to tax and penalty on approximately $23 million of understated income but settled with the ATO for a considerable discount; and he settled with the plaintiffs on terms which included that he undertook to answer a subpoena to give evidence for the plaintiffs.
3. Pausing here, a number of the witnesses sought s 128 certificates. I do not accept that I can properly draw any adverse inference from this in Frank Criniti's case or in the case of any other of the witnesses. That would be inconsistent with the very privilege against self-incrimination (see, for example, Clayton Utz v Dale (2015) 47 VR 48; [2015] VCSA 186 at [195]-[196]). [195] The prohibition on drawing an adverse inference from a claim of privilege was said by this court in Chong v CC Containers Pty Ltd to be traceable at least as far as Wentworth v Lloyd and confirmed in Victoria in R v Roberts where Batt JA said: [I]t is not permissible to draw any inference adverse to a witness from the reliance of the witness on a claim of privilege against self-incrimination. The credit of the witness is not impugned by the claiming of the privilege nor may any inference be drawn adverse to the case of the party calling the witness. [196] This is consistent with the observation made by the Australian Law Reform Commission that it was unnecessary for s 128(1) of the Evidence Act to contain a prohibition on the drawing of adverse inferences because the prohibition was part of the general law: No adverse inference should be drawn from the fact that privilege is claimed. Under existing law, no adverse inferences should be drawn where a person claims a privilege. It is not thought to be necessary, therefore, expressly to forbid the drawing of adverse inferences.
4. As to the fact of settlement reached by Frank Criniti with the ATO, again I can draw nothing from that. Litigants may (and in my experience do) settle cases for a variety of reasons - not necessarily on the basis of an admission of liability; and, in any event, Frank Criniti made abundantly clear his feelings as to the litigation and as to why he settled the claims against him in these Proceedings when he was cross-examined and I see no reason not to accept that evidence (see T 541-543).
5. The fact that Frank Criniti undertook an obligation to answer a subpoena to give evidence for the plaintiffs takes the matter no further (and his evidence that he was "here to be asked questions and … here to give the truth" - see below and T 539.29 - rang true to me).
6. Nor is the fact that Frank Criniti was found to have understated his personal income (or may have led an extravagant lifestyle in relation to his acquisition of motor vehicles) here relevant to his credit.
7. For Gino Cassaniti, it is said that Frank Criniti's evidence was largely self-serving and self-exculpatory. Pausing here, it must be said that there is an element of self-serving or self-exculpatory evidence on the part of all the individual Primary Conspirators (or at least those who served affidavit evidence) in that each sheets blame home to the others). For Frank Criniti, however, there was no need for exculpatory evidence since he had settled with the plaintiffs. That said, I exercise caution in accepting evidence of any of the witnesses who have an interest in painting others as blameworthy.
8. It is said by Gino Cassaniti that Frank Criniti's approach to giving evidence was "largely cavalier, approaching at times, frivolous in nature", referring in this regard to the following exchange (at T 539.16-37): Q. Thank you. MFI 5, that document that I just handed you, is that right? A. I - okay so I'll elaborate because I think I need to. I choose to not read certain things and I choose to sometimes not go through certain things that may bring up my past that affect me. Q. Right? A. So perhaps if there's an email that comes through that's negative I choose to avoid it because I'd prefer to just sit down and stand here and get asked the right question to give you the right answer. Q. Right. Okay all right well you're here for this reason to comply with a term of settlement is that right? A. I'm here to be asked questions and I'm here to give the truth. Q. Yeah because you were originally a defendant in these proceedings weren't you? A. If that's what you call it. Q. No, no it's not what I call it - A. I'm not here to joke around with you, I'm just here to - like I said you just ask me the right questions and I'm going to give you the right answers.
9. It is said that the exchange at T 539.35-36 amounted to, in effect, Frank Criniti saying "you ask me the right question" and "I'll give you the right answer that you want to hear". Pausing here, I do not accept that this was the tenor of Frank Criniti's evidence at all; rather, and I deal with this further below, I consider that Frank Criniti was there making it clear that he was in the witness box to answer questions truthfully but that he was not inviting an excursus into his personal affairs and he was displaying some emotion or feeling at the events that had led to him being required to give evidence in the matter.
10. Gino Cassaniti says that Frank Criniti's evidence at T 542.10-17 was disingenuous, in that he acknowledged that he was giving evidence under subpoena in the plaintiffs' cause (T 541.32-34) but disagreed that part of the settlement deal was that he had to agree to give evidence, and then explained that answer as follows (T 542.35-42): Q. But one of the conditions was the plaintiffs - someone instructing the plaintiffs, I suggest, said to you you have to come along to Court - why are you smiling? A. Because I remember that I didn't know about that and I found out later about that because I don't read my documents and I do remember that was - that doesn't interest me here.
11. For Gino Cassaniti, it is said that the clearest example of Frank Criniti striving to give the "right answer" in the plaintiffs' cause is the series of questions put to him in chief (commencing at T 511.6-513.44 and again at T 516.39-517.14) and his answers to the effect that Diamondwish and Rackforce did nothing to "earn" payments coming into their accounts, nor derive any benefit from payments going out of those accounts. It is noted that in answer to questions from Counsel for Fred Khalil in relation to whether the companies obtained any benefit from the transactions, Frank Criniti said (at T 584), after saying repeatedly that he did not know how he knew there was no benefit without remembering the payments themselves, that "the reality is it just - it makes sense that there was no benefit". Gino Cassaniti submits that Frank Criniti had simply assumed that was the right answer because that was what "makes sense" and that it incidentally advanced the plaintiffs' cause.
12. I differ in my impression of that evidence. I accept that what weight may be attached to the answer may be affected by Frank Criniti's lack of memory of the transactions, but his statement that it makes sense that there was no benefit seemed to me to be based on his understanding that the companies in question (Diamondwish and Rackforce) had done nothing in relation to those payments. Hence, his challenge, in effect, to the cross-examiner that "unless there's a benefit that you can outline for me that I can then understand I'll agree with you".
13. Reference is made by Gino Cassaniti to Frank Criniti's evidence at T 608.32-48 that if he made any transaction from December 2011 in or out of Diamondwish, Rackforce or Givana Prestige it was "based upon the whatever Gino Cassaniti had told us or Tarun to do"; and to his denial that he ever made transactions on his own accord; as well as to his denial that he ever gave instructions or directions to Tarun Shah to the effect whenever there were funds in the Criniti's Wood Fire Pizza account to transfer those funds across to Rackforce's account (see at T 615.8-29). Frank Criniti's evidence was that Tarun Shah had his system with Banq and that Tarun Shah would not take instructions from Frank Criniti "unless it came from Banq Accountants".
14. Gino Cassaniti submits that Frank Criniti is not a reliable witness and his evidence should not be accepted unless it is corroborated. Gino Cassaniti points, in this regard, to what is said to be Frank Criniti's general demeanour, evasiveness, unnecessary aggression, and coyness; and, on occasions, to the incredulity as to his evidence (for example, that important transactions on the Diamondwish and Rackforce account occurred with neither his involvement or direction), noting and that key parts of his evidence were contradicted by David Rizk and Tarun Shah.
15. It is said that Frank Criniti's evidence was a calculated attempt to blame Gino Cassaniti for every financial woe that befell the Criniti companies; and that Frank Criniti's own evidence gives the lie to that contention, in that, Gino Cassaniti submits that Frank Criniti "helped himself" to $23 million of what on his own admission was "undeclared moneys … from [his] restaurant business" over three years from 2011 to 2013 (T 602). As noted above, whatever Frank Criniti's personal failings in relation to his income tax liabilities, this is not to the point in the present proceeding - not least in circumstances where it seems to be common ground that a purpose of the arrangements was tax minimisation (a euphemism it would seem in the present case for tax avoidance). In any event, I could not possibly reach a view that the losses sustained by the Criniti companies were due to conduct of this kind.
16. For Ivana Cassaniti, it is similarly said that Frank Criniti's evidence was largely self-serving, reference again being made to Frank Criniti's evidence (at T 539.16-34). Further, Ivana Cassaniti says that Frank Criniti made his feelings towards Banq and Gino Cassaniti quite clear (at T 556.9-10) when asked why he "got rid" of Banq and he said "[b]ecause I made a mistake and got manipulated by an idiot".

Ruling as to Frank Criniti's credit

1. Frank Criniti struck me as down to earth and forthright. I accept that he was prone to engage in confrontation with the cross-examiner. He made no bones about his feelings and gave his evidence on the whole in a direct way. He did not shy away from his unhappiness with Gino Cassaniti and Banq; but nor did he shy away from accepting responsibility for his part in the arrangements. I accept that his emotions ran high at times. However, it seems to my observation that, where he volunteered responses, this was generally in an attempt to paint the whole picture where he perceived that the questioning was perhaps selective. So, for example, his answer, when questioned about his car acquisitions (T 567.43-568.1) seemed to me to ring true: A. And you also forgot to ask about the other cars that are missing in that pile where Porsche, Mercedes Benz, they're all owned by Fred, Peter and Gino and Ivana Cassaniti that owned also a Mercedes Benz four‑wheel drive.

Elias Nassar

1. Elias Nassar gave evidence on subpoena issued by the plaintiffs. Elias Nassar controlled a group of companies (the Wenman Parties) comprising Blackrock Media, Ignite Promotions and Wenman Brimak as trustee for the Wenman Investments Trust.
2. At T 827.17-37, Elias Nassar's evidence was that he had known Gino Cassaniti since he was six or seven years old; that, after a long break, he met Gino Cassaniti at an event years later, and that by, 2010, he regarded Gino Cassaniti as his accountant and someone who "the whole time … oversaw anything that was done for any of the companies that we had" (T 816.14-28). Elias Nassaar said that he was not aware that Gino Cassaniti was not an accountant up until Gino Cassaniti told him just over two years ago (i.e., around 2018) that he was bankrupt (T 816.21-28). (In cross-examination by Gino Cassaniti's Counsel, Elias Nassar said, with genuine feeling to my observation, that had he known that Gino Cassaniti had not been a registered tax agent since 2005 he would not have been with Banq - see at T 814; an observation that to my mind underscores Gino Cassaniti's involvement with Banq at the relevant times.)
3. As noted, Elias Nassar's evidence was that: Gino Cassaniti oversaw anything that Banq did; that in the period from about 2010 or 2011, Banq did the general accounting work for the Wenman companies, prepared financial statements and tax returns; and that "Gino oversaw our accounts" (T 800). Banq acted as the companies' tax agents. He said that his dealings at Banq in that period were with Gino Cassaniti and Peter Abboud and no one else. He said that Peter Abboud was doing a lot of bookkeeping (more the running around) and that he thought Peter Abboud was still studying at the time and anything he did would be overseen by Gino Cassaniti (at T 800.40-801.5). Elias Nassar said that he spoke to Gino Cassaniti numerous times over the phone in relation to different things in respect of the accounts and that he would have had a discussion with him in relation to a tax deduction for Blackrock Media (T 802.1-6). At T 817, he said that he did not know how things worked in Banq's office but that, any time he would see Peter Abboud, Gino Cassaniti would come in and oversee anything Peter Abboud was explaining to him.
4. Pausing here, I accept that caution should be exercised in accepting what is, in effect, Elias Nassar's perception as to the roles carried out by Gino Cassaniti and Peter Abboud respectively, considering the generality of the evidence in this regard. However, it makes sense logically for Gino Cassaniti to be overseeing work undertaken by a more junior accountant for clients introduced by Gino Cassaniti to the firm (and particularly where, as appears to be the case here, reliance was placed by the client - Elias Nassar - on Gino Cassaniti's involvement).
5. As noted already, the verified defence of Wenman Brimak was admitted without objection. The plaintiffs point to the fact that no other defendant sought to challenge by cross-examination of Elias Nassar the admissions contained therein. In that defence, as noted above, Wenman Brimak admitted that, in about late 2012 or early 2013, Gino Cassaniti advised and recommended to the "Nassar Clients" that, if they entered into a number of payments between, Blackrock Media, Ignite Promotions, RCG CBD and Wenman Brimak, then they could legitimately minimise the amount of tax which would otherwise be payable by them (see at [7(d)]).
6. Elias Nassar said in the witness box that Gino Cassaniti broadly explained the process for minimising tax (see T 819-820); that he saw him as an expert and so he went along with it; that the advice was along the lines of issuing invoices for consulting services he was doing - and that Gino Cassaniti said that there was a company he had that would issue the invoices (T 802). Elias Nassar's evidence was that he thought it was legitimate at the time (T 802.33).
7. Elias Nassar said that he did not understand that a fee would be charged by Banq for its involvement in the transactions and said that Gino Cassaniti did not tell him he would be taking a fee (T 803). He said that Gino Cassaniti explained to him that he (Gino) was consulting and so "the way it was explained to me was you know a legal way of of [sic] minimising tax" (T 803.27-30). As to a fee, all he could recall was that "it came back minus the GST" (T 803.15). Taken to his evidence on examination before Deputy Registrar Hedge on 21 March 2018 (where he gave evidence that he was told by Gino Cassaniti that the fee for involvement would be "less the GST"), Elias Nassar accepted that that was a truthful answer (T 804.1-806.30).
8. In relation to the payments into RCG CBD from Ignite Promotions and out of RCG CBD to Wenman Brimak, Elias Nassar's recollection was that invoices would be issued (from Blackrock Media to Ignite Promotions, Ignite Promotions to Blackrock Media, and then to Wenman Brimak, and then payment came back to Blackrock Media). At T 802.8-803.1, he gave evidence to the effect that: Gino Cassaniti let them know how payments would go from one company to another and that payments were to go from Blackrock Media to Ignite Promotions (T 806.12-25); that there was a conversation with Gino Cassaniti in which he said that Banq would organise the invoices to be sent that were to be paid (T 808.1-11); and that he left it to his office staff (Brenda Louwen) (T 807.1-11; 808.27-37; 820.20). Elias Nassar gave evidence that as to the exact amount Blackrock Media had to pay, Gino Cassaniti's staff would contact Brenda Louwen and the process was arranged from there (T 807.9-19); and that Banq would ask his staff to create an invoice from Blackrock Media to Ignite Promotions or from Ignite Promotions to Blackrock Media (he could not recall exactly which) (T 807.44-49). (The plaintiffs say that clearly those invoices were false.)
9. The plaintiffs say that Bluemine was used to implement the Scheme for one of the transactions involving the Wenman Parties. That transaction (Table 5.1) involved a "carousel payment" of $385,880 between Ignite Promotions, Bluemine and Wenman Brimak, for which Banq deducted a fee of $35,045. The plaintiffs say that there was no genuine commercial documentation for the transaction. The evidence from Elias Nassar was that Gino Cassaniti recommended to him the Scheme involving this transaction (see below).
10. At T 809.17-810.40, Elias Nassar's evidence was that RCG CBD did not ever provide any labour hire services to Ignite Promotions, and that the reason that invoices were paid in instalments was that Ignite did not have sufficient funds to pay the full amount at once. Further, at T 811.7-812.14, Elias Nassar confirmed that, in respect of the invoices issued by Ignite Promotions to Blackrock Media, no such consulting services as represented in those invoices were ever provided by Ignite Promotions to Blackrock Media. The plaintiffs emphasise that the benefits that were explained to Elias Nassar as arising from the transactions would be tax benefits. He gave similar evidence in relation to Bluemine (see T 812.45-813.43); his understanding being that Bluemine was "from Banq". He said that the amounts (for the invoice payments) were given to them by Banq (T 813); and his recollection was that within a few days of each payment the money would come back to Black Rock Media (T 810.18-21).
11. In cross-examination the extraordinary proposition was put to Elias Nassar (but, after objection, withdrawn) that it had been made clear to him that he should give false evidence about Gino Cassaniti and to suggest that he was involved in everything (T 818.45). I interpose here to note that I saw no basis in the evidence for such a suggestion.
12. At T 819, Elias Nassar was emphatic that he had had a discussion with Gino Cassaniti about Blackrock Media in 2012 to 2013; that Gino Cassaniti explained the process in relation to minimising tax (and see T 820); and that any time he went to sign anything Gino Cassaniti would oversee it (T 821.15) (and see at T 827).
13. Questioned as to this, Elias Nassar agreed that after he became aware of these Proceedings he had a meeting with Gino Cassaniti and asked him to speak with his lawyer (to sort the issue out - Elias Nassar said he needed Gino Cassaniti to explain the situation) (T 825). Elias Nassar said that Gino Cassaniti was blaming Peter Abboud and Fred Khalil about the situation (T 824-825; and see T 829).
14. There is no reason to disbelieve Elias Nassar's evidence. I accept that his recollection was not perfect but he did not overstate matters and I considered him to be genuine in giving his recollection of events. It is telling that Elias Nassar's evidence was that he needed Gino Cassaniti to explain the situation to his lawyers when the issue with the liquidator arose. That is consistent with Elias Nassar having little real understanding of the transactions. Indeed, with no disrespect to Elias Nassar (or a number of other witnesses, such as Frank Criniti, Mario Sande and George Said) the suggestion that he would have been in a position to conceive of and implement a tax minimisation scheme of this kind without advice from qualified accounting or tax professionals is not plausible.

Tarun Shah

1. Tarun Shah worked variously for Banq and then worked in-house for one or more companies in the Criniti companies.
2. Within the Criniti companies, Tarun Shah said (at T 933.23-37) that he reported to Frank Criniti; and that Frank Criniti would not give him directions in terms of the accounting entries or the like but that normally there would be a meeting to go through the payments for authorisation of the payments. (It is said that this is contrary to Frank Criniti's evidence that he did not give directions concerning the authorisation of payments. It is also noted that Tarun Shah gave evidence that Frank Criniti did give instructions for the movement of funds from one Criniti company to another Criniti company (see at T 936.5-7). It is also noted that (at T 935.42-49) Tarun Shah said that he did not do any bookkeeping for Rackforce and Diamondwish.
3. Tarun Shah's recollection was that there were labour hire payments going from the Criniti's restaurants to the other companies and that if he was unsure as to the nature of a payment he would ask Gino Cassaniti what kind of payment it was; and he would get an answer such as initially to record the payment as a loan to the respective entity, and he would record it accordingly (T 928.5-32; see also T 927.22-35).
4. Tarun Shah also explained that he spoke with other Banq employees whilst employed with the Criniti companies, including Devangh Shah (no relation) and Peter Abboud (T 929.25-930.12). His evidence is that Peter Abboud's advice on how payments should be accounted for was to "[l]ike, record as a loan … And it will get reconciled".
5. When questioned as to the making of transactions from Frank Criniti's online NAB accounts, Tarun Shah said that based on instructions (that he did not recall) he was still making transactions from those accounts in the period 2014 to 2017 but he did not accept that he ever received an instruction in the period 2011 to 2012 from Frank Criniti in words that when there were funds in the Criniti's Wood Fire Pizza account they were to be transferred to the Rackforce account; rather, Tarun Shah said that normally "the verbal instructions were if he wanted to transfer money and if he can't do it he would advise me that can you do this transfer" (T 939.30). (Insofar as reliance is placed on this as inconsistent with Frank Criniti's denial of such an instruction, it is difficult confidently to conclude that there was any inconsistency given the tenor of Tarun Shah's response to the question.)
6. Tarun Shah also worked at Banq for a period following his employment at the Criniti companies (following an interview with Fred Khalil and Peter Abboud). His evidence was that he reported to Devangh Shah as the first point of contact and then to Peter Abboud; and that he did not have direct contact with clients of Banq (T 930.33-931.44). He understood that when he prepared the BAS returns they had to be signed by clients and that a client would come into the office to sign them. He said that he would give those returns to Devangh Shah and on occasion to Peter Abboud as well.
7. There is no submission adverse to Tarun Shah's credit. He was calm and matter of fact in the witness box and his evidence was consistent with his involvement being limited to the accounting aspects of approved payments - not to the approval of those payments himself. I accept that he relied on persons at Banq (Gino Cassaniti and Peter Abboud) for decisions as to the accounting treatment of payments, albeit that Frank Criniti gave him directions or approval as to particular payments out of the companies as well.

David Rizk

1. Frank Criniti's evidence was that David Rizk was his personal assistant at the beginning of 2012. He is now a maintenance officer.
2. David Rizk's evidence (on subpoena under compulsion in the Proceedings) is that he came to be appointed as a director of Givana Prestige following a conversation with Frank Criniti (T 904). Although he could not remember the date of that request, he did not dispute the accuracy of the ASIC register that noted his directorship from 18 January 2012 to 10 May 2012.
3. David Rizk's evidence was that he did not have access to any internet banking of Frank Criniti or his businesses and he did not recall signing any paperwork (T 905). His evidence was that his work involved driving Frank Criniti around a few times and that he would fill out forms and take them to the RTA for the change of paperwork in relation to the registration of cars (into Givana "or whatever it was") (T 906). He had nothing to do with any money or payment for the vehicles (T 906.35).
4. In cross-examination by Mr Katsoulas, David Rizk did not recall ever directing Vanessa Scuteri (in payroll at the Criniti companies) or Frank Criniti to bank any cheques for Diamondwish or Rackforce (T 906.40-48). He accepted that it appeared to be his signature as co-signatory for the NAB account authority but he could not remember signing the authority (see Ex 6; T 907-908). He said that Frank Criniti did not ask him to be a shareholder or secretary of Givana Prestige. In cross-examination by Mr Gupta (appearing for Peter Abboud), he said that he was not asked to collect any cash takings on behalf of Frank Criniti (T 909.5-7).
5. David Rizk's credit was again not in issue. There is no reason to disbelieve his account as to how he became a director (although there is some doubt as to whether Gino Cassaniti was present when that request was made). It is not implausible that the request was discussed between Frank Criniti and Gino Cassaniti in any event. It seems implausible in the extreme that Frank Criniti was organising this off his own bat and it is consistent with the approach in relation to a number of companies associated with Banq that "straw directors" would be appointed (including, in this matter, persons such as Christopher Cherry).
6. Frank Criniti's evidence was to the effect that David Rizk was his personal assistant; that he and Gino Cassaniti asked David Rizk to become a director of Givana Prestige (which occurred); and that, when David Rizk expressed to Frank Criniti that his father was not happy about him being a director of Givana Prestige he asked to be removed, Frank Criniti advised Gino Cassaniti, who said he would sort it out. Frank Criniti said that David Rizk had no involvement in the management of Givana Prestige (T 523.31-37).

George Said

1. George Said (as noted above) is Fred Khalil's cousin. He is now a roof tiler, but his evidence is that when he was a director of Involved Recruitment he was a real estate agent (T 891.35; T 846.5).
2. George Said's evidence (on subpoena issued by the plaintiffs) was that he became a director of Involved Recruitment at the request of Gino Cassaniti (T 843.13-44); that he walked into the Banq office and he was approached by Gino Cassaniti who asked him if he wanted to "partake" in a business (at T 843.13-45); that he said he was working full time and that Gino Cassaniti said that it might be a bit of administrative work and that he could work via his laptop. He said that a couple of weeks later he began to do some work at the direction of Gino Cassaniti (T 843.41).
3. Pausing here, this evidence highlights the seemingly arbitrary way in which directors were appointed to companies associated with Banq. The suggestion that persons such as George Said and David Rizk (with no disrespect to them) had any appreciation of the role and duties of a company director is implausible in the extreme.
4. George Said's evidence (at T 843) that the work was "just pretty much paying whoever they asked via email. Whoever Gino asked via email". He said that he would get an email with a timesheet to invoice and he would then get the payment and would pay whoever it needed to be directed to via email.
5. George Said had access to the bank account but was not sure if he was a signatory on that account. He had the log in details and was able to do transfers on that account. He said that he was sure that Gino Cassaniti had access to the bank account and that he was sure that he was not the only one doing what he was doing because sometimes he "logged in" and saw that there were other transactions that he had not done (T 844-846).
6. At T 848.19-849.40, George Said's evidence was to the effect that he received documents from Banq on his laptop but could not recall what type of documents they were and if they were instructions; he later said he could not recall if he received documents from Banq; he recalled receiving invoices from clients of Involved Recruitment for labour hire work; they would then invoice that work to the clients at Involved Recruitment; he would receive instructions from either the client or Gino Cassaniti. His evidence (at T 849.18) was that he changed the letterhead on the invoices.
7. George Said agreed (at T 857.25-39) that his evidence (at 43 of his ATO transcript, see Ex R at 43) was truthful when he said that he changed the letterhead for the invoices for Involved Recruitment (I note that I admitted page 43 lines 15-38 of Ex R without the provisional qualification, as admissions against interest - see the Earth Civil 23 March 2020 Judgment at [143]). At T 858-859, George Said said that Gino Cassaniti instructed him on how to use the laptop to enable the change on the letterheads to be made and someone at the Banq office programmed his laptop for this work. At T 858.27-859.8, he said that he left his laptop in Gino Cassaniti's office for it to be set up although he was unable to say who in fact (in Gino Cassaniti's office) set it up. Gino Cassaniti also instructed him as to the withdrawal of money to take for himself and to take to Gino Cassaniti (T 869-870).
8. It should be noted that George Said then claimed (at T 861.38-862.49) that his previous answers in the ATO interview about changing the logo were incorrect. His evidence was to the effect that what he meant to say was that he just got an invoice or would get a timesheet and send it off, and that is all he did; he "never changed anything on it", "never touched it", "never amended anything". His evidence was to the effect that he could not remember whether, if a change did occur, then that was a change that he did not make or if the computer automatically did it. His evidence was to the effect that maybe he was not understanding what the tax officers had been asking him and, when he looked over the brief, he was not happy with what he had said for agreeing to the questions from the tax officers and he further went on to say that he took back the answer in the brief.
9. At T 866.43-867.25, George Said gave the following evidence: Q. You agreed with it because it was true didn't you? A. I agreed to it because it says throughout the whole course it says I would receive stuff so every time they said receive something I'd just say yes. Q. Well you said‑‑ A. And then they said would you have received those invoices? Yes. I received them. So everything they asked about receiving I did say yes. Every time they said received I did say yes but when they said you changed the letterheads it was always them implying I changed the letterheads and I agreed so when I looked back over it I realised hang on a minute, like I never changed anything. Q. Now that evidence, those answers that you've just given then are false aren't they? A. No. Q. You accepted, I want you to look back at this page, where they asked you at line 18 where you said on your oath Mr Said, "Yes. Yes. I've done that." When they asked you and changed the letterhead" and I'll just ask you once more, your answers "Yes. Yes. I've done that yes" were true weren't they? A. Yes they were true on the day that I answered yes. When I looked over it-- Q. All right-- A. Like I said to my solicitor I don't recall if that was true or not because I cannot remember if I did or didn't. Or it appeared by itself. Q. You had every opportunity to indicate to the taxation officers if that was incorrect or needed explanation didn't you? A. Could you repeat the question? Q. You had every opportunity to indicate to the taxation offices if that was incorrect or needed explanation; didn't you? You had every opportunity? A. It was a very fast interview.
10. The plaintiffs say (and I agree) that a review of George Said's transcript of interview with the ATO on 3 June 2019 makes it clear that there was nothing unfair in the nature of the questioning in the interview. They point out that George Said did not seek clarification of questions the answers to which he claimed before this court were wrong or mistaken. His evidence (at T 867.25) that it was a very fast interview is said not to be a plausible explanation as to why he did not have every opportunity to indicate to the taxation officers in the interview that any of his answers were incorrect or needed explanation. The plaintiffs accuse George Said of not being frank in the witness box in attempting to resile from evidence formerly given on oath; and they say that his contrary evidence in court was disingenuous and untrue. (His evidence was certainly confused and its reliability is moot - the notion of a letterhead somehow appearing by itself was not explained.)

Evidence on the voir dire

1. In the course of his evidence, objection was taken by Counsel for the Khalil defendants to leave being given for the plaintiffs to cross-examine George Said. So as not to interrupt the Proceedings, at that point I took evidence on the voir dire (see from T 854) and indicated that I would rule on the objection in due course (see my ruling below).
2. The evidence in question related to what George Said did in relation to the changing of letterheads on invoices. He said (at T 858) that he was able, on the laptop, to put on the heading Involved Recruitment and that he would do the same job role for all the directorships. He said that someone else set up the laptop to change the logos for the invoices - and he identified that person as Gino Cassaniti (T 859). He also said that Gino Cassaniti instructed him how to use the laptop to enable the change on the letterheads to be made.
3. George Said's evidence was that he would put the "Involved Recruitment" invoice header or logo on the invoices; send the invoices over to whoever was requested to pay it and, if it was a timesheet, he would normally have instructions (from the person who sent the timesheet or from Gino Cassaniti) as to the person to whom to send the invoice (T 860).
4. However, then (at T 862), George Said that he was not changing logos and that his earlier evidence to the tax office to that effect was incorrect (and that maybe he did not understand what they had been asking) (see his evidence at T 865ff which led to him saying that he could not remember if he did or did not change anything or if the logo just appeared by itself - see T 867, as adverted to above).
5. At T 869, when shown an invoice to Borg Civil with an Involved Recruitment logo (see Ex K at 38973), George Said's evidence seemed to be that he would send out an invoice of this kind from his laptop and that he was not making a decision as to how much money to add or any description of it.
6. George Said gave evidence that he was paid for being a director of the company but said that there was never a system and that he would go to the bank and withdraw money and sometimes Gino Cassaniti would tell him to take money from that amount or would give him cash for his work (T 869). He agreed that he would take out large sums and that he would give the money to Gino Cassaniti (T 870).
7. Asked about his directorship of Involved Recruitment, George Said's evidence was that Gino Cassaniti must have put his name down as a director of Involved Recruitment (T871). He said that he never discussed with Gino Cassaniti anything about the changes of directorship with Involved Recruitment.
8. Relevantly, George Said's evidence was that when he had his previous ATO interview, he did not want to say that the person he was dealing with was Gino Cassaniti (T 872). He was very clear that he had had nothing to do with Fred Khalil and Peter Abboud. George Said's evidence was that he knew Fred Khalil and Peter Abboud but that he did not deal with them other than to say hello. He also recalled (incorrectly, it would seem, having regard to the weight of other evidence) that Ivana Cassaniti had an office at Banq (T 873).
9. The commencement of cross-examination by Gino Cassaniti's Counsel (commencing at T 885) in effect marked the end of the voir dire. In cross-examination by Gino Cassaniti's Counsel, George Said accepted that he had met Gino Cassaniti at social functions over the years but he was adamant that he had also been involved in business dealings with him (T 889); and denied that his dealings were with Peter Abboud and Fred Khalil as opposed to Gino Cassaniti (see T 896). He accepted that he had had a drug problem (cocaine) and a gambling problem (see T 893).

Ruling as to evidence taken on the voir dire

1. It is convenient at this point to determine the objection to the evidence of George Said that was taken on the voir dire over objection and only provisionally admitted.
2. Section 38 of the Evidence Act provides, relevantly: 38 Unfavourable witnesses (1) A party who called a witness may, with the leave of the court, question the witness, as though the party were cross-examining the witness, about - (a) evidence given by the witness that is unfavourable to the party, or (b) a matter of which the witness may reasonably be supposed to have knowledge and about which it appears to the court the witness is not, in examination in chief, making a genuine attempt to give evidence, or (c) whether the witness has, at any time, made a prior inconsistent statement. (2) Questioning a witness under this section is taken to be cross-examination for the purposes of this Act (other than section 39). … (6) Without limiting the matters that the court may take into account in determining whether to give leave or a direction under this section, it is to take into account - (a) whether the party gave notice at the earliest opportunity of his or her intention to seek leave, and (b) the matters on which, and the extent to which, the witness has been, or is likely to be, questioned by another party. (7) A party is subject to the same liability to be cross-examined under this section as any other witness if - (a) a proceeding is being conducted in the name of the party by or on behalf of an insurer or other person, and (b) the party is a witness in the proceeding.
3. The term "witness" is defined in cl 7 of Pt 2 of the Dictionary to the Evidence Act as follows: 7 Witnesses (1) A reference in this Act to a witness includes a reference to a party giving evidence. (2) A reference in this Act to a witness who has been called by a party to give evidence includes a reference to the party giving evidence. (3) A reference in this clause to a party includes a defendant in a criminal proceeding.
4. Section 38 was intended to abrogate the common law relating to hostile witnesses (see the Evidence (Interim) Report (Australian Law Reform Commission Report 26, August 1985) at [625]). The provision permits a party to seek the leave of the court to cross-examine that party's own witness about, inter alia, evidence given by the witness that is unfavourable to the party (see generally, Adam v R (2001) 207 CLR 96; [2001] HCA 57 at [11], [24] per Gleeson CJ, McHugh, Kirby and Hayne JJ).
5. A discrete issue which arose for determination was whether s 38(7) operates to limit the scope of s 38(1) so that a party to proceedings, who is called as a witness, can only be cross-examined if the circumstances of s 38(7) are satisfied - that is, where the proceeding is being conducted in the name of that party by or on behalf of an insurer or other person. On such a construction, s 38(1) would not entitle a plaintiff to call an opposing party as a witness and to seek the leave of the court to cross-examine that party about "unfavourable" evidence.
6. I consider that, on the proper construction of s 38, s 38(7) does not limit the circumstances in which a court can grant leave for a party to be cross-examined about "unfavourable" evidence. This is particularly so given the wording of the subsection, "[a] party is subject to the same liability to be cross-examined under this section as any other witness if…" (emphasis added), which indicates that s 38(7) expressly extends the operation of s 38 to circumstances where the proceeding is conducted in the name of the relevant party to be questioned on behalf of an insurer or other person, as opposed to limiting it to that class of witness. While the operation of s 38(7) has not relevantly been considered by an appellate authority, leave has been granted for a party to cross-examine another party about "unfavourable" evidence (see MCCA Asset Management Ltd v Kamata Homes Pty Ltd (Admins Appointed) (No 2) [2019] VSC 842 at [36]-[37] per McDonald J (although no submission was advanced opposing the grant of leave); see also DEF v Trappett [2016] NSWSC 1387 at [16] per Adamson J).
7. Section 38(1) is expressed in broad terms. It entitles a party who called a witness to seek leave to cross-examine that witness in the circumstances specified in ss 38(1)(a)-(c). Given that the term "witness" is defined to include a party giving evidence, a party may call an opposing party as a witness (which it has long been entitled to do in a civil case - see Price v Manning (1889) 42 Ch D 372), and, pursuant to s 38(1), it may then seek leave to cross-examine the opposing party in the circumstances set out in s 38(1). A plain reading of section 38(7) does not require that the scope of application of s 38(1) be limited nor does it follow that the Dictionary definition of "witness" does not apply in s 38(1).
8. This interpretation of s 38 does not render s 38(7) otiose. That subsection removes any uncertainty that may have arisen in s 38(1) as to the meaning of "party", which is not defined in the Evidence Act. In Vocisano v Vocisano (1974) 130 CLR 267 (Vocisano) at 272, the High Court held that an authorised insurer, who had taken over the conduct of proceedings on behalf of the insured defendant, was not allowed to cross-examine that defendant about his earlier inconsistent statement because, pursuant to s 60 of the Evidence Ordinance 1971 (ACT), only a party "on the record" could seek leave to cross-examine, and an authorised insurer is not such a party.
9. The Explanatory Memorandum to the Evidence Act, which is relevantly identical in respect of s 38, stated at [70]: To overcome the decision of the High Court in Vocisano v. Vocisano (1974) 130 CLR 267, a person conducting a proceeding in the name of a party (e.g. an insurer conducting an action in the name of an insured) is to be able, where the party is called as a witness, to cross-examine the party in the same circumstances as the person may cross-examine any other witness. Accordingly, s 38(7) overcomes the decision in Vocisano and confirms that a "party" in s 38(1) includes an insurer conducting an action in the name of the insured.
10. Further, to construe s 38(7) as limiting the scope of s 38(1) would restrict the operation of the provision in a way which runs against the legislative purpose of s 38. The Evidence (Interim) Report of the Australian Law Reform Commission (ALRC Report 26, August 1985) stated at [295] that: …the present [common] law discourages the calling of witnesses. There are times where a [party's] cause would be assisted if that party could call the opposing party to give evidence. This is not usually done. The fact that the party, when called, cannot be cross-examined usually discourages any thought of calling the opposing party. That party can only be cross-examined if declared hostile. This is a difficult task at the best of times and especially so where the witness called is the opposing party. He will be expected to give evidence that does not support the party calling him.
11. If s 38(7) were construed as providing the only circumstance in which a court could grant leave for a party called as a witness to be cross-examined, the mischief which was detailed in the passage above and purportedly resolved by s 38(1) would remain unaddressed.
12. As to whether leave should be granted on such an application, see subs 6 which is set out above, which is not exhaustive of the matters that may be taken into account.
13. In the present case, I had regard to the fact that George Said's evidence, to the extent that it departed from what was said in his ATO interview, and to the extent that it was confirmed, required clarification and that it was in the interests of the administration of justice that the plaintiffs be permitted to test this evidence.
14. For these reasons, I confirm the leave granted to the plaintiffs to cross-examine George Said and I will treat the evidence on the voir dire as no longer subject to a provisional qualification.

Ruling as to credit

1. On any view of things, George Said's primary occupation in relation to Involved Recruitment was to undertake minor clerical work in the preparation of invoices (relevantly, he says, at the direction of Gino Cassaniti); doing this on his laptop from electronic instructions received by email and using software or templates (which were, he says, provided to him by Gino Cassaniti). As to whether this involved changing letterheads on invoices (see T 849), his evidence became more than a little confused (see at T 861-862; and above). George Said also withdrew money from the bank which he says was at the direction of Gino Cassaniti and for the payment of employees. He also said that when it involved withdrawing large sums of cash, he gave it to Gino Cassaniti (T 870).
2. What was abundantly clear in my opinion was that George Said never made any decision himself (as to how much was to be invoiced or paid); and that he did what he was instructed to do when issuing invoices (see at T 868).
3. I approach his evidence with some caution given the inconsistency between his ATO interview and his evidence in Court. Nevertheless, it is telling that he identified Gino Cassaniti as the person who he was reluctant to identify to the ATO officers. Moreover, his inability to give a cogent and consistent explanation of events supports the conclusion that he cannot have had any real understanding of the role or responsibilities of a company director - and is further evidence of the practice within Banq (and in George Said's case this is squarely at Gino Cassaniti's doing) of the appointment of what can only sensibly be seen as straw directors - meaning that the real control lay elsewhere.

Christopher Cherry

1. Christopher Cherry, now unemployed, could not remember how he came to be a director of Rackforce (saying that he had a really bad drug problem - see T 902); did not know Gino Cassaniti; did not think he performed any task for Rackforce; could not remember Frank Criniti's name; and could not remember anything to do with Diamondwish). Indeed, it is fair to say that he could not remember very much. Any suggestion that he performed a significant directorship role in the companies to which he was appointed is unlikely in the extreme (and is not supported by any contemporaneous documentary evidence).

Andrew Barsa

1. Mr Gupta, solicitor, appeared for Andrew Barsa, when the latter was subpoenaed to give evidence. Andrew Barsa's occupation is that of a business consultant (T 911).
2. Andrew Barsa's evidence was that when his cousin (George Abboud) was going through his divorce he (George) asked him to be a director of Bluemine. He said that this was for two reasons - one for asset protection in relation to the trucks and the second so that the trucks could operate as a business (T 911). He said that he delegated the responsibility for the business side of things to Michael Abboud because he had been in the industry for a long time and he delegated the accounting side of things to Banq to manage (T 912).
3. At T 913, Andrew Barsa said that when he delegated the accounts of Bluemine to Banq "all of them" were involved - Gino Cassaniti, Peter Abboud and Fred Khalil. He did not think that he was a signatory to the bank account and could not recall access online to the bank account for the company. Andrew Barsa was not aware of any monetary transactions made. (In cross-examination he thought it might have been Peter Abboud who was the signatory for the bank account - see T 917.) Andrew Barsa said that he "potentially" received instructions as to the operation of a bank account but could not recall. Shown the account authority form for Bluemine dated 14 November 2012 (Ex 8), he said that it was his signature but not his handwriting (T 923).
4. Andrew Barsa's evidence was that he knew nothing about $6 million in transactions in the Bluemine account in 2012 (T 914). Andrew Barsa did not recall if Bluemine had paid for the trucks but said that "potentially" he may have signed documents to purchase the trucks "initially, in the beginning" (T 918.44).
5. As to the BAS returns, Andrew Barsa said that someone from the office would call him to come in and who he would see there would "just be random really"; that there would be a lot of girls who would come over and he would just sign (T 916.35-39).
6. As to the circumstances in which Andrew Barsa ceased to be a director of Bluemine, he gave evidence at T 914.39-5 that: A. Well I pretty much - like I'm just looking at the date here. I don't know - so, between December 2012 and February 2013 I did mention to Banq and Gino that I wanted to come off and resign and - because I was very busy. I was flying in and out, so I don't know when those transactions were made so I don't - I'm uninformed.
7. At T 915.21-22, Andrew Barsa said that the discussion with Gino Cassaniti about Andrew ceasing as a director would have happened at Banq between December 2012 and February 2013; that the agreement was "through Banq and Gino that he was taking over" but he could not recall "the exact granular detailed conversation"; and that Gino Cassaniti said "fine" and someone at Banq told him that he had been removed. For Gino Cassaniti, it is said that that evidence given by Andrew Barsa is inconsistent with the statements made by Andrew Barsa in his ATO interview on 25 July 2016. It is said that a fair summary of that transcript is that Andrew Barsa did not even know who Gino Cassaniti was, let alone that he had a discussion with Gino Cassaniti, much less any agreement that Gino Cassaniti was taking over as director.
8. Gino Cassaniti emphasises that in the 16 page extract from the ATO transcript (Ex E), the name "Cassaniti" appears only three times: first, (Ex E at 274, lines 29-33), when Andrew Barsa was asked if he knew why Gino Cassaniti became the director of the company in April 2013 and Andrew Barsa responded "After me?" (a response that Gino Cassaniti says is incomprehensible but on its face appears to be a query as to the chronology of the events there being questioned); second, (Ex E at 283 lines 29-34), where Andrew Barsa was asked whether there were documents to explain why there was a need to change the director when he ceased to be director of Bluemine, and Gino Cassaniti was appointed director of the company, and Andrew Barsa said he did not recall; and the third, (Ex E at 283, line 35 to 284, line 14) being in the course of questioning as to whether Andrew Barsa was aware of any financial problems with the company at the time of the change of directorship and the interviewer, in response to a question from Andrew Barsa, identified Gino Cassaniti as the replacement director.
9. As to the second of those references, Gino Cassaniti points out that (cf his evidence at T 914.40-T915.42), Andrew Barsa did not say words to the effect he had a conversation with Gino Cassaniti and there was an agreement that he would be taking over the company. True it is that Andrew Barsa did not say words to that effect; he simply said that he did not recall. Nothing can be drawn from this.
10. As to the third of those references, it seems to me apparent from the transcript that Andrew Barsa was confused as to what he was being asked. What Andrew Barsa said was "So what you're saying - who - who replaced me for that month?" and when told that the new director was Gino Cassaniti, his answer was that he was not aware of any [presumably financial problems]. Andrew Barsa was then asked if there was a particular reason why the change of directorship document was lodged on 26 July 2013 but backdated to 1 April 2013, to which he responded that he did not know.
11. It is said by Gino Cassaniti that the last of these exchanges is "even more decisively inconsistent" with Andrew Barsa's evidence of an oral conversation and an agreement with Gino Cassaniti. First, it is said that it is clear that it was the month after 26 July 2013 (i.e., August 2013) that was being discussed; and Andrew Barsa (asked if he was aware of financial problems with the company in that month) sought clarification as to the time period involved and then said "[s]o I was off, and then a month later the company went to [liquidation]". Second, that, when told that it was Gino Cassaniti who replaced him for that month, Andrew Barsa simply said "Ok. So - okay"; rather than words to the effect that what had occurred was consistent with the agreement he had with Gino Cassaniti.
12. I have to say that I do not draw the same inferences from the above exchanges in Andrew Barsa's ATO interview as Gino Cassaniti does. Rather, I read those exchanges as consistent with Andrew Barsa not having any professed recollection of events and seeking to clarify precisely what he was being asked.
13. I note that (somewhat extraordinarily, given his apparent occupation as a business consultant) Andrew Barsa suggested in cross-examination by Counsel for Ivana Cassaniti that he would "possibly" advise clients not to keep a close eye on their business because they can just delegate that to others (see T 920) but nothing here turns on the implausibility of such evidence (or inadvisability of such advice). Suffice it to note that I did not find Andrew Barsa to be a particularly compelling witness and I have difficulty accepting that he performed a real directorship role from home in relation to the affairs of Bluemine (as he would have me believe).

Scott Crabbe

1. Scott Crabbe is currently working as a delivery driver (T 942). He gave evidence that he commenced employment in approximately 2004 or 2006 with Reliance Cleaning Group (T 943); that at the time he was working as a cleaner; that Fred Khalil was his accountant and doing his tax return (T 944); that at one point he told Fred Khalil that he was going to lose his job because the company was going into administration and he was stressed because he had a young family; and that Fred Khalil suggested that he approach the administrators and buy out the company, which he did in order to save his employment.
2. Scott Crabbe said his discussions were mainly with Fred Khalil. He said he thought it was a sign of good faith to "show commitment to sharing the directorship" of Reliance Cleaning with Peter Abboud. One other party that he said was involved was Debbie Akkawi.
3. Scott Crabbe agreed (at T 954) that Reliance Cleaning engaged and paid labour hire firms (at a sum totalling about $2 million). He said that Reliance Cleaning did have employed staff but that he could not name a supervisor with an employment contract with Reliance Cleaning "off the top of [his] head" (T 954). He agreed (at T 957) with the proposition that, as far as he knew, services (presumably labour hire services) were provided by RCG CBD to Reliance Cleaning. When it was put to him that he was still managing Reliance Cleaning in December 2012, Scott Crabbe said "[n]o, I was doing emails from home" (at T 958).
4. Scott Crabbe gave the following evidence about his involvement in the business (at T 49.3-8): Q. Could you explain to the court what you understood to be your duties as a director when you first got involved in the business? A. I didn't really understand them clearly at all. I'm not an accountant. I'm a cleaner. Got elevated up through the ranks and was given the title of general manager, but I engaged accountants to care of the day to day running of the behind the scenes operations of the business.
5. It is clear, with no disrespect to him, that Scott Crabbe had no idea what was involved in the duties or responsibilities of a director of a company. Scott Crabbe made no pretence of any understanding as to the duties he had as a director (T 949) and, as noted above, said that he engaged accountants to take care of the daily running of the business. Hence, it is unlikely in the extreme that he was focussed on performing those duties.
6. Scott Crabbe's evidence was that the business of the company was primarily office cleaning (T 944). His evidence was that, from the day he took over the company, he worked with clients. However, he did not prepare tax returns or any documents to go to the tax office (he said that he engaged accountants for that). He said that he did not have any "control or jurisdiction" over "that section" (when questioned about the preparation of BAS returns, financial accounts or tax returns) and the only people he knew in relation to that were Peter Abboud and Fred Khalil (T 946).
7. At T 946, Scott Crabbe said that he knew of Gino Cassaniti; that he had met him probably four to five times in the course of dealing with Banq. He said that he was not a signatory to the company cheque account and had nothing to do with payments in or out. The only person he knew with access to the bank account codes was Fred Khalil (see T 946.32-47). He did not know who was doing any transactions and that he did not do any bank transfers (T 947). He said that he was not involved in any meetings of directors.
8. In cross-examination by the solicitor for Peter Abboud, Scott Crabbe was taken to an email dated 27 December 2012 in which Scott Crabbe was referred to as "Managing Director". He said (at T 947.47) that his role would "morph" depending on what tender was being put in (General Manager, Managing Director, CEO, CFO, for example). He was adamant that throughout the period he was still helping with tenders.
9. Scott Crabbe said that, in around 2011, he became quite ill and that he went to Fred Khalil in approximately 2012 and asked that he be removed as director, primarily due to his ill health. In the period from 2011 to 2014 he made two suicide attempts. His recollection was that his discussion with Fred Khalil about being removed as a director was in late 2011 or early 2012 after his first suicide attempt (T 945). He said that, after that, he still helped out doing tenders and costings and that he basically worked from home (see T 945.22-39). He said that he met with Peter Abboud if there was a "question about a costing for a tender" (T 945.40-45).
10. I found Scott Crabbe to be a genuine witness. He was candid about his personal health issues and he did not attempt to overstate his role in the company. It was abundantly clear that Scott Crabbe could not himself have conceived and implemented the impugned transactions. His focus, understandably, throughout seems to have been to preserve his employment for the benefit of his family.

Gino Cassaniti

1. Gino Cassaniti, in his affidavits sworn 11 April 2019 and 28 June 2019, asserts that he only knew a handful of defendants; that he had no connection or relationship with a majority of the defendants; and that he had not made contact with or engaged in any form with a large majority of defendants (see his first affidavit at [39]). He did not depose to any shareholding in Banq.
2. In his first affidavit sworn 11 April 2019, Gino Cassaniti (at [10]) deposed that he ceased to do accounting work from Banq's incorporation in June 2011 but that he consulted Banq; and (at [30]) that he ceased to consult for Banq in December 2013. (The plaintiffs say that Gino Cassaniti's assertions in this regard are not to be believed in contrast to Frank Criniti's evidence.)
3. In his second affidavit sworn 28 June 2019, Gino Cassaniti deposed (at [7] and [16]) that his role at Banq was to introduce clients (without identifying whether those included clients who are parties to these Proceedings) and to intervene in client matters when specialist advice was required as to business structures and tax (while asserting that he did not engage in or advise anyone to undertake the transactions relevant to the current Proceedings). Further, Gino Cassaniti deposed that: at [10], he (or his wife, Ivana Cassaniti) was never a principal of Banq; at [12(c)], he received a salary (through RCG CBD); at [15], he never did spot checks and that he trusted Fred Khalil and Peter Abboud to run the business; and, at [10(c)], Ivana Cassaniti put up the money and owned the shares in Banq.
4. As to his involvement in the Insolvent Companies, Gino Cassaniti deposed: (11 April 2019 affidavit at [13]) that he had a conversation with someone (unidentified) at Banq in May or June 2013 during the course of which he told that person he thought he would go bankrupt and that person asked him to be a director of some of that person's clients' companies for a short period of time; (at [15]) that he was not asked to sign and did not sign consents for directorship of RCG CBD, Bluemine, Earth Civil or Involved Recruitment; (at [17]-[21]) that he did not act as a director of or manage the affairs of those companies and he did not agree to become a shareholder of those companies and did not resolve to place the companies in liquidation; and that he was not owed money by those companies and did not sign any proofs of debt or creditor's proxy for any of those companies.
5. As already noted, Ivana Cassaniti, in her first affidavit sworn 11 April 2019 (at [9]) deposed in effect that she formed Banq with Fred Khalil and Peter Abboud; and that she had a 60% interest through Givana; and that she invested all the funds to set up the practice. In her subsequent affidavit sworn 3 March 2020 (at [9]), Ivana Cassaniti's evidence (inconsistent with both her earlier evidence and Gino Cassaniti's evidence - see above) was to the effect that her interest in Banq, through Givana, was held jointly with her husband, Gino Cassaniti, and that they had together invested the funds in the business to set up the practice. (The plaintiffs note that Gino Cassaniti did not seek to cross-examine Ivana Cassaniti as to her evidence regarding his joint shareholding in Banq. The plaintiffs submit that an inference can be drawn that Gino Cassaniti was content not to contest Ivana Cassaniti's evidence about that issue; and that he was in effect a principal of Banq.)
6. Frank Criniti's evidence (at T 462) was that each of Gino Cassaniti, Peter Abboud and Fred Khalil had his own office at both the Former Banq Address and the Banq Address (and he recalled that when he went to the offices of Banq he also saw Ivana Cassaniti from time to time). Frank Criniti's evidence (at T 463.43) was that he signed things for Gino Cassaniti and never knew what he was signing (as he would be provided with a stack of papers and he just signed them).
7. The plaintiffs say that, in circumstances where Gino Cassaniti was married to Ivana Cassaniti (in effect, the major shareholder of Banq), who had provided 60% of the funds to acquire the firm's premises (referring to Ivana Cassaniti's affidavit sworn 28 June 2019 at [9]), it is not plausible that Gino Cassaniti was unaware of what was going on in Banq generally and specifically in relation to the Insolvent Companies. (The plaintiffs make a similar submission as to Ivana Cassaniti.) Further, they say that, while it may well be that Ivana Cassaniti came to have less knowledge of the day to day operations of Banq due to her domestic duties, it cannot be the case that, knowing this, Gino Cassaniti took as little interest in Banq as his affidavit evidence would suggest.
8. The plaintiffs say that it should not be accepted that Gino Cassaniti did not know what was happening at Banq. The plaintiffs contend that Gino Cassaniti well understood the purpose of large amounts of money "washing through" Banq and the Insolvent Companies; pointing to the absence of any explanation by Gino Cassaniti as to what Gino Cassaniti might have thought the payments were for (or that he even noticed the payments at all). It is said that an honest person would have at least enquired about the sources of the money.

Fred Khalil

1. Fred Khalil was a director and shareholder of Banq Accountants and, on the incorporation of Banq, the sole director and secretary and a 30% shareholder of Banq. In his affidavit sworn 25 March 2019 (at [15]), Fred Khalil confirmed that he was the tax agent, and a director, of Banq; that he acted as a senior accountant; and that he worked full-time at Banq after its incorporation. Fred Khalil's evidence is that he was appointed a director because he was the tax agent ([15]).
2. In Fred Khalil's affidavit sworn 25 March 2019 he deposed that: he understood that Gino Cassaniti and Ivana Cassaniti primarily funded the fit out and provided start-up capital for the new Banq offices (at [14]); Gino Cassaniti was the managing or senior partner (at [15]); Gino Cassaniti and Ivana Cassaniti had the "final say" regarding all of the business operations of Banq (at [24]); Gino Cassaniti was the first point of contact for major clients, would chair meetings and would delegate and supervise accounting work to him (Fred Khalil) and Peter Abboud (at [28]); Gino Cassaniti would make top level administrative decisions without reference to him (Fred Khalil) (at [29]); Gino Cassaniti and he (Fred Khalil) approved client tax returns and he (Fred Khalil) lodged the tax returns and financials of Banq and clients (at [24]); Ivana Cassaniti authorised and made payments from Banq's bank account, had primary responsibility for management of accounts payable and receivable, and oversaw all bank account transactions (at [26]); Gino Cassaniti and Ivana Cassaniti would check the bank account transactions on a regular basis, and each transaction out of the ordinary would have to be approved by Gino Cassaniti and Ivana Cassaniti. At [30], Fred Khalil deposed that after Gino's bankruptcy "the arrangements…remained the same".
3. In effect, Fred Khalil's evidence is that, while he also handled many of the day to day activities (including drawing necessary cheques on Banq general account as required), principally his role was to provide accounting services to clients of Banq (see Fred Khalil's affidavit sworn 25 March 2019 at [15]).
4. As to the significance of Fred Khalil being the supervising tax agent at Banq, the plaintiffs point out that the role of a tax agent is governed by the Tax Agent Services Act 2009 (Cth) (Tax Agent Services Act), referring in particular to s 20.5(3), which provides that a company may be eligible for registration as a registered tax agent if, inter alia, each director of the company is a fit and proper person and the company has not been convicted of a serious taxation offence or an offence involving fraud or dishonesty during the previous five years; and s 30.10, which sets out a code of professional conduct which includes, inter alia, that the tax agent must act lawfully in the best interests of its client and must not knowingly obstruct the proper administration of the taxation laws.
5. The plaintiffs point out that Fred Khalil was the person at Banq responsible for ensuring that the tax agent services provided by Banq were provided in accordance with the Tax Agent Services Act (something that Fred Khalil does not, as I understand it, dispute). It is also said that, as the supervising tax agent for Banq, Fred Khalil was responsible for all lodgements with the ATO for all of the clients of Banq and for ensuring (which Fred Khalil does take issue with) that any information in the documents lodged was true and correct (referring to the Tax Agent Services Act, ss 20.5, 30.10, 50.30; and the Taxation Administration Act, Sch 1, ss 388-60, 388-80).
6. According to Gino Cassaniti in his affidavit sworn 28 June 2019, Fred Khalil (together with Peter Abboud) ran the business of Banq ([10], [15]) and staff meetings were always organised and managed by Fred Khalil ([25(c)]).
7. Ivana Cassaniti's evidence (in her second affidavit sworn 28 June 2019) is that Fred Khalil was a partner who undertook all the tax returns, bookkeeping, preparing financial statements, managing client requests and general accounting tasks ([6]); that Fred Khalil contributed to the funding for the acquisition of the firm's premises ([9]); that Fred Khalil handled all of the firm's day to day activities ([12] and [13]); that Fred Khalil made all the decisions and bank transfers ([17]); and that, after 2010, Fred Khalil and Peter Abboud did all of the bank transactions ([24]).
8. Peter Abboud's evidence (in relation to Fred Khalil's role at Banq), in his affidavit sworn 22 March 2019 is that: he (Peter Abboud) was an authorised signatory of multiple bank accounts of Banq entities and completed transfers as directed by and on the instructions of Gino Cassaniti or Fred Khalil or Ivana Cassaniti and would follow up clients for payments of bills or invoices when requested by Gino Cassaniti or Fred Khalil or Ivana Cassaniti ([28]); all of the work he performed for clients of Banq entities was at the direction and instruction of Gino Cassaniti or Fred Khalil, who supervised him; and that he only did work that they instructed him to do and he cross-checked every instruction from a client with Gino Cassaniti or Fred Khalil or Ivana Cassaniti before taking any action ([29]); any important or significant decisions were made by Gino Cassaniti or Fred Khalil either of whom from time to time conducted staff meetings ([32]); he (Peter Abboud) was regularly appointed as a director, and as a signatory to bank accounts of newly incorporated companies ([33]); bank transfers were usually done by Fred Khalil or Gino Cassaniti or Ivana Cassaniti, but if he did process a transfer it was only ever at the direction of Fred Khalil, Gino Cassaniti or Ivana Cassaniti ([34]).
9. It is noted by the plaintiffs that none of Fred Khalil, Gino Cassaniti or Ivana Cassaniti sought to cross-examine Peter Abboud about these matters. In this regard, there is to my mind a distinction between one or more of the defendants not challenging in cross-examination evidence given by a deponent, such as Ivana Cassaniti, who made himself or herself available for cross-examination and the position where (as was the case with other witnesses) a decision to challenge a deponent who did not make himself available for cross-examination would have required the defendant to subpoena that witness (and then, absent leave, be confined to adducing evidence in chief); particularly having regard to the regime that was agreed to be adopted in relation to the evidence of witnesses such as Fred Khalil and Peter Abboud.
10. The plaintiffs say that, at all material times, with reference to all five Proceedings, Fred Khalil was a director of Banq, which provided financial, accounting and tax advice to participants in the Scheme, the supervising tax agent of Banq and held proxies on behalf of creditors other than the ATO in the windings up of each of the Insolvent Companies. They say that it can properly be inferred that Fred Khalil permitted Gino Cassaniti and Peter Abboud to act as shadow directors of Banq and held them out as such by allowing them to act in that capacity.
11. The plaintiffs further say that Fred Khalil's undertaking at the meeting of creditors of Earth Civil on 9 July 2013 (as with other such creditors' meetings in respect of the other Insolvent Companies) to deliver books and records "in his possession" must have been in his capacity as a principal of Banq, because he was not an officer or shareholder of Earth Civil and would not otherwise have known whether any books or records existed. They point out that although Gino Cassaniti (in his affidavit sworn 28 June 2019 at [20], read as an assertion), denies Fred Khalil's assertion (in his affidavit sworn 25 March 2019) that Gino asked him to meet the liquidator and assist in completing the liquidation forms, Gino Cassaniti did not require Fred Khalil for cross-examination.
12. It is submitted by the plaintiffs that Fred Khalil knew more about the affairs of Earth Civil than a mere proxy holder for the proofs of debt, otherwise he would not have provided such an undertaking as he gave in relation to the provision of books and records of the company and that, either Fred Khalil shirked his undertaking and did nothing at all or he must have spoken with Gino Cassaniti (who as a director of Earth Civil and principal of Banq it is said would be the person reasonably expected to know where Banq was keeping such records or who at Banq was in charge of such records). It is submitted by the plaintiffs that it is clear from this that Gino Cassaniti knew what Fred Khalil was doing; and that to that extent Gino Cassaniti was further implicated in controlling and using Earth Civil's liquidation for his own ends.
13. The plaintiffs point out that Fred Khalil was a signatory to a number of accounts, usually in conjunction with Peter Abboud and Ivana Cassaniti (Ex K at 10773-10776); and that many of the companies in respect of whose accounts Fred Khalil, Peter Abboud and/or Ivana Cassaniti were signatory were clients of Banq, but that no explanation has been proffered by any of the Primary Conspirators as to the necessity for them to be signatories to all of those accounts.

George Khalil

1. The only direct evidence of George Khalil's role at Banq (which the Khalil defendants emphasise in their submissions) is that he was a signatory to various bank accounts of Banq clients and that he occupied various administration roles in certain of the companies.
2. On the ASIC record, George Khalil was a director of RCG CBD for one day on 16 May 2012 (the day of incorporation). However, the plaintiffs contend that George Khalil's directorship was from 16 May 2012 until 28 May 2013 when the Form 484 was lodged notifying ASIC of the change in directorship (Ex K at 31691-31693).
3. The plaintiffs also note that George Khalil was a director of a number of other companies associated with Banq, including: Workforce Unlimited, RPS Security, RC Group Aust, Little Johnny, Involved Recruitment, Investmint, Genuine Constructions, EM and EN Investments and Compbiz, Bright Star Hire.

Peter Abboud

1. Peter Abboud's evidence is that he was a 10% shareholder of Banq Accountants from its inception in July 2009; and Ivana Cassaniti confirmed in cross-examination that she regarded Peter Abboud as a 10% owner of the business of Banq (at T 1120.48-49).
2. Peter Abboud is an accountant. He says that he was a junior employee of Banq from July 2011, when it commenced trading, until December 2011. Peter Abboud says that, from January 2012 to June 2014, he was employed and worked for Banq when employed through the following companies: Workforce Unlimited from January 2012 to June 2012; RCG CBD from July 2012 to June 2013; and RC Group Aust from July 2013 to June 2014. His evidence is that, in July 2014, he was again employed directly by Banq and remained employed by that company until his resignation in March 2017.
3. Peter Abboud says that, throughout the early period of his employment with Banq, he was trained by, reported to and managed by Gino Cassaniti; but that, through the later period of his employment with Banq, he reported to Gino Cassaniti and Fred Khalil. His evidence is that his tasks at Banq included data entry for accounts, accounts reconciliation, preparation of BAS and income tax returns of Banq's clients.
4. Copies of documents obtained by the ATO pursuant to the issue of s 353-10 Notices to NAB, show that Peter Abboud is (or was), amongst others, the signatory for bank accounts held by LFC Holdings as trustee for LFC Holdings Trust, Banq, Discobell as trustee for the Discobell Unit Trust, Kamikaze Teppanyaki (DH) Pty Ltd, Bluemine, Banq Accountants, Consolidated Wealth, GFP Holdings, and Reliance Cleaning (see Table E of the plaintiffs' closing submissions for all of the NAB bank accounts on which Peter Abboud was a signatory.)
5. Peter Abboud maintains that at no point was he a director, nor did he act as a director, of Banq; that he was not consulted about, nor involved in, any of the day to day management decisions of Banq; and that he considered his appointments as director of companies incorporated by Banq (and being a signatory to the bank accounts of those companies) as being "part of his job" of working at Banq. (That assertion is itself telling in that it does not bespeak an appreciation of his duty as a director and might be said to be consistent with the practice of appointing "straw" or "jump-on" directors.)
6. Peter Abboud says that, on "rare" occasions when he processed or caused bank transactions for companies for whom he was a bank account signatory, that was done at the direction of one of Fred Khalil, Gino Cassaniti or Ivana Cassaniti (and see Peter Abboud's affidavit affirmed 22 March 2019 at [29] where he described Ivana Cassaniti as in charge of the "administration of the office").
7. Ultimately, Peter Abboud contends that he was never a director or acted as a director of any of the Insolvent Companies, that he was not in any position in relation to the Insolvent Companies so as to owe them fiduciary duties; and that his involvement in any of the transactions pleaded with respect to the Insolvent Companies arose out of him fulfilling his day to day employment duties and occurred under the direction of Gino Cassaniti or Fred Khalil. To the contrary, the plaintiffs contend that Peter Abboud was a de facto or shadow director of Banq, pointing to the evidence in Ivana Cassaniti's affidavit sworn 28 June 2019 at [18] to the effect that Peter Abboud was a partner in Banq who managed, hired and fired staff. It is noted that Ivana Cassaniti, who had provided 60% of the funds for the acquisition of the firm's premises, trusted Peter Abboud as to his conduct of the business ([14]). Similarly, it is noted that Gino Cassaniti deposed, in his affidavit sworn 28 June 2019 at 24, that Peter Abboud was "….in fact an Equity Partner. Peter managed as a Partner would and was remunerated as a Partner".
8. The plaintiffs note that Peter Abboud's proportionate shareholding in GFP Holdings (which acquired the Banq premises) is the same as his and Fred Khalil and Ivana Cassaniti's proportionate shareholdings in Banq. It is said that GFP Holdings and Banq are entities through which Ivana Cassaniti, Fred Khalil and Peter Abboud conducted their affairs pursuant to a professional partnership as accountants (but also as property owners). The plaintiffs say that Ivana Cassaniti, Fred Khalil and Peter Abboud had a close business relationship and that it is unrealistic for them now to contend that their roles, and their knowledge of the affairs of the business (including all of the transactions that are the subject of these Proceedings), were independent of each other.
9. As to the evidence of other defendants in respect of Peter Abboud's role, Fred Khalil deposed, in his affidavit sworn 25 March 2019, that Peter Abboud started working at Banq in about mid 2008 and that he (Fred) and Peter Abboud "each managed the senior, intermediate and junior accountants" (at [7], [28]).
10. Elias Nassar's evidence was (at T 800.40-801.8) that "Peter [Abboud] was doing a lot of the bookkeeping, more the running around. He would - I think he was still studying at the time. I'm not sure. I was told he was still studying, and - back then, and then anything that he would do, and that would be overseen by Gino Cassaniti". See also his evidence in cross-examination (at T 814.24-27, T 816.14-18, T 817.30-33 and T 827.45-47) that Gino Cassaniti oversaw anything Peter Abboud did and anything that was done for any of the Nassar companies. (The plaintiffs say that this evidence corroborates Peter Abboud's evidence, in Peter Abboud's affidavit sworn 22 March 2019 at [43], [55], [65] and [78], to the effect that if he did cause any of the impugned payments to be made, he did so at the direction of Gino Cassaniti, Fred Khalil or Ivana Cassaniti.)
11. Frank Criniti's evidence (at T 491.8-21), consistently with that of Elias Nassar was that Peter Abboud did "more of the labour work" and that: A. … He was like - I'm trying to not to - I'm trying to not sound impolite because there is terms that we used but like he was the do-er, like the gofer, the donkey, like - sorry to - but like he was the one that I noticed was told what to do and - by his seniors, being Fred and Gino, and he would perhaps then obviously do what they told him to do and go and train accounts accordingly - payroll accordingly. But then sometimes it wasn't him; sometimes it was Fred. (Emphasis added)
12. Mario Sande's evidence (at T 786.15-25) was that Peter Abboud's role in Banq was to do with the preparation of the BAS returns and the MYOB (and that he dealt with Fred Khalil and Gino Cassaniti more in relation to "structures" or "more technical" matters). Andre Abou-Antoun's evidence (at T 761.50-762.17) was that Gino Cassaniti told him that he was a director of, and owned, Banq.

Ivana Cassaniti

1. I have referred above to Ivana Cassaniti's (varying) affidavit evidence as to her role in the formation of Banq and to the administrative work that she carried out with Banq. The plaintiffs say that her evidence in her affidavits as to becoming a silent partner with no involvement in running the business is self-serving and disingenuous (and should not be accepted).
2. In relation to Ivana Cassaniti's presence at the Banq offices in York Street in 2009, Frank Criniti observed her presence "from time to time" (T 461.5); and that, unlike Gino Cassaniti, Peter Abboud and Fred Khalil, who each had a private office, Frank Criniti observed Ivana Cassaniti sitting "more with the girls" (T 462.20-24) at a "more hot desk sort of things" against a wall (T 461.31-34). Although George Said gave inconsistent evidence (to the effect that Ivana Cassaniti had an enclosed office at Banq), it is noted for Ivana Cassaniti that it was not suggested that George Said actually saw Ivana Cassaniti within the office. It is said by Ivana Cassaniti that George Said's evidence should be discounted having regard to: Frank Criniti's recollection that Ivana Cassaniti sat at a desk in the public space of the Banq offices and George Said's prior statement in his ATO transcript to the effect that he did not know the name of Gino Cassaniti's wife.
3. Pausing here, as to the latter, it seems clear from the ATO transcript that George Said was clearly seeking to distance himself from Gino Cassaniti (in that in that interview he did not name Gino Cassaniti, and see his explanation of this in cross-examination). George Said's professed lack of knowledge of Gino Cassaniti's wife's name would not be inconsistent with that.
4. Fred Khalil's evidence as to Ivana Cassaniti's role in his affidavit sworn 25 March 2019 included that: Gino Cassaniti and Ivana Cassaniti were the major shareholders and the principals of Banq; and that Ivana Cassaniti controlled and was responsible for administration and the administration team (at [15]); that he (Fred), Gino Cassaniti and Ivana Cassaniti "all managed and supervised" Banq's staff; and Gino Cassaniti and Ivana Cassaniti had the "final say" regarding all of the business operations of Banq (at [24); that he "sometimes assisted Ivana in managing administration, including accounts receivable and payable" (at [25]); that Ivana Cassaniti was a principal, organised payments from Banq's bank account, oversaw all bank account transactions, managed and reconciled Banq's trust accounts; and that Ivana and Gino Cassaniti would "check the bank account transactions on a regular basis and spot check transactions" (at [26]-[27]).
5. Similarly, in his affidavit sworn 22 March 2019, Peter Abboud said that he was the authorised signatory of multiple bank accounts of Banq entities, together with Fred Khalil, Gino Cassaniti and Ivana Cassaniti; that he would occasionally complete bank transfers of these entities' bank accounts on the instructions of Gino Cassaniti or Fred Khalil or Ivana Cassaniti (at [28]); and that Ivana Cassaniti was "in charge of the administration of the office" and he "would do work for her as instructed" (at [29]).
6. With respect to the transactions pleaded in the RCG CBD third further amended statement of claim and the Bluemine third further amended statement of claim, including the Discobell transactions, Peter Abboud said (at [55], [65]) that he did not have a specific recollection of any of the transactions; it was possible that he was involved in one or more of the transactions either by the making of an electronic transfer or making entries into accounting ledgers; but that if he did do this for any of those transactions, it would have been on the instructions of Gino Cassaniti , Fred Khalil or Ivana Cassaniti.
7. The plaintiffs contend that Ivana Cassaniti's evidence as to the necessity for her, Fred Khalil or Peter Abboud to be signatories to the bank accounts of clients' of Banq because they were shareholders in the business of Banq should not be accepted; though she then said she was not sure what that had to do with the necessity to be a signatory to the bank accounts (see at T 1122.32-1123.39).
8. The plaintiffs contend that Ivana Cassaniti was well aware of why she, Fred Khalil and Peter Abboud were the signatory to those bank accounts; and that they were signatories because the Primary Conspirators (namely, Gino Cassaniti, Fred Khalil, Peter Abboud and George Khalil) controlled those companies, used them in the implementation of the Scheme and the Primary Conspiracy and needed access to those bank accounts to make transfers of funds between them to give the appearance that legitimate commercial activities were occurring.

Evidence as to advice given to Scheme Participants

1. The plaintiffs characterise the advice given (by one or more of Gino Cassaniti, Fred Khalil and Peter Abboud) to the various Scheme Participants as broadly involving two steps: structural advice (i.e., advice as to the corporate structure to be adopted) and invoicing advice (i.e., as to the creation of false invoices to channel moneys or "funnel cash" into the respective corporate entities).
2. The plaintiffs say that the structural and invoicing advice given to the various clients was essentially the same advice, pointing to the advice given: by Fred Khalil to Tanya and Michael Borg in relation to the payments into RCG CBD; by Fred Khalil and Peter Abboud to Andre Abou-Antoun and the AKA Parties in relation to the payments into Bluemine; by Gino Cassaniti to Elias Nassar in relation to the payments by the Wenman Group into RCG CBD; by Gino Cassaniti in relation to the payments into and out of the Criniti companies; and by one of Gino Cassaniti, Fred Khalil or Peter Abboud to Mario Sande in relation to payments into and out of the Statewide entities. The plaintiffs submit that the same advice given by different people (all of whom were principals of Banq) to different clients of Banq could not, and would not have occurred, in the absence of the Scheme.

Criniti Companies Advice - 2009 (Diamondwish and Rackforce Proceedings)

1. Specifically, at T 466.40-467.6, T 499.5-34, Frank Criniti's evidence was that what Gino Cassaniti told him was that: A. The way the company is set up is wrong. Q. Yes? A. Moving forward for tax saving purposes and for like being obviously more cost effective. Q. Yes? A. It needs to be set up where there is a trading company and a company that holds the assets. Then there needs to be a third company that's a labour hire company. The labour hire company is then the way it was - the labour hire company set up to be cost savings and protection for insurances in case anything ever goes wrong, and I believe directors had to be different from one section, he was saying that to from a trading to asset holding in case directors had to be changed it was all like a spider web. … Q. … You were asked what did Mr Cassaniti say was meant by tax savings and you said by implementing a labour hire company that controls the staff separately and by having a trading entity and I'm not certain if your answer had finished? A. Cause he yeah that's right it was the labour hire company was one of them. A trading entity with a different director that was sitting in the asset holding company, and this set up is the right way to do it for hospitality, we do it for many of our clients, it works so much better and it's beneficial for the future of the company especially because we wanted to grow the company in case there was ever insurance issues, there was also benefits from invoicing from company to company to save on taxes, and if anything ever happened, it closed down you could close down in sink this entity or this company and it won't have a shattering effect basically to other people, to other entities, the restaurants are running separately, separate identities. … Q. No just wait, what if anything did Mr Cassaniti say to you as to how the labour hire company would operate? A. The labour hire company would operate where it would be in Full Control of the staff and the obviously the taxes and everything for the workers, the insurances, and it would be separate and if anything was to happen it in that company it wouldn't affect the business because it would be running at separate arm's length.

Advice to AKA Parties - June 2010 to mid 2011 (Earth Civil and Bluemine Proceedings)

1. Andre Abou-Antoun's evidence was that, in about June 2010, either Peter Abboud or Fred Khalil advised the AKA Parties to set up a new company to deal with clients (T 626.37-45), as a consequence of which Banq arranged incorporation of AKA Civil in June 2010 (Ex K at 10975).
2. As to the subsequent change of the AKA group structure in mid 2011, Andre Abou-Antoun's evidence was to the effect (at T 622.3-623.23) that Fred Khalil told him and his brother Michael Abou-Antoun to incorporate another company (Earth Civil); that Peter Abboud said that they should restructure their corporate group such that AKA Civil would receive invoices from subcontractors and another company would invoice the clients (T 626); that Peter Abboud said that, as AKA Civil already existed, they should open another company (called AKA NSW) and then another company (LAM Haulage) to carry all the assets of the businesses such as trucks and machines and, in addition, that Earth Civil should be incorporated for wages, paying all the employees of the business (at T 624.8-16). Andre Abou-Antoun gave the following evidence (at T 623-624): Q. Was there any discussion with anybody within Banq Accountants as to any new corporate structure that your businesses should have? A. Yes. Q. With whom did you have that discussion? A. I believe Peter. Q. Do you mean Peter Abboud? A. Peter Abboud. Mainly Peter Abboud, yeah. Q. What did he say in relation to any changes to the corporate structure for your businesses? A. Well briefly that AKA Civil already existed so they advised us that we should be opening up another company called AKA NSW and AKA and then Lam Haulage for to carry all the assets of the business like trucks and machines. Q. Yes? A. So those three companies plus I believe Earth Civil for wages, paying all the employees of the business such as labourers and drivers, excavator operators and the like. Q. Well in that answer you said to me that they said that, what was that? A. Banq as in Peter Abboud you can say from Frank, from Banq, and probably Fred as well. From time to time.
3. Andre Abou-Antoun's evidence (at T 627.20-25) was that he acted on that advice and that the companies that were incorporated at that time were AKA NSW and Earth Civil. Andre-Abou-Antoun says that Peter Abboud said to him that the wage-paying entity should be separated from the rest of the group (T 627.5-9). Andre Abou-Antoun also gave evidence to the effect that Fred Khalil told him that he had a company (Bluemine) that could issue invoices (T 642).
4. As to the involvement of Bluemine, in his ATO interview, Andre Abou-Antoun had said: In the first - like, once they knew that we were making money and turning over money they - they approached us and they basically said that they had trucks and tipping sites. I naturally believed them because his brother was one of - Peter's brothers was a large operator in the civil industry. So I had no issues with that and - and they had trucks and they had assets in this company is what Peter said and they could introduce us to a company that really - they really were in control of and they could supply us with trucks and tipping services. We thought great. During the - and I'm answering this to the best of my memory on what I remember back then - during the course of - of the period of time they told us this company can also issue you with an inflated invoice, we could pay the invoice and then the money would come back to one of our companies and there would be a tax benefit. I didn't understand how - what - what the tax benefit was or whatever. I trusted what they told me at that point and I didn't think it was a big deal at all. (emphasis added)
5. Andre Abou-Antoun then accepted that the tax benefit that was explained to him was the ability to claim a deduction on the income of the AKA entities for those amounts being paid to Bluemine (T 655.42-47). He also accepted in the ATO interview that he was told that Bluemine had an ability to issue inflated or exaggerated invoices.
6. At T 631.1-18, questioned about this, Andre Abou-Antoun confirmed this but attributed it to a conversation in which he was told by Michael Abou-Antoun that: I've had a talk with Fred. He's got an idea to save us tax. Fred has suggested that Banq set up a company to issue invoices to Civil or New South Wales. The idea is that they issue invoices and we pay those invoices then their company will pay our money to a third company, which we own, less a commission. Fred suggested that the third company should be paid in cash, but I said no. We need the money back in our accounts for current and future investments and other projects. There's nothing we can do with the cash.
7. At T 642.6-37, Andre Abou-Antoun confirmed that in his ATO interview on 31 May 2018 he had given evidence that: So, the accountant approached us, being Peter Abboud and Fred Khalil. When they saw that we were making money and advised us that they had a company called Bluemine Pty Ltd that they managed and controlled and that company had assets and trucks and tipping sites and they could arrange inflated invoices and exaggerate invoices to our company. We would make the payment and then they would return the money back to our business, less a fee.
8. The plaintiffs submit that, although Andre Abou-Antoun later attempted to resile from the truth of the statement made in the ATO interview (see at T 642.15-.35), Andre Abou-Antoun's evidence in May 2018 was an admission against interest and was the truth. The plaintiffs emphasise this as being one of the most significant pieces of evidence in the Proceedings in that they say that: it directly involves Peter Abboud and Fred Khalil as proposing this arrangement, it directly involves Gino Cassaniti as the director of Bluemine and Earth Civil (an AKA company) and it directly involves George Khalil because the 2.5% fee was paid to RCG CBD by Bluemine and George Khalil was the controller of the RCG CBD bank account.
9. At T 647.49-648.16, Andre Abou-Antoun confirmed that Peter Abboud and Fred Khalil had advised him "that they could provide a valuable opportunity to the AKA entities…" and that that valuable opportunity was "saving tax, the primary tax and - and the GST" (T 671.27-39). Andre Abou-Antoun's evidence (at T 649.14-26) regarding the issue of inflated or exaggerated invoices issued by Bluemine was that his answers to the ATO (at 459-460) were true.
10. The plaintiffs say that the use of false and fictitious invoices for the provision of alleged services is a common theme throughout the evidence. It is said that, like the invoices from Ignite Promotions to Blackrock Media for consulting, from RCG CBD to Ignite Promotions for labour hire, and from RCG CBD to State Wide Design for management fees, Bluemine issued false invoices to AKA Civil and AKA NSW for purported management/supervision charges (Ex K at 56339-56343).
11. The plaintiffs say that the conversations attested to by Andre Abou-Antoun with Fred Khalil and Peter Abboud identify that the intention of setting up Bluemine was to facilitate the Scheme with the issuing of false and inflated invoices for the purpose of obtaining the tax savings that Andre Abou-Antoun was told by them would be obtained by the AKA Companies. It is said that this was the Scheme as explained and implemented (the plaintiffs refer to this as "the primary conspiracy in action").

Advice to Borg Parties - mid 2012

1. Tanya Borg (at [24] of her affidavit sworn on 4 December 2018) deposes that during the course of an initial meeting with Fred Khalil in about mid 2012, shortly after she and her husband were referred to Banq, Fred Khalil advised her (and Michael Borg) to the effect that: 24. …your structure is wrong, you should not have assets in your operating structure, you should have the assets held in one company and the business operations in another and employees in another company. I will set that up for you. and that Fred Khali came into the office of Borg Civil and said to her: 27. … we will set up a new company called Borg Civil Australia Pty Ltd. That company will operate the business going forward. All assets will be transferred to a new company as trustee; we will call that Borg Family…Tanya, you will be the director of Borg Family, I will take care of it all
2. During the course of her cross-examination, Tanya Borg gave the following (consistent) evidence regarding that meeting (at T 1383.19-40): Q. When you first met with Fred Khalil, do you recall the terms of the conversation? … A. Basically, that - you know, we spoke to him, telling him about our company we were at. He asked a lot of questions and he said that our structure was wrong in the set‑up and that we needed a trading company, a company for assets and then a company for our employees. Q. Was it you that was answering those questions? A. I don't recall that, ins and outs, to be honest. Q. Michael was there with you, you think? A. Yes. Q. Was he able to answer the questions that were being asked by Mr Khalil? A. I don't recall it to that detail, like, that dialogue- Q. Well, between you, you knew what was going on with your own companies; is that right? A. Yes.
3. Tanya Borg attests to further advice provided by Fred Khalil, namely that (her affidavit sworn 4 December 2018): "your accountant has recorded the equipment as being owned by the Company (Excavation) not Michael. I will work out the best way to transfer the property to the new company" (at [32]); "before it is transferred, you need a valuation. I will organise that for you but it will cost around ten thousand" ([33]); and that "I can structure those payments, I have a company called RCG, I can use that to make the payments to the old company" (at [34]).
4. Pausing here, the plaintiffs emphasise that RCG CBD was not Fred Khalil's company and they rely on this as indicating Gino Cassaniti's involvement in the Scheme.

Advice to Statewide entities - 2012

1. In its verified amended defence filed in the RCG CBD Proceeding (at [8]), Statewide Printing has admitted that Gino Cassaniti, Fred Khalil and/or Peter Abboud of Banq Accountants was or were the accountant(s) and taxation adviser(s) of Statewide Printing and State Wide Design; and that, in 2012, Gino Cassaniti, Fred Khalil and/or Peter Abboud advised and recommended to the Statewide Parties that if they entered into a number of carousel payments between, Statewide Printing and State Wide Design, then Statewide Printing and State Wide Design could legitimately minimise the amount of tax which would otherwise be payable by them (see [144.7]-[144.7.3.3] of the RCG CBD third further amended statement of claim).
2. At T 771.45-772.5, after having read through the transactions pleaded at [144.7]-[144.7.3.3] of the RCG CBD third further amended statement of claim, Mario Sande's evidence was that he received advice from Banq about the implementation of those transactions (T 775.35-48); and that he could not recall which individual at Banq but he said that it would have been one of Gino Cassaniti, Fred Khalil or Peter Abboud (T 775.50-776.2); and that the advice he was given was "[j]ust to channel - legitimately channel my money from company A to company B" (at T 776.4-6).
3. The plaintiffs say that, in relation to the Statewide Parties, it is to be inferred that Gino Cassaniti was involved in the Scheme Recommendation and implementation. It is said that, although Mario Sande could not always specifically recall which of three people at Banq (Gino Cassaniti, Fred Khalil or Peter Abboud) he dealt with for what aspect of the Scheme (T 775.35-776.2), that means that all did something in relation to Scheme as it applied to the Statewide Parties. It is said that, as each part of the Scheme was interrelated, any conversation with one of them about the Scheme must have implicitly involved the others in the Scheme; and that all must have known what the others were doing, since otherwise none of them would have known what particular thing it was that he had to do.

Advice to Wenman Parties - late 2012/2013

1. Wenman Brimak in its defence (verified by Elias Nassar) in the RCG CBD Proceeding admitted that in about late 2012 or early 2013, Gino Cassaniti advised and recommended to the Nassar clients that if they entered into a number of carousel payments (between Blackrock Media, Ignite Promotions, RCG CBD and Wenman Brimak) then Blackrock Media, Ignite Promotions and Wenman Brimak could legitimately minimise the amount of tax which would otherwise be payable by them (at 7(d)).
2. Elias Nassar's evidence in relation to Bluemine was to the effect that Gino Cassaniti broadly explained a process for minimising tax and that, as Elias Nassar saw Gino Cassaniti as an expert, he "just went along with what he told me was the best thing to do" (T 802.1-20). Elias Nassar could not recall the exact conversation but said that it was along the lines of "having - issuing invoices for consulting services that he was doing and that Elias Nassar thought it would be legal at the time (T 802.30-38); Elias Nassar said that Gino Cassaniti said that "there was a company that he had that would issue the invoices". His recollection was that Gino Cassaniti's advice was that this would minimise the tax of Blackrock Media, Ignite Promotions and Wenman Brimak (T 802.26-804.30); that Gino Cassaniti told him that Banq was going to take a fee for the involvement of RCG CBD in the Scheme which would be the GST amount from the invoice (T 804.1-806.30).

Expert evidence

1. In support of Gino Cassaniti's assertion as to forged signatures he led expert evidence, which was ultimately subsumed by a joint expert report dated 5 March 2020 (Ex T). The plaintiffs say that the joint expert report does not support Gino Cassaniti's contention that the signatures were forgeries. The joint conclusion of the experts (Ex T at 9) was that: … the evidence provides strong support for the first hypothesis (H1) that the writer of the Gino Cassaniti specimen signatures, wrote the Gino Cassaniti signatures on all the questions documents (excluding Item 27.2), as opposed to the alternative proposition (H2), that someone else, other than Gino Cassaniti, wrote the questioned signatures.
2. The joint experts further concluded that (Ex T at 10): On an assessment of the questioned signature on Item 27.2, the evidence provides roughly equal support for both of the above hypotheses and accordingly, we are unable to provide an opinion regarding the authorship of this particular signature.

Relevant legal principles - breach of fiduciary duty

Directors

1. Firstly, I note that an ASIC record, pursuant to s 1274B of the Corporations Act, constitutes proof of, inter alia, the appointment of directors in the absence of evidence to the contrary (see Lewis Securities v Carter per Emmett AJA at [161]).
2. Section 9 of the Corporations Act defines a director as follows: "director" of a company or other body means: (a) a person who: (i) is appointed to the position of a director; or (ii) is appointed to the position of an alternate director and is acting in that capacity; regardless of the name that is given to their position; and (b) unless the contrary intention appears, a person who is not validly appointed as a director if: (i) they act in the position of a director; or (ii) the directors of the company or body are accustomed to act in accordance with the person's instructions or wishes. Subparagraph (b)(ii) does not apply merely because the directors act on advice given by the person in the proper performance of functions attaching to the person's professional capacity, or the person's business relationship with the directors or the company or body.
3. The relevant factors for consideration as to whether a person is a de facto director, having regard to the duties performed by that person in the context of the particular company, were outlined in Deputy Commissioner of Taxation v Austin (1998) 28 ACSR 565 (Commissioner of Austin) per Madgwick J and Chameleon Mining NL v Murchison Metals Ltd [2010] FCA 1129 per Jacobson J. They include: the size of the company and the allocation of the responsibilities; the internal practices or structure of the company; whether those outside the company considered the person to be a director; the duties that would be expected to be performed by a director in the relevant company (namely, top-level management functions); the duties actually performed by the person; whether others in the company considered the person a director; whether the company held out the person as a director; and whether the person held themselves out as a director. A person may still be a de facto director even if the company has a properly constituted and functioning board; and the title of the person (for example, as "consultant" or "manager") is not determinative of the issue.
4. The plaintiffs have referred to the observations by White J, as his Honour then was, as to the definition of "shadow director" in Buzzle Operations Pty Ltd (in liq) v Apple Computer Australia Pty Ltd (2010) 238 FLR 384; [2010] NSWSC 233 (Buzzle Operations), namely, that: in some circumstances, it is possible for a person to be both a shadow director and a de facto director (at [233]-[236]); it is not necessary that the instructions or wishes of the shadow director be given over the whole areas of corporate activity for which the directors are responsible (at [241]); the directors must be accustomed to act as directors of the company (and not in some other capacity) in accordance with the shadow director's instructions or wishes regarding how the directors should so act (which means that a person is not a shadow director merely because they impose conditions on their commercial dealings with the company with which the directors feel obliged to comply) (at [242]-[243]); there must be a causal connection between the instruction or the wish of the shadow director and the directors acting on it; it is not sufficient if the act that was specified in the instruction is something that the directors would do irrespective of the instruction (at [244]-[247]); for the directors to be "accustomed to act" in accordance with the instructions or wishes requires "habitual compliance over a period of time" (at [248]); the directors collectively must be accustomed to act on the shadow director's instructions or wishes and it is sufficient if a "governing majority" of the board is so accustomed to act.
5. In Buzzle Operations, his Honour noted that it is not sufficient if executives who are not directors are accustomed to act on a person's instructions or wishes (although such a person might be a de facto director) or if the instructions or wishes are given to a director in their capacity as an executive and not in his or her capacity as a director (at [250]); and that the instruction or wish need not be communicated directly by the shadow director to all or a governing majority of the directors (at [307]).
6. As the plaintiffs note, the term "shadow director" colloquially refers to a person who, though not validly appointed as a director, is nonetheless a person in accordance with whose instructions or wishes the directors of the company are accustomed to act (and who is thus considered to be a director - see Standard Chartered Bank of Australia Ltd v Antico (1995) 38 NSWLR 290 per Hodgson J, as his Honour then was, where it was recognised that a body corporate may be a director). In their opening submissions, the plaintiffs contended that, in each case, Banq was a de facto or shadow director of the Insolvent Companies (citing Ho v Akai Pty Ltd (in liq) (2006) 247 FCR 205; [2006] FCAFC 159 (Ho v Akai) at [21] per Finn, Weinberg and Rares JJ); though it is not clear that any relief is sought consequent upon any such finding and this was not raised in closing submissions.

Statutory duties

1. Under the Corporations Act, the plaintiffs claim breaches of the duty to act with care and diligence, the duty to act in good faith and for a proper purpose and the duty not to misuse one's position (Corporations Act, ss 180, 181(1) and 182(1)). The relevant provisions are as follows: Section 180 Care and diligence--civil obligation only Care and diligence--directors and other officers (1) A director or other officer of a corporation must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise if they: (a) were a director or officer of a corporation in the corporation's circumstances; and (b) occupied the office held by, and had the same responsibilities within the corporation as, the director or officer. Section 181 Good faith--civil obligations Good faith--directors and other officers (1) A director or other officer of a corporation must exercise their powers and discharge their duties: (a) in good faith in the best interests of the corporation; and (b) for a proper purpose. … (2) A person who is involved in a contravention of subsection (1) contravenes this subsection. Section 182 Use of position--civil obligations Use of position--directors, other officers and employees (1) A director, secretary, other officer or employee of a corporation must not improperly use their position to: (a) gain an advantage for themselves or someone else; or (b) cause detriment to the corporation. … (2) A person who is involved in a contravention of subsection (1) contravenes this subsection.
2. As to the content of those duties, there seems to be no real dispute between the parties.
3. As to the content of the duty of care and diligence imposed by s 180(1) of the Corporations Act, the plaintiffs refer to what was said in Australian Securities and Investments Commission v Cassimatis (No 8) (2016) 336 ALR 209; [2016] FCA 102 (Cassimatis (No 8)), where Edelman J (then sitting in the Federal Court) referred (at [450]-[495]) to Vrisakis v Australian Securities Commission (1993) 9 WAR 395 per Ipp J, as his Honour then was, and to Shafron v Australian Securities and Investments Commission (2012) 247 CLR 465; [2012] HCA 18 at [18] per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ.
4. The plaintiffs identify the principles arising from Cassimatis (No 8) as being that: the duty under s 180(1) requires a director or officer to balance the foreseeable risk of harm to the corporation (the magnitude of the risk and the likelihood of its occurrence) by a certain course of action or inaction, along with the burden (expense, difficulty and/or inconvenience) of taking alleviating action; "harm" refers to harm to any of the interests of the corporation; s 180(1) does not require proof of actual or prospective loss (or financial harm) to the corporation; the standard of care required to discharge the duty will depend upon the corporation's circumstances, the director's or officer's position and whatever responsibilities the director or officer has; where the directors are the shareholders, that can impact considerably on the content of the duties owed to the corporation; however, the corporation is a separate legal entity and the shareholders cannot release directors/officers from their duty to the corporation under s 180(1), which has a public aspect; and that a director or officer who assumes vast responsibilities and exercises a very high degree of control within a corporation, as opposed to devolving functions and responsibilities to suitably experienced and qualified staff and allowing others to take an active role in participating in making decisions, will necessarily increase his or her level of exposure to a potential breach of s 180(1). The plaintiffs note that in Cassimatis (No 8) (at [487], [495]), the question posed was whether a reasonable person in the directors' position would have seen that the conduct involved risk of injury to the company (see also ASIC v Rich at [7205]-[7206]).
5. As to the duty to act in good faith in the best interests of the corporation and for a proper purpose (s 181(1)(a)-(b)), it is noted that while it "may be difficult to separate considerations that go to each of them they remain, conceptually, separate duties" (Bell Group Ltd (in liq) v Westpac Banking Corp (No 9) (2008) 39 WAR 1; [2008] WASC 239 at [4456] per Owen J).
6. Whether the duty to act in the best interests of the company is determined objectively or subjectively remains unsettled. Black J summarised the current position as follows in In the matter of Colorado Products Pty Ltd (in prov liq) (2014) 101 ACSR 233; [2014] NSWSC 789 (Re Colorado Products) (at [420]): [420] The case law is divided as to whether a contravention of s 181(1)(a) of the Corporations Act requires that it be established that a director engaged deliberately in conduct which he or she knew was not in the company's best interests: for example, Forge v Australian Securities and Investments Commission; [2004] NSWCA 448; (2004) 213 ALR 574 at [245] per McColl JA (with whom Handley and Santow JJA agreed); Holyoake Industries (Vic) Pty Ltd v V-Flow Pty Ltd above at [150], varied on appeal on another point in V-Flow Pty Ltd v Holyoake Industries (Vic) Pty Ltd above. In Westpac Banking Corporation v Bell Group Ltd (in liq) (No 3) [2012] WASCA 157; (2012) 44 WAR 1, the Court of Appeal of the Supreme Court of Western Australia unanimously held that the corresponding general law duty to act in good faith in the company's best interests was subjective and would be complied with if directors honestly believed they acted in the company's best interests (at [923] per Lee AJA, at [1988] per Drummond AJA, [2027], at [2772], [2795] per Carr AJA). The alternative view is that a contravention of that limb of s 181 can be established if the law objectively considers that what the director did was improper, even if the director subjectively believed that he or she was acting in the company's best interests: see, for example, Australian Growth Resources Corporation Pty Ltd v Van Reesema (1988) 13 ACLR 261 at 270-271; 6 ACLC 529 per King CJ; Mernda Developments Pty Ltd (in liq) v Alamanda Property Investments No 2 Pty Ltd [2011] VSCA 392; (2011) 86 ACSR 277 at [32]-[33]. The difference in those approaches does not seem to me to be material for the purposes of this case. The section may be contravened if a director promotes his or her personal interest in a situation where there is a conflict or real or substantial possibility of a conflict between those interests and the company's interests: Australian Securities and Investments Commission v Adler above at [735]; Parker above at [72].
7. As in Re Colorado Products, it is not necessary here to explore the differences in approach in this regard.
8. The plaintiffs note that, in determining what is in the best interests of the company, in certain circumstances (such as where the company is insolvent or approaching insolvency), the directors are required to take into account not only the interests of its shareholders (as a whole), but also the interests of its creditors (Spies v R (2000) 201 CLR 603; [2000] HCA 43 (Spies v R); Australian Securities and Investments Commission (ASIC) v Somerville (2009) 77 NSWLR 110 at [94]; [2009] NSWSC 934 (Somerville) at [37] per Windeyer AJ).
9. As to the director's duty to act for a proper purpose, the bulk of authority indicates that this is to be determined objectively, and it was not here in dispute (see, for example, Re Colorado Products at [421]; Re HIH Insurance Ltd and HIH Casualty and General Insurance Ltd; Australian Securities and Investments Commission (ASIC) v Adler (2002) 168 FLR 253; [2002] NSWSC 171 (ASIC v Adler) at [738]-[740] per Santow J; Somerville at [38]). The relevant principles to consider were distilled by Ipp J, as his Honour then was, (with whom Seaman J and Malcolm CJ agreed) in Permanent Building Society (in liq) v Wheeler (1994) 14 ACSR 109 at 137 as follows: The principles applicable in determining whether directors of a company have acted for an improper purpose and in abuse of their powers are well settled. Relevantly, as regards the issues that arise in this case, it may be said that those principles are: (a) Fiduciary powers and duties of directors may be exercised only for the purposes for which they were conferred and not for any collateral, or improper purpose. (b) It must be shown that the substantial purpose of the directors was improper or collateral to their duties as directors of the company. The issue is not whether a management decision was good or bad; it is whether the directors acted in breach of their fiduciary duties. (c) Honest or altruistic behaviour by directors will not prevent a finding of improper conduct on their part if that conduct was carried out for an improper or collateral purpose. Whether acts were performed in good faith and in the interest of the company is to be objectively determined, although statements by directors about their subjective intentions or beliefs will be relevant to that inquiry. (d) The court must determine whether but for the improper or collateral purpose the directors would have performed the act impugned.
10. Edelman J, then sitting in the Federal Court, expressed doubt in Australian Securities and Investments Commission v Drake (No 2) (2016) 340 ALR 75; [2016] FCA 1552 at [498] as to whether the "but for" test applies at the stage of determining a breach of the duty not to act for an improper purpose but did not determine the issue as "all parties assumed that it did and the case was conducted in that way", (as is similarly the case here).
11. As to the duty not to use one's position improperly to gain an advantage for oneself or another or to cause detriment to the corporation, this is to be assessed objectively (Re Colorado at [432]-[433]; Taxa Australia Pty Ltd v G Wang (2018) 130 ACSR 531; [2018] NSWSC 1412 at [33] per Black J). Impropriety is established by "a breach of the standards of conduct that would be expected of a person in the position of the alleged offender by reasonable persons with knowledge of the duties, powers and authority of the position and the circumstances of the case" (R v Towey (1996) 21 ACSR 46 at 57 per Gleeson CJ (with whom Allen and James JJ agreed)). It is not necessary for the relevant advantage or detriment sought to be achieved to establish a breach of s 182(1) (Re Colorado at [432]).
12. As to the content of directors' duties, reference is also made by the plaintiffs to the following authorities: Re One.Tel Ltd (in liq); Australian Securities and Investments Commission v Rich (2003) 44 ACSR 682; [2003] NSWSC 186 (Re One.Tel) per Bryson J, as his Honour then was; Re City Equitable Fire Insurance Co Ltd (1924) 19 LI L Rep 93; Re Property Force Consultants Pty Ltd (1995) 13 ACLC 1051; [1997] 1 Qd R 300 per Derrington J.

Common law and equitable duties

1. At common law and in equity, "directors owe duties of a fiduciary nature to act as best to promote the interests of the corporation whose affairs they are conducting" (Allco Funds Management Limited (recs and mgrs apptd) (in liq) v Trust Company (Re Services) Ltd (in its capacity as responsible entity and trustee of the Australian Wholesale Property Fund) [2014] NSWSC 1251 at [114] per Hammerschlag J; BCI Finances v Binetter at [258]-[259]). In particular, the plaintiffs note that, as a general proposition, the interests of a company include carrying on business in a manner which does not expose the company to liabilities to pay penalties and interest charges under income tax legislation, or to incur tax debts which will render it insolvent (citing Gleeson J in BCI Finances v Binetter at [264]).
2. As to the duty of care owed by directors, the plaintiffs submit, by reference to Deputy Commissioner of Taxation v Clark (2003) 57 NSWLR 113; [2003] NSWCA 91 (Clark) at [108]-[109] per Spigelman CJ (with whom Handley and Hodgson JJA agreed), that while the standards of skill and diligence may vary depending on the circumstances, there is a core, irreducible requirement of skill and of diligence that "involves an objective test". The requirement of diligence demands the director to take reasonable steps to place themselves in a "position to guide and monitor the management of the company" (see also Daniels v Anderson (1995) 37 NSWLR 438 (Daniels v Anderson) at 501, 503 per Clarke and Sheller JJA).
3. Further, equity also imposes on directors, as fiduciaries, "proscriptive obligations - not to obtain any unauthorised benefit from the relationship and not to be in a position of conflict" (Breen v Williams at 113; see also Mills v Mills (1938) 60 CLR 150; [1938] HCA 4 at 185 per Dixon J, as his Honour then was; and Pilmer v Duke Group at [74], [78] per McHugh, Gummow, Hayne and Callinan JJ; Richard Brady Franks Ltd v Price (1937) 58 CLR 112; [1937] HCA 42 at 142 per Dixon J, as his Honour then was). If these obligations are breached, the fiduciary must account for any profits and make good any losses arising from the breach.
4. There is no dispute as to the above principles.

Relevance of creditors to director's duties

1. As to the question of to whom such duties are owed by directors (as to which, again, there was here no real dispute), the plaintiffs point to Kinsela v Russell Kinsela Pty Ltd (in liq) (1986) 4 NSWLR 722 at 730 per Street CJ (with whom Hope and McHugh JJA agreed) for the proposition that interests of creditors intrude where a company is insolvent. However, it was made clear by the High Court in Spies v R (at [93]-[95]) that directors do not owe an independent duty to, and enforceable by, creditors (by reason of their position as directors) (see also Bilta (UK) Ltd (in liq) v Nazir [2015] UKSC 23; [2015] 2 WLR 1168 (Bilta) at [125]-[126] per Toulson and Hodge LLJ).
2. The plaintiffs accept that the extent to which directors are required to take into account the interests of creditors in their management of the company is contentious but say that, as a general proposition, the best interests of the company will depend on various factors including solvency (citing Angas Law Services Pty Ltd (in liq) v Carabelas (2005) 226 CLR 507; [2005] HCA 23 at [67] per Gummow and Hayne JJ).
3. As to the import of acquiescence or consent by shareholders to a course of conduct, the plaintiffs note that the general principle (that any act that falls within the corporate capacity of a company will bind it if it is done with the unanimous consent of all shareholders) does not enable the shareholders to bind the company itself to a transaction which constitutes a fraud on its creditors (citing Re Halt Garage (1964) Ltd [1982] 3 All ER 1016 at 1037 per Oliver J; Rolled Steel Products (Holdings) Ltd v British Steel Corporation [1986] Ch 246; Kinsela at 730) nor can shareholders authorise a breach of the directors' duty to the company that affects the interests of creditors (citing Kinsela at 732). Reference is made by the plaintiffs to Macleod v R (2003) 214 CLR 230; [2003] HCA 24 at [30], where Gleeson CJ, Gummow and Hayne JJ said that the "[t]he self-interested 'consent' of the shareholder, given in furtherance of a crime committed against the company, cannot be said to represent the consent of the company" (and at [74] per McHugh J and [131] per Callinan J). Further, the plaintiffs cite Lord Mance in Bilta at [38] where he stated that "[a]ll the shareholders of a solvent company acting unanimously may in certain circumstances…be able to authorise what might otherwise be misconduct towards the company. But even the shareholders of a company which is insolvent or facing insolvency cannot do this to the prejudice of its creditors, and the company's officers owe a particular duty to safeguard the interest of such creditors".
4. Finally, the plaintiffs refer to Edelman J's conclusion (in Cassimatis (No 8) at [523]) that where the shareholders acquiesce to a course of conduct then that acquiescence might affect the practical content of the duty but that such acquiescence "does not eliminate or relieve the duty where there are other relevant interests of the corporation apart from the interests of the shareholders".

Director's liability as trustee of company's money

1. The plaintiffs further point to authority for the proposition that moneys held to the credit of a company's bank account represent moneys under the control of the company's directors held on trust for the company's purposes; and that for the directors to apply those moneys otherwise is a breach of trust and hence, that directors have been considered and treated as trustees of moneys which come into their hands or under their control (see Selangor United Rubber Estates Ltd v Craddock (No 3) [1968] 1 WLR 1555 (Selangor) at 1577 per Ungoed-Thomas J; Re Lands Allotment Company [1894] 1 Ch 616 at 631 per Lindley LJ, at 637-639 per Kay LJ); and the application of that proposition by Brightman J in Karak Rubber Co Ltd v Burden (No 2) [1972] 1 WLR 602 at 633. Reference is also made in this context to Dal Pont and Chalmers, Equity and Trusts in Australia (4th ed, 2007, Lawbook Co) at 38.45-50. As to the application of Selangor in Australia, reference is made to Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 (Consul Development v DPC Estates) at 398 per Gibbs J; and at 411 per Stephen J, as their Honours then were.

Accessorial liability - s 79 of the Corporations Act

1. Section 79 of the Corporations Act provides that: Involvement in contraventions A person is involved in a contravention if, and only if, the person: (a) has aided, abetted, counselled or procured the contravention; or (b) has induced, whether by threats or promises or otherwise, the contravention; or (c) has been, in any way, by act or omission, directly or indirectly, knowingly concerned in, or party to, the contravention; or (d) has conspired with others to effect the contravention.
2. Section 79 is a definitional provision, the purpose of which is to give content to the expression "involved in a contravention" where it appears in the Corporations Act (Australian Securities and Investments Commission (ASIC) v ActiveSuper Pty Ltd (in liq) (2015) 235 FCR 181; [2015] FCA 342 (ASIC v ActiveSuper) at [422] per White J). I note for present purposes that ss 181 and 182 of the Corporations Act include that phrase, whereas s 180 does not.
3. Accessorial liability under s 79 demands actual knowledge of the essential facts constituting the contravention (ASIC v ActiveSuper at [433]; Lifeplan Australia Friendly Society Ltd v Ancient Order of Foresters in Victoria Friendly Society Ltd (2017) 250 FCR 1; [2017] FCAFC 74 (Lifeplan) at [104]; ASIC v Somerville at [40]); however, knowledge can be inferred from "the fact that the person is exposed to the obvious, but that is not to say that constructive knowledge of any of the essential facts is sufficient" (ASIC v Australian Investor Forum Pty Ltd & Ors (No 2) [2005] NSWSC 267 at [112]).
4. There is a clear similarity between s 79(c) and the second limb of Barnes v Addy, which I discuss in greater detail below (Lifeplan at [94], [107]).

Accessorial liability - second limb of Barnes v Addy

1. There is again no dispute as to the principles applicable where there are claims for accessorial liability or liability as knowing assistant to a breach of fiduciary duty (within the second limb of Barnes v Addy). A person who assists a fiduciary to breach his or her fiduciary duties, with knowledge of a dishonest and fraudulent design on the part of the fiduciary, is liable as though that person were the fiduciary (see Farah Constructions at [160]; Hasler v Singtel Optus at [75]; [109]; [123]; [129]-[139] per Leeming JA; Harstedt Pty Ltd v Tomanek (2018) 55 VR 158; [2018] VSCA 84 (Harstedt v Tomanek) at [80]; Lewis v Nortex Pty Ltd (In Liq); Lamru Pty Ltd v Kation Pty Ltd [2005] NSWSC 482 (Lewis v Nortex) at [33] per Hamilton J), including the liability to disgorge property transferred by another person in breach of that person's fiduciary duty, as well as in personam liability (see Sheahan v Thompson (No 2) [2015] NSWSC 871 (Sheahan v Thompson) at [141]-[146] per Rein J).
2. The elements of the second limb of Barnes v Addy may be itemised as follows (see Farah Constructions at [160]; Lewis Securities v Carter at [185]-[187]; Harstedt v Tomanek at [70]): (a) the existence of a fiduciary duty owed by the fiduciary; (b) a dishonest and fraudulent design on the part of the fiduciary; (c) assistance by the third party in that design; and (d) knowledge on the part of the third party of the circumstances constituting that design.
3. There will be assistance where, but for the action or inaction of the third party, the breach of fiduciary duty would not have occurred; and there may also be assistance where the third party has facilitated a breach of fiduciary duty that would have occurred in any event (see Harstedt v Tomanek at [116]-[118]; and see JD Heydon and MJ Leeming, Jacobs' Law of Trusts in Australia (7th ed, 2006) at [1339] in this regard) but neither assistance nor knowledge, alone, is enough (see in particular Harstedt v Tomanek at [120]-[121]). (The Khalil defendants submit that, although not free from doubt, acquiescence by a third party with knowledge, in the breach of fiduciary duty would not constitute knowing assistance (referring to the discussion in Harstedt v Tomenak at [119]). I note that in Harstedt v Tomenak (at [119]) Santamaria, McLeish and Niall JJA did not determine "whether, or when, an omission or acquiescence may amount to assistance in a dishonest and fraudulent design under the second limb of Barnes v Addy" as the case had not been pleaded as such, as is similarly the case here.
4. It is well recognised that the knowledge that a defendant must have, in order to be liable under the second limb of Barnes v Addy, is that which falls within one of the first four categories of knowledge in Baden Delvaux (Farah Constructions at [174]-[178]; Lewis Securities v Carter at [186]), namely: (i) actual knowledge, (ii) wilfully shutting one's eyes to the obvious; (iii) wilfully and recklessly failing to make such enquiries as an honest and reasonable person would make; or (iv) knowledge of circumstances that would indicate the facts to an honest and reasonable person.

Knowledge of a corporation

1. The state of mind of a director who is acting within the scope of his or her authority will generally be attributed to the company where there is a duty on the part of the director to communicate that knowledge to the company (as there will be if a director knows information which is important to the affairs of the company) (see Beach Petroleum at 569, 574 per von Doussa J; Belmont Finance Corporation v Williams Furniture Ltd (No 2) [1980] 1 All ER 392 (Belmont Finance v Williams Furniture) at 404; see also Commissioner of Taxation v Macquarie Health Corp Ltd (1998) 88 FCR 451 at 500 per Emmett J, sitting in the Federal Court as his Honour then was; Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2008] NSWSC 1070 (Tim Barr v Narui Gold Coast) at [104] per Barrett J, as his Honour then was).
2. However, where a corporation is the victim of fraud or other wrongdoing such as breach of fiduciary duty, the ordinary rule of attribution does not apply (Beach Petroleum at 571-572; Bilta at [7] per Lord Neuberger P; Permanent Trustee Co Ltd v O'Donnell (2009) 15 BR 28,1010; [2009] NSWSC 902 at [369]-[371] per Price J). The authors of Halsbury' Laws of Australia distil the relevant principles as follows: In a claim by a corporation against a person, such as a director, in respect to a transaction, the knowledge of the person will not be attributed to the corporation, if the person was acting totally in fraud of it in respect to the transaction; that is, where all the person's activities were directed against the interests of the corporation, and not partly for its benefit. 'Fraud' may take a variety of forms and is incapable of precise definition. However, it ordinarily implies some base conduct and moral turpitude and, in this context, might include equitable fraud arising out of a breach of a fiduciary duty, at least where the fiduciary's conduct is morally reprehensible. If the person is guilty of fraudulent conduct which is not totally in fraud of the corporation, and by design or result the fraud partly benefits the corporation, the knowledge of the person in the relevant transaction may be attributed to the corporation. (footnotes omitted)

Plaintiffs' submissions

1. In closing submissions, the primary conspiracy is contended to be an agreement between the conspirators whereby they would engage in conduct: to utilise the Insolvent Companies to create tax benefits or other benefits not known to the plaintiffs, for clients of Banq and/or for other natural persons or companies associated with the conspirators and/or for themselves; to organise and arrange to be carried out payments (into the companies by corporations and natural persons who had no lawful obligation to make payments in; and out of the companies to corporations and natural persons who had no legal entitlement to receive payments out; sometimes to enable payees to claim tax deductions, or other tax benefits not known to the plaintiffs; and to enable payees to receive and hold money for their benefit, some tax-free or with minimised tax obligations; and/or to create other benefits to payers and payees not known to the plaintiffs) to the effect that no transaction would be of any benefit to any of the Insolvent Companies; to denude the Insolvent Companies of all assets whilst knowing that the company was highly likely to incur tax liabilities; to wind up the Insolvent Companies (having left them insolvent with no ability to pay taxation obligations and not caring that the companies would be exposed to tax obligations including assessments by default, penalties and interest). The plaintiffs contend for a finding that the agreement was dishonest and fraudulent.
2. The plaintiffs contend in the statements of claim in each of the Proceedings that various representations were made to the Scheme Participants. It is said that parts of those representations included structural and "invoicing" advice as part of the arrangement, including the incorporation of "invoicing" companies. The plaintiffs say that "invoicing" is no genuine business activity per se, and that in these Proceedings, the conduct of "invoicing" was a euphemism for devious conduct.
3. The plaintiffs contend that the Scheme is to be inferred from the whole of the evidence in these Proceedings, in combination. They say that the co-incidence of significant events within the respective corporate lives of the Insolvent Companies is not an accident and is the primary conspiracy in operation, referring to: the common dates of windings up; the changes and "backdatings" of directorships; the purported (false) claims as purported creditors by one or more of the conspirators; and the lodgement of BAS immediately prior to windings up.
4. The plaintiffs say that the coincidences in each of the cases of the volume, overall size and modus operandi of these transactions, within a 24 month period, were such that they could not have occurred without the recommendation of Banq and its principals, noting that in each case Banq was the tax agent for the Paying Participant and the Receiving Participant and invariably their registered office; in each case Banq was the tax agent and registered office of the Insolvent Company; and, additionally, Banq controlled the bank accounts of the Insolvent Companies.
5. Similarly, the plaintiffs say that the coincidences of volume, size and benefits of these transactions to the Scheme Participants, predicated on false invoices were such that the transactions could not have occurred without their knowledge and approval. It is said that it is inherently implausible that the Scheme Participants did not either know, or closed their eyes or maintain reckless indifference to the veracity of transactions in which they paid money for nothing in return or received money without providing anything in return.
6. As to Bluemine, it is noted that the AKA Civil and AKA NSW transactions began in November 2011. The plaintiffs say that those transactions were orchestrated by Peter Abboud and Fred Khalil who told Andre Abou-Antoun that they would utilise Bluemine for the AKA transactions. It is noted that at T 642.6-37, Andre Abou-Antoun confirmed his statement in his record of interview with the ATO as follows: So, the accountant approached us, being Peter Abboud and Fred Khalil. When they saw that we were making money and advised that they had a company called Bluemine Pty Ltd that they managed and controlled and that Bluemine had assets and trucks and tipping sites and they could arrange inflated invoices and exaggerate invoices to our company. We would make the payment and then they would return the money back to our business, less a fee. and that, at T 671.27-39, Andre Abou-Antoun agreed that Peter Abboud and Fred Khalil had said "[t]hey basically said that, you know, we would be saving tax, the primary and - and the GST". At T 661.33-45, Andre Abou-Antoun agreed that a fee was charged by Banq.
7. As to Earth Civil, the director of which was Gino Cassaniti, the plaintiffs say that Earth Civil was involved with the Scheme that was set up by Peter Abboud and Fred Khalil for AKA Civil and AKA NSW. Cash payments totalling $965,000 were withdrawn from Earth Civil's bank account by Michael and Andre Abou-Antoun. At T 706.10, Andre Abou-Antoun said that "[w]e got advice to withdraw the money out of the account of Earth Civil".
8. The plaintiffs say that at T 678.36-679.34, although Andre Abou-Antoun attempted to resile from his evidence in the ATO transcript, it is clear that his evidence had been that the money was taken out because "you were being asked to do what Mr Cassaniti said to you". It is noted that, just prior to that, in the ATO interview Andre Abou-Antoun is recorded as saying that Mr Cassaniti said to him "[w]ell, he basically said "Just transfer the money and, then take the money out of the account after it was transferred". At T 678.1-9, when asked why AKA Civil was making payments to Earth Civil, Andre Abou-Antoun said "[i]t was - it was a device that Gino Cassaniti and Fred Khalil".
9. As to Diamondwish and Rackforce, the plaintiffs say that there was a complete absence of any genuine business records regarding the transactions for Diamondwish and Rackforce.
10. The plaintiffs' submissions analyse the complicity of each of the Primary Conspirators in the alleged Scheme by reference to the evidence as to the following matters: the relevant client relationship(s) and recommendations made to the clients by the Primary Conspirators (see above); the Primary Conspirator's use and control of the corporations; the use of their accounting and systems; the payments in and out of the Insolvent Companies; the benefits to the Scheme Participants; the benefits to the Primary Conspirators and/or associated entities; and the Primary Conspirators' control of directorships and creditors' voluntary winding ups.
11. I propose to summarise the submissions made by the plaintiffs and the response by each of the active defendants to those submissions and the plaintiffs' reply submissions specifically referable to that defendant before addressing the plaintiffs' submissions as to the more minor players and the defences that were common as between the respective defendants (relevantly, the joint release defences and causation defences).

Gino Cassaniti's relationship with Scheme Participants and recommendations

1. I have already referred to Gino Cassaniti's relationship with the respective Scheme Participants and the recommendations or advice it is said that he gave to them.

AKA Parties (Earth Civil and Bluemine Proceedings)

1. As to the AKA Parties (relevant to the claims in the Earth Civil and Bluemine Proceedings), the plaintiffs rely on the following as evidence of Gino Cassaniti's involvement in the recommendation to use Earth Civil in the Scheme: first, Gino's principal role at Banq; second, what they describe as Gino Cassaniti's "all-pervasive" presence in the affairs of Earth Civil, as its director; and, third, the evidence from Andre Abou-Antoun that Gino Cassaniti told him and his brother, Michael Abou-Antoun, to withdraw cash from Earth Civil after either AKA Civil or AKA NSW had deposited the money.
2. It is said that Andre Abou-Antoun's evidence (that Gino Cassaniti advised him and his brother, Michael Abou-Antoun, to make payments to Earth Civil) would not be plausible unless Andre Abou-Antoun regarded Gino Cassaniti as being as much involved in the establishment and use of Earth Civil as Fred Khalil; and that, had he not believed that, Andre Abou-Antoun would not have first obtained advice from Gino Cassaniti about the payments and then acted on Gino Cassaniti's advice to transfer money in and then take it out of Earth Civil.
3. As to the recommendation for the use of Bluemine for the Scheme, the plaintiffs point to Andre Abou-Antoun's evidence to the effect that such advice was from Fred Khalil and Peter Abboud. Referring to Andre Abou-Antoun's evidence that Fred Khalil told him that he had a company (Bluemine) that could issue invoices (something that it is said Fred Khalil could only have suggested if he had been working "hand in glove" with Gino Cassaniti, since the plaintiffs say that Gino Cassaniti was in fact the controller of Bluemine), the plaintiffs say that, in these circumstances, it is to be inferred that Fred Khalil's recommendation of the Scheme utilising Bluemine did not occur without the concurrence and adoption of Gino Cassaniti (and that such concurrence and adoption directly involved Gino Cassaniti in the making of the recommendation).
4. The plaintiffs say that it is proper to infer Gino Cassaniti's conspiratorial participation in the recommendation involving the use of Bluemine in the Scheme because at the same time: Gino Cassaniti was a principal of Banq; Banq was the accountant and tax agent of the AKA Parties, Earth Civil and Bluemine; between December 2012 and May 2013 Bluemine received $3.85 million from the AKA Parties; and at all times Gino Cassaniti was a director (including as a shadow or de facto director) of Bluemine (including the period that money was paid to the AKA Parties less an amount of $61,860 paid to RCG CBD, at a time when Gino Cassaniti was a director of RCG CBD).

Borg Parties (RCG CBD Proceeding)

1. As to RCG CBD, the plaintiffs accept that there is no evidence of Gino Cassaniti directly representing the Scheme to Tanya Borg (or Michael Borg). However, they say that Gino Cassaniti's role in recommending the Scheme to the Borg Parties arises: first, by reason of his directorship of RCG CBD (and that Fred Khalil must have spoken to him about the proposed Borg transactions); and, second, by his indirect relationship (through being a principal of Banq and his participation as a conspirator), as a result of which it is said that Gino Cassaniti is as culpable as if he had made the recommendation himself.
2. In this regard, the plaintiffs refer to Tanya Borg's evidence as to the structuring advice given to her by Fred Khalil (that he had a company called "RCG" that could be used). It is said that Gino Cassaniti's involvement in that advice can be inferred because Fred Khalil did not "have" a company called RCG CBD (rather, Gino Cassaniti was the director and shareholder of RCG CBD) and, therefore, for Fred Khalil to "use" RCG CBD to "make payments to the old company" would have required Gino Cassaniti's complicity (see Tanya Borg's affidavit sworn 4 December 2018 at [34]). Hence, it is said that there can be no suggestion that the amounts of money paid through RCG CBD for the Borg Parties (in accordance with the advice/recommendation) occurred without Gino Cassaniti's knowledge and approval. Second, in relation to Borg Family (which purchased the equipment from Excavation), the plaintiffs point to the fact that it was the trustee of the Borg Family Trust and that Gino Cassaniti settled the Borg Family Trust (witnessed by Fred Khalil) on 21 May 2012 (the same day that Borg Family was incorporated).
3. The plaintiffs say that there was no genuine commercial documentation in support of any of the impugned transactions recorded in Table 5.1 of the plaintiffs' closing submissions (the payment by Borg Civil to Bluemine of $25,000 on 28 June 2013; and payment within one week by Bluemine of $20,000 to Banq and of $5,000 to RCG CBD) and that recorded in Table 5.5 (the payment by Borg Family of $15,000 to Bluemine on 30 July 2013 and payment by Banq of that amount to Monica Abboud (the former 7th defendant and sister-in-law of Peter Abboud) one week later. It is noted that those transactions occurred while Gino Cassaniti was: the director of Bluemine; a principal of Banq; the person who, together with Fred Khalil, approved clients' accounts and tax returns; the director of Bluemine, who commenced its liquidation within three weeks after the last transaction on 30 July 2013; and a director of RCG CBD.
4. The plaintiffs thus contend that Gino Cassaniti was involved in recommending and implementing the Scheme for the Borg Parties' transactions with Bluemine. They maintain that it was impossible for the Scheme to be implemented without the Primary Conspirators' combined conduct. In those circumstances, it is submitted that Gino Cassaniti certainly knew of and approved the recommendation and implementation of the Scheme in relation to the Borg Parties.

Diamondwish and Rackforce

1. As to Diamondwish and Rackforce, the plaintiffs point to Frank Criniti's evidence of his introduction to Gino Cassaniti (and Banq). The plaintiffs say that although Gino Cassaniti was not a director or shareholder of Diamondwish or Rackforce, it is clear from Frank Criniti's evidence that the corporate structure of the Criniti companies (which included Diamondwish and Rackforce) was set up on Gino's advice and that, when Frank Criniti authorised the impugned payments as a director of those companies, Frank Criniti was acting on Gino Cassaniti's advice (reference here being made to Frank Criniti's evidence at T 508.27-509.9).
2. The plaintiffs submit that Gino Cassaniti's role and complicity in recommending the Scheme to and implementing the Scheme for the Wenman Parties is to be inferred from Elias Nassar's evidence to the effect that, when he received an invoice from RCG CBD, he thought it was the consulting company that Gino Cassaniti had been talking about (T 808.48, referring to the email correspondence and invoices at Ex K at 36321-36324). Additionally, it is noted that benefits from the Wenman transactions flowed to Banq, of which Gino Cassaniti was a principal. The plaintiffs have identified in Table 5.1 of their submissions that, on 25 June 2013, Ignite Promotions paid $385,880 to Bluemine. On 26 June 2013, Bluemine paid Wenman Brimak the sum of $350,835 and, on 27 June 2013, Bluemine paid Banq the sum of $35,045 (one-eleventh of $385,880). The plaintiffs note that the payments as set out in Table 3.3 of their submissions demonstrate that the fee retained by RCG CBD was $71,087 (which was eleven-tenths of the $781,955 paid by the Wenman Parties to RCG CBD). The plaintiffs point out that all of the impugned Wenman Parties payments were made between 30 January 2013 and 6 March 2013 while Gino Cassaniti was a director of RCG CBD.

Gino Cassaniti's control over and administration of relevant companies

AKA Parties

1. As to the AKA Parties, the plaintiffs point to Aris Zafiriou's evidence (see his affidavit sworn 9 March 2017 at [53]-[58]) to the effect that the ATO's investigations revealed that the AKA Parties engaged different labour hire companies to perform services periodically but for no longer than 12 months at a time; and it is said that two of those companies, Demolition and Earth Civil, are directly linked to Gino Cassaniti through his directorship of those companies.
2. Relevantly, the plaintiffs say that Gino Cassaniti's involvement in the deployment of Earth Civil for the purposes of the Scheme is evidenced by: his directorship of Earth Civil; his relationship with the AKA Parties; his principal role and interest in Banq (noting that the Banq Address was the registered office for Earth Civil); his joint role with Fred Khalil in approving the accounts and tax returns of clients; and his direct role in orchestrating Earth Civil's change of director and shareholder to himself. Reference is made to the evidence of Andre Abou-Antoun (see above) that Gino Cassaniti instructed him to withdraw $200,000 from Earth Civil's bank account when, the plaintiffs say, that Gino Cassaniti must have been aware of a debt owing to the ATO.
3. As to Gino Cassaniti's alleged involvement in the use of Bluemine for the AKA Parties, the plaintiffs say that the impression that Andrew Barsa sought to create in the witness box (of a businessperson who was at home, being a director, and running Bluemine efficiently) is not to be believed. The plaintiffs say that in fact what occurred was a complete abdication by Andrew Barsa of the responsibility of a director. It is submitted that it is clear from Andrew Barsa's evidence that he had little idea what was going on in Bluemine; the plaintiffs noting that Andrew Barsa did not know the activities in which Bluemine was engaged; whether the company was up to date with its tax compliance obligations or how much money it had in its bank account, despite being a signatory to the bank account. (I agree.)
4. The plaintiffs emphasise that the one time that Andrew Barsa did refer to dealing directly with Gino Cassaniti was when he wanted to resign his directorship of Bluemine (T 914.41-915.2). It is further noted that Gino Cassaniti's Counsel did not challenge Andrew Barsa's evidence that Andrew Barsa asked Gino Cassaniti if he could resign his directorship of Bluemine; and that Gino Cassaniti does not contest the circumstances leading to the liquidation of Bluemine (though he denies any involvement in them). The plaintiffs say that, for the reasons set out below in relation to Gino Cassaniti's involvement in the liquidation of Bluemine, that denial is not to be believed.

RCG CBD

1. As to RCG CBD, it is said that (apart from deploying the voluntary winding up provisions of the Corporations Act as a means of evading liabilities but keeping the benefit of assets by transfers to related entities without bona fide consideration for RCG CBD and the other Insolvent Companies), the evidence is that the assets for which Borg Family purportedly made the payments to RCG CBD (Table 3.5), came from Excavation and Excavation was then wound up by creditor's voluntary winding up on 27 February 2013 without having been paid by RCG CBD for the assets which it transferred to Borg Family.

Diamondwish and Rackforce

1. The plaintiffs say that the extent of Gino Cassaniti's control over and administration of the Criniti companies (which included Diamondwish and Rackforce) is to be inferred from correspondence between persons at the Criniti companies and the Primary Conspirators, after the relationship between Frank Criniti and Gino Cassaniti had "disintegrated". In this regard, the plaintiffs again point to the email chain of 30 September 2011 in which Gino Cassaniti's email signature identified his position as "Accountant" (Peter Abboud's affidavit sworn on 22 March 2019, Annexure A; Ex K at 14566; see above at [275]). The plaintiffs argue that, had Gino Cassaniti not controlled and influenced the Criniti companies to the extent that they allege, there would have been nothing for Gino Cassaniti to resist relinquishing after the relationship with Frank Criniti had collapsed.

George Said - Involved Recruitment

1. The plaintiffs say that Involved Recruitment's participation in the Scheme was different from other Scheme Participants in that: first, it was an instrument of Gino Cassaniti (rather than a client of Banq); and, second, George Said, as its director, was a "figurehead" of the company acting on Gino Cassaniti's bidding (though it is said that George Said bears no less culpability for wrongdoing executed under Gino Cassaniti's instructions). The plaintiffs say that George Said's evidence (see above) is directly relevant to the issue of Gino Cassaniti's use of corporate entities for his own purposes.
2. In particular, the plaintiffs say that the effect of George Said's evidence (at T 872.35-47) is that, in his capacity as a director of Involved Recruitment, George Said operated entirely on instructions from Gino Cassaniti alone. The plaintiffs say that, when cross-examined about this by Counsel for Gino Cassaniti (at T 889.6-12; and see T 890-891.30; T894.10-14; T 894.31-39 and T 897.45-50) George Said's evidence was undiminished. (I agree.)
3. The plaintiffs say that it is clear from George Said's evidence that Gino Cassaniti was the "real controller" of Involved Recruitment. Reference is made in this regard to George Said's evidence (at T 869.40-870.48) that: he was paid for his work as a director of Involved Recruitment; Gino Cassaniti told him the amount to take from the bank in payment for his services; alternatively, sometimes Gino Cassaniti would give him cash; that cash payment was to pay for the work that he had been doing; Gino Cassaniti would tell him to take $800 or $1,200 or $1,500; on occasions, George Said would withdraw large sums of cash and if he withdrew a sum in the order of $200,000 cash, generally that money would go to Gino Cassaniti at Banq's premises. George Said's evidence (at T 843.44-844.1) was to the effect that he paid whoever Gino Cassaniti asked him to via email. George Said's evidence was that he would get an email like a time sheet, then invoice it over, then he would get a payment and he would pay "whoever needed it to be directed to" (T 843.50). The plaintiffs say that it is clear that all payments from Involved Recruitment were made at Gino Cassaniti's behest. Reference is also made to George Said's evidence as to the receipt of documents from Banq and the sending out of invoices and the like (see above).
4. The plaintiffs say that no evidence of genuine commercial documents has been adduced by any of the defendants. From this, together with the evidence of George Said, the plaintiffs say that it is to be inferred that there were no genuine commercial documents to support the payments in and out of Involved Recruitment which, on the evidence from George Said, were made under the ultimate control and direction of Gino Cassaniti.
5. From this, the plaintiffs say that it is to be inferred that Gino Cassaniti's involvement with Involved Recruitment was such that he was a shadow director of it before he was recorded as a director with ASIC; and that he caused $934,399 to be paid to RCG CBD between 7 September 2012 and 30 May 2013 (Table 3.13), during which period Gino Cassaniti was the director of RCG CBD (and, it is said, a principal of Banq).
6. The plaintiffs say that Gino Cassaniti obtained a significant benefit from Involved Recruitment in that he received hundreds of thousands of dollars in cash delivered to him at Banq. George Said's evidence on this aspect of his instructions from Gino Cassaniti (as recorded in his ATO transcript of 3 June 2019 - see Ex U) was to the effect that: on occasion he was instructed to deliver amounts of cash to a car park; on other occasions he delivered (what the liquidator notes were large) amounts of cash to the office; he delivered amounts of cash to a person at Banq; whenever he delivered amounts of cash to Banq it was always to the same person; that person was not Fred Khalil or Peter Abboud but, out of fear for his own safety, George Said would not say who that person was. When cross-examined in the present Proceedings, George Said's evidence (at T 858.44-859.5, T 870 and T 871.30) was that the (unnamed) person to whom he had referred (as recorded in the ATO record of interview) was Gino Cassaniti.
7. The plaintiffs point out that Gino Cassaniti had notice, before the hearing commenced on 3 February 2013, that the plaintiffs had subpoenaed George Said to give evidence at the hearing and that the plaintiffs intended to rely on various representations contained in his ATO record of interview, including those representations about delivery of cash. The plaintiffs emphasise that Gino Cassaniti did not respond to this evidence by denying that large amounts of cash were paid to him; rather, that the only way Gino Cassaniti dealt with this evidence was through his counsel in cross-examination, when it was put to George Said that his evidence on this subject was not true. It is submitted that, against evidence of such a serious nature with attendant ramifications, Gino Cassaniti's conduct was not what would ordinarily be expected from an honest person. The plaintiffs draw from the fact that the veracity of George Said was not challenged on this issue (noting Counsel's obligation not to cross-examine the veracity of George Said without instructions) that Gino Cassaniti's denial of such an allegation was false to his knowledge.
8. The plaintiffs say that Involved Recruitment was utilised at Gino Cassaniti's behest. It is noted that Involved Recruitment was liquidated on the same day as RCG CBD and that Gino Cassaniti was the director of Involved Recruitment at the time, having taken over that role from George Said one month before on 16 May 2012.

Gino Cassaniti's role in the accounting systems of Scheme Participants

1. As to Gino Cassaniti's role in the accounting systems necessary to implement the Scheme, the plaintiffs says that this is to be inferred from the centrality of Banq in all of the impugned transactions and from the evidence of various Scheme Participants.

AKA Parties (Earth Civil Proceeding)

1. The plaintiffs accept that there was no direct evidence from Andre Abou-Antoun about Gino Cassaniti's involvement in the accounting systems required to implement the Scheme in relation to Earth Civil. However, it is submitted that the extent of Gino Cassaniti's involvement in the accounting (and consequential tax agent work) for the implementation of the Scheme for the AKA Parties regarding Earth Civil is evidenced by the following: the direct evidence from Fred Khalil and Peter Abboud about Gino Cassaniti's principal role at Banq generally, together with the fact that Ivana Cassaniti invested all of the funds in the business and had a 60% interest in the business; that Banq was a registered tax agent and Fred Khalil was its supervising tax agent (see Aris Zafiriou's affidavit sworn 9 March 2017 at [27]); that Banq was the accountant and tax agent for Earth Civil and the AKA Parties (Ex K at 10885, 12682-12688); that Gino Cassaniti was the sole director and shareholder of Earth Civil; that Banq had access to the AKA Parties' MYOB and ledgers for the purposes of doing their accounts and tax (noting Andre Abou-Antoun's evidence as to Banq's access to the AKA group companies' MYOB file - see above); and that Gino Cassaniti and Fred Khalil together approved client tax returns and that Fred Khalil lodged them (Fred Khalil's affidavit sworn 25 March 2019 at [24]).
2. Further evidence of Gino Cassaniti's knowledge of, and involvement in, the accounts for Earth Civil is said to be found in the ATO running balance account for Earth Civil exhibited to the liquidator's affidavit sworn 7 June 2018 (at [41]; see Ex K at 11700-11715), which records that Earth Civil did not lodge its BAS until 29 May 2013, well after the impugned payments in and out of Earth Civil.
3. The plaintiffs say that it is clear from the above, combined with the fact that the Form 484 recording Gino Cassaniti as the sole director and shareholder of Earth Civil (signed by Gino Cassaniti on 1 January 2013) was not lodged until 28 May 2013, that Gino Cassaniti was aware of the absence of accounting and tax returns for Earth Civil when he was in control of the fundamental administrative affairs of the company as set out in the Form 484 (see Table A; Ex K at 10241).

AKA Parties (Bluemine Proceeding)

1. As to Gino Cassaniti's alleged involvement in the accounting systems of the AKA Parties in relation to Bluemine, it is again noted that Andre Abou-Antoun's evidence was to the effect that he acted on the advice of Banq (of which firm the plaintiffs say Gino Cassaniti was a principal); and that Banq had access to the AKA Parties' MYOB files and ledgers for the purposes of doing their accounts and tax (as already referred to above). The plaintiffs rely on the same matters as relied on (and set out above) in relation to Earth Civil for their contention as to the extent of Gino Cassaniti's involvement in the accounting (and consequential tax agent work) for implementation of the Scheme as it related to Bluemine for the AKA Parties (noting, among other things, that Gino Cassaniti was the director of Bluemine).

Borg Parties (RCG CBD Proceeding)

1. As to Gino Cassaniti's alleged involvement in the Borg Parties' accounting systems, the plaintiffs point to Tanya Borg's evidence to the effect that Banq had complete access to the Borg Parties' MYOB accounting system and used it to prepare the BAS and tax returns for the Borg Parties (see above). The plaintiffs say that the "misconduct" exposed by the cross-examination of Tanya Borg (referred to above) in relation to the ledgers and taxation returns (see Ex W) reflects adversely on Gino Cassaniti's truthfulness because he in effect "oversaw" all of it (noting again that, in addition to doing the accounts for the Borg Parties, Banq was the tax agent for Borg Civil and Borg Family).
2. It is said that Fred Khalil knew that the BAS for Borg Family recorded that Borg Family claimed input tax credits for the equipment payments to RCG CBD; and that a sum equivalent to the payments to RCG CBD from Borg Family was paid to Borg Family (less the sum of $5,000) because he was the one who completed the BAS and who arranged the RCG CBD payments to Borg Family (together with George Khalil as the controller of RCG CBD's bank account). The plaintiffs say that Gino Cassaniti's knowledge of this is to be inferred from all of his conduct referred to in these Proceedings; particularly, his sole directorship of RCG CBD together with his principal role at Banq.
3. The plaintiffs point to the 2013 tax return lodged for Borg Family by Banq in which depreciation was claimed on the equipment purchased as a deductible expense; and that the depreciable amounts claimed were in accordance with the payments as recorded in the Borg Family ledger. Again, it is said that Fred Khalil (who completed the tax return) knew this because he was the one who arranged the RCG CBD payments to Borg Family (together with George Khalil as the controller of RCG CBD's bank account); and that Gino Cassaniti's knowledge is to be inferred upon the same basis as referred to above.
4. The plaintiffs say that further evidence of Gino Cassaniti's involvement or knowledge of the Borg Parties' BAS and tax returns is to be found in the uncontested evidence of Fred Khalil in his affidavit sworn 25 March 2019 at [24] to the effect that Gino Cassaniti approved all of Banq's clients' accounts and tax returns. The plaintiffs note that Gino Cassaniti did not require Fred Khalil for cross-examination, nor did he subpoena Fred Khalil to give evidence. It is said that, combined with Gino Cassaniti's failure to make himself available for cross-examination (as opposed to mere assertion as to his role at Banq), it can confidently be inferred that Gino Cassaniti was knowingly involved in the Borg Parties' accounting for the transactions comprised in the Scheme as it applied to them.

Criniti companies - Diamondwish and Rackforce

1. As to the Criniti companies, the plaintiffs point to Frank Criniti's evidence and that of Tarun Shah (see above) as to Gino Cassaniti's involvement in the accounting processes of the companies.

Gino Cassaniti's involvement in payments in and out of the Insolvent Companies

AKA Parties (Earth Civil Proceeding)

1. As to Gino Cassaniti's alleged involvement in the payments in and out of AKA Parties' accounts (relevant to the Earth Civil Proceeding), in relation to the $965,000 paid into Earth Civil by AKA NSW and AKA Civil, which was then paid out in cash to Michael Abou-Antoun and Andre Abou-Antoun (Tables 1.2 and 1.3), reliance is placed by the plaintiffs on the evidence of Andre Abou-Antoun in his ATO interview to the effect that Gino Cassaniti said to transfer the money in and then take the money out of the account after it was transferred (Ex O at 195); and his evidence in the present Proceedings that those payments were made to Earth Civil because Gino Cassaniti advised them to do so (at T 679-680). The plaintiffs contend that Andre Abou-Antoun's attempt to resile from this later in cross-examination should not be accepted (at T 679.12-680.45). (I did not understand Andre Abou-Antoun to be attempting to "resile" from his evidence that Gino Cassaniti had given the advice; rather, what he seemed to be attempting to clarify was that the advice was not given to him directly by Gino Cassaniti.)
2. The plaintiffs say that further evidence of Gino Cassaniti's knowledge is to be inferred from the fact that he was the sole director and shareholder of Earth Civil during the whole of the period that deposits and withdrawals were occurring. It is submitted that it is unlikely in the extreme that such an amount of money (nearly $1 million) could pass through Earth Civil and yet its sole director not know about it (and that this is particularly so when the same director, Gino Cassaniti, shortly thereafter instigated the company's creditors' voluntary winding up). (A similar submission is made in relation to Gino Cassaniti's knowledge of moneys passing through each of the Insolvent Companies with which he was involved.)

AKA Parties (Bluemine Proceeding)

1. As to Gino Cassaniti's alleged involvement in payments in and out for the AKA Parties in relation to Bluemine, the plaintiffs say that cash payments and those identified as going to unknown recipients (less fees to Primary Conspirators as identified in Table 5.2) can be assumed to be for the benefit of the AKA Parties because Andre Abou-Antoun's evidence was to the effect that an equivalent amount of all the money that the AKA Parties paid to Bluemine came back to one of their entities, less a fee (and they say that that evidence was not challenged).
2. The plaintiffs note that Gino Cassaniti does not contest the fact of these payments but simply denies any knowledge of them. The plaintiffs say that that denial should not be believed; rather, they say that Gino Cassaniti's knowledge is to be inferred from the whole of his conduct referred to in these Proceedings and, in particular, the fact that (as they contend was the case) he was a director (or deemed or shadow director) of Bluemine during the whole of the period that the impugned AKA transactions were occurring. Again, it is submitted that it is unlikely in the extreme that that amount of money could pass through Bluemine and yet its director not know about it (the plaintiffs again pointing to the fact that Gino Cassaniti shortly thereafter instigated the company's creditors' voluntary winding up).
3. The plaintiffs say that, from this, it is further to be inferred that Gino Cassaniti was aware of and complicit in the issue of false invoices to justify the payments into Bluemine because Andre Abou-Antoun's evidence is to the effect that, of all the payments made by AKA Civil and AKA NSW on receipt of invoices from Bluemine, only one ("very, very, very small") payment was for a genuine invoice. The plaintiffs contend that as a matter of the ordinary course of human experience it is not plausible that, during Bluemine's existence, Gino Cassaniti was unaware that it had received in excess of $3.8 million (or, knowing the receipt of those amounts, did not enquire as to what the payments were for).

Borg Parties (RCG CBD Proceeding and Bluemine Proceeding)

1. As to Gino Cassaniti's alleged involvement in the Borg Parties' payments in and out in relation to RCG CBD, the plaintiffs contend that Gino Cassaniti's role in the Scheme as used by the Borg Parties was indispensable, noting that he was the sole shareholder and director of RCG CBD, which received payments from Borg Civil and Borg Family, and that RCG CBD was the company that subsequently made payments to Borg Civil and Borg Family. It is again submitted that any assertion that Gino Cassaniti was unaware of transactions involving these amounts of money is not credible.
2. The plaintiffs also point to Gino Cassaniti's involvement in substantively similar equipment transfer transactions involving RCG CBD. It is said that these transactions were documented by false invoices and that Borg Family, which received the equipment, did not pay for that equipment. The plaintiffs say that this transaction was similar to the Bluemine truck purchase transactions where the purported transfer of trucks was documented by false invoices and the trucks were transferred by Bluemine for no consideration.
3. It is submitted that the similarity of each of those transactions, and the fact that Gino Cassaniti, Fred Khalil and Peter Abboud as principals of Banq played various roles in each of those transactions, enables the inference that the similarity of the transactions was not an innocent coincidence and that Gino Cassaniti's role as the common denominator was also not an innocent coincidence. It is noted that Fred Khalil advised Borg Family to enter into the RCG CBD transaction when Gino Cassaniti was a director of RCG CBD which he caused to be wound up shortly after the Borg Family had obtained the benefits of the RCG CBD transaction.
4. Further, it is said that Peter Abboud arranged for the incorporation of Bluemine to acquire trucks for $590,000 which were subsequently transferred to Multipower Tipper Pty Ltd (Multipower Tipper) and Jola Holdings. It is said that Bluemine did not obtain consideration for the transfers (which it is said were supported by false documents showing consideration of $590,000). The plaintiffs again say that that this happened when Gino Cassaniti was a director of Bluemine and that he caused it to be wound up shortly thereafter.
5. The plaintiffs say that: (i) the purported purchases of equipment from RCG CBD and Bluemine obtained GST credits for their acquisitions and that RCG CBD and Bluemine incurred countervailing GST liabilities; (ii) there was no genuine supporting documentation for the transactions; (iii) Gino Cassaniti was the director of RCG CBD and Bluemine and he instigated the creditors' voluntary liquidations of those companies; and (iv) RCG CBD and Bluemine were left unable to pay their taxation liabilities to the ATO which was their only legitimate creditor.

Criniti companies (Diamondwish and Rackforce Proceeding)

1. As to the impugned Diamondwish and Rackforce transactions (referred to above), the plaintiffs again say that there was no genuine or legitimate documentation for these transactions, as no services were provided for the Diamondwish payments; and that those payments were in accordance with Gino Cassaniti's advice. The plaintiffs say that Gino Cassaniti's involvement in payments in and out of Diamondwish is exemplified by the payment of $250,000 to Elle Barikhan. This is such as, the plaintiffs say that the $250,000 was transferred from RCG CBD to Diamondwish on 21 December 2012 and then from Diamondwish to Elle Barikhan on 24 December 2012, while Gino Cassaniti was a director of RCG CBD.
2. The plaintiffs say that, from this, it should be inferred that Gino Cassaniti was involved in the payments for which there was no legitimate purpose and no genuine documentation.

Gino Cassaniti's involvement in benefits to the Scheme Participants

AKA Parties (Earth Civil Proceeding)

1. As to Gino Cassaniti's alleged involvement in benefits to the AKA Parties (in the Earth Civil Proceeding), the plaintiffs note that the payments in and out of Earth Civil are not in dispute. The plaintiffs say that there was no credible evidence of a legitimate business purpose to support the cash payments of $965,000 to Michael and Andre Abou-Antoun (Tables 1.1 to 1.3 of the plaintiffs' submissions) and that, in cross-examination, Andre Abou-Antoun was unable sensibly to explain what he had done with that cash withdrawn from Earth Civil's bank account (see at T 681.5-683.25). The plaintiffs say that Andre-Antoun's evidence of having used the money for payment of wages (to people whom he could not recall other than "Richard - operator - Julie Tag"), for unspecified business expenses and labor hire is not credible.
2. It is submitted by the plaintiffs that, where evidence Michael Abou-Antoun received part of the cash benefits (as set out in Tables 1.1 to 1.3) is not disputed, and where Michael Abou-Antoun (who they say would be regarded as being in the AKA Parties' "camp" to the extent that he is not a party) chose not to give evidence, it should be inferred that his evidence would not have assisted the AKA Parties (and that inferences can be drawn against the AKA Parties, that might otherwise have been answered had Michael Abou-Antoun given evidence) (see at [567] as to the Jones v Dunkel issue).
3. The plaintiffs contend that, since use of the cash was left unexplained, it can be inferred that the AKA Parties utilised the Earth Civil transactions for themselves, tax free, and for other benefits or purposes not known to the plaintiffs.
4. It is said that in these circumstances, where Gino Cassaniti's Counsel did not obtain a concession from Andre Abou-Antoun to exculpate Gino Cassaniti in relation to the advice about taking the money out of Earth Civil, and Gino Cassaniti did not seek to bring Michael Abou-Antoun before the court, it may comfortably be inferred that the payments were in accordance with Gino Cassaniti's advice and/or recommendation.

AKA Parties (Bluemine Proceeding)

1. As to Gino Cassaniti's alleged involvement in benefits to the AKA Parties by reference to the impugned Bluemine transactions, the plaintiffs again point to Andre Abou-Antoun's sworn testimony to the ATO on 31 May 2018 and 31 July 2018 that the AKA Parties would save 30% on tax (referred to above)
2. Again, it is said that the extent of Gino Cassaniti's knowledge of and involvement in the benefits from the implementation of the Scheme as it related to Bluemine for the AKA Parties is to be inferred from the matters addressed above concerning his complicity in the: relationship with the client; recommendation of the Scheme as it related to Bluemine; use of Bluemine as a corporate vehicle for the Scheme; and accounting work done for the client.

Wenman Parties (RCG CBD Proceeding)

1. The plaintiffs reiterate that the benefits explained to Elias Nassar (of the Wenman Parties) by Gino Cassaniti would be tax benefits.

Frank Criniti and Criniti companies (Diamondwish and Rackforce Proceeding)

1. As to Diamondwish and Rackforce, the plaintiffs point to Frank Criniti's evidence to the effect that payments in and out of Diamondwish and Rackforce were to obtain the cash generated by his businesses to him and others tax free (at T 536.4-24). As to direct cash benefits, the liquidator deposes that Frank Criniti (and his wife, Rima Criniti) received payments of $2,499,000 from Diamondwish (see his affidavit sworn 8 February 2017 at [56]).
2. The plaintiffs say that Frank Criniti's evidence about benefits and use of companies for dishonest purposes was not confined to Diamondwish and Rackforce in the Criniti companies, noting Frank Criniti's evidence (at T 520-521.02) to the effect that Gino Cassaniti said to him that the operations and set up of Auswide were to save money on the luxury car tax and stamp duty.
3. The plaintiffs says that the benefits to the Criniti Scheme Participants, like the benefits to the Primary Conspirators and associated entities, were funded by Frank Criniti's breach of fiduciary duty to Diamondwish and Rackforce in participating in the Scheme by allowing the payments in and out of Diamondwish and Rackforce (as set out at Tables 7 and 9).
4. The plaintiffs point to Frank Criniti's evidence that, in undertaking the actions that were in breach of his duties, he was doing what Gino Cassaniti advised him to do; his evidence being that Gino Cassaniti advised him what to do and then put in place the corporate entities necessary to do it. It is said that Banq put in place the companies and accounting systems to facilitate payments which Frank Criniti authorised on Gino Cassaniti's advice.

Earth Civil

1. As to the benefits allegedly flowing from the AKA Parties to Gino Cassaniti and associated entities from moneys flowing through Earth Civil, the plaintiffs say that these were obtained from the AKA Parties' transactions with Bluemine.
2. It is said that Gino Cassaniti's knowing participation in the benefits of the Scheme can be inferred from Andre Abou-Antoun's evidence to the effect that, before he entered into the impugned transactions, he understood that Banq would be paid a fee, together with the ASIC records proving Gino Cassaniti's directorships of companies which received money from the transactions, and the oral evidence by various witnesses of Gino Cassaniti's principal role at Banq. It is submitted that Gino Cassaniti was a principal of Banq and that it is inherently implausible that he was so disinterested in the business that he was unaware of the sources of the money that it received.

Bluemine

1. As to the alleged benefits flowing from AKA Parties to Gino Cassaniti and associated entities in relation to the Bluemine transactions, the plaintiffs contend that Gino Cassaniti knew and expected that benefits would flow from the AKA Parties to companies of which he was a director (such as the $61,860 that RCG CBD received while Gino Cassaniti was the sole director and shareholder - see Table 5.2; Table A) in light of: Andre Abou-Antoun's evidence to the effect that, before he entered into the transactions comprising the Scheme, he understood that Banq would be paid a fee; the evidence of Gino Cassaniti's participation in the recommendation and implementation of the Scheme relating to Bluemine for the AKA Parties, (see above); and the coincidence of similar payments of fees from other Scheme Participants. The plaintiffs refer, by way of example, to the evidence from the Wenman and Statewide Parties to the effect that Gino Cassaniti was the person at Banq who provided an effectively identical recommendation from which the Wenman Parties knew that Banq would be taking a fee.
2. Reference is again made to Ivana Cassaniti's evidence from her affidavit sworn 3 March 2020 at [9] that "Gino formed Banq Accountants and Advisors Pty Ltd with Fred and Peter". Again, it is submitted that it is inherently implausible that Gino Cassaniti was so disinterested in the business that he was unaware of the source of the money that it received.

RCG CBD

1. As to the benefits to Gino Cassaniti and associated entities of the impugned RCG CBD transactions, the plaintiffs point both to benefits directly linked to particular clients and indirect benefits.
2. As to the former, the plaintiffs note that (see Table 3.5) Borg Family and Borg Civil paid $618,000 to RCG CBD between September 2012 and May 2013 and, of that money, RCG CBD then paid $580,000 to Borg Civil. It is noted that, on the face of the transactions, RCG CBD retained $38,000 (when Gino Cassaniti was the sole director, secretary and shareholder). In these circumstances the plaintiffs say that it is to be properly inferred that Gino Cassaniti and Fred Khalil were working "hand in glove".
3. As to the latter, it is said that, in addition to fees for provision of the Scheme as applicable to particular clients, the Primary Conspirators and associated entities received large sums of money at various times. The plaintiffs say that, due to the amounts of money involved, it was not possible that Gino Cassaniti knew nothing of the transactions where the money passed through RCG CBD and Bluemine, of which companies he was either the sole director or, they contend, the de facto director.
4. Payments totalling $920,415 were made by RCG CBD to Banq in the period 10 September 2012 to 30 May 2013 (see Table 3.2). The plaintiffs say that no explanation has been provided by any of the Primary Conspirators as to the basis for those payments. The payments to Banq from RCG CBD and Bluemine total $1,514,060 in the 2013 financial year, in which time Banq had substantial clients including the Criniti companies, the Borg Parties, the AKA Parties, the Wenman Parties and the Statewide Parties. The plaintiffs say that at least a significant part of those payments from Bluemine and RCG CBD were not disclosed as income in Banq's 2013 profit and loss statement (considering $1,575,371 was disclosed) (Ex K at 34233).

Diamondwish and Rackforce

1. As to Diamondwish and Rackforce, the plaintiffs say that Gino Cassaniti's knowing involvement in Frank Criniti's breaches of fiduciary duty can be inferred from evidence of his direct and indirect benefits from those breaches (those indirect benefits including benefits to associated entities); referring to the following payments: first, the payment of $250,000 from Diamondwish to Elle Barikhan for no consideration at Gino's direction (see Table 7.4), said to be to the benefit of Gino Cassaniti by reference to the fact that he (the sole shareholder), together with George Khalil, was a director of RCG CBD, which paid the sum of $250,000 to Diamondwish three days before Diamondwish made the payment to Elle Barikhan; second, the payment on 28 December 2011 from Diamondwish to Banq of $110,000 (Diamondwish second further amended statement of claim at [123(b)]; Table 7.3); third, the payment by Rackforce of $88,000 to Banq on 26 July 2013 (Rackforce third further amended statement of claim at [77(d)]; Table 9.2).
2. It is said that, in light of Frank Criniti's evidence about the nature and extent of his relationship with Gino Cassaniti, it is to be properly inferred that Gino Cassaniti was directly involved in obtaining the benefit of the payments for Banq of which he was a principal.

Gino Cassaniti's involvement in the voluntary liquidations of the Insolvent Companies

1. The plaintiffs say that further evidence of Gino Cassaniti's centrality to the conspiracy should be inferred from the common way in which directors of Banq's clients were routinely changed and the way in which Banq's corporate clients were wound up, while Gino Cassaniti was a principal of Banq. I have referred above to the modus operandi said to have been employed in that regard. It is submitted that the modus operandi in respect of the winding up of each of the Insolvent Companies and the absence of information provided to the liquidator in each case is so similar as to be beyond innocent coincidence.
2. Reference is also made to the non-compliance by Insolvent Companies with BAS reporting obligations until just before the companies' winding up (see for example, Diamondwish and Rackforce), during the period that Banq had been the accountant and tax agent for the companies (see liquidator's affidavit sworn 8 February 2017 (filed in the Diamondwish Proceeding) at [71]); and that, in response to requests for documents from the Insolvent Companies, very little documentation was produced (see as already noted above and see the liquidator's affidavit sworn 8 February 2017 (filed in the Diamondwish Proceeding) at [38]-[47] and [80]).
3. Gino Cassaniti's administrative control is said to be evident from the fact that he was the person who signed the relevant Form 484s shortly before the Insolvent Companies went into liquidation and that he was the director who placed the companies into liquidation.
4. As to the proofs of debt lodged in the liquidation of each of the Insolvent Companies, it is said that all of the putative debts are for alleged unpaid invoices or outstanding loans; and that, in a number of the proofs of debt (in Earth Civil, four of those five proofs of debt), Gino Cassaniti is either the claimant or a director of each of the claimants (see for Earth Civil Table D.2 of the plaintiffs' closing submissions). As already noted, the liquidator rejected all of these proofs of debt for lack of documentation. The plaintiffs contend that the proofs of debt highlights the use of false claims based on non-existent invoices to support or justify spurious transactions due to the fact that all of the rejected proofs of debt: are for rounded amounts; relate to undocumented debts; and are not supported by any documentation.
5. The plaintiffs point, in particular, to the fact that Banq's own claims for unpaid fees for Earth Civil (of $65,000) were rejected for lack of documentation, arguing that it is not credible for an accounting firm not to have records of the amounts invoiced for unpaid fees. It is said that if there was a proper basis for making the claim, it is inconceivable that Banq would have lost those records between the time of making the claim and when called upon by the liquidator to verify the claim (and hence, that it can confidently be inferred that there were never any records because no services were provided). Thus, it is submitted that the lodgement of the claim was a dishonest misrepresentation.

Earth Civil

1. As to Earth Civil, the liquidator's evidence (see the liquidator's affidavit affirmed 8 February 2017 (filed in the Earth Civil Proceeding)) is to the effect that: (at [36]-[38]) in response to his request of Gino Cassaniti on 4 July 2013 for financial records he was provided with BAS for the periods 1 July 2011 to 31 March 2013 together with a Payroll Activity Summary for financial year ending 30 June 2013 and Employee PAYG summaries for the same period; (at [38]) on 8 August 2013, he sought confirmation from Gino Cassaniti and Banq that there were no other Earth Civil books and records in their possession, and he did not receive any response; (at [52]-[53]) that the majority of Earth Civil's BAS were lodged approximately one month prior to his appointment (8 June 2013 which was also about the time that the Form 484 recording Gino Cassaniti as the sole shareholder and director was lodged); (at [60]-[63]) that Earth Civil failed to keep financial records that correctly recorded and explained the company's transactions, financial position and performance which would have enabled true and fair financial statements to have been prepared and audited. The liquidator's evidence was that Earth Civil did not keep all of the financial records that he would have expected for a company with sales disclosed in its BAS of $1,211,212 or sales as disclosed in its bank statements of $1,598,215. (It is noted that Gino Cassaniti's Counsel did not challenge the liquidator in respect of this evidence.)
2. The plaintiffs say that it is to be concluded from this evidence of the liquidator: first, that Gino Cassaniti was aware of the request for information because he did provide, or caused to be provided, the BAS in lieu of primary and supporting financial records, and, second, that Gino Cassaniti orchestrated the timing of the change of directorship and the filing of Earth Civil's BAS one month prior to instigating the creditor's voluntary winding up.

Bluemine

1. As to Gino Cassaniti's involvement in the winding up of Bluemine, the plaintiffs submit that, irrespective of Andrew Barsa's earlier evidence to the effect that he conversed with Peter Abboud or Fred Khalil regarding Bluemine, Andrew Barsa evidence to the effect that, when he wanted to cease his directorship, he needed to ask Gino Cassaniti. The plaintiffs say that from this it can be inferred that, irrespective of day to day operational control, Gino Cassaniti maintained overall control of Bluemine as the decision-maker who determined Bluemine's director.
2. It is noted that on 26 August 2013, Gino Cassaniti signed the minutes of members meeting appointing a liquidator and that, for the duration of Bluemine's corporate life, Banq was its registered office and tax agent.
3. Again, as to the proofs of debt lodged in the liquidation of Bluemine (see Table D.2) it is noted that all of the claimed debts are for alleged unpaid invoices or outstanding loans; and that, in two of the three proofs of debt, Gino Cassaniti is either the claimant or the principal of each of the claimants (Banq). All of these proofs of debt were rejected by the liquidator for lack of documentation (see liquidator's affidavit sworn 7 June 2018 at [23]). Again, the plaintiffs point to the features referred to in relation to the Earth Civil claims which are mirrored in relation to Bluemine (surprisingly rounded amounts, undocumented debts, and lack of documentation) as well as the fact that Banq's own claim of $20,000 for unpaid fees was rejected for lack of documentation (again, the lodgement of such a claim is said to have been a dishonest misrepresentation).
4. The minutes of the meeting of creditors of Bluemine of 12 September 2013 (Ex K at 11571-11573) note that Gino Cassaniti and Banq had appointed Fred Khalil their proxy and that he attended the meeting by telephone; and that, after some discussion about whether or not the books and records of the company had been received, the liquidator said that Fred Khalil was in the process of collating the records of the company and they would be delivered in due course. The plaintiffs submit, again, that Fred Khalil's undertaking to collate records must have been in his capacity as a principal at Banq, because he was not an officer or shareholder of Bluemine and would not otherwise have known whether any books or records existed. The minutes also record a query as to whether there had been "phoenixing activity", of which Fred Khalil disavowed any knowledge.
5. Again, it is noted that Fred Khalil asserts in his affidavit sworn 25 March 2019 that Gino asked him to meet the liquidator and assist in completing the liquidation forms and that Gino Cassaniti denied this yet he did not require Fred for cross-examination (see Gino Cassaniti's affidavit sworn 28 June 2019 at [20], read as an assertion). It is said that, as there had been "some discussion" about the status of the books and records of the company in the meeting at which the ATO was present, it is clear that Fred Khalil knew more about the affairs of Bluemine than a mere proxy holder for the proofs of debt (otherwise he would not have provided such an undertaking) and that Fred Khalil either shirked his undertaking (and did nothing at all) or he must have spoken with Gino Cassaniti (who, being a director of Bluemine and principal of Banq at the same time would be the person reasonably anticipated to know where Banq were keeping such records, or who at Banq was in charge of such records). It is submitted that Gino Cassaniti knew what Fred Khalil was doing; and, to that extent at the very least, Gino Cassaniti was further implicated in controlling and using Bluemine's liquidation for his own ends.
6. The plaintiffs that further evidence of Gino Cassaniti's "connivance" in Bluemine's liquidation is to be found in the liquidator's affidavit sworn 7 June 2018. The liquidator's evidence is to the effect that: (at [25]) it was apparent from the ATO running balance account re GST that Bluemine lodged its BAS on 5 July 2012 and 30 July 2013; (at [28]) the liquidator sent letters to Gino Cassaniti, Andrew Barsa and Banq requesting they deliver books and records, in response to which Alison Hanna of Banq on 30 October 2013 said "[w]e don't actually know who would have books and records" (Ex K at 11617); (at [29]) in response to his requests the only documents received from Bluemine and/or Banq were copies of BAS for the 2013 financial year and a Form 509 Summary of Affairs of a Company completed by Gino Cassaniti dated 1 August 2013 (Ex K at 11642); and (at [31] and [32]), in his experience the books and records with which he was provided were "deficient and unreliable". (It is noted that Gino Cassaniti's Counsel did not challenge the liquidator in respect of this evidence.)
7. The plaintiffs say that, from this evidence, it is to be concluded that Gino Cassaniti was aware of the request for information (because he did provide, or cause to be provided, the Summary of the Company's Affairs in lieu of primary and supporting financial records) and that he orchestrated the timing of the change of directorship and the filing of Bluemine's BAS shortly prior to instigating the creditor's voluntary winding up. It is also submitted that Fred Khalil must have reported back to Banq and Gino Cassaniti about the ATO's concerns that this liquidation indicated "phoenixing" activity. The plaintiffs point to the disconformity between the statement made at the creditors' meeting (in Fred Khalil's presence) that Fred Khalil was collating the records of the company and that they would be delivered in due course and the statement made by Banq (through Alison Hanna) on 30 October 2013 to the effect that Banq did not "actually know who would have the books and records".

RCG CBD

1. The plaintiffs say that RCG CBD's creditors' voluntary liquidation exhibited the common features of the other Insolvent Companies' liquidation (i.e., Banq was the registered office for RCG CBD; Banq was the accountant and tax agent for RCG CBD; Banq took care of corporate administrative tasks such as lodging Form 484s; and Banq or an associated entity lodged a proof of debt). It is noted that Gino Cassaniti was the director who placed RCG CBD into liquidation. The plaintiffs say that Gino Cassaniti's signature as a director on the resolution appointing Mitchell Ball as the liquidator of RCG CBD constitutes an admission by Gino Cassaniti that he was a director of RCG CBD (Ex K at 55825). The plaintiffs say that this, coupled with the filing of the Form 484, either by Gino Cassaniti or with his consent or knowledge (see his affidavit sworn 11 April 2019 at [13]) constitutes an admission that he was a director of RCG CBD from 16 May 2012; and that this evidence supports the ASIC records' prima facie position.
2. As to the proofs of debt lodged in the liquidation of RCG CBD (see Table D.1 of the plaintiffs' submissions), it is noted that (again) all of the putative debts are for unpaid invoices or outstanding loans; that Gino Cassaniti is recorded as either the claimant or a director or principal of each of the claimants; that each was rejected by the liquidator for lack of documentation and that they exhibit the same features as those in the other liquidations (rounded amounts, undocumented debts and no invoices).
3. Reference is made to the minutes of the meeting of creditors of RCG CBD of 9 July 2013 in which it is noted that Gino Cassaniti and Banq had appointed Fred Khalil their proxy and that he attended the meeting by telephone (Ex K at 72987). Again, the minutes detail that there was some discussion about the commencement and cessation of the trading dates; and that, in response to discussion about the status of the books and records of the company, Fred Khalil said that he would deliver all of the books and records of the company in his possession to the liquidator in short order. The plaintiffs emphasise that Fred Khalil was acting at the meeting on Gino Cassaniti's proxy.
4. The plaintiffs say that further evidence of Gino Cassaniti's "connivance" in RCG CBD's liquidation is to be found in the liquidator's affidavit sworn 7 June 2018. The liquidator deposed to the effect that: (at [9]) RCG CBD lodged its BAS on 29 May 2013; (at [11]-[13]) in response to his request of Gino Cassaniti on 4 July 2013 and Banq on 8 August 2013 for financial records, the liquidator was provided with MYOB reports, employee PAYG summaries for financial year ending 30 June 2013 and a Form 507 Report as to affairs of RCG CBD signed by Gino Cassaniti on 27 June 2013 (Ex K at 73183); (at [14]-[15]) RCG CBD failed to keep financial records that correctly recorded and explained the company's transactions, financial position and performance which would have enabled true and fair financial statements to have been prepared and audited; and that RCG CBD did not keep all of the financial records that he would have expected for a company with sales disclosed in it BAS of $3,922,660 or credits as disclosed in its bank statements of $8,511,593. (Again, it is noted that Gino Cassaniti's Counsel did not challenge the liquidator in respect of this evidence.)
5. It is said that, from the above evidence, it is to be concluded that Gino Cassaniti was aware of the request for information and orchestrated the timing of the change of directorship and the filing of RCG CBD's BAS shortly prior to instigating the creditor's voluntary winding up.
6. It is said that the absence of information provided to RCG CBD's liquidator did not occur by chance and that the similarity of the circumstances in the liquidations of Earth Civil, RCG CBD, Bluemine and Involved Recruitment in relation to the absence of documents, when Gino Cassaniti was the director who instigated the liquidation, makes it clear that these otherwise unrelated and separate events were not an innocent coincidence.

Diamondwish and Rackforce

1. As to Diamondwish and Rackforce, the plaintiffs say that the only distinguishing feature of the liquidations of Diamondwish and Rackforce from those of the other Insolvent Companies is that Gino Cassaniti instigated those liquidations even though he was not a director of those companies (the plaintiffs submitting that this is a real measure of his influence). Reference is made to Frank Criniti's evidence (at T 535.5-17) to the effect that he left the winding up and liquidation of Diamondwish and Rackforce to Banq. The plaintiffs submit that, from the nature and extent of Frank Criniti's relationship with Gino Cassaniti, as a principal of Banq, it is unimaginable that Gino Cassaniti was not directly involved in the creditors' winding up of each of Diamondwish and Rackforce. It is submitted that it is clear that Gino Cassaniti was involved in the liquidation of Diamondwish and Rackforce due to the factors in relation to the creditors' voluntary winding up of each (and the coincidence of the modus operandi with the creditors' voluntary winding up of the other Insolvent Companies).

Gino Cassaniti's culpability

1. The plaintiffs say that Gino Cassaniti's assertions (in his affidavit sworn 11 April 2019 in relation to each of Earth Civil, Bluemine and RCG CBD) denying that: he consented to be a director; he in any way managed the company's affairs; he resolved to place the company in liquidation; he was not owed any money by the company; he signed a proof of debt or appointed Fred Khalil his proxy for creditors' meetings; he prepared a report as to the affairs of the company, are untruthful. Emphasis is placed in this regard on the email chain of 28 June 2013 (see above at [408]) as to Gino Cassaniti's signature for the documents to commence the winding up of Earth Civil.
2. The plaintiffs submit that it can confidently be inferred that Gino Cassaniti conspired with the other Primary Conspirators to recommend the Scheme to the Scheme Participants as it related to each of Earth Civil, Bluemine and RCG CBD, with the intention that the relevant company ultimately be wound up without the ability to meet its liabilities. It is submitted that, the happening of these otherwise unrelated events was not an innocent coincidence having regard to the above matters and the unchallenged evidence about the impugned transactions (as to their volume by number and amount; time frame; and lack of genuine supporting documentation).
3. As to Diamondwish and Rackforce, the plaintiffs say that primary responsibility for the payments in breach of fiduciary duty in relation to these two Insolvent Companies rests with Frank Criniti (noting that he confirmed that he had "visual" over those companies' accounts, and that Vanessa Scuteri (in payroll) and Tarun Shah (in accounts) logged into internet banking using Frank Criniti's login details, which he provided to them - see at T 509.10-26). The plaintiffs point to Frank Criniti's acceptance (at T 509.31-38) that he had ultimate control over who could log into the bank accounts of those companies; and his acceptance that Diamondwish and Rackforce provided nothing in return for money received and received nothing for money paid; and that this was not honest conduct (T 536.10-48).
4. The plaintiffs say that Gino Cassaniti's accessorial liability for assisting Frank Criniti in those breaches of fiduciary duty arises from his assistance and knowledge that Frank Criniti's actions were dishonest and wrong. As to Gino's knowledge of that dishonesty, reference is made to the matters referred to above in relation to: his involvement in recommending and implementing the Scheme; his direct involvement in payments in and out of the companies; the benefits obtained by the Criniti companies; Gino Cassaniti's direct and indirect receipt of benefits from the Scheme; and Gino Cassaniti's involvement in winding up the companies.
5. It is noted that the evidence from Frank Criniti is that he effected or authorised the impugned transactions on Gino Cassaniti's advice. The plaintiffs say that that evidence was not diminished in any way in cross-examination by Gino Cassaniti's Counsel, pointing to Frank Criniti's evidence that he had acted on Gino Cassaniti's advice (see at T 556.31-36; T 562.18-33; T 564.25-42). It is submitted that if, as he admitted (at T 536.10-48), Frank Criniti knew that the impugned payments were dishonest, then it is inconceivable that Gino Cassaniti, on whose advice Frank Criniti relied, did not also know those actions were dishonest. (Pausing there, I have some difficulty with this aspect of the reasoning - it does not seem to me that a belief by Frank Criniti as to the dishonesty of particular transactions necessarily leads to a conclusion that Gino Cassaniti, even assuming for present purposes in favour of the plaintiffs that he recommended and assisted in the implementation of them, knew or understood the transactions to be dishonest. More relevant, in this regard, seems to me to be that an accountant in the position of Gino Cassaniti must have been aware that the impugned transactions would likely result in tax liabilities that the companies would be unable to meet and, hence, should have appreciated the dishonesty of the Scheme.)
6. The plaintiffs contend that, in the absence of any evidence in support of the bare denials by Gino Cassaniti in his defence, there should be a finding that Gino Cassaniti knew that the alleged breaches of fiduciary duty were dishonest. (The plaintiffs also say that Frank Criniti's conduct was in furtherance of the alleged conspiracy.)

Summary of plaintiffs' submissions re Gino Cassaniti

1. The plaintiffs emphasise the inherent unlikelihood of an innocent explanation for the similarity of the evidence regarding Gino Cassaniti's involvement with the Insolvent Companies and the Scheme Participants considered as a whole.
2. As noted above, the plaintiffs contend that an important feature of the Scheme was that the Insolvent Companies only existed or traded for a short period of time; and they point also to the fact that a common feature was that new directors were appointed just prior to liquidation (and that, in relation to Earth Civil, Bluemine and RCG CBD, the Form 484s recording the changes in directorship were backdated). It is noted that Gino Cassaniti was recorded as a director of Earth Civil, Bluemine and RCG CBD pursuant to those Form 484s. Further, it is said that Gino Cassaniti's signature as a director on the resolutions appointing Mitchell Ball as the liquidator of Earth Civil, Bluemine and RCG CBD constitutes admissions by Gino Cassaniti that he was a director of those companies.
3. The plaintiffs say that, on Gino Cassaniti's own evidence, Gino Cassaniti's role at Banq was to provide advice to clients about their corporate structure. It is said that it is apparent from the evidence of Frank Criniti, Elias Nassar, Mario Sande, Andre Abou-Antoun and Tanya Borg, that their relationship with Banq invariably involved advice on restructuring their companies (in addition to issuing false invoices) and that, almost without exception, Gino Cassaniti's involvement with most Scheme Participants commenced with the liquidation of an insolvent company.
4. Aris Zafiriou's affidavit sworn 9 March 2017 at [11] annexes a table of 123 companies which were associated with Banq that were placed into a creditors' voluntary liquidation (see Ex K at 31414-31416). Those where Gino Cassaniti's relationship with clients through Banq commenced with a company being wound up are identified as: within the Criniti companies, Zagoonda (formerly Criniti's Pty Ltd) - liquidated on 1 May 2010; within the AKA Group, Tip and Fill Pty Ltd (Tip and Fill) - liquidated on 28 September 2010, ACN 121913488 Pty Ltd (formerly AKA Civil Contracting Pty Ltd) - liquidated on 29 September 2010 and Jian Holdings - liquidated on 26 October 2012 (the assets of Jian Holdings being transferred to Bluemine); within the Borg Group, Excavation - liquidated on 27 February 2013 (its assets being transferred to Borg Family); and in relation to the Wenman Parties, Blackrock Media Worx Pty Ltd (Blackrock Media Worx) - liquidated on 26 September 2011. It is noted that each of those companies at the time of winding up had its registered office at Banq.
5. The common features of the creditor's voluntary liquidations for companies other than the Insolvent Companies are identified as being that: Banq were the companies' accountant and tax agent; Banq took and lodged Form 484s appointing "jump on" directors; directors were appointed shortly before the creditors' voluntary winding up were often directors of otherwise unrelated companies whose only common link was Banq. The "jump on" directors are identified at Annexure B to Aris Zafiriou's affidavit sworn 21 March 2017.
6. The plaintiffs say that this modus operandi is entirely consistent and corroborative of Frank Criniti's evidence to the effect that Gino Cassaniti advised him that the way to extinguish liabilities and protect assets was to appoint a new director for a fee of $5,000 and then wind the company up. It is said that the similarity of this modus operandi and the way that Gino Cassaniti liquidated the Insolvent Companies is too striking to be innocent and enables the inference more readily to be drawn that Gino Cassaniti used liquidation as a tool in providing corporate structuring advice for his own ends and in recommending and implementing the Scheme.
7. As to the proofs of debt of the Insolvent Companies (Tables D.1 and D.5), the plaintiffs say that in each case the common factors are that: all of the putative debts are for unpaid invoices or outstanding loans; in the preponderance of those proofs of debt Gino Cassaniti is recorded as either the claimant or a director of each of the claimants; and all of the proofs of debt were rejected by the liquidator for lack of documentation; all of the claims are for "surprisingly" rounded amounts (and it is submitted that it is therefore improbable in the extreme that they were genuine); and all relate to undocumented debts. It is said that the non-existence of the putative invoices is readily inferred from the inherent unlikelihood of separate legal personalities all being unable to provide any documentation at all in support of bona fide claims. Further, it is said that the non-existence or falsity of the invoices is underlined by the fact that Banq's own claims for unpaid fees were also rejected for lack of documentation.
8. The plaintiffs submit that, for an accounting firm (of which Gino Cassaniti was a principal and in which his wife, Ivana Cassaniti, had a 60% interest through Givana) not to have records of the amounts invoiced for unpaid fees is not credible. It is said that if there was a proper basis for making the claim in the first place, it is inconceivable that Banq would have lost those records between the time of making the claim and when called upon by the liquidator to verify the claim. That being so, it is submitted that it can confidently be inferred that there never were any records or that unpaid accounting fees were unsupported by genuine documentation; and that the lodgement of the claim was a dishonest misrepresentation. It is said that this provides further evidence from which to infer the falsity of all invoices for the impugned transactions as alleged by the Insolvent Companies.
9. The plaintiffs emphasise that in the minutes of each of the meetings of creditors for the Insolvent Companies it was noted that Gino Cassaniti and Banq had appointed Fred Khalil their proxy and that Fred Khalil attended the meeting by telephone; and the minutes further recorded that after some discussion about the status of the books and records of the company, Fred Khalil undertook to deliver books and records of the company in his possession to the liquidator's office in short order.
10. The plaintiffs say that: first, Fred Khalil's undertaking to deliver books and records in "his" possession must have been in his capacity as a principal at Banq, because he was not an officer or shareholder of Earth Civil, Bluemine or RCG CBD and would not otherwise have known whether any books or records existed; second, insofar as Fred Khalil asserts in his affidavit sworn 25 March 2019 that Gino Cassaniti asked him to meet the liquidator and assist in completing the liquidation forms and Gino Cassaniti denied this in his affidavit sworn 28 June 2019 at [20], it is relevant that Gino did not require Fred Khalil for cross-examination; third, as there had at each creditors' meeting been "some discussion" about the status of the books and records of the company in the meeting at which a representative of the ATO was present, it is clear that Fred Khalil knew more about the affairs of Earth Civil, Bluemine and RCG CBD than a mere proxy holder for the proofs of debt, otherwise he would not have provided such an undertaking. Fourth, it is said that Fred Khalil either shirked his undertaking and did nothing at all, or he must have spoken with Gino Cassaniti (who, being a director of Earth Civil, Bluemine and RCG CBD and a principal of Banq at the same time, would be the person reasonably anticipated to know where Banq were keeping such records, or who at Banq was in charge of such records). It is submitted that it is clear that Gino Cassaniti knew what Fred Khalil was doing; and to that extent (at the very least) Gino Cassaniti was further implicated in controlling and using Earth Civil's, Bluemine's and RCG CBD's liquidations for his own ends.
11. The plaintiffs also say that further evidence of Gino Cassaniti's "connivance" in these liquidations is to be found in the liquidator's evidence as to the deficiency of the books and records provided in each of the Insolvent Companies' creditors' voluntary liquidations. It is noted that Gino Cassaniti's Counsel did not challenge the liquidator in respect of his evidence of the failure to provide books and records in relation to Earth Civil, RCG CBD and Bluemine. It is said that the absence of information provided to Earth Civil's liquidator is beyond innocent coincidence; and that the similarity of the circumstances in the liquidations of Earth Civil, Bluemine and RCG CBD in relation to the absence of documents, when Gino Cassaniti was the director who instigated the liquidation, makes it clear that these otherwise unrelated and separate events were not innocent coincidences.
12. The plaintiffs also in this context emphasise the 28 June 2013 email chain (see above) in relation to the signing of the appointment documents for the Earth Civil liquidation.
13. Again, it is said that the similarity in the modus operandi and involvement of Gino Cassaniti and entities associated with him in the absence of books and records for the plaintiff companies is too striking to be an innocent coincidence, and that it should be inferred that Gino Cassaniti had direct involvement in the liquidations of the Insolvent Companies.
14. The plaintiffs say that Gino Cassaniti's assertions in his affidavit sworn 11 April 2019, in relation to his directorship or management of Earth Civil, RCG CBD and Bluemine are untruthful. Further, it is said that Gino Cassaniti, through his Counsel, was prepared to assert to witnesses that they were giving false testimony or lying, when he himself did not come before the Court and give positive evidence and be cross-examined about those matters.

Gino Cassaniti's knowledge of the tax benefits

1. The plaintiffs say that Gino Cassaniti's knowledge and intention of the tax benefits to be gained by participating in the Scheme is evident from the following four aspects of his orchestration of the Scheme.
2. First, the documentary and oral evidence as to Gino Cassaniti recommending the Scheme to Scheme Participants.
3. Although the affidavits of Gino Cassaniti in these Proceedings are subject to a s 136 order that they be read as assertion, the plaintiffs submit that those assertions are instructive when compared to the evidence of other Primary Conspirators and Scheme Participants on the same subject. It is noted that the tenor of Gino Cassaniti's affidavit sworn 11 April 2019 was that he simply introduced clients to Banq (at [4]; [40]); and had nothing to do with the Scheme as set out in Aris Zafiriou's affidavit sworn 9 March 2017; that he only knew a handful of defendants in the five Proceedings; that he had no connection or relationship with the majority of the defendants; and that he did not know and had not made contact with or engaged in any form with a large majority of the defendants ([39]).
4. The plaintiffs point out that in Gino Cassaniti's affidavit sworn 28 June 2019 he deposes to the effect that, with the forerunner to Banq (Banq Accountants), he introduced clients and "intervened" in matters when specialist advice was required as to business structures and tax ([7(b)(iii)]); that, if specialist advice as to structure and tax matters were required, he would obtain advice from barristers and solicitors ([7(c)]); and that he never engaged in work or undertook any transactional work at Banq, nor did he ever administer any transactions (see at [7(d)]). It is noted that, as far as Banq was concerned, Gino Cassaniti deposed that he "simply referred and introduced clients to Banq Accounting" and that he "did give them advice on tax and business structure related matters, but … did not engage in or advise anyone to undertake the transactions relevant to the current proceedings" (at [16(a)]). The plaintiffs say that this asserted limited involvement should not be accepted.
5. It is noted that the only Scheme Participants relevant to these Proceedings that Gino Cassaniti acknowledged even knowing were Statewide Printing (whom he admitted introducing to Banq - see at [30(a)]) and Frank Criniti (with whom he acknowledged having had a relationship - see at [33(b)]); and, other than that, Gino Cassaniti relied on his general disavowal of knowing defendants and disavowal of having assisted anyone to take part in the Scheme (see his affidavit sworn 11 April 2019 at [36]).
6. The plaintiffs point to the evidence from Scheme Participants to the effect that Gino Cassaniti, Fred Khalil or Peter Abboud, gave them advice that the impugned transactions would minimise tax. It is noted that Gino Cassaniti was aware of this proposed evidence but did not deal with it substantively in his own affidavit evidence. (For example, it is noted that Gino Cassaniti had the affidavit evidence of Andre Abou-Antoun and the ATO transcript of Andre Abou-Antoun (Ex O), yet he did not deal with that in his affidavit evidence and chose not to go into oral evidence.)
7. The plaintiffs say that insofar as the Scheme Participants who gave evidence (except for Frank Criniti) claimed that they did not, at the time, realise that the advice and recommendation was illegal, this is not to the point. The plaintiffs maintain that the advice was not lawful. The plaintiffs say that the tax minimisation advice that Gino Cassaniti gave was part of the Scheme Recommendation. It is noted that Gino Cassaniti did not address that evidence at all; that he asserted that he had no relationship of any substance with clients of Banq but did not seek to give any evidence at all of what work he did at Banq and for whom he undertook such work.
8. It is submitted that, if Gino Cassaniti had not been a principal of Banq (as it is said his evidence sought to imply), ordinarily it would be a simple matter for him to adduce evidence from even the non-professional staff at Banq to this effect; and that not only did he not do this but that he gave no explanation of why he did not. It is noted that the only evidence in support of his asserted role at Banq was in the form of anecdotal evidence that Gino Cassaniti's lack of knowledge of the staff employed at Banq was an office joke (see Gino Cassaniti's affidavit sworn 28 June 2019 at [25(a)]). The plaintiffs say that against allegations of such a serious nature and in the absence of explanation, more than unsubstantiated assertions of denial would be expected. It is submitted that it is clear that any explanation that Gino Cassaniti could have given would not have assisted his defence.
9. Second, as noted above, that a fundamental feature of the Scheme was that the Insolvent Companies existed or traded only for a short period of time. It is noted that in each case Gino Cassaniti was involved in instigating the Insolvent Companies' creditors' voluntary liquidations and the proofs of debt filed with the liquidator. It is said that, without probative evidence explaining the similar short life span of each of the Insolvent Companies and Gino Cassaniti implementing each creditors' voluntary winding up where the only legitimate creditor was the ATO, it can readily be inferred that Gino Cassaniti was knowingly involved in the tax benefits gained by winding up the Insolvent Companies. It is said that the necessity of the Insolvent Companies "short lived" existence arose from the fact that they paid out all the money that they received without retaining funds to satisfy their BAS, PAYG withholding and income tax liabilities which accrued from the money that they had received and then paid away.
10. Third, that in each case Gino Cassaniti was linked to the payments in and out of the Insolvent Companies. The plaintiffs note that the fact of the payments is not contested and that, before the commencement of the hearing, Gino Cassaniti was on notice of the evidence that would be, and was expected to be, led against him from various Scheme Participants such as Frank Criniti, Andre Abou-Antoun and George Said. It is said that, in those circumstances, it was incumbent on Gino Cassaniti to do more than respond with bare assertions to the effect that he was not involved in the Scheme and that he fell out with Frank Criniti in mid 2014 (see Gino Cassaniti's affidavit sworn 11 April 2019 at [33]; [38]-[40]).
11. Similarly, the plaintiffs point to the evidence from Peter Abboud to the effect that, if he was involved in making the impugned payments in the RCG CBD, Bluemine and Rackforce matters, those payments were made at the direction of Gino Cassaniti, Fred Khalil or Ivana Cassaniti (see Peter Abboud's affidavit sworn 22 March 2019 at [55], [65], [78]). The plaintiffs say that it was incumbent on Gino Cassaniti to do more than simply to assert (as he did in his affidavit sworn 28 June 2019, at [24]) that he did not direct Peter Abboud to complete any work and to deny ever directing Peter Abboud to complete any bank transfers; and at [30(d)], that he did not direct any transactions to be made. It is noted that, in relation to Peter Abboud's allegations at [65] and [78] of his affidavit, Gino Cassaniti said nothing at all.
12. Fourth, that Banq was the tax agent for each of the Insolvent Companies. The plaintiffs point to the evidence from Aris Zafiriou and George Khouri of the ATO regarding: Banq's tax agency for the Insolvent Companies (and Scheme Participants); Banq having lodged the relevant BAS; the dates on which those BAS were lodged; and the tax debts of the Insolvent Companies (which evidence was not contested). The plaintiffs say that in response to that evidence it was incumbent on Gino Cassaniti to do more than to assert that he did not approve tax returns while he was at Banq (see Gino Cassaniti's affidavit sworn 28 June 2019 at [14(a)]); to assert that he did not sign documents evidencing his role in the Insolvent Companies' creditor's voluntary winding ups (unsubstantiated by his own expert) (see Gino Cassaniti's affidavit sworn 11 April 2019 at [15]-[23]); and to provide anecdotal evidence as to his de minimis role at Banq (see Gino Cassaniti's affidavit sworn 28 June 2019 at [25(a)]).
13. The plaintiffs contend that, in the face of uncontested documentary evidence as to the impugned transactions, the BAS and tax returns, and Gino Cassaniti's role in instigating the creditors' voluntary liquidations, together with oral evidence from Scheme Participants of his role in the Scheme, the evidentiary onus shifted to Gino Cassaniti to explain why that evidence against him (of those roles) was incorrect, and that he has failed to satisfy it.

The inferences to be drawn from the nature of Gino Cassaniti's defence

1. The plaintiffs note that Gino Cassaniti's defence comprised denials of fact and the legal consequences (and that his defence during the hearing was conducted on the basis of complete absence of involvement). It is submitted that the denials of fact should be disregarded for the following reasons.
2. The plaintiffs point to the nature and extent of Gino Cassaniti's defences to the allegations made by each of the Insolvent Companies but, in particular, to his defences in the Earth Civil, Bluemine and RCG CBD Proceedings. It is said that those defences essentially comprise denials addressed to his: investment in Banq; role at Banq; relationship with clients; and recommendation of and involvement in the Scheme. The plaintiffs say that what evidence Gino Cassaniti did provide comprised self-serving unreliable assertions that were unable to be tested in cross-examination.
3. In addition to Gino Cassaniti's relationship with the Primary Conspirators, relationship with and recommendations to the Scheme Participants, and role in implementing the Scheme, it is submitted that the final element manifesting his knowledge and intent was his central role in winding up the Insolvent Companies.
4. The plaintiffs point to the evidence that, at the time of the liquidations of Earth Civil, RCG CBD and Bluemine, Gino Cassaniti was a director of those companies. It is said that, in relation to each of those insolvencies, key documents instigating the liquidations regarding Earth Civil, RCG CBD and Bluemine bore Gino Cassaniti's signature. The liquidator's unchallenged evidence was to the effect that Gino Cassaniti, as director, did not respond to correspondence requiring provision of books and records and, when the liquidator asked for records of the Insolvent Companies, limited or no information was provided. The liquidator's evidence regarding the absence of documentary evidence relating to the transfer of money as alleged for the Insolvent Companies was that Gino Cassaniti failed to provide: annual financial statements; bank statements from incorporation until the date of appointment (which, as noted, was a relatively short period); documents of prime entry; copies of employment agreements of any nature; superannuation statements for employees; GST reconciliations; monthly management accounts; invoices or receipts; any working papers.
5. The plaintiffs note that the only explanation from Gino Cassaniti regarding the absence of documents and records to verify the nature of those transactions (or transfers of money) is an assertion that he was not a director of the Insolvent Companies and that documents evidencing the contrary were forgeries (i.e., the resolutions in support of the creditors' voluntary liquidations, proofs of debt, proxies for the proofs of debt and reports as to the affairs of the relevant companies - see Gino Cassaniti's affidavit sworn 11 April 2019 at [15]-[28]). The plaintiffs say that it is to be inferred that the absence of documents was a very deliberately contrived element of the implementation of the Scheme.
6. The plaintiffs submit that Gino Cassaniti engaged an expert in the hope that at least an arguable position that the signatures were forgeries would arise. It is said that, when that did not eventuate following the joint expert report (Ex T), Gino Cassaniti abandoned any reliance upon his expert witness and he objected to the evidence of his own expert as incorporated in the joint expert report (see at T 1097-1098; Ex T). Thus, the plaintiffs say that there is no evidence in support of Gino Cassaniti's bare denial of signing the documents. (At T 1097, the submission put by Counsel for Gino Cassaniti seemed to me to be that if Gino Cassaniti's affidavit was withdrawn then the original report (which was referred to in the joint expert report) would not be in evidence and so this may undermine the basis of the joint expert report.)
7. The plaintiffs say that, other than denying his directorship and association with the Insolvent Companies, no explanation has been offered by Gino Cassaniti for the absence of genuine books and records relating to the imputed transactions provided to the liquidator for each of the Insolvent Companies; and no explanation has been provided in respect of the purported invoices (that are said to be false). It is said that, other than evidence from some Scheme Participants that there was no service provided as set out on the invoice, falsity would also be inferred from the content and format of the invoices from RCG CBD to Banq where the invoice numbers and the invoice dates are inversions of the same numbers (Ex K at 100290-100343).
8. The plaintiffs say that Gino Cassaniti's defence case did not deal with any of these issues (other than to assert that he was not a principal of Banq, was not a director of the Insolvent Companies, and did not engage in any scheme to defraud the Commonwealth). They say that, insofar as Gino Cassaniti's defence on the facts is primarily directed at the issue of his directorships (and shareholdings) of the Insolvent Companies, then if that denial falls away there is no contest in the defence as to the remaining factual issues dealing with the facts of Gino Cassaniti's involvement in the recommendation and implementation of the Scheme (in circumstances where these matters were peculiarly within his knowledge). It is submitted that, in those circumstances, Gino Cassaniti's generalised assertions (without basis or corroborative evidence) can be given no weight; and that in the absence of explanation for those matters, merely slight evidence of those matters is sufficient to prove them (but the liquidator says the evidence against him is far higher than that).

Gino Cassaniti's submissions

1. By way of introduction, Gino Cassaniti, in his closing submissions (which were filed last of the defendants' submissions - and late) adopted much of the submissions made by the various other parties (including as to overarching nature of the alleged conspiracy; the perceived logical difficulties and confusion that are said to arise from the plaintiffs' case theory; and the complaint as to circularity of the plaintiffs' case). I address those general complaints and submissions elsewhere. In this section I summarise the particular submissions referable to the equitable/statutory duty claims against Gino Cassaniti.
2. In summary, it is contended by Gino Cassaniti that if the existence of the alleged overarching conspiracy is not established, then the plaintiffs have not proved the necessary elements of liability for breach of fiduciary duty, knowing assistance and/or breaches of the Corporations Act against Gino Cassaniti with respect to each of the Insolvent Companies and with respect to all of the losses claimed; but that, even if the existence of the alleged overarching conspiracy were found to have been proved, the plaintiffs have not established that all of the losses claimed in respect each of the Insolvent Companies were the result of the implementation of the conspiracy rather than the individual acts of the controllers of the companies for unrelated purposes or for legitimate commercial purposes. Insofar as the plaintiffs' case theory proceeds from inferences sought to be drawn from the absence of explanation for transactions, Gino Cassaniti points to the difference between inferences drawn from circumstantial evidence and inferences sought to be drawn from the absence of evidence from the defendants (which the plaintiffs require to fill the gaps in their cases).
3. Insofar as the plaintiffs have asserted that there was a conspiracy, Gino Cassaniti says that there was no uniformity of purpose that transcended the separate activities that were undertaken with respect to each of the Insolvent Companies; and that, while the alleged Primary Conspirators may have been carrying out various acts in relation to the Insolvent Companies at different times, it is equally consistent to infer that their acts, or at least some of them, were separately inspired by a "simplistic concept as to tax avoidance", or by "self interested motivations", resulting in the separate losses claimed in respect of each of the plaintiffs.
4. Reference is made to the observations by Lewison J in Ultraframe (UK) Ltd v Fielding; Northstar Systems Ltd v Fielding [2005] All ER (D) 397 (Jul); [2005] EWHC 1638 (Ch) (Ultraframe) at [790] as to the elements of a successful conspiracy, tested against which it is submitted by Gino Cassaniti that, if there was an overarching conspiracy in the present case, then "it was not a very good, well thought out or successful one". For Gino Cassaniti, it is said that a conspiracy is not established by the fact that the various participants in the Scheme may all have had the same purpose of avoiding or reducing their individual tax liabilities.
5. Pausing here, (and with no disrespect to the observations made by Lewison J as to what makes a successful conspiracy) to my mind, whether in the present case this was a "very good" or "well thought out" or "successful" conspiracy is not to the point. There are no doubt many incompetent conspirators in this world, as Lewison J goes on to say at [791], "it may be that if a conspiracy fails to meet these criteria that is due to the ineptitude of the conspirators". The relevant question is whether the alleged conspiracy is established in the present case, not whether it was a particularly clever (or successful) one. That said, as I understand it, this and like submissions by other defendants goes to the submission as to the unlikelihood of there being such a conspiracy in the first place. However, insofar as that depends on an assessment as to the likelihood that the alleged Primary Conspirators would not have well thought through any such scheme, I am not well placed to form an assessment on this - since none of them made himself available for cross-examination. The plaintiffs' case does not require the conspiracy to have been successful. Indeed, the fact that it was an unsuccessful conspiracy would not make the defendants any the less liable if the causes of action arising out of that conduct are made good.
6. For Gino Cassaniti, it is also said that the alleged conspiracy would yield no tangible financial benefit to him. It is submitted that the potential benefit from the prosperity of Banq is not a realistic motivation for "such a far ranging and all-encompassing" conspiracy. He maintains that this was essentially "a very unimaginative and basic form of tax avoidance"; and says that any of the alleged Primary Conspirators could have acted on this idea and put the necessary arrangements in place without the assistance or involvement of the others. It is said that the fact that, on the plaintiffs' case, they all acted to do so does not establish a common purpose.
7. Pausing here, it goes almost without saying that the structural advice propounded by various of the accountants at Banq was indeed a form of tax avoidance - in that a number of clients were advised as to the purpose of the structure being for tax minimisation (albeit that emphasis was placed on it being a legitimate means of tax minimisation); and their attention was drawn to the potential for tax savings. However, to my mind the fact that this kind of structuring advice could have been given by many people in isolation of others fails to take into account that the advice in the present case was not simply to the effect that, say, there should be a separation between asset holding companies and operational companies; but, rather, the advice involved the invoicing of sums through entities associated with Banq for services that on any view of things were not provided (and, amongst other things, the proliferation of straw directors and the like). To suggest that this was simply an "unimaginative and basic form of tax avoidance" seriously downplays, to my mind, what was here put in place and implemented by more than one of the accountants at Banq. Further, the suggestion that each of Gino Cassaniti, Fred Khalil and Peter Abboud (each of whom is identified by one or more of the witnesses as having provided the structural and invoicing advice) separately came up with the identical idea (and implemented it separately without reference to the other but using Banq or associated entities in the same or much the same fashion) is inherently implausible. I return to this issue in due course.
8. Gino Cassaniti submits that the evidence does not support the inference that he (or, for that matter, Ivana Cassaniti) was a principal of Banq. Rather, it is said that, by the time of the alleged Scheme, both Gino Cassaniti and Ivana Cassaniti played little role in the management of Banq. Gino Cassaniti says that the self-exculpatory evidence given by Fred Khalil and Peter Abboud in relation to the management and organisational structure of Banq is at odds with the independent evidence, primarily being the books and records of Banq, as well as their own acknowledged roles in Banq. In particular, in terms of the determining the organisational structure of Banq, Gino Cassaniti places considerable weight on the organisational chart prepared by Fred Khalil at the time of the ATO interview (see Ex K at 57079), in which Fred Khalil is placed at the pinnacle of the organisational hierarchy and both Ivana Cassaniti and Gino Cassaniti are absent.
9. As to directorships, Gino Cassaniti says that the plaintiffs have failed to establish that Gino Cassaniti, relevantly and in the manner or to the extent, and for the durations alleged, was a director (whether actual, de facto or shadow) of any of the Insolvent Companies; that he owed (or breached) fiduciary or statutory duties to the Insolvent Companies; or that he was knowingly involved or concerned in the impugned transactions or the breaches of duties owed by others to the Insolvent Companies.
10. Further, it is said that any alleged breaches by Gino Cassaniti, if established, did not cause the Insolvent Companies to sustain any loss with respect to the funds and/or assets paid out by them, the Insolvent Companies not having acquired any beneficial right or entitlement to retain those funds and assets which it is said were held on constructive trust only.
11. Gino Cassaniti maintains that it is necessary for the plaintiffs to prove that the sum total of all of the impugned payments were made by the Scheme Participants upon acceptance of and acting pursuant to the Scheme Recommendations. So, for example, in relation to the Borg transactions, Gino Cassaniti says (among other things) that the transactions were not undertaken in the furtherance of the Scheme Recommendation but for a quite different commercial arrangement whereby the Borg Parties enlisted the benefits of incorporation to shield assets (noting, inter alia, the evidence of Tanya Borg that Gino Cassaniti first met her in 2014 after Borg Family had received a letter from one of the liquidators of Excavation; her denial that there were any arrangements with Gino Cassaniti as claimed by the plaintiffs; and the absence of any evidence to suggest that Tanya Borg or Michael Borg knew of any alleged involvement by Gino Cassaniti in any conspiracy or Scheme as claimed by the plaintiffs). It is said that there is no evidence that Gino Cassaniti was either directly or indirectly involved in making any representations, including the alleged Scheme Recommendation, to Tanya or Michael Borg or that there was any relevant relationship or dealings between Gino Cassaniti and either Tanya Borg or Michael Borg including the provision of any advice on the restructuring of the companies at any relevant time.
12. As to the connection sought to be made between Banq as an alleged Primary Conspirator, and each of Ivana and Gino Cassaniti, it is said that there is no evidence that any of the Primary Conspirators made a Scheme Recommendation to Ivana Cassaniti; nor to establish how Ivana Cassaniti, as a director of Discobell or an indirect shareholder in Banq acquired knowledge of the Scheme Recommendation. It is said that, absent any specificity as to how Gino Cassaniti is said to be a constructive trustee of Bluemine or of any funds received by Bluemine, it is impossible to know how Ivana Cassaniti is alleged to have had knowledge of the facts which are said to give rise to that constructive trust. It is said that there is no suggestion that Discobell or Givana Prestige filed false returns; nor was there any evidence that Ivana Cassaniti allowed Peter Abboud or Fred Khalil to file false returns. Complaint is made that the plaintiffs have not identified the conduct on the part of any Scheme Participant which is said to have provided knowing assistance to Gino Cassaniti in his breach of this statutory duty of care and diligence, or the facts said to constitute the breach of the duty of care, of which it is alleged the Scheme Participants had knowledge.
13. As to the impugned vehicle transactions with respect to Bluemine, Gino Cassaniti says that the evidence establishes that Bluemine was in fact utilised as a labour hire company and as a subcontractor; and that Reliance Cleaning did not make payments to RCG CBD otherwise than in the genuine pursuit of its business.
14. Finally, it is submitted that Gino Cassaniti has been released from liability by reason of the releases granted by the plaintiffs to various other parties and the abandonment of its claim against Andrew Barsa.
15. Turning then in more detail to Gino Cassaniti's submissions, I note as follows.

The limited role of Gino Cassaniti at Banq

1. Gino Cassaniti says that he was not a director or shareholder of Banq, nor was he employed by it; that Ivana Cassaniti was not in any relevant way in control of the activities of Banq; and that he, Gino Cassaniti, had a minimal involvement in the operation of Banq's business after about 2011 (referring to Ivana Cassaniti's evidence to that effect).
2. Gino Cassaniti says that it was not established that either he or Ivana Cassaniti was drawing 60% of the profits of Banq's business or that Ivana Cassaniti was receiving anything more than a wage; and that there is no evidence of benefit to Gino Cassaniti (or Ivana Cassaniti) commensurate with the scale of benefit that logic suggests would be derived from participation in the alleged Scheme.
3. Gino Cassaniti characterises the affidavit evidence of Fred Khalil and Peter Abboud (read as assertion) as self-serving and "conveniently self-exculpatory". He submits that their affidavit evidence does not sit comfortably with the information provided by them under oath in the course of their ATO interviews. It is submitted that Fred Kahlil had more control than he would admit to in his affidavits (referring to Fred Khalil's evidence in the ATO interview on 16 January 2016, to the effect that he was the person responsible in relation to Banq and that he was the director, not Ivana Cassaniti, because that was how he wanted it to be and that anything in relation to tax was supervised by Fred Khalil - Ex 18 at 12, 14). Weight is placed on Fred Khalil's evidence that Gino Cassaniti had a lot of "personal issues" at the time (Ex 18 at 15).
4. As to Peter Abboud's affidavit evidence, it is said that his attempt to deflect responsibility for his activities at Banq to either or both of Gino Cassaniti and Ivana Cassaniti (or simply to deny recollection of being involved) was patently unreliable as demonstrated by Peter Abboud's evidence in the course of his ATO interview held on 25 February 2016 (see above).
5. Gino Cassaniti argues that the ATO records of interview of both Fred Khalil and Peter Abboud demonstrate the inherent unreliability of the affidavit evidence relied on by the plaintiffs in their submissions against both Gino Cassaniti and Ivana Cassaniti; and that this applies whether or not the statements in the records of interview are admissible as to the truth of the assertions recorded in them (it is said that the mere fact that the statements were made at an earlier time underscores the risk involved in relying on the later affidavits of Fred Khalil and Peter Abboud, where they seek to implicate Gino Cassaniti and Ivana Cassaniti). Further, it is said that if Peter Abboud's statements against Gino Cassaniti and Ivana Cassaniti are accepted (leading to the conclusion that he was not part of any overarching conspiracy as alleged), then the plaintiffs' case based on the overarching conspiracy (which necessarily involves Peter Abboud) must fail as it is the means by which the plaintiffs seek to make Gino Cassaniti liable for all of the transactions, including those carried out or facilitated by Peter Abboud.
6. It is said that there can be no doubt that Fred Khalil regarded himself (and, to a lesser extent, Peter Abboud) as the "real controller" of Banq again (referring to the operational diagram prepared by Fred Khalil in the course of his ATO interview (which shows Fred Khalil at the apex of the "Banq Structure" above Peter Abboud) (Ex K at 57079) and to Fred Khalil's evidence to the ATO in his un-redacted transcript record of interview as to his role ("I was the manager. I was the person responsible. I was the tax agent. Any really that' pretty much it. It speaks for itself") (Ex 18 at 12).
7. Gino Cassaniti places significance on the use of the NAB Banq Business Cash Maximiser account number ending #939 (Banq Maximiser Account). It is said that this account stood in stark contrast to the other two bank accounts opened for the purposes of Banq's business (those ending #645 and #546), which were known to Ivana Cassaniti and on she was an authorised signatory together with Peter Abboud and Fred Khalil.
8. It is noted that the Banq Maximiser Account was opened on 18 November 2011 (Ex K at 51185). Gino Cassaniti says that although the document provided by NAB referred to Peter Abboud, Ivana Cassaniti and Fred Khalil as the signatories to the account, this was clearly incorrect since the authority card for this account (produced by NAB) contained only the signatures of Peter Abboud and Fred Khalil. It is said that the uncontroverted evidence from Ivana Cassaniti was that she did not sign the authority card at any time and that she had no knowledge of that account. Gino Cassaniti submits that it should be inferred from this that Peter Abboud and Fred Khalil arranged for the opening of the Banq Maximiser Account for purposes associated with their own benefit (and accordingly did not notify Ivana Cassaniti of its existence). Thus, it is said that Banq conducted its business and dealt with funds received by it to a significant extent by Peter Abboud and Fred Khalil operating a bank account of which only they were the signatories and about which Ivana Cassaniti was kept in the dark. It is said that this account is inconsistent with the existence of the over-arching conspiracy in respect of which all payments passing through the account are included in the global losses claimed against Gino Cassaniti.
9. It is said that Gino Cassaniti could not have directed the payment of funds by Bluemine or RCG CBD into a bank account which he did not know existed; and hence, serious doubts must arise as to the plaintiffs' contention that Gino Cassaniti was a director of or in control of those companies. (Pausing here, that submission depends largely on acceptance of Gino Cassaniti's assertion as to lack of knowledge of what was going on at Banq - the fact that neither he nor Ivana Cassaniti was not a signatory to the Banq Maximiser Account does not establish a lack of awareness on his part as to the operations of Banq; and he gave no direct evidence of his lack of awareness as opposed to untested assertion.)

Diamondwish and Rackforce

1. Gino Cassaniti says that the claims in relation to Diamondwish and Rackforce do not fit into the paradigm model of the overarching conspiracy relied on by the plaintiffs, pointing to the role of Frank Criniti in those entities (including that he was a signatory to those companies' bank accounts for their corporate life) and to the allegations pleaded against Frank Criniti in that regard, as a defendant in both the Diamondwish and Rackforce Proceedings (see the Diamondwish second further amended statement of claim at [8]; the Rackforce third further amended statement of claim at [11]) and the relief claimed against Frank Criniti in those proceedings before amendment to the pleadings (see at [36] and [11], respectively).
2. Gino Cassaniti says that Frank Criniti was a principal participant and beneficiary in the financial activities of Diamondwish and Rackforce, which could not have occurred but for his willing assistance and cooperation. He says that Frank Criniti was the controlling mind in the relevant period of each of: Diamondwish; Rackforce; Criniti's Wood Fire Pizza; Auswide; and (from at least 18 January 2012) Givana Prestige; noting that Frank Criniti controlled the bank accounts for those companies during that period.
3. Gino Cassaniti says that, if there was a conspiracy and the conspiracy extended to the use of Diamondwish and Rackforce, then it is difficult to escape the conclusion that Frank Criniti was also a Primary Conspirator. He points out that the conspiracy relied on by the plaintiffs is one conspiracy that necessarily involved not only Diamondwish and Rackforce but also, on the plaintiffs' case, Earth Civil, Bluemine and RCG CBD; and that it involved the complicity of all the alleged Primary Conspirators. Gino Cassaniti says that the evidence relied on by the plaintiffs fails to prove (either positively or inferentially) that the object of the alleged Scheme extended to all or any of the financial affairs and dealings of Diamondwish and Rackforce. Rather, it is said that Frank Criniti's evidence was focused almost entirely on alleging that Gino Cassaniti was the mastermind of the Scheme established for his companies, noting that Frank Criniti also alleged that it was Gino Cassaniti who gave instructions for payments made out of both Diamondwish and Rackforce.
4. As adverted to above, Gino Cassaniti says that the general structuring advice that Frank Criniti said he was given Gino Cassaniti (see at T 466.50-467.6; T 499.5-18), to the effect the group be structured with an asset holding entity, a trading entity, and an employer entity, is unremarkable. It is said that quarantining the employment function from, first, the asset entity and, second, the operating entity is an ordinary commercial arrangement (by which issues and liabilities relating to workers compensation insurance, payroll tax, PAYG and superannuation can be quarantined away from the asset holding company). It is noted that Tarun Shah's evidence confirmed that his own wages were paid by one of the Insolvent Companies, namely Rackforce.
5. Gino Cassaniti says that Frank Criniti's approach was to attribute blame to Gino Cassaniti for every manner of occurrence or event, however remote, concerning Rackforce and Diamondwish (including, the appointment of David Rizk as a director, referring to Frank Criniti's evidence at T 522.50-523.11).
6. As to the appointment of Christopher Cherry as a director of companies associated with Banq, Gino Cassaniti points out that (apart from the evidence that Christopher Cherry and Frank Criniti did not know each other) Christopher Cherry's evidence (at T 902.18-19) was that he did not know Gino Cassaniti (and it is noted that it was not explored with him in his examination in chief whether there was anybody else from Banq that he might have known or with whom he might have had dealings).
7. Gino Cassaniti says that Frank Criniti made abundantly clear his ill will towards him (at T 555.48-556.10), when he said that "I made a stupid choice, to pick stupid people" and "I made a mistake and got manipulated by an idiot".
8. Gino Cassaniti says that, ultimately, the cause of any loss in Diamondwish and Rackforce (and other Criniti entities) was simply Frank Criniti's extravagant lifestyle and excessive spending (referring to Frank Criniti's evidence at T 566.21-567.35); and Frank Criniti not paying his creditors (and in particular the ATO). It is said that Frank Criniti was counselled by Banq (possibly by Peter Abboud) to stop his extravagant spending and to stop taking cash out of the businesses; and that Frank Criniti falsely denied losing his temper at that reprimand and smashing his fist through a wall in response (see at T 574.4-30). (Pausing here, there was no evidence of any such incident; and no basis on which I could possibly form the view that Frank Criniti's denial of the incident, as put to him in cross-examination, was false.)
9. As to the reference in the plaintiffs' submissions (at [1026]) to a transfer to Elle Barikhan and Frank Criniti's suggestion that it was a payment he made for Gino Cassaniti, it is said by Gino Cassaniti that the denial by Frank Criniti that Elle Barikhan was Frank Criniti's long time friend and Frank Criniti's evidence that Elle Barikhan or his brother was Frank Criniti's finance broker was "too cute and clearly evasive" (see at T 564.49-565.2). Gino Cassaniti says that it is significant (given what he characterises as Frank Criniti's predilection to blame "all manner of faults" on Gino Cassaniti) that Frank Criniti did not attempt to say that Elle Barikhan was, in fact, Gino Cassaniti's finance broker. It is said that Frank Criniti jumped to deny that Elle Barikhan was a "long-term friend" but "has coyly avoided answering the question whether Elle Barikhan had in fact being doing finance for Frank Criniti for years". Gino Cassaniti says that it is open to infer that Frank Criniti did not want to disclose that, in fact, Elle Barikhan was Frank Criniti's own broker and that, accordingly, the impugned transfer was explicable as a transfer by Frank Criniti to his own finance broker for Frank Criniti's own purposes, whatever those purposes might have been. (Again, pausing here, there is simply no evidence as to Mr Barikhan's involvement in these events; the most that Frank Criniti indicated was that either Elle Barikhan or his brother was a finance broker. I cannot possibly draw the inference here invited to be drawn.)
10. As to the authorisation or directions for transfers to and from accounts of Rackforce and Diamondwish, Gino Cassaniti points out that Frank Criniti gave evidence that his accounting staff (Tarun Shah and others) had access to his online NAB accounts; and that, when cross-examined on certain specific transactions on his Rackforce and Diamondwish accounts, Frank Criniti on occasions had no recall of or denied either making the transactions himself or directing his staff to make the transactions (see, for example, at T 610-611; T 614.48-49). It is said that Frank Criniti sought to attribute responsibility for any transfers in or out of the accounts of Rackforce, Diamondwish and Givana Prestige to directions from Gino Cassaniti to Tarun Shah (referring to his evidence at T 608.32-48)
11. Gino Cassaniti says that Frank Criniti's self-serving evidence that Frank Criniti never exercised control over or gave directions concerning transactions involving the bank accounts of Rackforce, Diamondwish and Givana Prestige, and that everything was done on instructions from Gino Cassaniti should not be accepted (see T 615.8-29). It is submitted that it is inherently difficult to accept Frank Criniti's evidence, in light of Frank Criniti's acceptance that he led an extravagant lifestyle purchasing houses and fast cars and that he was assessable by the ATO on undeclared moneys from his restaurant business in the amounts of $7 million in 2011, $12 million in 2012 and $4 million in 2013 (see T 601.40-46 and T 602.7-16).
12. Gino Cassaniti says that, more fundamentally, Frank Criniti's evidence is directly contradicted by that of Tarun Shah, whose evidence is said to be disinterested and objective. It is noted that Tarun Shah was head of Frank Criniti's accounting department, with two assistants and responsible for the accounts of 17 or 18 companies in the Criniti companies (see T 935.34); and that Tarun Shah said that he did take directions from Frank Criniti concerning, for example, the authorisation of payments (see at T 933.23-37). Gino Cassaniti contends that clearly a direction (even if not exactly the same words) was given by Frank Criniti concerning the transfer of available funds from Criniti's Wood Fire Pizza to Rackforce; and that Frank Criniti simply cannot admit that any such direction was given because to do so would contradict his evidence that any transactions were attributable to directions from Gino Cassaniti.
13. Pausing here, I did not understand Tarun Shah's evidence to amount to any kind of acknowledgement that Frank Criniti gave him a direction that whenever there were available funds in Criniti's Wood Fire Pizza they should be transferred to Rackforce (nor was that put to him in terms) albeit that that Tarun Shah did give evidence that he received directions or instructions from time to time from Frank Criniti in relation to the transfer of moneys.
14. In cross-examination by Counsel for Gino Cassaniti, Tarun Shah said that within the Criniti's group he reported to Frank Criniti; that in terms of "operations, the accounting entries, that kind of area", Frank Criniti did not give him directions but that he would give directions "[l]ike normally the authorisation of payments was the time when me and him have a meeting, then we go through payments" (see at T 933). I read that as stating no more than that Frank Criniti had a role in approving or authorising payments (but was not involved in how payments or transactions were to be accounted for). In cross-examination by Peter Abboud's solicitor, Tarun Shah said that Frank Criniti gave instructions in relation to the transfer of funds from one Criniti company to another Criniti company; and that he (Tarun Shah) had access to the bank accounts to transfer those funds and followed those instructions (at T 936). Tarun Shah said that he recalled being given instructions by Frank Criniti to transfer funds from a Criniti company to Rackforce; and as to the purpose of such a transfer he said that "[l]ook I knew that there were wages paid out of Rackforce so that would have been a wage payment" (T 936.20-27).
15. None of that goes so far in my opinion as to support the submission for Gino Cassaniti that there was some form of standing instruction in relation to the transfer of funds given by Frank Criniti; nor is it inconsistent with Gino Cassaniti being the one who had given instructions in general to Frank Criniti as to how payments were to be transferred between the companies. Furthermore, the suggestion that Frank Criniti led an extravagant lifestyle and understated his personal income in his tax returns does not lead to the conclusion that Frank Criniti (a concreter turned restaurateur) had the accounting knowledge or ability to implement on his own accord a tax minimisation (or avoidance) scheme of the kind here involved.

Earth Civil

1. Gino Cassaniti says that Earth Civil also does not fit into the mold of the Scheme alleged by the plaintiffs. It is noted that Andre Abou-Antoun's affidavit sworn 5 July 2019 (at [7]-[8]) makes clear that his introduction to Banq was not through Gino Cassaniti but was through either or both of George Khalil and Peter Abboud, who introduced Gino Cassaniti to him. It is said that it is also clear from Andre Abou-Antoun's affidavit that the initial meeting at his family office in or about early 2010 was only in relation to a dispute concerning Yellow Pages. Gino Cassaniti says that the evidence is that any initial advice concerning the restructuring of the company group came from either Fred Khalil or Peter Abboud, and the incorporation of AKA Civil in June 2010 appears to have occurred after that "Yelllow Pages" advice.
2. It is said for Gino Cassaniti that the decision to move the AKA Parties' accounting business to Banq was for legitimate purposes and that there is nothing in Andre Abou-Antoun's evidence to suggest that Gino Cassaniti's early involvement was for any purpose other than to network and attract a new client for Banq. It is said by Gino Cassaniti to be significant that, after those initial meetings, it is Andre Abou-Antoun's evidence (see his affidavit sworn 5 July 2019 at [17]) that, he almost never dealt with Gino Cassaniti directly again (his dealings thereafter being with Peter Abboud and Fred Khalil).
3. Gino Cassaniti says that there is no evidence of any direct involvement by him in providing advice as to the corporate structure of the AKA Group; rather, such advice came from Peter Abboud and Fred Khalil (referring to Andre Abou-Antoun's evidence); and that the restructuring advice provided by Peter Abboud was specific and involved the incorporation of a separate invoicing company and a separate company to employ personnel and resulted in the incorporation of AKA NSW and Earth Civil (which was the employer company). Further, Gino Cassaniti says that there is no evidence that the various companies in the AKA group were not formed for legitimate purposes, noting that, throughout the period until September 2012, both Andre Abou-Antoun and Michael Abou-Antoun exercised control of the companies, which were carrying out legitimate trading activities and which generated substantial revenue.
4. Gino Cassaniti says that the advice in question came from Fred Khalil (after receipt of the first payment from the Sekisui House job in or about September 2012) (referring to Andre Abou-Antoun's evidence that Michael had "had a talk with Fred. He's got an idea to save us tax" - see above) and that thereafter whatever directions were being provided by Banq as to payments involving the companies came from Peter Abboud and Fred Khalil (again referring to Andre Abou-Antoun's evidence).
5. It is said that the impugned Earth Civil transactions (in and after September 2012) by either or both of Andre Abou-Antoun and Michael Abou-Antoun, who had actual control of its operations; and that Andre Abou-Antoun was clear in his cross-examination by the plaintiffs' Senior Counsel that it was either Fred Khalil or Peter Abboud from Banq who told him to make the transfers. Similarly, Gino Cassaniti says that Andre Abou-Antoun's evidence makes it clear that the instructions to make payments from AKA Civil or AKA NSW to Bluemine also came from Fred Khalil and Peter Abboud, as did all recommendations made as to the tax benefits of those payments. Gino Cassaniti says that there is no evidence of any direct involvement by him in, or knowledge by him of, these transactions and no evidence as to any involvement by him, referring to Andre Abou-Antoun's evidence that, over the course of seven or eight years, preparation of the BAS returns started with Peter Abboud and then, between 2013 and 2015, it was more Devangh Shah who was involved.
6. Gino Cassaniti also says that any evidence as to advice that may have come from Gino Cassaniti was hearsay (based on something that Michael Abou-Antoun may have said); noting that Michael Abou-Antoun did not give evidence and that, in cross-examination by Senior Counsel for the plaintiffs, Andre Abou-Antoun gave evidence that it was not Gino Cassaniti who had instructed him to transfer money between the AKA entities and Earth Civil.
7. Insofar as the plaintiffs submit that Andre Abou-Antoun was seeking to resile from the answer he had previously given to the ATO on the issue as to who advised the AKA Parties to make the payments to Earth Civil (and that the answer he gave the ATO should be accepted as the truth), Gino Cassaniti says that this involves a selective adoption and/or rejection of earlier inconsistent statements made by witnesses or parties to suit the plaintiffs' narrative (in the absence of any direct evidence linking Gino Cassaniti to any of the transactions involving the AKA entities and Earth Civil or to any advice given in relation to those transactions).
8. Gino Cassaniti submits that in the ATO interview Andre Abou-Antoun made clear that his reference to "us" was a reference to advice he believed had been furnished to Michael Abou-Antoun, referring to the following exchange (Ex O at 195): Q: What do you know about - why were those payments made? A: Well, not all of those - why were those payments made? Those payments were made because Mr Cassaniti advised us to make those payments to Earth Civil. … Q: Okay. So - and what did he tell you? A: Well, he didn't tell me anything. Q: Well, what did he say? A: I didn't really deal with him on the negotiations of how - what he was pretty much coordinating. All I did was I took - took out the money from Earth Civil as per his instructions.
9. It is said that this was entirely consistent with Andre Abou-Antoun's explanation in the witness box (see T 680.9-13): Q. That answer was true wasn't it? A. I have to say us meaning my brother - I classify my brother as myself in a way there, we're brothers, we're together, we do everything together. We have an understanding together so when I said us I meant us as in one.
10. Gino Cassaniti says that if there is any doubt about the absence of any direct dealings between Gino Cassaniti and Andre Abou-Antoun, it is dispelled in the evidence (referred to above) Andre Abou-Antoun gave about the lack of contact with Gino Cassaniti following the initial meeting in relation to the "Yellow Pages" dispute. It is said that no explanation has been provided by the plaintiffs as to what motivation Andre Abou-Antoun had for lying about the matter and why his evidence should be rejected; noting that Andre Abou-Antoun was not a defendant and it is submitted that, had Gino Cassaniti provided the advice, it would not matter from Andre Abou-Antoun's perspective whether it was given directly to his brother or directly to both of them.
11. Pausing here, the evidence that Andre Abou-Antoun gave as to the meaning he accorded to "us", i.e., that it meant his brother, was in my opinion not unfairly described by the plaintiffs as long-winded and nonsensical (and to my mind remarkable when set in the context of his professed inability to recognise his own brother's signature at a later point in his evidence in the witness box). Nevertheless, I consider that the answer "[w]ell, he didn't tell me anything" (at least as it reads on paper) has the ring of truth and that it is not implausible in a scenario where Andre Abou-Antoun said that he did not really deal with Gino Cassaniti. The answer that he took money out as per Gino Cassaniti's instructions would not be inconsistent if this were understood to be a reference to Andre Abou-Antoun's understanding of those instructions albeit as conveyed to him by Michael Abou-Antoun. That said, what seems to me to be abundantly clear (not least from my observations of Andre Abou-Antoun in the witness box) is that he would not have been the one making decisions as to what money was to be transferred between the companies - and that he had no real understanding of the need for the round robin of payments to be made.
12. Gino Cassaniti submits that it is clear from the evidence that Earth Civil was incorporated by Michael Abou-Antoun for a legitimate commercial purpose, namely, to provide labour hire services to other companies within the group. He says that in the course of conducting Earth Civil's business, a number of large transactions were effected by it, referring to the documentary evidence that Earth Civil had two accounts (the first, being account number ending #512 and the second being account number ending #420). It is noted that Michael Abou-Antoun was the authorised signatory of both accounts but that it appears that the accounts were accessed by both him and Andre Abou-Antoun. The transactions effected by Earth Civil included a significant number of cash withdrawals.
13. Gino Cassaniti says that it is apparent that the withdrawals were made by either Andre Abou-Antoun or Michael Abou-Antoun (or both). Reference is made by way of example to a withdrawal slip that records Andre Abou-Antoun as receiving the funds (Ex K at 10565); and cash withdrawal slips containing Andre Abou-Antoun's signature (Ex K at 10561-10562); as well as a withdrawal slip recording Michael Abou-Antoun as receiving the funds (Ex K at 10568). It is said that where the withdrawal slip does not record the recipient it obviously would have been either of the two. The cash withdrawals occurred from 28 September 2012 to 28 May 2013. It is said that these cash transactions were all conducted by Michael Abou-Antoun as account holder or on his behalf by Andre Abou-Antoun, both of whom were the actual controllers and true directors; and that the transactions are not consistent with the alleged Scheme.
14. Gino Cassaniti says that the direct withdrawal of these cash funds was for purposes that were not properly explained by Andre Abou-Antoun. Pointing to the fact that there were no invoices purporting to be in respect of the provision of services by a third-party entity (as Gino Cassaniti says might be expected if there were payments out made by Earth Civil in accordance with the alleged overarching conspiracy), Gino Cassaniti submits that the clear inference is that the withdrawal of the funds was for their own personal purposes unrelated to any such conspiracy. In any event, Gino Cassaniti says that there is no evidence that he approved, let alone knew, of those withdrawals or the purpose to which they were being put.
15. It is noted that on 28 May 2013, being the day that the last cash withdrawal was made, Gino Cassaniti was appointed as the director; and that the ASIC Form 484, lodged 28 May 2013, amended the ASIC register and appointed Gino Cassaniti as a "backdated director", recording his "backdated appointment date" (and the transfer of all shares of Earth Civil to Gino Cassaniti) as being 1 July 2012. Gino Cassaniti says that there is no evidence that he consented to or accepted the position of director for Earth Civil. It is said that the ASIC Form 484 is not signed and was capable of being lodged by anyone with access to the portal and the relevant details of Earth Civil; and that there is no evidence that he was the director of Earth Civil from the backdated appointment date of 1 July 2012.
16. Gino Cassaniti says that, at its highest, the nomination of him as a director in the ASIC Form 484 is consistent with his being utilised as a "jump on" director of Earth Civil, prior to its being placed in liquidation (placing significance in this context on the fact that the Form 484 was lodged on the same day the bank account was closed (on 28 May 2013) - Ex K at 10554-10555). Reference is here made to the liquidator's acceptance of the proposition that the rationale for "jump-on" directors is that it is a device or mechanism to create protection for the "real" directors of the company, often achieved by backdating of the form lodged with ASIC (though I interpose to note that the liquidator's acceptance was more nuanced that "it could be perceived that way").
17. Gino Cassaniti points out that this was not a device the use of which was confined to Banq, it being the liquidator's experience that "it seems to happen a lot"; and that the liquidator also accepted from his experience that the date of lodgement was more likely the true date the "jump on" director became director rather than the backdated appointment date.
18. It is said that the evidence given by the liquidator in relation to Gino Cassaniti's appointment as a director of Bluemine (namely that it appeared to be the case that he was a "jump on" director) is equally apposite to Gino Cassaniti's appointment with respect to Earth Civil.
19. Thus, it is submitted that: Gino Cassaniti's only direct involvement with Andre Abou-Antoun and Michael Abou-Antoun was well before the incorporation of Earth Civil and was in the context of the Yellow Pages dispute and sorting out an outstanding payroll tax liability; Gino Cassaniti may have played a role in attracting them as clients of Banq but that, apart from the initial contact, all dealings between the Abou-Antoun group of companies and Banq were with either or both Peter Abboud and Fred Khalil; Gino Cassaniti did not provide any restructuring advice to Andre Abou-Antoun or Michael Abou-Antoun, nor does the evidence established that he provided any transactional advice to either of them; there is no evidence that Gino Cassaniti was in any way involved in formulating or approving the restructuring and transactional advice provided by either or both Peter Abboud and Fred Khalil; both Andre Abou-Antoun and Michael Abou-Antoun retained full control over the activities and transactions of the companies; both Andre Abou-Antoun and Michael Abou-Antoun retained full control over the bank accounts of the companies, particularly Earth Civil; there is no evidence that Gino Cassaniti exercised any functions as a director, whether de facto or shadow, of Earth Civil prior to it being placed into liquidation on 28 June 2013; there is no evidence that Gino Cassaniti either directly or indirectly in any way controlled or influenced Andre Abou-Antoun and/or Michael Abou-Antoun; Andre Abou-Antoun and Michael Abou-Antoun utilised the bank accounts of Earth Civil to withdraw cash for their own purposes and not for purposes which bear any relationship to the methodology of the alleged Scheme (i.e., payment out to another party upon receipt of a purported invoice); there is no evidence that Gino Cassaniti advised, instructed, directed or knew of the cash withdrawals or the purpose to which they were to be put; and, in the circumstances, the backdating of the ASIC Form 484 does not provide any evidence or evidence to which any weight should be given as to the date when Gino Cassaniti did in fact commence to exercise the functions of a director.
20. It is submitted that the overwhelming evidence is that both Andre Abou-Antoun and Michael Abou-Antoun were, at all relevant times until shortly prior to its liquidation, in firm control of Earth Civil and its financial dealings and transactions; and that all breaches of fiduciary duties owed to Earth Civil were their own. It is thus submitted that the evidence is strongly against Gino Cassaniti having exercised any control or influence over the directors or having acted as a de facto or shadow director; or having provided transactional or restructuring advice to them; or owing any fiduciary duties to Earth Civil or even being in a position where such duties could have arisen.

Bluemine

1. As to the claim in relation to Bluemine, Gino Cassaniti denies that he was a director (or shadow or de facto director) of Bluemine at any time. Insofar as the plaintiffs base their submission on an appointment date of 1 April 2013, in accordance with the Form 484 lodged with ASIC, Gino Cassaniti accepts that the ASIC documents prima facie record him as a director of Bluemine during the period 1 April 2013 to 18 March 2014. However, it is said that this is unlikely to present an accurate representation of Gino Cassaniti's role, as the evidence indicates the likelihood of Gino Cassaniti having been appointed as a "jump on" director (pointing again to the acceptance by the liquidator of the general propositions put to him as to the practice of appointing "jump on" directors).
2. Pausing here, as adverted to above, what I understood the liquidator to accept were general propositions, as such, including that: part of the process of establishing a jump on director was that the change of director Form 484 "was usually lodged a lot later than the date of appointment"; the date of lodgement is "more likely to be the true date the jump on director became a director rather than the back-dated appointment date"; jump on directors "do not represent the real person or the real director behind the company"; a jump on director usually does not control the accounts of the companies to which they are appointed, and bank account authorisations generally remain "as is" notwithstanding the appointment of a jump on director; it is a reasonable premise that the director immediately preceding the appointment of the jump on director "is effectively the person who generally exercised control over the company"; the rationale for appointment of a jump on director was an "attempt to add a modicum of protection" for the real director; the appointment of jump on directors was a frequent occurrence; and there were instances where jump on directors were not aware of their appointment (see T 188-189).
3. I accept that the liquidator conceded that, when he became aware of Gino Cassaniti's appointment as a director of Bluemine, "it appeared to be the case" that this was as a "jump on" director, and that it was possible that it crossed his mind that this was done to "protect" the true director, Andrew Barsa (T 190). However, that does not establish that this was in fact the case (and to my mind the evidence of Andrew Barsa as to his role as director does not lead me to conclude that Andrew Barsa was in any sense the "real" director in this scenario). Moreover, it was open to Gino Cassaniti to make himself available for cross-examination on this and other issues.
4. Gino Cassaniti points to the following matters as relevant in this context: that it is apparent that the backdated change of director Form 484 was processed on 26 July 2013; that on or about 18 June 2012, Andrew Barsa opened bank accounts with the NAB for Bluemine (ending #1718 and #2486); that subsequently further NAB accounts were opened by Andrew Barsa and Peter Abboud (both being signatories) in the period up to and including November 2012 (including account ending #3687); that, after the date of Gino Cassaniti's apparent appointment as director, Peter Abboud signed various Withdrawal Debit Authorities (on 23 April 2013, for $8,500 on cheque account #3687; on 1 May 2013, for $10,700 on cheque account #3687; on 9 May 2013, for $8,300 on cheque account number #3687); that the authorised signatories to Bluemine's bank account were not changed after the date of Gino Cassaniti's apparent appointment as a director; that Bluemine's BAS returns were lodged by Fred Khalil; and that Bluemine's accounts were signed by Peter Abboud or Andrew Barsa. Again, Gino Cassaniti notes that the liquidator agreed, in his general experience that "jump on" directors do not represent "the real director behind the company" (see at T 188.45-48).
5. Gino Cassaniti points to the evidence of Andrew Barsa in his ATO interview to the effect that Andrew Barsa was the director of Bluemine up until 26 July 2013 and places weight on the fact that, when asked whether he was aware of any financial problems as at 26 July 2013, Andrew Barsa's response was not that he ceased to be a director on 1 April 2013 but that "I was off, and then a month later [which Gino Cassaniti says means the month after 26 July 2013] the company went to … [presumably, intending to say, liquidation]". Gino Cassaniti says that, in his ATO interview, Andrew Barsa was in effect accepting that he was a director on 26 July 2013. (Pausing there, it is by no means apparent that this is what Andrew Barsa was conveying in this passage of the transcript; and in any event it places much weight on the reliability of Andrew Barsa's memory as to the time of the relevant events.)
6. As to Andrew Barsa's evidence, Gino Cassaniti says that the plaintiffs, in effect, are here seeking to "approbate and reprobate" - i.e., that, on the one hand, they denigrate his evidence that he was appointed to Bluemine as an asset protection measure for the trucks and trucking business conducted by his cousin, George Abboud, and that he was an experienced business consultant providing consultancy services to other businesses and at all times either the sole or alternatively joint signatory with Peter Abboud on the Bluemine NAB account; whereas, on the other hand, in the plaintiffs' written submissions (at [419]-[422]) they accept the correctness of Andrew Barsa's evidence of the conversation with Gino Cassaniti some time in the period from December 2012 to April 2013 concerning Andrew Barsa being replaced as a director of Bluemine (see at T 914.39-45; T 915.21-22). Pausing here, there is no difficulty in accepting a part of a witness' evidence as credible, having regard to the overall evidence in the case, and other parts as not plausible.
7. Gino Cassaniti says that the evidence relied on by the plaintiffs is directly inconsistent with statements made by Andrew Barsa in his ATO interview on 25 July 2016 (see above) to the effect that he did not even know who Gino Cassaniti was; did not recall why there was a need to change the directorship to Gino Cassaniti; and asked who it was that had replaced him as director.
8. Insofar as the plaintiffs, in their written submissions place significance on the fact that Gino Cassaniti's Counsel did not challenge Andrew Barsa's evidence that it was Gino Cassaniti who Andrew Barsa asked if he could resign his directorship of Bluemine, it is said by Gino Cassaniti that the plaintiffs were obliged to explain two pieces of inconsistent evidence that the plaintiffs had themselves adduced, namely, Andrew Barsa's examination in chief and the ATO transcript of interview (Ex E); and that it was not a matter for the defendants to seek to clarify that inconsistency (as it was plainly known to the plaintiffs' Counsel).
9. Gino Cassaniti submits that this leads to the conclusion that Andrew Barsa's evidence is unreliable and that there is no good reason to prefer what he said in the witness box to that which he had said earlier under oath in the ATO record of interview. Further, it is said that it is more likely that what Andrew Barsa had said earlier, being closer in time to the events in question, is the accurate and reliable version. Gino Cassaniti asks, rhetorically, why Andrew Barsa did not implicate Gino Cassaniti in the ATO record of interview if Gino Cassaniti was so clearly involved (and why in those circumstances Andrew Barsa responded in a manner that suggested that the name "Gino Cassaniti" was unknown to him). (The danger in rhetorical questions, as always, is that it inspires speculation as to what other answer there might be - and in this case that might be found in the fact that at least one other witness, George Said, had demonstrated an unwillingness at the ATO interview to name Gino Cassaniti. I do not suggest that this is also the case in relation to Andrew Barsa - that would indeed be no more than impermissible speculation - but it does mean that I cannot draw any particular conclusion from the fact that Andrew Barsa did not name Gino Cassaniti in his ATO interview and that what I am left with is inconsistent evidence from Andrew Barsa in this regard.)
10. Gino Cassaniti's submission is that Andrew Barsa's evidence discloses that, contrary to the ASIC Form 484, he did not cease to be a director on 1 April 2013 (pursuant to a conversation with Gino Cassaniti and an agreement that Gino Cassaniti was taking over Bluemine); rather, that Andrew Barsa continued as a director until at least 26 July 2013. In any event, it is noted that, even after that date of 26 July 2013 it was Andrew Barsa who remained as a signatory on the bank account of Bluemine.
11. Gino Cassaniti says that the fact that Andrew Barsa played a substantive role in the affairs of Bluemine is confirmed by the statements made by Peter Abboud under oath in his ATO interview on 25 February 2016. It is said that the evidence given by Peter Abboud as to the trucks purchased and sold by Bluemine illustrates examples of dealings about which Gino Cassaniti could not have known anything and which were of no benefit to him directly or indirectly; noting that there is no mention of Gino Cassaniti or any allegation that he was in any way concerned with those (see as set out earlier).
12. Gino Cassaniti thus says that the plaintiffs' contention (at [708]) that Andrew Barsa "was Gino's puppet" is inherently without foundation.
13. As to Gino Cassaniti's alleged breaches concerning Bluemine, Gino Cassaniti repeats and adopts the submissions made by Ivana Cassaniti and the AKA Parties (see in due course as summarised below).

RCG CBD

1. Insofar as the plaintiffs' case in the RCG CBD Proceeding (at [287(c)]) depends upon the premise that Gino Cassaniti was the sole director and shareholder of RCG CBD from 16 May 2012 to 28 June 2013, Gino Cassaniti points to the ASIC register that records that, at the time of RCG CBD's incorporation on 16 May 2012, the secretary, sole director and shareholder of the company was George Khalil, and that the appointment of Gino Cassaniti as a director, secretary and shareholder is recorded with a purported appointment date of 16 May 2012 by a Form 484 that was lodged with (and received and processed by) ASIC on 28 May 2013, shortly before the winding up application in respect of RCG CBD was filed with ASIC on 1 July 2013 (Ex K at 30240).
2. Gino Cassaniti says that George Khalil was in fact the director and controlling hand of RGC CBD, placing emphasis on bank account details in documents produced to the ATO in response to a compulsory 353-10 notice from the Commonwealth Bank of Australia (CBA), which record that George Khalil was the sole signatory for the RCG CBD account for the period 21 May 2012 to 17 June 2013 (a period commencing some five days after the ASIC records show that George Khalil ceased to be a director, secretary and shareholder of RCG CBD).
3. Gino Cassaniti also refers to the following matters concerning the position of George Khalil as the director of RCG CBD in the period from 15 May 2012 to 17 June 2013: evidence under oath by Debbie Akkawi in her ATO interview (which does not appear to me actually to have been tendered - see T 68.20-69.48) as to George Khalil's role (which in the circumstances I cannot take into account as it is not before me); evidence under oath by Fred Khalil in his unredacted ATO interview dated 22 January 2016 that the director of RCG CBD was George Khalil (Ex 18 at 32); and the contract dated 18 November 2012 entered into between RCG CBD and Phoenix Industrial Cleaning (at a time when, on the plaintiffs' case, Gino Cassaniti is the director of RCG CBD) which bears George Khalil's signature on the execution page and a notation with George Khalil's name above the identification of RCG CBD and the words "Labour Hire Company or Subcontractor" (Ex K at 32063-32070). It is noted that Debbie Akkawi is referred to in the evidence in chief of Scott Crabbe (at T 944.32-36) in connection with the Reliance Cleaning Group.
4. Gino Cassaniti says (referring again to the liquidator's evidence as to jump on directors) that it is likely that he was also a jump on director with respect to RCG CBD (a fortiori given that the sole signatory on the RCG CBD account was, at all times, George Khalil). Gino Cassaniti again adopts the submissions of other parties concerning his lack of involvement in the affairs of RCG CBD. Further, it is said that there are no relevant indicia of control by Gino Cassaniti (such as evidence that Gino Cassaniti made or caused to be made any payments to himself or members of his family by RCG CBD).
5. It is submitted on the basis of the above matters that at no time was Gino Cassaniti ever properly a director (whether actual, shadow or de facto), of RCG CBD; rather, that the director was George Khalil; and therefore, Gino Cassaniti owed no fiduciary duties in respect of RCG CBD.

Plaintiffs' submissions in reply re Gino Cassaniti

1. At the outset, the plaintiffs cavil with the contention (at [21] of Gino Cassaniti's submissions - and with similar submissions raised elsewhere by other defendants) that, in a claim of a global nature, the claim must fail if any of the assumptions on which the overall claim is based are not proved or facts or inferences that are inconsistent with those assumptions are not excluded.
2. The plaintiffs say that their claims against Gino Cassaniti in the Bluemine, Earth Civil and RCG CBD Proceedings are that he, either as a director or de facto director of the Insolvent Companies, breached his fiduciary duties to those companies. They say that the factual elements of the cause of action against Gino Cassaniti require proof: that he was a director of the relevant companies; that he breached his fiduciary duties to those companies; that such breaches were dishonest and fraudulent, and that those breaches caused the relevant companies' loss.
3. The plaintiffs say that the accessorial claims against Gino Cassaniti in the Diamondwish and Rackforce Proceedings are that he knowingly assisted the director of those companies (Frank Criniti) to breach his fiduciary duty to those companies; and that the factual elements of those causes of action against Gino Cassaniti require proof: that a director of the relevant companies breached his fiduciary duties to those companies; that such breaches were dishonest and fraudulent; that Gino Cassaniti assisted the director; that Gino Cassaniti knew of the director's breaches, and that knowledge will arise from the second limb of Barnes v Addy; and that those breaches caused the relevant companies' loss.
4. It is submitted by the plaintiffs that their overarching conspiracy contention goes to their case that, from the evidence establishing factual elements of the overarching conspiracy and in the absence of direct evidence or credible evidence of a contrary explanation, it is be inferred that Gino Cassaniti dishonestly breached his directorial duties (or knowingly assisted another) as alleged by implementing the conspiracy. In other words, it is said that the overarching conspiracy goes to dishonest conduct in those breaches of fiduciary duties.
5. The plaintiffs say that the elements of the causes of action against Gino Cassaniti for which they claim relief (as, for example, set out at [228]-[260] of the Bluemine Statement of Claim) in turn reference the entirety of the Statement of Claim. They say that, on the pleadings and the conduct of the case, it is clear that their claim against Gino Cassaniti is that he owed fiduciary duties as a director which he dishonestly breached (or that he knowingly assisted others in the dishonest breach of their fiduciary duties) and, in consequence of those breaches, the plaintiffs suffered loss; and that the only question now is whether the evidence is sufficient to establish those elements of the causes of action against Gino Cassaniti.
6. The plaintiffs maintain that the evidence establishes dishonesty in Gino Cassaniti's breaches of fiduciary duties and establishes Gino Cassaniti's implementation and knowing participation in dishonest breaches of duty by Frank Criniti, as alleged regarding the transactions in respect of each of the Insolvent Companies for which relief is claimed. The plaintiffs point to the evidence of Gino Cassaniti's role at Banq and the conspiratorial relationship between the Primary Conspirators (as referred to in their closing submissions at [284]-[304]).
7. Insofar as Gino Cassaniti suggests (at [41] of his submissions and see also at [225]) that the plaintiffs' claim for compensation from him is for, or includes, the entirety of the amounts paid into the Insolvent Companies, the plaintiffs say that no such claims have been made.
8. Turning then to the particular submissions made by Gino Cassaniti, the plaintiffs respond as follows, emphasising again that Gino Cassaniti: was not prepared to come before the Court to be cross-examined on the issue; did not adduce any independent corroborative evidence of his lack of involvement; did not cross-examine Fred Khalil or Peter Abboud; and that his defence (in answer to claims based upon his alleged fraud and dishonesty) comprised bare denials and assertions in his affidavit evidence to the effect that he: did not own or control Banq; did not engage with Banq's clients; and that documents bearing his signature evidencing his involvement in the conspiracy were forged.
9. The plaintiffs say that Gino Cassaniti's evidence of his ownership and control of Banq was directly contradicted by evidence from each of Ivana Cassaniti, Fred Khalil and Peter Abboud (none of whom was cross-examined in respect of the evidence which contradicted his evidence; including that there was no cross-examination of Ivana Cassaniti regarding her oral evidence of his interest in Banq's profits).
10. The plaintiffs say that Gino Cassaniti's evidence that: (i) he did not engage with Banq's clients was directly contradicted by evidence from former clients such as Elias Nassar and Mario Sande; and (ii) it was not his signature on the documents for the relevant companies' creditors' liquidations (which the plaintiffs say show his direct involvement) was not supported by his own expert's evidence. The plaintiffs place emphasis on this as evidence that Gino Cassaniti lied about his role in the relevant companies' creditors' voluntary liquidations (see the plaintiffs' closing submissions at [575]-[632]).
11. It is said that nowhere in Gino Cassaniti's submissions does he satisfactorily deal with his role in the creditors' voluntary liquidations; in particular, that he does not deal with signing the documents, the false proofs of debt and appointing Fred Khalil as a proxy (other than to say it was not his signature).
12. It is said that, in those circumstances there was sufficient evidence from which to draw adverse inferences and about which (being matters peculiarly within his knowledge) Gino Cassaniti could have provided direct evidence (but did not without explanation), and thus, Gino Cassaniti came under "an evidential burden, or an onus of adducing evidence" (citing Krstic v Brindley at [26]).
13. As to Diamondwish and Rackforce, the plaintiffs say that Gino Cassaniti's submissions in reply are essentially directed at why he says reliance cannot be placed on Frank Criniti's evidence. The plaintiffs submit that Frank Criniti (who is no longer a defendant in these Proceedings) has no axe to grind.
14. Pausing here, it was apparent from Frank Criniti's evidence in the witness box that he blames Gino Cassaniti for what occurred in relation to the matters the subject of the claims that had been made against Frank Criniti in these Proceedings and the situation he has found himself in - his blunt (and disparaging) assessment being that he was manipulated by "an idiot" (at T 556). However, as I have explained above, while I exercise caution in accepting evidence that may well be influenced (subconsciously or otherwise) by his personal feelings towards Gino Cassaniti, I did not find Frank Criniti to be a dishonest witness; and his account of events (and in particular matters such as the advice given in relation to the so-called spider's web of transactions, the backdating of records, and the winding up of companies) is consistent not only with what the objective records show to have occurred over the relevant period but also with advice given to other clients of Banq over the relevant period (even if not exactly mirroring that other advice). To my mind that dispels the suggestion that Frank Criniti's evidence was motivated by some axe to grind against Gino Cassaniti.
15. I have already dealt with the submissions made for Gino Cassaniti as to matters such as the suggestion put to Frank Criniti in cross-examination as to an incident at a Christmas party at the offices of Banq (about which there was no evidence) and the inference sought to be raised by Gino Cassaniti in his submissions (at [117]) that the transfer to Elle Barikhan was for Frank Criniti's own purposes (which suggestion the plaintiffs say was not put to Frank Criniti in cross-examination and is not open here to be made). The plaintiffs' response to those is that there is not basis for any adverse inference to be drawn in respect to those matters (and they say that Gino Cassaniti's response to the evidence from Frank Criniti of Gino Cassaniti's involvement in the implementation of the Scheme as it applied to Diamondwish and Rackforce was insufficient).
16. As to Earth Civil, the plaintiffs say that Gino Cassaniti's submissions focus on why the evidence as to his involvement in Earth Civil should not be accepted (noting that Gino Cassaniti's evidence in relation to Earth Civil was that the documents bearing his signature were forgeries, but that he did not come before the Court to deny his involvement in Earth Civil).
17. As to the submission by Gino Cassaniti (at [149]), to the effect that Earth Civil was incorporated by Michael Abou-Antoun for a legitimate commercial purpose (namely, to provide labour hire services to other companies within the group), the plaintiffs point out that: (i) there is no evidence at all in these proceedings from Michael Abou-Antoun; (ii) Andre Abou-Antoun conceded that he took approximately $1 million in cash from Earth Civil purportedly for wages but (other than his evidence in Court at T 682.30-35 that there were a couple of people that he paid during the period - who when pressed he thought were named Richard and Julie) was unable to name particular employees that had been paid with that cash (see T 682 where Andre Abou-Antoun said that he could name couple but that "there was a lot more but just off the top of my head casting my memory back to that period there they are employees that were with us in that point of time. There was a lot more but yeah…"); and (iii) Andre Abou-Antoun's evidence was that Gino Cassaniti told him to take the money out of Earth Civil (cf the submission by Gino Cassaniti at [154] to the effect that there is no evidence that he approved of, let alone knew, of the withdrawals or the purposes to which they were put). The plaintiffs say that it is not contended that there were invoices in respect of payments out by Earth Civil.
18. As to Bluemine, the plaintiffs say that Gino Cassaniti's submissions focus on elevating the role of Andrew Barsa as the director of Bluemine, but do not deal with fact that Gino Cassaniti gave no evidence about his relationship with Andrew Barsa and was not prepared to be cross-examined on the subject.
19. As to RCG CBD, the plaintiffs say that Gino Cassaniti's submissions are to the effect of adopting (as exculpatory) the practice of "jump on" directors while ignoring the evidence as to Gino Cassaniti's complicity in the false proofs of debt and proxies for RCG CBD's creditors' voluntary winding up.
20. The plaintiffs submit that Gino Cassaniti's bare denial of knowledge of the creditors' voluntary liquidations is a lie and that this, in the absence of plausible evidence from him that would support an alternative inference (rather than mere unsubstantiated general assertions), enables it confidently to be concluded that Gino Cassaniti dishonestly and fraudulently breached his directorial duties to the Insolvent Companies.

Directorships - Banq, Earth Civil, RCG CBD, Bluemine

1. The plaintiffs' case is predicated on the position of Gino Cassaniti as director (be it de jure, de facto, deemed or shadow) of Earth Civil, RCG CBD and Bluemine (and, where relevant, also of Banq). As to Diamondwish and Rackforce, the plaintiffs contend that Gino Cassaniti is accessorially liable for Frank Criniti's breaches of fiduciary duty as the director of those companies.
2. As to the fact of Gino Cassaniti's directorship of the relevant companies, the plaintiffs rely not only on ASIC records (which, pursuant to s 1274B of the Corporations Act, constitute proof of, inter alia, the appointment of directors in the absence of evidence to the contrary) (see Lewis Securities v Carter per Emmett AJA at [161]); but also on the evidence that they say leads to the conclusion that he was acting as a director of the relevant companies, within the meaning of the definition of "director" in s 9 of the Corporations Act, including in the sense that he was the driving force behind their business dealings (see Mistmorn Pty Ltd (in liq) & Wily v Yasseen (1996) 21 ACSR 173 at 178 per Davies J). The plaintiffs note that where Gino Cassaniti denies the veracity of ASIC documents recording his directorships (contending, as he does, that documents are forgeries or were not authorised by him), the onus is on him to prove that the ASIC register recording his directorship of the relevant companies is wrong.
3. As to Gino Cassaniti's role in relation to the various entities, I find as follows.
4. First, I find that Gino Cassaniti was indeed a principal of Banq. I accept Ivana Cassaniti's evidence to the effect that the funds contributed to the establishment and or formation of Banq were jointly provided by the couple and that she regarded her shareholding in Givana (through which 60% of the shares in Banq were held) as jointly held or, perhaps more precisely, held by her on behalf of her and her husband jointly. It is not necessary, in order to reach that conclusion, to treat Ivana Cassaniti as a "front" for her husband; or to regard her role as that of some kind of marital lackey. Rather, it seems to me most likely that the shares in Givana were placed in Ivana Cassaniti's name for some form of asset protection purpose (consistent with the kind of asset protection structuring advice given to numerous of Banq's clients) but that Gino Cassaniti continued to have an interest and play a role in the operation of the business of Banq.
5. While I accept that the self-exculpatory evidence of alleged co-conspirators (Fred Khalil and Peter Abboud) needs to be treated with caution, it is clear from the evidence of others (such as Frank Criniti and Elias Nassar) that Gino Cassaniti played a pivotal role in attracting (and advising) clients to the firm; and Gino Cassaniti himself accepts that he provided specialist tax and accounting advice to clients of Banq. Any suggestion that Peter Abboud was responsible for formulating (as opposed to adopting, following or implementing) the structural advice given to clients at the relevant time is implausible given his junior role at the firm and the fact that he was still studying at the time. As to the role of Fred Khalil in advising clients in relation to such structural issues, that can only logically have been in consultation with Gino Cassaniti since in various instances the arrangements put in place involved the utilisation of companies with which Gino Cassaniti, not Fred Khalil, or for that matter Peter Abboud, had an ownership or directorial role.
6. The weight placed by Gino Cassaniti on the organisational chart prepared by Fred Khalil at the time of the ATO interview (which omits reference to Gino and Ivana Cassaniti and places Fred Khalil himself at the apex of the operations of Banq) is not in my opinion sufficient to displace the evidence of various of the witnesses (referred to earlier in these reasons) as to Gino Cassaniti's involvement in Banq over the relevant period. I am comfortably persuaded of this, even accepting that Gino Cassaniti was said to have been suffering from a lot of personal problems and in the midst of litigation with his cousin at the time.
7. It is inherently implausible that someone in the position of Gino Cassaniti - a specialist tax adviser who had played a formative role in Banq Accountants and in its successor firm, Banq, and in whom numerous clients clearly reposed their trust (see, for example, Elias Nassar's evidence that he would not have retained Banq had he been aware of Gino Cassaniti's bankruptcy), who (through Ivana Cassaniti's shareholding in Givana - that she gave evidence was held jointly with her husband) had a clear financial interest in the performance of the business, would have completely abdicated any oversight or role in the business. Further, this is inconsistent with the evidence as to Gino Cassaniti's ongoing role including in matters such as the change from time to time in, holding by Gino Cassaniti of, directorships in various of the companies in question and the subsequent winding up of the companies.
8. It is further implausible that Gino Cassaniti had no interest or awareness over the relevant period in what was happening by others in the provision of accounting advice at Banq; and this is inconsistent with the evidence not only of Frank Criniti, Mario Sande and Elias Nassar but also with the evidence of: David Rizk as to how he became appointed and then removed as a director of Givana Prestige; Andrew Barsa as to the request he made to Gino Cassaniti when he wished to cease to be a director; and George Said as to the withdrawal of cash on Gino Cassaniti's instructions. All of those matters make clear Gino Cassaniti's ongoing involvement in and presence at Banq.
9. I should make it clear, if it has not already been made sufficiently clear, that I do not draw simply from the fact that Gino and Ivana Cassaniti are married that there should be imputed to him Ivana Cassaniti's knowledge of the day to day affairs of Banq (assuming, contrary to her evidence and submissions, that she had a continuing day to day involvement in the business after the birth of her children). However, I do find significant Ivana Cassaniti's evidence as to the request by Gino Cassaniti that she transfer control of Givana Prestige to Frank Criniti (and her explanation as to the signing of the renewal dealer's licence) as indicative of Gino Cassaniti's involvement in companies associated with Banq and its clients. The evidence of statements made by Fred Khalil and Peter Abboud to various clients of the firm as to companies through which invoices could be issued (being companies in which they held no formal role), as adverted to above, also bespeaks Gino Cassaniti's ongoing involvement in Banq's affairs. Therefore, I find that Gino Cassaniti was a de facto director of Banq.
10. Second, I cannot accept Gino Cassaniti's denial of being a director of Earth Civil, RCG CBD and Bluemine at the relevant times or that he owed them fiduciary or statutory duties.
11. The position as stated in the ASIC records (which are prima facie evidence of the matters there recorded) has been set out already. Gino Cassaniti is there recorded as being a director of: Earth Civil from 1 July 2012 to 18 March 2014; RCG CBD from its incorporation on 16 May 2012 to 18 March 2014; and of Bluemine from 1 April 2013 to 18 March 2014. Subject to the position in relation to Bluemine, the statutory presumption as to the accuracy of ASIC records has not in my opinion been displaced as to Gino Cassaniti's directorship during those periods.
12. As to Bluemine, I am satisfied that Gino Cassaniti acted as a de facto director from its incorporation on 7 June 2012 until 1 April 2013. It is clear that Andrew Barsa was not carrying on any real directorship functions and responsibilities during the period that he was recorded as the sole director of the company. I can accept that Andrew Barsa was genuine in his evidence that the company was set up for the purpose of effecting the truck purchases from Jian Holdings (though it is by no means clear what commercial justification there was for so doing) and that he may have had something to do with the authorisation of the relevant transfers. However, beyond effecting the transfers of funds to George Abboud, there is nothing to show that he played any ongoing role in the affairs of Bluemine. In contrast, I find that Andrew Barsa's evidence, in particular that he sought Gino Cassaniti's permission to cease his directorship of Bluemine, speaks volumes to Gino Cassaniti's influence over Mr Barsa in relation to Bluemine, and thus I find that Gino Cassaniti was a de facto director of Bluemine from its incorporation. While I note the AKA Parties' submission that Andrew Barsa's evidence as to who it was at Banq that was managing and controlling the business of Bluemine often referred collectively to Gino Cassaniti, Peter Abboud and Fred Khalil, the fact that others also performed managerial roles at Bluemine does not impact on a finding that Gino Cassaniti was similarly "managing" the business; it is simply the case that no claim was brought against Peter Abboud or Fred Khalil as to whether they were shadow or de facto directors of Bluemine.
13. As to RCG CBD, again I am not persuaded that the prima facie position that ASIC records are correct has been displaced. I accept that George Khalil appears to have continued to have a role in the company (see the bank account details) notwithstanding the ASIC record that he ceased to do so from 16 May 2012. However, that does not gainsay Gino Cassaniti continuing to have a role in the company.
14. I therefore find that Gino Cassaniti was a director or deemed director of each of Banq, Earth Civil, RCG CBD and Bluemine at the relevant times (and, so far as it is relevant, that he was also the deemed director of Involved Recruitment at the relevant times - having regard to the sheer implausibility of George Said being able to act in a directorship role other than in accordance with Gino Cassaniti's instructions). I note that it was not pleaded that Gino Cassaniti was a de facto or shadow director of Diamondwish or Rackforce.

Breach of fiduciary duties

1. As a director, it cannot be disputed that Gino Cassaniti owed both fiduciary and statutory duties to Earth Civil, RCG CBD and Bluemine.
2. As noted above, the plaintiffs maintain that the Primary Conspirators (i.e., including Gino Cassaniti) agreed to use dishonest (and fraudulent) means with the intention of obtaining, making use of, or prejudicing the economic interests of the Insolvent Companies (pointing to the principles relating to conspiracy as outlined in Peters v R at [74], [79]-[80] but not here seeking damages for fraud).
3. I accept that it would not be unusual for an accounting firm to be the registered office of companies that were its clients; and I accept that an accounting firm might well provide advice as to how companies within a corporate group should be structured in a tax effective way. However, the appointment of directors with no apparent involvement in the companies (such as Christopher Cherry) or apparently as "jump on" directors prior to the winding up of companies (such as Aloeseiafi Faanoi, about whom almost nothing is known on the evidence before me) and seemingly with no regard for their ability or expertise as directors (such as David Rizk and George Said), let alone the appointment as directors of persons who candidly admit that they had serious drug problems or other difficulties at the time, goes well beyond what I would expect of ordinary accounting firm practices.
4. As to the significance placed by Gino Cassaniti on the use of the Banq Maximiser Account (and in particular his assertion as to the lack of knowledge of that account), apart from the fact that Gino Cassaniti was seemingly not above emailing directions to the bank purportedly in the name of or on behalf of his wife in other contexts, I have only his assertion (not tested in cross-examination) as to a lack of awareness of the accounts and operations of Banq at the relevant times (and I am not prepared to place weight on such assertions).
5. I accept that there is no evidence that Gino Cassaniti gave advice to the Borg Parties in relation to the establishment of Borg Family or Borg Civil (that advice coming from Fred Khalil) and that the advice given to the AKA Parties is likely to have been from Peter Abboud and Fred Khalil rather than from Gino Cassaniti. However, I am satisfied that the overall structuring advice must have been formulated by Gino Cassaniti in consultation with at least Fred Khalil (and that Peter Abboud was well aware of the substance of that advice); and that Gino Cassaniti must have been aware that such structuring advice would be given (and was being given) to various clients of Banq other than those to whom Gino Cassaniti personally gave advice. The aptly described "spider's web" of companies incorporated through Banq's offices and the change of directorships and appointment of directors (with Gino Cassaniti's involvement), seemingly on an arbitrary basis (such as the manner in which David Rizk and George Said were appointed as directors of companies) is evidence of Gino Cassaniti's ongoing involvement in the arrangements contemplated by the alleged Scheme.
6. As to the authorisation of payments in and out of the respective companies, while I accept that Gino Cassaniti may not have had direct knowledge of all of the transfers, I accept that he was a principal of Banq and I find that he must have been aware of amounts passing through its accounts from time to time.
7. I do not accept that the evidence establishes that Bluemine operated as a labour hire company; nor do I accept that the evidence is consistent in relation to the position of Rackforce being no more than a labour hire company (though I accept that there was evidence that certain of the Banq employees may have been employed through or paid by it).
8. As to the Earth Civil impugned transactions, I accept that these do not neatly fit within the overall pattern or mould of the alleged conspiracy (having regard to the matters to which the AKA Parties have pointed). I accept that Gino Cassaniti was not involved in the initial advice given in relation to the structuring of the AKA Group companies and had no direct involvement in that regard. It was clearly Andre Abou-Antoun's understanding (albeit likely to have been gleaned from his discussion with Michael Abou-Antoun) that the advice as to restructuring came from Gino Cassaniti. More relevantly, perhaps, it was his evidence that the withdrawal for moneys from Earth Civil was "as per [Gino Cassaniti's] instructions". I do not accept that there is no evidence that Gino Cassaniti did not give instructions in relation to invoicing (and it is again significant that, when Fred Khalil or Peter Abboud referred to having companies who could issue invoices, they were referring to companies controlled by Gino Cassaniti).
9. The idea that Andre Abou-Antoun had sufficient sophistication and knowhow to be able to determine how the impugned transactions and payments were to be effected through the companies without the assistance and advice of the accountants at Banq is (having regard to his evidence in the witness box), without disrespect to him, risible. Further, the need for the interposition of other entities in the payment chain both for this and the Bluemine truck transactions is unexplained.
10. As to Bluemine, as noted above, it is clear that Andrew Barsa's role in Bluemine was limited to the truck transaction and payments to George Abboud.
11. I find that the conduct in which Gino Cassaniti engaged in promoting (in the case of certain of the Banq clients) and/or assisting in the implementation of the Scheme Recommendation (in the case of others such as the Borg Parties and AKA Parties) (referred to in the chronology of events and submissions above) exposed Earth Civil, Bluemine and RCG CBD to the risk of tax losses and insolvency; and amounted to breach of his fiduciary and statutory duties as a director of those companies. It is evident from his conduct and involvement in the scheme that Gino Cassaniti was not discharging his duties with the degree and care of a reasonable director (s 180), nor was he exercising his powers or discharging his duties in good faith in the best interests of Bluemine and for a proper purpose (s 181); and find that he was using his position improperly to gain an advantage for himself and others (s 182(a)) and to cause detriment to Bluemine (s 182(b)). By way of a similar analysis I find that he has breached his fiduciary duty of care and diligence and to act in the best interests of Bluemine.
12. In particular, I consider it beyond doubt that Gino Cassaniti breached those duties in recommending or advising the transactions in question in that they clearly exposed Earth Civil, Bluemine and RCG CBD to the risk of tax liabilities that he must have known (and either intended or was wilfully blind as to the risk) that they would not be in a position to meet in due course - and that they would then be wound up. I accept the characterisation of Gino Cassaniti's treatment of the companies as "cavalier" (and I refer to Frank Criniti's evidence in this regard, which I accept, as to how Gino Cassaniti described the backdating of directorships, winding up of companies and the "spiders web" of transactions; which evidence, as I have already noted, is consistent with what in fact happened across a range of Banq clients and of which Frank Criniti himself would not have been aware at the time). I also find that Gino Cassaniti must have been aware of the dishonesty of the invoicing aspects of the Scheme. Ultimately, I accept that the breaches of duty were dishonest and fraudulent in that, by recommending and implementing the Scheme resulting in the breaches of duty, Gino Cassaniti sought to deprive the companies of their ability to meet their tax liabilities in order to secure tax benefits and that this is a clear transgression of the ordinary standards of honest behaviour.

Accessorial liability - Diamondwish and Rackforce

1. As to the accessorial liability claims against Gino Cassaniti in the Diamondwish and Rackforce proceedings, the allegation is that he knowingly assisted Frank Criniti to breach his fiduciary duties to those companies. I accept the plaintiffs' submission that the elements of that claim are here made good. Frank Criniti was clearly in breach of his duties as director of those companies in entering or causing the companies to enter into the impugned transactions (in the manner in which Gino Cassaniti had advised) and this was at Gino Cassaniti's instruction and with his involvement. Moreover, I find that Frank Criniti's breaches of duty were part of a dishonest and fraudulent design that transgressed ordinary standards of honest behaviour (see below).
2. It is clear that Gino Cassaniti assisted Frank Criniti in that design. I accept (and find it significant) Frank Criniti's evidence that he did not even know what business Diamondwish carried on; and that both it and Rackforce were incorporated on Gino Cassaniti's advice and as part of Gino Cassaniti's oversight of the accounting arrangements for the Criniti companies. The suggestion that Frank Criniti himself conceived of or implemented the arrangements pursuant to which these and the other Criniti companies were incorporated and operated (even if he did have the motivation to minimise his personal tax) is implausible in the extreme. Someone with accounting expertise must have been responsible for putting in place the structure adopted for the Criniti companies; and I am comfortably persuaded that that was Gino Cassaniti, as Frank Criniti says.
3. Gino Cassaniti's knowledge of the dishonesty of the Scheme can confidently be inferred from the evidence as to the advice he gave to Frank Criniti and his continuing involvement in aspects of the Scheme.
4. Therefore, subject to the issues of causation and loss (which I consider in due course below), I find that the claimed liability of Gino Cassaniti for breach of fiduciary and statutory duties, and accessorial liability in relation to Frank Criniti's breach of those duties, has been established to the requisite degree of satisfaction.

Submissions and findings - Fred Khalil

1. The plaintiffs carry out a similar analysis of the evidence in relation to Fred Khalil's alleged involvement in the Scheme, pointing to his relationship with others at Banq and his role at Banq and Banq Accountants (as set out above).

Fred Khalil's role in Scheme recommendation and implementation

1. As to Fred Khalil's role in recommending the Scheme, the plaintiffs refer to: Tanya Borg's evidence (see above) that Fred Khalil advised her (and her husband, Michael Borg) in about mid 2012 as to the structuring of the Borg companies and the invoicing of payments; and the reliance of Borg Civil on the advice of Fred Khalil and Banq; Andre Abou-Antoun's evidence of the advice given in relation to the incorporation of the various AKA companies, the utilisation of Earth Civil ostensibly as a labour hire entity and the use of false invoices; and Mario Sande's evidence to a similar effect.
2. The plaintiffs say that essentially the same structuring advice was given by Fred Khalil to Tanya and Michael Borg as was given by Gino Cassaniti to Frank Criniti and by Peter Abboud and Fred Khalil to Andre Abou-Antoun and the AKA Parties. Additionally, the plaintiffs submit that essentially the same invoicing advice was given by Fred Khalil to Tanya Borg regarding the payments into RCG CBD as that given by: either Gino Cassaniti, Fred Khalil or Peter Abboud to Mario Sande in respect to the Statewide Parties payments into RCG CBD; Fred Khalil and Peter Abboud to Andre Abou-Antoun regarding the payments into Bluemine; and by Gino Cassaniti to Elias Nassar in respect to the payments by the Wenman Group into RCG CBD. The plaintiffs submit that it is inherently unlikely that the same advice was given by three different people (all of whom were principals of Banq) to those various clients of Banq in the absence of the Primary Conspiracy. I agree.

Fred Khalil's role in the accounting systems of Scheme Participants

1. Reference is again made to Tanya Borg's evidence (at [48] of her affidavit sworn 4 December 2018) in relation to Fred Khalil's involvement in the accounting systems of the Borg Parties; Mario Sande's evidence in relation to the Statewide Parties; Andre Abou-Antoun's evidence in relation to the AKA Parties and Frank Criniti's evidence in relation to the Criniti Group companies (see above). As to Tanya Borg's evidence, in her affidavit Tany Borg deposed (at [48]): Fred and other employees at Banq, provided more than accounting advice in that they were also business advisors and were involved in our industry. They also assisted with things like workers compensation, audits, client audits, client and industry contacts and payroll tax matters. Eventually, Fred also recommended to us that we outsource our workers to various companies controlled by him.

Fred Khalil's role in payments in and out of the Insolvent Companies

Borg Parties

1. The plaintiffs again submit that there was no satisfactory explanation for the round robin transactions identified in the pleadings into which the Borg Parties entered and note Tanya Borg's explanation that "Fred instructed us to do it with this" in relation to the transactions (see at T 1369.26).
2. The plaintiffs say that (in the absence of explanation, and upon the whole of the evidence relating to the transactions between Borg Family and RCG CBD) it is to be inferred that Fred Khalil made representations to Tanya Borg that she has failed to reveal to the Court; and that the representations were as pleaded in [148] of the RCG CBD third further amended statement of claim, namely, that, by utilising RCG CBD in these transactions in the circumstances and events that did occur (including the absence of genuine commercial documents relating to the transactions), Borg Family could claim GST credits and depreciation deductions, reduce its taxable income, and acquire assets from Excavation for virtually no consideration.

Wenman Parties

1. The impugned Wenman Parties transactions involved Ignite Promotions making payments totalling $781,955 to RCG CBD in the period 30 January 2013 to 6 March 2013, and RCG CBD making payments totalling $710,868.20 to Wenman Brimak in the period 5 February 2013 to 7 March 2013 (i.e. minus a fee of ten elevenths). The plaintiffs point to Elias Nassar's evidence that RCG CBD did not provide any labour hire services to Ignite Promotions.

Statewide Parties

1. The impugned Statewide transactions, involved payments from State Wide Design to RCG CBD and subsequent payments from RCG CBD to Statewide Printing minus a fee of ten elevenths. The plaintiffs say that, Mario Sande's evidence (see above) provides that on each occasion that there was a payment into RCG CBD and a subsequent payment out of RCG CBD there had to have been a conversation between one of Fred Khalil, Peter Abboud or Gino Cassaniti (noting that Mario Sande was not able to identify or was not prepared to identify which of them) on the one hand and George Khalil on the other. The plaintiffs submit that the transactions involving the Statewide Parties could not have occurred without George Khalil's knowledge and co-operation as the controller of RCG CBD's bank account.
2. Further, it is said that, as the person who lodged the tax returns and other such documents for State Wide Design and Statewide Printing, Fred Khalil must have been aware that there were no genuine commercial documents in respect to any of the payments into or out of RCG CBD by State Wide Design and Statewide Printing and that the Statewide Parties had no legitimate basis to make and receive the payments and claim them as legitimate expenses. It is said that the inference should be drawn that the transactions were not for any legitimate commercial reason but were in furtherance of the Primary Conspiracy. It is said that the true explanation for the transactions was within the knowledge of Fred Khalil (who did not reveal that to the Court).

Reliance Cleaning

1. The plaintiffs point to the evidence given by Fred Khalil in his ATO interview as to the impugned Reliance Cleaning payments.
2. The plaintiffs say that mere "invoicing" is not a business activity and cannot be the business of any company, but that the Primary Conspirators from time to time regarded "invoicing" per se as a supposed form of business activity. It is said that it could be so only in the course of fraudulent activity; and that "invoicing" was the conspirators' euphemism for the activity of the company that would issue false invoices. The plaintiffs submit that Fred Khalil's response to the ATO about the different functions Reliance Cleaning and RC Group Aust is nonsense and that his inability to give a straight answer to the ATO corroborates the liquidator's position that Reliance Cleaning was "just another pawn in the scheme used to wash money into the hands of the primary conspirators or those associated with them".

Earth Civil

1. In summary, the impugned AKA Parties to Earth Civil transactions involved AKA NSW and AKA Civil paying a total of $986,000 into Earth Civil and $965,000 being withdrawn in cash by Michael and Andre Abou-Antoun (see Tables 1.1 to 1.3). The plaintiffs refer to Andre Abou-Antoun's evidence that this "was a device of Gino Cassaniti and Fred Khalil" (see above).

Bluemine

1. In summary, the impugned AKA Parties to Bluemine transactions involved AKA Civil and AKA NSW paying a total of $3,851,818.21 to Bluemine in the period from 3 December 2012 to 1 May 2013; and in the period from 4 December 2012 to 9 May 2013, Bluemine paying a total of $3,426,215 to MAL Land Group, LAM Haulage and The Great Brothers (see Table 5.2). (The plaintiffs say that some payments were unable to be traced.) The plaintiffs say that it is clear that all of those payments were made pursuant to the arrangement between Peter Abboud and Fred Khalil on the one hand and Andre Abou-Antoun on the other, as referred to above (and that this demonstrates the conspirators' control of the flows of money). In this regard, the plaintiffs point to Andre Abou-Antoun's evidence in cross-examination that Fred Khalil and Peter Abboud gave the directions as to the bank transfers.

Diamondwish and Rackforce

1. The payments made from and to Diamondwish and Rackforce referred at [59(i)], [59(ii)], [66(i)] and [66(ii)] above are broken down in the plaintiffs' closing submissions in Tables 7.1, 7.7, 9.1 and 9.2. The plaintiffs refer in this regard to Frank Criniti's evidence that, inter alia, payments out were "always done under the instruction of Gino Cassaniti" (see above).

Fred Khalil's involvement in benefits to the Scheme Participants

Borg Parties, Wenman Parties, Statewide Parties, AKA Parties, Criniti Companies

1. As to Fred Khalil's involvement in benefits to the Borg Parties, Wenman Parties, Statewide Parties, AKA Parties and Criniti Companies, the plaintiffs rely on the preparation and lodgement by Fred Khalil of the BAS and tax returns for those parties which assisted to claim tax benefits. Reference is made to the taxation benefits claimed and received by Borg Family and Borg Civil as a result of the transactions with RCG CBD (as set out above).
2. For example, the plaintiffs say that Fred Khalil, by lodging Borg Civil's BAS, as the company's tax agent, declared that those BASs were true and correct (Ex K at 36432-36444); and also that by lodging the Borg Family Trust tax return, he acknowledged that the tax return had been prepared in accordance with information supplied by Borg Family, that he had obtained from the director of Borg Family a declaration that the information was true and correct, and he had been authorised to lodge the return (Ex K at 36453). The plaintiffs say that Fred Khalil knew that these taxation returns were false.
3. The plaintiffs point to the same declarations and acknowledgements made in the BASs and tax returns for the Wenman Parties, Statewide Parties, AKA Parties and Criniti Companies, and submit that Fred Khalil knew that the contents of those forms were false given that the transactions were not genuine and that he knew that those parties were not entitled to the deductions.
4. As to the AKA Parties in particular, the plaintiffs say that Fred Khalil knew that when he prepared the BAS and tax returns lodged by AKA NSW and AKA Civil that they were claiming the false invoices issued by Bluemine as legitimate expenses in their returns. It is said that, given his conversations with Andre Abou-Antoun referred to above, he did so with the knowledge that AKA NSW and AKA Civil were not entitled to those deductions that those expenses were false, as was the information that he was providing to the ATO.

Fred Khalil's involvement in fees and other benefits to the Primary Conspirators and associated entities

RCG CBD - fees and other benefits

1. As to the payments totalling $653,439.54 made by Banq to RCG CBD in the period from 31 July 2012 to 27 May 2013, these were said to have been for labour hire services provided by RCG CBD to Banq (see the letter dated 6 October 2016 from Brown Wright Stein to the ATO, Ex K at 31914-31922 and the purported invoices issued by RCG CBD to Banq, Ex K at 31923-31976). The plaintiffs say that it cannot seriously be contended that those invoices were genuine (given the false invoice numbers, Banq's PO Box and telephone number in the header and that the format was identical to other false invoices, referring by way of example to Mario Sande's and George Said's evidence about this). It is noted that Banq's 2013 profit and loss statement disclosed no such labour hire expense (Ex K at 34233). Further, it is said that Peter Abboud admitted (see below) that RCG CBD was never a labour hire company.
2. As to the payments totalling $920,415 made by RCG CBD to Banq in the period from 10 September 2012 to 30 May 2013 (Table 3.2), it is said that the basis of those payments has not been explained by any of the Primary Conspirators. It is said that, given that the payments to Banq from RCG CBD and Bluemine totalled $1,514,060 in the 2013 financial year and that Banq had substantial clients including the Criniti companies, the Borg Parties, the AKA Parties, the Wenman Parties and the Statewide Parties, it is clear that at least a significant part of those payments were not disclosed as income (considering $1,575,371 was disclosed) (Ex K at 34233).
3. Insofar as Fred Khalil (in his affidavit at [46]) suggests that he and other staff at Banq undertook clerical work for RCG CBD for a period of time, the plaintiffs note that no records were produced by him either to the liquidator or to the Court which would substantiate any work let alone work to the value of $920,415. Reference is made to Fred Khalil's evidence in the course of his ATO interview in this regard (see above).
4. It is said that the total amount paid by RCG CBD far exceeded what could be reasonably expected for accounting fees for an eight month period, and that given this and the rounded amounts involved, any assertion that Fred Khalil did not know what those payments were for is not believable.
5. The plaintiffs say that the payments made by RCG CBD to Banq by the Primary Conspirators were in furtherance of the Primary Conspiracy and saw large amount of cash move through RCG CBD into their hands, as pleaded in the RCG CBD third further amended statement of claim.
6. The RCG CBD third further amended statement of claim identifies a number of transactions that were made by RCG CBD to companies associated with Fred Khalil (see at [44], [166], [171], [211], [298]). The liquidator in his evidence has not identified any benefit that RCG CBD received in return for those payments; nor was he provided with any documents let alone genuine commercial documents which properly explained any of those transactions. The affidavit evidence of Fred Khalil is said to be "unsurprisingly bereft of any explanation" as to why those payments were made to entities owned by and/or associated with him, the obvious inference from his silence is that they were made as part of the Scheme pleaded by the plaintiffs and were part of the benefit he received from his and Banq's involvement in that scheme.
7. The plaintiffs say that those transactions are further patent examples of a conspirator getting cash out of various companies and into RCG CBD, and through it into his or others' hands, tax free, as Fred Khalil, Gino Cassaniti, Peter Abboud and George Khalil determined.

Bluemine - Fees and other benefits

1. Finally, it is noted that, at T 666.29, Andre Abou-Anton agreed that they (Fred Khalil and Peter Abboud) said to him that a 2.5% fee (paid to Banq) was great value relative to the tax benefits that his companies would be receiving (which the plaintiffs say was an understatement). I interpose to note that Andre Abou-Antoun agreed that during the ATO interview he agreed to that proposition but he resiled from that answer during cross-examination, saying that the answer was not true and that he "can't remember if [he] understood [the] question at the time" (T 666-667). As stated above, I treat Andre Abou-Antoun's evidence with no little degree of caution.

Fred Khalil - Change of directors and liquidations

1. The plaintiffs refer to the winding up of Zagoonda on 5 January 2010 and note that the Form 484, purportedly dated 15 December 2008, which had the effect of changing the composition of the directors of Zagoonda from that date, was lodged by Fred Khalil on 27 October 2009 (Ex S at 15-23). It is said that this is an example of the conspirator backdated corporate changes.
2. The plaintiffs also refer to the creditor's voluntary winding up on 20 December 2011 of Banq Accountants (with a debt of $459,810.05 owing to the ATO). The plaintiffs say that it is to be inferred, as a matter of credit against the Primary Conspirators and also against Ivana Cassaniti, that they regarded it as a normal event of conducting business not to pay tax, and that to rid themselves of that obligation at any time they could just wind the company up, have a slight name change and continue business as before. It is submitted that this was dishonest.
3. The plaintiffs point to Fred Khalil's affidavit evidence as to his role in preparing the liquidation documents, obtaining creditors' proxies and attending the creditors' meetings.
4. The plaintiffs say that, in every case, Banq lodged a proof of debt in the liquidations of the Insolvent Companies (Table D). In the liquidations of RCG CBD and Earth Civil, the amount claimed in the proof of debt was $65,000; in Bluemine and Diamondwish the proof of debt amount was $20,000; and in Rackforce it was $100,000. Again, it is said that the coincidence of the rounded sums claimed by the same creditor in each of the liquidations of the Insolvent Companies can only be explained by reason of the existence of the Scheme.

Fred Khalil - Knowledge and culpability

1. The plaintiffs contend that it is to be inferred from all of the conduct referred to above involving Fred Khalil that he was a Primary Conspirator. It is said that it can comfortably be concluded that the conduct occurred, and was orchestrated and implemented by Gino Cassaniti, Fred Khalil, Peter Abboud and George Khalil in furtherance of the Scheme with Fred Khalil's knowledge.

Khalil defendants' (Fred Khalil, George Khalil and George Said) - submissions in defence

1. As noted above, each of Fred Khalil and George Khalil is identified by the plaintiffs as a Primary Conspirator in each of the Proceedings; George Said is identified as a Scheme Participant in the Bluemine and RCG CBD Proceedings only.
2. It is submitted that the necessary implication of these transactions is that the first leg of the impugned transactions (i.e., the payment of moneys in respect of false invoices) would not have occurred but for the assurance of the second leg of the impugned transactions (i.e., the payments out of the said moneys to the company or person associated with the paying company).
3. Insofar as the advantage said to have been promoted in each case by the Primary Conspirators to the paying company (i.e., the company to whom the first invoice was rendered) was the availability of a tax deduction and a claim for GST credits for the payments made to the Insolvent Company (presumably, it is said, supported by the false or inflated invoices received by the paying company from the Insolvent Company), the Khalil defendants say that there is no mention by the plaintiffs of the likely tax effect of receipt of those moneys in the hands of the subsequent recipient. It is said that it would be reasonable to expect that those receipts would in all probability be included in the assessable income of the ultimate recipient, whether characterised as having been received on capital or revenue account (and that, if not brought to account as assessable income, there is a net loss to the Revenue as a consequence of the deduction claimed by the paying company).
4. It is submitted by the Khalil defendants that there is nothing intrinsically dishonest or deceptive in the making of payments by the Paying Participants to the Insolvent Companies (or by the Insolvent Companies to the ultimate recipient) even in the absence of a commercial explanation for the payments; and that transactions which are not "commercial" are not, on that fact alone, unlawful.
5. The Khalil defendants say that it is when the paying company claims from the Commissioner a deduction against its assessable income for the amount paid to the Insolvent Company, that an issue arises; namely, that a representation is then being made to the Commissioner which effects the paying company's liability to income tax for the year in which the deduction is claimed (and similarly, that if a credit for GST paid is also claimed there is a further such representation). The Khalil defendants accepted that it would be unlawful for the ultimate recipient to fail to disclose the receipts. They note that the alleged benefit to the Insolvent Company, in this scenario, is a fee taken between the receipt from the paying company and the payment out to the ultimate recipient.
6. Insofar as the pleaded claim includes an alternative of the Scheme that encompasses the issue of invoices by the Insolvent Companies at "inflated prices" for the provision of goods and services, the Khalil defendants say that this does not sit well with the plaintiffs' allegation that the sole reason for the existence of the Insolvent Companies was the receipt and payment of funds (and not the supply of goods or services and that they never carried on any genuine business). In this regard, the Khalil defendants suggest that insofar as the plaintiffs maintain that in the majority, if not all, of the transactions there were no goods or services provided then the reference to "inflated" prices is redundant.
7. The Khalil defendants say that the further implication of inflated prices is that the return of the funds albeit to another party, presumably by way of direction, is effectively a rebate of the amount charged which would affect the value of the deduction or be required to be returned as assessable income of the paying company.
8. The Khalil defendants say that if the invoice is false, to the extent that it does not reflect a deductible expense, then the paying company has misrepresented its tax position to the Commissioner, and has understated its taxable income; and that, by issuing the invoice, the Insolvent Company has assisted the paying company in that conduct, if the invoice does not reflect a genuine expense to the paying company.
9. As to the defendant witnesses who were called in the plaintiffs' case, the Khalil defendants say that (apart from Andrew Barsa), as Scheme Participants, those witnesses have a clear interest in the outcome of the Proceedings (in their exposure to liability for breaches of fiduciary duty if the allegations of a dishonest and fraudulent design are made good). It is said that, in the circumstances, there is little which those defendant witnesses could say to deny participation in the transactions between their companies and the Insolvent Companies, and that the only way to minimise their exposure to liability was (as they did) to deny knowledge of the circumstances of the alleged dishonest or fraudulent design.

Fred Khalil

1. Turning then to Fred Khalil's position, the Khalil defendants say that, although at the time of the relevant events he was the sole formal director and secretary of Banq, holding 30% of its shares, he was not the only principal in the business of Banq providing accounting and tax advice to Banq's clients (a proposition which, as evident from the conclusion I have reached above in relation to Gino Cassaniti, I accept).
2. It is also accepted by the Khalil defendants that Fred Khalil acted as a senior accountant in the business of Banq and handled day to day activities of the accounting business of Banq. However, the Khalil defendants point to Fred Khalil's evidence that Gino Cassaniti and Ivana Cassaniti were also involved in the management and supervision of Banq's staff in the conduct of the business (see Fred Khalil's affidavit sworn 25 March 2019 at [24]). It is said (and again I accept) that Gino Cassaniti continued to play an important managerial role as a partner in the business of Banq, notwithstanding his bankruptcy (see Fred Khalil's affidavit sworn 25 March 2019 at [30]).
3. Further, while it is accepted by the Khalil defendants that, as a registered tax agent, Fred Khalil carried out the supervisory arrangements in that element of Banq's business (and, by holding the sole directorship of Banq, it was only Fred Khalil who was required to meet the standards of propriety required by the Tax Practitioners Board for registration of Banq itself as a tax agent), the Khalil defendants say that it is incorrect for the plaintiffs to assert (by reference to the responsibilities of a registered tax agent in lodging income tax returns and BAS returns with the Commissioner) that Fred Khalil was "responsible" for any information in documents lodged with the Commissioner of Taxation being "true and correct" (see plaintiffs' submission at [644]-[645]). The Khalil defendants say that this assertion is incorrect and overstates the responsibilities of a tax agent as set out in s 30.10 of the Tax Agent Services Act.
4. It is noted that s 30.10(9) of the Tax Agent Services Act requires a registered tax agent to take reasonable care in ascertaining a client's state of affairs, to the extent relevant to a statement being made or thing being done by the agent on behalf of the client. The Khalil defendants point to s 50.30 of the Tax Agent Services Act (which prohibits a tax agent in the course of providing a "tax agent service" from signing a declaration or other statement required or permitted by taxation law if the document in question was not prepared by the agent, another tax agent or someone working under the control and supervision of a tax agent), noting that "tax agent service" is defined in s 90.5 of the Tax Agent Services Act; and they refer to s 388-70 in Schedule 1 to the Taxation Administration Act (which provides in relation to a return, notice, statement application or other document given to the Commissioner by an agent on behalf of another, that the agent must make a declaration as required by the document stating that: the document has been prepared in accordance with the information supplied by the other entity; the agent has received a declaration from the other entity stating that the information provided to the agent is true and correct; and the agent is authorised by the other entity to give the document to the Commissioner).
5. The Khalil defendants say that the requirement that the client (on behalf of whom the agent is making the declaration in the lodged documents) provide a declaration that the information is true and correct is plainly intended to satisfy the tax agent's obligation in s 30.10(9) of the Tax Agent Services Act; and that it is the client who is responsible for the information provided to the tax agent (on the veracity of which the tax agent ultimately relies).
6. The Khalil defendants say that knowledge on the part of the tax agent of the veracity or otherwise of the information provided by the client cannot be inferred simply by reason of the standard generally imposed upon tax agents.
7. Turning then to the particular impugned transactions, the Khalil defendants say as follows.

The Borg Transactions

1. The Khalil defendants say that Tanya Borg's evidence concerning the initial advice given to her (and to Michael Borg) is uncontroversial and well within the usual ambit of modern accounting and business advice (which it is said would include assistance with matters such as workers' compensation, audits, client audits, industry contacts, payroll tax and the "outsourcing" for contract workers to be engaged). (I accept that general submission to an extent but note that it does not encompass the invoicing aspects of advice given to at least some of the Banq clients.)
2. The Khalil defendants say that, where an accounting firm advises of the adoption of a fresh corporate structure, it is likely (and cannot be controversial) that the companies would be obtained by the accountants and would have the accountants' address as the registered office of the new companies. As indicated above, I accept this as a general proposition. Furthermore, it is said (and again, as a general proposition I would accept) that the promotion by accountants in the same firm of a particular structure among a number of their clients is also uncontroversial. The Khalil defendants say (and I accept) that it does not follow (from the fact that a particular structure has been adopted by a number of the firm's clients) that, if one or more clients engage in transactions which are tainted for some reason, then the other clients adopted that structure in order to carry out like transactions.
3. The Khalil defendants say that the advice given by Fred Khalil in the case of the Borg transactions, i.e., that assets should be transferred from one entity, which the Khalil defendants say had presumably become obsolete (a proposition with which the plaintiffs cavil on the basis that there is no evidence to support a submission that Excavation had become obsolete), to another entity associated with the Borg entities; and that, for the purpose of the transfer of assets (a capital transaction), a valuation should be obtained of the assets to be transferred (noting that such a valuation was in fact obtained) (see T 1324.22-33; and the Hymans Report, Ex 20, Tab 9) is advice consistent with the transfer of depreciable assets between parties not operating at "arm's length" (in order, it is said, to establish an "arm's length" price that might be accepted by the Commissioner as a proper value in the books of the transferee entity).
4. It is said that there are a variety of reasons for obtaining a valuation which are commercially explicable but, relevantly, that it is inconsistent with a scheme involving false or artificially inflated invoiced prices that assets would be transferred based upon an arm's length valuation. It is further submitted that the proposal adopted by the Borgs that the assets be transferred to the Borg transferee entity through RCG CBD (an "ostensibly arm's length" company), is also consistent with a strategy of reinforcing an arm's length value for the transferee.
5. The Khalil defendants (referring to the plaintiffs' submission at [662]) say that whether or not Tanya Borg could give an explanation as to why "Excavation" was not paid directly for the transfer of the assets (or why there needed to be an intermediary for the transaction to occur) is beside the point; rather, that whether this is a Scheme transaction depends on whether a tax deduction was claimed for the payments made by the Borg transferor to RCG CBD. It is asserted (by reference to the plaintiffs' submissions at [664]) that the plaintiffs are well aware that the transactions were on capital account and that a tax deduction was not claimed by the transferor.
6. The Khalil defendants say that, whether or not Tanya Borg is accepted to be a witness of truth, the absence of evidence of an explanation (where the transactions actually undertaken were evidently different from those detailed in [148] of the RCG CBD third further amended statement of claim) cannot support an inference that the alleged representations were ever made by Fred Khalil to the Borgs.
7. It is said that the plaintiffs' submission (at [665]) (that the advice to transfer the business assets through RCG CBD is essentially the same as that given to other clients of Banq) is incorrect. It is noted that the two fundamental premises of the plaintiffs' case are that the Scheme operated by providing the Paying Participants with evidence of an expense on revenue account for which they could claim a tax deduction, for a service which was illusory or minimal compared with the invoiced cost; whereas the Borg transactions appear to be on a capital account and related to assets which have a real value. (It is again noted that the plaintiffs point to no evidence of a tax deduction being claimed by the Borg transferor or paying entity).
8. Whether or not the Borg transactions "suffer from a degree of apparent artificiality", the Khalil defendants say that it is plain that they differ from the plaintiffs' asserted version of the facts. The Khalil defendants say that the plaintiffs' submissions (at [665] and [666]) overstate the case; that these are not transactions with no subject matter which has no real intrinsic value; and that the fact that the transfers of assets through RCG CBD have a tax effect (which may be a reason they were undertaken in this manner) does not mean that they were not genuine.
9. The Khalil defendants say that what is evident, from the material relied upon by the plaintiff in its submissions concerning Fred Khalil, is that the only direct and explicit evidence of the advice which he gave to clients of Banq, with regard to any transactions with the Insolvent Companies (i.e., the advice given to the Borg Parties), was not consistent with the allegations against him of promoting or assisting in implementing a fraudulent and dishonest breach of fiduciary duty owed to RCG CBD.
10. Pausing here, in relation to the advice given to the Borg Parties by Fred Khalil, I accept that the impugned transactions (whatever may have been the intention at the time the advice was given) do not fit consistently with the alleged Scheme in that there is at least an argument that RCG CBD was interposed in the transaction in order to reinforce the arms' length nature of the transaction (but see the plaintiffs' submissions in reply on this issue).

The Wenman Parties

1. The Khalil defendants point out that the plaintiffs, in their submissions, assert that it was Gino Cassaniti who advised Elias Nassar, in connection with the Scheme (see at [667]). The Khalil defendants say that the plaintiffs do not point to any evidence of involvement by Fred Khalil in the affairs of the Wenman Parties other than the signing and lodging of BAS returns and income tax returns on behalf of the Wenman Parties ([671]).
2. The Khalil defendants accept that Fred Khalil's declaration is that the information was supplied by the director, who also gave a declaration, was true and correct. However, it is said that it does not follow from that proposition that Fred Khalil knew that the returns were false; nor, in the absence of any other clear evidence, can it be inferred from the evidence referred to and relied upon by the plaintiffs that he was aware of the circumstances which constituted the dishonest and fraudulent design of the fiduciary.

The Statewide Parties

1. The Khalil Parties note that Banq provided general accounting and financial services to the Statewide companies for a number of years and it is accepted that the accountants at Banq had access to the books of the Statewide group. The Khalil defendants do not appear to cavil with Mario Sande's evidence that he dealt with Gino Cassaniti, Fred Khalil and Peter Abboud over the years but they point out that Mario Sande was unable to say from whom at Banq he had received the advice that moneys could legitimately be channelled "from company A to company B". It is said (and I accept) that Mario Sande's recollection of the advice was "vague to say the least" (see at T 776.5).
2. The Khalil defendants say that, given the involvement of Banq as the accountants of the Statewide group, and the regularity with which Mario Sande saw the accountants over the years, it is explicable that Mario Sande would not recall who it was who gave him any particular advice (even though in this instance the ramifications of the advice have proven to be long-lasting and damaging).
3. It is submitted that (for the reasons submitted by the Khalil defendants in relation to the Borg transactions) the advice given by Fred Khalil to the Borgs is not "essentially the same advice" which it is asserted was given to Mario Sande (cf [676] of the plaintiffs' submissions).
4. Again, it is said that the only submission directed by the plaintiffs squarely at Fred Khalil (at [688] and [690]) is that he must have known "the true explanation for the transactions", because he was the person who lodged the companies' tax returns and the like; and the Khalil defendants submit that this allegation is premised on the (incorrect) assumption that a tax agent audits and vouches the veracity of the information provided by the client included in the client's tax returns.

Reliance Cleaning

1. As to Reliance Cleaning, the Khalil defendants say that the evidence of Fred Khalil referred to in the plaintiffs' submissions at [692] is (albeit less than clear) an explanation to officers of the ATO of the respective roles of different companies and how employees in the various businesses were paid; and that it does not assist the plaintiffs' case against Fred Khalil (cf [693] of the plaintiffs' submissions).

AKA Parties

1. The Khalil defendants say that there are two fundamental problems with the evidence of Andre Abou-Antoun: first, that it is likely largely based upon what he has told by his brother Michael but presented as his own (see T 679.21-680.42); and, second (and more significantly for Fred Khalil), that Andre Abou-Antoun now says that the advice that he was given was given to him by Peter Abboud and Fred Khalil.
2. The Khalil defendants agree with the plaintiffs' submissions (at [703]) to the effect that the evidence given by Andre Abou-Antoun that it was Peter Abboud and Fred Khalil who had advised "us" that they had a company which owned trucks and tipping sites and could arrange exaggerated invoices for a fee, was significant (it being the only evidence that directly links Peter Abboud and Fred Khalil in promoting the Scheme in relation to Bluemine). However, the Khalil defendants say that this evidence is probably untrue.
3. It is noted that all of the significant features of the plaintiffs' version of the Scheme were put to Andre Abou-Antoun in cross-examination by Senior Counsel for the plaintiffs and that Andre Abou-Antoun denied any prior knowledge of each relevant fact (T 705.22-706.14).
4. The Khalil defendants say that it is clear from the transcript of his evidence when questioned by the ATO that Andre Abou-Antoun considered himself under significant pressure (and they submit that this was also the case when he was giving his evidence in Court). They argue that this may explain the quality of his evidence.
5. The Khalil defendants place emphasis, in connection with the accusation made against Peter Abboud and Fred Khalil of promoting the Scheme, on the December 2017 correspondence between Andre Abou-Antoun (and his later accountants and advisers, PwC) and the ATO. It is said that this was in circumstances where Andre Abou-Antoun was under far less pressure to "get the story straight" (T 745.22-29), pointing out that Andre Abou-Antoun acknowledged in Court that the information contained in the correspondence with the ATO was based upon his knowledge and the records of the AKA Group (T 745.3-9).
6. It is noted that, in the 31 December 2017 correspondence to the ATO, and accompanying answers to requisitions, Andre Abou-Antoun blamed the AKA parties' difficulties on Banq and, in particular, Gino Cassaniti. The Khalil defendants emphasise that this correspondence was written after Andre Abou-Antoun had sought advice from a number of different advisors (including two solicitors and at least one other accountant) (see T 738.45, T 739.21). The Khalil defendants place weight on the fact that the only individual named in the responses to requisitions in connection with the work done by Banq was Gino Cassaniti. The Khalil defendants say that this is not a slip. They say that this correspondence (given its timing, its evident purpose and the fact that it was against the background that advice had been take from various professionals other than the accountants at Banq) is evidence which should weigh against accepting Andre Abou-Antoun's evidence in the present Proceedings as to the person with whom he dealt in relation to the transactions with Earth Civil (of which company it is noted that Michael Abou-Antoun, not Andre Abou-Antoun, was a director).
7. It is submitted that, in light of the conflict in the evidence between who gave what advice and when, and the fact that Andre Abou-Antoun now denies that he ever had any knowledge of the matters the subject of that advice, no weight can be given to his assertion that it was Peter Abboud and Fred Khalil who gave explicit advice in relation to the Scheme.

The Criniti Companies

1. As to the evidence relied upon by the plaintiffs in connection with the advice given to the Criniti companies, the Khalil defendants say that this all concerns Gino Cassaniti alone. They say that it is incorrect to suggest (cf [727] of the plaintiffs' submissions) that the advice given by Gino Cassaniti is consistent with advice given by Peter Abboud and Fred Khalil and would not have been given to separate clients if there were not some conspiracy; and that this confuses the nature of the advice which might have been given to each client.
2. It is said that Frank Criniti's evidence directly associating Fred Khalil with the Criniti companies is limited to what was essentially the everyday accounting work required by the Criniti companies and the formalities of the re-structuring. The Khalil defendants say that the plaintiffs rely upon evidence that instructions for all the transactions were given always by Gino Cassaniti (see plaintiffs' submissions at [734]); and that, in relation to Fred Khalil, what reliance is placed on, ultimately, is the preparation of BASs and income tax returns for the group by Fred Khalil (the Khalil defendants here restating their submission that a tax agent is not responsible for the veracity of the information provided by the client in the preparation of the relevant documents to be lodged with the Commissioner).
3. Thus, the Khalil defendants say that the allegations against Fred Khalil, based on a propounded inference to be drawn from his position as a tax agent are misconceived; and that evidence as to the advice given to the Borg Parties is so equivocal as to be of no probative value (referring to the evidence of Andre Abou-Antoun). It is said that none of the evidence upon which the plaintiffs have relied, taken individually or together, demonstrates in any significant degree conduct of Fred Khalil which amounts to assistance in a breach of fiduciary duty owed by Gino Cassaniti to any of the plaintiffs; nor does it demonstrate any one of the degrees of Baden Delvaux knowledge required to establish knowing assistance within the meaning of the second limb of Barnes v Addy. It is further said that there is no evidence that, without the involvement of Fred Khalil, the breaches of fiduciary duty would not have occurred nor the alleged loss suffered by the plaintiffs; and that, to the extent that there is evidence inferring knowledge or participation in the Scheme or the conspiracy, it does not rise above conjecture.

Plaintiffs' submissions in reply re Fred Khalil

1. The plaintiffs accept that the relevant responsibilities of a tax agent are as set out in s 30.10 of the Tax Agents Services Act, namely, to act honestly and with integrity and not knowingly to obstruct the proper administration of the taxation laws. However, it is said that a tax agent's duty goes beyond being "merely a mouthpiece for the client". It is noted that s 50.20 of the Tax Agents Services Act makes it an offence to: make a statement to the Commissioner or prepare a statement which it is known is likely to be made to the Commissioner by an entity where it is known (or the maker is reckless as to whether) the statement is false, incorrect or misleading in a material particular, or omits any matter or thing without which the statement is misleading in a material respect. Accordingly, in the plaintiffs' submission, it is not open to a tax agent to seek to hide behind the cloak of the client in this regard, especially where (as they say is here the case) Banq, Fred Khalil and the other Primary Conspirators inserted themselves completely into the business and affairs of their clients (such as the Criniti's, the Borg Parties and the AKA Parties), such that the plaintiffs submit that their client's information was their information.
2. The plaintiffs say that there is no factual basis (and no factual basis which would support any such inference) for the following submissions made by the Khalil defendants: that Fred Khalil advised Tanya and Michael Borg that assets should be transferred from Excavation to Borg Family because Excavation had become obsolete (cf [96] of the Khalil defendants' submissions); that a valuation was obtained so as to establish an arms length price which might be accepted by the Commissioner of Taxation as a proper value in the books of Borg Family for the assets transferred (cf [97] of the Khalil defendants' submissions); that the proposal adopted by Tanya and Michael Borg that the assets be transferred to the Borg Family through RCG CBD is consistent with a strategy of reinforcing an arms length value for Borg Family (cf [98] of the Khalil defendants' submissions); and that Andre Abou-Antoun's evidence to the ATO during the course of an interview with them was untrue (cf [115]; [117] of the Khalil defendants' submissions).
3. Further, the plaintiffs say that the following submissions by the Khalil defendants should not be accepted in the face of the evidence against them: that, as the transactions were on a capital account and not in respect of a revenue account, no tax deduction was claimed by the Borg Parties in respect to the impugned transactions; that the evidence is unequivocal that Borg Family claimed depreciation for equipment it obtained from Excavation (in circumstances where the plaintiffs say it did not pay for that equipment and therefore had no basis to claim depreciation); and that the Borg transactions do not suffer from a degree of apparent artificiality. The plaintiffs maintain their submission as to the apparent artificiality of the transactions in circumstances where payments were made to RCG CBD by Borg Family and then returned to Borg Family, in exchange for which it acquired equipment from Excavation, without any real explanation for any of those transactions.
4. The plaintiffs say that further submissions not supported by the evidence are: in respect of the Wenman and Statewide Parties, that there is no evidence that Fred Khalil knew that the BAS and the tax returns which were lodged were false and that there is no doubt that Peter Abboud was the instrument by which the false invoices to the Wenman and Statewide Parties were sent. The plaintiffs point to Peter Abboud's evidence that he was the first point of contact and would send emails, call and occasionally meet clients in person to get documents or pick up files; that he would also prepare the BAS, financial statements and tax returns to be checked by either Gino Cassaniti or Fred Khalil and that, except for basic administrative tasks, all of the work that he performed he did on the instruction of Gino Cassaniti or Fred Khalil (see Peter Abboud's affidavit sworn 22 March 2019 at [28]-[30]). The plaintiffs say that Fred Khalil knew that the books and records of those companies, insofar as they were based on the false invoices that had been issued to them by Peter Abboud or Banq, were likewise false.
5. Finally, other submissions by the Khalil defendants that the plaintiffs say are contrary to the evidence are, first, that Andre Abou-Antoun's evidence (that it was Peter Abboud and Fred Khalil who advised, in respect to Bluemine, that they had a company which owned trucks and a tipping site and could arrange false or exaggerated invoices for a fee) and the information he provided to the ATO in a letter from PwC in December 2017 should be preferred over the evidence that Andre Abou-Antoun gave to the ATO at the interviews on May and July 2018; and, second, in respect to the evidence of Frank Criniti, that there is no evidence that, without the involvement of Fred Khalil, the breaches of fiduciary duty would not have occurred nor the alleged loss.
6. As to the first, the plaintiffs maintain that it is clear from the ATO interviews that the information Andre Abou-Antoun provided to PwC was false; noting that Bluemine did not provide to the AKA Parties the services that were described in the invoices (and the plaintiffs say that Andre Abou-Antoun knew that as did Peter Abboud and Fred Khalil). The plaintiffs say that Fred Khalil knew that the books and records of the AKA Parties, insofar as they were based on the false invoices that had been issued to them, were likewise false.
7. As to the second, the plaintiffs say that the question is whether Fred Khalil was a party to the breaches and/or involved in the breach within the meaning of s 79 of the Corporations Act. It is submitted that the plaintiffs' evidence establishes that Fred Khalil was knowingly concerned in the breaches of duty; and it is said that Frank Criniti's evidence was not impugned and he was a witness of truth.

Loss and causation

1. As to loss and causation, with which I deal in due course, the Khalil defendants adopt the submissions made on behalf of the AKA Parties (see at [1995]).

Finding as to Fred Khalil (Kamikaze Teppanyaki and Sivasli)

1. There is no dispute that Fred Khalil was at the relevant times the sole de jure director of Banq (as per the ASIC records) and that he acted as an adviser and accountant at Banq, handling the day to day activities of the accounts of Banq's clients.
2. As to Fred Khalil's role as a registered tax agent, I do not understand the plaintiffs ultimately to suggest that he was "responsible" for the truth and correctness of information in the tax returns in the sense that he had a duty to ensure its truth. Rather, as I understand it, the plaintiffs point to his obligations (including his obligation not knowingly to mislead the Commissioner) as leading to the inference that he must have made himself aware of the relevant information of the client in order to be in a position to make the declarations that he did (which would surely be the case if, as a tax agent, Fred Khalil was performing his obligations honestly and diligently - and he does not here contend that he was not). Further, they rely on Banq's involvement (and, through it, Fred Khalil's involvement) in the "business and affairs" of its clients for an inference that Fred Khalil had the relevant client's information.
3. As to Fred Khalil's involvement in the Scheme, there is evidence (which I accept) of Tanya Borg as to the advice given by Fred Khalil in relation to the incorporation of Borg Family and Borg Civil. I accept that the structuring advice per se does not bespeak fraudulent or dishonest conduct and that there was an explanation given (from her perspective) for the payments insofar as they related to the transfer of ownership of the equipment from Excavation to Borg Family. I accept the submissions for the Khalil Parties to the effect that the Borg Parties' impugned transactions were of a different character from the transactions involving other Scheme Participants; and that there is evidence that would support the conclusion that there was a loan to Excavation in relation to the equipment and that the purpose of the invoices in question was to record this. Moreover, I consider that it is not insignificant that an independent valuation of the equipment was obtained.
4. Whether or not there was a view that Excavation was obsolete and that that was the purpose for its winding up, seem to me matters that are not to the point. It is clear that what was being put in place was a means to record the transfer of the equipment and the repayment of the moneys that it is said were initially advanced to the company by Michael Borg. The fact that Tanya Borg did not fully understand the effect of the advice does not mean that there was not a reasonable basis for her to assume that this was an appropriate means of accounting for the transaction (as I consider in due course when considering the claims against the Borg Parties).
5. I accept that there seems to be no reason for there not simply to have been a forgiveness of the debt to Michael Borg; and that the arrangement has a degree of artificiality in this regard. I accept that the fact that a transaction might have been structured in a tax effective way (or that Banq or associated companies may have obtained a benefit in the form of a payment or fee for that) would not of itself bespeak dishonesty. However, to the extent that the transaction involved the incurring of tax liabilities that otherwise would not have been incurred, this would give rise to questions as to breach of directors' duties (which, as I apprehend it, is the thrust of the plaintiffs' complaint in relation to at least some of the transactions). I accept that there is a dispute as to the evidence of any tax benefit received by the Borg Parties as a result of the transaction (having regard to its accounting on an accruals basis) but that does not mean that the transaction was not one that was not in the interests of the Insolvent Company there involved.
6. Ultimately, the difficulty I have with the question of Fred Khalil's liability for involvement in the Borg Parties' impugned transactions is that the arrangement (albeit that it may be accepted that this was to record the basis on which the equipment was transferred from Excavation to Borg Family) is that it involved what would seem to have been an unnecessary tax exposure for the Insolvent Company (and the interposition of RCG CBD in this regard seems to have been unnecessary) - matters of which he must have been aware at the time.
7. As to the Wenman and Statewide transactions, I accept that Elias Nassar's evidence squarely implicates Gino Cassaniti in relation to the Wenman transactions (not Fred Khalil) and that Mario Sande's evidence is not conclusive as to who he was dealing with at Banq. However, I note that Peter Abboud's evidence is that Fred Khalil checked all his work - and that seems to me not to be implausible given Peter Abboud's far more junior role in Banq at the time (and is consistent with the evidence from others). Therefore, I accept the submissions for the plaintiffs that it should be inferred that, in the course of his work in overseeing Peter Abboud, Fred Khalil must have known that the invoicing was false insofar as the services described in the invoices were not being provided; and hence, he was on notice of the dishonesty of the Scheme in that regard.
8. As to Reliance Cleaning, I accept that there is a timing issue as to when Andre Abou-Antoun became aware of certain matters but that does not address the fact that in his ATO interview he made clear that he was giving his evidence at that time to the best of his memory of events as at the relevant time. I accept that it is likely that the advice as to the structuring of the companies was conveyed to him by Michael Abou-Antoun (since his answer to that effect seemed genuine - i.e., when he said words to the effect "well he didn't tell me anything"). As to the fact that the PwC letter to the ATO placed blame for the position on Gino Cassaniti (rather than anyone else at Banq), I do not accept that it follows from the fact that Andre Abou-Antoun may have been under less pressure at the time (even assuming that to be the case) that his recollection then should be preferred to his evidence before the ATO or in Court. As to the premise that he was under less pressure, I can well accept that it is stressful for witnesses to give evidence under interrogation or cross-examination under oath (and that the court room environment may be particularly stressful). However, that may well make it more likely that a witness' recollection on oath will be more reliable than an answer to requisitions prepared in the less stressful environment of someone not on oath before an examiner. The fact that Andre Abou-Antoun might have been prepared (through his professional advisers) to cast the blame solely on Gino Cassaniti in an answer to requisitions does not mean that his later evidence on oath should be discounted.
9. As to the inconsistency in the evidence in relation to the role of RCG CBD and Reliance Cleaning, that seems to me to be telling - it illustrates the interchangeability of the various corporate entities. As to the belated provision of invoices from Reliance Cleaning and RC Group, in my opinion suspicion attaches to them not only because they were not produced when the liquidator first sought provision of documents but also (for the reasons submitted by the plaintiffs) having regard to the anomalies on the face of the documents (and the evidence of persons such as Elias Nassar and Mario Sande, and for that matter Andre Abou-Antoun himself, that no such services were provided). Given Fred Khalil's role in Banq (and his appointment as proxy in the creditors' voluntary liquidations) it is clear that he was implicated in this.
10. As to the Criniti Croup transactions, I accept that the initial structuring advice was given by Gino Cassaniti but it is clear that Fred Khalil was involved in the implementation of that advice.
11. Therefore, I find that Fred Khalil assisted in Gino Cassaniti's breach of duties as director of RCG CBD, Bluemine and Earth Civil, and those of Frank Criniti as director of Diamondwish and Rackforce. Moreover, I find that Fred Khalil had knowledge of the facts giving rise to the breach of duties by Gino Cassaniti as director of RCG CBD, Bluemine and Earth Civil (and of the impugned Wenman Parties, Statewide parties, Reliance Cleaning and Bluemine transactions), as well as of the breach of duties of Frank Criniti of Diamondwish and Rackforce; and that those would have put an honest and reasonable person on notice of the dishonest and fraudulent design in relation to the impugned transactions (even though I accept that there was an underlying basis for the Earth Civil transactions involving the payments for the equipment transferred to Excavation). Thus, subject to the issues of causation and the joint release defences, I find that liability is established against Fred Khalil.

Kamikaze Teppanyaki and Sivasli

1. Claims of accessorial liability are brought against Kamikaze Teppanyaki and Sivasli in the RCG CBD Proceeding. Kamikaze Teppanyaki was characterised as a Paying Participant and Sivasli was characterised as a Receiving Participant (RCG CBD third further amended statement of claim at [140]-[141]). Both of these claims are brought on the basis that Fred Khalil was the sole director of each company at the relevant times (Ex K at 31902; 30250) and that they entered into the respective impugned transactions by arrangement with RCG CBD's director, Gino Cassaniti.
2. From 19 December 2012 to 14 May 2013, RCG CBD made payments to Sivasli totalling $201,000. The plaintiffs note that Sivasli, in its defence filed in the Proceeding at [15], admits receiving the payments and particularises that the payments received were payments owed by the plaintiff and were paid to the defendant as directed. The plaintiffs say that Fred Khalil has not given or adduced any evidence in support of that pleading and that there is no evidence that RCG CBD "owed" Sivasli anything.
3. As to Kamikaze Teppanyaki, from 31 July 2012 to 21 May 2013, Kamikaze Teppanyaki made payments to RCG CBD totalling $364,656.20. At [33] of his affidavit, Fred Khalil attests that he earned $568,350 from Kamikaze Teppanyaki and that was paid from KTDH (the sole shareholder of Kamikaze Teppanyaki) to Sivasli (the sole shareholder of Sivasli is Fred Khalil). It is said that Fred Khalil's affidavit is again bereft of any explanation for the payments by Kamikaze Teppanyaki to RCG CBD. The plaintiffs note that all of the invoices provided by RCG CBD to Kamikaze Teppanyaki were described as being for "Labour Hire Services" (Ex K at 32004-32035).
4. Ultimately, the accessorial liability of Sivasli and Kamikaze Teppanyaki depends on whether Fred Khalil's knowledge can be imputed to each of the companies. As to Sivasli, in the absence of any evidence that RCG CBD owed Sivasli the moneys that were transferred to it, it is clear that the receipt of $201,000 was to Sivasli's benefit and in those circumstances, I find that Fred Khalil's knowledge of Gino Cassaniti's dishonest and fraudulent design should be attributed to Sivasli. I find that in receipt of the payments totalling $201,000, Sivasli assisted Gino Cassaniti in the implementation of the Scheme and thus, I find Sivasli accessorially liable for Gino Cassaniti's breaches of fiduciary duty.
5. As to Kamikaze Teppanyaki, the payment of invoices is likely to be within the authority of the company's director. However, there is nothing to indicate that the payment of $364,656.20 to RCG CBD in any way benefitted Kamikaze Teppanyaki. I was not taken to any evidence that Kamikaze Teppanyaki received the "Labour Hire Services" for which it was purportedly paying; nor of any GST credit or deduction claimed in its income tax returns. I find Fred Khalil's use of Kamikaze Teppanyaki knowingly to assist Gino Cassaniti in his dishonest and fraudulent design was in fraud of Kamikaze Teppanyaki. Consequently, I do not find that Fred Khalil's knowledge of Gino Cassaniti's dishonest and fraudulent design is to be imputed to Kamikaze Teppanyaki.

Plaintiffs' submissions re Peter Abboud

1. Again, as with the other individual Primary Conspirators, the plaintiffs analyse the evidence in relation to Peter Abboud by reference to the same matters addressed above. His relationship with, and role in, Banq has already been considered (see above).

Peter Abboud's involvement in Scheme Recommendation and Implementation

Banq and Bluemine

1. The plaintiffs say that Peter Abboud's record of interview with the ATO (Ex 17) (see above) shows that, other than his involvement in banking transactions, Peter Abboud was involved in the business of Bluemine (see below).

Banq and Bluemine Payments, Accounting and Benefits

1. In the period from 26 February 2013 to 6 August 2013, Bluemine made payments to Banq totalling $1,621,745.00 (Table 5.2).
2. On 25 June 2012, Banq paid $590,000 to Bluemine and on the same day, Bluemine paid $590,000 to Banq (see Table 5.1). Peter Abboud said this was for the purchase of trucks. The plaintiffs note that Peter Abboud acknowledged in his affidavit that he prepared the first BAS for Bluemine and that the first BAS involved the purported purchase of trucks by Bluemine, which involved the transfer of $590,000 between Bluemine and Banq. The plaintiffs say that, as a result of the payment in and the payment back, there was no cost to Bluemine for acquisition of the trucks, so that the BAS was false (to the knowledge of Peter Abboud). It is said that notwithstanding this, Bluemine's BAS for the period ended 31 March 2012, prepared by Peter Abboud and signed off on by Fred Khalil records (falsely, the plaintiffs say) the $590,000 as a capital purchase with GST on purchases of $53,636.00 claimed (Ex K at 50706).
3. On 10 July 2012, Bluemine's running balance account shows that it received a GST refund of $53,636.00 but the refund was paid into Banq's account (Ex K at 55250). On 10 July 2012, Banq's trust account (account number xxx-2546) records a credit of $53,636.00 with the description "ATO" (Ex S). The plaintiffs say from this that Banq immediately took the bulk of that GST refund for itself. On 10 July 2012, $36,636.00 was transferred out of Banq's trust account into its Business Cheque Account leaving a balance of $17,000 in Banq's trust account (Ex K at 34180). It is noted that, on 24 October 2016, as a result of the audit conducted in respect of Bluemine, the ATO disallowed the credit identified above and raised a liability of $53,636.00 on Bluemine's running balance account (Ex K at 55253), which liability remains unpaid and forms part of the tax liability claimed as damage by the plaintiffs. The plaintiffs say that there can be no doubt that this was a calculated and dishonest transaction orchestrated by Peter Abboud, whereby Banq received $53,636 and Bluemine was left with an equivalent tax liability that it could not pay, as it is said was intended by Peter Abboud (and the other conspirators).
4. It is said that Peter Abboud knew that there was no lawful entitlement to a GST refund because it was based on a false BAS return, and he knew that the ATO had refunded Bluemine $53,636 on the basis of a purported Bluemine capital purchase which did not exist. It is said that Peter Abboud new and always intended that the $53,636 "refund" would be kept by Banq; that his conduct was calculated, dishonest and fraudulent; and that he deceived the ATO.
5. As to the purported Bluemine vehicle purchases, the plaintiffs say that Peter Abboud further utilised the assets of Bluemine to gain additional benefits for himself and those associated with him by: selling four of the vehicles the subject of the purported purchase from Jian Holdings to Multipower Tipper for $200,500, and transferring the fifth vehicle to Jola Holdings (of which Peter Abboud was the sole director at the time) for no consideration although it was purported it was sold for $100,000.
6. It is noted that the sale of the vehicles was not reported in the Bluemine BAS for the period from June to September 2012 (see Ex K at 51561-51562) and that GST was not remitted to the ATO. The plaintiffs say that all of this conduct was calculated and dishonest.
7. The plaintiffs attach significance to the fact that, prior to the vehicles being owned by Jian Holdings, four of the five vehicles were owned by Tepall which had its registered office as Banq; and that CAP Accounting (another Cassaniti entity) was its taxation agent.
8. It is noted that when the four vehicles were purchased (or purportedly purchased) by Jian Holdings from Tepall in October 2010, Jian Holdings (in the relevant BAS period) claimed a GST credit of $53,000; but that neither Tepall nor the Tepall Trust reported this sale nor remitted the GST collected from Jian Holdings of $53,000 to the ATO.
9. The plaintiffs say that the above conduct resulted in: a GST credit to Jian Holdings of $53,000, where Tepall did not remit the equivalent GST payable to the ATO; a GST credit to Bluemine of $53,636, where Jian Holdings did not remit the equivalent GST payable to the ATO; the sale of the vehicles to Multipower Tipper for $200,500, where Bluemine did not report the sale to the ATO and remit any GST; and the transfer of a vehicle from Bluemine to Jola Holdings (a Peter Abboud company at the time) for no consideration.
10. The plaintiffs say that this conduct is a paradigm example of the conspiracy in action where Bluemine was utilised to obtain tax benefits and other benefits to Peter Abboud and those associated with him (including the other conspirators). The plaintiffs say that this was calculated, dishonest and fraudulent conduct.
11. It is said that a strikingly similar purported sale and purchase of assets and resulting taxation benefits occurred involving RCG CBD, Borg Family and Excavation (see below); and that this was not a coincidence and could not have occurred in the absence of the conspiracy involving Gino Cassaniti, Fred Khalil, Peter Abboud and George Khalil.

Banq and Bluemine Knowledge

1. Peter Abboud and Andrew Barsa were signatories to the Bluemine bank accounts (see Ex K at 51186-51187; Table E). Peter Abboud was a shareholder and bank account signatory of Banq's bank accounts, together with Fred Khalil and Ivana Cassaniti. Peter Abboud (at [57] in his affidavit sworn 22 March 2019) asserts that he was made a bank account signatory so that he could process payments from the bank accounts as directed by Gino Cassaniti, Fred Khalil or Ivana Cassaniti.
2. The plaintiffs say that there has not been one commercial document produced by Banq with respect to payments made between Bluemine and Banq. The plaintiffs say that it is to be inferred that there was no commercial basis for any of those transactions. It is noted that an amount was retained by Bluemine as a fee to be paid on to Banq (or as otherwise directed by the conspirators), with respect to transactions involving Bluemine and some of the Scheme Participants. The plaintiffs say that it is to be inferred that some of the Bluemine/Banq transactions were in fact the fee for the benefit of the Primary Conspirators; and that it is to be inferred that Peter Abboud was involved in these transactions as a signatory of the Bluemine bank account, and shareholder and principal of Banq.

Bluemine Thailand Payments

1. As to the Bluemine Thailand payments said to have been made to George Abboud, the plaintiffs submit that those transactions are yet other example of getting cash out of Bluemine and to Peter Abboud or to others associated with him, as Peter Abboud, Gino Cassaniti, Fred Khalil and George Khalil determined.

AKA Parties Advice

1. The plaintiffs say that Peter Abboud was involved in making the Scheme Recommendation along with Fred Khalil in relation to the AKA Parties' involvement with Bluemine and Earth Civil which also resulted in cash withdrawals from Earth Civil, referring again to Andre Abou-Antoun's evidence as to the change to the AKA Group structure (at T 624.8-16) and his evidence to the ATO (see above).
2. The plaintiffs say that the unchallenged evidence of Andre Abou-Antoun is that Peter Abboud (and Fred Khalil) recommended the Scheme involving Bluemine issuing false invoices and the structuring of the AKA Parties and related corporate entities. It is noted that this was virtually the same as the scheme recommended to the Criniti companies and the Borg Parties as to corporate structures, and to the Wenman and Statewide Parties, as to false invoices (in which Peter Abboud was directly involved - see further below). It is said that these events did not occur by innocent coincidence and would not have occurred in the absence of the conspiracy. The plaintiffs further submit that, in accordance with the advice from Peter Abboud, Banq arranged the incorporation of the AKA companies (see above).

AKA Accounting and Implementation

1. The plaintiffs refer to Andre Abou-Antoun's evidence as to this, noting, in particular, Banq's remote access to the AKA companies' MYOB (see T 623; T 734.28-32).

AKA Payments in and out

1. Again, reference is made to the payments made in and out of the AKA entities (see above). The plaintiffs rely on the description by Andre Abou-Antoun as to the arrangement with the AKA Parties and its implementation as demonstrative of Peter Abboud fulfilling his role in the conspiracy, and of the fact of the conspiracy.

AKA Parties - Knowledge of transactions

1. It is said that Peter Abboud recommended the Scheme to the AKA Parties and was subsequently involved in and had knowledge of the payments between those parties and Bluemine and the 2.5% fee that would be retained by Banq and taxation and other benefits. It is noted that over the period from 6 December 2012 and 18 April 2013 there was a series of emails between parties including Peter Abboud, Komel Kohli and Andre Abou-Antoun in relation to payments between AKA Civil and AKA NSW, on the one hand, and Bluemine, on the other (see above).
2. The plaintiffs say that Peter Abboud knew of and orchestrated all payments between the AKA Parties and Bluemine where he was included in email correspondence in relation to half of the transactions, including on occasions where directions were made with respect to the return of money paid. It is noted that Peter Abboud sent a follow-up email in relation to those invoices. The plaintiffs say that Peter Abboud knew the invoices were false and that no services were provided by Bluemine; and that this was dishonest.
3. The plaintiffs say that, as a result of that direct involvement, and the matters referred to below, it is to be inferred that Peter Abboud knew of and orchestrated (with Fred Khalil, Gino Cassaniti and George Khalil) all of the transactions between Bluemine and the AKA Parties, and that he knew they were dishonest.

Bluemine and Ignite Promotions/Wenman

1. The plaintiffs refer to the evidence of Elias Nassar as well as the documentary evidence (such as the email from Peter Abboud to Brenda Louwen on 19 June 2013 - see above) in relation to transactions involving the Wenman Parties, namely that Gino Cassaniti oversaw anything that was done by Peter Abboud and to the invoice issued purportedly for "labour hire" (see above) from Bluemine to Ignite Promotions. It is noted that Elias Nassar's evidence was that Bluemine did not provide any labour hire services to Ignite Promotions and that he understood Bluemine was from Banq Accountants. The plaintiffs say that Elias Nassar knew that the invoices were false and that Peter Abboud undoubtedly knew that the invoice issued by Bluemine to Wenman Brimak was false, that there were no services provided by Bluemine to Ignite Promotions, and that he and the other primary conspirators would benefit by way of the fee paid to Banq.

RCG CBD - Banq

1. As to the payments made between 10 September 2012 to 30 May 2013 by RCG CBD to Banq (totalling $920,415) (see Table 3.2), the plaintiffs again point to the fact that Peter Abboud was a signatory to the Banq bank accounts; and that he was a recipient of the Banq profit with his 10% shareholding. The plaintiffs say that it is to be inferred that those payments could not possibly have been made to Banq without his knowledge and that there is no explanation for the rationale behind those transactions.
2. The plaintiffs point to Peter Abboud's evidence in his interview with the ATO (Ex 17 at 56), where Peter Abboud was unable to explain why payments were made by RCG CBD to Banq in that period in the sum of $1.2 million, notwithstanding that Banq did accounting work for RCG CBD; and (at 57) where he agreed that the value of any work that Banq did for RCG CBD would be "nowhere near" the value of the payments made.
3. The plaintiffs say that, whenever the context suited them, the Primary Conspirators, verbally and in much of the documentation, contended that RCG CBD was a labour hire company (referring by way of example, to the affidavit sworn 25 March 2019 (at [19]) in which Fred Khalil attested that "Gino and I on behalf of Banq Advisors engaged RCG CBD Pty Ltd to provide accounting staff to Banq Advisors"), yet the plaintiffs point to other statements to the contrary (such as Peter Abboud's email to the Office of State Revenue in June 2014 - see above; and Peter Abboud's affidavit evidence (at [38] of his 22 March 2019 affidavit), to which I have referred earlier).
4. The plaintiffs say that the making of the payments from Banq to RCG CBD, and the issue of purported labour hire invoices from RCG CBD to Banq provided by Banq's solicitors to the ATO in 2016 (see above), was a charade. It is said that, not only are those invoices now shown to be false (by the evidence of Peter Abboud himself), but that this also demonstrates that, in 2016, Peter Abboud was prepared to deceive the ATO (in the context, known to him, that the ATO was now investigating Banq). The plaintiffs point to this as demonstrating Peter Abboud's dishonesty. (Pausing here, leaving aside the anomalies to which the plaintiffs point in relation to these invoices, the troubling aspect of the production of these invoices only in 2016 is that the liquidator had sought financial records some time earlier and no such invoices were produced at that stage, which gives rise to the inference that they were created after the event; that inference being reinforced by the anomalies in the invoices themselves.)
5. The plaintiffs say that it should be inferred that all of the invoices purportedly issued from RCG CBD to Reliance Cleaning, Kamikaze Teppanyaki (Darling Harbour) and Banq (all described as being for "Labour Hire Services") and provided to the ATO by Brown Wright Stein in 2016 in answer to s 353-10 notices issued by the ATO (see chronology above) were false to the knowledge of each of Peter Abboud (a principal of Banq; and director of Reliance Cleaning); Gino Cassaniti (a principal of Banq; and director of RCG CBD); Fred Khalil (a principal of Banq); and George Khalil (controller of the RCG CBD bank account).
6. It is further noted by the plaintiffs that RCG CBD did not pay any GST to the ATO; rather, the company was wound up. The plaintiffs say that Peter Abboud obviously expected this; and that this was the "plan" with Gino Cassaniti, Fred Khalil and George Khalil. On the basis that George Khalil was the controller of the RCG CBD bank account, it is said that he knew about all of the RCG CBD and Banq transactions; similarly, it is said that as Gino Cassaniti was the director of RCG CBD he also knew about all of those transactions; and the plaintiffs say that Peter Abboud and Fred knowledge is to be inferred.

RCG CBD - LFC Holdings' participation in the Scheme

1. As to the payments between 31 December 2012 and 9 January 2013 by RCG CBD to LFC Holdings (totalling $52,020), the plaintiffs note that there is no explanation for those transactions; and that Peter Abboud (the sole director, secretary, shareholder and sole signatory to the bank account of LFC Holdings - see Table C) has produced no documents of these transactions and has not sought to explain the absence of documents nor has he sought to establish any entitlement to those funds (referencing his ATO interview, Ex 17). It is said that they were a distribution to him.
2. The plaintiffs say that this is yet another example of the Primary Conspirators incorporating companies whose supposed business activity was merely "invoicing" and corroborates their contention that LFC Holdings was "just another pawn in the scheme used to wash money into the hands of the primary conspirators or those associated with them".
3. The plaintiffs say that it is clear from Peter Abboud's inability to provide any coherent or sensible explanation for the payments to LFC Holdings, that LFC Holdings (a mere "invoicing" company) was a company through which Peter Abboud was obtaining or receiving payment of his share of the fees and funds flowing to the primary conspirators including Banq.
4. The plaintiffs say that it is to be inferred that Peter Abboud had knowledge of the payments by RCG CBD to LFC Holdings (together with the sole bank account signatory for RCG CBD, George Khalil), particularly in the absence of an explanation for a commercial basis for these transactions, coupled with Peter Abboud's knowledge (to be inferred) that RCG CBD would be wound up in insolvency unable to pay its taxation obligations. It is submitted that the conduct of these transactions by Peter Abboud was dishonest.

RCG CBD - Reliance Cleaning

1. While both Peter Abboud and Scott Crabbe were recorded as directors of Reliance Cleaning from its incorporation (see above), the plaintiffs say that it is to be inferred that Peter Abboud was the controlling director. They point to Scott Crabbe's evidence (at T 945.1-21) that in late 2011 he became ill and subsequently in early 2012 he went to Fred Khalil and Peter Abboud and asked to be removed as a director. The plaintiffs say that it is revealing (as to the control of Reliance Cleaning) that Scott Crabbe, as a director, seemingly required the approval of Fred Khalil and Peter Abboud to resign (which did not occur). The signatories to the Reliance Cleaning bank accounts were Peter Abboud, Ivana Cassaniti and Fred Khalil (see Table E). Scott Crabbe, notwithstanding his directorship, was not a signatory to the bank account.
2. As to the 64 payments made by Reliance Cleaning to RCG CBD in the period from July 2012 to May 2013, totalling $1,618,254.35 (see Table 3.11), the plaintiffs point to the evidence given by Fred Khalil in his interview with the ATO (at [608] above) and note that there are no genuine commercial documents to explain the basis for those payments.
3. The plaintiffs also note that, in the period from 4 July 2013 to 21 February 2014, upon his appointment as liquidator of RCG CBD, the liquidator sent a number of requests for the books and records of RCG CBD to Gino Cassaniti, as the director of RCG CBD, Fred Khalil, as the former director of RCG CBD and Banq as the accountant for RCG CBD; and that no documents were provided other than a MYOB data file containing General Ledger and Employee PAYG summaries for the financial year ending 30 June 2013, and a Report as to Affairs completed by Gino Cassaniti.
4. The plaintiffs say that the invoices provided on 6 October 2016 by Brown Wright Stein Lawyers, in response to a s 353-10 notice issued by the ATO, purporting to be invoices from RCG CBD to Reliance Cleaning for labour hire services, were false (and were just created for appearance), for the following reasons.
5. First, the contradictory assertions from both Fred Khalil and Peter Abboud with respect to the business of RCG CBD and what it did, together with the convenience of the production of the purported invoices to the ATO in 2016 when no such records were produced to the liquidator in 2014. In particular, the plaintiffs note that: the registered office and principal place of business of Reliance Cleaning was Banq; Peter Abboud was the director of Reliance Cleaning and remained at Banq until March 2017; and, in respect of a number of s 353-10 notices issued by the ATO, Brown Wright Stein acted for Reliance Cleaning, RCG CBD, Kamikaze Teppanyaki and Banq. As to all of the RCG CBD to Reliance Cleaning invoices, it is noted that: the invoice number is the date in reverse, the contact details for RCG CBD are recorded as those of Banq, and the address on the invoice for Reliance Cleaning is the identical PO Box to that of Banq. It is said that these invoices were, in reality, Banq sending invoices to itself for purported labour hire services and were nothing more than an invention in 2016 to attempt to substantiate to the ATO payments made by Reliance Cleaning to RCG CBD.
6. Further, the plaintiffs say that, if those invoices were not false, then RCG CBD supposedly provided approximately $1.6 million in contracting services for Reliance Cleaning, yet there are no documents about any contract, arrangement or agreement of any kind in relation thereto. The plaintiffs say that the reality is that RCG CBD was never a labour hire company, nor was Reliance Cleaning. (I agree.)
7. It is noted that, for all of the amounts paid in to RCG CBD by Reliance Cleaning, RCG CBD did not pay any GST to the ATO and RCG CBD did not pay any PAYG to ATO. The plaintiffs say that the payments from Reliance to RCG CBD show, once again, that RCG CBD was being used by the Primary Conspirators as a bank account to wash money through, tax-free, for the benefit of entities and persons to whom RCG CBD had no obligation to pay.

RCG CBD - Wenman and Ignite Promotions

1. As to the transactions entered into by the Wenman Parties with RCG CBD and Bluemine (see above and see Tables 3.3 and 5.1), the plaintiffs refer again to the evidence of Elias Nassar that Gino Cassaniti oversaw anything that was done by Peter Abboud in relation to transactions involving the Wenman Parties; and to the emails in December 2012 to January 2013 to and from Peter Abboud in relation to the invoices from RCG CBD to Ignite Promotions (see above).
2. The plaintiffs refer to two tax invoices (#03009124 and #0000107) from RCG CBD to Ignite Promotions dated 30 June 2012 and 30 September 2012 for the total sum of $710,868.18 that are both described as for "labour hire" (Ex K at 36323-36324). The plaintiffs submit that handwritten notations on the RCG CBD invoices match the invoices issued from Ignite Promotion to Blackrock Media for "Consulting".
3. The plaintiffs point out that the email from Peter Abboud recommended a series of payments from Blackrock Media to Ignite Promotions to RCG CBD; and it is submitted that (reading the RCG CBD and Ignite Promotions invoices together) this is what occurred. The plaintiffs note that the evidence of Elias Nassar was that RCG CBD never provided labour hire services to Ignite Promotions and that Ignite Promotions never provided consulting services to Blackrock Media; and that he knew that the invoices were false.
4. It is said that, at the time Peter Abboud advised Elias Nassar to make the payments by way of the email, Peter Abboud also knew the respective services would not be provided; and that he also (as did Gino Cassaniti) knew that Banq would deduct a fee equivalent to the GST.

RCG CBD - Statewide

1. The plaintiffs refer again to the evidence of Mario Sande in relation to the transactions involving Statewide Parties to the effect that the payments were going around in a circle and that this was done as advised by Banq; and to the two emails from Peter Abboud to Mario Sande on 13 and 15 November 2012 with the subject "RCG CBD Invoices - Statewide Design" where Peter Abboud requested that Mario Sande make part payment "to start with", those invoices apparently being for "Management fees" (see Ex K at 36381). Reference is also made to Mario Sande's evidence (at T 779.29) to the effect that RCG CBD never provided any management services for State Wide Design.
2. The plaintiffs say that, if Mario Sande knew no management services were provided as set out on those RCG CBD invoices, then so did Peter Abboud. It is said that, in deliberately sending false invoices, Peter Abboud intended to create the dishonest impression of services provided for payment, which was not the truth.
3. It is noted that Mario Sande's evidence was also that, in relation to the payments, Banq would retain a 10% fee. The plaintiffs say that, at the time that Peter Abboud advised Mario Sande to make the payments by way of the emails, he knew that there were no management services being provided by RCG CBD to the Statewide Parties and that Banq would deduct a 10% fee from those payments where Statewide would lodge BAS returns (including those GST amounts) with the ATO. It is said that Peter Abboud and Mario Sande knew that such GST component would not be forwarded by RCG CBD to the ATO. The plaintiffs say that this conduct is another example of Peter Abboud directing payments that he knew were dishonest (in furtherance of the conspiracy), involving the deployment of RCG CBD to defraud the Commonwealth; and that his conduct was both calculated and fraudulent.

RCG CBD - Borg Group

1. The plaintiffs refer to Tanya Borg's evidence (at [75] of her affidavit sworn 4 December 2018) that the backup file for MYOB was sent to Banq and that she understood that Banq made any changes or adjustments thought necessary; and to her evidence in her subsequent affidavit sworn on 20 February 2020 (at [13]) as to Banq's regular access to Borg Civil and Borg Family's MYOB (see above). The plaintiffs also refer to the email annexed to Tanya Borg's 27 February 2020 affidavit (at 4) as evidencing that Tanya Borg was personally involved in communicating with Banq concerning the MYOB file of Borg Family.
2. The plaintiffs say that it is to be inferred that Peter Abboud knew of the Borg Party transactions and was involved in how these transactions were recorded in the Borg Family accounts, given his role at Banq, together with Fred Khalil, supervising and managing other accountants.

Diamondwish and Rackforce - Criniti Companies

1. The plaintiffs again refer to the evidence from Frank Criniti as to the implementation by Banq of the systems that the Criniti companies utilised and the introduction by Banq to the Criniti companies of Tarun Shah who was subsequently employed within the Criniti companies; noting the evidence that Banq (including Peter Abboud) trained Tarun Shah.
2. The plaintiffs also refer to the evidence that Tarun Shah worked at Banq for a period after his employment at the Criniti companies, following an interview with Fred Khalil and Peter Abboud; and his role at Banq (see above). The plaintiffs say that the evidence of Tarun Shah in relation to the role of Peter Abboud at Banq is consistent with the evidence of Frank Criniti, Fred Khalil, Ivana Cassaniti, Gino Cassaniti, Elias Nassar and Mario Sande. It is submitted that the inference can be drawn that Peter Abboud had knowledge of the accounting treatment and taxation benefits of all transactions involved in the Scheme and the deployment of the Insolvent Companies in furtherance of the conspiracy.

Liquidations and Change of Directors

1. As to Peter Abboud's involvement in the winding up of companies and the change of directors, it is noted that a number of the companies associated with Banq that have gone into a creditor's voluntary winding up and which are said to be involved in the Scheme are associated with Peter Abboud by familial relationship (see Aris Zafiriou's affidavit sworn 9 March 2017 at [11], and Annexure B).
2. The plaintiffs say that another striking similarity (which again they maintain was no innocent coincidence) between the Bluemine purported vehicle purchases, when compared with the Borg purported machinery purchases, is that both Jian Holdings and Excavation (the purported vehicle or machinery vendors) were wound up with a common director after the transactions (Aloeseiafi Faanoi).
3. It is submitted that the obvious inference is that Peter Abboud knew and expected that: the purported purchase of vehicles by Bluemine was false; that similar false purchases occurred with entities related to Peter Abboud, namely Jian Holdings and Tepall; similar false sale and purchase transactions occurred with Bluemine and Borg Family; the BAS lodged with the ATO to obtain GST credits by these companies relating to the purported purchase of vehicles and or machinery was false; the companies would be wound up in insolvency owing taxation liabilities to the ATO; a new director would be appointed just prior to the companies being wound up; and the scheme was a means to obtain cash and other benefits to the Primary Conspirators (through Banq) and those associated with them.

Peter Abboud's Knowledge

1. The plaintiffs submit that all of the conduct referred to above involving Peter Abboud could not have occurred in the absence of the Scheme.
2. In summary, the plaintiffs point to the following matters (by reference to Peter Abboud's affidavit sworn 22 March 2019): that Peter Abboud was an authorised signatory of multiple bank accounts of Banq entities and completed transfers as directed by and on the instructions of Gino Cassaniti or Fred Khalil or Ivana Cassaniti, and would follow up clients for payments of bills or invoices when requested by Gino Cassaniti or Fred Khalil or Ivana Cassaniti ([28]); all of the work he performed for clients of Banq entities was at the direction and instruction of Gino Cassaniti or Fred Khalil, who supervised Peter Abboud; that Peter Abboud only did work that Gino Cassaniti and Fred Khalil instructed him to do and he cross checked every instruction from a client with Gino Cassaniti or Fred Khalil or Ivana Cassaniti before taking any actions ([29]); any important or significant decisions were made by Gino Cassaniti or Fred Khalil, either of whom from time to time conducted staff meetings ([32]); he was regularly appointed a director and signatory to bank accounts of newly incorporated companies; and that bank transfers were usually done by Fred Khalil or Gino Cassaniti or Ivana Cassaniti, but if Peter Abboud did process a transfer it was only ever at the direction of Fred Khalil, Gino Cassaniti or Ivana Cassaniti ([34]).
3. It is said that, even if Peter Abboud was junior to Gino Cassaniti and Fred Khalil, that in no way diminishes his responsibility for his actions.

Peter Abboud's submissions in defence

1. It is said for Peter Abboud that the pleaded facts against him, taken together, do not establish that Peter Abboud was a conspirator to defraud or injure the Insolvent Companies or to recommend a dishonest or fraudulent Scheme in pursuit of the alleged conspiracy.
2. Peter Abboud points out that in the Bluemine Proceeding, it is alleged: (at [133.22]) that Peter Abboud (and/or Gino Cassaniti and Fred Khalil) was the accountant and taxation adviser of Statewide Printing and State Wide Design (the Statewide Parties) and that, in 2012, they advised the Statewide Parties that by entering into the transactions, they could legitimately and legally channel money by making payments to RCG CBD (the Statewide Advice); (at [133.35]) that Peter Abboud, Fred Khalil and Gino Cassaniti were at all material times the directing will and mind of Banq; and (at [133.46]-[133.49]) that Fred Khalil permitted Peter Abboud to act as a shadow or deemed director of Banq by holding him out as such and that Peter Abboud acted in the capacity of a director of Banq and the employees of Banq were accustomed to act in accordance with his directions, instructions or wishes as a director; and that Peter Abboud was at all material times an accountant employed by Banq (repeating the matters at [133.22] in respect of the Statewide Parties and the matters particularised in [133.34]-[133.37]).
3. Peter Abboud thus says that the totality of the plaintiffs' pleaded dishonest and fraudulent scheme claim against him is that, together with Gino Cassaniti and Fred Khalil, he provided the Statewide Advice (relying on inferences drawn from the matters set out above). In particular, it is said that the plaintiffs have failed to provide any evidence of the pleaded fact that Peter Abboud was involved in the Statewide Advice (at [133.22.2]).
4. Peter Abboud says that the reliance placed by the plaintiffs on the transaction that involved the sale of three trucks and two trailers from Jian Holdings to Bluemine for $590,000, as an example of the Scheme to create fictitious invoices where no real goods or services exist, is contrary to the plaintiffs' own evidence (pointing to RTA records that show the transfer of three trucks and two trailers from Jian Holdings to Bluemine). It is said that, even if this transaction was fictitious, it does not fit with the plaintiffs' case since Bluemine claimed $53,636 of input tax credit on the purchase of the trucks and trailer from Jian Holdings. Thus, it is said that Bluemine benefited from this transaction and that it was not defrauded "or injured" of any money that it would otherwise have been required to pay to the ATO.
5. As to the AKA Parties, Peter Abboud says that there is no evidence that he made the Scheme Recommendation to the AKA parties together with Fred Khalil; and that there is credible evidence that the only person from Banq that made any recommendations to the AKA Parties was Gino Cassaniti.
6. Insofar as reliance is placed by the plaintiffs (see [821] of the plaintiffs' submissions) on two emails sent by Peter Abboud to Brenda Louwen of Ignite Promotions attaching invoices and asking for payment (as evidence of Peter Abboud's knowledge of, and receipt of a benefit from, the alleged Scheme), Peter Abboud says that this shows that the plaintiffs have no evidence to prove their allegation against Peter Abboud of knowledge of the Scheme. Similarly, it is said that the plaintiffs' claims that Peter Abboud was involved in recommending or implementing the Scheme with Reliance Cleaning, Wenman Brimak, Ignite Promotions, the Statewide parties and Borg Group are not supported by any credible evidence.
7. As to the pleaded conspiracy, it is said that, to be a co-conspirator in the conspiracy, it would need to be established that Peter Abboud knew and expected that the Scheme would involve breaches of fiduciary duties and still recommended and implemented the Scheme; and that this would in turn require that he: had knowledge of the Scheme; and of the breaches of fiduciary duties by directors of the Insolvent Companies as a result of the Scheme; and that he still recommended and/or represented to the Scheme Participants that they enter into the Scheme transactions.
8. Peter Abboud says that, even if the plaintiffs are correct about the existence of a conspiracy and the alleged conspirators, the evidence shows that he was not a conspirator as he had neither direct knowledge of the Scheme or of the breach of fiduciary duties resulting from the Scheme (due to his junior role at Banq) and nor did he recommend and/or represent and/or implement the Scheme. It is said that there is no credible evidence that Peter Abboud was a controlling will and mind of Banq or a shadow director of the company, pointing to the evidence of Frank Criniti, Mario Sande, Elias Nassar and Andre Abou-Antoun to the effect that only Gino Cassaniti was the controlling will and mind of Banq and that Peter Abboud was a junior.
9. Insofar as the plaintiffs have submitted (at [762]) that Banq operated as a professional partnership, Peter Abboud points out that the business of Banq was carried out through a corporation and not through a partnership. It is said that, even though Peter Abboud was offered 10% shares in the new entity being set up to run an accounting firm, he was not a controlling will or mind of Banq or a shadow director; that he was an unqualified junior employee whose duties were limited to bookkeeping, accounting and simple tax compliance matters. It is said that the other shareholders and directors of Banq (including in this context Mr Cassaniti) all had completed formal accounting qualifications. It is noted that Peter Abboud deposed that he had not then completed his accounting studies (commenced in March 2002 and undertaken on a part-time basis with periodic breaks) (his affidavit sworn 22 March 2019 at [6]).
10. Peter Abboud refers to the evidence summarised earlier of others of his role in Banq and points to Annexure A to his affidavit sworn 22 March 2019 as confirming that he had to ask Gino Cassaniti for authority before providing documents at the request of the client.
11. As to [765] of the plaintiffs' submissions (relying, as evidence that Peter Abboud was a shadow director of Banq, on Ivana Cassaniti's affidavit sworn 28 June 2019 where she deposes that he managed, hired and fired staff), Peter Abboud points out that, in cross-examination, Ivana Cassaniti could not recall which staff Peter About hired or fired. It is said by Peter Abboud that Ivana Cassaniti lacked credit and that any evidence that she gave against Peter Abboud was self-serving evidence and should be disregarded. As to [766] of the plaintiffs' submissions, which refer to Gino Cassaniti's affidavit evidence that "Peter Abboud was in fact an equity partner of Banq who managed as a partner and was remunerated as a partner", again, it is said by Peter Abboud that this evidence is self-serving and cannot be relied upon; and that it is contradicted by evidence of other witnesses (referring to the evidence given by Elias Nassar and Andre Abou-Antoun summarised earlier).

Scheme recommendations and implementation - re Banq and Bluemine

1. Peter Abboud cavils with the proposition (at [770]-[798] of the plaintiffs' submissions) that the transactions involving the transfer of vehicles from Jian Holdings to Bluemine and subsequent sale/transfer of those vehicles was "a paradigm example of the conspiracy in action". Peter Abboud says that this ignores prima facie documents that show that the Bluemine truck transactions do not fit the steps involved in the alleged Scheme (noting that these transactions involved "real" trucks and trailers). It is said that George Abboud had a genuine reason to have these trucks transferred out of Jian Holdings to a new company; and that there was a legitimate reason for setting up Bluemine to acquire and hold the trucks (referring to Peter Abboud's affidavit sworn 22 March 2019 at [7], [59]-[60] and to the evidence given by Andrew Barsa in cross-examination (at T 912.10-14]). Peter Abboud says that Andrew Barsa's evidence is consistent with the evidence that Peter Abboud gave during his ATO interview (see Ex 17 at 39-41, 46, 62-63, 67).
2. Peter Abboud points out that the contention (at [789] of the plaintiffs' submissions) that he was the sole director of Jola Holdings is incorrect; that the director of Jola Holdings was Michael Abboud (I note that the plaintiffs' submission stated that he was the sole director "at the time" and that Peter Abboud was the sole director and secretary of Jola Holdings from 6 May 2011 to 22 March 2013, and that Michael Abboud took over those positions on 22 March 2013, see Ex K at 50614).
3. Insofar as the plaintiffs (at [791] and [792] of the plaintiffs' written submissions) assert facts from 2005 to 2011 which predate Peter Abboud's employment with Banq, it is submitted that these should be disregarded in assessing whether Peter Abboud was involved in recommending a dishonest or fraudulent scheme that would defraud or injure Bluemine.
4. It is said that the submissions at [793] of the plaintiffs' submissions are incorrect, in that the ATO running account balance has marked the respective BAS for the sale of the Multipower Tipper as "self-assessed" meaning that the sale was reported to the ATO.
5. Peter Abboud says, in summary, that these truck transactions benefited Bluemine and the real owner of the trucks; and that he and George Abboud did not cause harm or injure Bluemine in relation to those transactions. It is said that, once the two trucks and two trailers were sold to third parties by Bluemine, the money was deposited into a high interest account and held for the benefit of George Abboud until he needed it. It is said that George Abboud was living in Thailand in 2012 to 2013 and that the payments to him were moneys that belonged to him from the sale of his trucks, and made at his directions; and that there was nothing dishonest or fraudulent about these transfers. Reference is made to the evidence that Peter Abboud gave to this effect in his ATO interview (Ex 17 at 36.22-38).

Bluemine and AKA Parties

1. As to Bluemine's involvement with the AKA Parties, Peter Abboud says that Andre Abou-Antoun's evidence was riddled with errors, inconsistencies and contradictions; and that aspects of his evidence have clearly proven to be untrue, inconsistent and contradictory on cross-examination (adopting the submissions by the Khalil defendants in this regard).
2. Peter Abboud further says that the plaintiffs' submissions (at [800(a)]) as to the purported advice given by Peter Abboud and Fred Khalil to set up new companies, contradict the plaintiffs' submissions (at [807]-[808]), which it is said show that one of those companies was set up was before the AKA Parties engaged Banq (and indeed before Banq even existed).
3. It is submitted that it is clear from the evidence of Andre Abou-Antoun that the structuring or tax advice that the AKA Parties received from Banq (including incorporating Earth Civil) came from Gino Cassaniti; as Earth Civil was set up right after Andre Abou Antoun's meeting with Gino Cassaniti (T 754.6-16). It is said that "the finger was pointed" at Peter Abboud and Fred Khalil in order to protect Gino Cassaniti. Peter Abboud says that it is clear that the only individual named in the letter to the ATO in connection with work done by Banq for the AKA parties is Gino Cassaniti.

Bluemine and Ignite Promotions/Wenman Parties

1. As to the transactions involving Bluemine, Ignite Promotions and the Wenman Parties, Peter Abboud submits, in effect, that the inferences sought to be drawn by the plaintiffs (see at [821]-[822] of the plaintiffs' submissions) as to Peter Abboud's involvement in recommending and implementing the Scheme (from the two emails that Peter Abboud forwarded) are not tenable. Peter Abboud says that the evidence is that he acted under the direction of Gino Cassaniti, Fred Khalil and Ivana Cassaniti and hence, he says that he "would have sent" these emails as directed by one of those individuals. Reference is made to the evidence that was given by Elias Nassar to the effect that he considered Gino Cassaniti to be his accountant and tax advisor for the entirety of his engagement with Banq Accountants (T 827.45-47). Peter Abboud adopts [108]-[110] of the Khalil defendants' submissions in this regard.

RCG CBD - Banq

1. Peter Abboud also cavils with the plaintiffs' submissions (at [823]-[830]) as to the purpose and role of RCG CBD being as a sham company solely used to issue fictitious invoices (and as to Peter Abboud's knowledge of this dishonest and fraudulent scheme).
2. Peter Abboud says that RCG CBD was utilised both as a labour hire company and as a subcontractor. Insofar as the Office of State Revenue enquiry referred to at [826] of the plaintiffs' submissions is concerned, Peter Abboud says that this related to RCG CBD invoices that were issued to Melhem Civil Pty Ltd for subcontracting work performed by RCG CBD. It is submitted that it is not unusual for a company to be used to fulfil multiple types of contractual arrangements.
3. Reference is made to the evidence of Scott Crabbe (at T 954.16-29), to the effect that he was employed "under George Khalil's business" which he agreed was RCG CBD; and to the evidence of Fred Khalil in his affidavit sworn 25 March 2019 at [45] that "RCG was a company acquired by my brother George Khalil to undertake cleaning contract work from head contractor Reliance Cleaning Group (Aust) Pty Ltd. I understand that it also hired staff to Banq Advisers in the 2013 financial year".
4. As to the plaintiffs' suggestion (at [829]) that Peter Abboud wound up RCG CBD, Peter Abboud says that the evidence does not suggest that he had any involvement in the winding up of RCG CBD or any other of the Insolvent Companies, noting the evidence that Peter Abboud has never met the liquidator or attended any meetings as a proxy and that Peter Abboud was instructed by Gino Cassaniti to prepare some accounting ledgers that were requested by the liquidator after the corporations were already in liquidation. Reference is also made to the evidence in cross-examination of the liquidator (at T 252.43-253.41), in which the liquidator did not recall ever having met or spoken to Peter Abboud; and confirmed that a document shown to him appeared to be an instruction from Gino Cassaniti to Peter Abboud as to the preparation of company ledgers.

RCG CBD - LFC Holdings participation in the Scheme

1. Peter Abboud says that the suggestion that LFC Holdings was a Scheme Participant has only been raised by the plaintiffs in their submissions (noting that it is not named as a defendant or a Scheme Participant in the RCG CBD third further amended statement of claim). Peter Abboud denies that he derived (see [831]-[840] of the plaintiffs' submissions) a dishonest financial benefit of $52,020 from the Scheme. Peter Abboud says that the payments into LFC Holdings from RCG CBD were for the work he performed as instructed, referring to his affidavit sworn on 22 March 2019 (at [27]) in which he deposes that "[a]ll decisions to set up the various Banq entities and transfers of my employment were made by Gino [Cassaniti]".
2. Insofar as it is submitted by the plaintiffs (at [832] of their submissions) that there is no explanation for these transactions and that Peter Abboud has produced no document, Peter Abboud points to Annexure B to his affidavit sworn 22 March 2019, which he says is a complete disclosure of his remuneration earned from his work at Banq from 2009 to 2017 (salary, bonuses, LFC additional salary and LFC additional bonuses).
3. Peter Abboud also points to his evidence in the ATO interview as to the purpose and use of LFC Holdings (see Ex 17 at 15.40-41), namely to the effect that he was being paid through labour hire firms and that he was paid additional amounts through LFC Holdings; and to his evidence in that interview at 14.29-36; 13.11-18; and 19.18-21, to the effect that he was employed by Banq on a salary plus bonuses and that the labour hire companies he was associated with would have paid LFC Holdings "for work that was done for Banq Accountants if it was paid".

RCG CBD - Reliance Cleaning

1. Peter Abboud says that the relevance of the plaintiffs' submissions as to Peter Abboud's involvement in transactions from Reliance Cleaning to RCG CBD (at [841]-[851]) is unclear and that those submissions should not be accepted. It is noted that the pleaded case is that there was a dishonest and fraudulent Scheme to issue fictitious invoices to obtain a tax advantage and that the Scheme was designed to cause a loss to the Insolvent Companies due to the breaches of fiduciary duties of the directors of those Insolvent Companies.
2. Peter Abboud points to Scott Crabbe's evidence in cross-examination to the effect that Reliance Cleaning was a genuine cleaning business with hundreds of business customers in Sydney's CBD for whom cleaning services were performed (T 948.40-951.10) and Exs 9, 10 and 11; and to Scott Crabbe's evidence that these businesses were issued with genuine invoices for real cleaning work performed (T 952.1-5). Peter Abboud says that Reliance Cleaning did not employ cleaners; rather, it subcontracted the work to RCG CBD which employed cleaners who undertook the work; thus, it is said that Reliance Cleaning made a margin on what it billed its customers and what it paid RCG CBD.
3. Furthermore, it is noted that Peter Abboud only owned 3.4% of Reliance Cleaning, which was held through GFP Holdings (a company that Ivana Cassaniti controlled). Peter Abboud says that he did not receive any income, dividends, bonuses or any form of remuneration from Reliance Cleaning. It is noted that Scott Crabbe owned 33% of Reliance Cleaning and it is said that Scott Crabbe (who Peter Abboud says is unconnected with Banq and was always in the cleaning industry) was always in control of Reliance Cleaning. Peter Abboud says that the evidence shows that Scott Crabbe was the "Managing director" of Reliance Cleaning until he ceased on 23 August 2016.
4. Peter Abboud says that his income (directly as salaries and wages or bonuses, or through LFC Holdings) has been fully disclosed in his affidavit and that he has paid the required income tax to the ATO on all of those receipts.
5. Peter Abboud says that the plaintiffs have attempted to downplay Scott Crabbe's control and role within the Reliance Cleaning business in an attempt to amplify Peter Abboud's involvement in the Reliance Cleaning business and have done so in order to make it fit their claim that Peter Abboud was involved in recommending and implementing the Scheme. It is said that the evidence of Peter Abboud's involvement in Reliance Cleaning is consistent, namely that Peter Abboud's role was to provide Scott Crabbe assistance in the commercial tendering processes. Reference is made to [40] of Peter Abboud's affidavit sworn 22 March 2019 and to the evidence given by him in his interview with the ATO (Ex 17 at 22.11-18) to the effect that he helped with the tender processes for cleaning contracts. Reference is also made to the evidence given by Fred Khalil in his ATO interview (Ex 18 at 25.20-27) that Scott Crabbe was "running the tenders and the day to day operation" of Reliance Cleaning and that: A. … he was an owner, so he was - he was the tenders, the operation… So Scott was basically getting the contracts, getting the tenders. Peter would look over the tenders, quote it…
6. Peter Abboud accepts that he was a director of Reliance Cleaning. Peter Abboud says he was instructed by Gino Cassaniti to become director of various companies and to become the signatory to the bank accounts of various companies, as part of his employment with Banq. It is said that Peter Abboud always knew that there was a genuine commercial subcontractor relationship between RCG CBD and Reliance Cleaning. It is noted that Scott Crabbe gave evidence in his cross-examination (T 957.48-958.1) to the effect that labour hire services were being provided by RCG CBD to Reliance Cleaning; and that Scott Crabbe agreed that Reliance Cleaning engaged labour hire firms and paid them a sum about $2 million in that year (which I understand to be 2012-2013) (T 954.1-3).
7. Reference is made to Fred Khalil's ATO interview (Ex 18 at p 23.12-19) to the effect that an agreement was made (between him, "RC Group", Ivana Cassaniti and George Khalil) to have a labour hire company to provide services to Reliance Cleaning. It is noted that Peter Abboud said in his ATO interview (Ex 17 at 24.10-16) that one of the labour hire companies was RCG CBD and that "Reliance Cleaning Group would have provided that with a contract - with contract work as well".
8. As to [847]-[848] of the plaintiffs' submissions, Peter Abboud says that there is no evidence that shows the invoices were produced only in response to the s 353-10 notice issued by the ATO.

RCG CBD - Wenman Parties and Ignite Promotions

1. Peter Abboud says that there is no evidence to support the inference (see [852]-[856] of the plaintiffs' submissions) that he knowingly made dishonest and fraudulent Scheme Recommendations to Elias Nassar and that Banq would receive a fee. Reference is made, rather, to his evidence at [28(o) and (p)] of his affidavit sworn 22 March 2019, where he deposes to his role as authorised signatory of multiple bank accounts of Banq entities and that he would occasionally complete bank transfers of these entities "as directed by and on the instructions of" Gino Cassaniti or Fred Khalil or Ivana Cassaniti; and that he would "follow up" clients for payments of bills or invoices when requested by one of those three.

RCG CBD - Statewide

1. As to the inference sought to be drawn by the plaintiffs (see [857]-[861] of the plaintiffs' submissions), from the email sent by Peter Abboud to Mario Sande chasing the payment of an invoice, that Peter Abboud must have recommended the Scheme to Mario Sande, Peter Abboud maintains that he would have sent that email as directed by Gino Cassaniti, Fred Khalil or Ivana Cassaniti. He maintains that he never recommended any scheme or had knowledge of any scheme in operation between RCG CBD and the Statewide Parties. Peter Abboud points to Mario Sande's evidence (at T 786.15-25) to the effect that he dealt with Fred Khalil and Gino Cassaniti in relation to structures and more technical matters and that Peter Abboud's role in Banq related to preparing the BAS returns and MYOB entries.

RCG CBD - Borg Group

1. Peter Abboud says that there is no evidence to support the inference sought to be drawn by the plaintiffs (at [862]-[865] of their submissions) that he "knew of the Borg party transactions and was involved in how these transactions were recorded in the Borg Family accounts given his role at Banq". Peter Abboud points out that there was no mention of him in Tanya Borg's affidavit or during her cross-examination.

Diamondwish and Rackforce - Criniti Companies

1. Peter Abboud says that he had no knowledge of the existence of Diamondwish until after it was in liquidation and that he had no involvement with accounting work for Rackforce and Diamondwish until after they were in liquidation; referring to his affidavit sworn 22 March 2019 in which he said that the only work he undertook in relation to Rackforce (which he said was used by Frank Criniti "as a labour hire company for his employees of the restaurant chain, as well as to pay royalties to investors in the chain") was when the liquidator asked him to reconcile the bank statements he provided while it was in liquidation (see [75], [80]).
2. It is said that there is no evidence to support the plaintiffs' claim that Peter Abboud made the Scheme Recommendation to Frank Criniti and/or that he knew that a scheme was implemented by Gino Cassaniti that would cause Frank Criniti to breach his fiduciary duties and defraud and injure Diamondwish and Rackforce.
3. Peter Abboud points to the evidence given by Tarun Shah that he was not aware of Diamondwish until 2014 and that he never asked anyone at Banq to do any work in relation to either Diamondwish or Rackforce (T 935.45-936.5); and to Frank Criniti's evidence in cross-examination, that Peter Abboud was just a "gofer" or a donkey and just did low level work.
4. It is noted that Tarun Shah gave evidence in cross-examination that there were 17 or 18 companies in the Criniti companies (T 935.30-40); and that he was employed by Rackforce and received his wages from Rackforce (T 936.25-35).
5. Peter Abboud says that it is clear that Diamondwish and Rackforce were companies personally used by Frank Criniti for tax avoidance and that Frank Criniti was always in control of these entities. Peter Abboud adopts the Khalil defendants' submissions (at [127]-[129]) in this regard.

Summary of Peter Abboud's submissions

1. Peter Abboud says that his evidence and that of the liquidator, Frank Criniti, Mario Sande, Elias Nassar, Andre Abou-Antoun and Scott Crabbe, demonstrates that he, Peter Abboud, was a junior employee who undertook basic bookkeeping, accounting and tax compliance tasks at Banq and its associated entities under the supervision of Gino Cassaniti. It is accepted that, from time to time, Peter Abboud was made a director and bank account signatory of Banq companies or client companies but it is said that he undertook work and money transfers under the direction of Gino Cassaniti and Ivana Cassaniti.
2. Peter Abboud contends that his evidence, and that of Andrew Barsa, together with the documentary evidence clearly shows that Bluemine was incorporated for a genuine reason and undertook a genuine transaction in the purchase of trucks from Jian Holdings. Peter Abboud says that, after the purchase and sale transactions of those vehicles, he had little knowledge of Bluemine's activities.
3. As to Reliance Cleaning, it is said that the evidence of Peter Abboud and Scott Crabbe and the documentary evidence clearly shows that Reliance Cleaning was a genuine cleaning business and had a genuine subcontracting agreement with RCG CBD.
4. Peter Abboud says that the documentary evidence obtained under subpoena and tendered into evidence clearly shows that Gino Cassaniti was the only accountant/advisor of the AKA Parties and that the evidence that Peter Abboud, together with Fred Khalil, was involved in recommending and implementing the Scheme is false. It is said that there is no evidence that supports the claims that Peter Abboud was involved in making any Scheme Recommendations to the Wenman Parties, the Statewide Parties, the Borg Parties or Criniti Parties.
5. Peter Abboud also says that he has fully disclosed his earnings from Banq including through LFC Holdings from 2009 and 2017 in his affidavit and he has paid taxes on this income.
6. In relation to loss and causation issues, Peter Abboud adopts the submissions made by the AKA Parties (see in due course).

Plaintiffs' submissions in reply re Peter Abboud

1. The plaintiffs cavil with the proposition that they have ignored prima facie evidence as to the purchase of trucks for the purpose of which Bluemine was incorporated, referring to their closing submissions (at [770] and [782]) as to the incorporation of Bluemine on the advice of Peter Aboud and Fred Khalil for the purported purpose of purchasing trucks (and see at [770]-[795] of the plaintiffs' closing submissions).
2. The plaintiffs make clear that they do not contend that the vehicles did not exist; rather, their position is that insofar as the transfer of certain trucks and trailers involved Bluemine there was a "purported sale and purchase" (and that this was an example of the conspiracy in action). It is said that the contentions advanced at [58]-[60] of Peter Abboud's submissions rest on assertions and or hearsay.
3. As to the involvement of Peter Abboud in the transfer of $155,000 to Bluemine from Discobell (which also involved transactions with Banq and Consolidated Wealth), the plaintiffs note that the email on 28 June 2013 to NAB (at Ex 24) records that Peter Abboud advised the bank that the purpose of the various transfers would be considered as a loan to Jola Holdings to pay for a truck in Bluemine. It is said that, notwithstanding Peter Abboud's sworn evidence that "if I did process a transfer, it was only ever at the direction of Fred, Gino or Ivana" (read only as assertion), the purpose of the various transactions was within the knowledge of Peter Abboud and Ivana Cassaniti; and that they have failed to provide an explanation for them.
4. As to the plaintiffs' submission (at [789(c)] and [793(c)]) that Peter Abboud was the director and/or shareholder of Jola Holdings at the time the trucks were purportedly transferred from Bluemine to Jola Holdings, the plaintiffs point out that there is no evidence (other than the application for the transfer of registration) which records 28 June 2013 as the date on which the truck was purportedly purchased by Jola Holdings from Bluemine for $110,000. It is noted that the bank records of Bluemine do not record a payment from Jola Holdings on or around that date and that there is no other document which reveals that any consideration passed between Jola Holdings and Bluemine.
5. Thus, while the plaintiffs accept that the ASIC records reveal that Peter Abboud ceased his appointment as the director of Jola Holdings on 22 March 2013, they do not accept the proposition that Jola Holdings purchased a truck from Bluemine on 28 June 2013 (or any other date). It is said that, on the evidence before the Court, Vehicle 5 passed from Bluemine to Jola for no consideration; and that, other than the purported purchase date recorded in the application for the transfer of registration, the date on which Jola Holdings obtained Vehicle 5 cannot be determined with any certainty. It is submitted that the Jola Holdings benefit occurred either when Peter Abboud was the director of Jola Holdings or at a later time on or around 28 June 2013 when Jola Holdings was a company related to Peter Abboud (by way of his familial relationship with Michael Abboud).
6. As to the reference made by the plaintiffs in their submissions (at [791]-[792]) to facts from 2005 and 2011, which predated Peter Abboud's employment with Banq, the plaintiffs say that it is of no consequence whether Peter Abboud was employed by Banq (or Banq Accountants) at the time when Jian Holdings purportedly purchased trucks from Tepall, noting that Peter Abboud was the director of Jian Holding in October 2010 (and they accuse Peter Abboud of obfuscation in this regard)
7. As to Peter Abboud's submissions at [26], to the effect that Bluemine claimed an input tax credit of $53,636 on the purchase of the trucks and trailer from Jian Holdings (and it was therefore Bluemine that benefited from the transaction and that it was not defrauded or injured), the plaintiffs say that this ignores the remainder of the facts relevant to the input tax credit. It is noted that the refund arising from the input tax credit claimed by Bluemine was paid by the Commissioner to Banq's trust account; that the bulk of that refund was almost immediately transferred into Banq's Business Cheque Account; and that, as a result of the audit of Bluemine conducted by the Commissioner the refund of $53,636 was disallowed and a liability in that amount was raised against Bluemine's Running Balance Account. Again it is submitted that Peter Abboud's submissions amount to obfuscation (and the plaintiffs include a table pointing to the status of any evidence referred to in Peter Abboud's submissions to show that either there was no evidence or, if there was, it was either not read or subject to a s 136 ruling that it be limited to assertion).

Finding - Peter Abboud

1. It is not disputed that Peter Abboud was the signatory of multiple bank accounts for entities associated with Banq and that he carried out work in relation to those entities including effecting bank transfers and following up invoices.
2. As to the impugned Bluemine transactions, I find that Peter Abboud gave advice to Andre Abou-Antoun in relation to Bluemine (and that the reference to a company that "we" have that could arrange invoicing is significant in pointing to his involvement with Banq). I accept that, even though his role at Banq was junior, Peter Abboud was involved in the implementation of the transactions and he must have known that they involved a series of transactions for which no services had been rendered. While I can accept that Peter Abboud was not a controlling mind of Banq (being only a 10% shareholder and only a junior employee), that does not mean he was not aware of the implementation of the Scheme involving its clients.
3. As to the Borg Parties, I accept that Peter Abboud's role was subordinate to that of Fred Khalil (the latter being the one who gave advice on the re-structuring of the companies). However, for the reasons set out above in relation to Fred Khalil, it must have been apparent to Peter Abboud that the involvement of RCG CBD and Bluemine in the relevant transactions was for no purpose or benefit to the Insolvent Companies and was not necessary for the transactions in question.
4. As to RCG CBD, I do not make a finding that its purpose was to be a sham company (nor is it necessary to do so). However, it is clear that the impugned transactions went far beyond any labour hire services that may have been provided by it and there is a direct inconsistency in the evidence between Peter Abboud and Fred Khalil as to which company was even the labour hire company - which, again, points to the treatment of companies interchangeably and without regard to their actual roles.
5. While I accept that payment for Peter Abboud's work could be effected through entities such as LFC Holdings (and his evidence is that he declared all of his income), and I accept that he did not play a primary role in the Scheme Recommendation, I consider that Peter Abboud did play a large role in the implementation of the Scheme in relation to the clients of Banq the subject of these Proceedings; and that he must have done so knowing that it was in effect a mirage; i.e., that invoices were being rendered for services not provided (which could only have been for tax minimisation or avoidance purposes and which carried the risk of tax exposure for the companies in question - and no likely ultimate benefit to them).
6. I reject the submission made for Peter Abboud that Diamondwish and Rackforce were companies personally used by Frank Criniti for tax avoidance and that Frank Criniti was always in control of those entities. I can well accept that they were utilised for tax avoidance; but not that Frank Criniti was in control of that process.
7. Peter Abboud had the requisite degree of knowledge - knowledge of the relevant aspects of the Scheme in its application to Bluemine and RCG CBD. Peter Abboud knew, at the very least, of facts that would indicate to a reasonable and honest person that no services were provided as claimed in the invoices. I therefore find Peter Abboud liable for knowing assistance in breach of directors' duties as alleged.

Plaintiffs' submissions re George Khalil

1. I have set out above the family relationships between Fred Khalil and George Khalil, and between George Khalil and Peter Abboud. I have also referred to George Khalil's role in Banq.
2. The plaintiffs say that George Khalil's role in the primary conspiracy was a critical one in that he was the controller of a number of purported "labour hire" entities that the Primary Conspirators utilised in the implementation of the primary conspiracy (in particular, RCG CBD).
3. The plaintiffs say that "labour hire entities" were at the heart of the conspiracy, in that, on every occasion, in the course of giving the structural advice the Primary Conspirators advised their clients that there needed to be a trading entity, a separate asset holding entity and a labour hire entity. While the plaintiffs accept that such advice would otherwise be entirely innocuous, the plaintiffs say that here it was not because the labour hire entity would be "loaded up: with GST and/or PAYG obligations to the Commissioner that it will be unable to pay, because all of the money paid into that entity will have been paid out" (see for example the evidence given by Frank Criniti (at T 499.5-34) of the advice he was given by Gino Cassaniti).
4. It is noted that George Khalil's ASIC Personal Names Extract reveals that George Khalil was formerly a director of eleven companies, of which nine went into creditors' voluntary liquidations (Ex K at 31534-31538); and that George Khalil has been associated with a number of purported labour hire companies that are also associated with Banq. Insofar as Fred Khalil in his interview with ATO said that Reliance Cleaning engaged these different labour hire companies to perform cleaning services periodically, the plaintiffs contest that proposition.
5. The plaintiffs point out that the labour hire entities purportedly used by Reliance Cleaning, and associated with George Khalil (with the exception of RC Group Aust), have been associated with the Banq Address. The plaintiffs say that (see Ex K at 31873-31880) copies of the Statements of Account for the labour hire Companies (except for RC Group Aust which failed to lodge any taxation returns) demonstrate that the labour hire entities did not report their GST and PAYG obligations (or reported these just prior to the appointment of a liquidator); and that no amounts for GST or tax purportedly withheld from salaries and wages were remitted by the labour hire entities to the ATO.
6. The plaintiffs rely on various emails and other documents (obtained by the ATO during the course of an access visit to Banq) that it is said demonstrate George Khalil's involvement and inter-connectedness with Banq, the "labour hire companies" and the Primary Conspiracy, those being namely: the email dated 9 April 2013 from Vipul Parekh to Compbiz as to the use of the Banq server for all Reliance email accounts (see above) (Ex K at 38534); the following email on 18 April 2013 from George Khalil, using his email address at Banq but signing off as the "Operations Manager" at Reliance Cleaning (Ex K at 38532); the email chain between Peter Abboud (at Banq) and Mario Sande (of Statewide Printing) requesting the printing of 1000 RCG CBD business cards, in which George Khalil is described as the operations manager (Ex K at 38509); an email relating to George Khalil in relation to Workforce Unlimited trading as RCG Australia (Ex K at 38512-38513); and emails between Fred and George Khalil as to matters related to Workforce Unlimited (Ex K at 38517, 38519); and other matters (Ex K at 38526, 38528); including stamping of an assignment of a lease from KTDH to Kamikaze (DH) Pty Ltd (Ex K at 38542); signing of insurance forms for RC Group Aust (Ex K at 38547); organising a cheque book to make payments for RC Group Aust Pty Ltd (Ex K at 38548-38549); George Khalil's agreement with Fred Khalil's suggestion of a monthly meeting to go through the profit and loss (and anything and everything to do with) Reliance and Right Clean Group (Ex K at 38568); requesting clarification of handyman activities for the purposes of workers' compensation insurance (Ex K at 38579); dealing with client requests as to payments (Ex K at 38585) (George Khalil here as operations manager of RCG (Aust) Pty Ltd); as to the making of a request to CBA (Ex K at 38662); as to outstanding payments by a client of Reliance Cleaning (Ex K at 38707-38709); a Subcontractors Statement for RC Group Aust, signed by George Khalil as the director (Ex K at 38733); communications as to amended timesheets (Ex K at 38911); an email as to payroll for RCG CBD dated 14 August 2012 from Vipul Parekh (whose sign off is there identified as "Accounts Supervisor" for Reliance Cleaning) and sent to George Khalil (Ex K at 38934); other communications regarding Reliance Cleaning (Ex K at 38935, 38937); emails from George Khalil (signing off as RCG Operations Manager) and enclosing documents signed by George Khalil (Ex K at 38938).
7. The plaintiffs say that, amongst other matters, those emails and documents show that George Khalil's role in the Primary Conspiracy was as the controller (including financial controller) of the labour hire entities purportedly operated by Banq; and it is said that the various entities (Reliance Cleaning, RC Group Aust, RCG, RCG CBD, Right Clean Group and Right Clean Global) appear to have been used interchangeably, as if they were the one entity.
8. As to George Khalil's role in the Scheme Implementation, the plaintiffs point to his position as a director (and, in some cases, company secretary) of the following companies connected to Banq: Workforce Unlimited; RPS Security; RCG CBD; RC Group; Little Johnny; Involved Recruitment; Investmint; Genuine Constructions; EM and EN Investments; Compbiz; and Bright Star Hire
9. The plaintiffs contend that the striking similarity (which they say is no innocent coincidence) of George Khalil's appointments to the companies identified above, the appointments of liquidators in creditor's voluntary liquidations and the backdating of directorships could not have occurred in the absence of the primary conspiracy. It is said that, by his involvement in those companies and those activities, the correspondence referred to above, and the transactions discussed below, it is to be inferred that George Khalil was a Primary Conspirator and that he had knowledge of and participated in the primary conspiracy.

George Khalil's involvement in RCG CBD payments in and out

RCG CBD

1. A purported labour hire/subcontract agreement between Phoenix Industrial Cleaning and RCG CBD signed by George Khalil on behalf of RCG CBD was produced by Phoenix Industrial Cleaning in answer to a s 353-10 notice (Ex K at 33853, 32065-32070).
2. As noted above, George Khalil was recorded in ASIC records as a director of RCG CBD from its incorporation on 16 May 2012 until 28 May 2013 when the (backdated) Form 484 was lodged notifying ASIC of the change in directorship (Ex K at 31691). The plaintiffs say that the ASIC record is prima facie evidence that George Khalil was a director of RCG CBD and acted as its director from 16 May 2012 until 28 May 2013 and they contend that that prima facie evidence has not been rebutted.
3. Relevantly, the plaintiffs contend that the prima facie position caused by the lodging on 28 May 2013 of the Form 484 (which had the purported effect of causing George Khalil to cease as director from 16 May 2012), should not be accepted because the Form was backdated. It is said that there is no independent evidence that George Khalil ceased as director from that date; and that the inference to be drawn from the fact that George Khalil was the controller of RCG CBD bank account involving transactions of millions of dollars (including those in respect to Banq, Reliance Cleaning, Involved Recruitment, the Wenman Parties, and the Statewide Parties, amongst others) substantiates the position that, during the period in which those transactions occurred, George Khalil was a director of RCG CBD. It is noted that George Khalil has not gone into evidence contradicting his directorship of RCG CBD and that this evidence is peculiarly within his knowledge.
4. As also noted above, George Khalil was at all times the sole signatory of the RCG CBD bank account (an account ending #8539) with the CBA (Ex K at 31543-31544) as evidenced by the documents produced in response to a notice issued to CBA pursuant to s 353-10.
5. The plaintiffs say that all of the payments identified in the RCG CBD third further amended statement of claim (either to or from RCG CBD) could not have been made without the knowledge and approval of George Khalil as the controller of RCG CBD's bank account. The plaintiffs say that the payments could only have occurred with the knowledge and concurrence of George Khalil as to every element of each transaction and the chain of transactions that led to them (in other words, the plaintiffs say that George Khalil was not just watching money going in and out; rather, that he knew what the payments were for, and he knew the sources of the funds).
6. It is said that George Khalil had to have known: the reasons for the payments from clients of Banq that were coming in and that the moneys were to be paid on to other clients of Banq minus the fee that had been negotiated with that client; that on each and every occasion what that fee was, because they differed between clients; and that the fee which Banq took (some of which appeared to be a 10% GST amount) would not be paid on to the Commissioner.
7. It is submitted that, due to George Khalil's failure to give any evidence, when the true basis for him to approve these transactions going in and out of RCG CBD's bank account was peculiarly in his knowledge, it can confidently be concluded that those payments were the implementation of the Scheme.

RCG CBD - Banq Payments

1. Similarly, the plaintiffs say that the payments (totalling $653,439.54) made by Banq to RCG CBD in the period 31 July 2012 to 27 May 2013 could not have occurred without the knowledge of the principals of Banq, namely, Gino Cassaniti, Fred Khalil and Peter Abboud, and George Khalil (as the controller of RCG CBD's bank account).
2. As already noted, the plaintiffs say that the purported invoices for labour hire services issued by RCG CBD to Banq are false (see above).
3. As to the payments totalling $920,415 made by RCG CBD to Banq in the period from 10 September 2012 to 30 May 2013 (see Table 3.2), again the plaintiffs say that no explanation has been provided by any of the Primary Conspirators as to the basis for those payments (which information is peculiarly within their knowledge) (and that the suggestion by Fred Khalil in his affidavit at [46] that he and other staff at Banq undertook clerical work for RCG CBD for a period of time could not explain payments of that magnitude). Further, the plaintiffs say that, given that the payments to Banq from RCG CBD and Bluemine totalled $1,514.060 in the 2013 financial year, it is clear that they were not disclosed as income in Banq's 2013 profit and loss statement (considering $1,575,371 was disclosed) (Ex K at 34233).
4. Reference is made to Fred Khalil's evidence in his ATO interview (Ex 18 at 89.23-26) that Banq was not providing accounting services to RCG CBD "worth anywhere near" the amounts paid by RCG CBD to Banq; and to Peter Abboud's inability (despite his claim to have "worked for" RCG CBD - see Ex 18 at 9.18) to explain why RCG CBD paid large sums of money to Banq (Ex 18 58.18-59.08) and that Peter Abboud also agreed that value of any work that Banq did for RCG CBD was nowhere near the value of $1.2 million. It is noted that Peter Abboud attested that he could not recall Banq doing any accounting work for RCG CBD (at 56.35-39). The plaintiffs say that, given the rounded figures and total amount paid by RCG CBD, which far exceeded what would be reasonably expected for accounting fees for an eight-month period, any such assertion is not believable.
5. The plaintiffs say that the payments made by RCG CBD to Banq are nothing more than the Primary Conspirators moving cash through RCG CBD and into their hands, in furtherance of the Primary Conspiracy as pleaded in the third further amended statement of claim, with George Khalil's knowledge as the controller of RCG CBD's bank account.

RCG CBD - payments to LFC Holdings; Reliance Cleaning, HCC Commercial Cleaning; Kito Investments; Sivasli; the Wenman parties; Statewide; Borg Group; North Shore/John Haddad; Crinz; Kamikaze and Involved Recruitment

1. The plaintiffs refer to a succession of payments in and out of RCG CBD, often in rounded sums, in respect of all of which they contend that the payments could not have occurred without the knowledge and approval of George Khalil as the controller of and sole signatory to RCG CBD's bank account; and in respect of which they say that the inference can confidently be drawn (in the absence of any evidence from George Khalil, or where relevant Peter Abboud and Fred Khalil; and given the lack of any documents produced to the liquidator) that George Khalil had knowledge of the basis of those transactions, namely the implementation of the Scheme, and that the transactions were not for any legitimate commercial reason.
2. The payments in question (to which reference has already been made above) are payments made by or to RCG CBD: between 31 December 2012 and 9 January 2013, to LFC Holdings (totalling $52,020) (see Tables 3.6 and 3.7); in the period from July 2012 to May 2013, to Reliance Cleaning (totalling $1,618,254.35) (Table 3.11) and paid out either the same day or within a few days to Tuff Gym, Workforce Unlimited, Investmint or Banq; the payments in January 2013 of $13,200 by HCC Commercial Cleaning to RCG CBD and on to Investmint (see [211] of the RCG CBD third further amended statement of claim and Table 3.6); in the period from 20 November 2012 to 13 May 2013, of amounts totalling $140,000 to Kito Investments (some of which came into RCG CBD from Reliance Cleaning) (see [171] of the RCG CBD third further amended statement of claim and Tables 3.11 and 3.14); in the period from 19 December 2012 to 14 May 2013, to Sivasli (totalling $201,000) (some of which came into RCG CBD from Involved Recruitment) (see [44] and [166] of the RCG CBD third further amended statement of claim and Tables 3.10 and 3.13); by Ignite Promotions to RCG CBD in the period from 30 January 2013 to 6 March 2013 and from RCG CBD to Wenman Brimak in the period from 5 February 2013 to 7 March 2013 (as well as payments made from Blackrock Media to Ignite Promotions or from Wenman Brimak back to Blackrock Media not included in Table 3 - see above) (see Table 3.3); by State Wide Design to RCG CBD in the period from 15 November 2012 to 7 March 2013 (totalling $491,961.71) and from RCG CBD to Statewide Printing in the period from 16 November 2012 to 13 March 2013 ($447,223.27) (Table 3.4); by Borg Family to RCG CBD in the period from 25 September 2012 to 24 May 2013 (totalling $618,000) and from RCG CBD to Borg Family in the period from 25 September 2012 to 10 October 2012 (totalling $580,000) (Table 3.5); by North Shore and John Haddad to RCG CBD in the period from 5 October 2012 to 8 May 2013 (totalling $931,000) and from RCG CBD to Aaron Tippet, Kydon Segal Lawyers/Aaron Tippet and Kito Investments in the period from 11 October 2012 to 9 May 2013 (in the sum of $580,000) (Table 3.8); by Crinz to RCG CBD in the period from 29 August 2012 to 5 October 2012 (totalling $530,000) and from RCG CBD to JRC Kazzi, Crinz, RCG CBD and Banq in the period from 30 August 2012 to 11 September 2012 (totalling $372,400) (Table 3.8); by Kamikaze to RCG CBD in the period from 31 July 2012 to 21 May 2013 (totalling $364,656.29) and from RCG CBD to Katherine Khalil, Tuff Gym and Kamikaze, amongst others, in the period from 2 August 2012 to 21 May 2013 (Table 3.12); and by Involved Recruitment to RCG CBD in the period from 7 September 2012 to 30 May 2013 (totalling $934,339.28) and from RCG CBD to North Shore, Tuff Gym and Sivasli, amongst others, in the period from 14 February 2013 to 14 May 2013 (Table 3.13).

Bluemine

1. As to the round robin of payments made by the companies in the AKA Group to Bluemine (see Table 5.2), the plaintiffs say that Bluemine issued purported invoices to AKA NSW and AKA Civil, which were paid to Bluemine and that Bluemine paid that sum, less a fee, onto companies within the AKA Group (LAM Haulage, MAL Land Group and The Great Brothers); and that the payments into Bluemine were made on the advice of Peter Abboud and Fred Khalil (T 642.6-37). Bluemine then made payments to RCG CBD of $33,110 on 10 December 2012, $16,285 on 12 December 2012 and $12,465 on 18 December 2012 (Table 5.2). (In respect to the third payment by Bluemine to RCG CBD on 12 December 2012 of $16,285 that was pleaded at [172] of Bluemine's Statement of Claim as going to an "unknown" recipient, this has now identified in RCG CBD's bank statement (Ex K at 30427).)
2. The plaintiffs say that it is to be inferred that Gino Cassaniti knew of the above payments (as a director of RCG CBD) and also that, as early as December 2012, he was orchestrating payments from Bluemine to RCG CBD. Further, it is said that, when those payments from Bluemine to RCG CBD were occurring, they could only have occurred with the knowledge and concurrence of George Khalil (as the controller of RCG CBD's bank account) as to every element of the transactions and the chain of transactions that lead to them; i.e., that he knew what the payments were for and the sources of those funds. The plaintiffs say that George Khalil must have known that the payments from Bluemine were coming in to RCG CBD in accordance with the Scheme Recommendation and the primary conspiracy.
3. Again, it is submitted that by reason of the failure of George Khalil to give any evidence (when the true basis for him to approve these transactions going into RCG CBD's bank account from Bluemine was peculiarly within his knowledge), it can confidently be concluded that those payments were the implementation of the Scheme.

Diamondwish

1. Similarly, the plaintiffs say that the Diamondwish transaction (payment on 21 December 2012 by RCG CBD to Diamondwish of $250,000 and its on-payment on 24 December 2012 to Elle Barikhan) could not have occurred without the knowledge and authority of George Khalil as the sole signatory to the bank account of RCG CBD; that George Khalil must have known of it and its basis, and that Diamondwish had no entitlement to it and RCG CBD had no obligation to pay it; and that it was the implementation of the Scheme.
2. Again, it is said that, in the absence of evidence from George Khalil, where he was the controller of RCG CBD's bank account, it can confidently be concluded that George Khalil had knowledge of the basis for those transactions, which was the implementation of the Scheme.

George Khalil's involvement in fees and other benefits to Primary Conspirators and associated entities

1. The plaintiffs again emphasise that George Khalil was the controller of the RCG CBD bank account. Reference is made to the transactions identified in the RCG CBD third further amended statement of claim (at [211], [171], [44] and [166], and [298]) that were made by RCG CBD to companies associated with Fred Khalil (and thereby, it is said, also associated with George Khalil) in respect of which the liquidator has not identified any benefit that RCG CBD received in return for those payments; nor was he provided with any documents or explanation for those transactions (see transactions above).
2. As already noted, the plaintiffs say that the above transactions are further patent examples of a conspirator getting cash out of various companies and into RCG CBD, and through it into his or others' hands, tax free, as Fred Khalil, Gino Cassaniti, Peter Abboud and George Khalil determined. They say that when those payments from RCG CBD to companies associated with Fred Khalil were occurring, they could only have occurred with the knowledge and concurrence of George Khalil as to every element of the transaction (including their purpose and the source of the funds); and that George Khalil must have known that the payments out of RCG CBD were made in accordance with the Scheme.
3. Again, it is said that due to George Khalil's failure to give any evidence (when the true basis for him to approve these transactions going from RCG CBD's bank account to companies associated with Fred Khalil was peculiarly within his knowledge), it can confidently be concluded that those payments were the implementation of the conspiracy. A similar submission is made as to the payments by RCG CBD to LFC Holdings (see above) which, it is said, should be inferred to be Peter Abboud's remuneration for his involvement in the primary conspiracy.

George Khalil - Change of Directors and Liquidations

1. As noted already, the plaintiffs say that George Khalil was appointed the "straw director" of the following companies immediately prior to them being wound up in a creditor's voluntary winding up and prior to George Khalil going into bankruptcy, namely: Little Johnny; Investmint; Genuine Constructions; EM and EN Investments; Compbiz and Bright Star Hire.
2. Again, the plaintiffs say that, by George Khalil's failure to give any evidence, when the true basis for him becoming a director of those companies was peculiarly within his knowledge, it can confidently be concluded that this conduct was in fact the implementation of the conspiracy and that George Khalil was one of the Primary Conspirators.

George Khalil - Knowledge of RCG CBD's liabilities (Schedule 1)

1. The tax liabilities incurred by RCG CBD included BAS related liabilities for the period from 1 July 2012 to 30 June 2013 in the sum of $1,065,107 and income tax liability for the financial year ended 30 June 2013 in the amount of $2,235,475.80.
2. The plaintiffs say that all of the payments identified in the RCG CBD third further amended statement of claim, from RCG CBD, could not have been made without the knowledge and approval of George Khalil as the controller of RCG CBD's bank account; and that such payments out of the RCG CBD bank account, could only have occurred with the knowledge and concurrence of George Khalil as to every element of the transaction.
3. The plaintiffs say that it cannot seriously be contended that a director of a company and controller of the company's bank account (in this case George Khalil) was not aware that, in receiving payments for the provision of purported services, GST would be payable to the Commissioner (or at least the Commissioner would regard it as being payable). Similarly, it is said that if moneys are paid for the provision of a purported service, that will be income in the company's hands, which will incur income tax liabilities.
4. The plaintiffs say that, by George Khalil's failure to give any evidence, when the true basis for him to approve these transactions going out of RCG CBD's bank account was peculiarly within his knowledge, it can confidently be concluded that those payments were the implementation of the conspiracy. The plaintiffs say that it is to be inferred that George Khalil was therefore aware that payments coming into RCG CBD for the purported provision of labour hire services would incur GST liabilities and income tax liabilities and that, as the controller of RCG CBD's bank account, George Khalil was well aware that no payments were being remitted to the Commissioner in respect to any tax liability incurred by RCG CBD including for BAS related liabilities and income tax liabilities.

George Khalil - Knowledge

1. Again, the plaintiffs assert that all of the payments identified in the RCG CBD third further amended statement of claim, either to or from RCG CBD, could not have been made without the knowledge and approval of George Khalil as the controller of RCG CBD's bank account; and that, in relation to payments coming into RCG CBD and then out of RCG CBD (totalling millions of dollars), they could only have occurred with the knowledge and concurrence of George Khalil as to every element of the transaction. It is said that (by reason of his position as controller of the RCG CBD bank account) George Khalil must have known the reason why the payments from clients of Banq were coming in and that the money was to be paid on to other clients of Banq minus the fee that had been negotiated with that client; and must have known that the fee which Banq took, some of it to look like 10% GST, would not be paid on to the Commissioner.
2. The plaintiffs say that, on each occasion that a payment was made into RCG CBD and then out (for example, the payments in by Ignite Promotions), it is to be inferred that there was a conversation about that payment in, the fee to be deducted, in this example 10%, and the entity into which the outgoing payment was to be made, namely Wenman. It is said that those conversations occurred between Gino Cassaniti, Fred Khalil and Peter Abboud, on the one hand, and George Khalil, on the other, as to each and every element of the respective transaction.
3. In summary, the plaintiffs submit that George Khalil had knowledge of all, of the essential elements of the following matters:

• the payments into RCG CBD by Ignite, the extraction of the 10% fee and the payments out to Wenman (which it is said must have involved a conversation between Gino Cassaniti and George Khalil);
• the payments into RCG CBD by State Wide Design, the extraction of the 10% fee and the payments out to Statewide Printing (which it is said must have involved a conversation between Gino Cassaniti, Fred Khalil and Peter Abboud on the one hand and George Khalil on the other);
• the payments into RCG CBD by Borg Family/Borg Civil, and the payments out to Borg Civil (which it is said must have involved a conversation between Fred Khalil and George Khalil);
• the payments into RCG CBD by Banq and out of RCG CBD to Banq (which it is said must have involved a conversation between Gino Cassaniti, Fred Khalil and Peter Abboud on the one hand and George Khalil on the other);
• the payments out of RCG CBD to LFC Holdings (which it is said must have involved a conversation between Peter Abboud (as the director of LFC Holdings) and George Khalil);
• the payments into RCG CBD by Reliance Cleaning (which it is said must have involved a conversation between Fred Khalil and Peter Abboud on the one hand and George Khalil on the other);
• the payments into RCG CBD by HCC Commercial Cleaning and the payments out from RCG CBD to Investmint (which it is said must have involved a conversation between Fred Khalil (as the director of Investmint) and George Khalil);
• the payments out of RCG CBD to Kito Investments (which it is said must have involved a conversation between Fred Khalil (as the director of Kito Investments was Katherine Khalil) and George Khalil);
• the payments out of RCG CBD to Sivasli (which it is said must have involved a conversation between Fred Khalil (as the director of Sivasli) and George Khalil);
• the payments into RCG CBD by North Shore and John Haddad and the payments from RCG CBD to Aaron Tippet, Kydon Segal Lawyers/ Aaron Tippet and Kito Investments (whose director, as already noted, was Katherine Khalil) (which it is said must have involved a conversation between Gino Cassaniti, Fred Khalil and Peter Abboud on the one hand and George Khalil on the other);
• the payments into RCG CBD by Crinz and the payments from RCG CBD to JRC Kazzi, Crinz, RCG CBD and Banq) (which it is said must have involved a conversation between Gino Cassaniti, Fred Khalil and Peter Abboud on the one hand and George Khalil on the other);
• the payments into RCG CBD by Kamikaze and the payments from RCG CBD to Katherine Khalil, Tuff Gym and Kamikaze, amongst others (which it is said must have involved a conversation between Gino Cassaniti, Fred Khalil and Peter Abboud on the one hand and George Khalil on the other);
• the payments into RCG CBD by Involved Recruitment and the payments from RCG to North Shore, Tuff Gym and Sivasli (which it is said must have involved a conversation between Gino Cassaniti, Fred Khalil and Peter Abboud on the one hand and George Khalil on the other);
• the payments from Bluemine, which in turn came in from AKA NSW and AKA Civil, into RCG CBD being the 2.5% fee payable for the AKA Group companies involvements in the Scheme (which it is said must have involved a conversation between, Fred Khalil and Peter Abboud on the one hand and George Khalil on the other);
• the payment of $250,000 from RCG CBD to Diamondwish, which in turn was paid on to Elle Barikhan (which it is said must have involved a conversation between Gino Cassaniti and George Khalil);
• the payments from RCG CBD to Patsouris (see [54] of the RCG CBD third further amended statement of claim) (which it is said must have involved a conversation between Gino Cassaniti, Fred Khalil and Peter Abboud on the one hand and George Khalil on the other);
• the payments from RCG CBD to Fox & Staniland ([74] of the RCG CBD third further amended statement of claim) (which it is said must have involved a conversation between Gino Cassaniti, Fred Khalil and Peter Abboud on the one hand and George Khalil on the other);
• the payments from RCG CBD to JRC Kazzi ([84] of the RCG CBD third further amended statement of claim) (which it is said must have involved a conversation between Gino Cassaniti, Fred Khalil and Peter Abboud on the one hand and George Khalil on the other);
• the payments from RCG CBD to Coolfind ([94] of the RCG CBD third further amended statement of claim) (which it is said must have involved a conversation between Gino Cassaniti, Fred Khalil and Peter Abboud on the one hand and George Khalil on the other);
• the payments from Phoenix Industrial Cleaning to RCG CBD and from RCG to Katherine Khalil, LFC Holdings and Involved Recruitment (which it is said must have involved a conversation between Gino Cassaniti, Fred Khalil and Peter Abboud on the one hand and George Khalil on the other
• the fact that payments coming into RCG CBD for the purported provision of labour hire services would incur GST liabilities and income tax liabilities; and
• the fact that payments were going out of RCG CBD meant that no payments were being remitted to the Commissioner in respect to any tax liability incurred by RCG CBD including for BAS related liabilities or income tax liabilities.

1. It is again noted that no documents were produced to the liquidator of RCG CBD when he sought them from Gino Cassaniti and/or Banq. The liquidator has been unable to identify a genuine commercial basis for the transactions that occurred. It is said, by reference to George Khalil's failure to give any evidence and failure to produce any genuine commercial documentation, when the true basis for these transactions going in and out of RCG CBD's bank account was peculiarly within his knowledge, that it is established that those payments were the implementation of the primary conspiracy and that George Khalil was a Primary Conspirator. It is said that his role in the primary conspiracy was at the very heart the Scheme as he was the controller of RCG CBD's bank account and a director of a number of purported labour hire entities, in particular RCG CBD. I accept that George Khalil was the controller of RCG CBD's bank account and a director of a number of purported labour hire companies, but as described below, that is not necessarily sufficient to establish accessorial liability.

George Khalil's submissions

1. The Khalil defendants say that the highest point of the plaintiffs' case against George Khalil is that he was a director of RCG CBD and a signatory on the company's account. Again, it is noted that the ASIC record demonstrates that he was appointed and removed as a director on the same day (based on an ASIC notice signed by Gino Cassaniti, albeit lodged about a year later).
2. It is accepted that George Khalil remained a signatory to the relevant bank account but it is said that it is no longer the case that the signatory on a bank account is the only person with access to that account (noting that a PIN or login device is a standard means of access to and use of bank accounts by the Internet). Thus, it is said that being the sole signatory on a bank account does not of itself mean that the signatory is the only person causing money to be paid in and out of the account.
3. The Khalil defendants say that, while it might be the case that George Khalil had the required knowledge of the transactions said to constitute the implementation of the Scheme, there is no evidence that he either agreed to implement the Scheme, made the Scheme Recommendation to any of the Scheme Participants or actually undertook any of the transactions said to be impugned as part of the Scheme; and it is said that knowledge without assistance does not attract liability for knowing assistance.
4. It is said that the submissions of the plaintiffs proceed on the basis that George Khalil knew or must have known of the transactions involving RCG CBD while he was a director and signatory on the bank account of that company and that this equates with knowledge of a dishonest and fraudulent design being carried into effect by Gino Cassaniti in breach of his duty as a fiduciary. The Khalil defendants say that this is not the case and that it is inconsistent with the matters pleaded as constituting the breach of duty by Gino Cassaniti.

Plaintiffs' submissions in reply re George Khalil

1. The plaintiffs maintain that they have established that: George Khalil, the brother of Fred Khalil, was a director of a number of labour hire entities including RCG CBD; George Khalil was the sole signatory and controller of RCG CBD's bank account; payments of millions of dollars went into RCG CBD and then out from RCG CBD; and those payments could only have occurred with the knowledge and concurrence of George Khalil as to every element of each transaction and the chain of transactions that led to them.
2. The plaintiffs accept the concession that they said was made by the Khalil defendants that George Khalil had the requisite knowledge of the transaction said to constitute the implementation of the Scheme. It is said that the Khalil Parties' submission that it is no longer the case that the signatory on a bank account is the only person with access to the account (and that George Khalil was not the only person causing money to be paid into and out of the RCG CBD account) is without basis, noting that George Khalil did not lead any such evidence.
3. The plaintiffs say that any evidence about access to RCG CBD's bank account is peculiarly within the knowledge of George Khali and therefore slight evidence of that fact suffices to prove the fact because it is not explained away by George Khalil, being the party with the knowledge of the fact (citing Hampton Court Ltd v Crooks at 375; Tyco Australia Pty Ltd v Optus Networks at [121]; Parker v Paton at 243; Ex parte Ferguson at 67, 70). It is said that there was no evidence that indicated that anyone other than he had access to the RCG CBD bank account.

Finding - George Khalil

1. There is no suggestion in the evidence that George Khalil played any role in the recommendation of the Scheme but he was clearly involved as a director of a number of entities and the sole signatory of a number of accounts (including RCG CBD's account through which substantial sums were transferred). There is no evidence that anyone else had actual access to the accounts on which he was the sole signatory. Though I accept that it is conceivably possible that such access could have been given by him to others via the internet or otherwise, whether he did so appears no more than speculation - and he chose not to give evidence to explain this. The documentary evidence listed by the plaintiffs (at [1482]) shows George Khalil's involvement with the so-called "labour hire companies" associated with Banq. The Form 484 notifying ASIC of RCG CBD's change of director on 16 May 2012 was not lodged until 28 May 2013; and in the interim and continuing thereafter George Khalil remained the sole signatory on RCG CBD's bank account. I consider that this strongly indicates that George Khalil continued to have a substantial role at RCG CBD after 16 May 2012 (the date on which he purportedly ceased as director of RCG CBD). I also note that George Khalil did not come forward to give evidence about his role at RCG CBD (a matter peculiarly within his knowledge) or to displace the evidence that he was the person effecting the transactions (as sole signatory) out of RCG CBD's account.
2. I find that the evidence warrants the inference (which I am comfortably satisfied should here be drawn) that George Khalil had knowledge of the facts and circumstances that would indicate to an honest and reasonable person the dishonest and fraudulent design that had been put in place. In this respect, I place emphasis on the large sums paid in and out of RCG CBD, less a fee amount, and the significant payments made to Banq (for no apparent purpose). I also find that George Khalil's role in effecting these transactions facilitated Gino Cassaniti's and Frank Criniti's breaches of duty, such that his knowing assistance in the breaches of fiduciary and director's duties is established.
3. While I am not persuaded that the evidence establishes that George Khalil was a Primary Conspirator, I find that the claims made against George Khalil for knowing assistance in the dishonest and fraudulent designs of Gino Cassaniti and Frank Criniti in breach of their duties to the relevant companies are made good.

Scheme Participants

1. In each of the five Proceedings, it is said that, by reason of the Paying Participants' knowledge, deliberate blindness or reckless indifference regarding the purpose of their payments to the Insolvent Companies, they knowingly assisted the Primary Conspirators in their breach of fiduciary duty to the Insolvent Companies; and to that extent they are jointly liable, as if they were constructive trustees, to account for their profit and provide equitable compensation for damages to the fiduciary's principal (i.e., the respective Insolvent Companies).
2. It is said that the Paying Participants had or should be taken to have had knowledge (within the first four categories in Baden Delvaux), that it was likely that: first, the Insolvent Companies would be left unable to pay tax on the putative earnings from the Paying Participants because the Paying Participants or entities with whom they were associated received (less commission to the Primary Conspirators) the same amount of money back; and second, that the ATO would then audit and/or fine the Insolvent Companies for non-payment of tax. It is said that the damage then suffered by each of the Insolvent Companies, was caused by the Paying Participants role in the Scheme in that had they not paid the false invoices, the respective Insolvent Companies would not have received assessable income (and incurred liability for non-payment of taxes).
3. It is said that in each case the Scheme Participants exploited the conditions which made the commission of that wrong a distinct probability and were either aware of, or else indifferent to, that probability. It is said that, whether they had any knowledge at all of whether a breach had in fact occurred, that breach was wanted by them and, even if they were ignorant of any actual wrong by the Primary Conspirators, they should be taken as having assumed the risk, should the wrong occur. It is submitted by the plaintiffs that, by their own actions (by the role taken in the matter) the Scheme Participants can properly be said to have had "reason to know" of the substantial chance of its possible occurrence.
4. By reason of the Receiving Participants' knowledge, deliberate blindness or reckless indifference to their entitlement to the payments received from the Insolvent Companies, the plaintiffs say that they are the paradigm example of a knowing recipient of money obtained in breach of fiduciary duty; and that this is exacerbated by the fact that the direct or indirect source of the funds with which they were paid (enabling the payment) was from an entity related to the Receiving Participant. (Pausing here, the claim against the defendants is for knowing assistance not knowing receipt.) However, it is said in the alternative that the Receiving Participants were clearly the beneficiaries of uncommercial transactions within the relation-back period in terms of s 588F of the Corporations Act (see further below).

Plaintiffs' submissions re AKA Parties (Earth Civil and Bluemine)

1. In the Earth Civil Proceeding, the plaintiffs claim that Michael Abou-Antoun, AKA Civil and AKA NSW were accessories to Gino Cassaniti's breaches of duty (Earth Civil AKA Parties). In the Bluemine Proceeding, the plaintiffs claim that LAM Haulage, MAL Land Group, the Great Brothers, Andre-Abou-Antoun, Michael Abou-Antoun, AKA Civil, and AKA NSW were accessories to Gino Cassaniti's breaches of duty (Bluemine AKA Parties).
2. I have referred above to the circumstances in which Andre Abou-Antoun was introduced to Banq; to the evidence as to the advice given in about June 2010 by Peter Abboud or Fred Khalil to set up a new company to deal with clients (T 626.37-45), in consequence of which, Banq arranged the incorporation of AKA Civil in June 2010 (Ex K at 10975); and to the events that followed in relation to the AKA companies' accounting; the creditors' voluntary winding up of both of Tip and Fill and ACN 121913488 (formerly, AKA Civil Contracting) in September 2010; and the incorporation of AKA Civil, AKA NSW, Earth Civil, MAL Land Group and the Great Brothers.
3. I have also set out above the evidence as to the Scheme Recommendation and its implementation insofar as it concerned the AKA Parties (see, in particular, Andre Abou-Antoun's evidence at T 627.5-9; T 631.1-18). Andre Abou-Antoun's evidence was that LAM Haulage was the asset-holding company within the group (T 634.1-10).
4. The plaintiffs maintain that the evidence given by Andre Abou-Antoun to the ATO was the truth. They place considerable weight on this as they say that this directly involves not only Peter Abboud and Fred Khalil (as proposing this arrangement) but also Gino Cassaniti (as the director of Bluemine and Earth Civil) and George Khalil (as the controller of RCG CBD's bank account, noting that RCG CBD received 2.5% of the payments in fees).
5. Reference is made to the evidence of Andre Abou-Antoun in the hearing (referred to above) as to the advice given about the Scheme and the tax benefits by Peter Abboud and Fred Khalil and his understanding of that advice (see T 647.49-648.16; T 671.27-39; T 655.16-31). The plaintiffs say that the conversations attested to by Andre Abou-Antoun that he had with Fred Khalil and Peter Abboud identify that the intention of setting up or utilising Bluemine was to facilitate the Scheme, with the issuing of false and inflated invoices for the purpose of obtaining the tax savings that he was told by them would be obtained by the AKA Companies (see at T 649.14-26 and T 635.24-31). As to the involvement of Banq in the implementation of the AKA Group's accounting systems, reliance is placed on the evidence set out earlier as to Banq taking care of all of the AKA family companies' accounting from about June 2010 onwards, and Andre Abou-Antoun's evidence that Banq had access to the AKA Group companies' MYOB file (and his personal observation of the use of such access by persons at Banq).
6. The plaintiffs say that it is plain that all of the AKA transactions in the Bluemine Proceeding (i.e., the impugned payments involving the LAM Haulage transactions, the MAL Land Group transactions, The Great Brothers transactions and the AKA Civil and AKA NSW transactions) occurred as a result of the AKA Parties (through Andre and Michael Abou-Antoun) performing the arrangement as explained by Peter Abboud and Fred Khalil; and with the full knowledge of Gino Cassaniti, the director of Bluemine, and the full knowledge and concurrence of George Khalil. Similarly, they say that the impugned AKA Civil and AKA NSW transactions in the Earth Civil Proceeding were pursuant to an arrangement facilitated by Fred Khalil and Peter About but caused or permitted by Gino Cassaniti.
7. The plaintiffs say that it should not be accepted that Andre Abou-Antoun did not know at the time that the Bluemine invoices were exaggerated or inflated. Additionally, they say that it should be accepted that he regarded them at the time as fake and fabricated, pointing to his evidence to the ATO of the primary recommendation made to him by Peter Abboud and Fred Khalil as to the use of Bluemine and false and inflated invoices. The plaintiffs note that there were no genuine commercial documents evidencing any of these impugned transactions; and that Andre Abou-Antoun agreed in oral evidence that no such services were provided; and that the descriptions of those services in the invoices were false (see T 689.1-27 and T 688.12-50).
8. As to the benefits obtained by Andre and Michael Abou-Antoun and the AKA Parties in relation to the AKA Civil payments to Earth Civil, it is said that this was the amount of cash taken out of Earth Civil tax free. It is noted that, although Andre Abou-Antoun suggested at the ATO interview and again in Court (see T 681.15-684.34) that those funds were used to pay employees in cash, Andre Abou-Antoun was unable to identify to the ATO a single employee that was paid in cash, notwithstanding that a number of members of his family worked in the business (though in his evidence in Court at T 682.30-35 he suggested there were a couple of people that he paid during the period, being Richard and Julie); and that he was unable to produce any document identifying any such payments. The plaintiffs say that that evidence would not be believed in circumstances where Andre Abou-Antoun is unable to produce a single legitimate business record which corroborates the payments of purported cash wages (T 683.5-20). (Andre Abou-Antoun's explanation as to why he could now remember some employees' names was that previously he had been "on the spot" and that he had remembered "just through some of the work we've done recently", which calls into question the reliability issues in relation to his evidence both before the ATO and in the Court (T 683.15-23). It is noted that Andre Abou-Antoun agreed (at T 684.25-36) that it was a truthful answer in the ATO interview when he said that he could not remember name of a single employee that had been paid with the cash.) The plaintiffs refer to Andre Abou-Antoun's agreement that he took the money home and put it in the safe (for Andre Abou-Antoun, it is said that this must be put in context - and that it is not an admission that the money was used for personal purposes).
9. Pausing here, for Andre Abou-Antoun reference is made to the payroll ledger in evidence for Earth Civil (Ex K at 10338). The AKA Parties say that Earth Civil employed "real employees" in the AKA business and it is suggested that the "work we've done recently" to which Andre Abou-Antoun referred may have included reviewing the Earth Civil payroll ledger. Nevertheless, Andre Abou-Antoun accepted that the cash withdrawals amounted to some hundreds of thousands of dollars. If those amounts were paid in wages it might be expected that there would be records of some kind beyond simply a payroll ledger to corroborate this.
10. The plaintiffs say that the contention that Earth Civil's cash was being used to pay employees is false and a clear demonstration that the cash remained in Andre Abou-Antoun's pockets. They say that it is to be inferred (in the absence of any commercial documentation), coupled with the evidence of the purpose for those payments being to obtain taxation benefits and the absence of evidence of explanation, that Andre Abou-Antoun, Michael Abou Antoun and the AKA Parties obtained the benefits from the AKA Parties' payments to Earth Civil (even though they accept that their evidence does not precisely identify that).
11. Other than the admission of withdrawing the money from Earth Civil, the plaintiffs say that Andre Abou-Antoun's answer (at T 706.1-20) that when he withdrew the money he was not aware that it was being withdrawn immediately after it was paid in, was false and should not be accepted. It is said that the evidence Andre Abou-Antoun gave to the ATO was the truth; i.e., that Gino Cassaniti had told him to "just transfer the money and, then take the money out of the account after it was transferred". It is submitted that both Andre Abou-Antoun and Michael Abou-Antoun knew, when the money was transferred to Earth Civil, that it would be paid away almost immediately.
12. It is said that the benefit that the AKA Parties obtained from the payments to Bluemine is that AKA Civil and AKA NSW were able to claim those payments as purported legitimate expenses, both for the purposes of their BAS and their income tax returns and claim the GST credit, in circumstances where there was no such provision of services; and were able to funnel that money from Bluemine to entities within the AKA Group, tax free.
13. The plaintiffs say that Michael Abou-Antoun and Andre Abou-Antoun knew that when they signed the BAS and tax returns lodged by AKA NSW and AKA Civil that they were claiming the false invoices issued by Bluemine as legitimate expenses in their returns. The plaintiffs say that Andre Abou-Antoun did so with knowledge that AKA NSW and AKA Civil were not entitled to those deductions and that those expenses were false, as was the information that he was providing to the ATO. The plaintiffs say that it is to be inferred that all of the impugned transactions involving the AKA Parties (see Tables 1.2, 1.3, and 5.2) were not genuine commercial transactions and that claiming a taxation benefit was false and dishonest.
14. Similarly, the plaintiffs say that Andre Abou-Antoun's evidence (at T 708.16-49) that he recalled withdrawing money out of Earth Civil but could not specifically recall $100,000 being withdrawn on 8 October 2012 was false. The plaintiffs submit that this response is extraordinary in light of his evidence above that participation in the Scheme would provide a "tax benefit" to the companies (T 655.16-31) and that they would be "saving tax, the primary tax and - and the GST" (T 671.27-39) as part of a valuable opportunity (T 647.49-648.16).
15. The plaintiffs say that the documentary evidence reveals that AKA NSW, Michael and Andre Abou-Antoun gained the taxation benefits. In summary, it is said that, in the financial year 1 July 2012 to 30 June 2013, AKA NSW gained fraudulent GST benefits of at least $177,301.74. In addition, as a result of the payments to Bluemine recorded in the General Ledger as "management expenses other", the $1,773,016.57 was part of the $2,411,718.30 total other management expenses. The total of $2,411,718.30 is recorded in the AKA NSW Profit and Loss as expenses. The plaintiffs say that it is to be inferred that this amount was included in the AKA NSW Company tax return (which was not produced pursuant to a Notice to Produce to Court, see Ex K at 56262) resulting in fraudulent income tax deductions of $1,773,016.57. It is said that the documentary evidence of the $1,950,318.31 benefit to AKA NSW confirms the evidence given by Andre Abou-Antoun that the AKA Parties were saving the primary tax (income tax) and GST as proposed as part of the valuable opportunity recommended by Fred Khalil and Peter Abboud.
16. As to the involvement of Andre Abou-Antoun and the AKA Parties in terms of fees and other benefits to the Primary Conspirators and associated entities, the plaintiffs say that, although there is no evidence of direct Earth Civil payments to Banq or the Primary Conspirators, the utilisation of Earth Civil (for example, Gino Cassaniti directing withdrawal of large amounts of cash) was part of the total arrangement that the Primary Conspirators made for the AKA Parties, to achieve tax benefits. It is said that that arrangement included the AKA companies, Bluemine and Earth Civil; and that, for this overall arrangement the Primary Conspirators' fees (in effect, Banq's fees) were 2.5% of the AKA/Bluemine transactions (see at T 692.17-24).
17. The plaintiffs note that when money was transferred as part of the round robin of transactions involving Bluemine, a corresponding payment was also made to RCG CBD, or an unknown entity, or cash was withdrawn in the exact percentage of 2.5% for the fee. They say that those fee payments are entirely consistent with Andre Abou-Antoun's evidence as to the 2.5% fee that would be paid to the Primary Conspirators and that it is to be inferred that these payments of over $96,000 were for the benefit of the Primary Conspirators or others associated with them.
18. The plaintiffs say that there was no genuine commercial reason for the fee payments from Bluemine; that these payments could not have occurred without the knowledge of Gino Cassaniti, Fred Khalil, Peter Abboud and George Khalil (as the controller of the RCG CBD bank account); and that these payments were in furtherance of the conspiracy.
19. As to the creditors' voluntary liquidations (a key feature of the Scheme according to the plaintiffs, that involved straw directors and "jump on" directors just prior to the liquidation of the companies), it is noted that three AKA Group companies were wound up by Banq prior to the liquidation of Earth Civil. The plaintiffs say that the only inference that can be drawn by the pattern of these events is that Andre and Michael Abou Antoun knew and expected that Earth Civil would be wound up owing debts to the Commissioner as they would have paid away the assets of the company. It is said that that was not a coincidence.
20. It is noted that Earth Civil has an outstanding taxation liability of $1,122,680.34; and that, notwithstanding the $965,000 paid away to Michael Abou-Antoun by Earth Civil, AKA Civil lodged a proof of debt in the liquidation of Earth Civil for $100,000 in unpaid invoices (Ex K at 52169). It is noted that no invoices from AKA Civil to Earth Civil have been produced to the liquidator by the AKA Group. AKA Civil appointed Fred Khalil as its proxy in respect to the liquidation of Earth Civil (Ex K at 52163). The plaintiffs say that it is to be inferred that these documents were executed by the AKA Parties on the advice of the Primary Conspirators in furtherance of the conspiracy.
21. The plaintiffs say that it is also to be inferred that the AKA Parties also expected that companies involved in the Scheme transactions (namely, Bluemine and RCG CBD) would also be wound up in insolvency owing debts to the Commissioner. When coupled with Andre Abou-Antoun's evidence as to (what the plaintiffs say were false) invoices, where no services were provided by Bluemine and payments were made to RCG CBD as a fee for participation in the Scheme, the plaintiffs say that this inference is obvious. The plaintiffs say that Andre Abou-Antoun's evidence in relation to his knowledge of tax deductions for false or inflated invoices was obfuscatory at best (see their submissions earlier as to his credibility).
22. The plaintiffs contend that all of the conduct referred to above involving Andre and Michael Abou-Antoun, Gino Cassaniti and Bluemine would not have occurred in the absence of the Scheme; that it did not occur by accident; and that, on the whole of the evidence, it is established that the conduct occurred, and was orchestrated and implemented throughout by Gino Cassaniti, Fred Khalil, Peter Abboud and George Khalil in furtherance of the conspiracy.

AKA Parties' Submissions in defence

1. At the outset, the AKA Parties submit that a significant issue in the respective Proceedings is as to whether, and to what extent, the plaintiffs' claims, if made out, can be fairly attributed and quantified to each defendant. They say that the tax liabilities of the Insolvent Companies may well change depending upon how the ATO allocates payments it receives from the defendants in respect to their own tax liabilities that concern the same moneys upon which any of the Insolvent Companies has been assessed. It is suggested that, if the plaintiffs are successful in the Proceedings, a separate damages enquiry proceeding may be required (see as in BCI Finances Pty Ltd (in liq) v Binetter (No 5) [2017] FCA 1524). Pausing here, the suggestion of a separate damages enquiry was not pursued in any detail in oral submissions and it is not clear to me that it would be necessary - if there is to be adjustment as between amounts recoverable from different defendants, the plaintiffs have indicated a willingness to make such adjustments.
2. In summary, the AKA Parties submit that the plaintiffs' evidence at its highest gives rise to no more than a series of "tenuous" inferences that the AKA Parties may have been knowing or reckless participants in an alleged conspiracy supposedly orchestrated by Banq and its principals. They say that even if Banq and its officers, agents, employees and/or shareholders, conspired with each other in the manner contended by the plaintiffs, that does not of itself prove that third parties joined in any unlawful agreement, either knowingly or with any relevant degree of reckless indifference.
3. It is noted that the only existing creditor of the Insolvent Companies is the Commissioner. It is submitted that it could not have been reasonably conceived of, or anticipated by, either the Paying AKA Parties or the Receiving AKA Parties that there could be a risk that the Insolvent Companies could be assessed for moneys to which those entities were never beneficially entitled under circumstances (if this be shown to be the case) where those moneys merely passed through the Insolvent Companies destined for an entity related to the Paying company; and it is said that the three step process described (at [84] of the plaintiffs' opening submissions) would not be obvious to the objective reasonable person.
4. The AKA Parties say that there is no evidence (or no sufficient evidence) that: the AKA Parties had any knowledge of or involvement with the financial affairs of Bluemine from which it could be inferred that they could have reasonably suspected that Bluemine was or could become insolvent; that any of the AKA Parties themselves intended or had any knowledge of any plan which may have existed on the part of Banq to cause Bluemine or Earth Civil to become insolvent or upon which any such intention or knowledge may be inferred; or that any of the AKA Parties intended or had any knowledge of any plan which may have existed on the part of Banq to put Bluemine or Earth Civil into voluntary administration; nor (they say) is there any evidence upon which such intention or knowledge may be inferred.

AKA Parties - Earth Civil Proceeding

1. The AKA Parties note that the plaintiffs claim against the Earth Civil AKA Parties as follows: against Michael Abou-Antoun, for money had and received to the use of the plaintiff (restitution to prevent unjust enrichment) (Earth Civil Restitution Claim) and for equitable or statutory compensation: against Michael Abou-Antoun, AKA Civil and AKA NSW, for being accessorially liable for breaches of duty by Gino Cassaniti, the de jure director of Bluemine during the period the relevant transactions; or in the alternative against Michael Abou-Antoun for his breaches (as a de facto or shadow director of Earth Civil) of fiduciary and statutory duties (together the Earth Civil Breach Claims); against Michael Abou-Antoun, for unreasonable director-related transactions (s 588FDA Claim); and against Michael Abou-Antoun for uncommercial transactions (s 588FB Claim).
2. The AKA Parties make similar submissions in relation to the common claims.

AKA Parties - Bluemine Proceeding

1. In the Bluemine Proceeding, the AKA Parties identify (and then address) the following five factual propositions on which findings are sought by the plaintiffs (other than those concerning the existence of a conspiracy).
2. First, that the invoices issued by Bluemine to AKA Civil and AKA NSW were false invoices, in that they purport to be in respect of goods or services that were never provided. Second, that no consideration was given or received (no goods or services provided) in exchange for the payments to Bluemine during its corporate life. Third, that the transactions nevertheless occurred (both inbound and outbound). Fourth, that Bluemine was only ever a "money transaction unit". Fifth, that Bluemine was never beneficially entitled to the funds it received from the Paying Participants. It is said that, on the plaintiffs' case, Bluemine was obliged to pay the funds out to the AKA Receiving Entities and Bluemine was entitled to retain a fee. The AKA Parties submit that certain legal consequences necessarily follow (see below) if findings consistent with the above five factual propositions are made.
3. As to the claims relating to the AKA Parties' alleged knowing involvement in breaches of duty by one or more persons said to be the director of Bluemine, the AKA Parties raise a number of defences (some of which, such as the joint release defence and causation defence, I deal with in common with the same defences raised by other defendants later in these reasons).
4. As to their substantive defences to the claims for accessorial liability, the AKA Parties say that the evidence does not sustain a finding: that there existed a conspiracy amongst two or more of the Primary Conspirators whereby they would engage in the conduct described in the plaintiffs' closing submissions at [241]; that whatever conduct is found to have been engaged in by one or more of the Primary Conspirators, that conduct amounts to a "dishonest and fraudulent" design or was otherwise in breach of any fiduciary or statutory duty owed to Bluemine by one or more of those persons; Gino Cassaniti was a director of Bluemine; that Gino Cassaniti breached any fiduciary or statutory duty to Bluemine; or that one or more of the AKA Parties had sufficient knowledge or understanding of, or involvement in, the dishonest and fraudulent design pleaded, on the part of the director of Bluemine, such that they should be held accessorially liable for any such breach of duty.
5. Further, the AKA Parties say that: the alleged breaches of duty, if they occurred, did not cause the loss complained of for the purposes of an award of equitable compensation; there was no compensable loss (submitting that a tax liability may not be an appropriate reference point for the calculation of an award of equitable compensation where Pt IVC rights subsist and that it should be concluded on the balance of probabilities that, if an objection under Pt IVC were lodged, it would be allowed); and, in the alternative, that any award of equitable compensation would be in an amount less than that which has been claimed.
6. The AKA Parties make the following submissions in this regard.

The plaintiffs have not proved that Gino Cassaniti was a director of Bluemine

1. The AKA Parties adopt and rely upon the submissions of Gino Cassaniti (see above) to the extent that those submissions are to the effect that it should not be found that he was a director of Bluemine. The AKA Parties also point to the following matters in that regard.
2. It is said that, for the AKA Parties to be liable under the second limb of Barnes v Addy, there must be dishonesty on the part of the fiduciary (not someone else, unless that person was acting in accordance with the instructions or wishes of the fiduciary). Reference is made to the evidence given by Andre Abou-Antoun (said to be unchallenged) that he and Michael Abou-Antoun only dealt with Peter Abboud and Fred Khalil in respect of Bluemine; and that it is not submitted by the plaintiffs that either Peter Abboud or Fred Khalil was ever a director of Bluemine. It is noted that the plaintiffs' submission is that Fred Khalil could only have made the Scheme Recommendation to Andre or Michael Abou-Antoun if he had been working "hand in glove" with Gino Cassaniti (the plaintiffs asking for an inference to this effect) (see plaintiffs' closing submissions at [419]-[422]).
3. Insofar as the plaintiffs rely, for the conclusion that Gino Cassaniti had sufficient control over Bluemine to be deemed a de facto or shadow director on the drawing of an inference from the evidence given by Andrew Barsa to the effect that he went to Gino Cassaniti when he determined to resign his directorship of Bluemine, the AKA Parties say that a more likely inference, when considered with the totality of Andrew Barsa's evidence, is that Andrew Barsa sought professional advice from Banq about resigning as a director, or he directed Banq, who he knew was managing Bluemine's accounting and other affairs (because he had delegated that authority), to cause him to be removed as a director.
4. Pausing here, I do not consider that to be the more likely inference considering the totality of the evidence. As already noted, it is clear from the evidence that Andrew Barsa was not carrying on any real directorship functions, and Andrew Barsa's evidence is not that he sought "professional advice" but, rather, that he mentioned "to Banq and Gino that [he] wanted to come off and resign", that Gino Cassaniti said "fine", and that someone from Banq then told him that he was removed (T 914.39-5; T 915.21-22). This interaction more easily draws the inference that Andrew Barsa was not able simply to remove himself as director and that he needed permission from Banq and Gino Cassaniti. Moreover, the apparent ease with which Andrew Barsa was removed and Gino Cassaniti appointed as director, combined with the minimal role Andrew Barsa played at Bluemine, suggests that Gino Cassaniti was always in control of Bluemine. As to the suggestion that Andrew Barsa went to Banq to direct it to cause him to be removed as a director, it seems to me significant that it was Gino Cassaniti who he approached at Banq.
5. The AKA Parties appear to accept that Andrew Barsa did fully delegate (or abdicate) his responsibility as a director of Bluemine. However, it is submitted that there is insufficient evidence to support a finding that he abdicated that responsibility to Gino Cassaniti, instead of to any one or more of Peter Abboud, Fred Khalil, someone else at Banq Accountants, or either George Abboud (whose trucks were said to be in need of asset protection) or Michael Abboud (who the AKA Parties point out was the person, according to Andrew Barsa, who ran the company). (However, I interpose to note that, as I understand it, Andrew Barsa said Michael Abboud was running the trucking business (i.e. he "delegated the responsibility of the business side of things with the trucks to Michael Abboud because he's been in the industry for a long time" (emphasis added)), which I do not think equates to "running" Bluemine, as such.)
6. Insofar as the plaintiffs refer to the evidence of Andrew Barsa that "they" [Banq] "managed everything" and that he spoke to a variety of people at Banq in respect of Bluemine, the AKA Parties emphasise that not once did Andrew Barsa say that he acted in accordance with the wishes of Gino Cassaniti in respect of Bluemine (and that, to the contrary, his evidence is that he delegated the accounts of Bluemine to Banq and that operational control was with Michael Abboud).
7. The AKA Parties say that the plaintiffs' case in respect of the claims against them for accessorial liability for breach of fiduciary or statutory duties depends upon Gino Cassaniti being established to be a de facto or shadow director of Bluemine; that there is not enough evidence to conclude that Gino Cassaniti was a director of Bluemine; and that, whatever others may have caused Bluemine to do or not to do, or whatever design those others may have had, those others are not alleged to have been directors of the company. The AKA Parties thus submit that the plaintiffs' case in the Bluemine Proceeding based on accessorial liability fails on this issue (i.e., that the plaintiffs have not proved that Gino Cassaniti was a director of Bluemine.

The plaintiffs have not proved the dishonest and fraudulent design by a director of Bluemine; nor have they proved a breach of duty by a director of Bluemine

1. The AKA Parties repeat the above submissions and adopt the submissions of Ivana Cassaniti on this issue.
2. Insofar as the plaintiffs place significance (and say it was not coincidental) on essentially the same "structural advice" being given to Andre and Michael Abou-Antoun as was given to others (in substance to incorporate new companies to each operate in differing capacities), the AKA Parties say that the substance of this advice is a common form of asset protection advice given to a business once it reaches a certain size. The AKA Parties submit that no inferences should be drawn from the coincidental structural advice (if it is found that such advice was given) nor should it be concluded that the existence of the alleged conspiracy is more likely due to commonplace structural advice being given.

The plaintiffs have not proved knowledge (Barnes v Addy) or involvement (s 79) on the part of AKA Parties

1. The AKA Parties maintain that it has not been established that the AKA Parties had knowledge, sufficient to meet the standard necessary for accessorial liability, of the essential elements of the alleged dishonest and fraudulent design (i.e., the conspiracy). In this context, it is submitted that no adverse inferences (under the principles in Jones v Dunkel or otherwise) should be drawn, on the basis that Counsel for the AKA Parties was unable to re-examine Andre Abou-Antoun to clarify matters (for reasons discussed in Song v Ying (2010) 79 NSWLR 442; [2010] NSWCA 237 at [28]).
2. The AKA Parties accept that, for the purposes of Barnes v Addy liability, it need not be shown that the fraudulent scheme of the fiduciary be "fully known" to the AKA Parties. However, they say that the plaintiffs still need to prove the AKA Parties knew facts sufficient to form a general understanding that there was "a fraud" or that they had "actual knowledge of facts which would tell of fraud to a reasonable man" (noting that the "fraud" here is that defined in the plaintiffs' closing submissions at [241]). Similarly, it is said that, for the purpose of liability under s 79, the plaintiffs must show that the AKA Parties had actual knowledge of the essential facts, including each element in plaintiffs' closing submissions at [241] and that each of those elements was the design of the director of Bluemine.
3. It is said that, even if the AKA Parties are shown to have obtained (at least in the first instance) tax benefits to which they were not otherwise entitled (which is not admitted), that does not ground the fraud of which complaint is made, since that fraud (the subject of the alleged dishonest and fraudulent design) is to defraud the companies themselves, and for those companies not to be able to meet their tax obligations, thereby depriving the Commissioner and the Commonwealth of funds the subject of assessments the Commissioner would eventually issue.
4. It is submitted that the plaintiffs have not established knowledge of those essential elements to the requisite degree for purposes of both accessorial liability under Barnes v Addy and liability under the provisions of the Corporations Act.
5. The AKA Parties say that there is no evidence that they, through their principals, Andre and Michael Abou-Antoun, had any knowledge (in the requisite sense) of any plan on the part of the Primary Conspirators which may have existed: to denude the Insolvent Companies of assets; "whilst knowing that the company was highly likely to incur tax liabilities"; to wind Bluemine up having left it insolvent with no ability to pay taxation obligations; and to wind Bluemine up leaving it exposed to default assessments, penalties and interest.
6. As to the question of knowledge of a plan to denude the Insolvent Companies of assets, the AKA Parties say that such a suggestion would be "curious" given that the design alleged by the plaintiffs includes a fee component. (This seems to me to be a non-sequitur, since the fee was taken from the impugned payments and therefore the payment of a fee is not on its face inconsistent with a plan to denude the companies of assets - since such a fee could readily be paid away, as it seems to have been.)
7. As to the question of knowledge that the Insolvent Company was highly likely to incur tax liabilities, the AKA Parties accept that (as a general matter of common experience), anyone could reasonably assume that most companies doing business incur tax liabilities. However, they say that there is no evidence that the AKA Parties had the requisite level of knowledge of this aspect of the alleged dishonest design. It is submitted that it could not be suggested that the AKA Parties would have acted "knowing" of some high probability that the company would incur tax liabilities other than those ordinarily incurred by a company; or that they could be expected to know that the Commissioner would assess on a financial statement basis, ignoring outflows, rather than on an income derived basis. (I would accept that in the absence of some specialised accounting knowledge, the highest that the AKA Parties would be expected to have been aware would be that some tax liabilities might be likely to be incurred as a result of the transactions, as would not be unexpected as a matter of ordinary business experience.)
8. As to the question of the third of those matters (i.e., that the plan was to wind Bluemine up having left it insolvent with no ability to pay taxation obligations), it is submitted that if, objectively speaking, the AKA Parties were aware at the time that Bluemine was charging fees but not providing any service other than acting as a conduit, then the plaintiffs have not disproved that the reasonable assumption of a person in the AKA Parties' position would be that Bluemine would incur income tax on the Fee Amounts. It is noted that Andre Abou-Antoun gave evidence (corroborated it is said by Andrew Barsa's evidence) that he believed Bluemine had trucks and tipping sites; and therefore, it is submitted that the plaintiffs have not demonstrated that Andre Abou-Antoun could have reasonably concluded that Bluemine would be likely to be left insolvent and would be wound up. It is said that there is no evidence that the AKA Parties had any knowledge that Bluemine may not have been keeping proper accounts and records.
9. As to the question of knowledge of any plan to wind Bluemine up, leaving it exposed to default assessments, penalties and interest, it is submitted that there is no evidence upon which to ground a finding (or even a reasonable inference) that the AKA Parties had knowledge of a design which included Bluemine not lodging tax returns disclosing its taxable income or not lodging correct BAS returns.
10. In respect of the above matters, it is said that the plaintiffs rely entirely upon inferences to be drawn from Banq being the tax agent assisting with the winding up of three entities related to Andre Abou-Antoun and Michael Abou-Antoun in September 2010 and October 2012. The AKA Parties say that it does not follow (assuming that to be correct) that the inference would be drawn that Bluemine, an entity entirely separate from the AKA Parties in terms of shareholders and directorships, was also intended to be placed into administration.
11. Insofar as the plaintiffs rely on Andre Abou-Antoun's knowledge of the falsity of invoices (and leaving aside the timing issue in relation to that knowledge which I address below), the AKA Parties say that, even assuming that Andre Abou-Antoun had that knowledge at the relevant time, that does not provide a basis to infer (or for Andre Abou-Antoun to have predicted) that there was a design in place which included winding Bluemine up.
12. The AKA Parties therefore say that there is no sound basis upon which to infer that the AKA Parties knew (or knew of circumstances sufficient to indicate to a reasonable person) that Bluemine would not be able to meet its tax liabilities or to predict that the Commissioner would issue a default assessment on the "financial statement analysis basis" disallowing all claimed deductions and imposing administrative penalties of 75%.
13. I have referred above to the "timing issue" as to Andre Abou-Antoun's knowledge about the nature of what the plaintiffs submit occurred with respect to Bluemine. The AKA Parties say that it should not be accepted that this knowledge was acquired contemporaneously with the transactions, pointing to the evidence given by Andre Abou-Antoun at the hearing that he came to understand certain aspects of the AKA Parties' relationship with Bluemine and Earth Civil after the fact (during the course of an ATO audit of the AKA Group of entities, which was still ongoing at the time of his evidence). It is said that this is entirely consistent with the evidence Andre Abou-Antoun gave to the ATO during his compulsory interviews.
14. The AKA Parties say that it is an ordinary quality of human experience that people will superimpose current knowledge over past events (not dissimilar, perhaps, from the recognition of the fallibility of human memory referred to in Watson v Foxman (1995) 49 NSWLR 315 at 319 per McLelland CJ in Eq). As noted above, the AKA Parties submit that it should not be concluded that Andre Abou-Antoun's evidence in Court was dishonest. It is said that his evidence was consistent with that which he gave in his ATO interviews (reference being made to the extracts and submissions contained in schedules in Appendices B and C to the AKA Parties' submissions). It is said that it makes sense that Andre Abou-Antoun would try to clear things up about what was said in the interviews that do not accord with the propositions that were being put to him by the plaintiffs.
15. The AKA Parties say that, aside from there being no evidence of his knowledge of the essential elements of the conspiracy, if Andre Abou-Antoun's evidence that he learned after the fact about significant aspects of what the plaintiffs say is the dishonest scheme is accepted, then the knowledge requirement will not have been met in respect of Andre Abou-Antoun or the entities of which he is a director (including LAM Haulage and The Great Brothers); those aspects of later-acquired knowledge including: false (exaggerated or inflated) invoices; that the only service provided by Bluemine was "very, very, very small and only one"; and the tax benefits to AKA Civil and AKA NSW and the "value" of entering into the transactions.
16. As noted above, it is submitted that there is no evidence (and no available inference) that the AKA Parties knew at the time (or even after the fact) about any plan to liquidate Bluemine or, further, to do so with significant tax liabilities; or that the Commissioner of Taxation could issue default assessments on the "financial statement analysis" and impose stringent penalties for failure to give information and for false and misleading statements.
17. With respect to the falsity of the invoices, it is said that Andre Abou-Antoun accepted that management and supervision services were not provided but not necessarily that he understood at the time that that meant the invoices were "false". It is said that, from his perspective, services of some sort were being provided by the accountants to facilitate the purchase of properties which is said to be entirely consistent with what he said in his ATO interviews. Pausing here, as I have already noted, Andre Abou-Antoun's evidence in the witness box was confused and I found him in that regard to be an unreliable witness. However, I place some weight on the fact that at the time of the ATO interview he made clear that he was answering at least one of the questions based on what he could remember from the relevant time; moreover the fact that he accepted that management and supervision services were not being provided or not being provided to any great degree (and he must have been aware of that at the relevant time) is significant insofar as it would surely have put an honest and reasonable person on enquiry as to what those invoices actually related. The explanation that property services were being provided (which appears to be an ex post facto justification or explanation for the payments rather than his stated understanding at the time) does not explain why no query was raised at the time about invoices for large sums for management and supervision services that he knew were not being provided.
18. As to those matters about which it is said it is unclear whether Andre Abou-Antoun knew at the time or learned later on, these include the fee or commission to Bluemine (which the AKA Parties say it appears from his evidence that he agreed he discovered a fee "during the course of the transactions").
19. The AKA Parties say that the matters which Andre Abou-Antoun agreed he knew about at the time of the transactions include: that AKA Civil or AKA NSW would pay money to Bluemine and that Bluemine would pay money to another AKA Party (such as LAM Haulage, MAL Land Group or The Great Brothers) to purchase property, for example, in St Mary's; that, in respect of Bluemine, those payments would be made following receipt of an email from Banq, as per the advice of Banq (the emails attached invoices; however, it is noted that Andre Abou-Antoun's evidence was that he did not bother looking at the invoices other than to identify the amount to be paid, because he understood the money would "always come back"); and that the money paid out would always come back to an AKA related entity.
20. The AKA Parties say that the "known" matters do not constitute sufficient knowledge of what is said by the plaintiffs to be the fraud (i.e., that described in the plaintiffs' closing submissions at [241] and the third further amended statement of claim at [131]).
21. It is submitted that, from what appears in Appendices B and C, it would not be found that Andre Abou-Antoun was being deliberately obtuse or lying to the Court. It is said that his evidence in Court was consistent in all material respects with what he said in his ATO interviews; and that any inconsistency is explained by the "timing issue". Pausing here, I have made no finding that Andre Abou-Antoun was deliberately lying or guilty of obfuscation in the witness box. However, he was hopelessly confused and inconsistent in his evidence (and therefore inherently unreliable) and to my observation he displayed a tendency when under pressure to "shut down" - see for example at T 667.17ff when he suddenly requested a break (confronted with inconsistent answers in his ATO transcript) and said he was "getting very drained out and exhausted", was starting "to get a bit dizzy" and really needed to take a break because he was "not feeling really well". To my observation, he took refuge in blaming others when faced with inconvenient inconsistencies in his evidence (see his suggestion that the transcript was not accurate and his comment that he was not satisfied with his legal representation at the time of the ATO interview).
22. In any event, it is said by the AKA Parties that, even if aspects of Andre Abou-Antoun's evidence are rejected, the plaintiffs still have not proved the requisite knowledge of the material aspects of the conspiracy for him or the entities of which he is or was a director, to be liable for any breaches of duty by the director of Bluemine.
23. As to the knowledge of Michael Abou-Antoun, the AKA Parties say that no adverse inference should be drawn from the fact that Michael Abou-Antoun did not go into evidence in these Proceedings. As already noted, Michael Abou-Antoun claimed self-incrimination at the pleading stage of the Proceedings, resulting in him (personally and on behalf of entities over which he is or was a director) not being required to plead to certain paragraphs of the statements of claim in the Earth Civil and the Bluemine Proceedings, including those paragraphs dealing with the fraud alleged. It is said that the fact that he did not go into evidence is consistent with that claim, as he could not voluntarily give evidence with the protection of a certificate under s 128 of the Evidence Act. The AKA Parties say that the procedure adopted for Andre Abou-Antoun was unusual, and overcame difficulties associated with the plaintiffs' proposed tender of compulsory transcripts, which the AKA Parties submitted would, if freely admitted, impermissibly interfere with the accusatorial process of criminal justice.
24. The AKA Parties otherwise rely upon the fact-finding principles set out in Appendix A to their submissions (at [10]-[26], [31]-[37]) concerning inferences which may or may not be drawn against a person claiming the privilege.
25. Specifically, in response to the plaintiffs' submissions as to their knowledge, the AKA Parties said the following.
26. First, that knowledge that three companies associated with Andre and Michael Abou-Antoun were wound up by way of a creditors' voluntary winding up while Banq was their tax agent does not give rise to an inference that Andre or Michael Abou-Antoun knew that Bluemine (a company with which they were not associated in the Corporations Act sense) would later be wound up by others. I agree. I cannot infer from the fact that certain of the AKA companies were wound up while Banq was their tax agent (Tip and Fill, ACN 121913488 (formerly, AKA Civil Contracting) and then later Earth Civil) that the Abou-Antoun brothers were on notice of any plan to wind up other companies associated with Banq.
27. Second, again, that there is nothing unique or unusual about the "structural advice" that it is said Banq gave to the AKA Parties; rather, that this kind of advice is a common form of asset protection advice given to businesses by advisers once an enterprise reaches a certain size; and that nothing can be inferred about the giving of such advice. The AKA Parties further submit that no inferences would be drawn from the giving of coincidental structural advice to other companies, nor should it be concluded that the conspiracy alleged is more likely due to the commonplace structural advice given.
28. Pausing here, the coincidence of the giving of such advice (and there is no doubt in my opinion as to the coincidence of such advice, albeit that there were what might be called some "variations on a theme"), as to the structuring of the group companies, goes to my mind to different issues as to the involvement in particular of Gino Cassaniti in the affairs of various of the Insolvent Companies. More significant is the way in which the invoicing occurred and the coincidence of large payments without documentation or credible commercial explanation in what seems to be often a round robin of transactions. Again, however, the AKA Parties were not on notice of what advice was being given to other clients; so any such knowledge could not be inferred on their part.
29. Third, it is not contested that Banq was the registered tax agent for the AKA Parties (and the AKA Parties were aware of this).
30. Fourth, as to the evidence that Andre Abou-Antoun spoke to Michael Abou-Antoun about a conversation Michael Abou-Antoun had with Fred Khalil, it is noted by the AKA Parties that that the evidence of this conversation was limited to the fact of a conversation having occurred and not the truth of those matters. Pausing here, the fact that Andre Abou-Antoun deposed to his brother having conveyed such a conversation to him at least establishes that Andre Abou-Antoun was being told at the time certain matters (whether or not they were true) and hence his state of knowledge (and whether he was on notice of matters that would put a reasonable and honest person on enquiry for the purposes of the fourth category of Baden Delvaux knowledge) must be assessed on the basis that this was what his brother told him had been the advice conveyed to his brother. Michael Abou-Antoun did not give evidence to dispute this conversation (though, as already noted above, it is said that no adverse inference can be drawn against Michael in this regard).
31. Fifth, as to the evidence that Andre Abou-Antoun gave in his ATO interview (see above) to the effect that Peter Abboud and Fred Khalil approached "us" and said they could arrange inflated and exaggerated invoices, which would be paid and that they would return the money back less a fee, it is submitted, that this evidence should be interpreted through the lens of the timing issue, to which I refer above (and as set out in Appendices B and C to the AKA Parties' closing submissions, which I do not here reproduce). Additionally, it is noted that the interviews with the ATO where the above was recounted occurred in 2018, some five years after the actual events, and in the course of an audit of the AKA Group concerning tax liabilities of the Group which Andre Abou-Antoun was trying to resolve, after engaging PwC for that purpose. It is said that Andre Abou-Antoun has been consistent in saying that he came to understand these matters well after the fact.
32. Pausing here, the difficulty I have with that last submission is that in Andre Abou-Antoun's answer at 60 of the ATO transcript he makes clear that he was "answering this [a question as to the moneys that were transferred being returned back to other entities in the AKA Group] to the best of [his] memory on what [he] remember[ed] back then". It was in the context of that answer that he said "during the course of - of the period of time" that "they told us" about the inflated invoices and tax benefits. Unfortunately, there is a degree of revisionism in Andre Abou-Antoun's now evidence that this was not his recollection of events at the relevant time.
33. Sixth, that there was a valuable opportunity characterised by tax benefits flowing from false invoices. It is submitted that there was no such conversation with Fred Khalil or Peter Abboud and Andre Abou-Antoun (see my comments above and see below).
34. Seventh, that Banq had access to the AKA Group companies' MYOB. This is not contested.
35. Eighth, that Banq gave directions for the payments in from the AKA Paying Entities and out to the AKA Receiving Entities. It is said that there was some confusion about what Andre Abou-Antoun understood "direction" to mean; and that it was clarified in the course of the hearing that it meant for the internal accountant to cause the payment "actually [to] get paid".
36. The AKA Parties say that (by reference to the evidence as to directions) that the plaintiffs are relying on evidence Andre Abou-Antoun gave in his ATO interviews (see plaintiffs' closing submissions [1082]) which in cross-examination he explained was information he learned after the fact.
37. Pausing here, Andre Abou-Antoun's evidence (again given in a highly confused fashion) seemed to me, properly understood, to be to the following effect. First, that Peter Abboud had given advice as to the relationship between AKA Civil and AKA NSW and at least in general terms for the transfer (at least in principle) of funds between those companies. Andre Abou-Antoun referred to advice "to set up our companies and do that would be from Banq Accountants", expressly there referring to the initial explanation from Peter Abboud (see T 634.34ff). He then said that it would be "we" (presumably meaning he and Michael Abou-Antoun) who would approve payments but that he, Andre Abou-Antoun, never personally made any actual payments himself - that being done by the internal accountants in the AKA Group (including someone called Dillon). Where the confusion arose was that he said that internal accountant would "naturally by default" make the payments "because that was his job that's what he did" and he confirmed that there was a distinction between approving a payment and the making of the payment. What was not clarified (but would be consistent with the above evidence) was that the general invoicing structure (or direction that payments would go between companies) was given or explained by Banq (specifically by Peter Abboud). Understood in that way it is consistent with the transfers between companies being as advised by Banq but the internal mechanism for transfers being handled by the internal accountants (which makes sense). What would not make sense would be that some internal accountant "naturally by default" knew when and how much to transfer between companies or to issue invoices between the companies.
38. What Andre About-Antoun seemed to me to be confused about (both in his ATO interview (at 60) and in Court (T 656) was as to what the tax benefit would be or how it would arise or be calculated. He did not accept that the Scheme was attractive because of the tax deductions but he accepted that he probably said that in his ATO interview; and he accepted that in the interview he said that there would be inflated or exaggerated invoices and said that that was the best answer he could give at the time "due to the knowledge [he] had of the matter". It seems to me that Andre Abou-Antoun's resistance was largely to the proposition that he understood about the tax deductions not that he did not understand that there would be inflated or exaggerated invoices (although I accept that he ultimately was adamant that that was his understanding "now").
39. Ultimately, the position with Andre Abou-Antoun was that he knew that there was not much, if anything, being provided by way of management or supervision services and he understood (whether from what his brother, Peter Abboud or anyone else at Banq had said or otherwise) that there would be some form of tax benefit to the transaction (or perhaps that this would be the most tax effective structure - although I doubt that he thought that precisely about it) and he had a recollection of a reference of some kind to inflated or exaggerated invoices but he did not understand the mechanics of any of that. To my mind, that is knowledge that would put an honest and reasonable person on enquiry as to the dishonest and fraudulent design (i.e., Baden Delvaux notice in the third and fourth categories).
40. As to the remaining matters identified in the plaintiffs' closing submissions (up to [1105]) that go to tax benefits and fees paid to Banq, the AKA Parties refer to their closing submissions at Appendix B. I have considered those and addressed them either in dealing with the issues as to Andre Abou-Antoun's credit or above.
41. Finally, insofar as the matters relied upon by the plaintiffs (see at plaintiffs' closing submissions [1106]-[1107]) relate to matters concerning the eventual winding up of Bluemine, the AKA Parties again submit that an inference of knowledge as to this aspect of the pleaded conspiracy is not open. The AKA Parties say that the natural and probable consequences of the alleged actions of the director of Bluemine (if found to have occurred) to cause the company to issue purported invoices with the effect that funds paid into the company appeared to be in respect of services provided, and then to pay those moneys out to a related entity, to a third-party observer, do not reasonably include: seeking to wind up the company with outstanding debts to the Commissioner of Taxation; failing to lodge tax returns (even though the due date for those returns had not arrived by the time of the creditors' winding up in August 2013); failing to prepare and lodge accurate BASs; default assessments under s 166 (which include: assessing income on the financial statement analysis; and imposing administrative penalties of 75% for failure to file a return and for giving false or misleading statements in a document).
42. It is submitted that no reasonable person in the circumstances of the AKA Parties could have known these things were intended (if they were intended) by the director of Bluemine and it should not be inferred that they did have that knowledge.
43. Pausing here, insofar as emphasis is placed in this context on the content of the tax assessments or the penalties that were issued, I do not accept that the alleged accessory needed to know or understand how a tax assessment might issue. It seems to me sufficient to give rise to the requisite knowledge that an alleged accessory be on notice of fact that would indicate to an honest and reasonable person a risk that tax assessments might issue and that, if money was paid out of the companies (as it was apparently always intended it would be - in that Andre Abou-Antoun accepted that he understood it was always to be paid back) then the companies would be at risk of being unable to meet those tax liabilities and that penalties might then be imposed.

Earth Civil AKA Parties

1. The Earth Civil AKA Parties in respect of the Earth Civil breach claims submit that the plaintiffs have not proved that Michael Abou-Antoun was a director or shadow or de facto director of Earth Civil and, as such, he did not owe any duties to Earth Civil; and they say that the plaintiffs have not proved that Michael Abou-Antoun had knowledge sufficient to be liable as an accessory to any breach or contravention of duty by Gino Cassaniti, who was the sole director of Bluemine as per the ASIC Form from 1 July 2012 to 18 March 2014).
2. As to the breach claims, the Earth Civil AKA Parties summarise the evidence of Andre Abou-Antoun concerning Earth Civil as follows: that he could have been a signatory on the account, but he was not sure (as to which it is noted that the account authorisation documentation in evidence reflects only Michael Abou-Antoun as a signatory; not Andre Abou-Antoun); that he had a conversation with Michael Abou-Antoun concerning a conversation Michael Abou-Antoun had with Gino Cassaniti (as to which it is noted that this evidence was admitted only for the fact of the conversation and not for its truth); that Andre Abou-Antoun did not speak to Gino Cassaniti about Earth Civil's affairs, or about withdrawing money from its bank account (as to which it is submitted that Andre Abou-Antoun should not be disbelieved - see Appendix B to their submissions, item 12); that Andre Abou-Antoun and Michael Abou-Antoun withdrew cash amounts and those amounts were paid to employees in wages (as to which it is said that Andre was candid about withdrawing money to the effect that Andre Abou-Antoun was directed to do so by his brother and that the money went into the safe to pay wages and other business expenses; and it is submitted that his evidence is consistent with what he said to the ATO); that Andre Abou-Antoun did not understand, at the time, that Earth Civil may have tax liabilities in respect of the money being paid in (as to which it is submitted that Andre should not be disbelieved).
3. It is noted that, throughout the relevant period, Andre was a young labourer in his early 20s without any tertiary education and that, even at the time of his evidence, after years of ATO audit and receiving advice from lawyers and accountants, he had only the most rudimentary understanding of tax, finance, accounting and bookkeeping. It is submitted that it would not be inferred that in 2012 and 2013, Andre Abou-Antoun had such knowledge or that he did not place complete reliance on his accountants.

Michael Abou- Antoun was not a director of Earth Civil

1. The Earth Civil AKA Parties submit, first, that it should not be found that Michael Abou-Antoun was a deemed or shadow director of Earth Civil. It is noted that the evidence relied on by the plaintiffs for the contention of his de facto or shadow directorship is: that he had previously been a director of Earth Civil; that he was the sole signatory on the bank account of Earth Civil; that Earth Civil employed persons in the AKA Group including members of Michael's family; that AKA Civil and AKA NSW paid $986,000 to Earth Civil; and that within a week or less of each transfer comprising the $986,000, withdrawals were made by either Andre Abou-Antoun, Michael Abou-Antoun and unknown person(s) totalling $965,000. It is said that there is no additional or better evidence from which any of the de facto director factors (see plaintiffs' closing submissions at [46]) could be established.
2. It is submitted by the Earth Civil AKA Parties that the bare facts that Michael Abou-Antoun had a conversation with Gino Cassaniti and then at some stage asked Andre Abou-Antoun to withdraw cash from Earth Civil's bank account does not establish that Michael was a director of Earth Civil. It is submitted that there is insufficient evidence to ground a finding or reasonable inference that Gino Cassaniti acted in accordance with the directions of Michael Abou-Antoun with respect to Earth Civil during the period from 1 July 2012 onwards.
3. The Earth Civil AKA Parties say that the above matters, taken individually or together, are insufficient to establish that Michael Abou-Antoun was a de facto or shadow director of Earth Civil; and that this aspect of the plaintiffs' claim is not made out.

Insufficient knowledge for accessorial liability

1. Second, it is submitted by the Earth Civil AKA Parties that the plaintiffs have not proved that Michael Abou-Antoun had knowledge sufficient to be an accessory to the pleaded dishonest and fraudulent design, if found, on the part of Gino Cassaniti and others and Banq Accountants. The Earth Civil AKA Parties repeat the submissions in this regard made by the AKA Parties in the Bluemine Proceeding.
2. The Earth Civil AKA Parties say that, despite Michael Abou-Antoun not giving evidence (on the basis of a claim of self-incrimination privilege referred to earlier) the above does not give rise to an inference that: Michael was a shadow or de facto director; or Michael's evidence could not have assisted him as to directorship; that Michael had sufficient knowledge to be an accessory; or that Michael's evidence could not have assisted him as to his knowledge.

Bluemine - Andre Abou-Antoun, Michael Abou-Antoun, LAM Haulage, MAL Land Group, the Great Brothers

1. As above, I have found that Gino Cassaniti was the de facto director of Bluemine during the relevant period and that his breaches of duty were fraudulent and dishonest.

Bluemine - Andre Abou-Antoun

1. I have commented above on my observations of Andre Abou-Antoun's evidence. The difficulty I have with Andre Abou-Antoun's evidence is that, at the very least, Andre Abou-Antoun understood at the time that advice had been received by Michael Abou-Antoun (leaving aside the truth of what was communicated to Michael Abou-Antoun) that the company restructuring was to be for a tax benefit (though he did not understand what that was or how it was to be effected) and that it was to involve the use of an invoicing company; and, that when the invoices were in fact issued, Andre Abou-Antoun appreciated that they were not correctly describing services that had been rendered. In those circumstances, whether or not he also understood that there were to be payments made as between the companies for proposed property purchases, he was on notice of facts that would have put an honest and reasonable person on enquiry as to why the invoices were being structured in that way; and therefore, whether or not his knowledge that the invoices were "inflated" or "exaggerated" or as to the way in which the tax benefits were achieved was gained at a later stage, it does not affect the fact that at the time the arrangements were being put in place - and when they were implemented - he was on notice of the facts that comprised the dishonest and fraudulent design on the part of Gino Cassaniti in which Fred Khalil and Peter Abboud were involved and that he assisted in that design.

Bluemine - Michael Abou-Antoun

1. As to Michael Abou-Antoun, the fact that he communicated to his brother the essence of the Scheme advice (whoever had communicated it to him and whatever were its precise terms as to the way in which tax benefits were to be achieved or the like) establishes that he was on notice of the proposal to structure the companies so as to render invoices for services that he also must have known were not being rendered. There simply is no evidence that management or supervision services were being rendered to the extent stated in the invoices. Moreover, as director of AKA NSW and AKA Civil, Michael Abou-Antoun must have known of the large sums being paid out to Bluemine and then repaid to LAM Haulage, MAL Land and The Great Brothers (The Great Brothers being another company of which he was a director). Therefore, I find that Michael Abou-Antoun had knowledge of the circumstances that would indicate the facts to an honest and reasonable person and that he assisted in Gino Cassaniti's dishonest and fraudulent design.

Bluemine - LAM Haulage, MAL Land and The Great Brothers

1. A finding that LAM Haulage, MAL Land and The Great Brothers are accessorially depends on whether there is to be imputed to them knowledge of the dishonest and fraudulent design. Andre Abou-Antoun was the director of LAM Haulage; Michael Abou-Antoun was the director of MAL Land; and both Andre and Michael Abou-Antoun were directors of The Great Brothers during the relevant period.
2. There is nothing to indicate that Andre or Michael Abou-Antoun were acting outside of their authority as directors of the respective companies in accepting the funds paid in. However, even if it is considered that Andre and Michael Abou-Antoun were acting in "fraud" of each of the companies, it is clear that their actions were partly for the respective companies' benefit, in that each of these companies received large sums of money for seemingly no consideration. I consider that the knowledge of Andre Abou Antoun should be attributed to LAM Haulage, the knowledge of Michael Abou-Antoun to MAL Land and the knowledge of each of Andre and Michael Abou-Antoun to The Great Brothers. Finally, I find that in receiving the impugned transactions each of LAM Haulage, MAL Land and The Great Brothers assisted in the dishonest and fraudulent design.

Earth Civil - Michael Abou-Antoun, AKA Civil and AKA NSW

Earth Civil - Michael Abou-Antoun

1. As to Michael Abou-Antoun's liability in the Earth Civil Proceeding, I similarly consider that he had Baden Delvaux knowledge. I am not persuaded by Andre Abou-Antoun's evidence that some of the large cash withdrawals made by Michael Abou-Antoun (as admitted in his defence) were used to pay employees wages, and in this regard, I would have expect some documentary evidence to support this claim. I also consider that the payment of large sums into Earth Civil and then withdrawal of large sums by Michael Abou-Antoun from Earth Civil, including cash withdrawals, for no apparent commercial purpose, must have put him on notice of the facts that would put an honest and reasonable person on enquiry. Moreover, his assistance in the Scheme can be inferred from his role involvement in the impugned transactions.

Earth Civil - AKA Civil and AKA NSW

1. As to whether Michael Abou-Antoun's knowledge, as director, can be imputed to AKA Civil and AKA NSW, it appears that Michael Abou-Antoun was acting in fraud of these companies. AKA Civil paid out $400,000 to Earth Civil, which was then paid to Andre and Michael Abou-Antoun. AKA NSW paid $586,000 to Earth Civil that was then mostly paid to Michael Abou-Antoun ($565,000). I have not been taken to any benefit received by AKA Civil or AKA NSW for entering into these transactions and in those circumstances, I consider that Michael Abou-Antoun was acting in fraud of these companies and that they cannot be imputed with his knowledge.
2. I have concluded that Andre Abou-Antoun, Michael Abou-Antoun, LAM Land, MAL Haulage and The Great Brothers were on notice of facts that would have put an honest and reasonable person on enquiry as to the issuing of the invoices (and hence the making of the payments). I do not find that they were on notice of those aspects of the Scheme that related to the winding up of the companies but I do not accept that such knowledge is necessary to make good the claims made against them of accessorial liability.
3. Therefore, subject to issues of causation and loss (and the joint release defences), which I consider in due course below, I find that liability has been established on the part of the AKA Parties.

Submissions and findings - George Said and Involved Recruitment

Plaintiffs' submissions re George Said and Involved Recruitment

1. As to the claims against George Said and Involved Recruitment, I have already noted the evidence given by George Said, and the relevance of that evidence to the claims against Gino Cassaniti and do not here repeat those matters. I add that George Said's evidence was that he did not visit Banq only for his accounting work prior to being engaged with Involved Recruitment in 2012, but also because he was friends with people at Banq (T 847.1-11; 847.50-848.4). George Said (despite the ASIC records) regarded himself to "be a director of Involved Recruitment" (T 846.5).
2. In summary, the plaintiffs say that it is clear from the effect of George Said's evidence that Gino Cassaniti was the real controller of Involved Recruitment (referring to George Said's evidence (at T 869.40-871.14) and, in relation to his appointment as a director, George Said's evidence (at T 871.9-13) that Gino Cassaniti must have put his name down as a director of the company; and the evidence at T 871.37-43 that Gino Cassaniti had never discussed with him anything to do with changes of directorship for Involved Recruitment). The plaintiffs say that the effect of George Said's evidence (at T 872.35-47) is that he primarily or entirely received his instructions regarding Involved Recruitment from Gino Cassaniti alone; and that the fact that Gino Cassaniti controlled Involved Recruitment is demonstrated by the conflicting Form 484s lodged with ASIC (see above).
3. Further, it is noted that: Form 484s appointing Gino Cassaniti to RCG CBD and Earth Civil were also purportedly signed on 1 January 2013 and all lodged on 28 May 2013; and the Forms purportedly backdated the appointment of Gino Cassaniti as a director to 16 May 2012 (RCG CBD and Involved Recruitment) and to 1 July 2012 (Earth Civil); each of the three companies, Involved Recruitment, RCG CBD and Earth Civil, went into liquidation on the same day, 28 June 2013; and those three liquidations were all instigated by Gino Cassaniti as the director of each of the three companies, that is, Gino Cassaniti signed the respective resolutions appointing Mitchell Warren Ball in a creditor's voluntary winding up.
4. When coupled with George Said's evidence (see above), that he was acting on Gino Cassaniti's instructions, the plaintiffs say that it is obvious that Gino Cassaniti controlled Involved Recruitment. Reference is made again to George Said's evidence as to the work he did on his laptop in relation to invoices. The plaintiffs say that George Said's evidence to the ATO in that regard was the truth.
5. The plaintiffs say that clearly Gino Cassaniti controlled payments from Involved Recruitment, noting George Said's evidence in this regard (at T 843.44-844.1; T 844.28-32). The plaintiffs also point out that the bank statements for Involved Recruitment were addressed to "the Director" at George Said's home address in Belmore over a 21-month period and note that his evidence was that he received the bank statements for Involved Recruitment (T 845.21-846.4).
6. It is noted that Fred Khalil also had involvement with Involved Recruitment. Of the payments from Involved Recruitment to RCG CBD totalling $934,339.28 (Table 3.13), one of those payments was of $17,500 from Involved Recruitment to RCG CBD on 14 May 2013. RCG CBD then paid $17,500 to Sivasli (Fred Khalil's company) on 14 May 2013.
7. Reference is made to the evidence as to the liquidation of Involved Recruitment (see above) and the lodgement of proofs of debt by Gino Cassaniti and Banq.
8. As to George Said's knowledge, it is said that he was a straw director of Involved Recruitment appointed and instructed by Gino Cassaniti. It is said that, in carrying out his instructions, George Said acting as the director of Involved Recruitment was the person that: delivered large sums of cash to Gino Cassaniti from Involved Recruitment; caused Involved Recruitment to pay $934,399 to RCG CBD; and caused Involved Recruitment to receive and accept $55,590 from Bluemine; for which there was no genuine commercial documentation.
9. The plaintiffs maintain that, in carrying out those instructions George Said knew that he was assisting Gino Cassaniti (because on his evidence he was doing what Gino Cassaniti asked him to do). The plaintiffs contend that, from the nature of the transactions, George Said knew what Gino Cassaniti was doing was dishonest or had knowledge of circumstances which would indicate to an honest and reasonable person that Gino Cassaniti was acting dishonestly and fraudulently in instructing George Said to cause Involved Recruitment to deliver cash to Gino Cassaniti, transfer $934,399 to RCG CBD and receive $55,590 from Bluemine.
10. The plaintiffs say that all of the conduct referred to above involving George Said, RCG CBD and Bluemine would not have occurred in the absence of the Scheme Recommendation/Primary Conspiracy; that is, it did not occur by chance. The plaintiffs say that on the whole of the evidence it is established that the conduct occurred, was orchestrated and implemented throughout by Gino Cassaniti, Fred Khalil, Peter Abboud and George Khalil in furtherance of the conspiracy. Thus, it is said that George Said is liable to RCG CBD as an accessory, as claimed.
11. As to George Said's culpability in (dishonestly) assisting Gino Cassaniti in his breach of fiduciary duty and in causing Involved Recruitment to make the impugned payments to RCG CBD (and as to his involvement in Involved Recruitment's entry into the Scheme as effected and instructed by Gino Cassaniti), similar submissions are made by the plaintiff as to the submissions made in respect of the conduct of both Tanya Borg and Michael Borg (see below).
12. The plaintiffs say that whether or not George Said knew that the Scheme ultimately required the liquidation of RCG CBD and Bluemine is irrelevant; that the part of the Scheme that he did know about (the dishonest payments) was the substratum of the dishonest and fraudulent conduct that ultimately concluded with RCG CBD's liquidation.
13. Again, similar submissions are made as to George Said's culpability (as a director of Involved Recruitment) in assisting Gino Cassaniti in his breach of fiduciary duty as a director of Bluemine in relation to the impugned payment from Bluemine which was said to be for no consideration and without genuine or legitimate documentation.
14. It is submitted that George Said's conduct, as a director of Involved Recruitment, in causing Involved Recruitment to receive and acquiesce to the impugned payment from Bluemine, without providing consideration and without genuine/legitimate documentation, was dishonest; and that he knew that his conduct in receiving the impugned payment was dishonest. It is said that, without George Said's involvement, Gino Cassaniti could not have perpetrated his dishonest and fraudulent design in breach of his fiduciary duty to Bluemine and that thus, George Said is also liable to Bluemine as an accessory, as claimed.

George Said's submissions in defence

1. As to George Said, the Khalil defendants note that the evidence is that George Said was a director of Involved Recruitment for one day. Insofar as the plaintiffs assert that George Said remained a director at least until the notice to ASIC was lodged, the Khalil defendants say that the late filing of notice to ASIC is not the backdating of the director's removal from the board; it is simply a late notice. They say that the ASIC record is prima facie evidence of the matters recorded. In any event, they say that it is likely that George Said was never a director "in any real sense" pointing to George's Said's evidence (see as summarised earlier).
2. The Khalil defendants submit that it should be inferred that the guiding mind of Involved Recruitment was in fact Gino Cassaniti and not George Said. Moreover, they say that the evidence of the facts of which George Said was aware does not lead to a clear inference that the invoices which he was preparing were part of any dishonest or fraudulent design (rather, it is said that they are consistent with invoicing customers for the deployment of staff and the payment of staff, including himself).
3. The Khalil defendants say that George Said (who they describe as a man who ordinarily would work with his hands) gave his evidence in Court (as well as that given in the ATO interview) as frankly as he could. It is said that the concerns he expressed in relation to his earlier interview with the ATO reflected more his concern that he had misunderstood or had subsequently realised that he had been mistaken in his understanding of the questions he was actually being asked at the time, rather than any serious attempt to dissemble.
4. The Khalil defendants say that (contrary to the plaintiffs' submissions at [1326]; [1328]) there was no evidence of the work which George Said actually did for Involved Recruitment, nor was there evidence of any other circumstances in connection with what he did or would have known, which meets the fourth (and lowest) category of Baden Delvaux knowledge that he was assisting in a dishonest or fraudulent design in breach of a duty owed by Gino Cassaniti to one of the five Insolvent Companies (even if he was). It is said that the proceedings should be dismissed as against George Said.

Plaintiffs' reply submissions re George Said

1. The plaintiffs say that there does not seem to be any dispute between the parties as to the following matters: that George Said became a director of Involved Recruitment at the behest of Gino Cassaniti, who was the ultimate controller of Involved Recruitment; that George Said regarded himself as a director of Involved Recruitment; that George Said's role at Involved Recruitment centred around the changing of the letterhead for invoices that he was provided by either Banq or clients of Banq (the plaintiffs say that, to describe this process as minor clerical work, as suggested by the Khalil Parties, seeks to downplay his role in the Scheme); that Involved Recruitment made payments to RCG CBD totalling $934,339.28; that George Said could log onto Involved Recruitment's bank account and conduct transactions on it, and that he was also able to withdraw large sums from the account; that George Said was paid for this work, either directly from the bank account of Involved Recruitment or Gino Cassaniti would give him cash payments; and that George Said would withdraw large sums of cash (in the order of $200,000), and generally that money would go to Gino Cassaniti at Banq's premises.
2. It is said that George Said cannot on any view have been an innocent party in these transactions; rather, that he was the proverbial "bag man". It is said that George Said played his part in the Scheme and he did so with knowledge; and that he admitted as much to the ATO during the course of his interview with them on 3 June 2019 (which he accepted in cross-examination was the truth). The plaintiffs say that the submission that the matters put to George Said during his cross-examination were unfair (because he ordinarily works with his hands) is without basis (noting that George Said has been a real estate agent for some 7 years). The plaintiffs say that George Said's attempt to resile from the evidence that he gave to the ATO in cross-examination should be rejected in its entirety, and that that attempt "shredded his credibility".

Finding - George Said

1. I consider that George Said's involvement in the scheme renders him liable for knowing assistance. While there is an argument that he was simply performing an administrative task (giving rise to a question as to whether, by issuing the invoices, he was on notice of facts that rendered the invoices false or suspicious). I consider that the evidence as to the manner in which the invoices were created (confused and inconsistent as that evidence was) must have raised a question in the mind of a reasonable and honest person. That alone might not have been sufficient. However, it must be taken in the context of the circumstances in which he withdrew large sums of cash, at Gino Cassaniti's instructions, that he delivered to him at Banq's offices and from which Gino Cassaniti directed him to take seemingly arbitrary amounts of money. The circumstances in which that occurred surely put him on notice of facts that would put a reasonable and honest person on enquiry. I consider that George Said's role in issuing the invoices, making the payments, withdrawing large sums and delivering them to Gino Cassaniti is sufficient to establish his assistance in Gino Cassaniti's breaches of fiduciary duty to RCG CBD and Bluemine.
2. Accordingly, I find that the claim against George Said for accessorial liability for knowing assistance is made good.

Plaintiffs' submissions re Frank Criniti

1. Although no relief is now claimed against Frank Criniti, it is relevant to note the plaintiffs' submissions as to Frank Criniti as it is necessary to establish Frank Criniti's dishonest breaches of duty as director of Diamondwish and Rackforce in order to find the accessorial liability here sought (and moreover, his evidence forms the basis on which inferences as to Gino Cassaniti's involvement in the Scheme are at least partially sought to be drawn).
2. Frank Criniti's relationship with Banq and its predecessor firm has been set out above; as has the evidence as to his introduction to Gino Cassaniti by Pierre Moio and the advice that Frank Criniti says he was given by Gino Cassaniti. The plaintiffs say that, although the advice as to the company restructuring was in and of itself innocuous, it was the implementation of that advice using the Insolvent Companies (and some 123 other companies as identified in Annexure B to Aris Zafiriou's affidavit sworn 9 March 2017) in the manner alleged in the statements of claim in these Proceedings, with knowledge that that was to occur, which gave rise to the misconduct of which complaint is made.
3. As to the implementation of the Scheme, it is noted that a number of companies were incorporated and/or utilised by Frank Criniti and Banq (as set out above) and that the evidence of Frank Criniti is that those entities were set up by Banq (T 499.50; T 501.37; T 503.35-40 and T 505.23). It is also noted that in most cases, Banq was the tax agent for those companies and companies that were set up in the period 2009 to 2013 (see Aris Zafiriou's affidavits sworn 21 March 2017 at [35]-[43] in the Diamondwish Proceeding and 13 April 2017 at [45]-[50] in the Rackforce Proceeding; and see Table G).
4. Reference is made to Frank Criniti's evidence concerning the winding up of Zagoonda (T 497.26-32). It is said that this evidence is entirely consistent with Gino Cassaniti's modus operandi and cavalier approach to winding up companies. Reference is also made to Frank Criniti's evidence as to Auswide's liquidation and the change of director of Givana Prestige first to David Rizk and then to Frank Criniti (at T 522.36-523.26), corroborated by David Rizk in his evidence in chief (T 904.41-905.31). The plaintiffs submit that Frank Criniti's evidence about the operation of Givana Prestige is to be believed in its entirety and that evidence to the contrary from Ivana Cassaniti is not to be believed.
5. The appointment of David Rizk is said to be another example of Gino Cassaniti arranging the appointment of a director merely as a matter of form without any regard to the obligations and responsibilities of directorship. It is noted that at no time did David Rizk engage in any directorial duties.
6. Again, as to the implementation of the accounting systems, reference is made to the evidence of Frank Criniti that Banq did all of the accounting work for his companies (T 463.23-44) and that Banq implemented the systems that the Criniti companies used. It is said that Frank Criniti's evidence of Banq's involvement with his companies is uncontested. Reference is also made as to the involvement of Banq in the training of Criniti staff (Vanessa Scuteri and Tarun Shah) and to the evidence given by Tarun Shah. The payments made from and to Diamondwish and Rackforce are identified at Tables 7.1 to 7.7 and 9.1 to 9.2, respectively and reference is made to Frank Criniti's evidence in relation to these payments (at T 508.27-509.9).
7. The plaintiffs accept that such payments for fit-out and the like are usual within a restaurant business, but note that Diamondwish and Rackforce were not ever engaged in that or any other business.
8. The plaintiffs also note Frank Criniti's evidence concerning Christopher Cherry's appointment as a director of Diamondwish. It is said that Christopher Cherry was another straw director, noting that Christopher Cherry gave evidence which confirmed that he had no role as a director of Rackforce; that he never carried out any tasks or duties of any kind at any time for Rackforce; that he did not know who Frank Criniti was; that he could not recall how he came to be appointed as a director of Rackforce (T 902.7-26); and that he could not recall any details about Diamondwish, including whether he had any role in that company or how he came to be appointed as a director of Diamondwish (T 902.39-903.13).
9. The plaintiffs say that the obvious inference is that Christopher Cherry's appointment as a straw director occurred in furtherance of the Scheme, and that it was orchestrated by Banq (noting that the ASIC form 484 was lodged by Banq - Ex K at 72941) in accordance with the advice given by Gino Cassaniti to Frank Criniti referred to above. It is said that, in light of Frank Criniti's evidence to the effect that Gino Cassaniti provided overall strategic advice and that Peter Abboud and Fred Khalil implemented that advice, it can be inferred that one or other of Gino Cassaniti, Fred Khalil or Peter Abboud selected and appointed or caused to be appointed Christopher Cherry as the director of Diamondwish and Rackforce.
10. As noted above, both Diamondwish and Rackforce (together with Bluemine) were placed into creditors' voluntary liquidation on 26 August 2013 and Mitchell Warren Ball was appointed the liquidator. Frank Criniti's evidence is that he was well aware that both Diamondwish and Rackforce would have to be wound up; and that both of those companies, before they went into liquidation paid money away and got nothing in return for it (T 536.26-29). And, despite numerous demands by the liquidator to the former directors and officeholders of Diamondwish and Rackforce, and to its accountant - Banq, to be provided with the books and records of those companies, the liquidator has not been provided with any substantial financial records which correctly record and explain Diamondwish's and Rackforce's transactions, financial position and performance. In light of Frank Criniti's evidence that Banq maintained and controlled the financial records of Diamondwish and Rackforce and the appointment of Christopher Cherry as a straw director, it is said that, in substance, the responsibility for providing any records rested with Banq. (The plaintiffs say that there were no genuine records of the transactions so it is unsurprising that no such records were provided to the liquidator.)
11. As to the winding up and tax debts of Diamondwish and Rackforce, it is said that Frank Criniti was well aware of the transactions that occurred in and out of Diamondwish and Rackforce; he was aware that, as a result of those transactions, Diamondwish and Rackforce would incur liabilities to the Commissioner for tax debts including income tax, PAYG and GST (T 535.39-536.36); he knew that when those companies paid away their money, those companies would be left with no funds to meet those tax liabilities and would have to be wound up. It is said that the purpose of the transactions was, to Frank Criniti's knowledge, to enable him and companies associated with him to obtain tax benefits, that is, to get cash generated by his businesses to him and others tax free; and that he knew that conduct was not honest (T 536.4-46).
12. The plaintiffs say that all of the conduct referred to above involving Frank Criniti, Diamondwish and Rackforce did not occur in the absence of the Scheme Recommendation or the conspiracy; and that it is established that the conduct, occurred, and was orchestrated and implemented throughout by Gino Cassaniti, Fred Khalil, Peter Abboud and George Khalil in furtherance of the conspiracy.

Findings - Frank Criniti

1. I have considered the issues raised in various of the defendants' submissions as to Frank Criniti's credibility; and in consideration of Gino Cassaniti's submissions in particular, I have referred to the claims made as to Frank Criniti's role in events.

Directorship

1. Frank Criniti is recorded as a director of Diamondwish on the ASIC record from 15 July 2011 to 16 March 2012. However, I am of the opinion that the ASIC record has been displaced as regards the purported commencement of Christopher Cherry's directorship on 16 March 2012 (pursuant to a Form 484 dated 1 January 2013 and lodged on 28 May 2013). The evidence indicates that Christopher Cherry was, in essence, a straw director who carried out none of the roles or responsibilities of a director in relation to Diamondwish.
2. It is clear, by contrast, that Frank Criniti continued to have control of Diamondwish after 16 March 2012. I note, in particular, Frank Criniti's evidence that he "had the ultimate control" as to who could access the bank accounts of Diamondwish and Rackforce and was signatory (among others) of both accounts for the entirety of the companies' corporate lives (at T 509.30-40). Moreover, looking at the payment from Diamondwish to Elle Barikhan, for example, on 24 December 2012, Frank Criniti's evidence was that Gino Cassaniti asked him to make that payment through Diamondwish (at T 514.5-40), which indicates Frank Criniti's continued involvement and control of Diamondwish after 16 March 2012. I also note that when asked whether his involvement in the day to day business of Diamondwish and his control of its business changed in any way after 16 May 2012 (presumably the cross-examiner meant March 2012), Frank Criniti responded "I don't think so" (T 533.1-5). Therefore, I am persuaded of the fact that the ASIC Form 484 was indeed backdated and that not only did Frank Criniti's directorship continue until the date the Form 484 was lodged on 28 May 2013, but that Frank Criniti remained a director of Diamondwish until its liquidation.
3. As to Rackforce, the ASIC record evidences that Frank Criniti was a director from incorporation on 4 February 2011 until 22 September 2011. Frank Criniti was then replaced by Frank Scuteri, who was in turn replaced by Christopher Cherry on 15 March 2012. As above, Frank Criniti remained a signatory of the Rackforce bank account for the entirety of its corporate life, and he gave evidence that he had the "ultimate control" over the bank account's log in (T 509). It was apparent throughout Frank Criniti's cross-examination on the various transactions in and out of Rackforce spanning until 2013 that Frank Criniti continued to be heavily involved in the management of Rackforce (see, for example, at T 533-534, where Frank Criniti gives evidence on transactions well into 2012 and 2013). While Frank Criniti gave evidence that the transactions in and out of Rackforce "wasn't really [his] focus", his evidence that he "had trust in the system whatever the workers were doing and whatever they were shown to do that was being done accordingly" (T 517-518) shows that Frank Criniti maintained a managerial position of "ultimate control" over the bank account log in but delegated the day to day tasks to employees such as Tarun Shah and Vanessa Scuteri. In my opinion, this is consistent with Frank Criniti holding the position of a de facto director after 22 September 2011 and until the liquidation of Rackforce.
4. I have concluded that Diamondwish and Rackforce were set up on Gino Cassaniti's advice. Frank Criniti had no idea as to the business of Diamondwish and no knowledge of Christopher Cherry. The practice of using straw directors (in which I accept Frank Criniti participated insofar as he put forward David Rizk for that role) and the backdating of ASIC Forms and the like are matters that clearly were not at Frank Criniti's instigation. I accept his evidence that he followed instructions generally from Banq in that regard. However, it is also clear that he conveyed those instructions internally within the Criniti companies to Tarun Shah to implement.

Breaches of fiduciary duty

1. I accept that the evidence establishes that Frank Criniti was aware of the transactions in and out of both Diamondwish and Rackforce; that he understood the transactions were not for the services purported to have been provided; that he was aware that Diamondwish and Rackforce would incur tax liabilities as a result of those transactions; and that he knew that the companies would be wound up without the funds to meet those liabilities. I also find that Frank Criniti authorised these transactions, as director of those companies, for the purpose of obtaining tax benefits for himself and the companies associated with him.
2. In this regard, Frank Criniti did not discharge his director's duties with the degree of care and diligence that a reasonable person would exercise; did not discharge his duties in good faith in the best interests of each of Rackforce and Diamondwish; did not discharge his duties for a proper purpose; and used his position as director of each of Rackforce and Diamondwish to gain an advantage for himself that also caused detriment to those companies. Additionally, Frank Criniti's conduct also breached his fiduciary duty of care to the companies and his fiduciary duty not to obtain an unauthorised benefit. I note, in particular, that Frank Criniti failed to take reasonable steps to place himself in a position to guide and monitor the management of the companies. Finally, Frank Criniti gave evidence that he knew his conduct was not honest, and I accept that his conduct clearly transgressed the ordinary standards of honest behaviour.

Submissions and findings - Ivana Cassaniti, Givana Prestige and Discobell

Plaintiffs' submissions re Ivana Cassaniti, Givana Prestige and Discobell (Diamondwish and Rackforce)

1. The plaintiffs dealt with Ivana Cassaniti, Givana Prestige and Discobell together, although ultimately, Discobell was separately represented from Ivana Cassaniti and Givana Prestige.
2. I have set out above the details of Ivana Cassaniti's relationship to other parties and entities involved in the Proceedings and I have referred to her evidence as to the circumstances in which the Banq entities were formed; and the corrections made to that evidence in her most recent affidavit sworn 3 March 2020, to the following effect: that where Ivana Cassaniti had deposed to forming Banq Accountants and personally borrowing funds to do so, her assistance in forming Banq Accountants was limited to supporting her husband Gino Cassaniti and funds were borrowed together with Gino Cassaniti; that Ivana Cassaniti had always understood that her shares in Givana were owned jointly with Gino Cassaniti; that it was Gino Cassaniti who formed Banq with Peter Abboud and Fred Khalil; that she agreed to be the shareholder of the business through Givana on the basis that the shares were jointly owned; that her interest as a shareholder on the record was held by her for her and Gino Cassaniti; and that she and Gino Cassaniti invested the funds in the business to set up the practice.
3. The plaintiffs say that those purported corrections were disingenuous recent inventions, noting what was said by Gino Cassaniti in his affidavit sworn 11 April 2019 (at [4]-[5]) (at a time, I would add, when Ivana Cassaniti was not separately represented) to the effect that Ivana Cassaniti funded the whole of Banq when it was incorporated and (at [10]) that he was never a major shareholder of the company (rather, Ivana's company, Givana, held 60% of the shares in Banq). The plaintiffs say that Ivana Cassaniti's disavowal of the fact that she was the majority shareholder of Banq and her personal involvement and investment in Banq Accountants and Banq is not to be believed, given the self-serving nature of the March affidavit and the ample evidence against such disavowal, including from Ivana Cassaniti.
4. The plaintiffs say that Ivana Cassaniti's denials in cross-examination that she was familiar with the bank accounts of Banq and was aware that large sums of money were from time to time paid into one or other of the bank accounts of Banq are also not to be believed, particularly in light of the evidence of Fred Khalil and Peter Abboud (and what the plaintiffs maintain to be Ivana Cassaniti's seriously false evidence of having no knowledge of Givana Prestige transactions).
5. The plaintiffs say that Ivana Cassaniti's evidence that, from 2010, she had little to do with the business of Banq because of her family commitments (see T 1116.33-41 and 1117.23-32) (although she continued to receive a wage as an employee of Banq - see at T 1117.8-28), is not to be believed. It is said that Ivana Cassaniti received a substantial wage of $108,631 from Banq in the financial year ended 30 June 2013, noting that this was twice the amount paid by Banq to Fred Khalil (Ex K at 31915). (Pausing here, that differential seems likely to be attributable to their shareholding in the company not their respective roles in the company. There is no evidence to suggest that Ivana Cassaniti played a substantial role in advising the clients of the firm as to accounting or tax matters. Her role seems on any account to have been limited to bookkeeping functions, reconciliations, transfers of moneys, overseeing staff, chasing debtors and the like. With no disrespect to Ivana Cassaniti, any suggestion that she was as qualified as Fred Khalil to advise clients (let alone as qualified as Gino Cassaniti) seems to me to be risible. Therefore, the wage paid to her cannot have reflected her contribution to the professional tax and advisory services provided by the firm.
6. The plaintiffs nevertheless say that the evidence in Ivana Cassaniti's March 2020 affidavit and denials of involvement in the business of Banq in cross-examination ought not to be believed because the totality of that evidence is nothing more than Ivana Cassaniti attempting to distance herself from the transactions and conduct complained of by the plaintiffs.
7. It is noted that Ivana Cassaniti agreed in cross-examination, at T 1117.34-43, that Fred Khalil and Peter Abboud were in a position to observe what she was doing in the office and the extent of her working hours. Reference is made to Fred Khalil's assertions in his affidavit sworn 25 March 2019 as to Ivana Cassaniti's role; and to the evidence of Peter Abboud in that regard (see above). In light of that evidence, the plaintiffs say that Ivana Cassaniti's retractions from the evidence in her 11 April 2019 affidavit ought not to be believed. It is said that the preponderance of the evidence, in particular the unchallenged evidence of Gino Cassaniti, Fred Khalil and Peter Abboud, is that she was the major shareholder of Banq Accountants and Banq; exercised oversight and control over the running of the business of Banq Accountants and Banq; and had knowledge of, oversight and control over bank accounts and transactions including the transactions pleaded by the plaintiffs throughout the entirety of the period. (I interpose to note that it does seem somewhat contradictory to me the weight that the plaintiffs seem to seek for me to place on the evidence of Gino Cassaniti, Fred Khalil and Peter Abboud as it relates to Ivana Cassaniti when they have otherwise sought largely to disparage their evidence and emphasise that it is to be read as assertion only.)
8. The plaintiffs say that a further telling factor against the acceptance of Ivana Cassaniti's evidence, where it is contradicted by the evidence of Fred Khalil and Peter Abboud, is that she did not seek an opportunity to challenge their evidence in cross-examination. Instead, it is said that she was content to consent to the s 136 order and she thereby gave up all rights of cross-examination of those defendants. (That submission has given rise to a heated debate in Ivana Cassaniti's defence submissions - and ultimately, I consider that it takes the matter nowhere for the reasons I address in due course.)
9. As to Givana Prestige, the plaintiffs point to particular transactions evidenced by documents produced in answer to subpoena by NAB (Ex S), namely payments of respectively $100,000 and $99,000 which were identified to be payments from Workforce Unlimited (T 1157-1158) (of which company George Khalil became a director in February 2012 shortly after these transactions). The plaintiffs note that when cross-examined on these payments, Ivana Cassaniti said she "had no idea" that those sums had been paid into Givana Prestige (T 1158).
10. The plaintiffs point to the following as significant transactions: Rackforce payment into Givana Prestige $653,933 on 16 December 2011; transfer out of Givana Prestige to Auswide $68,964.60 on 19 December 2011; an RTGS (i.e., bank direct as opposed to internet) transfer to CBFC $130,070.40 on 19 December 2011; and a transfer to Auswide $653,000 on 20 December 2011. The plaintiffs note that when cross-examined on these transactions, Ivana Cassaniti said that "[she] was not aware of any of those transactions" (see T 1160-1161).
11. Diamondwish made three payments to Givana Prestige: on 20 December 2011, the sum of $316,185; on 2 April 2012, of $640,000; and of 2 April 2013, of $13,000. Only the payment of 20 December 2011 of $316,185 is pressed against Ivana Cassaniti, plus interest (in the Diamondwish Proceeding). The payment from Diamondwish to Givana Prestige on 20 December 2011 was preceded by a payment from Rackforce to Diamondwish (see Tables 9.1 and 7.1). Further, Givana Prestige made a payment to Diamondwish of $330,056.71 on 9 January 2012. A consequential Diamondwish tax liability for that is claimed against Ivana Cassaniti, plus interest (in the Diamondwish Proceeding).
12. Rackforce made two payments to Givana Prestige in December 2011 of $653,933 and $499,950 ($1,153,883) (Table 9.1). Those sums are claimed from Ivana Cassaniti, plus interest (in the Rackforce Proceeding). The payment from Rackforce to Givana Prestige of $188,800 on 16 March 2012 is not pressed against Ivana Cassaniti.
13. The context of the payment by Discobell of $155,000 to Bluemine on 28 June 2013 is that: Banq made a payment of $155,000 to Consolidated Wealth (account ending in #330); Consolidated Wealth then made a payment of $155,000 to Discobell; Discobell then made the payment of $155,000 to Bluemine; Bluemine made a payment of the same amount to another of its bank accounts; and Bluemine then paid $155,000 to Banq. It is said that: Ivana Cassaniti was the sole director and secretary of Discobell from 25 August 2011 to 8 August 2013 and then again from 19 February 2014 (with the obligation to be aware of all of its activities) (Ex K at 53091); in effect the 60% owner/controller of Banq; and a signatory to the bank accounts of Banq, Consolidated Wealth and to the relevant Discobell bank account (account number ending #5597) with Fred Khalil and Peter Abboud (Ex K at 51185-51186; T 1120.41-1121.2; see Table F). It is said that it is not commercially conceivable that Ivana Cassaniti would not have known of a payment of that significant amount, and its origin - Discobell - of which she was the sole director and shareholder.
14. The plaintiffs point out that, even though Ivana Cassaniti was the 100% shareholder of Discobell and a 60% "owner of Banq" (T 1138.16-22), Ivana Cassaniti maintained that she knew nothing of the transaction of $155,000 paid by Discobell to Bluemine, even though three weeks later (on 18 July 2013) Bluemine paid $155,000 to Banq. It is said that the potential benefit to Ivana Cassaniti, via her 60% interest in Banq, is obvious, and that it required an explanation from her (and not simply a denial of knowledge).
15. It is noted that (at T 1140.25-32), Ivana Cassaniti agreed that the transaction of $155,000 out of Discobell to Bluemine could only be authorised by herself, Peter Abboud or Fred Khalil; yet, (at T 1138.30-40) she said that she did not have access to that account and did not even know it existed. The plaintiffs say that evidence was false, pointing to NAB records that show Ivana Cassaniti to be a signatory to all four of Discobell's accounts (Ex K at 51185-51187). It is noted that in her first affidavit sworn 11 April 2019 (at [23]) Ivana Cassaniti revealed the existence of one such account only. The plaintiffs say that Ivana Cassaniti was well aware of the existence of the other three Discobell accounts but did not refer to them, and instead sought to draw focus only to the one account to which she had referred.
16. It is noted that (at T 1120.18-35) Ivana Cassaniti agreed that she "might have" instructed Peter Abboud and Fred Khalil to make bank transfers from time to time. The plaintiffs say that it was her company's bank account and, in effect, Ivana Cassaniti is contending that she did not notice $155,000 going in and going out on the same day. It is said that Ivana Cassaniti had no explanation of not having any knowledge about why her company received and paid out such a large amount of money. It is noted that, Ivana Cassaniti made the same denials in respect to the Givana Prestige bank account and transactions (at T 1179-1180). The plaintiffs say that those denials were proved false and thus, her denials of the Discobell transactions should not be accepted. (Pausing here, I am not persuaded that Ivana Cassaniti would necessarily have noticed particular transactions occurring on the same day in and out of the accout - that would require a level of attention to detail that may not be consistent with someone looking at the account on a regular but not necessarily daily basis and seems to me to involve too much speculation.)
17. Reference is made to Ex 24, which comprises NAB records purportedly showing that the bank payment (transfer) of $155,000 by Discobell to Bluemine was authorised by Peter Abboud. It is submitted that Ivana Cassaniti has not fulfilled her evidentiary onus in relation to any contention that she was not involved in that transaction because: (i) in relation to Givana Prestige, Ivana Cassaniti's evidence should not be believed unless (if at all) it is independently corroborated; (ii) the bank records do not establish that internal instructions were not given by Ivana Cassaniti for the payment to be made; (iii) the evidence of Peter Abboud (affidavit sworn 22 March 2019 at [65]) is that he often made bank transfers upon Ivana Cassaniti's instruction. (It is said that it is not open to Ivana Cassaniti to ask the Court to infer that, in this instance, she gave no instruction to Peter Abboud, particularly when she did not seek an opportunity to challenge his evidence. It is said that Ivana Cassaniti gave up the right to cross-examine him and test his evidence about anything.)
18. As to the payments by Banq to RCG CBD for purported labour hire services, Ivana Cassaniti, when shown some of the purported invoices from RCG CBD to Banq (T 1144-1145; Ex K at 31923-31976), was unable to recall whether any labour hire services were provided by RCG CBD to Banq (see at T 1144.45). The plaintiffs say that it was obviously well known to her that no such services were provided.
19. The plaintiffs note that Ivana Cassaniti was shown the Banq profit and loss statement for the year ending June 2013 which recorded no expenditure for labour hire but her evidence was (at T 1147.45) that she did not recall having seen a profit and loss statement for Banq for that year and (at T 1148.17) that she had absolutely no idea what the profit of the business was in the 2013 year. The plaintiffs say that that answer was absurd, and false, as they say also was her denial of knowledge that payments totalling $653,439.54 were being made for supposed labour hire services (T 1148.25-34; Table 3.1).
20. It is said that the payments from Bluemine, Rackforce and Diamondwish to Banq (Tables 5.1, 7.3 and 9.2) also involve Ivana Cassaniti because she was a signatory to the bank accounts of Banq, and it is said that as a matter of commercial common sense, she was aware of those transactions with Banq.
21. As to Ivana Cassaniti's directorship of Givana Prestige, the plaintiffs say that Ivana Cassaniti's evidence (in her affidavit sworn 11 April 2019 at [20]), that from sometime in late 2011 she had not had anything to do with Givana Prestige was false (pointing to the documents in relation to the renewal of the dealership licence in February 2012). It is noted that (at T 1168.37) Ivana Cassaniti accepted that it looked like her signature on the relevant form; and (at T 1168.45-1169.1) Ivana Cassaniti said that "I'm not saying that this is not my signature, that I didn't sign it. I don't recall signing it. At this time, I would have been at home, in these years, so I honestly don't remember what happened".
22. The plaintiffs submit that the 2010 and 2012 signatures were Ivana Cassaniti's and it is noted that it is not part of her defence case that those signatures were forgeries. (Of course, pausing here, Ivana Cassaniti was clearly not on notice in advance of her cross-examination of this being an issue so it is difficult to see how that should have been anticipated in her defence.)
23. The plaintiffs say that this evidence about the motor dealer licence renewal, coupled with the evidence of her emails and bank authorisations through to 17 January 2012 when she authorised the Munoz transaction of $60,000, clearly demonstrates that, with full knowledge Ivana Cassaniti's actions were as the director of Givana Prestige, and Ivana Cassaniti made or authorised all of the transactions recorded in the NAB bank statement in Ex S. It is said that Ivana Cassaniti was acting, in business transactions and banking, as the director of Givana Prestige at least up until 9 February 2012.
24. As to Ivana Cassaniti's knowledge, it is said that Ivana Cassaniti was the directing mind and will of Givana Prestige and Discobell; that her knowledge is to be imputed to the companies; and that she had full knowledge of all of the relevant transactions and she knew that there was no genuine commercial reason for them (and that there were no genuine commercial documents evidencing them).
25. The plaintiffs say that Ivana Cassaniti was directly involved in the Givana Prestige transactions and that she has refused to reveal an explanation for them or the arrangements within which the transactions occurred. The plaintiffs say that, in the absence of an explanation, it is to be inferred: that Ivana Cassaniti knew the transactions were for no genuine purpose; that Ivana Cassaniti knew of, and participated in, a form of money laundering which was occurring for the benefits of the participants in the transactions, and Banq, and for other benefits to them and other persons not known to the plaintiffs, such benefits not revealed; that Gino Cassaniti knew that the reciprocal participants to the transactions were doing so on the same basis as above; and that she knew of the above matters as the directing mind and will of Givana Prestige; and she entered into the transactions for her own benefit, Givana Prestige's benefit, and the benefit of others.
26. It is said that the true explanation for the transactions was peculiarly within the knowledge of Ivana Cassaniti, and she "refused to reveal" that. The plaintiffs say that it is to be inferred that Ivana Cassaniti knew that it was not honest for Givana Prestige and Discobell to engage in the transactions, and that she knew that the directors of Bluemine, Diamondwish and Rackforce were, respectively, not acting honestly in allowing the companies to participate in the transactions, in breach of their duties as directors.
27. It is said that Ivana Cassaniti, acting as the director of Givana Prestige and Discobell and on their behalf, caused Givana Prestige and Discobell respectively to engage in the transactions. It is said that, in so doing, Ivana Cassaniti: had actual knowledge of the breaches of duty by the directors of Bluemine, Diamondwish and Rackforce; alternatively, she wilfully shut her eyes to the dishonest and fraudulent breaches of the directors of those companies; alternatively, she wilfully and recklessly failed to make such enquiries as an honest and reasonable person would make with respect to the breaches by those directors; alternatively, she had knowledge of circumstances which would indicate to an honest and reasonable person that the directors of those companies were acting in breach of their duties.
28. The plaintiffs, having made the submissions referred to above as to Ivana Cassaniti's credibility, say that it is to be inferred that, regarding the Givana Prestige transactions, Ivana Cassaniti knew of them and she assisted the director's dishonest breaches of fiduciary duty to Diamondwish in utilising, or allowing to be utilised, the company Diamondwish for these transactions. The plaintiffs say that it is to be inferred from the whole of the evidence that Ivana Cassaniti: had actual knowledge; wilfully shut her eyes to the obvious; wilfully and recklessly failed to make such enquiries as an honest and reasonable person would make; or had knowledge of circumstances that would indicate the facts to an honest and reasonable person. Thus, it is submitted that Ivana Cassaniti is liable to Diamondwish and Rackforce as an accessory.
29. Similarly, as to the transactions involving Discobell, the plaintiffs say that Ivana Cassaniti's evidence that she had no knowledge of these transactions should not be believed (for the reasons set out above).
30. It is said that Ivana Cassaniti is precluded from inviting an inference that she did not instruct Peter Abboud to make the transfer to her company Discobell (the plaintiffs citing Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 (Ferrcom) at 418-419 per Priestley JA). Alternatively, it is said that it should be concluded that any evidence of Peter Abboud about this issue would not have assisted Ivana Cassaniti.
31. The plaintiffs say that the payment of $155,000 by Discobell to Bluemine was part of a series of payments involving Bluemine (whose director was Gino Cassaniti). It is contended that this was an uncommercial transaction with an absence of genuine documentation that was a breach of his fiduciary duties to Bluemine, as part of his dishonest and fraudulent design in utilising Bluemine this way. The plaintiffs contend that it is to be inferred that, regarding the Discobell transaction, Ivana Cassaniti knew of and assisted the fiduciary's dishonest actions, as follows: she had actual knowledge; she wilfully shut her eyes to the obvious; she wilfully and recklessly failed to make such enquiries as an honest and reasonable person would make; or she knew of circumstances that would indicate the facts to an honest and reasonable person.
32. For the above reasons it is said that Ivana Cassaniti was knowingly involved in the respective fiduciaries' breaches of ss 181 and 182 (pursuant to s 79) in relation to the Givana Prestige and Discobell transactions. It is said that, for the purposes of ss 181(2) and 182(2), Ivana Cassaniti was a person "concerned" in the breaches; and that, applying the terminology used by Wilcox J in Trade Practices Commission v Australian Meat Holdings Pty Ltd (1988) 83 ALR 299 at 357-358, her association with the transactions in the context of all matters relevant to her (as detailed earlier) demonstrates (objectively) her "concern" in them.
33. It is thus submitted that, in respect of the Givana Prestige and Discobell transactions, Ivana Cassaniti has accessorial liability pursuant to ss 181(2) and 182(2), and is liable to compensate Bluemine and Diamondwish pursuant to s 1317H of the Corporations Act.

Ivana Cassaniti submissions in defence

1. For Ivana Cassaniti, it is said (as to her holding of interests in the Banq businesses) that Gino Cassaniti is likely to have had financial difficulties well before he entered into bankruptcy on 18 March 2014 (noting the evidence that suggests he was involved in substantial litigation before his bankruptcy - see at T 1181.49-50); and it is submitted that it would not be unusual for his wife, Ivana Cassaniti, to serve as his nominee for his business interests, including shareholdings.
2. Pausing here, that submission seems to me little more than speculation. It was certainly not Ivana Cassaniti's evidence that the reason she held the roles and interests she did in Banq and various companies associated with Banq was as his nominee in light of an impending bankruptcy (nor was that Gino Cassaniti's evidence); and whatever view Gino Cassaniti's bankruptcy trustee might have taken of the matter is beside the point. (Similarly, the fact that Ivana Cassaniti had three children over the period between April 2010 and May 2014, to which there was more than passing reference in her submissions, says nothing about the interests or role she held in Banq or associated companies over that period; her evidence simply being at a general level namely that she had little to do with the business or was at home after the birth of her children - evidence that is inconsistent with that of other witnesses referred to above to the effect that she oversaw the business over the whole of the relevant period and with the fact that she signed documents relating at least to Givana Prestige over that period).
3. It is submitted, in effect, that Ivana Cassaniti simply played the role of a "front" for her bankrupted husband, rather than being the controlling mind of Banq because of her shareholding in Givana. That may or may not be the case. Certainly, it makes more sense that Gino Cassaniti would have had more of a role in Banq (as the accountant proffering specialist tax or accounting advice to clients, for a number of whom he had been their first contact with the firm) than Ivana Cassaniti (whose evidence, once corrected by her, was ultimately that she had only ever done bookkeeping work for Banq and who is not a qualified accountant).
4. Ivana Cassaniti argues that there is no evidence that she played any meaningful role in the business of Banq (and certainly not during the period between April 2010 and May 2014). Although Peter Abboud and Fred Khalil have asserted in their affidavit evidence that Ivana Cassaniti was at the office and instructed them to make transfers from time to time, Ivana Cassaniti says that this evidence should be given no weight (except to the extent that it is an admission against their own interest) given that neither made himself available for cross-examination.
5. Ivana Cassaniti points to the tension in the plaintiffs' case between the proposition that Gino Cassaniti was the "mastermind" behind the tax avoidance scheme (the rainmaker who brought in the clients to the Scheme and who acted as a shadow director to implement the Scheme) and the proposition that Ivana Cassaniti (through her indirect legal ownership of 60% of Banq) was acting with full knowledge and for her own benefit, as the true majority owner of Banq (as opposed to acting "unwittingly as Gino's instrument", which is how I understand her case to be put).
6. At a general level, as to the alleged conspiracy, Ivana Cassaniti draws a distinction between the outcome (or effect) of a scheme of the kind pleaded and the purpose of such a scheme. It is submitted that, while a conspiracy to avoid paying tax by raising fictitious invoices and then remitting the money paid with the intention of defrauding the Commissioner is plausible, and may have had the potential to cause the companies harm (depending on whether the scheme was detected and the response taken by the Commissioner in those circumstances), it is difficult to conceive why anyone would conspire to cause the relevant companies injury or how those companies could have been defrauded given the knowledge each of their controlling minds is said to have had.
7. Pausing here, the distinction between purpose and effect seems to me not to take into account that, ordinarily, one may be said to intend the consequences of one's actions (or at least those that are inevitable or might be expected would naturally follow therefrom). Hence, the potential consequences of one's actions might be expected to have been taken into account. Moreover, the scepticism that anyone would conspire to cause the Insolvent Companies injury rather begs the question - since one of the features of the alleged Scheme is said to be the cavalier treatment of companies (characterised by the utilisation of straw and "jump-on" directors; back-dated documents and the like). If companies were (as they seem to have been) treated as expendable vehicles, then it makes not implausible a lack of concern that they might ultimately be wound up owing substantial tax liabilities (and highlights a failure of the directors to take into account the best interests of the companies). As to the submission that the Insolvent Companies could not have been defrauded in the relevant sense having regard to the knowledge of their controlling minds, that raises the debate as to whether knowledge of fraud will be imputed to the company (to which I refer elsewhere). Therefore, the general comments made by Ivana Cassaniti as going to the unlikelihood of such a scheme do not to my mind carry weight.
8. As to the pleaded case against Ivana Cassaniti, who is identified only as a Scheme Participant (see at [127]), I have referred earlier to the pleading difficulties to which she has pointed. Having regard to the plaintiffs' opening (at T 117; T 179-180), it is said that the plaintiffs' accessorial case against Ivana Cassaniti is confined to a claim only on the basis of the various breaches of duty said to have been owed by Gino Cassaniti (not any other defendant).
9. It is said by Ivana Cassaniti that there was no suggestion in the evidence (and it was not put to her in cross-examination nor was any such submission made in closing) that any of the Primary Conspirators made a Scheme Recommendation to Ivana Cassaniti (cf the pleading at [137]); and that the only pleaded case against Ivana Cassaniti is that her connection with the Scheme came through her directorship of particular companies and transactions (for example, in the Bluemine Proceeding, through her directorship of Discobell and the "Discobell Transactions" pleaded at [212]).
10. Ivana Cassaniti points out that the only impugned transaction conducted by Discobell was to pay out of its account an amount of $155,000 on 28 June 2013 to Bluemine (and that what happened to those funds after that payment cannot be further "Discobell Transactions" as they are not conduct by Discobell). That transaction is said to have been performed by Discobell "by arrangement with Bluemine's director, [Gino] Cassaniti pursuant to the Scheme Recommendation" (see at [213]). It is noted that the particulars to [213] state that this arrangement with Gino Cassaniti is to be inferred from the following matters: that Fred Khalil and Ivana Cassaniti were directors and company secretaries of Discobell and Peter Abboud was the signatory on the Discobell bank account (Fred Khalil and Peter Abboud being two of the Primary Conspirators); that Banq ultimately received the benefit of the payment from the Discobell payment (noting the connection with Gino Cassaniti and Banq); and that the Discobell transaction could not have occurred in the absence of the knowledge and approval of Gino Cassaniti, Fred Khalil and Peter Abboud (see at [213(f)]).
11. Ivana Cassaniti says that nowhere is it alleged how she, as a director of Discobell or an indirect shareholder in Banq, acquired knowledge of the Scheme; and that there is no allegation that she participated in any dishonest or fraudulent conduct or knowingly assisted Gino Cassaniti in his dishonest and fraudulent conduct or that she was knowingly involved in Discobell's knowing involvement (the case against her seemingly being put on the basis that she assisted Gino Cassaniti by implementing the Scheme "arrangement" and participating in "their respective transactions").
12. It is contended that the mere fact that Ivana Cassaniti was indirectly a shareholder in Banq and a director of Discobell could not suffice for an inference that Ivana Cassaniti knew that Discobell was knowingly participating in dishonest and fraudulent conduct (noting that there is no allegation that Ivana Cassaniti made the transfer herself on behalf of Discobell and that the evidence shows that it was Peter Abboud who made the transfer - see Ex 24); and that there is no pleading (nor evidence) of any specific conduct on the part of Ivana Cassaniti in relation to any of the Discobell transactions.
13. Ivana Cassaniti further says that the claim pleaded against her requires not only that all of the transactions, with the various and unrelated Scheme Participants, be part of one overarching scheme (rather than a series of transactions between each Scheme Participant and Bluemine) but that anyone said to be an accessory of the Scheme was aware of the entire Scheme. It is said that in order for Ivana Cassaniti (as a Scheme Participant) to be a participant in the breach by Gino Cassaniti of his duty as a trustee, it would be necessary for her to have knowledge of the facts which are said to give rise to the alleged constructive trust over Bluemine.
14. Insofar as the case against Ivana Cassaniti is put on the basis that she assisted Gino Cassaniti by implementing the Scheme and participating in "their respective transactions", Ivana Cassaniti emphasises that there is no evidence of anyone ever making a Scheme Recommendation to her and that she herself did not participate in any transaction (not even indirectly through conducting the transfer on behalf of Discobell). It is noted that the case is not put by the plaintiffs that Ivana Cassaniti knowingly assisted Discobell in its knowing assistance in the breach by Gino Cassaniti; rather, the case is put on the basis that Ivana Cassaniti is liable as a Scheme Participant on the same basis as any of the other Scheme Participants (including Discobell).
15. It is noted that Ivana Cassaniti herself was not a Paying Participant, nor a Receiving Participant, nor did she herself enter into any transaction with Bluemine (or, it is said, at all); nor is there any evidence that she allowed Fred Khalil or Peter Abboud to file false tax returns for any Scheme Participant (indeed, it is noted that her evidence is that Discobell never filed a tax return as it was a trustee); and that there is no pleading of any specific conduct on the part of Ivana Cassaniti in any of the Discobell transactions.
16. For Ivana Cassaniti, it is said that the plaintiffs' case is predicated on the assumption that Gino Cassaniti shared with her the details of an alleged fraudulent and dishonest scheme. It is submitted, to the contrary, that there is every reason to believe that Gino Cassaniti would not do so, particularly where Ivana Cassaniti was a shareholder and director in Givana, and a director of Discobell and Givana Prestige; and he was not. It is said that there is no evidence that Gino Cassaniti did so; and that Ivana Cassaniti's evidence is that he did not. It is submitted that, if Ivana Cassaniti were aware of a fraudulent scheme, one would not have expected her to be a director of companies that were used in such a scheme (which seems to me a moot point - it begs the question whether she would have been prepared to join in such an endeavour if it were suggested to her by her husband and I cannot possibly determine that on the evidence before me; that said, nor would I accept that merely because they were married Gino Cassaniti's knowledge of any such scheme would have been conveyed to Ivana Cassaniti; therefore, to the extent that the plaintiffs' case is predicated on such an assumption I would not make such an assumption).
17. Ivana Cassaniti says that the evidence in contemporaneous documents concerning the opening by Gino Cassaniti of a bank account to which Ivana Cassaniti was a signatory and the conduct of transactions on those accounts by Gino Cassaniti (even though he was not a signatory) points strongly to Ivana Cassaniti being kept "in the dark". That submission, again, seems to me to be little more than speculation.
18. Insofar as the plaintiffs argue that Scheme Participants should have known that the transactions themselves were dishonest (and therefore should have known about the Scheme) by reference to the coincidences of volume, size and benefits of those transactions to the Scheme Participants predicated on false invoices (and that the transactions could not have occurred without their knowledge and approval), such that it was inherently implausible for the Scheme Participants not to have either known, closed their eyes to or maintained reckless indifference to the veracity of transactions in which they paid money for nothing in return or received money without providing anything in return, Ivana Cassaniti points out that, in relation to Discobell, there was only one transaction, and, in respect of Givana Prestige, not only were the transactions confined to a limited period (between December 2011 and January 2012) but the transactions themselves were varied in size, volume and beneficiaries such that it is said that (contrary to the plaintiffs' submissions) nothing could reasonably have been inferred from knowledge of the transactions alone.
19. It is noted that, in relation to the Diamondwish Proceeding, specific reference was made in the plaintiffs' opening submissions to Ivana Cassaniti's directorship of Givana Prestige; and that there is no allegation of specific conduct on her part or evidence that she was aware of the Scheme. It is noted that Ivana Cassaniti was not said to have been involved in providing advice to Frank Criniti or his entities, or undertaking transactions on behalf of Frank Criniti or his entities, or participating in any way in the operation or management of Diamondwish, Rackforce or Frank Criniti's businesses. Ivana Cassaniti suggests (though this is again speculation and a serious allegation to make) that she was joined in these Proceedings to give the plaintiffs leverage over Gino Cassaniti rather than because there was a proper case against her.
20. In summary, Ivana Cassaniti says that the inferences sought by the plaintiffs to establish their case against her are not available on the evidence.
21. First, in relation to the knowledge requirement, it is said that there is no direct evidence that Ivana Cassaniti knew: of the Scheme Recommendations; of any of the facts said to give rise to a breach of any duty by the relevant director; nor, is there any inferential evidence that she had such knowledge.
22. It is noted (and significant in my opinion) that there was no evidence of Ivana Cassaniti having any relevant communications with Frank Criniti (a director in whose breaches she is said to have participated - beyond an email exchange asking for the Givana Prestige logo, see Ex 16). It is further noted that there was no evidence of Ivana Cassaniti interacting with Gino Cassaniti beyond being copied into emails in relation to the operation of Givana Prestige's bank account after the decision to transfer the company to Frank Criniti had been made; and there was no evidence of Ivana Cassaniti communicating with Peter Abboud or Fred Khalil about the operation of any Scheme or any of the transactions.
23. Rather, it is said that the case against Ivana Cassaniti appears to have been put on the basis that, simply because she was a director (or even the sole director) of a company through which funds were moved, and a signatory on the company's account, that was sufficient to give rise to an inference that she had knowledge of a dishonest and fraudulent scheme (and that the director of the conduit company was breaching his duties in a dishonest and fraudulent matter).
24. As to transfers coming into and payments going out of Discobell and Givana Prestige, it is said that there is no evidence that Ivana Cassaniti was aware of these because: in respect of Discobell, there was only one transaction, which the evidence under subpoena from the NAB shows was made by Peter Abboud, not Ivana Cassaniti; and, in respect of Givana Prestige, only limited transactions to a variety of beneficiaries over a short period of time (and as such, no pattern of circulating funds that would have made it obvious to an honest person that the transactions were for a dishonest purpose).
25. It is said that there was a plausible explanation for the activities in the Givana Prestige bank account that was corroborated by Frank Criniti; and that no honest person, noting the source of the funds into the Givana Prestige and the identity of the various beneficiaries from its bank account, would have had any reason to suspect that Givana Prestige was a vehicle for any tax scam. It is said that the possibility of any such inference disappeared once Ivana Cassaniti gave evidence.
26. Responding to particular submissions made by the plaintiffs in their written closing submissions dated 28 April 2020, Ivana Cassaniti says the following.
27. First, as to the submission that the corrections made in her 3 March 2020 affidavit are "disingenuous recent inventions" (see at [1336] of their submissions), Ivana Cassaniti says that her correction of her earlier evidence (to reflect that she held her interest in Givana jointly with her husband, Gino Cassaniti, and that it was in fact Gino Cassaniti who had agreed with Peter Abboud and Fred Khalil to form Banq) was not only not self-serving (because the effect of her evidence was to undermine what was exculpatory evidence for her husband, Gino Cassaniti, that distanced him from Banq and the Scheme alleged; and that the cost, for her, of so doing so was to open up the present attack on her credit); but that it had the obvious ring of truth. Ivana Cassaniti contends for a finding that the only involvement she had in Banq was as the legal owner of shares beneficially owned jointly by her husband and herself in Givana. Further, Ivana Cassaniti says that the inference of knowledge about the Scheme sought to be drawn from her interest, through Givana, in Banq (see plaintiffs' submissions at [1377]; [1381(e)]; [1386]; [1394(ii)]) should not be drawn, not least because equity ownership of an accounting firm does not give rise to a logical basis for inferring any knowledge of the transactions advised upon by that accounting firm in the context of any of its varied clients.
28. Second, as to her role at Banq, Ivana Cassaniti says that the receipt of a wage during the period from April 2010 until 2015 (see [1344] of the plaintiffs' submissions) is not a proper basis for rejecting her evidence that she was not involved in any accounting business in that period (particularly, it is said, having regard to her status as the wife of Gino Cassaniti, who, on the plaintiffs' case, is the Banq "rainmaker"; and her status as the legal shareholder in Banq).
29. Insofar as the plaintiffs invoke the evidence of Peter Abboud and Fred Khalil to impeach her evidence (see at [1344]; [1347]-[1349] of their submissions), Ivana Cassaniti says that their evidence should not be accepted when its effect is to "point the finger" at someone else for the manner in which the affairs of Banq were conducted but that, even if accepted, their evidence is to the effect that Ivana Cassaniti only performed administrative tasks. It is noted that neither gave evidence of Ivana Cassaniti instructing him to perform any specific bank transaction which was the subject of these proceedings. It is also said that, to the extent that the plaintiffs attempt to invoke the evidence of Peter Abboud as being specific to transactions pleaded in this case (see at [1349] of their submissions), that must fail since the generality of Peter Abboud's evidence (said to be self-serving) (that he does not have any specific recollection of any of the transactions but that if he did make the transfer "it would have been at the instructions or request of Gino, Fred or Ivana") does not rise to the level of proof required to constitute evidence that Peter Abboud was given an instruction by Ivana Cassaniti specifically to effect any specific transaction.
30. Ivana Cassaniti says that the attempt by the plaintiffs (through Gino Cassaniti's affidavit evidence) to impeach her evidence that she never performed the services of an accountant but only those of a bookkeeper, including limited bank reconciliations must also fail (see at [1343] of the plaintiffs' submissions). It is said that there is every reason to be sceptical of evidence from Gino Cassaniti that his involvement in Banq was only through his wife; and that she played the role ascribed to him by others.
31. Similarly, it is said that the plaintiffs' attempt, in a broad-brush manner, to fix Ivana Cassaniti with knowledge of the relevant transactions conducted through the various bank accounts of Banq (see at [1344] of their submissions) must fail. It is said that the role that Ivana Cassaniti had played (before taking time off to raise her children) in managing the firm's debtors and reconciling trusts accounts, would not give her any understanding of the reasons why moneys were being paid into Banq by various entities; nor would her role as a signatory on the various Banq accounts. Further, it is submitted that the sheer number of transactions conducted through the various Banq accounts precludes attributing any understanding or knowledge as to the circumstances concerning those payments in and out of the accounts to any person on the basis that the person was one of four signatories on those accounts (and ignoring those or others that had internet banking access). It is said that the contention is untenable when considered from the perspective of Ivana Cassaniti's limited role as an administration manager (before her absence once her children were born).
32. As to Table F, it is said that this is not accurate as it shows Ivana Cassaniti as the signatory on the NAB account ending #6939 (the Banq Business Maximiser Account) whereas the Account Authority Card (Ex 14) does not record Ivana Cassaniti as a signatory and Ivana Cassaniti gave evidence that she had no recollection of signing any authority card (see T 1185-1187).
33. As to the plaintiffs' submission (at [1350]-[1351]), to which I have referred above, that Ivana Cassaniti chose not to challenge the evidence of Gino Cassaniti, Fred Khalil and Peter Abboud, Ivana Cassaniti points to the sequence of events which led to the affidavit of those witnesses being read only as assertions (which I have referred to already) and says, in any event that there was not a need to challenge that evidence having regard to its "loose nature".
34. Third, as to the payments in and out of Givana Prestige, it is accepted by Ivana Cassaniti (as noted earlier) that, in light of the emails at Ex 15, there is no question that Ivana Cassaniti had some involvement in giving instructions to NAB to transfer certain sums of money out of Givana Prestige's bank account in December 2011 and possibly January 2012. However, it is submitted that there is a significant issue as to whether her involvement in giving those instructions constitutes sufficient assistance to the fiduciary's breach to found a liability on the second limb of Barnes v Addy and that there is a significant issue as to whether that assistance was with the requisite knowledge that the plaintiffs attribute to her (and as considered already, it is said that it should not be concluded that Ivana Cassaniti's evidence in relation to the bank accounts was deliberately false).
35. For Ivana Cassaniti, it is submitted that it should be concluded that Givana Prestige was a dormant company established by Gino Cassaniti that Gino Cassaniti "gifted" to Frank Criniti as a corporate vehicle to use in his business of dealing in luxury cars; and that, as a matter of common sense, Gino Cassaniti caused the company to open a bank account with his wife as the signatory because at that time the ASIC directorship of the company still rested with her (and the changes to replace her as the director were only effected in January 2012). It is submitted that it should be concluded that it is likely that Ivana Cassaniti was given instructions to transfer moneys from that account at the behest of Frank Criniti or Gino Cassaniti or somebody else; and that Ivana Cassaniti did not regard herself, as a shareholder in Givana Prestige, as having any financial interest in the moneys that came into the account opened by her husband or where the money went from that account.
36. Conversely, it is submitted that it would not be concluded (as the plaintiffs argue at [1368]) that Ivana Cassaniti "without doubt, knew the source of the funds paid in, including Rackforce" or that she "would not have instructed those payments out of Givana Prestige in the absence of knowledge of the payments being made into Givana Prestige". It is said that there is simply no evidence of Ivana Cassaniti having any involvement with Frank Criniti and his business (cf the considerable evidence of his involvement with Gino Cassaniti and Peter Abboud concerning the Criniti business).
37. Fourth, as to the payments in and out Discobell, Ivana Cassaniti emphasises that (in contrast to the Givana Prestige transactions), there is no evidence at all that Ivana Cassaniti was involved in making the transfer out of Discobell. It is said that Ex 24 makes it clear that the relevant transfer was done by Peter Abboud.
38. Ivana Cassaniti says in this regard that: it does not follow from the fact that she was the sole shareholder of Discobell and held a 60% interest in Banq (see plaintiffs' submissions at [1377]) that she instructed Peter Abboud to make the transfer; that (cf [1380]) there is no evidence that she had any knowledge of the money coming in or going out of the Discobell account; and that the submission (at [1381], that she did not fulfil her evidentiary onus, is an inversion of that onus. Ivana Cassaniti says that the only evidence before the Court is that the transaction was made by Peter Abboud and that, if the plaintiffs wish to challenge that evidence, the evidentiary onus is on them to do so. Further, it is said that the onus always remains on the plaintiffs to prove that Ivana Cassaniti caused the transfer to be made as an element of the assistance they allege to support the alleged Barnes v Addy liability.
39. It is said that the plaintiffs' resort to concessions that Ivana Cassaniti might have instructed Peter Abboud and Fred Khalil from time to time to make transfers (particularly given her intended meaning of the word "instruct" as "ask" - see at T 1203-1204) cannot rise to a basis for finding that, in this instance, Peter Abboud made this transaction on the instruction of Ivana Cassaniti. Nor, it is said, does resort to Ivana Cassaniti's interest in Banq assist the plaintiffs to make out their case (cf [1381(e)]). It is said that the proposition that it was not "commercially conceivable that she would not have known of a payment of that significant amount and its origin - Discobell - of which she was the sole director and shareholder" does not sit well with the plaintiffs' case that these various entities were used as conduits for a Scheme where none of the funds were beneficially held by companies like Discobell; nor, it is said, is there any attempt to explain why Peter Abboud and Fred Khalil were needed as signatories on the account of Discobell if this was indeed Ivana Cassaniti's company.
40. It is submitted that the challenge to Ivana Cassaniti's credit (at [1378]) is unfounded. It is said that Ivana Cassaniti gave evidence that the only Discobell account she knew of, regardless of whether she was a signatory or not at the request of Gino Cassaniti, was the one to which she had internet access and this account was not that account (see her 3 March 2020 affidavit at [14]). Thus, Ivana Cassaniti says that the case against her in respect of Discobell is plainly misconceived.
41. Fifth, as to the payments by Banq to RGC CBD for purported labour hire services, Ivana Cassaniti says that the plaintiffs' submissions made against her (at [1382] and [1385]) do not relate to any pleaded case against her (and, to the extent that the plaintiffs seek to widen the case against her, this is objected to and should not be allowed). It is said that it is not obvious that it was known to Ivana Cassaniti that no labour services were provided to Banq nor was it absurd that she had no idea of what the profit of Banq was (at a time when she maintains that she was not involved in the business). Ivana Cassaniti further contests any proposition that the conduct element of an accessory case could be made out simply by her being a signatory of a bank account.
42. Sixth, as to the directorship of Givana Prestige, and the submission by the plaintiffs that Ivana Cassaniti's evidence (that "from sometime in late 2011, I have not had anything to do with Givana Prestige") was false (see at [1387]) on the basis that on 7 February 2012 Ivana Cassaniti signed a declaration for a renewal of the motor dealer's licence as a director of Givana Prestige, Ivana Cassaniti says that it cannot be concluded that she in fact signed that declaration (in light of her oral evidence on that issue) but that, even if she had signed the document, and even in light of the emails between her and the NAB, her evidence should still be accepted (i.e., that, from late 2011, she had nothing to do with Givana Prestige - if she ever did, beyond being a director at the instance of Gino Cassaniti of what she understood to be a dormant company) because her evidence is entirely consistent with the evidence of Frank Criniti (referred to in the plaintiffs' submissions at [1006]-[1007]).
43. It is said that even if Ivana Cassaniti had signed the renewal declaration (contrary to her evidence that she did not believe that it was her signature on the document) that would not suggest that she played any role in the affairs of Givana Prestige after December 2011, at least in the relevant sense of guiding Givana Prestige as a Scheme Participant. It is submitted that, if she had played such a role, there would be some indication in the evidence of Frank Criniti, at least, of her involvement in the affairs of Givana Prestige and there is none.
44. It is said that the only connection Ivana Cassaniti had with Givana Prestige was as a director before Frank Criniti's nominee was appointed (and, it may be inferred, in assisting Gino Cassaniti or Frank Criniti with making transfers to accounts in the Ex 15 emails). It is said that those administrative tasks do not elevate Ivana Cassaniti's role to "acting, in business transactions and banking, as the director of Givana Prestige at least up until 9 February 2012" (cf the plaintiffs' submissions at [1392]).
45. Finally, as to the question of Ivana Cassaniti's knowledge of the Scheme, complaint is made that: apart from making a bald assertion that Ivana Cassaniti was the "directing mind and will of Givana Prestige and Discobell", there is no attempt by the plaintiffs to establish a case of her knowledge in respect of the Discobell transaction (or how that transaction amounted to assistance in the breach of any fiduciary duty); and that, in respect to Givana Prestige, the plaintiffs' case is put on the basis of inferences said to be drawn from an alleged failure to explain matters (as to which see below).
46. Ivana Cassaniti says that none of the plaintiffs' submissions (at [1393]) is supported by reference to evidence; that there is no attempt to show how it can be said that Ivana Cassaniti had "full knowledge of the relevant transactions" or how "she knew that there was no genuine commercial reason for them" or that she knew that "there were no genuine commercial documents evidencing them" (and that those submissions should be rejected).
47. As to the submission by the plaintiffs that Ivana Cassaniti was "directly involved in the Givana Prestige transactions" and that "she has refused to reveal to the court an explanation for them" ([1394]) (such that it should be inferred that Ivana Cassaniti knew various matters), Ivana Cassaniti says that neither of the premises for that submission is made good. As to the first premise, it is said that the only involvement that Ivana Cassaniti is shown on the evidence to have had with the impugned transactions concerning Givana Prestige is the administrative role of sending the emails at Ex 15. As to the second premise, it is said that Ivana Cassaniti has not refused to do anything - rather, she has given evidence that she was not even aware of the bank account and did not authorise any transactions on any bank account; and that, when shown the emails in Ex 15, she now accepts that she must have made those transfers but has no recollection as to why she made those transactions other than it was because someone asked her to do so (T 1201.20-22). It is said that there is no evidence to suggest that Ivana Cassaniti would have any idea why those transactions were required to be done; and that it should be accepted that, eight years after the event, Ivana Cassaniti has no recollection of these transactions. Accordingly, it is said that it cannot be submitted that she has refused to explain anything about these transactions.
48. Ivana Cassaniti submits that in those circumstances, it cannot be inferred that Ivana Cassaniti knew that she was involved in a form of money laundering (cf plaintiffs' submissions at [1394(ii)]); nor that she knew that the reciprocal participants to these transactions were also involved in a form of money laundering (cf plaintiffs' submissions at [1394(iii)]); nor could such knowledge be ascribed to her on the basis contended by the plaintiffs that she was "the directing mind and will of Givana Prestige" (cf the plaintiffs' submissions at [1394(iv)]).
49. It is said that, the plaintiffs' submission (at [1395]) (that the true explanation of the transactions was peculiarly within the knowledge of Ivana Cassaniti), is destructive of the plaintiffs' claim against the other defendants in the case; that the submission at [1396] (that it is to be inferred that Ivana Cassaniti knew it was not honest for Givana Prestige and Discobell to engage in the transactions, and that she knew the directors of Bluemine, Diamondwish and Rackforce were in breach of their duties and not acting honestly), is precisely the type of inference that would not drawn without compelling reason to do so and none is offered; and that the submission at [1397] (that Ivana Cassaniti had the various categories of Baden Delvaux knowledge of the breaches of duty by the directors of Bluemine, Diamondwish and Rackforce), serves no more than to rehearse the matters pleaded against Ivana Cassaniti and offers no reason why those findings should be made.
50. As to the submission impeaching Ivana Cassaniti's credit at [1398] (dealt with above), it is said that impeaching Ivana Cassaniti's evidence does not detract from the fact that, even without her evidence, the plaintiffs never adduced evidence to make out a case against her. The submissions at [1399] - [1400] (that Ivana Cassaniti was a very active participant in the transactions of Discobell and Givana Prestige and that she embarked on "a course of denials, absence of recall, dissembling and lies") are said to be without substance.

Plaintiffs' reply submissions re Ivana Cassaniti

1. The plaintiffs say that the case against Ivana Cassaniti for accessorial liability on the basis of a second limb Barnes v Addy claim is sufficiently established on the whole of the evidence (referring to the principles applied in Hasler v Singtel Optus (at [129]-[130]) and that the plaintiffs are not required to establish: "how" Ivana Cassaniti acquired any knowledge; "how" (specifically) participants became part of the Scheme; that Ivana Cassaniti was "knowingly involved in Discobell's knowing involvement"; or that all the participants were involved in all of the transactions (which, the plaintiffs say, was never part of the case pleaded, opened and conducted by them). The plaintiffs' position is that, if there is evidence sufficient to establish the second limb Barnes v Addy case as discussed by McDougall J and Leeming JA in the Hasler v Singtel Optus proceedings, it does not matter if other pleaded facts are not proved.
2. Regarding Givana Prestige and Discobell, the plaintiffs say that Ivana Cassaniti's activities show that she assisted in, or facilitated, or furthered, those breaches. It is noted that Frank Criniti and his companies had been clients of Banq since 2010 and that Ivana Cassaniti was involved in Discobell's investment in a Criniti company (her affidavit sworn 11 April 2019 at [21]). The plaintiffs say that, contrary to Ivana Cassaniti's denials, it was established in cross-examination that she was comprehensively involved in Givana Prestige transactions of four substantial payments to Auswide (noting that Frank Criniti was the director of Auswide) and that Ivana Cassaniti says that she "gave" Givana Prestige to Frank Criniti.
3. Emphasis is placed on the absence of genuine commercial documentation, or any documentation, evidencing the transactions or any aspect of them (except banking records) as indicative that something untoward was occurring, which it is said necessarily involved Ivana Cassaniti on that basis and that the transactions were not genuine business transactions. It is said that the transactions did not occur in a vacuum, without reason or purpose; and it is asserted that Ivana Cassaniti knew the purpose in each case and that she also knew that no purpose was for a genuine business transaction of the payer, payee, Givana Prestige, Discobell, Bluemine, Diamondwish, Rackforce, respectively. Further, it is said that Ivana Cassaniti knew that the purposes of the transactions were for the personal interests of the directors and others for each of the companies, over the interests of the particular company itself.
4. The plaintiffs say that Ivana Cassaniti had Givana Prestige and Discobell enter into the transactions with Bluemine, Diamondwish and Rackforce, respectively, "for her own benefit and purposes which she refused to reveal". It is submitted that, whatever those benefits and purposes were: they were not genuine business benefits and purposes of the Insolvent Companies, to her knowledge; and that from her perspective, they needed to be concealed from all scrutiny (including the ultimate scrutiny by this Court in these Proceedings).
5. It is also said that, for Givana and Discobell, Ivana Cassaniti knew (as she had to know) there were sufficient funds in the accounts to make the payments out, and thus, she knew (as she had to know on any sensible basis) the source of funds coming in to Givana Prestige and Discobell.
6. The plaintiffs say that those matters demonstrate that Ivana Cassaniti assisted in, facilitated and furthered the breaches. It is said that Ivana Cassaniti had knowledge of those breaches within the Baden Delvaux categories.
7. Pausing here, the difficulty I have with those submissions is that the lack of documentation (for example) does not establish knowledge of a transaction per se (such as the Discobell transaction that it appears was authorised by Peter Abboud); nor does it necessarily establish knowledge of the alleged purpose underlying the Givana Prestige transactions (particularly since the control of Givana Prestige was around that time agreed to be transferred to Frank Criniti and it is not implausible that Ivana Cassaniti was simply signing documents such as the renewal dealer's licence at Gino Cassaniti's direction or request until such time as Frank Criniti or his nominee director was formally appointed).
8. The plaintiffs say (and I see some force in this) that the submissions made by reference to Ivana Cassaniti being a stay at home mother and the like (including that she was a nominee for her husband) are demeaning and embarrassing. It is submitted that Ivana Cassaniti demonstrated in the witness box that she was independent and entirely in charge of her own business interests. (I accept that Ivana Cassaniti appeared competent and articulate in the witness box and that she ultimately took an independent role in the Proceedings from that of her husband. I would not, however, accept that her evidence demonstrated that she was "entirely in charge of her own business interests" - the evidence as to the transfer of control of Givana Prestige seems to be a clear illustration to the contrary, in that Ivana Cassaniti appears simply to have acceded to Gino Cassaniti's requests in relation to that company.)
9. The plaintiffs say that the submissions as to Ivana Cassaniti's lack of involvement in the business of Banq are contrary to the evidence, pointing to Fred Khalil's evidence in his affidavit sworn 25 March 2019 (at [26]) that Ivana "oversaw all bank account transactions" and that she also "managed and reconciled" Banq's trust accounts and (at [27]) that "Gino and Ivana would check the bank account transactions on a regular basis and spot check transactions". I accept that there is contrary evidence as to Ivana Cassaniti's role - and I accept that there is a self-serving element to the evidence of defendants such as Fred Khalil (who do indeed appear to be seeking to place blame on others). However, I consider that there is a relevant distinction between the role of reconciliation or oversight of bank account transactions and the role of providing specialist tax or accounting advice and I do not accept that knowledge gleaned through the former role necessarily parlays into knowledge of the latter.
10. The plaintiffs say (and I accept) that Ivana Cassaniti had the opportunity to deal with the case that the plaintiffs put against her (albeit that I note that she makes complaint as to confusion as to aspects of the pleaded case - for example, as to how it is said that a constructive trust arose over Bluemine of which she should be found to be aware). The plaintiffs reiterate their contention that Ivana Cassaniti's evidence that she had no involvement in, and knew nothing about, any of the relevant transaction is false; and that there is evidence that reveals her independent involvement in significant business transactions. It is further noted by the plaintiffs that Ivana Cassaniti never once gave evidence of her actions occurring as a result of pressure from, or influence of, or loyalty to, Gino Cassaniti.
11. The plaintiffs take issue with the submissions put for Ivana Cassaniti as to the basis on which the s 136 limitations were placed on the evidence of certain of the defendants. They say, among other things, that it is incorrect for Ivana Cassaniti to suggest that they attempted to dissuade Ivana Cassaniti from getting in the witness box or that "the price" for her so doing would be that the plaintiffs would require Gino Cassaniti, Peter Abboud and Fred Khalil for cross-examination; or that the ultimate basis on which the s 136 limitations were agreed required Ivana Cassaniti to agree that she did not require those defendants for cross-examination (see at [141] of Ivana Cassaniti's submissions).
12. I do not propose here to revisit what occurred in relation to this issue (see for example the transcript from T 1101ff). Suffice it to say that the plaintiffs' position is that once the s 136 limitations were made (on the basis on which that regime was agreed), there was nothing in the affidavit evidence of Peter Abboud, Fred Khalil and Gino Cassaniti for the plaintiffs to contradict and it was therefore not necessary for the plaintiffs to require them for cross-examination but that none of this deflects or detracts from the fact that Ivana Cassaniti did not herself seek to cross-examine Peter Abboud, Fred Khalil or Gino Cassaniti. It is said that their sworn evidence stands against her, unanswered by her; and that that was her forensic choice. The plaintiffs reject the proposition that they were somehow approbating and reprobating in this regard.
13. In respect of specific matters arising from Ivana Cassaniti's submissions, the plaintiffs say the following.
14. As to the submission by Ivana Cassaniti at [8], it is said that there is no evidence that Ivana Cassaniti served as Gino Cassaniti's nominee for his business interest, including shareholders; rather, that the only evidence as to Ivana Cassaniti's 60% ownership of Banq, is comprised of the contradictory affidavits provided by Ivana Cassaniti (see plaintiffs' closing submissions at [1349]).
15. As to the submission by Ivana Cassaniti at [10], the plaintiffs say that nowhere in the plaintiffs' case or submissions has it been contended that Ivana Cassaniti was the controlling mind of Banq. Further, the plaintiffs say that Ivana Cassaniti did not play the role of a "front" for anybody. The plaintiffs say that the submissions for Ivana Cassaniti overlook the pleading that, for both Givana Prestige and Discobell, she was their directing will and mind and was at all material times acting in that capacity. The plaintiffs maintain that the state of mind, knowledge and actions of those companies (at the relevant times) were that of Ivana Cassaniti.
16. As to Ivana Cassaniti's submission at [13], the plaintiffs maintain that Ivana Cassaniti was aware of the case against her and of the evidence as set out in Peter Abboud and Fred Khalil's affidavits; and that her Counsel was fully aware of the s 136 regime under which those affidavits were admitted (T 1101-1105). The plaintiffs reiterate that in those circumstances Ivana Cassaniti cannot now complain that neither Peter Abboud nor Fred Khalil had the confidence to be cross-examined on those statements, when her own Counsel had the opportunity of requiring Fred Khalil and Peter Abboud for cross-examination but did not do so.
17. As to Ivana Cassaniti's submission at [30], it is said that the tenor of their cross-examination of Ivana Cassaniti was that, by reason of her 60% ownership of Banq, she had a financial interest in knowing what Banq was doing. It is said that the cross-examination was directed to the fact that through her awareness of Banq's business and oversight of the bank accounts she had knowledge about the workings of Banq (including more than one hundred companies that had been wound up) to fall within the four Baden Delvaux categories. The plaintiffs maintain that it is incorrect to say that Ivana Cassaniti's only connection, in the Bluemine Proceeding, with the Scheme was her directorship of Discobell and the Discobell transactions pleaded at [212] (reiterating the factors relied on by them in their closing submissions at [1375]-[1382] in this regard).
18. As to Ivana Cassaniti's submission at [35], the plaintiffs refer to the whole of the particulars in support of the allegation at [213]. As to Ivana Cassaniti's submission at [39], the plaintiffs say that their closing submissions at [1375]-[1382] deal with considerably more indicia of knowledge than simply Ivana Cassaniti's shareholding in Banq and directorship of Discobell, including, for example, her interest in Discobell and Peter Abboud's evidence that he received instructions from her.
19. As to Ivana Cassaniti's submission at [58] (to the effect that, if the plaintiffs' case is accepted, it is difficult to see how any of Gino Cassaniti's conduct lacked due care and diligence unless it is suggested that the Scheme could have been conducted in such a way as to not to have given rise to any tax avoidance penalties, or, perhaps, by not allowing the Scheme to be detected), the plaintiffs point to what they say is the overwhelming evidence against Gino Cassaniti in these Proceedings of his serious fraudulent conduct. It is submitted that Ivana Cassaniti's submission overlooks the high duty of care that Gino Cassaniti owed to Bluemine. It is said that Gino Cassaniti's duties as director and fiduciary of the company required him to act to a stringent standard, in a completely selfless manner and with the utmost duty of loyalty (in the words of the Full Court of the Supreme Court of South Australia in Duke Group Ltd (in liq) v Pilmer (1999) 73 SASR 64; [1999] SASC 97 at [832] there adopting a statement from Hodgkinson v Simms (1994) 117 DLR (4th) 161 at 214); and that Gino Cassaniti failed to do so by his egregious conduct. The plaintiffs maintain that it cannot seriously be suggested that Gino Cassaniti nevertheless performed his duties with due care and diligence.

Findings - Ivana Cassaniti

1. I am not persuaded that Ivana Cassaniti was on notice in the requisite sense of the facts comprising the Scheme (and hence of the alleged dishonest and fraudulent design on the part of Gino Cassaniti and others at Banq). I considered that she was an honest witness genuinely attempting to give her best recollection of events - and that her concession as to the Ex 15 emails, after those were drawn to her attention in cross-examination, illustrated that.
2. On balance, I consider that it is likely that Ivana Cassaniti did continue to some extent to be involved in the affairs of Banq after 2010 when her children were born (not least because she continued to be a signatory to accounts and she continued to sign documents and send emails or the like) but I am prepared to accept that much of this she may have done from home. As noted above, I find that Ivana Cassaniti's wage more likely reflected her shareholding in the business of Banq rather than her involvement in the firm.
3. As to the claim against Ivana Cassaniti in the Bluemine Proceeding specifically, I am not persuaded that the transfer of $155,000 from Discobell to Bluemine was made by Ivana Cassaniti by arrangement with Bluemine's director, Gino Cassaniti, as the plaintiffs have submitted. There is evidence showing that the particular payment was made by Peter Abboud and, I do not find that it has been established on the balance of probabilities that Peter Abboud acted on Ivana Cassaniti's instruction. While I note the plaintiffs submission that Ivana Cassaniti, as director of Discobell, had an obligation to be aware of its activities, this is not a claim for breach of her duty to that company, and I cannot be satisfied on the evidence that she did know of these transactions. Moreover, even setting aside the Discobell transaction, given that it is not established that Ivana Cassaniti was on notice of the facts that of the Scheme, I do not find that Ivana Cassaniti was on notice of Gino Cassaniti's dishonest and fraudulent design with regards to Bluemine.
4. As to the claims made against Ivana Cassaniti in the Rackforce and Diamondwish Proceedings, I am not satisfied on the evidence that Ivana Cassaniti had any of the relevant categories of Baden Delvaux knowledge of Frank Criniti's dishonest and fraudulent design in regard to either company. Ivana Cassaniti's lack of knowledge of the Scheme, combined with the minimal evidence of her interactions with Frank Criniti (handing over Givana Prestige (although at Gino Cassaniti's direction); emailing the logo for Givana Prestige; investing in a Criniti business; Frank Criniti seeing her in the office "from time to time" "with the girls") and her lack of knowledge of the impugned transactions do not provide a basis from which to conclude otherwise. There is simply not enough before me to conclude that Ivana Cassaniti was on notice of the circumstances that would indicate Frank Criniti's design to an honest and reasonable person.
5. Thus, I find that the claims against Ivana Cassaniti are not made good.

Discobell closing submissions in defence

1. Discobell (which was jointly represented by others of the Cassaniti parties at the commencement of the hearing) filed (admirably brief) written closing submissions, noting that the plaintiffs' closing submissions solely addressed the liability of Ivana Cassaniti (see at [1429]-[1438]), and submitted that the plaintiffs erroneously treated Discobell and Ivana Cassaniti as the one entity (referring to the plaintiffs' closing submissions at [1438]).
2. Discobell submits that, in order to visit liability upon Discobell, the plaintiffs must impute to Discobell both the acts and knowledge of Ivana Cassaniti because the allegation is one of involvement in a breach of fiduciary duty, with knowledge of each essential element of the breach. It is said that one essential element of the breach is that Ivana Cassaniti knew that the alleged errant fiduciary owed a fiduciary duty to Bluemine; and another is that the errant fiduciary was actually breaching the duty.
3. It is noted that in order to impute the acts of a director (Ivana Cassaniti) to the company (Discobell) the act must have been undertaken by the agent as the agent of the company and within the scope of the agent's authority (citing von Doussa J in Beach Petroleum at [22.34]) and that knowledge will not be imputed where the director "is acting totally in fraud of the company, that is, where all the director's activities are directed against the interests of the company, and not partly for the benefit of the company". Reference is made to what was said by Barrett J, as his Honour then was, in Tim Barr v Narui Gold Coast at [104] to the effect that a single director company does not automatically possess the knowledge of its sole director (his Honour citing Sargent v ASL Developments Ltd; Turnbull v ASL Developments Ltd (1974) 131 CLR 634; [1974] HCA 40 at 649 for the general principle that, "where information is obtained by an agent within the ambit of his or her authority, the agent comes under a duty to communicate the information to the principal, with the result that it is taken to be imputed to the principal".
4. Discobell says that the acts of Ivana Cassaniti have not been shown to have been undertaken as Discobell's agent; and that the plaintiffs' case is contrary to making a finding that lvana Cassaniti's acts were as agent of Discobell. It is noted that the allegation is that Ivana Cassaniti was knowingly involved in the Scheme Recommendation; and that the Scheme Recommendation involved much more than the Discobell transaction. Accordingly, it is said that Ivana Cassaniti, if she used Discobell's account as a convenient conduit of money, cannot have been acting as agent of Discobell; rather, she would have been acting in her role as a Scheme Participant.
5. It is said that, to the extent that Ivana Cassaniti involved Discobell, in her role as a Scheme Participant, as alleged by the plaintiffs, Discobell would have been a victim of her wrongdoing, as lvana Cassaniti's actions would not have been in the pursuit of any interest or business of Discobell and would have had the potential to visit liability on Discobell, when Discobell gained no honest, or dishonest, gain or advantage from the transaction.
6. As to the question of knowledge, it is said that the plaintiffs do not say how and why Ivana Cassaniti's knowledge is to be imputed to Discobell. Discobell emphasises the distinction between Ivana Cassaniti and Discobell, the latter being a separate legal entity with its own obligations to third parties.
7. Discobell also relies on the joint release defences raised by Ivana Cassaniti in relation to the Bluemine Proceeding (at [204]-[214]).

Findings - Discobell

1. It follows from the finding that I have made in relation to Ivana Cassaniti that the claim against Discobell is not made good.

Plaintiffs' submissions re Borg Parties (RCG CBD and Bluemine)

1. Again, I have referred above to the evidence as to the relationship between the Borg Parties and Banq and as to the advice that Tanya Borg says was given to her and to Michael Borg at the meeting at Banq with Fred Khalil in around 2012; and as to the implementation of that advice.
2. The plaintiffs point out that Tanya Borg in her affidavit is silent as to why Excavation was wound up or the advice Fred Khalil gave her and Michael Borg concerning the need for the name change or the need to liquidate Excavation. (The Borg Parties say, see below, that there was no need for an explanation having regard to the claim as pleaded.)
3. The plaintiffs submit that Tanya Borg and Fred Khalil's implementation of this recommendation included taxation benefits to the Borg Parties and other benefits to the Primary Conspirators. It is said that, from the outset (for, it is said, no genuine commercial reason) RCG CBD was introduced as a third-party participant in these transactions.
4. It is submitted that it was convenient for Tanya Borg wilfully to shut her eyes to the obvious, and to fail to make the enquiries that an honest and reasonable person would make, in circumstances that would indicate the facts to an honest and reasonable person (namely, not to ask Fred Khalil questions as to: why RCG CBD was in these transactions; who was to forward to the ATO the GST payment that Borg Family made within the sums paid to RCG CBD; whether the money had in fact been paid to Borg Civil (Excavation); whether money had been paid from Borg Civil (Excavation) to Borg Family; and whether Michael Borg had been paid). The plaintiffs say that, even if Tanya Borg did have only limited accounting understanding at the time, at the very least she wilfully and recklessly failed to make enquiries of Fred Khalil about these matters; that is, enquiries that an honest and reasonable person would have made. It is submitted that, by failing to do so that was a transgression of the ordinary standards of honest behaviour (to adopt the terminology used in this area - see Emmett AJA in Lewis Securities v Carter at [187]). (Although I interpose to note that the element of dishonest and fraudulent behaviour is what is required of the fiduciary, not the accessory.)
5. As to the implementation by Banq of the accounting systems for the Borg Parties, reference is again made to Tanya Borg's evidence set out above that the backup file for MYOB was sent to Banq and that she understood that Banq made any necessary changes or adjustments (and see her affidavit sworn on 27 February 2020 at [13]). As noted above, the plaintiffs say that the email communication exhibited to her second affidavit reveals that Tanya Borg was personally involved in communicating with Banq concerning the MYOB file of Borg Family.
6. It is said that, notwithstanding her training as an accountant and her involvement in communicating with Banq regarding the MYOB entries, Tanya Borg does not attest in her affidavits as to which entries relevant to these Proceedings were made or altered by Banq; yet her position in cross-examination was that the accounting entries were not made by Borg Family (see, for example, T 1307). The plaintiffs say that that evidence was highly improbable and should not be accepted as the truth.

RCG CBD/Borg Family payments

1. As to the impugned payments between RCG CBD and Borg Family (Table 3.3), the plaintiffs say the following.

Invoices 1, 2 and 3

1. As to invoices referred to as invoices 1, 2 and 3, Tanya Borg agreed (at T 1300.1-10) that the journal to which she was taken (Ex W at 10; T 1299.25) was there recording that in respect of those purchases, GST had been paid and that it was in the GST return (T 1301.43-46); and that the ATO refund of $14,655 to Borg Family included the GST on the three purchases (T 1302.23) (as adjusted in the BAS).

25 September 2012 payment - $185,000 to RCG CBD

1. As to the 25 September 2012 payment by RCG CBD to Borg Family of $185,000 (Ex W at 16), Tanya Borg agreed (at T 1303.26) with the proposition that the money had come in from RCG CBD and was shown in the Borg Family General Ledger for that date as a loan; and the plaintiffs point out that it was also recorded in the Loan Journal (as a loan obligation of Borg Family); and was an element in the Loan Journal total of $1.783 million (Ex W at 17).

28 September 2012 payment - $180,000 to RCG CBD

1. As to the third transaction, the plaintiffs note that this was recorded as a "Loan" in the Borg Family Cheque Account Ledger (Cash Book) (Ex W at 20) and appears in the Loan Journal (Ex W at 21) as an asset (a loan due to Borg Family), though Tanya Borg was not sure that it was a loan from Borg Family to RCG CBD (see T 1304.45-50). The plaintiffs submit that this was not a genuine answer and further note that Tanya Borg's evidence was that she was not aware of "any loan documents between RCG CBD and Borg Family at any time" (T 1305.21).

3 October 2012 payment by RCG CBD to Borg Family $75,000

1. As to the fourth transaction, the RCG CBD bank statement recorded it as a "Loan" (T 1306.12; Ex W at 22). The Borg Family bank statement also recorded it as a "Loan" (Ex W at 23); as did the Borg Family Loan Journal (Ex W at 25). Tanya Borg said that she did not believe it was a loan, that she was not sure what it was and that from what she understood the loan was "to Michael Borg" (T 1306.45-50). The plaintiffs point to Tanya Borg's evidence (at T 1307.5-10) as to her belief that the payments from Borg Family were for the purchase of assets from Excavation and that Michael Borg had directed the payments back (to Borg Family) as repayment of loans which Excavation paid to him because he had bought the assets. Tanya Borg said that: So, I'm not too sure what thing - because, like I said, we didn't do these entries on here. They weren't looked after by us, but from my understanding of how it happened, was just so, for a loan to Michael.
2. It is noted that (at T 1307.23) Tanya Borg appeared to accept that the Borg Family accounting records in relation to the equipment coming in from Excavation to Borg Family recorded no payment from Borg Family to Michael Borg.

8 October 2011 Borg Family payment to RCG CBD $220,000

1. As to the fifth transaction, Tanya Borg said that this was "a payment for assets" and was "to purchase assets from Excavation or Borg Civil, in this case" (T 1307.34-37). It is noted that Tanya Borg did not believe there was any payment from RCG CBD to Excavation or to Michael Borg for these matters (see questions at T 1307.41; T 1307.44; T 1309.20; T 1309.26; and answer at T 1309.36).
2. It is noted that the $220,000 transaction is recorded in the Borg Family Loan Journal as "RCG" and that it appears in the column of loans due to Borg Family (Borg Family Assets) and as such is part of the loan reconciliation total (see Ex W at 29). It is also noted that Tanya Borg understood that this "is recording a loan due to Borg Family" (T 1312.17).
3. Invoice numbers 14, 13 and 35 (1 October 2012) recorded total GST of $20,016.93 (Ex W at 32) and this amount was recorded for those invoices in the GST return (Ex W at 34) and refunded by the ATO (Ex W at 34B). The plaintiffs point out that while, Tanya Borg agreed (at T 1316.14) with the proposition that there had been a refund received for the $20,017, later in her cross-examination (at T 1352.29-1353.11) Tanya Borg cavilled with the question of a refund back to Borg Family. The plaintiffs say that this evidence was disingenuous.

10 October 2012 RCG CBD payment to Borg Family $320,000

1. As to this transaction, the sum of $320,000 was recorded as cash received "CR" in the Borg Family Cash Book (Ex W at 37); and it was recorded as a loan in the Loan Journal (Ex W at 38 "RTGS"); and included in the total of loan obligations due by Borg Family (at 38).

Remittance advices

1. The plaintiffs point to the copy of the Remittance Advices issued by Borg Family (Ex W at 42A, 42B; Tanya Borg's affidavit sworn 4 December 2018 at [66]; Ex K at 36618). The plaintiffs note that the Borg Family documents that have been produced in these Proceedings include no copy of Remittance Advices for invoices 1, 2 and 3. It is said that this is plainly because there was no remittance to Excavation in payment of any of the amounts recorded in invoices 1, 2 and 3.

Recipient-created tax invoices

1. The plaintiffs say that the obvious purpose of an RCTI is that the vendor has not issued a tax invoice; and that, here, that was obviously the case because Borg Family, as purchaser, issued the invoice. Further, it is noted that no Excavation invoices have been produced by Borg Family regarding Borg Family's acquisitions of assets, including invoices for transactions that are unrelated to those which are the subject of the Proceedings against Borg Family resulting from its transactions with RCG CBD.
2. It is said that Borg Family's defence case is premised upon the issue by of RCTIs, yet Tanya Borg would not agree that Excavation did not issue an invoice for these goods (saying, at T 1355.4, "I don't know"). The plaintiffs say that Tanya Borg was not frank in her evidence in response to questions as to whether RCG CBD had issued an invoice to Borg Family for these goods (T 1358.19-49).
3. When asked about her previous answer (at T 1307.5) that the payments to Borg Family and repayments back were "repayments of loans which Excavation owed to [Michael] because he had bought the assets" and whether Excavation could have simply gifted the assets to Michael Borg and Michael Borg could have forgiven the alleged loan owed to him, Tanya Borg said that she "did not know" (at T 1361-1362). The plaintiffs submit that if Tanya Borg was being genuine in her evidence, she could have at least agreed to that as a possibility.
4. The plaintiffs say that Tanya Borg knew that there was no benefit to RCG CBD in these transactions, and that there was no genuine commercial basis for RCG CBD's involvement; and knew that there was no genuine commercial documentation regarding any transactions between RCG CBD and Borg Family. Further, the plaintiffs say that Tanya Borg also knew that no transactions such as these, involving RCG CBD, could be authorised by any person acting on behalf of RCG CBD because there was no genuine commercial basis for the payments to be made by Borg Family to RCG CBD, nor for payments to be made by RCG CBD to Borg Family; and that she knew that it was not possible for a director, acting lawfully, to authorise those transactions to occur, under Fred Khalil's hand or otherwise.
5. The plaintiffs say that RCG CBD was being utilised, by its involvement in these transactions, to enable Borg Family to obtain tax and other benefits; and that this would have been obvious to any honest and reasonable person. The plaintiffs say that it is to be inferred that Tanya Borg knew that. Thus, it is said that Tanya Borg and Borg Family are liable to RCG CBD as accessories.
6. The plaintiffs say that the explanation that Tanya Borg has given for Borg Family having entered into these transactions with RCG CBD (i.e. "to repay monies owed to Michael") is false (see her affidavit sworn 4 December 2018 at [35]). It is said that there is therefore no explanation for what did actually occur, including Borg Family's nil payments to Excavation and no explanation for the payments from RCG CBD (it is said that they were not payments from Excavation, no money was "returned" from Excavation, and no payments were made by Borg Family to Michael Borg).
7. The plaintiffs say that the true explanation for the transactions between RCG CBD and Borg Family was peculiarly within the knowledge of Tanya Borg and that she refused to reveal that to the Court, emphasising in this context what was said by Gleeson J in BCI v Binetter at [123].
8. The plaintiffs maintain that what Tanya Borg here needed to explain (as information peculiarly within her knowledge) was: why the money was not paid to Excavation; why (of funds received from RCG CBD) nothing was paid to Michael Borg; and the true arrangement between RCG CBD and Borg Civil that she made with Fred Khalil (which it is said resulted in payments made by Borg Family to RCG CBD, payments made by RCG CBD to Borg Family, no payments to Excavation, and no payments to Michael Borg). It is submitted that, in the absence of any such explanation, the only conclusion that is open is that (as was put to her in cross-examination at T 1367.3-36) there was never any intention that Borg Family pay anything to Excavation or to Michael Borg.
9. The plaintiffs say that the reasons for the Borg Family/RCG CBD transactions that did occur, as revealed in the evidence, were not those given at [35] of Tanya Borg's affidavit (because what was there deposed did not occur). Rather, it is submitted that the reasons for the payments (as put to Tanya Borg in cross-examination at T 1369.29, then at T 1371.1-1372.32) were that: Borg Family would acquire the assets; Borg Family would create RCTIs purportedly showing purchases and GST liability (i.e. a cost to Borg Family); Borg Family would lodge BAS returns with the ATO showing purported "purchases" and GST paid; absent GST liabilities to the ATO, Borg Family would be "refunded" that purportedly paid GST (which is what occurred); Borg Family would lodge a Depreciation Schedule with the ATO and claim tax benefits for depreciation based on the purported cost (which is what occurred and the tax benefit accrued); as to the $585,000 paid by Borg Family to RCG CBD supposedly for cost of purchase, RCG CBD would pay the equivalent amounts (less $5,000) to Borg Family; Borg Family would acquire the asset for a net cost of $5,000 (although I note in the transcript the net cost was said to have been of $10,000); and there would be no genuine commercial documentation evidencing the Borg Family/RCG CBD transactions.
10. The plaintiffs regard the sinister elements of these transactions as being that: Borg Family would report the transactions as purchases (as in sale and purchase) for GST purposes, at a purported cost to Borg Family, and the ATO would "refund", that is, would pay to Borg Family an amount equivalent to Borg Family's purported GST "cost"; there would be no purchase by Borg Family, as in a sale and purchase; and there would be no net cost to Borg Family to acquire the assets; of the supposed GST element in the Borg Family created invoices, there was no person or entity obliged to forward that GST element on to the ATO (it is noted that, plainly, it was not paid to the ATO by anyone); of the purported GST element (for example) of $16,818.18 within the $185,000 payment from Borg Family to RCG CBD, not only would that not be remitted, the ATO would accept the Borg Family characterisation of the transactions in its BAS returns as purchases for cost and would "refund" to Borg Family $16,818.18 (and that occurred); depreciation benefits (expenses) would be allowed as deductions to Borg Family against its assessable income (and that occurred); and there would be no genuine commercial documents for the transactions (as between Borg Family and RCG CBD; as between Borg Family and Excavation and Michael Borg; as between all of them).
11. It is said that these transactions between Borg Family and RCG CBD were to the benefit of Borg Family (and the conspirators) but, if revealed, the true nature of them would operate to the detriment of RCG CBD, including that RCG CBD would incur liabilities to pay income tax and penalties.
12. As to the tax benefits arising out of the transactions, the plaintiffs say that the Borg Family and Borg Civil claimed and received taxation benefits as a result of the transactions with RCG CBD (as set out above): the claiming of GST credits as a result of the $185,000 payment from Borg Family to RCG CBD (which resulted in a GST refund paid to Borg Family of $14,665 - see Ex W at 13B); the claiming of GST credits in relation to the $220,000 payment from Borg Family to RCG CBD (which resulted in a GST refund paid to Borg Family of $20,017 - see Ex W at 13B); and the claim by Borg Civil of GST credits by way of the BAS lodged with the ATO and a taxation deduction for the $33,000 payment to RCG CBD on 24 May 2013.
13. It is said by the plaintiffs that, for Borg Family to have been in a position to claim a GST credit, it would have had to have made a creditable acquisition which would have required it to have paid consideration for the machinery the subject of the payments to RCG CBD. It is said that no consideration was in fact paid by Borg Family to Excavation, given that a sum equivalent to the moneys paid to RCG CBD was paid to Borg Family by RCG CBD. The plaintiffs say that, if the forgiveness of a debt owed to Michael Borg was the consideration for the transfer, then it was Michael Borg and not Borg Family that paid the consideration and was therefore the beneficiary of the creditable acquisition and it was Michael Borg (not Borg Family) that was entitled to a GST credit (if he was registered for GST).
14. Also, it is said that as a result of the purported purchase of machinery and equipment by way of the payments between Borg Family and RCG CBD, Borg Family claimed tax depreciation expenses in the company's income tax return for the year ending 30 June 2013. The Borg Family financial statements for the year ended 30 June 2013 contain a depreciation schedule (Ex W at 43-44). The first three items in the schedule include the equipment transferred as a result of the $185,000 payment from Borg Family to RCG CBD as recorded in the Borg Family ledger (Ex W at 9) and the RCTI (created by Borg Family Created) (Ex W at 5-7). The total depreciation of $144,176 is claimed in the company's income tax return for the year ending 30 June 2013 (Ex W at 50) which was signed by Tanya Borg (Ex W at 54).
15. The plaintiffs say that if there was no creditable acquisition (i.e., no consideration was paid for the machinery the subject of the RCG CBD payments), then the cost of acquiring the equipment, insofar as Borg Family was concerned, was zero. It is said that any calculation of depreciation (being the decline in value of a depreciating asset) commences with the cost of acquiring the machinery (see ss 40-175 and 40-185 of the Income Tax Assessment Act 1997 (Cth) (Income Tax Assessment Act 1997)). Here, it is said that, as the cost to Borg Family was zero for the acquisition of the assets the subject of the RCG CBD payments, no depreciation could or ought to have been claimed by Borg family.
16. As to the Borg Civil payment of $33,000, it is noted that this payment is recorded as a payment to Banq in the Borg Civil Ledger for Cheque 418 (Ex W at 40). The Borg Civil Ledger records that GST was paid and treated as an accounting expense (Ex W at 41-42). The Borg Civil profit and loss statement for the year ended 30 June 2013 contains accounting expenses of $74,415.18 (Ex K at 364222) notwithstanding that the ledger records accounting fees as $52,243.18, of which the payment to RCG CBD is included (Ex K at 34641-34642). The plaintiffs note (see Ex W at 56B) that the ATO questions put to Tanya Borg included a question as to "how the transactions had been characterised for tax purposes, including…the amount of purchases and GST paid reported in the company's Business Activity Statements" and that (at Ex W at 43) there is an element of $17,136 for the purported "costs in the three invoices for $185,000" (see T 1321; Ex W at 55). It is noted that (at T 1322.30-42) Tanya Borg agreed that the payments for those goods (in the three invoices) were made to RCG CBD.
17. The plaintiffs say that the answers to the ATO (Ex W at 56I, 56J and 56K) were misleading and disingenuous. It is said that the answers showed no amounts for GST when, as agreed in Tanya Borg's answer in cross-examination, and as demonstrated in the Borg Family financial records and in the Borg Family GST returns, GST was recorded, and reported, as paid (obviously as parts of the respective payments of $185,000 and $220,000) and, on that basis, refunds of $14,565 and $20,017 were received.
18. Further, it is said that the response to ATO relating to the sums received from RCG CBD, "[r]efund for expected purchase of capital asset", was false. It is said that, at the time of these answers (on 23 September 2016) Borg Family and Tanya Borg well knew that there had been no "expected purchase" for assets in respect of which Borg Family had advised the ATO were purchases ("Capital Purchases G10") (based on the payments to RCG CBD of $185,000 and $220,000) (Ex W at 13 and 34) (citing also the Borg Family Purchase Register at Ex W at 56A). It is said that Tanya Borg also knew that Borg Family had received refunds based upon that characterisation.
19. Additionally, it is noted that the payment from RCG CBD to Borg Family of $185,000 was made on the same day that Borg Family paid $185,000 to RCG CBD. The plaintiffs say that Borg Family could not truthfully characterise the payment by RCG CBD to it of $185,000 as a "refund" when it well knew that it was not, and that it had been earlier described to the ATO as a "Capital Purchase". The plaintiffs make the same criticism of Borg Family's characterisation of the $225,000 paid by RCG CBD to Borg Family on 10 October 2012 as a "refund".
20. Reference is made to the cross-examination of Tanya Borg at T 1322.44-1329.49; in particular, her evidence that she did not know "how they'd been accounted for" (T 1328.17); that she did not know that none of the money went to Michael Borg (T 1327.42-48); that she was confused (T 1327.48); and that she did not understand it (T 1328.27; T 1329.3).
21. It is noted that Tanya Borg said that the "purchase did occur" (T 1327.6; T 1327.35-38; T 1328.15-19) and (at T 1347.40) she agreed that she characterised the $185,000 transactions as purchases. Complaint is made that Tanya Borg would not deal squarely with the issue created by the Borg Family answers to the ATO (namely, that $185,000 was paid to Borg Family as a "[r]efund for expected purchase"). The plaintiffs say that her evidence in Court was to the effect that there had been purchases, but that the response to the ATO was based upon the absence of purchases. The plaintiffs say that these were seriously false responses to the ATO; that Tanya Borg was evasive and disingenuous about this, and that, while she may not have overseen these responses to the ATO, if Tanya Borg were being frank and truthful (given her training and experience, as at 17 March 2020), she would simply have agreed, in cross-examination that the responses to ATO were not correct.
22. Similarly, it is said that (at T 1349) Tanya Borg did not wish to agree that the ATO return (Ex W at 56) was incorrect in showing no sum for GST when, plainly, there had been a GST component in the $185,000 (in respect of which she had previously agreed, repeatedly) and that in the witness box she was being evasive and would not confront the fact that no GST was recorded in that response to the ATO (T 1349.40-44).
23. As to the fees and other benefits to Primary Conspirators and associated entities, the plaintiffs point to the benefits gained by the Primary Conspirators and their associated entity, RCG CBD, as a result of the transactions between the Borg Parties and RCG CBD. As to the transactions between Borg Family and RCG CBD, the total amount paid by Borg Family was $585,000 when only $580,000 was returned (see Table 3.5). There was a $5,000 benefit to RCG CBD as a result of those transactions. There was a further benefit of $33,000 by way of the payment from Borg Civil. The total benefit to the Primary Conspirators as a result of the Borg Parties transactions was $38,000.
24. The plaintiffs point to the change in directorships in relation to Excavation and the winding up of both Excavation and Demolition as consistent with the conduct of the Primary Conspirators and, when considered in connection with other parties in these Proceedings, reveals the modus operandi in relation to the liquidation of companies. It is noted in that regard that a new director was appointed just prior to the winding up; and that the director that replaced Michael Borg (Aloeseiafi Faanoi) was the same director who was appointed just prior to the liquidation of other companies associated with Banq and Scheme Participants (namely, Demolition, an AKA company where Gino Cassaniti was also a previous director; Jian Holdings (associated with the Bluemine purported truck purchase); and Auswide (a Criniti company)).
25. Reference is again made in this context to Frank Criniti's evidence in relation to the winding up of Auswide (that Banq would "find a director for $5,000 and whatever the date was 10% of the debt goes to the liquidator" (T 521.21-34). It is said that the only inference from this is that Aloeseiafi Faanoi was a "jump on" director of the above companies.
26. The plaintiffs point to what they say are the stark similarities between: the purported purchase of assets (machinery) by Borg Family from Excavation by way of false invoices and false BAS lodgements resulting in GST and other benefits to Borg Family (facilitated by Fred Khalil); and the purported purchase of assets (vehicles) by Bluemine from Jian Holdings by way of false invoices and false BAS lodgements resulting in GST and other benefits to Bluemine (facilitated by Peter Abboud); and to the similar structural advice given to Frank Criniti, Elias Nassar, Mario Sande, the AKA Parties and the Borg Parties; and the coincidence that, shortly after becoming associated with Banq, Frank Criniti, Elias Nassar, Mario Sande, Andre and Michael Abou-Antoun, all had companies wound up (namely, Zagoonda a Criniti company); Blackrock Media Worx (an Elias Nassar company); 3MJ Enterprises Pty Ltd (a Mario Sande company); Tip and Fill (an AKA Party company); ACN 121913488 (formerly AKA Civil Contracting) (an AKA company)); and to the coincidence that companies incorporated on the advice of Banq were either the Insolvent Companies or involved in transactions with the Insolvent Companies in these Proceedings (namely: the Criniti companies including Diamondwish and Rackforce; Wenman Brimak, Blackrock Media and Ignite Promotions (the Elias Nassar companies); State Wide Design (a Mario Sande company); AKA Civil, AKA NSW and Earth Civil (AKA Party companies); and Borg Family and Borg Civil (Borg Party companies)).
27. The plaintiffs say that the only inference is that the liquidation of Excavation, and the related transactions with Borg Family and RCG CBD just prior to this occurring, when considered in the context of the whole of the evidence in these Proceedings did not occur by innocent coincidence but, rather, occurred in furtherance of the conspiracy, orchestrated and implemented throughout by Gino Cassaniti, Fred Khalil, Peter Abboud and George Khalil.
28. The plaintiffs say that Tanya Borg was the directing mind and will of Borg Family and that her knowledge is said to be imputed to Borg Family.
29. The plaintiffs says that the basis of the case against Tanya Borg is not confined to the mere fact that she held office as a director; rather, that she was directly involved in the relevant transactions. It is noted that Tanya Borg says that she received advice from Fred Khalil; and that, exercising her authority as a director of Borg Family, she acted to have Borg Family and RCG CBD perform the transactions. The plaintiffs emphasise that the transactions did not occur conformably with Tanya Borg's description of the purported advice (in [35] of her affidavit). It is said that in fact there is no explanation from Tanya Borg for the transactions that did occur, noting that she involved Borg Family in the transactions with RCG CBD.
30. The plaintiffs say that the absence of that evidence readily enables the inference that there was no genuine purpose for interposing RCG CBD into the transaction in the context of: false invoices for equipment transferred to Borg Family; and that Excavation was not paid any sum upon those invoices.
31. It is submitted that the temporal proximity and commonality of parties involved in the liquidations of RCG CBD and Excavation manifestly excludes any possibility of innocent coincidence. Emphasis is placed on the fact that Banq was a central party in both. It is noted that the two liquidations involved a number of transactions: a series of payments from Borg Family to RCG CBD purportedly for equipment from Excavation for which Excavation was never paid; that Excavation was then wound up; the advice of Fred Khalil as to its orchestration; and within a short period of time RCG CBD, having paid money away to various parties (including the Borg Parties) for which it received no consideration, was wound up bereft of funds to satisfy creditors (including the ATO).
32. It is thus submitted that, in the absence of explanation from Tanya Borg as to the true arrangement between Borg Family and RCG CBD, it is to be inferred: that she knew that the transactions would (for all Borg Family accounting and taxation purposes) be characterised as purchases, at cost, when that was not so; that she knew that Fred Khalil, on behalf of RCG CBD, was acting on the same basis; that she knew that there was no genuine basis for payments to be made by Borg Family to RCG CBD, and payments to be made by RCG CBD to Borg Family; that she knew that RCG CBD was interposed between any Borg Family and Borg Civil transaction in order to give the appearance (which she knew was false) that payments by Borg Family were for genuine business purposes and part of a genuine business transaction; and that, knowing the above, as the directing mind and will of Borg Family, Tanya Borg entered into the transactions for Borg Family's financial benefit.
33. The plaintiffs say that, in the absence of that explanation, and upon the whole of the evidence relating to, or concerning, or as a result of, the Borg Family-RCG CBD transactions, it is to be inferred that Fred Khalil made representations to Tanya Borg that she has failed to reveal, as pleaded in [148] of the RCG CBD third further amended statement of claim, namely that, by utilising RCG CBD in these transactions (including the absence of genuine commercial documents relating to the transactions): Borg Family could claim GST credits and expense deductions, reduce its taxable income, and acquire assets from Excavation at virtually no cost to Borg Family; the sums to be paid to RCG CBD and from RCG CBD were to be as chosen by Fred Khalil, on the basis that they would not be paid to Excavation, and no sum would be received by RCG CBD from Excavation, and no sum would be paid to Michael Borg; there would be a fee payable for RCG CBD's involvement; and any tax liability that RCG CBD should incur would be managed by it being wound up with no ability to pay any such liability.
34. The plaintiffs say that it is to be inferred that Tanya Borg knew that it would not be honest for Borg Family to engage in the transactions, and that the directors of RCG CBD could not be acting honestly in allowing RCG CBD to participate in the transactions (and were thus in breach of duty to RCG CBD).
35. It is alleged that Tanya Borg, acting as the director of Borg Family and on its behalf, thus caused Borg Family to engage in the transactions and in so doing she had the categories (put alternatively) of Baden Delvaux knowledge of the dishonest and fraudulent breaches of the director of RCG CBD.
36. The plaintiffs, having made the submissions referred to earlier as to Tanya Borg's credibility, submit that Tanya Borg knew very well that, by use of supposed RCTIs, false tax deductions (depreciation expense) and GST credits would be created (and claimed) for Borg Family. The plaintiffs say that it must have been obvious to her that no GST would be paid to the ATO as there was no creditor/recipient of the supposed GST debtor payment as part of the transactions involving RCG CBD.
37. The plaintiffs say that Tanya Borg's culpability in assisting Gino Cassaniti in his breach of fiduciary duty is in direct consequence of her conduct being the foundation upon which Gino Cassaniti perpetuated his dishonest and fraudulent design; in that, without Tanya Borg's conduct in causing Borg Family's participation, Gino Cassaniti would have been unable to execute his dishonest and fraudulent design against RCG CBD in respect of the impugned payments from and to Borg Family.
38. It is said that Gino Cassaniti's dishonest and fraudulent design rested on RCG CBD first receiving and then paying money for no consideration and without genuine/legitimate documentation; and that Borg Family's payments to and receipts from RCG CBD without consideration and without genuine/legitimate documentation, were dishonest. The plaintiffs say that Tanya Borg knew that her conduct in causing Borg Family to make and receive the impugned payments was dishonest; and that, without Tanya Borg having caused Borg Family's dishonest payments to and receipts from RCG CBD unsupported by consideration and for which there was no genuine/legitimate documentation, Gino Cassaniti could not have perpetrated his dishonest and fraudulent design in breach of his fiduciary duty to RCG CBD.
39. Further, it is said that Borg Family's entry into and performance of the Borg Family transactions, by an arrangement with RCG CBD's director Gino Cassaniti, was facilitated by Fred Khalil recommending the Scheme to Tanya Borg.
40. The plaintiffs say that facilitation of the arrangement clearly required its concurrence and adoption by Gino Cassaniti as he controlled RCG CBD. It is said that, had Gino Cassaniti not concurred with and adopted the arrangement, it would not have occurred as the arrangement required RCG CBD to pay to Borg Family an equivalent sum of money (less a fee) to that which it had received from Borg Family.
41. The plaintiffs contend that, having facilitated the arrangement, it was then performed by Gino Cassaniti; and that the performance of the arrangement required Gino Cassaniti as the director of RCG CBD to cause it to accept payments from Borg Family for which there was no genuine/legitimate documentation supporting the transaction; and that, subsequently, Gino Cassaniti, as the director of RCG CBD, then caused it to make payments to Borg Family for which the liquidator says there was no legitimate documentation. It is said that on the other side of the transaction it required Borg Family to make payments to and receive payments from RCG CBD; the counter party in execution of the arrangement being RCG CBD.
42. The plaintiffs say that this was an arrangement facilitated by Fred Khalil, but that it was not an arrangement with Fred Khalil; rather, it is said that it was an arrangement with RCG CBD which was caused to act in performance of its arrangement with Borg Family by Gino Cassaniti.

Borg Civil and Michael Borg - payment of $33,000 to RCG CBD

1. As noted earlier, Michael Borg is the 32nd defendant and was at all relevant times the director of the 30th defendant, Borg Civil (ASIC extract, Ex K at 36567). The plaintiffs point out that on 3 April 2020, in the RCG CBD Proceeding and 6 April 2020 in the Bluemine Proceeding, the Borg Parties filed a defence (verified by Michael Borg in his capacity as a director of Borg Civil) to the Bluemine third further amended statement of claim, in which the Borg Parties (therein defined to include Michael Borg and Borg Civil) at [26] denied [191] of the third further amended statement of claim and at [28] denied [193] of the third further amended statement of claim. In circumstances where Michael Borg did not give evidence in these Proceedings, it is said that his denial in the Borg Parties' general defence remains unsubstantiated by him.
2. Borg Civil paid $33,000 to RCG CBD. As noted above, the plaintiffs say that there were no genuine commercial documents evidencing this transaction. It is noted that the payment was made to RCG CBD by a Borg Civil cheque drawn by Tanya Borg but that she says that she left the name of the payee blank at Fred Khalil's request. The cheque as banked has RCG CBD as the named payee. The plaintiffs say that it may be assumed that Fred Khalil made that entry.
3. In respect of the payment by Borg Civil (see Table 3.5) on 24 May 2013 of the sum of $33,000 to RCG CBD, Borg Civil claimed GST credits by way of the BAS lodged with the ATO and a taxation deduction for the $33,000 payment to RCG CBD on 24 May 2013. This payment is recorded as a payment to Banq Accountants in the Borg Civil Ledger (Ex W at 40) for cheque 418. The Borg Civil Ledger records that GST was paid (Ex W at 42) and treated as an accounting expense (at 41). The plaintiffs say that this entry was false; that the payment to which the entry refers was made to RCG CBD, and that no GST was paid.
4. Similarly, it is said that Borg Civil's financial statements based on the ledger records are false considering that the profit and loss statement for the year ending 30 June 2013 contains accounting expenses of $74,415.18 (Ex K at 36422) notwithstanding that the ledger records accounting fees of $52,243.18 (of which the payment to RCG CBD is included) (Ex K at 34641-34642).
5. It is submitted that, given the false entries in Borg Family's accounts, Tanya Borg's contention that this payment was for Banq, for its "advice", should not be accepted. It is noted that there is no Banq memorandum of fees, and no commercial document of any liability of Borg Civil to Banq; and that it is conceded that no money was owed by Borg Civil to RCG CBD. As to the documents, it is noted that Tanya Borg asserts that she asked Banq for them but that no documents were available as Banq was then in liquidation. The plaintiffs note that this payment of $33,000 to RCG CBD created an income tax liability in RCG CBD ("in no small measure" because of the absence of genuine documents). It is said that such records that are available are in evidence demonstrate that the funds stayed with RCG CBD. The plaintiffs also say that there is no explanation as to how this payment, made by cheque payable to RCG CBD, was entered into Borg Civil's financial accounts as a payment purportedly to Banq. It is said that Borg Civil's payment to RCG CBD was clearly part of the arrangement which has not been explained by the evidence of Tanya Borg, or otherwise.
6. In circumstances where Michael Borg was the director of Borg Civil (and where it is established that the payment as alleged was made and made in consequence of advice from Fred Khalil after a meeting with Michael and Tanya Borg), the plaintiffs say that an evidentiary onus arose, particularly in the absence of genuine commercial documents evidencing the transaction, which required Borg Civil and Michael Borg to cross-examine Fred Khalil and have him explain the circumstances of the basis for the payment to RCG CBD; and that it was incumbent on Michael Borg, as the director of Borg Civil (the relevant facts being particularly within his knowledge), to provide an explanation of the reasons for the $33,000 payment to RCG CBD paid and (falsely, it is said) recorded in Borg Civil's ledgers as a payment to Banq for accounting expenses.
7. It is submitted that it should be concluded that, if Fred Khalil or Michael Borg had given evidence about these matters, that evidence would not have assisted the defence of Borg Civil and Michael Borg. Further, it is submitted that where the relevant facts were peculiarly in the knowledge of the Michael Borg, who chose not to give evidence explaining the transaction, slight evidence of Michael Borg's knowledge as the director of Borg Civil will suffice to prove the fact of his knowledge. The plaintiffs contend for the inference to be drawn that Michael Borg was well aware of the true basis of this transaction, and that he was not prepared to reveal that to the Court - either on his own behalf or as the director of Borg Civil.
8. Similarly to the submission in relation to Tanya Borg, it is submitted that Michael Borg's culpability in assisting Gino Cassaniti in his breach of fiduciary duty is a direct consequence of his conduct being the foundation upon which Gino Cassaniti perpetuated his dishonest and fraudulent design (in that, without Michael Borg's conduct in causing Borg Civil's participation, Gino Cassaniti would have been unable to execute his dishonest and fraudulent design against RCG CBD in respect of the impugned payment from Borg Civil). The plaintiffs say that Gino Cassaniti's dishonest and fraudulent design rested on RCG CBD receiving money for no consideration and without genuine/legitimate documentation; and that Borg Civil's payment to RCG CBD without consideration and without genuine/legitimate documentation, was dishonest. It is said that Michael Borg knew that his conduct in causing Borg Civil to make the impugned payment was dishonest; and that, without Michael Borg causing Borg Civil's dishonest payment to RCG CBD, Gino Cassaniti could not have perpetrated his dishonest and fraudulent design in breach of his fiduciary duty to RCG CBD.
9. Thus, it is said that Michael Borg and Borg Civil are liable to RCG CBD as accessories, as claimed.

Borg Family and Tanya Borg (Bluemine Proceeding) - payment of $15,000

1. As to the payment by Borg Family of $15,000 to Bluemine, which Tanya Borg asserts was part of the price for a purported truck purchase by her husband, Michael Borg, from Sydney Haulage Pty Ltd (Sydney Haulage), for $48,000 (and for which an RTCI was created) (Ex K at 56484), the plaintiffs say that no genuine documentation about the transaction has been produced.
2. The plaintiffs say that Tanya Borg's evidence does not establish how Bluemine became a recipient of these funds (other than that she says she was instructed, by an unnamed person, to make this $15,000 payment). It is noted that Bluemine was not the vendor (if there was one) and that it had no role in any such transaction; and that Monica Abboud (Peter Abboud's sister-in-law) was not the vendor but was the recipient of $15,000 from Borg Family (on direction from Banq) (Ex K at 56666) and the ultimate recipient of the $15,000 paid from Borg Family to Bluemine. It is said that Monica Abboud's involvement in this transaction is unexplained and it is noted that Tanya Borg and Borg Family did not call Michael Borg to explain the basis for the payment.
3. The plaintiffs say that, as a matter of common sense, there must have been additional arrangements; that someone on Bluemine's side of the transaction must have been told by someone on the Borg Parties' side of the transaction that the payment was occurring or had occurred (but that there is no evidence about that).
4. The same submissions are made as to Tanya Borg's culpability in assisting Gino Cassaniti in breach of his fiduciary duty in relation to Borg Family's engagement in the Bluemine transactions as are set out above pertaining to Tanya Borg's culpability in assisting Gino Cassaniti in breach of his fiduciary duty in relation to Borg Family's engagement in the RCG CBD transactions. Similarly, the same submissions are made (as that above in relation to her involvement in the RCG CBD transactions) as to Tanya Borg's entry into and performance of the Borg Family transactions by an arrangement with Bluemine's director Gino Cassaniti having been facilitated by Fred Khalil recommending the Scheme to Tanya Borg.
5. Thus, it is said that Tanya Borg and Borg Family are liable to Bluemine as accessories, as claimed.

Alleged Trust

1. The plaintiffs say that the evidence demonstrates that there was no trust as alleged by the Borg Parties, or at all. It is noted that Tanya Borg does not contend in her evidence that the purported trust circumstances failed (the plaintiffs say that no doubt this was because if she did so, that would require her to explain the basis upon which she permitted the conduct and events that did occur, to remain to full effect, then, and since). It is said that this further demonstrates that the Borg Family/RCG CBD transactions in fact occurred as Tanya Borg intended but not as she asserted in her evidence.

Borg Parties' submissions in defence

1. I have already noted the Borg Parties' complaint that the plaintiffs' submissions raise unpleaded new allegations against them (in relation to the alleged issuing of allegedly false or fictious (or invalidly created) invoices (the RCTIs)) and the Borg Parties' objection to the expansion of the plaintiffs' case, including to the (unpleaded) allegation that the Borg Parties implemented an "accounting system" to effect the implementation of the Scheme Recommendation is not pleaded.
2. By way of overview of their defence, the Borg Parties say that the Scheme Recommendation cannot explain various contemporaneous transactions which are not impugned by the plaintiffs. They say, first, that the plaintiffs' case fails to take into account not only contemporaneous evidence that is inconsistent with the plaintiffs' case theory (relevantly, the existence of primary documents such as cheque butts, bank statements and the like) that it is said demonstrate the payment by Borg Family to Excavation for the equipment said to have been acquired from it - i.e., the sum of $1.36 million paid directly to Excavation by way of cheque and the sum financed by NAB of $220,186 (totaling $1,580,186) but also the accrual basis on which Borg Family's BAS returns were lodged (i.e., that GST and input tax credits were payable on invoices issued; not payments made).
3. The Borg Parties attach significance to the latter on the basis that they say that there was no benefit (as asserted by the plaintiffs) to them from the transfers to and from RCG CBD (cf [1167]-[1169]; [1447] of the plaintiffs' submissions). It is noted that Borg Family's BAS returns correlate with the RCTIs that Borg Family issued (not the transfers made to RCG CBD) and that the BAS returns were lodged at the same time as the payments to Excavation (and not the payments to RCG CBD) (see as per chronology above). It is also said that the challenge made in submissions to the validity of the RCTIs does not advance the plaintiffs' case, not least because the Commissioner has not carried out any reassessments.
4. As to the claims of accessorial liability, the Borg Parties say that: there is no evidence that Gino Cassaniti had any knowledge or involvement with any of the impugned transactions involving the Borg Parties; there is no pleading or evidence that Gino Cassaniti acted through anyone else, including through Fred Khalil (as an agent) (and the Borg parties regard the allegation in the plaintiffs' submissions that the transactions were "partly" in accordance with Fred Khalil's advice as a significant concession in this regard); there is no pleading or any evidence that Fred Khalil owed any obligations to RCG CBD or Bluemine; there is no evidence in support of the proposition that the Borg Parties had or should have had any knowledge of any involvement by Gino Cassaniti in the impugned transactions; there is no evidence that the Borg Parties assisted Gino Cassaniti in any way in relation to the implementation of the Scheme Recommendation; the transactions were not undertaken in furtherance of the Scheme Recommendation but of a quite different commercial arrangement (whereby the Borg Parties enlisted the benefits of incorporation to shield assets); Borg Family engaged in a direct transaction with Excavation, in which Borg Family paid or procured finance for a total of $1,580,186 (incl GST) for Excavation's equipment; and the plaintiffs have failed to prove that either RCG CBD or Bluemine suffered any loss or damage as a result of the alleged conduct.
5. In any event, it is said that the plaintiffs are barred from making their claims against the Borg Parties, given their releases of other parties, including Bluemine's director and other so-called accessories (the joint release defences). The Borg Parties also submit, in the alternative, that RCG CBD cannot bring this action where it was the alter ego of the alleged Primary Conspirators.
6. Second, as to the claim against Borg Family for moneys had and received (see below), the Borg Parties say that: the evidence does not establish any legal right of RCG CBD to the moneys transferred to it; RCG CBD held the moneys on trust for Borg Family; and the plaintiffs have not proved that the moneys paid by RCG CBD to Borg Family were in accordance with any arrangement that differs from the arrangement proffered by the Borg Parties. Insofar as the plaintiffs' claim for restitution is made on the basis that the payments were unauthorised by RCG CBD, the Borg Parties say that the absence of authority is not proved and, in any event, RCG CBD took benefits under the impugned transactions and thus, it is said, adopted and ratified them. The Borg Parties say that this claim ignores the fact that RCG CGD received moneys from Borg Family. It is Borg Family's contention that the moneys repaid were trust moneys. In the alternative, it is said that RCG CBD would have to offer counter-restitution, consistent with the equitable principles which inform a claim for moneys had and received.
7. As to the two discrete transactions the subject of claims against the Borg Parties (i.e., in relation to the $33,000 payment by Borg Civil and a $15,000 payment by Borg Family for the purchase of a truck), it is said that both of those claims should be dismissed (for the reasons set out below).
8. As to the relief sought in the RCG CBD third further amended statement of claim against the Borg Parties, insofar as there is a claim for damages in the alternative to claims for equitable compensation or other claims (see at [37]; [38]; [49]), the Borg Parties say that, having eschewed any common law conspiracy claim against them, the plaintiffs cannot have any extant claim for damages against Borg Family under those prayers for relief (and, further, insofar as the relief claimed at [49] is for repayment of trust assets, it is noted that there is no allegation that any of the Borg Parties holds any of RCG CBD's or Bluemine's assets on trust - thus it is said the relief claimed at [49] is limited to equitable compensation or compensation pursuant to s 1317H of the Corporations Act).
9. Similarly to the submissions made by other defendants, the Borg Parties say that the plaintiffs must establish, to the requisite standard of satisfaction that all of the essential elements of the Scheme Recommendation were disclosed or represented to the Borg Parties; that there was any arrangement between the Borg Parties and Gino Cassaniti; that any of the transactions complained of were made pursuant to the Scheme Recommendation; that the Borg Parties knowingly assisted or were knowingly involved in breaches by Gino Cassaniti of his fiduciary obligations to RCG CBD and Bluemine; that the Borg Parties should bear any liability as claimed; that RCG CBD had any legal or beneficial entitlement to the moneys Borg Family paid it; that Borg Family was unjustly enriched for receiving its own moneys; and that the plaintiffs are entitled to any relief in restitution.
10. As to the evidence, as noted earlier, the Borg Parties submit that Tanya Borg's evidence (and her explanation as to the impugned transactions) should be accepted as genuine and truthful. It is accepted that Michael Borg was not called by the Borg Parties, but it is said that the plaintiffs have identified no fact on which he was able to shed more light than Tanya Borg's evidence did. It is said that the Borg Parties do not need to adduce evidence which is cumulative (cf the plaintiffs' submissions at [459]). It is submitted that the case against the Borg Parties was very narrow; that Tanya Borg's evidence addressed that case; and that no adverse inference lies against the Borg Parties for not calling Michael Borg.
11. Further, it is said that no criticism may be made of the Borg Parties (and no adverse inference may be drawn against them) for not calling or cross-examining Fred Khalil or Gino Cassaniti (cf plaintiffs' submissions at [477]), especially in circumstances where the plaintiffs also failed to do so. In any event, it is said that neither Fred Khalil nor Gino Cassaniti (nor any other defendant is in the Borg Parties' "camp") so as to enliven the principles of Jones v Dunkel. It is said that whether Fred Khalil ought to have required Gino Cassaniti for cross-examination or vice versa does not provide a basis for any inference against the Borg Parties (cf plaintiffs' submissions at [486]), especially given that the plaintiffs similarly did not require those defendants for cross- examination.

Submissions as to factual findings

1. The Borg Parties say that, at least in relation to Bluemine, the plaintiffs have not proved that the Borg Parties knew that Gino Cassaniti (as the plaintiffs claim) was Bluemine's shadow or de facto director. It is noted that this was not put to Tanya Borg in cross-examination. Further, it is said that the plaintiffs have not proved that the Borg Parties knew any elements of the Scheme Recommendation; that there is no evidence that Fred Khalil communicated them to her or to Michael Borg and that there is no evidence of the involvement of RCG CBD or Bluemine in any Scheme.
2. It is noted that Tanya Borg denied that there were any arrangements with Gino Cassaniti as claimed by the plaintiffs (her evidence being that they first met Gino Cassaniti in 2014 - see above). It is said that Tanya Borg's denial that there were any arrangements with Gino Cassaniti (as claimed by the plaintiffs) was not subject to any challenge and that there is no evidence to suggest that Tanya Borg or Michael Borg knew of Gino Cassaniti's alleged involvement in any conspiracy or Scheme (as claimed in the plaintiffs' submissions at [461]). It is noted that the plaintiffs concede that there is "no evidence of Gino Cassaniti directly representing the scheme to Tanya Borg" (see plaintiffs' submissions at [440]).
3. In those circumstances, it is said that to the extent that the plaintiffs contend for factual findings inconsistent with this, that should be rejected, including the plaintiffs' submissions that: Gino Cassaniti was indirectly involved in the making of any representation, including the Scheme Recommendation, to Tanya Borg or Michael Borg (cf plaintiffs' submissions at [440] and [444]); that Tanya Borg or Michael Borg met Gino Cassaniti before 2014 or had any "relationship" with him (cf plaintiffs' submissions at [615]); that Tanya Borg had any "dealings" with Gino Cassaniti at any relevant times (cf plaintiffs' submissions at [301], [303] and [581]; or that the relationship of Tanya Borg and Gino Cassaniti "involved advice on restructuring their companies, in addition to issuing false invoices" (cf plaintiffs' submissions at [581]; [615]).
4. The Borg Parties say that, at all relevant times, Borg Family's BAS returns were lodged on the accrual basis (a fact of which, it is said, Fred Khalil would have been aware, given that Banq lodged Borg Family's BAS's for the relevant period). That the BAS were lodged on that basis is said to be evidenced on the face of the BAS returns. Accordingly, it is said that any GST or input tax credits were at all times payable on the issuing of invoices and not upon the making of any payment. It is said that this fact undermines the plaintiffs' claims against the Borg Parties as to accessorial liability.
5. Insofar as the plaintiffs have submitted that there should be a finding or inference that the impugned transactions involving the Borg Parties were effected to implement the Scheme Recommendation because of alleged essential similarities in the advice given by Banq to other defendants (the AKA Parties and Frank Criniti for example) on the one hand (see plaintiffs' submissions at [463]; [655]; [656]; [676]; [697]; [698]; [727]; [995]; [1018]; [1061]; [1062]; [1126]; [1258]; [1188] to [1190]) and to the Borg Parties on the other, the Borg Parties say that the complicated transactions between RCG CBD and Borg Family (on which the plaintiffs' submissions focus and which allegedly bespeak misconduct), were unnecessary in order for Borg Family to obtain any tax benefits (given that Borg Family lodged its BAS on the accrual basis). It is said that this distinguishes the position of the Borg Parties from that of the other defendants in that it was Borg Family (and not RCG CBD) that issued invoices.
6. Further, it is said that, at both conceptual and factual levels, the advice given to Tanya and Michael Borg differs, in its essence, significantly from the advice that the plaintiffs allege individuals at Banq provided to Frank Criniti, to the AKA Parties, to Mario Sande or the Statewide Parties, in the following respects.

AKA Parties

1. As to the AKA Parties, it is noted that the plaintiffs contend that the AKA Parties were advised that they could save substantial amounts of tax by funnelling cash through Bluemine in order to claim false deductions and input tax credits (see plaintiffs' submissions at [700]; [708]; [1055]-[1071]); and that Fred Khalil and Peter Abboud advised the AKA Parties that they "could arrange inflated invoices and exaggerate invoices to [their] company" (plaintiffs' submissions at [254] and [431]); and that the advice to the AKA Parties and implementation by them of that advice occurred in two steps (see plaintiffs' submissions at [367]; [694]; [1055]-[1071]). The Borg Parties say that no such advice was given to them.
2. The Borg Parties say that (contrary to the plaintiffs' submissions at [367]), there was never any "invoicing" company amongst the Borg Parties, no labour hire company was set up and there was no mechanism to "funnel cash" to any of the individual or corporate Borg Parties (cf plaintiffs' submissions at [696]). It is said that there was no advice given to the Borg Parties concerning "inflated" invoices (cf plaintiffs' submissions at [706]); and it is noted that the Borg Parties obtained (at considerable cost) a valuation that supported the RCTIs that were issued. It is submitted that, if the Borg Parties were motivated by dishonesty, there is no reason to think that they "capped" their dishonesty to the amount set out in a valuation over which they exercised no "editorial control".
3. Moreover, it is said that Borg Civil and Borg Family were not involved in any "carousel", circular or "round robin" payments in the manner described by the plaintiffs in relation to the AKA Parties (see plaintiffs' submissions at [427]; [1075]-[1090]; cf plaintiffs' submissions at [716]), noting that the payments by the AKA Parties did not return to the payer but to another of the AKA Parties whereas the payments from Borg Family were returned to Borg Family.
4. Finally, it is said that there is no evidence or claim that the Borg Parties paid out any moneys to anyone from either Borg Family or Borg Civil. To the contrary, it is alleged that AKA NSW received $1,950,318.31 in benefits based on the issuing of false or exaggerated invoices (see plaintiffs' submissions at [1099]).

Criniti parties

1. The Borg Parties say that the advice to the Criniti parties was also wholly dissimilar to the advice that Fred Khalil gave Tanya Borg and Michael Borg.
2. First, insofar as the plaintiffs describe those arrangements (see plaintiffs' submissions at [307]) as being aimed to be the most "cost-effective for tax purposes" (see plaintiffs' submissions at [724]) and to move "forward for tax serving purposes" (see plaintiffs' submissions at [725]; [726]; [993]ff), the Borg Parties say that this was not the expressed aim of the restructure that Fred Khalil advised the Borg Parties to undertake. It is noted that, on Tanya Borg's evidence, Fred Khalil did not advise Tanya Borg and Michael Borg to effect transactions to save tax.
3. Second, the arrangement with the Criniti parties involved a labour hire company (see plaintiffs' submissions at [307(d)]; [725]); whereas, as noted above, no labour hire company was proposed to the Borg Parties or in fact set up.
4. Third, it is said that there was no suggestion that the structure proposed to the Borg Parties was to be a "spider's web" (cf plaintiffs' submissions [307(e)]) or that it was meant to be impenetrable.
5. It is said that there is no evidence of any advice given to the Borg Parties akin to the advice pursuant to which the plaintiffs allege the Criniti parties were set up (see plaintiffs' submissions at [997]-[1007]). Further, it is said that there is no evidence that Gino Cassaniti or Fred Khalil controlled Borg Family or Borg Civil in the way that it is alleged they controlled the Criniti entities (cf plaintiffs' submissions at [313]-[318]; [728]). It is noted that no "accounting system" was implemented by Banq for the Borg Parties akin to the system that is alleged to have existed with the Criniti parties (cf plaintiffs' submissions at [1008]-[1018]).
6. Again, it is said that Borg Civil and Borg Family were not involved in any "carousel", circulate or "round robin" payments in the manner described by the plaintiffs in relation to the Criniti parties (see, for example, plaintiffs' submissions at [328]; cf plaintiffs' submissions at [661]; [1019]-[1033]); it being noted that the payments that were made by Borg Family were returned to Borg Family.
7. Finally, it is again said that there is no evidence or claim that the Borg Parties paid out any moneys to anyone from either Borg Family or Borg Civil; equally, the Borg Parties did not receive any collateral benefit from those transactions. By way of example, it is said that the position is different from the position of the Criniti parties, who the plaintiffs assert received substantial benefits (see the plaintiffs' submissions at [304]; [326]; [1034]-[1037]).

Statewide parties

1. Next, it is said that there is no similarity between the advice given to the Borg Parties and the advice allegedly given to Mario Sande or the Statewide Parties (c.f., the plaintiffs' submissions at [676]). The advice to those parties was to effect a series of transactions to "channel my money from company A to company B" (see plaintiffs' submissions at [675]). It is said that that advice is completely different to the advice that Fred Khalil provided to the Borg Parties, because only one Borg company was involved in the transactions involving RCG CBD, namely Borg Family (i.e., there was no "company B" involved). It is for that reason that the Borg Parties say that the contention that the Borg Parties were engaged in any "carousel" or "round robin" payments is inapt.

Emphasis placed on lack of invoicing and on independent valuation

1. Finally, it is said that another important difference between the allegations made by the plaintiffs against the abovementioned defendants and the facts that pertain to the Borg Parties is that RCG CBD and Bluemine never issued any invoices to any of the Borg Parties; whereas in other cases, the relevant Insolvent Company did. Further, the plaintiffs contend that the Scheme was implemented to provide the Paying Participants the means to claim a tax deduction on revenue account for a minimal or non-existent service, whereas there was no such tax deduction on revenue account by Borg Family. It is said that the transactions whereby equipment was transferred to Borg Family were on the capital account and, upon proper analysis, did not involve RCG CBD.
2. It is said that the existence of the valuation report corroborates Tanya Borg's evidence whilst undermining the contention that the transaction between Excavation and Borg Family was not a "genuine commercial transaction". Further, it is said that the existence of the valuation corroborates (to the extent that this needs to be done) the validity of the RCTIs, which were issued in accordance with it and the payments to Excavation that were subsequently made. It is said that this is not a case where arbitrary values were attributed to equipment or where the invoices were artificially inflated.
3. It is said that the fact that Borg Family took steps to establish that the transaction was at arm's length also sets the facts of the Borg Parties' case apart from the allegations of the plaintiffs against the AKA Parties, the Criniti parties and the Statewide parties (as well as the Bluemine truck purchases), in that none of those transactions involved any independent third-party valuation.
4. The Borg Parties refer to Tanya Borg's evidence that, after the valuation report was obtained, Fred Khalil told her that "I have the valuation [which he had obtained], I can structure those payments, I have a company called RCG, I can use that to make the payments to the old company". Insofar as the plaintiffs contend that, despite the above statement by Fred Khalil to Tanya Borg, Fred Khalil did not have any authority to enter into the arrangement (see plaintiffs' submissions [466]) for which the Borg Parties contend, the Borg Parties say that elsewhere the plaintiffs have submitted otherwise (referring to the plaintiffs' submissions at [701]-[703]; [1193(b)]). The Borg Parties say that it is not open for the plaintiffs to assert that Fred Khalil should be taken to have had authority to arrange for the transfers to RCG CBD but lacked authority to effect the return of those moneys. Thus, it is submitted that the question of authority should be resolved in accordance with the Borg Parties' submissions.
5. It is noted that the plaintiffs otherwise led no evidence as to who had access to or was able to operate, or actually operated, RCG CBD's bank account. It is said that the fact that George Khalil was the authorised signatory does not make it improbable that his brother, Fred Khalil, either directly or indirectly operated RCG CBD's bank account; and that there is no evidence that Fred Khalil lacked access to RCG CBD's bank account independently from Gino Cassaniti. In those circumstances, it is said that there is no substance to the plaintiffs' assertions that it was "impossible" for payments to be made to Borg Family without Gino Cassaniti's knowledge and approval (cf plaintiffs' submissions [467]; [462]; [487]-[488]); and that such an inference cannot be drawn.
6. The Borg Parties say that even if there was a conspiracy as alleged by agreement between Gino Cassaniti and Fred Khalil, and Gino Cassaniti knew of the payments from RCG CBD to Borg Family and approved of them, there is no basis for the inference that any such knowledge or approval was necessarily pursuant to any arrangement based on the Scheme Recommendation.
7. In that regard, the Borg Parties say that no doubt there was an arrangement between Borg Family and RCG CBD, but that this arrangement was as has been claimed by the Borg Parties in the RCG CBD defence. It is said that the arrangement for which they contend is supported by ample unchallenged direct oral and documentary evidence (whereas the plaintiffs concede they have no direct evidence of the arrangement, for which they contend, between Gino Cassaniti and the Borg Parties).
8. It is said that all parties are at idem that RCG CBD did not pay Excavation as had been arranged (see plaintiffs' submissions at [469]), but that they differ as to what that failure signified. The Borg Parties contend that, the purpose having failed, RCG CBD held the moneys on trust for Borg Family and returned them to Borg Family, so that they could be paid directly to Excavation. In the ultimate result, it is said that there was no "purported" transfer of assets (cf plaintiffs' submissions [469]); rather, there was an actual purchase and transfer of assets.
9. The Borg Parties say that it is not disputed that Tanya Borg knew that the payments were for the purchase of equipment, which in fact occurred; nor that she knew that a valuation had to be and was performed before the transaction. As to the proposition that the purchases were not "at cost"; it is said that they were in accordance with a third-party valuation (cf plaintiffs' submissions [1193(a)] which do not appear to address this).
10. It is noted that Tanya Borg's evidence is that, whilst she did not understand what the advice from Fred Khalil proposed, she understood that money would be paid to RCG CBD and then to Excavation; and the money, she understood, would then be returned to Michael Borg. It is said that the fact that she could not point to, or that she was unaware of, payments from RCG CBD to Excavation or Michael Borg is not to the point, because there were none. It is said that the absence of any such transfers does not strengthen the plaintiffs' case but, rather, supports the contentions made in the Borg Parties' defence, namely that the purpose for which moneys were transferred to RCG CBD, namely to pay Excavation, failed and, therefore, RCG CBD held those moneys on trust for as long as it held them.
11. The Borg Parties say that the fundamental difficulty with the contentions that the plaintiffs make (based on the absence of transfers from RCG CBD to Excavation or Michael Borg) is that they are made without reference to the direct payments that were in fact made.
12. As to the challenges by the plaintiffs in relation to four BAS returns lodged by the Borg Family in the period from September 2012 (see the chronology; Borg Parties' submissions, Sch 4); the Borg Family's tax return for the financial year ended 30 June 2013, and the reliance placed by the plaintiffs on the Depreciation Schedule for the financial year ending 30 June 2013 (Borg Parties' submissions, Sch 6), the Borg Parties refer to the affidavit sworn 27 February 2020 of an accountant (Peter Power) (at [37], [13]), which was not challenged by the plaintiffs. The Borg Parties say: first, that Borg Family and Borg Civil Australia accounted and lodged their BAS returns on the accrual basis (as they say is clear on the face of the BASs); second, that three of the four BASs do not correlate with the payments but with the RCTIs that were issued (noting that the first BAS correlates with the payments of RCTIs 1-3), but in any event, the payments were unnecessary for the claiming of input tax credits; and, third, that the BAS returns and tax return have not been reassessed by the Commissioner despite the fact that they were based on RCTIs. The Borg Parties submit that this confirms that the RCTIs (and not the transfers made to RCG CBD) formed the basis for the input tax credits claimed.
13. The Borg Parties emphasise the date of lodgement for each relevant BAS return (to which I refer below): the first BAS (the September 2012 quarterly BAS) was lodged on 2 November 2012, the same day on which Borg Family drew cheque 8 in the amount of $200,000 to Excavation; and the subsequent BAS lodgements were each lodged following the subsequent payments to Excavation and, in the case of the October monthly BAS return, the NAB finance.
14. It is submitted that the fact that the Borg Parties waited to lodge their September 2012 quarterly BAS on the same day as cheque 8 for $200,000 was drawn and paid to Excavation further illustrates another difficulty with the plaintiffs' case theory. The Borg Parties ask, rhetorically, why (if they were motivated by dishonesty or were implementing the Scheme Recommendation) they would wait until 2 November 2012 (the day they paid $200,000 to Excavation) to lodge the September 2012 quarterly BAS when they could have lodged it, if the plaintiffs' contentions were correct, on 1 October 2012.
15. The Borg Parties say that the change of course referred to above in the chronology and the direct payments to Excavation (which are supported by or reflected in the primary documents) undermine the force of the Borg Family's General Ledger, on which the plaintiffs rely heavily. It is submitted that little if any reliance should be placed on that document for the following reasons.
16. First, that the General Ledger is a secondary document based on the drafter's interpretation of transactions and expertise. It is said that there is no good evidence of who made the entries in the General Ledger, so their veracity cannot be examined and the reasons for them are not explained. Banq had access to Borg Family's MYOB, but some entries were also made by Borg Family's bookkeeper. In that context, it is said that Tanya Borg's evidence in relation to the General Ledger was measured and appropriate, in that it identified her possible inability to explain "the way" in which certain transactions were "recorded or described". The Borg Parties emphasise that she was not the author of the relevant entries.
17. Second, that the contents of the General Ledger appear inconsistent with the primary documents, which it is said lessens its evidentiary weight. For example, given that payments were made for all of the RCTIs via cheque and finance obtained from NAB, it is said that all of the equipment should have been recorded as having been paid for by cheque finance.
18. For those reasons, it is submitted that reliance should be placed on the primary documents rather than the General Ledger. It is said that such an approach would be consistent with the import of s 140 of the Evidence Act and the nature of the allegations made by the plaintiffs (reference is also here made to [34]-[40] of Bryson J's decision in National Australia Bank Ltd v Rusu (1999) 47 NSWLR 309; [1999] NSWSC 539).
19. Insofar as the plaintiffs contend that the Borg Parties benefited from their alleged involvement in Gino Cassaniti's breaches of his fiduciary obligations (and identify those benefits in the plaintiffs' submissions at [665]; [1170]-1177]), the Borg Parties deny that they received any such benefit from, or as a result of, any of the payment transactions involving RCG CBD.
20. First, the Borg Parties deny that they claimed any benefit from the cash transactions. This flows from the submissions made above founded in Borg Family's requirement to lodge its BAS on the accrual basis. It is said that the credits were, as a matter of fact, based on the issuing of the RCTIs and not the making of the payments; and that is why the figures in the BAS do not reflect the payments.
21. Second, the Borg Parties deny ever actually receiving any benefit from the cash transactions.
22. Third, it is said that there were no benefits to Borg Family or they were so modest in real terms that it could be inferred that the Borg Parties were not motivated to obtain any such benefits by dishonesty.
23. Insofar as the plaintiffs, in their submissions at [665(a)] and [1171], contend that GST credits were claimed in the BAS for the period from 1 July 2012 to 30 September 2012, that resulted in a GST refund of $14,665, the Borg Parties say that that BAS was lodged based on the October RCTIs and an invoice to Capital Hill Motors. It is noted that the total GST claimed on the October RCTIs was $16,818 (out of a total of $19,782 that includes the Capital Hills Motor transaction); that is, 85% of the total. There was GST on sales in the amount of $5,117. Applying 85% to the GST on sales brings one to a total net amount of $12,468 relating to RCTIs 1-3.
24. It is noted that the plaintiffs' submissions (at [665(b)]) assert that "a result of the transactions with RCG" was that, inter alia, Borg Family claimed GST credits for a $220,000 payment. It is said that that figure is unrelated to the sum of the transactions identified in RCTIs 1-3; and that the submission is incorrect because that credit was referable to the refinancing undertaken in collaboration with NAB. The NAB letter of 8 October 2012 records the figure of $220,186 (Ex 20, Tab 21). It is noted that the equipment referred to is not the subject of RCTIs 1-3.
25. The Borg Parties say that the payment of $220,000 was not claimed in the October 2012 BAS (cf plaintiffs' submissions at [665(b)]; [1172]; [1180]). The figure in that BAS was the figure in the NAB letter of 8 October 2012. Accordingly, it is said that the claims that any GST benefit resulted from the $220,000 is incorrect.
26. As to the plaintiffs' submissions at [665(c)], it is said by the Borg Parties that the depreciation on the equipment that was the subject of the transactions complained of was much less than $144,176. It is said that that figure was the total for all of the equipment transferred to Borg Family, including the equipment transferred pursuant to transactions about which no complaint is made. (A copy of the Depreciation Schedule at Schedule 6 to the Borg Parties' submissions notes the items referable to RCTIs 1-3.) The Borg Parties say that it is incorrect to contend (cf the plaintiffs' submissions at [664(a)]-[664(b)]) that the figure of $144,176 constitutes the deduction claimed from the impugned transactions.
27. Accordingly, it is said that the assessment of the quantum of the alleged benefit arising from deductions claimed for depreciation depends on the amount claimed for depreciation of the equipment, which was the subject of RCTIs 1, 2 and 3 ($185,000). That figure is $17,136 (10% depreciation). As depreciation is claimed as a deduction and set off against gross income, any benefit was $5,140.80 (30% [being the applicable corporate tax rate] of the sum of $17,136).
28. Based on the plaintiffs' own allegations (the input tax credit of $12,468 and the depreciation deduction of $5,140.80), therefore, it is said that the total gross benefit claimed by Borg Family was $17,608.80.
29. The Borg Parties submit that, given that: Borg Civil paid $33,000 for the advice that Fred Khalil gave the Borg Parties; and Borg Civil paid $10,000 for the valuation; and after allowing for the tax benefits claimed in relation to those two payments ($14,818, which includes the input tax credits and deductions); the costs of participating in the so-called Scheme outweighed any benefits (- $10,573.20) (cf plaintiffs' submissions at [1175]-[1177]; [1185]).
30. Having regard to the reasoning of Dixon J, as his Honour then was, in Briginshaw, it is submitted that regard would be had to the alleged net benefit to the Borg Parties in determining the likelihood that they were motivated to enter into the dishonest design alleged against them.

Total payments to Excavation and the transfer of the equipment

1. Having regard to the amounts paid from November 2012 to Excavation (see the chronology of events above), it is said by the Borg Parties that, as at 13 January 2013: a total of $1,570,636 (incl GST) in RCTIs had been issued; and Borg Family had paid Excavation $1.36 million by way of cheque and organised refinancing by the NAB in the amount of $220,186 (total of $1,580,186).
2. On the basis of those totals and the evidence, it is said that there is no basis for the submissions that Borg Family did not pay Excavation (see, for example, the plaintiffs' submissions at [473], [474]). Similarly, it is said that submissions based on the absence of "remittance advices" in relation to invoices 1-3 are unpersuasive when faced with evidence of the actual payments that Borg Family made (cf plaintiffs' submissions at [1149]).
3. The Borg Parties say that it was after significant payments were made to Excavation that the equipment was transferred to Borg Family.
4. Insofar as the plaintiffs, in their submissions at [479], identify a number of indicia that are said to support the proposition that Excavation's winding up (in February 2013) was a consequence of the implementation of the Scheme Recommendation, the Borg Parties say that this is an instance of "top-down logic", that is, of fitting disparate facts into a theory.
5. The Borg Parties say that the difficulty with the plaintiffs' submissions (at [479(a)] and [479(e)]), is that there were many payments which constituted the consideration for the transfer of equipment. For the reasons given above, it is submitted that the reference to a "series of payments" is apt to ignore two facts: first, that these were few compared to the transactions which are not challenged; and second, the benefits which passed to the Borg Parties were at best modest but more likely non-existent.
6. It is submitted that the process of drawing inferences does not accommodate why there were many more legitimate payments than impugned payments and why the Borg Parties should seek such small benefits. It is noted that the plaintiffs' submission at [479(c)] links the Scheme to Fred Khalil's advice, even though the pleadings do not assert that Fred Khalil had anything to do with the Primary Conspirators' approach to the Borg Parties.
7. The plaintiffs rely on the portions of Ex V that were admitted (subject to the limitation that it is the liquidator's summary of, or understanding of, something that had been reported to him by Michael Borg) to submit that they show Michael Borg's explanation as to why Excavation was not paid (plaintiffs' submissions at [471(b)]). The Borg Parties say that that submission faces the following difficulties.
8. First, that the contents of Ex V appear to weigh against the plaintiffs' submissions and appear to support the proposition that consideration was in fact paid for the equipment. It is noted that the statement attributed to Michael Borg by the author of the document is that "[i]n response to our enquiries in relation to the assets transferred, …Michael Borg… alleged that the consideration paid was in reduction of a Loan Facility [Ex 21] provided by himself". It is said that whilst the terms of the document are unclear, there is no language that supports a contention that the transfer was in consideration or forgiveness of the debt Excavation owed to Michael Borg. It is said that the words "consideration paid", in particular, do not support the plaintiffs' construction. The contents of Ex V are said to be consistent with the evidence of payments by Borg Family to Excavation and the Borg Parties' case. Finally, it is said that the representation itself is, although somewhat ambiguous, supported by the contents of Ex 21 (being the Loan Agreement between Michael Borg and Borg Civil).
9. The Borg Parties say that the plaintiffs' submissions (at [474(a)] and [475]) do not accurately capture Tanya Borg's evidence. It is accepted that Tanya Borg acknowledged that she knew what the purpose of the valuation was (namely, to demonstrate that the transfer of the assets from one company to the other was to be done at an arm's length value - T 1384.32). However, it is said by the Borg Parties that her difficulty was not that she did not know what an arm's length transaction was (cf plaintiffs' submissions at [475(c)]); rather, it was that she did not understand the structure that Fred Khalil sought to put in place. It is said that so much is clear from the exchange at T 1384.36. It is said that Tanya Borg then gave the evidence that her focus then was on, as she put "our day to day, our customer relationship", in distinction to "our own stuff, I don't really look after these affairs". The Borg Parties say that, consistently with that evidence, Tanya Borg's manner of speaking does not betray any profound understanding of the accounting concepts underpinning the Scheme Recommendation (and see also her evidence in cross-examination by Fred Khalil's Counsel, referred to above). It is submitted that it is equally likely, but in all events not improbable, that Tanya Borg did act on the faith of advice she received from someone who she felt able to trust (cf plaintiffs' submissions at [479(d)]).
10. Insofar as the plaintiffs, in their submissions at [470], identify the alleged common links between the liquidation of Excavation and the liquidation of the companies said to arise pursuant to the Scheme and say that the consequence of the alleged modus operandi is the exclusion of bona fide creditors, including the ATO, the Borg Parties maintain that the plaintiffs have not made out that aspect of that case. It is said that there is no evidence about Excavation's creditors and the position of the ATO therein.
11. The Borg Parties say that, having paid for the equipment it received from Excavation, Borg Family lodged its 2013 return, in which it sought a deduction for the depreciation in the value of that equipment; and that the depreciations sought were in accordance with the values set out in the RCTIs and not in accordance with the payments to RCG CBD (cf the plaintiffs' submissions at [484]). Further, it is said that given that the ATO has not taken any steps to reassess Borg Family in relation to those returns, they stand as having been accepted by the ATO and correct (cf the plaintiffs' submissions at [485]).
12. Even if the plaintiffs' case on the Borg Parties' alleged conduct is accepted, it is said that none of that conduct caused RCG CBD any loss or damage. In that regard, the Borg Parties adopt the submissions of the AKA Parties (at [51]-[103] and elsewhere) in relation the question of causation. It is said that those matters are applicable equally to RCG CBD and Bluemine. A further argument that is said to support the Borg Parties' submissions is that, unlike the position alleged against the other Scheme Participants, neither RCG CBD nor Bluemine issued any invoices to any of the Borg Parties (purporting to be for any goods or services), which it is said makes oany case to overturn the assessments in relation to those payments still stronger, because RCG CBD did not even pretend that any moneys (momentarily) transferred to it by Borg Family were purportedly the fruits of a taxable service.

The $33,000 cheque

1. The Borg Parties note that no challenge is made to the authenticity of the remittance advice issued by Borg Civil (Ex K at 36609). It records "Banq Accountant" as the recipient of the cheque. They say that that document is supported by the contents of the cheque butt, which also records that the cheque numbered "418" (which reference accords with the reference on the face of the remittance advice), was drawn to pay "Banq Accountants".
2. Tanya Borg gave evidence that she thought the payment was "in payment for Fred's advice" and was told to leave the payee details blank and that Fred Khalil would fill them out. It is said that Tanya Borg was not contradicted as to her evidence that she attempted to recover the invoice from Banq, only to be told of the company's liquidation.
3. It is said that there is nothing improbable in Tanya Borg taking steps to make a payment to Banq at this time; and that whatever Fred Khalil did with the cheque that was provided to him is a matter ultimately for Fred Khalil, and not Borg Civil or Michael Borg (who are sued in relation to the $33,000 cheque).
4. As to Tanya Borg's evidence in cross-examination on this issue, it is said that what occurred was that: the cross-examiner traversed and confirmed Tanya Borg's evidence in relation to the purpose of the payment, the fact that she had not been able to locate an invoice and her call to Banq (see T 1374.5- 27); the cross-examiner asked why the cheque "went to RCG", to which the witness replied, "I don't know" (T 1374.45) (the Borg Parties say this evidence was not improbable when Tanya Borg did not fill out the payee's name and it is not in her handwriting); then, the cross-examiner suggested to the witness she had "told her Honour that you can't remember why the RCG - why the cheque was paid to RCG". It is said that this introduced, subtly, the concept of the witness' state of recollection; but that what Tanya Borg had disavowed was knowledge of why the payment was made in that way, not that she had suffered a loss of memory (see also at T 1377.14). It is noted that Tanya Borg had, earlier in her oral evidence, restated what appears in [9] of her affidavit sworn 27 February 2020 in relation to Fred Khalil telling her to leave the payee details blank.
5. It is said that, contrary to the contention that Tanya Borg had "earlier" failed to remember these circumstances (T 1377.24), the cross-examination at T 1374 did not invite her (T 1375.39) to recount all of the evidence on this issue; and that she was plainly referring to the same occasion referred to in her evidence.
6. Further, it is said that there is no conceptual connection between the drawing of the $33,000 cheque, the Scheme Recommendation or the other allegations made by the plaintiffs against Borg Civil and Michael Borg. It is said that it was not a benefit to Gino Cassaniti or Fred Khalil pertaining to the Scheme Recommendation or otherwise, whatever the breaches of fiduciary obligations alleged against Gino Cassaniti (cf plaintiffs' submissions at [491]-[492], [494]).
7. The Borg Parties say that the plaintiffs' case is not furthered by additional allegations of dishonesty (plaintiffs' submissions at [1477]-[1488]) as they are not supported by the evidence and readily explicable.
8. First, there is an allegation that the entry of the $33,000 in Borg Civil's financial documents was false. The Borg Parties say that that notation, however, accords with the contents of the cheque butt and the remittance advice. Further, it is said that those documents corroborate Tanya Borg's evidence as to the circumstances in which the cheque was drawn. The number of the cheque produced by NAB matches the number on the cheque butt. It is submitted that that evidence decisively weighs against the plaintiffs' contention as to the falsity of that entry.
9. As to the plaintiffs' submissions (at [1480]-[1481]), inviting the conclusion that Borg Civil's financial statements were false to the extent that they recorded accounting expenses of $74,415.18, the Borg Parties note that the basis for the claim of falsity is that the ledger records a smaller sum for accounting fees (namely, $52,243.18). It is said that that submission, which makes a serious allegation, overlooks the fact that Borg Civil also paid $22,172 for bookkeeping fees in the 2013 financial year. It is said that Tanya Borg was not given the opportunity to deal with the criticism and that the appropriate course is for it to be rejected without further consideration.
10. The Borg Parties also say that the force of the plaintiffs' submissions (at [1477]-[1488]) falls away in light of the above submissions. It is said that in light of the documentary evidence, there was no need for Michael Borg to give evidence because there was nothing for him, relevantly, to explain in relation to this payment; it was Tanya Borg who knew of the invoice, made out the cheque and dealt with Fred Khalil.
11. It is submitted that Tanya Borg's evidence should be accepted with the findings sought by the Borg Parties and that the case against Michael Borg and Borg Civil in relation to the $33,000 payment should be dismissed.

The $15,000 payment to Bluemine for a truck - June 2014

1. There is an assertion in the plaintiffs' submissions (at [441]) in relation to an alleged payment by Borg Civil to Bluemine (alleged in the Bluemine Proceeding), to which Borg Civil and Michael Borg are not parties. The Borg Parties say that, after settling the Bluemine Proceeding with Borg Civil and Michael Borg, it is said that the plaintiffs gave no notice that they wished to rely on that $15,000 alleged payment; and no reference was made to that payment either in the plaintiffs' written or oral opening submissions. Further, it is said that none of the allegations in relation to that alleged payment was put to Tanya Borg. It is said that reliance on that payment in those circumstances is procedurally unfair.
2. The Borg Parties say that the payment of $15,000 was one of three payments made by Borg Family for the purchase of a truck. They say that the purchase price was $48,000 (incl GST) and that the fact that the payment of $15,000 was made towards the purchase of a truck is supported by the primary documents in evidence. The cheque butt is in evidence (cf plaintiffs' submissions at [442], and their complaint that no genuine commercial documentation exists for this transaction). It records a number plate for a vehicle "BU94XV" next to "Detail", a figure of $15,000 and "B/C $15,000". It is noted that neither that document, nor Tanya Borg's explanation at [61] and [62] of her affidavit sworn 4 December 2018, was challenged in cross-examination.
3. It is noted that the registration number of the vehicle ("BU94XV") is proved by the admission of a registration slip for the vehicle into evidence, which records that as at 20 February 2016, Borg Family owned a vehicle with those registration details (cf, again, the plaintiffs' submissions at [442]). It is said that the fact that the vehicle is a truck (as Tanya Borg has deposed) is to be proved by the description on the tax invoice issued when that vehicle was sold (it is described as a "Freightliner…Tipper"). Again, it is said that the plaintiffs have not disputed the nature of the vehicle.
4. The Borg Parties say that the documents also corroborate Tanya Borg's evidence in relation to the payment of the balance of $33,000. An RCTI dated 1 May 2013 issued to Sydney Haulage records the payment of $18,000 to that company. There is a remittance advice for the payment of $15,000 to Monica Abboud on 28 August 2013. It is noted that no challenge was made to the authenticity of these documents.
5. Tanya Borg deposed that she was instructed to pay $15,000 to Monica Abboud as the final payment for the truck. An email from Andrew Kelada dated 27 August 2013 corroborates that evidence. It came into existence the day before the impugned payment.
6. The Borg Parties say that there is no direct evidence which suggests that the payment was made for any purpose other than the payment for the truck that Borg Family purchased. It is said that the plaintiffs' case must depend upon a process of deduction and drawing inferences but that the Court should prefer the contemporaneous documentary records; a fortiori where it was not expressly put to Tanya Borg that those documents were not genuine. It is noted that it was not expressly suggested to Tanya Borg that this payment was an element of any dishonest and fraudulent design. It is said that the proposition that "[she] knew that the money was just going to be used for somewhere and [she] would allow that to occur without inquiry" (T 1380.43) was insufficient to put to the witness that she assumed a position of willful blindness in relation to such a design. The Borg Parties say that there is no basis to challenge the documentary evidence that the vehicle was transferred for the stated consideration.
7. Insofar as the plaintiffs claim that the $15,000 was paid to Monica Abboud thereafter (see plaintiffs' submissions at [441]), the Borg Parties say that they have not proved that the $15,000 paid to Monica Abboud was in fact the $15,000 paid by Borg Family to Bluemine. Even if it was the same money, the Borg Parties say that whatever arrangements were in place between Monica Abboud and Bluemine do not undermine the force of the evidence that Borg Family was purchasing a truck.

Reply submissions re Borg Parties

1. The plaintiffs cavil with the contentions of the Borg Parties (at [93], [314] and [315]) as to the matters which it is said the plaintiffs are required to prove. Again, it is submitted that there is no requirement that every fact pleaded must be established; rather, the issue at the close of the Proceedings is whether the causes of action have been established, on the evidence and within the facts pleaded. Reference is again made to what was said by Einstein J in HIH v Adler at [50]-[51] (in effect that, when considering knowledge of essential facts for involvement in a contravention, it is not necessary that the accessory had to have knowledge of the contravenor's intentions and every aspect of the contravention, as this would constitute all the relevant facts, rather than just the essential facts); and to the principles articulated in Lewis Securities v Carter by Emmett AJA at [183]-[187].
2. As to the fiduciary's breach, the plaintiffs say that they have established: that the director fiduciary (Gino Cassaniti), in implementation of the conspiracy with co-conspirator Fred Khalil, dishonestly authorised, facilitated and permitted the RCG CBD-Borg Parties transactions which were: not genuine business transactions; without any genuine records; for Gino Cassaniti's personal benefit; for no benefit of RCG CBD; and for benefits and purposes of Gino Cassaniti, Borg Family and Tanya Borg not known to the plaintiffs; and that the fiduciary's conduct was in breach of duty and answers the description of a fraudulent design (as a "plain transgression of ordinary standards of honest behaviour", citing Leeming JA in Hasler v Singtel Optus at [127]).
3. It is said that Borg Family and Tanya Borg assisted in the breaches and facilitated and furthered them by entering into and performing the RCG CBD-Borg Family transactions in which Tanya Borg was the directing mind and will of Borg Family and acting in that capacity at all times.
4. The plaintiffs submit that the moment that RCG CBD was to be inserted into these transactions, an honest and reasonable person would immediately conclude that something was very "dodgy" about this, and that would put an honest and reasonable person on serious enquiry to ensure that it did not transgress ordinary standards of dishonesty; and the honest and reasonable person would not shut their eyes to it and, without more, it would indicate to an honest and reasonable person that the director of RCG CBD was acting in breach of the director's duties. However, the plaintiffs say that this single circumstance was compounded and expanded. It is said that (leaving aside for present purposes, the three supposed "invoices" for the first payment of $185,000), Tanya Borg knew that: there were no genuine documents for any of the other transactions; the first payment by RCG CBD of $185,000 was recorded in Borg Family ledgers as a "loan" but was reported to the ATO in the BAS return as a purchase, with deduction of GST; and on the basis that the character of the transaction was a purchase, the ATO refunded that GST element (included in the refund amount of $14,655). The next payments by RCG CBD to Borg Family were recorded as "loans" for which there was no documentary evidence, and no evidence of a loan arrangement, nor of discussion or consideration of loans. The second, third, fourth, fifth and sixth payments were recorded as "loans" by Borg Family. Again, it is said that there was an absence of genuine transactions. The fifth payment of $220,000 was also reported by Borg Family to the ATO in its BAS return as a payment for a purchase, and again a refund was provided by the ATO upon the basis that the transaction had the character of a purchase; the refund was contained within the payment of $20,017.
5. Further matters upon which the plaintiffs rely, as alerting an honest and reasonable person to the prospect that the transactions were not to the ordinary standards of honest behaviour and thus would provoke enquiries and not permit Tanya Borg wilfully to shut her eyes to them, are as set out in the plaintiffs' primary submissions at [1133]-[1169].
6. It is said that Tanya Borg had knowledge of the fiduciary's breach; that such knowledge is established (see plaintiffs' closing submissions at [1196]), because Tanya Borg fulfilled all or any of the four Barnes v Addy second limb criteria (citing Hasler v Singtel Optus at [130]).
7. The plaintiffs say that the later transactions between Borg Family and Borg Civil are irrelevant. It is noted that the issues in the claims in these Proceedings concerned the fiduciary's breaches in September and October 2012 and concerned accessorial liability in respect of those breaches. The plaintiffs say that the Borg Parties' attempts to recast the character of the September and October 2012 transactions in the light of subsequent self-serving transactions fail.

Findings - Borg Parties

1. I have commented above on Tanya Borg's evidence. Although it was confused in parts and by the conclusion of her evidence it was clear that Tanya Borg was becoming frustrated as to the perceived lack of understanding as to her position (see at T 1383-1385), I considered her to be a genuine witness. Relevantly, I accept her evidence that, in effect, she (and her husband) relied on advice from Fred Khalil as to how the AKA companies should be structured and, insofar as that involved accounting for the equipment recorded in the books of Excavation (which was to be wound up on Fred Khalil's advice), as to how that was to be effected. I do not accept that Tanya Borg had the requisite knowledge that would put an honest and reasonable person on enquiry as to the honesty of the transactions there involved (and more specifically, of a dishonest and fraudulent design on the part of the director of RCG CBD and Bluemine whom she did not know); and her inability to explain why it was that the transactions were effected in the way that they were simply reinforces that conclusion. I did not form the impression that Tanya Borg was being obfuscatory in her evidence - rather, I considered that she was genuinely unclear as to why the payments were effected through RCG CBD and she placed reliance on a professional accountant to trust that they were being properly effected. The payment of a not inconsiderable sum for an independent valuation can only have reinforced that belief.
2. I accept that there was no direct evidence from Michael Borg. However, having regard to Tanya Borg's evidence, I would not infer that his knowledge was any greater than hers as to the reasons for the transactions being effected as they were. I cannot conclude that Michael Borg was on notice of the circumstances of a dishonest and fraudulent design on the part of Gino Cassaniti as director of RCG CBD.
3. Consequently, it is not necessary to consider whether Borg Civil and Borg Family were imputed with knowledge of Gino Cassaniti's dishonest and fraudulent design.
4. Accordingly, I find the claims as against the Borg Parties for accessorial liability or knowing involvement in breaches of directors' duties are not made good. (I consider in due course, in the context of the similar claim by the AKA Parties, the trust claim by the Borg Parties although nothing turns on it in light of the above finding.)

Default judgment - Scott Crabbe and John Haddad

1. The plaintiffs submit that they are entitled to default judgment against John Haddad and Scott Crabbe pursuant to r 16.1 of the UCPR.
2. As to Mr Haddad, in the Bluemine Proceeding, judgment in the sum of $1,327,494.66 is sought against John Haddad (personally and as director of North Shore and Centerium Wholesalers) for damages and/or equitable compensation, and/or for compensation pursuant to s 1317H of the Corporations Act, comprising: moneys paid away; the extent to which he caused Bluemine's liability to pay the Commissioner $5,138, 203.36; and the costs and expenses of the winding up.
3. In the RCG CBD Proceeding, judgment in the sum of $1,030,726.01 is sought against John Haddad (personally and as director of North Shore) for damages and/or equitable compensation, and/or for compensation pursuant to s 1317H of the Corporations Act, comprising: moneys paid away; the extent to which he caused RCG CBD's liability to pay the Commissioner $6,209,097.72; and the costs and expenses of the winding up.
4. As to Mr Crabbe, the plaintiffs seek a declaration that Scott Crabbe was an accessory to Gino Cassaniti's breaches of fiduciary duties, a determination that he was involved Gino Cassaniti's contraventions of ss 181 and 182 of the Corporations Act, judgment for RCG CBD in the sum of $1,603,386.57 against Scott Crabbe for damages and/or equitable compensation, and/or for compensation pursuant to s 1317H of the Corporations Act, comprising: (a) moneys paid away; (b) the extent to which he caused RCG CBD's liability to pay the Commissioner $6,209,097.72; and (c) the costs and expenses of the winding up", interest pursuant to s 100 of the Civil Procedure Act or alternatively s 588FF(1)(c) of the Corporations Act and that the said defendants (collectively) pay the plaintiffs' costs.

Default judgment - relevant principles

1. If a defendant fails to file a defence within the time limited by r 14.3(1) or within such further time as the court allows, then the defendant is in default (UCPR, r 16.2). The relevant rules applicable to an application for default judgment are set out in rules 16.3 and 16.6 of the UCPR.
2. In Gregory's Transport Pty Ltd v Ray's Haulage Pty Ltd [2008] NSWCA 333 at [22]-[24], the Court of Appeal held that, without an affidavit in support, the power to give default judgment under r 16.6 of the UCPR is not enlivened, unless the Court exercises its discretion under r 16.3(2) to order "otherwise", which requires "an expression of reasons" as to why the discretion is exercised (see also Arnold v Forsythe [2012] NSWCA 18 at [88] per Sackville AJA (with whom McColl and Young JJA agreed)).
3. In Wily v King [2010] NSWSC 352, Barrett J considered the underlying policy behind default judgments and noted that ultimately under r 16.6, the court is empowered to give default judgment but not bound so to do. For reference, see his Honour's remarks at [16]-[17]: 16. The philosophy underlying r 16.6 is that, because provision is made for the filing of a defence in response to a statement of claim and the statement of claim, of its nature, should contain all allegations necessary to make good the entitlement to the asserted cause of action, failure to file a defence should be taken to represent acceptance of the statement of claim and admission of the several allegations in it. 17. The important word in r 16.6, for present purposes, is "may". The court is empowered to order judgment by default in cases within this rule but is not bound to do so. In Charles v Shepherd [1892] 2 QB 622, where judgment was sought upon default in delivery of a defence, Lord Esher MR said (at 624): … the Court is not bound to give judgment for the plaintiff, even though the statement of claim may on the face of it look perfectly clear, if it should see any reason to doubt whether injustice may not be done by giving judgment; it has a discretion to refuse to make the order asked for.

Leave to file and serve affidavits of service

1. In their written closing submissions, the plaintiffs sought leave to file and serve affidavits of service for John Haddad and Scott Crabbe. On 16 June 2020, I gave leave for the plaintiffs to re-open their case in chief and read and rely upon those affidavits of service, being John Stewart's affidavit sworn 11 September 2017 (Affidavit of Service of Scott Crabbe), Steven Lee Cook's affidavit sworn 11 September 2017 (Affidavit of Service on John Haddad (Bluemine)) and Steven Lee Cook's affidavit sworn 11 September 2017 (Affidavit of Service on John Haddad (RCG CBD)).

Plaintiffs' submissions re Scott Crabbe and Reliance Cleaning

1. Scott Crabbe is a defendant in the RCG CBD Proceeding and did not file a defence. As noted above, the plaintiffs say that his role was confined to that of a straw director (referring to Scott Crabbe's evidence as to how he became involved in the Reliance Cleaning business - see T 943.41-944.17, as set out above); and noting that he became a director and shareholder of Reliance Cleaning together with Peter Abboud. It is submitted that Scott Crabbe was to be the figurehead for Reliance Cleaning, referring to his own evidence that his role would "morph" depending on the tender (see at T 947.45-50) and his lack of understanding of (and admitted lack of involvement in) accounting matters or directors' duties; and his evidence that he had nothing to do with payments in or out of Reliance Cleaning (T 946.35-45).
2. Reliance Cleaning paid $1,618,254.35 to RCG CBD between July 2012 and May 2013. The plaintiffs point out that Scott Crabbe clearly knew nothing about those payments and submit this is consistent with the documentary evidence identifying that the signatories to Reliance Cleaning's NAB bank account were Fred Khalil, Peter Abboud and Ivana Cassaniti (Ex K at 32240). As to the costing of tenders, it is noted that Scott Crabbe referred any questions to Peter Abboud. (As noted above, George Khalil was at all times the sole signatory to RCG CBD's bank account; and the plaintiffs contend that he was the controller of that account.)
3. The plaintiffs therefore contend that Reliance Cleaning was a company utilised by the Primary Conspirators for the purposes of the Scheme, pointing to the substantial sums (Table 3.11) in rounded amounts paid into RCG CBD by Reliance Cleaning and equivalent sums paid out on either the same day or within a few days to: Tuff Gym (a company whose directors were Baris and Fidel Tukel - Ex K at 31417); Workforce Unlimited (another "ostensible" labour hire entity said to be utilised by the Primary Conspirators ); Investmint (a company whose sole director and company secretary was Fred Khalil); or Banq.
4. The plaintiffs say that the conduct involving Reliance Cleaning and RCG CBD (and involving Scott Crabbe, Peter Abboud and Fred Khalil) would not have occurred in the absence of the Scheme Recommendation or Primary Conspiracy and that it occurred, was orchestrated and implemented throughout by Gino Cassaniti, Fred Khalil, Peter Abboud and George Khalil in furtherance of the Scheme.

Finding re Scott Crabbe

1. At the outset, I note that by failing to file a defence within the requisite time Scott Crabbe is in default. John Stewart's affidavit sworn 11 September 2017 deposes that Scott Crabbe was served with the further amended originating process and the further amended statement of claim.
2. According to Sch 3 of the plaintiffs' closing submissions, the sum claimed against Scott Crabbe is said to be his proportion of the tax liability ($1,348,424.25) calculated on the amount paid into RCG CBD while Scott Crabbe was purportedly a director (being $1,618.254.35), which is said to make him 21.72% liable for the assessed income ($5,138,203.36), plus liquidation costs of $254, 962.32.
3. Given the evidence adduced during the Proceeding that related to Scott Crabbe (and the evidence given by Scott Crabbe in cross-examination in these proceedings), there is sufficient evidence in support of the allegations.
4. However, even so, I am not satisfied that it is appropriate to give default judgment.
5. I have made observations above as to Scott Crabbe's evidence. With no disrespect to him, I have no difficulty in accepting the submission that he was a straw director in the sense that he did not purport to exercise the duties and responsibilities of a director of the company and his role, ultimately, was simply in relation to the costing of tenders. The fact that his "title" changed (or "morphed") depending on the entity to which the tender was being sent reinforces that conclusion.
6. That said, I also have difficulty in accepting that someone in Scott Crabbe's position was on notice of facts that would have put an honest and reasonable person on enquiry as to the existence of a dishonest or fraudulent scheme of the kind alleged; nor, more specifically, of the circumstances of Gino Cassaniti's dishonest breaches of fiduciary duties. It seems to me not dissimilar to the position in Turner v O'Bryan-Turner where regard should be had to the position of the person said to be liable under the second limb of Barnes v Addy. I also note that the plaintiffs themselves made submissions that Scott Crabbe was a straw director, had no role in the creation of BAS, financial accounts or tax returns of Reliance Cleaning and that Scott Crabbe's evidence that he had nothing to do with the impugned payments was consistent with the documentary evidence.
7. While I note that failure to file a defence may be considered acceptance of the statement of claim, I have reason to doubt whether justice may be done by ordering default judgment against Scott Crabbe and thus, I do not find that default judgment should be entered against him.

Plaintiffs' submissions re John Haddad

1. John Haddad was a director of North Shore and Centerium Wholesalers.
2. From 5 October 2012 to 8 May 2013, payments totalling $931,000 were made by North Shore and John Haddad to RCG CBD. The plaintiffs say that payments totalling $272,000 were made by RCG CBD to Aaron Tippett from 11 October 2012 to 9 May 2013.
3. On 20 February 2013, John Haddad paid $508,600 to Bluemine and on 26 February 2013, Bluemine paid $508,600 to Banq. On 27 February 2013, John Haddad paid $90,000 to Bluemine and on 28 February 2013, Bluemine paid $100,000 to Pierre Youssef.
4. Moreover, from 27 February 2013 payments totalling $512,969.66 were made by North Shore to Bluemine and payments totalling $495,850 were made by Bluemine to Pierre Youssef, Mohmoud Khalouf, Centerium Wholesalers, Sam, Sonia and Eddy Haddad.

Findings - John Haddad

1. John Haddad has been served with the respective originating processes in the Bluemine and RCG CBD Proceedings, affidavits expressly in support of the applications for default judgment have not been filed and served.
2. Broadly, the pleadings in each Proceeding allege that the transactions involving John Haddad (and in the RCG CBD Proceeding, North Shore) were by arrangement with Gino Cassaniti pursuant to the Scheme Recommendation; and claim that John Haddad knowingly assisted Gino Cassaniti in dishonest and fraudulent conduct (RCG CBD third further amended statement of claim at [195], [197]; Bluemine third further amended statement of claim at [205], [207]).
3. The affidavit evidence filed in the Proceedings as a whole set out the evidentiary basis on which the claims against John Haddad are made, and to the extent that there is not a separate affidavit filed in support of the application for default judgment, I am satisfied the discretion conferred by r 16.3(2) should be exercised to dispense with the need for an affidavit in support. The basis for judgment against him has been established and he has been on notice of it for some time. I am satisfied that default judgment should be entered.

Causation defences

1. It is appropriate at this stage to consider the common defences that have been run by the respective defendants and I turn first to the causation defence. As a number of the defendants in effect adopted (with some additions) the AKA Parties' submissions on this issue, I will outline first the substance of those submissions.

AKA Parties - causation defence

1. The AKA Parties here contend that any compensable loss suffered by the plaintiffs was caused by the plaintiffs' failure to object to the notices of income tax and penalty assessment (Tax Assessment) issued in respect of Bluemine on 24 November 2016 under Pt IVC, not by any purported breach of duty of a director of Bluemine or the AKA Parties. It is said that whether such an objection would have been allowed, need only be assessed on the balance of probabilities; and that, if so, it is submitted the plaintiffs became the authors of their own misfortune.
2. The AKA Parties submit that there is an uncomfortable tension (or circularity) in the "paradoxical" manner in which the plaintiffs advance their case in the Bluemine Proceeding in respect of their claims for equitable compensation and damages under Barnes v Addy principles, which it is said are anchored to an alleged dishonest and fraudulent design characterised by a conspiracy to defraud Bluemine itself, the Commonwealth, and the Commissioner.
3. It is noted that, as expanded, equitable compensation and damages were sought (initially "jointly and severally") from the Scheme Participants in an amount calculated by reference to taxation debts (primary tax, penalties and interest) of Bluemine; and that the liquidator verified the amended pleading and each amended pleading thereafter. Similar claims are advanced on statutory grounds under the Corporations Act.
4. The AKA Parties point out that Bluemine's taxation debts arose, by default, on the premise that Bluemine derived assessable ordinary income in respect of moneys it received from the Paying Participants (which include two of the AKA Parties, being AKA Civil and AKA NSW). However, it is said that the Barnes v Addy claim depends on the liquidator establishing that the transactions pursuant to which Bluemine received the moneys for which it has been assessed, were not genuine transactions, in that no goods or services (or other consideration) were provided in exchange for receiving those moneys and that, in some cases at least, the payments were made pursuant to false tax invoices.
5. It is noted that the plaintiffs rely primarily upon evidence and information provided by officers of the ATO, including a former senior officer (Aris Zafiriou), in order both to form the belief as to truth necessary to verify the 13 July 2017 amended statement of claim and to establish that Bluemine did not in fact have any "lawful" entitlement to the moneys it received from the Paying Participants.
6. The AKA Parties say that, in the event that it is found that Bluemine provided no (or nominal) consideration in exchange for its receipts, such that Bluemine was not "beneficially" entitled to the funds it received, then it necessarily follows, by ordinary operation of the taxation legislation (see further below), that Bluemine did not derive ordinary (or statutory) income in respect of the moneys it received from the Paying Participants, including the AKA Paying Entities (i.e., that the ordinary income it did derive (from the commission it retained) is not properly calculated by reference to the moneys it received in its bank account in the relevant tax years).
7. Accordingly, it is said that, if the plaintiffs prove their case as to no beneficial entitlement due to no consideration being given in exchange for the receipts (being a case that it is said primarily relies on information already in the possession of and readily known to the Commissioner), then those same facts would be sufficient to conclude, on the balance of probabilities, that the Tax Assessments which ground the debts the plaintiffs are suing to recover, are excessive and wrong.
8. Complaint is made that, rather than objecting to the Tax Assessments under the readily available (and constitutionally necessary) procedure outlined in Pt IVC of the Taxation Administration Act, the plaintiffs instead commenced the present Proceedings. It is submitted that this is relevant: in the application of the principles of causation in respect of equitable compensation for breach of fiduciary and statutory duties by a director of a company; in the quantification of equitable and statutory compensation (if necessary); and in the considerations in respect of the commerciality of the relevant transactions under s 588FB and exercise of the discretion in s 588FF of the Corporations Act. Reference is made in this context to the opening submissions (at T 110.16-28), where it is said that the tension in the plaintiffs' case was acknowledged.
9. The AKA Parties say that this also has direct consequences with respect to liability under the second limb of Barnes v Addy and related Corporations Act claims, which require the plaintiffs to prove that the alleged breaches of duty caused the loss of which complaint is made. It is submitted that the liquidator, by failing to take the obvious step of objecting to the relevant Tax Assessments under Pt IVC, has caused any loss suffered by Bluemine.
10. Reference is made to the explanation by Cooke P, in Day v Mead [1987] 2 NZLR 443 (CA) at 451, for the maintenance in equity of a strict rule in relation to the events which follow a breach of fiduciary duty (in a passage approved by the majority of the Supreme Court of Canada in Canson Enterprises Ltd v Boughton & Co (1991) 85 DLR (4th) 129 (Canson Enterprises v Boughton), namely that: Compensation or damages in equity were traditionally said to aim at restoration or restitution, whereas common law tort damages are intended to compensate for harm done; in many cases, the present being one, that is a difference without a distinction. There is, however, the more significant historical difference that Courts of equity were regarded as having wider discretions than common law Courts. Equitable relief was said to be always discretionary. Its grant or refusal was influenced by ideas expressed in sundry maxims. He who seeks equity must do equity. He who seeks equity must come with clean hands. Delay defeats equity. These are merely examples. Further, relief could be granted on terms or conditions.
11. The AKA Parties point to the wide variety of remedies available to a court of equity following proof of a breach of fiduciary duty as making relevant that the plaintiffs have sought compensation for a debt which it is said (on their own case) would (more likely than not) not exist, if only the liquidator had (instead of expanding these Proceedings to include the breach of duty claims) requested the Commissioner to re-consider the Bluemine Tax Assessments in July 2017. It is said that, at that time, on the information that the liquidator knew the Commissioner had, and on the case relied on to expand the Proceedings to include the breach of duty claims, it followed that Bluemine did not derive the income assessed by the Commissioner. It is submitted that this Court need only assess whether such an objection would have been allowed, on the balance of probabilities; and, if so, then it is submitted that the plaintiffs have become the author of their own misfortune.
12. It is accepted that the liquidator is not funded by the Commissioner to object but it is said that it is relevant that the liquidator is a running a case that, if proved, would also prove the objection and that the liquidator treats the assessment as a loss on the basis of the same case that would prove the assessment excessive.
13. It is said that the Commissioner's Tax Assessments created the debt which the liquidator seeks to vindicate in these Proceedings and the Commissioner's own investigations through a "without notice" audit and the exercise of compulsory powers discovered the information which comprises the Commissioner's evidence upon which the liquidator places primary reliance to prove his claims, which if proved, show the Tax Assessments are excessive.
14. Further, it is said that, in the context of the claims under Pt 5.7B of the Corporations Act (the Pt 5.7B Claims), the plaintiffs ask the Court to apply the Corporations Act in a novel way to work an outcome which would infuse Bluemine with funds to which it never had any beneficial entitlement.
15. As to the relevant principles of causation for the purposes of a claim for equitable estoppel, the AKA Parties emphasise the requirement for precise focus on both the nature of the obligations and the nature of the breach; and to identify "the criteria which supply an adequate or sufficient connection between the equitable compensation claimed and the breach of fiduciary duty" (Maguire & Tansey v Makaronis (1997) 188 CLR 449; [1997] HCA 23 (Maguire v Makaronis) at 473). It is submitted that there will not be an adequate or sufficient connection between the equitable compensation claimed and the breach of fiduciary duty where the loss can be said to result from "clearly unreasonable behaviour" on the part of the plaintiff; and that, in those circumstances, any link between the breach and the loss will not be sufficiently direct (with the result that the loss complained of will not be recoverable).
16. Thus, it is submitted that a plaintiff's conduct is relevant to assessment of causation in the context of equitable compensation for breach of fiduciary duty; and that, if the plaintiff's conduct is clearly unreasonable, that could (and would in the circumstances of this case) result in there being an inadequate or insufficient connection between the compensation claimed and the breach alleged.
17. In the present case, it is submitted that while loss arising from a director's breach of duty by causing a company (Bluemine) to pay away its own money to the Receiving Participants when those entities provided no (or no sufficient) consideration in exchange could be said to be directly linked (sufficiently connected) to the breach, those are not the facts here said to warrant an order for equitable compensation. It is submitted that the question arises as to what Bluemine has actually lost as a result of the alleged breaches. In that regard, it is accepted by the AKA Parties that Bluemine has a tax debt but they emphasise that it also has (or had) subsisting Pt IVC rights.
18. It is noted that what is alleged against the AKA Parties in the Bluemine Proceeding is, in summary, that: the AKA Parties are knowing accessories to the director of Bluemine's breaches of fiduciary duty and therefore liable to pay equitable compensation in an amount calculated by reference to Bluemine's tax (and penalty and interest liabilities, in the amount of $5,138,203) and that the Receiving AKA Parties were recipients of funds paid pursuant to uncommercial transactions and should therefore be ordered under s 588FF of the Corporations Act to pay moneys to Bluemine in the total amount of $3,426,215.
19. It is submitted that, to the extent that the "loss" is the sum of the assessments imposed by the Commissioner, then the following circumstances are relevant: that the assessments were issued by default more than three years after the impugned transactions had taken place; that, by that time, the liquidator had control of Bluemine and the directors' control and duty had ceased; that, before the assessments were issued, the liquidator had the necessary control to lodge, but did not lodge, tax returns; that, as soon as the assessments were issued, Bluemine's Pt IVC rights arose; that from this time, the liquidator had the necessary control to engage, but did not engage, Bluemine's Pt IVC rights; that, by no later than 13 July 2017 when the plaintiffs filed an amended statement of claim expanding their case to include claims for equitable compensation, the liquidator had the necessary information to engage (or get advice concerning the merits of engaging) Bluemine's Pt IVC rights; that, on the facts said by the plaintiffs to support the breach of fiduciary duty claims, the Pt IVC objection would more likely than not have succeeded (save in respect of the amounts retained by way of fee or commission - referred to as the Fee Amounts); and that, as a result of allowing the objections, the assessments would have been amended down to calculate the tax by the value of the Fee Amounts.
20. The AKA Parties submit that, in these circumstances, the tax losses complained of were caused by (i.e., as a result of) acts or omissions of the third-party liquidator, which, it is submitted, were unreasonable.
21. It is said that the plaintiffs' ability to object under Pt IVC to the Tax Assessments giving rise to Bluemine's tax liability subsisted (at least until November 2020) (Tax Administration Act, s 14ZW). The AKA Parties say that the plaintiffs had due notice and opportunity to take the "obvious step" to seek to alleviate Bluemine's tax liabilities (by objecting under Pt IVC); and that it is unreasonable for the liquidator not to have taken these steps.

Principles of causation pointed to by the plaintiffs

1. The AKA Parties say that the authorities principally relied upon by the plaintiffs as to causation (see below, Nicholls v Michael Wilson & Partners Ltd [2012] NSWCA 383 (Nicholls) at [174] per Sackville AJA (with whom Meagher and Barrett JJA agreed); and Gageler J's minority observations in Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd (2018) 265 CLR 1; [2018] HCA 43 (Ancient Order of Foresters)) are distinguishable.
2. As to Nicholls, the AKA Parties say that in the present case the allegation is not of fraudulent dispositions of company property in breach of fiduciary duty; rather, it is the plaintiffs' case that the breaches of duty were in causing Bluemine to enter into a tax avoidance scheme (with the intention that Bluemine would never become beneficially entitled to the funds it received and subsequently disposed of, which ran a risk that the company would become insolvent, despite earning a fee, and that the Commissioner would issue assessments on a financial statement analysis). It is said that this is not a simple case of fraudulent disposition, since, on the plaintiffs' own case, Bluemine never beneficially owned the funds it promised to (and did) pass on. Secondly, they say that in Nicholls (at [174]) what is there summarised are the principles described by Spigelman CJ (with whom Priestley and Meagher JJA agreed) in O'Halloran v RT Thomas & Family Pty Ltd (1998) 45 NSWLR 262 (O'Halloran), which concerned separate and concurrent causes. It is said that O'Halloran is not inconsistent with McLachlin J's decision in Canson Enterprises v Boughton.
3. The AKA Parties emphasise that the breach in O'Halloran concerned improper conduct which prevented the sale of the shares at any time over the relevant period to any person including third parties. It is said that the plaintiff could not have sought to compel rectification and that there was no suggestion in that case that the plaintiff had acted unreasonably and no evidence adduced from which the court could have concluded that the plaintiff would have been successful in seeking rectification (referring to what was said by Meagher JA at 281).
4. The AKA Parties say that the statement of the plurality (Kiefel CJ, Keane and Edelman JJ) in Ancient Order of Foresters (at [1]) to the effect that the issues of causation might there be resolved without the need for any revision of principle is sufficient to dispose of any submission which seeks to rely upon the last two sentences of Gageler J's separate judgment (at [88]) in support of a contention that the principles of causation are as his Honour there describes. It is noted that his Honour was in the minority in Ancient Order of Foresters, and that the test as articulated at [88] has not been followed elsewhere. The AKA Parties submit that the plurality in Ancient Order of Foresters (Kiefel CJ, Keane and Edelman JJ) was correct to hold (at [9]) that: Whether a benefit can be said to be obtained "as a result of" knowing participation in a breach of fiduciary duty by another contrary to the principles of equity is a question of causation or contribution that depends on a "precise examination of the particular facts" of the case, rather than upon attempts to refine the expression "as a result of", as if that phrase has some determinate operation of its own that may be discerned and applied independently of the equitable principle of which it is part.
5. It is submitted that liquidator should have objected under Pt IVC to the Tax Assessments giving rise to Bluemine's tax liabilities.
6. It is therefore submitted that, if there is a finding that one or more of Gino Cassaniti, Peter Abboud and Fred Khalil was a director of Bluemine and that one or more of them breached his fiduciary duties to Bluemine in the manner suggested by the plaintiffs, then the question arises as to whether the "loss" complained of (being Bluemine's tax liabilities as assessed by the Commissioner in November 2016) was "as a result of" the breaches (said to have occurred between May 2011 to August 2013), in circumstances where: (i) Bluemine was under the control of the liquidator from between August 2013 and the time of the Tax Assessments; (ii) the liquidator never lodged a tax return for Bluemine; and (iii), despite forming the view that Bluemine was never beneficially entitled to the moneys it received from the Paying Participants, the liquidator did not cause Bluemine to object under Pt IVC to the Tax Assessments.
7. The AKA Parties submit that, applying Canson Enterprises v Boughton and the principles expressed above, the Bluemine tax liabilities were not caused in the relevant sense by any breach of fiduciary or statutory duty on the part of one or more of the directors of Bluemine but, rather, were the result of the "clearly unreasonable" behaviour on the part of the plaintiffs by not causing Bluemine to object under Pt IVC to the Tax Assessments which gave rise to the tax liabilities said to constitute the "loss", such that any losses should be "adjudged to flow from that behaviour, and not from the breach".

Causation in context of compensation under the Corporations Act

1. It is noted that the plaintiffs contend, in the alternative to their second limb Barnes v Addy claim, that the AKA Parties were involved (pursuant to s 79) in the contravention of Bluemine's director of their statutory duties in ss 181 and 182 of the Corporations Act.
2. The AKA Parties contend that s 79 is not here engaged. They say that, since none of them was a director of Bluemine, it is only by the operation of ss 181(2) and 182(2), respectively, that it is possible for them to contravene ss 181 and 182. It is said that, in order for that to be the case, it would in turn be necessary for the AKA Parties to have been persons who were "involved" in those contraventions within the meaning of s 79.
3. For the reasons set out above (at [1575]), in respect of the knowledge requirement for purposes of the second limb of Barnes v Addy, the AKA Parties say that, similarly, they were not "involved" in the contraventions of the directors of the Insolvent Companies within the meaning of s 79. It is said that they did not have knowledge, and cannot be imputed with the knowledge, of the "essential elements" of the dishonest and fraudulent design alleged. The AKA Parties say that it follows that the AKA Parties did not contravene s 181 or s 182 of the Corporations Act.
4. The AKA Parties further say that s 1317H is not engaged. They say that if there were to be a finding (against the above submission) that the AKA Parties were relevantly "involved" in the contraventions for s 79 purposes, (thereby engaging ss 181(2) and 182(2)), then, for there to be an order for compensation for those contraventions, the requirements of s 1317H remain to be satisfied and it is necessary that "the damage resulted from the contravention".
5. It is noted that in Adler v ASIC Giles JA rejected (at [708]) any analogy between s 1371H and equitable claims against fiduciaries and concluded (at [709]) that: In my opinion, the words "resulted from" in s 1317H are words by which, in their natural meaning, only the damage which as a matter of fact was caused by the contravention can be the subject of an order for compensation. Like the word "by" in s 82 of the Trade Practices Act 1974 (Cth) (see Marks v GIO Australia Holdings Ltd [1998] HCA 69; (1998) 196 CLR 494 at [38]-[42]), they should be given their ordinary meaning of requiring a causal connection between the damage and the contravening conduct, free from the strictures of analogy with equitable claims against fiduciaries.
6. Further, the AKA Parties say that causation under s 1317H should be determined as a question of fact by reference to common sense experience pursuant to the test prescribed by the High Court in March v E & MH Stramare Pty Ltd (1991) 171 CLR 506; [1991] HCA 12 (March v Stramare) (see Hydrocool Pty Ltd v Hepburn (No 4) (2011) 279 ALR 646; [2011] FCA 495 at [476] per Siopis J; Asden Developments Pty Ltd (in liq) v Dinoris (No 3) (2016) 114 ACSR 347; [2016] FCA 788 (Asden Developments v Dinoris) at [150]-[151] per Reeves J).
7. The AKA Parties say that it follows that the test of causation under s 1317H is no wider (and very likely stricter) than that which applies in respect of equitable compensation, as it is more akin to the 'traditional' tortious concept of causation.
8. Accordingly, it is said that any alternative claims for damages under s 1317H fail for want of causation on the basis that any loss to Bluemine arising from the Bluemine Tax Assessments was not relevantly caused by any contraventions of ss 181 and 182 by either the directors of Bluemine or the AKA Parties but, rather, by the plaintiffs not objecting to the Bluemine Tax Assessments under Pt IVC.
9. Similarly, it is submitted that an award of statutory compensation under s 1317H would not properly be calculated by reference to a tax liability in respect of which the person claiming the compensation unreasonably refuses to challenge by objecting to that liability under Pt IVC.

Any "loss" to Bluemine was caused by the liquidator's failure to object to the Bluemine Tax Assessments under Pt IVC

1. The AKA Parties say that the issues raised by their submissions in this regard arise for determination by application of the taxation legislation to the facts as found; and that there is no question of the exercise of the Commissioner's discretion. It is said that the Commissioner would determine the taxable facts and apply those facts to the tax legislation and therefore, this Court is in a position to anticipate the outcome.
2. In summary, the AKA Parties submit that any breach by a director of Bluemine (or the AKA Parties) did not relevantly cause the loss complained of by the plaintiffs. The AKA Parties make clear that they do not here intend to waive self-incrimination privilege and do not purport to put a positive case. Rather, they say that their case is contingent and that these submissions are premised on the event that findings of fact consistent with what the AKA Parties call the Five Propositions sought by the plaintiffs (i.e., findings that: (i) the invoices issues by Bluemine to AKA Civil and AKA NSW were false; (ii) no consideration was given or received, no goods or services were provided, in exchange for the payments to Bluemine; (iii) the transactions occurred; (iv) Bluemine was only ever a money transaction unit; and (v) Bluemine was never beneficially entitled to the funds it received (save for that part of the gross receipts Bluemine retained as a fee or commission - the Fee Amounts)). The AKA Parties say that their primary case is that it follows that Bluemine did not derive income in respect of those gross receipts, again, save for the Fee Amounts which are assessable income under the principals set out in Commissioner of Taxation v La Rosa (2003) 129 FCR 494; [2003] FCAFC 125 (La Rosa) at [23] per Hely J (with whom Carr and Merkell JJ agreed).
3. The AKA Parties say that this raises the issue as to whether an objection to the Bluemine Tax Assessments would have been allowed under s 14ZY(1)(a) (Objection Issue) on the following grounds: first, that the amounts deposited into Bluemine's bank accounts during the two relevant income years were neither assessable income under s 6-5 of the Income Tax Administration Act 1997; nor statutory income under any provision of the Income Tax Administration Act 1997 or Income Tax Administration Act 1936 (No Derivation Ground); second, in the alternative to the No Derivation Ground, the approximately $6.1 million in outgoings from Bluemine during the 2013 and 2014 tax years constituted allowable deductions as outgoings incurred in gaining or producing assessable income under s 8-1 of the Income Tax Administration Act 1997 (Allowable Deductions Ground); third that the amounts deposited comprise payments under a trust by which, as a matter of fact or by operation of law, Bluemine was constituted as trustee for the paying entities, rendering amounts deposited as neither assessable nor statutory income under Income Tax Administration Act 1997 or Income Tax Administration Act 1936 (Not Trustee's Income ground).
4. Further, the AKA Parties say that the Commissioner incorrectly calculated GST by reference to Bluemine's gross receipts during the relevant period because, on the liquidator's case, Bluemine did not make taxable supplies in respect of Bluemine's gross receipts for the relevant periods. The AKA Parties maintain that the merits of the tax arguments available to Bluemine must here be determined on the basis of facts as found under the plaintiffs' own case. The issue as here framed is as to whether income tax payable on receipts assessed to be assessable and GST payable on supplies assessed to be taxable supplies and penalties and interest thereon constitutes a form of compensable loss in equity where Pt IVC rights remain alive, have not been abandoned and an objection, if lodged, would succeed (to which the AKA Parties refer as the Loss Issue).
5. The AKA Parties submit that it should be found that, if Bluemine had objected on the grounds set out above, the Commissioner would have determined that: the gross amounts received by Bluemine (save for the Fee Amounts) were not assessable income derived by Bluemine; the Bluemine Tax Assessments did not assess Bluemine on the correct amount of taxable income, namely the Fee Amounts, and were therefore excessive; and the tax debt arising from the Bluemine Tax Assessments and resultant loss suffered by Bluemine was caused by the plaintiffs' failure to lodge an objection under Pt IVC against the Bluemine Tax Assessments, where the grounds for such objection outlined above were (and, it is said, remain) obvious and have merit.
6. Alternatively, in the event that there is a finding (contrary to the plaintiffs' contentions in this case) that the gross receipts were beneficially derived and therefore they remain the assessable income of Bluemine, the AKA Parties submit that it would follow that the gross outgoings paid by Bluemine would be deductible to Bluemine (see further at [2113] below).
7. For the purposes of the GST calculations, the AKA Parties say that it follows that Bluemine (on the plaintiffs' own case) is not liable for GST in respect of the gross receipts but is liable for GST in respect of the Fee Amounts. Further, it is said that no entitlement to input tax credits for any of its outgoings arises.
8. Further or in the alternative, the AKA Parties say that it should be found that the primary income tax liability which arises under the Bluemine Tax Assessments is either not, under the circumstances of this case, a compensable loss or the quantum of compensation should be reduced on equitable principles (see at [2130] below).

The facts, if found, that support of the contention that the loss was caused by the liquidator's failure to object to the Bluemine Tax Assessments

1. It is said that the evidence upon which findings consistent with the Five Propositions set out above (which include the plaintiffs' claims that no consideration was given, or goods or services provided, by Bluemine to the Paying Participants (inclusive of AKA Civil and AKA NSW) in exchange for the payments those entities made to Bluemine during the 2013 and 2014 tax years), is comprised of information which is already in the possession of the Commissioner (and that the evidence of the liquidator and Mr George Khouri, of the ATO, which was always available to Bluemine and is available to the Commissioner, supports the AKA Parties' (contingent) submissions).

The liquidator's evidence

1. In summary, the AKA Parties point to the liquidator's evidence as follows. As noted already, the plaintiffs' original verified statement of claim in the Bluemine Proceeding was filed on 8 September 2016 (and did not seek equitable compensation or plead any form of fraud). The Deed of Indemnity between the Commissioner and the plaintiffs was entered into on or about 19 December 2016. The plaintiffs amended their statement of claim on 13 July 2017, introducing the claims for equitable compensation which seek loss and damage calculated by reference to the Bluemine Assessments. The liquidator verified the amended statement of claim.
2. It is noted that the liquidator's evidence is that, prior to the Commissioner's involvement, he investigated the affairs of Bluemine and those investigations were "somewhat stunted" and characterised by a "paucity of documents"; and that the Commissioner was the primary source of information in his investigation. It is further noted that the liquidator accepted that, due to the covert nature of the Commissioner's audit, Bluemine was not able to make any contentions to the Commissioner prior to the issuance of the Bluemine Assessments and that he did not make any contentions to the ATO. The liquidator considered and immediately dismissed the prospect of an objection under Pt IVC because "[he] had absolutely no reason to doubt the veracity [of] the application of the Deputy Commissioner of Taxation to the assessment and [he] had no books and records in front of [him] that gave rise to, you know, even contemplating doing so" (T 221.20-25).
3. By at least 13 July 2017, the liquidator had verified his pleaded case that Bluemine had no lawful (beneficial) entitlement to the funds it received from the Paying Participants. The AKA Parties point to this as being that the liquidator believed that Bluemine issued invoices in respect of services that were either never provided or provided at much inflated prices. It is noted that the liquidator accepted in cross-examination that the claims for equitable compensation calculated by reference to a tax liability (which on his own case are excessive) "appears paradoxical" (T 221.30).

Mr Khouri's evidence

1. Mr Khouri accepted that, upon receipt of assessments in respect of which no objection has been lodged, ATO debt officers simply accept that the assessment is good. Mr Khouri accepted as being "a sound position" (T 285.1-2), speaking hypothetically, that where a taxpayer receives funds which it does not own and which are subsequently distributed in accordance with the direction of the owner, those funds do not form part of the assessable income of the first taxpayer. Mr Khouri accepted that had he been aware that the plaintiffs were asserting that the receipts of the five companies in these Proceedings were in fact owned by someone else, that was a fairly significant fact, and he would have passed it onto the audit group at the ATO.
2. It is noted that Mr Khouri explained that "… if a party believes that an assessment is incorrect, they have four, Pt IVC rights to lodge objections and referrals to the AAT and appeals to the Federal Court of Australia to challenge those assessments".

The bifurcated structure of the Taxation Administration Act and constitutional imperatives

1. The AKA Parties note that the Taxation Administration Act is, relevantly, divided as between Pt IVC (objection, review or appeal), on the one hand, and recovery, on the other.
2. It is also noted that it is a policy of the Taxation Administration Act (in relation to challenges or objections or review of an assessment) that a taxpayer is to "pay now, argue later"; and it is said that this policy is evidenced by what is commonly known as the "conclusive evidence provision" in s 350-10(1) of Sch 1 of the Taxation Administration Act (which provides that the assessment itself is conclusive evidence that the assessment was properly made and that the particulars on the assessment, including the amounts, are correct). Reference is also made to s 175 of the Income Tax Assessment Act 1936 (Cth) (Income Tax Assessment Act 1936), which provides that "[t]he validity of any assessment shall not be affected by reason that any of the provisions of this Act have not been complied with".
3. The AKA Parties say that the effect of these provisions is that the Commissioner is empowered to recover tax in reliance on an assessment, as conclusive evidence of a debt, and it is no defence to an action to recover that debt that the assessment is excessive or wrong, or that an objection in respect of the assessment has been lodged, or following that, that an appeal or a review of an objection decision is pending, or that there was some defect in the issuance of the assessment (such as conscious maladministration in its making; although other proceedings and remedies would be available in such a case).
4. It is noted that the existence of Pt IVC objection rights is the reason why s 350-10 is not unconstitutional; since, absent the existence of those rights, a regime which allowed for the conclusive establishment of the existence of a debt on the basis of an unreviewable act of the executive, would impermissibly encroach into the realm of the judiciary under Chapter III of the Constitution or otherwise impermissibly create an incontestable tax.
5. The AKA Parties point to the fact that the Commissioner has a duty to determine an objection and to decide whether to allow it, partly allow it or disallow it (see Taxation Administration Act, s 14ZY). It is noted that if an objection is successful, in whole or in part, the Commissioner must issue an amended assessment to reflect the objection decision and there is no time limit for amending an assessment to reflect a determination as a result of Pt IVC rights (Income Tax Assessment Act 1936, s 170(1), Item 6). Again, at least as at the time of their closing submissions, the AKA Parties say that the time limit for objecting had not yet expired (but they point out that even if it had, the Commissioner may extend the time).

The Court's jurisdiction to consider the merits of an objection to an assessment

1. The AKA Parties say that it is not inconsistent with the requirement under s 350-10 (that this Court treat as conclusively established for purposes of, what are in effect, "taxation debt recovery proceedings" that the "amounts and particulars of the assessment … are correct") for the Court simultaneously to consider whether an objection would be successful for the purposes of a determination of causation.
2. Insofar as the plaintiffs submit that this Court cannot "look behind the correctness of an assessment" as that course is precluded by, inter alia, the decisions of the High Court in Broadbeach and the Court of Appeal in Anglo American Investments Pty Ltd v Deputy Commissioner of Taxation (2017) 347 ALR 134; [2017] NSWCA 17 (Anglo American), the AKA Parties do not dispute those authorities but say that they do not preclude the approach here sought by the AKA Parties.
3. It is noted that, in Anglo American, the taxpayer sought to challenge notices of assessment as being the product of conscious maladministration of the Commissioner. Payne JA, with whom McColl and Meagher JJA agreed, applied Futuris to hold (at [52]-[54]) that in tax debt recovery proceedings in a State court, the Court could not determine, as part of a defence to the debt recovery proceedings, a collateral challenge to the notice of assessment on judicial review grounds under the Administrative Decisions (Judicial Review) Act 1977 (Cth), s 39B of the Judiciary Act 1903 (Cth) or s 75(v) of the Constitution; particularly when such a proceeding had not been issued. The AKA Parties say that their submissions do not traverse this accepted principle.
4. The AKA Parties say that they do not seek to challenge the Bluemine Assessments in this forum, nor do they submit that findings or determinations be made that the debt created by the Bluemine Tax Assessments is not owing. Rather, it is submitted that, in determining whether the plaintiffs were the author of their own misfortune and thus themselves caused the loss complained of, it is entirely appropriate (and necessary) to consider whether the probabilities are in favour of the Commissioner allowing an objection to the Bluemine Tax Assessments under Pt IVC.
5. The AKA Parties say that authorities such as Anglo American stand for the proposition that, in an action predicated on the existence of a debt arising from the issuing of an assessment, the Court must accept the assessment as conclusive evidence of the matters in s 350-10, Item 2 of Sch 1 of the Taxation Administration Act, that is, that "the assessment was properly made"; and "except in proceedings under Pt IVC of [the Taxation Administration Act] on a review or appeal relating to the assessment - the amounts and particulars of the assessment are correct".
6. The AKA Parties say that the authorities relied upon by the plaintiffs do not stand for the proposition that it is outside the bounds of this Court's jurisdiction to consider the merits of an objection, review or appeal under Pt IVC in deciding issues which are within its jurisdiction to decide, such as: applications for a stay or adjournment of proceedings; applications for a stay of execution of a judgment debt; whether to make an order for the winding up of a company; whether there had been a misrepresentation or breach of warranty. It is submitted that these categories are not closed and that the Court may look at the merits of a Pt IVC objection to determine causation, quantum of loss and the exercise of any discretions.
7. Reference is made by the AKA Parties in this regard to the following authorities.
8. First, Snow v Deputy Commissioner of Taxation (1987) 14 FCR 119 (Snow) at 139.7, where French J, as his Honour then was, identified the merits of a taxpayer's appeal as one of the relevant matters bearing upon the exercise of the discretion to grant a stay of execution of a judgment debt based on a tax assessment (although his Honour also noted that some judges had expressed different views on the point).
9. Second, Southgate Investment Funds Ltd v Deputy Commissioner of Taxation (2013) 211 FCR 274; [2013] FCAFC 10 (Southgate Investment), where, in considering the exercise of the discretion to grant a stay of execution of a judgment debt based on a tax assessment, the Full Court of the Federal Court held it permissible to take into account the merits of a pending Pt IVC proceeding (see at [77(g)] per McKerracher, Jagot and Griffiths JJ).
10. Third, Broadbeach, where it is said the High Court recognised (at [13]) a concession by the Deputy Commissioner of Taxation that, notwithstanding the presumption of insolvency that would apply under s 459C(2)(a) of the Corporations Act, "upon the hearing of such winding up applications the court might properly have regard to whether the taxpayer had a "reasonably arguable" case in proceedings under Pt IVC of the Administration Act, if those proceedings then still be on foot" and that questions of the kind canvassed in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; [1964] HCA 69 might arise. The AKA Parties say that Broadbeach stands for the proposition that, while the existence of proceedings under Pt IVC does not give rise to a "genuine dispute" as to the amount or existence of a debt for purposes of s 459H(1)(a) of the Corporations Act so as to set aside a statutory demand, engagement of the Pt IVC process where the taxpayer has a reasonably arguable case may, as a matter of substance, serve as a basis upon which a court would not make a winding up order.
11. Fourth, Deputy Commissioner of Taxation v Bayconnection (2012) 127 ALD 64; [2012] FCA 363 at [9], where the Deputy Commissioner of Taxation conceded the correctness of the proposition recorded in Broadbeach at [13]. It is noted that Robertson J (at [26]) summarised the relevant principles (later adopted by Leeming JA (with whom Beazley P, as Her Excellency then was, and Emmett AJA agreed), in Peter Sleiman Investments v Deputy Commissioner of Taxation (2017) 105 ATR 431; [2017] NSWCA 81 at [36]), as follows: There is no doubt that there is a discretion and that there are principles relevant to the exercise of that discretion. A principle of great importance is that the collection of the revenue should not be prejudiced. But there may be circumstances where an application to wind up the company on the grounds of insolvency should be adjourned until the outcome of Pt IVC proceedings is known. The circumstances in which such a discretion may be exercised include where the collection of the revenue is not prejudiced or any such prejudice is insubstantial, where a debtor company has a reasonably arguable case in proceedings under Pt IVC of the Administration Act and where those proceedings are soon to be heard.
12. Robertson J there ordered an adjournment of the winding up proceedings (at [63]), accepting that the defendant company had a "reasonably arguable" case in the Pt IVC proceedings and that, although the defendant company was insolvent, it had no other third-party creditors other than the Deputy Commissioner of Taxation (at [58]-[59]).
13. The AKA Parties say that in the present proceeding the Court is called upon to determine whether an objection would have been successful, specifically for purposes of s 14ZY(1)(a), in order to demonstrate severance of the causal chain as between the alleged breaches and the taxation liabilities which arose, which are said to constitute the loss. The AKA Parties submit that, in this context, the discretionary power to stay recovery proceedings or not to make a winding up order is relevant by way of illustration that it is within this Court's jurisdiction to consider the merits of an objection in the context of determining the element of causation in respect of a claim for compensation for breach of duty.
14. The AKA Parties say that this submission is consistent with the observations of Rothman J in Pratten v Commonwealth Director of Public Prosecutions (2013) 302 ALR 329; [2013] NSWSC 594 at [123]-[124].
15. The AKA Parties also refer to Aquatic Air v Siewert as an additional authority which supports the proposition that under certain circumstances it is both appropriate and within this Court's jurisdiction to consider the "correctness" of an assessment, even though it must be accepted that the Court could not itself make orders vitiating the assessment. It is said that those circumstances include where the merits of an objection (or the correctness of an assessment) are directly relevant to elements of the specific cause of action pleaded, such as, it is submitted, causation. Reference is made to the ultimate conclusion by Brereton J, as his Honour then was, at [71(3)] in this regard.
16. The AKA Parties say that, here, in order to determine the issue of causation, there does not need to be a final determination of the correctness of the Bluemine Tax Assessments; rather, that, in considering whether the alleged breaches of duty caused the loss complained of, what is to be determined is whether, on the balance of probabilities, an objection under Pt IVC would succeed, in whole or in part. It is said that any finding with respect to that question will not impact whether there is a debt due and payable by Bluemine but that it may, properly, impact the Court's assessment of whether the cause of the loss complained of was relevantly, for purposes of equitable and statutory compensation, caused by the liquidator and not the director(s) of Bluemine. It is submitted that this decision is also relevant in that it supports the proposition that the perceived tax liability of an entity at a particular time may be relevant to the cause of action pleaded.
17. The AKA Parties further note that, in professional negligence cases involving solicitors, in determining whether a solicitor is negligent in advising her or his client, regard would be had to the accuracy and appropriateness of the legal advice given and that, in the context of taxation law, this necessarily involves a consideration of the likelihood of the Commissioner assessing a taxpayer in a particular way. Reference is made in this regard to Symond v Gadens Lawyers Sydney Pty Ltd (2013) 96 ATR 658; [2013] NSWSC 955 at [217]-[218] per Beech-Jones J. The AKA Parties say that this case is highly relevant because it is an example of the Court looking behind an assessment to determine whether a solicitor ought to have known that s 45B applied. Furthermore, the AKA Parties say that the reference by his Honour there to the test being whether the Commissioner would "successfully" apply s 45B must be a reference to the outcome after prosecution of Pt IVC rights. It is said that this emphasises the importance of Pt IVC to the question as to what is the loss occasioned by an assessed tax liability.

BCI Finances v Binetter

1. The AKA Parties emphasise what they identify as the differences between this case and BCI Finances v Binetter. The AKA Parties say that the critical feature of that case was that the directors agreed to conceal the true facts, thereby effectively depriving BCI of the ammunition needed to contest the amended assessments in earnest; the directors agreed to keep silent on what really happened. It is said that the reason there was an increased exposure to increased tax liability was not merely that the Commissioner might assess the incoming funds as income, it was because the directors "conspired" not to tell the truth to enable the Court properly to characterise the inflows as not assessable. In any event, it is noted that the directors themselves abandoned their Pt IVC rights.
2. The AKA Parties note that in that case Gleeson J found that the directors breached their fiduciary duties to the applicant companies in liquidation in that (by filing a tax return and then deploying incomplete documents to support the return, concealing the offshore deposits and to whom they belonged) they exposed the applicants to a risk that the Commissioner would issue amended assessments requiring them to pay tax that they would not have the funds to pay. The AKA Parties say that, critically, the distinguishing feature is that the directors agreed between themselves to continue to hide the truth and therefore refused to arm BCI Finances Pty Ltd with the information to prosecute the Pt IVC rights.
3. The AKA Parties say that it was the deliberate concealment by the directors of the offshore deposits throughout the ATO tax audit and throughout the tax appeals and court proceedings, that was of significance. It is noted that the Full Court of the Federal Court on appeal observed (at [565]) that the existence of the offshore deposits "was not disclosed to the Commissioner and it was intended that their existence would not be disclosed in the event of a tax audit or tax proceedings". The companies were found to have suffered loss in the amount of the liabilities incurred by reason of the amended assessments.
4. The AKA Parties say that the loss found in BCI Finances v Binetter was in one sense a squandered opportunity to object on a full and proper basis, instead of on a deliberately incomplete basis by concealing material information, critical to the success of the objection. It is said that, had the offshore deposits been disclosed, that would have affected the determination as to whether the receipts were loans, and if they were loans (obligation to repay), then the funds paid pursuant to the loans were not assessable as income (referring to what was said by the Full Court at [559]; [561]-[562]).
5. It is said that even though the Full Court expressed the view that the incoming receipts were repayable (and on that basis, it would follow, not assessable income), that did not affect the question whether the breach of duty had caused the loss as calculated by the full amount of the assessment (for the reason that long before then the directors had already abandoned the companies' Pt IVC rights and there was thereafter no possibility of having the assessments reduced). In contrast, the AKA Parties emphasise that the liquidator has here had the power to object with full and comprehensive information.
6. In summary, the AKA Parties say that BCI Finances v Binetter is distinguishable in material respects from the present case. First, that in BCI Finances v Binetter, the Pt IVC rights of the applicant companies in liquidation had been exhausted (indeed, abandoned by the directors prior to winding up) and the liabilities for primary tax, interest and penalties had become final. Second, that the directors had agreed amongst themselves to conceal the true nature of the transactions (the existence of the offshore deposits) from the Commissioner (whereas here it is said that, as at the time of the hearing at least, the Pt IVC rights of Bluemine had not been yet been exhausted and the assessed liabilities for primary tax, interest and penalties were not final). It is said that, on the plaintiffs' case in these Proceedings, an objection to the Bluemine Tax Assessments would be successful (see further at [2085] below), including for the reason that, contrary to BCI Finances v Binetter, the Commissioner already has the information needed to determine the objection in Bluemine's favour; and there is no relevant concealment or obfuscation.
7. The AKA Parties say that, here, the plaintiffs' case stands in complete opposition to the position taken by the Commissioner in the Bluemine Reasons for Decision in respect of the Bluemine Tax Assessments; and that the plaintiffs' conduct in not lodging an objection premised on the case for which they contend in the present Proceedings is the cause of the loss they claim.
8. The AKA Parties thus say that there is an insufficient basis for a compensable loss in this case by reference to Bluemine's tax liabilities, referring (as apposite in the present case) to the passage cited by Gleeson J in BCI Finances v Binetter at [323] from the judgment of Browne-Wilkinson LJ in Target Holdings Ltd v Redferns [1996] AC 421 (Target Holdings) at 423 (also cited with approval by Spigelman CJ (with whom Priestley and Meagher JJA agreed) in O'Halloran): [T]he defendant is only liable for the consequences of the legal wrong he has done to the plaintiff and to make good the damage caused by such wrong. He is not responsible for damage not caused by his wrong or to pay by way of compensation more than the loss suffered from such wrong (emphasis added)
9. The AKA Parties say that the above decisions confirm that the merits of an objection may here be considered (i.e., effectively, answering the question whether an objection would more likely than not be allowed) notwithstanding the conclusive evidence provision. It is said that this does not constitute a collateral attack on the assessments.
10. The AKA Parties say that the import of the above decisions is to establish that the context (for example, the nature of the claim for relief or charge and the defence to that claim or charge) of a case may require the Court to consider the correctness of a tax assessment in order to determine issues specific to that case which do not depend upon vitiating the debt created by the assessment. It is said that this arises here in the context of, first, causation, and, second, whether there has been a compensable loss while Pt IVC rights remain alive and have not been abandoned.
11. It is accepted that, in recovery proceedings, on the cause of action created by the assessment, the notice of assessment is conclusive evidence of the debt. However, it is said that, here, the questions are as to causation of the loss. It is submitted that the mere fact that a statutory debt arises from the issuance of an assessment, which is unchallengeable outside Pt IVC proceedings, does not answer the questions before this Court.

Conclusive evidence provision of the Taxation Administration Act and the Commissioner's statutory duty

1. It is noted that the plaintiffs point in submissions to authorities concerning the "conclusive evidence provision" (Taxation Administration Act, Sch 1, s 350-10(1), Item 2), which provides that the production of the Notices of the Bluemine Tax Assessments is conclusive evidence that: the assessment was properly made; and, except in proceedings under Pt IVC of the Taxation Administration Act on a review or appeal relating to the assessment, the amounts and the particulars of the assessment are correct.
2. The AKA Parties say that the conclusive evidence provision does not justify or excuse the liquidator's failure to take the obvious step of objecting, or even making enquiries about objecting. They say that neither the authorities pointed to by the plaintiffs in submissions nor the interpretation of s 350-10 of Sch 1 to the Taxation Administration Act is in dispute between the parties. Rather, what they say is critical is the liquidator's "considered decision" to dismiss the idea of lodging an objection, such that he avoided confronting the significance of the following words in s 350-10(1) "except in proceedings under Pt IVC of the [the Taxation Administration Act] on a review or appeal relating to the assessment".
3. The AKA Parties say that the fact that the liquidator verified on oath that he believes his pleaded case to be true and correct is fundamentally inconsistent with a considered dismissal of the viability of an objection on the claimed basis that he had no reason to doubt the veracity of the Bluemine Tax Assessments. They say that there was every reason to do so. They say that a liquidator with Mr Ball's experience ought to have doubted the correctness of the Bluemine Tax Assessments by at least 13 July 2017, when he verified the amended statement of claim which pleaded that Bluemine was never lawfully (beneficially) entitled to the moneys it received from the Paying Participants as those transfers were without consideration, made on the basis of "purported invoices" and in respect of which no goods or services were provided.
4. It is said that the parties with existing authority to lodge an objection to the Bluemine Tax Assessments are the plaintiffs; and that they have steadfastly refused to do so. The AKA Parties say that, when confronted with an application seeking orders for the appointment of a special purpose liquidator to, if consistent with legal advice, object to the Bluemine Tax Assessments, the liquidator opposed that application. They say that, ultimately, that application was dismissed primarily for the reason that the applicants were not themselves willing to seek to prove the liquidators' case in the substantive Proceedings in the context of an interlocutory application (the plaintiffs cavil with this proposition).
5. The AKA Parties say that, despite the fact that the liquidator has not to date objected to the Bluemine Assessments, it remains open for him to do so until at least 24 November 2020, after which time he would need to seek an extension from the Commissioner. It is submitted that, given the obvious merits of the objection, it is submitted that an extension would be given.
6. The AKA Parties say that, here, the questions are not hypothetical; and that the merits of the objection may be discerned from the facts otherwise found in this case.
7. It is noted that an objection must meet the requirements of s 14ZU of the Taxation Administration Act to be valid. An objection will be valid if it: is made in an approved form which may be seen to be user-friendly and is readily accessible by taxpayers and their agents online; is lodged within the period prescribed by s 14ZW (24 November 2020 unless an extension is granted); and states fully and in detail the grounds relied upon by the taxpayer.
8. It is noted that, once an objection is lodged, the Commissioner must decide whether to allow the objection (either in whole or in part) or disallow it (Taxation Administration Act, s 14ZY(1)). The Commissioner's statutory duties and administrative practice upon receiving and considering an objection include: to consider all information in his possession in determining whether to issue amended assessments under s 166 of the Income Tax Assessment Act 1936; and to refer the objection to officers who were not involved in issuing the assessments the subject of the objection. Reference is also made to the ATO website as reflecting the ATO's usual practice in this regard.
9. It is noted that Mr Khouri's evidence confirmed, without any objection, that independent review and consideration is given to any objection by an appeals and review group within the ATO comprised of a new decision-maker to the officer who raised the assessment.

The grounds upon which an objection, had it been lodged by the liquidator, would have succeeded

1. The AKA Parties raise three grounds of objection upon which they contend that an objection under Pt IVC would have succeeded, as follows.

No derivation ground - the gross amounts deposited not assessable income

1. The AKA Parties say that a central plank of the plaintiffs' claims for equitable and statutory compensation, which were first introduced by verified amended statement of claim on 13 July 2017 (nearly a year after commencement of the Proceedings in August 2016), is that Bluemine never had any lawful (beneficial) entitlement to the amounts it received from the Paying Participants and that no consideration was given in exchange for those amounts. As noted above, the AKA Parties say that this position is fundamentally at odds with the basis upon which the Commissioner assessed Bluemine for income tax, being that Bluemine derived as ordinary income from carrying on a business in respect of all funds (net of GST which should not have been calculated by reference to gross receipts) which were deposited into its bank account during the relevant tax years, including funds said to have been deposited by AKA Civil and AKA NSW.
2. It is submitted that, if the liquidator's claim in the above regard is proved, it follows that Bluemine did not derive income in respect of those receipts such that the Bluemine Tax Assessments are excessive (and the Commissioner would agree they are excessive) to that extent.
3. It is noted that, for income to be assessable as ordinary income under s 6-5 of the Income Tax Assessment Act 1997, it must first be derived. The AKA Parties say that the hallmark of derivation (aside from constructive derivation the subject of s 6-5(4) which is not relevant here) is that the amount has "come home" or "come in" to the taxpayer. It is noted that in Federal Commissioner of Taxation v Clarke (1927) 40 CLR 246; [1927] HCA 49 at 261, Isaacs ACJ said that "derived" simply means "obtained" or "got" or "acquired" and that "all income is derived from something and by someone". Reference is made to what was said in Reuter v Federal Commissioner of Taxation (1993) 111 ALR 716 at 730 by Hill J in this regard (in a statement approved by the Full Court in MIM Holdings Ltd v Federal Commissioner of Taxation (1997) 36 ATR 108 at 117), namely that "[p]erhaps the most usual usage of the word "income" in ordinary speech is to describe that which comes in as a reward for services. Amounts such as salary, wages, commission, tips and the like, are universally regarded as income".
4. It is noted that, in the present case, the plaintiffs contend that Bluemine did not perform services, yet it has been assessed for its gross receipts as if it had performed services in exchange for those receipts. The Bluemine Tax Assessments are premised on the amounts deposited into Bluemine's bank account during the relevant tax years constituting ordinary income from "sales" or "carrying on a business". The AKA Parties say that, plainly, on the plaintiffs' case, there were no "sales".
5. Section 995-1 of the Income Tax Assessment Act 1997 defines "business" as any "profession, trade, employment…". It is noted that the question of whether particular activities constitute a business is one of fact and degree. Also, the question of what income arises from the business must take into account the nature of the business. The AKA Parties say that the Commissioner correctly identifies in the Bluemine Reasons for Decision at [115] that: ....There is generally considered to be three components of ordinary income: income from personal exertion (eg. employment); income from property (eg. rent, dividends, interest) and income from carrying on a business (eg. retail sales, farming).
6. However, it is said that there has been no suggestion by the Commissioner or the plaintiffs, nor could there be, that the gross amounts deposited constitute income from "personal exertion" of Bluemine or "income from property".
7. As to the question of business income: it is said that, assuming the "business" could be conceived of as the business of a money transaction unit, as the plaintiffs suggest (or perhaps as a clearinghouse or professional trustee), the question would be what was earned by that business. It is noted that the plaintiffs' case in these Proceedings is that Bluemine did not engage in any activities or provide any goods or services to the Paying Participants in consideration for the $6.6 million deposited into Bluemine's bank account during the 2013 income year or for the $170,000 deposited into its bank account during the 2014 income year; all that could be earned is the Fee Amounts.
8. To the extent that it is suggested the business is that of a "money transaction unit" (that is, a business of acting as an intermediary in and arranging and facilitating the remittance of funds between transferor and transferee entities), then the AKA Parties say that the assessable income of that business comprises the Fee Amounts it earns from acting as an intermediary in and arranging and facilitating the remittance of funds transfers. They say that the gross amount of the funds received from the transferor or sender of funds for remittance by the business is not included in the assessable income of that business, much in the same way the value of a package received by a courier business from the sender of that package, is not included in the assessable income of that courier business and its assessable income comprises only the fee, (analogous to the Bluemine Fee Amounts) it earns for remitting the package from the sender to the recipient.
9. The AKA Parties say that the more likely characterisation is that the plaintiffs' case depends on there being no identifiable business; i.e., the case depends on what amount to sham arrangements under which it is said that Bluemine did nothing to earn each of the amounts it received in the relevant income years). It is accepted that the plaintiffs do not expressly use the word "sham"; however, it is said that it is sufficiently clear from the case as pleaded that the liquidator asserts that "purported" tax invoices issued by Bluemine to the AKA Civil and AKA NSW, were sham invoices.
10. The AKA Parties say that, if the plaintiffs prove their case, which is in effect a case of a sham arrangement using invoices as a disguise for Bluemine to act as a conduit which had the practical effect of moving money from one group of entities to a related group of entities, then it cannot be correct that Bluemine derived income in respect of all of its receipts during the relevant period; and that if the liquidator's case in this regard is proved, the Bluemine Tax Assessments are excessive.
11. The AKA Parties submit that the plaintiffs case that "purported invoices" were created and issued in respect of non-existent services so that the issuing entity could claim a tax deduction despite never having incurred a deductible expense in respect of the payment made pursuant to the purported invoice, constitutes, in effect, a sham arrangement (citing Leeming JA's description of sham in Lewis v Condon (2013) 85 NSWLR 99; [2013] NSWCA 204 at [68]-[70], the most important aspect of which is that there must be intentional deception as to the effect of a document - here, the purported invoices). The AKA Parties submit that, once it is accepted that the liquidator pleads a sham arrangement, the merit of the Pt IVC objection becomes apparent (referring to Allsene Pty Ltd v Federal Commissioner of Taxation (1989) 20 ATR 1688 (Allsene) per Lockhart, Beaumont and Einfeld JJ). In Allsene, the Full Court of the Federal Court (at 1704) held that funds received further to sham transactions did not have the character of income in the hands of the recipient and were therefore not assessable.
12. The AKA Parties say that, here, on the liquidator's case, the arrangement was a cloak to get money from one related entity to another using an interposed entity, being Bluemine, to facilitate the transfer; and the true legal character of the payments was that Bluemine did nothing to derive the income it received and then immediately paid out. It is said that, just as the moneys received and payments made by Allsene Pty Ltd (Allsene) pursuant to a sham arrangement were neither assessable nor deductible to Allsene, so too are the moneys received and payments made by Bluemine, on the liquidator's case, neither assessable nor deductible (citing Allsene at 1705).
13. The AKA Parties say that it follows that if the Bluemine invoices to the AKA entities are ultimately held to be sham invoices in the sense that no services were actually provided, then the Commissioner could not, in determining an objection, approbate and reprobate, and the amounts received and paid pursuant to those sham arrangements would neither be assessable nor deductible in the hands of Bluemine.
14. Accordingly, it is submitted that, on the balance of probabilities, the objection would be allowed, and that the approximately $6.6 million received by Bluemine in the 2013 income year and the $170,000 received by Bluemine in the 2014 income year was not assessable income; save for the Fee Amounts.
15. It is said that, as the liquidator made clear, the plaintiffs have not previously contested the issue of the Bluemine Tax Assessments; so an objection would be the first opportunity in which the Commissioner would be required to re-consider the merits of the default position as set out in the Bluemine Reasons for Decision; and that, as Mr Khouri made clear, the position that where a taxpayer receives funds which it does not own and which are subsequently distributed in accordance with the direction of the owner, that those funds do not form part of the assessable income of the first taxpayer was a "sound position" and "if a party believes that an assessment is incorrect, they have....Pt IVC rights to lodge objections and referrals to the AAT and appeals to the Federal Court of Australia to challenge those assessments" (T 285.25-30). It is submitted that Bluemine has more than an "arguable case", in fact, it has a case which would more likely than not succeed (see Southgate Investment).
16. The AKA Parties say that, since at least Federal Commissioner of Taxation v Dalco (1990) 168 CLR 614; [1990] HCA 3 (Dalco) (see at 623 per Brennan J; and they refer to the more recent case of Bosanac v Commissioner of Taxation (2019) 267 FCR 169; [2019] FCAFC 116 at [57] per Greenwood, Burley and Colvin JJ), it is well established that in order to prove an assessment is excessive, a taxpayer must prove that the correct amount of tax is lower than the amount assessed and what that amount is; and that it is insufficient to simply point to error in the Commissioner's reasoning. They say that how that is done varies from case to case. Here, they say that it is done by pointing to the amounts assessed and establishing that those amounts were not derived as ordinary or statutory income, i.e. on the plaintiffs' case, the funds were not the funds of Bluemine; or if they were, the matching outflows were deductible. No goods or services or consideration was ever provided for the gross receipts - according to the plaintiffs. The Fee Amounts on the other hand were earned for (as the plaintiffs say) acting as an intermediary in and arranging and facilitating the remittance of funds between transferor and transferee entities.
17. It is submitted that the Fee Amounts derived by Bluemine would be assessable under s 6-5 of the Income Tax Assessment Act 1997 in each of the income years on the principles set out in La Rosa.
18. For the 2013 income year, it is said that the Fee Amount would be calculated by deducting from the total moneys received by Bluemine of $6,613,419, the total moneys paid out of $5,709,494. The resulting Fee Amount received by Bluemine from the AKA Parties of $903,925 is the correct amount of assessable income. They say that, as no further deductions arise for that income year, the Fee Amount of $903,925 is the correct taxable income.
19. For the 2014 income year, the Fee Amount would be calculated by deducting from the total moneys received by Bluemine of $170,743, the total moneys paid out of $458,000. The resulting Fee Amount calculated is -$287.257. Unlike the 2013 year, this amount represents a Fee Amount returned or paid to the AKA Parties, resulting in a loss to Bluemine. They say that the correct assessable income and taxable income for the 2014 year is therefore nil.
20. As to Bluemine's correct GST liability, it is noted that during the 2013 and 2014 income years, Bluemine being registered for GST, was liable for GST on taxable supplies and entitled to input tax credits on creditable acquisitions. The net amount of GST offset by input tax credits for a quarterly tax period during these income years results in an amount payable to (where GST exceeds input tax credits) or refundable from (where input tax credits exceed GST) the Commissioner.
21. In terms of GST, the meaning of "supply" is broad and includes the provision of services, including funds transfer and remittance services provided by Bluemine in the course of its enterprise acting as a "money transaction unit". Where Bluemine makes such a supply, for consideration, in the course of its money transaction enterprise, it is a taxable supply and therefore subject to GST calculated at 1/11th of the amount of the consideration.
22. For the 2013 year, the GST payable is $82,175 (total consideration being the total Fee Amount of $903,925 divided by 11).
23. In terms of input tax credits, where Bluemine acquires a thing in carrying on its enterprise (that is for a creditable purpose), for consideration, which is a taxable supply, then it is a creditable acquisition and is therefore is entitled to an input tax credit calculated at 1/11th of the amount of consideration. As there is no evidence of Bluemine holding any tax invoices in respect of creditable acquisitions, the AKA Parties say that it follows that no input tax credits would be available; and that, as no entitlement to any input tax credits arise, the net amount payable by Bluemine is the GST payable.
24. As to 2014, the AKA Parties say that Bluemine paid out more than it took in, operating at a loss. At worst, it is said that the net amount payable would be calculated at 1/11th of the Fee Amounts received in the period.
25. As to Bluemine's total primary tax liabilities (income tax and GST), it is noted that the corporate tax rate of 30% applied to the GST exclusive amount of $821,750 yielding primary tax of $246,525 for the 2013 year and a GST liability of $82,175 for the 2013 year amounts to a total primary tax liability of $328,700.
26. Accordingly, the AKA Parties say that the objection would be allowed under s 14ZY(1)(a) because the Bluemine Tax Assessments are excessive and Bluemine can prove what the correct taxable income is for the relevant years. They say that, if that is accepted, then the plaintiffs by not objecting, and not the defendants, have caused any loss to Bluemine to the extent of the excess.
27. In those circumstances, on the basis of the case advanced by the plaintiffs, it is said that Bluemine would more likely than not discharge its burden of proving the Bluemine Tax Assessments are excessive.

Allowable Deductions ground - even if the amounts deposited constitute assessable income, Bluemine is entitled to deductions in the amounts paid to the Receiving Participants

1. Second, it is said that if (contrary to the primary submission of the AKA Parties that assessable income is limited to the Fee Amounts), it is held that the assessable income is instead referable to the entirety of the receipts (i.e., $6.6 million in 2013 and $170,000 in 2014), then the AKA Parties submit that the payments out are properly construed as allowable deductions to Bluemine.
2. It is said that, subject to the negative limbs contained in s 8-1 of the Income Tax Assessment Act 1997, any "outgoing" incurred in "gaining or producing" that "assessable income" is an allowable deduction. It is said that Bluemine had total outgoings of $6.1 million across the 2013 and 2014 income years (by reference to the plaintiffs' closing submissions at 421) (being $5,709,494 in 2013 and $458,000 in 2014), which, on the liquidator's case, were incurred in furtherance of an alleged scheme involving "washing" money through Bluemine. On the liquidator's case, Bluemine would receive payments from AKA entities (which were treated by the Commissioner as assessable), from which payments of a slightly lesser amount were made to AKA related parties and Bluemine would keep a Fee Amount of approximately 2.5%.
3. It is noted that it is not the plaintiffs' case that it was ever intended that Bluemine, upon receipt of the payments from AKA entities, was beneficially and legally entitled to retain those amounts or deal with those funds as it pleased. It is noted that the liquidator contends that Bluemine provided no goods or services in consideration of the payments it received. Therefore, it is said that it cannot be controversial that the amounts received by Bluemine were received in contemplation that Bluemine would need to make outgoings to the Receiving Participants, ultimately in the amount of $6.1 million during the relevant period.
4. The AKA Parties say that it follows that the payments out are deductible because the obligation to pay those amounts was incurred in order to gain assessable income; and, as such, the outgoings of $6.1 million year can be reasonably seen as directly connected to the receipts of assessable income. It is said that there is a close nexus between the two amounts and hence the first positive limb in s 8-1 of the Income Tax Assessment Act 1997 is met. It is noted that in La Rosa it was held that losses from illegal activities may be deductible (at [46] per Hely J (with whom Carr and Merkel JJ agreed)). It is noted that La Rosa was applied by Gzell J (with whom Basten JA agreed at [150]ff) in the context of an exemption from land tax for land used as a principal place of residence in De Marco v Chief Commissioner of State Revenue (NSW) (2013) 83 NSWLR 445; [2013] NSWCA 86.
5. The AKA Parties say that none of the four negative limbs in s 8-1(2) of the Income Tax Assessment Act 1997 is satisfied in the present case; that the $6.1 million across the 2013 and 2014 income years could not be characterised as capital in nature, private or domestic, incurred in producing exempt income or otherwise non-deductible under the Act (and that the Commissioner has not suggested as much).
6. It is said that the effect of allowing a deduction under s 8-1 of the Income Tax Assessment Act 1997 is (correctly) to tax Bluemine on its net taxable profits, being the Fee Amounts it derived. It is said that to tax Bluemine only on its gross income of $6.6 million, without recognising its "expense of trading", would be contrary to the method prescribed by the Act in ascertaining "taxable income" and imposing tax on that amount.
7. Therefore, it is submitted that it is more likely than not that, even if the $6.6 million was assessable income, then the $6.1 million paid out would be an allowable deduction.
8. The AKA Parties say that the income tax calculation for this alternative position is the same as for the No Derivation ground for each year, as payments out would reduce taxable income by way of deductions rather than the payments in not being assessable income except to the extent of the Fee Amounts, and the payments out not being allowable deductions.
9. However, it is noted that in terms of GST, there is a significant difference here, as GST would be calculated, as the Commissioner has done in his Reasons for Decision, by reference to gross receipts with no allowance for input tax credits on creditable acquisitions, since it is accepted there is insufficient evidence to claim an input tax credit in respect of the payments out, despite the deductions for purposes of income tax being allowable under s 8-1. Therefore, for the 2013 year, the net amount payable would be 1/11th of $6,613,419 which equals $601,046 as per the Bluemine Reasons for Decision at [117]; and the net amount payable for the 2014 year would be 1/11th of $170,743 which equals $15,522 as per the Bluemine Reasons for Decision at [119]. The total GST payable for the relevant period is $616,568 ($601,046 + $15,522).

Not trust income ground - the amounts deposited into and paid out by Bluemine comprise payments under a trust (which by operation of law Bluemine is constituted as trustee) rendering such amounts neither its assessable nor statutory income

1. Third, the AKA Parties refer to their submissions (see at [2555]ff below) as to the existence of a trust relationship as between the AKA Parties and Bluemine. It is said that the tax legislation, and therefore the Commissioner, could not impose tax on Bluemine as trustee. The AKA Parties say that, assuming Bluemine was a trustee with respect to the funds it received from the Paying Participants, those funds were distributed to the "beneficiaries" almost immediately after receipt, or the funds were returned to the Paying Participant, less of course the Fee Amount, which may be taxed as the residual net income of the trustee.
2. The AKA Parties say that the applicable tax legislation is in Div 6 of the Income Tax Assessment Act 1936, the starting position being that, subject to the Taxation Administration Act, a trustee is not liable as trustee to pay income tax upon the income of the trust estate and the tax liability falls to the beneficiaries presently entitled. It is said that in order for funds held on trust to be assessed against the trustee, there could not have been a beneficiary presently entitled to a distribution; and that this could not arise here as the funds paid in were paid out almost immediately. It is said that if a trust relationship here arose, then the beneficiaries (AKA Receiving Entities or the AKA Paying Entities), shoulder the tax burden, not the trustee (Bluemine).

Outcome of objection

1. The AKA Parties thus say that the grounds upon which an objection, had it been lodged by the plaintiffs, would have succeeded are as set out above. It is submitted that if Bluemine were to object, in reliance upon information already in the hands of the Commissioner (which includes the information contained in the plaintiffs' evidence in these Proceedings including that of Mr Khouri and Mr Zafiriou, including, inter alia, compulsory interviews conducted under s 353-10 of Sch 1 to the Taxation Administration Act of Andre Abou-Antoun, Peter Abboud, Fred Khalil, George Said and Andrew Barsa), then Bluemine did not derive income as set out in the Bluemine Reasons for Decision and the objection in respect of the moneys received by Bluemine from the Paying Participants, including the relevant AKA Parties would be allowed. It is said that Bluemine's taxable income would, however, include the "fee" or "commission" which Bluemine derived by providing the service.
2. Thus, it is said that if the Bluemine did not give or receive consideration for the moneys transferred to it, consistent with the plaintiffs' case, then on objection Bluemine's taxable income would be calculated by reference to the Fee Amounts it derived by acting as a either a conduit, intermediary or nominee by facilitating the transfer of funds from AKA Civil and AKA NSW to MAL Land Group, LAM Haulage or The Great Brothers, as the case may be; and that GST would be calculated accordingly.
3. Alternatively, in the event that, contrary to the plaintiffs' case, the gross receipts were beneficially derived by and therefore assessable income of Bluemine, it is said that it would follow that Bluemine would be entitled to a deduction with respect to the payments out to the Receiving Participants, including MAL Land Group, LAM Haulage and The Great Brothers, as the case may be; and, again, GST would be calculated accordingly.
4. Either way, the AKA Parties submit that the outcome would be that the liquidator caused any loss to Bluemine as there would be a reduction in Bluemine's tax liability commensurate with one or the other of the tax calculations shown above.
5. Therefore, the AKA Parties submit that it should be found, on the balance of probabilities, that an objection in respect of the Bluemine Assessments on the grounds identified would be allowed by the Commissioner, in whole or in part, under s 14ZY(1)(a) of the Taxation Administration Act. Accordingly, they submit that it is the plaintiffs who have caused any loss to Bluemine to the extent that an objection under Pt IVC would be allowed. It is said that the step to nullify the loss complained of was "obvious" and by not taking that obvious step, the plaintiffs have been "the author of [Bluemine's] own misfortune".
6. Finally, and in any event, it is said that it is not appropriate with respect to claims for equitable or statutory compensation to calculate "loss" (or damage) by reference to amounts on notices of assessment where Pt IVC rights remain alive and if engaged, would be successful. It is said that BCI Finances v Binetter (at [327]-[332]) should not be read to create a principle of general application and should be limited to its facts (which the AKA Parties say, as noted above, are readily distinguishable from this case).

Loss issue - assessed amounts do not give rise to a compensable loss in equity or under the Corporations Act where Pt IVC rights exist and, if engaged, would succeed

1. Further or in the alternative, the AKA Parties submit that Bluemine has not suffered compensable loss (in equity or for purposes of the Corporations Act) in the amounts of Bluemine's assessed tax liabilities until such time as its Pt IVC rights have been exercised or deemed abandoned rendering the assessed tax liabilities final.
2. It is noted that in Thomas v Arthur Hughes Pty Ltd (2015) 107 ACSR 443; [2015] NSWSC 1027 it was recognised that an assessed tax liability may later be varied by objection, review and/or appeal under Pt IVC (there in the context of considering whether or not to make an order for equitable compensation). White J, as his Honour then was, observed (at [74]) that whether any of the defendants was liable to pay equitable compensation would depend upon whether or not the company was restored to its position by the proprietary remedies his Honour has considered. His Honour said that the extent of the liability of the relevant defendants to pay equitable compensation would also be affected by whether or not the company was entitled to a refund of the capital gains tax paid on its behalf. His Honour granted liberty to the plaintiffs to apply for the assessment of equitable compensation.
3. It is noted that tax on a company's income is an ordinary incident of that company carrying on a business which is imposed on all companies by operation of the relevant legislation, subject to the review mechanisms in Pt IVC (which it is said the liquidator has made the conscious decision to not pursue despite such a course having obvious advantages for Bluemine). It is said that, while Pt IVC rights remain and the plaintiffs' case is such that the Bluemine Tax Assessments must be excessive, it is premature to crystallise "loss" by reference to the particulars of those assessments; or as advanced above, if the loss has crystallised to finality and certainty in quantum, that loss was caused by the decision taken not to object.

Nature of assessment, no merger, any "loss" contingent, uncertain and not yet crystallised

1. It is noted that, in Deputy Commissioner of Taxation v Chemical Trustee Ltd (No 8) (2013) 302 ALR 634; [2013] FCA 494 (Chemical Trustee), Perram J considered whether an earlier judgment obtained by the Commissioner on the basis of certain notices of assessment gave rise to res adjudicata or issue estoppel barring the Commissioner from seeking further recovery in relation to the income years the subject of the earlier judgment. In deciding the case against the taxpayer, his Honour held that a taxpayer's underlying tax rights (such as objection and review rights under Pt IVC) and obligations in respect of the relevant tax years did not merge into the judgment obtained on the basis of the earlier assessments (see at [21]-[25]; citing also Chemical Trustee Ltd v Deputy Commissioner of Taxation (2014) 308 ALR 366; [2014] FCAFC 27 at [15] per Edmonds, Jagot and Pagone JJ). Those rights remained (just as the AKA Parties say they remain here). It is said that the purported "loss" had not yet crystallised and lacked the finality and certainty to be compensable in equity.
2. Further, the AKA Parties say that, assuming judgment were granted in favour of the plaintiffs in an amount calculated by reference to amounts on the Bluemine Tax Assessments, then on the authority of Chemical Trustee, there would be no merger with that judgment of Bluemine's Pt IVC rights, which would persist; a judgment in the plaintiffs favour for the full amount of the tax debt is fully collectible despite the substantial likelihood that an objection would be allowed reducing the quantum of that liability (assuming the AKA Parties' causation submissions are rejected). It is noted that, unlike the Commissioner, the liquidator is not obliged by statute to refund moneys which have been overpaid. The Commissioner may amend the assessment on his own accord later or an objection may be lodged by a new liquidator or through some other mechanism. It is said that, if that were to occur and be successful, and assuming the liquidator has obtained judgment against the AKA Parties calculated by reference to the current tax debts of Bluemine, the liquidator would have received an excessive judgment, with no clear mechanism available to correct the windfall received by the liquidator. It is noted that the liquidator's cause of action will have merged in the judgment, yet the Pt IVC rights remain unaffected. It is said that, assuming the tax debt were paid in full by Bluemine, the Commissioner would return any excess with interest to Bluemine, which then Bluemine would have no obligation to pay back to the judgment debtor.
3. The AKA Parties say that it follows that it is inapt to apply the figures arrived at by reference to the default assessment of the Commissioner as the "loss" in the context of a claim for equitable compensation, until such time as the taxpayer's (Bluemine's) rights under Pt IVC are extinguished, particularly where it can be established that the conduct which gives rise to the liability also gives rise to the basis upon which the assessments would be found to be excessive.
4. It is said that this is to be distinguished from BCI Finances v Binetter where Pt IVC rights had been pursued but later withdrawn or discontinued by the directors before the company went into liquidation, as described above. For example, the tax liabilities in BCI Finances v Binetter had crystallised by way of the directors of the relevant entities secretly agreeing not to reveal the true facts and relevantly, in agreeing not to continue to prosecute the Pt IVC appeals and in abandoning the Pt IVC proceedings, which occurred, with the consequence that punitive costs orders were made against them.
5. Here, it is said that the AKA Parties have made every effort in the face of the plaintiffs' opposition, to cause Bluemine to lodge an objection (even agreeing to fund that endeavour) but those efforts thus far have proved unsuccessful. It is said that the AKA Parties have made every effort to cause Bluemine to engage its Pt IVC rights, to no avail. It is noted that Gino Cassaniti, who is alleged to be a de facto or shadow director of Bluemine, actively participated in support of the application for appointment of a special purpose liquidator, if consistent with legal advice, to cause Bluemine to lodge an objection under Pt IVC. The AKA Parties say that that application was unsuccessful because the AKA Parties were not in a position to put a positive case. They say that those considerations do not arise here, where the AKA Parties are responding to the positive case put by the plaintiffs.

Penalties and interest

1. It is noted that, as penalties and interest are calculated by reference to the primary tax liability, until the taxpayer's Pt IVC rights are exhausted, those components of the Bluemine Tax Assessments, may also be varied. It is submitted those amounts are equally inappropriate to be the subject of an order for equitable or statutory compensation until such time as the Pt IVC rights have been exhausted or abandoned and the Court is prepared to find that an objection, on the balance of probabilities, would succeed. In other words, it is submitted that a reduction in the primary tax payable would result in a commensurate reduction in the administrative penalty and interest.
2. The AKA Parties say that it remains the case that, had income tax returns been filed for Bluemine by the due date which disclosed the income ultimately assessed by the Commissioner, any liability to pay penalties and interest would have been reduced, perhaps to nil. Reference is made to the Commissioner's Reasons for Decision relating to the Bluemine Assessments, (at [161]): Under section 284-90 the rate of the penalty applicable is 75% as the Company failed to give the Commissioner its 2013 and 2014 returns by the due date; and these documents were necessary for the Commissioner to determine the Company's tax-related liability and the Commissioner determined the tax liability without the assistance of those documents.
3. It is noted that the liquidator was appointed in August 2013, before the obligation to lodge objections for the relevant tax years arose. The assessments for those years were issued in November 2016, some three years later. It is said that had the returns been lodged for Bluemine for the 2013 and 2014 years reasonably on time which disclosed the receipts ultimately assessed, which could have been gleaned from Bluemine's bank statements, then there would not have been any basis upon which to impose penalties for fraud or evasion or for failing to file a return; and that, had the returns been lodged consistently with the evidence relied upon by the plaintiffs to file these Proceedings (evidence from the Commissioner) it would be anticipated that such returns would have been accepted; or objections as described above, would have succeeded.

Quantum

1. Alternatively, it is said that for the foregoing reasons and the principles set out below at [2771]ff in respect of quantification of equitable compensation, compensation would not be calculated by reference to a taxation debt because, if the plaintiffs had lodged an objection, it would more likely than not have significantly reduced the assessments (by the objection being allowed, in whole or in part).

Conclusion

1. The AKA Parties thus say that Bluemine's obligation to lodge objections fell to the liquidator upon his appointment. It is submitted that he had an obligation fully to investigate the prospects of lodging an objection under Pt IVC; and that he did not fulfil that obligation. It is said that these steps were obvious and were beyond the control of the AKA Parties, who used their best endeavours to cause Bluemine to object (a step the plaintiffs opposed). Hence, it is said that the plaintiffs are the authors of their own misfortune.
2. It is thus submitted that there should be a finding that an objection would be successful such that the liquidator, by failing to engage the Commissioner's statutory duties (under s 166 and otherwise) by objecting to the Bluemine Tax Assessments, was the author of his own misfortune. In any event, it is said that loss for purposes of equitable compensation is not properly calculable by reference to a tax liability under the circumstances of this case.

Plaintiffs' submissions - causation defence

1. As to causation in equity, the plaintiffs note the observation of Mummery LJ in Swindle v Harrison [1997] 4 All ER 705 at 733-734, that there "is no equitable by-pass of the need to establish causation", which observation was approved by the High Court in Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484; [2003] HCA 15 (Yougang v Minter Ellison) at [44]. It is noted that the most expansive approach to causation applies to a trustee who misapplies trust property, who can be required to restore the trust property or, if that is not possible, pay an equivalent monetary amount into the trust, and that liability is not limited by considerations of causation or remoteness (the plaintiffs referring to Re Dawson: Union Fidelity Trustee Co Ltd v Perpetual Trustee Co Ltd (1966) 84 WN (Pt 1) (NSW) 399; [1966] 2 NSWR 211 (Re Dawson); Maguire v Makaronis at 469-470; Youyang v Minter Ellison; BCI Finances v Binetter at [319]).
2. Reference is also made to what was said by Sackville AJA (with whom Meagher and Barrett JJA agreed) in Nicholls; and to what was said in Ancient Order of Foresters by Gageler J at [88]-[90]).
3. It is noted that in BCI Finances v Binetter at [320] Gleeson J accepted that, but for the directors' breaches of fiduciary duty, the companies would never have been involved in the transactions and liability for taxation assessments (which arose by the companies' involvement in the transactions) would not have been suffered. See also Bilta at [178], where Lord Toulson and Lord Hodge concluded that "when the directors of Bilta caused it to incur VAT liabilities and simultaneously caused it to misapply money which should have been paid to HMRC [Her Majesty's Revenue and Customs], leaving the company with large liabilities and no means of paying them, the directors caused it to suffer a recognisable form of loss". It is noted that in Moore Stephens (a firm) v Stone & Rolls Ltd (in liq) [2009] UKHL 39; [2009] 1 AC 1391 at [231], Mance LJ observed that it would be wrong to assume that a deficit rendering a company insolvent is not a loss.
4. The plaintiffs say that because compensation is awarded for breach of an equitable obligation, more absolute in character than a common law duty of care or contractual obligation, it is not limited or influenced by such matters as remoteness of damage, foreseeability or causation (citing Gemstone Corporation of Australia Ltd v Grasso (1994) 13 ACSR 695; Hill v Rose [1990] VLR 129).
5. The plaintiffs say that the "but for test" is sufficient to apply for damages from breach of fiduciary duty, citing BCI Finances v Binetter per Gleeson J at [319]-[331]. In addition, on the question of accessorial liability, reference is made to Ancient Order of Foresters at [88].
6. As to the claim for equitable compensation, reference is made to O'Halloran at 272 where Spigelman CJ (with whom Priestley and Meagher JJA agreed) noted that the "object of equitable compensation is to restore persons who have suffered loss to the position in which they would have been if there had been no breach of the equitable obligation" and cited, with approval, passages from the judgment of Browne-Wilkinson LJ in Target Holdings at 432 (noting that the High Court in Maguire v Makaronis had also quoted from the judgment of Lord Browne-Wilkinson). Relevantly, at 470 of Maguire v Makaronis, it was said that there is "there is no translation into this field of discourse of the doctrine of novus actus interveniens".
7. As to the AKA Parties' submission that the liquidator, rather than the conduct of the defendants, caused the loss to Bluemine by failing to object to the assessments made by the Commissioner, which failure was unreasonable, the plaintiffs' response is that: the liquidator's conduct was not causative in the sense that the loss had already occurred; alternatively, the reasonableness or otherwise of the liquidator's conduct goes to mitigation not causation. Alternatively, the plaintiffs point to the merits of a hypothetical Pt IVC objection; and, further, they point to the Commissioner's entitlement to assess Bluemine's income on the basis that the transactions were not shams.

Liquidator's conduct was not causative

1. On the issue of causation, the plaintiffs emphasise that causation in the common law sense is not determinative for a claim of equitable compensation, noting what was said by Street J (as his Honour then was) in Re Dawson, to the effect that, if a breach has been committed then the trustee is liable to place the trust estate in the same position as it would have been in if no breach had been committed; and that considerations of causation, foreseeability and remoteness "do not readily enter into the matter"; the enquiry being not "as to whether the loss was caused by or flowed from the breach" but as to "whether the loss would have happened if there had been no breach".
2. It is said that in the present case it is clear that the AKA Parties concede the loss (referring, by way of example, to their submissions at [132] where they do not deny the debt is owing and at [65] they concede that it must be accepted that Bluemine has a tax debt). The plaintiffs say that this means that the only question to be determined (in terms of Re Dawson) is whether the loss would have happened had there been no breach (noting, as said by Spigelman CJ in O'Halloran, that the standard applying to trustees remains strict and stringent - see at 277).
3. The plaintiffs contend that the liquidator's conduct (in not making a Pt IVC objection) was not unreasonable (referring to the Corporations Act, s 545); and they contend that the liquidator's allegedly unreasonable behaviour occurred after the loss.
4. Insofar as the AKA Parties place weight on Canson Enterprises v Boughton at 556, the plaintiffs say that in Canson Enterprises v Boughton the loss arose out of a separate unrelated venture, whereas here it is said that the loss arose from the same transaction.
5. The plaintiffs say that Bluemine has a tax debt (as they say is conceded by the AKA Parties at [65]); the receipt of funds from the AKA Parties is what has been taxed and that tax is owing. It is emphasised that Pt IVC objection rights by definition arise after the tax is assessed. It is said that that loss (i.e., the tax) subsists and that the Commissioner is given priority in respect of the recovery of taxation revenue by provisions such as ss 14ZZM and 14ZZR of the Taxation Administration Act (notwithstanding that a taxpayer has a Pt IVC proceeding on foot). It is noted that the legislative intent is to advantage the Commissioner.
6. On the issue of causation, reliance is placed on what was said in BCI Finances v Binetter at [325]-[332].
7. The plaintiffs say that the real substance of the AKA Parties' argument is about mitigation rather than causation (reinforced they say by the argument as to nullifications since they submit that in order to nullify the loss, as submitted by the AKA Parties, there is an implicit concession as to the pre-existence of that which is sought to be nullified. The plaintiffs point out that even at common law mitigation is not weighed "in nice scales at the insistence of the party whose breach of contract had occasioned that difficulty" (citing Banco De Portugal v Waterlow & Sons Ltd [1932] AC 452 at 506 per Macmillan LJ).
8. The plaintiffs say that mitigation is not a relevant consideration in a claim for equitable compensation but that, even if it were to be, it is not open for the AKA Parties now to assert mitigation in defence having not pleaded it. It is said that this would have required a fully particularised pleading which they forensically chose not to do so. (It is said that they did not even plead causation; they only particularised it, even though it was open to them to do so.)
9. In any event, the liquidator says his conduct was reasonable.
10. It is noted that s 545 of the Corporations Act provides that "[s]ubject to this section, a liquidator is not liable to incur any expense in relation to the winding up of a company unless there is sufficient available property". The plaintiffs say that the effect of the section is that, apart from lodging certain documents, a liquidator is not required to do anything if he (or she) cannot recover the expenses of so doing. It is said that this means the liquidator commits no wrong in failing to carry out any duties and if the liquidator did nothing, he is still protected by s 545 (referring to Jenkins v Jonkay Pty Ltd [2007] FCA 858 at [10]-[11] per Finkelstein J); and that the exceptions to s 545 are that a liquidator can be directed to incur a particular expense if a creditor or contributory requests the Court or ASIC to direct the liquidator to do so, and indemnifies the liquidator for the amount expended; and that, in all events, the liquidator must lodge all documents (including reports) which the Corporations Act requires him or her to lodge with ASIC.
11. Thus, it is said that, subject to these exceptions, if a liquidator does not have assets from which his or her fees and expenses can be paid, he or she is not obliged to continue to carry out the work involved in the liquidation (see Re French Caledonia Travel Service Pty Ltd (in liq) (2003) 59 NSWLR 361; [2003] NSWSC 1008 at [200] per Campbell J).
12. The plaintiffs say that the AKA Parties' submission (at [258]) that the liquidator did not fulfil an obligation fully to investigate the prospects of lodging a Pt IVC objection is wrong. It is said that any obligation requiring expenditure is governed by s 545 of the Corporations Act, pursuant to which a liquidator is not liable to incur any expense in relation to the winding up of a company unless there is sufficient available property. In this case, it is noted that Bluemine had no assets (in consequence, it is said, of the defendants' actions) and, therefore, the liquidator was not obliged to undertake investigations into the prospects of lodging a Pt IVC objection.
13. The plaintiffs say that the submission by the AKA Parties that these steps were obvious and were beyond the control of the AKA Parties is contrary to their application for the appointment of a special purpose liquidator (the SPL Application) (see In the matter of Bluemine per Black J). It is said that there is no evidence why that application could not have been made sooner nor as to why more funds could not have been made available for the liquidator.
14. The plaintiffs say that the defendants continue to face the same two problems identified by Black J, namely that: they have not put the liquidator in funds, and they have not sought to put the liquidator in a position that would enable him to conclude that any such objection was arguable "let alone had merit or was determinative of the issue". It is said that there has been no disclosure by the AKA Parties of the type that would enable the liquidator to make such an objection and that they have not sought to explain any of the transactions nor to provide evidence for the liquidator, rather they have maintained defences arguing to the contrary of the plaintiffs' case that all of the pleaded transactions were part of a scheme to defraud the Commonwealth. It is noted that the AKA Parties specifically identify (in footnote 17) that they put the plaintiffs to proof but otherwise did not wish to be heard on any facts relating to any transaction. It is said that this disclosure (or the lack thereof) falls far short of the "wide survey and an exact scrutiny of the taxpayer's activities" usually required to determine whether receipts are or are not assessable income (referring to Federal Commissioner of Taxation v Stone (2005) 222 CLR 289; [2005] HCA 21 at [19]; Federal Commissioner of Taxation v Montgomery (1999) 198 CLR 639; [1999] HCA 34 at [69] citing Western Gold Mines NL v Commissioner of Taxation (WA) (1938) 59 CLR 729; [1938] HCA 5 at 740).

Income tax liability and evidentiary provisions

1. The plaintiffs refer to the provisions of the Income Tax Assessment Act 1936 in relation to: the obligation to lodge annual income tax returns (s 161); the Commissioner's obligations in relation to the making of an assessment of taxable income (ss 166-168); and service of notice of assessment in relation to a liability to pay income tax (s 174). It is noted that the service of a notice of assessment is a pre-condition for an amount of income tax becoming due and payable; i.e., for there to be a liability to pay income tax (see Commissioner of Taxation v Nash (2013) 211 FCR 520; [2013] FCA 336 at [41]-[60] per Griffiths J in relation to s 204 of the Income Tax Assessment Act 1936 as in force at the relevant time; the equivalent of s 5-5 of the Income Tax Assessment Act 1997. See Chemical Trustee Ltd at [15] as to the liability arising under s 5-5 of the Income Tax Assessment Act 1997 only on the making of the assessment for the amount stated in the assessment.
2. The plaintiffs note that Item 2 of the Table at s 350-10(1) of Sch 1 to the Taxation Administration Act provides that a notice of assessment under a taxation law is conclusive evidence that the assessment was properly made; and that, except in proceedings under Pt IVC of the Taxation Administration Act on a review or appeal relating to the assessment, the amounts and particulars of the assessment, declaration or notice are correct. The plaintiffs refer to Broadbeach, as to the conclusive effect of the assessment in other proceedings (such as was there the case in a proceeding for the setting aside of a statutory demand pursuant to s 459H(1)(a) of the Corporations Act, such that the assessments could not be the subject of genuine dispute for the purposes of that provision - see at [54]-[56], [60]); and as to the operation of the provision being to implement a long-standing legislative policy to protect the interests of the revenue (see at [44]).
3. The plaintiffs refer to authority that confirms that the correctness of a notice of assessment produced in accordance with s 177 of the Income Tax Assessment Act 1936 (the predecessor to the Taxation Administration Act, Sch 1, s 350-10), cannot be challenged in recovery proceedings on any ground (citing FJ Bloemen Pty Ltd v Commissioner of Taxation (Cth) (1981) 147 CLR 360; [1981] HCA 27 (Bloemen) at 375 per Mason and Wilson JJ; Futuris at [64]-[65]; Broadbeach at [40]-[45]).
4. Thus, it is noted (by reference to Futuris) that: the validity of an assessment is not affected by failure to comply with any provision of the Income Tax Assessment Act 1936, but a dissatisfied taxpayer may object to the assessment in the manner set out in Pt IVC of the Taxation Administration Act (at [24]); in review or appeal proceedings under Pt IVC, the amount and all the particulars of the assessment may be challenged by the taxpayer but with the burden of proof provided in ss 14ZZK and 14ZZO of the Taxation Administration Act (at [24]); the protection afforded by s 175 of the Income Tax Assessment Act 1936 encompasses all errors in the process of assessment such as a failure to take into account a material factor, taking into account an extraneous factor or an error in the calculation of tax due; and those matters may be challenged only in the context of Pt IVC proceedings (at [45]); and only two categories of jurisdictional error remain outside the scope of s 175 of the Income Tax Assessment Act 1936 (namely, where a purported assessment is "tentative or provisional", or where there has been conscious maladministration of the assessment process) (at [24]-[25];[49]-[56]). Reference is here made also to Roberts v Deputy Commissioner of Taxation (2013) 228 FCR 280; [2013] FCA 1108 at [19] per Besanko J; Pratten v Commissioner of Taxation [2015] FCA 1357 at [24]-[26] per Robertson J; and Commissioner of Taxation v Ornelas [2016] FCA 457 (Ornelas) per Bromwich J.
5. It is noted that these limitations on an assessment taking effect according to its terms are not within the jurisdiction of this Court (see Anglo American at [45]-[54] and [60]-[74] per Payne JA (with whom Meagher and McColl JJA agreed).
6. Thus, the plaintiffs say that the effect of s 350-10(1) of the Taxation Administration Act is that: notices of assessment have a conclusive evidentiary character both in respect of the due making of the assessment and, save in Pt IVC proceedings, that the amount and all the particulars of the assessment are correct (referring to McAndrew v Federal Commissioner of Taxation (1956) 98 CLR 263; [1956] HCA 62 at 281-282 per Taylor J and Bloemen at 376); a taxpayer is confined in respect to the appeal procedures for which the taxation legislation provides (see Bloemen at 376); and it weighs against any challenge to the validity of an assessment where the purported assessment is a bona fide attempt to exercise the powers conferred by the Act, relates to the subject matter of the Act and is reasonably capable of reference to those powers (see Deputy Commissioner of Taxation v Warrick (No 2) (2004) 56 ATR 371; [2004] FCA 918 at [84] per French J, as his Honour then was).

BAS liabilities and evidentiary provisions

1. The plaintiffs similarly refer to the statutory provisions relating to BAS liabilities; in particular, referring to various of the provisions of s 155 of Sch 1 to the Taxation Administration Act, namely: s 155-15(1), Item 1 of the Table, headed "Self-assessed amounts", by which the Commissioner is treated as having made an assessment under s 155-5 of a net amount for a tax period if a GST return for the tax period is given to the Commissioner; s 155-5(2)(a), which provides that a net amount is an assessable amount; s 155-15(4), by which the GST return is treated as being a notice of the assessment signed by the Commissioner, and given under s 155-10 on the day that the GST return is provided to the Commissioner; s 155-35(1), which provides that the Commissioner may amend an assessment of an assessable amount within the period of review for the assessment; s 155-80, which provides that an amended assessment of an assessable amount is an assessment for all purposes of any taxation law; s 155-10(1) which provides that the Commissioner must give notice of an assessment of an assessable amount as soon as practicable after the assessment is made; and, relevantly, s 155-85, which provides that "[t]he validity of any assessment of an assessable amount is not affected by non-compliance with the provisions of this Act or of any other taxation law".
2. Reference is made to Pt IIB of the Act, which deals with RBA statements and Div 2 of Part IIB which allows the Commissioner to establish one or more systems of accounts for primary tax debts that are called running balance accounts (or RBAs) that may be established on any basis the Commissioner determines.
3. The plaintiffs note that an RBA deficit debt is defined in s 8AAZA of the Taxation Administration Act to mean a balance in favour of the Commissioner based on primary tax debts that have been allocated to the RBA and that are currently payable, and payments made in respect of current or anticipated primary tax debts of the entity and credits to which the entity is entitled under a taxation law that have been allocated to the RBA (referring in this context to Evans v Deputy Commissioner of Taxation (2012) 89 ATR 108; [2012] NSWCA 396 at [10] per Gzell J (with whom Macfarlan JA and Tobias AJA agreed)). It is noted that "primary tax debt" is defined in s 8AAZC of the Taxation Administration Act as any amount due to the Commonwealth directly under a taxation law (and hence that a wide range of debts may be allocated to an RBA); and it is further noted that, for the purposes of s 8AAZD(2), a primary tax debt does not include a general interest charge on an RBA deficit debt. If there is an RBA deficit debt, the tax debtor is liable to pay the Commonwealth that amount under s 8AAZH of the Taxation Administration Act.
4. The plaintiffs note that a certificate produced to the Court under s 255-45 (now repealed) of Sch 1 to the Taxation Administration Act signed by the Commissioner, a Second Commissioner or a Deputy Commissioner, stating any of the things referred to in sub-sections 2 or 3 of that section is prima facie evidence of the matters referred to therein in a proceeding to recover a tax-related liability. Such a certificate certifies that the amount claimed by the plaintiff is due and payable, and that the notice of assessment above was taken to have been served on the plaintiff.
5. Reference is made to Naumcevski v Deputy Commissioner of Taxation [2019] NSWCA 72 as to the prima facie effect of an evidentiary certificate (see at [69] per Leeming JA (with whom Payne JA agreed)), the Court of Appeal there noting that a certificate under s 255-45 does not alter the legal burden of proof, although it may be determinative where the taxpayer does not go into evidence (referring to R v Hush; Ex parte Devanny (1932) 48 CLR 487; [1932] HCA 64 at 507-508; Ex parte Ryan; Re Johnson (1943) 44 SR (NSW) 12 at 17 and Trimcoll Pty Ltd v Deputy Commissioner of Taxation [2007] NSWCA 307 at [45]); and that where both sides adduce testimonial and documentary evidence on the critical issue, then the result in such a case is not determined by the certificate, but by an evaluation of the competing evidence.
6. The plaintiffs summarise the relevant legislative framework as follows: that the overall legislative regime continues to be "a clear policy in favour of the revenue against the taxpayer" (citing Trade World Enterprises Pty Ltd v Deputy Commissioner of Taxation (Cth) (2006) 64 ATR 316; [2006] VSCA 191 at [19] per Nettle JA, as his Honour then was, and Ornelas; the certificate under s 255-45 of the Taxation Administration Act establishes that a notice of assessment is a debt due and payable to the Commonwealth (citing Ornelas); where it is not a Pt IVC appeal, the presumptive effect of the provisions referred to above must be given full force and effect (citing Dalco at 621-622 and Ornelas); and that the the legislation places the Commissioner in a "position of special advantage" (citing Clyne v Deputy Commissioner of Taxation (1983) 48 ALR 545 at 548; Ornelas).

Liability to pay a penalty

1. The plaintiffs also reference the penalty provisions in relation to the making of false or misleading statements by a taxpayer to the Commissioner (see Taxation Administration Act, Sch 1, s 284-75(1)), which section applies to a statement made by a taxpayer's agent as if it had been made by the taxpayer (s 284-25). The amount of the penalty is determined by reference to s 284-85. It is noted that the penalty of 75% of the shortfall amount (as defined in s 284-80) is based on a finding by the Commissioner that the shortfall resulted from intentional disregard of a taxation law (see the relevant principles in this regard in Russell v Federal Commissioner of Taxation (Cth) (2009) 74 ATR 466; [2009] FCA 1224 at [180]-[182] per Logan J).

Causation Issues

1. The plaintiffs note that in Aquatic Air v Siewert, Brereton J, as his Honour then was, considered the question whether (a year before the issue of an assessment) an entity (Wingaway) had a liability under the GST legislation and concluded (at [63]; [64]) that it did not (though such a liability arose upon the issue of the assessment in question on 23 July 2012 and, until the assessment was challenged, while the assessment stood it was conclusive evidence of the existence and amount of the tax liability (referring to Administration Act 1953, Sch 1, s 105-100; and Broadbeach). On appeal, the Court of Appeal determined that the significance of the issuing of an assessment is that, as between the relevant taxpayer and the Commissioner, it is conclusive as to the existence of a liability to pay tax (Aquatic Air Pty Ltd v Siewert [2016] NSWCA 318).
2. The plaintiffs say that Aquatic Air v Siewert is not authority for the proposition that this Court can look behind the correctness of an assessment; they say that such a course is precluded by the decisions of the High Court in Broadbeach and the Court of Appeal in Anglo American (at [44]-[45], [50]) (and they refer also in this context to Re Citadel Financial Corporation Pty Ltd [2019] NSWSC 65 and Deputy Commissioner of Taxation v Buzadzic [2019] VSCA 221). It is noted that in Anglo American the majority held that the clearly laid down view in Futuris was that unless "judicial review" proceedings are successfully conducted, a court in "recovery proceedings" must give full effect to the conclusive evidence provision in s 350-10(1). The plaintiffs say that the fact that the present proceedings are recovery proceedings is not in doubt (citing Simionato Holdings Pty Ltd v Commissioner of Taxation (Cth) (No 2) (1995) 60 FCR 375 at 384 per von Doussa J; and Federal Commissioner of Taxation v Tamarama Fresh Juices Australia Pty Ltd (2017) 252 FCR 471; [2017] FCAFC 154 at [9] per Middleton, Gilmour and Jagot JJ).
3. Reference is made by the plaintiffs to what was said by Perram J in Commissioner of Taxation v Iannuzzi [2018] FCA 1053 at [25] and to the decision of the Full Court of the Federal Court in Iannuzzi v Commissioner of Taxation (2019) 268 FCR 349; [2019] FCAFC 39 at [30].
4. In any event, the plaintiffs say that they do not need to establish that these are recovery proceedings, pointing to the clear wording of s 350-10 to the effect that the conclusive evidence provisions apply in all cases except in Pt IVC proceedings (as was submitted in BCI Finances Pty Ltd v Binetter - see at [12]). Reference is also made to Commonwealth v Duncan (1981) 50 FLR 449 at 453-454 per Lush J as support for this proposition in relation to s 177 of the Income Tax Assessment Act 1936 (the former equivalent of the Taxation Administration Act, Sch 1, s 353-10); and to Re Master Painters Association of Victoria Ltd; Deputy Commissioner of Taxation v Rathner (2004) 211 ALR 316; [2004] VSC 352 per Mandie J; James v Deputy Commissioner of Taxation (2008) 220 FLR 181; [2008] FMCA 1189 per Wilson FM.

Merits of hypothetical Pt IVC objection

1. As to the merits of an hypothetical Pt IVC objection, the plaintiffs say that it is uncontroversial that, in considering whether to grant a stay of execution pending an appeal under Pt IVC, including a stay of winding up order, there is a discretion to consider (but not determine) the merits of the Pt IVC appeal, but that the Court should not attempt to do so unless it has sufficient material before it and it should avoid speculation (citing Southgate Investment at [77]).
2. The plaintiffs say that, contrary to the defendants' submissions, there is no discretion to look at the merits of an objection in determining whether to enter judgment based upon an assessment (Broadbeach at [57]-[58]). Here, it is said that, where the defendants have not led any evidence to cast doubt on the assessments or the certificates, "there is no reason to doubt that those debts are due and payable, and that there is no real dispute about them" (citing Brereton J, as his Honour was then, at [29] in Re Plutus Payroll Pty Ltd [2017] NSWSC 1360).
3. It is said that, irrespective of the clear discretion to consider the merits of a Pt IVC objection in the ordinary course of events, the exercise which the defendants ask this Court to undertake in relation to these Proceedings is something quite different in that, here, the defendants claim that there is jurisdiction to consider the outcome of an objection and whether it would succeed if lodged.
4. It is noted that no Pt IVC objection has been lodged and that there is no evidence that the defendants propose to apply to the Court for the appointment of a special purpose liquidator to consider whether or not to lodge a Pt IVC application; nor is there any evidence of providing facts and funding necessary for a special purpose liquidator to consider and proceed with a Pt IVC objection.
5. Leaving aside potential juridical issues or problems such as comity and different decisions on the same facts, and that the proper Pt IVC objection process has not been engaged; the plaintiffs say that the defendants nonetheless are here asking the Court to engage in a process of determining an hypothetical objection (noting that Courts do not undertake determinations of hypothetical issues).
6. Insofar as the AKA Parties point to the fact of their SPL Application (see AKA Parties' submissions at [253]) and that they, together with Gino Cassaniti, offered to fund the special purpose liquidator, the plaintiffs point to the following matters, that: in June 2019 these matters were set down for hearing commencing 3 February 2020; the application made by the AKA parties was not heard until November 2019; the facts upon which the application was advanced were known to the AKA Parties (and Gino Cassaniti) for some four years; and, as observed by Black J in In the matter of Bluemine, the applicants (being the AKA Parties and Gino Cassaniti) chose not to provide evidence of information necessary for the Court to determine the viability of a Pt IVC objection; the evidence of the information which they proposed to provide to the special purpose liquidator was in Black J's judgment insufficient for the special purpose liquidator to determine the viability of a Pt IVC objection; and the application was not made until the "eleventh hour" (which it is said would have derailed the present Proceedings for two years and in respect of which neither the AKA Parties nor Gino Cassaniti offered terms for the injustice of that).
7. The plaintiffs say that it is clear from Black J's judgment that the AKA Parties (contrary to their submission at [253]), did not make every effort to cause Bluemine to lodge an objection.
8. As to the proposition (in the AKA Parties' submissions at [253]) that the SPL Application was unsuccessful for the reason that the AKA Parties were not in a position to put a positive case, the plaintiffs say that this is factually incorrect, pointing to Black J's observation (at [21]) that there was not in his view any lack of opportunity but rather "a choice made in the relevant circumstances to adopt one approach and not another". Furthermore, it is said that that was not the only reason that the application was unsuccessful. The plaintiffs point to Black J's statement at [11] that considering "[t]he seriousness of the matters which it was suggested that the special purpose liquidators might raise in an objection to the assessment, including allegations that transactions in which Bluemine and the Applicants and the 11th Defendant were involved were a sham, an amount of $125,000 is still relatively modest funding for a full documentary review, factual enquiry and taking any necessary advice".

The Commissioner's entitlement to assess Bluemine's income

1. Insofar as the AKA Parties further submit that Bluemine earned no income because it was never beneficially entitled to the funds and therefore, the assessments based on deposits into the bank account of Bluemine are wrong, the plaintiffs say that the AKA Parties have not established that Bluemine earned no taxable income. They say that the issue is not whether Bluemine earned income but whether the Commissioner was entitled to make the assessments that he did. It is noted that similar submissions were dealt with by Gleeson J in BCI Finances v Binetter at [223].
2. The plaintiffs say that, here, the Commissioner assessed Bluemine on the basis of what was disclosed in Bluemine's BAS and the deposits into the company's bank account, as unexplained deposits. It is said that he was entitled to do so on the information he had; and that it is uncontroversial that the Commissioner frequently conducts audits of taxpayers' affairs and, upon discovering the existence of unexplained bank deposits, issues default assessments pursuant to s 167 of the Income Tax Assessment Act 1936 (reference being made by way of example to Nguyen v Commissioner of Taxation (2018) 364 ALR 1; [2018] FCA 1420 at [5]-[13] per Kenny J; Bosanac v Commissioner of Taxation [2018] FCA 946 (Bosanac) at [77] per Steward J; Deputy Commissioner of Taxation v Doyle [2018] NSWSC 1704 at [21] per Adamson J; Re Cassaniti and Commissioner of Taxation [2020] AATA 3447 at [6] per Reitano R (Member)).
3. It is said that this approach (regarding the treatment of unexplained bank deposits) is clearly permitted by the taxation legislative scheme, having regard to the reasoning of the High Court in George v Federal Commissioner of Taxation (1952) 86 CLR 183 at 203 per Dixon CJ, McTiernan, Williams, Webb and Fullagar JJ, in which it was held that the Commissioner (in issuing a default assessment under s 167 of the Income Tax Assessment Act 1936) was not required to supply the particulars of the sources of additional taxable income which had been so assessed.
4. Accordingly, the plaintiffs say that it is unnecessary for the source of the relevant bank deposits to be "explained" by the Commissioner prior to making an assessment; they may continue to be considered income unless or until the taxpayer is able to explain otherwise. Reference is made to what was said in Dalco at 619 per Brennan J, as to the operation of s 167 of the Income Tax Assessment Act 1936 and to the decisions in Bosanac and Gashi v Commissioner of Taxation (2013) 209 FCR 301; [2013] FCAFC 30 at [65] per Bennett, Edmonds and Gordon JJ.
5. The plaintiffs say that their case is that the invoices issued by Bluemine are false, that is, they were not for the purported provision of any goods or services; they say that it is no part of the plaintiffs' case that Bluemine did nothing. They say that Bluemine was incorporated in furtherance of the primary conspiracy and utilised as part of the Scheme to avoid tax; and that the money Bluemine received was entirely part of the transactions in which it engaged under the control of its director and agents. It is said that they were real transactions and that Bluemine's income was therefore assessable as income in its hands (referring to the circumstances envisaged by Brennan J in Federal Coke Co Pty Ltd v Federal Commissioner of Taxation (1977) 34 FLR 375; [1977] FCA 3 at 404). It is said that so much was accepted by Black J in the SPL Application at [18].
6. Reference is made to Fistar v Riverwood Legion and Community Club Ltd (2016) 91 NSWLR 732; [2016] NSWCA 81 (Fistar) at [37] per Leeming JA (with whom Bathurst CJ agreed at [1] and Sackville AJA agreed at [88], making the additional observation at [89]) for the proposition that possession of a chattel gives rise to a possessory title, even where it is possessed by a thief. The plaintiffs say that, once Bluemine received those funds, they formed part of Bluemine's assets "against all the world except someone with a superior title" (Fistar at [89] per Sackville AJA). It is noted that no defendant has come before this Court to explain the transactions let alone to establish superior title.

Sham

1. Insofar as the defendants contend that the transactions were shams, the plaintiffs say that they were not. It is noted that a narrow approach to sham prevails in Australia. The plaintiffs cite Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471; [2004] HCA 55, where it was said (at [46]) that "'Sham' is an expression which has a well-understood legal meaning. It refers to steps which take the form of a legally effective transaction but which the parties intend should not have the apparent, or any, legal consequences" and they note the observation (at [48]) that the respondents' argument appeared to be as to the economic not legal effect of the transactions. Reference is also made to the observations of Kirby J in Raftland Pty Ltd as Trustee of the Raftland Trust v Commissioner of Taxation (2008) 238 CLR 516; [2008] HCA 21 at [145]-[149].
2. It is said that no evidence has been led by the liquidator (and none by the defendants), to demonstrate that the transactions complained of were shams in the necessary sense; and that no evidence of any party's intention is before the Court to the effect that the transactions and documents were intended to be a sham. To the contrary, it is noted that the AKA Parties expressly disavow any knowledge on the part of Michael or Andre Abou-Antoun as to any element of the conspiracy or the Scheme. The plaintiffs refer to what was said by Megarry J in Miles v Bull [1969] 1 QB 258 at 264: A transaction is no sham merely because it is carried out with a particular purpose or object. If what is done is genuinely done, it does not remain undone merely because there was an ulterior purpose in doing it.
3. Again, it is noted that Black J said, in the application for a special purpose liquidator, at [18]: 18. Ms Seiden seeks to characterise that pleading, and Mr Golledge also adopted that characterisation for the Eleventh Defendant as involving an allegation of a "sham" in the sense of a transaction which is not what it purports to be or does not create the rights and obligations it appears to create. It is by no means apparent to me that the liquidator pleads a sham in that sense, as distinct from pleading a fraudulent scheme that was intended to have operative, but fraudulent, effect.

Causation and damage in relation to breaches of statutory duties

1. As to causation and damage in relation to breaches of statutory duties, reference is made to s 1317H of the Corporations Act. It is noted that recovery of compensation pursuant to s 1317H is only possible in relation to "damage which as a matter of fact was caused by the contravention of the relevant provision" (see Adler v ASIC at [709]; Agricultural Land Management Ltd v Jackson (No 2) (2014) 48 WAR 1; [2014] WASC 102 (Agricultural Land Management) at [450] per Edelman J sitting in the Supreme Court of Western Australia, as his Honour then was; Asden Developments v Dinoris at [153] per Reeves J).
2. The plaintiffs note that, as to the standard of causation, it has been accepted that there ought not be any analogy between the standard of causation under s 1317H and the standard of causation in equitable claims against fiduciaries (see Adler v ASIC; cf Agricultural Land Management at [450]; Asden Developments v Dinoris at [152]).
3. As to the approach to be taken to assessing causation, the plaintiffs say that the "but for" approach is preferred; namely that it is generally necessary, but not always sufficient, for the claimant to establish that his loss would not have been suffered but for the director's breach of duty (see Agricultural Land Management at [451]; Asden Developments v Dinoris at [153]); and that, in determining what would have occurred "but for" a director's breach of duty, the probabilities of certain eventualities occurring should be assessed objectively in light of all of the relevant surrounding facts and circumstances (see Asden Developments v Dinoris at [160]).
4. It is noted that the assessment of damage for the purposes of making a compensation order under s 1317H is to be made having regard to the position at the time of the order (see Cassegrain v Gerard Cassegrain & Co Pty Ltd (Final Orders) (2012) 264 FLR 392; [2012] NSWSC 834 at [11] per Bergin CJ in Eq, citing Ho v Akai at [48]-[52] per Finn, Weinberg and Rares JJ).

Borg Parties - causation defence

1. As to the issue of causation, the Borg Parties repeat and adopt the statements of principle and submissions set out in [51]-[103] of the AKA Parties' submissions insofar as they set out the principles that apply to the approach to the question of causation; and the submissions set out in [104]-[259] of the AKA Parties' submissions. It is said that those submissions are equally applicable to RCG CBD, especially given that the plaintiffs do not claim that RCG CBD was in any way entitled to receive any moneys that Borg Family paid it.
2. The Borg Parties furher raise what appears to be akin to a Quistclose trust submission (adverted to earlier) in their contention that the plaintiffs have accepted that the "arrangement" failed (referring to the plaintiffs' submissions at [1445(a)] where the plaintiffs say that the accounting records demonstrate that "the purported arrangement involving RCG CBD was never fulfilled"; I note that the plaintiffs cavil with the premise of this submission - see below). The Borg Parties say that, in circumstances where RCG CBD has no basis to claim that it had any legal or equitable interest in the moneys Borg Family had paid it, and where the purpose for which moneys were paid to RCG CBD failed, then there should be a finding that the moneys were impressed with a trust in RCG CBD's hands. As to the plaintiffs' reference to the fact that Tanya Borg gave no evidence about this (see their submissions at [1468]-[1469]), the Borg Parties say that Tanya Borg did not need to give any evidence about the failure of the arrangement with RCG CBD, because that issue was never in dispute. (I deal with this submission below in the context of the Quistclose trust submissions made by the AKA Parties - see at [2675]).
3. As to the issue of equitable compensation, the Borg Parties (as do the AKA Parties) note the requirement that a causal link be established between the errant conduct of a fiduciary and the loss sustained by the principal for which compensation is sought (referring to the summary of relevant principles by Vickery J in Hodgson v Amcor Ltd; Amcor Ltd v Barnes (2012) 264 FLR 1; [2012] VSC 94 (Hodgson v Amcor) at [1645]ff); and, by reference to what was said in Canson Enterprises v Boughton and O'Halloran, note that, while foreseeability is not a concern in assessing compensation, it is essential that the losses made good are only those which on a commonsense view of causation, were caused by the breach. In the present case, it is said that the issue arises as to whether there was the necessary causal link between the impugned payments and the RCG CBD's insolvency, such that the relevant Borg Parties are liable for the costs of RCG CBD's liquidation.

Gino Cassaniti's submissions - causation and loss

1. Gino Cassaniti says that the plaintiffs' case depends on acceptance of the proposition that, in each case, implementation of the alleged conspiracy involved the adoption and implementation of the Scheme Recommendation, pursuant to which payments were made and/or assets were transferred to each of the Insolvent Companies by the Paying Participants at inflated prices or for no genuine provision of goods and services on the understanding that the funds or assets received by the Insolvent Companies would be repaid to the Receiving Participants less the deduction of a fee; and that inherent in this is the proposition that moneys were paid and/or assets transferred by the Paying Companies to the Insolvent Companies not for legitimate commercial purposes but, rather, in pursuance of a fraudulent scheme.
2. Reference is made in this context to: the emphasis in the plaintiffs' submissions to the effect that there was no genuine commercial explanation for any of the impugned transactions; the cross-examination of the liquidator as to the contention that no consideration was provided for the money received by Bluemine from the Paying Participants (and similar cross-examination in relation to RCG CBD) (see at T 206; T 211; T 240); and the evidence of Frank Criniti that neither Diamondwish nor Rackforce provided anything in return for the payments made to them or received any benefit for the payments made by them.
3. Gino Cassaniti says that, insofar as the plaintiffs' case is that an integral part of the alleged Scheme involved payment out by the Insolvent Companies to corporations and/or natural persons who had no legal entitlement to receive those payments, this proposition is speculative and without a proper evidentiary foundation (since, on the case theory propounded by the plaintiffs, the payments out are likely to have been made pursuant to the directions of the Paying Participants); but that, in any event, on the plaintiffs' case the Insolvent Companies and those who controlled them and the Paying Participants had the expectation that funds received by the Insolvent Companies would not be retained by them but would be paid out to the Receiving Participants. Further, it is said that, on any view, the funds paid by the Paying Participants to the Insolvent Companies were not paid to them beneficially but for a specific purpose.
4. It is therefore said that (on the basis of the case propounded by the plaintiffs and on the assumption, which is denied, that the plaintiffs' case is proved), the claim for recovery from Gino Casssaniti of the amounts paid to each of the Insolvent Companies by the Paying Participants must fail for the following reasons.
5. First, it is said that the funds received by the Insolvent Companies were impressed with constructive trusts. It is said that, on the plaintiffs' case, the funds and/or assets paid over to the Insolvent Companies were clearly not in the nature of income derived in the course of carrying on business, nor did the Insolvent Companies derive any entitlement to retain the funds or treat them for any purpose as their assets. It is said that it follows that, on the plaintiffs' own case, all funds and/or assets that were paid to each of the Insolvent Companies by other companies or by individuals from funds derived from other companies (the Paying Participants) were impressed with a constructive trust and were held by the Insolvent Companies not beneficially, but on trust for the Paying Participants from the time of their receipt. Gino Cassaniti adopts the AKA Parties' submissions in this regard (see below).
6. Further, Gino Cassaniti says that a constructive trust will arise even if the funds were paid by the Paying Participants in pursuance of the Scheme Recommendation, thereby putting into effect the alleged fraudulent scheme, referring to Orix Australia Corporation Ltd v Moody Kiddell & Partners Pty Ltd [2005] NSWSC 1209 (Orix Australia Corporation v Moody Kiddell) at [155]-[156] per White J, as his Honour then was; Wambo Coal Pty Ltd v Ariff (2007) 63 ACSR 429; [2007] NSWSC 589 (Wambo Coal v Ariff) at [41]-[44] per White J). See, for example, Belmont Finance v Williams Furniture at 405 per Buckley LJ as cited in Grimaldi v Chameleon Mining at [563]: 563. The real difficulty arises where the property sought to be followed and traced is not trust property in the strict sense but is corporate property. The analogy between the two is an imperfect one. As Buckley LJ put it in Belmont Finance at 405: A limited company is of course not a trustee of its own funds; it is their beneficial owner; but in consequence of the fiduciary character of their duties the directors of a limited company are treated as if they were trustees of those funds of the company which are in their hands or under their control, and if they misapply them they commit a breach of trust (Re Lands Allotment Co [1894] 1 Ch 616 at 631 and 638, per Lindley and Kay LJJ). So, if the directors of a company in breach of their fiduciary duties misapply the funds of their company so that they come into the hands of some stranger to the trust who receives them with knowledge (actual or constructive) of the breach, he cannot conscientiously retain those funds against the company unless he has some better equity. He becomes a constructive trustee for the company of the misapplied funds.
7. Gino Cassaniti says that it is no answer that the companies willingly paid the funds to the plaintiffs, since the payments were the result of breaches of fiduciary duty by the paying companies' directors. Gino Cassaniti maintains that if any of the paying companies had been placed into liquidation shortly after the payments were made, the liquidators of those companies would have been entitled to recover the funds from the plaintiffs not only as uncommercial transactions, but also as funds derived by the Insolvent Companies from breaches of fiduciary duty by the paying companies' directors.
8. It is said that, equally, on the plaintiffs' case, the funds sought to be retained by the Insolvent Companies as commissions were also contaminated and impressed with trusts, as they were derived from the funds to which they had no entitlement and were tainted by being illicit commissions earned for facilitating the breaches of fiduciary duty in respect of the paying companies.
9. Gino Cassaniti says that it is no answer to say that the funds paid to the Insolvent Companies by the paying companies would not have been recoverable pursuant to the constructive trusts because they were tainted in some way by illegality. It is said that the transactions themselves, although (on this hypothesis) uncommercial and for no consideration, were not illegal (and were not directly contrary to the provisions of any statute). Gino Cassaniti says that the tax statutes did not prohibit the transactions, nor did they prohibit the coming into existence of any constructive trusts in respect of the money received by the Insolvent Companies.
10. It is said that the fact that the payments were associated with an unlawful purpose does not result in the court refusing to enforce equitable rights in relation to them; reference here being made to Nelson v Nelson (1995) 184 CLR 538; [1995] HCA 25 (Nelson v Nelson) at 581 where Dawson J noted that illegal conduct on the part of a person claiming equitable relief does not in every instance disentitle that person to the relief (and see also at 612 per McHugh J).
11. Gino Cassaniti notes that the taxation legislation imposes various sanctions for breaching or evading the legislation and its policies but does not render the transactions illegal or unenforceable. It is said that this is amply demonstrated by the facts of the present cases, in that the Commissioner can treat the transactions as valid revenue earning transactions for the purposes of imposing taxation obligations.
12. In any event, Gino Cassaniti says that, in the present cases, the Insolvent Companies (in reality having not derived any assessable income) did not incur any liability for taxation and did not evade any liability for income tax by entering into the transactions. In this regard, Gino Cassaniti again repeats and adopts the AKA Parties' submissions to that effect (see above).
13. Gino Cassaniti says that a further consideration in the present Proceedings is that the Court is not being asked to enforce any equitable rights that arose in respect of the money paid to the Insolvent Companies (that no longer being possible because by the time of the liquidation of the Insolvent Companies, the funds had been divested). It is said that the plaintiffs' case necessarily ignores any such equitable rights in favour of others and that it "simplistically" treats the funds and/or assets paid out by the Insolvent Companies as funds or assets to which they were legally and beneficially entitled. Gino Cassaniti says that this fails to recognise that, consistent with the plaintiffs' case theory, the funds were necessarily impressed with a constructive trust from the time they were received to the time they were paid out. Thus, it is said that the payment out of these funds could not have caused the Insolvent Companies to suffer the loss of funds or assets to which they had any legal or beneficial entitlement.
14. Gino Cassaniti maintains that, if the Insolvent Companies were to recover those funds from the defendants, it could only be on the basis that they were to be held by the Insolvent Companies beneficially for the Paying Participant companies who were beneficially entitled to them. It is said that even this would be fraught with difficulty where the funds had been paid by the Insolvent Companies to the Receiving Participants who are likely to have acquired the right to beneficial ownership. It is said that the plaintiffs have not mounted such a case, seeking instead to recover equitable compensation in respect of the funds paid out on the basis that the Insolvent Companies are entitled to retain such recovered funds beneficially; and that, to allow this to occur, would be to confer a windfall on the Insolvent Companies in respect of funds to which, on the plaintiffs' case, they never had any entitlement to retain.
15. In any event, insofar as, by the time of the liquidation of the Insolvent Companies, the funds had been divested, Gino Cassaniti says that it makes little sense for the plaintiffs to contend that, by doing so, their directors or fiduciaries breached their duties to the companies by failing to retain funds which had been secured pursuant to uncommercial or sham transactions, to which the companies had no proper entitlement, which neither they nor the paying companies intended they should keep and which were paid in pursuance of a scheme which had as its primary objective tax avoidance.
16. Gino Cassaniti thus says that the Insolvent Companies have incurred no loss by the payment out of the funds (just as an agent who receives and pays out money on behalf of a principal does not thereby suffer financial loss). It is said that if any loss has been suffered, it is the loss incurred by the Paying Participants.
17. As to the taxation liability claims, Gino Cassaniti relies on the submissions contained in Pt 3 of the AKA Parties' submissions, namely that: no causation has been established (i.e., that Gino Cassaniti's alleged breaches of duty, and those of the other defendants, if they occurred, did not cause the loss complained of for purposes of an award of equitable compensation); there is no compensable loss (in that a tax liability may not be an appropriate reference point for the calculation of an award of equitable compensation where Pt IVC rights subsist and the Court is sufficiently informed to conclude on the balance of probabilities, that if an objection under Pt IVC were lodged, it would be allowed); and as to quantification (alternatively, by reference to the AKA Parties' submissions in Pt 3 and Pt 7, that in quantifying any award of equitable compensation it would be concluded that equitable compensation in an amount less than that which has been claimed is appropriate).
18. In particular, Gino Cassaniti submits that: an award of equitable compensation or statutory compensation under s 1317H is not properly calculable by reference to a tax liability in respect of which the person claiming the compensation (i.e., the liquidator) unreasonably refuses to challenge under Pt IVC of the Taxation Administration Act; any "loss" to the Insolvent Companies in respect of the taxation liabilities was relevantly caused by the clearly unreasonable behaviour on the part of the plaintiffs (through the liquidator) in failing to object to the respective notices of assessment under Pt IVC of the Taxation Administration Act which gave rise to the tax liabilities said to constitute the "loss" and not by any breach of fiduciary or statutory duty on the part of one or more of their directors; and the plaintiffs' claims for equitable compensation and any alternative claims for damages under s 1317H of the Corporations Act must therefore fail for want of causation.

Plaintiffs' response to Gino Cassaniti's causation/loss submissions

1. As to Gino Cassaniti's constructive trust submissions (to the effect that the plaintiffs suffered no loss from the carousel transactions because money paid to the plaintiffs was impressed with a trust), the plaintiffs generally rely on submissions in response to the AKA Parties' trust argument (see below). Additionally, the plaintiffs say that it is unclear from the Gino Cassaniti's submissions as to how many and what sort of trust(s) he contends for and who are the objects of such trusts. It is said that Gino Cassaniti seems to be contending that two constructive trusts came into being: the first, in favour of the Paying Participants; and the second, in favour of the Receiving Participants.
2. It is noted that (at [224]) Gino Cassaniti makes detailed submissions about the expectation that the money paid to Diamondwish and Rackforce would be paid out to the Receiving Participants and that on any view the funds paid by the Paying Participants to the Insolvent Companies were not paid to them beneficially but for a specific purpose. It is then submitted (at [225]) "that that case for recovery from Cassaniti of the amounts paid to each of the plaintiff companies by the Paying Participants must fail for the reasons set out below". The plaintiffs emphasise that there is no claim against Gino Cassaniti for recovery of amounts paid to each of the Insolvent Companies by the Paying Participants.
3. The plaintiffs say that the first constructive trust for which Gino Cassaniti contends (at [226]) is a constructive trust in favour of the Paying Participants from the time of receipt by the Insolvent Companies (pointing to [227] of Gino Cassaniti's submissions and the contention that the funds paid to the Insolvent Companies were impressed with a constructive trust). The plaintiffs say that presumably the objects of that constructive trust are the Receiving Participants because the AKA Parties' submissions contend rather that there was a primary Quistclose trust (Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567; [1968] 3 All ER 651) in favour of the Receiving Participants; and that any secondary trust in favour of the Paying Participants is said to arise from the failure of the primary Quistclose trust. The plaintiffs say that this is quite a different trust (primary and or secondary) from that for which Gino Cassaniti contends.
4. Insofar as Gino Cassaniti contends for a constructive trust by reference to Orix Australia Corporation v Moody Kiddell and Wambo Coal v Ariff, the plaintiffs say that these authorities are factually distinct from these Proceedings in that money was there obtained by fraud for non-existent cranes or paid by mistake and a constructive trust arose of those moneys in favour of the payer. It is said that neither of those situations here applies; rather, the plaintiffs' case is that the Paying Participants knew precisely what they were doing when they made those payments. It is said that there was no circumstance of a constructive trust as submitted by Gino Cassaniti (at [224]).
5. Insofar as Gino Cassaniti relies on the authority of Belmont Finance v Williams Furniture to support the contention that the plaintiffs are accessorially liable for the directors of the Paying Participant companies breach of fiduciary duties in paying money for false invoices, the plaintiffs say that such a submission is without foundation absent further submissions dealing with the exact nature of any accessorial liability and the Paying Participant company's knowledge of and acquiescence to the alleged breach of fiduciary duty. The plaintiffs note that no declaration of such trust is sought, nor would it be granted in equity. Further, it is said that such a submission is not supported by Gino Cassaniti's amended defence.
6. The plaintiffs say that Gino Cassaniti's submissions (at [237]-[249]) as to illegality and constructive trusts do not support the submission that there is no claim against him for recovery of the amounts paid to each of the Insolvent Companies by the Paying Participants. To the extent that those submissions are intended to support the contention that the plaintiffs cannot recover from Gino Cassaniti the amounts paid away in uncommercial transactions, the plaintiffs say that the thrust of those submissions is that illegality of purpose would not disentitle the Paying Participants to a constructive trust over funds advanced to the Insolvent Companies despite the payment being in furtherance of an illegal purpose, which was the conferral of illegitimate tax benefits on the paying companies. To that end it is said the money advanced to the plaintiffs from the Paying Participants was impressed with a constructive trust from the time received until the time it was paid out. Further, that if the Insolvent Companies recover the funds from the Receiving Participants, it would be on the basis of being held beneficially for the Paying Participant companies. The plaintiffs say that, for the reasons set out earlier, there is no constructive trust; that there was no fraud perpetrated against the Paying Participant; and that the payments were not by mistake.
7. It is said that, for Gino Cassaniti to succeed in establishing a constructive trust (or perhaps a resulting trust) in favour of the Paying Participants, he must first establish that there was a primary trust in favour of the Receiving Participants, which failed, and then contend for a resulting trust in favour of the settlor Paying Participants.
8. It is noted that Gino Cassaniti adopts [361]-[369] of the AKA Parties' submissions (and are the subject of a response to the AKA Parties' submissions). The plaintiffs say that these submissions are based on Bluemine relying on its own fraudulent conduct and amount to a submission that, without knowledge of any design to wind up Bluemine, equity will not be an instrument of fraud in allowing the loss to lie where it fell. The plaintiffs say that, even if such reasoning might be arguable for the AKA Parties, if there was an overarching conspiracy, it cannot apply to Gino Cassaniti.
9. The plaintiffs say that Gino Cassaniti's assertion of a trust, in one form or another, being impressed upon the money advanced from the Paying Participants to the Insolvent Companies, requires him to rely, inconsistently with his denials, on his own intention to defraud the Commonwealth.
10. As to the submission at [247] (that payment out of the funds caused no loss as the Insolvent Companies had no legal or beneficial entitlement to the funds), the plaintiffs say this submission is wrong as a matter of law and refer to their submissions in answer to the AKA Parties. The plaintiffs say Gino Cassaniti's contention (at [248]) that the plaintiffs seek to recover equitable compensation in respect of the funds paid out on the basis that they are entitled beneficially to retain such recovered funds is also wrong.
11. Finally, the plaintiffs also contest Gino Cassaniti's submission that "[i]f any loss has been suffered, it is the loss incurred by the paying companies", which they note immediately follows the submission at [249] (that it makes little sense to claim the directors of the Insolvent Companies breached their fiduciary duties by doing things in pursuance of a scheme which had as its primary objective tax avoidance); and note that the evidence is that the Insolvent Companies have tax assessments which cannot be paid in consequence of that Scheme.

Determination - causation in equity

1. The purpose of equitable compensation is to make good losses which, on a common sense view of causation, were caused by the breach of an equitable obligation (Canson Enterprises; Target Holdings at 432). It is clear that "[c]ausation in equity is not, however, susceptible to the formulation of a single test. It is necessary to identify the purposes of the particular rule to determine the appropriate approach to issues of causation" (see O'Halloran at 274-275). Ultimately, there must be an adequate or sufficient connection between the equitable compensation claimed and the breach of fiduciary duty, which requires consideration of both the nature of the obligations and the nature of the breach (see Maguire v Makaronis at 473; O' Halloran at 277; Ancient Order of Foresters at [9]). The appropriate test to be applied in circumstances of the breaches of fiduciary duty in issue here is the "but for" test (Agricultural Land Management at [395]-[396]).
2. Ultimately, the relevant question is whether the Insolvent Companies would have suffered the loss claimed (being the tax liabilities) but for the defendants' breach. First, it has been established that causing a company to incur tax liabilities and misapplying its funds such that it is unable to discharge those liabilities is a recognisable form of loss (Bilta at [178]; BCI Finances v Binetter at [330]). Second, I consider that when the Insolvent Companies were issued with the notices of assessment (i.e., the Tax Assessments), they suffered loss in the amount of those assessments (BCI Finances v Binetter at [330]; Taxation Administration Act, Sch 1, s 350-10(1), Item 2); I do not think that an ongoing ability to lodge an objection to the particular assessments (i.e., that rights under Pt IVC subsist), impacts the evidentiary weight of the assessments as conclusive evidence that the assessments were properly made and are correct. I find that there is a sufficient connection between the loss caused to the Insolvent Companies and the breaches of fiduciary duties, in that, but for the fiduciaries entering into the impugned transactions, the Insolvent Companies would not have incurred the tax liabilities in the notices of assessment.
3. From this standpoint, I now consider the defendants' causation defence that, by failing to lodge an objection to the Tax Assessments under Part IVC of the Taxation Administration Act, the plaintiffs are the authors of their own misfortune. It is relevant, first, to consider the relevance of questions of novus actus interveniens and mitigation to causation in claims for equitable compensation.
4. The doctrine of novus actus interveniens does not apply to causation in equity (Maguire v Makaronis at 470; O'Halloran at 275, 279). Reference was made by the High Court in Maguire v Makaronis (at 469-470) to the judgment of Browne-Wilkinson LJ in Target Holdings (at 434), where His Lordship said: Even if the immediate cause of the loss is the dishonesty or failure of a third party, the trustee is liable to make good that loss to the trust estate if, but for the breach, such loss would not have occurred.
5. The defendants' causation argument hinges on the judgment of McLachlin J, as Her Ladyship then was, in dissent in Canson Enterprises v Boughton, that: …while the plaintiff will not be required to act in as reasonable and prudent a manner as might be required in negligence or contract, losses stemming from the plaintiff's unreasonable actions will be barred. This is also sound policy in the law of fiduciary duty. In negligence and contract the law limits the actions of the parties who are expected to pursue their own best interest. Each is expected to continue to look after their own interests after a breach or tort, and so a duty of mitigation is imposed. In contrast, the hallmark of fiduciary relationship is that the fiduciary, at least within a certain scope, is expected to pursue the best interest of the client. It may not be fair to allow the fiduciary to complain when the client fails forthwith to shoulder the fiduciary's burden. This approach to mitigation accords with the basic rule of equitable compensation that the injured party will be reimbursed for all losses flowing directly from the breach. When the plaintiff, after due notice and opportunity, fails to take the most obvious steps to alleviate his or her losses, then we may rightly say that the plaintiff has been "the author of his own misfortune." At this point the plaintiff's failure to mitigate may become so egregious that it is no longer sensible to say that the losses which followed were caused by the fiduciary's breach. But until that point mitigation will not be required. This said, it must also be emphasized that behaviour by the defendant which is a not unreasonable attempt to make the best of a difficult situation, as in Doyle v. Olby (Ironmongers) Ltd. or Esso Petroleum Co. v. Mardon [1976] Q.B. 801 (C.A.), will not be penalized. …. The plaintiff's actual loss as a consequence of the breach is to be assessed with the full benefit of hindsight. Foreseeability is not a concern in assessing compensation, but it is essential that the losses made good are those which, in a common sense view of causation, were caused by the breach. The plaintiff will not be required to mitigate, as the term is used in law, but losses resulting from clearly unreasonable behaviour on the part of the plaintiff will be adjudged to flow from that behaviour, and not from the breach. Where the trustee's breach permits the wrongful or negligent acts of third parties, thus establishing a direct link between the breach and the loss, the resulting loss will be recoverable. Where there is no such link, the loss must be recovered from the third parties. (emphasis added)
6. Parts of McLachlin J's dissenting judgment have been approved on multiple occassions (see Target Holdings at 438-439; O'Halloran at 273, 279; Beach Petroleum at [432]).
7. Her Ladyship's discussion on mitigation (or at least some form of mitigation) has garnered less attention. In Maguire v Makaronis, Kirby J, citing Canson Enterprises v Boughton noted (at 494) that "[c]ontroversially, it has been suggested that a way to avoid burdening the fiduciary in default with the consequences of the beneficiary's own unreasonable conduct is the application of an equitable principle of apportionment." His Honour did not discuss the topic further, however, noting that it was not argued in that case. McLachlin J's discussion of mitigation was referred to in Ronnoc Finance v Spectrum Network Systems Ltd (1997) 45 NSWLR 624 at 635, however, that was in the context of damages for loss of bargain, not equitable compensation.
8. Doyle CJ, Duggan and Bleby JJ in Duke Group v Pilmer provide the most direct discussion of McLachlin J's judgment as it relates to mitigation in equitable compensation. In that judgment, their Honours noted (at [848]) that: [McLachlin J's] reference to the distinction between unreasonable behaviour on the part of the plaintiff and the wrongful and negligent acts of third parties is also significant. It suggests that unreasonable behaviour on the part of the plaintiff may in appropriate circumstances be seen as a disqualifying causative event.
9. Their Honours go on to reason that: 854. Although equitable and common law compensation spring from different origins, the cases recognise the similarity of the underlying principles, and while the rules of causation may be different, we are required nevertheless to take a commonsense view of causation. Notwithstanding bald assertions that common law principles of causation do not apply, it is apparent that certain intervening factors may destroy or qualify the right to compensation. In that context we have, in the judgment of McLachlin J in Canson Enterprises Ltd v Boughton & Co (1991) 85 DLR (4th) 129, a judgment which has been accepted at the highest level in the United Kingdom and at intermediate appellate level in this country, specific recognition of intervening unreasonable behaviour by a plaintiff as a possible disqualifying factor. 855. Against that background, and in the absence of any Australian authority on the point, we consider that in awarding equitable compensation for losses for this type of breach of fiduciary duty it is appropriate to make allowance in the assessment of that loss for conduct of Kia Ora that contributed to the loss. … 861. As we have seen from the minority reasoning in Canson Enterprises Ltd v Boughton & Co (1991) 85 DLR (4th) 129 , unreasonable behaviour by the plaintiff may, in equity, be sufficient to bar the recovery of losses attributable to such behaviour. It is a very small step to hold that in fairness a plaintiff's rights to compensation for breach of fiduciary duty should be reduced on account of such behaviour. … 877. One of the criticisms of allowing contribution in this type of case is that it produces results at variance with the fundamental principles concerning liability of trustees. However, as we have already pointed out, fiduciary liability, although founded in trust, has extended way beyond mere trustees. Remedies must be moulded to accommodate that change. Besides, the question is more appropriately whether it is consistent with principles of equitable compensation rather than principles relating to the liability of trustees, for that is the particular remedy with which we are dealing in this case. An allied criticism is that the introduction of principles akin to contributory negligence will subvert the fundamental principle of fiduciary loyalty. We disagree. Nothing we have said seeks to qualify what the courts have consistently held to be the inapplicability of other causative events which at common law, but not in equity, might present a bar to recovery. No doubt, in assessing the appropriate degree of apportionment against a plaintiff courts will give due weight to the seriousness of fiduciary obligations and the high standards that equity demands.
10. On appeal, in Pilmer v Duke (2001) 180 ALR 240 (at [84], [86]-[87]), the High Court (McHugh, Gummow, Hayne and Callinan JJ) did not determine the question of whether the Supreme Court of South Australia erred "in holding that the equitable compensation allowed to Kia Ora is to be reduced on account of Kia Ora's 'contributing fault'?" as it was unnecessary. However, the following observations were made: 86. With respect to question (c), concerning "contributing fault", it is sufficient to say that the decision in Astley v Austrust Ltd indicates the severe conceptual difficulties in the path of acceptance of notions of contributory negligence as applicable to diminish awards of equitable compensation for breach of fiduciary duty. Astley affirms: At common law, contributory negligence consisted in the failure of a plaintiff to take reasonable care for the protection of his or her person or property. Proof of contributory negligence defeated the plaintiff's cause of action in negligence. Contributory negligence focuses on the conduct of the plaintiff, fiduciary law upon the obligation by the defendant to act in the interests of the plaintiff. Moreover, any question of apportionment with respect to contributory negligence arises from legislation, not the common law. Astley indicates that the particular apportionment legislation of South Australia which was there in question did not touch contractual liability. The reasoning in Astley would suggest, a fortiori, that such legislation did not touch the fiduciary relationship. 87. It follows that the allowance by the Full Court of the sum for the issue and allotment of Kia Ora shares, in assessing the damages for breach of contract or negligence, is not to be sustained on the footing that there was a fiduciary duty owed by the appellants, breach of which brought with it a measure of equitable compensation in the same sum.
11. In a separate judgment, Kirby J (agreeing with the majority on this point) held: 171. Nevertheless, there are, as the joint reasons point out, severe "conceptual difficulties" in the path of adopting a principle derived by analogy from contributory negligence to diminish awards of equitable compensation for the breach of fiduciary obligations. The foundation of the difficulty is explained by Justice Gummow, writing extracurially, in an essay to which I referred in Maguire: While negligence is concerned with the taking of reasonable care, a fiduciary traditionally has more expected of him. His duty is one of undivided and unremitting loyalty. The fiduciary acts in a "representative" capacity in the exercise of his responsibility. One must fear that introduction of concepts of contributory negligence into that setting inevitably will work a subversion of fundamental principle. 172. To the same effect, Justice Handley has said: Equity has not hitherto considered that a beneficiary is bound to protect himself against his fiduciary. The relationship is not at arm's length and the beneficiary is entitled to place trust and confidence in the fiduciary. The basis for a finding of contributory negligence is therefore lacking. 173. Whatever might have been my inclination to explore the notion adopted by the Full Court prior to Astley v Austrust Ltd, I regard the holding in that case as a splash of cold water, discouraging any creative instinct in this connection. There, after all, the court was considering the development of an apportionment principle within the four walls of the common law and the applicable statute. A majority of the court concluded that no such development was available. Damages for breach of contract could therefore not be reduced under apportionment legislation expressed in terms of "contributory negligence" whether or not the plaintiff had, or could also have, sued in tort. In the face of that decision and the repeated recognition by this court that, in Australia, the substantive rules of equity have retained their identity as part of a separate and coherent body of principles, the attempt to push common law notions of contributory negligence, as now modified by statute, into equitable remedies collapses in the face of insurmountable obstacles.
12. The High Court's discussion of Duke Group v Pilmer indicates that McLachlin J's discussion of a form of mitigation relevant to equitable compensation that would result in an apportionment of damages is not good law in Australia. This must be so, as it is not for the beneficiary to protect itself against the fiduciary; and so, here, it could not be incumbent on the Insolvent Companies to have taken actions to reduce the loss caused by the directors. Thus, I consider that the basis of the defendants' causation defence is flawed, and it must fail.

Determination - causation under the Corporations Act

1. Section 1317H(1) of the Corporations Act provides as follows: Compensation for damage suffered (1) A Court may order a person to compensate a corporation, registered scheme or notified foreign passport fund for damage suffered by the corporation, scheme or fund if: (a) the person has contravened a corporation/scheme civil penalty provision in relation to the corporation, scheme or fund; and (b) the damage resulted from the contravention. The order must specify the amount of the compensation. Note: An order may be made under this subsection whether or not a declaration of contravention has been made under section 1317E. (emphasis added)
2. Causation is a question of fact to be determined by applying "common sense" to the facts of each case (March v Stramare). Section 1317H limits an order for compensation to damage which, as a matter of fact, was caused by the contravention (see Adler v ASIC at [709]). I note that Giles JA, in Adler v ASIC, held that the words "resulted from" in s 1317H "should be given their ordinary meaning…free from the strictures of analogy with equitable claims against fiduciaries". However, I consider there to be force in the observation of Edelman J, then sitting in the Supreme Court of Western Australia, that while "resulted from" in s 1317H must be given its ordinary meaning it is difficult to see why "analogies cannot be drawn with the approach to causation taken to breaches of near-identical duties in equity" (see Agricultural Land Management at [452]). Following that line of reasoning, his Honour concluded that the question of causation under s 1317H should be determined with the "but for" test (Agricultural Land Management at [451]-[452]; Asden Developments v Dinoris at [152]-[154]). (I have already found that the Insolvent Companies would not have incurred the tax liabilities as set out in the notices of assessment but for the directors' breaches of fiduciary duty.)
3. Common law principles as to the duty to mitigate are not directly applicable to claims under s 1317H of the Corporations Act. Wigney J considered the import of principles of mitigation and novus actus interveniens to compensation under s 1317H in Trilogy Funds Management Ltd v Sullivan (No 2) (2015) 331 ALR 185; [2015] FCA 1452 (Trilogy Funds Management). His Honour's reasoning at [713] considered the relevance of such principles to s 82 of the Trade Practices Act 1974 (Cth), as follows: … As already indicated, in Adler v ASIC, it was considered that the causation issues arising from the words "resulted from" in s 1317H of the Corporations Act are similar to those that arise from the words "by conduct" in s 82 of the Trade Practices Act. In Munchies v Belperio, the Full Court referred, with apparent approval, to the following passage (at 287) from the judgment of French J in Pavich v Bobra Nominees Pty Ltd [1988] ANZ ConvR 556: The primacy of the causation principle in s 82 would seem to exclude reliance upon such concepts as mitigation or contributory negligence, unless it can be shown that the applicant's own carelessness or disregard for his or her interest is the cause of all or some part of the claimed loss. It may still be in such a case that the misleading or deceptive conduct complained of may be identified as a sine qua non of the loss claimed. There may come a point, however, where the applicant's own conduct is so dominant in the causal chain as to constitute a novus actus interveniens. It is perhaps simply putting it another way to say that in such a case a selection principle of the kind adverted to [in the Elna Australia case] comes into operation to exclude liability. The criteria for such selection may import concepts analogous to remoteness, mitigation or contributory negligence.
4. His Honour went on to frame the issue as such (at [717]): It would seem, therefore, that the issue here is not so much whether Trilogy failed to mitigate its loss. Rather, the question is whether any unreasonable conduct by Trilogy in response to, or as a consequence of, the respondents' contraventions resulted in some or all of the Fund's losses. Was Trilogy's conduct in relation to the realisation of the Saddleback land unreasonable? If so, did that unreasonable conduct break the chain of causation from the respondents' contraventions to some or all of the losses suffered by the Fund?
5. Notwithstanding the fact that the defendants were not given leave to plead a mitigation defence, to the extent that their submissions implicitly raise such an argument, and more relevantly, in response to the question of whether any unreasonable conduct by the liquidator in response to, or as a consequence of, the defendants' contraventions resulted in some of the Insolvent Companies' losses, I find: firstly, that it was not unreasonable for the liquidator not to object to the notices of assessment in the circumstances (given, inter alia, the information available to him, the funding required to lodge such an objection, and s 545 of the Corporations Act); secondly, that it is not open to the court, when assessing causation and loss, to question the merits of an objection under Pt IVC (which, it would seem to me, subverts a significant purpose of the section). I find that any of the Insolvent Companies' losses did not result from the actions of the liquidator.

Joint release defences

1. The various defendants generally adopt the submissions for Ivana Casssaniti on this issue (perhaps unsurprisingly since it was not until first raised by her Senior Counsel that any of the other defendants had considered the prospect of such a defence). Before turning to the defendants' submissions on this defence, in order to set the context it is useful to set out the text of the standard release clause found in the bulk of the settlement deeds (and the variation in the later settlement deed entered into with Laurance Abou-Antoun after this issue was raised in the course of the hearing).

Text of release clauses

1. The plaintiffs refer, as an example of the standard release clause contained in various of the settlement deeds (see Ex 26), to cl 5.2 of the settlement deed entered into with Pierre Youssef in relation to the claims made against him in the Bluemine Proceeding: 5.2 Upon payment of the Settlement Sum in full and in consideration for the promises in this Deed, the Liquidator and Bluemine each, to the extent permitted by law, hereby: (a) release Pierre Youssef from all Pierre Youssef Claims and Pierre Youssef Liabilities; (b) irrevocably covenant not to sue (whether on their own behalf or otherwise) Pierre Youssef in respect of any Pierre Youssef Claims or Pierre Youssef Liabilities; and (c) irrevocably covenant not to induce, encourage, counsel or assist any person or entity to instigate, initiate, commence, maintain, prosecute or advance any Pierre Youssef Claim (whether on their own behalf or otherwise) against the other (whether personally or in a representative capacity) which they would be barred or otherwise prevented from making, instigating, initiating, commencing, prosecuting or advancing by reason of this Deed.
2. In relation to Frank Criniti, the relevant clause in relation to his deed in the Diamondwish Proceeding is cl 10.4, which provides in similar terms that: 10.4 Subject to and conditional upon payment of the Settlement Sum and Frank Criniti complying with his obligations under clause 9.2(a) of the Diamondwish CP Deed in full and in consideration for the promises in the Criniti GP Deeds, the Liquidator and Diamondwish, and each of them, to the extent permitted by law, hereby: (a) release Frank Criniti from all Claims and Liability; (b) irrevocably covenant not to sue (whether on their own behalf or otherwise) Frank Criniti in respect of any Claims and Liability; and (c) irrevocably covenant not to induce, encourage, counsel or assist any person or entity to instigate, initiate, commence, maintain, prosecute or advance any Claim or Liability (whether on their own behalf or otherwise) against the other (whether personally or in a representative capacity) which they would be barred or otherwise prevented from making, instigating, initiating, commencing, prosecuting or advancing by reason of the Diamondwish CP Deed.
3. The deed entered into with Laurance Abou-Antoun included the following additional clause (not found in earlier deeds): 2.3 The parties acknowledge and agree that any settlement of the Proceedings, the Payments in Allegations and the Payments Out Allegation as between the Liquidator and/or Bluemine on the one part and Laurance Abou Antoun on the other, does not constitute a release by the Liquidator and/or Bluemine of any claims by either Bluemine and/or the Liquidator against any other party in the proceedings, including but not limited to Mr Cassaniti, LAM, the Great Brothers, M.A.L, Land Group (ACN 146 940 963) (MAL), Andre Abou Antoun and Michael Abou Antoun including in respect of his liability for the Payments in Allegations and the Payments Out Allegation and the Liquidator and Bluemine reserve all of their rights as against all other parties in the Proceedings.
4. Turning back to the deed entered into with Pierre Youssef, the plaintiffs also point to Recitals C and G to that deed and the definitions contained in that deed, as well as cll 3.1, 6.1 and 7.1, as follows: C. On 25 August 2016, Mitchell Warren Ball in his capacity as Liquidator of Bluemine (as well as Bluemine as second plaintiff), issued proceedings in the Supreme Court of New South Wales numbered 256135 of 2016 (Proceedings) against, inter alia, Pierre Youssef alleging that the Pierre Youssef Payments were… … G. The parties have now agreed to resolve all issues as between them in accordance with the terms of this Deed. … Definitions ... Pierre Youssef Claim means any claim (including any counterclaim, cross-claim or set off), notice, demand, action, proceeding, litigation, investigation, judgment, or entitlement of any kind, statutory or otherwise, however it arises and whether it is present or future, fixed or unascertained, actual or contingent, in relation to any circumstance, act or omission arising out of, or relating to the facts, matters and circumstances alleged in the Proceedings but excludes any such claim (including any counterclaim, cross-claim or set off) notice, demand, action, proceeding, litigation, investigation, judgement or entitlement arising out of any breach by a party of the terms of this Deed. Pierre Youssef Liability means liability of any kind, statutory or otherwise, present or future, actual or contingent, known or unknown, in relation to any circumstance, act or omission arising out of, or relating to the Proceedings but excludes any such liability arising out of any breach by a party of the terms of this Deed. … 3.1 In consideration of the covenants contained herein, and conditional upon the Settlement Sum being paid in full, which Pierre Youssef agrees to pay to the Liquidator strictly on a no admission of liability basis, the Liquidator; and Bluemine agree to accept, the payment of the Settlement Sum in full and final satisfaction of the Proceedings and all Pierre Youssef Claims and Pierre Youssef Liabilities. … 6.1 Subject to and conditional upon Pierre Youssef complying with his obligations under clause 2 of this Deed, the Parties shall take all steps necessary to sign and file in the Proceedings as soon as practicable a Notice of Discontinuance in the form annexed to this Deed and marked with the letter "A". … 7.1 This Deed may be pleaded by a party to this Deed (or any of them) as a bar to the commencement or maintenance by another party of any Claim.

Defendants' submissions as to the joint release defence

Ivana Cassaniti - joint release submissions

1. Ivana Cassaniti submits that, in the event that she were to be found to have any liability for any involvement in the pleaded breaches of fiduciary duty, that accessorial liability has been released in accordance with the principle discussed by Stevenson J in Edgewater Homes v Donohoe (at [47]-[60]) by reason of the release of Frank Criniti (the defaulting fiduciary) in the Rackforce and Diamondwish Proceedings.
2. In relation to the Bluemine Proceeding, it is noted that the release pleaded only arises in the event that there is a finding that the plaintiffs have established a liability on the part of accessories such as Ivana Cassaniti for a common liability (say, in relation to the plaintiffs' claim that each is liable for a portion of the tax liability of Bluemine and the costs of the winding up of Bluemine), in which event, it is said that the release of the Nassar defendants has the effect of releasing Ivana Cassaniti, as does the election by the plaintiffs to abandon the claim against the 10th defendant, Andrew Barsa (citing Yeshiva Properties No 1 Pty Ltd v Marshall (2005) 219 ALR 112; [2005] NSWCA 23 (Yeshiva v Marshall) at [80] per Bryson JA (with whom Beazley JA, as Her Excellency then was, and Mason P agreed)). It is said that simply because the plaintiffs seek to claim only for part of any joint and several liability of course does not result in the true nature of that liability being different or the consequences of a release not arising.
3. As to the responses raised by the plaintiffs to that defence (see below), Ivana Cassaniti says, first, that the argument that Ivana Cassaniti would be relying upon her own illegal conduct is logically flawed (as is the unclean hands argument) because, if correct, the principle could never operate (as it is axiomatic that the person raising the defence in this context will always be a person who has engaged in conduct constituting knowing assistance in a fraudulent design for the liability to have arisen in the first place). (Pausing here, while I accept the force of this response - see by way of analogy claims for relief against forfeiture which is predicated on there having been a breach of the lease, it may well be that there is a question of degree here as to the nature of the conduct and the underlying fraud itself.) Second, as to the argument that he or she who seeks equity must "do equity", Ivana Cassaniti says that, if accepted, this would mean that the principle never operates as a release because there is nothing to release once the compensation is paid.

Gino Cassaniti - joint release submissions

1. As to the defences based on the releases and abandonment, Gino Cassaniti again adopts and supports the submissions of other parties: the AKA Parties; the Khalil Parties; and Ivana Cassaniti.
2. It is said that the decision in Edgewater Homes v Donohoe provides a complete defence to Gino Cassaniti: in the Diamondwish and Rackforce Proceedings, on account of the release of Frank Criniti as a defaulting fiduciary, and or the release by the plaintiffs of the other settling parties in that matter; in the Bluemine Proceeding on account of the plaintiffs' decision not to sue (or alternatively to ignore) Andrew Barsa as a defaulting fiduciary; and, further and in the alternative, the release of the other settling parties by the plaintiffs in that matter; in the RCG CBD Proceeding on account of the release of the other settling parties by the plaintiffs in that matter; and, further and in the alternative, in each of the Diamondwish, Rackforce and RCG CBD Proceedings, it is said that Gino Cassaniti has been released to the same extent and for the same amounts that the settling parties in each respective matter have been released from liability.
3. Gino Cassaniti further says that the "act[ing] in concert to secure a mutual benefit" exception (the so-called "Grimaldi exception" - see Grimaldi v Chameleon Mining at [558]) here applies, i.e., that, where the fiduciary and the assistant are alleged to have acted in concert to secure a mutual benefit, the liability is joint and several such that a release of one operates as a release of all (citing Edgewater Homes v Donohoe at [32]-[36], [61]-[65]). Gino Cassaniti submits that the terms of the settlement deeds in the present case, properly construed, take effect as releases (not mere covenants not to sue); pointing to the difference in wording of the deeds of settlement before and after 20 February 2020 (suggesting that the expression in the latter deeds of covenants not to sue may be inferred to have been so as to avoid the consequences of the decision in Edgewater Homes v Donohoe). Pausing here, as to the last submission, the fact that the later deeds are expressed as covenants not to sue does not seem to me to involve any admission that the former deeds operated as a release of other defendants' liability - most likely this was done for the avoidance of doubt in circumstances where there was by then a live dispute as to that issue.
4. Gino Cassaniti points to additional academic commentary, which it is said is supportive of the result in Edgewater Homes v Donohoe concerning the release of trustees by beneficiaries, namely that contained in Austin W Scott and William F Fratcher, Scott on Trusts, (4th ed, 1988, Aspen Law & Business) at 608 that "a release of one co-trustee discharges all trustees" (referred to by Gummow J in Thompson v Australian Capital Television Pty Ltd (1996) 186 CLR 574; [1996] HCA 38 (Thompson v Australian Capital Television at footnote 159); the statement in David J Hayton and Arthur Underhill, Underhill and Hayton: Law Relating to Trusts and Trustees (15th ed, 1995, Butterworths) at 848, citing Blackwood v Borrowes (1843) 4 Dr & War 441 (Blackwood v Borrowes), to the effect that while beneficiaries may claim the whole from any one of the trustees nevertheless "a release of one trustee may incidentally operate as a release of the others"; and the statement in Harold Ford, WA Lee et al, The Law of Trusts: Ford and Lee (Thompson Reuters) at [18.3050], which cites Edgewater Homes v Donohoe for the proposition that "[w]here more than one person may give a release, a release given by one of them usually has the effect of releasing others".
5. It is noted that (at [37]-[45]) in Edgewater Homes v Donohoe, Stevenson J considered and applied by analogy the release rule in the context of joint tortfeasors (Thompson v Australian Capital Television); parties who are jointly liable in contract (Walker v Bowry (1924) 35 CLR 48; [1924] HCA 28 (Walker v Bowry) at 56-58 per Isaacs ACJ (with whom Rich J agreed)); and to joint or joint and several debtors (Harplex Pty Ltd v Konstandellos (2018) 54 VR 174; [2018] VSCA 67 (Harplex v Konstandellos) at [60] per McLeish and Hargrave JJA and McDonald AJA). Further, Gino Cassaniti points to New South Wales v McCloy Hutcherson Pty Ltd (1993) 43 FCR 489 at 496, where Beazley J, sitting in the Federal Court as Her Excellency then was, rejected the contention (in a trade practices collusive tendering case) that the release rule should not be extended outside of its traditional categories of debt and tort; and saw the release rule as having general application (though I note that her Honour also added the caveat that this was subject to the question whether the rule has in any event been abrogated by statute - as to which I say more below). Reference is also made to the obiter observation by a'Beckett J in Wilkie v McCalla (No 3) [1905] VLR 278 at 293 to the effect that release of a co-trustee "might release" the other liable trustees.
6. Gino Cassaniti points to the obiter observation by Bryson JA in Yeshiva v Marshall (with whom Mason P and Beazley JA, as Her Excellency then was, agreed) at [80] that: To my mind it is doubtful whether an equitable remedy against an alleged accessory should be granted to a plaintiff who has given the alleged defaulting trustee or fiduciary a release, or has decided not to sue the trustee or fiduciary. Doing equity as between the plaintiff and the accessory, who is not the person principally liable, seems to me to be possible only if the plaintiff also pursues his claim against the person principally liable. A plaintiff who seeks an equitable remedy commits himself to a suit in which all equities in the controversy will be resolved together, and the court should not allow the plaintiff to decide which party to sue and which party to ignore or give a release, perhaps for forensic advantages related to assessed readiness to contest the claim.
7. Noting the consideration of this passage in Amcor v Barnes [2007] VSC 515 (Amcor v Barnes) at [47] by Osborn J and in Sheahan v Thompson at [154] by Rein J. In the latter, his Honour expressed the opinion that it would be a somewhat odd result if at trustee could be exonerated from suit by virtue of an exoneration clause in the trust deed yet a third party could be held liable for knowledge of breach by that trustee, but the issue did not there arise as his Honour held that the trustee in question was not exonerated by the Trust Deed.
8. In summary, Gino Cassaniti submits that Stevenson J's decision is: supported by academic commentary; consistent with the authorities that releases are not limited to traditional categories of tort and debt; consistent with the description of the position of trustees noted by Gummow J in Thompson v Australian Capital Television; supported by the observations in Yeshiva v Marshall; and says that, as a matter of comity and respect, it should be followed unless considered to be clearly or plainly wrong (citing Hamilton Island Enterprises Pty Ltd v Commissioner of Taxation (Cth) (1982) 1 NSWLR 113 at 119F per Rogers J).
9. In that context, reliance is also placed on the observations of the plurality in Farah Constructions at [135]; and Hunter v Hanson [2014] NSWCA 263 at [71] per McColl JA (with whom Macfarlan JA agreed); and on the distinction drawn between a conclusion that an earlier authority is wrongly decided and a conclusion that an earlier authority is "plainly wrong" and thus ought not to be applied and followed (see BHP Billiton Iron Ore Pty Ltd v National Competition Council (2007) 162 FCR 234; [2007] FCAFC 157 at [86] per Greenwood J (with whom Sundberg J agreed)). In this instance, it is submitted by Gino Cassaniti that the decision of Stevenson J in Edgewater Homes v Donohoe is, relevantly, neither wrong nor much less plainly or clearly wrong. Accordingly, it is submitted that the decision of Stevenson J in Edgewater Homes v Donohoe should be followed.
10. As to the plaintiffs' contention that Gino Cassaniti cannot rely on the decision as he has previously denied the case against him, Gino Cassaniti points out that the decision in Edgewater Homes v Donohoe is put by him as a defence in the alternative. As to the plaintiffs' contention that the liability alleged against him is several liability, Gino Cassaniti says that the plaintiffs have pleaded, and (with which the plaintiffs cavil) have conducted, their case on the basis that the liability of Gino Cassaniti was joint and several; but, in any event, he points to what I have referred to as the "Grimaldi exception". Gino Cassaniti say that, on any view, in each of the Earth Civil, Bluemine, and RCG CBD Proceedings, the plaintiffs' case against Gino Cassaniti is that he has engaged with other assistants and recipients acting in concert (relevantly described as a "conspiracy") to secure a mutual benefit. It is submitted that it clearly follows, on the plaintiffs' pleaded case, that any liability on the part of Gino Cassaniti is, conformably with Edgewater Homes v Donohoe at [33] and Grimaldi v Chameleon Mining at [558], a joint and several liability.
11. As to the form of the releases given to fiduciaries and alleged accessories, Gino Cassaniti notes that in the Diamondwish and Rackforce Proceedings, the plaintiffs have pleaded that Frank Criniti "engaged in dishonest and fraudulent conduct in breach of his fiduciary duties and duties as trustee" to the respective companies; and that, in each case, the plaintiffs have pleaded a case against alleged accessories.
12. It is said that (with the exception of the Deed of Settlement and Release dated 20 February 2020 with Laurance Abou-Antoun (Bluemine Proceeding) and the Deed of Settlement and Release dated 25 February 2020 with Katherine Khalil and Kito Investments (RCG CBD Proceeding)), the deeds of release in respect of Frank Criniti in both the Diamondwish and Rackforce Proceedings and the deeds of release in respect of the accessories against whom claims have been settled in the Rackforce, Diamondwish, RCG CBD and Bluemine Proceedings adopt the same, or relevantly indistinguishable, drafting (referring to cl 10.4 of the deed entered into with Frank Criniti in the Diamondwish proceeding by way of illustration - see above).
13. Gino Cassaniti submits that, on the authority of Carr and Purves v Thomas [2009] NSWCA 208 (Carr and Purves v Thomas) at [14]-[24] per Beazley, Ipp and McColl JJA, cl 10.4 (and the equivalent provisions in other deeds) is clearly a release and not a covenant not to sue. It is said that, conformably with Dorgal Holdings Pty Ltd v Buckley (1996) 22 ACSR 164 (Dorgal v Buckely), to which reference was made in Carr and Purves v Thomas at [15], there is no indication that other debtors jointly (or jointly and severally) liable with the released debtor, were intended to remain liable. Gino Cassaniti says that there is no indication that any right against any other joint debtor was intended to be preserved (referring to Duck v Mayeu [1892] 2 QB 511; [1891-4] All ER Rep 410 (Duck v Mayeu) at 514 and Bryanston Finance Ltd v de Vries [1975] QB 703; 2 All ER 609 at 732 per Diplock LJ). Gino Cassaniti says that the inclusion of the covenant not to sue by itself does not operate to restrict or limit the effect of the release (which is itself not expressed without any restriction). Thus, it is said that the covenant not to sue simply reinforces the protection or immunity afforded to the debtor released, but otherwise has no effect on the reach or implications of that release.
14. Gino Cassaniti maintains that the plaintiffs derive no support from the subsequent Deed of Settlement and Release with Laurance Abou-Antoun (in relation to the Bluemine Proceeding) or the Deed of Settlement and Release with Katherine Khalil and Kito Investments (in relation to the RCG CBD Proceeding), pointing to cl 2.3 of the Laurance Abou-Antoun deed (and cl 3.3 of the Katherine Khalil deed) as extracted above. Gino Cassaniti says (and I agree) that the terms of the deeds of 20 and 25 February 2020 cannot affect the proper construction of earlier deeds involving different parties. Further, it is noted that the earlier deeds all contain an entire agreement clause (referring by way of example to cl 13.1 of the deed entered into by Frank Criniti in relation to the Diamondwish Proceeding, which is in a standard form).
15. Similarly, it is noted that the plaintiffs have filed notices of discontinuance in each of the Diamondwish Proceeding (in respect of Australian Muscle Car Sales Pty Ltd, Mike Selby and Christo Tzortzis) and the RCG CBD Proceeding (in respect of Fox & Staniland) and consent judgments in the Bluemine Proceeding (in respect of Jillian Abboud, Michael Abboud and Jola Holdings Pty Ltd). It is said that such discontinuances and consent judgments effect a release and/or an abandonment of the plaintiffs' claims against those respective parties.
16. Gino Cassaniti invokes the reasoning and conclusion in Edgewater Homes v Donohoe at [55]-[60] that, if the release of the fiduciary releases the assistant, then the same should be true in reverse. Gino Cassaniti says that, without more, the plaintiffs' release of Frank Criniti, on the plaintiffs' own pleadings, as the defaulting fiduciary and trustee, in the cases of Diamondwish and Rackforce, has the effect of releasing Gino Cassaniti in the Diamondwish and Rackforce Proceedings; and that the plaintiffs' release of various of the accessories against whom it had claimed in each of the Diamondwish, Rackforce, RCG CBD and Bluemine Proceeding, together with the notices of discontinuance and consent judgments, in respect of the alleged accessories in each respective matter, has the effect of wholly releasing Gino Cassaniti from all claims in each respective matter.
17. Further, and in the alternative, Gino Cassaniti submits that in each respective matter, if Gino Cassaniti and each settling party are not jointly and severally liable for the whole of the loss alleged to have been occasioned to the relevant plaintiffs, then Gino Cassaniti has been released for the loss to the same extent and for the same amount that each of the respective settling parties have been released from liability in the respective matter.
18. As to the position of Andrew Barsa in the Bluemine Proceeding, Gino Cassaniti notes that Andrew Barsa was a director of Bluemine and at all material times either the sole signatory or a joint signatory on the NAB bank account of Bluemine; and that, on the plaintiffs' case, Andrew Barsa stood aside and permitted and facilitated all aspects of directorship and management of Bluemine (including control and management of its bank account) to be carried out by others. Gino Cassaniti says that it follows that, if the plaintiffs prove these allegations, then Andrew Barsa was a fiduciary and a trustee and was in breach of his fiduciary and statutory duties to Bluemine or, alternatively, was an accessory to what the plaintiffs allege are breaches of fiduciary and statutory duties by Gino Cassaniti. It is said that Andrew Barsa's breaches of fiduciary and statutory duty give rise to the same loss which is the subject of the claim against Gino Cassaniti.
19. Invoking what was said in Yeshiva v Marshall at [80] (and, it is said, approved at [53] of Edgewater Homes v Donohoe), Gino Cassaniti says that the plaintiffs have either released, or abandoned or decided not to sue Andrew Barsa as the defaulting fiduciary or trustee; and that this release (express or implied) or abandonment or decision not to sue, operates to release Gino Cassaniti from all claims. Alternatively, it is said that the failure by the plaintiffs to pursue any claim against Andrew Barsa disentitles them to any equitable remedy against Gino Cassaniti.
20. Gino Cassaniti contends that the evidence positively supports the inference that the plaintiffs have released or abandoned or decided not to sue Andrew Barsa as the relevant fiduciary or trustee. That inference is said to arise from the following: the plaintiffs had prepared a statement of claim to be served on Andrew Barsa by 17 July 2017 at the business premises of Banq; the plaintiffs knew by, at the latest, 9 October 2017 that Andrew Barsa had not been served; over 12 months later, on 12 November 2018 (in respect of a delay that is said not to be explained in the affidavit sworn on 5 May 2020 by the plaintiffs' solicitor, Mr Narayan), the plaintiffs requested a "skip trace" search of Andrew Barsa; on 28 November 2018, the plaintiffs were advised that Andrew Barsa was "residing with his parents …" at an address in Elizabeth Hills (which address Andrew Barsa gives in his evidence in chief); Mr Narayan's affidavit sworn 5 May 2020 at [5] and [6] is silent as to any actual attempts to serve the statement of claim on Andrew Barsa on or around 28 November 2018; by inference, it is said that there were no attempts to serve the statement of claim because it would be expected that Mr Narayan would disclose any such attempts; by 24 May 2019, some six months later, the plaintiffs cease to try and serve a statement of claim and decide to subpoena Mr Barsa to give evidence on 27 January 2020 instead; no explanation is provided by Mr Narayan as to why the plaintiffs on 24 May 2019 decided to require Andrew Barsa to attend by subpoena; and Mr Narayan does not depose (although he could have done) that it was not intended that the claim against Andrew Barsa be abandoned.
21. It is noted that on 20 March 2020, the plaintiffs were apprised of the existence and import of the decision of Stevenson J in Edgewater Homes v Donohoe including paragraphs [47]-[59]. Gino Cassaniti points to correspondence on 30 March 2020 from Gino Cassaniti's solicitor to the plaintiffs' solicitor and the response thereto as indicating that the plaintiffs have expressly or impliedly released Andrew Barsa or alternatively have abandoned any claim against Andrew Barsa (or, alternatively, using the language in Yeshiva v Marshall at [80], have decided not to sue Andrew Barsa (the trustee or fiduciary being a "party to ignore") and have not committed themselves to "a suit in which all equities in the controversy will be resolved together"). It is submitted that it follows that the release/abandonment or decision not to sue Andrew Barsa has the effect of releasing Gino Cassaniti.

AKA Parties - joint release submissions

1. The AKA Parties say that the operative question determined in Edgewater Homes v Donohoe is that posed at [15(1)] of his Honour's reasons, namely, whether "the release by a party, wronged by an errant fiduciary, of those who have knowingly received the fruits of the fiduciary's breach of duty or to have knowingly assisted the fiduciary, also release[s] the errant fiduciary".
2. The AKA Parties say that the following principles of law emerge from Edgewater Homes v Donohoe: first, that the answer to the above question is yes where the errant fiduciary and the knowing assistants were jointly and severally liable (either for the reason that they were acting in concert to secure a mutual benefit or otherwise); and, second, that it is sufficient to satisfy the criterion of "acting in concert to secure a mutual benefit" if the errant fiduciary and the knowing assistants each achieved a benefit to which the recipient was not otherwise entitled by their mutual participation in the same scheme. It is submitted that there is no principled reason why the same principles would not equally apply to the release of some (but not all) knowing assistants. They further contend that Edgewater Homes v Donohoe is directly applicable to the circumstances of the present case and, as a matter of judicial comity, it should be followed unless determined to be clearly wrong.
3. As to the construction of the relevant deeds, reference is made to the principles articulated in Carr and Purves v Thomas (see above).
4. The AKA Parties say that the plaintiffs' case (taken at its highest for purposes of raising the pleas in bar) is that the AKA Parties knowingly assisted in the breaches of duties of those said to be fiduciaries or directors of Bluemine and that, in so doing, they "acted in concert to secure a mutual benefit". Under those circumstances, it is submitted that the holding in Edgewater Homes v Donohoe is engaged; that it is not plainly wrong; that the present case is indistinguishable; and that, in the result, the AKA Parties have been released from liability.
5. Further, it is submitted that, because the plaintiffs' case is that the fiduciary and the assistants or accessories acted "in concert to secure a mutual benefit", the principle in Edgewater applies to release the AKA Parties from liability where one or more other defendants who would be jointly and severally liable has been released, irrespective of whether the AKA Parties are alleged fiduciaries or merely accessories.
6. It is submitted that the principle in Edgewater v Donohoe operates to release all knowing assistants where there has been a release of either at least one assistant, on the one hand, or the errant fiduciary, on the other. It is said that, provided liability at law is joint and several (and on the basis that, on the plaintiffs' case taken at its highest, the parties were acting in concert to secure a mutual benefit) then release of one is a release of all. In any event, it is submitted that a release of Andrew Barsa (a fiduciary of Bluemine) occurred by way of abandonment (by reference to Yeshiva v Marshall). The AKA Parties say that the principle also operates in respect of the Corporations Act claims for breach of statutory duty which arise under ss 181, 182, s 79 and s 1317H.
7. It is submitted that the plaintiffs have abandoned their claims against Andrew Barsa, the named director of Bluemine, thus releasing the AKA Parties from any joint and several liability they would otherwise have under the second limb of Barnes v Addy. The abandonment is said to be evidenced by the statement made by the plaintiffs' solicitor at [10] of the letter dated 30 March 2020 (see above) that, in respect to Andrew Barsa, he had not been served and, in the circumstances, the plaintiffs did not propose to seek relief against him.
8. The AKA Parties say that, to the extent that Mr Narayan's affidavit sworn 5 May 2020 purports to establish that there has been no abandonment, it is significant that he does not there depose to any intention (or lack of intention) on the part of the plaintiffs to maintain (or abandon) their claims against Andrew Barsa. It is submitted that this evidence does not preclude a finding of abandonment and that it should be found that the plaintiffs have abandoned their claims against Andrew Barsa and hence, that this constitutes a release of the AKA Parties for purposes of applying the principles in Edgewater Homes v Donohoe.
9. Reliance is also placed on the Deed of Settlement and Release entered into with Laurance Abou-Antoun, who, as a Scheme Participant (and, it is said, technically an AKA Party, despite being separately represented), would also be jointly and severally liable with the other AKA Parties. It is noted that, whether this deed operates as a release for Edgewater Homes v Donohoe purposes depends upon the construction of the Deed, which post-dates the Edgewater Homes v Donohoe decision and is in terms materially different to those in previous deeds.

Borg Parties - joint release submissions

1. The Borg Parties repeat and adopt the submissions made by Ivana Cassaniti, the AKA Parties, Gino Cassaniti and the other defendants in relation to the decision of Stevenson J in Edgewater Homes v Donohoe and its application to the case against the Borg Parties.

Khalil defendants - joint release submissions

1. The Khalil defendants have filed amended defences in four of the Proceedings, similarly pleading release from any liability for "knowing assistance" by reason of releases granted to others said also to have been knowing assistants (referring to Edgewater Homes v Donohoe).
2. Suffice it here to note that the Khalil defendants say that settlement deeds executed between the plaintiffs and former defendants in the four Proceedings other than the Earth Civil Proceeding include releases in unequivocal terms of defendants who would otherwise be involved in the Proceedings as knowing assistants; and it is said that there are no other terms in those deeds which can be read as inconsistent with the release, or which otherwise indicate an intention to proceed against others with coordinate liabilities with the releasee. It is said that if the terms of the deeds of release are construed as indeed releases of liability, the plaintiffs' claims in all but the Earth Civil Proceeding should be dismissed.
3. As to the former director of Bluemine, Andrew Barsa, who is identified as a Primary Conspirator in the Bluemine Proceeding, the Khalil defendants also invoke the so-called "Yeshiva" issue (referring to Yeshiva v Marshall at [80] per Bryson JA - see above). It is noted that Andrew Barsa was not served with Bluemine's statement of claim and has not been pursued by Bluemine notwithstanding his alleged role in the Scheme. It is said that Bluemine has disclosed that in fact it abandoned its case against Andrew Barsa (though noting that he was subpoenaed and called as a witness in the Proceedings in the plaintiffs' case). The Khalil defendants submit that the decision not to proceed against Andrew Barsa falls within the principle elucidated by Bryson JA in Yeshiva v Marshall, and that the plaintiffs should be denied the relief sought on equitable grounds in the Bluemine Proceeding.

Plaintiffs - joint release submissions

1. The plaintiffs contend that the liability of the defendants in every instance of these Proceedings is several (not joint and several) liability, citing JD Heydon, MJ Leeming, PG Turner, Meagher, Gummow & Lehane's Equity: Doctrines and Remedies (5th ed, 2015, LexisNexis Butterworths) (Meagher, Gummow & Lehane's Equity: Doctrines and Remedies) at [23-555], footnote 419, for the proposition that "the liability of a knowing participant for loss suffered by the principal is now several only" (and citing Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427; [2011] HCA 48 (Michael Wilson v Nicholls) at [106] per Gummow ACJ, Hayne, Crennan and Bell JJ; and Grimaldi v Chameleon Mining); such that the joint release defences are without basis. Alternatively, the plaintiffs say that, if the liability of defendants is joint and several in any claim, the release of one (or failure to pursue one in the proceedings) does not (for the reasons set out in due course) release the others.
2. The plaintiffs point out that in Edgewater Homes v Donohoe (see at [23]), unlike the present case, the parties had asked the Court to proceed on the basis that it was common ground that a defaulting fiduciary and a knowing assistant are jointly and severally liable to compensate for loss sustained by reason of breach of fiduciary duty. (Hence, in light of that concession, it was not there necessary for his Honour to form a concluded view as to that proposition.) By contrast, the plaintiffs say that it is necessary here to determine if the liabilities are several, or joint and several, which requires consideration of the "Grimaldi exception", and the facts necessary to enliven that exception.
3. The plaintiffs cavil with the propositions set out in the academic texts to which Stevenson J referred (at [50]-[51] in Edgewater Homes v Donohoe) (namely, the chapter by Professor Mitchell on "Assistance" in P Birks and A Pretto (eds), Breach of Trust (2002, Hart Publishing) (Breach of Trust) and Lynton Tucker, Nicholas Le Poidevin and James Brightwell, Lewin on Trusts (19th ed, 2015, Thompson Reuters) (Lewin on Trusts), that a release of the primary wrongdoer will debar any claim against dishonest assistants because they are jointly and severally liable with the wrongdoing trustee or fiduciary and that release of the principal in breach of trust or fraud extinguishes any liability, such that proceedings cannot be taken against other parties who would have been jointly and severally liable therefore.
4. The plaintiffs submit that the authorities referred to by Professor Mitchell in Breach of Trust (at footnote 94) do not support the proposition that a release of one inevitably debars any claim against the others because they "are jointly and severally liable". Similarly, the plaintiffs submit that the authorities cited in Lewin on Trusts at [110] are not authority for release of a wrongdoer who is jointly and severally liable with other wrongdoers. They submit that: in Thompson v Harrison (1787) 2 Bro CC 164; 29 ER 94 (Thompson v Harrison) there is no reference in the decision to principle other than that the case in fraud could "not go on against the other parties, though they would have been secondarily liable"; in Blackwood v Borrowes there is no mention of joint and several liability, the case being decided on the disentitling conduct of the plaintiff on the basis of estoppel, and that the plaintiff had suffered no loss (at 477-478); and that in Re E.W.A. [1901] 2 KB 462 (Re E.W.A.), the Court of Appeal held that the purported release was not a release at all, that Collins LJ (with whom Rigby LJ agreed) noted (at 648) that "it is too late now to question the law - that where the obligation is joint and several, the release of one of two joint debtors has the effect of releasing the others", and that Romer LJ expressed doubt only as to whether the document was a discharge of debt or an agreement not to sue the particular debtor. (Pausing there, in Blackwood v Borrowes at 475, the Lord Chancellor of Ireland, Lord St Leonards, said that the release of one trustee discharged the other not "upon the technical ground of one trustee operating as a release to the other, but … open the substance and merits of the case".)
5. The plaintiffs submit that the academic commentary referred to by Stevenson J has (wrongly) equated common law principles as equal authority in equity regarding trustees, fiduciaries and beneficiaries and wrongdoers (the unstated reasoning process being that it follows that a release will operate automatically, in equity, in the event that there is joint and several liability).
6. In this regard, the plaintiffs say that the common law principles of release, and bar, are based upon unity of cause of action and upon merger of the one cause of action in a judgment (noting the statement by Brennan CJ, Dawson and Toohey JJ in Thompson v Australian Capital Television at 581-582) and submit that the law as to the effect of a release of two or more defendants who are jointly liable can be traced back to the common law principle that a release was as good as a satisfaction (referring to what was said by Gummow J in Thompson v Australian Capital Television at 609-611).
7. It is noted that, in Edgewater Homes v Donohoe, Stevenson J reasoned that if, as the authorities there referred to suggested, the release of a primary wrongdoer released his or her assistant, then there was no principled reason why the converse should not apply; and held the release of the assistant also released the primary wrongdoer (see at [55], [59]).
8. The plaintiffs further say that the effect of the High Court's finding in Thompson v Australian Capital Television that s 11(2) of the Law Reform (Miscellaneous Provisions) Act 1955 (ACT) (the ACT Law Reform Act) had the effect that a cause of action against joint tortfeasors is no longer one and indivisible (and thus, there is no conceptual basis for the rule that the release of one joint tortfeasor releases the other - see Gummow J at 614-615), is that the equivalent provision of s 5(1)(a) in the Law Reform (Miscellaneous Provisions) Act 1946 (NSW)) (the NSW Law Reform Act) similarly abrogated the common law rule.
9. Reference is made to Harplex v Konstandellos, where the Court of Appeal of the Supreme Court of Victoria applied Thompson v Australian Capital Television and held that s 24AA of the Wrongs Act 1958 (Vic) (Wrongs Act) impliedly abrogated the common law rule that release of one joint debtor released all debtors, noting that the provision destroyed the unity of the underlying cause of action in debt (and see at [63]).
10. As to the applicable New South Wales legislation, the plaintiffs say that the existence of s 95 of the Civil Procedure Act, which in terms is wider than the Victorian legislation, operates to destroy unity of action in every cause of action or claim that would be a joint liability in any proceeding (including all such claims at law and in equity). The plaintiffs point out that s 95 is not limited in its terms to where there is a judgment against a jointly liable defendant.
11. The plaintiffs submit that, pursuant to s 95 of the Civil Procedure Act, no person who is jointly liable can have that liability discharged by a judgment against another who is jointly liable; rather, referring to s 95(1)(b), if there is a liability against one only who is jointly liable, thereafter that defendant's liability is forever converted to a several liability with the others against whom there is not yet judgment; i.e., they "become liable" as between all of them "severally but not jointly". The plaintiffs refer in this context to Ruffino v Grace Bros Pty Ltd [1980] 1 NSWLR 732 (Ruffino v Grace Bros) at 735, where Master Allen, as his Honour then was, held that s 97 of the Supreme Court Act 1970 (NSW) (Supreme Court Act) (the predecessor to s 95 of the Civil Procedure Act) did not abrogate the common law position regarding severally liable wrongdoers because that provision was "directed, not to concurrent several liability, but to joint liability" (which the plaintiffs submit was an implicit recognition that the position at common law had been abrogated with regard to joint liability). The plaintiffs also refer to Woodgate v Davis (2002) 55 NSWLR 222; [2002] NSWSC 616 (Woodgate v Davis) at [10] as recognition by Barrett J, as his Honour then was, that s 97 had abrogated the common law as to merger of a common law action in a judgment (for a joint liability).
12. The plaintiffs, adopting the language of Gummow J in Thompson v Australian Capital Television, say that the reason and justification for treating the release of a jointly liable fiduciary or accessory, have now gone (by reason of s 95 of the Civil Procedure Act, which puts an end to the basis of the joint release rule as regards all joint liabilities, however arising, at law and in equity, and impliedly abolishes that rule both at common law and in equity).
13. As to the invocation by some of the defendants to reference by Stevenson J in Edgewater Homes v Donohoe (at [53]) to part of the reasons for judgment of Bryson JA in Yeshiva Marshall (at [80]), the plaintiffs point to Bryson JA's obiter comments as to the advantage that might have been obtained in that case from the release of the party primarily liable and his Honour's concern that "there must have been some large advantage, and it should have been explained, evaluated and credited in any remedy to which the appellants were otherwise entitled". The plaintiffs say that if the defendants sought to rely upon circumstances of that kind then it was necessary for them to plead any such circumstances to be relied on as part of the release defences (not just, as they have done, to plead the fact of release) (and had that been sought to be done there would have been irreparable procedural unfairness to the plaintiffs in circumstances where the release defences were first foreshadowed on 20 March 2020 (at a time when the plaintiffs had closed their cases on 24 February 2020 - see T 959.15; T 988.8; the defendants had effectively closed their cases by 20 March 2020 - see T 1434.36-48); the liquidator's cross-examination had concluded on 7 February 2020; and the plaintiffs no longer had an opportunity to deal with such a matter in evidence).
14. The plaintiffs point out that in Yeshiva v Marshall the effect of s 95 of the Civil Procedure Act was not considered. They maintain that (at [80]) Bryson JA was there describing joint and several liability in equity and that his Honour's statement of the principles (where defendants are jointly and severally liable) must be qualified by the effects of the abrogation by s 95 of the release rule in in New South Wales. Additionally, it is noted that his Honour did not have the benefit of reference to Meagher, Gummow & Lehane's Equity: Doctrines and Remedies at [23-555] nor to the decision of the High Court in Michael Wilson v Nicholls at [106].
15. The plaintiffs also refer to Duke Group v Pilmer (at [863] to the effect, when considering apportionment legislation and contribution in equity, there was no reason for equity not to benefit and draw upon the common law experience. (Although, see above as to the High Court's view on this point and Kirby J's comment at [156], there agreeing with the majority, that "[e]quity will not be concerned, as such, with the common law analysis".) The plaintiffs say that, if s 95 has the effect of abrogating the Duck v Mayeu rule for actions at common law (and by its inclusive wording extends its application to all claims at law and in equity), it would be incongruous if its indirect impact in equity differs from its impact at common law so that principles of release in equity remain unaffected. The plaintiffs submit that the legislature did not intend that result. The plaintiffs thus contend that Edgewater Homes v Donohoe provides no authority which would be applied here; and that his Honour there erred in making the findings of law that he did.
16. As to the question of joint or several liability, the plaintiffs say that all liabilities of the defendants to the plaintiffs in the Proceedings are several liabilities; and that the releases do not provide any defence for the respective defendant wrongdoers (endorsing the statement by the authors of Meagher, Gummow & Lehane's Equity: Doctrines and Remedies at [23-555]). The plaintiffs refer to Wilson v Nicholls (at [106]) as demonstrating that, in the circumstances there considered by the High Court, the relief against defaulting fiduciaries and knowing assistants will not necessarily coincide (which it is said immediately dispels any notion of joint liability). Reference is also made to Grimaldi v Chameleon Mining, where the Full Court (at [559]) was inclined to the view that an accessory's liability to "[r]estore the trust fund by way of monetary compensation for the assets which have been lost" was several with a primary wrongdoer.
17. As to the so-called "Grimaldi exception" (referring to what was said at [558]), the plaintiffs cavil with the existence of such an exception (but also note Stevenson J's finding in Edgewater Homes v Donohoe was not dependent on the application of such an exception. The plaintiffs point out that the Full Court in Grimaldi v Chameleon Mining primarily relied on CMS Dolphin Ltd v Simonet [2001] 2 BCLC 704 (CMS Dolphin) per Collins LJ as to the consideration of the possible "acting in concert" exception; and that the decision in CMS Dolphin was not followed by Lewison J in Ultraframe [1576] (although I note that Finn, Stone and Perram JJ did have reference to Ultraframe in determining Grimaldi v Chameleon Mining - see at [558]). In particular, it is noted that in Ultraframe (at [1574]) Lewison J said that neither of the two authorities relied on in CMS Dolphin (at [102]) (namely, Cook v Deeks [1916] 1 AC 554 and Canadian Aero Service Ltd v O'Malley (1973) 40 DLR (3d) 371) was authority for the proposition that a fiduciary is liable to account for the profits of an accessory; and that Lewison J also had difficulty with the basis upon which, in CMS Dolphin, the decision in b had been distinguished or could be said to be "other than authority for the proposition that a fiduciary is not liable to account for a profit that he has not made" (see Ultraframe at [1575]).
18. In any event, the plaintiffs say that the Full Court's comments in Grimaldi v Chameleon Mining regarding the "acting in concert" exception were obiter and framed speculatively, rather than as a concluded statement of principle (referring in this context to McDougall J's comment in Singtel Optus Pty Ltd v Almad Pty Ltd [2013] NSWSC 1427 (Singtel Optus v Almad) (at [285]) that this "exception" was raised as "an issue for consideration", not a statement of concluded principle upon which an assessment of compensation could proceed).
19. The plaintiffs say that Stevenson J does not appear to have considered the tenuous basis for the "Grimaldi exception" in Edgewater Homes v Donohoe; and that, accordingly, his Honour's application of the "acting in concert" exception should not be followed.
20. Further, it is said that the defendants were obliged to plead all material facts necessary to make out any positive defence on the issue of release; and that no defendant has done so. The plaintiffs say that, to do so, the defendants would be pleading contradictory facts (and would be faced with the obstacles outlined in the plaintiffs' written submissions of 25 March 2020 (at [11]-[17]) when opposing the applications for leave to amend the defences to plead the release defences). The plaintiffs say that, construed strictly, each of the defendants' release defences pleads solely the release and that there has been no attempt to comply with the requirements of r 14.7 of the UCPR (that all material facts must be pleaded) and that no contention is to be found in the defendants' written submissions of any supporting fact or circumstance other than the release. (Pausing here, that complaint seems to me to be well founded.)
21. The plaintiffs maintain that, as a matter of law, there is no such principle as the "Grimaldi exception". Alternatively, they say that, if there is such an exception, there must be at least a coincidence of benefits (to plaintiffs and defendants), as in Edgewater Homes v Donohoe. It is submitted that the defendants' misconduct must be forensically related to the alleged benefit; that is, related to the identification of the actual benefit, and also to mutuality of benefits.
22. As to the question of benefits, it is noted that (unlike Edgewater Homes v Donohoe, where the benefits could be identified as simple percentages of receipts), in the present Proceedings the plaintiffs have pleaded in many instances that benefits were not known to the plaintiffs. It is said that this required the defendants to identify (and plead) the facts of benefits to them upon which they rely to invoke the mutual benefit (which would then have given the plaintiffs the opportunity of assessing and dealing with those facts to test if there was the necessary forensic coincidence).

Statutory claims - corporations law

1. Insofar as the defendants contend that the releases resulted in the defendants being released from all claims, including the statutory claims, the plaintiffs say that those contentions are wrong for the reasons that: as a matter of statutory construction, the statutory liabilities are not joint and several; even if they were, there is no rule such as that in Duck v Mayeu, whereby the release of one jointly liable wrongdoer releases the others (noting that Thompson v Australian Capital Television abrogated that rule as regards joint tortfeasors, including claims by analogy pursuant to dicta to that effect by Santow J, as his Honour then was, in Australian Securities and Investments Commission (ASIC) v Adler (2002) 42 ACSR 80; [2002] NSWSC 483 (Adler)) and that s 95 of the Civil Procedure Act has ended the basis for such a rule in all instances of joint liability; and that the defendants would be forced to contend that there is a stand-alone rule applicable to the supposed joint and several liability.
2. As to the statutory construction of s 180, it is noted that (although s 180 is not an accessorial liability provision), the expression of duty is similar to that in s 181. Reference is made to s 29(2) of the Companies (NSW) Code and s 223(4) of the original Corporations Law which were in the same terms (the latter being amended in 1992); and to what was said by Spigelman CJ (with whom Handley and Hodgson JJA agreed) in Clark at [96]-[100] in relation to the 1992 restatement of the statutory obligation (which emphasised the objective nature of the duty), his Honour referring to the decision in Daniels v Anderson in which Clarke and Sheller JJA held that duties of directors under the equivalent of s 180 were owed severally (see at 505).
3. The plaintiffs say that, in the earlier legislation, the duty to take care was owed by all directors severally; and therefore, that it could not follow that such directors were jointly and severally liable for breaches by any of them. It is submitted that the modern s 180 duty to take care also imposes duties that directors owe severally.
4. The plaintiffs submit that s 181 is to be construed similarly; and that the directors owe their respective duties severally and, as between themselves, they are not jointly and severally liable for a breach by any of them. As to the position between the director and a s 181(2) accessory, it is noted that the defendants here contend that the liability of the director and the accessory is joint and several. The plaintiffs say that this cannot be correct if the duty owed by the director (the breach of which duty founds the action) is owed severally. (The plaintiffs submit that the statement in Adler at [117] that "[f]irst, where a plaintiff obtains separate judgments against defendants jointly and severally liable as would be the case here" is therefore incorrect).
5. The plaintiffs point to the fact that, for each of ss 181 and 182, the statutory obligation is imposed on every individual person (whether a director, secretary, officer, employee or otherwise); noting that the statute uses an indefinite article to refer to all persons, individually; and that contravention must be proved against each defendant. Further, it is noted that s 185 of the Corporations Act provides that ss 180-184 are in addition to, and do not derogate from, any other law relating to the duty or liability of a person. It is said that this amounts to clear statutory indication that the statutory duties are stand-alone duties and that their force and effect should be construed having regard to the statutory text, and that their effect must not be bound by equity.
6. Reference is made to the observation by Dr Robert Austin and Black J that s 181(1) is a statutory approximation of the two general law duties of directors and officers, the case law on the duty to act in good faith in the best interests of the company and for a proper purpose is relevant, but that such case law must yield to the statutory language (see Dr Robert Austin and Black J, Austin & Black's Annotations to the Corporations Act (LexisNexis Australia) (Austin & Black) at [2D.181]). Reference is also made in this regard to the observation made by Spigelman CJ in Vines v Australian Securities and Investments Commission (ASIC) (2007) 73 NSWLR 451; [2007] NSWCA 75 at [142] per Spigelman CJ, with respect to the relevant provisions of the Corporations Law to the effect that where the legislature has used language plainly derived from civil case law then it may be accepted that it had in mind a standard of care of a similar character; but that nevertheless the legislature must be taken to have acted on the basis that the law of statutory interpretation will be applied (and that this may lead to a different conclusion).
7. Accordingly, the plaintiffs say that equating statutory and equitable causes of action is to be avoided. It is said that it does not necessarily follow that, if the liability arising from equitable claims against the fiduciary and the accessory are joint and several, the same is the case for the statutory causes of action against the same individuals.
8. The plaintiffs further note that ss 181 and 182 are civil penalty provisions; and say that therefore there can be no unity of action. Further, they say that a finding of a contravention of ss 181 and 182, of itself, achieves no end; rather, a contravention enlivens various penalty and compensation provisions under Pt 9.4B of the Corporations Act. It is noted that relief includes the making of compensation orders against the defendant pursuant to s 1317H, and that liability arises from proof that each defendant has an individual liability and has individually breached a civil penalty provision. Reference is made in this context to what was said in Adler v ASIC at [707]-[710], per Giles JA, in support of the proposition that the plaintiffs' statutory and equitable causes of action must be analysed and applied separately (the former, based on the statutory interpretation and the latter, based on principles in equity). The plaintiffs point out that the difference in approach (and, potentially, outcome) between equitable and statutory relief was recognised in Grimaldi v Chameleon Mining at [641].
9. The plaintiffs say that, for the reasons given by Giles JA in Adler v ASIC, the statutory text of ss 181 and 182 does not evince any legislative intention to refer to, or create categories of, a primary or accessorial wrongdoer (noting that the description is directed to all stand-alone breaches). They say that past attempts to import additional principles into the Corporations Act regarding liability have been treated with caution (referring to Selig v Wealthsure Pty Ltd (2015) 255 CLR 661; [2015] HCA 18 at [35] per French CJ, Kiefel J, as her Honour then was, Bell and Keane JJ); and Yeo v Freeman (2018) 55 VR 334; [2018] VSC 448 at [47] per Gardiner AsJ).
10. The plaintiffs attach significance to the fact that the legislature did not express the relevant liabilities to be joint and several, noting that elsewhere express words have been used for that purpose (referring, by way of example, to ss 571(2)(a); 579E(2)(a); 588FGA(5)(d); 592(1); 917C(4); 917F(2); 953B(3)(c)(ii); 961P(b)(ii); 1020AL(2)(b); 1022B(4)(b)(ii) of the Corporations Act). Particular focus is placed on s 592, which provides expressly for joint and several liability in subs (1), but not in subs (6) for "a person knowingly concerned".

Andrew Barsa

1. As to Andrew Barsa, reliance is placed on Mr Narayan's affidavit sworn 5 May 2020 as to the circumstances of the plaintiffs' inability to serve process on him, and subsequent service of a subpoena on him to attend court to give evidence. The plaintiffs say that Andrew Barsa was not available to them for consultation; that he gave evidence without any briefing by the plaintiffs; and they formed the opinion that they were not in possession of evidence to enable a claim to be made against him. It is submitted that there is no basis in equity to apply any release rule against the plaintiffs for their failure to conduct proceedings against him. (I agree.)

Public policy issues

1. The plaintiffs further raise the issue as to the effect of a finding of the kind here sought on the public policy interest in encouraging settlements and invoke s 56 of the Civil Procedure Act. It is submitted that there will be circumstances where a covenant not to sue will be inadequate for a defendant who would otherwise settle, but only if granted a full release. The plaintiffs say that there are many commercial circumstances whereby a full release would be required. It is said that, to the extent that the common law release rule applies unchecked, it increases the burden of litigation on courts and is against the public interest. As protection, by its terms, it is said that s 95 operates to ensure (if it be necessary) that there can be no double recovery.
2. In this regard, reference is made to Baxter v Obacelo Pty Ltd (2001) 205 CLR 635; [2001] HCA 66 (Baxter v Obacelo), where the High Court considered the issue of satisfaction in relation to joint tortfeasors where there had been settlement with one and entry of consent judgment against another; and Kirby J made observations as to the importance of not inhibiting parties from settling proceedings (see at [74]-[75]).
3. It is noted that Stevenson J observed in Edgewater Homes v Donohoe at [47] that there is no direct binding authority on the question whether the release of an assistant also releases the fiduciary. The plaintiffs submit that, in circumstances where there is no clearly justifiable legal authority that is certainly applicable, the approach considered by Kirby J in Baxter v Obacelo should be adopted. The plaintiffs say that it would not readily be concluded that a release of one party operates to release others where such a conclusion would inhibit the early settlement of litigation as between those parties to a dispute that are agreed as it is ordinarily desirable that parties should be able to settle severally. It is said that the settlement of proceedings by the plaintiffs as against those parties that were agreeable had the effect of disposing of those parts of the Proceedings; and that should judgment be entered for the plaintiff it is for the defendants to "fight out their respective claims for contribution as the ... hearing priorities permit" (at [74]). The plaintiffs also point out that they have given credit for those settlements in these Proceedings by reducing the liability of certain defendants.
4. Further, the plaintiffs say that, even if it otherwise applied, the release rule cannot be applied globally in the present Proceedings, since it applies, if at all, only where there is one wrong and unity of action. The plaintiffs say that there is not one unitary claim or one unitary cause of action in the Proceedings; that the actions have been pleaded and conducted on the evidence on the basis of the individual causes of action against each defendant; and that the defendants have (until final submissions) conducted the defences throughout conformably in answer to the plaintiffs' individual causes of action.
5. Reference is made to Singtel Optus v Almad, where McDougall J said (at [280]) that there was no principle that, where it has been shown that an "assistant" has been knowingly involved in a breach of duty by a fiduciary, the liabilities of the fiduciary and the assistant must necessarily be the same; and noted (at [281]) that the Full Court in Grimaldi v Chameleon Mining held that where the assistant is the alter ego or nominee of the defaulting fiduciary, their liabilities would be joint and several. The plaintiffs place significance on the fact that, in McDougall J's process of reasoning (at [282]-[284]) to the conclusion that the facts were "not at all similar" and that there was no joint and several liability, his Honour (at [283]) noted that the submissions for the defendant did not seek to demonstrate the extent to which there had been a benefit from the relevant conduct. The plaintiffs again point to the fact that no defendant has identified and dealt with "benefit", nor with the necessary forensic connection of "benefit" to "acting in concert" and the plaintiffs submit that, had the defendants done so, what was said in Grimaldi v Chameleon Mining at [558] would be applied against them, namely that "when wrongdoers so entangle their affairs" as a matter of legal policy one could readily understand why the law "might wish to make it their responsibility - and not a claimant's - to untangle them for accountability purposes" (at [285]).
6. It is noted that in Singtel Optus v Almad, in distinguishing Grimaldi v Chameleon Mining, McDougall J said that it could not be suggested that the assistant was knowingly involved in the whole of the breaches of fiduciary duty (Singtel Optus v Almad at [284]). The plaintiffs say that, even if the assistant was there sufficiently involved to enliven an exception to the general rule of several liability, McDougall J did not appear to accept the basis in authority for an "acting in concert" exception (his Honour concluding that the assistant's liability for equitable compensation was several only - see at [286]). The plaintiffs note that this aspect of McDougall J's judgment was not challenged on appeal (Hasler v Singtel Optus).
7. The plaintiffs say that in Michael Wilson v Nicholls, the High Court made clear that the liability of a fiduciary and assistant is several, and that the reference to liability of a knowing assistant as "accessorial" does no more than establish, as discussed in Singtel Optus v Almad, that breach of fiduciary duty is an element of a claim for accessorial liability. It is said that, where proceedings can properly be commenced separately against an accessory, and in such proceedings relief awarded against an accessory will not in nature or quantum coincide with an errant fiduciary, it can be concluded that the liability is several only (notwithstanding the view of Stevenson J in Edgewater Homes v Donohoe at [27]).

Unclean Hands - if defendants are seeking to invoke the Grimaldi exception

1. Further, the plaintiffs say that, in the event that a defendant seeks to rely on the Grimaldi exception (of acting in concert for mutual benefit), so as to establish joint and several liability, then (even if the defendant would be entitled to raise a defence of equitable release) the defendant ought to be barred from relying on the joint release defence by reason of unclean hands.
2. It is noted that the maxim of unclean hands equally applies to all persons seeking equity's assistance, including an equitable defence. The plaintiffs refer to Bullhead Pty Ltd v Brickmakers Place Pty Ltd (in liq) (2018) 58 VR 91; [2018] VSCA 316 at [117]-[118] (Bullhead) for the principle that the defence of unclean hands requires the conduct in question to have "an immediate and necessary relation to the equity sued for"; and "a depravity in a legal as well as in a moral sense". In Kation Pty Ltd v Lamru Pty Ltd; Lewis v Nortex Pty Ltd (in liq) (2009) 257 ALR 336; [2009] NSWCA 145 (Kation v Lamru) at [28], Hodgson JA (with whom Allsop P, as his Honour then was, agreed) noted that these principles are "not a rule of law but merely an aspect of principles guiding the exercise of discretion" to grant equitable relief and so should not be "given a narrow or technical construction".
3. The plaintiffs note that the doctrinal basis on which discretion is exercised in these circumstances is that he (or she) "that hath committed iniquity shall not have equity" (referring to FAI Insurances Ltd v Pioneer Concrete Services Ltd (1987) 15 NSWLR 552 at 558 per Young J, as his Honour then was; and Black Uhlans Inc v NSW Crime Commission (2002) 12 BPR 22,421; [2002] NSWSC 1060 at [161]); thus, "when a plaintiff whose conduct has been improper in a transaction seeks relief in equity that relief will be refused" (see Meagher, Gummow & Lehane's Equity: Doctrines and Remedies at [3-090]).
4. As to the meaning of "an immediate and necessary relation to the equity sued for", reference is made to Carantinos v Magafas [2008] NSWCA 304 (Carantinos v Magafas), where the test applied by Hodgson JA (with whom Campbell JA and Handley AJA agreed) was whether "the disentitling conduct had a sufficiently close relationship to the equity sued for" (see [58], [117] and [153]); and Kation v Lamru, where Hodgson JA posed the test as being whether the relationship between the plaintiffs' iniquity and the equity for which he sued was "sufficiently close to justify application of the unclean hands doctrine" (at [29]); and (at [9]), where Allsop P held that the plaintiff's wrong had "an immediate and sufficiently close relation to the equity sued on" because the connection between the plaintiff's wrong and the conduct of the defendant that gave rise to the equity was "a close temporal connection", "a close (indeed decisive) forensic connection" and "a close practical human connection".
5. The plaintiffs submit that, in the present case, all of the defendants necessarily have a sufficiently close relationship to the equity for which they rely upon to justify the exercise of a discretion to refuse that relief. It is noted that the principle of unclean hands applies to persons who seek to derive advantage from their own wrongdoing; and that the principle applies equally to defendants as well as to plaintiffs. Reference is also made to the statement by Isaacs J in Meyers v Casey (1913) 17 CLR 90; [1913] HCA 50 (Meyers v Casey) at 124 that "[n]o court of equity will aid a man to derive advantage from his own wrong, and this is really the meaning of the maxim".
6. The plaintiffs point out that in Bullhead, the maxim was applied to the respondent (see at [115]), the Court of Appeal there upholding Sifris J's finding at first instance (in Bullhead Pty Ltd v Brickmakers Place Pty Ltd [2017] VSC 206) that the trustee and those liable as accessories did not have clean hands and were not able to rely on the there proposed equitable defence; it being unconscionable for the defendants in effect to derive a benefit or advantage from their own wrong (Sifris J there citing Official Trustee in Bankruptcy v Tooheys Ltd (1993) 29 NSWLR 641 at 650 per Gleeson J, as his Honour then was).
7. Accordingly, the plaintiffs say that a defendant seeking to rely on a release from liability arising out of a breach of fiduciary duty in pursuance of a fraudulent scheme will be prevented from so doing due to the defendant's unclean hands.

Settlement Deeds are covenants not to sue

1. The plaintiffs next submit that the Settlement Deeds should be construed as covenants not to sue, referring (as have various of the defendants) to the decision in Carr and Purves v Thomas as to the relevant principles in relation to the construction of the deed (at [15]-[24]).
2. Referring by way of illustration to the Pierre Youssef deed (see the extracted Recitals and clauses above), the plaintiffs submit that, as was the case in Carr and Purves v Thomas, the deed represents an intention of the parties that the agreement of the parties as recorded in the deed was limited as to operate only between the parties to the deed. This intention is said to be further expressed in Recitals C and G, in the definitions contained in the deed and in cll 3.1, 6.1 and 7.1 of the deed.
3. It is said that, consistent with the approach in Carr and Purves v Thomas, the Youssef deed expressly provided that the full and final settlement was only as between the plaintiffs and Pierre Youssef in respect to the plaintiffs' claims again him. That qualification is said in itself to be an indicator that the settlement was not a release of the claims against other parties; and that intention is said to be further supported by the other clauses of the deed (as extracted above). It is said that on the proper construction of the deed as a whole the Youssef deed (and the deeds in the same form) is a covenant not to sue as between the parties and was not in fact a release of the claims against other parties.
4. Further, in relation to the Settlement Deed as between the plaintiffs and Laurance Abou-Antoun (entered into after the release defence had been raised by the defendants), the plaintiffs say that (having regard to its terms and the further qualification in cl 2.3 extracted above), it is clear that it was a covenant not to sue and not a release as against other parties.
5. Finally, reference is made to Nau v Kemp & Associates Pty Ltd t/as Active Working Solutions (2010) 77 NSWLR 687; [2010] NSWCA 164 where (at [33]) McColl JA referred to Baxter v Obacelo (to which I have referred above) where the High Court (after holding that s 5(1)(b) of the NSW Law Reform Act did not apply to a case where a plaintiff brought one action against joint tortfeasors, settled against one, with judgment entered in their favour for the settlement sum, and then sought to pursue the proceedings against the remaining joint tortfeasor) went on to hold that, aliter the statute, the remaining tortfeasor could not resist the plaintiff's claim by invoking the defence of satisfaction because the documents effecting the settlement demonstrated the plaintiff intended to pursue their action against the remaining tortfeasor and had not accepted the settlement sum in full satisfaction of their loss (her Honour there referring to Baxter v Obacelo at [49] per Gleeson CJ and Callinan JJ; at [69] per Gummow and Hayne JJ; and at [90] per Kirby J).

Determination - joint release defences

1. It is convenient at the outset to address the joint release defences, which if made good would amount to a complete defence to certain (though not all) of the claims made by the defendants.
2. In summary, the defendants contend that they have been released, invoking Edgewater Homes v Donohoe (to the circumstances of the releases of various defendants in the respective Proceedings) and invoking Yeshiva v Marshall (in relation to the non-pursuit or abandonment of the claims against Andrew Barsa in the Bluemine Proceeding). Broadly, the claims for release are as follows.
3. In the Diamondwish and Rackforce Proceedings, each of Gino Cassaniti, Ivana Cassaniti, Peter Abboud, George Khalil and Fred Khalil pleads (in similar terms) that the release of Frank Criniti (i.e., the fiduciary) has released them from the claims against them in the respective Proceedings. Additionally, Gino Cassaniti, Ivana Cassaniti, Fred Khalil and George Khalil plead that all claims against them are released on the basis of the release of other Scheme Participants (i.e., other accessories - for example, Rima Criniti, Givana Prestige, the Criniti companies, Elle Barikhan, Karl Haidenbauer and others).
4. In the Bluemine and RCG CBD Proceedings, Peter Abboud, Fred Khalil, George Khalil, Gino Cassaniti, Andre and Michael Abou-Antoun, the AKA Parties, the Borg Parties, George Said, Kamikaze Teppanyaki, Sivasli, Ivana Cassaniti and Discobell plead (in similar terms and in the relevant Proceedings), that all claims (or for some, limited to those in respect of breach of fiduciary duty) against them have been released on the basis that other Scheme Participants (i.e., other accessories - for example, JRC Kazzi Investments, the Wenman Parties, the Nassar Parties, Frank Scuteri, Pierre Youssef) have been released.
5. Alternatively, in the Bluemine Proceeding, Tanya Borg and Borg Family also plead that to the extent that their liability is joint and several with Monica Abboud for the payment to Bluemine of $15,000, their liability has been released due to Monica Abboud's release.
6. Further and in the alternative, in the Bluemine Proceeding, Gino Cassaniti, Tanya Borg, Borg Family, Andre and Michael Abou-Antoun, the AKA Parties, George Khalil, Fred Khalil and George Said plead that (depending on the particular defence) either all claims against them, or all the claims against them founded on breach of fiduciary duty, have been released due to the release and/or abandonment of the claim against Andrew Barsa.
7. The basis of the joint release defences is the common law rule that the release of a joint and several wrongdoer from liability releases all the other joint and several wrongdoers; the rule here being invoked by the defendants in the context of claims against a defaulting fiduciary (Gino Cassaniti, Frank Criniti or Andrew Barsa) and those alleged to have knowingly assisted in the breach by that fiduciary (the various Scheme Participants and Gino Cassaniti insofar as the alleged default by Frank Criniti or Andrew Barsa is concerned).
8. The joint releases defence is predicated on the liability the subject of the releases in question (as between defaulting fiduciary and knowing third-party assistant) being joint or joint and several (as opposed to several only); that, if the liability be several, then the so-called "acting in concert" exception applying; and as to the common law rule being applicable in the context of equitable claims under the second limb of Barnes v Addy (or commensurate equitable claims). The defendants invoke the principle of comity in support of their contention that the conclusion reached by Stevenson J in Edgewater Homes v Donohoe should be followed.
9. The plaintiffs' position, in essence, is that the joint release rule does not apply to claims as between defaulting fiduciaries/knowing assistants; liability is several only; that there is no established exception to the joint release rule where the parties severally liable are acting in concert (the statement in Grimaldi v Chameleon Mining being obiter) but in any event that the defendants have not pleaded the relevant facts to support such a conclusion - just pleading the bare fact of release; that the relevant settlement deeds should be construed as covenants not to sue (and not as releases of joint and several wrongdoers); and that, for various reasons, the defendants should not be permitted to rely on the rule.

Terminology

1. It is helpful here to note the clarity provided in Baxter v Obacelo by Gleeson CJ and Callinan J as to the different terminology used in this area of discourse. Their Honours there said (at [18]): 18. Concurrent tortfeasors are persons whose acts concur to produce the same damage. Joint tortfeasors are responsible for the same wrongful act leading to single damage. Such joint responsibility may arise from vicarious responsibility of one for another, or from the non-performance of a joint duty, or from concerted action. Several concurrent tortfeasors are independent tortfeasors whose separate acts combine to produce damage. In their case, "concurrence is exclusively in the realm of causation".
2. At [19], their Honours explained that: 19. At common law, the liability of joint tortfeasors was joint and several. A plaintiff could sue joint tortfeasors separately, in independent actions, for the full amount of the loss. Or the plaintiff could sue all the joint tortfeasors in the same action. Several concurrent tortfeasors, on the other hand, could not be joined as defendants in the one action. That was because they were severally liable "on separate causes of action". The difference between action and cause of action was significant. A person suffering injury as a result of the wrongdoing of joint tortfeasors had only one cause of action…Such a person might bring one action (ie proceeding), or more than one action. In the case of several concurrent tortfeasors, there was a separate cause of action against each, and if a plaintiff desired to sue more than one, it was necessary to commence separate actions.
3. Their Honours then identified a number of corollaries of the principle that a plaintiff had only a single cause of action against a number of joint tortfeasors, as follows: 20. One corollary of the principle that a plaintiff had only one cause of action against a number of joint tortfeasors was that, where an action was brought against two or more joint tortfeasors, only one judgment for one sum of damages could be given in favour of the plaintiff. 21. Another corollary, sometimes referred to as the rule in Brinsmead v Harrison, was that the single cause of action resulting from the joint commission of a tort merged in the first judgment which the plaintiff obtained in respect of it. A plaintiff who recovered action against any one joint tortfeasor was "barred from subsequently recovering judgment against any other joint tortfeasor responsible for that tort whether in an action commenced before, at the same time as, or after the action in which a final judgment had already been recovered. … 26 A third corollary of the principle that a plaintiff had only a single cause of action against a number of joint tortfeasors was that an unqualified release of one joint tortfeasor released the others…In Thompson v Australian Capital Television Pty Ltd, it was held that, since the effect of s 5(1)(a) was that the cause of action against joint tortfeasors was no longer one and indivisible, the rule that a release given by one joint tortfeasor releases any other had been abolished. [citations omitted]
4. I refer to Baxter v Obacelo at the outset because recent cases, which have considered whether liability to pay equitable compensation is joint and several or several only, as between defaulting fiduciaries and accessories, appear to use the word "several" to mean, in effect, several concurrent wrongdoers, as that term is used in the passage above in Baxter v Obacelo (see Edgewater Homes v Donohoe at [70]-[71]; Grimaldi v Chameleon Mining at [559]); as distinct from "several wrongdoers" who are responsible for different acts which cause different damage to the plaintiff. (In the latter case, the release of one wrongdoer would clearly have no effect on the liability of a several wrongdoer who is responsible for causing different damage to the plaintiff.)
5. Further, when considering terminology, it is relevant to note that (as I consider shortly), the traditional rationale for the release rule at common law, as applicable to joint tortfeasors (whose liability was joint and several) is the unity of action principle (see Walker v Bowry at 54-55). It was not the joint and several nature of their liability which caused the release rule to apply (with "joint and several" liability referring, as in Baxter v Obacelo at [19] above, to the nature of the liability being such that the plaintiff can sue all the defendants separately for the full amount of the loss, or it could sue them all in the same action for the full amount of the loss). Insofar as it is said in Grimaldi v Chameleon Mining and Edgewater Homes v Donohoe that the release rule may apply where liability is "joint and several", this appears to be a short-hand way of saying that joint wrongdoers (whose liability at common law is "joint and several") may be subject to the release rule. This language may be apt to cause confusion in circumstances where several concurrent wrongdoers are now also jointly and severally liable (in the sense that they may be sued together in the same action - see, for example Div 5 of the UCPR). Accordingly, the key question is whether there is joint wrongdoing or several concurrent wrongdoing (i.e., whether there is unity of action). Therefore, although I have adopted for convenience the language of "joint and several" liability (i.e., release rule ordinarily applies) as opposed to "several" liability only (i.e., release rule does not apply), it should be borne in mind that this terminology refers to the old common law position of liability.

Release rule

1. Turning then to the release rule itself, I note as follows.
2. In Walker v Bowry, Starke J (at 58) referred to the long-established rule at common law that "the release of one of a number of co-debtors jointly or jointly and severally liable for the same debt released all". Isaacs ACJ in Walker v Bowry explained (at 54-55) that: Where the obligation is joint, there can be no doubt that judgment against one obligor puts an end to the original contractual liability of both-as against the judgment debtor, because that liability transivit in rem judicatam, so that he can never be sued again; as against the other obligor, because his right, if sued, to be sued in company with his co-contractor cannot be satisfied (King v. Hoare (1) and Kendall v. Hamilton (2). But what is meant by transivit in rem judicatam? This is explained by Parke B. in King v. Hoare (3). He says - referring to the maxim Transit in rem judicatam - "the cause of action is changed into matter of record, which is of a higher nature, and the inferior remedy is merged in the higher. This appears to be equally true where there is but one cause of action, whether it be against a single person or many". What is meant by "one cause of action"? This, to my mind, is the crux of the position. The "cause of action" is not, in my opinion, the liability to pay "jointly" or "jointly and severally" or "severally." Those terms signify merely certain conditions attached to the promise to pay. I freely confess that one may find observations difficult to square with this; but, on the other hand, when the leading case of Kendall v. Hamilton is carefully examined, what I have said will, I think, be found to be the underlying principle on which the decision is rested. [emphasis added]
3. Davies J set out the rationale for this rule in Cluness v Official Trustee in Bankruptcy (Federal Court of Australia, Davies J, 17 April 1998, unrep) at 3: The basis of the principle that the release of one joint debtor extinguishes the liability of the other joint debtor is that there is only one debt. It is a debt owed jointly by one or more persons. If the debt is released and thereby extinguished, the debt ceases to exist. Therefore anybody who was previously bound to pay the debt is also released, although the deed of release may have been expressed in favour of only one of the joint debtors.
4. This rationale is underpinned by a desire to protect debtors. As Bowen LJ said in In re Hodgson; Beckett v Ramsdale (1886) 31 Ch D 177 at 188-189, albeit in the context of a merger of a cause of action upon judgment: It is based, rightly or wrongly, on the idea that a joint debtor has a right to demand, if he pleases, that he shall be sued at one and the same time with all his co-debtors. To enforce this right he is only entitled to plead in abatement, but the right is one of considerable business value, and is so recognised by the law. In order to protect each of the joint debtors, the law treats the cause of action as being a joint one, and as capable of being merged whenever it is pursued to a judgment. It is absorbed and merged in the judgment which is recovered against one of the debtors not only as against him but as against all the rest, and the object is to prevent the prejudice which the law conceives might arise to a joint debtor who is not being sued, if he were left with future litigation still hanging over his head. All his liability is merged therefore in the judgment, - the old debt disappears and the judgment is left in its place.
5. Rein J observed in Conridge v Schaapveld [2015] NSWSC 663 at [33] that the rationale behind the release rule (at least insofar as it governs co-debtors jointly and severally liable), has been repeatedly questioned but that, in Australia, as a matter of authority the position remained governed by the High Court's decision in Walker v Bowry. McLelland CJ in Eq, stated the position thus in Dorgal v Buckley at 167: As a matter of principle, this rule seems impossible to justify: the release of one of a number of debtors jointly liable would undoubtedly release all from the joint debt, but on what basis in principle can it be taken to release the others from their several debts? Be this as it may, as a matter of authority, the rule is binding on this court since it was expressly applied by the High Court in Walker v Bowry (1924) 35 CLR 48; 30 ALR 371. I do not think that the circumstance that the liability there was contractual and the liability in the present case is statutory provides a sufficient basis for distinguishing that decision.
6. Although the unity of action theory is the central justification for the release rule, for completeness I note that there are other justifications that have occasionally been invoked in support of the rule (see, for example, the discussion by Kulongoski J for the Court in the decision of the Supreme Court of Oregon in Schiffer v United Grocers Inc, 989 P 2d 10 (Or, 2006) cited by Judge Paul Baker QC in Deanplan Ltd v Mahmoud [1993] Ch 151; [1992] 3 AII ER 945 at 167-168). However, as made clear by the Court of Appeal of Victoria in Harplex v Konstandellos, in jurisdictions (as here) that are bound by Walker v Bowry, unless there is unity of cause of action the the release rule cannot have any application.
7. I note that in DIF III - Global Co-Investment Fund LP v Babcock & Brown International Pty Ltd [2019] NSWSC 527 (DIF III - Global Co-Investment Fund), Ball J proceeded on the basis (without deciding the issue), that the common law release rule had application to liability between jointly (or jointly and severally) liable fiduciaries (see at [174]-[175]).

Edgewater Homes v Donohoe

1. In Edgewater Homes v Donohoe, having summarised the effect of various of the authorities referred to above, Stevenson J considered whether the principle at common law that "a release of a party jointly and severally liable in tort or in contract 'contractually discharges the others'", should apply such that the release from liability of knowing assistants would release the fiduciary (at [45]-[46]). His Honour then referred to several texts and authorities.
2. At [50], Stevenson J referred to the statement of Professor Mitchell in his chapter on "Assistance" in Breach of Trust at 208 that: If a claimant releases the primary wrongdoer or affirms or acquiesces in the primary breach, then this too will debar him from suing the dishonest assistant. The reason for this is that dishonest assistants are jointly and severally liable with the wrongdoing trustees or fiduciaries in whose breaches of duties they assist, with the consequence that the release of one operates to release the others as well.
3. Next, at [51], Stevenson J referred to Lewin on Trusts at [39-110] for the proposition that "[i]f the beneficiary releases the principal in a breach of trust of fraud so as to extinguish any liability, he cannot afterwards take proceedings against other parties who would have been jointly and severally liable". In the footnote to [39-110] the authors added the following: The position is otherwise where there is a mere covenant not to sue the principal and the beneficiary reserves his rights against other parties.
4. His Honour then referred to various authorities. First, (at [52]) to Thompson v Harrison, where Thurlow LC appeared to determine the case not on the basis that the relevant parties were jointly (or jointly and severally) liable but on the basis that the liability of a defendant who had not been released (Mr Harrison) was only secondary (and therefore, without the primary liability of the fiduciary, the secondary liability could not subsist).
5. Stevenson J next referred to the Court of Appeal's decision in Yeshiva v Marshall at [80] per Bryson JA. At [77], Byson JA stated that: 77. When claims based on alleged accessary liability and the second limb of Barnes v Addy are made it is usual, in my experience, that the trustee or fiduciary whose liability is alleged to be the principal liability is joined in the suit and that appropriate equitable remedies are claimed against that person. This accords with the usual approach taken by Courts of Equity in which, so far as is practicable, all aspects of the controversy are brought under consideration and resolved in the same suit. This approach is sometimes expressed in the obscure maxim 'Equity delights to do justice,' which alludes to the Courts' wish to resolve the whole controversy and give effect to all equities of all persons involved in the controversy. The same policy is expressed in ss 60 and 63 of the Supreme Court Act 1970. Except when the principal cannot be found, is insolvent, has a bankruptcy discharge, or is unavailable to be sued for some other reason, it is appropriate that that person should be joined as a defendant. There may be advantages for the attainment of justice if that person can be required to produce documents on discovery, answer interrogatories or otherwise to participate in the proceedings. It is not safe to assume that all relevant aspects of the principal persons' conduct are known to an accessary.
6. The reference to the maxim "equity delights to do justice" and the comments his Honour made regarding it, are important parts of the context in which to understand what was said at [80], namely that: 80. To my mind it is doubtful whether an equitable remedy against an alleged accessary should be granted to a plaintiff who has given the alleged defaulting trustee or fiduciary a release, or has decided not to sue the trustee or fiduciary. Doing equity as between the plaintiff and the accessary, who is not the person principally liable, seems to me to be possible only if the plaintiff also pursues his claim against the person principally liable. A plaintiff who seeks an equitable remedy commits himself to a suit in which all equities in the controversy will be resolved together, and the Court should not allow the plaintiff to decide which party to sue and which party to ignore or give a release, perhaps for forensic advantages related to assessed readiness to contest the claim. If the party principally liable has a release under bankruptcy or some other legislation there may be no purpose in requiring it to be joined as a party; except perhaps to obtain discovery. Even so, any dividend or other advantage obtained in the bankruptcy would obviously have to be brought into account. The appellants obtained some advantages from the release granted to the Feldmans and Vageta, as they also obtained releases from many parties; their case seemed to me to require a full explanation of what it was that moved them to release the Feldmans, whose conduct they were complaining about, and Vageta, which was said to have obtained a large amount of the appellants' money. There must have been some large advantage, and it should have been explained, evaluated and credited in any remedy to which the appellants were otherwise entitled. While I feel these concerns strongly, they were not debated on appeal and the appeal can be disposed of without reaching conclusions on them.
7. As his Honour acknowledged, at the conclusion of [80], it was not necessary for the Court of Appeal to determine the issue. However, his Honour's conclusion was expressed in strong terms. His Honour's conclusion rests on two pillars, namely: first, as Thurlow LC did, the notion that the liability of a knowing assistant is only secondary to the primary liability of the fiduciary; and, second, that there is something inequitable in allowing a prospective plaintiff to elect who to sue.
8. As to the first, it is doubtful whether any such reasoning can stand in light of the High Court's decision in Michael Wilson v Nicholls, where their Honours considered that other than the fact that the liability of a knowing assistant dpends upon establishing, among other things, a fiduciary's breach of duty; the nature and extent of the liability of a knowing assistant does not depend on the nature and extent of the liability of the fiduciary or trustee.
9. As to the second, it is somewhat problematic to suggest that such a course is inequitable where the common law has, for a significant period of time, allowed a plaintiff to elect whom to sue and, relatedly, whom to release (indeed, that is one of the chief advantages of joint and several liability).
10. That said, Bryson JA's observations have received some later approval at first instance. Osborn J considered in Amcor v Barnes at [47], that there was "much to be said" for Bryson JA's remarks (albeit that this was said in the context of an application for cross-vesting of proceedings, not on a question of the effect of a release).
11. Returning, again, to Edgewater Homes v Donohoe, Stevenson J considered that the above authorities suggested that a release of "the primary wrongdoer releases his or her assistant" and that the converse should also apply (see at [55]-[56]). His Honour concluded at [59]: 59. In those circumstances, I accept Mr Pritchard's submission that there is 'no principled reason (in light of the liability being joint and several) why any distinction should be drawn between the operation of a release in favour of the defaulting fiduciary and a release in favour of a third party accessory'.
12. With respect, the language used there by Stevenson J is to my mind of significance; in that the parenthetical comment "in light of the liability being joint and several", indicates that, were the liability not so, the conclusion might not well hold.
13. Stevenson J's decision has not received extensive subsequent consideration. In Ambridge Investments Pty Ltd (in liq) v Baker [2020] VSC 534, Counsel for the second defendant referred to the decision as authority for the proposition that "the release or abandonment of claims against co-fiduciaries or accessories leads to the release in equity of claims against the remaining fiduciary" (at [58(g)]). Almond J concluded, however, that the second defendant had failed to satisfy the evidentiary onus on this issue and did not take it any further (at [71]).
14. Similarly, Ball J in DIF III - Global Co-Investment Fund at [176], cited the relevant passages of Stevenson J's decision, but it was ultimately unnecessary for his Honour to engage with the issue.
15. Stevenson J noted (at [54]) that McLaughlin AsJ's decision in Coulton v Coulton [2008] NSWSC 910 (Coulton) was inconsistent with Bryson JA's observations in Yeshiva v Marshall, but considered that McLaughlin AsJ may not have been taken to Bryson JA's comments. In Coulton, McLaughlin AsJ considered an application by the fifth defendant for summary dismissal of a dispute, the substratum of which was a partnership dispute between the plaintiff and the first to fourth defendants. The fifth defendant was party to neither of the partnerships in question. However, it was alleged that the first to fourth defendants had, in breach of their fiduciary duties, caused the sale to the fifth defendant (she being the wife of the fourth defendant) of certain partnership assets. In seeking summary dismissal, the fifth defendant relied on principles of indefeasibility of Torrens title to defeat any claim by the plaintiff to the assets. The fifth defendant also asserted that the release of thr fourth defendant had the effect also of releasing her from "the only liability asserted against her, being in the nature of an accessorial liability".
16. McLaughlin AsJ noted (at [51]) that on the summary dismissal application it was not necessary that he be persuaded that the plaintiff must of necessity succeed in her claim against the fifth defendant, it being necessary only that, at that stage of the proceedings, he be satisfied that the plaintiff had an arguable case; and concluded that: 51. ... I am far from being persuaded that the inevitable consequence of the release of the Fourth Defendant is that the Fifth Defendant, if a knowing participant in the breach of the Fourth Defendant's fiduciary obligations to the Plaintiff is also thereby released from the consequences of her such knowing participation.

Authorities referred to in Thompson v Australian Capital Television

1. In Thompson v Australian Capital Television, the broader relevance of which I will return to below, Gummow J at 608-609 referred in a footnote to several authorities relevant to the release of jointly and severally liable trustees.
2. The first was a decision of the Supreme Court of Appeals of Virginia in First & Merchants National Bank of Richmond v Bank of Waverly (1938) 70 Va. 496; 197 SE 462 (First & Merchants National Bank). In that case, the plaintiffs brought an action against the defendant in its capacity as co-executor and co-trustee of a deceased estate for breach of duty. The defendant contended that the plaintiffs' release of the co-trustee also operated to release the defendant. Gregory J, writing for the majority, likened the action to one in tort and said at 503: That the present action is one of tort can not be questioned. The notice of motion filed in the case is grounded upon the negligence of the defendant. There was but one single cause of action and it grew out of the wrongful conduct of the co-trustees. While the co-trustees are jointly and severally liable in tort for the injury caused by their negligence or misconduct, the satisfaction of the cause of action made by one for the mischief wrought discharges the other. It is similar in its operation to an accord and satisfaction. This is true, even though the parties did not intend to discharge the other joint wrongdoer. … The rule of law, so well established in Virginia, by the cases referred to, is subject to no known exceptions. The fact that the wrong grows out of the misconduct of co-trustees constitutions no exception to the rule of which we are aware. These fiduciary wrongdoers are just as much joint wrongdoers as any other joint tort-feasors. There is just one cause of action against them. When one of them satisfied that single cause of action the other was released. There can be no bar until there has been satisfaction for the wrong done (Code, s 6264) but when once the wrong has been satisfied by one, that constitutes a complete bar to any action that may be instituted against the other.
3. Hudgins J, as his Honour then was, in dissent, doubted the extension of principles relevant to joint tortfeasors to trustees, stating at 505: The principles of law controlling the relation of the parties are different. The fiduciary relation to the cestui que trust is voluntarily assumed, and assumed, as in this case, for a consideration to be paid out of the trust estate. In construing a release of an ordinary tort-feasor by the party who has suffered loss, the courts apply the rules of construction governing a simple contract between parties dealing at arm's length. These rules of construction do not apply to a release of the fiduciary executed by a ward or other cestui que trust.
4. His Honour then referred to a number of texts and authorities dealing with the scrutiny levied at a release given by a ward or a cestui que trust; and added, with reference to the facts of the parties in that case: If a cestui que trust is thus protected in executing a release directly to his trustee, it would seem to be illogical not to extend him the same protection and give him the same rights against a solvent trustee, where, without full knowledge of all the facts, or his legal rights, he had acquiesced in the release of the insolvent trustee in consideration of payment of part only of the loss sustained.
5. His Honour referred to the principle that a co-trustee is not ordinarily liable for the loss of trust funds in the hands of the other trustee (see generally, s 59 of the Trustee Act 1925 (NSW) (Trustee Act)) and concluded at 508: Where two trustees are liable to the beneficiary for a breach of trust, and one is more at fault than the other, and the one least at fault makes redress, he is entitled to contribution, and may be entitled to indemnity from the other (ALI Trusts, sec 258). But where the trustee entitled to contribution obtains or participates in a compromise settlement whereby the defaulting trustee is released, he should not be permitted to plead such a release in an action against him for his own neglect of duty, unless it appears that the beneficiary was fully informed of all the facts, and of his legal rights and, after obtaining this information, he accepted the settlement as a complete discharge of all liability for the breach of duty.
6. McLaughlin AsJ in Coulton v Coulton (at [48]-[50]) considered the majority's view in the First & Merchants National Bank case to be plainly wrong and, at least implicitly, adopted the reasoning of Hudgins J, stating that: 48. However, the equation of co-trustees with joint tortfeasors made by their Honours in the Commonwealth of Virginia in 1938 has no warrant either in law or in principle, and totally misconceives the nature of the office of a trustee. 49. The dissenting judgment of Hudgins J in that case reveals a far greater understanding of the concepts of trusts and trustees and their obligations and liabilities. His Honour said (and I would respectfully agree): I do not think the same rule [as that applicable to tortfeasors] should be applied to the release of one of two fiduciaries for the loss of trust funds. The principles of law controlling the relation of the parties are different. 50. I am not persuaded, first, that the judgment of the majority in the Virginia case is correct, or, even if it were, that, by analogy, the principle upon which that decision was based would have the effect of discharging the Fifth Defendant from any liability which she might have incurred in consequence of her having knowingly accepted a transfer to her of property which had been relinquished by the Plaintiff by reason (as it is alleged) of the breach by the other Defendants of fiduciary duties owed to the Plaintiff. (In any event, it needs hardly to be emphasised that the Virginia case, which I consider to have been wrongly decided, is of no binding authority upon the Supreme Court of New South Wales.)

The effect of Thompson and Harplex

1. There is now an extant issue (to which the plaintiffs have adverted in their submissions in reply at [55]-[80]) as to whether the common law release rule has been abrogated by statute, following the decision of the Court of Appeal of Victoria in Harplex v Konstandellos, applying the High Court's decision in Thompson v Australian Capital Television. Prior to addressing what said by the Court of Appeal of Victoria, it is useful to address, briefly, the background to Thompson v Australian Capital Television.
2. In Thompson v Australian Capital Television, the Court noted that at common law, prior to statutory intervention, the release of one joint tortfeasor released all others (at 581-582 per Brennan CJ, Dawson and Toohey JJ) and that the liability of "joint tortfeasors" was, in fact, joint and several (at 603 per Gummow J). The rule reflected the distinction between joint tortfeasors and several tortfeasors, whereby "the former are responsible for the same tort whereas the latter are responsible for the same damage" (at 580 per Brennan CJ, Dawson and Toohey JJ).
3. Thus, as Brennan CJ, Dawson and Toohey JJ explained in Thompson v Australian Capital Television at 581, the rationale behind the rule that the release of one joint tortfeasor released all others lay in the notion that there was only one, indivisible, cause of action. Their Honours explained that: At common law, where there was a joint tort there could be only one action and one judgment for the whole amount of damages to which the plaintiff was entitled. That is to say, the cause of action was one and indivisible so that when judgment was obtained on it, whether against one or more of the joint tortfeasors, the cause of action merged in the judgment and precluded further recovery against any remaining tortfeasors … It was also the basis of the rule that the release of one joint tortfeasor released all the others … [citations omitted]
4. One of the issues in the decision in Thompson v Australian Capital Television was whether the common law rule had been abrogated by the introduction of s 11 of the ACT Law Reform Act (the analogue to which in New South Wales was s 5 of the NSW Law Reform Act). Section 11(2) of the ACT Law Reform Act provided: Judgment recovered against a tort-feasor liable in respect of the damage is not a bar to an action against any other person who would, if sued, have been liable as a joint tort-feasor in respect of the same damage.
5. The High Court concluded that s 11(2) of the ACT Law Reform Act destroyed the unity of action amongst joint tortfeasors. Brennan CJ, Dawson and Toohey JJ said at 584: Similarly, under s 11(2) of the ACT Act it is no longer the case that the victim of a tort committed by joint tortfeasors has only one cause of action; the cause of action is no longer one and indivisible. The concept of a single wrong and a single cause of action having gone, the rule that a release given by one joint tortfeasor releases any others must have gone with it, for that rule is nothing more than another aspect of the same thing, namely, that there is only one cause of action against all joint tortfeasors in respect of the one tort. In other words, once the cause of action is by statute no longer one and indivisible, there is no conceptual basis for the rule that the release of one joint tortfeasor releases the others. The rule must therefore be taken to have been impliedly abolished by the statute.
6. Gummow J (with whom Gaudron J agreed) reached the same conclusion (at 612-614).
7. In Harplex v Konstandellos, the Court of Appeal of Victoria (McLeish and Hargrave JJA and McDonald AJA) considered the effect of s 24AA of the Wrongs Act, which provided that: Judgment recovered against any person liable in respect of any debt or damage shall not be a bar to an action, or to the continuance of an action, against any other person who is (apart from any such bar) jointly liable with the first-mentioned person in respect of the same debt or damage.
8. The appellants submitted that s 24AA (much like s 11 of the ACT in Thompson v Australian Capital Television), abrogated the common law rule that the release of one joint (or joint and several) debtor, released them all. The Court of Appeal accepted that submission at [60], commenting that: 60. … on the authority of Thompson, s 24AA destroys the unity of the cause of action in debt which, on the authority of Walker, is the basis for the common law rule as it applies to both joint and joint and several liability. It is not possible, given the High Court's conclusion in Thompson that the statute impliedly abolishes the common law rule by destroying the unity of the cause of action in relation to tort, to avoid the same conclusion in respect of the unified cause of action in contract. In the circumstances, the reasoning governing the position regarding joint, or joint and several, tortfeasors applies equally to joint, or joint and several, debtors.
9. Their Honours concluded at [64]: 64. It follows that the statement of the common law rule in Associated Retailers does not reflect the law in Victoria. There is, instead, no principle that a release of one of a number of co-debtors who are jointly, or jointly and severally, liable for the same debt releases all of them. [citations omitted]

Liability of a knowing assistant

1. Turning then to the proper characterisation of the liability of a defaulting fiduciary and knowing accessory (i.e., whether for the purposes of the release rule it should be regarded as joint and several or several only), the learned authors of Meagher, Gummow & Lehane's Equity: Doctrines & Remedies, JD Heydon, MJ Leeming, PG Turner, have stated that in Australia the liability of a knowing assistant for loss is several only (based on the decision of the High Court in Michael Wilson v Nicholls). The authors further note that the liability of a knowing assistant for profits (and I interpose to note that an account of profits is not the claim here made) is limited to the profits (or other benefits) gained by the knowing assistant himself or herself (that is, the knowing assistant is not liable for profits or other benefits gained by the defaulting fiduciary or other knowing assistants).
2. In Michael Wilson v Nicholls, the plurality concluded (at [106]) that the "relief that is awarded against a defaulting fiduciary and a knowing assistant will not necessarily coincide in either nature or quantum". It follows that the liability of a knowing assistant is discrete and is only "ancillary" in the sense that a breach of fiduciary duty is a requisite element in establishing that liability.
3. Subsequently, the Full Court of the Federal Court in Grimaldi v Chameleon Mining held that, subject to two exceptions, the liability of a knowing assistant and a fiduciary for profits gained is several only. (The logic behind that conclusion must, necessarily, extend to liability between multiple knowing assistants.)
4. While the position is less clear in relation to loss-based remedies (such as equitable compensation) as opposed to claims for an account of profits, it seems likely that the liability of and between knowing assistants and a defaulting fiduciary for a loss-based remedy is properly to be regarded as several only. (However, as is explained below, such a conclusion might leave a knowing assistant (or a fiduciary) without recourse to the doctrine of contribution in circumstances where both caused the loss suffered by the principal).

The two strands of reasoning in Meagher, Gummow & Lehane's Equity: Doctrines and Remedies

1. At [23-555], in the context of a discussion about the remedy of equitable compensation, the authors state that: At the time, the law in Australia was that a knowing participant was jointly and severally liable with the defaulting fiduciary for losses suffered by the principal as a result of the fiduciary's breach of duty.
2. Importantly, the learned authors continue on (in footnote 419) in support of that proposition: For example, Catt v Marac Australia Ltd (1986) 9 NSWLR 639. In Australia, the liability of a knowing participant for loss suffered by the principal is now several only: Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427; 282 ALR 685 at [106]. In England, where the relevant liability is of a dishonest (as distinct from knowing) participant, the participant's liability for loss remains joint and several with the defaulting fiduciary: for example, Daraydan Holdings Ltd v Solland International Ltd [2005] Ch 119; [2005] 4 All ER 73 at [54]. As to the liability in England of a dishonest participant to account for profits, see Novoship (UK) Ltd v Nikitin [2014] EWCA Civ 908. [my emphasis]
3. The reference there is as to "losses" or "loss" suffered by the principal, indicating that the analysis is in relation to loss-based remedies, rather than those remedies focussed on gain-stripping or, perhaps, proprietary remedies.
4. At [5.270] in a discussion of the remedies available in the fiduciary relationship, the authors pose the question whether a knowing participant must account for the profits made by the fiduciary (inherent in which must be an appreciation of whether any aspect of the liability between the defaulting fiduciary and the knowing participant is joint). Reference is there made to the judgment of reference McLelland J, as his Honour then was, at first instance in United States Surgical Corporation v Hospital Products International Pty Ltd [1982] 2 NSWLR 766 (United States Surgical Corporation), where his Honour said at 817, that a person who knowingly participates in a breach of fiduciary duty "may be … (ii) jointly liable with the fiduciary in respect of any pecuniary liability of the fiduciary to the beneficiary as a result of the breach".
5. Meagher, Gummow & Lehane's Equity: Doctrines & Remedies thus conclude that United States Surgical Corporation case is authority for the view that "each respondent is jointly and severally liable to account for the profits made by all" (at [5-270]).
6. McLelland J relied upon the judgment of Gibbs J, as his Honour then was, in Consul Development v DPC Estates at 395-397 to support the proposition of liability being joint and several. The authors of Meagher, Gummow & Lehane's Equity: Doctrines & Remedies note that Gibbs J's judgment does not, in terms, provide that support but point out that Gibbs J did rely on the importance of deterring those who might assist a breach of fiduciary duty from doing so in order to justify ordering the accessory to account for its profits; and that this "would also justify ordering the accessory to account for the profits made by the fiduciary".
7. The authors also refer to a decision of the Supreme Court of British Columbia in Canada Safeway Ltd v Thompson [1951] 3 DLR 295, where Manson J, at 323, concluded that the liability amongst active participants was "not joint but joint and several"; but refer, to the High Court's decision in Warman International Ltd v Dwyer (1995) 182 CLR 544; [1995] HCA 18 (Warman) at 569-570 as being contrary to those authorities (to the effect that "strictly each respondent must account for its profits but not for those of any other respondent").
8. Finally, the authors of Meagher, Gummow & Lehane's Equity: Doctrines & Remedies refer to three authorities to support the proposition that the purpose of the remedy of an account of profits is to prevent the unjust enrichment of the defendant (Dart Industries Inc v Decor Corporation Pty Ltd (1993) 179 CLR 101; [1993] HCA 54 at 111 per Mason CJ, Deane, Dawson and Toohey JJ; My Kinda Town Ltd v Soll (Chicago Pizza Case) [1983] RPC 15 at 55 per Slade J; Colbeam Palmer Ltd v Stock Affiliates Pty Ltd (1968) 122 CLR 25; [1968] HCA 50 at 34 per Windeyer J). The authors, consequently, reason (at [5-270]): If those statements are taken literally, it is hard to see how an accessory can be liable for the profits made - the riches unjustly acquired - by the fiduciary. If the purpose is to prevent the fiduciary from being unjustly enriched, and the fiduciary has since lost those riches, it is not a purpose that can be vindicated by making accessories pay over riches which they themselves did not receive.
9. The above analysis thus suggests that the liability of a knowing assistant and a defaulting fiduciary is several.
10. As noted above, Michael Wilson v Nicholls is cited in support of the proposition that "[i]n Australia, the liability of a knowing participant for loss suffered by the principal is now several only". It is not necessary here to set out the facts of the case.
11. The plurality (Gummow ACJ, Hayne, Crennan and Bell JJ) considered the issue of the liability of a knowing participant, noting (at [100]) the proposition that the liability of the respondents (for knowing assistance) was no more than "ancillary or coordinate" with that of the defaulting fiduciary. The plurality expressly rejected that understanding of the relationship between the liabilities of a defaulting fiduciary and a knowing assistant of the fiduciary's breach; and (at [105]), rejected as inaccurate the proposition that the liability of the respondents was "necessarily confined by the extent of [the defaulting fiduciary's] liability" or that the respondents' liability to the principal was no more than accessorial to the principal wrongdoing of the defaulting fiduciary. Their Honours (with whom Heydon J agreed on this issue), continued (at [106] - i.e., the paragraph later cited in Meagher, Gummow & Lehane's Equity: Doctrines & Remedies): 106. As MWP rightly pointed out, this Court has held that liability to account as a constructive trustee is imposed directly upon a person who knowingly assists in a breach of fiduciary duty. The reference to the liability of a knowing assistant as an 'accessorial' liability does no more than recognise that the assistant's liability depends upon establishing, among other things, that there has been a breach of fiduciary duty by another. It follows, as MWP submitted, that the relief that is awarded against a defaulting fiduciary and a knowing assistant will not necessarily coincide in either nature or quantum. So, for example, the claimant may seek compensation from the defaulting fiduciary (who made no profit from the default) and an account of profits from the knowing assistant (who profited from his or her own misconduct). And if an account of profits were to be sought against both the defaulting fiduciary and a knowing assistant, the two accounts would very likely differ. It follows that neither the nature nor the extent of any liability of the respondents to MWP for knowingly assisting Mr Emmott in a breach or breaches of his fiduciary obligations depends upon the nature or extent of the relief that MWP obtained in the arbitration against Mr Emmott.
12. Their Honours acknowledged (at [107]), that the liability of the respondents as knowing assistants to a breach of fiduciary duty depends upon proof, in proceedings against them, of a relevant breach of fiduciary duty by the defaulting fiduciary but repeated, with some emphasis (at [109]): 109. As already explained, the common starting point for all of the arguments that there was or would be an abuse of the process of the Supreme Court was that MWP's claims against the respondents in the Supreme Court were limited by the nature and extent of the relief it sought and obtained in the arbitration of its claims against Mr Emmott. That premise is flawed."
13. Apart from Michael Wilson v Nicholls, the decision of the Full Court of the Federal Court (Finn, Stone and Perram JJ) in Grimaldi v Chameleon Mining is the most relevant authority on the present issue. Their Honours began (at [553]) by acknowledging that there were "subsisting uncertainties as to whether and/or when the liabilities of the knowing assistant or recipient are only several, or are joint and several, with those of the delinquent fiduciary or trustee". As it transpired, it was unnecessary for their Honours to resolve many of the uncertainties in this area of law. Nonetheless, their Honours' subsequent explanation of the area remains authoritative.
14. The general position as to liability was described by their Honours (at [557]) by reference to the passage from the plurality's reasons in Michael Wilson v Nicholls (at [106]). Their Honours said: 557. …the fiduciary and the third party will ordinarily be only severally liable for the profits each makes in consequence of the breach of fiduciary duty or breach of trust in which it participated/was a recipient: see generally Warman at 569. Each is not responsible for the other's profits as we earlier indicated …
15. In addition to citing Michael Wilson v Nicholls, their Honours cited a number of other authorities in support. Those authorities, however, did not in terms suggest that liability was "several" but, rather, emphasised that a knowing assistant ought not be required to account for profits or benefits the fiduciary (but not the assistant) had received (see Glandon Pty Ltd v Tilmunda Pastoral Co Pty Ltd (2008) ASAL 55-186; [2008] NSWSC 218 at [108]-[109] per Gzell J; Australian Medic-Care Co Ltd v Hamilton Pharmaceutical Pty Ltd (2009) 261 ALR 501; [2009] FCA 1220 at [680]-[681] per Finn J; Ultraframe at [1600] per Lewison J (discussed further below)).
16. Their Honours also referred to McLelland J's decision in United States Surgical Corporation (see above) and concluded that "[i]f this is to be taken as suggesting that the liability for profits is joint and several (there are later textual indications to this effect: see Meagher, Gummow and Lehane, at [5.245]), we disagree and would not apply it".
17. In addition to the general position that the fiduciary and the knowing assistant will ordinarily only be severally liable for profits, their Honours espoused two exceptions: the first, may be termed the "alter ego" exception, and the second, the "acting in concert" exception (the latter otherwise being referred to as the Grimaldi exception in this judgment).
18. First, their Honours described the "alter ego" exception (at [556]): 556. … where the advantage of a fiduciary's/trustee's wrongdoing accrues to a third party (whether as a knowing recipient or an assistant) and the third party is the alter ego/'nominee' (usually corporate) of the fiduciary, its liabilities will be joint and several with the fiduciary's: Green v Bestobell at 40; see Gencor ACP Ltd v Dalby (where the action was against the fiduciary for commission payments 'diverted into his own creature company' and for which both the company and the fiduciary were held accountable).
19. Second, their Honours described the "mutual benefit" exception (at [558]): 558 … if the fiduciary and the third party assistant or recipient act in concert to secure a mutual benefit, be this to misappropriate trust property for a particular mutually beneficial purpose or to participate in a breach of fiduciary duty to secure a mutual advantage (eg a business opportunity), they are jointly and severally liable to the wronged beneficiary/principal to restore the trust or to account for the profits made. In CMS Dolphin, directors were held equally liable with the corporate vehicle they formed to take unlawful advantage of business opportunities they provided to it: '[T]he reason is that they have jointly participated in the breach of trust': at [103] emphasis added; Green v Bestobell; see also the facts in Macdonald v Hauer, above; but cf the criticism in Ultraframe (UK), at [1561]-[1576]. One can readily understand why, when wrongdoers so entangle their affairs, that the law as a matter of legal policy might wish to make it their responsibility - and not a claimant's - to untangle them for accountability purposes. [emphasis in original]
20. At [559], in the context of cases of "knowing receipt" (cf the plaintiffs' reply submissions at [84]), their Honours said: 84. Fifthly, in the case of knowing receipt, where some or all of the trust property received no longer exists (or is not traceable) and so cannot be returned, the knowing recipient is obliged (no less than the wrongdoing trustee) to restore the trust fund by way of monetary compensation for the assets which have been lost: on this form of equitable compensation see Re Dawson (decd); Union Fidelity Trustee Co Ltd v Perpetual Trustee Co Ltd [1966] 2 NSWR 211; and see generally Mitchell and Waterson, at 132 ff. In this matter, Mr Grimaldi, Winterfall and Murchison are all exposed to such a claim in respect of the cheque advances at Chameleon's. We have not been asked to determine whether this liability is joint or several or several only. We incline to the latter view.
21. The view of the Full Court in Grimaldi v Chameleon Mining thus suggests an alternative viewpoint to that expressed in Meagher, Gummow & Lehane's Equity: Doctrines & Remedies.
22. In Edgewater Homes v Donohoe, it was common ground before his Honour that a defaulting fiduciary and a knowing assistant were jointly and severally liable to compensate for loss sustained by reason of breach of fiduciary duty. Whilst it was common ground, his Honour noted that the alternative view had been taken by the learned authors of Meagher, Gummow & Lehane's Equity: Doctrines & Remedies. Having quoted that passage of the text, and the relevant paragraph from Michael Wilson v Nicholls, Stevenson J said at [27]-[29]: 27. I do not see that passage as providing authority for the specific proposition set out at [25]. 28. Rather the passage is authority for the more narrow proposition set out in Grimaldi at [557]: [T]he fiduciary and the third party will ordinarily be only severally liable for the profits each makes in consequence of the breach of fiduciary duty or breach of trust in which it participated/was a recipient… Each is not responsible for the other's profits…. 29. Nonetheless, the Full Court said that they were inclined to the view that a knowing assistant's obligation to 'restore the trust fund by way of monetary compensation' was several, rather than joint and several with that of the 'wrongdoing trustee' (at [559]).
23. Thus, it appears that Stevenson J was drawing a distinction between the liability for loss and liability for profits made. In the circumstances of the case, his Honour did not consider it necessary to determine the issue (at [32].) His Honour proceeded on the basis that, even if the liability to "compensate the victim is merely several with that of the errant fiduciary, there is an exception where the fiduciary and the assistant acted 'in concert to secure a mutual benefit'". In that way, his Honour applied the "acting in concert" exception and concluded that the liability of the knowing assistant was joint and several with that of the fiduciary.
24. In Hasler v Singtel Optus, Leeming JA (with whom Barrett and Gleeson JJA agreed) wrote, albeit in obiter, at [118]: 118. …. At least where a third party must compensate for loss, the fiduciary may be jointly liable for the same loss (see Grimaldi at [557]-[558], noting the position may be different if both are required to account for profits: Michael Wilson & Partners Ltd v Nicholls [2011] HCA 48; 244 CLR 427 at [106]).
25. Leeming JA's reference to [557]-[558] of Grimaldi v Chameleon Mining, paragraphs which specifically refer to "profits", suggests that his Honour was not there intending to draw a distinction between loss and profits.
26. There are other authorities which cite Michael Wilson v Nicholls as authority for the proposition that knowing assistance is a distinct species of liability from the ancillary breach of fiduciary duty, without considering the issue of joint and several, or several, liability (see, for example, Rinehart v Hancock Prospecting Pty Ltd (2019) 267 CLR 514; [2019] HCA 13 at [98] per Edelman J; Ancient Order of Foresters at [76] per Gageler J; Lewis Securities v Carter at [63]-[64] per Leeming JA (with whom Sackville AJA agreed); Andrews Advertising Pty Ltd v Andrews [2014] NSWSC 318 at [134] per Darke J; Roadshow Films Pty Ltd v iiNet Ltd (2012) 248 CLR 42; [2012] HCA 16 at [110] per Gummow and Hayne JJ).
27. In other cases, decided since Michael Wilson v Nicholls, it has been assumed that liability for a loss-based remedy (i.e., equitable compensation) was joint and several. Those authorities made no mention of Michael Wilson v Nicholls or the relevant passage in Meagher, Gummow & Lehane's Equity: Doctrines & Remedies. In that regard, see Commonwealth v Davis Samuel Pty Ltd (No 8) [2014] ACTSC 312 at [276], [413]-[414] per Refshauge J; and see also Jin Niu Investments Pty Ltd v Wang (No 2) [2020] NSWSC 649 at [258], [260] per Henry J.
28. There have also been mixed views of the issue in the academic arena.
29. Professor Gummow, writing extra-curially in "Knowing assistance" (2013) 87(5) Australian Law Journal 311 at 315, referred to [106] of Michael Wilson v Nicholls and said: With respect to several claims to compensation, in Wilson their Honours pointed out that each of the respondents would have an equity to prevent double recovery of compensation, and the doctrine of contribution would allocate the ultimate burden of satisfying the liability to provide compensation. The position with respect to an account of profits is unsettled. Warman International Ltd v Dwyer (1995) 182 CLR 544 at 569-570 indicates that while the fiduciary and each accessory must account for its profits, its liability is confined so as not to include responsibility for the profits of any other defendant. More difficult, is the indication in Warman that the plaintiff must elect between an order for compensation, to restore the plaintiff's position, and an order for an account of profits, semble even though, as Mason J had emphasised in Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 107-108,30 the liability to account arises irrespective of whether the profit was one which the plaintiff would or could have made. [citations omitted]
30. While Professor Gummow does not precisely address the issue at hand, he does raise the issue as to the availability of the doctrine of contribution.
31. Another different point of view appears to have emerged wherein the liability both for loss-based remedies and for gain-stripping remedies is seen as joint and several (see JD Heydon and MJ Leeming, Jacobs' Law of Trusts in Australia (8th ed, 2016, LexisNexis Butterworths) at [13-34]).
32. As adverted to above, if the liability of a fiduciary and a knowing assistant (or between knowing assistants) for the loss suffered by the principal is several only, then conventional authority might suggest that the doctrine of contribution would not apply (since knowing assistance is a discrete form of liability). The doctrine of contribution requires co-ordinate liability. The authors of Meagher, Gummow & Lehane's Equity: Doctrines & Remedies note at [10-050] that "the liability may be joint, joint and several, or several". The prevailing view of what is required for liabilities to be "co-ordinate" was expressed by the High Court in Burke v LFOT Pty Ltd (2002) 209 CLR 282; [2002] HCA 17 (Burke v LFOT). Gaudron ACJ and Hayne J approved (at [15]) the formulation in BP Petroleum Development Ltd v Esso Petroleum Co Ltd 1987 SLT 345, to the effect that the right to contribution depends on whether the liability was "of the same nature and to the same extent".
33. Insofar as their Honours in Michael Wilson v Nicholls, confirmed that knowing assistance is a discrete form of liability, "neither the nature nor the extent" of which depended on the nature and extent of the fiduciary's liability, this presents a difficulty in characterising the liability of the knowing assistant and the defaulting fiduciary as co-ordinate. Ball J, in obiter, adverted to this difficulty in DIF III - Global Co-Investment Fund at [185], noting that: It may be that if BBIPL and BBLP's liability arose from the fact that they were knowing participants in Messrs Topfer and Green's breaches of duty that their liability was not co-ordinate, since, as Gummow ACJ, Hayne, Crennan and Bell JJ pointed out in Michael Wilson & Partners Limited v Nicholls (2011) 244 CLR 427; [2011] HCA 48 at [106] 'the relief that is awarded against a defaulting fiduciary and a knowing assistant will not necessarily coincide in either nature or quantum'.
34. In those circumstances the knowing assistant might be left without recourse to the doctrine of contribution notwithstanding that both the knowing assistant and the defaulting fiduciary contributed to the loss suffered. Associate Professor (Faculty of Law, University of Sydney) Jamie Glister has observed (in J Glister, "Knowing assistance and equitable compensation" (2016) 42 Australian Bar Review 152), that if the fiduciary and the knowing assistant were severally liable, equity would prevent double recovery by the principal. However, that would be of little comfort to the knowing assistant (or equally the fiduciary if the situation were reversed) who is liable for the whole of the debt.
35. If, however, Michael Wilson v Nicholls were construed as only suggesting that: knowing assistance was a discrete liability; and that the liability for an account of profits with the fiduciary was several only, such a result would be avoided. If the liability of the knowing assistant with the fiduciary for the loss of the principal is joint and several, it is difficult to see how the liabilities could not be "co-ordinate" in the sense explained by the High Court in Burke v LFOT.
36. Against this analysis is the observation of Professor Gummow in the Australian Law Journal referred to above, in which it was noted that the plurality in Michael Wilson v Nicholls did refer to the availability of contribution (at 315). The plurality in Michael Wilson v Nicholls (at [101]) said as follows: 101. First, to the extent to which the submissions about abuse depended upon the proposition that prosecution of the New South Wales proceedings to judgment, or the subsequent execution of that judgment, might lead to MWP recovering compensation for more than it had lost, the submissions ignored the equity which the respondents (and Mr Emmott) would have to prevent enforcement of an award or judgment against them where to do so would lead to double recovery. The respondents (and Mr Emmott) would have an equity to prevent enforcement of a judgment (or an award) to the extent to which the claim or claims for compensation for which judgment (or the award) was obtained had been satisfied. And as between Mr Emmott and the respondents the doctrine of contribution would regulate the ultimate allocation of the burden of satisfying the particular claims. The spectre of double recovery and unjust allocation of responsibility for satisfaction of liabilities to compensate MWP for loss it suffered must therefore be put aside from consideration in connection with the allegation of an abuse of process. [emphasis added]
37. Although their Honours did suggest that the doctrine of contribution would be available, they did not engage with the issues raised by the formulation in Burke v LFOT as adverted to by Ball J in DIF III - Global Co-Investment Fund.
38. As Stevenson J observed in Edgewater Homes v Donohoe (at [30]-[31]), there is considerable authority and academic support for the notion that the liability of a knowing assistant is joint and several. However, all of the sources to which his Honour referred were decided, or written, prior to the High Court's decision in Michael Wilson v Nicholls (with the exception of D Hayton, P Matthews and C Mitchell, Underhill and Hayton Law of Trusts and Trustees (19th ed, 2016, LexisNexis) at [98.70], which referred to Michael Wilson v Nicholls at [98.71], stating that "the High Court of Australia has also held that a primary wrongdoer and an assistant are not jointly liable for one another's profits, although they may be severally liable to disgorge their own profits"). The usefulness of those sources is, therefore, somewhat lessened. It suffices, as an illustrative example, to refer to the decision of Young CJ in Eq, as his Honour then was, in New Cap Reinsurance Corporation Ltd v General Cologne Re Australia Ltd [2004] NSWSC 781 (see at [34]).
39. Reference is often made to the decision of Lewison J (as his Lordship then was) in Ultraframe. There his Lordship rejected a submission that the only remedy that might be obtained against a dishonest assistant (acknowledging that such a concept does not exist in Australian law) was a compensatory one; that is, an account of profits was not available against a dishonest assistant. His Lordship, in rejecting that submission, appeared to draw a distinction between liability for loss, and liability for profit, stating at [1600]: 1600. I can see that it makes sense for a dishonest assistant to be jointly and severally liable for any loss which the beneficiary suffers as a result of a breach of trust. I can see also that it makes sense for a dishonest assistant to be liable to disgorge any profit which he himself has made as a result of assisting in the breach. However, I cannot take the next step to the conclusion that a dishonest assistant is also liable to pay to the beneficiary an amount equal to a profit which he did not make and which has produced no corresponding loss to the beneficiary. As James LJ pointed out in Vyse v. Foster (1872) LR 8 Ch App 309: 'This Court is not a Court of penal jurisdiction. It compels restitution of property unconscientiously withheld; it gives full compensation for any loss or damage through failure of some equitable duty; but it has no power of punishing any one. In fact, it is not by way of punishment that the Court ever charges a trustee with more than he actually received, or ought to have received, and the appropriate interest thereon. It is simply on the ground that the Court finds that he actually made more, constituting moneys in his hands "had and received to the use" of the cestui que trust.'" (emphasis in original)
40. His Lordship's view has been endorsed in later decisions in England and Wales (Lifestyle Equities CV v Santa Monica Polo Club Ltd [2020] EWHC 688 (Ch) at [28]-[39] per Recorder Douglas Campbell QC; Novoship (UK) Ltd v Mikhaylyuk [2012] EWHC 3586 (Comm) at [95]-[100] per Clarke J; see also Novoship (UK) Ltd v Nikitin [2014] EWCA Civ 908 at [77]). Other decisions in England and Wales, separately, have considered that dishonest assistants, as between themselves, were jointly and severally liable in respect of an award for equitable compensation (see UK Communications Ltd v Nahim [2010] EWHC 1691 (Ch) at [24] per Sales J).
41. However, the rationale for the English authorities in support of a conclusion that liability for loss is joint and several is somewhat different. As is explained by Steven B Elliott and Charles Mitchell in "Remedies for Dishonest Assistance", the rationale behind joint and several liability is founded in dishonest assistance being a species of secondary liability (S Elliot and C Mitchell, "Remedies for Dishonest Assistance" (2004) 67(1) Modern Law Review 16 at 17-20). Such a rationale could not apply in Australia post Michael Wilson v Nicholls. (See also Alison Gurr, "Accessory Liability and Contribution, Release and Apportionment" (2010) 34(2) Melbourne University Law Review 481, which proceeds on the assumption, pre Michael Wilson v Nicholls, that the liability of a knowing assistant was joint and several.)

Conclusion on this issue

1. My conclusion as to this issue is that in Australia the liability of a defaulting fiduciary and accessory to account for profits is several only, subject to the two exceptions in Grimaldi v Chameleon Mining; and that, while the position is less clear in relation to loss-based remedies such as equitable compensation, the liability is again several only (subject to the Grimaldi v Chameleon Mining exceptions).
2. While the Court in Grimaldi v Chameleon Mining was largely concerned with the nature of the liability to account for profits, the comments that were made in relating to equitable compensation (at [559]) are apposite: …in the case of knowing receipt, where some or all of the trust property received no longer exists (or is not traceable) and so cannot be returned, the knowing recipient is obliged (no less than the wrongdoing trustee) to restore the trust fund by way of monetary compensation for the assets which have been lost: on this form of equitable compensation see Re Dawson (decd); Union Fidelity Trustee Company Ltd v Perpetual Trustee Company Ltd [1966] 2 NSWR 211; and see generally Mitchell and Waterson, 132 ff. In this matter, Mr Grimaldi, Winterfall and Murchison are all exposed to such a claim in respect of the cheque advances at Chameleon's. We have not been asked to determine whether this liability is joint or several or several only. We incline to the latter view. What we wish to emphasise, though, is that Chameleon cannot obtain double recovery for its loss and the trial judge's orders are sensitive to this. (emphasis added)
3. I consider that the implication arising from Michael Wilson v Nicholls is that the liability of a fiduciary and accessory to pay equitable compensation is several only (subject to the Grimaldi v Chameleon Mining exceptions, as explained above). In particular, in Michael Wilson v Nicholls, the High Court noted (at [101]) that the respondents in the matter would have an equity to prevent the enforcement of an award or judgment against them where to do so would lead to double recovery, thereby acknowledging that the relevant liability was concurrent (i.e. both have caused the same damage to the plaintiff). (This leads to the further question considered above as to whether, at common law using the language of Baxter v Obacelo, the parties were joint wrongdoers or several concurrent wrongdoers.)
4. The key passage of the judgment is at [106] (as set out above): The reference to the liability of a knowing assistant as an "accessorial" liability does no more than recognise that the assistant's liability depends upon establishing, among other things, that there has been a breach of fiduciary duty by another. It follows, as MWP submitted, that the relief that is awarded against a defaulting fiduciary and a knowing assistant will not necessarily coincide in either nature or quantum. So, for example, the claimant may seek compensation from the defaulting fiduciary (who made no profit from the default) and an account of profits from the knowing assistant (who profited from his or her own misconduct). And if an account of profits were to be sought against both the defaulting fiduciary and a knowing assistant, the two accounts would very likely differ (97). It follows that neither the nature nor the extent of any liability of the respondents to MWP for knowingly assisting Mr Emmott in a breach or breaches of his fiduciary obligations depends upon the nature or extent of the relief that MWP obtained in the arbitration against Mr Emmott.
5. This passage appears to suggest that there is no single wrong and single cause of action against a defaulting fiduciary and knowing assistant, but rather that the parties are liable under different causes of action as several concurrent wrongdoers. Further, when considering the three classes of joint tortfeasors described by Glanville Williams and outlined at [18] of Baxter v Obacelo (namely, vicarious liability, breach of a joint duty, and concerted action), it does not appear that a defaulting fiduciary and accessory would, as a general rule, fall within any of them.
6. In relation to the "alter ego" and "acting in concert" exceptions in Grimaldi v Chameleon Mining, the Full Court in that case did not explicitly state that the exceptions apply in relation to the liability to pay equitable compensation. However, this outcome may be gleaned from the language used at [558]: …if the fiduciary and the third party assistant or recipient act in concert to secure a mutual benefit, be this to misappropriate trust property for a particular mutually beneficial purpose or to participate in a breach of fiduciary duty to secure a mutual advantage (eg a business opportunity), they are jointly and severally liable to the wronged beneficiary/principal to restore the trust or to account for the profits made. (emphasis in original)
7. The language of "restore the trust" suggests that the Court may have been contemplating the application of the exception in relation to loss-based remedies, such as equitable compensation, in addition to gains-based remedies. Further, there does not appear to be any rationale that would prevent the Grimaldi v Chameleon Mining exceptions from applying in the case of liability to pay equitable compensation.
8. If the release rule continues to have application in equity in respect of defaulting fiduciaries and accessories, it would only apply if the liabilities are joint and several, rather than several only. Put another way, the fundamental inquiry is whether defaulting fiduciaries and accessories are to be considered as joint wrongdoers who are responsible for the same act causing damage to the plaintiff, or whether they are "several concurrent wrongdoers" responsible for different acts causing the same damage to the plaintiff.
9. The "acting in concert" exception described in Grimaldi v Chameleon Mining (at [558]) effectively captures the common law position whereby tortfeasors were regarded as jointly liable where they engaged in concerted action to a common end. In Joint Torts and Contributory Negligence, Glanville Williams stated in relation to this category of joint tortfeasors that "[b]roadly speaking, this means a conspiracy where all the conspirators are active in the furtherance of the wrong", but this does not require that the parties realise they are committing a tort (Glanville William, Joint Torts and Contributory Negligence (1951, Stevens & Sons Ltd) at 10) (Joint Torts and Contributory Negligence). Accordingly, the "acting in concert" exception in Grimaldi v Chameleon Mining mirrors the common law justification for imposing joint liability on certain tortfeasors.
10. Finally, having regard to the seeming discrepancy between Meagher, Gummow & Lehane's Equity: Doctrines & Remedies and Jacobs' Law of Trusts in Australia, the language in the latter that a "defendant may be jointly and severally liable" (emphasis added) for money remedies and an account of profits is perhaps explained by the fact that one of the Grimaldi v Chameleon Mining exceptions could apply in any given case to render the liabilities joint and several.

Finding as to Grimaldi exception

1. I find that the Grimaldi exception is applicable in the present case. The factual matrix of the case at hand, characterised as a "Scheme" or "conspiracy" by the plaintiffs, is certainly one where the fiduciary and third party assistants were acting in concert to secure a mutual benefit. In order for this "Scheme" to take effect, it required the fiduciary and the knowing assistants to jointly participate in the breaches of duty; I consider that the interrelated acts required by the different parties (for example, setting up companies, creating invoices, paying invoices, paying Fee Amounts to other companies) was such that the fiduciary and knowing assistants were acting in concert. In this case, the mutual benefit was one of tax avoidance, and while I note this may have taken different forms (in terms of charging fees, claiming deductions or withdrawing money tax free, for example), I do not find that this detracts from the mutual character of the benefit.

Effect of s 95 of the Civil Procedure Act

1. However, even on the basis that the Grimaldi exception here applies, such that the liability is joint and several, my view is that the release of a defaulting fiduciary or accessory does not have the effect of releasing the others because I consider that s 95 of the Civil Procedure Act (to which Stevenson J was not taken in Edgewater Homes v Donohoe) has impliedly abrogated the release rule.
2. The release rule only applied at common law in relation to joint tortfeasors (whose liability was joint and several). It did not apply in relation to several concurrent tortfeasors who could not be joined as defendants in one action. This distinction between joint tortfeasors and several concurrent tortfeasors is now largely irrelevant because of s 5 of the NSW Law Reform Act, which abrogated the common law rule that the cause of action against joint tortfeasors was one and indivisible (see Thompson v Australian Capital Television).
3. The NSW Law Reform Act only applied to tortfeasors (hence the recent case law that continues to apply the "release rule" in equity in respect of defaulting fiduciaries and accessories).
4. Section 95 of the Civil Procedure Act provides as follows: 95 Joint liability (cf Act No 52 1970, section 97) (1) If two or more persons have a joint liability and, in any proceedings, judgment on the liability is given against one or more but not all of them: (a) the liability of the other or others of them is not discharged by the judgment or by any step taken for the enforcement of the judgment, and (b) after the judgment takes effect, those of them against whom the judgment is given and the other or others of them become liable, as between those of them against whom the judgment is given on the one hand and the other or the others of them on the other hand, severally but not jointly, and (c) if there are two or more such persons against whom the judgment is not given, they remain, after the judgment takes effect, jointly liable amongst themselves, and (d) if the judgment is satisfied wholly or in part by payment or by recovery under execution, the liability of the persons against whom the judgment is not given is taken also to have been satisfied in the amount of the payment or recovery. (2) This section does not affect a person's right to contribution or indemnity in respect of the person's satisfaction, wholly or in part, of a liability that the person has (whether jointly or severally or jointly and severally) with any other person. (3) This section does not apply to a judgment to which section 5(1)(a) of the Law Reform (Miscellaneous Provisions) Act 1946 applies. (4) In this section, "liability" includes liability in contract, liability in tort and liability under a statute.
5. The question to be decided is whether s 95 impliedly abrogates the unity and indivisibility at common law of a cause of action against joint debtors or wrongdoers. One secondary consequence is that the release of one joint debtor or wrongdoer would no longer have the effect of releasing any other joint debtor or wrongdoer because the cause of action is no longer indivisible.
6. This was the effect of s 5(1)(a) of the NSW Law Reform Act, which was only limited to tortfeasors. In Victoria, s 24AA of the Wrongs Act was found to have the same effect in respect of joint, or joint and several, debtors (Harplex Pty Ltd v Konstandellos).
7. In XL Petroleum (NSW) Pty Ltd v Caltex Oil (Australia) Pty Ltd (1985) 155 CLR 448; [1985] HCA 12 at 459-460 (XL Petroleum), Gibbs CJ held that once the common law rule of a single wrong and a single cause of action was abolished, the companion rules concerning release and bringing further actions also fell away. His Honour stated: Once it is accepted that more than one judgment may be given against joint tortfeasors for damages caused by a joint tort, whether damages are given in the same or in different proceedings, there can remain no foundation for the rule that only one sum can be awarded by the different judgments. The reason for the rule was that there was only one cause of action against the joint tortfeasors, but that is no longer the position - the statute has abolished, 'in its entirety' the old common law principle that a person who suffers damage by a joint tort has only one cause of action which merges in the first judgment recovered in respect of it. Surely the statutory provision was not intended to abolish only the doctrine of merger, for it was not primarily directed to the question of merger, and there is no reason for selecting one aspect of the principle rather than another as that which it was intended to affect; the whole principle should be held to have gone.
8. This passage confirms that s 95 of the Civil Procedure Act need not be directed towards the release rule specifically. Rather, the question is whether it abrogates the common law rule in New South Wales concerning the indivisibility of the cause of action against joint debtors or wrongdoers. If it is held to do so, the effect is that the release rule no longer applies.
9. The wording of ss 95(1)(a)-(b) appears to suggest that more than one judgment may be given against persons who share a joint liability. The subsections provide that the liability of the jointly liable persons against whom judgment is not given is "not discharged". Further, pursuant to s 95(1)(b), the liability as between those against whom judgment is given and the others shifts from a joint liability to a several liability. The explicit use of the word "several" here appears to be a technical way of saying that separate actions can be brought against the remaining debtors or wrongdoers. Accordingly, if the section impliedly abrogates the unity of action at common law, then the companion release rule also no longer applies in respect of persons to whom the section relates.
10. Section 95(4) provides that "liability includes liability in contract, liability in tort and liability under a statute". Given the non-exhaustive use of "includes", as well as the fact that the common law rule originated in the context of tortfeasors and was then applied to joint debtors (both of whom are covered by the section), the rationale for continuing to apply the rule in equity arguably falls away.
11. The Explanatory Note to the Civil Procedure Bill 2005 (NSW) is not particularly helpful - it provides that "[c]lause 95 sets out the consequences on persons having a joint liability if a court gives judgment on the liability in respect of some but not all of those persons". However, s 95 is based on and is to the same effect as the repealed s 97 of the Supreme Court Act. The Law Reform Commission in a report on Supreme Court Procedure stated at 15 that (see NSW, Law Reform Commission, Report on Supreme Court Procedure, (1969)): A further innovation we propose is that where two or more persons are jointly liable for money and judgment is given against one or more but not all of them, the liability of the other or others shall not be discharged by the judgment or by any step taken for the enforcement of the judgment. The purpose of this provision is to mitigate the harshness of the present rule which, at times, deprives a creditor of his rights for purely technical reasons. Our proposed section (section 97) has its origin in the Model Joint Obligations Act (U.S.A.), sections 1 and 2.
12. The reference to "purely technical reasons" suggests that the intention of the legislation was to avoid the harsh outcomes which arise from the common law release rule.
13. Section 97 of the Supreme Court Act has not been subject to a great deal of judicial consideration. In Woodgate v Davis, Barrett J, as his Honour then was, while considering the nature of a partner's liability in respect of a partnership debt, stated (at [10]) that: A pertinent factor is that the liability to which s 9 [of the Partnership Act] refers is a joint liability, as distinct from a several liability or a liability that is both joint and several. That, at all events, is the position at law recognised by the statute, with the result that only one claim can be asserted in a common law action and, subject to the effect of s 97 of the Supreme Court Act 1970 in the case of a judgment of this Court, the single cause of action merges in the first judgment recovered.
14. This passage indicates that Barrett J, while clearly not deciding the issue, may have considered that s 97 operated to abrogate the common law rule in the Supreme Court of NSW. Further, in Ruffino v Grace Bros at 735-736, Master Allen said that s 97 was "directed, not to concurrent several liability, but to joint liability" and explained the possible reason for the application of the section to persons jointly liable in tort (given Counsel argued that this would be covered by the NSW Law Reform Act and so s 97 must have some further application) but did not provide any guidance on the section that is relevant for present purposes.
15. In relation to s 95 of the Civil Procedure Act, Ritchie's Uniform Civil Procedure NSW explains the common law rule relating to the indivisibility of the cause of action against jointly liable persons and then states that "[u]nder the present section, judgment may be obtained against any of the persons jointly liable and successive proceedings may be brought against others subject to the prohibition against double recovery" (at [s 95.5]).
16. There is a paucity of case law concerning the operation of s 95. However, in Tyneside Property Management Pty Ltd v Hammersmith Management Pty Ltd [2013] NSWSC 635 (Tyneside), Brereton J, as his Honour then was, treated the provision as abrogating the rule that judgment against one joint obligor extinguishes the claim against the others. At [334], his Honour stated: Mr Haggis is a guarantor of Tyneside's obligation. The guarantee was given jointly by him and Mr Oliver, and there is nothing in its terms to indicate that it was intended to bind them severally as well as jointly; in those circumstances, they were joint obligors. Although the plaintiffs complained that Mr Oliver had not been sued, that is no obstacle: there is no legal imperative to proceed against all the joint obligors, and nowadays, judgment against one does not extinguish the claim against the others [(NSW) Civil Procedure Act, s 95]. Hammersmith is entitled to judgment also against Mr Haggis.
17. The appeal of Tyneside was dismissed and did not raise any question concerning the nature of the joint liability as outlined above (see Tyneside Property Management Pty Ltd v Hammersmith Management Pty Ltd (2014) 103 ACSR 201; [2014] NSWCA 417).

Finding as to s 95 of the Civil Procedure Act

1. Therefore, even on the premise that the liability of a defaulting fiduciary and knowing assistant(s) is joint and several (or at least, joint and several according to the exceptions in Grimaldi v Chameleon Mining), I find that s 95 impliedly abrogates the unity of action of a fiduciary and knowing assistant (including those who are "acting in concert" or are an "alter ego"). As above, I see no reason why the inclusive definition of liability in s 95 would not include liability in equity, and therefore, the concept of an indivisible cause of action as between a fiduciary and knowing assistant is gone and with it, any application of the release rule in the present case.

Release rule in equity

1. In my view, even if s 95 does not impliedly abrogate the release rule, courts of equity should not follow the release rule, which is derived generally from the unitary cause of action against joint debtors and tortfeasors.
2. In Joint Torts and Contributory Negligence, Glanville Williams made the following critical remarks about the release rule (at 44): It has long been settled that the release of one joint tortfeasor releases all the others. Reasons given for this rule are technical, and even fictitious; according to the earlier cases, the reason is that a release is a 'satisfaction in law', according to the later, it is that the cause of action is one and indivisible, so that when it goes for one it goes for all. It is hard to see how the latter view is reconcilable with the proposition that the liability of joint tortfeasors is joint and several, for joint and several liability is generally taken to mean a combination of joint obligation and several obligations incumbent upon each tortfeasor; and a number of separate obligations can hardly be regarded as a single cause of action. However, this may be, the rule has been too often affirmed to admit of doubt, and nothing short of legislation can get rid of it.
3. The Privy Council in Wah Tat Bank Ltd v Chan Cheng Kum [1975] AC 507 (Wah Tat Bank) at 515-516 described the rule that one cause of action "merged" in judgment, thereby barring further claims, as "highly technical and unsatisfactory". The Court further stated at 516: There can be little doubt that by the time that section 11(1)(a) of the Civil Law Act (c. 30) was enacted, it was generally recognised that the common law rule was far too favourable to tortfeasors and produced manifest injustice. Evidently the rule ought to have been expunged in its entirety.
4. Further, in Harplex v Konstandellos, the Court stated (at [55]) that: First, the stated rationale for the rule in Walker, including in respect of joint and several debtors, is that there is a single cause of action. It is perhaps illogical that this rationale extends to the case of joint and several liability. In Dorgal Holdings, McLelland CJ in Eq said that, as a matter of principle, the application of the rule beyond joint liability 'seems impossible to justify' but was none the less binding. It is similarly not open to this Court to disregard Walker and to rely on alternative or competing rationales for the rule.
5. There is no binding appellate authority which requires the release rule to be followed in equity. Given the criticisms levelled at the rule as per above, its implied abrogation in New South Wales in respect of tortfeasors following statutory intervention, and the fact that it causes "manifest injustice", the rule should not be followed in equity. In my view, this is the case for several further reasons.
6. First, the application of the release rule in equity has led to the absurd result where defaulting fiduciaries and accessories are better off if it is found that they acted in concert towards a common end. The consequence is that their liability becomes joint and several, and accordingly the release rule applies. As a matter of policy, it seems unsatisfactory that defaulting fiduciaries and accessories who have acted towards a common fraudulent purpose should benefit from a technical rule which means that the release of one party releases the rest. Indeed, at [289] of Gino Cassaniti's submissions, it can be seen that the defendants seek to rely on the "acting in concert" exception to their benefit.
7. Where the "acting in concert" exception from Grimaldi v Chameleon Mining applies, it is arguably even more important that the plaintiff is able to recover the full extent of their loss. However, applying the release rule to fiduciary situations would conflict with equity's desire to ensure that the beneficiary is compensated "to the fullest extent possible" (Maguire v Makaronis at 492 per Kirby J).
8. Secondly, the New South Wales Court of Appeal's decision in Yeshiva v Marshall at [80] per Bryson JA (with whom Mason P and Beazley JA, as Her Excellency then was, agreed) must be considered (see above). As to the statement that doing equity as between the plaintiff and the accessory requires the plaintiff to pursue the person principally liable, considering the discrete liability of fiduciaries and knowing assistants, where the plaintiff can establish the defaulting fiduciary's liability without suing them, I see no reason why this is so. Indeed, the comments of Bryson JA appear to be aimed at situations where a more culpable wrongdoer is "let off the hook" so to speak. It is arguable that the situation is different where a genuine settlement has been reached for an amount which seeks to reflect the responsibility and relative culpability of the particular wrongdoer. Indeed, settlements of this kind arguably facilitate the "just, quick and cheap" resolution of the dispute and should not be deterred for fear that the remaining wrongdoers can no longer be pursued in court.
9. Further, Bryson JA's comment (at [80]) that "the Court should not allow the plaintiff to decide which party to sue and which party to ignore or give a release" is antithetical to the fundamental and long-standing principle of joint and several liability, which entitles a plaintiff to sue any one of the relevant parties for the whole amount of the loss. Further, If the rationale or a rationale of the release rule is to encourage all the controversies to be heard together (as Bryson JA appears to suggest), the consequences of the rule would seem to be highly disproportionate given that it can leave other wrongdoers "off the hook" following the release of one wrongdoer and may prevent a plaintiff from recovering the entire remedy.
10. In addition, as per the passages in Baxter v Obacelo at [6] quoted above, the concept of the single cause of action against joint tortfeasors was the source of multiple rules, of which the release rule was one, but also the rule in Brinsmead v Harrison 1871 LR7CP 547 (Brinsmead v Harrison) that judgment against one joint tortfeasor barred any subsequent actions against other joint tortfeasors. Following the comments of Gibbs CJ in XL Petroleum (at 459-460 above), both the release rule and the rule in Brinsmead v Harrison were tied together as aspects of the same common law rule concerning the indivisibility of the cause of action. Thus, if equity was to apply the release rule, presumably it would also apply the rule in Brinsmead v Harrison such that, for example, once judgment was given against one jointly liable fiduciary, any subsequent judgments against jointly liable accessories would be barred. Accordingly, it may be necessary to consider whether the rule, as a whole, is consistent with equity's doctrines and principles, lest a particular aspect of the common law rule be retained while other related aspects are disregarded.
11. For example, in relation to the equitable doctrine of contribution, the High Court noted in Friend v Brooker (2009) 239 CLR 129; [2009] HCA 21 (Friend v Brooker) at [38] that equity does not seek to influence a creditor's choice of which obligors to pursue, but rather, equity makes a subsequent adjustment so that their common burden is shared equally among them. In Burke v LFOT, while the High Court did not award contribution in that case, it acknowledged that the doctrine of contribution operated in equity to adjust the liabilities of wrongdoers who had caused the same loss or damage to a plaintiff (see at [14]). Indeed, following the enactment of the NSW Law Reform Act, equity now allows for contribution between persons liable in tort and contract, where previously it did not (Sky Channel Pty Ltd v Tszyu [2000] NSWSC 838). These developments in the equitable doctrine of contribution give rise to the question of whether it is inconsistent with the continued application of the release rule.
12. In Wah Tat Bank at 516, the Privy Council stated in relation to the common law rule: Its only possible justification was stated by Blackburn J. in Brinsmead v. Harrison (1872) L.R. 7 C.P. 547, 553: "Is it for the general interest that, having once established and made certain his right by having obtained a judgment against one of several joint wrongdoers, a plaintiff should be allowed to bring a multiplicity of actions in respect of the same wrong? I apprehend it is not; and that, having established his right against one, the recovery in that action is a bar to any further proceedings against the others." … If the purpose of the rule was to prevent a multiplicity of actions, it undoubtedly did so but at what is now generally recognised as too high a price.
13. If the rule's "only possible justification" was to prevent a multiplicity of actions, it may be inconsistent for equity to apply such a rule in light of the doctrine of contribution. The very existence of contribution rights is founded on the idea that a plaintiff might choose to throw the whole burden of a loss onto one debtor or wrongdoer, and indeed has the right to do so, but equity will then provide a mechanism so that one party does not bear a disproportionate share of that burden. This doctrine inherently recognises that there may be a multiplicity of actions - it does not punish the plaintiff for only suing one wrongdoer, and indeed as stated above in Friend v Brooker at [38], "[e]quity follows the law in the sense that it does not seek to direct the manner of exercise of the rights of the creditor". Accordingly, there may be difficulties in reconciling the doctrine of contribution with the continued application of the release rule in equity.
14. Therefore, I consider that even if s 95 does not impliedly abrogate the release rule, it has no application in equity. For the above reasons, I thus find that the joint release defences are not made good. In circumstances where Stevenson J did not have the benefit of the considered argument that was rehearsed before me and where the parties there conceded that the liability was joint, it is not necessary to make any finding that his Honour was plainly wrong. I have come to a different view in the present case.

Bankruptcy defence

1. In Gino Cassaniti's defence, he pleads in answer to the entirety of the allegations against him that they were provable debts pursuant to s 82 of the Bankruptcy Act. Gino Cassaniti was made bankrupt on 18 March 2014 and discharged around 18 March 2017. Gino Cassaniti pleads that by reason of s 153(1) of the Bankruptcy Act, on 18 March 2017, his discharge from bankruptcy released him from any debts which were probable in his bankruptcy. Therefore, he pleads that no claim for moneys in these Proceedings are maintainable against him. No submissions were made on this issue in closing submissions by Gino Cassaniti.

Plaintiffs submissions re bankruptcy defence

1. As to whether a claim for compensation, equitable or statutory, for breach of director's duty is provable in bankruptcy, the plaintiffs refer to the consideration of this issue by Black J in Gordon as liquidator of Lyon Form Pty Ltd (in Liq) v Leon Plant Hire Pty Ltd (in liq) (2015) 16 ASTLR 185; [2015] NSWSC 397 (Gordon v Leon Plant Hire) at [96]-[102] and to his Honour's conclusion in obiter at [102] that such a claim was not a liquidated claim nor an unliquidated claim arising by reason of a breach of trust and therefore was not provable in bankruptcy.
2. Accordingly, it is said that, at the very least, the plaintiffs' claims (insofar as they are for a breach of directors' duties) are neither liquidated claims nor unliquidated claims arising by reason of breach of trust; and therefore, are not provable in a bankruptcy. Further, it is said that the plaintiffs' claims seek a wider enquiry into the loss suffered and are not merely claims for restitution of misappropriated funds and therefore Auto Group Ltd v England [2008] NSWSC 402 can be distinguished. It is also submitted that, even if the claims against Gino Cassaniti were a debt provable in his bankruptcy, given that the claim is founded in a fraud and fraudulent breach of fiduciary duties, s 153(2)(b) of the Bankruptcy Act operates such that Gino Cassaniti's discharge from bankruptcy does not release him from the claim.
3. Reference is made to Maxwell v Chittick [1994] NSWCA 196 (Maxwell v Chittick) where Mahoney JA (with whom Priestley and Powell JJA agreed) found (at 13) that "fraud", in the context of s 153(2)(b) of the Bankruptcy Act, has been given a broad interpretation; and to Re Bosun Pty Ltd (in liq); Makris v Sheahan (2000) 34 ACSR 597; [2000] SASC 180 (Re Bosun) where Debelle J followed Maxwell v Chittick (see [18]). It is noted that the meaning of fraud in s153(2)(b) was considered in Skalkos v Smiles [2006] NSWSC 192, where Johnson J followed the decisions in Maxwell v Chittick and Re Bosun to find that fraud has a broad interpretation and dismissed an application for summary judgment and/or strike out on that basis (see at [62]; [64]-[65]; and also Re Galtari Pty Ltd (in liq) [2018] NSWSC 917 per Gleeson JA at [83]-[84]).
4. The plaintiffs say that, given the broad interpretation of fraud established in the authorities identified above, and the plaintiffs' claim being founded in a fraudulent scheme and fraudulent breach of duty or even a breach of duty which only gives rise to a technical fraud of the kind identified in Re Bosun, should the claim be found to be a debt provable in the bankruptcy from which Gino Cassaniti has been discharged, it is a claim which squarely falls within the exception in s 153(2)(b).

Finding as to bankruptcy defence

1. I am satisfied, given the broad interpretation by the authorities of "fraud" in the so-called "fraud exception" under s 153(2)(b) of the Bankruptcy Act, that it would extend to the fraudulent breaches of fiduciary duty of the kind established here that involve a transgression of the ordinary standards of honest behaviour. Therefore, even if the monetary claims sought against Gino Cassaniti were provable in bankruptcy and extinguished upon his discharge, I find that the fraud exception in s 153(2)(b) applies and thus, the bankruptcy defence is not made good.

Part 5.7B Claims (Earth Civil, RCG CBD and Bluemine Proceedings)

1. Turning then to the Pt 5.7B Claims, the plaintiffs seek recovery of payments from the various defendants under s 588FB (uncommercial transactions), s 588FC (insolvent transactions) and s 588FE (voidable transactions) in the Earth Civil, RCG CBD and Bluemine Proceedings. Those provisions are as follows: 588FB Uncommercial transactions (1) A transaction of a company is an uncommercial transaction of the company if, and only if, it may be expected that a reasonable person in the company's circumstances would not have entered into the transaction, having regard to: (a) the benefits (if any) to the company of entering into the transaction; and (b) the detriment to the company of entering into the transaction; and (c) the respective benefits to other parties to the transaction of entering into it; and (d) any other relevant matter. … 588FC Insolvent transactions (1) A transaction of a company is an insolvent transaction of the company if, and only if, it is an unfair preference given by the company, or an uncommercial transaction of the company, and: (a) any of the following happens at a time when the company is insolvent: (i) the transaction is entered into; or (ii) an act is done, or an omission is made, for the purpose of giving effect to the transaction; or … 588FE Voidable transactions ... (3) The transaction is voidable if: (a) it is an insolvent transaction, and also an uncommercial transaction, of the company; and (b) it was entered into, or an act was done for the purpose of giving effect to it, during the 2 years ending on the relation-back day.
2. Section 588FF provides that orders may be made about voidable transactions: 588FF Courts may make orders about voidable transactions (1) Where, on the application of a company's liquidator, a court is satisfied that a transaction of the company is voidable because of section 588FE, the court may make one or more of the following orders: (a) an order directing a person to pay to the company an amount equal to some or all of the money that the company has paid under the transaction; ... (c) an order requiring a person to pay to the company an amount that, in the court's opinion, fairly represents some or all of the benefits that the person has received because of the transaction; ... (g) an order providing for the extent to which, and the terms on which, a debt that arose under, or was released or discharged to any extent by or under, the transaction may be proved in a winding up of the company;
3. For the purposes of Pt 5.7B, s 9 provides a non-definitive list of examples of the meaning of the term "transaction" whereby a transaction to which the body is a party, includes a payment by the body.
4. The plaintiffs also seek recovery for payments in the Earth Civil Proceeding for unreasonable director-related transactions pursuant to s 588FDA which provides that: Unreasonable director-related transactions (1) A transaction of a company is an unreasonable director-related transaction of the company if, and only if: (a) the transaction is: (i) a payment made by the company; or (ii) a conveyance, transfer or other disposition by the company of property of the company; or (iii) the issue of securities by the company; or (iv) the incurring by the company of an obligation to make such a payment, disposition or issue; and (b) the payment, disposition or issue is, or is to be, made to: (i) a director of the company; or (ii) a close associate of a director of the company; or (iii) a person on behalf of, or for the benefit of, a person mentioned in subparagraph (i) or (ii); and (c) it may be expected that a reasonable person in the company's circumstances would not have entered into the transaction, having regard to: (i) the benefits (if any) to the company of entering into the transaction; and (ii) the detriment to the company of entering into the transaction; and (iii) the respective benefits to other parties to the transaction of entering into it; and (iv) any other relevant matter.

Plaintiffs' submissions - Pt 5.7B Claims

1. The plaintiff seek recovery from the defendants identified below of the following payments on the basis that payments made by the Insolvent Companies were uncommercial transactions pursuant to s 588FB of the Corporations Act: from Earth Civil to Michael Abou-Antoun, the sum of $965,000 (the Earth Civil Payments); from RCG CBD to Sivasli, the sum of $201,000 (the Sivasli Payments); from Bluemine to LAM Haulage, the sum of $261,105 (the LAM Haulage Payments); from Bluemine to MAL Land Group, the sum of $1,624,005 (the MAL Land payments); and from Bluemine to The Great Brothers the sum of $1,541,105 (The Great Brothers Payments).
2. In the Earth Civil Proceeding, the plaintiffs also seek recovery of the payments totalling $965,000 from Michael Abou-Antoun on the basis that the payments made by Earth Civil were unreasonable director-related transactions pursuant to s 588FDA of the Corporations Act (the Director Payments).

Relevant principles

1. The plaintiffs note that the relevant transactions between the parties must be considered in a manner which accords with commercial reality; that it is not a matter of isolating particular individual steps in the course of a business relationship so as to give one element a different characteristic from that which the totality of that relationship would evidence, but of looking at the transaction as a whole (see VR Dye & Co v Peninsula Hotels Pty Ltd (in liq) (1999) 32 ACSR 27; [1999] VSCA 60 (VR Dye & Co) at [37] per Ormiston JA (with whom Winneke P and Tadgell JA agreed)). Thus, it is noted that a transaction may include a payment by the company which has the effect of extinguishing the debt of another (see Re Emanuel (No 14) Pty Ltd (in liq); Macks v Blacklaw & Shadforth Pty Ltd (1997) 147 ALR 281); or it may consist of a series of events occurring at different points of time which are sufficiently connected together (Mann v Sangria Pty Ltd (2001) 38 ACSR 307; [2001] NSWSC 172 at [41] per Bryson J).
2. The totality of the business relationship between the parties must be considered, as well as what the parties under their relationship intended to effect, and how their intention was effected, in part or in whole, by the impugned transaction (see VR Dye & Co at [39]-[40]).
3. As to whether the impugned transaction is an uncommercial transaction of the company pursuant to s 588FB(1), the test is whether it was one which it may be expected that a reasonable person in the company's circumstances would not have entered into, having regard to the matters specified under the section and looking at the matter from the point of view of the company (see Tosich Construction Pty Ltd (in liq) v Tosich (1997) 23 ACSR 466 at 473 per Lehane J). In Welcome Homes Real Estate Pty Ltd v Ziade Investments Pty Ltd (in liq) [2007] NSWCA 167, Hodgson JA (with whom Spigelman CJ and Santow JA agreed) held that the test was not so high as to require that the transaction be so unreasonable that no reasonable person would enter into it; and that normal commercial practice, while not decisive, is relevant to whether "it may be expected" that a reasonable person in the company's circumstances would not have entered into it.
4. Reference is made to Gordon v Leon Plant Hire where Black J at [89] concluded that the transfer of funds to a director, immediately prior to the lodgement of tax returns which would crystallise its unpaid tax liabilities and bring about its liquidation (in circumstances where a director had given evidence that he withdrew funds from the company's account with the intention of paying a liability of the company but did not in fact do so) were unreasonable director-related transactions within the meaning of s 588FDA and uncommercial transactions within the meaning of s 588FB of the Corporations Act. The plaintiffs also refer to Featherstone v Ashala Model Agency Pty Ltd (in liq) [2018] 3 Qd R 147; [2017] QCA 260 (Featherstone) and at first instance Ashala Model Agency Pty Ltd (in liq) v Featherstone (2016) 309 FLR 321; [2016] QSC 121; and, ironically perhaps, insofar as the matter involved a claim against Banq Accountants, Re FMA Holdings Group Pty Ltd (in liq) [2018] NSWSC 2057 (Re FMA Holdings Group) at [9]-[10] per Brereton J.
5. Under s 588FF(1) the court may make one or more of the orders therein specified on the application of the company's liquidator, where it is satisfied that a transaction is voidable under s 588FE.
6. The plaintiffs argue that the present case is not unlike that considered in an earlier case involving Banq Accountants (Re FMA Holdings Group), where Brereton J, as his Honour then was, said at [8] that: 8. The Liquidators have investigated the affairs of the company and have been unable to ascertain any commercial basis for the payments in question. The Company was purportedly engaged in the business of selling luxury motor vehicles. Banq was an accountancy practice. The total amount of the payments, having regard to the affairs of the company overall, appear disproportionate to any sum that might have been properly payable for accountancy fees. No fee notes, invoices or any other like documents that might provide a basis for supposing that there was any commercial basis for this transaction, have been identified. Although Banq put on a defence in which it denied that the transactions were uncommercial, it advanced no explanation for the payments. I am satisfied that a reasonable person in the company's circumstances would not have entered into the transaction, having regard to the apparent absence of any benefit whatsoever to the company from doing so, and the detriment of denuding it of a large proportion of its assets. The benefit to Banq, so far as the evidence reveals, was entirely disproportionate to any benefit to the Company.
7. Reference is made by the plaintiffs to Re RMATA Cutelli Pty Ltd (in liq) [2018] NSWSC 382 at [24], [31] per Black J, as follows: 24. A transaction between a company and a director or his or her close associate is treated as voidable on a winding up of the company if it occurs in circumstances where a reasonable person in the company's circumstances would not have entered into the transaction, under s 588FDA of the Corporations Act. This section applies in respect of, inter alia, a payment made by the company: s 588FDA(1)(a)(i). Whether a reasonable person in the company's circumstances would not have entered into the transaction is determined having regard to any benefits to the company of entering into it; the detriment to the company of entering into it; the respective benefits to other parties to the transaction of entering into it; and any other relevant matter: s 588FDA(1)(c). The test whether such a transaction is unreasonable is objective in character and the matters specified in s 588FDA(1)(c) must be taken into account in determining that: Weaver v Harburn [2014] WASCA 227 at [91]. In Vasudevan v Becon Constructions (Australia) Pty Ltd [2014] VSCA 14; (2014) 97 ACSR 627, the Court of Appeal of the Supreme Court of Victoria held that a disposition may be "for the benefit of" a director where it "legally or financially advantages the director in question regardless of whether it is paid or directed to a close associate of the director" (at [26]) and that the purpose of the section is "to catch director-related transactions of kinds not otherwise liable to avoidance as unfair preferences, uncommercial transactions or unfair loans" (at [28]); see also Angus Carnegie Gordon in his capacity as liquidator of Lyon Form Pty Ltd (in liq) & Anor v Leon Plant Hire Pty Ltd (in liq) & Ors [2015] NSWSC 397 at [88]; Smith (in his capacity as liquidator of Action Paint Ball Games Pty Ltd) v Starke (No 2) [2015] FCA 1119; (2015) 109 ACSR 145 at [104]; Crowe-Maxwell v Frost [2016] NSWCA 46; (2016) 91 NSWLR 414; 111 ACSR 583 per Beazley P (with whom Macfarlan and Gleeson JJA agreed) at [67]-[92]. … 31. This claim relates to withdrawals from the Company's bank account on 4 March 2014, 25 July 2014 and 23 September 2014. There is no explanation, and no evidence led by Mr and Mrs Cutelli, of how the Company obtained benefit for cash payments made to them and recorded in the bank statements. A reasonable person would not have made the payments constituted by those withdrawals in the Company's circumstances, having regard to the lack of any benefit to the Company of doing so; the detriment to the Company of doing so; and the benefit to Mr and Mrs Cutelli of those payments, again obtained at the expense of the Company's creditors. I am satisfied that these transactions were also unreasonable director-related transactions for the purposes of s 588FDA of the Corporations Act.
8. The plaintiffs accept that, in order to establish the presumption of insolvency for a particular period, the position must be separately and distinctly proved for that period; and it must be proved either that no documents within the description of "financial records" were kept in that period or that the documents which were kept were "deficient as to content", because they did not correctly record and explain the company's transactions and financial position and performance (for example, because they did not accurately record the matters purportedly recorded) or would not enable true and fair financial reports to be prepared and audited (citing Woodgate v Fawcett (2008) 67 ACSR 611; [2008] NSWSC 868; Re SSET Constructions Pty Ltd (in liq); Sims v Khattar [2010] NSWSC 102; Fisher v Divine Homes Pty Ltd; Allen v Harb (2011) 85 ACSR 512; [2011] NSWSC 8 at [24] per Barrett J; Re FMA Holdings Group at [9]-[10] per Brereton J, as his Honour then was).
9. Reference is made by the plaintiffs to Australian Securities and Investments Commission (ASIC) v Ostrava Equities Pty Ltd [2016] FCA 1064 for the proposition that the failure to comply with s 286 of the Corporations Act constitutes a breach of the statutory duty of care under s 180, as failure to prevent the company from contravening the Corporations Act.
10. The plaintiffs say that, in each case, the Receiving Participant obtained a bargain of such commercial magnitude that it could not be explained by normal commercial practice (citing Skouloudis Group Pty Ltd (in liq) v Planet Enterprizes Pty Ltd (2002) 41 ACSR 369; [2002] NSWSC 239 (Skouloudis Group) at [14]-[15] per Windeyer J; see also Vasudevan (as joint and several liquidator of Wulguru Retail Investments Pty Ltd) (in liq) v Becon Constructions (Australia) Pty Ltd (2014) 97 ACSR 627; [2014] VSCA 14 at [26] per Nettle JA, then sitting in the Court of Appeal of Victoria (with whom Beach and McMillan JJA agreed).

Insolvency

1. The liquidator's evidence in each case is that the financial records with which he was provided by Banq and/or the Insolvent Companies when conducting his statutory investigations into the affairs of the Insolvent Companies were: 1. Earth Civil: BAS for the periods 1 July 2011 to 31 March 2013, Payroll Activity Summary for the financial year ended 30 June 2013, and Employee PAYG summaries for the financial year ended 30 June 2013; 2. RCG CBD: an MYOB file containing an incomplete General Ledger for the financial year ended 30 June 2013, employee PAYG summaries for the financial year ended 30 June 2013, and a statutory report as to the company's affairs signed by Gino Cassaniti; 3. Bluemine: BAS records for year ended 2013, and (a statutory report as to the company's affairs signed by Gino Cassaniti.
2. The liquidator's evidence in each case is to the effect that the Insolvent Companies did not provide him with any or sufficient records in relation to the uncommercial transactions thereby importing the deemed insolvency provisions of the Corporations Act by reason of the combined effect of ss 286(1) and 588E(4). Indeed, having regard to the amount of money that had been received and paid away by the Insolvent Companies within two years preceding their entry into liquidation, the plaintiffs say that the company records produced to the liquidator during his statutory investigation into those companies were manifestly deficient. The plaintiffs submit this is such as the Insolvent Companies failed to provide the liquidator with: annual financial statements in the nature of balance sheets, profit and loss statements or cash flow statements; books of prime entry or source documentation for transactions; employment agreements; employee superannuation statements; GST reconciliations; monthly management accounts, equipment leases and other contracts; invoices for payments and receipts; job cards for work carried out; correspondence from bankers, creditors, employees and the ATO.
3. It is noted that there were no primary or source documents in the nature of: contracts for work to be performed; invoices for work completed; invoices paid; receipts for payments made; and that the Insolvent Companies failed to provide a General Ledger to the liquidator which would ordinarily contain at the least entries of sales and income by way of a: sales or contracts fees journal; cash receipts journal; purchases journal; cash payments journal; general journal.
4. The liquidator's evidence is that he was unable to locate any assets that the impugned payments were used to acquire or to discern any liabilities that the payments were used to discharge. Thus, it is submitted that there was no legitimate commercial basis for the payments.
5. The plaintiffs point out that Gino Cassaniti does not deny the allegation that the Insolvent Companies did not maintain proper books and records (but denies that he had any involvement in the Scheme and denies causing the Insolvent Companies to be wound up or ever having received requests for information; and, where documents bearing his signature contradict that denial, he has asserted such documents are forgeries).

Earth Civil - Uncommercial Transaction

1. By a resolution of members of Earth Civil, in the course of an extraordinary general meeting held on 28 June 2013, the members of Earth Civil passed a resolution that it be wound up in a creditors' voluntary winding up and the liquidator was appointed. The relation-back day is therefore 28 June 2013; and any payments impugned as uncommercial transactions must therefore have been made within the two years prior to 28 June 2013.
2. In the course of investigating the affairs of Earth Civil, the liquidator identified a number of payments made by Earth Civil to its director Michael Abou-Antoun (collectively referred to as the Director Payments). The Director Payments were payments made by Earth Civil (an Earth Civil transaction) to Michael Abou-Antoun within the two years preceding the relation-back period. Thus, it is submitted that those elements of the claim have been made out.
3. It is noted that, despite numerous demands by the liquidator to the former directors and officeholders of the Earth Civil and to its accountant Banq to be provided with the books and records of Earth Civil, the liquidator has not been provided with any substantial financial records which correctly record and explain Earth Civil's transactions, financial position and performance.
4. The liquidator says that in his investigations into the affairs of Earth Civil, he has been unable to determine the commercial justification for Earth Civil to make the Director Payments; or any assets acquired by Earth Civil as a result of the Director Payments, or any liabilities that the Director Payments may have been used to discharge; or any commercial basis for the Director Payments. It is said that their only result was to reduce the cash at bank of Earth Civil.
5. Michael Abou-Antoun has filed a defence in the Earth Civil Proceeding, in which he denies the Director Payments but admits that Earth Civil made the Director Payments to him (see [52] and [56] of the amended defence filed on 14 April 2020) and otherwise denies that they were uncommercial transactions or unreasonable director-related transactions which are liable to be impugned by the liquidator. The plaintiffs say that it is telling that Michael Abou-Antoun does not seek to provide any commercial justification for the Director Payments in the amended defence, nor has he gone into evidence providing any such explanation.
6. Reference is made to Andre Abou-Antoun's evidence as to the withdrawal of large cash payments from Earth Civil (T 681.35-36; T 678.1-9); and to the advice that he received from Gino Cassaniti (T 678.36-679.34). The plaintiffs say that to the extent that his evidence was that that money was used to pay wages, that evidence would not be believed because he did not produce a single piece of documentary evidence substantiating that such wage payments were made (T 684.13-36) and in his record of interview with the ATO he was unable to name a single employee that he paid with cash (despite trying to resile from that position in cross-examination) (see Ex O; T 683.1-14 and T 682.13-36). The plaintiffs contend that Andre Abou-Antoun kept the money.

Earth Civil - Unreasonable Director-Related Transaction

1. The Director Payments the subject of this claim were payments by Earth Civil to Michael Abou-Antoun.
2. The plaintiffs allege that Michael Abou-Antoun was appointed the sole director and secretary of Earth Civil on 25 May 2011 and purportedly ceased being a director and company secretary on 1 July 2012 (Ex K at 10143-10144). It is noted that he thereafter remained the sole signatory to Earth Civil's bank accounts (Ex K at 10453-10455 and 10443-10445), he controlled the bank account and he gave instructions to Andre Abou-Antoun to make the cash withdrawals; and it is said that he was therefore a shadow director of Earth Civil after 1 July 2012.
3. The relation-back day is 28 June 2013. Any payments impugned as unreasonable director-related transactions must therefore have been made within the four years prior to 28 June 2013.
4. The plaintiffs submit that the Director Payments were therefore payments made by Earth Civil to its director Michael Abou-Antoun. It is said that no reasonable person in Earth Civil's circumstances would have entered into the Director Payments having regard to the fact that Earth Civil derived no benefit and only suffered detriment by reason of making the Director Payments.

RCG CBD - Uncommercial Transaction

1. By a resolution of members of RCG CBD, in the course of an extraordinary general meeting held on 28 June 2013, the members of RCG CBD passed a resolution that it be wound up in a creditors' voluntary winding up and the liquidator was appointed.
2. The relation-back day is therefore 28 June 2013. Any payments impugned as uncommercial transactions must therefore have been made within the two years prior to 28 June 2013.
3. The liquidator has identified the Sivasli Payments, which it is said were payments made by RCG CBD to Sivasli, that is, transactions of RCG CBD, and which occurred within the two years preceding the relation-back day. Thus, it is said that those elements of the claim have been made out.
4. It is said again that, despite numerous demands by the liquidator to the former directors and officeholders of RCG CBD and to its accountant (Banq) to be provided with the books and records of RCG CBD, the liquidator has not been provided with any substantial financial records which correctly record and explain RCG CBD's transactions, financial position and performance.
5. The liquidator has been unable to determine any commercial justification for the Sivasli Payments (he has not been able to discern any assets acquired by RCG CBD as a result of the Sivasli Payments, or any liabilities that the Sivasli Payments may have been used to discharge; and has not been able to ascertain any commercial basis for the Sivasli Payments). Again, it is said that their only result was to reduce the cash at bank of RCG CBD.
6. Sivasli has filed a bare defence in the RCG CBD Proceeding, in which it admits the Sivasli Payments and, except for the assertion that money was owed to Sivasli, denies that they were uncommercial transactions which are liable to be impugned by the liquidator. The plaintiffs say that Fred Khalil does not seek to provide any commercial justification for the Sivasli Payments in the defence, nor has he gone into evidence providing any such explanation or dealt with the Sivasli Payments at all in his affidavit material.

Bluemine - Uncommercial Transaction

1. By a resolution of members of Bluemine, in the course of an extraordinary general meeting held on 26 August 2013, the members of Bluemine passed a resolution that it be wound up in a creditors' voluntary winding up and the liquidator was appointed. The relation-back day is therefore 26 August 2013. Any payments impugned as uncommercial transactions must therefore have been made within the two years prior to 26 August 2013.
2. In the course of investigating the affairs of Bluemine, the liquidator identified the LAM Haulage Payments, the MAL Land Payments and The Great Brothers Payments. Those payments all occurred within the two years preceding the relation-back period. Thus, it is said that this element of the claim has been made out.
3. Again, despite numerous demands by the liquidator to the former directors and officeholders of the Bluemine and to its accountant, Banq, to be provided with the books and records of Bluemine, the liquidator says he has not been provided with any substantial financial records which correctly record and explain Bluemine's transactions, financial position and performance.
4. Again, the liquidator has been unable to determine any commercial justification for these payments (he has been unable to discern any assets acquired by Bluemine as a result of the payments or any liabilities that the payments may have been used to discharge or any commercial basis for them). Their only result was to reduce the cash at bank of Bluemine.
5. It is noted that LAM Haulage, MAL Land Group and The Great Brothers have filed bare defences in the Bluemine Proceeding, in which each respectively admits the relevant payments and otherwise denies that the payments were uncommercial transactions or unreasonable director-related transactions which are liable to be impugned by the liquidator.
6. Michael Abou-Antoun with respect to the MAL Land Group Payments and The Great Brothers Payments does not seek to provide any commercial justification for them in the defence, nor has he gone into evidence providing any such explanation.
7. With respect to LAM Haulage and The Great Brothers Payments, Andre Abou-Antoun gave evidence concerning the nature of the payments into Bluemine by AKA Civil and AKA NSW and said that an equivalent sum (less a fee) was paid out to other members of the AKA Group companies, namely that (T 642.6-37): So, the accountant approached us, being Peter Abboud and Fred Khalil. When they saw that we were making money and advised us that they had a company called Bluemine Pty Ltd that they managed and controlled and that company had assets and trucks and tipping sites and they could arrange inflated invoices and exaggerate invoices to our company. We would make the payment and then they would return the money back to our business, less a fee.

Plaintiffs' conclusion - Pt 5.7B Claims

1. The plaintiffs say that there is no suggestion that: the Director Payments in Earth Civil; the Sivasli Payments in RCG CBD;and the LAM Haulage Payments, the MAL Land Payments and The Great Brothers payments in Bluemine; were anything other than the "disposing of assets or other resources through transactions which resulted in the recipient receiving a gift or obtaining a bargain of such magnitude that it could not be explained by normal commercial practice" as described in Capital Finance Australia Ltd v Tolcher (2007) 164 FCR 83; [2007] FCAFC 185 at [73] per Lindgren J (Capital Finance v Tolcher).
2. It is said that each of Earth Civil, RCG CBD and Bluemine was insolvent from its inception by reason of the presumption of insolvency in s 588FE(4) because each of Earth Civil, RCG CBD and Bluemine failed to keep financial records as required by s 286 of the Corporations Act (referring to Re FMA Holdings Group at [9]-[10]).
3. It is said that the Director Payments were uncommercial transactions of Earth Civil in that: the Director Payments were payments made by Earth Civil to Michael Abou-Antoun and therefore a transaction of Earth Civil within the meaning of ss 9, 588FB and 588FE of the Corporations Act; Earth Civil and Michael Abou-Antoun were parties to each of the Director Payments; the Director Payments, were made during the two year period ending on the relation-back day; and for the reasons identified above no reasonable person in Earth Civil's circumstances would have entered into the Director Payments having regard to the fact that Earth Civil derived no benefit and only suffered detriment by making the payments.
4. It is said that the Director Payments were also unreasonable director-related transactions of Earth Civil in that: the Director Payments were payments made by Earth Civil within the meaning of s 588FDA(1)(a)(i) of the Corporations Act; the Director Payments were payments made by Earth Civil to Michael Abou-Antoun within the meaning of s 588FDA(1)(b)(i) of the Corporations Act; the Director Payments were made during the four year period ending on the relation-back day; and for the reasons identified above, no reasonable person in Earth Civil's circumstances would have entered into the Director Payments having regard to the fact that Earth Civil derived no benefit and only suffered detriment by making the payments.
5. The Sivasli Payments are said to be uncommercial transactions of RCG CBD in that: the Sivasli Payments were payments made by RCG CBD to Sivasli and therefore, a transaction of RCG CBD within the meaning of ss 9, 588FB and 588FE of the Corporations Act; RCG CBD and Sivasli were parties to each of the Sivasli Payments; the Sivasli Payments were made during the two year period ending on the relation-back day; and for the reasons identified above no reasonable person in RCG CBD's circumstances would have entered into the Sivasli Payments having regard to the fact that RCG CBD derived no benefit and only suffered detriment by making the payments.
6. The LAM Haulage Payment, the MAL Land Group Payments and The Great Brothers Payments are said to be uncommercial transactions of Bluemine in that: the said payments were payments made by Bluemine to LAM Haulage, MAL Land Group and The Great Brothers, respectively, and therefore transactions of Bluemine within the meaning of ss 9, 588FB and 588FE of the Corporations Act; Bluemine and LAM Haulage, MAL Land Group and The Great Brothers were parties to each of the said payments, respectively; the payments, were made during the two year period ending on the relation-back date; and no reasonable person in Bluemine's circumstances would have entered into the said payments, having regard to the fact that Bluemine derived no benefit and only suffered detriment by making the payments.
7. The plaintiffs seek judgment in the sums identified below and/or orders pursuant to s 588FF of the Corporations Act directing those defendants identified below to pay to the Insolvent Companies an amount equal to Director Payments, the Sivasli Payments, the LAM Haulage Payment, the MAL Land Payments and The Great Brothers Payments.

Uncommercial transactions (s 588FB, FF)

1. As noted above, the claims made against the AKA Parties in this regard are: claims for declarations of uncommercial or other voidable transactions pursuant to s 588FB, s 588FDA(1) and/or s 588FE of the Corporations Act in respect of the AKA Parties that received money from the Insolvent Companies and consequential orders pursuant to s 588FF of the Corporations Act to repay the amounts received from the uncommercial transactions.
2. With respect to the voidable transaction claims, the AKA Parties submit that the evidence does not sustain a finding: that the transactions concerning the AKA Parties were uncommercial; and that Bluemine was beneficially (as opposed to legally) entitled to the funds received from AKA NSW and AKA Civil. Further, by way of substantive defence in respect of the voidable transaction claims, the AKA Parties submit as follows.
3. First, that if there is a finding that Bluemine was never beneficially entitled to the moneys received from the AKA Paying Entities (AKA Civil and AKA NSW), then Pt 5.7B of the Corporations Act should not operate to infuse a company in liquidation with funds for the benefit of unsecured creditors (and the liquidator) where that company never had any beneficial entitlement to the funds in the first place.
4. Second, that, if findings consistent with the Five Propositions identified in the AKA Parties' closing submissions (see above) are made (including that the funds were paid pursuant to a recommendation or understanding which included that those funds (less a fee or commission) would be returned to the AKA Receiving Entities, and that that occurred), then it would be found that Bluemine was constituted as a trustee with respect to the funds it received from the AKA Paying Entities and that the trust has been performed by payment out to the AKA Receiving Entities. The AKA Parties say that the requisite intention arose from the circumstances. It is said that, if Bluemine was constituted as a trustee, and the AKA Receiving Entities are ordered to pay those funds back to Bluemine under s 588FF or as restitution to prevent unjust enrichment, then it is not the case that Bluemine would hold those funds for its creditor but, rather, it would hold the funds as trustee for the settlor (a Quistclose trust arising on failure of purpose) or for the beneficiaries. It is submitted that any illegality found to have existed on the part of the directors of Bluemine does not change this result.
5. Third, that the whole of the relevant transactions, correctly identified, were not uncommercial under s 588FB of the Corporations Act.
6. Fourth, that, under the circumstances in which the principles of causation are invoked in relation to the breach claims, and the "no beneficial entitlement" defence raised above in relation to the voidable transaction claims, the discretion (which is at large) under s 588FF of the Corporations Act would be exercised against the making of an order for payment under that section; or, in the alternative, the discretion would be confined to order only "some or all of the money" that the AKA Receiving Entities received (for example, a nominal one dollar sum).
7. The AKA Parties say that if the AKA Transactions are found to have occurred in the amounts and on the dates submitted by the plaintiffs, then, for the purposes of determining whether the transactions are uncommercial under s 588FB; and how the discretion in s 588FF should be exercised, it should also be found that the relevant "transactions" to be considered include, first, the payments into Bluemine by AKA NSW and AKA Civil, on the one hand, and, only secondly, the almost immediate payments out to LAM Haulage, MAL Land Group and The Great Brothers, on the other.
8. It is submitted that, if findings consistent with the Five Propositions referred to earlier are made, then it necessarily follows that the AKA Transactions do not fall within sub-para (a) in the definition of "transaction" (see below). However, it is accepted that the AKA Transactions would fall within (d) and (e). The relevant "transaction" here is comprised of both the payments to Bluemine by the AKA Paying Entities and the payments out of Bluemine to the AKA Receiving Entities.
9. Reference is made to VR Dye & Co, where the Court of Appeal, considering the totality of the transaction, emphasised that a transaction should not be viewed in isolation in determining whether it is an unfair preference; rather, the circumstances in which the transaction took place are also relevant (reference being made to what was said by Ormiston JA (with whom Winneke P and Tadgell JA agreed) at [37]-[38]; [42], [45]); and it is noted that VR Dye & Co has been followed on the point that the whole of the transaction needs to be taken into account in determining whether it is a voidable transaction under Pt 5.7B of the Corporations Act.
10. Although the AKA Parties acknowledge that the circumstances in the present Proceedings, on the plaintiffs' case, are slightly different than in VR Dye & Co (in that, here, the payments into Bluemine were induced by promises that the money would be paid back out) they say that there is no principled reason why the the payment in, the promise to pay out, and then the payment out should not be seen as components of each relevant transaction (reference is made to Hodgson v Amcor at [1156]-[1158] per Vickery J; and to Federal Commissioner of Taxation and Kassem v Secatore (2012) 205 FCR 156; [2012] FCAFC 124 at [51] per Jacobson, Siopis and Murphy JJ; and to Capital Finance v Tolcher at [120] per Gordon J (with whom Heerey J agreed)). It is noted that consideration must be given to the "ultimate effect of the entire transaction (see VR Dye & Co at [37] by reference to Airservices Australia v Ferrier (Compass Airlines case) (1996) 185 CLR 483; [1996] HCA 54).
11. The AKA Parties say that the relevant "transaction" here is comprised of both the payments to Bluemine by the AKA Paying Entities and the payments out of Bluemine to the AKA Receiving Entities; and that it would also include, if found, the trust relationship the subject of the AKA Parties' submissions.
12. It is submitted that, if findings consistent with the Five Propositions referred to above are made, then those propositions would provide the framework for applying the definition of "uncommercial transaction" in s 588FB by reference to the authorities which have considered the definition.
13. It is noted that to assist considering whether the whole of the transaction should be found to be "uncommercial", it is necessary first to characterise the transaction. It is submitted that there should be a further finding that Bluemine was constituted as trustee with respect to the funds the subject of the AKA Transactions. If Bluemine were so constituted as a trustee, then it is submitted that the transactions were not uncommercial or, alternatively, even if they were uncommercial, the funds impressed with a trust which has been performed would not be made the subject of an order under s 588FF(1).
14. Again, the AKA Parties' submissions on this issue (as to Bluemine having been constituted as trustee in respect of the funds the subject of the AKA Transactions for the benefit of the AKA Receiving Parties) are contingent submissions. The AKA Parties say that if an iteration of the Scheme Recommendation is found to have been made, that provides a further basis upon which there should be a finding that Bluemine was constituted as trustee and that it should be found that the trust was performed in accordance with the above terms. It is noted that, save for the Fee Amount in respect of each transfer, Bluemine remitted the funds to an AKA Receiving Entity.
15. The AKA Parties say that the plaintiffs have not established that the purpose of the transfers to Bluemine by the AKA Paying Entities was to defeat creditors (whether of the AKA Paying Entities or of Bluemine); and have not established that the AKA Parties had sufficient knowledge of any illegality or fraudulent conduct on the part of the directors of Bluemine for the trust to be avoided or set aside.
16. Thus, it is submitted that there should not be an order for those funds to be repaid to Bluemine under Pt 5.7B of the Corporations Act, whether under restitutionary principles or otherwise.
17. As to the submission that there is a trust, the AKA Parties say that in the present case: the trustee is Bluemine; the Trust Property is comprised by the funds the subject of the AKA Transactions; the beneficiaries are the AKA Receiving Entities; and the personal obligation annexed to the property arises from the circumstances and from the fact (if found) of performance of the trust according to its terms.
18. As to the question of intention, it is said that the available trusts here include an ordinary private express trust, where the manifest intention to declare the trust is either presumed (as in the case of a resulting trust) or proved (either by inference or direct evidence) or, a species of an express trust, the Quistclose trust. The AKA Parties say that, in any case, the trust has been performed and no order for repayment to the trustee who had performed its obligations under the trust should be made. If the trust has been performed, then, under principles associated with a Quistclose trust, the secondary trust aspect would only arise upon an order that the beneficiaries (the AKA Receiving Entities) are disgorged of ther distributions, which would result in the funds being held by Bluemine, not for the benefit of creditors, but for the benefit of the AKA Paying Entities, due to failure of the purpose of the trust, as occurred in Quistclose. It is said that an order under s 588FF or otherwise should not be made in respect of those funds and that the loss, if any, should lie where it falls.
19. By way of example, it is said that if there is a Quistclose trust and, say, LAM Haulage must repay the moneys it received from Bluemine, then it is not the case that Bluemine would hold those funds for its creditors. It is said that if an order was made to repay the funds in the present case, then the funds would either remain impressed with a trust for the original purpose, or alternatively, that purpose having failed, would be held on secondary trust for the benefit of the AKA Paying Entities. Reference is made to what was said in George v Webb [2011] NSWSC 1608 (George v Webb) at [191], [197] in this regard.
20. The AKA Parties accept that once the funds are transferred as intended under the terms of the trust, the trust comes to an end. However, they say that if the trust fails because the purpose was thwarted (due to the making of an order of repayment under s 588FF, for example) the trustee holds the funds for the settlor. This principle, it is submitted, is engaged where the transfer to effect the intended purpose is unwound for any reason, including by operation of the Corporations Act; and the AKA Parties submit that therefore, an order under s 588FF should not be made.
21. As to the requisite intention for a Quistclose trust, it is noted that an intention to create a trust may be found from the circumstances including the nature of the transaction. Reference is made to Bahr v Nicolay [No 2] (1988) 164 CLR 604; [1988] HCA 16 per Mason CJ and Dawson J; Walker v Corboy (1990) 19 NSWLR 382 at 384 per Priestley JA; Byrnes v Kendle (2011) 243 CLR 253; [2011] HCA 26 at [49], [55], [57] (Byrnes) per Gummow and Hayne JJ and at [107]-[108], [113] per Heydon and Crennan JJ.
22. The AKA Parties say that an analogy may be drawn to the principles of proving an oral contract (the terms of such a contract being a question of fact to be determined having regard to all the surrounding circumstances, including pre-contractual and post-contractual conduct) (County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193 (County Securities) at [17] per Spigelman CJ). Reference is made to Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603; [2009] NSWCA 407 at [325] per Campbell JA as to whether subsequent conduct may be used in the course of ascertaining the terms of an oral or partly oral contract (see County Securities at [7]-[27], [45] per Spigelman CJ; Masterton Homes Pty Ltd v Palm Assets Pty Ltd (2009) 261 ALR 382; [2009] NSWCA 234 (Masterton Homes) at [114] per Campbell JA (with whom Allsop P and Basten JA agreed); and the recognition in Masterton Homes at [114] that there is "room for debate" about whether it is appropriate ever to talk about "construction" of a contract not wholly in writing. The AKA Parties say that, in the absence of identified precise words giving rise to the relationship, then subsequent conduct may be taken into account (referring to Handbury v Nolan (1977) 13 ALR 339 at 346 per Stephen J, who in turn referred to Deane v City Bank of Sydney (1904) 2 CLR 198; [1904] HCA 44 at 209 per Griffith CJ); and see also Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692 at 697 per Young J, as his Honour then was; Macindoe v Parbery (Supreme Court (NSW), Kirby J, 17 August 1994, unrep)). It is noted that the parol evidence rule and the policies behind it are inapplicable (see County Securities at [8] per Spigelman CJ).
23. The AKA Parties note that the manifest declaration of intention may also be proved by a presumption (as opposed to inference or direct evidence), referring to what was said by Edelman J, then sitting in the Supreme Court of Western Australia, in Anderson v McPherson (No 2) (2012) 8 ASTLR 321; [2012] WASC 19 at [106]-[107].
24. The AKA Parties say that, here, the manifest intention of the Paying Parties should be presumed from all the circumstances (or would be inferred on the evidence) not to be that the Paying Parties "gifted" the payments to Bluemine; and that, in the absence of any consideration moving from Bluemine for the payments, a trust would be implied or found. It is thus submitted that the payments from the AKA Paying entities to Bluemine were held by Bluemine as Trustee (the AKA Trust).
25. The AKA Parties say that (assuming findings consistent with the above identified Five Propositions are made, and by reference to the plaintiffs' closing submissions at [241] and the third further amended statement of claim at [137]), the essential features of the AKA Transactions (see below) provide a powerful indication that the AKA Trust was created.
26. Those features are said to include the following: first, that representatives of Bluemine represented (offered) to one or more of the AKA Parties that: Bluemine would issue invoices to AKA Civil and AKA NSW; AKA Civil and AKA NSW would pay money to Bluemine pursuant to the invoices; Bluemine would retain a fee of around 2.5%; and Bluemine would pay the balance to one of the AKA Receiving Entities; and second, that Andre Abou-Antoun understood at the time that the purpose of the AKA Transactions was to facilitate the purchase of property by one or more of the AKA Receiving Entities.
27. Thereafter, it is said that, on the plaintiffs' case, there was performance, namely that: Bluemine issued invoices to AKA Civil and AKA NSW; AKA Civil and AKA NSW paid those invoices; Bluemine retained a "fee" of around 2.5%; Bluemine then paid the balance to one of the AKA Receiving Entities. It is noted that the plaintiffs submit that it was part of the arrangement that the moneys which came into Bluemine "always came back from Bluemine … to another AKA entity".
28. Reference is made to Andre Abou-Antoun's evidence that there was no agreement (or contract) between Bluemine and AKA Civil as to the provision of services for AKA Civil; rather, that "there was only the understanding that we wanted to purchase the properties that we eventually did with Banq and Bluemine was the company that they used to facilitate purchase of the properties from the AKA or entities of AKA that purchased the properties"; that there was "an agreement in regards to us understanding that we would purchase the property and that Bluemine was used as a facility to purchase the property" and that "they" (presumably Banq and Bluemine) would issue invoices and we would pay them and then "the payment we made to Bluemine purchased the properties on our behalf of our entities" (T 672-673).
29. Andre Abou-Antoun was adamant that they would purchase the properties and would transfer the money to Bluemine and Bluemine would transfer the money back to the AKA related entities. The AKA Parties say that Andre Abou-Antoun was consistent throughout his evidence as to the property purchasing purpose underlying the arrangement with Bluemine; and that, consistently with Andre Abou-Antoun's evidence (see Appendix C to their submissions) the AKA Receiving Entities used the funds they received to purchase properties. In any event it is said that it is not necessary for the AKA Parties to prove the property purchasing intention to find that Bluemine was constituted as trustee for purposes of paying out the funds as directed by the AKA Parties.
30. The AKA Parties say that the AKA Trust was performed and that it should not be unwound in Bluemine's favour to the detriment of the Receiving Parties (beneficiaries); it being performed in accordance with the manifested intention of the settlor and Bluemine itself.
31. To the extent that a trust is established then it is noted that generally trust property is precluded from distribution among creditors. Further, the AKA Parties say that the plaintiffs can have no recourse to Bluemine's right or power of exoneration (or indemnity) as the debts owed by Bluemine to the Commissioner are not debts incurred in the course of the business of the AKA Trust (but, rather, are debts incurred by the Commissioner assessing Bluemine for ordinary income (not the AKA Trust income under Part III, Div 6 of the Income Tax Assessment Act 1936 dealing with trust income). The AKA Parties say that there are no AKA Trust creditors and that the company has long since distributed its AKA Trust assets in accordance with the terms of the AKA Trust (which it is said arises if findings are made consistent with the Five Propositions identified at the outset).
32. As to the spectre of fraud, sham and illegality concerning a trust that has been performed, the AKA Parties say that cases where suggestions of fraud arise in the context of a trust where a settlor transfers property into trust to defeat creditors of the settlor are inapposite here, where there can be no such intention on the part of the AKA Paying Entities. It is noted that there is no evidence here that those entities are or were insolvent.
33. As already noted, the AKA Parties submit in this context that the plaintiffs have not sufficiently proved knowledge (in the Barnes v Addy and s 79 senses) of elements of the alleged dishonest and fraudulent design including an intention to wind up Bluemine in insolvency leaving it without the ability to pay its taxation debts. It is said that the plaintiffs have not established any intention or knowledge on the part of the AKA Parties, including the AKA Receiving Entity beneficiaries, that either Bluemine or the Commissioner be defrauded in the way alleged.
34. The AKA Parties further say that illegality is irrelevant to formation of the AKA Trust (referring to Byrnes at [115]). The AKA Parties say that it follows that subjective intention (including any fraudulent or dishonest intention) is irrelevant to the existence of the trust in the first instance.
35. It is noted that, irrespective of any illegality, and subject to the narrow holding in Carter Holt Harvey Woodproducts Australia Pty Ltd v Commonwealth (2019) 368 ALR 390; [2019] HCA 20, a mere legal interest would not be converted into a beneficial interest for the purposes of benefitting the creditors of an insolvent trustee (as opposed to the settlor). It is said that Bluemine has no entitlement to the funds for the benefit of non-AKA Trust creditors (the Commissioner) even if the AKA Trust is, having been extinguished by performance, reinstated for the purposes of being set aside.
36. Finally, the AKA Parties say that any trust which came into existence may not be avoided or set aside, ex post facto, by the plaintiffs, on the grounds that Bluemine is now under the control of a liquidator seeking to recover funds to pay the Commissioner.
37. It is said that the maxim that equity will not be an instrument of fraud (referred to in the plaintiffs' closing submissions at [89]-[90]) does not assist the plaintiffs. It is said that the AKA Parties are here defending claims, in which Bluemine seeks to rely upon its own fraudulent conduct as a means by which to recover moneys to which (on its own case), it was never beneficially entitled; and seeks to recover those moneys from third parties who it is submitted did not have sufficient knowledge reasonably to predict that Bluemine would be wound up in insolvency with substantial tax liabilities including substantial penalties.
38. Under the circumstances, where it is submitted that the AKA Parties were without knowledge of any design to wind up Bluemine with substantial liabilities to the Commissioner (or that the Commissioner would come along much later and assess Bluemine on the financial statement analysis), the AKA Parties say that their contention that the loss (if any) should lie where it fell does not engage the maxim referred to by the plaintiffs.
39. Therefore, the AKA Parties say that, if findings consistent with the Five Propositions are made, there should be a further finding that Bluemine was constituted as trustee in respect of the funds the subject of the AKA Transactions such that there would be no order, under Pt 5.7B or otherwise, that the AKA Receiving Entities repay some or all of those funds back to Bluemine. It is said that the funds remain impressed with the AKA Trust, such that they could not benefit the only Bluemine creditor. It is further submitted (see below in the context of the moneys had and received claim) that the payments were not made at the expense of Bluemine and that the AKA Receiving Entities have not been unjustly enriched by receiving moneys lawfully derived by other companies in the AKA Group.

The Borg Parties' trust

1. The AKA Parties say that the trust contended for by the Borg Parties (see above at [2204]) (i.e., what is in effect a Quistclose trust in respect of discrete transactions concerning the Borg Parties and Bluemine) is a separate and distinct trust from the AKA Trust. However, as to matters of principle, to the extent that the Borg Parties' submissions (see above) assist a finding as to the existence of the AKA Trust, the AKA Parties adopt those submissions.

AKA Transactions and s 588FB uncommerciality

1. The AKA Parties submit that the AKA Transactions, when viewed as a whole and considering their ultimate effect, were not uncommercial for purpose of s 588FB.
2. The AKA Parties say that the alleged uncommercial transactions include aspects which have the potential to attract the spectre of illegality; and that a question arises whether any illegality which may be shown to attach to any element of the transaction is sufficient to render the whole of transaction as uncommercial in the relevant sense. It is noted that this depends upon the findings in respect of the conspiracy and which elements of the unlawful agreement, if any, are ultimately accepted, as to which the AKA Parties say the following.
3. As noted above, the AKA Parties say that, when viewed in their full context, the funds the subject of the AKA Transactions were impressed with a trust, which was performed and in respect of which Bluemine earned a fee. It is said that these characteristics do not bear the hallmarks of an uncommercial transaction. It is said that it is not the case that the transactions here were at an undervalue so as to be found to be uncommercial on that basis; pointing to the fact that, on the plaintiffs' case, Bluemine "earned" fees by receiving money and paying money in a manner akin to a clearinghouse. It is said that the Fee Amounts themselves could not be said to undervalue the clearinghouse-like transactions. Thus, it is said that the transactions concerning Bluemine paying away the Fee Amounts (if proved) do not form part of the AKA Transactions said to be uncommercial. It is noted that the Plaintiffs do not suggest that the AKA Parties had any knowledge of how Bluemine intended to deal with its own assets.
4. As to the allegation of false invoices, the AKA Parties submit that the mere fact of issuing false invoices (if found) would not be sufficient by itself to qualify the AKA Transactions as uncommercial. It is further submitted that the risk of potential default tax treatment by the Commissioner is too far removed from the transaction to be relevant to the matters in s 588FB.

Discretionary considerations

1. Assuming, contrary to the AKA Parties' submissions, that the whole of the AKA transactions properly identified are uncommercial, then the AKA Parties make the following submissions as to the question of the discretion under s 588FF.
2. First, it is said that, having received the money, it would have been uncommercial for the company to have kept it; such that an order that the funds be repaid would only restore an uncommercial state of affairs. It is said that Bluemine should not be put in a position of having entered and performed half of an uncommercial transaction to enable the Commissioner to recover a tax debt that the AKA Parties submit should not exist. Second, it is said that, if Bluemine had not paid the money to the receiving entities, presumably it would have returned those funds (and had to return its fee as well) to avoid a claim in restitution to prevent its own unjust enrichment. It is said that if the whole of the transaction is uncommercial, then unwinding the whole of the transaction would require the funds be returned to AKA Civil and AKA NSW, as Bluemine was never beneficially entitled to the funds (on a trust theory or otherwise). However, it is noted that the Corporations Act does not provide a mechanism for that to occur.
3. The AKA Parties point to the discretion whether or not to make an order under s 588FF(1) even if the statutory criteria are met (which the AKA Parties submit is consistent with the weight of authority); or to make one of the orders listed in the section, including under sub-ss (a) or (e), which allow for a determination as to whether "some or all" of the money should be the subject of the order.
4. It is submitted by the AKA Parties that, if the latter construction is preferred, and if findings are made consistent with the five propositions they identified at the outset of their submissions, then only a nominal payment would be ordered as Bluemine would have been found to have not paid consideration for the funds (and had no beneficial entitlement to them). It is said that it would follow that the money the subject of the AKA Transactions was never Bluemine's money, and that it would be unjust for the provisions to apply to vest an entity with an ownership interest in funds it never previously enjoyed. (Pausing here, there is a distinction between no consideration being provided for a payment and submitting that a company is not beneficially entitled to moneys transferred to it. Until any dispute as to the funds is determined, title to the money sitting in the bank account would ordinarily be that of the account holder.)
5. The AKA Parties submit that, even if the relevant transactions were uncommercial, insolvent, voidable transactions for the purposes of ss 588FB, 588FC and 588FE respectively, an order of repayment should not be made under s 588FF(1).
6. Contrary to the plaintiffs' contention that orders would be made under s 588FF(1) that the AKA Receiving Entities pay to Bluemine the whole of the amounts they received from Bluemine, less the Fee Amounts, the AKA Parties contend that either no order should be made under s 588FF(1) at all; or, alternatively, that only a nominal amount (such as one dollar) should be repaid to Bluemine by each of the AKA Receiving Entities.
7. The AKA Parties emphasise that s 588FF is discretionary not mandatory. They say that the use of the word "may" in s 588FF(1) is a clear textual indication to that effect. It is noted that there remain some conflicting views as to whether the power under s 588FF is discretionary or mandatory (see Great Investments Ltd v Warner (2016) 335 ALR 542; [2016] FCAFC 85 (Great Investments v Warner) at [141], where Jagot, Edelman and Moshinsky JJ proceeded on the assumption that the provision conferred a discretion (although I note without deciding the issue); reference is made to BP Australia Ltd v Brown (2003) 58 NSWLR 322 (BP Australia) at [157] per Spigelman CJ (with whom Mason P and Handley JA) where his Honour also proceeded on the basis that the power is discretionary, in a passage approved in Ansell Ltd v Davies (2008) ACSR 356; [2008] SASC 203 at [52] per Doyle CJ (with whom Anderson and David JJ agreed)). Reference is also made to New Cap Reinsurance Corp Ltd v AE Grant (2009) 72 ACSR 638; [2009] NSWSC 662 at [59] per Barrett J, as his Honour then was; and Buzzle Operations Pty Ltd (in liq) v Apple Computer Australia Pty Ltd (2011) 81 NSWLR 47; [2011] NSWCA 109 (Buzzle Operations v Apple Computer), where Young JA expressed doubts as to the decisions holding that there was no discretion to refuse to make an order (at [258]-[261] (with whom Whealy JA agreed at [287] and Hogdson JA substantially agreed at [2]).
8. The AKA Parties contend, consistently with the observations and approach of the Court of Appeal in Buzzle Operations v Apple Computer and BP Australia, and I accept, that the power to make a remedial order under s 588FF(1) is discretionary. In the present case, the AKA Parties say that, if there is a finding that the transactions by which moneys were paid by Bluemine to the AKA Receiving Parties were voidable pursuant to s 588FE (which the AKA Parties deny), because those moneys were never beneficially held by Bluemine, then the purpose of the statutory provisions would not be served by making an order under s 588FF(1) for the AKA Receiving Parties to repay those moneys to Bluemine; andthe discretion ought therefore be exercised not to make any order at all under s 588FF(1).
9. Reference is made to the Explanatory Memorandum to the Corporate Law Reform Bill 1992 (Cth) at [1035] which stated that: The purpose of the provisions in this proposed Division is to ensure that unsecured creditors are not prejudiced by the disposition of assets or the incurring of liabilities by a company in a period shortly before the winding up which would have the effect of favouring certain creditors or other persons, and especially related entities. This might occur where a creditor (whether or not that creditor has some connection with the company) was paid out in full rather than having to prove for a proportion of the debt in the winding up. The provisions also seek to avoid transactions where the body of unsecured creditors might be prejudiced by the company's having given away assets or incurred liabilities without adequate consideration passing to the company. This is particularly so where such a disposition might have the effect of benefiting persons or entities associated with the company such as directors, their relatives or associated companies. The provisions are also aimed at ensuring that unsecured creditors as a body are not prejudiced by the company's having entered into wholly unrealistic loans or other agreements on which the interest rate or other charges are excessive to the point of being 'extortionate'.
10. The AKA Parties say this statement of purpose assumes that the company being wound up had beneficial entitlement to the assets the subject of the disposition; and that the purpose falls away where there is no such entitlement.
11. Reference is also made to Demondrille Nominees Pty Ltd v Kevin R Shirlaw & Cornelis Holdings Pty Ltd (in liq) (1997) 25 ACSR 535 at [548] per Foster, Lindgren and Madgwick JJ as to the purpose of ss 588FB and 588FC; Re Cyberduck Software Pty Ltd (in liq) (2018) 125 ACSR 79; [2018] VSC 122 at [29] per Efthim AsJ; and Capital Finance Australia Ltd v Tolcher at [66] Lindgren J (dissenting in the outcome).
12. The AKA Parties say that, having regard to the extrinsic materials and the authorities which have considered the purpose of the provisions (and unlike the usual position with respect to beneficially held assets), unsecured creditors are not prejudiced by the disposition of non-beneficially held assets by a company in a period shortly before a winding up (for the reason that the beneficial interest in such assets would not, in any event, have been available to those unsecured creditors as the beneficial interest was not a company asset). Rather, it is said that only the (presumably nominal) value of the legal interest in such assets held by the company would have been available to be realised by the company in satisfaction of the unsecured creditor's demands (for the reason that: this is all that the company held) and equity would protect the subsisting equitable interest in the asset that remains with the beneficial owner. By corollary, it is said that the disposition of such assets to a receiving party did not unfairly favour that person over creditors.
13. Reference is made, in this context, to authority to the effect that the payment out of a company of moneys that were never intended to be the company's moneys was not an unfair preference because it was not a transaction of the company (referring to Prentice v St George Bank Ltd (2002) 20 ACLC 923; [2002] NSWSC 358 at [23]-[46] per Austin J). The AKA Parties say that, by analogy, if it is here found that the beneficial interest in the subject moneys was never an "asset" of Bluemine, then the payment of those moneys to the AKA Receiving Parties was not a transaction of Bluemine per se but, rather, of Bluemine in a fiduciary capacity as trustee.
14. Further, it is submitted that, if the essence of the transaction is one of the creation and fulfilment of a trust, then the transaction, if unwound, would require the funds to be stripped from a beneficiary and then either paid directly back to those beneficiaries, or returned to the settlors (AKA Civil and AKA NSW) due to the failure of the trust's purpose.
15. The AKA Parties say whether the AKA Receiving Entities received cash in return for no consideration (and thus this was "a bargain of such commercial magnitude that it could not be explained by normal commercial practice" (Skouloudis Group at [14]-[15]) is not relevant. First, they say that the AKA Receiving Entities were beneficiaries of a trust. Second, they say that even if that is not the case, the AKA Receiving Entities were part of the same corporate group as the AKA Paying Entities and the funds could have been paid to them directly.
16. In the alternative, if an order under s 588FF is to be made then the AKA Parties submit that there should only be an order that a nominal amount be repaid to Bluemine by the Receiving AKA Parties.
17. Reference is made to what was said by Black J in Re Employ (No 96) Pty Ltd (in liq) (2013) 93 ACSR 48; [2013] NSWSC 61 (Re Employ), as to the flexibility of the principles to be applied when determining what orders were to be made pursuant to s 588FF in respect of uncommercial transactions under s 588 FB (see at [83]-[84]). The AKA Parties say that, on one view, had the arrangement been commercial, then those characteristics which rendered it uncommercial would be ignored, and in the result, either: Bluemine would never have entered into the transaction, and therefore it never would have received even a mere legal interest in the funds the subject of the AKA Transactions; or it would have received the funds and paid them out as (on the plaintiffs' case) was done, resulting in the AKA Receiving Entities receiving the whole amount of the funds and Bluemine collecting its fee.
18. In either case, it is submitted that the most just outcome is that there be no order under s 588FF; or it should only be for a nominal amount, because: those moneys would not, in any event, have been available to the unsecured creditors (as on this hypothesis the beneficial interest in the moneys was not an asset of Bluemine); and, as the subsisting equitable interest in the moneys remained held by the beneficial owner, the disposition of that asset to the AKA Receiving Parties did not unfairly favour those persons over other secured creditors.
19. The AKA Parties submit that the statutory scheme is not concerned with transmuting a "mere fleeting" and limited legal interest (or an interest arising by virtue of Bluemine being constituted as trustee) into a beneficial one for the benefit of creditors of an insolvent company. It is submitted that it follows that it would not, in those circumstances, be "just and equitable to enforce the whole of the compensation" (being the repayment of "all of the money that [Bluemine] has [received and] paid under the transaction") against the AKA Receiving Parties (citing Re Employ at [83]). Rather, it is said, an order to repay only a nominal amount would fairly balance the interests of the unsecured creditors with the AKA Receiving Parties and accord with the purpose of the provisions.

Earth Civil - AKA Parties

1. In respect of the s 588FDA unreasonable director-related transactions claim, the Earth Civil AKA Parties repeat their submissions in respect of Bluemine and say, further, that the plaintiffs have not proved that Michael Abou-Antoun was an associate of a director and, therefore, s 588FD does not apply; and in respect of the s 588FB uncommercial transactions claim, they repeat their submissions in respect of Bluemine.
2. Again, in respect of the discretion under s 588FF which may arise in the context of the Pt 5.7B Claims, the Earth Civil AKA Parties submit that if the discretion is found to be engaged then either: no order should be made (because, on the plaintiffs' case, it was never Earth Civil's money - see above); or no order should be made because it was Earth Civil's money but it was used to pay wages to third-party employees who are not implicated in the plaintiffs' allegations; or that an order for repayment by Michael Abou-Antoun should be made in an amount less than $965,000 (which the plaintiffs contend is the total amount paid in by the AKA Paying Entities) on the approach adopted by Black J in Re Employ at [84], to account for any overvalue (i.e. by ordering repayment of an amount of wages net of GST and PAYG that, on the plaintiffs' case, should have been withheld but was not).
3. The AKA Parties identify the fundamental premises of their defence to the claim for compensation for the uncommercial transactions as being that: the alleged uncommercial transactions cannot be looked at in isolation and must be considered in the context of the overarching conspiracy or the Scheme as a whole; and that, when looked at as a whole, the payments to the Receiving Participants were in accordance with a trust created when the Paying Participants advanced the funds to Bluemine on the condition that those funds were to be paid to the Receiving Participants; in consequence of which, it is said that the payments from Bluemine to the Receiving Participants were not uncommercial because those payments were in accordance with the terms of the trust. Alternatively, the AKA Parties say that if those payments were uncommercial, an order for compensation to Bluemine would not be made because the money that Bluemine paid away was not money to which Bluemine had a beneficial entitlement (as that money was held for the benefit of Receiving Participants) and compensation would unjustly enrich Bluemine.
4. Further in the alternative, the AKA Parties say that if the Receiving Participants were ordered to compensate Bluemine for the uncommercial transactions, Bluemine would in turn hold such compensation on resulting trust in favour of the Paying Participants, by reason of the primary trust having failed.

Section 588FDA claim

1. The Earth Civil AKA Parties say that, in order for the s 588FDA claim to succeed, the plaintiffs must establish one of the matters in subs (1)(b)(i), (ii) or (iii) of s 588FDA. They say that the matter in sub-s (1)(b)(i) (that Michael Abou-Antoun was a director) has not been established and that no adverse inference would be drawn against Michael Abou-Antoun for not giving evidence in the proceeding. In respect of the matter in (1)(b)(ii) (that Michael Abou-Antoun was a close associate), it is noted that "close associate" means a relative of the director, or a relative of the spouse of a director (s 9); and that Michael Abou-Antoun is not a relative of Gino Cassaniti or a relative of Ivana Cassaniti; therefore, it is said that he is not a "close associate". It is said that the matter in subs (1)(b)(iii) is equally unavailable.
2. If, however, it is found that Michael Abou-Antoun was a de facto or shadow director, then the Earth Civil AKA Parties repeat the submissions made by the AKA Parties in the Bluemine Proceeding in respect of identifying the whole of the transaction and those in relation to the discretion to make an order under s 588FF.

Uncommercial Transactions

1. As to the submissions made by the defendants in relation to the uncommercial transaction claims, the plaintiffs say that: first, there is no necessity to look beyond the impugned transaction(s); second, alternatively, there was no trust; and third, again alternatively, if there was a trust, equity's assistance cannot be invoked (or, if enforced, the trustee is entitled to indemnification).

No need to look beyond the impugned transactions

1. As to the first, the plaintiffs say that the defendants elide the necessity of looking at the transactions as a whole for two different purposes or reasons: the first, being in order to examine the alleged uncommercial payments; the second, being to establish a trust.
2. As to the first of those purposes or reasons, the plaintiffs say that the defendants' submission (that, for the purposes of s 588FB, the alleged uncommercial payments out were part of an overall transaction that included the payments in) should be rejected. The plaintiffs concede that a purposive interpretation of s 588FF (in determining whether a transaction is an uncommercial transaction) requires that the transaction be looked at as a whole, rather than identifying particular parts and considering each component in isolation, referring to what was said by the High Court in Richardson v Commercial Banking Co of Sydney Ltd (1952) 85 CLR 110; [1952] HCA 8, cited in VR Dye & Co at [37].
3. However, it is said that that does not assist the defendants in this case. The plaintiffs submit that (unlike the position in VR Dye & Co, where it was determined that, by looking at the overall relationship of the parties in respect of the impugned transaction, the ultimate purpose disclosed an arrangement for prepayment of services for the benefit of the company rather than an uncommercial transaction; and that this did not advantage one creditor over another), the present case is one akin to the situation considered by the Queensland Court of Appeal in Featherstone at [76]ff per Sofronoff P.
4. The plaintiffs say that, when looked at as a whole, the ultimate effect of the other components of the impugned transaction with Bluemine was to create a competing creditor (the Commissioner) and to pay the Receiving Participant in preference to the competing creditor. It is said that the reason for this is that the purpose of the other part of the impugned transaction was to obtain an illegitimate tax deduction for payment of false invoices. The plaintiffs say that, in order to effect that purpose, it was necessary (as between the parties to the whole transaction relied upon by the defendants) to treat the transactions as unrelated and separate. It is said that, in so doing, the parties adopted, as the conventional basis of the alleged uncommercial transaction between them, an assumption which they knew to be contrary to the actual state of affairs and that the defendants cannot now set up rights against Bluemine inconsistent with that assumption (referring to Grundt v Great Boulder Gold Mines Pty Ltd (1937) 59 CLR 641; [1937] HCA 58 (Grundt v Great Boulder Gold Mines) at 674-675 per Dixon J, as his Honour then was).
5. The plaintiffs say that, in the present case, the surrounding circumstances demonstrate that there was no commercial purpose; and that, unlike the authorities cited by the defendants, there was no consideration of any form flowing to the Insolvent Company. It is said that the purpose of the defendants' fraud was to misrepresent the payments to and from Bluemine as totally unrelated.
6. The plaintiffs say that the authorities relied upon by the defendants in support of the reason for looking at the transactions as a whole were cases in which the relevant transaction, when looked at as a whole, was not for an uncommercial purpose and contrary to the intent of Pt 5.7B of the Corporations Act (unlike what the plaintiffs contend is the case here). Further, the plaintiffs say that their cause of action under s 588FF is distinct from their overall conspiracy case; that they could have run a case on uncommercial transactions alone; and that this would then have required the defendants to plead illegality of purpose (for which the court would provide no assistance or relief).

No trust

1. As to the the defendants' argument that a trust was established, the plaintiffs say that this argument requires the defendants to adopt the plaintiffs' case.
2. That being so, the plaintiffs say that the defendants must adopt the alleged fraud as the basis of their case on trusts because the transactions looked at as a whole identify an unmistakeable intention to defraud the revenue. The plaintiffs say this is so because the defendants: knew that they paid the plaintiff for false invoices; claimed tax deductions for those payments; at that point, knew enough to know that they paid tax on money they received and obtained deductions for money that they paid; knew Bluemine would then pay the same amount (less a fee) to a related party; therefore, knew in relation to that transaction that Bluemine would only have retained 2.5%, at most, of the money it received; but now claim that they did not know Bluemine would be liable for tax on receipt of payment for which they received a deduction on the other side of the same transaction; and now claim that they did not know that there was a chance that Bluemine would be wound up in insolvency despite the fact that in relation to their dealings with Bluemine, it did not retain sufficient funds to pay tax on the transaction for which they obtained a tax deduction.
3. The plaintiffs say that the transactions as a whole do not constitute a trust. They say that, of the three certainties necessary to establish an express trust (noting that the Quistclose trust has been recognised to be an express trust, citing George v Webb at [282]), the defendants fail in establishing at least certainty of intention and certainty of object.
4. As to certainty of intention, the plaintiffs say that it was within the power of the AKA Parties to adduce evidence of the express trust for which they now contend (but they chose not to do so) and that, having not led evidence of the terms of the trust (which was within their power), the AKA Parties now say that the terms of the trust should be inferred from the surrounding circumstances. The plaintiffs invoke what was said by du Parcq LJ in In re Schebsman; Ex Parte The Official Receiver, The Trustee v Cargo Superintendents (London) Ltd [1943] Ch 83 at 104, namely that "unless an intention to create a trust is clearly to be collected from the language used and the circumstances of the case, I think that the court ought not to be astute to discover indication of such an intention".
5. The plaintiffs say that the application of that principle to the present case is fortified by the principle stated in Ferrcom at 418 per Handley JA to the effect that, where a party gives evidence but omits to give evidence of facts within its knowledge, the court should not infer those facts favourable to the party.
6. The plaintiffs submit that, if there is a finding in their favour as to the alleged Scheme, then it is not possible to find evidence of an intention by the AKA Paying Participants to create a trust at the time of the relevant payments. It is said that, by paying false invoices and claiming tax deductions for them the defendants intended to represent that Bluemine was beneficially entitled to the money advanced; and that, implicit in the purpose of the Scheme, was that the payments in and out of Bluemine were unrelated and separate transactions (otherwise the AKA Paying Participants could not have received a tax deduction for the payment in).
7. The plaintiffs say that, whether or not there was a collateral agreement between the parties that Bluemine pay the AKA Receiving Participants an equivalent amount to the money advanced by the Paying Participants is another matter. The plaintiffs maintain that there was no intention at the time of the payment to establish a trust and that the defendants are estopped from asserting this (invoking the principles set out in Grundt v Great Boulder Gold Mines at 674-675). In the present case, it is said that the defendants played an integral role in the adoption of the assumption (in that they intended the money advanced to Bluemine to have the appearance of income for payment of invoices which they knew to be false and on which they relied to obtain tax deductions). Reference is also made to the later statement in Grundt v Great Boulder Gold Mines that "[p]arties may adopt as the conventional basis of a transaction between them an assumption which they know to be contrary to the actual state of affairs" (at 676-677). It is noted that these principles have subsequently been extensively adapted and applied (the plaintiffs referring to Legione v Hateley (1983) 152 CLR 406; [1983] HCA 11 at 437 per Mason and Deane JJ; The Commonwealth v Verwayen (1990) 170 CLR 394; [1990] HCA 39 at 444 per Deane J, 453 per Dawson J, 500 per McHugh J; and Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; [1988] HCA 7 at 427 per Brennan J).
8. The plaintiffs say that, in the present case, the prejudice suffered by Bluemine in departing from the representation that it was beneficially entitled to the money, is that Bluemine was taxed on the basis of the representation of its beneficial entitlement to the money. It is said that if the defendants are now allowed to set up rights inconsistent with that assumption (the AKA Trust), the Bluemine will be left without compensation from the AKA Parties to pay its tax liability that arose by reason of the defendants' representation.
9. The plaintiffs say that, because the defendants are estopped from asserting rights inconsistent with the assumption of facts that they caused Bluemine to adopt, there is no basis to determine that the money paid by the Paying Participants was advanced with the mutual intention that it should not become part of the assets of Bluemine but should be used exclusively for a specific purpose of paying the Receiving Participants (referring to Australasian Conference Association Ltd v Mainline Constructions Pty Ltd (in liq) (1978) 141 CLR 335; [1978] HCA 45 (Mainline Constructions) at 353 per Gibbs ACJ, as his Honour then was). It is said that the adopted facts are that the Paying Participants intended to represent that the money was advanced in payment of the false invoices. It is said that, in so doing, it was necessary that the money not be kept in a trust account separate from Bluemine's general assets (and the evidence is that the money was paid into Bluemine's general account). The plaintiffs emphasise that there is no evidence of any declaration of trust; and they say nor could there be as that would defeat the purpose of the false invoices enabling the Paying Participants to claim a tax deduction.
10. The plaintiffs maintain that, for the Scheme to work, it was necessary to create the impression to third parties that Bluemine was beneficially entitled to the money; otherwise there was no need to issue the invoices. They say that the fact that Bluemine agreed subsequently (or, I would add, may even have intended at the outset) to pay an equivalent amount of money (less commission) to the Receiving Participants merely created a common law contractual obligation, not a fiduciary obligation in equity arising from an express trust over specific funds. It is said that the arrangement was no different from a bank account where the bank agrees, on receipt of funds, to pay an equivalent amount to nominated persons; namely that the funds are not held by the bank on trust, but on the basis of simple contract.
11. It is said by the plaintiffs that, had the account into which the money was paid been in overdraft, that money would have been credited to the bank's account and not the account holders; the bank as a creditor would have an entitlement to the funds in the plaintiffs' bank account; and the defendant would have no claim against the bank for recoupment.
12. The plaintiffs contend that the fact that the money was paid into Bluemine's revenue in its general account (and the intention of the Paying Participant and Bluemine) to demonstrate that Bluemine was the beneficial owner of the money together militate against a finding that there was a "mutual intention that it should not become part of the assets of [Bluemine], but should be used exclusively for a specific purpose" such that "if the purpose fails the money will be repaid, and the arrangement will give rise to a relationship of a fiduciary character, or trust" (citing Mainline Constructions at 353 per Gibbs ACJ).
13. As to the certainty required in relation to the object of the trust, it is noted that none of the defendants led evidence of the precise beneficiaries at the time the trust was said to have been created. It is said that it is therefore not open to identify those beneficiaries by inference (citing Ferrcom); rather, that the objects must be defined with sufficient precision to satisfy "list certainty"; and that it is not sufficient for the defendants to rely on some general class of beneficiaries to satisfy the requirement of certainty of object.
14. The plaintiffs note that the only relevant evidence in the present case is that an equivalent sum of money was paid to the Receiving Participants who were related entities of the Paying Participants. It is said that this is evidence of what happened (with the benefit of hindsight) but that it is not evidence of the settlor's intention at the time of the creation of the putative trust. It is noted that certainty of object would require that, at the time of distribution, "the provisions of the trust ensure that upon that date the beneficiaries can be ascertained with certainty" (citing Kinsela v Caldwell (1975) 132 CLR 458; [1975] HCA 10 at 461 per McTiernan, Stephen and Mason JJ). It is further noted that (unlike the position in Quistclose and George v Webb), the defendants led no evidence of who, specifically, had the beneficial entitlement to the money in question.
15. The plaintiffs point out that if a purported trust fails for uncertainty of intention and for uncertainty of object, then the person to whom the property has been given will retain it unfettered by any trust (Jacobs' Law of Trusts in Australia at [5-30]).

Illegality of trust

1. As to the third of those matters, the plaintiffs point to the authority for the proposition that, where the creation or execution of the trust may be associated with, or in furtherance of, a purpose rendered illegal by statute, then as a matter of public policy the trust will not be enforced (citing Nelson v Nelson; Jacobs' Law of Trusts in Australia at [902]).
2. The plaintiffs argue that implicit in the AKA Parties' submission (at [362]) that the plaintiffs have not established intention or knowledge on the part of the AKA Parties that either Bluemine or the Commissioner would be defrauded in the way alleged, is an acknowledgement that, if the plaintiffs have proved knowledge of the AKA parties, then the spectre of fraud and illegality is not merely a preliminary matter.
3. As to the AKA Parties' knowledge, including that of the Receiving Participants, the plaintiffs say that the basis of the defendants' trust case effectively requires them to adopt the allegations against them of fraud. In addition, the plaintiffs say that further indicia of knowledge of fraud are to be found at [368] and [369] of the AKA Parties' submissions (where the AKA Parties contend that Bluemine seeks to rely on its own fraudulent conduct to recover money from innocent third parties, in that they are said to be without requisite knowledge, and that the loss should fall where it lies). The plaintiffs say that that proposition should be rejected; and that if, as the AKA Parties contend, Bluemine's conduct was fraudulent, then clearly the AKA Paying Entities were a party to that fraud in paying invoices that they knew to be false. It is said that it is implausible then to contend that the third parties from whom it is sought to recover compensation for the money paid away (i.e., the AKA Receiving Entities) had no knowledge of that fraudulent conduct. Further, the plaintiffs point to the fact that all of the AKA Entities were controlled by Michael and Andre Abou-Antoun (T 680.10-12) and, therefore, they say that knowledge of one of them was knowledge of all of them.
4. The plaintiffs say that those volunteers were "far from innocent and ignorant". It is noted that (at [421] of their submissions) the AKA Parties contend that one reason the third parties were entitled to the alleged uncommercial payment was that the AKA Receiving Entities were part of the same corporate group as the AKA Paying Entities and that the funds could have been paid to them directly.
5. It is noted that, at the same time, the AKA Parties contend that, if the money in question was paid to the AKA Receiving Participants as alleged, they are protected by a trust.
6. The plaintiffs make the following further points in answer the AKA Parties' submissions on this issue (at [367]-[369]). First, that Bluemine does not seek to rely on its own fraudulent conduct; rather, that the fraud was perpetrated against it by its directors acting in breach of fiduciary duty. Second, that Bluemine can have no knowledge of any fraud perpetrated against it unless it received a benefit from the fraud. Third, that any benefit received by Bluemine in the nature of fees was transitory and insufficient to impute Bluemine with the requisite knowledge. The plaintiffs submit that, looking at the transaction as a whole, indicates that all of Bluemine's assets were to be dissipated before it was wound up. (I agree.)
7. As to the AKA Parties' submissions (that Bluemine "earned" fees, and that if it had not paid the money to the Receiving Participants it would have needed to return that money and would not have received a fee at [376]; [379(b)]), the plaintiffs say that their case is that the Primary Conspirators earned fees for the transactions; and that there was no retention of benefit by the Insolvent Companies, which were liquidated shortly after the transactions in question. It is said that an essential point of the Scheme from the outset was to divest the plaintiffs of funds. It is said that, contrary to the AKA Parties' contention, the plaintiffs did not benefit from their directors' fraudulent conduct and therefore the knowledge of the fraudulent directors is not attributed to them (referring to Beach Petroleum at 574 per von Doussa J). It is noted that, where a fraudulent director embroils a company in the director's fraudulent conduct for the director's benefit, the director's state of mind is not to be attributed to the company in relation to those transactions (see Bilta).
8. The plaintiffs further say that illegality destroys the legal and equitable rights of a plaintiff, whereas the maxim of clean hands merely deprives a plaintiff of the right to equitable relief (citing Jacobs' Law of Trusts in Australia at [9-03]). They say that if the doctrine of illegality operates, there is no occasion to apply the maxim as to clean hands; equity in such cases simply follows the law.
9. The plaintiffs, drawing from several authorities, submit that the relevant issues in determining whether illegality of purpose will militate against equity recognising rights or providing remedies include: whether the sanction of refusing to enforce those rights is disproportionate; the seriousness of the unlawful conduct; the intention of the parties; how central the illegality is to the agreement itself; the consequences for the innocent party or third parties; and whether enforcing the agreement would frustrate any relevant statute (see REW08 Projects Pty Ltd v PNC Lifestyle Investments Pty Ltd (2017) 95 NSWLR 458; [2017] NSWCA 269 at [18], [25], [26] per Macfarlan JA and Byrnes at [115]; Holdcroft v Market Garden Produce Pty Ltd (2000) 2 Qd R 381; [2000] QCA 396)(Holdcroft).
10. In the present case it is said that, because the defendants must adopt the plaintiffs' allegations to support the basis of an express trust, the defendants cannot then approbate and reprobate by denying that they entered into the agreement with the objects that the plaintiffs have contended against them; or now say that the substance of the transaction did not corrupt and invalidate the whole agreement. It is said that the tax avoidance benefit sought to be obtained here was not collateral; it was the sole purpose of the transaction.
11. Reference is made in this context to Holdcroft, a case for specific performance of a contract apparently for the purposes of employment but which the court determined had been structured to avoid taxation on the sale of a business (at [17]ff per Thomas JA). The plaintiffs say that the approach in Holdcroft squarely applies to the defendants in the present case, namely that, the defendants' conduct revealed an arrangement to be performed in a particular and misleading way, for which the only reasonable explanation is that it was done for the purpose of defrauding the revenue and that revealed sufficient involvement in the illegal purpose to call for the withholding of the court's assistance.
12. The plaintiffs say that if the Five Propositions identified in the AKA Parties' submissions are accepted, then the defendants cannot now say that the trust alleged was not for an illegal purpose of the kind considered in Holdcroft (citing also Civil and Allied Technical Construction Pty Ltd v A1 Quality Concrete Tanks Pty Ltd [2018] VSCA 157 at [119]ff). It is said that, on the facts necessarily adopted by the defendants in the present case: (i) the illegal purpose goes to the substance of the transaction said to a constitute a trust; and (ii) recognition of the trust would require this court to uphold seriously anti-social and gravely reprehensible conduct; and as Kirby J said in Fitzgerald v FJ Leonhardt Pty Ltd (1997) 189 CLR 215; [1997] HCA 17 at [88], would be an afront to the public conscience to involve the court in upholding it; and (iii) the defendants' conduct is far from being properly characterised as regulatory non-compliance.

Unclean Hands - trusts

1. In the event that it is determined that there was a trust (either Quistclose or resulting), the plaintiffs say that the defendants' position is not advanced because of their unclean hands by reason of the authorities and principles referred to above. It is said that the defendants' misconduct is the inextricable substratum of the trust(s) for which the defendants seek this court's assistance in declaring their beneficial interests in those trusts. The plaintiffs here repeat the principles relied on in Kation v Lamru at [9] noting that the maxim of unclean hands equally applies to all persons seeking equity's assistance including an equitable defence (citing Bullhead).
2. The plaintiffs say that the principles regarding illegality and clean hands as applicable to express trusts, equally apply to resulting trusts. They say that the proposition that a resulting trust can arise where an express trust for an illegal purpose fails is uncontroversial but that the settlor will not be able to recover the trust property unless the illegal purpose is not carried into execution or to protect a fraud (Jacobs' Law of Trusts in Australia at [12-05], footnote 21).
3. The plaintiffs say, first, that this is not a case where a trust is sought to be enforced. It is noted that the transactions which the defendants characterise as being in performance of a trust are executed; and say that any putative trust has been performed. Reference is made to the statement in the AKA Parties' submissions (at [360]) that "the company has long since distributed its AKA Trust assets in accordance with the terms of the AKA Trust". It is said that the purported trust did not fail; rather, money was paid according to the terms of the arrangement contended for by the defendants.
4. It is said that, by reason of s 588FE that payment was uncommercial, and the recipient beneficiaries of the payment are required by statute to compensate the plaintiffs. The plaintiffs thus say that it is not a question of the trust not being performed but, rather, having been performed, where the consequence of the payments to the beneficiaries entitles the plaintiffs to statutory compensation under s 588FF for those payments.
5. The plaintiffs say that the trust was performed according to its terms with the object of defrauding the revenue; and that, having been exposed, the defendants now seek to invoke equity's assistance in declaring that the funds were impressed with a fiduciary obligation in favour of a beneficiary as a reason for the court to find that the transaction was not uncommercial in terms of s 588F. In essence, it is said that the defendants are asking the court to find that fraud is a commercial purpose and they are not permitted to do that.
6. The plaintiffs also say that the statutory compensation is not repayment of the same money; it is compensation for payment of the money (or an uncommercial transaction). Again, it is said that the arrangement has not failed; that the purpose for which the money was advanced to the plaintiff was fulfilled, namely that equivalent sums less fees be paid to the recipients. It is said that the fact that implementation of the Scheme, which the defendants now adopt in support of the trust argument, had statutory consequences for an uncommercial payment is "bad planning" but it does not mean the arrangement failed.
7. The plaintiffs maintain that the equitable obligation that attached to the plaintiffs has been fulfilled; and that no further equitable obligation (in the form of a resulting trust) can attach to the plaintiffs because the defendants did not obtain an ancillary benefit of the Scheme. The plaintiffs say that the fact that unintended legal consequences arise from fulfillment of the purpose does not mean that the purpose was not fulfilled. They say that the fact that the ultimate intended benefit was not achieved does not mean the purpose for which the money was paid was not satisfied. It is submitted (and I interpose to note that I agree) that this is entirely different from the situation in each of George v Webb and Quistclose where the purpose for which the money was advanced was not carried into effect. (The plaintiffs note that the defendants in this case do not say that the intention in creating the arrangement was to defraud the Commonwealth and that, if that failed, then the money paid pursuant to the Scheme should be repaid.)
8. The plaintiffs say that the admission by the AKA Parties' at [360] (that if findings consistent with the Five Propositions are made then the company has long since distributed its AKA Trust assets in accordance with the terms of the AKA Trust), shows that the purpose of the arrangement was tax evasion and that the defendants admit that funds were distributed in accordance with its terms. The plaintiffs say that the illegal purpose was obtaining input tax credits to which the parties were not entitled. They say that if an equivalent amount of money had not been paid to a related entity, the defendants would not have obtained advantage by deception for payment of false invoices, because the defendants would have been out of pocket. It is said that an advantage could not be obtained from the deception without the second leg of the transaction, being payment in accordance with the terms of the trust.
9. Thus, the plaintiffs say that on any view the illegal purpose has been executed and a declaration of resulting trust would protect the fraud in that illegal purpose. The plaintiffs submit that the court would not provide the defendants with that assistance (for the reason set out in Meyers v Casey at 124 per Isaacs J).
10. Finally, on this issue, it is said by the plaintiffs that if there was a trust, and it did not fail, then the issue of indemnification arises. It is said that any defendant claiming an entitlement to the money in consequence of an equitable estate which it seeks to enforce must do equity to seek equity in raising their equitable entitlements or rights; and that this entails the beneficiaries indemnifying the trustee from any loss suffered in its performance of the terms of the trust.
11. The plaintiffs say that if it is accepted that a Quistclose trust was constituted, then the trustee, as with any express trust, is entitled to be indemnified from the trust assets for liabilties incurred in the authorised conduct of the trust (Jacobs' Law of Trusts in Australia at [21-04] citing Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360 (Octavo Investments) at 371 per Stephen, Mason, Aickin and Wilson JJ). It is said that under the terms of the trust propounded by the defendants, the trustee in carrying out the terms of the trust has received an assessment for income tax on the money received from the Paying Participants, and in consequence of the money paid out, is bereft of funds with which to pay that assessment. Thus, it is said that, on the facts as they stand, they have incurred a loss in complying with the terms of the trust; and that there is no reason not to indemnify the plaintiffs as trustees.
12. Reference is made to the entitlement, where a trustee is entitled to an indemnity out of the trust for debts or other liabilities properly incurred in the administration of the trust, of the trustees creditors to be subrogated to those rights and to claim against the trust estate to the extent of the trustee's indemnity (see Re Staff Benefits Pty Ltd (1979) 1 NSWLR 207). It is noted that distributions by a trustee to beneficiaries prior to a winding up may constitute voidable preferences as against any liquidator subsequently appointed (see Octavo Investments at 369).
13. The plaintiffs say that, if the defendants are able to succeed in their elaborate argument establishing a trust, it is the first act of the Bluemine qua trustee that the Commissioner determined was a receipt of taxable income and subsequently issued an assessment for which the trustee is now liable. Further, it is said that if it is accepted that the transaction looked at as a whole constituted a trust, then the defendants' submissions to the effect that Bluemine had no beneficial entitlement to the money advanced are fundamentally wrong.
14. The plaintiffs note that equity saves a trustee from the obligations attaching to the performance of the trust which is the price the beneficiaries pay for the services of the trustee (citing Chief Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226; [1998] HCA 4 (Buckle) at [51] per Brennan CJ, Toohey, Gaudron, McHugh and Gummow JJ).
15. It is noted that s 59(4) of the Trustee Act provides for the trustees' reimbursement out of trust property for expenses incurred in or about the execution of the trust; and that the right goes beyond statute by making the right of reimbursement and indemnity a first charge of the trust property and, in some cases, extends to a personal right against the beneficiary. The plaintiffs point to Custom Credit Corp Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42, where it was held that the interest of the trustee in the trust assets which arises from the equitable lien is a proprietary chose in action.
16. The plaintiffs say that if the trustee's actions are authorised by the trust instrument, prima facie a right of indemnity does arise (citing RWG Management Ltd v Commissioner for Corporate Affairs [1985] VR 385 at 396-397 per Brooking J). They refer to Jacobs' Law of Trusts in Australia at [21-04] where it is noted that, even where the trust instrument does not authorise the activities, the right to indemnity may be exercised against the trust assets if all cestuis que trust authorise the trustee to conduct those activities and that the right to indemnity subsists against those cestui que trust (Vacuum Oil Co Pty Ltd v Wiltshire (1945) 72 CLR 319; [1945] HCA 37 at 325 per Latham CJ). It is also noted that a sole beneficiary who is sui juris is personally bound to indemnify a trustee for liabilities properly incurred; the obligation of the beneficiary rests upon the principle that the cestui que trust who gets all the benefit of the property should bear its burden (citing Balkin v Peck (1998) 43 NSWLR 706).
17. It is noted that, as stated in Jacobs' Law of Trusts in Australia at [21-05], the trustee is entitled in equity to an order for indemnity as soon as the liability to the creditor has crystallised and the usual order will be for the beneficiary to pay the creditor or otherwise to procure the release or discharge of the trustee. The plaintiffs argue that if the expense in question was properly incurred, then this is inconsistent with an argument that Bluemine would be unjustly enriched obtaining the windfall of compensation for funds paid away to which it was never beneficially entitled; and that, as set out in Buckle, it always had a preferred beneficial interest in the trust fund.
18. The plaintiffs say that the pivotal issue (if there was a trust and if the rights under it were not destroyed by illegality and if the defendants' unclean hands do not preclude them invoking equity's assistance), is whether the plaintiffs' tax liabilities are expenses properly and reasonably incurred in execution of the trust. The plaintiffs say that the answer to this is that, had it not been for the defendants' actions in paying false invoices for the purpose of representing that they had incurred a legitimate expense, Bluemine would not have been taxed. They note that the enquiry is as to whether the loss would have happened if there had been no breach (Re Dawson).
19. Insofar as those payments by the defendants are now said to constitute settlement of a trust; and the payments out to the Receiving Participants are said to be in accordance with the terms of that trust, the plaintiffs say that, looking at the transactions as a whole (as contended for by the defendants), there were no other transactions or functions for Bluemine to perform.
20. It is said that if, contrary to the plaintiffs' contentions, there was a trust, when the defendants advanced the money to Bluemine on terms of trust now propounded by the defendants, and that receipt was by definition the act of a trustee. It is said that, if that was not the case, then no fiduciary obligation could have attached to the money and there would be no trust. It is said that the first act of Bluemine qua trustee in accepting the money advanced was indivisible from carrying out the terms of the trust; and that it is therefore not possible to contend (as the AKA Parties do at [360]), that the debts owed by Bluemine to the Commissioner are not debts incurred in the course of the business of the AKA Trust.
21. The plaintiffs say that, if there was a trust, the only documents evidencing the trust were false invoices, for which the defendants claimed input tax credits to which they were not entitled; the Commissioner subsequently assessed the amount settled on the trustee as income; and the trustee's consequent income tax liability was inextricably linked to the settlor advancing the money to the trustee for the purposes of the trust. Thus, it is said on this hypothesis, that the trustee (Bluemine) is entitled to be indemnified for liabilities incurred in performing its role as a trustee.

Plaintiffs' response to Borg Parties - Trust submissions

1. In response to the Borg Parties' trust submissions (at [342]; [2204] of the judgment), the plaintiffs rely on their submissions in response to the AKA Parties' trust submissions but, in addition, the plaintiffs point out that the evidence from Tanya Borg was that the RCG CBD transactions were intended to be at arm's length and that such evidence is entirely contrary to an intention to create a trust. It is noted that there was no evidence that the funds advanced to RCG CBD were paid into a separate account to be held on trust; rather, the money was paid into RCG CBD's revenue account, without restriction.
2. The plaintiffs say that the fact that Borg Family brought into existence RCTIs in respect of $185,000 paid to RCG CBD contradicts any supposed intention to create a trust and militates against any all-embracing trust contention.
3. It is said that there never was a transaction (or arrangement) in the terms as alleged in Borg Parties' defence; and that there was no "failure" of transaction or arrangement, as alleged or otherwise. The plaintiffs say that they are not "ad idem" that the arrangement failed; that they have never agreed to any circumstance conformably with that proposition.
4. As to the Borg Parties' submission (at [342]) that RCG CBD has no basis to claim that it had any legal or equitable interest in the moneys that Borg Family paid it, the plaintiffs say that, as a matter of law, this is incorrect. For the same reason as the position that the plaintiffs say pertains in relation to Bluemine, it is said that the funds in RCG CBD's bank account were RCG CBD's assets; and that RCG CBD has proprietorship of those funds in law and in equity against the whole world unless someone else can establish better title to them.
5. The plaintiffs also cavil with the contention that Tanya Borg did not need to give any evidence about the failure of the arrangement with RCG CBD "because that issue was never in dispute". The plaintiffs point out that the amended defence filed by the Borg Parties on 17 February 2020 (at [25(g)(ii)]) alleged that if the Proposed Transaction did not proceed or failed, then the second plaintiff (i.e., the Insolvent Company in that proceeding) would hold the moneys transferred by the Borg Family payment on trust for Borg Family and would return those moneys to Borg Family (which it is alleged it did). The plaintiffs say that that matter was clearly at issue between the parties (and they repeat their closing submissions at [1470]-[1494] in that regard). It is submitted that those matters establish the knowing assistance liability elements of the cause of action, and prevent the attempts in the Borg Parties' submissions to equate the position of Michael Borg (on the evidence) with that of Gary Binetter in BCI Finances v Binetter.
6. The plaintiffs say that Michael Borg's participation is to be inferred "to the extent that it goes without saying" and that, as the directing mind and will of Borg Civil and acting in that capacity at all material times, Michael Borg had second limb Barnes v Addy knowledge.

Finding - Trust

1. It is appropriate first to deal with the AKA Parties' trust argument (and the corresponding argument put by the Borg Parties) as this colours their submissions in relation to the Pt 5.7B Claims. I note that the AKA Parties submit that Bluemine was constituted as a trustee (and not Earth Civil), so this submission is relevant to the LAM Haulage, MAL Land and The Great Brothers Payments.
2. A Quistclose trust is an express trust that arises where money has been paid to another for a specific purpose, such that it can be said that there is a trust for that purpose, and so, if that purpose is subsequently not fulfilled, a trust may be impressed upon those funds in favour of the payer (see Quistclose; George v Webb at [191]).
3. In Quistclose, Lord Wilberforce said (at 580-582): There is surely no difficulty in recognising the co-existence in one transaction of legal and equitable rights and remedies: when the money is advanced, the lender acquires an equitable right to see that it is applied for the primary designated purpose (see Re Rogers where both Lindley and Kay LJJ explicitly recognised this): when the purpose has been carried out (ie, the debt paid) the lender has his remedy against the borrower in debt: if the primary purpose cannot be carried out, the question arises if a secondary purpose (ie, repayment to the lender) has been agreed, expressly or by implication: if it has, the remedies of equity may be invoked to give effect to it, if it has not (and the money is intended to fall within the general fund of the debtor's assets) then there is the appropriate remedy for recovery of a loan. I can appreciate no reason why the flexible interplay of law and equity cannot let in these practical arrangements, and other variations if desired: it would be to the discredit of both systems if they could not. In the present case the intention to create a secondary trust for the benefit of the lenders, to arise if the primary trust, to pay the dividend, could not be carried out, is clear and I can find no reason why the law should not give effect to it. (emphasis added)
4. It is convenient in this context simply to refer to what was said in George v Webb, as to the creation of a Quistclose trust, at [211]-[216]. I address those requirements first in relation to the AKA Paying Entities.

Mutual intention

1. In the present case, it is necessary that there was a mutual intention on the part of the AKA Paying Entities (AKA Civil and AKA NSW) and Bluemine as to how the funds were to be exclusively used. The AKA Parties submit that the funds transferred to Bluemine were to be exclusively used for the benefit of the AKA Receiving Entities to purchase property; or alternatively that it is sufficient for the Court to find that Bluemine was constituted as trustee for the purposes of paying out the funds as directed by the AKA Parties.
2. Andre Abou-Antoun gave evidence as to the agreement between the AKA Parties and Bluemine, see relevantly as follows (T 660ff): Q. What happened, will you agree, was that Bluemine issued invoices to AKA Civil and AKA NSW and those two companies paid money to Bluemine, first of all that happened, didn't it? A. Yes. Q. And then in relation to that payment Bluemine would make a payment to one of the AKA related companies, MAL land group, Great [sic] Brothers, LAM Haulage, one of those? A. That's correct. Q. And in your mind what was happening at that time, in accordance with the arrangement that Mr Abboud and Mr Khalil had put to you that you've described earlier on was that that money that was being paid away by AKA Civil and AKA NSW was coming back into the group, is that right? A. Yes. Q. And you understood that the system, that the arrangement in operation would always result in the money coming back? A. Yes. Q. And do you remember that you told the tax officers [sic] that the money always came back? A. Yes. Q. And that was a truthful statement to the tax officers [sic], wasn't it-- A. Yes. Q --the money always came back from Bluemine? A. With Bluemine, yes. Q. And it came back to another AKA entity, that is, other than-- A. Well it came back to an entity we were purchasing property in. I'm not sure if you recall an AKA entity because AKA is basically a demolition and excavation business. Wherever the company that we were purchasing properties in where different entity names and in some instance a common director, which was my brother Michael Abou-Antoun. Q. So, it came back, we've just used that expression, into an AKA related company? A. It was transferred to, yeah, the property where we want to purchase the land. Q. Well, it came back to a number of companies, didn't it, LAM land group, Great [sic] Brothers, LAM Haulage? A. Which are all three - two of those three companies that you listed are the properties that we purchased with our money, and LAM Haulage is also a related AKA - sorry related entity, it holds the assets that service and provide trucks and machines to AKA. … Q. Well first of all if it was an invoice from Bluemine you understood it would be paid to Bluemine? A. Yes. We'd make a payment to Bluemine based on the invoice. Q. Yes. And then later as you've told us the money would come back into an AKA entity? A Into the property Mal yeah. … Q. We'll look at some transactions in a little while and you might remember that they went to more than Mal. They went to Great Brothers, they wentto Lam Haulage, they went to don't you remember that? A. Yes we spoke about that yes. Q. What I want to ask you you see is did you observe with payments that were coming back from Bluemine by whatever route that when the moneys came back that approximately 2.5% it was 2.5% less than what had been paid in. Did you observe that? A. Yes. (Emphasis added)
3. Further to this, Andre Abou-Antoun went on to say in response to my attempt to clarify whether there was any agreement between Bluemine and AKA Civil as to the provision of services for AKA Civil or for any other matter, as follows (see T 672-673): A. There was the - there was the - no, there was only the understanding that we wanted to purchase the properties that we eventually did with Banq and Bluemine was the company that they used to facilitate purchase of the properties from the AKA or entities of AKA that purchased the properties. FAULKNER Q. Isn't it correct that there was no arrangement - there was no agreement or arrangement between the AKA parties and Bluemine of the kind that you've just described relating to property, was there? A. There was an agreement in regards to us understanding that we would purchase the property and that Bluemine was used as a facility to purchase the property. Q. You agree, don't you, that there was no contract in place that governed the arrangements between Bluemine and AKA Civil? A. I don't think there was a contract, no. 10 Q. In fact, the only arrangement between you was just how to deal with the invoices, wasn't it? A. That they would invoices, and we would pay them. Q. Yes. A. And then the payment we made to Bluemine purchased the properties on our behalf of our entities. Q. I'm suggesting to you that the-- A. AKA would purchase the properties and we would transfer the money to Bluemine and Bluemine will transfer the money back to the AKA related entities. (emphasis added)
4. As noted earlier, I place weight on Andre Abou-Antoun's following evidence in his ATO interview, where he made clear that he was doing his best to give his recollection or memory of events at the time (see Ex O, 31 May 2018 interview at 60): During the - and I'm answering this to the best of my memory on what I remember back then - during the course of - of the period of time they told us this company can also issue you with an inflated invoice, we could pay the invoice and then the money would come back to one of our companies and there would be a tax benefit. I didn't understand how - what - what the tax benefit was or whatever. I trusted what they told me at that point and I didn't think it was a big deal at all.
5. I have said earlier that I am not particularly persuaded by Andre Abou-Antoun's evidence that the funds were used to purchase property. While I note he referred in his ATO interview (Ex O) to a number of properties held by different companies in Parramatta and Saint Marys, for example, the AKA Parties did not adduce any documentary evidence of the kind one might expect (for example, certificates of title) and there is no evidence that those funds were indeed used for that specific purpose.
6. While I do find, in all of the circumstances, that the AKA Parties transferred the funds to Bluemine with a clear understanding that they would receive those funds back by payment to an AKA Receiving Entity, and that Bluemine had a similar understanding (as I doubt it would have distributed those funds in such a short period for no consideration bar the apparent Fee Amount without that understanding), I am not persuaded that a mutual intention was held between the AKA Paying Entities and Bluemine that the funds paid in were to be held on trust for the benefit of the AKA Receiving Entites. This is not a case where funds were exclusively distributed from company A to company B for prepayment of a specific service or asset. Although formal words are not necessary for the creation of a trust, there is no evidence of any language used that indicates that Bluemine was never to gain a beneficial interest in the funds or that there was an agreement that the funds were to be used "exclusively" in a particular way (Re Australian Elizabethan Theatre Trust (1991) 102 ALR 681 (Elizabethan Theatre Trust) at 695 per Gummow J, sitting in the Federal Court of Australia). I note, in particular, that the funds were kept in Bluemine's general account (not placed in a separate trust account) a fact which tends against a finding of an intention to create a trust (Elizabethan Theatre Trust at 689). This is such, as it indicates that the funds were at Bluemine's free disposal. Ultimately, the fact of payment from the AKA Paying Entities to Bluemine and then to the AKA Receiving Entities, alongside an understanding that the payment on (minus a fee) would indeed occur is insufficient to ground a finding of an intention (let alone mutual intention) to create a trust. In that regard, the relationship between the AKA Paying Entities and Bluemine (given that the invoices Bluemine distributed were not for services rendered) is more readily characterised as one of creditor and debtor.

Certainty of object and subject

1. It is necessary that the object of the trust (i.e. the beneficiary) is certain on the date of distribution (see Kinsela v Caldwell at 461). Relevantly, Andre Abou-Antoun gave the following evidence of how it was determined who would receive the funds (at T 674): Q. Do you accept that payments were made to Great Brothers? Did you regard it as money coming back? A. Yes. Q. What I want to ask you is who decided whether the money or part of it that was paid in that there would be a payment out to Great Brothers? A. It would be a conversation that would have been had between ourselves and Banq Accountants, probably Fred or Peter, where the money needed to go and-- Q. And did you ever suggest where the money needed to go? A. Not to my memory. I could have though, but-- Q. Did you care which entity it went to in the group? A. Of course, because the entity that the money was required to go to was the entity that was required to purchase land, so it did matter where the money went, and it only went to two or three different companies that we were purchasing at the time. Sorry, not companies, I meant land that we were purchasing at the time. Q. Yes, but you didn't really care which entity it went to, so long as you got the money back, isn't that right? A. The obvious answer to that is of course, the money has to come back to our entities, but it did matter where the money went because we were purchasing property. When you're purchasing property timing is of the essence.
2. Although it does not now fall to be considered whether there was certainty of object, given the above evidence and the fact of payment to the three companies (MAL Land, LAM Haulage and The Great Brothers), I would have found that there was certainty of object. Moreover, it does not appear that certainty of subject was in dispute (the plaintiffs not having made any submissions on this point).

Borg Parties alleged trust

1. As to the position in relation to the Borg Parties alleged trust, I have reached similar conclusions. I am not persuaded that the understanding that moneys would come back to the Borg Parties establishes an intention to create a trust over those moneys - it simply indicates an understanding that the purposes of the transaction were to be achieved by the making of the payments in the way that had been structured by the advisers at Banq. In any event, I have considered for other reasons that the claims made against the Borg Parties are not made good.

Illegality

1. Had I found that a Quistclose trust was created (as the AKA Parties contend), I would have held that it failed due to illegality. I am satisfied that the evidence establishes that, if such a trust was created, then it was created with the purpose of avoiding tax obligations and that this was central to the purpose of the trust (if not, then, as the AKA Parties have noted in their submissions in other contexts, the funds could have simply been directly transferred between the AKA entities without the need to involve Bluemine). I find, similarly to the finding in Holdcroft (see at [30]), that if the AKA trust was indeed created, then it was have been "a vehicle, not of lawful tax minimisation, but of deception and actual tax evasion". The evidence in the present case leads to this conclusion and does not provide an alternative interpretation of the purpose of such a trust. I would have therefore found, as a matter of public policy, that the trust must fail, as upholding it would involve the court in serious illegal conduct with consequences on other citizens and institutions. In those circumstances it is not necessary to consider the submissions based on unclean hands.

Insolvency

1. The allegation of insolvency is made good.
2. Pursuant to s 286 of the Corporations Act, a company is obliged to keep written financial records that correctly record and explain its transactions and financial position and performance; and would enable true and fair financial statements to be prepared and audited and to retain those financial records for seven years after the transactions covered by the records are completed. The purpose of this requirement is to prevent a company and its officers from "flying blind" as to the company's true financial position at any time (Austin & Black at [2M.286] citing Manning v Cory [1974] WAR 60; (1974) CLC 40-140; Stratti Ocean & Earthworks Pty Ltd v Deputy Commissioner of Taxation [2003] NSWSC 509 at [8] per Palmer J). The authors there note that this section is predicated on the assumption that the records kept under it will be accurate (citing Kenna & Brown Pty Ltd v Kenna (1999) 32 ACSR 430; [1999] NSWSC 533 at [53] per Bergin J, as her Honour then was).
3. "Financial records" are defined in s 9 to include: invoices, receipts, orders for the payment of money, bills of exchange, cheques, promissory notes and vouchers; documents of prime entry; and working papers and other documents needed to explain the methods by which financial statements are made up; and adjustments to be made in preparing financial statements. It has been held that the records required to be kept under s 286 include a balance sheet, profit and loss statement and a cash flow statement (ASIC v ABC Fund Managers at [44]). The authors of Austin & Black further note that the keeping of a general ledger appears to be one of the "minimum requirements" of this section (referring to Van Reesema v Flavel (1992) 7 ACSR 225; 10 ACLC 291 (Van Reesema v Flavel) at 295; Love v ASC (2000) 36 ACSR 363; [2000] WASCA 404 at [59] per Owen J), and that this requirement is not met by keeping the source material from which a set of books may be written up (again citing Van Reesema v Flavel and ASIC v ABC Fund Managers). The authors go on to say that: It appears that monthly management accounts of a company are not accounting records required to be kept under this section or its predecessors: Duke Group Pty Ltd (in liq) v Pilmer (1994) 63 SASR 364; 123 FLR 210; 15 ACSR 255; BC9400878 at 263. On the other hand, books, wage records and other documents prepared by an accountant were held to be accounting records required to be kept under a predecessor of this section in Caratti v R (2000) 22 WAR 527; 45 ATR 305; [2000] WASCA 279; BC200005748; see also Linfox Transport (Aust) Pty Ltd v Arthur Yates & Co Ltd (2003) 47 ACSR 261; [2003] NSWSC 876; BC200305676; Australian Securities and Investments Commission v Rich (2005) 216 ALR 320; 53 ACSR 752; [2005] NSWSC 417; BC200502844 at [284]ff. The concept of "financial records" does not extend to underlying contracts and transaction documentation, although the effect of those contracts and transactions should be reflected in company's financial records so that they are appropriately accounted for: Boulos v Carter, Re Tarbs World TV Australia Pty Ltd (2005) 220 ALR 572; 54 ACSR 827; [2005] NSWSC 891; BC200506576. [emphasis added]
4. The complaint of the liquidator is that the Insolvent Companies did not produce financial documents or records of the kind that he would expect to have been kept in relation to the impugned transactions. The absence of such documents gives rise to the presumption of insolvency at the relevant time. In Love v ASIC, it was said that failure to record loan transactions and to carry out proper account reconciliations provided sufficient evidence to establish contravention of the section.
5. In the present case, I am satisfied on the liquidator's evidence that each of Earth Civil, Bluemine and RCG CBD was in breach of s 286 of the Corporations Act, in that the minimal financial records provided to the liquidator were clearly deficient and would not enable the production of true and fair financial reports; I find that the failure to keep records with regard to each company was not merely minor or technical but substantial (s 588E(5)); and thus, I find that the presumption of insolvency arises for each of Earth Civil, Bluemine and RCG CBD pursuant to s 588E(4). I also find, given the apparent absence of the required records throughout their corporate life, that each of the companies has been insolvent from incorporation. I note that no attempt was made to rebut the presumption of insolvency - indeed the companies were placed into voluntary winding up on the basis of insolvency.

Uncommercial transactions

1. Pursuant to s 588FB(1), a transaction will be an uncommercial transaction of the company if it may be expected that a reasonable person in the company's circumstances would not have entered into the transaction having regard to the benefits and disadvantages to the company of entering into the transaction, the respective benefits to other parties to the transaction of entering into it, and any other relevant matter.
2. An uncommercial transaction which is an insolvent transaction is voidable if it is entered into during the two years ending on the relation-back day (s 588FE(3)) or, if a related entity of the company was party to the transaction, it is voidable if it was entered into within four years ending on the relation-back day (s 588FE(4)). An insolvent transaction entered by a company with a purpose of defeating, delaying or interfering with the rights of any or all of its creditors on a winding up can be set aside within 10 years ending of the relation-back day (s 588FE(5)).

Earth Civil Payments

1. The Earth Civil Payments are a collection of payments totalling $965,000 from 27 September 2012 to 28 May 2013 from Earth Civil to either Andre Abou-Antoun or Michael Abou-Antoun and on one occasion, a cash withdrawal to an unknown recipient. The Earth Civil Payments are clearly transactions within the meaning of s 9 of the Corporations Act. The relation-back day is 28 June 2013, on which date the liquidator was appointed pursuant to a creditors' voluntary liquidation. Therefore, all of the Earth Civil Payments occurred within the two years prior to the relation-back day.
2. The AKA Parties emphasise that these payments out of Earth Civil were preceded by payments totalling $986,000 to Earth Civil from either AKA Civil or AKA NSW. In accordance with the authorities that the transaction must be looked at as a whole (and not broken down into discrete parts), I accept that the payments totalling $986,000 into Earth Civil should be taken into account when considering whether the transactions are uncommercial. Indeed, the evidence indicates that the Earth Civil would not have received the $986,000 if there was not an arrangement in place whereby the $965,500 would be paid out to Andre and Michael Abou-Antoun.
3. I find that no assets were acquired by Earth Civil or liabilities discharged by carrying out the Earth Civil Payments. I am not satisfied that some of these funds were used to pay wages. There is an absence of the kind of documentary evidence one would expect to see in relation to payment of employees wages. In saying that, on the other side of the transaction, it is the plaintiffs' case that Earth Civil did not provide any services or assets to the AKA companies in exchange for the $986,000.
4. On one view it might be said that Earth Civil received a benefit in the sum of the $21,000 difference between the payments in and the payments out. However, Earth Civil also incurred significant tax liabilities. The ultimate effect of the transaction was that the AKA entities paid the $986,000 into Bluemine in order to obtain tax benefits for the payment of invoices in respect of which no services were received in support of the invoices. Ultimately, the tax risk associated with entering into such large transactions outweighs the benefit received by Earth Civil such that a reasonable person in the company's circumstances would not have entered into the transaction.
5. In any event, in Crowe-Maxwell v Frost (2016) 91 NSWLR 414; [2016] NSWCA 46 (Crowe-Maxwell v Frost) at [89]-[90] Beazley P, as Her Excellency the was (with whom Macfarlan and Gleeson JJA agreed) noted the circumstances in which it may be inferred that a transaction is uncommercial, as follows: [89] A common thread in the uncommercial transaction cases is that, where there is limited evidence of the nature or purpose of a transaction, but the surrounding circumstances show it to be a departure from normal commercial practice and to raise inferences as to a lack of benefit to the company, detriment caused to the company, or benefit accruing to other parties, absent some commercial explanation, courts may infer the transaction was uncommercial, without requiring the liquidator to prove its precise uncommercial nature. The same may be said with respect to the identification of unreasonable director-related transactions. [90] In those limited circumstances, for practical purposes, a defendant may be said to bear an 'onus', sometimes referred to as an evidentiary onus, of raising some commercial explanation for the transaction. Thus, in Hawksford v Hawksford [2005] NSWSC 463; 191 FLR 173 Campbell J explained, at [54]: "The distinction between an onus of proof and an onus of adducing evidence is of particular relevance in the present situation. Where party A has the legal onus of proving a negative proposition, and relevant facts are peculiarly in the knowledge of party B or where party B has the greater means to produce evidence relating to those facts, then provided party A establishes sufficient evidence from which the negative proposition may be inferred, party B then comes under an evidential burden, or an onus of adducing evidence." (citations omitted)
6. Thus, given the limited evidence of the purpose of the transaction, that the circumstances of the transaction depart from normal commercial practice, and that no sufficient commercial explanation has been proferred by Andre Abou-Antoun or Michael Abou-Antoun, I can comfortably infer that the transaction was uncommercial (see Crowe-Maxwell v Frost at [89]-[90]).
7. Therefore, having regard to the above matters, I find that a reasonable person in the company's circumstances would not have entered into the Earth Civil Payments.
8. Additionally, the transaction is clearly an insolvent transaction within the meaning of s 588FC given that it was an uncommercial transaction entered into while Earth Civil was insolvent.
9. Thus, the Earth Civil Payments are voidable as an insolvent and uncommercial transaction of Earth Civil that was entered into during the two years ending on the relation-back day (s 588FE(4)). Consequently, an order may be made in relation to the Earth Civil Payments under s 588FF. I note that in his amended defence, Michael Abou-Antoun admits that the relevant payments were made to him, so there is no issue as to the monies withdrawn by Andre Abou-Antoun or those for which the cash withdrawer could not be identified. Therefore, I am satisfied that it is appropriate to make an order that Michael Abou-Antoun repay the monies paid to him by Earth Civil in the sum of $965,000.

LAM Haulage, MAL Land and the Great Brothers Payments

1. The LAM Haulage Payment was a payment of $261,105 from Bluemine to LAM Haulage on 21 January 2013. The MAL Land Payments consisted of three payments from 4 December 2012 to 23 April 2013 from Bluemine to MAL Land totalling $1,624,005. The Great Brothers Payments were three payments made from 12 December 2012 to 1 May 2013 from Bluemine to The Great Brothers totalling $1,541.105. All of these payments were made within the two years prior to the relation-back day of 26 August 2013, being the day on which the creditors passed a resolution for the winding up of Bluemine and the liquidator was appointed.
2. Similarly, the AKA Parties say, and I accept, that these payments must be considered in light of the payments made by AKA NSW and AKA Civil to Bluemine from 3 December 2012 to 1 May 2013 of $3,851,818.21.
3. According to Table 5.2 of the plaintiffs' submissions, approximately $100,110 of the $3,851,818.21 that was paid in by the AKA Paying Entities was not passed on to the AKA Receiving Entities. While the $100,110 was paid to other parties or the subject of unknown cash withdrawals, this sum must be viewed as a benefit to Bluemine as a result of the funds paid in by the AKA Paying Entities.
4. Again, there is no evidence of any assets received or debts paid off for the transfer of the funds to LAM Haulage, MAL Land and The Great Brothers and similarly, on the other hand, there is no evidence of Bluemine having provided anything in return for the funds paid in. I am again concerned by the absence of any commercial explanation for the transactions and so I find each of these transactions uncommercial for the reasons provided above with regards to the Earth Civil Payments (i.e., that a reasonable person in the circumstances of each company would not have entered into the transaction considering the tax liability likely to be incurred and the lack of benefit to the company in paying away the funds).
5. These transactions are similarly insolvent transactions as they are uncommercial transactions that were entered into while Bluemine was insolvent (s 588FC). Thus, these transactions are also voidable transactions for which orders may be made pursuant to s 588FF. As to these transactions, I am satisfied that an order should be made for each of the companies to repay the funds they received to Bluemine.

Sivasli Payments

1. The Sivasli Payments consist of four payments made by RCG CBD to Sivasli from December 2012 to May 2013 amounting to $201,000. The relation-back day is 28 June 2013, being the day on which the creditors passed a resolution for the winding up of RCG CBD and the appointment of the liquidator. Thus, the Sivasli Payments were entered into during the two year relation-back period.
2. The available evidence indicates that this payment was of no benefit to RCG CBD and that Sivasli received the $201,000 without providing any services or assets and there is nothing to indicate that this payment was to discharge a debt of any kind. I also note the lack of evidence as to the purpose of the Sivasli Payments and that the payment of this amount for seemingly no consideration is clearly outside of normal commercial practice. Thus, I find that a reasonable person in RCG CBD's circumstances would not have entered into the Sivasli Payments.
3. The Sivasli Payments are insolvent transactions as they are uncommercial transactions that were entered into while RCG CBD was insolvent. Thus, these transactions are also voidable transactions for which orders may be made pursuant to s 588FF and I am satisfied that an order should be made for the repayment by Sivasli of the $201,000 paid to it by RCG CBD.

Unreasonable director-related transaction

1. The plaintiffs also bring a claim against Michael Abou-Antoun that the Earth Civil Payments are an unreasonable director-related transaction (s 588FDA).
2. As above, the Earth Civil Payments took place from 27 September 2012 to 28 May 2013. On the ASIC record, Michael Abou-Antoun was the sole director and secretary of Earth Civil from 25 May 2011 until 1 July 2012 when he was replaced by Gino Cassaniti. Elsewhere in their submissions, the plaintiffs have submitted that Gino Cassaniti was the sole director and shareholder of Earth Civil (see, for example, [381(d)], [388]).
3. The plaintiffs submit that as Michael Abou-Antoun remained the sole signatory of Earth Civil's bank accounts and that he gave instructions to Andre Abou-Antoun to make cash withdrawals, he was a shadow director after 1 July 2012 (presumably until its winding up). As it has not been submitted or established that Andre Abou-Antoun was a director, the fact that Michael Abou-Antoun may have given him directions to make cash withdrawals is not relevant to a finding that he was a shadow director; such a finding would require evidence that Gino Cassaniti was accustomed to act on Michael Abou-Antoun's instruction.
4. The factors that are taken into account when determining whether a person is a de facto director have been summarised at [955] above. As to a finding that Michael Abou-Antoun was a de facto director from 1 July 2012, I consider the fact that Michael Abou-Antoun remained the sole signatory on Earth Civil's bank account after 1 July 2012 is telling of a continued role in the top management of the company. I also note that Michael Abou-Antoun continued to withdraw funds from that account and to instruct Andre Abou-Antoun to do so. However, Andre Abou-Antoun's evidence was that it was on Gino Cassaniti's instruction that money was transferred into Earth Civil and out of Earth Civil (T 679-680), and indeed, it is the plaintiffs' submission that it should be inferred that the payments were in accordance with Gino Cassaniti's advice (see at [394] of their closing submissions). I consider that the available evidence gives rise to an expectation that Michael Abou-Antoun would have given an explanation as to his role at Earth Civil after 1 July 2012 and that, therefore, an adverse inference can be drawn that any evidence adduced by Michael Abou-Antoun in that respect would not have assisted him. However, I do not think this goes any further than to a finding that Michael Abou-Antoun continued to have a role, perhaps even a substantial role, in Earth Civil. I have had some doubts as to whether being a signatory to a bank account (even the sole signatory) is enough to conclude that the financial decisions of the company (i.e., as to how funds were disbursed) rested with that person. However, I do think it significant that sole control of the bank account lay with Michael Abou-Antoun.
5. Ultimately, I have concluded that there is sufficient evidence that Michael Abou-Antoun had top-level management functions in Earth Civil. I find that Michael Abou-Antoun was a de facto director of Earth Civil.
6. As the Earth Civil Payments, also referred to as the Director Payments, were transactions made by Earth Civil to Michael Abou-Antoun, a de facto director of Earth Civil, and it may be expected that a reasonably person in the company's circumstances would not have entered into the transaction given there appears to have been no consideration for the transactions, I find that the unreasonable director-related transaction claim is made good.

Plaintiffs' submissions - moneys had and received

1. In the alternative, the plaintiffs bring a claim in unjust enrichment. As to the relevant principles, reference is made to Break Fast Investments Pty Ltd v Giannopoulos (no 5) [2011] NSWSC 1508 (Break Fast), where a personal claim in unjust enrichment was brought, the contention being that a remedy in unjust enrichment was available where the defendants had obtained a benefit at the expense of a plaintiff and a vitiating factor such as misappropriation is present (citing David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353; [1992] HCA 353 (David Securities) at 378-379; Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548 (Lipkin Gorman) at 572; Heperu Pty Ltd v Belle (2009) 76 NSWLR 230; [2009] NSWCA 252 (Heperu)). Black J accepted in Break Fast (at [34]) (by reference to Farah Constructions) that a claim in unjust enrichment should not be permitted in substitution for a claim for knowing receipt under the first limb of Barnes v Addy. However, his Honour did not consider that the decision in Farah Constructions excluded an unjust enrichment claim arising from payments made without authority (as distinct from payments made with authority but in breach of directors' or officers' duties). His Honour said that Break Fast's claim for unjust enrichment did not depend upon an allegation of breach of fiduciary duty but, rather, upon an allegation that the relevant payments were made without its authority.
2. Reliance is also placed by the plaintiffs on Fistar, where the Court of Appeal confirmed that a claim for restitution against a fiduciary, or a volunteer recipient from a fiduciary acting without authority, did not outflank liability under Barnes v Addy (see at [48]).
3. The plaintiffs say that where funds are transferred to a recipient from a company without the authority of the company, and without a contract, the liability to make restitution is strict (subject to defences), citing Great Investments v Warner at [60] and [68] per Jagot, Edelman and Moshinsky JJ.
4. The plaintiffs also rely on the proposition that the court will not allow its processes to be used by a litigant to enable it to benefit from its own illegal conduct (citing Nelson v Nelson at 606-614 per McHugh J; Carantinos v Magafas at [62] per Hodgson JA; and Smith v Jenkins (1970) 119 CLR 397; [1970] HCA 2 at 414 per Windeyer J.
5. The plaintiffs say that the evidence establishes that each transaction occurred without authority and that none of the defendants have sought to make out a positive case for authority. The plaintiffs submit that the Earth Civil, Sivasli, MAL Land, LAM Haulage and the Great Brothers Payments together with the payments by RCG CBD to Borg Family of $580,000, were all without authority, to volunteers, and that therefore the plaintiffs are entitled to orders that equivalent sums be paid to the respective plaintiffs on the basis of unjust enrichment. AKA Parties' submissions - moneys had and received.
6. It is noted that, in the Bluemine second further amended statement of claim, the liquidator makes claims for moneys had and received against the Receiving AKA Parties (for example, LAM Haulage at [41]; [51] MAL Land Group at [51]; The Great Brothers at [61]). (The AKA Parties point to an inconsistency in such a claim to the extent that the plaintiffs submit that Bluemine was never beneficially entitled to the money it received.)
7. As to the plaintiffs' alternative restitutionary claims, the AKA Parties submit that, for the same reasons as put forward in respect of the discretion under s 588FF, an order for restitution should not be made in favour of Bluemine.
8. The AKA Parties say that the plaintiffs' claim for money had and received to the use of Bluemine is unavailable to recover the funds paid to the AKA Receiving Entities in circumstances where (assuming that findings are made consistent with the Five Propositions): the money was never Bluemine's; no consideration was given by the AKA Receiving Entities for payment of the funds, because they were beneficiaries of a trust; any agreement (trust) was between AKA Civil and AKA NSW and Bluemine; and Bluemine was remunerated for its performance under the agreement (trust).
9. It is noted that it "[i]t is not legitimate to determine whether an enrichment is unjust by reference to some subjective evaluation of what is fair or unconscionable. Instead, recovery depends upon the existence of a qualifying or vitiating [unjust] factor" (David Securities at 379). Reference is made in thise regard to Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516; [2001] HCA 68 at [62] per Gummow J as to claims for money had and received.
10. The AKA Parties say that the requisite "unjust factor" for Bluemine to recover for unjust enrichment in the present case does not exist. They say that there has not been: a total failure of the agreed return for payment of the moneys, because there was no agreed return in the first place; a mistake of law or fact; an extortion, oppression, undue influence or duress; or an undue advantage taken of the plaintiffs' position. The AKA Parties rely on the fact that, even on Bluemine's own case, Bluemine was never the owner of the funds, and again, on its own case, it was remunerated. It is noted that the funds originated in the AKA Paying Entities and there is no suggestion that those funds were not lawfully derived. It is said that no other unjust factor remains.
11. Reference is also made to Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221; [1987] HCA 5 at 266 where it is said that Dawson J said, in effect, that the basis of the obligation to make payment for an executed consideration given and received under an unenforceable contract should be accepted as lying in restitution and unjust enrichment rather than quasi-contract and to what was said by Deane J (at 256-257) of the principle of unjust enrichment. The AKA Parties say that the concept of restitution for unjust enrichment assumes that the contract is ineffective and that this would apply to a contract found to be illegal or tainted by fraud.
12. It is noted that the defendant must be enriched at the expense of the plaintiff; and that this was the crucial question in Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51; [1994] HCA 61 (Royal Insurance). It is accepted that the requirement can mean that the enrichment is "by doing wrong to" or "by subtraction from" the plaintiff's wealth (Royal Insurance at 68, 73, 75 per Mason CJ)). Here, however, the AKA Parties say that, on the plaintiffs' case, Bluemine's only wealth was the net amount it "earned" by way of fees. It is said that it could not have retained the moneys paid to it by the AKA Paying Entities; that if it had done so, the AKA Paying Entities would have had an action in restitution to recover those funds against Bluemine; alternatively, the AKA Receiving Entities would have had grounds as beneficiaries under the AKA Trust to compel Bluemine to distribute the funds to them.
13. The AKA Parties say that they have found no authority in support of restitution being ordered in favour of a plaintiff where the plaintiff never enjoyed a beneficial entitlement to the funds the subject of the orders sought. It is said that restitution for unjust enrichment typically arises where a contract which has been partly performed is held to be void or unenforceable, or there is a total failure of consideration, and it would be unjust for the defendant to retain its enrichment. Here, it is said that performance is complete and, on the plaintiffs' case, the funds landed where they were intended to land (with the receiving entities). It is submitted that it would be necessary for a new category of case to emerge in this context for restitution to be ordered and that the present case is not a proper vehicle to do so.
14. The AKA Parties make the following points with reference to the authorities referred to in the plaintiffs' submissions for this claim(at [82]-[87]): first, as to the submission at [82], that moneys paid over without authority "remain the property of the payer", they say that on the plaintiffs' case the property at issue was never the property "of the payer" (Bluemine); and, as to the submissions at [83]-[87], they say that there is no indication that the payments made by Bluemine were without authority, so the exception pointed to by Black J in Break Fast does not apply. It is said that application of this exception to Farah Constructions also requires the property to be "of the company", which the plaintiffs contend was not the case.
15. The AKA Parties say that the following are other reasons why restitution would not be ordered.
16. First, that, if Bluemine was constituted as a trustee, then there is no basis upon which the trustee could seek restitution for unjust enrichment of a beneficiary so as to recover for itself or its unsecured creditors moneys which were paid to beneficiaries. It is said that, if it is found that Bluemine kept the Fee Amounts, then it was remunerated. The AKA Parties say that the AKA Trust has been performed; that it should not be undone by way of an order for restitution in respect of funds held by third-party beneficiaries who have not been unjustly enriched at Bluemine's expense.
17. Second, that if Bluemine was never beneficially entitled to the moneys received from the AKA Paying Entities (other than the fee or commission which it retained and dealt with as it pleased), then it follows that the payments out to the AKA Receiving Entities were not "at the expense" of Bluemine and that this would not result in a windfall for the AKA Receiving Entities. It is said that the only windfall would be to Bluemine if it were repaid funds to which it was never beneficially entitled. The AKA Parties say that the focus of the enquiry is whether it is unjust to allow the AKA Receiving Entities to retain any enrichment they received (at the expense of Bluemine); and that it cannot be unjust to not order restitution in favour of an entity that never had beneficial entitlement to the funds to begin with; thus, that the loss, if any, should lie where it fell.
18. Third, that if it is found that the AKA Transactions were "at Bluemine's expense" for the purposes of restitution, and that money had and received claim should lie (where, on the plaintiffs' case, Bluemine never had beneficial entitlement to the funds), then nevertheless the loss should lie where it falls as the transactions were founded on Bluemine's illegality. It is said that the ordinary rule is that restitution is not available if founded on illegality. The AKA Parties say that if there is a finding that there existed a dishonest and fraudulent design on the part of the Primary Conspirators, then Bluemine's participation in the AKA Transactions was tainted by illegality and it should not be able to recover in restitution from the AKA Parties. It is noted that the maxim emphasises as well that the benefits conferred should also be left to lie where they fell.
19. Fourth, the AKA Parties says that the principles of assessing quantum of a claim in restitution do not fit neatly into the facts of this case. They identify those principles as being that: the task is not to assess damages for breach of contract, but to ascertain what is fair and reasonable compensation for the benefit of the services performed and accepted, actually or constructively by the recipient; the enquiry is not primarily directed to the cost to the plaintiff of performing the work, since the law is not compensating that party for loss suffered; however, the actual cost should not be ignored; and any price or commission agreed between the parties may be received as evidence of the value the parties themselves put on the services performed, even where the services have not been totally performed, but the agreed amount is not determinative of the matter.
20. It is said that, assuming findings consistent with the Five Propositions are made, then Bluemine has been compensated for any services it provided by way of the Fee Amounts. It is said that it would be unjust to give Bluemine a windfall in restitution. The AKA Parties argue for a finding that, as far as the AKA Parties were aware, Bluemine was deriving income in the Fee Amounts. It is submitted that there is no evidence from which the contrary conclusion could be reached.
21. The Earth Civil AKA Parties repeat the submissions put by the AKA parties in relation to the Earth Civil restitution claim.

Borg Parties' submissions - moneys had and received

1. The Borg Parties say that the plaintiffs' submissions at [1413]-[1415] identify the bases for the claim of money had and received; namely that the moneys paid by RCG CBD to Borg Family were made without authority (and they say that it appears that the plaintiffs no longer claim that the funds were stolen - RCG CBD third further amended statement of claim at [225(a)]). Further, it is said that the absence of a legal obligation is not a proper basis for seeking relief for a claim of monies had and received.
2. It is said that the there is an assumption but no explanation as to why it is said that the payments were made without authority. The person who initiated the payments is not identified; and, in any event, that Fred Khalil's lack of authority has not been proved and is not sustainable. It is said that the plaintiffs' submissions do not indicate why it should be inferred that Fred Khalil lacked either actual or ostensible authority. It is said that if Fred Khalil was the vehicle for the dissemination or facilitation of the Scheme Recommendation to the detriment of RCG CBD, then there must have been some authority on his part to act on RCG CBD's behalf (and hence, the lack of authority restitution claim is inconsistent with the breach claim).
3. Further, it is said that where the moneys were returned to Borg Family pursuant to an arrangement (Borg Family was not a volunteer but was entitled to the return of its funds) whereby there was an express agreement for RCG CBD to return those moneys to Borg Family (on both the plaintiffs' and the Borg Parties' case), no room is left for the plaintiffs to argue that the moneys were paid to Borg Family without RCG CBD's authority. It is noted that, where a person receives a benefit from the fraud of another, that person is not permitted to deny the agency. In this regard, see Davis v Williams (2003) 11 BPR 21,313; [2003] NSWCA 371 (Davis v Williams) where Young CJ in Eq, as his Honour then was, referred at [128]ff to the Mair principle (referring to Mair v Rio Grande Rubber Estates Ltd [1913] AC 853) to the effect that where a person receives a benefit from the fraud of another that person is not permitted to deny the agency. It is noted that Hodgson JA accepted (at [38]-[40]) that such a principle existed, although held that it was not enlivened on the facts.
4. The Borg Parties submit that the Mair principle is applicable in this case. The Borg Parties otherwise repeat and adopt the AKA Parties' submissions at [431]-[449].
5. It is said that the benefits received by RCG CBD from the impugned transactions are set out at plaintiffs' submissions at [212] and that if there was a conspiracy, it was doubtless intended, it is claimed, to benefit RCG CBD. Further, it is noted that the claim is pressed in circumstances where RCG CBD both received from, and remitted moneys to, Borg Family. It is noted that at [212(e)] of the plaintiffs' submissions it is recorded that, between 25 September 2012 and 10 October 2012, Borg Family paid RCG CBD $585,070 and received from it $580,000. It is said that the plaintiffs' claim attaches legal significance to only one aspect of the transaction, and not the other; and that this anomaly is all the greater when the plaintiffs presumably accept that RCG CBD had no entitlement to receive any money from Borg Family (noting that the liquidator accepted as much in cross-examination - T 240.40-45; T 241.10-15).
6. The Borg Parties say there is no need to resort to legal principle to resolve the anomaly since the automatic set-off stipulated by s 553C of the Corporations Act operates to defeat the claim, but that principle also operates to defeat the claim.
7. It is said that no injustice arises from the dismissal of RCG CBD's claims for moneys had and received or, indeed, for equitable compensation based on alleged accessorial liability, because in either case, not dismissing those claims would result in RCG CBD's unjust enrichment. In other words, it is said that if the plaintiffs' claims succeed, RCG CBD would end up in a better position than had its alleged fiduciary not breached his obligations and if the alleged accessory, Borg Family, had not partaken in the implementation of the Scheme Recommendation (citing Maguire v Makaronis).
8. In this case, it is said that the circumstances of the payment were an arrangement which RCG CBD promoted; that it voluntarily paid moneys by reference to its own perceptions of self-interest; and that it should not be entitled to restitution in any event.
9. The Borg Parties also say that good conscience and elementary equitable principle mean that RCG CBD should not recover without recognising the benefits it received. It is said that RCG CBD would seek relief founded on equitable notions without itself doing equity. It is said that this is no more than an illustration of the role of counter-restitution, citing Croft J in ABL Custodian Services Pty Ltd v Smith [2010] VSC 548 at [38] that "[c]ounter restitution operates to do justice between the parties by restoring each party to their original position to the extent practicable".
10. Further, it is said that if, as it is claimed, the plaintiffs were involved in a dishonest and fraudulent design, then RCG CBD's participation in the transactions with Borg Family was marred by illegality, which would bar recovery by it of the moneys it paid Borg Family.
11. In this case, it is said that restoring the parties to their original position would require RCG CBD to recognise the payments it received from Borg Family; all the more so given the close correspondence between the receipts and the payments. To put it another way, it is said that given that any enrichment of Borg Family was not at RCG CBD's expense, the recognition of Borg Family's entitlement to those moneys and the rejection of the plaintiffs' claims does not amount to a windfall to Borg Family. Rather, the relief sought against Borg Family, namely to repay $580,000 to RCG CBD, would lead to RCG CBD's unjust enrichment.
12. On the Borg Parties' case, none of these issues arise and the plaintiffs' claims would be dismissed, because for as long as it held them, RCG CBD held the moneys that it received from Borg Family on trust and that, in any event, it had no entitlement or title to those moneys.

Findings as to moneys had and received/ unjust enrichment

1. As to the claims made (as described in the plaintiffs' submissions under the broad heading of claims for moneys had and received or in unjust enrichment), what the plaintiffs here invoke is the restitutionary claim stemming from the old common law indebitatus counts for money had and received or money paid (see the historical account of the link between restitution and quasi-contract in the introductory chapter of Robert Goff and Gareth Jones, Law of Restitution (2nd ed, 1978, London Sweet & Maxwell), for example).
2. As has been made clear in a number of High Court decisions, unjust enrichment does not itself constitute a cause of action (see David Securities at 378-379; rather, it provides a unifying legal concept (see for example Farah Constructions at [151] per Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ). See also the observation by Edelman J, then sitting in the Supreme Court of Western Australia, in Lampson (Australia) Pty Ltd v Fortescue Metals Group Ltd (No 3) [2014] WASC 162 (Lampson) (at [50]) that "unjust enrichment is not the direct basis of restitutionary relief in Australian law", it being, rather, an event from which certain legal consequences flow (namely, restitution).
3. What is required to be established, broadly speaking, for restitutionary relief on the basis of unjust enrichment to be granted is that the defendant received a benefit, at the plaintiff's expense, in circumstances where there is a recognised vitiating factor or unjust element that calls for restitution (and no countervailing factor against the grant of such relief). In Farah Constructions, in a well-known passage, the High Court said the following (at [150]) as to the requirement for an "unjust" or vitiating factor in claims brought on the basis of unjust enrichment: 150. First, whether enrichment is unjust is not determined by reference to a subjective evaluation of what is unfair or unconscionable: recovery rather depends on the existence of a qualifying or vitiating factor falling into some particular category. In David Securities Pty Ltd v Commonwealth Bank of Australia, Mason CJ, Deane, Toohey, Gaudron and McHugh JJ gave as instances of a qualifying or vitiating factor mistake, duress or illegality…. Further, principles respecting fiduciary duty have been said to be foreign to unjust enrichment notions because the unjust factors are commonly concerned with vitiation or qualification of the intention of a claimant.
4. This is relevant in the present case when one comes to consider the pleaded claims which are expressed as claims for moneys had and received (and, in various of the proceedings) but with little more than the allegation that the payments claimed were moneys had and received by a particular defendant to the use of the plaintiff company and, in the circumstances, there is an obligation to repay those moneys (see, for example, [9] of the claim in relation to the Director Payments in the Bluemine Proceeding); and the virtually identical claims with respect to the LAM Land, MAL Haulage and The Great Brothers Payments (see Bluemine third further amended statement of claim at [41], [51] and [61]) and the Sivasli Payments (see the RCG CBD third further amended statement of claim at [52]).
5. By contrast, as to the Borg Family Payments, the RCG CBD third further amended statement of claim pleads (at [255]): 255. Further or in the alternative, each of the payments to Borg Family identified at paragraph 190 above were monies had and received by it to the use of RCG in that the funds were: (a) monies stolen from RCG by Cassaniti or George Khalil; (b) alternatively, RCG did not authorise the payments; and (c) RCG had no lawful obligation to make the payments.
6. It has been recognised that a pleading based on unjust enrichment must explain the basis of the allegation (it not being sufficient merely to allege the fact of unjust enrichment) (see as discussed in Chidiac v Maatouk [2010] NSWSC 386 at [217]-[218], by reference to the discussion in Mason and Carter, Mason & Carter's Restitution Law in Australia (1st ed, 1995, LexisNexis Butterworths) at [2904] as approved in Lactos Fresh Pty Ltd v Finishing Services Pty Ltd (No 2) [2006] FCA 748 at [111] per Weinberg J).
7. In the proceedings here before me, the money had and received claims appear to be based on the payments in question having been paid out without authority (in the case of the Borg Family Payments, this is an alternative to the principal allegation of theft or misappropriation), and being recoverable in the absence of valuable consideration and receipt of the money in good faith by the recipient (see Lipkin Gorman; Heperu).
8. In Heperu, Allsop P, as his Honour then was (with whom Campbell JA and Handley AJA agreed), held (with reference to Banque Belge and Lipkin Gorman) that there is an obligation at law to restore, in money terms, the value of the retained proprietary benefit derived from the receipt by a volunteer of funds traceable in equity from misappropriated cheques (at [144]; [153]).
9. Reliance is also placed on the decision of Black J held in Break Fast (at [34]), for the proposition that an unjust enrichment claim is not excluded by Farah Constructions where it arises from payments made without authority (as opposed to payments made in breach of directors' or officers' duties).

Authority

1. The key issue in the plaintiffs' claim for money had and received or unjust enrichment is therefore whether the respective payments were made without authority (and were not received in good faith and for valuable consideration).

Earth Civil Payments

1. Turning first to the Earth Civil Payments, Gino Cassaniti was recorded on the ASIC records as the sole director and shareholder of Earth Civil when the Earth Civil Payments took place. As the sole director and shareholder, Gino Cassaniti was able pursuant to s 198E of Corporations Act to exercise all the powers of the company except any powers that the Act or the company's constitution (if any) required the company to exercise in general meeting; and he was permitted to manage the business of the company by or under his direction of the director.
2. The evidence of Andre Abou-Antoun during his ATO interview, as noted earlier, was to the effect that Gino Cassaniti "basically said just transfer the money, and then take the money out of the account after it was transferred" (T 679). While there appears to have been some confusion as to whether this was said to Andre Abou-Antoun or to Michael Abou-Antoun (and then communicated between the two brothers), what emerges from this evidence, and the broader circumstances discussed above, is that (whether or not the payments were made in breach of Gino Cassaniti's duties as a director) the payments were made with Gino Cassaniti's authority. Thus, the plaintiffs' unjust enrichment/moneys had and received claim in the Earth Civil Proceeding, being premised on the vitiating factor being that the funds were paid out without authority, is not made good.

MAL Land, LAM Haulage, and The Great Brothers Payments

1. On the ASIC record, the director of Bluemine when the MAL Land, LAM Haulage and The Great Brothers Payments took place (with the exception of the payments on 23 April 2013 and 1 May 2013) was Andrew Barsa. However, for the reasons above, I am satisfied that Andrew Barsa was no more than a straw director and that Gino Cassaniti was a de facto director when these payments took place. As to the payments on 23 April 2013 and 1 May 2013, Gino Cassaniti was recorded as the sole director and shareholder of Bluemine during that period.
2. Andre Abou-Antoun's evidence is that the transactions between the AKA Parties and Bluemine took place on the advice of Fred Khalil and Peter Abboud. As noted above, at T 646-648, Andre Abou-Antoun accepted that "Peter Abboud and Fred Khalil … advised us that they had a company called Bluemine Pty Ltd, that they managed and controlled and that company had assets and trucks and tipping sites, and that they could arrange inflated invoices and exaggerate invoices to our company, we would make the payment and then they would return the money back to our business less a fee" (see also T 660; T 674). In all, Andre Abou-Antoun's evidence about the MAL Land, LAM Haulage and The Great Brother's Payments indicates that his understanding was that Fred Khalil and Peter Abboud had the ability to make those payments and that Bluemine was their company.
3. Andrew Barsa gave evidence that he delegated the accounts of Bluemine to Banq namely, Gino Cassaniti, Peter Abboud and Fred Khalil (T 913). At T 914, he said that he was not aware of any monetary transactions made out of RCG CBD while he was its director and went on to say (at T 919-920): Q. Do you know if Bluemine paid any wages to anyone? A. I don't know. Banq would have organised that. Q. What about bank accounts, to your knowledge did Bluemine have a bank account? A. It would have had a bank account yeah. Q. But do you have any knowledge of where that bank account might have been held? Which bank? A. No. Q. Did you ever cause Bluemine to enter into any contracts? A. No. Q. Did you cause Bluemine to enter into any banking transactions that you can recall? A. No. … Q. So aside from telling Michael to utilise the trucks any other involvement? A. No. I delegated that yep.
4. What is clear on the evidence is that Andrew Barsa had little to no involvement in the business of Bluemine; what is less clear is the extent to which he gave authority to Banq and Gino Cassaniti, Peter Abboud and Fred Khalil to operate the business of Bluemine and enter into transactions on its behalf. However, Andrew Barsa clearly permitted Gino Cassaniti to exercise the powers of a de facto director of that company and, in those circumstances I consider that the plaintiffs have not established that the Bluemine transactions occurred without authority.

Sivasli Payments

1. Gino Cassaniti was the director of RCG CBD when the Sivasli Payments occurred. There does not appear to be any evidence as to who effected the Sivasli payments or whether that person had the authority to enter into the transactions. In the absence of evidence that the payments were made without Gino Cassaniti's authority, I consider that the plaintiffs' evidentiary burden has not been discharged.

Borg Family Payments

1. The Borg Family Payments are the three payments in the total sum of $580,000 paid by RCG CBD to Borg Family from 25 September 2012 to 10 October 2012. Gino Cassaniti was the sole director and shareholder of RCG CBD throughout the period when the Borg Family Payments took place.
2. In Tanya Borg's affidavit sworn 4 December 2018, she deposed: 34. At some stage after that, Fred said, "I have the valuation, I can structure those payments, I have a company called RCG, I can use that to make the payments to the old company". 35. I did not completely understand what was being proposed but I understood that money would be paid to RCG and that money was to be held by RCG to pay money to Excavation. The money would be returned to repay monies owed to Michael.
3. I have already concluded that the evidence establishes that the overall structuring advice is one that must have been devised by Gino Cassaniti in consultation with Fred Khalil. Given this, and Tanya Borg's evidence as to Fred Khalil's role in structuring the relevant payments through RCG CBD, I cannot comfortably conclude that the transactions on behalf of RCG CBD were without authority. This is particularly so where the sole director of RCG CBD, Gino Cassaniti, did not dispute these transactions. I do not accept that the allegations of theft or misappropriation of funds have been made good.
4. Therefore, the plaintiffs' money had and received/unjust enrichment claims are not made good (notwithstanding that I accept that the payments in question were made for no consideration apnd that there were breaches of fiduciary and statutory duties in the making of a number of the respective payments - to the extent that they were for no consideration and not being in the interests of the plaintiff companies).

AKA Parties' submissions - quantification of compensation

1. It is noted by the AKA Parties that the primary heads of claim are: for equitable or statutory compensation calculated by reference to a tax debt; recovery of moneys paid pursuant to voidable transactions under s 588FF of the Corporations Act; and restitution to prevent unjust enrichment. It is said that the overlapping nature of these claims is such that, if orders were made as requested, the plaintiffs would receive a greater amount than the loss that is said to have occurred. Accordingly, the AKA Parties say that if the plaintiffs were successful, the companies in liquidation would (due to the combined effect of the alleged breaches and the orders for relief now sought) effectively receive a windfall gain. The AKA Parties submit that the principles of equitable compensation do not permit the plaintiffs to receive a windfall gain or "double-up".
2. It is noted that the cardinal principle of equity is that the remedy must be fashioned to fit the nature of the case. Reference is made in this context to what was said as to the purpose of equitable compensation in V-Flow Pty Ltd v Holyoake Industries (Vic) Pty Ltd (2013) 296 ALR 418; [2013] FCAFC 16 at [55]. The AKA Parties invoke the principle that equity will not countenance remedies that amount to a windfall gain (referring to the summary of principle in Ahrkalimpa Pty Ltd v Schmidt (No 3) [2019] VSC 197 at [34] per Elliot J; and to Gageler J's decision in Ancient Order of Foresters at [92], [94] and Warman at 561). The AKA Parties acknowledge that both Ancient Order of Foresters and Warman were concerned with the liability to account for profits but they say that in both decisions the High Court made findings with respect to equitable principles, including that a plaintiff may not improve its position or make a windfall gain.
3. The AKA Parties also point to the consideration of the issue of equitable relief for breaches of fiduciary duties by Gibbs CJ in Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41; [1984] HCA 64 at [99].
4. The AKA Parties note that principles of valuation of loss of opportunity in the context of equitable compensation include: that contract and tort principles applicable to the recovery of damages for loss of a chance or opportunity are applicable to a claim for equitable compensation for breach of fiduciary duty (referring to Ramsay v BigTinCan Pty Ltd (2014) 101 ACSR 415; [2014] NSWCA 324 at [34]); that it may be inequitable to order equitable compensation for the full amount of the loss because the loss is attributable in whole or in part to one or more other contributing causes such that it is "practically just" that the loss be apportioned or that some allowance be made in favour of a defendant; that the judgment to be made by the court is evaluative and factors which might bear on the judgment to be made in an individual case cannot be catalogued exhaustively in advance but they will include the need to ensure that the remedy is not transformed into a vehicle for the unjust enrichment of the plaintiff; and that it is the outcome of the evaluative judgment here, and not merely the outcome of an initial enquiry into causation, which yields the true measure of the compensation to be reflected in the order (citing Ancient Order of Foresters at [91]-[95]).
5. The AKA Parties say that if Bluemine has "sacrificed" its opportunity to object to the Bluemine Assessments then that is a valuable opportunity the value of which should be subtracted from the amount claimed of $5,138,203.36. It is said that if on the balance of probabilities it can be determined that a Bluemine objection would be allowed, then the full amount of the reduction in the tax liability which would flow from an objection (which the plaintiffs have, at least to date, foregone) should be subtracted from the overall tax liability claimed. For example, it is said that the correct taxable income for the 2013 tax year, is $903,925, which results in approximately $301,308 in primary income tax. The AKA Parties say that any award of compensation should be apportioned in an appropriate manner to reflect the tax liability that Bluemine would have achieved had it objected under Pt IVC.
6. It is said that the AKA Parties' respective apportioned liabilities, if found on the basis contended for by the plaintiffs (which is denied) would result in the "[p]ercentage of assessed income" being multiplied by the reduced (amended) amount.
7. Further, it is said that, in fashioning the remedies which it is apt for equity to provide, most, if not all, of the matters which would otherwise be urged as a reason for excluding relief altogether (on the ground of the alleged absence of a causal connection between the breach and the loss) are relevant to be considered (referring again to what was said by Cooke P in Day v Mead).
8. It is said that it would therefore be of some significance to the determination of this matter that the plaintiffs have approached equity, seeking compensation for a debt which on the liquidator's own case would more likely than not, not exist, if only the liquidator had simply requested the Commissioner to re-consider the Bluemine Assessments in July of 2017, when, on the information the liquidator knew the Commissioner had, it is said that there was every indication that Bluemine did not derive the income assessed by the Commissioner. As submitted earlier, it is said that there need only be an assessment as to whether such an objection would have been allowed, on the balance of probabilities; and, if so, then the plaintiffs became the authors of their own misfortune.
9. When dealing with a loss of opportunity to object to the Bluemine Assessments, to the extent that an objection if made would have been allowed, as submitted above, then the AKA Parties submit the loss of that opportunity should be valued and taken into account in arriving at an equitable award of compensation.

Determination - compensation

1. The AKA Parties' submissions on the quantification of compensation tie into their submissions on causation. For the reasons already given in relation to the causation argument, I do not consider that Bluemine's compensation should be reduced to reflect a hypothetical outcome of a Part IV objection.
2. As to the submission that the overlapping claims give rise to the spectre of a windfall gain, it is trite to observe that the plaintiffs cannot obtain double recovery. However, they are entitled to judgment on the claims on which they have succeeded and the working out of the recovery of amounts referable to those claims will no doubt depend on the ability of the respective defendants to satisfy the judgments.
3. I accept that to the extent that the claims for breach of directors' or officers' fiduciary or statutory duties succeed in relation to various of the disputed payments, then the claims for money had and received or unjust enrichment in relation to those payments would be excluded as against the relevant defendant(s) liable for breach of fiduciary or statutory duties but (as noted above) the unjust enrichment/money had and received claims fail for other reasons.

Conclusion

1. For the above reasons, I propose to make the following orders. I will defer entering the orders for 14 days and give liberty to the parties to apply if there be a need to amend or clarify the proposed orders (which have been adapted from those sought by the plaintiffs to reflect the conclusions that I have reached). As various of the parties sought the opportunity to make further submissions as to costs, I will make directions for written submisions with a view to dealing with those on the papers, unless any of the parties persuades me that an oral hearing is required for some particular reason.

Orders

1. The orders I propose to make are as follows, noting that to the extent that the orders encompass liability severally on the part of various of the defendants (for example in relation to the tax liabilities of the Insolvent Companies) the plaintiffs will not be able to obtain more than the total amount for which the defendants are severally liable. The plaintiffs should outline in their submissions following these reasons any adjustment required to be made (as was foreshadowed in their submissions) as to the amounts to be entered as judgment in favour of the respective defendants. I note that as George Khalil has been found accessorially liable but not been found to be a Primary Conspirator, orders will need to be proposed as to his individual liability.

Earth Civil Proceeding 1. Declare that: 1. Gino Cassaniti (2nd defendant) breached his fiduciary statutory duties as a director to Earth Civil (2nd plaintiff). 2. Michael Abou-Antoun (1st defendant), Fred Khalil (4th defendant), George Khalil (5th defendant), Peter Abboud (6th defendant) assisted, and were accessories to, Gino Cassaniti's breaches identified in (i) above. 1. Determine that: 1. Gino Cassaniti (2nd defendant) contravened ss 180, 181 and 182 of the Corporations Act 2001 (Cth). 2. Michael Abou-Antoun (1st defendant), Fred Khalil (4th defendant), George Khalil (5th defendant), Peter Abboud (6th defendant) were involved in the contraventions referred to in (i) above, contrary to ss 181(2) and 182(2) of the Corporations Act 2001 (Cth). 1. Judgment for Earth Civil in the sum of $2,170,332.73 against Gino Cassaniti (2nd defendant) for breaches of fiduciary duty, and/or for breaches of the Corporations Act 2001 (Cth) comprising: 1. $965,000.00 for the Director Payments; 2. $1,122,680.34 for Earth Civil's liability to the Commissioner for GST and PAYG withheld, penalties and interest; and 3. $82,652.39 for costs and expenses of winding up. 1. Judgment for Earth Civil (2nd plaintiff) in the sum of $2,170,332.73 against Fred Khalil (4th defendant), Peter Abboud (6th defendant) (as primary conspirators) and Michael Abou-Antoun (1st defendant) (director of AKA NSW, AKA Civil and Earth Civil) for damages and/or equitable compensation, and/or for compensation pursuant to s1317H of the Corporations Act 2001 (Cth). 2. Declarations that: 1. each of the Director Payments is an insolvent transaction pursuant to s 588FC of the Corporations Act 2001 (Cth) and an uncommercial transaction pursuant to s 588FB(1) of the Corporations Act 2001 (Cth); 2. each of the Director Payments is an unreasonable Director-Related Transaction pursuant to s 588FDA(1) of the Corporations Act 2001 (Cth); and 3. the Director Payments are voidable pursuant to ss 588FE(3) and 588FE(6) of the Corporations Act 2001 (Cth); 1. The abovenamed defendants pay interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) or in the alternative pursuant to s 588FF(1)(c) of the Corporations Act 2001 (Cth). 2. Otherwise dismiss the claims brought against the remainder of the defendants.

RCG CBD Proceeding 1. Declarations that: 1. Gino Cassaniti (11th defendant) breached his fiduciary duties to RCG CBD (2nd plaintiff). 2. Fred Khalil (12th defendant), George Khalil (13th defendant), Peter Abboud (14th defendant), Sivasli (5th defendant), John Haddad (32nd third defendant) and George Said (38th defendant) assisted, and were accessories to, Gino Cassaniti's breaches identified in (i) above. 1. Determine that: 1. Gino Cassaniti (11th defendant) contravened ss 180, 181 and 182 of the Corporations Act 2001 (Cth). 2. Fred Khalil (12th defendant), George Khalil (13th defendant), Peter Abboud (14th defendant), Sivasli (5th defendant), John Haddad (32nd third defendant) and George Said (38th defendant) were involved in the contraventions referred to in (i) above, contrary to ss 181(2) and 182(2) of the Corporations Act 2001 (Cth). 1. Judgment for RCG CBD (2nd plaintiff) in the sum of $12,897,646.16 against Gino Cassaniti (11th defendant) for breaches of fiduciary duty, and/or for breaches of the Corporations Act 2001 (Cth) comprising: 1. $7,451,586.12 which includes the payments and transactions identified below, being the assets of RCG CBD paid away: 1. the Banq Payments; 2. the Wenman Brimak Payments; 3. the Statewide Payments; 4. the Sivasli Payments; 5. the Patsouris Payments; 6. the Kito Payments; 7. the Fox & Staniland Payment; 8. the JRC Kazzi Payments; 9. the Coolfind Payments; 10. the Tippett Payments; 11. the Borg Family Payments; 1. $6,209,097.72 for RCG CBD liabilitiies to the Commissioner for GST, PAYG withheld, SGC and income tax, penalties and interest; 2. $254,962.32 for costs and expenses of winding; and 3. less sums received by way of settlements totalling $1,018,000.00. 1. Judgment for RCG CBD in the sum of $12,897,646.16 against Fred Khalil (12th defendant), Peter Abboud (14th defendant), (primary conspirators) for damages and/or equitable compensation, and/or for compensation pursuant to s1317H of the Corporations Act 2001 (Cth). 2. Declare that: 1. each of the Sivasli Payments is an insolvent transaction pursuant to s 588FC of the Corporations Act 2001 (Cth) and an uncommercial transaction pursuant to s 588FB(1) of the Corporations Act 2001 (Cth); and 2. the Sivasli Payments are voidable pursuant to s 588FE(3) of the Corporations Act 2001 (Cth). 1. Judgment for RCG CBD in the sum of $455,962.32 against Sivasli for damages and/or equitable compensation, and/or for compensation pursuant to s 1317H of the Corporations Act 2001 (Cth), comprising: 1. moneys paid away; 2. the extent to which it caused RCG's liability to pay the Commissioner $6,209,097.72; and 3. the costs and expenses of the winding up. 1. Judgment for RCG CBD in the sum of $1,030,726.01 against John Haddad (personally and director of North Shore) for damages and/or equitable compensation, and/or for compensation pursuant to s 1317H of the Corporations Act 2001 (Cth), comprising: 1. the extent to which he caused RCG CBD's liability to pay the Commissioner $6,209,097.72; and 2. the costs and expenses of the winding up. 1. Judgment for RCG CBD in the sum of $1,033,508.53 against George Said (director of Involved Recruitment) for damages and/or equitable compensation, and/or for compensation pursuant to s 1317H of the Corporations Act 2001 (Cth), comprising: 1. the extent to which he caused RCG CBD's liability to pay the Commissioner $6,209,097.72; and 2. the costs and expenses of the winding up. 1. The abovenamed defendants pay interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) or in the alternative pursuant to s 588FF(1)(c) of the Corporations Act 2001 (Cth). 2. The abovenamed defendants pay the plaintiffs' costs of the proceedings including any reserved costs. 3. Otherwise dismiss the claims brought against the remainder of the defendants.

Bluemine Proceeding 1. Declare that: 1. Gino Cassaniti (11th defendant) breached his fiduciary duties to Bluemine (2nd plaintiff). 2. Fred Khalil (12th defendant), George Khalil (13th defendant), Peter Abboud (14th defendant), LAM Haulage (3rd defendant), MAL Land Group (4th defendant), The Great Brothers (5th defendant), Andre Abou-Antoun (20th defendant), Michael Abou-Antoun (21st defendant), John Haddad (25th defendant) and George Said (33rd defendant), assisted, and were accessories to, Gino Cassaniti's breaches identified in (i) above. 1. Determines that: 1. Gino Cassaniti (11th defendant) contravened ss 180, 181 and 182 of the Corporations Act 2001 (Cth). 2. Fred Khalil (12th defendant), George Khalil (13th defendant), Peter Abboud (14th defendant), LAM Haulage (3rd defendant), MAL Land Group (4th defendant), The Great Brothers (5th defendant), Andre Abou-Antoun (20th defendant), Michael Abou-Antoun (21st defendant), John Haddad (25th defendant) and George Said (33rd defendant), were involved in the contraventions referred to in (i) above, contrary to ss 181(2) and 182(2) of the Corporations Act 2001 (Cth). 1. Judgment for Bluemine in the sum of $11,074,943.98 against Gino Cassaniti (11th defendant) for breaches of fiduciary duty, and/or for breaches of the Corporations Act 2001 (Cth) comprising: 1. $6,167,594 which includes the payments and transactions identified below, being the assets of Bluemine paid away by Gino Cassaniti; 1. the Banq Payments; 2. the Wenman Payments; 3. the LAM Haulage Payments; 4. the MAL Land Group Payments; 5. the Great Brothers Payments; 6. the Eddy Haddad Payments; 7. the Monica Abboud Payments; 8. the Pierre Youssef Payments; and 9. the Jola transfer. 1. $5,138,203.36 for Bluemine's liability to the Commissioner for GST and PAYG withheld, income tax and penalties and interest; 2. $235,611.62 for costs and expenses of winding up; and 3. less sums received by way of settlements totalling $466,465.00. 1. Judgment for Bluemine in the sum of $11,074,943.98 against Fred Khalil (12th defendant), Peter Abboud (14th defendant), (primary conspirators) for damages and/or equitable compensation, and/or for compensation pursuant to s1317H of the Corporations Act 2001 (Cth). 2. Declare that: 1. the LAM Haulage Payment ($261,105.00) is an insolvent transaction pursuant to s 588FC of the Corporations Act 2001 (Cth) and an uncommercial transaction pursuant to s 588FB(1) of the Corporations Act 2001 (Cth). 2. the LAM Haulage Payment ($261,105.00) is voidable pursuant to s 588FE(3) of the Corporations Act 2001 (Cth). 3. each of the MAL Land Group Payments ($1,624,005.00) is an insolvent transaction pursuant to s 588FC of the Corporations Act 2001 (Cth) and an uncommercial transaction pursuant to s 588FB(1) of the Corporations Act 2001 (Cth). 4. the MAL Land Group Payments ($1,624,005.00) are voidable pursuant to s 588FE(3) of the Corporations Act 2001 (Cth). 5. each of the Great Brothers Payments ($1,541,105.00) is an insolvent transaction pursuant to s 588FC of the Corporations Act 2001 (Cth) and an uncommercial transaction pursuant to s 588FB(1) of the Corporations Act 2001 (Cth). 6. the Great Brothers Payments ($1,541,105.00) are voidable pursuant to s 588FE(3) of the Corporations Act 2001 (Cth). 1. Judgment for Bluemine in the sum of $496,716.62 against LAM Haulage for damages and/or equitable compensation, and/or for compensation pursuant to s 1317H of the Corporations Act 2001 (Cth), comprising: 1. moneys paid away; and 2. the costs and expenses of the winding up. 1. Judgment for Bluemine in the sum of $1,859,616.62 against MAL Land Group for damages and/or equitable compensation, and/or for compensation pursuant to s 1317H of the Corporations Act 2001 (Cth), comprising: 1. moneys paid away; and 2. the costs and expenses of the winding up. 1. Judgment for Bluemine in the sum of $1,776,716.62 against the Great Brothers for damages and/or equitable compensation, and/or for compensation pursuant to s 1317H of the Corporations Act 2001 (Cth), comprising: 1. moneys paid away; and 2. the costs and expenses of the winding up. 1. Judgment for Bluemine in the sum of $2,037,821.62 against Andre Abou-Antoun (the director of LAM Haulage and The Great Brothers) for damages and/or equitable compensation, and/or for compensation pursuant to s 1317H of the Corporations Act 2001 (Cth), comprising: 1. moneys paid away; and 2. the costs and expenses of the winding up. 1. Judgment for Bluemine in the sum of $5,939,328.98 against Michael Abou-Antoun (the director of MAL Land, The Great Brothers, AKA NSW and AKA Civil) for damages and/or equitable compensation, and/or for compensation pursuant to s 1317H of the Corporations Act 2001 (Cth), comprising: 1. moneys paid away; 2. the extent to which he caused Bluemine's liability to pay the Commissioner $5,138,203.36; and 3. the costs and expenses of the winding up. 1. Judgment for Bluemine in the sum of $1,327,494.66 against John Haddad (personally and the director of North Shore and Centerium Wholesalers) for damages and/or equitable compensation, and/or for compensation pursuant to s 1317H of the Corporations Act 2001 (Cth), comprising: 1. moneys paid away; 2. the extent to which he caused RCG's liability to pay the Commissioner $5,138,203.36; and 3. the costs and expenses of the winding up. 1. Judgment for Bluemine in the sum of $291,201.62 against George Said (as the director of Involved Recruitment) for damages and/or equitable compensation, and/or for compensation pursuant to s 1317H of the Corporations Act 2001 (Cth), comprising: 1. monies paid away; and 2. the costs and expenses of the winding up. 1. The abovenamed defendants pay interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) or in the alternative pursuant to s 588FF(1)(c) of the Corporations Act 2001 (Cth). 2. The abovenamed defendants pay the plaintiffs' costs of the proceedings including any reserved costs. 3. Otherwise dismiss the claims brought against the remainder of the defendants.

Diamondwish Proceeding 1. Declares that: 1. Frank Criniti breached his fiduciary duties to Diamondwish (2nd plaintiff). 2. Gino Cassaniti (6th defendant), Fred Khalil (9th defendant) George Khalil (10th defendant), and Peter Abboud (11th defendant) assisted, and were accessories to, Frank Criniti's breaches identified in (i) above. 1. Determine that: 1. Frank Criniti contravened ss 180, 181 and 182 of the Corporations Act 2001 (Cth). 2. Gino Cassaniti (6th defendant), Fred Khalil (9th defendant) and George Khalil (10th defendant), Peter Abboud (11th defendant) were involved in the contraventions referred to in (a) above, contrary to ss 181(2) and 182(2) of the Corporations Act 2001 (Cth). 1. Judgment for Diamondwish in the sum of $7,757,230.67 against Gino Cassaniti (6th defendant), Fred Khalil (9th defendant) and Peter Abboud (11th defendant) (primary conspirators) for damages and/or equitable compensation, and/or for compensation pursuant to s 1317H of the Corporations Act 2001 (Cth), comprising: 1. $7,960,774.08 which includes the payments and transactions identified below, being assets of Diamondwish paid away by Frank Criniti: 1. the Givana Prestige Payments; 2. the Criniti's Wood Fire Payments; 3. the Criniti Payments; 4. the Barikhan Payment; 5. the Silkred Payment; 6. the Karl Haidenbauer Payment; 7. the Setaro Payment; 8. the Banq Payments; 9. the Criniti's Darling Harbour Payment; 10. the Darren and Keti Craus Payment; 11. the Australian Muscle Payment; 1. $1,439,573.61 for Diamondwish's liability to the Commissioner for GST and PAYG withheld, penalties, income tax and interest; and 2. $241,882.98 for costs and expenses of winding up. 3. less sums received by way of settlements totalling $1,885,000.00. 1. The abovenamed defendants pay interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) or in the alternative pursuant to s 588FF(1)(c) of the Corporations Act 2001 (Cth). 2. The abovenamed defendants pay the plaintiffs' costs of the proceedings including any reserved costs. 3. Otherwise dismiss the claims brought against the remainder of the defendants.

Rackforce 1. Declare that: 1. Frank Criniti breached his fiduciary duties to Rackforce (2nd plaintiff). 2. Gino Cassaniti (8th defendant), Fred Khalil (9th defendant), George Khalil (10th defendant), and Peter Abboud (11th defendant) assisted, and were accessories to, Frank Criniti's breaches identified in (i) above. 1. Determine that: 1. Frank Criniti contravened ss 180, 181 and 182 of the Corporations Act 2001 (Cth). 2. Gino Cassaniti (8th defendant), Fred Khalil (9th defendant), George Khalil (10th defendant) and Peter Abboud (11th defendant) were involved in the contraventions referred to in (i) above, contrary to ss 181(2) and 182(2) of the Corporations Act 2001 (Cth). 1. Judgment for Rackforce in the sum of $13,091,524.91 against Gino Cassaniti (8th defendant), Fred Khalil (9th defendant) and Peter Abboud (11th defendant) (primary conspirators ) for damages and/or equitable compensation, and/or for compensation pursuant to s 1317H of the Corporations Act 2001 (Cth), comprising: 1. $10,926,471.64 which includes the payments and transactions identified below, being assets of Rackforce paid away by Frank Criniti: 1. the Givana Prestige Payments 2. the Frank Criniti Payments 3. the Criniti's Wood Fire Pizza Payments; 4. the Artivita Payments; 5. the Banq Payments; 6. the Cosimo Foods Payments; 7. the Criniti's Darling Harbour Payments; 8. the Criniti's Wooloomooloo Payments; and 9. the Frank Criniti & Rima Criniti Payments; 1. $3,626,578.95 for Rackforce's liability to the Commissioner for GST, PAYG withheld, income tax and superannuation guarantee charge; 2. $201,474.32 for costs and expenses of winding up. 3. less sums received by way of settlements totalling $1,735,000.00. 1. The abovenamed defendants pay interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) or in the alternative pursuant to s 588FF(1)(c) of the Corporations Act 2001 (Cth). 2. Otherwise dismiss the claims brought against the remainder of the defendants.

1. For present purposes, I simply make the following orders at this stage: 1. Direct that the parties file and serve within 21 days brief written submissions as to costs. 2. Direct the plaintiffs to file and serve within 14 days short minutes of order comprising any necessary adjustment or variation to the proposed orders set out at [2784] of the judgment and brief written submissions as to those orders. 3. Direct the defendants to file and serve within 7 days thereafter any brief submissions on the plaintiffs' short minutes of order served pursuant to order 2 above. 4. Note that the question of costs will be dealt with, if possible, on the papers. 5. Liberty to apply on 3 days' notice.

Earth Civil Australia, Diamondwish, Bluemine, Rackforce, RCG (all in liq)

Dramatis Personae Key Companies Name Description Party Incorporated 7 June 2012; wound up 26 August 2013 Sole director, secretary and shareholder: • Andrew Barsa: 7 June 2012-1 April 2013 • Gino Cassaniti: 1 April 2013-18 March 2014 1 Bluemine Registered office: Banq Address Plaintiff Tax agent: Banq Bank account signatories: • Peter Abboud • Andrew Barsa Incorporated 15 July 2011; wound up 26 August 2013 Sole director, secretary and shareholder: • Frank Criniti: 15 July 2011-16 March 2012 • Christopher Cherry: 16 March 2012-26 August 2013 2 Diamondwish Registered office: Bank Address Plaintiff Tax agent: • Faouzi Khalil: 15 July 2011 Bank account signatories: • Frank Criniti • Dominic Criniti Incorporated 25 May 2011; wound up 28 June 2013 Sole director, secretary and shareholder: • Michael Abou-Antoun: 25 May 2011-1 July 2012 • Gino Cassaniti: 1 July 2012-18 March 2014 3 Earth Civil Registered office: Plaintiff • Banq Accountants Address: 25 May 2011-7 July 2011 • Banq Address: 8 July 2011-7 July 2013 Tax agent: Banq Bank account signatory: Michael Abou-Antoun Related companies: AKA Parties Incorporated 4 February 2011 (as Fina Fries Pty Ltd); wound up 26 August 2013 Sole director, secretary and shareholder: • Frank Criniti: 4 February 2011-22 September 2011 • Frank Scuteri: 22 September 2011-15 March 2012 • Christopher Cherry: 15 March 2012-26 August 2013 Registered office: • Banq Accountants Address: 4 February 2011-5 July 2011 4 Rackforce • Banq Address: 6 July 2011-onwards Plaintiff Tax agent: Banq Bank account signatories: • Frank Criniti • Dominic Criniti • Vanessa Scuteri • Frank Scuteri • Anthony Borg Incorporated 16 May 2012; wound up 28 June 2013 Sole director, secretary and shareholder: • Gino Cassaniti: 16 May 2012-18 March 2014 5 RCG CBD • George Khalil: 16 May 2012-16 May 2012 Plaintiff Registered office: Banq Address Tax agent: Banq: Bank account signatory: George Khalil

Primary Conspirators Name Description Party 10% Shareholder of Banq Director of: • Reliance Cleaning • LFC Holdings Earth Civil: 6th defendant • Jola Holdings RCG CBD: 14th defendant 1 Abboud, Peter Family relations: Bluemine: 14th defendant • Wife: Mandi Abboud (nee Kaleda) Diamondwish: 11th defendant • Sister: Katherine Khalil (nee Abboud) Rackforce: 8th defendant • Brothers: Michael Abboud, George Abboud, Fadi Abboud • Sisters in law: Monica Abboud, Jillian Abboud (ex-wife of George Abboud) • Cousin: Andrew Barsa Incorporated 13 July 2009; wound up 18 July 2018 Accounting practice: tax, insolvency, business building services, asset protection and strategies Sole director and secretary: • Fred Khalil: 13 July 2009-19 June 2017 • Hussein El-Massri : 19 June 2017-18 July 2018 Shareholders: • Givana: 60 ordinary shares Earth Civil: 3rd defendant • Hussein El-Massri : 40 ordinary shares RCG CBD: 1st defendant 2 Banq Former shareholders: Bluemine: 1st defendant • Fred Khalil: 40 ordinary shares Diamondwish: 7th defendant • Peter Abboud: 10 ordinary shares Rackforce: 4th defendant Registered office: Banq Address (owned by GFP Holdings) Bank account signatories: • Peter Abboud • Ivana Cassaniti • Fred Khalil • Alison Hanna Predecessor: Banq Accountants Pty Ltd Accountant and registered tax agent Sole director and company secretary of: • Earth Civil: 1 July 2012-18 March 2014 Earth Civil: 2nd defendant • RCG CBD: 16 May 2012-18 March 2014 RCG CBD: 11th defendant 3 Cassaniti, Gino • Bluemine: 1 April 2013-18 March 2014 Bluemine: 11th defendant Director of: Involved Recruitment: 16 May 2012 Diamondwish: 8th defendant Employee of: Givana Rackforce: 5th defendant Declared bankrupt: March 2014; discharged from bankruptcy: 18 March 2017 Family relations: • Wife: Ivana Cassaniti Director of: • Banq • Kamikaze Earth Civil: 4th defendant • Silvasli RCG CBD: 12th defendant 4 Khalil, Faouzi (Fred) • Investmint Bluemine: 12th defendant • Involved Recruitment Diamondwish: 9th defendant • Discobell (8 August 2013-19 February 2014) Rackforce: 6th defendant Family relations: • Wife: Katherine Khalil • Brother: George Khalil Director of: • RC Group • RCG CBD - appointed 16 May 2012 (purportedly ceased on the same day) • Investmint Earth Civil: 5th defendant • Involved Recruitment RCG CBD: 13th defendant 5 Khalil, George Employee of Banq Bluemine: 14th defendant Sole signatory of RCG CBD's bank account Diamondwish: 10th defendant Declared bankrupt: 24 September 2014 Rackforce: 7th defendant Family relations: • Brother: Fred Khalil • Sister in law: Katherine Khalil

Scheme Participants Name Description Party Director of: • LAM 1 Abou-Antoun, Andre • The Great Brothers Bluemine: 20th defendant Family relations: • Brothers: Michael Abou-Antoun and Laurence Abou-Antoun Director of: • Earth Civil • AKA Civil 2 Abou-Antoun, Michael • AKA NSW Earth Civil: 1st defendant • MAL Land Bluemine: 21st defendant • The Great Brothers Family relations: • Brothers: Andre Abou-Antoun and Laurence Abou-Antoun Incorporated 16 June 2010 3 AKA Civil Director: Michael Abou-Antoun Earth Civil: 7th defendant Registered office: Banq Address (from 7 July 2011) Bluemine: 24th defendant Tax agent: Banq Incorporated 25 May 2011 4 AKA NSW Director: Michael Abou-Antoun Earth Civil: 8th defendant Registered office: Banq Address or Banq Accountants Address (from 8 July 2011) Bluemine 23rd defendant Tax agent: Banq Incorporated 21 May 2012 5 Borg Civil Director: Michael Borg RCG CBD: 31st defendant Registered office: Banq Address (21 May 2012-27 February 2017) Bluemine: former 31st defendant (settled) Tax agent: Banq Incorporated 21 May 2012 6 Borg Family Director: Tanya Borg RCG CBD: 29th defendant Registered office: Banq Address (21 May 2012-6 April 2017) Bluemine: 29th defendant Tax agent: Banq 7 Borg, Michael Director of: Borg Civil RCG CBD: 32nd defendant Family relations: Wife: Tanya Borg Bluemine: former 32nd defendant (settled) 8 Borg, Tanya Director of: Borg Family RCG CBD: 30th defendant Family relations: Husband: Michael Borg Bluemine: 30th defendant Director of: • Discobell • Givana Bluemine: 35th defendant 9 Cassaniti, Ivana • Givana Prestige Diamondwish: 27th defendant • Auswide Rackforce: 9th defendant Family relations: • Husband: Gino Cassaniti 10 Crabbe, Scott Director of Reliance Cleaning RCG CBD: 28th defendant Fred Khalil was his accountant Sole director and secretary: • Ivana Cassaniti: 25 August 2011-8 August 2013; 12 September 2014-onwards • Fred Khalil: 8 August 2013-19 February 2014 11 Discobell Bank account signatories: Bluemine: 34th defendant • Ivana Cassiniti • Fred Khalil • Peter Abboud Registered office: Banq Address 12 Haddad, John Director of North Shore and Centerium Wholesalers Bluemine: 25th defendant RCG CBD: 33rd defendant Incorporated 12 October 2010 Directors: 1. Fred Khalil: 12 October 2010 - 2. Kwok Ming Law: 12 October 2010-23 December 2011 13 Kamikaze Shareholder: KTDH RCG CBD: 34th defendant Registered office: Banq Address Bank signatories: 1. Peter Abboud 2. Fred Khalil 3. Ivana Cassaniti Incorporated 14 January 2008 14 LAM Director: Andre Abou-Antoun Bluemine: 3rd defendant Registered office: Banq Address (from 6 July 2011) Tax agent: Banq Incorporated 20 October 2010 15 MAL Land Director: Michael Abou-Antoun Bluemine: 4th defendant Registered office: Banq Address (from 9 April 2012) Tax agent: Banq Director of Involved Recruitment: 16 May 2012-16 May 2012 16 Said, George Family relations: Bluemine: 33rd defendant 1. Friends with people at Banq RCG CBD: 38th defendant Banq was George Said's accountant Incorporated 2 March 2011 Director and company secretary: 17 Sivasli 1. Turkel Fidel: 2 June 2011 - 18 December 2012 RCG CBD: 5th defendant Sole director, company secretary and shareholder: 1. Fred Khalil: 18 December 2012 Registered office: Banq Address Incorporated 23 August 2013 Directors: 18 The Great Brothers 1. Andre Abou-Antoun Bluemine: 5th defendant 2. Michael Abou-Antoun Registered office: Banq Address (from 16 January 2012) Tax agent: Banq

Other relevant individuals and entities Name Description Party Director of: Jian Holdings 1 Abboud (nee Edwards), Jillian Family relations: Bluemine: former 37th defendant (settled) • Ex-husband: George Abboud Payroll officer at RC Group Family relations: 2 Abboud (nee Kelada), Mandi • Husband: Peter Abboud • Brothers in law: Michael Abboud, George Abboud, Fadi Abboud • Sister in law: Katherine Khalil Director of Jola Holdings Family relations: • Girlfriend: Watcharee Syua Nang 3 Abboud, George • Ex-wife: Jillian Edwards • Brothers: Peter Abboud, Michael Abboud, Fadi Abboud • Sister: Katherine Khalil • Cousin: Andrew Barsa Director of: Jola Holdings Family relations: 4 Abboud, Michael • Brother: Peter Abboud, George Abboud, Fadi Abboud Bluemine: former 26th defendant (settled) • Sister: Katherine Khalil • Cousin: Andrew Barsa Tax agent: Banq Family relations: 5 Abboud, Monica • Husband: Fadi Abboud Bluemine: former 7th defendant (settled) • Brothers in law: Peter Abboud, Michael Abboud, George Abboud • Sister in law: Katherine Khalil Director of: • LAM 6 Abou-Antoun, Laurance • The Great Brothers Bluemine: former 22nd defendant (settled) Family relations: • Brothers: Andre Abou-Antoun and Michael Abou-Antoun Director of: 7 Attard, Richard • Statewide Printing RCG CBD: former 22nd defendant (settled) • Statewide Design Predecessor of Banq; incorporated 1 May 2008; wound up 20 December 2011 Directors and secretaries: • Ivana Cassaniti: 1 May 2008-15 September 2009 • Fred Khalil: 23 February 2009-15 September 2009 • Gino Cassaniti: 15 September 2009-15 September 2009 • Fred Khalil: 15 September 2009-7 January 2011 8 Banq Accountants • Gino Cassaniti: 7 January 2011-25 January 2014 Shareholders: • Fred Khalil • Ivana Cassaniti Bank account signatories: • Peter Abboud • Fred Khalil • Ivana Cassaniti Sole director, secretary and shareholder: 9 Barsa, Andrew • Bluemine: 7 June 2012-1 April 2013 Bluemine: 10th defendant Family relations: Cousins: Peter, Michael, George and Fadi Abboud and Katherine Khalil (nee Abboud) Director of: 10 Cherry, Christopher • Crinz • Diamondwish • Rackforce Director of Cosi Holdings 11 Criniti, Cosimo Family relations: Diamondwish: former 17th defendant (settled) • Son: Frank Criniti Director of Cosimo Foods 12 Criniti, Dominic Family relations: Rackforce: former 15th defendant (settled) • Father: Cosimo Criniti • Brother: Frank Criniti Director of: • Diamondwish • Rackforce • Auswide • Criniti's (Darling Harbour) 13 Criniti, Frank • Criniti's (Wooloomooloo) Diamondwish: former 3rd defendant (settled) • Crinti's (Castle Hill) Rackforce: former 2nd defendant (settled) • Criniti's Woodfired Pizza Family relations: • Ex-wife: Rima Criniti • Father: Cosimo Criniti • Brother: Dominic Criniti Director of: 14 Faanoi, Aloeseiafi • Auswide Diamondwish: 12th defendant • Excavation Rackforce: 11th defendant • Jian Holdings Incorporated 12 October 2010 Sole director: • Fred Khalil: 12 October 2010-8 August 2013 • Ivana Cassaniti: 8 August 2013 onwards 15 GFP Holdings Shareholders: • Givana: 6 shares • F & K Khalil Pty Ltd: 3 shares • Peter Abboud: 1 share Owner of Banq's premises 16 Ghanem, Ahmed Director of Phoenix Industrial Cleaning RCG CBD: former 36th defendant (settled) 17 Ghanem, Zouhair Director of Phoenix Industrial Cleaning RCG CBD: former 37th defendant (settled) Incorporated 9 October 2017 Sole director, secretary and shareholder: Ivana Cassaniti 18 Givana Employee: Gino Cassaniti Majority shareholder of Banq Registered office: Banq Address Incorporated 29 November 2010 Motor vehicle business Directors: 19 Givana Prestige • Ivana Cassaniti: 29 November 2010-18 January 2012 Diamondwish: former 1st defendant (settled) • David Rizk: 18 January 2012-10 May 2012 Rackforce: former 1st defendant (settled) • Frank Criniti: 10 May 2012 onwards Registered office: Banq Address Tax agent: Banq 20 Haidar, Nizar Director of HCC Commercial Cleaning RCG CBD: Former 41st defendant (settled) Incorporated 5 October 2011; deregistered 5 March 2016 Directors: • Fred Khalil: 5 October 2011-24 September 2014 21 Investmint • George Khalil: 19 February 2014-24 September 2014 Shareholders: Fred and George Khalil Registered office: Banq Address Tax agent: Banq Incorporated 16 May 2012; wound up 28 June 2013 Directors: • George Said: 16 May 2012-16 May 2012 22 Involved Recruitment • George Khalil: 16 May 2012-16 May 2012 • Gino Cassaniti: 16 May 2012-18 March 2014 Registered office: Banq Address Bank account signatory: George Said Director of Kito Investments Family relations: 23 Khalil, Katherine • Husband: Fred Khalil RCG CBD: former 24th defendant (settled) • Brothers: Peter, Michael, George and Fadi Abboud • Brother in law: George Khalil • Sisters in law: Monica, Mandi and Jillian Abboud 24 Kohli, Komel Accounts manager of AKA Civil Directors: • Fred Khalil: 12 March 2010-3 May 2010; 13 October 2010-27 July 2013 • Gino Cassaniti: 27 July 2013-18 March 2014 25 KTDH Shareholder: Gino Cassaniti Bank account signatories: • Peter Abboud • Fred Khalil • Ivana Cassaniti Incorporated 5 October 2011 26 LFC Holdings Director: Peter Abboud: 10 August 2011 onwards Registered office: Banq Address Bank account signatory: Peter Abboud 27o Murray, David Director of Ignite Promotions Bluemine: former 19th defendant (settled) RCG CBD: former 19th defendant (settled) 28 Naesse, Fred Director of Coolfind RCG CBD: former 26th defendant (settled) Director of Blackrock Media Bluemine: former 17th defendant (settled) 29 Nassar, Elias Family relations: RCG CBD: former 17th defendant (settled) Wife: Wendy Nassar Director of Wenman Bluemine: former 15th defendant 30 Nassar, Wendy Family relations: RCG CBD: former 15th defendant (settled) • Husband: Elias Nassar 31 Parekh, Vipul Operations manager or accounts manager of Reliance Cleaning Incorporated 23 July 2010; wound up 5 September 2017 Directors: • Debbie Akkawi: 23 July 2010- 23 July 2010 • Scott Crabbe: 23 July 2010-23 August 2016 • Peter Abboud: 23 July 2010-5 September 2017 32 Reliance Cleaning • Hussein El-Massri: 10 July 2017-5 September 2017 Registered office: Banq Address Tax agent: Banq Bank account signatories: • Peter Abboud • Fred Khalil • Ivana Cassaniti 33 Rizk, David Director of Givana Prestige: 18 January 2012-10 May 2012 Diamondwish: former 28th defendant Personal assistant of Frank Criniti Director of: • Statewide Printing 34 Sande, Mario • Statewide Design RCG CBD: former 21st defendant (settled) Family relations: • Brother: Michael Sande Director of: 35 Sande, Michael • Statewide Design RCG CBD: former 23rd defendant (settled) Family relations: • Brother: Mario Sande 36 Shah, Tarun Employee (accountant) of Banq In-house accountant of one or more of Frank Criniti's companies Directors: 37 Statewide Design • Mario Sande RCG CBD: former 20th defendant (settled) • Michael Sande • Richard Attard Directors: 38 Statewide Printing • Mario Sande RCG CBD: former 3rd defendant (settled) • Richard Attard 39 Wenman Director: Wendy Nassar Bluemine: former 2nd defendant RCG CBD: former 2nd defendant (settled) Incorporated 18 February 2003; renamed Zagoonda; wound up 5 January 2010 Directors: • Frank Criniti: 18 February 2003-15 December 2008 40 Zagoonda (previously Criniti's Pty Ltd) • Cosimo Criniti: 20 February 2003-15 December 2008 • Mohammad Irshad Rosunally: 15 December 2008-5 January 2010 Registered office: Banq Address Bank account signatory: Frank Criniti

Schedule of Parties Proceedings Parties Representation Counsel: 1st Plaintiff: Mitchell Warren Ball in his capacity as liquidator of Earth Civil Pty Ltd Plaintiffs: I Faulkner SC / S Shepherd 2nd Plaintiff: Earth Civil Australia Pty Ltd (in liq) 1st, 6th, 7th Defendants: R Seiden SC / R Johnson 1st Defendant: Michael Abouantoun 2nd Defendant: D Feller SC / I Young / W Brewer In the matter of Earth Civil Australia Pty Ltd 2nd Defendant: Gino Cassaniti 3rd, 4th Defendants: C Robinson (2016/000194955) 3rd Defendant: Faouzi Khalil Solicitors: 4th Defendant: George Khalil Plaintiffs: Craddock Murray Neumann Lawyers 5th Defendant: Peter Abboud 1st, 6th and 7th Defendants: Lionheart Lawyers 6th Defendant: AKA (Civil) Pty Ltd 2nd Defendant: Paramount Lawyers 7th Defendant: AKA (NSW) Pty Ltd 3rd, 4th Defendants: Cambridge Law/Raed Rahal 5th Defendant: Gupta Co Law 1st Plaintiff: Mitchell Warren Ball in his capacity as liquidator of RCG CBD Pty Ltd 2nd Plaintiff: RCG CBD Pty Ltd 1st Defendant: Banq Accountants and Advisors Pty Ltd Counsel: 5th Defendant: Sivasli Pty Ltd Plaintiffs: I Faulkner SC / S Shepherd 11th Defendant: Gino Cassaniti 5th, 12th, 13th, 34th , 38th, Defendants: C Robinson 12th Defendant: Faouzi Khalil 11th Defendant: D Feller SC / I Young / W Brewer In the matter of RCG CBD Pty Ltd 13th Defendant: George Khalil 29th to 32nd Defendants: M Condon SC / P Afshar (2016/00195008) 14th Defendant: Peter Abboud Solicitors: 28th Defendant: Scott Crabbe Plaintiffs: Craddock Murray Neumann Lawyers 29th Defendant: Borg Family Pty Ltd 5th, 12th, 13th, 34th, 38th Defendants: Cambridge Law/Raed Rahal 30th Defendant: Tanya Borg 11th Defendant: Paramount Lawyers 31st Defendant: Borg Civil Australia Pty Ltd 14th Defendant: Gupta Co Law 32nd Defendant: Michael Borg 29th to 32nd Defendants: MistryFallahi 34th Defendant: Kamikaze Teppanyaki (Darling Harbour) Pty Ltd 38th Defendant: George Said 1st Plaintiff: Mitchell Warren Ball in his capacity as liquidator of Bluemine Pty Ltd (in liq) 2nd Plaintiff: Bluemine Pty Ltd (in liq) Counsel: 3rd Defendant: LAM Haulage Pty Ltd Plaintiffs: I Faulkner SC / S Shepherd 4th Defendant: M.A.L. Land Group Pty Ltd 3rd, 4th, 5th, 20th, 21st, 23rd, 24th Defendants: R Seiden SC / R Johnson 5th Defendant: The Great Brothers Pty Ltd 11th Defendant: D Feller SC / I Young / W Brewer 11th Defendant: Gino Cassaniti 12th, 13th, 33rd Defendants: C Robinson 12th Defendant: Faouzi Khalil 29th, 30th Defendants: M Condon SC / P Afshar 13th Defendant: George Khalil 34th Defendant: D Allen In the matter of Bluemine Pty Ltd 14th Defendant: Peter Abboud 35th Defendant: D Cook SC / A Katsoulas (2016/00256135) 20th Defendant: Andre Abou-Antoun Solicitors: 21st Defendant: Michael Abou-Antoun Plaintiffs: Craddock Murray Neumann Lawyers 23rd Defendant: AKA (NSW) Pty Ltd 3rd, 4th, 5th, 20th, 21st, 23rd, 24th 24th Defendant: AKA (Civil) Australia Pty Ltd Lionheart Lawyers 25th Defendant: John Haddad 14th Defendant: Gupta Co Law 29th Defendant: Borg Family Pty Ltd 11th Defendant: Paramount Lawyers 30th Defendant: Tanya Borg 12th, 13, 33rd Defendants: Cambridge Law/Raed Rahal 33rd Defendant: George Said 29th, 30th Defendants: MistryFallahi 34th Defendant: Discobell Pty Ltd 34th and 35th Defendants: Kekatos Lawyers 35th Defendant: Ivana Cassaniti Counsel: Plaintiffs: I Faulkner SC / S Shepherd 1st Plaintiff: Mitchell Warren Ball in his capacity as liquidator of Diamondwish Pty Ltd (in liq) 8th Defendant: D Feller SC / I Young / W Brewer 2nd Plaintiff: Diamondwish Pty Ltd (in liq) 9th, 10th Defendants: C Robinson In the matter of Diamondwish Pty Ltd 8th Defendant: Gino Cassaniti 28th Defendant: D Cook SC / A Katsoulas (2016/00256272) 9th Defendant: Faouzi Khalil Solicitors: 10th Defendant: George Khalil Plaintiffs: Craddock Murray Neumann Lawyers 11th Defendant: Peter Abboud 8th Defendant: Paramount Lawyers 27th Defendant: Ivana Cassaniti 9th and 10th Defendants: Cambridge Law/Raed Rahal 11th Defendant: Gupta Co Law 28th Defendant: Kekatos Lawyers Counsel: Plaintiffs: I Faulkner SC / S Shepherd 1st Plaintiff: Mitchell Warren Ball in his capacity as liquidator of Rackforce Pty Ltd (in liq) 5th Defendant: D Feller SC / I Young / W Brewer 2nd Plaintiff: Rackforce Pty Ltd (in liq) 6th and 7th Defendants: C Robinson In the matter of Rackforce Pty Ltd 5th Defendant: Gino Cassaniti 9th Defendant: D Cook SC / A Katsoulas (2016/00256503) 6th Defendant: Faouzi Khalil Solicitors: 7th Defendant: George Khalil Plaintiffs: Craddock Murray Neumann Lawyers 8th Defendant: Peter Abboud 5th Defendant: Paramount Lawyers 9th Defendant: Ivana Cassaniti 6th, 7th Defendants: Cambridge Law/Raed Rahal 8th Defendant: Gupta Co Law 9th Defendant: Kekatos Lawyers

Amendments 06 September 2021 - [174] Delete sentence DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 06 September 2021