French v Bremner

Issues for determination

1. These proceedings began in April 2014 as a debt recovery action by Provident against Mr French. The proceedings were begun in the Common Law Division. They were transferred to the Commercial List in December 2014. As I will describe in more detail below, Provident obtained judgment against Mr French and has dropped out of the proceedings.
2. The issues before me arise from cross-claims between Mr French and Dr Bremner. Mr French filed a cross-claim against Dr Bremner in September 2014. Dr Bremner filed his own cross-claim against Mr French and Ms Bakey in October 2015.
3. The proceedings on the two cross-claims took a long time to come to trial. Provident's claim against Mr French was dealt with first, and was not finally resolved until the end of 2015. Progress was later delayed for a period while Mr French was subject to bankruptcy proceedings. Another factor was that Mr French's legal representatives wished to lead evidence from Mr Iliuta, who is still living in France and would not co-operate. Arrangements had to be made with the French authorities to summon Mr Iliuta to a court in France to give evidence by video link.
4. The hearing took place before me over nine days, beginning on 6 May. I record my thanks to counsel for both parties for the co-operative and efficient approach they displayed in conducting the hearing. In the end, through no fault of either side, the application to obtain evidence from Mr Iliuta by video link ended in fiasco when he refused to answer questions and could not be compelled to do so. I describe this in more detail below.
5. Initially in his cross-claim Mr French sought relief against Dr Bremner for infringement of copyright, and seeking return of products and prototypes, promotional sales material, drawings and designs associated with the magnetic coupling invention. Those claims have not been pursued. Mr French's claim against Dr Bremner is now confined to a claim for damages for breach of contract (or monies due under contract); the alternative claim for damages for misleading and deceptive conduct was abandoned in final submissions.
6. In his cross-claim, Mr French alleges that he made three separate contractually enforceable agreements with Dr Bremner. Mr French claims damages for breach of each of those agreements (or, in the case of the third agreement, payment of monies allegedly due under that agreement).
7. The first alleged agreement concerned the Provident mortgage. Mr French alleges that Dr Bremner agreed to "buy the mortgage". On Mr French's case this meant that Dr Bremner assumed responsibility to discharge the mortgage debt, or at least, keep Mr French indemnified against the mortgage liability. Mr French alleges that Dr Bremner's failure to indemnify him against Provident's claim in these proceedings was a breach of this agreement, and claims damages representing the value of the judgment entered against him in Provident's favour. The claim under this alleged agreement is $3.32 million.
8. The second alleged agreement concerned the exploitation of the magnetic coupling invention, and in particular its exploitation in Europe. It is referred to in Mr French's Statement of Cross-Claim as the "joint venture agreement".
9. Mr French's allegation is that Dr Bremner agreed to the incorporation in France of a company to exploit the invention in Europe, with Mr French to hold 51% of the shares, Dr Bremner 44% and Mr Iliuta 5%. Dr Bremner was to fund the company's costs until it was able to do so from its own earnings. Mr French would license to the company the intellectual property for the inventions, including the patent rights, know-how and copyright. Dr Bremner would fund all of the costs of obtaining and maintaining the necessary patents. Mr French alleges that Dr Bremner breached this agreement by refusing to proceed with the incorporation of the company and then going into business with Mr Iliuta to the exclusion of Mr French. Mr French claims damages on the footing that he lost the profits he would have made from successful exploitation of the technology. The damages are put at more than $39 million.
10. The third alleged agreement concerned the Victorian properties. It is referred to in the Statement of Cross-Claim as the "property maintenance agreement". Mr French alleges that Dr Bremner agreed for Mr French, in effect, to manage and maintain the properties and to contribute towards the expenses incurred by Mr French in doing so. The alleged agreement was that Dr Bremner would contribute 100% of the costs associated with the properties which he owned, and 50% of the cost of the properties which were jointly owned. In the course of the hearing, some of the expenses and remuneration which had been claimed were not pursued. The amount now claimed by Mr French under this alleged agreement is $128,000.
11. In Dr Bremner's cross-claim, he claims repayment from Mr French of monies he provided to Mr French or paid to third parties allegedly at the request of Mr French. Dr Bremner's case is that these payments were loans which are now repayable. The amount claimed is $3.15 million.
12. Initially, there was some dispute about the amount of money which Dr Bremner actually provided to Mr French over the years. But in the course of the trial a Notice to admit Facts was served and an answer was provided, following negotiations between the parties, which greatly reduced the area of dispute. The Notice to Admit called for an admission that Dr Bremner had advanced a total of $3.13 million to Mr French. Ultimately, admissions were made by Mr French that he received $3.10 million. Mr French also admitted that some of these payments, totalling $1.82 million, were made by way of loan. He did not admit that the remainder of the monies had been provided by way of loan. Nor did he admit that any of the moneys, even if initially received by way of loan, were repayable.
13. In his cross-claim, Dr Bremner also makes a counter claim against Mr French and Ms Bakey over the Victorian properties. Dr Bremner claims that, having provided the funds for the purchase of the properties, he is entitled to a resulting trust over the properties to the extent that they are registered in the name of Mr French or Ms Bakey.
14. Alternatively, to the extent that Dr Bremner is unsuccessful in establishing the existence of a resulting trust over the jointly owned properties, he seeks orders appointing trustees for the sale of the property. These orders are sought under Part IV of the Property Law Act 1958 (VIC), the Victorian equivalent of Part 4 Division 6 of the Conveyancing Act 1919 (NSW), s 66G.

Summary and analysis of evidence

1. Mr French was the main witness in his case. He gave evidence and was cross-examined over a period of three days. Ms Bakey also gave evidence, and was cross-examined, at some length.
2. An affidavit was filed for Dr Bremner in support of his case. Ultimately the affidavit was not read. Counsel for Dr Bremner conceded that as a result, a Jones v Dunkel inference is available on some of the factual issues in the case, although counsel contended that no such inference should be drawn. I address this when considering each of the factual issues in question.
3. Throughout the time Mr French and Dr Bremner knew each other, Dr Bremner lived overseas. The evidence before me included dozens of email communications between Mr French (and, towards the end of the relationship in 2011, Ms Bakey) and Dr Bremner. From 2009 these email communications included Mr Iliuta who was also overseas. The agreements alleged by Mr French are all oral ones and the emails naturally provide useful contemporaneous context for what was happening, particularly when, as we will see, the affidavit evidence on these questions has reliability problems.
4. The emails are important for another purpose. The relationships between Mr French and Dr Bremner, and between Mr French and Mr Iliuta, were tumultuous ones marked by angry emails (particularly on Mr French's side) about one issue or other, following which things would be smoothed over and the parties would be reconciled, at least on the surface. From 2010 onwards these spats appear to have become more frequent and some of the correspondence became more heated. Some of the emails, on both sides, involved a degree of recrimination, referring back to earlier dealings between the parties. Although they must be understood in their immediate context, such emails at least have the advantage of being more closely contemporaneous to the relevant events than the affidavits which have subsequently been prepared.
5. The Court Book in the present case contained ten volumes of documents and the emails must have represented a substantial proportion of the tender. I have read and considered most of the emails, even though many of them were not referred to in cross-examination or otherwise brought to my attention for the purpose of submissions. I have found some of them illuminating in resolving the factual issues which arise and have relied on them for this purpose. The emails were, after all, in evidence. In relying in this case on emails which were not referred to in cross-examination or submissions, I have, of course, borne that fact in mind.
6. In the remainder of this section of the judgment, I first set out the background of the main protagonists and comment generally on the credibility of Mr French and Ms Bakey. I then set out the main events in chronological order, as established by documentary evidence or otherwise not in dispute. Then I deal with the admissibility of Mr Iliuta's affidavits and draft affidavit, and deal with two other evidentiary issues on which I ruled in the course of the trial. Finally, I analyse the evidence on the various disputed issues of fact and give my conclusions on those issues.

Mr French

1. Mr French was born in March 1962. He left school in 1980 or 1981. It is not clear what other work he has done in the course of his career, but he has been an inventor since early on. He said that he produced his first invention (a device which prevented dogs from knocking over garbage bins) in the summer of his first year out of school. He later invented a snow gun for snowmaking, which he exhibited at the Geneva International Exhibition of Inventions in 1994. The following year he exhibited devices he had invented for fish farms.
2. Mr French's technical and scientific abilities as an inventor, and in particular the genius involved in the magnetic coupling invention, were acknowledged by Dr Bremner and Mr Iliuta. According to Mr French, Dr Bremner also once told him that he had a wonderful eye for property. But the evidence in this case suggests that, although an enthusiastic participant in business dealings, Mr French did not have a very businesslike frame of mind.
3. Mr French's attempts to commercialise the magnetic coupling invention appear to have been punctuated by long periods of time where his attentions moved to other projects. The purchase of the properties in Victoria and attempts to improve them are an instance of this. Mr French was also chronically short of the money needed to fund his projects. When compared with the amounts outlaid on them, none of the projects generated much money and Mr French does not seem to have had any other source of income.
4. The tone of Mr French's emails varies widely. Usually they were friendly. But issues would blow up, resulting in angry emails complaining about the conduct of Dr Bremner or Mr Iliuta. In some cases, these were written late at night and followed soon afterwards (presumably on re-reading) by a much more conciliatory post-script. At other times Mr French might drop his bundle and say he did not care anymore, or adopt a pleading tone to try to get what he wanted. He must have been an exhausting man to deal with.
5. Counsel for Dr Bremner made a wholesale attack on Mr French's credibility in closing submissions. Counsel referred in particular to three aspects of Mr French's evidence.
6. First, counsel referred to Mr French's conduct towards Mr Iliuta in trying to obtain evidence from him for the purposes of these proceedings. I refer to this conduct in more detail below when dealing with the admissibility of Mr Iliuta's affidavits. On Mr Iliuta's account it extended to making physical threats, although as we will see, I consider that his complaints did not justify Mr Iliuta in refusing to give evidence. Mr French may well have been frustrated by Mr Iliuta's prevarication and his attempts to extract benefits for testifying. But at best, Mr French's emails were overbearing and displayed a "whatever it takes" mentality to obtaining Mr Iliuta's testimony. It is only right that the Court should treat with reservations the evidence of a person who is prepared to behave like this.
7. Second, counsel referred to the circumstances in which Mr French's main affidavit was prepared. It emerged from the evidence about the preparation of Mr Iliuta's draft that the draft was shared with Mr French and Ms Bakey while they prepared their affidavits in chief. They also shared their drafts with each other.
8. It hardly needs pointing out how unsatisfactory this was. In such circumstances there is an obvious potential, if not likelihood, of cross-contamination of the witness' evidence.
9. Counsel also referred to the manner in which Mr French gave his evidence orally. As counsel correctly pointed out, Mr French's testimony was marred by his failure to answer questions directly. This happened time and again, even after the Court had intervened on many occasions to remind Mr French of his obligation to answer the question, and only the question, asked of him. It is not surprising that Mr French feels strongly about the events which are the subject of his claim. But it was clear for all to see that he was unable to restrain himself and focus on what, as a witness, he ought to be doing: relaying what he could recall in as plain and unvarnished manner as possible.
10. Counsel also relied on the well-known statement in Watson v Foxman (1995) 49 NSWLR 315 at 319-320 concerning the difficulty facing a plaintiff in seeking to make out a case based on oral dealings. I agree that those principles are of particular application in this case, where the relevant events took place long ago and the parties have now been involved in disputes for many years involving claims for large amounts of money.
11. I should add that, to the extent that contemporaneous evidence is available, it conflicts in a number of respects with the sequence of events set out in Mr French's affidavit. This further reduces the confidence which I could have in the reliability of what Mr French now says.
12. None of this means that all of Mr French's evidence has to be rejected. But I consider that counsel's criticisms of Mr French's evidence have force and I have borne them in mind in evaluating Mr French's testimony. Overall, I have treated his evidence with considerable caution.

Ms Bakey

1. Ms Bakey is seven years younger than Mr French. She was brought up and went to school in Melbourne, and studied business at Box Hill Technical School. She completed her studies in 1986.
2. In 1989, Ms Bakey joined Westpac Banking Corporation. She worked in the bank in "all areas", including as an assistant manager and also in the legal and securities area. She left the bank early in 1995.
3. Ms Bakey met Mr French in 1996 in Narrabeen in Sydney. She had moved from Melbourne and was working as a waitress in a local pub. She and Mr French have been in a relationship ever since. They have two sons. The older son, Eon, was born in 1998 or 1999. The younger son, Eden, was born in 2004 or 2005.
4. The observations I have made about the Watson v Foxman principle apply equally to Ms Bakey's evidence. The account of events in her affidavit was less detailed than that of Mr French but there was also a similar lack of consistency between some of the things she said and the documentary record, to the extent that it existed. There is also a cloud over her evidence because of the circumstances in which her affidavit was prepared.
5. There is a further important aspect of Ms Bakey's evidence. On an objective view of the evidence, whatever Dr Bremner may have done or not done, Mr French plainly bears some responsibility himself for his financial misfortunes. Ms Bakey did not appear to acknowledge this; she blames Dr Bremner for everything which has gone wrong. It was clear from the documents in evidence, and from Ms Bakey's own testimony, that she never liked Dr Bremner. She has now come to dislike him, intensely.
6. All of these factors make Ms Bakey's reliability questionable. I have accordingly treated her evidence with a great deal of reserve.

Mr Iliuta

1. Mr Iliuta is of Romanian extraction. He was born in Bucharest but when he was 14 years old his parents moved to Sweden. He completed his education in Sweden and is a Swedish citizen. After finishing high school he undertook a three year technical course in aviation technology graduating in 1989. He worked as an aircraft technician but also (in his spare time, apparently) was an inventor. He attended the Geneva International Exhibition of Inventions in 1994 and 1995, and first met Mr French at those two shows.
2. Afterwards, Mr Iliuta was involved in trying to set up an inventors' show in Romania and asked Mr French to help. This was through an organisation for which he worked known as the Swedish Young Inventors' Network.
3. Mr Iliuta visited Australia in 1996 in an attempt to commercialise one of his inventions. During this period he stayed briefly with Mr French in Manly. He lost contact with Mr French in 1997 when Mr French met Ms Bakey and moved to Port Stephens, but remained in Australia. After living in Europe between 2003 and 2004 he returned to Sydney and completed a Bachelor of Industrial Design Course at the University of Technology Sydney.
4. In the second half of 2008, shortly before graduating, Mr Iliuta met Mr French again by chance in a manner I describe in more detail below. This led, the following year, to Mr Iliuta travelling to France to set up the distribution operation for Mr French's magnetic coupling invention.
5. As will be seen, on his own admission, Mr Iliuta made use of intellectual property belonging to Mr French (or MGT) by copying drawings and prototypes, which he later tried to claim as his own or his own and Dr Bremner's. I was also unimpressed by the excuse which Mr Iliuta offered (which I do not think should be considered as sworn evidence) for not testifying.
6. A fundamental question about evaluating the weight of Mr Iliuta's affidavit and draft affidavit, emphasised by counsel for Dr Bremner, is that Mr Iliuta was not cross-examined on them. Quite apart from that, I think the draft affidavit has serious flaws, to which I refer below.

Dr Bremner

1. Dr Bremner, of course, did not give evidence. His background and personality could therefore only be evaluated through what I was told by other witnesses and by what can be gleaned from the emails and other documents he wrote which are in evidence.
2. On the evidence, Dr Bremner appears to have ceased to practice as a medical doctor (if he ever did practice as such) before he met Mr French in 2001. One of Dr Bremner's emails refer to him undertaking research in the field of theoretical physics for NASA in the United States. Other emails refer to Dr Bremner working in the London financial markets. It appears, however, that all this had ended by the time Dr Bremner met Mr French in 2001. Thereafter, Dr Bremner seems to have operated as an international investor, with particular interest in the commercialisation of scientific discoveries and in property acquisition and development.
3. By his own estimate, Dr Bremner is a wealthy man. During the period of time which is principally relevant for the purpose of these proceedings (2008-2010) he was living at an address in Cheyne Walk in London. He also had an apartment at Darling Point in Sydney. He visited from time to time, but appears to have been a tax exile from Australia. As the evidence shows, Dr Bremner was capable of lavish displays of generosity, on one occasion buying Mr Iliuta an Audi motor car as a present.
4. There were also times when Dr Bremner would unpredictably go "off the radar" completely. A recurring theme in the evidence was that Dr Bremner was often uncontactable and it was often difficult to get a response from him about something, even if it was urgent.
5. Dr Bremner's self-assessment, as recorded in one of his emails to Mr French, was that he is a similarly remarkable and unusual man. He certainly emerges from the evidence as being mercurial. He seems to have travelled frequently, with his attention flitting between his ventures with Mr French and other ventures, the nature of which is not revealed in the evidence.
6. Dr Bremner's email style was quite different from that of Mr French. When he did eventually respond to something by email, he often gave the impression that he had sent his email when he had something else on his mind. His emails were usually terse to the point of being military, and often did not fully respond to what he was being asked.

Chronology of main events

1. In 1997 Mr French bought a farm at Bulga Creek near North Arm Cove on the northern side of Port Stephens. He and Ms Bakey moved there at some point in the second half of 1997. The farm consisted initially of two lots and a third lot was bought in 2003. The three lots covered 368 acres (149 hectares). The evidence does not reveal how these purchases were financed.
2. It was after moving to Bulga Creek that Mr French made the magnetic coupling invention which became the subject of these proceedings. The idea behind the invention was to use the attractive and repulsive forces of magnets to transfer power from one drive shaft to another. Traditional methods of power transfer use physical connections or couplings, such as pulleys, chains, gears, discs and cogs. Mr French's invention did not require any physical coupling. It could be used, for example, to transfer power from a drive shaft inside a boat to a propeller outside the boat without the need for a physical connection between the drive shaft and the propeller.
3. In September 1999 Mr French applied for a provisional patent from the Australian Patent Office. In October 2001 he made an application under the Patent Co-operation Treaty which enabled him to obtain patent protection in PCT member countries, which included the United States of America, China, India, Japan and major European countries. These applications and patents were managed on his behalf by a firm of patent attorneys, Griffith Hack.
4. Mr French made various prototypes of magnetic coupling machinery to demonstrate his invention. On New Year's Eve 1999 Mr French carried out a public launch of his invention by demonstrating a prototype located at Bulga Creek. He later made a portable prototype which could be transported on a pallet. This prototype was known as "Old Girl". In building the prototype, Mr French was helped by Peter Bradshaw, who was a mechanic, and Adam Donnelly, who was an electrician.
5. In July 2000, Mr French arranged for a company to be incorporated under the name "The Magnetic Gearing & Turbine Corporation Pty Ltd", which was referred to in the evidence as "MGT" or "MGT Australia". The name of the company dates from October 2000; it was initially called The Magnetic Inertia Turbine Corporation Pty Ltd.
6. Mr French was the sole director and secretary of MGT. It eventually came to have more than 94 million issued shares, of which Mr French held 89 million. Ms Bakey held a further million and so did Eon French, the older son of Mr French and Ms Bakey. Mr Donnelly was issued half a million shares in MGT and Mr Bradshaw one million.
7. It is clear that MGT was used by Mr French as a vehicle for raising money for commercialising his invention. But there was little evidence about this, apart from a statement in Mr French's August 2010 promotional report (see [175] below) that he raised $266,000 from "friends and associates". At all relevant times, Mr French remained the registered owner of the patents.
8. According to Mr French, he first met Dr Bremner in or shortly before March 2001. This was shortly before the Geneva International Exhibition of Inventions which was held in April 2001 and at which Old Girl was to be demonstrated.
9. Dr Bremner was introduced to Mr French by a mutual acquaintance as a potential investor in the technology. Dr Bremner visited the Bulga Creek farm at night (apparently because he was shortly returning to the UK where he lived) to see it and was very enthusiastic. Mr French told Dr Bremner that the prototype was to be demonstrated at the Geneva International Exhibition of Inventions.
10. Old Girl was air freighted to Europe for the purposes of the Geneva Exhibition and was accompanied by Mr French, Ms Bakey, Mr Bradshaw, and Mr Donnelly. Through contacts made at the Geneva Exhibition, Mr French arranged to show the invention at the Hanover Fair at the end of April. According to Mr French, the Hanover Fair is the world's largest, and probably most important, industrial technology trade fair.
11. Dr Bremner visited the Geneva Exhibition and saw the invention there. Between the Geneva Exhibition and the Hanover Fair, the party spent a few days in London at a house in which Dr Bremner was living in Battersea. The four later returned to London where Old Girl was entered into a BBC competition called Tomorrow's World which took place at the end of June. Again they stayed at the Battersea house with Dr Bremner.
12. According to Mr French, during discussions with Dr Bremner at Battersea in mid-2001, Dr Bremner indicated an interest in buying land in the Port Stephens area and remarked on having seen a "for sale" sign during his visit to the Bulga Creek farm. The land in question was a 100 acre (25 hectare) property which was surrounded by Mr French's lots. Access was by a right of way over Mr French's property. Dr Bremner rang the agent and bought the land for $200,000. Mr French was later told by the agent that Dr Bremner made the purchase with his credit card.
13. At the Hanover Fair in April, Mr French had met representatives of a South African company called Allied Production Industries Pty Ltd ("API"). One of the divisions of API's business was called Rely Precision Castings ("RPC"). The API executives were interested in developing Mr French's invention for solar powered water pumps to be used in Africa. In June 2001, Mr French visited South Africa (between the Hanover Fair in April and the London competition in June) and signed what was described as an "option agreement" for entering into a joint venture. The parties were API and MGT. API was to produce a working model of the water pump technology and to pay 600,000 rand to MGT for the purchase of the necessary magnets. At the end of the period API was to have the right to enter into a joint venture with MGT through a new company which was to be 50% owned by MGT and 50% by API.
14. Although the option agreement referred to API manufacturing the water pump model, according to Mr French he developed the product himself. He said that he visited API's headquarters in South Africa over the following six months or so on several occasions in connection with this development work.
15. The first formal document, or attempt at a formal document, concerning the financial dealings between Mr French and Dr Bremner is a loan acknowledgement signed by Mr French in favour of Dr Bremner, in October 2001. The acknowledgement appears on a letterhead with Mr French's name on it and does not refer to MGT. It states simply: This is to acknowledge that I have received the sum of $335,000.00 from Dr Chris Bremner as a loan to pursue my inventions.
16. As will be seen, Mr French used at least $80,000 of this money to pay for patents for the magnetic coupling invention. He also said that some of the money was for another invention, to do with escalator handrail advertising. The document refers to the pursuit by Mr French of his "inventions" which is consistent with this.
17. According to Mr French, his next contact with Dr Bremner was in early 2002. Dr Bremner visited the Bulga Creek farm with his mother to show her the land he had purchased. After Dr Bremner returned to Sydney Mr French visited him there to ask whether he would be able to help with further money to develop the magnetic coupling invention, and in particular the solar water pump for use in South Africa. Dr Bremner told him that money was tight and that he could not help. After that there was no further contact between them for almost five years.
18. Mr French visited South Africa again in March 2002 where he presented the product to API. API provided him with a further 200,000 rand. The terms on which this was provided were recorded in a letter from API to Mr French dated 13 March 2002. The letter recorded that due to Mr French's financial position there was concern about him being made bankrupt and losing the patent rights. API offered to move the patents into a "safe company" so that they would not be under threat. API also indicated that it did not have the resources or expertise to commercialise the project alone and other participants able to provide capital and expertise were needed. API stated that it would not invest further funds into the project until satisfied that such participants had been lined up. API stated that it saw itself as a passive investor.
19. Mr French does not appear to have taken up the "safe company" option. Instead he put further proposals to API for it to invest more money in developing the invention. Emails between Mr French and the managing director of API, Mr Graham Knight, from June 2002 are in evidence. But as indicated in the letter of March, API's position remained that it would not invest until the right equity partners and management had been obtained. Mr Knight noted that API had spent about 1.25 million rand and had not even obtained a shareholder's agreement. The joint venture agreement never seems to have been activated, and there is no further evidence of any dealings between Mr French and API.
20. In his affidavit, Mr French stated that the total amount he received from API equated to $180,000. This would not have lasted very long. Mr French conceded that after his dealings with API petered out he lacked the money to develop the technology further and he decided to concentrate on farming operations at the Bulga Creek property. He did however set up a small-scale manufacturing operation at Karuah and tried to sell water pumps to farmers in Australia. He also built a lawn mower using the technology which he showed at the Hanover Fair in 2005. He continued to maintain the patents over the invention.
21. Mr French's individual banking was done with Westpac. As well as an account in his personal name, he had an account in the business name "Bulga Creek Pastoral Co". Presumably this business name was for Mr French's farming activities at Port Stephens. MGT had its own separate bank account with the ANZ.
22. The bookkeeping for MGT and Mr French were done by Ms Bakey, who appears to have maintained the cash books and ledgers. Tax returns and financial statements would presumably have been prepared by external accountants, but there are none in evidence.
23. At some stage, Mr French decided to sell 100 acres of the Bulga Creek property to raise funds. He began negotiating with a church organisation known as Victory Mission. The negotiations resulted in a proposal which was recorded in a March 2005 letter from solicitors acting for Victory Mission to solicitors acting for Mr French.
24. The proposal was for Mr French to sell one of the three lots making up the Bulga Creek property (Lot 3, consisting of 168 acres) to the Church for $2.4 million and buy back 68 acres for $600,000. Mr French was to be responsible for the necessary subdivision. Victory Mission's solicitors asked Mr French's solicitors to take instructions and respond, presumably for the purpose of pursuing negotiations along these lines. But there is no documentary evidence of any response.
25. Mr French took out the loan from Provident which is the subject of these proceedings in May 2006. A signed loan agreement and registered mortgage, both dated 15 May 2006, are in evidence. The loan was repayable after six months. The principal sum was $1.935 million, which included interest in advance. The "normal" interest rate was 17.3%, which was discounted to 11.3% if payment was made on time.
26. Mr French did not repay the loan on its due date in November 2006. Provident extended the expiry date to February 2007 and the interest rate increased to 17.3%.
27. According to Mr French he engaged a surveyor to undertake the subdivision which was the subject of the proposal to the Victory Mission, but this was delayed as a result of surveying and boundary definition problems. There is no independent evidence of this. In any event, by the end of 2006 no subdivision had occurred and no sale had taken place.
28. It was at this point that contact between Mr French and Dr Bremner was renewed. According to Mr French, this happened as a result of a telephone call from Dr Bremner in the United Kingdom. I discuss Mr French's account of the conversation in more detail below.
29. Soon afterwards, Dr Bremner provided further monies to Mr French. Dr Bremner deposited $20,000 to Mr French's bank account on or about 22 December 2006 and a further $50,000 on or about 30 January 2007.
30. These payments were the prelude to a much bigger payment. This was documented by a "Loan Agreement" which was dated 14 February 2007. The document was prepared and signed by Mr French. The parties were identified as Mr French and Dr Bremner. The document stated: I Andrew French agree that for the loan of 1 million AUD loaned to me by Christopher Bremner, I will give him an option to purchase Lot 3 Pacific Hwy, Nth Arm Cove for 2 million AUD if the money is not repaid.
31. On the same day, 14 February, Mr French sent a fax to Dr Bremner in the United Kingdom attaching a copy of the "Loan Agreement". The fax stated: I hope this is what you want, let me know if you want any changes or added clauses. At present the land is 168 acres, with the boundary adjustment we would make 2 blocks out of it by adding the other 32 acres from the block next to it. The R/Estates valuation for this was $1,400,000 for one block & $1,800,000 for the block closest to the water, we have listed it with True Blue R/Estate in Newcastle, but this is a better option. The valuation was done by Du Points in Newcastle, but I don't have access to it as it was ordered and paid for by the finance company. You could try to contact them or try to get an idea from talking to R/Estates. … Thank you for helping out and I am sure we will have success in Germany.
32. The reference to "success in Germany" was to the Hanover Fair which Mr French was planning to visit again in April that year. Following receipt of the fax, Dr Bremner transferred $1 million into Mr French's account. The money was received seven days later, on 21 February.
33. Meanwhile, Mr French and Ms Bakey had become interested in living in Gippsland. A property known as "Corringle Beach Homestead" near Orbost at the mouth of the Snowy River was for sale. The property consisted of two parcels of land on separate titles. One parcel contained the homestead itself; the other was low-lying farm land protected by a levee bank.
34. The purchase price for the Corringle Beach property was $920,000. Mr French paid a deposit of $92,000 and exchanged contracts to buy the property. The deposit was made up of three payments: $9,100 paid on 3 February, $9,300 paid on 20 February, and $73,600 paid on 17 April.
35. Mr French travelled to the Hanover Fair in April 2017 with an Australian associate, Mr Hugo Simpson. According to Mr French, after the Fair they travelled, at Dr Bremner's invitation, to stay with him at a luxurious resort at Marbella in southern Spain. Dr Bremner had to leave after a few days but Mr French and Mr Simpson stayed on. This was all at Dr Bremner's expense.
36. Following his return from Marbella, Mr French stayed in touch with Dr Bremner about the magnetic coupling invention. He was receiving expressions of interest from contacts he had made at the Hanover Fair, and forwarded those emails to Dr Bremner.
37. Presumably as a result of his experience at the Hanover Fair, Mr French wanted to develop the magnetic coupling technology by building magnetic wheels for it. He also wanted to have tests done to confirm the torque which the coupling could generate, and identified a Dutch company to perform the test and certify the results. These tests were performed in the second half of 2007.
38. Meanwhile, on 14 February, the Provident loan was extended for another three months, with the expiry date being 15 May. On 9 March, Mr French paid $113,000 to Provident out of the monies received from Dr Bremner, reducing the balance to approximately $2 million. On 15 May, there was a further extension to 2 July. On 1 June, Mr French paid a further $200,000 to Provident, reducing the balance to $1.85 million.
39. On 2 July the Provident loan was extended for another six months to 2 January 2008. In August Mr French entered into a further loan agreement with Provident. This involved borrowing a further amount of $15,000, taking the principal amount of the loan to $1.95 million.
40. The purchase of the Corringle Beach Homestead property was completed in November 2007. By this stage Mr French had retained a local firm of solicitors known as Wards. Taking into account the deposit already paid, the amount payable on settlement was approximately $890,000. Dr Bremner provided $1 million to Wards to enable the settlement to proceed. I will refer to the ownership details in discussing Dr Bremner's resulting trust claim below.
41. When the purchase of the Corringle Beach Homestead property was completed, most of the land was, and had been for some time, flooded with salt water. In this state it could not be used for farming, but apparently that had been part of the attraction to Mr French. He thought the purchase price was cheap because he had worked out a way to drain the land so as to bring it back into production.
42. According to Mr French, he and Ms Bakey had become interested in the Corringle Beach property because they were contemplating the subdivision and sale of the North Arm Cove properties. Mr French and Ms Bakey appear to have occupied the homestead at Corringle Beach soon after the settlement in November 2017. But they also maintained their residence at the Bulga Creek farm, moving between there and Corringle Beach from time to time. The Bulga Creek farm later seems to have been operated as some sort of bed and breakfast facility.
43. Since paying the deposit on Corringle Beach Homestead in 2007, Mr French had been looking at other Victorian properties. Six other properties were acquired with the agreement of Dr Bremner, who funded substantially all of the purchases (there was a dispute about whether Mr French paid some small holding deposits). Two other properties were bought at Corringle Beach. Two further properties were acquired at Newmeralla slightly inland of Corringle. Another property was purchased at Cobungra in the Victorian Alps, not far from the ski resort at Mount Hotham. The final property was at Deddick Valley, in the mountains to the east of the Snowy River north of Orbost.
44. Mr French and Ms Bakey became enthusiastic about using the Corringle Beach farmland to grow samphire, which is a type of succulent which grows in salty environments. They believed that this could be sold to high-end restaurants. Mr French also wanted to run cattle.
45. Meanwhile work was continuing on Mr French's invention. The torque test reports were issued in December. Mr French made plans to visit Europe early in 2008.
46. On 31 January Mr French emailed Dr Bremner with details of "amounts needed" totalling approximately $210,000. Of this, $87,000 was required for deposits on two of the Gippsland properties, one at Newmeralla and the other at Corringle Beach. A further $83,000 was required for works on one of the Corringle Beach properties, which Mr French suggested could then be rented. There was also $40,000 for patent costs coming up, air fares and other travelling expenses. In February 2008 Mr French emailed Dr Bremner updating him on the progress of a machine being built by Mr French and also requesting further money.
47. Dr Bremner did not provide all the money for which Mr French asked, at least immediately. But he did provide some. In mid-February, mid-March and mid-April 2008 he made three payments to Mr French totalling $50,000. The money needed for the deposits on the Newmeralla and Corringle Beach properties was provided separately: it was paid out of the money left over from the amount sent by Dr Bremner to Wards in November 2007. Dr Bremner presumably gave authority to Wards to allow Mr French to make these payments.
48. The three payments made by Dr Bremner to Mr French in February, March and April 2008 were the beginning of a series of such payments which ultimately extended until December 2010. Over that period, the payments were roughly made monthly, in multiples of $10,000. In 2008, all of the payments were between $10,000 and $30,000 but in 2009 and the first half of 2010 many of them were much larger. The biggest was $120,000 made in March 2009. The purpose of the payments was to fund Mr French's ongoing expenditure, and in the rest of this judgment I will refer to them as the "regular funding payments".
49. Meanwhile, on 2 January the Provident loan had been extended for a further two months until 2 March. At the end of February it was further extended to 1 May. But Mr French owed arrears of interest. Provident commenced debt recovery proceedings against him in this Court. According to Mr French, this was in March 2008, although in fact the actual proceedings may not have been commenced this early. Mr French retained Mr Greenstein to act for him.
50. On 3 April, Provident's solicitors wrote to Mr Greenstein enclosing a loan account statement from Provident. According to the letter, the amount of interest outstanding was approximately $98,000. The following Monday, 7 April, Mr Greenstein forwarded the letter and statement to Mr French. Mr Greenstein recommended that payment of interest be made on a without prejudice basis. Mr French was then overseas. Mr Greenstein asked that Mr French transfer the necessary funds to enable payment to be made. He also asked for a conference when Mr French returned to Sydney "in order to determine a way forward with this unfortunate matter". Mr French, who was then in Asia, forwarded the email to Dr Bremner along with a request for a further $5,000 or $10,000, apparently for travel expenses.
51. These events provoked an email from Dr Bremner in response on 18 April: Dear Andrew, I was shocked and deeply hurt to see of the 1,000,000 dollars I gave to you to pay down the loan on Port Stephens only 200,000 was applied to this, I have acted in good faith, you blatantly lied to me. Why? How can I continue to do business with you? Call me urgently.
52. In saying that only $200,000 had been applied to the loan on the Port Stephens property, Dr Bremner appears to have overlooked the payment of $113,000 early in March 2007. But it is clear from this email, and from Mr French's response to it which I discuss below, that Dr Bremner provided his $1 million for the purpose of reducing the debt on the North Arm Cove properties and that most of the money was not used for that purpose.
53. On 23 April Mr French responded saying that he had only just received Dr Bremner's email (five days later) and said it was "not like that". The email continued: I have paid more than that to the finance company and the mortgage broker. However when the loan was to be paid down it was past the date and the finance company had rolled it over. I have paid at least $350,000 and have more money that was given to the mortgage broker which was not paid to the finance company when I was overseas. That was another $110,000, when I found out it was not paid I approached them and they said it would be paid in the next month. I was very upset and they signed a loan agreement with me with 10% interest per month. I have a meeting with the broker and the solicitor when I get back to Australia. It should be about $300,000 now with interest. It was the same company that got the loan for me at the start and they were communicating with the finance company regarding the loan. With the other banks, they would not take on the loan without the guarantee. I was stuck in the middle and was overseas at Hannover when this problem occurred. I am sorry and I did not intend to lie to you. Chris this is my stuff up and I told you take all the land in that block up north, which you still can. Apart from that I have offered you 50% of the MGT and most of the money has gone into that. It is about to go to the market with a lot of positive vibe around it, this will return all the money in the next 2 years. Please stick by and back me and things will repay you 1,000 fold. I will ring you soon.
54. On 6 May Mr French sent a follow-up email providing an estimate of where the $1 million provided by Dr Bremner had gone. This included approximately $200,000 for the invention. That included $80,000 for patents. It also included costs associated with the licence agreements, the torque tests, magnets and moulds, the visit to the Hanover Fair in April 2007 and a second trip to Europe and factory rental for MGT, presumably the premises at Karuah.
55. There was also approximately a further $200,000 associated with property, including $82,000 for the deposit on the Corringle Road Homestead (the actual deposit was $92,000); a deposit of $6,000 on one of the Corringle Beach Road properties for Dr Bremner; $5,000 for the property at Mt Hotham; $30,000 for a bulldozer and $30,000 for wages at the Bulga Creek farm; and excavator and machinery costs of $50,000 for Corringle Beach.
56. The remainder included $313,000 for the Provident loan. It also included personal expenses such as tax, an excess payment on a repossessed car, other outstanding personal bills and living expenses.
57. Mr French continued: The highlighted amount [which I cannot identify from the copy of the email in the Court Book] is the only amount that has not gone to where it should of. That is my fault, as I trusted the mortgage broker and he has let me down. I can fax you a copy of the agreement that he signed with me, with interest if it is every paid = $300,000. The money was to be paid to the mortgage company whilst I was in Europe $110,000. It was not done so it still incurs 10% interest per month and is secured by property in South Australia. It may never come back, but I have spoken to a solicitor who knows about his position and he says that it is going forward. The money has been spent on keeping the whole thing rolling - the invention & farms. The inventions is about to pay off in a big way. And you have half of the block of land that we were going to sell to the church for $2 million and that was only 100 acres of the 168 acres. I know you are shocked as you thought it was all going to the land, but how would I have got the invention where it is now. And I have offered you half of that when you said we would go 50/50 in all the land that I found. I am not sure what you want to do from here on, but please let me know quickly so that I can arrange some future income and money so that we can live from some other sources or some other means. …
58. On Mr French's account in his emails to Dr Bremner, the story about a payment to the mortgage broker is a strange one which does not make much sense. Mr French twice mentioned the figure of $110,000 but the evidence does not identify a payment of this particular amount. It is hard to see how, even at 10% interest, the amount outstanding could have grown to $300,000 by April-May 2008. Nor, apparently, was anything ultimately recovered, whether from the supposed secured property in South Australia or otherwise. What is clear is that Mr French had spent most of the money provided to him for paying down Provident on other purposes, and had kept Dr Bremner in the dark about it.
59. In his affidavit, Mr French said that Dr Bremner first became "directly involved" in the magnetic coupling business in 2008. The products which Mr French hoped to sell would of course include magnets. Mr French had lined up a manufacturer at Ningbo in China who was able to produce the magnets needed. In July 2008 Mr French caused a company called Bright Effect Limited to be incorporated in Hong Kong. Mr French and Dr Bremner each held half the shares. It appears that the plan, or part of the plan, was that the Hong Kong company would buy the magnets from the Chinese manufacturer and sell them on to the manufacturer of the magnetic coupling products with a large mark-up. According to Mr French, this was Dr Bremner's idea.
60. Mr French was very enthusiastic about the Hong Kong company. He referred to it as a "money tree". But for the moment the number of magnets required for prototypes and the like was small and the Hong Kong company appears to have remained dormant.
61. Meanwhile Dr Bremner sent monies to Wards to pay for the settlement of the further Victorian properties purchased by Mr French. Dr Bremner sent $1.7 million at the end of May and a further $800,000 towards the end of July. These monies were paid into Wards' trust account and mainly used for the settlement of the purchases, but it appears Mr French had been authorised by Dr Bremner to withdraw monies from the trust account and he used this authority to make payments totalling $275,000 for other purposes. These payments included payments to Mr Greenstein's firm and to himself totalling $165,000 in July and August. He also spent $104,000 on cattle for the Deddick Valley property and paid $6,000 to Dwyers Toyota for a farm vehicle.
62. By the end of August, the monies in Wards' trust account appear to have been exhausted. On 10 September Mr French emailed Dr Bremner advising that Wards needed more money to pay for the settlement of the Deddick Valley purchase. Mr French also included a list of other amounts requiring "urgent payment" totalling $123,100. Mr French's email also said enigmatically that he was "moving forward on the Provident matter".
63. The amounts identified in the list were a mixture of magnetic coupling expenses (including $53,400 for Griffith Hack); property expenses; and personal costs. The last category included $20,000 for "farm running costs/living" and $10,000 for two mortgage payments owed by Barrie French, Mr French's father.
64. Barrie French lived in a house at Manly in Sydney which was mortgaged to a financier called CKM. He was having difficulties in meeting the mortgage payments and was in poor health. Apparently he had borrowed to put money into the magnetic coupling invention and for this reason Mr French felt a particular obligation to help him with his mortgage.
65. Following Mr French's request, Dr Bremner made two regular funding payments totalling $50,000 in September and October. Presumably he also provided the money for the Deddick Valley property purchase settlement, although there is no direct evidence of this.
66. Between February and December 2008 Dr Bremner made regular funding payments totalling $150,000. He also paid $30,000 directly to Griffith Hack in early July for patent expenses. This was in addition to the $165,000 paid out of Wards' trust account to Mr French or Greenstein & Associates at Mr French's direction.
67. In the last few months of 2008 contact had been renewed between Mr French and Mr Iliuta, who was then getting close to completing his degree at UTS (he completed the degree in December). This came about as a result of a chance meeting between Mr French and Mr Iliuta at a supermarket in Mona Vale, where Mr Iliuta was working. Mr French and Mr Iliuta exchanged contact details.
68. A few months later, Mr French and Ms Bakey had the idea that Mr Iliuta could help with work needed to develop the magnetic coupling technology further. Mr French contacted Mr Iliuta, who was then living in Queensland. He sent Mr Iliuta some travelling money and Mr Iliuta came down to live with Mr French and Ms Bakey and work on developing the invention.
69. Meanwhile, the dispute between Mr French and Provident had not been resolved and Mr French was under pressure in the litigation. A defence had been filed. The defence itself was not in evidence, but it appears to have had no substance. In February 2009 Provident moved to have the defence struck out.
70. Provident's Notice of Motion was listed on 17 February before the Common Law Registrar but Mr Greenstein was able to defer it until 25 February on the basis that Mr French could not be contacted. The case was referred to the Possession List Judge and adjourned to the next day on the basis that Mr Greenstein was unable to obtain instructions.
71. At this point, Provident made a formal written offer to Mr French to compromise the proceedings. The offer required Mr French to sign a consent judgment in favour of Provident, but provided that he would have three months to sell the properties and that the consent judgment would be held in escrow until the three month period had elapsed. Mr Greenstein reported in a later letter to Mr French what happened next: We confirm you having read the letter of 25 February, 2009, referred to above and instructed the writer that you agree to the terms of the offer, on the basis between now and the date by which the offer expires, being Monday, 25 May, 2009, you will take steps to refinance the loan or make other arrangements with your UK based colleague, Chris Bremner, to enable you to retain possession of the properties. We further confirm having had a discussion with Dr Bremner during your attendance at our office in terms of which he requested that he be kept informed of all further developments with regard to the handling of this matter. We confirm your instructions to keep Dr Bremner informed on this basis; …
72. In mid-March Dr Bremner intervened. He contacted Mr Michael O'Sullivan, the managing director of Provident, directly, to try to negotiate a more favourable settlement. Mr O'Sullivan and Dr Bremner appear to have agreed in principle that Dr Bremner would pay the sum of $2.6 million (a discount from Provident's figure of $2.75 million) and take an assignment of the mortgage. Dr Bremner would make a down payment of $600,000 and pay the balance after two months. Mr O'Sullivan had a draft deed of assignment to this effect drawn up and sent to Dr Bremner. Dr Bremner made the $600,000 down payment but the negotiations dragged on. The proceedings were adjourned on several occasions. In the meantime, Dr Bremner paid the interest on the loan. The proceedings were eventually discontinued at the beginning of December that year without anything being signed.
73. All of the negotiations between Dr Bremner and Mr O'Sullivan took place without the involvement of Mr French (or Mr Greenstein). It appears that Mr Greenstein reported regularly to Mr French as the proceedings were adjourned, but Mr French did not give him any instructions. Mr French in effect left the whole matter to Dr Bremner.
74. In the meantime, Dr Bremner visited Mr French at Corringle. This probably happened in the second half of March. Together with Mr Iliuta, they discussed the exploitation of the technology in Europe. The conversation which took place is relied upon in support of Mr French's case concerning the exploitation agreement. I will refer to Mr French's evidence about that conversation in more detail below.
75. Soon afterwards Mr Iliuta moved to Montpellier. There he began work on exploiting the MGT technology in Europe. He worked on drawings, prototypes and promotional material. On 1 April he wrote an email reporting to Dr Bremner and Mr French on his progress. He was using the MGT Australia email address and describing himself as "European Operations Manager, MGT".
76. Mr French visited the Hanover Fair again in April 2009 to display the magnetic coupling technology. He was accompanied by Mr Iliuta.
77. Mr Iliuta of course needed funding when he moved to Europe to perform his role. According to a later email from Mr Iliuta to Dr Bremner, Mr French had told Mr Iliuta that he would be paid $1,000 per week. Mr Iliuta was also incurring costs for supplies, travel and the like.
78. Mr French and Ms Bakey made some payments to Mr Iliuta to cover his remuneration and expenses. Some of the payments came out of Mr French's personal bank account, some from his Bulga Creek Pastoral Co account, and some from the MGT account. Apart from payments of $5,000 on 9 April and $12,000 on 20 May, these payments ranged between a few hundred dollars and a thousand dollars. For the period between the end of March and early June, they totalled only about $4,500.
79. In early June Mr Iliuta emailed Dr Bremner pointing out that he had not been paid the promised $1,000 per week and that there were also expenses to pay. Mr Iliuta asked Dr Bremner to cover these amounts. On the same day Mr Iliuta wrote to Mr French with a copy to Dr Bremner, suggesting it would be a good idea for him to sign a contract concerning his involvement with MGT. This would deal with ownership of the IP and his remuneration entitlements.
80. After this point Mr French made a few other small payments to Mr Iliuta out of his and MGT's bank accounts. But for practical purposes Mr Iliuta's remuneration and expenses were paid by Dr Bremner. Mr French did not take up Mr Iliuta's suggestion of signing an employment contract and for the moment this remained in limbo.
81. Although details of the litigation are not in evidence, it appears that Mr French brought proceedings in this Court in 2004 against a company called Polar Technologies International Pty Ltd, and others associated with it, concerning his snow making invention. Those proceedings were dismissed for want of prosecution by Macready AsJ and in November 2006 an appeal from his Honour's judgment was dismissed by Hamilton J: French v Polar Technologies International Pty Ltd [2006] NSWSC 1260.
82. Presumably as a result of being told about this litigation by Mr French, Dr Bremner agreed to fund a review of it. The review was carried out by the large city firm of Blake Dawson, who were retained to provide advice on pursuing the proceedings in light of "new information" obtained since they had been dismissed. Blake Dawson requested a payment on account of $25,000, which Dr Bremner made.
83. The third formal document concerning the business dealings between Dr Bremner and Mr French is dated 13 September 2009. The document was written out by Dr Bremner and signed by Mr French when he and Ms Bakey were visiting Dr Bremner in Sydney during one of his visits to Australia. It read: I Andrew French hereby confirms [sic] that Dr Christopher Bremner my generous financial backer of the last 10 years has equal ownership with myself of MGT Magnetic Gearing and Turbine Co incl its associated patents and my patents in the area of magnetics. Dr Christopher Bremner is also confirmed to be my equal partner in the ownership of the 360 acres of land registered to me near North Arm Cove at Port Stephens, NSW Australia after a value of 4 million.
84. I discuss the circumstances in which this document was prepared in more detail below.
85. The result of Blake Dawson's review of the Polar Technologies litigation was not good news for Mr French (or Dr Bremner). Nothing could be done about the dismissal of the proceedings in this Court; moreover, there were District Court proceedings brought by Polar Technologies against Mr French (dating from 2008) where Mr French had been ordered to pay costs amounting to more than $100,000. Blake Dawson advised that there was no alternative but to pay these costs. Dr Bremner eventually paid $108,000 for Polar Technologies' costs as well as a further $25,900 for Blake Dawson's fees.
86. Mr French received a report from Mr Greenstein on the discontinuance of the proceedings by Provident in early December 2009. He took no further action, leaving the matter to Dr Bremner. Dr Bremner continued to remain in touch with Mr O'Sullivan, paying the interest on the mortgage debt, but no deed of assignment was ever executed.
87. Initially Mr Iliuta had undertaken his magnetic gearing work at a small factory unit in Montpellier. Later he moved to commercial premises at Avenue Albert Einstein elsewhere in Montpellier. This appears to have happened in about October 2009. The premises were leased from a French company called Regus which provided serviced business premises. In December 2009, Mr French wrote to Regus on MGT Australia letterhead confirming the lease on MGT Australia's behalf.
88. Between January and December 2009, Dr Bremner made regular funding payments to Mr French of $670,000. In June he also made a direct payment of $32,700 to have power connected to the North Arm Cove properties. This was in addition to the payments to Blake Dawson in connection with the Polar Technologies matter.
89. In around September 2009 Dr Bremner had retained a man called John Nel, who had previously been a farmer in Zimbabwe, to act as the manager of his Victorian properties. Initially Mr Nel lived in Orbost but work was done on one of the Corringle Beach properties to allow him to live there. The precise scope of Mr Nel's activities is not revealed in the evidence. Presumably he looked after the two properties which were registered in Dr Bremner's sole name at Corringle Beach. It is unclear what else he was involved in.
90. According to Dr Bremner's email of 12 January 2011, [see [210] below), recruiting Mr Nel was Mr French's idea. But it seems that Mr French did not get on with him. In around the first quarter of 2010, Mr Nel suffered an injury. The injury was apparently minor but he left and was not replaced. From this point forward, Mr French and Ms Bakey seem to have looked after Dr Bremner's Corringle Beach properties.
91. Meanwhile, Mr Iliuta since 2009 had been pursuing leads with potential customers for the magnetic coupling products which had been shown at the Hanover Fair in 2009. He approached companies in Europe. He also visited the United States to present the product to a company there called Lovejoy.
92. Among the potential customers approached by Mr Iliuta was a Danish company called Technoflex. Technoflex permitted Mr Iliuta to set up a display in its offices in Denmark promoting MGT's products. Mr Iliuta travelled to Denmark for this purpose.
93. Technoflex also bought a number of batches of batteries apparently for the purposes of prototypes. These were supplied from Ningbo and the arrangements were made by Mr Iliuta, but Mr French required the purchases to be invoiced through MGT, no European company having been established at that point.
94. As the development of the European business appeared to be gathering pace, Mr French thought that he should come over to Montpellier to visit. The parties began to talk about this happening in the second half of 2010.
95. Meanwhile, payments on his father's mortgage continued to be a problem for Mr French. CKM began possession proceedings in January 2010. Mr Greenstein was retained by Mr French.
96. By May 2010 the mortgage arrears (including fees) had grown to $60,000 and CKM was at the point of entering judgment. Dr Bremner agreed to take over the management of the proceedings on behalf of Barrie French. Mr Greenstein was instructed by Mr French to take his instructions from Dr Bremner, who arranged to pay the arrears and CKM's costs. He also arranged to make the future mortgage payments (about $5,000 per month) directly to CKM.
97. By this stage Mr Iliuta was becoming frustrated. He wanted to proceed with the signing of a distribution agreement with Technoflex and pursue arrangements with other customers. But Mr French wanted the legal structure sorted out first. Mr Iliuta also disapproved of the European customers being invoiced by MGT out of Australia. He saw it as wrong for money being paid by European customers for product development to be pocketed by Mr French.
98. In late May or early June 2010 Mr French was introduced to the international accounting firm, Pricewaterhouse Coopers ("PWC"). The first contact was with Mr Darren Turner of PWC's Newcastle office. PWC expressed interest in acting as advisers to Mr French.
99. On 12 June, Mr French emailed Mr Iliuta (copied to Dr Bremner) about the need to get MGT's legal and accounting affairs sorted out. He said: The accountants are asking me what is going on with these sales in Denmark. Also they want to know how the technology is being licensed by myself? What profit margins are allotted to certain products and how we are running the MGT operations in Europe. (Licensed or Subsidiary) From here on please allow for a 10% royalty to be added by any licensee to any end price and inform them of this. - At this stage everything must be run through MGT Australia. Is Technoflex aware of that? Any agreements must be between Technoflex and the company MGT Australia until the we have another licensed vehicle in place. Meaning the formation of another company such as MGT Hong Kong or MGT Europe and that company having the license in place to use the IP. With that in place the company must show that it is paying a proper consideration for these rights or be a subsidiary of a parent company. This must be demonstrated paying an initial fee meaning a lump sum or a income stream from profits with a royalty to the inventor who is licensing the IP. Chris paying you directly into your account has caused a problem and it looks from here like the decisions are being made by you 2 over in Europe. Chris is not a shareholder in the Australian Company MGT at present. MGT Australia is the only company registered at the moment.
100. After referring to his meeting with PWC he continued: PWC are going to look at the company structure in terms of tax advice and management. I am not sure at this stage if the Hong Kong company will control the world or if it will be run from here in Australia. They want to run a series of scenarios to test the results of different tax decisions. This must be done properly, because I am still paying off a $80,000 tax bill to the Australian Government from the Escalator Handrail invention. Right now we must finalise Chris's input and calculate the amount of money + interest that he has put into this project alone MGT only, excluding all farm expenses. This then needs to be put into my tax return as a loan to me personally or as me selling shares in MGT to him, which then means I have to pay tax on it. I have to explain why all this money has gone through my bank accounts here in Australia and show it is not income.
101. After referring to the history of MGT he continued: I have spent the most in time and money on this project carrying it for 8 years without Chris's being there. All the money Chris has paid you directly must be put onto my loan account with him. Your input has also been very important and could deserves a share of the royalty, this has to be decided by myself as I employed you from MGT Australia. Can we speak on Skype soon and discuss all this? Then I can give the Australian tax office and the companies accountants some direction. Anyway the main thing is that we are going well. Thank you for the great job you have been doing. But let's not forget Technoflex came from Hannover, it was the 4th time myself and MGT Australia has exhibited in Germany and has claimed tax expenses on those trips. We must workout now how this whole international rollout is going to come together.
102. A few hours afterwards, in the early hours of 13 June, Mr French sent a separate email to Dr Bremner concerning the September 2009 memorandum. The email was headed "Duress agreement 50/50" and stated: Please let it be understood again. The agreement you put in front of me in your flat at Darling Point when I was drunk was signed under Duress. I told you Gabi my partner had to see it and she has not had that chance as of yet. We have not spoken about that since then and she has on a number of occasions tried to talk to you about - 1/ Our loan account to you. 2/ The agreement you put in front of me relating to 50/50 with no consideration. 3/ A number of farm issues that you decided on behind our backs. The land is not 50/50 the titles show that. Please contact me ASAP to discuss things, I have tried to call you. YOU DO NOT HAVE ANY AUTHORITY TO BE AT ANY MGT MEETINGS.
103. What prompted this email is not revealed by the evidence. Nor is there any written response from Dr Bremner in evidence.
104. Initially Mr Iliuta accepted what Mr French said in his email of 12 June. On 20 June he emailed Mr French confirming that the decisions and financial transactions would go through MGT Australia "until we have structured things in Europe". But it seems that Dr Bremner continued to pay Mr Iliuta directly (clearly Mr French was in no position to do so). Nothing appears to have been done, either, about recording the payments in Mr French's or MGT's accounts, or about including a royalty for Mr French in the sales.
105. In late July 2010 there was a further spat between Mr French and Dr Bremner. Mr French wanted Dr Bremner to finance a new venture. This was a yabby farm which Mr French proposed should be acquired on a 50/50 basis. Dr Bremner consulted a stockbroker he knew in Sydney and turned the proposal down, resulting in an outburst from Mr French.
106. Dr Bremner responded with his own complaints. He had provided a credit card in his name to Mr French, apparently for the purpose of paying expenses on the Victorian properties, Mr French had put a whole lot of charges on it, and Dr Bremner's mother had somehow found out and screamed at him. Dr Bremner said that he was being made ill by all of the stress placed on him by Mr French. In due course they both calmed down.
107. Mr French returned to the charge, however, a week or so later. He wanted to ramp up the samphire business at Corringle. This would include buying more equipment and building a packing shed. His email spoke of sales of $3 million to $4 million and of sitting on a goldmine. Dr Bremner clearly saw this as a distraction. He wanted to conserve money, and for the expansion of the samphire business to wait. Mr French complained about being slowed down and "doing it tough" because he and his family only had the money being provided by Dr Bremner to live on.
108. At around this time the arrangements for Mr French and his family to travel to Montpellier was confirmed. On 16 August Dr Bremner transferred $20,000 to Mr French to enable him to pay for the trip.
109. Then problems with Mr Iliuta resurfaced. On 17 August Mr Iliuta wrote to Mr French (with a copy to Dr Bremner): I am finding it hard to sleep because of stress. The initial deal we discussed has been changed over and over too many times and keeps changing. I am happy to finish the existing projects. I hope we can still be friends and like I said I'll finish the production run on the whole range. The events in the last months have caused me a lot of stress and I need to get out of the present business relation with MGT. I feel tired all the time, have insomnia, a rash and it's getting worse. I have to look after my health. If MGT needs my services as a designer then we can of course discuss that but I will not work for MGT as an employee. So far my work has been appreciated by MGT's clients and I feel that the products I have designed for MGT have a large market potential. I wish you all the best but now we need to discuss my exit strategy.
110. On 19 August Mr Iliuta followed up with an email to Mr French, with a copy to Dr Bremner, proposing a structure under which he (Mr Iliuta) would work for MGT in Europe. Under this structure parts for European customers would be made in China by MGT and sold to MGT Europe at defined mark-ups. MGT Europe would assemble and test the products and sell the finished products to distributors with a further mark-up. MGT Europe's operations would be financed by Dr Bremner. The directors of MGT Europe would be Dr Bremner and Mr Iliuta and the shareholders would be Dr Bremner, Mr French and Mr Iliuta at one-third each.
111. Mr French saw this as too favourable to Mr Iliuta. There was nothing for the MGT shareholders and no licence fee. Mr French said he would pass the proposal on to others involved, but his reaction made his distaste clear. A few hours later Mr Iliuta wrote: OK do it your way - wow 5 minutes after I sent you that proposal I realized that I almost got sucked into doing business with you again…to be quite honest I am in fact pretty happy that I will not be in your sphere of influence - ever. It keeps me happy. Then I will finish the projects we have going, and then if MGT needs my services in the future, well please contact me through one of your lawyers at PWC in writing, then at least I'll know it won't change from one day to the other. We can be mates if you want but don't insult me with claims of running away with your invention. All I did was to design some awesome stuff that the biggest companies in Europe want to buy, because it was designed to cover their needs, which I researched using our distributors. I will instruct a lawyer to draft a letter saying that all MGT technology I was involved with belongs to MGT so that your fears can go away. By the way it has been an interesting project but I never knew this side of you, and I don't want to be there mate.
112. Mr French then responded in a more conciliatory way and matters were smoothed over, at least on the surface.
113. With his response, Mr French sent some parts of a document he had prepared, which he described as a "report" on the magnetic couplings business. One of them dealt with MGT's structure. It contained a history of Mr French's MGT dealings, a description of the current state of the business and proposed structures for the future. The document appears to have been a preparatory form of information memorandum for soliciting investment. At the time, Mr French's emails refer to the possibility of obtaining further capital for MGT's business from Middle Eastern sources, which Mr French referred to as "the sheiks". I will refer to the document as the "promotional report".
114. Under the heading "Financing to Date" the promotional report stated that MGT had been funded by loans from Mr French of approximately $3.5 million. It then went on to explain Dr Bremner's involvement: Christopher Bremner is a person who has loaned Andrew a large sum of money on a hand shake. This money has not time to be paid back and it is loaned at 5% interest. It may be converted to stock at a later date if and when the accountants think it is wise too. Andrew has a 2 million dollar loan with Provident Capital which has been paid down from 2.7 million. Andrew has also been paying his fathers mortgage on a property in Manly as money was also borrowed on that property to fund MGT. The loan on that property is $500,000. Both the above mortgages have been paid for by money loaned from Chris Bremner to Andrew French.
115. The promotional report then went on to provide some details about the different MGT operations which Mr French planned around the world. One of these was MGT Europe. The information memorandum stated: MGT Europe is being set up by Price Waterhouse Coopers. The company will control all the assembly and supply of the MGT Technology in Europe. Assembly will be done in Europe to cut tax on imported finished products. The assembly factory will be in Montpellier, France. Agents in each country in Europe will promote and supply the products. Technoflex - Denmark is one agent bringing in a lot of work at present. Share structure - Andrew French 45%, Christopher Bremner 45%, MGT Australia 5%, Rad Iliuta 5%.
116. The promotional report also stated that Dr Bremner was funding the assembly plant in France for MGT Europe and would "fund MGT with loans to Andrew French" for whatever was needed.
117. By this time Mr French had decided that PWC should take over MGT's accounting work as well as providing higher level advice. PWC offered legal as well as accounting advice, and took instructions from Mr French and Ms Bakey at a number of meetings concerning MGT's affairs, and Mr French's personal affairs, so as to be able to provide advice on the way forward.
118. PWC's involvement led to another disagreement between Mr French and Dr Bremner at the end of August. Mr French complained that Dr Bremner would not make himself available to talk to PWC as asked. For his part, Dr Bremner (presumably anticipating that he would have to fund PWC's costs) complained about PWC's involvement. He pointed out that between them, he and Mr French had all the records of MGT's expenses and the monies which Dr Bremner had provided. Dr Bremner had his own adviser on tax issues. This was Mr Ian Domaille, whose firm, called "Artemis", was based in the Channel Islands. Dr Bremner thought that on the European structuring questions, advice should be obtained from Mr Domaille as a local expert, rather than from PWC.
119. This did not dissuade Mr French, who clearly had made up his mind that PWC had to be part of the team and thought that their costs would be minor compared with all the money which was going to be made. A debate, heated at times, ensued between Mr French and Dr Bremner (with Mr Iliuta being copied in) about the structure of the European business. One of the areas of debate was that Mr French wanted a royalty. Dr Bremner thought this was inappropriate.
120. While this debate was going on, Mr French received legal advice from PWC that MGT, not Mr French, should be the party exploiting the technology. PWC appear to have taken the view that, although in Mr French's name, the patents had been funded by MGT and monies raised from investors on this basis; it followed that for Mr French to appropriate benefits from ownership of the patents to himself would involve a breach of his duties as a director of MGT. This advice was provided orally on 3 September. Mr French immediately emailed Mr Iliuta and Dr Bremner: I was told swiftly today by a lawyer. I WON'T be taking up any shares in MGT Europe in my name. MGT Australia owns all legal rights to the patents and if I take a share in Europe in my name I will be breaching the company laws. Please don't commit to any agreements with agents until we speak. You can bring them on board but explain to them that the company is being structured and they will be exclusive agents, but we are still working through the setup with PWC and a royalty will be involved. It can be done as a JV with MGT Australia having 51% and additional investors making up the other 49%. It is the only way legally, there are also tax treaties between Australia & France already in place so it can happen. You and the other investors can run the day to day operations of the company. MGT Australia has the Patents and it will have to license MGT Europe, which will then have to sub license its agents or have an agent agreement in place that fits with the sub/license of MGT Europe. This is not what I wanted to please don't company to me, it is the only way it can be done, or a very large license fee which no one wants to pay.
121. Meanwhile, on 31 August Mr Domaille had emailed Mr French to try to set up a meeting between himself, Dr Bremner and Mr French about structuring the European operations. On 6 September Mr French replied, stating: The ownership of the technology and all the advancements to date is the property of MGT Australia. This has been verified by PWC and the MGT company lawyers here in Australia. In past documents at the beginning of the company set up, it was stated as an assignment. There for I am bound by the laws here in Australia and the only way forward from this point on is with a joint venture type arrangement for MGT Europe. This will be 51% MGT Australia and 49% other investors. A small license fee and a royalty will be paid to MGT Australia for the granting of the license. If this is to go ahead the company MGT Europe will be formed by PWC Montpellier. PWC will be controlling the accounting and legal's worldwide. There are 45+ other shareholders here in Australia who have been involved for 10 years and I don't want any trouble. Please don't spend any time or money setting up MGT Europe.
122. Dr Bremner visited Mr Iliuta in Montpellier from time to time. They appear to have collaborated on the technical work Mr Iliuta was doing on developing the magnetic coupling technology. In the course of his visits, he gave Mr Iliuta a luxury car and an expensive personal computer. At some point Mr French or Ms Bakey found out about these gifts, provoking mistrust on their part of both Dr Bremner and Mr Iliuta.
123. Early in September the relationship with Mr Iliuta went off the rails again. On 7 September he emailed Mr French (with a copy to Dr Bremner): I cannot work with you or for your because a) you change your mind after deals have been done with myself or others b) moneys paid to MGT by clients are gobbled up by you personally c) I am showing the early signs of an ulcer after having to clean up after your disasters So like I said before do what you want to do with MGT, it's your company but I decline to have anything to do with you in business. I need to see a doctor and take care of my acid levels in the stomach so please leave me alone on the business side of MGT. We can be mates, have beers etc but no business. If you need design work done then we can surely discuss that.
124. This email arrived just at the point at which Mr French, Ms Bakey and their children had left Australia on their trip. Mr French responded with a one line email stating "OK if that's your decision". He then sent a longer email saying that if Mr Iliuta did not want to be involved he would be disappointed but MGT would move on with its "international rollout" without him.
125. Mr Iliuta responded repeating his complaints. He then received a call from Mr French who spoke to him and then put Ms Bakey on. In an email to Dr Bremner, Mr Iliuta described them both as "extremely aggressive". This appears to have been an understatement, having regard to a follow up email sent by Ms Bakey to Mr Iliuta on 11 September. The email consisted of a tirade against Mr Iliuta and Dr Bremner.
126. At some point in this torrent of abuse, Mr French said something to Mr Iliuta which Mr Iliuta interpreted as a physical threat against him if he did not comply with Mr French's wishes. There is no direct evidence of exactly what Mr French said, but it appears to have greatly upset Mr Iliuta.
127. Following the phone call, Mr French called Mr Iliuta in a conciliatory mood. He disclaimed any threats and confirmed he still wished to meet. Mr Iliuta reported this to Dr Bremner who replied: Told you everything would be cool, I have known/done business with Andrew for 10 years, he is eccentric but sane.
128. Mr Iliuta replied to Dr Bremner agreeing that Mr French was eccentric. He would continue to work on the MGT Europe business and spoke of the need to establish the MGT Europe company, but told Dr Bremner that he still would not work in the company if Mr French had control of it.
129. Before sending his email of 7 September Mr Iliuta had adopted a business name (Iliuta Brothers Design) and web domain of his own. He continued to use the MGT email address in dealing with Mr French. But despite the apparent reconciliation with Mr French, Mr Iliuta did not give up the Iliuta business name or email address, which he thereafter used to communicate privately with Dr Bremner.
130. The dates on which Mr French and his family visited Montpellier as part of their trip cannot be determined with certainty. They seem to have been there for a week or so at the end of September and the beginning of October. In anticipation of the expansion of the MGT Europe business, Mr Iliuta found new and larger accommodation for it. This was a factory building at Candillargues, outside Montpellier.
131. The visit had its moments. At one stage both Mr French and Ms Bakey boiled over, shouting (and in Ms Bakey's case, screaming) at Dr Bremner. This is said to have been triggered by Dr Bremner telling Mr French and Ms Bakey that he and Mr Iliuta had, in effect, had to reinvent the technology; and by disparaging remarks by Dr Bremner towards Ms Bakey. Again this was smoothed over.
132. For the purposes of setting up the MGT Europe company, Mr French consulted Alex Larue, a French lawyer. Mr Larue was a member of a firm known as "Landwells". Landwells was a correspondent firm of PWC.
133. A meeting took place in Mr Larue's office which was attended by Mr French, Dr Bremner and Mr Iliuta. There is a dispute about what happened at that meeting which I deal with below. Mr Larue drew up the equivalent of a memorandum and articles of association for a company to be incorporated in France called "Magnetic Gearing & Turbine Europe (MGT Europe)". The documents provided for MGT to have 51% of the shares, Dr Bremner 44% and Mr Iliuta 5%. The documents were agreed by Mr French (on behalf of MGT) and Mr Iliuta (and in fact one set of documents was signed by them), and sent to Dr Bremner for his signature.
134. On 11 October, Dr Bremner paid $18,900 to CPA Global Limited, an intellectual property management firm in the Channel Islands. The payment covered fees on an account in Mr French's name for various patents of Mr French's. The evidence does not explain how or when this account was established, or how the dealings with CPA fitted in with Mr French's longstanding arrangements with Griffith Hack.
135. At around the same time arrangements were made for PWC to forward to Dr Bremner the bills for the work they had done. Dr Bremner paid PWC $42,000.
136. In the second half of October, Dr Bremner and Mr Domaille obtained advice from another lawyer at Landwells, Ms Emmanuelle Veras, about the tax implications of Dr Bremner taking up shares in MGT Europe. Early in November Mr Larue emailed Dr Bremner to ask what the result had been. There was no response from Dr Bremner. At the end of November Mr Larue was told by Mr French that he would hurry the matter along, but nothing happened.
137. Since July, Mr French had been hoping to get a contract to sell samphire through Woolworths. In order to get the contract, the samphire operation had to pass an audit by Woolworths. At the end of November, Mr French emailed Dr Bremner asking for some money to pay for this. He said he could repay Dr Bremner in four to six weeks when his invoices were paid.
138. On 10 December Mr French emailed Dr Bremner again asking him to "finalise any outstanding share matters" if he wanted shares in MGT Europe and complaining about being unable to comply with the requirements for the upcoming Woolworths audit due to a lack of funds. Dr Bremner replied that he could not afford to give Mr French a blank cheque anymore. Mr French said he was only trying to do what Dr Bremner had agreed to in Montpellier. He repeated that if Dr Bremner wanted the MGT Europe shares he needed to sort it out now.
139. On 13 December, Dr Bremner wrote to Mr French saying that he had asked his sister, Amanda Bremner, to look after his financial affairs in Australia, including the properties. Dr Bremner asked Mr French to co-ordinate with her. This led to a further outburst from Mr French, who obviously hated the whole idea of having to deal with Ms Bremner.
140. On 16 December, Mr French wrote to Dr Bremner acknowledging receipt of the latest regular funding payment of $10,000 but saying that Dr Bremner's credit card, which he described as "our life line", had been cancelled. In fact this was incorrect. The card had not been cancelled, but the credit limit had been exceeded. Dr Bremner replied: Andrew, the card is maxed out at 60,000 what are you doing? You have put 55,000 on it since the last cycle this is fraud legally are you out of your mind?
141. Ms Bremner was trying to get copies of invoices to support the payments which had been made on Dr Bremner's credit card. On 20 December Mr French wrote to Ms Bremner, with a copy to Dr Bremner, with an unhelpful response. He said that Ms Bakey was too busy to scan and send invoices and Ms Bremner was welcome to come to Port Stephens or down to Victoria to look at them. He added that if Dr Bremner wanted to sort matters out he should sign the incorporation papers for MGT Europe.
142. Meanwhile Mr Larue, at Mr French's request, had been trying to make contact with Dr Bremner, but without success. On 24 December Mr Iliuta reported to Dr Bremner that he had received a call from Mr French to say that the MGT Europe invoicing had to go through MGT in Australia. Mr Iliuta said he had replied that he would not send money to Mr French because European customer payments were not being returned to him. Mr Iliuta also reported that Mr French had instructed Mr Larue to proceed with incorporating the MGT Europe company without Dr Bremner. Mr Iliuta said that he told Mr Larue to wait for Dr Bremner to sign and that it was Dr Bremner who paid the bills.
143. The Woolworths audit took place shortly before Christmas. On Boxing Day, Dr Bremner wrote a friendly email to Mr French and Ms Bakey with good wishes for Christmas and the New Year. He added that he could pay Eon's school fees to make things easier for them, as his Christmas gift. Mr French responded in a similarly friendly way. But he admitted that he was not confident of the outcome of the audit with Woolworths. Woolworths confirmed shortly afterwards the audit had been unsuccessful.
144. Between January and December 2010, Dr Bremner had made regular funding payments to Mr French totalling $290,000 (including the $20,000 paid in August 2010 to fund the trip to Montpellier). This did not include the payments to CKM on Barrie French's mortgage, the payments to PWC and CPA Global, or payments on the credit card.
145. The friendly emails exchanged on Boxing Day had not addressed the outstanding issues about the structure and operation of the MGT Europe business. Mr French took the issues up again after the New Year, with emails back and forth (copied to Dr Bremner) between Mr French and Mr Iliuta about how to invoice the European customers and the need to get the incorporation documents signed. Mr French also emailed Dr Bremner direct asking him to sign (he was apparently then on holiday).
146. On 10 January, Mr Larue wrote to Dr Bremner on Mr French's instructions. He said: We are still waiting for your answer concerning the execution of the legal documentation related to MGT Europe. Therefore please note that if we do not receive any news from you before Wednesday COB (Paris time), Andrew has decided that MGT Europe will be incorporated without you.
147. This eventually provoked the following response from Dr Bremner: Dear Alex, as I am paying the bill if you expect to be paid then you should await my instruction, my problem is that my original agreement with French is 50 50, the current shareholdings do not apply this, in addition undue duress was placed on me and Mr Iliuta on his visit. To date all the operations in Europe and Mr Iliuta have been paid by me, hence are my property. If French goes ahead without me I will consider it a hostile act and proceed without him as I am an inventor on the IP I am using I consider I have every right to do so. I am willing to proceed at 47.5% a vehicle nominated by me and 47.5% a vehicle nominated nominated by French with 5% Mr Iliuta, as was originally agree. I am unwilling to offer any more as I consider this more than generous as I have paid for every thing for years. Mr French owes me several million dollars and is completely reliant on me, my considerations are essential to consider. There is an issue on fiscal planning that is not addressed and is essential, ie French tax brakes and grants etc. The development of the business is and has not been delayed in any significant way by waiting is not affecting any thing.
148. Dr Bremner's email provoked a furious response from Mr French. Mr French appears to have been particularly offended by the suggestion of "undue duress" on his part in Montpellier, and responded with a long email full of recriminations.
149. Dr Bremner replied with recriminations of his own in an email sent on 12 January. The email was long by Dr Bremner's standards; it covered almost two pages of single-spaced type. The email presented the history of the relationship going back to 2001 from Dr Bremner's point of view, and is the most complete statement in evidence of his version of events. Dr Bremner referred to all of the financial support he had provided to Mr French, and ended by saying: Without me I its likely you would have lost your farm, magnet business and your father his home, instead you have a portfolio of valuable properties, and a magnet business although in startup phase with good prospects, I am unwilling to give you complete control as that was never agreed or contemplated until PWC advised you just prior to your visit to France, your behaviour on that visit was abusive and threatening. Most investors in my position would expect much more than 47.5% but it fits with our original agreement and as many people I am extremely generous and talented enough to be able to be so. I am sure Mr Greenstein, Blake Dawson, Provident capital and CKM mortgages will corroborate my representations in this email. I know in the past your business partners have taken advantage of you, I am the opposite as any impartial observer will attest to. You are a very talented individual, but so are Mr Iliuta and myself, you are used to me being a certain way, but there are alternatives, please do not lose perspective.
150. This response did not satisfy Mr French. On 14 January he replied accusing Dr Bremner of trying to take control. He continued to press for MGT to have 51% ownership of the MGT Europe company. But he added: If you don't agree with this, then maybe we better work out what money is owed to you for the MGT monies you have loaned and we will make arrangements to refinance this and have you paid out. All the patents are in my name, so they will go onto my personal loan account which can be paid out as well. If you think you have any ownership in any of the IP, which may be your own idea then we can work that out fairly as well. I know allot of what Rad has done has already been disclosed in my first applications. We will need to get expert advice from Griffith Hack, PWC and maybe others on this. I also know that when the patent enters The National Phase the patent office will want to separate all the different inventions into separate applications anyway, so it would be good to sort that out now.
151. Meanwhile, on the morning of 14 January Mr Iliuta sent an email to Mr French, copied to Dr Bremner about MGT. The email stated: I have decided not to work with MGT projects due to personal threats and insults from Mr French. Since this is the last time I will use this email address, you can reach me on [email]. Andrew, I will not talk to you over the phone since you cannot be trusted. If you want to communicate with me then please use a third party such as PWC or anyone that can remember what they said. No gangsters this time I will go to the police.
152. This email marked the final rupture between Mr French and Mr Iliuta. Although Mr French sent later emails to Mr Iliuta remonstrating with him, Mr Iliuta did not reply. There appear to have been no further communications between them until after these proceedings began in 2014.
153. While this was happening, Griffith Hack was chasing Mr French for payment of outstanding patent fees. The amount due was $41,500, some of which went back as far as May 2010. Griffith Hack advised Mr French that if payment was not made within seven days they would have to cease to act for him. Dr Bremner, who had been copied into this letter by Griffith Hack, emailed Ms Georgina Higinbotham, who was handling the matter for Griffith Hack, asking her to break down the invoice so as to identify the charges which related to the patents where he and Mr Iliuta were the inventors. Ms Higinbotham did so, copying in Mr French. Mr French then emailed Dr Bremner asking for a copy of his email to Ms Higinbotham and proposing that they discuss the share structure issue. Dr Bremner did not reply.
154. Despite his veiled threats Mr French did not make any attempt to separate his financial affairs from Dr Bremner's and go it alone. Instead he and Ms Bakey continued to email Dr Bremner with requests to complete the MGT Europe incorporation and also for money for farm and living expenses. Then on 31 January Mr French changed tack. He emailed Dr Bremner saying he did not want to fight and was prepared to talk about a royalty or profit share arrangement for MGT Europe. None of this produced any response.
155. No doubt at Mr French's suggestion, PWC then wrote to Dr Bremner proposing a conference call with Mr French to try to work out a solution to the dispute. This resulted in another relatively lengthy email from Dr Bremner. The theme of the response was that Dr Bremner had financed all of MGT's operations and that Dr Bremner and Mr Iliuta had been largely responsible for the technical development. The email ended: I understand that Andrew has spent 10 years but I paid for the original patents and have spent millions of dollars and contributed my inventions and guidance I will not throw it away because of personality conflicts, I would rather have had Andrew and MGT directly involved but it is not an option. Please speak to the other shareholders of MGT to get their view of things. Of course MGT and Mr French are free to do as they wish with their IP, including compete in the European market, Mr Iliuta and I expect no exclusivity hence what is MGT and Andrew giving up? Only an expected free carry in a business worked on and paid for by someone else which may or may not use IP covered by Mr French's original patents) which have only 3-4 years life left and probably could be challenged hence probably rendered worthless given the costs for defending an interference which I have been advised would probably run for longer than the patent life). Please this is not a conflict over money or ownership but an insurmountable relationship breakdown, I am very saddened that it has turned out as such but there is too much water under the bridge, the parties can not be together in a business.
156. This resulted in a further explosion from Mr French to which there was no response. On 2 March Ms Bakey took up the cudgels. She said that they needed to get things finalised, including the technology, the Victorian properties, Port Stephens and Barrie French's mortgage. Dr Bremner responded that he would pay the outstanding amounts on Barrie French's mortgage, noting that he had paid $50,000 interest on the Provident mortgage. But he rejected Ms Bakey's criticisms. He ended by saying: Nothing is stopping Andrew from doing his things with magnets no one has taken his patents or designs, its up to him, but Rad and I are separate individuals not indentured labor or slaves to be threated to sign over our inventions or face retribution, hence are free to do our own work and spend our own time and money, no Andrew is not our "boss so get used to it", if this is unacceptable to you than I don't know what to say.
157. All of the ill-feeling culminated in an exchange of emails between Mr French and Ms Bakey on the one hand, and Dr Bremner on the other, in the first and second weeks of April. She was seeking payment for running the Corringle property. She also reminded Dr Bremner that he had agreed to pay Eon's school fees. Dr Bremner responded by saying that the complaints by Mr French and Ms Bakey was a case of them biting the hand that had fed them. Ms Bakey was outraged by this and responded with her own version of events, directly accusing Dr Bremner and Mr Iliuta of cheating Mr French. She told Dr Bremner that his conduct only confirmed the poor opinion that she had always had of him. The email correspondence ended on 7 April on that note.
158. In evidence is a company extract (in French) for a company (SARL) called RCI which was incorporated by Mr Iliuta in 2011. Its business was the fabrication, assembly and commercialisation of magnetic couplings. Mr Iliuta was shown as the person administering the company. The company's address was shown as the Candillargues factory. The company appears to have been formally incorporated on 15 June 2011, but its date of commencement of business was shown as 1 April 2011.
159. Dr Bremner made no more regular funding payments to Mr French after December 2010. In March 2011 he brought Barrie French's mortgage account up to date as he had promised. But his payments to CKM then ceased. It is common ground that the total amount paid between June 2010 (when Dr Bremner cleared the earlier arrears and began making the mortgage payments) and March 2011 was $99,600.
160. Despite the rupture in his relationship with Mr French, Dr Bremner continued to pay the interest on the Provident loan for a further year or so, until Mr O'Sullivan left Provident in July 2012. Dr Bremner made no further payments to Provident after this point. It is common ground that the total amount which Dr Bremner paid from March 2009 to July 2012 was $1,148,000.
161. After the collapse of the relationship with Dr Bremner, Mr French made attempts to interest other financiers in his magnetic gearing technology, but these came to nothing. Mr French and Ms Bakey continued in possession of the Corringle Beach Homestead and farmland, and the jointly owned properties at Newmerella, Deddick Valley and Mount Hotham. Dr Bremner made no attempt to contest this. It seems that, at least for a time, Mr French and Ms Bakey retained possession of the Corringle Beach properties owned by Dr Bremner as well; they claim to have incurred expenses in maintaining the properties even after April 2011. It is not clear on the evidence whether this is still the case.
162. At some point after July 2012 Provident was placed in receivership. The evidence does not explain why, or exactly when, this happened.
163. Provident by its Receivers commenced these proceedings against Mr French in April 2014. In March 2015 Mr French signed a form of consent judgment in favour of Provident in the amount of $3.32 million and judgment was entered by the Court accordingly. This followed settlement discussions between Ms Bayard and lawyers acting for Provident in February 2015. In the course of those discussions the terms of a deed were agreed, although it seems that the deed was not actually signed. The deed provided for Mr French to obtain a default judgment against Dr Bremner by way of cross-claim, and for the sale of the properties at Port Stephens (apparently being Dr Bremner's as well as Mr French's). Contracts of sale were to be executed by 1 September and the total debt was to be paid by 1 November.
164. Mr French failed to repay the debt by 1 November and instead made an application to have the consent judgment set aside. That application was refused by Sackar J: Provident Capital Limited v French [2015] NSWSC 1827.
165. The Bulga Creek farm properties were subsequently sold, and there appears to have been a shortfall, but the evidence does not reveal what it was.
166. MGT was struck off in late 2014. Mr French stated in his June 2016 affidavit that he intended to have the company reinstated; but this has not happened. MGT is not a party to the proceedings.

Evidence from Mr Iliuta

1. Initially it seems Mr Iliuta was prepared to co-operate with Mr French and provide evidence in support of his case in the proceedings. Two affidavits were prepared by Mr French's then solicitor, Jacinta Bayard of Bayard Lawyers, and sworn by Mr Iliuta in June 2015.
2. These affidavits were relatively brief and their form created admissibility problems. It was decided to obtain a further more extensive affidavit. Evidence about this was given before me by Peta Kathryn Maloney, a solicitor with Maxwell IP, who took over acting for Mr French in the proceedings after Mr French fell out with Ms Bayard. Ms Maloney's evidence was that she was in contact by email with Mr Iliuta in Montpellier from February 2016 onwards.
3. Mr Franklin, senior counsel for Mr French, dealt with Mr Iliuta and interviewed him in London for the purpose of obtaining a fresh affidavit. Neither Ms Maloney, nor, it seems, any other solicitor from Maxwells, directly participated. Ms Maloney assisted Mr Franklin in Sydney with the preparation of the affidavit. This was in May 2016 (references to email times in this part of the judgment, unless otherwise stated, are to Sydney time).
4. On 23 May, Mr Franklin emailed to Mr Iliuta a draft affidavit, and asked him to check it and advise of any changes that he needed to make. Mr Iliuta agreed to do so.
5. The draft affidavit, as revised by Mr Iliuta, contained a description of Mr Iliuta's dealings with Mr French and Dr Bremner from early 2009 (incorrectly stated as 2008) onwards. This included a description of some of the engineering drawings and sales brochures which he had produced. Mr Iliuta said that in doing so he worked from brochures developed by Mr French and from Mr French's technology as reflected in his patents.
6. Mr Iliuta's draft affidavit presented a picture of being enticed away from Mr French by Dr Bremner. He said this happened "towards the end of 2010" when it "became apparent to me that the relationship between French and Bremner was breaking down". He said Dr Bremner visited him in Montpellier and suggested that Mr French was not trustworthy and the two of them should go it alone without him. Mr Iliuta said that that suggestion was renewed early in 2011, at which point Dr Bremner started bestowing gifts on him. He said that Dr Bremner offered him a car and invited him to pick anything he wanted. He said that he picked out his car at an Audi showroom and Dr Bremner used his credit card to buy it and put it in his (Mr Iliuta's) name. Mr Iliuta also referred to the expensive computer Dr Bremner bought him, along with other things for the business.
7. Mr Iliuta said that the incorporation of RCI was Dr Bremner's idea. He said that the initials stood for "Rad Chris Innovations". But he said that Dr Bremner did not want to appear as a shareholder or director of the company and instead insisted that a colleague of Mr Iliuta's, Madame Boissiere, should appear on the documents. Mr Iliuta said that he and Dr Bremner visited the Hanover Fair together in 2011 and 2012 to sell the products which had been developed for MGT Europe under the name of RCI. Mr Iliuta said that the activities of RCI were funded by Dr Bremner until 2013 when Dr Bremner inexplicably disappeared. Mr Iliuta said that this left him with RCI bills to pay; he tried to contact Dr Bremner but was unsuccessful.
8. Mr Iliuta emailed the revised draft affidavit back to Mr Franklin and Ms Maloney on 25 May at 3.04am. The draft was attached to the email with the alterations made by Mr Iliuta coloured blue. In his email, Mr Iliuta explained why he had changed one paragraph. He also attached some relevant documents.
9. As part of the preparation of the affidavit, Ms Maloney had established a drop-box containing copies of the documents which were proposed to be the exhibits. Ms Maloney sent Mr Iliuta a link giving him access to the drop-box. At 6.16 am Mr Iliuta emailed Ms Maloney: For some reason I couldn't download the exhibits when using my PC. But it worked using the expensive Mac that Chris bought me (mentioned in the affidavit). I have these files now and will review them tomorrow and cross check with the affidavit.
10. At 5.52 pm that day Mr Iliuta emailed again, asking whether he needed to initial and sign each page of the affidavit or could simply sign on the last page and scan the affidavit back. But he did not sign it. In fact, the draft affidavit still contained some gaps and areas where further information was needed.
11. There is a gap in the evidence until early June. By then Mr Iliuta was evidently having reservations. On 4 June, Mr Iliuta sent an email to Mr French and Ms Maloney. Mr Iliuta wrote: … before I go further I need a few things in writing to protect myself and to get the RCI accounting to the tax office in France. - legal help and funding for it if Chris decides to sue me - which will effectively ruin my ongoing business. - an indemnification from MGT to the effect that MGT will not sue me, because you ask me to testify how as a Director of RCI I copied products developed by MGT. - in case the case is won then as per my verbal agreement with Andrew, a sum of money will immediately be forwarded to pay the fines and an accountant to lodge the declarations of revenue etc. I hope you will find these requests reasonable as my intention is to see this court case go through. But not at the expense of losing the few things that keep myself and my family going.
12. Mr French replied by email saying "No problem". But in her response Ms Maloney was more circumspect, pointing out in particular that Mr French was not in a financial position to fund Mr Iliuta's defence if sued by Dr Bremner. She also said that Mr French did not know what RCI's costs were. On 6 June Mr Iliuta replied: This whole thing is becoming more and more confusing - now Andrew does not remember specifics however we spoke about the amount needed for more than one year, then copies of fines issued by the tax office were emailed to him at least twice. Besides two days ago he actually said "no worries" to my three requirements, now it seems this is not the case. We did touch upon these number just one week ago when we discussed how much I need to go to Puerto Rico, and how much an accountant will charge to sort out the RCI mess, and the amount of the fines, etc. Andrew is a talented guy but he can change his mind so things need to be agreed in writing. I am between two deliveries so I will be short: there is no way I am going to jeopardize the well-being of my family to the benefit of Mr French or anyone by that matter. I will help with getting MGT back on-track but seeing how a demand for help can turn into complicated legal procedures that jeopardize my very existence then I must respectfully decline and wish you all the best.
13. The 4 and 6 June emails were in evidence on the voir dire to determine the admissibility of Mr Iliuta's draft affidavit. Subsequently, by agreement between the parties, these two emails (but not the other emails referred to in this section of the judgment) were removed from the Court Book. I have left reference to them in this part of the judgment because it deals with the question of admissibility but I have not relied on the emails for the purposes of making my findings on the substantive issues.
14. The discussions continued and Mr Iliuta was sent a further draft but he did not complete it. Eventually, on 10 June, Mr Iliuta wrote: Here's the deal - I thought Andrew has changed and for once he means what he says so I tried to help him out. But the threats I have received from him this week now include threats against my friends that he knows of, and quite a lot of SMS's and incessant phone calls. I have barred him and if he continues then I will report the matter to the police as harassment. Now, Anthony [Franklin] and I had a cordial meeting in London where I was directed by Jacinta [Bayard] to identify products that were MGT and later became RCI, in exchange that MGT pay the RCl fines and accounting. Fine, done. But even at that time I did tell her that these products were never a property of MGT, because they are not patentable, not sure if Andrew relayed that to you. Most of those things are in the public domain and some others like the meshed N/S "xmas" configurations are a SEIKO patent. So even if either RCI or MGT put them on the market, they would get sued by the rightful owner of those patents. It's typical of Andrew to lodge a patent application with a big firm before conducting a patent search. I did tell Andrew this again at the latest last week when he was trying to con me into putting those systems into a US client's machines in Puerto Rico, with the brilliant results that then those guys could get sued. Anyway, I had it with Andrew, I don't want to be contacted by this maniac again, I want my friends left alone, I withdraw my affidavit or whatever statements I made if possible legally, I don't know. I had enough, and I am between one maniacal guy and another less active person, better these guys fight it out and leave me out. If I were to choose as to what side to support, I would choose Chris, at least he never threatened to bring his mates from Amsterdam to "pay me a visit". Andrew left that message on my message bank. But I prefer to stay neutral if you leave me be and pay my fines little by little. I thought Andrew has changed but I guess not. So yes, judging by his latest SMS, you guys will now seize or impound everything I own, so you can do so, I have a 10-yrs old diesel Peugeot and an Iphone that I actually own. Just put everything you got in a big letter or something legal and come after me and you can have the car - but it needs tires and the engine is almost dead.
15. In evidence is an email from Mr French to Mr Iliuta from May 2017. The evidence does not include the chain of communications of which the email formed part. Mr French stated: This is totally untrue and nothing more than lies. If you say I have threatened you please outline those threats now. I have not contacted you until this email. I have not threatened you at all. I hope the police do know where you are because my lawyers including Mr Franklin are coming to question you in France. YOU WILL BE FORCED TO GO TO COURT IN FRANCE BY THE FRENCH POLICE. You also have a company here in Australia in Queensland. I have in the past provided accommodation and money to you for many years backing your young inventors network in 1994-1995, have you forgotten? I have paper clippings. I have been very successful in court latterly and Jacinta Bayard is also in trouble over here. She has been beaten in one court case by me. She was a lawyer who works alone and my new lawyers are a big law firm. I will forward an email from her to my new lawyers showing this, she is begging me to drop the next case against her and using you as the pawn. I don't care if you stupidly choose to not sign your affidavit, you will pay dearly in the end and I will try to sue you for everything you have. This is not a threat it is a promise if you don't cooperate now. I give you one more chance to wake up to yourself and sign your affidavit or you will be chased by the law in Australia and in Europe. Your actions are ridiculous, please take this seriously. Peta Maloney from Maxwell is working closely with Anthony Franklin and they will both be attending court in France to question you in a French court as Peta stated to you in her last email to you. This is going through Canberra to the French Authorities and is costing a lot in time and money which I think you will pay for one day. If your business is going well I would take this very seriously. You can't run and hide from this if you want to continue in business the internet will tell the truth about you and the whole world will see what has happened forever in your name. Please call or email me or Peta Maloney to discuss this ASAP. Don't take this as a threat - it is not - it a last chance to help an ex-friend and get him to assist with immunity only at this point in time before it all back fires on him if he does not assist now.
16. Mr French's lawyers arranged for the Court to issue a letter of request to the French authorities so as to require Mr Iliuta to attend, in France to give evidence via video link. The Court made orders setting the letter of request procedure in motion in December 2017. This eventually resulted in arrangements being made for Mr Iliuta to be summoned before a French court at Montpellier so as to give evidence.
17. The video link hearing was convened for 13 May 2019, at the beginning of the second week of the trial. Mr Iliuta appeared before the court in Montpellier. The video link did not function, but it was possible to communicate by audio link. An interpreter was present. Documents from the Court Book were made available in Montpellier to allow Mr Iliuta to be questioned.
18. An oath or affirmation was administered to Mr Iliuta in accordance with French practice. In answer to a question from Mr French's counsel, he gave his name and confirmed he had access to the documents. But then the following exchange took place: FRANKLIN Q. There are some page numbers at the bottom right hand corner, which accord with our court book numbers. Do you see that? A. Well, I don't really want to follow through with the procedures, because I'm only here because of the requirement of the French law, but I will not witness to anything, or comply with any of your requests. HIS HONOUR Q. Mr Iluita, you've been, as I understand it, required by the French authorities to appear, and to answer the questions that are put to you. A. Well, sir, I will not answer these questions because of the death threats made by Mr French against myself, the members of my family, and my close friends. This will I am only here because of out of respect for the French law, but it stays here. I will not answer or cooperate in any way.
19. The Court reminded Mr Iliuta that under Australian law he was required to answer the questions and would be guilty of contempt if he failed to do so without a proper excuse. Mr Iliuta maintained his refusal. The Court sought assistance from the French Magistrate presiding at the hearing in Montpellier. As I understood it, French law required Mr Iliuta to attend and answer the questions but, because the proceedings were civil proceedings, the only sanction available to the French Magistrate was to record Mr Iliuta's refusal. Accordingly, there was nothing further which could be done to obtain Mr Iliuta's oral testimony.
20. Following this fiasco, counsel for Mr French sought to tender Mr Iliuta's June 2015 affidavits and the draft affidavit attached to Mr Iliuta's email to Mr Franklin of 24 May 2016. The application was made pursuant to the Evidence Act 1995 (NSW), s 63, which provides that a witness' previous representation, if recorded in a document "made" by the witness, is admissible despite the rule against hearsay if the witness is not available to give evidence. It was common ground that as a result of Mr Iliuta's refusal to give evidence he was not "available" in the relevant sense: see, eg, Mindshare Communications Ltd v Orleans Investment Pty Ltd [2007] NSWSC 976 at [14]-[18].
21. The Evidence Act requires that if a party wishes to rely upon s 63, notice must be given in accordance with s 67. Counsel for Mr French formulated a notice overnight and moved the next day, 14 May, to have Mr Iliuta's 2015 affidavits and 2016 draft affidavit admitted.
22. Counsel for Dr Bremner did not object strenuously to the tender of the June 2015 affidavits under s 63. Only parts of the affidavits were relied upon by counsel for Mr French and I ruled on objections to some of those passages.
23. But counsel for Dr Bremner strongly objected to Mr Iliuta's draft affidavit being received into evidence. The application to tender it was argued at length. Counsel resisted its admission on three main grounds.
24. First, counsel complained about the s 67 notice. The Court has power to dispense with the notice and shorten the time for service from fourteen days, and no point was taken about that as such. But counsel complained about the form of the notice. The notice simply listed the 2015 affidavits, the 2016 draft affidavit, four of the May 2016 emails, and the exhibits under the heading "representations".
25. Counsel's main point was that s 63 does not make documents, as such, admissible. It makes representations in documents admissible. But those representations must be based on "personal knowledge" s 63(2)(a); Dictionary cl 6(a); see also Caterpillar Inc v John Deere Ltd (No 2) [2000] FCA 1903 at [21]-[22]]; Nichia Corporation v Arrow Electronics Australia Pty Ltd (No 3) [2016] FCA 466 at [18]-[19]. Counsel complained that the notice failed to identify the specific representations which were relied upon as evidence of the fact and made admissible under s 63.
26. Counsel's analysis of s 63 was correct. But the Court must adopt a practical method of applying the provisions of the Act.
27. The business record provisions in s 69 raise similar procedural issues. That provision likewise renders "previous representations" in business records admissible; it does not, strictly speaking, render the documents admissible as such. But it is commonplace in proceedings in this Division, and in particular in this List, for hundreds or thousands of pages of business records to be included in the Court Book and tendered. It is not the Court's practice to require every single representation which the parties contend to arise from these documents to be individually identified and the "personal knowledge" on which such representations might be based, before they can be admitted. The practice is that the documents are tendered and, to the extent that any question arises about what they prove in terms of "previous representations", this is addressed by way of submission. Any other approach would be quite impracticable.
28. Mr Iliuta's draft affidavit consists of 127 paragraphs extending over 29 pages. In a handful of places it is incomplete where Mr Iliuta did not fill in the gaps or answer the questions which had been asked of him. But apart from that it is in conventional affidavit form. Dr Bremner's legal representatives had known for a long time that the draft affidavit would be relied upon. It was included in the tender bundle. The possibility that Mr Iliuta might not co-operate would have been foreseen on both sides and counsel for Mr French must have contemplated that if Mr Iliuta did not give evidence an application would be made to tender the draft affidavit.
29. Because of its form, the "previous representations" in the body of the draft affidavit, in most cases, appeared clearly from a reading of it, and any lack of "personal knowledge" could readily have been dealt with by specific objection. The exhibits were in no different position from any other business records (some had actually been separately tendered as such without objection). In my view, the s 67 notice was adequate notification of reliance on the draft affidavit despite the fact that it did not individually identify every "previous representation". Accordingly, I overruled the objection based on the form of the notice.
30. Counsel's next objection focused on the requirement for admissibility under s 63 that the document in question be "made" by the witness. The dictionary in the Act, cl 6, deals with this question. It provides: 6 Representations in documents For the purposes of this Act, a representation contained in a document is taken to have been made by a person if: (a) the document was written, made or otherwise produced by the person, or (b) the representation was recognised by the person as his or her representation by signing, initialling or otherwise marking the document.
31. Counsel for Mr French relied first on (b). The submission was that by including the blue type in the draft affidavit, Mr Iliuta was "signing, initially or otherwise marking" the document for the purposes of sub-clause (b). I am not sure that this is correct. The term "marking" must be construed eiusdem generis with "signing" and "initialling". So understood, I think the reference to "marking" should be understood as some formal acknowledgement of the correctness of the document as a whole.
32. But that was not the only possible basis for tender. There was no objection to the tender of Mr Iliuta's covering email under s 63. Although the email was not signed, it was clearly "written, made or otherwise produced" by him for the purposes of sub-paragraph (a). The draft affidavit was an attachment to the email and it was clear from the context that Mr Iliuta had gone through the draft and corrected it. In my view the email and draft affidavit must be considered a single document for the purposes of s 63. If Mr Iliuta had copied and pasted the draft affidavit into his email, and then made changes before sending it, there would be no doubt that he "made" the draft affidavit for relevant purposes. In my view, the fact that the draft was an attachment should make no difference.
33. This reasoning did not apply to the exhibits. Subsequent emails directed Mr Iliuta to the drop box but there was no response from Mr Iliuta signifying adoption of the exhibit bundle. This however was not the end of the question. Some of the exhibits (for example, brochures prepared for the MGT Europe business) were admissible as business records in their own right. Where the exhibits were not on their face business records (for example, photographs described by Mr Iliuta in the draft affidavit) was open to counsel to lead further evidence or to present submissions to support the inference that a particular document is that referred to in the affidavit. Accordingly I received the exhibits, not as documents necessarily referred to by Mr Iliuta, but as documents which the Court might ultimately conclude were the documents to which the draft affidavit referred.
34. Counsel's third contention was that, if otherwise admissible, Mr Iliuta's draft affidavit should be rejected under Evidence Act, s 135, which gives the Court a discretion to refuse to admit evidence if its probative value is, relevantly, substantially outweighed by the danger that the evidence might be unfairly prejudicial to a party. Counsel pointed to a number of factors in support of the exercise of the discretion in this way. Counsel pointed out that the result of admitting the draft affidavit was that Mr Iliuta's evidence would be admitted in circumstances where he could not be cross-examined. Counsel referred to the allegation by Mr Iliuta that he was threatened by Mr French. This was not just something that Mr Iliuta said during the abortive video link hearing in Montpellier. He referred to it in his email of 10 June. There is also Mr French's email of May 2017 which was cast in threatening terms (although the threat was financial, not physical).
35. It is the ordinary consequence of s 63 that evidence in a document made by a witness is admitted without the other party having an opportunity to cross-examine. In my view, something more would usually have to be shown before the s 135 discretion would be exercised so as to refuse the document to be admitted. Any other approach would involve the Court exercising its discretion so as to subvert the will of Parliament as expressed in the Act.
36. I saw nothing in the circumstances of the preparation of the draft affidavit which would make the risk of it having been unreliable or contrived so great as to warrant the exercise of the discretion. Rather than the reverse. As has been seen, Mr Iliuta alleged in the draft affidavit that Dr Bremner was intimately involved in attempts by Mr Iliuta to exploit Mr French's ideas for his own benefit. According to Mr Iliuta Dr Bremner financed RCI and held an interest in it through a nominee. Mr Iliuta admitted having copied drawings and prototypes for this purpose. These admissions were made against interest and, in my view, were repeated in the subsequent email of 4 June. Counsel submitted that the reference to "how I copied products developed by MGT" did not have this meaning but I cannot agree. I think in the context Mr Iliuta plainly treated the copying as a fact; that was why he sought an indemnity against any action MGT would otherwise be able to take against him.
37. Mr Iliuta's assertions in the draft affidavit of Dr Bremner's involvement are also consistent with what he said in email correspondence. Mr Iliuta's evidence on this point was potentially prejudicial to Dr Bremner, but, if correct, it had very substantial probative value in evaluating the case put by Mr French. Furthermore, Dr Bremner could, had he chosen to do so, readily have given evidence to deny Mr Iliuta's allegations. There may have been prejudice to Dr Bremner in the sense that he lost the opportunity to challenge Mr Iliuta's testimony in cross-examination without exposure to cross-examination himself. But in the circumstances, that was not "unfair prejudice" in the sense used in the Act.
38. Mr French's threats in his email of May 2017 do him no credit. But that did not mean that they were relevant to the admissibility of Mr Iliuta's draft affidavit. For one thing, they post-dated the draft affidavit. There was no reason to think that what Mr Iliuta said in his affidavit was induced in any way by some form of threat.
39. More broadly, I was not impressed with Mr Iliuta's attempt to rely on the threats as a justification for failing to give evidence. His position was illogical. Mr French wanted Mr Iliuta to give evidence. Mr Iliuta was at no risk from Mr French if he did so. His affidavit supported Mr French's case. His only risk was if he defied Mr French by refusing to verify what he said in the draft affidavit. In the end, that is what he did, thereby demonstrating that the threats were ineffective. However much the Court may deplore Mr French's behaviour, it did not provide a reason to reject tender of the draft affidavit.
40. Counsel also referred to Mr French's apparent readiness to agree to the conditions specified by Mr Iliuta, and in particular the payment of money if the case against Dr Bremner was successful. I should say immediately that no criticism attaches to Mr French's current solicitors. Ms Mahoney's response, as I have stated, was circumspect. She at no stage attempted to "buy" Mr Iliuta's testimony by offering him some sort of contingent benefit out of the proceeds.
41. Mr French's approach was open to more substantial criticism. The circumstances left open a submission that the credibility of Mr Iliuta's testimony was reduced by the possibility that it had been given in response to an inducement. But having regard to the circumstances of the case and the nature of the allegations made by Mr Iliuta, I did not think that this was something that should prevent the tender of the evidence completely. I considered that the proper course was to overrule the general s 135 contention, and to leave counsel's submissions about the circumstances in which the affidavit had been prepared to be pursued as a matter of weight at the end of the hearing.

Waiver of privilege

1. As we have seen, the tender of Mr Iliuta's draft affidavit was accompanied by emails passing between Mr Iliuta, Mr French and Mr French's solicitors and counsel. To the extent that this might otherwise have been privileged, any privilege was waived. When counsel for Mr French announced that he would be applying to tender Mr Iliuta's draft affidavit, a notice to produce was issued on behalf of Dr Bremner for the surrounding communications.
2. Documents were produced in answer to the notice. Because of the urgency, Mr French's solicitors produced them directly to Dr Bremner's solicitors without the formality of producing them to Court and permitting access. Among the documents produced was an email chain consisting of four emails in chronological order. These were: (1) 2 June 4.33pm: Email from Mr Franklin to Ms Maloney, Mr French and Ms Bakey (2) 2 June 4.52pm: Response from Ms Maloney to Mr Franklin, Mr French and Ms Bakey (3) 3 June 10.30am: Email from Mr Franklin to members of Mr French's legal representation and Mr Iliuta (4) 4 June 2.43am: Email from Mr Iliuta to Mr Franklin
3. I will refer to these as emails (1) to (4) for convenience. In the course of the hearing on the admissibility of Mr Iliuta's draft affidavit, counsel for Dr Bremner tendered the four emails as a chain. At that point, counsel for Mr French announced that the production of emails (1) and (2) had been a mistake. Although covered by the Notice to Produce, they were documents passing between Mr French and his lawyers that had not gone to Mr Iliuta. Counsel stated on instructions that the documents had been produced in error. After taking instructions, counsel for Dr Bremner accepted this.
4. Counsel acknowledged that, in the ordinary course, the documents should be returned: Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303. But counsel announced that he wished to argue that the privilege in the documents had been waived. Counsel did not argue that the production of the documents was a waiver and it was accepted that should the contention fail the documents would be returned. For the purposes of the argument, counsel retained copies of the emails but they were not provided to the Court and I dealt with the application on the basis of other evidence and on the description of the emails which I have already set out.
5. In support of his argument on waiver, counsel criticised the way in which the affidavits had evidently been prepared. Counsel for Mr French had been directly involved in suggesting possible changes to the draft affidavit so as to achieve consistency. Not only that, but the draft affidavits had been sent to Mr French and Ms Bakey in circumstances where their affidavits had not been completed. Counsel relied on the obvious potential for cross-contamination of the evidence in these circumstances.
6. To say the least, what happened was unfortunate. The cynical statement that the truth may sometimes leak out of an affidavit like water out of the bottom of a well has been attributed to one or other of Lord Buckmaster, Lord Justice Bowen or Lord Justice Chitty: see, The Hon JJ Spigelman AC, "Truth and the law" (2011) Bar News 99 at 110. What happened in this case shows why such cynicism exists. But I am not concerned with the disciplinary consequences, if any, of what happened. The question is simply whether the circumstances are such as to give rise to a waiver of privilege.
7. Counsel for Mr French put forward two lines of argument. The first was that the email chain should be seen as a single document. Counsel argued that either the whole of the chain was privileged or none of it was. I do not accept this argument. In my view, each email is a distinct communication. The two emails which were tendered, emails (3) and (4), do not contain any reference to the earlier two emails. Emails (3) and (4) were presumably tendered as part of the context within which Mr Iliuta was negotiating with Mr French and his lawyers about whether he would swear the affidavit. They can be used for that purpose without the need to refer to emails (1) and (2) at all.
8. Counsel's second argument focused on the principle that where a party gives evidence about a matter, the party will not be allowed to claim privilege over part of the story if that would make the evidence which has been given potentially misleading because of its incompleteness: Attorney-General (NT) v Maurice (1986) 161 CLR 475 at 488; Great Atlantic Insurance Co. v Home Insurance Co [1981] 2 All ER 485.
9. Counsel argued that this principle applied to the affidavits put forward by Mr French (and presumably Ms Bakey). Counsel submitted that to receive the affidavits in their completed form would be misleading, or potentially misleading, without disclosure of the full circumstances in which the affidavits was prepared, including emails (1) and (2).
10. This argument proves too much. If correct, it would mean that wherever an affidavit is read, that would automatically result in the waiver of all of the prior communications between the witness and the legal advisers of the party calling the witness involved in the preparation of the affidavit. If that happened, it might be a better way of getting to the truth than the current process by which the witness' initial recollection and expression is massaged (if not worse) through the drafting process. But an accepted feature of legal professional privilege is that it prevents evidence which would be relevant from being put before the Court.
11. In my opinion, the principle to which I have referred did not apply to Mr French's affidavit. The affidavit was complete in itself and the fact that there might have existed some notes or internal communications of Mr French's solicitors which could have qualified or contradicted it could not be a justification for the loss of privilege over those documents. For these reasons, I rejected the waiver contention. I understood that as a result of this ruling, all of the copies of emails (1) and (2) in the possession of Dr Bremner's legal advisers were to be destroyed or returned.

Quantum evidence

1. Mr French's legal advisers retained Mr Domenic Quartullo, a forensic accountant, to give evidence quantifying the claim for damages for breach of the alleged joint venture agreement concerning the exploitation of the magnetic gearing technology in Europe. A report was filed from Mr Quartullo in which he assessed the income foregone by Mr French, grossed up for tax, at between $39.5 million and $58.9 million. In response, Dr Bremner's legal representatives filed a report by Ms Jennifer Exner, another forensic accountant. A report from Mr Quartullo was then filed in reply.
2. Mr Quartullo did not have, and did not claim to have, any expertise in the commercialisation of inventions. He based his calculations on a document he was provided called "Five Year Business Plan and Information Memorandum (Global Rollout)".
3. The Business Plan is dated September 2013. It is said to have been prepared by Investment Capital Pty Ltd, but in conjunction with MGT, and was produced on MGT letterhead. Investment Capital Pty Ltd was apparently a company belonging to Mr John Mennega. Mr French met Mr Mennega after the breakdown in his relationship with Dr Bremner in 2011, and enlisted Mr Mennega's help in trying to commercialise the magnetic gearing technology himself.
4. As its full name suggests, the Business Plan was obviously prepared for the purposes of trying to raise finance for commercialising the invention. It contained a lengthy description of the MGT business and its history. The Plan was based on the assumption that funding of approximately $2.2 million could be obtained. It contained projected income, costs and net profit for the first five years after funding was made available.
5. Counsel for Mr French sought to tender the Business Plan through Mr French. The Plan was one of the exhibits to Mr French's 2016 affidavit. But the affidavit did not more than refer in a general way to Mr French's involvement with Mr Mennega and then exhibit the document. The tender through Mr French was clearly objectionable on the grounds of form alone, and this was accepted by counsel for Mr French when the inevitable objection was made.
6. Some further evidence about the preparation of the Business Plan was included in Mr French's supplementary affidavit produced in the course of the trial and counsel for Mr French then sought to read those paragraphs and renew the tender of the Plan. The objection was maintained by counsel for Dr Bremner. They argued that the additional material in the supplementary affidavit did not solve the problem. Counsel submitted that there was still no basis shown for the figures in the Plan.
7. As the debate went on, it seemed to me that there was a more fundamental objection to the evidence, as a matter of relevance. Counsel for Mr French had previously foreshadowed, probably acknowledging the weakness of the damages evidence, the deferral of the assessment of any damages until a later hearing. I informed counsel for both parties that I was inclined to reject the evidence on the ground of relevance but hear any application counsel for Mr French might make to defer the assessment of any damages to which Mr French might be entitled.
8. Counsel for Mr French then made an application for such a deferral. I heard argument from both counsel on the application. A major difficulty with the application was that it would in effect put Mr French in the position, should he establish an entitlement to damages, to start his entire case again. Counsel for Mr French frankly acknowledged that should this happen, Mr French would present an entirely new evidentiary case based on an assessment from an expert with appropriate qualifications in the commercialisation of inventions.
9. Ultimately I decided that I would make an order deferring an assessment of damages but only on terms that Mr French first pay a substantial sum of money into Court to cover the costs of Dr Bremner which would be thrown away by reason of taking that approach. Counsel for Mr French was unable to obtain instructions to comply with this condition, and I therefore refused the application. I then confirmed my foreshadowed ruling that the plan was inadmissible. As a result, counsel for Mr French did not read the paragraphs of the supplementary affidavit concerning the plan. The reports which had been filed from Mr Quartullo and Ms Exner were not read.
10. When I confirmed my decision to reject the Business Plan, I indicated I would give fuller reasons in due course for that part of my decision. Those reasons now follow.
11. When a court is called upon to decide whether a defendant's breach of contract has caused damage to a plaintiff, and if so the amount of such damage, the court is engaged in a retrospective exercise. The court must determine whether the plaintiff would have been in a better financial position than he or she now is, and if so, by how much. For the purpose of determining what position the plaintiff would have been in, the Court uses hindsight having regard to events as they actually happened, even if those events may not necessarily have been expected or even foreseen by the plaintiff and the defendant at the time of breach: cf Vairy v Wyong Shire Council (2005) 223 CLR 422 at 461 [124].
12. This underlines a fundamental difficulty in using a forward-looking document such as the Business Plan as the basis for assessment of damages. The Business Plan represents what Mr French and Mr Mennega hoped to achieve once they had got their finance. At the time it was prepared they could not hope to know what would happen in future. Even if the prediction was as skilfully prepared as possible, the Court still does not know whether under the market conditions which actually prevailed at the time, the hoped-for returns would have been achieved.
13. There is a further difficulty. Any damages would be assessed on the footing that Dr Bremner complied with his putative obligations to proceed with and fund the MGT Europe company in accordance with the alleged agreement. That would have been a business based in Montpellier, starting in late 2010 or early 2011. The hypothesis in the Business Plan is quite different. It was prepared in September 2013 and the figures in it were for the five years after finance had been obtained. In my view, even if the figures were reliable the analysis is so distant from that which must be the basis for the Court's analysis as to provide no assistance at all.
14. Reinforcing all of this is the fact that the assumptions behind the Business Plan are barely articulated. It is an amateurish document, the figures in which appear to have been plucked out of the air. In my view its form is such that it is impossible to relate to the exercise which the Court would have to undertake in assessing damages.
15. For these reasons I considered that the Business Plan failed the test of relevance under the Evidence Act, s 55(1). If I was wrong and the Plan in some way had some relevance, in my view, it was so marginal that I would have excluded it under s 135.

Advances by Dr Bremner in 2001

1. The October 2001 loan acknowledgement (see [76] above) expressly stated that Mr French had received $335,000 by way of loan from Dr Bremner. Mr French admits that the payment or payments, when made, were by way of loan. There is thus no doubt about the nature of the payment. But there are questions about the context.
2. In his affidavit in reply to Dr Bremner's unread affidavit, Mr French said that he had a conversation with Dr Bremner about the need for money to pay Griffith Hack for patents. Mr French claimed that he had sufficient money to pay for PCT applications but that Dr Bremner encouraged him to apply for further patents in other countries, which was expensive.
3. A list of expenses paid by Mr French to Griffith Hack for the 2001-2002 to 2004-2005 financial years is in evidence. That list refers to payments to Griffith Hack between November and December 2001 totalling about $80,000 for countries in Africa, South America, the Middle East and elsewhere in Asia. They include Zambia, Argentina, Chile and Egypt.
4. The $80,000 could thus have been for patents in non-PCT countries. But that accounts for less than a quarter of the money provided, and it is clear from Mr French's evidence concerning his dealings with API (and his unsuccessful request for more money from Dr Bremner early in 2002) that he was in financial difficulties at the time. I am not satisfied that he had sufficient funds from his own resources to finance the PCT patents and that the money from Dr Bremner was for secondary patent costs, as his evidence suggested.
5. In his email of 12 January 2011 (below at [394]) Dr Bremner said that he had lent money to Mr French on a handshake when his other backers in MGT had not been prepared to. In the light of all the evidence, this seems to me a more plausible explanation for how the 2001 loan came to be made. I suspect it resulted from a request by Mr French rather than from Dr Bremner setting out to become involved.

Advances by Dr Bremner in 2006 - 2007

1. As with the October 2001 acknowledgement, the February 2007 "loan agreement" prepared by Mr French expressly recorded that the payment by Dr Bremner was a loan, and this was confirmed by way of admission by Mr French in these proceedings. The "loan agreement" does not cover the other payments totalling $100,000 made in December 2006 and January 2007, but Mr French has admitted that those payments were also made by way of loan. Again, however, Mr French sought in his evidence to put these loans in a context which suggested that the idea came from Dr Bremner.
2. I have already referred to Mr French's evidence that the loans followed the resumption of contact between himself and Dr Bremner after a 5 year hiatus. According to Mr French, Dr Bremner telephoned him from the United Kingdom. They discussed the magnetic coupling invention, and Dr Bremner told him that he had taken the magnetic coupling invention to "the Russians". Mr French said he remonstrated with Dr Bremner but Dr Bremner replied that their involvement would make him really rich and in some way "the Russians" were going to be able to use a magnetic coupling apparatus to make more power than it used.
3. According to Mr French, he and Dr Bremner also discussed rising land prices at Port Stephens; Dr Bremner expressed enthusiasm about the purchase of the land he had made and spoke of the two of them subdividing their land together. Mr French said he told Dr Bremner about the arrangement with the Victory Mission and Dr Bremner said that he should not sell and they should subdivide together.
4. The story about "the Russians", and especially the idea that a device could be made using the technology that produced more energy than it consumed, is one of the more bizarre features of this case. But there is reference to Dr Bremner taking the invention to "the Russians" in later emails, so Dr Bremner must have said something to give some basis to the story.
5. But I find it less easy to accept that Dr Bremner was trying to prevent Mr French from selling the land to the Victory Mission. For one thing, the only documentary evidence of the Victory Mission proposal is the solicitor's letter from March 2005, which appears not to have been taken any further. Mr French's fax of 14 February 2007 mentioned subdivision but did not say anything about a sale to the Victory Mission; instead the fax suggests that what Mr French and Dr Bremner had discussed was holding, and perhaps subdividing, the land as an alternative to selling it through a real estate agent. Indeed the fax stated that part of the property had been listed, and that seems inconsistent with any continued idea of selling to the Victory Mission.
6. There is a further difficulty in the context as presented by Mr French. In his affidavit he portrayed the proposed sale to the Victory Mission as having been a way of reducing debt to Provident. In fact, on the evidence before me, the true sequence appears to have been the other way around. The Victory Mission proposal was put forward in March 2005 and it was not until May 2006 that Mr French obtained the loan from Provident.
7. It will be recalled that the term of the Provident loan was six months expiring in November 2006, although it was subsequently rolled over. A more plausible reconstruction of the events would be that, having borrowed the money from Provident on a short term basis, perhaps in the hope of obtaining a subdivision and sale, Mr French found himself at the end of 2006 in a financial jam and sought finance from Dr Bremner to give himself more time to complete a scheme for the subdivision and sale of the Bulga Creek Farm. This would explain why the money was borrowed on the understanding that it would be used to pay down the Provident debt.

Acquisition and registration of Victorian properties

1. In his affidavit, Mr French said that he first discussed the Victorian properties with Dr Bremner at Marbella following the Hanover Fair in April 2007. At this stage he had paid a deposit on the Corringle Road Homestead and ascertained that the owner of the two other Corringle Beach properties was interested in a sale with a two year delayed settlement. Mr French said that Dr Bremner was very taken by the properties and told him to "buy the lot". Mr French said that he agreed with Dr Bremner that he (Mr French) would have an option to buy his share in the Corringle Beach Homestead property when the MGT business became profitable.
2. Mr French said that he discussed with Dr Bremner acquiring further properties in Victoria; the idea was that the properties would be put into working order and sold for a profit in the future, giving them a joint capital gain. He said that Dr Bremner said words to the effect: If you find properties that you think are suitable and pay a holding deposit, I will pay the balance of the purchase price, but they should be registered in our joint names - 50/50
3. Both Mr French and Ms Bakey referred specifically in their affidavits to the Corringle Beach Homestead property being registered in Ms Bakey's name.
4. Mr French said: This was also discussed between me and Bremner in a telephone conversation when he said to me words to the effect that "the house block should go into Gabi's name alone for security in case something happens to you".
5. At one point in his cross-examination, it was put to Mr French that he had no real recollection of the alleged 50/50 conversation in Marbella. He disagreed. He was not challenged on his account of the conversation about putting the Corringle Beach Homestead block in Ms Bakey's name.
6. Ms Bakey stated in her affidavit: I recall a telephone conversation with Bremner in which he said to me words to the following effect "Because all the businesses and other properties are in Andrew's name it would be a lot safer for this property to be put in your name only. That will give you and the kids security". This property settled near my birthday after Bremner had paid the balance of the purchase price. Bremner telephoned me to tell me about this. He told me that he had arranged with Ward's solicitors that this property would be registered in my name. I specifically recall words to the effect "What a great birthday present for you". I agreed and thanked him. There was never any discussion between myself and Bremner regarding my holding this property in trust for him.
7. Ms Bakey was not asked about this in cross-examination.
8. There is no documentary evidence which expressly supports a 50/50 conversation having occurred in Marbella in April/May 2007 in the full terms alleged by Mr French. But early in June, Mr French emailed Dr Bremner saying that he had secured a beach block at "Corringle and they would go halves in that" (this block was different from the Corringle Beach properties later bought by Dr Bremner and the purchase did not proceed). Then in his email of 6 May 2008, quoted at [118] above, Mr French said that he had offered Dr Bremner half of the magnetic gearing invention "when you said we would go 50/50 in all the land that I found".
9. As I explain in more detail below, the most likely date for the "offer" of half the magnetic gearing invention would have been in early 2008. This would have been after the settlement of Corringle Beach Homestead property but before expenditure began in earnest on the purchase of the other Victorian properties. That would fit comfortably with what Mr French said in his 6 May email.
10. In his email of 12 January 2011 (above at [210]) Dr Bremner referred to the $1 million loan in February 2007 and said: Some time later you informed me you had paid a deposit on a farm in Orbost but could not settle, I said I would help you settle if we would be partners in the property. Subsequently we invested in buying a number of farms together some in partnership some individually including a home in your wifes name, I paid for everything amounting to several million dollars …
11. Given all the other financial scrapes that Mr French got into, Dr Bremner's account of what happened is a plausible explanation for how the purchase of the Victorian properties began. But Dr Bremner expressly went on to describe the purchase of the jointly owned properties as having been made "in partnership", and this is consistent with the sort of arrangement described by Mr French.
12. I now turn back to the circumstances in which Ms Bakey and Mr French were registered as proprietor, or joint proprietor, of the properties.
13. When the purchase of the Corringle Road Homestead property was settled, two transfers were prepared. The homestead parcel was transferred to Ms Bakey as sole proprietor. The farming land was transferred into the name of Mr French, but at the same time he executed a deed of trust (not itself in evidence) declaring himself trustee of the land for himself and Dr Bremner as tenants in common in equal shares.
14. Details of the purchases of the Victorian properties are set out in a letter from Wards to Dr Bremner sent in late September 2008. This letter contained settlement details for all of the properties, although at that point the final property purchased, at Deddick Valley, had not actually settled.
15. Wards' letter to Dr Bremner also contained details of ownership for each property. The ownership of the two parcels making up the Corringle Road Homestead property corresponded with the registration in the names of Ms Bakey and Mr French (as trustee) in the way that I have described. The two Corringle Beach properties were shown as owned by Dr Bremner. The Newmeralla, Deddick Valley and Mount Hotham properties were shown as owned by Mr French and Dr Bremner as tenants in common in equal shares.
16. One of the Corringle Beach properties had been registered in Dr Bremner's name because Wards had held a transfer signed by him as transferee. None of the other purchases had been registered and Dr Bremner needed to sign the transfers. Wards eventually obtained signed transfers from Dr Bremner for those properties; they were stamped and registered in January 2009. At the same time, the Corringle Beach Homestead farmland was registered in the joint names of Mr French and Dr Bremner in accordance with their interests under the November 2007 deed of trust.
17. At the end of his email of 12 January 2011, quoted at [210] above, Dr Bremner said that instead of having lost his Bulga Creek farm, he had "a portfolio of valuable properties". In the context, he must have been referring to the Victorian properties. Those properties, of course, would not have been valuable to Mr French if he was simply holding them for the benefit of Dr Bremner. And when Dr Bremner referred to the Corringle Beach Homestead property having been put in Ms Bakey's name, he clearly did not mean that she was holding it as nominee for him. Instead, what Dr Bremner said tends to support the account given by both Ms Bakey and Mr French that the property was registered in her name so as to protect her in case something should befall Mr French.
18. The affidavit evidence of Mr French and Ms Bakey is self-serving but not inherently incredible, especially given the circumstances and the evidence of other acts of generosity on Dr Bremner's part. I will give my conclusions on it, and on the other evidence to which I have referred, when considering Dr Bremner's resulting trust claim below.

Alleged agreement concerning Provident mortgage

1. I have already referred to the conference on 25 or 26 February 2009 between Mr French and Mr Greenstein at which Mr French agreed to accept an offer of a consent judgment with three months to pay, and it was agreed with Dr Bremner (who had been contacted by telephone) that he would be kept informed of all developments. On 10 March Mr Greenstein wrote to Mr French seeking further instructions and recommending that he seek to settle with Provident for around $2 million. A further letter of 10 March noted that Mr French was trying to refinance the loan with the ANZ Bank.
2. Dr Bremner's intervention, when he made a direct approach to Mr O'Sullivan to negotiate a settlement, came on 16 March. A file note by Mr Greenstein records: Telephone discussion with Christopher Bremner in the United Kingdom. He informed me that he had spoken to Michael O'Sullivan of Provident Capital Limited and had come to an agreement with Provident Capital as follows:- 1. The amount outstanding in terms of the loan from Provident Capital, interest and costs amounted to $2.75 million; and 2. Provident Capital had agreed to accept $2.6 million in full and final settlement; and 3. Christopher Bremner would be paying Provident Capital the amount of $600,000 immediately (and in this regard Dr Bremner indicated that he would notify us as soon as such payment had been made); and 4. It had been agreed that the balance of $2 million was to be paid within 60 days but in the meantime would attract interest at the rate of 10% per annum on the balance; and 5. It had been agreed that if the amount of $2 million was not paid within 60 days the interest accumulating thereon would be calculated at the rate of 20% per annum; and 6. Provident Capital Limited will agree to abandon the current proceedings and will not take any further steps with regard to the Consent Judgment/Order pending payment of the amounts referred to above.
3. On the same day (although misdated 10 March) Mr Greenstein wrote to Dr Bremner (with a copy to Mr French) confirming the instructions recorded in the file note. Mr Greenstein sought instructions on further details about the proceedings and the interest.
4. Although Mr Greenstein was under the belief that agreement had been reached for the liability to Provident to be settled by payment (from Dr Bremner) of $2.6 million, this was not quite accurate. The email record shows that Mr O'Sullivan proposed to Dr Bremner that Dr Bremner buy Provident's mortgage out for the sum of $2.6 million, but no final agreement was reached. On the evening of 16 March Mr O'Sullivan forwarded a draft deed of assignment to Dr Bremner. The draft deed provided for payment of $600,000 up front with a further $2 million to be payable after 60 days.
5. Emails passed to and fro between Mr O'Sullivan and Dr Bremner over the next few days about how the debt claimed by Provident had been calculated. Dr Bremner then emailed Mr O'Sullivan stating that he was travelling from London to Sydney on 19 March and asking for a meeting. He said that he was "keen to deal on this matter expediently".
6. Meanwhile, Mr French had raised the possibility of refinancing the Provident debt with ANZ. On 19 March the bank responded. Confirmation was required that Mr French had satisfied a previous liability to Esanda (a subsidiary of ANZ) on which he had defaulted. ANZ also required a commitment from Dr Bremner to guarantee the ANZ facility, and full financial details for Mr French, MGT and Dr Bremner were all required. All these matters needed to be addressed before the application could be considered any further. Mr French sent this to Dr Bremner, saying that he could provide the Esanda documentation, but it was not taken any further. On 30 March, after some requests to schedule a date for the meeting, Mr O'Sullivan emailed Dr Bremner noting that he had heard nothing further from him and assuming that he had no further interest in the assignment. The email stated that the "offer of discount" was withdrawn. This provoked a response from Dr Bremner blaming communication difficulties on his mother's cancer treatment and stating that he was still interested in the assignment and would like to meet.
7. It is not clear whether a meeting took place, but on 1 April, Dr Bremner emailed Mr O'Sullivan to say that he had sent $650,000 to Provident from an account at UBS Zurich. Dr Bremner explained that the extra $50,000 was for interest "to be drawn as needed". But the assignment deed was not executed, and negotiations continued. Apparently Dr Bremner had discussed with Mr O'Sullivan the possibility of refinancing the debt through the CBA. The proceedings were adjourned on 1 June until early July on the basis that the parties were negotiating a settlement.
8. In early July the proceedings were further adjourned to September. A few days later Mr O'Sullivan wrote to Dr Bremner stating that Provident was happy to continue with the loan to Mr French if interest continued to be paid. Mr O'Sullivan proposed that the position be reviewed at the end of December or earlier if "required by you (i.e. dependent upon your business relationship with Mr French)". He stated that in the meantime Provident's "preferred option" would be for a further capital of repayment of $250,000, but did not press for this. In the event, Dr Bremner paid the interest, which was about $50,000 per quarter.
9. There were unusual features of Dr Bremner's dealings with Mr O'Sullivan which had nothing to do with Mr French's loan. In his email to Mr O'Sullivan on 1 April 2009 Dr Bremner referred to an ASX listed company called Benitec which he said he controlled. Benitec had developed an experimental technology used for treating aids, lymphoma and leukaemia. Dr Bremner said: The company is financially dependent on me (as with Mr French) and I continue to support it from my reserves. I am impressed with your skills on our brief interaction and think the company would benefit greatly if it had a CEO with strong flexible attributes as negotiating skills will be the core of IP commercialization, if you have time have a look I would be thankful to hear your views.
10. Mr O'Sullivan's initial response was non-committal but by July he seems to have been attending Benitec meetings.
11. The proceedings, which had in July been adjourned to September, were then adjourned again to 1 December. At that point the proceedings were discontinued with no order as to costs. On 1 December Mr Greenstein wrote to Mr French reporting as follows: … We understand that the reason of the filing of the Notice of Discontinuance is due to Provident Capital Limited being satisfied with arrangements that are in place for your colleague, Dr Bremner, to take an assignment of the loan, the subject of the above-referenced proceedings. Once the assignment is completed Provident Capital would in any event be compelled to discontinue the proceedings and it is likely that the current discontinuance is in anticipation of the satisfactory completion of the assignment. If the assignment does not go ahead for any reason, Provident Capital could re-commence proceedings against you.
12. Further email communications between Mr O'Sullivan and Dr Bremner after December 2009 are in evidence. But there was no further mention of Dr Bremner taking assignment of the mortgage. Instead, every three months or so, the loan was extended and Dr Bremner paid the interest, although in some cases, several reminders were required and the payments were made late.
13. Early in June 2012 Mr O'Sullivan wrote to Dr Bremner: You know I hate doing this but could I ask you to fix up the French interest payment asap. We are approaching year end and need to ensure that this is resolved. Also, as you know I personally invested some funds into the French loan (approx. $290,000) so that it could remain in our wholesale funding programme. I'm going to need this money back soon (I wouldn't ask but it's important). Is there any chance of seeing this paid? If not, would you be opposed to us starting a sales/recovery process on the loan? Things are still pretty tough here - hopefully you're doing well.
14. The reference to Mr O'Sullivan personally "investing" $290,000 in the French loan is peculiar. The documentary evidence did not elucidate this any further.
15. The last email in evidence is one from Mr O'Sullivan to Dr Bremner dated 19 July 2012 in which Mr O'Sullivan informed Dr Bremner that he was to leave the employment of Provident on the following day and asking whether Dr Bremner wanted him to take any action about the loan. It appears that there was no response from Dr Bremner to this, and there is no evidence about Dr Bremner's further dealings with Provident.
16. In September 2013 Mr French provided a statutory declaration to Provident's receivers about the loan. At the beginning of his declaration, he said: My dealings with Mr Michael O'Sullivan have been very limited. I have never met him and have only conversed on the phone with him in approximately the last 12 months since I received the strange letter from him asking me for money and to deposit it into a bank account that was obviously related to him and came from a strange postal address in Neutral Bay.
17. The alleged agreement concerning the Provident mortgage is pleaded in Mr French's statement of cross-claim as having been made "on or about 16 March 2009". That was the date of the initial discussion between Dr Bremner and Mr O'Sullivan which was (incorrectly as it turns out) recorded in Mr Greenstein's file note.
18. The particulars go on to state that the agreement was in two parts. The first part was oral and was made between Dr Bremner and Mr French personally and with Mr Greenstein as Mr French's representative. To be effective, any such conversation or conversations must have occurred before Dr Bremner's 16 March conversation with Mr O'Sullivan. The second particularised part of the alleged agreement was the September 2009 memorandum.
19. Mr Greenstein gave evidence by affidavit and was cross-examined. His credit was not in issue, but, (not surprisingly) he had no independent recollection of what happened. He was unable to cast any light on the difference between the agreement recorded in his file note, and the negotiations which in fact took place between Dr Bremner and Mr O'Sullivan. In the end, his evidence did not provide any real assistance in determining the factual questions which arise in these proceedings.
20. Mr O'Sullivan also gave evidence by way of affidavit and was cross-examined without his credit being challenged. In his affidavit he gave a version of the conversation he had with Dr Bremner on 16 March. But he made no note at the time and I am not satisfied that he had any actual recollection of the conversation in any detail. He was not asked about the peculiar aspects of his dealings with Dr Bremner. Again, his evidence was of no real assistance for present purposes.
21. In these circumstances, the alleged agreement depends upon acceptance of Mr French's evidence. As I have mentioned, in his affidavit Mr French said that Provident started proceedings against him in March 2008. He said that at that time he reconsidered selling Lot 3 to the Victory Mission in accordance with the proposal set out in the March 2005 correspondence. He continued: Shortly after this I had a telephone conversation with Bremner, who was then in Australia, and I told him about the Provident proceedings to recover the mortgaged debt. During this telephone conversation I told him that I was reconsidering selling to the Church to clear this debt. He again advised me not to sell the land to the Church as the land would be worth $400 million in the future. My reply to him was I would still have 268 acres left to subdivide in the future and no debt now. Bremner offered to contact Michael O'Sullivan, the CEO of Provident, and see if he could "get him to back off a bit". A meeting was arranged between Bremner and O'Sullivan and I asked to attend, but was told by Bremner it would be better if I did not. Bremner met with O'Sullivan and he reported back to me on the telephone. Bremner told me about O'Sullivan that "he is a nice guy". From memory they may have had a few more meetings and then Bremner again telephoned me and told me "I have bought the mortgage" and that he had given Michael O'Sullivan a job as a stand in director for him at Benitec, a public company here in Australia that Bremner had a lot of shares in. Bremner told me not to worry about the mortgage had "bought it" from Provident. At the time I did not understand what he meant by he had "bought the mortgage" and I questioned it. Bremner said "it is now my debt not Provident's" and we did not have to pay for it anymore. We would subdivide the land together in the future. I recall giving Bremner the contact details of my solicitor who was acting for me in the first Provident proceedings, David Greenstein.
22. Mr French said that his understanding of the upshot was that Dr Bremner was paying the money "in anticipation of" combining his property with Mr French's, subdividing all the properties and selling them. He said he understood that once the proceedings had been discontinued he did not need to worry about the matter any more, and it had been dealt with.
23. Ms Bakey also said that Dr Bremner told her that he had "bought the mortgage" and that Mr French and she did not have to worry about Provident anymore. She said that one of the occasions on which he said this to her was the day they stayed at his flat in Sydney in September 2009, when the September 2009 memorandum was signed.
24. There are some immediate difficulties with Mr French's affidavit account of his dealings with Dr Bremner. In the first place Mr French's account telescopes together a period of almost a year between when Provident made its claim against Mr French (in March 2008) and when Dr Bremner intervened by negotiating directly with Mr O'Sullivan, which did not happen until mid-March 2009.
25. Second, the critical conversation is said to have taken place between Mr French and Dr Bremner over the telephone when Dr Bremner was in Australia. This, it appears, would have been after 19 March 2009 when Dr Bremner told Mr O'Sullivan he would be leaving London. But by that stage Dr Bremner had already begun negotiations with Mr O'Sullivan, developed the proposal for taking an assignment of the mortgage, and reported that to Mr Greenstein (who had incorrectly understood it as a final deal).
26. Mr French refers to giving Mr O'Sullivan a "job with Benitec" as part of the negotiations but the documentary evidence makes it clear that Mr O'Sullivan's involvement with Benitec did not take place until several months after March 2009. The whole account appears to be an abbreviated and garbled summary of what Mr French could remember of events which took place over a much longer period of time.
27. Mr French made an incidental reference to his March 2009 dealings with Dr Bremner in an email written on 1 August 2010 in the course of the spat about Mr French's yabby farm proposal. Mr French wrote: I have attached some letters regarding the sale of some of my land just before you resurfaced. When you rang me after 5 years and said don't sell it to them. Back then you said you would guarantee the refinance at the ANZ after telling me not to sell, I spoke to the ANZ and all you had to do was call him. Instead you told me to keep the same lender and gave me a million bucks to pay it down. I kept the same lender going and put the rest into MGT, which you did not agree with. AND NOW LOOK, do you remember NOT thinking MGT was worth it??????? Real Estate is where is it at !!!!! was your words. Anyway, thank god I did it MY WAY kept MGT going, I then got Rad involved and now it is evolving as planned. If you read the attachments, I would of been clear of debt back then and I also had $600,000 coming in over 2 years. Now I still have the 2 million debt and I have spent so much in interest.
28. The letters which Mr French attached were copies of the letter from the Victory Mission's solicitors setting out their understanding of the sale proposal, and a related letter from Mr French's solicitors, from March 2005.
29. On Mr French's affidavit account, in March 2009 he was thinking of selling Lot 3 to the Victory Mission and Dr Bremner again talked him out of it. I have already explained why I think that the Victory Mission proposal had disappeared well before February 2007. In his email to Dr Bremner of 23 April 2008 (quoted at [114] above), Mr French referred to the proposal as something in the past. The only contemporaneous evidence of efforts by Mr French to raise funds in March 2009 did not involve any approach to the Victory Mission, but rather to the ANZ bank.
30. It is true that the first quoted paragraph in Mr French's email of 1 August 2010 referred to the proposed sale of Lot 3 to the Victory Mission and attributes to Dr Bremner the statement "don't sell it to them". But this paragraph clearly referred to events in February 2007. The following paragraph, which referred to events in 2009, only mentioned ANZ. The first paragraph was also incorrect in suggesting that the Victory Mission proposal was "just before" Dr Bremner resurfaced at the end of 2006.
31. Even if (which I do not necessarily accept), Dr Bremner did advise Mr French not to sell to the Victory Mission in late 2006 or early 2007, I am not satisfied that he gave any such advice in March 2009. I think Mr French's August 2010 email is a case of Mr French overstating matters and convincing himself that the position as overstated was correct. It was also clearly an overstatement to say that all Dr Bremner had to do was to call ANZ.
32. The fact is that by the end of February 2009 Mr French had run out of time. He had tried to stall Provident's claim but had been forced to submit to a consent judgment, with three months to sell. He had no means of repaying Provident from his own resources, and no prospect of raising fresh loans from a bank or other financial institution on his own. It would have been impossible to subdivide and sell the property within the three month period. Mr French may have believed that the North Arm Cove property would ultimately be worth $400 million, but the practical reality was that if Dr Bremner did not rescue him he would be bankrupt. I do not accept that the transaction involved him doing some sort of favour to Dr Bremner by passing up an opportunity to clear his debt. No such opportunity existed.
33. Mr French's email of 1 August 2010 did state that Dr Bremner agreed to guarantee a refinance of the Provident loan by the ANZ but then did not go through with it and lent Mr French $1 million to pay the loan down instead. It is notable that this is not reflected in Mr French's affidavit, but even if it is correct, and not another overstatement by Mr French, it has no ultimate significance. Mr French did not keep to his end of the bargain and instead spent the money largely on other things.
34. I accept that at some stage Dr Bremner may have said that he had "bought the mortgage" (in lay terms, this would be equivalent to taking an assignment of it). Dr Bremner and Mr French may well have discussed combining the properties and subdividing them in the future. But I do not accept that there was any bargain between them to this effect. They were just plans discussed in the course of Dr Bremner bailing Mr French out.
35. The September 2009 memorandum was relied upon in the particulars, and so must also be considered. That memorandum purported to confirm that Dr Bremner was entitled to a 50/50 share of the North Arm Cove properties "above $4 million".
36. Mr French disputed the validity of the memorandum on the grounds of "duress" but this apparently was because of what it said about Dr Bremner having 50% of the magnetic coupling invention, rather than what it said about the North Arm Cove properties. In his affidavit in reply, responding apparently to a statement by Dr Bremner in his affidavit that he was told by Mr French that he was to receive 50% of the North Arm Cove properties: I did not state that I wanted to give Bremner 50% of the properties and this was not the agreement. What we had agreed, and what is reflected in the handwritten document referred to, was that I would get the first $4 million from the North Arm Cove properties and that any balance would be shared 50/50.
37. The memorandum purported to confirm an existing agreement concerning the North Arm Cove properties. It did not on its face show that any new or varied understanding was reached about the Provident mortgage in September 2009. But in any event, the memorandum does not support the agreement now alleged. It says nothing about discharging the debt or holding Mr French harmless against it. It is not inconsistent with the debt continuing to exist. In fact an agreement under which Mr French was to receive the first $4 million of the sale of proceeds would have allowed him to satisfy the debt out of those proceeds alone.
38. Mr French's own subsequent emails bear this out. In his email of 23 December 2009, in the course of complaining about the uncertainty in his life, he said: I don't know what's happening with the mortgage at Port Stephens except you are now friends with the guy [Mr O'Sullivan]. Is the place mine or yours or whose? Do I still have to pay off the mortgage????
39. Mr French's email of 1 August 2010 stated that he still had "the $2 million debt", which in the context was clearly a reference to Provident. In an email of 28 August 2010 to Dr Bremner he said: My places at Port Stephens is still blowing in the wind with $2 million debt plus interest I owe Chris.
40. In my view, this reflects the true position. Dr Bremner had stepped in and staved off action by Provident, but the debt remained unfinished business which would eventually have to be dealt with.

Alleged property maintenance agreement

1. The particulars of the alleged property maintenance agreement are very broad. They state only that the agreement was oral and was made in the course of conversations between Mr French and Dr Bremner "during 2009".
2. Mr French's evidence in support of this was that his conversation with Dr Bremner took place at the time they were discussing the so-called joint venture for the exploitation of the magnetic coupling technology in Europe. Mr French stated: I told him that I had been paying to improve and maintain all of the Victorian properties and I paid for expenses including rates. These included properties registered in our joint names, and those properties registered in Bremner's name only. In relation to all the properties registered in our joint names Bremner said to me words to the effect: "Keep a record of what you've spent and I will pay for half of the expenses". In relation to the properties registered in Bremner's name he told me that he would "pay all the expenses" that I had incurred and would incur in the future. Bremner said that he would put monthly amounts into my bank account to cover the cost of expenses, renovations and upgrades to his properties. Following this, and between 12 January 2009 and 16 December 2010 Bremner did pay monthly amounts into my account to cover expenses that I had incurred in respect of renovations and upgrades to the properties.
3. Again, Mr French's account has difficulties of chronology. The agreement is said to have predated the provision of monies beginning in January 2009. But the joint venture discussions during which the agreement was supposedly struck did not take place until March 2009: see [380] below. Moreover there is nothing in the evidence to suggest that there was some change in the financial relationship between Mr French and Dr Bremner around the beginning of January 2009. Dr Bremner had in fact been making semi-regular payments to Mr French (which covered expenditure on the magnetic coupling invention and personal expenses as well as property expenses) since February 2008. Again, Mr French's version appears to present a garbled and inaccurate summary after the event.
4. I am not satisfied that there was a bargain made in 2009 between Mr French and Dr Bremner on this subject. Certainly Dr Bremner funded the earlier purchases of the properties themselves. He also provided money in response to requests. But again there was no element of bargain in this. Again, Mr French had nothing to bargain with. He would have been unable to find any other source of money if it had not been forthcoming from Dr Bremner. And although Mr French and Ms Bakey complained when Dr Bremner eventually ceased making payments, they did not suggest that he had made any commitment to do so.
5. For reasons I have already given, I do think it is likely that at some point early in 2008 Dr Bremner and Mr French reached an understanding that the properties which they purchased in Victoria (leaving aside the Corringle Beach Homestead block registered to Ms Bakey, and the two Corringle Beach properties registered to Dr Bremner) would be held on a 50/50 basis, with a view to them sharing the benefit of the increase in value of those properties which they expected to achieve. But that does not mean that the parties contemplated that all of the expenditure associated with the properties would necessarily be equally shared.
6. The farming ventures being carried out on those properties were carried out in Mr French's own name (and, from the second half of 2010, in the name of a new company which he and Ms Bakey incorporated, Snowy River Samphire Pty Ltd). Holding expenses such as rates would presumably have been deductions against this business income. Expenditure on improvements, repairs and maintenance would likewise have been deductible or depreciable. As we will see, the money provided by Dr Bremner to Mr French was provided on the basis that the farming activities were entirely to Mr French's personal account. On the face of it, an express understanding, that all property expenses were to be shared equally between Mr French and Dr Bremner, as alleged by Mr French, would cut across that.
7. In an email to Mr Iliuta of 4 January 2011, written as part of Mr French's attempts to get Dr Bremner to sign the incorporation papers prepared by Mr Larue and Mr Iliuta to invoice customers through MGT, Mr French said: I am not sure if you understand how all this money comes to you, it is all on a loan to me, that's how it started and that's how it is recorded here in Australia. Everything to do with MGT is in my name and he has provided funds on a loan basis. It is the same with the Cattle and the Samphire, however I have made Chris a lot of money in land value rises, by finding bargains well below market price and fixing them up. So his upside is the capital gain on the land and the uniqueness of the locations.
8. In my view this probably reflected the true position. I am not satisfied that the 50/50 deal extended to expenditure after the purchase of the properties.
9. This reasoning, of course, does not necessarily apply to expenditure on the Corringle Beach properties owned solely by Dr Bremner. It was not very clear what use was made of these properties after they were purchased in 2008, apart from a period of a few months when Mr Nel lived there. Counsel for Dr Bremner did not suggest to Mr French that they formed an integral part of the farming operations being carried out on the jointly owned properties.
10. But it must be remembered that Mr French received more than $1 million from Dr Bremner from 2008 to 2010 in regular funding payments. Those payments were clearly intended to cover expenditure by Mr French on the Corringle Beach properties owned by Dr Bremner as well as the jointly owned properties and Mr French's personal expenditure. Dr Bremner is not seeking to have Mr French account for those monies as part of his loan claim. Nor has Mr French sought an account (which would of course have required him to give credit for income received). In the circumstances Mr French has not demonstrated that overall he is out of pocket. If an accounting were undertaken, I suspect that the balance would be heavily in Dr Bremner's favour.

Alleged joint venture agreement concerning magnetic coupling invention

1. The particulars of the alleged joint venture agreement allege that it was made orally in "conversations between French and Bremner during 2009 and 2010". In a previous version of the Statement of Cross-Claim the particulars stated that the agreement was made partly in writing, referring to the memorandum of 13 September 2009, but this was deleted from the final version of the Statement of Claim filed at the hearing.
2. In final submissions, counsel presented the terms of the agreement as having been mapped out initially during Dr Bremner's visit to Corringle in 2009 (see [135] above), and reaching their final form during the visit by Mr French to Montpellier in September/October 2010, when, it was said, the shareholding of the French company which was to exploit the invention was agreed.
3. Mr French gave evidence about these conversations in his affidavit in chief of June 2016. At the trial what he said was objected to as a matter of form and a supplementary affidavit was sworn and read. In that affidavit Mr French said that the joint venture agreement was the subject of conversations between himself, Dr Bremner and Mr Iliuta at Corringle and in "several subsequent telephone conversations over a long period". He said that he recalled "conversations and statements to the following effect": Bremner: We should all go in business together. Andrew will provide the IP, I will finance the business and Rad will be the technical manager. French: Because of our success in Hanover we have lots of customer contacts in Europe. That will be the best market to first concentrate on for the coupling business. Iliuta: I think we should form a company in Europe. I will manage it and we can base it in Montpellier because that's where my mother lives.
4. Mr French said that in the initial conversation at Corringle Dr Bremner also expressly said that he would pay the costs of establishing the new company, including rental on the premises and other expenses. Mr French said that Dr Bremner made separate statements that he would pay all of Griffith Hack's bills.
5. According to Mr French, the fact that Dr Bremner and Mr Iliuta would have shares in the new company was also discussed. He said that he promised Mr Iliuta 5% of the shares, although he acknowledged that later, in 2010, Mr Iliuta said he wanted 10%.
6. The sequence of events, and in particular the date of Dr Bremner's visit to Corringle, is unclear. Mr French identified it as happening in March 2009. Both Mr Iliuta and Ms Bakey also placed it in March. Ms Bakey said that Dr Bremner hired a helicopter in Sydney and was flown by her brother (who was a helicopter pilot) to Corringle. From there Dr Bremner was flown to Deddick Valley, from where he returned to Corringle and then was flown back to Sydney. She said all of this happened in one day. That is hardly likely to have left a lot of time for negotiation and agreement on the European venture, especially as this was the first day on which Dr Bremner met Mr Iliuta. It is not however impossible having regard to the way in which Dr Bremner conducted business.
7. Another difficulty with Mr French's account is its precise timing. Mr Greenstein's file note establishes that on 16 March Dr Bremner was still in London and Dr Bremner's email to Mr O'Sullivan shows that he planned to leave London on 19 March. That would have got him to Sydney on 20 March. Yet Mr Iliuta's email of 1 April shows that he was already in France beginning his work on developing the European business by the end of March. That seems a very short time, especially when, on Mr French's evidence, the first thing that happened after the visit was that Mr Iliuta visited Ningbo, from where he returned to Australia with engineering drawings for a number of developed products. The explanation could, of course, be that Dr Bremner visited Australia earlier in 2009, perhaps in late February or early March, and his visit to Corringle happened then. But there is no evidence of that.
8. Mr French's claims in these proceedings did not rely on the September 2009 memorandum. But the circumstances in which the memorandum was prepared and signed are a significant part of the evidentiary context.
9. Mr French's evidence was that he and Ms Bakey travelled from Corringle to Sydney to attend a friend's birthday party. Dr Bremner was in Sydney at his flat in Darling Point and he invited them to stay there overnight.
10. Ms Bakey added some further contextual details. Before Mr French and Ms Bakey went out to their party, Dr Bremner offered her a choice of among three dresses of his wife's to wear, saying "now that you are a woman of wealth you will have to get used to wearing designer clothes". According to Ms Bakey, she replied "I will wait until I am wealthy then" but did choose a dress. After she and Mr French were dressed and were about to leave Dr Bremner said that Ms Bakey needed a coat, reached into the cupboard and gave her a coat. It still had a $2,000 price tag on it.
11. Mr French stated that he and Ms Bakey returned to the flat from the party after midnight. They stayed up with Dr Bremner drinking and chatting for an hour or so before Ms Bakey went to bed and Mr French then continued to drink and chat with Dr Bremner until 3 or 4 in the morning. He said that just before he went to bed Dr Bremner took out the document, which he had already written, and asked him to sign it, which he did. Mr French said he was fairly drunk at the time.
12. The following day Ms Bakey found out about the document being signed and was unhappy with it. According to Mr French's account, he and Ms Bakey told Dr Bremner that the agreement was not binding.
13. There is no reason to doubt that Mr Iliuta's relocation to France had its origin in discussions which took place when Dr Bremner visited Corringle in March 2009. But the difficulty with Mr French's account, commencing as it does from that visit, is that it is incomplete.
14. Mr French's emails of 23 April 2008 (quoted at [114] above) and 6 May 2008 (see [118] above) shows that the discussion at Corringle was not the first time that Mr French and Dr Bremner discussed Dr Bremner having a share of the magnetic coupling invention. Both emails spoke of Mr French having "offered" half the invention to Dr Bremner. In the email of 6 May, this offer was linked to the agreement to go 50/50 in the Victorian properties.
15. For reasons I have already given, I think that that "offer" was probably made in early 2008. Had Mr French and Dr Bremner reached an understanding that Dr Bremner was to have a half share in the magnetic coupling business (should he want to take it up), that would explain why Dr Bremner started to involve himself directly in the commercialisation of the invention in 2008. It would also explain the incorporation of Bright Effect Limited with Dr Bremner and Mr French having 50/50 shares in July of that year. It would also be consistent with the fact that Dr Bremner started to provide regular funding for Mr French in 2008, money which was used among other things for the purpose of commercialising the invention.
16. Such an analysis is also consistent with the September 2009 memorandum. In a sense, the memorandum could be seen as an "acceptance" of the "offer" by Mr French, or a confirmation of such acceptance.
17. In his affidavit, Mr French suggested that the September 2009 memorandum referred only to the "magnet business" (meaning the proposed business of buying the magnets from China and reselling them, to be conducted by Bright Effect Limited in Hong Kong). But the September 2009 memorandum does not say that; it refers to equal ownership of MGT as well as "its associated patents and my [Mr French's] patents in the area of magnetics" and, as we have seen, the 50/50 "offer" was made no later than early 2008, well before the Hong Kong company was incorporated.
18. There is of course Mr French's evidence that he was fairly drunk at the time of signing the memorandum. But Mr French acknowledged that he read the memorandum before he signed it and asked questions about it. On his own account, he was not incapacitated. It was not until June 2010, when the question of control over the proposed MGT Europe company had become an issue, that there is any documentary evidence of any complaint by Mr French and Ms Bakey about the September 2009 memorandum being obtained by "duress".
19. There is further confirmation of the 50/50 arrangement from Mr French after the September 2009 memorandum. In an email of 23 December 2009 Mr French said: With the Magnetic Drive I have offered you 50% and on top of that you want 50% of all my properties, but I can't get 2% of your time.
20. All of this is consistent with Dr Bremner's account in his email of 12 January 2011: In 2008 you asked me to help with the operational development on the magnet ideas, which I did including the addition of new ideas and inventions, after meeting Mr Iliuta I agreed with him to pay him a considerable retainer directly so he could also work on the magnet project. I paid for the farm improvements, the purchase of livestock and equipment. You offered that due to my considerable financial and intellectual support that we be equal partners in the magnets business and the Port Stephens properties, it was your proposal which I accepted. Some time later after the birth of my twin daughters we put it in writing which we both signed.
21. In fact, despite his email in June 2010 repudiating the September 2009 memorandum, in his promotional report of August 2010, Mr French was still proposing what was in substance a 50/50 split (Mr Iliuta and Dr Bremner on the one hand, and himself and MGT on the other). It was not until he received the advice from PWC on 3 September that Mr French first insisted on MGT owning 51%.
22. Counsel for Mr French accepted that the shareholding had not been finally agreed before Mr French visited Montpellier. But he submitted that the evidence of Mr French and Mr Iliuta established that the shareholding was agreed during that visit, and I now turn to this question.
23. There is in evidence an email from Mr Larue circulating draft by-laws (in English) for MGT Europe to Mr French, representatives of PWC in Australia, Dr Bremner and Mr Iliuta, and a reply from Mr Iliuta with some questions and comments. The email was dated 28 September and expressed to be "as discussed" with "Mr French". In the draft (and in Mr Iliuta's comments) the subscribing shareholders were identified but their shareholdings were not.
24. Also in evidence is a completed French language version of the by-laws. These provided for the subscription of share capital of €30,000 with the shareholders being MGT €15,300 (51%); Dr Bremner €13,200 (44%); and Mr Iliuta €1,500 (5%). The membres du conseil d'administration (directors) were to be Mr French, Dr Bremner and Mr Iliuta. The directeur general (managing director) was to be Mr Iliuta. The président (chairman) was to be Mr French. Provision was made for signature by each of the subscribers (MGT, Dr Bremner and Mr Iliuta) and, separately by Mr French again in order to accept the appointment as Chairman. The by-laws were signed by Mr French on behalf of MGT as subscriber and individually as President and by Mr Iliuta. Mr Iliuta also signed under Dr Bremner's name. The document is undated.
25. In his affidavit, Mr French said that the blow-up between Ms Bakey and Dr Bremner took place on the evening after he, Ms Bakey and their children arrived in Montpellier and had met with Dr Bremner and Mr Iliuta. He said that Mr Iliuta, Dr Bremner and he visited Mr Larue's office on the following day. He said: We spent some time with him explaining the company structure. In particular I recall us telling him that the shareholding would be 51% to MGT Australia, 44% to Bremner and 5% to Rad.
26. According to Mr French, at the end of the meeting it was agreed that Mr Larue would draw up the documents and an appointment was made to see Mr Larue a week later. That night they were all in good spirits and went out for dinner and drinks. Mr French said that Dr Bremner congratulated Eon on being the future CEO of MGT Europe and told him to buy three motorbikes back in Victoria: one for Dr Bremner himself, one for Eon and one for Mr French.
27. According to Mr French he stayed on with his family in Montpellier while Dr Bremner went back to the United Kingdom. On the appointed day in the following week, he and Mr Iliuta went to Mr Larue's office for the signing of the incorporation documents, but Dr Bremner was not there. He called in to apologise because his wife was sick. The meeting was postponed to the next day but again Dr Bremner did not arrive, saying his wife was in hospital. According to Mr French he and Mr Iliuta signed the French language version of the company by-laws, on the basis that Dr Bremner would sign later. He said he did not know when or why Mr Iliuta signed for Dr Bremner.
28. In his draft affidavit, Mr Iliuta also said that he, Mr French and Dr Bremner had a meeting with Mr Larue at which Mr Larue was given instructions to draw up the incorporation documents and they agreed to return a week later. He also said that Dr Bremner did not turn up on the appointed day or the following day. He said that he was told by Mr Larue that he would send the incorporation documents to Dr Bremner in the UK for him to sign and return them. This was not something mentioned by Mr French. Mr Iliuta did not explain how his signature came to be on the by-laws over Dr Bremner's name.
29. On Mr French's and Mr Iliuta's account, the shareholding structure of the company was agreed at a meeting between Mr French, Dr Bremner and Mr Iliuta in Mr Larue's office, and the draft was prepared after that. But the draft circulated by Mr Larue on 28 September did not have any shareholding details in it. In order to reconcile with Mr French's and Mr Iliuta's account, that draft must have been a preliminary one, circulated before the meeting with Dr Bremner. Presumably the discussion with Mr French took place by telephone.
30. Mr Iliuta's signature on the incorporation documents on behalf of Dr Bremner is harder to explain. Mr Iliuta might have placed his signature for Dr Bremner if he believed Dr Bremner had agreed and he was in some way authorised to sign on his behalf. But it is hardly likely that Mr Larue would have countenanced this, and it is also inconsistent with the evidence of both Mr French and Mr Iliuta that they left the issue on the basis that Dr Bremner's signature would be obtained.
31. In the end, I cannot unravel an answer to this question. It is another mystery in the case. The critical issue which remains is whether the evidence establishes that Dr Bremner agreed orally at the meeting with Mr Larue to incorporate MGT Europe in the terms which were later signed by Mr French (on behalf of MGT) and Mr Iliuta.
32. By the time the meeting took place in Mr Larue's office, Mr French had confirmed Dr Bremner's entitlement to a 50 percent interest in the magnetic gearing technology on several occasions. In particular he had done so in the September 2009 memorandum. Even if Mr French's signature on that memorandum resulted from "duress", the memorandum was written by Dr Bremner and reflected his view of his entitlement. There was no pressing reason for Dr Bremner to alter his position. There is no evidence of him doing so.
33. Even if this factual problem could be overcome, there would be another obstacle. On Mr French's and Mr Iliuta's account, the agreement was made before the final version of the incorporation documents was drawn up. Those documents constituted a formal written contract between the shareholders. As with an agreement for the sale of land, the court will usually infer that the parties contemplated that they would be bound only upon execution of a formal written instrument. There is no evidence that the parties agreed in Mr Larue's office to be bound immediately. Nor is there even any direct evidence that they agreed on all of the terms as reflected in the final version drawn up by Mr Larue.
34. In fact there is evidence to the contrary. Mr Larue's chase-up email to Dr Bremner of 3 November 2010 suggests that the structure on Dr Bremner's side had not been agreed. Mr Larue said: Further to your discussions with our tax team, could you please indicate if a decision has been taken from your side concerning the tax structuring of your investment. Indeed, the incorporation process is still pending and we are waiting for your position.
35. In an email of 11 January 2011, Mr French said: We all sat in Alex's office in France and agreed on MGT Corp, owning 51% of MGT Europe, you 44% and Rad 5% a claim of duress in ridiculous at this point in time. Before this your excuse for not signing the papers was that you needed to work out what vehicle it was going into. Duress???????? If that was so why did you not mention it then.
36. Even if this email is correct in recording that Dr Bremner had agreed to a 44% shareholding, it acknowledges that Dr Bremner declined to sign the documents because he still wished to consider whether he, or some other entity, should be the shareholder. It is thus clear from Mr French's own email that no final agreement was reached at the meeting with Mr Larue.
37. For these reasons, I am not satisfied that the parties even reached final agreement on the shareholding in the European company. But this was not the only matter which was left open.
38. Over the period from mid-June until early September 2010, issues arose between the parties about the terms on which the patents and other intellectual property relating to the magnetic coupling technology were to be licensed to the new European company. There was also a debate about who Mr Iliuta was working for. No doubt the parties recognised that this was potentially relevant to the ownership of the intellectual property which he had developed.
39. The licensing issue was critically dependent upon who owned the intellectual property in the first place. This too was raised but not resolved. It was only after 3 September that Mr French took the position that the licensor had to be MGT. That, of course, would require a formal assignment, at least of the patents, thus raising another agreement, the terms of which had to be settled and documented.
40. I am not satisfied these matters were even discussed at Corringle in March 2009. If they were, they were certainly not resolved by any final agreement. They remained incomplete when Mr French returned from Montpellier, and there is no evidence that they were even discussed there.

Payments by Dr Bremner in 2008-2011

1. It is common ground that, as I have recorded above, Dr Bremner made payments totalling $3.10 million to Mr French or to third parties (not including payments to Provident) between February 2008 and March 2011. The Dwyers Toyota payment of $6,000 (above [122]) was not pursued in final submissions.
2. The remaining payments are: (1) $1,275,000 to Mr French, including payments from Wards' trust account to Mr French and Greenstein & Associates (above [101], [108], [122], [126], [127]); (2) $30,000 to Griffith Hack (above [127]); (3) $32,700 for the North Arm Cove power connection (above [149]); (4) $158,900 to Blake Dawson (above [143], [146]); (5) $99,600 to CKM (Barrie French mortgage) (above [220]); (6) $18,900 to CPA Global (above [195]); (7) $42,000 to PWC (above [196]).
3. Mr French admits that the payments out of the Wards' trust account to him and to Greenstein & Associates totalling $165,000 were made by way of loan. Dr Bremner does not pursue recovery of the regular funding payments, except for a payment of $30,000 in July 2008 and the payment of $20,000 made in August 2010 for Mr French's family's trip to Europe. Mr French admits that both of these payments were loans. He also admits that the payment to Griffith Hack, the payment for the North Arm Cove power connection and the payments to Blake Dawson were made at his request, and by way of loan to him. Otherwise he does not admit that the remaining admitted payments were made by way of loan to him.
4. The payments to CKM by Dr Bremner form the main category of payments whose status is in dispute. Mr French denies that this money was paid by way of loan to him. He seeks to present it as being, if anything, a loan to his father.
5. I do not accept this analysis. Barrie French's mortgage payments had previously been paid by Mr French out of the regular funding payments made by Dr Bremner. They were treated in the same way as other personal expenses of Mr French, but were seen as having a particular connection with MGT because Barrie French's financial difficulties resulted from having previously borrowed to support MGT. Dr Bremner never had any personal dealings with Barrie French, and apart from his relationship with Mr French, Dr Bremner had no reason to pay Barrie French's debts. In my view it is clear that Dr Bremner only paid monies off the mortgage because, explicitly or implicitly, Mr French asked him to. Even if there was no explicit discussion between Mr French and Dr Bremner about these monies being loaned, in the light of previous dealings and in the circumstances, I think an objective bystander would have understood that the payments were not gifts but loans. Mr French's August 2010 promotional report (quoted at [175] above) expressly said so.
6. The remaining payments whose status as loans is in dispute are the payments to CPA Global and PWC. Counsel for Mr French disputed these payments only on the basis that Dr Bremner was obliged to meet them under the alleged joint venture agreement. He accepted that if I were to reject the claim based on that alleged agreement (as I have done) Mr French would be liable to Dr Bremner for the amounts.
7. Although Mr French admits that at least some of the payments were initially made as loans (and I have found that nearly all of them were), he does not accept that any of them are now repayable. Counsel for Mr French faintly suggested that the loans had been released, or were only repayable out of profits from the magnetic coupling invention.
8. I reject the suggestion that the loans, when made, were subject to some sort of condition concerning the profitability of the magnetic coupling venture or the property ventures. There is no evidence to support this.
9. It is clear from Mr French's August 2010 information memorandum that Mr French and Dr Bremner contemplated that Mr French's debts to Dr Bremner would, or at least might, be converted into equity in the magnetic coupling business. It is equally clear that this was only a possibility which lay in the future.
10. Counsel for Mr French, however, relied on evidence given by Mr French and Ms Bakey about the visit to Montpellier in late September or early October 2010. Both of them said that after (on their account) the shareholdings were agreed, Dr Bremner said that Mr French "owed him nothing". Ms Bakey said that something similar was said much earlier, the evening before the September 2009 memorandum was signed.
11. I am not satisfied that this is correct. There is no contemporaneous evidence to support it. So far as September 2009 is concerned, there is subsequent documentary evidence in the form of emails which contradicts it. On my findings, there was no final deal at Montpellier and in those circumstances it cannot have been contemplated that Dr Bremner would have abandoned millions of dollars in loans.

Dealings between Dr Bremner and Mr Iliuta

1. Counsel for Mr French criticised Dr Bremner's conduct concerning the exploitation of the magnetic gearing technology in Europe. Counsel invited the Court to find, in accordance with the allegations made by Mr French and Ms Bakey in their emails, and the evidence in Mr Iliuta's draft affidavit, that Dr Bremner conspired with Mr Iliuta to hijack Mr French's intellectual property and exploit it for his own benefit.
2. As will be seen, the agreement alleged by Mr French was that Dr Bremner would proceed with the incorporation of the MGT Europe company with the shareholdings which were the subject of Mr French's instructions to Mr Larue, and ensure that the technology was exploited through that company. Under the agreement as alleged, Dr Bremner would also have been obliged to fund those activities and pay for the patents. Even if Dr Bremner had done no more than refuse to proceed with the incorporation of the MGT Europe company and to stop funding further developments, he would have been in breach of the agreement as alleged. The degree of his participation with Mr Iliuta in the rival business RCI may not, therefore, really be in issue in these proceedings. Nevertheless it is right that I should say something about it.
3. The case against Dr Bremner on this point rests on the untested affidavit evidence of Mr Iliuta. I do not find that evidence very impressive. It contains at least one major error of sequencing: Mr Iliuta placed the gifts from Dr Bremner as being made in January 2011, whereas in fact they must have occurred before Ms Bakey referred to them in her email of 11 September 2010. I think this is a significant difference which, of itself, engenders a lack of confidence in what Mr Iliuta said.
4. But I think there are more fundamental problems than errors of this type. Mr Iliuta's affidavit tells only part of the story. It presents the breakdown in the relationship with Mr French as being driven by Dr Bremner. This was far from the whole truth. As the email correspondence shows, by the second half of 2010 Mr Iliuta's relationship with Mr French had become fractious at best. This was a result of Mr Iliuta's own dissatisfaction with Mr French and clearly was not just based (if it was based at all) on anything Dr Bremner may have told him. Indeed, the email evidence shows that Mr Iliuta was more hostile to Mr French in 2010 and 2011 than Dr Bremner was. As we have seen, Dr Bremner was telling Mr Iliuta that Mr French was "eccentric but sane". Other emails in 2011 show Mr Iliuta telling Dr Bremner that Mr French was exploiting him and urging him to break with Mr French as he (Mr Iliuta) had done.
5. Another feature of Mr Iliuta's draft affidavit was that it was tailored to match the case being presented by Mr French in the proceedings. As we have seen, one of the points of dispute between Mr French (and Ms Bakey) on the one hand, and Mr Iliuta on the other, was Mr Iliuta's alleged disloyalty to MGT as his employer and the entity who was paying him. In his 2010 and 2011 emails, Mr Iliuta rejected that, insisting that he had been paid by Dr Bremner. But the draft affidavit went out of its way to say that the engineering drawings which Mr Iliuta made in France were made by him while he was being paid by Mr French. To my mind it is significant that not only was this a complete reversal of the position taken by Mr Iliuta at the time, but that the affidavit described him as being employed by Mr French rather than MGT, consistently with the case which Mr French has presented for the purpose of these proceedings.
6. For these reasons, although Dr Bremner has not given evidence to contradict it, I think that Mr Iliuta's draft affidavit has very little weight on any contested issue of fact.
7. I accept that Dr Bremner must have financed the RCI business from 2011 onwards. Given his attitude towards the proposed MGT Europe company, I expect that he would have had some sort of controlling interest in it. And he would have been well aware that the development of the business had taken place with the assistance of intellectual property which belonged to MGT or Mr French. But Dr Bremner is not being sued for misuse of confidential information.
8. I am not satisfied that there was some sort of plot by Dr Bremner to steal Mr French's invention in 2009 or 2010. An internal email of Dr Bremner to Mr Domaille from March 2011 indicates that even at that stage Dr Bremner was hoping to achieve an agreed outcome with Mr French. I see no reason to think that his stated negotiating position, which would have allowed for some sort of independent determination of what parts of the intellectual property belonged to Mr French and what parts to Dr Bremner and Mr Iliuta, was not genuine. Overall, I am not satisfied that Mr Iliuta's version of events is correct. It may well be that in fact it was Mr Iliuta who was the prime mover in establishing RCI and continuing to try to exploit the magnetic coupling invention.

Alleged agreement concerning Provident mortgage

1. As pleaded, the terms of the alleged agreement concerning the Provident mortgage were as follows: a. Bremner agreed to settle French's debt to Provident under the Loan Contract i.e Bremner would settle the Provident debt; b. Bremner, by agreement with Provident, would pay an initial sum of $600,000 and the balance of $2 million within 60 days with interest at the rate of 10% per annum until payment; … e. In consideration there would be a 50-50 sharing arrangement in relation to the proceeds generated from the subdivision, development and sale of the joint 468 acres at North Arm Cove, but only after French had been paid the first $4 million.
2. On my findings, this claim does not succeed. There was no promise by Dr Bremner to discharge the mortgage or hold Mr French harmless against the mortgage debt. Nor was there any consideration from Mr French in exchange for any such promise.
3. It seems to me that the most likely explanation for Dr Bremner's intervention is that Mr French and Dr Bremner wanted the debt to Provident in friendly hands, which would have bought time for Mr French to subdivide and sell his North Arm Cove properties, possibly in conjunction with Dr Bremner's land. I suspect that this was equally as much, if not more, Mr French's idea than Dr Bremner's. But whether this is so or not does not in the end matter. It is sufficient to say that Dr Bremner had no contractual obligation to keep holding the debt indefinitely.
4. An understanding that the parties would co-operate so as to put the Provident mortgage in friendly hands might have been used as the basis of some sort of claim for equitable relief. It might have been possible to characterise the understanding as a type of joint venture giving rise to fiduciary obligations on Dr Bremner's part to have regard to Mr French's interests. Whether that would have extended indefinitely or required by Dr Bremner to bear the debt himself may be doubtful, but is academic in the present case. No such equitable claim is made.

Alleged agreement: exploitation of magnetic coupling invention

1. The terms of the alleged agreement concerning the exploitation of the magnetic coupling invention, as pleaded, the terms were relevantly: … b. French and Bremner would become partners in the exploitation of French's inventions which would initially be exploited in Australia through Magnetic Gearing & Turbine Corporation Pty Ltd ACN 093 745 290 ("MGT Australia") with French to supply the intellectual property, including the initial patent applications and any future patent applications, know-how in relation to the design and manufacture of the products including engineering drawings and specification, product brochures and literature, customer contacts developed by French in relation to the products including Technoflex Denmark, Grundfos, Daimler, Raja Lovejoy, General Electric, Amel Tecnica, MAN Diesel, MBE Holland, NASA and Alfa Laval (the "customers"); and with Bremner to supply financial backing until the business was self-supporting; c. A company, Magnetic Gearing & Turbine Europe ("MGT Europe") would be incorporated in France to exploit French's inventions with the shareholding to be as follows: French (or nominee) 51%; Bremner (or nominee) 44%; Radu Iliuta ("Iliuta") 5%. .. e. MGT Europe would operate from rented premises in Montpellier and would employ Iliuta as a manager, with Bremner to pay MGT Europe's establishment costs and rental until such time as MGT Europe was able to do so from its own earnings; e.1 Iliuta, under employment by French, would continue to make engineering drawings for product components and marketing brochures. f. French would license to MGT Europe the intellectual property, including French's inventions and the know-how and copyright in engineering drawings and marketing brochures in consideration for which he would earn profits from participation as a shareholder in MGT Europe and from director's fees. f.1 Engineering drawings and brochures made by Iliuta (the copyright works) using the technology and for the exploitation of the inventions, no matter the owner of copyright in the works, would be used exclusively in the furtherance of the business of the joint venture and, after its incorporation, by MGT Europe. …
2. This contractual claim also fails. On my findings, the parties never reached a concluded agreement on the terms of the proposal to incorporate a company to exploit the magnetic coupling technology in Europe. In particular, the parties never reached a concluded agreement on such essential matters as: the terms on which the intellectual property would be licensed to the proposed company, or the identity of the shareholders. Nor was it even clear at that time who the owner or owners of the intellectual property even were.
3. Even if these problems of uncertainty had been overcome, there would have been a further difficulty with the parties to the contract. As we have seen, Mr French put his case in these proceedings on the basis that he individually and Dr Bremner were the parties to the alleged joint venture agreement. It was necessary for him to take this position because MGT was not made a party to the proceedings.
4. Consistently with this position, Mr French's evidentiary case proceeded on the basis that he personally was the owner of the patents and other intellectual property, and the employer of Mr Iliuta. As we have seen, that is quite contrary to the view which Mr French had at the time.
5. In my opinion, PWC were probably correct in thinking that Mr French raised money from investors in MGT on the footing that MGT was the ultimate owner and controller of the patent and intellectual property rights, and that it would consequently have been a breach of duty on Mr French's part to arrogate those rights to himself. The same conclusion would flow on to any employment contract with Mr Iliuta and any IP rights derived from that.
6. Of itself, that does not rule out the claim being made by Mr French in these proceedings. The fact that Mr French held the intellectual property rights effectively as trustee for MGT would not prevent him from contractually dealing with those rights in a legally effective way. It would only give rise to some potential form of breach of trust or director's duties for which he could be made accountable at the suit of MGT. But it does underline a factual problem with Mr French's case.
7. From September 2010 onwards Mr French was clearly alive to the issue and wanted to resolve it by transferring the intellectual property to MGT. Mr French told Dr Bremner (and Mr Iliuta, if he was a party to the putative joint venture agreement) that the intellectual property rights would be licensed by MGT. He presented this as being non-negotiable. He also put forward MGT, not himself, as the shareholder in MGT Europe. In these circumstances, the proper interpretation of any agreement which was reached during the visit to Montpellier in September/October was that the contracting party was MGT, not Mr French personally. His claim in these proceedings fails on this basis also.
8. In case I am wrong in these views, I will briefly consider the question of damages. As we have seen, as a result of my ruling on the admissibility of the Five Year Business Plan produced in 2013, all of the forensic accounting evidence fell away. Nevertheless, counsel for Mr French submitted that I should still award Mr French damages, difficult though it might be to assess the quantum. Counsel relied on the principle that once damage has been established difficulties in calculation of the quantum of damages cannot prevent the Court from making an award in favour of the successful plaintiff.
9. But this principle still requires the Court to be satisfied, on the balance of probabilities that the plaintiff has suffered some damage as a result of the breach of contract: Sellars v Adelaide Petroleum NL; Poseidon Ltd v Adelaide Petroleum NL (1994) 179 CLR 332 at 355. That means that in the present case the Court would have to be satisfied that if the European business had been established in accordance with the alleged joint venture agreement Mr French would have derived some substantial financial benefit from it.
10. It is important to note that this analysis would have to be carried out on the basis that the other party or parties to the relevant agreements would have performed their contractual obligations but not necessarily any more: cf the "Mihalis Angelos" principle discussed in TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130 at 150 ff. As Dr Bremner pointed out, Mr Iliuta was not an indentured servant. Had the European business been established under the control of Mr French, Mr Iliuta might have been restrained from using confidential information for the benefit of a competitor. But he could not have been forced to work for the business. Given Mr Iliuta's attitude to Mr French by late 2010, there is real doubt about whether he would have wanted to be involved at all.
11. Similarly, Dr Bremner could not have been forced to do anything more to support the business than comply with the minimum obligations imposed by the joint venture agreement, whatever they were. Although Mr French asserted that the intellectual property produced by Mr Iliuta from 2009 onwards was all completely derivative of his work, I am not convinced that that was actually the case. In assessing damages, it cannot be assumed that the benefit of all of that work would have flowed to Mr French.
12. The Court has little if any evidence on which to work. What little evidence there is suggests that by late 2010 Mr Iliuta was heartily sick of Mr French and was not prepared to work in any organisation where Mr French had control. Dr Bremner was also reaching, if he had not reached, the end of his tether.
13. The history of Mr French's attempts to commercialise the invention up to 2010, and after he fell out with Dr Bremner and Mr Iliuta in 2011, is one of attracting the interest of larger organisations but being unable to follow through with commercialisation. The reasons for this may be to do with limitations in Mr French's invention, or Mr French's lack of management skills, or a combination of the two. But it does not inspire any confidence that Mr French would have found the winning formula if only Dr Bremner had signed up to the incorporation of MGT Europe on the terms of the alleged joint venture agreement. I am not satisfied that if he had done so the result would have been any different.

Alleged agreement: Victorian property expenses

1. The terms of the alleged property maintenance agreement, as pleaded, were as follows: a. French would maintain the Victorian properties and pay all expenses in relation thereto, including rates; b. in relation to properties jointly owned by French and Bremner, Bremner would be liable to French for his half share of all outgoings incurred in relation to maintenance of the properties and expenses; c. in relation to properties owned by Bremner, Bremner would be liable to compensate French for all outgoings occurred in relation to maintenance of the properties and expenses; d. Bremner agreed to send French monthly amounts to cover the cost of expenses, renovations and upgrades to his properties.
2. I have found against Mr French's case, as particularised, that a general agreement in these terms was made in 2009. Accordingly, the pleaded contractual claim, which covers all expenses incurred by Mr French on any of the properties, fails in that form.
3. In fact, I think that the agreement between the parties is more likely to have been that the farming activities were entirely on Mr French's account, and that property expenses such as rates would have been part of this. But if that is wrong, it would make the farming in effect a 50/50 partnership between Dr Bremner and Mr French. However, a partnership claim, even if established, would not have resulted in the order sought by Mr French in these proceedings.
4. In any partnership action, it would have been necessary to take an account of the partnership dealings as a whole. This would have required Mr French to give credit for monies derived from the operation of the properties and the sale of the putative partnership assets such as the cattle. There is no way of knowing whether the balance would have been in favour of Mr French or Dr Bremner, and the answer is academic because no such claim is made by either party. On my findings, having regard to the way the case was pleaded, Mr French's expenditure on the jointly owned properties lies where it falls.
5. This does not deal with the expenditure, if any, on the properties solely owned by Dr Bremner. But there is no evidence that Mr French has been left out of pocket.

Dr Bremner's loan claim

1. I have found that $3.15 million was paid by Dr Bremner by way of loan to Mr French, either to third parties or to Mr French himself, and that this debt is still outstanding. The precise figure is $3,148,718. There will be judgment for Dr Bremner accordingly. A claim for interest is pursued and the interest will need to be calculated.

Dr Bremner's resulting trust claim

1. Dr Bremner's claim is for the recognition of what has been called a "purchase money resulting trust" namely a trust which may arise where a person provides money to purchase property, the legal title to which is then put in someone else's name, or where a number of persons contribute the purchase money and the shares of the legal title do not reflect the respective contributions: see J C Campbell QC, "The consequences of rebutting a presumption of advancement" (2018) 46 Aust Bar Rev 229. A resulting trust in favour of the person who provided the money (or in favour of the persons who provided the money in the shares in which it was provided) is presumed, but the presumption may be rebutted by proof that the actual intention of the payer was otherwise.
2. Counsel for Dr Bremner submitted that, as Mr French provided the $92,000 deposit on the Corringle Beach Homestead property and Dr Bremner provided the balance, there would be a resulting trust in favour of Dr Bremner and Mr French as joint tenants in shares which reflect their proportionate contributions to the purchase price. Counsel submitted that Mr French made no contribution to the purchase price of the other jointly owned properties and therefore the resulting trust should be for Dr Bremner alone.
3. There are, in my opinion, two complicating factors, at least so far as the Corringle Beach property is concerned, when it comes to determining whether the presumption has been rebutted by proof of contrary intention. The first is that, where two people have provided the purchase monies, the intention to be determined is their common intention, as determined objectively by reference to words or conduct used by them: Professor Campbell (above at [459]) at p 4 citing Calverley v Green (1984) 155 CLR 242 at 251, 258, 261. This means that it is the "common intention" of Mr French and Dr Bremner which must be discerned for the purpose of determining whether the presumption is rebutted, not merely the intention (or lack of one) of Dr Bremner alone.
4. The second complicating factor arises from Mr French's involvement in giving instructions to Wards. Although the contract of sale is not in evidence, it can be assumed from the fact that Mr French paid the deposit that he would have been the purchaser under the contract. On any view, when the transfers of the two parcels of the Corringle Beach Homestead land were registered, Wards were acting for Mr French. They may have been acting for Dr Bremner as well, as the provider of most of the purchase money, but he was not their sole client. In any event, it would seem that the instructions for the registration came from Mr French, albeit under authority from Dr Bremner. Arguably, the relevant intention was that of Mr French as Dr Bremner's agent.
5. The point is starkly illustrated by what was done with the title to the parcel of farm land forming part of the Corringle Farm Homestead. That land was registered in Mr French's name, but subject to a trust for himself and Dr Bremner as tenants in common under an express written declaration of trust. If the argument for Dr Bremner is correct, then at the point of registration Mr French was bound by a resulting trust to hold the whole of the property for the benefit of Dr Bremner. This would be flatly inconsistent with the terms of the express trust.
6. Of course equity would not permit Mr French to use his authority as Dr Bremner's agent to confer benefits on himself in breach of his fiduciary duty. If Mr French had instructed Wards to register the properties in a way which was inconsistent with Dr Bremner's instructions, he would have been guilty of breach of fiduciary duty and would be treated as holding the properties on trust for Dr Bremner. But that would be a constructive trust not a resulting one. No suggestion, of course, has been made in the present proceedings that Mr French actually did act outside his authority.
7. These complications might be a separate obstacle to Dr Bremner's resulting trust claim over the Corringle Beach Homestead property. But I propose to put them aside and proceed to consider whether, in the circumstances of the case, the presumption of a trust in favour of Dr Bremner has been rebutted by reference to Dr Bremner's intention alone.
8. It is worth noting that often in purchase money resulting trust cases the transaction has happened long ago and the person who provided the money is no longer available to give evidence. That is not so here. Had Dr Bremner wished to tell the Court directly what his intentions were so far as the beneficial ownership of the properties was concerned, he could have. He chose not to do so. Nor, it seems, did he make any effort to obtain any evidence from Wards, either documentary or oral, on the question. This is far from being a situation where the Court must rely on presumptions in the absence of direct evidence.
9. In this case, there is the direct evidence of Mr French and Ms Bakey that Dr Bremner expressly wanted for the Corringle Beach Homestead parcel to be registered in Ms Bakey's name, essentially as a gift to her. That evidence may be self-serving but Dr Bremner could have tried to contradict it and he has not. His counsel did not even mount a challenge to it.
10. There is also Mr French's evidence, reinforced by contemporaneous emails, and supported by admissions on the part of Dr Bremner in emails, of an agreement to acquire the properties on a 50/50 basis.
11. In the light of this evidence, I am satisfied that the presumption has been rebutted. Dr Bremner's resulting trust claim fails.

Sale of jointly owned properties

1. As I have mentioned, Dr Bremner's alternative claim for orders for appointment of trustees for sale of the Victorian property is based on the applicable Victorian legislation, Part IV of the Property Law Act 1958 (Vic) ("PLA"). PLA s 225 provides that a co-owner of land may apply to the Victorian Civil and Administrative Tribunal ("VCAT") for such an order. PLA s 231 then provides: VCAT may order appointment of trustees (1) In any proceeding under this Division, if VCAT thinks that the appointment or removal of trustees is necessary or desirable, it may order - (a) the appointment of trustees; or (b) the removal of trustees. (2) In an order appointing trustees for the purposes of the sale of land or goods, VCAT may - (a) direct the trustees as to the terms and conditions on which any sale is to be carried out; (b) direct the distribution of any proceeds of the sale in any manner specified by VCAT. (3) In an order appointing trustees for the purposes of a physical division of land or goods, VCAT may direct the trustees as to the manner in which the division is to be carried out. (4) An order under this section may provide for the remuneration of the trustees appointed under the order and - (a) if trustees are appointed for the purposes referred to in subsection (2), the order may provide that the remuneration of the trustees be paid from the proceeds of sale; and (b) if the trustees are appointed for the purposes referred to in subsection (3), the order may provide that the remuneration of the trustees be paid by such parties to the proceeding as VCAT considers just and fair in the circumstances.
2. These provisions refer only to applications being made to, and orders being made by, VCAT. Initially, it was contended on behalf of Mr French that the jurisdiction of VCAT is exclusive. But PLA s 234C relevantly provides: Jurisdiction (1) Subject to this section, the Supreme Court and the County Court do not have jurisdiction to hear an application under this Part. … (4) The Supreme Court and the County Court have jurisdiction to hear an application under this Part if - (a) in any proceeding which has commenced in the Supreme Court or the County Court (as the case requires), the issue of co‑ownership of land or goods arises in the course of that proceeding; or (b) in the opinion of the Supreme Court or the County Court (as the case requires), special circumstances exist which justify the Supreme Court or the County Court hearing the application. (5) For the purposes of subsection (4), special circumstances means circumstances in which - (a) the matter which is the subject of the application is complex; or (b) the matter which is the subject of the application, or a substantial part of that matter, does not fall within the jurisdiction of VCAT.
3. This Court may exercise such jurisdiction as the Supreme Court of Victoria has under Part IV of the PLA: Jurisdiction of Courts (Cross-Vesting) Act 1987 (Vic), s 4(3); Jurisdiction of Court (Cross-Vesting) Act 1987 (NSW), s 9(a). On behalf of Dr Bremner it was contended that this Court has cross-vested jurisdiction on two bases. First, the issue of co-ownership of land has arisen in the course of these proceedings (s 4(a)). Secondly, the matter the subject of these proceedings is complex (s 5(a)), and accordingly there are special circumstances (s 4(b)). There may also be special circumstances because the other claims in these proceedings do not fall within the jurisdiction of VCAT (s 5(b)).
4. The challenge to the Court's jurisdiction to make an order in favour of Dr Bremner was not ultimately pursued. I am satisfied that this concession was correct and the Court has jurisdiction.
5. As I have rejected Dr Bremner's resulting trust claim, the conditions for the exercise of the Court's power are enlivened. In the case of disagreement between the parties, such an order is made virtually as of course: Tory v Tory [2007] NSWSC 1078 at [42]. It was not suggested on behalf of Mr French that there was any reason not to make an order in this case.
6. The Court should therefore make an order for the appointment of trustees for sale as sought. But there are various details which need to be sorted out. The identity of the trustees needs to be determined. It is also necessary to consider whether any directions should be made to the trustees concerning the sale of the properties, or whether there should be any ancillary orders covering such matters as when vacant possession should be given.

Conclusions and orders

1. On Mr French's cross-claim, I have concluded that: (1) Mr French's claim that Dr Bremner was contractually obliged to discharge, or indemnify him against, the liability under the Provident mortgage, fails; (2) so too does Mr French's claim of a "joint venture" contract to exploit his magnetic coupling technology through a company incorporated in France; (3) moreover, Mr French has failed to establish an entitlement to damages for breach of that alleged contract; (4) Mr French's claim for reimbursement of expenses based on the alleged property management contract also fails.
2. On Dr Bremner's cross-claim, I have concluded that: (1) Dr Bremner is entitled to judgment against Mr French in the sum of $3,148,718, together with interest; (2) Dr Bremner's resulting trust claims over the Corringle Beach Homestead property registered in Ms Bakey's name, and to the half share of the other five Victorian properties, registered in Mr French's name, fail; (3) Dr Bremner is however entitled to an order appointing trustees for sale of the five jointly owned properties.
3. Mr French's cross-claim has failed and must be dismissed. Dr Bremner's cross-claim has largely succeeded. But as against Ms Bakey, the cross-claim has failed and must be dismissed. I will direct Dr Bremner to bring in short minutes of order otherwise to give effect to this judgment, and dealing with costs.
4. The orders of the Court are:
5. Order that the first cross-claim be dismissed.
6. Order that the second cross-claim be dismissed as against the second cross-defendant.
7. Direct that the cross-claimant to the second cross-claim bring in short minutes of order otherwise to give effect to this judgment, and dealing with costs.

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: 29 August 2019