Galati v Deans [2021] NSWSC 1094 | Case summary

Galati v Deans [2021] NSWSC 1094 | Case summary | Zoe

[3]

Statement of Claim 1. Whether TRHS held all the shares in Felan's Fisheries on trust as to 50% for Mr Galati and Trading Australia, and 50% for Mr Deans and/or Fishbank. (No.) 2. Alternatively, whether Mr Deans held 50% of the shares in TRHS on trust for Mr Galati and/or the Trading Australia. (No.) 3. Whether it was agreed by the Galati interests, on the one hand, and the Deans interests, on the other hand that each of the Galati interests and the Deans interests would nominate one director to the Board of Felan's Fisheries and that no other director would be appointed to that Board. (Yes, they agreed that each would nominate a director to the Board of Felan's Fisheries; however, I am not persuaded that that was to be an irrevocable or exclusive nomination such that another director could not later be appointed to that Board in place of one or both of the initial two directors.) 4. Whether the nominee director of the Galati interests (Mr Pho) was wrongly removed as a director of Felan's Fisheries by TRHS. (Mr Galati does not have standing to seek declaratory relief in relation to this issue; nor were any rights held by Trading Australia in this regard - and if there were they were personal rights and prima facie not assignable.) 5. If the matters in (i)-(iv) are not established by way of a trust relationship, whether Mr Deans and Fishbank are otherwise estopped from denying those matters. (No.) 6. Whether, previously, in about August 2014, Mr Deans and/or Fishbank agreed with Mr Galati and/or Trading Australia to pay them a success fee of $1.5 million if Dahua No 1 purchased the Bidvest Land. (No.) 7. Whether the Galati interests have suffered loss and damage (noting that it is common ground that the Dahua success fee has not been paid). (No.) 8. Whether Trading Australia has absolutely assigned to Mr Galati all its claims made in these proceedings. (Nothing turns on this but, if it did, certain of the choses in action here sought to be maintained are not assignable.)

[4]

Cross-Claim 1. Whether as at 20 November 2015, the Galati interests were: (a) the agents of Fishbank and Mr Deans; or (b) partners or joint venturers with Fishbank and Mr Deans. (The Galati interests were involved in a joint venture or joint enterprise of some description with the Deans interests (and, indeed, Mr Galati's submissions concede as much); however, I am not persuaded that there was a partnership relationship as such. I consider that the joint venture or joint enterprise came into being from around the time of the equity funding agreements reached in October 2014 as to the basis on which a commission or share of profits would be paid to Mr Galati or Trading Australia in certain events; and that (as Mr Galati concedes in his submissions) Mr Galati owed obligations of a fiduciary nature to the Deans interests arising out of that relationship - see below. As to the assertion that the Galati interests were agents of the Deans interests, in general I do not find that there was an agency relationship; however, I consider that insofar as Mr Galati or Trading Australia received part of the purchase price for the option rights ($1,799,820.95) without disclosure of that fact to the Deans interests, that amount was received as agent for the benefit of the co-joint venturers, i.e., the Deans interests and the Galati interests, jointly.) 2. Whether, as at 20 November 2015, fiduciary duties as particularised in the fourth amended statement of cross-claim at [87] (or otherwise) were owed between the Galati interests (on the one hand) and the Deans interests (on the other) in either an unilateral or a mutual manner. (The Galati interests and the Deans interests were involved in a joint venture relationship and owed each other fiduciary duties of the kind recognised in United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1 (UDC v Brian) at this time.) 3. Whether the October 2014 Equity Funding Agreement(s) (as defined in due course) was or were superseded by later agreements, terminated in accordance with their terms or are still binding, and if the latter was there a breach. (The Equity Funding Agreements were in effect superseded by the Agreement Principles document; and, in any event, there has been no breach of the earlier agreements by the Deans interests.) 4. Whether either the Galati interests or the Deans interests breached any extant confidentiality term, or duty of good faith or fiduciary duties owed to the other as alleged. (I am not persuaded that there was a breach of any confidentiality term; I do consider that there was a breach by the Galati interests of a duty of good faith or fiduciary duty in relation to the payment and receipt by Trading Australia of the alleged secret commission.) 5. Whether Trading Australia holds any interest in the FeIan's Fisheries' shares on a resulting, alternatively constructive, trust for the benefit of Mr Deans. (Trading Australia does not have any interest in the Felan's Fisheries shares.) 6. Whether Trading Australia holds any interest in any funds received on the sale of the option rights to and/or shares in Felan's Fisheries on a resulting, alternatively constructive, trust for the benefit of Fishbank. (On receipt of the undisclosed payment, i.e., the secret commission, from Wealth Shift, Trading Australia held this on constructive trust for the co-venturers jointly (Fishbank and Trading Australia). That payment was in respect of the option rights for the purchase of the Bidvest Land; there is no dispute that the funds received in respect of the option rights for the shares in Felan's Fisheries were properly disbursed; and I have found that Trading Australia has no interest in the shares in Felan's Fisheries.) 7. Whether the Deans interests are entitled to damages and/or equitable compensation and/or an account of profits in respect of any commissions earned on the sale of rights to EJC. (Yes, the Deans interests are entitled to damages at law and equitable compensation in respect of the alleged secret commission that I have found was made. I am not persuaded that an account of profits should be ordered.) 8. Whether the Galati interests hold any interest in funds received on the sale of the option rights to and/or other interest in the Bidvest Land on trust for Fishbank. (These funds appear already to have been largely disbursed. The orders for damages and equitable compensation are the appropriate remedy in the present case.) 9. Whether the Deans interests are entitled as against any cross-defendant to any: (a) damages and/or equitable compensation; (b) damages pursuant to Sch 2 - Australian Consumer Law of the Competition and Consumer Act 2010 (Cth) (Competition and Consumer Act) (Australian Consumer Law) on the basis of unconscionable conduct or false or misleading conduct; (c) damages and/or an account of profits in respect of breach of fiduciary duty; (d) exemplary damages on the basis of misleading and deceptive conduct, unconscionable conduct or deceit. (Various (but not all) of these claims are made good against the respective cross-defendants; as I explain in due course.) 10. Whether: (a) Mr Galati or (b) Wealth Shift and Ms Pritchard has or have aided, abetted, counselled or procured and/or induced and/or been directly or indirectly knowingly concerned in and/or conspired with Trading Australia within the meaning of s 75B of the Competition and Consumer Act in respect of the alleged representations and alleged claims of unconscionable conduct under the Australian Consumer Law pleaded in the fourth amended statement of cross-claim. (I find, as an alternative to a direct breach of fiduciary duty, that Mr Galati would have accessorial liability to the cross-claimants in respect of the claims made good against Trading Australia; the claim for accessorial liability against Wealth Shift and Ms Pritchard is made good only in relation to their knowing participation in the payment of the secret commission.) 11. Whether Wealth Shift, Ms Pritchard, Trading Australia and Mr Galati hold any funds transferred to them arising out of a payment from Baiada made on 8 December 2015 in the sum of $2,279,820.95 as constructive trustees for the Deans interests. (On receipt of the sum of $1,799,820.95, Trading Australia held that sum jointly for the benefit of it and Fishbank. As noted above, that amount has now largely been disbursed, including in part to Mr Galati or for his benefit. I make no declarations of constructive trust in relation to the transfer of those funds but instead make orders for the payment to Fishbank of half of the sum comprising the secret commission.) 12. Whether Wealth Shift, Ms Pritchard, Trading Australia and Mr Galati should transfer any amount arising out of a payment from Baiada made on 8 December 2015 of $2,279,820.95 to the Deans interests. (As adverted to above, the claims against Trading Australia are not pressed. I make orders for the payment to Fishbank of the sum of $899,910.48, plus interest, being its half share of the secret commission.) 13. Whether pursuant to s 37A of the Conveyancing Act 1919 (NSW) (Conveyancing Act) any payments of $1,799,820.95 made by Wealth Shift to Trading Australia on 9 December 2015 are void. (This relief was not ultimately pressed; so the issue does not arise for determination.) 14. If the Galati interests are held liable for claims of misleading or deceptive conduct (fourth amended statement of cross-claim at [142]-[175]), whether Wealth Shift, Ms Pritchard and EJC are concurrent wrongdoers. (For the purposes of the proportionate liability regime, no, because Mr Galati is an excluded concurrent wrongdoer.) 15. Whether any party is entitled to a defence of set off (fourth amended statement of cross-claim at [74]; defence to fourth amended statement of cross-claim at [47]-[48]); and, if so, in what respect and what amount. (No.)

[7]

Initial proposal to redevelop Blackwattle Bay precinct - 2002

From around 2002, Mr Deans formulated a proposal to redevelop the area around Blackwattle Bay. Fishbank was the entity through which Mr Deans pursued the redevelopment project.
There is reference in some of the evidence to Fishbank acting as the trustee of a unit trust. It is not clear that there was any such unit trust established at the outset of the proposed redevelopment project (i.e., in or around 2002). There is reference in some later documents - in particular, see the October 2014 Equity Funding Agreements, to two seemingly separate unit trusts: a trust established by deed dated 24 December 2010 "and known as the Fishbank Development Corporation Unit Trust"; and a trust referred to as the FDC Group Unit Trust, of which another entity apparently associated with Mr Deans (FDC Group Pty Ltd, to which I will refer as FDC Group) seems to have been the trustee. However, I was not taken to any Trust Deed or Unit Holder register in relation to either of those trusts.
In 2002, Deans Property, the licensed real estate agency through which Mr Deans carried on business as a real estate agent, entered into an agency agreement with the owner of the Bidvest Land. I was not taken to a copy of this agreement but I note this because Mr Deans relies on an entitlement to commission under this or a similar agreement with Bidvest as the explanation for the receipt by Deans Property of a $500,000 commission after the sale of the Bidvest Land to Dahua No 1. Mr Galati complains that this amount was not received for the benefit of the project - and Mr Galati has made issue of the fact that it was he who had introduced the Dahua Group to the project; as to which I say more in due course. Suffice it here to note that Mr Galati contends that the receipt of this amount was a breach of fiduciary or other duties owed by Mr Deans as a joint venture partner (see below), although the commission payment itself appears referable to the agency agreement entered into some years before the joint venture.

[8]

Involvement of Mr Mark Fraser in project - 2009

In 2009, Mr Mark Fraser, a solicitor, of Fraser Clancy Lawyers, became involved in the project with Mr Deans. There was reference to the acquisition by Mr Fraser or a company associated with Mr Fraser (identified by Mr Deans as a company called Nomad - see at T 423) at some stage of a 7% interest in one of the Unit Trusts with which Mr Deans was associated (Mr Deans was not clear as to the name of the Unit Trust) as a way of giving Mr Fraser an interest in the project (see Mr Deans' evidence in cross-examination at T 423, to the effect that Mr Fraser's company was a unitholder in the unit trust because he was working on the Blackwattle Bay project). (This is of some relevance insofar as there was an assertion made by Mr Galati's lawyers later in the course of events to the effect that Mr Galati or Trading Australia was a shareholder or unitholder in that or another unit trust - see below; through which it seems Mr Galati understood his participation in the project would be recognised.)
Mr Fraser provided legal advice and acted as solicitor in relation to various matters associated with the proposed development and for both the Deans interests and the Galati interests in various transactions; and also acted as solicitor on the record in litigation brought by the Deans interests in 2015 against Mr Galati (involving a dispute as to the wish of Mr Deans to conduct an auction of the Bidvest Land option rights), leading ultimately to complaints by Mr Galati (not unwarranted in my opinion) that Mr Fraser had a conflict of interest. In any event, there appears to be no dispute that, during 2014 and until about March 2016, Fraser Clancy Lawyers (through Mr Fraser) acted as the solicitors for Mr Galati, Trading Australia, Mr Deans and Fishbank in a variety of matters and contexts. (Mr Fraser's absence from the witness box in the present proceeding gave rise to a submission that an adverse inference against the Deans interests should be drawn therefrom - as to which I say more in due course.)

[11]

Submission of Unsolicited Proposal - December 2013

By letter sent in December 2013 (apparently not received until 7 January 2014) with further information submitted on 13 February 2014 (after "initial feedback"), Fishbank submitted an "Unsolicited Proposal" to the New South Wales (NSW) Government in relation to the project (under the Government guidelines for Unsolicited Proposals at that time).
The proposal included by way of introduction (or abstract) the statements that Destination Blackwattle Bay "delivers what no other proposal can deliver", including amalgamation and control of the Blackwattle Bay precinct and control of the Sydney Fish Market; and that the Destination Blackwattle Bay Master Plan "has garnered broad acceptance by stakeholder and the community" (Ex 3 at 10). (There seems to have been no little element of puffery in those statements having regard to the incomplete state of negotiations at that time for the overall parcels of land in the Blackwattle Bay area and the later evidence of dispute within SFM in respect of the proposed development - but nothing here turns on this.)
At the time of the Unsolicited Proposal, Mr Deans was working with a number of people in relation to the project including Mr Kym Lennox (a consultant who apparently provided consultancy services through a company or entity associated with him - referred to as Tipping Point Capital or The Tipping Point Institute Pty Ltd (The Tipping Point Institute), about which I say further below) and Ms Bhavani Ma (who is also known as Ms Kerry Anne Hyland) (a "Spiritual Entrepreneur, mentor and teacher" - see T 287) who provided her consultancy services at the time through a company known as Heartland Productions Pty Ltd (Heartland Productions) and later incorporated a company known as That Sounds Fantastic Pty Ltd (TSF) which provided services to Mr Galati and his then company or companies).
The Destination Blackwattle Bay Unsolicited Proposal was rejected by letter dated 6 June 2014. The letter rejecting the proposal advised Mr Deans that, while the proposal aligned "at a high level" with the NSW Government's strategies to redevelop the precinct, the proposal was "not found to be sufficiently unique to justify direct dealing" and did not demonstrate that Blackwattle Bay possessed any unique property rights or full support from the landowners and leaseholders (the latter presumably being a reference at least to the leaseholders of stalls or space inside the Sydney Fish Markets). The letter also stated that it was determined that the proposal did not demonstrate sufficient financial and delivery capacity for the proposed development.

[12]

Initial involvement of Mr Galati in project - 2014

At some stage in the course of 2014, Mr Galati and Mr Deans met. In Mr Galati's first affidavit affirmed 4 December 2017 (at [6]) he placed this meeting as occurring in August 2014. Mr Galati corrected that in his later affidavit affirmed 12 March 2019 at [11] and seemed to place the meeting in around April 2014. The first meeting must have been after 6 June 2014 if, as Mr Galati said, he was told at the first meeting about the rejection of the Unsolicited Proposal (T 49-50). However, pressed on this in cross-examination, Mr Galati thought it was closer to August 2014 that he was told about the rejection of the Unsolicited Proposal (T 51). There remains some doubt therefore as to the precise time at which Mr Galati and Mr Deans first met.
Pausing here, Mr Galati was self-avowedly "not good with dates" (see in the course of his cross-examination his evidence at: T 50; T 54; T 85, where he gave a rambling answer about dates in relation to the alleged success fee; and as to certain stages of the project), which makes it difficult to be confident as to the reliability of his memory as to the chronology of events (though, for Mr Galati, it is said that he broadly remembered the sequence of events).
In any event, it seems clear that Mr Galati's involvement in the project commenced not long after the rejection of the Unsolicited Proposal, which (as noted above) was in early June 2014. There is a reference in some of the documentary evidence to discussion between Mr Deans and Mr Galati in June 2014 which supports this conclusion. Therefore, it is reasonable to assume that, from at least around June 2014, Mr Galati was involved to some extent in discussions with Mr Deans about the project.
Mr Galati's evidence is that he (Mr Galati) was asked by Mr Deans to find investors for the project; and Mr Galati says that he gave advice as to how to progress the proposal generally and which "high profile" businesspeople should represent it to the NSW Government and major corporates.
Mr Galati's evidence is that when he began working on the project (from May-June 2014) he began to attend Fishbank's office three to four days a week (in the first year) to get the project or development up and to get the funds raised (T 53-54). Mr Galati emphasised in submissions that he did so several days a week (without remuneration up until 20 November 2015). There is a tension in Mr Galati's case between the proposition that he was in a partnership arrangement with Mr Deans and his emphasis on the fact that he did not receive any remuneration at all from the Deans interests for his work on the project - something that he relies upon to suggest that his later "separate agreement" or "side agreement" for the $1,799,820.95 alleged secret commission was understandable - but I will return to this in due course. Suffice it for present purposes to say that it is not suggested by Mr Galati that, at the start of the working relationship between Mr Galati and Mr Deans, their relationship was put on any formal basis as to his (ultimate) remuneration and it seems clear from Mr Galati's evidence that he was not expecting any remuneration at least until or unless he "brought in the money" (which, as I explain below, he maintains he did - albeit I note that was only in relation to the option rights not the project overall).
Mr Galati's evidence in cross-examination was that he "started doing stuff" for Mr Deans two to three months after the first meeting to try to find a developer or funds for the project (see T 52); and he says that, from August 2014, he introduced into the "venture" the former Premier (the Hon Kerry Chikarovski) (who took on the role of chairperson of the Fishbank Board), Mr John Shepherd (later put forward as the managing director of Fishbank) and Mr Tony Shepherd (his affidavit affirmed 12 March 2019 at [36]); and it is said that, from September 2014 until December 2014, Mr Galati met numerous prospective investors for the project (including SpaceCon, LandCorp, Mr Yossie Goldberg and, relevantly, Dahua Group Fish Market Project Pty Ltd, to which I refer as Dahua Group).
It would appear that Mr Galati's introduction of Dahua Group to the project occurred through a referral to Mr Galati by another entity, Madison Marcus Advisory Pty Ltd (Madison Marcus Advisory), since that entity claimed in due course a consultancy fee or commission for the introduction and was a party to at least one of the agreements into which the relevant parties entered (see below). (Pausing here, a recurring feature in this saga, as adverted to above, is the proliferation of consultants and advisers seeking and/or receiving commission or consultancy fees in respect of the project - not necessarily referable to any particular outcome for the project.)

[15]

Cessation and then resumption of Mr Kym Lennox' involvement in project -2014

At some time after the 6 June 2014 rejection of the Unsolicited Proposal (this is put in Mr Galati's reply submissions as being in late 2014), Mr Lennox ceased to work as part of the Deans interests' team in relation to the project. Mr Galati says that Fishbank could not afford to retain Mr Lennox and that there were arrears owing to Mr Lennox (and Mr Lennox was clearly also of that view by reference to some of his evidence in cross-examination to which I refer in due course). Whether or not there was actually anything contractually owing to Mr Lennox or his company at the time (which strictly speaking would depend on the terms of any retainer or other arrangement Mr Lennox or his company may have had with Fishbank at the time - and there was none in evidence), it does not appear to be disputed that Mr Deans did not continue any consultancy arrangements with Mr Lennox at that time (and there was evidently a level of dissatisfaction on Mr Lennox' part - and, for that matter, Ms Ma's part - as to the lack of payment by the Deans interests for their respective consulting services).
Mr Galati says that (not long after Leighton Properties withdrew from the project) he "re-introduced" Mr Lennox to the project, and promised to pay him (it is relevant here to note that Mr Galati thus seems to have assumed the burden of responsibility for Mr Lennox' fees - although he now says they were expenses of Fishbank).
Mr Galati says that Mr Lennox was an important team member, producing project modelling and attending presentations to prospective investors. Certainly, Mr Lennox appears to have had a firm view as to the value of his intellectual property (IP) in relation to the project (since he made very clear in cross-examination his concern to protect his "IP" and he justified a considerable payment made by Trading Australia or Trading Australia Enterprises Pty Ltd (Trading Australia Enterprises) to his company in late 2015 by reference to his "IP" and consultancy services in relation to the project). In submissions, the (valuable) IP was identified as being the "figures" (I assume this means the project financial calculations or "project modelling" to which reference was made, though there was also an assertion of copyright in some of the information memoranda prepared in relation to the project). As will be seen in due course, what seems to have happened is that, over time, different iterations of the project documentation were prepared - in broadly identical form but with a re-branding or re-badging of the group or team purportedly involved in the proposal (and by November 2015 this was without the inclusion of reference to Mr Deans).

[16]

Equity Funding Agreements - October 2014

On 23 October 2014, a deed was entered into between Trading Australia and various entities, including Mr Deans. The deed was prepared by Fraser Clancy Lawyers and was entitled "Equity Funding Agreement".
On 29 October 2014, another deed was entered into by the same parties, also prepared by Fraser Clancy Lawyers and entitled "Equity Funding Agreement". The two deeds were virtually identical and it appears that the later document was intended to supersede the former (particularly having regard to the respective footers of the deeds), although there was no recital to that effect. The only relevant difference between the two deeds was the Sunset Date (see below), which was amended from 30 November 2014 in the first deed to 31 December 2014 in the second deed. Where I refer to the Equity Funding Agreement henceforth in these reasons it is to the deed executed on 29 October 2014.
I note that Mr Galati relies on the Equity Funding Agreement as providing him with an entitlement to an equitable share in the redevelopment project, depending on funds secured. It is the first such written agreement recording the basis on which the Galati interests were to be involved with the Deans interests in the project. Relevantly, there is no reference in either of the iterations of this agreement to any $1.5 million success fee or commission.
The Recital to the Equity Funding Agreement (Recital A) recited that the Investment Recipients (defined in the Reference Schedule as each of: FDC (i.e., Fishbank), FDC Group, four other entities which were parties to the deed and the FDC Unit Holders (being the holders of FDC Units who are parties to the Units Sale Agreement as also defined in the Reference Schedule)), on the one hand; and Fishbank, on the other hand; had requested that Trading Australia: (i) procure funds to enable the Investment Recipients to redevelop part/s of the Blackwattle Bay foreshore and waterway; and (ii) procure a buyer of Fishbank's assets or of some or all of the units currently issued in the FDC Trust; and that Trading Australia had agreed to use its best endeavours to comply with those requests on the terms and conditions set out in the Deed.
Part A of the Equity Funding Agreement (headed "Trading Australia's Obligations") provided for Trading Australia to use its best endeavours to procure payment to one or more of the Investment Recipients of "Invesmtent [sic] Funds" (an obvious typographical error but which I note because it appears in both versions of the executed Deed which makes clear, as evident from the footer in any event, that the 29 October 2014 version is simply an amended version of the 23 October 2014 version).
The term "Investment Funds" was defined as "Equity Funds" and funds received as a payment of the Sale Price. The term "Equity Funds" is in turn defined as funds paid: (a) for application to the progress of the redevelopment of the Development Site and for such other purposes as may be agreed between the Investor and the respective Investment Recipients; and (b) whether by way of loan and or in exchange for the issue to the payer or its nominee of units in a unit trust of which the payee is the trustee or of shares in a company which is the payee. The term "Sale Price" was defined as the price which is agreed to be paid by an Investor to Fishbank for "FDC's Assets, or as the case may be, to the FDC Unit Holders for the FDC Units".
The term "FDC's Assets" was defined as the contracts which Fishbank has with persons who have an interest in or a right to develop the Development Site and the intellectual property which Fishbank has in respect of its proposed redevelopment of the Development Site. The term "FDC Units" was defined as units issued in the FDC Trust, which in turn was defined as the trust established by deed dated 24 December 2012 "and known as the Fishbank Development Corporation Unit Trust".
The Equity Funding Agreement referred both to the FDC Trust (with some specificity insofar as it referred to a trust deed of specified date); and to the FDC Group Unit Trust (the trustee of that trust, FDC Group Pty Ltd, being a party to the Equity Funding Agreement).
Mr Deans executed the Equity Funding Agreement on behalf of various (but not all) of the Investment Recipients, including FDC Group Pty Ltd as trustee of the FDC Group Unit Trust; and also in his personal capacity.
Mr Deans (by cl 7) warranted, among other things, that Fishbank (there referred to as FDC) was the sole trustee of the FDC Trust; that he was the sole shareholder and director of Fishbank; that an entity which he controls holds a substantial number of the units issued in the FDC Trust and that he was authorised by the FDC Unit Holders to enter into the deed on their behalf.
The structure of the Equity Funding Agreement was that Trading Australia was to become entitled to a commission (equal to the product of the amount of the Investment Funds which that Investment Recipient received and the Commission Rate (of 5%)) each time it satisfied the Commission Entitlement Pre-Condition (defined as the payment of Investment Funds to one or more of the Investment Recipient/s) (see cl 4.1); and there was provision for payment of a Bonus Sale Commission (see cl 5) as well as the issue of Bonus Units in the events there specified (see cl 6).
In essence, if Fishbank or the FDC Unit Holders received payment of a part of the Sale Price in excess of the "Super Sale Price" (of $150 million) then the Bonus Sale Commission was payable (50% of the Sale Price received in excess of the Super Sale Price); and if one or more payments to the Investment Recipients exceeded, or the total of which exceeded, $25 million, Trading Australia was entitled to the issue of units (i.e., Bonus Units) in the FDC Trust or the FDC Group Unit Trust "as the case may be" which represented 3% of the total number of units issued in the respective trust immediately following the issue of those units.
It is relevant to note that this was an agreement (as so named) that related to the equity funding of the project; not an agreement as to commission for finding a purchaser for the Bidvest Land, as such (although Mr Galati was adamant in cross-examination that the initial task - and his initial focus - was to find a purchaser for the land).
Mr Galati says that at this time he was mainly working on a "commission" basis but that the relationship between the Galati interests and Deans interests changed after Dahua Group became involved (or, in the words of his submissions, after a "real investor" "started to commit").
Mr Galati accepted that the $150 million figure in the Equity Funding Agreement was for a "Super Sale Price". Mr Galati's evidence is that this agreement was separate from the other "agreements" with Mr Deans (relevantly, the alleged agreement for a $1.5 million success fee) (T 99). At T 100, Mr Galati was not sure if the timing of the $1.5 million agreement was before or after this Equity Funding Agreement (cf [8CA] of the pleading which puts the former at August 2014). However, Mr Galati later said that the $1.2 million success fee agreement was reached roughly two months before the two Equity Funding agreements were signed (T 1010).

[17]

Identification of Dahua Group as prospective investor

As noted, Mr Galati says that he identified Dahua Group (a Chinese investment or property company) as a proposed investor through a contact at Madison Marcus Advisory.
As adverted to above, this seems an instance of a chain of persons or entities claiming credit, and in some cases commission or a fee, for having introduced an entity "into the project"; i.e., Madison Marcus Advisory claimed, and was later acknowledged, to have been the effective cause of the introduction of Dahua Group to the project; but Mr Galati here claims credit for introducing the Dahua Group to the Deans interests (albeit through Madison Marcus Advisory) and Deans Property separately claimed and received commission from Bidvest in relation to the sale to Dahua No 1 of the Bidvest Land. Another instance of this seems to have been the introduction of Celestino as purchaser of the Bidvest Land. It was seemingly accepted that Ms Pritchard (or Wealth Shift) introduced Celestino to Mr Galati but in due course Mr Galati suggested to Ms Pritchard (and her evidence was that Mr Galati was very angry when she did not agree to this) that part of Ms Pritchard's commission should be paid to another real estate agent (Mr Steve Kremisis) who Mr Galati apparently believed also had some involvement in the project for which he should have been paid (and whom Mr Galati did later pay, out of the sum of $1,799,820.95 received after the sale to EJC). It is not clear to me that Mr Kremisis' involvement in the project went further than he having introduced an unrelated business opportunity to Ms Pritchard, in the course of which Ms Pritchard learnt from Mr Galati about the Sydney Fish Markets opportunity.
On 18 November 2014, Mr Deans (for Deans Property) and Bernard Berson (of Bidvest) signed a letter in which it was agreed that Bidvest would pay an agent's commission to Deans Property if the Bidvest Land was sold to Dahua for more than $18 million and settlement occurred by April 2015. (This may have superseded the earlier 2002 agency agreement with Bidvest to which Mr Deans referred, although that was not made clear in the evidence.) As noted above, Mr Galati complains that the commission received (by Deans Property) under this arrangement was not disclosed to him at the time (and that those funds were not expended on the project).

[18]

Deed of Exclusivity - 10 December 2014

On 10 December 2014, Fishbank and Trading Australia entered into a Deed of Exclusivity with Dahua Group. The document was prepared by Madison Marcus Law Firm Pty Ltd (Madison Marcus Law Firm) (as distinct from Madison Marcus Advisory, which appears to be a related transactional company).
The Deed of Exclusivity recited that, in consideration of the payment by Dahua Group to Fishbank and Trading Australia of the Exclusivity Fee (of $1 million plus GST) and "committing time and resources to investigate and analyse and consider the Proposed Transaction", Fishbank agreed to grant Dahua Group a period of exclusivity in relation to the Proposed Transaction (Recital A). Recital B recorded that Dahua Group wished to ensure that neither Fishbank nor Trading Australia negotiated with any third party in respect to the Proposed Transaction during the Exclusivity Period (of ten business days from the date of the Deed).
The Proposed Transaction was defined as meaning "a transaction/s" pursuant to which Dahua Group or a related entity "will enter into a Relationship to acquire rights from the owners of the Property and the Project based on the Core Commercial Conditions".
"Relationship" was defined as a relationship between Dahua Group, Fishbank and Trading Australia for the development of the Project subject to Gazettal and Master Plan Approval. The "Property" was defined as the land comprising and upon which the Project is located as described by item four of the Schedule (which was there described the Bidvest Land, the Hymix Site, the Sydney Fish Markets and two properties on Pyrmont Bridge Road). "Project" was defined as the development known as the Blackwattle Bay Project and identified in the same item of the Schedule as the "proposed Blackwattle Bay Project".
The "Core Commercial Conditions" were set out at cl 7 of the Deed of Exclusivity which specified conditions required to be satisfied on or before the expiry of the Exclusivity Period, including that: (a) Fishbank and Trading Australia demonstrate that they "have secured" a 52% simple majority support and rights to make decisions material for the Project from Buyers; and (b) have the proxy of the majority of the shareholders of that entity; as well as Fishbank and Trading Australia obtaining a total Project GFA (gross floor area) of not less than 239,000 square metres as there set out. (Pausing there, the likelihood of at least the second of those conditions - the securing of the specified GFA - being satisfied within ten business days would seem, at least in hindsight in the context of the history of the project to that date, to have been very low.)
Nevertheless, the Deed of Exclusivity set out certain adjustments to the Core Commercial Conditions (cl 8) there being provision for Dahua Group to elect to proceed with the Project on the basis of specified adjustments if the Core Commercial Conditions were not satisfied by the expiration of the Exclusivity Period.
The Exclusivity Fee, as noted above, was $1 million plus GST. Clause 10.1 provided that payment of the Exclusivity Fee under the Deed of Exclusivity to Fishbank and Trading Australia was to be held in Madison Marcus Advisory's Trust Account (cl 10.1(a)) and released to Fishbank and Trading Australia only for the purpose of facilitating the exchange of the acquisition contract for the Bidvest Land in the name of the special purpose vehicle established by Dahua Group in its absolute discretion (see cl 10.1(b)).
Clause 5 provided for Dahua Group to be entitled to rescind the Deed in certain circumstances including: (a) if the parties had not been able to agree the Proposed Transaction by the expiry of the Exclusivity Period; and (b) if Dahua Group notified Fishbank and Trading Australia that it did not wish to proceed with the Proposed Transaction. Clause 7(h) further provided that in the event that, following completion of its due diligence, Dahua Group was not satisfied that Fishbank and Trading Australia can deliver any or all of the Core Commercial Conditions then Dahua Group was entitled to rescind the Deed. Under either clause, it was provided that, on rescission, cl 11 of the Deed was to apply (which provided for the form by which notice of rescission was to be given).
Clause 10.1(c) provided for what was to occur in the event that Dahua Group, following the exchange of the Bidvest Land acquisition contract, wished to rescind the Deed of Exclusivity. In that event, Dahua Group was to grant to Fishbank and Trading Australia a call option over 100% of the issued capital of the special purpose vehicle established by Dahua Group and the following provisions (in subcll (i) and (ii)) were to apply. Sub-clause 10.1(d) provided what was to occur should Dahua Group wish to proceed with the Project and remain bound to the terms of the Deed (as to how the Exclusivity Fee was to be credited to the first instalment payable under cl 10.2(a)(i) of the Deed).
In cross-examination, Mr Deans was not sure what had happened in relation to the $1 million fee paid by Dahua Group under the Deed of Exclusivity arrangements (T 435-436). However, that appears to have been elucidated in an email chain from Mr Deans to Madison Marcus on 19 June 2019 and the response of 1 July 2019 thereto; and nothing here turns on this (see Ex 5).

[19]

Deed of Binding Commission Distribution Direction - 12 December 2014

On 12 December 2014, each of Mr Galati, Trading Australia, Mr Deans, Fishbank and Madison Marcus Advisory entered into a deed which was entitled a "Deed of Binding Commission Distribution Direction". This document was also prepared by Madison Marcus Law Firm.
The Deed recited, among other things, that on about 1 December 2014 Trading Australia, Madison Marcus Advisory, Fishbank and Mr Deans and Mr Galati "amongst other parties" entered into a Commission Sharing Agreement (Recital A) (though I note that a copy of this does not appear to be in evidence); that the Commission Sharing Agreement provided for Madison Marcus Advisory to assist Trading Australia in procuring investors to invest into the Blackwattle Bay Project pursuant to an Equity Funding Agreement attached to the Commission Sharing Agreement (Recital B); and to provide assistance to Trading Australia in order to satisfy its obligations under the Equity Finding Agreement and introduce potential investors to provide Investment Funds in payment to investment recipients pursuant to both agreements (Recital C); and that Madison Marcus Advisory had procured the Deed of Exclusivity (Recital D).
The Deed further recited that the parties agreed that Madison Marcus Advisory had complied with its obligations under the Commission Sharing Agreement and pursuant to the Deed of Exclusivity (Recital E); acknowledged that Madison Marcus Advisory was the effective cause of the introduction of Dahua Group to the investment (Recital F); and agreed that (in relation to the payments to be made by Dahua Group "of the Deed of Exclusivity"), the commission and bonus entitlements payable pursuant to the Commission Sharing Agreement under cl 2 would be pursuant to the terms and conditions of the Deed of Binding Commission Distribution Direction (Recital G).
Relevantly, the Deed of Binding Commission Distribution Direction contained: an acknowledgement that Fishbank and Trading Australia were jointly and severally entitled to receive payments of the Pool of Funds pursuant to cl 10.2 of the Deed of Exclusivity (i.e., the payments due if Dahua Group agreed to proceed with the Project) (see cl 3.1); an irrevocable direction and authority to Dahua Group to pay the Pool of Funds directly to Trading Australia (see cl 3.2); and provided how Trading Australia was to deal with those funds (see from cl 4).
Effectively, this document recorded an agreement between the parties as to the percentage each would receive upon Dahua Group or its nominee purchasing any of the assets the subject of the Deed of Exclusivity (Madison Marcus Advisory and Trading Australia were together to receive 58% and Fishbank was to receive 42%). (I interpose here to note that Mr Galati says that this represented a substantial increase in Mr Galati's equity allocation in the Blackwattle Bay project, all of which he says was being overseen by the "partners"' joint solicitor, Mr Fraser.)
Mr Deans' understanding of the agreement entered into with Madison Marcus Advisory was that entry into that agreement was a condition that Madison Marcus Advisory and Trading Australia had put to him as to how the deal was to be (see at T 438). This suggests that Mr Deans was there falling in with their wishes or acceding to what he understood was the exigency of getting the deal 'over the line', so to speak. Mr Deans denied that the document was one that recognised a partnership with Mr Galati and his company (T 438).
Mr Deans' explanation as to the acknowledgement in the Deed of Binding Commission (that Madison Marcus Advisory had been the effective cause of Dahua's introduction to the project) was that it introduced Dahua to the project and to Deans Property; and that Deans Property then introduced Dahua to the land (T 439). Mr Deans repeated that distinction at T 440. However, Mr Deans also accepted that the property was part of the project. In submissions, Mr Galati says that (while Mr Deans would not concede that he "freeloaded" in receiving a commission for the sale to Dahua) Mr Deans did eventually concede that the sale of the Bidvest Land was part of the deal done by Madison Marcus Advisory.
Mr Deans was, however, adamant that he was entitled to the $500,000 commission earnt from the sale to Dahua because of the earlier agency agreement between Deans Property and the owner of the land. Mr Deans thought (and I found him to be genuine in this belief) that the Deed of Binding Commission was "complicated" (T 440). Similarly, Mr Deans was confused when asked about the call options (T 441). (There was some inconsistency in his answers as to meetings with the Dahua people in 2015 (see T 442-443) but Mr Deans was adamant that it was "absolutely not" the idea that Dahua would own the whole project.)

[21]

Call Options - 19 December 2014

On 19 December 2014, Trading Australia and Fishbank jointly entered into two interdependent call option deeds (each for a Call Option Fee of $1): a Call Option Deed with a Share Sale Deed annexed, entered into with Dahua No 2 in relation to all of the Felan's Fisheries shares (which I have referred to above as the Share Option Agreement); and a Land Option Agreement with Dahua No 1 concerning the Bidvest Land (the Land Option Agreement). The documents were again prepared by Madison Marcus Law Firm.
Relevantly, Trading Australia and Fishbank were named jointly as the Grantee in the Share Option Agreement, that call option being expressed to be interdependent with the Land Option Agreement on the same day over the whole of the issued share capital in Dahua No 1 by way of a Put and Call Option Deed executed on 19 November 2014. In other words, what was proposed was that if both options were exercised (and they were required to be exercised together), Trading Australia and Fishbank or their nominee would acquire both the Felan's Fisheries shares and the shares in Dahua No 2 (the latter giving the ownership of the Bidvest Land).
Pausing here, Mr Galati notes that diagrammatic charts prepared by Mr Lennox (with Mr Fraser) in late December 2014 to February 2015 make reference to the separate acquisition of the shares and the land. It is said for Mr Galati that the charts reflect the notion that Mr Galati and Mr Deans were envisaging a shared profit and control structure upon Dahua Group "bankrolling" the project. In any event, there is no doubt that the call option in relation to the Felan's Fisheries' shares provided for Trading Australia and Fishbank to acquire the shares or to nominate a purchaser in that regard. None of the agreements made clear what arrangements there were to be as between Trading Australia and Fishbank in respect of the Felan's Fisheries' shares beyond this.
Mr Deans accepted that the Call Option was held by Trading Australia and Fishbank but was not sure as to how that worked (i.e., he was not sure that they would be the only ones with the right to get the shares - asking, perhaps rhetorically, "is that how it works" before agreeing that that was how it was proceeding all along) (see T 452). With all due respect to Mr Deans, it is by no means clear to me from his evidence in the witness box that he had any accurate understanding what any of the contractual documents provided. Mr Deans' explanation at the end was that Mr Fraser became an equity partner because he acquired units in the unit trust but he was adamant that Mr Galati never became an equity partner in Fishbank (T 453) and nor did Trading Australia (T 454); rather, Mr Deans said that Trading Australia was entitled to a "profit share" after expenses but he was adamant that Mr Galati and Trading Australia were not equity partners (T 454).
Mr Deans disagreed that when the first options were entered into in December 2014 he knew that Trading Australia was going to be on equal footing with Fishbank, saying that "I agreed for them to be on the option. I didn't agree that they were equal standing" (T 467). As to why he agreed to the later ("new") options (in September 2015 - see below) Mr Deans said, at T 468, "well I wasn't informed there was another thing I could do" and that no one had asked him.

[25]

Payment of commission by Bidvest to Deans Property - 10 April 2015

On 10 April 2015, Mr Deans' real estate agency (Deans Property) was paid commission of $500,000 by Bidvest in connection with the sale of the Bidvest Land to Dahua Group's nominated entity (Dahua No 1). This was apparently spent by Deans Property on its business. As noted above, Mr Galati complains about the fact that Mr Deans did not in some way account to him or to Fishbank for the purposes of the project for this sum, contending that this was a sale that had occurred due to Mr Galati's efforts (see at T 94); and Mr Galati points to Recital E of the Deed of Binding Commission Distribution Direction in this regard (which recited an agreement that Madison Marcus Advisory had complied with its obligations under the Commission Sharing Agreement and pursuant to the Deed of Exclusivity and which referred to Dahua as the investor introduced by Marcus Madison Advisory); and see also the defence to cross-claim which seeks to have this amount taken into account in respect of any amount for which Mr Galati is held liable to the cross-claimants.)
It appears that in April 2015 Mr Galati was told by Madison Marcus about Deans Property receiving commission from Bidvest (see submissions for Mr Galati). As adverted to above, Mr Deans maintains that this was a payment referable to a much earlier (2002) commission arrangement direct with Bidvest and that there was no basis for him to be required to account for this to Mr Galati or to bring it into the project in some fashion (even accepting that Dahua Group was introduced to Mr Deans through the efforts of Mr Galati and/or Madison Marcus Advisory). Mr Deans also pointed out in cross-examination (as raised in his pleading) that Mr Galati was not a licensed real estate agent (nor was Trading Australia). Mr Deans denied that Mr Galati was entitled to the $500,000 commission from Bidvest saying that "[h]e's not a real estate agent" (T 455).
Mr Galati accepted in cross-examination that he did not know that Deans Property had had an agreement with Bidvest going back some years (see at T 95, where he was shown the invoice for an agreed 2.78% commission). Ms Ma's evidence was that Mr Deans told her he had received a half million dollar commission from Bidvest by dint of an agency agreement some time before (T 272), which corroborates Mr Deans' account of an earlier agency agreement at least to the extent that it shows this was not a recent invention.
Mr Galati says that Mr Deans did not tell him of his agreement with Bidvest. Mr Galati says that he confronted Mr Deans about the "Bidvest commission", claiming that it should have been shared with him and others (a stance similar to that which Mr Galati later seems to have adopted with Ms Pritchard when insisting that she share some of her commission from EJC with Mr Steve Kremisis - see below) (see his affidavit affirmed 12 March 2019 at [123]-[124]) and that Mr Deans refused to share that commission.
In his affidavit sworn 14 June 2019 at [58], Mr Deans denied that this payment was secret but then in cross-examination Mr Deans did not recall if he had told Mr Galati about it (at T 431.20-34; T 435.35) (evidence to which Mr Galati points as revealing Mr Deans' unreliability as a witness - as to which, see below).

[26]

Agreement Principles document

Around this time in 2015, it appears that the relationship between Mr Deans and Mr Galati was showing some signs of strain. Mr Galati seemed in part of his evidence to accept that this was from about April 2015 but elsewhere linked the breakdown in their relationship to the falling through of the so-called "Abacus deal" in about June or July 2015 (to which I will refer in due course). Mr Galati nevertheless accepted that "to some extent" he did not have "complete faith" in Mr Deans as at April 2015 (though, interestingly, he seems to have blamed Mr Fraser more for this lack of faith - see at T 114).
Ms Ma then seems to have assumed the role of peace-maker to broker some kind of deal between the two (or at least insofar as she acted as the conduit between them), in that Ms Ma met with Mr Galati and Mr Deans to prepare a document recording agreement as to their relationship and respective roles (Ms Ma's affidavit affirmed 21 June 2018 at [170], [198]).
A two page document headed "Agreement Principles between Robert Deans, Dominic Galati & Bhavani Ma" (the Agreement Principles document) was drawn up by Ms Ma. Ms Ma's evidence was that she believed it was drawn up from notes made by her given the detail of the document - but there is no copy of any such notes.
There is conflicting evidence as to how and when the document came to be signed by Mr Galati and Mr Deans. The copy in evidence (which bears the notation "witnessed by Bhavani Ma" (and which it is not disputed was signed by both Mr Deans and Mr Galati) bears the date 22 April 2015 under Mr Deans' signature on both pages; but the date 7 June 2015 under Mr Galati's signature on both pages. (It does not appear that Ms Ma signed each page twice, so it is unclear to which signature Ms Ma's attestation purportedly related.) Ms Ma deposed that the document was signed by both Mr Deans and Mr Galati on 22 April 2015 and that the 7 June 2015 date is incorrect (her affidavit affirmed 21 June 2018 at [170]). Mr Galati did not remember when he signed the Agreement Principles document though he thought he would have signed it when he dated it, being 7 June 2015 (T 107-108).
Mr Galati submits that the document was entered into following a meeting with Ms Ma to record the terms of their "partnership". Mr Deans' evidence is that it was presented to him (and he believed it had been prepared by Ms Ma and Mr Galati). Mr Deans says Ms Ma told him that he needed to show his trust in Mr Galati and so he signed the document (see below).
It is convenient at this point (not least because I attach some significance to this document as I explain in due course) to set the document out in full.
The first page, bearing the heading set out above, was as follows: Process ● Communication & liaison on all strategy, deals & tactics with each other & agreement before they are enacted ● Final decisions are made by Robert Robert Paton Deans 1. IP & Development rights 2. Project Design ● to build the best Fish Market in the world ● An alignment across suppliers, wholesalers, retailer and related services ● Incorporate the following in the development proposal ○ Provision for an Indigenous & Multi Cultural Event Centre ○ Provision for a Centre of Excellence for the research and development of sustainable food and urban farming, including ○ Acquiculture, Hydroponics, Acquaponics, Waste and Energy management 3. Project Oversight - sitting [sic] on FDC Board 4. Managing the Architectural process 5. Financially - Best Case ● $10m for him [i.e., Mr Deans] at commencement ● $6-$8m accrued costs commencement for costs for funding the project to date ● $150m ● 10% development equity ● Engage Deans Property for Real Estate and ● Conveyancing Management Development Coordination role by Deans Property, including but not limited to: ○ Communication Strategy ○ Marketing and PR Strategy ○ Transaction Management 6. Financially - Worst Case ● If $100m, then ○ $70m for Robert ○ $30m for Dominic ● OR Pro-rata, ie 30% of what is achieved 7. Ideal scenario ● If over $150m then Robert 50%: Dominic 50%
The second page was as follows: Dominic Gerardo Galati 1. Get the finance for the deal 2. Strategic & Tactical Management 3. Manage the political process ● UrbanGrowth NSW ● RMS ● SFM Board ● T & M Board ● Catchers Trust ● Poulos 4. Responsible to pay bonuses to ● John Shepherd ● Tony Shepherd ● Kerry Chikarovski ● Sal [a real estate agent from Brisbane] ● Steve [Kremisis] ● Kym [Lennox] from January 2015 forward 5. Corporate Governance 6. Financially - Best Case ● $5 [sic] at commencement ● $50m 8. [sic] Financially - Worst Case ● If $100m or less, then ○ $70m for Robert ○ $30m for Dominic ● OR Pro-rata, ie 70%:30% Robert: Dominic of what is achieved Bhavani Ma 1. Strategic Co-Ordination 2. Managing the Presentations 3. Corporate Governance 4. Marketing & PR 5. Financially from Robert ● Accrued cost & bonus to date $1m ● 3% of Robert's % 6. Financial bonus from Dominic John Shepherd 1. Managing Director role
Broadly, therefore, what was provided for under the Agreement Principles document meant that the return to each of Mr Deans and Mr Galati was to depend on the amount funded: for any amount received of under $100 million, the proportionate split was 70%/30%; and above $150 million, the split was equal. Relevantly, there is nothing in the document as to the Felan's Fisheries shares. (Nor, significantly in my opinion, is there anything about an agreed $1.2 million success fee.) The best case scenario seemed to involve the receipt by Mr Deans of $10 million and by Mr Galati of $5 million at the commencement of the project (it being conceded that $5 was likely a typographical error and that it was meant to be $5 million).
It is also relevant to note that, under this document, bonuses to a range of persons (including Ms Chikarovski, the two Mr Shepherds, and, from January 2015, Mr Lennox - i.e., from around when Mr Galati "re-introduced" him into the project) were recorded as being Mr Galati's responsibility.
Mr Galati agreed that he told Mr Deans that he accepted that the IP and development rights rested with Mr Deans and were reserved to him and his company (T 110). Mr Galati also seemed to accept that the 50/50 split over $150 million was not of the profits but of commission (T 111). Mr Galati's submissions, however, seem to put the amounts to be recovered on the best case/worst case scenarios as profit sharing not commission as such.
Insofar as the document records that Mr Galati was to be responsible for bonuses to the two Mr Shepherds, Ms Chikarovski, Mr Kremisis and others, in cross-examination, Mr Galati seemed to suggest that this meant that he would arrange the payments (which is not in my opinion the obvious construction of the document, which provided in terms that Mr Galati was to be "responsible" for those payments - consistently with Mr Deans apparently not having agreed that some or all of those consultants should be retained or engaged).
As to the fact that there was no reference in the document to the $1.5 million success fee (for which Mr Galati now sues), Mr Galati said in cross-examination that "I let that go because that's why, why these new arrangements came into place, because Robert couldn't pay me the $1.5 million…. I wanted to get my money, but Robert didn't have the money to pay it" (T 112). (Pausing here, this evidence seems perilously close to Mr Galati there suggesting that he had agreed to a variation to the arrangement he says had earlier been reached in relation to the $1.5 million or was abandoning any claim under any such agreement or arrangement.) However, Mr Galati was then quick to say that this did not replace what went before and that he "was going to come back to the 1.5 million once I brought all the money in" and he suggested that in that event (i.e., if he brought all the money in) then he would sit down to "work it out" eventually (T 113) (which is hardly consistent with there being a binding agreement at that stage).
Ms Ma gave evidence that she remembered the discussion in April 2015 between Mr Deans and Mr Galati as to their relationship (T 270); she believed that the document was typed "probably" from some notes (given the detail of it) prepared by her; and she said that her purpose was to record the discussion and agreement between the two men (see T 271).
Ms Ma's evidence was that she had no note of the conversation but that there were three triggers that enabled her recollection of the part of the conversation set out at [186] of that affidavit of her affidavit affirmed 21 June 2018: first, the Agreement Principles document; second the Abacus deal falling through; and, third, the Celestino deal being put together (see T 276). (The Abacus and Celestino deals of course did not come into being until after - and in the case of the Celestino deal, well after - the Agreement Principles document, so it is not clear how those are said to have triggered Ms Ma's memory of the earlier conversation. Logically, those events could not have precipitated the Agreement Principles document, so to have triggered a memory of the earlier document then presumably the later events must have in some way related to or reflected upon something in the earlier agreement but Ms Ma did not elaborate on this.)
As to the Agreement Principles document, Mr Deans said that Mr Galati and Ms Ma drafted it and presented it to him (T 444); there was a discussion about it and he believed that he understood it (T 445); and that he believed that it operated such that accrued costs would be deducted and then there would be a split of profits after all accrued expenses were met (T 445). He believes that he signed it on 22 April 2015 (T 445). Mr Deans said that he had the Agreement with the view of taking it to Mr Fraser but did not do that (T 446); that he wanted to "sleep on it" but that Ms Ma said that he needed to show trust in Mr Galati so he signed it and handed it back to her.

[29]

Abacus deal

A similar joint venture arrangement was proposed in June/July 2015 (involving Trading Australia and Fishbank) to Abacus Property Group (Abacus) the proposal being for a 50/50 joint venture with profits shared between Abacus on the one hand and Fishbank/Trading Australia on the other (the Abacus deal). The presentation for the Abacus deal was made by Mr Galati and Ms Ma with Mr John Shepherd.
By letter dated 26 June 2015 to Mr Galati, the Director of Property Ventures at Abacus Property Group (Mr John L'Estrange) set out his general understanding of what Abacus' involvement in the project would be (in a document headed Indicative Terms). Those indicative terms included that profits were to be shared 50/50 between Abacus and Fishbank.
The proposed Abacus indicative terms were amended in late June and forwarded by Ms Ma by email on 27 June 2015 to Mr Galati and Mr Deans (and copied to Mr Fraser), Ms Ma there noting that the document did not include Mr Fraser's "preference to have changes made to include a condition [precedent] that the agreement is binding or reduce the Exclusivity period to end 8 July to enable sufficient time to find an alternative if Abacus do not proceed. The change has been made to end 12 July". One of the changes included the statement that "[t]he joint venture will be conducted via Blackwattle Bay Developments Pty Ltd…". The indicative terms also changed the statement as to the sharing of profits, which was to be 50% to Abacus and 50% to Fishbank and Trading Australia. The estimated profit range, as indicated by Fishbank and Trading Australia was there stated to be $100 million to $150 million.
Mr Galati notes that the proposal to Abacus (not dissimilar to that which ultimately proceeded involving EJC) was for payment for an amount (there, $900,000) jointly to Fishbank and Trading Australia with those entities (or their nominee) to retain the Felan's Fisheries shares, and equity payments between the parties.
The Abacus deal occupied some prominence in the evidence because Mr Galati clearly blames Mr Deans for the Abacus deal not proceeding and because Mr Galati maintains that the arrangements between the Deans and Galati interests changed after that deal fell through (see below). (However, as noted above, Mr Galati accepted in cross-examination that the relationship was strained by June 2015 (T 124) and it would seem perhaps as early as April 2015.)
In any event, Mr Galati refers to the proposals that were made in relation to the Greenland and Abacus deals and contends that, both to the outside world and between themselves, the Deans interests and the Galati interests were acting as partners, working together with a view to making a joint profit out of the project.

[30]

Alleged "dictate the terms" agreement

Mr Galati says that the "deal" (i.e., the basis on which the Galati interests and the Deans interests were proceeding) changed at some point (he says after the Abacus deal fell through) such that it was agreed between he and Mr Deans that whoever sourced the funder to exercise the two Dahua Call Options would (in his words) "dictate the terms" in relation to their sharing of the interests in the venture (T 124) (and Mr Galati says that his position was that if he did, then it would be on a 50/50 basis.) This evidence seems to suggest that Mr Galati regarded this as a new arrangement; and he said in cross-examination that this was the basis of his claim to a 50% equity in Felan's Fisheries (see at T 125).
Mr Galati confirmed later in cross-examination that this arrangement was made "straight after" the Abacus deal fell through (i.e., sometime after 27 July 2015 - see below), and that the parties proceeded on that basis from that time, but then seemed to say that it was from September 2015 (T 127). In closing submissions, Counsel for Mr Deans pointed to some evidence that the "dictate the terms" arrangement was reached earlier than this - in about March/April 2015.
The significance of this is (as noted above) that Mr Galati appears to rely on this agreement as the basis (or at least in part the basis) for his claim now to be entitled to 50% of the shares in Felan's Fisheries (see below). However, Mr Galati also said that he had discussions with Mr Deans prior to the Abacus deal about getting shares in Felan's Fisheries and that these were when he was a director on the SFM board (T 129). The inconsistency in the placement of the time for this alleged agreement is in my view indicative of a lack of binding agreement on the so-called "dictate the terms" arrangement.
In cross-examination, Mr Galati could not remember if the 50/50 "split" in relation to the shares in Felan's Fisheries was recorded in any document (see at T 128). Mr Galati said that he took it that he was "part of Fishbank" and that he would get the percentages through that company once he "signed the deal off" ( T 128). Mr Galati insisted that, prior to the Abacus deal, he would have had a 50% shareholding in Felan's Fisheries (having the 50% share in Fishbank) and said that technically he would own 50% of Fishbank and would thus get a 50% share of Felan's Fisheries. (I note for completeness that Mr Galati does not in this proceeding claim any entitlement to shares in Fishbank (see at T 123).)
Mr Deans, for his part, flatly denied that Mr Galati said words to the effect "if I find buyer/investor I want 50/50" (T 466). Asked if there was a difference of opinion between the two, Mr Deans said (with evident feeling) that "there is a difference in - otherwise we wouldn't be in court, I'd imagine" (T 466).
Mr Deans' position was that his understanding was that Mr Galati was entitled to a profit share, after expenses, if "basically he helped get the project going"; it was not his understanding that unless there was a nominee the Felan's Fisheries shares would be transferred to both companies. Mr Deans said that the reason he kept going back to Mr Galati was because "he was on the options" (T 466).
Mr Galati accepted that he had kept no note of any discussion with Mr Deans and Mr Fraser as to the shares in Felan's Fisheries, saying it was "in his head" but maintained that Mr Deans and he agreed to split the shares in Felan's Fisheries 50/50 (T 148-151). At T 149, Mr Galati said that Mr Lennox was going to record it (though he said that he did not know in what document); and then later, Mr Galati said that he had asked Mr Fraser to document the deal as to the Felan's Fisheries shares; and that he engaged lawyers to document it (but later corrected this to say that he had engaged lawyers to "take on" Mr Fraser to get the document). (Pausing here, this is consistent with my observation of Mr Galati's evidence generally in the witness box in that he had a tendency to make broad assertions and then retract or retreat from them when pressed for detail.)

[31]

Mr Deans' 27 July 2015 email

Mr Deans' perception of the position at around this time can be gleaned from the email he sent on 27 July 2015 to Mr Fraser, Mr Galati and Ms Ma (with the subject header "Abacus offer and our situation". Among other things, in that email Mr Deans stated (Ex F at 143): OUR SITUATION OFFERS At present we have Abacus who were ready to exchange Friday. Dominic and Kym, made Mark and I aware they were unhappy and did not support the deal. At the time this did not seem logical as we stood to lose the options by Friday 5pm and would be left with nothing other than our ideas. Fortunately we were able get an extension until Tuesday. I have since negotiated a slightly better deal. Still not great but better. (See below) Any other offer is really welcome but we have no certainty or progressed paperwork at this point. … ABACUS The offer from Abacus is $23.5m: - $22.6 pays for the Bank St, Felans & their duties (Apparently the $22m incl their duties) - $900,000 will go to FDC/TA - If we can receive the $2m bonus to Dahua then we retain that - We also retain the Felan's and T&M Shares but Abacus first buy it and we have a call option to buy back Felans (I believe the terms are $1 - is this correct).
Mr Deans then set out in the email his synopsis of the outcome of the Abacus deal (saying that it was not an ideal outcome but "[w]e retain Felans, shares in the SFM and the IP"). Mr Deans also set out how he considered the funds allocation would work, stating that the funds would provide enough in relation to the following matters: 1. Outstanding bills. These include: architects, legals, consultancies that have not been paid and are due. (These are not success payments). 2. Secure Felans lease and shares. This will require immediate legal action and possibly a court case with SFM. This will also be a catalyst in exposing the SFM Board and Managements poor behaviour and may serve our overall [endeavour] albeit after we have lost control of Bidvest. (Mark is hopeful it [won't] go to court). 3. Provide Felans working capital to funds setting up, pay rent, outgoings, wages. Greg and Bernard said they would help us set it up. Essentially we need to cover costs and get it to break even as quickly as possible. 4. DBB working capital. The nature of our path moving forward will have changed dramatically and this requires forecasting 5. Past work, bonuses, equity payments. (Obviously the more we get the more we can equitably share)
At least from this, it seems that Mr Deans considered the Abacus deal still to be on the table as at the end of July 2015.

[34]

Court proceedings to challenge rescission of the Call Options

Court proceedings then ensued in order to challenge the termination of the Dahua Call Options. That litigation was settled by an agreement on the part of the Dahua Group entities to execute fresh Call Options in favour of Fishbank and Trading Australia. Those further Call Options (in the same terms but with a later expiry date) were executed on 24 September 2015. Trading Australia and Fishbank were (again) jointly named in the Call Options as the "Grantee". The September Call Options provided for the options to expire on 20 November 2015 at 5pm (and it appears that the Deans and Galati interests were under no illusions that there would be any further extension of the options) (Ex F at 145).
Mr Deans agreed that, leading up to 20 November 2015, he was "absolutely" concerned at that time that SFM had "kicked" Felan's Fisheries out of the Sydney Fish Markets and that he needed money to run the court case about that (T 457). Mr Deans was adamant that he was not working out a deal for his and Mr Galati's interests but that it was for the interests of the project "under me", the project being to develop the area in Blackwattle Bay that he says he controlled (T 458). Mr Deans was adamant that "it was always my project" (T 459). Mr Deans accepted that there was a clear understanding that Trading Australia had an interest in the outcome of the project but said that the size of the interest was in dispute, and that the Felan's Fisheries' shares were "not necessarily" part of the project (T 459).
Mr Deans understood that the share option was granted to the two companies (Trading Australia and Fishbank) but did not understand what that meant (T 460). When taken to the definition of Buyer he said "I do get it now" (T 460). Mr Deans' understanding was that "we were to find someone to come in and replace the joint venture idea of the project funding" (see T 461).
Mr Deans accepted that at this time there were a lot of things going on (and said he had to try and work towards spilling the SFM Board as well - see T 461). He accepted that there was a definite deadline and said that Mr Galati was "working for the project for me to find buyers or investors to come in for the project of which he would have had to come back to me" and agreed that he was doing the same "for the benefit of the project" (T 461). Mr Deans said that he had to agree on the solution but he did not accept that Mr Galati had to agree (T 462). Mr Deans agreed that he had asked Mr Galati to sign the option deeds. Mr Deans said that Mr Galati was tied to the options and then agreed that he needed Mr Galati's agreement to proceed with the option but that the focus was on carrying out the project (he says it was defined as a joint venture partner to exercise the options with him) (T 462).

[35]

Ms Ma's invoice - 3 August 2015

At the end of 30 June 2015, Ms Ma ceased working for Fishbank. On 3 August 2015, Ms Ma rendered invoices (on Heartland Productions' letterhead) to Fishbank, totalling $115,000, for arrears of fees allegedly due for her consultancy services. It appears clear that by this time Ms Ma had formed the view that her provision of consulting services for Fishbank had come to an end.
At some time around August 2015, Ms Ma began providing consultancy services for the project to the Galati interests (see Ms Ma's evidence at T 267.19). However, Ms Ma's evidence is that she was not receiving payment for the first 5 months that she worked for the Galati interests (T 270.6).
Mr Galati agreed that Ms Ma was a consultant to Trading Australia from around August 2015 (T 160) and agreed with the proposition that, from August 2015 to the end of 2015, Ms Ma was "firmly in [his] camp" (but added that it was Ms Ma who came to him - perhaps to dispel any criticism of "poaching" her services, though none was here made).
Ms Ma accepted in cross-examination that she had lodged a proof of debt in the liquidation of Trading Australia for unpaid fees from January 2016 to April 2020 (in relation to consultancy services provided by TSF to Trading Australia for work done by that company). In the proof of debt Ms Ma identified a commencement date of 1 August 2015 (consistent with Mr Galati's agreement that she was a consultant to Trading Australia around that time; and with her rendering to Fishbank of a final invoice on 3 August 2015 for her consultancy fees prior to that date); and claimed entitlement to consultancy fees at the rate of $10,000 per month. (There is no explanation for the apparent inconsistency with Mr Galati's evidence that the project was "going forward" with Trading Australia Enterprises after that company was incorporated in late 2015 but the proof of debt claimed amounts due from Trading Australia not Trading Australia Enterprises, but nothing here turns on this.)

[39]

"Current state of play" email - 17 August 2015

By email dated 17 August 2015 sent at 12.35pm, Mr Lennox sent to Ms Ma (copied to Mr Galati) information (a "terms sheet") under the subject header "[c]urrent state of play". Ms Ma then forwarded this email to Mr Deans and Mr Fraser (at about 12.49pm) with the subject header "Up-Dated information from Dominic & Kym". Pausing here, a header that refers to "up-dated information" (as appears on Ms Ma's email) clearly suggests that this was not the first such information being provided. Moreover, it is implausible that Ms Ma was a mere "mailbox" (as suggested in her evidence in cross-examination - see below) and did not have some idea at the time of what was there being forwarded.
The email from Mr Lennox said that "[s]orting out a term sheet of sorts is proving too slow, so in the interim, here is the latest framework" and then set out a table which included comments against the items "FDC", "FDC Creditors", "TA" and "TA Creditors". The comments included financial amounts seemingly referable to a division of commission and apportionment of "bona fide third party invoices" as between Fishbank and Trading Australia. The email went on to state: There is no commitment for participation by the team for the development going forward, any engagement will be on a merit basis at the sole discretion of the investor's Development Manager. That said, they seek immediate progress on the Felans matter which is likely to involve at least some interim on-going engagement. The upshot is a potential of $8.25M for FDC [Fishbank] and $5.75M for TA [Trading Australia] (or $15M + GST in total).
It can be seen from this that the framework there being put forward was one that involved both Trading Australia and Fishbank receiving an upfront amount but seemingly with no certainty of ongoing participation in the project (since that was said to be "on a merit basis at the sole discretion of the [there unidentified] investor's Development Manager").
Ms Ma's email, forwarding this to Mr Deans and Mr Fraser, stated: Please see below the up-dated information from Kym for Robert Rolands of Platform BMD Investments Pty Ltd. All releases have been removed to make it a cleaner simpler offer for consideration. Please advise when you wish to meet to discuss these Investor proposals?
Again, this in terms suggests that there was some earlier "offer", insofar as this refers to a "cleaner simpler offer" and to the removal of releases.
This exchange of correspondence raises one of the more curious aspects of the matter (about which Ms Ma was singularly unforthcoming in the course of her cross-examination - see below), and which has given rise to much suspicion on Mr Deans' part, because as it transpires there was no company by the name of "Platform BMD Investments Pty Ltd" (Platform BMD Investments) and considerable uncertainty as to the existence or otherwise of the mysterious "Robert Rolands" (which I explain below).
Mr Lennox was questioned as to the 17 August 2015 email to Ms Ma that was copied to Mr Galati; and as to the proposed commercial terms from "Platform BMD". Mr Lennox said he recalled the 17 August 2015 email "roughly in terms of this discussion" (T 347) and that, from the text of Ms Ma's email, he believed that it referred to an offer from "Henyi", which he said was (or was part of a group that was) "quite a sizeable" developer. Mr Lennox said (at T 347) that: Q. Who was its development manager? A. I do believe Robert Rolands was, was representing that whole group. They had their own development team. They were quite a sizeable development - developer.
Later in cross-examination, Mr Lennox said that Mr Rolands was not someone from Henyi but that he "represented" Henyi; and said that Mr Rolands worked for Landsburys (and that "[h]e still does now as far as I know"). Mr Lennox said that Mr Rolands provided advice to the government on compulsory acquisitions; and that "… I mean, he didn't work for Henyi, he was an advisor or involved in Henyi in some commercial manner". Asked whether Mr Rolands worked for Platform BMD Investments, Mr Lennox (the very person apparently putting forward the terms in the "state of play" email) did not know.
Mr Lennox' evidence (quite extraordinarily to my mind) seemed to be to the effect that, although Ms Ma had forwarded the "up-dated information from Dominic [Galati] & Kym [Lennox]", referring to "up-dated information from Kym for Robert Rolands of Platform BMD Investments Pty Ltd", the offer that Mr Lennox understood was there being conveyed was an offer from or on behalf of Henyi and was quite separate from Platform BMD Investments (and further, his evidence was that he did not know or recall a company known as Platform BMD Investments). However, he said he saw no reason to correct that information in Ms Ma's email (because he was just conveying details). See, for example, the following exchange (at T 348): Q. The subject Ms Ma used in her email [dated 17 August 2015] was "Updated information from Dominic and Kym". You see that? A. Yes. Q. She said "Please see below the updated information from Kym for Robert Rolands of Platform BMD Investments Pty Limited". You see that? A. Yes. Q. Do you now agree that prior to 20 November 2015, you had heard of a company whose name incorporated the words "BMD Investment"? A. Well in passing from this email, yes. But otherwise no, I didn't recall it. The reference to BMD is the reference to the government's definition of the site. They call it - they called it Bays Market District. Q. No. The reference to BMD is to a company whose name is described in the email copied to you as "Platform BMD Investments Pty Ltd". You see that? A. The - sorry you're referring to my use of the term "BMD" in the documents that I've written? Q. I wasn't referring to anything other than what appears in the first line of Ms Ma's email of 17 August in which she refers to a company called "Platform BMD Investments Pty Limited"? A. Okay I see that, yes. Q. Had you ever heard of that company prior to 17 August 2015? A. By that name, no. Platform yes. Q. My question was whether you'd ever heard of that company or a company by that name prior to that date? A. In that name, no. I don't recall. I may not of but I don't recall ever knowing the name. Earlier I didn't recall the name at all. Q. Had you not heard of that name before, do you agree you would have immediately called Ms Ma and said words to the effect "Who or what is Platform BMD Investments Pty Limited?" Do you agree? A. No I would not have done that. Q. You would not have done that? A. No. Q. Here was a representation being made to Robert and Mark by Bhavani Ma that the updated information contained below had been received from you for Robert Rolands of Platform BMD Investments Pty Ltd? See that? A. I wouldn't have seen it as material to the matter. What mattered was what I'd written down. Q. You wouldn't have seen it as a material matter, is this right? Do you mean by that that even if the information hadn't come from you for Robert Rolands of Platform BMD Investments Pty Ltd, you would not have regarded that as a relevant consideration? Is that your evidence? A. I - the ultimate investor was Henyi. Whether or not they used the company like that or otherwise, but Platform wasn't them anyway. Platform is separate. But this particular entity name, it was in an email. I wouldn't have raised that as an issue at the time. Q. Sorry, you said Platform was separate, this particular name you wouldn't have raised that as an issue at the time, is that your evidence? A. Yes, I wouldn't have raised it at the time. You asked if I would have said something. I wouldn't have said anything about that. Q. When you say Platform was separate, do you mean by that that Platform was separate from any information you were seeking to pass on to Bhavani Ma? Is that what you're saying? A. Yes, this is the offer associated with Henyi's interests. Q. Well, then, when Ms Ma said, "Kym," and provided this information on behalf of someone at Platform BMD Investments Pty Ltd, did you understand that to be false? Didn't come from Platform BMD Investments Pty Ltd at all but someone called Henyi? A. It came from Robert Roland.
Mr Lennox' evidence, so far as it can be understood, was that he considered that he was passing on an offer associated with the Henyi interests; that the ultimate investor was Henyi; and that "Platform" was separate from the Henyi interests. Mr Lennox said that he "sent on this arrangement" to Ms Ma "to convey to dealers it had been discussed to that date, how far it was up to" and that he copied it to Mr Galati at Trading Australia because "[w]e were working together on discussing and progressing the project" (T 349-350).
There was then the following exchange (at T 350): Q. Right. I ask you again whether on your oath you are saying that notwithstanding the reference in the email copied to you at 12.49pm on 17 August to a company Platform BMD Investments Pty Ltd, that might have been a company of which you'd never heard and from whom you have never obtained any information? Is that what you say? A. You're being specific about the company entity. Q. I am. A. Platform I know about. The fact that it's Platform BMD Investments Pty Ltd? I'm not sure if I'd seen it before. Q. Was Robert Rolands a representative of an entity called Platform? A. He was looking to be part of that I think, yes. Q. What leads you to that conclusion? A. Discussions with him at the time. Q. What, you were inviting him to join Platform, were you? A. It was a discussion around whether or not Robert was - what he was going to be doing and what he was negotiating with Henyi as far as I was aware. Q. My question was did you invite him to join you, did you? A. That wouldn't be appropriate framework. I wouldn't have invited anybody. I had my IP, I was protecting it. Q. Did you invite Mr Rolands to join you? It's a simple question. Yes or no. A. No.
Ms Ma, in cross-examination, did not recall what she had understood was meant by Mr Lennox' email of 17 August 2015 when she received it. Ms Ma (seemingly to explain why the email had been sent to her and then sent by her on to the others) explained that she was the point of contact between Mr Lennox, Mr Deans and Mr Fraser (T 285). (That, however, fails to take into account that Ms Ma's own email suggests that she had some knowledge of what the "cleaner simpler offer for consideration" was - particularly since there is no reference to Robert Rolands or Platform BMD Investments in Mr Lennox' email.)
The defendants note that the offer purportedly came from Platform BMD Investments but that (as Mr Lennox in the witness box conceded) no such company existed.
Ms Ma was not prepared to respond to a question as to what her understanding of this was. She said (unresponsively, since the question was as to her understanding not anyone else's understanding) that the cross-examiner would have to ask Mr Lennox about that; although Ms Ma when pressed accepted that she had responded with reference to the "updated information" and accepted that (at that time) she had an understanding as to the event to which it referred. Ms Ma said that she had no recollection of which emails were attached.
Ms Ma then said (at T 286) that Mr Lennox told her that Robert Rolands was an investor that he dealt with; and said that she had "now" heard of Mr Rolands (and "most certainly" did not know that he did not exist). Ms Ma thought that Platform BMD Investments did exist (T 286) and said that she had heard the name "Platform Development". Ms Ma's recollection was that it was a group putting forward an investment proposal to invest funds into the redevelopment project. Ms Ma was adamant that "I'm not part of, and never been part of, Platform Investment Pty Ltd".
Ms Ma agreed that her name and photograph may well have appeared in a brochure bearing the name Platform Development (T 287). Ms Ma's evidence was that it "would have been put together by Kym Lennox as part of that proposal", with her knowledge and "most probably" with her participation (T 287). Ms Ma agreed that the reference to herself in the brochure was a description that she had used in a number of places and those words were written by her.
Ms Ma said that Mr Lennox "would have" told her about the email and that there would have been a conversation but she was unable to say on what date or when or where it took place (adding, to my perception, sarcastically, "[o]r what he had on") and added that it was probably on the telephone (T 288).
Ms Ma resisted the suggestion that she was working "closely" with Mr Deans and Mr Lennox by this stage although she accepted that as at 17 August 2015 she was working with them and that she was contracted to Mr Galati and Trading Australia (and working and invoicing Mr Galati for that work) (T 288-289). (By now, it will be recalled, Ms Ma had issued an invoice to Fishbank that effectively represented the cessation of her role with Mr Deans' team, so to speak - see above.) Ms Ma did not accept that she must have discussed the updated information with Mr Galati before sending that email (and again gave a somewhat argumentative answer as to her understanding of it when pressed at T 289-290). Taken to the Platform Development Information Memorandum (to which I refer below), Ms Ma was somewhat resistant to the question whether she accepted that some of the information and photographs came from the original Destination Blackwattle Bay brochure (T 291-292). Ms Ma said that the bulk of the information contained in it was prepared by Mr Lennox (and said that the diagrams and financial information were prepared by Mr Lennox "and owned by Kym Lennox") (T 292).
For his part, Mr Galati disavowed any knowledge of any of this, including any knowledge of Mr Robert Rolands (although, after an adjournment overnight in the course of his cross-examination, Mr Galati corrected this to say that he had a "Bob Rolans" listed in his telephone and that he had met him twice - see at T 196). In particular, Mr Galati denied that he pretended to Mr Deans that Robert Rolands from BMD Investments Pty Ltd or BDI International was interested in making an offer; and said that he could not remember who "Platform" was and did not know Platform (though accepting that his name and photograph were under the proposal); implausibly Mr Galati said that Mr Deans told him the name "Platform" (T 161).
Taken to the 17 August email and term sheet that was forwarded by Ms Ma, Mr Galati said that he did not open this email from Ms Ma and was adamant that he did not see the email (though how he could be so adamant was not apparent) (T 169-170). Mr Galati nevertheless, grandiosely, asserted at T 170 that he had "110,000 emails not opened in my account".
Mr Galati denied that this was an attempt to get Mr Deans "off the scene" by paying him some money (the figure of around $8 million referred to in the email) and for Mr Galati to be paid $7.5 million and take over the development adding (at T 175) that this was not true and that "I was already on my way after the Abacus". Clearly, Mr Galati placed some weight on the events surrounding the Abacus deal (as he constantly placed the change in his arrangements or relationship with Mr Deans as being from that time). Mr Galati was emphatic that, after the Abacus deal, Trading Australia was there to seek funds but that both he and Mr Deans were free to do their own thing (although he seemed by this to mean that it was open to either of the two whether or not to accept any proposal but that, if one rejected it, then the proposal would not go ahead) (T 178).
At T 175, Mr Galati (implausibly) asserted that he considered Mr Deans his partner but that they were not working together as partners (adding that "I know it sounds strange but that's the truth of the matter").

[40]

"Platform BMD Investments Pty Ltd" - Proposed Commercial Terms - 18 August 2015

By email dated 18 August 2015 at 6.56pm, Ms Ma forwarded to Mr Deans and Mr Fraser (copied both to Mr Galati at Trading Australia and Mr Lennox) an email that Ms Ma had received at 6.46pm from Mr Lennox. Ms Ma's email had the subject header "Platform BMD Investments Pty Ltd Proposed Commercial Terms to FDC & TA" and attached a pdf described as "Proposed Commercial Terms 20150818B". The email stated: Attached are the revised & simplified proposed commercial terms from Platform BMD to FDC & TA for consideration. Mark, thanks for making your Boardroom available for us all to meet tomorrow morning at 9:30am with a view to determining the best way forward regarding an Investor. On hand are: 1. Abacus 2. Cabe 3. Platform BMD
Mr Galati did not remember seeing the 18 August 2015 email from Ms Ma, attaching the "revised and simplified proposal" and commercial terms for Platform BMD; and said that he had never seen this offer before. Mr Galati could not remember a meeting in Mr Fraser's boardroom to discuss the matters referred to in the email (T 172). Mr Galati said he found the meeting discussed in the email hard to believe because Abacus had "gone by then". Pausing here, this was one of a series of emails that Mr Galati said he did not see (and that he would have remembered if he had seen). Mr Galati said that he did try to "bind Abacus back into the agreement again" but he could not remember discussions as to the terms (T 173-174). (Mr Galati was adamant that he had never seen the later Information Memorandum dated 3 June 2016.)
As adverted to above, there is no evidence that there was ever any proprietary limited company registered with the name Platform BMD Investments Pty Ltd. That might perhaps be explicable by an inattention or indifference by persons such as Ms Ma and Mr Lennox to the corporate status of parties involved or proposed to be involved in the project. More curious (and indeed the Deans interests put a more sinister connotation on this) is that commercial terms (indeed what was described elsewhere as an "offer") were here seemingly being proposed to Mr Deans for discussion without any disclosure to Mr Deans that they were being put forward by some "team" apparently comprising at least one of the people (i.e., Mr Lennox) who was at that time supposedly working with Mr Deans (and Mr Galati) in order to find an investor to enable the exercise of the call options and to pursue the development project. I say that because, notwithstanding Mr Lennox' suggestion that the proposal being put forward was by the Henyi interests, there is nothing to suggest that those interests had any involvement with any entity known as "Platform BMD Investments" at that stage (indeed Mr Lennox was adamant that he would not have invited Henyi to join in "Platform") and the only person who now acknowledges some involvement or association with any entity or team known as "Platform" is Mr Lennox.
As far as Mr Lennox is concerned, his evidence (after being taken to the 18 August 2015 email sent by Ms Ma that was copied to him) was as follows (at T 351): Q. You still tell her Honour that you'd never heard of an entity called Platform BMD? A. Well, sorry, you said the company Platform BMD. I think this is potentially mistyped or - I didn't write that there, I'm not sure. I do know of Platform as an entity even today. Q. What is the Platform entity you know today? A. It's, it's a limited partnership. Q. A limited partnership? A. Yes. Q. Yes, between whom? A. Well, eventually - it wasn't then, but eventually it involves myself. That's why I know about it. Q. Yes, and who else? A. Well, there's - for corporate reasons, part of the Tipping Point group is involved, or was. Q. Who else? A. It actually isn't now. And not Bhavani Ma or Dominic or anyone else. I progressed in other ways. At one stage, there was a person called Simon Livingstone that was involved. He's not there anymore. Q. Ms Ma and Mr Galati were involved at some stage, were they? In this limited partnership? A. In Platform? No. Q. They never were? A. No. Q. Is that your sworn evidence, is it? Ms Ma and Mr Galati were never involved in-- A. In the limited partnership. Q. --with you in an organisation called Platform? A. In the limited partnership? They weren't-- Q. What is-- A. They weren't in the limited partnership, no. Q. Were they in any other kind of relationship with you using the name Platform at any time? A. Well, I was wrapping my IP, as you can see, inside the Platform BDMIM(as said) there, and the BDM meaning, the Banks District itself [sic], the Banks Market, or Bays Market District, which was what it was called, and that's what the government was calling it in their master planning and so on, so that's where BMD came from. Platform itself was an entity to contain eventually my IP if things happened. Because someone needed my IP and people realised that it wasn't tied up by anybody else, it wasn't with Trading Australia or with FDC, so how do you make sure it's there? Q. Can I remind you of my question? Were Mr Galati and Ms Ma involved in an organisation with you using the name Platform? A. Platform was an entity handled in the IP, so the answer's no, not as an entity. Dealing is - as a - is a different thing. We were dealing with FDC. Do you mean was there a discussion around Platform doing - involving its IP? Yes.
Ms Ma (after some resistance during the line of questioning in relation to this issue) agreed that after November 2015 she regarded herself as part of a team named "Platform" that proceeded to pursue development applications in respect of the Blackwattle Bay area (T 293). However, Ms Ma was unable to recall what happened in relation to that proposal or why it did not proceed (see T 290- 291). Ms Ma's role, she said, was to co-ordinate information between Mr Galati and Mr Lennox (see T 294) (the "mailbox role" to which I have referred above). Ms Ma said she did not go out seeking funds and that she spent most of her time in the office.
Despite the unhelpful (and, on Mr Lennox' part, quite confused) state of recollection of the witnesses as to who or what comprised "Platform BMD Investments" and its legal status, what is apparent from the 18 August 2015 email is that a proposal was being put forward, ostensibly by "Platform BMD Investments" (that purportedly being a corporate entity), as early as August 2015 for discussion by those involved with the Deans and Galati interests (and, relevantly, for discussion in the context of other proposals or offers then apparently also open for consideration - the Abacus and Cabe proposals; although Mr Galati considered the former unlikely from a timing point of view).
Mr Lennox seems to have considered "Platform" to be a description of whomever he decided should be involved from time to time in his "limited partnership" or team (see from T 351-352 extracted above). Ms Ma does not accept that she was part of "Platform" until after November 2015 (whereas Mr Lennox says that Ms Ma and Mr Galati were never part of the limited partnership); and Mr Galati denied any knowledge of it.
Insofar as Mr Lennox' explanation made any sense (and from time it was difficult to discern what in fact he understood to have been involved from a corporate or partnership sense - see at T 352-353), and given the lack of any ASIC record of its existence, it would appear that there was no such entity as Platform BMD Investments. Additionally, it appears that the reference in the "Platform" documents to a director is, intentionally or otherwise, misleading insofar as it suggests that there was a corporate entity. What was intended (at least on Mr Lennox' part) was that there was to be some form of informal arrangement of people putting forward what Mr Lennox regarded as his very valuable IP (though even that explanation is not consistent with Mr Lennox saying that he was not "then", though he is now, part of "Platform").
In any event, what is abundantly clear is that it was not made clear to Mr Deans that what was being put forward as the "Platform BMD Investment Pty Proposed Commercial Terms" did not emanate from some third party corporate or other entity interested in investing in the project but was being put forward by some ill-defined and loosely associated (and seemingly susceptible to change at the whim of Mr Lennox or whoever was the undisclosed "Development Manager") team of people, including one or more of the very people with whom Mr Deans had been working with for some time but who (having regard to the Information Memorandum which omitted any reference to Mr Deans at all) were now putting forward a proposal effectively independent of Mr Deans and his company, Fishbank.
As to the Platform BMD Investment Group proposal, Mr Deans said that Mr Galati told him that he had found the Platform BMD Investment Group (T 463).

[41]

Draft Release Agreement - 22 August 2015

By email sent at 5.48pm on 22 August 2015, Ms Ma sent to Mr Deans and Mr Fraser, copied to Mr Galati and Mr Lennox, a draft "Release Agreement" between Fishbank (as trustee for the FDC Unit Trust), Mr Deans, Trading Australia, Fraser Clancy Lawyers, Heartland Productions (Ms Ma's company), The Tipping Point Institute (Mr Lennox' company) and Platform BMD Investments (apparently there anticipated to be a reference to a corporate entity since it included space for insertion of an ACN; and defined as "Platform").
The background section of the draft agreement recited, inter alia, that "Platform or its nominee has entered, or intends to enter" the Dahua Contract for Sale and the Felan's Share Sale Deed; and wished "to development [sic] the Land"; and had accepted that the other parties to the agreement "have rights in respect of the Land and Shares" and had agreed to compensate each to gain a release of those rights. The precise nature of those rights was not identified, although there was reference in draft cl 9 to copyright in "any documentation prepared by contractors or consultants of the Rights Holders in relation to the Land".
There seems to have been no provision made in the document for execution by Platform BMD Investments notwithstanding that it is included as a named party to the agreement.
The email included the statement that: Kym has sent the Platform proposed agreement as it is so far … he advises the terms are a little different from before. There is no offer of equity but the amounts are improved - the consideration for FDC can be $8.5M + $1M liabilities + $1.25M for Fraser/Heartland/TTPI making a total of $10.75M plus GST where applicable. Also, there is also no mention of an offer to Deans Property regarding being an agent. It is not withdrawn, but it isn't going to be part of this agreement, it will have to occur separately. Dominic has advised me the terms have been finalised & the formal legal agreement will be offered to FDC on Monday.
This email belies the assertion by Mr Galati that he had no knowledge of the Platform BMD Investments' proposal. However, Mr Galati did not accept that the statement by Ms Ma in this email (that "Dominic has advised me the terms have been finalised & formal legal agreement are being offered to FDC on Monday") was true (T 175). Mr Galati was adamant that he was not involved in any "Platform" arrangements as stated in that email.

[43]

Cabe offer - November 2015

In early November 2015, Fishbank received an offer from Cabe and Mr Ross Pelligra to purchase the Bidvest Land and Felan's Fisheries shares. Mr Galati accepted that the offer made by Mr Pelligra on behalf of Cabe was a proper form of offer. Mr Deans signed the term sheet and sent it to Mr Daly at Acumen, through whom the offer had been obtained (and with whom Mr Deans says that Mr Galati had previously entered into his own commission-sharing agreement). On 10 November 2015, Mr Daly of Acumen signed the same term sheet (for his company as Lead Arranger) and returned it to Mr Deans. Mr Deans sent it to Mr Galati for signature. Mr Galati refused to proceed, informing Mr Deans on 15 November 2015 that he would not do a deal with Mr Daly and that he had another offeror. The defendants say (and it appears from the evidence to be the case) that, as at that date (15 November 2015), Mr Galati did not have another offeror.
Mr Galati disagreed that he was aware of the offer before he signed the Nomination Agreement with EJC (on 20 November 2015) although he agreed that he was told that Cabe was interested. Mr Galati denied that he was made aware of the offer terms (which is difficult to reconcile with the term sheet having been sent to him for signature). Mr Galati agreed that on one occasion in 2015 in conversation with Mr Deans he said that he would not proceed with Cabe because Cabe was associated with Mr Daly of Acumen (T 156). Mr Galati denied that there was a falling out or disagreement with Mr Daly; rather, he said cryptically that he did not approve of what Mr Daly was doing at his premises (T 157).
Mr Galati said that he had had a discussion with Mr Pelligra, representing Cabe, the week before he met with Mr Vassallo. Mr Galati said that Mr Pelligra told him he had a partner who was in scaffolding. Mr Galati said that he determined (it is not clear how) that Cabe did not have enough money to proceed with the investment (T 158); and added his opinion that a term sheet was not a formal offer (T 159). Earlier, Mr Galati had denied that Mr Deans told him at the time that he had a better deal (than the EJC deal - see below) - and said that Mr Deans said that later) (T 135).
The significance of the proposed investment by Cabe is that the cross-claimants rely on the Galati interests' refusal to progress this proposal as conduct that amounted to breach of the October 2014 Equity Funding Agreement and breaches of fiduciary duty (see the fourth amended statement of cross-claim at [101], [108]). It is alleged, in effect, that Mr Galati unreasonably refused to progress this proposed investment (which it is said included immediate funds) and the 50% joint venture arrangement in the proposed development because of Mr Daly's involvement.

[44]

12 November 2015 Email

Meanwhile, by email sent 12 November 2015 to a Ms Annie Luu, Mr Lennox forwarded material "as requested from Dominic" that morning. The material included models showing projected profit and other calculations prepared by Mr Lennox on Tipping Point paper and a "Key Output pdf BMD IM" (Bays Market District Information Memorandum" (the October 2015 Platform Information Memorandum).
The October 2015 Information Memorandum was branded with the name "Platform" (and bore a © copyright Platform 2015 footer) but appears to have been little more than a rebadged copy of the material forwarded as part of the Unsolicited Proposal material.
The information under the "Important Notice" included the date 22 October 2015 and was described as relating to the potential offer of interest in Platform's proposed Bays Market District development". It included the statement that neither "Platform nor any of its directors or associates guarantee …" (there suggesting that Platform was a corporate entity).
On 13 November 2015, Mr Lennox emailed two others (presumably potential investors) with the same Information Memorandum and "feasibility output" for the Bidvest Land and also for the "proposed whole of bay development". (The same Information Memorandum, as well as feasibility "key output" calculations, was subsequently forwarded to Ms Pritchard on 17 November 2015.)
Mr Lennox was vague as to his recollection of the "specifics" of the 12 November 2015 email (T 353) but spoke of "the limited partnership" and thought "it might be called Platform Developments now" (T 355) (see below).
Taken to the documents attached to the email to Ms Luu, Mr Lennox accepted that these included a set of calculations developed by himself and his colleagues at Tipping Point (the note to the document that records that "[t]he estimates, assumptions and other information have been developed by TPG"), including projections of project cash flow. Also attached was a "Bays Market District Information Memorandum" headed "Platform", and bearing a © symbol with the statement "Platform 2015, all rights reserved". Mr Lennox said that it was the "limited partnership" called Platform that had copyright in this document in 2015. There was then the following exchange (see from T 355-356): Q. What entity? A. Platform. I think it might be called Platform Developments now. Q. You describe this as a limited partnership, by which you mean what? A. It's registered as a limited partnership in New South Wales under the partnership law or whichever way that gets done. Q. When was it registered? A. I think its initial dealings were back in 2014 but I'm not sure. Q. The proprietors of that name were whom? A. By this stage, I was a party, I was a stakeholder. Q. The proprietors of the name Platform A. Were Tipping Point.
Mr Lennox was then taken to the statement in the Information Memorandum dated 22 October 2015 that (on an ordinary reading) would convey the impression that Platform was a company (to the effect that neither "Platform nor any of its directors or associates guarantee the performance or success of the development"). Asked about that, there was the following evidence (T 356): Q. Who were the directors of Platform? A. Well, typically it doesn't have directors in a Corporations Act sense, it has‑‑ Q. In any sense, did it? A. Well, it has a general partner which directs the organisation. Q. Is that what you intended to convey when you used the expression, "Platform nor any of its directors"? A. Well, this is boilerplate in, in, you know, important notices material, it's in any sort of normal information memorandum so it's the standard clause in dozens of these documents. So when it means directors, it means the players or people or entities that are providing direction, that's all it means, as opposed to associates being not directing it and‑‑ Q. You sent to prospective investors an information memorandum referring to directors of Platform, is this your evidence, when you knew there was no directors of Platform? A. The, the - well, this isn't, this isn't a defined term or proper noun, it says "directors". It - Platform has a general partner, it's a company, it has directors, so that still associates to Platform, but that's not the common parlance in information memorandums, what "directors" mean.
Mr Lennox did not recall if he or Tipping Point had registered the name Platform (or some variant) as a business name and said: Q. So in effect Platform was you, is that right? A. It was - I was getting involved in leading it, yes. Q. Not only that. If it had no directors but you were in truth referring to the directors of Tipping Point, that was you, correct? A. I'm not sure if I was the only director at the time but‑‑
Mr Lennox confirmed that Mr Galati and Ms Ma were not directors, and nor was Mr Deans, and then accepted that "for the purposes of this dealing" to all intents and purposes, "Tipping Point" was him (T 357). Mr Lennox seemingly accepted that there was no reference in this material to him acting on behalf of an organisation or group that included Fishbank; but later somewhat argumentatively added that "there's no reference to any of the stakeholders, there's no reference to Trading Australia either". Mr Lennox said that there were different "generations" of this document over time and that, based on the numbering, the one sent to Ms Luu was probably "generation 8 of that cycle" (T 357).
Mr Lennox resisted the suggestion that the Information Memorandum was sent to potential investors to induce them to invest in the project saying that "it was attempting to share the opportunity with them and get them to be a partner" and went on (somewhat incredibly given the lack of transparency as to the identity of Platform itself) to give the following evidence (T 357-358): A. These are - they're investment memorandums, they're entire - they're intended to be transparent to provide them with the ability to have their own due diligence, so you're not really inducing someone, you're simply showing. Q. The very purpose you went to see these investors was to try and talk them into investing in the project, wasn't it? A. To show them they should be there. Q. When you went to see investors, in addition to sending emails to them, were you providing them with financial projections and the information memorandum of the kind that are contained in the volume that I've put in front of you? A. This was a - this is a sample at that point in time. They looked often quite different at different times, and previously and subsequently, they weren't always framed this way.
Mr Lennox did not recall when the information memoranda started to include reference to "the team" and did not recall bringing Ms Ma on board to join the team promoting this project on documents prepared by him for Tipping Point. When asked about Mr Galati he then said (T 358): A. I was part of their team, not so much them with me. I'm not sure if I understand what you're saying, I'm inviting them to be a member of my team.
Mr Lennox was at pains to disavow that it was his team, referring to it as "the team". Mr Lennox denied that he, Ms Ma and Mr Galati were seeking to market the project to future investors without the involvement of Mr Deans (T 359).
Taken again to the status of Platform, there was the following (T 359): Q. You know, don't you, that there never was such a company as Platform BMD Investments Pty Ltd. A. I, I know - I only know of Platform Developments' limited partnership, I don't know of that entity, that's true.
Confronted with the difficulty that the Information Memorandum was promoting one of two possible outcomes (an investment in the development as a whole or an investment in the Bidvest Land) but that "Platform" or Tipping Point had no right which it could exercise or convey to anybody in respect of either the Bidvest Land or the development as a whole, Mr Lennox said (T 359-360): A. These are representing the figures of something and the intellectual property behind the development of the site. The - in that respect, the, the documents are transparent- … A. You're saying, you're saying something about whether or not we had any rights to it. The IP of how to develop the site was held by Tipping Point. That's what it's representing. Q. Would you be kind enough to address yourself to what I asked you. You knew at the time that Platform or Tipping Point had no rights to acquire any part of either the redevelopment as a whole or the Bidvest site, is that correct? A. In respect of land acquisition, yes, it had no rights. Q. Or in respect of development it had no rights? A. Yes. Q. The only rights of which you were aware were those that had accrued to either Dahua through its purchase of the site, or to Trading Australia and FDC by reason of the call options that they'd executed, correct? A. Well, there's also that held by the Sydney Fish Market itself. Q. Yes. The Sydney Fish Market itself had no interest in the Bidvest land, did it? A. No, it didn't. Q. No. My question was, you knew that the rights to be exercised if, first of all, the Bidvest land were to be sold or developed, did not reside in Tipping Point or Platform, that's correct, isn't it? A. That's correct. Q. Yes and the same for the other sites surrounding the Bidvest land the development of which you were hoping to promote, correct? A. Yes. Q. Relevantly they were held, so far as the people that you had been previously undertaking work for, to the extent they existed by FDC and Trading Australia, correct? A. Well, I was also dealing with other sites around the bay and had been a stakeholder there since 2008. … Q. No, neither Platform - whatever that was - or Tipping Point had any rights to develop either the Bidvest site or the surrounding sites the subject of your information memorandum; that's first, you already accepted that. A. No, there was - I was also dealing with B1 and B2 and there were rights that existed there that were being dealt with. So that's why I'm saying that insofar as the Bidvest site is concerned and the - what you're saying is true.
Mr Lennox denied that Platform was a concept with Mr Galati and Ms Ma (T 366). Mr Lennox said that at that time he was using it to represent the "interests identified" (T 365) but that Platform was always "just me" (T 366).
All of this leads me to conclude that there was no concrete proposal being put forward (or capable of being put forward) at all in relation to the Platform proposal. Mr Lennox seems to have had no idea of what any such structure would involve; had no real concept of what was being offered (other than the IP that he was so anxious to protect); and Platform (if it comprised only Mr Lennox or his company) had no rights (other than perhaps his so-called IP) that he was in a position to convey to any investor. If Mr Lennox' evidence is to be believed (and much of it made little sense), then Mr Galati (and for that matter Ms Ma) had no formal role in "Platform" (the limited partnership) (although they featured in the various iterations of the Platform Information Memorandum) and (which the Deans interests do not dispute) Mr Lennox did not attempt to involve Mr Deans in it.
How it was thought that "Platform" was in a position to offer participation in the project to investors (unless it was proposed that there be an assignment of IP, which Mr Lennox seemed adamant he would wish to protect) is unclear to say the least. More relevantly, for present purposes, it beggars belief that Mr Galati, who was copied into this material (and who was referred to in Ms Ma's email communication as having finalised the terms of the proposal - see above) would not have queried how it was that this unknown entity was in a position to offer participation in the project to potential investors if he had not indeed been involved in the preparation of the proposed terms that were there being put forward.

[46]

Proposal for auction of Bidvest Land - proceedings for injunction - 17 November 2015

Against the background of the looming deadline for exercise of the Call Options, Mr Deans apparently formed the view that there should be an auction of the Bidvest Land. Mr Galati disagreed with that course.
On 17 November 2015, Mr Deans instructed Mr Fraser, on behalf of Fishbank, to commence proceedings in the Equity Division against Trading Australia and Mr Galati seeking urgent relief to allow the proposed auction to proceed.
A summons was filed on 17 November 2015, with Mr Fraser as the solicitor on the record for the plaintiff, seeking by way of final relief an order pursuant to s 66G of the Conveyancing Act for the appointment of a trustee for sale of the right to be nominated as purchaser pursuant to the option agreement dated 15 September 2015 between Dahua No 1, Fishbank and Trading Australia (referred to as the Land Option Rights) in order to sell the Land Option Rights on such terms as such trustee for sale may think fit (and in the alternative, relief including the appointment of a receiver of the Land Option Rights). An order was also sought that Trading Australia execute all documents and perform all acts necessary or incidental to the valid and binding exercise of the Call Option in relation to the Felan's Fisheries shares (the Share Option Rights).
Mr Deans said that the point of the court proceeding was to force Mr Galati's hand with the understanding that disagreements about the interest to which he would be entitled would be resolved after the auction. Mr Deans said that it was his understanding that there were disputes about what Ms Ma and Mr Lennox ("and all the people putting their hand out") were disputing and he says that he said words to the effect "let's forget all that and concentrate on getting the property sold and we'll sort that out later" (T 465).
Mr Deans disagreed that he was not satisfied that either had found a suitable purchaser or investor but says that he did want to put it to auction "to force the situation" (T 463). Mr Deans accepted that he thought he needed Mr Galati's agreement to go to auction. Mr Deans says Mr Galati disagreed and he accepts that he instructed Mr Fraser ("because he was my solicitor") to commence the court proceedings about the auction. Mr Deans did not agree that the auction was a failure because an auction is a process - "a real estate process of bringing urgency" (T 464). Mr Deans considered that there were plenty of reasons to have an auction without having bids because it brought urgency to the sale process and he thought on that basis that the auction succeeded (T 465).
Those proceedings were resolved by agreement between the parties and Mr Galati consented to the auction proceeding. No bids were received at the auction (but in cross-examination Mr Deans was adamant that this did not mean that the auction was a failure, emphasising the importance of an auction in creating a sense of urgency). (In passing, I note that there is a body of academic writing on the analysis of the auction process in certain contexts but there was no reference to this in the present case and it is not necessary to divert into a debate as to this in the present context.)

[47]

Celestino/EJC involvement - 17 November 2015

In November 2015, Mr Galati identified Celestino (which was introduced to him through Ms Pritchard of Wealth Shift) as a potential investor and buyer. I set out below the details of the negotiations in that regard.
On 17 November 2015, Ms Pritchard (as noted above, the sole director and secretary of Wealth Shift, a company which provides business brokerage and real estate services) had a meeting with Mr Galati in relation to a different investment opportunity (referred to as the Marsden Park Dairy transaction) at the conclusion of which (responding to a query from Ms Pritchard as to a bundle of documents in his possession) Mr Galati told Ms Pritchard of the opportunity in relation to the Bidvest Land.
Ms Pritchard's evidence is that another real estate agent and acquaintance (Mr Steven Kremisis, who as noted above was one of the persons identified in the Agreement Principles document as someone for whom Mr Galati would be responsible for bonuses and who was subsequently paid moneys out of the alleged $1,799,820.95 secret commission) had referred Mr Galati to her for an unrelated investment opportunity (the Marsden Park Dairy transaction). Mr Galati agreed that, on 17 November 2015, at the conclusion of the meeting at her home about that other investment opportunity, Mr Galati indicated that he was one of the director of SFM, that "there's an option that expires on Friday 20 November 2015" and enquired whether she knew of anyone who may be interested (T 244).
Ms Pritchard says that she then made a series of enquiries with potential investors, including of Mr John Vassallo (the CEO of Celestino and, in due course, EJC). On 17 November 2015, Ms Pritchard sent to Mr Vassallo an email attaching a brochure (the Platform Information Memorandum bearing the 22 October 2015 date). Mr Vassallo sought a meeting at 12.30pm at his office the following day (18 November 2015). Ms Pritchard arranged the introduction of Mr Vassallo to Mr Galati at that meeting.

[48]

Meeting with Mr Vassallo - 18 November 2015

On 18 November 2020, Mr Galati and Ms Pritchard met Mr Vassallo at Mr Vassallo's office. Mr Lennox also attended that meeting. Mr Vassallo recalled attending that meeting (T 529). Mr Vassallo's evidence was that the following afternoon he offered $24 million for the property (emphasising that this was "not for the shares, just for the property") (T 530). Mr Vassallo thought that in his discussions with Mr Galati, Mr Galati was playing the "good cop/bad cop" routine, with Mr Deans as the bad cop (see T 530 and his affidavit sworn 4 April 2019 at [54]).
The upshot of that meeting, according to Ms Pritchard, is that Mr Galati agreed to accept the sum of $24 million for the Bidvest Land and that Mr Vassallo agreed to that price. Ms Pritchard's evidence is to the effect that Mr Vassallo offered $24 million and that Mr Galati said "OK". (Mr Vassallo, as noted above, deposes that he offered $24 million but places this as occurring on the following day.) Mr Galati deposed to a discussion in which Mr Vassallo enquired why Celestino would pay $28 million when the property was at auction for $21 million; and that the best deal he could negotiate was for the purchase of the land for $21,555,818.98, purchase of the shares for $535,785.50 (with the shares being transferred to Trading Australia and Fishbank), a $250,000 fighting fund to commence legal proceedings against Felan's Fisheries and Trading Australia and Fishbank receiving an entitlement to 10% of the profit if the Bidvest Land was redeveloped (his affidavit affirmed 12 March 2019 at [169]-[170], see also T 246-247 where he described the deal as "22 million plus the expenses of around another 2 million"). Relevantly, on none of the initial accounts of this meeting is it suggested that the agreed purchase price was to be less than $24 million.
Mr Galati's evidence is that, at that meeting, Mr Galati said to Mr Vassallo "You will look after Caroline?" and that Mr Vassallo said "Absolutely" (T 246, see also T 188-189). For Ms Pritchard, it is emphasised that this indicates that it was understood by the parties that Ms Pritchard was the "buyer's agent" (although from later communications it is not apparent that Ms Pritchard necessarily understood the import of this, since at one point she asked EJC's solicitor why she was not named on the contract for sale as the agent). To my mind nothing turns on Ms Pritchard's position as the "buyer's agent" on the sale (although it was emphasised more than once in the submissions of the eighth and ninth cross-defendants). It simply meant that Ms Pritchard's commission was to be paid by the purchaser (EJC) (i.e., not by the vendor of the option rights or ultimately of the property). The complaint here is not (or at least is not now) about the commission paid to Ms Pritchard or her company for her or its services; rather, the complaint is as to the amount (quite unrelated to Ms Pritchard's commission) that was paid to Wealth Shift and then on-paid to Trading Australia (the $1,799,820.95 alleged secret commission - see below).

[49]

Meeting with Mr Vassallo - 19 November 2015

Following the meeting on 18 November 2015, on about 19 November 2015, there was (according to Mr Vassallo) a further discussion as to the terms for the exercise of the respective call options.
Mr Vassallo deposes (at [60] of his affidavit sworn 4 April 2019) that Mr Galati advised him that "[t]here's going to be a difference between the payments under the Nomination Agreement and the $24 million. Please pay the difference to Caroline once the matter has settled and we will direct her to pay it as required. There's a team of consultants and lawyers we need to pay". (This is referred to by various of the witnesses as the "shortfall" but that seems to me to be euphemistic - the more accurate description of the so-called "shortfall" is that this is the difference between the amount that Mr Vassallo had agreed with Mr Galati to pay for the property, namely $24 million, and the amount actually payable to Dahua No 1 for the property under the contract for sale to be executed on exercise of the Land Option Agreement.)
In cross-examination, Mr Vassallo says that he agreed to this arrangement; and that he assumed Mr Deans was aware of this and that there was no conflict. Mr Vassallo said more than once in cross-examination that he assumed or understood that Mr Galati was the representative of the option-holders (i.e., both Trading Australia and Fishbank).
In cross-examination by Ms Pritchard's Counsel, Mr Galati disagreed that he had said what was attributed to him by Mr Vassallo in the latter's affidavit at [60] (T 239). Nevertheless, Mr Galati did accept in cross-examination that he had a "side agreement" with Mr Vassallo about consultants' costs, saying that this was "entirely private"; that Mr Deans did not know about it; and that he (Mr Galati) did not tell Ms Pritchard anything about it (T 240). As I understand his evidence, Mr Galati accepts that any conversation with Mr Vassallo as to the terms of this "side agreement" or arrangement was one that took place prior to 20 November 2015. Mr Galati confirmed in cross-examination that there was no agreement with Dahua Group for it to be invoiced for consulting costs (T 239) and that he never communicated anything to Dahua Group as to potential costs (T 240).
At T 241, Mr Galati said that he told Mr Vassallo prior to 20 November 2015 that there would be costs for consultants and lawyers (putting this conversation as occurring sometime between 18 and 20 November 2015). Mr Galati agreed in cross-examination that what he told Mr Vassallo was that there would be costs up to the transaction on 20 November 2015; not that there would be costs "going forward" in relation to the development (T 242) (this being of some relevance since at least some of the moneys later disbursed out of the so-called "shortfall" amount were paid for costs going forward not past costs - see below).
Pressed on this issue, at T 247, Mr Galati said that all he remembered was that at a meeting at the The Westin Hotel (the Westin) the "final price" was given to him; and that Mr Vassallo agreed to pay $22 million plus expenses of around $2 million. It is not clear when Mr Galati says this was (the only references in the documents to a meeting at the Westin were the occasion of the celebratory drink after the Nomination Agreement was executed on 20 November 2015 and a meeting scheduled for the following week, which Mr Galati was not sure he had even attended). The reference to a meeting at the Westin may be to the meeting that seems to have taken place there after the 20 November 2015 transaction (on about 4 December 2015 - see below) and, if so, this might explain what Mr Galati was referring to as the "final price" but this is not clear.
In any event, the evidence as to the side agreement being part of the purchase price arrangement is not consistent with the evidence of both Ms Pritchard and Mr Vassallo that what Mr Vassallo initially agreed to pay was $24 million. Moreover, if the agreement had been that Mr Vassallo would pay the sum of $22 million plus an amount (payable to Trading Australia) to meet project expenses, then there is no obvious reason why that would not have been communicated to Mr Deans and documented (and in due course invoiced) in that way.
There was some cross-examination directed to the question as to whether Mr Galati would have known what the costs of the consultants were as at the time of this alleged side agreement. Mr Galati, in cross-examination, said that he knew, by 19 November 2015, the total costs for lawyers and consultants and confirmed that he had asked Mr Lennox for a breakdown of the costs. However, Mr Galati then added that Mr Lennox did not him the figure in writing (see at T 247-248). It is not clear from any contemporaneous document that Mr Galati asked for such a breakdown of costs prior to the discussion with Mr Vassallo as to the consultants' costs (and hence, it is not clear that he had a firm idea of the amount of any such costs as at the time of the conversation about the so-called "shortfall" - whether that be before or on 20 November 2015). I treat Mr Galati's evidence in this regard as mere assertion.
Moreover, in circumstances where the amounts that Mr Galati caused later to be paid out of the $1,799,820.95 received under this "side agreement" included amounts seemingly plucked out of the air by Mr Galati (see below) as well as amounts that had nothing to do with the project expenses at all, it is impossible to resist the conclusion that any suggestion that the arrangement was legitimately an arrangement for the payment of $22 million plus consultants' expenses is nonsense.
Mr Galati denied in cross-examination that 20 November 2015 was the first day that he had a conversation with Mr Vassallo as to the costs of lawyers and consultants (T 248) and he denied that he had a telephone conversation at about 9am or 9.30am that morning with Mr Vassallo about those costs.
Mr Galati accepted that the "shortfall" arrangement was a side agreement between him and Mr Vassallo. His position (as adverted to above) was that the side agreement was a private matter; and that it did not concern Mr Deans (and he did not need to tell Mr Deans about it) because of the alleged "dictate the terms" agreement with Mr Deans that whoever found the funder was entitled to a commission and to direct any money received as he desired.
At T 118, Mr Galati accepted that he did not identify to anyone at the time of the transaction that the money ("shortfall" referred to above) was referable to the $1.5 million success fee he says he was owed; he accepted that in his head "maybe" he attributed the payment to the success fee; and he says that he said to Mr Vassallo that Mr Deans owed him money but he did not say the exact amount (T 118).
To my mind, Mr Galati's impassioned evidence in cross-examination as to how much he was owed in relation to the project is telling - the so-called "side agreement" was obviously Mr Galati's way of recouping amounts he considered that he and others were owed; and that Mr Galati was doing so without Mr Deans' knowledge because he thought Mr Deans would not agree to this.
Pressed as to what he had said to Mr Vassallo, Mr Galati said that he said to Mr Vassallo that $22 million was not sufficient because he needed to pay expenses that Mr Deans owed and he needed to get some of the money owed to him (T 119). Mr Galati accepted that he did not say in his affidavits that the amount was in any way connected to the $1.5 million success fee (saying in cross-examination that "[m]y arrangement with Robert had completely changed by that time" (T 119)). Mr Galati agreed that he said to Mr Deans that the $22 million deal was the best deal he could negotiate with Mr Vassallo (T 133; see also Mr Galati's affidavit affirmed 12 March 2019 at [170]); and then he said that that was not the actual deal and that there were other discussions in relation to the payment of debts.
Insofar as Mr Galati's position was that the $1.5 million was an earlier agreement that was not current when the Bidvest Land was sold and that there was a different agreement in place at that point (T 120), this seems to suggest that the $1.5 million success fee was something that Mr Galati had foregone (if it ever existed) or else thought he could keep "up his sleeve" to press for if and when the whole development went through. While Mr Galati denied that this was a secret deal, insisting instead that it was a "separate deal" (though it was part of the deal negotiated with Celestino), there is no dispute that he did not tell Mr Deans about it (he said that he did not need to tell Mr Deans as Mr Deans was not his partner "for that transaction") (T 183-184). (The difficulty with this justification is that, insofar as Mr Galati seeks to justify what he did by the assertion that he paid Fishbank's debts of the project, then he can hardly be heard to say that it was a "separate deal" or that Mr Deans was not his partner for some separate part of the overall project; and once it is accepted that it was part of the deal negotiated with Celestino, then that gives rise to the problem that this was a part of the deal deliberately kept secret from Mr Deans - which I consider in due course.)
For Ms Pritchard, it is emphasised that she was not made aware of this conversation between Mr Galati and Mr Vassallo about the "shortfall"; and that Mr Galati never mentioned the direction for payment of consultants and lawyers to Ms Pritchard. That does not appear to be disputed.

[52]

Meeting between Mr Deans, Mr Galati and Mr Vassallo - 20 November 2015

Ultimately, in the course of a lengthy meeting (that took most of the day on 20 November 2015) attended by both Mr Deans and Mr Galati (in which Ms Pritchard did not participate - she sitting in the reception area while the meeting took place in a conference room or boardroom), it was agreed with Mr Vassallo (shortly prior to expiry of the options on 20 November 2015), that EJC would acquire the Bidvest Land (and pay the acquisition price for both the land and the shares) but that the shares in Felan's Fisheries would be acquired by a nominee of Trading Australia and Fishbank (that being TRHS - though it does not appear there was anything formally nominating TRHS).
Mr Galati contends that it can be drawn from what transpired that the shares in Felan's Fisheries were to be beneficially held for the benefit of the Deans interests and the Galati interests, as the fruit of their joint efforts over the past year or more, and consistent with their conduct during that time. I consider this argument in due course.
Ms Pritchard's evidence is that Mr Galati called Ms Pritchard to attend the office of Mr Fraser of Fraser Clancy Lawyers on 20 November 2015; and that no details were provided to Ms Pritchard of the meeting or why her presence was required at the meeting. Ms Galati's evidence is that, at Mr Fraser's office, Mr Galati introduced Ms Pritchard to Mr Deans as "the buyer's agent for Celestino"; that Mr Deans acknowledged Ms Pritchard and said "hello"; and that Mr Deans then asked Mr Galati to follow him. Mr Galati said that Ms Pritchard remained in the reception area; and that she was not part of the meeting between Mr Deans, Mr Galati and Mr Fraser, which ran for several hours (T 249).
In his affidavit affirmed 12 March 2019, Mr Galati deposed that he told Mr Deans that "Caroline acts on behalf of the Celestino Group…" (at [181]), and that he said "their representative is outside here to authorise the deal…" (at [175]). Ms Pritchard emphasises that she did not have authority to authorise the deal.
Mr Deans recalls Mr Galati and Ms Pritchard being at Mr Fraser's office on 20 November 2015 but was not aware that Ms Pritchard was a real estate agent or that Ms Pritchard was entitled to commission in respect of the transaction contemplated by the Nomination Agreement (see the reference to his affidavit evidence in this regard at T 614-615). In cross-examination by Ms Pritchard's Counsel, Mr Deans did not recall a "buyer's agent" introduction but he confirmed that Ms Pritchard was not in any meeting with him; and that he had had no dealings with her and no conversations or agreements with her in 2016.
By 4.00 pm on 20 November 2015, Mr Galati, Mr Deans and Mr Vassallo had executed various agreements, including the Nomination Agreement. Ms Pritchard emphasises that she was not privy to any of the agreements, including the Nomination Agreement. Ms Pritchard and Mr Vassallo then met at the Westin and had a celebration drink.
Mr Galati was adamant that he had reached an oral agreement with Mr Deans on 20 November 2015 in relation to the shares. At T 154, Mr Galati said that he, Mr Deans and Mr Fraser agreed that two directors were required for the constitution of Felan's Fisheries and each nominated one; the purpose being to maintain a position where the company could influence SFM.
Mr Deans accepted that it was agreed that each could have one member on the Board of Felan's Fisheries (Mr Pho and Mr Turner, respectively) but denied that it was because he knew that Mr Galati was his partner in relation to the Felan's Fisheries shares (see T 468) and denied that he was bound to give Mr Galati half of the Felan's Fisheries shares.
Pausing here, the crux of the issue is that Mr Deans clearly thought that it was "his" project and that he was able to make the decisions (and see the April 2015 Agreement Principles document in this regard); whereas Mr Galati says that he did a lot of work and was entitled to participate in the project. The issue seems to have come to a head when Mr Galati appears to have moved to exclude Mr Deans altogether from the project and take it over as his own.
Mr Deans denied that the options led to shares in Felan's Fisheries; rather, he said that the options led to the project moving forward. Mr Deans said that it was never discussed with him that Mr Galati would have ownership of the Felan's Fisheries shares, or rather, that Fishbank and Trading Australia woud both have ownership (T 467). Mr Deans was adamant in cross-examination that Fishbank was "the project" and that these shares were (along with the other assets associated with the project, the IP and "all the rest of it") part of the project in respect of which he said Mr Galati "had some options" which gave him the ability to stop Mr Deans from proceeding with the "project people" with whom Mr Deans wanted to proceed (clearly there referring to Abacus - see below) (T 467).
At T 469, Mr Deans agreed that Mr Galati had introduced the Celestino group and that he (Mr Deans) agreed to the deal; and Mr Deans agreed that there would be a 10% share in the development. Mr Deans said that there was definitely the hope of the project going forward and there was also the incentive that if development of the Bidvest Land had occurred then there was the 10% profit share (T 470). Mr Deans said that there was some thought given to who would be the legal owner of Felan's Fisheries but then agreed that there was a discussion about shares (T 470). (Again Mr Deans' understanding of the contractual arrangements was not particularly reliable.)

[53]

Nomination Agreement - 20 November 2015

The document executed on 20 November 2015 was a deed entitled "Nomination Agreement" (prepared by Fraser Clancy Lawyers). It was signed by Fishbank and Trading Australia (as Grantee) and by EJC (as Property Purchaser) and another related entity (E.J.Cooper & Son Pty Ltd) as Guarantor.
The Nomination Agreement recited that the Grantee was the grantee of a Call Option to purchase the Property (the Bidvest Land) and that the Grantee had agreed to nominate EJC to exercise the Call Option in place of the Grantee on the terms and conditions of the Deed.
The Nomination Agreement also made reference to the Share Option Deed dated 24 September 2015 (under which the option for the Grantee or the Grantee's nominee to purchase all of the shares in Felan's Fisheries was granted to the Grantee (named as Fishbank and Trading Australia).
The Nomination Agreement (which Ms Pritchard emphasises she did not see) recorded that the contract for the sale of land which would come into existence upon the exercise of the Property Option (i.e., for the Bidvest Land) provided for a purchase price of $21,555,818.98 excluding GST, with a deposit of $2,095,768.83.
The Nomination Agreement contained an acknowledgement by EJC that, in order validly to exercise the Property Option, EJC was obliged, inter alia, to deliver to the vendor (Dahua No 1)'s solicitors evidence that the Share Option will be simultaneously exercised in accordance with the terms of the Share Option Deed (see cl 2.1) and that completion of the Property Contract was conditional upon the simultaneous completion of the Share Option Deed (cl 3.1). The Share Purchaser was defined as the person/s whom the Grantee nominated pursuant to the Share Option Deed to be the buyer of the Shares, or where the Grantee did not make a nomination, the Grantee.
Pausing here, Mr Galati says (and Mr Deans appeared to accept) that anonymity was regarded as being important in respect of ownership of the shares in Felan's Fisheries - and that neither Mr Galati nor Mr Deans (nor their companies) could be seen to be associated with Felan's Fisheries for "political reasons" (Mr Galati's affidavit affirmed 12 March 2019 at [190]; T 470).
Mr Deans agreed that, for "political reasons" in relation to SFM, he (Mr Deans) Mr Fraser and Mr Galati were of the view that Mr Deans and Mr Galati should not be known to be associated with the new purchaser of the Felan's Fisheries shares and that each would nominate a director; but then at T 471 Mr Deans said that "well you're speculating" and that he did not think of it (rather, he thought that probably Mr Fraser and Mr Lennox were involved in those sorts of discussions).
The Nomination Agreement provided (cl 10) that: 10 Warranty as to Introduction 10.1 The Property Purchaser warrants that it was not introduced to the Grantee or to the Property by any real estate agent other than the Nominating Agent. 10.2 The Property Purchaser agrees to indemnify the Grantee (or any one of them) for any expenses (including legal costs on a solicitor and own client basis) and payments (including a payment in the nature of a commission) which the Grantee incurs or is ordered to or otherwise reasonably makes as a consequence of a breach of the warranty given by the Property Purchaser pursuant to Clause 10.1. 10.3 This clause shall not merge on completion.
The Nomination Agreement also provided that, if the Bidvest Land was redeveloped then the Property Purchaser would pay Grantee, being Fishbank and Trading Australia, 10% of the profits (cl 16(a)).
Also executed on 20 November 2015 in exercise of the Call Option under the Land Option Agreement was a contract for the sale of the Bidvest Land by EJC as purchaser from Dahua No 1 with the specified contract price of $20,957,683.46 exclusive of GST.

[55]

Mr Galati's evidence as to the position after 20 November 2015

It is relevant at this point to note that in the course of cross-examination (when Mr Galati was being questioned about a conversation that Ms Pritchard recorded in a file note on 27 November 2015 about Mr Vassallo being prepared to assist with "hurt money" to get Mr Deans to go away (see below)), Mr Galati added (with what seemed to me the ring of truth) that after the event on 20 November 2015 "there was no Mr Deans anyway" (T 186). That is consistent with what Mr Galati had earlier said (at T 165) namely that he was not associated with Mr Deans after the Celestino deal and that "we parted at that time".
However, almost immediately after his unprompted observation that "there was no Mr Deans anyway" after 20 November 2015, Mr Galati retracted this (at T 186) and said that after 20 November 2015 "we were going to try and go into a joint venture with Celestino group"; and Mr Galati referred to a meeting at Mr Deans' office which he said was in relation to moving forward with that proposal. Mr Galati adamantly denied that his state of mind from 20 November 2015 was that "there was no more Mr Deans" (T 186) (even though that had been his, perhaps unguarded, own evidence). Mr Galati then proffered the explanation that "for me there was no more Mr Deans" but that the Nomination Agreement was that Celestino would be the joint venture partner with him and Mr Deans (T 186). Earlier, Mr Galati had said that, after 20 November 2015, there was a "different agreement" with Fishbank (see at T 155).
The inconsistent evidence of Mr Galati in this respect points to the unreliability of his evidence. Far more plausible, to my mind, is that Mr Galati indeed was working from 20 November 2015 with a view to progressing a redevelopment proposal without Mr Deans' involvement. Whatever Mr Galati's now explanation of his state of mind as at 20 November 2015, it seems beyond doubt that from that time Mr Galati was intent on progressing (with Ms Ma and Mr Lennox) a proposal for the redevelopment of Blackwattle Bay that did not include Mr Deans (hence the Platform Information Memoranda which omitted any reference to Mr Deans). Mr Galati, however, said that the presentation of a development proposal for Blackwattle Bay with "Platform" (which had nothing to do with the development proposal of Mr Deans) was not his (Mr Galati's) presentation and Mr Galati maintained that he was not aware of a proposal around Platform (adding that unless this was "after then" and Mr Lennox had set up another entity - see at T 176-178 - which, rather tellingly, seems to acknowledge the possibility that there were proposals afoot through Mr Lennox that did not involve Mr Deans).

[57]

Communication between Ms Pritchard and Mr Galati - 27 November 2015

Ms Pritchard gave evidence that she received a telephone call from Mr Galati around noon on 27 November 2015. Ms Pritchard made a file note of that conversation as follows: Dom [Mr Galati] called me and said his lawyers want to wait for the full settlement before they go after Deans. I told him JV [John Vassallo] is there to assist with some hurt money if it gets rid of Deans and Dom can get on with what he needs to do. When we started talking about settlement etc. I told him I probably can't give Steve [Kremisis] [another real estate agent that appears to have been seeking a share of the commission] the comm he suggested (120k); and that John and I work on many deals and there is give and take (ie: assisted with sales that have been of huge benefit to JV)…. Therefore, I could give Steve a little something but not what Dom suggested. He got angry and said you will disclose to me what you are getting from JV or you won't work with me … "That's not the way I work and you will tell me etc"". I was calm and told him that John and I have not even nutted it all out as yet and that it won't be as much as Dom wants …. He wouldn't calm down; so I said I'll call you later (it wasn't going to get any better) …. These are my concerns with Dom; very hot headed …. (Especially since he knows full well that in the meeting with John at the board room he said to John … "You look after Caroline")…. There's certainly was no mention of now I have to pay Steve. I am willing to give him something, but when I look back at all the comms Steve has offered me and the occasions of ie: Haymarket, etc. he was only generous where there was millions in the kitty … other then that, he never included me as a team player the way he suggests he should be part of this project. It needs to be noted that Steve NEVER ONCE BROUGHT ME THE FISH MARKETS. Dom came to my home on Dec 17th ["Dec" crossed out with handwritten "Nov"] at 5:00pm to get the information of the Dairy Farm in Marsden Park and discuss his buyer through Vince … Only because he has the fish markets perspectives with him and I asked what is that did we even venture into my selling it …
In handwriting at the bottom of the page are the words "he sms'd me back "you won't talk to me later!".
In cross-examination as to the notes of the telephone call with Mr Galati on 27 November 2015, Ms Pritchard confirmed that these were contemporaneous notes made by her (T 507-508). Her recollection was that Mr Vassallo said that Mr Galati's lawyers wanted to wait for full settlement before they "go after Deans". Ms Pritchard was not sure what was meant by full settlement but said that she believed it meant settlement of all moneys (T 508) or the finalisation of the transaction (T 510).
As to the reference to "hurt money", Ms Pritchard said that she had discussed this with Mr Vassallo at some time between 20 November and 27 November 2015 but was not 100% sure when (T 508-509). Her understanding of the expression "hurt money" was that he would pay to get Mr Deans to "go away" so that Mr Galati could get on "with the team he had put together and presented to us" (T 509). Ms Pritchard believes that Mr Galati told her that Ms Ma was part of the team and Mr Lennox. Asked about others who were part of the team, Ms Pritchard identified Ms Chikarovski and Mr John Shepherd.
At T 510, when asked what Mr Galati's response was to the hurt money, Ms Pritchard said that he referred to what had happened on 20 November 2015 when Mr Deans or Mr Fraser ("it was articulated to me") had offered him $10 million to go away. Ms Pritchard did not otherwise recall Mr Galati's response.
As to Ms Pritchard's note of 27 November 2015 at noon, Mr Galati denied that he told her that his lawyers wanted to wait to see full settlement "before they go after Deans" (T 185) and did not recall that Ms Pritchard made the comment to him as to Mr Vassallo being able to assist with "hurt money" (T 186) Mr Galati added (at T 187) "I don't know what I would have gone after him for" (a statement that frankly did not ring true to me - particularly, given Mr Galati's evidence about the $1.5 million; i.e., that he would wait until he brought in all the money and then go back for that amount).
Mr Galati agreed that he was angry with Ms Pritchard in the conversation of 27 November 2015 in relation to Mr Kremisis' commission and said that he felt that they (Ms Pritchard and Mr Kremisis) should share the commission (T 252). Mr Galati's evidence is that he thought Mr Kremisis deserved some of the commission as Mr Kremisis had introduced Mr Galati to Ms Pritchard and Mr Galati said that he thought Mr Kremisis and Ms Pritchard "had an agreement…at the time that they would share the commission 50/50" (T 252). I note that this seems a rather indirect role to have been played by Mr Kremisis; however, this is not inconsistent with Mr Galati's apparent approach to the payment of consultants (see further below). In any event, I raise this because Mr Galati's acceptance that he was angry with Ms Pritchard in this conversation corroborates her note of the conversation. It is also consistent with Ms Pritchard's note to the extent that she states that her and Mr Kremisis "worked on many deals and there is give and take".
As to the reference in Ms Pritchard's handwritten note to an SMS message, Mr Galati simply said that he did not recall this (T 189).
Mr Vassallo did not remember a conversation with Ms Pritchard after 20 November 2015 about Mr Deans in relation to "hurt money" or to assist in getting rid of Mr Deans. However, at T 540, Mr Vassallo said that there may have been conversations (at some point after) regarding a payment to Mr Deans to remove the 10% profit share from the Nomination Agreement to make that provision null and void but he did not believe it was during November 2015; his recollection that this was in the New year - sometime in January or February 2016.
Mr Vassallo said that the conversation may have taken place probably in January/February when it became obvious that Mr Deans was not willing to forego the 10% profit share provision of the Nomination Agreement. He said that he met with Mr Deans following the settlement (he believed on 9 December 2015) (T 540).

[60]

Payment of commission to Wealth Shift

As noted earlier, the agreement initially struck between Mr Vassallo and Mr Galati was for the payment of $24 million for the Bidvest Land (there was a separate amount agreed to be paid in respect of the Felan's Fisheries shares, which ultimately TRHS was nominated to retain and an amount paid to be held as a "fighting fund" for the SFM litigation); whereas the Nomination Agreement recorded the purchase price for the Bidvest Land as in the order of $21 million. The difference in essence is the claimed secret commission in the present proceeding $1,799,820.95.
The circumstances in which that amount came to be paid to Trading Australia are unusual (as Mr Vassallo conceded), to say the least.
Ms Pritchard says that, up until 30 November 2015, no agreement had been made between herself and Mr Vassallo in relation to her commission but that it was customary for 2% to be paid as an introduction rate. Ms Pritchard says that on 1 December 2015, Mr Vassallo agreed to pay her a 2% commission, through Wealth Shift, on the sale of the Bidvest Land (as buyer's agent) (Ms Pritchard's affidavit sworn 3 September 2018 at [88]). Her understanding was that the purchase price was $24 million. The chronology as to what then transpired, as it appears from the contemporaneous emails, was as follows.
At 12.45pm, on 2 December 2015, Mr Lennox emailed Ms Pritchard, with the subject heading "Short term and longer term", saying: Once again I will share that I am most grateful that after all that came before this, the result is that we are working together. It gives me comfort that he team has people of such integrity and that as such we together provide a cornerstone for the private sector's role in the urban renewal of the Bays Market District. As I mentioned, while resolving the detail of how we will work together and the roles and responsibilities of each of us will take time, the project is a live concern. The development industry as a whole winds down now, but the Government will not be slowing down all that much and the Sydney Fish Market actually gets busier (although so busy in the day-to-day that its future does take a bit of a back seat). I would see that the following needs to be addressed: 1. Payment of the final amount this week And next week 2. Empower the team to carry on the project as required in the short term - this will most likely need a basic commercial and governance framework; plus 3. Agreement on a general timetable to negotiate the long-term. Naturally we have proposed approaches for this that means we are not starting from a blank page.
At 12.54pm on 2 December 2015, Ms Pritchard sent an email to Mr Vassallo, attaching an invoice on Wealth Shift letterhead to Celestino for "Sales commission for the sale and negotiation of the above site" (the Bidvest Land) in the sum of $480,000, expressly noting that the purchase price was $24 million. Thus, Ms Pritchard's commission of $480,000 represented 2% of a sale price of $24 million (consistent with the evidence as to the agreement as originally struck between Mr Galati and Mr Vassallo). In her email attaching the first Wealth Shift invoice, Ms Pritchard said: Hi John Congratulations again. (When we spoke this morning I was actually in the car on the way to your office) 😊 Recap: See you Friday [presumably 4 December as the email was sent on Wednesday 2 December] at the Westin 10:30am. Sharp with Dom and Kym Monday, Dec 7th morning at 7:30am. We meet on the site at Bringelly (I will pick you up from the Bringelly Shops) Would your office please direct deposit this invoice into the Wealth Shift account as the mail as this time is very slow and possible loss. Appreciate it being in account before I leave for Canada.
At 1.25pm on 2 December 2015, Mr Vassallo emailed his external solicitor acting on the sale transaction (Ms Boden at Henry Davis York) asking for a statement setting out the total moneys paid in relation to the property purchase including the moneys paid for the share purchase "and payment into trust for Fishbank Development Corporation".
As to the email of 2 December 2015, Mr Vassallo said in cross-examination that "we wanted a tax invoice to pay the balance of the $24 million and it had to be from Caroline Pritchard to accord with the agreement we had on 20 November" (T 546). Mr Vassallo agreed that he told Ms Pritchard that he wanted the one invoice. Mr Vassallo accepted that he knew that Ms Pritchard had not provided any services warranting the $2.279 million payment but then said that "No she provided the commission services and the balance was a disbursement for her to pay property services" (T 546).
Ms Boden responded, at 1.40pm on 2 December 2015, advising that the total amount paid was $22,381,882.79 and attaching the final settlement statement for the property. Ms Boden advised that the adjusted purchase price for the property including the deposit was $21,580,805.94; and that in relation to the share sale the total amount paid was $801,076.85, being $53,578.55 for the exercise of the call option and $747,498.30 for the nomination payment. (Pausing here, the sum paid for the shares included an amount of $250,000 agreed to be paid for the "fighting fund" for yet more litigation - this time relating to the termination of Felan's Fisheries lease in the Sydney Fish Markets.)
At 4.23pm on 2 December 2015, Mr Lennox sent an email to Ms Pritchard (signing off the email as Investment Director of Tipping Point Capital) attaching a tax invoice from Trading Australia (this was the first Trading Australia Invoice). The invoice was dated 1 December 2015 (Invoice 110B1) addressed to Wealth Shift marked to the attention of Ms Pritchard and was: Provision of transaction advisory services $1,643,104.17 GST $ 164,310.42 Total $1,807,414.42
As Ms Pritchard notes, the amount there noted as being for "transaction advisory services" was the exact amount of the so-called "shortfall" between the purchase price of $24 million and the amounts specified in the Nomination Agreement for the property ($21,555,818.98 excluding GST) and for the Felan's Fisheries shares ($801,076.85 excluding GST).
Asked in cross-examination about this, Mr Lennox had no recollection of any specific conversations about the invoices but accepts that he must have had such a conversation in which he was informed that Ms Pritchard was to be sent an invoice from Trading Australia (T 373). Mr Lennox, asked how he valued Trading Australia's "transaction advisory services", said that they were what he was advised by Ms Pritchard (see T 374); and repeated that the "number" came from Ms Pritchard (T 375). Mr Lennox believed that there was a coffee shop meeting to do with the number but in any event he was adamant that he did not insert the number (T 374).
At 4.55pm on 2 December 2015, Ms Pritchard forwarded the Trading Australia invoice to Mr Vassallo with the comment "FYI. I'll sort once you have all settlement figures worked out".
In cross-examination, when asked why she forwarded the Trading Australia invoice for $1.8 million to Mr Vassallo, Ms Pritchard said "[b]ecause I did not have $1.8 million so I was sending it to him" (T 513). Asked whether Mr Vassallo told her that more money was coming to her than just the 2% commission, Ms Pritchard said "that conversation did happen" but Ms Pritchard was not sure when it happened ("Maybe the 2nd or 3rd") (T 514).
As to whether she had been surprised (or shocked) to receive the first Trading Australia invoice for $1.8 million, Ms Pritchard's evidence in cross-examination was that "I would think there may have been a call… you wouldn't be invoicing a buyer's agent. My opinion, looking at this, is that it was sent [to] me to be on sent to my client" (T 515). Ms Pritchard agreed that she did not accept that Wealth Shift was going to pay the invoice and said "I didn't have it. That's why I sent it to my client" (T 515).
Ms Pritchard could not explain what was meant by saying that she would "sort" things (T 513-514). Ms Pritchard agreed in cross-examination that she did have a conversation with Mr Vassallo where he told her that more money was going to come than her 2% buyer's commission. Ms Pritchard's evidence was that when she received the first Trading Australia invoice she assumed it was the difference between the purchase price and the [option] (T 515); i.e., the difference between $24 million and the sum payable pursuant to the agreement on 20 November 2011.
Taken to the statement in Ms Pritchard's email ("I'll sort once you have all settlement figures worked out"), Mr Vassallo said that he was getting settlement figures from his lawyers to ensure that they were paying the correct amount; he said that the amount actually differed by about $20,000 (T 544). At T 544, Mr Vassallo said that Mr Galati said to him when he explained the shortfall payment that the moneys would go towards reimbursing Mr Galati's costs and expenditure... "a number of consultants that had to be reimbursed" (T 544). Mr Vassallo said that when he received the invoice he was looking at the numbers to make sure the calculation was correct.
As to the amendment of the invoices, Ms Pritchard believed that Mr Vassallo said that the invoice was not correct. Her evidence was that Mr Vassallo said to her that all the money came to her and that she was to take her portion and the rest was to go to Trading Australia (T 513). Ms Pritchard said that she discussed this with Mr Vassallo prior to the 4.55pm 2 December 2015 email "for the simple fact that there's no other reason I would say that" (in the email) (T 514). Ms Pritchard did not think that she had discussed this with Mr Galati; her evidence was that when it came to money she was dealing with Mr Vassallo (T 514).
Ms Pritchard said that there may have been a call to Mr Lennox (when she received the invoice) (T 515). Her opinion was that it was sent to her to be on-sent to her client. Ms Pritchard said that she probably called Mr Vassallo but did not recall this. Ms Pritchard did not expect Wealth Shift to pay the invoice (T 516).

[61]

Amendment to invoices - 3 December 2015

Ms Pritchard then received a series of instructions to amend the first Wealth Shift invoice that she had issued.
Ms Pritchard has an undated (and she says contemporaneous) note of a telephone conversation with Mr Vassallo which she places as occurring on 3 December 2015 (see her affidavit sworn 3 September 2018 at [96]). The note states: John Vassallo $6,000 off Total $1,636,200.86 + gst 1,799,820.95 (CP writes them) + 480,000 "Invoice from WS for the" full amount $2,279,820.95 * Commission + consulting f as agreed (Incl. of GST) Beside Total.
The reduction of $6,000 reduced the amount of the first Trading Australia invoice from $1,643,104 to $1,636,200.
As to the note of her conversation with Mr Vassallo, Ms Pritchard did not recall what was meant by $6,000 off (T 517).
Ms Pritchard's evidence was that he requested changes to the first Wealth Shift invoice at the instructions of Celestino's accountant (though it is by no means apparent why this would have been necessary) (T 517).
At 6.24pm on 3 December 2015, Ms Pritchard emailed Mr Vassallo a second Wealth Shift invoice (this one dated 3 December 2015) saying "As per your request". That invoice stated: Sales commission for Wealth Shift Pty Ltd for the sale and negotiation of the above site: (Purchase Price of $24,000,000) (inclusive of GST) $ 480,000 Property Advisory Services $1,636,200.86 (GST) 163,620.09 TOTAL $2,279,820.95
At 6.31pm on 3 December 2015, Ms Pritchard sent an email to Mr Lennox, requesting him to amend the first Trading Australia invoice: Good evening Kym Would you kindly change your invoice to reflect: Dated: Dec 3, 2015 Property Advisory Services for 31-35 Bank Street, Pyrmont NSW (Bidvest site) $1,636,200.86 GST 163,620.09 $1,799,820.95
At 6.55pm on 3 December 2015, responding to Mr Lennox' "Short term and longer term" email, Ms Pritchard asked in anticipation of their meeting on 4 December 2015 with Mr Vassallo if Mr Lennox could email the proposed approach he had mentioned; and saying that she assumed he had prepared a timetable spreadsheet and role definitions, especially as to the points that he saw as urgent over the next three to six months.
At 10.25pm on 3 December 2015, Mr Lennox emailed Ms Pritchard attaching an invoice "updated as advised" (the second Trading Australia invoice). That email was forwarded by Ms Pritchard to Mr Vassallo.
On 4 December 2015, Mr Vassallo requested a further change to the Wealth Shift invoice (for a single line amount of $2,279,820.95 inclusive of GST).
At 8.26am on 4 December 2015, Ms Pritchard emailed the third Wealth Shift invoice to Mr Vassallo: As requested. Invoice showing the one amount inclusive of GST.
The attached invoice dated 3 December 2015, addressed to Celestino, read: Sales commission for Wealth Shift Pty Ltd for the sale and negotiation of the above site: (Purchase Price of $24,000,000) Property Advisory Services TOTAL GST INCL $2,279,820.95
At 10.20am, Mr Vassallo called Ms Pritchard asking her to change the invoice (i.e., the third Wealth Shift invoice) again and said that the invoice needed to be addressed to EJC.
At 11.52 am on 4 December 2015, Ms Pritchard emailed the fourth Wealth Shift invoice to Mr Vassallo: Changes made as instructed. Please ask Penny [the in-house lawyer] to email me a contract for my files. Trust accounting and licensing dictates I have to have a contract on file.
Attached was the invoice extracted in the paragraph above but addressed to EJC. Ms Pritchard says that Mr Vassallo noticed errors with that fourth Wealth Shift invoice and called Ms Pritchard to make changes; and Ms Pritchard says that she noted that the incorrect ABN had been included. There then is another copy of the EJC invoice with a handwritten line through the company details and the words "Now going to Business Account". The same invoice was then reproduced with a different ABN for Wealth Shift (this being the fifth Wealth Shift invoice forwarded to Mr Vassallo).
The upshot was that there was ultimately an invoice in the sum of $2,279,820.95 addressed to EJC for "Sales commission for Wealth Shift Pty Ltd for the sale and negotiation of the [Bidvest land]" noting the purchase price at $24 million and describing the services as Property Advisory Services.
Ms Pritchard confirmed that the invoice had nothing to do with property advisory services for Wealth Shift (T 519).
Mr Galati agreed that Trading Australia never provided transaction advisory services to Wealth Shift or Ms Pritchard (T 191). Questioned as to whether Trading Australia had provided "property advisory services", Mr Galati said that "I never stipulated what you know, she should put down in the invoice number one, I don't know where she got that from, and if you can define for me what that means, then I could say to you maybe we did. I'm not sure" (T 192).
Mr Lennox' cross-examination on the circumstances in which the Trading Australia invoices were issued by him was frankly extraordinary. Mr Lennox seemed to have no idea why the changes were made or why there needed to be an invoice in the first place, as apparent from the following exchange from T 376ff: Q. Just explain, please, what the advisory services were that Trading Australia provided to Wealth Shift Pty Ltd for which you sent an invoice for $1.643 million. A. Advising her on - and the process on being - you know, because this is - it's a bit vague, isn't it, "transaction advisory services", but it is to do with the transaction, obviously, so it was about helping her have it happen. Q. It's about doing what, sorry? A. Helping her have it happen. Q. Helping her have it happen? A. Mm. Q. Why were you interested in helping her have it happen? A. Well, as in my case, I'm looking to have the intellectual property that I've invested, and really not really seen any compensation for, get some channel to being utilised and paid for. Q. What's that got to do with providing to Ms Pritchard's agency an invoice for $1.643 million for the provision by Trading Australia of advisory services to Wealth Shift? It's got nothing whatever to do with it, has it? A. Well, in terms of you asking me what I was saying, why I would be interested in it, and that's‑‑ Q. No. I was asking you why you put in the invoice the description "advisory services" with a value of $1.6 million plus when you know very well Trading Australia never provided to Wealth Shift advisory services for $1.643 million. Do you understand the question? A. I, I think I do. I mean, you're, you're, you're getting‑‑ Q. And your answer is? A. You're getting involved in what the meaning of "advisory services" are. Q. I am, that's exactly what I'm getting involved in. You wrote the words. Did you not have any idea of what they were referring to? A. Well, they're referring to what was required by Trading Australia on things like bonuses and so on to pay, as far as I was aware Q. Sorry? A. As far as I was aware, there was an obligation on the parties to have bonuses paid by Trading Australia and that‑‑ Q. But what does that have to do with advisory services, is my question. A. Well, I'm sorry, if they don't get paid, the transaction doesn't necessarily happen. Q. Why did you bill Wealth Shift for $1.6 million? A. Cause - well, that was where it was being - I, I don't understand the question. Q. Why bill Wealth Shift for Trading Australia's advisory services? Why Wealth Shift? A. The bonuses needed to get paid. If they weren't paid, the deal would fall over for the future of the business. So Wealth Shift was there as - well, originally it was, as far as I know, it was a buyer's agent who was making sure that the purchase occurred, this was what she was doing. Q. Exactly, she was a buyer's agent. A. Yes. Q. The buyer was Mr Vassallo's company, correct? A. Yes. Q. You would expect, in your vast experience of transactions of a financial nature, that the buyer's agency commission would be paid by the buyer, correct? A. Well, yeah, I don't - I, I assume that was done. Q. You would have assumed the buyer's agency commission would have been paid by the buyer, would you not? A. Yes. Q. As far as you know, that happened, correct? A. Yes, dealing with other parties that I wasn't party to. Q. Do you want to offer to the Court any other explanation that you have as to how it came about that Trading Australia sent to Wealth Shift Pty Ltd an invoice for $1.64 million plus GST for "transaction advisory services", or have you done the best you can to explain that? A. Well, I believe I've been fairly clear. Q. I beg your pardon? A. I believe I've been fairly clear that the bonuses were needing to be paid, that was an obligation on Trading Australia, and that was organised as, you know, in that respect, through Wealth Shift. Q. Why? A. I don't even remember if it was Wealth Shift in my mind but, you know. Q. Why Wealth Shift? If there were bonuses that Trading Australia needed to be paid, what did that have to do with Caroline Pritchard or Wealth Shift? A. Well‑‑ Q. Straightforward question, can you answer it? A. I don't know. I don't know that.
Mr Lennox there said that bonuses needed to be paid; he accepted that this was an obligation on Trading Australia (not, I might add, an obligation of Mr Deans or Fishbank) but said that that this needed to be organised through Wealth Shift (although he did not understand why and did not even remember if it was Wealth Shift in his mind) (see T 377-378).
Mr Lennox' focus instead seemed to be on his own interests (T 379). His evidence was vague and confusing in the extreme. Mr Lennox was adamant that he had spoken at no point with Mr Fraser or Mr Galati about it; he confirmed that Ms Pritchard gave him the number for the invoice (T 380); and he said he changed the invoice because the buyer's agent told him to change it (T 386-387). Mr Lennox had no idea what transaction or property advisory services were being referred to (T 387) and seemed to think it was related to the entirety of the transaction (for the entity fronting the transaction - T 388).
All that can sensibly be taken from Mr Lennox' evidence in relation to the invoicing in December 2015 is that he acted on someone else's instruction when issuing and amending the invoices (according to him, that coming from Ms Pritchard, though the email communications make clear that she had received that instruction from Mr Vassallo). It is inherently implausible that this was at Mr Lennox' instigation.
Mr Galati's evidence was that he left it to Mr Lennox to send the invoice; that he knew that Ms Pritchard would not question it (because of the meeting with Mr Vassallo that he would instruct Ms Pritchard to pay moneys to Trading Australia) (at T 250). Mr Galati said that his agreement with Mr Vassallo was that Mr Vassallo would pay the two amounts and he would "work through" that with Ms Pritchard. At T 251, Mr Galati said that he was not "using" Ms Pritchard; rather that "it was about having a vehicle at short notice to pay the moneys". (This can only sensibly be understood as meaning that he needed a vehicle to pay him moneys at short notice without reference to Mr Deans - since there seems otherwise no reason that EJC was not an appropriate vehicle to have paid the money direct to Trading Australia rather than through the interposition of Wealth Shift.) Mr Galati was not sure why the Trading Australia invoice could not have been sent direct to Mr Vassallo (T 252).
Pressed on the invoices, Mr Galati said (with increasing assertiveness) that he did a lot of deals and this transaction was not for a lot of money (T 192); that no law was broken here (T 193); and that his company rendered legitimate services of sale of the properties (those services being in relation to the negotiations for the Bidvest Land). Mr Galati denied that the invoices were a sham or were fake (T 194) and said that Mr Lennox was left to do the invoicing paperwork. Tellingly, Mr Galati said that someone had to have some sort of invoice to show in relation to a payment of $1.8 million (T 194).
Mr Vassallo accepted that the variations on the invoice were on his instructions to Ms Pritchard (T 547). Mr Vassallo said that the agreement on 20 November 2015 was for the option holders to be paid after settlement as Mr Galati directed (or as Trading Australia directed). As to the reference in the invoice to the provision of transaction advisory services, Mr Vassallo said that "to me… the overall cover or reference to all the advisory services that Trading Australia had, had to pay for and had paid for" (T 545). As to the fact that the invoice was addressed to Wealth Shift, Mr Vassallo accepted that Wealth Shift had never been provided with advisory services to the value of $1.6 million but said that he was not surprised because Mr Galati told him that the balance of the $24 million was to reimburse and cover costs of a number of property consultants (T 545).
As to why Mr Lennox would not have expected Trading Australia to directly invoice him, Mr Vassallo said that it was not what was requested of them on 20 November; that the request and agreement was that we would pay money back to Ms Pritchard (T 545).
At T 547, Mr Vassallo clarified the above and said that he disagreed with the proposition that Ms Pritchard had not provided any services in relation to the entire $2.2 million. Mr Vassallo said that Ms Pritchard had $480,000 for which she had provided services (that being her buyer's agent commission). However, Mr Vassallo agreed that Ms Pritchard or her company had not provided her services for the balance.

[64]

Payment - 8 December 2015

On 8 December 2015, Ms Pritchard received the sum of $2,279,820.95 from Baiada (the previous name of EJC) in payment of the invoice and on 9 December 2015, Ms Pritchard transferred the sum of $1,799,820.95 to Trading Australia.
Mr Galati deposed that the deal negotiated with Celestino was that Ms Pritchard was paid $2,279,820.95, from which Trading Australia received $1,799,820.95, such that Ms Pritchard was left with the balance as her commission (see his affidavit affirmed 12 March 2019 at [187]; T 137ff).
In Ms Pritchard's cross-examination there was the following exchange (T 521): Q: You knew that the payment of $2,279,820.95 received by Wealth Shift on 8 December 2015 included your $480,000 commission that Mr Vassallo had agreed to pay you, is that right? A: Yes. Q: The balance you knew was destined for Trading Australia and Trading Australia alone, correct? A: No, I didn't know what he was going to do with the money. Q: No, but you knew that it was going to Trading Australia. A: Of course, that was on the invoice. … Q: Not knowing what Galati was going to do with it, correct? A: No. … Q: Why would you use the bank account of the estate agency in which you were the licensee to wash through that account almost $1.8 million when that payment had nothing to do with you or your company? A: Why did I do it? In hindsight I should have asked. I just followed instructions.
On 10 December 2015, Trading Australia paid $1 million to a newly opened Commonwealth Bank of Australia (CBA) account in the name of Trading Australia Enterprises, which was a company controlled by Mr Galati. That deposit was the first transaction on the account. Mr Lennox was a signatory on this CBA account and operated it. Mr Lennox said that this was because it was seen as the entity to carry forward the project he was going to be involved in (T 338).
Mr Galati said that the money deposited in the bank account opened for Trading Australia Enterprises on 10 December 2015 was for costs going forward "and payments that were due for the services of certain people prior to that date" (namely, Ms Chikarovski, Mr John Shepherd and Mr Lennox - see T 242). Mr Galati said that he had disclosed details to Mr Vassallo as to the amount to pay Ms Chikarovski and others (T 247).
In his affidavit, Mr Galati said that the Trading Australia Enterprises account was opened for transactions in relation to the redevelopment. In his oral evidence he said that he opened it because he has a different bank account for each individual project; and that this was a new project - a "new entity moving forward" on the Fish Market project (T 200).
Mr Galati accepted that he had had the company Trading Australia (not Trading Australia Enterprises) for years; and he could not explain why he had not paid the whole amount to the Trading Australia Enterprises account (T 201). Mr Galati said that he needed to pay funds to people who worked on project and that he "pushed funds" into there so that could pay everybody and have a record of that special purpose vehicle company (referring here to SFM, so perhaps seeing the potential need to justify expenditure on the project to SFM).
When it was pointed out that some of the moneys were paid not out of Trading Australia Enterprises but out of Trading Australia's account, Mr Galati's explanation (at T 202) was that there were expenses up to that date from Trading Australia invoices via Fishbank so that he paid those out of Trading Australia and then after he set up Trading Australia Enterprises that was the project moving through. Mr Galati said that payments out of Trading Australia Enterprises related to matters going forward and payments out of Trading Australia related to expenses for Fishbank and Trading Australia at that point in time (T 201). When it was pointed out that this was inconsistent with his evidence the day before that these were expenses of Fishbank (only), Mr Galati's response was that "well Trading Australia was part of FDC at this point in time" (T 202).
At T 202, Mr Galati became somewhat testy and said that the reason he set up Trading Australia Enterprises was that he knew he had so many problems with Mr Deans that Mr Deans was never going either to pay him or to get him involved in Fishbank.

[65]

Disbursement of amounts received by Trading Australia

Mr Galati deposed that he went with Ms Pritchard to Mr Fraser's office, where Mr Lennox and Mr Deans were, and that they all had a conversation in which Mr Galati said "I will explain the deal again - Celestino will pay $22.5 million for the purchase of the Bidvest Assets and we go 50/50 on the Felan's shares" (see at [175] of his affidavit affirmed 12 March 2019). (Ms Pritchard denies this; at least insofar as it is suggested that she knew at the relevant time that there was a separate arrangement in relation to paying expenses - and her denial is not difficult to accept given that Mr Deans was also a part of this conversation and there is no mention of the payment of expenses.) Mr Galati agreed that he had lost faith in Mr Deans paying the bills and said that he wanted to separate the $2 million so that he could pay Ms Chikarovski and himself and the expenses of the project (T 137).
Mr Galati said that he used the funds received from Wealth Shift out of the sale proceeds in order to pay creditors. Mr Galati was adamant in cross-examination that he had paid amounts that Mr Deans owed in relation to the project; and that they were debts other than the bonuses (T 121). (He accepted that he had not sought in the present proceeding to recoup those amounts.)
In an affidavit served shortly before the hearing, Mr Galati provided more evidence as to where the moneys went (and was cross-examined on that evidence). As noted above, Mr Galati's position, in effect, was that he wanted to pay the debts of the project (and that he did not trust Mr Deans to pay them); and he used some of the money paid by Wealth Shift out of the sale proceeds received from EJC (or Baiada) to pay for those debts (and see opening submissions at T 8). Mr Galati accepted that he did not tell Mr Deans about this (see at T 136). (Mr Galati agreed that there was nothing in his affidavit about the terms of any agreement with Mr Vassallo.)
Mr Galati said that the Agreement Principles reference to bonuses was that Mr Deans did not want to pay them whereas Mr Galati did; and so Mr Galati said that "so he [Mr Deans] instructed me to pay bonuses" ( T 138). Mr Galati insisted that he told Mr Deans the truth about what he was going to do with the moneys "by dictating the terms of this arrangement in that way" (T 138). Mr Galati did not agree that he negotiated a price of $24 million; he was adamant that it was in two parts (and that Mr Vassallo offered the $21.5 million and that the other was a side agreement in relation to additional moneys) (T 140). Mr Galati said that he did not think it necessary to put this in his affidavit because it was a separate arrangement for Trading Australia to pay the expenses of Fishbank (T 140).
Again, Mr Galati was adamant that the money was used to pay for Fishbank's expenses (T 143) and expenses for those working on the project (T 143.22). Mr Galati accepted (at T 144) that he did not tell Mr Deans and maintained that he did not need to tell him. At T 199, Mr Galati made clear that his position was that "my company can transfer money to any account".
Mr Galati said that he paid others who had given him valuable assistance (each without an invoice). For example, Steve Kremisis (who was referred to in the Agreement Principles document), was paid $110,000 on 10 December 2015 by Mr Lennox from the Trading Australia Enterprises' CBA account (Mr Galati says that Mr Deans concedes Steve Kremisis was "a sub agent" involved in introducing Abacus to the project - though that did not proceed in any event); and each of Mr Pho (a proxy director of Felan's Fisheries) Mr Tony Abi Fares (a consultant) and Mr Emanuel Vaggis (a consultant) was paid $10,000 in December 2015 from Trading Australia's CBA account. Additionally, Mr Galati made car lease and insurance payments (two each) on 28 January 2016 and 26 and 29 February 2016 from Trading Australia's CBA account; and office rent payments for one level of Mr Galati's family home for 30 weeks at $1,000 per week, paid out of Trading Australia Enterprises' CBA account.
The position of the Deans interests (though challenging Mr Galati's evidence as to the payments he made out of these funds - which I consider below) is that it does not matter what was done with the funds; and that Mr Galati is liable for the full amount received as a secret commission.
There are a number of difficulties with Mr Galati's evidence in this regard: first, it is clear that not all the moneys were paid to discharge debts of the "project", even using that expression in a loose sense (for example, amounts paid by Mr Galati for vehicles for his personal use or his private expenses which he characterises as being "for my benefit as remuneration for the work that I had conducted on the Fish Market redevelopment" - his affidavit affirmed 27 November 2020 at [6]); Mr Galati seemed to acknowledge that some amounts were simply plucked out of the air insofar as they just "come out of [his] head" (such as the payment to Mr Pho of $10,000 said to be for his services as a director) (see T 203-204) and, in any event, under the Agreement Principles document Mr Galati had agreed to be responsible for consultancy fees; and third, some of the payments appear to have related to consultancy fees for the project "going forward" (which on Mr Galati's own evidence seems not to have been intended to include Mr Deans).
As to the payment by Celestino of about $24 million, Mr Deans said that he later found out about this and that he wanted Mr Galati to account for it (T 489). Mr Deans said that the money should have gone to project; and that there were no outstanding expenses of which he was aware (T 489). Mr Deans said that Ms Ma was paid by him; and that Ms Chikarovski was not paid by him and should not have been paid by him (T 489-490). Mr Deans said that how he allocated those funds (being the $1.799 million) (or as I understand it, how he would have allocated those funds) was a different story (T 490).
Mr Galati's affidavit evidence and cross-examination revealed the following as to the particular amounts paid.

[66]

Payments to or for benefit of Mr Galati

Out of the Trading Australia account, Mr Galati paid Trading Australia $415,270 on 10 December 2015 and then two days later, paid himself $100,000. (These two amounts are said by the Deans interests to be recoverable - at a minimum - as moneys had and received by Mr Galati to his own use. I agree but in the overall disposition of the claims it is not necessary to deal with these separately as they fall within the overall sum that will be awarded.)
At T 209, Mr Galati said that he could not remember the exact calculation of the sum of $415,270 and agreed that he probably did not undertake a calculation. Similarly, Mr Galati did not remember how he calculated the sum of $100,000 (these being numbers again seemingly plucked out of the air). Mr Galati agreed that he regarded himself as entitled to a fee (emphasising that he had worked for no payment from 2014 - T 209-210) and he denied that he was not entitled to anything unless the deal came through; asserting that there is "nothing by law that states that I have to have a document").
Mr Galati said that his entitlement was for his work on the project and for bringing in funds to the project; and his complaint is that he "never got paid for it by either Mr Deans or [Fishbank]" (T 210). In this context, Mr Galati again referred to the alleged $1.5 million agreement but he accepted that there was nothing else that entitled him to be paid remuneration independent of what he was going to receive in the event that the transactions came to fruition (T 210).
There followed the telling evidence (in cross-examination at T 211) that: "I took the money because Robert didn't pay me the, the $1.5 million"; "I didn't need to have an agreement"; and "Trading Australia is a proprietary limited company, right? And it can pay anyone any amount it wants" (which to my mind demonstrates that Mr Galati's view was that this was his own money and that he could do whatever he wanted with it - i.e., pay whomever he wanted and whatever he liked; indeed, he could simply pluck figures out of air).
Mr Galati was adamant that Mr Deans owed him more money than the $1.5 million (T 212). Mr Galati said that (at 212): Because I was working on the project…I was owed a lot of money. That's how I looked at it. And it wasn't just specifically the 1.5 million, it was a lot more than that, but I took the money because I, I believed I, I worked for that money, and I brought in funds that Robert owed me $1.5 million on. There was more than just the 1.5 million.
Mr Galati then (seemingly inconsistently) said that there was no relationship between the moneys he paid himself and the $1.5 million because "I was going to come back once we brought in a lot more money to go…back to get my $1.5 million, from Robert Deans and [Fishbank]" (T 213). Confusingly, Mr Galati then seemed to agree that the money he had paid himself was partly in discharge of the $1.5 million (but said that it did not cross his mind to put this in his affidavit, becoming argumentative in cross-examination at T 213-214).

[70]

The Tipping Point Institute (Mr Lennox)

Mr Lennox' company, The Tipping Point Institute, rendered an invoice on Trading Australia Enterprises for his professional services in the amount of $495,000 including GST. The invoice dated 1 December 2015 (Invoice 1522001) was issued shortly after the 20 November 2015 Nomination Agreement (Mr Lennox explaining in some detail his invoice numbering formula before saying that it was not correctly followed in that instance - see T 335).
Mr Lennox' evidence was that Mr Galati was to pay bonuses (in contrast, he claimed that Mr Deans still owed him money for their arrangements). Mr Lennox saw the relevance of this as being that the commercial dealings were separate (T 335). Mr Lennox saw his bonus as being "[f]or the inclusion of my IP and other work supporting the progression of the project" (T 336). Mr Lennox said that there was no identification of hours in the invoice because that was not the nature of the arrangement - that it was not an hourly professional services arrangement (T 336).
Mr Lennox caused this invoice to be paid out of the Trading Australia Enterprises CBA account. Mr Galati again said that the invoice represented a proper expense of the project, and was deservedly paid (emphasising, in particular, the large contribution made by Mr Lennox).
At T 216, Mr Galati said again that the moneys paid into Trading Australia Enterprises' account were for matters "going forward" but that this was "not in relation to Kym Lennox". Mr Galati gave inconsistent evidence as to whether this payment to Mr Lennox' company was an expense of Fishbank, ultimately saying (at T 217) that it was an expense by reference to what Mr Lennox did previously for Fishbank and for his IP (being the project financing model and the unsolicited proposal for Mr Deans) in the project.
Asked whether he accepted that there was no way Mr Lennox would be paid $495,000 for the small amount of time (i.e., as I understand it, the time "going forward" from 20 November 2015 through to the December 2015 invoice), Mr Galati's response was that he could not remember if there was an invoice (T 231); and then, taken to the invoice, noted that it was for $450,000 for professional services invoiced on 1 December 2015 with no indication of period; no identification of services; and no basis set out on which the amount was charged.
As to the figure of $450,000, Mr Lennox said that he discussed this with Mr Galati between 20 November and 1 December 2015 and that Mr Galati "would of" agreed; then said that the discussion may not have been in that gap of time. Mr Lennox said that he did not know when actually they spoke about it but he said that they certainly spoke of it (T 376). Mr Lennox did not recall that Mr Galati had asked him to send the invoice and his evidence was that he thought it would be unusual for Mr Galati to do so (T 337) (presumably, because Mr Galati was - as he portrayed himself - a "big picture" person and not across the details).
Mr Lennox then gave evidence that the invoice was to be prepared for $500,000 but that he was unclear whether it was to be with or without GST. Mr Lennox seems ultimately to have decided unilaterally to render the invoice as inclusive of GST and said that he was prepared to issue it with round numbers (because the $5000 lesser figure was not material) (T 337) (i.e., as I understand it that he was doing the company a favour by charging a lesser amount).
As to the fact that the invoice was address to Mr Galati as the managing director of Trading Australia Enterprises (which as at 1 December 2015 had only recently been incorporated), Mr Lennox (with what seems to have been a characteristic disregard for corporate legal personality) said that he was working for Mr Galati and that Mr Galati's "nominated entity" was not really his concern (T 338). Mr Lennox disagreed that he did not do any work for Trading Australia Enterprises - he said that he worked for Mr Galati and his nominated entity (and then he said it did not even need to be Trading Australia and in this case it was "chosen to be" Trading Australia Enterprises - T 338). Then Mr Lennox said that it might have come from his accountant and that it probably was his accountant (and he confirmed this a number of times - at T 340).
Mr Lennox did not regard it as unusual that the invoice was made out to Trading Australia Enterprises and said that "it's quite common when projects transition from one phase to another that they get restructured" (T 341). However, his evidence was quite confused in relation to this. His evidence was that there would have been conversations around the structure (with Trading Australia and Trading Australia Enterprises) but does not recall when the first conversation was in relation to this (T 342). Mr Lennox agreed that Trading Australia Enterprises appeared for the first time on the 1 December 2015 invoice (before the CBA account was opened) and therefore, it was likely that the first conversation was shortly before 1 December 2015 (T 342).
Mr Lennox explained that the company which provided his services in relation to the development at the time prior to 20 November 2015 was The Tipping Point Institute, of which he was a director, and which was the provider of the services of Tipping Point Capital (T 343).

[71]

Payment to Ms Ma's company, That Sounds Fantastic (TSF)

Ms Ma's company (TSF) rendered an invoice on 11 December 2015 to Trading Australia for consultancy services for $55,000 inclusive of GST. It will be recalled that Heartland Productions was Ms Ma's entity during most of the time that Ms Ma worked with the Deans interests. TSF was only incorporated on 19 November 2015. The invoice dated 11 December 2015 was issued one day after the "secret commission" money from Wealth Shift was deposited into Trading Australia Enterprises' account. The invoice states "December 2015" under the word "Date". However, Mr Galati said that it is apparent this sum represents all the work Ms Ma did for the project from 1 August 2015, not just in December 2015. Mr Lennox caused this invoice to be paid from Trading Australia Enterprises' CBA account. Mr Galati says that the invoice represents a proper expense of the project, and was deservedly paid.
It will be recalled that an invoice for Ms Ma's services had earlier been rendered on 3 August 2015 to Fishbank. Mr Galati said that Ms Ma had worked for Fishbank until June 2015; that she went on holidays and that she came back in September and then worked for Mr Galati. Mr Galati agreed that he asked Ms Ma to invoice him (and not Fishbank) for work before November 2015 (T 145). Mr Galati said that he spoke to both Ms Ma and Mr Lennox about the invoices and he said that Mr Lennox looked after paying them. Mr Galati then said that he did not recall if he had told Ms Ma to prepare or send invoices (T 145).
At T 146, Mr Galati said that he did not tell Ms Ma at the time about the "side arrangement" (with Mr Vassallo); rather, he said that he told Ms Ma that the moneys would be to pay expenses. (Mr Galati accepted that this was also not in his affidavit and again said that he did not think it was relevant.)
Pressed as to Ms Ma's consultancy fee in late 2015 for $55,000, Mr Galati then said that he could not remember how the rate was calculated, saying that Mr Lennox looked after the payments and had access to the bank accounts (T 224). At T 227, Mr Galati could not remember if he had asked Ms Ma to send an invoice then said "I asked for everybody - I asked Lennox to get invoice from everybody that was owed money". Mr Galati said that he may have been billed for December 2015 (but he had no real idea, his evidence was that Mr Lennox was arranging this) and that it could have been longer.
As to the amount of $55,000, Mr Galati said a number of times that it was not a lot of money to him (T 229) and he became somewhat strident about this (at T 230), saying in effect that he is entitled to pay anyone any amount of money he wants to "and that's how all my business are done like that". At T 230, Mr Galati said that the sum of $55,000 was too small to go back to 2014 (since Ms Ma billed her costs at $10,000 per month) but he said that it could have been November, December and then said "I don't care" about the exact work time. Mr Galati was not sure if this was paid for as a Fishbank expense.
A number of things emerged from this evidence.
First, it shows Ms Ma's apparent unconcern as to which corporate entity was responsible for the provision of her consulting services at the relevant time. That is because TSF was only in existence from 19 November 2015 and therefore, if the invoice represented five or so months' fees (as the $10,000 monthly rate specified in Ms Ma's later proof of debt in Trading Australia's insolvency would suggest), then as at December 2015 this could not have been for services rendered by or through TSF (though it is possible that TSF acquired the right to charge for those services, none of this was explored in the evidence).
Second, it would seem that Ms Ma must have been charging for consulting services while she was away on holidays (since Mr Galati's evidence was that Ms Ma was on holidays from around June to September 2015). Ms Ma herself seems to have rendered her final invoice to Fishbank in early August 2015 and placed the end of her services to Fishbank as being around the end of June or early July 2015.
Third, that no real attention seems to have been paid by Mr Galati as to whether the fees had been properly charged.
Fourth, that on Mr Galati's own evidence this invoice did not relate to Fishbank's expenses at all but was for work performed by Ms Ma for Mr Galati (or Trading Australia).

[73]

Mr Pho

As to the amount paid on 11 December 2015 to Mr Pho ($10,000 from the Trading Australia account), Mr Galati said that this was for directors' fees for Mr Pho's involvement in Felan's Fisheries, for: "working with [the] company" as its director; and liaising with Mr Fraser on behalf of the company. Mr Galati said that he would have paid "probably" $8,000 for Mr Pho's work as director and $2,000 in travelling expenses (T 203). (It seemed to me at this point that Mr Galati was simply picking figures off the top of his head; there is nothing for example to suggest any basis for the estimate for travelling expenses of $2,000 from the Central Coast and that was in fact confirmed when Mr Galati made clear (at T 204) that "everything comes out of my head" and (at T 205), when asked that very question, Mr Galati said "[c]orrect - that's how I operate my business".) Mr Galati confirmed that he did not ask for accounts from Mr Pho for his costs as director.
Mr Galati said that he "verbally" had an arrangement with Mr Pho for Mr Pho to look after the interests of Felan's Fisheries and keep talking to Mr Galati; and that he did not have a contract with Mr Pho (nor did Felan's Fisheries) (T 204). Mr Galati did not accept that Mr Pho had no entitlement to a directors' fee, asserting that there is "[n]othing by law that warrants me to have a contract" (T 205). Mr Galati agreed that the $8,000 figure was for acting as his proxy; but maintained that it was a debt of Fishbank; and as to the travel expenses he said "I don't need vouchers" (T 205). Mr Abi-Fares
Mr Galati's evidence was that the same position applied, as for Mr Pho, to the amount paid to Mr Abi-Fares (who he described as one of his consultants out of Brisbane and who he says was retained by Trading Australia in approximately 2014). At T 207, Mr Galati justified the fee paid to Mr Abi-Fares by reference to the fact that Mr Abi-Fares "brought Landcorp to the…project, right at the beginning" (though Mr Galati accepted that the Landcorp "deal" did not eventuate and that Mr Abi-Fares did not ever send him an invoice) (T 208).
Again, there is nothing to substantiate that this was properly a Fishbank expense. Moreover, the suggestion that there was some entitlement to a fee by reference to Landcorp having been brought to the project begs the question as to whether there was any arrangement at all whereby a success fee for the introduction of a prospective investor was to be payable even if that prospective investor did not proceed with the project (and there is no evidence of any such arrangement). This seems yet another instance of Mr Galati's apparent generosity to persons that he considered had been of assistance (to him and perhaps indirectly to the project) in some way but without any contractual or other obligation to do so.

[76]

Commencement of proceedings against SFM - 16 December 2015

On about 16 December 2015 (by which stage the shares in Felan's Fisheries were owned by TRHS - said in communications at that time by Mr Fraser to be in its capacity as trustee of the TRHS Unit Trust) (see Ex F at 192), Felan's Fisheries commenced proceedings against SFM relating to its termination of Felan's Fisheries lease and/or licence of premises at the Sydney Fish Markets. As noted above, a notice to quit had been issued by SFM to Felan's Fisheries in April 2015. Felan's Fisheries had apparently not traded after Bidvest ceased to manage the seafood business of the company in about June 2015.
Mr Fraser acted in those forfeiture proceedings as solicitor for Felan's Fisheries. (As adverted to earlier, the significance of the proceedings in relation to the alleged wrongful termination of lease is that there was a requirement for shareholders of Buyers to own or operate a stall or premises in the Sydney Fish Markets. Hence, if Felan's Fisheries no longer operated a stall in the Sydney Fish Markets (as it appears it had not done since around June 2015) then it was required to relinquish its shares in Buyers.)
In the course of the forfeiture proceedings an application was made that Felan's Fisheries provide security for payment of the defendants' costs, in the context of which (in January 2016) Mr Fraser emailed an accountant in Nowra (Bruce McDonald) for assistance to provide a balance sheet for Felan's Fisheries and to provide other advice. Mr Fraser informed Mr McDonald that $245,000 was held by Fraser Clancy Lawyers on trust for Felan's Fisheries. (This, as I understand it, is the fighting fund to which reference was made as part of the payments made by EJC.)
Mr Lennox (somewhat dismissively it seems) queried with Mr Fraser the use of a chartered accountant from Nowra, in response to which Mr Fraser (seemingly equally dismissively) said "[w]e have to use someone" (Ex F at 190). Mr Fraser went on to say that he did not want to use Nick Parras (an accountant) "as he is known to be associated with Robert" (noting that Mr McDonald was from Financial Dynamics Group Pty Ltd (Financial Dynamics Group), whose office was the registered office of Felan's Fisheries). Mr Fraser said that it was critically important that the items in the balance sheet could be explained and verified by someone capable of doing so in court. Mr Fraser expressed the hope that SFM would be convinced by the balance sheet not to press its application for security but suggested that if the security for costs application was pressed (as indeed it seems to have been) then his advice would be to agree to provide security (to avoid incurring costs).
Mr Deans accepted that the appointment of an accountant in Nowra was another attempt to disguise ownership of Felan's Fisheries (T 477) (though it seemed to me that by this point in cross-examination some of his answers were little more than him accepting what was put to him rather than focussing carefully on answering the relevant questions).

[78]

TRHS

By Form 484 lodged on 29 January 2016 by Fraser Clancy Lawyers, a change in the company details for TRHS was notified to ASIC, being a change in its registered office to the Nowra office of Financial Dynamics Group effective from that date.
ASIC records show that on 23 February 2016 Mr Donald Hoban was appointed as director and secretary of TRHS in place of a Mr Andrew Schultz. Mr Deans explained in cross-examination that Mr Schultz was an accountant ("just someone that was willing to stand in that position", so as again to disguise the nature of the business or the ownership of the business) (T 477). Mr Deans denied that the role of Mr Schultz was to disguise Mr Deans' involvement in the company and denied that Mr Deans and Mr Galati were both the true owners of the company. (Later, on 1 April 2016, Mr Deans was appointed as director and secretary of the company in place of Mr Hoban.) Mr Deans appears to have accepted that both Mr Schultz and Mr Hoban were persons prepared to act as directors effectively on Mr Deans' instructions or at his direction.
As to TRHS, Mr Deans said in cross-examination that it was already a trustee company of a unit trust. Mr Deans agreed (at T 471) that he wanted to disguise the identity of the purchaser of shares in Felan's Fisheries so TRHS was used in the place of Trading Australia and Fishbank. Mr Deans disagreed that the beneficiaries of the unit trust were going to be Mr Deans and Mr Galati (again, he maintained that it was already an existing unit trust; and he said that there was not a discussion about units to be issued to Mr Deans and Mr Galati) (see at T 472). This is of no little relevance having regard to the fact that the understanding asserted by Mr Galati after the breakdown of the relationship with Mr Deans and Fishbank (and the submissions made in this proceeding) appears to have been predicated on Mr Galati obtaining an interest in the TRHS Unit Trust (and achieving an indirect interest in the Felan's Fisheries shares in that way); not any interest in the Felan's Fisheries shares directly.
Mr Deans said that TRHS was a "complicated structure" and that it was always "tasked" to be that way to disguise who TRHS was ("who was me") (see T 488). Mr Deans was adamant (T 488) that it was never agreed who would own the rights to Felan's Fisheries (and added, in a seeming non-sequitur, that he had to force Mr Galati to exercise the option).

[80]

Removal of Mr Pho as director of Felan's Fisheries

By a notice of general meeting dated 26 February 2016, purportedly issued by order of the Board of Felan's Fisheries, notice was given of a general meeting of the company to be held on 21 March 2016 at 4pm. The notice stated that the notice was given with the consent of the members to abridge the time and to hold the meeting at short notice at 4pm on 26 February 2016 (I note that the a document titled "Consent to short notice under section 249H(2)" executed by Mr Hoban, as director of TRHS, on 26 February 2016 is also in evidence). The stated business of the meeting included to remove Mr Pho as a director of Felan's Fisheries and to appoint Mr Donald Hoban as a director in his place. The notice was signed by Mr Hoban (who was at that stage a (newly appointed) director and secretary of TRHS (the sole shareholder of Felan's Fisheries).
Also on 26 February 2016, Mr Hoban, as director of TRHS, signed a document headed "Members' resolutions without a meeting where more than one member". The document stated the resolution of all members of Felan's Fisheries, relevantly, to remove Mr Pho as a director and to appoint Mr Hoban in his place.
The removal of Mr Pho as director and his replacement by Mr Hoban was not notified to ASIC until 27 April 2016, when a Form 484 was lodged by Ms Perry (of Pure Legal), who Mr Deans identified as his solicitor who acted on his instructions.
In cross-examination, Mr Deans readily agreed that it was his idea to remove Mr Pho and appoint Mr Hoban but said that this was "through my advice from my solicitor" (T 481). Mr Deans accepted that he had instructed Ms Perry to file the relevant documents and he thought that Ms Perry had drafted the meeting documents (T 482). Mr Deans said that the process was managed by his solicitor (Ms Perry) and that he asked her to do it carefully to help him (T 482). Taken to the articles of Felan's Fisheries (T 483), Mr Deans said that he found it difficult to understand Article 100 (see below). Mr Deans had no idea why it took time to file the document; he denied that it was so that Mr Galati would not know (T 484). Mr Deans agreed that Mr Galati was a director of Buyers at the time.
Mr Deans said that he did not need to tell Mr Galati about the removal of Mr Pho (T 485) (and did not recall if he had planned not to tell him). Mr Deans said that he had removed Mr Pho because he wanted to make SFM aware that he (Mr Deans) was there but then agreed that he did not replace Mr Pho with himself (T 485). Mr Deans said that the Board wanted to remove Mr Galati's person and he agreed that he wanted someone he could control (and that Mr Hoban did what he told him) (T 486). Mr Deans was adamant that he was always the sole director and shareholder of TRHS. When confronted with the fact that Mr Schultz had been a director, Mr Deans insisted that ultimately he (Mr Deans) was the controlling interest of that entity.
Mr Galati says that Mr Pho's removal was done irregularly, in a company law sense (on the basis that the replacement was contrary to Art 100 of the Constitution of Felan's Fisheries); and he says that it was done without his agreement.
Article 100 of the Articles of Association of Felan's Fisheries (under the Companies Act 1936 (NSW)) (which deals with eligibility for election of a director, not the removal of a director) provides: No person, not being a retiring Director shall be eligible for election to the office of Director at any General meeting unless he or some other member intending to propose him has at least eleven clear days before the meeting left at the office a note in writing duly signed signifying his candidature for the office or the intention of such member to propose him provided that in the case of a person recommended for election by the Board nine clear days' notice only shall be necessary. Notice of each and every candidature shall seven days previously to the Meeting at which the election is to take place be served on the registered holders of shares.
Article 87 of the Articles of Association provides that, until otherwise determined by the company in general meeting, the number of directors shall be not less than two nor more than five.

[83]

Complaint made by Mr Galati to Fraser Clancy Lawyers as to litigation "fighting fund" - 10 June 2016

By letter dated 10 June 2016, solicitors (JJ Honeyman & Associates) acting for Mr Galati wrote to Fraser Clancy Lawyers in relation to the litigation against SFM and asserting that Mr Galati was one of two shareholders in the Unit Trust which was the ultimate beneficial owner of Felan's Fisheries. (Pausing here, it is relevant to note that Mr Galati's apparent understanding at the time, so far as that was being accurately conveyed or reflected in his solicitors' correspondence, was not that TRHS held or was to hold the Felan's Fisheries shares on trust for Fishbank (or for the Deans and Galati interests, respectively) but, rather, that TRHS was to hold those shares in its capacity as trustee of the TRHS Unit Trust (of which Mr Galati claimed or expected to be one of two "shareholders", though perhaps more precisely one of the unitholders).
The 10 June 2016 letter referred to the sum of $250,000 said to have been provided (upon the acquisition of the company from Dahua No 2) jointly, at the direction of Mr Galati and Mr Deans, to the solicitors' trust account for the purposes of the litigation against SFM (the so-called "fighting fund") and asserted that no funds were to be disbursed without the authority of both Mr Deans and Mr Galati (it being noted that no accounts had been provided to Mr Galati and it being said that Mr Galati's approval for costs to be transferred from the trust had not been obtained). Request was made for a copy of any costs agreement signed by Mr Galati in respect thereof.
It seems that this demand was in the context of the security for costs application that was then outstanding in the forfeiture proceedings because the 10 June 2016 letter referred to advice from the solicitors that Mr Deans was unlikely to provide further funding (for the forfeiture proceedings) and stated that Mr Galati was not prepared to consider providing further funding until Fraser Clancy Lawyers furnished details of the Unit Trust evidencing Mr Galati's ownership and an itemised account of costs and disbursements incurred to date. The letter referred to the security for costs application being due to be before the court on 17 June 2016.
Cross-examined as to the proceedings in relation to the termination of Felan's Fisheries' tenancy at the Sydney Fish Markets, Mr Deans did not remember details of the proposal for $245,000 of the "fighting fund" to be put into Felan's Fisheries as capital with an issue of new shares to improve the company's balance schedule (T 478); he remembered "sort of a general security deed or something like that" but thought it was to do with a combination of the purchase price of the Felan's Fisheries shares (T 478).

[84]

Letter dated 15 August 2016 from Fraser Clancy Lawyers

By letter dated 15 August 2016 (clearly responding to a letter from solicitors (JJ Honeyman & Associates) sent later than the 10 June 2016 letter referred to above, on behalf of Trading Australia and Mr Galati), Fraser Clancy Lawyers, among other things, referred to having prepared a loan agreement and security agreement between Fishbank and Trading Australia, as lender and as secured parties, and TRHS, as borrower (those presumably being the documents referred to above, which were the subject for the request as to why the funding of Felan's Fisheries was by way of capitalisation); and stated that these agreements had been executed for Fishbank and TRHS but that, despite several requests (and Mr Galati's advice on several occasions that he would do so), Mr Galati had not attended to execute the agreements.
The letter also stated that: TRHS was established long ago on Mr Dean's instructions. We confirm our previous advice to you on more than one occasion that the ultimate beneficial owner of units in TRHS is, following TRHS being nominated to exercise the option to buy the shares in Felan's, FDC and your client company, in such shares as they may agree or as is ultimately determined by a court. As you are aware, your client is represented by you in relation to the dispute and we understand your client is claiming 50% ownership, and FDC is represented by Chris Perry of Pure Legal and we understand that FDC is claiming a greater share than 50%. As you know, we are not representing either party in this dispute. [my emphasis]
Reference was made in that letter to a meeting apparently convened to discuss "formalising the interest of FDC and [Mr Galati] in TRHS, and the funding of the proceedings brought by Felan's against Sydney Fish Market Pty Ltd and others" but at which it was said that the only discussion was in relation to the issue of security for costs for those proceedings. Mr Fraser (noting that he was acting for Felan's Fisheries) made the suggestion in that letter that the respective clients meet as soon as possible to discuss formalising the interest of Fishbank and Mr Galati in TRHS (which company Mr Fraser noted owned all of the issued shares in Felan's Fisheries) and the funding of the proceedings against SFM (which it was said was required on an urgent basis).
Reliance is placed by Mr Galati on this letter, as I understand it, as corroboration of his entitlement to a 50% interest in the shares in Felan's Fisheries. A number of comments may be made as to this: first, that the relief sought by Mr Galati in the present proceedings is as to the shares of Felan's Fisheries (not a shareholding or perhaps more precisely unitholding in the TRHS Unit Trust); second, and related to this, that insofar as it seems to have been understood that TRHS would hold its shares in Felan's Fisheries in its capacity as trustee of the TRHS Unit Trust, that is not consistent with the shares in Felan's Fisheries being held by TRHS on trust for the Deans/Galati interests; and, third, that any suggestion that this was some kind of admission by Mr Deans as to the holding of units by Mr Galati in the TRHS Unit Trust (because it was a statement by Mr Fraser), suffers from the difficulty that Mr Fraser at this stage was representing Felan's Fisheries in the forfeiture proceedings (not the Deans interests directly) and it is not established that this letter was written on Mr Deans' instructions.
At most this letter suggests that Mr Fraser's understanding of what had been proposed was that Mr Galati was to be issued with units in the TRHS Unit Trust. However, there is nothing to suggest that this ever occurred (nor as to any binding agreement that it would occur) and a later communication from Mr Fraser (to which I refer below) suggests that the parties never reached a final agreement as to what interest Mr Galati would acquire in the units.
In cross-examination, Mr Deans said that he did not know that Mr Pho had been asked to sign documents in connection with the "fighting fund" (see above) (T 478-479). Mr Deans nevertheless identified Ms Ghalloub (who had sent the email requesting execution of documents by Mr Pho) as someone at Mr Fraser's office. Mr Deans then said that he "potentially" did see an email about Mr Pho signing documents (T 481).
Taken to the statements made in the 10 June 2016 letter from Mr Fraser to Mr Galati's solicitors, Mr Deans: agreed that TRHS was established "long ago" on his wishes but did not agree that the ultimate beneficial owner of units in TRHS (following TRHS being nominated to exercise the option to buy shares in Felan's Fisheries) was Fishbank and Trading Australia (jointly) (see T 473). Mr Deans said that Mr Fraser was not his solicitor at that time advising him on this company; rather, that Mr Fraser was his solicitor for the SFM case, but then he agreed that Mr Fraser was the one "tasked" with setting up TRHS (T 473) (and that Mr Fraser was "possibly" in charge of "sorting out" the company structure (T 476). At T 474 (somewhat confusingly), Mr Deans then said that what happened was correct. Mr Deans was adamant that it was never explained to him that Trading Australia was supposed, to some degree, to be a unitholder of TRHS Unit Trust (T 474). Mr Deans accepted that Mr Fraser was also his solicitor in the case against Mr Galati and Trading Australia in November 2015 (but said that Mr Fraser was not acting on behalf of anything ongoing at the moment) (T 474-475).
I consider it telling that Mr Fraser, in the 15 August 2016 letter clearly proceeded on the basis of an understanding that it had not been agreed between Mr Deans and Mr Galati as to what interest in the TRHS Unit Trust the Galati interests were to hold but that the arrangement or understanding was one that applied to the unit holdings in the TRHS Unit Trust and not any other interest directly or indirectly in the Felan's Fisheries shares following the nomination of TRHS to exercise the option rights in relation to the shares.

[90]

Mr Galati

Mr Galati is a company director of an American company, having formerly held positions in various governmental and private business organisations.
For the plaintiff, it is submitted that Mr Galati is an honest witness who made admissions against his interests. It is said that he disclosed exactly where the "so-called" secret commission was paid (including to himself); and that his justification for dealing with the almost $1.8 million in the way that he did is honestly held. It is accepted that Mr Galati's recollection of the dates of events was obviously imperfect, but it is said that in most instances his recollection of the order in which events occurred was correct. It is submitted that Mr Galati is obviously a "big picture" person, and that this was reflected at times in his testimony, where it is conceded that he may have been prone to make sweeping statements; but the plaintiff says that he is not dishonest.
For the Deans interests, it is said that Mr Galati was an unimpressive witness who was, in his oral evidence, unreliable, evasive and self-promoting. The defendants say that, where Mr Galati's evidence conflicts with the evidence of Mr Deans, Mr Galati's evidence ought not be accepted.
There is no doubt that Mr Galati's recollection of dates was imperfect; and he could hardly be described as someone who focussed on the details of transactions. He accepted in cross-examination that for some details of his affidavit evidence he was just guessing (such as the number of people he said were in attendance at the first meeting with Mr Deans - which in his affidavit he said was ten but in his oral evidence he put as twenty or more than ten and closer to twenty - see T 50-51); and he was unable to explain what he meant by the statement in his affidavit evidence as to having to discuss projects with prospective investors at more than a superficial level (T 73). Mr Galati could not remember what level of detail he had discussed projects with investors (and could not remember why he had put that in his affidavit but was sure that those were his words - T 73). Mr Galati made clear that he regarded himself as a very busy businessman (T 51); he said that he was the dealmaker and others had to complete the documentation (T 79).
I accept that the characterisation by the Deans interests of Mr Galati as a "big picture" person is well-founded having regard to his evidence (see, for example, the above and his evidence as to his apparent disinterest in the information provided to prospective investors - see T 57. T 62; and his professed reliance on others for the detail of matters - see T 62-63). I have little confidence in Mr Galati's recollection of events as being accurate or reliable.
Not only did Mr Galati display a tendency to gloss over the details of the transactions in which he was involved, he gave inconsistent evidence on various aspects of the matter (such as whether he had seen Gerry Harvey about the project - see T 61); his evidence was inconsistent on matters such as whether he had familiarised himself with the details of the Unsolicited Proposal - see his affidavit which suggests he was going to the offices three to four days a week to familiarise himself with the proposal and his evidence at T 66 that he briefly went through it and did not go into the intricate details.
Moreover, Mr Galati had what might charitably be described as a rather broad brush approach to how he dealt with payments out of the funds received - being insistent that he could determine for himself whatever he thought was a reasonable amount for others working on the project to be paid.
In the witness box, Mr Galati had a tendency to argue with the cross-examiner; to overstate or exaggerate matters (such as his evidence that he had done "many, many deals in development projects" and then, when pressed, said that there were about six - see at T 51-52; his broad assertion that he met with Mr Deans "hundreds of times" - T 50; and his reference to having an array of lawyers, when he then made clear that he was referring in part to lawyers acting for one or other of the organisations with which he had previously been involved - T 86; and then saying that he did not use lawyers when he was working with Mr Deans - T 87); to assert dogmatically his right to deal with matters in the way that he had done; and to seek to justify or explain his conduct by reference to complaint as to Mr Deans' conduct in the project overall. Having regard to his unreliability in relation to dates; and the implausibility of aspects of his evidence (such as his protestation that he did not care about the money; and the fact that he did not press for written confirmation of the alleged agreement reached with Mr Deans for the payment of a success fee); and the fact that his evidence (as I accept was also that of Mr Deans) is obviously self-serving in that he has a personal interest in the outcome of the proceeding, I treat Mr Galati's evidence with no little degree of caution.
While I do not find that he was dishonest in the giving of his evidence, I consider that Mr Galati displayed a tendency to place his own spin on events; and I do not find him to be a credible or reliable witness on those aspects of the case which go to his claimed agreement with Mr Deans and the circumstances in which the alleged secret commission was paid.
In particular, I find wholly implausible the proposition that, if Mr Galati had indeed reached an agreement (as he asserts) with Mr Deans for payment of a $1.5 million success fee, he would not have documented that in some way (particularly in circumstances where there were numerous documents signed recording the arrangements between them and no mention of the success fee). Mr Galati's evidence on this varied from: "I didn't care in the beginning"; "I wasn't expecting my own partner to walk away from me or whatever" (T 81); "I didn't care…money doesn't motivate me" (T 90); to a belief that he did have something that documented it (like bits of paper) that Mr Deans was supposed to instruct Mr Fraser to document (T 81-82); to the evidence that he was pressing Mr Deans every week to document the agreement and to get Mr Fraser to put it in writing (T 86); to the suggestion that Mr Fraser "always played games" and did not like the fact that he, Mr Galati, was earning more than Mr Fraser (T 88); to the suggestion that he did not press for this because he knew that Mr Deans could not afford to pay him (T 91, T 112-113); and that Mr Dean had reneged on the payment of the success fee because at the time he could not pay for his first deal on the Bidvest Land; and that he never chased Mr Deans because he knew he would never get paid for it (T 91); that otherwise Mr Deans would be trading insolvently (T 101); and that he thought that he could come back to work this out later after he brought all the money in (T 114).
Mr Galati's evidence as to the Deed of Exclusivity (at T 102; see also Ex 3 at 34), when asked why there was no reference to the $1.5 million, was that the deal had "completely changed at that point in time" (T 103). He said that as to the $1.5 million "I wasn't after that, when we did the agreement - right - the 1.5 million came after Dahua bought the, the property".
On more than one occasion it seemed to me that Mr Galati just talked off the top of his head without focus on what he was saying. For example, at T 88 and 89 when he asserted that he had asked Ms Ma (on many occasions) to send Mr Fraser an email "for all my agreements" and then said he was pretty sure that she had done so but did not know 100% and it was not in writing.
Mr Galati seemed prone to self-aggrandisement - see the above evidence about him being a very busy businessman; that he had done many many development deals; that money did not motivate him and that he dealt in billions of dollars (the latter at T 90); but then saying that he needed the money (the success fee) to "run me and my family" (T 90).
At points, Mr Galati said he would remember if he saw the documents (T 102, T 105), suggesting a lack of independent recollection.
In summary, while I do not find Mr Galati to have been a dishonest witness, I did not find him to be a credible or reliable witness and I approach his evidence with no little caution.

[91]

Ms Bhavani Ma

Ms Ma is a company director who began working for Fishbank in 2013. Ms Ma's services were provided through Heartland Productions until 31 July 2015 (though Mr Galati placed this earlier, at June 2015), when she ceased to work for Mr Deans or his company, Fishbanks (rendering a final invoice through Heartland Productions - to Trading Australia - on 3 August 2015, which she said was to finalise all of Fishbank's accounts). Ms Ma commenced working for Mr Galati from about August 2015 (Mr Galati in some of his evidence put this at September 2014) pursuant to an agreement for the provision of services to his company and has continued to do so (T 268). Although her later company (TSF) was not incorporated until 19 November 2015, Ms Ma invoiced Trading Australia for her services from August 2015 in the name of TSF.
In that regard, Ms Ma's evidence was that in June 2015 there were two separate projects which she invoiced in two separate ways (T 279): consulting through Heartland Productions to "revamp" Deans Property's website ; and otherwise work done via Heartland Productions for Fishbank (generally in relation to the redevelopment project). Ms Ma said that in some instances she also provided support to Mr Deans relating to the running of his office and his business (see T 279.)
Ms Ma confirmed that Fishbank had owed her (or Heartland Productions) fees in the vicinity of $122,000, noting that she had not been paid since December 2014, and said this was "a valuable amount of money" (T 281). However, when pressed as to whether it concerned her that Mr Fraser told her that Fishbank was being wound up, Ms Ma said that it did not concern her because she did not believe it (and see the response at T 283).
Mr Galati says that Ms Ma was an honest witness. It is said that Ms Ma gave her evidence carefully and it is submitted that Ms Ma was in the position of a bystander at all relevant events until about 17 November 2015.
Ms Ma presented in the witness box as wary (and with a tendency to pedantry and to display what I would describe as passive aggression of confrontation with the cross-examiner). More than once, Ms Ma's response was to the effect that she did not understand what was being put to her or what she was being asked (see for example, and I do not suggest this is an exhaustive list, T 265; T 269; T 272 - in response to a question clearly referable to what Ms Ma had clearly deposed in her affidavit); T 273.10; T 273.15; T 274; T 275; T 277; T 279; T 281; and at T 289 twice) in circumstances where I considered that, for someone with her professed experience (a company director invoicing not inconsiderable sums for her consulting expertise), there should have been little or no difficulty for Ms Ma to listen, comprehend and answer the relevant question; and Ms Ma seemed quick to demand to be shown "where did I say that in my affidavit" (see at T 271) or to challenge what was put to her (see at T 272); in effect accusing the cross-examiner of putting words in her mouth (see T 282).
I considered Ms Ma's responses on a number of occasions to be unco-operative and unnecessarily confrontational for someone who it is said by Mr Galati to have had no direct personal interest in the outcome of the proceedings (giving rise to my impression that Ms Ma was perhaps not as objective or disinterested a witness as Mr Galati has submitted; and cf her evidence at T 269). I accept that giving evidence in Court proceedings is stressful for any witness but there were aspects of Ms Ma's evidence that suggested that Ms Ma was indeed more in Mr Galati's camp, so to speak, than that of Mr Deans; or at least that she considered her interests to be more aligned with Mr Galati than Mr Deans; or perhaps was simply not particularly sympathetic to Mr Deans. There is, however, no need to make any credit findings in relation thereto; other than to note that I did not consider Ms Ma to be a co-operative witness and that I thought her to be unduly pedantic and combative.

[92]

Mr Lennox

Mr Lennox worked for Fishbank until sometime in 2015 then "rejoined" the project by working for Trading Australia. Mr Lennox is a company director who provided his consultancy services (and IP, about which a great deal of emphasis was placed by Mr Lennox) through Tipping Point Capital and The Tipping Institute. Mr Lennox' evidence was that he dealt largely with Mr Galati and Trading Australia in relation to the redevelopment proposal (T 327). Mr Lennox' main focus (and indeed his constant refrain in the witness box) seems to have been the value he attached to his IP in the financial information prepared in connection with the project (see at T 327): I would say that my connection to the project comes from my own dealings in the site and the parties. In that respect, I, I see myself as having a significant stake holding in the IP. … My connection to the project is beyond that to other stakeholders and preceded all of their involvement.
While Mr Galati does not dispute that Mr Deans was involved in the project from 2002 and that it was Mr Deans' vision or concept at the outset, Mr Lennox appears to have held a firm view of his involvement in the project (see from T 329). Mr Lennox ultimately seems to have aligned himself with the Galati interests; his evidence was that he felt far more comfortable with Mr Galati to follow through and deliver on the project and in relation to paying his invoices (T 330).
Mr Lennox said that from the end of 2014 he saw that his arrangement was going to be "around having a bonus" and (speaking in the passive voice) that "it was seen that, that Mr Galati was the commercial party to fulfil that" (T 330). It appears therefore that, at least to that extent, that Mr Lennox saw his financial reward from the project ultimately coming through Mr Galati (perhaps not surprisingly given that there had been some dispute earlier with Mr Deans as to invoices rendered by him to Fishbank - see at T 328). However, Mr Lennox maintained that, while commercially his arrangement was bonus based and he dealt with Trading Australia in that respect, he was "otherwise dealing" with both of Mr Galati and Mr Deans, adding that this was "because they would attend meetings separately" (T 331). Mr Lennox said that he "certainly saw that [he] needed to be there to get it [the project] over the line" (T 331). Taken to parts of his affidavit as to his dealings with Mr Galati that suggested he was more comfortable with Mr Galati than Mr Deans, Mr Lennox said, tellingly, "[w]ell I didn't have the history of not being paid invoices" (T 332), suggesting a lingering resentment perhaps at Mr Deans' failure to pay earlier invoices.
At some length Mr Lennox explained that dates were not his forte, so to speak (see T 333) (to the extent that he somewhat surprisingly volunteered that he could not even tell the cross-examiner that day's date) but that he recalled "events". Mr Lennox did not recall seeing the Nomination Agreement (T 334) but his understanding of the arrangement was that EJC paid moneys to Dahua and acquired the land and left the shares with Trading Australia and Fishbank (a fair summary) (T 334).
Mr Galati submits that Mr Lennox was an honest witness; and places some weight on Mr Lennox as someone who witnessed the relationship between he (Mr Galati) and Mr Deans "with all its ups and downs". I do not suggest that Mr Lennox was not an honest witness but it is clear that his main focus was on his own position and the value that he obviously considered he had added to the project. Mr Lennox did not appear to have a particularly clear or focussed recollection on the role of others in the project, except as it affected his position; and (as noted above) he made clear that he had no specific recollection of dates (cf his affidavit evidence, which did specify dates). Parts of his oral evidence (put as charitably as possible) made little sense.
Mr Lennox certainly did not display a clear understanding of what was proposed in terms of structure in the Platform Development Information Memorandum (and cannot possibly have been in a position to promise much of what was there being promoted to prospective investors). Mr Lennox agreed, for example, that "Platform" had no "secured interests" (cf the statement in the document that Platform must vest all its existing and progressively secured interest in the areas). However, Mr Lennox did not agree that there was no prospect of him being able to do so (rather, Mr Lennox asserted that he could have obtained them from Trading Australia and Fishbank or could otherwise have organised this - see T 367).
Frankly, Mr Lennox' evidence about Platform (to which I have referred above) was inherently implausible but the explanation for that seemed to me that he was simply misguided, not that he was intentionally seeking to deceive Mr Deans. I have little doubt that at some point in 2015 (if not indeed at the time that he "re-joined" the transaction team at Mr Galati's instigation) Mr Lennox formed the view that his prospects of a financial outcome from his IP lay with Mr Galati and that his professional allegiance was to Mr Galati.
I regard Mr Lennox' evidence overall with some caution. He was not in my view a reliable or accurate historian of events and he, too, did not present as being as objective or disinterested a witness as Mr Galati would have me believe.

[93]

Mr Deans

As to Mr Deans, his performance as a witness in the witness box is more difficult to characterise. Mr Galati points to the frequent pauses that there were between questions and answers (some of which were indeed lengthy - Mr Galati noting that in one instance there was a pause of over a minute); and it is noted that his recollection of some events was hazy. Mr Galati submitted that Mr Deans had a tendency to take refuge in non-recollection (it is said when he was faced with difficult topics). For example, Mr Galati refers to Mr Deans' evidence that he did not recall whether or not he told Mr Galati about the $500,000 commission he was to receive from Bidvest (see at T 430; T 435), when it is said that Mr Deans obviously did not tell Mr Galati.
That said, Mr Galati accepts that some of Mr Deans' evidence was truthful, pointing to the admission by Mr Deans as to his involvement in the removal of Mr Pho as a director of Felan's Fisheries on 26 February 2016 (though Mr Galati says that Mr Deans had no satisfactory answer as to why he did not tell Mr Galati that he had effected Mr Pho's removal, nor why it took two months and one day to notify ASIC of the change). It is said that Mr Deans' attempt to distance himself from the content of his solicitor's correspondence of 15 August 2016 was unimpressive; and that his failure to call his solicitor (Mr Fraser) is telling. Mr Galati seeks a Jones v Dunkel inference (of the kind in Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8) against the Deans interests for their failure to call Mr Fraser. It is said that, where there is a contest between Mr Deans' testimony and that of another witness, then Mr Deans' testimony ought not be preferred.
I accept that Mr Deans had a habit of taking a while to answer questions. Indeed, there was more than one occasion when I was not sure that Mr Deans had understood that there was a question to be answered (or was simply thinking about the answer to the question) and I sought to clarify this once or twice in the course of his cross-examination. However, I formed the view that this was likely to be Mr Deans' way of processing the questions in his own mind; and the fact that it was a consistent practice throughout the course of his cross-examination suggests to me that it was not caused by a particular consciousness for difficulty of his case in relation to any particular question or line of questions. That is consistent with Mr Deans' not uncommon request for questions to be repeated (see, for example, at T 429; T 433; T 441; T 463, twice; T 487) and the fact that there were occasions Mr Deans clearly lost track of the questions he had been asked (see, for example, at T 432) or became confused when he thought there was a change of question (see at T 433).
I did not form the view that Mr Deans was being obstructive; rather, I thought that he was slow in processing information and that he was trying to be careful to ensure that he understood what he was being asked (see for example at T 432.44). In particular, I did not form the view that Mr Deans' non-recollection from time to time was an attempt to avoid answering questions; rather, I thought Mr Deans to be a genuine witness who had no doubt a long held view about events but a difficulty being precise in the detail of events. By way of example, I refer to the line of cross-examination from about T 451-455 as to when Mr Galati found out about the $500,000 commission from Dahua, which commenced with Mr Deans not recalling and then led into a series of hypothetical answers about that hypothetical event, culminating in a passage of transcript that included much inability to recall and the "If he said it I might have said …" and "If I did, if I recall" answers, about which one could have no confidence that this was an accurate or reliable recollection (as opposed to his hypothesis of what he would have said had it occurred).
I considered that Mr Deans had a view (rightly or wrongly) that it was "his" project and that Mr Galati was assisting him with a view to obtaining a share of the profits (or commission) at the end of the day if there was a successful outcome but that, until then, there was no entitlement on Mr Galati's part. The Agreement Principles document is telling in that regard - it shows that Mr Deans considered he should be able to retain the IP and development rights; and also that certain matters about which he and Mr Galati were clearly not then in agreement (such as the payment of consultants' commission or bonuses) were to be Mr Galati's responsibility. I say "rightly or wrongly" because ultimately, the position turns on what the agreements or arrangements are objectively found to be - not what Mr Deans understood them to be. However, I consider that Mr Deans' understanding of events informs the objective assessment of his actions (particularly in relation to the removal of Mr Pho as director) and I consider it clear that what Mr Deans thought (with an understandable basis in hindsight) was that it was "his" project and that Mr Galati was seeking to take the project away from him (as is the thrust of much of the pleaded claims). (See, for example, Mr Deans' evidence that he did not accept he was losing control of the project when the consultants were engaged by Mr Galati - T 428.)
As with all witnesses so clearly with an obvious self-interest in the outcome of proceedings, I treat with caution Mr Dean's evidence of oral conversations or events not documented in objective contemporaneous documents. However, I do not accept the submission that Mr Galati's evidence (also to be approached having regard to his own self-interest) should in general be preferred to that of Mr Deans. I considered Mr Deans far less prone to self-aggrandisement and exaggeration than Mr Galati and, on the whole, I considered Mr Deans' account to be consistent with the objective facts. Thus, I found Mr Deans to be an honest witness albeit one whose recollection of events was not always reliable. (The same observation has been made of Mr Lennox in that regard.)

[94]

Ms Pritchard

Ms Pritchard presented as a nervous witness. I considered her to be an honest witness who answered the questions put to her co-operatively and readily made concessions against interest. I accept that Ms Pritchard was genuine in her evidence as to her recollection of events.
Ms Pritchard said she took a "keen interest" in the discussion at the meeting on 18 November 2015 for many reasons, including that it was going to be an historical site (T 504). Ms Pritchard was firm in her recollection (and I accept her evidence) that Mr Vassallo said that Celestino would be prepared to pay $24 million for the site and that Mr Galati agreed to that price (and that is consistent with Ms Pritchard charging her buyer's commission calculated on that price). Ms Pritchard agreed that she was told by both Mr Galati and Mr Vassallo that the purchase price for the Bidvest assets was $24 million and that, prior to her invoice, she had not been provided by Trading Australia with any services (whether project property services or transaction advisory services) (T 505). Again, I accept that evidence as plausible and consistent with the logic of events as set out in the chronology above.
Ms Pritchard understood that Mr Lennox was working for Mr Galati as at 2 December 2015 (T 511); and Ms Pritchard readily agreed that she was hopeful of a role in relation to the sales and marketing of the Blackwattle Bay development.
Ms Pritchard confirmed that she was asked by Mr Vassallo to have Mr Lennox change the Trading Australia invoice but was not sure why there were variations. Ms Pritchard said that she did not know what Mr Galati was going to do with the money. Ms Pritchard accepted that Wealth Shift's bank account had been used (she did not know why) and, in hindsight, Ms Pritchard said that she had followed instructions. Ms Pritchard said (and I accept this was credible) that she would not ask anyone what they did with their commission.
As noted above, I found Ms Pritchard to be an honest witness and I accept her evidence. I accept that she has found herself in this position because she unthinkingly followed instructions. (That, however, does not necessarily absolve her or her company for liability for what occurred.)

[95]

Mr Vassallo

As noted above, Mr Vassallo was subpoenaed to give evidence. He had previously sworn an affidavit on 4 April 2019 (at a time when EJC was a party to the proceeding).
Mr Vassallo confirmed that EJC was incorporated as a special purpose vehicle in November 2015; and that it was incorporated for the purpose of entering into the Nomination Agreement. Mr Vassallo accepted that he had learnt on 20 November 2015 that the person that Mr Galati had discussed as his partner was Mr Deans (T 530); and Mr Vassallo agreed that there was discussion that Mr Galati and his partner might receive a percentage of profits in the event EJC decided to proceed with the redevelopment of the site.
Mr Vassallo agreed that under the Nomination Agreement the share price had to be paid to Dahua but that the Grantee (defined as Trading Australia and Fishbank) was to retain the shares. Mr Vassallo agreed that the amounts to be paid on settlement under the Nomination Agreement were to be paid to the Grantee's solicitor (T 532). Mr Vassallo confirmed that he knew on 20 November 2015 that the price to be paid as described in the Nomination Agreement was less than the $24 million he had agreed to pay (T 534). Mr Vassallo said that Mr Galati said that there would be a "shortfall" when we received the documents; and that Mr Galati asked him to pay that difference to Ms Pritchard once the matter settled (T 535). Mr Vassallo said that he did not give the instruction much thought (see his affidavit at [61]; T 536), pointing out (and correcting the cross-examiner) that Mr Galati was not the vendor; he was the option holder.
In cross-examination, Mr Vassallo agreed that in substance he was being asked to pay the sum not directly to the option holder but through a real estate agent, who was Mr Vassallo's agent not Mr Galati's agent (T 536). Mr Vassallo thought this was "not normal" it was "unusual" and said that it was not something that he had been asked to do before, reiterating that it was unusual (T 537).
Mr Vassallo accepted that he would never record in companies' accounts purchase prices significantly lower than the price agreed to be paid but said that the land contract did not record a lower price but rather the Nomination Agreement did (T 536). Taken to his statement that this was at the request of option holders he said that "[w]ell Mr Galati was the representative of the option holders" (T 537).
As to the day of the transaction, Mr Vassallo says that he received the instruction before the Nomination Agreement was executed on the day; that he thought it out of the ordinary; and that he agreed to proceed in accordance with it (T 537).
Mr Vassallo said that he did not think to give instruction to anyone to include in the Nomination Agreement provision for payment of the difference "because it wouldn't have reflected the agreement with the option holders" (T 539), again treating Mr Galati as acting on behalf of the option holders. Mr Vassallo said that as far as he knew he had agreed to that course with the option holders that Mr Galati represented. He confirmed that Mr Galati was the person he had conversations with.
Asked why the commission was not paid on settlement (T 541), Mr Vassallo said that that was in accordance with the instructions and agreement of Mr Galati back on 20 November 2015. Mr Vassallo said that Mr Galati had said "[w]e'll pay that after settlement". Mr Vassallo said that he (Mr Vassallo) was happy to pay as soon as it settled.
Asked why the amount would not be paid to the Grantee's solicitor, Mr Vassallo said that was not the agreement that was reached on 20 November 2015 (T 542). Mr Vassallo said that he was given a direction to pay it to Ms Pritchard and that that was what they did (T 542).
Mr Vassallo agreed that he calculated the final amount to be paid - he said that they took out stamp duty and adjustments and worked out the exact amount that would make up the $24 million.
In cross-examination for Ms Pritchard, Mr Vassallo confirmed that he did not tell Ms Pritchard about the shortfall on 20 November 2015 but said that he knew that she knew about the shortfall between the day she signed the deed (rounded up) and the day we settled. Mr Vassallo said that his only recollection is that Mr Galati informed Ms Pritchard because she knew about it and Mr Vassallo did not remember informing her himself but he did remember having a conversation with her towards 2 or 3 December 2015.
Mr Vassallo gave his evidence calmly and in matter of fact fashion. I accept he was honestly giving his best recollection of events.

[96]

Mr Fraser

As adverted to above, Mr Galati invited the drawing of a Jones v Dunkel inference in relation to the failure of the Deans interests to call Mr Fraser as a witness. The circumstances in which a Jones v Dunkel inference may be drawn are well-known (see Glass JA in Payne v Parker [1976] 1 NSWLR 191 (Payne v Parker) at 200-202).
In circumstances where the evidence adduced calls for an explanation by a party and that party fails to call a witness or tender evidence, a Jones v Dunkel inference may be drawn that the uncalled witness or missing evidence would not have assisted that party's case. The rule allows for the more ready acceptance of evidence which might have been contradicted, but which was not (see as explained in Greenaway v Auzhair 1 Pty Ltd (2010) 80 ACSR 538; [2010] NSWSC 1339 (Auzhair Supplies) at [114]). However, the rule does not permit the court to choose between guesses simply because one guess seems more likely than the other or to fill the gaps in evidence (Jones v Dunkel at 305 per Dixon CJ). Thus, a Jones v Dunkel inference is only available where there is, on the evidence, a reasonable basis on which the inference may be drawn (Auzhair Supplies at [115]-[117]). Moreover, in Payne v Parker, Glass JA made clear that the rule only applies when three conditions are met, namely: (i) the missing witness would expect to be called by one party rather than the other; (ii) their evidence would clarify a particular issue; and (iii) their absence is unexplained.
In the present case, I am not persuaded that any adverse inference should be drawn from the absence of Mr Fraser from the witness box (although he was clearly the missing "pachyderm" in the courtroom, so to speak). That is because I am not persuaded that he was in anyone's "camp". Mr Fraser acted for both Mr Deans and Mr Galati (and their companies) from time to time across the period in which the relevant events unfolded; and he (or his firm) drafted many (though by no means all) of the documents that were in evidence. Mr Fraser clearly had a personal interest in the outcome of the project (insofar as he was said to have held shares in the unit trust); and criticism might well be made as to potential conflicts of interest in that regard. However, that is not here to the point.
It is obvious that there was a falling out between Mr Galati and Mr Fraser (which may well explain why Mr Galati did not wish to call Mr Fraser as a witness or indeed why Mr Fraser might not have been willing to be involved in the proceeding had he been asked) but that does not mean that an adverse inference should be drawn against Mr Deans for not calling him as a witness. It was open to both parties to subpoena Mr Fraser to attend - and if there were then issues of privilege or the like that would have been a matter to address at the time. I do not accept that Mr Fraser was someone that it would have been expected that Mr Deans would have called rather than Mr Galati. Mr Fraser was a solicitor who had acted for both at various times and was available to be called to give evidence by both. I therefore draw no adverse inference against either side in this regard.
Moreover, the drawing of an adverse inference does not permit an inference that his evidence would have been positively damaging to the case of the party against whom the inference is drawn, in any event.

[99]

Mr Galati's submissions

Mr Galati points to Mr Deans' oral evidence to the effect that: Mr Deans had a conversation with Mr Galati in the lead up to the signing of the Dahua documents in which Mr Galati said words to the effect that he (Mr Galati) wanted to be paid something for securing that deal; and that Mr Deans agreed that Mr Galati should be paid something for getting the Dahua deal (noting that Mr Deans claimed that such payment was comprised of the $107 million split between Mr Galati and Madison Marcus Advisory; i.e., in relation to the overall project not simply the introduction of Dahua Group to acquire the Bidvest assets).
Mr Galati submits that Mr Deans' concession that Mr Galati should be paid for getting the Dahua deal recognises the fact that $1.5 million had been agreed. (I do not consider that this follows as a matter of course or of logic - a recognition that Mr Galati should be paid or wanted to be paid something for his efforts is very different from an agreement that he be paid a success fee in any particular amount - let alone a $1.5 million success fee.) It is said by Mr Galati that the $107 million under the Deed of Binding Commission Distribution Direction was not an agreement for guaranteed payment but a mechanism for payment on the assumption that the relationship with Dahua progressed. (I agree, but that seems to me to be beside the point.)
For Mr Galati, it is said to be common sense that he would reasonably expect to be guaranteed some payment for attending Fishbank's offices for months (three to four times a week), introducing key personnel, and securing a major funder for the project in Dahua; and that (while he conceded that he was not strong on precise dates) as a matter of his recollection of the $1.5 million fee agreement, Mr Galati's evidence was "generally strong" on the order and events of significance such as this. Reference is made to Mr Galati's evidence that he knew that Mr Deans could not pay (and that Mr Deans had reneged on paying) the $1.5 million because at that time Mr Deans could not pay for the first deal with the Bidvest Land; and Mr Galati's evidence that (at T 91): Robert Deans on the first transaction took $500,000…I went to Robert and I said you were paid $500,000, you need to pay me and the others some money. He said he couldn't because he had to save his company. From that I took that he could never pay me the 1.5 million sotherefore that's when the things started to change between me and him in relation to where we were going forward in the partnership. So I knew we were never going to get the 1.5 million so I never chased it…. I never chased it anymore because I knew Robert couldn't pay.
Mr Galati maintains that this fee of $1.5 million is due and owing to him. Mr Galati says that the fee agreement occurred at a point in time which preceded the "crystallisation" of their 50/50 fiduciary relationship; and for Mr Galati it is noted that there is no defence of waiver in relation to the sum due.

[100]

Defendants' submissions as to $1.5 million "commission"

The defendants say that the alleged agreement for the payment of a $1.5 million commission or bonus has not been established.
It is noted that Mr Galati pleaded in his further amended statement of claim that "in about August 2014" Mr Deans promised Mr Galati a success fee of $1.5 million for introducing and negotiating the sale agreement with Dahua; and that Mr Galati verified that assertion of fact by his affidavit forming part of the further amended statement of claim; and further verified that assertion in his evidence in chief. Mr Deans denies both the conversation and agreement.
The defendants say that Mr Galati's dealings with Dahua Group did not commence in about August (but only in November 2014) and that the fact that Dahua's interest only arose in November 2014 was the premise for the cross-examination of Mr Deans about the matter. Insofar as Mr Galati now seeks to explain this discrepancy as a mere error in date (see his submissions at [19], [99]), the defendants say that this is not a sufficient explanation.
The defendants point out that, despite Mr Galati's experience in the business world, he did not make any record or note of this agreement to pay such a substantial sum to him or his company (the defendants here invoking the Watson v Foxman (1995) 49 NSWLR 315 (Watson v Foxman) line of cases). It is noted that, on Mr Galati's evidence, he procured from Mr Deans an assurance that the agreement would be reduced to writing but that it never was. (Indeed, the defendants say - and I consider this observation to have some force - that Mr Galati's evidence as to this part of his case bordered on the farcical.) It is noted that Mr Galati had many opportunities to have the asserted agreement reduced to writing; and that Mr Galati's asserted "vast array" of lawyers documented all his business agreements, he said, but not the "agreement" to pay him $1.5 million.
The defendants say that there is an inconsistency in Mr Galati's evidence that, on the one hand, he asked Ms Ma and Mr Fraser many times to document the agreement; yet, on the other hand, he never chased Mr Deans because he knew that Mr Deans could not pay that amount. (That evidence is not necessarily inconsistent, insofar as it could relate to Mr Galati's state of mind at different times and he may well have wished to document something even if only in the forlorn hope that Mr Deans might later be willing and able to pay that amount.)
More pertinently, to my mind, the defendants say (and I agree) that, had any such agreement in fact been reached, Mr Galati had abundant opportunity to have his entitlement to a $1.5 million commission formally documented. The defendants point in this regard to the two Equity Funding Agreements signed in October 2014; the Deed of Exclusivity signed on 10 December 2014; the Deed of Binding Commission Distribution Direction signed on 12 December 2014; the Call Option and Share Sale Agreement and Land Option Agreement; the Agreement Principles document; the Deeds signed on 24 September rescinding the earlier Call Options and the two further Call Options and a Deed of Settlement Release; and, finally, the Nomination Agreement on 20 November 2015 (none of which documents referred to the asserted $1.5 million entitlement).
Thus, the defendants say that there is no note of the conversation, and no acceptable evidence of any request for the promised writing. Furthermore, it is said that, absent any stipulation that the "agreement" was immediately binding, it would not have subsequently become so when (on Mr Galati's own account) the agreement was to be reduced to writing, which it never was. The defendants submit that the asserted agreement was not made.

[101]

Determination as to the alleged $1.5 million commission

In King v Adams [2016] NSWSC 1798 at [65]-[69], Sackar J summarised the principles relating to the formation of an oral contract, including that the existence and terms of an oral contract are to be ascertained as a question of fact; and that consideration of surrounding circumstances and post-contractual conduct is permissible when the existence or terms of an oral contract are in issue. His Honour there referred to what was said by Spigelman CJ in County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193 at [7]; and to what was said by Heydon JA, as his Honour then was, in Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61 at [74], [77]. Further, the question whether parties intended to enter into legally binding relations is to be determined objectively, taking into account the totality of the evidence, including the state of affairs between the parties (see Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95; [2002] HCA 8 at [24]-[25] per Gaudron, McHugh, Hayne and Callinan JJ).
I note that in Sergienko v AXL Financial Pty Ltd [2021] NSWSC 297 (albeit in a very different factual context - the matter there involving "claims of unreceipted delivery of millions of dollars of cash in bags and suitcases, participation by a convicted criminal and a flagrant breach of trust" - see at [2]), Hammerschlag J noted that a party "asserting, and seeking to rely upon, the terms of an alleged, undocumented commercial transaction … ought not to be taken by surprise when he, she or it fails to persuade the Court of its existence" (see at [1]). A similar comment may here be made.
As the defendants have noted, and as Mr Galati made clear in the course of his cross-examination, he regarded himself as an experienced businessman. Mr Galati must have understood that by leaving undocumented an alleged commercial agreement (even one for what Mr Galati apparently considers a relatively small amount of money) he risked later being unable to prove (and hence rely on) it.
It has been recognised that the implausibility of accounts of oral arrangements may be reinforced by the fact that neither of the parties sought to confirm in writing what objectively would have been a momentously significant outcome (see White v Philips Electronics Australia Ltd [2019] NSWCA 115 at [49] per Bell P).
In the present case, I am not persuaded that there was a concluded oral agreement in relation to the payment of a $1.5 million success fee, as alleged by Mr Galati. There is no written record whatsoever of any such agreement and none of the successive written documents as to the interests of the parties in the joint venture make any reference to it. As the defendants note, the Agreement Principles document set out potential profit shares from the proposed redevelopment, but said nothing of the supposed commission entitlement. I consider that this is significant in circumstances where, by then, the relationship was becoming strained and the purpose of the document was to record the parties' agreement as to their roles and responsibilities going forward; yet there was not a word of this commission or success fee that on Mr Galati's account had been triggered by his introduction of Dahua Group and its purchase of the Bidvest assets.
Moreover, Mr Galati's evidence was inconsistent as to how the alleged $1.5 million agreement fitted in with the subsequently well-documented arrangements (including whether he had abandoned any claim to that amount or it had been superseded by the later arrangements; and whether or not the amount paid to Trading Australia by Wealth Shift after the settlement of the sale of the Bidvest Land to EJC represented any part of that amount - which seemed at times to be how Mr Galati justified his conduct in relation to the so-called "side" agreement with EJC).
The fact that Mr Deans conceded in cross-examination that Mr Galati had said words to the effect that he should be paid something for getting the Dahua deal says nothing other than that Mr Galati made such an assertion (no doubt Mr Galati made various claims or assertions as to his entitlements - he does not appear to have been shy about asserting his position). Nor does the fact that Mr Deans agreed that he should be paid something take matters much further. What is required is evidence to establish on the balance of probabilities that there was a binding agreement for a payment in this amount. I am not persuaded that this has been established.
As to the resort by Mr Galati to common sense (i.e., that someone in Mr Galati's position would not have engaged in the efforts he did in relation to the project without recompense), that seems to me to fail for the simple reason that any number of persons involved in this project seem to have been involved in the hope or expectation of receiving a payment out of it - in the absence of any binding contractual arrangement or retainer; and Mr Galati himself did not see that as being in any way unusual (indeed he suggested that he always did business like that).
When considering the account given by Mr Galati of this alleged oral agreement, I am simply not able to reach "an actual persuasion" of the occurrence of the conversation(s) propounded by him (leaving aside the difficulty as to when precisely such a conversation is said to have occurred) (see John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451 at [94] per Hammerschlag J as to the need for such an actual persuasion). Moreover, I give more weight to contemporary materials, objectively established facts and the apparent logic of events (see Watson v Foxman at 319 per McLelland CJ in Eq).
Mr Galati was at pains to emphasise his experience as a businessman. He must have appreciated the importance of setting out in writing any concluded agreement (and indeed he seems to have understood this insofar as he said he had pressed for it to be put in writing). I cannot be satisfied, in the absence of any objective contemporaneous evidence, that there was such an agreement struck and it does not seem to me to be an inference that should be drawn in all the circumstances.
The apparent logic of events does not assist Mr Galati - because the logical course if such an agreement had been reached would have been for it to be documented (as later occurred with all the other agreements as to commission or profit share); and, as noted above, it is not inconsistent with the entrepreneurial flavour of this project (where numerous consultants were apparently prepared to perform services without any agreement as to their remuneration or reward, if any, for their services) that Mr Galati would have been prepared to perform services (and introduce the Dahua Group) without an agreement in advance as to commission - perhaps simply in the expectation that he would be able to strike an agreement for commission at some later stage (or, as his evidence in this respect later was, would eventually sit down to "work it out").
As adverted to above, Mr Galati's own practice with consultants or others performing services for him or his company (where he was very clear that he did not need - and nothing by law required him - to have a contract with them and that he could pay them whatever he wanted to pay them; and that it was all in his head) suggests that it is by no means implausible that there was no agreement at all for him to be paid a $1.5 million success fee or commission for the introduction of the Dahua Group in relation to the acquisition of the Bidvest Land; and that he simply thought that Mr Deans had some form of moral obligation to reward him for his efforts (and would do so in due course).
Accordingly, Mr Galati's claim for payment of that amount (or damages for the failure to pay that amount) is not made good.

[103]

Status of contractual arrangements from October 2014

I have concluded above that the pleaded agreement as to the $1.5 million success fee has not been made good. What the evidence does, however, disclose is that from October 2014 a number of agreements were entered into, which addressed the parties' rights and entitlements in respect of commission or profit shares in the event that the (overall) redevelopment project went ahead. A practical difficulty for Mr Galati is that, as it transpired, that project had not progressed to completion and hence the entitlements provided for under those agreements have not on any view been enlivened.
I have set out above in the chronology of events the relevant provisions of the respective agreements. I find that the Agreement Principles document must objectively have been intended to supersede any previous agreements at least as between Mr Deans and Mr Galati as to how the arrangements between them and their companies were to operate (although nothing here turns on this because the previous October 2014 agreements did not trigger any entitlement to commission or the like, in any event).
This brings me to the so-called "dictate the terms" agreement, which is now the principal basis on which Mr Galati maintains that there was an agreement that the shares in Felan's Fisheries would be held as to 50% by Trading Australia and as to 50% by Fishbank or alternatively that the shares in TRHS would be held on trust in those proportions. Such an agreement is certainly not to be found in any written document (other than as can be implied from the fact that the call option for the shares was granted jointly to the Grantee - namely, Trading Australia and Fishbank jointly; a possibility that I consider in due course below).
Relevantly, I am unable to conclude that there was any binding "dictate the terms" agreement. Again, this alleged agreement was not reduced to writing; and to my mind does not accord with commercial common sense that one party (such as Mr Deans) would, in a large project such as this (and of which he was the initial proponent), willingly leave it to a co-venturer (with whom by then relations were already strained) to dictate in that party's absolute discretion the terms (including profit share) that were thenceforth to apply. For such an agreement to be plausible it would surely have to have been in writing.
I can well imagine Mr Galati making such an assertion (and that, as a practical matter it might carry considerable commercial force) - i.e., that if he brought in the money to the venture then he wanted to (or would) dictate the terms. What I cannot see is that there is objective evidence that Mr Deans agreed to be bound by any such arrangement. The response said to have been given (to the effect "OK, go and find the funder") seems to me to be inconclusive as to what was in fact there being agreed (if anything) and to be equally consistent with Mr Deans in effect calling Mr Galati's bluff and challenging him to find a funder before any change to the arrangements would be agreed.
Mr Galati places weight on his evidence that, as at 19 November 2015, he reiterated to Mr Deans the "50/50 agreement" that he said was in place "before Abacus" and his assertion that they had agreed that whoever brought the money "dictated the split"; in which conversation Mr Galati says he said to Mr Deans (and Mr Deans agreed) that (his affidavit affirmed 12 March 2019 at [172]): Galati: I am telling you that the terms are that the interest in Felan's will be 50% to [Trading Australia] and 50% [Fishbank]. I found the buyer. You are lucky that I am not saying 70% for me and 30% for you. That is not my style, Robert. Deans: I've got a better deal. I'll then dictate the terms.
There is an obvious difficulty in accepting one party's (necessarily self-interested) account of an undocumented conversation such as this but, in any event, I do not accept Mr Galati's assertion that Mr Deans' agreement to the above, insofar as Mr Deans' response implicitly recognised the existence of the "dictate the terms" agreement, is borne out by any objective evidence.
Mr Galati's position is that the appointment of the two directors to the board of Felan's Fisheries (Mr Pho and Mr Turner) was a consequence of the reality that "we had a 50/50 interest"; and Mr Galati relies on Mr Lennox' evidence as supporting this position. Mr Lennox' evidence was that Mr Galati said on 20 November 2015 in a conversation with Mr Fraser, Mr Deans and Mr Galati that (his affidavit affirmed 30 August 2018 at [325]): Well its deal or no deal. I am not going to bring Celestino to the table unless it's 50/50. When the Dahua deal ended, we agreed that whoever brings in the buyer of the options, sets the terms, it needs to be 50%. and reference is also made to Mr Lennox' understanding (apparently by reference to the Agreement Principles document) that Mr Galati had "a right to a 50% equity interest). Again, I regard Mr Lennox' evidence is not conclusive for the reasons set out above.
Mr Galati also refers to Ms Ma's affidavit evidence (at [186]) that around the time of the Agreement Principles document Mr Galati said that "Robert…I will only work with you on the basis that if I secure the funds then I will dictate the terms that we share the profits 50:50" and that, in her oral evidence, Ms Ma said that Mr Galati had made that comment "many" times and that she had heard many conversations about Mr Galati and Mr Deans sharing profits 50/50 from around April until November 2015. Pausing here, the conversations to which Ms Ma deposes as to 50/50 sharing of profits do not in terms address the interest in the Felan's Fisheries shares.
I cannot place weight on the accounts given by Ms Ma (of many conversations to that effect) given that Ms Ma presented as a witness not impartial to Mr Galati's cause (and that it does not make sense that it would not have been documented had the agreement in fact been reached). Indeed, the very fact that there are said to have been many conversations or discussions as to the basis on which the Galati interests were to participate or be involved in the project simply highlights the lack of a binding agreement providing for what Mr Galati seems to have been pressing (namely, a 50% interest in the project, however that was to be achieved.)
Nor can I place weight on Mr Lennox' evidence given the unreliability of his recollection generally and the confused nature of his evidence. I frankly do not consider him to be a reliable historian (particularly given that his focus was largely on his own self-interest - the protection of his allegedly valuable IP).
Mr Galati also points in this regard to the appointment of the two directors to the board of Felan's Fisheries and to the letter from Mr Fraser (who Mr Galati describes as the joint venture solicitor at the material times) in August 2016 which referred to Mr Galati having an equitable ownership interest in the Felan's Fisheries shares (the only dispute between the parties there being said to be as to the percentage). (Pausing here, an assertion or acknowledgment by Mr Fraser that Mr Galati had an equitable interest in the shares - even leaving aside the question as to whether this would amount to an admission by Mr Deans in circumstances where Mr Fraser had acted for both parties - is hardly evidence of an enforceable agreement in circumstances where it is there acknowledged that there is disagreement as to what that interest is (and a recognition that it might be necessary to have that determined by a court). The fact that any equitable interest in the shares was disputed at the time is the nub of the present problem.)
In similar vein, Mr Galati points to Mr Deans' concession in his oral evidence that there was a "clear understanding that Trading Australia had an interest (in the project) and that was in dispute, and how much that interest was" and Mr Deans' acceptance that the Felan's shares "were part of the project" (T 549). Mr Galati says that, in his affidavit evidence, Mr Deans appears to accept that Trading Australia was entitled to a 30% interest (but did not accept it was entitled to a 50% interest).
Pausing here, there is to my mind a difference between an agreement to share in the profits of a joint venture in a particular proportion and an agreement that there would be an equity interest in the shares in a company regarded as relevant (even critical) to the project itself. The submissions for Mr Galati seem to me, with respect, to conflate the two. That said, I accept that Mr Lennox' evidence includes his recollection that Mr Galati said that the interest in Felan's Fisheries would be 50/50. However, again I consider that what Mr Galati said to others would be the case is not the most reliable of evidence and I do not accept that this establishes that there was a concluded and binding agreement to that effect (particularly in the absence of writing - in circumstances where the parties were otherwise quite capable of putting their agreements in writing).
It is therefore not necessary to delve into the question whether a "dictate the terms" agreement would be otherwise unenforceable or too uncertain (though I consider the submissions in this regard to have force).

[104]

Mr Galati's submissions as to the nature of the relationship

As to the nature of their relationship, Mr Galati submits that, from a point in time (imprecisely identified in his submissions as "several months after they had commenced working together"), he saw Mr Deans as his "partner" (though I interpose to note that Mr Galati's subjective view of the arrangement is not determinative - see below).
Mr Galati emphasises that, from September 2014 until 20 November 2015, Mr Galati met with numerous potential investors in the Destination Blackwattle Bay project. Mr Galati says that he was successful in introducing every "joint venture partner" who signed up to injecting cash "into the partnership" with Mr Deans for the purposes of progressing the redevelopment proposal. (Pausing here, in this context Mr Galati includes not only Dahua Group and Celestino - who did in fact provide some funds - but also Abacus, even though the Abacus proposal or "deal" did not proceed - for which Mr Galati clearly blames Mr Deans; though Mr Deans evidently thought the deal remained on the table at least until the end of July 2015 and that Mr Galati and Mr Lennox had not supported aspects of it - see the 27 July 2015 email referred to in the chronology of events above.)
Mr Galati says that, at all material times up until 20 November 2015, he and Mr Deans were looking for a redevelopment "partner" in the whole site at the Sydney Fish Markets (that much, I accept); and that their priority was first to secure the Bidvest Land so that (and this is where there is doubt on the evidence) Mr Galati and Mr Deans as "partners" would "keep the Felan's shares", the significance of those being (as adverted to above) the fact that Felan's Fisheries owned 25% of the shares in Buyers.
Mr Galati maintains that, by the time of entering into the joint agreements with the two Dahua entities, and thereafter up to and including 20 November 2015, Mr Deans and Mr Galati, by their words and conduct, had become bound in equity as fiduciaries to conduct themselves in connection with the project in their joint or combined interests to the exclusion of their own individual interests; and that the consequence of their fiduciary obligations was proscriptive in the sense that it took away their freedom to act self-interestedly without first obtaining fully informed consent of the other. (Pausing here, this submission - if accepted - seems to me to be fatal to Mr Galati on the cross-claim as to the secret commission; as I discuss in due course. It also seems contradictory to the concept of any "dictate the terms" agreement.)
Mr Galati submits that the existence of a joint venture or partnership relationship giving rise to fiduciary duties is supported by the following: that Mr Deans and Mr Galati were working jointly in a commercial enterprise with a view to profit; that profits were to be shared; that the joint venture's policy was ultimately a matter for joint decision; that the joint venture property (shares in Felan's Fisheries) was held upon trust; and that each side agreed to ongoing joint management of the tangible asset of the venture (by having a proxy director for each nominated on the two person board of Felan's Fisheries).
As to the first and second of those matters (a joint commercial enterprise with a view to profit; and that profits were to be shared), Mr Galati here points to the execution of the formal contracts or deeds and says that the documents executed by the parties involved them making profits jointly, or sharing profits, in the project (referring to the Deed of Exclusivity, Deed of Binding Commission Distribution Direction, Agreement Principles document and Nomination Agreement). Reference is also made in this context to the intended joint venture agreement in relation to Dahua on the one hand and Fishbank and Trading Australia on the other (and the schematics prepared by Mr Lennox in relation thereto, which it is said showed a mixed profit and control sharing arrangement between Trading Australia and Fishbank).
Further, Mr Galati says that, after the Agreement Principles document was signed, the parties proceeded on the basis of joint profits or a 50/50 division of profit sharing. In this regard, Mr Galati refers to the proposals put to Greenland, Abacus and Cabe, which contemplated joint profit sharing arrangements (even though those proposals never eventuated into any concluded agreement). (I interpose here to say that I consider that the weight that can be placed on what arrangements the parties might have been prepared to enter into had those proposals been accepted by third parties is moot.)
As set out in more detail in the chronology of events above, the Deed of Exclusivity provided that Fishbank and Trading Australia would jointly receive payments from Dahua Group in return for exclusive rights to negotiate for the potential purchase of the Bidvest Land and any part of the Blackwattle Bay project; the Deed of Binding Commission Distribution Direction provided for agreement as to the percentage commission that each party would receive upon Dahua Group or its nominee purchasing any of the assets the subject of the Deed of Exclusivity (Madison Marcus Advisory and Trading Australia, 58%; Fishbank, 42%); the Agreement Principles document provided for the parties' proportionate share, after expenses, depending on the amount funded; and the Nomination Agreement which provided for a joint share of the Development Profit if the Bidvest Land was redeveloped. (Pausing here, it is relevant to note that none of the executed documents provided for an interest in the shares in Fishbank, nor does Mr Galati suggest that he had any such interest; and hence the acceptance by Mr Deans, to which Mr Galati refers in his submissions, that Fishbank was part of the project takes the matter no further in my opinion.)
Nor do any of the executed documents set out how the Felan's Fisheries shares were to be jointly held (in particular, as to what was to happen if - as has transpired - the project did not proceed and the rationale for the holding of the shares disappeared); though I accept that the Share Sale Option Agreement and the later Nomination Agreement provided for Fishbank and Trading Australia jointly to have the option to acquire the shares.
Mr Galati says that Mr Lennox conducted himself on the basis that, as at 20 November 2015, the aspect of the Agreement Principles document concerning payment of financial bonuses (i.e., that Mr Galati would be responsible for them) was still binding; and that Mr Lennox' evidence was that all forecasts and feasibilities prepared in the project had identified that the total joint benefit from the interests at the Sydney Fish Markets and in the Bidvest land "are above the threshold of $150 million". (The relevance of Mr Lennox' profit projections or forecasts, or how Mr Lennox conducted himself, again seems to me to be moot. As adverted to above, this project seems to have been characterised by numerous parties holding very optimistic views as to the profits that would be engendered by the redevelopment and the returns in which they would share; which views have remained unrealised. Moreover, I place little weight on the reliability of Mr Lennox' understanding of any of the contractual arrangements.)
Mr Galati says that, not only did the parties' documentation reflect a "crystallised" 50/50 equity or joint profit sharing basis, but that this was also the basis agreed between them orally as at 20 November 2015 (relying on the alleged "dictate the terms" agreement - which Mr Deans disputes and which, as I have noted above, I am not persuaded has been established on the balance of probabilities).
As to the position from 20 November 2015, Mr Galati submits that the agreement with the respective interests on 20 November 2015 (with a further or incidental term on 23 November) was that: Celestino would buy the Bidvest Land from Dahua No 1; Celestino would purchase the share option in Felan's Fisheries and then transfer that option to both Fishbank and Trading Australia (as to 50% each); Celestino would permit an entity nominated by Trading Australia and Fishbank and independent of Celestino (TRHS) to acquire the shares in Felan's Fisheries; the Galati interests and the Deans interests would each nominate one director to the board of Felan's Fisheries; $250,000 would be paid by Celestino for the Felan's Fisheries' fighting fund against SFM; and both Trading Australia and Fishbank would receive a 10% profit share in any development by Celestino of the Bidvest Land. (That this was broadly the agreement reached on 20 November 2015 does not appear to be disputed by Mr Deans, other than that he disputes that the Galati interests were entitled to a 50% share in the Felan's Fisheries' shares, which is, of course, the relevant issue here.)
As to the third of the above matters relied upon by Mr Galati as relevant to determine the existence of a partnership (i.e., the submission that policy decisions for the joint venture were to be made jointly), Mr Galati points to the conduct of Mr Deans and himself in the year leading up to and including 20 November 2015, in which he says decisions were jointly made. It is said that this would not have been necessary if Mr Galati were simply an agent of Mr Deans.
In this regard, Mr Galati points to the documentation from the time of the Deed of Exclusivity up to and including the 20 November 2015 Nomination Agreement which he says reflects that decisions were to be made jointly (namely, the Deed of Exclusivity; the Dahua Call Options; and the documents in relation to the proposals involving Abacus and Cabe), referring to the fact that Fishbank and Trading Australia were to be the joint nominator of the investor purchaser and were to have other related joint decision-making functions; and to the fact that the Nomination Agreement bound Fishbank and Trading Australia jointly as Grantee.
Mr Galati says that the parties' conduct reinforced the situation reflected in the documentation and points to Mr Deans' concession in cross-examination that he was not at all times in control of the project. Mr Galati emphasises his own role in relation to the project (in the introduction of "high calibre personnel" and both Dahua and Celestino). (I interpose to note that the quality and the quantity of the contributions which Mr Galati brought to the joint venture, and which Mr Galati here emphasises, are matters that say nothing as to joint decision-making in respect of the project but seem again to be Mr Galati's view as to the value of his own contribution to the project.) It is noted by Mr Galati that, in his affidavit evidence, Mr Deans variously confirms that, prior to proceeding with possible deals, he would refer them to Mr Galati "to consider", and that Mr Deans also spoke of a "joint venture partner" in terms which included Mr Galati (see the Cabe term sheet).
As to the proposition that the joint venture property (shares in Felan's Fisheries) was held upon trust (also referred to as an indicium of there being a partnership relationship), Mr Galati maintains that at all times up until and including 20 November 2015, Trading Australia and Fishbank were the two entities that were entitled and required to acquire the Felan's Fisheries shares (i.e., under the Call Option in relation to the shares), and it is said that that is how both Mr Deans and Mr Galati proceeded. (I consider the issue of the claimed trust in relation to the Felan's Fisheries shares below.)
Mr Galati points to evidence that he regularly referred to Mr Deans as his partner and he says that both Ms Ma and Mr Lennox also saw the relationship as a partnership or joint venture.
Thus, Mr Galati submits that there was a partnership. However, even if there is not a concluded partnership as such, Mr Galati says that the indicia of a fiduciary relationship as set out in UDC v Brian are to be found in the present case (including that: the participants were joint venturers in a commercial enterprise with a view to profit; profits were to be shared; the joint venture property was held upon trust; and the joint venture's policy was ultimately a matter for joint decision); and Mr Galati says that the duty of loyalty binding Mr Deans and Mr Galati obliged them to act in their joint interests to the exclusion of their own interests.

[105]

Defendants' submissions

As to the weight placed by Mr Galati on the conversation (at [110] of Mr Galati's affidavit affirmed 12 March 2019), where it is said that Mr Galati said "we need to be clear on our agreement" and that Mr Deans said he was prepared to give a 30% interest in Fishbank; Mr Galati said that he wanted 50%; and Mr Deans is said to have said "Ok Dominic. Just go and find a funder", the defendants say: first, that Mr Deans denies the conversation; but, second, it is in any event not clear what is there meant by finding a funder and, further, that it is not a conversation about any shareholding in Felan's Fisheries (noting that even on Mr Galati's evidence it is about a shareholding in Fishbank); and hence, it is said that this is irrelevant to the present issue.
Mr Deans submits that the relationship between the parties falls short of a formal partnership, noting that a relevant feature of a partnership is a mutual agency (referring to Marzec v Lysiak [2015] NSWSC 647 at [145] per Kunc J, his Honour there citing Walters v Scarborough [2011] NSWSC 1380) (Walters v Scarborough).
The Deans interests emphasise that there is no evidence of any partnership accounts having been prepared or partnership tax returns or the like; that the terms of the alleged partnership have not been recorded in any written document; and that on Mr Galati's own evidence he agreed with Mr Deans that the terms of the partnership would not be set until and unless one of them brought in a purchaser or investor for the redevelopment as a whole.
Further the Deans interests say that if the terms were to be declared by whoever brought in the funds then the alleged partnership agreement is uncertain and would not constitute the foundation for a legal arrangement - being simply an agreement to agree.
Therefore, it is submitted that there was no partnership - although it is accepted that there was some form of loose joint venture. Reference is made to UDC v Brian but it is said that what is not clear is when those obligations arose. It is accepted that a joint venture or joint endeavour existed for a period at least sometime from 2014 (T 574) when Mr Galati's involvement in the project increased (but it is said that, even if Mr Galati is accepted, the whole purpose of the Felan's Fisheries shares is the joint venture and that once that foundation fails then the intent underlying the holding of the Felan's Fisheries shares evaporates. I consider this in due course.)

[106]

Finding as to partnership/joint venture/fiduciary duties

The definition of partnership in s 1(1) of the Partnership Act 1892 (NSW) (Partnership Act) is the relation which exists between persons carrying on business in common with a view of profit. Section 2 of the Partnership Act sets out various rules to which regard shall be had in determining whether a partnership does or does not exist. Those include the rule that the sharing of gross returns does not of itself create a partnership (s 2(1)(2)) and that the receipt by a person of a share of the profits of a business is prima facie evidence that the person is a partner in the business (s 2(1)(3)).
In determining the characterisation, as a matter of law, of the relationship of the parties (in the absence of any written agreement defining that relationship), the intention of the parties must be objectively ascertained from their words and conduct. The description that the parties themselves have placed on their relationship is not conclusive (see Weiner v Harris [1910] 1 KB 285 at 290 per Cozens-Hardy MR). What is important is the substance of the transaction (Canny Gabriel Castle Jackson Advertising Pty Ltd v Volume Sales (Finance) (1974) 131 CLR 321 (Canny Gabriel) at 327 per McTiernan, Menzies and Mason JJ). In Industrial Equity Ltd v Lyons (Supreme Court (NSW), Cohen J, 15 October 1991, unrep) (IEL v Lyons), it was said that the first question is whether the joint venture between the parties in the relevant case is that which would amount in law to a partnership, whatever name they may have subjectively put on that relationship. (Hence, my earlier observation that the views of Mr Deans or Mr Galati as to this are not determinative.)
Further, it is important to note that there may be a joint venture which does not constitute a partnership as a matter of law (see UDC v Brian; and IEL v Lyons, where Cohen J noted that the phrase "joint venture" (which the parties there had adopted) did not establish any particular form of relationship).
In UDC v Brian, Mason, Brennan and Deane JJ said (at 10): The term "joint venture" is not a technical one with a settled common law meaning. As a matter of ordinary language, it connotes an association of persons for the purposes of a particular trading, commercial, mining or other financial undertaking or endeavour with a view to mutual profit, with each participant usually (but not necessarily) contributing money, property or skill. Such a joint venture (or, under Scots' law, "adventure") will often be a partnership. The term is, however, apposite to refer to a joint undertaking or activity carried out through a medium other than a partnership: such as a company, a trust, an agency or joint ownership. The borderline between what can properly be described as a "joint venture" and what should more properly be seen as no more than a simple contractual relationship may on occasion be blurred.
Turning then to the question whether the relationship in the present case between the Deans interests and the Galati interests (or Mr Deans and Mr Galati) amounted at law to a partnership, and addressing the factors that have been considered relevant (see Canny Gabriel, and IEL v Lyons), which include how the policy of the business undertaking or commercial enterprise was to be determined; whether there was property held jointly or on trust for the parties; and the contribution made by each of the parties to the responsibility and control of the undertaking, I note as follows.
First, it has been recognised that the intention to make a profit lies "at the very heart" of the partnership relationship and is "the grand characteristic of every partnership" and "the leading feature of nearly every definition of the term" (see Roderick l'Anson Banks, Lindley & Banks on Partnership (18th ed, 2002, Sweet & Maxwell) (Lindley & Banks) at [2-07]).
As to the sharing of profit, what is relevant is not merely the sharing of gross returns but the sharing of profits and losses which is said to be of the essence of a partnership contract. Here, it is evident that at least from the time of the Agreement Principles document there was a common enterprise (i.e., the redevelopment project) in which both sets of interests were participating with a view to sharing the profit after expenses of the project. An arrangement that Mr Galati would receive a share of profits would not necessarily be sufficient (see Phillips-Higgins v Harper [1954] 1 QB 411) but in the present case the Agreement Principles document makes clear that Mr Galati was to be responsible for certain expenses and bonuses. Therefore, this characteristic of a partnership appears here to be satisfied.
As to the policy of the joint venture, it is said in Lindley & Banks at [15-01] that it is inherent in the contract of a partnership that each partner will be remunerated and have the right to participate in the management and administration of the partnership (the authors there referring to Hybernia Management & Development Co v Newfoundland Steel Inc (1996) NFLD & PEIR 91 at 107 per Well J) (see also BSP Technical Services Pty Ltd v AMEV-UDC Finance Ltd (Supreme Court (NSW), Hodgson J, 25 March 1985, unrep); United Builders Pty Ltd v Mutual Acceptance Ltd (1980) 144 CLR 673 at 679 per Stephen J). However, a right to participate in management can be modified by agreement (see s 24(1)(5) of the Partnership Act). In Cribb v Korn (1911) 12 CLR 205 it was suggested that that one party's right to direct or control the other is a relevant factor to take into account.
In the present case, the Agreement Principles document appears to have reserved to Mr Deans the right to make the final decisions but, from a practical point of view, it is clear that at least once the Call Options were entered into it was necessary for there to be a joint decision (if nothing else then at least as to the nomination of a purchaser of the land and other assets the subject of the option rights); and I accept that there was a practice of consultation in relation to the decisions made in respect of the proposals put to the prospective investors (so, for example, it was recognised that Mr Deans' consent to the Abacus deal was necessary). (See also the requirement in the Agreement Principles document for communication and liaison on all "strategy, deals & tactics", and agreement before the same are enacted; in which context it might be said that what Mr Deans was being given was in effect a casting vote - but there is an element of inconsistency in this regard.)
As to the indicium of joint property, it has been said that it is not necessary that there be joint property for there to be a partnership (see Lindley & Banks at [5-32]). As noted above, Mr Galati characterises the shares in Felan's Fisheries as the joint property. Strictly speaking, however, the joint property seems to me to be the option rights.
In my view there was clearly a "joint venture" or joint endeavour between Mr Deans and Mr Galati (and their respective companies) but I am not persuaded that this amounted to a partnership as at the time that they entered into the 20 November 2015 Nomination Agreement. Rather, I consider that the partnership that the parties were contemplating (when using the term "joint venture partner" for example) was the entry into a partnership or partnership structure to undertake the redevelopment proposal itself (not a "partnership" to find a re-development partner or investor simply to acquire the Bidvest Land). Hence, the discussion and agreements as to the sharing of profits focussed on profits of the ultimate redevelopment project. I consider that the activities prior to that time were being undertaken with a view to some form of partnership down the track.
It is not insignificant that there was no partnership agreement as such; and there is no suggestion that any partnership accounts have been kept or partnership returns filed.
In the circumstances, I consider that the reference to "partners" was not a technical term intended to encompass a formal partnership arrangement; rather it was a descriptive term that might just as easily have been "co-venturer".
Ultimately, nothing seems to me to turn on this issue in the present case because the indicia of the kind of relationship in which fiduciary obligations will arise encompass much the same kinds of features and would in my view be satisfied in the present case. Indeed, the irony is that both sides maintain that the relationship was one in which fiduciary obligations arose (save that they rely on this for very different purposes - Mr Galati to assert that Mr Deans was in breach of his fiduciary duties in relation to the dealings with TRHS' shareholding in Felan's Fisheries; Mr Deans to assert that Mr Galati was in breach of fiduciary duties in relation to the circumstances in which he received the alleged secret commission payment).
In UDC v Brian, the High Court said that (at 12): A fiduciary relationship can arise and fiduciary duties can exist between parties who have not reached, and may never reach, agreement upon the consensual terms which are to govern the arrangement between them. In particular, a fiduciary relationship with attendant fiduciary obligations may, and ordinarily will, exist between prospective partners who have embarked upon the conduct of the partnership business or venture before the precise terms of any partnership agreement have been settled. Indeed, in such circumstances, the mutual confidence and trust which underlie most consensual fiduciary relationships are likely to be more readily apparent than in the case where mutual rights and obligations have been expressly defined in some formal agreement. Likewise, the relationship between prospective partners or participants in a proposed partnership to carry out a single joint undertaking or endeavor will ordinarily be fiduciary if the prospective partners have reached an informal arrangement to assume such a relationship and have proceeded to take steps involved in its establishment or implementation.
I am satisfied that by the time of the Agreement Principles document (and indeed most likely from an earlier point, namely at the time of entry into the October 2014 Equity Funding Agreements, as the defendants' submissions themselves concede), the relationship between Mr Deans and Mr Galati (and their respective companies) was a fiduciary one, in that the parties were joint venturers working towards a common end and their relationship was based on mutual confidence. At the very least, Mr Deans was placing trust in Mr Galati when he gave Mr Galati the responsibility, on behalf of the joint venture, for liaising with proposed investors and financiers for the project (armed with confidential information in relation to the project and the strategic decision-making reached between the respective interests).
I therefore consider that the relationship between the Deans interests and the Galati interests gave rise to the fiduciary duties considered in UDC v Brian, namely that "each participant was under a fiduciary duty to refrain from pursuing, obtaining or retaining for itself or himself any collateral advantage in relation to the proposed project without the knowledge and informed assent of the other participants" (at 13).

[108]

Mr Galati's submissions re shares in Felan's Fisheries

Mr Galati says that (by reason of the secrecy or anonymity that he and Mr Deans agreed was required with regard to the ownership of the shares in Felan's Fisheries) a unit trust (the TRHS Unit Trust) was agreed to be deployed to represent their interests in the Felan's Fisheries shares; i.e., that there was an agreement to use an existing unit trust to hold the beneficial interest in the Felan's Fisheries shares for the benefit of the interests of Mr Galati and Mr Deans. Mr Galati's complaint is that Mr Galati has not been issued any units in the TRHS Unit Trust and that Mr Deans contests Mr Galati's entitlement in this regard (see T 472.9).
However, there is a distinction between an agreement or expectation that Mr Galati would become a unitholder of the TRHS Unit Trust (consistent with the assertion made by his lawyers in the correspondence in June 2016) and the trusts here sought to be recognised by way of the declaratory relief for which Mr Galati contends.
Mr Galati also submits that Mr Deans and Fishbank should be estopped from denying that: TRHS holds the Felan's Fisheries shares on trust for Mr Galati on the one hand and Mr Deans and Fishbank on the other in equal shares; or that Fishbank holds 50% of the shares in TRHS on trust for Mr Galati and Trading Australia.
Mr Galati accepts that the agreement to use a unit trust structure (i.e., that which was said to be put in place through TRHS) might obviate the need for equity to impose a remedial constructive trust in order to make good the breach of fiduciary duty here alleged (or even as to the alleged estoppel - see below). However, Mr Galati says that the more practical view is that, now that there is no need for anonymity as to the ownership of the shares in Felan's Fisheries, the whole unit trust structure can be abandoned (as can TRHS) and Mr Galati can be declared to be the owner of half the shares in Felan's Fisheries, leaving the other half owned by TRHS, which is under Mr Deans' control.
As to the claim in estoppel, Mr Galati invokes the principles articulated in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; [1988] HCA 7 (Waltons Stores v Maher) per Brennan J, as his Honour then was, including the six elements of an equitable estoppel there set out (at 428-429): … (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise.
As to those elements of estoppel, Mr Galati submits as follows.
First, as to the assumption or expectation of existence of a particular legal relationship, Mr Galati says that he had not agreed to "work for free" on this major redevelopment project (and that he was not a "charity"); rather, it is said that there was an expectation (reflected in the arrangements from and subsequent to the Equity Funding Agreements) that that the arrangement between the parties was partially or entirely equity based (not debt based).
Reliance is placed on Mr Deans' commitment to the Agreement Principles document (which reflected a 70/30 or 50/50 share of profits in the joint venture partnership). It is submitted that, by the time of the Abacus "deal" and subsequently, the 50/50 equity/joint profit basis "including through the Felan's Fisheries shares" constituted the assumed and/or expected particular legal relationship between the parties (if Mr Galati sourced the funder, which it is said he did in Celestino on 20 November 2015). It is said that Mr Deans was bound in equity not to withdraw from that assumed legal relationship.
Second, as to the requirement for inducement to adopt that assumption or expectation, Mr Galati has alleged that, by their conduct and acquiescence in the matters pleaded at [8A]-[8K] and [14]-[39] of the amended statement of claim (see the amended statement of claim at [40A]), Mr Deans and Fishbank induced in Mr Galati the belief that 50% of the Felan's Fisheries shares would be held by TRHS (or 50% of the shares in TRHS would be held by Fishbank) on trust for Mr Galati and/or Trading Australia. It is said that Mr Deans' own evidence conveys that he continuously sought Mr Galati's support from early to mid-2014 onwards to deliver on the two Call Options by 20 November 2015; and that Mr Galati's work "for the project" (for some 16-18 months without remuneration) was necessarily on the promise of an equitable share in the joint venture.
Third, as to the requirement for reliance on the assumption or expectation, it is said that Mr Galati (and "his team", which later included Mr Lennox, Ms Ma, Ms Chikarovski, and each of Mr John Shepherd and Mr Tony Shepherd) worked consistently throughout the relevant period in reliance on the expectation or assumption of obtaining 50% of the Felan's Fisheries shares or 50% of the units in TRHS Unit Trust on the basis of a joint interest with Mr Deans. (Pausing here, the relevance of reliance by other members of Mr Galati's so-called "team" is not apparent.)
Fourth, as to the requisite knowledge or intention, Mr Galati says that Mr Deans at all times knew and intended that Mr Galati would work for the project (and that they were bound to each other). Mr Galati says that Mr Deans was consulting and relying on him as a joint venture partner right up until the Celestino deal was finalised; and that Mr Deans ultimately accepted Mr Galati's Celestino deal as being the "best" of any possibility which either of them could source.
Fifth, as to detriment, it is submitted that if Mr Galati's assumption or expectation is not fulfilled, then he will obtain no interest in the venture, will have no shares in Felan's Fisheries and will not have been paid for his work. It is said that the Felan's Fisheries shares are a tangible asset but also are important given the voting rights attached to the shares.
Finally, as to the element of failure to avoid detriment, Mr Galati says that Mr Deans and Fishbank failed to avoid the detriment to Mr Galati, whether by fulfilling his assumption or expectation or otherwise. It is said that the Deans interests resiled from the assumed state of affairs; and that Mr Deans thwarted Mr Galati from realising his entitlement to the shares in Felan's Fisheries.
Mr Galati points out that Mr Deans conceded that TRHS was only a device necessary to ensure anonymity for him and Mr Galati in respect of the ownership of Felan's Fisheries; and that the need for anonymity became redundant in view of the litigation between Felan's Fisheries and SFM in early 2016.
Mr Galati says that, had there been no need for anonymity, the natural progression upon the exercise of the option was for the Grantee (namely, Trading Australia and Fishbank together) to become the owners of the shares in Felan's Fisheries. Moreover, Mr Galati says that, as things transpired, Mr Deans and Mr Galati have chosen to abandon their corporate vehicles and to take on the ownership of the shares personally (noting that Mr Deans is now the sole unitholder in the TRHS Unit Trust, the sole shareholder in TRHS, and the sole director of Felan's Fisheries and of TRHS - and Fishbank has no interest therein).
Mr Galati contends that the agreed split between the two joint owners of the right to acquire the shares in Felan's Fisheries was 50/50. Insofar as the Call Options and the Nomination Agreement do not disclose expressly whether the relationship between Trading Australia and Fishbank as to the shares was to be an association as joint tenants or as tenants in common in certain shares, Mr Galati points to the preference of equity that parties be tenants in common rather than joint tenants (and the presumption that this is so in the absence of express agreement to the contrary) (noting that this is now reflected in s 26 of the Conveyancing Act and referring to Delehunt v Carmody (1986) 161 CLR 464; [1986] HCA 67).
Mr Galati says that if (contrary to his contentions) there is found to be no agreement as to the percentage split in the Felan's Fisheries shares, then the maxim that equity is equality would apply (referring to Re Steel; Public Trustee v Christian Aid Society [1979] Ch 218; 2 All ER 1026 at 225-226 per Sir Robert Megarry VC; and to cases in the context of a trustee apportioning administration costs between various trusts - namely, Trio Capital Ltd (Admin App) v ACT Superannuation Management Pty Ltd (2010) 79 ACSR 425; [2010] NSWSC 941 at [34] per Palmer J, citing Re Suco Gold Pty Ltd (in liq) (1983) 33 SASR 99 at 109 and 13 Coromandel Place Pty Ltd v CL Custodians Pty Ltd (in liq) (1999) 30 ACSR 377).
Thus, it is submitted that, absent an agreement between Mr Galati and Mr Deans as to what their split of the ownership of the shares in Felan's Fisheries should be, the solution is found in the maxim that "equity is equality"; and that there would be a presumption that each of the co-owners would obtain a several half interest in the shares, i.e., half the shares each.

[109]

Defendants' submissions as to claim to shares in Felan's Fisheries

The defendants emphasise that there was no written agreement for Mr Galati or Trading Australia to acquire half the shares in Felan's Fisheries; and they say that the reliance that Mr Galati seeks to place on inferences drawn from the nature of Mr Galati and Trading Australia's relationship with the Deans interests (and the various documents signed during 2014-2015 and conversations held during the same period) faces a number of difficulties.
First, that the evidence given by Mr Galati of an oral agreement ought to be treated with considerable caution, noting the recognised reservations as to the acceptance of such evidence (in cases such as Watson v Foxman at 318-319; The Nominal Defendant v Cordin (2017) 79 MVR 210; [2017] NSWCA 6 [167] per Davis J (with whom Emmett AJA agreed); BM Sydney Building Materials Pty Ltd v AWT Building Group (Aust) Pty Ltd [2019] NSWSC 421 at [51] per Hammerschlag J) and their criticism of Mr Galati's oral evidence in general (which I have addressed already).
Second, the defendants emphasise that the sole purpose and rationale for the acquisition of the Felan's Fisheries shares was that the shareholding was a means by which to influence Buyers to consent to Fishbank's long term large scale redevelopment project (as Mr Galati ultimately conceded); and the defendants say that the said purpose and rationale have long since disappeared.
Third, that the terms of any "partnership" or lesser arrangement (such as a form of joint venture or joint enterprise for a limited time), from which a right to an interest in the Felan's Fisheries shares is said by Mr Galati to be inferred, were never determined. The defendants point to Mr Galati's own evidence as to the "dictate the terms" agreement (and say that, until then, there were no terms of the relationship that were ever really finalised). The defendants say that any such "dictate the terms" agreement was so uncertain in its terms as to be void; and that, at best, there was an unenforceable agreement to agree (citing Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd (1982) 149 CLR 600; [1982] HCA 53 at 604 per Gibbs CJ, Murphy and Wilson JJ). The defendants further say that an agreement which reserves to one party a discretion or option to determine the terms of performance under the agreement, is on that account also void (citing Thorby v Goldberg (1964) 112 CLR 597; [1964] HCA 41 at 605 per Kitto J; Placer Development Ltd v The Commonwealth (1969) 121 CLR 353; [1969] HCA 29 at 356 per Kitto J). The defendants say that this was not an agreement the discretionary performance of which was contained within defined parameters (cf, Re Anglican Development Fund Diocese of Bathurst (2015) 336 ALR 372; [2015] NSWSC 1856 at [349] per Hammerschlag J).
Fourth, the defendants maintain that there was no agreement or arrangement or convention by which the parties each became entitled to half of the Felan's Fisheries shares. The defendants say, by way of example, that as at April 2015 (when the Agreement Principles consensually recorded the arrangements of the parties) the signed document identified liabilities for payments and potential (albeit varying) entitlements to future profits; but it did not identify any percentage shareholding in Felan's Fisheries. It is said that the Call Options, Deeds and other Agreements executed by the parties never identified Trading Australia as having any identifiable, quantifiable entitlement to shares in Felan's Fisheries (noting that some of these documents did expressly address rights to which Trading Australia would become entitled upon various events). The defendants say that the fact that the parties did address their minds to Trading Australia's entitlements, without once referring to any shareholding in Felan's Fisheries, militates strongly against the inference of entitlement said by Mr Galati to be derived from the dealings of the parties.
Fifth, the defendants emphasise that, whatever features of the relationship might once have formed a basis for application of partnership or estoppel doctrines, those features "completely evaporated" when Mr Galati determined in mid-2015 that he and Trading Australia would no longer co-operate in their dealings with Fishbank. The defendants say that it was the essential and enduring premise of all of the signed documentation, and of any and all discussions that might have occurred with respect to sharing the shares, that the very purpose and function of the acquisition and retention of shares in Felan's Fisheries was the pursuit of the long-term project (yet, that purpose and function ceased long ago).
The defendants say (and I accept that the evidence reveals this to have been the case from at least mid-August 2015) that, over an extended period, Mr Galati, Ms Ma and Mr Lennox formed their own "team" to pursue their own agenda by canvassing potential investors for a redevelopment which they sought to undertake for themselves without any reference to Mr Deans. The defendants point to Mr Galati's evidence to the effect that, after the Abacus deal collapsed (which was in about July 2015) and certainly by the time of the Nomination Agremeent, Mr Galati considered that "there was no more Mr Deans" and, in effect, that Trading Australia would "move forward" without Mr Deans. In particular, the defendants point to statements by Mr Galati that after that time he and Mr Deans were no longer "working together" as partners (T 175); and that Mr Galati said that he was "no longer doing business with Robert" (T 200).
The defendants also point to the email communications in August 2015 from Mr Lennox and Ms Ma (including Mr Lennox' "going down with the ship" email) in relation to the Platform Information Memorandum and Platform offer (see the chronology of events above). The defendants say that the emails comprised a fictitious (illusory) offer from a fictitious company, designed to suggest to Mr Deans that this was a proposal from an arms-length investor (rather than from the Galati/Ma/Lennox team, who did not reveal their association with the Platform name). The defendants point out that the October 2015 version of the Information Memorandum was sent by Mr Lennox to various potential investors; and that, in June 2016, the further iteration of the Information Memorandum contained photographs and short descriptions of Mr Galati (as "Principal"), Ms Ma and Mr Lennox. The defendants say that all of these demonstrate a deliberate, ongoing campaign to undermine (or, indeed, usurp) Fishbank's role in the project; and they say that they demonstrate that the very purpose for which Mr Galati says he was entitled to obtain and retain the shares in Felan's Fisheries has long since expired.
The defendants thus contend that the concept of the suggested joint working relationship between Mr Deans and Mr Galati, and their respective companies, came to an end (emotively described as a "shuddering and final halt") on 20 November 2015, with the Nomination Agreement. It is said that Mr Galati's plan was that he would from that time (if not earlier) plot his own path in pursuit of his own redevelopment plans and that, from then, in Mr Galati's own words, there was "[n]o Mr Deans because we parted at that time" (T 165; see the chronology of events set out earlier).
As to the estoppel claim(s), the defendants say that there was no consistent representation or conduct upon which Mr Galati was shown to have relied, nor is there evidence that he has suffered or would suffer any relevant detriment. The defendants say that Mr Galati's submissions as to Waltons Stores v Maher (see at [79]-[89]) are not to the point. It is said that if there were a "relationship" of sorts (referring to the plaintiffs' submissions at [81]), it was one from which Mr Galati, not Mr Deans, withdrew; and that Mr Galati may not have been a "charity" but that both he and Mr Deans were expecting to be "remunerated" (to the extent of tens of millions of dollars) if and when the proposed redevelopment proceeded and returned a profit (which they say is what the Agreement Principles document reflected). The defendants submit that, whatever other incidents of the estoppel cases may once have been present, they all came to an end when Mr Galati "went his own way".
In terms of conventional estoppel (which it is noted was pleaded but not argued in submissions), the defendants say that the principles discussed in Moratic Pty Ltd v Gordon (2007) 13 BPR 24,713; [2007] NSWSC 5 at [32] per Brereton J (Moratic v Gordon); Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603; [2007] NSWCA 65 and in Anthony v Morton [2018] NSWSC 1884 at [490]-[521] are not satisfied in the present case. It is said that there was no relevant common assumption upon which the parties can be found to have conducted their business relationship (certainly not after 2015; and that, even before then, when the parties were (on Mr Galati's own case) only to set the terms of their relationship once a buyer/investor was found).
In summary, the defendants say that there was never any definite or certain arrangement for Trading Australia to acquire any definite or certain shares on any definite or certain terms; and that, even if there were any such arrangement, it was always conditioned upon the continued pursuit by the Galati interests and the Deans interests of the project and the eventual redevelopment at Blackwattle Bay. It is said that, when that arrangement came to an end (at the latest) in November 2015, any entitlement Trading Australia otherwise had (denied by the defendants) also came to an end. Therefore, it is submitted that declaratory relief should be declined as a matter of discretion, if not otherwise.

[110]

Determination as to claims re shares

At the outset, as noted above, it was conceded for Mr Galati that Mr Galati does not contend that there was any agreement as to an entitlement on the part of Mr Galati to 50% of the shares in Fishbank.
As to the rights to acquire the shares in Felan's Fisheries, the relevant Call Option document makes clear that these were jointly held by Fishbank and Trading Australia; so that, on exercise of the option, the two entities would jointly have acquired those shares (and I accept that, in the absence of any express agreement to the contrary, they would have done so as tenants in common - see s 26 of the Conveyancing Act).
Senior Counsel for the Deans interests candidly accepted that, if all one had was the Nomination Agreement, then it might be concluded that (by default) that each party had an interest in half of the shares. However, it is said that a trust must be inferred from all the documents and that the overriding circumstances by mid-2015 (on Mr Galati's evidence) is that the parties had finished as a team. Therefore, it is submitted that the so-called default position no longer applies - that there is no reason for the holding of the shares as property for a joint venture the underlying premise of which has failed. Hence, it is said that when the nomination of TRHS as the shareholder was made there is nothing to say that it was intended that TRHS hold those shares on trust for the respective interests; and that such evidence is necessary to make a finding of trust.
Thus, while it appears to be accepted by the Deans interests that the Nomination Agreement in isolation might suggest an agreement or understanding that the shares in Felan's Fisheries would be held jointly (and to my mind this is the high point of Mr Galati's claim to an interest in the shares), the difficulty is that what happened, instead, was that Fishbank and Trading Australia appear jointly to have nominated TRHS to be registered as the owner of the shares (indeed, they must have done so in order for this to have occurred, as there is certainly no dispute that TRHS is the registered holder of the shares), without any concluded agreement as to the interest it was anticipated that Trading Australia would have in the TRHS unit trust.
It is clear that this was in an attempt to disguise the involvement of at least Mr Deans (and seemingly also Mr Galati) in the shareholding of Felan's Fisheries for "political reasons" related to the then ongoing disputes with the SFM Board. However, I am not satisfied that there was any express agreement between the parties as to the basis on which TRHS was to hold the shares (rather the evidence appears to suggest that it was understood by Mr Galati that it would do so in its capacity as trustee for the unit trust in which he later asserted he had an ownership interest). In my opinion, the most likely conclusion is that the parties informally agreed that the shares would be acquired by TRHS as the trustee of a unit trust (units in which would at some stage be issued to Mr Galati in a proportionate amount then still to be agreed - and assuming that the project was to proceed at that stage).
I have no doubt that (for "political reasons") it was intended that the Felan's Fisheries shares were to be held by TRHS (most probably as the trustee for the TRHS Unit Trust) for the benefit and purposes of the overall joint venture (i.e., the redevelopment project) proposed to be progressed; and in that sense for the benefits of the respective interests ultimately pursuing the proposed joint venture. However, the Deans and Galati interests chose to nominate TRHS as the shareholder for this purpose. I am not persuaded that there was a separate trust in respect of the shares in that company. Rather, I consider that the parties were at that stage yet to agree what interest in the TRHS Unit Trust was to be acquired by Mr Galati or the Galati interests as part of the proposed joint venture (a conclusion reinforced by the Fraser Clancy Lawyers letter to which I have already referred, in which it was noted that the extent of the interest was uncertain) - and it remained undecided as to what that interest would be. Moreover, the purpose of the proposed joint venture has come to an end - since it is abundantly clear that whatever the prospects of a proposed redevelopment it will not be pursued by a joint venture between the Galati and Deans interests respectively.
In the absence of a trust in respect of the Felan's Fisheries shares, and in the absence of an agreement as to what was to happen in the event that the joint venture did not proceed, I am left to conclude that TRHS retains the legal ownership of the shares in Felan's Fisheries as trustee for the TRHS Unit Trust (and that, as Mr Deans controls TRHS, he retains the indirect benefit or control of the Felan's Fisheries shares; albeit for the benefit of the unitholders of the TRHS Unit Trust - of which, due to the failure of the parties to reach agreement on this, Mr Galati is not one).
I do not accept that a claim in estoppel is made out.
The well-known passage of Brennan J in Waltons Stores v Maher as to the elements of equitable estoppel has been extracted above as part of Mr Galati's submissions. I simply add that those propositions are a useful check, however they do not need to be applied in every case in a mechanical fashion (see Doueihi v Construction Technologies Australia Pty Ltd (2016) 92 NSWLR 247; [2016] NSWCA 105 at [166], per Gleeson JA, (with whom Beazley P, as Her Excellency then was, and Leeming JA agreed); and see DHJPM Pty Ltd v Blackthorn Resources Ltd (2011) 83 NSWLR 728; [2011] NSWCA 348 at [47], per Meagher JA, (with whom Macfarlan JA agreed)).
As to the elements of conventional estoppel, in Moratic v Gordon at [32], Brereton J held that it is necessary for the party asserting the estoppel to establish: first, that it has adopted an assumption as to the terms of its legal relationship with the party said to be estopped; second, that the party said to be estopped has adopted the same assumption; third, that both parties have conducted their relationship on the basis of that mutual assumption; fourth, that each party knew or intended that the other act on that basis; and, fifth, that departure from the assumption will occasion detriment to the party claiming the estoppel (see also, for example, Miller Heiman Pty Ltd v Sales Principles Pty Ltd (2017) 94 NSWLR 500; [2017] NSWCA 106 at [37]-[49]).
As to the claim in equitable estoppel, while I accept that there was an assumption on both sides that the parties would work together in a partnership or joint venture relationship for the implementation of the proposed redevelopment, I find that the expectation was that the reward or remuneration that the Galati interests would receive (for Mr Galati's efforts to find investors or financiers for the project) would be an interest (to be agreed) in the project (ultimately via the TRHS Unit Trust). I am not persuaded that there was any mutual expectation that the Galati interests or Mr Galati would receive any remuneration for work done with the aim of the ultimate project in mind unless and until it progressed at least to the stage where an investor or financier contributed funds to the overall redevelopment (see the best case/worst case scenarios on the Agreement Principles document, for example).
It is clear that as the remuneration to Mr Galati was largely to come from a completed development (or at least one to which the Agreement Principles would apply) - not from the introduction of a purchaser for the Bidvest assets alone; there is nothing unconscionable in Mr Deans now withdrawing from the failed relationship (and indeed Mr Galati himself chose not to continue a development proposal with Mr Deans as part of his team from at least around November 2015).
Mr Galati's own evidence makes clear that what he relied upon was the belief or expectation that he would be able to negotiate a favourable "deal" with Mr Deans in due course. The many attempts that he says he made to have matters documented shows that Mr Galati well understood that he was at risk of there ultimately being no binding agreement (or binding relationship from which Mr Deans would not be free to withdraw) unless and until the arrangement was documented in writing.
Furthermore, it is clear from Mr Galati's own evidence that the terms of any such arrangement were never concluded.
I am therefore not persuaded that Mr Deans is estopped from denying Mr Galati's claims.
For similar reasons, I am not persuaded that the claimed conventional estoppel has been established. The reality seems to be that the respective interests were, by the time of the nomination of TRHS as owner of the Felan's Fisheries shares, largely if not indeed wholly, pursuing their own objectives (and often at cross-purposes). In circumstances where the joint venture has clearly come to an end, and where the arrangements under which the Galati interests were to participate in the joint venture with reference to those shares were never agreed, there was no conventional basis or assumption on which they were proceeding and it is not unconscionable now for the Deans interests to act as they have done.

[112]

Defendants' submissions

The defendants say that, if any right exists to declaratory relief as to the circumstances of Mr Pho's removal as a director, it lies with Mr Pho (noting that he has not been joined as a plaintiff) or perhaps Felan's Fisheries (say, to seek a declaration as to the identity of its true directors) but they point out that it, too, is not a plaintiff.
As to Mr Galati's claim with respect to Mr Pho's directorship, the defendants say the following. First, that if it be the plaintiffs' case that Trading Australia acquired equity in Felan's Fisheries (because it was a party to the Call Option Deeds and other formal documents executed during 2014 and 2015), then Mr Galati himself has no relevant corporate entitlements. Second, that, whatever may have been said between the parties, Mr Galati did not have a right to appoint a director under the Articles of Felan's Fisheries (referring to Ex E - Art 101); that there was a process to be undertaken, which may or may not have led to the appropriate appointment; but that it was not one which could be undertaken by Mr Galati; and that neither did the Articles give to someone in the position of Mr Galati any right to maintain, on behalf of the company or a member or a director, a claim for relief in respect of that directorship.
The defendants say that, even assuming (which is disputed) that Trading Australia had a right as putative shareholder in equity to pursue such a remedy (i.e., a declaration as to the invalidity of removal of a director), such a right was not "property" that was assignable by the liquidator. It is noted that s 477(2) of the Corporations Act 2001 (Cth) (Corporations Act) does not make assignable those claims which are not otherwise assignable (citing Owners of Strata Plan 5290 v CGS & Co Pty Ltd (2011) 81 NSWLR 285; [2011] NSWCA 168 at [64] per Sackville AJA (with whom Giles and Campbell JJA agreed); Pentridge Village Pty Ltd (in liq) v Capital Finance Australia Ltd (2018) 58 VR 1; [2018] VSC 633 at [111] per Connock J).
It is accepted that a shareholder's right to a dividend may be assignable property but it is said that a right under a company's constitution (for example, to appoint a proxy to attend meetings) would be personal to the shareholder and not assignable. Similarly, it is said that as there was no "right" under Felan's Fisheries Articles for a shareholder to "appoint" a director, a right to claim invalid dismissal is not assignable property of the company.
The defendants say that if the "directorship" case is said to be derived from rights of Trading Australia pursuant to some agreement, or as a "partner", or that Trading Australia acquired by estoppel an entitlement to some Felan's Fisheries shares, then no right to maintain the directorship of Mr Pho did arise or endure, for the reasons discussed above.
Further, the defendants argue that Mr Galati has not demonstrated that Mr Pho was wrongly removed. It is said that, although there is some inconsistency in the documentation (Ex F at 215-218), s 249B(1) of the Corporations Act provides that a company with one member may pass a resolution if the member records it and signs the record. It is said that on 26 February 2016, such a record was made and signed (Ex F at 217). The Deans interests say that the document had an inaccurate heading and incorrectly referred to s 249A (when it should have referred to s 249B), but that it nevertheless satisfied the requirements of s 249B(1) and was a valid resolution. Alternatively, it is said that the error (if any) constituted a procedural irregularity for the purposes of s 1322 of the Corporations Act and that Mr Pho's removal is not invalidated.
Finally, it is submitted that the relief sought should be declined in any event. It is said that were it to be concluded that Mr Pho was not validly removed from office, declaratory relief should not be granted for the reasons given above with respect to the shares in Felan's Fisheries. It is said that the underlying purpose for the appointment of the directors, like the shares, was always to procure the support of Felan's Fisheries for Fishbank's redevelopment of the Blackwattle Bay precinct; and that purpose has long since expired.

[113]

Mr Galati's submissions

The relevance of the removal of Mr Pho is put as being that it is a breach of the agreement that each of the parties could appoint a director to the company (T 569). (However, the claim is not for breach of that agreement nor is it easy to see how damages would flow therefrom in the present circumstances.)
As to the matters raised by the defendants in relation to the notices that were issued, Mr Galati says that the notice of general meeting was purportedly sent by Mr Hoban as director of TRHS as shareholder of Felan's Fisheries (T 546) and that, while a shareholder can requisition a meeting, Senior Counsel for Mr Galati submits that there is no evidence that any steps were taken to effect that. It is said that a unanimous resolution on behalf of TRHS to apply for the removal of a director of Felan's Fisheries would need to be drafted as a resolution of Felan's Fisheries. It is said that if TRHS was the sole shareholder of Felan's Fisheries then a resolution to remove a director would require a meeting and that it would have to be a meeting of Felan's Fisheries. Issue is taken with any suggestion that reliance can be placed on the headings of the notice (i.e., that it can be read as a notice on behalf of TRHS as opposed to a notice of Felan's Fisheries). For example, the document records "record of unanimous resolutions of the members of TRHS Pty Ltd passed without holding a meeting…" where it ought to have been headed as a resolution of the members of Felan's Fisheries (the sole member being TRHS).
Mr Galati maintains that Art 100 imposes strict requirements in relation to the replacement of directors. Mr Galati submits that Mr Pho has not been removed as a director as a replacement director cannot be appointed unless the steps in Art 100 are taken (T 569).
Further, it is said that there was a valid assignment of the choses in action. Pausing here, I do not see an issue with the assignment per se; the difficulty is that the choses in action are not all validly assignable (and particularly those relied upon in relation to the complaint as to the removal of Mr Pho as a director).

[114]

Determination as to relief re Mr Pho

I accept that there was a valid assignment of the choses in action from Trading Australia to Mr Galati. However, I do not accept that the claim for declaratory relief in relation to the removal of a director of Felan's Fisheries is an assignable chose in action of Trading Australia. The assignability of a chose in action from Trading Australia to Mr Galati depends on whether any chose in action indeed existed and, as I have found that Trading Australia did not and does not have any interest in Felan's Fisheries, it follows that Trading Australia itself has no right to sue for the removal of Mr Pho. The complaint in relation to breach of an agreement to appoint a director goes nowhere. It is not necessary here to discuss in detail whether such a chose in action would have been assignable by Mr Pho himself or whether, if Trading Australia was a shareholder it had a right to sue Felan's Fisheries (an issue about which there is room to debate) let alone whether that right was assignable. (Black J noted in Re Colorado Products Pty Ltd (in prov liq) (2014) 101 ASCR 223; [2014] NSWSC 789 at [344] that there are exceptions to the principle that a personal right to litigate cannot be assigned, including where the assignee has a genuine and substantial commercial interest in the claim which exists independent of the assignment; and went on to discuss this further in that case, but it is not necessary here to delve into that issue.)
Therefore, whether there was a valid removal is not necessary here to determine and even if the complaints made as to the form of the notices issued were correct, this is a procedural irregularity that may be rectified as long as there is not substantial prejudice (see s 1322(2) of the Corporations Act). In essence, s 1322(2) presumes the validity of a meeting where there is a procedural irregularity, including, as per s 1322(1)(b)(ii), where there is a defect, irregularity or deficiency of the notice of the meeting (Howard v Mechtler (1999) 30 ACSR 434; [1999] NSWSC 232 (Howard v Mechtler) at [32]-[33] per Austin J). The Court applies s 1322 in a beneficial manner to technical defects when it is clear that no injustice has occurred (Howard v Mechtler at [33]). I am satisfied that any deficiencies in the headings of the notice in the present case would be technical defects and that, as the substance of the notice clarifies that the notice is given by TRHS as "all of the members of Felan's Fisheries", no prejudice can be said to have been suffered as a result of the error; the same goes for the reference to s 249A (as the basis on which a resolution may be passed without a general meeting where all of the members entitled to vote sign a document stating that they are in favour of the resolution) when presumably reference ought to have been made to s 249B (which permits a company that has only one member to pass a resolution by recording it and signing the record).
For the reasons explained by the defendants, Art 100 seems to me to be irrelevant since it relates to the appointment of new directors not the removal of an existing director. The potential that Mr Pho's replacement was invalidly appointed does not consequently render Mr Pho's removal invalid.
Mr Galati might perhaps have had a basis for complaint if there had been an enforceable agreement for him to appoint and irrevocably appoint a nominee director to the company and Mr Deans was in breach of that by removing Mr Pho; but that is not the complaint here made. Mr Galati otherwise had no right to appoint a director and no basis to complain about his removal.

[116]

Alleged representations

The fourth amended cross-claim, after the formal parts of the pleading and the pleading (at [7]) of the introduction to Fishbank (by Mr Nathan Daly of Acumen Finance) of a potential investor to the project in or about June 2014 (Lion Hub Group), goes on to allege various representations by Mr Galati and/or Trading Australia (which representations are alleged to have been made variously to the Deans interests or to third parties): the Lion Hub Best Endeavours Representation ([9]); Commercial Experience Representation ([11]); TA/Daly Representations ([12]); LandCorp Representation ([17]); LandCorp Best Endeavours Representation ([18]); Inducement Representations ([26]); and Principal Liable for Expenses Representations ([27]); those representations variously being pleaded to be representations as to future matters (see from [28]-[41]).
It is alleged (at [42]) that, in reliance on those representations (other than the Principal Liable for Expenses Representations and any of the Inducement Representations made on or after 23 October 2014), Mr Deans caused Fishbank to, and Mr Deans did, certain things including the execution of the agreements pleaded at [42] (those being the Equity Funding Agreements; the December 2014 commission agreement entered into with Madison Marcus Advisory; the Deed of Exclusivity; the Deed of Binding Commission Distribution Direction; and the Call Option Deeds); and (see at [42.1]) undertaking and/or continuing to undertake business dealings with Trading Australia, reposing trust and confidence in the Galati interests, not contacting or appointing Mr Daly or his organisation, and incurring time and expenses related to the anticipated development. Further allegations of reliance are made at [43]-[44].
Under the heading "Falsity and Further Conduct", (at [51]-[73]) there are allegations to the effect that the various representations were false or misleading within the meaning of s 18 of the Australian Consumer Law and allegations as to the failure of the Galati interests to use their best endeavours to secure investment from various prospective investors (because the Galati interests had sought to derive a personal benefit and payment in the nature of a secret commission not disclosed to the Deans interests) - defined as the Lion Hub Demand Extra Conduct, Landcorp Extra Conduct and Dahua Extra Conduct.
The damage claimed to have been suffered as a result of the reliance by the Deans interests on the alleged representations (which the Deans interests seek to set off against any damages or other relief claimed by the Galati interests) (see at [74]) is particularised at [95] - see below). At [76], it is alleged that, as a result of the Principal Liable for Expenses Representation (and the reliance by Marcus Madison Advisory and/or Ms Chikarovski thereon - as pleaded at [9]-[50], being demands for payment from Fishbank), the Deans interests suffered loss and damage particularised (at [95(r)]) as becoming "embroiled in a number of legal proceedings and claims for payment".

[118]

Alleged breach of contract/breach of fiduciary duty

At [88]-[95], the cross-claimants plead breach of contract and breach of fiduciary duty arising out of a whole raft of matters, including: the allegation that Trading Australia made no serious attempt to use its best endeavours in locating and introducing financiers and/or investment funds in the best interest of Fishbank but rather dealt with financiers "on such a basis as would suit" the Galati interests' objectives first; failure to inform the Deans interests of the falsity of the various alleged representations; engaging in the Landcorp Demand Extra Conduct and the making of LandCorp Threats; and allegations as to the failure of Trading Australia to inform Fishbank of a material change to the basis of the arrangement, by reference to the documents entered into (in particular as to the effect of the documents in relation to Trading Australia acquiring an entitlement to options for the Bidvest Land and the shares in Felan's Fisheries). In this context, various other representations are alleged to have been made by Trading Australia and/or Mr Galati (the No Equity Change Representation and the Execute Now or Lose Representation).
At [90], it was alleged that the Principal Liable for Expenses Representation was part of a strategy by Mr Galati and/or Trading Australia to attempt to cause Fishbank financial distress and/or liquidation, so that Trading Australia could take over the proposed development rights, and which involved gathering support from consultants and others with whom Fishbank had ceased engagements (Strategic Financial Distress Conduct); and (at [91]) that this conduct was undertaken in breach of the good faith term and in breach of fiduciary duty.
Further conduct (the Elias Conduct), being the alleged making of an offer by Trading Australia and/or Mr Galati purportedly on behalf of Fishbank to Ben and Joe Elias of a payment of $1 million as a bonus for ongoing support for the proposed development (without the knowledge or consent of the Deans interests) is alleged to be conduct undertaken in breach of the good faith term and in breach of fiduciary duty.
At [95], it is alleged that as a result of each of the alleged breaches of contract and of fiduciary duty; and in reliance upon each of the alleged representations or misleading and deceptive conduct, the Deans interests suffered loss and damage (as there particularised). In essence, the complaints made in the particulars include: that Fishbank executed the various commission agreements and Call Options deeds under duress and/or under a misunderstanding as to their legal effect; that Fishbank was "locked into" having Trading Australia exercise power "as holding title to one half of the rights which FDC held in relation to the Bidvest Land and the Felan's Shares"; and that had Fishbank not executed the documents in their form it would have retained 100% equity in the proposed development; would have been able to source its own financiers and/or investment funds; would have realised a high profit by concluding investment arrangements with others; would not have become embroiled in litigation against Dahua or SFM; would not have had to sell its rights with respect to the land and shares "on a fire-sale basis with time expiring and its rights evaporating on expiration" and would not have had to sell its rights to EJC at the price which it did; would have obtained "the full sale price" and would only have been liable to Trading Australia for commissions in accordance with the 29 October 2014 Commission Agreement; would not have had to pay the costs which Trading Australia failed to pay in breach of the October Commission Agreements; incurred expenses in excess of $1 million by reason of the Inducement Representation; became embroiled in a number of legal proceedings and claims for payment; and became liable to make a future payment to an entity associated with Joe Elias (Blackwattle Bay Marina Pty Ltd) of $1 million more than would otherwise have been the asking price in relation to an extension of time for Fishbank to obtain development rights over property in the area of the proposed development.

[119]

Conduct and breaches after December 2014

Paragraphs [96]-[110] plead conduct and breaches after December 2014. This includes (at [101]), that after December 2014, Mr Galati and/or Trading Australia repeatedly advised the Deans interests of interested investors or later, in 2015, of buyers, but refused to procure finance or a buyer unless Trading Australia was promised commissions or other payments greater than provided for in the October Commission Agreement or to which it was otherwise contractually entitled (Further Demand Extra Conduct). It is pleaded that (see at (b)), Mr Galati and/or Trading Australia refused to progress a proposed investment by Cabe which included immediate funds and a 50% joint venture arrangement in the proposed development due to the involvement of Mr Daly (Cabe Demand Extra Conduct). (Other conduct alleged in the fourth amended statement of cross-claim in relation to other investors is no longer pressed.)
At [102], it is pleaded that, on or about 24 July 2015, Mr Galati and/or Trading Australia refused to transfer Trading Australia's rights under the Deed of Exclusivity and/or under the Call Option Deeds to "FOG" (sic; presumably Fishbank).
Also part of the conduct of which complaint is made in this part of the pleading is the allegation (at [103]) that, in or about August 2015, Mr Galati and/or Trading Australia aligned itself or himself with a development vehicle called Platform Developments and used confidential information and analysis to promote the sale and/or joint venture "completely independently" of Fishbank; and the allegation (at [104]) as to Mr Galati and/or Trading Australia putting forward on 18 August 2015 an offer in writing to purchase the proposed development rights from Platform BMD Investments Pty Ltd (which would have removed Mr Deans and/or Fishbank for $5 million, $2.5 million or 10% of profits on a cascading basis) in circumstances were there was no such registered company (the conduct in [103] and [104] together referred to as the Platform BMD Conduct). The Platform BMD Conduct is alleged (at [109]) to be a breach of cl 9 of the October Commission Agreements (as well as amounting to other breaches).
There is also an allegation as to representations made in the marketing material by Mr Galati and Trading Australia "through the vehicle of Platform Developments" that the development included the rights to the Poulos Family property, which it is alleged were false (Poulos Land Representations Conduct) (at [106]).
At [107] is the first of the allegations that give rise to the claims for a secret commission. It is alleged that in or about October to December 2015 Mr Galati and/or Trading Australia sought and obtained a commission indirectly or payment of $2,279,820.95 from EJC (EJC Secret Commission), which was not disclosed to Fishbank, over and above the sale price agreed with EJC (EJC Demand Extra Commission Conduct). (No claim is now pursued for the whole of this amount, since the cross-claimants accept that Ms Pritchard was entitled to a buyer's commission of $480,000.)
It is pleaded: at [108], that the breaches pleaded at [101]-[107] were further breaches of contract and fiduciary duty; at [109], as adverted to above, that the Platform BMD Conduct was also a breach of cl 9 of the alleged October Commission Agreements. At [110], it is pleaded that Fishbank and Mr Deans suffered further loss and damage as a result of the said further breaches, the particulars of which include: that Cabe was prevented from investing; that Fishbank continued attempting to advance the proposed development in a situation where Trading Australia claimed 50% ownership rights and thwarted all attempts by the Deans interests to advance it; that the Poulos Land Representations Conduct created a rift between Fishbank, the Poulos Family and persons within the Sydney Fish Markets "which has made any Proposed Development by Deans and the exercise of rights in relation to the Felan's Shares difficult"; that Fishbank was forced to engage lawyers as a result of the Strategic Financial Distress Conduct and take proceedings to set aside a statutory demand served upon it and to settle claims in order not to become embroiled in further litigation; and that Fishbank received less on the sale of the rights associated with the EJC sale as a result of the EJC Demand Extra Commission Conduct.

[122]

Unconscionable conduct

Further or in the alternative (at [121]-[124]), the cross-claimants plead conduct on the part of Trading Australia and Mr Galati by reference: (i) to the allegation (at [121]) that the Galati interests failed to use their best endeavours to obtain investors in order to increase the financial pressure upon Fishbank so that Trading Australia could use this to the advantage of the Galati interests by renegotiating the bases of Trading Australia's commission; and (ii) to the representations alleged (at 12-(h)) and the Principal Liable for Expenses Representations ([122]). It is alleged that this conduct: was known to be false; and/or was a means to extract a higher commission; and/or was a means to damage Fishbank; and/or was a means to gain control of the proposed development to the detriment of Fishbank and/or Mr Deans and in circumstances where Trading Australia and Mr Galati knew of the vulnerability of the Deans interests.
At [123(a)-(t)], there is the allegation that the Galati interests: made no serious attempt to use best endeavours in locating and/or introducing financiers and/or investment funds other than on the basis that Trading Australia received payment greater than its contractual entitlement under the Commission Agreement; delayed using its best endeavours to procure finance and/or investment funds; engaged in the conduct alleged at [122]; instructed "its" solicitors to prepare the various documents in such fashion as benefited the Galati interests or others at the expense of the Deans interests; engaged in the Cabe Demand Extra Commission Conduct; and/or engaged in the EJC Demand Extra Commission Conduct. It is pleaded that by reason of the matters alleged (at [123(a)-(t)]) each of Trading Australia and Mr Galati engaged in unconscionable conduct (including within the meaning of s 20 of the Australian Consumer Law); and Trading Australia engaged in conduct in breach of its fiduciary duties to both Fishbank and Mr Deans. At [124], it is alleged that, as a result of the unconscionable conduct and breaches of fiduciary duty, the Deans interests suffered loss and damage.

[127]

EJC allegations

Included under the heading "Tort of Deceit", as noted above, are the allegations (commencing at [142]) against Wealth Shift. Relevantly, in this section of the pleading there are a number of allegations against EJC (which is no longer a party to the proceeding); however, the conduct the subject of those allegations is relevant to the claims by the cross-claimants against both the Galati interests and the eighth and ninth cross-defendants.
It is here alleged that Trading Australia and EJC made a number of representations to the Deans interests in the context of the events that occurred on 20 November 2015.
First, a representation on or about 20 November 2015 that all of the terms of the proposed sale of the option rights then held in the names of Trading Australia and Fishbank were to be part of the (shortly to be executed and exchanged) Nomination Agreement and that there would be no additional payments or third-party payments besides what was documented in the sale documentation (the EJC No Side Payments Representation) ([150]). This, in essence, is a representation by non-disclosure or silence.
Second, by reference to a warranty provided in cl 10 of the Nomination Agreement, that EJC had not been introduced to Trading Australia and Fishbank or to the property the subject of the Nomination Agreement by any real estate agent other than the Nominating Agent (Deans Property) (the EJC No Commission Payment Representation) ([154]).
It is alleged that those representations were made in trade or commerce ([155]-[156]); and that, in reliance upon both the EJC No Side Payments Representation and the EJC No Commission Payment Representation, Mr Deans caused Fishbank, among other things: (i) to proceed with the sale of rights to EJC pursuant to the Nomination Agreement instead of selling to another interested party; (ii) not to require the insertion of a clause in the Nomination Agreement specifically preventing any payment to a third party or increasing the consideration in the Nomination Agreement; and (iii) not to commence urgent court proceedings in either of the events there pleaded ([157]).
At [164], it is alleged that as a result of their reliance on the said representations Fishbank and Mr Deans suffered loss and damage. The alleged loss is particularised as loss of the sale of the rights to another named entity for the sum of $35 million; loss of the opportunity to cause the sale documentation to be amended to include the true amount which was to be paid by or on behalf of EJC, and therefore loss of the opportunity to demand all or part of that sum; and that the Wealth Shift commission is now dissipated and no longer available to the Deans interests without invoking legal processes such as tracing remedies.

[129]

Misleading or deceptive/unconscionable conduct allegations

At [167]-[168], it is alleged that (in the premises of the matters pleaded at [142]-[164]) Wealth Shift engaged in misleading or deceptive conduct within the meaning of s 18 of the Australian Consumer Law in agreeing to receive and receiving the Wealth Shift commission and by making the Wealth Shift payment to Trading Australia.
At [170], it is alleged (again by reference to the matters pleaded at [142]-[164] and also by reference to [169] - that being an allegation of unconscionable conduct by EJC) that Wealth Shift, by agreeing to receive and or by receiving the Wealth Shift commission, engaged in unconscionable conduct within the meaning of s 20 of the Australian Consumer Law. (I note that the pleaded claim in relation to s 21 was not pressed.)
At [171], it is alleged (by reference to the matters pleaded at [142]-[164]) that Wealth Shift, by making the Wealth Shift payment to Trading Australia, engaged in unconscionable conduct within the meaning of s 20 of the Australian Consumer Law (again, the claim under s 21 was not pressed).
Further particulars of the alleged unconscionable conduct were set out at [171(a)-(j)], namely that: (a) Wealth Shift was aware that the Nomination Agreement nominated Deans Property as the agent in relation to the sale; (b) Wealth Shift was aware that the Nomination Agreement provided that Deans Property and no other person had introduced EJC to the property; (c) Wealth Shift was aware that by virtue of Deans Property being nominated as the Nominating Agent, unless there was some commission sharing arrangement in placed, it would be highly unusual for another agent to be receiving a commission on sale; (d) there was no such commission sharing arrangement in place; (e) Wealth Shift was aware that a commission payable to a real estate agent is ordinarily calculated upon and relative to the sale price, whereas the Wealth Shift Commission was not; (f) Wealth Shift was aware that a commission payable to a real estate agent is paid out of the sale proceeds, whereas the Wealth Shift commission was paid independently of the sale proceeds; (g) Wealth Shift was aware that if the contract does not provide for it, settlement adjustment sheets normally refer to amount to come out of purchase proceeds which will not be paid to the vendor, but will be paid to third parties whereas the Nomination Agreement made no such provision and there was no settlement adjustment sheet making any such provision; (h) Wealth Shift was aware that normal conveyancing practice provides for a direction to pay to any third party, where the vendor will not be receiving part of the settlement proceeds, but there was no direction to pay given in favour of Wealth Shift; (i) notwithstanding the invoice from Wealth Shift to EJC there was no agreement between EJC and Wealth Shift for any commission to be paid to Wealth Shift; and (j) Wealth Shift did not disclose the Wealth Shift Commission to the Deans interests or Mr Fraser.
At [172] is the allegation of loss and damage as a result of the alleged unconscionable conduct (particularised by repeating the particulars of loss and damage at [164]).

[135]

Cross-claimants' submissions

The cross-claimants maintain that, when Mr Galati directed Ms Pritchard of Wealth Shift and Mr Vassallo of Celestino (and its special purpose vehicle, EJC) to divert $1.799 million of the $24 million purchase price for the Bidvest assets to Trading Australia alone, Mr Galati and Trading Australia were acting as the agents of Fishbank for the receipt of that money and that the receipt of that payment amounted to a secret commission. The cross-claimants invoke, in that regard, the statement of principle as to secret commissions made by the Full Court of the Federal Court of Australia (Finn, Stone and Perram JJ) in Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; [2012] FCAFC 6 (Grimaldi v Chameleon Mining) (see below).
The cross-claimants point to the evidence that, at the meeting prior to the execution of the Nomination Agreement on 20 November 2015, Mr Galati told Ms Pritchard and Mr Vassallo that he and his "partner" had an option over property in Pyrmont and that his "partner" had been running an auction sales process. It is said that both Ms Pritchard and Mr Vassallo realised well before moneys were paid to Trading Australia in December 2015 that the so-called "partner" was Mr Deans. (I am satisfied that the evidence establishes this.)
The cross-claimants say that, although he did not sign the Nomination Agreement, Mr Vassallo knew and understood the key terms of the Nomination Agreement (which they point out was signed by Mr Deans and Mr Galati); that both Mr Galati and Mr Vassallo knew that the total purchase price stipulated in the Nomination Agreement was considerably less than the purchase price which Mr Vassallo and Mr Galati had agreed, namely $24 million; and that there is no doubt that Mr Deans was not informed of the true purchase price. (Again, I am satisfied that the evidence establishes this.) The cross-claimants note that Mr Vassallo himself calculated the difference between the true and the disclosed purchase prices.
Reference is made to Ms Pritchard's file note of 27 November 2015 (see above). The cross-claimants contend that it should be accepted that Ms Pritchard was informed by Mr Galati that he and his lawyers wished to wait until settlement before they took steps to "go after Deans"; that Mr Galati and Ms Pritchard discussed Mr Vassallo's preparedness to assist with "hurt money" (so that Mr Galati could "get rid of" Mr Deans and get on with what Mr Galati and his team needed to do); and that Ms Pritchard had discussed this with Mr Vassallo during the previous week. While Mr Vassallo could not recall that conversation, the cross-claimants submit that Ms Pritchard's evidence that such a conversation occurred should be accepted. The defendants say that what Mr Galati wanted to "get on with" was to continue to press for the redevelopment of the Blackwattle Bay precinct (if the Celestino deal proceeded) with his "team", which included himself, Ms Ma and Mr Lennox (but not Mr Deans). I accept Ms Pritchard's evidence of her conversation with Mr Vassallo (and its effect - though the concept of Mr Deans being paid to "go away" is not far removed from Mr Deans' own apparent proposal to buy out Mr Galati as per the account of Ms Pritchard in relation to the events of 20 November 2015).
The cross-claimants say that, when settlement of the transaction contemplated by the Nomination Agreement took place on 1 December 2015, both Mr Vassallo and Mr Galati knew that moneys payable to Fishbank and Trading Australia referable to the purchase were required by the Nomination Agreement to be paid to both (and not just one) of them as the "Grantee". Pausing here, I accept that this is the case. Mr Galati certainly knew that and the secret nature of the so-called "side" deal makes that clear. Had there been a legitimate purpose for the arrangement that Mr Galati says was reached in relation to consultants' fees, there would have been no reason not to inform Mr Deans of this; nor for payment of the additional amount not to occur on settlement; and, significantly, no reason for the extraordinary process of invoicing for non-existent services (variously described as transaction or property advisory services) that occurred with Wealth Shift's assistance in December 2015.
Pointing to the exchange of emails and invoices between 1 and 3 December 2015 (Ex 3 at 102-124) in relation to commission, including Trading Australia's invoice for $1,807,414.59 (including GST) (for what the cross-claimants describe as the non-existing and fictional provision by Trading Australia of "transaction advisory services"), the cross-claimants say that Mr Galati, Mr Vassallo and Ms Pritchard all knew that the true purchase price was $24 million; that the amount paid by Mr Vassallo's company to Wealth Shift, and paid on by Ms Pritchard to Trading Australia ($1,799,820.95), represented the difference between the true purchase price and the amount payable to Trading Australia and Fishbank under the Nomination Agreement; and that the amount approximating $1.799 million was paid to Trading Australia alone (and not to Trading Australia and Fishbank), even though Mr Galati had represented to Mr Vassallo and Ms Pritchard that Mr Deans was his partner.
The cross-claimants say that these events would give rise to a liability by Trading Australia to Fishbank for moneys had and received by Trading Australia to the use of Fishbank. However, Trading Australia is in liquidation and the cross-claimants have not sought leave to proceed against it. The cross-claimants nevertheless say that Mr Galati remains liable for moneys had and received to Fishbank's use to the extent at least of the amounts of $415,270 and $100,000 that he paid to himself (as disclosed by his affidavit of 27 November 2020 at [6]; and see the chronology of events above).
The cross-claimants further say that the payment of $1,799,820.95 was a secret commission because: (i) Mr Vassallo and Ms Pritchard and their respective companies made the payment of approximately $1.799 million to Trading Australia as the agent of Fishbank; (ii) they made that payment to Trading Australia knowing that Trading Australia was acting on behalf of himself and Fishbank; and (iii) Mr Galati, Mr Vassallo and Ms Pritchard failed to disclose to Fishbank that the payment was made to Trading Australia alone.
It is submitted that, in receiving the payment, Mr Galati and Trading Australia acted as agent for their principal (Mr Deans or Fishbank). The cross-claimants refer to the recognition of the Full Court in Grimaldi v Chameleon Mining (at [191]) that the "agent must not take remuneration from the other side without both disclosure to and consent of his principal". The cross-claimants emphasise (as is clearly the case on the authorities) that there is no need here for Fishbank to prove: (a) that Mr Vassallo and Wealth Shift (or Ms Pritchard) acted with a corrupt motive; or that (b) Fishbank's mind was affected by the payment; or that (c) Mr Vassallo and Ms Pritchard knew or suspected that Trading Australia would conceal the payment from Fishbank; or that (d) Fishbank suffered any loss or that (e) the transaction was in some way unfair.
It is submitted that there was, therefore, a secret commission to which all three relevant entities (Mr Galati, Ms Pritchard and Wealth Shift) were privy and that those cross-defendants are liable to pay damages (at law) or compensation (in equity) so as to compensate Fishbank for the shortfall suffered by not having received its full share of the true purchase price (citing O'Halloran v RT Thomas & Family Pty Ltd (1998) 45 NSWLR 262 at 272-273; Grimaldi v Chameleon Mining at [588]). It is noted that, in the case of the payment of a bribe or secret commission, it is not just the recipient of the funds who becomes liable but also the parties making the payment (the cross-claimants here citing Grant v Gold Exploration and Development Syndicate Ltd [1900] 1 QB 233 at 244 per Smith LJ; T Mahesan s/o Thambiah v Malaysia Government Officers Co-op Housing Society Ltd [1978] 2 WLR 444 at 449-450 per Diplock LJ; Indeco Pacific Pty Ltd v Geneva Investments Pty Ltd [2012] VSC 621 (Indeco Pacific) at [82]-[90] per Vickery J).
The cross-claimants say that Mr Galati (who procured the payment to Trading Australia) and Wealth Shift and Ms Pritchard are thus liable to compensate Fishbank for the whole of the shortfall suffered. The cross-claimants say that the amount that should have come in from the transaction on 20 November 2015 would have represented revenue (not profit) because the Deans interests had incurred very substantial expenses (well exceeding $1.799 million) that had not been reimbursed (and it is said that Mr Galati has not therefore demonstrated any entitlement to any of the funds that he took).
As to Mr Galati's affidavit affirmed on 27 November 2020 and filed in Court during the hearing, the cross-claimants (apart from characterising this as a belated and ill-considered attempt to justify Mr Galati's receipt of the undisclosed funds) say that what Mr Galati did with the money he improperly procured is (for the purposes of the cross-claim) irrelevant to the fact of its receipt. (As noted earlier, upon Trading Australia's receipt of the $1.799 million from Wealth Shift, Mr Galati caused $1 million of it to be paid into a new CBA account in the name of Trading Australia Enterprises; and the cross-claimants say that there has not been a satisfactory explanation for this.)
The cross-claimants point to the inconsistency between Mr Galati's evidence that he opened the account "for the project moving forward" and his evidence that he used the funds received to pay past expenses or disbursements owed by Fishbank in relation to the project; and to the lack of explanation as to why the rest of the moneys received were not paid into the Trading Australia Enterprises account or as to how or why many of the amounts paid were referable to past debts as claimed (nor as to how the rounded amounts were calculated).
The cross-claimants submit that the payment of bonuses to Mr Lennox and Ms Chikarovski (and to Mr Galati himself) were not identifiable as having been incurred prior to November-December 2015; that many were paid without invoice; and that Mr Galati acknowledged that he paid anyone he wanted for anything he wanted to pay them. Insofar as Mr Galati claimed that he paid debts of the Deans interests of $1 million or more, this was without even informing Mr Deans that he had done so. The cross-claimants say that much of the evidence given by Mr Galati about these payments was self-evidently made up in the course of his evidence; and that it was not believable.

[136]

Claim for damages and exemplary damages for deceit

The cross-claimants say that the same facts which establish the secret commission also give rise to the tort of deceit on the part of Mr Galati and both Wealth Shift and Ms Pritchard.
As to the tort of deceit, it is again said that, at the time of payment of the sum of $1.799 million to Trading Australia, each of Mr Vassallo, Ms Pritchard and Mr Galati knew that the money was being paid to Trading Australia alone and not to the Deans interests; and that they also all knew that the full amount paid under the Nomination Agreement was not the full amount of the purchase price which EJC agreed to pay. It is submitted that this conduct was not merely negligent; it was deliberate.
In the case of Mr Galati and Mr Vassallo, it is said that both knew that the representation as to the purchase price contained in the Nomination Agreement signed by Mr Deans was false. In the case of Ms Pritchard, it is said that she knew that the payment she facilitated (with the aid of the Wealth Shift invoices) was a payment made to Trading Australia alone, for the difference between the true purchase price and the represented purchase price, for services which had never been provided.
Reference is made to Bao v Qu; Tian (No 2) (2020) 102 NSWLR 435; [2020] NSWSC 588 at [33] per Rothman J for the proposition that the tort of deceit or fraud at common law arises when there is an act or omission done for an intentionally deceitful purpose or with reckless indifference as to the truth of a representation. The cross-claimants also refer to Sealed Air Australia Pty Ltd v Aus-lid Enterprises Pty Ltd (2020) 375 ALR 324; [2020] FCA 29 at [196]ff per Kenny J, as to the circumstances in which, in the context of intentional torts, reckless indifference might be constituted by wilful blindness. In the present case, the cross-claimants submit that, if there were not a deliberate intention on the part of the active players to deceive the Deans interests, then there was certainly a wilful blindness to Mr Deans' situation and as to the necessity to enquire of him as to whether he consented to Trading Australia receiving the whole of the separate and differential payment.
It is thus submitted that each of Mr Galati, Ms Pritchard and Wealth Shift is guilty of the tort of deceit and that Fishbank is entitled to recover as damages its loss (the $1.799 million) arising from the commission of the tort by those cross-defendants.
Further, it is submitted that exemplary damages should be awarded against Mr Galati, Wealth Shift and Ms Pritchard by reason of their tortious conduct. It is noted that such an award has punitive, deterrent and compensatory functions (the cross-claimants citing Lewis v Australian Capital Territory (2020) 381 ALR 375; [2020] HCA 26 at [110] per Gordon J); and it is submitted that this is an obvious case in which they are appropriate. The cross-claimants note that focus of the enquiry in this context is upon the wrongdoer, not the party wronged (Gray v Motor Accident Commission (1998) 196 CLR 1; [1998] HCA 70 at [15] per Gleeson CJ, McHugh, Gummow and Hayne JJ). In the present case, the cross-claimants say that the conduct was not accidental or inadvertent, but high-handed and deliberate.

[137]

Claim for damages for unconscionable conduct

Further, the cross-claimants say that the same facts which establish the secret commission claim also give rise to the claim of unconscionable conduct on the part of Mr Galati and both Wealth Shift and Ms Pritchard.
Relief is sought pursuant to the provisions of s 20 of the Australian Consumer Law (again, the cross-claimants did not at the hearing press the pleaded claim pursuant to s 21 of the Australian Consumer Law which requires conduct in connection with the supply of goods or services). The cross-claimants note that the unwritten law invokes the traditional concepts in equity as to the need to find conduct involving a sufficient degree of moral obloquy as to warrant relief (referring to Tonto Home Loans Australia Pty Ltd v Tavares (2011) 15 BPR 29,699; [2011] NSWCA 389 at [291] per Allsop P (with whom Bathurst CJ and Campbell JA agreed); Mortimer v Ah Sam [2020] NSWSC 1763 at [75]-[89] per Sackar J). It is noted that recklessness may be constituted by wilful blindness and this may, on the facts of some cases, suffice in establishing moral obloquy (Violet Home Loans Pty Ltd v Schmidt (2013) 44 VR 202; [2013] VSCA 56 at [58] per Warren CJ, Cavanough and Ferguson AJA).
The cross-claimants submit that if the three principal participants (Mr Galati, Wealth Shift and Ms Pritchard) did not deliberately engage in the deceit of Fishbank, they certainly turned a wilfully blind eye to its predicament (for the purposes of the unconscionable conduct claim).
It is said that Fishbank was, in the unusual circumstances of this case, entirely vulnerable, and under a special disability, by reason that (in circumstances where the true arrangements were secret) Mr Deans and his company were kept in a state of complete ignorance of the true purchase price and the difference between it and the price stipulated in the Nomination Agreement he signed. Thus, it is submitted that the relevant cross-defendants (Mr Galati, Wealth Shift and Ms Pritchard) are liable as principals for their unconscionable conduct.
Alternatively, it is submitted that Wealth Shift and Ms Pritchard bear an accessorial liability, pursuant to s 75B of the Competition and Consumer Act, for which purpose it is said that Ms Pritchard had the requisite knowledge having regard to the matters set out above.

[138]

Mr Galati's submissions re secret commission and related deceit/unconscionable conduct claims

As to the claim that Mr Galati is liable for the whole amount of the claimed secret commission (on the basis of a constructive trust in favour of Fishbank, relying on Attorney-General for Hong Kong v Reid [1994] 1 AC 324 (Attorney-General for Hong Kong v Reid) at 331 per Templeman LJ; Zobory v Federal Commission of Taxation (1995) 64 FCR 86 at 90 per Burchett J), Mr Galati refers at the outset to what was said in Grimaldi v Chamaleon Mining at [582]-[584] to the effect that the remedy of imposition of a constructive trust in cases where there has been a payment of a secret commission is discretionary; and that the constructive trust remedy ought not to be imposed if other orders are capable of doing full justice (the Full Court there referring to John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19 at [128] and the cases there footnoted).
Mr Galati contends that in the present case there were many legitimate claims of third parties (of which he says he took care) that should here be taken into account (as to whether there is an alternative remedy which is adequate to avoid adverse effects on the legitimate claims of third parties).
Reference is made in this context to what was said in Warman International Ltd v Dwyer (1995) 182 CLR 544; [1995] HCA 18 when considering whether an account of profits should be awarded in favour of a successful plaintiff in an action for breach of fiduciary obligation and, if so, the basis upon which such an account should be taken in all the circumstances of the case. In particular, Mr Galati points to the recognition there by the High Court that the equitable remedy of an account of profits is discretionary (which will be defeated by equitable defences such as estoppel, laches, acquiescence and delay or other disentitling conduct on the plaintiff's part); and to the principle that in equity the remedy must be fashioned to fit the nature and particular facts of the case.
Mr Galati accepts that the onus is on an errant fiduciary to satisfy the court that an allowance should be made; and that, as a general rule a fiduciary must not be allowed to benefit from a breach of fiduciary duty unless there has been some antecedent agreement for profit sharing; but he says that, whether or not there is such an agreement, allowance may be made for skill and expertise and expenses incurred in generating those profits.
In his submissions Mr Galati then turns to addresses the following questions: (i) whether there has been a breach of fiduciary duty by him; (ii) whether there is an antecedent agreement for profit sharing; (iii) whether there should be allowance for skill and expertise and expenses incurred in generating the profits; (iv) whether third party issues arise; and (v) equitable defences and fairness overall.

[139]

(i) Question of breach

Mr Galati's starting position, in effect, is that his conduct in arranging the "separate payment" of about $1.8 million might be seen as both understandable and forgivable, he having worked on the project for 16-18 months "for free". (Pausing here, this again appears to conflate an arrangement for a share of profits on the completion of a redevelopment project, or for a commission for the introduction of an investor to the project, with an entitlement to remuneration for work undertaken on the project in anticipation that such a profit or commission might ultimately be earnt. Leaving aside the disputed agreement for payment of a $1.5 million commission for having introduced Dahua Group to the project, there is no basis whatsoever in the evidence to suggest that Mr Galati was to be remunerated for his efforts towards the project otherwise than by way of a profit share if the project was ultimately successful. The fact that Mr Galati expended time and effort on the project that might not ultimately sound in any reward or remuneration for him is entirely a risk that he chose to undertake and that someone with the experience he said he had in business deals should well have understood).
Mr Galati also says that the arrangement in relation to the "separate payment" was one that accorded with his understanding of what was agreed between the parties from roughly March/April 2015 onwards (i.e., the "dictate the terms" arrangement); namely, that he was to set the terms if he sourced the funder (including 50/50 in Felan's Fisheries). As to this, I have not accepted Mr Galati's evidence as to the "dictate the terms" agreement but even if I had, that arrangement was in the context of profit shares - not as to who was to be responsible for payments for expenses or bonuses connected with the project, nor could it sensibly be thought to permit the payment of whatever amount Mr Galati thought in his head ought to be paid to whoever he liked in relation to the project (which is what seems to have happened - and accords with how Mr Galati adamantly claims he does business).
Mr Galati (again complaining that Mr Deans had failed to pay him the $1.5 million that Mr Galati says was owing to him on the sale of the Bidvest Land to Dahua - or even one cent in that regard) says that he considered that he was paying Fishbank's bills by way of this transaction, including himself. In submissions reference is made to Mr Galati's oral evidence that (T 137): I lost faith in Robert in paying bills so I therefore had, had - wanted to separate the $2 million so I could pay Kerry Chikarovski and Co...and myself, correct...lt was all to do with the development... [including bills] of FDC which I didn't really have to do, but I, I did it because I knew he didn't want to pay it…it's the truth.
Again pausing here, the above evidence appears to put Mr Galati in the position akin to an officious bystander paying the debts of another (as to which I say further in due course). It is said that Mr Galati has given evidence to explain why Mr Deans was not told of the $1.8 million payment, by which I understand Mr Galati to be referring to his affidavit evidence at [188] that: 188. Since I had introduced the Celestino deal, Robert was given 50% of the Felan's shares by me, but, in accordance with my discussions with Robert as set out above, otherwise the terms were up to me. Robert also received the benefit of the fighting fund and the profit share. I therefore did not believe that I was obliged to tell Robert about the sums paid to Caroline and me, and I believed that he had no entitlement to those funds.
It also seems to have been Mr Galati's belief that otherwise Mr Deans would not pay the bills (see his affidavit at [187]).
Mr Galati maintains that he is far removed from the type of errant fiduciary referred to in Attorney-General for Hong Kong v Reid on the basis that he (Mr Galati) not only paid Fishbank's bills in late 2015 (the Deans interests cavil with the premise that these were Fishbank's bills) but had precipitated the very agreement with Celestino which "solved" the Call Option problem. It is said that, in circumstances where no cogent evidence of any offer from Mr Deans has been produced relating to November 2015, or at any other time, Mr Galati "saved" Mr Deans.
Having made those somewhat emotive submissions, Mr Galati seems in his submissions to accept that, having offended the strict no profit/no conflict rules in this transaction, he would then have been in breach of a fiduciary duty owed in the "joint venture partnership" at that time. However, Mr Galati then goes on to suggest that he was then able to deploy "self-help" to pay the project's consultants "and himself into the bargain". It is said that, had Mr Galati not arranged things in this way then "presumably" the Nomination Agreement price would have been $1,799,820.95 higher, including GST; and that that money would have been a surplus and the property of Trading Australia and Fishbank, as they held the Call Options, or perhaps Mr Deans and Mr Galati personally (in the same way that Mr Galati says the shares in Felan's Fisheries were intended to be held). It is said that had there been the surplus on the sale, it would have been held 50/50.
Mr Galati contends that the present case is not one where the money received was put out of reach or wasted away; that more than half of it was used to pay creditors; and that if Mr Galati is required to account for the $1,799,820.95, he should be given credit for amounts he or Trading Australia (or Trading Australia Enterprises) paid to the project's consultants/creditors.

[141]

(iii) Allowance for skill and expertise and expenses in generating profits

Mr Galati also contends that an allowance should be made to Mr Galati (above the 50% antecedent agreement) due to his skill, expertise and assumption of expenses and risk in generating the project profits.
Mr Galati argues that there is a difference between appropriating a business opportunity on the one hand (where a significant proportion of an increase in profits may have been generated by the skill, efforts, property and resources of the fiduciary, the capital which he has introduced and the risks he has taken), which he says is here the case; and appropriating a specific asset on the other; and he says that a rule requiring accounting for profits could be taken to the extreme of becoming a vehicle for the unjust enrichment of the plaintiff.
Mr Galati emphasises that a significant proportion of an increase in profits was generated by the skill, efforts, property and resources of Mr Galati; the capital which he introduced to the project; and the risks he has taken. It is said that the deal that ultimately proceeded was Mr Galati's deal and that in cross-examination Mr Deans accepted this, referring to the following exchange (T 469): Q. Anyway, Mr Galati brough[t] this Celestino group to the table, didn't he? A. They introduced them - he introduced them. Q. Yes. You agreed that EJC should join in the exercise of the options and the deal was - you agreed to EJC? A. I agreed to the deal, yes.
Similarly, reference is made to Mr Deans' affidavit evidence to the effect that he accepted that, at 20 November 2015, Mr Galati's Celestino deal was the "the best offer at the moment" (at [172]). It is said that this deal was a consequence of all the business skill and human capital which Mr Galati had injected since he entered in early/mid-2014, and that Mr Deans accepted in cross-examination that, by the time of at least Dahua Group, the project "had evolved".
It is submitted that Mr Galati's contribution of skill, expertise and expenses, merits an allowance in that Mr Galati: "brought all the money to the project", referring to Dahua Group, Abacus (though again I note that this did not eventuate in any money at all because the deal did not proceed, irrespective of who was responsible for this, although Mr Galati clearly blames Mr Deans' intervening conduct) and Celestino; brought in Ms Chikarovski, Mr Kremisis and the two Mr Shepherds; "brought back" Ms Ma and Mr Lennox; worked without remuneration for 16-18 months, at times 3-4 days a week in Mr Deans' office, "while producing every deal"; paid the workers who made the venture a reality; and absorbed and assumed the risks of this and delivered on the deadline. (Again, this seems to me to conflate the exercise of the Call Option with the redevelopment project as a whole; and, again, it seems to recast Mr Galati from someone who was involved in the project in anticipation of reward or remuneration if it proceeded to someone who ought to be remunerated for his time in relation to the project even if it did not proceed.)

[142]

(iv) Third party issues

As noted above, Mr Galati contends that account should be taken as to whether there is an alternative remedy which is adequate to avoid adverse effects on the legitimate claims of third parties such as Ms Chikarovski; and he maintains that he took care of many legitimate claims of third parties (see the defence to cross-claim at [47]). Pausing here, it is by no means clear how it is suggested that the relief sought by the cross-claimants on their secret commission claim has an adverse effect on the legitimate claims of third parties. To the extent that any of the third party consultants did indeed have a legitimate claim to remuneration (in circumstances where the ultimate development project did not proceed), and this is difficult to assess in the absence of any evidence as to the contractual or other arrangements by which they provided any services in relation to the project, those are not affected in the sense that there is no claim by the cross-claimants for reimbursement of moneys paid to those individuals.
Mr Galati emphasises that Mr Deans accepted in cross-examination that the $1.8 million "should have gone to the project" (T 489). Mr Galati says that Mr Deans was not entitled to that amount individually (an ironic submission when Mr Galati elsewhere seems to suggest that he was entitled to the payments made to himself out of that "separate payment"). Complaint is made that Mr Deans had proceeded on the basis throughout the project that workers did not need to be paid; and that, while Mr Deans wrote about the need to pay the project's expenses before any "equity" distribution was made on 27 July 2015, Mr Deans was unable to pay creditors such as Ms Chikarovski. It is submitted that this is not equitable conduct.
Mr Galati submits that his evidence (referring to his affidavit at [187]-[189]) was honest, that being evidence in which he deposed to his immediate payment (out of the moneys Trading Australia received) of "the people who had been helping on the project for a long time without payment and whom FDC [Fishbank] and Robert ought to have paid, being Kerry Chikarovski, John Shepherd, Kym Lennox, Bhavani Ma, Steve Kremisis and others". In oral evidence, Mr Galati reiterated that he took the money because Mr Deans had not paid him anything (despite agreeing to do so), and that the money went to Fishbank or project expenses. Mr Galati submits that he should be credited for these project expenses as this was not a profit in breach of duty.
Reference is made by Mr Galati to the evidence of Mr Lennox to the effect that Mr Deans had failed to look after his (Mr Lennox') financial interests and that Mr Deans had received the work of team members which Mr Galati introduced or reinstated without paying them. It is said in this context that the liability of a fiduciary should not become a vehicle for the unjust enrichment of the plaintiff.
Pausing here, the above seems to me to be an ex post facto justification for receipt of the sum of $1,799,820.95 without disclosure to Mr Deans. Moreover, it suffers (not least) from the difficulty that: there is no evidence that there was any liability on the part of Fishbank to pay the amounts that Mr Galati took it upon himself to pay; that Mr Galati in the Agreement Principles document had agreed that he was to be responsible for a number of the consultants' "bonuses" (including bonuses to Ms Chikarovski, Mr Kremisis; Mr John Shepherd; Ms Ma; and Mr Lennox from January 2015, though these were among the persons paid out of the so-called "separate payment"); and that on any view of things payments were made (and acknowledged by Mr Galati to be made) for expenses that were not Fishbank expenses.

[143]

(v) Equitable defences and fairness overall

Mr Galati contends (although this does not appear to be pleaded in the defence to cross-claim) that Mr Deans is estopped from denying Mr Galati's 50% interest in the amount of the separate payment (i.e., the payment of $1,799,820.95). Further, it is submitted that Mr Deans' conduct warrants that any account for this payment should be reduced by reference to the fact that Deans Property received the sum of $550,000 inclusive of GST as commission on the sale of the Bidvest Land to Dahua Group (see defence to cross-claim at [48]). Mr Galati (in emotive terms) submits that this "was a piece of treachery that did not enrich the Project at all". Mr Galati points out that Mr Deans used that commission to pay for the expenses of Deans Property. Mr Galati says that this is in itself a breach of the no conflict/no profit rule to which Mr Deans was subject; and that the payment ought to have been disclosed to Mr Galati and paid into the project. (It is submitted that "[w]hat is good for the goose is good for the gander".)
Mr Galati says that Mr Deans' own evidence on secret profit was not as honest as that of himself, pointing to the series of answers in cross-examination to the effect that Mr Deans did not recall matters put to him and to Mr Deans' explanation (said to be absurd) of being the effective cause of the Bidvest sale to Dahua Group, even though the Deed of Binding Commission Direction warranted that Madison Marcus Advisory was the effective cause.
It is said that Mr Deans' evidence in cross-examination also disclosed fiduciary breaches concerning an interference with the agreed upon trust arrangements after 20 November 2015, Mr Galati referring to the following (T 486): Q. So what you wanted to do was obliterate Mr Galati from Felan's Fisheries? A. I wanted to remove Mr Galati's person that he'd put in place, you're correct. Q. And put someone that you could control? A. Yes. Q. And Mr Hoban did what you told him to do? A. Correct. Q. It did occur to you that you were going back on your agreement with Mr Galati that you could each appoint one director? A. True.
Similarly, Mr Galati points to Mr Deans' admission that the TRHS shares were transferred to himself post 20 November 2015 and that he did not cause units in the TRHS Unit Trust to be issued Mr Galati.
Mr Galati submits that the relief should be moulded to the circumstances of the case. Mr Galati has tabulated the relevant transactions relating to the $1,799,820.95. It is submitted that if (only): the 50/50 profit sharing arrangement is accepted; the third party expenses which Mr Galati paid are accepted as legitimate project expenses; and Mr Deans' "secret commission" of $550,000 is taken into account, then the end result is that Mr Galati is only "in the red" for $131,850.49.
Mr Galati submits that if allowance is also taken of Mr Galati's disproportionately higher contribution in terms of skill, expertise, expense and assumption of risk then the fair result would be that he is not "in the red at all" or only for a lesser amount. (It is said that if Mr Galati is owed $1.5 million in commissions, then that ought also to be taken into account.)

[146]

Claims made against the eighth and ninth cross-defendants

As noted above, the claims made against Wealth Shift are that it engaged in misleading or deceptive conduct in breach of s 18 of the Australian Consumer Law; engaged in unconscionable conduct within the meaning of s 20 of the Australian Consumer Law; aided or abetted the contraventions by Trading Australia, Mr Galati and/or EJC, of the Competition and Consumer Act; or is accessorially liable for that conduct. Against Ms Pritchard, it is alleged that she aided or abetted the contraventions by Trading Australia, Mr Galati and/or EJC, and/or Wealth Shift, of the Competition and Consumer Act or is accessorially liable for that conduct.
I note that that the claim in respect of Ms Pritchard's commission of $480,000 is not pressed by the cross-claimants; their claim against the eighth and ninth cross-defendants being limited to the (secret) payment of $1,799,820.95.
Insofar as there is a claim in the tort of deceit in depriving Fishbank of the $1,799,820 paid to Trading Australia, that claim is pleaded at [136]-[140]. I have adverted above to the complaint by the eighth and ninth cross-defendants that no material facts are pleaded that include them in the pleading of deceit; and they point out that the allegation is made against Mr Galati and/or Trading Australia in respect of what is defined (at [107]) as the "EJC Demand Extra Commission Conduct" by reference to various representations set out at [122] of the fourth amended cross-claim.
Insofar as there is reference in the Deans' interests submissions (at [56]) to falsified invoices issued by Ms Pritchard for Wealth Shift at the direction of EJC and Trading Australia, the eighth and ninth cross-defendants point out, first, that there is no reference in the pleadings to "falsified invoices" and, second; they say that expression is ambiguous; and they deny that the invoices were falsified.
Pausing here, although no reliance is now placed on the claim pursuant to s 37A of the Conveyancing Act, the cross-claimants maintain (and I agree) that [176] of the pleading is sufficient to put eighth and ninth cross-defendants on notice of the allegation of fraud (that paragraph being an allegation that the Wealth Shift payment to Trading Australia was made with intent to defraud Fishbank). Moreover, the characterisation of the invoices as falsified emerges clearly from the evidence in the proceeding. It is accepted by Ms Pritchard (and Mr Galati) that no transaction or property advisory services were provided by Wealth Shift to Trading Australia. Whether that part of the Wealth Shift invoices is described as falsified or fictitious (or a sham) makes very little difference to my mind. The relevant thing to note is that it was clear to Ms Pritchard at all times that (albeit on the instructions of others) she was rendering an invoice for services that had not been provided.
The eighth and ninth cross-defendants deny liability and say that: they were the buyer's agent for EJC; they had no relationship, contractual or otherwise, with the Deans interests; they were not in a relationship of trust with the Deans interests; they owed no duties to the Deans interests; they were not in a relationship of abuse of position or in a position of strength (and did not engaged in "profit gouging"); they were innocent agents acting on instructions from Trading Australia and EJC; and they further emphasise that time was of the essence as the deal needed to be completed in days and/or hours.
As to the claim for misleading or deceptive conduct pursuant to s 18 of the Australian Consumer Law, the eighth and ninth cross-defendants refer to Domain Administration v Domain Names Australia Pty Ltd (2004) 207 ALR 521; [2004] FCA 424 at [12] per Finkelstein J for the proposition that, for there to be misleading or deceptive conduct, there must be a "sufficient nexus" between the conduct and the error. It is submitted that there was no nexus between the eighth and ninth cross-defendants' actions and any of the alleged representations.
As to the claim for unconscionable conduct pursuant to s 20 of the Australian Consumer Law, the eighth and ninth cross-defendants refer to Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447; [1983] HCA 14 (Amadio) for the proposition that, to prove unconscionable conduct, the plaintiff must have suffered from a special disability which seriously affected the plaintiff's ability to make a decision as to their own best interest. The eighth and ninth cross-defendants submit that the alleged representations did not seriously affect the cross-claimants' judgment; and that other factors were present which induced the cross-claimants to enter into the Nomination Agreement (such as the opportunity of a bargain and opportunity to profit).
The eighth and ninth cross-defendants say that, if special disability is present, the cross-defendants must have had knowledge of the special disability and have taken advantage of it (referring to Amadio at 467). The eighth and ninth cross-defendants emphasise that they were not party to and did not have access to the Nomination Agreement. Therefore, it is said that they could not have had knowledge of cl 10 of the Nomination Agreement. Further, it is said that the eighth and ninth cross-defendants were not involved in any of the discussions where the alleged representations were made.
As to the claim for accessorial liability, the eighth and ninth cross-defendants refer to Yorke v Lucas (1983) 49 ALR 672 for the proposition that, to prove accessorial liability, the defendant must have had actual knowledge of all the essential facts that make up the contravention; and that it is not sufficient merely to show that the defendant had some knowledge of the essential facts.
In this context, the eighth and ninth cross-defendants reiterate a number of the matters already referred to above and say that they did not have access to information that gave them a superior position or greater bargaining power; and that they were confined to their dealings with EJC and Mr Galati. By reason of this, it is said that the eighth and ninth cross-defendants were not aware nor did they have actual knowledge of any special disability of the cross-claimants and could not have taken advantage of the cross-claimants' special disability, if any.
It is further submitted that the eighth and ninth cross-defendants were not aware that their, or any such, conduct would be deemed unconscionable; and, therefore, they say that they did not have the requisite intent that is needed to prove accessorial liability under s 2 of the Australian Consumer Law.
Insofar as reference is made to He Kaw Teh v R (1985) 157 CLR 523; [1985] HCA 43 for the proposition that an inference may be drawn that the defendant had the requisite actual knowledge if it is proven that the defendant had failed to enquire, the eighth and ninth cross-defendants maintain that they were not willfully blind. The eighth and ninth cross-defendants say, first, that no objection was raised when Ms Pritchard was introduced to Mr Deans and Mr Fraser as the "buyer's agent for Celestino" (referring to [63]-[65] of Ms Pritchard's affidavit sworn 3 September 2018). As such, it is submitted that the eighth and ninth cross-defendants were of the view that they did not need to make any inquiries into the dealings between Mr Galati, EJC and the Deans interests. Second, it is said that, in receiving the sum of $2,279,820.95 (including $480,000 in commission) from Baiada and transferring the sum of $1,799,820.95 to Trading Australia, the eighth and ninth cross-defendants were giving effect to the agreement that was between Mr Galati, Trading Australia, Celestino and EJC.
In closing submissions, emphasis was placed on Ms Pritchard's personal circumstances (as a single mother of two children and the sole director and shareholder of Wealth Shift). It was noted that, at the relevant time, Ms Pritchard was a real estate agent and business broker with 18 years' experience in real estate and 2 years' experience in business broking; that Ms Pritchard earned income from commissions from buyers or sellers depending on the transaction or deal; that Ms Pritchard was not an employee of any other company; and that her income was ad-hoc and never certain or guaranteed. It was said that Ms Pritchard has to compete for attention to survive and thrive; and that she relies on building and maintaining contacts or client list of influential men, networking and building her image and reputation. (Pausing here, the relevance of all of this is moot as I discuss in due course.)
The eighth and ninth cross-defendants also emphasise that, by November 2015, Wealth Shift had been operating for only 12 months and had only been involved in a handful of deals, one of which involved Mr Vassallo (the CEO of EJC) for the purchase of a property in George Street, Sydney. Ms Pritchard says that the relationship with Mr Vassallo was a professional relationship based on trust and that she never felt pressured to enter into any agency agreement with Mr Vassallo for her commissions. They note that, as to the Bidvest Land sale, Ms Pritchard said that the Sydney Fish Markets sale represented Ms Pritchard's biggest deal to that date; and that Ms Pritchard said that the matter was left to the lawyers to look after the transaction.
As to her commission, Ms Pritchard says that Mr Vassallo did not mention cl 10 of the Nomination Agreement to her, noting that Mr Vassallo deposed at [58] that he knew that Ms Pritchard was the introducer and that EJC would pay her commission. It is noted that Mr Vassallo saw no risk of the indemnity in cl 10.2 because Fishbank and Trading Australia would not be liable for any commission; and that Mr Vassallo has agreed in past deals to similar clauses in circumstances where a buyer's commission was to be paid.
Turning then to the particular claims made against them, the eighth and ninth cross-defendants have submitted as follows.

[147]

Misleading or Deceptive Conduct

As to the claim pursuant to s 18 of the Australian Consumer Law, reference is made to what was said by McHugh J in Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; [2004] HCA 60 (Butcher v Lachlan Elder Realty) at [109] and to the summary of principles set out in Vouzas v Bleake House Pty Ltd [2013] VSC 534 at [107] by Macaulay J (in relation to the predecessor provision s 52 of the former Trade Practices Act 1974 (Cth)). It is not necessary here to set out those principles. They are well-known. Reference is also made to what was said by French CJ, Crennan and Kiefel JJ in Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435; [2013] HCA 1 at [6]-[9] as to: the meaning of the words "likely to mislead or deceive"; and that it is not necessary that the defendant intends to mislead or deceive (rather, contravention can occur even though the defendant acted reasonably and honestly).
In the present case, the cross-claimants allege reliance on: the EJC No Side Payments Representation; and the EJC No Commission Payment Representation, both directly or indirectly derived or were attributed from cl 10 of the Nomination Agreement. It is noted that the "conduct" proscribed by s 18 of the Australian Consumer Law here comprises a misrepresentation (reference being made to Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 202 per Deane and Fitzgerald JJ).
The eighth and ninth cross-defendants note that it is necessary to determine, as a factual question, whether any representations were made by Ms Pritchard and, if so, whether she made them solely on her own behalf or on behalf of Wealth Shift or both, or any combination thereof (see Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82).
Emphasis is placed on the fact that Ms Pritchard was the buyer's agent for Celestino; that Ms Pritchard was not a party to the Nomination Agreement; and that Ms Pritchard was not part of the negotiations that took place on 20 November 2015. It is not alleged that Ms Pritchard made any representations, in particular the EJC No Side Payments Representation and the EJC No Commission Payment Representation. It is said that Ms Pritchard was two steps removed from the transaction (i.e., not at arms' length) and not aware of any of the relevant terms or conditions including the Property Nomination Price.
Therefore, it is submitted that any claim that the eighth and ninth cross-defendants engaged in misleading or deceptive conduct as a result of reliance on the EJC No Side Payments Representation and the EJC No Commission Payment Representation is said to be misconceived and must fail.
In the alternative, the cross-claimants allege that the transactions were not disclosed to Mr Deans or Fishbank. The eighth and ninth cross-defendants deny that Ms Pritchard was under a duty or obligation to disclose the payment of $1,799,820 to Mr Deans or Fishbank.
It is noted, by reference to s 2(2) of the Australian Consumer Law, that misleading or deceptive conduct can include refraining from doing an act, otherwise than inadvertently. Reference is made to the statement of Black CJ in Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 (Demagogue v Ramensky) at 32: as to the necessity to consider the significance of silence in the context in which it occurs; and as to the decision of the High Court in Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357; [2010] HCA 31(Miller v BMW) at 369 in which French CJ and Kiefel J, as her Honour then was, said that whether there was a reasonable expectation of disclosure is a practical aid to the objective characterisation of non-disclosure as misleading or deceptive conduct or otherwise.
The eighth and ninth cross-defendants say that no duty of disclosure was imposed on them arising from the particular circumstances of this case. They submit that the relevant question is whether, in all the circumstances, the cross-claimants should be taken to have had a reasonable expectation that particular further information would be disclosed by the cross-defendant, information which (had it been disclosed), would have changed the message conveyed by the information (reference here being made to what was said by Lindsay J in Barrett v Maradaca Pty Ltd [2020] NSWSC 440 (Barrett v Maradaca) at [166]; and to what was said in Rema Tip Top Asia Pacific Pty Ltd v Gruterich [2019] NSWSC 1594 and the authorities there cited, including Semrani v Manoun ; Williams v Manoun [2001] NSWCA 337; Metalcorp Recyclers Pty Ltd v Metal Manufactures Ltd (2004) ASAL (Digest) 55-119; [2003] NSWCA 213, as to the issue of non-disclosure and silence).
In particular, reference is made to Miller v BMW Australia, where French CJ and Kiefel J (as her Honour then was) said (at [22]) that, as a general proposition, "s 52 does not require a party to commercial negotiations to volunteer information which will be of assistance to the decision-making of the other party. A fortiori it does not impose on a party an obligation to volunteer information in order to avoid the consequences of the careless disregard, for its own interests, of another party of equal bargaining power and competence".
As to the question of intention, it is noted, having regard to s 2(2)(c)(i) of the Australian Consumer Law, that the expression "refraining (otherwise than inadvertently) from doing that act" raises the question whether some form of intentional non-disclosure is required before non-disclosure can be a breach of s 18. The eighth and ninth cross-defendants note that the case law on this point is unsettled with some authorities suggesting that a person does not have to be subjectively aware of the facts that he or she does not disclose; whereas other cases suggest that a person is required to be aware of the non-disclosed facts.
In the present case, the eighth and ninth cross-defendants emphasise that Ms Pritchard was not a party to the transaction; Ms Pritchard had no direct involvement with Mr Deans or Fishbank; Ms Pritchard had no prior dealings with Mr Deans; Ms Pritchard had no agreement or contract either at the time of signing the Nomination Agreement or otherwise; and they say that Ms Pritchard was not in a position of trust with Mr Deans or Fishbank. It is said that Ms Pritchard owed no obligations to Mr Deans or Fishbank; rather, that Mr Galati and Mr Deans owed obligations to each other by virtue of their position as option holders. It is said that no obligation extended to Ms Pritchard by virtue of her contact or dealings with Mr Galati or Mr Lennox.
The eighth and ninth cross-defendants point out that the Deans interests were legally represented in the transaction. They say that the Deans interests took no interest in Ms Pritchard, made no enquiries and never contacted Ms Pritchard from 20 November 2015 to sometime in 2016. It is said that Ms Pritchard acted under the instructions of Mr Vassallo; and that all her dealings with the option holders were with Mr Galati or Mr Lennox.
It is noted that there was no evidence from Mr Galati that he contracted with or provided instructions to Ms Pritchard to convey or advise Mr Deans of any matter pertaining to the transaction. It is accepted that Ms Pritchard knew that Mr Deans was the other option holder but it is emphasised that she was not privy to any agreements in place between the Galati interests and the Deans interests.
The eighth and ninth cross-defendants point out that Ms Pritchard was not aware of the Trading Australia costs invoice until Mr Lennox sent her the first such invoice. It is said that Ms Pritchard assumed that the first Trading Australia invoice was part of the settlement arrangements, noting that Ms Pritchard gave evidence in cross-examination that Mr Vassallo said to her that he had not finalised the final settlement figures arising out of transaction on 20 November 2015 (Ex 3 at 106; T 513). It is noted that Mr Vassallo believed the advisory costs was a disbursement and that he instructed Ms Pritchard to make changes to the Wealth Shift invoices in order for Celestino to make payment for "lawyers and consultants" as agreed with Mr Galati. Ms Pritchard says that she facilitated Mr Vassallo's instructions.
It is submitted that Mr Lennox and the Celestino accountant were in the same position as Ms Pritchard (though I fail to see the relevance of this).
Reference is made in this context to the observations of Gleeson CJ in Lam v Ausintel Investments Australia Pty Ltd (1989) 97 FLR 458 at 475 to the effect that, where parties are dealing at arm's length in a commercial situation in which they have conflicting interests it will often be the case that one party will be aware of information which, if known to the other, would or might cause that other party to take a different negotiating stance and that this does not of itself impose any obligation on the first party to bring the information to the attention of the other party (and that failure to do so, without more, would not ordinarily be regarded as dishonesty "or even sharp practice"). There his Honour considered that it would normally only be if there were an obligation of full disclosure that a different result would follow (giving as an example where some feature of the relationship between the parties or previous communications between them gave rise to a duty to add to or correct earlier information).
The eighth and ninth cross-defendants say that the claims against Ms Pritchard and Wealth Shift for misleading and deceptive conduct have not been made good.

[149]

Accessorial Liability

Reference is made to the definition of "involved" in s 2 of the Australian Consumer Laws: "'involved': a person is involved, in a contravention of a provision of this Schedule or in conduct that constitutes such a contravention, if the person: (a) has aided, abetted, counselled or procured the contravention; or (b) has induced, whether by threats or promises or otherwise, the contravention; or (c) has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; or (d) has conspired with others to effect the contravention.
It is noted that a person will be held to have aided or abetted a contravention where the person was aware or should have been aware of the facts that gave rise to the contravention; and a person will be said to have been knowingly concerned in a contravention if that person had full knowledge of the essential facts which gave rise to the contravention. Reference is made to Director General, Department of Services, Technology and Administration v Veall (No 4) [2011] NSWSC 904 (Director General v Veall) at [8] per Buddin J as to the concept of being "knowingly concerned".
The eighth and ninth cross-defendants submit that, in relation to "knowledge of the essential matters constituting the contravention", what is required is: actual and subjective knowledge that the conduct engaged in is a breach of the Australian Consumer Law; actual knowledge that the conduct was illegal, although not aware of the particular law that is being broken; actual knowledge of the falsity of the conduct without being aware that it is illegal; wilful blindness to the truth or falsity of the conduct, amounting to knowledge of the facts that make up the contravention; or reckless indifference to the truth or falsity of the conduct, amounting to knowledge of the facts that make up the contravention.
The eighth and ninth cross-defendants say that the cross-claimants' pleading presumes that Ms Pritchard was aware of the lack of information passing from Mr Galati to Mr Deans in relation to the "side agreement". It is said that the evidence does not establish Ms Pritchard's knowledge as to whether Mr Galati informed, advised or communicated to Mr Deans the details of the side agreement; or whether Ms Pritchard knew that Mr Deans and or Fishbank was or were misled or deceived by Mr Galati. It is submitted that if Ms Pritchard was not aware of what Mr Galati did or did not convey to Mr Deans about the side agreement then it was too remote to say that Ms Pritchard was knowingly concerned.
The eighth and ninth defendants say that Ms Pritchard assumed that the lawyers for the Deans interests, the Galati interests and Mr Vassallo and Celestino were working out the details. The eighth and ninth cross-defendants point out that Ms Pritchard was challenged in cross-examination about what she knew Mr Galati was going to do with the money and she did not know. It is said that Ms Pritchard was not challenged about whether she was aware or knew that Mr Galati had told Mr Deans about the side agreement or whether Mr Deans approved of the side agreement or whether she made inquiries as to Mr Deans' state of mind about advisory costs and who was going to pay for them. Emphasis is placed on the fact that Ms Pritchard said in cross-examination that "In hindsight I should have asked. I just followed instructions" (T 522). It is said that mere recklessness and wilful blindness to the truth of the facts is not to be equated with knowledge of the essential facts of the contravention. The eighth and ninth cross-defendants say that Ms Pritchard was detached from the transaction, believing she was merely assisting in the settlement process.

[151]

Summary

In summary, the eighth and ninth cross-defendants say that the cross-claim for misleading and deceptive conduct/unconscionability fails for the following reasons: Ms Pritchard was not privy or party to the Nomination Agreement; Ms Pritchard did not sign/execute the Nomination Agreement; Ms Pritchard has no legal relationship or relationship of trust with the Deans interests or the Galati interests; Ms Pritchard was not the maker of the EJC No Side Payments Representation or the EJC No Commission Payment Representation; Ms Pritchard owed no duty of disclosure to the Deans interests; Ms Pritchard was the buyer's agent for Celestino/EJC; the Deans interests are not in a "special category of disadvantage" of which Ms Pritchard is able to take advantage; lawyers for both Mr Deans and Trading Australia (Mr Fraser) and Celestino/EJC (Ms Dixon) drafted the Nomination Agreement; the substance of conversations between Mr Fraser and Ms Dixon in relation to key issues in the Nomination Agreement was not disclosed to Ms Pritchard; and Mr Fraser and Ms Dixon were both aware of or were on constructive notice of Ms Pritchard as buyer's agent for Celestino/EJC.
It is said that Mr Galati informed Mr Vassallo about the shortfall due to consulting and lawyers' fees; that the first thing that Ms Pritchard did was to invoice Celestino/EJC for her commission; and that Mr Lennox emailed the first Trading Australia invoice after Ms Pritchard issued the first Wealth Shift invoice. The eighth and ninth cross-defendants say that timing is important. They say that Ms Pritchard forwarded to Mr Vassallo the Trading Australia invoice sent to her by Mr Lennox believing it was part of settlement costs ("I'll sort once you have all settlement figures worked out"). It is noted that Mr Lennox was a consultant/advisor at the time, he was not included as a cross-defendant; and that the changes to the first, second, third, fourth and fifth Wealth Shift invoice were at the direction of Mr Vassallo. It is said that Mr Lennox or Mr Galati did not provide instructions to Ms Pritchard to change her first to fifth Wealth Shift invoices (contrary to the cross-claimants' opening submissions at [29.3]); instead the directions came from Mr Vassallo.
The eighth and ninth cross-defendants accept that Ms Pritchard did not receive advisory services from Trading Australia and did not receive any sum greater than her commission. They say that the $1,799,820 was passed through or facilitated by Ms Pritchard as the buyer's agent for Celestino/EJC. The eighth and ninth cross-defendants say that neither Mr Galati nor Mr Vassallo disclosed the advisory costs to Ms Pritchard. The eighth and ninth cross-defendants further say that it is not unusual to see advisory costs on invoices in deals or sale of assets (the eighth and ninth cross-defendants suggesting that there may be a number of professional people involved, particularly if the acquisition is significant). It is noted that Ms Pritchard had no dealings with Mr Deans; and that Ms Pritchard only dealt with Mr Galati, Mr Lennox and Mr Vassallo. It is accepted that Ms Pritchard was aware of Mr Deans as the other option holder but it is said that she was not under any legal obligation to Mr Deans.
The eighth and ninth cross-defendants say that Mr Galati and Mr Deans owed each other fiduciary duties and/or contractual obligations to account to each other or as directed by the partnership agreement (if any) but that Ms Pritchard owed no legal or moral duty to Mr Deans to disclose the correct purchase price (cf opening submissions of cross-claimants at [33]). It is said that all the negotiations were done by lawyers for each of the parties and or the principals.
As to the assertion by the cross-claimants that Ms Pritchard was "knowingly concerned" or an accessory, the eighth and ninth cross-defendants say the following: Ms Pritchard made no sense of the advisory costs; Ms Pritchard believed that it was correct at the time and took the invoice of Trading Australia at face value or on good faith that there was nothing illegal; Ms Pritchard was questioned about the advisory costs and agreed that in hindsight it was not correct but it is said that this does not equate to actual knowledge (that it was either mere recklessness and wilful blindness to the truth of the facts); and that Ms Pritchard was under the belief the details of the transaction were being done by the lawyers and so had approval from Mr Vassallo.
It is said that, although Ms Pritchard knew the purchase price was $24 million, she was not aware of the Nomination Agreement and later the settlement sums, which she indicated to Vassallo ("I'll sort once you have all settlement figures worked out"). It is said that Ms Pritchard was waiting for Mr Vassallo to finalise the settlement figures, which Ms Pritchard would then facilitate on his behalf. It is said that Ms Pritchard was expecting further costs to be provided by Mr Vassallo and was not aware of what was said between any of Mr Galati, Mr Deans, Mr Lennox or Mr Vassallo (in varying combinations) in relation to advisory costs.

[153]

Bribe and breach of fiduciary duty

The legal principles relevant to bribes/secret commissions are well established. Slade J in Industries & General Mortgage Company Ltd v Lewis [1949] 2 All ER 573 (Industrial & General Mortgage) at 575 defined a bribe as meaning: … the payment of a secret commission, which only means (i) that the person making the payment makes it to the agent of the other person with whom he is dealing; (ii) that he makes it to that person knowing that that person is acting as the agent of the other person with whom he is dealing; and (iii) that he fails to disclose to the other person with whom he is dealing that he has made that payment to the person whom he knows to be the other person's agent.
Slade J's definition in Industries & General Mortgage was followed and applied by Vickery J in Indeco Pacific (at [83]-[84]) and also by the Full Court of the Federal Court (Finn, Stone and Perram JJ) in Grimaldi v Chameleon Mining (at [190]). At [192], in Grimaldi v Chameleon Mining the Full Court went on to refer to Daraydan Holdings Ltd v Solland International Ltd [2005] Ch 119 (Daraydan Holdings) at [53] per Collins J for the proposition that: In proceedings against the payer of the bribe there is no need for the principal to prove (a) that the payer of the bribe acted with a corrupt motive; (b) that the agent's mind was actually affected by the bribe; (c) that the payer knew or suspected that the agent would conceal the payment from the principal; (d) that the principal suffered any loss or that the transaction was in some way unfair; the law is intended to operate as a deterrent against the giving of bribes.
In Attorney General for Hong Kong v Reid, Templeman LJ said for the Privy Council (at 330-331): A bribe is a gift accepted by a fiduciary as an inducement to him to betray his trust. A secret benefit, which may or may not constitute a bribe, is a benefit which the fiduciary derives from trust property or obtains from knowledge which he acquires in the course of acting as a fiduciary. A fiduciary is not always accountable for a secret benefit but is undoubtedly accountable for a secret benefit which consists of a bribe. … Bribery is an evil practice which threatens the foundations of any civilised society … Where bribes are accepted by a trustee, servant, agent or other fiduciary, loss and damage are caused to the beneficiaries, master or principal whose interests have been betrayed.
In Grimaldi v Chameleon Mining, the Full Court (at [188]) said that the bribe/secret commission rules are an accepted subset of the general principles relating to conflict of duty and interest and the misuse of a fiduciary position. The argument and decision proceeded on this basis in FHR European Ventures LLP v Mankarious [2015] AC 250 (FHR European Ventures).
It is also relevant to note that in Panama and South Pacific Telegraph Company v India Rubber, Gutta Percha and Telegraph Works Company (1875) LR 10 Ch App 515, James LJ said (at 526) that, "any surreptitious dealing between one principal and the agent of the other principal is a fraud on such other principal cognizable in this Court"; and Mellish LJ (at 528) concluded that it was sufficient that the defendants had notice of the agent's conflict and therefore described the arrangement in that case as "morally wrong" (see at 529). Further, in Sydney Water Corporation v Makucha [2010] NSWSC 114 (at [59]) White J, as his Honour then was, said that "[a] secret payment made to an agent of a person with whom the payer is dealing, or proposes to deal, when the payer knows that the payee is acting as agent, is, for the purposes of the civil law, a bribe. It requires no proof of corrupt purpose and it is immaterial whether the payment is by way of gift or whether it is for services rendered or is made for any other reason".
The decisions of the High Court in Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 98; [2007] HCA 22 and Consul Development v DPC Estates Pty Ltd (1975) 132 CLR 373; [1975] HCA 8 (Consul Development v DPC Estates), each emphasised the fault-based principles underlying both knowing receipt and knowing assistance (and, indeed, it has been recognised that bribers may be characterised as third-party knowing participants in the breach of a fiduciary duty - Grimaldi v Chameleon Mining at [243]-[248]; Daraydan Holdings at [54]).
The remedies available in respect of bribes and secret commissions will generally include the normal range of equitable remedies: rescission of contract and proprietary remedies (Furs Ltd v Tomkies (1936) 54 CLR 583; [1936] HCA 3; Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41; [1984] HCA 64 (Hospital Products) at 107-108 per Mason J, as his Honour then was); and, as against a bribed agent, declarations of constructive trusts (in respect of both fiduciaries and third parties) (Grimaldi v Chameleon Mining at [582]; Consul Development Pty Ltd v DPC Estates at 396-397 per Gibbs J, as his Honour then was, and the authorities cited therein); equitable compensation for breach of fiduciary duty which may be awarded in lieu of rescission or specific restitution (BB Australia Pty Ltd v Danset Pty Ltd [2018] NSWCA 101 at [53] per Barrett AJA (with whom Meagher JA agreed); Bristol and West Building Society v Mothew [1998] Ch 1 at 17); and an account of profits (Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427; [2011] HCA 48 at [106]).
As to declarations of constructive trust, in Chan v Zacharia (1984) 154 CLR 178; [1984] HCA 36, Deane J said (at 199) that "a person who is under a fiduciary obligation must account to the person to whom the obligation is owed for any benefit or gain (i) which has been obtained or received in circumstances where a conflict or significant possibility of conflict existed between his fiduciary duty and his personal interest in the pursuit or possible receipt of such a benefit or gain or (ii) which was obtained or received by use or by reason of his fiduciary position or of opportunity or knowledge resulting from it. Any such benefit or gain is held by the fiduciary as constructive trustee". In Hospital Products (at 107-108), Mason J said: Any profit or benefit obtained by a fiduciary [in breach of the proscriptions on conflict of duty and interest or on misuse of position] is held by him as a constructive trustee … Neither principle nor authority provide any support for the proposition that relief by way of constructive trust is available only in the case where a profit or benefit obtained by the fiduciary was one which it was an incident of his duty to obtain for the person to whom he owed the fiduciary duty. Once it is established that the fiduciary is liable to account for a profit or benefit which he has obtained there can be no objection to his being held to account as a constructive trustee of that profit or benefit. It can make no difference that it was not his duty to obtain the profit or benefit for the person to whom the duty was owed. What is important is that the advantage has accrued to him in breach of his fiduciary duty or by his misuse of his fiduciary position. The consequence is that he must account for it and in equity the appropriate remedy is by means of a constructive trust.
Significantly, liability to account as a constructive trustee may be imposed on a person who knowingly assists in a breach of fiduciary duty where the person receives or becomes chargeable with trust property or has assisted with knowledge in a dishonest or fraudulent design (see Consul Development v DPC Estates at 397 and 408, citing Barnes v Addy (1874) LR 9 Ch App 244 at 251-252).

[154]

Trading Australia and Mr Galati

Turning then to the allegations here made in relation to the alleged secret commission, I have found that at least from the time of the Agreement Principles document (and most likely from October 2014, with entry into the Equity Funding Agreements - as indeed has been admitted by the Deans interests), the Galati interests were involved in a joint venture with the Deans interests (though I do not find that it amounted to a partnership as such); and that the respective parties in that joint venture owed each other at least duties of good faith and fiduciary duties of the kind pleaded at [87] of the fourth amended cross-claim (namely, to act in good faith and in the best interest of the joint venture; not to act for a purpose collateral to the purpose of the joint venture; not to place themselves in a position of actual or potential conflict with the interests of the joint venture; and not to act in their own interests to the detriment of the interests of the joint venture). I appreciate that the pleading expresses these fiduciary duties as being owed to Fishbank but I understand that as being based on the premise that Fishbank in some way was seen as the embodiment of the joint venture. I think the correct analysis is that the respective parties to the joint venture owed these duties to each other (and that is the way that the case has been run on both sides). Each participant in the joint venture was under a fiduciary duty to refrain from pursuing, obtaining or retaining for itself or himself any collateral advantage in relation to the proposed project without the knowledge and informed assent of the other participants. (The reason that there was not a breach in relation to such an obligation by the retention of the $500,000 commission by Deans Property, as discussed earlier, is that this was a commission earnt by reference to an arrangement entered into before, and therefore unrelated to, the joint venture and there is nothing to indicate that the Deans interests undertook to bring such amounts into the joint venture.)
I find that the payment of $1,799,820.95 by EJC, effected through Wealth Shift, to Trading Australia was a secret commission in that the payment was made by EJC with the knowledge that the money was payable jointly to Trading Australia and Fishbank (as Grantee), and hence, that the payment was to Trading Australia on behalf of (and thus as an agent of) the joint venturers. Further, the only plausible inference from the charade entered into in relation to the invoices was that the payment was without disclosure to Trading Australia's co-joint venturers (through the Nomination Agreement or otherwise). The additional payment made to Trading Australia via Wealth Shift represented the balance of the $24 million purchase price that Mr Vassallo had agreed on behalf of EJC to pay for the acquisition of the option rights; and the receipt by Trading Australia of that amount must have been as agent for the parties to whom that sum was payable (the Grantee as specified under the Nomination Agreement (i.e., Fishbank and Trading Australia)). Indeed, the attempted justification by Mr Galati that he was obtaining these moneys in order to pay expenses of the joint venture is predicated on him so doing on the basis that he was acting in some way on behalf of the parties to the joint venture (and in that sense as an agent on behalf of the joint venture parties). That the payment was not disclosed to Mr Deans cannot seriously be disputed. It is probably not necessary to go so far as to find that it was a bribe as such (as opposed to a secret benefit), since no claim is now pressed against EJC in relation to the alleged secret commission or bribe.
What is clear is that Trading Australia knew that the payment of the impugned amount was not being disclosed to the Deans interests and that it was in effect being diverted from Fishbank (to enable Mr Galati to do as he wished with that payment).
Thus, I find that Trading Australia, by invoicing Wealth Shift for non-existent services and receiving the impugned payment did so as agent of the joint venture and, by failing to disclose this benefit to the Deans interests, was in breach of the fiduciary duty owed to its co-joint venturers, Mr Deans and Fishbank. I also consider it to be a deliberate and dishonest breach of duty.
Further, I find that the conduct of Mr Galati in pursuing and obtaining an advantage in relation to the project (by organising and entering into the secret commission arrangement with Mr Vassallo, and retaining a personal financial benefit therefrom, without the knowledge and informed consent of the Deans interests) was in breach of his fiduciary duty as a co-joint venturer to Fishbank (see UDC v Brian). While it is unnecessary, given that I have found Mr Galati directly liable for breach of fiduciary duty; I note that for the same reasons I would have found Mr Galati accessorially liable as a knowing assistant for Trading Australia's dishonest and fraudulent breach of duty.
I reject the proposition that the secret separate payment was in some way "both understandable and forgiveable" by reason of Mr Galati having worked on the project for as long as he did without remuneration (as I have made clear already above); and I reject the suggestion that Mr Galati was authorised, under the arrangements between the parties, unilaterally to choose to act in the way that he did (in that regard I note that the Agreement Principles document did not authorise the taking of such funds and I have already indicated that I am not persuaded that there was a concluded or binding "dictate the terms" agreement as Mr Galati has alleged).
As to the reliance placed by Mr Galati on the profit sharing arrangements with Mr Deans, that does not assist Mr Galati in circumstances where the overall development did not proceed; and I do not accept the suggestion that Mr Galati should be given an allowance for his time and skill in progressing the project - that was the very task he had undertaken with a view to a not insubstantial profit share if the project proved to be successful; it did not justify him taking a secret commission and applying it at his whim.
As to Mr Galati's claim that the money was used to pay the debts of Fishbank, I am not persuaded that this has been established as a matter of fact (let alone as a matter of legal principle).
As to the payments to persons identified in the Agreement Principles document in respect of whom Mr Galati agreed to be responsible for their bonuses (Ms Ma, Mr Lennox, Ms Chikarovski, Mr John Shepherd and Mr Kremisis), there is no basis for Mr Galati now to assert that these were Fishbank's debts. As to a variety of other payments, there is nothing to establish that these were a genuine obligation of Fishbank (such as the amounts paid to Mr Pho, Mr Abi-Fares, Mr Vaggis). As to the amounts that Mr Galati conceded were not Fishbank's expenses at all, it is difficult to see how his claim to be entitled in some way to an offset or credit for these amounts could be maintained. Finally, as to the not insubstantial amounts that Mr Galati effectively paid himself or applied for his own benefit, Mr Galati's complaint that he had not been paid a cent for the work that he had done to that time is (for the reasons already considered) beside the point. The arrangement that was agreed with the Deans interests did not oblige Fishbank to pay Mr Galati the amount that Mr Galati chose unilaterally to pay himself or his company.
That makes it strictly unnecessary to consider the line of authority to the effect that an "officious bystander" who pays the debt of another cannot be found to have discharged that burden unless the debtor provides consent to such a payment. For completeness, I repeat the dictum of Scarman LJ in Owen v Tate [1976] QB 402 (at 411-412) to which reference was made recently in Boulos Holdings Pty Ltd v Edwin Davy Pty Ltd [2021] NSWSC 689 (Boulos), namely that: In my judgment, the true principle of the matter can be stated very shortly, without reference to volunteers or to the compulsions of the law, and I state it as follows. If without an antecedent request a person assumes an obligation or makes a payment for the benefit of another, the law will, as a general rule, refuse him a right of indemnity. But if he can show that in the particular circumstances of the case there was some necessity for the obligation to be assumed, then the law will grant him a right of reimbursement if in all the circumstances it is just and reasonable to do so. In the present case the evidence is that the plaintiff acted not only behind the backs of the defendants initially, but in the interests of another, and despite their protest. When the moment came for him to honour the obligation thus assumed, the defendants are not to be criticised, in my judgment, for having accepted the benefit of a transaction which they neither wanted nor sought.
In Falcke v Scottish Imperial Insurance Company (1887) LR 34 ChD 234 (Falcke) at 248, Bowen LJ referred to the general principle that one person cannot force a liability on another, or confer a benefit on that other, against his or her will. Here, not only was there no implied request by the Deans interests for these payments to be made; Mr Galati was well on notice of the fact that Mr Deans would not consent to such payments.
The suggestion that any amounts recoverable from Mr Galati should be reduced by reference to the debts he allegedly discharged on behalf of Fishbank is thus, with all due respect, misconceived both in fact and as a matter of principle.
As to Mr Galati's claim in relation to an alleged breach of good faith and fiduciary duty by Mr Deans in respect of the receipt (by Deans Property) of the Bidvest commission as an answer to the claims against Mr Galati, as noted above, the difficulty I have is that this was a benefit gained by Deans Property pursuant to an agency agreement entered into before any joint venture with the Galati interests and was separate therefrom. There was no entitlement on the part of the Galati interests to this amount; and no obligation in my opinion on the part of Mr Deans to inform Mr Galati about the receipt of this payment or to apply that payment to the redevelopment project. To my mind it falls into an entirely different category from that of the secret commission claim in relation to the EJC payment.
Therefore, the breach of fiduciary duty claim against Mr Galati is made good. I have found that the relationship between the Deans interests and the Galati interests gave rise to fiduciary duties of the kind considered in UDC v Brian (at 13) and that the undisclosed arrangement for payment of the secret commission to Trading Australia, which was then used by Mr Galati for his own benefit (and to make payments to those he considered entitled to some recompense or reward), amounted to a breach of those fiduciary duties.

[155]

Unconscionable conduct

The cross-claimants bring the various claims for unconscionable conduct on the part of Mr Galati both in equity and under s 20 of the Australian Consumer Law.
It is necessary here only to note that the principles of unconscionable conduct in equity were recently restated by the High Court in Thorne v Kennedy at [38] as follows: A conclusion of unconscionable conduct requires the innocent party to be subject to a special disadvantage "which seriously affects the ability of the innocent party to make a judgment as to [the innocent party's] own best interests". The other party must also unconscientiously take advantage of that special disadvantage. This has been variously described as requiring "victimisation", "unconscientious conduct", or "exploitation". Before there can be a finding of unconscientious taking of advantage, it is also generally necessary that the other party knew or ought to have known of the existence and effect of the special disadvantage. [footnotes omitted]
As to the claims in equity, I find that the allegation of unconscionable conduct on the part of Mr Galati or Trading Australia is not made good. Such a finding requires that Fishbank and Mr Deans were under a special disadvantage that impaired their ability to act in their own best interests.
A party to a transaction has been considered to be at a special disadvantage due to "illness, ignorance, inexperience, impaired faculties, financial needs or other circumstances" (Blomley v Ryan (1956) 99 CLR 362 at 415 per Kitto J). I do not consider that Mr Deans or Fishbank was under any such disadvantage. Mr Deans and Fishbank were at all times participating in arms-length transactions and had the benefit of legal advice from Mr Fraser (and other solicitors) from time to time; and, relevantly, this was the case when the Celestino deal took place. Mr Deans, as an individual and as the director of Fishbank, is a registered real estate agent with experience in significant property transactions (one can even look to the Dahua transactions in this regard as an example of his experience). In Cresswell v Potter [1978] 1 WLR 255, Megarry J considered that "ignorant" in the context of special disadvantage referred to being "less highly educated" (at 257).
While I accept that Mr Deans and Fishbank did not know of the secret commission, I do not accept their submission that their "ignorance of the true purchase price" put them at the kind of special disadvantage contemplated by the principle of unconscionable conduct in equity. If that were to be the case anyone (however sophisticated and well-advised), who fell prey to a fraudster could claim to be under a special disadvantage.
I am thus not persuaded that, within the joint venture or otherwise, Mr Deans or Fishbank was at a special disadvantage vis a vis Mr Galati or Trading Australia (although this is ultimately of no import as I have already found that the breach of fiduciary duty claim is made good).
As to the claim under s 20 of the Australian Consumer Law the conclusion must be the same. Unconscionable conduct under s 20 is "within the meaning of the unwritten law". Some forms of statutory unconscionability, such as under s 21 (which I again note has not been pressed), have been expressly "unmoored" from the limitations of the unwritten law (see s 21(4)(a)); and so it has been held that claims under those sections do not require a special disability or vulnerability (see, for example, Australian Competition and Consumer Commission v Quantum Housing Group Pty Ltd (2021) 388 ALR 577; [2021] FCAFC 40 (ACCC v Quantum Housing) at [82]-[93]; and Australian Securities and Investments Commission v Kobelt (2019) 267 CLR 1; [2019] HCA 18). By contrast, s 20 is within the restraints of the unwritten law and so requires the element of special disability or vulnerability (see ACCC v Quantum Housing at [86]; Ipstar Australia Pty Ltd v APS Satellite Pty Ltd (2018) 356 ALR 440; [2018] NSWCA 15 at [183] per Bathurst CJ (with whom Beazley P, as Her Excellency then was, and Leeming JA agreed). Therefore, the claims of unconscionable conduct within the meaning of s 20 fail for the reasoning above.

[156]

Wealth Shift and Ms Pritchard unconscionable conduct/accessorial liability

As to the position of the eighth and ninth cross-defendants, the crossclaimants plead that Wealth Shift engaged in unconscionable conduct by agreeing to receive/receiving the $1.799 million and/or by paying that amount to Trading Australia (at [170] and [171]). In the alternative (at [173]-[174]), it is pleaded that Wealth Shift and/or Ms Pritchard aided, abetted, counselled, procured or induced or was directly or indirectly knowingly concerned in the contraventions under the Competition and Consumer Act of Trading Australia and Mr Galati "in respect of each of the representations and claims of unconscionable conduct".
What is critical in this regard is the knowledge of Ms Pritchard (since that knowledge is to be imputed to Wealth Shift, Ms Pritchard being the sole director and controlling mind of that company and there being no question that her conduct amounted to any kind of fraud against that company).
As to the knowledge or awareness particularised at [171(a)-(j)], I accept that the evidence does not establish that Ms Pritchard was aware of the Nomination Agreement or its terms (and therefore the awareness particularised at (a) and (b) is not established). Given Ms Pritchard's experience as a real estate agent, I can readily accept that she must have been aware of the matters set out at (e)-(h) (as to practices around the payment of commissions and payments to third parties); and (albeit that she was not aware of the premise of the matter particularised at (c)) that she would have been aware that, unless there was some commission sharing arrangement in place, it would be unusual for another agent to be receiving a commission on sale. In that regard, I also accept that Ms Pritchard was not aware of any commission sharing arrangement in place (and, indeed, the evidence does not suggest that this invoicing arrangement was justified by any commission sharing arrangement).
As noted above, Ms Pritchard was well aware that no transaction or property advisory services had been provided by Wealth Shift to Trading Australia. It seems likely, having regard to Ms Pritchard's experience that (even though not put to her in terms as such) Ms Pritchard would have been aware of ordinary conveyancing practice as particularised at (e)-(h).
Ms Pritchard was certainly aware, notwithstanding the invoice she caused to be issued by Wealth Shift to EJC, that there was no agreement between EJC and Wealth Shift for any commission or fee for transaction advisory services to be paid to Wealth Shift; and that Wealth Shift did not disclose that additional Wealth Shift commission to the Deans interests (the matters particularised at (i)-(j)). (To the extent that this includes the amount paid to Ms Pritchard as buyer's agent, I accept that a buyer's agent may not necessarily be required to disclose to the vendor its own commission; what is relevant, however, is the extent to which it includes the $1.799 million paid out of the overall purchase - i.e., the secret commission.)
Ms Pritchard knew: that the purchase price (on which she charged her commission) had been agreed between EJC and Trading Australia to be $24 million; that the purchase price was payable to the owners of the option rights; and that there were two "partners" or entities associated with those rights (i.e., the Galati interests and the Deans interests), even though I accept that she was not aware of the terms of the Nomination Agreement as such. By the time of the invoicing arrangements and payment of the commission, Ms Pritchard also (relevantly) knew that there was at least an element of distrust (if not an outright falling out) between Mr Galati and Mr Deans (having regard to the account she gave of Mr Galati's reaction to what occurred on 20 November 2015, and the later "hurt money" conversation with Mr Vassallo, and Mr Deans' exclusion thereafter from discussions in relation to the project). Critically, in my view, Ms Pritchard knew (and made no pretence to the contrary) that there had been no services rendered by Wealth Shift that would justify the issue of an invoice in the terms and amount that was ultimately rendered by her; and, in my opinion, a reasonable and honest person in her position would clearly have been put on enquiry as to the legitimacy of the invoicing arrangements in that regard.
As to the unconscionable conduct claims against Wealth Shift, first, I accept that there was no dealing or transaction directly between Wealth Shift and Mr Deans or Fishbank nor was Wealth Shift a party to any transaction with either or both of the Deans interests (as is emphasised by the eighth and ninth cross-defendants). Wealth Shift, as the buyer's agent for EJC (or Celestino), does not appear to have been involved in any meaningful way (if at all) in the negotiation of the Celestino transaction or the terms of the Nomination Agreement. Rather, Wealth Shift introduced Celestino to Mr Galati (and through him to the project) but does not appear to have been involved in any of the decision-making. In that sense, I do not consider Wealth Shift to have been a party to the transaction with the Deans interests (or Trading Australia) as such but, rather, Wealth Shift was a facilitator on the part of Mr Vassallo.
Moreover, even to the extent that Wealth Shift was involved in the circumstances leading up to the transaction whereby EJC acquired the option rights from Trading Australia and Fishbank, I do not consider that there was any special disadvantage on the part of the Deans interests vis a vis Wealth Shift (the buyer's agent). Both Ms Pritchard and Mr Deans were experienced real estate agents. There is no factual basis to support a finding that Mr Deans was somehow on unequal footing with Ms Pritchard such that he could not make a judgment in the best interests of he and Fishbank in any dealings with Wealth Shift. Therefore, the unconscionable conduct claims against Wealth Shift are not made good.
As to the claims that Wealth Shift and/or Ms Pritchard were accessorially liable for the representations and claims of unconscionable conduct amounting to contraventions by Trading Australia and Mr Galati under the Australian Consumer Law, these fail (other than as to the representation as to the purchase price - as to which, see below). In particular, I make no findings of unconscionable conduct for which the eighth and ninth cross-defendants could be accessorially liable in this regard.

[158]

Trading Australia and Mr Galati

The cross-claimants plead that, by obtaining the secret commission (i.e., by seeking and receiving the payment of $1.799 million without disclosing it to Fishbank), Mr Galati and Trading Australia engaged in false or misleading conduct under s 18 of the Australian Consumer Law (at [118] of the fourth amended cross-claim). It is particularised at [118(i)] that "Deans and [Fishbank] had become aware of some of [Trading Australia's] and Galati's previous requests for secret commissions and specifically demanded, and it was stated by Galati, that there would be no such conduct".
First, as to this claim, I am satisfied that the Celestino deal with the option holders (being Fishbank and Trading Australia) was in trade or commerce. It was not suggested otherwise.
Second, I consider that Mr Galati's conduct in relation to the secret commission was misleading and or deceptive conduct for the purposes of s 18 of the Australian Consumer Law as it was objectively capable of inducing error (Butcher v Lachlan Elder Realty at 625-626 per McHugh J). Looking at Mr Galati's conduct as a whole, it is clear that Mr Galati led Mr Deans to believe that the purchase price was less than the $24 million that had been agreed with Mr Vassallo; and it is clear that the Nomination Agreement was negotiated and executed on that basis, with Mr Galati remaining silent as to the additional $1.799 million that was to be paid to Trading Australia by EJC through Wealth Shift. I consider that Mr Galati's conduct in relation to the Celestino deal was likely to induce a reasonable person in the position of Mr Deans (i.e., an experienced real estate agent) into error as to the amount that Celestino (or EJC) was prepared to pay in order to purchase the option rights in relation to the Bidvest Land and the Felan's Fisheries shares and therefore as to the amount of money that was being paid by EJC to the option holders. It is entirely reasonable to expect that an accurate purchase price would be detailed on a document such as the Nomination Agreement.
I find that Trading Australia has breached s 18 of the Australian Consumer Law by its conduct in failing to disclose to the Deans interests the amount of the additional payment.
As to the claim that Mr Galati has accessorial liability pursuant to s 75B of the Competition and Consumer Act, I note at the outset that s 75B of the Competition and Consumer Act does not apply to the Australian Consumer Law generally. Relevantly, for present purposes, it does not apply to s 18. Section 75B applies within the Competition and Consumer Act to "a provision of Part IV, IVB or IVBA, or of section 55B, subsection 56BN(1), 56BO(1), 56BU(1) or 56CC(1), section 56CD, 60C, 60K or 92 or a civil penalty provision of the consumer data rules" (s 75B).
However, the essence of what is pleaded at [131] of the further amended cross-claim (that "Galati has aided, abetted, counseled or procured and/or has induced and/or had been directly or indirectly knowingly concerned in and/or has conspired with [Trading Australia] within the meaning of s 75B of the Competition and Consumer Act") is covered by a combination of ss 2 and 236 of the Australian Consumer Law which provide as follows: 2 Definitions (1) In this Schedule: … "involved" : a person is involved, in a contravention of a provision of this Schedule or in conduct that constitutes such a contravention, if the person: (a) has aided, abetted, counselled or procured the contravention; or (b) has induced, whether by threats or promises or otherwise, the contravention; or (c) has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; or (d) has conspired with others to effect the contravention. … 236 Actions for damages (1) If: (a) a person (the claimant ) suffers loss or damage because of the conduct of another person; and (b) the conduct contravened a provision of Chapter 2 or 3; the claimant may recover the amount of the loss or damage by action against that other person, or against any person involved in the contravention. (emphasis added)
Therefore, other than as a technical pleading point, nothing ultimately turns on this since I consider that Mr Galati has liability even apart from the claimed accessorial liability in relation to the relevant conduct.
As held by the High Court in Yorke v Lucas (at 670), a person cannot be knowingly concerned in a contravention unless that person has knowledge of the essential facts constituting the contravention. It is clear that, as the director of Trading Australia and the individual making the representations to Mr Deans and Fishbank about the "deal" with EJC (or Celestino), Mr Galati was "concerned" in Trading Australia's contravention; which satisfies the physical element of being "knowingly concerned" (Director General v Veall at [8]).
The key question is whether Mr Galati had knowledge of the essential facts constituting the contravention. As the person who requested Mr Vassallo to structure Celestino's purchase of the property and the shares in this way, and who organised for the payment of the secret commission, Mr Galati clearly did have knowledge of the essential facts constituting the contravention. Thus, accessorial liability on the part of Mr Galati is made out.

[159]

Wealth Shift and Ms Pritchard - misleading or deceptive conduct

At [167] and [168] of the fourth amended cross-claim, it is pleaded that Wealth Shift engaged in misleading and deceptive conduct under s 18 of the Australian Consumer Law by agreeing to receive/by receiving the "WS Commission" (being the payment from Baiada of $2,279,820.95) and by paying the $1.799 million to Trading Australia.
Alternatively, it is pleaded (at [173] and [174]) that Wealth Shift and/or Ms Pritchard are accessorially liable, within the meaning of s 75B of the Competition and Consumer Act, for Mr Galati and Trading Australia's "representations" that contravened the Competition and Consumer Act.
There is no suggestion that Ms Pritchard communicated in some way with the Deans interests as to the arrangements in relation to the purchase price. As to whether Wealth Shift (through Ms Pritchard) engaged in misleading or deceptive conduct, it is necessary to consider whether Wealth Shift's silence (as to the receipt, and on-payment, of an amount in excess of its commission) was conduct objectively capable of inducing error on the part of the Deans interests. As made clear in Demagogue v Ramensky, silence must be considered in the context in which it occurs and may include facts giving rise to a reasonable expectation, in the circumstances, that a particular matter may be disclosed.
The question to my mind is whether, in the absence of any direct dealings between the Deans interests and Wealth Shift or Ms Pritchard, there would have been a reasonable expectation on the part of Mr Deans or Fishbank that Wealth Shift or Ms Pritchard would disclose to them information as to directions given by Mr Vassallo as to the manner in which payment out of the overall purchase price was to be paid via Wealth Shift to Trading Australia. There is no evidence of any particular encounter or communication between Ms Pritchard and Mr Deans which would have given rise to some duty of disclosure on her part. So, for example, there is no evidence of any communication between them in which Mr Deans raised any enquiry as to the payment directions (perhaps not surprisingly since Mr Deans knew nothing of the additional payment) and nothing which could be said to have put Ms Pritchard on notice that Mr Deans was laboring under a particular misapprehension in that regard.
That said, the more unusual the transaction the more likely to my mind that there would have been a reasonable expectation on the part of the Deans interests that someone dealing with their co-joint venturers would raise any concerns or suspicions as to the payment directions with them. Nevertheless, I am not persuaded that the claim directly for misleading or deceptive conduct is made good against the eighth and ninth cross-defendants, primarily because of the lack of direct communications that might be said to have given rise to a duty of disclosure.
However, I find that the claim for accessorial liability on the part of Wealth Shift and Ms Pritchard in respect of Trading Australia's misleading or deceptive conduct in relation to the representation of the purchase price is made good. I find that Ms Pritchard had knowledge of the essential facts of the contravening conduct.
I note that in Rafferty v Madgwicks (2012) 203 FCR 1; [2012] FCAFC 37 (Rafferty v Madgwicks) at [261], it was said that 261. In this context, it is important to bear in mind that the knowledge that a person must have in order to be "a person involved in a contravention" within s 75B(1)(a) or (c) is actual knowledge. The weight of authority is now clear on this point. See Rural Press at 74 [48] and Quinlivan v Australian Competition and Consumer Commission (2004) 160 FCR 1 at 4 per Heerey, Sundberg and Dowsett JJ; see also Bowler v Hilda Pty Ltd [2000] FCA 899 at [77] per Finn J. This means that, notwithstanding occasional judicial statements to the contrary (eg, Ridgway v Consolidated Energy Corporation Pty Ltd (1986) 7 IPR 452 at 457) constructive knowledge is not enough. The existence of actual knowledge may be inferred from wilful blindness (see Australian Competition and Consumer Commission v IMB Group Ltd [2003] FCAFC 17 at [135]) or from dishonest or deliberate ignorance (see Giorgianni at 482-483, 495, 507-508). Brennan J's reference (in Yorke v Lucas at 677) to "honest ignorance" was an indirect reference to this latter concept; that is, his Honour was referring to a state of mind from which no inference of actual knowledge might be drawn.
Ms Pritchard knew that a different purchase price had been recorded on the face of the contract for sale (which was copied to her) that was less than the price of $24 million on which her own commission was based; Ms Pritchard knew that Mr Galati and Mr Deans had had a falling out and that Mr Vassallo had offered to provide "hurt money"; (and most significantly in my opinion) Ms Pritchard knew that there had been no services provided for the invoice which she issued. When Ms Pritchard was asked why she made the payment to Trading Australia, Ms Pritchard responded, as already noted, "Why did I do it? In hindsight I should have asked. I just followed instructions".
Constructive knowledge is not, however, enough. The question is whether actual knowledge may be inferred on all of the evidence. In my opinion, and having given this careful consideration, I have concluded that Ms Pritchard's actual knowledge of Mr Galati and Trading Australia's dishonest and misleading conduct can comfortably be inferred from her knowledge of the above circumstances and her deliberate ignorance or willful blindness resulting from a failure to question why she needed to alter her invoice (as directed) and, in particular, why, as the buyer's agent, Wealth Shift should pay a significant sum of money to one of the option holders in such a fashion (see Rafferty v Madgwicks at 261; Giorgianna v R (1985) 156 CLR 473; [1985] HCA 29 at 482-483 per Gibbs CJ). Thus, I consider that Ms Pritchard, and consequently, Wealth Shift, had sufficient knowledge to be knowingly concerned in Trading Australia's breach of s 18 of the Australian Consumer Law.
As to the damages for which Wealth Shift and Ms Pritchard should be held liable, while I accept that Ms Pritchard has explained her conduct as simply "following instructions" but decisions of that kind may (as they have here) have adverse consequences. I do not accept that only nominal damages should be awarded. The cross-claimants are entitled to recover damages for the loss that has been suffered; and that loss could not have been suffered as it ultimately was had Ms Pritchard not chosen blindly to follow the instructions she was given as to the invoicing charade that took place. I see nothing unjust or inequitable in the cross-claimants seeking to recover damages for their losses pursuant to the statutory provisions that enable them to do so.

[160]

Tort of deceit

As to the claim made against Mr Galati in the tort of deceit, I find that the conduct in relation to the secret commission does give rise to liability for deceit on the part of Mr Galati but the only consequence of this for present purposes lies in the claim for exemplary damages. (For completeness, I note that no claim in deceit was brought against the eighth and ninth cross-defendants.)
In Magill v Magill (2006) 226 CLR 551; [2006] HCA 51, Gleeson CJ stated (at [17]) that "[t]he tort of deceit provides a legal remedy for harm suffered in consequence of dishonesty". Gummow, Kirby and Crennan JJ there (at [114]) set out the five elements required to establish the modern tort of deceit as follows: (i) the defendant made a false representation; (ii) the false representation was made with the knowledge that it was false, or the defendant was reckless or careless as to the falsity of the representation; (iii) the false representation was made with the intention that the plaintiff would rely on it; (iv) the plaintiff acted in reliance on the false representation; and (v) the plaintiff suffered damage which was caused by reliance on the false representation.
The plaintiff bears the onus of proving that he or she was induced to act upon the false representation and suffered damage (see Gould v Vaggelas (1984) 157 CLR 215; [1984] HCA 68 at 237-239). In Gipps v Gipps [1978] 1 NSWLR 454 at 460, Hutley JA (with whom Glass and Samuels JJA agreed) said the following of the requirement that the person is induced to act on the misrepresentation: To state that a person is induced by a statement is to affirm a causal relation which is a question of fact, not of law. That being so, it is impossible to apply to any situation a rule which produces a final result. The trial judge or jury have to answer the question: Did the misrepresentation cause the representee to enter into the contract, it being understood that the representation, as was stated in Australian Steel and Mining Corporation Pty. Ltd. v. Corben (10), "was one among the factors which induced the contract". … In determining whether a person is induced by a misrepresentation, the court is entitled to assume that the representor knows his victim, and the misrepresentation designed to produce a result does so: Corben's case.
I am satisfied of the first three elements of the tort of deceit detailed above by application of the factual findings made earlier under the determination of the misleading or deceptive conduct claim.
The pertinent question in the case at hand (and which I consider below) is whether the misrepresentation by Trading Australia and Mr Galati (in failing to disclose the purchase price of $24 million and the extra payment of $1.799 million to be paid to Trading Australia) induced Mr Deans and Fishbank to act in reliance on that representation such that they suffered damage.
At [136]-[140], the cross-claimants alleged simply that they were deceived and that they suffered loss and damage as a result. The loss pleaded as a result of the conduct in relation to the secret commission is that "[Fishbank] received less on the sale of the rights associated with the EJC sale as a result of the EJC Demand Extra Commission Conduct". I take this to mean that the reliance by the Deans interests on the misrepresentation related to the execution of the Nomination Agreement (and I consider that this was the basis on which the case was conducted and defended by the Galati interests). I would readily infer (as is evident having regard to Mr Galati's own understanding that Mr Deans had not agreed to the making of the payments Mr Galati subsequently made to consultants or others out of the additional payment, i.e., the use that he made of those moneys) that, had Mr Deans been aware of the full amount that EJC was prepared to pay, and was paying, by way of the purchase price for the option rights, Mr Deans would have insisted on the receipt of those funds into the project coffers (and hence the reliance on the misrepresentation was the failure to take action to protect Fishbank's position in that regard). I am therefore persuaded that, as a result of Mr Galati's and Trading Australia's false representations as to the purchase price and as the amount that Mr Vassallo and Celestino were willing to pay to the option holders to exercise the options, the Deans interests were induced to execute the Nomination Agreement providing for a purchase price of some $21.5 million and a "Nomination Price" to be paid to the Grantee (i.e., Fishbank and Trading Australia) of $801,076.85 (without insisting upon the full payment for those rights being made jointly to the Grantee). I further find that, as a result of the Deans interests being induced to execute the Nomination Agreement on those terms, Fishbank suffered loss, in that an amount of $1.799 million above the amount in fact paid for the purchase price would have been payable to the Grantee (Fishbank and Trading Australia jointly) under the Nomination Agreement or otherwise (had the whole of the deal with Celestino/EJC been disclosed) and the Deans interests would therefore have had joint control (with Trading Australia) over those moneys.
Therefore, I find that the tort of deceit claim is made good.

[161]

Exemplary damages

Exemplary damages for deceit have been held to be recoverable in Australia. In Musca and Others v Astle Corporation Pty Ltd (1988) 80 ALR 251, this was considered at length by French J (as his Honour then was), his Honour stating (at 269) that "[t]here is nothing so anomalous or illogical about exemplary damages as to prevent their logical application, to deceit. Indeed that tort is a paradigm case for their application".
His Honour there cited Cassell & Co Ltd v Broome [1972] AC 1027 and noted that exemplary damages are to be awarded where the compensatory damages are insufficient punishment. However, his Honour clarified that "where a compensatory award exceeds the benefit gained by the defendant by reason of his tort, the case for or the quantum of exemplary damages may be diminished accordingly" (at 269).
In Hill v James [2004] NSWSC 55, Bergin J (as her Honour then was) considered that an award of exemplary damages for the tort of deceit was appropriate (at [280]): Essential elements of the tort of deceit include the falsity of the representation, the defendant's knowledge that the representation is false and the defendant's intention that the plaintiff will rely upon or be induced to act upon the false representation. This kind of conduct, essential for the proof of the tort, may fit within the descriptions of the type of conduct that has been found to warrant the award of exemplary damages - "contumelious disregard for the plaintiff's rights", "conscious wrongdoing", "high-handed" and "reprehensible": Gray v Motor Accident Commission (1998) 196 CLR 1; Lamb v Cotogno (1987) 164 CLR 1.
In making such an award, her Honour noted that the conduct of the defendant (in continuously changing the terms of and amounts in the draft asset sale contracts before they were sent to the plaintiff for approval) was "quite appalling", "high handed and reprehensible", and considered that the defendant was "obviously intent upon trickery". (I should note that this decision was the subject of an appeal (James v Hill [2004] NSWCA 301), but the exemplary damages ground of appeal was dismissed.)
As to the amount that may be awarded for exemplary damages, in Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298; [2003] NSWCA 10 (Harris v Digital Pulse), Heydon JA (as his Honour then was) at [256] affirmed that "[i]f exemplary damages are to fulfil their threefold purpose, they must not merely irritate, they must sting". His Honour said that "[i]t is the gravity and character of the Defendants' conduct which guides the Court's discretion as to the proper amount to award by way of exemplary damages" and that this was why there was "no necessary proportionality" between the amount awarded as compensation for the damage suffered by the plaintiff and the amount of exemplary damages awarded against the defendant. His Honour said that "[a] minimal amount of damage inflicted on a plaintiff may, if the wrongdoing was outrageous, nevertheless require heavy exemplary damages to be visited upon the defendant" and that the need for the deterrence of exemplary damages was especially strong where the defendant's wrongdoing is calculated to profit.
Mr Galati's conduct in the present case, in deliberately concealing the true purchase price from Mr Deans and the payment to Trading Australia of the additional sum of $1.799 million (when Trading Australia and Fishbank jointly held the option rights) was in my view both reprehensible and high-handed; and the ultimate distribution of a not insubstantial portion of the funds to Mr Galati and for his interests shows that the wrongdoing was calculated at least partly for profit. Indeed, to the extent that moneys went to various consultants for whom Mr Galati had agreed under the Agreement Principles to be responsible, those amounts were also for his benefit.
In circumstances where the Deans interests have been deprived by Mr Galati's conduct of the opportunity of asserting a right to direct the whole of the additional commission to the payment of legitimate project expenses, I consider that the compensatory damages that I propose to order are not sufficient to mark the Court's censure of this conduct. I note that there is necessarily an impressionistic or evaluative element to the quantum of exemplary damages (as recognised by Heydon JA in Harris v Digital Pulse to which I have referred above). In circumstances where the Galati interests obtained at least $550,000 for their own benefit (plus additional amounts for expenditure which was conceded not to be for Fishbank expenses and/or was for private purposes), I consider that the sum of $100,000 is the appropriate amount to award as exemplary damages in the present case (damages, I note, for the tort of deceit, not for any statutory or equitable claim).

[164]

Best endeavours to procure finances

Second, as to the claimed breach of obligations on the part of Trading Australia to use its best endeavours to procure finance and/or investment funds; to act in good faith and to keep confidential Mr Deans' confidential information in relation to the project (see from [88]), I am not persuaded that the evidence establishes that Trading Australia (or the Galati interests) made no serious attempt to use its best endeavours in locating and introducing financiers and/or investment funds in the best interest of Fishbank. The fact that Trading Australia did not ultimately succeed in those endeavours (or, perhaps more precisely, succeeded ultimately only in obtaining Dahua's initial contribution to the project and then a buyer (EJC) for the option rights) does not establish that it did not use its best endeavours at the relevant times to locate and introduce financiers and/or investment funds for the whole of the project.
As to the suggestion that Trading Australia dealt with financiers "on such a basis as would suit" the Galati interests' objectives, apart from the fact that it is not apparent that in a joint venture or joint enterprise of this kind one party negotiating with prospective financiers would not be able to put forward as part of the negotiations matters that would also be in its interest, I am simply not in a position to make a determination on the evidence as to the alleged failures on Trading Australia's part. It seems to me that these complaints go little further than dissatisfaction that an investor was not obtained at an earlier time or on more favourable terms. Moreover, parties to joint ventures are not disentitled from taking into account their own particular interests in the commercial venture as long as those are not to the detriment of the joint venture as a whole (see Gleeson CJ in Ausintel Investments Australia Pty Ltd v Lam (1990) 19 NSWLR 637).
Thus, I do not find that there was a breach of contract or breach of fiduciary duty as alleged at [88], nor am I satisfied that there was misleading or deceptive conduct, in relation to the negotiations entered into by Mr Galati with other potential purchasers or failed attempts to obtain finance or investment funds; nor were those matters pressed to any extent in the submissions at hearing. To make any such determination, much more would need to be known as to the details of the negotiations with particular parties and the like. Furthermore, it is difficult to see how it could have been expected that Mr Galati could secure investment from financiers or investors to the project without providing details in relation to the project and hence, the complaints as to the misuse of confidential information are not to my mind made good.
Nor am I satisfied that the loss and damage particularised at [95] has been established. The assertion that Fishbank entered into various of the documents under duress, for example, is not made good. (There was no doubt pressure at a later time occasioned by the impending expiry of the Call Options but I am not persuaded that at the time the original commission agreements and options were entered into Fishbank was acting under duress occasioned by the Galati interests - and I note that Fishbank had the advice of its lawyer or the joint venture's lawyer (Mr Fraser), however he might have been characterised, throughout that whole process.)

[165]

Material change to arrangement

As to the complaint that Trading Australia (or Mr Galati) failed to inform Fishbank of a material change to the basis of the arrangement between the parties (as to the effect of the documents in relation to Trading Australia acquiring an entitlement to options for the Bidvest Land and the shares in Felan's Fisheries), I find such a complaint extraordinary in circumstances where the Deans interests had legal representation and were quite capable of obtaining advice as to precisely the legal effect of the documentation into which they were entering. It must have been obvious that the documents entered into in and from October 2014 were intended to put in place a structure for the parties' respective rights in relation to the development. If the Deans interests failed to understand the import of those documents that was not due to any unconscionable conduct on the part of the Galati interests.
The complaints made as to the No Equity Change Representation and the Execute Now or Lose Representation are not, in my opinion, made good. In particular, the suggestion that somehow the Galati interests engaged in a strategy to expose the Deans interests to a position of financial distress (so that the former could put pressure on the latter and be able to take over the development rights to the exclusion of the latter), seems to me no more than a conspiracy theory (perhaps inspired by the email referring to a plan to wind up Fishbank but not established nonetheless). The complaint of a breach of good faith or breach of fiduciary duty as to the alleged Elias Conduct is also not established to my mind.
Thus, I find that the various alleged breaches of contract and of fiduciary duty leading up to the claims of loss and damage as particularised at [95] are not made good. The fact that the Deans interests were under financial pressure (and chose to enter into the various commission agreements and Call Options deeds) was a result of the position in which the Deans interests had placed themselves. It was not due to any duress caused by the Galati interests and not due to any misunderstanding as to the legal effect of the documents that was attributable to the Galati interests (although I have no doubt that Mr Deans had little real understanding as to the contractual arrangements - or at least he exhibited none in the witness box).
In any event, I do not accept that it has been established that, had Fishbank not executed the relevant documents in the form that it did, Fishbank would have been able to source its own financiers and/or investment funds and would have realised a high profit by concluding investment arrangements with others. At most it lost the opportunity to do so and I would not have placed any real value on the loss of an opportunity to gain more from the project than ultimately it did through the Celestino deal (having regard to the history of the project to the time of Mr Galati's involvement and the uncertainty that any of the "deals" that Mr Deans himself claims to have sourced would have eventuated).
The suggestion that some breach of duty on the Galati interests' part led to Fishbank becoming embroiled in litigation against Dahua or SFM seems to me to be unsustainable; and I do not accept that it has been established that the sale to EJC of the rights with respect to the land and shares was "on a fire-sale basis", even though it was certainly a sale that was entered into at a time when the option rights were shortly due to expire.

[166]

The Cabe offer

Next, as to the alleged breaches relating to conduct in relation to prospective investors after December 2014 (see from [96]), the principal complaint pressed in submissions related to the Cabe offer (see at [101]). The cross-claimants say that the Cabe offer (see above) was considerably better than the offer subsequently received from Celestino because it offered to Trading Australia and Fishbank $2.5 million plus half the cost paid for the Felan's Fisheries shares, as well as a significant profit share. Thus, the cross-claimants submit that the Cabe offer promised a substantially greater return to the Galati and Deans interests than was obtained under the Nomination Agreement which came to be signed with EJC on 20 November 2015. It is said that the offeror was ready to proceed.
The cross-claimants say that, at the same time, Mr Galati was already "running his own race" in order to achieve a redevelopment of his own (see above). The cross-claimants say that this was not a mere case of Mr Galati and Mr Deans having differing views as to a particular offer; rather, that the Cabe offer was rejected by Mr Galati for no sound reason and that the rejection of this offer was not in the interests of the project or the parties.
In this regard, there is a claim that this conduct amounted to unconscionable conduct and a breach of fiduciary duty. It is submitted that Mr Deans' special vulnerability arose from the prior execution by both Trading Australia and Fishbank of the Call Options, so that it was not open to Mr Deans to proceed unilaterally with the Cabe offer. It is said that Mr Deans and Fishbank were in effect "held to ransom" by Mr Galati with the Call Options about to expire. In the circumstances, and for the reasons set out below, the cross-claimants say that Fishbank suffered loss directly attributable to Mr Galati's unconscionable conduct.
For Mr Galati, it is said in response to the allegations as to the Cabe offer that there is no evidence as to the intention of Cabe's principal (Mr Pelligra) to follow through with the proposed investment (and no evidence about who he is or what he is worth). It is said that the only evidence of this concerns a purported Cabe offer supported by a brief term sheet attached to Mr Pelligra's affidavit and a brief discussion in the affidavit (noting that Mr Daly's affidavit was not read). Mr Galati submits that the term sheet does not show a concluded offer; saying that it is "embryonic", has no finalised figures; and that there is no substantive supporting evidence showing any ability to implement it. Further, it is noted that the term sheet envisages a 50/50 joint profit sharing (which it is said reinforces Mr Galati's case).
I am not persuaded that the complaint as to the Cabe offer has been established (whether as a claim for breach of fiduciary duty or good faith or as a claim for unconscionable conduct). I am not persuaded that Mr Galati's stance was so unreasonable as to amount to a breach of such obligations; nor am I persuaded that the fact that the Deans interests had committed to the arrangements in relation to the option rights (and hence required Mr Galati's consent) was such as to put them in a position of special vulnerability.
Thus, I am not persuaded that the refusal of the Galati interests to progress a proposed investment by Cabe (even if that were because of Mr Galati's refusal to be involved in a joint venture with Mr Daly) was in breach of any duty owed by the Galati interests (and whether or not it was unreasonable might well depend on the basis for Mr Galati's disapproval of Mr Daly's business operations - which was not explored). Similarly, I am not satisfied that the refusal to accept or engage with that offer amounts to unconscionable conduct in equity or under s 20 of the Australian Consumer Law. In any event, all that would sound in would be a loss of opportunity claim (as was fairly conceded in the course of submissions) and I would not have put any great prospect of that deal going ahead when so many others fell by the wayside in that period.

[171]

Failure of the substratum

Next, insofar as it is alleged (at [125]-[127]) that there was a total failure of consideration and/or failure of the substratum (without attributable blame) of any agreement that may be found to have been in existence to give Trading Australia half of the legal rights held by Fishbank in the proposed development or joint endeavour, it appears that this is an attempt to counter Mr Galati's contention that Trading Australia was entitled to half of the shares in Felan's Fisheries (or a half share in the joint venture through half the shares in TRHS or the TRHS Unit Trust).
In equity, there is a general principle which restores to a party the contributions made to a joint venture which fails in circumstances where it was not intended that the other party should enjoy the contributions (see Walters v Scarborough at [293]). Accordingly, per Mason CJ, Wilson and Deane JJ in Baumgartner v Baumgartner (1987) 164 CLR 137; [1987] HCA 59, citing Deane J in Muschinski v Dodds (1985) 160 CLR 583; [1985] HCA 78 (Muschinski), a constructive trust may arise when an assertion of a legal right would be unconscionable (at 148): …the principle operates in a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specially provided that other party should so enjoy it. The content of the principle is that, in such a case, equity will not permit that other party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him so to do…
These principles may (in an appropriate case) be applied in commercial joint ventures (see here Liquor National Wholesale Pty Ltd v Redrock Co Pty Ltd [2007] NSWSC 392 at [42] per Brereton J).
As I earlier considered in Australian Building & Technical Solutions Pty Ltd v Boumelhem; Boral Australia Ltd v Boumelhem; Boumelhem v Jones (2009) 2 ASTLR 336; [2009] NSWSC 460 (Boumelhem) (citing West v Mead [2003] NSWSC 161), the prerequisites for imposing such a trust are as follows (at [50]-[53]): first, there must be both a joint relationship or endeavour, in which expenditure is shared for the common benefit in the course of and for the purposes of which an asset is acquired; second, the substratum of that joint relationship or endeavour must have been removed or the joint endeavour prematurely terminated "without attributable blame"; and, third, it must be unconscionable for the benefit of those monetary and non-monetary contributions to be retained by the other party to the joint endeavour.
In Boumelhem, citing Cetojevic v Cetojevic [2006] NSWSC 431 at [43] per Campbell J, I noted that in such a case, a starting point for ownership of the asset is that the beneficial interest ought to be shared equally and that "the application of the maxim equity is equality places an onus of attributing any other conclusion on a person who asserts that the title should be held unequally." As to the meaning of "without attributable blame", I suggested (at [99]) that the answer may be that "if the joint endeavour comes to an end due to some wrongful conduct of the party seeking the imposition of a constructive trust this might impact on whether it is unconscionable for the other party in those circumstances to retain the benefits of the joint endeavour"; in other words, that a lack of focus on the "without attributable blame" part of the Muschinski formulation of the test may be explicable if it is bound up in the question of unconscionability.
As to the claim in the present case, that there was a failure of the substratum of any such agreement or joint venture can hardly be disputed. Moreover, I am prepared to accept that this was without attributable blame on the Deans interests' part (in circumstances where the Galati interests chose to engage in the secret commission conduct and acted so as to to exclude the Deans interests from the project).
The difficulty I have with this claim (leaving aside questions as to how to assess the parties' non-monetary contributions to the joint venture) is that the Call Option Deeds clearly gave Trading Australia the ability (jointly with Fishbank) to exercise the option rights and acquire an interest in the Bidvest Land and the Felan's Fisheries shares. The fact that Trading Australia contributed no funds directly into the joint venture does not to my mind establish a failure of consideration as such. The arrangement reached with the Galati interests was clearly one whereby the consideration to be provided by Trading Australia for its interest in the option rights was the agreement by it to use its best endeavours to attract an investor or financier to the project. Its ultimate inability to find a financier for the whole of the project does not mean that there was a failure of consideration and does not detract from the fact that ultimately, Trading Australia contributed Mr Galati's skills so as to be able jointly to exercise the Call Option Deeds to the project. Thus, I see no basis to impose a constructive trust over Trading Australia's interests in the joint venture (but in any event nothing turns on this because I am not persuaded that there was any concluded agreement as to the TRHS shares being held on trust).
This appears to be an alternative claim by the Deans interests. The option rights were exercised and TRHS was nominated as the holder of the shares in Felan's Fisheries. As noted above, I am not satisfied that there was a trust in respect of those shares; nor am I satisfied that there was an enforceable agreement for the acquisition by the Galati interests of an interest in the TRHS Unit Trust. Therefore, it seems to me that the rights to the shares in Felan's Fisheries (and the units in the TRHS Unit Trust or shares in TRHS) remain as presently constituted. Trading Australia has no interest in those shares or units (and hence there is nothing over which a resulting or constructive trust ought to be declared for the benefit of Fishbank).

[173]

Damage and concurrent wrongdoers

In order to make a finding as to concurrent wrongdoers, it is necessary first to determine the loss or damage suffered and the acts or omissions that caused that loss or damage (see Reinhold v New South Wales Lotteries Corporation (No 2) (2008) 82 NSWLR 762; [2008] NSWSC 187 at [19]-[22] per Barrett J, as his Honour then was). I have set out s 236 of the Australian Consumer Law above and I am satisfied that as a result of that misleading and deceptive conduct, Fishbank suffered damage, in that the $1,799,820.95 that would have been payable to the joint venture was diverted to Trading Australia solely. As the Nomination Price was payable to the Grantee (being Fishbank and Trading Australia), I consider that Fishbank has suffered loss in the form of half of that sum (i.e., $899,910.48).
Mr Galati claims that Ms Pritchard and Wealth Shift are concurrent wrongdoers and so the damage or loss awarded by the Court should be apportioned between them pursuant to Part VIA of the Competition and Consumer Act or Part 4 of the Civil Liability Act 2002 (NSW) (Civil Liability Act). I have found that Wealth Shift and Ms Pritchard were involved in Trading Australia's contravention of s 18 of the Australian Consumer Law as to the misleading and deceptive conduct in relation to the secret commission.
It is helpful to set out the sections of the Competition and Consumer Act that are relevant to the apportionment of damage between concurrent wrongdoers: 87CB Application of Part (1) This Part applies to a claim (an apportionable claim) if the claim is a claim for damages made under section 236 of the Australian Consumer Law for: (a) economic loss; or (b) damage to property; caused by conduct that was done in a contravention of section 18 of the Australian Consumer Law. (2) For the purposes of this Part, there is a single apportionable claim in proceedings in respect of the same loss or damage even if the claim for the loss or damage is based on more than one cause of action (whether or not of the same or a different kind). (3) In this Part, a concurrent wrongdoer, in relation to a claim, is a person who is one of 2 or more persons whose acts or omissions (or act or omission) caused, independently of each other or jointly, the damage or loss that is the subject of the claim. (4) For the purposes of this Part, apportionable claims are limited to those claims specified in subsection (1). (5) For the purposes of this Part, it does not matter that a concurrent wrongdoer is insolvent, is being wound up or has ceased to exist or died. 87CC Certain concurrent wrongdoers not to have benefit of apportionment (1) Nothing in this Part operates to exclude the liability of a concurrent wrongdoer (an excluded concurrent wrongdoer) in proceedings involving an apportionable claim if: (a) the concurrent wrongdoer intended to cause the economic loss or damage to property that is the subject of the claim; or (b) the concurrent wrongdoer fraudulently caused the economic loss or damage to property that is the subject of the claim. (2) The liability of an excluded concurrent wrongdoer is to be determined in accordance with the legal rules (if any) that (apart from this Part) are relevant. (3) The liability of any other concurrent wrongdoer who is not an excluded concurrent wrongdoer is to be determined in accordance with the provisions of this Part. 87CD Proportionate liability for apportionable claims (1) In any proceedings involving an apportionable claim: (a) the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of the defendant's responsibility for the damage or loss; and (b) the court may give judgment against the defendant for not more than that amount. (2) If the proceedings involve both an apportionable claim and a claim that is not an apportionable claim: (a) liability for the apportionable claim is to be determined in accordance with the provisions of this Part; and (b) liability for the other claim is to be determined in accordance with the legal rules, if any, that (apart from this Part) are relevant. (3) In apportioning responsibility between defendants in the proceedings: (a) the court is to exclude that proportion of the damage or loss in relation to which the plaintiff is contributorily negligent under any relevant law; and (b) the court may have regard to the comparative responsibility of any concurrent wrongdoer who is not a party to the proceedings. (4) This section applies in proceedings involving an apportionable claim whether or not all concurrent wrongdoers are parties to the proceedings. (5) A reference in this Part to a defendant in proceedings includes any person joined as a defendant or other party in the proceedings (except as a plaintiff) whether joined under this Part, under rules of court or otherwise.
Therefore, if not intentionally or fraudulently done, a claim for damages under s 236 for contravention of s 18 of the Australian Consumer Law is an apportionable claim. The apportionment provisions in the Australian Consumer Law are similar to ss 34-39 of the Civil Liability Act.
As I have found Mr Galati liable for the tort of the deceit for the same conduct that satisfied the claim against him under s 18 of the Australian Consumer Law, Mr Galati is an "excluded concurrent wrongdoer" under s 87CC of the Competition and Consumer Act (as would also be the case under s 34A(1)(b) of the Civil Liability Act). This is because I have found that Mr Galati fraudulently caused the relevant loss to Mr Deans and Fishbank and so Mr Galati's liability cannot be reduced by a defence of apportionment (see Johnson v Mackinnon [2021] NSWCA 152 at [61], [298] per Brereton J (with whom Macfarlan JA and Simpson AJA agreed; Jiangsu Lianguan Zhaoxing Petrochemical Science and Technology Co Ltd v Wu [2021] VSC 228).

[174]

Conclusion

For the above reasons, I consider that Mr Galati's claims have not succeeded and that the cross-claims against Mr Galati and against Ms Pritchard and Wealth Shift, in relation to the secret commission, have been made good.
The issue is as to the relief that should be granted in that regard. Had the secret commission not been paid, the whole of the purchase price (less commission) would have been paid to Fishbank and Trading Australia in their joint capacity as Grantee. The Deans interests maintain that the whole of the amount should be awarded in Fishbank's favour having regard to the evidence of Mr Deans in his first affidavit of 9 February 2018 that if the whole of the secret commission had been paid it would have been set off against project expenses which exceeded that amount (see at [6]; T 606). It is said that all of that amount should have gone to Fishbank to defray expenses and that Mr Galati should not retain any of that amount.
However, I do not accept that it can be assumed that the whole of the money would have been applied by the joint venturers towards the project expenses as calculated by Mr Deans (not least because of the dispute between them at that time as to what those project expenses were). Had the moneys been paid to the "Grantee" jointly, then there might well have been a dispute as to how those moneys were to be expended.
Notwithstanding that the Agreement Principles document reserved to Mr Deans the ability to make final decisions, I cannot confidently conclude that (particularly given the history of the relationship between the parties) he would have had the final say as to who was to be paid out of the funds (and I note that the Galati interests disputed this). I consider that the appropriate relief is to require Mr Galati to account to Fishbank for a half share of the secret commission (as damages at law or equitable compensation for breach of fiduciary duty or as an accessory for the breach of fiduciary duty by Trading Australia). There should also be an award of exemplary damages against Mr Galati in the sum of $100,000 for the tort of deceit. A similar award of damages (but not exemplary damages) should be made against Wealth Shift and Ms Pritchard.
I see no utility in the declaratory relief that has been sought in the fourth amended cross-claim, in circumstances where I have made findings as to the impugned conduct.
Costs should in the ordinary course follow the event. If any of the parties wishes to make submissions as to the costs orders to be made then I will make directions for this to be dealt with on the papers.

Parties

Applicant/Plaintiff:

Galati

Respondent/Defendant:

Deans

Legislation Cited (7)

Companies Act 1936(NSW)

Trade Practices Act 1974(Cth)

Civil Liability Act 2002(NSW)

Competition and Consumer Act 2010(Cth)

Conveyancing Act 1919(NSW)

Corporations Act 2001(Cth)

Partnership Act 1892(NSW)

Cases Cited (157)

rtner (1987) 164 CLR 137; [1987] HCA 59 BB Australia Pty Ltd v Danset Pty Ltd [2018] NSWCA 101 Blomley v Ryan (1956) 99 CLR 362 BM Sydney Building Materials Pty Ltd v AWT Building Group (Aust) Pty Ltd [2019] NSWSC 421 Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd (1982) 149 CLR 600; [1982] HCA 53 Boulos Holdings Pty Ltd v Edwin Davy Pty Ltd [2021] NSWSC 689 Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61 Bridgewater v Leahy (1998) 194 CLR 457; [1998] HCA 66 Bristol and West Building Society v Mothew [1998] Ch 1 BSP Technical Services Pty Ltd v AMEV-UDC Finance Ltd (Supreme Court (NSW), Hodgson J, 25 March 1985, unrep Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; [2004] HCA 60 Canny Gabriel Castle Jackson Advertising Pty Ltd v Volume Sales (Finance) (1974) 131 CLR 321 Cassell & Co Ltd v Broome [1972] AC 1027 Cetojevic v Cetojevic [2006] NSWSC 431 Chan v Zacharia (1984) 154 CLR 178; [1984] HCA 36 Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447; [1983] HCA 14 Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373; [1975] HCA 8 County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193 Cresswell v Potter [1978] 1 WLR 255 Cribb v Korn (1911) 12 CLR 205 Daraydan Holdings Ltd v Solland International Ltd [2005] Ch 119 Delehunt v Carmody (1986) 161 CLR 464; [1986] HCA 67 Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 DHJPM Pty Ltd v Blackthorn Resources Ltd (2011) 83 NSWLR 728; [2011] NSWCA 348 Director General, Department of Services, Technology and Administration v Veall (No 4) [2011] NSWSC 904 Domain Administration v Domain Names Australia Pty Ltd (2004) 207 ALR 521; [2004] FCA 424 Doueihi v Construction Technologies Australia Pty Ltd (2016) 92 NSWLR 247; [2016] NSWCA 105 Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95; [2002] HCA 8 Falcke v Scottish Imperial Insurance Company (1887) LR 34 ChD 234 Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 98; [2007] HCA 22 FHR European Ventures LLP v Mankarious [2015] AC 250 Furs Ltd v Tomkies (1936) 54 CLR 583; [1936] HCA 3 Galati v Deans (No 2) [2018] NSWSC 181 Giorgianna v R (1985) 156 CLR 473; [1985] HCA 29 Gipps v Gipps [1978] 1 NSWLR 454 Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82 Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435; [2013] HCA 1 Gould v Vaggelas (1984) 157 CLR 215; [1984] HCA 68 Grant v Gold Exploration and Development Syndicate Ltd [1900] 1 QB 233 Gray v Motor Accident Commission (1998) 196 CLR 1; [1998] HCA 70 Greenaway v Auzhair 1 Pty Ltd (2010) 80 ACSR 538; [2010] NSWSC 1339 Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; [2012] FCAFC 6 Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298; [2003] NSWCA 10 Havyn Pty Ltd v Webster (2005) 12 BPR 22,837; [2005] NSWCA 182 He Kaw Teh v R (1985) 157 CLR 523; [1985] HCA 43 Hill v James [2004] NSWSC 55 Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41; [1984] HCA 64 Howard v Mechtler (1999) 30 ACSR 434; [1999] NSWSC 232 Hybernia Management & Development Co v Newfoundland Steel Inc (1996) NFLD & PEIR 91 Indeco Pacific Pty Ltd v Geneva Investments Pty Ltd [2012] VSC 621 Industrial Equity Ltd v Lyons (Supreme Court (NSW), Cohen J, 15 October 1991, unrep) Industries & General Mortgage Company Ltd v Lewis [1949] 2 All ER 573 Ipstar Australia Pty Ltd v APS Satellite Pty Ltd (2018) 356 ALR 440; [2018] NSWCA 15 James v Hill [2004] NSWCA 301 Jiangsu Lianguan Zhaoxing Petrochemical Science and Technology Co Ltd v Wu [2021] VSC 228 John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19 John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451 Johnson v Mackinnon [2012] NSWCA 152 Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 King v Adams [2016] NSWSC 1798 Lam v Ausintel Investments Australia Pty Ltd (1989) 97 FLR 458 Lewis v Australian Capital Territory (2020) 381 ALR 375; [2020] HCA 26 Liquor National Wholesale Pty Ltd v Redrock Co Pty Ltd [2007] NSWSC 392 Magill v Magill (2006) 226 CLR 551; [2006] HCA 51 Marzec v Lysiak [2015] NSWSC 647 Metalcorp Recyclers Pty Ltd v Metal Manufactures Ltd (2004) ASAL (Digest) 55-119; [2003] NSWCA 213 Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427; [2011] HCA 48 Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357; [2010] HCA 31 Miller Heiman Pty Ltd v Sales Principles Pty Ltd (2017) 94 NSWLR 500; [2017] NSWCA 106 Moratic Pty Ltd v Gordon (2007) 13 BPR 24,713; [2007] NSWSC 5 Mortimer v Ah Sam [2020] NSWSC 1763 Musca and Others v Astle Corporation Pty Ltd (1988) 80 ALR 251 Muschinski v Dodds (1985) 160 CLR 583; [1985] HCA 78 O'Halloran v RT Thomas & Family Pty Ltd (1998) 45 NSWLR 262 Owen v Tate [1976] QB 402 Owners of Strata Plan 5290 v CGS & Co Pty Ltd (2011) 81 NSWLR 285; [2011] NSWCA 168 Panama and South Pacific Telegraph Company v India Rubber, Gutta Percha and Telegraph Works Company (1875) LR 10 Ch App 515 Payne v Parker [1976] 1 NSWLR 191 Pentridge Village Pty Ltd (in liq) v Capital Finance Australia Ltd (2018) 58 VR 1; [2018] VSC 633 Phillips-Higgins v Harper [1954] 1 QB 411 Placer Development Ltd v The Commonwealth (1969) 121 CLR 353; [1969] HCA 29 Rafferty v Madgwicks (2012) 203 FCR 1; [2012] FCAFC 37 Re Anglican Development Fund Diocese of Bathurst (2015) 336 ALR 372; [2015] NSWSC 1856 Re Colorado Products Pty Ltd (in prov liq) (2014) 101 ASCR 223; l2104] NSWSC 789 Re Steel; Public Trustee v Christian Aid Society [1979] Ch 218; 2 All ER 1026 Re Suco Gold Pty Ltd (in liq) (1983) 33 SASR 99 Reinhold v New South Wales Lotteries Corporation (No 2) (2008) 82 NSWLR 762; [2008] NSWSC 187 Rema Tip Top Asia Pacific Pty Ltd v Gruterich [2019] NSWSC 1594 Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603; [2007] NSWCA 65 Sealed Air Australia Pty Ltd v Aus-lid Enterprises Pty Ltd (2020) 375 ALR 324; [2020] FCA 29 Semrani v Manoun ; Williams v Manoun [2001] NSWCA 337 Sergienko v AXL Financial Pty Ltd [2021] NSWSC 297 Sydney Water Corporation v Makucha [2010] NSWSC 114 T Mahesan s/o Thambiah v Malaysia Government Officers Co-op Housing Society Ltd [1978] 2 WLR 444 Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 The Nominal Defendant v Cordin (2017) 79 MVR 210; [2017] NSWCA 6 Thorby v Goldberg (1964) 112 CLR 597; [1964] HCA 41 Thorne v Kennedy (2017) 263 CLR 85; [2017] HCA 49 Tonto Home Loans Australia Pty Ltd v Tavares (2011) 15 BPR 29,699; [2011] NSWCA 389 Trio Capital Ltd (Admin App) v ACT Superannuation Management Pty Ltd (2010) 79 ACSR 425; [2010] NSWSC 941 United Builders Pty Ltd v Mutual Acceptance Ltd (1980) 144 CLR 673 United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1 Violet Home Loans Pty Ltd v Schmidt (2013) 44 VR 202; [2013] VSCA 56 Vouzas v Bleake House Pty Ltd [2013] VSC 534 Walters v Scarborough [2011] NSWSC 1380 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; [1988] HCA 7 Warman International Ltd v Dwyer (1995) 182 CLR 544; [1995] HCA 18 Watson v Foxman (1995) 49 NSWLR 315 Weiner v Harris [1910] 1 KB 285 West v Mead [2003] NSWSC 161 White v Philips Electronics Australia Ltd [2019] NSWCA 115 Yorke v Lucas (1983) 49 ALR 672 Zobory v Federal Commission of Taxation (1995) 64 FCR 86 Texts Cited: Roderick l'Anson Banks, Lindley & Banks on Partnership (18th ed, 2002, Sweet & Maxwell) Category: Principal judgment Parties: Dominic Gerardo Galati (Plaintiff) Robert Paton Deans (First Defendant) Fishbank Development Corporation Limited (Second Defendant) TRHS Pty Ltd (Third Defendant) Felan's Fisheries Pty Ltd (Fourth Defendant) Trading Australia Pty Ltd (in liq)(Fifth Defendant) Wealth Shift Pty Ltd (Eighth Cross-Defendant) Caroline Pritchard (Ninth Cross-Defendant) Representation: Counsel: Mr R Marshall SC with Mr A Butt (Plaintiff) Mr M Einfeld QC with Mr P Barham (First to Fourth Defendants/Cross-Claimants) Mr M Fantin (Eighth and Ninth Cross Defendants)

[1975] HCA 8

[1986] HCA 67

[1936] HCA 3

[2012] VSC 621

[2021] VSC 228

[2018] VSC 633

[2013] VSCA 56

[2013] VSC 534

(1990) 19 NSWLR 637

(2021) 388 ALR 577

(2019) 267 CLR 1

(2020) 102 NSWLR 435

(1987) 164 CLR 137

(1956) 99 CLR 362

(1982) 149 CLR 600

(2001) 53 NSWLR 153

(1998) 194 CLR 457

(2004) 218 CLR 592

(1974) 131 CLR 321

(1984) 154 CLR 178

(1983) 151 CLR 447

(1975) 132 CLR 373

(1911) 12 CLR 205

(1986) 161 CLR 464

(1992) 39 FCR 31

(2011) 83 NSWLR 728

(2004) 207 ALR 521

(2016) 92 NSWLR 247

(2002) 209 CLR 95

(2007) 230 CLR 98

(1936) 54 CLR 583

(1985) 156 CLR 473

(1984) 2 FCR 82

(2013) 249 CLR 435

(1984) 157 CLR 215

(1998) 196 CLR 1

(2012) 200 FCR 296

(2003) 56 NSWLR 298

(1985) 157 CLR 523

(1984) 156 CLR 41

(2018) 356 ALR 440

(2010) 241 CLR 1

(1959) 101 CLR 298

(1989) 97 FLR 458

(2020) 381 ALR 375

(2006) 226 CLR 551

(2011) 244 CLR 427

(2010) 241 CLR 357

(2017) 94 NSWLR 500

(1988) 80 ALR 251

(1985) 160 CLR 583

(1998) 45 NSWLR 262

(2011) 81 NSWLR 285

(2018) 58 VR 1

(1969) 121 CLR 353

(2012) 203 FCR 1

(2015) 336 ALR 372

(1983) 33 SASR 99

(2008) 82 NSWLR 762

(2007) 69 NSWLR 603

(2020) 375 ALR 324

(1982) 42 ALR 177

(2017) 79 MVR 210

(1964) 112 CLR 597

(2017) 263 CLR 85

(1980) 144 CLR 673

(1985) 157 CLR 1

(2013) 44 VR 202

(1988) 164 CLR 387

(1995) 182 CLR 544

(1995) 49 NSWLR 315

(1983) 49 ALR 672

(1995) 64 FCR 86

(2004) 160 FCR 1

(1986) 7 IPR 452

(1987) 164 CLR 1

[2010] HCA 31

[2011] HCA 48

[2010] HCA 19

Cited By (7)

Attorney-General (NSW) (Ex rel Corporate Affairs Commission) v Australian Softwood Forests Pty Ltd

Clayton v Clayton

Dracoma Pty Ltd v Changela

Galati v Deans

Galati v Deans & Ors

In the matter of DCA Enterprises Pty Ltd [2023] NSWSC 11

WFM Motors Pty Limited v Bar M Pty Limited

Galati v Deans

At a glance

Court

Decision date

Before

Source

Judgment (177 paragraphs)

Parties

Legislation Cited (7)

Cases Cited (157)

Cited By (7)