Garslev Holdings Pty Ltd v Overdean Developments Pty Ltd

A. the proceedings below

1. Before summarising the primary judgment and the costs judgment, it is desirable to outline the multiple other proceedings in which these parties have been involved arising from BAD Nominees' relationship with BLE, and to say something further about the procedural history of the proceeding which gives rise to the present appeal.

(a) Other proceedings summarised

1. The other proceedings relating to BLE following the involvement of Messrs L Smits and Mahommed from May 2016 are: 1. In the matter of Beechworth Land Estates Pty Ltd (administrators appointed) [2017] NSWSC 1447: Gleeson JA published reasons for orders made on 23 October 2017, including the joinder of Mr Dean and Messrs L Smits and Mahommed as parties in the proceedings. 2. In the matter of Beechworth Land Estates Pty Ltd (in liq) and Griffith Estates Pty Ltd (in liq) (No 5) [2018] NSWSC 959: Robb J published reasons for judgment relating to remuneration of voluntary administrators. 3. In the matter of Beechworth Land Estates Pty Ltd [2018] NSWSC 1630: Brereton J published reasons for judgment as to why he granted declaratory relief to the effect that the Power of Attorney was irrevocable. 4. In the matter of Beechworth Land Estates Pty Ltd (in liquidation) and Griffith Estates Pty Ltd (in liquidation) [2018] NSWSC 1703: Black J published reasons for judgment as part of disputes between various parties who asserted claims to the assets of BLE. 5. In the matter of Beechworth Land Estates Pty Ltd (admins apptd) and Griffith Estates Pty Ltd (admins apptd); Cussen and of Beechworth Land Estates Pty Ltd v Douglas Estate Holdings Pty Ltd [2019] NSWSC 1129: Parker J published reasons for judgment concerning disputes about priority between BLE's various creditors. The dispute included an issue as to whether a debt owing under the February 2013 security had priority over the administrators' remuneration and disbursements. 6. In the present appeal proceedings, there were also several interlocutory disputes which resulted in the primary judge publishing separate reasons for judgment regarding the setting aside of various notices to produce and the provision of security for an undertaking as to damages: see respectively Overdean Developments Pty Ltd v Garslev Holdings Pty Ltd [2020] NSWSC 670 and Overdean Developments Pty Ltd v Garslev Holdings Pty Ltd (No 2) [2020] NSWSC 745. 7. Finally, shortly before the appeal was heard, Hammerschlag CJ in Eq gave reasons for judgment for winding up Garslev and appointing a liquidator: In the matter of Garslev Holdings Pty Ltd [2023] NSWSC 609.

(b) Some procedural matters

1. It is desirable to say something more about the difficulties which confronted the primary judge in the substantive proceedings below. The proceedings were commenced in December 2018 and were listed for an expedited final hearing in May 2019. That final hearing was vacated on two occasions. The trial was conducted over 11 days commencing on 22 June 2020. As the primary judge noted at PJ[33], the conduct of the parties had added to the complexity of the litigation. This included the fact that the defendants had read no less than 14 affidavits by Mr Mahommed rather than providing a comprehensive affidavit addressing all of the issues. The Court Book covered six volumes and the defendants tendered several folders of documents some of which were duplicates of those in the Court Book.
2. The primary judge also noted at PJ[35] that the defendants provided 340 pages of written submissions prior to the commencement of the hearing. Mr L Smits (who appeared below both for himself and the other defendants) subsequently provided more succinct written closing submissions (comprising 41 pages of single spaced submissions) but then declined the opportunity to supplement them with any oral submissions.
3. In these circumstances, it is understandable that the primary judge reserved her judgment for some time. The primary judgment exceeds 250 pages and the costs judgment is approximately 20 pages.
4. The smooth and orderly conduct of the proceedings below was also made more difficult by various other events. Several of the plaintiffs' claims were expressly abandoned or were taken to be abandoned. What remained were claims for breach of fiduciary duty; liability under the first or second limbs of Barnes v Addy (1874) 9 Ch App 244 (knowing receipt or knowing assistance respectively); and fraud on the power.

(c) The relief sought by the plaintiffs

1. The plaintiffs ultimately sought a declaration that each of the 9 May 2016 agreements was rescinded in equity as void ab initio for breach of fiduciary duty: PJ[455]. The plaintiffs also sought either a declaration that the Garslev deeds have been rescinded or an order that they be rescinded. This relief was sought on the following three alternative bases (PJ[457]): 1. If the Power of Attorney was rescinded as sought, then the three deeds entered into by Mr Mahommed on behalf of BAD Nominees purporting to exercise his authority under the Power of Attorney must also be rescinded. 2. Messrs L Smits and Mahommed acted in breach of their fiduciary duties by acting in circumstances where their interests conflicted with those of BAD Nominees. 3. The nomination of Garslev as the transferee of the nine lots and the execution of the three deeds was a fraud on the Power of Attorney, irrespective of whether Messrs L Smits and Mahommed owed and breached fiduciary duties to BAD Nominees.
2. The plaintiffs claimed that rescission was also available as against Garslev because (PJ[458]): 1. Garslev became chargeable with the nine lots and the other rights assigned to it under the 20 March 2018 deed because it had knowledge that the property was being assigned to it in breach of fiduciary duties owed by Messrs L Smits and Mahommed to BAD Nominees (relying on the first limb of Barnes v Addy); 2. Garslev procured the three deeds, which it knew were entered into in breach of fiduciary duties owed by Messrs L Smits and Mahommed to BAD Nominees or were a fraud on the power; and/or 3. Garslev and Mr J Smits were co-conspirators in the Garslev conspiracy, and knowingly assisted in breaches of fiduciary duty that were a dishonest and fraudulent design (relying on the second limb of Barnes v Addy).
3. The plaintiffs contended that, if orders for rescission were made, they were entitled to relief in the form of a declaration that the sum of $1,126,000 received by Garslev from the sale of the nine lots was held on trust for BAD Nominees (PJ[459(1)]) or to restitution or equitable compensation in that sum (PJ[459(2)]). The plaintiffs contended that, if orders for rescission were not made, they were entitled to relief in the form of equitable compensation for the alleged breaches of fiduciary duty and fraud on the power (PJ[460(1)]) and a declaration that Garslev held the sum of $1,126,000 on constructive trust for BAD Nominees on the basis that Garslev had knowledge of the alleged breaches of fiduciary duty or fraud on the power and received those sale proceeds as a volunteer (PJ[460(2)]). The plaintiffs made submissions on how orders for restitution or equitable compensation should be made if they were found to be entitled to such relief (PJ[461]).
4. The plaintiffs also claimed compounding interest on the basis that Messrs L Smits and Mahommed were defaulting fiduciaries, costs and interest on costs (PJ[472]).

Defence and cross-claim

1. The defendants denied liability in respect of the plaintiffs' claims. They raised claims in defence that the plaintiffs lacked standing; that the doctrines of res judicata, issue estoppel or Anshun estoppel applied; that various other estoppel claims were available; and that the proceedings were an abuse of process.
2. The defendants cross-claimed for damages in the sum of $769,397.20 (plus interest). This sum was said to comprise the outstanding fees due to Mr L Smits and Vestecorp under either the 9 May 2016 agreements or to Mr L Smits personally in respect of legal services performed by him, under the various retainers entered into by Mr Mahommed on behalf of BAD Nominees, less the $850,000 sum specified as consideration for the assignment of the nine lots in the 20 March 2018 deed (PJ[473]).
3. The defendants also cross-claimed against Mr Dean for allegedly having procured or induced breaches by BAD Nominees of the Consultancy Agreement and the three deeds entered into with Garslev (see in more detail at PJ[474]-[476]).
4. The defendants claimed pre-judgment interest and costs (PJ[478]).

(a) Preliminary matters - rejecting much of the defendants' defence

1. The primary judge rejected the defendants' claim that the plaintiffs lacked standing to maintain the proceedings (PJ[479]-[485]).
2. The primary judge also rejected many (but not all) of the defendants' claims that the doctrines of res judicata, issue estoppel or Anshun estoppel applied (PJ[486]-[535]). This is because, while various issues related to the parties' agreements had been litigated earlier, those earlier proceedings had not necessarily resolved any ultimate issue of fact or law put in issue in these proceedings.
3. This conclusion was subject to two exceptions. First, as noted at PJ[504], the plaintiffs were issue estopped from raising the following matters, which had been determined by Brereton J: 1. whether the Power of Attorney was coupled with an interest of the attorneys in earning 25% of recoveries referred to in cl 1 of the IAD; and 2. whether the IAD entitled Messrs L Smits and Mahommed and Vestecorp to receive 25% of monies payable to BAD Nominees in respect of the Griffith Estates' lots only.
4. Secondly, the plaintiffs were Anshun estopped from maintaining the following claims (see PJ[514]-[522] and [524]): 1. The 9 May 2016 agreements were void, voidable or should be rescinded by reason of alleged breaches by Messrs L Smits and Mahommed of fiduciary duties owed to BAD Nominees and Mr Dean at the time those documents were negotiated and executed. 2. The retainer of Mr L Smits in 2017 to act as solicitor for BAD Nominees involved a breach of fiduciary duty by Messrs L Smits and Mahommed and a breach of the terms of the Power of Attorney. 3. The claim that Messrs L Smits and Mahommed and Vestecorp owed fiduciary obligations to Mr Dean and BAD Nominees during the May 2016 negotiations; the claim that they breached those obligations (or, in the case of Mr Mahommed and Vestecorp that they procured and participated in a breach by Mr L Smits of those obligations) by entering into inter alia the 9 May 2016 agreements; the claim that, by reason of those matters, the agreements were "void, voidable and rescinded"; and the claim that by reason of those matters any document entered into by Messrs L Smits and Mahommed on behalf of BAD Nominees using the Power of Attorney should also be rescinded. 4. The claim that the retainer of Mr L Smits in 2017 to act as solicitor for BAD Nominees involved a breach of fiduciary duty by Messrs L Smits and Mahommed and a breach of the terms of the Power of Attorney, and that the 2017 retainer was therefore void, voidable or rescinded or cannot be enforced by Mr L Smits on the basis that he cannot take advantage of his own wrong.
5. The primary judge dismissed various other estoppel claims by the defendants at PJ[536]-[558]. Her Honour also rejected the defendants' claims of abuse of process, including their claim that the plaintiffs had invoked the Court's procedures for an illegitimate purpose, describing the claim as "nothing more than a complaint about what they say will be the effect on them if the plaintiffs' claims are upheld": PJ[565].

(b) Breaches of fiduciary duty by executing the 9 May 2016 agreements

1. The plaintiffs pleaded below that the execution of the 9 May 2016 agreements per se involved breaches of fiduciary duties by Messrs L Smits and Mahommed and, accordingly, each of those agreements was "void, voidable and rescinded". In light of her Honour's findings as to Anshun estoppel (see at [45] above), the primary judge held that this claim for relief could not succeed (PJ[570]).

(c) Creation of fiduciary duty after execution of the 9 May 2016 agreements

1. The plaintiffs alleged that after the execution of the 9 May 2016 agreements Messrs L Smits and Mahommed were the fiduciaries of BAD Nominees. In particular, they pointed to the following matters as underpinning the fiduciary relationship: 1. the characterisation of the 9 May 2016 agreements as a "pledge" by Messrs L Smits and Mahommed to act in the best interests of BAD Nominees; 2. the fiduciary character of the obligations owed to BAD Nominees were confirmed by cll 6(c)-(e) of the Power of Attorney; 3. the overriding purpose of the 9 May 2016 agreements was to allow Messrs L Smits and Mahommed to act as legal representatives and agents of BAD Nominees; 4. in implementing the 9 May 2016 agreements, Messrs L Smits and Mahommed would make decisions that would bind and affect BAD Nominees; and 5. the relationship was one in which BAD Nominees, to the knowledge of Messrs L Smits and Mahommed, reposed trust and confidence in Messrs L Smits and Mahommed and the company was therefore vulnerable to any misuse of the powers and authority conferred upon Messrs L Smits and Mahommed (PJ[115]-[116]).
2. Messrs L Smits and Mahommed denied the existence of any fiduciary relationship. In particular, they made the following claims (PJ[117]-[118]): 1. they made no pledge to BAD Nominees which overrode the express terms of the 9 May 2016 agreements; 2. cll 6(c)-(e) of the Power of Attorney did not support the characterisation of any duty owed to BAD Nominees as fiduciary, nor did those clauses override the express terms of the Power of Attorney; 3. properly construed, the 9 May 2016 agreements did not have the overriding purpose of allowing Messrs L Smits and Mahommed to act as authorised representatives and agents of BAD Nominees; 4. it is not unusual for an attorney to make a decision which binds or affects, or even adversely affects, the principal; 5. the relationship did not involve BAD Nominees reposing trust and confidence in them as attorneys, rather the relationship was one in which all parties had an implied contractual duty of co-operation in the performance of the 9 May 2016 agreements and under which the interests of Messrs L Smits and Mahommed (as well as Vestecorp) were capable of being protected at law and in equity by virtue of the Power of Attorney; 6. the claim of vulnerability on the part of Mr Dean and BAD Nominees was misplaced, because the powers and authority of Messrs L Smits and Mahommed arose not from any trust and confidence reposed in them by BAD Nominees, but rather by reason of the express terms of cl 2 of the Power of Attorney; 7. any duty to avoid a conflict in interest was "proscriptive and of limited or qualified application" because of the terms of cl 2 of the Power of Attorney; and 8. reliance was also placed on ss 126, 128 and 129 of the Corporations Act 2001 (Cth) (the primary judge's rejection of these particular claims at PJ[612] has not been appealed).
3. After noting that the Power of Attorney was a "prescribed power of attorney" within the meaning of s 8 of the Powers of Attorney Act, her Honour acknowledged that, in determining the powers and obligations imposed on Messrs L Smits and Mahommed by that instrument, together with a question of whether the Power of Attorney included the implied terms as claimed by the plaintiffs, regard had to be had to "the circumstances in which it was entered into" (including the execution of the Consultancy Agreement and the IAD at the same time) and the provisions of Pt 2 of the Powers of Attorney Act governing prescribed powers of attorney (PJ[571]).
4. After noting the terms of cl 2 of the Power of Attorney, the primary judge found that the Power of Attorney was signed in circumstances where BAD Nominees had made loans to BLE and Griffith Estates in its capacity as trustee of the Dean Super Fund. Those loans remained unpaid after the companies went into administration approximately two years earlier and no valid security was held in relation to the loan to Griffith Estates. Her Honour further noted that the administration proceedings were on foot and BAD Nominees lacked legal representation. Her Honour found that the object of the 9 May 2016 agreements, including the Power of Attorney, was recorded in cl 3 of the IAD, which contained the following acknowledgment by BAD Nominees to Messrs L Smits and Mahommed and Vestecorp: Without your input and assistance, BAD would be unable to marshal or engage the requisite expertise and resources to deal with the enforcement of its alleged loan securities and associated rights or to make or resist any legal challenges against or from the Administrators of or any Liquidators or Receivers or Trustees (if appointed) to BLE, GEP, and associated wrongdoers and that, BAD carries the risk of payment of all related legal costs, for which BAD undertakes that you will be fully indemnified by BAD.
5. The primary judge reasoned that reading cl 2 of the Power of Attorney as a whole and in the context of the "factual matrix" described by her Honour, cl 2 and p 5 of the Power of Attorney delineated the scope of the things which the attorneys were authorised to do on behalf of BAD Nominees (PJ[577]).
6. Her Honour then noted that the Power of Attorney did not contain any provision which authorised the attorneys to confer a benefit on themselves or a third party (PJ[581]).
7. The primary judge rejected the defendants' submission that cl 6(c) (i.e., the attorney must not benefit from being an attorney, unless expressly authorised by the principal) was subject to and qualified by cl 2. Her Honour held that cl 2 said nothing which qualified the requirements of cl 6(c). The primary judge also made clear at PJ[585] that this did not mean that Messrs L Smits and Mahommed were not entitled to work towards earning the 25% of recoveries referred to in cl 1 of the IAD.
8. The primary judge explained at PJ[589] why she rejected the defendants' submission that Messrs L Smits and Mahommed did not owe fiduciary duties to BAD Nominees (and/or Mr Dean) because the Power of Attorney was irrevocable both under s 15 of the Powers of Attorney Act and at common law. The defendants claimed that, at common law, an attorney appointed under an irrevocable power of attorney did not owe any fiduciary duties to the principal and could act contrary to the principal's interests subject to the express terms of the instrument appointing the attorney. Those submissions were rejected by the primary judge for reasons which may be summarised as follows: 1. Contrary to the defendants' claim, Brereton J (in the decision cited at [29(3)] above) did not determine that the Power of Attorney was irrevocable at common law, rather the finding of irrevocability was based solely on s 15 of the Powers of Attorney Act. 2. As Brereton J pointed out, s 16 of the Powers of Attorney Act provided for the consequences of irrevocability. It did not expressly provide that a power of attorney which is irrevocable by reason of s 15 precluded fiduciary duties being owed to the principal.
9. The principal's inability to revoke the Power of Attorney did not preclude by necessary implication any fiduciary duties that would otherwise be owed. Her Honour explained that this was "because the rationale for common law's treatment of a power coupled with a grant of an interest as irrevocable and not subject to fiduciary duties owed by the attorney lies in the nature of the interest granted to the attorney and the purpose of the power", citing this Court's decision in Despot v Registrar-General of NSW [2013] NSWCA 313 at [49]-[52].
10. The primary judge found that the purpose of the Power of Attorney was to protect and advance the rights and interests of BAD Nominees (as trustee of the Dean Super Fund) as a secured creditor of BLE and a creditor of Griffith Estates (PJ[594]). Her Honour also found that the attorneys' interest in earning 25% of any recoveries for themselves and Vestecorp as provided in cl 1 of the IAD was an interest which was "wholly aligned" with the interest of BAD Nominees in achieving such recoveries.
11. Accordingly, at PJ[596] the primary judge concluded that the Power of Attorney was not irrevocable at common law and that any fiduciary duties of the attorneys were not excluded on that basis. Her Honour concluded at PJ[598] that the question whether equity imposed fiduciary duties on Messrs L Smits and Mahommed as attorneys, and the extent of any such duties, depended on the terms of the Power of Attorney and the purpose for which it was granted (citing Despot at [48]).
12. Importantly, the primary judge made clear at PJ[600] that she accepted the defendants' submission that any fiduciary duty had to accommodate itself to the relationship created by the 9 May 2016 agreements and any such duty could not alter the intended operation of the contract, citing Taheri v Vitek (2014) 87 NSWLR 403; [2014] NSWCA 209 at [115] per Leeming JA, with whom Bathurst CJ agreed.
13. The primary judge then turned her attention to the issue of whether the Power of Attorney here was qualified or conditioned by any implied or express terms. Her Honour made the following findings: 1. It was an implied term that Messrs L Smits and Mahommed would not act in circumstances of a conflict between their interests and those of BAD Nominees. 2. It was an express term that the attorneys must act in BAD Nominees' best interests. 3. Subject to the qualification that, properly construed, the reference to 25% of recoveries in cl 1 of the IAD is a reference to monies actually recovered by the efforts of the attorneys and consultants, the 9 May 2016 agreements did not include an implied term that Mr L Smits and Vestecorp would only be paid if and when they were the cause of BAD Nominees recovering money from BLE. 4. The 9 May 2016 agreements did not include an implied term that the Power of Attorney was only to be used for the purpose of providing the services pursuant to the Consultancy Services Agreement. 5. The 9 May 2016 agreements did not include an implied term that all fees charged, including under the Consultancy Agreement, would be fair, reasonable and proportionate and could be substantiated and ascertained to be fair, reasonable and proportionate from invoices. 6. There were no implied terms that would incorporate by reference the provisions of s 172 of the Legal Profession Uniform Law 2014 (NSW) to fees charged by each of Mr L Smits and Vestecorp to the extent that they engaged in legal practice.
14. Ultimately, the primary judge accepted the plaintiffs' submission that the execution of the Power of Attorney created a fiduciary relationship between BAD Nominees as principal and Messrs L Smits and Mahommed as attorneys (PJ[604]). This fiduciary relationship was of the kind as between an agent and principal, which attracted the proscriptive duties of not placing oneself in a position of conflict and not obtaining an unauthorised benefit from the fiduciary relationship (PJ[605]-[607]).
15. It is well to set out PJ[605] (emphasis added and footnote omitted): The relationship between agent and principal is a recognised category of fiduciary relationship. In any event, this particular relationship had all the hallmarks of a fiduciary relationship for the reasons I have summarised immediately above even if it had not been expressly described as an agency and even if there was no express obligation to act in the best interests of BAD Nominees: John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19 at [86]-[92] (French CJ, Gummow, Hayne, Heydon and Kiefel JJ). As the plaintiffs submitted, that is particularly so in circumstances where the judgments and discretions to be exercised by the attorneys required legal expertise that Mr Dean lacked and that Mr Smits offered by putting himself forward as either a practising or retired lawyer who was capable of assisting BAD Nominees in its efforts to recover monies in the administration of BLE and GEP, and by entering into the 9 May 2016 documents authorising him to represent BAD Nominees in the existing proceedings.
16. The primary judge rejected the defendants' claim that these proscriptive fiduciary duties were inconsistent with the express terms of the 9 May 2016 agreements. Her Honour added at PJ[607] that the fiduciary duties were "entirely consistent" with cll 2 and 6 of the Power of Attorney.
17. After explaining at some length at PJ[608] her reasons for rejecting the defendants' submissions as to why the proscriptive fiduciary duties were not owed, her Honour acknowledged, however, that those duties "must accommodate themselves to the particulars of the underlying relationship that gave rise to the duty so that the scope of the duties conform to the scope and limits of that relationship" (citing Howard v Commissioner of Taxation (2014) 253 CLR 93; [2014] HCA 21 at [34]-[35] per French CJ and Keane J and at [60] per Hayne and Crennan JJ).

(d) Breach of fiduciary duty by Messrs L Smits and Mahommed in entering into the 20 March 2018 deed

1. The primary judge found at PJ[662]: The absence of any evidence of any serious attempt to identify a buyer for the nine lots other than Garslev, the absence of any detailed analysis undertaken to ascertain a fair price for the nine lots and the fact that the $850,000 sum was not even reached through negotiation with Garslev but was unilaterally "set" by Mr Mahommed and reflected a $73,000 discount on the market appraisal for the nine lots alone [of $923,000] are strong indications that the $850,000 sum was less than the fair value for the rights in respect [of] the nine lots and the other rights assigned to Garslev under the 20 March 2018 deed.
2. Her Honour stated that, even if the $850,000 sum did represent fair value, it was plainly contrary to the interests of BAD Nominees to enter into the 20 March 2018 deed permitting "payment" of the $850,000 in the manner it did, because its effect was to empower Garslev to determine whether and in what amounts fees allegedly payable to Messrs L Smits and Mahommed and Vestecorp would be paid out of the $850,000 without investigating their entitlement to the fees claimed and without consultation with BAD Nominees: PJ[663].
3. Considering all of the circumstances, the primary judge determined that the 20 March 2018 deed was contrary to the interests of BAD Nominees and conferred unauthorised benefits on Messrs L Smits, Vestecorp and Garslev (PJ[670]-[672]). Her Honour further found that there were a number of apparent conflicts of interest at the time the 20 March 2018 deed was entered into (PJ[674]).
4. The primary judge found that, by having drafted and/or executed the 20 March 2018 deed, Messrs L Smits and Mahommed breached their fiduciary duties to BAD Nominees because it conferred unauthorised benefits on Mr L Smits and Vestecorp and Garslev and because they acted in circumstances of conflict (PJ[673], [675]).
5. The primary judge also found that the established breaches of fiduciary duty involved and constituted a dishonest and fraudulent design (PJ[703] and see further at [80]ff below).
6. However, the primary judge at PJ[676] rejected the plaintiffs' contention that the 20 March 2018 deed was entered into in breach of fiduciary duties owed by Messrs L Smits and Mahommed to BAD Nominees on the grounds that they were acting as agents of Garslev in entering into the deed and the deed was entered into in furtherance of the alleged Garslev conspiracy. This was because there was insufficient evidence to establish the alleged Garslev conspiracy and, consequently, the alleged agency relationship between Messrs L Smits and Mahommed and Garslev (see in more detail at PJ[677]-[685]). As will emerge below at [164]ff, the appellants submit under appeal ground 3 that some of the primary judge's findings of breach of fiduciary duties were outside the pleadings.

(e) Breach of fiduciary duty by Messrs L Smits and Mahommed in entering into the Garslev deeds

1. The primary judge found that "[t]he obvious effect of the terms of the [three] Garslev deeds was to ensure that no part of the $850,000 payable to BAD Nominees under the 20 March 2018 deed would pass to BAD Nominees" (PJ[692]). Her Honour rejected Mr L Smits' evidence that BAD Nominees was contractually obliged to pay his fees as solicitor and that the 5 November 2018 deed of assignment was in BAD Nominees' interest because it provided a means for it to comply with those obligations. This was primarily because the deed purported inter alia to approve the payment of invoices which either had not been reviewed by Mr Mahommed prior to executing the deed or were yet to be issued by Mr L Smits in amounts unknown, and to waive BAD Nominees' statutory right to have the legal costs assessed or taxed (PJ[694]).
2. The primary judge concluded that by drafting and/or executing the three Garslev deeds, Messrs L Smits and Mahommed breached their fiduciary duties owed to BAD Nominees by conferring unauthorised benefits on Mr L Smits, Vestecorp and Garslev and by acting in circumstances where there was a conflict between the interests of BAD Nominees and their own interests (PJ[700], [702]). The primary judge set out at PJ[701] a list of conflicts of interest which existed when the Garslev deeds were entered into.
3. The primary judge rejected, however, the plaintiffs' allegations that the Garslev deeds were entered into in furtherance of the alleged Garslev conspiracy (PJ[704]).

(f) Fraud on the power

1. Having regard to her Honour's earlier finding that the purpose of the power conferred on Messrs L Smits and Mahommed by the Power of Attorney was to protect and enforce the rights and interests of BAD Nominees (as trustee of the Dean Super Fund) as a creditor of both BLE and Griffith Estates, the primary judge found that the execution of the 20 March 2018 deed was a fraud on the power because "Messrs Smits and Mahommed did exercise the power for that extraneous purpose" and the "execution of that deed … was not an exercise of the power in good faith and for a proper purpose" (PJ[708]).
2. The primary judge found at PJ[709] that the Garslev deeds were a fraud on the power: … in that they conferred on Messrs Smits, Mahommed and Vestecorp blanket approval of all of their invoices issued, or to be issued in the future, to BAD Nominees, provided for payment of those invoices without assessment or review by deduction from the $850,000 payable to BAD Nominees under the 20 March 2018 deed, assigned those alleged present and future debts to Garslev and offset them against the $850,000, thereby ensuring that no part of the $850,000 payable to BAD Nominees under the 20 March 2018 deed would pass to BAD Nominees.
3. However, the primary judge expressly rejected the plaintiffs' contention that the execution of these deeds was a fraud on the power because they were entered into in furtherance of the alleged Garslev conspiracy, for the same reasons as given earlier (see at [70] above) (PJ[710]).

(g) Various claims against Garslev

1. The primary judgment addressed three claims made against Garslev as identified at [35] above (in short, liability under both the first and second limbs of Barnes v Addy, and liability for having induced or procured breaches of fiduciary duty by Messrs L Smits and Mahommed).
2. The primary judge noted the plaintiffs' submission that considering the case on those three alternative bases may add unnecessary complexity because, in the particular circumstances, it was sufficient for the plaintiffs' claims for relief if Garslev was found to have induced or procured the breaches of fiduciary duty (at PJ[712]). Accordingly, her Honour addressed this claim first.

Inducement or procurement of breaches of fiduciary duty

1. After considering the authorities relating to liability under this cause of action, the primary judge concluded at PJ[716]: The matters relied on by the plaintiffs as establishing that Garslev induced or procured the breaches of fiduciary duty by Messrs Mahommed and Smits are the alleged Garslev conspiracy and the contention that Messrs Smits and Mahommed acted as Garslev's agents in procuring the 20 March 2018 deed and the Garslev deeds. For the reasons explained at [677]-[685] above, the plaintiffs have failed to establish the alleged Garslev conspiracy and the alleged agency. The plaintiffs' allegation that Garslev induced or procured the breaches of fiduciary duties is therefore rejected.

Second limb of Barnes v Addy

1. The primary judge turned next to the claim under the second limb of Barnes v Addy. After considering some authorities relating to establishing liability under this cause of action, the primary judge rejected the plaintiffs' allegations that the 20 March 2018 deed and the Garslev deeds were a dishonest and fraudulent design because the Power of Attorney was being used in furtherance of the Garslev conspiracy (this finding resting on the fact that the plaintiffs had failed to prove the Garslev conspiracy, as referred to above) (PJ[721]).
2. Nevertheless, the primary judge accepted that, for the following reasons, the breaches of fiduciary duty by Messrs L Smits and Mahommed in relation to the Garslev deeds were a dishonest and fraudulent design for other reasons advanced by the plaintiffs (PJ[722]-[735]).
3. First, as to the 20 March 2018 deed, the Power of Attorney was used to assign to Garslev the right to receive a transfer of the nine Beechworth lots and other rights in consideration for a mere promise by Garslev to pay the $850,000 at some unspecified time in the future by paying to third parties unspecified amounts they claimed were owing to them or would become owing to them in the future, with Garslev having no obligation to inquire whether those amounts were in fact owing by BAD Nominees (PJ[723]). These features "alone transgressed ordinary standards of honest behaviour by enabling Garslev to take the benefit of the nine lots as soon as the transfers could be facilitated whilst leaving BAD Nominees at the mercy of its alleged creditors and Garslev as to whether or to what extent it received any benefit from the assignment of its rights to Garslev" (PJ[724]). Indeed, the primary judge found that all of these features of the transaction were apparent from the terms of the 20 March 2018 deed, and it was plain that the attorneys stood to benefit (PJ[725]).
4. The primary judge found that Mr J Smits had read the 20 March 2018 deed before resolving that Garslev would execute the deed. Thus, Garslev, through its sole director, had actual knowledge of the features identified above and that BAD Nominees was being signed up to the transaction by its attorney, Mr Mahommed, who stood to benefit from the deed. Her Honour continued at PJ[727] (emphasis added; citations removed): In my opinion, a reasonable and honest person in the position of Mr J Smits would have made inquiries on behalf of Garslev about whether the Power of Attorney permitted Mr Mahommed to cause BAD Nominees to enter into a transaction with those features. It would have been a simple matter for such inquiries to be made - the Power of Attorney had been registered by this time and the registration details were cited in the execution clause of the 20 March 2018 deed. The terms of the Power of Attorney would have alerted Garslev to the provisions of clause 6 and to the lack of any clause expressly authorising the attorneys to deal with property of BAD Nominees in order to recover fees that the attorneys claimed were owing to themselves or to pay any other alleged creditors of BAD Nominees, or to confer benefits on third parties (such as Garslev). To the extent that this did not make it clear to Garslev that the Power of Attorney could not be used to cause BAD Nominees to enter into the 20 March 2018 deed, an honest and reasonable person in that position would have sought independent legal advice. There is no reason why such advice would not have been readily available to Garslev had it been sought. As Mr Smits said, Mr J Smits was: "the CEO of a large enterprise, very large, which he's been the CEO of for more than 50 years, and he has his own retinue of advisers. ... He, he has a number of lawyers in his family who are very experienced people and he consults freely with them". Having regard to the ease with which Garslev could have taken any of these steps and the benefit that it stood to gain by entering into the 20 March 2018 deed, I attribute Garslev's failure to make the inquiries to it wilfully shutting its eyes to the obvious or wilfully and recklessly failing to make such inquiries as an honest an reasonable person in its position would make before entering into the 20 March 2018 deed.
5. For these reasons, the primary judge concluded that the breaches of fiduciary duty by Messrs L Smits and Mahommed in relation to the 20 March 2018 deed were a dishonest and fraudulent design and that Garslev knowingly assisted Messrs L Smits and Mahommed in those breaches (PJ[730]-[731]).
6. As to the other deeds, the primary judge repeated her finding that the effect of their terms was to ensure that no part of the $850,000 payable to BAD Nominees under the 20 March 2018 would pass to BAD Nominees. Her Honour found that Garslev knew the effect of the Garslev deeds at the time that it entered into them. Her Honour concluded that the breaches of fiduciary duty by Messrs L Smits and Mahommed in relation to the Garslev deeds were a dishonest and fraudulent design and Garslev "either had actual knowledge of their effect or wilfully shut its eyes to their effect" (PJ[734]-[735]).

First limb of Barnes v Addy

1. Having found Garslev liable under the second limb of Barnes v Addy, the primary judge considered that it was unnecessary to address the plaintiffs' claim under the first limb. Nevertheless, her Honour added at PJ[737]: Had it been necessary to do so, and subject to one qualification, I would have upheld the plaintiffs' claim under the first limb of Barnes v Addy on the basis that, for the same reasons that I have explained at [726]-[734] above, Garslev received the assignment of the rights assigned to it under the 20 March 2018 deed, received the title to the nine lots as contemplated by that deed, and received the benefit of the Garslev deeds with the requisite knowledge that Mr Mahommed (in the case of the 20 March 2018 deed and the transfers) and Messrs Smits and Mahommed (in the case of the Garslev deeds) were engaging in conduct that amounted to a breach of fiduciary duties owed to BAD Nominees (whether or not Garslev was aware of that legal characterisation of the conduct): Farah v Say-Dee at [111]-[112]; Grimaldi at [268]-[270] (referred to with approval in Hasler at [191]).
2. The stated qualification was that it would have been necessary to determine whether the first limb of Barnes v Addy applied in circumstances where the property was transferred to Garslev by the attorneys who were fiduciaries, but not trustees. Her Honour noted "some continuing uncertainty about that question" as divergent views have been expressed by intermediate appellate courts (compare Pittmore Pty Ltd v Chan (2020) 104 NSWLR 62; [2020] NSWCA 344 at [155]-[156] with Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; [2012] FCAFC 6 at [254]). The primary judge considered that it was not appropriate to express a view given it was not necessary to do so in the circumstances (PJ[740]).

(h) Claims for equitable compensation or restitution against Mr J Smits

1. The primary judge noted that the plaintiffs put their claims for equitable compensation or restitution against Mr J Smits on two alternative bases (PJ[741]), namely: 1. He was liable for procuring or inducing the breaches of fiduciary duty committed by Messrs L Smits and Mahommed in entering into the Garslev deeds because he was a party to the alleged Garslev conspiracy. 2. He knowingly assisted in those breaches of fiduciary duty, which were a dishonest and fraudulent design, because he failed to make inquiries that an honest and reasonable person in his position would have made.
2. The claim on the first basis was rejected because the plaintiffs had failed to prove the alleged Garslev conspiracy (PJ[742]).
3. The claim on the second basis was rejected because Mr J Smits was not a party to the relevant deeds and his involvement extended only to causing Garslev to enter into those deeds with the knowledge he had in his capacity as the sole director of Garslev. The primary judge considered that the plaintiffs had failed to articulate any reason why Mr J Smits personally should be held to have knowingly assisted in the breaches of fiduciary duty committed by Messrs L Smits and Mahommed, or why Mr J Smits should be personally liable for those breaches in which Garslev knowingly assisted (PJ[743]). These findings are challenged in the cross-appeal.

(i) Relief

1. The relief granted by the primary judge may be summarised as follows.
2. First, the following deeds were rescinded ab initio: 1. Deed of Assignment dated 20 March 2018 between BAD Nominees (as assignor) and Garslev (as assignee). 2. Deed of Assignment dated 5 November 2018 between BAD Nominees, Garslev, Peter Mahommed and Leonardus Smits. 3. Deed of Settlement dated 5 November 2018 between BAD Nominees, Garslev, Peter Mahommed, Vestecorp and Leonardus Smits.
3. Secondly, Garslev was ordered to account to Overdean (as trustee of the Dean Super Fund) for the net proceeds of sale of the nine lots of Beechworth land that were the subject of the declaration made on 23 October 2017 in proceeding 2017/279755.
4. Thirdly, a declaration was made that monies paid into Court during the period since February 2019 representing the net proceeds of sale of the nine lots of Beechworth land referred to immediately above less the sum of $50,000 were impressed with a constructive trust for the benefit of Overdean (as trustee of the Dean Super Fund).
5. Fourthly, those monies held in Court were impressed with a constructive trust referred to immediately above and were ordered to be paid to Overdean (as trustee of the Dean Super Fund).
6. Fifthly, Messrs L Smits and Mahommed were ordered to pay equitable compensation to Overdean (as trustee of the Dean Super Fund) in the amount of $1,058,579 plus interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) for the period from 30 April 2019 until the date of the orders.
7. Sixthly, the third further amended statement of claim was otherwise dismissed.
8. Seventhly, the defendants' further amended cross-claim was dismissed.
9. Finally, the parties were given an opportunity to make submissions on costs.

The costs judgment

1. It is unnecessary to summarise the primary judge's reasons in the costs judgment as they do not feature heavily in the appeal. After describing which of the plaintiffs' and defendants' claims succeeded or failed (and making some critical comments about the conduct of both the plaintiffs' and defendants' cases), and addressing an accidental omission in Order 6 identified at PJ[856], the primary judge made the following orders at CJ[82]: (1) Order that the plaintiffs are to pay the defendants' costs thrown away by reason of the adjournment of the final hearing in May 2019, being the costs that were reserved by order 3 made on 24 May 2019. (2) Order that the first, third, fourth and fifth defendants and the first, third, fourth and fifth cross-claimants are to pay the plaintiffs' and cross-defendants' costs of these proceedings on the ordinary basis in an amount to be agreed or assessed (including any reserved costs but excluding any costs that are the subject of a previous costs order that provides otherwise, including order (1) above). (3) Order that any costs within the meaning of s 3 of the Civil Procedure Act 2005 (NSW) incurred by the sixth defendant in defending the plaintiffs' claims against him (but excluding any costs incurred by him as the sixth cross-claimant in relation to the cross-claim) are to be paid by the plaintiffs on the ordinary basis in such amount as may be agreed or assessed. (4) Pursuant to r 36.17 of the Uniform Civil Procedure Rules 2005 (NSW), order 6 made on 17 November 2021 is corrected to read as follows: "Order that the monies held in court that are impressed with the trust in order 5 above, together with any interest accrued thereon whilst those monies have been held in court, be paid to Overdean (as trustee of the Dean Super Fund)." (5) Dismiss the defendants/cross-claimants' informal application made in their submissions filed on 1 December 2021 and 8 December 2021 for a stay of execution of these orders and the judgment and orders made on 17 November 2021.

Vacation of original appeal hearing dates and related matters

1. The appeal was initially set down for hearing on 23 and 24 November 2022. On the morning of 23 November 2022, the Court (comprised of the same bench) heard an application to vacate those hearing dates on account of Mr L Smits having COVID-19 and being unable to instruct the appellants' senior counsel (Mr GS Clarke KC) during the hearing. The Court made orders vacating those hearing dates.
2. At the same time, the Court made orders striking out the appellants' original 44-page notice of appeal and requiring the appellants to file and serve by 5pm on 28 November 2022 an amended notice of appeal "in proper form containing grounds limited to those in paragraphs (2)(a) to (g) of their supplementary submissions filed on 20 October 2022". The Court also granted leave to the respondents to file and serve a proposed notice of contention and notice of cross-appeal annexed to a notice of motion filed on their behalf in these proceedings on 17 November 2022.
3. The Court ordered that the parties' submissions on the substantive appeal that had been filed to date were to stand as their submissions in support of, or in response to, the amended notice of appeal. The parties were otherwise directed to file and serve brief submissions in support of, or in response to, the respondents/cross-appellants' notice of contention and notice of cross-appeal. The Court reserved judgment on the costs associated with the vacation of the original hearing dates.
4. The matter was then relisted for hearing on 20 March 2023. On 16 March 2023, the appellants requested that the hearing be vacated again on account of the ill health of their solicitor, Mr L Smits. The respondents consented. The Court ordered that the hearing listed for 20 March 2023 be vacated, that the costs thrown away by the making of the order to vacate be reserved and that the matter be stood over for a new hearing date to be fixed.
5. The appeal was listed for hearing on 9 June 2023.
6. The day before the hearing of the appeal, Hammerschlag CJ in Eq delivered judgment in In the matter of Garslev Holdings Pty Ltd [2023] NSWSC 609. His Honour ordered that Garslev be wound up but that order was then stayed until 12 June 2023 to avoid any adverse consequences of the winding up on the conduct of the appeal. At the commencement of the appeal, the Court gave leave for the respondents to press their cross-appeal against Garslev.

Amended notice of appeal

1. On 1 December 2022, the appellants filed an amended notice of appeal containing the following grounds of appeal: 1 The LTJ [Learned Trial Judge] erred in holding or finding at J [606], [607] that Messrs Smits and Mahommed, as attorneys, under the 9 May 2016 contracts were subject to proscriptive fiduciary duties or obligations to the principal, BAD Nominees, and ought to have held that they were only subject to contractual obligations and rights under those contracts. 2 The LTJ erred in holding or finding at J [601] (1), (3), [602] that the contracts were subject to implied terms, and ought to have held that the contracts were not subject to the implied terms as found. 3 Alternatively to Grounds 1 and 2, the LTJ erred in holding or finding at J [675], [619]-[674] that the attorneys breached the fiduciary duties owed to the principal, and ought to have held that the attorneys did not breach the fiduciary duties. 4 Alternatively to Ground 3, the LTJ erred in holding or finding at J [703], [727]-[745] that the fiduciary duties breaches bore the quality of a dishonest or fraudulent design of which Garslev had the requisite knowledge, and ought to have held that they did not bear that quality and that Garslev did not have the requisite knowledge. 5 The LTJ erred in holding or finding at J [708], [709] that Messrs Smits and Mahommed committed a fraud on their powers under the 9 May 2016 contracts, and ought to have held that they did not do so. 6 The LTJ erred in ordering the relief against the Appellants at J [856] (1)-(7), and as to costs in the Costs Judgment, and ought not to have ordered any such relief. 7 Dependent upon the decision of the Court of Appeal as to Grounds 1 to 6: (a) the LTJ erred in holding or finding that Messrs Smits and Mahommed ought pay equitable compensation at J [856] (7); (b) the LTJ erred in holding or finding at J [856] (4), (5), (6) that the net proceeds of the sale of the Lots was $1,058,579, and ought to have held that the net proceeds of sale instead were $846,732.78. (c) the Court of Appeal should make such orders and directions concerning the net proceeds of the sale of the Lots, in the events that have occurred concerning those proceeds, as the Court shall deem fit.
2. The appellants sought the following orders: 1 The Appeal be allowed and orders made in accordance with the Grounds of Appeal. 2 The Respondents pay the Appellants' costs of the trial of the Third Further Amended Statement of Claim. 3 The Respondents pay the Appellants' costs of the Appeal. 4 The Court make such further or other orders or relief as to the Court shall deem fit having regard to the way in which the Court of Appeal finds in favour of the Appellants.

C. Consideration and determination

1. The parties filed a series of written submissions. In the case of the appellants, written submissions were filed on 13 May 2022, 20 October 2022, 14 November 2022 and 28 November 2022. The respondents filed written submissions on 7 November 2022, 24 November 2022 and 2 December 2022. The parties also filed written submissions on the cross-appeal. To avoid adding unduly to the length of these reasons, I will seek to address the parties' primary submissions (including their oral submissions) in this section of the judgment.
2. Each of the seven grounds of appeal raised in the amended notice of appeal filed on 1 December 2022 will now be addressed in turn.

Ground 1 (no fiduciary duties owed)

1. The appellants' primary contention is that the primary judge erred in concluding that Messrs L Smits and Mahommed owed proscriptive fiduciary duties to BAD Nominees upon execution of the 9 May 2016 agreements. They claim that those agreements only gave rise to contractual obligations and rights, which left no room for there to be an overlaying fiduciary relationship such as to impose proscriptive duties in addition to or in qualification of the 9 May 2016 agreements. The appellants' challenge to these findings was commendably more focused on the appeal when compared with the way in which the defendants' case was conducted below. Indeed, in the defendants' closing written submissions below, the defendants simply repeated (without elaboration) their opening submissions on whether there was a fiduciary relationship or duty (the opening written submissions on this topic occupied approximately 200 paragraphs).
2. This ground of appeal raises the following claims by the appellants: 1. The nature and extent of the inconsistencies between the proscriptive fiduciary duty imposed by the primary judge and the terms of the Power of Attorney were such as to preclude the imposition of any such fiduciary duties. 2. Moreover, there was either no, or insufficient, vulnerability in the relationship between BAD Nominees (and Mr Dean) on the one hand, and the attorneys on the other hand, so as to justify equitable intervention and the imposition of such proscriptive fiduciary duties.
3. The two matters overlap and it is convenient to deal with them together.
4. The appellants added that the 9 May 2016 agreements were given for valuable consideration and were part of a single arrangement, each being consideration for the others. They emphasised that the Power of Attorney was irrevocable, as was confirmed by the terms of the IAD. Clause 1 of the IAD contained an express authorisation and direction from Mr Dean (as the sole director of BAD Nominees) for the attorneys to pay 25% of all monies, damages, interests and costs due to BAD Nominees in respect of the Griffith Estates lots "as directed in writing by you and for your absolute benefit and the balance of 75% thereof shall be paid to BAD" (emphasis added). Moreover, they pointed to the fact that in cl 2 of the IAD Mr Dean acknowledged that he had obtained, or had had ample opportunity to obtain, independent advice in relation to these matters. They also emphasised the breadth of the obligations imposed on the attorneys by cll 6(c) and (d) of the Power of Attorney, which stated respectively that the attorneys must not benefit from being an attorney unless expressly authorised by the principal and that they must always act in the principal's best interests.
5. The appellants also pointed to s 16(1)(a) of the Powers of Attorney Act in support of their contention that the irrevocable Power of Attorney could not be revoked or otherwise terminated even if the attorneys acted without the principal's concurrence.
6. The appellants placed heavy reliance on Palmer J's decision in Cordiant Communications (Australia) Pty Ltd v The Communications Group Holdings Pty Ltd [2005] NSWSC 1005 in support of their contention that, because the Power of Attorney was irrevocable (as held by Brereton J in his 2018 judgment), it did not attract proscriptive fiduciary duties. This authority was referred to only in passing in the defendants' written outline of submissions below. Indeed, it was relegated to a footnote, which may explain why it was not addressed by the primary judge.
7. In the appeal, the appellants relied on the following passages from Cordiant at [152]-[153] and [158]: Third - and of decisive importance - an irrevocable power of attorney, by its very nature, is very different from a revocable power of attorney whereunder the donee is constituted the agent of the donor and has fiduciary duties of loyalty to the donor: see e.g. Midland Bank Limited v Reckitt [1933] AC 1, at 14; Saad v Doumeny Holdings Pty Ltd [2005] NSWSC 893, at para [24]. A power of attorney, to be irrevocable at common law, must be coupled with an interest so that it is given for the better securing of that interest as against the donor. Statute has long recognised the irrevocable power of attorney as a special creature which, although constituting the donee as the donor's agent, does not fasten upon the donee the usual fiduciary obligations of an agent: see e.g. Powers of Attorney Act 2003 (NSW) s.15 and s.16 and its precursors. Indeed, it has been suggested that an irrevocable power of attorney confers on the donee the right to act independently of the donor so that the donee need not consult, or confer with, the donor and, indeed, may ignore any direction given by the donor: P.W. Young Annotated Conveyancing and Real Property Legislation (NSW) 3rd Ed. Butterworths, para 33410.5. The principal authority cited for this proposition is Tingley v Müller [1917] 2 Ch 144. … In my opinion, it should now be accepted that, subject to any contractual provision to the contrary, as between donor and donee an irrevocable power of attorney confers on the donee the right to act within the terms of the authority conferred independently of, and even contrary to, the directions of the donor. As between the donee and a third party, the acts of the donee within the terms of the authority conferred are valid and binding by virtue of s.16(1)(a) Powers of Attorney Act regardless of whether the donee has disregarded the directions of the donor.
8. Cordiant is not inconsistent with the primary judge's reasoning. That is because, as Palmer J made clear in the final paragraph extracted immediately above, the general principles enunciated therein are "subject to any contractual provision to the contrary". This necessarily focuses attention on relevant clauses in inter alia the Power of Attorney.
9. Clause 2 of the Power of Attorney dealt with powers. It stated: My attorney/s may exercise the authority conferred on my attorney/s by Part 2 of the Powers of Attorney Act 2003 to do anything on my behalf I may lawfully authorise an attorney to do.
10. At the end of cl 2, the following statement was added (without alteration): THE ATTORNEYS SHALL BE APPOINTED IRREVOCABLY FOR THREE (3) YEARS AS "AUTHORISED REPRESENTATIVES" AND AGENTS OF THE PRINCIPAL TO ACT AND TO EXERCISE ALL POWERS, RIGHTS AND PRIVILEGES OF OR IMPUTABLE TO OR EXERCISABLE BY THE PRINCIPAL IN RELATION TO OR IN RESPECT OF THE MATTERS REFERRED TO IN PAGE 5: CONTINUATION AS TO; "SECTION 2. POWERS".
11. Accordingly, as the primary judge correctly found, the Power of Attorney was irrevocable during the specified three year period, a matter which the appellants contended has particular significance.
12. As noted above, the matters set out in "SECTION 2. POWERS" (which matters are the subject of the attorneys' powers, rights and privileges) included express reference to BAD Nominees' loan to BLE and the related security: (a) Beechworth Land Estates Pty Ltd (Administrators Appointed) A.C.N 160 808 631 ("BLE") regarding, touching or concerning, under, or ancillary or incidental to: I. Deed of Loan dated 1 February 2913 (sic) between BLE, the Principal and James Edward Spencer; II. General Security Agreement dated 1 February 2013 between BLE as Grantor and the Principal as Secured Party; III. Associated PPSR Documents Rn. No. 2013 051 300 0068 with start time of 13 May 2013 and end date of 13 May 2038; IV. Redhill Estate Developments Pty Ltd A.C.N 118 520 755 ATF The Red Hill Trust Partnership and in its personal capacity ("RED") with respect to Mortgage Rd. No. AF 168070Y, any land or lots mortgaged thereby, the associated Deed of Loan dated 27 June 2007 between RED as the Mortgagor and any existing of past Mortgagee, and any associated marketing, sale or other realisation and security over the land or lots; V. Any Administration, Liquidation, Affairs and/or litigation or claims to which BLE and/or RED may be privy, may maintain or prosecute or be affected by; VI. Any disputes or claims concerning BLE and/or RED and any associated debts or liabilities, securities or trusts and priorities; …
13. Clause 6 is another important part of the Power of Attorney (particularly cll 6(c)-(e)): 6. Attorney responsibilities Your attorney must do the following: a) Keep your money and property separate from the attorney's property and money. b) Keep reasonable accounts and records of your money and property. c) Not benefit from being an attorney, unless expressly authorised by you. d) Always act in your best interests. e) Always act honestly in all matters concerning your legal and financial affairs.
14. The appellants contended that there was no warrant to impose fiduciary duties on top of those contained in the Power of Attorney which would lead to an inconsistency. Emphasis was placed on the breadth of the duties imposed on the attorneys by cll 6(c) (i.e., prohibition on benefitting from being an attorney, unless expressly authorised by the principal); (d) (i.e., always act in the principal's best interests); and (e) (i.e., always act honestly in all matters concerning the principal's legal and financial affairs).
15. I do not accept that there is any inconsistency between these matters, as claimed by the appellants.
16. It is well settled that a contractual and fiduciary relationship may co-exist between the same parties but there is a need for any fiduciary relationship (assuming it to exist at all) to accommodate relevant contractual terms to avoid any inconsistency. As Mason J said in Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 97; [1984] HCA 64: That contractual and fiduciary relationships may co-exist between the same parties has never been doubted. Indeed, the existence of a basic contractual relationship has in many situations provided a foundation for the erection of a fiduciary relationship. In these situations it is the contractual foundation which is all important because it is the contract that regulates the basic rights and liabilities of the parties. The fiduciary relationship, if it is to exist at all, must accommodate itself to the terms of the contract so that it is consistent with, and conforms to, them. The fiduciary relationship cannot be superimposed upon the contract in such a way as to alter the operation which the contract was intended to have according to its true construction.
17. The primary judge was well aware that any fiduciary duties must accommodate the particulars of the underlying relationship which created those duties, such that the scope of the fiduciary duties conforms to the scope and limits of that relationship. Her Honour made express reference to this at PJ[608(7)], citing Howard at [34]-[35] per French CJ and Keane J and at [60] per Hayne and Crennan JJ, as noted at [64] above.
18. Another related aspect of Mason J's influential judgment in Hospital Products is relevant here. It concerns the issue of whether the fact that a party is entitled under a contractual arrangement to act in that party's own interests precludes the existence of a fiduciary relationship where one party is obliged to act in the interests of another. His Honour said at 99: But entitlement to act in one's own interests is not an answer to the existence of a fiduciary relationship, if there be an obligation to act in the interests of another. It is that obligation which is the foundation of the fiduciary relationship, even if it be subject to qualifications including the qualification that in some respects the fiduciary is entitled to act by reference to his own interests. The fiduciary duty must then accommodate itself to the relationship between the parties created by their contractual arrangements. And entitlement under the contract to act in a relevant matter solely by reference to one's own interests will constitute an answer to an alleged breach of the fiduciary duty. The difficulty of deciding under the contract when the fiduciary is entitled to act in his own interests is not in itself a reason for rejecting the existence of a fiduciary relationship, though it may be an element in arriving at the conclusion that the person asserting the relationship has not established that there is any obligation to act in the interests of another.
19. Hospital Products involved a similar claim to that raised by the appellants here, namely that the presence of a "best efforts" clause in the contract was inconsistent with the co-existence of a fiduciary duty. Mason J accepted that a contractual term might be so precise in stipulating what a party could do that there was no relevant area of discretion remaining so as to provide a basis for the creation of a fiduciary duty. His Honour found, however, that in the particular circumstances of that case, the appellant enjoyed a substantial area of discretion in performing its contractual obligation to promote the market in Australia for the respondent's surgical stapling products. Consequently, the contractual best efforts promise did not relevantly limit the ambit of the appellant's discretion in discharging that responsibility.
20. The position is similar here. The attorneys had a very broad discretion under the 9 May 2016 agreements in carrying out their responsibilities and services under those agreements. The breadth of that discretion is reflected in the wide range of matters identified in what is described as "SECTION 2. POWERS" in the Power of Attorney. Those are the matters to which the attorneys were appointed as "authorised representatives and agents" of the principal and empowered "to exercise all powers, rights and privileges" in relation thereto.
21. The breadth of the attorneys' discretion and powers is further reflected in the IAD, particularly cl 3 which specifically acknowledges the importance to BAD Nominees of the attorneys' "input and assistance" in enforcing its securities and associated rights vis-à-vis BLE and Griffith Estates. The breadth of the power and discretions is further reinforced by the terms of item 1 to the Consultancy Agreement. For example, under the heading "Power of Attorney of 8 May 2016 (sic)", the consultants' "Services" are stated as including: ALL SERVICES FUNTIONS (sic) AND POWERS, ALL MATTERS REFERRED TO IN THE POWER OF ATTORNEY, ALL RELATED ANCILLARY AND INCIDENTAL SERVICES.
22. Item 1 then identifies a wide range of other services under the headings "Planning" and "Operational" (see [145] below).
23. The primary judge explained why she rejected the defendants' submission that cl 2 of the Power of Attorney qualified or limited the relevant proscriptive fiduciary duties. Her Honour stated at PJ[608(7)]: …As I have already explained, it was that appointment that created the fiduciary relationship. One example of the manner in which the attorneys' fiduciary obligations must conform to the particular relationship created by the Power of Attorney executed together with the Consultancy Agreement and the IAD, is that any fees to which Mr Smits and Vestecorp were entitled under the Consultancy Agreement would not constitute an unauthorised benefit obtained by Mr Smits or Mr Mahommed (through Vestecorp), as I have explained above. However, the use of the Power of Attorney to procure payment of fees in circumstances where Mr Smits and Vestecorp were not entitled to those fees, or where their entitlement was disputed, is a different matter.
24. The appellants have failed to demonstrate any error in that reasoning. Rather, her Honour was correct to find that the fiduciary duties arose from the nature of the relationship between BAD Nominees and the attorneys (which was a relationship based on trust and confidence) and the purpose and relevant terms of the 9 May 2016 agreements (see particularly PJ[605] which is set out at [62] above).
25. Nor do I accept their claim that the primary judge's conclusion that Messrs L Smits and Mahommed owed proscriptive fiduciary duties was based upon the plaintiffs' allegations below concerning specified alleged conduct by the attorneys.
26. I also respectfully agree with her Honour's reasoning at PJ[609] that there is no inconsistency between the relevant fiduciary duties and the fact that Messrs L Smits and Mahommed and Vestecorp were entitled to look to BAD Nominees to pay any fees to which they were entitled under the Consultancy Agreement. As her Honour noted, as attorneys, Messrs L Smits and Mahommed "were not entitled to treat the interests of BAD Nominees as secondary to their own interests or the interests of Vestecorp in relation to [the consultancy] fees".
27. As noted above, the appellants also contended that there was no, or no sufficient, vulnerability here to give rise to the existence of fiduciary duties. In particular, they submitted that the primary judge failed to make findings as to the circumstances in which the 9 May 2016 agreements came into existence with the consequence that no vulnerability had been established. They claimed that they had argued below that, contrary to Mr Dean's evidence, he had in fact obtained legal advice before executing the 9 May 2016 agreements. They contended that the primary judge needed to make findings in relation to a range of matters raised by them below which were relevant to the commercial context and surrounding circumstances to the execution of the 9 May 2016 agreements. Instead, it is said that the primary judge determined the operation and effect of the 9 May 2016 agreements in the context of the plaintiffs' allegations below concerning specific alleged conduct of the defendants, which conduct was disputed by the defendants. The defendants contended that the terms of the agreements needed to be construed in the context of the circumstances in which they had come into being, citing Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 at [46], [52] per French CJ, Nettle and Gordon JJ and at [116]-[117] per Kiefel and Keane JJ.
28. For the following reasons, I do not accept these contentions. First, I reject the claim that the primary judge failed to make findings or take into account the context in which the 9 May 2016 agreements were made. Her Honour addressed those matters at some length at PJ[603]-[611].
29. It is true that the primary judge made no express finding in response to the appellants' claim below that Mr Dean had obtained legal advice before executing the 9 May 2016 agreements. In my respectful view, however, no significance attaches to that omission. That is because cl 2 of the IAD contained an express acknowledgment by Mr Dean either that "independent advice" had been obtained or, alternatively, that there was ample opportunity to obtain such advice, in relation to the Power of Attorney, the Consultancy Agreement and the affairs of BAD Nominees. That acknowledgment of itself does not preclude the existence of a fiduciary relationship having regard to the nature of the relationship between the relevant parties essentially being one of agency and where trust and confidence was reposed in the attorneys and the other matters identified at [48] above.
30. Secondly, I reject the appellants' submission that the primary judge failed to make findings concerning events leading up to the execution of the 9 May 2016 agreements, which events the appellants claim were inconsistent with BAD Nominees being vulnerable to misuse by the attorneys. The appellants' case seemed to be that because BAD Nominees had recovered some of its investment with BLE prior to the involvement of Messrs L Smits and Mahommed, there was no basis for finding any vulnerability. In support of this claim, the appellants relied upon various matters, including the fact that Mr Dean swore in his affidavit dated 7 December 2018 that BAD Nominees paid for, and released, 26 Beechworth lots which BLE had either sold or held as mortgagee in possession or had refinanced. But even if that be accepted, it does not deny BAD Nominees' position of vulnerability. Indeed, as will shortly be developed, that vulnerability was expressly acknowledged in the IAD (see at [144] below).
31. It is well settled that a fiduciary relationship is one which arises where a person is given a "special opportunity to exercise [a] power or discretion to the detriment of [another] person who is accordingly vulnerable to abuse by the fiduciary of his position" (Hospital Products at 97 per Mason J). Although his Honour was in dissent in the outcome of that case, this observation "is generally seen as an important and correct statement of principle": Heydon, Leeming and Turner, Meagher, Gummow and Lehane's Equity: Doctrines and Remedies, (5th ed, 2015, LexisNexis Butterworths) at [5-005] (Equity: Doctrines and Remedies).
32. That is not to suggest that the vulnerability of any contracting party to breach by another party is sufficient of itself to create a fiduciary relationship. As pointed out in Equity: Doctrines and Remedies at [5-005], "the element which Mason J described as the critical element is the essential element in most cases - 'that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person'". As found by the primary judge, that is what Messrs L Smits and Mahommed agreed to do here, as is recorded in cl 2 of the Power of Attorney which expressly refers to their appointment as "authorised representatives and agents" of BAD Nominees (see at [120] above).
33. Focusing on the issue of vulnerability, I consider that the following additional factors support the primary judge's conclusion that, as agents and authorised representatives of BAD Nominees, Messrs L Smits and Mahommed were in a fiduciary relationship with BAD Nominees and that this fiduciary relationship included the proscriptive duties identified by her Honour.
34. First, BAD Nominees' vulnerability was expressly acknowledged in the IAD. As has previously been noted, it was made explicit in cl 1 of that document that the attorneys were entitled to receive 25% of all monies payable to BAD Nominees in respect of the Griffith Estates' lots for the "absolute benefit" of those attorneys. But other important parts of the IAD highlighted BAD Nominees' vulnerability. For example: 1. It was made explicit at the end of cl 1 that BAD Nominees was entitled to receive the balance of 75% of all monies recovered by the attorneys in respect of the Griffith Estates' lots. Thus there was a close link between the attorneys' right to receive 25% of the monies and the Principal's right to receive the balance. 2. After giving the acknowledgment in cl 2 regarding independent advice (see at [139] above), it was then expressly stated therein that "BAD is in serious risk or jeopardy of being unable to recover any monies from the administrators in the events which have happened and due to in-action since their Appointments and that BAD is impecunious". Thus BAD Nominees' vulnerability was directly tied to the engagement of Messrs L Smits and Mahommed in which it placed trust and confidence. 3. BAD Nominees' vulnerability and dependency on the attorneys and the trust and confidence which it reposed in them was further reinforced in cl 3 of the IAD, which stated: 3. Without your input and assistance, BAD would be unable to marshall or engage the requisite expertise and resources to deal with the enforcement of its alleged loan securities and associated rights or to make or resist any legal challenges against or from the Administrators of or any Liquidators or Receivers or Trustees (if appointed) to BLE, GEP and associated wrongdoers and that BAD carries the risk of payment of all related legal costs, for which BAD undertakes that you will be fully indemnified by BAD.
35. Secondly, relevant provisions of the Consultancy Agreement reflect BAD Nominees' vulnerability and dependency upon Messrs L Smits and Mahommed (the latter acting through his company Vestecorp). Under that agreement, Mr L Smits and Vestecorp were engaged as consultants by BAD Nominees. They were engaged to perform a wide range of "Services", which naturally required the consultants to exercise significant judgment, discretion and power, as reflected in item 1 of that agreement, which stated: ITEM 1 ENGAGEMENT for the purpose of providing the following Services: POWER OF ATTORNEY OF 8 MAY 2016; ALL SERVICES FUNTIONS (sic) AND POWERS, ALL MATTERS REFERRED TO IN THE POWER OF ATTORNEY, ALL RELATED ANCILLARY AND INCIDENTAL SERVICES. PLANNING; PROJECT PLANNING, PROJECT/S TECHNOLOGY RESOURCES ANALYSIS, TECHNOLOGY RESOURCES IDENTIFY DOCUMENTS FORMAT & COMPILE PROJECT/S DOCUMENTS, RISK MANAGEMENT, MANAGEMENT PLANNING OPERATIONAL; IDENTIFY DOCUMENT SOURCES , REVIEW DOCUMENTS AND RESOURCES MANAGE STARTEGIES (sic), MANAGEMENT PLANNING, DOCUMENTATION MANAGEMENT, FORMAT DOCUMENTS BRIEF LEGAL ADVISORS BRIEF ACCOUNTANTS & AUDITORS PREPARE REQUIRED FORECAST SCHEDULES, REPORTING TO PRINCIPAL
36. This early part of the description of the Services makes explicit the connection between the Consultancy Agreement and the Power of Attorney.
37. Item 2 identified the consultants' representative as Messrs L Smits and Mahommed and the Principal's representative was identified in Item 3 as Mr Dean.
38. Thirdly, as the primary judge pointed out at PJ[604], the very purpose of the execution of the Power of Attorney, whereby the attorneys were required to act as agents of BAD Nominees in respect of the matters specified on p 5, was to protect and advance the interests of BAD Nominees as a secured creditor of BLE and a creditor of Griffith Estates. The interests of the attorneys in earning 25% of recovery monies, as provided for in cl 1 of the IAD, was not inconsistent with their express obligation under cll 2 and 6 of the Power of Attorney to act "as authorised representatives and agents" for and on behalf of, and in the best interests of, BAD Nominees in relation to the relevant matters. As the primary judge found at PJ[604]: …this would involve the attorneys exercising their judgment and discretion in pursuing and defending on behalf of BAD Nominees various claims in the 2014 proceedings that were already on foot when the 9 May 2016 documents were executed, and any other litigation or claims concerning BLE or GEP. The attorneys' conduct of those matters plainly had the potential to adversely affect the interests of BAD Nominees.
39. For these reasons, the appellants have failed to establish any error in the primary judge's reasoning as to why the 9 May 2016 agreements (and the Power of Attorney in particular) gave rise to the relevant proscriptive fiduciary duties.

Ground 2 (implied terms)

1. As noted above, the primary judge found in the plaintiffs' favour regarding the following two aspects of the Power of Attorney (see at [60] above): 1. there was an implied term that Messrs L Smits and Mahommed would not act in circumstances of a conflict between their interests and those of BAD Nominees; and 2. the reference in cl 1 of the IAD to 25% of recoveries was to be read as a reference to monies actually recovered by the efforts of the attorneys and consultant.
2. The appellants contended that: the first of those terms should not be implied, having regard to the express obligations imposed upon the attorneys in cl 6 of the Power of Attorney; the term is unnecessary and does not go without saying; and the 9 May 2016 agreements work reasonably without implying such a term. They added that the implied term is inherently uncertain as to its meaning because of the obscurity as to what "conflicts in interest" are as a matter of contract law.
3. As to the second matter, the defendants claimed that it involved an impermissible re-writing of the 9 May 2016 agreements (particularly the Power of Attorney).
4. The appellants also submitted that these two matters regarding the Power of Attorney should be rejected because of the primary judge's failure to make any findings as to the commercial context in which the contracts came to be executed.
5. Finally, in their written submissions in reply, the appellants claimed that the findings formed part of her Honour's reasoning in finding the subsistence of the proscribed fiduciary duties. They claimed that this occurred in circumstances where the plaintiffs failed to plead, and the primary judge failed to find, that there were breaches of any implied term.
6. For the following reasons, I reject those submissions. First, I repeat what is said above regarding the alleged inconsistency between the implied term that Messrs L Smits and Mahommed would not act in circumstances of a conflict between their interests and BAD Nominees and the terms of the Power of Attorney.
7. Secondly, cl 6(c) of the Power of Attorney, which prohibits the attorney from benefitting from that status unless expressly authorised by the Principal, is narrower than, and not coterminous with, the implied term regarding avoidance of conflicts of interests.
8. Thirdly, having regard to the nature of the relationship and the trust and confidence implicit in it, I reject the appellants' contention that the implied term is unnecessary and does not go without saying.
9. Fourthly, I reject the appellants' claim that, as a matter of contract law, the notion of "conflicts in interest" is inherently uncertain. The content of the obligation is well understood, albeit that its application may give rise to difficulties in individual cases (which is not the case here).
10. As to the proper construction of cl 1 of the IAD, I do not consider that it involves an impermissible re-writing of the 9 May 2016 agreements. Rather, it clarifies the ambit of cl 1 of the IAD and otherwise accords with well established principles of construction.
11. As to the appellants' complaints that the two matters were not pleaded and that the primary judge did not find any breaches of the terms, the terms were adequately pleaded at [58] of the third further amended statement of claim. The defendants denied the existence of the alleged implied terms in [58] of the second further amended defence.
12. As to the primary judge's findings, her Honour noted at PJ[243] that the plaintiffs alleged that the attorneys caused BAD Nominees to enter into the 20 March 2018 deed in breach of their fiduciary duties "not to act in conflict". Her Honour noted the defendants' denial at PJ[244]. The primary judge then expressly found at PJ[601(1)] that it was an implied term of the Power of Attorney that the attorneys would not act in circumstances of a conflict between their interests and those of BAD Nominees and her Honour provided a detailed explanation for that finding (with which I respectfully agree).
13. Similarly, her Honour gave detailed reasons at PJ[602] as to why cl 1 of the IAD should be read in the manner found by her Honour. I also respectfully agree with those reasons. As her Honour explained, that qualified term involved reading into cl 1 the words "and recovered by your efforts". Moreover, contrary to the appellants' submissions, I consider that it is necessarily implicit in the primary judge's findings that Messrs L Smits and Mahommed breached their fiduciary duties that the two relevant terms were also breached (see in particular her Honour's findings at PJ[607] and [609]).
14. Finally, the appellants' submission that the primary judge made no findings as to the commercial context in which the 9 May 2016 agreements came to be executed is without substance. As noted above, her Honour made express reference at PJ[571] to the need, in determining whether or not there were implied terms as claimed by the plaintiffs, for regard to be had to "the circumstances in which [the Power of Attorney] was entered into (including the execution of the Consultancy Agreement and the IAD at the same time)".

Ground 3 (no breach of 9 May 2016 agreements or fiduciary duties)

1. As presented, this ground had several elements. Ultimately all were directed to the primary judge's order to rescind the Garslev deeds (i.e., the 20 March 2018 deed of assignment, the 5 November 2018 deed of assignment and the 5 November 2018 deed of settlement). The basis for rescinding these deeds was the primary judge's finding that, by having BAD Nominees execute those deeds, Messrs L Smits and Mahommed acted in breach of their fiduciary duties, which breaches bore the character of being a dishonest and fraudulent design.
2. In brief, the appellants challenged the primary judge's findings of breaches of fiduciary duties because they were claimed to traverse a wider range of matters than the plaintiffs' pleaded case. Although it was not always easy to follow the appellants' pleading complaints, it appears the complaints relate in large part to the alleged "disparity" between the primary judge's findings of breach and her Honour's rejection of the Garslev conspiracy.
3. In their written submissions in reply filed on 14 November 2020, the appellants claimed that there was a lack of clarity and specificity in the plaintiffs' pleaded case which caused the primary judge to make findings outside the pleadings. The appellants then referred to the following three aspects of the pleadings: 1. The issue concerning the ability of BAD Nominees to pay conveyancing fees was not a matter raised by the plaintiffs in the pleading. 2. The pleading that the $850,000 was an undervalue was only pleaded in the context of the Garslev conspiracy, which conspiracy was rejected by the primary judge. 3. The plaintiffs did not allege that "by" drafting the 20 March 2018 deed and approving of its execution on behalf of his co-attorney Mr Mahommed, Mr L Smits breached fiduciary duties owed to BAD Nominees.
4. During the course of the hearing of the appeal, Mr Clarke KC handed up three separate aide memoires which identified the relevant pleadings in respect of the Garslev deeds. Unfortunately, the paragraphs of the pleadings referred to in some of the aide memoires were different from the paragraphs of the pleadings identified in the relevant parts of the appellants' supplementary submissions filed on 20 October 2022 in support of ground 3. The references in the aide memoires also went beyond the three specific matters which were identified in the appellants' written reply, as referred to immediately above. This created some confusion. Nevertheless, doing the best as one can in the circumstances, I will address each of the three topics in turn and give primary attention to the pleading paragraph references in the three aide memoires.

(a) 20 March 2018 deed of assignment

1. The appellants summarised the plaintiffs' pleaded case regarding the 20 March 2018 deed of assignment as containing the following allegations ("SC" refers to the third further amended statement of claim): (a) Smits and Mohammed had BAD Nominees enter the Deed of Assignment in pursuit of the Garslev Conspiracy, SC [145]; (b) in nominating Garslev, Smits and Mohammed were acting in conflict in that the Deed of Assignment was entered into in furtherance of the Garslev Conspiracy and this was not in the interests of Nominees, SC [158] (b); (c) in using the Power of Attorney to enter the Deed of Assignment, Smits and Mohammed breached the terms of the Power of Attorney and their fiduciary duties owed to Bad Nominees in that: … (c) they did not act in the best interest of BAD Nominees in that they acted in their own interest in furtherance of the Garslev conspiracy … (e) they did not act honestly in dealing with BAD Nominees' legal and financial affairs in that they acted in conflict and in furtherance of the Garslev Conspiracy, SC [168] (c), (e); (d) The use of the Power of Attorney was beyond, outside and a fraud on the power provided in that the Power of Attorney was not being used for the benefit of BAD Nominees but in furtherance of the Garslev Conspiracy, SC [169] (a).
2. The appellants also emphasised that the primary judge had rejected the plaintiffs' allegations both in respect of the Garslev conspiracy and the Garslev agency. They submitted that those matters were no longer "live" issues in the plaintiffs' fiduciary duty case. Moreover, they pointed to the fact that, contrary to the plaintiffs' allegation that the Power of Attorney did not authorise Messrs L Smits and Mahommed to enter into any retainer for the provision of legal services by Mr L Smits, Brereton J had held that Mr Mahommed was entitled under the Power of Attorney to retain Mr L Smits as solicitor for BAD Nominees from September 2017. Thus, that was no longer a "live" issue.
3. The appellants then contended that the remaining (or live) issues were those that were pleaded in various paragraphs of the third further amended statement of claim as set out in the first aide memoire and did not include the following matters upon which the primary judge proceeded to make findings adverse to the appellants: 1. BAD Nominees could have paid conveyancing costs and stamp duty in respect of the transfer of the nine Beechworth lots, and so could have completed the 2 August 2017 contract by taking the transfer of the lots itself (see PJ[631] and [635]). 2. The sum of $850,000 was less than fair value for the rights in respect of the nine lots and other rights assigned to Garslev under the 20 March 2018 deed (see PJ[661], [663] and [674(1)]). 3. By drafting the 20 March 2018 deed and approving of its execution by Mr Mahommed as his co-attorney, Mr L Smits breached fiduciary duties owed to BAD Nominees (see PJ[673] and [675]).
4. The appellants contended that the primary judge should not have found that Messrs L Smits and Mahommed entered into the 20 March 2018 deed (and the 5 November 2018 deeds) to extract for themselves, and for Vestecorp, benefits using the mechanism of the transfer of the nine lots to Garslev as a means of extracting their very high fees from the value of the nine lots and putting it beyond BAD Nominees' ability to scrutinise and object to those fees.
5. The appellants added that, under cll 2 and 3 of the 20 March 2018 deed of assignment, although there was provision for Garslev to pay the $850,000 by way of offset of BAD Nominees' liabilities to third party creditors (including the attorneys), Garslev was absolutely obliged to pay the $850,000 to, or for the benefit of, BAD Nominees, including in cash.
6. For the following reasons, those submissions are not accepted.
7. The appellants' claims regarding BAD Nominees paying conveyancing costs and stamp duty in order to complete the 2 August 2017 contract arose, not because of the plaintiffs' pleadings as such, but rather because of the evidence given by Messrs L Smits and Mahommed to the effect that they caused BAD Nominees to enter into the 20 March 2018 deed because inter alia BAD Nominees lacked the funds required to complete the 2 August 2017 contract. As the primary judge noted at PJ[630], these matters were raised by the defendants in their defences and in their submissions.
8. It was for this reason, therefore, that the primary judge made findings in respect of the defendants' claims that BAD Nominees lacked the funds to complete the 2 August 2017 contract.
9. For these reasons, the appellants' pleading objection in relation to this matter is rejected.
10. The second pleading objection relates to the primary judge's finding that the sum of $850,000 was less than fair value for the rights which were assigned to Garslev under the 20 March 2018 deed. Again, it is important to appreciate how this matter arose. As the primary judge noted at PJ[661], it arose in the context of Mr Mahommed's cross-examination. He was asked to identify the benefit to BAD Nominees in entering into the 20 March 2018 deed, to which he said that the benefit was that "we actually had a buyer for the nine lots". The adequacy of that response was then analysed by the primary judge. At PJ[662] her Honour explained why there was material which cast doubt on the proposition that $850,000 was a fair value for the rights which were assigned to Garslev under the 20 March 2018 deed. Her Honour then added at PJ[663] that, even if that figure represented fair value, the 20 March 2018 deed was contrary to BAD Nominees' interests, for reasons which her Honour explained. It was entirely appropriate for her Honour to conduct that analysis, having regard to Mr Mahommed's evidence and noting that no objection was made to the question which was put to him in cross-examination and elicited his response.
11. The third pleading objection in relation to the 20 March 2018 deed primarily concerns the primary judge's findings at PJ[673]. Those findings were that by drafting the 20 March 2018 deed and approving Mr Mahommed's execution of the deed on behalf of BAD Nominees, both Mr L Smits and his co-attorney breached their fiduciary duty by conferring unauthorised benefits on Mr L Smits, Vestecorp and Garslev. Her Honour then explained at some length at PJ[674] why entry into the 20 March 2018 deed occurred in the context of various conflicts of interest which her Honour identified in that paragraph. These findings were not outside the scope of the pleadings. Paragraph 157 of the third further amended statement of claim explicitly stated that, on 20 March 2018, Messrs L Smits and Mahommed were subject to a fiduciary duty not to act in conflict. Paragraph 158 particularised the plaintiffs' claims as to why Messrs L Smits and Mahommed, as well as Garslev, were acting in conflict with specific reference to the interest of the attorneys and Vestecorp securing their purported fees on the best terms for them, which were in conflict with the interests of BAD Nominees.
12. For these reasons, there is no substance in any of the appellants' pleading complaints relating to the primary judge's findings concerning the 20 March 2018 deed.

(b) Garslev deeds (dated 5 November 2018)

1. The appellants summarised the primary judge's findings as follows in relation to the two 5 November 2018 deeds: 1. The 5 November deeds conferred unauthorised benefits on Messrs L Smits and Mahommed, Vestecorp and Garslev for reasons which are set out at PJ[689]-[698]. 2. By drafting the 5 November deeds and approving or acquiescing in the execution of the deeds, on behalf of BAD Nominees by his co-attorney, and by Mr Mahommed executing the deeds, Messrs L Smits and Mahommed breached their fiduciary duties owed to BAD Nominees by conferring unauthorised benefits on Mr L Smits, Vestecorp and Garslev (see PJ[700]). 3. When the 5 November deeds were entered into, conflicts of interest persisted (see PJ[701]). 4. By their conduct concerning the 5 November deeds, Messrs L Smits and Mahommed breached their fiduciary duties not to act in circumstances where there was a conflict between the interests of BAD Nominees and their own interests. The attorneys preferred their own interests and those of Garslev to the interests of BAD Nominees (see PJ[702]).
2. The appellants contended that these findings by the primary judge went beyond the pleaded case in ways similar to those which they complained of in respect of the primary judge's findings relating to the 20 March 2018 deed.
3. The appellants focused particular attention on the primary judge's findings at PJ[689] and [692] and, in particular, her Honour's finding that the effect of the Garslev deeds "was to ensure that no part of the $850,000 payable to BAD Nominees under the 20 March 2018 deed would pass to BAD Nominees". They submitted that Messrs L Smits and Mahommed received no real benefit from the Garslev deeds and would receive nothing in respect of any of the invoices which they rendered. They added that the 20 March 2018 deed did not require Garslev to pay the obligations in a specified time and that under the 5 November 2018 deeds no proceeds were to be received from the Yeppoon development.
4. For the following reasons, I do not accept those submissions.
5. First, for not dissimilar reasons to those given immediately above, there is no substance in the pleading objection. The plaintiffs explicitly pleaded at [263] of the third further amended statement of claim that Messrs L Smits and Mahommed were subject to fiduciary duties not to act in conflict when the Garslev deeds were executed. Moreover, the particulars of the alleged conflicts of interest were set out at some length at [264] of the pleading. The primary judge's findings, to which objection is now taken, were comfortably within both the pleaded case and the way in which this part of the case was conducted below. It was made clear in the plaintiffs' opening that their case was that Messrs L Smits and Mahommed acted in conflict when using their position as attorneys of BAD Nominees in nominating Garslev as transferee of the nine Beechworth lots and reference was made to the three deeds with Garslev in that context. The plaintiffs then opened their case by submitting that the three deeds should be rescinded on the following bases: 1. the attorneys' conflict of interest; 2. breach of fiduciary duties by Messrs L Smits and Mahommed; and 3. irrespective of whether they were fiduciaries, the nomination and entry into the three deeds with Garslev was a fraud on the power.
6. As noted above, in their closing written submissions, the defendants simply repeated without elaboration their detailed opening submissions as to why there was no fiduciary relationship or fiduciary duty, including a claim that there was no conflict of duty or interest and that such conflicts were "excluded contractually". They added that, in their defence, they held "vested or assigned interest" which they were entitled to protect and advance.
7. Finally, in so far as the appellants challenge the correctness of the primary judge's findings at PJ[689] and [692] I consider that those findings were correctly made, for the reasons given by her Honour in those paragraphs.
8. These matters are developed further below in explaining why ground 4a is also rejected.

(c) 20 March 2018 deed of assignment and the 5 November 2018 deeds, and the knowing involvement of Mr J Smits and Garslev in the procurement and performance of those deeds

1. In oral address, Mr Clarke KC explained that the third aide memoire related to the primary judge's finding that, because there was a dishonest and fraudulent design in the breach of fiduciary duties, and Garslev knowingly assisted in that dishonest and fraudulent design, it was appropriate to grant relief against Garslev by rescinding the three deeds which it executed. Those findings are specifically challenged under ground 5 of the appeal. In oral address, Mr Clarke KC did not elaborate upon the appellants' pleading objections concerning this matter. Accordingly, it is appropriate to address those objections under ground 4b.

Ground 4a (whether any breaches of fiduciary duties bore the quality of a "dishonest or fraudulent" design)

1. The appellants noted the primary judge's finding that only breaches of a fiduciary duty which amount to a dishonest and fraudulent design are capable of giving rise to liability under the second limb of Barnes v Addy, which relates to a third party knowingly assisting in the breach.
2. The appellants contended that the primary judge's finding that the breaches of fiduciary duties were a dishonest and fraudulent design were based on her Honour's reasons at PJ[723]-[725].
3. The appellants challenged that reasoning on the following grounds: 1. Consideration for the nine Beechworth lots was a promise to pay by Garslev and this was not uncommercial. 2. It was not out of the ordinary for the time period for payment (in a fixed sum) not to be specified. This was particularly so where the 2 August 2017 contract between BLE's administrators and BAD Nominees did not have a fixed time for completion and was not completed by 20 March 2018. 3. It was not inevitable that Messrs L Smits and Mahommed would earn fees to a value of $850,000 and, if they did not, Garslev would have to pay. As the respondents' cross-claim below was dismissed, Garslev is obliged under the 20 March 2018 deed to pay $850,000 to BAD Nominees. 4. As at 20 March 2018, there was no reason to find that Messrs L Smits and Mahommed would likely claim fees to which they were not entitled under the 9 May 2016 agreements. 5. The 20 March 2018 deed did not entitle Messrs L Smits and Mahommed to make fraudulent fee claims. 6. As at 20 March 2018, there was no reason to find that it was likely that Messrs L Smits and Mahommed would make claims that exceeded any genuine debts. 7. Under the 9 May 2016 agreements, the attorneys were entitled to be paid fees for their services. 8. Garslev was obliged to pay for the assigned property and receipt of that property was not a "benefit" to which it was not entitled bearing in mind the terms for payment as set out in the 20 March 2018 deed. 9. The primary judge erred by finding that the effect of the terms of the Garslev deeds was to ensure that no part of the $850,000 payable under the 20 March 2018 deed would pass to BAD Nominees because the $850,000 was payable in all events. 10. There was no transgression of ordinary standards of honesty in the circumstances here. Garslev did not get something for nothing under the Garslev deeds and, because of the actions of Messrs L Smits and Mahommed, Garslev agreed to pay for the assigned lots and must pay in the events that have occurred. 11. In drafting the Garslev deeds, Mr L Smits did not fail to attend to ordinary applicable standards and obligations that are well known to experienced solicitors. Rather, the Garslev deeds were commercial transactions and Mr L Smits considered that they were within the power of the 9 May 2016 agreements. In any event, the dishonesty findings made by the primary judge in relation to Messrs L Smits and Mahommed were inconsistent with the Briginshaw standard (see Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34). 12. After rejected and incorrect matters were re-excised, the pleading of the dishonest and fraudulent design "was at best opaque". 13. Fairly read, the primary judge's finding that there was a dishonest and fraudulent design was not squarely put in the third further amended statement of claim, nor were the matters squarely put to Messrs L Smits and Mahommed in cross-examination.
4. For the following reasons, all these contentions are rejected.
5. First, the primary judge's finding that the breaches of fiduciary duty by Messrs L Smits and Mahommed in relation to principally the Garslev deeds were a dishonest and fraudulent design was based on her Honour's analysis of the following features of the 20 March 2018 deed (see PJ[724]).
6. The Power of Attorney was used to assign to Garslev under the 20 March 2018 deed the right to receive the nine Beechworth lots (and other rights) for what her Honour viewed to be inadequate or at least uncertain consideration. This was because Garslev's promise to pay the $850,000 transfer price was unlimited as to time and (perhaps more significantly) could be satisfied by Garslev paying to various third parties (including the attorneys, consultants and Mr L Smits personally as a solicitor) unspecified amounts which those third parties could claim to be owed to them by BAD Nominees. Moreover, Garslev had no obligation to inquire whether any such claimed amounts were in fact owed by BAD Nominees. Accordingly, how much if any of the $850,000 transfer price was in fact paid to BAD Nominees by Garslev depended entirely on the amounts claimed by the third parties and how much Garslev determined in its absolute discretion to pay (without being obliged to make any inquiries into the validity of any such claims). The primary judge concluded (correctly) that this left BAD Nominees at the "mercy" of these parties.
7. Secondly, none of the multiple matters raised by the appellants at [191] above undermines the primary judge's analysis of the features of the 20 March 2018 deed. In particular (responding to each of those matters seriatim): 1. The features, as identified by the primary judge, are inconsistent with the appellants' claim that the consideration paid by Garslev under the deed was not uncommercial. 2. The failure to specify a time period for payment of the consideration may not be determinative in its own right, but this omission acquires a different character when attention is turned to the terms of the deed concerning payment of third party claims. 3. It may not have been inevitable that third party fees would amount to $850,000, but it is notable that Mr Dean discovered in late May 2016 that Messrs L Smits and Mahommed had asserted that their combined fee charges totalled $120,000 for work purportedly done by them and Vestecorp during the period 9 May 2016 to 31 May 2016 (see PJ[669]). In defence to this claim, Messrs L Smits and Mahommed and Vestecorp admitted that they had done the work as alleged. The defence pleaded that this was only part of the work they had performed, and reference was made to other Services having been rendered. In particular, the defence referred to Services in a specified Vestecorp tax invoice in the amount of more than $60,000. The defence also pointed to a tax invoice issued by Mr L Smits personally on 19 September 2018 in an amount in excess of $200,000. In addition, in the defendants' closing submission below, reference was made at [42] to Mr L Smits having issued lump sum bills to BAD Nominees in the amounts of $138,380 and $133,509 dated 12 December 2017 and 30 March 2018 respectively, which the defendants claimed were properly particularised and not challenged in cross-examination. Furthermore, it is significant that the effect of the 20 March 2018 deed was to deny BAD Nominees any capacity to monitor or question the fees claimed by third parties, including all professional or consulting expenses in respect of any affairs of BAD Nominees, including legal costs of proceedings between BAD Nominees and BLE in 2017 as well as legal costs of proceedings between Mr Dean and the attorneys in 2017-2018 (see cl 3). In light of all these matters, there was ample material to justify the primary judge's finding that the total fees could exceed $850,000. 4. Contrary to the appellants' contention that there was no reason to find that, as at 20 March 2018, the attorneys would likely claim fees to which they were not entitled under the 9 May 2016 agreements, there was some such evidence, including the evidence referred to immediately above concerning the claimed amount of $120,000. Moreover, as previously noted, the effect of the 20 March 2018 deed was to remove any right by BAD Nominees to scrutinise and verify such fees. 5. The appellants' claim that Messrs L Smits and Mahommed were not entitled to make "fraudulent fee claims" under the 20 March 2018 deed is hardly compelling. It would be surprising for any deed to provide so blatantly. More significantly, however, the deed entitled them to make fee claims on Garslev as to amounts allegedly owing to them from BAD Nominees, which Garslev was obliged to pay in its absolute discretion and without having any obligation itself to ascertain the validity of those claims. 6. The appellants' claim that there was no reason to find, as at 20 March 2018, that Messrs L Smits and Mahommed would likely make claims that exceeded any genuine debt is rejected for the same reasons as given in sub-para (d) above. 7. The issue was not that the attorneys were entitled under the 9 May 2016 agreements to be paid fees for their services to BAD Nominees, but rather the way in which the verification, scrutiny and payment of those fees was taken entirely out of BAD Nominees' hands and transferred to Garslev (which had no particular interest or obligation to ascertain the validity of the fees claimed and, indeed, had an interest in reducing its liability to pay BAD Nominees $850,000 for the transfer). 8. The primary judge was entitled to conclude that these features made the whole arrangement uncommercial from the perspective of BAD Nominees. The appellants' claim that the transfer of the property to Garslev was not a "benefit" to which it was not entitled is rejected. As the primary judge pointed out at PJ[672(2)], the effect of the 20 March 2018 deed was to give Garslev the benefit of making further deductions from the transfer price of $850,000 with reference to future fee claims by specified third parties in circumstances where those fee claims would have to relate to work ostensibly done by the third parties for BAD Nominees, but, in fact, for the benefit of Garslev as the assignee of BAD Nominees' rights. 9. The appellants' claim that the $850,000 was payable in all events overlooks the fact that there was no definite time for that payment to occur and the third party fees could exceed that amount. 10. For the reasons given above, the primary judge was correct to conclude that the features of the 20 March 2018 deed, together with the other deeds, were uncommercial and resulted from actions taken by Messrs L Smits and Mahommed in breach of their fiduciary duties. 11. The primary judge was correct to find that the relevant deeds were not commercial transactions. The primary judge made explicit at PJ[703] that her finding that there was a dishonest and fraudulent design was based on the reasons given at PJ[727]-[745]. Those reasons are comprehensive and compelling and amply satisfy the Briginshaw standard. 12. I do not accept the appellants' pleading objection to the effect that after "rejected and incorrect matters were re-excised", the pleading of the dishonest and fraudulent design "was at best opaque". The plaintiffs' pleaded case below contained allegations that there was both a Garslev conspiracy and an Attorney conspiracy. The former claim was not accepted by the primary judge and her Honour found it unnecessary to determine the latter claim (see at [14] above). But the plaintiffs' claim that there was a dishonest and fraudulent design was not tied to those particular allegations alone. 13. The plaintiffs pleaded in no uncertain terms at [170] of the third further amended statement of claim that the conduct of Messrs L Smits and Mahommed "was a dishonest and fraudulent design". This was particularised by reference to [144] to [169] of the pleading which all related to the 20 March 2018 deed. The particulars were partly based on allegations concerning the Garslev conspiracy, but other matters were pleaded in support of the claim of dishonest and fraudulent design. These matters included relevant terms of the 20 March 2018 deed; the value of the secured rights; the attorneys' failure to render any invoices to Mr Dean as at the date of the deed; the claim that the attorneys did not intend to charge for work actually done at a "fair, reasonable and proportionate rate"; the claim that Messrs L Smits and Mahommed were subject to a fiduciary duty not to act in a conflict of interest; particulars as to how that duty was breached; relevant provisions of the Power of Attorney; and how the Power of Attorney was used as a fraud on the power. 14. The plaintiffs' claim that there was a dishonest and fraudulent design was also made plain at [204] of the plaintiffs' opening submissions (emphasis added to demonstrate that the claim was not dependent upon establishing the Garslev conspiracy): …at a minimum, the terms of the Deeds gave notice to Garslev and Jac Smits that Mahommed and Smits were fiduciaries and were using their power as fiduciaries in conflict and for profit, and this is sufficient to prove their knowing involvement in a fraudulent and dishonest design (the second limb of Barnes v Addy). 1. As to the claim that the finding that there was a dishonest and fraudulent design was not squarely put to Messrs L Smits and Mahommed in cross-examination, that submission is also rejected. 2. It is important to bear in mind that conduct need not be morally reprehensible for it to constitute a dishonest and fraudulent design (see Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 at [165], [173]). 3. As defendants to the proceedings, Messrs L Smits and Mahommed are assumed to have knowledge of the pleadings. Moreover, in relation to Mr L Smits, he was subject to a lengthy cross-examination about his understanding of the Garslev deeds. He was repeatedly asked to explain how the deeds were in BAD Nominees' interests as opposed to the interests of himself, Mr Mahommed and Garslev. Although, as the respondents' counsel (Mr Allen) conceded, it was not put to Mr L Smits (or presumably Mr Mahommed) that they were involved in a fraudulent and dishonest design, the transcript confirms that they were both being accused of dishonesty. For example, there was the following exchange in the cross-examination of Mr L Smits regarding cl 2 of one of the 5 November 2018 deeds: Q. You wrote clause 2 so you could get away with ripping off Nominees by taking the value of the nine lots and leaving Nominees with nothing. That's the case isn't it? A. No it's not. That wasn't my intention, and - Q. You were no better than a thief were you? A. I object to that. I object to your constant vilification of myself. I'm not trying to be anything of the sort. 1. Another example relates to the following exchange when it was squarely put to Mr L Smits that there was a "scheme" which was designed to benefit him and Garslev: Q. What happened in March 2018 is that you, your brother and Mr Mahommed hatched a scheme whereby Garslev would be given the nine lots for no consideration, Garslev would immediately on sell the properties for a profit and the money would then be put into the Yeppoon development for your and Garslev's profit? A. No that's simply untrue, and I had no such, no such discussion. I don't even know whether Jack Smits - what part of the moneys he intended to use for that purpose. I expected he would use some of the money for that purpose. But he was also - he was also owed over a million dollars himself on his loan account so what he did with his money if it came into the company, could have repaid part of his own debt. I mean it's up to him, he's a director, he was going to determine the disposition of those funds as he saw fit. 1. As to Mr Mahommed, not only should it be presumed that he was familiar with the pleadings, he was also subject to a lengthy cross-examination which should have left him in no doubt that he was being accused (together with Mr L Smits) of acting dishonestly and in flagrant breach of his duties as an attorney. For example, there was the following exchange in cross-examination following Mr Mahommed's evidence that Garslev would develop the nine Beechworth lots which were transferred to it under the 20 March 2018 deed: Q. You agree that your story that Garslev was going to develop the lots is a fairy-tale? A. No. Q. Do you also agree that your intention as of March 2018 was to have Garslev eventually pay you and Mr Smits at least $850,000 between you? A. No. Q. You'd agree that the effect of the transactions evidenced by the three deeds is that Garslev will eventually pay you and Mr Smits $850,000 between the two of you? A. They'll pay the creditors. Q. And who are the creditors? A. The creditors are myself, Vestecorp, and Smits' lawyers and Smits individual. We had - Q. Do you agree that in March 2018 you were going to raise invoices for work that you didn't perform in order to justify the deed entered on 20 March 2018 and the subsequent deeds entered on 5 November 2018. A. No.

Ground 4b (whether Garslev and Mr J Smits had the requisite knowledge of the "dishonest or fraudulent" design)

1. The appellants raised yet another pleading objection in relation to the primary judge's finding that Mr J Smits had sufficient knowledge of the dishonest and fraudulent design, which knowledge was attributed to Garslev.
2. Having regard to [181] and [182(d)] of the third further amended statement of claim, the appellants submitted that the plaintiffs raised four allegations concerning Mr J Smits and Garslev, namely that they: 1. would have known of a dishonest and fraudulent breach of fiduciary duty; 2. would have been alive to the possibility of a breach constituting a dishonest and fraudulent design; 3. would have known of some other form of dishonesty perpetrated by Messrs L Smits and Mahommed; and 4. would have been alive to the possibility of some other form of dishonesty perpetrated by Messrs L Smits and Mahommed.
3. The appellants contended that these allegations lacked clarity and were not adequately expressed so as squarely to indicate to Mr J Smits how the plaintiffs put their case against him and Garslev. They emphasised that Mr J Smits was entitled to rely upon a fair reading of the pleadings in deciding whether or not he should give evidence. The appellants also criticised the plaintiffs for having pleaded alternative states of mind. These matters were developed in the appellants' written submissions filed on 20 October 2022 at [63] to [71]. They contended that neither Mr J Smits nor Garslev knew with the requisite particularity and clarity what the plaintiffs' case was and that it was significant that the plaintiffs did not call Mr J Smits as a witness.
4. As to Mr J Smits' understanding of the 20 March 2018 deed, the appellants submitted that it was not an easy read, even for a lawyer. Merely because there was evidence that Mr J Smits had read the deed did not mean that he understood it, contrary to the primary judge's finding at PJ[726]. The appellants emphasised that there was no evidence as to what legal advice Mr J Smits received in respect of the deed. For these reasons, the appellants submitted that there was no basis for the primary judge to find that Mr J Smits had actual knowledge of the features of the transaction.
5. The appellants also challenged the primary judge's finding at PJ[727] that Mr J Smits did not act reasonably and honestly because he failed to make inquiries about the Power of Attorney. The appellants submitted that these findings cannot stand because: 1. it is "mere speculation" as to whether or not Garslev did or did not seek, or take, or heed any, and if so, what, legal advice; and 2. the primary judge's finding, based upon Mr L Smits' evidence, that Mr J Smits had received legal advice was made in the absence of knowing what the terms of that advice were.
6. For the following reasons, this pleading objection is also rejected. First, the appellants have incorrectly summarised the plaintiffs' allegation relating to this subject. They omitted to mention [171] to [180] of the third further amended statement of claim which also contains additional relevant pleadings on this subject which were not limited to the unsuccessful claims of a Garslev conspiracy. For example, it was pleaded that Mr L Smits knew of the terms of the 20 March 2018 deed and that his co-attorney Mr Mahommed was executing the deed pursuant to the Power of Attorney; that he knew from the terms of the deed that the Power of Attorney was not being used in the interests of BAD Nominees and instead in the interests of Messrs L Smits and Mahommed; and he failed to make any inquiries as to Mr Dean's knowledge and approval of the deed.
7. These pleadings were sufficient to put Garslev and Mr J Smits on notice of the claim that they had knowledge of the dishonest and fraudulent design.
8. Secondly, I see no substance in the appellants' complaint that Mr J Smits and Garslev had inadequate notice of the claims against them because alternative states of mind were pleaded (referring to the terms of [181] and [182(d)] of the pleading). The plaintiffs were entitled to plead the case in the alternative. The appellants' complaint is not strengthened by the fact that Mr J Smits elected not to give evidence. That was his forensic choice which he presumably took on advice. There is no basis to conclude that this decision was made because he did not have a case to answer having regard to the pleadings outlined above.
9. The written opening confirmed that the plaintiffs' case was that Garslev and Mr J Smits had knowledge of the dishonest and fraudulent design. The plaintiffs' counsel contended at [275] of the opening submissions that equitable compensation and a constructive trust should be ordered against Garslev because it had either constructive or actual knowledge that BAD Nominees' property was being taken in breach of fiduciary duty. Furthermore, it was explicitly stated at [278] that constructive notice was sufficient and that, as agent of Garslev, Mr J Smits' actions ought to be treated as those of Garslev. In [281(b)] of the opening submissions, it was contended that one of the bases of Mr J Smits' liability was that "he was knowingly involved in a fraudulent and dishonest design".
10. Thirdly, the appellants have failed to establish any appellable error in the primary judge's finding at PJ[726] that Mr J Smits had in fact read the 20 March 2018 deed and had actual knowledge of its features. Although Mr J Smits elected not to give evidence, his brother gave evidence that he had been told by Mr J Smits immediately before the deed was signed on 20 March 2018 that he understood it and had discussed it with a third party, who Mr L Smits assumed was one of his brother's "retinue of advisers".
11. Fourthly, the appellants' challenge to the primary judge's finding at PJ[727] to the effect that an honest and reasonable person in Mr J Smits' position would have made inquiries about whether the Power of Attorney permitted Mr Mahommed to cause BAD Nominees to enter into the 20 March 2018 deed is also baseless. Her Honour was well entitled to rely upon Mr L Smits' evidence that not only did Mr J Smits have his own "retinue of advisers", but that he also had a number of lawyers in his family with whom he freely consulted.

Ground 5 (fraud on the power)

1. As noted above, the plaintiffs relied on the doctrine of fraud on the power as an alternative basis for rescinding the Garslev deeds to cover the contingency that the primary judge did not find that Messrs L Smits and Mahommed breached their fiduciary duties to BAD Nominees. Accordingly, although it was strictly unnecessary for the primary judge to determine the fraud on the power case, her Honour proceeded to do so. The appellants challenged these findings because they claimed that the findings were premised on the following two incorrect bases: 1. The attorneys were obliged to seek direction from Mr Dean for approval of their fees even though the Power of Attorney was irrevocable, because the 9 May 2016 agreements stated the circumstances in which fees were payable, at specified rates and where the services were to be provided. 2. The attorneys would inevitably render excessive fee invoices after 20 May 2018 in relation to unauthorised work.
2. In their written submissions in reply, the appellants contended that different relief would be available depending upon whether liability was based upon breaches of fiduciary duty as opposed to fraud on the power. They emphasised that because the attorneys were not parties to the 20 March 2018 deed, any breach of fiduciary duty by them could not found an order against Garslev which involved rescinding the Garslev deeds. Any such relief would depend upon some finding of procurement or knowing receipt or knowing assistance. Accordingly, the appellants claimed that if they fail in their challenge to the fraud on the power point, orders based on the primary judge's judgment could not stand.
3. The appellants said that these matters did not involve mere "procedural points". They claimed that the primary judge's orders were based on the findings against the attorneys of breach of fiduciary duties by them and were not based upon any finding that Garslev assisted or participated in any fraud on the power (citing PJ[744]-[745]). They added that the orders made against Garslev rescinding the Garslev deeds were based on the primary judge's findings that Garslev knowingly assisted those breaches, and not upon any finding that Garslev assisted or participated in any fraud on the power by the attorneys. They submitted that it was important to understand the way in which the plaintiffs pleaded the fraud on the power case against the attorneys.
4. With respect to the 20 March 2018 deed, the plaintiffs pleaded that the use of the Power of Attorney was a fraud on the power because it was not used bona fide for a proper purpose and instead it was used for improper purposes as particularised at [169] of the pleading. The primary judge found at PJ[708] that the purpose of enabling the attorneys to determine the fees to be paid to them without determining the knowledge or approval of BAD Nominees was extraneous to the purpose for which the power was conferred. The appellants challenged this finding as being inconsistent with the terms of the 9 May 2016 agreements, as well as the terms of the consequent retainer agreements because it was under those agreements that fees payable to the attorneys were determined. The attorneys were not at large to determine what fees were payable to them.
5. As to the 5 November 2018 deeds, the appellants pointed to the plaintiffs' pleading at [273] of the third further amended statement of claim and to the primary judge's findings at PJ[709]. The appellants contended that the primary judge's findings there went beyond the pleaded matters, particularly bearing in mind the seriousness of the findings.
6. The appellants contended, moreover, that the primary judge's findings were not sustainable on the facts because the $850,000 was payable by Garslev in all events and the primary judge erred in ascribing improper purposes to them.
7. Having regard to the appellants' failure to make good its grounds of appeal relating to fiduciary duties, it is strictly unnecessary to resolve this part of the appeal. For completeness, however, I would also reject this part. Contrary to the appellants' contention, the primary judge did not find at PJ[708] that the attorneys were obliged to seek directions from Mr Dean for approval of their fees. Rather, her Honour was making the point that because the purpose of the power conferred on the attorneys by the Power of Attorney was to protect BAD Nominees' rights and interests, it was extraneous to that purpose for the attorneys to have BAD Nominees enter into the 20 March 2018 deed which had the effect of having Garslev step into the shoes of BAD Nominees in approving these fees.
8. As to the other matter raised by the appellants, although the primary judge did not make an explicit finding that it was inevitable that the attorneys would render excessive fee invoices after 20 May 2018 in relation to unauthorised work, her Honour referred several times to the fact that the obvious effect of the various deeds was to ensure that no part of the $850,000 would pass to BAD Nominees. To the extent that that conclusion was based upon an expectation that this amount would be exhausted by fees rendered by Messrs L Smits and Mahommed and Vestecorp, there was a sufficient evidentiary basis for that conclusion (see at 195] above).

Ground 6 (costs)

1. The appellants did not contend that the primary judge had erred in making the costs orders below. Rather, this ground of appeal simply turns on whether or not any of the other grounds of appeal succeed. For this reason, it is unnecessary to elaborate on it any further.

Ground 7 (the appropriateness of the relief)

1. Putting all the other grounds of appeal to one side, the appellants contended that the primary judge erred in ordering the relief which her Honour did.
2. First, the appellants submitted that no equitable compensation order should have been made against Messrs L Smits and Mahommed because they did not receive any pecuniary benefit from the matters the subject of the proceeding and Overdean should not be over-compensated for its actual proven loss. Alternatively, any such order ought to have been in the amount of $846,732.78 and not $1,058,579 as referred to in Order 7, as made below.
3. Secondly (and related to the first matter), the appellants claimed at [94] of their written submissions filed on 20 October 2022 that the primary judge erred and made an accounting error in ordering Messrs L Smits and Mahommed to pay equitable compensation to Overdean in the amount of $1,058,579 (plus interest). They claimed that the true figure should have been $846,732.78. This is because they say that the net proceeds of sale of the nine Beechworth lots were lower than as calculated by the primary judge and should have been arrived at by subtracting from the gross sale proceeds of $1,126,000 the correct expenses being $102,226 for GST, $59,621 for Settlement Costs and $117,421.02 for re-sale costs.
4. In their written submissions in reply, the appellants reiterated their claim that the primary judge had made insufficient deductions in calculating a "net" sale proceeds figure. In support of this claim, cross-references were made to the following material (noting that the figure for GST in paragraph (c) differs from the figure set out at [218] above): (a) Table 11 submissions of 24 APR 2020; Black Book Vol 1, 298; (b) the Affidavit affirmed by Mr Mahommed on 6 May 2019; at [15.5] Table A: Blue Book V1, 407-408; (c) GST of $90,090 and other statutory adjustments for land tax and council rates that were included in the transfer consideration of $1,000,000 for the 9 Lots that was provided by Garslev to BLE In liq., as acknowledged in the Points of Claim and Submissions of Overdean and Mr Dean filed in December 2018 before Parker J in BLE 2014 Administration Proceedings.
5. In their written submissions in reply, the appellants also claimed (evidently for the first time) that the primary judge had made insufficient deductions against the figure of $850,000. The following cross-references were given in support of that claim: (a) …Table 6, in the Defendants' submissions of 24 APR 2020; Black Book Vol 1, 298 and the evidence annotated there; (b) …Schedule "B" to the Amended Defence in Red Book V1, 453-454, Statement of Further Amended First Cross-Claim, Red Book V2, 465-466 and Notice of Appeal in Red Book V2, 872-874, respectively; and (c) further at Defendants' Submissions of 20 May 2019, Black Book V1, 145-154 and Defendants' Submissions of 29 August 2019, Black Book V1, 206-207;
6. Thirdly (and apparently in support of the first claim), the appellants submitted that, if the constructive trust in relation to the monies paid into Court (and later paid to Overdean) which founded the order against Garslev to account survives, this is sufficient compensation in favour of Overdean. This is because the object is to compensate Overdean as the new trustee for its actual and proven loss. The appellants submitted that neither Messrs L Smits nor Mahommed received any pecuniary benefit from the matters raised against them in the proceeding. In these circumstances, the appellants contended that it was sufficient to make orders in relation to the constructive trust monies for the respondents to receive adequate equitable compensation.
7. As to the first of those matters, no appellable error has been established in relation to her Honour's conclusion that Messrs L Smits and Mahommed should be ordered to pay equitable compensation to Overdean. Contrary to the appellants' submission, the order that Garslev account to Overdean for the net proceeds of sale does not provide sufficient compensation for Overdean. That is particularly so as matters stand at present, given that, as noted at [106] above, there is now an order that Garslev be wound up and no evidence has been adduced to the Court to indicate that the taking of accounts will fully compensate Overdean.
8. Moreover, as the primary judge noted at PJ[764], Messrs L Smits and Mahommed have an equity to prevent Overdean from enforcing against them the order for equitable compensation (including interest) to the extent that it would recover more than it had lost.
9. As to the appellants' complaint that the amount of that equitable compensation should be varied, it is necessary for them to establish that there was an accounting error in her Honour's calculation of the net proceeds of the sale of the nine Beechworth lots. Her Honour explained at PJ[749] that the gross sale proceeds amounted to $1,126,000. Her Honour then deducted from that figure stamp duty and registration fees of $57,800 and legal costs and disbursements of $9,621, relying on the figures set out in Mr Mahommed's affidavit affirmed on 8 March 2019.
10. In oral address on the appeal, Mr Clarke KC frankly and properly conceded that there was no evidence to support the figures listed in Table 11 of the defendants' submissions dated 24 April 2020. That table simply asserted amounts of $59,621 in respect of "associated settlement costs" and $117,421.02 for "re-sale costs paid by Garslev". Moreover, as noted at [219(c)] above, in their written submissions in reply, the appellants advanced a different figure in relation to the amount of GST (together with "other statutory adjustments for land tax and council rates") which was paid for by Garslev. The appellants left entirely unclear, however, which of these two figures was correct.
11. In the absence of any evidence on these matters, and having regard to the confusion in the appellants' own submissions, the appellants' claim that there was an accounting error is rejected.
12. As to the appellants' claim (which was raised for the first time on the appeal in their written submissions in reply filed on 14 November 2022) that the primary judge made insufficient deductions against the $850,000, this matter was not developed at all in either the appellants' written submissions in reply or in oral address. The appellants were content simply to make a series of cross-references to multiple other documents, including submissions and pleadings, as set out at [220] above. It would be tedious to reproduce the material the subject of those cross-references. Some of the cross-references are to material of some length, including for example, the cross-reference referred to at [220(c)] above to ten pages of the defendants' submissions dated 20 May 2019. These submissions were said to itemise invoices issued by Mr L Smits and Vestecorp to BAD Nominees, as well as an invoice dated 12 November 2018 issued by Law Albury Wodonga.
13. The Court was given no assistance at all in seeking to understand how that vast material made good the appellants' claim that the primary judge had made insufficient deductions against the figure of $850,000. The same may be said in relation to the other material which was the subject of cross-references as set out at [220] above.
14. In my view, the appellants have fallen far short of discharging their onus of establishing the alleged error. This aspect of ground 7 is also rejected.
15. As to the third matter raised by the appellants under ground 7 (see at [221] above), I have explained why I reject the appellants' submission that no order for equitable compensation should be made against Messrs L Smits or Mahommed. I do not accept that Overdean will be adequately compensated merely by orders in relation to the constructive trust monies.
16. Finally, having regard to the time which has passed since the primary judge made orders in the proceeding below, it is necessary that Order 7 dated 17 November 2021 be varied so as to take account of that passage of time.

D. Cross-appeal

1. The cross-appeal challenges the primary judge's finding at PJ[743] that Mr J Smits was not liable personally, as opposed to Garslev, under the second limb of Barnes v Addy. Her Honour gave two reasons there for that finding: 1. the plaintiffs' submissions did not explain why Mr J Smits personally (as opposed to Garslev) should be held to have knowingly assisted in the breaches of fiduciary duty by Messrs L Smits and Mahommed or why Mr J Smits should be personally liable for those breaches in which Garslev knowingly assisted (referring to Pittmore at [167]-]170] per Leeming JA, with whom Bell P and Brereton JA agreed); and 2. Mr J Smits was not a party to any of the Garslev deeds and, although he caused Garslev to enter into those deeds (with the knowledge that he had as at 20 March 2018 and 5 November 2018 respectively in his capacity as the sole director of Garslev), he had no involvement in the transactions in any other capacity.
2. The cross-appellants challenged both those reasons. As to the first, they submitted that the relevant matters were in fact addressed at [281]-[286] of their written submissions below dated 16 June 2020. It was submitted there (at [284]) that Mr J Smits' "moral obliquity is shown by the fact that he had Garslev enter the three Deeds, the terms and circumstances of which would have made it evident to an honest person that Smits and Mahommed were acting in conflict in order to profit at the expense of Nominees". The plaintiffs also submitted below that Mr J Smits would have known from the terms of the various deeds that the purpose was to take BAD Nominees' property and that this involved a breach of fiduciary duty. Reliance was placed on what Leeming JA said in Hasler v Singtel Optus Pty Ltd; Curtis v Singtel Optus Pty Ltd; Singtel Optus Pty Ltd v Almad Pty Ltd (2014) 87 NSWLR 609; [2014] NSWCA 266 at [139] (Gleeson JA agreeing): However, where the third party knows the essential facts constituting what is prima facie a dishonest breach of duty, in which he or she is participating, then without more the third party will be liable on conventional principles. It will be seen that the formulation of the categories of knowledge in Baden reflects as much. "Wilfully shutting one's eyes to the obvious" and "wilfully and recklessly failing to make such inquiries as an honest and reasonable man would make" includes studiously avoiding ascertaining whether consent has been given which is fully informed.
3. As to the second alleged error, the cross-appellants contended that her Honour erroneously considered Pittmore to be inconsistent with their claim that Mr J Smits was personally liable, contending instead that Pittmore at [169] supports their case.
4. The cross-appellants' essential argument seems to be that a company director does not escape personal liability when he or she knows the essential facts giving rise to a dishonest breach of fiduciary duty in which the director is participating merely because the company of which the person is a director entered into a contractual relationship.
5. The cross-appellants seek an order against Mr J Smits personally in similar terms to those which the primary judge made vis-à-vis Garslev.
6. In response, in their written submissions on appeal, the cross-respondents were content to rely on relevant parts of their supplementary submissions dated 20 October 2022 relating to grounds 3 to 4b of the appeal and on their written reply submissions relating to ground 5 of the appeal (fraud on the power).
7. In oral address on the appeal, when pressed by the Court to respond to the cross-appellants' challenge to the primary judge's reasoning at PJ[743], Mr Clarke KC submitted that the issue did not arise if he was successful in his argument that Garslev was not liable under the second limb in Barnes v Addy. When further pressed on the contingency that that part of the appeal failed, Mr Clarke KC submitted that a distinction should be drawn between corporate and personal liability. He submitted that Garslev's liability stemmed from Mr J Smits having signed the documents in his capacity as sole director and that he did not participate in any other way in the attorneys' alleged breach of fiduciary duties.
8. Assuming in the cross-appellants' favour that they did in fact make submissions below in support of their contention that Mr J Smits should be personally liable (see, in particular, at [284] of their written submissions dated 16 June 2020), for the following reasons I consider that her Honour was correct to reject the contention.
9. Pittmore does not support the cross-appellants' case. At [162]-[170] of Pittmore, Leeming JA addressed the proposition whether a sole director acting merely as a director of a company is liable in equity for procuring or inducing a breach of trust or fiduciary duty by the company of which he is a director. His Honour's reasons for doubting that proposition may be summarised as follows: 1. The proposition sits uncomfortably with the position in contract where a director would not be liable at law for inducing a breach of contract by his company and there is a need to ensure coherence of the law (citing, e.g., O'Brien v Dawson (1942) 66 CLR 18; [1942] HCA 8 and Tsaprazis v Goldcrest Properties Pty Ltd [2000] NSWSC 206 at [11] per Hodgson CJ in Eq). 2. The position may be different if a director procures or induces a breach of trust or fiduciary duty by the company of which he is a director acting other than in their capacity as one of the organs of the company. Leeming JA added, however, at [166] that he understood it not to have been put that the director in Pittmore acted other than in his capacity as a director of the company. 3. Although Leeming JA favoured the view that there is the same rationale underlying liability for procuring or inducing a breach of trust or fiduciary duty and liability at common law for procuring a breach of contract, his Honour noted at [169] that it was conceivable that the character of a fiduciary relationship might result in a broader approach to ancillary liability than would be the case at common law, but it was unnecessary to take that matter any further in the circumstances of Pittmore.
10. His Honour's view was only a provisional one (see at [170]); it was not necessary to reach a final view on the issue in that case. Here, the cross-appellant assumed the correctness of the discussion by Leeming JA but sought to distinguish it on the basis that the actions taken by Mr J Smits were not taken merely in his capacity as a director. It suffices here to assume the correctness of his Honour's provisional view without deciding the point.
11. I consider that the cross-appellants have not pointed to any step taken by Mr J Smits other than in his capacity as a director of Garslev.
12. Contrary to the cross-appellants' contention, the passage cited at [233] above from Hasler takes the matter no further. The correctness of the passage may not be doubted, but it says nothing about the relevant issue here, namely whether the second limb of Barnes v Addy is said to apply not only to a company, but also to a director who acts in no other capacity than as a director.
13. Apart from emphasising Mr J Smits' "moral obliquity", the cross-appellants pointed to nothing done by Mr J Smits personally (apart from signing the relevant agreements in his capacity as sole director of Garslev) which would support a finding that his actions were taken other than in his capacity as director. There was no evidence, for example, that Mr J Smits acted as he did because there were other dealings in his own personal interest which were advanced by Garslev's participation. The challenge of establishing any such dealings was not assisted, of course, by the fact that Mr J Smits elected not to give evidence in the proceeding. Although Mr J Smits had the requisite knowledge (as imputed to Garslev) of the dishonest and fraudulent design, he did not render any assistance in his personal capacity as opposed to as a director of Garslev. It is Garslev that facilitated and/or furthered the breach of fiduciary duties by Messrs L Smits and Mahommed (see the discussion of Dodds-Streeton J in Re-Engine Pty Ltd (in liq) v Fergusson (2007) 209 FLR 1; [2007] VSC 57 at [117]-[124]).
14. For these reasons, the cross-appeal should be dismissed.

E. Notice of contention

1. The notice of contention raised the following two grounds: 1. the orders against Garslev ought also to have been based on acceptance of the appellants' claims regarding fraud on the power; and 2. the orders against Garslev ought also to have been based on a finding that Garslev was liable under the first limb of Barnes v Addy.
2. Having regard to the appellants' failure to establish any of its grounds of appeal, it is unnecessary to determine the notice of contention.

F. Conclusion

1. For these reasons I propose the following orders be made: 1. The amended notice of appeal dated 1 December 2022 be dismissed. 2. The cross-appeal be dismissed.
2. My tentative view is that the appellants should pay the respondents' costs of the appeal, including reserved costs, and the cross-appellants should pay the cross-respondents' costs of the cross-appeal.
3. If any party disagrees with these proposed orders, it should file and serve within 14 days hereof brief written submissions not exceeding 5 pages as to why different orders should be made. Any response should be provided within a further 7 days thereof, with the same page limit. Final orders will then be made on the papers without a further oral hearing.

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