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Issue estoppel 54The next question concerning the 1998 Federal Court proceedings is whether those proceedings gave rise to issue estoppels binding as between GC & Co and Claude in such a way as to preclude re-litigation of the same matters in these proceedings. 55In that respect, the starting point must again be the judgment of Dixon J in Blair v Curran (above) and, in particular the passage at CLR 531-532: "A judicial determination directly involving an issue of fact or of law disposes once for all of the issue, so that it cannot afterwards be raised between the same parties or their privies. The estoppel covers only those matters which the prior judgment, decree or order necessarily established as the legal foundation or justification of its conclusion, whether that conclusion is that a money sum be recovered or that the doing of an act be commanded or be restrained or that rights be declared. The distinction between res judicata and issue estoppel is that in the first the very right or cause of action claimed or put in suit has in the former proceedings passed into judgment, so that it is merged and has no longer an independent existence, while in the second, for the purpose of some other claim or cause of action, a state of fact or law is alleged or denied the existence of which is a matter necessarily decided by the prior judgment, decree or order." 56Dixon J went on (at 532) to say that only that which is "legally indispensable to the conclusion" is precluded; and that, in matters of fact, the issue estoppel is "confined to those ultimate facts which form the ingredients in the cause of action, that is, the title to the right established". 57Reference was also made in submissions to the formulation by Barwick CJ in Ramsay v Pigram [1968] HCA 34; (1968) 118 CLR 271 at 276: "Long standing authorities, in my opinion, warrant the statement that, as a mechanism in the process of accumulating material for the determination of issues in a proceeding between parties, an estoppel is available to prevent the assertion in those proceedings of a matter of fact or of law in a sense contrary to that in which that precise matter has already been necessarily and directly decided by a competent tribunal in resolving rights or obligations between the same parties in the same respective interests or capacities, or between a privy of each, or between one of them and a privy of the other in each instance in the same interest or capacity. The issue thus determined, as distinct from the cause of action in relation to which it arose, must have been identical in each case. Of its nature such an estoppel must be available to and operative in respect of each party; or, as it is said, estoppels must be mutual." 58GC & Co maintains that certain matters were "necessarily decided" as the foundation of or justification for the declaration against Claude ultimately made by the Federal Court (see paragraph [29] above). The matters "necessarily decided" are said to be: (a) that the division of the $9.5 million settlement proceeds between Claude and GC & Co was agreed by Claude and Gerard for the sole purpose of reducing capital gains tax liability of GC & Co on those moneys; (b) the $9.5 million was paid to GC & Co and received by it in settlement of its claim against CSIRO and no attempt was ever made genuinely to estimate a sum for any personal claim by Claude; (c) when the purported division was agreed in July 1993, neither Gerard nor Claude regarded the $4.25 million as Claude's money; and (d) the purported division did not impose on GC & Co any obligation to pay Claude any part of the $4.25 million. 59The reasons for judgment published by Davies J may be examined in the search for what was "necessarily decided" by the Federal Court. This is made plain in the judgment of Walsh JA in Lombardo v Stuart Bros Pty Ltd (1967) 68 SR(NSW) 159 at 162: "One can look at the reasons given by the Commission to elucidate what was decided and to ascertain what findings were indispensable bases of the decision." 60The starting point, however, must always be "what was decided". Resort can be had to accompanying reasons only for the purpose of elucidation. In the present case, "what was decided" is contained within the four corners of the declaration (see paragraph [29] above). The terms of that declaration, looked at in isolation, make it clear that the court decided: (a) that Claude treated the $4.25 million loan account with GC & Co as his entitlement to be drawn down at his will; (b) that Claude drew upon the loan account as he saw fit; (c) that Claude caused the passing of a resolution of directors of GC & Co allowing for the payment of retrospective interest on the loan account; and (d) that the actions in the foregoing (a), (b) and (c) were "oppressive and unfairly prejudicial" to the members of" GC & Co. 61The preoccupation here is with the loan account. The main elucidating parts of the reasons for judgment are paragraphs [12], [13] and [15] as set out at paragraph [46] above. Relevant findings in those paragraphs are that Claude and his father Gerard did not, at the time of the receipt of the CSIRO settlement proceeds, regard the sum of $4.25 million as Claude's money; that, in Gerard's lifetime, expenditure from loan accounts did not occur without his approval; that Claude could not have drawn down the $4.25 million without Gerard's agreement; that, except as to legal expenses and perhaps other like matters, Claude did not draw down on the loan account during Gerard's lifetime; that, after Gerard's death, Claude resorted to the GC & Co loan account for regular living expenses and other personal expenses; that the appropriate course for Claude to have taken was to arrange for a fair remuneration, not to apply the funds of the company as he chose; that Claude drew $1.3 million from the loan account for the purchase of the Dairy Farm and did so without seeking or obtaining the approval of the other shareholders of GC & Co; that Claude took the view at that time that the funds in the loan account were his and, in addition, that he had a moral claim to have GC & Co provide him with a home; and that the action of Claude and Anne-Marie, as directors of GC & Co, in resolving that the $4.25 million had been lent on terms as to reasonable interest that he could claim should he choose to do so had no justification. 62The oppression of which Claude was held guilty was, in effect, treating the loan account as his own to resort to as and when he saw fit, instead of maintaining, after Gerard's death, the practice of not drawing on the account without agreement - although with the requirement for agreement having become, after Gerard's death, a requirement for the agreement of the other GC & Co shareholders, instead of the agreement of Gerard. 63Necessarily implicit in these findings, however, is a further finding, namely, that the $4.25 million was not Claude's to deal with as he wished and, therefore, that the so-called loan account was not a loan account at all, in the ordinary sense of a reflection of the company's obligation to pay without question as and when payment was demanded. Had the situation been of that kind, there could and would have been no objection to Claude's making demands for payment and receiving payment. The finding that the $4.25 million was not Claude's to deal with as he wished is the product of three further findings: at paragraph [12] of the reasons: "I am satisfied that the split was agreed between Claude and his father with a view to reducing the capital gains tax otherwise payable on the $9.5m. I am satisfied that Gerard and Claude did not at the time regard the sum of $4.25m as Claude's money." also at paragraph [12]: "I am satisfied that the $9.5m was paid to GC & Co and received by it in settlement of its claim against CSIRO and that no attempt was ever made genuinely to estimate a sum for any personal claim by Claude including any claim falling within the terms of s160ZB(1)." at paragraph [15] of the reasons: "I am satisfied that neither Gerard nor Patrick, who signed the letter to Garrett & Walmsley of 6 July 1993, looked upon the $4.25m as Claude's money . . ." 64It follows that the contention of GC & Co at paragraph [58] above is correct and that GC & Co and Claude are, in these proceedings, bound by the findings (a) to (d) there set out.

Events leading up to the CSIRO settlement 65The findings just mentioned are of central significance in the resolution of the present proceedings. They are not, however, dispositive and it is necessary to refer to essential matters of fact. 66In approaching the facts, I note the submission made on behalf of Claude that, where issue estoppels arise from findings in earlier proceedings, the party having the benefit of them must either make do with the findings thus made available or abandon them and seek to prove relevant matters afresh. I am not persuaded that this is so. Issue estoppels put established facts at the disposal of the parties and the court. They must accept and have regard to those facts even if some attempt to call them into question is made. But those facts do not constitute the whole of the available facts. It is open to the plaintiff to prove other facts in the ordinary way. 67I therefore turn to the evidence. 68In about 1987, representatives of GC & Co and representatives of CSIRO began discussions about possible application of certain soil improvement technology to land of GC & Co. On 10 July 1987, a written agreement was entered into between GC & Co and CSIRO. A joint venture company called "Cassiro Pty Ltd" was formed. Disputes later arose and, in 1992, GC & Co commenced proceedings in the Federal Court against CSIRO, Cassiro and a CSIRO-owned company (Sirotech Pty Ltd). Shortly afterwards, CSIRO filed proceedings in the Federal Court seeking winding up of GC & Co on the just and equitable ground. 69In the proceedings instituted by GC & Co, a draft pleading was prepared which referred to several matters that CSIRO and Sirotech had allegedly published to various Government persons which, it was said, were defamatory of GC & Co. There were also allegations of injurious falsehood perpetrated by CSIRO and Sirotech against GC & Co. 70Moves towards settlement were in due course made. Claude, as secretary of GC & Co, wrote to the chairman of CSIRO on 5 May 1993 providing "some numbers that support our demands" - apparently demands communicated at a meeting a few days earlier. Various items said to warrant compensation were then set out. They totalled more than $56 million. Among them was: "Damages to the name, reputation and standing of GC & Co, Cassegrain Family name, Cassegrain Group of companies, and Claude Cassegrain and his family as a result of being publicly associated with a failed venture involving bitter litigation and disruption to the family and their associated business activities - $5,000,000." 71The letter concluded by saying: "... we would accept a payment of $15,000,000 tax effective plus legal costs on an indemnity basis ...". 72On 16 June 1993, CSIRO's solicitors (Blakes) wrote to GC & Co's solicitors (Garrett & Walmsley) offering to settle the proceedings on the basis of a payment of $7.25 million to GC & Co, subject to CSIRO obtaining Ministerial approval. That amount was said to represent $4.32 million in respect of damages claimed by GC & Co, $2 million for costs and $930,000 for transfer to CSIRO of GC & Co's interest in certain technology. Blakes' letter stated that comprehensive releases would be required from GC & Co and relevant associates, including Claude. 73This proposal was not accepted by GC & Co. The dispute went to mediation over three days. On the second of those days (29 June 1993), Garrett & Walmsley wrote to Blakes saying that they had instructions to seek leave to amend in the first proceeding by adding "counts in defamation and injurious falsehood in relation to communications between servants and agents of CSIRO and Sirotech on the one hand and the State Bank on the other". This was no doubt a reference to the draft pleading already mentioned. 74This letter from GC & Co's solicitors did not refer to any proposal to add Claude as a plaintiff. On the face of things, it was the existing plaintiff, GC & Co, which was the victim of the alleged defamation and injurious falsehood. The draft pleading (never in fact filed) did not refer to any defamation claim by Claude and he never became a party to the Federal Court litigation. 75The mediation resulted in an offer of $9.5 million by CSIRO to GC & Co. This was communicated on 2 July 1993. 76Four days later, on 6 July 1993, GC & Co, in a letter signed by Gerard and Patrick, informed Garrett & Walmsley: "It was resolved at an extraordinary general meeting held by the shareholders on Saturday 3 July 1993 that the following offer in settlement of the dispute would be accepted by Gerard Cassegrain & Co Pty Ltd: $5.25m to Gerard Cassegrain & Co Pty Ltd ($4.32 in respect of damages, $.930 sale of GC & Co's shares in Cassiro Pty Ltd). $4.25m in personal damages payable to Claude Cassegrain." 77Claude himself wrote to Garrett & Walmsley on the same day saying that he was "prepared to accept in settlement of the proceedings $4.25m as personal damage". He added: "This has been discussed with the company at an extraordinary general meeting held by the shareholders on Saturday 3 July 1993." 78The meeting thus referred to was apparently a discussion on 3 July 1993 involving Gerard, Francoise, Claude and Mr Walmsley, solicitor. Garrett & Walmsley were thus told by Gerard, Patrick and Claude himself that GC & Co had agreed that $4.25 million out of the negotiated $9.5 million was to pass to Claude. 79On 6 July 1993, Garrett & Walmsley sent a letter to Blakes proposing various matters to be included in the settlement documentation and said: "1. Payment of $9.5 million to occur on execution and exchange of settlement documentation and in accordance with the written authority of Gerard Cassegrain and Co Pty Ltd ('GC'). 2. In consideration of the personal releases etc by Claude Cassegrain the amount of $9.5 million be paid as follows: (a) $5.25 million to Gerard Cassegrain and Co Pty Ltd ($4.32 million on account of damages and $930,000 consideration for share transfer); (b) $4.25 million to Claude Cassegrain." 80At that point, the $4.25 million proposed to be paid to Claude had not been characterised in any correspondence as damages for defamation or damage to reputation. It had not been tied to any entitlement or loss on Claude's part. 81On 7 July 1993, GC & Co's external accountant, Mr Griffith, wrote to Mr Farrell of Deloiotte Touche Tohmatsu. The letter is headed "Re Section 160ZB(1) CGT" and begins by referring to a conversation the previous day in relation to "the effects of Part IIIA on the receipt by taxpayers on compensation for damages". Mr Griffith then set out a request for written advice on capital gains tax. He described the position as follows: "The court proceedings have reached the position where mediation was completed last week and a total sum of money for compensation was agreed to between the parties. The compensation has two components to it - Compensation to the company for loss sustained by it on account of the defendant's failure to discharge its duty of care to the company. An amount payable to the person (director) for defaming the good name of the person. Would you please advise me of the CGT implications of each of the amounts agreed to ..." 82This advice was given by Mr Farrell in a letter dated 9 July 1993. It was to the effect that, under s 160ZB(1) of the Income Tax Assessment Act 1936 (Cth), a capital gain is not to be taken to accrue to a taxpayer by reason of the obtaining of a sum by way of compensation or damages for wrong or injury suffered to his or her person or in his or her profession or vocation; and that there was "little doubt" that payment of compensation to the individual would not be treated as a capital gain. Mr Farrell also advised that it was unlikely that a company would merit this favourable treatment since a company could not suffer injury in relation to "his or her person". 83GC & Co, through its solicitors, then renewed requests to CSIRO's solicitors for part of the settlement sum to be payable to Claude and, for the first time, identified defamation as the basis. CSIRO resisted any such element of the settlement. It said that, even if Claude had been a party to the litigation and had pursued a defamation claim, he would not have recovered more than about $500,000. CSIRO also referred to its responsibilities as a Commonwealth instrumentality and said that it did not wish to be a party to a document that did not fully represent the true position. In short, CSIRO refused to countenance either an apportionment between GC & Co and Claude or any acknowledgement of any claim in defamation on Claude's part to which any part of the overall sum was attributable. It obviously thought that $4.25 million was a ridiculous sum for any defamation settlement. 84The relevant deed ("Deed of Settlement and Release") was executed on 27 September 1993, along with numerous other documents effecting the settlement. The parties to the deed were GC & Co, Claude, CSIRO, Sirotech and Cassiro. The operative provisions run to 54 pages and there are numerous schedules and annexures. For present purposes, the focus should be upon the provisions involving Claude. He is referred to in the deed as "Cassegrain". GC & Co and Claude together are designated "the Cassegrain Parties". Other relevant provisions are as follows:

1. "Cassegrain Claim" is defined as "any present or future or future action, proceeding, claim or demand, which GC & Co, Cassegrain, Cassiro or any Associate of GC & Co or of Cassegrain may bring against SCIRO or Sirotech or against any Associate of CSIRO or Sirotech, whether or not the action, proceeding, claim or demand is identified or known at the date of this Deed or at Completion with certainty or at all, and whether or not the action, proceeding, claim or demand also involves or may involve some other party, arising directly or indirectly in any way from or referable to" certain stated matters.
2. Clause 2.1 states that the deed does not become binding on the parties unless and until CSIRO has paid $9.5 million "to or at the direction of the Cassegrain Parties".
3. Clause 2.2 states that the $9.5 million "will be referable to" certain specified matters as follows: (a) $8,835,083 to discharge of all liabilities which "any party to this Deed" has to pay costs or damages to any other party to the deed (whether under the first proceedings or otherwise) and the benefit of the covenants and other promises of the Cassegrain Parties under the deed; (b) $503,667 for the transfer of certain rights by GC & Co to "CSIRO or its nominee"; (c)$155,000 for the transfer of certain machinery; and (d) $6,250 for a specified "net difference" in the value of goods exchanged between GC & Co and CSIRO.
4. By clause 6.1, GC & Co, Cassiro and Claude accepted certain restraints on future activities.
5. Clause 7 provided for the parties to seek the making of certain orders by consent to put an end to the two Federal Court matters.
6. Clauses 8, 9, 10 and 11 recorded certain comprehensive releases and indemnities given by and to "GC & Co, Cassegrain and Cassiro". 85The deed did not refer to any division of the $9.5 million between GC & Co and Claude or refer to any specific interest of anyone in any part of the proceeds. 86The $9.5 million was paid by CSIRO in accordance with a written direction given to it by GC & Co and Claude. They were the "Cassegrain Parties" and, as has been noted, clause 2.1 contemplated payment of the $9.5 million "to or at the direction of the Cassegrain Parties". The written direction required the following payments by CSIRO: $8,309,502 to State Bank of New South Wales $1,170,000 to Garrett & Walmsley $20,498 to Garrett & Walmsley "on account of income tax calculated for Cassiro Pty Limited". 87GC & Co was, at the time, heavily indebted to the State Bank. By letter to the bank dated 7 July 1993, Claude said that "the whole of the proceeds" of the CSIRO settlement were to go to the bank, after providing for legal costs amounting to $1,374,443.10 as at 30 June 1993. The sum of $8,309,502 received by the bank on settlement was applied in reduction of GC & Co's liability to the bank. Upon receipt of it, the bank released security it held over property to be transferred to CSIRO as part of the settlement. 88The bank had provided GC & Co with funding specifically for the CSIRO litigation. It had done so on the express condition that any proceeds would be applied in reducing GC & Co's debt to the bank. When settlement with CSIRO was imminent, Garrett & Walmsley wrote to the bank as follows by letter dated 27 August 1993: "The settlement sum is payable as damages to both GC & Co and Mr Cassegrain. Clause 2.1 in its current form is a 'compromise' clause. The parties have decided (to date) not to express the apportionment of that sum between GC & Co and Mr Cassegrain. However, as we understand it, there is no disagreement that a significant sum is being paid to Mr Cassegrain in respect of his own claims identified in the recitals, his releases and the restraints of trade imposed upon him. The Bank's security at present only covers the damages (net of costs) payable to GC & Co. Our clients intend to pay to the State Bank that amount of damages due to Mr Claude Cassegrain personally (after provision for costs). In this respect it might be desirable for him to execute a Deed of Assignment to the Bank in respect thereof, and we seek your advice accordingly. The charge from GC & Co to the Bank, and Mr Cassegrain's proposed assignment, will cover all settlement proceeds after payment/provision of costs." 89The essential message here was that, although part of the total receipt from CSIRO would be "damages due to Mr Claude Cassegrain personally", the whole (less legal costs) would be received by the bank in reduction of GC & Co's bank debt, with Claude perhaps executing "a deed of assignment" to the bank in respect of his part. 90On or about 31 October 1993, an entry was made in GC & Co's books of account crediting $4.25 million to a loan account in the name of Claude, which account, immediately before that point, reflected a balance of $178,095.16 in Claude's favour. 91Thereafter, Claude drew upon his loan account with GC & Co for personal expenses. Ledger entries relating to, for example, David Jones, St Joseph's College, Peters of Kensington and State Bank Visa bear this out. There are also entries concerning the transfer of the Dairy Farm. These will be examined in some detail presently.

Subsequent taxation matters 92It is necessary to refer next to certain taxation litigation that began in or about 2000. 93The litigation arose from objections by GC & Co against its taxation assessment for the year ended 30 June 1994. The Commissioner of Taxation ("ATO") originally assessed GC & Co on the basis that the full $9.5 million from the CSIRO settlement should be included in GC & Co's assessable income. An objection was disallowed by the ATO and GC & Co appealed to the Administrative Appeals Tribunal: Re Gerard Cassegrain & Co Pty Ltd and Commissioner of Taxation [2005] AATA 72. There was then an appeal by GC & Co to the Federal Court (Lindgren J) on questions of law: Gerard Cassegrain & Co Pty Ltd v Commissioner of Taxation [2007] FCA 415; (2007) 66 ATR 198. The court set aside the AAT decision and remitted the matter to the AAT to be determined according to law. 94The matter was then determined again by the AAT: Gerard Cassegrain & Co Pty Ltd v Commissioner of Taxation [2010] AATA 12; (2010) 78 ATR 328. The determination eventually concerned the status, for tax purposes, of the $8,835,083 that formed the bulk of the apportionment under clause 2.2 of the settlement deed (see item 3(a) of paragraph [84] above). 95These taxation proceedings cannot, of course, be regarded as the source of facts or findings binding on the parties to the present proceedings. Nor, as I have said, can the decisions be called in aid as evidence of facts found in the proceedings: Evidence Act , s 91. GC & Co, however, places reliance on submissions made in the taxation proceedings. 96Reference is made, in particular, to written submissions filed by CG & Co with the AAT on 10 July 2009. At paragraph 93 of those submissions, GC & Co stated how the $8,835,083 should be apportioned: "The amount of $8,835,083 is to be apportioned by taking into account: (a) allowance to Claude Cassegrain for compensation for foregone remuneration discounted to its NPV as at 27 September 1993: $9.722m (before tax); (b) a deduction from paragraph (a) above for income actually earned by Claude Cassegrain during the 19 year loss period allowed for by Mr Costello: ($1,220,765); (c) payment to Claude Cassegrain for general reputation damages for his defamation claim: $500,000; (d) payment to Claude Cassegrain for his legal costs: $200,000; (e) payment to GC&Co for reimbursement of its legal costs in the Federal Court proceedings of $2,503,449." 97It was then stated in paragraph 94: The combined effect of those amounts is that, by the Deed, Claude Cassegrain disposed of assets valued as at 27 September 1993 at $9,201,235 (sub-paragraphs 103(a) + 103(c) + 103(d) - 103(c) above). GC&Co gave up assets valued at $2,503,449 (sub-paragraph 103(e) above). In consideration for the above they received the apportioned amount of $8,835,083 under cl. 2.2(a) of the Deed." 98The references here to sub-paragraphs 103(a), 103(c) and 103(d) are confusing. It seems that the references should be to 93(a), 93(b) and 93(d); also that "103(a) + 103(c) + 103(d) - 103(c)" should read "93(a) + 93(c) + 93(d) - 93(b)". 99The proposition advanced by GC & Co was thus that, under the CSIRO settlement, GC & Co "disposed of" assets to the extent of $2,503,449 and Claude "disposed of" assets to the extent of $9,201,235, so that GC & Co's share of the $8,835,083 was the proportion that $2,503,449 bears to the aggregate of $2,503,449 and $9,201,235. 100Particularly noteworthy is the point that the element said to be attributable to Claude for "general reputation damages for his defamation claim" was only $500,000. 101However, the ATO's statement of findings produced in 2000 in consequence of CG & Co's appeal to the AAT contains the following under a heading "Taxpayer's Contentions": "Claude Cassegrain has contended that the $4,250,000 settlement payout was made by CSIRO to settle his defamation action against CSIRO" [original emphasis]. 102If one then moves to the decision of Lindgren J of 23 March 2007, one finds reference to the need for the applicants (relevantly, GC & Co - Claude was not a party) "to prove that Claude Cassegrain provided part of the consideration for the sum of $9.5 million". Then follows: "They did so, because they proved not only that he gave the surrender of all and any existing claims, but also that he gave contractual undertakings." 103The documents concerning the taxation proceedings are of use in this case only to the extent that they record statements by GC & Co (or by its lawyers on its instructions) or recordings by the ATO, the AAT or the Federal Court of things so said by way of submission. It is clear that it was Claude who acted for CG & Co in these respects. 104The significant point is that, as is clear from paragraph [101] above, GC & Co initially took the line with the ATO that $4.25 million of the settlement moneys had gone to Claude to settle his own "defamation action against CSIRO" and that GC & Co subsequently changed tack. Once it had been held by Lindgren J (see paragraph [102] above) that GC & Co had succeeded in showing that Claude had provided part of the consideration for the $9.5 million by surrendering claims and giving contractual undertakings, GC & Co's focus shifted to attributing sums to a range of elements of the consideration so provided by Claude: see paragraph [96] above. The overwhelmingly predominant element then became foregone remuneration with only a relatively modest $500,000 for "general reputation damages for his defamation claim".

The first Dairy Farm transfer and the consideration for it 105On 2 September 1996, Claude and Anne-Marie, as directors of GC & Co, resolved that the company transfer the Dairy Farm property to Claude and Felicity as joint tenants for a consideration of $1 million; and that there also be transferred to them, for the written down book value thereof, the cattle, milk quota, plant and equipment and other assets of the dairy business. 106A transfer under the Real Property Act 1900 between GC & Co as transferor and Claude and Felicity as transferees dated 14 September 1996 was executed under the common seal of GC & Co. The transfer was for an expressed consideration of $1 million and the meeting of GC & Co's directors that resolved that the company should undertake the transaction had before it a valuation of the Valuer-General supporting that consideration. There is no suggestion that the transaction was at an undervalue from GC & Co's perspective. 107The transfer was not signed personally by either Claude or Felicity as transferee. It was accepted by the solicitor for the transferees, Mr McCarron. The transfer was registered on 10 March 1997. 108The consideration for the transfer of the land and other property was debited to Claude's loan account, in the sense that the account was adjusted to reflect a reduction in the balance owing by CG & Co to Claude equal to the amount of the consideration. This was in accordance with a resolution passed by the directors at the meeting of 2 September 1996: "RESOLVED that the Company debit the loan account of Claude Cassegrain in the books of the Company for the amount of the consideration payable pursuant to resolutions 2, 4 and 5 hereof and that the debiting of the said loan account shall be full satisfaction of the amounts payable to the Company pursuant to resolutions 2, 4 and 5 hereof and that thereafter the Company shall relinquish all right title and interest in the property referred to in resolutions 1 and 3 hereof." 109Resolution 2 determined the consideration for the transfer of the Dairy Farm land at $1 million. Resolution 4 fixed the consideration for the plant, stock and other business assets as the written down value in the company's books as advised by the external accountants. Resolution 5 referred to Claude's reimbursing the company for improvements since 21 September 1995. 110GC & Co's balance sheet as at 30 June 1996 recorded, as a liability, shareholder loan accounts of $4,075,618. The corresponding figure at 30 June 1997 was $2,554,417. Most of the movement of $1,521,201 is accounted for by two journal entries of 30 June 1997 - one for $1 million designated "Sale dairy land to CC"; and the other for $228,922.07 designated "Tsfr Claude's loan a/c to one no". The latter debit entry corresponds in amount with a credit entry with the same designation in a separate ledger account which appears to cover a myriad of personal expenses of Claude. 111I infer from these books of account that, so far as the $1 million consideration for the Dairy Farm land was concerned, the debiting to Claude's loan account envisaged by the directors' resolution of 2 September 1996 was, as a matter of bookkeeping, effected on 30 June 1997. The fact that there was no actual movement of cash indicates that it was only at 30 June 1997 that the financial impact was recorded within (and suffered by) GC & Co. The directors' resolution of 2 September 1996 set out at paragraph [108] above makes clear two important points: first, that amounts were "payable to the Company" for the assets in question pursuant to the earlier resolutions 2, 4 and 5; and, second, that a debiting of Claude's loan account in the way envisaged by the resolution would, in the future, constitute "full satisfaction of the amounts payable to the Company". Pending that debiting and satisfaction, the situation was to be one of purchase moneys payable but unpaid. 112The overall effect was thus that, on 30 June 1997, GC & Co acted upon and gave effect to the directors' resolution of 2 September 1996 concerning debiting of Claude's loan account and thereby notionally paid the relevant amount to Claude (thereby reducing the debt that GC & Co owed to Claude) and that amount was paid by Claude to GC & Co to satisfy the consideration that had already become payable by Claude and Felicity in respect of the Dairy Farm land. It was thus on 30 June 1997 that value passed from GC & Co to Claude by way of debit to the loan account.

The second Dairy Farm transfer 113A transfer dated 24 March 2000 was subsequently executed by Claude alone as transferor in favour of Felicity as transferee. Again, Mr McCarron accepted as solicitor for the transferee. This transfer was registered on 18 April 2000. The expressed consideration was $1.00.

Conclusions concerning Claude 114From an early stage in the settlement negotiations with CSIRO, GC & Co, through Claude, made it clear that any settlement sum was to be received in a "tax effective" way. GC & Co was the only plaintiff in the proceedings settled by the documentation of 27 September 1993. There was a proposal or idea within the GC & Co camp (evidenced by a draft pleading) that GC & Co might expand the proceedings to include claims for defamation and injurious falsehood of which it, that is, GC & Co itself, had been the victim. But those claims were never communicated or activated. 115The proposal that the settlement moneys of $9.5 million might be - or, at least, appear to be - split between GC & Co and Claude originated with Claude and was agreed to by Gerard and Patrick (the signatories to the letter of 6 July 1993 to Garrett & Walmsley) and probably also by Francoise (who is said to have been party to the discussion on 3 July 1993). 116The proposal to CSIRO that $4.25 million out of the agreed $9.5 million be paid to Claude and the associated proposition that this was warranted by defamation of him went hand in hand with the obtaining of the Deloitte advice as to the impact of capital gains tax and the revelation that a payment of damages for defamation would very likely not be an assessable capital gain in the hands of the defamed person - provided, importantly, that the defamed person was an individual, not a company. 117Claude nevertheless intended - as no doubt did others within GC & Co - that the net settlement proceeds of $8,309,502 (after allowing for legal costs) should be received and applied in such a way that the whole was applied to reduce GC & Co's bank debt. 118The objective of avoiding capital gains tax was the driving force in the decision to represent that the $9.5 million was split between GC & Co and Claude. CSIRO did not wish to participate in or countenance any such split. Its purposes were sufficiently served by the provision that allowed "the Cassegrain parties" - GC & CO and Claude - to direct the way in which the settlement moneys were to be paid. In the event, GC & CO and Claude did not direct any payment by CSIRO to Claude. The $8,309,502 went to the State Bank to be applied in reduction of GC & Co's debt. The split between GC & Co and Claude was effected wholly within GC & Co in the sense that it never found expression, as a matter of established fact, otherwise than in the books of GC & Co. The request that it be recorded in the CSIRO settlement documents was rejected by CSIRO. The only apportionment in the settlement deed was that described at item 3 of paragraph [84] above. It said nothing about any separate sum for Claude. 119I have said that Claude is, in these proceedings, bound by the findings (a) to (d) at paragraph [58] above. Those findings are, in any event, fully supported by the evidence in this case. In particular, the manoeuvrings of GC & Co (at the instigation of Claude) in the tax proceedings as to the basis on which Claude was somehow entitled to $4.25 million of the CSIRO settlement proceeds show that the original pretext of compensation for damage to reputation was simply an invention by Claude. When it suited him at a later stage to do so, he made compensation for unpaid remuneration and lost income the predominant element of the justification for the allocation of $4.25 million to him. The element for compensation for damage to reputation was, at that later time, said by Claude to be a mere $500,000. It is beside the point that it was found in the tax proceedings that some part of the settlement moneys was attributable to Claude. He relied solely on the supposed entitlement to $4.25 million for defamation as justification for establishing the loan account. Once it is seen that that particular entitlement was illusory and non-existent, the justification is illusory and non-existent also. 120The basis put forward at the time of the CSIRO settlement for allocation of $4.25 million to Claude was simply an invention - an invention that was abandoned in the later tax proceedings. CSIRO did not at any time accept or acknowledge that any part of the moneys it paid to settle the litigation brought by GC & Co was for Claude, whether on account of defamation claims or on any other basis. 121It follows that the establishment of the $4.25 million loan account in the books of GC & Co did not represent the recording of genuine indebtedness of GC & Co to Claude in that (or any other) amount; that GC & Co was never in a position where it was bound to act upon and satisfy demands by Claude for repayments of "loan" out of the supposed loan account; and that, to the extent that Claude received payments from GC & Co upon that supposed pretext, he took moneys of GC & Co that it was not legally obliged to pay to him and which he, in turn, had no legal right to demand or receive from it. The loan account was a false loan account. 122I have also said that there has been no suggestion in these proceedings that the transfer of the Dairy Farm by GC & Co to Claude and Felicity was at an undervalue from GC & Co's perspective. It follows that, had that transfer taken place on a basis that saw Claude and Felicity pay GC & Co from their own pockets for the assets transferred, there might have been no attack on the transaction (I put to one side the self-dealing rule applicable to fiduciaries since, on the pleadings, no issue arises in that connection). The attack that GC & Co mounts in these proceedings is made because there was no actual payment and because Claude, with the concurrence of his co-director Anne-Marie, purported to pay GC & Co by recording a reduction in the balance owing and payable by GC & Co to him in respect of the false loan account. That was, in reality, no giving of valuable consideration in return for the transfer of the Dairy Farm to Claude and Felicity. 123The position is the same in relation to each other occasion on which GC & Co gave value to Claude (for example, by providing cash or paying a personal bill) and there was a corresponding debit to the supposed loan account. Because, as Claude well knew, he had no right to demand or receive money from GC & Co by reference to the loan account, the making and satisfaction of such demands entailed his misappropriating company funds. 124The establishment of the loan account - in the sense of the making of entries in GC & Co's books of account recording a liability to Claude - was improper in the sense that there was no legal basis for any such recognition of indebtedness of the company. But the establishment and recording of the loan account did not, of itself, cause harm to the company in any immediate way. Its asset base remained intact while matters remained at the level of the mere recording of non-existent indebtedness to Claude. It is not shown that any prejudice accrued to the company because of that mere recording. 125Appropriation by Claude occurred when drawings were made, either by actual outlay of funds by the company on the footing that Claude was entitled to them (with contemporaneous or subsequent book entry reflecting a reduction in the supposed debt to Claude) or, as in the case of the Dairy Farm, by recording a reduction in satisfaction of some genuine indebtedness owed to the company, again on the footing of some entitlement of Claude. Where there was an actual outlay of funds (whether to Claude or to a third party for his benefit), appropriation occurred at the time of outlay. In cases exemplified by the case of the Dairy Farm, where no payment as such was made, appropriation occurred upon recording in the books of a reduction in the company's indebtedness to Claude and satisfaction of the concomitant financial obligation to the company. 126As a director of GC & Co, Claude owed fiduciary duties to it (the question whether he also owed fiduciary duties because he was the secretary arises on the pleadings but, because he was a director at all material times, there is no need to address that question). Claude was therefore bound to protect GC & Co's interests and to subordinate his own. In fact, he acted against the company's interests and preferred his own by, first, becoming party to the creation of the false loan account in his favour in the company's books and, second, thereafter taking and receiving financial benefits in the form of payments by the company or reduction of his own liability to the company on the footing that the loan account represented genuine indebtedness of the company to him. 127Furthermore, the evidence shows that Claude acted dishonestly in this respect. He never had any genuine or objectively based belief that the settlement moneys included $4.25 million for him as compensation for defamation. He knew that CSIRO had not agreed to any such apportionment. The apportionment was adopted so as to create a false position from which to argue that GC & Co's assessable capital gain was $5.25 million rather than $9.5 million. In the subsequent tax proceedings, it was Claude who, with an eye to a different tax advantage, seized upon supposed allocations of the settlement moneys as a whole that were entirely at odds with the line he had taken in 1993. His subsequent adoption of those alternatives underscores his lack of genuine belief in the original story regarding compensation for defamation. 128Claude subscribed to the fiction that $4.25 million of the settlement moneys was received for him because that suited the capital gains tax argument that he wanted GC & Co to adopt at the time. He knew when the loan account was established that the reflection of $4.25 million as owing by GC & Co to him was false. His actions in relation to the creation of the loan account were therefore dishonest. When he later drew on the loan account (including in connection with the consideration for the first Dairy Farm transfer), he did so knowing that he had no proper claim upon the company by reference to the loan account. He therefore obtained the relevant money or value dishonestly. 129It follows that, on each occasion on which Claude obtained money or value from GC & Co which reflected in a reduction of the loan account balance, he acted not only in breach of fiduciary duty but also dishonestly. It is therefore correct to categorise his conduct as dishonest or fraudulent breach of fiduciary duty. It went beyond the pleaded alternative of recklessness.

Consent by GC & Co? 130Implicit in the conclusions just stated is the proposition that GC & Co, as the beneficiary of the fiduciary duties owed by Claude, did not give its informed consent to his actions so as to excuse them in advance. The relevant principles are discussed in cases such as Hogg v Cramphorn Ltd [1967] Ch 254, Bamford v Bamford [1968] 3 WLR 317 , Winthrop Investments Ltd v Winns Ltd [1975] 2 NSWLR 666 and Kinsela v Russell Kinsela Pty Ltd (1986) 4 NSWLR 722 . It is sufficient to quote from the headnote to the report of Winthrop Investments Ltd v Winns Ltd : "A general meeting of the shareholders in a company, to whom a proper and full disclosure of all relevant facts has been made, may ratify an exercise of power by the directors of that company which constitutes a breach of their fiduciary duty to the company; and may give advance authority for an exercise of power which would otherwise involve such a breach." 131Likewise, a general meeting of shareholders to whom a proper and full disclosure of all relevant facts has been made may give advance authority for the giving and receipt of financial benefits the taking of which by a director would otherwise entail breach of the director's fiduciary duty. Thus, although fiduciaries generally should act gratuitously, remuneration not provided for by the company's constitution may be paid and received if voted by the company in general meeting: Re George Newman & Co [1895] 1 Ch 674. 132In this connection, Claude puts store by the letter of 6 July 1993 to Garrett & Walmsley, signed by Gerard and Patrick, set out at paragraph [76] above. 133That letter refers to "an extraordinary general meeting" of GC & Co on 3 July 1993 being, as I have said, a meeting (or, at least, discussion) involving Claude and his father and mother, Gerard and Francoise, together with the solicitor, Mr Walmsley. There is no evidence that a general meeting was formally convened by notice to all members. Nor have minutes of a meeting been put into evidence. Claude would no doubt have produced such minutes or chosen to give appropriate affidavit evidence had a general meeting been convened and held. 134The fact that Gerard subscribed to the decision of 3 July 1993 notified by the letter of 6 July 1993 is said by Claude to be of special significance. Article 66 of GC & Co's constitution states the voting rights of members at a general meeting. It is first stated that, on a show of hands, every member present in person (or, being a corporation, by representative) has one vote. Then follows this specification: "On a poll every member present in person or by proxy shall have one vote for every ordinary share held by him and the holders of 'A' class shares shall not be entitled to vote on a poll provided always that so long as Gerrard [sic] Rene Jean Francois Cassegrain is a shareholder in the Company at any meeting of the Company he shall be entitled to sufficient votes to carry or defeat any resolution whether ordinary extraordinary or special despite the fact that any or all other votes on such resolution may be cast contrary to those of the said Gerrard [sic] Rene Jean Francois Casssegrain." 135Under article 61, a poll may be demanded by at least three members present in person or by proxy or by one or two members holding at least 15% of the paid up capital; also: "by the said Gerrard [sic] Rene Jean Francis [sic] Cassegrain." 136Gerard was living in July 1993. Had a duly convened general meeting of GC & Co been held on 3 July 1993 at which a resolution in the terms notified by the letter of 6 July 1993 had been proposed, Gerard alone could have, first, demanded a poll to prevent the measure being finally decided by show of hands and, second, caused the resolution to be passed. It follows, according to Claude, that Gerard's participation on 3 July 1993 as notified by the letter of 6 July 1993 was tantamount to a resolution of a general meeting of GC & co and that any breach of duty by Claude in relation to the establishment of the $4.25 million loan account was thereby authorised by the company. 137It is, of course, established that the unanimous assent of a company's members to a particular proposition within the competence of a general meeting is as effectual and binding as a resolution duly passed at a general meeting embodying that proposition. The various views regarding the legal basis of this unanimous assent doctrine are discussed at paragraph 7.590 of R P Austin and I M Ramsay, "Ford's Principles of Corporations Law". 138There is no need here to examine the true meaning and rationale of the unanimous assent principle. This is because it has not been shown that there was unanimous assent of the members. The most that has been shown is concurrence by three members - Gerard, Francoise and Claude - who met on 3 July 1993 (and, perhaps, a separate assent by Patrick when, on 6 July 1993, he signed the letter to Garrett & Walmsley); and that one of the assenting members was the member to whom the constitution gave the special powers conferred by article 61 and article 66 as to demanding a poll and voting on a poll. 139Importantly, those special powers were exercisable only at a duly convened general meeting, that is, in a context where all members had been given notice of the meeting and where opportunities for discussion and debate were assured. The meeting or gathering of 3 July 1993 was not of that character. It has not been shown that any member beyond Gerard, Francoise and Claude was notified that a meeting of members was to take place on that day (or that any had waived notice). It has therefore not been established that a forum for discussion and debate had been created. 140One can easily imagine that a proposal that $4.25 million of a family company's funds be directed to one family shareholder to the exclusion of the others would have prompted significant debate. In short, one or other of Gerard and Francoise's children other than Claude might, as a shareholder, have spoken against the proposal that Claude receive value of $4.25 from the company. Gerard's decision whether to exercise his article 61 and article 66 powers might well have been affected by such debate. But, of course, there is no evidence that the opportunity for such debate ever eventuated. It is also possible that the presence of other children would have produced in Gerard a sense of restraint that prevented his agreeing to the giving of a large benefit to one child, either at all or without also giving something to the others. 141It is not appropriate to apply some extension or variant of the unanimous assent principle to the circumstance that Gerard, who would have had the article 61 and article 66 powers at his disposal had a general meeting been convened, was one of the three members represented as having participated in the meeting of 3 July 1993. The plain fact is that he did not exercise the article 61 and article 66 powers because there was no general meeting so that a condition indispensable to the exercise of the powers was not satisfied. Apart from those provisions of the constitution, his position as patriarch and the dynamics of family relationships in the company context (something properly taken into account in the Federal Court oppression proceedings) had no role to play in the proper and lawful administration of the company. The actions of the three family members who gathered together on 3 July 1993 did not amount to a valid and binding resolution of the company in general meeting; nor did they have any effect equivalent to that of such a resolution. 142Another insuperable obstacle confronts Claude's attempt to rely on the letter of 6 July 1993 as GC & Co's consent to or authorisation of what was done. 143The result of the mediation, as notified by the mediator's memorandum of 2 July 1993, was: "a proposed settlement involving a payment of $9,500,000 by CSIRO to Gerard Cassegrain & Co Pty Limited." 144The mediator also said: "The proposal is subject to approval on both sides. Such approval will be recommended by the legal advisers on both sides." 145The mediation produced a result involving CSIRO and GC & Co alone. The mediator said nothing about an "offer in settlement of the dispute" involving $5.25 million to GC & Co and $4.25 million to Claude, that being the "offer" that the letter of 6 July 1993 said "would be accepted by Gerard Cassegrain & Co Pty Ltd". Nor was any such "offer" ever made to GC & Co. CSIRO was astute to avoid any outcome that involved payment by it to Claude. There was thus never any offer in relation to which a resolution of GC & Co in terms of the 6 July 1993 letter could have operated, even if Gerard's assent had had the same effect as a resolution. 146Nor does it avail Claude to point to some other concurrence by Gerard in the course that saw the establishment of the loan account and recognition of indebtedness of $4.25 million by GC & Co to Claude following receipt of the settlement proceeds into GC & Co's bank account. Gerard's special powers under articles 61 and 66 were meaningful only in the context of a general meeting. He had previously occupied a special position under article 85A which designated him managing director for the duration of his tenure as a director and provided that "the management and control of the Company shall be vested in him and the other Directors shall be subject to his control and Decisions"; but Gerard ceased to be a director in 1989. 147There was no consent by GC & Co to the establishment of the $4.25 million loan account in favour of Claude or to the embracing by those operating the company of the proposition that GC & Co owed that amount to Claude in such a way to allow him to draw on the company's funds at will.

The case against Felicity 148Felicity is the current registered proprietor of the Dairy Farm. She became one of two joint tenants (Claude was the other) by registration on 10 March 1997 of the transfer from GC & Co dated 14 September 1996. By virtue of registration on 18 April 2000 of a transfer dated 24 March 2000 executed by Claude alone as transferor in favour of Felicity as transferee, Felicity became the sole registered proprietor. 149GC & Co contends that (a) the issue estoppels binding on Claude also bind Felicity as a privy in interest; (b) Felicity's legal title as one of two joint tenants was registered through the fraud of Claude who was her agent, so that the exception to indefeasibility in s 42 of the Real Property Act applies; (c) Claude's notice of the existence of a trust in favour of GC & Co was sufficient to cause his co-owner as joint tenant to cause the estate of both joint tenants to be affected by that notice; (d) notwithstanding Felicity's registered title, proceedings lie against her for the recovery of the Dairy Farm because she was registered as proprietor through the fraud of her agent (Claude): s 118(1)(d)(i) of the Real Property Act ; (e) to the extent that Felicity may rely on the severing of the joint tenancy by the transfer of 24 March 2000 by Claude to her, proceedings for recovery of the land lie against her because she derived her remaining interest (otherwise than as a bona fide transferee for value) from or through a person (Claude) registered as proprietor through fraud: s 118(1)(d)(ii) of the Real Property Act ; (f)because (i) Claude acted as Felicity's agent for the specific purpose of registering her title to the land; (ii)that agent acquired his knowledge about relevant breaches of fiduciary duty, being the fraudulent acquisition of the transfer from GC & Co and proceeding to register it, during his performance of the very task on which he was employed as her agent Felicity acquired her title with notice of Claude's breaches of fiduciary duty.

Privity? 150The first issue for consideration here is whether Felicity is properly regarded as a privy in interest of Claude in the Federal Court proceedings so as to be bound by the issue estoppels arising against Claude. 151As Barwick CJ said in Ramsay v Pigram (above) at 279, the "basic requirement of a privy in interest" is that "the privy must claim under or through the person of whom he is said to be a privy". Where, as here, the question is of privity between a defendant and another person, the requirement must be that the defence by the defendant is such that it is defence by the privy under or through the defendant. 152That simply cannot be the case as regards Felicity, Claude and the 1998 proceedings. Claude was a defendant to those proceedings because of the position he occupied within and in relation to the various companies, including GC & Co. In defending those proceedings - and, in particular, in resisting the allegation of oppression that was made good against him and reflected in the court's declaration - he was not defending anything in which Felicity had an interest. It is true that the Dairy Farm and the acquisition of it played a part in the court's conclusion with respect to oppression. But that did not change the nature of the defence as a defence by Claude alone in his own interest stemming solely from his position in relation to the company. The title to the Dairy Farm was simply not in issue. 153On this basis, the issue estoppels I have held to be binding on Claude are not also binding on Felicity.

Agency? 154I consider next the proposition that Claude was (and acted as) Felicity's agent in taking and obtaining registration of, first, the transfer by GC & Co to Claude and Felicity as joint tenants and, second, the transfer by Claude to Felicity alone. 155The evidence regarding both transfers is sparse. On the face of each, it is clear that Felicity did not sign as transferee. In each case, the transfer was accepted by Mr McCarron as solicitor for the transferees or transferee. There is no evidence of the giving of any instruction to him by Felicity in relation to signing of the transfer (compare Davis v Williams [2003] NSWCA 371; (2003) 11 BPR 21,313 at [59]). 156The only evidence of any relevant contact with Mr McCarron in relation to the first transfer comes from a letter of 27 February 1997 - that is, some five months after the date of the transfer - by which Mr McCarron was instructed to "register the transfer as exchanged". But that was a letter on GC & Co letterhead signed "Claude Cassegrain - Managing Director". It thus conveyed an instruction from the transferor, not either or both of the transferees; and an instruction, moreover, with respect to an already existing document. It related to an already existing document because it referred to the transfer "as exchanged" (in the past) and because the document is dated 14 September 1996. The letter is thus unrelated to the execution of the transfer. 157As regards the second transfer, there is no evidence at all of the circumstances in which it was signed by Mr McCarron as solicitor for the transferee (Felicity). 158In short, there is no basis in the evidence for a finding that, in any aspect of the events concerning the preparation of either transfer, its execution and the processes culminating in its registration, Claude had or exercised any actual or implied authority of Felicity. It was for GC & Co to prove such authority, not for Claude or Felicity to disprove it.

The significance of the joint tenancy 159Counsel for GC & Co sought to derive assistance from cases about devises to joint tenants in circumstances where one but not the other promises the testator to give effect to a secret trust. Reference was made in submissions to Jones v Badley (1868) LR 3 Ch App 362 and Freeman v Laing [1899] 2 Ch 355. A summation of the relevant principle appears in Re Stead; Witham v Andrew [1900] 1 Ch 237 at 241: "If A. induces B. either to make, or to leave unrevoked, a will leaving property to A. and C. as tenants in common, by expressly promising, or tacitly consenting, that he and C. will carry out the testator's wishes, and C. knows nothing of the matter until after A.'s death, A. is bound, but C. is not bound: Tee v Ferris [2 K. & J. 357]; the reason stated [Ibid. 368] being, that to hold otherwise would enable one beneficiary to deprive the rest of their benefits by setting up a secret trust. If, however, the gift were to A. and C. as joint tenants, the authorities have established a distinction between those cases in which the will is made on the faith of an antecedent promise by A. and those in which the will is left unrevoked on the faith of a subsequent promise. In the former case, the trust binds both A. and C.: Russell v. Jackson [10 Hare, 204]; Jones v. Badley [L.R. 3 Ch. 362], the reason stated being that no person can claim an interest under a fraud committed by another; in the latter case A. and not C. is bound: Burney v. McDonald [15 Sim. 6] and Moss v. Cooper [1 J. & H. 352], the reason stated [1 J. & H. 367] being that the gift is not tainted with any fraud in procuring the execution of the will." 160It is the principle of the "former case" (a devise to A and C as joint tenants) that is said to apply here. 161Where two persons hold as joint tenants, they are seised "per my and per tout" ( the correct transaction of which, according to Young J in Big River Timbers Pty Ltd v Stewart (1998) 9 BPR 16,599, is "for nothing and yet for everything" or "for nothing and for the whole"), so that neither has a separate estate or interest that can be encumbered to the exclusion of an estate or interest of the other. It follows that, if the circumstances of the devise or conveyance to them as joint tenants are such as to cause the conscience of one to be bound so as to create an obligation of a kind that would give rise to an equitable encumbrance on a sole owner's title, the equitable encumbrance affects the title held by both joint tenants together. If it were otherwise, equity would fail in its task. Of course, the position is different if, after the two have taken as joint tenants, one acts alone in a way that would create an encumbrance. In that case, the co-owner in question acts inconsistently with the joint tenancy and shows an intention to sever it. 162The notion, as it relates to notice as such, is explained in Freeman v Laing (above), a case concerning the right to tack a subsequent advance. Byrne J said at 358-9: "In the case of a mortgage of real estate to joint tenants to secure a debt due to them jointly, it cannot be said as against strangers that any one portion of the security or of the debt belongs to any one of the mortgagees: each is entitled to the whole; and if notice of a second incumbrance be given to any one of them, that appears to me, by creating an equity against one in respect of the whole, to prevent any tacking, which in such a case must be of the further advances to the whole subsisting original debt." 163Here, GC & Co contends (and I have found), Claude was guilty of fraudulent breach of fiduciary duty against GC & Co in connection with the acquisition of the Dairy Farm by Felicity and him as joint tenants, in that, t o satisfy the unpaid consideration for the transfer, Claude drew on the false loan account and thereby obtained from GC & Co value to which he had no entitlement. The situation was thus, in substance, akin to one in which property was purchased with stolen money, albeit that Felicity may not have known at the time that the particular financial advantage had been improperly obtained by Claude. The circumstances were, in that way, the same as those in Heperu Pty Ltd v Belle [2009] NSWCA 252; (2009) 76 NSWLR 230 where a husband paid into his wife's bank account funds misappropriated by him (she being unaware of the misappropriation at the time), from where they were expended for his benefit and also for hers. As Allsop P said at [93] with the concurrence of Campbell JA and Handley AJA: "The well-known principle is that a person entirely innocent of a fraud who comes to know that he or she has received and still retains the proceeds of, or taken advantage of, a fraud to which he or she was not party, cannot knowingly seek to retain those proceeds or that advantage, without, in effect, becoming a party to that fraud and liable accordingly: Black v S Freedman & Company , per Griffith CJ (at 109), per Barton J (at 110), per O'Connor J (at 110-111)." 164In the present case, the value improperly obtained by Claude is now represented by Felicity's sole title to the Dairy Farm. There is no allegation that Felicity was a participant in or had notice of Claude's fraud at the time the Dairy Farm passed to the two of them as joint tenants. There is accordingly no claim of liability on Felicity's part under either limb of Barnes v Addy (1874) LR 9 Ch App 244 . But Felicity may have become aware subsequently that she had received the proceeds of fraud (she was obviously aware of the allegations in these proceedings) and that may be sufficient, in the eyes of equity, to cause Felicity to be accountable to GC & Co. 165It was clear in Heperu Pty Ltd v Belle, however, (see [167]) that " no issue was raised at trial or on appeal by way of defence referable to any effect of the Real Property Act 1900." Felicity does raise such an issue. She says that s 42 of the Real Property Act precludes recognition, as against her, of any interest of G C & Co detracting from the full and unencumbered registered title she now enjoys on the face of the register.

Section 42 of the Real Property Act 166Section 42, so far as relevant to this case, is in these terms: "Notwithstanding the existence in any other person of any estate or interest which but for this Act might be held to be paramount or to have priority, the registered proprietor for the time being of any estate or interest in land recorded in a folio of the Register shall, except in case of fraud , hold the same, subject to such other estates and interests and such entries, if any, as are recorded in that folio, but absolutely free from all other estates and interests that are not so recorded . . . " [emphasis added]. 167I am of the opinion that the operation of s 42 is such that Felicity today holds free from any interest of GC & Co sourced in Claude's fraudulent breach of fiduciary duty and that the "fraud" exception to that section does not operate to detract from Felicity's current registered title. 168In the particular statutory context, "fraud" is "to be construed as meaning something more than mere disregard of rights of which the person sought to be affected had notice, and as importing something in the nature of personal dishonestly or moral turpitude": Stuart v Kingston [1923] HCA 17; (1923) 32 CLR 309 at 329 per Knox CJ (reversed by the Privy Council on grounds not affecting this point: Stuart v Kingston ; (1924) 34 CLR 394). T he High Court said in Bahr v Nicolay (No 2) [1988] HCA 16; (1988) 164 CLR 604 at 614 that relevant fraud or dishonesty is "dishonesty on the part of the registered proprietor in securing his registration as proprietor." As was noted in that case, the Privy Council, in a passage in Assets Co Ltd v Mere Roihi [1905] AC 176 at 210 cited with approval in Frazer v Walker [1967] 1 AC 569, declared that "fraud" in this context means "actual fraud, i.e, dishonesty of some sort" and went on to say that "the fraud which must be proved in order to invalidate the title of a registered purchaser ... must be brought home to the person whose registered title is impeached or to his agents". 169Equitable fraud, in the form of an impingement upon conscience giving rise to an equitable interest, is, of itself, insufficient to activate the "fraud" exception to s 42 - although, of course, some circumstances of equitable fraud will, on their facts, involve actual dishonesty of the kind with which the statutory exception is concerned. 170In the particular statutory context, there is no meaningful room for any concept of imputed dishonesty or imputed moral turpitude, unless the perpetrator is an agent of the person whose registered title is sought to be impeached. To the extent that Claude may have been guilty of fraud in the s 42 sense, the mere fact that Felicity took under the first transfer as joint tenant with him (or even was aware of his dereliction), while it may have fixed her with notice of some kind, does not warrant any conclusion that the title she now has as sole registered proprietor is tainted by "dishonesty on the part of the registered proprietor in securing [her] registration as proprietor". 171The estate now vested in Felicity arose in consequence of the registration of the second transfer, that is, the transfer by Claude to Felicity dated 24 March 2000 and registered on 18 April 2000. It is that estate that, in accordance with s 42, she now holds free from all unregistered interests "except in case of fraud". Importantly, Felicity's present estate derived from registration of the second transfer is distinct from the estate she had as one of two registered proprietors holding as joint tenants after registration of the first transfer on 10 March 1997. The effect of the second transfer and its registration was to extinguish both Claude's interest as one of two joint tenants and Felicity's interest as one of two joint tenants; and to cause to arise in Felicity as sole registered proprietor a "new and different indefeasible title for the lot", that is, a title distinct from both the pre-existing interests: Peldan v Anderson [2007] HCA 48; (2006) 227 CLR 471 at [20] - [21]. 172As things now stand, the only relevant inquiry regarding the "except in case of fraud" qualification in s 42 is confined to this "new and different indefeasible title for the lot" now enjoyed by Felicity. She acquired that "new and different" title by virtue of the registration that occurred on 18 April 2000. At worst, she had, at that time, notice of conduct of Claude arguably giving rise to an unregistered interest on the part of GC & Co. Her position is therefore as described by Austin J in Heggies Bulkhaul Ltd v Global Minerals Australia Pty Ltd [2003] NSWSC 851; (2003) 59 NSWLR 312 at [96]: "[T]here is no fraud for the purposes of s 42 if a person does no more than to acquire title and become the registered proprietor with notice of a prior unregistered interest, and assert that his title is free of that interest: Mills v Stokman [1967] HCA 15; (1967) 116 CLR 61, at 78 per Kitto J; the Leros case, 174 CLR at 418 per Mason CJ, Dawson and McHugh JJ; Friedman v Barrett [1962] Qd R 498." 173From Felicity's viewpoint, there could have been, at most, attribution to her of notice of matters involving Claude's wrongdoing that bound her conscience so as to produce in GC & Co an equitable interest that s 42 does not allow to encumber her title. Even if she thus took with notice of such an interest, the "fraud" exception to s 42 does not preclude her asserting against GC & Co a registered title free of that interest. 174The fact that Felicity gave no valuable consideration for the second transfer does not affect the protection given to her by s 42: Bogdanovic v Koteff (1988) 12 NSWLR 472.

Section 118(1)(d) of the Real Property Act 175Section 118(1)(d) of the Real Property Act provides: "Proceedings for the possession or recovery of land do not lie against the registered proprietor of the land, except as follows: . . . (d) proceedings brought by a person deprived of land by fraud against: (i) a person who has been registered as proprietor of the land through fraud, or (ii) a person deriving (otherwise than as a transferee bona fide for valuable consideration) from or through a person registered as proprietor of the land through fraud." 176Because the fraud relied upon is the fraud of Claude and the attempt by GC & Co to prove that Claude was Felicity's agent in relevant respects has failed, there is no basis for a finding of fraud on the part of Felicity. She is now (and has been since 18 April 2000) the sole registered proprietor. Because there was no fraud by her, she cannot be said to have been "registered as proprietor through fraud" (s 118(1)(d)(i)). That leaves the possibility that Felicity derived title "from or through a person registered as proprietor of the land through fraud" (s 118(1)(d)(ii)). 177Reference has been made to the "new and different indefeasible title" that arose in Felicity through registration of the second transfer. Felicity must be accepted as a person "deriving" that new and different title "from or through" Claude, since, had it not been for the effect of the second transfer (by Claude to Felicity), Felicity would not have attained the new and different title. Furthermore, since the transfer registration of which created Felicity's new and different title was for a purely nominal consideration of $1.00, she was not, in relation to the acquisition of that interest, "a transferee . . . for valuable consideration". 178Notwithstanding that the elements on which s 118(1)(d)(ii) depends may be, to that extent, satisfied, one important thing is lacking. Claude, the person "from or through" whom Felicity derived her interest, was not "registered as proprietor of the land through fraud". These are the operative words of the section. Their focus is exclusively on the process by which registration as proprietor was achieved and the question whether that process was achieved by fraud. This is the effect of the words "registered . . . through". Section 118(1)(d)(ii) thus deals with a much narrower and more specific subject-matter than the "except in case of fraud" exception in s 42. 179The process by which Claude came to be registered as one of two proprietors involved the lodgment of a transfer for registration, followed by registration itself. The transfer was regularly executed under the common seal of GC & Co. It was a genuine instrument, regular on its face and suitable to be registered. There is nothing calling in question the integrity of the transfer or of the registration process to which it was subjected following its lodgment. The process by which the registration of Claude as a registered proprietor was achieved was not attended by fraud. The fact that he had wrongfully drawn funds from GC & Co to satisfy the consideration expressed in the transfer (or, perhaps more accurately, that he gave illusory consideration by reference to the false loan account) is remote from the process of registration and therefore beside the point. 180It follows that, if and to the extent that these proceedings, as they affect Felicity, are "[p]roceedings for the possession or recovery of land", s 118(1)(d) of the Real Property Act precludes their being brought.

The position reached 181GC & Co has made good the allegation that Claude breached his fiduciary duty to GC & Co by: (a)asserting against GC & Co that he was personally entitled to payment of $4.25 million in consequence of the CSIRO settlement; (b) ensuring that GC & Co acknowledged the existence of a corresponding current liability to pay him $4.25 million; and (c) relying on that acknowledgment to obtain money or value from GC & Co. 182Subject to the question of defences about to be mentioned, GC & Co is entitled to appropriately framed declaratory relief accordingly, as well as an injunction restraining future resort to the loan account and an order for an inquiry to establish the amount of all money and value obtained by Claude in breach of duty. 183Subject to the same qualification, there should also be an order that Claude pay equitable compensation to GC & Co, with the quantum to be determined after inquiry made in accordance with the court's order. There will be a need for further submissions as to the precise method of assessing equitable compensation having regard to both accrual of " value to the misappropriating fiduciary" (to quote words used by Thomas JA in Ferrari v Ferrari Investments (Townsville) Pty Ltd [2000] 2 Qd R 359; [1999] QCA 230) and financial detriments to GC & Co resulting, in each case, from Claude's recourse to the supposed loan account. 184GC & Co has not established an entitlement to the relief it claims against Felicity in relation to the Dairy Farm. 185It remains to consider the availability of defences based on delay.

Delay 186It is unnecessary to consider time-based defences raised by Felicity. I must, however, deal with time-based defences raised by Claude. 187Claude points to the fact that these proceedings were commenced by statement of claim filed on 11 September 2008. Although judgment on the s 237 application was delivered only on 23 September 2008, Sackville AJ made consent orders on 5 September 2008 granting leave on the footing that it was to be revoked if the ultimate decision was that the application for leave should be dismissed. 188The substantive relief to which GC & Co has shown an entitlement, as against Claude, is equitable relief by way of declaration and an order for the payment of equitable compensation. The basis for such relief is not the mere establishment of the loan account in the books of GC & Co but the obtaining of money or value by Claude from GC & Co by resort to the loan account and in exercise of Claude's asserted entitlement to draw upon the account. 189Delay and the passage of time are relevant to both a defence of laches raised by Claude and the potential operation by analogy of provisions of the Limitation Act 1969. 190It is significant that the present action is brought with leave granted under s 237 of the Corporations Act . One of the matters on which the court must be satisfied in order to grant such leave is that the company itself will not bring the proceedings: s 237(2)(a). The court was so satisfied upon the hearing of the application for leave. Sackville AJ said ([2008] NSWSC 976; (2008) 68 ACSR 132 at [70]): "The Company will not itself agree to bring proceedings against Claude because he controls the voting shares in the Company and will not authorise proceedings against himself. Accordingly, the requirement in s 237(2)(a) is satisfied." 191That finding must be considered in light of certain background facts. When the loan account was established in 1993 following the CSIRO settlement, Claude and John were the only directors of GC & Co and Gerard was in the background exercising his paternal influence. When, in 1996-7 the Dairy Farm was transferred to Claude and Felicity as joint tenants and Claude resorted to the loan account to satisfy the consideration, Claude and Anne-Marie were the only directors of GC & Co. It was they who passed the relevant board resolutions and affixed GC & Co's common seal to the transfer. Anne-Marie was appointed a director on 12 April 1995 and ceased to hold office on 25 June 1998, after which, it appears, Claude was in office alone until 22 October 1998 when A B Sarks was appointed a director. Sarks held office until 13 July 2005, at which point T G Cassegrain was appointed. 192There is nothing in the evidence to suggest that John played any active role in relation to the CSIRO settlement and the establishment of the loan account, even though he was a director at the time. The functionaries in that connection were Claude and Gerard, but Gerard died on 29 October 1993, so that his knowledge of relevant matters was then lost. The only repository of such knowledge on the board of directors thereafter was Claude himself. 193By mi-1997, however, all relevant family members were aware of the $4.25 million loan account established after receipt of the CSIRO settlement proceeds and the subsequent transfer of the Dairy Farm to Claude and Felicity. 194The awareness just mentioned is made clear by documents related to the Federal Court proceedings. An amended pleading produced in May 1997 referred to the CSIRO settlement and to Claude's having "agreed to accept $4.25 million of the settlement proceeds as being damages for personal injury suffered by himself"; and to Claude's having "declared himself to hold that proportion of the sum which exceeded his entitlement to an equal share in the moneys on trust, in equal shares, for all family members, including Gerard, the First to Fourth Applicants [Patrick, Catherine, John and Denis] and the Second and Third Respondents [Anne-Marie and Francoise]". 195In the course of submissions before Davies J on 20 October 1997 concerning an application to amend, there was reference by counsel for Patrick, Catherine, John and Denis to a claim for a declaration that Claude held the $4.25 million in trust and "the need to identify the extent to which the claim of 4.25 [sic] now made by Claude for himself is a proper extraction from the company's assets". There was also reference to an allegation that "Mr Claude Cassegrain improperly transferred assets to himself and his wife", that there was no real or genuine transaction in that respect, that the supposed transfer "purported to confer benefits in breach of his fiduciary duty" and that the true value of the assets concerned was more than the $1.3 million represented by the documents. Davies J said, at that point, "This 1.3 million came off the loan account I take it, did it?" Counsel for Claude and the other respondents answered in the affirmative. 196On 20 October 1997 Davies J granted leave to file a further amended statement of claim. It contained fully pleaded allegations in relation to the matters that had been referred to briefly in court on that day. In particular, it was alleged (a) that, in order to minimise tax payable by CG & Co, Gerard and Patrick, at the direction of Claude, had instructed the accountants that the CSIRO settlement moneys were to be split so that Claude would receive $4.25 million purportedly as damages for injury to his reputation; (b) that, after receipt of the $9.5 million by GC & Co, the $4.25 million loan account in favour of Claude was raised in GC & Co's books even though no loan had been made; (c) that Claude thereby obtained benefit for himself in breach of his fiduciary duty; (d) that, in or about July 1997, Claude caused the Dairy Farm to be transferred to himself and Felicity; and (e) that the transfer caused loss to GC & Co, was carried out in breach of Claude's fiduciary duties as a director and was not in the best interests of the company as a whole. 197The claim based on these allegations appeared in the further amended application of February 1998 (see paragraph [43] above). 198Denis, who has brought these present proceedings on behalf of GC & Co, was one of the applicants in the Federal Court proceedings. The others were, as I have noted, Patrick, Catherine and John. Anne-Marie (co-director with Claude from 12 April 1998 to 25 June 1998) was a respondent. 199It is thus clear that, in the second half of 1997, Denis, Patrick, Catherine, John and Anne-Marie were all fully aware of the facts concerning the CSIRO settlement proceeds, the $4.25 million loan account and the Dairy Farm transfer to Claude and Felicity that form the basis for these present proceedings. Moreover, all of them except Anne-Marie had explicitly alleged breaches of duty by Claude that correspond with (or are closely analogous with) those at the centre of the present litigation. And all of them were aware of the judgment of 15 July 1998 in which Davies J, referring to the events concerning the CSIRO settlement moneys, and their application, said: "If the applicants wish to claim that Claude should repay moneys to GC & Co, those proceedings can be taken and an order for the taking of accounts as between Claude and GC & Co can be sought. I do not think that these present proceedings are concerned with that." 200In the period between the exchanges in court on 20 October 1997 and 25 June 1998, Claude and Anne-Marie were the only directors of GC & Co. The board thus constituted would not, as a practical matter, have caused the company to sue Claude, particularly since he and Anne-Marie were aligned on the same side of the Federal Court proceedings. After 25 June 1998, and until 22 October 1998, Claude alone was in office as a director and unable to function as a board (even if minded to cause the company to sue him). From 22 October 1998 until 13 July 2005, the board consisted of Claude and A Sarks, while from 13 July 2005, the directors were Claude and T G Cassegrain. Such a two-person board could not have caused the company to sue Claude except with Claude's concurrence which would not have been forthcoming. 201From at least mid-1997, it must have been obvious to the other shareholders of GC & Co - in particular, Denis, Patrick, Catherine and John - that, if there were to be any meaningful move to assert GC & Co's rights of recovery against Claude, it would be necessary for one or more of the shareholders to take the initiative. 202The statutory derivative action procedure now provided for in Part 2F.1 of the Corporations Act has been available since December 1999 by virtue of amendments made to the Corporations Law by the Corporate Law Economic Reform Program Act 1999 (Cth). Before that, a member could bring a derivative action for the company's benefit only under recognised exceptions to the rule in Foss v Harbottle (1843) 2 Hare 461; 67 ER 189. 203None of the shareholders acted until 18 December 2007 when Denis filed the application upon which Sackville AJ made the orders of September 2008 granting leave under s 237 for him to bring proceedings on behalf of GC & Co against Claude. None of the other shareholders joined in that application, although Patrick, Catherine and John gave certain undertakings supporting Denis for the purposes of a security for costs application; also, they were described by Sackville AJ as "supporting" Denis's s 237 application. 204Why did Denis wait ten years? The answer is found in the judgment of Sackville AJ of 25 September 2008: "I also accept Denis' evidence that the primary reason for the very long delay in bringing the leave application was that the Company was in receivership from 1999 until the end of 2004 and that he considered that proceedings were not feasible during that period." 205An ASIC extract in evidence shows that Mr Smith and Mr Kershaw were receivers and managers of GC & Co from 15 June 1999 to 21 December 2004. They were appointed by the Commonwealth Bank, a secured creditor. Since all registered charges recorded are described as "fixed/floating", it may be accepted that, during the period of receivership, decision-making with respect to any right of action GC & Co had against Claude was in the hands of the receivers. The prospects of leave being granted for a member to bring a derivative action while the company was in that state would be very remote. The "best interests" criterion in s 237(2)(c) would, in the particular circumstances, direct attention to the agency and decision-making role of the receivers and treat as predominant their function of serving the interests of the secured creditor, with the normal decision-making organs superseded although not destroyed: Hawkesbury Development Pty Ltd v Landmark Finance Pty Ltd (1969) 92 WN (NSW) 199 at 209. 206The question of delay in commencing these proceedings should therefore be approached on the basis that (a) the board of directors of GC & Co was, at all relevant times, constituted in such a way as to make it impossible, in every practical sense, for GC & Co to commence proceedings against Claude through a decision of the directors; (b) Denis, Patrick, Catherine and John were aware, from at least mid-1997, of all facts relevant to the institution of the proceedings; (c) from mid-1997 to 15 June 1999 (when receivers were appointed) it was open to any one or more of Denis, Patrick, Catherine and John to take steps to initiate a general law derivative action asserting GC & Co's causes of action against Claude; (d) the practical ability of those persons to take such steps came to an end on 15 June 1999; (e) after 21 December 2004, however, it was again open to any one or more of Denis, Patrick, Catherine and John to seek leave under s 237 to bring a statutory derivative action against Claude. 207It follows that operative delay was confined to the period mid-1997 to 15 June 1999 and the period 21 December 2004 to the filing of Denis's s 237 application on 18 December 2007.

The Significance of Delay 208The remedies to which GC & Co has established an entitlement against Claude (subject to any defence based on delay) are, as I have said, equitable remedies. The first question to be addressed in relation to delay is therefore whether the equitable doctrine of laches operates as a discretionary bar to recovery. If that bar does not operate might it be appropriate to consider some analogy with a bar created by the Limitation Act 1969. 209That this is an appropriate approach is, I think, indicated by Williams v Minister, Aboriginal Land Rights Act 1983 (1994) 35 NSWLR 497 at 509-511 and The Duke Group Ltd v Alamain Investments Ltd [2003] SASC 415 at [116]. The Limitation Act itself states, in s 9, that nothing in the Act affects the rules of equity concerning the refusal of relief on the ground of laches, acquiescence or otherwise, thus implying that the applicability of those rules should be considered first.

Laches 210A succinct summary of principle appears in the judgment of Owen J in Bell Group Ltd v Westpac Banking Corporation (No 9) [2008] WASC 239; (2008) 39 WAR 1 at [9303] - [9308]: "The equitable defence of laches follows the maxim that the law assists those who are vigilant, not those who sleep over their rights. As Lord Blackburn said in Erlanger v New Sombrero Phosphate Co (1878) 3 AC 1218 ; Erlanger v New Sombrero Phosphate Co (1878) 3 AC 1218 at 1279 (approved by Kitto J in Lamshed v Lamshed (1963) 109 CLR 44; Lamshed v Lamshed (1963) 109 CLR 440 at 453-454): 'A Court of Equity requires that those who come to it to ask its active interposition to give them relief, should use due diligence, after there has been such notice or knowledge as to make it inequitable to lie by.' Thus laches provides a bar to the grant of relief where there has been an unreasonable delay in the commencement or prosecution of proceedings and where the delay renders it unjust in all the circumstances to grant the relief sought. Mere delay is insufficient to invoke the laches defence, even in cases of 'spectacular delays'. For example, in Burroughes v Abott [1922] 1 Ch 86; Burroughes v Abott [1922] 1 Ch 86, the court granted rectification of an instrument after a delay of twelve years. A mortgagor's redemption suit was held not time-barred in Weld v Petre [1929] 1 Ch 33; Weld v Petre [1929] 1 Ch 33 despite a delay of twenty-six years. Finally, in Fitzgerald v Masters (1956) 95 CLR 420, the High Court granted specific performance twenty-six years after the cause of action arose. The point of time from which the reasonableness of the delay is assessed is, prima facie, the time when the plaintiff became aware of facts that give rise to the availability of equitable relief. In Meagher, Gummow & Lehane at [36-085], the authors commented that where a plaintiff has knowledge of the relevant facts, he or she is presumed to have knowledge of his or her rights to a cause of action. They go on to say that the 'availability of the means of knowledge is as good as knowledge'. These propositions were confirmed in: Savage v Lunn [1998] NSWCA 204 at 5-6; Savage v Lunn [1998] NSWCA 203 at 59-60 (per Handley and Sheller JJA and Sheppard AJA). Unreasonable delay alone will not be sufficient to attract the laches defence. The delay must render it unjust in the all circumstances of the case for relief to be granted (Spry, Equitable Remedies , 6th edition, 2001 at 43). The doctrine can be relied upon where a plaintiff, in delaying to take or pursue an action, has: (a) acquiesced to the defendant's conduct; or (b) caused the defendant or a third party to alter their position in reasonable reliance on the plaintiff's acceptance of the status quo or otherwise permitted a situation to arise that would be unjust to disturb. The question is whether the balance of justice favours granting the remedy or withholding it. In Lindsay Petroleum Co v Hurd (1874) LR 5 PC 221; Lindsay Petroleum Co v Hurd (1874) LR 5 PC 221; Lindsay Petroleum Co v Hurd (1874) LR 5 PC 221, the Privy Council looked at, among other things, the nature of the claim, the nature of the property to which the claim relates, the identity of the party against whom the defence is raised, the length of the delay, the extent to which the delay has prejudiced the defendant and the acts of each party during the delay." 211There are thus two central questions: first, whether the plaintiff has been guilty of unreasonable delay in bringing proceedings; and, second, whether any such unreasonable delay makes it unreasonable, in the particular circumstances, for the relief to be granted because the plaintiff has either acquiesced in the defendant's conduct or caused the defendant or someone else to change their position in reasonable reliance on the plaintiff's acceptance of the status quo or otherwise permitted to arise a situation that it would be unjust to disturb.

Some further facts 212It is necessary, against this background, to consider yet further factual matters. 213On 24 August 1998, John, Catherine and Patrick gave what purported to be a notice convening a general meeting of GC & Co for 15 September 1998. Its efficacy as a notice of meeting and the question whether proposed resolutions notified lay within the competence of a general meeting do not matter. Its significance lies in the concerns it embodies. The proposed resolutions included the following: "That Claude Cassegrain and Anne-Marie Cameron being the Directors of GC&Co provide a written report to the meeting listing, identifying and explaining basis of each movement in all company loan accounts of Claude George Rene Cassegrain from 1 September 1993 to 15 September 1998." "The Directors of GC&Co advise the meeting whether they have taken steps to rectify the loan account or to require payment by Claude Cassegrain to GC&Co of the amount of the loan account in view of the declaration by His Honour Justice Davies on 15 July 1998. If so, what steps have been taken. If not, an explanation by the Directors as to why they have not taken such steps." "Further, an explanation to the meeting as to what steps the Directors of GC&Co propose to take in respect to the matters in Item 2 above and a written Timetable for taking such steps." "That no further funds shall be drawn by Claude Cassegrain or for his benefit against his loan account in GC&Co." "That GC&Co amend its accounting records to reverse and rectify the entry made in relation to the $4.25 million in 1993." "That GC&Co take all necessary and proper steps to call, to account and recover from Claude Cassegrain all assets of the Company misapplied by him against his loan accounts." 214Commentary in the notice of meeting referred to the 15 July 1998 judgment of Davies J and his Honour's findings about the establishment of the loan account and drawings on it. 215On 27 October 1998, a memorandum ostensibly from Catherine, Patrick, John and Denis and signed by John alone was sent to Claude as "managing director" of GC & Co. It referred to Davies J's judgment and to the notice of meeting dated 24 August 1998 and continued: "I refer to the meeting which was held on 15 September 1998. As you are aware you refused to participate in that meeting. The only conclusion that we can draw is that you intend to continue to conduct the affairs of the company for your own benefit and not for the benefit of the shareholders as a whole." 216The memorandum then set out a request under s 247A of the Corporations Law for access to books showing movement of funds from 1 April 1998 to the date of the memorandum. Claude replied to John (with a copy to Patrick, Catherine, Denis, Anne-Marie and others) on 28 October 1998 referring to a multitude of matters about family businesses that he regarded as reflecting badly on John. On the question of access to GC & Co's books, Claude merely said that John had had access over a period of two months "last year". 217By a letter of 30 October 1998 addressed to Denis alone, Claude said: "I hereby authorise you to inspect the books of Gerard Cassegrain & Co Pty Limited. Please arrange with me for a mutually convenient time during normal working hours." 218Some eight months later, control of the affairs of GC $ Co passed to the receivers appointed by the Commonwealth Bank. 219In a report dated 24 April 2006 forming part of GC & Co's financial statements for the year ended 30 June 2005, Claude referred to the taxation litigation then in progress. He attributed that litigation to actions of Catherine, Patrick, John and Denis. He said that, during the case heard by Davies J, they had alleged "that the compensation Claude Cassegrain received from the CSIRO was held in trust by Claude Cassegrain on their behalf and the compensation received by Claude Cassegrain was for the purpose of the company avoiding tax"; and that it was after these allegations that the Commissioner of Taxation had issued amended assessments. There were also statements implicating Catherine, Patrick, John and Denis in the creation of the financial predicament that had led to the receivership. 220As at 24 April 2006, therefore, Claude made it clear that there was continuing hostility between him and Catherine, Patrick, John and Denis and that, by that time, he saw GC & Co as locked in battle with the Commissioner of Taxation and otherwise suffering continuing prejudice because of their actions. 221It is thus shown that, as at April 2006, there had been no healing of family wounds and that Claude saw the taxation proceedings as a vehicle for putting to rest allegations by his siblings adverse to him concerning the CSIRO settlement proceeds and their application. It is reasonable to think that the siblings also saw the taxation litigation as a forum in which the competing contentions on that subject would be addressed.

Acquiescence? 222It cannot be said that the passage of some ten years from mid-1997 to December 2007 entailed acquiescence by Denis (or any of Catherine, John and Patrick) in the diversion of GC & Co assets to Claude in the wake of the CSIRO settlement. 223Denis and the siblings aligned with him were active in levelling relevant complaints at Claude in 1998. The receivership intervened in June 1999 and, for reasons I have stated, there can have been no real expectation that they would seek to assert and pursue GC & Co's rights against Claude while the receivership continued. 224After the termination of the receivership in December 2004, there was no acceptance by Denis (or the associated siblings) that there should be no pursuit of Claude. Rather, taxation proceedings were on foot which they were entitled to regard as keeping alive the controversy about GC & Co and the CSIRO proceeds in which they were interested.

Change of position? 225There is no basis for finding that Claude changed his position in any material way on the faith of a belief or expectation that the complaints of Denis and the associated siblings were dead or would not be pursued. Nor has it been suggested that Claude has been otherwise prejudiced by the passage of time. It is not said, for example, that his ability to assemble and present evidence has been compromised.

Conclusion on laches 226This is not a case in which the passage of time has had a deleterious effect on Claude, so far as the present proceedings are concerned. It seems clear that acrimonious differences between the family factions continued unabated throughout the period of the receivership. And after the receivers retired, Claude himself showed, by his statements in the report of 24 April 2006, that he regarded the general issue of his loan account and its application to be not only alive but also a source of serious differences between himself and the sibling group associated with Denis. 227There is accordingly no basis for the operation of the doctrine of laches to defeat the equitable claims pursued by Denis on behalf of GC & Co in these proceedings.

The Limitation Act 228Because the relief to which GC & Co has established an entitlement is wholly equitable relief, the provisions of ss 14, 16, 17, 18, 20 and 21 of the Limitation Act have no direct application. This is the effect of s 23. Nor, in my view, does s 47 operate. This is because a company director owing fiduciary duties is not within the s 11 definition of "trustee". 229The question is accordingly whether the court should apply a Limitation Act provision by analogy. In the absence of some sound analogy, a cause of action for equitable relief for breach of fiduciary duty is not subject to any period of limitation: Attorney-General v Cockle [1988] Ch 414. 230It is therefore necessary to consider whether any of the causes of action dealt with by the legislation is analogous with the cause of action for equitable relief actually before the court. In other words, is there any relevant analogy between the case expressly dealt with by any of the limitation provisions and the circumstances of this case, that is, where a company director who has applied company funds for his own use has been found to have acted dishonestly in breaching fiduciary duties owed by him to his company? 231It has been held in England that a claim for dishonest breach of fiduciary duty is relevantly analogous with a claim for fraudulent misrepresentation or conspiracy to defraud: Coulthard v Disco Mix Club Ltd [2000] 1 WLR 707. In Companhia de Seguros Imperio v Heath (REBX) Ltd [2000] EWCA Civ 219; [2001] 1 WLR 112 at 121, Waller LJ, dealing with claims by a client against an insurance broker for dishonest breaches of fiduciary duty, said: "... equity would have taken the view that it should apply the statute by analogy to a claim for damages or compensation for a dishonest breach of fiduciary duty. I say that because what is alleged against Heath's as giving rise to the dishonest breach of fiduciary duty are precisely those facts which are also relied on for alleging breach of contract or breach of duty in tort." 232Clarke LJ said (at 125): "... the essential nature of the pleaded case is the same whether it is put as damages for breach of contract, damages for breach of duty or damages (or compensation) for breach of fiduciary duty." 233In Aussie Ideas Pty Ltd v Tunwind Pty Ltd [2006] NSWCA 286, the Court of Appeal (Handley JA; Giles JA and Bryson JA concurring) held, following Companhia de Seguros Imperio v Heath (REBX) Ltd , that a breach of fiduciary duty by an accountant and financial adviser involving "elements of dishonesty" warranted analogy with breach of contractual and tortious professional duties. 234Breach of fiduciary duty by company directors was at issue in The Duke Group Ltd v Alamain Investments Ltd (above). But the liability for which the plaintiff actually sought redress was that of a firm of accountants who, it was alleged, had knowingly and dishonestly assisted the directors in the breach of the directors' duties to the company. Doyle CJ was of the view (at [133]) that, had the directors themselves been under attack, "there are causes of action in tort against the directors sufficiently similar to the claim against the directors for breach of fiduciary duty, to warrant in principle the application of that time limit to a claim against the directors for breach of fiduciary duty" (his Honour no doubt had in mind the species of duty of care in negligence discussed in Daniels v Anderson (1995) 37 NSWLR 438). Where, as here, the director acted dishonestly, a closer tort analogy is with deceit or conspiracy to defraud. 235In this case, the characterisation with respect to company directors in The Duke Group Ltd v Alamain Investments Ltd (reinforced by Aussie Ideas Pty Ltd v Tunwind Pty Ltd) warrants an analogy with tort so that the limitation period of six years specified in s 14(1) should be applied. GC & Co seeks equitable compensation for breach of fiduciary duty by Claude. The analogy with a claim for damages for deceit or conspiracy to defraud is valid. 236I have considered but rejected a possible analogy with an action in respect of fraudulent breach of trust or an action to recover trust property. Each of these, under s 47(1), attracts a limitation period of twelve years. The provisions about trustees have regard to the fact that a trustee holds trust property and that the relevant fiduciary duties are owed in relation to that very property: see, for example, Cohen v Cohen [1929] HCA 15; (1929) 42 CLR 91; Paragon Finance PLC v D B Thakerar & Co [1998] EWCA Civ 1249; [1999] 1 All ER 400. Equity views with particular disapproval cases in which a trustee actually holding property misapplies it in breach of duty. A company director who takes company assets which the company then sues to recover may be likened to such a trustee. So too may a defaulting director against whom an account of profits is sought, in that the profits should have come home to the company in the first place: JJ Harrison (Properties) Ltd v Harrison [2001] EWCA Civ 1467 ; [2002] BCLC 162; Gwembe Valley Development Co Ltd v Koshy [2003] EWCA Civ 1048; [2004] 1 BCLC 131. That is not this case. The claim against Claude is for equitable compensation. 237When the analogy with tort is applied, the general rule under s 14(1) is that the cause of action becomes barred six years from the date on which it first accrued to the plaintiff. Given that relevant allegations were aired in the context of the Federal Court proceedings as early as mid-1997 (see paragraphs [193] to [196] above), it is reasonable to think that Denis, John, Patrick and Catherine became aware of the transfer of the Dairy Farm dated 14 September 1996 - and the ledger entries of 30 June 1997 - at or very soon after the happening of those events. 238I have already expressed the opinion that, in relation to the Dairy Farm transfer, Claude's dishonest breach of fiduciary duty consisted of his receiving the advantage of the book entries of 30 June 1997 by which it was recognised that the consideration for the transfer had been satisfied and the supposed indebtedness of CG & Co to Claude had been reduced by an equivalent amount. It was the recording of those matters in the books on 30 June 1997 that gave effect to the directors' resolution of 2 September 1996 and brought about the effective movement of value from GC & Co to Claude and the corresponding depletion of the assets of GC & Co. 239I therefore proceed on the basis that, in relation to the breach of duty involving the Dairy Farm, the start of the s 14(1) period was 30 June 1997. On that basis, the six-year limitation period applicable by analogy with the statute would be taken to have expired on 30 June 2003. 240But, bearing in mind that this is an equity case in which no common law remedy is sought and that the court, acting by analogy only, will follow the law according to the justice of the case, the process must be taken further. Because, at all times after 30 June 2003, Claude was either the sole director of GC & Co or one of two directors (Anne-Marie being the other), the situation was always one in which GC & Co could not, in any realistic sense, assert its cause of action against Claude by means of action by its board of directors and any action by GC & Co would have to be a derivative action initiated by one or more of its shareholders other than Claude. Throughout the period 15 June 1999 to 21 December 2004, however, there was no real ability for any such shareholder to initiate a derivative action either under the general law or by resort to the statutory procedure when it became available in December 1999: see paragraph [205] above. The bank-appointed receivers' predominant duty was to the secured creditor, particularly regarding the realisation of assets. They were at liberty to ignore the company's own interests, except to the extent that any surplus was held after satisfaction of the creditor's debt, in which event they were bound to preserve the surplus for the company. They had no duty to pursue claims of the kind involved in these proceedings. Indeed, they might well have been criticised for doing so instead of preferring easier avenues of realisation. 241The state in which GC & Co found itself between 15 June 1999 and 21 December 2004 closely resembles a state of "disability" under s 11(3) of the Limitation Act . GC & Co was, during that period, "substantially impeded in" the management of its affairs in relation to proceedings against Claude by forces virtually equivalent to "impairment of . . . physical or mental condition" or "restraint of his or her person, lawful or unlawful". By virtue of s 52, the running of a limitation period imposed by the Act is suspended while the person with the cause of action is under a disability in the s 11(3) sense. The process of analogy in the present case should be on the basis that the period 15 June 1999 to 21 December 2004 is one during which GC & Co was "substantially impeded" in the relevant sense, so that that period is excluded in determining whether proceedings commenced on 11 September 2008 upon a cause of action arising, in the relevant sense, on 30 June 1997 were commenced within six years after the accrual of the cause of action. 242The period 30 June 1997 to 11 September 2008 is eleven years two months and eleven days. The period 15 June 1999 to 21 December 2004 is five years six months and six days. When the latter period is excluded, it is seen that, in relation to the consideration for the Dairy Farm transaction, the period between the accrual of the cause of action and the commencement of the proceedings was five years eight months and five days, that is, less than six years. 243In relation to drawings on the loan account involving payment by GC & Co of Claude's personal expenses or drawing of cash by Claude, those occurring after the day that was eleven years six months and six days before 11 September 2008 must be treated as not affected by any time bar applied by analogy. Any earlier drawing must, however, be left out of account in determining equitable compensation to be awarded to GC & Co.

Jones v Dunkel 244In the course of his closing address, Mr Walker SC referred to this case as "Jones v Dunkel at twenty paces". As I have noted, no party called any witness and the whole of the evidence was documentary. Submissions were made by all counsel regarding the significance of the absence of witnesses. 245Having regard to the principles in Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298, I have proceeded on the basis that failure to call a particular witness cannot make up for any deficiency in evidence, allows a fact that might have been contradicted to be more readily accepted and operates in favour of drawing an inference made available in any event by the evidence actually presented. 246On that basis, the absence of evidence from Claude has been much more significant than the absence of evidence from Denis or, for that matter, any of the siblings aligned with him (John, Patrick and Catherine). Denis and his allies were remote from the relevant events except, as to one isolated aspect, for Patrick who was a signatory to the letter of 6 July 1993 and, to that very limited extent, played some active role. 247Claude, by contrast, was intimately involved in every facet of the events in question. He could have provided a vast quantity of relevant information. The fact that he chose not to do so has meant that inferences adverse to him available from the documentary evidence have been drawn with greater confidence.

Relief 248The time-based defences having failed, relief will be granted against Claude and in favour of GC & Co as outlined at paragraphs [182] and [183] above (this is, however, subject to the limitation expressed at paragraph [243] above). The claims by GC & Co against Felicity will be dismissed. 249On costs, my present inclination is to think that Claude should be ordered to pay GC & Co's costs except as they relate exclusively to the aspects of the claims against Felicity not replicated in the claims against Claude; and that GC & Co should pay Felicity's costs as a whole. It is desirable, however, that, before coming to any firm decision, I hear submissions on costs and particularly on the question whether the outcome I have tentatively indicated may cause particular difficulties for a costs assessor. 250I will direct that, within fourteen days, the parties settle draft orders giving effect to these reasons and deliver them to my associate together with a statement of the parties' views as to the most expeditious method of dealing with the remaining matters. I shall then appoint a further hearing.

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