Mr Ashton's Evidence in Cross Examination
Mr Ashton then was cross-examined. Not surprisingly, one avenue of attack was the apparent discrepancy between the affidavits filed and the oral testimony in chief as to the accounts said now by Mr Ashton in his oral evidence in chief to have been rendered to Mr Jury in July-August 1995.
Initially in cross-examination Mr Ashton said that he constructed the invoices probably just after completion of the purchase of the home - about August- September 1995 and, it may be interpolated, certainly not "recently" as the affidavits of 26 February 1998 and 10 October 1997 had said. Confronted with this Mr Ashton said that he would be surprised if he had not done it straight after the settlement. He conceded, as his written testimony had made clear, that he had not prepared or rendered any invoice to Mr Jury prior to settlement - nor had he calculated any figure which he claimed to be owing to him at that time.
The cross-examination then turned to the examination of Mr Jury under s 81 of the Act which had taken place in August and October 1997. Certainly no invoices had been produced in connection with the examination in August 1997 although Mr Ashton denied that they had not existed at that time. He said that he had given the invoices to Mr Jury around the time they were prepared, but that Mr Jury had never thereafter referred to them. This too was inconsistent with Mr Ashton's affidavit of 26 February 1988. When confronted with the inconsistency Mr Ashton claimed that his oral testimony was correct. The invoices had not been rendered on a monthly basis as work was done because Mr Jury was not in a position to pay and Mr Ashton was "happy to carry him" until the litigation was finished when Mr Ashton could be paid out of "any settlement that arose". Given the outcome of the litigation one might wonder what settlement was likely to arise.
It should be here noted that the invoices first appeared after the examination of Mr Ashton conducted on 21 August 1997 in response to a notice from the Trustee given in anticipation of a continuation of the examination on 22 October 1997. I would find that the invoices were first prepared some time around the date they were forwarded to the Trustee, namely 14 October 1997 and indeed around the date they first surfaced, that is to say, with the affidavit of 10 October 1997. No doubt this means that the affidavit of 10 October 1997 and the subsequent affidavit of 26 February 1998 was, in this respect, correct. It means also that Mr Ashton's oral testimony can not be accepted on this point.
The cross-examination then moved to the negotiations with Castrission & Co for financial accommodation for Mr Jury to pay legal fees required to be met by Mr Jury and the companies in the litigation. On 19 June 1995 Mr Ashton wrote to Mr Castrission certifying that Mr Jury earned $129,000 from his various companies and could service a loan of $450,000. That figure was false, as Mr Ashton well knew. It represented, said Mr Ashton, the net profits of the Jury companies. Mr Jury's own income as per his income tax return which Mr Ashton had prepared was in the order of $10,000 to $12,000. He said initially that he had just made a mistake. He then conceded that that answer was likewise false. He later reverted to saying that the letter was "a mistake". It reflects somewhat badly however on Mr Ashton's credit.
Accompanying the letter was what purported to be a statement of assets and liabilities of Mr Jury. That document was not in evidence. However, a document purporting to be a statement of assets and liabilities of Mr Jury as at 30 June 1995 was also forwarded to Mr Castrission, although presumably after the letter of 19 June. In addition to shares in public companies said to be worth $1 million (it is clear, at least as a result of the litigation, that they are now worthless) and motor cars, the home was shown to be worth $650,000 to $700,000. A liability was shown of a mortgage to Kothellic Holdings Pty Ltd of $450,000 (to be fair that sum was stated to include anticipated legal costs in another matter).
Mr Ashton said he knew nothing about Kothellic Holdings Pty Ltd. It turned out not to be an Australian company but a Netherlands company - since nothing was apparently paid in discharge of that mortgage I would infer that this was a company which Mr Jury controlled, having, it may be assumed, something to do with tax. The Kothellic Holdings liability was said, in another letter, this time addressed to Smyth King to amount to $200,000 with legals of $100,000. Mr Ashton said that the figure of $200,000 had come from Mr Jury. When a letter of confirmation was requested that the loan was up to date it was provided in a day. It is not clear whose signature is on the letter although it may be noted that Mr Jury's signature appears on the mortgage as a director with a member of the New South Wales Bar as another director. By the time of this letter the application for finance had been reduced to $350,000. In Mr Ashton's letter of 11 July 1995 he wrote that:
"A most conservative valuation of the property would be at $650,000 which would give a LVR of 54%. We consider the property would value at $700,000 which would give an LVR of 50%."
LVR is an abbreviation for "loan-value ratio".
According to Mr Ashton the application was knocked back by Smyth King because Mr Anderson of that firm was uncomfortable with the value of the house as well as being uncomfortable with having Mr Jury as the borrower because of the litigation. It may be interpolated here that Smyth King obtained a valuation of the home as at 25 July 1995. That valuation (an affidavit of the valuer attaching this valuation was read) which was sought in mid July showed, at least in typed form, the borrower to be Mr Jury, although it had been altered in ink to accord with the later developments discussed below. The valuation was of a market value of $595,000, of average marketability. It suggested that a market rental for the home would be $450-$500 a week.
In a postscript to the letter to Smyth King, Mr Ashton added:
"Would it be easier if I bought the house
Cost $600,000 loan $350,000
Loan $350,000 less costs
Interest est 50,000
12 mths in
advance
& legals ------------
Net 300,000"
On 19 July 1995 Mr Ashton wrote to Mr Anderson saying that it was his intention to purchase the property and that he wished to borrow the maximum available on first mortgage, ie. $395,000. He submitted a statement of his own assets and liabilities. It contained no reference to the money which Mr Jury owed him for fees. Although it did show in an income statement fees said to be received from clients in the period to 10 June 1995 of $128,156 which Mr Ashton said represented time charged out at $120 per hour.
Mr Ashton made no enquires of valuers concerning the real value of the home. He said that he was not interested to ascertain what a valuer would say about the property.
According to Mr Ashton the change in arrangements came about as a result of a discussion with Mr Jury about the problem of arranging finance. It may be added that Mr Ashton conceded that at that time he knew that the home was the only asset of value which Mr Jury had. He knew too that, if either Westpac or BAC succeeded in the litigation that they would move to recover the house from Mr Jury, as well as the fact that in that event his prospect of recovering fees from Mr Jury would be zero.
The cross-examination then turned to the question of the lease which Mr Ashton had entered into with Mr Jury. That lease, headed "Residential Tenancy Agreement" purports to have been made on 1 July 1997. It is for a term of three years beginning on 8 January 1996 and ending on 1 July 1999 at a weekly rent of $450.00. Four options take the available tenancy to 7 January 2011. In the event of exercise of the options rent is to be market rent.
In response to requisitions given in regard to the mortgage Mr Ashton indicated that the property was purchased with vacant possession on settlement, that the vendor, Mr Jury, was in possession and that there were no current leases. He agreed that whatever happened. Mr Jury's occupancy was not to be disturbed, an occupancy that included, of course, Mr Jury's family. However, according to Mr Ashton he had subsequently spoken to Mr Anderson saying that he wanted to give a lease to the Jurys to give them security of tenure, with which Mr Anderson acquiesced. He said he might have provided Mr Anderson with a copy. It may be interpolated that in reply to a requisition whether he had ever been bankrupt, Mr Ashton said no, although he said in evidence that he had been bankrupt, although the bankruptcy had subsequently been annulled. However, he said he had disclosed this verbally to Mr Anderson.
The contract by which Mr Ashton purported to purchase the property was drawn up by a Mr Baker who worked for Mr Ashton. The signature purporting to be Mr Ashton's as purchaser was not, Mr Ashton said, his. Whose it was does not appear from the evidence. Mr Baker also prepared a settlement sheet indicating what went on at the settlement. It is interesting to note that nothing appears to have been paid out on the mortgage to Kothellic Holdings. Mr Ashton said he received the settlement statement some two to four months after the settlement on 11 August 1995. It showed a deposit paid to the vendor, when none was paid.
The contract, as is usual provided for a 10% deposit. That no deposit was in fact paid in cash came about, said Mr Ashton, as a contra arrangement against fees payable. The balance payable to Mr Jury on settlement, according to the settlement sheet, $495,370.91, was banked to a company of which Mr Jury was neither a director nor a shareholder. The settlement sheet suggested that an amount of $100,370.91 was paid by Mr Ashton from his own funds and included in the $495,370.91. This, of course, was not true either - no such amount was paid by Mr Ashton, nor was $495,370.91 ever received by Mr Jury. There was only one cheque, in essence the money provided by Mr Ashton's mortgagee which was in the order of $345,000. A year's interest was deposited with Smyth King on an arrangement that half of each quarterly interest payment would be debited from this account with the balance of interest to be provided by Mr Ashton.
In the examination before a Registrar, Mr Ashton said on oath that from August 1995 to January 1996 he had received $150 per week rent from Mr Jury's daughter or son in cash. After January that figure changed to $450 per week. If Mr Ashton's income tax returns are to be believed that was clearly also untrue. Mr Ashton said in evidence before me that he had first received rent from Mr Jury in August 1995 of $100 per week, paid in cash. Nothing turns on the figure of $100 rather than $150 for Mr Ashton said he was unsure which was the correct figure. Cash would be handed over sometimes by Mr Jury, sometimes by his daughter. If Mr Ashton had regularly received rent in the amount he claimed the receipts in the year ended 30 June 1996 would have been in the order of $15,000. What Mr Ashton received was $9,600 according to his tax return. There were no records to verify the matter. The mathematics of rent payable as against tax return records indicate clearly enough that at least in the initial period from August 1995 to January 1996 Mr Ashton could not have been paid anything like either $100 or $150 per week. He made, it would seem, no complaint about his being out of pocket; nor did he attempt to recover arrears. When the figures were put to him Mr Ashton accepted that prior to January 1996 payments of rent to him were irregular.
The date on the lease agreement of 1 July 1997 can not be accepted. In response to a notice regarding his examination by the Trustee in July 1997 Mr Ashton said that there was no documentary evidence of a lease, except for rent statements. The latter Mr Ashton said he "constructed", whatever that expression may be taken to mean. It follows that the lease agreement was probably prepared after that date, although Mr Ashton continued to protest that it had been prepared around the date it bore. However, in the course of his examination under oath by the Trustee Mr Ashton had said that it had been prepared about two weeks before the examination which took place on 21 August 1997. When confronted with this Mr Ashton said the truth was what was stated in the transcript. It is easy to infer that the continuing bankruptcy enquiries prompted the preparation of the lease. The successive options display both Mr Ashton's and Mr Jury's preoccupation with securing Mr Jury's continued occupation of the home at the expense of creditors.