Hyhonie Holdings Pty Ltd v Leroy

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

2663/03 - HYHONIE HOLDINGS PTY LTD v LEROY JUDGMENT 1 HIS HONOUR: These proceedings are brought to determine whether 1000 shares in Aldora Holdings Pty Ltd form part of the bankrupt estate of Robert Lewis Yazbek or whether they are held on trust for the Robert Yazbek Family Trust. 2 The undisputed background facts are that the first plaintiff was incorporated on 1 August 1996 and purchased as a shelf company by persons associated with Mr Robert Yazbek about 21 August 1996. On 26 August 1996, a Mr Back as settlor instituted the Robert Yazbek Family Trust by executing a trust deed and paying a small sum of money. The first plaintiff was the trustee of that trust. 3 There is a second plaintiff, Leila Marie Yazbek, the daughter of Robert Yazbek. However, in the events which have happened, it is not necessary to refer to her further and when I use the word "plaintiff" I mean the first plaintiff company. 4 At all material times prior to his bankruptcy, which occurred on 11 June 2002, after he had filed a debtor's petition, Mr Robert Yazbek was the sole shareholder and sole director of the plaintiff. 5 The first defendant, Mr Leroy is the Trustee of Mr Robert Yazbek's bankrupt estate. When I use the word "defendant" I am referring to Mr Leroy. 6 Aldora Holdings was incorporated as a shelf company on 20 February 1997 and acquired by the Yazbek interests later that month. 7 On 14 March 1997, Aldora allotted 1,000 ordinary shares to R Yazbek and 5 shares to M Yazbek (Robert Yazbek's father, Malek Yazbek) and these people became its directors. 8 As at 14 March 1997, Mr Anthony Alexandrou was the accountant for the Yazbek interests. He continued in that role until December 2000 when he was replaced by Mr Peter White of Bentleys MRI. 9 There is in evidence a document bearing date 14 March 1997 and signed by Mr R Yazbek and witnessed by Mr Alexandrou a declaration of trust, the relevant parts of which are as follows:-

THIS DECLARATION OF TRUST is made by Robert Lewis Yazbek of 28 Liguria Street, South Coogee in the State of New South Wales

I am the holder of one thousand (1,000) ordinary shares, in the company known as Aldora Holdings Pty Ltd (A.C.N. 077 577 550) and having its registered office at Level 8, 55 Grafton Street, Bondi Junction, in the State of New South Wales.

Monies used by me for the acquisition of the shares in the Company aforesaid were provided by the Robert Yazbek Family Trust of Level 8, 55 Grafton Street, Bondi Junction, NSW, and not by me personally.

At the request of and by arrangement with the current trustee of the Robert Yazbek Family Trust being a company by the name of Hyhonie Holdings Pty Ltd (ACN: 075 076 345) I have personally become a shareholder of the Company aforesaid.

I am at all times acting and have at all material times acted as Nominee and Trustee only for the Robert Yazbek Family Trust as herein set out.

I hold now, and at all material times have held, and will hold the benefit of the shares in the Company aforesaid for and on behalf of the Robert Yazbek Family Trust and not otherwise;

The profits and receipts arising therefrom shall be, and are, held by me on trust for and not otherwise, subject at all times to the Robert Yazbek Family Trust indemnifying and holding me indemnified against loss (if any) thereby incurred." 10 Just what happened to that document after it was executed is quite unclear. 11 On 23 December 2000, Mr White collected a box of documents from Mr Alexandrou. He commenced working on the documents found in the box in February 2001. He found the declaration of trust, noticed it was not stamped and had it stamped. 12 On 14 February 2001, Mr White sent an email to one Megan Wilson, an employee of Bentleys MRI. This read: "FYI when preparing the 2000 year accounts for the Robert Yazbek Family Trust we have discovered that the previous accountant has left out the shares that the trust holds in the company 'Aldora Holdings Pty Ltd'. These were never brought to account in the trust. This will also affect the annual return of Aldora Holdings Pty Ltd in that the 1000 shares held by Robert Yazbek are in fact held on behalf of the Family Trust (ie not beneficially). I've asked David to set up the companies within CRS. The 1000 shares will need to be input as being held by Robert Yazbek (ie the legal owner) with the Robert Yazbek Family Trust as the beneficial owner. All good fun." 13 Aldora Holdings filed its first annual return dated 27 November 1997. This was prepared by Mr Alexandrou. This, and indeed each of the returns had a space for it to be declared whether Mr Yazbek held the 1,000 shares beneficially or not. In this, and indeed the four subsequent returns the "beneficially" box was ticked. 14 In his evidence Mr Alexandrou said his wife prepared the annual returns for his clients. She sent them to the client to be signed and on their return to his office, they were filed. He says he forgot to tell his wife about the declaration of trust. His wife also prepared the 1998 and 1999 returns. 15 Mr White prepared the 2000 and 2001 returns. These returns also show Robert Yazbek as the beneficial owner of the shares. Mr White says that that was due to his inadvertence. 16 In April 2002, that is, two months before Mr Yazbek's bankruptcy, there was produced a set of minutes which purported to appoint Mr Yazbek's daughter, Leila Yazbek (the second plaintiff) as sole director of Aldora Holdings and for her as director to approve the transfer of the 1000 shares from Robert to Leila Yazbek. Austin J declared this ineffective in proceedings 1128 of 2003 which had been brought by Malek Yazbek. However, for present purposes, it is significant that Robert Yazbek was involved in this manoeuvre. 17 Malek Yazbek died on 26 April 2003. 18 Robert Yazbek was in business with a Mr Michael Sanchez. Their joint venture was via the corporate vehicle of Doncaster Developments. Aldora Holdings held 50% of the shares in Doncaster Developments and Mr Sanchez's interest the other 50%. 19 The board minutes of Doncaster Developments of 17 August 1999 show that Mr Robert Yazbek was present as a representative of Hyhonie Pty Ltd and the agreement that he would represent both Vitarni (a Sanchez company) and Hyhonie at a meeting with an architect. It would seem that the minutes were prepared by Ms Tranter, Mr Sanchez's personal assistant. 20 Mr Sanchez's evidence is that he was never told of any such trust. 21 Mr A J L Bannon SC and Mr R Powell, for the plaintiff, submitted that these minutes are clearly consistent with a recognition by all interested parties in 1999 that Hyhonie was the real holder of the Aldora shares. Thus, I should not accept Mr Sanchez's evidence. 22 They further say that these minutes were probably based on information given to Ms Tranter by Mr Robert Yazbek, that Ms Tranter is alive and well and in Mr Sanchez's camp, yet was not called. It is also said, and it is not denied, that Mr Sanchez is funding Mr Leroy in these proceedings. 23 I do not see any reason for rejecting Mr Sanchez's evidence. A set of minutes prepared otherwise than by Mr Sanchez is insufficient to displace otherwise credible evidence. 24 Mr B Connell for Mr Leroy says that there are a whole host of facts in addition to what I have set out above which tell against there being a trust. First, he says, the evidence is contrary to the recital that the funds for the acquisition of the shares came from the trust. In fact the trust never had the funds to make the acquisition. 25 Secondly, he says there is a complete lack of record in the books of the trust and elsewhere in places where one would expect to find recordings of the transaction. 26 Thirdly, there is the unexplained circumstance that the trustee was Robert Yazbek, not Hyhonie. 27 Then there is the cryptic end of the email to Megan Wilson, "All good fun": what else could this mean but that there was some smokescreen being set up? Mr White was not asked by either set of counsel to explain this. 28 Before passing to the contentions, I should note that as it may be that in law Robert Yazbek is the trustee of the shares and not the plaintiff as the shares were never vested in the plaintiff, Robert Yazbek was added as an additional defendant at the hearing. I should also note that both counsel inform me that the shares might be very valuable indeed. 29 The plaintiff's case was fairly simple. It says that there was an undoubted declaration of trust signed on 14 March 1997. Despite the fact that it was overlooked by successive accountants and annual returns prepared inadvertently, there is sufficient to show that the trust was genuine and it should be enforced. 30 The plaintiff says that once a person makes a declaration of trust, the trust is effective, even without any communication. Furthermore, the trustee or any beneficiary may enforce the trust even though they provided no consideration. 31 The defendant's case will take much more space to state. Basically, the defendant had the following defences:

2. Any intention to create a trust was not carried out into execution;

There are other matters which also need to be explored such as: (a) the accountants' concept of negative trust property; (b) whether an abandoned trust may be resurrected or revived; (c) the application of the rule in Browne v Dunn in cases where each side has filed affidavits; and (d) whether any order that the plaintiff obtains should be subject to it doing equity by charging the shares with the amount owing by the trust to Robert Yazbek which appears to be $439,053.94. 32 I will deal with the defences noted above under the five heads and then under head 6 come to a conclusion on the fate of this case. 33 1 and 2. These two matters may be considered together as they involve the same facts and legal analysis. 34 The onus of establishing a trust is on the person who alleges it. 35 It is true that a person can create a fully effective trust merely by declaring himself or herself a trustee. As Jacobs notes at [623] the express declaration must be intended to be final and binding on the settlor. It is also true that, if a fully constituted trust has been declared, it may be enforced even though the plaintiffs are volunteers: Collinson v Pattrick (1838) 2 Keen 123; 48 ER 575; Sheslow v Kostin - Young J, 2 May 1997, BC 9702183. 36 However, difficult questions of fact not infrequently arise where a person, despite that declaration continues to exercise personal dominion over the so-called trust property. In Hughes v Stubbs (1842) 1 Hare 476, 479; 66 ER 1119, 1120, Wigram VC said, "a person not intending to give or part with the dominion over his property may retain such dominion, notwithstanding he may have vested the property in trustees, and declared a trust upon it in favour of third persons" and that, when that occurs, it is a very difficult question for equity to determine whether the trust exists or not. 37 In Commissioner of Stamp Duties (Queensland) v Jolliffe (1920) 28 CLR 178, 181, Knox CJ and Gavan Duffy J applied a statement which was to be found in the 11th (1904) edition of Lewin on Trusts, viz: "It is obviously essential to the creation of a trust, that there should be the intention of creating a trust, and therefore if upon a consideration of all the circumstances the Court is of opinion that the settlor did not mean to create a trust, the Court will not impute a trust where none in fact was contemplated." 38 That passage which was included in all subsequent editions of Lewin up to and including the 16th (1964) p 35, is missing from the current (17th ed (2000)) where the authors say in a footnote to para 4-23 that the dissenting judgment of Isaacs J would to-day be preferred in England. Whether this is so or not, Jolliffe's case, or at least Jolliffe's case as interpreted by later decisions of the High Court, is binding on me. 39 The cases cited by Lewin are instructive. The principal authority is Gaskell v Gaskell (1828) 2 Y & J 502; 148 ER 1017. That was a case where there were many indicia of a trust created by a man now deceased, yet that man had never communicated the trust to the trustees appointed and the surrounding circumstances showed that it was more likely than not that the man considered what he was doing would save legacy duty. Alexander LCB held in all the circumstances that no trust had been created. 40 The High Court has revisited this matter at least twice, namely in Kauter v Hilton (1953) 90 CLR 86 and Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (2000) 202 CLR 588. In the latter case, four justices said at 605: "in Kauter v Hilton, the Court treated Jolliffe as deciding, for the purposes of the legislation there in question that 'all the relevant circumstances must be examined in order to determine whether the depositor really intended to create a trust.' " 41 In Arthur v Public Trustee (1988) 90 FLR 203, 209, Asche CJ, giving the judgment of the Full Northern Territory Supreme Court approved the trial judge's test that: "equity will only enforce a trust to the extent that the intention to create a trust is clear. …. Words alone may suffice but where those words are at odds with the donor's action proof may be lacking." 42 It is possible to create a trust by declaration without communication to any person, see Jacobs on Trusts [521] based on Middleton v Pollock (1876) 2 Ch D 104 and Rose v Rose (1986) 7 NSWLR 679, 686. However, the fact of little or no communication is a relevant factor to take into account when assessing whether any trust exists at all. 43 In In re Cozens [1913] 2 Ch 478, 486, Neville J considered the effect of non-communication of a declaration of trust. He said at p 486: "the absence of communication raises a strong inference against an intention to make an appropriation irrevocable. In the absence of evidence to the contrary I think the inference of silence was intended to enable the declarant to adhere to or to abandon the declaration as best served his advantage for the time being." 44 There is no doubt that the authorities which I have summarised above guide me as to how I approach the question as to whether there is any trust. 45 Mr Connell, in his written submissions has made a number of telling points as to why there was no irrevocable trust. I will set these submissions out in the succeeding paragraphs with only slight editing. 46 The analysis of Neville J in In re Cozens at 486-7 is quite apposite to this case even if the court is of the view that Robert Yazbek did not simply fail to implement the transaction envisaged in the document entitled "Declaration of Trust" and leads to the conclusion that even if a trust was created, it was at all times revocable. 47 If any trust was created in 1998, it was not irrevocable and was revoked by its (immediate) abandonment. Given the evidence that the facts in the recitals were quite untrue, there was every reason to do so. 48 The declaration of trust is dated 14 March 1997, the same day as the transactions in which the shares were allotted to Robert Yazbek. The plaintiff, despite the fact that Robert Yazbek and Mr Alexandrou have sworn affidavits in these proceedings, led no evidence as to the timing of the events on that day, or as to any events leading up to or surrounding the execution of the document, as to the existence of any of the facts recorded in the recitals, or as to any step being taken to record or implement the existence of the trust. The evidence is to the contrary. 49 The plaintiff was unable to lead any evidence of such transactions. The only evidence of payments by the plaintiff which its counsel was able to identify as supportive of its case were two cheques issued some time later said to be made on behalf of Aldora Holdings Pty Ltd. These will be dealt with further below to demonstrate that they do not assist in establishing that the alleged trust existed in relation to the shares. 50 The evidence is to the contrary of recital 2 on examination of the accounts of the Robert Yazbek Family Trust, which shows it never had the funds to make the purchase. Mr Alexandrou's evidence was to the effect that he entered data from cheque books and bank statements in compiling the accounts. 51 If there had been an intention to implement the arrangement as envisaged in the declaration of trust one might have expected at the very least the creation of the financial transaction recorded in the recitals, at least on or about the time of creation of the document on 14 Mach 1997, when also the shares were actually acquired by Robert Yazbek, and that to be reflected in the books of account of the trust. 52 There is no evidence led by the plaintiff as to who drew the declaration of trust or as to any surrounding circumstances at the time. 53 Indeed with the onus of proof on the plaintiff, its failure to assist in casting light on the totality of material circumstances counts heavily against it in discharging its onus of proof. 54 There is no evidence that as declared in recital 2, the monies expressed as "used by me" for the acquisition of the shares "were provided by the Robert Yazbek Family Trust … and not by me personally" and the evidence is to the contrary, as referred to above. The form of words "by me personally" is interesting, rather suggesting that the payment was made by his cheque or cash payment and that accordingly there was not on the facts any resulting trust (see Jacobs Law of Trusts 6th ed at para 1210, p 292.9). 55 There is no evidence of any request by the plaintiff or arrangement with it for Robert Yazbek to acquire the shares as recorded in the recitals to the declaration of trust. It is to be noted in this regard that the trust deed of the Robert Yazbek Family Trust provides for the preparation of a minute book for the trust (clause 16). There is also provision for delegation (clause 19) which would govern the unexplained mechanism of having the shares registered in the name of Robert Yazbek rather than the plaintiff, but that should have resulted in a board minute, and none has surfaced. 56 Investigation of the books and records of the trust and of the trustee uncover no evidence of any minute of the board or otherwise separately of the trust, recording the request or arrangement referred to in the recital to the declaration of trust. One would have thought, particularly in the case where Robert Yazbek was in fact the sole director of the trustee, that it would be particularly important if the transaction was intended to be effective, that such a minute be created, and that those advising Robert Yazbek, including his accountant, Mr Alexandrou, who witnessed the document, if directed to implement the transaction (and there was not a shred of evidence to suggest any such direction was given) would have ensured that that occurred. 57 Further, one would have expected a record of the trustee of the trust as provided for in the trust deed, and indeed formal documentation, providing the indemnity envisaged as a requirement in the second bullet point in the declaration of trust, if the transaction was intended to be effective. 58 The absence of a transfer in blank in favour of Hyhonie accompanying the declaration of trust, also, along with the failure to stamp the declaration of trust, are indicative of a proposed transaction which never reached the point where Robert Yazbek intended it to be completed. It is to be noted that Mr Alexandrou's evidence is inconsistent with any implied direction to stamp the document; that was not within his sphere of responsibility. 59 It appears the document was created in a hurry, and that along with evidence of other steps which one would expect is suggestive of an uncompleted transaction. An oddity of the document is that the document does not provide for Robert Yazbek to hold the shares as a nominee for the plaintiff, being the trustee, but rather seems to be expressed as if being somehow holding the shares on the same trusts. It is difficult to imagine that that was ever intended, and that is not the plaintiff's case. There is some uncertainty in the effect of the document. Certainly there is no evidence of Robert Yazbek ever preparing separate trust accounts. 60 After the date of the document, 14 March 1997, nothing further happened for years to give any indication of the existence of a trust. Yet otherwise the records indicate that transactions were properly recorded. 61 Mr Alexandrou and later Mr White had prepared accounts for the Robert Yazbek Family Trust and tax returns which gave no indication of the shares in question being owned by the trust. They completed appropriate declarations approving the documents and confirming the source of information for them, they procured Mr Robert Yazbek to sign them. He did so, after reading them first, and completed the appropriate declarations, all of which are in evidence. His evidence suggestive of lack of complete attention in re-examination was given in circumstances where it was so obviously sought in his interests that it should be given no weight; in any event it was inconsistent with his evidence in cross examination rather than explanatory of it. 62 Indeed the records of the Robert Yazbek Family Trust not only fail to bring into account the shares in question but positively indicate that it had no funds available at the time with which to purchase them. 63 Annual returns for Aldora Holdings Pty Limited were prepared from year to year, which indicated that the shares were owned by Robert Yazbek beneficially. Those annual returns were read, approved and signed by Robert Yazbek year after year. Only once did he alter the entry to indicate he did not own the shares beneficially, and that is on the document stamped as lodged on 4 July 2002, after he became bankrupted and not on the date the document bears, 28 March 2002. In the circumstances it is submitted that it is likely the alteration was made around 4 July, and in cross examination conceded it was possible. Indeed it would be inexplicable to make such a correction to one document in March and to fail to take any other steps to rectify relevant records. 64 The plaintiff called no evidence from those who created the annual returns as to their instructions, nor any explanation as to why they were not called. 65 There was no notification to Aldora Holdings Pty Ltd that the shares were not owned beneficially by Robert Yazbek being registered owner despite the special provision for notification in the company's articles of association (clause 23.9). 66 Indeed, years passed and there was not a single scrap of paper other than the document itself to indicate that the transaction was ever carried into effect. Rather, the business records of all relevant entities as prepared on the instructions of Robert Yazbek were quite inconsistent with the transaction ever having been carried into effect. 67 The evidence indeed points to the fact that even when the declaration of trust "surfaced" when it (or a copy) was given to Mr White on or before 28 February 2001 (see Bentleys MRI timesheets for that day) that it was not taken to have been an effective arrangement by any of the relevant "players". Mr White did take the initiative to have the declaration of trust (or a copy) stamped after informing Robert Yazbek that he should do so but after that it was apparently ignored. Perhaps it was not considered to be effective, this fits in with the "all good fun" dictum. I prefer this to the "overlooked" or "I forgot" theory which does not gel with an accountant's usual practice. 68 As was the case with Mr Alexandrou, the plaintiff led no evidence of Mr White being instructed to bring the shares into the accounts of the trust. The lack of such evidence is startling. 69 Rather, and in the absence of such evidence, the plaintiff asks me to infer that lightning struck the accountants twice, and miraculously the entries they would like to see did not appear in the accounts of the trust. As to Mr White's email to Megan Wilson of 14 February 2001 concluding "All good fun …" and referring to a direction to David (which was not the subject of evidence), the defendant submits that the direction was passed by as put to Mr White in cross examination, and a positive decision was made not to include any such entry. 70 Defendant's counsel submits that just as he was over-anxious to please his client in preparing a backdated minute for distribution for the trust, Mr White's evidence denying this should not be accepted. It is quite inconsistent with the subsequent course of events particularly as evidenced by the fact that advice was 24 April 2002 and attention to the trust's accounts thereafter, the checking and approval of the financial statements as completed thereafter and the Bentleys WIP statements and invoices at that time and after. Further, it is submitted the failure to call other staff is startling; clearly their evidence would not assist the plaintiff's case. 71 The shares were not brought into the accounts of the trust, and in documents prepared by the accountants for the plaintiff and for Robert Yazbek's interests generally, the contemporaneous documentation continued to treat the shares as being beneficially owned by Robert Yazbek. 72 The failed attempt to transfer the shares to Leila Yazbek is also consistent with there being no trust: were there a trust, this attempt would have been quite unnecessary. 73 Robert Yazbek's statement of affairs shows:

(1) Robert Yazbek treating the shares in Aldora Holdings Pty Ltd as being held by him personally and transferred to Leila Yazbek for value (again $1,000).

(2) States in item 11 that he has not transferred any assets to a trust in the last 5 years. In the absence of payment for the shares by the plaintiff, if the declaration of trust was asserted at the time to be effective, the answer would have been, "yes", and not "no" as appears in the document. 74 The most plausible explanation of the course of events is that at no time before Robert Yazbek's bankruptcy, was there any intention to treat the declaration of trust as being effective. It is a plausible explanation of events that the scheme of attempting to transfer shares to Leila Yazbek was one originally designed to assert that there was a transfer for value to her. 75 The only transactions which the plaintiff could come up with in support of an assertion that the declaration of trust was carried into effect was:

(1) The payment of two cheques in relation to the Kensington project. This is not probative of the plaintiff's case.

(2) A board minute of Doncaster Developments (NSW) Pty Ltd at which it is said Robert Yazbek was associated with the plaintiff; this is not probative of the plaintiff's case. 76 I repeat that paragraphs 46-75 are Mr Connell's submissions. However, I accept them as a proper analysis of the position. 77 The defendant says that even if there were otherwise a trust, it was never completely constituted as the step noted in the second bullet point in the declaration of trust was never consummated, nor were the matters the subject of recitals 2 and 3 implemented: see Milroy v Lord (1862) 4 De GF & J 264, 274; 45 ER 1185, 1189. 78 The defendant further says that despite the oddity of the drafting of the declaration of trust, it is not a credible construction in the circumstances that there was an intention to create a different trust, excluding the plaintiff. 79 The plaintiff's riposte to these last two points was merely to the effect that the defendant's submissions completely overlooked the Doncaster board meeting of March 1999. 80 As to the general factual issues, Mr Bannon SC and Mr Powell say that one can see throughout the period from 1997 that there are a series of acts of Mr Yazbek which are only explicable on the basis that the trust exists. 81 Further, the mistakes by the accountants in filing statutory documents should not be given too much weight. The Alexandrou errors are to be explained by the simple facts that Mr Alxandrou did not tell his wife who prepared the return of the trust and Mr Yazbek merely assumed that everything was in order and did not check what he was signing. 82 There is some merit in these points, but they do not deal with the bulk of the criticisms made by the defendant's counsel which I have set out in paragraphs 46 to 75 above. 83 I should further note that when a director is signing an annual return for filing with ASIC, it is seldom an acceptable excuse that he misled the community because he did not properly read the document before signing. 84 The question is one of fact in all the circumstances. As in many cases, there are indications going each way. However, in my view, the facts referred to by Mr Connell far outweigh factors the other way. 85 It is not really a question to be decided on credit as Mr Yazbek and Mr Alexandrou cannot remember the circumstances of the coming into existence of the declaration of trust, nor why it was not immediately acted on. The onus is on the plaintiff, yet there are so many unexplained events. How can it be that two successive accountants ignored the declaration of trust? Why were the shares in Aldora Holdings allotted to Mr Yazbek personally? Why was there the last minute attempt to vest the shares in Leila Yazbek, if they were already protected by being a trust asset? 86 The proper conclusion is that Mr Yazbek and his advisors were seeking the best of all worlds. The trust deed was in existence, but it was never seriously considered until the time came for it to be given significance about the time of Robert Yazbek's bankruptcy. 87 It is of little purpose to analyse whether the trust ever came into existence or whether it was merely incompletely constituted. I incline to the first, but, if this is wrong, then the plaintiff fails because of the second. 88 Thus the plaintiff fails on its principal case. 89 3. In the circumstances there is no need to explore abandonment. 90 4. As to the transaction being a sham, again it is not necessary to explore this. Indeed as Lockhart J said in the Full Federal Court in Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 18 FCR 449, 461, to find a sham needs a strong finding. It is sufficient to say that the bulk of the evidence points to transactions being conducted on the basis that there was no trust at all and that this reinforces the conclusion reached with respect to questions 1 and 2. 91 5(a) and(b). Mr White's accounts showed that, from time to time, the trust fund was a negative amount. As one of the vital elements of a trust relationship is obligations owed by the trustee to the beneficiary over the trust property, what in equity occurs when the trust property ceases to exist? When the trust fund is later augmented or its assets increase in value, is the trust revived or resurrected? 92 There is, as far as I am aware, no decision on this point. However, Scott on Trusts 3rd ed considers the matter at para 74.2 and concludes: "although a trust cannot be created unless there is trust property of such a character that it is the proper subject of a trust, yet the trust is not altogether extinguished merely because the trustee no longer holds any property in trust. It is, however, no longer a full and complete trust. The fiduciary relation continues, although it ceases to be a relation with respect to any specific property." 93 I adopt the proposition stated in Scott. He means that, whilst it is technically wrong to issue accounts for a trust showing negative trust property, the trust continues despite this fact. When, later, as here, the asset is bona fide revalued and the assets are positive again, the trust affixes to the asset once more. I will forbear from describing this as revivor or resurrection. 94 5(c) The Browne v Dunn point has been recently considered by J Campbell J in West v Mead [2003] NSWSC 161. Because I agree wholeheartedly with what his Honour held, I will merely set out what his Honour said in [98] and [99] after a citation from Cross on Evidence 6th Australian edition [17460] footnote 12. 95 J Campbell J said: "[98] The consequences of these decisions is that the circumstances in which Browne v Dunn will require matter to be put to a witness in cross-examination will depend upon the nature of the pre-trial preparation there has been, and whether that pre-trial preparation has been sufficient to give notice to a witness of the submission ultimately intended to be put to the court. An aspect of this is that Browne v Dunn will require more extensive cross-examination in a case where all the evidence is given orally, than is necessary in a case where the substance of the evidence proposed to be given by each side is notified in advance by affidavit or statement. [99] Even when there has been an exchange of affidavits or statements, the rule in Browne v Dunn will require a cross-examining counsel to put to a witness the implications which counsel proposes to submit can be drawn from the evidence, if those implications are not obvious from the evidence, or from other pre-trial procedures, or the course of the case. However, the submission which Ms Bateman seeks to put on the basis of paragraph 181 of Ms West's affidavit in chief involves no drawing together of strands of evidence to create some overall theory or inference of fact, but is a submission as to the legal consequence that should be drawn from the facts plainly asserted in paragraph 181. Nothing in the rule in Browne v Dunn prevents her from putting that submission." 96 Applying the case to the present case, I do not place the significance on non-cross examination by Mr Connell on contentions by the plaintiff's witnesses that Mr Bannon SC submits I should in view of the fact that the relevant positions were already made clear in the opposing affidavits. 97 5(d) This point does not arise on the findings I have already made. However, it is clear that a person who seeks equity must do equity. If the trust owes Robert Yazbek or his bankrupt estate $439,053.94 and if the shares in Aldora Holdings are a trust asset, it follows that one way or another, that sum has to be paid to the estate before the beneficiaries can enjoy the fund. Whether that is done by a condition of payment as a term of doing equity, set-off or otherwise is immaterial. I will not spend further time on it because, in the light of my findings, the matter is academic. 98 6. It follows that the plaintiff's claim must be dismissed with costs. No cross claim was filed and the legal property is vested in the first defendant. Thus I do not need to consider the utility of making a reverse declaration. However, if it is thought to be of utility, I will reserve further consideration. 99 Accordingly, I make the following orders:

(1) Proceedings dismissed; (2) Order that the plaintiff pay the defendants' costs of the proceedings;

(3) Exhibits to be returned; (4) Reserve further consideration as to whether any reverse declaration should be made.

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