In the matter of MSU Management Pty Ltd - Urusoglu v MSU Management Pty Ltd & ors - [2011] NSWSC 54 - NSWSC 2010 case summary — Zoe

NSWNSWSC

In the matter of MSU Management Pty Ltd - Urusoglu v MSU Management Pty Ltd & ors

[2011] NSWSC 54

Supreme Court of NSW|2010-11-12|Before: Ward J

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Source facts

Court

Supreme Court of NSW

Decision date

2010-11-12

Before

Ward J

Source

Original judgment source is linked above.

Judgment (8 paragraphs)

[1]

49 CLR 337 Commonwealth of Australia v McLean (NSWCA, 31 December 1996, unreported) David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; (1992) 175 CLR 353 Davis Contractors v Fareham UDC [1956] AC 696 Dextra Bank & Trust Company Limited v Bank of Jamaica [2002] 1 All ER (Comm) 193 Equity 8 Pty Ltd v Shaw Stockbroking Ltd [2006] NSWSC 1251 Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471 Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95 ES Gordon Pty Ltd v Idameneo (No 123) Pty Ltd (1995) 15 ACSR 536 Farah Constructions v Say-Dee [2007] HCA 22; (2007) 230 CLR 89 Fexuto v Bosnjak Holdings Pty Ltd (1998) 30 ACSR 688 Flett v Deniliquin Publishing Co Ltd (1964-1965) NSWR 383 Ford by his Tutor Beatrice Ann Watkinson v Perpetual Trustees Victoria Limited [2009] NSWCA 186; (2009) 75 NSWLR 42 Goozee v Graphic World Group Holdings Pty Ltd [2002] NSWSC 640; (2002) 42 ACSR 534; 20 ACLC 1502 Grant v John Grant & Sons (1950) 82 CLR 1 Hangkam Kwintong Woo v Liu Lan Fong (1951) AC 707 Hayward v Timilty [2009] NSWDC 54 HML v R [2008] HCA 16; (2008) 235 CLR 334 Ho v Powell (2001) 51 NSWLR 572 Horton v Jones (1934) 34 SR (NSW) Horton v Jones [No 2] (1939) 39 SR NSW 305 Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) [2008] FCA 810; [2008] ATPR 42-410 Integrated Computer Services Pty Ltd v Digital Equipment Corporation (Aust) Pty Ltd (1998) 5 BPR 11,110 Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 Joseph Constantine Steamship Line Ltd v Imperial Smelting Corp Ltd, "The Kingswood" [1942] AC 154 Katsilis v Broken Hill Pty Co Ltd (1977) 18 ALR 181 Lactos Fresh Pty Ltd v Finishing Services Pty Ltd (No 2) [2006] FCA 748 Lumbers v W Cook Builders Pty Ltd (in liq) [2008] HCA 27; (2008) 232 CLR 635; (2008) 247 ALR 412 Mackay v Dick and Anor (1880-81) 6 App Cas 251 Magill v Magill; [2006] HCA 51(2006); 226 CLR 551 Martin v Australian Squash Club Pty Ltd (1996) 14 ACLC 452 McLaughlin v Daily Telegraph Newspaper Co Ltd (No 2) [1904] HCA 51; (1904) 1 CLR 243 Morningstar Research Pty Ltd [2005] NSWSC 442; (2005) 53 ACSR 732 at 735; 23 ACLC 1100 Nocton v Lord Ashburton [1914] AC 932; [1914] All ER Rep 45 Ocean Tramp Tankers Corp v V/O Sovfracht (The Eugenia) [1964] 2 QB 227 Pacific Brand Sports & Leisure Pty Ltd v Underworks Pty Ltd [2005] FCA 288 Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221 Placer (Granny Smith) Pty Limited v Thiess Contractors Pty Limited (2000) 77 ALJR 768 Rafeletos v Great Wall Resources Pty Ltd [2009] FCA 1396 Re M. Dalley & Co Pty Ltd (1968) 1 ACLR 489 RJ Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd [2009] WASC 206; [2010] WASCA 128 (7 July 2010) Roxborough v Rothmans of Pall Mall Aust Ltd (2001) 208 CLR 516 Scanlan's New Neon Ltd v Tooheys Ltd (1943) 67 CLR 169 Secured Income Real Estate (Australia) Limited v St Martins Investments Proprietary Limited [1979] HCA 51; (1979) 144 CLR 596 Shelton v NRMA [2004] 51 ACSR 278 Southport Tramways v Gandy [1897] 2 QB 66 State Bank of New South Wales Ltd v FCT (1995) 62 FCR 371; 132 ALR 653 The Bell Group Ltd (in liq) v Westpac Banking Corp [No 9] [2008] WASC 239 The Super Servant Two [1990] 1 Lloyd's Rep 1 Thomas v HW Thomas Ltd [1984] 1 NZLR 686; (1984) 2 ACLC 610; (1984) 2 NZCLC 99,148 Vroon BV v Fosters Brewing Group Ltd [1994] 2 VR 32 Watson v Foxman (1995) 49 NSWLR 315 Wilson v Kelly [1957] VR 147 Winspear v MacKinnon [2007] FCA 2077 Texts Cited: Andrew Marsden in 'Prejudicial relief?' (1994) 15 Company Lawyer 178 Elizabeth Boros in Minority Shareholders' Remedies at p 123 Goff & Jones, The Law of Restitution (7th edn, 2007 Category: Principal judgment Parties: Elif Urusoglu (First Plaintiff) Mahir Urusoglu (Second Plaintiff) MSU Earthworks & Heavy Haulage Pty Ltd (Third Plaintiff) MSU Management Pty Ltd (First Defendant) Scott Larry Brennan (Second Defendant) Representation: Counsel: S Jacobs (Plaintiffs) E Cox (Defendants) Solicitors: Marando Solicitors (Plaintiffs) Walker Hedges & Co (Defendants) File Number(s): 09/288299 (Equity Division) 09/295975 (Common Law Division)

[2]

Judgment 1HER HONOUR : In these proceedings, claims are made by two members of the Urusoglu family (Elif and her brother Mahir) and by a company controlled by Mahir (MSU Earthworks & Heavy Haulage Pty Ltd) against a finance broker and erstwhile family friend (Scott Brennan) in relation to matters relating to a company (the first defendant, MSU Management Pty Ltd) formerly controlled by Elif but now controlled by Mr Brennan. (Without any disrespect, I will refer to the members of the Urusoglu family, including Elif and Mahir's father Huseyin, by their first names. Both Mahir and Huseyin were also referred to on occasion in the evidence before me by Anglicised names - Mike and Sam, respectively - but for consistency I will refer to them by their given names.) 2Elif's principal claim is for the rectification of the company's share register so as to regain the legal ownership of the shares in MSU Management (to which it is said she is in equity entitled) and thus to regain control of the company. She also seeks damages in her own right for breach of contract or alternatively relief on behalf of the company (relying upon an alleged contravention by Mr Brennan of ss 181 and 182 of the Corporations Act 2001 (Cth)) in relation to the use by Mr Brennan of moneys drawn from the company funds, while he was a director, for his personal expenditure. In the alternative, Elif seeks damages (in the pleading claimed in the sum of $680,000 but in the course of closing submissions put at a lesser sum - in the order of $250,000, or lesser still, $179,000) plus interest by way of relief for the alleged oppression of her interest as a former member of the company or in lieu of specific performance of the alleged agreement on the part of Mr Brennan to transfer back to her the shares in MSU Management. 3Elif's claims broadly rest on the establishment of an alleged agreement on the part of Mr Brennan either to hold on her behalf or to transfer back to her (after obtaining the financing necessary to enable the company to purchase a property in Mt Vernon) the shares in MSU Management. 4Mahir's claim (and that of his company) is in the alternative to that brought by Elif. Counsel for the plaintiffs, Mr Jacobs, confirmed that this claim is pressed only if Elif does not obtain the relief sought by her. In that event, Mahir and his company seek restitution for the alleged unjust enrichment on the part of the defendants in retaining the benefit of subdivision works said to have been carried out at their request and/or freely accepted by them (those works having been carried out by or at the expense of Mahir or his company) or alternatively as damages for deceit. Mahir's claim is nevertheless said to hinge on the existence of the agreement on which Elif claims (T 388). 5The nub of the dispute is as to what agreement was reached in 2008 in relation to the purchase by MSU Management of land at Mt Vernon which one or more of the Urusoglu family wanted to retain for the construction of their family home (but also for use as a display home in order to promote a wall panel product - WIPS - created or developed by Mahir and apparently patented by him or by an entity associated with him). 6In essence (though there seemed to be various iterations of the alleged agreement on which the principal claim is based, to which I will refer in more detail shortly), the Urusoglu claim is that Huseyin and Mahir (acting on behalf of Elif) entered into an agreement with Mr Brennan, the intent of which was to enable the purchase and development of the Mt Vernon land with the benefit of mortgage finance to be arranged by Mr Brennan and that, following the subdivision of the land into two blocks, one block of land (the front block) was to be the Urusoglu family home. It is said that the agency relationship between Huseyin/Mahir and Elif can be inferred from the fact that Elif (somewhat inconsistently with her protestations of independence) left the conduct of the affairs of MSU Management to her father and brother. 7The land in question had been acquired by Huseyin in 2004. Following his voluntary entry into bankruptcy in late 2007, the land was put up for auction by Permanent Custodians in the exercise of its powers as mortgagee in possession. It was acquired at auction on 5 July 2008 by MSU Management and remains in the ownership of that company (the land having been subdivided into two lots in early 2009). As part (or on Elif's evidence in breach) of the arrangements between the parties for the financing of the acquisition of the land, the shares in MSU Management were transferred to Mr Brennan in 2008 pursuant to a share transfer form dated 16 June 2008 but registered on about 28 July 2008 after the auction sale. 8It is alleged that Mr Brennan's refusal to transfer the shares back to Elif is in breach of the above agreement. It is further alleged that, in breach of an implied term of the agreement on the part of Mr Brennan (to do nothing within his power to diminish or destroy the benefit to Elif of the agreement), Mr Brennan has diverted (from funds obtained through the later refinancing in 2009 of the initial loan arrangements pursuant to which the land was acquired) funds of the company to his own personal use. (Although initially pleaded as a diversion of funds in the order of $300,000, by the time of the hearing what was claimed as funds utilised for personal expenses was in the order of $179,000.) 9The alternative unjust enrichment claim arises in respect of the work carried out for the construction of a concrete access road (sometimes described, 'absurdly' in the words of one of the Urusoglu relatives, Mr Mesut Kanli, as a driveway) through the land (to satisfy one of the conditions of the development consent for subdivision) and the provision of landscaping and other services, such as water services, to the land. It is alleged that this work was carried out at the express request of Mr Brennan or, alternatively, that the benefit of the work was freely accepted by Mr Brennan (or MSU Management), and that the work was provided upon the mistaken belief that the shares in MSU Management would be transferred back to Elif (such that the Urusoglu family would obtain the benefit of this work). 10Further, it is alleged that the making of the alleged agreement constituted a representation that Mr Brennan would reconvey the shares (on which representation Mahir and his company allegedly relied in carrying on the works in question) and that Mr Brennan had no honest intention of so doing - this being relied upon for the claim for damages in deceit. 11Mr Brennan denies the agreement as pleaded but does admit that an agreement was made in relation to the land in question. That agreement, in summary, is alleged to have been that Mr Brennan would arrange the funding for the acquisition of the Mt Vernon land; that Mr Brennan would acquire the property (it being agreed that he would do so through the corporate vehicle, MSU Management); that the Urusoglu family would carry out the subdivision work at their own cost; and that on completion of the subdivision the front block would be sold to a person or entity nominated by Huseyin at a fair market price (with the logical consequence that the back block, and any profit thereon, to be retained by Mr Brennan through his ownership of the shares in MSU Management). It is said that it was never a term of this agreement that Mr Brennan would re-convey the shares to Elif. 12Mr Brennan says that after the subdivision was completed Huseyin nominated a newly incorporated company controlled and owned by his brother-in-law (Mr Kanli) to acquire the front block. A Contract for Sale of Land was entered into on 9 February 2009 in respect of the front block, with Sebat Pty Ltd (Mr Kanli's company) as purchaser (for the sum of $850,000) and MSU Management as vendor. No deposit was paid as required by the contract (according to the Urusoglu witnesses, it was agreed that Mr Kanli's contribution to the cost of the subdivision works would be treated as the deposit). That contract was in due course terminated for breach. The land in question remains occupied by Mahir and remains burdened by an equitable mortgage in favour of Trimac (as well as securing the lending by NAB/Homeside). MSU Management seeks an order for possession in respect of the land and mesne profits for the period of its occupation by Mahir. 13By way of reply, filed by leave at the close of the hearing but foreshadowed during the course of the hearing, it is contended by Elif and Mahir that (in the event that the agreement is found to be as asserted by the defendants and not as asserted by the plaintiffs) on the facts pleaded in paragraph 5(vii) of the Defence to the Amended Statement of Claim (i.e. the termination of the Sebat Contract of Sale on or about 9 March 2009) there has been a frustration of the contract Mr Brennan says he entered into with Huseyin. In those circumstances, the plaintiffs seek practical restitution as between the parties. It is said that such restitution requires the recoupment of the benefit of the works carried out on the land and that one way this benefit may be valued is by reference to the benefit of the company funds Mr Brennan used for personal expenses since becoming a director (on the basis that those funds were only made possible though a refinancing that occurred on the basis of the subdivision that had been effected). Issues 14The issues for determination are broadly as follows: (i) What was the agreement pursuant to which the Mt Vernon land was acquired in the name of MSU Management and Elif's shares in that company were transferred to Mr Brennan (it being neither party's case that there was no agreement at all in relation to the transfer of the shares)? (ii) If the agreement was as the plaintiffs contend (and Mr Brennan is in breach of that agreement by having refused to re-convey the shares in MSU Management to Elif), what relief should be granted (and is Elif entitled to damages for breach of an implied obligation by Mr Brennan not to diminish the benefit to her of the agreement to re-convey the shares)? (iii) Alternatively, has Elif established an entitlement to relief on the basis of oppression and/or is she entitled to claim damages in the name of MSU Management for funds diverted from the company to Mr Brennan's personal use? (iv) If the agreement was as Mr Brennan contends, did the termination of the Sebat Contract of Sale amount to frustration of the agreement and, if so, should practical restitution be ordered and what would it comprise? (v) Has Mahir established an entitlement to damages for deceit? (vi)Are Mahir and his company entitled to relief on the basis of their unjust enrichment claim and, if so, in what amount does their claim in quantum meruit sound? (vii) On its separate claim, is MSU Management entitled to an order for possession of the Mt Vernon land and for mesne profits? 15Pressed at the close of the hearing to articulate the damages claimed by Elif, Mr Jacobs said that, if the shares are returned to Elif, then the amount claimed by her is $179,000 plus interest (being the amount of the company funds used for personal expenses of Mr Brennan) but that, if the shares are not returned to Elif, then what is sought is the amount of $250,000 plus interest (being the value of the land, as evidenced by the purchase price stipulated in the Sebat contract - $850,000 - less the amount outstanding on the existing mortgage over the front block - $600,000 - and assuming the Trimac loan over the land had been extinguished). 16Therefore, when considering the relief claimed, I note that the amount quantified in the pleadings at $300,000 is now said to be $179,000 and the $680,000 claimed elsewhere in the pleading is now claimed as $250,000. 17Mahir's alternative quantum meruit claim is in the order of $350,000 (a sum of $347,000 being the amount appearing in an invoice rendered by his company, MSU Earthworks, in December 2008 for the subdivision works. That sum includes a component referable to an invoice for $90,000 on the letterhead of All Concrete Constructions Pty Ltd, the authenticity of which invoice is in dispute. Conceding that there might be some difficulty in establishing the figure of $350,000, it is nevertheless submitted by Mr Jacobs that at least $250,000 in value has been shown to have been conferred by reference to the works (that comprised of $130,000 from Mr Kanli, concrete supplied by Western Suburbs Concrete for approximately $30,000 and the disputed invoice of $90,000). Summary 18In summary, for the reasons set out below, my views on the above issues are as follows. (i) What was the parties' agreement? 19The plaintiffs (Elif, Mahir and his company, MSU Earthworks) have not established on the balance of probabilities that there was an agreement in the terms for which they contend. On the whole, I find Mr Brennan's version of events to be the more credible. I find that the agreement reached between Huseyin and Mahir (on behalf of Elif) in relation to the acquisition of the Mt Vernon land was for Mr Brennan to arrange finance for its purchase by MSU Management; for the shares in, and control of, MSU Management to be transferred to Mr Brennan; for the subdivision of the land at the cost of Mahir (or the extended Urusoglu family); and for the transfer of the front block, at a fair market price, to Huseyin's nominee after completion of the subdivision. 20In particular, I find that there was no promise by Mr Brennan not to register the share transfers and no obligation on the part of Mr Brennan to transfer the shares in MSU Management back to Elif. 21The consequence of this is that (subject to the obligation to transfer the front block to Huseyin's nominee) Mr Brennan is entitled through the shares in MSU Management to any profit from the sale of the respective blocks of land. (ii)Relief for Elif if agreement in relation to shares were established 22On my finding in (i) above, this issue does not arise. Had it arisen, I would have been inclined to the view that the appropriate relief depended on the content of Mr Brennan's obligation in relation to the shares. If his obligation was to hold the share transfer form and not to register it, then I would have been of the view that the appropriate remedy was to rectify the register. Had I been of the view that Mr Brennan was entitled to register the share transfer but was thereafter obliged to transfer back to Elif the shares, then I would have considered the appropriate relief to be to order the transfer by Mr Brennan back to Elif of the shares he holds in MSU Management (or damages for failure to do so). 23In either case, I consider that any relief involving the reinstatement of Elif as a member of the company would have needed to be conditional on the reimbursement to Mr Brennan of any interest or other payments made by him or on his behalf in relation to the land over the period from July 2008 and to the procuring of a release in respect of any liability he or his wife have or may continue to have under guarantees given in connection with the financing of the acquisition or development of the Mt Vernon land. 24As to the re-financing of the initial loan facilities obtained in that regard, and the use by Mr Brennan of funds derived from that refinancing for his personal use, had I found that the agreement was as contended for by Elif, then any claim for damages suffered for breach of an implied obligation not to diminish the benefit to Elif of the reconveyance of the shares would be referable to the loss of value in the shares which was not established. I would have therefore been inclined to think that the appropriate remedy would be to order Mr Brennan to reimburse to the company the sum of $179,000 (plus interest) being the amount drawn from the company funds to his personal use (in the absence of evidence from Mr Brennan that he was entitled to do so). (iii) Oppression/derivative claim 25I am not satisfied that Elif, as a former member of the company, has established any oppression in relation to the circumstances in which she was removed as a member and director of the company and hence has not established any entitlement to relief under s 234 of the Corporations Act . 26As to the question of any breach by Mr Brennan of his duties as a director of MSU Management by reason either of his conduct (after Elif ceased to be a shareholder) in not paying down the so-called Trimac loan at an earlier time or in drawing down company funds for his personal use, those issues do not arise on the suit of Elif (since I am not satisfied that she has any entitlement to the shares of the company). Had the issue arisen, then it would have been necessary to consider Elif's application for leave to bring a derivative suit in the name of the company (problematic in that it could be assumed that if Elif were the sole director and shareholder then there would be no basis for thinking that the company would not itself prosecute the claim and because it was not explained how the overlap between Elif's personal claim for damages and the cause of action asserted on behalf of the company would be addressed in the context of what whether it would be in the best interests of the company to bring the claim). I am inclined to think that the requirements for leave to bring a derivative suit in those circumstances were not satisfied. 27In passing I note that I would not have been satisfied that the evidence before me enabled me to form a conclusion (had it been necessary) that the delayed repayment of the Trimac loan was a breach of director's duties since I was not privy to all of the circumstances in which that loan was not paid down (there having been, I was told, litigation last year in relation to that loan) and the commercial prudence or otherwise of deferring repayment in the anticipation of a sale of one or both of the blocks is something that seems to me to fall within the realms of a business judgment that I am simply not in a position on the evidence to assess. However, I accept that the evidence would have allowed the conclusion that there was a serious question to be tried on that issue. 28As to the payment by Mr Brennan from company funds of personal expenses, it was suggested that this could legitimately have been effected by way of a loan account with the company or as a payment at the direction of Mr Brennan of directors' fees. However, in the absence of evidence as to those issues, a payment out by Mr Brennan of company funds for personal expenses would prima facie seem to be in breach of his duties as a director and there would have been a serious question to be tried also on that issue. 29In light of the finding in (i) above, I can usefully take the matter no further (other than to note that had Elif succeeded on her principal claim in relation to rectification of the shares, and been reappointed as sole director it would then have been open to her in the name of the company to pursue claims for breach of director's duties against Mr Brennan, if so advised, and hence there would not seem to be a need for leave to bring a derivative suit). (iv) Frustration 30I am not satisfied that the termination of the Sebat Contract of Sale operated to frustrate the agreement that I have found was reached in relation to the transaction (namely that the front block would be subdivided at Mahir or the Urusoglu family's expense and sold at a fair market price to Huseyin's nominee). 31The front block remains in the ownership of MSU Management. I am not satisfied that the agreement has become impossible of performance. (It seems to me that there is a reasonable argument that, the sale to Sebat having fallen through, it remained open at least for a reasonable time after termination of the Sebat contract for Huseyin to nominate another purchaser of the land for fair market value.) Nor am I satisfied that performance of the contract has become a radically different thing, so as to give rise as a matter of law to frustration of the contract. The performance by Mahir of his obligations to carry out the subdivision works may not have had the outcome Mahir desired but his performance of the subdivision works was always to be in circumstances where the benefit hoped to be achieved was dependent on Huseyin's nominee being able and willing to complete the contract. 32In any event, I have concluded that the failure of Sebat to complete the 2009 contract was due to a decision by Huseyin (or in which he acquiesced) for his nominee not to proceed with that sale or an inability on the part of Huseyin to arrange the necessary finance for that to occur. I am satisfied that Sebat, in entering into the contract for sale, was doing so on behalf of Huseyin. Any frustration of the agreement by reason of the failure by Sebat to complete the contract in those circumstances seems to me to be self induced. (v) Damages for deceit? 33I am not satisfied that it has been established that Mr Brennan has any liability in tort for deceit. (vi) Mahir's alternative quantum meruit claim 34I am not satisfied that Mahir (or his company) has established a claim based on the unjust enrichment of Mr Brennan or MSU Management (and, even if there had been such a claim I could not be satisfied that the quantum of the benefit to be restored to Mahir or his company had been adequately established). (vii) Claim for possession 35In light of the above findings, MSU Management is entitled to an order for possession of the Mt Vernon land. I consider that it is also entitled to an order for mesne profits. I think it appropriate that the quantification of those profits be referred to a referee or to an Associate Justice but will hear submissions in relation to the most expeditious way of carrying out such an assessment. Facts 36Prior to his entry into bankruptcy, Huseyin had carried on business as a property developer. (According to Huseyin's evidence in the witness box, in explanation for his assertion that he did not care what happened to the Mt Vernon property after his bankruptcy, Huseyin said that he had been involved in millions of dollars worth of property development.) He was described by Counsel for the plaintiffs, Mr Jacobs, as an entrepreneur (and there was no suggestion to the contrary). 37Mr Brennan is a finance broker and had, over the years, arranged to procure finance for Huseyin for various property developments. Mr Brennan conceded that there had been a commercial relationship with Huseyin over the years and did not deny that he had derived commission or brokerage fees from his dealings with Huseyin. Though the precise quantum was not admitted, Mr Brennan accepts that he had received at least $120,000 in that regard. Nevertheless, the receipt of commissions seems to be only one side of the equation. Mr Brennan claims to have suffered considerable (and far more extensive) losses in at least one project in which he says he (and his colleagues) had invested funds (referred to as the Granville development), something not acknowledged either by Huseyin or by Mahir (other than that Huseyin said that "everybody" had lost in that project and appeared to acknowledge that Mr Brennan had been pressing him for repayment of money in respect of the project). 38It does not appear to be disputed that the two men and their families had had a social relationship for some time (though the extent of it may be in dispute). Both Elif and Mahir said that they had called Mr Brennan "Uncle". (Their trust in Mr Brennan, which I consider likely to have been overstated by both, was given as the explanation for Elif's preparedness to sign documents that she now says she knew were incorrect at the time and which she says her father's accountant had advised her at the time not to sign.) 39In around 2004/2005, Huseyin bought the land at Mr Vernon which is the subject of the claims in the present proceedings. At that time, the land had the benefit of a Development Consent for subdivision into two lots. One of the conditions of the subdivision consent was the creation of a 3.5m sealed driveway or access road along the boundary of the land. Mahir's evidence is that he carried out substantial work to clear the Mt Vernon land in 2006 (and he estimated that work to be worth around $300,000). Mahir's evidence in the witness box was that much of the work done prior to the events in question in 2008 (or at least the works in relation to the access road) was rendered worthless (and later had to be re-done) due to the delay occasioned by the mortgagee taking possession of the property (that arising by reference to the impact of the weather on the incomplete roadworks). 40Huseyin says that he wanted to build a family home on the Mt Vernon land and to do so by using an insulated wall panel system ("WIPS"). Mahir said that he had created or invented the idea of WIPS. He was enthusiastic and expansive in his description of it in the witness box, (as compared with his evidence in relation to other matters in which he displayed an attitude of distinct disinterest). Huseyin's plan was to live in the home but also to use it as a display home in order to demonstrate the features of the WIPS product. In the witness box, Huseyin emphasised that the only way that "they could all get back trading" was for the WIPS project to "get off the ground" (T 74) and that for that to happen it was necessary to have a display home to demonstrate the benefits of WIPS.

WIPS 41It is not clear to me when the WIPS product was first developed or what, if any, arrangements were made as between the parties for the development or commercialisation of WIPS. However, Mr Brennan seems to have been approached to become involved in the WIPS project, at least in relation to the financial side of that project, at some time in 2007. Huseyin said that there were discussions as to Mr Brennan obtaining a commercial interest in the product. (Huseyin said that he had promised both Mr Brennan and another person, who he described as a friend, Mr Ashish Patel, a percentage of the company to be set up to commercialise WIPS although no such shareholding was ever transferred and it seems clear that WIPS did not ever 'get off the ground' at least in the Urusoglu family's hands). Huseyin says that he set up WIPS Management (T 74), although this is not clear from the ASIC search. Mahir said in the witness box that WIPS had been patented and that the patent was owned by a company but that it had been sold - though he claimed to have an entitlement to some management and royalty fee. He accepted that to date WIPS has not made money (T 30) and there is nothing to suggest that there was any mechanism in place by which, if it did, Mr Brennan would benefit therefrom. 42The relevance of WIPS to the dispute at hand is that Mr Jacobs submits that the prospect of a profit being made out of the WIPS product (together with the commission to be generated from the raising of finance for the acquisition of the Mr Vernon land) was the commercial incentive for Mr Brennan to enter into the agreement that Huseyin and Mahir say was reached in mid 2008. (For Mr Brennan it is said that there was no commercial purpose served in him entering an agreement in the terms contended for by the Urusoglu family and hence it is objectively unlikely that there was an agreement in such terms). 43In any event, in August 2007, a company was incorporated (WIPS Management Pty Ltd) by Mr Brennan, which suggests that at that time he anticipated in some fashion becoming involved in the promotion and sale of WIPS in the future (since otherwise the use of WIPS in the company name seems hard to explain - it might be thought likely that Mahir or his father would take objection to the use of the WIPS name by a party not involved in some way with the project). This company did not, however, ever trade. In June 2010, Mr Brennan resigned as a director and secretary of the WIPS Management company and transferred his shares in that company to his wife. Mr Brennan, in cross examination, said that WIPS Management was just "lying around unused" and had been put into his wife's name so some good use could be made of it, though it is not clear what use that might be.
Huseyin's bankruptcy - late 2007 44In late 2007, Huseyin declared himself bankrupt. Chronologically, this followed (and Huseyin says it was caused by) the failure of the Granville project. In cross-examination, Huseyin became visibly upset when talking about his current financial position (saying that he had lost everything) and at one stage seemed to attribute his bankruptcy to following Mr Brennan's advice, though there was no evidence as to this and nothing turns on it for the purposes of this proceeding. For his part, Mr Brennan says that he (and his colleagues, collectively) lost about $2.8m in the Granville project. He deposed to having made a number of attempts to procure repayment of moneys lent for the project from Huseyin (and Huseyin does not seem to dispute that Mr Brennan was upset and demanding moneys around this time). Huseyin's attitude in the witness box seemed to be that he, Huseyin, had lost his 'life' over the project and thus he had little room for sympathy for Mr Brennan's position; further, he maintained that he was not aware whether there had in fact even been any losses sustained by Mr Brennan (apparently solely on the basis that he had not been shown all the financial documents he had requested in relation to this issue.) 45The first registered mortgagee (Permanent Custodians) in due course exercised its power of sale and put the property up for auction on 5 July 2008 as mortgagee in possession.

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Mesut Kanli 228Mr Cox submits that, insofar as Mesut Kanli accepted that he was not involved in these transactions as a free agent for his own benefit, he was Huseyin's stooge. While I do not accept that Mr Kanli made such a concession, his actions (and in particular his inaction in early 2009) seem inconsistent with someone seeking to purchase the front block in his or his company's own right. It seems inconceivable that if Huseyin (or Mahir) was not the real person behind the Sebat transaction that Mr Kanli had not shown any interest in the progress of the transaction and that there had been no complaint when the contract had been terminated. I accept that Mr Kanli was genuinely trying to help the family. I think it likely that he was doing so at the request and in accordance with the directions of Huseyin and/or Mahir. 229As to the evidence on the cash cheques and cash given to Mahir, on its face it seems unlikely that an experienced businessman would part with substantial sums without any more particular information as to the request than that there was a development being undertaken by Mahir at the Mt Vernon land and without keeping or obtaining records of what was spent. It seems more likely from this that Mr Kanli was providing funds as a gift and as a family matter. Mr Kanli did not suggest that these payments were loans to Mahir. Mr Cox submits that the reference to these payments as contributions to the ultimate purchase price is improbable. (In that regard, it seems to me more likely that any reference to these amounts being treated as the deposit was raised after the subdivision and as part of an attempt by Huseyin or Mahir to reduce the amount of cash that would be necessary for the purchase of the front block, but this is speculation on my part.) 230It was pointed out that a large amount of cash was deposited into Mr Kanli's account on 20 January 2008 and yet a cash cheque was drawn the following day (which surely would not have been necessary since the amount to be withdrawn could have been retained before the deposit was made) and hence it is submitted the evidence on cash payments should not be accepted as reliable. 231There is no dispute that Mr Kanli paid $9,800 by cheque to the council and that he had a concrete account with Western Suburbs concrete (which he says he paid) but he has not advanced any claim in relation to those funds. 232As to the (very vague) evidence from Mr Kanli in respect of the circumstances in which the sale contract was signed in the name of Sebat on 6 February 2009 at Strathfield, the only logical explanation for his denial of knowledge in relation to the contract was that he did not have a real interest in it (and was acting at the direction of his relatives). 233Mr Cox submits that, as a witness, Mr Kanli was guarded and sceptical of any questioning. He certainly appeared to be wary in the witness box (and went so far as to suggest that he thought it was as if he were on trial, perhaps since there had been a need to caution him in relation to the evidence he might give in relation to disclosure in relation to taxation matters). However, in general I formed the view that Mr Kanli was endeavouring to answer the questions put to him truthfully and to the best of his ability. Dennis Castino 234Mr Jacobs submits that Mr Castino presented as someone who was embarrassed to have been party to a back-dating of the relevant company form. I accept that Mr Castino was quick in the witness box to shoulder the blame for the fact that he had acted otherwise than in accordance with what he regarded as proper practice in that regard. Other than his long term client relationship with Huseyin, there seems no reason for Mr Castino not to have given truthful evidence. That said, I would place more reliance on his contemporaneous notes than his memory particularly when some of the evidence of what occurred at the meeting emerged for the first time in the witness box. Defendant's witness Mr Brennan 235Mr Jacobs points to a number of matters that he says reflect adversely on Mr Brennan's credit and/or on his attitude in this litigation. 236First, it is said that it was difficult to obtain from Mr Brennan on discovery the documents relating to expenditure of funds from the NAB refinancing (said to be reflective of a consciousness of guilt on Mr Brennan's part) and it is said that the cross-examination of Mr Pelle as to the basis for his assertion that moneys had been applied to Mr Brennan's personal use was a waste of court resources when Mr Brennan then conceded that those expenses were for his personal benefit. A Notice to Produce issued on 1 April 2010 was relied upon in this regard, (Mr Cox, however, pointed to the response which had been made on 12 April 2010 inviting the plaintiffs to identify particular transactions in respect of which documents were sought, an invitation that the Urusoglus' solicitor (Mr Marando) concedes was not taken up.) As to this issue, I do not consider that the resistance by a party to production of documents of itself indicates a consciousness of guilt. It is unfortunately a common experience of litigation that opposing sides will take different views as to the relevance of documents sought by way of discovery or as to the ambit of discovery sought. I think it more likely that Mr Brennan's initial stance (rightly or wrongly) was that these were documents personal to him and not relevant to the dispute and he should not be required to produce them. The invitation later put forward by his solicitors seems to me to have been a sensible means to resolve the issue and not redolent any intentional concealment of documents. 237Secondly, it was suggested that Mr Brennan had misstated or misrepresented the basis on which he had made certain accusations in relation to the represented value of the Granville project by suggesting that an expression of interest document (by Australian Unity) in relation to the Granville Project had been a signed contract (this also being said to be inconsistent with Mr Brennan's practice only to lend on written third party valuations). The difficulty with this submission is that this material was rejected, on Mr Jacobs' application, when Mr Brennan's affidavit was read at the hearing. 238Mr Jacobs then made much of two matters in particular: first the fact that Mr Brennan had made a statutory declaration on 28 August 2008 (apparently in the context of an application to the Office of State Revenue in relation to stamp duty on the share transfers) to the effect that MSU Management had no liabilities or contingent liabilities or assets or contingent assets as at that date and as to his evidence in the witness box in relation to his awareness of discovery obligations. 239As to the OSR declaration, Mr Jacobs submitted that this was a false declaration in that, as at that date, MSU Management had incurred a liability under the Contract for Sale of Land and had an asset being the chose in action represented by the contract. Mr Jacobs pointed to paragraph 29 of Mr Brennan's affidavit, in which he had used the phrase "unknown contingent liability". It was submitted that as a mortgage broker of long standing, Mr Brennan would know the meaning of that phrase. Cross-examined as to the declaration, however, it seemed to me that, while the declaration was factually incomplete, it was consistent with Mr Brennan's incorrect understanding of the effect of entry into the sale contract. 240As to the evidence relating to his discovery obligations, my observation of Mr Brennan in the witness box was that he was at times unable to follow the thrust of Mr Jacob's somewhat rapid fire style of questioning. The gist of Mr Brennan's evidence, however, was not consistent with a disregard for his discovery obligations but, rather, with a feeling that he had been let down by his former solicitor (on whom he had relied for advice and answers in this regard). 241Mr Jacobs also points to inconsistencies in Mr Brennan's evidence such as the statement in Mr Brennan's affidavit that he was "not aware of the reason why those documents [the ASIC forms] were not .......available for me to sign until 21 August 2008", faced with his acknowledgement in cross-examination that he had received the ASIC forms on 7 July 2008 and was in a position to sign the forms on that date. It is not clear to me what the reason for the discrepancy in the dates was or whether it did anything more than cast doubt on Mr Brennan's recordkeeping. 242It was further submitted that the fact that Mr Brennan could not recall a number of matters in respect of the documentation of the Mt Vernon deal and in relation to the proceedings indicated either that his memory was dull or that his tactics in the witness box were sharp. In this regard, Mr Jacobs pointed to the answers given by Mr Brennan as to his understanding of "discovery" (notwithstanding the swearing of various affidavits in relation to discovery) and the evidence he subsequently gave in that regard (evidence that I consider explicable by reference to the evident difficulty Mr Brennan had in following the questions put to him). 243Mr Jacobs also pointed out that Mr Brennan had conceded in cross-examination that some of the items listed as personal expenditures in his affidavit had not been paid by him (such as Capital Gains Tax and Goods & Services tax amounting to somewhere in the order of $80,000.00). However, on a fair reading of the relevant pages, it seems to me that Mr Brennan was doing no more than deposing to those amounts being payable. 244It was submitted by Mr Jacobs that Mr Brennan was a reticent and overly cautious witness, guarded in his evidence and as someone who was doing less than his best to assist with the truth. My impression of Mr Brennan in the witness box was that he was frequently confused by the questions put to him and that he was not seeking to avoid answering them but attempting to do so to the best of his ability. 245On balance, I accept Mr Brennan's evidence as being his genuine attempt to recall the relevant events. The matters to which Mr Jacobs adverted did not persuade me otherwise. 246I note that Mr Cox submitted that Mr Brennan's recollection of events in 2008 was not tested so it could not be submitted that funds could have been better utilised by way of repayment of the Trimac loan - matter going to the breach of director's duty allegation. Mr Ishwar Shrestha 247Mr Jacobs submits that a Jones v Dunkel inference ( 1959) 101 CLR 298) can be drawn from the fact that no evidence was called from Mr Brennan's accountant, Mr Ishwar Shrestha, to whom documents were supposedly given on the 16 June 2008. 248A Jones v Dunkel inference is open to be drawn in relation to an unexplained failure to call evidence as to a matter that calls for explanation. The rule in such a case permits evidence in relation to that matter to be given greater weight, and an inference or inferences to be more readily drawn, when the party who might have called evidence to the contrary has chosen not to do so. In Commonwealth of Australia v McLean (NSWCA, 31 December 1996, unreported), Handley JA and Beazley JA said: "... The rule typically applies to strengthen or weaken an inference otherwise available on the evidence for the benefit of the party not in default." 249If such an inference does arise, it would do no more than permit the court to infer that the uncalled evidence or missing material would not have assisted the case of the party against whom the inference is drawn; it would not permit the court to infer that that the uncalled evidence was in fact damaging to that case. 250What the principle allows is the more ready acceptance of evidence which might have been contradicted (but which was not). Thus, w here an inference is open from facts proved by direct evidence and the question is whether it should be drawn, the circumstance that the party disputing it might have proved the contrary, had it chosen to give evidence, is properly to be taken into account as a circumstance in favour of drawing the inference (per Davies AJA in Ho v Powell (2001) 51 NSWLR 572, at [76]; HML v R (2008) 235 CLR 334; 245 ALR 204 at [302] [303; [2008] HCA 16; Brandi v Mingot (1976) 12 ALR 551 at 559-60; Cf Jones v Dunkel (1959) 101 CLR 298 at 320-321; [1959] HCA 8; Katsilis v Broken Hill Pty Co Ltd (1977) 18 ALR 181 at 197; 52 ALJR 189 at 197; and Menzies J in Jones v Dunkel (at 312)). 251It nevertheless remains the case that (as per Dixon CJ (at 305)): The facts proved must form a reasonable basis for a definite conclusion affirmatively drawn of the truth of which the tribunal of fact may reasonably be satisfied. 252In Ho v Powell , Davies AJA said at [15]: ... it is important to have regard to the ability of parties, particularly parties bearing the onus of proof, to lead evidence on a particular matter, and the extent to which they have in fact done so: cf 69 ALJ at 732-733, 736, 740. As stated by Lord Mansfield in Blatch v Archer (1774) 1 Cowp 63 at 65; 98 ER 969 at 970: "... [A]ll evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted". See also Azzopardi v The Queen (2000) 75 ALJR 931 at 935 [10]; 179 ALR 349 at 353 [10]. noting that Jones v Dunkel was a particular application of this principle. 253Mr Jacobs pointed out that Mr Brennan had described Mr Shrestha as the in house accountant of NLG ([para 29]) and that, as there was no suggestion that he had been unavailable to give evidence, his evidence can thus be inferred not to have been of assistance to Mr Brennan on the key issue as to when the ASIC documents were prepared (and perhaps as to when the meeting was held), such that this should lead the court to prefer the plaintiffs' version of events. 254Mr Cox submits that there was no reason to call Mr Shrestha since he did no more than prepare documents for lodging with ASIC and for the incorporation of Sebat and that all he could have been expected to give evidence about would be the date of lodgement of the ASIC forms - not the date of the meeting. (It was said from the bar table that he no longer works for Mr Brennan.) In circumstances where it is not ultimately disputed that the ASIC forms were prepared by Mr Castino on 7 July 2008 and signed by Mr Brennan on that day (lodged thereafter) I accept that there is no issue on which Mr Shrestha might be assumed could have assisted and I draw no adverse inference from the fact that he was not called. 255Mr Jacobs also submitted a Jones v Dunkel inference would arise from the failure of the defendants to tender a file note of Mahir's solicitor that had been the subject of a notice to produce (as to the instructions received by him in relation to the initial draft of the Statement of Claim). Mr Cox submitted that I could not infer that this assisted the plaintiffs when they had not themselves sought to tender the documents. I do not consider anything arises from this. In the absence of evidence to the contrary, I can only assume that a solicitor acting properly would have drafted the pleadings consistently with his or her instructions. Issues (i) What was the relevant agreement in relation to the Mt Vernon land? 256The content of the agreements for which the respective parties contend is markedly different.

Urusoglu contentions as to the agreement 257Mr Jacobs submits that the agreement reached between Huseyin, Mahir and Mr Brennan was an evolving or springing contract, by which I understand him to mean that it was reached during the course of a series of conversations and not necessarily able to be identified by reference to a previous point at which there was an offer and acceptance. 258When pressed as to precisely what the agreement was (there having been I thought, some conflicting evidence from the Urusoglu witnesses in that regard particularly as to the non-lodgement of the paper work versus the re-transfer of the shares), Mr Jacobs confirmed that on the plaintiffs' case the only contract was one that arose after the auction and was one pursuant to which Mr Brennan was to seek finance for the purchase of the land (and to be responsible for arranging the payment of interest for the first 3 months - a term said to be implied into the contract, though it is hard to see why such a term should be implied since on the Urusoglu version of events the company was at all times to be in equity in the ownership of Elif). 259Mr Jacobs emphasised that one of the terms of that agreement was that there was to be no actual transfer of the shares in MSU Management (through which the purchase was to be effected) - the purpose of signing the share transfer form (and related documents) being so that Mr Brennan could lend his good credit rating to enable the funds to be borrowed by MSU Management and to show the financier that Mr Brennan was in control of the company for the relevant period. In response to my query as to whether or not that was tantamount to unclean hands (and seemingly inconsistently with the above submission and with the pleaded term to that effect), Mr Jacobs submitted that the plaintiffs' case was not that there was only a 'paper transfer' (which is what one might have thought was an apt description if there was a signed share transfer form transferring the shares on paper but it was never to be lodged) but rather that the shares were to be transferred and later re-transferred. 260(Elif's evidence that the shares were never actually to be transferred seems to be inconsistent with Mr Castino's stated unhappiness with what he referred to as the 'actual transfers' - T 203. More relevantly, it is inconsistent with the allegation that the shares were to be re-transferred to Elif (which necessarily is predicated on there being a transfer in the first place). It is also inconsistent with the arrangement being one pursuant to which the front block was to be sold to Mr Kanli (since if MSU Management remained in control, through Elif's ownership of the shares, of the Urusoglu family, there would be no need for that to happen in order to realise the so-called family dream or, in Mahir's words, "family plan").) 261Mr Jacobs says that the agreement that Mr Brennan was to arrange finance was reached in discussions between Mr Brennan and Huseyin on 6 or 7 (and probably 7) July; and that MSU Management was to be used for that purpose. Mr Brennan was to become a director of the company in order to arrange the borrowing. The land was, according to Mr Jacobs, to be held as an asset of "trust" (MSU Holdings Trust), which did not feature in any version of the relevant conversations (though Mahir says he raised the position of the trustee when he was at the auction). 262The consideration for Mr Brennan's involvement was said to be the earning of commissions and the possibility of obtaining some profit out of WIPS (though the mechanism as to how the latter was to be achieved was by no means clear - Mr Brennan's ownership of WIPS Management Pty Ltd, later transferred to his wife, achieves nothing if that company has no interest in WIPS). 263Such an arrangement does not explain why Mr Brennan would have been willing to assume any personal liability in relation to the financing (even if that personal exposure might be limited to a 3 month window, as Huseyin says Mr Brennan insisted it was to be). Perhaps that might have been explained by reference to the social relationship between the parties but by 2008 that relationship seems already to have been sorely tested by the events leading up to Huseyin's bankruptcy. Further, it seems unlikely that an experienced finance broker would have committed to such an arrangement without any written document making clear the limit to his obligations in relation to the transaction and without some form of security for the obligations he was undertaking. 264Huseyin says that there was sufficient equity in the land to cover any exposure (and that may have been the case) but even if that makes any exposure on the Trimac loan unlikely, the exposure remains (as the present events have clearly shown) and it is not clear that it would remove concern by Mr Brennan as to personal exposure on the ANZ loan in any event. 265It is the plaintiffs' case, confirmed by Mr Jacobs, that the arrangement in relation to the works to be carried out (namely that they were to be undertaken by Mahir,) forms part of the so-called springing contract and that this arrangement was reached in discussions with Mahir in November - at which time the term pleaded in paragraph 6(ii) of the Amended Statement of Claim became part of the contract. However, it is submitted by Mr Jacobs that discussions with Huseyin in relation to the land being subdivided necessarily involved the subdivision works being done - so it seems to be the plaintiffs' case that the November discussions simply crystallised the manner in which the Urusoglu family's interest in the land was to be effected. 266It is also contended by Mr Jacobs, that in September/October 2008, a further term of the contract was agreed namely that there would be a second mortgage (by which I understand him, and Huseyin as well, to be referring to the Trimac loan); that the subdivision would be completed and that all the funds (presumably from the refinancing) would be used to pay the second mortgage with the balance to reduce the first mortgage (ANZ loan) on the front block. On this, the evidence of Huseyin seems to be that initially the funds for the 20% portion of the acquisition that could not be borrowed from ANZ because of its 80% loan to value ratio were to be provided by Mr Kanli but that Huseyin then decided to use those funds for the subdivision works which meant there was a need for a second facility (the Trimac loan). The need to pay it out quickly was due to the high interest rate (hence the force of Huseyin's complaint in the witness box seemed to be as to Mr Brennan's failure to pay down the Trimac loan, thus exposing the company to higher default interest, and that he had used those loan funds for his personal interest). 267The final piece of the agreement asserted by the Urusoglu family (T 371) seems to be that in December 2008 it is said that Mr Brennan and Mahir agreed that Mr Kanli's contribution to the subdivision works would form the deposit for a contract for the sale of the front block to Mr Kanli and that Mr Kanli would take the front block encumbered with a mortgage of $600,000 approximately. 268Apart from the fact that no sale to Mr Kanli would be necessary if the arrangement at all times was that MSU Management would remain in the ownership of the Urusoglu family, the contract signed by Mr Kanli's company in early 2009 is inconsistent with that arrangement. Significantly, also, Huseyin seems to have been involved in that sale process (having, according to Mr Kanli, accompanied Mr Kanli to Mr Brennan's office in January 2009 for the incorporation of Sebat and when arrangements were put in place for the raising of finance - and, according to Mr Kanli, when the contract for sale was signed) and seems to have raised no objection to that process. I would infer from Mr Kanli's evidence that Huseyin nominated Mr Kanli or his company as his nominee for the purpose of the agreement to sell the front block after subdivision (as contended for by Mr Brennan). 269Raising of the refinance from Homeside/NAB is said to be consistent with the agreement to pay out the Trimac loan when it fell due in February 2001 and to support the agreement as contended for by the Urusoglu family. Of course, if there was no agreement to transfer back the shares in MSU Management to Elif, then the fact that the Trimac loan has not been repaid (even if that be in breach of director's duties) would occasion no loss to the Urusoglu family because Mr Brennan (both through MSU Management and through his personal security in respect of that loan) ultimately will be liable for the increased arrears (except perhaps to the extent that this might prejudice the ability to sell the front block to Huseyin's nominee). (If, however, Elif is entitled to the shares then I accept that if they were transferred back to her (or the register rectified to that effect) then she would regain ownership of the company now encumbered by a much larger liability to Trimac due to the defaults since February 2009. Whether (and how) that is compensable is something I deal with later in the context of the relief claimed for breach of contract.)

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(ii) Relief, had agreement been established? 292The primary relief sought by Elif is an order nunc pro tunc pursuant to s 175 of the Corporations Act for the rectification of the register of MSU Management to remove Mr Brennan's name as shareholder and to reinstate that of Elif. That order is sought on the basis of the contract pleaded, whereby Elif's shares were to be re-transferred to her, and Mr Brennan's refusal to do so. Given the finding in (i) above, this does not arise but nevertheless I consider the position had it in fact arisen. 293It is submitted by Mr Jacobs that Elif is an "aggrieved person" within the meaning of s 175 because she is the equitable owner of the issued shares in MSU Management (presumably on the basis of the contention that there was an enforceable agreement for the shares to be transferred back to her, since no trust over the shares was alleged). Reference was made to what was said as to the court's discretion by Fullagar J in Grant v John Grant & Sons ( 1950) 82 CLR 1 at 51 as follows: The power to order rectification of the register must clearly, I think, be in all cases discretionary. The person claiming rectification must show that he has some equity which the court will protect. If he is a shareholder, then prima facie he shows such an equity if he establishes that a name is wrongly included in or omitted from the register of his company . Some definite reason must be shown, I would think, for refusing rectification before rectification will be refused. But there may be circumstances which justify, or even compel, refusal." (my emphasis). 294The power of the court to order rectification of the register is part of its general jurisdiction to "act in personam" in aid of a legal right which is subject to the same principles which apply generally to equitable remedies (G rant , per Fullagar J, at 51). 295Where it is established that someone who is a shareholder has ceased to be noted on the register as a shareholder, and asserts that this was without authority, then the company must establish that the shares were cancelled with authority and/or that it acted reasonably to remove the name of the shareholder from the register. In McLaughlin v Daily Telegraph Newspaper Co Ltd (No 2) [1904] HCA 51; (1904) 1 CLR 243 (at 266) Griffiths CJ, on an application for rectification of the share register, said: The plaintiff is entitled to say to the company - to adopt the words of Shadwell VC ... - 'you are bound by law to be my bookkeeper in respect of my stock, and to show me the true account of it, and if I can show that on a given day stock stood in my name, and now show that it does not stand in my name, and I have not authorised the transfer of it, you are responsible to me - that is say, you must make the account stand as it ought to have stood'. ... The plaintiff, then, having established that he was, before the transfers to be directly mentioned, registered in defendants' register as the holder of the ... shares in question, the onus is cast on the defendants to show that the change in the register has been made by plaintiff's authority. 296That said, Grant would suggest that the ultimate onus of establishing wrongful omission or removal from the register remains on the party asserting it. This was the approach adopted in Actwane Pty Ltd (Receiver and Manager Appointed) (In Liquidation) and William James Moss v Hotel Redfern Pty Ltd, Actwane Holdings Pty Ltd and Stephen Michael Larkin [2002] NSWSC 265 by Bergin J (as her Honour then was) and in Rafeletos v Great Wall Resources Pty Ltd [2009] FCA 1396 by Emmett J, In other words, an evidentiary onus will lie on the defence in respect of particular factual issues asserted by the defendant (by way of the defences raised) failing the satisfaction of which the plaintiff's evidence in favour of rectification may be sufficient to support the relief sought but this does not change the ultimate onus on the person claiming an entitlement to rectification of the register. 297Here, there is no dispute that Elif signed the share transfer form pursuant to which Mr Brennan became registered as shareholder and on which he relied to procure the removal of Elif's name from the register. Thus, the onus lies on Elif to establish that there was an agreement that the share transfer form would not be lodged and that Mr Brennan would not become registered as shareholder. Had that agreement been established then the registration of Mr Brennan as shareholder and the removal of her name from the register would have been without Elif's authorisation and prima facie an order for rectification of the register would lie. However, I am not satisfied that Elif has established that this was a term of the agreement reached on her behalf by her father and brother in 2008. 298Once it is established that the registration of the transfer was authorised (as logically it must have been for there to be any agreement at the outset of the transaction for there to be a later transfer of the shares back to Mr Brennan, as also contended by Elif on the pleadings), then the question becomes whether there was an agreement for the transfer of the shares and, if breached, what remedy lies for breach of that agreement. Elif bears the onus in that regard also. 299As it is, I have found that there was no agreement for the re-transfer of the shares to Elif (and no antecedent promise by Mr Brennan not to register the share transfer form). Therefore, I am not satisfied that Elif's name was wrongly removed from the register in the first place. Had there been an agreement for the shares to be re-transferred to Elif, then I would have considered the appropriate remedy to be to order Mr Brennan to re-transfer the shares in accordance with that agreement (or, in the alternative, to order damages for breach of that obligation). The case, it seems to me, is one of wrongful omission in the register but one which it is said to be a breach of contract for Mr Brennan not to reconvey the shares. 300Insofar as there is a discretionary element in relation to relief of the kind sought on this aspect of the claim, Mr Cox submits that Mr Brennan should not be ordered to re-transfer the shares (and the register should not be rectified) without account being taken for interest paid by Mr Brennan on behalf of MSU Management in respect of the loans made to it. It is submitted that Mr Brennan changed his position in so doing. (In that regard, there is some dispute as to the evidence in relation to what amounts were personally paid by Mr Brennan and what came out of the finances obtained by the company - or what remain payable. It is not necessary for me to determine that issue. Suffice it to note that I do not accept Mr Jacobs' submission that Mr Brennan has misrepresented the position in the schedule to his affidavit.) 301(I also note that Mr Cox submits that the loss on any claim for damages for the refusal to transfer the shares would be the value of the shares and that this has not separately been proved and cannot be assumed to be the cost of the works or the moneys personally expended by Mr Brennan out of company funds. By way of illustration, Mr Cox says that the land was acquired for $960,000 and that if the work on it (as Mahir says) cost $350,000 then there was an expenditure of $1.31 plus interest (say $1.5m) whereas the asking price for the respective blocks in 2009 totalled $1.48m; thus leaving little by way of profit in the company at that stage.) 302I accept the force of the submission that any rectification of the register would need to take into account amounts personally expended by Mr Brennan on account of the company and would have been inclined to make any order for relief of this kind conditional on account being made of such interest repayments (though not the default interest occasioned by the decision to spend part of the finance obtained from Homeside Lending on personal expenses rather than repayment of the loan). 303The other claim for relief based on the existence of an agreement for the re-transfer of the shares is Elif's claim for damages for the alleged breach of an implied term of the agreement with Mr Brennan (namely, that he would not act so as to subvert the contractual benefit of that contract), whether that term be found as a matter of construction of the agreement or by way of an implication of the term at law (Mr Jacobs noting the discussion in this regard in Jackson Nominees P/L v Hanson Building Products P/L [2006] QCA 126.) It is said that Mr Brennan breached this term by diverting $179,000 of MSU Management's money to his personal use. 304As to the allegation of damages for breach, in Jackson Nominees , Williams JA referred to the position where one party, by its conduct, removes the sub-stratum of the contract so that the other party is denied the benefit of the contract, referring to the principle stated by Lord Blackburn in Mackay v Dick and Anor (1880-81) 6 App Cas 251 at 263 (that where both parties have in a written contract agreed that something be done that could not effectually be done unless both concurred in doing it, then the construction of the contract was that each agreed to do all that is necessary to be done on his or her part for the carrying out of that thing) and other authorities as to the implication of a mutual obligation to do all things necessary to enable the other party to have the benefit of the contract or not to do anything calculated to hamper the other in the performance of the contract. Jerrard JA noted that this was referred to as a rule of construction in Mackay v Dick and Secured Income Real Estate (Australia) Limited v St Martins Investments Proprietary Limited [1979] HCA 51; (1979) 144 CLR 596 but described in Byrne v Australian Airlines Limited as not so much as a rule of law as a term implied in the sense of being attributed to the contractual intent of the parties unless contrary to the proper construction of their bargain. Mr Jacobs seemingly contends for a term in effect of the kind referred to in Ansett Transport Operations Pty Limited v The Commonwealth of Australia and Ors [ 1977] HCA 71; (1977-78) 139 CLR 54 at 61, that "a party to a contract made on the footing of a continuance of a state of things may not by any act within its power or control do anything to destroy or diminish that situation" 305On this basis, Elif seeks damages for breach of the agreement to transfer back to her the shares, those damages it is said to reflect the value of the shares as at the date of breach calculated on the basis of the value of the work done (said in the submissions to be $347,463.60) plus the diverted sum of $179,000.00. Mr Jacobs says that this calculation assumes that the mortgages otherwise balanced out the value of the Mr Vernon land. 306In that regard I think that a distinction would have to be made between conduct such as mismanagement of the company's affairs due to inefficiency or incompetence, for example, or due to a belief that there would be funds derived from other sources to pay down the Trimac loan in the short term, which surely must be a risk assumed by someone transferring shares under an arrangement of the kind contended for by Elif, and conduct whereby company moneys were deliberately diverted for personal benefit of the director). 307The damages recoverable as a result of any such breach would be such as to put Elif in the position that she would have been in had there not been such a breach. Logically, given that the conduct complained of is that Mr Brennan chose not to apply all of the funds from the Homeside refinancing to the repayment of the Trimac facility and instead diverted moneys to his own use, the question would be how the value of those shares in Elif's hands would be diminished by the fact that the company remained liable for the interest on the Trimac loan - I am by no means satisfied that this would be measured by the additional interest payable to Trimac or the quantum of the moneys so applied for personal expenses (the former being the cost to the company but not to Elif directly of the conduct; the latter being to require Mr Brennan to disgorge the benefit he obtained personally). 308In the event, nothing turns on this as I have not found there to be any agreement for the transfer of the shares back to Elif. Had I so found, then it would have been impossible for me on the evidence to ascertain what damage had been caused to Elif (as opposed to the company) in terms of the diminution of the value of her shares by reference to the conduct in question (and I would not have considered it appropriate to order the payment of the $179,000 direct to Elif, but would have been inclined to consider that the appropriate relief would be to order Mr Brennan to repay those moneys to the company with interest). 309Had I found that the agreement with Mr Brennan was that he would do no more than hold the share transfer forms or that he would retransfer the shares to Elif after holding them for a short time solely to facilitate the financing, then I would have been inclined to the view that Mr Brennan had an implied obligation not to diminish the company's assets in the interim or, put in positive terms, to do no more than would be consistent with a "caretaking" role or as required to effect the financing. A withdrawal of funds for private purposes seems to me clearly to be inconsistent with this. However, the damage Elif personally suffers as a result of that conduct must be the amount by which value of shares diminished by that conduct and I am not satisfied that this has been established (and it could not be pursued at the same time).

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(iii) Oppression/Breach of Directors' Duties 310There are two further bases on which Elif seeks the repayment (to herself or to the company) of the moneys used by Mr Brennan for personal expenses ($179,000) (and said to have been wrongly diverted from MSU Management). 311The first is oppression and the second is via a claim for breach of directors' duties. It is submitted that if the register is rectified nunc pro tunc , such that Elif is back in control of MSU Management, then she has standing to seek a remedy in its name (Mr Jacobs referring to Winspear v Mackinnon [2007] FCA 2077 para [54], where Marshall J noted Counsel's concession that if the rectification order was made nunc pro tunc , (finding the plaintiff to be entitled retrospectively to be a member of the company at the time the application was filed) then the standing issue - there, in relation to an oppression suit - disappeared. No similar concession was made by Mr Cox.)

Oppression 312As to the oppression claim, s 234(c) of the Corporations Act provides a remedy for oppression to those who have ceased to be members, if the application relates to the circumstances in which they ceased to be a member. 313Mr Jacobs drew my attention to two articles referred to by Elizabeth Boros in Minority Shareholders' Remedies at p 123, addressing the question as to whether the corresponding English statutory provision should be expanded to give standing to former members of a company to complain of oppression (Ms Boros being of the view that it should "since unfairly prejudicial conduct may arise out of circumstances in which a person ceases to be a member, or have occurred while the former members were still members but have come to light only after they ceased to be so"). 314Given that Elif was the sole member and director up until the time of transfer of her shares to Mr Brennan, any complaint of her treatment or of the conduct of the affairs of the company while she was still a member could only be a complaint directed against herself. I did not understand Mr Jacobs to be invoking the second of the scenarios identified by Ms Boros (of circumstances where a former member might legitimately have a complaint as to unfairly prejudicial conduct of the affairs of the company). 315As to the first of those scenarios, Ms Boros referred to the fact situation described by Andrew Marsden in 'Prejudicial relief?' (1994) 15 Company Lawyer 178, where one of three director/members of a company resigned as director in accordance with his contractual terms and the remaining directors were entitled to acquire his shareholding at a price representing a proportionate part of the net asset value of the company as certified at the date of exercise of the option. It was suggested that (where it was alleged that the remaining directors had, after his resignation, set about to reduce the value of the company's net assets so as to produce a lower price payable on exercise of the option), this was conduct that would appropriately be dealt with by permitting the former member to sue under the oppression provision of the relevant legislation. 316As I understand it, what Mr Jacobs argues is that, here, there is a not dissimilar scenario, in that Mr Brennan (having, on Elif's case, reached an agreement that he would take a transfer of the shares for a particular purpose and for a short time only, then retransfer them to Elif) has conducted the affairs of the company in the meantime in a manner unfairly prejudicial to her interests (in that he has diverted funds from the company to his personal use instead of using them to pay down the Trimac loan - hence reducing the value of the shares she says he is obliged to transfer back to her). 317Mr Jacobs contends that the present application relates to the circumstances in which Elif ceased to be a member of MSU Management, on the basis that the nub of the present dispute is what was the agreement then reached in relation to the shares. It is submitted in that regard that a large proportion of the hearing time was spent exploring the circumstances in which Elif ceased being a member (whether it was on 16 June 2008 or 7 July 2008; whether there was a face to face meeting, or rather a meeting in Mr Castino's office on 7 July 2008 (after the auction) attended only by Elif, Mahir and Mr Castino, after which the forms were faxed to Mr Brennan; how long was the meeting in Mr Castino's office; what happened in the course of that meeting; whether Mr Brennan was contacted by telephone and, if so, what was said; and what was the arrangement as to the shares namely whether they were to remain with Mr Brennan or be transferred back to Elif). While I accept that time was devoted at the hearing to those issues, this was because they were relevant to the existence or otherwise of the agreement alleged. There was nothing there raised as to the circumstances referable to Elif as a member of the company in which (whatever version of the agreement was reached) that agreement was reached. 318In particular, it is noted that there is no claim of undue influence or duress. Mr Cox contends that if the shares were agreed to be transferred on 16 June 2008 and a valid transfer giving effect to that intention was signed on 7 July 2008 (later registered on 28 July 2008), then Elif voluntarily gave away any beneficial interest in the company. Mr Cox submits that Elif was not excluded by Mr Brennan from the management of a company in which she had an interest and that the shares were not held on any trust for her benefit. Thus it is submitted that Elif's claim should fail because she has no standing to complain about how Mr Brennan managed his own company and no other oppressive conduct is identified in the pleading. 319I do not consider that this has been shown to be a case in which, under s 234(c), a former member would have a claim for oppression. The agreement pursuant to which Elif transferred her shares was not one procured by oppression of any member of the company at that time. She was the only member of the company. Even accepting, for present purposes, and taking a broad view (which I think would be incorrect), that the application did relate to the circumstance in which Elif ceased to be a member (insofar as it relates to whether there was an agreement that the share transfers would not be lodged with ASIC or, alternatively, that if lodged the shares would be transferred back to her), I am not satisfied that Elif has established that there has been oppression in that regard, namely that the affairs of the company at the relevant time were being conducted in a manner oppressive to Elif. 320Mr Jacobs submits that this is established by the fact that (as it is asserted) it is unfairly prejudicial to Elif, who "embodies her family's interests", to have the substantial work done by her family, in contemplation of a family home and display home for WIPS, "gifted" to Mr Brennan. It is submitted by Mr Jacobs that it is unconscionable for Mr Brennan to retain the benefit of the works "after plundering the company accounts", while being aware that the Urusoglu family does not have the money to purchase the front block and without offering to pay the "fair value of the works." 321It is submitted that Mr Brennan has used his legal rights as owner of the shares in MSU Management as an "instrument of oppression" in order to deny the Urusoglu family (though surely the only relevant person who could bring a claim of oppression would be Elif, as she was the only member of the company) their fair share of the rewards constituted by the development of the Mt Vernon land. In this regard, Mr Jacobs invokes what was said in Re M Dalley & Co Pty Ltd (1968) 1 ACLR 489 per Lush J: In my opinion want of probity is only one of the ways in which oppression can manifest itself, ... One person may `subject another to continual injustice' by insisting, however honestly, on a proposition that is wrong or by using his strength to maintain, however honestly, a position unjustified in law. ... Section 186 [the predecessor in the Companies Act 1961 of s.260] is, upon the authorities, a wide remedial section not to be narrowed in the manner contended for by an interpretation of the first judicial observations made upon it. It is to be observed that it speaks of oppression in terms of its impact on the oppressed, not in terms of the intention of the oppressor, except to the extent that the word itself has some moral or emotional content. 322However, it is of relevance to note that in the above extract, his Honour was addressing the position where (however honestly) there was insistence upon or maintenance of a position unjustified in law. If (as I have found) there was no agreement on the part of Mr Brennan to re-transfer the shares to Elif, then it seems to me that he is justified in maintaining his refusal to do so and the present enjoyment of benefits arising from his ownership of the shares cannot amount to oppression of Elif's interests in relation to the circumstances in which the shares were transferred to him in the first place(which is the focus of the statutory provision). 323Mr Cox submits in this regard that the use of the $179,000 is irrelevant to this proceeding. Even if substantially for Mr Brennan's personal use, it is submitted that he would be entitled to director's fees and to have a company loan account and that ultimately he was the only person affected by running the company in that way.) 324Therefore, even had I been satisfied that Elif had signed the share transfers pursuant to an agreement that the shares would be held for her or transferred back to her, I would still have had difficulty with the proposition that conduct of Mr Brennan in his capacity as a director (which on this hypothesis had led to the company shares being worth less to her on their transfer back to her or the company being in a less favourable financial position at that time,) amounted to oppression of Elif's interests as a former member of the company in relation to the circumstances in which she ceased to be a member. (Such conduct would more likely, in my view, amount to breach of an implied term of the kind pleaded, at least if the conduct can be said inevitably have had the result of diminishing the benefit of the agreement to re-convey the shares to her, as considered earlier.) 325Accordingly, I do not consider that the oppression claim has been established. Strictly speaking, I therefore do not need to consider what remedy would be appropriate had the claim in oppression been sustained. However, for completeness I note that Mr Jacobs submitted that compensation could be awarded by reference to the uplift in the value of the Mt Vernon land by virtue of the work (even though the (said to be oppressed) shareholder, Elif, had not contributed to that work). Mr Jacobs noted that fairness under s 232 must not be assessed in a vacuum ( Thomas v HW Thomas Ltd [1984] 1 NZLR 686, at 694; (1984) 2 ACLC 610; (1984) 2 NZCLC 99,148). Young J (as his Honour then was) in ES Gordon Pty Ltd v Idameneo (No 123) Pty Ltd (1995) 15 ACSR 536, at 540 said that: The flavour of the judgments in the company oppression cases is that in looking to the fair value one must look at all the circumstances of the case and seek to put the oppressed in the same position as nearly as can be as if there had been no oppression, erring, if there is to be any erring, on the side of the oppressed. 326The aim is to fashion relief which removes the adverse effects of the oppression ( Shelton v NRMA (2004) 51 ACSR 278 at [26], cited by Bergin J (as her Honour then was) in Backoffice Investments v Campbell [2007] NSWSC 161; (2007) 61 ACSR 144 (2007) 25 ACLC 302, at [93], and reaffirmed in Campbell v BackOffice Investments Pty Ltd [2008] NSWCA 95 ; (2008) 66 ACSR 359, which was not questioned in the High Court's decision in this matter, Campbell v Backoffice Investments Pty Ltd [2009] HCA 36, at [178]; ( 2009) 259 ALR 402 ; (2009) 83 ALJR 110.) Furthermore, it has been said that the remedy chosen should be the least intrusive: Martin v Australian Squash Club Pty Ltd (1996) 14 ACLC 452, at 475; Fexuto v Bosnjak Holdings Pty Ltd (1998) 30 ACSR 688, Young J (as his Honour then was), at 742. 327Had I been satisfied that there was oppression in the present case (because the value of the shares to be transferred back to Elif had been diminished) then I would have considered the appropriate relief to be an order for the payment by Mr Brennan of a sum to reflect the diminished value of the shares (but I am unable on the evidence before me to quantify that amount).
Derivative suit/claim against company 328Elif also asserts a claim on behalf of the company itself to damages (and seeks leave under s 237 of the Corporations Act, if that be necessary), to seek relief in effect on a derivative suit against Mr Brennan as director of MSU Management for alleged breach of his duties as officers of the company to exercise his powers in good faith in the best interests of the company for proper purposes (s 181 Corporations Act ) and not improperly to use his position to gain an advantage for himself to the detriment of the company (s 182 Corporations Act ). 329It is contended that Mr Brennan has breached his duties as a director of MSU Management by reference to the use by him of funds from the company for his personal or family expenses. 330Although Mr Pelle, when cross-examined as to the basis on which he had expressed the opinion that company funds had been so used (and which, at the hearing, he qualified and expressed in more temperate terms), was not able to do more than comment on the likelihood of a particular description of expense being a company expense (something on which he was rightly, in my view, criticised for not having any particular expertise and not having suitably qualified his opinions), nevertheless Mr Brennan did ultimately admit that he had used funds obtained from the company for personal expenses such as school fees for one or both of his children and that those funds were in the order of $179,000. 331It is submitted by Mr Cox, in effect, that the drawing of cheques on the company's account for personal expenses does not necessarily constitute a breach of director's duties, since those drawings might properly be reflected in internal loan accounts in the company's books or the money might have represented a payment in lieu of director's fees. Mr Pelle conceded that he had not seen the company's financial statements over the relevant period (and had not qualified his report in that regard). Accordingly, he could not comment on whether the company's records evidenced the existence of internal loan accounts or the like. That said, the company remains in Mr Brennan's control. It was open to him to have adduced evidence of such matters and he did not. 332Mr Cox further submits that, as the sole member of the company, any question as to the use of company funds is a matter for Mr Brennan. Of course, this submission assumes that there was no agreement for the re-transfer of the shares such that Elif would have no standing (as someone entitled to the shares) to complain of Mr Brennan's conduct while a director of the company. 333Given the finding in (i) above, this issue does not arise. However, had I been satisfied that there was an agreement for the re-transfer of the shares to Elif, then in the absence of evidence as to the entitlement of Mr Brennan to draw down company funds for his personal benefit, it would seem that once the shares were transferred to Elif she would have a basis on which (acting as the sole director of the company) to bring proceedings on the company's behalf against Mr Brennan for breach of director's duties by reference to the transfer of company funds. (In those circumstances it would not be necessary for her, as shareholder, to pursue a derivative suit in the name of the company; the proceeding could be commenced in the company's name with her authority as sole director.) Until then, however, she could not do so. Therefore, it would have been necessary to consider whether the criteria to be considered on an application for such leave had been satisfied ( Goozee v Graphic World Group Holdings Pty Ltd [2002] NSWSC 640; (2002) 42 ACSR 534 at 541; 20 ACLC 1502) and had they been then I would have been bound to grant the application ( Fiduciary Morningstar Research Pty Ltd [2005] NSWSC 442; (2005) 53 ACSR 732 at 735; 23 ACLC 1100). 334Of those five criteria, I am satisfied that while Mr Brennan is the sole shareholder and director the probability is that the company will not itself bring the proceedings but that poses the interesting question as to whether if I had ordered that the register be rectified nunc pro tunc, that I could then form such a view (as clearly Elif would be in a position to bring the claim). I accept that Elif has been acting in good faith (albeit probably on the assumption that what her father and brother have told her about the alleged agreement was correct). I am satisfied that there would have been a serious question to be tried as to Mr Brennan's conduct as a director in relation to the matters of which complaint is made. As to whether it is in the interests of the company to commence the proceedings, if the allegation of breach of duties were to be sustained then the company would recoup moneys paid out to Mr Brennan and on that basis this criterion would seemingly be satisfied but there is an obvious overlap with the claims brought by Elif personally and it was not clear to me how it was that the plaintiffs sought to overcome that overlap. It might well have been that it was not in the best interests of the company to pursue a claim for relief that ultimately would benefit its sole shareholder if that shareholder was maintaining at the same time a claim in relation to the same matters). It may well have been that in those circusmtances Elif would not have pressed the derivative suit if she had succeeded on her personal claim. Finally, there is no evidence as to whether the requirement for notice was satisfied but it might have been a matter in which there could have been a dispensation at that stage. 335I do not need to decide whether the breach of director's duties claim would have succeeded. I am inclined to the view that, Mr Brennan having adduced no evidence as to any entitlement he had to the funds in question, he was relying on no more than the fact that he was the sole shareholder of the company when drawing those funds for his personal use and would have been inclined to the view that the appropriate order (had Elif established that she was entitled to the shares of the company) would be to fashion relief such that these amounts should be refunded to the company with interest. As to the position of the Trimac loan, however, I would not have been satisfied that the decision not to pay it out in full in February 2009 amounted to a breach of director's duties, as it seems to me that involves an assessment of the exercise of business judgment (a matter in which the court should not be involved). Mr Brennan, during cross-examination, indicated that there may have been other factors relevant to the decision not to repay the Trimac loan (including the anticipation of funds from the sale of the back block and the reference to an amount of money held in a trust fund to which it was suggested the plaintiffs had impeded access - matters that I am not in a position to assess on the state of the evidence). 336In any event, given my findings in (i), this claim for relief fails. (vi) Frustration 337As to the alternative claim in frustration, Mr Jacobs submits that if the agreement is as Mr Brennan contends, then the inability of the Urusoglu family to have the fruits of their labour, which was in the contemplation of both contracting parties in the lead up to the agreement, is said to constitute a failure of something which was "at the root" of the contract (using the terminology in Scanlan's New Neon Limited v Tooheys Limited (1943) 67 CLR 169) and the frustration of the commercial object of the contract. The subject matter of the agreement is said to be the acquisition of the Mt Vernon land front block, as improved by the road access works. It is submitted by Mr Jacobs that to the extent that one must focus on the performance of the obligation, the performance by the Urusoglu family, (in contemplation of receiving the benefit of their work), has become a radically more onerous burden (in that their work has in effect stood as a gift to Mr Brennan's interests). 338Reliance was placed on what was said by Lord Denning MR in The Eugenia [1964] 2 QB 227. There, in well-known passages (at p 238 and 239 respectively), his Lordship said: ... if it should happen, in the course of carrying out a contract , that a fundamentally different situation arises for which the parties made no provision - so much so that it would not be just in the new situation to hold them bound to its terms - then the contract is at an end. (my emphasis) and We are thus left with the simple test that a situation must arise which renders performance of the contract "a thing radically different from that which was undertaken by the contract," see Davis Contactors Ltd. V. Fareham Urban District Council by Lord Radcliffe. To see if the doctrine applies, you have first to construe the contract and see whether the parties have themselves provided for the situation that has arisen. If they have provided for it, the contract must govern. There is no frustration. If they have not provided for it, they you have to compare the new situation with the situation for which they did provide. Then you must see how different it is. The fact that it has become more onerous or more expensive for one party than he thought is not sufficient to bring about a frustration. It must be more than merely more onerous or more expensive. It must be positively unjust to hold the parties bound. ( my emphasis) 339Has there been frustration of the contract as a matter of law? 340At the outset, I note that it is by no means clear to me that Huseyin's nomination of Sebat constitutes an election once and for all, such that Mr Brennan's obligation (which he concedes, under the agreement for which he contends), to transfer the front block for a fair market price to a nominee of Huseyin could be said to have been discharged. The agreement itself was informally made. There was no mechanism stipulated for the nomination of the purchaser. It would surely be a matter of construction of the agreement as to whether once an election was made there was an ability to nominate a different purchaser. At first blush this would not seem to be same as the situation where exercise of an option must be strictly in accordance with its terms, there being no manner of exercise of the right of nomination having been referred to in the terms of the alleged agreement in the present case. No doubt there would be a requirement that the right to nominate a purchaser be exercised within a reasonable time. 341Therefore it is not immediately apparent that Huseyin could not simply have nominated a new purchaser as nominee or to have sought to have the Sebat contract novated when Huseyin realised (as he must have done at some stage in February or March 2009) that Sebat was not in a position to complete the contract. (I note that Mr Brennan has not asserted in the present proceedings that he has been discharged from that obligation.) 342Tellingly, Huseyin does not appear to have taken any steps to nominate a replacement purchaser once the contract with Sebat was terminated; nor have Elif and Mahir sought an order in the nature of specific performance of an obligation to convey the front block to a nominee of Huseyin (as they could have done as an alternative to the claims made under the agreement for which they contend), which raises the question of self-induced frustration that I consider in due course. 343Before doing so, I note that it has been recognised that hardship and expense in the performance of a contract does not, in itself, constitute frustration ( British Movietonews Ltd v London & District Cinemas Ltd (1952) AC 166 [at 185] per Viscount Simon). In the case of financial hardship, the Privy Council in Hangkam Kwintong Woo v Liu Lan Fong (1951) AC 707 stated [at 721-722] "...the question is whether this change in fortune is to be regarded as so fundamental as to strike at the root of the agreement and render its performance, in the manner contemplated by the parties, impossible ." (my emphasis). 344Here, the point at which it is asserted that the contract has been frustrated is the time at which the performance of Mahir's obligations is already complete - the subdivision works have been finished. Mahir has no further obligations to perform. In effect, what is being said is that, in retrospect, the performance of Mahir's obligations in relation to the subdivision works has been more onerous for him than he had expected because the Urusoglu family now may be unable to enjoy the benefit of the works (due to Sebat's failure to complete the contract to purchase the front block). 345The threshold for establishing frustration is higher than mere hardship or burden. What is required, as was recognised by the High Court in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337 is that the change in circumstances that led to performance becoming more onerous must render the contract "radically different" or "fundamentally different" from anything contemplated by the parties. 346True it is that in Brisbane City Council v Group Projects (1979) 145 CLR 143, Stephen J (with whom Murphy J agreed, the majority deciding the case on a different ground) considered that an agreement was frustrated where the purpose of undertaking any obligation under the contract at all had been "wholly destroyed" although it could not be said that the performance of its obligations had been rendered impossible or more onerous in nature. There, however, the obligations remained to be performed - it was not a case (as is here the case) where the relevant party claiming frustration had already performed its obligations and was simply faced with the position that in hindsight it had not obtained the benefit it had sought to achieve from the contract (the risk of which it might be taken to have assumed when entering into the agreement pursuant to the work was performed). (Moreover, his Honour there had noted that the Council was not in the position of a party to a commercial venture concerned exclusively with is own financial interests and would not be deprived of some commercial advantage if the contract were to be declared to be frustrated. His Honour considered that the Council's own particular concern with the performance of the work in question had also come to an end. The position is quite different in the present case.) 347I do not consider that the failure of Sebat to complete the contract is something that operates to frustrate the contract - it does not change the fundamental nature of the contractual obligations or render the contract radically different; it does not change the mutual purpose of the contract insofar as that was to develop the land for subdivision - it simply changes the outcome of that performance. Mahir has no obligation left to perform and so the contractual performance required from him has not changed in any fundamentally different or radical way. It is simply that the bargain he struck (based on the expectation that Huseyin's nominee would acquire the front block) has proven not to be a prudent one, assuming the benefit of the front block has now been lost. (That assumption has not been tested. Therefore, even if a failure to obtain the front block would have constituted sufficient hardship to render the contract such that it would be positively unjust to hold the parties still bound thereby, I am not satisfied that the acquisition of the front block by the Urusoglu family became impossible by the non-completion of the Sebat contract.) 348There has been no claim for damages for failure on the part of Mr Brennan to convey the land to Huseyin's nominee (which is the context in which one would expect to see a frustration claim based on impossibility of performance). Nor has Huseyin or Mahir requested or sought to compel Mr Brennan to sell the land to a third party in place of Sebat. 349This brings me to the question of self induced frustration. Lord Radcliffe in Davis Contractors v Fareham UDC [1956] AC 696 at 729 notes that frustration can only occur where there is no 'default' by either party. Latham CJ in Scanlan's New Neon Ltd v Tooheys Ltd (1943) 67 CLR 169 at [186] affirmed that a "state of facts brought about by the act of a party" cannot be the basis of a claim of frustration by that party (see also Joseph Constantine Steamship Line Ltd v Imperial Smelting Corp Ltd , "The Kingswood" [1942] AC 154). 350Even if I am wrong and the contract was frustrated by reason of the inability of Sebat to complete, in my view that amounts to a self-induced frustration - since it was open to Huseyin to nominate whomever he chose to purchase the front block and since I have concluded that Sebat entered into the contract at his instigation and on behalf of Huseyin and its failure to complete seems most likely to lie at the feet of Huseyin and/or Mahir, who between them appeared to be responsible for arranging the balance of the financing for the acquisition. 351There is no suggestion in the proceedings that the termination by MSU Management of the Sebat contract for sale was wrongful - nor was there apparently any suggestion by Huseyin at the time the Sebat contract was entered into that its terms did not reflect the agreement that had been struck with Mr Brennan in relation to the Mt Vernon land (a telling point in that the Sebat contract requires payment of a fair market price for the land, whereas on the version of the agreement for which Elif and Mahir now seem to contend, the land was to be transferred for the consideration that Sebat would assume the obligations under the ANZ mortgage with Mr Kanli's monetary contributions would be treated as the deposit - a markedly different scenario to that provided for under the Sebat contract). (An interesting point might well have arisen had Mr Brennan been sued for damages for breach of the agreement he alleges, for damages for failure to transfer the front block to Huseyin's nominee. Mr Brennan would surely then have a claim for indemnification for those damages against Sebat.) 352It could not have been open to Huseyin, for example, to frustrate the agreement he made with Mr Brennan by nominating a purchaser he knew was unable or unwilling to complete the contract (and, in my opinion, that must also be the case where the nominated purchaser is relying, for its ability to complete, on Huseyin procuring part or all of the necessary finance). By way of illustration I note that The Super Servant Two [1990] 1 Lloyd's Rep 1, a contract for carriage by either of two vessels at the carriers' option was not frustrated by the loss of the vessel that the defendants had intended to use for that purpose, where the unavailability of the remaining vessel was due to the existence of commitments to other persons. It was said that the contract did not oblige the carriers to use the vessel that had been lost and that the inability to use the other vessel was, for the purposes of self-induced frustration, the carriers' own fault. 353I accept that the onus lies on the party (here Mr Brennan) alleging that the frustrating event was due to the other's fault to establish that this is the case. Here, however, I am satisfied that the apparent failure of Huseyin to take any steps to procure completion by its nominee of the contract or to nominate any other nominee for that purpose means that the contract cannot be said to be frustrated (even had that conclusion otherwise been open). 354It is submitted by Mr Cox that the fact that Mr Kanli (or the Urusoglu family) could not procure the money to meet the conditions of the loan Mr Brennan obtained for Mr Kanli (which was at 80% loan to value ratio) and could not pay the deposit or effect the loan, is not an external frustration of the contract (but simply the failure of Huseyin as the person who was really doing this deal). I agree. 355Mr Kanli (the director of Sebat) knew almost nothing as to the performance of the contract and was not concerned about what was required to perform the contract or as to its subsequent termination. This is consistent with his approach to the handling of the contract from the time of entry into it, leading to the inference that Mr Kanli had left the sale transaction to his relatives: Huseyin and Mahir. Huseyin was aware of the Sebat contract, and must have been aware of the need for financing to be procured. 356The failure by Sebat to complete the contract seems to be due to a decision by Huseyin not to do so or an inability of Huseyin to arrange finance for that to occur. 357I find that the alternative claim in frustration fails.

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(v) Deceit 358The tort of deceit provides a legal remedy for harm suffered "in consequence of dishonesty" ( Magill v Magill [2006] HCA 51; (2006) 226 CLR 551 per Gleeson CJ at [17]). The tort of deceit is based on fraud; it arises in relation to a misrepresentation where the defendant lacks an honest belief in its truth, and that misrepresentation is relied upon to the detriment of the plaintiff. Fraud must therefore be proved on the balance of probabilities. In Nocton v Lord Ashburton [1914] AC 932; [1914] All ER Rep 45, Viscount Haldane explains the concept of 'fraud' in the commercial context in which the tort of deceit emerged. He states at [954]: If a man intervenes in the affairs of another he must do so honestly, whatever be the character of that intervention. If he does so fraudulently and through that fraud damage arises, he is liable to make good the damage. A common form of dishonesty is a false representation fraudulently made, and it was laid down that it was fraudulently made if the defendant made it knowing it to be false, or recklessly, neither knowing nor caring whether it was false or true. That is fraud in the strict sense. 359The tort of deceit does not require an intention to injure; it requires intention to deceive. Such intent may be established by proof of an intention to induce a representee to rely and act upon a belief in the truth of the representation. 360Gummow, Kirby and Crennan JJ set out the five elements required to establish the modern tort of deceit in Magill at [114] as being the making of a false representation; with the knowledge that it was false, (or being reckless or careless as to the falsity of the representation); with the intention that the representative would rely on it; that the representative acted in reliance on the false representation; and suffered damage which was caused by reliance on the false representation. Deceit is not actionable without proof of injury, but the misrepresentation need not be the sole cause of the damage suffered. 361Mr Jacobs submits that the dishonest state of Mr Brenann's mind is to be inferred from his conduct (reference being made to para [9146] o f The Bell Group Ltd (in liq) v Westpac Banking Corp [No 9] [2008] WASC 239 ) . There, Owen J summarised the law in relation to an intention to defraud creditors under the relevant legislation and observed that a dishonest intention could be established by inference. His Honour said "if the natural and probable consequences of the disposition are such that its effect will be to defeat or delay creditors, the necessary inference can be drawn and a court might more readily do so. But a finding to that effect is a finding of an actual or real intention not one that is implied to the disponor by virtue of a legal principle." 362Here, I see no basis on which to conclude (or to draw any inference to this effect) that when Mr Brennan entered into the agreement (as I have found it) he had no genuine intention to perform the obligations under the agreement. 363I am not satisfied that any representation was made by Mr Brennan other than such representation as was comprised by the making of the agreement in the terms for which Mr Brennan contends. There is nothing to suggest that Mr Brennan did not have an honest intention to comply with that agreement and his conduct supports the conclusion that he did have an honest intention to do so - he took the steps for the raising of the finance to acquire the land, he gave personal guarantees in that context, he entered into the contract for the sale of the land to Sebat and assisted in the procurement of finance for such an acquisition. The claim for damages for the tort of deceit fails. (vi) Quantum Meruit 364As an alternative remedy,(though said to be "hinged" on the alleged agreement) Mahir, through his company MSU Earthworks, claims the value of the subdivision works by way of a quantum meruit, in circumstances where it is said that the work was requested to be done by Mr Brennan and/or freely accepted by him. Reliance was placed generally on what was said by the High Court in Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221 and the principle identified by Beech J in R J Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd [2009] WASC 206 at paras [156] to [157]. 365In this regard, it was submitted by Mr Jacobs, (but not conceded by Mr Cox) that it is common ground that the purpose of the purchase and development of the Mt. Vernon land was to provide a family home for Mahir and Elif (referring to para 7 of the Amended Statement of Claim and para 7 to the Defence thereto) and thus that the driveway work was not intended to be a gift to Mr Brennan. (In fact, the Defence in terms concedes that this was the Urusoglu family's "wish" at a particular time.) 366Profit margin is said to be claimable upon a quantum meruit by reference to; Hayward v Timilty [2009] NSWDC 54 at [128 ff] (though I note that there the Court also explained that there must be some external standard by which a court assesses a reasonable price for work and materials ( Flett v Deniliquin Publishing Co Ltd (1964-1965) NSWR 383). 367The initial difficulty for Mahir's quantum meruit claim is that, as Williams DCJ made clear, "indebitatus", "quantum merit" or "restitution" actions, so called, can only occur in the absence of an enforceable agreement and cannot be used where there is an enforceable agreement. However, where there is an unenforceable agreement, reference may be made to the agreement in order for the court to determine the appropriate amount of compensation (citing Deane J at 257 per Jordan CJ in Horton v Jones (1934) 34 SR (NSW) at 368). 368Mr Cox submits that it is not open to Mahir and his company to claim for the benefit of the work they were required to do under the contract with Mr Brennan, since that was part of the bargain in return for which Mr Brennan had agreed to sell the front block to Huseyin's nominee. It is submitted that Mr Brennan honoured his part of the bargain and entered into the contract for sale of the front block to Mr Kanli as agreed. 369Where the contract provides the means of remuneration for particular work, no claim may be made in restitution ( Horton v Jones [No 2] (1939) 39 SR NSW 305 at 319 referred to with approval in Pavey at 237-8, 240-1). In RJ Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd [2009] WASC 206, in an analysis of the principles applicable on quantum meruit claim (strictly obiter in light of his Honour's findings on the principal contractual claim), Beech J noted (at [154]) that a well-established exception to the general rule stated in Lumbers v W Cook Builders Pty Ltd (in liq) [2008] HCA 27; (2008) 232 CLR 635; (2008) 247 ALR 412 was that if the request (to provide services) is made in the context of an enforceable contract, then the claim must be founded in contract not restitution (citing Lumbers at 111 and Pavey at 256). Restitution is not available in a contractual situation where the contract is still on foot as this would subvert the parties' contractual allocation of risk ( Lumbers v Cook ). 370Even assuming that the claim in restitution could be pursued in face of an enforceable contract, Mr Cox submits that here the situation is simply that the Urusoglu family could not complete the purchase. It is said that there is no total failure of consideration of the kind considered in cases such as Roxborough v Rothmans of Pall Mall Aust Ltd [2001] HCA 68; (2001) 208 CLR 516. It is conceded that Mr Brennan (through MSU Management) has received a benefit from the works, but it is said not to be unjust for him to retain that benefit where it was never in contemplation that he would be required to pay for the works. 371Wilcox J in State Bank of New South Wales Ltd v FCT (1995) 62 FCR 371; 132 ALR 653 said : The principle underlying the modern law of restitution is unjust enrichment, the purpose being, in the words of Halsbury at para 630, "to prevent a man from retaining the money of, or some benefit derived from, another which it is against conscience that he should keep". The emphasis is on the position of the beneficiary, not the loss sustained by the claimant. 372Deane J in Pavey said that the concept of unjust enrichment: constitutes a unifying legal concept which explains why the law recognises, in a variety of distinct categories of case, an obligation on the part of a defendant to make fair and just restitution for a benefit derived at the expense of a plaintiff and which assists in the determination, by the ordinary processes of legal reasoning, of the question whether the law should, in justice, recognise such an obligation in a new or developing category of case. 373In Lumbers , Gummow, Hayne, Crennan and Kiefel JJ, in their joint judgment, stated (at [85]): The second point to be noted is that unjust enrichment was identified as a legal concept unifying "a variety of distinct categories of case". It was not identified as a principle which can be taken as a sufficient premise for direct application in particular cases. Rather, as Deane J emphasised in Pavey & Matthews , it is necessary to proceed by "the ordinary processes of legal reasoning" and by reference to existing categories of cases in which an obligation to pay compensation has been imposed. " To identify the basis of such actions as restitution and not genuine agreement is not to assert a judicial discretion to do whatever idiosyncratic notions of what is fair and just might dictate ". (my emphasis) On the contrary, what the recognition of the unifying concept does is to assist "in the determination, by the ordinary processes of legal reasoning, of the question whether the law should, in justice, recognise such an obligation in a new or developing category of case " (emphasis in original) 374More is required than proof of a retention of a benefit, that is there must be some additional factor rendering retention of the benefit 'unjust' in the relevant sense, (see Deane J in Pavey and in Lactos Fresh Pty Ltd v Finishing Services Pty Ltd (No 2) [2006] FCA 748, and what was said in David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; (1992) 175 CLR 353, at 378-379, (by Mason CJ, Deane, Toohey, Gaudron and McHugh JJ) that: ... it is not legitimate to determine whether an enrichment is unjust by reference to some subjective evaluation of what is fair or unconscionable. Instead, recovery depends upon the existence of a qualifying or vitiating factor such as mistake, duress or illegality. (my emphasis) 375Similarly, more is required than simply that a request was made for the provision of the goods or services in question (see Christiani and Nielsen Pty Ltd v Goliath Portland Cement Company Limited; Goliath Portland Cement Company Limited v Christiani and Nielsen Pty Ltd [1993] TASSC 156 16 December 1993) per Zeeman J, his Honour there observing that the mere request for work to be done (for the benefit of a third party) and the mere non-payment (by that third party under a contract the first had entered into for the performance of the work, did not give rise to a conclusion that such enrichment as there was unjust.) 376The mistake here asserted is a mistake that Mahir (through his family) would have the benefit of the interests. Huseyin (and Mahir to the extent that he was involved in the arrangements reached with Mr Brennan) seems to have been operating under an assumption or belief that the outcome of the subdivision would be for the sale of the front block to Huseyin's nominee (an assumption that Mr Brennan must have shared, since he asserts that this was the agreement he reached with Huseyin and Mahir). A mere misprediction will not give rise to a basis for unjust enrichment ( Cadorange Pty Ltd (in liq) v Tanga Holdings Pty Ltd (1990) 20 NSWLR 26, at 32; Dextra Bank & Trust Company Limited v Bank of Jamaica [2002] 1 All ER (Comm) 193). Nor, it seems to me, will the fact that the parties were operating on simply a common assumption that was not ultimately fulfilled (at least where it does not appear that the fact that it was not fulfilled was due to the fault of Mr Brennan). 377Here, for example, there might be various scenarios in which the benefit of the front block was not ultimately reaped by the Urusoglu family notwithstanding the expenditure on the sub-division works - say, if the market rose and the fair market value of the front block was such as to make the acquisition of the block such that they did not wish to (or could not) proceed with the purchase. 378The need to establish an 'unjust' factor was again affirmed by the High Court in Farah Constructions v Say-Dee , [2007] HCA 22; (2007) 230 CLR 89, Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ stated at [150]-[151]; First, whether enrichment is unjust is not determined by reference to a subjective evaluation of what is unfair or unconscionable: recovery rather depends on the existence of a qualifying or vitiating factor falling into some particular category; Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation [1988] HCA 17; (1988) 164 CLR 662 at 673 per Mason CJ, Wilson, Deane, Toohey and Gaudron JJ; David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; (1992) 175 CLR 353 at 379 per Mason CJ, Deane, Toohey, Gaudron and McHugh JJ. In David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; (1992) 175 CLR 353 at 379, Mason CJ, Deane, Toohey, Gaudron and McHugh JJ gave as instances of a qualifying or vitiating factor mistake, duress or illegality. ... Further, principles respecting fiduciary duty have been said to be foreign to unjust enrichment notions because the unjust factors are commonly concerned with vitiation or qualification of the intention of a claimant Edelman, "A Principled Approach to Unauthorised Receipt of Trust Property", (2006) 122 Law Quarterly Review 174 at 177-178. 379In Lumbers v Cook , Gummow, Hayne, Crennan and Kiefel JJ, at [80] said that; ... where one party ... seeks recompense from another ... for some service done or benefit conferred by the first party for or on the other, the bare fact of conferral of the benefit or provision of the service does not suffice to establish an entitlement to recovery ... (my emphasis) 380Their Honours had earlier noted [at 53] that the concept of "free acceptance" was commonly related to a defendant who "did not take a reasonable opportunity open to him to reject the proffered services" (citing Goff & Jones, The Law of Restitution , 7 th edn (2007) [1-019]). No such opportunity was given here. 381In Christiani , Zeeman J observed that the claim there made was one seeking to be protected from the consequences of entering into a contract that, with the benefit of hindsight, might be seen as having been unwise on the basis that there had been unjust enrichment at its expense - and noted that unjust enrichment was not a separate cause of action - at [28].) 382It seems to me that it can be said that Mahir (and, for that matter, Huseyin) chose to carry out the subdivision works at his own expense (or, more accurately, at the expense of his uncle Mr Kanli) on the basis of an expectation that the benefit of those works would be enjoyed when the front block was acquired by Huseyin's nominee (Mr Kanli) but did so in circumstances where they must have realised that if completion of the sale could not take place then they would have lost the benefit of the works. There was no provision in the agreements asserted (on either version) for Mr Brennan to bear the cost of the subdivision works. 383In Christiani it was noted that a commercial decision had been made to perform the work the subject of the subcontract and to look to another party for payment (a decision that might have been wise or foolish) but that, regardless of the wisdom of the commercial decision, there was no occasion to relieve the consequences of that decision by imposing a liability on that other party that, had Christiani wished to protect itself against the risk that had eventuated, Christiani could have sought to include in the initial contractual arrangements. Here, similarly, had Mahir wished to ensure that, if sale of the subdivided block to Huseyin's nominee did not proceed, he would be reimbursed for the works carried out by his company to effect the subdivision, then he could have sought Mr Brennan's agreement to such an arrangement. He did not. Therefore, it seems to me that Mahir assumed the risk that he or his family might not ultimately enjoy the fruits of his labour. 384Reference was made to the statement by the Court of Appeal (at para [123]) in Ford by his Tutor Beatrice Ann Watkinson v Perpetual Trustees Victoria Limited [2009] NSWCA 186; (2009) 75 NSWLR 42 to the effect that the question of request, payment, receipt and benefit should be viewed as matters of substance and not form or legal technicality, in the context of restitutionary actions. 385Insofar as Mr Jacobs invokes the terminology of "free acceptance" of the benefit conferred by the works, Beech J in Baker Nominees (at [174]) noted the test as to when services have been accepted, applied in Brenner v First Artists Management Pty Ltd [1993] 2 VR 221 (at 257-261) and ABB Power Generation Ltd v Chapple [2001] WASCA 412; (2001) 25 WAR 158 (at [15],[20]-[21]), is that stated in Goff & Jones, The Law of Restitution (7th edn, 2007) [1-019] as being where a reasonable person "should have known that the claimant who rendered the services expected to be paid for them, and yet he did not take a reasonable opportunity open to him to reject the proffered services". (His Honour also noted (at [177]), but did not need to address, the doubt as to whether acceptance of a benefit, without a request, would be sufficient to found an action for quantum meruit for work done (as opposed to services provided) referring to paras [82] and [86] of Lumbers .) 386Here, there was no suggestion that Mr Brennan had any expectation that he or MSU Management would be required to pay the cost of the works to complete the subdivision. Those were to be provided by Mahir or his company in order to enable the Urusoglu family to obtain the front portion of the land. 387In conclusion, a claim in restitution does not lie where there is an enforceable contract and the parties' rights can be determined in accordance with that contract. Here, to grant relief on a restitutionary basis would subvert the contractual arrangements as I have found them to be. Mr Brennan did not undertake to pay the cost of the work, nor did Mahir expect him to do so. That is clear from Mahir's own evidence. Mahir must be taken to have accepted that any remuneration for those works/services was to come through the acquisition of the front block by or on behalf of the Urusoglu family and to have (knowingly or otherwise) accepted the risk that if that did not come to fruition, the works would have been carried out at his expense. There is not a question of any free acceptance as that concept is referred to in the authorities, as there was no opportunity to refuse the benefits knowing that otherwise they would have to be paid for by Mr Brennan. 388Therefore I am not satisfied that Mahir has established his quantum meruit claim. Had I been so satisfied, I would nevertheless not have been satisfied that Mahir had established the quantum of that claim at anywhere near the $347,000 asserted by him. While I accept that the payments made by Mr Kanli to third parties (such as the contract supplier and the Council) can be relied upon in establishing the value to Mr Brennan of the works, I am not satisfied that the concrete supply invoice of $90,000 is genuine nor do I consider that the evidence of "cash" payments or cash cheques (unsupported by independent evidence) is sufficiently reliable to accept. Therefore, any quantum meruit claim in my view would have been restricted to the Council fees, cost of the Western Suburbs concrete supply and the total of the invoices that were ultimately produced and marked as Exhibits in the proceedings, those being amounts that I am satisfied were directly referable to the subdivision works. (I do not regard Mahir's assertions as to the cost of such works to be reliable.) 389In my view it cannot be said that there is anything that warrants the conclusion that it is inequitable or unconscionable for Mr Brennan now to retain the benefit of the subdivision works in circumstances where there was no expectation at the time the works were carried out that that he would be required to make payment for those works and he had honoured his side of the bargain by entering into a contract to sell the front block to Huseyin's nominee. (vi) Possession 390Mr Cox submits that if Mr Brennan remains the beneficial owner of MSU Management then he is entitled to an order for possession and mesne profits and that the assessment of the quantum of reasonable rent should be referred for assessment. He points out that no defence was raised to this claim. 391Mesne profits are payable where the defendant occupies the premises as a trespasser. They represent in substance damages for trespass ( Wilson v Kelly [1957] VR 147). They are recoverable until such time as possession is delivered up ( Southport Tramways v Gandy [1897] 2 QB 66). 392While mesne profits may be assessed by reference to the rent that would be payable for the premises, it seems that this is where it represents the fair value of the premises and that there may be a different basis for assessment in appropriate cases. Where the occupant fails to keep the premises in repair then this may also be taken into account. 393I have given some consideration to whether an order for mesne profits should take into account (perhaps be way of offset) reimbursement of those sums that I can be satisfied were expended by Mahir on the subdivision works. However, I have not done so because that would then not take into account the interest payable by MSU Management on the mortgages securing the land during such time as MSU Management has not been able to sell the land to reduce the mortgage because of Mahir's unauthorised possession of the land. 394In the event, I consider that the appropriate order is to order that Mahir pay mesne profits for the period of his occupation until possession is delivered up in accordance with my orders and to refer the assessment of those profits to a referee or associate justice for determination.

June 2008 - discussions before auction? 46According to Mr Brennan, in early June 2008 he had conversations with both Huseyin and Mahir in relation to the forthcoming sale of the land in which he was asked to assist them to purchase the land and it was suggested to him that there was potential to buy the land for a low price, complete the subdivision and make a profit (Mr Brennan says that it was put to him that he could thereby recoup some of his losses on the Granville project). Huseyin and Mahir deny this. Huseyin says that it was Mr Brennan who offered (after the auction) to help. 47At T 110, Mahir denied asking Mr Brennan for help to buy the Mt Vernon property but "vaguely" remembered a conversation "maybe saying I buy it back: He said he didn't really remember any conversation, but "may" have mentioned buying the property. (I had the impression that the vagueness with which Mahir answered this and other questions in similar vein, was because he thought it was at least possible, if not likely, that there had been such discussions and did not wish to be caught out in a straight denial of those conversations.) 48Mr Jacobs submits that Mr Brennan has distorted what happened in relation to the Granville project. Whether or not that is the case, on the oral evidence given by Huseyin and Mahir (albeit perhaps influenced by subsequent events, not least being this litigation), it was difficult to discern any sympathy on the part of either Huseyin or Mahir for the fact that Mr Brennan may have suffered losses on the project (which belies any suggestion that they were earlier anxious to help him in this regard). Nevertheless, the context of the failure of the Granville project does provide not only a basis on which they might well have sought to persuade Mr Brennan to be involved in the purchase of the Mt Vernon land but also a reason why Mr Brennan might be reluctant to do so (as he says was the case). Indeed, Huseyin accepted that Mr Brennan did not want to enter into any further business venture with him unless there was an expectation of profit, which makes Huseyin and Mahir's version of the agreement less likely. 49Notwithstanding Mr Brennan's professed reluctance to become involved in another commercial or property project with Huseyin (after his experience with Granville), he says that he was prepared to make some enquiries in relation to the property and the possibility of arranging finance for the property. He could not recall whether he had filled in an application before or after auction and could not remember date started making enquiries (T 351.46). There is no documentary evidence of such enquiries, although Mr Brennan said that he had commenced them prior to the auction (T 352.19). There was certainly no application for finance from any external finance-provider made prior to the auction (whether by Mr Brennan or by the members of the Urusoglu family) although the speed with which finance was later arranged might support the inference that some enquiries had been made prior to the auction (albeit on an informal basis). In any event, Mr Brennan does not seem to have been in a position to commit to the purchase of the property as at the date of the auction (which is consistent with his denial of an intention to bid on that occasion.) 50Somewhat surprisingly (since the importance Huseyin places on the acquisition of the front block to enable the family to get back on its feet), Huseyin denies that he had any interest in the Mt Vernon property or its potential at that stage - he says he was overseas a lot and that he had much more valuable properties, such as an interest in a business park, that he was concerned about at the time. He denies that he had the relevant conversations with Mr Brennan. 51Whatever his father's attitude to Mt Vernon at that time (and it is hard to accept Huseyin's evidence that he did not care at all about the fate of the land that his Counsel described as the 'family dream' and on which the hopes of the WIPS product - and the only way to get trading again, T 74) apparently rested, Mahir seems to have been keen to keep the land in the family. Mahir says that he spoke to his father before the auction about acquiring the land and that also he spoke to his uncle, Mr Kanli, to arrange funds for its acquisition. Mr Kanli confirmed that Mahir had asked him before he went to the auction (T 236) to help get the money but it seems that any such promise of financial assistance was in very general terms (not least because there was no information provided as to the amount in question). In the witness box, Mr Kanli said Mr Brennan was going to fund it (the acquisition) (T236.27) and that he agreed to help get the money, which is inconsistent with the purchase being financed solely by Mr Kanli (yet on Mahir's evidence that is the only source of finance he had arranged before the auction). 52Mr Kanli did not have $96,000 in a bank account in October/November (T 236.23) with which to meet the deposit (and seems to have been relying on undisclosed sources of cash as the basis for any such financial assistance that he did provide to Mahir). 53Mahir was equivocal as to whether he had had any discussion with Mr Brennan prior to the auction about the purchase, although suggesting he had a 'very vague recollection' that there might have been such a discussion. He certainly denies any agreement with Mr Brennan in relation to the proposed purchase. 54Mahir did not, personally, have the funds to acquire the Mt Vernon land and accepted that he did not have a good credit history (T 106.45) (though he was not willing to admit that, had he tried, he would not have been able to borrow the funds. Nor did MSU Management (which seems never to have traded) have the ready funds to acquire the land. 55On Mahir's version of events, therefore, he attended and bid at the 5 July 2008 auction without any ability to meet the deposit (let alone the purchase price) other than by relying on his uncle's largesse (conduct that seems foolhardy in the extreme and tends to make Mr Brennan's version of events the more objectively credible).

Ownership of shares in MSU Management 56There is a live dispute as to the ownership of the shares in MSU Management as at the date of the auction (5 July 2008). MSU Management, according to the historical company records, was incorporated in December 2006. Elif was the sole shareholder and director of the company. According to Mahir (who said that he did not understand much about incorporation - T 126), the company was set up to act as trustee of the MSU Holding Trust, of which he was a beneficiary - T126 - and he paid the costs of its establishment. Prior to 5 July 2008, there is no suggestion that there were any assets of the trust or that MSU Management had traded or actively carried on any business. (Mahir was not able to say whether the trust had been registered for GST purposes - T 125 - and dismissed questions as to its status by saying that Mr Brennan's accountant had set it up and "he did it all" (T 125).) 57Mahir accepted that he was "not that experienced" in relation to corporations and that his sister Elif (who says she made the decision to incorporate the company) was less experienced than he (T 127). However, Mahir was not prepared to concede that Elif was not actively going to be involved in the running of the company. Elif (who seemed intent in establishing that she was an independent decision-maker) could not point to any real purpose for the existence of MSU Management but then, somewhat inconsistently, said dogmatically that the company was "never to be separated from the trust". (It is difficult to know what Elif understood by such a proposition, since she was not able to explain what a trust was and gave no reason for the requirement that the company remain trustee of the trust, if this is what she meant by it not being separated therefrom.) It was not suggested that the MSU Holding Trust itself had any assets at the relevant time. Elif seems to think it was there to put funds into if the occasion so arose but it is not clear from where or when it was expected that any such funds would have been derived. 58Mr Brennan deposes (in paragraph 28 of his 23 May 2010 affidavit) to a conversation with Huseyin (denied by Huseyin), to the effect that Huseyin had said to him that MSU Management could be used as the vehicle for Mr Brennan to acquire the Mt Vernon land. (Huseyin, however, says that Mr Brennan only offered to help after the auction and seems to deny that there was any discussion about the role of MSU Management in the acquisition of the land prior to the auction.) 59What is clear is that Huseyin (then an undischarged bankrupt) could not himself buy the land and he readily acknowledged that he could not borrow any funds to do so. He seems to have been under the impression that because of his bankruptcy his children would not have been permitted themselves to bid at the auction (which lends some weight to the suggestion that he or his son would have approached Mr Brennan to assist in that regard and may explain the suggested use of MSU Management as a vehicle for the purchase). 60Why the use of MSU Management would be suggested if the purchase was to be by Mr Brennan in his own right (rather than as a means for the Urusoglu family to acquire the whole of the land) as Mr Brennan contends is not clear. Mr Brennan suggested in his affidavit that he had a difficulty being seen to be involved in the acquisition as he had procured the initial mortgage for Huseyin and his wife, but it was not made clear why that would necessarily cause a difficulty if the subsequent sale was to occur at a public auction. However, if Mr Brennan had such a concern it might explain the use of the corporate vehicle. Counsel for Mr Brennan (Mr Cox) submitted that the corporate vehicle was simply used as a matter of convenience. 61Mr Brennan says that on 16 June 2008 there was a meeting in which Elif (the then sole director, secretary and shareholder of MSU Management) resigned as a director of the company and agreed to transfer the shares to Brennan. (A minute of meeting subsequently prepared by Mr Castino records a meeting on that date at the registered office and principal place of business of MSU Management at which both Elif and Mr Brennan are noted as being in attendance. Interestingly, the minute contains the same misspelling of Elif's surname as is found where her name first appears in the 5 July letter.) 62Elif was adamant that she had not attended any such meeting and her conviction on this issue (compared with rather more uncertain evidence on other matters) led me to believe her on this issue. She produced in the witness box a pay slip that she contended proved that she was at work on that day (although the pay slip simply indicated hours worked over the period) and explained that the hours of travel to and from work made such a meeting impossible. Mr Cox submits that Elif's evidence on the physical impossibility of attending the meeting was exaggerated. While it is conceivable that Elif could have attended such a meeting, outside of her day-to-day work commitments, it seems to me unlikely (if, as it seems they were, Huseyin and Mahir were the moving parties in relation to the sale) that Elif had any active role. (Huseyin, while saying that she made her own decisions, cast doubt on that by referring to the 'ethnic brain', by which I understood him to be suggesting that he regarded his daughter as not having as much independence or responsibility as his son.) 63The real difficulty I have in accepting that there was a formal meeting convened (at some time prior to the 7 July 2008 meeting with Huseyin's accountant, Mr Castino) at which Elif resolved (whether at her own initiative or at the direction of her father or brother) to resign as director and shareholder of MSU Management and to transfer her shares to Mr Brennan is that (and I say this without any criticism of her) Elif seemed to have very little idea of anything to do with the company or its role as trustee of the MSU Holding Trust or of what a trust was. In matters of that kind I strongly suspect that Elif simply followed whatever instructions were given to her by her father or brother and there is nothing to suggest they paid any attention to the need for the passing of resolutions of this kind at that stage. I doubt that much attention was paid to the formalities of corporate life by Mahir and Huseyin was overseas around the time of the auction. 64Mr Jacobs relies, in support of the plaintiffs' assertion that Elif was the owner of the shares in MSU Management as at the date of the auction, on two matters: a letter dated 5 July 2008 in its terms authorising Mahir to bid on MSU Management's behalf at the auction and, secondly, the fact (as to which there can be little doubt) that the share transfer and accompanying documentation was not prepared until 7 July 2008. 65As to the first, a copy of the letter (headed "Director's Minute") signed by Elif, authorising Mahir to bid at the auction, was produced at the hearing. (Although Mr Jacobs placed emphasis on the fact that the letter was dog-eared, stained and appeared to be a few years old, that could equally be the case whether it was produced before the auction, as Elif and Mahir say it was, or after the auction, as I am invited to infer by Mr Cox.) 66The letter (Exhibit 4) provides as follows: DIRECTOR'S MINUTE" ELIF URISOGLU [sic] appoints and gives/confirms authority to Mahir Urusoglu to execute the contract for the purchase of ... Mt Vernon on behalf of the company MSU Management Pty Ltd (ACN 122 996 525) (Signed) Elif Urisooglu [sic] Sole Director and Secretary 5 July 2008 67Mr Jacobs points out that Elif only needed to provide a letter to authorise Mahir to bid at the action and sign the contract if she were still the director of MSU Management on 5 July 2008. 68As to the letter, although I accept Elif's evidence that she typed it herself (T177.43) (though twice apparently misspelling her own name), I have difficulty accepting that Elif drafted the text of the letter, particularly when she had no real concept of what a Director's Minute might be in a corporate context. At T I78 she said "it was a meeting that would have taken place with a director". She also said at T 179 "If I had a dictionary and time I possibly could have [known what the language meant]" (hardly a ringing endorsement that she had any understanding of the document being described by the heading to the letter). 69I think it more likely that Elif was told by someone else what the letter was to say, at least in general terms. (That person seems unlikely to have been Mahir, whose evidence was that he was "pretty sure" a director's minute meant "a director, you know makes a note" - T 213 - and his evidence that his sister used language of the kind in the note was not convincing in light of her own evidence - T 213.31) 70The copy letter in evidence bears a fax imprint on the top (dated 8 July 2008) with a fax number which appears to be that of someone I was told was Huseyin's lawyer (a Mr Matthew Grew), suggesting that the letter was faxed to or by Mr Grew on that date. I cannot see the need for a copy of the letter to be sent to Mr Grew if it had been earlier given or shown to the auctioneer at the auction - hence the fax imprint suggests the letter was prepared after the auction. (Mahir's evidence showed a tendency to speculate on this point. In cross-examination he said at T 97.35 that the letter was given to Mr Grew "because when the property was bought and my signature on there it had been given to Grew to say it was brother on the day"; he later said that he did not give the letter to Mr Grew, which begs the question as to how it came to be faxed to or by Mr Grew on 8 July 2008, (T 215) and said that he had a copy of the letter in his pocket at the auction T 213.37, before suggesting that there might have been a number of copies in existence.) 71According to Mahir, there was a discussion at the time the contract was signed as to whether the contract was to refer to the purchaser, MSU Management, as a trustee. However, he does not refer to any discussion as to the need for evidence that he was bidding on behalf of the company. Mahir signed the contract on 5 July 2008. In the contract he is described as the sole director of MSU Management. Having regard to the fax imprint on the 5 July letter, it seems to me more likely that a request for evidence of authority to bid was made only when it was realised that Mahir was not a director of the company, i.e. after the auction and that at that stage Mr Grew asked for and was given a letter of authority to send to the real estate agent. (Mr Grew was not called to give evidence in the proceedings.) 72I am not persuaded that the 5 July letter was in fact prepared and signed prior to the auction on 5 July 2008. If, as Mahir suggests, he attended the auction and bid for the property on his own bat, then it seems to me quite likely that he did so without realising he would need a letter of authority to bid for the company (whether or not there had been the meeting on 16 June at which Elif had agreed to resign and to transfer her shares). Elif's suggestion that the letter was needed for Mahir to register prior to the auction as a bidder is not supported by any evidence from a real estate agent as to any pre-auction registration requirement (nor for that matter was this the evidence of Mahir). Mr Cox points out that Elif's evidence as to when the letter was provided (as to whether it was provided on 5 July 2008 or the day prior to the auction) was also contradictory. 73Mr Cox submits and I agree that it is reasonable to infer that on around 8 July 2008 (the date of the fax imprint) someone on behalf of the vendor (presumably having conducted a corporations search of MSU Management) discovered that the director/secretary of the company records was Elif and made enquiries as to Mahir's authority, which resulted in the production of the letter. 74The second matter relied on by Mr Jacobs as pointing against a meeting on 16 June having taken place as Mr Brennan contends, is the evidence of the accountant who had prepared the documents for the share transfer (Mr Dennis Castino) as to what occurred on 7 July 2008. I will consider that evidence shortly. 75According to Mr Brennan, throughout June 2008 and up to the auction on 5 July 2008, he had explored the possibility of obtaining finance to purchase the Mt Vernon land without success. (Although it was put to him that the manner in which this was phrased in his affidavit had been intended to convey that there had at least been an application for finance made but just not finalised, and I accept that his affidavit might well be thought to convey such an impression, the fact is that there had been no formal application.) It is unclear precisely what enquiries Mr Brennan had made or which he thought were necessary to enable an application for finance (something he said was a lengthy process, although the only evidence of such a process in this case - in relation to the application for finance for Sebat - seemed to take a matter of 2 or 3 weeks). 76Mr Brennan, not unreasonably in my opinion, was not prepared to bid at the auction without finance being in place. He said, but Mahir denies, that Mahir continued to pressure him to do so (paragraph 30 of Mr Brennan's affidavit).

Auction - 5 July 2008 77The auction took place on a Saturday. Huseyin says that he was in China at the time and there was no suggestion that this was not the case. Mr Brennan attended the auction (he says reluctantly and with no intention of bidding). Both Huseyin and Mahir suggested that Mr Brennan had attended the auction simply out of interest (in Huseyin's words, "to sticky beak") because he held a caveat. (Mahir at first said that he remembered Mr Brennan had a caveat on the land but then later said that he was informed by his father that there could have been caveats - T 130.40/T 134). There was no evidence of any caveat that had been lodged by Mr Brennan over the property. (There was, however, evidence in the form of a 3 August 2006 loan agreement that permitted the lenders - who included a Mr Colles and Mr Brennan - to take security by way of a mortgage over the Mt Vernon land. Therefore, although Mr Brennan was not a caveator, it might have been understood by Huseyin that he had some form of security interest under the 2006 arrangements over the land by reason of which he might conceivably have had an interest in attending the auction to ascertaining at first hand the outcome of the sale). Whatever may have been the case in that regard, it is clear that Mahir's information as to any caveat can only be attributable to whatever his father had told him. 78Mr Brennan says that, without prior agreement or notice to him, Mahir successfully bid at the auction with an offer of $960,000 for the property. Mr Brennan says that he immediately confronted Mahir and challenged his authority (paragraph 31 of Mr Brennan's 23 May 2010 affidavit). Mahir denies this account of the conversation. I have to say that Mr Brennan's version of events would be consistent with the attitude that Mahir displayed in the witness box of apparent disregard for, or lack of appreciation of, the serious financial consequences that might flow from signing a contract for such an amount of money when he had no firm finance in place (and was doing so on behalf of a company in which he had no interest and was not a director). Mahir was, to my observation, casual and disinterested in his approach to giving evidence (described by his Counsel as being "emotionally flat") - he did not appear to think carefully about the questions he was being asked and had an air of disinterest about the process of giving evidence. (His attitude to the production of documents called for by the defence is an example of this - documents seemed to be produced in dribs and drabs as and when Mahir bestirred himself to make searches for the documents.) 79Mahir was cross-examined as to the fact that the first page of the contract he signed on the day of the auction had falsely described him as the 'sole director' of MSU Management. Those words were handwritten on the contract. Mahir denied that they were in his handwriting (and speculated that they had been mistakenly added by the real estate agent, not knowing that he was not the sole director (T 98.42) i.e. simply on the basis of an assumption that he was the sole director). 80Mahir said that the contract was blank when he signed it (including as to the price). If that was the case, then this seems to me not only to be remarkably nave or careless on his part (in entering into such a contract without such details) but inconsistent with ordinary conveyancing practice. There would be no need for the price to be left blank (and every reason for both purchaser and vendor for that not to be the case). The contract was on all accounts signed after the completion of the auction when the purchase price should by then have been well known to all. (It was not therefore a situation where blank contracts were signed as some form of assurance of intent to bid, which might explain Mahir's evidence.) One would think that price would be the first detail that a vendor and purchaser would want to ensure was correctly entered into the contract (particularly a vendor selling as mortgagee). 81As noted earlier, Mahir says that there was a conversation with the auctioneer as to the contract noting that the purchaser was a trustee. If that is the case (and the auctioneer refused to accept that notation - as one might think the auctioneer would not unreasonably do in the absence of evidence to satisfy himself that the contract would be personally binding on the entity purportedly acting as trustee of an undisclosed trust), then it seems to me to make it even less likely that such a careful auctioneer would have signed (or accepted) a blank contract. (On one view it may also make it more likely that the auctioneer would have asked at the time for authorisation to be provided as to the entry into the contract by Mahir in the name of a company, and hence that Mahir did have the letter of authority with him, since the auctioneer was apparently prepared to proceed with the purchaser being disclosed as a corporate entity, but it is equally possible that such an issue would only have arisen if there were something to put the auctioneer on notice that Mahir was not a director of the company (there perhaps being a greater sensitivity to purchases by trustees than purchases in the name of a company). (No evidence was called from the real estate agent to assist in shedding light on this issue.) 82I find it difficult to accept that the auctioneer or real estate agent would not have been careful to ensure that the essential details to be inserted on the contract were complete before it was signed by the purchaser (if nothing else than to avoid issues later arising as to the proper completion of the contract). In the absence of independent evidence to support Mahir's assertion that he signed a blank coversheet to the contract, I would therefore conclude that the contract details were complete, including the price and the words 'sole director', when it was signed and that Mahir either paid no attention to what the contract said or else was unconcerned that he was wrongly identified on the front page as signing as a sole director. 83The fact that the contract described Mahir as the sole director of the company (even assuming this description to have been added in by the auctioneer or real estate agent, as Mahir suggests, after he signed the contract and based on an assumption that this was the case) puts the lie to the suggestion that Mahir had produced the 5 July letter of authority at the time the contract was signed (since if that had been the case it would have been clear that he was not a director of the company, let alone the sole director, and there would have been no basis to describe him as such on the contract). (Similarly, if there had been negotiation in advance with the real estate agent as to the purchaser being a company or corporate trustee, including the 3 month delayed settlement, it is odd that the formalities of who was bidding and in what capacity would not have been resolved at that stage.) 84The circumstances in which Mahir appears to have bid for and signed the contract at auction (and, as I must assume from his evidence, that he was prepared to sign, or would have thought nothing of signing, a blank contract on behalf of a company of which he knew he was not a director) suggest to me that if there was indeed no arrangement already discussed with Mr Brennan for the potential purchase of the land, then this can only have been an impetuous and ill-thought through attempt by Mahir to secure the acquisition of the proposed family home (the 'family dream' as it was described in submissions by his Counsel) and to worry later about how it was to be financed (such as to make it likely that Mahir would have agreed to a deal of the kind Mr Brennan says was reached). 85According to Mr Brennan, after Mahir had bid for the property he said to Mahir words to the effect "your [sic] on your own" (paragraph 31 of his 23 May 2010 affidavit), a sentiment which would be understandable given the apparent folly of Mahir's actions (even assuming he had the relatively vague comfort of financial support from Mr Kanli). Mr Brennan appears to have anticipated that there would be an expectation on Mahir's part that Mr Brennan would assist Mahir in the process of acquisition of the land. Mahir, for his part was again vague as to the question whether he had had a conversation with Mr Brennan after the final bid ("Not necessarily. It was a very very vague sort of conversation" T 130.15). As to why he bid if his sister had made her own decisions - probably Mahir speculated that she wasn't available on the day T 107.2, whereas in his affidavit he said he had told his sister he was going to look after it, and it is inconsistent with preparation of the 5 July letter prior to auction.

Deposit 86Mahir says he drew a cheque for 10% of the deposit ($96,000) on his personal account. (He did not produce bank statements in answer to a notice to produce served on him seeking such statements in relation to this period - and seemed to suggest that they were not available, though it is not clear why historical records would not have been available from the bank on request.) It is accepted that there were not sufficient funds then in Mahir's bank account to meet the cheque. However, Mahir says that he had made arrangements with Mr Kanli for the funds to be put into his account if he were to be the successful bidder (and Mr Kanli gave evidence to that effect, although it would seem that what he was really agreeing to do was to help Mahir, without any idea of how much money that would involve). If that had been the case, then it seems odd that at the auction Mahir would have requested (as it seems he did) the real estate agent not to bank the cheque for a short period (a request that I would have thought was likely to cause the real estate agent some concern as to the capacity of the purchaser to meet its obligations, and on Mahir's account of events that would have been an unnecessary concern). It seems to me to be surprising, if this is what in fact happened, that someone in Mr Kanli's position would have given the assurance as to the funding without any conversation as to the amount Mahir proposed to bid for the property (and hence without knowing what amount he might be required to place in Mahir's account for the purpose of meeting a deposit cheque - let alone the balance of the purchase price), even accepting the family relationship (unless the funds were to come indirectly via Huseyin). 87Mr Kanli gave evidence that he did not have funds to meet the deposit in his bank account (T 236.23), but had a practice of keeping (not insubstantial) sums of money in cash in what sounded to me to be a relatively unsecure location (which he was not prepared to reveal in open court, and which I do not here disclose, due to concerns he expressed as to the security of his funds). Mr Kanli is an executive of a company with a turnover in excess of $3.5m in 2008 and $3.7m in 2009 but his personal tax return in evidence before me (Ex Q) disclosed an annual income of only $60,000. Where the funds were to come from was not clear. It seems, however, that Mr Kanli was in the habit of receiving large sums of money from overseas from 'family businesses' in Turkey, (T248.29) (which he admitted he did not declare on his income tax returns and which he seemed, at one point in cross-examination, to refer to as funds referable not to him but to his brother-in-law (saying that the funds were coming in for their use - T 250.33) - a matter that Huseyin's trustee in bankruptcy might have found worthy of investigation had he or she known). 88Mr Kanli's evidence was that Mahir had told him beforehand he intended to bid at the auction T 226 but without any indication of the amount.) Mr Jacobs suggests that it could be implied that Mr Kanli would assist with the deposit up to a reasonable amount. I do not see how that can be implied from the sparse evidence of the conversations between Mr Kanli and Mahir (even assuming I accepted those conversations at face value). I do not consider that the evidence before me supports a conclusion that Mr Kanli had the ability to fund a purchase of the Mt Vernon land from income derived from the company of which he was an executive or otherwise (not does it support the conclusion that Mr Kanli agreed to do so). 89According to Mr Brennan, there were further conversations over the weekend with Mahir in relation to the auction and he agreed to arrange and personally to give security for a deposit bond so that Mahir's cheque did not bounce. Mahir denies this and seemed to suggest that he had been forced to withdraw his cheque at Mr Brennan's insistence. 90I have noted the extraordinary turn of events on 5 July in some detail because it seems to me not surprising that, Mahir having successfully bid (falsely, it would seem, as a director of the company - though Mahir resisted acknowledging this it seems because he saw that as an admission of fraud) at the auction on Saturday without a clear line of credit or funds to meet either the deposit or the purchase price (but apparently with the motivation of impressing his father by securing the family dream), there would then be some urgency by the Monday morning to regularise the situation. (As indeed there seems to have been.) On both Mahir and Elif's evidence, Mahir sought an urgent appointment on the Monday after the auction with Mr Castino. It is submitted by Mr Cox, and I agree, that there seems no reason for the urgency of the meeting (given that there was a 3 month settlement period for the contract), other than the need to regularise the position in relation to the deposit (and then put in place the arrangements to procure finance).

Conversations after the auction 91Meanwhile, Mahir says that after the auction he rang his father in China and told Huseyin that he had been the successful bidder. According to Huseyin, this was the first he knew that Mahir had purchased the land (in what one might expect him to have considered a hare-brained scheme, given the lack of committed finance (at least from an external source) at that stage, assuming that Huseyin is to be believed and there had been no discussion and/or no agreement had previously been struck with Mr Brennan to arrange the finance for the purchase). Huseyin, however, seems to have been remarkably unconcerned by this turn of events (and, according to Mahir, simply told him later to go and see Mr Brennan as they had worked out an arrangement for the financing of the purchase). 92Huseyin says that he received a telephone call from Mr Brennan after the auction (and presumably this must have been after he had received the call from Mahir if, as he says, the first he knew of the sale was from Mahir) in which Mr Brennan offered to help (something that seems unlikely to have been the case unless Mr Brennan thought there would be a profit for himself out of the arrangement). 93Huseyin says that they worked out how the purchase could be financed - an arrangement which, according to Huseyin, required Mr Brennan to take on responsibility for the purchase by acquiring the shares of MSU Management (and, as it turned out, personally to take on a considerable potential liability in relation to the financing) for no reward other than a potential commission from the financing (estimated to be in the order of an upfront commission of about $1,500 and trailer commissions of about the same amount) and a potential benefit if WIPS got off the ground (once the display home was built and Huseyin made good on the promise to transfer an interest in the shares of whatever company was to promote the product in due course; something that has not happened - either to Mr Brennan or to Mr Patel, the so-called friend of Huseyin to whom a similar promise was made and who also provided security for the financing of the acquisition but who made no appearance in the witness box). 94Huseyin's evidence is that the arrangement he discussed with Mr Brennan was that Mr Brennan would seek finance for the purchase; the purchase would be through his daughter's company (MSU Management) [a somewhat unnecessary suggestion if it was made at that stage since the contract had already been signed in its name]; the shares in MSU Management would be transferred to Mr Brennan so that he could use his good credit rating with the banks to borrow the necessary funds; Huseyin [a bankrupt who was well aware of the limitations on him in terms of borrowing, as was made clear in his answers in cross-examination] would have to come up with 20% of the purchase price (i.e. 20% of $960,000.00) plus stamp duty [to meet the likely 80% loan to value ratio required by a financier]; and [significantly for present purposes] Mr Brennan would later re-transfer the shares. 95According to Huseyin, his role at this stage was simply to provide advice to his children and he did not regard himself as entering into any agreement on behalf of his children as such. Any agreement they might come to in relation to the purchase or the financing of the purchase was one, he said, that was for them to make for themselves - thus seeming to distance himself from the very agreement on which Elif relies for her claim. Interposing here, Mr Cox submits that this evidence (i.e. Huseyin's disavowal of any agreement on Elif's behalf) is fatal to Elif's contract claim). Mr Jacobs, however, relies upon the authorities that make clear that questions as to whether a contract has been formed, and as to the terms of any such contract, are matters to be determined on an objective not subjective basis. In RJ Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd [2010] WASCA 128 (7 July 2010) Newnes JA in the Court of Appeal in Western Australia noted that the "legal rights and obligations of the parties turn upon what their words and conduct would be reasonably understood to convey, not upon subjective beliefs or intentions", citing the High Court in Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471 [34]; Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95 [25]; Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 [22]. 96That said, Huseyin was an experienced businessman and it might well be thought that if he had not understood himself to be acting to negotiate an agreement on Elif's behalf, then it would be unlikely that he would use language that would convey to a reasonable person that there was an intention to bind her to an agreement. (It also seems inconsistent with the submission by Mr Jacobs that an agency arrangement should be inferred because Elif had left the affairs of the company to others, namely Huseyin and Mahir, for Huseyin to profess no understanding of his role in that regard.) 97In any event, whether or not Huseyin was acting as Elif's agent in his discussions with Mr Brennan, Elif has effectively adopted his conduct by suing on the alleged agreement said to have come into existence in those discussions. 98According to Mahir's affidavit evidence, it was in his discussion with Mr Brennan after the auction (and it seems on his evidence that this must have taken place over the weekend of the auction) that Mahir agreed he would effect the works necessary to complete the subdivision of the Mt Vernon land. He says that this was so that the rear block could be sold and the profits applied to pay down the (remaining) mortgage on the front block. According to Mahir, it was anticipated that this could be done within three months. 99The contract for sale provided for a 90 day settlement period. Mr Jacobs points to this as providing (together with the term of the Trimac loan used to assist in the purchase) as objective support for the three month term of the agreement contended for by Huseyin and Mahir. What Huseyin says is that the agreement was, in effect, that Mr Brennan's role was only to be the holder of the shares on paper (in his words, to be 'on the mortgage'), and thus only to be personally liable under the finance arrangements for a short term (3 month) period. According to Mahir, this was only to be until the mortgage was 'manageable'. However, that seems to conflate the respective 3 month periods involved - the three month period for completion of the sale and the ensuing three month period from completion of the sale (and drawdown of the Trimac loan) to the date on which that loan was repayable. The earlier 3 month period seems to have nothing to do with the latter - the Trimac loan period coinciding, one might think, with the time in which it was hoped to complete the subdivision and be in a position to realise funds from the sale of one or other of the blocks of land (something noted on the indicative loan documentation as part of the 'exit strategy' for that loan). 100In any event, even accepting that it may have been part of the arrangement that the subdivision would be completed and one of the blocks on-sold within 3 months of the Trimac loan being drawn down (so as to minimise the high interest rate), that is not inconsistent with Mr Brennan taking the profit of the overall transaction (through MSU Management) having made it possible for Huseyin or his family to purchase the front block in order to have their planned family/display home on that block.

7 July 2008 meeting 101On the Monday following the auction (7 July 2008),Elif and Mahir met with Mr Castino in his office in Ryde. Mr Castino's diary notes (which seem to serve a dual purpose of providing a billing record and recording instructions or advice) were in evidence before me. After some confusion on his part as to the meaning of the numerical notations in his records, it seems that Mr Castino recorded 4 and a half hours' time spent in conference with Elif and Mahir on that day and attending to the instructions given in that conference. It seems, therefore, on any view of things to have been a relatively lengthy conference, (though this seems to have been because of the time involved in creating the relevant company forms through an on line service provider rather than in the provision of detailed advice as to the transaction, at least since no evidence of such advice was given). 102The circumstances in which this meeting took place (and the evidence given by Elif and Mahir in this regard) illustrate the unreliability of the Urusoglu evidence. The affidavit account of events by Elif and Mahir do not suggest any discussions with Mr Brennan over the auction weekend as to steps to be taken in relation to MSU Management in connection with the refinancing and suggest instead that Mr Brennan arranged the necessary paperwork at his office. By the hearing, of course, it was apparent that the documentation had been prepared by Mr Castino in his office and that Mr Brennan was not present (other than by telephone mid way through that meeting). 103Mahir, in the witness box, tried to address this inconsistency by saying that he had had a vague conversation with his sister "to my recollection it was after a conversation with Scott" and that Mr Brennan had instructed Mr Castino to prepare the documents (documents were drawn under instruction from Scott) At T 104, Mahir, said he did not ask Mr Castino to prepare the documents; Mr Brennan did. This is inconsistent with Mr Castino's evidence as to how the documents were prepared. Mahir also said the reason for appointment with Mr Castino was to change the management of MSU Management - T 104.48 - "Yeah. To my memory again, over the weekend and probably the morning of 7 July, we were instructed by Mr Brennan we needed an accountant and only an accountant could prepare these documents". 104Mr Brennan was not in attendance at Mr Castino's office but was at some stage contacted by telephone, and after the conference with Mr Castino each of Mahir and Elif went to Mr Brennan's office. The chronology of events disclosed by Mr Castino's notes indicates that Mr Brennan was contacted only after instructions had been given to Mr Castino by Elif/Mahir as to what was required from him. Therefore, the request for preparation of company minutes and share transfer as made to Mr Castino must (on either side's version of events) have been made by Mahir and/or Elif in each other's presence - though that is inconsistent with the evidence of the siblings - and is consistent with there being an agreement in advance of that meeting as to how the purchase was to be effected (consistent with Mr Brennan's version of events). 105Mr Castino explained in the witness box the process by which he uses a service provider (commshelf) to prepare company forms of the kind produced on that day - a process which involves registration on-line before documents can be prepared and lodged. There is no doubt, having regard to Mr Castino's evidence and the contemporaneous documents (in particular, a "commshelf" email to Mr Castino, which indicates when he received the relevant ASIC forms, and Mr Castino's facsimile transmission of 7 July 2008 to Mr Brennan forwarding those forms), that the company forms recording the resignation of Elif as director and secretary of the company, and Mr Brennan's appointment in her place, and the share transfer documents were not physically created until 7 July 2008. (That, of course, does not preclude the possibility that the documents created on that day correctly recorded an earlier meeting.) 106Mr Castino's diary notes from his diary record the following "7/7 Meeting M & E re transfer of share MSU. Go to ASIC website and download. Prepare to lodge 362 Notice. Download ASIC details to compliance. Attend to resignation director and secretary. Transfer to two shares to Scott. Appoint Scott as director/secretary." 107Mr Castino noted in his diary records certain personal details of Mr Brennan necessary for completion of the forms, which he says he obtained in the telephone call placed with Mr Brennan on that day. What was said in the conversation is a matter in dispute between the parties. 108Mr Castino's notes do no more than record the bare personal details required for the form. However, in evidence, Mr Castino said he recalled the documents were prepared at Mr Brennan's request (T 200) and both Mahir and Mr Castino say that Mr Brennan asked that the documents be back-dated to 16 June 2008. Mr Castino explained that the on-line or electronic registration process required that there be a date entered in the relevant field (i.e., the date of the meeting at which the resignation as director etc occurred). Mr Cox submits that the suggestion that any request was to backdate the minutes in that conversation should not be accepted. It is submitted that it is implausible and likely to be a recent invention. It is certainly not recorded in Mr Castino's record of the meeting. Mr Castino also says in his affidavit that Mr Brennan said during the conversation that the paperwork in relation to the shares would not be lodged (though that is not recorded in his notes either). (There was nothing in his affidavit as to Mr Brennan requesting the preparation of the documents.) 109Mr Castino was uncomfortable in the witness box when pressed as to the so-called 'backdating' of the relevant documents. In that regard, he seems now to accept that what he was being asked to do on 7 July 2008 was to enter false information on the document (though I am by no means certain that this was his understanding at the time). That would, of course, only be the case if there had been no relevant meeting or resolution on 16 June 2008. (There would arguably be nothing wrong, other than a complaint as to dilatory record keeping and perhaps a failure to comply with any relevant rules for the timing of notification to ASIC of change of company officeholders, with a scenario in which a meeting took place on that earlier date but, for whatever reason, the formal minute of meeting was only prepared some time after that meeting - in which case it would be understandable that the minute itself was not dated the same date as the meeting). 110Any discomfort on Mr Castino's part at what he says he was asked to do can surely only have come from what he was told by Elif or Mahir (then or later) in relation to the meeting (or what was said by Mr Brennan during the telephone conversation) since it seems unlikely that he would have seen anything sinister if all he had been told was that the meeting had occurred on an earlier date. Yet there is nothing in his diary notes recording a request for backdating, as such, or any protest by Elif or Mahir as to the date to be put on the document or (despite his assertion in the witness box that he had given such advice) to the effect that he had advised Elif not to sign the relevant documents (which one might well expect to see if a professional adviser had given advice with which his or her client has not complied). 111Nothing was said in Mahir's first affidavit as to the backdating of the company documents. He was cross-examined as to the inconsistency between his 6 April affidavit and his 23 April affidavit in this regard (sought to be explained by Mr Jacobs by reference the urgency of preparation for the initial interlocutory application in these proceedings in April). Mahir's explanation was that he did not think it was relevant. There remains in my mind a strong suspicion that the so-called 'backdating' request was nothing more than Mr Brennan responding to a query by Mr Castino as to what date should be put on the form and he nominating an earlier date as the date on which the relevant decision was made, and that the sinister connotation now sought to be put by Mahir and Elif on the discrepancy between the date of the meeting shown on the form and the date the form was completed has been communicated in some fashion to Mr Castino (causing him retrospectively to question his own conduct on this issue). 112I am not satisfied that there was an express request by Mr Brennan to backdate the documents (in the sense that he was acknowledging to Mr Castino that there had been no meeting on 16 June). I think it far more likely that what occurred was that Mr Brennan was asked to nominate a date for the purposes of the completion of the form and he did so having regard to his recollection that the broad arrangements of the purchase had been put in place prior to the auction. 113That said (as noted earlier), I have real doubts that there was any actual resolution by Elif on that earlier date - since she seems to have played no active role in relation to the company or the acquisition of the land until after the auction. 114What I cannot see (and what neither Counsel was able to suggest) is any significance, for the determination of the issues in this case, as to whether the meeting was held on 16 June or 7 July, other than insofar as this goes to the credit of the respective witnesses. There seems to be no commercial purpose served by the parties consciously agreeing to backdate the documents in order to record a transfer of the shares prior to the auction (particularly since on either scenario the identification of Mahir as the sole director of the purchaser was incorrect) - there was no suggestion, for example, that this somehow lent more weight to the application for finance by MSU Management than if the transfer of shares was agreed after the auction. 115Some significance was placed by Mr Jacobs on the fact that Mr Brennan had not referred in his affidavit evidence to the receipt of documents from Mr Castino on 7 July 2008 (though he admitted in cross examination that he had received the documents on that date and that when he received them they were in a form requiring his signature where his name appeared) and had not included in his affidavit a copy of the coversheet with which the documents were apparently faxed to him. I draw very little from that (which seems to me less significant that the omission of any reference by Mahir in his initial affidavit to the alleged conversation in relation to the back-dating of the documents). 116It seems to me that the most likely explanation of the evidence is that Mr Brennan, having seen the 16 June date on the documents, assumed that this was when the events recorded in the documents occurred. At that time he may or may not have retained the coversheet of the facsimile transmission from Mr Castino. As to why an earlier date would have been nominated if (as I think likely) there was no meeting on that day, a charitable explanation would be that, when asked to nominate the date on which Elif had resigned as director, this is when Mr Brennan recalled having reached agreement with Huseyin as to how the finance would be arranged, but the fact remains that (apart from the doubt it raises as to the reliability of Mr Brennan's recollection of the timing of events) nothing seems to turn on whether Elif had agreed to resign as a director before or after the auction. 117What is more significant for the purposes of the plaintiffs' claim is what was said as to the transfer of the shares to Mr Brennan at that stage. Elif says (but this is not something to which either Huseyin or Mahir depose and is not reflected in anything in Mr Castino's notes) that when the call was placed to Mr Brennan from Mr Castino's office on 7 July (according to Mahir, on his mobile phone), Mr Brennan was 'patched in' by loudspeaker and said words to the effect: The paperwork transferring the shares to me will not be lodged. I just need it to put on the table with the bank to pull off the finance. Bring the paperwork from the accountant and come and see me at my office. 118Mr Castino, in the witness box, supported Elif's evidence when he said that Mr Brennan had said the paperwork would not be lodged. There was, however, no reference to this in his affidavit or notes. It is surprising that, if this was indeed Mr Castino's understanding at the time of what the arrangement was, it would not have been recorded in his notes. 119It seemed to me (and I raised this with Mr Jacobs) that this evidence might well raise the question of unclean hands, insofar as it seemed to be suggested by this that the intention of the parties was to deceive the banks into believing that someone other than the true owner of the shares was in control of the company. (Mr Jacobs, however, submitted that no such question arose since the arrangement was for the transfer of the shares to Mr Brennan and he was in fact in control of the company - though that seems to me wholly inconsistent with Elif's evidence that the paperwork was not to be lodged.) 120As to the objective likelihood that an arrangement would be put in place whereby the share transfer form was signed but not lodged, it seems to me unlikely that a financier wanting to be satisfied as to the creditworthiness of the company by reference to the identity of its shareholder/director would be so satisfied simply by sighting an unregistered transfer of shares form - particularly if there was no ready explanation as to why a document dated 16 June 2008 had not been lodged with ASIC in the ordinary course. 121The arrangement, according to Huseyin, was for the transfer of the shares to Mr Brennan. There was no restriction, under that arrangement, on the registration of the share transfer form. Elif's version of events is not supported by Mr Castino's notes (though, as noted, he recalled in the witness box that such a statement had been made). It does not seem consistent with the purpose for which the transfer was (on her father's evidence) being effected; nor is it consistent with the agreement on which Elif relies (since there can be no need for an obligation to re-transfer the shares if they have not in fact been transferred in the first place). I cannot therefore accept that Elif's account of the conversation in this regard is accurate and, while there seems no reason for Mr Castino to have invented this recollection, I place more weight on the contemporaneous notes of Mr Castino than in his oral evidence some time after the event (and at a time when he seems to see a sinister gloss on matters not seen with such a dim view at the time to warrant even a note by him.) Mr Castino's notes suggest an agreement or undertaking by Mr Brennan not to register the share transfer. His now recollection that something was said as to the non-lodgement of paperwork is not sufficient to persuade me that there was an agreement as Elif contended in relation to the share transfer. 122For completeness, I note that had I been satisfied that this was what had been said then I would have been inclined to think that the doctrine of unclean hands would apply to preclude Elif from now raising an issue as to the fact that the transfer of shares had, contrary to that statement, been registered (though it would not necessarily have precluded her reliance on an alleged agreement by Mr Brennan to re-convey to her the shares in question). 123Elif's affidavit evidence is also inconsistent with the evidence that emerged in her cross-examination at the hearing, in that her affidavit suggested that the ASIC forms were signed in Mr Brennan's office whereas it became clear by reference to Mr Castino's notes (and Elif accepted in the witness box) that Elif had signed the forms in Mr Castino's office and that she and Mahir only then went to Mr Brennan's office. Since by that time the forms were already signed by her (against what Mr Castino now says was his advice in that regard), Elif's evidence that she then queried the date of the meeting with Mr Brennan seems to me to be implausible.

Steps after contract 124Mr Brennan gives evidence that he arranged for the deposit bond, giving security for it personally, and that he paid the stamp duty on the contract (paragraphs 33 and 34 of Mr Brennan's affidavit). The fact that he did so suggests that the arrangement was one in which he was personally interested. It is not objectively likely that someone complaining of moneys lost on a previous project (as Huseyin accepts that Mr Brennan had done) would willingly proffer personal guarantees or security (and make payments out of his or her own pocket) on another project if there was no personal interest in the project. (And in that regard, the mere possibility of a profit from WIPS seems to me an implausible reason for Mr Brennan or his wife to take on any personal exposure; as also is the prospect of commission in what seems a comparatively small amount.) 125On around 27 July 2008, Mr Brennan, with the assistance of his in house accountant and his then lawyer, prepared further documents to have the share transfer presented to the Office of State Revenue and ultimately lodged with the ASIC to record himself as the director and shareholder. Mr Jacobs cross-examined Mr Brennan as to what was, on its face, an incorrect declaration to the effect that MSU Management had no assets or liabilities at the relevant time (though after the auction it had a liability to pay the deposit and in due course to pay the purchase price, subject to completion of the matters required for settlement of the sale of the property as well as an asset in the form of the chose of action represented by the contractual promise to convey the land and an equitable interest as purchaser in the land). 126Mr Cox submits that any misunderstanding on Mr Brennan's part regarding the statutory declaration does not reflect on his honesty, simply his commercial understanding of assets and liabilities. I accept that Mr Brennan's evidence in this regard exhibited a belief (which would be consistent with the statement in the statutory declaration) as to the time at which any asset or liability in respect of the property was acquired or incurred being only on completion of the sale (though that does not explain how his then solicitor came to have drafted such a document, given that he should have understood the correct position in that regard. (While it seemed to me that this cross-examination was tending towards a suggestion that the reason for the incorrect statutory declaration was to minimise stamp duty on the transfer of shares, I cannot make such a finding in light of Mr Brennan's apparent lack of understanding as to the legal consequences of entry into the contract for sale from which it seems reasonable to infer that he relied on his professional advisers for the accuracy of the matters to which he had deposed in the statutory declaration.) 127I also note that there was in evidence, curiously, a version of the company minutes on which the date was crossed out and in handwriting there appeared the date 28 July 2008. However, Mr Brennan was not able to shed any light on this alteration and it may be that the innocent explanation is that whoever was arranging for the lodgement of the documents had incorrectly made the amendment on a draft of the document (since the document ultimately lodged bore the date as per the document prepared by Mr Castino).

Finance for acquisition 128Finance for the acquisition was arranged by or through Mr Brennan or his brokerage firm. Although it is asserted that Mr Brennan thereby derived both up front and trail commissions from the finance arrangements, Mr Brennan's evidence was that (at least in relation to the Trimac loan) he was the client not the broker and he did not derive such commissions. (He accepted that he had received a commission on the ANZ loan, which he estimated at $1,500 with potential trailer commissions of a similar amount.) 129In relation to the deposit, Mahir's cheque was returned and a deposit bond was arranged through Mr Brennan (secured by personal guarantees from himself and his wife). Mahir's evidence suggests that this happened at the suggestion of Mr Brennan. (The fact that a deposit bond was provided might indicate a recognition that Mahir had insufficient funds for the deposit otherwise to be met or that there was a benefit in retaining the funds that might otherwise have been received from his uncle for the deposit so that they could be used in other ways - say for the subdivision works, as Mahir suggests.) In any event, the provision of a deposit bond under which Mr Brennan was exposed to personal liability (whether or not the suggestion for the bond came from him) is consistent with his version of the agreement - namely that he was incurring potential liability for an asset that he was, through his ownership of MSU Management, to own. 130Two loans were obtained in order to enable the settlement of the purchase in November 2008. One was a short term high interest (20% pa) loan from a New Zealand company known as Trimac Holdings Ltd (NZ) (in the order of $280,000) and the other was an ANZ Bank loan of $768,000. Both those loans were secured by the Mt Vernon land. (In the case of the Trimac loan, security was also provided by Mr Brennan, his company and Mr Ashish Patel; in the case of the ANZ loan, this was personally guaranteed by Mr Brennan). (Mr Patel was described variously as an associate and friend of the Urusoglu family but did not give evidence in the proceedings and thus no light was shed by him on his involvement in the relevant transactions.)

November 2008 131The purchase of the Mt Vernon land settled on 14 November 2008. Huseyin gave evidence (in a further affidavit in chief served at the hearing) that Mr Brennan had said to him in November or December 2008 that he wanted to be in and out in 3 months. Huseyin did not accept that this conversation had taken place when the property was agreed to be purchased back in July (T 46), having earlier said that the first time there was a discussion with Mr Brennan as to his involvement in the land was after the auction. Huseyin dates his conversation with Mr Brennan (as to the latter being in and out within 3 months) by reference to the fact that the building work was not complete at that time (although it equally was incomplete back in July 2008) (T 44.2). 132On any view the share transfer forms were signed in July 2008. The company at that time had an obligation to settle on the purchase of the land in November. In those circumstances it does not seem to me to make sense that the first conversation in which Mr Brennan agreed to assume a personal liability in effect in relation to the financing would not have been until November/December 2008. 133For the plaintiffs, evidence was adduced from an accountant (Mr Dominic Pelle) to explain the source and application of the loan funds and refinancing of the loans by reference to the various loan documents and bank statements. This evidence was put forward as expert evidence (over the objection of Mr Cox). I admitted it subject to weight and relevance. Ultimately, Mr Pelle conceded in the witness box that an average HSC student of basic level mathematics with an ability to read could have performed the task he had performed. I found his evidence to be of little assistance. 134In relation to the Trimac loan (which I was told had itself been the subject of litigation involving Mr Brennan), which remains outstanding (and is now incurring a higher or penalty rate of interest), an indicative offer of finance was provided to MSU Management on 4 November 2008. That offer (not capable on its face of giving rise on acceptance to a binding contract) was for the sum of $280,000.00 (from which $30,000 was to be retained for capitalisation of interest). 135Mr Jacobs placed significance on the fact that the indicative offer (signed by Mr Brennan) stated the purpose of the loan as including purposes additional to the acquisition of the Mt Vernon land and referable to Mr Brennan personally (those being for landscaping costs for a property at Cronulla and the balance for business purposes) - a matter which it seems to me is consistent with Mr Brennan having the understanding at that time that the company effecting the borrowing was his company and that the borrowing could quite properly be used for purposes of his own - and further that it made reference to an exit strategy that Mr Jacobs says is consistent with the version of the agreement contended for by the plaintiffs. 136That 'exit strategy' involved four steps: the completion of the sub-division of the Mt Vernon land; the sale of the sub-divided land (seemingly, this is a reference to the rear block, having regard to the fourth step in the strategy); the application of the sale proceeds of the sub-divided land to extinguish the Trimac facility ; and the transfer of the (second) ANZ Bank facility to the remaining front l ot being retained by MSU Management. (whatever the intentions of Mr Brennan at the time, it is the case that the terms of the indicative letter of offer would not have committed MSU Management or Mr Brennan to following the exit strategy, although it sheds light on what had been the stated intention of the company at the time.) 137The Trimac loan was for a term of 3 months, with a covenant for repayment on 13 February 2009. The larger loan facility (with ANZ) was for a longer term and at a lesser interest rate. Huseyin was adamant that the need for the short term loan was to complete the subdivision works - T 46 - but then was used to make up the balance of the purchase price once Mr Kanli's contribution was diverted to the subdivision works. 138Mr Jacobs relies on the covenant for repayment of the Trimac loan within 3 months as being consistent with an agreement on Mr Brennan's part that the later NAB refinancing of the ANZ loan was to be used to pay out the Trimac loan (since it was unlikely that funds from the sale of the rear block would be available prior to 13 February 2009). Mr Brennan accepted (paragraph 7 of the defence) that he knew one of the purposes of the Urusoglus' wish to purchase and develop the land was for the construction of the family home but it is not inconsistent with Mr Brennan assisting this to happen in the context of an arrangement in which he acquired (and was able to retain) through the shareholding in MSU Management an interest in the back block of the subdivided land.

Subdivision works 139From 15 November 2008, the works necessary to complete the subdivision (broadly, the driveway or road access works, but with some landscaping and, according to Mahir, the provision of some services to the land) were carried out. These took place in late 2008 and over the Christmas and New Year period (as emphasised with some feeling in the witness box by both Huseyin and Mr Kanli). 140Mr Kanli, at Mahir's request, set up an account with at least one concrete supplier (Western Suburbs Concrete) for the provision of concrete to the site and says in his affidavit that he provided sums totalling somewhere in the order of $170,000 or $180,000 by way of cash or cash cheque to Mahir. (Annexed to his affidavit were bank statements on which he had placed an asterix against the relevant amounts he says were provided to Mahir - and he conceded in the witness box that these only amounted to around $136,000). Mr Kanli says that he did this as and when requested by Mahir (but without apparently asking for any detail of the purpose for the moneys. Mr Kanli seems to have been satisfied that the moneys related in some way to work on the Mt Vernon land (presumably on the faith of what Mahir said and perhaps because Mahir was not involved in other work at that stage). 141Mahir, for his part, seems to have been unconcerned to ensure that he kept records of invoices received or receipts for moneys paid in relation to the works (a matter that became apparent with the provision in dribs and drabs during the course of his cross-examination of documents that had been the subject of an earlier Notice to Produce and that he seemingly only made an effort to find when pressed in cross-examination). The explanation for missing records was variously that Mahir had moved houses a number of times; that invoices get lost and damaged on site; and he did not make a conscious effort to keep all invoices became he believed he was doing the driveway for himself (though this is somewhat inconsistent with his assertion in the witness box that all documents would be provided to his accountant for preparation of tax returns and financial statements in due course). 142Mahir gave evidence as to what was involved in the road access works and was quite expansive in cross-examination as to what had been required (and as to the reason that the works carried out prior to his father's bankruptcy had needed to be re-done). (In paragraph 15 of his 9 September, 2009 affidavit, Mahir says that he commenced works on the sub-division, involving cleaning contaminated soil, excavation work and construction of the road on 15 November 2008.) Mahir said that the work was "heavy duty" involving extremely long hours 6 days per week and that he (and presumably his company) had not been working on any other project during this time. (Hence it is said that the only project on which Mr Kanli's money could have been spent was the Mr Vernon subdivision works.) 143In particular, Mahir said that he had received moneys from Mr Kanli and that those moneys had been spent on trucking fees, tipping fees, Council fees, surveyors' costs and plants in respect of the Mt Vernon development. His evidence in that regard is incorrect at least in that it appears from the bank statements produced by Mr Kanli that the Council fees had been paid by Mr Kanli direct. (Mahir's affidavit evidence was that Mr Kanli had "advanced" the sum of between $165,000.00 and $186,000.00. There was no evidence of any loan agreement between them and I understood Mahir's evidence in this regard simply to be that moneys had been provided to him. Mahir has no way of substantiating the total sums he claims to have received. There is a discrepancy between his evidence and Mr Kanli's bank statements that is only resolved if one accepts Mr Kanli's oral evidence as to the payment of considerable cash sums in addition to the cash cheques.) 144Apart from the withdrawals marked with an asterix in Mr Kanli's bank statements (which he said represented cash cheques drawn by him and given to Mahir, totalling approximately $136,000), Mr Kanli's evidence was that another $40,000 - $50,000 had been provided to Mahir in cash. There is no record of those amounts. Mr Cox noted that on a number of occasions the payments out by cash cheque had coincided with overseas transfers of moneys deposited into Mr Kanli's account. 145Mahir produced photographs (Exhibit G) showing the completed sub-division works on the Mr Vernon land and it is not disputed that the necessary works were carried out (though Mr Brennan disputes the extent and cost of those works). Apart from the photographic evidence, the observations of Mahir, Huseyin and Mr Kanli, and a bundle of invoices (produced seemingly randomly by Mahir), there is no evidence of the extent of the works carried out from November 2008 (and, relevantly, no evidence from a quantity surveyor or other independent witness with expertise as to the reasonable cost of the necessary works). 146After the subdivision works were completed, steps were taken to complete the subdivision of the land (a linen plan was drawn up and the plan (signed on behalf of MSU Management by Mr Brennan as its sole director and secretary) was lodged, with the mortgagee's consent, with the Council). The plan of subdivision was registered on 2 January 2009.

2009 partial refinancing 147In 2009, Mr Brennan arranged for a partial refinancing of the existing ANZ loan through Homeside Lending (a division of NAB). (There was some suggestion that the refinance application was in November 2008 but Mr Brennan said that he did not submit the application T 322, that apparently being left to his staff. The Homeside Lending facilities were drawn down on 13 February 2009 - one for $170,000 and one for $290,000 (raising finance in total of $460,000). The effect of the partial refinancing was that the $768,000 ANZ loan was reduced to around $600,000 and the Trimac loan was reduced by $106,000. The remaining $179,000 of the funds drawn down in February 2009 was retained in MSU Management's bank account. (It is this amount that the plaintiffs contend was 'diverted' by Mr Brennan for his own use.) 148Mr Pelle swore two affidavits in which, purportedly as an expert, he itemised various expenses for which he asserted that there had not been a proper account. He did not make clear the assumptions on which that conclusion was asserted and the objectivity of his report was clouded in my view by the terms in which it was expressed. 149Although the amount used for personal expenses (originally claimed to be around $300,000) was put into contest by Mr Brennan, and Mr Pelle was cross-examined as to the basis on which he had expressed opinions on this issue (which highlighted that Mr Pelle proceeded on the basis that any item that could not be matched to a company expense (described as such) was for personal expenditure, and had no information as to whether there was an internal loan account to which these funds were allocated or any arrangement in relation to the payment of sums in lieu of directors' fees or the like). Further, Mr Pelle had no list to hand of which transactions made up the $179,000 which he said were not personal expenses. He accepted (at T 160.1) that an HSC level student with basic mathematics and an ability to read could have done what he did -namely to go through the documents to see if invoices could be matched in the discovery folder. He accepted (at T 160.15) that an understanding of the refinance transaction was not necessary to perform that exercise. 150Nevertheless, the upshot of this was that Mr Brennan did accept in the witness box that approximately $179,000.00 of MSU Management's money had been expended for personal expenses (such as school fees) and he accepted that the whole of the Trimac loan could have been paid from the funds (T 328.18) and there was nothing to stop that occurring in February 2009 when the loan was repayable. 151There was a suggestion (in Mr Brennan's cross-examination)of other funds held in trust over which there is a dispute (at T 328 reference was made to an amount of $140,000 held in trust) and in re-examination (at T 355) Mr Brennan when asked about any other way to pay the Trimac loan, said "selling the back block where there was money held up by the plaintiffs and it is still sitting there to this day". If, by this, Mr Brennan meant anything more than that the sale of the back block (to clear the debt) has been thwarted by the present proceedings, there was no evidence before me as to what that was.

Sale of front/back blocks 152After the subdivision, separate contracts were entered into for the sale of the respective blocks of land. Neither has been completed. 153In relation to the front block, a contract for sale to Sebat Pty Limited (a company associated with Mr Kanli) dated 6 February 2009, with a specified purchase price of $850,000, was executed by Sebat as trustee for the Kanli Discretionary Trust. (Sebat was described by Mr Jacobs as Mr Kanli's alter ego.) It is fair to say that Mr Kanli was exceedingly vague as to the matters relating to the purchase, other than he accepted that he had signed the contract (in Sebat's name). 154Mr Kanli accepts that he attended Mr Brennan's office in January 2009 to make an application for the loan to purchase the front block. (The loan application was for 80% of the purchase price.) 155Mr Kanli, in the witness box, said that the contract of sale was signed in front of Mr Brennan at his office (T 237.20) in January 2009, although initially his evidence was that he had signed the document at a solicitor's office in Strathfield (T 12). Mr Kanli says he went to Mr Brennan's office to apply for the loan on 20 January and that this was the only occasion on which he went to Mr Brennan's office (T 237). (The contract coversheet identified a firm of solicitors at Strathfield as the purchaser's solicitors but Mr Kanli denied any knowledge of them or of having attended those offices - from which I can only assume that those solicitors were instructed by someone other than Mr Kanli in the Urusoglu family since there is no suggestion that this contract was not a genuine document.) 156Significantly, irrespective of whether Mr Kanli signed the contract for sale on that occasion, he says (T 246) that Huseyin attended the January meeting in Mr Brennan's office (and therefore Huseyin must have been aware of whatever arrangements were then put in place for Sebat's purchase of the front block). (Mahir accepted in the witness box that he was aware of the contract - T 124.) 157Mr Kanli was also vague as to how it was that the purchase was to be financed. He says he did not see anyone else to apply for finance (T 238.25). Mr Kanli accepts that he filled out the application form on 20 January, set up Sebat and gave his accountant's details on that date, but says nothing was forwarded to him in relation to the loan (T 239). 158Mr Kanli said he had no idea of what had happened in relation to the contract (T 240). He says he heard nothing afterwards but, somewhat inconsistently, said he had earlier rung Mr Brennan and asked what was going on with the loan application - T 239.38. The suggestion that Mr Kanli had heard nothing in relation to the loan is inconsistent with the business records adduced by Mr Brennan (Exhibit 6) to which I will refer shortly. 159Mr Kanli's evidence was that he was to obtain the front block (burdened with a mortgage of $600,000) and that the money he had already contributed to the subdivision works to stand as his deposit, although this is inconsistent with the contract for sale signed by him on behalf of Sebat. Mr Jacobs submits that the existing ANZ Bank loan of $600,000 provides inferential support for Mr Kanli's version of events. However, if that was the arrangement then it is difficult to see why Mr Kanli agreed to sign the Contract for Sale (which he says he did in Huseyin's presence) committing Sebat to the payment of $850,000 for the front block and signed a loan application for 80% of the finance necessary to effect such a payment. 160As to the rear block, a contract was exchanged on 14 January 2009 for sale of this block with a completion date of March 2009 to a Mr and Mrs Ash for the sum of $630,000. A $1,000 deposit was required (suggesting a somewhat unusual conveyancing arrangement). Matthew Grew was identified as the vendor's solicitor. That sale has not completed. At T 218.15, Mahir said that on completion of the rear block sale the difference between $630,000 (the sale price) and $460,000 (the mortgage) was going to be given to Mahir for the work that he had done and that the front block was to be handed over to his uncle with a $600,000 mortgage on the block. (Mr Brennan's documents suggest that at around this time he was claiming that the difference between the sale price and the mortgage was due to be paid to him in reimbursement of moneys spent by him and that there was a shortfall owing.) 161Mr Kanli does not appear to have had any expectation that he would be required to meet the interest costs on a $600,000 mortgage. Mr Kanli agreed that he was going to borrow money and be liable for the loan (T 247) but said that the Urusoglu family was going to make the repayments (this suggesting to me that the interposition of Sebat as purchaser of the land was done on behalf of Huseyin and his family). 162Mr Cox submits that Mr Kanli was, in effect, the "stooge" of Huseyin and that, in entering into the Sebat contract, he did so solely on behalf of Huseyin and not in his own right. Mr Kanli denied that in cross-examination (T 246.5) However, there is considerable force in the submission that this was the effect of Mr Kanli's evidence. Mr Kanli said that he was there to help the family (T 246.25); that the family agreement was that he would be the owner and that "eventually I would have given it back to them". 163It is almost inconceivable that a person with business experience (as Mr Kanli presumably has, as an executive of a company with turnover of some $3.5m or more a year) would take as little interest in a not insubstantial property acquisition as Mr Kanli seems to have done, unless he was simply lending his company's name to the transaction and it was for the benefit of another (such as Huseyin). Mr Kanli says that he signed the contract and then heard nothing further. He knew nothing of the firm of solicitors which was noted on the contract as acting for the purchase (T 243.5) and said he had not been to their offices. He was adamant that he had signed everything including the contract in Mr Brennan's office (T 244). He says that he did not know that the contract had been terminated (T 244), which makes one wonder from whom it was that the solicitors to whom the termination letter was sent were receiving instructions and with whom they were communicating. Mr Kanli agreed that his role was simply to attend when necessary to help the family and Huseyin (T 251). 164Significantly, Mr Kanli does not seem to have made any attempt (once he did find out that the contract had been terminated) to dispute the termination of the contract or to complain that he had not received notice of termination. The distinct lack of interest Mr Kanli appears to have shown as to his company's obligations under the Sebat contract for sale is consistent with Mr Brennan's version of events and with this purchase being made as Huseyin's nominee and with Huseyin's knowledge and direction. (This is of significance when I come to consider the alternative argument based on frustration of contract.) 165I also note that Huseyin in the witness box displayed a knowledge of the arrangements said to have been reached with Mr Kanli (when explaining the decision to use Mr Kanli's money for the subdivision and therefore the need for the short term Trimac loan) which seems to belie his professed disinterest in the transaction and lack of involvement in the discussions at the time of the purchase - Huseyin was adamant, for example, that he had said he would create the equity to enable the loan to be paid out (T 46) and I was left with the impression that Huseyin had sought to minimise his involvement in the transaction and had done so because he knew, as a bankrupt, that he was not able to incur liability directly. 166Significantly, after Mr Kanli attended the meeting at Mr Brennan's office with Huseyin on 20 January 2009, Mr Brennan (or one of his staff) then took steps to procure approval for a loan for Mr Kanli's company of 80% of the funds required to purchase the property. (Mr Brennan says that it was Huseyin who was to come up with the other 20%.) Exhibit 6 is a copy of a computer printout from Mr Brennan's business records, noting the steps taken for the procurement of a "Loan for Mesut Kanli". In the witness box, Mr Brennan explained the method of creation of such a business record, the steps taken being recorded electronically. 167From this, it appears that the first entry was made on 6 February 2009, not long after the 20 January 2009 meeting at which Mr Kanli says he signed the sale contract. That entry reads "Deal received and compiled and lodged on line accordingly". On 9 February 2009 the document records that "supporting information" was faxed to Homeside Lending; the application was referred to an assessor by the proposed lender on 10 February; "further personal and company financials" were required as at 17 February; those, together with a company tax return were apparently provided on 19 February; and further information on 20 February. The document then records that "Conditional" approval was received and "clients advised" on 20 February 2009. As at 27 February 2009 the status of the loan was recorded as "Awaiting funds to complete and trust investigation [perhaps of the Kanli Discretionary Trust] by Perpetual", followed by two entries in March which reveal the ongoing involvement of the Urusoglu family in the deal - on 3 March there is noted "Funds to complete letter and rental confirmation requested from Mike Urus [i.e., Mahir]", with no reference there to Mr Kanli, and then on 8 March 2009 the same entry is recorded but the request this time is noted as "from Mike Urus and Mesut". The inference that Mr Kanli was taking out the loan to acquire the front block with Mahir's knowledge and involvement is inescapable. (The last entry also casts doubt on Mr Kanli's denial of any knowledge of what happened in respect of the loan arrangements.) 168As it transpired, no deposit was paid (according to the Urusoglu side, the deposit was to be treated as having been met by the contribution to the cash works - an argument inconsistent with any suggestion that the cost of the subdivision works were to be met by MSU Management or Mr Brennan by payment to Mahir or his company of the amounts claimed) and the loan arrangements were not finalised. 169Mr Cox submits that it should be inferred that Mr Kanli (and/or the Urusoglu family) could not procure funds for the acquisition (and this would be consistent with the fact that there was no application for relief against the termination of the contract for sale or for specific performance of the contract). Such an inference seems to follow from the business record in relation to the loan application and the absence of satisfactory evidence from Huseyin, Mahir or Mr Kanli to refute the suggestion that completion of the finance was dependent on input of funds from the Urusoglu/Kanli side of the transaction. Significantly, Mr Kanli said, as to the $850,000 purchase price, "That was between Mr Brennan and Sam Urusoglu [i.e., Huseyin]" (T 252). He suggested in re-examination that generally it would have been Huseyin ringing Mr Brennan to chase up the loan application (T 254). 170It must also be noted that the sale of the front block by way of a contract of sale to Sebat is inconsistent with an agreement that the Urusoglu family would have the benefit of the front block through a reconveyance to Elf of the shares in MSU Management (since on that hypothesis then the front block would have to remain in the ownership of the company). 171At T 121.37, Mahir accepted that he knew the contract for sale had been executed between MSU Management and his uncle; and it appears from Exhibit 6 that he knew it was necessary for funds to be contributed by Mr Kanli or the Urusoglu side of the family to effect the purchase. He made no complaint that this was inconsistent with the contract that he now says there was for the transfer to be to Mr Kanli with no payment other than the assumption of the mortgage debt. 172In March 2009, MSU Management, through its solicitor, terminated the contract with Sebat for breach (that breach being the non-payment of the deposit). (Mr Kanli again did not seem to know what had occurred - which is, again, consistent with him leaving the handling of the sale transaction in Huseyin or Mahir's hands. As noted above, Mr Kanli made no complaint that the contract had been wrongly terminated and Sebat took no steps to seek relief against forfeiture of the contract.) MSU Earthworks invoice 173Meanwhile, in December 2008, Mahir's company (MSU Earthworks) issued an invoice to MSU Management (in the sum of some $347,000 inclusive of GST) for work and services including council fees, surveyors, excavation, cartage, landfill and landscaping. The account was on the company letterhead and dated 15 December 2008. Mahir agreed that he had prepared the invoice (T 134.50) and said that he had done so "because I was informed that the company was not mine [which, I interpose to add, it never was] or not my sisters [a hasty correction by Mahir, no doubt realising his error] and we had no control over it" (T 135.2). (Initially, Mahir had annexed the wrong document to his affidavit as being that invoice - a quote his company had given in relation to excavation of the rear block - but this was corrected in his October 2009 affidavit.) 174Mahir's explanation as to why he had issued the invoice is telling - there is no suggestion that he had previously had any expectation of payment in relation to the works; rather he issued the invoice because he realised that the effect of what had occurred was that the company was now in the hands of Mr Brennan. In what seemed to me to be a slip that Mahir quickly corrected in the witness box, Mahir suggested that he had expected the company to be his ("I was informed the company [MSU Management] was not mine"). Mahir's assumption that he should have had some control over the company (" we had no control over it") belies the evidence of his sister that she made the decisions in relation to the company. 175Mahir's invoice (which he relies upon for the quantum meruit claim and which Elif relies on as establishing the value of the works for the purposes of the alternative claim for restitution based on frustration of the contract) is criticised as an attempt to inflate the costs of the works. It is said that Mahir exaggerated the number of workers on site and failed to maintain records of payments. In that regard, I cannot form any assessment of the reasonableness of the number of workmen on the site or the amount of time spent by them. Mahir's record keeping in that regard was abysmal and his assertions hardly disinterested. I accept that it is likely that construction of a concrete access road would require a considerable amount of labour, but was not assisted with any independent evidence in that regard. 176Mahir, in an abstract of evidence confirmed under oath in the witness box, attested to the performance of the work and provision of goods referred to in that invoice and provided detail as to how those amounts were costed by him (in general terms the price per item was said to be derived from Mahir's knowledge of competitors' prices - though there was no evidence of those prices or of projects from which Mahir might have acquired this knowledge so as to permit it to be tested in any real way). Mahir's evidence in this respect was little more than a series of assertions. 177Mr Jacobs, in effect, criticised the defence for adducing no evidence rebutting the scope of works, quantities of materials, man hours and value of items said to have been provided, and for simply challenging the value of works asserted by Mahir. Mr Jacobs submitted that Mahir's evidence was tested in cross-examination only in two respects: first, as to the proposition that the majority of the subdivision works had been done previously and secondly as to the basis on which the works had been costed. 178As to the former, the issue of certificates in relation to items such as water services that were certified as complete prior to Huseyin's bankruptcy suggests that there is some substance in this challenge. However, I accept that road access works were carried out in the period from November 2008 and that they may well have been not insubstantial. (There was evident feeling from each of Huseyin, Mahir and Mr Kanli when they were challenged as to the scope of the works carried out for the subdivision.) It seemed to me that there was logic to the explanation by Mahir as to why much of the earlier work in relation to the laying of the concrete had to be redone. (Mahir, did, however, concede in cross-examination that the construction of a driveway would not ordinarily cost $200,000.) 179As to the latter, reliance was placed on Mahir's assertion as to his awareness (unsupported, as I have already noted, by reference to any examples) of market rates. Mahir asserted that to his knowledge the rates reflected in the invoice were competitive rates. 180In that regard, even if Mahir does have the general expertise to enable him to offer an opinion as to what would be a competitive market price for works of the kind required to be carried out, and there was no evidence from which I could test that proposition, it seems to me that his evidence has objective. Mahir has a clear self interest in maximising his or his company's claim. To his credit, Mr Jacobs conceded that this might affect the weight of his evidence, noting that in Equity 8 Pty Ltd v Shaw Stockbroking Ltd [2006] NSWSC 1251, Barrett J (who had held admissible opinion evidence from a principal of the plaintiff on matters within his expertise) nevertheless noted that "Self-interest may eventually be seen to have compromised objectivity" in such a case. 181Here, the expertise of Mahir was expressed in general terms and he gave no examples from previous experience in the industry against which his opinion could be tested. In ASIC v Rich , Spigelman CJ referred to the need to expose the process of reasoning by which an expert has formed the opinion expressed by that expert. Other than a mathematical breakdown of cost per item, there was nothing in Mahir's evidence which exposed his reasoning as to the assertions made and on which Mr Jacobs relied as based on his general expertise in the industry. 182Mahir is not qualified as a quantity surveyor and agreed in cross-examination that he knew what that role was. The assertion that he had 'stuck to relative market rates' and had a 'good idea' how much the work cost (T 190) was of little assistance to me. (When told that Mr Kanli's bank statements only showed cash cheque withdrawal of around $136,000 he asserted that that 'must be a mistake' - T 190, but had little in the way of records to support this and the opinion that cash cheques represented 99% of the moneys provided by Mr Kanli, apart from being inconsistent with the claim that $180,000 was provided to him, seemed to be a percentage plucked out of the air.) 183Mahir's record-keeping, as noted above, was hardly the most reliable even if (as he said) some of the records were lost because he had moved house a few times. The weight I could attach to Mahir's assertions as to the reasonable cost of the work seems to me to be very low, particularly having regard to his obvious self-interest in the outcome of the quantum meruit claim. 184Criticism was made by Mr Jacobs of the fact that Mr Brennan had chosen not to adduce any evidence of his own as to the scope of the works reasonably required for completion of the subdivision or as to the cost of those works. However, it is for Mahir to prove not just what works were carried out but the value of the works carried out as part of his quantum meruit claim and I am not satisfied that he has adequately done so. In Placer (Granny Smith) Pty Limited v Thiess Contractors Pty Limited ( 2003) 77 ALJR 768, Callinan J referred to the proposition that all evidence is to be weighed according to the proof which it is in the power of one side to have produced and the power of the other to have contradicted. There is nothing to suggest that it was not in Mahir's power to have adduced independent evidence going beyond assertion as to the cost of the works and it is not to the point that Mr Brennan could have done so when it was for Mahir to prove his quantum meruit claim. 185A limited bundle of invoices was ultimately produced but there was little explanation for what records had been made in the first place let alone retained. Mahir was not sure whether MSU Earthworks had filed its tax return (T 137); asserted that he had given invoices including expenses to his accountant (Mr Castino) but there was no evidence of this; asserted that he would have kept "some" bills from contractors, and "most" of those he still had or "a fair bit"; and kept some records of who he had paid money to (T 138). Mr Jacobs says that the manner in which Mahir kept records was, in effect, consistent with him understanding that the work was being carried out for his own benefit. That, however, would equally be consistent with Mr Brennan's version of the agreement (under which the Urusoglu family through Huseyin's nominee would ultimately have the benefit of the land). It is inconsistent with an expectation that Mahir would be paid for the work and it makes it extremely difficult to put a reliable quantum on the value of the work by reference to its cost. Mahir, himself, accepted that he was not to be paid for the drive way work "Absolutely not. I was told the block was mine" (T 191). 186Moreover, of the invoices in question, one (for a substantial sum - $90,000) which was included in Mahir's December 2008 invoice, was highly suspicious - that being an invoice on the letterhead of All Concrete Constructions Pty Limited. It was suggested by Mr Cox that this was a false invoice. The basis for that suggestion was that the building licence number for the company shown on the letterhead of the invoice (was the same licence number (albeit expired) as the building licence number of a company with the same ACN but with a slightly different name - All Concrete SLD Pty Limited). That company's building licence had expired in February 2008. The letterhead on the invoice was slightly different from that of All Concrete SLD Pty Ltd, though with the same ACN, prompting Mr Cox to observe that one would ordinarily assume company letterhead accurately to set out the company name). There was no invoice number on the letterhead (contrary to what Mahir seemed to accept would be normal practice). Furthermore, there was no evidence of any demand for payment of an outstanding amount of that sum. (Mahir explained this by saying that he had been chased up by the principal of the company, Mr Darcy, a few times and that, in the industry, not all creditors took steps to press for payment.) 187The veracity of the invoice was also in question in light of the fact that there was evidence that concrete had been supplied from a separate supplier (Western Suburbs Concrete, from whom documents were available and who had pursued Mr Kanli on the supply account set up with Mr Kanli for a much smaller debt). 188Mr Cox points out that it is implausible that a company would get its own name wrong on its letterhead when issuing an invoice and that a subcontractor would bill up to $100,000 for materials and labour without being paid and then wait two years for payment without issuing a demand or doing more than ringing up from time to time (as Mahir said it had done). I agree. Again, Mahir's evidence in relation to this was given in a casual dismissive way and I was left with no confidence that there was any debt owing in this amount. 189Insofar as costs were paid directly by Mr Kanli, they were not costs incurred by Mahir and there was no evidence that Mahir had any obligation to reimburse Mr Kanli for such costs. They would, however, provide a means by which the objective cost of some of the works could be assessed. (Had I found for Mahir on the quantum meruit claim I would have been inclined to award the amount which it has been shown (by reference to business records other than the suspect All Concrete invoice) was paid in respect of the project but would have discounted the assertions by Mahir as to the balance of the works as being unreliable and self-interested. I have not sought to carry out the arithmetical exercise - nor was there any attempt by Mahir to carry out such an exercise - but it would result in a payment of far less than the $347,000 claimed.) Present occupation of the land 190As to the present position in relation to the land, Mahir has asserted a right of possession in respect of the land and has remained in occupation (hence the separate claim by MSU Management for an order for possession). Both the Trimac and the ANZ mortgages remain on foot (the latter reduced to an extent as a result of the Homeside refinancing) and interest is accruing on those loans. Mr Brennan has refused to reconvey the shares in MSU Management to Elif and seeks possession (through MSU Management) of the land. Credit of Witnesses 191Before turning to the issues for determination I note that criticism was made by both sides as to the credibility of the others' witnesses. When considering those criticisms (and addressing my observations of the witnesses) I bear in mind the caution expressed by McLelland CJ in Eq (as his Honour then was) in Watson v Foxman (1995) 49 NSWLR 315 (at 318-319), as to the difficulty in placing reliance on witnesses' recollections of what was said in conversation (particularly where the conversations in question took place some time ago). In an oft-quoted passage, his Honour there said: ... human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience. 192Although the conversations in question in the present case occurred not so long ago (in mid to late 2008), none of the principal witnesses appeared to have a particularly marked facility for recalling the events that had occurred or the conversations that had taken place. Given the fragmented nature of the conversations that, at least on the Urusoglu case, are said to have comprised the relevant agreement (described as it was by Mr Jacobs as an 'evolving' or 'springing' contract), and the fact that at least some of the conversations seem to have involved communications relayed from one to another of things said by third parties - such as Huseyin's conversation with Mr Brennan as said to have been relayed by him to Mahir or as relayed by Mr Brennan to Mahir), the difficulty recognised by his Honour seems particularly acute. 193It seems to me not unreasonable to think that the various participants have put their own gloss on the relevant conversation(s) and that one or more of them may have heard what they wanted to hear and not what may actually have been said. Mahir, for example, agreed that he did not remember word for word what was discussed on 7 July 2008 but simply asserted that he could "remember certain facts and things" - T 110. (In this regard, I do not suggest that Mr Brennan's memory or attention to detail was markedly superior to that of Huseyin, but it did seem to me that the recollection of Mahir was particularly poor.) 194In Watson , having noted that each element of the cause of action before the court must be proved to the reasonable satisfaction of the court, such that the court "must feel an actual persuasion of its occurrence or existence", his Honour went on to say that: Such satisfaction is "not ... attained or established independently of the nature and consequence of the fact or facts to be proved" including the "seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding": Helton v Allen (1940) 63 CLR 691 at 712. 195As noted in Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) [2008] FCA 810; [2008] ATPR 42-410 (at [41]), by Rares J, the observations of McLelland CJ in Eq as to the frailty of human memory are just as apposite where the question is as to what oral terms of a contract were agreed in the course of negotiations (as they must be when, as here, considering what version of an oral agreement was reached in the course of one or more conversations - those occurring at a period of some stress such as seems to have been the case here when the prospect of the Urusoglu family home, and its use to promote the new product of which Mahir was obviously proud, was under threat and where Mahir's actions in bidding at the auction on 5 July 2008 seem inevitably to have engendered a degree of urgency in putting the arrangements in place for the purchase of the land). 196I turn then to the particular witnesses whose credit has been or may be called in issue. Plaintiffs' witnesses Huseyin 197Mr Jacobs submits that Huseyin was passionate about his case and, although he concedes that Huseyin was occasionally unresponsive (without identifying those occasions but perhaps best illustrated in Huseyin's long answer in response to the question that he did not really care what had happened to the land), a witness of the truth. (In one critical respect, namely as to the existence of the pleaded contract, Mr Cox does not submit otherwise. Rather, he contends that Huseyin's evidence was entirely inconsistent with the pleaded case in that Huseyin says that all the conversations he had with Mr Brennan were not with a view to creating a contract, but were simply advice - T 48; and he denied any agency relationship for his children - T 66.) 198In general, however, Mr Cox submits that Mr Cox submits that Huseyin's evidence was generally imprecise, evasive and unresponsive; that he did not have a good recollection of dates or what had been said; and that on the critical questions little reliance can be placed on his evidence. 199The impression I gained from Huseyin's evidence in the witness box was that Huseyin was in fact seeking to distance himself from involvement in the transaction and that his memory of events could fairly be described as selective. So, for example, he denied knowing that Mr Brennan and his wife had given personal guarantees in relation to the loan but said that Ashish Patel had been approached in the period from the sale to the settlement (T 46) in relation to the second loan and therefore seems to have been aware of the need for further security to be provided. Huseyin later agreed that he was told in November that Mr Brennan had to put his own property up as security (T 80) and that he had not referred to this in his affidavit. 200From Huseyin's apparent willingness (as an undischarged bankrupt) to proffer guarantees to produce equity in the project - seemingly, on his version of events, in order to persuade Mr Brennan to become involved in the financing of the transaction, it appears clear that Huseyin was more involved behind the scenes in the project than his evidence of not caring as to the fate of the land and his professed lack of knowledge of the purchase transaction suggested. 201Huseyin's evidence was that he had walked away from all of his properties (T 68.38) and he denied that he had seen considerable potential for subdivision or had an interest in the property (T 70) but he spoke as if he had been involved "I came up with the second mortgage" T 43.8; "We've spent $350,000 on the property" (though by this he said he was referring to his son and his brother-in-law); and he was emphatic that he would create the equity in the land (T 41.20-37). Even if this was just an example of loose language it seemed to me to demonstrate a clear interest in the outcome of the purchase and the development of the property) T 81. 202Mr Cox submitted that Huseyin repeatedly understated his involvement and knowledge of the deal and that his denials of involvement were untruthful. I think that submission has force. Huseyin's evidence as to the equity needed to be created in order to pay out the finance bespoke a greater involvement in the detail of the transaction than Huseyin appears to concede (T 41.20; T 41.37 T 42). 203It is submitted by Mr Cox that since Huseyin knew that his son and daughter were not involved in the deposit bond and loans to buy the Mt Vernon land, he must have known that Mr Brennan had taken the risk on the financing arrangements; that Huseyin's evidence (that as far as he knew his son was liable for the debts - T 47 should not be believed - and his evidence that he thought both his children were the directors and shareholders of MSU Management - T 48 - (though then said that he did not know who owned the shares) is inconsistent with the evidence that Mahir had told him on 5 July 2008 that he had got a letter of authority from his sister to bid at the auction - T 53.15 (which would not be necessary had his son owned the shares) - though Huseyin seems to have attempted to meet this argument by suggesting that he queried Mahir as to why this was necessary as he owned the shares. Huseyin's professed lack of involvement with MSU Management might well be thought to be an attempt to distance himself from the company in light of the restrictions on his involvement as a director or officer of the company while bankrupt. ( Huseyin also said "My wife and I didn't know a family member could buy it" - T 54.10, which might well explain why the suggestion was made that MSU Management become involved in the purchase.) Given Huseyin's acceptance that Elif was not experienced in company matters - T 50, it seems surprising that he would leave family affairs run through a company solely controlled by her. 204Mr Cox further submits that Huseyin's denial of involvement in relation to the original statement of claim (see for example his denial that he had met Mahir's solicitor, Mr Marando, in March/April 2009 - T 61) and his claimed lack of awareness of the proceedings until after their commencement (T 63) is inconsistent with the evidence of Mr Marando that he took detailed instructions for the preparation of the pleadings (and the fact that Huseyin swore his first affidavit in the matter on 6 April 2009, an affidavit prepared by Mr Marando or someone in his office); his denial of recognition of his daughter's signature on the share transfer (T 51) is said to be surprising; and his assertion that Mr Brennan had a caveat over the Mt Vernon land property prior to the auction on 5 July and that this was Mr Brennan's reason for attending the auction is not supported by the evidence (although I note that the documents did disclose that consent had been given to the lodgement of a caveat by one of Mr Brennan's associates, Mr Colless and it seems that Mr Brennan's associates may have had some form of security over the land, thus lending some foundation for Huseyin's belief even though that belief may have been incorrect). 205There were inconsistencies in Huseyin's evidence. For example, his oral evidence that he "had an idea" that his son was going to the auction but says that this was to "sticky-beak" and that he did not know his son was actually going to bid and buy the property (T 71), seems difficult to reconcile with the statement in his affidavit that his son had said to him that he was going to buy the property. Again this seemed to me to be an attempt by Huseyin to distance himself from the relevant events and minimise his involvement. 206I was left with the distinct impression that Huseyin had a greater involvement in the transaction than he would admit and therefore I have treated his evidence with some caution. Elif 207Mr Jacobs submits that Elif's evidence was clear, concise and consistent with her sworn evidence and that she is to be considered as a trustworthy and credible witness. Mr Cox, on the other hand, submits that Elif was careless and inconsistent in giving her answers and at times unresponsive. By way of example, he refers to the evidence given by Elif as to her independence, which is inconsistent with the suggestion that her will was overborne by Mr Brennan on 7 July 2008 (and, I might add, with the manner in which her brother seems to have assumed the leading role at the auction and in relation to the development); to her evidence as to the initial meeting with Mr Castino (in that she could not at first recall that Mahir was at the meeting but was later very sure about it; and that she could not say why she and her brother were going to see Mr Castino - T 170.43); and to the fact that her affidavit suggested she had signed the company documents in Mr Brennan's office not Mr Castino's office, when it is clear on the evidence that she did so in Mr Castino's office. 208It is submitted by Mr Cox that Elif's evidence that she had queried with Mr Castino the back-dating of the transfer and as to the advice she says he then gave to her not to sign the documents on 7 July 2008 (which was not referred to in her affidavit) had the flavour of recent invention and that her evidence that she had drafted the "Director's Minute" authorising her brother to bid at the auction (and that it was in her own words), even though it was clear she had not understood its language, is implausible. Reference was also made to the inconsistent answers given by Elif as to when she had given the 5 July letter to her brother (T 181 - she said it was before the auction; that it was on 6 July; that it could have been the morning of the auction; and that she was not sure) as going to demonstrate Elif's unreliability as a witness. 209Elif's evidence was that Mr Castino said not to back date the document (T 182), not that he had told her not to proceed with an arrangement whereby paperwork was not to be lodged. 210Mr Cox submits, in effect, and I accept, that Elif did not present as a sophisticated woman who had any real understanding of the business transactions in this case (an assessment that her father and to a lesser degree her brother seemed to share). That is no criticism of Elif. It is simply a function of her experience. She is currently employed as a childcare worker, having commenced but not completed a strata management course. She has no relevant experience as a corporate director (other than of MSU Management, where she does not seem to have carried out any business activities). 211Elif did not know what a trust was (T 165) and said that there was no 'exact reason' why the company was established (T 164.13). Yet she was adamant that she had established MSU Management on her own account (T 164), inconsistent though that is with some of Mahir's evidence. Her evidence was that: "There was no exact reason why we opened up the company just to have a trust there, if anything had come up to that, we needed to transfer into" (T 164.13). This is hard to reconcile with her insistence that the company was never to be separated from the trust (T 164.20) for reasons that she did not explain. Elif accepted that she did not have a real understanding of the company/trust arrangement (T 164.20). She did not "exactly" understand the difference between resignation as a director and the share transfer (T 186). In that context her statement that Mr Brennan had said he would not register (T 184.14) begs the question as to what it was that he said was not to be registered or what she thought was not to be registered. 212Similarly, Elif could not remember "exactly" whether she had known the purpose for which she and her brother were meeting Mr Castino, though she was 'pretty sure' that she had made the appointment (T 164.48). 213Mr Cox submits, and I agree, that the suggestion that Elif was acting in relation to the Mt Vernon land independently of her brother (and/or father for that matter) is not tenable. She did "not exactly" know what the purchase price was (T 177) and did not seem to have taken any interest or part in the financing for the purchase. 214Of the three Urusoglu witnesses (Huseyin, Mahir and Elif), it seems obvious that Huseyin had by far the greater business experience and was far more likely to be the guiding mind behind the subdivision project. 215My assessment is that in a transaction such as this, involving corporate matters, Elif would have acted not on her own initiative but in accordance with advice or instructions from her father or brother - in other words, at their bidding. If, therefore, she signed papers because Mr Brennan had told her to do so, then I would infer that this must have been in compliance with the direction given to her by Huseyin or Mahir to do so. Mahir 216Mahir's evidence in the witness box in relation to aspects of the matter relating to the work that had been carried out on the property or as to the WIPS product was in marked contrast to the manner in which he gave evidence generally. Perhaps for this reason, Mr Jacobs commenced his submissions as to Mahir's evidence by noting upfront that the strain of the litigation was clear on Mahir and acknowledging that he had appeared to be "emotionally flat" other then when answering about technical building works. 217My observation of Mahir was that he did not display any real interest in answering the questions put to him other than in areas in which he may have thought this would assist his case (hence the detail as to the works carried out on the land). In general he displayed a remarkably casual and disinterested attitude for someone who was a party to the proceedings. He seemed quite oblivious to the fact that he had been required to produce documents to the court and unconcerned as to the apparent lack of production (his offer in the witness box to search for those document and his later production of further documents suggests that he cannot have taken seriously his obligation to produce documents in the first place). 218On Mahir's own version of events, he signed the contract to purchase the Mt Vernon land in the name of MSU Management (in circumstances where he knew he was not a director of MSU Management but claimed to have been authorised by Elif to do so) when he knew the company had no funds to complete the purchase and was relying solely on a promise by his uncle to assist him; and signed a cheque for the deposit when he also knew he had no funds to meet it and was relying on his uncle again to assist in that regard. 219I consider that in all probability Mahir was aware that he had been falsely described in the contract as the sole director and was trying to avoid admitting that he had signed a document that he knew at the time was false (perhaps because he seemed to think that the falsity of the information contained in the document would of itself amount to fraud - T 71 or because to do so would put the lie to his statement that he would not sign a document that he knew to be false - T 98.1). 220Mr Cox submits, and I agree, that Mahir's evidence that the contract was blank when he signed it was implausible and inconsistent with his evidence that there was a conversation with the auctioneer about how to describe the purchaser and that the trust should be referred to on the contract he was about to sign. In terms of the objective likelihood of Mahir's evidence on this issue being correct, it seems to me to make no sense that the auctioneer or real estate agent would write the words 'sole director' on the contract if he or she had been provided with the director's minute giving Mahir authority to act for someone else (since it would then have been apparent that Mahir was not a director at all, let alone the sole director). At 92.49, Mahir agreed that he may have signed next to the words 'sole director' and denied that this was false. Only later did he assert (at 93.24) that the words 'sole director' had been filled in after the signed the contract and that it had been blank when he did sign it. Mahir also said that the name of the purchaser was not correct when he signed the document in that the address details were incorrect (T 94). He said that the address information must have come from his licence at the time and that he had signed the contract blank and handed it back (T 94). 221As to the assertion that Mr Brennan instructed Mr Castino on 7 July 2008 as to what the minutes and transfer form should say, this is inconsistent with the evidence of both Elif and Mr Castino (and, importantly, is inconsistent with the chronology of events at the 7 July meeting as recorded in Mr Castino's diary notes). Further, the evidence that Mahir did not know that the company minutes had been backdated (when his sister signed them in Mr Castino's presence on 7 July) is said to be inconsistent with Elif's evidence that she knew they were false and had questioned the date and with Mr Castino's evidence that he advised Elif against signing them. 222I consider Mahir's evidence to be unreliable in terms of his recollection. For example, Mahir's evidence as to the letter from his sister was that he could not recall it (T 97.20) then did remember it and said it had given him permission to bid on behalf of the company. Mahir could not remember whether he had told the solicitors what happened to prepare the statement of claim (T 99) saying it was "so long ago I can't remember. I can't recall". 223As to the meeting with Mr Castino, Mahir said that Mr Brennan had vaguely explained things over the phone to Mr Castino and that he had relayed information to Mr Castino (T 105) who had prepared the forms in front of him, before then saying he could have been outside having a cigarette but that he was on the premises. As to his sister's signature, he thinks she signed in the outside but only glimpsed the documents (T 106). He says that Mr Brennan told Mr Castino in his (Mahir's) presence to create minutes that were deliberately backdated (T 105.42) though there was no reference to this in his earlier affidavits. 224As noted earlier, Mahir's 6 April 2009 affidavit is inconsistent with his 9 September affidavit (in that paragraph 23 of the former suggested that Mr Brennan had prepared the ASIC documents). There was no reference to backdating in Mahir's affidavit of 9 September 2009 (at T 112 Mahir said he had a vague recollection about what was in that affidavit and that it was produced under pressure). The April 2009 affidavit makes no reference to any conversation between 5-7 July 2008 in which Mahir now says Mr Brennan offered to help them purchase the land. (Further, the suggestion that he asked Mr Brennan to explain the procedure and 'why they were doing this' - T 109.20 - at a time after he had already met with Mr Castino and could have posed those very questions to him; and after his sister had already signed the documents, does not make sense.) 225These seem to me to be matters of some importance when the issue at that stage related to the transfer of the shares (Mahir's claim in relation to the works only being raised at a later stage) and it is difficult to accept that Mahir would not have thought it important to convey such information to his sister's solicitor at the time. Even if there was pressure at the time the documents were being prepared and this is the explanation for the omissions and inconsistencies, this does not remove the doubt I have as to the reliability of Mahir's recollection and hence his evidence generally. 226Mr Cox submits that Mahir's evidence as to how he used the alleged cash cheques and cash from Mr Kanli was also inconsistent and unreliable: in chief he said the money was used for tipping fees, council fees/contributions and surveyors; in cross examination he asserted the money was used for materials, subcontractors and wages. (The evidence disclosed that Mr Kanli himself had paid the Council fees, not Mahir with or without Mr Kanli's cash). Mahir claimed that sums totalling about $180-190,000 had been paid, whereas Mr Kanli on his bank statement identified only about $137,000 cash cheques drawn for Mahir. The evidence as to the cash drawn from the secret cache is unable to be tested. 227It is submitted by Mr Cox that Mahir was a cavalier and unresponsive witness when answering questions and that his evidence included unjustifiable exaggeration. I think there is considerable force to that submission. I am unable to accept his evidence on critical questions without independent corroboration.

Conclusion as to agreement 271Insofar as Mr Jacobs says this was a "springing contract", I note that in Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424, in the Federal Court, Allsop J (as his Honour then was), with whom Drummond and Mansfield JJ concurred, rejected a submission to the effect that a "springing contract" was not something known to the law, saying: On the contrary, a number of authorities discuss the need not to constrict one's thinking in the formation of contract to mechanical notions of offer and acceptance. Contracts often, and perhaps generally do, arise in that way. They can also arise when business people speak and act and order their affairs in a way without necessarily stopping for the formalities of dotting "i"s and crossing "t"s or where they think they have done so. ... Sometimes this failure occurs because, having discussed the commercial essentials and having put in place necessary structural matters, the parties go about their commercial business on the clear basis of some manifested mutual assent, without ensuring the exhaustive completeness of documentation. In such circumstances, even in the absence of clear offer and acceptance, and even without being able (as one can here) to identify precisely when a contract arose, if it can be stated with confidence that by a certain point the parties mutually assented to a sufficiently clear regime which must, in the circumstances, have been intended to be binding, the court will recognise the existence of a contract. Sometimes this is said to be a process of inference or implication. For my part, I would see it as the inferring of a real intention expressed through, or to be found in, a body of conduct, including, sometimes, communications, even if it be the case that the parties did not consciously advert to, or discuss, some aspect of the relationship and say: 'and we hereby agree to be bound' in this or that respect. The essential question in such cases is whether the parties' conduct, including what was said and not said and including the evident commercial aims and expectations of the parties, reveals an understanding or agreement or, as sometimes expressed, a manifestation of mutual assent, which bespeaks an intention to be legally bound to the essential elements of a contract . The authority for the above can be found in, at least, the following: Meates v A-G [1983] NZLR 308, 377 per Cooke J (as his Lordship then was); Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR [97,326] at 11,117-118 per McHugh JA (Hope and Mahoney JJA concurring); Vroon BV v Fosters Brewing Group [1994] 2 VR 32, 81-83 per Ormiston J (as his Honour then was); Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523,555 per McHugh JA (with whom Samuels JA concurred); Pagnan SpA v Feed Products [1987] 2 Lloyd's Rep 601, 611 per Bingham J (as his Lordship then was) affirmed on appeal at p615; Pobjie Agencies v Vinidex Tubemakers [2000] NSWCA 105 [22-24] per Mason P (with whom Meagher and Handley JJA concurred); Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61 at [74] to [80] per Heydon JA; though see Toyota Motor Corp Australia Ltd v Ken Morgan [1994] 2 VR 106, 178 per Tadgell J (as his Honour then was); and in this context see also Electrical Enterprises Retail Pty Ltd v Rodgers (1989) 5 NSWLR 473, 489 per Kearney J and Manzi v Smith (1975) 132 CLR 671, 674. (my emphasis) 272Therefore, the fact that consensus may only have been reached over a series of discussions or that their agreement evolved over the course of time, such that one may not be able to pinpoint the precise time at which the contract was concluded is not necessarily fatal to the plaintiffs' claim. However, what is necessary is that the conduct of the parties be capable of proving all of the essential elements of an express contract: Integrated Computer Services Pty Ltd v Digital Equipment Corporation (Aust) Pty Ltd ( 1988) 5 BPR 11,110 at p 11,117-11,118 per McHugh JA (as his Honour then was), with whom Hope and Mahony JJA concurred. 273Mr Jacobs pointed to the significance to be attached to the fact that parties have embarked on significant elements of their business venture (as something which would influence a court to give effect to the parties' implicit intentions (referring to what was said by Ormiston J in Vroon BV v Fosters Brewing Group Ltd [1994] 2 VR 32 at 87 and to Pacific Brand Sports & Leisure Pty Ltd v Underworks Pty Ltd [2005] FCA 288). Nevertheless, I doubt that this is of much assistance where the embarkation by the parties on the venture comprised by the acquisition and development of the Mt Vernon land might equally be referable to an agreement of the kind contended for by the defendants. 274Mr Cox points to a number of matters that he says support the conclusion that Mr Brennan's version of events is the more plausible. 275First, it is said that it is unlikely (Huseyin being in China at the time of the auction) that Mahir would have made the decision to purchase the property and to assume the financial risk without his father's approval and without an arrangement to fund it. Pausing there, it seems to me that such a decision by Mahir would certainly have been foolhardy but is not wholly inconceivable, particularly given the lack of any real appreciation by Mahir in the witness box as to the significance of the obligations to which he was thereby committing the company. It may well be that Mahir was prepared to run the risk of not being in a position to complete the contract (particularly if he were not the party proposing to put up the funds to pay the requisite deposit on the contract). 276However, what does seem to me to be highly unlikely (whether or not Mahir had made the decision to purchase without reference to his father and whether or not he had arranged for some level of finance from his uncle to do so), is the version of events proffered by the Urusoglu family under which Mr Brennan must be taken to have assumed a substantial personal exposure for the speculative hope of a future profit if WIPS 'got off the ground' (and if the Urusoglu family honoured the seemingly vague idea that he could share in those profits in some way) and a small commission from the financing aspects of the transaction. 277Secondly, Mr Cox points out that neither Elif nor Mahir said in their affidavits that they had spoken to Mr Brennan on the evening of the auction or the following day (the Sunday) (though by the time he gave evidence Mahir recalled that he had "probably" had discussions with Mr Brennan over the weekend in which Mr Brennan told him what he had to do in relation to the sale), yet on the Monday Elif and Mahir went to see Mr Castino on an urgent appointment to have company minutes and a share transfer prepared. It is submitted by Mr Cox that this points towards the existence of a prior agreement to transfer the shares in the company (and it certainly seems to me that it is consistent at least with there having been discussions in which such an arrangement was contemplated at some time prior to the auction, since otherwise it was a very fortuitous decision taken in a hurry after Mahir had already committed that company to the purchase). (Mahir's evidence, as already noted, gave inconsistent explanations as to how Mr Castino came to be given instructions in relation to the documentation). 278Mr Cox submits that any suggestion that Mr Brennan simply attended the auction as a casual observer (or, for that matter, a caveator) on the Saturday and, without any intervening discussion in relation to the land, concocted a scheme to steal the shares in MSU Management (which at that time had no assets and only a substantial potential liability following the auction) is implausible. I agree. Similarly, the suggestion that Mr Brennan forced Mahir to withdraw a cheque (the funds to meet which were not then in his bank account though hoped to be placed there from his uncle's undisclosed sources) in order for Mr Brennan to assume personal liability on a deposit bond for purchase of a property in which Mr Brennan was to have no interest, seems to me to be ludicrous. 279A further indication against the version of events for which the Urusoglu family now contends, though I do not place a great deal of weight on it, is that the plaintiffs' version of the agreement changed (in not unimportant details) during the course of the proceedings, first as to the date on which the agreement was struck (June 2008 in the original pleading; 7 July 2008 on the ultimate version put to the Court) and as to who was party to the agreement (the initial allegation was that there was an agreement simply with Huseyin but this was later amended to include Mahir). 280On one view, it is immaterial whether agreement was before or after the auction. However, from the point of view of their credit and reliability of witnesses it seems to me significant that, while Huseyin and Mahir may not have been able to recall exact dates, it would be surprising for them (and particularly Mahir) to have forgotten whether the initial agreement was before or after the auction (in Mahir's case because of the considerable exposure to which he was putting himself by bidding) or to have forgotten with whom the agreement was struck. 281It might be thought that the changes were explicable simply by an error in the taking of instructions by the initial draftsperson of the pleading. However, Mr Marando, who gave evidence and was cross-examined on this issue, maintained that he had taken detailed instructions from Huseyin before drafting the pleading and that seems to be supported by the fact that Huseyin swore an affidavit on the same date as that pleading. I can only assume that the initial pleading accorded with instructions given in relation to the proceedings by one or more of the Urusoglu family (Elif then being the only plaintiff but her father and brother having sworn affidavits at that time) and what was then asserted was that there was a contract in June which contemplated Mahir bidding at the auction. That could be consistent only with pre-auction discussions and an agreement of some kind, which lends support to Mr Brennan's account of events. This suggests that the recollection of the plaintiffs (and of Huseyin, whose affidavit was obtained at the time of the pleading and whose account must have informed the way in which the matter was initially pleaded), is unreliable and casts doubt on the plaintiffs' evidence generally. 282When considering the inherent or objective likelihood of the version of events put forward by the Urusoglu plaintiffs (to use McLelland CJ in Eq's words), I am of the view that Mr Brennan's version of events in relation to the circumstances in which the property was acquired is the more plausible. I am left with the firm conviction that the more likely reason for Mr Brennan to have taken the role he did (in personally assuming exposure on the deposit bond and the Trimac and ANZ loan facilities) was that this arrangement was one that permitted him to obtain some upside from the property redevelopment (after the sale of the front block at fair market value to a nominee of Huseyin) more immediate than a speculative future WIPS profit and more substantial than a relatively minor commission. 283I think it likely that the rationale for Huseyin (and Mahir) entering into such an arrangement was that it gave them the prospect of achieving the family home (and its use as a display home) with the immediate exposure to the financial side being borne by Mr Brennan. True it is that Mahir (or more precisely Mr Kanli) was to bear the brunt of the subdivision works, but this is explicable as part of the wider agreement for the ultimate acquisition of land for the family home. 284The fact that Mr Brennan (and his wife) assumed a personal liability under the financial agreements is therefore, in my view, a powerful factor tending against the Urusoglu version of events. 285As I have said, it does not seem to me to be material whether the agreement to transfer the shares was reached before or after the auction other than as to credit and, in that regard, there are aspects of the evidence on both sides which are unsatisfactory. 286In the case of Mr Brennan, his evidence as to the 16 June meeting, seems likely to have been based on a reconstruction of the chronology of events by reference to the date disclosed on the share transfer. I am not persuaded that there was any formal meeting of Elif, in her capacity as sole director and shareholder of the company, and Mr Brennan on 16 June (and I doubt that there was any such meeting up until 7 July 2008). It could have been that an agreement or understanding was reached on or around 16 June between Huseyin and Mr Brennan and hence that the June date was later fixed as the date on which a notional meeting took place at which the necessary resolution was said to have been passed, but on that hypothesis it would have been after the event. The fact remains that I have real doubts as to whether it was ever the case that Elif attended a meeting (other than the meeting on 7 July 2008) to make the necessary resolution and sign the necessary forms to transfer control of MSU Management to Mr Brennan, 287In the case of the Urusoglu witnesses, there are inconsistencies as between themselves and in their own evidence (which I have attempted to highlight during the factual excursus earlier in these reasons), which have led me to believe that their evidence in this regard is unreliable. 288I am therefore left with unsatisfactory accounts of what occurred in the period leading up to and immediately following the auction - which raises the question of onus. It is for Elif to establish the agreement for which she contends. I am not satisfied on the evidence that she has done so on the balance of probabilities. 289What I think most likely is that discussions between Huseyin and Mr Brennan prior to the auction (and to the extent that Mahir was involved, the possibility of which was conceded by him when he referred to his very vague recollections that he may have been, Mahir) were inconclusive and that at the auction Mahir took matters into his own hands and committed the company to the purchase. At that stage there must have been some pressure on Mahir to arrange funding for the purchase (even if he thought the deposit was already 'in the bank', so to speak, through his uncle's assistance). That is consistent with the urgency that attended the initial meeting with Mr Castino. And at that stage, it seems to me that the likelihood is that an agreement was reached by Huseyin and Mahir with Mr Brennan for him to arrange finance (and to do so through an arrangement whereby he took control of MSU Management). Whether the agreement at that stage involved the arrangement for Mahir to complete the subdivision or that became part of the arrangements at a later stage is not material - suffice it to note that Mahir accepted that it was not his understanding at the time the works were carried out that these were to be at the cost of MSU Management or Mr Brennan. A necessary consequence of the arrangement whereby Mr Brennan was to acquire control over the company (but had only committed to the sale of the front block to Huseyin's nominee) was that he would retain any profit in relation to the back block after completion of the subdivision. 290Had the agreement been that Mr Brennan would be no more than the figurehead on a financing application, then he surely would have taken steps to protect himself from exposure if the financing arrangements or the project itself turned sour - there is no suggestion that he did so. Had the WIPS profit been the motivating factor from Mr Brennan's viewpoint, then it is surprising that he would have taken no steps to have that firmly in place before he committed himself personally to the transaction. I am also not satisfied that there was ever an agreement reached for the re-transfer of the shares in MSU Management to Elif. Had that been the case then it is difficult to see why Mr Castino would not have documented this in some fashion (and why Mr Brennan would not have insisted on steps to protect his position in terms of personal liability for the company loans taken out for the acquisition). 291The agreement that I find more likely to have been reached was that Mr Brennan would acquire the shares in the company and procure the financing of the purchase, Mahir would carry out the subdivision works at his own expense and that Mr Brennan would then cause MSU Management to sell the front block at a fair market price to Huseyin's (or a Urusoglu family) nominee (consistent with the steps later taken to achieve that outcome with Sebat in early 2009).

In the matter of MSU Management Pty Ltd - Urusoglu v MSU Management Pty Ltd & ors

At a glance

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Before

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Judgment (8 paragraphs)

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Legislation Cited (1)

Cases Cited (74)

Cited By (5)