In the matter of Tzavaras & Sons Pty Ltd [2022] NSWSC 359

Catchwords

[2009] HCA 27 Australian Securities and Investment Commission v Storm Financial Ltd (2009) 71 ACSR 81[2009] FCA 269 Australian Securities and Investments Commission v Green Pacific Energy Ltd (2006) 59 ACSR 142[2007] NSWSC 161 Biviano v Natoli (1998) 43 NSWLR 695 Briginshaw v Briginshaw (1938) 60 CLR 336[1938] HCA 34 Burwood Council v Visy Paper Pty Ltd [2021] NSWSC 565 Campbell v Backoffice Investments Pty Ltd (2008) 66 ACSR 359[2008] NSWCA 95 Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304[2009] HCA 25 Cassegrain v CTK Engineering Pty Ltd [2005] NSWSC 495 Cremin, in the matter of Brimson Pty Ltd (in liq) (2019) 136 ACSR 639[2019] FCA 1023 Darrington v Caldbeck (1990) 20 NSWLR 212 Delehunt v Carmody (1986) 161 CLR 464[1986] HCA 67 Doyle v Australian Securities and Investments Commission (2005) 227 CLR 18[2020] FCA 1863 Hunter v Organic and Natural Enterprise Group Pty Ltd (2012) 92 ACSR 183[2012] QSC 383 Hunter v Organic and Natural Enterprise Group Pty Ltd [2013] QCA 331 In Re a Company (No 00709 of 1992)O'Neill v Phillips [1999] 2 All ER 961[2019] NSWSC 1643 John J Starr (Real Estate) Pty Ltd v Robert R Andrew (Australasia) Pty Ltd (1991) 6 ACSR 63[2009] NSWSC 342 Nelson v Nelson (1995) 184 CLR 538

Judgment (43 paragraphs)

[1]

Background

As noted above, Bill, Peter and John are brothers, the three children of Nick (who is now deceased) and Jenny. Jenny was diagnosed with dementia in 2010 and, as at the time of the hearing, resided in a nursing home aged in her late 80s.
The first defendant, Tzavaras & Sons, as noted above, is a company that was established by Nick on 22 March 1985. Until his death on 2 September 2001, Nick was a director and shareholder of Tzavaras & Sons and was substantially responsible for its management and the conduct of its affairs. Since 25 November 1994, each of the three sons has also been a director of Tzavaras & Sons.
The issued share capital of Tzavaras & Sons is comprised of four $1.00 ordinary shares, held as to one share each by: Bill; Peter; John (who purchased his share from Jenny in 1994); Nick (until his death in 2001); and, after Nick's death, Jenny. Since 17 June 1985, Bill has been the secretary of Tzavaras & Sons. Bill's wife, Kylie Tzavaras, has been and is the company's bookkeeper. For some time Mr George Ferizis (who gave evidence in John's case) was the accountant for Tzavaras & Sons, the Family Trust and a company controlled by Bill (Northmead Auto Centre Pty Ltd, to which I refer below). Mr Ferizis is now only John's accountant; another accountanting firm (Lime Street Wealth, where both Mr Jim Dionysatos and Mr Chris Dionysatos provide accounting services to the defendants) has been engaged on behalf of Northmead Auto Centre and Tzavaras & Sons (and associated entities).
Tzavaras & Sons does not itself trade or conduct any business. It operates solely as the trustee of the Family Trust, which was created by deed dated 13 May 1997 (Trust Deed). The income and corpus beneficiaries of the Family Trust include each of Bill, Peter and John.
Tzavaras & Sons, in its capacity as trustee of the Family Trust, is the registered proprietor of two properties: a property in Northmead NSW (the Northmead Property), purchased in 1997 and valued as at 10 December 2020 at approximately $7,600,000 (a more recent valuation obtained by John, which was dated 29 June 2021 but not served until 12 July 2021, was rejected - see the debate at T 31), which is subject to a mortgage to AMP Bank Ltd (AMP Bank), with a debit balance of $2,394,809 as at 30 June 2020 (AMP Mortgage); and a unit in Surfers Paradise, Qld (the Surfers Paradise Unit) purchased in 2003 for $650,000 (and now valued at approximately $700,000).
The sole source of income for Tzavaras & Sons (and through it the Family Trust) is the rental income it receives from the Northmead Property and the Surfers Paradise Unit. The upper level of the Northmead Property is leased by Tzavaras & Sons to 7 Eleven Stores Pty Ltd (for a rental by the time of the hearing at approximately $434,000). The lower level of the Northmead Property has been occupied by Northmead Auto Centre Pty Ltd (Northmead Auto Centre) as trustee of the Northmead Auto Centre Trust (NAC Trust) (of which John is not a beneficiary) since at least 2015. Bill is the sole director, secretary and shareholder of Northmead Auto Centre, which was incorporated in 2013 (a fact relevant to certain of the complaints made by John on the oppression application).
Northmead Auto Centre operates an automotive mechanics workshop and repair business from that part of the Northmead Property that it occupies. It does not pay any rent or fee to Tzavaras & Sons for its use and occupation of the lower level of the Northmead Property. John says that the estimated present rental value of the lower level of the Northmead Property is approximately $50,000 to $56,000 per annum (relying on a real estate appraisal to which I will refer in due course). On that basis John argues that the value of the lower level of the Northmead Property is approximately $869,000 (saying that this is the market range as at 10 December 2020).
John points to the operating profit after income tax of the NAC Trust for FY16 to FY20 and notes that the financial statements for the NAC Trust for FY20 record that the total income available for appropriation (after application of carried forward tax losses) of $36,458.38 was distributed to NAC Trust, recorded as "beneficiary loan". It is noted by John that the NAC Trust is not an income beneficiary of the Family Trust. Complaint is made that John has received no part of the profits from Tzavaras & Sons as trustee of the Family Trust (despite the profits as recorded in the relevant financial statements) and that those profits have been offset against tax losses (see T 3.10-40). John's two principal complaints as to alleged financial mismanagement (which I address in due course) are as to the reduction in the joint shareholder loan account and the failure of Tzavaras & Sons to distribute profits of the trust (although no breach of trust is here alleged) (see T 3.38), but there is also a complaint as to an increase in the loan account for Northmead Auto Centre (which it is contended is part of the distribution of the profits of the Family Trust - see T 3.42).
The Family Trust has net assets which have been valued by the Court appointed single expert, Ms Fiona Bateman of Dolman Bateman Chartered Accountants, as at 30 June 2020 at $5,766,000 (Ms Bateman's report dated 1 April 2021 was adopted by the Court - see the orders of Black J of 26 April 2021 - and marked Exhibit A at the final hearing). Those assets comprise: the Northmead Property ($7,600,000); the Surfers Paradise Unit ($700,000); a loan to NAC Trust (valued at $593,761), which John notes represents an increase from $486,490 as at 30 June 2019); a loan account in the name "N, G, W, P, J Tzavaras" ($209,370) (the Shareholders' Loan Account), which John notes represents an increase from $191,870 as at 30 June 2019; and the amount recorded as a beneficiary loan in relation to NAC Trust of $36,458 (that amount being the subject of an entry "Distribution to beneficiaries, Northmead Auto Centre Trust" and then an entry under the heading Financial Liabilities, as a current unsecured liability, reading "Beneficiary loan Northmead Auto Centre Trust" - from which it appears that there was a notional distribution to the trustee of the NAC Trust and a loan back to Tzavaras & Sons) (see T 254.18-36).
It is relevant to note at the outset (since John's complaints seem largely to derive from a misunderstanding of this distinction) the distinction between the position of Tzavaras & Sons (i.e., the company) as trustee of the Family Trust and the position of the Family Trust (in which the relevant assets are held) itself. John sees himself as having an entitlement to one quarter of the assets of the Family Trust because he holds one quarter of the issued share capital of Tzavaras & Sons. Thus, it is said that "an integral part of the mathematics" in the present case is that one-quarter of the valued assets of the Family Trust is $1.44 million (see T 4.29-31). The difficulty which the defendants here emphasise (and by defendants I refer to Bill and Peter, since those are the relevant contradictors to the claims by John in relation to Tzavaras & Sons) is that what John has is one ($1) share in a trustee company, which itself has no relevant assets; he is only a discretionary object (as are they) of the Family Trust and would not be entitled to call for one-quarter of the assets of the Family Trust.
Indeed, in closing submissions it was accepted that Ms Bateman had valued the company and the trust as one, rather than separately valuing a 25% shareholding in the company and then an expectancy as a beneficiary of a discretionary trust (see T 258.14-23); and hence that if any order for the compulsory purchase of John's share in Tzavaras & Sons (which is not the relief he is now seeking in any event) were to be made then there would be no evidence as to the value of his minority share (and it was suggested that in that case were such a valuation to be necessary there might be a fresh referral out to determine the value of John's minority share in Tzavaras & Sons and/or interest as a discretionary object of the Family Trust).
Moreover, a winding up of the trustee of the Family Trust (i.e., Tzavaras & Sons) would bring into operation provisions of the Trust Deed as to the ongoing management of the Family Trust (see below), which would not necessarily result in John obtaining a one-quarter share of the assets of the Family Trust.
Insofar as John complains of the reduction in the shareholder loan account (which he accepts is a joint loan account), his complaint is not as to the "legitimacy" of the making of withdrawals from that account (which I note have included some not insubstantial payments made by the defendants for the benefit of Jenny's needs); rather, the complaint of oppressive conduct in this regard is as to the perceived unfairness of John's treatment (i.e., that the shareholder loan account has been reduced by some $1.1 million - $1,125,527 - for the benefit of the other three named owners of that loan account, in a period of in excess of three years, with no part of that money being paid to or for his benefit between 1 July 2012 and 30 June 2020) (see T 252.28-31; T 256.11-17).

[2]

Establishment of Tzavaras & Sons and acquisition of Northmead Property

Nick established the family company (Tzavaras & Sons) in 1985, and the Family Trust in May 1997.
The Northmead Property was acquired by Tzavaras & Sons, expressly as trustee for the Family Trust, in 1997 for the sum of $654,000. The transfer was registered on 23 July 1997. It was encumbered by a mortgage (dated 11 July 1997) in favour of St George.

[3]

The family business

Each of Nick's sons appears to have worked at various times as a motor mechanic in what was started by Nick as the family business. Relevantly, from 2000 until about 2012, John worked (his consistent complaint in this proceeding being that this was without wages) as a mechanic at the Northmead Property. The evidence is nevertheless to the effect that the sons, including John, were able to draw on funds from time to time by way of use of the company cheque book - and John seems to accept that from time to time he did indeed have use of the cheque book to pay for tools or other items for his own benefit (see T 92.9-50, 93.1-11). John also made use of the lower part of the Northmead Property for some time, storing one or more racing cars on that part of the premises for no cost (see T 93.34-41, 94.1-23).

[4]

Establishment of Northmead Auto Centre

I interpose here to note that Bill's company, Northmead Auto Centre, was incorporated on 15 October 2013. Until then, the "Northmead Auto Centre" business was apparently conducted by Tzavaras & Sons. Hence the defendants say that the allegation at [13A] of the amended statement of claim to the effect that John worked as a mechanic for Bill or Northmead Auto Centre for the period from 2002 to 2012 is factually incorrect.

[5]

Departure of John from family business

In 2012, John ceased working at the Northmead Property and (on his own evidence) left those premises permanently. John says that his main complaint at that stage was as to non-payment of wages (see T 262.8-14). John commenced his own business at or about this time. In closing submissions, John emphasises the distinction between the business of Northmead Auto Centre, i.e., the business conducted by Bill from the lower level of the Northmead Property; and the assets and affairs of the Family Trust (see at T 261.47-50, 262.1-2), John maintaining that what happened in 2012 was that John ceased to work for or in Bill's business but that this did not mean he had absented himself from the affairs of Tzavaras & Sons and the Family Trust (and see for example the submissions at T 281.10-11). However, as at 2012, Bill's company did not exist; rather, the business conducted at the Northmead Property seems to have been the family business through Tzavaras & Sons.
In his (third) affidavit, sworn 27 July 2021, John deposes to a conversation that he says he had with Bill in about March or April 2012 at the time he "left the Northmead Auto Centre site permanently" (and immediately following which he says he handed Bill the keys to the workshop) to the following effect: John: Bill, can we have a chat. I've had enough. I can't do this anymore. I want out. I want you and Peter to buy me out. Bill: Well, what's your number? Obviously you've got a number in your head. John: Four million. Bill: No way. One million for everything, including Maroubra. [This being a reference to the property jointly owned by Peter and John - see below] John: No way. That's not enough.
John deposes that the conversation was in the presence of the brothers' uncle (Bill Coundrelis). No evidence was called by either side from the uncle.
Bill denies that this conversation took place (at [4] of his affidavit affirmed 29July 2021).
By letter dated 30 July 2012, John's solicitor (Mr Titus of Carneys Lawyers) wrote to Bill, Peter and Mr Ferizis (Annexure "A" to Bill's affidavit of 29 July 2021) stating that John "did not work for the Company from 2007 to 2010"; that John "walked out on 13 July (or 20 July) [sic] 2012"; and that John "wishes to sever his ties with the Company and for [his solicitors] to advise in relation to his rights as a shareholder in the Company".

[6]

John's automotive repair and service centre business

John deposed (at [13] of his affidavit of 25 August 2020) that in 2010 he started his own automotive repair and service centre business, trading as Norwest Automotive at Seven Hills, which he managed until it ceased trading in 2013. In cross-examination, John accepted that this was incorrect in that the relevant date was not 2010 it was 2012 (see T 82.8-24). The defendants point out that John's email address as at 27 July 2012 was "norwestauto" (see Bill's 29 July 2021 affidavit, annexure A). Further, the defendants argue that it is clear from T 82.29-30 that John's business did not cease trading until 2013 when "it went broke".

[7]

Maroubra Property

As to the chronology of events in relation to the Maroubra Property (which is the subject of the separate claim by John), it was acquired at auction on 20 January 1997 for the price of $610,000. Settlement of the purchase occurred on 25 June 1997 (which was at around the same time that the Northmead Property was acquired by Tzavaras & Sons).
There appears to be no dispute that, when the Maroubra Property was acquired, John contributed a sum of $125,000 towards the purchase price; Peter contributed a sum of $90,000; Nick (or perhaps, according to Bill, Nick and Jenny out of their joint funds) contributed around $195,000; and there was a loan taken out from Westpac Banking Corporation (Westpac) by John and Peter secured by mortgage over the property in the sum of around $200,000 in relation to the balance.
In oral evidence, Bill was adamant that he had also contributed to the Maroubra Property, saying that "we sold a family property and paid off the property" (T 208.33-35). Bill clarified this by saying that he put his money into the property "when the property got sold and paid it off" (T 208.49). As far as I can glean, Bill was referring to amounts paid at the time of the refinancing of the property but this was not altogether clear (see below as to Bill's evidence in cross-examination).
The title to the Maroubra Property was (and remains) in the name of Peter and John as tenants in common in equal shares (and it is now subject to the AMP Mortgage). Peter and John together occupied the Maroubra Property for about a year after it was purchased before John moved back into his parents' home (he says to look after his ailing mother, Jenny). The Maroubra Property has been occupied since about 1997 exclusively by Peter and his family (and John complains in this proceeding that no rent or occupation fee has been paid to him in respect of Peter's occupation of the property since 1997).
In 1999, the St George Bank mortgage to Tzavaras & Sons in relation to the Northmead Property was refinanced with Westpac, the mortgage being stamped as at 27 March 1999 on the basis that the amount secured was $680,000.
On 27 January 1999, a second mortgage was granted to Westpac over the Maroubra Property, securing the sum of $1.9 million as collateral security for an increased loan by Westpac to Tzavaras & Sons for the development of the Northmead Property.

[8]

Pleaded claims

In prayers 1, 2 & 3 of the initial Originating Process filed on 28 August 2020, John sought: an order pursuant to s 232 of the Corporations Act declaring that Bill and Peter's conduct of the affairs of Tzavaras & Sons is and has been oppressive to, unfairly prejudicial to or unfairly discriminatory against him; an order pursuant to s 233(1)(a) of the Corporations Act, that Tzavaras & Sons be wound up; and, in the alternative, an order pursuant to s 233(1)(d) of the Corporations Act that Bill and/or Peter purchase his shares in Tzavaras & Sons at a price to be determined by the Court. As noted, the relief sought in prayer 3 (the compulsory purchase order) was not ultimately pressed.
In prayers 4-12 of the initial Originating Process, John also sought orders for the appointment of trustees for sale of the Maroubra Property under s 66G of the Conveyancing Act.
On 15 October 2020, Black J ordered that the matter proceed on pleadings. A statement of claim was filed on 1 December 2020. In the statement of claim, John pleaded claims of oppressive conduct under five headings: exclusion from the management of Company affairs; shareholder loans and dividends; Northmead Auto Centre claim; misuse of Company funds (relating to the failed acquisition of the trucking business); and the Surfers Paradise Unit claim (in relation to unpaid holiday rent).
In summary, those oppression claims are as follows.
The exclusion from management claim (pleaded at [12]-[13]) involves an allegation that John has "taken no part in" the management of the company's (Tzavaras & Sons) affairs and business, received no notice of any annual general meeting of the company or its board of directors and has not been provided with any minutes of meetings or financial statements or other information about the company's financial or taxation affairs.
The claim as to the Shareholders Loan Account and non-payment of dividends (pleaded at [14]-[24]) is an allegation that John did not receive repayment from the joint Shareholder Loan Account (referred to above) owned by Nick, Jenny, Bill, Peter and John; and that John was not paid any dividend by Tzavaras & Sons. (I note that the Shareholder Loan Account was established by Mr Ferizis, on instructions from Nick, in 1998 - see Mr Ferizis' evidence at T 115.22-25.)
The Northmead Auto Centre claim (pleaded at [25]-[26]) is an allegation that Bill and/or Peter have preferred their own interests to those of Tzavaras & Sons by allowing Bill to use the workshop under the service station for motor vehicle repairs, without Bill's operating company (Northmead Auto Centre) being required to pay rent. The claim is for a 25% share of rent alleged to be properly assessed at a rate of $50,000 per annum (for an unstated number of years).

[9]

Issues

The following issues thus arise for determination: first, whether there has been oppressive conduct by Bill and Peter within the meaning of s 232 of the Corporations Act; second, if so, whether an order for the winding up of Tzavaras & Sons should be made pursuant to s 233(1)(a) of the Corporations Act; third, and alternatively, whether Tzavaras & Sons should be wound up on the just and equitable ground pursuant to s 461(1)(e) and/or s 461(k) of the Corporations Act; third, whether some alternative remedy should be granted under s 467(4) of the Corporations Act; and, finally, whether an order should be made under s 66G of the Conveyancing Act appointing trustees for the sale of the Maroubra Property (and, if so, on what terms).

[10]

Evidence

Affidavit evidence was adduced from John (three affidavits sworn on 25 August 2020, 11 February 2021 and 27 July 2021, respectively) and from Mr Ferizis (an affidavit sworn 15 October 2020, and a further affidavit sworn 27 July 2021), who, as noted above, is the former accountant for Tzavaras & Sons. Much of the evidence on which John relied was documentary, such as the financial statements and records of the Family Trust, particularly since 2015.
The defendants adduced affidavit evidence from each of Bill and Peter (each of whom affirmed an affidavit on 7 December 2020, with Bill affirming an additional affidavit on 29 July 2021), from Bill's wife (Kylie) (being an affidavit affirmed 7 December 2020) and from their current accountant (Mr Chris Dionysatos) (being an affidavit affirmed 7 December 2020).
As noted above, a joint expert report dated 1 April 2021 by Ms Fiona Bateman as to the value of Tzavaras & Sons "as trustee" of the Family Trust adopted on 26 April 2021, by consent, by Black J was tendered in evidence (marked Exhibit A). The report concluded that the value of Tzavaras & Sons (i.e., the company) as trustee of the Family Trust was $5,766,000 (that being the sum of the net assets of the Family Trust). The report did not value the interest of a minority shareholder in a company in its capacity as trustee of the Family Trust; nor did it value the interest of a beneficiary object under that discretionary trust. With no disrespect to Ms Bateman (since her report was addressing the questions asked and on the assumptions with which she was provided), ultimately this report was of little assistance since it seems to have been premised on an incorrect assumption that the interest of a shareholder in a trustee company (that shareholder being no more than a discretionary object under the trust of which the company is trustee) has a proportionate share (in this case one quarter) of the assets of the trust. It is unfortunate, to say the least, that time and expense was wasted by the parties on this misconceived exercise.

[11]

Lay witnesses

As to the respective lay witnesses, the following submissions as to credit were made.

[12]

John Tzavaras

John submits that he should be accepted as a truthful witness, even if a little naïve and stubborn at times. It is noted that John is not well educated, having left school before completing his HSC and is a car mechanic (not a mechanical engineer); and it is said that he is not a sophisticated person (noting that his evidence was that he did not understand what a trust was (T 80.18-23).
John's evidence is to the effect that, until Nick's death in 2001, John had been content to leave Tzavaras & Sons in Nick's hands; and that, after Nick's death, Bill assumed the management of the company's affairs and John trusted Bill, until at least 2018.
Much complaint is made by John to the effect that John had worked in the workshop at the Northmead Auto Centre (a business said to be owned and conducted through Bill's company and effectively Bill's business but - as the defendants point out - this was not the case until 2013, after John had left) from at least 2000 until 2012, without receiving a wage. The significance attributed by John to the non-receipt of a wage by him over this period is that it informs the oppression claim. Perhaps ironically, in circumstances where John himself seems not to have understood the import of the distinction between a company and a discretionary trust - nor even the nature of a trust - John says that Bill conflates the business of Northmead Auto Centre or the NAC Trust and the business of Tzavaras & Sons or the Family Trust.
For John, it is said that it was hardly surprising that, in 2012, shortly after John became married in 2010, he should desire to start his own business and to cease working (for no payment) at the Northmead Auto Centre. It is said that much of John's attitude can be explained by his resentment at his treatment by Bill (including the refusal of Bill and Peter to buy out his interest in Tzavaras & Sons or the Family Trust at a fair price). Pausing here, whether or not John felt justifiably resentful of his treatment by his brothers is not to the point when assessing his credit as a witness (which is the context in which John here raises this). It simply indicates to my mind that caution should be exercised in accepting John's account of events in circumstances where that is likely to have been influenced, subconsciously or otherwise, by his admitted feelings of resentment,
My impression of John in the (virtual) witness box was that he has a genuine sense of grievance as to the matters of which he complains but that he has a misguided sense of his entitlements (hence, his belief that he is entitled to a payout of a quarter of the net assets of the trust) and that this (perhaps understandably) has influenced his perception or recollection of events. The complaint about oppression in relation to the Shareholders Loan Account is one such example. The fact is that there were not insignificant sums paid for the benefit of his elderly mother (who as noted is suffering from dementia) yet no account seems to have been made for this in John's perception of events. Further, John's evidence is not always reliable such as the date on which he commenced his own service station operation. More relevantly, for example, the complaint as to non-payment of wages by Bill's company is untenable in circumstances where Bill's company was not incorporated at the time (though I accept that it may perhaps be explicable on the basis that John's understanding was that Bill was in control of the business from the family perspective).

[13]

Bill Tzavaras

John refers to the following evidence of Bill: that the NAC Trust occupied the lower level of the Northmead Property without paying rent to Tzavaras & Sons (at T 198.33-36); his description of himself as a caretaker (at T 198.43-49); and Bill's acceptance that John was not paid any wages for working in the Northmead Auto Centre workshop from 1998 to 2012, and that this was probably a source of complaint by John to him (at T 217.14-20). It is further noted that Bill agreed (T 215.31-33; T 222.42-43) that he had not himself spoken with John since John's departure in 2012. I pause here to note that Bill says at T 239.34-35 that "John's never been kicked out of the place. He, he was welcome to come up any time he wants" and Bill was emphatic in his denial (which I accept) that this was on the proviso that John came back to work at the Northmead Auto Centre.
It is said for by John (and I agree) that Bill's recollection in the witness box as to John's exit from the Maroubra Property (see T 209.19-21; T 211.13-16) was poor. Similarly, it is said that Bill's recollection of the conversation or conversations he had with John around the time of John's departure from the Northmead Property in 2012 was less than clear (T 218.23-221.50). John says that his own evidence should be preferred in this regard (and that he was clear in his recollection at T 83.25-49, T 90.1-29).
The submission that Bill's evidence was less than clear is an understatement - Bill's recollection on many matters was poor. Nevertheless, the argument that John's evidence should be preferred because he was clear in his recollection seems to me to beg the question - there is little doubt that John has a firm belief in the merits of his claim but the fact that he has (or has convinced himself that he has) an entitlement to the relief he seeks does not make his evidence inherently more reliable.
John notes that Bill was unable to point to any notices of meetings of directors of Tzavaras & Sons or of annual general meetings of Tzavaras & Sons that he, as secretary, had sent to John (see T 223-224); and John says that his own evidence (that until 2018 at least John had received no such documents from Tzavaras & Sons) is to be preferred. (I agree.)
It is noted that, at T 226.32-34, Bill agreed that he had relied on Kylie to maintain the books of Tzavaras & Sons and the Family Trust on its MYOB software. Bill said that he left the bookkeeping for the Family Trust to Kylie and to Tzavaras & Sons' accountant (T 233.36-37). It is said that, beyond that, Bill was basically unaware of the detail of those financial records (T 233.15-17) and that he again relied on Kylie and Tzavaras & Sons' accountant (T 235.42-44). Further, it is noted that (see T 239.23-25) Bill accepted that NAC Trust's loan account in the Family Trust amounted to approximately $593,000.

[14]

Kylie Tzavaras

As to Kylie's evidence, John notes that Kylie accepted the accuracy of the financial records of the Family Trust shown to her in every respect; that Kylie gave evidence of the system that operated from 2001 to 2020 in relation to maintenance of the financial records of Tzavaras & Sons and the Family Trust and in relation to the preparation, finalisation and approval of the financial statements and tax returns, as between Kylie and Tzavaras & Sons' accountants.
It is noted that: Kylie agreed that all of the payments recorded as shareholder drawings represented personal payments to the shareholders (at T 184.10-13); Kylie could not recall any request from John for payment by the Family Trust of a personal expense for John (at T 184.33-35); and Kylie agreed that Tzavaras & Sons had not paid any money to or for the benefit of John in recent years (at T 185.37-38).
At T188.33-37, Kylie agreed that, as a result of a discussion between Tzavaras & Sons' accountant, Bill and herself, the decision was made to distribute the Family Trust's total available profit for FY20 of approximately $36,000 to Northmead Auto Centre. John points to Kylie's explanation (at T 189.16-190.13) that this was in the best interest of everything as a whole, because NAC Trust had losses which that income could be written off against, so that there was no tax paid.
I considered Kylie in general to be a co-operative witness when giving evidence as to her role in the book keeping and administrative matters in relation to the company. I have little doubt that Kylie relied on accounting advice in relation to the preparation of the relevant company documents. More problematic was her evidence (see T 155-158) as to her inability to recall much, if any, of a telephone conversation that Mr Ferizis asserts that he had with Kylie on 18 June 2015 and that is recorded in Mr Ferizis' contemporaneous file note of that conversation. Telephone attendance upon Kylie regarding yesterday's call to Bill which unsettled her greatly. Outlined potential and quite real issues with ATO audit on $387,000.00+ loss by the business in just 7 months' trading in 2013-2014. Pointed out above loss is before wages and market rent. Current lessee (7/11) is paying $300,000.00 in rent as well as substituted wages. Closing stock explanation of being out of date and unsaleable not good enough. The business was trading daily and turning over stock constantly up to date of cessation of business. This stock could/should have been sold at wholesale prices to a third party or taken downstairs for use in Northmead Auto business. Advising that the stock was thrown out does not go down well, especially due to question marks about ATO Benchmarking Variances saying that it was Peter's fault because he did not care does not absolve everyone else. These are serious issues which could/are likely to come back to bite you big time from the ATO and other interested parties such as John, who could argue that money had been misappropriated. Your response that John is not entitled to anything might not be appropriate. If this matter went before a Judge, my gut feeling is that John would end up with between 0% and 40% of the assets, more likely around 33%. Emotional outbursts about John not being worthy might not be even considered by a Court of law dealing with his share of entitlement under equity principles. Saying that John will be dead and Bill in jail before any Court decision is simply outrageous and not helpful. Also, all cars and equipment should be moved from Tzavaras & Sons to Northmead Auto as it is the latter using them. she said the cars are not worth much at all and equipment is…

[15]

Peter Tzavaras

Reference is made by John to the following evidence given by Peter in cross-examination.
First, at T 122.46-48, that the $200,000 Nick had put towards the purchase of the Maroubra Property he regarded as a "helping hand", not a gift; and (at T 128.25-28, said that the $200,000 was his mother's money as well). It is noted that (at T 131.4-7) Peter agreed that at the time of paying $125,000 to John in January 2013 he did not ask John to sign any document in relation to the Maroubra Property, nor any transfer; and that Peter agreed that it was just a verbal agreement (T 131.4-20).
Second, that (at T 135.25-27) Peter agreed that he had not spoken a single word to John since about 2012.
Third, that (at T 137.33-35), Peter agreed that Tzavaras & Sons had paid personal expenses on his behalf; that (at T 138.24-26) Peter agreed that he relied on Kylie to keep the books of Tzavaras & Sons accurately; and (at T 139.22-31) that John had not received any amounts debited to the Shareholders' Loan Account since 2015, whereas Peter and Bill had. John says that Peter's question (at T 144.24-25) "[w]hich business are we talking about? Northmead Auto Centre, that's part of Tzavaras & Sons" reveals the blurring in his mind of the two distinct corporate entities. It is submitted that the use of the term "the family business" also conflates these two entities into one. Further (and consistent with John's emphasis on this issue) that (at T 146.31-33), Peter agreed that neither he nor John got a wage from Northmead Auto Centre.
John notes Peter's evidence (at T 147.38-39) that the arrangement was that, in exchange for occupying the lower part of the Northmead Property without paying rent, Bill would maintain the property; that Peter was unaware that there was a loan account of NAC Trust with the Family Trust (at T 149.24-26); and that Peter said he had no knowledge of NAC Trust owing the Family Trust $593,000 (at T 150.1-24).
My impression of Peter in the witness box was that he too was a laconic and not particularly sophisticated witness. Peter made no pretence of any involvement in the financial or accounting matters involving Tzavaras & Sons and I have no difficulty accepting that he relied on Bill and others for that side of things. Peter no longer works in the Northmead Auto Centre business (for health reasons) but clearly had no issue with the manner in which the business was operated by Bill (Peter's evidence is consistent with the operation of the business being on a relatively informal basis with drawings as and when needed and with little emphasis on technical corporate requirements, no doubt as would not uncommonly be the case with many small family businesses).

[16]

Mr Ferizis

Mr Ferizis deposed in his affidavit sworn 15 October 2020 that, when Nick purchased the Northmead Property in 1997, he gave instructions that Tzavaras & Sons was to operate for the benefit of his three sons equally, regardless of the contribution they had made to the purchase of the property. Mr Ferizis' evidence was that, at that time, he created a loan account of a joint shareholder or beneficiary variety, so that all shareholders would have an equal entitlement to receive repayments from Tzavaras & Sons, despite the fact that Nick had contributed the majority of the funds (at T 115.16-20).
Mr Ferizis deposed that he had concerns with respect to the management of Tzavaras & Sons by Bill and Kylie. He deposed to the "misuse" of company funds by virtue of the failed investment (made by Bill and George) in the amount of $825,000. Mr Ferizis further deposed to the fact that John had not received any amounts from Tzavaras & Sons in respect of his share of the shareholder loan repayments.
It seemed to me apparent from Mr Ferizis' evidence that he is partisan to John's position (and hence I am cautious when approaching his evidence in general). There is no doubt that Mr Ferizis disapproved of the way in which he accounts were prepared (and made that clear in his affidavit evidence) and he has in effect adopted a role of advocating for John's position with the other members of the family. There is nothing in the evidence that tends to show that the new accountants (Jim Dionysatos and Chris Dionysatos) take issue with the manner in which the accounts have been prepared, which may be telling.

[17]

John's submissions

John submits that the conduct of the affairs of Tzavaras & Sons by Bill and/or Peter is and has been oppressive to, unfairly prejudicial to and/or unfairly discriminatory against him and he seeks the relief set out in prayers 1-3 of the amended originating process, namely that the company be wound up. Consequential orders are sought that the liquidator(s) also be appointed as receiver(s) of the Family Trust with the necessary powers, as set out in the amended Originating Process.
As to the principles applicable when considering the issue of oppression, John notes that the test of oppression is an objective one of unfairness (see Wayde v NSW Rugby League Ltd (1985) 180 CLR 459; [1985] HCA 68 at 472-473 per Brennan J (Wayde); Munstermann v Rayward [2017] NSWSC 133 at [22] per Stevenson J (Munstermann)): whether objectively in the eyes of a commercial bystander there has been unfairness, namely conduct that is so unfair that reasonable directors who consider the matter would not have thought the decision to be fair (see Campbell v Backoffice Investments Pty Ltd (2008) 66 ACSR 359; [2008] NSWCA 95 at [181] per Basten JA (Campbell v Backoffice Investments NSWCA)). It is noted that this does not necessarily entail a finding of breach of fiduciary duty on the part of directors of the company, nor does it involve application of the Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 (Briginshaw) standard of proof (the standard of proof being the balance of probabilities).
It is accepted by John that, in a family situation, fairness must be considered against the background of the fair treatment of the whole body of shareholders, in the light of the history of the company and the family and the purpose for which the company was formed (see In the matter of Ledir Enterprises Pty Ltd (2013) 96 ACSR 1; [2013] NSWSC 1332 at [178] per Black J (Ledir Enterprises)).
John notes that conduct of a company's affairs may be oppressive even though the conduct is otherwise lawful; and that improper diversion of corporate business and unauthorised payment of funds in breach of fiduciary duty may also constitute oppressive conduct for the purposes of s 232; and may amount to exclusion from management (at least where there is an expectation of participation in management).
The principal basis on which the allegation of oppression is made is the assertion by John that, since the death of Nick on 2 September 2001, he has been excluded by Bill and Peter from the management, business and affairs of Tzavaras & Sons. John contends that, since 2001, the affairs of Tzavaras & Sons and its business have been exclusively managed by Bill and Kylie; that he has been excluded from, and has taken no part in, the management of the company's affairs and business (though I would interpose here to note that this seems to have been at his own instigation - see the evidence below), and in particular that this has been the case since 2012; that he has not received notice of the convening or holding of any annual general meeting or general meeting of Tzavaras & Sons and has not attended any annual general meeting or general meeting of the company; that he has not received notice of the convening or holding of any meeting of directors of Tzavaras & Sons and has not attended any meeting of directors of the company; that he has not received minutes of any meeting of directors of Tzavaras & Sons or of any annual general meeting or general meeting of the company; and that he has not received from Bill, Peter or Kylie any financial statements of Tzavaras & Sons or information as to its financial or taxation affairs. Complaint is made that, since 1994, there has been no declaration of any dividend to shareholders nor has John received any dividend from the company. At [13] of their defence filed on 16 December 2020 there is a general denial of these allegations by Bill and Peter.

[18]

Factual findings sought by John

John contends for the following factual findings, about most of which there appears to be no dispute (although the significance of those matters is disputed).
First, as to the unequal treatment of the Shareholders' Loan Account, that the credit balances of the Shareholders' Loan Account for the period 2001 to 2020 recorded in the Financial Statements of the Family Trust (following amounts paid in the respective financial years to Bill and/or Peter which were debited to the Shareholders' Loan Account in the total amounts there specified) decreased as follows: 1. for FY12 (after amounts totalling $67,135), a decreased credit balance from $1,334,897 to $1,267,759; 2. for FY13 (after amounts totalling $132,090) a decreased credit balance from $1,267,759 to $1,135,669; 3. for FY14 (after amounts totalling $67,819) a decreased credit balance from $1,135,669 to $1,067,850; 4. for FY15 (after amounts totalling $120,837.13 by way of shareholders' drawings debited to the Shareholders' Loan Account, and amounts totalling $86,761) a decreased credit balance from $1,067,850 to $981,089; 5. for FY16 (after amounts totalling $91,556.02 by way of shareholders' drawings were debited to the Shareholders' Loan Account, and amounts totalling $545,856, including the amount of $91,556.02) a decreased credit balance from $981,089 to $435,233; 6. for FY17 (after amounts totalling $128,057.80 were paid by the Trust) a decreased credit balance from $435,233.00 to $307,175.20; 7. for FY18 (after amounts totalling $115,305.39 including shareholders' drawings of $84,556.96, which amounts were debited to the Shareholders' Loan Account) a decreased credit balance from $307,175.30 to $191,869.21; and 8. for FY19 (after a debit for shareholders' drawings of $71,560.34) the amount standing to the credit of the Shareholders Loan Account increased by $17,500.21 from $191,869.81 to $209,370.02.
Thus, John says that, between 1 July 2012 and 30 June 2020, the amount standing to the credit of the Shareholders' Loan Account was reduced in total by $1,125,527 from $1,334,897 to $209,370 (one quarter of which he notes is $281,382).
There is no dispute, as I understand it, that there was a reduction in the amount standing to the credit of the Shareholders' Loan Account over the period here mentioned (nor, for that matter, is there any dispute as to the arithmetical calculation of a one quarter share of the total amount distributed from the account).

[19]

Defendants' submissions

At the outset of their submissions, the defendants emphasise the following matters.
First, that John has eschewed any remedy which is less intrusive than the winding up of the company and/or the appointment of a receiver, even though any such order will ipso facto cause Tzavaras & Sons to lose office as trustee of the Family Trust (and it is said that such an order would have no utility other than as an inducement to Bill and Peter to buy John out).
Second, that, as a specified beneficiary and object of a discretionary trust, John has no legal entitlement to demand and receive payment of the income or capital of the Family Trust, or an exercise of discretion in his favour (see Gartside v Inland Revenue Commissioners [1968] AC 553 at 602, 606 (Gartside); JD Heydon, MJ Leeming, PG Turner, Meagher, Gummow & Lehane's Equity: Doctrines and Remedies (5th ed, LexisNexis, 2014) at [4-075]).
Third, that none of the pleaded grounds alleges any breach of trust, breach of duty or unlawful act on the part of the defendants. It is noted, in particular, that it is no part of John's case that the discretion to distribute income miscarried. While accounting matters have been raised, it is noted that there is no allegation of any accounting irregularity.
Fourth, that all of the pleaded grounds distinguish themselves by their longevity and the absence of any relevant complaint by John before he chose to bring the present proceeding in 2020. It is noted that, on John's own evidence, until 2018 he believed that Bill was managing the company in its best interests and in the best interests of the shareholders (see at [67]) and that what changed in 2018 was that John "simply wanted out of the company" (T 51.50-52.1). Reference is made to the 30 July 2012 letter from John's solicitors in which they advised that John wished to "sever his ties with the Company". The defendants say that this is precisely what John proceeded to do (by absenting himself from the business and affairs of the company; ceasing all contact with his fellow directors; and paying only lip-service to his duties as a director by receiving and signing documents through intermediaries, including circular minutes of meetings of directors and the like).
Indeed, the defendants say that, if there is any oppressive conduct in this case, it is the conduct of John towards Tzavaras & Sons and its other shareholders and directors by his wholesale failure to attend to his duties as a director. It is noted that on John's own evidence, he did not familiarise himself with the nature of the company's business when he became a director (T 55.3-5) and he did not know that the company was the trustee of a trust nor what that means (T 55.19-21). It is said (with some force in my opinion) that John was the author of the misfortune of which he now complains.

[20]

Particular allegations of oppression

It is relevant at this stage to address each of the five heads of oppression relied upon by John as contained in the pleading.

[21]

John's submissions

As indicated above, John contends that he has been excluded from the company's affairs (since 2002 - indeed he says in his oral evidence from "day one", but in particular since 2012 (see T 87.45-50)); his complaint being as to the matters referred to above including that he was not sent any financial statements for Tzavaras & Sons or the Family Trust or minutes of meetings from 2012 until Mr Ferizis "started asking questions on his behalf" in 2018.
As to the proposition by Bill and Peter that they would welcome John back "to the family company", John says that this should not be accepted, noting that the brothers have not spoken for almost 9 years. John argues that this amounts to no more than a requirement that John should return to working for Bill in the business of Bill's company, Northmead Auto Centre, as he did before 2012 for no wages and would in effect be the enforcement of a contract for personal service.
Pausing here, as already indicated, that contention to my mind is not tenable (even apart from the factual inaccuracy it involves, in that Bill's company was not incorporated until after John left the "family business"). What is clearly being proffered by the defendants is that John (who made it very clear back in 2012 that he wished to have nothing to do with Tzavaras & Sons) can resume his duties as a director if he now wishes to do so (and can thus take on a managerial position in relation to the company that the defendants say he has, to date, abdicated). On no sensible view of things does that amount to a requirement that John resume working as a motor mechanic for Northmead Auto Centre (whether with or without pay).
Even apart from the fact that I am not aware of any proposition that a director is obliged to perform the underlying workplace roles involved in the performance of a company's business (a director of a large banking institution is not, for example, required to perform tasks as a bank teller), this in my opinion illustrates the difficulty with much of John's contentions in the present case - in that John is here conflating the position of Tzavaras & Sons (and the Family Trust, of which the company is trustee) and the position of Northmead Auto Centre (and NAC Trust of which Northmead Auto Centre is the trustee). John's position is as a director of the former company; whereas the motor mechanic business is now conducted by the latter company. So even if a resumption of directorial duties involved working for the trustee company in some capacity, it would not involve working as a motor mechanic for another company (i.e., Bill's company).

[22]

Defendants' submissions

The defendants say that the plaintiffs' exclusion claim (pleaded at [12]-[13]) is factually incorrect. It is said that (like many small family companies) the business and affairs of Tzavaras & Sons were conducted with minimum formality and that, although John absented himself for long periods of time (as and when he chose), John's own evidence is that "Bill's practice was to bring me documents relating to the financial and accounting affairs of the company and request that I sign the documents".
The defendants say that Tzavaras & Sons relied on its accountants to attend to prepare minutes of meetings, accounts, taxation returns and the like. (Mr Ferizis being the company accountant until 2018; Mr Jim Dionysatos and Mr Chris Dionysatos (from Lime Street Wealth) having been the company's accountant since 2019). The defendants further say that if John now wishes to do his duty as a director and participate in the management of the company, they would be happy to ensure that he was given all necessary notices of any meeting and had access to any business records in their possession.
It is noted that there are passing references in John's evidence to superannuation, wages and insurance premiums but that there is no pleaded claim in relation to any of those matters. The defendants emphasise that John was not employed by Tzavaras & Sons; rather, he worked as a mechanic for Northmead Auto Centre. Accordingly, the defendants say (and I agree) that the evidence in relation to John's wages and insurance is irrelevant to the oppression claim in relation to the conduct of the affairs and business of Tzavaras & Sons.
Insofar as John alleges that he has "taken no part" in the management of the affairs and business of Tzavaras & Sons, the defendants say that it is plain from John's evidence that he did take part (as a director), by signing minutes of meetings of directors and other documents relating to the financial and accounting affairs of Tzavaras & Sons, except during those periods when he chose to absent himself. It is noted that John was a signatory on the company cheque book for at least a decade (T 92.26-31); that John drew cheques as and when he wished to do so (it being "common practice, if we needed a cheque ... (to) go upstairs and write a cheque out for whatever it may be, a part or a delivery, everything come out of the one cheque book that was kept behind the counter in the petrol station" (T 93.4-7); and that one of the things for which John used the cheque book was to buy tools for himself, over a period of time, after some of his tools were stolen (see his affidavit of 11 February 2021 at [7]; T 93.9-11).

[23]

John's submissions

This allegation of oppression relates to the shareholders' loan account recorded in the books and financial records of the Family Trust in the name of "N, G, W, P, J Tzavaras". John says that he is, and has been since 2001, a co-owner as to a 25% share, together with Bill, Peter and Jenny, of the debt owed by the Family Trust to its shareholders constituted by the Shareholders' Loan Account. (In oral submissions, it was accepted that this account is a joint shareholders' account, each shareholder jointly owning with the others the whole of the account. John relies on the unequal treatment of the Shareholders' Loan Account and the non-distribution of profits as amounting to financial oppression.)
John points to the credit balances of the Shareholders' Loan Account for the period 2001 to 2020 as recorded in the books of the Family Trust, noting that: between 1 July 2012 and 30 June 2020 the amount standing to the credit of the Shareholders' Loan Account was reduced by $1,125,527 from $1,334,897 to $209,370 (a quarter share of which is $281,382). John complains that between 1 July 2012 and 30 June 2020 John did not receive from Tzavaras & Sons or the Family Trust any or any part of the amount by which the Shareholders' Loan Account was reduced.
It is noted that since 2012 Tzavaras & Sons has not declared any dividend out of its profits to shareholders nor has the plaintiff received any dividend from Tzavaras & Sons or any distribution from the Family Trust. It is said that between 2015 and 2019 no profits were distributed by the Family Trust to any beneficiary by reason of the Family Trust utilising carried forward losses arising from a loss of $825,400 in FY13.
John also points to the financial statements for the Trust for FY20 which record that the net income available for distribution to beneficiaries (after application of the balance remaining of carried forward losses) for that financial year was $36,458.38. It is noted that in 2020 all available profits of the Family Trust after carried forward losses had been fully utilised, namely $36,458.38, were distributed to NAC Trust, and that sum was then lent back to the Family Trust, thereby making NAC Trust a creditor of the Family Trust.
It is asserted that, by this conduct, Bill and Peter have preferred their own interests to those of Tzavaras & Sons and its members (including the plaintiff) and have conducted the affairs of Tzavaras & Sons in a manner prejudicial to John and to his detriment; complaining as to the unequal treatment of the Shareholders' Loan Account (see Vigliaroni v CPS Investment Holdings Pty Ltd (2009) 74 ACSR 282; [2009] VSC 428 at [79]-[83] per Davies J (Vigliaroni)).

[24]

Defendants' submissions

As to this allegation of oppression, the defendants say that their understanding of the position is that, when distributions were made out of the Family Trust during the following 20 years after the loan account was established, they were credited to the Shareholders' Loan Account; and when funds were required by the Trust, they were debited to that account. The defendants accept that no dividends were ever paid by Tzavaras & Sons. The defendants contend that Mr Ferizis is in the best position to explain the operation of the Shareholders' Loan Account since he managed all of the accounting and tax related affairs of the Family Trust from 1998 to 2018 (when a dispute arose in relation to alleged over-charging). (It is noted that Mr Ferizis exercised a lien over the books and records of the Family Trust and retains the relevant records.)
The defendants say that if John (or any other shareholder) is owed money by the Family Trust, the remedy is a claim for a liquidated debt or demand against the company; that the mere existence of a debt on a shareholder loan account is not oppressive; and that the test is whether there is conduct which is objectively unfair (citing Wayde at 472 per Brennan J).
As adverted to above, the defendants say that it is common ground that the account is a joint shareholders' loan account properly so called; that is, an account in which the funds are owned by all of the named account holders jointly, whereupon any joint holder is entitled to draw on the account, regardless of his or her contribution (in contrast to separate or individual accounts, exemplified by the shareholder loan accounts established for the purpose of the Family Trust). In this regard, the defendants note that, although John's evidence at [32] of his affidavit sworn 25 August 2020 suggested that he might not understand the difference between a joint account and separate accounts (insofar as he deposed to his belief that after Nick's death the loan account was owned by the four individuals as to 25% each; i.e., allocating a one quarter interest to each of the survivors), in cross-examination (at T 96.3-40) John made it clear that his understanding was that the account styled "N, G, B, P, J Tzavaras" was a joint account properly so called, on which any joint named holder was at liberty to draw: Q. Is this right? You understand that there is a difference between something which is described as a joint account and something that might be described as a separate account, correct? A. Yes. Q. Just to make sure we're speaking the same language, if you and your wife went along to the bank, you might, if you wished, open two bank accounts, one in each of your names, that they would be separate bank accounts or individual bank accounts-- A. Yes. Q. --correct? A. Yes. Q. Whereas if you and your wife went along to the bank and you opened one bank account in each of your names, that is to say one bank account with the name of each of you on it, that might be more accurately described as a joint bank account, correct? A. Yes. Q. It's your understanding that where one has a joint account, any of the account holders is at liberty to use and draw on the account? A. Yes. Q. Equally, moneys from either of them were open to be deposited into the joint account, correct? A. Yes. Q. If you have a joint account that's owned by one, two, three, four, five individuals and one of them dies, it's your understanding that because it is a joint account, the four who survive are then the owners of all that remains. Is that your understanding? A. Yes. Q. That's what you're saying here in this sentence, that is to say it's your understanding that this account NGWPJ Tzavaras was always a joint account, meaning joint account in the way that you've described, correct? A. Yes. Yes.

[25]

John's submissions

This relates to the complaint that, since 2015, Northmead Auto Centre (itself or as trustee of the NAC Trust) has not paid any rent, fee or any other amount to Tzavaras & Sons in respect of its exclusive occupation and use of the lower level of the Northmead Property (which it is alleged was done with the knowledge and consent of Bill and Peter but not that of John). It is said that Bill and Peter have thereby preferred the interests of Bill to those of Tzavaras & Sons and its members (including John) and preferred Bill's interests to those of the Family Trust, to the detriment of Tzavaras & Sons and John.
Reference is made to the valuation attached to Ms Bateman's report (an Opinion of Value of Ray White Commercial NSW - Western Sydney), which estimates the rental income (excluding outgoings and GST) of the lower level of the Northmead Property to be $50,000 per annum.
John asserts that Tzavaras & Sons has suffered loss and damage by the loss of the rental income that it ought to have received since about 1997 from the use and occupation by Northmead Auto Centre of the lower level of the Northmead Property. John has calculated that, from 2015 to 2020, at the rate of $50,000 per annum that lost rental income amounts to approximately $300,000 (which it is said continues at the rate of $56,000 per annum).

[26]

Defendant's submissions

As to the Northmead Auto Centre claim, the defendants say that there is no evidence to prove that $50,000 per annum or any other sum is a fair market rent. Further, they say that it is not oppressive for the trustee of a discretionary trust to allow a beneficiary to use trust property in specie, especially where, as here, Bill provided caretaker services and secured the site.
The defendants point to the definition of the term "Beneficiaries" in Schedule 4 to the Trust Deed of the Family Trust namely, that "'Beneficiaries" means the persons referred to as Beneficiaries in Schedule 2; and note that the persons referred to as Beneficiaries in Schedule 2 include "Named Person or persons" being "Tzavaras, Bill"; "Tzavaras, Peter" ; and "Tzavaras, John"; the "Spouse", "Child", "Lineal issue" and "Other relatives" of the named persons; "[a]ny company in which a share is held for the time being by any of the persons referred to above"; any trusts "under which [a named person or company] … has or have any interest"; the trustee of various charitable trusts; and the company (being Tzavaras & Sons). Thus, it is noted that Northmead Auto Centre is a Beneficiary of the Family Trust (being a company the sole shareholder of which is Bill).
Clause 10 of Schedule 3 of the Trust Deed provides that the trustee shall be entitled to exercise any of the powers hereunder, including the power to: Allow any one or more of the Beneficiaries to occupy, have custody of, or use any property forming part of the Trust Fund on such terms and conditions in all respects as the Trustee deems fit.
Thus the defendants maintain that Tzavaras & Sons, as trustee, is and always has been entitled to allow Northmead Auto Centre, as a Beneficiary, to use and occupy the Northmead Property on such terms as it thinks fit, including without the need to pay rent. The defendants say that there is nothing unfair about Tzavaras & Sons exercising the power in cl 10 in favour of Northmead Auto Centre or in not requiring Bill's company to pay rent. It is said that the power contemplates that the Trustee may do just that; noting also that Tzavaras & Sons allowed John to use and occupy the workshop by storing his racing cars, parts, engines and tools on those same premises for many years before 2012 (see the transcript extracted below) and pointing to Bill's evidence that services are provided to keep the site secure.

[27]

John's submissions

This complaint of oppressive conduct relates to the unsuccessful attempt by the defendants, in the period 1 July 2012 to 30 June 2013, to acquire a trucking business, including trucks, for the sum of approximately $825,400, which sum was paid to the purported vendor of the trucking business. The proposed acquisition did not proceed and Tzavaras & Sons was unable to recover the sum that it had paid (this amount being recorded in the books of the Company as at 30 June 2013 as "Embezzlement - $825,400").
John points to the increase in the loan facilities held by Tzavaras & Sons with AMP Bank Ltd (accounts ending #2015 and #2035) from $649,814 and $109,385, respectively as at 30 June 2012 to $1,234,814 and $448,661, respectively by 30 June 2013. As noted above, John contends that the increase in the said loans was in order to fund the proposed trucking business acquisition.
John's complaint is that Bill and Peter did not inform him of the proposed acquisition of the trucking business nor of the increase in the company's loans from AMP Bank to finance this; and it is said that Bill and Peter thereby excluded John from the company's affairs and mismanaged its affairs, to the detriment of members of the company including himself. John submits that it is verging on inconceivable that competent directors of a company, properly advised, could part with $825,400 of a company's moneys without obtaining anything in return and without there being any documentary record of the transaction.

[28]

Defendants' submissions

The defendants point out that this loss has been recorded in the books of Tzavaras & Sons every year since 2013. It is noted that it is not alleged that anyone within the company embezzled or misused the funds in question; rather, the pleaded case is that Bill and Peter did not inform John of the proposed acquisition or of an increase in the AMP Bank loan to finance the acquisition (see at [34] of the amended statement of claim). The defendants say that it is common ground that Tzavaras & Sons was the victim of a fraud by a third party who was paid for the purchase of a trucking business but did not deliver.
The defendants cavil with the proposition that Bill and Peter did not inform John of the proposed acquisition; and with the assertion that the AMP Bank loans were increased to pay for it before the transaction happened. Peter's evidence is that John was aware that Tzavaras & Sons wished to invest in the trucking business and that, when told this in April 2012, John said "[d]o what you like, I don't care" (see [32]). It is noted that this was around the time (in March or April of 2012) that John says he asked Bill to buy him out for $4 million. The defendants say that, although there is a dispute about the timing of that conversation and whether or not $4 million was ever mentioned, there is no dispute that John walked out of the business in July 2012 (and that John's case is that he did not speak to his brothers after that).
The defendants suggest that it is implausible in this context that Bill and Peter should still have kept John informed of this transaction, noting John's evidence at T 105.17-50, 106.1-16 that: Q ... what you're complaining about (is) that Peter was a victim of a confidence trick. A. No, my complaint is I knew nothing about this. Q. Let me understand. Your only complaint is that you weren't told, you say, about what happened as moneys were progressively paid for what turned out to be a non-existent trucking business, is that right? A. That's my main complaint. Q. So you have another complaint? A. Well, one, they didn't ask me. One, they didn't ask me. Q. What difference would asking you have made? A. I would have objected. Q. But you had already indicated you'd already gone off to set up a business of your own and left the company, you say, as early as the beginning of the calendar year 2012, don't you? A. Yeah, but like I said before, I didn't stop caring about the company. Q. You just left-- A. It's still my, it's still my interest. Q. Well, were they supposed to run after you up to Seven Hills and report to you? Is that what you say? A. I'm sure they could get a message to Uncle Bill. Q. Is your complaint that they didn't tell somebody else who might have then told you after you had decided that you wanted to, what's the word used by your solicitor in his letter, after you had decided to sever your ties with the company? A. My complaint is they did whatever they wanted with the funds without asking me. Q. After you had severed your ties with the company? A. After I had left the company ..(not transcribable)... Q. Is that your complaint-- A. Left working there. Q. --that after you'd left this company, after you'd made it plain by your solicitor's letter that you wish to sever your ties with the company, you say that Peter and Bill should still have run after you and consulted you about company transactions? A. Why would I be okay with that, giving money away like this, when I'm trying to ask them for money to buy me out? Q. So you would have preferred them to give money to you or buy you out rather than buy a trucking business? Is that what it boils down to? A. Definitely.

[29]

John's submissions

Finally, complaint is made in relation to the Surfers Paradise Unit, which was purchased by Tzavaras & Sons on 28 November 2003 for $650,000 and is now estimated to be worth $700,000. The complaint by John is not as to the acquisition of the property per se (although his oral evidence he made it clear that he did not agree with the acquisition and would have preferred to have the money to acquire his own property: see John's affidavit sworn 25 August 2020 at [69]); rather, it is that, since about 2003, Bill has occupied the Surfers Paradise Unit on numerous occasions (as has Peter from time to time) without paying any rent or other amount to Tzavaras & Sons (see at [37] of John's affidavit of 25 August 2020).
John points out that the Surfers Paradise Unit is rented out for most of the year. By reference to the rental statement for the Surfers Paradise Unit (exhibited at Exhibit GF1 to the affidavit of Mr Ferizis of 15 October 2020) for FY17, it is noted that the net rental income from the Surfers Paradise Unit for that year was approximately $27,000 per annum. John's complaint is that only minimal rental income was recorded during the month of January 2017 (this apparently being peak holiday season on the Gold Coast).
John asserts that Bill and Peter have thereby preferred their own interests over those of Tzavaras & Sons, and have conducted the affairs of the company for their benefit and to the detriment of the company and its members (including himself) by their use of the Surfers Paradise Unit without payment to Tzavaras & Sons for the same.

[30]

Defendants' submissions

The defendants point out that Bill and Kylie have a unit of their own in the same building in Surfers Paradise but their evidence is that they stay in the company unit in alternative years when they paint the unit and attend to other maintenance. It is noted that other members of the family have stayed in the company unit without payment of rent, including John.
The defendants' evidence is that when the unit was acquired, it was discussed with John and agreed that all family members may holiday in the unit rent free. It is submitted that there is said to be nothing oppressive in Bill having done so; nor is there any evidence of what time was spent, or what a fair market rent might be, especially when maintenance was also carried out by Bill.
The defendants refer to John's evidence (at T 62.43-50, T63.1-21): Q. You say, don't you, that you've stayed in this unit on one occasion, for a week, with your wife? A. Yes. Q. Are you sure it was only the one occasion? A. Yes. Q. That was in 2009, was it? A. Best of my memory, yes. Q. The company had had this unit for six years by then, had it not? A. Yes, yes. Q. You stayed there for that week without being called upon to pay for it? A. Yes. Q. You knew that your brother, Peter, had stayed there from time to time, without being called upon to pay for it? Yes, is that your answer? A. Yes, sorry, yes, yes. Q. By 2009 you were aware that your brother, Bill, had also stayed from time to time without being called upon to pay for it? A. Yes. Q. The first time you've made any complaint to anybody about any of the three of you, with or without other members of your family, staying at this unit without having being called upon to pay for it, is when these proceedings have commenced in 2020, correct? A. As I said before, I've had conversations with my brothers regarding the unit.
The defendants say that there is no question that Tzavaras & Sons, as trustee of the Family Trust, is entitled to allow Beneficiaries (such as Bill, Peter and John) to use and occupy trust property on whatever terms it thinks fit, including use the Surfers Paradise Unit rent free. It is said that there is nothing in this head of claim to support a finding that, in allowing Bill to do so, the business and affairs of Tzavaras & Sons were conducted in a manner that oppressive to, prejudicial to, or discriminatory so far as John was concerned.

[31]

John's submissions

John's submission is that s 232 Corporations Act has been enlivened and he seeks as his principal relief an order pursuant to s 233(1)(a) of the Corporations Act that the company be wound up so as to put an end to the ongoing oppression. (As noted, John no longer seeks, by way of relief, a compulsory purchase order.)
John maintains that it is not unreasonable (within the meaning of s 467(4) of the Corporations Act) for him to seek the winding up of the company. John says in that regard that no evidence has been brought forward of any offer to acquire John's interest in Tzavaras & Sons or the Family Trust at any price "let alone a reasonable price". (That ignores the contested conversations as to a buy-out - see above - but I accept that any offer there made is not now on the table.) John says that there is no alternative remedy available to the winding up of the company, noting the observations of Leeming JA at [39]-[40] in Snell v Glatis (No 2) [2020] NSWCA 166 (Snell v Glatis (No 2)).
Insofar as the defendants have suggested that John's interest is worth only a quarter of $1.00, (see defendants' submissions) John says that it is hardly reasonable to expect John to sell his share in Tzavaras & Sons, and hence his interest in the Family Trust, for that price having regard to the assets of the Family Trust as valued by Ms Bateman (see above); nor is it reasonable to require John to return to working for Bill or Northmead Auto Centre as he did prior to 2012. (I have already dismissed the latter suggestion; and the former suffers from the problem, with which John does not seem to have grappled, that his interest in the Family Trust is an interest as a discretionary object of that trust; he is not entitled as of right to a quarter share of the assets of that trust.)
John submits that the solvency of Tzavaras & Sons, as a non-trading property holding company, is no impediment to its being wound up. (In the event that a winding up order is made, John seeks consequential orders that the liquidators also be appointed as receivers of the Family Trust with the necessary powers as set out in prayers 2B, 2C and 2D of the amended originating process.) I interpose to note that this does not take into account the provisions of the Trust Deed which apply in the event of liquidation of the trustee (being cl 10 of the Trust Deed), namely that the office of the trustee "shall ipso facto become vacant" (which would then require the appointment of a new trustee).

[32]

Defendants' submissions

The defendants say that none of the pleaded heads of claim has been made good and therefore there is no basis on which the requirements of s 232 of the Corporations Act have been satisfied, or on which a winding up order under s 233(1)(a) or any other form of relief under s 233(1) should be granted. (It is noted that the same grounds are relied on for an order for winding up under s 461(1)(e) or (k) and for the appointment of receivers and that, absent those grounds, the alternative basis for relief should also fail.)
The defendants say that as a matter of principle, where oppression is established, the least intrusive form of relief should be granted (citing Ehsman v Nutectime International Pty Ltd (No 2) [2009] NSWSC 1096 at [87]-[88] per Gzell J); and, even then, only to provide relief against the oppression as found, not to serve another purpose (citing Re Dernacourt Investments (1990) 20 NSWLR 588 at 620 per Powell J (Re Dernacourt); Campbell v Backoffice Investments NSWCA at [121] per Giles JA).
It is submitted that in the present case, winding up would·be unjustified because Tzavaras & Sons and the Family Trust are solvent and that the effect of a winding up order, or the appointment of a receiver, would not only be futile because either would lead ipso facto to the removal of Tzavaras & Sons from the office of Trustee by operation of cl 10 of the Trust Deed (and the appointment of a new trustee) but that it would also be harmful to the credit of Tzavaras & Sons and the Family Trust. It is noted that there are mortgages over the Northmead Property and the Surfers Paradise Unit. The defendants say that the appointment of a liquidator or receiver would have an obvious impact on those credit facilities.
The defendants note that it has been said that an order for winding up a solvent company should be avoided if at all possible (citing John J Starr; that the powers under s 233(1) are intended to bring the oppression to an end, so the "appropriate" order under s 233(1) is one which serves that purpose, nothing more or less (citing Re Dernacourt, cited with approval in Campbell v Backoffice Investments NSWCA at [121); and noting Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25 (Campbell v Backoffice Investments HCA)).
The defendants also say that the position of the general body of beneficiaries is also relevant; that John (incorrectly) treats the Family Trust as though he has a one third share of the capital; and that if a liquidator or receiver were to be appointed, the interests of other beneficiaries would be adversely affected (since, if nothing else, the expense of liquidation would consume a considerable part of the trust property).

[33]

Relevant Provisions

Section 232 of the Corporations Act provides that: The Court may make an order under section 233 if: (a) the conduct of a company's affairs; or (b) an actual or proposed act or omission by or on behalf of a company,· or (c) a resolution, or a proposed resolution, of members or a class of members of a company; is either: (d) contrary to the interests of the members as a whole; or (e) oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in that capacity or in any other capacity. For the purposes of this Part, a person to whom a share in the company has been transmitted by will or by operation of law is taken to be a member of the company.
Subsections 233(1) and (2) of the Corporations Act provide that: (1) The Court can make any order under this section that it considers appropriate in relation to the company, including an order: (a) that the company be wound up; (b) that the company's existing constitution be modified or repealed; (c) regulating the conduct of the company's affairs in the future; (d) for the purchase of any shares by any member or person to whom a share in the company has been transmitted by will or by operation of law; (e) for the purchase of shares with an appropriate reduction of the company's share capital; (f) for the company to institute, prosecute, defend or discontinue specified proceedings; (g) authorising a member, or a person to whom a share in the company has been transmitted by will or by operation of law, to institute, prosecute, defend or discontinue specified proceedings in the name and on behalf of the company; (h) appointing a receiver or a receiver and manager of any or all of the company's property,· (i) restraining a person from engaging in specified conduct or from doing a specified act; (j) requiring a person to do a specified act. (2) If an order that a company be wound up is made under this section, the provisions of this Act relating to the winding up of companies apply: (a) as if the order were made under section 461; and (b) with such changes as are necessary.
There is no doubt that John has standing pursuant to s 234 of the Corporations Act to make an application for an order under s 233.
Section 53 of the Corporations Act defines the term "affairs" of a company when used in ss 232 and 233; and (as adverted to above) includes in subsection (b) a company that is a trustee.

[34]

Applicable principles

In Campbell v Backoffice Investments HCA, the High Court made clear (see at [176]) that s 232 should not be construed narrowly and that exclusion from management may be a form of oppression. The principles applicable to oppression suits have been summarised in a number of cases and I do not here repeat them in any detail (see, for example, Tomanovic v Argyle HQ Pty Ltd [2010] NSWSC 152 at [37]-[46] per Austin J (Tomanovic); Campbell v Backoffice Investments NSWCA per Basten JA at [181]; Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (2001) 37 ACSR 672, [2001] NSWCA 97 at [85], [86], [175] per Spigelman CJ (Fexuto); Nassar v Innovative Precasters Group Pty Ltd (2009) 71 ACSR 343; [2009] NSWSC 342 at [96] per Barrett J, as his Honour then was; Munstermann per Stevenson J at [21]-[22]).
Whether oppression is established is to be determined by reference to the nature of the business carried on by the company and the nature of the relations between participants, and "whether objectively in the eyes of the commercial bystander, there has been unfairness, namely conduct that is so unfair that reasonable directors who consider the matter would not have thought the decision fair" (see Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692 per Young J, as his Honour then was, at 704). As Black J noted in In the matter of Computer Room Solutions [2021] NSWSC 845 (at [89]), each case must be considered on its own facts and circumstances, and by reference to the conduct as a whole.

[35]

Determination

In the present case, the history of the formation of Tzavaras & Sons as a family company; and its limited role as trustee of the Family Trust should be noted. I accept that, as recognised by Rees J, in In the matter of Scientific Management Associates Pty Ltd (2019) 141 ACSR 115; [2019] NSWSC 1643, at [191]-[192], a closely-held company or quasi-partnership has features that may form a species of oppression claims (her Honour there citing In Re a Company (No 00709 of 1992); O'Neill v Phillips [1999] 2 All ER 961; [1999] UKHL 24 at 970 per Lord Hoffman, with whom Lords Jauncey of Tullichettle, Clyde, Hutton and Hobhouse of Woodborough agreed); and I note that in Trafalgar West Investments Pty Ltd v Superior Lawns Australia Pty Ltd (No 6) (2014) 102 ACSR 130; [2014] WASC 278 Kenneth Martin J said at [91]: I should say at the outset that, in my view, it would be incorrect in legal principle to approach this issue on a basis that there is some unlegislated category of corporation, whether one terms it a 'close held family company' or otherwise, the conduct of whose affairs can never be oppressive or which fall to be assessed at some lesser standard. The day-today experience of the courts rather suggests that loose or informal management practices, underlying personal relationships and frequently uncommercial conduct or decision making (from a company perspective) routinely characterise the operations of family companies. Yet these circumstances are highly conducive to the manifestation of corporate oppression scenarios.
Nevertheless, it is pertinent that the company here in question was set up as trustee of a discretionary family trust and has not (since at least 2013) carried on a business of itself; it clearly being intended to control the family trust but not (since that time) having the management or conduct of the operation of the family business.
In Shelton v National Roads and Motorists Association Ltd (2004) 51 ACSR 278; [2004] FCA 1393 (Shelton v NRMA) Tamberlin J stated: [23] It is not practicable to delineate the numerous ways in which oppressive conduct may be established. The Court will generally look at the overall course of conduct and consider whether it is so unfair that reasonable directors would not consider it fair. If directors exercise a power so as to impose a disability or burden on a member that is unfair according to ordinary standards of reasonableness and fair dealing, then such conduct may be described as oppressive. The question is one of fact and degree for the Court to determine, having regard to the view the directors have formed themselves, and allowing for any special skill or knowledge possessed by the directors. The test of unfairness is objective: see Wayde v NSW Rugby League Ltd (1985) 180 CLR 459 at 472 ("Wayde") per Brennan J; Morgan v 45 Flers Avenue Pty Ltd (1987) 11 NSWLR 573. The Court should not take a narrow approach to cases of oppression. It is necessary for the Court to come to a conclusion that there has been conduct unfairly prejudicial to or unfairly discriminatory or oppressive to a member before it makes an order to this effect: see John J Starr (Real Estate) Pty Ltd v Andrew (Australasia) Pty Ltd (1991) 6 ACSR 63, and the authorities there collected at 65-67. [my emphasis]

[36]

Relief

Had oppressive conduct under s 232 of the Corporations Act been established, John invokes what was said by Bell P, as his Honour then was, in Snell v Glatis (No 2) at [6]: Although statements may be found in the authorities that winding up is a last resort remedy in a case where oppression is found (see, for example, Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd [1998] NSWSC 413; (1998) 28 ACSR 688 at 742; Tomanovic v Argyle HQ Pty Ltd [2010] NSWSC 152 at [46]; Munstermann v Rayward; Rayward v Munstermann [2017] NSWSC 133 at [22]), the present case highlights the fact that the context in which the particular company or companies operate together with their structure and history will always be relevant to the fashioning of appropriate discretionary relief and generalised statements as to, for example, the inappropriateness of ordering winding up in cases of oppression other than as a last resort do not mean that that remedy should not be considered, in an appropriate case, even if neither party in fact seeks it. The present was, in my opinion, an appropriate case. It would also have secured the cessation of oppression "going forward" which was the legitimate concern referred to by the primary judge at [296] of her reasons.
John places weight on the observations by Leeming JA in Snell v Glatis (No 2) at [39]-[40] that: 39 It is a noteworthy feature of the SMA group of companies that they were not only solvent but in very large measure non-trading. Their assets substantially comprised real estate (much of which was leased to tenants) and debts (some secured, some unsecured). The purpose which is achieved by a buyout order is to return to a minority shareholder the value of his, her or its shareholding. In a case such as the present where the corporate assets were substantially realisable and there was very little active trading, many of the usual considerations tending against ordering winding up did not apply. 40 ... In the present case, where the companies were for the large part not running a business, but rather collecting rents on leased property and repayments of secured and unsecured loans, winding up was a realistic means of securing to the plaintiffs their share of the value of the SMA Group, which would also prevent ongoing oppression. (See also the observations of Bell P at [5]-[7] and Leeming JA at [42], [51] in that case.)
Further, it is noted that in Vigliaroni, Davies J found at [68] that, by reference to s 53, the court's jurisdiction and powers under the statutory oppression provisions were not circumscribed in respect of a trustee company. Thus, the court had power to make orders under s 233, including an order that the company be wound up, if the appropriate circumstances were established, including where the company acted as trustee and the oppression related to the affairs of the trust (points by way of example to Crow Inn (No 2) per Rees J at [284], [287]-[288]).

[37]

Claim for winding up on the just and equitable ground

In the alternative, John seeks a winding up of Tzavaras & Sons on the just and equitable ground pursuant to s 461(1)(e) and/or s 461(1)(k) of the Corporations Act.
Sub-section 461(1)(e) of the Corporations Act provides that the Court may order the winding up of a company if the directors have acted in affairs of the company in their own interests rather than in the interests of the members as a whole, or in any other manner whatsoever that appears to be unfair or unjust to other members. Sub-section 461(1)(k) of the Corporations Act provides that the Court may order the winding up of a company if the Court is of the opinion that it is just and equitable that the company be wound up.
It is noted that an order for winding up under the just and equitable ground may be made by reason of mismanagement, misconduct or lack confidence in the conduct and management of the company's affairs (see Australian Securities and Investments Commission v Letten (No 10) [2011] FCA 498 at [13] per Gordon J, sitting in the Federal Court as her Honour then was); and also, if a company was based on an association formed on the basis of a personal relationship involving mutual confidence, where that confidence has broken down (see Ledir Enterprises at [251] per Black J); or where a shareholder has been denied access to information or excluded from major decisions (McMillan v Toledo Enterprises International Pty Ltd (1995) 18 ACSR 603 at 619 per Beazley J, as Her Excellency then was). John relies upon the same evidence in this context as is relied upon in relation to his primary oppression claim.
The defendants say that the alternative basis for the winding up claim also fails since it is based on the same grounds that are here relied upon as for the oppression claim. Further, as adverted to above, the defendants say that this is not here truly a quasi-partnership since, when Tzavaras & Sons was established by Nick, he had control of the company (and the sons have in effect simply acquired their interests in the father's company). That is, the defendants say that the company was not formed on the basis of a relationship of mutual trust and confidence as between the Tzavaras brothers but, rather, was formed by their father, Nick; and that the brothers' relationship only took on importance vis-à-vis the company following Nick's death.

[38]

Section 66G claim

As to the separate claim under s 66G of the Conveyancing Act in respect of the Maroubra Property, as noted above John and Peter are the registered proprietors of the Maroubra Property as tenants in common in equal shares. The Maroubra Property was purchased at auction on 20 January 1997 for the price of $610,000. Settlement occurred on 25 June 1997. John says that he contributed $125,000 from his own funds towards the purchase price; that Peter contributed $90,000; that a loan was obtained from Westpac for $200,000 (secured by mortgage over the property); and that Nick contributed the balance of $195,000.
Also as noted above, on 23 January 2003, Peter made a payment in the sum of $125,000 to John. John asserts that the payment of $125,000 was only a partial payment by Peter towards John's interest in the Maroubra Property. Peter, on the other hand, asserts that the payment was in full satisfaction of John's interest and has not paid any further amount to John since that date.
John says that he has never signed (nor has he been requested to sign) any document to transfer his interest in the Maroubra Property to Peter (reference being made to s 54A of the Conveyancing Act in this regard) and notes that he remains registered on its title. (As noted above, John has signed the mortgage to AMP Bank as co-registered proprietor.)
John submits that the surrounding facts and circumstances support John's version of these events (rather than Peter's). John says it was quite clear in his mind, and he made it known to Peter, that he regarded half of the monies provided by his father of $200,000 as his. John maintains that he had a share or interest in the Maroubra Property above that of the $125,000 that he himself had provided towards its purchase price, by reason of Nick having provided the sum of approximately $200,000 towards its purchase. (John consistently maintained this stance in cross-examination.)
John says that the sum of $200,000 provided by Nick should be regarded as a gift, in equal measure, to his sons Peter and John. It is noted that, according to Peter's evidence he regarded this as something provided by his father "to help towards the house". John says that there is no evidence that Nick retained any interest in the Maroubra Property by way of resulting trust (and even if there were, that presumption is rebutted by the evidence that his father intended it to help towards the house). It is submitted that half of the sum of $200,000 (namely $100,000) was a gift to him by his father (and thus in effect he maintains that he contributed some $225,000 to the house purchase). John submits that he is therefore the equitable owner of a one-sixth share of the Maroubra Property (reflecting the $100,000 given to him by his father as a gift, which represented one sixth of the purchase price of the Maroubra Property).

[39]

Defendants' submissions

As to the s 66G claim, the defendants do not cavil with the principles applicable on such an application but they say that the issue here is whether the interests that Peter and John held in the Maroubra Property were settled by agreement between them in 2002 when Peter "bought out" John's interest in that investment.
The defendants accept that John contributed $125,000 towards the purchase price of the Maroubra Property in 1997 and that title was taken by Peter and John as tenants in common in equal shares. It is noted that John proposed that the Maroubra Property be sold in 2002, which Peter declined because the property was used as security for borrowings by Tzavaras & Sons to fund the development of the Northmead Property.
The defendants say that the issue is whether the brothers settled their differences on terms that Peter would pay John his $125,000 contribution and obtain all of the beneficial interest in the house. Peter's evidence is that John said "Just give me the money I put into the property ... Just give me my money, that's all I want. The house is all yours"; that Peter paid John the $125,000; and that Peter has resided in the house ever since.
It is noted that the legal title to the Maroubra Property is still in the names of Peter and John, but that it is subject to the AMP Mortgage to support borrowings by Tzavaras & Sons. It is said that, if John is not prepared to honour his agreement with Peter, then it is appropriate to appoint trustees of the Maroubra Property under s 66G of the Conveyancing Act upon terms that the property be conveyed to Peter subject to the existing encumbrance. It is said that the costs of the application, including any costs of the trustees, should be paid by John. Insofar as prayers 11 and 12 of the originating process seek orders that Tzavaras & Sons pay John an amount equivalent to half the amount required to discharge the AMP Mortgage and that Peter pay John mesne profits in respect of his sole occupation of the Maroubra Property, the defendants say that no basis for either of those claims has been pleaded (so it is assumed that they have been abandoned) but that, if that assumption be incorrect, the claims fail for lack of legal basis and evidence in support.
The defendants say that Peter's evidence of the conversation concerning the Maroubra Property should be preferred to the evidence of John not only because they submit Peter was the more credible witness but also because of what they maintain is the sheer improbability that the transaction which undoubtedly occurred on the occasion in question (the payment of $125,000) was not a transaction in which Peter paid $125,000 to buy his brother out of their jointly owned property but rather was a transaction in which Peter did nothing more than make part payment of a price (which John himself says had not been agreed).

[40]

Relevant legislative provisions

Section 66G(1) of the Conveyancing Act provides as follows: (1) Where any property (other than chattels) is held in co-ownership the court may, on the application of any one or more of the co-owners, appoint trustees of the property and vest the same in such trustees, subject to incumbrances affecting the entirety, but free from incumbrances affecting any undivided shares, to be held by them on the statutory trust for sale or on the statutory trust for partition.
"Co-owner" is defined in s 66F to mean a co-owner of either a legal or equitable interest. A person must be a co-owner at the time of making the application (see Darrington v Caldbeck (1990) 20 NSWLR 212 at 215 per Young J, as his Honour then was).
It is now clear (despite earlier authority to the contrary) that s 66G imposes no obligation upon a court to make an order for sale (or partition) but rather is discretionary in nature (see Forgeard v Shanahan (1994) 35 NSWLR 206 at 213 per Kirby P, as his Honour then was (Forgeard v Shanahan); Williams v Legg (1993) 29 NSWLR 687 at 692-693 per the Court).
Peter (as the party opposing the sale) bears the onus of dissuading the Court from ordering such a sale (see Woodson (Sales) Pty Ltd v Woodson (Aust) Pty Ltd (1996) 7 BPR 14,685 at 14,701).

[41]

Relevant principles

The principles in relation to resulting trusts are well known (see the summary in Amit Laundry Pty Ltd v Jain [2017] NSWSC 1495 at [145]-[168]; and see Guirguis v Girgis [2021] NSWCA 156 at [53] per White JA by reference to Foundas v Arambatzis [2020] NSWCA 479 at [47]-[50]).
Of the types of resulting trust, here what is involved is what is commonly referred to as a purchase money resulting trust (see Hancock Family Memorial Foundation Ltd v Porteous (1999) 32 ACSR 124 at [68] per Anderson J). The purchase money was contributed from a number of sources (not only John and Peter - in differing amounts; but also Nick, perhaps jointly out of funds held with Jenny; and also Tzavaras & Sons via the finance it obtained). The property was registered in the names of John and Peter only. The classic authority for this type of resulting trust is Dyer v Dyer (1788) 2 Cox Eq Cas 92 at 93 per Eyre LCB: The clear result of all the cases, without a single exception, is, that the trust of a legal estate, whether freehold, copyhold, or leasehold; whether taken in the names of the purchasers and others jointly, or in the name of others without that of the purchaser; whether in one name or several; whether jointly or successive, results to the man who advances the purchase money. This is a general proposition supported by all the cases, and there is nothing to contradict it; and it goes on a strict analogy to the rule of the common law, that where a feoffment is made without consideration, the use results to the feoffor.
That this is the position in contemporary Australia has been confirmed by the High Court in Napier v Public Trustee (WA) (1980) 32 ALR 153 (per Aickin J). As to the position vis-à-vis contribution to the purchase price by two or more people in circumstances where the property is conveyed in the name of only some of the purchasers, see Delehunt v Carmody (1986) 161 CLR 464; [1986] HCA 67 at 472-3 (per Gibbs CJ).
Therefore, the application of the presumption of a resulting trust (unless rebutted by evidence of actual intention or excluded by operation of the presumption of advancement) would be that John and Peter hold their respective interests in the property on resulting trust for themselves and the other contributors in the proportions in which they each contributed to the purchase price.
The presumption may be rebutted by evidence as to actual intentions (though not yielding to slight circumstances); and a presumption of advancement may well also apply (see Nelson v Nelson (1995) 184 CLR 538; [1995] HCA 25 at 584 per Toohey J that "the presumption of advancement between father and child remains intact", in that case the Court recognising the presumption of advancement as between a mother and her adult children).

[42]

Conclusion

For the above reasons, I make the following orders: 1. Dismiss the plaintiff's claims for the winding up of the first defendant with costs. 2. Order pursuant to s 66G of the Conveyancing Act 1919 (NSW) that Brian Raymond Silvia and Geoffrey Peter Granger be appointed as trustees for the sale of the property referred to in these reasons as the Maroubra Property, such transfer to be to the third defendant for no consideration but subject to the existing encumbrances. 3. Order the plaintiff to pay the third defendant's costs of the application pursuant to s 66G of the Conveyancing Act, 1919 (NSW) other than the costs (if any) of the trustees for sale appointed pursuant to order 2 (with a view to those costs being borne jointly by the plaintiff and the third defendant).

[43]

Amendments 05 April 2022 - Addition of counsel on coversheet 11 April 2022 - [211] - (non abandoned) amended to (now abandoned) DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 11 April 2022

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