Evidence of the existence of an arrangement
211 Mr Tonuri gave a statement in this proceeding on 2 June 2014. In relation to his interaction with Mr Nankervis, Mr Tonuri deposed relevantly as follows:
69. I had not undertaken a property development project previously. I was also living in Sydney in 2008 and 2009. My capacity to successfully complete the project under those conditions was questionable.
70. I recall telling Mr Nankervis that in or about January 2009. He indicated that he would be able to provide ad hoc advice (both before and after acquiring Lot 170) given his own experience as a civil engineer, including by putting me in contact with a variety of people relevant to a property development project such as civil contractor, a project superintendant, a cultural heritage consultant, a koala catcher, a tree clearing contractor and so on.
71. I understood from discussions with Mr Nankervis at the time that he was under huge pressure from Investa to get Lot 170 sold, especially after the prior offer had failed to complete, and had been made personally responsible for making this happen.
72. Mr Nankervis also mentioned to me that he was in line for a decent bonus from Investa that year if he sold Lot 170 and made his plan. I cannot precisely recall the figure that he mentioned, but it was either $65,000 or $120,000.
73. That being the case, I took maximum advantage of these circumstances by having Mr Nankervis commit to helping me out in these areas specified. I would not undertaken the project without this commitment and regarded this commitment from him as an inducement given on the part of vendor for me to transact.
74. All of the tasks performed by Mr Nankervis didn't seem like a huge effort to me. They seemed to me to be done in his spare time and on the weekends or after work.
…
81. Mr Nankervis and entities associated with him agreed in late 2009 to buy 2 finished lots in the development under put and call agreements at a price of $190,000.
82. These put and call agreements assisted me greatly in obtaining the level of pre-sales necessary to be able to draw down on the construction finance and thereby commence the development phase of the project.
85. In 2011 and 2012, I was having significant issues with the collapse of a major structural wall to the eastern side of Lot 170. The wall had been badly damaged by the rains that led up to the January 2011 floods. The civil contractor that built the wall was refusing to engage with me and Ipswich City Council was threatening to take civil action against me as well as to confiscate my performance bond of some $160,000.
86. I asked Mr Nankervis, who by this time had long ceased employment with Investa, to provide me some paid civil engineering assistance over a period of about four months, which he was happy to do. He invoiced Two Eight Two Nine Pty Limited an amount of approximately $90,000 which I negotiated down to $70,000 and paid him in September 2012.
…
91. In August or September 2009, I recall having lunch with Mr Barclay and Mr Nankervis at Mr Barclay's apartment in New Farm. At this time, the purchase of Lot 170 had recently completed.
92. I was extremely grateful for the assistance that both had provided me over the previous 9 months or so, and so raised with them a proposal that I grant each a one third interest in the project in recognition of that.
93. I also had concerns about what would happen if my partially completed divorce proceedings interfered with the development that was soon to commence. I believed that the project would be less at risk of Mr Barclay and Mr Nankervis diluted my own interest down to a one third shareholding.
94. Both Mr Barclay and Mr Nankervis immediately rejected the proposal that I put forward on the basis that it would be entirely inappropriate for that to happen. Mr Nankervis was considerably more dismissive than Mr Barclay. I allowed the discussion to lapse.
212 Mr Tonuri subsequently deposed that he, Mr Barclay and Mr Nankervis had become close friends as a result of the amount of time they had spent together, and that by mid-2010 they had become interested in setting up a property syndication business (statement of Mr Tonuri paras 99-100).
213 In oral evidence under cross-examination from Mr Nankervis, Mr Tonuri explained the provenance of another corporation in which he had an interest, namely Bandat Pty Ltd. It appears that, at material times, Bandat Pty Ltd was a wholly-owned subsidiary of Two Eight Two Nine. Relevantly Mr Tonuri said:
Okay. The statement then goes on to say that Two Eight Two Nine Proprietary Limited through a subsidiary called Bandat Proprietary Limited 5 had an option acquired at a nominal 5000 to develop a second site. Just putting the second part of that to one side for the moment, what was the association of the identity Bandat in relation to the principal entity Two Eight Two Nine Proprietary Limited?---At this point in time, Bandat Pty Limited was a wholly owned subsidiary of Two Eight Two Nine. It was incorporated on 3 February 2009 and the relevance of the company name is that it is the combination of the initials of me, of yourself and Mr Barclay.
And the relevance of that entity, what was the -the relevance of that entity you've described but what was the purpose of that entity and whose brain child was that?--- Yes. In mid to late January 2009, I recall a conversation that I had with yourself and with Mr Barclay in which I proposed some arrangements whereby we would acquire and hold the property jointly in equal thirds as between the three of us. During that meeting, we agreed that was a good idea. I went off and subsequently incorporated Bandat as a vehicle through which that purchase would take place. I recall perhaps four or five days later, you telephoning me saying that you had had a private with Mr Barclay and you had agreed between the two of you that it was a bad idea and that it would not be possible for you to hold an involvement in the project because of your responsibilities towards other organisations.
Right. And the date of the incorporation of that Bandat company, just to confirm for the court?---3 February 2009.
Okay. And the activity under that entity you describe here as nominating - nominally looking to develop a second site. Could you just elaborate on that?---The proposal to acquire the site through Bandat was abandoned after that conversation with you that I've described and it was for that reason that I pursued the purchase of the property through a completely separate entity, begin Two Eight Two Nine. In terms of the activities of Bandat, it only ever has done two things: one is to be the nominee option holder of a second site that ended up not progressing and Bandat is also the - now the trustee of my self-managed super fund. It has had no other commercial operations other than those two issues that I've described.
(transcript 22 August 2015 pp 1662-1663.)
214 Later under cross-examination by Mr Murr for the applicants, Mr Tonuri said:
And, in fact, you did reach an agreement with Nankervis and Barclay in December or January '09 that they would each take a one-third interest in the project that would follow the acquisition of lot 170?---The only agreement that was - that took place was the one that I've - the one that I've referred to in document marked 224 in - 45 sorry. I've got my documents mixed up. The only agreement is the one that I've referred to that happened in the late part of January and it was one which lapsed once I had received the phone call back from Mr Nankervis saying, "Look, very, very kind and generous of you but we can't do it." So I - I allowed it to lapse and I had another go at them in early August when I realised how much I would need both of them going forwards.
(transcript 22 August 2014 pp 1718-1719.)
215 Significantly, evidence was also produced to the Court in the form of redacted affidavits sworn by Mr Tonuri in the Family Court of Australia proceedings between himself and his former wife in 2009. Materially, Mr Tonuri deposed in that material that he and Mr Barclay had had detailed discussions concerning Lot 170, and that on or about 31 January 2009 he had agreed with Mr Barclay that Bandat Pty Ltd would be incorporated to purchase Lot 170, with Mr Tonuri holding a one-third interest in the project and Mr Barclay and Mr Nankervis the remaining two-thirds. Mr Tonuri deposed that he understood that neither Mr Barclay nor Mr Nankervis wanted to be publicly associated with that particular project because of their involvement in other projects in the area. The tenor of Mr Tonuri's evidence was that Mr Barclay was particularly active in relation to this venture, and had obtained funds to pay the deposit (by way of a loan at commercial interest rates) required by Two Eight Two Nine to purchase Lot 170, settlement of which took place on 30 July 2009. Mr Tonuri also deposed in his Family Court affidavit that on or about 1 August 2009 he provided to each of Mr Barclay and Mr Nankervis a letter confirming their one-third entitlements to the assets and profits of Two Eight Two Nine and all related developments.
216 In his statement of 2 June 2014 in these proceedings, Mr Tonuri acknowledged that he had given the evidence in the Family Court proceedings which I have just described, however sought to modify the nature of that evidence in the following manner:
108. In July 2010, whilst this property syndication business opportunity was under active consideration, my former wife made an application to the Family Court for the entire project to be transferred into her name in satisfaction o a lump sum child support and spousal maintenance order that she was seeking, even though my property division orders had been finalised in December 2008.
109. I couldn't allow that to happen given the personal animosity that my former wife had towards me. It would have caused the project to collapse and in all likelihood for me to have become bankrupt in the process given the personal guarantees that I had provided to the company.
110. I saw it highly probable at the time that I would go into business with Mr Barclay and Mr Nankervis, and pursuant to which I would allocate an unspecified interest to them in some form as part of the process.
111. I deposed that Mr Barclay and Mr Nankervis each held a one third interest in the company as that was close enough to my best expectation of how matters might take place.
112. The Family Court matter did not go to trial and was settled via Consent Orders.
113. I subsequently took a new job with the Bank of Queensland and lost interest in proceeding with the property syndication business.
114. Neither Mr Barclay nor Mr Nankervis were ever advised about the issues disclosed in paragraphs 108 to 112.
217 Tendered as exhibit 116(A) in the proceedings was an email from Mr Tonuri to Mr Mike Nicholls of Mortgage Corp, mortgage brokers, dated 16 June 2009 in which Mr Tonuri wrote, materially:
The other two people who have been helping me (and who will get a share of the profits down the track) are both based in Brisbane - one is an experienced civil engineer and has helped with the Development Approval and Operational Works Approval through Ipswich Council, and the other is a long-term house and land project sales guy - and so there is a good assembly of skills in developing the site further - including contacts with builders and investor syndicates etc etc. Done well, there is a good $4-5m of profit in the project, so would be very interested in having you help here.
218 At the hearing Mr Murr cross-examined Mr Tonuri concerning this evidence and the roles of Mr Nankervis and Mr Barclay in connection with Lot 170. In particular, I note the following exchange:
You've read that?---Yes, I have.
The other two people who have been helping me and who will get a share of the profits down the track.
?---Mmm.
How do you explain those words?---That indicated my intention to have another ping at Mr Barclay and Mr Nankervis to lock them into the project.
No. You're not saying there you're going to have another ping at something, as you put it. You're saying there they will - will - get a share of the profits down the track, Mr Tonuri?---Well, I express here my hope that I can lock them in, in such a way so I could secure their services and which I - services I regarded as necessary for the successful completion of the project.
Do you understand the difference between the reality of something and a hope that something will occur?---Of course I do.
Do you understand the difference between the reality of something and an expectation that something will occur?---I do.
You're not saying anything there about a hope there, Mr Tonuri; you are saying:
And who will get a share of profits down the track.
?---Well, that was my expectation in writing that, that I would be able to secure an arrangement with them, the arrangement that I subsequently put to them on 1 August.
Why then didn't you put "And whose services I hope to secure on a long-term basis by offering them a one-third interest in the project. Why didn't you say that, if that was the truth?---Well, in terms of these particular words, I would have written what was the simplest way to communicate to a person, being this mortgage broker, at the time.
Yes. You would have put the truth as you saw it, wouldn't you?---I would have put my expectation of what I would look to do going forwards with their involvement in the project, which I certainly would have needed, given my inexperience with running a property development project under my own steam.
And the truth as you saw it at this stage was that you had an agreement with Mr Nankervis and Mr Barclay that they were one-third participants in this project. That's right, isn't it?---That is wrong. I don't say that here.
Well, you come very close to it, Mr Tonuri, when you say:
And who will get a share of the profits down the track.
That's very close to saying that they are ownership participants in this project, isn't it?---I don't say that.
You might now answer my question, which is that's very close to saying that, isn't it?---It is my hope and expectation there that I would be able to lock them in. And for reasons that I've also disclosed in my - - -
Do you need me to repeat the question, Mr Tonuri?---I don't need you to.
Well, could you answer it, please?---For reasons that I've also - for very similar reasons as which I've disclosed in my statement at paragraph 53 and paragraph - sorry, paragraph 53 and paragraph 79, communicating that I had people who knew 15 what they were doing involved was beneficial for my attempts in raising finance. And bearing in mind that this email was to a mortgage broker, so for the very same reasons in paragraphs 53 and 79, it helped my case to present a message that I had people involved who were going to be involved and drive this project towards completion.
And my question - accepting that - I accept that that's completely true and I'm saying that you had those people lined up from January 2009, but the question I actually am asking you is why didn't you just tell people the fact of the matter, if it was the fact of the matter, that this was somebody - these were people that you had lined up and whose services you proposed to secure by offering a one-third interest in the project, rather than by saying that they were people who will be sharing profits down the track? Why didn't you do that?---The answer to that question is in paragraph 54 of my statement, which says:
I was content to allow any ambiguity on their respective parts to continue, so long as the misinterpretation played to my commercial advantage.
I was more than happy to provide an impression that I had skills and capability locked in in such a way to give financiers the confidence that I would be able to follow through with getting the project done.
But if what you're saying is correct, then that statement that you made in this letter is a straight out lie, isn't it?---No, it's not.
Well, you didn't have people locked in, did you?---Well, I had people who were there willingly able - willing and able to help me, as they had been doing since January 2009.
You didn't have them locked in, did you?---I don't say I have them locked in here. Right. Of course, the truth of the matter is you did have them locked in, because you had had the agreement - you were in agreement with them since January, weren't you?---Well, that is incorrect.
(transcript 22 August 2014 pp 1790-1792.)
219 It is also helpful to consider the emails upon which the applicants specifically rely in their amended statement of claim.
220 The email of 20 January 2009 from Mr Tonuri to Mr Nankervis and Mr Barclay read, materially:
Guys,
Attached is a model that I have knocked up which focuses on how we might finnace [sic] the project.
I have lifted the numbers for the most part out of the latest printout from Estate Master - with the two exceptions being
(a) an assumption of 20 sales before Sep 09 and then 3 per month thereafter with all those sales settling in Jul 10 when the civil works are complete, and
(b) an average selling price of $175k to be ultra conservative.
… I have modelled with the bank finance is 60% lending progressively against the land, the improvements and then against the presales. Put another way, if we pay $23k for the land, then we get 60% of that as debt, then if we pay another $89k to improve, then we get 60% of that as debt, and then when we record a presale, then we get to borrow 60% of the profit per lot as debt in advance of the Jul 10 settlement. It is a little rudimentary but gives a good indication of the project profits after bank finance and before splitting the profits amongst us and the equity providers.
The main points to note are that:
1) the amount of equity required stays below $2m for just about the entire period (the exception being just before the end of construction)
2) the debt would be drawn for just 10 months
3) the project comes into cash profit by Oct 10
4) the average drawing for the equity is about $1.5m ... which means that is matters little what the carrying cost of the equity is, whether it's 10%, 15%, 20% or 25% because the difference is just a few $000k ... the greater sensitivity for us is the amount of the final profit we have to pay away which in this model is $3.5m in total.
What we each ought to be thinking about over the next few days is what our pain threshold is in terms of how much of … profit we would be prepared to give up, so that we can yes/no any proposal that Bill gives us reasonably ..ickly [sic].
Any comments welcome.
(gaps in original before the Court.)
221 The second, third and fourth emails of 24 May 2010 pleaded in paragraph 174A of the amended statement of claim were in a chain of four emails between Mr Tony Hoffman, of Hoffman Kelly Accountants and Mr Tonuri on that date. Materially, these emails were as follows:
The email from Mr Tonuri to Mr Hoffman at 10.42 am on 24 May 2010 read:
Thanks, Tony.
I caught up with Adam and Ashley on the weekend and we kicked the issue around a little.
I broadly understand how a DAS works but I had always thought that they were right on the boundary in terms of anti-streaming provisions ... it's very much more in your area of expertise than mine so I take it that you don't see any material ATO risks in this approach?
As 2829 won't be in the position of having to pay tax until April 2012, I would presume that any such dividends paid in specie will be treated as unfranked dividends to the recipients?
I had always regarded the "base case" scenario as one where 1/3rd of the pre-tax project profits would be paid to each of Adam and Ashley (and/or their nominated entities) either (a) in cash or (b) via an in specie distribution of finished lots or (c) as payment of the sale price amount owing to settle some lots in their names or (d) some combination of (a) to (c). This would take place through presentation of an invoice for the specified amount. This amount would be deductible to 2829 and assessable to the recipients, such that each of 2829, Adam Co and AshleyCo have taxable income of 1/3rd of the pre-tax profits and liability for tax on that income. There would be stamp duty payable in (b) and in (c), and GST payable and claimable in all cases. There may be some capacity for part of the amount to fall under the CGT umbrella in the event of (c) and where the lots are held in personal name or through a trust for 12 months.
I am unsure as to precisely where the advantage comes in following the DAS approach as opposed to the "base case" scenario outlined above.
Can you please elaborate for me?
The email from Mr Hoffman to Mr Tonuri at 11.11 am on 24 May 2010, provided:
Many thanks David,
My understanding is that (1) there is a "gentlemen's agreement" that the profits are split 1/3 each, (2) that you are near the end of the [d]evelopment and (3) wish to move the remaining stock out of the company 1/3 each.
As I understand, it is the intention of our clients to hold the lots on investment account and as such, their entities (trusts) will not have to register for gst and would be assessed (if in the event of an eventual sale where the land is held> 12 months) on only 50% of any capital gain.
It would be arguable (given our observations & experience with our developer clients), in the event of a trade sale of the remaining lots from the company to related trusts, a discount of between 15%-20% is not uncommon.
This would result in a discounted sale price to the trusts, reduced stamp duty for the trusts, less tax for the company and less GST on the sale.
These transfers/sales could be affected before 30/6/2010 and an estimate of the tax payable paid voluntarily before 30/6/2010 with fully franked dividends paid on 1/7/2010 (to DAS holders) to clear all retained profits and loans.
We never pay unfranked dividends from a Pty Ltd company .... (tax planning 101)
We have regard to several private binding rulings obtained from the ATO where, provided properly issued, Dividend access shares:
1. do not trigger value shifting
2. do not trigger dividend streaming provisions
3. do not trigger dividend stripping provisions
4. do not trigger debt/equity provisions
The ATO has recently confirmed this in a private ruling involving over $20 million in dividends paid to DAS holders.
Of course, should you guys wish to go down the "base case" scenario, that is perfectly fine, we will just ask that we liaise with you and your accountants to try to minimise the "income tax issues" to our clients associated with the "invoicing" process.
The email from Mr Tonuri to Mr Hoffman at 11.36 am on 24 May 2010 read:
1 will have a think through this … but 2829 is unlikely to be able to make the voluntary payment of tax on 30 June 2010 ... which could be a problem with the DAS solution as suggested.
In the second paragraph below, I presume that the cost base for the entities would be set at the 15-20% discount level (so circa $180k per lot) so the concessional CGT treatment arises on any gain made over this level (assuming > 12 months holding period), with income tax payable by the entities in the 2010/11 year on the cost base of lots received?
That being the case, then I see the advantages of reduced stamp duty etc etc ... although this same outcome could also be substantially achieved through the invoicing approach ... and option (c) referred to in my email below.
1 am not sure if there is an angle with GST though after reading your comment about registration for GST ... are you … that there is an approach whereby the lots can be held in an entity which does not have to be registered for ..T and therefore when that entity sells each lot, it is not required to remit 10% of the sale price to the ATO as GST? 1 am not sure if if [sic] is relevant, but the margin scheme does not apply here for 2829.
(gaps in original.)
222 I note that the previous email in that chain on that day was from Mr Hoffman to Mr Tonuri at 9.42 am and read:
Thanks David
Yes, that would be the case if you established the company directly via ASIC. In that case, you probably took the "replaceable rules" option which is a very simple form of constitution embedded in the Corporations Act.
Did you guys want us to take over the ASIC work on this one??
Provided that the Company strictly issues a Dividend Access Share with no rights to the capital of the company- there should be no land rich duty on that issue. This is on the basis that the land rich provisions are triggered when there is an acquisition of an "interest" in a land rich company.
"Interest" is defined as the entitlement that a shareholder would receive if the company was wound up. If the Dividend Access Shares contain no rights with respect to the capital of the company, there is no acquisition of an interest and therefore no dutiable event.
To be able to issue this type of share, the company will need to adopt a new constitution as "replaceable Rules" under the Corp Act do not have these powers. We can get a new constitution prepared which will contain a special class of Dividend access share to issue to each of you respectively to be able to extract the final product via dividend.
223 Further, the first in the chain of emails was sent at 9.54 am on 22 May 2010, from Mr Tonuri to Mr Hoffman, and specifically copied to Mr Nankervis and Mr Barclay. It provided:
1) I don't believe that the company has a Constitution ... I don't think a company must have one these days … when I got it incorporated, I am pretty sure that I ticked the box saying "don't worry, I will stick with the standard ASIC provisions" ... would this be right?
2) Attached is the latest Company Annual Statement.
224 In my view, these emails clearly evidence an arrangement between Mr Tonuri, Mr Nankervis and Mr Barclay in relation to a development project concerning Lot 170, in respect of which they were in receipt of accounting advice from Mr Hoffman, and in respect of which it appears Mr Tonuri had taken the lead role. In so concluding I also make the following observations.
225 In relation to evidence of Mr Nankervis, I note that Mr Nankervis conceded that the word "Bandat" was an anagram of the initials of himself, Mr Tonuri and Mr Barclay.
226 Before the Court the tenor of Mr Nankervis' evidence was that his actions in relation to Mr Tonuri and Two Eight Two Nine were motivated only by his wish to have the sale by Investa to Mr Tonuri concluded. So, for example, in response to questioning from Mr Murr for the applicants concerning an email of 15 May 2009 from Mr Nankervis to Mr Tonuri and Mr Barclay in which Mr Nankervis had written, inter alia, "We have the potential to sell this site to a purchaser at $4.8M on this basis", Mr Nankervis gave the following evidence:
Yes. Now, the put and call option that was entered into with Two Eight Two Nine was dated 20 February 2009, wasn't it?---I think that's correct.
That's about almost three months before the date of this document?---Okay.
So effectively, Investa had sold the land to Two Eight Two Nine Proprietary Limited about three months prior to this email. Do you agree?---Effectively, yes.
Yes. This email is from you directed to Barclay and Tonuri, correct?---Correct.
Do you agree it's an unusual email for a vendor to be writing to a purchaser, effectively three months after the property has been sold?---The context around it is probably the thing that needs to be explained.
Do you agree it's unusual or not?---No.
All right. Thank you. In that you say:
We have the potential to sell this site to a purchaser at $4.8 million on this basis.
Do you see that?---I see that.
Who's we?---I was working with - helping David with trying to get this deal across 25 the line with Investa, so I was talking generally.
Just talking generally?---Yes, yes.
Well, who's we? Who is we? Who do you mean when you say, "we"?---The group.
The group. Who's the group?---That email is directed to two others, David and Adam Barclay.
So you and Barclay and Tonuri had the potential to sell this site to a purchaser for 35 $4.8 million on this basis. Is that right?---No, that's not what that means.
Well, I'm just using your words, Mr Nankervis?---Sure.
Who is the group that you're referring to as "we"?---I just explained that to you, Mr Murr.
Well, I thought you said it was - - -
HER HONOUR: Okay. I'm afraid I'm a bit confused too, Mr Nankervis?---The - the terminology of "we" - as in, I was assisting David to get this project to the end for the purpose of everyone involved, and I'm talking about generally.
So who is "we"? When you say "we", you mean you in your capacity as - - -?---I
was helping David in that capacity, yes.
All right. Thank you.
MR MURR: So you were just - and what exactly was Investa's interest in this at this stage, three months after? Effectively you had had Tonuri on the hook?---Investa - their interest was to complete the approvals in line with the initial - in line with the initial contract, which was the subsequent requirements of David proceeding. So that was the - that was the Investa issue at the day.
That last statement, I put it to you, is untrue, that there was any obligation to do anything about approvals?---I don't think you're right.
Okay. But in any event, this has got nothing - this not about approvals, is it, this email?---You just asked me what Investa's deal was.
But this email isn't about approvals, is it?---You didn't ask me that. You asked me what Investa's deal was at the day, and I answered it.
And you identified its interest as to being one to do with approvals, didn't you?---I said they had an ongoing interest on the back of approvals that had to be had which were post this date.
This email has got nothing to do with approvals, has it?---No.
This email has got to do with working out various scenarios of prices at which the land could be sold. Isn't that right?---Yes, but that wasn't what you asked three questions ago.
Well, it's what I'm asking you now, Mr Nankervis?---Yes, and I agree.
And I take it you agree with that proposition?---I do agree with that proposition.
And what you're saying is that "we" have the potential to sell the site to a purchaser
for $4.8 million, correct?---That's what it says.
Well, that's what you said, isn't it?---Well, that's what it says, yes.
(transcript 29 September 2014 pp 1923-1924.)
227 In relation to the incorporation of Bandat Pty Ltd, Mr Murr for the applicants put to Mr Nankervis an email from Mr Tonuri to Mr Nankervis and Mr Barclay dated 3 February 2009, which was in the following terms:
I have incorporated Bandat Pty Limited ACN 135 188 055.>
In setting up, there is one director (Sue-Ellen) and one shareholder (me) for now- but let me know who to add and also when would be the best time to do so. I will keep all the company documents here - but if we need anything like company incorporation certificates along the way, then I can send them through.
228 Mr Nankervis' evidence in this respect was as follows:
MR MURR: Go the last email in that series, if you would, please, Mr Nankervis, commencing at the bottom of page 9037 and continuing into page 9038. Do you see it?---Yes.
That's from Tonuri to you and Barclay?---Yes.
Subject Bandat?---Yes.
It says he's incorporated Bandat Proprietary Limited. And that's - Bandat, as we now know, is a - an anagram of your initials, correct?---Correct.
He describes the corporate structure as one director and one shareholder for now, "but", he says:
Let me know who to add and also when would be the best time to do so.
And that's something which is directed to you and Barclay; correct?---Correct.
And can I suggest that the reason he was making that request was because you and Barclay were - I withdraw that. Because - first of all, because Bandat was intended to be the vehicle through which this land would be purchased and developed - correct?---I'm unsure whether that was what his intent was.
Well, you put Bandat in ..... delegated approval authority submission as to purchaser, didn't you?---I don't know.
I see. All right. In any event, my suggestion is that that was the intention, and the intention - and it was also the fact of the matter, that you and Barclay were equal participants in that venture - that's right, isn't it?---What venture?
The venture of the purchase and the development of lot 170?---No.
And the reason that he's asking, to let you know who to add - let him know who to add - and also when would be the best time to do so was because of the possibility that, as co-venturers, you and Barclay may wish to become shareholders of the venture company. That's right, isn't it?---No. I did not wish that at all.
HER HONOUR: Can I just ask a question. Mr Nankervis, what's going on with Bandat? I mean Bandat was obviously created by Mr Tonuri - - -?---At some point.
At some point?---Yes.
Its initials are your initials - - -?---Yes.
- - - Mr Barclay's initials - - -?---That's right.
- - - Mr Tonuri's initials, so what's going on with Bandat?---It - - -
- - - as far as you knew at the time?---At the time, he was proposing to - David was unemployed at the time, was proposing to get into property development. And it was a vehicle he created, or an entity he created, to do that with myself and Mr Barclay. He threw several propositions around about joining him in some capacity to do things, and that's what it was about.
All right?---Yes.
And did you - you were - and did you say - I presume this is with your agreement; is that right?---No, I've never agreed to anything.
All right?---Those discussions were - - -
So - sorry, so did you say to him, "Look, I don't want to be involved in something like this with you, and why are you creating a company with our initials as the name of the company?"?---Yes, we - - -
Did you say that?---Yes.
Did you say that to him?---Yes. Yes and - - -
All right. Is that - - -?--- - - - these confirm it.
Is that in evidence somewhere?---Sorry?
Is that in evidence somewhere or?---Yes, yes.
Where is it?---It was in his statement. It was in the court transcripts when he attended on the day that he was giving evidence, or days. So yes. So he made note of that.
All right. And I simply just make the observation that it's a bit - it would be a bit odd for someone who does not expect to be in a business relationship with you to create a company, or have a company incorporated, with - which seems to nominate you, at least in the name of the company, as having an interest?---He thrashed things around probably more with Mr Barclay than me, and I actually probably weren't involved in any detailed conversations, and he moved pretty quickly on all that sort of stuff, yes.
All right. Okay?---Yes.
Thank you.
(transcript 30 September 2014 pp 2040-2042.)
229 Further, in relation to an email from Mr Tonuri dated 1 August 2009 concerning the possible acquisition of a block of land adjacent to Lot 170, Mr Nankervis replied in an email dated 3 August 2009:
David,
I think the opportunity needs to be acted on especially if we are to develop rather than dispose Lot 170. It would be better for us to lodge a new DA as we already have a Negotiated Decision Notice on the existing OA and council would see further changes not as minor ammendments [sic] and would most likely make us start the process again for both.
230 In relation to this email, Mr Nankervis gave the following evidence:
Why did you use the word "we" there?---Because I think this was post him purchasing lot 170, wasn't it, if the dates - what date was that? Yes. And I washelping him, assisting him doing some work for him in a development management sense.
I see?---Yes.
And that's all - that's all you were doing?---Yes.
I see. Why are you saying "If we are to develop rather than dispose of lot 170"? Why didn't you say if you are develop and dispose of lot 107?---Because I always talk about it as a - as a group.
Because you were a group, weren't you?---In a development management sense, I was helping him.
Yes. In splitting the profit sense, you were a group, weren't you?---No.
You refer, "It would be better for us to lodge a new DA as we already have a negotiated decision notice on the existing DA." All throughout this document you are referring to "us" and "we" and "our" aren't you?---Yes. As a development team. Correct.