Jaken Properties Australia Pty Ltd v Naaman [2022] NSWSC 517 | Case summary

Supreme Court of NSW|2020-11-27|Before: Kunc J

J Kelly SC and A Maroya (Plaintiff and Cross-defendants)

Norton Rose Fulbright Australia (Plaintiff and Cross-defendants)

KB Legals Pty Ltd (Defendant and Cross-claimant) File Number(s): 2019/24203 Publication restriction: Nil

Overview

For all the factual and legal complexities over several years, these proceedings are essentially about a creditor of a former trustee seeking to enforce a judgment debt. In this overview, I will identify the parties and the issues, and give a summary of the Court's conclusions. It is intended to help the reader orient themselves before descending into those factual and legal complexities. This overview must be read with, and is not a substitute for, the Court's detailed reasons which follow. For the sake of readability, I will use the various defined terms as they are later set out in these reasons.
Although he is nominally the defendant/cross-claimant, the moving protagonist in these proceedings is Mr Anthony Naaman. Although he is nominally the second cross-defendant, the defending protagonist is Mr Peter Sleiman. The other cross-defendants are Peter Sleiman's brother, Tony Sleiman, and companies associated (using the term loosely) with them or Peter Sleiman's wife, Samantha Sleiman. The most important of these companies is Jaken, which is the trustee of the Sly Fox Trust.
Jaken was not always the trustee of the Sly Fox Trust. The initial trustee was JPG, which is now in liquidation. In 2016, by which time Jaken had succeeded JPG as the trustee of the Sly Fox Trust, Mr Naaman obtained a judgment in this court for $3,446,755.55 against JPG. The Court declared that JPG was entitled to be indemnified for that judgment from the assets of the Sly Fox Trust and that Mr Naaman was subrogated to JPG's right of indemnity.
At all material times, the assets of the Sly Fox Trust have been subject to mortgages to the National Australia Bank (NAB) and the main asset of the Sly Fox Trust has been O'Malley's Hotel, a public house operated on the Kings Cross Property. However, other assets of the Sly Fox Trust have included the Granville Land and the Victorian Properties.
The underlying dispute between the protaganists is that, according to Peter Sleiman, there is little or nothing of the assets in the Sly Fox Trust available after satisfying NAB as a secured creditor to satisfy Mr Naaman's judgment debt. Mr Naaman says that to the extent that may be the Sly Fox Trust's position, it has been brought about by Peter Sleiman over a number of years directly or indirectly causing Jaken to enter into impermissible transactions including the transfer of the Granville Land and the Victorian Properties, and Jaken increasing its secured indebtedness to NAB by the $3.6 Million Drawdown (the Impugned Transactions).
By the end of the hearing, it was clear that Jaken's summons had no work to do. It sought a declaration about the ownership of the King's Cross Property that Jaken conceded was based on a wrong premise. It also sought the removal of a caveat lodged by Mr Naaman over the Kings Cross Property which Jaken ultimately accepted Mr Naaman had a caveatable interest to maintain.
The case really became about the relief sought in Mr Naaman's amended cross-claim. The Court has concluded that, in general, the various cross defendants are liable in equity, as Mr Naaman contended. However, not least because NAB has appointed a receiver to the Kings Cross Property and O'Malley's Hotel the quantification of that liability will have to be reserved for further consideration.
The Court's conclusions may broadly be summarised as: 1. As a former trustee of the Sly Fox Trust, JPG is entitled to indemnity for Mr Naaman's judgment debt from the assets of the Sly Fox Trust. That entitlement is given effect by an equitable lien over the assets of the Sly Fox Trust and confers a proprietary interest in those assets from time to time on JPG. 2. As the successor trustee of the Sly Fox Trust, Jaken owes a fiduciary duty to JPG not to deal with the assets of the trust in a way which destroys, diminishes or jeopardises JPG's right of indemnity from those assets. 3. Mr Naaman is subrogated to JPG's right to enforce that fiduciary duty owed by Jaken to JPG. 4. While Tony Sleiman was the nominal director of Jaken, Peter Sleiman was the de facto and shadow director of Jaken and the architect of the Impugned Transactions. 5. Each of the Impugned Transactions was undertaken with the intention, or at least had the effect, of destroying, diminishing or jeopardising JPG's right of indemnity from the assets of the Sly Fox Trust and, among other things, is liable to be set aside (subject to the rights of secured creditors) pursuant to s 37A of the Conveyancing Act 1919 (NSW) or, in the case of the Victorian Properties, its Victorian equivalent). 6. The transfer of the Granville Land to Superior (a company controlled by Peter Sleiman's wife, Samantha Sleiman) for no apparent commercial purpose and no consideration gives rise to liability on various bases to JPG enforceable by Mr Naaman in Jaken, Peter Sleiman, Tony Sleiman and Superior. 7. The transfer of the Victorian Properties to PSJK, also a company controlled by Samantha Sleiman, for no apparent commercial purpose and no consideration gives rise to liability on various bases to JPG enforceable by Mr Naaman in Jaken, Peter Sleiman, Tony Sleiman and PSJK. 8. The $3.6 Million Drawdown for no apparent commercial purpose and no consideration, insofar as it increased Jaken's liability to NAB as a primary debtor and involved paying away $3.6 million to Powerhouse, gives rise to liability on various bases to JPG enforceable by Mr Naaman in Jaken, Powerhouse, Peter Sleiman and Tony Sleiman. 9. Furthermore, the $3.6 Million Drawdown was in breach of certain consent freezing orders made by Rein J. However, Mr Naaman's action for tortious interference with the contract underlying those consent orders fails for want of proof of damage. 10. Peter Sleiman and Tony Sleiman are not liable to Mr Naaman under the Corporations Act 2001 (Cth) for his judgment debt.
The parties' agreed a set of questions for the Court's determination. These appear at the end of these reasons with summary answers.
Mr J Kelly of Senior Counsel appeared with Mr A Maroya of Counsel for the plaintiff and cross-defendants. Mr P Afshar of Counsel appeared with Ms N Wootton of Counsel for the defendant and cross-claimant.

Structure of these reasons

These reasons are divided into the following sections and page numbers: 1. Overview [3] to [6]; 2. Structure of these reasons [6] to [7]; 3. Relevant persons and definitions [7] to [10]; 4. Facts [10] to [58]; 5. Some common ground [58] to [60]; 6. Peter Sleiman's credit and his role as a de facto and shadow director [60] to [73]; 7. Jaken's other witnesses [73]; 8. Jaken's absent witnesses [73]; 9. Mr Naaman's witnesses [73]; 10. Some impugned documents [74] to [88]; 11. Mr Naaman's standing [88] to [104]; 12. Other applicable legal principles [104] to [109]; 13. The transfer of the Granville Land [109] to [117]; 14. The $3.6 Million Drawdown [117] to [131]; 15. The Victorian Properties [131] to [141]; 16. The business of O'Malley's Hotel [141] to [142]; 17. Liability under the Corporations Act [142] to [144]; 18. Conclusions [144] to [145]; 19. Agreed questions and the Court's answers [145] to [154].

Relevant persons and definitions

The persons relevant to these proceedings are: 1. Anthony Naaman (Defendant/Cross-claimant). 2. Three brothers and two sisters: 1. Peter Sleiman (Second Cross Defendant); 2. Tony Sleiman (Third Cross Defendant); 3. George Sleiman; 4. Najette Michael; and 5. Hilda Saab. 1. Samantha Sleiman or Samantha Panetta (Peter Sleiman's wife). 2. Ashleigh Panetta or Ashleigh Sleiman (Peter Sleiman's daughter). 3. Jake Sleiman (Peter Sleiman's son). 4. Tony Ghalbouni (married to Hilda Saab), and their children: 1. Rita Saab; and 2. Raymond Saab. 1. Tony Michael (married to Najette Michael), and their daughters (Peter Sleiman's nieces): 1. Angela Michael or Angela Siviero, married to Daniele Siviero; and 2. Alissia Michael. 1. Chris Saab (Peter Sleiman's nephew, son of Hilda Saab). 2. Stefano Laface, a solicitor. 3. Evan Spiegel, a person the Court is satisfied was a fiction. 4. Joe Nasr, a solicitor.
In these reasons: 1. 'JPG' means Jaken Property Group Pty Ltd and for the period after 28 February 2007 Jaken Property Group Pty Ltd (In Liquidation). 2. 'Jaken' means Jaken Properties Australia Pty Ltd (Plaintiff/First Cross Defendant). 3. 'First O'Malley's' means ACN 150 830 087 (formerly known as O'Malley's Hotel Pty Ltd ACN 150 830 087). 4. 'Second O'Malley's' means O'Malley's Hotel Pty Ltd 608 025 636 (Fifth Cross Defendant). 5. 'Powerhouse' means Powerhouse Corporation Pty Ltd. 6. 'First Logan Fox' means Exclusive Sports Management and Fitness Pty Ltd (formerly known as Logan Fox Lawyers Pty Ltd). 7. 'Second Logan Fox' means Logan Fox Lawyers Pty Ltd ACN 161 353 153. 8. 'Kingsht' means Kingsht Pty Ltd (formerly known as Kings Head Tavern Pty Ltd). 9. 'Stallones' means Stallones Group Pty Ltd. 10. 'Superior' means Superior Family Investments Pty Ltd (Fourth Cross Defendant). 11. 'PSJK' means PSJK Holdings Pty Ltd. 12. Any other company not referred to above will be described by its full company name.

The facts

What follows are the Court's findings of fact based upon public records and contemporaneous documents.
On 28 November 2003, Jaken Group Pty Ltd (Jaken Group) was registered.
On 18 December 2003, Jaken Property Group Pty Limited (JPG) was registered. It was originally known as Sleiman Property Group Pty Limited. At various times its sole director and secretary has been Najette Michael, Peter Sleiman and Raymond Saab.
On 2 February 2005, Stallones Group Pty Limited (Stallones) and Powerhouse Corporation Pty Ltd (Powerhouse) were registered.
By a discretionary trust deed made on 21 June 2005, the Sly Fox Family Trust (Sly Fox Trust) was settled with JPG as trustee. Peter Sleiman was noted in the schedule as the specified beneficiary, the default beneficiary and appointor.
By discretionary trust deed made on 23 June 2005 (upon which duty was paid on 28 June 2005), the PeteJake Family Trust (PeteJake Trust) was settled with Powerhouse as trustee. Mr Peter Sleiman was recorded in the schedule to that deed as the specified beneficiary, default beneficiary and appointor.
On 1 July 2005, Sleiman Property Group Pty Ltd changed its name to JPG. Peter Sleiman was the sole director and secretary of JPG between March 2004 and January 2006.
On 15 July 2005, JPG entered into a Deed of Guarantee and Restraint with Mr Naaman, from which the parties' dispute arose.
By transfer dated 24 August 2005 and registered on 30 August 2005, Unit 261 and Unit 191 at X Cavanagh Street, Southbank in Melbourne were transferred to JPG for $640,000 (Victorian Properties).
By mortgage dated 24 August 2005 and registered on 30 August 2005, JPG granted a mortgage over the Victorian Properties to St George Bank Limited (St George).
By contract dated 7 October 2005, JPG purchased the property at X William Street, Kings Cross (Kings Cross Property) and the plant, goodwill and licences of the O'Malley's Hotel which was located on the Kings Cross Property. The purchase price for the Kings Cross Property was $8,900,000.
On 29 November 2005, JPG's purchase of the Kings Cross Property settled.
By mortgage dated 29 November 2005, JPG granted a mortgage over the Kings Cross Property to St George.
Also on 29 November 2005, JPG granted a fixed and floating charge to St George to secure a maximum amount of $17,000,000. The property charged was "all of JPG's rights, property and undertaking of whatever kind, wherever situated whether present or future including all [JPG's] right, title and interest in all licences, liquor licences and gaming machine entitlements (as defined in the charge) held by [JPG] in respect to the businesses known as O'Malley's Hotel and all [JPG's] rights of indemnity as trustee of the Sly Fox Family Trust".
By contract dated 14 February 2006, JPG (recorded on the face of the contract as acting in its capacity as trustee for the Sly Fox Trust) agreed to purchase a property at X Cowper Street, Granville for $750,000 (Granville Land).
JPG's purchase of the Granville Land settled on 5 April 2006. By mortgage of that date, JPG mortgaged the Granville Land to St George.
In August 2006, JPG commenced proceedings in the Equity Division of this Court against Mr Craig Wheeler and Mr Naaman (First 2006 Proceeding).
In the course of the First 2006 Proceeding, on 11 August 2006, orders were made that JPG should pay Mr Naaman's costs in relation to a notice of motion which the Court infers sought injunctive relief against Mr Wheeler and Mr Naaman.
On 18 August 2006, Bergin J (as her Honour then was) made orders to give effect to JPG discontinuing the First 2006 Proceeding by consent. The orders made on that day included: "4. The defendants expressly reserve their rights to bring proceedings against the plaintiff or any other party arising out of the facts or circumstances alleged in these proceedings including, and without limitation, to bring a claim for damages and/or other relief for breach by the plaintiffs of the Share Sale Agreement entered into on or around July 15, 2005, Deed of Guarantee and Restraint entered into on or around July 15, 2005 and a Services Agreement entered into on or around July 15, 2005. The parties expressly agree that the doctrine of anschun estoppel does not apply. 5. The plaintiffs expressly reserve their rights to bring proceedings against the defendants or any other party arising out of the facts or circumstances alleged in these proceedings including, and without limitation, to bring a claim for damages and/or other relief for breach by the defendants' of the Share Sale Agreement entered into on or around July 15, 2005, Deed of Guarantee and Restraint entered into on or around July 15, 2005 and a Services Agreement entered into on or around July 15, 2005. The parties expressly agree that the doctrine of anschun estoppel does not apply."
Sometime between August and December 2006, Mr Naaman lodged an application for the assessment of his costs of the First 2006 Proceeding.
By statement of claim dated 6 November 2006, Mr Naaman commenced proceedings in the Common Law Division of this Court against JPG for judgment in the sum of $2,000,000 relying upon, among other things, the Deed of Guarantee and Restraint (Mr Naaman's Common Law Proceedings). JPG did not file a defence to those proceedings.
On 12 January 2007, Jaken Properties Australia Pty Ltd (Jaken) was registered with Mr Tony Sleiman as its sole director, secretary and shareholder.
Also on 12 January 2007, a change to company details form in respect of JPG was filed. According to the form, nearly one year earlier on 16 January 2006 Peter Sleiman had resigned as a director of JPG in favour of his nephew Mr Raymond Saab, and as at the same date Mr Sleiman had purportedly transferred the one share in JPG from himself to Mr Saab.
Peter Sleiman accepted in cross-examination that the reference to 16 January 2006 in the form was a back dating. Furthermore, the form recorded Mr Saab as having signed it on 11 August 2006, which was the date on which the costs order had been made against JPG in favour of Mr Naaman. This was the first of a number of examples of corporate events occurring at or about the time of significant litigation events.
By a deed of appointment made on 13 February 2007 between JPG, Jaken and Peter Sleiman, JPG retired as trustee of the Sly Fox Trust in favour of Jaken. The deed included: "1.3 Discharge of Retiring Trustee On and from the date of this deed the Retiring Trustee is discharged from further performance of its obligations and duties as trustee of the Trust. 1.4 Assignment of Trust's debts The Retiring Trustee must give notice to each person or entity owing moneys to the Retiring Trustee as trustee of the Trust and do all such things as may be necessary for the assignment to the New Trustee of any debt or chose of action. 1.5 Indemnity The New Trustee indemnifies the Retiring Trustee against all debts which the Retiring Trustee has incurred and which are unpaid at the time of execution of this deed by all parties, while acting under and in terms of the Trust Deed and undertakes and agrees that the New Trustee will pay and discharge all such debts out of the assets of the Trust in accordance with the terms of credit or otherwise under which such debts were incurred."
By transfer dated 13 February 2007 (but not registered until 5 February 2008), the Victorian Properties were transferred from JPG to Jaken.
On 14 February 2007, JPG's solicitor, Mr Joe Nasr then of CPC Lawyers, wrote to Mr Naaman's lawyers (KB Legals) indicating that they no longer acted for JPG in relation to Mr Naaman's Common Law Proceedings. On the same day, JPG's lawyers also wrote to the costs assessor in relation to the costs of the First 2006 Proceedings confirming they no longer acted for JPG in relation to that matter.
On 25 February 2007, a costs assessment was issued against JPG in favour of Mr Naaman for $19,012.98 for his costs of the First 2006 Proceeding and $5,771.99 for the costs of the costs assessment.
On 27 February 2007, Mr Christopher Darin was appointed liquidator of JPG in a voluntary winding up by creditors. In a report as to affairs of the same date prepared by Raymond Saab, the only asset or liability recorded was a $2,500 unsecured debt described as admitted as owing to Kostas Augerinos and Associates. That firm had been the Sleiman family accountants and Mr Augerinos was the settlor of the Sly Fox Trust.
The winding up of JPG had the result that Mr Naaman's Common Law Proceedings were stayed.
On 6 March 2007, the Court's manager of costs assessment sent the certificate of determination of Mr Naaman's costs in the First 2006 Proceeding to the parties.
On 29 March 2007, Mr Naaman lodged a caveat over the Kings Cross Property and the Granville Land. The caveat did not specify the nature of the estate or interest in the land, but specified that it was by virtue of "an agreement between the Caveator and the Registered Proprietor [JPG] under which the Registered Proprietor agreed to charge its rights to and interest in the land".
By letter dated 10 May 2007, CPC Lawyers (who had previously acted for JPG) informed Mr Naaman's solicitors that they now acted on behalf of Jaken as the trustee of Sly Fox Trust.
On 1 June 2007, Mr Darin as liquidator of JPG lodged a caveat over the Kings Cross Property and the Granville Land. The interest claimed was as either owner or chargee: "1. The Caveator is the registered proprietor and is beneficially entitled to the land, or in the alternative, 2. The Caveator is a trustee of the land and is entitled to a charge over the Land to the extent of its indemnity for any liabilities incurred by the Caveator in its capacity as trustee."
Between 17 April 2007 and 13 June 2007 there was correspondence between Mr Naaman's solicitors, Mr Darin and Jaken's solicitors in relation to lapsing notices that had been issued by Jaken in relation to the caveat that had been lodged by Mr Darin.
In its tax return for the year ended 30 June 2007, the Sly Fox Trust represented that it had a total income of $1,800,940 and gross assets of $13,684,438, describing its main business activity as "renting/leasing of non-res prop as owner/leaseholder".
In its tax return for the year ended 30 June 2007, Stallones recorded its business address as that of O'Malley's Hotel, described its main business activity as "Hotel operation mainly drinking place", that it paid rent of $900,000 and had a gross income of $3,813,308.
On 11 February 2008, Peter Sleiman made a statutory declaration in which he stated that the Kings Cross Property and the Granville Land were properties of the Sly Fox Trust.
On 9 April 2008, a hotelier's licence was issued to Galea Jamie Percival in respect of O'Malley's Hotel.
On 30 April 2008, Tony Sleiman as the sole director of Jaken in its capacity as trustee of the Sly Fox Trust, gave written undertakings to Mr Darin not to encumber further the Granville Land and O'Malley's Hotel in return for Mr Darin's consent as liquidator of JPG to register Jaken as the registered proprietor for the properties of the Sly Fox Trust. Mr Darin's consent was given on 1 May 2008.
In its annual report for the year ended 30 June 2008, the Sly Fox Trust represented that it had: 1. received rent of $992,000 and owned land and buildings to the value of $13,565,827; and 2. gross income of $1,021,360 and declared that it had total assets of $14,478,361.
In its annual report for the year ended 30 June 2008, Stallones reported that it paid $900,000 in rent. In its tax return for the same period, Stallones also reported that it had paid rent of $900,000 and that it had generated gross income of $3,968,430.
In its annual report for the financial year ended 30 June 2008, the PeteJake Family Trust (of which Powerhouse was trustee) represented the value of the Kings Head Tavern to be $15,586,113. In its tax return for the same period, the PeteJake Family Trust recorded total assets of $17,234,207.
On 15 September 2008, PSJK Holdings Pty Ltd (PSJK) was incorporated with Peter Sleiman as its sole director, secretary and shareholder.
On 9 October 2008 (and subsequently relodged after payment of duty), applications to record Jaken as the new registered proprietor of the Granville Land and the Kings Cross Property were lodged, after which title to those properties was transferred to Jaken as trustee for the Sly Fox Trust.
On 29 October 2008, Jaken applied to lapse JPG's caveat (filed by its liquidator Mr Darin) from the Kings Cross Property and the Granville Land.
On 5 November 2008, Mr Darin's solicitors wrote to Mr Naaman's solicitors, including: "In accordance with our client's undertaking to you, you are hereby notified that my client was served today with a Notice of Lapsing Caveat. If no application is made to extend the caveat, the liquidator's caveat will lapse. My client does not have funds to make that application. It is unlikely he will be in a position to make an application, unless your client funds the application, and provide the necessary security to indemnify my client. The application has to be made urgently, if it is to be made at all."
No application to extend Mr Darin's caveat over the Kings Cross Property and the Granville Land was ever made, so that the caveat lapsed.
On 17 March 2009 at 2.18pm, Stefano Laface of HPL Lawyers purportedly emailed Peter Sleiman saying "When did you want me to come over, this afternoon or tomorrow morning?". The subject line was Sly Fox Deed. Mr Sleiman purportedly replied by email on the same date at 4.46pm "Morning mate say 10.00am on Friday I'm flat chat next couple of days". I have used the word "purportedly" because these emails were only located by Peter Sleiman in September 2019 and were tendered in Jaken's case to corroborate the authenticity of the deed referred to in the next paragraph. The authenticity of these emails was not accepted by Mr Naaman.
On 20 March 2009, a deed of variation of discretionary trust deed was purportedly entered into in relation to the Sly Fox Trust by Jaken as trustee, Peter Sleiman as the resigning appointor and Tony Sleiman as the new appointor, with amendments to the Sly Fox Trust including to change the specified beneficiaries and default beneficiaries from Peter Sleiman to Tony Sleiman. This purported deed of variation had never been produced to Mr Naaman until it was provided by Jaken's solicitor on 5 September 2019.
On 17 April 2009, Mr Scott Robertson prepared a valuation for St George of the freehold and business of O'Malley's Hotel as a going concern for first mortgage purposes of $15,250,000.
In its annual report for the year ended 30 June 2009, the Sly Fox Trust represented it had property assets valued at $14,565,827 and received rent in the sum of $992,000.
In its tax return for the year ended 30 June 2009, the Sly Fox Trust declared that it had received gross business income of $992,200 and that its total assets were valued at $15,922,333.
In its annual report for the year ended 30 June 2009, Stallones represented that it had paid rent of $900,000.
In its tax return for the year ended 30 June 2009, Stallones represented that it had received gross total income of $3,778,870 and that it had paid rent of $900,000.
In its annual report for the year ended 30 June 2009, the PeteJake Family Trust represented that the value of the Kings Head Tavern was $18,318,310.
In its tax return for the year ended 30 June 2009, Powerhouse as trustee of the PeteJake Family Trust represented that it had total assets to the value of $19,763,158.
By statement of claim filed in this division of the Court on 6 July 2009, Mr Naaman commenced proceedings against Peter Sleiman and Jaken as trustee of the Sly Fox Trust seeking, among other things, judgment against Jaken as trustee for the Sly Fox Trust in the sum of $2,000,000 (2009 Proceeding).
On 28 October 2009, Joe Nasr (now describing himself as corporate legal counsel of Jaken) served on Mr Naaman's solicitors a sealed copy of Jaken's defence in the 2009 Proceeding.
By letter dated 23 December 2009, Mr Naaman's solicitors notified Peter Sleiman and Jaken of the categories for discovery that were sought in the 2009 Proceeding, including documents in relation to the change of trustee for the Sly Fox Trust.
On 8 February 2010, Peter Sleiman was replaced as sole director, secretary and shareholder of PSJK by his wife Samantha Sleiman.
In its annual report for the year ended 30 June 2010, the Sly Fox Trust represented that it held land and buildings to the value of $14,565,827 and that it had received rent of $992,000.
In the Sly Fox Trust's financial report for the year ended 30 June 2010 signed by Tony Sleiman, the trust represented that it held property, plant and equipment to the value of $15,231,031 and that it had received revenue in the sum of $998,002.
In the Sly Fox Trust's tax return for the year ended 30 June 2010 signed by Tony Sleiman, the trust declared that it had received business income of $997,940 and that the value of its total assets was $15,739,541.
In its annual report for the year ended 30 June 2010, Stallones represented that it paid rent of $900,000 and that its gross sales income was $4,564,852.
In its financial report for the year ended 30 June 2010, signed by Peter Sleiman, the PekeJake Family Trust reported that it owned land and buildings to a value of $18,933,512.
It its annual report for the year ended 30 June 2010, the PeteJake Family Trust represented that the value of the Kings Head Tavern was $18,308,810.
Shortly after 14 July 2010, Mr Naaman received a lapsing notice in respect of his caveat over the Kings Cross Property.
By letter dated 17 September 2010, the Commonwealth Bank wrote to Peter Sleiman to inform him that the bank refused his loan application to refinance moneys owed by various trusts including the PeteJake Family Trust and the Sly Fox Trust. The letter included "As discussed, given the outstanding litigation involving AVS [AVS Group of Companies Pty Ltd], and potential reputation and commercial impacts, we are unable to consider the application further."
By email dated 22 September 2010, Stefano Laface (the solicitor for the defendants in the 2009 Proceeding) served a verified list of documents in response to Mr Naaman's discovery categories. The list was verified by an affidavit of 22 September 2010 sworn by Peter Sleiman in his own right and by Tony Sleiman as a director of Jaken.
By a deed of variation of discretionary trust purportedly made on 30 September 2010 between Peter Sleiman Investments Pty Limited and Peter Sleiman, the Sleiman Family Trust Deed (originally entered into in 1999) was purportedly amended by deleting Peter Sleiman as the primary beneficiary and replacing him with his brother George Sleiman.
By a deed of variation of discretionary trust purportedly made on 15 October 2010 between AVS Group Australia Pty Ltd and Tony Sleiman, the AVS Group Australia Trust (originally entered into in 2006) was varied in relation to its revocation and amendment provisions.
By a deed of variation of discretionary trust purportedly made on 15 October 2010 between Jaken as trustee and Tony Sleiman, the trust deed for the Sly Fox Trust was purportedly amended by changing the definition of general beneficiaries to include the specified beneficiaries, their spouse and descendants.
By its tax return for the year ended 30 June 2010, apparently completed on 21 September 2011, the PeteJake Family Trust declared that it had total assets of $19,054,988.
On 24 November 2010, Peter Sleiman met with Tony Owen of Owen Property Valuations Pty Limited in relation to the valuation of the Kings Cross Property and the Kings Head Tavern.
On 29 November 2010, Peter Sleiman met again with Mr Owen in relation to the valuation of the Kings Cross Property and the Kings Head Tavern.
On 1 December 2010, Mr Owen emailed Peter Sleiman a tax invoice for an upfront fee of $2,200 "to provide indicative verbal valuations on the two hotels" [O'Malley's Hotel and the Kings Head Tavern]. The evidence included a tax invoice of $1,100 addressed to Stallones c/- O'Malley's Hotel for "part valuation fee O'Malley's Hotel, XXX William Street, Kings Cross". Although not in evidence, the Court assumes that there was an invoice in the same amount in respect of the upfront fee for the Kings Head Tavern valuation because Mr Owen's covering email refers to a total of $2,200.
On 3 December 2010, Mr Owen emailed Ms Louise Keenan of the National Australia Bank (NAB) saying that he had not yet received from Peter Sleiman the information which he (Mr Owen) had requested to enable him to undertake the valuations.
On 15 December 2010, Mr Owen emailed Peter Sleiman that "to undertake a valuation that will be relied on for first mortgage security purposes I would require the full Financial Statements for Stallones Group Pty Ltd and Jakes Place Pty Ltd, prepared by your external accountants for tax reporting purposes for the financial years 2007/2008, 2008/2009 and 2009/2010".
As at 31 December 2010, a St George statement of account for "Jaken Property Group atf the Sly Fox Family Trust" on the maturity of a bank bill shows that JPG owed St George $8,250,000.
By deed dated 17 February 2011 between Powerhouse as trustee and Peter Sleiman as the appointor, the PeteJake Family trust was varied to include a definition of general beneficiaries which included the specified beneficiary or their descendants.
In April 2011, Kings Head Tavern Pty Ltd (Kingsht) replaced Jakes Place Pty Ltd as the operator of the Kings Head Tavern.
On 10 May 2011, O'Malley's Hotel Pty Ltd (First O'Malleys) was registered with Peter Sleiman as its sole director, secretary and shareholder and then replaced Stallones as the operator of O'Malley's Hotel.
Acting on the instructions of Peter Sleiman, on 18 May 2011 Scott Robertson valued the freehold and business as a going concern of O'Malleys Hotel at $14,500,000, the purpose of the valuation being recorded as "First Mortgage".
On 2 June 2011, Peter Sleiman ceased to be a director of First O'Malleys and Tony Sleiman was appointed as a director and received Peter Sleiman's one share in the First O'Malleys.
On 17 June 2011, Jaken purportedly leased the Kings Cross Property to First O'Malley's for ten years commencing on 20 June 2011 at a base rent commencing at $300,000 per annum plus GST. For the reasons set out in [318] to [321] below, this lease could not possibly have been entered into on the date it bears.
In its annual report for the two months ended 30 June 2011, First O'Malleys recorded that it paid rent in the amount of $90,000 (equivalent to $540,000 per annum).
In its profit and loss statement for the two months to 30 June 2011 that was provided by First O'Malleys to NAB (being a document dated 22 September 2011), First O'Malleys represented that it had total income of $737,095.94 and that it had paid rent of $150,000 (being $900,000 per annum).
In its balance sheet for the year ended 30 June 2011 that was provided to NAB, Powerhouse as trustee of the PeteJake Family Trust represented the value of its land and equipment to be $18,933,512.
On 6 July 2011, a St George account styled JPG atf the Sly Fox Family Trust received "settlement proceeds" of $970,921.35.
On 13 October 2011, Peter Sleiman lodged an ASIC change to company details form noting the appointment of Tony Ghalbouni as director and secretary of Stallones with effect from 18 February 2011.
Also on 13 October 2011, Tony Ghalbouni purportedly lodged an ASIC change to company details form noting the cessation of Peter Sleiman as a director and secretary of Stallones with effect from 18 February 2011.
By letter dated 17 October 2011, NAB wrote to Jaken as trustee of The Sly Fox Trust and Jaken in its own right enclosing a letter of offer to Jaken as trustee of the Sly Fox Trust for a facility of up to $8,750,000 with an expiry date of 31 December 2014.
By a report dated 18 October 2011, Scott Robertson issued a valuation to NAB of the O'Malley's Hotel freehold and business as a going concern of $14,500,000.
NAB's offer was accepted on behalf of Jaken on 26 October 2011 by Tony Sleiman.
On 21 October 2011, NAB also sent an offer of finance to Powerhouse as trustee for the PeteJake Trust for a facility of up to $13,250,00 with an expiry date of 31 December 2014. This was accepted by Peter Sleiman on 26 October 2011.
By a declaration made on 26 October 2011, Tony Sleiman confirmed to NAB on behalf of Jaken as trustee of the Sly Fox Trust that the full unencumbered market value of its property was $18,000,000. Tony Sleiman made a similar declaration insofar as NAB had approved finance for Powerhouse as trustee of the PeteJake Trust.
On 26 October 2011, Jaken as trustee for the Sly Fox Trust instructed NAB to draw down and disperse $8,750,000, nearly all of which was to be applied to pay out the St George loan to Jaken.
By deed of guarantee and indemnity signed by both Tony Sleiman and Peter Sleiman on 27 October 2011, various persons and entities including Peter Sleiman, Tony Sleiman, Powerhouse, First O'Malley's and Kingsht guaranteed Jaken's loan from NAB to the limit of $8,750,000. That limit never changed.
By another deed of guarantee and indemnity also dated 27 October 2011, Jaken and other parties including Peter Sleiman, Tony Sleiman, First O'Malley's and Kingsht, guaranteed the NAB loan to Powerhouse to the limit of $13,250,000.
St George's mortgage over the Kings Cross Property was discharged on 31 October 2011.
On 22 November 2011, NAB's mortgage was registered over the Kings Cross Property and the Granville Land.
On 7 March 2012, Superior Family Investments Pty Ltd (Superior) was incorporated with Samantha Panetta (Peter Sleiman's wife) as the sole director, secretary and shareholder.
On 7 March 2012, a deed of variation for the Superior Family Investments Trust (apparently created by deed of the same date) was purportedly entered into to vary the identity of the general beneficiaries.
On 4 April 2012, Peter Sleiman sent the financial statements for First O'Malley's and the Kingsht for the two months ended 30 June 2011 to NAB.
On 12 April 2012, Peter Sleiman sent the financial statements for Kingsht for the 9 months ended 31 March 2012 and for First O'Malley's for the nine months ended 31 March 2012 to NAB.
On 7 May 2012, a valuation obtained on the instructions of NAB valued the Granville Land at $700,000. The valuation noted that the land had been purchased on 26 March 2012 for $1,500,000. The purpose of the valuation was "first mortgage security purposes" and Superior was referred to as the applicant.
On 11 May 2012, Tony Sleiman ceased to be a director of First O'Malley's.
In its trading profit and loss statement for the year ended 30 June 2012 provided to NAB, First O'Malley's recorded that it had paid rent in the sum of $720,000.
On 23 August 2012, the Victorian Properties were transferred from Jaken to PSJK for recorded consideration on the face of the transfer of $500,000.
On 6 September 2012, the St George home loan to Jaken in respect of the Victorian Properties was paid out in the sum of $451,261.21.
By motion filed on 28 September 2012, Peter Sleiman and Jaken applied for Mr Naaman's statement of claim in the 2009 Proceedings to be summarily dismissed. By letter of the same date, Mr Naaman's solicitors sought an explanation from Peter Sleiman's solicitors as to the basis of the application.
On 5 October 2012, Jaken's mortgage to NAB over the Granville Land was discharged and the Granville Land was transferred to Superior for a consideration of $500,000.
On 8 October 2012, a mortgage apparently executed on 24 July 2012 over the Granville Property to NAB from Superior was registered and stamped as securing up to $6,015,000.
On 22 November 2012, Logan Fox Lawyers Pty Ltd (First Logan Fox) was registered with Samantha Panetta and Charles Parisi as its founding directors.
On 5 December 2012, Charles Parisi of Parisi Lawyers, who had been acting for Peter Slieman and Jaken, sought to explain the basis of the notice of motion referred to in [125] above.
On 6 December 2012, Mr Naaman's lawyers responded to Parisi Lawyers including that they may be instructed to seek leave to proceed against JPG, which would entail the re-registration of that company.
On 14 March 2013, Black J made orders in the 2009 Proceeding reinstating the registration of JPG and appointing Mr Mark Cooper as its liquidator. His Honour also made directions for Mr Naaman to file a motion for leave to commence proceedings against JPG.
On 19 March 2013, Peter Sleiman sent financial reports for First O'Malley's and other companies for the six months ending 31 December 2012 to NAB.
On 9 May 2013, Stallones was voluntarily wound up and Mr Ozem Kassem was appointed as its liquidator.
On 10 May 2013, Black J made these orders by consent in the 2009 Proceeding: "1. The plaintiff [Mr Naaman] is granted leave to file the amended statement of claim … to join Jaken Property Group Pty Ltd (in liquidation) as a defendant. 2. Leave is granted to the plaintiff to proceed against Jaken Property Group Pty Ltd (in liquidation) … 2A That no step be taken to enforce judgment against Jaken Property Group Pty Ltd (in liquidation) without leave of the Court. 3. The defendants' [Jaken as trustee for the Sly Fox Trust and Peter Sleiman] notice of motion filed 28 September 2012 be dismissed."
In its annual report for the year ended 30 June 2013 that was provided to NAB, the Sly Fox Trust represented that it held property to the value of $15,065,827 and received rent in the sum of $1,353,258.
In its annual report for the year ended 30 June 2013 that was provided to NAB, First O'Malley's represented that it had paid rent in the sum of $720,000 and that its income had increased from $4,028,797 to $4,064,383.
The annual report for the PeteJake Family Trust for the year ended 30 June 2013 represented the value of the Kings Head Tavern to be $18,308,810.
On 25 July 2013, NAB wrote to Jaken (addressed to Tony Sleiman) stating that the facility limit for its loan to NAB was $8,400,000 and gave notice of a revised interest rate.
A record of the Independent Liquor and Gaming Authority for the liquor licence details for O'Malley's Hotel as at 11 October 2013 records the business owner as First O'Malley's and the premises owner as Jaken.
By letter dated 26 November 2013 addressed to Peter Sleiman of the "AVS Group of Companies", Mr Christopher Batten advised that various properties held on trust should each be the subject of a "Deed of Declarations" so that each would become held by a fixed unit trust. The advice records that it "is provided solely for the use of Mr Peter Sleiman".
In the annual report for the six months ended 31 December 2013 for First O'Malley's that was provided to NAB, it was represented that the company had paid rent in the amount of $360,000 and that its gross income was $2,303,608.
On 3 March 2014, Pembroke J determined part of the 2009 Proceeding by entering judgment against JPG in the sum of $2,000,000 together with interest for the period from July 2006 to March 2014 in the sum of $1,291,246.58 and ordered JPG to pay Mr Naaman's costs. His Honour adjourned the balance of the proceedings "with the intention that the claim against Peter Sleiman and [Jaken as trustee for the Sly Fox Trust] proceed on another date".
By letter dated 10 March 2014, the solicitors for the liquidator of JPG wrote to First Logan Fox (who were acting for Peter Sleiman and Jaken), referred to Pembroke J's judgment and said: "Our client in his capacity as the liquidator of the former corporate trustee of the Sly Fox Family Trust, demands that your client, Jaken Properties Australia Pty Ltd, the new trustee, indemnify and discharge our client's costs of liquidation and judgment out of the Trust assets, pursuant to our client's right of indemnity set out at 1.5 of the Deed of Appointment dated 13 February 2007. Our client has lodged the attached caveat .. over the Trust asset, being the property at XXX William Street, Kings Cross, …, pursuant to our client's equitable right of interest over the land arising from the former trustee's right of interest over the land arising from the former's trustee's right of indemnity. Unless your client is able to discharge the costs of liquidation and judgment, or make arrangements for their satisfaction by 27 March 2014, we will obtain our client's instructions in respect of seeking to enforce that indemnity."
On 11 March 2014, the liquidator of JPG registered a security interest over all present and after acquired property of Jaken on the Personal Property Securities Register.
On 12 March 2014, the caveat lodged by the liquidator of JPG over the Kings Cross Property was registered.
By notice of motion filed on 17 March 2014 in the 2009 Proceeding, Peter Sleiman and Jaken sought to set aside Pembroke J's judgment against JPG.
By notice of motion filed on 27 March 2014, Mr Naaman brought an application in the 2009 Proceeding for restraining and freezing orders against Jaken in relation to the Kings Cross Property.
On 7 April 2014, Mr Andrew Soo of NAB emailed Peter Sleiman confirming the loan balances of Jaken as trustee for the Sly Fox Trust as $8,400,000 and Powerhouse as trustee for the PeteJake Family Trust as $10,900,000. The email urgently sought various financial information.
On 14 April 2014, a caveat by Mr Naaman over the Kings Cross Property was registered, claiming a right of subrogation to JPG's right of indemnity against Jaken.
By summons filed on 8 May 2014, Jaken commenced proceedings against JPG and Mr Naaman for the removal of their respective caveats over the Kings Cross Property.
On 16 May 2014, Joe Nasr (describing himself as managing director and corporate legal counsel of Jaken) emailed Mr Phil Rennie of Phil Rennie Valuations: "Peter Sleiman has provided your email as well as discussed the need for us to obtain the valuation/market appraisal for O'Malley's Hotel at XXX William Street Woolloomooloo [Peter Sleiman denied this in the course of his evidence]. Attached is a copy of the current lease. Please note that the owner of the property is Jaken Properties Australia Pty Limited in its capacity as trustee. The owner owns the land and the building. Please note that for the purposes of the valuation this is all we require valued. Please exclude the business, Hotel Licence, Poker Machine Entitlements and the Fitout as these are not owned by us and owned by a third party that operates the business from the Premises. Please let me know if there is anything else you require. Your urgent assistance in this matter would be appreciated."
By email dated 16 May 2014, Mr Rennie sought further information from Mr Nasr in relation to O'Malley's Hotel. Mr Nasr provided that information to Mr Rennie by email dated 19 May 2014.
On 21 May 2014, Mr Rennie issued a valuation as at that date of $4,500,000 as the "current market value of the lessor's interest" in O'Malley's Hotel: "the interest being valued as the encumbered fee simple subject to the existing tenancy, of the real estate only, excluding the hotelier's licence and attached poker machine entitlements, the business/good will (for the remaining lease term), lessee's plan, equipment, furniture and furnishings etc and stock".
In support of the proceedings to remove JPG's and Mr Naaman's caveats (see [150] above), Peter Sleiman swore an affidavit dated 8 May 2014. That affidavit had attached what purported to be a lease for the Kings Cross Property said to have been entered into between Jaken and First O'Malley's on 17 June 2011. On 27 May 2014, Mr Naaman's solicitors wrote to the Registrar General concerning that lease. On 21 May 2014, Land and Property Information responded by confirming that the form of lease used had not been released until 5 September 2013.
On 31 May 2014, a new NAB bank account (8943) was opened for the Sly Fox Trust shown fully drawn at $8,400,000.
By motion dated 4 June 2014, Mr Naaman applied to have the various applications in the 2009 Proceeding expedited and heard together with Jaken's summons in relation to the withdrawal of caveats.
The parties' various applications were fixed for hearing before Rein J on 18 June 2014. They were resolved by consent orders of that date (the Rein J Orders) which included: "1. The Court orders that orders numbered 1, 2 & 4 of the orders of Pembroke, J made on 3 March 2014 and entered on 5 March 2014 be set aside. 2. That upon the plaintiff, through his counsel giving the usual undertaking as to damages, the Court makes orders in accordance with paragraphs 1 and 2 (as amended in writing) of the Amended Notice of Motion filed by the Plaintiff and annexed to these orders. 3. The plaintiff is to serve on the first and second defendant by Friday 27 June 2014 an affidavit as best as he can of his assets and liabilities. 4. The Court notes that the first and second defendant will not assert any defence based on the proposition that the plaintiff must take all of the steps of first obtaining judgment and exhausting its remedies and right of execution against the third defendant. … Amended Notice of Motion Pursuant to Rule 25.11 and/or 25.14 UCPR: 1. An order that the second defendant [Jaken] (the Respondent) be restrained from disposing of, dealing with other than in the usual course of business, or further encumbering or diminishing the value of the property [known] as 'the O'Malley's Hotel' Lot X DP XXXXXX and having street address XXX Williams Street Kings Cross (the Kings Cross Property) until further order of this court. 2. An order that the Respondent by 27 June 2014 serve on the plaintiff and the third defendant an affidavit setting out, as best it can: (a) The amount of any indebtedness secured by the Kings Cross Property; (b) Any assets of the Slyfox Family Trust (the Trust); (c) The circumstances of the transfer of the property at Lot XX DP XXXXXX being XX Cowper Street Granville (the Granville Property) from the second defendant to Superior Family Investments Pty Ltd (Superior) including the manner of payment of the consideration received in respect of the sale of that property; (d) The circumstances of the indebtedness of the second defendant to NAB that gave rise to the lodgement of the PPSR security interest registered on 24 January 2014 in favour of the secured party National Australia Bank Ltd (Registration Number XXXXXX); (e) In the event the hotel business operating from the Property and known as O'Malley's Hotel (the hotel) has been sold, transferred, licensed or leased by the Respondent, the circumstances of that transaction, including to whom it was sold, transferred, licensed or leased and the consideration received and attaching a copy of the relevant contracts, lease or deed evidencing the transaction; and (f) annexing: (i)the tax returns, balance sheets and profit and loss statements of the Trust for financial years ending 30 June 2010, 2011, 2012 and 2013; (ii) copies of all bank statements for any loan account or deposit account held in a bank or financial institution in the name of the Respondent in its own capacity or as trustee for the Sly Fox Family Trust for the period 1 January 2011 to date; (iii) copies of: - any bank guarantee or bank statement or deposit slip showing the receipt of a security deposit; and - all bank statements and remittance slips showing the payment of rent, pursuant to the June 2011 lease. To (Jaken Properties Australia Pty Ltd and its directors). If (Jaken Properties Australia Pty Ltd) disobeys paragraph (1) of this order, then (Jaken Properties Australia Pty Ltd) and its directors will be liable to sequestration of property and the said directors to imprisonment."
Also on 18 June 2014, Peter Sleiman met with, among others, Mr Peter Hartley of NAB to discuss a "plan" proposed by Peter Sleiman to increase Jaken's facility with NAB to $12,000,000 and reduce the Powerhouse facility. The fact of this meeting and the "plan" was confirmed in an email from Mr Hartley to Peter Sleiman and others dated 20 June 2014 in which Mr Hartley said "Just confirming from our meeting on Wednesday the plan you suggested was"..
On 26 June 2014, Peter Sleiman emailed to Andrew Soo of NAB various financial documents which Mr Hartley had sought, including the Sly Fox Trust's annual report for the year ended 30 June 2013 which valued the trust's land and buildings at $15,065,827 and recorded rent received of $1,353,258.
On 26 June 2014, Peter Sleiman swore an affidavit in response to the Rein J Orders which included that "Presently, the funding from the NAB is through commercial bank bills. At present the amount due under the bank bills is approximately $8.75 million … At present a figure in the vicinity of $13.25m remains owing by Powerhouse to the NAB".
In relation to O'Malley's Hotel, Peter Sleiman's affidavit annexed a 10 year lease (with a further 10 year option) from Jaken to First O'Malley's dated 17 June 2011. However, the affidavit said nothing about the sale or transfer of the O'Malley's hotel business.
In its profit and loss statement for the year ended 30 June 2014, First O'Malley's represented that it had gross income of $4,453,054 with an operating profit of $691,685, and that it had paid rent of $724,511.
In its financial statements for the year ended 30 June 2014 and provided to NAB, the Sly Fox Trust represented the value of land and buildings held by it was $15,065,827.
On 2 July 2014, Mr Hartley emailed Peter Sleiman referring to a "structure…we were talking about recently" of Jaken having a facility of $12 million and Powerhouse a facility of $3 million.
By letters dated 21 August 2014 to Jaken as trustee for the Sly Fox Trust and to Powerhouse as trustee for the PeteJake Family Trust, NAB offered to vary their respective facilities. Jaken's facility was increased from $8,400,000 to $12,000,000, with NAB's offer accepted by Tony Sleiman on 22 August 2014. Powerhouse's facility was reduced from $10,600,000 to $7,000,000. This was just over two months after the Rein J Orders had been made, including an asset preservation order.
In a declaration made on 22 August 2014, Tony Sleiman, on behalf of Jaken as trustee for the Sly Fox Trust, confirmed that the highest amount of financial accommodation provided by the Bank to Jaken was $12,000,000, while the guarantee given by various people and companies including Powerhouse, Tony Sleiman, Peter Sleiman and O'Malley's Hotel remained limited to $8,750,000. In the same declaration, Tony Sleiman asserted that the full unencumbered market value of Jaken's property was $100.
In a declaration made on 22 August 2014, Peter Sleiman, on behalf of Powerhouse as trustee for the PeteJake Trust, also confirmed that the highest amount of financial accommodation provided by the Bank to Jaken was $12,000,000, while the guarantee given by various people and companies including Powerhouse, Tony Sleiman, Peter Sleiman and O'Malley's Hotel remained limited to $8,750,000. In the same declaration, Tony Sleiman asserted that the full unencumbered market value of Powerhouse's property was $100
On 8 September 2014, several transactions occurred: 1. Jaken drew down $12,000,000 on its new facility which was contained in a newly established NAB account. 2. The $12,000,000 was paid into an account held by Powerhouse with the description "Debt reallocation". 3. $10,525,000 was paid from the account held by Powerhouse to Powerhouse's loan account, which reduced the latter to zero. 4. The amount of $1,422,954.86 was paid from the account held by Powerhouse to a business cheque account held by Jaken. 5. An additional $7,000,000 was deposited into Jaken's cheque account with the description "debt reallocation". While the source of that funds is not identified in the bank statements, the Court infers that amount was debited to a loan account of Powerhouse and is the $7,000,000 limit and balance referred to in the correspondence set out in [171] below. 6. $8,400,000 was then deposited into Jaken's loan account to clear it.
The final result of the transactions referred to in the previous paragraph was that Jaken then had a loan account of $12,000,000 and Powerhouse's loan account had been reduced to $7,000,000.
On 10 September 2014, Peter Sleiman emailed Peter Hartley and others at NAB: "PETER I need you to call me. My accounts are all over the place since we relocked the facility. $12m was supposed to be JAKEN not PWH."
On the same day Andrew Soo of NAB replied to Peter Sleiman confirming that the limit and balance for Jaken was $12,000,000 and the limit and balance for Powerhouse was $7,000,000. Mr Soo also sent an email confirming that the amounts were fully drawn and included payment of a break cost.
On 24 October 2014, Mannellis Pty Limited was incorporated with Logan Fox Lawyers as its registered office and Ashleigh Panetta (Peter Sleiman's daughter) as director and secretary. According to an ASIC search, Samantha Sleiman was a director and secretary of Mannellis Pty Limited for one day (28 November 2014). Samantha Sleiman and Ashleigh Panetta were equal shareholders in the company.
On 17 November 2014, Mr Naaman filed a further amended statement of claim in the 2009 Proceeding. This added a prayer for judgment against JPG as trustee of the Sly Fox Trust for $2 million and declarations that JPG was entitled to be indemnified out of the assets held by Jaken, and that the transfer of the Sly Fox Trust assets from JPG to Jaken was voidable as a fraud on creditors.
On 26 November 2014, the defendants in the 2009 Proceedings filed their defence to the further amended statement of claim. In that defence, the defendants admitted that: 1. On 15 July 2005, JPG in its capacity as trustee of the Sly Fox Trust incurred a liability to pay the instalments of purchase price under the "Guarantee Agreement and the Share Sale Agreement' and that Peter Sleiman was the sole director of JPG as at that date; and 2. At all material times up to and including the date of the defence, JPG was entitled to indemnity out of the assets of the Sly Fox Trust for any liability to Mr Naaman as alleged in the 2009 Proceeding.
On 3 December 2014, there was an attempt by Jaken to transfer the assets of the Sly Fox Trust to two trusts of which Jaken was also to be trustee. At the hearing before me, the cross-defendants accepted this transaction was ineffective such that Jaken continues to hold the Kings Cross Property as trustee of the Sly Fox Trust.
The 2009 Proceeding was heard by Stevenson J on 15, 17 and 18 December 2014.
On 16 December 2014, NAB issued a business letter of offer to Trojan Marketing and Consultants Pty Ltd for a facility of $1,500,000.
On 17 December 2014, NAB issued a letter of offer to South Street Properties Pty Ltd as trustee for the South Street Unit Trust for a facility of $2,315,000.
On 24 December 2014, Stevenson J delivered judgment dismissing Mr Naaman's claims in the 2009 Proceeding.
On 11 January 2015, Jaken entered into a lease with Mannellis Pty Limited for the Kings Cross Property for 10 years, commencing on 1 January 2015 at a rent of $180,000 per annum including reference to the liquor licence.
On 13 January 2015, Logan Fox Lawyers served a lapsing notice in respect of JPG's caveat over the Kings Cross Property on JPG's liquidator, Mr Cooper.
On 16 January 2015, Mr Naaman served his notice of intention to appeal against the decision of Stevenson J.
On 20 January 2015, a deed of change of trustee was purportedly executed appointing AVS Group Australia Pty Limited as the trustee of the Sly Fox Trust.
On 27 January 2015, Mr Cooper, as liquidator of JPG, applied to extend that company's caveat over the Kings Cross Property.
On 4 February 2015, Peter Sleiman filed an affidavit in opposition to Mr Cooper's application, stating that he had been authorised to do so on behalf of Jaken by Tony Sleiman. In that affidavit, Peter Sleiman continued to assert that the funding for the original purchase of the Kings Cross Property remained through commercial bank bills, with the "present amount" owing of approximately $8.75 million.
On 6 February 2015, Bergin CJ in Eq heard Mr Cooper's application for the extension of the caveat over the Kings Cross Property. The application was resolved by her Honour making the following orders: "1. Note the undertaking in paragraph 1 of the short minutes of order initialled and dated today. 1.1 The trustee of the Sly Fox Family Trust undertakes not to sell the property known as XXX William Street, Woolloomooloo NSW Folio XXXX, O'Malley's Hotel, without 28 days prior written notice to Mr Mark Cooper, liquidator. 2. Dismiss the amended summons. 3. Each party to pay their own costs."
On 10 March 2015, Stevenson J delivered his costs judgment in the 2009 Proceeding and dissolved the freezing orders that had been made by consent as part of the Rein J Orders on 18 June 2014.
On 9 April 2015, Stevenson J delivered a further judgement in relation to the costs of the 2009 Proceeding.
On 25 June 2015, Logan Fox Lawyers ceased to act for Peter Sleiman and Jaken in the appeal from Stevenson J in the 2009 Proceeding.
In the annual report for the Sly Fox Trust for the year ended 30 June 2015, the land and buildings of the Sly Fox Trust were valued at $15,454,333 and reported having received rent of $1,461,742.
In its annual report for the financial year ended 30 June 2015, which like the report in the previous paragraph, was provided to NAB, First O'Malley's reported that it had gross income of $4,697,416 and that it had paid rent of $757,114.
On 22 July 2015, NAB valued the Granville Land at $1,000,000, with the land component being valued at $700,000.
On 11 August 2015, the day before the Court of Appeal hearing, O'Connor Legal began acting for Jaken and Peter Sleiman in Mr Naaman's appeal against Stevenson J's judgment.
On 1 September 2015, the Court of Appeal delivered its judgment, allowing Mr Naaman's appeal against JPG and Jaken. The proceedings were remitted to the trial division for an assessment of damages.
On 1 September 2015, First O'Malley's resolved to change its name to ACN 150 830 087 Pty Ltd.
On 3 September 2015, O'Malley's Hotel Pty Ltd (Second O'Malley's) was registered with George Sleiman as the sole director, secretary and shareholder.
On 11 September 2015, copies of the deeds for the Sly Fox 1 Unit Trust and the Sly Fox 2 Unit Trust were certified by a solicitor, Mr Zachary Jones. These were the trusts referred to in [175] above. The deeds were stamped on 13 September 2015. This was les than two weeks after the Court of Appeal judgment.
On 18 September 2015, Angela Michael emailed NAB: "Can we please open a new account named O'Malley's Hotel - I know its probable (sic) confusing but it's not the same one - ACN is different."
On 3 December 2015, O'Connor Legal filed a notice of ceasing to act for the defendants in the remitted 2009 Proceeding.
On 7 December 2015, the details of the liquor licence for O'Malley's Hotel were updated to reflect the details of Second O'Malley's.
On 14 December 2015, Mr Naaman's solicitor emailed Peter Sleiman and Tony Sleiman informing them that Slattery J had fixed 22 and 23 February 2016 for the hearing of the quantification of damages in the 2009 Proceeding.
On 11 and 13 February 2016, change to company details forms were signed which recorded the purported appointment of a Mr Evan Spiegel as a director of First O'Malley's with effect from 1 July 2015 including a notation "meeting for Evan to purchase the company from 01-07-2105". The first of these forms gave the company's registered office as being Mr Spiegel's address in South Australia with effect from 1 July 2015. The second form gave that as the company's registered address but with effect from 11 May 2012, which was also given as the date on which Tony Sleiman ceased to be a director.
On 15 February 2016, Mr Naaman's solicitor sent various documents to the Associate to Slattery J copied to Tony Sleiman and Peter Sleiman.
On 17 February 2016, Peter Sleiman responded "Please do not include me in your correspondence as I have nothing to do with this matter and you are breaching the director's privacy".
Also on 17 February 2016, Mr Naaman applied for orders to restrain Jaken from dealing with the Kings Cross Property.
That same day, a process server attempted to serve a number of documents on Jaken at Parramatta Road, Granville. The process server's affidavit records: "3. On 17 February 2016, I served JAKEN PROPERTIES AUSTRALIA PTY LIMITED ACN 123 423 432 AS TRUSTEE FOR THE SLY FOX FAMILY TRUST, the Second Defendant, with the following documents: • Letter from KB Legals - Solicitors dated 17 February 2016 • Notice of Motion filed on 17 February 2016 • Copy of Email from the Associate of Slattery J confirming the listing of the matter before Slattery J on 23 February 2016 sent 17 February 2016 • Affidavit of Karl Alexander Burnett sworn on 17 February 2016 • Exhibit "KB 27 February 2016" in the Affidavit of Karl Alexander Burnett sworn on 17 February 2016 4. I served the documents by affixing them to the front door of the premises at the given address of XX Parramatta Road, Granville NSW 2142. [Another point of access to Jaken's premises at Cowper St, Granville.] 5. At the time of service, I was unable to gain access into the building as the doors were locked. I noted signage which advised that the office is always closed and provided a contact number of 9XXXXXXX. I telephoned the number 9XXXXXXX and spoke with a female employee in or to the following effect: I said: "I have some documents for Jaken Properties Australia Pty Limited as Trustee for the Sly Fox Family Trust. Will you accept service?" The female replied: "Yes, I will come down to accept the documents." A short time later, a female person opened the front door. The female said, "There is no one here to accept the documents." I said, "The documents may be left here and you can pass them on to the appropriate person." The female replied, "I will not accept them." The female then closed the door."
By an ASIC change to company details form signed by Tony Sleiman on 18 February 2016, the registered office of Jaken was purportedly changed from 3 December 2014 from Cowper Street, Granville to a firm of accountants in Templestowe, Victoria.
Also on 18 February 2016, Andrew Soo of NAB emailed Peter Sleiman with the subject line "change of trustee for O'Malley's" and asking Peter Sleiman to send him "a copy of the new trust deed and transfer for O'Malley's". Shortly afterwards, Peter Sleiman replied to Mr Soo: "Hey mate so you required a new Trustee PJKL Property Holdings P/L and the trust deeds for Sly Fox 1 and Sly Fox 2 Unit Trust and an unsigned transfer for XXX William Street so they can get veted (sic). Just confirming. Chris will send that to you shortly."
Mr Soo replied to Peter Sleiman on the same day "Yes can you send them all through. I've ordered a copy of the loan documents for you".
The quantification of damages hearing proceeded not before Slattery J, but before Young J on 22 February 2016 in the absence of the defendants. On that day his Honour made orders (the Young J Orders) (which were entered on 25 February 2016) which included: "3. Order the 2nd defendant [Jaken] pay the plaintiff's [Mr Naaman's] costs of the whole proceedings other than the costs specifically dealt with by the Court of Appeal. 4. That judgment be entered for the plaintiff against the third defendant [JPG] in the amount of $3,446.755.55. 5. Declare that the third defendant is entitled, as against the second defendant and generally, to be indemnified out of the assets of the Sly Fox Family Trust for liabilities incurred by it in its capacity as trustee of the Sly Fox Family Trust, including in respect of the judgment entered against the third defendant in these proceedings. 6. Further declare that the plaintiff is subrogated to the rights of the third defendant for its entitlement to be indemnified from the assets of the Sly Fox Family Trust for its liability to the plaintiff in respect of the judgment to be entered in these proceedings, subject only to the costs and expenses of the liquidator of the creditors' voluntary winding up of the third defendant and the claim of $2,500 which has been referred to in the evidence. 7. Vacate the listing of the Notice of Motion on 23 February 2016. 8. Vacate the listing of the hearing on 23 February 2016. 9. Liberty to apply. NOTICE OF MOTION 1. The Second Defendant (Respondent) be restrained from disposing of or dealing with other than in the usual course of business, or further encumbering or diminishing the value of the property known as O'Malley's Hotel, Lot X DP XXXXXX and having street address XXX Williams [sic] Street Kings Cross (the Kings Cross Property) until further order of this Court. 2. That the Respondent within 7 days of being served with the orders, serve on the Plaintiff and the third defendant an affidavit setting out, as best it can: (a) The amount of any indebtedness secured by the Kings Cross Property; (b) The assets of the Sly Fox Family Trust, giving their value, location and details (including any mortgages, charges or other encumbrances to which they are subject) and the extent of the Respondent's interest in the assets; (c) In the event it is asserted that the hotel business known as O'Malleys Hotel, operating from the Kings Cross Property has been sold, transferred, licensed or leased by the Respondent the circumstances of that transaction. To (Jaken Properties Australia Pty Ltd as trustee for the Sly Fox Family Trust and its directors). If (Jaken Properties Australia Pty Ltd as trustee for the Sly Fox Family Trust) disobeys paragraph (1) of this order, then (Jaken Properties Australia Pty Ltd as trustee for the Sly Fox Family Trust) and its directors will be liable to sequestration of property and the said directors to imprisonment.
On 23 February 2016, (being the day after the hearing before Young J but before the Young J Orders were entered) Christopher Batten (who had prepared the earlier advice to Peter Sleiman on trust structures to hold property - see [140] above) emailed Mr Soo of NAB (copied to Peter Sleiman) at 7.31am with a number of attachments saying: "Please find attached the certified trust deeds for the Sly Fox 1 Unit Trust and Sly Fox 2 Unit Trust together with a deed for change of trustee and variation for each trust and a Real Property Act transfer. Should you have any questions or wish to discuss this further please do not hesitate to contact me."
These were the documents referred to in [197] above, and included an unsigned and undated transfer form for the transfer of the Kings Cross Property from Jaken to PSJK.
By an ASIC change to company details form signed on 26 February 2016, Raymond Saab certified that he had been appointed a director of Logan Fox Lawyers Pty Limited with effect from 25 May 2015, being the date on which Samantha Panetta ceased to be a director and transferred her shares in the company to Mr Saab.
By letter dated 2 March 2016 addressed to Jaken at its Victorian registered office (being the office of accountants Bilias & Associates), Mr Naaman's solicitors enclosed by way of service a copy of the Young J Orders as entered. On the same day the orders were emailed to Tony Sleiman and to Bilias & Associates.
On 3 March 2016, Tony Sleiman made this affidavit in response to the Young J Orders: "1. I am the sole director of Jaken Properties Australia Pty Limited (Jaken Properties). 2. Jaken Properties is no longer the trustee of the Sly Fox Family Trust. 3. The trustee of the Sly Fox Family Trust is AVS Group Australia Pty Limited. 4. Jaken Properties is the trustee of Sly Fox 1 Unit Trust and Sly Fox 2 Unit Trust (Unit Trusts), 5. The Unit Trusts are the beneficial owners in equal shares of the property known as XXX William Street, Kings Cross (Kings Cross Property). 6. Annexed hereto and marked with the letter "A" is a true copy of a letter dated 2 March 2016 from KB Legal to Jaken Properties, serving a copy of the orders made by this Honourable Court on 22 February 2016 (Orders). 7. In order to comply with Order 2 of the Orders under the heading "NOTICE OF MOTION", 1 set out the following; (a) The amount of indebtedness secured by the Kings Cross Property is approximately $12,000,000 in favour of the National Australia Bank. (b) The Sly Fox Family Trust has no assets. Jaken Properties holds the Kings Cross Property in trust for the Unit Trusts, subject to a mortgage to the National Australia Bank. (c) The hotel business known as O'Malleys Hotel has been operated by a company known as O'Malleys Hotel Pty Limited, as lessee of the Kings Cross Property, since about August 2015 when my niece Alissia Michael took over the day to day operation of the hotel from me. The lessee now pays its rent to the Unit Trusts and that rent is used to pay interest to the NAB under the mortgage. The Kings Cross Property has a current market value which I estimate to be less than $5 million and that estimate is subject to the on-going negative effect of the "lock-out" laws which have had a severely depressing effect on the value of the hotel property in Kings Cross. Members of the Sleiman family and their related entities provide ongoing support for the Unit Trusts by contributing the difference between the rent paid by the lessee and the interest which is payable under the mortgage."
On 13 March 2016, Mr Naaman lodged the caveat AK XXXXXG which is the subject of these proceedings over the Kings Cross Property (the Naaman Caveat) claiming "equitable right of interest or equitable lien" supported by a lengthy annexure setting out the facts relied upon in support of his claim to be subrogated to JPG's right of indemnity from the assets of the Sly Fox Trust.
On 22 March 2016, Evan Spiegel as the sole member and director of the First O'Malley's purportedly resolved to place the company in voluntary liquidation and Andrew Wily was appointed liquidator. There was in evidence before the Court an envelope produced under subpoena by Mr Wily addressed to Evan Spiegel at the address for him in South Australia that had been notified to ASIC. The envelope was marked Return to Sender and "Not at this address - no current address". To the extent it is a necessary finding, the Court finds that there was no "Evan Speigel".
In the profit and loss statement for the quarter ended 31 March 2016 that was provided to NAB, Second O'Malley's represented that it had made gross sales of $1,469,508 for that quarter and had paid rent in the amount of $239,089.
On 7 April 2016, Mr Wily was formally appointed liquidator of First O'Malley's.
On 26 April 2016, Peter Sleiman emailed Mr Soo of NAB urgently requesting accounts to be opened for Powerhouse as trustee of the PeteJake 1 Trust and PeteJake 2 Trust and for Jaken as trustee for the Sly Fox 1 Unit Trust and Sly Fox 2 Unit Trust.
On 27 April 2016, Mr Soo responded to Peter Sleiman to say that two of the O'Malley's accounts would have to remain frozen as they were linked to First O'Malley's which was in liquidation. On the same day two new accounts were opened with NAB in the name of Second O'Malley's.
On 16 May 2016, Mr Soo emailed Peter Sleiman and informed him "Old O'Malley's accounts have been closed and the funds have been credited to" an account of Second O'Malley's.
On 19 May 2016, Five Clover Hotels Pty Ltd was registered with George Sleiman as the sole director, secretary and shareholder.
On 14 June 2016, Peter Sleiman sent Mr Soo the quarterly profit and loss statements for the period ending 30 March 2016 for the Kings Head Tavern and for Second O'Malley's.
On 15 June 2016, Peter Sleiman emailed Mr Soo: "Hi Andrew can we open theses (sic) accounts Urgent please. FIVE CLOVER HOTELS PTY LTD T/A O'Malley's Hotel 2 accounts please, a General Account and a Gaming Account please."
Notwithstanding George Sleiman was the director of Five Clover Hotels Pty Ltd, he was not copied on this email. The two accounts were opened on 16 June 2016.
On 12 October 2016, Mr Naaman's solicitors sent to Mr Soo a letter enclosing a copy of the Naaman Caveat, a copy of Young J's orders of 25 February 2016 and a copy of the title search for the Kings Cross Property.
On 26 October 2016, Mr Stuart King of NAB emailed Peter Sleiman proposing a meeting for the following Monday, 31 October to discuss what were described as "current items of concern". In an attached schedule setting out those matters, one of them identified the Naaman Caveat. A response to that query recorded as coming from Peter Sleiman's solicitors includes: "Dispute against Mr Naaman relates to a breach of contract of sale where Mr Sleiman purchased Mr Naaman's company [exact company details not noted]. The caveat was lodged on the wrong entity [?]. New proceedings need to be commenced in order to remove the caveat. Estimate legal costs will be $350K. The intention is to bankrupt Mr Naaman [as he won't be able to pay the legal fees] and have the caveat removed."
NAB's response is recorded as: "It is unclear from the Court orders made on 22 February 2016 whether Anthony Naaman has a right to lodge a caveat over the property. However, the orders contemplate Mr Naaman will be subrogated to the rights of Jaken out of the assets of the Sly Fox Family Trust, noting that the O'Malley's Hotel is (or was) an asset in the trust. This suggests that Anthony Naaman has a caveatable interest in the property. While not impacting NAB, it will impact the customer's ability to deal with property."
On 15 November 2016, Angela Michael emailed Mr Soo (copied to Peter Sleiman) requesting the monthly repayments for both hotels be debited from the new accounts created for Powerhouse and Jaken as the trustees of the PeteJake 1 Unit Trust and the Sly Fox 1 Unit Trust.
On 17 November 2016, Peter Sleiman sent Mr Soo the management accounts for O'Malley's Hotel and Kings Head Tavern for the period January 2016 to June 2016. In the profit and loss statement for Second O'Malley's that was provided to NAB, it was represented that it had gross income of $1,897,196.87 and that it had paid rent of $198,818.18 for the period.
On 24 November 2016, Black J delivered his decision in Deputy Commissioner of Taxation v Peter Sleiman Investments Pty Ltd [2016] NSWSC 1657 ("DCT") in which, among other things, his Honour made orders for the winding up of Peter Sleiman Investments Pty Ltd.
In a profit and loss statement prepared for Second O'Malley's on 2 December 2016 for the period January 2016 to June 2016, it was represented that Second O'Malley's had a total income of $1,897,196.87 and had paid rent of $198,818.18.
On 13 December 2016, legal counsel for NAB wrote to Peter and Tony Sleiman's solicitors referring to "The subsequent request from your clients to refinance some of their facilities with Westpac. We note that Andrew Soo is liaising directly with your clients regarding the proposed refinance."
Also on 13 December 2016, George Sleiman ceased to be the sole director, secretary and shareholder of Second O'Malley's and was replaced in those roles on 14 December 2016 by Alissia Michael, Peter Sleiman's niece.
In balance sheets dated 19 December 2016 for Jaken as trustee for the Sly Fox Trust as of September 2016, and which were provided to NAB, it was recorded that the value of O'Malley's Hotel "at cost" was $15,500,000, the O'Malley's Hotel poker machines "at cost" was $2,000,000" and the O'Malley's Hotel goodwill was $500,000, with total fixed assets being $18,245,446.07.
In the first quarter of 2017, Mr Soo was replaced by Mr Danny Tran as the contact at NAB for the various Sleiman entities.
On 17 March 2017, NAB wrote to Peter Sleiman referring to concerns that had been raised by NAB "regarding a number of matters", which included the Naaman Caveat, and continued: "In light of the concerns raised on page 1, in order for NAB to consider the proposed refinance and corresponding release of certain securities, as well as the offer of additional security for newly incorporated entities associated with the Group, NAB will require an Independent Business Review."
On 18 April 2017, the Court of Appeal delivered its judgment in Peter Sleiman Investments Pty Ltd v Deputy Commissioner of Taxation [2017] NSWCA 81 ("the DCT Appeal"), confirming the winding up order but ordering a stay while the debt underlying the winding up order was subject to challenge in the AAT.
On 5 May 2017, NAB wrote to Peter Sleiman and Tony Sleiman and the various companies in their group including Jaken as trustee for the Sly Fox Trust, refusing a request that had been made for a partial release of NAB's securities.
On 18 May 2017, Stuart King, the Head of Group Strategic Business Services of NAB wrote to Peter Sleiman (and notably not copied to either Tony Sleiman or Angela Michael) with the subject heading "Sleiman - discharge basis". The email included: "Dear Peter Thank you for your time last Wednesday in trying to find a mutually beneficial solution to end the hiatus over the last few months. We understand that your preference is not to engage an IA, and that you do not want to pay any break costs. NAB can appreciate your preferences and is willing to work with you to achieve a progressive exit … As per your preference, NAB proposes to retain fixed rate facilities in the amount of $17,000,000 as set out in the attached spreadsheets until the expiry date, at which time they will be repaid and the securities released. … Given you put two of the entities over which we had security in voluntary administration, the security will need to be redocumented to include the new entities involved. This is not straightforward and our respective lawyers will need to discuss how this can be achieved (as an example, there will need to be "corporate benefit" for all entities). As part of this process, NAB will need to be comfortable with the current status of the security, for example, this might include consideration of any encumbrances registered against the real property, or reviewing the status of any litigation involving the security providers."
By email dated 26 May 2017 to Peter Sleiman, Mr Danny Tran of NAB sought cashflow forecast for the "pub entities" for the next two years. These were sent to Danny Tran by Daniele Siviero of Peter Sleiman's office on 31 May 2017. These included projections that the revenue for O'Malley's Hotel would increase from $4,958,686 in 2017 to $5,524,046 in 2019.
In a profit and loss statement for the year ending 30 June 2016, and produced on 2 June 2017, and provided to NAB in respect of O'Malley's Hotel, it was represented that the total income was $4,838,135 and that it had paid rent of $790,820.
On 3 August 2017, the Sleiman Group's lawyers wrote to Henry Davis York (who represented NAB) and asserted that "Mr Naaman is on the verge of bankruptcy".
On 10 August 2017, the Sleiman Group's lawyers wrote to Henry Davis York that "Mr Naaman is likely to be bankrupt, in the course of bankruptcy, during the 120 day period covered by those clauses and it makes no commercial sense for our client to commit to a result over which they have no control". The parties were at that time in the course of renegotiating a Deed of Settlement, Amendment and Restatement.
On 18 August 2017, Peter Sleiman emailed Stuart King of NAB and said: "The Valuation on both pubs is $37M and the debt for both the pubs is $17.4M which shows enough equity there to secure the loan".
On 6 September 2017, Peter Sleiman and Tony Sleiman and various corporate entities and trusts provided a guarantee to NAB in the sum of $12,000,000 in respect of Jaken as trustee for the Sly Fox Trust, Sly Fox Number 1 Unit Trust and the Sly Fox Number 2 Unit Trust.
Also on 6 September 2017, Jaken gave a mortgage over the Kings Cross Property to NAB.
On 11 September 2017, Danny Tran wrote to Peter Sleiman confirming the details in relation to stages 1 and 2 of the refinancing of the Sleiman Group facilities by NAB.
On 18 September 2017, Jaken, Powerhouse, Tony and Peter Sleiman, and other companies in the Sleiman Group entered into the Deed of Settlement, Amendment and Restatement with NAB.
On 29 September 2017, NAB lodged a caveat over the Kings Cross Property.
On 13 April 2018, Peter Sleiman caused a bankruptcy notice to be issued to Mr Naaman for an alleged debt of $104,544.58.
On 25 May 2018, Mr Naaman's solicitors served an examination notice on Jaken as trustee for the Sly Fox Trust.
On 14 July 2018, Christopher Batten wrote to Tony Sleiman seeking to explain the various transactions that had occurred on 3 December 2014.
On 10 August 2018, Tony Sleiman ceased to be the director, secretary and shareholder of AVS Group Australia Pty Ltd and was replaced in those roles by Chris Saab.
On 30 October 2018, the Court ordered Tony Sleiman to attend for examination and Jaken to produce documents for the purposes of the examination with respect to Young J's judgment entered on 25 February 2016. The examination was fixed for 12 February 2019.
On 14 January 2019, Mr Naaman commenced contempt proceedings against Jaken for failure to comply with the Court's orders in relation to the examination.
On 23 January 2019, Jaken commenced these proceedings by summons. Peter Sleiman's affidavit in support provided to Mr Naaman for the first time the trust deed with Tony Sleiman as the appointor and the deed of change of trustee dated 20 January 2015.
For the purposes of the examination, Tony Sleiman made an affidavit dated 10 February 2019. In that affidavit he said that Jaken had ceased to be trustee of the Sly Fox Trust in January 2015 when it was removed as trustee of that trust and AVS Group Australia Pty Limited was appointed as trustee of the trust. He said that Jaken did not hold any assets of the Sly Fox Trust, or receive any income of that trust. He stated that "Jaken is not in a position to make any arrangement to pay any debt of the SFFT to Mr Naaman. Any assets it owns are held by it as trustee of the Sly Fox 1 Unit Trust or the Sly Fox 2 Unit Trust".
On 12 February 2019, Tony Sleiman was examined pursuant to the Court's orders. An extended extract and summary from that examination is set out at [306]-[310] below.
On 1 March 2019, Mr Naaman's solicitors sought these particulars of the summons: "Paragraph 1 and 2 1. Please provide the usual particulars as to the facts and circumstances you allege give rise to the Land as being beneficially owned by the Sly Fox 1 Unit Trust and Sly Fox 2 Unit Trust as tenants in common in equal shares. 2. Please provide the usual particulars of the transaction, which, your client claims, took place to effect the alleged result described in paragraph 1 above. 3. Please provide the usual particulars as to the date that you allege the Sly Fox 1 Unit Trust and Sly Fox 2 Unit Trust became the beneficial owners of the Land. 4. Please provide the usual particulars of the allegation the Land is free of any estate or interest or equitable lien or charge in favour of the defendant."
On 11 March 2019, Jaken's solicitors replied: "1. The relevant transaction was: (a) Wholly express (b) Wholly written (c) Effected by the documents executed on 3 December 2014 in the circumstances set out in the affidavits of Peter Sleiman, Tony Sleiman and Joe Nasr filed and served in these proceedings. The documents in question are listed in paragraph 24 of the affidavit of Peter Sleiman sworn on 24 January 2019. Copies of those documents have already been provided to you by way of service of Exhibit PS-1 to that affidavit. If you wish to inspect the original exhibit, please let us know and we will make arrangements for inspection at our office. (d) Not applicable. (e) Not applicable. 2. See 1(a) to (e) above. 3. SF1UT and SF2UT became the beneficial owners of the land on 3 December 2014 by reason of the above transaction. The plaintiff repeats 1(a) to (e) above as further particulars of the transaction. 4. The equitable lien or charge claimed in the defendant's caveat is an equitable lien or charge over the assets of the Sly Fox Family Trust. It is not and does not claim to be an equitable lien or charge over the assets of SF1UT or SF2UT. To any extent that may be relevant, the plaintiff repeats 1(a) to (e) above."
On 29 March 2019, Mr Naaman filed his cross-claim in these proceedings.
On 2 April 2019, the bankruptcy notice issued to Mr Naaman was set aside in the Federal Circuit Court of Australia.
By an email on 5 September 2019 from Jaken's solicitors to Mr Naaman's solicitors, the deed of variation of discretionary trust purportedly made on 20 March 2009 was provided to Mr Naaman for the first time.
On 6 September 2019, Mr Naaman's solicitors wrote to the solicitors for NAB (NAB having been subpoenaed for documents in these proceedings) and, among other things, asked NAB to see if it had copies of the deed of variation of discretionary trust deed dated 20 March 2009 and the deed of variation of discretionary trust dated 13 or 15 October 2010 because, so the letter said, Mr Naaman had never seen these deeds before and they had not, up to that time, been produced by NAB.
On 13 September 2019, NAB's solicitors responded that the variation deeds referred to, being dated 20 May 2009 and 13 or 15 October 2010, were from a time that the various Jaken entities were not customers of NAB.
On 4 October 2019, Mr Naaman filed his amended cross-claim and the proceedings were given a provisional hearing date by Darke J.
On 13 November 2019, Mr Naaman issued a notice to produce to Jaken for the original of the purported deed of variation dated 20 March 2009.
On 13 December 2019, Powerhouse sold the Kings Head Tavern for $20,630,550.
On 30 January 2020, the deed of variation of trust deed bearing the date 20 March 2009 was produced to the Court. The authenticity of this document is considered in [333] to [355] below.
On 3 February 2020, on Mr Naaman's application, the Court vacated the hearing dates originally fixed for these proceedings.
By deeds made on 5 February 2020, Powerhouse was retired as trustee of the various PeteJake trusts.
On 14 September 2020, JPG and its liquidator Mr Cooper, entered into a deed of assignment with Mr Naaman. This document is considered in [395] to [398] below.
On 3 November 2020: 1. Rees J made freezing orders in relation to the proceeds of sale of the Kings Head Tavern and the Royal Hotel Granville that was purchased with those proceeds. 2. Black J made orders approving the entry by JPG into the deed of assignment referred to in [274] above pursuant to s 477(2B) of the Corporations Act 2001 (Cth) ("the Corporations Act").
On 10 November 2020, by notice of assignment dated 3 November 2020, Mr Naaman gave notice to Peter Sleiman, Tony Sleiman and various other Sleiman Group companies of the assignment.
The hearing of these proceedings before me commenced on 16 November 2020.
On 17 November 2020, the Court made orders upon the application of Mr Naaman including: "5. Upon the defendant cross-claimant by his Counsel giving the usual undertaking as to damages, order that the plaintiffs and the cross-defendants, by their employees, related parties, related persons, agents and any other person, be restrained, until further order, from entering into any transaction or doing any other thing, in any manner or to any effect, which has any effect whatsoever on the legal or equitable ownership of the property located at XXX William Street, Kings Cross, NSW (being Lot 1 in DPXXXXXX) or on any person's legal or equitable interest in that property."
During the course of the hearing, on 25 November 2020, the Court made this order on Mr Naaman giving the usual undertaking as to damages: "That each of Five Clover Hotels Pty Ltd, Mannellis Pty Limited and O'Malley's Hotel Pty Limited whether as trustee, or in their own right, be restrained up to and including 5.00pm on 26 November 2020 by themselves, their employees, related parties, related persons, agents and any other person from dealing with, disposing of or encumbering other than in the ordinary course of business the assets and undertaking of the business known as O'Malley's Hotel operating at XXX William Street, Kings Cross, New South Wales."
On 27 November 2020, on what was ultimately the unopposed application of Mr Naaman, the Court made orders for the appointment of a receiver and the sale of the Kings Cross Property including: "1. Order that, on and from 12:00 noon on Tuesday, 1 December 2020, Michael Jones be appointed, without security, as the receiver and manager (Receiver) of the: a. property located at XXX William Street Kings Cross in the State of New South Wales (being Lot 1 in deposited plan XXXXXX) (Kings Cross Property) and all rights, property and other undertakings pertaining to the Kings Cross Property; b. all of the assets and undertakings of the fifth cross-defendant; c. the goodwill, furniture, fittings, plant, equipment, all poker machines and entitlements pertaining thereto, any licenses used in the operation of any business from the Kings Cross Property, stock, credits, monies, food, crockery; and d. any and all rights, undertakings and other property used in the operation of any business from the Kings Cross Property (Received Assets), with all the powers in respect of the Kings Cross Property and the Received Assets provided for in s420 of the Corporations Act 2001 (Cth) as if reference in that section to "the corporation" were a reference to the Sly Fox Family Trust. 2. Order that the Kings Cross Property and the Received Assets be sold by the Receiver as a freehold going concern."
On 16 March 2021, while judgment was reserved, the proceedings were relisted because NAB had appointed receivers to, among other things, the Kings Cross Property. On that occasion the Court made these notations and orders: "THE COURT NOTES THAT: 1 Morgan John Kelly and Philip Alexander Quinlan (Receivers) have been appointed by the National Australia Bank (NAB) pursuant to Deeds of Appointment dated 17 December 2020 (copies of which appear at pages 10 and 18 of Exhibit PAQ-1 to the affidavit of Philip Alexander Quinlan sworn on 8 March 2021 (Deeds of Appointment)), as the joint and several receivers and managers in respect of the "Secured Property" (as defined in the Deeds of Appointment), which includes: (a) a property located at XXX William Street Kings Cross in the State of New South Wales (being Lot 1 in deposited plan XXXXXX) (Kings Cross Property); (b) all of the other assets and undertakings of the Plaintiff / First cross-defendant; (c) all of the assets and undertakings of O'Malley's Hotel Pty Ltd (Hotel Company); (d) all other assets that are "Secured Property" as defined in the Deeds of Appointment, (together, the O'Malley's Hotel Assets). 2 The Defendant/Cross-claimant has commenced separate proceedings against NAB in Supreme Court of NSW proceeding number 2020/00260302 in which the Defendant / Cross-claimant alleges or will allege priority against NAB in respect of a portion of any sale proceeds of the Kings Cross Property and arising from the amount of approximately $3.6 million advanced to the Plaintiff / First cross-defendant by NAB on 8 September 2014. 3 The orders set out below are made without any admission by the Defendant / First cross-defendant, NAB or the Receivers and on the basis that the Defendant / First cross-defendant, NAB and the Receivers agree and acknowledge that all of the rights of the Defendant / First cross-defendant in respect of his alleged priority against NAB or any other claim, including those claims made in this proceeding, are reserved and will not be waived or prejudiced by the making of any of the orders set out herein or the sale of the O'Malley's Hotel Assets. THE COURT ORDERS: 4 Order 5 of the orders made on 17 November 2020 be varied but only to the extent that the Plaintiff / First Cross-defendant and/or the Hotel Company, through their Receivers, or NAB as mortgagee in possession, are not restrained from disposing of or dealing with the O'Malley's Hotel Assets. 5 After the application of the proceeds of the sale of the O'Malley's Hotel Assets to: (a) the agent's commission; (b) the remuneration and expenses of the Receivers (including their reasonable legal costs) pertaining to receivership and management (including the sale) of the O'Malley's Hotel Assets as approved by NAB; (c) the satisfaction of the claimed secured indebtedness of the Plaintiff / First Cross-defendant (either in its own capacity or as trustee) to NAB only, including the accrued interest, costs, charges and expenses in accordance with the relevant facilities between the Plaintiff / First Cross-defendant and NAB, the balance of the proceeds of the sale of the O'Malley's Hotel Assets (if any) are to be paid into Court until further order of the Court in relation to whatever sum has been paid into Court."
On 11 January 2022, the Court made these orders after a further application had been made by Mr Naaman: "1. Upon the applicant giving the usual undertaking as to damages, the Court notes that each of Superior Family Investments Pty Ltd, Samantha Panetta, Samanril Pty Ltd and Riley Panetta-Sleiman gives, without admission, undertakes to the Court in terms of prayers 7(a), (b), (c) and (d) of the Notice of Motion filed on 23 December 2021 (Notice of Motion) until the final hearing and determination of that Notice of Motion. 2. The Notice of Motion is listed for hearing before Kunc J at 10am on 28 January 2022. …"
On 28 January 2022 the Court made the following orders: "Freezing Order 1 Subject to Order 2, an order pending final determination of the proceedings or further order of the Court pursuant to rule 25.11 of the Uniform Civil Procedure Rules 2005 (UCPR) in the terms annexed to these orders and marked "A", against each of: a. Jaken Properties Australia Pty Ltd, the plaintiff and the first cross-defendant (Jaken); and b. O'Malley's Hotel Pty Ltd, the fifth cross-defendant (Hotel Company). 2 Order 1 does not operate to: a. restrain Jaken and the Hotel Company, through their Receivers (Morgan John Kelly and Philip Alexander Quinlan) or through National Australia Bank Limited as mortgagee in possession, from disposing of or dealing with the 'O'Malley's Hotel Assets' as defined in the orders made on 16 March 2021; and b. require Jaken and the Hotel Company, through their Receivers and National Australia Bank Limited to comply with paragraphs 7 and 8 of Annexure A. … Further orders 1. NOTE the undertakings given to the Court in terms of prayers 7(a), (b), (c) and (d) of the Notice of Motion filed on 23 December 2021 (Motion) given by each of Superior Family Investments Pty Ltd, Samantha Panetta, Samanril Pty Ltd and Riley Panetta-Sleiman are to continue, without admission, until the final determination of these proceedings, or further order. 2. NOTE the undertakings given to the Court through their Senior Counsel by: a. Peter Sleiman, without admission, until the final determination of these proceedings, or further order, that he will not in any way dispose of, deal with, further encumber, lease or diminish his legal or beneficial interest in any of his assets with a value in excess of $500,000 without first giving fourteen (14) days' notice in writing of his intention to do so to the solicitors for the defendant. b. Tony Sleiman, without admission, until the final determination of these proceedings, or further order, that he will not in any way dispose of, deal with, further encumber, lease or diminish his legal or beneficial interest in any of his assets with a value in excess of $500,000 without first giving fourteen (14) days' notice in writing of his intention to do so to the solicitors for the defendant. c. Superior Family Investments Pty Limited, without admission, until the final determination of these proceedings, or further order, that it will not in any way dispose of, deal with, further encumber, lease or diminish its legal or beneficial interest in any of its assets with a value in excess of $500,000 without first giving fourteen (14) days' notice in writing of his intention to do so to the solicitors for the defendant. d. Samanril Pty Limited without admission, until the final determination of these proceedings, or further order, that it will not: i. in any way dispose of, deal with, further encumber, lease or diminish its legal or beneficial interest in any of its assets with a value in excess of $500,000 without first giving fourteen (14) days' notice in writing of its intention to do so to the solicitors for the defendant; ii. in any way dispose of, deal with, further encumber, lease or diminish its legal or beneficial interest in the property at 15 Cowper Street, Granville 2142. e. Samantha Panetta, without admission, until the final determination of these proceedings, or further order, that she will not in any way dispose of, deal with, further encumber, lease or diminish her legal or beneficial interest in any of her assets with a value in excess of $500,000 without first giving fourteen (14) days' notice in writing of her intention to do so to the solicitors for the defendant. f. Riley Panetta-Sleiman, without admission, until the final determination of these proceedings, or further order, that he will not in any way dispose of, deal with, further encumber, lease or diminish his legal or beneficial interest in any of his assets with a value in excess of $500,000 without first giving fourteen (14) days' notice in writing of his intention to do so to the solicitors for the defendant. g. PSJK Holdings Pty Ltd, without admission, until the final determination of these proceedings, or further order, that it will not: i. in any way dispose of, deal with, further encumber, lease or diminish its legal or beneficial interest in any of its assets with a value in excess of $500,000 without first giving fourteen (14) days' notice in writing of its intention to do so to the solicitors for the defendant; ii. in any way dispose of, deal with, further encumber, lease or diminish its legal or beneficial interest in the properties described as Units 191 and 261 in the Amended Cross-claim filed on 4 October 2019. h. Saphire Mortgage Solutions Pty Ltd without admission, until the final determination of these proceedings, or further order, that it will not dispose of, further encumber or in any way diminish the value of any of its assets (owned either legally or beneficially) up to the unencumbered value of $516,000 without first having given fourteen (14) days' notice in writing of its intention to do so to the solicitors for the defendant."

Some common ground

There were five areas of common ground.
First, Jaken holds the Kings Cross Property as trustee of the Sly Fox Trust. The plaintiffs accepted that the purported attempt to change that position in December 2014 (see [175] above) by Jaken becoming the trustee of the Sly Fox 1 Unit Trust and Sly Fox 2 Unit Trust was ineffective.
Second, there was no dispute that pursuant to the Young J Orders: 1. Mr Naaman was a judgment creditor of JPG in the latter's capacity of trustee of the Sly Fox Trust; 2. JPG was entitled to be indemnified out of the assets of the Sly Fox Trust in respect of JPG's judgment debt to Mr Naaman; and 3. Mr Naaman was subrogated to the rights of JPG to be indemnified out of the assets of the Sly Fox Trust in respect of JPG's judgment debt to Mr Naaman.
Third, it was accepted that (subject to the reserved for consideration issue of accounting) Mr Naaman had a caveatable interest in the Kings Cross Property by virtue of his position as a creditor of JPG who was subrogated to the rights of JPG to be indemnified out of the assets of the Sly Fox Trust in respect of JPG's judgment debt to Mr Naaman.
Fourth, the cross-defendants accepted that Mr Naaman had standing to claim: 1. declarations in relation to his alleged caveatable interest in the Kings Cross Property; 2. relief under s 37A of the Conveyancing Act 1919 (NSW) (the CA) and the equivalent s 172 of the Property Law Act 1958 (Vic) (the PLAV); 3. damages for intentional interference with contractual relations arising out of the alleged breach of the Rein J Orders; 4. that Peter Sleiman and Tony Sleiman are jointly and severally liable for the Debt by operation of s 197 of the Corporations Act; and 5. that a receiver should be appointed to the assets of the Sly Fox Trust for the purpose of a judicial sale as a creditor of the Sly Fox Trust.
Fifth, the cross-defendants accepted that the Rein J Orders of 18 June 2014 were made by consent and constituted a contract between Mr Naaman, Jaken and Peter Sleiman. It was also accepted that Peter Sleiman and Tony Sleiman were aware of the Rein J Orders at the time they were made or shortly after. Those orders were dissolved on 10 March 2015 by order of Stevenson J.

Peter Sleiman's credit and his role as a de facto and shadow director

Peter Sleiman is the central figure in these proceedings. I have reviewed the transcript of his evidence which has only served to confirm the impression I recorded at the time he gave his evidence. At various times I found his evidence incredible, smug, desirous of avoiding the question, displaying willingness to "play dumb" and offering ridiculous explanations inconsistent with the documentary record that suggested he was in fact an astute businessman. Before turning to consider Mr Naaman's submissions about Mr Sleiman (which I accept), I will set out what struck me as some particularly telling examples.
First, his evidence about basic corporate matters explored early in his cross-examination was unconvincing and bespoke feigned obtuseness. For example, in relation to JPG, his asserted lack of knowledge about it, including who was operating the business after June 2012 when he and his wife and others had ceased to be directors (T112-113) made for an unconvincing start. While he admitted to causing JPG to be incorporated in 2003, he asserted that when he succeeded his sister as a director, he had no interest in what she had done as a director or in what the company did. I cannot accept that as a serious or truthful answer.
Second, Peter Sleiman was shown a signature block on an email which he sent to NAB describing himself as "Jaken Hotels/Peter Sleiman/Managing Director". Of this he said "Yeh, that's just a signature, but I'm not [the managing director]" (T165:43). His subsequent denial that he was representing to NAB that he was managing director of "Jaken Hotels" (T165:48) cast him in a very poor light.
Third, Peter Sleiman was shown some emails at the time of the negotiations that led to the $3.6 Million Drawdown. Significantly, none of the emails between Peter Sleiman and NAB were copied to Tony Sleiman. Despite Peter Sleiman's obfuscations in the witness box, I was left with no doubt from the email correspondence that Peter Sleiman was in sole charge of the negotiations. Peter Sleiman was shown an email to him from Andrew Soo of NAB which had the subject matter "Re: rates lower - need your approval please" and included: "Hi Peter, I hope you are having a great time in America with the family. In fantastic news we have seen a dip in the market and I know you would be keen to see better rates. (1) We are working on extending the approved term for Powerhouse and Jaken. Can you please confirm you are happy for me to speak to Angela in a couple of days to finalise this before she leaves? (2) Can you also confirm please that Angela is authorised to finalise these rates/structure on your behalf please? … The above structure is what we were talking about recently. Please let me know if you would prefer something different." This email gave rise to these entirely unsatisfactory answers from Peter Sleiman in cross-examination (T166:38-T167:10): "Q. You understood that the reference to, "Need Your Approval, Please" was the bank asking for your approval; isn't that right? A. He was asking me for my communication, yes. Q. No, it was asking for your approval; isn't that right? A. For the communication. They know that I talk to my brother about this. Q. No, it was asking for your approval; isn't that right? A. No. Q. You see that at the end of the line numbered 1 it says, "Can you please confirm you're happy for me to speak to Angela in a couple of days to finalise this before she leaves." Do you see that? A. Yes. Q. That's a reference to Angela Michael who is the director of Powerhouse Corporation at the time; isn't that right? A. Yes,. Q. In relation to the Jaken loan and facility that was a matter for your approval, wasn't it? A. No. It was a matter for our - me and my brother to discuss and then I'd give them the go ahead."
In similar vein, Peter Sleiman was shown an email of 10 September 2014from him to Peter Hartley of NAB which said: "PETER I need you to call me, my accounts are all over the place since we relocked the facility. $12m was supposed to be for Jaken and PWH". It was put to Peter Sleiman (T167:26) that the reason that he used the expression "my accounts" as opposed to "Powerhouse's accounts" or "Jaken's accounts" was because he considered all of those various companies to be his. I am unable to accept Peter Sleiman's denial of that proposition as credible in the face of these and similar email chains.
Fourth, the cross-examination of Peter Sleiman in relation to the refinancing that led to the $3.6 Million Drawdown included examples both of his determination to give evidence contrary to the documentary record in a way that he thought could help his case and to avoid difficult questions (T304:31-305:5): "Q. You didn't group the loans that they were taken out by Powerhouse and Jaken into one big loan in your affidavit, did you? A. I can't recall, but they're one big loan. Q. But by the time you made the affidavit of 8 May 2014, you were well aware that the loan account for Jaken showed a debit of $8.4 million, isn't that right? A. Mr Afshar, like I said, it's the way the bank did it. It's one massive loan. Q. Is there a reason you're resisting answering my question with a yes or no? A. No, I'm just - it's not a yes or no question, answer, it's - the bank did it that way, it's one massive loan for over $20 something million, that's just how it is. Q. Is the fact that you're answering the questions in this way an attempt by you to try to give evidence from the witness box that you think supports your case that all of this were one loan, is that right? A. Sorry, say that - can you just break it up smaller? You're just making paragraphs. Q. Is the reason you're giving the answers in the way that you're doing now, an attempt to support your case that all of this was one big loan? A. No, it's all in the documents. It is one big loan. Q. You were well aware that separate offers were made to Jaken Properties Australia and Powerhouse, aren't you? A. No, it was one massive loan."
Fifth, when Peter Sleiman was further examined about the arrangements in relation to the refinancing and $3.6 Million Drawdown, his answers about what NAB referred to in its email as "his plan" also gave rise to what struck me as a ridiculous attempt to suggest that NAB was responsible for suggesting the structure that was being used.
Peter Sleiman first accepted that he knew at the time he met with NAB on 18 June 2014 that the Rein J Orders were to be made, but resisted responsibility for the refinancing plan (T328:17-329:6): "Q. Before the freezing orders were made, you were aware that there was an application for freezing order by Mr Naaman? A. Yes. Q. On the day that you met with the NAB, the freezing orders were made by a judge of this Court, is that right? A. Yes. Q. Before those orders were made, you were aware of those orders, isn't that right? A. Yes. Q. You went into the meeting with the NAB being aware that, withdraw that, being aware of the contents of the orders that were proposed to be made, isn't that right? A. Yes. Q. Because before they were made, you received advice and spoke to your solicitors about the orders that were going to be made, isn't that right? A. Yes. Q. So when you went into the meeting with the NAB, you had all of the knowledge that I just put to you, didn't you? A. Yes. Q. When you went into the meeting with the NAB, you suggested to the NAB a plan to reallocate the debt as between Jaken and Powerhouse, didn't you? A. To renew the facility. Q. No, can you attend to my question please, you proposed-- A. I don't understand what you mean by plan, renew the facility yes. Q. When you went into the meeting with the NAB on 18 June 2014, you proposed a plan that the debt as between Jaken and Powerhouse be reallocated, do you accept that or do you not? A. It was one debt. Q. Do you accept my proposition Mr Sleiman or do you not? A. I don't understand what you're trying to say, plan, we had a meeting to renew the facility for the debt and that was it."
Having been shown the email referred to at [158] above, the following exchange occurred (T330:8-25): "Q. Now, first I want to suggest to you that the plan described by Mr Hartley was your plan that you suggested to them, do you accept that or do you not? A. No. Q. You didn't write back to this email and say "Mr Hartley, you're wrong, that wasn't my plan." Did you? A. No. Q. Because it was your plan, isn't that right? A. No, we were discussing the, renew the facilities and they put some suggestions to me, that's all it was. We had to renew the facilities, they were going to expire and the bank calling the loan, so we had to renew the facility. Q. The suggestion was put by you to the bank, not the other way around isn't that right? A. They came to me and spoke to me and said "We have to renew the facility. We'll put some proposals for the interest rates, because there's all different types that are for fixed year, fixed periods and all that." And I said "Okay, come to me with a proposal, tell me what you think." That was it."
This exchange culminated in Peter Sleiman attempting to lay the entire structure at the feet of NAB in what I regard as a further discreditable attempt to distance himself from what was plainly corporate activity driven by him (T331:32-T332:33): "Q. And what I'm going to suggest to you is that you suggested to the bank - I withdraw that. At the time of 20 June 2014, you were well aware that the facility limit for Jaken was $8.75 million. You were aware of that weren't you? A. Like I've previously told you, it's one facility guaranteed by both the companies. It's one facility. It's one amount of money. Q. Well, you were aware that-- HIS HONOUR Q. Mr Afshar - pardon me-- A. Mr Sleiman. Q. Mr Sleiman-- A. Yes. Q. If that's right-- A. Yes, your Honour. Q. --then why did you have two entities there at all? A. That's how the bank did it your Honour. I don't know, that's how the bank was doing it. The properties-- Q. What, the bank insisted you have two trusts is that what you're telling me? A. Yes. Yes, your Honour. Q. Why did they do that, to your understanding? A. I don't know. There's a whole heap of things the bank did, there's a lot more other companies and trusts guaranteeing these loans as well your Honour. That's just how they did it. Q. I understand the bank had every entity that you controlled guaranteeing things. But are you seriously telling me sir, that it was the bank that suggested you have a Jaken trust and a Powerhouse trust? A. That's what the properties were owned in your Honour. That's-- Q. But that's your business, not theirs, isn't it? A. No, your Honour. They want - if they grabbed my shirt off me, they could say that's theirs. Q. They told you which trust to put the property in, is that what you're telling me? A. Yes your Honour, that, that, no, that's where the, that's where the, the, the trustee Powerhouse and Jaken Properties I'm told - that's what they told me, they said "These are the trusts we need, this is what we want." And that's it, from the start your Honour. Q. So, all of this was put to you by the bank? A. Yes, your Honour. I just wanted to redo the facility to - because it's one facility, it was just one amount of money. They just told me that they got companies that barely had nothing - that they just guarantee everything your Honour."
In addition to the matters to which I have just referred, Mr Naaman's closing submissions set out a detailed criticism of Peter Sleiman's evidence which I accept is correct and reproduce as an accurate summary (references omitted): "15. His evidence was a curious and unsatisfactory mix of dogmatic assertions or denials on significant issues, yet a proclaimed lack of any real knowledge on other issues of much the same significance. 16. Those dogmatic assertions or denials in a number of cases were clearly untrue, but he would not be swayed from them nor, when pressed, did he provide any real reason or explanation for those views. Indeed, the most common refrain from this witness - a businessman who has self-described in affidavits to this Court as having over "25 years of experience in the ownership and operation of security businesses", 10 years of experience "negotiating the sale and purchase of a number of hotels in New South Wales and Victoria", and 10 years of "active involve[ment]" in reviewing the "financials and profitability" of hotels - when asked any question perceived to be adverse to his interests was: "I don't know" and "I can't recall". Even more curiously, he had a seemingly firm and distinct memory of events which had occurred as far back as 2010, but his recollections appeared to progressively fade the closer to the present day he approached. 17. Peter Sleiman's evidence as to his knowledge of the conduct of the business of each of the cross-defendants and JPG would not be accepted. He repeatedly attempted to point the finger at accountants, lawyers, barristers, taxation advisers and "The Bank" when confronted with untruths in his evidence. One example of this was when asked about the "Trust Transaction". Mr Sleiman repeatedly gave evidence that he did not understand the "technicalities" of the Unit Trusts which had been set up by Mr Chris Batten; he parroted that it was done in order to save land tax when the questions were asking him to accept the end effect of that failed transaction. At times, he even attempted to suggest that he did not know that the properties were held in two Unit Trusts. That had been his case until the first day of the trial. 18. His evidence stands in stark contrast to his written communications with the NAB which expressly referred to sending the "Unit trust deeds for the pubs". It also contrasts to his careful and deliberate answers in relation to other trusts. For example, when asked whether Jaken held any property, he answered with no prevarication that it did so "[a]s trustee for the trust". When asked whether his own home was in his name, he answered, again with no hesitation: "it's in a Unit Trust". 19. The Court would reject his various claims to lack knowledge about the conduct of the business, financial statements and legal documents. For example, Mr Sleiman claimed he did not understand profit and loss statements, and repeated, ad nauseam, that he just "reads the bottom line". This stands in sharp contrast to emails sent by him to the officers of the NAB, which asked the recipient whether "these P&L Management reports" were "ok", or whether he should "get the draft financials finished", and emails where he referred to sending the "quarterly P/L" to the bank. The repeated assertions that it was "the accountants" who send financial documents on behalf of Jaken directly to banks would also be rejected, in the face of documentary evidence over a number of years showing that Peter Sleiman sent financial documents directly to the bank without accountants' intervention."
The end result of this consideration of Peter Sleiman's evidence is that the Court concludes that he was an unreliable witness whose evidence on critical matters could not be accepted as truthful unless it was against interest, or corroborated by reliable contemporary documentary records. I emphasise the word "reliable" because as will be seen from the discussion from [317] to [360] below, I am satisfied that Jaken (which as I next discuss, was one and the same as Peter Sleiman) was prepared to attempt to deploy in its defence documents that were either forged, or as to which the Court could not conclude on the balance of probabilities were authentic.
The question of Peter Sleiman's credit is closely connected to the fundamental allegation made by Mr Naaman that, in relation Jaken, Peter Sleiman was a director. At all material times, the only formally appointed director of Jaken was Tony Sleiman. However, s 9 of the Corporations Act includes in the definition of director: "(b) Unless the contrary intention appears, a person who is not validly appointed as a director if: (i) they act in the position of a director; or (ii) the directors of the company or body are accustomed to act in accordance with the person's instructions or wishes."
The first of these options is informally referred to as a "de facto director" and the second of these options as a "shadow director". Whether a company has held out a person as a director will be a relevant but not decisive consideration: Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296: [2012] FCAFC 6 at [75] per curiam.
Mr Naaman submitted that the evidence demonstrated that Peter Sleiman was both a de facto director and a shadow director. Jaken submitted that neither conclusion had been proven, in particular that there was no evidence that Tony Sleiman was accustomed to act in accordance with Peter Sleiman's instructions or wishes.
The Court has concluded that Peter Sleiman's role in Jaken as demonstrated in the lengthy recitation of the history of this matter in paragraphs [14] to [283] above and including specific examples such as those set out above concerning Peter Sleiman's dealings with NAB, amply demonstrate that he was a de facto director of Jaken. The Court accepts Mr Naaman's submission that the evidence demonstrates that Peter Sleiman: 1. Was held out as "managing director" of Jaken Hotels when he was not a named director of either JPG or Jaken and where he agreed there was no other company named Jaken in his or his family's portfolio; 2. Communicated and negotiated with banks on behalf of Jaken; 3. Had access to the bank accounts of Jaken (noting for example an email from NAB of 10 September 2014 that he was able to put the new accounts for Jaken and Powerhouse on NAB Connect to which he obviously had access); 4. Instructed solicitors and counsel on behalf of Jaken; 5. Had possession and control over the books and records of Jaken; and 6. Was the only person who gave evidence in these proceedings about Jaken and its activities.
Assessing Peter Sleiman's role as both a de facto director and a shadow director of Jaken also requires consideration of the position of Tony Sleiman. While Tony Sleiman did not give evidence in these proceedings, a matter which permits Jones v Dunkel inferences to be drawn in relation to matters about which there was otherwise evidence, the Court received without objection a transcript of Tony Sleiman's evidence at the creditor's examination in relation to Mr Naaman's judgment against JPG. The Court adopts Mr Naaman's summary of that evidence as accurate which is set out in his closing written submissions (references to the court book omitted); "38.1. when asked about the sale of the Granville Property: "I don't recall, my brothers do alot of my paperwork for me. I don't quite understand contracts and stuff"; 38.2. when asked what Peter and George Sleiman do for Jaken: "They do all my paperwork, all my admin work, all my stuff"; 38.3. when asked how much was done by Peter vis-a-vis George: "I don't know. I'm hardly ever there", "They do pretty much all of my admin stuff and my accountants and solicitors they do all of that stuff, the solicitors"; 38.4. when asked "what about the financial stuff of the company": responded that Peter and George do "All of it""; 38.5. when asked which brother he says "does alot of this stuff for me": responded "Peter"; 38.6. when asked about the bank statements of Jaken: "Like I said, I don't deal with any of this stuff" (emphasis added); 38.7. when asked about the books and records of Jaken: "I leave them with my brothers", and when asked where they were kept, "I couldn't tell you"; 38.8. when asked whether Peter and George do the dealings with solicitors: "majority of the time unless I have to be there"; 38.9. when asked about his knowledge of the proceeding between Jaken and Mr Naaman (which at that point had been ongoing for 13 years): "I didn't even know until January"; 38.10. when asked about the accountant for Jaken: "I very rarely interact with him"; 38.11. when asked how he came to be a director of AVS Group Australia Pty Limited: "I've signed a lot of documents so", and "Things get prepared and I go through them and sign them. That's the way it works. I trust my family, I trust my brothers, and I just go with them" (emphasis added); 38.12. when asked how the proceedings between Jaken and Mr Naaman were conducted: "They [Peter and George] were always overlooking my shoulder. they were always looking after me. As I've said, I don't understand this stuff."; 38.13. when asked if he had an email account for Jaken or AVS Group: "No"; 38.14. when asked about the circumstances in which the Jaken loan was increased to $12m after the Rein J Orders: "My brothers helped me. They know the bank managers. They brought them down… I don't know"; that Peter asked the NAB to meet with him to "help me", 38.15. initially claimed that he increased the loan to $12m because he was having difficulty making the loan repayments, but then accepted that the rent he was receiving covered the loan repayments, and ultimately professed not to know why he needed to borrow the $12m; 38.16. When pressed on why he borrowed $12m, said "I don't know", when asked what he did with the $12m, "I can't remember", when asked if he had any records for it, said "No", and when asked what he needed the extra $3.6m for, did not know; 38.17. when asked why he entered into the Trust Transaction, repeatedly asserted to "save land tax", yet could not say how much land tax he had in fact saved; 38.18. did not know anything about the company or business name O'Malleys Pty Limited; 38.19. did not know how he came to transfer his shares and directorship of the AVS Group Australia Pty Limited to Chris Saab; 38.20. when asked about the mysterious "Evan Spiegel": "I have no idea" and "I don't know anything about him"; and 38.21. when asked how Evan Spiegel came to be a director of O'Malleys Hotel Pty Ltd (First O'Malleys), noting it is recorded on the relevant ASIC form that Tony Sleiman had a meeting "for Evan to purchase the company", said he did not attend the meeting, and when asked whether his brother "buys and sells shares for you", agreed "Yeah", and when asked whether he "changes your directorships from one director to another director" agreed, "If I need him to, yeah"."
Mr Naaman also relied on the three further passages of Tony Sleiman's evidence at the creditor's examination.
First, there was: "Q: Do you know what happens to the companies of which you're a director at all? A: Like I said before, my brother [Peter Sleiman] does everything, my accountants do everything. So this paperwork you're showing me, 90%, 99% of it is my brother's and my accountants so I doesn't (sic) understand most of it. Q: What about the 1%? A: Well, if you're lucky I've got 1%. So all these questions are just gibberish to me. I don't understand it."
Second, this exchange was relied on: "Q: Are you sure, or are you not sure, that you are a director of Jaken Properties Australia Pty Ltd or you don't know? A: It's too confusing to me. I'm sorry. I don't know."
Finally, attention was drawn to these answers: "Q. Do you understand how companies operate, Mr Sleiman? A. No. Q. Do you understand how the accounts of companies operate, Mr Sleiman? A. Well, my accountants do all of that, I don't. Q. Do you understand how companies are regulated and what you need to do to comply with the regulations, Mr Sleiman? A. Only what I'm told through my accountants. Q. Is it the case that these companies are, for all intents and purposes, companies run by Messrs Peter Sleiman and George Sleiman? A. No, they just help me. Q. They just help you? A. With my, with my stuff. Q. They do it for you, don't they, Mr Sleiman? A. Yeah. Q. They basically run these companies, Mr Sleiman? A. Yeah, must. Q. They do everything necessary to run these companies, Mr Sleiman? A. Yeah. Q. And it is, in effect, Peter Sleiman who does all of that, that is run the companies, run the accounts, run the legals, and run all the other affairs to do with this company; isn't that right, Mr Sleiman? A. To a point. Q. Do you agree with me or not? A. No, I don't agree with you. Q. You don't agree with me. To which part of that do you disagree? A. I don't let them just run rings, I do have a say in it, whether I understand it or not I give my opinion. Q. How can you give your opinion if you don't understand what's going on? A. Well, that's why I have got them there to explain, which really doesn't matter for me because it doesn't work out. Q. Sorry, because it does, what? A. It doesn't work for me. I don't understand a lot of this stuff. If I can't rely on my brothers, then who do I rely on. Q. You rely on them basically to run these companies on a day to day basis, isn't that right? A. Yes."
By reference to the matters set out in [305] to [310] above, the Court is satisfied on the balance of probabilities that at all times relevant to these proceedings, Peter Sleiman was a de facto director of Jaken and that, to the extent that he was ever involved or permitted to be involved in the affairs of Jaken, Tony Sleiman was accustomed to act in accordance with Peter Sleiman's instructions or wishes.
Peter Sleiman's role as a de facto director is established by: 1. The primary evidence of his role summarised above as amply demonstrated in email exchanges with, for example, NAB; and 2. Tony Sleiman's evidence at the creditor's examination set out above, including "my brother does everything".
Alternatively, Peter Sleiman's role as a shadow director is established by the same matters referred to in the preceding paragraph, together with the inference that if, according to Tony Sleiman, Peter Sleiman did "everything", and Tony Sleiman was so obviously ignorant of Jaken's affairs, whatever he may have formally done (such as execute documents) must have been because Tony Sleiman was accustomed to act in accordance with Peter Sleiman's instructions.

Jaken's other witnesses

Jaken called two other witnesses in the proceedings, both solicitors. The first was Mr Stefano Laface, who was cross examined, and Mr Joe Nasr, who was not required for cross-examination. Their evidence will be considered in the context of the impugned documents dealt with below.

Jaken's absent witnesses

No other witnesses were called for the cross-defendants. Most notably, neither Tony Sleiman nor Samantha Sleiman gave evidence, notwithstanding their role as directors of corporate cross-defendants. In what follows, where it is properly able to do so, the Court has no hesitation in concluding that their evidence would not have assisted any of the cross-defendants. Therefore, where other evidence exists for a particular finding against the cross-defendants, the Court has made that finding more easily in accordance with the principle discussed in Jones v Dunkel (1959) 101 CLR 538; [1959] HCA 9.

Mr Naaman's witnesses

Neither Mr Naaman nor his expert witnesses was required for cross-examination. Where necessary, and the Court being otherwise satisfied of its inherent cogency, that evidence is accepted. This conclusion in particular relates to the expert valuation evidence filed in Mr Naaman's case.

Some impugned documents

There were five documents which Mr Naaman submitted were inauthentic. I will consider each of these in turn.

Some impugned documents - 17 June 2011 Lease

In May 2014, Peter Sleiman swore an affidavit in support of an application to remove the caveats that had been lodged over the Kings Cross Property by Mr Mark Cooper in his capacity as liquidator of JPG and by Mr Naaman relying upon his right of subrogation to JPG's right of indemnity. Exhibited to Peter Sleiman's affidavit was a lease purportedly entered into on 17 June 2011 from Jaken to First O'Malleys in relation to the Kings Cross Property. The lease is purportedly executed on behalf of both the lessor and the lessee by Tony Sleiman as the sole director and secretary of each company.
The lease is unregistered and is on a standard Lands Title Office form described as "Form 07L" and "Release: 4.4". At the bottom right hand corner of the front page of the document was the number "1309".
By letter dated 21 May 2014, Land and Property Information informed Mr Naaman's solicitor: "I acknowledge receipt of your letter of 27 May 2014 regarding the release date for RP Lease form 07L, version 4.4 and confirm that the Form was released on 5 September 2013. I bring to your notice that the number "1309" printed at the bottom right edge of the Form represents the year "2013" and the month "9" being September."
The Court is satisfied that the lease could not possibly have been entered into on its purported date of 17 June 2011. The Court also accepts Mr Naaman's submission that the lease is likely to have been prepared around the time Peter Sleiman swore the affidavit for the purposes of attempting to persuade the Court that the Kings Cross Property was worth less than it in fact was.

Some impugned documents - the 11 April 2014 email

This is another document attached to Peter Sleiman's affidavit to remove the caveats lodged by the liquidator of JPG and Mr Naaman over the Kings Cross Property. This 11 April 2014 email appears under an email from Peter Sleiman to Joe Nasr of 11 April 2014 at 4.40pm in which Peter Sleiman says "See email from Andrew from NAB below. We need to get the caveat off asap". Peter Sleiman's email address for that email is peter@jakenhotels.com.au.
The "email from Andrew" referred to is an email purportedly from Andrew Soo dated 11 April 2014 at 3.46pm and sent to Peter Sleiman at the address peter@avsgroup.com.au. The subject is described as "Loan Details" and the text is: "Hi Peter, Loan details re: Borrower: JAKEN PROPERTIES AUSTRALIA PTY LIMITED ATF SLYFOX FAMILY TRUST Balance: $8,750,000 POWERHOUSE CORPORATION PTY LTD ATF PETEJAKE FAMILY TRUST Balance: $13,250,000 Further to our discussions the rollover of the bills and refinance for the Super Fresh purchase will not proceed whilst the caveat remains on the O'Malley's property. Any loan facility that is issued will be dependent on the removal of the caveat. Unfortunately our finance will not certify or move forward while the caveat is on. Peter I can't hold the discounted rates for much longer. If we can't get this over the line quickly you will be stuck with the extra interest costs - $$$tens of thousands over 5 years. Let me know if there is anything else you need from this end."
It was submitted for Mr Naaman that the Court would find that the 11 April 2014 email was created by Peter Sleiman to convey a false sense of urgency to the Court about the need to remove the caveats. In support of this proposition, Mr Naaman relied on: 1. NAB had not been able to locate a copy in its records of the email of 11 April 2014, but had located an email dated 7 April 2014 also sent at 3.46pm. 2. Andrew Soo's email of 7 April 2014 in NAB's records had indicated the indebtedness of Jaken and Powerhouse as being $8,400,000 and $10,900,000 respectively. The purported email of four day's later recorded those amounts as $8,750,000 and $13,250,000. 3. It was inherently improbable that a senior banker such as Mr Soo would use language such as "you'll be stuck with the extra interest costs - $$$ tens of thousands over 5 years" where there is no remotely similar usage in any of the many emails sent from Mr Soo that appeared in the court book. 4. Peter Sleiman had been asked to produce the original email of 11 April 2014 and had declined to do so. 5. The cross-defendants had produced not the original electronic version of the email but the forwarded version which was sent to Mr Joe Nasr, which said nothing about the authenticity of the original email purportedly sent by Mr Soo to Peter Sleiman.
In cross-examination Peter Sleiman denied that the 11 April 2014 email from Mr Soo to him was a fabrication. An affidavit of Joe Nasr was produced attaching the forwarded version of what was said to Mr Nasr.
The Court accepts the arguments advanced on behalf of Mr Naaman and finds that the 11 April 2014 email was a fabrication. The fact that it may have been forwarded to Joe Nasr casts no light on the question of the authenticity of the email. The Court's finding is made on the Briginshaw standard.

Some impugned documents - the 2013/2014 bank statement

Pursuant to the Rein J Orders, Peter Sleiman produced an affidavit setting out details concerning the financial position of the Sly Fox Trust. He exhibited to that affidavit what purported to be an NAB bank statement for Jaken for the period 25 December 2013 to 25 June 2014 ("the 2013/2014 bank statement").
Mr Naaman submitted that the 2013/2014 bank statement was also inauthentic and had been created belatedly to provide support for evidence sought to be given in the same affidavit that the lease purportedly entered into in June 2011 had been formalised in writing in or about October 2013 to record what until then had been an informal lease between Jaken and First O'Malley's.
The difficulty for Jaken is that NAB produced on subpoena bank statements for the same account (described as Jaken Properties Australia Pty Limited atf/Sly Fox Family trust) which was in a different form and contained different entries to the 2013/2014 bank statement (which was described as account name Jaken Properties Australia Pty Ltd). The 2013/2014 bank statement was curious in other respects. For example, it had two NAB logos in its top left hand corner in slightly different forms. Furthermore, it used headings such as "Narrative", "Reference", "Debit amount", "Credit amount" and "EOD balance" which do not appear on the form of statement produced by NAB.
The 2013/2014 bank statement referred to credits into the account on 28 January 2014 and 27 March 2014 with the narrative "transfer credits TRF O'Malley's", whereas the statements produced by NAB describe those transactions as "Loan Spa/JPA Spa JRK Inves". Furthermore, the statement produced by NAB uses this same description to refer to a credit and debit on 7 February 2014 for $300,000 that is not to be found on the 2013/2014 bank statement.
When these discrepancies were pointed out to Peter Sleiman in cross-examination, he accepted that the two versions were in respect of the same bank account but was unable to explain the discrepancies. His answer was "… these bank statements are clearly different to the other one so it's the Bank's bank statements" (T345:3-4).
Taking into account the discrepancies to which I have referred, the Court is satisfied on the Briginshaw standard that the 2013/2014 bank statement cannot possibly be an authentic statement produced by NAB. The only available conclusion is that it was used by Peter Sleiman in his affidavit made pursuant to the Rein J Orders to present a different picture about the financial condition and income of the Sly Fox Trust to what it actually was. Furthermore, given the view which the Court has formed about Mr Sleiman's credit generally, his denials that the document is a fabrication are not accepted. On the contrary, given what was plainly his close connection to and control over the business of Jaken (see for example Tony Sleiman's evidence set out in [306] to [310] above), the Court concludes that Peter Sleiman must have known at the time he deployed the 2013/2014 bank statement that it was not an authentic document.

Some impugned documents - the Tea Deed

The next document is a variation of discretionary trust deed purportedly made on 20 March 2009 and purporting to vary the Sly Fox Trust, including by substituting Tony Sleiman for Peter Sleiman as the appointor. This document came to be known as the Tea Deed, and I shall refer to it as such. As the evidence unfolded, the Tea Deed has a most curious history. For the reasons which follow, the Court has concluded that Jaken has failed to prove that any such document was actually ever entered into on or before 20 March 2009 or at all, and that, through Peter Sleiman, the cross-defendants were again prepared to deploy what must have been known to Peter Sleiman to be a concocted document.
The original appointor of the Sly Fox Trust was Peter Sleiman. By a defence filed on 9 October 2019, the cross-defendants pleaded that Jaken was not entitled to defend the cross-claim on behalf of the Sly Fox Trust because it had been removed as trustee on 20 January 2015 pursuant to an instrument executed by Tony Sleiman as appointor. However, on the evidence as it then stood, there was no evidence to support the proposition that the appointor had been changed from Peter Sleiman to Tony Sleiman.
In an affidavit sworn on 30 October 2019, in a section headed "Change of Appointor". Peter Sleiman said (at paragraph 41): "I cannot now recall when I had that conversation, except it would have been shortly before the Deed of Variation dated 20 March 2009 was made. I had forgotten the deed existed until I came across it earlier this month when rummaging through some archive boxes looking for documents for the purpose of these proceedings. When I found the deed, some of the other events started to come back to me."
However, while referred to in his affidavit, the purported deed of variation dated 20 March 2009 was not exhibited to his affidavit. A Notice to Produce was issued for that document. It was not produced. Darke J made orders requiring production. It was not produced.
On 30 January 2020, Mr Kelly of Senior Counsel emailed Mr Afshar saying "My people have dropped the original copy of the Deed of Variation of Trust dated 20 March 2009 into my chambers …. Would you prefer to pick it up from my chambers, or for us to produce it formally to the Court?" This was the document which came to be known as the Tea Deed. On 30 January 2020 the Tea Deed was formally produced to the Court under cover of a letter from Jaken's solicitors saying "We now produce in answer to paragraph 1 of the said Notice to Produce, the Original Deed of Variation dated 20 March 2009". As I will next set out, whatever else the document produced to the Court may have been, it was not the "original" of anything.
The Tea Deed was tendered into evidence before me. No forensic skill is required to discern that however it came to be stained with what appears to be tea, the tea was applied with a brush of some kind. Nevertheless, in an affidavit sworn on 18 March 2020, Peter Sleiman said (at paragraph 12): "I am responsible for the staining on the [Tea Deed]. The staining took place, on my desk, at my office, at XX Parramatta Road, Granville in February 2020, when I picked up my two year old great niece Alyssa and we accidentally knocked over a mug of tea on that desk. At that time, I thought the [Tea Deed] was the original copy of the Deed dated 20 March 2009 that I found at Silverwater in September 2019. I went into a panic when my tea tipped over. I attempted to wipe each page clean in the belief that the document needed to be preserved. I knew nothing about aging paper with tea or other substances. I had no intention of doing any such thing when I tried to clean the [Tea Deed]."
This version of events changed during Peter Sleiman's cross-examination (T449:17-46): "Q. The document that was produced by Fred David from David Legal to the Supreme Court of New South Wales on 30 January 2020 was the contents of packet N4 - I withdraw that, deed of variation of discretionary trust deed, the document I'm holding now, Mr Sleiman? A. Yes. Yes. Q. So, it was produced to the Court on 30 January 2020? A. Yes. Q. How did you spill tea on it in February 2020? A. I was in my office; my niece was running around in there and she knocked it over. HIS HONOUR Q. The point you're being asked about is the document having been produced, it would appear, to the Court on 30 January A. Yes, your Honour. Q. --how did you manage to spill tea on it in February? A. I don't know. AFSHAR Q. It was already produced to the Court on 30 January 2020. So, you couldn't have spilled tea on it in February 2020, isn't that right? A. I don't know. No. Q. You couldn't have, could you? A. I don't know. I don't think so."
There was uncontested forensic evidence tendered on behalf of Mr Naaman that the Tea Deed "is not an original document as purported in the letter dated 30 January 2020 from David Legal … rather, it is a reproduction possibly printed on or about 3 September 2019 . There has also been a liquid such as tea (or other tan/brown substance) applied to it with some kind of brush". The Court finds in accordance with that evidence.
In his affidavit of March 2020 (which was after Mr Naaman's forensic evidence had been received), Peter Sleiman deposed (at paragraph 13) that "I no longer believe that the [Tea Deed] is the one I found at Sliverwater. I now believe I made a mistake in producing that copy of the Deed dated 20 March 2009 to the Court" and at paragraph 14 "To be clear, I do not believe the document I found was the original deed. I believe it was a photocopy".
If the matter were not so serious, Peter Sleiman's attempts to rely on the Tea Deed and his explanations in the face of the forensic evidence, might be described as ludicrous. The Tea Deed is not an original document. No original of the purported deed of variation alleged to have been entered on 20 March 2009 has been produced. The Court finds that no such document was ever entered into.
In making that finding, I have not overlooked the evidence of Jaken's solicitor, Mr Stefano Laface. He swore an affidavit on 2 October 2019 which attached the Tea Deed and continued: "3. I drafted the Deed on instructions from Mr Peter Sleiman and his brother Mr Tony Sleiman in or about March 2009. 4. The Deed was executed in my presence on 20 March 2009. 5. The date "20" March 2009 was written on the Deed by me. 6. I witnessed the signatures of Mr Tony Sleiman, where it appears twice on the last page of the Deed, and the signature of Peter Sleiman, where it appears once on the page. 7, The signature in the middle of the three signatures at the foot of the cover page and each of the following three pages of the Deed is my signature."
As I shall shortly develop, a point of some concern to the Court is that Mr Laface's signature as it appears on his affidavit of 2 October 2019 bears little resemblance to his signature as it purportedly appears on the Tea Deed.
For the following reasons advanced on behalf of Mr Naaman, the Court is not satisfied on the balance of probabilities that an original version of the Tea Deed was executed in the presence of Mr Laface in March 2009. The Court finds, as submitted for Mr Naaman, that the likelihood is that Mr Laface has persuaded himself that he executed the original of the Tea Deed by reason of having been shown a copy of it and bearing in mind, as the Court accepts, that Mr Laface executed many documents for and in relation to Jaken, Peter Sleiman, Tony Sleiman and their affairs.
There are five reasons for this conclusion. First, while Mr Laface initially claimed to have an actual recollection of witnessing an original of the Tea Deed, he was unable to provide any file note or other contemporaneous record of having done so. Furthermore, when pressed in cross-examination, Mr Laface said (T471:9-50): "Q. You understand that that's the document with which your affidavit is concerned? A. Yes, it is, yes. Q. So, you were shown the deed of variation and you were asked whether or not it was signed in your presence isn't that right? A. I was asked if it was signed my presence and if I prepared it. Q. And you looked at the deed is that right? A. I did. Q. And you saw that there was a reference to you on the deed, isn't that right? A. As a witness, yes. Q. And you reasoned that you must have signed the document that had a reference to you on it isn't that right? A. Sorry, can you just reclarify that? Q. When you looked at the document, you reasoned that it must been something that you witnessed, signed, isn't that right? A. That's correct. Q. And that's because it's your practice isn't it to ensure that you wouldn't witness a signature if you weren't in someone's presence isn't that right? A. That's right. Q. And so, when you looked at the document, you reasoned that you must have been there and that's why you say that you were there in your affidavit isn't that right? A. I think the affidavit says I witnessed the signatures. Q. Well, that's what I'm saying to you. A. That's right yes, sorry sir, yes. Q. You say in your affidavit "I witnessed the signatures." Because when you looked at the document, you reasoned that you must have been there and witnessed the signatures when you signed that isn't that right? A. Yes. Q. You have no independent recollection of how you signed that document isn't that right? A. Independent recollection? Q. Independent from the document itself isn't that right? A. I've got memory of attending XX Granville because there was a boardroom downstairs and I recall signing documents there." In the light of that evidence I am not satisfied that Mr Laface has any independent recollection of signing an original of the Tea Deed.
Second, in certifying a list of documents in the 2009 proceedings on 22 September 2010, Mr Laface had certified a list of documents in which he said that he "was not aware of any documents" which fell within the description of "amendments for variation(s) of the trust deed" for the Sly Fox Trust, whereas 10 years later he purported to recall executing the original of the Tea Deed.
Third, Mr Laface could not claim to be completely independent of Peter Sleiman and Tony Sleiman. He had had business dealings with the Sleimans as part of a joint venture, including being a director of Logan Fox Lawyers Pty Ltd, a law firm which operated from the office of Peter Sleiman and of which Samantha Sleiman was also a director. That relationship fortifies the Court both in its conclusion that there would have been many documents which Mr Laface would have witnessed or executed for or in relation to Peter Sleiman, Tony Sleiman and Jaken, and that he could not be regarded as completely independent.
Fourth, in contrast to his apparent ability to recall executing the original of the Tea Deed in March 2009, Mr Laface showed a poor recollection in cross-examination of what matters relating to Peter Sleiman and Anthony Sleiman he had taken from his former employer to his own practice which he had set up in 2010.
Fifth, Mr Laface was taken to a number of documents which he accepted he had signed in 2009, 2010 and 2011. As a matter of ordinary, visual comparison, Mr Laface's signatures purporting to witness the execution by Tony Sleiman and Peter Sleiman of the original of the Tea Deed are quite different to Mr Laface's signature in the other documents to which he was taken which he accepted bore his signature.
I raised with Mr Afshar my concern as to what the Court was entitled to do with such a comparison in the absence of expert evidence, even when it is recalled that expert evidence is evidence which enables the Court to make findings of fact.
Mr Afshar submitted that where all that could be done was to compare a copy document (the Tea Deed) with other copy documents, the Court was in just as good a position as an expert to reach a conclusion as to the authenticity of the impugned signatures. He drew to attention the decision of the Court of Appeal in Carnemolla v Adelaide Bank [2013] NSWCA 122, in which the Court said: "24. In any event, the issue concerning the genuineness of the appellants' signatures to the documents relating to the Levuka Street loan was collateral to the Bank's proceedings with respect to the appellants' default under the Bank's loan. Further, the reports in question are of little assistance to the appellants. Mr Anderson had only been provided with copies rather than the originals of the documents in question and, therefore, stated that it was not possible to make any determination about the authenticity of the challenged signatures. However, he did observe that: "The only pertinent observation that can be made is that the respective signatures have a level of pictorial similarity to the respective specimen signatures." an observation which is of no assistance to the appellants' case on this issue. 25 Mr Dubedat was similarly handicapped by not having access to the original documents. He concluded that no determination could be made as to whether or not the challenged signatures on the loan application form had been transferred or reproduced from another document. So far as the signatures on the loan contract were concerned, he concluded that the first signature purporting to be that of the first appellant was probably genuine, although that purporting to be that of the second appellant was very probably not genuine. Nevertheless, each opinion was qualified due to the absence of the original documents."
Mr Afshar then invited an analogy to the decision of the High Court in Smith v The Queen (2001) 206 CLR 650; [2001] HCA 50, in which the plurality rejected as irrelevant the evidence of two police officers who had given evidence at the trial that one of the robbers depicted in security camera photographs was the accused. Their Honours said (at [11]) "Because the witness's assertion of identity was founded on material no different from the material available to the jury from its own observation, the witness's assertion that he recognised the appellant is not evidence that could rationally affect the assessment by the jury of the question we have identified".
I accept Mr Afshar's submission that, at least insofar as the question of authenticity is concerned, I am entitled to take into account my own observation of how different Mr Laface's signatures on the Tea Deed appear to be from those on the other documents which he accepted were his signature for the period 2009 to 2011 (and, although much later, his signature on his affidavit in these proceedings). Contrary to how it was originally presented by Peter Sleiman, the Court has no doubt, and has concluded, that the Tea Deed is not an original document.
The fact that, in the first instance, the Tea Deed was sought to be presented as an original document is a matter which the Court also takes into account on the next question, which is that given the Tea Deed is a copy, was there ever an original document which in fact was executed on 20 March 2009 as Jaken's witnesses sought to suggest? Taking into account the various matters to which I have referred to in [334] to [354], the Court is not satisfied that there was ever any such original document, not least because the end result of Peter Sleiman's evidence, if accepted at face value, is that he found but still has not produced what he first said was an original document when he was rummaging around in archive boxes in 2019. Taking all of the matters to which I have referred together, the Court concludes that on the balance of probabilities (and applying the Briginshaw standard) the Tea Deed and its liquid vicissitudes were no more than an inept attempt by Peter Sleiman to concoct evidence in support of Jaken's case.

Impugned document - Purported Deed of Variation of Discretionary Trust made on 30 September 2010

The final impugned document is a deed of variation of discretionary trust purportedly made on 30 September 2010 in relation to the Sleiman Family Trust (the purported SFT variation deed). On its face this has the effect of deleting Peter Sleiman as the primary beneficiary of the Sleiman Family Trust and appointing George Sleiman as the primary beneficiary of that trust, in addition to deleting a class of general beneficiaries. The deed is between Peter Sleiman Investments Pty Ltd as trustee of the Sleiman Family Trust and Peter Sleiman, described as its appointor. It is executed by George Sleiman as the sole director and secretary of Peter Sleiman Investments Pty Limited (witnessed by a solicitor, Joe Nasr, who was not required for cross-examination but whose affidavit evidence was not directed to this document), and Peter Sleiman's signature is witnessed by Angela Michael.
Mr Naaman's criticism of the authenticity of the purported SFT variation was based upon the fact that the Sleiman Family Trust had been the subject of proceedings heard by Black J in 2016 in DCT (referred to at [232] above). As appears from paragraph [26] of Black J's judgment, that case was fought for the defendant (represented by Mr Kelly of Senior Counsel and Jaken's current solicitors, David Legal), on the basis that the primary beneficiary of the Sleiman Family Trust was Peter Sleiman. Furthermore, when the proceedings were dealt with in the Court of Appeal, Peter Sleiman did not object to being joined as a party to perfect the record by reason of his status as primary beneficiary.
Mr Naaman's submission was that history meant that either Peter Sleiman had permitted the case before Black J and in the Court of Appeal to proceed on a false basis, or the purported SFT variation deed was in itself inauthentic. These alternatives were put to Peter Sleiman in cross-examination, who was unable to offer any explanation.
The Court accepts Mr Naaman's submissions. In light of how the proceedings appear to have been run before Black J in the Court of Appeal in relation to the Sleiman Family Trust, I am unable to reach a state of actual satisfaction on the balance of probabilities that the purported SFT variation deed was executed on or about the date which it bears or at all as a document executed with the intention of having legal effect.

The impugned documents - a final summary

As Mr Naaman's submissions accepted, the significance of the various impugned documents was not necessarily their legal consequences in relation to the transactions impugned by Mr Naaman in these proceedings. Their significance, which the Court readily accepts, was to demonstrate as part of the general attack on the credibility of Peter Sleiman, that the Court could not necessarily rely on the veracity of documents propounded on his behalf or on his evidence. By reference to what I have said above in relation to the impugned documents and more generally in relation to Peter Sleiman's credit, Mr Naaman's submission to that effect is accepted as well made.

Mr Naaman's standing

The only seriously contested question of legal principle between the parties related to Mr Naaman's standing, in particular in relation to causes of action against the third parties who are said to have received property of the Sly Fox Trust other than as bona fide purchasers for value without notice. This issue is able to be dealt with at the level of principle before being referred to later in these reasons in relation to particular causes of action.
It is uncontroversial that a current trustee is entitled to indemnity from the trust assets for all liabilities properly incurred in the execution of the trust. That right arises as an incident of the law of trusts, under statute (see for example, s 59(4) of the Trustee Act 1925 (NSW)) and is also often given expression in the express terms of a trust deed.
So it is that the trust deed for the Sly Fox Trust included: "10 TRUSTEES ONLY LIABLE IF FRAUDULENT NO Trustees shall be responsible for - (a) any loss or damage occasioned to the trust Fund or nay part thereof or to any person by the exercise of any discretion or power hereby or by law conferred on the Trustees or by any alleged failure ot exercise any such discretion or power; or (b) any breach of duty or trust whatsoever - Unless the same shall be proved to have been committed made or omitted in person conscious and fraudulent bad faith by the Trustees charged to be so liable. All person claiming any interest in the income or capital of the Trust Fund shall be deemed to take with notice of and subject to the protection hereby conferred on the Trustees. … 16. INDEMNITY FOR THE TRUSTEES The Trustee shall be entitled to be indemnified out of the assets for the time being comprising the Trust Fund against liabilities incurred by them in the execution or attempted execution or as a consequence of the failure to exercise any of the trusts authorities powers and discretions hereof or by virtue of being the Trustees hereof but the Trustees shall not be entitled to be indemnified by any Beneficiary personally in respect of any liabilities or other matters aforesaid other than in respect of any duty or tax which they are entitled to recover from the Beneficiary by law."
The parties each began with this basal principle set out in the judgment of the High Court in Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360; [1979] HCA 61 at 367 (citations omitted): "13. We do not understand the general principles concerning the bankruptcy of a trading trustee to be in dispute. It is common ground that a trustee who in discharge of this trust enters into business transactions is personally liable for any debts that are incurred in the course of those transactions: Vacuum Oil Co. Pty. Ltd. v. Wiltshire [1945] HCA 37; (1945) 72 CLR 319. However, he is entitled to be indemnified against those liabilities from the trust assets held by him and for the purpose of enforcing the indemnity the trustee possesses a charge or right of lien over those assets: Vacuum Oil Co. Pty. Ltd. v. Wiltshire. The charge is not capable of differential application to certain only of such assets. It applies to the whole range of trust assets in the trustee's possession except for those assets, if any, which under the terms of the trust deed the trustee is not authorized to use for the purposes of carrying on the business: Dowse v. Gorton (1891) AC 190. 14. In such a case there are then two classes of persons having a beneficial interest in the trust assets: first, the cestuis que trust, those for whose benefit the business was being carried on; and secondly, the trustee in respect of his right to be indemnified out of the trust assets against personal liabilities incurred in the performance of the trust. The latter interest will be preferred to the former, so that the cestuis que trust are not entitled to call for a distribution of trust assets which are subject to a charge in favour of the trustee until the charge has been satisfied: Vacuum Oil Co. Pty. Ltd. v. Wiltshire. 15. The creditors of the trustee have limited rights with respect to the trust assets. The assets may not be taken in execution (Savage v. Union Bank of Australia Ltd. [1906] HCA 37; (1906) 3 CLR 1170, at p 1186 ; In re Morgan; Pillgrem v. Pillgrem (1881) 18 Ch D 93 ) but in the event of the trustee's bankruptcy the creditors will be subrogated to the beneficial interest enjoyed by the trustee: Vacuum Oil Co. Pty. Ltd. v. Wiltshire; Ex parte Garland [1804] EngR 336; (1804) 10 Ves Jun 110, at p 120; [1804] EngR 336; (32 ER 786, at p 789)."
Once JPG had retired as trustee of the Sly Fox Trust to be replaced by Jaken, JPG's means of enforcing its right of indemnity against the trust assets was different. So much appears in the judgment of Leeming JA (Beazley P and Emmett AJA agreeing) in the DCT Appeal referred to at [239] above: "56. The trustee's right of indemnity may be vindicated in two distinct ways. The trustee may, if the trustee has discharged the liability, be reimbursed from trust property. Alternatively, if the liability has not been discharged, the trustee may apply trust property to do so. In some cases it is convenient to distinguish the former right of reimbursement from the latter right of exoneration. But common to both, of course, is the notion that the trustee can have recourse to assets held by the trustee on trust in support of the trustee's right of indemnity. 57. One consequence of the trustee's entitlement to have recourse to trust assets in support of its right of indemnity is that, until the trustee's entitlement has been satisfied, "it is impossible to say what the trust fund is": Chief Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226; [1998] HCA 4 at [48]. 58. Where a trustee ceases to hold office (for example, where a new trustee is appointed), it may still enjoy a right of recoupment or exoneration in respect of liabilities incurred by it as trustee. But after trust assets are vested in the new trustee, its rights are necessarily enforced in a different way. No longer having legal title to trust assets, a former trustee may no longer simply appropriate trust assets to reimburse or exonerate it. 59. In Bruton Holdings Pty Ltd (in liq) v Commissioner of Taxation (2009) 239 CLR 346; [2009] HCA 32 at [43], the High Court said: "[B]y force of cl 13 of the Trust Deed, the appellant has a lien on the trust assets for all liabilities, costs and expenses properly incurred by it in administration of the Trust. Further, even without that express provision, the appellant has rights of recoupment or exoneration in respect of all obligations incurred by it in that administration. These rights were supported by a lien over the whole of the trust assets which amounted to a proprietary interest therein and they survived the appellant's loss of office as trustee." [footnotes omitted]. 60. But it does not follow that a trustee which sells a trust asset without breach of trust and for fair value continues to enjoy any rights over the asset formerly held by it on trust. The nature of the rights of recoupment or exoneration - whereby a trustee deploys assets owned by it to discharge the trustee's liability - is that they extend to current assets. It will be noted that the formulations of principle in Octavo Investments and Bruton Holdings reproduced above refer in terms to the trustee's rights being in respect of trust assets, references which are to be understood as the trust assets from time to time."
It is convenient at this point to note that, in this case, under the deed of appointment and retirement of trustee of discretionary trust made on 13 February 2007 whereby Jaken replaced JPG as the trustee of the Sly Fox Trust, it was provided: "1.5 Indemnity The New Trustee indemnifies the Retiring Trustee against all debts which the Retiring Trustee has incurred and which are unpaid at the time of execution of this deed by all parties, while acting under and in terms of the Trust Deed and undertakes and agrees that the New Trustee will pay and discharge all such debts out of the assets of the Trust in accordance with the terms of credit or otherwise under which such debts were incurred."
The final point of agreement between the parties was that in insofar as a creditor such as Mr Naaman was subrogated to the trustee's right of indemnity from the assets of a trust, the creditor could not be in a better position than the trustee would have been.
The point of divergence between the parties came with Jaken's emphasis on the statement of principle by Brereton J (as his Honour then was) in Lemery Holdings Pty Ltd v Reliance Financial Services Pty Ltd (2008) 74 NSWLR 550; [2008] NSWSC 1344 ("Lemery"): "18 Fifthly, being an equitable lien, the security is enforceable by the trustee only by judicial sale or appointment of a receiver, and not by foreclosure nor by sale out of Court [Tennant v Trenchard (1869) LR 4 Ch App 537; ANZ Banking Group Ltd v Intagro Projects Pty Ltd [2004] NSWSC 1054, [14]; Melbourne Tramways Trust v Melbourne Tramway & Omnibus Company Ltd (1887) 13 VLR 487, 490; Re Pumfrey (1882) 22 Ch D 255, 265; Re Stucley [1906] 1 Ch 67; Davies v Littlejohn (1923) 34 CLR 174, 184; Hewett v Court (1983) 149 CLR 639, 663; Sykes & Walker, The Law of Securities, 5th ed, (1993) Lawbook Co, 198]." Jaken puts particular emphasis on the word "only" in the passage just quoted.
Jaken then goes on, critically for its argument, to draw attention to what was said by Bell, Gageler and Nettle JJ in Carter Holt Harvey Woodproducts Australia Pty Limited v The Commonwealth of Australia (2019) 268 CLR 524; [2019] HCA 20 ("Carter Holt") (Jaken's emphasis): "85. In several of the authorities, and thus in the proceedings below, the property of a trustee available for the payment of creditors in the event of insolvency is described as being the right of indemnity. That is so in the sense that the trustee's right of indemnity confers a beneficial interest in the trust assets. As this case demonstrates, however, it is necessary to keep in mind that the property constituted of the right of indemnity as such and the property constituted of the trust assets themselves are separate and distinct, albeit that the former confers a proprietary interest in the latter. Failure to bear that in mind is liable to result in the misconception at which the primary judge arrived, and which was perpetuated in the appellant's submissions before this Court, that, because Amerind's right of indemnity as such was not property that was subject to a circulating security interest, s 433 did not apply."
Jaken submits that this is "a critical distinction which leaves no room for a trustee, let alone a creditor to whom the trustee's right of indemnity is subrogated, to presume that the trustee's right of indemnity in trust assets are one and the same". The submission continues that "there is no room for Mr Naaman or any other creditor to treat any cause of action which belongs to the Trust as though it were his own and he is somehow entitled to bring an action on that cause of action in his own name".
Taken together, Jaken's submission is that, 1. the only right that JPG has (and to which Mr Naaman is subrogated) is to enforce JPG's lien over such assets of the Sly Fox Trust as there are by the appointment of a receiver to effect sale of those assets; and 2. what Mr Naaman is seeking to do is to enforce a cause of action which belongs to the Sly Fox Trust.
As I will next develop in my respectful opinion, both of those propositions are incorrect. As to the first, the Court accepts Mr Naaman's submission that the authorities amply demonstrate that a court will do more to assist the former trustee than appoint a receiver to effect a judicial sale. To understand the basis for that further assistance, a starting point is this paragraph in the judgment of Bell, Gageler and Nettle JJ in Carter Holt (emphasis added): "83. The trustee also has a right to be indemnified out of the trust assets in respect of liabilities properly incurred in the execution of the trust, which takes priority over the beneficiaries' claim on the trust assets. Until that right has been satisfied, the beneficiaries cannot compel the trustee to exercise the trustee's powers as legal owner of the trust assets for their benefit. A court of equity will assist the trustee to realise trust assets to satisfy the trustee's right of indemnity, in priority to the beneficiaries' interests, and thus it is said that the trustee has an equitable charge or lien over the trust assets. It is not, however, a charge or lien comparable to a synallagmatic security interest over property of another. It arises endogenously as an incident of the office of trustee in respect of the trust assets."
As will be shortly demonstrated by reference to the authorities, equity's assistance to the trustee does not stop with facilitating the realisation of trust assets. In referring to Brereton J's statement of principle in Lemery Holdings, Jaken overlooks his Honour's conclusion, albeit in obiter dicta, (at 561) that "To my mind, then, it follows in principle that a former trustee does not have a right to retain as against a new trustee, the trust assets as security for an accrued right of indemnity, though the former trustee is entitled to ensure the new trustee does not take steps which will destroy, diminish or jeopardise the old trustee's right of security, which subsists in the trust assets after their transfer to the new trustee" (emphasis added). I respectfully agree with his Honour and, as will be developed below, add that where there has been such destruction, diminishment or jeopardy, equity will assist.
The foregoing explains why the second sub-proposition in Jaken's argument is in error. Mr Naaman, by subrogation to JPG, is not seeking to exercise "any cause of action which belongs to the Trust". What he is seeking to exercise is JPG's own entitlement as the former trustee to enlist the assistance of equity where the assets of the Sly Fox Trust have been diminished by being paid away or otherwise disposed of other than to a bona fide purchaser for value without notice. That is not a cause of action of the Sly Fox Trust. It is an entitlement of JPG to which Mr Naaman in subrogated. The nature of that entitlement is further considered below.
Turning to Mr Naaman's reliance on the authorities, which the Court accepts as correct, the starting point is this statement by the High Court in Bruton Holdings Pty Ltd (In Liquidation) v Commissioner of Taxation of the Commonwealth of Australia (2009) 239 CLR 346; [2009] HCA 32, where speaking of the position of the appellant as a former trustee, the Court said (citations omitted): "43. The appellant was not entitled to charge any remuneration, but, by force of cl 13 of the Trust Deed, the appellant has a lien on the trust assets for all liabilities, costs and expenses properly incurred by it in administration of the Trust. Further, even without that express provision, the appellant has rights of recoupment or exoneration in respect of all obligations incurred by it in that administration. These rights were supported by a lien over the whole of the trust assets which amounted to a proprietary interest therein and they survived the appellant's loss of office as trustee. The amount so secured to the appellant has yet to be determined."
Translated to the facts of this case, when JPG ceased to be trustee of the Sly Fox Trust, its right of indemnity continued to be supported by a lien over the whole of that trust's assets and which gave JPG a proprietary interest in those assets. That lien and interest, to the enforcement of which Mr Naaman is subrogated, continued after JPG had ceased to be trustee in relation to the assets of the Sly Fox Trust now legally held by Jaken. The same conclusion appears in the decision of the Court of Appeal in Agusta Pty Ltd v Provident Capital Ltd [2012] NSWCA 26, in which Barrett JA (with whom Campbell JA and Sackville AJA agreed) said: "80. Provident and other trust creditors were entitled by subrogation to the benefit of Agusta's preferred beneficial interest. Equitable execution by way of the appointment of a receiver and sale of trust assets held by Agusta would have been available for the benefit of trust creditors. After the trust assets had passed into the hands of Riva as successor trustee, Agusta's preferred beneficial interest (and the rights accruing to Agusta's creditors by subrogation) continued to subsist in those assets and the same remedy could have been obtained in relation to trust property in Riva's hands."
The next step is to identify what further assistance equity will give a former trustee such as JPG and, by subrogation to JPG's rights, Mr Naaman in relation to trust assets in which JPG had a preferred beneficial interest where those assets had been paid away. The short answer is that JPG (and, by subrogation, Mr Naaman) was entitled to follow those assets into the hands of third parties (other than bona fide purchasers for value without notice) who will hold them on a constructive trust imposed by the court in aid of JPG's proprietary interest in the Sly Fox Trust assets. Mr Naaman relied on a number of authorities in the argument made on his behalf to reach that conclusion, but the point is sufficiently demonstrated by reference to four cases.
The first decision relied upon by Mr Naaman is that of Mansfield J in Rothmore Farms Pty Ltd (in provisional liquidation) v Belgravia Pty Ltd & Ors [1999] FCA 745. In that case, the plaintiff ("Rothmore Farms") was the trustee of a family trust. It was succeeded in that role by the defendant (Belgravia), which subsequently vested the whole of the assets in the trust in another defendant, Mr Andrew Cooper. Justice Mansfield described the appointment of Belgravia as the "first transaction" and the vesting of the assets of the trust in Mr Cooper by Belgravia as the "second transaction".
In relation to the first transaction, his Honour held: "36 The next issue to address is whether the removal of Rothmore Farms as trustee, so that it relinquished its possession of the assets of the Trust, resulted in that lien or charge being lost. In my judgment, it did not. It would be a strange result if that equitable interest were capable of being lost by a transaction such as the first transaction. The persons controlling Rothmore Farms and the main beneficiaries under the Trust were the Cooper Family. Mrs Cooper alone under the Trust Deed had power to change trustees. The transfer of assets in many cases (as in this case) could be effected by a notional change in possession or by book entries. The ease with which that equitable interest could thus be lost if the respondents are correct tends to suggest that the proposition urged by the respondents should be carefully scrutinised. 37 Authority also indicates that the equitable interest of the trustee in trust assets, to the extent of the trustee's right of indemnity against the trust assets, is not lost by a change of trustee or by the giving up of possession of the trust assets by that former trustee. Jennings v Mather (above) recognised that the trustee's right of access to the trust assets for that purpose was not lost by the trustee's bankruptcy; it was maintainable by his trustee in bankruptcy. That position is also recognised in In Re Suco Gold Pty Ltd (1982) 33 SASR 99 where the trustee had been placed in liquidation. King CJ at 109 said: "The trustee's lien is an equitable lien which confers on him a charge over the trust property, whether in his possession or not, for the purpose of protecting and enforcing the right of indemnity ... The rights conferred by the lien passed to the liquidator. They would enable him to obtain and retain possession of the trust property until the right of indemnity has been exercised, and to realize the trust property in the course of exercising it."… 42 In my judgment, therefore, Rothmore Farms' right to indemnity against the assets of the Trust, to the extent of its indebtedness to the Banks, survived the first transaction. I also find that at the time of the first transaction, and thereafter, Rothmore Farms had an equitable charge or lien over the assets of the Trust to the extent of that right of indemnity. An illustration of the recognition of those principles is provided by Kemtron Industries Pty Ltd v Commissioner of Stamp Duties [1984] 1 Qd R 576 where the value of the interest in a trust transferred by a beneficiary was assessed, for the purposes of ad valorem stamp duty, having regard to the trustee's equitable claim over the trust assets to protect the trustee's indemnity against those assets."
It is his Honour's finding in relation to the second transaction that is on all fours with this case: "112 Rothmore Farms contends first that its equitable lien or charge over the assets of the Trust survived the second transaction. On the evidence, nothing occurred to disturb that interest between the first transaction and the second transaction. Nothing was suggested by the respondents to have had that effect. It submits that because Andrew Cooper was not, by the second transaction, a bona fide purchaser for value without notice, that equitable interest was not defeated by the second transaction. … 115 It is also clear that he took the assets of the Trust by the second transaction without consideration on his part. He took them in a transaction which enabled him at law to assume those assets without having to assume the liabilities to the Banks. Even if, as counsel for Andrew Cooper contended, the second transaction was a lawful transaction, it does not follow that the equitable interest of Rothmore Farms in the Trust assets was thereby lost. 116 Counsel for Andrew Cooper did not put any submissions that that equitable interest did not survive the second transaction, apart from the contentions which I have rejected earlier in these reasons that there was no ongoing debt to the Banks and that no right of indemnity existed or equitable interest arose because of the wrongful conduct of Rothmore Farms as trustee. 117 There is, in my judgment, no reason in equity why Andrew Cooper's title to the Trust assets as a result of the second transaction was not subject to the equitable interest of Rothmore Farms in those assets."
I respectfully agree with the conclusion set out by Mansfield J and find that his reasoning is equally applicable to the circumstances of these proceedings.
The second case is Ron Kingham Real Estate Pty Ltd v Edgar [1999] 2 Qd R 439. It is less directly in point because it concerned a trustee's right to be indemnified by the beneficiaries rather than out of the trust assets. In that case, confronted with a judgment against the trustee company, the beneficiaries caused the trust assets to be transferred to them while the judgment remained unsatisfied.
McPherson JA (with whom Davies JA and Fryberg J agreed) held that the judgment creditor, who was subrogated to the trustee's right of indemnity against the beneficiaries, was entitled to sue the beneficiaries directly.
What is important for present purposes is that his Honour did not see any difference between the enforcement by the subrogated creditor of the trustee's right of indemnity from the trust assets as opposed to against the beneficiaries themselves. His Honour said (emphasis added) at 443-444: "In the end, however, I cannot see that it makes any difference in principle whether the creditor claims to be subrogated to the trustee's right of indemnity against the trust property or against the beneficiary in person. In Marginson v. Ian Potter & Co., Jacobs J. evidently did not consider that a distinction was involved. In disposing of that appeal, his Honour said (136 C.L.R., 161, 176): "the appellant … was always liable to make good personally and out of the purchased shares the indebtedness of the company to the respondents. It does not matter whether the company is described as trustee or as agent in this context. The same right to indemnity and consequent right in the creditor to be subrogated thereto existed." The other members of the High Court, who were Gibbs and Mason JJ., did not find it necessary to consider the right of indemnity or subrogation; but in this field of law the authority of Jacobs J. is such that it would be bold, without good reason, to question the accuracy of his Honour's statement on the subject. The trustee's right to indemnity is, in any event, a chose in action: see Re Richardson [1911] 2 K.B. 705, 715. It is an incident of trusteeship that enables a trustee to act in the best interests of the trust in an impartial and disinterested manner with some assurance that his personal financial position will not be prejudiced. Under the pre-Judicature system, a creditor who found the trustee unwilling to enforce the indemnity could appeal to a court of equity to compel the trustee to lend his name to proceedings against the beneficiary. The procedure is explained in Archard v. Coulsting (1843) 6 Man. & G. 75, 79; 134 E.R. 815, 816; and Sharpe v. San Paulo Ry Co. (1873) L.R. 8 Ch.App. 597, 609-610. Nowadays the presence of the trustee as a party might still be required to ensure he was bound by the determination; but it is difficult to see why in the circumstances of this case the plaintiff here should not be entitled to sue the beneficiaries directly. The defendants had notice of the plaintiff's claim at the time they arranged for the trust assets to be paid to themselves, and they enriched themselves at the expense of satisfying the plaintiff's claim against the trustee. It would plainly be against conscience for them to retain the proceeds of their conduct so as to defeat that claim. In equity they would be considered as constructive trustees of the assets received at least to the extent necessary to satisfy the trustee's liability."
The Court draws two points from this decision. First, it is directly contrary to Jaken's submission (which the Court rejects) that the only relief open to JPG in relation to assets that may have been paid away from the Sly Fox Trust would be to appoint a receiver to the Sly Fox Trust who could then pursue the funds. Second, if the subrogated creditor is entitled to sue the recipient of the funds on the basis of the trustee's right of indemnity against those recipients (whether or not beneficiaries), there is no reason why the same principle would not apply to assets that have been paid away by or from a successor trustee. The point is that whether or not the trust assets are legally held by the first trustee or the successor trustee, they remain impressed with the lien in favour of the first trustee to whose rights the creditor is subrogated.
Mr Naaman then relies on the next iteration of the Rothmore Farms litigation: Rothmore Farms Pty Ltd (In liq) v Belgravia Pty Ltd [2005] SASC 117 ("Rothmore No 2"). As a result of the first set of proceedings heard by Mansfield J, an inquiry and account had been conducted which resulted in orders against two of the six defendants in that case. I add, in passing, that it seems to me a similar course will have to be followed in this case. Rothmore No 2 concerned the continuation of the proceedings before Perry J (for reasons which need not be rehearsed) for "damages and/or equitable compensation" against the other defendants for the deficit.
Perry J discussed the principles and their application in this way: "72. As I have explained, Rothmore Farms was entitled to exercise a right of indemnity against the assets of the Trust with respect to its liability to the banks. This arose under the general law and pursuant to the Trust Deed. Mansfield J so found. There is no challenge to that finding. 73. When Belgravia was substituted as trustee and thereby acquired legal ownership of the Trust assets, it became a fiduciary vis a vis Rothmore Farms, or a constructive trustee with respect to the protection of Rothmore Farms' right of indemnity against those assets. Belgravia was obliged not to act with respect to the assets of the Trust in a way which jeopardised Rothmore Farms' right of indemnity and its lien over the assets. … 76. It follows that when Belgravia acquired legal ownership of the Trust assets, it did so subject to the equitable lien or charge over those assets in favour of Rothmore Farms to the extent of Rothmore Farms' indebtedness to the banks. 77. Furthermore, Rothmore Farms' right of indemnity and its lien over the assets of the Trust took priority over the equitable interests of the beneficiaries of the Trust. … 79. Effectively, the equitable interest which remained in Rothmore Farms reduced pro tanto the interest of the beneficiaries: ".. the trust property ... where there is a right in the trustee to indemnity from the assets, at any time is limited to the beneficial interest in the assets remaining after deduction of the value of the trustee's interest comprising his right to indemnity out of the assets." (Kemtron Industries Pty Ltd v Commissioner of Stamp Duties [11] and the cases there cited. See also Re Neander Constructions Pty Ltd.[12]) 80. When Belgravia resolved to vest the Trust and distribute the assets to Andrew Cooper, it did so as part of a process of carrying out a dishonest or fraudulent design, designed in part to prevent Rothmore Farms from exercising its lien, and in turn to prevent the banks from taking effective action to recover from Rothmore Farms its indebtedness to them. In doing so, Belgravia was in breach of its fiduciary duties owed to Rothmore Farms. … 85. Clearly, it owed a duty to maintain the Trust, rather than to dissolve it, so as to protect Rothmore Farms' right of indemnity against the Trust assets. Its distribution of the whole of those assets to one of the beneficiaries was a flagrant breach of that fiduciary duty. It is nothing to the point that Rothmore Farms' right of indemnity in the associated lien over the assets might have survived the transaction. 86. That the defendants Noelene Cooper and Robert Mills actively participated in Belgravia's breach of fiduciary duties with knowledge of its dishonest or fraudulent design cannot be denied. … 89. In my view, this is one of those cases where it can be said that Noelene Cooper's and Robert Mills' involvement with the second transaction was an expression of the fact that they were: "… acting as the corporation rather than for the corporation: … the person or persons who are the 'directing mind and will' of the corporation."… 92. So that in the circumstances of this case, rather than regarding them as participating in a breach of fiduciary duty by Belgravia, one should have regard to their conduct as one and the same as the breach of fiduciary duty by the company. In those circumstances, resort to the second limb of the Barnes v Addy principle is otiose. … 109. But it was Belgravia's breaches of fiduciary duty which Noelene Cooper and Robert Mills engineered or in which they participated which put Andrew Cooper in the position of being able to enter into the third transaction. 110. In those circumstances, there is no doubt that Noelene Cooper and Robert Mills remain liable in damages."
I accept Mr Naaman's submission that Perry J's analysis is on all fours with the present case, with JPG being in the same position of Rothmore Farms and Mr Naaman being entitled to sue on the causes of action available to JPG as a subrogated creditor of JPG.
It was further put for Mr Naaman that Jaken held the assets of the Sly Fox Trust in trust for JPG insofar as they were required to satisfy JPG's right of indemnity. I do not consider the relationship between Jaken and JPG may be so neatly characterised. Perry J's analysis of the relationship between the successor trustee and the former trustee as fiduciary, or the successor being a constructive trustee of the trust assets to protect the former trustee's right of indemnity is correct (see Rothmore No 2 at [73] cited in [387] above). In my respectful opinion, the relationship is an example of one that may be analysed as bearing both fiduciary and trust characteristics. It is the incidents of that relationship in a particular case that are important, recognising, as Bell, Gageler and Nettle JJ in Carter Holt at [83] (see [369] above) that the former trustee's lien is not "comparable to a synallagmatic security interest over property of another", but arises "endogenously as an incident of a trustee in respect of the trust assets".
Finally, on the question of standing more generally, Mr Naaman relied on these dicta of Young J (as his Honour then was) in McLean v Burns Philp Trustee Co Pty Ltd (1985) 2 NSWLR 623 at 637: "Recent decisions of the High Court have shown that the classes of people whose proceedings should be entertained by a court are wider than formerly thought: see Australian Conservation Foundation Inc v Commonwealth (1980) 146 CLR 493 at 547 and Onus v Alcoa of Australia Ltd (1981) 149 CLR 27. As I have said before, the trust is the creature of Equity, rights under a trust exist only because of the orders an Equity Court may make and it is to my mind inconceivable that if a matter of mal-administration or, worse, fraud were brought to the attention of the Equity Court by a plaintiff who was a creditor, the court would not act on that motion. It certainly would not send the plaintiff away with his suit dismissed with costs because of a lack of standing. … A fortiori, where there is a trust with no beneficiary or there is a trust whose sole beneficiary itself holds its interest on trust or pursuant to fiduciary obligations, equity would permit those for whom the beneficiary holds its interest, or creditors, to approach it for relief."
While not in and of themselves dispositive, these dicta fortify me in the conclusion to which I have come that a creditor subrogated to a trustee's right and power of indemnity from the trust assets is entitled to sue directly those who have received, with notice, money paid away or assets disposed of improperly from the trust property or who are responsible for that impromptu conduct.
The conclusion to which the Court has come means it is not necessary to determine two other issues that were raised in relation to Mr Naaman's standing. However, I will briefly set out my opinion in relation to both matters.
First, there was debate as to whether or not Young J's orders enlarged or provided an independent source of Mr Naaman's rights. It will be recalled that the relevant declarations are: "5. Declare that the third defendant is entitled, as against the second defendant and generally, to be indemnified out of the assets of the Sly Fox Family Trust for liabilities incurred by it in its capacity as trustee of the Sly Fox Family Trust, including in respect of the judgment entered against the third defendant in these proceedings. 6. Further declare that the plaintiff is subrogated to the rights of the third defendant for its entitlement to be indemnified from the assets of the Sly Fox Family Trust for its liability to the plaintiff in respect of the judgment to be entered in these proceedings, subject only …"
Were it necessary to do so, I would accept Jaken's submission that those declarations declared, but did not of themselves create or enlarge, the rights referred to in them. In particular, the use of the expression "and generally" in order 5 made clear that the entitlement to indemnity out of the assets existed as against the second defendant and anyone else (for example a further trustee) who may be in possession of those assets.
The second issue is the effect, if any, of the deed of assignment between JPG and its liquidator, of the one part, and Mr Naaman of the other part, made on 14 September 2020. This deed was entered into in response to Jaken's claim that Mr Naaman lacked standing to bring a number of claims which Jaken characterised as being "derivative". Such claims included claims in relation to the transfer of the Granville Land which occurred in October 2012 and the transfer of the Victorian Properties which took place in March 2013.
Reduced to their essentials, the relevant terms of the deed are: "K. Naaman in the Proceeding is seeking recovery of assets of the Trust and the judgment debt entered in the Judgment and the other relief and pleadings set out in the Cross-claim. In response, the Cross-defendants claim that some of the claims made by Naaman against them are derivative in nature (Cross-defendants' Claims). L. Notwithstanding the matters set out in recital K above and without admissions by Naaman in relation to the Cross-defendants' Claims, the Assignor has agreed, at the request of Naaman, to the assignment of any right that is not otherwise inherent in Order 6, (if any), to extent (sic) the right can be assigned at law, which Naaman has not acquired through subrogation and to assign to Naaman, to the fullest extent they can be assigned at law, without warranty, including but not limited as to the nature, value and enforceability, the Causes of Action (as defined in clause 1) in accordance with the terms and conditions of this deed. … 1.1 Defined Terms … Causes of Action means (a) Any Claim arising from the Company's rights and entitlement, as against the Trust and JPA generally, to be indemnified out of the assets of the Trust for liabilities incurred by the Company as trustee for the Trust including but not limited tom all the Company's rights and interest pursuant to the:- i. Act (including section 197 and any person referred to in that section); ii. Trustee Act 1925; iii. terms of the trust deed for the Sly Fox Family Trust; iv. terms of the Deed of Appointment; and v, the right and entitlement generally of a trustee to be indemnified including at law and in equity. (b) Any Claim arising from or relating to the Company's right to enforce the right of indemnity and the Judgment as against assets of the Trust, the Trust and any trustee of the Trust including, JPA. (c) Any Claim arising from or relating ot the conduct or representations by JPA, Peter Sleiman and/or Tony Sleiman including for and on behalf of such parties which the Company relied upon to transfer Trust assets ot JPA and as a consequence suffered loss and damage including but not limited , the subsequent transfer and dissipation of trust assets to related or associated parties. (d) Any Claim for equitable compensation, constructive trust declarations or trading of assets by reason of any Claim referred to in sub-clauses (a), (b) and (c) above. (e) Otherwise very Claim that the Assignor otherwise has or may have against any person who is not a Party to this Deed for any reason or on any such basis (but not including personal rights of the Liquidator referred to in section 100-5 of the Insolvency Practice Schedule), arising from or in connection with (a) to (d) above. (f) Any right to sue which is conferred on the Assignor concerning or associated with any Claim referred to in (a) to (e) above. … 3.1 Assignment of Causes of Action (a) Subject to and conditional upon the:- i. The Condition Precedent being satisfied; ii. The terms and conditions of the Court Approval; and (b) pursuant to section 477(2)(c) of the Corporations Act and otherwise; the Assignor irrevocably and absolutely assigns to Naaman all his and the Company's beneficial right, title and interest in the Causes of Action that are not otherwise inherent in Order 6 (if any) to the extent capable of being assigned at law and/or in equity without warranty including but not limited as ot their nature, value and enforceability, and will undertake such actions as may be reasonably required to confer an assignment of the Causes of Action at both law and in equity to Naaman."
Jaken's principal argument was that none of the causes of action relied upon by Mr Naaman accrued, if they did at all, before 13 February 2007 when JPG ceased to be trustee of the Sly Fox Trust. Therefore, it was submitted, JPG had nothing to assign.
Mr Naaman's response to this argument was that insofar as any such causes of action accrued after 13 February 2007, they were not causes of action of JPG as trustee for the Sly Fox Trust. Instead, they were causes of action which JPG had against the assets of the trust and as against the new trustee. That submission is correct because it reflects the conclusion which the Court has reached about the nature of JPG's rights both against Jaken and third parties set out above. Mr Naaman is, as the Court has already concluded, subrogated to JPG's rights in those respects. To the extent it is not so subrogated, the Court is satisfied that the deed effectively assigns to Mr Naaman all of JPG's rights in relation to the various causes of action pleaded by Mr Naaman in these proceedings. In relation to any particular one of those causes of action, no point arises insofar as whether Mr Naaman sues by subrogation to JPG's rights or as assignee of those rights.

Other applicable legal principles

The question of Mr Naaman's standing was strenuously contested between the parties. Insofar as the other claims advanced by Mr Naaman, the debate was whether they had been made out on the facts rather than as to the applicable legal principles. Because they were not in issue, it is convenient to set them out as they appeared in Mr Naaman's closing submissions: "Section 37A of the Conveyancing Act 169. Section 37A of the Conveyancing Act provides that "every alienation of property … with intent to defraud creditors, shall be voidable at the instance of any person thereby prejudiced". Thus, there are three questions to be answered with respect to the impugned transactions: (1) was there an alienation; (2) if there were properly an alienation whether that alienation was effected with the requisite intent; and (3) whether the defendant was thereby prejudiced. 170. The matters necessary to establish an "intent to defraud creditors" for the purposes of s 37A of the Conveyancing Act were summarised by Austin J in Langdon v Gruber [2001] NSWSC 276 at [54]-[56] (omitting citations of authority) as follows: It is not necessary to prove all of the ingredients of the tort of deceit. In Lloyds Bank v Marcan, at 760-1, Cairns LJ said that a dishonest intention must be shown, at any rate where the conveyance is for consideration. But in Australia, at least, it is not necessary for the plaintiff to bring actual proof that the debtor had in his or her mind an intention to defraud creditors; if it appears from evidence of all the circumstances that the transfer might be expected to have that effect, and has had that effect, the Court will attribute fraudulent intention to the debtor … However, the onus of proof of intent to defraud is on the plaintiff … If the conveyance is voluntary, it is easier to infer a dishonest intention than when it is made for consideration … There is Canadian authority for the proposition that, where the parties to the conveyance of property are related and the circumstances are suspicious, there is a presumption that the transfer is voidable ... This probably means no more than that a transferor and transferee being related is a factor relevant to the court's decision on the transferor's intention. 171. Section 37A is also capable of applying to a transaction which involves an intention to hinder or delay creditors, and where it is established that the party to the transaction knew of its adverse effect on the ability of its creditors to recover, without showing an actual intent to cause loss to those creditors: Marcolongo v Chen [2011] HCA 3; (2011) 242 CLR 546 (Marcolongo v Chen) at [31] to [32]. 172. Although it requires that the requisite intention be established, the existence of that intention would ordinarily be inferred, from a consideration of all relevant circumstances: Cannane v J Cannane Pty Ltd (in liq) [1998] HCA 26; (1998) 192 CLR 557 at [12], [92]; Bell Group Ltd (in liq) v Westpac Banking Corp (No 9) (2008) 39 WAR 1 at [9105]; Marcolongo v Chen at [26]. These principles were helpfully summarised in Patel v Lal [2011] NSWSC 603 at [6], where Biscoe AJ observed that: Section 37A should receive a liberal construction in effecting its purpose of suppressing fraud. The term "defraud" in s 37A means to delay, hinder or otherwise defraud … It is unnecessary to show that the debtor wanted creditors to suffer a loss or that the debtor had a purpose of causing loss. It is necessary to show the existence of an intention to hinder, delay or defeat creditors and in that sense to show that accordingly the debtor had acted dishonestly. If the debtor disposes of an asset which would be available to creditors with the intention of prejudicing them by putting it, or its worth, beyond their reach, he is in the ordinary case acting in a fashion not honest in the context of the relationship of debtor and creditor. In cases of voluntary disposition that intention may be inferred: at [32]. A person may have acted dishonestly, judged by the standards of ordinary, decent people, without appreciating that the act in question was dishonest: at [33]. The party seeking to avoid the disposition bears the onus of proving an intent to defraud. While the existence of the intent may be inferred from the evidence, it is to be found as a fact: at [34]. Sections 37A does not require the intent to defraud to be the sole or predominant intent: at [57]. 173. It is not necessary that an intention to hinder or delay creditors is the sole or predominant or primary purpose of the transaction: Federal Commissioner of Taxation v Oswald (No 6) [2016] FCA 762 at [63]. Sham 174. In the alternative, Mr Naaman pleads that each of the impugned transactions were sham transactions. The essence of a sham transaction was stated by the High Court in Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471 at [46]: " [Sham] refers to steps which take the form of a legally effective transaction but which the parties intend should not have the apparent, or any, legal consequences. 175. In Lewis v Condon [2013] NSWCA 204 at [59] the Court stated: [I]t is essential that there be an intention that the true transaction is different from that which would ordinarily be attributed to the transaction on the face of the documents. As Lord Wilberforce put it, "to say that a document or transaction is a 'sham' means that while professing to be one thing, it is in fact something different": WT Ramsay v Inland Revenue Commissioners [1982] AC 300 at 323. 176. In Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 18 FCR 449; [1988] FCA 179 Lockhart J concluded at 454: A "sham" is therefore, for the purposes of Australian law, something that is intended to be mistaken for something else or that is not really what it purports to be. It is a spurious imitation, a counterfeit, a disguise or a false front. It is not genuine or true, but something made in imitation of something else or made to appear to be something which it is not. It is something which is false or deceptive. Breach of trust and breach of fiduciary duties 177. The issue with respect to the breaches of trust falls to be determined by the most basic application of the law of trusts. Where one person (Jaken) holds property, which is in equity, the property of another (JPG), it holds it on trust for that other (JPG). Jaken had, at least, an obligation to protect the property of JPG: CGU Insurance Ltd v One.Tel Ltd (In Liq) (2010) 242 CLR 174 at [36]. It could not, at the very least, dispose of that property for no consideration. The obligations, whether fiduciary in character or whether properly characterised as the obligation of a trustee, arises as an incident of the power that Jaken had to deal with the property of another: see, by analogy, Bofinger v Kingsway Group Ltd (2009) 239 CLR 269 at [50]. Mr Naaman's ultimate submission is that in disposing of the trust property, to related parties, not for fair value, with no apparent commercial benefit, it disposed of the property in breach of trust and in breach of its fiduciary obligations to JPG. 178. An alternative basis for the same result arises by application of the principles stated in Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 (Hospital Products). The critical feature of a fiduciary relationship is that "the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense": Hospital Products at [68]. Once it is found to exist, the duties of the fiduciary vary according to the circumstances which generate the relationship, and the scope of the fiduciary duty is dependant on the nature of the relationship and the facts of the case: Hospital Products at [84]. 179. In the circumstances of this case, JPG transferred the legal interest in the Trust property to Jaken in circumstances where it was aware of the claims which Mr Naaman was making and in circumstances where it would have had a right to be indemnified out of the assets of the Trust. In doing so, it reposed a special trust and confidence in Jaken that it would, at the very least, protect its equitable proprietary right, constituted by the right of indemnity which subsisted in that property. The relationship was plainly one which gave Jaken the "opportunity to exercise the power or discretion to the detriment of that other person who is accordingly vulnerable to abuse by the fiduciary of his position": Hospital Products at [68]. Further, such relationship accommodates and conforms to the contractual obligations undertaken by Jaken pursuant to the Deed of Appointment and Retirement dated 13 February 2007 with respect to indemnifying JPG. 180. The Court would find that Jaken held the property of JPG constituted by its right of indemnity on trust for JPG or as a fiduciary, with a basic obligation to protect the property. Knowing receipt and knowing assistance 181. The consequence of the nature of the property in the hands of JPG is that when transferred to each of the cross-defendants, who had knowledge of its source, each of the cross-defendants knowingly received trust property in circumstances such that each ought to have known that the transfer was made in breach of trust and/or fiduciary duties: Barnes v Addy (1874) LR 9 Ch App 244 (Barnes v Addy). 182. Liability under the first limb of Barnes v Addy extends not only to persons who receive trust property, but to persons who receive property with knowledge that the transfer is made in breach of fiduciary duty: Super 1000 v Pacific General Securities (2008) 221 FLR 427 at [204] per White J. 183. Similarly, each of the cross-defendants who have knowingly assisted in the transfers are liable under the second limb in Barnes v Addy: namely, they have each knowingly assisted in Jaken's dishonest and fraudulent design in breach of fiduciary duties: see Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89. Breach of Freezing Orders: Illegality and Contract 184. In agreeing to the Rein J Orders, Jaken agreed to be restrained from "disposing of, dealing with other than in the usual course of business, or further encumbering or diminishing the value" of the Kings Cross Property. The Rein J Orders remained in force until 10 March 2015. 185. A contract in breach of an order of the Court is void for illegality and unenforceable: Clarke v Chadburn [1985] 1 WLR 78; Bank of Western Australia Ltd v Ocean Trawlers Pty Ltd (1995) WAR 407; and see Heydon on Contract (2019) at 795. This principle was applied in relation to a breach of freezing orders in Re Statewide Office Furniture Pty Ltd [2018] NSWSC 1393 at [29] per Brereton JA; see also Allianz v Vitale & Ors [2015] NSWSC 352 at [61] per Slattery J. There is no bona fide purchaser for value without notice in relation to the impugned transactions. To the effect that the transactions purport to convey a transfer of property, they are ineffectual. To hold otherwise "would give the transaction an effect which the law relating to illegality denies": Mason et al, Mason and Carter's Restitution Law in Australia (2016) at 913. The illegality of the transactions enlivens equity to intervene to restore the property to the Trust: Statewide at [29]. 186. The Rein J Orders were, moreover, made as an agreement for valuable consideration, namely the agreement of the defendant to have the orders of Pembroke J set aside. A consent order will prima facie bind the parties in contract: Spencer v Nominal Defendant [2008] 2 Qd R 64 at 68 [13] per Keane JA, de Jersey CJ and Mullins J agreeing citing Harvey v Phillips (1956) 95 CLR 235 at 243-244 per Dixon CJ, McTiernan, Williams, Webb and Fullagar JJ. A breach of an order of the Court is actionable where it gives effect to an underlying private law obligation which is itself actionable: JSC BTA Bank v Ablyazov (No 14) [2018] 2 WLR 1125; [2018] 3 All ER 293 at 1141 [23] per Sumption and Lloyd-Jones LJJ (Mance, Hodge and Briggs LJJ agreeing). Finally, a Court will enforce, in contract, a consent order containing undertakings to the Court: Independiente Ltd v Music Trading Ltd [2008] 1 WLR 608; Midland Marts Ltd v Hobday [1989] 1 WLR 1143. Tortious Interference 187. The elements of tortious interference with contractual relations were authoritatively summarised in Daebo Shipping Co Ltd v The Ship Go Star (2012) 207 FCR 220 at [88]-[90] per Keane CJ, Rares and Besanko JJ as follows: 187.1. there must be a contract between the plaintiff (or applicant) and a third party; 187.2. the defendant (or respondent) must know that such a contract exists; 187.3. the defendant must know that if the third party does, or fails to do, a particular act, that conduct of the third party would be a breach of the contract; 187.4. the defendant must intend to induce or procure the third party to breach the contract by doing or failing to do that particular act; and 187.5. the breach must cause loss or damage to the plaintiff. 188. In Fightvision Pty Ltd v Onisforou (1999) 47 NSWLR 473, the Court reviewed the authorities with respect to the tort at [159] to [170] and summarised the necessary proof with respect to intention at [171]: The position may be stated, we think, as follows. The plaintiff must prove that the defendant intentionally procured the breach. The requirement that the defendant have sufficient knowledge of the contract is a requirement that he have sufficient knowledge to ground an intention to interfere with contractual rights. Ignorance of the existence of the contract or of its terms born of inadvertence or negligence is not enough. On the other hand, reckless indifference or wilful blindness to the truth may lead to a finding of the necessary intention. Section 197 of the Corporations Act 189. Pursuant to s 197 of the Corporations Act, a person who is a director when it incurs a liability while acting, or purporting to act, as trustee, is liable to discharge the whole of the liability if the corporation has not discharged, and cannot discharge, the liability or that part of it; and is not entitled to be fully indemnified against the liability out of trust assets solely because of: (a) a breach of trust by the corporation or (b) the corporation's acting outside the scope of its powers as trustee.
Before turning to the application of these principles to the impugned transactions, one aspect of Mr Naaman's claim may be conveniently dealt with at this point. Assuming in Mr Naaman's favour but without deciding that he could rely on the sham doctrine, the Court does not agree that any of the Impugned Transactions were legally shams, i.e. something other than what they appeared to be. Mr Naaman's case otherwise succeeds precisely because those transactions had the effect they purported to achieve, being the unlawful alienation of assets of the Sly Fox Trust to third parties.

The transfer of the Granville Land - the facts

In this section I will set out the Court's findings in relation to the Granville Land. These findings are made by reference to contemporaneous documents.
By contract made on 14 February 2006 JPG, as trustee of the Sly Fox Trust, purchased the Granville Land for $750,000.
On 20 February 2006, $75,000 was drawn from a personal account of Peter Sleiman's to pay the deposit for the purchase, the relevant bank statement noting "XX Cowper deposit" as the description of the withdrawal.
The purchase settled on 5 April 2006.
By letter dated 5 April 2006 from St George to Peter Sleiman, described as "The Director Jaken Property Group Pty Ltd" $518,000 was drawn down against the loan from St George to JPG, and an additional $198,808.81 was drawn from Peter Sleiman's personal account to complete the purchase of the Granville Land.
At the time of the settlement, St George took a mortgage over the Granville Land which was noted as securing indebtedness of $8.7 million.
On 13 February 2007, JPG retired as trustee of the Sly Fox Trust in favour of Jaken. There was no evidence as to when Jaken succeeded JPG as the registered proprietor of the Granville Land.
In October and November 2011: 1. NAB offered Jaken as trustee of the Sly Fox Trust a loan facility for $8,750,000; 2. Powerhouse and others guaranteed NAB's loan to Jaken of $8.75 million; 3. NAB loan was drawn down to pay out Jaken's loan from St George; 4. A mortgage in favour of NAB was registered over the Granville Land.
On 7 October 2011, JPG was deregistered.
On 7 March 2012, Superior was incorporated with Samantha Panetta (Peter Sleiman's wife) as the sole director, secretary and shareholder and the Superior Family Investments Trust was settled with Superior as the trustee.
On 7 May 2012, a valuer retained by NAB valued the Granville Land at $700,000.
On or about 5 October 2012 Jaken transferred the Granville Land to Superior. The Real Property Act transfer in evidence records that "the transferor acknowledges receipt of the consideration of $500,000". At about the same time, NAB's mortgage over the Granville Land was discharged.
On or about 8 October 2012, Superior gave NAB a mortgage over the Granville Land securing an amount of up to $6,000,015.
By reference to the unchallenged valuation tendered in evidence on behalf of Mr Naaman the Court finds that the market value of the Granville Land as at 2 October 2012 was $837,000.

The Granville Land - the parties' contentions

Mr Naaman's fundamental contention was that, notwithstanding what was recorded on the transfer, no consideration had in fact been paid to Jaken by Superior. This was the starting point for Mr Naaman's contentions that: 1. The transfer to Superior was made with the intention to defraud Jaken's creditors and was therefore voidable pursuant to s 37A; 2. The transfer was in breach of the fiduciary duty owed by Jaken to JPG in relation to JPG's right of indemnity from the Sly Fox Trust's assets; 3. Superior (through Peter Sleiman's wife Samantha) had knowingly received and assisted in Jaken's breach of fiduciary duty; 4. Peter Sleiman (as Jaken's shadow de facto director) and Tony Sleiman (as Jaken's named director) had knowingly assisted in a dishonest and fraudulent design (being to put the Sly Fox Trust's assets beyond the reach of Mr Naaman as a creditor of the Sly Fox Trust). Peter Sleiman and Tony Sleiman were therefore liable to pay equitable compensation to Mr Naaman.
Jaken's submissions were: 1. There was no breach of duty of any kind on the part of Peter Sleiman or Tony Sleiman because it had not been pleaded that they had obtained any unauthorised benefit or were in a conflict. 2. There was no evidence that Peter Sleiman or Tony Sleiman had the requisite intention to engage s 37A. It was not put to Peter Sleiman in cross-examination that he was trying to hinder the creditors of the Sly Fox Trust. 3. Payment of the consideration of $500,000 was proved by the statement on the face of the transfer (see [412] above) and the fact of the registered discharge of NAB's mortgage to Jaken over the Granville Land which acknowledged in terms that NAB had "received full satisfaction and discharge" of that mortgage. It was submitted that it could not seriously be suggested that NAB would have countenanced a situation in which the mortgage was discharged without consideration having been received. 4. There was no suggestion that Peter Sleiman or Tony Sleiman were shadow directors of Superior. Nor was there any basis to show there was any relevant knowledge on the part of Samantha Panetta that would affix Superior with any kind of liability. 5. In any event, Peter Sleiman had an interest in so much of the Granville Land on resulting trust as was represented by the amount he had contributed to its purchase price. This submission was met by Mr Naaman because with the contention that any presumption of a resulting trust was rebutted by the fact that the existence of the Sly Fox Trust demonstrated that it was his intention that the property be held on trust for the beneficiaries of the Sly Fox Trust, and noting that the accounts of the Sly Fox Trust recorded beneficiary loans. 6. In relation to any liability for equitable compensation, Mr Naaman had failed to prove that any breach had caused him loss.

The Granville Land - was there consideration?

The fundamental issue for Mr Naaman's claim in relation to the Granville Land is whether or not Jaken received any consideration for the transfer of that land to Superior. For the reasons which follow, the Court finds that no consideration was paid by Superior, or received by Jaken for that transfer. There are seven reasons for this conclusion. Because of the evidence available to Mr Naaman in relation to the transfer of the Granville Land, a detailed exposition of the law in relation to proving a negative is unnecessary. However, it is pertinent to the Victorian Properties and is set out in [489] to [490] below.
First, in an ordinary arms-length transaction the acknowledgement of receipt of consideration in a Real Property Act transfer would be prima facie, and often sufficient, evidence that consideration was paid. However, the transfer of the Granville Land from Jaken to Superior was not an arms-length transaction. It was a related party transaction within the Sleiman family. For this reason I give it very little weight.
Second, and recognising that Mr Naaman bore the burden of proving a negative, Mr Naaman tendered three sets of bank statements for the period in or around October 2012. The first was the Sly Fox Trust's NAB loan account which remained fully drawn for $8.4m with no reduction in or about October 2012. The second was the Sly Fox Trust's cheque account with NAB. This recorded no receipt of funds of $500,000 (or any sum or any figure anywhere near that amount) in or about October 2012. Third, the Sly Fox Trust still held a St George account which similarly showed no receipt of funds in or about October 2012.
Third, neither Jaken nor Superior tendered any financial records to show the receipt or payment of $500,000 passing between them or made to or from any third party, being a bank or otherwise. The absence of such evidence from Jaken and Superior, when taken with the evidence referred to in the preceding paragraph, satisfies the Court on the balance of probabilities that Jaken transferred the Granville Land to Superior for no consideration. The following matters fortify the Court in that conclusion.
Fourth, beyond asserting that the $500,000 was paid, Peter Sleiman did not provide any other evidence to show that money was received by Jaken for the transfer. Furthermore, Peter Sleiman conspicuously failed to fulfil an assertion he made in his affidavit of 3 October 2019 in relation to the Granville Land that he would "refer to the records of St George Bank in relation to loan account XXXXXXXXX when produced at the hearing of the present proceedings and to the relevant loan account and bank statements of the NAB to trace and prove payment". As I have already noted, neither Jaken nor Superior produced any bank statements that could be said to "trace and prove" that any consideration had been received by Jaken from anyone for the transfer to Superior.
Fifth, no commercial, or any other, reason for the transfer from Jaken to Superior was advanced in evidence or submissions on behalf of Jaken.
Sixth, neither Samantha Sleiman nor Tony Sleiman gave evidence. If there was a legitimate explanation for the transaction, it was to be expected that they would give evidence about it. The Court therefore makes a Jones v Dunkel inference that their evidence would not have assisted their or Jaken's case on this point. This enables the Court more easily to draw the inference which it has in [417] above by reference to the other evidence referred to in the preceding paragraphs.
Contrary to the submission put on behalf of Jaken, the discharge by NAB of its mortgage over the Granville Land from Jaken says nothing, without more, about whether or not Jaken received consideration for the transfer. On its face, this charge speaks only to the position as between Jaken and NAB, not the position between Jaken and Superior.
Finally, the Court accepts Mr Naaman's submission (see [416(5)] above) why any presumption of a resulting trust in favour of Peter Sleiman for his contribution to the purchase price of the Granville Land has been rebutted. For example, Peter Sleiman was taken to the balance sheet of the Sly Fox Trust as at 30 June 2008 which showed beneficiary loans of $1,850,617 for the year ended 30 June 2007 and $1,785,606 for the year ended 30 June 2008. It was put to Peter Sleiman that the money which he had paid towards the purchase of the Granville Land was a loan to the Sly Fox Trust included in those beneficiary loans. Given the view I have taken of Peter Sleiman's reliability generally, I do not accept his denial of that proposition. The Court accordingly finds that the money paid by Peter Sleiman to the purchase of the Granville Land was a loan to the Sly Fox Trust and not intended to be the basis of any direct beneficial interest by Peter Sleiman in the Granville Land.

The Granville Land - conclusions

Having regard to the foregoing, I will next set out the Court's conclusions in relation to the Granville Land.
The Court's findings mean that Superior is a volunteer and equity will not assist a volunteer.
In circumstances where there was no consideration for the transfer and no commercial explanation for the transaction has been advanced, the Court is satisfied that Superior, through its director Samantha Sleiman knowingly received the Granville Land in breach of Jaken's fiduciary obligations to JPG and knowingly received and assisted in the transfer of the Granville Land. The Granville Land is held on constructive trust by Superior for JPG, but subject to the interest of NAB as registered mortgagee. It was one in a long series of manoeuvres which the Court is satisfied were undertaken by or at the behest of Peter Sleiman to defraud or hinder creditors including at least Mr Naaman.
The same circumstances of no consideration and no commercial purpose satisfy the Court that the transfer was also in breach of s 37A and is voidable. Even if this conclusion is wrong, because the Granville Land is held on constructive trust for Jaken, Mr Naaman is entitled to an order that the Granville Land be reconveyed to Jaken as the current trustee to be held for the benefit of JPG (subject again to the interests of NAB as registered mortgagee).
Next, by allowing the Granville Land to be transferred for no consideration and thereby depriving JPG of an asset of the Sly Fox Trust which should have been available to satisfy JPG's right of indemnity, Jaken breached its fiduciary duty or obligation to JPG. Jaken is therefore liable in equitable compensation to the extent of any shortfall attributable to the Granville Land not being available to JPG.
The absence of consideration or commercial purpose, and the undoubted knowledge of Peter Sleiman and Tony Sleiman of Mr Naaman's claims, satisfies the Court that Jaken engaged in a dishonest and fraudulent design to strip itself of assets that might otherwise be available to satisfy JPG's power of indemnity to which Mr Naaman was subrogated. For the reasons set out in [305] to [313] above the Court finds that Tony Sleiman as director of Jaken and Peter Sleiman as shadow or de facto director of Jaken, knowingly assisted in that dishonest and fraudulent design. They are therefore liable to JPG, and by subrogation, to Mr Naaman in equitable compensation to the extent of the shortfall already referred to.
However, as was the case in Rothmore No 2 (see [387] above), in my respectful view the Barnes v Addy accessorial liability analysis in relation to Peter Sleiman and Tony Sleiman is unnecessary. They were, for all intents and purposes, the controlling minds and personalities of Jaken and are directly liable in compensation to JPG and, by subrogation, to Mr Naaman accordingly.
Finally, I record the Court's conclusions in relation to Jaken's submissions (see [416] above and following the numbering of those sub-paragraphs) to be: 1. The submission that there was no breach of any kind on the part of Peter Sleiman or Tony Sleiman was misconceived. The issue was a breach of duty by Jaken which, as the Court has found, Peter Sleiman and Tony Sleiman were directly involved as the controlling mind and will of Jaken or, alternatively, as having knowingly assisted in Jaken's dishonest and fraudulent design. 2. It was not necessary for Peter Sleiman or Tony Sleiman to have a particular intention to engaged s 37A. The question is the effect of their conduct rather than what they may or may not have been consciously trying to achieve. 3. There was no question of Peter Sleiman or Tony Sleiman being shadow directors of Superior. Samantha Sleiman's knowledge as a director of Superior of Jaken's dishonest and fraudulent design is to be inferred from the lack of consideration or commercial purpose for the transfer of the Granville Land to Superior and her position as Peter Sleiman's wife. The inference of Samantha Panetta's knowledge of those matters is more easily drawn by reason of the Jones v Dunkel inference that arises because of her failure to give evidence so that the Court may conclude that her evidence would not have assisted Superior's case of denying knowing receipt of the Granville Land.

The $3.6 Million Drawdown - the facts

Although these appear set out above in the factual narrative commencing at [157], it is convenient to repeat them here:
The parties' various applications were fixed for hearing before Rein J on 18 June 2014. They were resolved by consent orders of that date which included: "1. The Court orders that orders numbered 1, 2 & 4 of the orders of Pembroke, J made on 3 March 2014 and entered on 5 March 2014 be set aside. 2. That upon the plaintiff, through his counsel giving the usual undertaking as to damages, the Court makes orders in accordance with paragraphs 1 and 2 (as amended in writing) of the Amended Notice of Motion filed by the Plaintiff and annexed to these orders. 3. The plaintiff is to serve on the first and second defendant by Friday 27 June 2014 an affidavit as best as he can of his assets and liabilities. 4. The Court notes that the first and second defendant will not assert any defence based on the proposition that the plaintiff must take all of the steps of first obtaining judgement and exhausting its remedies and right of execution against the third defendant. … Amended Notice of Motion Pursuant to Rule 25.11 and/or 25.14 UCPR: 1. An order that the second defendant [Jaken] (the Respondent) be restrained from disposing of, dealing with other than in the usual course of business, or further encumbering or diminishing the value of the property as 'the O'Malley's Hotel' Lot X DP XXXXXX and having street address XXX Williams Street Kings Cross (the Kings Cross Property) until further order of this court. 2. An order that the Respondent by 27 June 2014 serve on the plaintiff and the third defendant an affidavit setting out, as best it can: (a) The amount of any indebtedness secured by the Kings Cross Property; (b) Any assets of the Slyfox Family Trust (the Trust); (c) The circumstances of the transfer of the property at Lot XX DP XXXXXX being XX Cowper Street Granville (the Granville Property) from the second defendant to Superior Family Investments Pty Ltd (Superior) including the manner of payment of the consideration received in respect of the sale of that property; (d) The circumstances of the indebtedness of the second defendant to NAB that gave rise to the lodgement of the PPSR security interest registered on 24 January 2014 in favour of the secured party National Australia Bank Ltd (Registration Number XXXXXX); (e) In the event the hotel business operating from the Property and known as O'Malley's Hotel (the hotel) has been sold, transferred, licensed or leased by the Respondent, the circumstances of that transaction, including to whom it was sold, transferred, licensed or leased and the consideration received and attaching a copy of the relevant contracts, lease or deed evidencing the transaction; and (f) annexing: (i) the tax returns, balance sheets and profit and loss statements of the Trust for financial years ending 30 June 2010, 2011, 2012 and 2013; (ii) copies of all bank statements for any loan account or deposit account held in a bank or financial institution in the name of the Respondent in its own capacity or as trustee for the Sly Fox Family Trust for the period 1 January 2011 to date; (iii) copies of: - any bank guarantee or bank statement or deposit slip showing the receipt of a security deposit; and - all bank statements and remittance slips showing the payment of rent, pursuant to the June 2011 lease. To (Jaken Properties Australia Pty Ltd and its directors). If (Jaken Properties Australia Pty Ltd) disobeys paragraph (1) of this order, then (Jaken Properties Australia Pty Ltd) and its directors will be liable to sequestration of property and the said directors to imprisonment."
Also on 18 June 2014, Peter Sleiman met with, among others, Mr Peter Hartley of NAB to discuss a "plan" proposed by Peter Sleiman to increase Jaken's facility to $12,000,000 and reduce the Powerhouse facility. The fact of this meeting and the "plan" was confirmed in an email from Mr Hartley to Peter Sleiman and others dated 20 June 2014.
On 26 June 2014, Peter Sleiman emailed to Andrew Soo of the NAB various financial documents which Mr Hartley had sought, including the Sly Fox Trust's annual report for the year ended 30 June 2013 which valued the trust's land and buildings at $15,065,827 and recorded rent received of $1,353,258.
On 26 June 2014, Peter Sleiman swore an affidavit in response to the orders of Rein J which included that "Presently, the funding from the NAB is through commercial bank bills. At present the amount due under the bank bills is approximately $8.75 million … At present figure in the vicinity of $13.25m remains owing by Powerhouse to the NAB".
In relation to O'Malley's Hotel, Peter Sleiman's affidavit annexed a 10 year lease (with a further 10 year option) from Jaken to First O'Malley's dated 17 June 2011. However, the affidavit said nothing about the sale or transfer of the O'Malley's hotel business.
In its profit and loss statement for the year ended 30 June 2014, First O'Malley's represented that it had gross income of $4,453,054 with an operating profit of $691,685, and that it had paid rent of $724,511.
In its financial statements for the year ended 30 June 2014 and provided to NAB, the Sly Fox Trust represented the value of land and buildings held by it was $15,065,827.
On 2 July 2014, Mr Hartley emailed Peter Sleiman referring to a "structure…we were talking about recently" of Jaken having a facility of $12 million and Powerhouse a facility of $3 million.
By letters dated 21 August 2014 to Jaken as trustee for the Sly Fox Trust and to Powerhouse as trustee for the PeteJake Family Trust, the NAB varied their respective facilities. Jaken's facility was increased from $8,400,000 to $12,000,000, with the NAB's offer accepted by Tony Sleiman on 22 August 2014. Powerhouse Corporation's facility was reduced from $10,600,000 to $7,000,000. This was just over two months after Rein J had made freezing orders against Jaken.
In a declaration made on 22 August 2014, Tony Sleiman, on behalf of Jaken as trustee for the Sly Fox Trust, confirmed that the highest amount of financial accommodation provided by the Bank to Jaken was $12,000,000, while the guarantee given by various people and companies including Powerhouse, Tony Sleiman, Peter Sleiman and O'Malley's Hotel remained limited to $8,750,000. In the same declaration, Tony Sleiman asserted that the full unencumbered market value of Jaken's property was $100.
In a declaration made on 22 August 2014, Peter Sleiman, on behalf of Powerhouse as trustee for the PeteJake Trust, also confirmed that the highest amount of financial accommodation provided by the Bank to Jaken was $12,000,000, while the guarantee given by various people and companies including Powerhouse, Tony Sleiman, Peter Sleiman and O'Malley's Hotel remained limited to $8,750,000. In the same declaration, Tony Sleiman asserted that the full unencumbered market value of Powerhouse's property was $100.
On 8 September 2014, several transactions occurred: 1. Jaken drew down $12,000,000 on its new facility which was contained in a newly established account. 2. The $12,000,000 was paid into an account held by Powerhouse with the description "Debt reallocation". 3. $10,525,000 was paid from the account held by Powerhouse to Powerhouse's loan account, which reduced the latter to zero. 4. The amount of $1,422,954.86 was paid from the account held by Powerhouse to a business cheque account held by Jaken. 5. An additional $7,000,000 was deposited into Jaken's cheque account with the description "debt reallocation". While the source of that funds is not identified in the bank statements, the Court infers that amount was debited to a loan account of Powerhouse and is the $7,000,000 limit and balance referred to in the correspondence set out in [2 paras on]. 6. $8,400,000 was then deposited into Jaken's loan account to clear it.
The final result of the transactions referred to in the previous paragraph was that Jaken then had a loan account of $12,000,000 and Powerhouse's loan account had been reduced to $7,000,000.
On 10 September 2014, Peter Sleiman emailed Peter Hartley and others at the NAB: "PETER I need you to call me. My accounts are all over the place since we relocked the facility. $12m was supposed to be JAKEN not PWH."

The $3.6 Million Drawdown - the parties' contentions

It was submitted for Mr Naaman that there was no commercial explanation for the $3.6 Million Drawdown in any of Jaken's evidence. Powerhouse had given no consideration for the $3.6 million it received. Because the guarantee ceilings were left unchanged, with the effect that Powerhouse's guarantee was limited to $8,750,000, no one else guaranteed the balance of Jaken's increased indebtedness. This was said to have the following consequences: 1. The result of the transaction was to further encumber the Kings Cross Property in breach of the Rein J Orders. This was done by each of Peter Sleiman as the shadow or de facto director, and Tony Sleiman as the named director, causing Jaken to affect the $3.6 Million Drawdown. 2. The $3.6 Million Drawdown was void for illegality because it was in breach of the Rein J Orders. 3. It was a transaction that contravened s 37A as Powerhouse was not a bona fide purchaser for value without notice. 4. By reason of the preceding conclusions, Powerhouse held, and related parties now hold, $3.6 million on trust as property of the Sly Fox Trust. 5. Given that the $3.6 million was paid over to Powerhouse for no consideration, this was a transfer of property in breach of the trust or fiduciary duties owed by Jaken to JPG. Given that no one has offered an explanation for the transaction on behalf of Powerhouse, the Court should infer that Powerhouse knowingly received the $3.6 million in breach of those trust or fiduciary duties and holds the $3.6 million on trust for JPG. 6. Peter Sleiman as shadow or de facto director, and Tony Sleiman as named director, knowingly assisted in the dishonest and fraudulent design on the part of Jaken to divest itself of property which was held on trust for JPG. Each of them was liable in equitable compensation for any shortfall of the $3.6 million. 7. Each of Peter Sleiman and Tony Sleiman were aware of the Rein J Orders and procured Jaken to breach those orders in circumstances amounting to a tortious interference with the contractual relationship between Jaken and Mr Naaman arising from the Rein J Orders which were made by consent. Each of them is therefore liable in damages to Mr Naaman.
For its part, Jaken accepted that the Rein J Orders were made by consent and were therefore the product of a contract of compromise between the parties, being Mr Naaman, Peter Sleiman and JPA. However, it drew to attention that the Rein J Orders were made until further order, which was relevantly when Stevenson J dissolved those orders on 10 March 2015. This was said to be relevant to the question of whether any tortious interference with the contract caused any loss.
Jaken also accepted that Peter Sleiman and Tony Sleiman were aware of the Rein J Orders at the time they were made or shortly afterwards.
Jaken premised most of its argument in relation to the $3.6 Million Drawdown on this passage from the judgment of Hodgson J (as his Honour then was) in Standard Chartered Bank v Antico (Nos 1 and 2) (1995) 38 NSWLR 290 ("Standard Chartered") at 314: "In my opinion, a company incurs a debt when, by its choice, it does or omits something which, as a matter of substance and commercial reality, renders it liable for a debt for which it otherwise would not have been liable. This formulation has three aspects which could cause difficulty in particular cases: first, as to whether the company has a choice whether to do (or omit) the act or not; secondly, as to whether it is the act or omission, or something else, which renders the company liable for the debt; and thirdly, as to whether the company would otherwise (in any event) have been liable for the debt."
Having regard to the Rein J Orders, Jaken submitted that it did not "deal with the Kings Cross Property" other than in the usual course of business in August 2014, nor did it "further" encumber or diminish the value of that property within the meaning of the Rein J order, nor did it "pay" $3.6 million to Powerhouse.
Jaken submitted that when it accepted the offer contained in the letter from NAB dated 21 August 2014 and implemented the arrangements set out in that letter, the arrangements were "in the usual course of business". This was because Jaken's and Powerhouse's facilities fell due on 31 December 2014 and it was to be expected that in the months leading up to that date there would be negotiations between those companies and their banker. It was suggested that those negotiations were already underway by the time the Rein J Orders were made. However, while that matter may be true as a general proposition, the Rein J Orders were made on exactly the same day when Peter Sleiman met with, among others, Mr Peter Hartley of NAB to discuss the "plan" proposed by Peter Sleiman to increase Jaken's facility to $12m and reduce the Powerhouse facility. Because Peter Sleiman was a party to the proceedings in which the Rein J Orders were made and those orders were made by consent, the Court has no doubt, and finds, that Peter Sleiman knew the Rein J Orders were going to be made at the time he met with representatives of NAB to propose his "plan".
Jaken further submitted that rolling over and renewing existing facilities before their expiration date was a paradigm example of the usual course of business. Adopting the language of Hodgson J in Standard Chartered, it was submitted as a matter of "substance and commercial reality", the facilities entered into upon acceptance of the August 2014 offers did not "further" encumber or diminish the value of the Kings Cross Property. This was because other than varying the facility limits, the terms of the facilities remained in full force and effect and Jaken acknowledged as part of the new facility documents that all security provided to NAB remained in place and could be relied on by NAB. However, no additional security was provided by either Jaken or Powerhouse and neither company received any "new" money. It was submitted, therefore, that the $3.6 Million Drawdown was "liability and security neutral", with the effect that there was no further encumbrance or reduction in the value of equity in either trustee company.
Jaken also relied on the fact that the securities which were either given or continued in support of the $3.6 Million Drawdown included "all moneys" mortgages and registered charges over all of the assets and undertaking of each of Jaken and Powerhouse. This meant, it was submitted, that each of those entities became liable for the whole of the other's debts to NAB. The Court's attention was drawn to a registered charge and a reference to a memorandum of mortgage in the evidence, both of which secured "all amounts" owing. In other words, under the various securities, Jaken and Powerhouse were each liable for the others debts and there was no net increase in that liability by reason of the $3.6 Million Drawdown.
Jaken also contended that there was no payment made to Powerhouse of $3.6 million or any other sum in August 2014, nor did Powerhouse receive any payment from Jaken. It was submitted that each facility had been fully drawn and spent in October 2011.
Jaken answered a number of Mr Naaman's claims in relation to the $3.6 Million Drawdown by submitting that no liability could exist because the drawdown as defined, including the making of a $3.6 million payment to Powerhouse, did not occur. The reference to the drawdown "as defined" can be understood by having regard to two paragraphs of Mr Naaman's amended cross-claim: "The $3.6 million drawdown 57 In breach of the Rein J Orders and the Restraint Term, in August 2014, Jaken refinancing its loan facility with National Australia Bank Limited (NAB) and increased its loan borrowings secured by the Kings Cross Land by drawing down a further $3.6 million (Draw Down) thus further eucumbering it. Particulars i. Letter of Offer dated 18 August 2014. … 61 Peter Sleiman and Tony Sleiman caused Jaken to effect the Draw Down and pay out the $3.6 million to Powerhouse from the Trust in order to: a. frustrate the Rein J Orders and the Restraint Term; b. frustrate any judgment in favour of the cross-claimant in the 2009 Proceeding: and c. prevent performance of Rein J Orders, in particular, the Restraint Term; and d. to reduce the debt owed by Powerhouse to NAB and increase the debt owed by Jaken to the NAB, thereby: e. depriving the cross-claimant the benefit of the Rein J Orders, the Restraint Term and any judgment in the 2009 Proceeding; and f. reducing the available equity in the property of the Trust."
Jaken further submitted: 1. Even if the $3.6 Million Drawdown was in breach of contract (which was denied), it did not follow that Peter Sleiman or Tony Sleiman were liable for tortious interference with that contract because it had not been proved that either of them, as alleged tortfeasor, knew that the conduct alleged to constitute the interference was a breach of the contract which underpinned the making of the Rein J Orders. 2. The $3.6 Million Drawdown could not be voidable pursuant to s 37A because it was not property and it was not "alienated" within the meaning of that section. 3. Nor could it be said that the $3.6 Million Drawdown was a sham because it was in accordance with the offers of finance made to Jaken and Powerhouse by NAB and was reflected in various book entries. 4. Because Powerhouse did not receive the $3.6 million at all, there could be no question of a want of consideration, knowing receipt or knowing assistance. 5. Neither Peter Sleiman nor Tony Sleiman could be liable in equitable compensation for the value of the $3.6 Million Drawdown because Jaken had not lost any such amount. It had always been liable to NAB for the whole of the amount secured by its securities. Before August 2014 that amount was $19 million and it was the same amount after that date. Therefore no loss had been caused.

The $3.6 Million Drawdown - consideration

While "$3.6 Million Drawdown" is a convenient label, it is apt to mislead. As I understood it, Mr Naaman's complaint, properly understood, had two aspects relating to two different consequences of the transaction. The first was that, in effect, Jaken drew down and paid $3.6 million to Powerhouse for no good reason. Second, Jaken had reduced the amount of equity available to Jaken's unsecured creditors through Jaken's access to the assets of the Sly Fox Trust by $3.6 million.
The facts set out in [435] to [447] above demonstrate and the Court finds that: 1. Contrary to Jaken's submissions, there was a fresh drawdown of funds by Jaken from its new facility. That was a drawdown of $12 million, but which was then paid to Powerhouse. 2. There was no commercial purpose or benefit to Jaken (and none was suggested) by paying over $12 million to Powerhouse or effectively increasing Jaken's liability as principal or primary debtor to NAB by $3.6 million. 3. Powerhouse gave no consideration or benefit to Jaken in return for Jaken providing funds to Powerhouse to reduce Powerhouse's overall indebtedness to NAB by $3.6 million. 4. There was no increase in the amount guaranteed by various entities (including Powerhouse) to secure Jaken's additional liability to NAB as principal or primary debtor of $3.6 million.
Jaken's reliance on Standard Chartered did not give sufficient attention to what was a nuanced analysis by Hodgson J in answering the question of whether a debt had been incurred as a "matter of substance and commercial reality". His Honour was conscious of the need to examine the particular circumstances in a given case. So much appears from this passage in his Honour's judgment (at 316): "What is directly involved in this present case is a situation where finance is taken by a company, and then the company enters into a further transaction with the "lender" which affects the terms on which the finance continues. Two broadly different situations arise. First, where the original "loan" agreement contemplates subsidiary transactions (here, drawing, acceptance and discounting of bills) which affect the rights of the parties; and secondly, where the principal is left outstanding on the basis of the further agreement. As regards the former, it seems to me that, accepting that the company had a choice whether or not to enter into each of these subsidiary transactions, the second and third of my questions arise: does the subsidiary transaction in substance and reality render the company liable for a debt, which is a debt for which it otherwise would not have been liable? Where, as here, the proceeds of the bills are used to pay out a pre-existing liability, it seems to me that this would depend on the circumstances: if both the pre-existing liability and that arising under the subsidiary transaction are of the same amount and to the same creditor, and are equally contemplated by the original loan agreement, then it may well be that in substance and reality the subsidiary transaction does not render the company liable for a debt for which it otherwise would not have been liable. As regards the latter, again the circumstances are important. If the further agreement imposes an additional debt on the company, for example by increasing interest, then certainly the company incurs a debt to that extent. Generally, in my opinion the further agreement could not be regarded, as a matter of substance and reality, as rendering the company liable to the creditor for the principal, for which it otherwise would not have been liable; at least unless there is some strong reason for regarding the debt for principal under the further agreement as a different debt from that which existed under the original agreement."
Adopting his Honour's language, in my respectful view the $3.6 Million Drawdown is an example of where a "further agreement imposes an additional debt on the company". Jaken's former facility was coming to an end. A new facility agreement was entered into for a larger sum. While it may be accepted that Jaken may have had liability to NAB for the entire borrowings of Jaken and Powerhouse under "all moneys" provisions of various security instruments, it would be contrary to both substance and commercial reality to overlook the fact that by its new facility agreement, Jaken's express liability as principal or primary debtor to NAB increased by $3.6 million. Of the $12 million which Jaken drew from the new facility and paid away to Powerhouse, this necessarily included the $3.6 million, notwithstanding that Powerhouse appears to have repaid $1.422 million of that $12 million and, through a separate facility, also paid $7 million to Jaken (producing the amount of $8.4 million that was used by Jaken to clear its former loan account).
Turning to the various causes of action maintained by Mr Naaman in relation to the $3.6 million drawdown the Court concludes that insofar as the result of the drawdown and the related movement of funds set out in [446] above was to increase Jaken's principal liability to NAB by $3.6 million, this was a "further encumbering or diminishing the value of the property" other than in the usual course of business. It could not be in the usual course of business if, as the Court has found, there was no commercial purpose or benefit to Jaken demonstrated by assuming the additional liability and paying away the funds to Powerhouse. To that extent, the drawdown of the $12 million and payment away of that sum to Powerhouse (but crediting back the $1.422 million repaid by Powerhouse to Jaken) is void as a breach of the Rein J Orders.
The Court does not accept Jaken's submission that there was no alienation of property for the purposes of s 37A. Jaken paid away $12 million to Powerhouse as part of a series of transactions which must have included the $3.6 million, being the amount by which Jaken's liability as principal to NAB increased over its former $8.4 million facility. That paying away, in the context of the series of transactions identified in [446] above, was an alienation. The Court finds that there was an intent to defraud or hinder creditors on the part of Jaken through both Peter Sleiman and Tony Sleiman given the absence of any commercial purpose or benefit to Jaken of assuming that additional debt as principal, Peter Sleiman's obvious authorship of the arrangements, the knowledge on the part of both of them of the proceedings being brought by Mr Naaman and the imminence and subsequent making of the Rein J Orders. The inescapable conclusion is that the increase in Jaken's liability to NAB which was effected by drawing down and paying away the $12 million to Powerhouse was intended to defraud creditors (most obviously, Mr Naaman) by increasing Jaken's liability as principal to NAB as a secured creditor. The payment to Powerhouse, to the extent of $3.6 million, should be voided under s 37A.
Turning to Jaken's submission that the $3.6 million is held on trust as property of the Sly Fox Trust, this is correct as a theoretical proposition. However, if only part of that fund is still held by Powerhouse it can only be a matter for account and inquiry.
On the other hand, the Court is well satisfied that JPG has made out a cause of action against Jaken for breach of its fiduciary duty sounding in equitable compensation insofar as Jaken paid away $3.6 million which would otherwise have been available to it under its new facility to meet any obligation to indemnify JPG (to which right Mr Naaman is subrogated). Importantly, the same conclusion follows in relation not to the paying away, but quite separately in relation to assuming the increased primary liability to NAB for no commercial benefit. This is completely inconsistent with JPG's obligation not to diminish the assets of the Sly Fox Trust available to meet JPG's right of indemnity.
Nor can there be any doubt that insofar as Powerhouse received the $3.6 million as part of the $12 million payment, Powerhouse did so knowing that it was being paid those monies in breach of Jaken's trust or fiduciary duties to JPG. Powerhouse's knowledge was through Peter Sleiman and Tony Sleiman. If a remedy in the nature of tracing is not available, then at the very least Powerhouse is liable to JPG in equitable compensation for any shortfall attributable to either the payment away or the increase in liability.
Peter Sleiman and Tony Sleiman are similarly liable to JPG (and by subrogation to Mr Naaman). While the Court is satisfied that they knowingly assisted in Jaken's dishonest and fraudulent design to divest itself of property (in this case both by paying away $3.6 million of the $12 million and bringing about a commensurate increase to its liability to NAB as secured creditor) as was the case with the Granville Land the Court is satisfied that Peter Sleiman as shadow or de facto director and Tony Sleiman as named director were in fact the alter egos of Jaken such that ancillary liability for knowing assistance need not be made out. Each of them is liable in equitable compensation to JPG (and to Mr Naaman by subrogation) to the extent that the $3.6 million cannot be restored to Jaken.
However, the Court does not accept the alternative basis of liability advanced against Peter Sleiman and Tony Sleiman for tortious interference with the contract which underpinned the Rein J Orders. This is because, even assuming there had been such interference, Mr Naaman has not proven any damage caused by that breach. As a tort, proven damage is an essential element of the cause of action and it has not been made out. This may be contrasted with the Court's ability, as it has done, to find parties liable for breach of fiduciary duty to pay equitable compensation, but to reserve the quantum of that compensation for further consideration.

Victorian Properties - the facts

The objectively demonstrable facts in relation to the Victorian properties are in short compass. These are the Court's findings.
In August 2005, JPG purchased the Victorian Properties for $645,000.
Consequent upon the appointment of Jaken as trustee of the Sly Fox Trust, by transfer dated 13 February 2007 the Victorian Properties were transferred to Jaken. The transfer recorded the consideration as "an entitlement in equity".
On 15 September 2008, PSJK was incorporated with Peter Sleiman as its sole director, secretary and sole shareholder.
On 8 February 2010, Samantha Sleiman succeeded Peter Sleiman as the sole director, secretary and shareholder of PSJK.
On 23 August 2012, the Victorian Properties were transferred from Jaken to PSJK for a consideration stated on the transfer of $500,000. The transfer was signed for Jaken by Tony Sleiman as sole director and secretary and for PSJK by Samantha Sleiman as sole director and secretary.
Westpac's mortgage over the Victorian properties was discharged at the time of the transfer and replaced by a mortgage to NAB. '
By reference to unchallenged valuation evidence tendered by Mr Naaman, the Court finds that the market value of the Victorian properties as at 23 August 2012 was $1,035,000.

The Victorian Properties - Mr Naaman's contentions

Mr Naaman's fundamental contention was that Jaken in fact received no consideration for the transfer of the Victorian Properties. It was submitted that in those circumstances, the transfer was an alienation of the Victorian Properties with the intention to defraud creditors for the purposes of s 172 of the PLAV and voidable accordingly.
Furthermore, it was submitted that the transfer of the Victorian Properties was in breach of the trust or fiduciary duties owed by Jaken to JPG. Furthermore, given that PSJK was a related party controlled by Peter Sleiman's wife, PSJK knowingly received the Victorian Properties in breach of trust or fiduciary duty and knowingly assisted in the transfer. It was submitted for Mr Naaman that the Court would find that PSJK holds the Victorian Properties on trust for JPG.
Finally, it was submitted that the Court would find that Peter Sleiman as shadow or de facto director, and Tony Sleiman as named director, knowingly assisted in the dishonest and fraudulent design on the part of Jaken to divest itself of property which was held on trust for JPG such that each of Peter Sleiman and Tony Sleiman were liable in equitable compensation or damages for any shortfall.

The Victorian Properties - Jaken's contentions

Jaken made two submissions in answer to Mr Naaman's claim.
First, Jaken submitted that $500,000 had in fact been paid.
Second, it was submitted that when JPG purchased the Victorian Properties for the Sly Fox Trust in August 2005, Peter Sleiman paid the 10% deposit, the stamp duty and the balance of the purchase price in excess of the mortgage that was taken out. Attention was also drawn to evidence that St George withdrew the sum of $108,297.72 from Peter Sleiman's personal bank account to complete the August 2005 settlement of the purchase of the Victorian Properties. This meant that Peter Sleiman had an interest by reason of a resulting trust in his favour as to 16.92% of the Victorian Properties. Were the Court minded to void the transfer to PSJK, allowance would have to be made for what was said to be Peter Sleiman's interest.

The Victorian Properties - consideration

It is convenient first to deal with the argument that Peter Sleiman has a 16.92% interest in the Victorian Properties. The only admissible evidence on this point was an email of 24 August 2005 from a senior account executive at St George Corporate Banking to Peter Sleiman with the subject matter "Settlement - Kavanagh Street, Southbank" which stated: "Peter, As instructed, we have withdrawn $108,297.72 from your account styled: Peter Sleiman (Call Deposit Account XXX XXX XXX), to complete the settlement of Lots XXX and XXX, XX Kavanagh Street, Southbank, Vic. Settlement is scheduled for 3.00pm today. …"
Although the email does not indicate precisely how the amount withdrawn from Peter Sleiman's account was to be applied to complete the settlement, I will assume in his favour that he did in fact contribute that amount towards the purchase price of the Victorian Properties.
It is uncontroversial that any presumption concerning the parties' intention where a party contributes to the purchase price of real property without being recorded on the title is rebuttable. In the present case, the Court accepts Mr Naaman's submission that any such presumption is rebutted by the fact that the Victorian Properties were purchased by JPG to hold on trust as part of the Sly Fox Trust (of which at the time Peter Sleiman was the primary beneficiary). The Court infers that it was the intention of both Peter Sleiman and JPG that the Victorian properties would be held by JPG upon the terms of the Sly Fox Trust so as to rebut any suggestion that Peter Sleiman was to have any interest outside the terms of that trust by reason of his having contributed to the purchase price.
Turning to the question of whether consideration was ever paid by PSJK, the starting point must be that Mr Naaman assumed the burden of proving a negative. Jaken relied on the consideration recorded in the transfer to PSJK. As I have already noted in [418] above in relation to the Granville Land, in the ordinary course the statement of consideration in a transfer which is the product of an arm's length transaction between unrelated parties will be accepted as at least prima facie evidence that the consideration was paid. In this case, however, the transfer is not between unrelated parties and, on any view, was at an undervalue, being even less than the price for which the properties had been purchased seven years earlier. Taking those matters into account, I am unable to be satisfied on the balance of probabilities to the level of actual satisfaction by the transfer alone that any consideration actually moved from PSJK to Jaken.
That conclusion does not end the inquiry. I respectfully adopt these observations on proving a negative made by J C Campbell JA (with whom McColl JA and Handley AJA agreed) in Rockcote Enterprises Pty Ltd v FS Architects Pty Ltd; Carelli v FS Architects Pty Ltd [2008] NSWCA 39: 78 If a plaintiff has the onus of proving a negative proposition, the fact that the defendant has greater means to produce evidence which contradicts that negative proposition, does not mean that the plaintiff ceases to have the onus of proof of that negative proposition. However, once the plaintiff establishes sufficient evidence from which, if that evidence is accepted, the negative proposition may be inferred, an evidential onus shifts to the defendant to adduce evidence that tends to show that the negative proposition is incorrect. If a defendant adduces such evidence, the plaintiff must then, as part of its overall burden of proof, deal with that evidence either by submission or argument. See generally Apollo Shower Screens Pty Ltd v Building and Construction Industry Long Service Payments Corporation (1985) 1 NSWLR 561; Hampton Court Ltd v Crooks [1957] HCA 28; (1957) 97 CLR 367 at [1]-[2], 371-2; Baiada v Waste Recycling & Processing Service of NSW [1999] NSWCA 139; (1999) 130 LGERA 52 at [55], 64-65. As Hunt J put it in Apollo at 565: "… provided that the plaintiffs have established sufficient evidence from which the negative proposition may be inferred, the defendant carries what has been called an evidential burden to advance in evidence any particular matters with which (if relevant) the plaintiffs would have to deal in the discharge of their overall burden of proof …. [T]he plaintiffs' burden of proof of the negative proposition for which they contend is not as difficult in this case as it might otherwise have been because of the defendant's greater means to produce evidence which contradicts that proposition." … 84 Ms Olsson SC submitted that if the evidence adduced by a plaintiff was such that one inference that was open was that the negative proposition of which the plaintiff bore the onus of proving is correct, but another inference is equally open that did not involve the truth of the proposition, the evidential onus still shifted to the defendant. Put in the concrete terms of this case, she submitted that if the poor standard of the workmanship, and other matters to which she pointed in the evidence, might be explained by Update not being an approved applicator, or might equally be explained by Update being an approved applicator who ought never have been approved by Rockcote, that is sufficient to shift the evidential onus. I do not accept that proposition. Before an evidential onus shifts from a plaintiff, the plaintiff must have adduced enough evidence for the court to infer, if the evidence that the plaintiff adduced was accepted by the court and was the only evidence on that topic in the case, that the proposition concerning which the plaintiff had the onus of proof was more likely than not true. In that situation, one says that an onus of adducing evidence shifts to the defendant because the defendant is then in a situation in which, if the defendant does not adduce evidence concerning that proposition, the plaintiff might succeed in establishing that proposition. Counsel for a defendant has to decide whether to adduce evidence on a topic at a time in the course of the trial when counsel necessarily cannot be absolutely sure of two matters that are of critical importance to whether the onus of adducing evidence has actually shifted - will the judge accept the plaintiff's evidence on the topic, and if so will the judge regard that evidence, if no other evidence is adduced, as enough to make it more likely that the plaintiff's contention concerning that topic is correct. The type of "onus" that the defendant is then under is one of practical necessity - either adduce evidence, or risk losing on that issue. But before a defendant is in that situation, the evidence that the plaintiff has put forward on the topic must be such that, if accepted and the only evidence on the topic, it would justify the court in deciding it is more likely than not that the proposition for which the plaintiff bears the onus of proof is true. If the evidence that a plaintiff adduces is equally consistent with that proposition being true, or that proposition not being true, so that the plaintiff would fail to discharge its onus of proof if that were the only evidence on the topic, the defendant does not come under the sort of practical compulsion that I have been describing."
I also sought to summarise the relevant principles in Claudia Leung in her capacity as Executrix of the Estate of the Late Robert Ho v Paul Mervyn Fordyce t/as PMF Legal Trading [2019] NSWSC 18: "233. As a starting point, in civil proceedings, the standard of proof is on the balance of probabilities: Evidence Act, s 140. In making a finding, the Court must feel an "actual persuasion of the occurrence or existence" of facts in issue and may take into consideration "the nature of the cause of action or defence, and the nature of the subject-matter of the proceeding, and the gravity of the matters alleged": Evidence Act, s 140(2); see, e.g., Warner v Hung, in the matter of Bellpac Pty Limited (Receivers and Managers Appointed) (In Liquidation) (No 2) (2011) 297 ALR 56; [2011] FCA 1123. 234. The Uniform Civil Procedure Rules 2005 ("UCPR"), rr 14.14, 15.3 and 15.4 relevantly provide that allegations in the nature of fraud must be pleaded specifically and with particularity by the claimant, and where any condition of mind is alleged, which includes fraudulent intent, the claimant must give "particulars of the facts on which the party pleading relies": see Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563, 573; [1995] HCA 68; Forrest v Australian Securities and Investments Commission (2012) 247 CLR 486; [2012] HCA 39, [26]; Nadinic v Drinkwater (2017) 94 NSWLR 518; [2017] NSWCA 114, [46]. 235. It is helpful to repeat the entire passage from Neat Holdings at 450-451 referred to above (citations omitted): "The ordinary standard of proof required of a party who bears the onus in civil litigation in this country is proof on the balance of probabilities. That remains so even where the matter to be proved involves criminal conduct or fraud. On the other hand, the strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what it is sought to prove. Thus, authoritative statements have often been made to the effect that clear or cogent or strict proof is necessary "where so serious a matter as fraud is to be found". Statements to that effect should not, however, be understood as directed to the standard of proof. Rather, they should be understood as merely reflecting a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct and a judicial approach that a court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct." 236. The relevant legal principles were conveniently summarised by Gleeson J in Binetter: "122 Where a plaintiff has the onus of proving a matter, and "relevant facts are peculiarly in the knowledge of the defendant or where the defendant has the greater means to produce evidence relating to those facts", then if the plaintiff provides sufficient evidence from which the matter may be inferred, "the defendant then comes under an evidential burden, or an onus of adducing evidence": Krstic v Brindley [2006] NSWSC 1414 at [26]. 123 Where a fact is peculiarly within the knowledge of a party to litigation, slight evidence of that fact may suffice to prove the fact unless that evidence is explained away by the party with the knowledge of the fact: Hampton Court Ltd v Crooks [1957] HCA 28; (1957) 97 CLR 367 at 375; TyCo Australia Pty Ltd v Optus Networks Pty Ltd [2004] NSWCA 333 at [121]; Parker v Paton (1941) 41 SR (NSW) 237 at 243; Ex parte Ferguson; Re Alexander (1944) 45 SR (NSW) 64 at 67, 70. 124 A failure by respondents to deny or explain facts when it was in the respondents' exclusive power to do so allows increased strength or weight to be given to primary facts favourable to the applicants and allows inferences favourable to the applicants to be more confidently drawn: United Group Resources Pty Ltd v Calabro (No 5) [2011] FCA 1408; (2011) 198 FCR 514 at [75]-[76]. The silence of a party may serve to resolve a doubt or an ambiguity regarding the existence of a fact, especially where the facts are peculiarly within the knowledge of the silent party: Transport Industries Insurance Co. Ltd v Longmuir [1997] 1 VR 125; (1996) 9 ANZ Insurance Cases 61-385 at 142. 125 All evidence "is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted": Coshott v Prentice [2014] FCAFC 88; (2014) 221 FCR 450 at [80], quoting Blatch v Archer (1774) 1 Cowp 63 at 65; 98 ER 969 at 970. This maxim also bears upon the appropriateness of deciding whether a fact has been proved when only limited evidence is available. In Ho v Powell [2001] NSWCA 168; (2001) 51 NSWLR 572 at [14]-[15], Hodgson JA (with whom Beazley JA agreed) said: [I]n deciding facts according to the civil standard of proof, the court is dealing with two questions: not just what are the probabilities on the limited material which the court has, but also whether that limited material is an appropriate basis on which to reach a reasonable decision … In considering the second question, it is important to have regard to the ability of parties, particularly parties bearing the onus of proof, to lead evidence on a particular matter, and the extent to which they have in fact done so …" 237. Evidential burden is not to be confused with the legal onus. Relevant here are the observations of Heydon J in Strong v Woolworths Limited (2012) 246 CLR 182; [2012] HCA 5 (citations omitted): "[52] In the first sense, "evidential burden" refers to the duty of one party (usually the party bearing the legal (ie persuasive) burden, who in most instances will be the plaintiff) to call sufficient evidence to raise an issue as to the existence or non-existence of a fact in controversy. This must be done to prevent a no case submission succeeding (or if the relevant evidential burden rests on the defendant, to prevent the issue otherwise being withdrawn from the jury). The Privy Council (Lord Hodson, Lord Devlin, Viscount Dilhorne, Lord Donovan and Lord Pearson) criticised the expression "evidential burden of proof" as follows: It is doubtless permissible to describe the requirement as a burden, and it may be convenient to call it an evidential burden. But it is confusing to call it a burden of proof. Further, it is misleading to call it a burden of proof, whether described as legal or evidential or by any other adjective, when it can be discharged by the production of evidence that falls short of proof. However that may be, this is what Wigmore called the duty of producing evidence. [53] In the second sense, "evidential burden" refers to circumstances in which a plaintiff calls evidence sufficiently weighty to entitle, but not compel, a reasonable trier of fact to find in the plaintiff's favour. There is then said to be an "evidential burden" in the sense of a "provisional" or "tactical" burden on the defendant: if the defendant fails to call any or any weighty evidence, it will run a risk of losing on the issue - that is, a risk that at the end of the trial the trier of fact will draw inferences sufficiently strong to enable the plaintiff to satisfy the legal (ie persuasive) standard of proof. The "provisional" or "tactical" burden raises the question whether a defendant should as a matter of tactics "call evidence or take the consequences, which may not necessarily be adverse". [54] The third sense in which the expression "evidential burden" is employed arises where a plaintiff, in discharging the evidential burden in the first sense, calls evidence so strong that a reasonable trier of fact would be bound to decide the issue in the plaintiff's favour if the defendant calls no evidence. It is sometimes said that an "evidential burden" rests on the defendant which, if not discharged, will cause the defendant to lose and which, if discharged so as to cause the trier of fact either to reject the plaintiff's evidence or to be undecided, will result in the legal (ie persuasive) burden on the plaintiff not being satisfied." 238. In respect of drawing inferences, Beazley ACJ (as her Honour then was) recently stated in Rail Corporation New South Wales v Donald; Staff Innovations Pty Ltd t/as Bamford Family Trust [2018] NSWCA 82 at [76]-[78]: "76 … An inference may only be drawn if there is evidence to support it. In Luxton v Vines (1952) 85 CLR 352; [1952] HCA 19 the plurality, Dixon, Fullagar and Kitto JJ at 358 approved the High Court's explanation of the principle in the then unreported decision of Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1 as follows: "… where direct proof is not available, it is enough if the circumstances appearing in evidence give rise to a reasonable and definite inference: they must do more than give rise to conflicting inferences of equal degrees of probability so that the choice between them is mere matter of conjecture ... But if circumstances are proved in which it is reasonable to find a balance of probabilities in favour of the conclusion sought then, though the conclusion may fall short of certainty, it is not to be regarded as a mere conjecture or surmise.""
Applying those principles to the present case, whether or not consideration was actually paid by PSJK to Jaken is a matter peculiarly within the knowledge of those two entities. In those circumstances, relatively slight evidence is required to have been adduced by Mr Naaman from which the Court can draw the inference that no consideration was in fact paid. What Mr Naaman has established, and the Court finds, at least meets the description of "slight evidence" and, in my assessment is more than that: 1. The purported consideration was at a gross undervalue to the market price of the Victorian Properties, being even less than the price that had been paid for them seven years earlier. 2. This was in substance a related party transaction given the family relationship between the directors of the two companies. 3. Mr Naaman has established an overall pattern of conduct on the part of Peter Sleiman and his related entities over an extended period of time, to have the effect of depleting the assets of the Sly Fox Trust in the face of Mr Naaman's claim. This included the other Impugned Transactions considered above which appear to be gratuitous and have no commercial purpose.
Those three matters are sufficient, without more, for the Court to find, as it does, on the balance of probabilities, that no consideration was paid. They are also sufficient to move the evidential burden on to Jaken and PSJK, in whose camp material must have existed to demonstrate the payment and receipt of consideration if in fact that had occurred. No admissible material going to the question was forthcoming from either Jaken or PSJK. Moreover, neither of the directors who executed the transfer - Tony Sleiman for Jaken and Samantha Sleiman for PSJK - was called to give evidence.
The Court therefore draws a Jones v Dunkel inference that neither the evidence of Tony Sleiman or Samantha Sleiman would have assisted the relevant defendants in demonstrating that any consideration was paid or received in relation to the transfer of the Victorian Properties out of the Sly Fox Trust. This fortifies the Court in drawing the inference, based on the evidence to which I have referred above, more easily that no consideration was received by Jaken for transferring the Victorian Properties to PSJK. If, contrary to that conclusion, $500,000 was in fact paid, then the liability of the various defendants which I find in the following paragraphs is reduced from being a liability in respect of the entire Victorian Properties to the difference between their market value of $1,035,000 and $500,000.
Having regard to the Court's conclusions by reason of the matters set out in [491] to [493] above, the Court accepts these contentions made on behalf of Mr Naaman in relation to the Victorian Properties: 1. The transfer of the Victorian Properties by Jaken to PSJK was an alienation of those properties with the intention to defraud creditors pursuant to s 172 of the PLAV and should be voided accordingly. 2. Jaken's transfer of the Victorian Properties was in breach of its fiduciary obligation owed to JPG (which are enforceable by Mr Naaman by subrogation) and, Jaken is liable in equitable compensation to JPG to the extent of any shortfall. 3. Jaken was engaged in a dishonest and fraudulent design to divest itself of property which it held subject to fiduciary duties for JPG and was knowingly assisted in that dishonest and fraudulent design by both Peter Sleiman as shadow or de facto director and Tony Sleiman as the named director. As with the other transactions considered in these reasons, in my view it is not necessary to go so far as to find accessorial liability in the case of either man, given the Court's view that for all intents and purposes they were the alter ego of Jaken. On either basis, they are liable in equitable compensation to JPG (and by subrogation to Mr Naaman) for any shortfall. 4. PSJK holds the Victorian Properties on constructive trust for JPG (enforceable by Mr Naaman but subject to the rights of NAB) such that JPG can require the reconveyance of the Victorian Properties to Jaken for these reasons: 1. PSJK was a volunteer; 2. PSJK, through Samantha Sleiman, knowingly assisted in Jaken's dishonest and fraudulent design to breach its fiduciary duties to JPG and knowingly received the Victorian Properties given that there was no consideration paid and no explanation was proffered by anyone for either Jaken or PSJK for the transaction. It also follows that PSJK is liable to JPG (and Mr Naaman by subrogation) for any shortfall to the extent the Victorian Properties are not available to meet Jaken's obligations to JPG.

The business of the O'Malley's Hotel

At various points in the hearing and Mr Naaman's final submissions, references were made to the possible or apparent impermissible severing of the ownership of the assets and undertaking of O'Malley's Hotel from the assets of the Sly Fox Trust. However, the question was not pursued with any precision on behalf of Mr Naaman. Mr Kelly SC's response for Jaken was that the assets and undertaking of O'Malley's Hotel (including, for example, its liquor licence) had been leased by Jaken (either formally or informally) to operating companies at various times, as might be expected.
Notwithstanding, for example, Peter Sleiman seeking a valuation of the Kings Cross Property excluding the assets and undertaking of O'Malley's Hotel (see [151] above), the result of the Court's review of the evidence is that it accords with Mr Kelly SC's submission. Putting the matter another way, Mr Naaman refrained from pointing to any specific evidence that demonstrated there had been such an impermissible severing.
Perhaps the most powerful point in support of the proposition that Mr Naaman though JPG has no actionable complaint of the kind suggested is that the receivers appointed by NAB have clearly been appointed to both the King's Cross Property and the assets and undertaking of the O'Malley's Hotel business operating on the King's Cross Property. That is to be expected given that the commercial intention is to attempt to realise NAB's security by selling the land and business as a going concern. There has been no suggestion by any party (including NAB who have participated in the proceedings insofar as the appointment of receivers is concerned) that funds realised by the sale would not be applied in reduction of Jaken's debt to NAB incurred in Jaken's capacity as trustee of the Sly Fox Trust.

Liability under the Corporations Act

Given the view to which the Court has come, this aspect of Mr Naaman's claim can be dealt with in relatively short compass.
It was submitted for Mr Naaman that each of Peter Sleiman and Tony Sleiman was jointly and individually liable for Mr Naaman's judgment debt pursuant to s 197 of the Corporations Act. That section relevantly provides: "197. Directors liable for debts and other obligations incurred by corporation as trustee (1) A person who is a director of a corporation when it incurs a liability while acting, or purporting to act, as trustee, is liable to discharge the whole or a part of the liability if the corporation: (a) has not discharged, and cannot discharge, the liability or that part of it; and (b) is not entitled to be fully indemnified against the liability out of trust assets solely because of one or more of the following: (i) a breach of trust by the corporation; (ii) the corporation's acting outside the scope of its powers as trustee; (iii) a term of the trust denying, or limiting, the corporation's right to be indemnified against the liability. The person is liable both individually and jointly with the corporation and anyone else who is liable under this subsection.s.197(1)."
It was submitted for Mr Naaman that his judgment debt was a liability which had been incurred by JPG for the purposes of s 197(1) when the Young J Orders were made on 22 February 2016 or entered on 25 February 2016. The Court accepts Mr Kelly SC's submission that this was not the occasion when JPG "incurs a liability while acting, or purporting to act as trustee". In my respectful view, both as a matter of ordinary construction and applying Hodgson J's "matter of substance and reality" test from Standard Chartered, the relevant liability which ultimately became an ascertainable sum by the judgment was incurred when JPG breached its contract with Mr Naaman on or about 20 June 2006 and Mr Naaman's entitlement to damages arose.
"Incurs" for the purpose of s 197 must be understood in the context of the following words "while acting, or purporting to act as trustee". This means that the liability is relevantly incurred as a result of some action on the part of the corporation. So understood, having a judgment entered against it is not to "incur" a liability because the judgment is not the product for some action or purported action by the corporate trustee. The relevant action in this case was JPG acting in breach of its contractual obligations to Mr Naaman and incurring a liability to him in damages accordingly. There was no dispute that as at 20 June 2006, neither Peter Sleiman nor Tony Sleiman was a director of JPG.
Second, the Court accepts Mr Kelly SC's submission that s 197(1)(b) is not satisfied because in this case JPG has the benefit of a declaration that it is entitled to be fully indemnified against the liability out of the assets of the Sly Fox Trust.
Third, assuming in favour of Mr Naaman that JPG was "not entitled to be fully indemnified against the liability out of trust assets", Mr Naaman has not identified any evidence which enables the Court to find that the lack of entitlement is "solely" because of one of the matters listed in paragraphs (i) and (iii) of s 197.
For these reason, Mr Naaman's claim pursuant to s 197 of the Corporations Act fails.

Conclusion

The parties will be given an opportunity to consider these reasons and to make submissions about the next steps. In the absence of some resolution, it is clear this will not be the last first instance hearing.
As occurred in the Rothmore Farms litigation, it seems inevitable that there will have to be a second hearing. This is because the Court will reserve consideration of the quantum of the equitable compensation for which the various cross-defendants have been found liable.
Insofar as there may be a shortfall in Mr Naaman's recovery by subrogation to JPG between what would have been the outcome if the Impugned Transactions had not occurred and the final position after NAB's receivership and other steps, the Court is satisfied that shortfall is the result of the breaches of fiduciary duty identified in this judgment. The reservation of consideration extends to the parties putting submissions as to how any compensation is to be calculated, a matter not addressed so far in any detail by anyone. What is clear is that quantum cannot be sensibly addressed until such matters have been addressed as the NAB receivership of the King's Cross Property and O'Malley Hotel, whether it will be necessary to appoint receivers to the Victorian Properties and the Granville Land, the rights of NAB as a registered mortgagee over those assets, and no doubt other issues which will be identified by the parties.
Agreed statement of questions for determination and Court's answers: 1. Does the cross-claimant have standing to seek the relief listed in paragraph 123 of the Further Amended Defence filed on 17 November 2020 having regard to the matters set out in that paragraph? Mr Naaman's standing in relation to sham has been assumed in his favour without deciding. Otherwise the answer to this question is yes. 1. Does a creditor's right of subrogation to a former trustee's right of indemnity out of trust property effect an assignment to the creditor of any right of action that forms part of the trust property and thereby entitle the creditor to sue on that cause of action as though it were his or her own property? It is not necessary to answer this question. The rights sought to be enforced by Mr Naaman are JPG's rights and not rights that form part of the trust property. 1. If not, are Orders 5 and 6 of the orders made by Young AJ on 22 February 2016 properly construed to extend any such right to Mr Naaman? No. 1. Does the Deed of Assignment dated 1 September 2020 operate to give Mr Naaman the standing to sue the cross defendants or any and if so, which of them, in relation to any and if so, which of the causes of action pleaded against the cross defendants? It is not necessary to answer this question. Mr Naaman has the necessary standing to maintain all of the causes of action he maintains independently of the effect of the Deed. His standing in relation to sham has been assumed in his favour without deciding. 1. Was the transfer of the Granville Land: 1. Voidable pursuant to 37A of the Conveyancing Act? Yes. 1. A sham transaction? No. 1. In breach of trust? It is not necessary to answer this question given the answer to 5(d). 1. In breach of fiduciary duties? Yes. 1. Did Superior: 1. Receive the Granville Land for no consideration or inadequate consideration? Yes. 1. Knowingly receive the Granville Land in breach of trust? It is not necessary to answer this question given the answer to 6(c). 1. Knowingly assist in the transfer of the Granville Land in breach of trust? Yes, but in breach of fiduciary duty. 1. Does Superior hold the Granville Land on trust for the Trust and/or JPG and/or on resulting trust for Peter Sleiman or any of them and if so, in what proportion? Superior holds the Granville Land on constructive trust for JPG as to 100%. 1. Did Peter Sleiman and Tony Sleiman knowingly assist in the transfer of the Granville Land to Superior in breach of trust? Yes. 1. Are Peter Sleiman and Tony Sleiman liable for: 1. Equitable compensation for the value of the Granville Land; or Reserved for further consideration. 1. Alternatively, equitable compensation for the value of unpaid consideration for the transfer of the Granville Land? Reserved for further consideration. 1. Were the Rein J orders a contract between Jaken, Peter Sleiman, and the defendant? Yes in the sense they were the subject matter of such a contract. 1. Were Tony Sleiman and Peter Sleiman aware, at all material times, of the Rein J Orders? Yes. 1. Did Jaken further deal with, encumber or diminish or dispose of the value of the Kings Cross Property in August 2014 otherwise than in the usual course of business, by drawing down a further $3.6m and/or paying that sum to Powerhouse (Draw Down)? Yes. 1. Did Peter and Tony Sleiman cause Jaken to effect the Drawn Down? Yes. 1. Was that Draw Down in breach of the Rein J Orders? If yes, is the Drawn Down void for illegality? Yes. 1. Was that Draw Down in breach of contract? If yes, are Peter Sleiman and Tony Sleiman liable for tortious interference with Jaken and the defendant's contractual relations? No because even if there was tortious interference, damage has not been proven. 1. Was the Draw Down: 1. Voidable pursuant to s 37A of the Conveyancing Act? Yes. 1. A sham transaction? No. 1. In breach of trust? It is not necessary to answer this question given the answer in 16(d). 1. In breach of fiduciary duties? Yes. 1. Did Powerhouse: 1. Receive the $3.6m Draw Down for no consideration or inadequate consideration? Yes. 1. Knowingly receive the $3.6m Draw Down in breach of trust? Yes, but in breach of fiduciary duty rather than trust. 1. Knowingly assist in the $3.6m Draw Down in breach of trust? Yes, but in breach of fiduciary duty rather than trust. 1. Does Powerhouse hold the $3.6m on trust for the Trust and/or JPG? Yes, subject to an accounting. 1. Did Peter Sleiman and Tony Sleiman knowingly assist in the $3.6m Draw Down in breach of trust? Yes, but in breach of fiduciary duty rather than trust. 1. Are Peter Sleiman and Tony Sleiman liable for equitable compensation for the value of the $3.6m Drawdown? Reserved for further consideration. 1. Does Jaken hold the Kings Cross Property on resulting trust for Peter Sleiman and if so, in what amount? No. 1. Does Mr Naaman have a caveatable interest in the Kings Cross Land? Yes. 1. Should the Caveat be removed? No. 1. Was the Hotel Business (as defined in paragraph [3] of the Amended Cross-claim) separated from the Kings Cross Property? No. 1. If no, does the Hotel Business remain property of the Trust in that it has never been validly transferred out of the Trust? Yes, but it has been leased rather than absolutely transferred. 1. If the Hotel Business does not remain the property of the Trust, was transferred out of the property of the Trust: 1. Is the transfer voidable pursuant to s 37A of the Conveyancing Act N/A 1. Was the transfer a sham? N/A 1. Was the transfer in breach of trust? N/A 1. Was the transfer in breach of fiduciary duties? N/A 1. Does the purported transferee hold the Hotel Business on trust for the Trust and/or JPG and/or on resulting trust for Peter Sleiman or any of them and if so, in what proportions? N/A 1. Was the transfer of Unit 191 and Unit 261: 1. Voidable pursuant to 37A of the Conveyancing Act Yes. 1. A sham transaction? No. 1. In breach of trust? It is not necessary to answer this question given the answer to 26(d). 1. In breach of fiduciary duties? Yes. 1. Did PSJK: 1. Receive Unit 191 and Unit 261 for no consideration or inadequate consideration? Yes. 1. Knowingly receive Unit 191 and Unit 261 in breach of trust? Yes, but in breach of fiduciary duty rather than trust. 1. Knowingly assist in the transfer of Unit 191 and Unit 261 in breach of trust? Yes, but in breach of fiduciary duty rather than trust. 1. Does PSJK hold Unit 191 and Unit 261 on trust for the Trust and/or JPG and/or on resulting trust for Peter Sleiman or any of them and if so, in what proportions? PSJK holds Unit 191 and Unit 261 on constructive trust for JPG and the Trust. 1. Did Peter Sleiman and Tony Sleiman knowingly assist in the transfer of Unit 191 and Unit 261 to PSJK in breach of trust? Yes, but in breach of fiduciary duty rather than trust. 1. Are Peter Sleiman and Tony Sleiman liable for: 1. Equitable compensation for the value of Unit 191 and Unit 261, or Reserved for further consideration. 1. Alternatively, equitable compensation for the value of unpaid consideration for the transfer of Unit 191 and Unit 261? Reserved for further consideration. 1. Was Jaken in a trust or fiduciary relationship with JPG? Yes, a fiduciary relationship. 1. Did Jaken cause the property of the Trust to be dealt with in breach of trust and in breach of fiduciary duties? Yes, in breach of fiduciary duties. 1. Is the Granville Land, Unit 191 and Unit 261, the proceeds from the Draw Down, the Kings Cross Property and the Hotel Business held on constructive trust by the respective cross-defendants for JPG, and the defendant? Yes as to the Granville Land, Unit 191 and Unit 261 and (subject to accounting) the proceeds of the Draw Down. The Kings Cross Property and the Hotel Business are subject to JPG's equitable lien. 1. Have each of the cross-defendants knowingly assisted in breaches of trust and/or breaches of fiduciary duties and are each of them liable for equitable compensation and damages to JPG, and the defendant? Yes. 1. Have each of the cross-defendants knowingly received property in breach of trust and/or breaches of fiduciary duties and do each of them hold that property on trust for JPG, and the defendant? Yes. 1. Are Peter Sleiman and Tony Sleiman liable for the Judgment Debt to the defendant pursuant to s 197 of the Corporations Act? No. 1. Was Peter Sleiman at all relevant times a shadow director of JPA? Yes - a shadow director and a de facto director. 1. Is the Deed of Variation dated 20 March 2009 authentic? No. 1. Causation. Yes, in relation to breach of fiduciary duty. 1. Quantum. Reserved for further consideration. 1. Account. Reserved for further consideration. 1. What relief if any should be granted pursuant to the Amended Cross-Claim? Parties are to consider these reasons and make submissions. 1. On what terms should any relief be granted? Parties are to consider these reasons and made submissions.

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: 29 April 2022

Jaken Properties Australia Pty Ltd v Naaman

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