Jaken Properties Australia Pty Ltd v Naaman

No orders at all because of a pending special leave application?

1. The primary submission made on behalf of Mr Naaman is that this Court should make no orders at all. That is because he has filed an application for special leave to appeal, and if special leave is granted and the appeal is allowed, then it will no longer be necessary to resolve the outstanding aspects of the appeal.
2. We are not disposed to take that course. It is appropriate, especially if this Court's decision is to be the subject of an appeal to the High Court, that the appeal be completely resolved if that is possible. Partly determined proceedings pending in multiple courts are generally to be avoided. Resolving the issues in this Court will enable both sides to know precisely where they stand in the event that special leave is granted or dismissed. Further, in the event that one party is dissatisfied with the further orders made by this Court, then that party may seek to exercise its entitlement to seek special leave to appeal in respect of those orders.

Answers to questions and other orders which are agreed

1. Mr Naaman's fallback submission is to agree in large measure with the orders proposed by the appellants answering the questions framed by the primary judge, although he proposes different answers to ten of those questions. In large measure, the differences are minor. We shall address those disputed questions and answers below.
2. Mr Naaman's fallback submission also extends to acknowledging the appropriateness of this Court setting aside the answers to questions 9(a) and (b), 16(a), 17(a), 20 and 41. It disagrees with the answers proposed to questions 16(a), 17(a) and 41 but agrees with the answers proposed to questions 9(a) and (b) and 20. Mr Naaman also agrees to an order remitting the proceedings to the Equity Division for decision of all remaining issues. At that hearing, the National Australia Bank and any other necessary party will be given an opportunity to be heard.

The notice of motion should be dismissed

1. The appellants, together with various third parties against which freezing orders have been made, seek a suite of other relief in the notice of motion. What is proposed, speaking generally, is for the freezing orders to be vacated, a caveat removed from the Hotel Land (so as to permit refinancing to occur) on terms that $3,600,000 be paid into Court as a fund which will abide the final hearing and determination of claims in respect of the $3.6 Million Drawdown. They also propose an alternative regime that the freezing orders be varied and the caveat be removed so as to permit a refinancing on such terms as the Court sees fit.
2. Mr Naaman says that the notice of motion should be dismissed because it is not part of the appeal and outside the scope of the liberty granted or UCPR r 36.16. If alternatively the Court were minded to entertain the motion, he seeks an oral hearing and an opportunity to adduce evidence in response.
3. This Court should not entertain the motion, which amounts to a varied interlocutory regime concerning the principal asset which is in dispute between the parties and over which the bank has security. First, although this Court can and will grant interlocutory relief pending appeal, there is no pending appeal. The orders made today will resolve the entirety of the proceedings in the Court of Appeal. Secondly, if orders were to be made in this appeal, this Court would be doing so without hearing from the Bank. Thirdly, the consequence of this Court making orders would be to deprive all parties of the ordinary right to an interlocutory appeal (by leave) to this Court in the event that a party is dissatisfied by the order made. All of those considerations point to the latest application for interlocutory relief being heard and determined in the Equity Division, something which was flagged at [225] of this Court's earlier judgment.
4. For those reasons, the notice of motion will be dismissed. To be clear, that is without prejudice to any entitlement for similar relief to be sought in the Equity Division proceedings from a judge in that division.

Costs

1. Mr Naaman says there should be no order as to the costs of the appeal in light of the parties' partial success. The appellants agree, save that they say that there should be an order for costs in favour of Messrs Peter and Tony Sleiman. The appellants were represented by the same solicitors and counsel, and there is nothing to suggest that there was any substantial amount of the costs of the appeal separately attributable to Messrs Peter or Tony Sleiman as opposed to the other appellants. Further, as Mr Naaman points out, part of the appeal which failed was a challenge to the finding that a presumed resulting trust in favour of Mr Peter Sleiman was rebutted: see at [153]-[156]. It is not the case that Mr Peter Sleiman was wholly successful on every point that was his and his alone.
2. The appropriate order as to the costs of the appeal is that there be no order as to costs, with the intention that the parties bear their own costs, but subject to a separate order concerning the notice of motion filed on 21 September 2023. Mr Naaman is correct to seek his costs of that notice of motion, which should not have been filed in this Court.
3. The costs at first instance cannot be determined by this Court, and must be remitted to the Equity Division.

Answers to questions which are not agreed

1. This Court's main judgment anticipated that there might be questions the answers to which should be set aside which had been overlooked (there were 65 questions in all, including sub-questions) and invited the parties to identify any that had been. The Court is grateful to the parties for agreeing that the answers to questions 9(a) and (b), 16(a), 17(a), 20 and 41 should also be set aside. The orders below will do that.
2. Before turning to the particular questions, it is best to clear up what may be some misconceptions shared by the parties.
3. First, contrary to the orders proposed by the parties, it is not necessary once again to set aside those answers which were set aside by order 3 made by this Court on 8 September 2023.
4. Secondly, the proceedings will be remitted to the Equity Division so that all outstanding issues may be determined. It is unnecessary separately to remit the determination of particular questions. A further point should be made here. In some of his submissions Mr Naaman invited this Court to provide an answer which entailed that there was an undecided point, and in some of their submissions the appellants invited this Court to provide an answer which precluded there being anything left to decide. The better course is for the answers to reflect this Court's judgment, but without predetermining whether or not there is anything left undetermined by the primary judge. It is not appropriate for this Court, through the mechanism of settling the answer to questions formulated by the parties and answered by the primary judge, to determine the scope of what has been left undetermined by the primary judge.
5. Thirdly, it is not necessary to answer all or any of the questions. Subject to any determination by the High Court, the parties are bound by this Court's judgment, irrespective of whether any question concerning an aspect of their dispute has been answered. It may do no harm, and it may help parties to identify the real issues dividing them, to have answers to issues identified by them. However, it will hinder the efficient determination of the litigation if poorly formulated questions themselves give rise to debate.
6. In particular, questions 12-17 concern the "Draw Down", which is defined in question 12 as follows: 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)?
7. This Court was critical of the imprecision in the definition of "Draw Down" at [166]: On the face of it, the "Draw Down" is defined in question 12, and is conduct which was found to be in breach of the Court's order and a fiduciary duty and a transaction which is voidable pursuant to s 37A. But the "Draw Down" is defined quite imprecisely, as "drawing down a further $3.6m and/or paying that sum to Powerhouse". Neither limb of that description accurately records what the contemporaneous banking documents disclose occurred. Moreover, the imprecision is quite striking when read with the answer to the question, which recorded conclusions that the "Draw Down" was in breach of the orders made by Rein J and void for illegality. It should be said immediately that any charge of contempt for breach of those orders would have required far greater particularity, and that a statement that something is "void", thereby altering the rights of persons, both personal and proprietary, likewise warrants precision: see the decisions collected in Brown Brothers Waste Contractors Pty Ltd v Pittwater Council (2015) 90 NSWLR 717; [2015] NSWCA 215 at [165]-[166] and Ross v Lane Cove Council (2014) 86 NSWLR 34; [2014] NSWCA 50 at [29].
8. The series of transactions constituting the "Draw Down" involved the Bank, which was not a party to these proceedings, but had a right to be heard in respect of Mr Naaman's submissions that it was void or voidable. This Court said at [220] that "In respect of the claim based on the '$3.6 Million Drawdown', that should not be determined finally in the absence of the bank". Even if "Draw Down" were properly defined, it is difficult to see utility in answering a question where that answer does not bind the Bank and may be redetermined in the future.
9. In short, there is no reason to answer questions which are poorly framed, especially if (as Mr Naaman has contended and continues to contend) there is the possibility of a contempt. We see no reason to answer any of the questions which involve the term "Draw Down", and good reason for not doing so. Nor is there any reason to seek to reformulate the questions into something less ambiguous, especially since, as was also indicated in this Court's judgment, precisely what was involved in the transactions constituting the "Draw Down" may potentially be affected by evidence adduced by the Bank.
10. No harm is caused by the existing answers to questions 13, 15 and 16(b), but the remaining questions 12, 14, 16(a), (c) and (d), 17(a), (b) and (c) referring to the Draw Down are best answered "Inappropriate to answer in light of the ambiguity in the definition of 'Draw Down' and the answer not binding the Bank".
11. The answers to questions 1-4 are agreed in the form proposed in [222] of the main judgment.
12. It is accepted that the answers to questions 5(c) and (d), 6(b) and (c), 8, 9(a) and (b), 19, 20, 28(c) and (d), 29(b) and (c), 31, 32(a) and (b), 33, 34 and 37 should be "No". We have reviewed those questions and it is appropriate to answer them. In particular, we note that although questions 19 and 20 refer to the "$3.6m Draw Down", the agreed negative answer to those questions reflects the determination that there is no fiduciary duty.
13. There is a dispute in relation to question 7. Part of the dispute reflects the fact that the question is in fact numerous rolled up questions. The question is "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?" The appellants say it should be answered "No". Mr Naaman says it should be answered "Insofar as it concerns Peter Sleiman, No. The balance of the question should be remitted to the Equity Division for decision".
14. The question should be answered "Insofar as it concerns Peter Sleiman, No". It is unnecessary for there to be a further remitter, especially if doing so were to suggest that there was an obligation upon the judge determining the remainder of the litigation to determine a poorly worded question.
15. The answers to questions 12, 14, 16(a), (c) and (d), 17(a), (b) and (c) should be as indicated above.
16. There is an especially arid dispute concerning the answer to question 18. The question is "Does Powerhouse hold the $3.6m on trust for the Trust and/or JPG?". The appellants say it should be answered: This question should be remitted to the Equity Division for decision after the National Australia Bank has been given an opportunity to be heard.
17. Mr Naaman says it should be answered: This question should be remitted to the Equity Division for decision. Insofar as it concerns relief concerning section 37A of the Conveyancing Act 1919, any finding should be made after the National Australia Bank has been given the opportunity to be heard in relation to the questions whether (a) the finding that the "$3.6m Draw Down" was an alienation of property to defraud creditors, and (b) whether any orders should be made consequent upon that finding.
18. The question should be answered "Inappropriate to answer in the absence of the National Australia Bank". It is unnecessary to go any further.
19. There is a dispute concerning question 30 which resembles the dispute concerning question 7. It should be answered "Insofar as it concerns Peter Sleiman, No".
20. It is agreed that question 35 should not be answered. There is a dispute whether the answer should be "Not decided. This question should be remitted to the Equity Division for decision after all necessary parties have been given an opportunity to be heard" (as the appellants contend) or instead "Not decided. This question should be remitted to the Equity Division for decision" as Mr Naaman contends. For the reasons earlier given, it should simply be answered "Inappropriate to answer."
21. There is a dispute concerning question 36, which, like question 7, rolls up numerous questions. Question 36 is: "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?". The appellants say it should be answered "No", while Mr Naaman says is should be answered: Insofar as any accessorial liability is based on the contention that Jaken owed JPG fiduciary obligations, no. The question should otherwise be remitted to the Equity Division for decision.
22. The question should be answered "Insofar as any accessorial liability is based on the contention that Jaken owed JPG fiduciary obligations, no." That answer reflects this Court's decision, and leaves open to Mr Naaman to contend that there might be some other basis for any of the sub-questions to be answered affirmatively, without determining whether or not there is some basis left open by this Court's decision for any such answer.
23. "Question" 41 is "Causation". This is not even a question. It is inappropriate to answer, and it is unnecessary to resolve the competing proposed "answers" favoured by the parties, namely "Not in relation to breach of fiduciary duty, on the basis that there is no such duty" and "Not in relation to breach of fiduciary duty, on the basis that there is no such duty. The question should otherwise be remitted to the Equity Division for decision."
24. It is desirable for the questions and answers to be consolidated in a single document, for the purposes of the remaining aspects of the dispute. The parties will be directed to file and serve such a document, with a view to it being incorporated into the orders of the Court and an addendum to these reasons. That will also ensure that if there has been some mistake by the Court in dealing with more than 60 questions, it may be identified and resolved promptly.
25. Finally, the partial success of each side in relation to the making of orders in the appeal means that there is no occasion for some separate order as to the costs of the applications for orders. The consequence will be that the parties bear their own costs, save in respect of Mr Naaman's costs of the notice of motion.
26. For those reasons, the orders of this Court are as follows:
27. In addition to order 3 made on 8 September 2023, also set aside the answers to questions 9(a) and (b), 16(a), 17(a), 20 and 41.
28. In lieu of the answers set aside by order 3 made on 8 September 2023 and order 1 above, answer those questions as follows: Questions 1-4: "Insofar as these questions are directed to Mr Naaman's and JPG's standing to sue for breaches of fiduciary duty owed by Jaken to JPG, they do not arise because no such duty was owed. Otherwise, it is unnecessary to answer these questions." Questions 5(c) and (d), 6(b) and (c), 8, 9(a) and (b), 19, 20, 28(c) and (d), 29(b) and (c), 31, 32(a) and (b), 33, 34 and 37: "No". Questions 7 and 30: "Insofar as it concerns Peter Sleiman, no". Questions 12, 14, 16(a), (c) and (d), 17(a), (b) and (c): "Inappropriate to answer in light of the ambiguity in the definition of 'Draw Down' and the answer not binding the Bank". Question 18: "Inappropriate to answer in the absence of the National Australia Bank". Questions 35 and 41: "Inappropriate to answer." Question 36: "Insofar as any accessorial liability is based on the contention that Jaken owed JPG fiduciary obligations, no."
29. Dismiss the notice of motion filed on 21 September 2023 with costs.
30. Subject to 3 above, there be no order as to the costs of the appeal, with the intention that the parties bear their own costs.
31. Direct the parties to file and serve an agreed document consolidating the questions and answers reflecting the above, or in the absence of agreement, documents containing the questions and answers for which they contend and short submissions in support of their contentions, within 7 days of today, with a view to those questions and answers being incorporated into orders made by the Court.
32. Remit the proceedings to the Equity Division for decision of all remaining issues.

ADDENDUM of 10 November 2023 Substantially in accordance with order 5 above, the parties supplied an agreed document containing the questions and answers affected by this Court's decisions. Those questions and answers are reproduced below. Each of those answers is reflected in order 2 made on 26 October 2023. The questions omitted from the list are those which were answered by Kunc J and which were unaffected by this Court's decisions. 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? Insofar as these questions are directed to Mr Naaman's and JPG's standing to sue for breaches of fiduciary duty owed by Jaken to JPG, they do not arise because no such duty was owed. Otherwise, it is unnecessary to answer these questions. 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? Insofar as these questions are directed to Mr Naaman's and JPG's standing to sue for breaches of fiduciary duty owed by Jaken to JPG, they do not arise because no such duty was owed. Otherwise, it is unnecessary to answer these questions. 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? Insofar as these questions are directed to Mr Naaman's and JPG's standing to sue for breaches of fiduciary duty owed by Jaken to JPG, they do not arise because no such duty was owed. Otherwise, it is unnecessary to answer these questions. 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? Insofar as these questions are directed to Mr Naaman's and JPG's standing to sue for breaches of fiduciary duty owed by Jaken to JPG, they do not arise because no such duty was owed. Otherwise, it is unnecessary to answer these questions. 1. Was the transfer of the Granville Land: 1. … 2. … 3. In breach of trust? No. 1. In breach of fiduciary duties? No. 1. Did Superior: 1. … 2. Knowingly receive the Granville Land in breach of trust? No. 1. Knowingly assist in the transfer of the Granville Land in breach of trust? No. 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? Insofar as it concerns Peter Sleiman, No. 1. Did Peter Sleiman and Tony Sleiman knowingly assist in the transfer of the Granville Land to Superior in breach of trust? No. 1. Are Peter Sleiman and Tony Sleiman liable for: 1. Equitable compensation for the value of the Granville Land; or No. 1. Alternatively, equitable compensation for the value of unpaid consideration for the transfer of the Granville Land? No. 1. … 2. … 3. 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)? Inappropriate to answer in light of the ambiguity in the definition of 'Draw Down' and the answer not binding the Bank. 1. … 2. Was that Draw Down in breach of the Rein J Orders? If yes, is the Drawn Down void for illegality? Inappropriate to answer in light of the ambiguity in the definition of 'Draw Down' and the answer not binding the Bank. 1. … 2. Was the Draw Down: 1. Voidable pursuant to s 37A of the Conveyancing Act? Inappropriate to answer in light of the ambiguity in the definition of 'Draw Down' and the answer not binding the Bank. 1. … 2. In breach of trust? Inappropriate to answer in light of the ambiguity in the definition of 'Draw Down' and the answer not binding the Bank. 1. In breach of fiduciary duties? Inappropriate to answer in light of the ambiguity in the definition of 'Draw Down' and the answer not binding the Bank. 1. Did Powerhouse: 1. Receive the $3.6m Draw Down for no consideration or inadequate consideration? Inappropriate to answer in light of the ambiguity in the definition of 'Draw Down' and the answer not binding the Bank. 1. Knowingly receive the $3.6m Draw Down in breach of trust? Inappropriate to answer in light of the ambiguity in the definition of 'Draw Down' and the answer not binding the Bank. 1. Knowingly assist in the $3.6m Draw Down in breach of trust? Inappropriate to answer in light of the ambiguity in the definition of 'Draw Down' and the answer not binding the Bank. 1. Does Powerhouse hold the $3.6m on trust for the Trust and/or JPG? Inappropriate to answer in the absence of the National Australia Bank 1. Did Peter Sleiman and Tony Sleiman knowingly assist in the $3.6m Draw Down in breach of trust? No. 1. Are Peter Sleiman and Tony Sleiman liable for equitable compensation for the value of the $3.6m Drawdown? No. 1. … 2. … 3. … 4. … 5. … 6. … 7. … 8. Was the transfer of Unit 191 and Unit 261: 1. … 2. … 3. In breach of trust? No. 1. In breach of fiduciary duties? No. 1. Did PSJK: 1. … 2. Knowingly receive Unit 191 and Unit 261 in breach of trust? No. 1. Knowingly assist in the transfer of Unit 191 and Unit 261 in breach of trust? No. 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? Insofar as it concerns Peter Sleiman, No. 1. Did Peter Sleiman and Tony Sleiman knowingly assist in the transfer of Unit 191 and Unit 261 to PSJK in breach of trust? No. 1. Are Peter Sleiman and Tony Sleiman liable for: 1. Equitable compensation for the value of Unit 191 and Unit 261, or No. 1. Alternatively, equitable compensation for the value of unpaid consideration for the transfer of Unit 191 and Unit 261? No. 1. Was Jaken in a trust or fiduciary relationship with JPG? No. 1. Did Jaken cause the property of the Trust to be dealt with in breach of trust and in breach of fiduciary duties? No. 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? Inappropriate to answer 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? Insofar as any accessorial liability is based on the contention that Jaken owed JPG fiduciary obligations, no. 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? No. 1. … 2. … 3. … 4. Causation. Inappropriate to answer 1. … 2. … 3. … 4. …

Amendments 10 November 2023 - Addendum added. 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: 10 November 2023