Kanjian Holdings No 1 Pty Ltd v Kanjian; Kanjian v Kanjian - [2021] NSWSC 839 - NSWSC 2019 case summary — Zoe

NSWNSWSC

Kanjian Holdings No 1 Pty Ltd v Kanjian; Kanjian v Kanjian

[2021] NSWSC 839

Supreme Court of NSW|2019-12-19|Before: Henry J

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At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2019-12-19

Before

Henry J

Source

Original judgment source is linked above.

Judgment (111 paragraphs)

[1]

Ashton v Pratt (2015) 88 NSWLR 281; [2015] NSWCA 12 Aspinall v Aqua Sports Pty Ltd [2018] NSWSC 706 Austotel v Franklins (1989) 16 NSWLR 582 Australian Securities & Investments Commission v Maxwell (2006) 59 ACSR 373; [2006] NSWSC 1052 Bridgewater v Leahy (1998) 194 CLR 457; [1998] HCA 66 Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 Brooks v Burns Philp Trustee Company Ltd (1969) 121 CLR 432; [1969] HCA 4 Byrnes v Kendle (2011) 243 CLR 253; [2011] HCA 26 Calvo v Ellimark Pty Ltd [2016] NSWCA 136 Castle Constructions Pty Ltd v Sahab Holdings Pty Ltd (2013) 247 CLR 149; [2013] HCA 11 Castle Constructions Pty Ltd v Sahab Holdings Pty Ltd (No 2) [2013] HCA 44 Chao v Chao [2008] NSWSC 584 Chetwynd v Rose [2020] NSWSC 111 Commercial Bank of Australia Limited v Amadio (1982) 151 CLR 447; [1983] HCA 14 Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Aust) Ltd (1986) 160 CLR 226; [1986] HCA 14 Cubillo v Commonwealth of Australia (No 2) (2000) 174 ALR 97; [2000] FCA 1084 Day v Perisher Blue Pty Limited (2005) 62 NSWLR 731; [2005] NSWCA 110 Delaforce v Simpson-Cook (2010) 78 NSWLR 483 Derry v Peek (1889) 14 App Cas 337 DHJPM Pty Ltd v Blackthorn Resources Ltd (formerly called AIM Resources Ltd) (2011) 83 NSWLR 728; [2011] NSWCA 348 Dlakic by his tutor Dlakic v Vaughan [2018] NSWSC 1455 Dong v Song [2018] ACTSC 82 Doulaveras v Daher [2009] NSWCA 58 DW v R [2014] NSWCCA 28 Ell v Ell [2015] NSWCA 38 Fay v Moramba Services Pty Ltd [2009] NSWSC 1428 Fisher-Pollard by her tutor Fisher-Pollard v Fisher-Pollard [2018] NSWSC 500 Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 Gibbons v Wright (1954) 91 CLR 423; [1954] HCA 17 Giumelli v Giumelli (1999) 196 CLR 101; [2010] HCA 10 Grundt v Great Boulder Proprietary Gold Mines (1937) 59 CLR 641; [1937] HCA 58 Hanna v Raoul [2018] NSWCA 201 Harlowe's Nominees Pty Ltd v Woodside (Lakes Entrance) Oil Co (1968) 121 CLR 483; [1968] HCA 37 Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 Hawcroft v Jamieson [2017] NSWSC 1478 Heperu v Belle (2009) 76 NSWLR 230; [2009] NSWCA 252 Herrman v Simon (1990) 4 ACSR 81 Hiscox v Outhwaite [1992] 1 AC 562 Hotien Holdings Pty Ltd v Frits Maré [2007] NSWSC 599 Howard Smith Ltd v Ampol Petroleum Ltd [1974] 1 NSWLR 68; [1974] AC 821 Huguenin v Baseley (1807) 33 ER 526 In re Alma Spinning Company (Bottomley's Case) (1880) 16 Ch D 681 ING Funds Management Ltd v ANZ Nominees Ltd [2009] NSWSC 243 Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd [2008] NSWCA 206 Jarrett v Perpetual Trustee Co Ltd (2007) 64 ACSR 552; [2007] NSWSC 1231 Johnson v Buttress (1936) 56 CLR 113; [1936] HCA 41 Juul v Northey [2010] NSWCA 211 Kanjian v Kanjian [2019] NSWSC 166 Kauter v Hilton (1953) 90 CLR 86; [1953] HCA 95 Kooma Aboriginal Corp for Land v Goolburri Regional Council of the Aboriginal & Torres Strait Islander Commission [1999] FCA 82 Legal Services Board v Gillespie-Jones (2013) 249 CLR 493; [2013] HCA 35 Louth v Diprose (1992) 175 CLR 621; [1992] HCA 61 Magill v Magill (2006) 226 CLR 551; [2006] HCA 51 Maguire v Makaronis (1997) 188 CLR 449; [1997] HCA 23 Miller Heiman Pty Ltd v Sales Principles Pty Ltd (2017) 94 NSWLR 500; [2017] NSWCA 106 Miller v Cameron (1936) 54 CLR 572; [1936] HCA 13 Milling v Hardie [2014] NSWCA 163 Moratic Pty Ltd v Gordon (2007) 13 BPR 24,213; [2007] NSWSC 5 Mummery v Irvings Pty Ltd (1956) 96 CLR 99; [1956] HCA 45 Nanosecond Corporation Pty Ltd v Glen Carron Pty Ltd (2018) 132 SASR 63; [2018] SASC 116 Parker v Higgins [2012] NSWSC 1516 Permanent Building Society (in liq) v Wheeler (1994) 11 WAR 187 Plunkett v Bull (1915) 19 CLR 544 Poland v Hedley [2019] WASC 403 Preston v Diaspora Holdings Pty Ltd; Diaspora Holdings Pty Ltd v Owners Corporation of Strata Plan 68608 [2019] NSWSC 651 Priestley v Priestley [2017] NSWCA 155 Queensland Independent Wholesalers Ltd v Coutts Townsville Pty Ltd [1989] 2 Qd R 40 R v Byrnes (1995) 183 CLR 501; [1995] HCA 1 Rathswohl v Court [2020] NSWSC 1490 Re QFC (No 2) [2018] NSWCATGD 49 Re Reserve Hotels Pty Ltd [2021] NSWSC 376 Riches v Hogben [1985] 2 Qd R 292 Riz v Perpetual Trustee Australia Ltd [2007] NSWSC 1153 Roden v International Gas Applications (1995) 18 ACSR 454 Rose v Rose (1986) 7 NSWLR 679 Rosenbaum v Baidarman (No 2) [2021] NSWSC 574 RRG Nominees Pty Ltd v Visible Temporary Fencing Australia Pty Ltd (No 3) [2018] FCA 404 Saunders v Vautier (1841) 4 Beav 115; (1841) 49 ER 282 Senses Northbridge Pty Ltd v Sahab Holdings Pty Ltd [2019] NSWSC 1201 Senses Northbridge Pty Ltd v Sahab Holdings Pty Ltd (No 3) [2020] NSWSC 345 Sepulveda v R [2006] NSWCCA 379 Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19 Silovi Pty Ltd v Barbaro (1988) 13 NSWLR 466 Steinberg v Commissioner of Taxation (Cth) (1975) 134 CLR 640; [1975] HCA 63 Strategic Management Australia AFL Pty Ltd v Precision Sports & Entertainment Group Pty Ltd (2016) 114 ACSR 1; [2016] VSC 303 Swiss Screens (Australia) Pty Ltd v Burgess (1987) 11 ACLR 756 Szozda v Szozda [2010] NSWSC 804 Tam v Tang [2013] NSWSC 708 Thomas v Nash (2010) 107 SASR 309; [2010] SASC 153 Thompson v Palmer (1933) 49 CLR 507; (1933) HCA 61 Thorne v Kennedy (2017) 263 CLR 85; [2017] HCA 49 Tillett v Varnell Holdings Pty Ltd [2009] NSWSC 1040 Titterton v Oates (1998) 143 FLR 467 Turner v O'Bryan-Turner [2021] NSWSC 5 Vanguard Financial Planners Pty Ltd v Ale (2018) 125 ACSR 1 Walker v Corboy (1990) 19 NSWLR 382 Walsh v Walsh [2012] NSWCA 57 Watkins v Combes (1922) 30 CLR 180; [1922] HCA Watson v Foxman (1995) 49 NSWLR 315 Zugic v Vesuvius Australia Pty Ltd [2020] NSWSC 106 Texts Cited: Austin, Ford and Ramsay, Company Directors: Principles of Law & Corporate Governance (2nd ed, LexisNexis Butterworths, 2005) Barnes, The Law of Estoppel (Hart Publishing, 2020) Dal Pont, Equity and Trusts in Australia (6th ed, 2015, Thomson Reuters) Heydon and Leeming, Jacobs' Law of Trusts in Australia (8th ed, 2016, LexisNexis Butterworths) Category: Principal judgment Parties: Proceedings No 2018/150768

[8]

Judgment Overview of the proceedings, the hearing and the evidence The hearing The evidence Facts The Kanjian family Kanjian Holdings Sahab Holdings 1984: The Metropole Trust and the purchase of the Northbridge Village 1987: Purchase of the Strathfield property Mid-1987: Changes to Sahab Holdings' share structure and to the Metropole Trust 2002 and 2003: Redevelopment of 347 Sailors Bay Road property 2006-2008: The Kanjian Family Trust and purchase of the Northbridge Drycleaner 2009-2010: Philip ceases to be the family accountant 2011 and 2012: New wills, Sonia and change to the Kanjian Settlement Trust 2013-2014: Outcome of the Right of way proceedings and the Bondi conversation Mid-2014: New wills and powers of attorney 2014: Refinance and indemnity to Ken 2015-2016: New wills and car accident 2016: Aldi proposal and Loris moves into the Brookvale nursing home Early 2017: Changes in the family dynamics May 2017: Offer to purchase the Northbridge properties June 2017: External lawyers get involved July 2017: Sale of Castle Cove property, referral of Sonia to geriatrician and more signed authorities Mid-July to mid-August 2017: Understanding to share management responsibilities of family assets 27-31 August 2017: Appointment of siblings as directors of Kanjian Holdings and removal of Sahab Holdings' funds September 2017: More authorities and directions signed and countermanded October 2017: Power of attorney by Sonia in favour of Philip and more demands for documents November and December 2017: Demands for documents and more authorities signed by Loris and Sonia January 2018: Ken corresponds with siblings and more meetings with Sonia and Loris Late January/early February 2018: Dr Rosenfeld and new wills February 2018: Correspondence regarding Kanjian Holdings' document request March 2018: Loris signs Revocation and new Power of Attorney 12 and 13 April 2018: Bondi rent direction 18 April 2018: Kanjian Holdings resolution and Sonia signs agreement for lease relating to the Northbridge properties 20 and 21 April 2018: Demand by Kanjian Holdings, countermand signed, secret recording and the police are called Late April and May 2018: More demands, more authorities and Corporations proceedings are commenced June - December 2018: Ken's Cross-Claim, Equity proceedings commenced, documents produced, and Court appoints expert to assess Sonia and Loris 2019: Senses litigation, appointment of receivers to Sahab Holdings and claims against Ken relating to the Senses AFL 2020: Termination of Senses AFL Other financial matters Deferred evidentiary rulings 21 April 2018 secret recording Keypoint Law file notes Evidence: credibility of principal witnesses Loris Ken The siblings Corporations proceedings Issues for determination Is the issue of whether there was a meeting of directors and resolution passed raised by the pleadings and, if not, was an amendment required or should the issue be determined as part of the course of trial? Was there a meeting of directors of Kanjian Holdings on 27 August 2017 and a resolution passed by Loris and Sonia as directors of Kanjian Holdings to appoint the siblings as directors? Undue influence and related issues Professor Peisah The parties' submissions The ASFCC and scope of Ken's claims Legal principles Dishonesty allegation Further factual findings The 27 August Resolution The 2017 and 2018 Powers of Attorney and Revocations 18 April 2018 Resolution, 11 May Authorities and 11 May Bondi Direction Equity proceedings Sahab A Class Share Claim Legal principles Submissions Did the 1987 discussion occur? Does Ken hold the A class share on trust for Loris? Is Loris estopped from asserting a right to call for the A class share? Trustee Removal Claim Further findings Senses AFL issues Should Sahab Holdings be removed as trustee? Bondi Estoppel Claim Factual finding: Bondi conversation Legal principles Submissions Determination of the Bondi Estoppel Claim Conclusion, relief and costs

[10]

Overview of the proceedings, the hearing and the evidence

The first proceedings (2018/150768) were commenced on 14 May 2018 by Kanjian Holdings against Ken and a firm of accountants, Walker Wayland, (Corporations proceedings) seeking access to documents relating to Kanjian Holdings most of which have been produced by Ken.
The issues for determination in the Corporations proceedings arise, in the main, out of Ken's Amended Statement of First Cross-Claim filed on 7 August 2018 (ASFCC) against Kanjian Holdings, the siblings, Loris and Sonia.
Ken seeks to set aside or declare invalid ten resolutions, instruments, directions and authorities signed by Loris and Sonia in 2017 and 2018 as directors of Kanjian Holdings and in their personal capacities (which I refer to collectively as the impugned documents). He seeks this relief on the basis that the impugned documents were passed or signed in circumstances where Loris and Sonia lacked capacity and/or by reason of dishonesty, undue influence or unconscionable conduct at the hands of the siblings.
Ken also claims that the Corporations proceedings should never have been commenced as they were authorised by Philip and Victor who were not validly appointed as directors of Kanjian Holdings on 27 August 2017.
The second proceedings (2018/258352) were commenced by Loris and Sonia on 22 August 2018 against Ken, Kanjian Holdings and Sahab Holdings (Equity proceedings) seeking access to documents relating to Loris and Sonia's affairs. Again, most of the documents sought have been produced by Ken.
The issues for determination in the Equity proceedings arise out of Loris' Second Further Amended Statement of Claim (SFASC) and Ken's Cross Claim.
Loris contends that he has an absolute and indefeasible beneficial interest in one of the two A class shares in Sahab Holdings that is held by Ken and seeks relief that compels Ken to transfer the share to Loris. Loris also claims that Sahab Holdings should be replaced as trustee of three Kanjian family trusts for reasons that include Ken's past management of the affairs of Sahab Holdings, the breakdown in relations between Ken and the beneficiaries of those trusts, and Ken's conduct in causing Sahab Holdings to enter into a long term lease over certain real properties.
Ken denies Loris' claims. He argues that Loris is estopped from demanding that Ken transfer legal title to the A class share based on an alleged agreement or assumed state of affairs that arose out of a conversation in 1987 and contests the removal of Sahab Holdings as trustee. Ken also rejects any allegation that he has acted otherwise than as a diligent and faithful director of Sahab Holdings for the past 36 years.
In his Cross-Claim, which is brought against Loris and Sonia, Ken also asserts an interest in some commercial property jointly owned by Loris and Sonia in Bondi by reason of an estoppel and seeks declaratory relief in relation to that interest and to the A class share. Loris and Sonia have denied Ken's claims.
Although a party to both proceedings, Sonia has not played an active role since 14 December 2018 when the Court made a declaration under s 41(1)(a) of the NSW Trustee and Guardian Act 2009 (NSW) and appointed the NSW Trustee and Guardian (NSW Trustee) to manage her affairs (management orders). As a consequence, Sonia was removed as the second plaintiff in the Equity proceedings and joined as the fourth defendant. The NSW Trustee has filed a submitting appearance and did not attend the hearing.
Due to the disputes in these proceedings, there was no appearance on behalf of Sahab Holdings, the third defendant in the Equity proceedings.

[12]

The evidence

Kanjian Holdings and the siblings read affidavits from Marianne and Victor, both dated 6 May 2018, and from Philip dated 8 May 2018. They also read affidavits from Vivian Evans dated 14 December 2018 and 18 February 2019. Ms Evans, a Partner at Uther Webster & Evans, was previously the solicitor for Kanjian Holdings and the siblings in these proceedings.
Loris read five of his own affidavits dated 17 August 2018, 29 August 2018, 18 February 2019, 3 May 2019 and 21 June 2019.
Loris also read affidavits from Monica Ross-Maranik dated 22 August 2018, 18 February 2019 and 23 March 2020, Lara Kolokossian dated 30 August 2018 and 22 March 2020, Anthony Rumore dated 30 August 2018, Philip Diviny dated 18 February 2019, Freya Luick dated 6 April 2019 and Hiroshi Takei dated 3 May 2019. Ms Ross-Maranik, a Consulting Principal at Keypoint Law, had been the solicitor for Loris and Sonia prior to and for a period during the proceedings. Ms Kolokossian, a solicitor at Keypoint Law, had dealings with Loris and Sonia in 2017 and 2018. Mr Rumore, a Consultant at Colin Biggers & Paisley, was also retained by Loris and Sonia in 2017.
Loris also read affidavits and expert evidence from Matthew Young and Nicholas Brady.
Ken read all or part of eight of his own affidavits dated 12 July 2018, 29 August 2018, 24 October 2018, 8 February 2019, 18 February 2019, 3 May 2019 and 8 July 2019, 20 March 2020. He relies on affidavits from his wife, Annie Kanjian, dated 8 July and 25 September 2019, and an affidavit of Marie Evanian, an Armenian translator, sworn 13 September 2019. Ken also read an affidavit of Zorik Avakian dated 13 June 2019.
Loris and the siblings objected to parts of Annie's 8 July 2019 affidavit and to Ms Evanian's affidavit as they comprise evidence about a discussion between Loris, Sonia, Ken and Annie that was secretly recorded by Annie on her mobile telephone on 21 April 2018. The parties were content for the hearing to proceed on the basis that the witnesses would be cross-examined on that evidence and for these reasons to deal with its admissibility. I have admitted the secret recording, translated transcript and related evidence as evidence for the reasons set out at [465]-[504].
Expert evidence from Professor Carmelle Peisah was also tendered. Professor Peisah was appointed by the Court to assess the capacity of Loris and Sonia. Her opinion that Sonia lacked financial capacity and the capacity to instruct lawyers was the catalyst for the financial management order made in December 2018.
The siblings, Ken, Loris and Annie were cross-examined and submissions were made about their credit and the reliability of their evidence. This issue is significant as some of the claims rely on oral communications from many years ago (which are denied) and other claims seek to set aside documents on the grounds of undue influence about which Loris, a party alleged to have been unduly influenced, makes no complaint. At this point, I simply note that I did not unreservedly accept the evidence of any of the parties. In view of the timing of certain events, the frailty of human memory and the parties' self-interest, I have placed greater weight on the contemporaneous documents: Watson v Foxman (1995) 49 NSWLR 315 at 319.
As Sonia was not capable of giving evidence, I have also carefully considered and treated with caution the evidence given about conversations with her where that evidence is not corroborated and is in the personal interest of the witness: Turner v O'Bryan-Turner [2021] NSWSC 5 at [216].
Professor Peisah, Mr Rumore, Ms Kolokossian, Ms Ross-Maranik and Mr Brady were also cross-examined. No issues of credit were raised in respect of their evidence, although submissions were made as to the accuracy of the conclusions in Mr Brady's report, which I refer to below.

[14]

The Kanjian family

Loris was born on 3 November 1926. Sonia was born on 15 December 1934. Both of them are of Armenian descent. They migrated to Australia in the 1950s and have been married since 1956.
Loris is a trained architect and was a Professional and Technical Officer at Sydney University prior to his retirement in 1981. Sonia did not work in external employment but had a keen interest in identifying and managing property investments for her, Loris and their family.
Since October 2017, Loris and Sonia have lived in separate rooms in a Bupa-operated nursing home in Willoughby where they remain permanent residents. Loris is confined to a wheelchair and wears a hearing aid. Professor Peisah's assessment of Sonia suggests that she has a moderately severe dementia.
Over the years, Loris and Sonia built wealth by buying and developing property. They are the registered proprietors as joint tenants of commercial premises located on Brighton Boulevard, North Bondi (Bondi property) which they bought in 1982. Sonia is the registered proprietor of a block of eight apartments located at 347 Sailors Bay Road, Northbridge (347 Sailors Bay Road property) and commercial premises located at 50 Sailors Bay Road, Northbridge (50 Sailors Bay Road property). They have interests in other properties via family trusts and companies which are detailed below.
Loris and Sonia lived in a property they owned at Neerim Road, Castle Cove (Castle Cove property) until their move into a nursing home. The Castle Cove property was sold in 2017.
Ken (sometimes referred to as Vasken) was born on 5 October 1956. He is married to Annie and has three adult children. Ken was admitted as a solicitor in 1980 and, since 1981, has practised on his own account, generally as a commercial lawyer.
Victor (sometimes referred to as Vidgen) was born on 9 January 1960. He is married with two adult children. He is a painter by trade and does not have any financial or legal background. Until 2017, Victor had a very close relationship with Ken.
Philip was born on 7 May 1964. He is married to Aline and has two adult children. He is an accountant with his own practice in Dee Why. Philip was the accountant for the family companies and trusts until sometime in early 2010.
Marianne was born on 4 January 1975. She is married with two adolescent daughters. She is not in external employment. Until 2017, Marianne and Ken had a close relationship.

[16]

Sahab Holdings

Sahab Holdings is the trustee of the Metropole Trust, the Kanjian Family Trust and the Kanjian Testamentary Trust (Sahab Trusts).
Sonia and Ken each hold one A class share in Sahab Holdings, with Sonia registered as beneficial owner and Ken registered only as the legal owner of their respective A class shares. Each of Ken, Philip, Victor and Marianne also hold one B class share in Sahab Holdings.
Ken and Sonia, until the latter's incapacity, were the directors of Sahab Holdings. Since early 2019, Ken, Victor and Bernard Le Boursicot have been the company's directors. Ken is also the company secretary.
As trustee of the Metropole Trust, Sahab Holdings owns: 1. 59-67 Strathallen Avenue, Northbridge, a property that comprises a number of retail shops and a commercial office (Northbridge Village, also referred to as Sahab I); and 2. 145-149 Concord Road, North Strathfield, which comprises retail premises leased to Woolworths (Strathfield property, also referred to as Sahab II).
The Kanjian Family Trust was established as a unit trust by trust deed on 21 December 2006. The sole unit holder of the Kanjian Family Trust is Kanjian Holdings, holding the units as trustee of the Vasir Superannuation Fund. Sonia is the only member of the Vasir Superannuation Fund.
As trustee of the Kanjian Family Trust, Sahab Holdings owns real property at 69 Strathallen Avenue, Northbridge which adjoins the Northbridge Village (Northbridge Drycleaner).
The Kanjian Testamentary Trust was established by the will of Loris' late mother who died on 8 November 2001. The beneficiaries of the Kanjian Testamentary Trust are Loris, Sonia, Ken, the siblings, the latter two's spouses and children, and various companies.
According to Ken's evidence, Loris settled an inheritance of around $750,000 from his mother who died in 2011 on Sahab Holdings as trustee for the Kanjian Testamentary Trust, which funds were subsequently lent to Sonia to finance part of the cost of redeveloping the 347 Sailors Bay Road property.

[17]

1984: The Metropole Trust and the purchase of the Northbridge Village

The Northbridge Village was purchased by Sahab Holdings as trustee for the Metropole Trust in mid-1984.
There is a contest on the evidence as to whether Sonia or Ken identified the Northbridge Village as a suitable property for the family to purchase. It is unnecessary to resolve that dispute. I accept Ken's evidence that he commenced the negotiations which resulted in an agreement on the price and general terms being reached by the end of March 1984 and that Ken set up the trust and company structures associated with the purchase.
Ken deposes that, in early 1984, he had numerous discussions with Loris and Sonia about the best way to proceed with the purchase of the Northbridge Village. As it is relevant to Ken's claim in relation to the A class share in Sahab Holdings, the terms of the key conversation about which Ken gives evidence is set out below in full: Ken: We should buy the property in the name of a shelf company which then acts as trustee of a family trust. A trust structure gives us a lot of flexibility. What I propose is this - the shelf company can have two shares issued; one for mum and one for me. It will effectively be a $2 company. Mum and I will be directors of the company. The trust deed will name all family members as beneficiaries but you (referring to my parents) will be the primary beneficiaries because if all goes according to plan, you will eventually receive all income produced by the company. I propose that dad not be director of the new company nor the legal owner of any shares. I say this for two reasons. First, you are both already directors and shareholders of Kanjian Holdings No 1 Pty Ltd. If you were to be directors and shareholders of the new company, aggregation provisions under the Land Tax Management Act would cause the unimproved capital value of the Cremorne property and the Northbridge property to be added to one another resulting in land tax liability to be greater than it would otherwise be if the two properties were taxed separately. Instead, I propose to hold the single ordinary share issued to me in trust for dad. As dad will not be a director, the aggregation provisions will not apply. There is also another reason. We will be borrowing a lot of money to purchase the Northbridge property and I will be required to give my personal guarantee to the lenders. I have already made tentative enquiries. In my estimation we will need mortgage advances totalling $750,000. I have saved $40,000. That is all I have and to support you, I will put it into the property to help us buy it. As I will be managing the property and as I will be investing in it and as well giving my personal guarantee on the borrowings, I would like to hold one share in my name but because at the end of the day this property will hopefully produce income for your benefit, I believe that I should secure dad's position in two ways. First, I will declare that I hold my share on trust for him so that if dividends are one day declared, the income will go to him or if something happens to me, dad's interest in the company will be secure. Second, dad will be named in the trust deed as a primary beneficiary. So the primary beneficiaries will be the two of you and Victor, Philip, Marianne and I will be secondary beneficiaries. I know that it is a little bit involved but I think it will all work. How does it sound to you? Loris: I will be guided by you. It sounds good to me. It looks like you have done quite a bit of thinking about the matter. Sonia: I am fine with all of that. We will be relying on you to manage the six tenancies. My only concern is that three of them are a little unsteady at the moment. I hope we will be successful. There is quite a bit of risk involved here.
On 28 February 1984, Sahab Holdings was acquired as a shelf company in connection with the proposed purchase of the Northbridge Village. Sonia and Ken were appointed the directors and the shareholders holding one ordinary share each.
On 17 April 1984, Ken executed a deed by which he declared that he held the one ordinary share in Sahab Holdings as trustee as to the entire interest for the benefit of Loris (1984 Declaration of Trust). Loris is not a party to the 1984 Declaration of Trust.
On 14 May 1984, the Metropole Trust was established by a trust deed that provided for Sahab Holdings to be the trustee (cl 2). Under the Metropole Trust Deed, Ken was, for his lifetime, the Appointor with the power at any time and in his absolute discretion to remove the trustee and appoint any other person, apart from himself, a beneficiary or the settlor, as trustee (cl 10). The primary discretionary beneficiaries under the Metropole Trust were, and continue to be, Loris and Sonia, with each of Ken and the siblings a secondary discretionary beneficiary in the sense that any rights to the corpus of the trust arise only on the death of the survivor of Loris and Sonia. Loris and Sonia are both parties to the Metropole Trust Deed.
Sahab Holdings purchased the Northbridge Village for $1,050,000 with first and second mortgages from the Public Trustee and Westpac respectively totalling about $750,000. The balance of the purchase price was funded by Sonia and Ken, with Ken contributing $40,000 from his life savings. Ken and Sonia gave personal guarantees to support the mortgages which were paid out over time from funds generated from rents. Sonia and Loris repaid Ken his contribution of $40,000 by around 1988 (T412.38-41).
Loris deposes that he contributed about $28,000 to $30,000 towards the purchase of the Northbridge Village from the inheritance he received from his father who died in 1986. I reject this evidence as Loris accepted in cross-examination that his father left his estate to his mother and that Loris did not receive any inheritance at that time (T704.26-30).
Loris accepts that Ken discussed with him and Sonia that Northbridge Village would be purchased by a company which would act as trustee and that the trust deed would name all the Kanjian family members as beneficiaries, with Loris and Sonia as the primary beneficiaries. He deposes that Ken told him and Sonia they should set up trusts and companies as it was "better for tax", that Loris understood the Metropole Trust was established for that reason and, although there was a trust, he believed that "it belonged" to Loris and Sonia, by which I understood Loris to mean he believed the Northbridge Village belonged to them. Loris also gives evidence that he believed that he and Sonia held one share each at the time Sahab Holdings was established and that he had not seen the 1984 Declaration of Trust or knew that Ken held the ordinary share in Sahab Holdings on Loris' behalf until he gained access to the legal documents in these proceedings.
Ken's evidence is that he became the manager of the Northbridge Village and its tenancies after its purchase in 1984 and that, from 1987 until a car accident in 2015, Loris assisted Ken in management and administration of the property by doing basic bookkeeping and liaising with tenants and tradesmen, including in relation to routine maintenance and repairs.
Loris gives evidence that he and Sonia agreed that Loris would oversee the day to day management of the Northbridge Village after its purchase, which he did from 1984, and that Ken's responsibilities were primarily dealing with legal matters and lease agreements.
Loris and Ken were both cross-examined about the role each of them played in relation to the management of the Northbridge Village over the years. I return to that issue later in these reasons. At this point, I note that I am satisfied that Loris was involved in the day to day operations and administration of the Northbridge Village from at least November 1987 until his accident in 2015. Mr Takei and Ms Luick, who were tenants in the Northbridge Village from November 1997 and around 2002 to 2011 respectively, give evidence that Loris was frequently at the Northbridge Village, around three to four days per week, that he often checked in with them about their business and was the point of contact for issues relating to their shops. In contrast, their evidence is that they had limited contact or interaction with Ken.
Ken's evidence, which I accept, is that he did not charge any management fees for the time he spent on matters relating to the Metropole Trust and the Northbridge Village, other than on two occasions in June 2009 and June 2010 with the approval of Loris and Sonia.
Loris and Sonia received the net income from the Northbridge Village by way of distributions from Sahab Holdings which, for the period up to June 2018, was arranged by Ken.
Ken deposes that he has been the de facto managing director of Sahab Holdings since its inception in 1984. Ken's evidence is that, since that time, he has assumed primary responsibility for all of the affairs of the company, including the negotiation and implementation of commercial initiatives such as acquisitions, financing and leasing transactions. Loris disputes this. His evidence is that Ken was not responsible for the commercial initiatives undertaken by Sahab Holdings, but that Sonia, in consultation with Loris, was responsible for sourcing and acquiring property with respect to the Northbridge Village.
It is not in dispute that the siblings played no role in setting the strategic direction or in the management and administration of Sahab Holdings, save for the years up to late 2009 or early 2010 when Philip was its accountant.

[19]

Mid-1987: Changes to Sahab Holdings' share structure and to the Metropole Trust

Ken deposes that, midway through 1987, he had a discussion with Loris and Sonia about Sahab Holdings and the Metropole Trust during which he proposed a regime to make more concrete the rights of Ken and the siblings and to give up his role as Appointer of the trustee of the Metropole Trust (1987 discussion).
As the 1987 discussion is key to Ken's estoppel claim in relation to the A class share in Sahab Holdings, I have set out Ken's evidence of what he says was discussed in full: Ken: I'm pleased with the performance of Northbridge Village. It has taken a lot of work but we are now on an even keel and I have sorted out the tenants. We have a better mix now and they are paying rent more or less on time. We are on course to reduce debts secured by the property and I hope there will be good income for you. However, I have been thinking about succession. I think that Northbridge Village has sound prospects and I would like to be able to hold it for long enough so that it benefits Victor, Philip, Marianne and me in the future. At the moment, Victor, Philip, Marianne and I are secondary beneficiaries of the trust and we do not have concrete rights. I have been thinking on how, after you, our interests can be secured on a more certain basis. I spoke earlier this week to the Stamp Duties Office and was told that if I were to vary the trust deed to make the four of us default beneficiaries, that would be a resettlement of the trust and would attract very high stamp duty. We don't want that. The trust has a life of 80 years or so. Therefore, I was thinking that what we should do is something like this. The two ordinary shares presently on issue - one to me and one for mum - should be converted to A class shares. They will have voting rights but only for as long as you remain alive. Then we should issue B class shares - one to each of Victor, Philip, Marianne and me. Those shares will only have voting rights after your death. But we will change the articles of association of Sahab so that all major decisions concerning the Metropole Trust will have to be by unanimous vote of all B class shareholders and if there is no unanimity, the status quo will continue or, as a default outcome, all income and capital distributions must be equal between the four of us. I think that will work. I have looked at the law on this and the cases and I see no impediment to it working. We won't have stamp duty problems. It won't be a resettlement of the trust and each of us will eventually then have an equal say in the management of the company in connection with assets of the trust which include both Northbridge Village and the North Strathfield property. Loris: You are doing a great job for us at the moment. You have taken the entire management burden of Northbridge and North Strathfield properties onto yourself and they are both performing well. If you think that what you are proposing is a good idea so that after us, you all have equal rights, I'm all for it. I trust you to look after your brothers and sister. Sonia: Me too. We are very pleased with the way Northbridge Village is going and are so grateful to you for your careful management of it. Your father and I would like to pass the Northbridge property to you (referring to me and to my siblings) after we are gone. It is a good investment. The shops were constructed in 1982 and have a fair amount of life in them. Please go ahead with your plan. Ken: Thanks, that's great. There is one other thing I should mention. You know that the trust deed names me as the appointor of the trust and after me my executor. The appointor can decide who will be the trustee. That was okay while I was still living at home and was not married but if something were to happen to me, Annie (referring to my wife) would become the appointor and that is not appropriate. I think we should change the appointor. My proposal is that Sahab should have the right to appoint another company in its place as trustee. So during your lifetimes, mum and I will have the vote on the matter and it will have to be unanimous. After you, all B class shareholders will have to agree if the trustee is to be changed. In this way, Sahab can be guaranteed to remain trustee of the Metropole Trust and the power of appointment limited unless everyone wants a new trustee to be appointed. I think that this fair. It dovetails with the plan I have in mind for succession, for the proposed rights of B class shareholders and for keeping the Northbridge and North Strathfield properties in the family on a long term basis. After all, the trust itself has a long life. So I am prepared to give up being the appointor but for as long as the two of you are alive, I should be allowed to retain and exercise voting rights attached to the share I hold in Sahab because I believe it is only fair that I be given a say in how the company is run. Don't forget that I will continue to be the manager of the properties, I will not be charging the company for that work, to obtain the loans that we have, I have given personal guarantees exposing my assets including my legal practice and I have also made a significant personal financial investment in the company. What do you think? Loris: It's all very complicated for me but if you think that that is in the best interests of the family, go ahead Sonia: I agree. It sounds quite complicated but dad and I trust you to do everything properly and fairly for the whole family.
On 25 September 1987, Sahab Holdings passed a special resolution that amended the articles of association to create A class shares with voting and other rights that attached during Loris and Sonia's lifetime, create B class shares that entitled the holders to the same rights after Loris and Sonia's lifetime, and convert the two ordinary shares (held by Sonia and Ken) into two A class shares. It also passed a resolution to allot one fully paid up B class share to each of Ken and the siblings.
On the same day, Ken caused Sahab Holdings to execute a Deed of Variation in its capacity as trustee of the Metropole Trust (Deed of Variation) which varied cl 10 (Removal and Appointment of Trustee) and cl 11 (Decisions by Corporate Trustees) of the Trust Deed to provide that the Trustee may remove any Trustee from office and appoint another person as trustee other than any beneficiary, itself or the Settlor. This had the effect of removing Ken's right, as the Appointer, to remove and appoint a new trustee and to confer that power on Sahab Holdings.
Ken gives evidence that, after 25 September 1987, he continued with the management and administration of the Northbridge Village and Strathfield properties although he delegated more tasks relating to the Northbridge Village to Loris due to Ken's legal practice commitments and Loris' availability in retirement.
Loris admits that Ken provided some management services in relation to Northbridge Village such as undertaking leasing work, operating bank accounts and undertaking rent reviews but that he and Sonia otherwise undertook the management of the Northbridge Village.
In or about 1989, Sonia and Loris funded the construction of additional offices at the Northbridge Village at a cost to them of around $250,000.

[20]

2002 and 2003: Redevelopment of 347 Sailors Bay Road property

In 2002, plans were underway to redevelop the 347 Sailors Bay Road property into eight apartments.
According to Ken's evidence, around that time, he discussed a proposal to fund the $2.3 million cost of construction with the siblings that had been approved by Loris and Sonia. The proposal involved Sonia and Loris funding $1.1 million with the balance of $1.2 million to come from the siblings. Ken proposed that Sahab Holdings would borrow $1.2 million on the security of the Strathfield property, use it to repay loans owed by Sahab Holdings to Ken and the siblings of $300,000 each, and then for him and the siblings to lend the money to Sonia interest free to fund the construction. He also proposed that the rental from the apartments be made available for an education fund and that the apartments themselves would be left for the children of Ken and the siblings in the future. Ken's evidence is that the siblings agreed to that proposal. Philip disputes this.
In evidence are minutes of a meeting of the directors of Sahab Holdings dated 6 August 2003 that are signed by Ken and record that Sahab Holdings would borrow $1,200,000 from the Public Trustee on the security of the Strathfield property with the proceeds to be applied to repay the amount of $300,000 to a company associated with Ken and to each of the siblings.
On 1 September 2003, a mortgage over the Strathfield property in favour of the Public Trustee was registered for $1,200,000.
Also in evidence is a loan agreement dated 7 September 2003 between Kancorp Pty Ltd (Kancorp), Victor, Philip and Marianne as lenders and Sonia as borrower. The loan agreement is signed by Ken and Annie as director and secretary of Kancorp, the siblings and Sonia. It records that Kancorp and the siblings agree to advance the amount of $1.2 million to Sonia to finance the construction of the apartments.
Philip says that he knew there was a mortgage over the Strathfield property but was not aware of the matters referred to in Sahab Holdings' minutes of meeting and did not consent to a loan taken out for that purpose. Having regard to its contents and the fact that he is a signatory to the agreement, I do not accept Philip's evidence that he did not consent to the loan for the purpose referred to.

[22]

2009-2010: Philip ceases to be the family accountant

Philip had acted as the accountant for the family from the early 1990's and Kanjian Holdings and its associated trusts from around 2001.
In late 2009 and early 2010, there were tensions in the family, primarily between Philip and Ken. Philip was raising questions about the structures that Ken had put in place as well as concerns that Loris and Sonia were being asked to sign misleading declarations to the Australian Tax Office (ATO) and were not properly advised about the capital gains tax (CGT) implications of certain transactions. He also raised concerns about the lack of documentation and the status of his and the other siblings' investments in the Strathfield property and shares in Transurban Roads that were held via the Carkan Trust, a trust that Ken had established (Carkan).
Philip raised these issues in a letter to Sonia dated 22 January 2010 which begins with the statement "reasons why I am unhappy with family structure and the total control by Ken". Ken deposes that he has never seen that letter and, having read it, says he would "dismiss most of [the issues and complaints] as either lacking in substance, irrelevant or just querulous" and describes the letter as "self-righteous in tone".
Ken was, however, aware of some of the concerns as, on 27 January 2010, he sent a letter to the siblings about "the family investments" in which he sought to address and allay concerns by providing some formal advice about their investments in the Strathfield property via Sahab Holdings and in Carkan Pty Ltd as trustee for Carkan.
Tensions between Ken and Philip reached a tipping point around February 2010 during a family meeting at the Castle Cove property. While there is a dispute as to what was said and who caused matters to come to a head, it is common ground that Philip got upset and frustrated, accused Ken of misleading Sonia and Loris, and the police were called. Philip believes that Ken called the police and made false statements about him. Ken believes that Philip had threatened to strike Ken (which Philip denies), Sonia called the police and Ken saved Philip from a criminal record by not pressing charges for assault.
I find it likely that, at or around the time of the family meeting, Philip ceased as the family accountant. Philip notified Ken of that fact in a letter dated 11 March 2010 in which Philip also set out his wishes to liquidate his interests in Carkan and the Strathfield property. Ken later caused the Transurban shares in Carkan to which Philip was entitled to be sold with the proceeds accounted to Philip directly.
On 29 September 2010, Uther Webster & Evans, a firm of solicitors instructed by Philip, wrote to Ken asking for information and documents regarding Sahab Holdings, Kanjian Holdings and Carkan.
Ken responded by a letter dated 11 October 2010 in which he indicated that he would put the request to his parents in a meeting. Ken's evidence is that, at a meeting with Loris and Sonia, they told him they did not want external lawyers to get involved or the documents to be released and that he did not reply to the letter in accordance with Sonia's instructions.
Ken deposes that Loris and Sonia formed the view that it would be unwise to allow Philip to have a role in the future management of what Ken describes as the "family's collegiate assets". Ken also deposes that he believes Philip abandoned the family and that his withdrawal as the family accountant meant that Ken had to take charge of managing the family investments and accounting matters.
Philip deposes that, rather than engaging in unhelpful arguments with Ken, he thought it best to cease acting as the family accountant.
Loris' evidence is that, at the time Philip began to distance himself from the family, he did not understand Philip's reasons for doing so. In his evidence, Loris refers to the "falling out" that Philip had with the rest of the family and a period of tension, but says that there was no estrangement. In cross-examination, Loris gave evidence that, in about 2012, Philip was causing problems in the family by making accusations about the work Ken was doing for the family, stating that he didn't trust Ken, yelling at Loris and Sonia and not attending family functions (T27.12-T29.5).
It is apparent that, from early 2010, there was significant distrust and a lack of familial relations between Philip and Ken. At that time, Loris and Sonia had sided with Ken and Philip no longer played a role in relation to the family investments, trusts and companies or Loris and Sonia's affairs until sometime in early to mid-2017.

[23]

2011 and 2012: New wills, Sonia and change to the Kanjian Settlement Trust

According to a note made by Sonia's general practitioner, Dr Telan, and a letter from Sonia's psychologist, Kathi Pauncz, to Dr Telan, dated 7 January 2011, around that time, Sonia was "having issues with [her] son", has a "very difficult husband" and "a son who has cut off from Sonia. This causes her extreme distress…". Based on the evidence at [99]-[105], I infer that the reference to Sonia's son in those documents was to Philip.
On 23 January 2011, Loris and Sonia each made new wills (2011 Wills). The 2011 Wills were prepared by Ken and were witnessed by Ralph Selwyn, a retired solicitor who lived next door to Loris and Sonia.
The 2011 Wills are in similar terms. Loris and Sonia each appointed the other as their executor and beneficiary of the whole of their estates. If they predeceased one another, Annexure A to their wills were to take effect. Annexure A appointed Ken, Victor and Marianne as joint executors and trustees and were also in similar terms. The differences relate to assets held separately by Sonia and Loris.
In Annexure A, each of Loris and Sonia made a number of specific bequests to their children, grandchildren, charities and various relatives and deal with the interests in the Kanjian Family Trust, Kanjian Holdings, the Vasir Superannuation Fund, the Metropole Trust, Sahab Holdings and their various properties. Relevantly, the specific bequests included the Castle Cove property and another property being left to Marianne and a property that Loris and Sonia owned at 377 Sailors Bay Road, Northbridge to Philip. Pausing here, it appears that the 377 Sailors Bay Road property was transferred to Philip and his wife in respect of an undivided half share in 1994, with the remaining half share transferred in 2011.
Subject to the specific property bequests and gifts and in relation to Philip, in very general terms, Annexure A provided that Loris and Sonia's property and interests are to be divided between Ken and the siblings (and their families) equally. Relevantly, the Bondi property was to be left to a company to be incorporated by the trustee in the name of Sonhangood Pty Ltd which would act as trustee of a unit trust, the units of which would be held equally between Ken and the siblings for life with the remainder to the grandchildren or several of them: cls 16-17.
Clause 21 of Annexure A of both of the 2011 Wills refers to "deliberately segregated gifts to my son Philip Kanjian".
Clause 22 states: … I have specifically chosen to separate my son Philip Kanjian from being involved in and from taking the full benefit of certain assets comprising my estate by reason of his sadly divisive, disruptive and disturbing conduct in relation to family affairs since 1998. Since that time I have been unable to rely on him for support and he has increasingly sought to divide the family. He has been aggressive and physically intimidating towards various members of my family and at the time of preparation of this will, continues steadfastly to refuse to seek medical attention for his deteriorating psychological condition. I further declare that despite the antagonistic and disentitling conduct of my son Philip Kanjian I nevertheless wish to make provision in my will for him and his family … I make this declaration with a heavy if not broken heart but in the belief that measures taken in my will may well be necessary to ensure harmony between my four children and the proper administration of gifts devised and bequeathed in their favour.
Loris deposes that the comments in his will about Philip are "disgusting. I do not agree with them". According to the report from Professor Peisah, Loris told her that they were "Ken's words, he did it in such a way I was bamboozled and swayed".
Ken deposes that similar comments in the 2014 wills about Philip reflected "deliberate instructions" from Loris.
As there is no challenge in these proceedings to the 2011 Wills or the later wills made by Loris and Sonia, I simply observe that the statement about Philip in the 2011 Wills is also made in two later wills
By deed of amendment dated 3 February 2012, the terms of the Kanjian Settlement Trust were varied to provide for Ken, Marianne and Victor, but not Philip, to be the Appointor of the trustee after the death of Sonia and Loris.

[24]

2013-2014: Outcome of the Right of way proceedings and the Bondi conversation

On 10 March 2013, the High Court held in the Right of way proceedings that the easement was incapable of reinstatement: Castle Constructions Pty Ltd v Sahab Holdings Pty Ltd (2013) 247 CLR 149; [2013] HCA 11. Sahab Holdings had not succeeded at first instance but won in the Court of Appeal. On 23 August 2013, Sahab Holdings applied to the High Court for review of the 10 March decision, which application was rejected: Castle Constructions Pty Ltd v Sahab Holdings Pty Ltd (No 2) [2013] HCA 44. Sahab Holdings was ordered to pay the costs of the other parties at first instance, in the Court of Appeal and in the High Court.
Ken acted as the solicitor for Sahab Holdings in the Right of way proceedings.
On around 7 April 2014, Ken prepared a document that set out the costs of the Right of way proceedings which totalled $975,052 and was made up of professional fees for Ken's firm on a solicitor-client basis, Counsels' fees, other disbursements and $395,179 for the party-party costs that Sahab Holdings had been ordered to pay and the costs assessment costs.
By that time, Sonia had paid Ken $300,000 towards the costs incurred in the Right of way proceedings by two payments of $100,000 on 2 July 2013 and $200,000 on 3 January 2014. Sonia later made another payment to Ken of $100,000 on 3 October 2014. Ken paid the party-party costs of $395,179 from his personal account by two payments made on 19 February and 22 April 2014.
Ken deposes that, on or shortly after 7 April 2014, he met with Sonia and Loris and presented to them his calculation of the costs incurred in the Right of way proceedings. The conversation to which Ken deposes is critical to his claim to an interest in the Bondi property and is set out in full below (Bondi conversation): Ken: You know how sorry I was that we lost the case in the High Court. The financial cost has been disastrous. I have prepared a summary of the costs - all up it's almost a million dollars. [Ken deposes he then showed Loris and Sonia the summary and explained the components of the costs. The conversation continued.] Ken: It was supposed to be a short sharp case involving judicial review of an administrative decision but Castle turned it into Ben Hur. Once you are caught in the dragnet of litigation, it is not easy to get out especially if you believe that you are on the right side of the law. It's then a disaster for whichever party loses. Obviously, Sahab (referring to the company in its capacity as trustee for the Kanjian Family Trust) cannot pay these costs. You have already provided me with $400,000 from your other funds. For now, I am prepared to bear responsibility for or to forgo remaining costs and fees but can you make some provision for me so that in the future I can recoup these losses - perhaps an adjustment to your wills so that Sahab makes more generous provision for me than has presently been made. Sonia: Your father and I have been thinking carefully about this. We knew that the overall loss would be massive. You have already spoken to us about their extent. We cannot cover you for more than $400,000. If you take the rest on yourself, then after we have gone, we can leave Bondi to you. How does that sound? Loris: Yes, we think that will work. Sonia: You have been doing an extraordinary job for us at Bondi. You are doing all the work, not charging us anything and we just sit back and collect the rent. In fact, your father and I appreciate that if it wasn't for your expertise and efforts, the shop would have been closed down a long time ago. Therefore, this is our proposal. We will cover you for up to $400,000 and you pick up the rest on the basis that you continue to look after Bondi for us as you have and when we are gone, we will leave it to you. Loris: Yes. Partly to cover you for loss that you will bear but more than that in recognition of the work you have done for us over the years. Mum and I realise that there is opposition to the shop from the residents in the apartments above. We depend on you to keep management of the property on an even kneel as you have done so far. Ken: Thank you for that. I did not even expect you to cover me for the $400,000 but you did and I am grateful. I realise that it is a big hit for you but your proposal has eased the burden of the loss which I will now pick up and I am happy to continue as before and for Bondi to be left to me after you pass
Pausing here, the Bondi property comprises a small ground floor shop that has been tenanted since it was purchased by Sonia and Loris in 1982. Ken negotiated the purchase at a price of around $62,000. Loris' submissions refer to a purchase price of $900,000, but does not appear in the evidence. In any event, based on the date of purchase, I accept Ken's evidence.
Ken's evidence, which I also accept, is that Sonia and Loris entrusted him to manage the Bondi property from the outset and Ken agreed and has done so without charging management fees. Over the years, Ken has negotiated leases, managed rent reviews and other tenant issues and, from 2011, represented Sonia and Loris at the strata committee meetings. Ken has also represented the tenants in an application before the Strata Titles Commissioner, applied (in Loris and Sonia's name) to the Commissioner for orders that the Owners Corporation make special by-laws and made an application to the Consumer Trader and Tenancy tribunal for orders relating to the Bondi property.
Loris says the 2014 Bondi conversation did not occur. He also deposes that Ken only informed him about the Right of way proceedings at the Court of Appeal and High Court stages, that he did not know anything about the trial at first instance until it was over, and that Ken did not seek his instructions and Loris did not hear Ken ask for Sonia's instructions.
In cross-examination, Ken gave evidence that most of the discussions he had about the Right of way proceedings were with Sonia as the Northbridge Drycleaner was related to her superannuation fund, and that the proceedings were discussed during their regular weekly meetings at which Loris was invariably present (T483.18-26).
Shortly after the Right of way proceedings, Sahab Holdings commenced fresh proceedings in this Court against Castle Constructions Pty Ltd seeking an easement to permit rear access to the Northbridge Drycleaner under s 88K of the Conveyancing Act 1919 (NSW) (s 88K proceedings). Ken gave instructions to abandon the case on the third day of the hearing which resulted in Sahab Holdings paying $275,000 to Castle Constructions by way of a lump sum cost order (T488.32, T489.4-12). Ken was cross-examined in the s 88K proceedings and parts of the transcript of his evidence were tendered in these proceedings by Loris.
In cross-examination, Ken gave evidence that he told Loris and Sonia about the s 88K proceedings, that he had no recollection that he told the siblings about the case, and that he made the decision to abandon the proceedings on the recommendation of his counsel (T486.24-9, T488.39-41).
During cross-examination about the s 88K proceedings, Ken also gave evidence that he considered himself to be the "de facto managing director" of Sahab Holdings, consistent with his affidavit evidence that he considered himself to be in that position since 1984. Ken accepted that he was never formally appointed managing director and did not tell his parents that he regarded himself in that way but considered that Loris and Sonia had delegated expansive powers to him as a director and that he had authority to conduct the s 88K proceedings and transact business in relation to it (T489.23-50, T490.22-25).

[25]

Mid-2014: New wills and powers of attorney

On 16 May 2014, Loris and Sonia made new wills which were prepared by Ken and also witnessed by Mr Selwyn (2014 Wills). The 2014 Wills are in the same terms as the 2011 Wills, save that they include a new clause that provides for the right, title and interest in the Bondi property to be devised to Ken or, if he does not accept the gift, to a person or company nominated by him, rather than to Sonhangood Pty Ltd: cl 16, Annexure A 2014 Will of Sonia; cl 15, Annexure A 2014 Will of Loris.
According to Loris' evidence, at the time of making the 2014 Wills, Loris and Sonia instructed Ken that they wanted their assets to be divided equally amongst the children, except for the Castle Cove property to Marianne and the 347 Sailors Bay Road property units to the grandchildren. Loris says that he was not aware that his 2014 Will gifted the Bondi property to Ken.
Loris deposes that he did not read the 2014 Will, did not know at the time he signed that part of the estate was given to trusts and not to individuals, that Ken did not give him a copy of the will and, when he obtained a copy from documents produced in these proceedings, he did not understand the effect of his will. He also deposes that Ken referred to the wills using "a lot of legal terms" that Loris did not understand and that Ken told him the "main thing is [the will] says that everything goes equally between the four of us".
Ken denies this and gives evidence that he left completed drafts with Loris and Sonia to consider and that Sonia told him they had spoken to Mr Selwyn about the wills who had said that the family's affairs were quite involved.
On 22 May 2014, Loris and Sonia each executed instruments of Enduring Powers of Attorney and Guardianship by which they appointed Ken, Victor and Marianne as their attorneys and guardians and provided for them to exercise their powers jointly.
According to Ken's evidence, which Loris does not challenge and I accept, Loris told Ken not to include Philip because he had not shown himself to be reliable or trustworthy and had cut himself off from the family.

[29]

Early 2017: Changes in the family dynamics

At the start of 2017, there was still friction between Philip and other members of the family. Text messages exchanged between Ken, Marianne and Victor in early January indicate that Marianne and Victor were concerned by Philip's influence on the family, with a text from Victor referring to Philip as "demolishing this family".
On 13 January 2017, a letter that was prepared by Ken and signed by Ken, Loris, Sonia, Victor and Marianne was sent to Philip asking him to sign an acknowledgement that he was ultimately liable for one quarter of the indebtedness accruing under the NAB mortgage over the Strathfield property, which was due for repayment on 31 March 2019. The letter states that, if Philip chose not to sign, "we will have no choice but to give careful consideration to join together to cause the trustee to resolve to set aside" Philip's income distributions until they reached $250,000 to enable the NAB loan to be repaid in three years. Marianne's evidence, which I reject, is that she signed a similar letter in mid-2016 and her signature was cut and pasted into the letter by Ken in 2017.
Marianne deposes to a meeting of the family at the Castle Cove property in January or February 2017 during which the NAB loan, Ken's guarantee and the indemnity sought by him was discussed and that Philip said he would not sign what Ken wanted. Ken does not recall that meeting.
Philip deposes that Ken said to him in 2017 that he would stop Philip's distributions from the Strathfield property if Philip did not sign the acknowledgement. Ken's evidence is that this threat was made by the family in the 13 January letter.
On 18 January 2017, Loris called Marianne to say he was concerned about Sonia as Philip had been arguing with her. According to a text message from Marianne to Annie, "Philip has told [Sonia] off". In cross-examination, Marianne accepted that Philip had got into "some kind of argument with my mum" and said that "we do speak a little bit louder than usual" (T825.10-19). Philip's evidence in cross-examination was that he didn't recall the incident (T959.20-22).
Marianne also accepted in cross-examination that, around this time, Philip had said to her that Ken was doing things that were "not fair" (T827.32-33).
On 8 March 2017, Marianne, Ken and Sonia had a discussion during which Ken lost his temper with Sonia.
The next day, Ken sent an email to Marianne apologising for doing so and noting he had apologised to Sonia. The content of Ken's email is instructive as it identifies there were differing views about how the family assets should be dealt with. Ken refers to the family being "at a crossroads" with "pressure within … to sell everything and divide it all up" which, in Ken's view, was "not a very clever option but it may be the one that ultimately prevails". He also refers to having spoken to Sonia about a meeting to map out a viable solution and, if they reach agreement, Sonia's intention to "sign a new will to reflect that".
Ken's email also refers to his concern that Philip will not sign the acknowledgement document regarding the NAB loan, Philip's disruption and division within the family since 1998, and queries that Marianne had raised earlier that month about the status of her Transurban shares in Carkan. Ken subsequently sent an email to Marianne by way of a formal acknowledgment to satisfy her concerns that Carkan held shares in Transurban on her behalf and states that he would transfer them to her on her direction. Ken's email asks Marianne to keep the document confidential and refers to the CGT implications if it "falls into the hands of the [ATO]".
Marianne deposes that, in March 2017, Ken, Marianne and Sonia had a discussion during which Sonia asked Ken for information about cheques withdrawn on her bank account and to explain the outgoings. Marianne's evidence is that Ken said to Sonia that she didn't trust him, that "you are both stupid and pathetic" and "worse than Philip", and shouted and slammed the door when he left. Marianne also gives evidence that Sonia was crying and, after Ken left, said: You were right Marianne. Ken is a control freak. He is controlling my assets, my money and he won't tell me where my money is going. Now he is taking my income too.
Ken's evidence is that there was only one meeting at the Castle Cove property at which he, Sonia and Marianne were present, which was on 18 March 2017. Pausing here, his email of 9 March 2017 suggests they met on 8 March, although it is not clear whether they did so at the Castle Cove property.
Ken deposes that Sonia called the meeting on 18 March 2017 and wanted Marianne to be present. His evidence is that Marianne and then Sonia accused him of controlling Sonia's money and taking her cheque books, Sonia said to him that she didn't know what was happening, Marianne accused him of "hiding things from us" and they both referred to him as a "control freak". Ken also says that he told Sonia he had taken over her affairs since her accident and that everything was in order, asked her why things had changed and why she didn't trust him, and told them they were "all sounding like Philip". Ken's evidence is that Marianne and Sonia were "both hysterical" and shouted at him. Ken also rejects slamming the door when he left.
Based on Ken's 9 March email, I accept Marianne's evidence that Ken shouted at Sonia during their discussion on 8 March 2017. Ken's email, in which he asks when Marianne would be available for a further meeting, also makes it likely that there was a subsequent discussion between the three of them on 18 March 2017 as Ken deposes. Irrespective of whether there were one or two meetings at the Castle Cove property, I am satisfied that, by 18 March 2017, Sonia had raised concerns with Ken about his control of her finances and accused him of hiding things about her finances and of being too controlling, all of which reflected that Sonia was losing trust in Ken.
According to Marianne's evidence, on the morning of 19 March 2017, Sonia called her and said, "Ken's taking all my money and I'm so upset." Marianne gives evidence that she told Sonia "it will be ok Mum we will get to the bottom of this" and arranged to pick her up at 11:30 am to take her out.
Pausing here, other than the fact that Ken had, by his own evidence, taken over and was controlling Sonia and Loris' finances by this time, I have seen no evidence that Ken was "taking" Sonia or Loris' money in the sense of keeping it for his own benefit or depriving them of their income.
When Marianne arrived at the Castle Cove property, she found Sonia injured on the floor. Sonia was taken to Royal North Shore Hospital in a critical condition and subsequently moved to Hirondelle Private Hospital.
On or about 3 May 2017, after being discharged from hospital, Sonia moved into the Brookvale nursing home as a permanent resident with Loris.

[30]

May 2017: Offer to purchase the Northbridge properties

According to Loris' evidence, in early 2017, he and Sonia discussed selling the Northbridge properties. Loris deposes that he told Sonia they were better off selling at that stage of their lives, and they should see what offers they get. He gives evidence that he and Sonia engaged Scott Stephens (the real estate agent who had been involved in the Aldi offer) and that Sonia asked Marianne to deal with Mr Stephens.
Sometime in May 2017, Marianne was contacted by Mr Stephens who told her that investors were interested in purchasing the Northbridge properties for $20 million. She arranged a meeting with Mr Stephens and her parents at the Castle Cove property during which the offer was, according to Marianne, described as an offer to purchase the Northbridge properties for $20 million, payable over 18 months, with a $1 million deposit and the balance on settlement.
Also, in May 2017, Loris and Sonia decided to sell the Castle Cove property. Ken's evidence is that they instructed him to prepare the sale contract ahead of the property being submitted for auction on 8 July 2017.
On or about 24 May 2017, Loris, Sonia, Marianne, Victor and Annie were at the Castle Cove property cleaning up the house in preparation for its sale. Marianne, Victor and Annie each depose to discussions regarding the offer on the Northbridge properties. While their evidence about what was discussed differs in some respects, it is apparent from their recollection of events that Sonia and Loris were happy about the offer and had expressed a desire to sell the Northbridge properties. They each also give evidence to the effect that Annie asked whether Ken knew about the offer, she said that they "couldn't just sell it" as "Ken had plans for the property", and Sonia said that the property belonged to her
On 26 May 2017, Mr Stephens sent a sales advice to Ken which outlined the offer to purchase the Northbridge properties. The sale advice provided for a purchase price of $20 million with a 10% deposit, the contract to be exchanged within 16 months of an option deed being executed, an option fee of $1 million being released to the vendor upon execution of the option deed, and the purchaser being responsible for the agent's selling fee.
Shortly after, Ken sent an email to Marianne expressing surprise about the terms of the offer as Sonia had told him it was unconditional, whereas the purchaser wanted an option for 16 months, and notes the possible impact of CGT on the $1 million option fee. Ken's email suggested a meeting with everyone to have a frank and open discussion about where to go concerning this and the other properties, states that Ken believed the family were "at crossroads" and there needed to an "honest expression of opinion by each of us as to where preferences and priorities lie".
On 28 May 2017, Ken and the siblings met with Loris and Sonia at the Brookvale nursing home to discuss the offer.
Ken's evidence is that he explained why he thought the offer for the Northbridge properties was not attractive but did not shut the gate on a sale. He gives evidence that he also said that, as a director of Sahab Holdings, he had a say as to whether and on what terms the properties should be sold and told the family that, if a decision was taken to sell, the property must be exposed to a much wider market with a proper marketing campaign. Ken's evidence is that Sonia and Loris were not, at that point in time, adamant that they wanted to sell.
Ken gives evidence that the siblings shouted at him during the meeting, called him a "control freak" and accused him of "keeping everything secret", putting assets into his name and cheating them out of their inheritance by stopping them from selling. Ken's evidence is that Sonia and Loris began crying and questioned why the siblings were saying those things about Ken.
Philip also gives evidence that Loris and Sonia were crying towards the end of the meeting. Philip says that, during the meeting, Loris and Sonia indicated that they wanted to sell, Philip told Ken that it was Loris and Sonia's decision to sell and not his, and that Loris said that the Northbridge property was his and Sonia's. Marianne and Victor's evidence in these respects are similar to that of Philip, although not in identical terms.
Loris says that Ken did not explain why he did not consider the offer to be a good one other than make reference to the Council not giving approval because of the intense traffic flow. Loris deposes that he asked the children to speak to each other with respect and that statements attributed to him by Ken were made to try and keep peace within the family.
The dispute about precisely what was said and by whom at the 28 May meeting is not possible to reconcile. However, I am satisfied that, during the meeting, Ken made clear he was against accepting the offer, the siblings made it clear they were for the sale and Loris and Sonia expressed a desire to sell for $20 million. I am also satisfied that the siblings shouted at Ken and accused him of being a control freak and hiding things from them and their parents and that tempers flared, which not unexpectedly distressed Sonia and Loris. It was, as Ken described in cross-examination and Philip referred to in his evidence, the meeting that led to the schism within the family and the catalyst for Loris, Sonia, Marianne and Victor's decline in trust in Ken (T613.1-15). As Ken also accepted in cross-examination, he knew that Sonia and the siblings wanted to sell the Northbridge properties and the schism was because of his refusal to allow the call option to proceed (T611.14-21, T612.10-14, T613.1-6).
After the May meeting, Victor left a message on Ken's phone saying words to the effect of "we would like to get rid of you but we can't". Victor's evidence, which I accept, is that this was a reference to removing Ken from Sahab Holdings so that Sonia and Loris could sell the Northbridge properties.

[31]

June 2017: External lawyers get involved

At 10:12 am on 6 June 2017, Ken emailed Mr Stephens and told him to place the "put and call option" on hold. Ken's email refers to the Northbridge property being dealt with as part of a bigger issue on how the family as a whole was to move forward.
Later that day, Mr Stephens left a message with Chris Rumore, a Partner at Colin Biggers & Paisley, about referring a client.
Mr Rumore spoke to Marianne about the offer on the Northbridge property on 6 June 2017. Mr Rumore's evidence, which I accept, is that Sonia and Loris instructed him in relation to the sale of the Northbridge properties on or about 6 June, he received those instructions over the phone and, when they spoke, Loris and Sonia seemed to think that the Northbridge properties had been sold for $20 million by a straight sale rather than a transaction involving a put and call option (T246.3-T247.42).
At 8:29 am the following day, Marianne sent the latest sales advice to Mr Rumore. Marianne's email, which is copied to Philip, seeks advice on the ability of the purchaser to withdraw from the contract and asserts that Sonia, a director of Sahab Holdings, is in favour of the property being sold now. Marianne's email also asserts the following about Ken: he had "not put one cent into the asset"; he put his name as a director and appointed the siblings "as B class shareholders without our authority"; he holds all of the relevant documents; and he does not want to sell as he prefers "to sell it in 2.5 years' time … and keep the $20,000,000-$25,000,000 for himself and his projects".
On 8 June 2017, Mr Rumore sent an email to Marianne, copied to Philip, in which he advises that there was little point in preparing put and call options and contracts if Ken, as a director and holder of one of the A class shares, opposes the sale and refuses to sign the contract. Later that day, Mr Rumore informed Mr Stephens that he had forwarded an advice to "our client" and there were issues that needed to be resolved before the put and call options and contract could be issued.
Mr Rumore also gave evidence, which I accept, that when he first met with Sonia and Loris in person at the Brookvale nursing home, Sonia told him that the Northbridge properties were essentially assets that belonged to her, she was of the view that the terms of the transaction were favourable and she wanted the sale to proceed. Mr Rumore's evidence is that he explained to her that, as a director, Ken would have to sign the documents for the transaction to proceed and that Sonia told him that Ken would do so (T250.36-8).
Mr Rumore says that the transaction "died" because Ken said he would not sign any documents relating to an option for Northbridge (T250.41-3). Ken denies indicating to Mr Rumore that he refused to sign any documents relating to the sale but does not deny that he refused to sign the documents.
Sometime in June 2017, Sonia instructed Lara Kolokossian, a solicitor at Keypoint Law, in relation to her estate planning. Philip had contacted Ms Kolokossian and told her that Sonia was having issues with her will, needed a lawyer that was not part of the family to help her and that Sonia would be comfortable with Ms Kolokossian as she spoke Armenian (T136.8-9, T144.17-22).
Ms Kolokossian's evidence, which I accept, is that she first spoke to Sonia by telephone when Sonia was staying with Marianne. Ms Kolokossian deposes that the discussion was not on speaker phone and Sonia told her she was alone.
Ms Kolokossian's evidence is that Sonia told her she wanted a lawyer who was "neutral", that Sonia was distressed by the behaviour of Ken as he would not discuss how her will had been structured and that she wanted someone independent from the family to act for her. Ms Kolokossian also gives evidence that Sonia said that she had always trusted Ken with her legal affairs but that she did not understand what terms he included in the will and was not certain that what he had written is what she wanted (T150.4-9).

[32]

July 2017: Sale of Castle Cove property, referral of Sonia to geriatrician and more signed authorities

On 2 July 2017, Ken visited Loris at the Brookvale nursing home. Ken deposes that Loris informed him that the siblings had visited him that morning and had brought a letter that Victor asked him to sign during the week. Ken's evidence is that Loris described the letter as the "one that gave me nothing from the sale of the Castle Cove property".
Ken prepared a file note of his discussion with Loris on 2 July 2017. Ken's evidence is that he prepared the file note as he suspected legal issues could arise as a result of the incident, he wished to ensure he had a recollection of the conversation that was as accurate as possible.
Ken's file note records that Loris said that Sonia and the siblings had put pressure on him to sign the letter, Loris was shocked at how aggressive and rude they were, the letter required the proceeds of the sale of the Castle Cove property to be paid as to $1,000,000 to Sonia and the rest to Marianne, and that he signed the letter to get "some relief and peace". The file note also records that Loris said he had to sign as he "could not resist the pressure they put on me" and that "Philip called me a 'f… bastard' and motioned towards me as if to strike me. I was scared".
Loris denies the conversation referred to in Ken's 2 July file note and rejects that Philip called him a 'f… bastard' and motioned to strike him. Loris' evidence is that he and Sonia discussed what would happen with the money from the sale of the Castle Cove property, it was Sonia's wish that the money would go to Marianne, and Loris agreed to this. Loris gives evidence that he asked Sonia about the "other kids", Sonia told him it was "my wish…my decision. Don't meddle", and that Loris said, "fair enough", for reasons including that Marianne was their only daughter and the boys had received more generous gifts than Marianne over the years.
Pausing here, there is evidence about various gifts and property transferred to Ken and the siblings over the years which are not necessary to detail in these reasons. Loris' evidence is to the effect that, as at 2017, Marianne had received less in the way of gifts of property from Sonia and Loris than Ken, Philip and Victor over the years. Ken also accepted in cross-examination that, prior to this time, there had been an inequality of treatment between Ken, Victor and Philip on the one hand, and Marianne on the other, in terms of gifts over the years (T625.10-22).
Philip also denies calling Loris a 'f… bastard' and forcing Loris to sign anything but accepts that he told Loris around that time that Ken should not be doing the conveyancing for the Castle Cove property and Loris should get independent legal advice.
In cross-examination, Marianne gave evidence that Sonia told Loris that it was her wish that the proceeds went to Marianne and Loris said, "I would like to have some money to you know, to be well looked after" (T846.46-T847.13). Marianne described Philip as a "little agitated" at the meeting and that she told him to "just calm down" and she would talk to Loris and that they speak "a little bit loudly". Marianne's evidence is that she said to Loris that she would "never leave you dry" and that he knew she "will always look after [him]" (T846.37-T847.13).
Marianne also gave evidence in cross-examination that she and Loris had the following exchange (T847.43-48): Marianne: You know Dad, you know when Ken deserted you and said I'm not going to look after you anymore and through the cheque in your face. Go to Marianne she'll look after you. Loris: If that's the case that's fine.
Loris also gives evidence that Ken had, on different occasions, said to Loris that he was on his own, that he would not give Loris "any money" and to "go ask Marianne to help" when Loris asked him to top up his account with money.
Marianne's evidence in cross-examination was that she had done the right thing and looked after Loris financially, rejected that the siblings had ganged up on Sonia and Loris at the meeting or that they had already worked on Sonia to persuade her to give Marianne the house (T847.48-9, T848.38-47). She also gave evidence in cross-examination that she had paid up to $1.2 million out of the Castle Cove property sale proceeds for legal fees, barrister fees, Bupa fees, pharmaceutical medicine, excursions for Loris and technology for Sonia (T847.30-3).
On 5 July 2017, Loris and Sonia signed a written authority that appointed Mr Rumore as their solicitor with respect to the sale of the Castle Cove property and terminated Ken's retainer (5 July authority). Loris' evidence, which Ken disputes, is that he called Ken that day and said to him "Ken, you're no longer our solicitor".
Loris gives evidence that he told Sonia that he did not feel right about Ken doing the conveyance as his "gut" told him that Ken would not respect their wishes that the money was to go to Marianne and Sonia agreed that Mr Rumore should do the conveyance because he was independent.
At 5:24pm on 5 July 2017, Mr Rumore sent the 5 July authority to Ken and asked him to urgently let him have all correspondence with potential purchasers in view of the impending auction that Saturday.
After Ken received the 5 July authority from Mr Rumore Ken deposes that he spoke to Sonia and Loris on their separate lines at the nursing home. Ken did not take a file note of those conversations.
Ken's evidence is that Sonia said she didn't want Ken involved in the sale and "you will steal the money from the sale and use it for your purposes … I'm sorry but your father and I have made up our minds".
Ken also gives evidence that Loris said: I had no choice. They made me sign the authority to terminate you. I have to go along with them. You know they now control my finances. I depend on them to pay my nursing home fees. I am quite scared of them. Just accept what has happened. In any case, as you know, the property was intended to be gifted to Marianne on our death so just let her take control of the sale.
According to Ken's evidence, he agreed to Loris' request and let Mr Rumore take carriage of the conveyance.
Loris denies this conversation. Loris' evidence is that, at this point, he had a lack of confidence in Ken.
At 10:54 am on 6 July 2017, Philip sent an email to Mr Rumore asking him to continue his role as solicitor in relation to the Castle Cove property. Philip's email states: I wish to confirm that it has nothing to do with Ken Kanjian's ability or quality of legal services provided. He has abused my parents, through threats and shouting. Stated that everything is mine and made them sign documents without explanation or understanding. Ken Kanjian in a cunning fashion has underlying control of ALL family assets and is ruthless and brutal to his family members. My parents are seeing these things are very disappointed. My mothers concern is that the proceeds from the sale of the house will be deposited into his trust account and Ken will persuade or convince over time to disbuse of the proceeds in a manner outside my parents intention. My parents do not want to speak to him. I spoke to my mother last night and was very upset given the true colours of Ken Kanjian has emerged. We are removing Ken Kanjian authority on all my parents bank account as we speak.
In cross-examination, Philip accepted that what he had written about Ken went "overboard" but did not accept that it was an extraordinary exaggeration. He gave evidence that Ken had been brutal and ruthless to Philip and referred to statements made by Annie to the effect that everything was Ken's (T971.11-27, T969.18-39).
On 6 July 2017, Marianne took Sonia to a geriatric medical assessment with Dr Anita Warrier. In her report dated 6 July 2017 to Sonia's general practitioner, Dr Warrier refers to Sonia "undergoing a complex legal battle with her older son who has taken it on himself to become the director of her company and the primary beneficiary of her will" and that "Sonia and her other children are seeking to fight this and are in the process of changing legal documents to reflect this".
In the afternoon of 6 July, Marianne and Sonia had a meeting with the bank manager at Westpac during which there was a discussion about two bank accounts in the name of Sahab Holdings. According to an email sent by Marianne to Mr Rumore at 6:18 pm that day, the bank manager had informed Sonia and Marianne that Ken was not a signatory but had been signing cheques on the accounts. It seems that, as a consequence, the password on the accounts were changed and Ken's access to them was blocked. After Philip informed Marianne that, as a director, Ken was authorised to access the accounts, Marianne reset the password. Marianne's email to Mr Rumore noted these matters and stated that she would give Ken "some reason" that Sonia tried too many times to log in on the internet and got blocked and they had to reset the password.
At 6:23 pm on 6 July 2017, Marianne sent an email to Ken informing him of the new passwords and also said that Sonia had to change them today as "she tried too many time online to access her accounts and …she was blocked".
On 7 July 2017, Marianne sent an email to Mr Rumore which, amongst other matters, suggested that Mr Rumore meet with Loris and Sonia to see they both have a strong mental capacity and to "have better instructions on what they want". The email goes on to state: Ken up to date has always had a controlling conflict of interest, managing our Parent's financial bank accounts and all assets … Also Ken conveyed to our mum that he will keep the net sales of the residence sold and keep it for the family expenses … up to now Ken has controlled everything and there is no accountability with any money taken out of the company bank accounts and no paper work provided … Ken has been bullying and intimating our Parents, yelling and threatening them to give him extra company shares so he can overpower his siblings … Dad called me petrified and scared and requested please don't leave be alone with him this Sunday, I am scared I need family support. After spending 35 minutes on the phone with him, I rest assured he will have Mum with him and Victor, Philip and I as well … Mum admitted to Philip and I last night, that he comes to Mum on Sunday afternoons and get Mum to sign blank cheques.
On 8 July 2017, contacts for the sale of the Castle Cove property were exchanged for a sale price of $4,450,000.
In an exchange of emails with Mr Rumore on 10 July 2017 concerning information needed to progress completion, Philip advised Mr Rumore that, at a future date, other documents held by Ken relating to the Kanjian Settlement Trust and Metropole Trust would be required.
On 10 July 2017, Marianne sent an email to Mr Rumore in which she asked him to prepare a cost agreement for Sahab Holdings to remove Ken as a director "as per wishes of our parents Sonia and Loris Kanjian." Marianne's 10 July email also states: Mum and Dad are incredibly disgusted, money is debited out of the account and there is no communication with our Mum, who is the other Director. Our Parents are requesting to remove Ken Kanjian as a Director of Sahab Holdings Pty Ltd, effective immediately, as this asset belongs to our Mum. She bought the property in 1984 and she financed it. Ken did not put one cent into the property. Up to date, Mum is wishing to sell the property, but Ken won't allow it. … I'm happy to arrange for you to talk to my Mum personally to get the instructions from her personally.
Philip's evidence in cross-examination was that he had no prior knowledge of Marianne's 10 July email (T972.41-48).
Around this time, Loris signed a letter dated 11 July 2017 that directed the real estate agent to transfer the deposit and sale proceeds of the Castle Cove property to a St George bank account in Sonia's name. Philip's evidence in cross-examination was that he did not know who prepared that letter and rejected that he wanted control over the sale proceeds (T972.50-23).
On 12 July 2017, Mr Rumore met with Loris and Sonia at the Brookvale nursing home. Mr Rumore's evidence, which I accept, is that Sonia said they needed to talk about their affairs as they were "concerned that Ken hasn't done what we wish" and didn't think that what Ken had set up would lead to everything being divided equally between the four children when she and Loris died. Mr Rumore also gives evidence that Loris said that he wanted to make it clear that all their assets were to be split equally and that documents which Mr Rumore would need would be with Ken who had been their solicitor for a number of years (T244.48-T245.23).
That morning, Philip had sent an email to Mr Rumore asking him to check for "elderly abuse by Ken". Philip's email refers to a belief of "threats and intimidation", Ken "convincing our parents that there is no outsider solicitor to be involved", and Sonia being "terrified and … a different person with Ken".
The next day, Philip asked Mr Rumore for the name of a good geriatrician to assess Sonia for testamentary capacity. Philip's email asserts that Sonia's will was not drafted in accordance with her wishes or intentions and describes it as a "one sided affair favouring Ken..." that excludes Philip as executor and director in any family companies. Philip's email also attributes Sonia's injury to "Ken's abuse the night before" (presumably a reference to Sonia's injury in March), alleges that Ken had openly admitted to Victor that he had "done something bad" and states, in bold writing, that they would like to refer the matter to the police "ASAP" as elderly abuse and intimidation causing injury and that Ken needed to be accountable for his actions. Philip's email also refers to Mr Rumore having authority from Sonia and Loris to "obtain information pursuant to the Kanjian Family Settlement Trust (99 Cremorne Road)" and to "Please proceed".
Philip sent another email to Mr Rumore about Sonia's will on 16 July 2017 in which he refers to Sonia not understanding what she signed and a range of "irregularities of the will" that included: Ken having drafted a company constitution in such a way that Ken will have a controlling interest in the company; the belief that Ken will pocket the proceeds of the loans repayable by Sonia to Sahab Holdings in the amount of $800,000 from the Kanjian Testamentary Trust and $1.2 million from the Metropole Trust; and, if Sonia passes away, Ken taking over a $20 million property unchallenged. Philip's email asks Mr Rumore to provide a fee estimate to rewrite Sonia's will, refers to the need to move quickly as Philip believes that Sonia is in the early stages of dementia, and alleges that Ken is turning Sonia against the siblings and that he went to the nursing home that day to get her "to sign documents ???". It is not apparent why Mr Rumore was being asked to do Sonia's will when Ms Kolokossian had already been retained.
On 16 July 2017, Loris, Sonia, Marianne, Victor and Ken met at the Brookvale nursing home. The meeting is referred to in two documents.
The first reference is in a lengthy email sent by Marianne to Mr Rumore at 9:37 pm on 16 July 2017 which mentions a meeting that day that she and Victor had at the request of her parents and which Ken attended. Marianne's email makes a number of assertions about Ken, including that Ken "lied … played the victim … was very was ruthless and cunning", refers to Sonia not having the "mental capacity and understanding [about] what is happening", and that Sonia "didn't even remember Victor and I today" and "… only sees what good Ken has done".
Marianne's email also states: Mum and Dad forgave him for embezzling money out of the accounts without any accountability or receipts or balance sheets, they forgave him for yelling and disrespecting them and instilling fear and giving threats to them, they forgave him for Ken admitting that he was going to keep the settlement money of their property against their wishes, they forgave him for not allowing to sell Cremorne property and Sahab Holdings without his permissions and the list goes on.
The email also states the following: "heads up … Ken has forced [Sonia and Loris] and instilled fear and intimidation again"; Mr Rumore would be sacked as the lawyer this week; Ken wanted to be reinstated as lawyer and "get his hands on the settlement money" and made it clear that "he needs that money for family expenses"; Ken said to Sonia that he would only come back to the family if he was the family lawyer; Ken has engaged in "manipulation and [has] undue influence" over Sonia and Loris; "surely there is laws against this, this is utterly elderly abuse and intimidation"; there is a need for an action plan "to tackle Ken and stop his undue influence and dilute his power"; and "we are ready to fight this".
The other reference is in a lengthy letter that Ken sent to Marianne dated 20 July 2017 in which Ken refers to Marianne's emails and remarks as being "shrill and laden with accusation and acrimony" and Sonia remarking "last Sunday" (16 July) that Marianne was "quite aggressive and vulgar" when speaking to Ken. Ken's letter goes on to address what Ken describes are the allegations made against him by Philip, including in relation to the need for a guarantee in respect of the NAB loan over the Strathfield property. In his affidavit evidence, Ken rejects the allegations made about him in Marianne's email to Mr Rumore on 16 July 2017 but does not otherwise give evidence of what was discussed at the meeting that day.
On 18 July 2017, Ms Kolokossian wrote to Professor Tuly Rosenfeld, a Consultant Geriatrician, and provided instructions to assess Sonia's capacity to make a testamentary document. Ms Kolokossian's letter to Professor Rosenfeld refers to being first contacted by one of Sonia's sons, which Ms Kolokossian accepted in cross examination was Philip (T145.36-41, T147.18-9), who advised that Sonia was not agreeable to the terms of her current will and wanted it to be reviewed and updated so that her estate is divided equally amongst her four children. The letter goes on to state: We were advised that one of [Sonia's] other children, who is a solicitor, has managed all of her financial affairs, taken control of her assets and prepared a will on her behalf which is contrary to her testamentary wishes. We subsequently spoke with [Sonia] to obtain instructions from her directly and she provided us with the same information.
Ms Kolokossian's evidence is that, at the time she wrote the letter, she had not been given a copy of Sonia's will and she did not know what Sonia knew about her current will (T145.50-T146.50). She also said that, before the letter was sent, she spoke to Sonia who told her about the matters referred to in the last sentence of the quote above (T147.15-16, T148.28-42).

[33]

Mid-July to mid-August 2017: Understanding to share management responsibilities of family assets

In mid-July 2017, an understanding was reached within the family regarding a sharing of management responsibilities for family assets and undertakings between Ken on the one hand and the siblings on the other.
Ken's evidence is that, in June and July 2017, he, Loris and Sonia discussed an arrangement whereby the management of the properties would be divided between the children, the siblings would look after Loris and Sonia's personal finances and Philip would do their accounting work again. Ken's evidence is that Loris and Sonia said they would speak to the siblings about these matters, told Ken that the siblings had agreed to the arrangement and that Ken welcomed the siblings sharing the load and assuming more responsibility.
The mid-2017 understanding is recorded in an email sent from Marianne to Ken dated 23 July 2017. The email refers to an understanding pursuant to which Ken was to manage Sahab Holdings, the Vasir Superannuation Fund, the Northbridge properties, the Bondi property and the Strathfield property, and the siblings were to manage the Cremorne property and the 50 and 347 Sailors Bay Road properties. Marianne's 23 July email also states "As a family, we need to help each other, share the work load, share the management of assets, share the Directorship and the equal shares of distribution of managing a asset", refers to "a 10-year extension of a lease" at the Northbridge Village and, at the end, states "I guess the day care proposal is down the gurgle?"
Philip's evidence is that Marianne told him that she had been given responsibility to manage the Cremorne and Sailors Bay Road properties, asked him to help together with Victor, and that he agreed to do so. Philip deposes that he said to Marianne that they should probably ask Loris and Sonia to include them as directors for day to day management, that they needed to understand the structures in place, and that Marianne said she would raise it with their parents. Marianne does not give evidence about that discussion.
On about 30 July 2017, Ken handed over to management to Marianne of the Cremorne property and an associated term deposit of $762,039.37 with Macquarie Bank in the name of Kanjian Holdings. It is not clear when, but presumably at around the same time, Ken handed over management of the Sailors Bay Road properties to the siblings. In all, the properties and funds which the siblings were to manage represented: 1. 13 residential and one commercial tenancy that were generating an annual gross rental income of approximately $420,000; and 2. term deposits totalling $1,913,910.88 which comprised, in addition to the Kanjian Holdings Macquarie Bank account, $641,596.59 with Macquarie Bank in Sonia's name, $316,719.69 with St George Bank in the joint names of Sonia and Marianne, and $83,316.92 with Macquarie Bank and $110,238.31 with St George Bank in Loris' name.
On 10 August 2017, Marianne notified Mr Rumore that the Castle Cove property sale proceeds were to be transferred into a new account in Sonia and Marianne's name that had been opened up with the Commonwealth Bank and to disregard the joint Westpac account.
On 20 August 2017, Ken went to visit Sonia at the Brookvale nursing home. He deposes to a conversation with Sonia about the 347 Sailors Bay Road property during which he showed her a letter dated 12 July 2017 which she had signed that instructed the letting agent to deal with Victor and not Ken, and to the siblings having blocked Ken's access to the St George account for that property. Ken then drove Sonia to Marianne's house in Castlecrag. While there, at Sonia's request, Marianne prepared and Sonia signed a letter to the letting agent telling him to communicate with Ken as well as Victor in connection with 347 Sailors Bay Road property. Pausing here, I note that, according to the mid-2017 understanding, the 347 Sailors Bay Road property was to be managed by the siblings and not Ken.
On 21 and 22 August 2017, Marianne and Ken exchanged emails in which Marianne accused Ken of wanting control of everything and causing mayhem in this family and stated that "its best you keep far away from all of us". In response, Ken raised concerns, suggesting that something had gone "terribly wrong" with Marianne's "mental outlooks".

[34]

27-31 August 2017: Appointment of siblings as directors of Kanjian Holdings and removal of Sahab Holdings' funds

According to the evidence of Loris and the siblings, on 27 August 2017, Loris and Sonia, in their capacities as directors of Kanjian Holdings, held a meeting at the Castle Cove property and resolved to appoint the siblings as directors of the company.
In evidence is a document headed "Minutes of meeting of directors of Kanjian Holdings No 1 Pty Ltd held at [the Castle Cove property] on 27 August 2017 at 12 pm" (27 August Minutes). The Minutes identify Loris and Sonia as being present, refer to the minutes of the previous meeting of directors having been read and confirmed, and refer to a resolution that Victor, Marianne and Philip are to be appointed as directors of the company (27 August Resolution) and for such appointment to be effective from the conclusion of the meeting. The 27 August Minutes are signed by Loris. Philip's evidence is that Loris signed the Minutes when he visited Loris at the Brookvale nursing home later in the week.
Ken challenges the validity of the 27 August Resolution and the authenticity of the 27 August Minutes in the Corporations proceedings. He contends there was no meeting or resolution passed on 27 August 2017 or at all.
An ASIC Form 484, which was prepared and lodged by Philip, records that the siblings were appointed as new directors of Kanjian Holdings on 28 August 2017. In cross-examination, Philip suggested that the 28 August 2017 date reflected the date he and the other siblings signed consents to act as directors (T914.27-42). Consents to act as directors were signed by Philip, Victor and Marianne and are dated 30 August 2017.
On 28 August 2017, Marianne and Sonia attended the Westpac branch at Northbridge. Marianne deposes that Sonia had said she could not get any money out as "Ken has taken all my credit cards away", Ken only gave her money in small amounts and she wanted to have control of the Sahab Holdings bank accounts with Westpac. Pausing here, the evidence suggests that Ken had been giving Loris and Sonia $1000 per month, $500 to each of them.
Marianne also deposes to a conversation between herself, Sonia and the Westpac bank manager in which the bank manager referred to cheques signed by Ken and Ken not being a signatory on the account. Marianne gives evidence that Sonia asked the bank manager to open up another account for Sahab Holdings and that she opened up another savings account under her and Marianne's names.
Between 29 August and 1 September 2017, approximately $562,000 was transferred out of Sahab Holdings' Westpac accounts, mainly into accounts in the name of Marianne and Sonia. In cross-examination, Marianne gave evidence that the transfers were done on Sonia's authority as a director and that Sonia was furious that she was locked out of the bank account. Marianne agreed that the transfers of around $400,000 represented almost all of the available cash in the Sahab Holdings' accounts (T874.36-T875.13).
On 28 August 2017, in their capacity as directors of Kanjian Holdings, Loris and Sonia signed an authority that directed Ken to forward documents relating to Kanjian Holdings, the Kanjian Settlement Trust and the Cremorne property to Mr Rumore (28 August authority). Philip prepared the 28 August authority for Loris and Sonia.
At 3:30 pm on 29 August 2017, Mr Rumore sent the 28 August authority by email to Ken and, in the attached letter, asked Ken to provide all the documents referred to in the authority.
After receiving the 28 August authority from Mr Rumore, Ken called Loris at the nursing home. Ken deposes that Loris asked Ken to come and see him the next day as Loris was being "made to sign documents which are calculated to exclude you from involvement with the family" and Loris agreed to Ken's suggestion of bringing a general authority that says Loris is cancelling all authorities and documents signed by Loris unless Ken approves.
At 5:09 pm on 29 August 2017, Marianne sent an email to Ken and Annie that was copied to Victor and Philip. Marianne's email refers to Loris having "called in distress. Apparently you and Annie are relentlessly harassing [Loris] with your continuous phone calls". Marianne's email states: As from 4:52 pm on Tuesday 29th August, as per wishes of our Parents Loris & Sonia Kanjian, under no circumstances, you are to contact Dad & Mum on the phone or personally.
On 30 August 2017, Ken visited Loris at the Brookvale nursing home. Ken deposes to a discussion and making a file note later that day. The file note records the following: Loris told Ken that Philip and his wife had come to see Loris the previous afternoon and presented him with a series of papers concerning the Cremorne property, one of which Loris believed was a resolution appointing the siblings as directors of Kanjian Holdings; Ken explained to Loris that the appointment of the siblings as directors meant that Loris and Sonia were giving control of the company to them and allowing them to take control of the property, which Loris was "horrified" to hear; Ken asked Loris whether he wanted Mr Rumore to be the lawyer for Kanjian Holdings as that was the effect of the 28 August authority; and Loris said he was not aware that would be the consequence of signing the authority and that he did not want an external lawyer to be appointed as lawyer for Kanjian Holdings.
Ken's evidence is that he put his dictation machine in front of Loris and asked Loris to say in his own words what he had just expressed to Ken. The recording is in evidence and the transcript is as follows: Loris: I was not aware when I was signing the letter that I was giving him full control of the company and I don't agree with it. If I was given an explanation what I was signing, I would never have given the permission. I don't want external lawyers to be involved. I only want my son to be in charge and be involved with it as a lawyer. Now that I have accepted my son to be my lawyer to deal with all matters, legal matters, I don't want him to surrender any of these documents, important documents, concerning the property to any other solicitor or to any other persons who wants to be involved with the company.
Ken also deposes, and his file note records, that Ken told Loris he would "take the matter up with my siblings" and presented Loris with the countermanding authority they had discussed the previous evening, which Loris signed after Ken read it to him. The countermanding authority is dated 30 August 2017, and states: I, Loris Sarkis Kanjian, hereby countermand and negative all authorities and directions which I have previously signed whether in my own right or as a director where those authorities and directions have been addressed to my eldest son, Ken Kanjian. I further declare that hereafter I do not wish to sign any other authorities, directions or other documents without the knowledge and consent of Ken Kanjian but if I do so, I wish to make it known that it will be because of conditions of duress imposed on me by persons at whose instance my further signature is required or demanded.
I pause here to observe that the countermanding authority is drafted in very broad terms. It purports to operate as some form of acknowledgement that any other document that Loris signed in the future without Ken's knowledge or consent was because of duress by the persons who required Loris' signature. The persons are not limited to the siblings and could, theoretically, extend to any other third party, such as the manager of the Bupa nursing home or an independent solicitor. Having observed Loris in the witness box and considered his and the other evidence in this case, particularly that of Professor Peisah, I find it difficult to reconcile Loris signing an authority that purported to limit his future decision-making in this way.
Loris denies that Ken's file note accurately discloses the discussion. Loris deposes that Ken did not explain to him what he was signing, did not tell him that his words were being recorded, and says that the words transcribed do not accurately reflect Loris' position at the time or his recollection.
At 6:47 pm on 30 August 2017, Ken sent a lengthy email to Marianne, copied to Victor and Philip. Ken refers to being alarmed that he was warned off seeing Loris and Sonia and also refers to the following: Ken had not spoken to Sonia for a while in accordance with Marianne's "injunction" to Ken to stay away; Loris had mentioned that morning that Marianne and Sonia were distressed because access to certain bank accounts had been denied to them; funds were held in the Sahab accounts to pay for land tax, council rates and the church in December; no access should be had to the accounts except for payment of the monthly sum of $1,000 to Loris and Sonia, being $500 each; and that, strategically, it was a major blunder to allow Mr Stephens to go "behind my back" and commence negotiations with Sonia in her weakened state for the sale of the property. Ken's email does not refer to any discussions with Loris concerning the appointment of the siblings as directors, the countermanding authority and not wanting external lawyers to be involved.
At 12:09 pm on 31 August 2017, Philip sent an email to Mr Rumore, copied to Marianne, in which he states they are "at a stage where [they] need action against Ken now". The email asserts that Ken is "harassing" Marianne, the focus and priority is the documentation for the Castle Cove property and Kanjian Holdings and that Sonia would like to take full control of Sahab Holdings as she has "already lost a buyer". The email goes on to state: His intentions are clear, wait for my mum and dad to pass away, sell the property and keep the $20m proceeds capital gains tax free. At 11.57 am, I spoke to my mother and confirmed she wants full control and have Ken Kanjian removed as director and shareholder. It is my mothers intention as confirmed to yourself at the nursing home to have the assets divided by 4. Please advise the process and cost to have Ken Kanjian removed as director and shareholder. OR Can I act as alternate director for Sonia Kanjian in Sahab Holdings Pty Ltd. Also my mother would like to have Ken Kanjian power of attorney revoked.
At 4 pm on 31 August 2017, Ken sent an email to Mr Rumore in response to the 28 August authority asserting that it came as a "complete surprise" as it was contrary to the "peace deal" Ken had brokered with his siblings (presumably a reference to the mid-2017 understanding). Ken's email refers to a "disturbing pattern … emerging" of the siblings taking Loris by surprise, asking him to sign "seemingly significant commercial documents on the spot" and working to exclude Ken from playing a continuing representative role for Loris and Sonia. Ken requested copies of the documents the siblings had required Loris to sign and told Mr Rumore to advise the siblings that, apart from the transfer of the Castle Cove property, Loris was not to be presented with any other documents for signing unless Ken first vets and approves them for him. The email also states that Loris will be directing Mr Rumore to pay $300,000 of the proceeds of the Castle Cove into Loris' account, with the balance to be paid according to their written directions.

[35]

September 2017: More authorities and directions signed and countermanded

Mr Rumore responded to Ken's email the next day noting his instructions from Loris and Sonia were to obtain copies of the documents which Ken had them recently sign and, in accordance with the 28 August authority, requests that Ken let him have the information and documents regarding Kanjian Holdings and the Kanjian Settlement Trust immediately. Mr Rumore also notes that Loris and Sonia had asked Mr Rumore to meet with Ken to discuss these matters (which Mr Rumore was ready to do), noting that Ken would be on leave in September.
Ken did not produce any documents in response to the 28 August authority to Mr Rumore.
Also on 1 September 2017, Philip sent an email to Mr Rumore in which he refers to Loris and Sonia having authorised the siblings to be directors of Kanjian Holdings and that they are expecting an "explosive reaction from Ken" to the meeting minutes and the Form 484 being lodged. In his email, Philip asks Mr Rumore to chase information concerning the Northbridge property and Kanjian Holdings, asks whether he can revoke Ken's power of attorney "asap" and says that taking over Sahab Holdings is not a priority.
On Sunday, 3 September 2017, Mr Rumore spoke to Sonia on the phone when she was alone at the nursing home. Mr Rumore gives evidence, which I accept, that Sonia said she was concerned that Ken had control of her and Loris' affairs and that she wanted to get control back of her assets through the companies and trusts which Ken was involved with and ensure her assets were divided equally between the four children on her death.
On Monday, 4 September 2017, multiple emails were exchanged between Mr Rumore and Ken, Mr Rumore and the siblings. There were also discussions between Ken and his parents. The following is a summary of those communications.
At 10:27 am on 4 September 2017, Mr Rumore sent an email to Ken advising that he had instructions to take action if Ken did not release the documents. He also referred to Sonia's instructions that Sahab Holdings was effectively her company, she had contributed all funds and assets to it and was not aware that Ken was effectively an equal shareholder and other director who could create a stalemate situation if he did not agree with her.
Ken deposes to a conversation with Sonia after receiving Mr Rumore's email. Ken's evidence is that he said to Sonia that Mr Rumore had written to him "basically telling me that I am to be removed from all family affairs", asked whether that was what she wanted and suggested that she call Mr Rumore to tell him not to make any more threats until Ken got back from holiday. He also deposes that Sonia agreed to call Mr Rumore and told Ken she did not remember signing anything in relation to Kanjian Holdings. Ken did not make a file note of the conversation.
At 11:45 am, Philip sent an email to Mr Rumore in which he asserts that Sonia has confirmed to Mr Rumore that "Ken's behaviour has been somewhat irrational screaming and shouting at her", that "[Ken's] actions are the principal reason for her major fall", and that Sonia "has confirmed she is prepared to go to the police if necessary". In cross-examination, Philip gave evidence that Sonia told him of Ken's behaviour and that his allegations were also based on Victor having told him that Ken had said to Victor "what have I done" (T931.44-T932.12). Pausing here, I have seen no evidence that Ken physically abused Sonia or caused her fall and accept Ken's evidence that he did not do so.
Philip's email also refers to the documents relating to Kanjian Holdings and the Castle Cove property as being the priority and states that revoking Ken's power of attorney and reducing his control and power in Sahab Holdings are also very important.
At 11:55 am, Philip sent an email to Mr Rumore stating that Ken was threatening Loris by phone at the nursing home "right now" and "this harassment must stop". Philip's email alleges that Ken was saying that "everything is mine … I am not releasing any information or documents. I have worked hard for this. The other lawyer … must step down immediately."
At 3:36 pm, Mr Rumore sent an email to Ken referring to legal proceedings and other action to restrain Ken from harassing Sonia and Loris if Ken did not respond by the next day about the immediate release of the documents and engagement in a without prejudice discussion before he went overseas.
After receiving Mr Rumore's 3:36 pm email, Ken says he called Loris and Sonia. He deposes that Loris said he had not spoken to Mr Rumore that day to instruct him to commence legal proceedings against Ken. According to Ken, he asked Sonia whether she remembered their conversation that morning in which Sonia said she would call Mr Rumore and "tell him no more legal action" until Ken gets back from holiday, to which Sonia responded "no" as she has been "too tired" and "lying down all day". Ken also deposes that Sonia said she did not know who had told Mr Rumore that Ken had harassed her or had said that all of her assets were Ken's. Ken made a file note of the discussions.
At 3:41 pm, Mr Rumore sent an email to Marianne and Philip in which he states the real issue was Loris succumbing to the pressure he receives from Ken and contradicting what he tells the siblings and Mr Rumore and that Sonia was now saying that she is being somewhat "overborne" by Loris. Mr Rumore's email refers to the need to gather evidence as the matter is "inevitability going to end in litigation" and attaches a copy of a revocation document in relation to Sonia's power of attorney which Sonia will need to sign and have witnessed by someone who knows her, but not one of her children.
At 4:19 pm on 4 September 2017, Ken sent two emails to Mr Rumore. Those two emails state the following: that Ken's instructions from Loris were not to entertain further correspondence regarding Kanjian Holdings until Ken received the documents Loris was required to sign on 29 August 2017; that Ken believed that Mr Rumore's instructions were now coming through the siblings; that his parents had made clear to Ken that morning that Mr Rumore has no instructions to act as solicitor for Kanjian Holdings; that it was inappropriate for the siblings and Ken to be directors of Kanjian Holdings because of issues under superannuation law; and that Ken did not wish to engage in further correspondence or discussions until he returned at the end of the month.
In a further email sent to Mr Rumore at 4:20 pm, Ken states that he had just spoken to Loris and Sonia who "vehemently denied" the matters alleged in Mr Rumore's 3:36 pm email. In the email, Ken suggested that someone other than Loris and Sonia was giving Mr Rumore instructions and there was "serious malevolence and slander" now involved.
On the afternoon of 4 September, Annie visited Loris and Sonia at the Brookvale nursing home.
In cross-examination, Annie gave evidence that she was aware that Mr Rumore had written a letter threatening legal proceedings and that she had discussed this with Sonia as she and Ken did not want proceedings while they were away (T717.8-14). Annie's evidence is that she asked Sonia whether she had called Mr Rumore to call off the litigation as she had promised to Ken during the day (T723.39-T724.2, T725.6-12). Annie also gave evidence that, when handed the phone by Sonia during a call with Mr Rumore's secretary, she introduced herself and that Sonia left a message for Mr Rumore to the effect of "don't sue Ken" (T721.27-9, T722.43-723.1).
At 5:20 pm, Philip sent an email to Mr Rumore about Annie's visit to Sonia that afternoon referring to it as "pure harassment, intimidation and provocation".
The following morning, Mr Rumore sent an email to Ken that refers to Annie's visit to Sonia and states, "your wife was in the background directing what your mother should say … [she] got on the phone and gave instructions".
In an email sent in response, Ken later acknowledged that Annie was at the nursing home to persuade Sonia not to instruct Mr Rumore to litigate, but rejected she was coaching Sonia. Ken's email also records that he had spoken to Sonia that morning who had confirmed to Ken that no action would be taken and the status quo would be maintained until he returned from leave. The email also states that, on instructions from Loris, no documents would be released, with the exception of those relating to the Castle Cove property, until Loris gives his informed consent.
In an email sent to Mr Rumore on 5 September 2017 at 1:19 pm, Philip asserted that a court order should proceed against Ken if the documents demanded were not delivered that day and that Loris and Sonia wanted the siblings to be directors of Kanjian Holdings.
At 5:05 pm on 5 September, Mr Rumore sent an email to Marianne, copied to Philip and Victor, in which he reports speaking to Sonia and Loris that day and that Loris was happy to keep Ken as his solicitor although he would go along and agree with any decision made by Sonia. Mr Rumore's email also records that Sonia indicated that she felt bullied by Ken's wife, who stayed for hours to get her to change her mind about things, and that she wanted access to her financial records and documents. Mr Rumore's email also attaches a form of authority for Loris and Sonia to sign and suggested serving it on Ken with information about an expired fixed deposit and the documents signed by Loris and Sonia on or about 29 August 20217.
At 5:09 pm, Philip responded to Mr Rumore's email in which he states that no details would be provided to Ken in relation to the term deposit and other legal documents signed in relation to the trustee company, the siblings were the directors of Kanjian Holdings effective from 31 August 2017, court orders would be required if the documents were not produced, and that the documents are needed to "dilute [Ken's] shares in trustee company". In cross-examination, Philip gave evidence that he had no problem disclosing information concerning the term deposit to the Court and said that he understood from information provided by Marianne to Ken that the money had been set aside for future capital works on the Cremorne property (T936.9-32).
Also, on 5 September 2017, a request was made by the purchaser of the Castle Cove property to extend settlement for another two weeks to the end of October. In an email from Marianne to Mr Rumore sent at 10:07 am that day, Marianne refers to the extension, to Loris and Sonia moving to a new nursing home and to both of them needing $850,000 each for nursing home fees.
In the morning of 6 September 2017, Victor sent an email to Ken, headed "Harassment of my elderly parents", that refers to Annie having "harassed" Sonia and Loris the other day. Victor's email demands "no more visits" by Annie and tells Ken to listen and "take this as a threat". Shortly after, at 8:57 am, Victor left a message on Ken's telephone that was in similar terms to his email, saying, amongst other things, that Annie should not go anywhere near Sonia, they were "dealing with Victor", he would not "put up with what you did the other day to Mum", to back off and "if I hear you go down there one more time, I'm going to come down and pound you to the ground".
In cross-examination, Victor accepted that his choice of words was "basically terrible", said that he did not intend to make a threat, that his emotions had taken over, and that he was embarrassed by the email (T752.49-T753.21). Six further emails were exchanged between Victor and Ken about these matters between 6 and 12 September 2017. Ken also sent an email to Mr Rumore about Victor's communications on 6 September 2017, noting that the threats were "properly referable to the police".
At 3:48 pm on 6 September 2017, Mr Rumore sent an email to Ken which attached an authority signed by Loris and Sonia dated 6 September 2017 (6 Sept authority). The 6 Sept authority directs Ken to make available to Mr Rumore and Philip copies of documents in relation to the affairs of Loris and Sonia, Kanjian Holdings, Sahab Holdings and any related trust or superannuation fund. The 6 Sept authority is partly typed and partly in Loris' handwriting. The part in Loris' handwriting directs Ken to produce documents relevant to the Bondi property and the Vasir Superannuation Fund, title deeds, trust deeds and copies of tax returns, lease agreements and other relevant documents. The handwritten part also directs Ken to resign immediately as a director of Sahab Holdings if the documents are not produced that week .
At around 3:20 pm on 7 September 2017, Ken spoke to Sonia and made a file note of his conversation. According to the file note, Sonia told Ken that she had no recollection of signing the 6 Sept authority, no knowledge of its contents, no idea that legal proceedings were being contemplated, and that she did not issue any instructions to Mr Rumore to commence proceedings.
At 3:47 pm on 7 September 2017, Mr Rumore sent an email to Ken which records that Mr Rumore had been contacted by Sonia who indicated that she required all original documents and records to be provided, Ken to relinquish his position as a director of Sahab Holdings and to either transfer his share in that company or acknowledge it is held on trust for her. Mr Rumore's email also refers to Loris' position that he and Sonia wanted the matter resolved and for the issues to be put on the table so that they could be worked through.
Later that day, at 6:28 pm, Ken responded to Mr Rumore's email and the 6 Sept authority. In his email, Ken says that the 6 Sept authority was seeking to divest him of his executive and legal role in the family and was "diametrically inconsistent" with what Loris and Sonia had been repeatedly telling Ken over the past few weeks on the phone and in person. Ken's email raises a number of aspects about the 6 Sept authority which he found "disconcerting". Ken's email also notes that Marianne had sought to direct the management of the Brookvale nursing home not to permit Ken and Annie to visit Loris, that Sonia "does not seem to understand the written word anymore", and this was a "clear case of mind control" where differences between the parents and Ken were being "confected and manipulated".
During the early evening of 7 September 2017, Mr Rumore spoke with Loris. According to an email Mr Rumore sent to Ken at 7:39 pm, Loris' instructions to Mr Rumore were get the documents as per Loris' authority, Loris said Ken had promised to make the documents available but had not done so, and Loris had carefully drafted the authority which he and Sonia had signed.
The next morning, Ken informed Mr Rumore that he would not be able to correspond more about his family matters, asserted that he had never promised to Loris that he would make the documents available to Mr Rumore, and took issue with the suggestion that Loris had drafted the authority. Two more emails were exchanged between Ken and Mr Rumore that day, with Ken asserting that Mr Rumore's instructions ran counter to what he had been told by Sonia, and Mr Rumore advising Ken that he had clear and confirmed instructions and asking Ken to get the documents to him on Monday in accordance with the valid authorities.
On 8 September 2017, Mr Rumore sent an email sent to Philip and Marianne, copied to Victor, in which he refers to Philip's request for court action and records that, during Mr Rumore's discussion with Loris the day before, Loris was "somewhat vacillating" and had indicated that he did not want to give Ken a deadline to produce the documents but for Ken to commit to production at a time that is mutually acceptable. Mr Rumore also states that proving the truth with respect to dealings by Ken would be difficult without all of the documentation and that Loris and Sonia may now be dissuaded from pressing for the documents before Ken goes away.
In an email sent to Mr Rumore at 1:59 pm on 8 September 2017, Philip refers to Loris being "terrified and scared of Ken", that Philip had spoken to Loris on several occasions and that Loris had asked whether Ken had delivered the legal documents. The email also states that Loris and Sonia had advised the nursing home that they did not wish to see Ken and Annie and that Philip would advise the Manly police station if Ken approaches his parents that weekend.
On 10 September 2017, Ken visited Loris and Sonia at the Brookvale Nursing Home. He deposes to what was discussed during his two-hour visit and also exhibits a file note of the conversation he made at the time.
Ken's file note records that Loris and Sonia said the following to Ken: they signed the 6 Sept authority but were not aware it required Ken to deliver all papers concerning the family affairs to an external solicitor and for Ken to resign as a director of Sahab Holdings; Loris signed the 6 Sept authority to please Marianne and avoid drama; Loris acknowledged his promise to Ken that he would never sign documents which the siblings presented to him without Ken checking them first; Loris was not "strong enough to withstand the pressure" the siblings exerted on him to sign various documents; Loris did not want legal proceedings to be commenced against Ken because there would be no hope for reconciliation; and Loris and Sonia would contact Mr Rumore and ask him not to commence legal proceedings.
Ken deposes, and the file note records, that Ken wrote an endorsement by hand on the 6 Sept authority which he dated 10 September 2017 and had Loris and Sonia sign it, which they did. The endorsement states: Now that my son Ken Kanjian has explained the meaning and implications of this authority, we withdraw the authority and demand unconditionally.
Ken deposes, and his file note records, that Loris asked Ken not to send the endorsement to the siblings unless the matter goes to Court, "which I hope will not happen", as Loris feared "reprisal of one kind or another".
Loris denies the conversation took place and deposes that the siblings explained what he and Sonia signed (presumably a reference to the 6 Sept authority). He also deposes that Ken forced Loris and Sonia to sign the endorsement without explaining what they were signing, that they refused to sign initially, that Ken said he would not leave until they signed, and that it "became exhausting and we eventually gave in to Ken's demands". Loris also gives evidence that, on occasion and against his better judgment, he signed documents at Ken's request and often did so "simply to keep the peace".
Late on Sunday, 10 September 2017, Mr Rumore sent an email to the siblings asking whether there were any developments over the weekend as he needed to speak to Loris and Sonia to advise next steps and get instructions. Philip replied the following morning emphasising that "serious action must be taken now".
On the morning of 11 September 2017, at 8:15am, Marianne sent an email to Mr Rumore in which she tells him that Ken had visited Loris and Sonia the day before and "FORCED Mum and Dad to sign letters". The email asserts that Ken said to Sonia, "you won't get [your money] anymore Mum, I am keeping that money", and told her and Loris that all their accounts and assets were his. In the email, Marianne emphasises that "enough is enough" and tells Mr Rumore "Simply this is DURESS. I hope you don't sit quietly".
That same morning, Mr Rumore advised the siblings by email that "nothing can be done without clear, precise and unambiguous instructions from your parents" and that, at that stage, Loris was vacillating as to what he wanted done. Mr Rumore's email also records that Sonia's clear instructions were that the only powers of attorney she and Loris were prepared to give at this time were in favour of each other and they did not wish Ken to be their attorney. Mr Rumore suggested a meeting with Sonia and Loris with one of his senior litigation partners present, refers to Ken having called into question their cognition and capacity, particularly of Sonia, and that the siblings need to speak to Loris and Sonia when they are in a "calm frame of mind, and obtain their clear and uninfluenced instruction".
In an email sent to Mr Rumore at 1:02 pm on 11 September 2017, Philip advised that he had visited Sonia at the nursing home that day who had confirmed that she had signed multiple documents for Ken the day before, that she was "forced to sign these documents" and that she cannot remember what she signed. Shortly after, at 1:37 pm, Philip sent another email to Mr Rumore that referred to the siblings and Sonia, as directors of Kanjian Holdings, requiring the documents before Ken goes away and that the authority to proceed with court action would come from all four directors.
In cross-examination, Philip gave evidence that he could not remember why he said "four" directors. His evidence was that Loris was being influenced by Ken, that Loris wanted the legal documents and for Sonia and the siblings to "handle it" because he didn't want any "trouble" (T940.38-T941.5).
Ken deposes to a conversation he had with Loris on the morning of 12 September 2017 in which Loris informed him that he had been asked to authorise Mr Rumore to commence court proceedings against Ken which he refused to do, and that Sonia would be placed in the Bupa nursing home in Willoughby. Ken took a file note of the conversation as was his practice. Ken deposes, and the file note records, that Loris said he wanted to direct the solicitor to pay one half of the Castle Cove property sale proceeds into a solicitor's trust account to be applied to his benefit because he had expenses to meet and that he promised not to sign further documents without Ken first having a look to make sure that they were in his interest.
Loris denies saying any of the words attributed to him by Ken. Loris' evidence is that he did not promise Ken that he would not sign any further documentation without first showing Ken the documents and that he did not want Ken to be involved in any of his affairs or those of Kanjian Holdings or Sahab holdings at that point because he did not trust Ken.
Also, on 12 September 2017, Ken was told by the maintenance manager of Northbridge Village that cheques which Ken had sent him had bounced. Ken contacted the nearest Westpac branch and was told that he had no right to access the two accounts in the name of Sahab Holdings. At 6:19 pm, Ken sent Marianne an email asking what had happened to the accounts, to which Marianne replied that Sonia had decided to look after her affairs and accounts. Marianne also asked Ken to forward all accounts to her and stated that Sonia wanted the refund of $40,000 back to her "super pension" before he went on holidays.
On or about 13 September 2017, Professor Rosenfeld met with Sonia for her assessment. Ms Kolokossian gave evidence in cross-examination that Professor Rosenfeld could not complete the assessment as Sonia was not being co-operative and they agreed that he would revisit the assessment later. Ms Kolokossian did not receive a written report from Professor Rosenfeld. Her evidence in cross-examination was that Professor Rosenfeld informed Ms Kolokossian that he thought Sonia was able to do a simple will, but he did not say anything about her not being able to do a complex will (T330.44-7, T332.5-8).
On 16 September 2017, Ken left Sydney for vacation with his family and did not return until 1 October 2017.
Also, on 16 September 2017 Sonia moved from the Brookvale nursing home to the Bupa nursing home in Northbridge. Ken's evidence is that, despite being a joint guardian, the decision to move Sonia was taken without consulting him.
On 27 September 2017, Philip sent an email to Mr Rumore in which he asserts that Loris had told him that afternoon that Ken has no intention of providing any documents, that there were five directors of Kanjian Holdings, four of which were willing to take legal actions against Ken if necessary, that "dad is petrified of Ken", and that they needed details to move forward in relation to the Cremorne property.

[36]

October 2017: Power of attorney by Sonia in favour of Philip and more demands for documents

On or about 5 October 2017, Loris, Sonia and the siblings, as directors of Kanjian Holdings, signed an authority addressed to Ken directing him to forward to Colin Biggers & Paisley documents relating to Kanjian Holdings, a certificate of title for the Cremorne property, copies of documents relating to the Kanjian Settlement Trust and other related documents (5 October authority). That authority was sent by Philip to Mr Rumore the same day who Philip instructed to give Ken until 17 October 2017 to produce the documents.
On 8 October 2017, Ken visited Loris at the Brookvale nursing home. Ken deposes that they did not discuss issues concerning Kanjian Holdings although he mentioned the difficulties with respect to the two accounts held with Westpac in the name of Sahab Holdings. Ken deposes that he also visited Sonia at the Bupa nursing home and raised the issue with her, and that Sonia told him that she had not blocked his access to the accounts and that he must continue to manage the Northbridge property and the Sahab accounts.
During the evening of 8 October 2017, Ken, Loris and Marianne had a three-way conversation about the Westpac accounts. Ken deposes, and Marianne does not challenge, that Loris told Marianne not to interfere with Ken's management of the Northbridge property and that she would have to restore his access to the accounts and put back the money she had taken out.
On 9 October 2017, Mr Rumore sent Ken an email attaching the 5 October authority. Following this, Ken retained Bryan McMahon of McMahons Lawyers (McMahons) to represent him.
Mr Rumore's evidence, which is denied by Ken but which I accept, is that prior to McMahons being appointed, he spoke to Ken and, in response to Mr Rumore's request and authority for Ken to provide documents to him, Ken said to Mr Rumore: "I've worked for my ungrateful parents for years", "You'll never get the documents", "I've done their estate planning, there is nothing for you to do" and "My parents don't want you to have the documents, you have misunderstood your instructions".
At 7:50 am, on 10 October 2017, Mr Rumore sent an email to the siblings in which he advises that action could only be taken if both Loris and Sonia stood united and repeats his previous advice that unless Loris and Sonia gave him clear, uniform and consistent instructions, there was nothing further that could be done. Mr Rumore gives evidence, which I accept, that he spoke to Loris on 10 October 2017 who said that he was concerned that he was being asked to sign documents with Westpac which he did not understand and had made it clear to Ken that he would not sign anything without it first being vetted by Mr Rumore.
Philip responded to Mr Rumore by email sent at 10:55 am, copied to Marianne, in which he says they would speak to Loris and Sonia and, if nothing changes and the documents are not provided (in accordance with the 5 October authority), "legal action including reporting to a regulatory authority still stands".
On 10 October 2017, Sonia signed two documents, one of which is an Enduring Power of Attorney in favour of Philip (2017 Power of Attorney). Sonia signed the Power of Attorney in the presence of the solicitor from the firm O'Brien Connors & Kennett who came to the Bupa nursing home. Philip arranged the meeting between Sonia and O'Brien Connors & Kennett.
The other document signed by Sonia on 10 October 2017 is an authority that directed Ken to release to Keypoint Law all documents he held relating to Sonia's personal, financial and testamentary affairs. Ms Ross-Maranik from Keypoint Law served the 10 October authority on Ken on 11 October 2017.
On 11 October 2017, Ken also received a letter from O'Brien Connors & Kennett enclosing a Revocation of Appointment of Power of Attorney signed by Sonia and dated 6 September 2017 (2017 Revocation) which revoked the appointment of all powers of attorney given to Ken prior to September 2017, including (but not limited to) a power of attorney granted by Sonia in favour of Ken on 16 July 2002.
Ken challenges Sonia's 2017 Power of Attorney and Revocation in the Corporation proceedings on the grounds that she lacked capacity by reason of dishonesty, undue influence or unconscionable conduct at the hands of the siblings and seeks an order declaring that the 2014 Power of Attorney remains valid.
At around 6 pm on 11 October 2017, Ken visited Sonia at the Bupa nursing home. Ken deposes that Sonia told him the following: she could not read the 5 October authority, she signed what she was given because she feared Philip and Marianne getting angry at her, she could not remember engaging solicitors in Dee Why to cancel the Power of Attorney she had given Ken in 2002 or signing the revocation, she agreed there should be no court case, and she would do her best to tell Mr Rumore not to commence proceedings but she was old and tired and that "they have taken over". As was his practice, Ken took a file note of this discussion.
On 12 October 2017, Mr McMahon, acting for Ken, sent a lengthy letter to Mr Rumore in response to the email attaching the 5 October authority. Mr McMahon's letter refers to Sonia having disclaimed knowledge of the authority and her inability to read and understand documents she is being asked to sign. The letter also refers to Ken's surprise that the siblings were recorded as directors of Kanjian Holdings, that Ken challenged the validity of their appointments, and that he required them to resign, noting that the recording of their appointment had the consequence that the Vasir Superannuation Fund was no longer a self-managed fund under the Superannuation Industry (Supervision) Act 1993 (SIS Act). Mr McMahon states that his instructions were not to enter into further correspondence regarding Kanjian Holdings and the demands until the status quo prevailing before 29 August 2017 is fully restored and that, if proceedings are commenced, the issue of Loris and Sonia's cognitive capacity would be raised and an order sought to appoint an independent psycho-geriatrician to assess them.
Ken deposes that he spoke to Sonia by phone on the morning of 12 October 2017 and that she told him she had never met Ms Ross-Maranik from Keypoint Law. Later that day, Ken sent an email to Ms Ross-Maranik asking her to inform him who gave instructions on Sonia's behalf. Ken's email also refers to Sonia as fragile, not in good health and suffering from significant cognitive impairment.
Ms Ross-Maranik deposes that she has met with or spoken to Loris and Sonia on many occasions from 2017 to 22 August 2018. She gives evidence of a conversation with Loris in October 2017 in which he informed her that he and Sonia had agreed to sell the Bondi property to pay their Bupa fees, wanted the title deeds of the 50 and 347 Sailors Bay Road properties and Sahab Holdings properties returned to him and Sonia, and wanted the rental income from the Bondi and Sahab Holdings properties deposited into a nominated account.
Meanwhile, Philip was corresponding with Mr Rumore about Kanjian Holdings, Loris and Sonia. In an email sent on 13 October 2017, Philip questioned why the siblings could not demand the legal documents as they were a "majority of directors" and asserted there was no question concerning the capacity of Loris who signed the minutes appointing the siblings as directors. Philip's email also refers to Dr Rosenfeld having stated that Sonia does not have the capacity to write a complex will although day to day matters and simple instructions were not ruled out. Later that day, Philip asserted to Mr Rumore by email that, in the siblings' opinion, Ken had fraudulently become a director of Sahab Holdings.
On 16 October 2017, Philip advises Mr Rumore by email that it was not necessary for a partner to attend a meeting with Loris and Sonia and proposes he report the matter to ASIC and the Law Society but not to pursue a court case if documents were not produced. He also refers to Sonia's Power of Attorney and said, "A local solicitor has assessed my mother, taking notes about the capacity. They were satisfied she understood". In response, Mr Rumore asks Philip for a copy of the solicitor's notes. Philip's evidence in cross-examination was that he could not recall taking any steps to ensure they were provided (T944.42-945.5).
In another email sent on 16 October 2017, Philip asserts that Ken had gotten Sonia to sign documents without explanation or the right to have copies for over 20 years, that Ken's appointment to Sahab Holdings was "attained under duress/fraud" and that Ken was asserting that he has a significant interest in every property owned by Sonia and Loris.
In further emails sent to Mr Rumore on 17 and 23 October, Philip refers to his Power of Attorney from Sonia, states that he is willing to use it in the future to obtain information, and asks Mr Rumore not to tell Ken as it was a private arrangement between himself and Sonia. In cross-examination, Philip gave evidence that he said it was private because he feared backlash from Ken on Sonia if Ken found out (T946.34-7).
On 18 October 2017, Zorik Avakian, a medical practitioner and friend of Ken's daughter, visited Sonia at the Bupa nursing home. Mr Avakian visited Sonia at the request of Ken's daughter and saw Sonia with documents on the table and three other people in the room, two of whom identified themselves as Philip and Marianne. He gives evidence that, after leaving the nursing home, he received an aggressive message from Victor asking him to never visit Sonia again.
Also on 18 October 2017, Ms Kolokossian responded to Ken's 12 October email confirming that she had received instructions to act from Sonia in June, had met with Sonia in person the day before and asked Ken to provide the documents requested within seven days.
Later that day, Ken visited Sonia at the Bupa nursing home to discuss Ms Kolokossian's email. According to Ken's file note, Sonia said she was angry with Ken because the 12 October McMahons letter said she was losing her mind, she trusted the siblings and would sign whatever they gave her, Ken was controlling all her and Marianne's money, she had forgotten what was in her will, Ken took money from the sale of the Castle Cove property, and that, according to the siblings, Ken had said that all the assets were his and that he was going to take everything after she and Loris die.
On 19 October 2017, settlement of the sale of the Castle Cove property took place. The proceeds of sale were deposited into a joint account in the name of Sonia and Marianne.
On 22 October 2017, Ken sent a lengthy email letter to Marianne regarding Sahab Holdings and her access to its funds. Ken's email refers to the company's funds having been denuded by $326,470.26 and states that this needed to be repaid as part of the funds was earmarked for costs and expenses relating to the Northbridge properties. Ken also asserts that Marianne had no legal right to use the access code to transfer funds out of the account without his prior written consent.
The following day, Ken sent an email to Marianne in which he says that Sonia had told him that Marianne had shouted at her when Marianne and Victor had visited, and that Sonia generally has no idea about her finances. Marianne's email reply to Ken, sent on the same day, rejects shouting at Sonia and refers to Ken being accountable for "kidnapping, [elder] abuse, shouting and yelling accusations". Marianne's email also states that, looking at the Sahab accounts, there were weeks that Ken had "pulled out $1,000 and Mum and Dad have never received the money?".
Later that day, Ken had a telephone conversation with Sonia. According to his file note, Sonia accused Ken of harassing Marianne, claimed that the Northbridge property was hers and the money Marianne had taken out of the Sahab accounts was "none of [Ken's] business", and asserted that Ken stole $40,000 to fund his overseas trip.
Sometime in October 2017, Ken found out that his access to the Macquarie Bank account into which the Bondi property rent was paid had been blocked. Ken was told by the Bank that only his parents and Philip, as the holder of a Power of Attorney, had authority to operate the account. From around this time, Ken required the tenant of the Bondi property pay the rent into his trust account.
In late October 2017, Mr Rumore was instructed to lodge a complaint against Ken with the Legal Service Commissioner and the Law Society of NSW, which he did by letters dated 27 October 2017. The complaints were sent to Ken in early November 2017. McMahons responded to the Law Society complaint. Ken responded to the Legal Services Commissioner complaint, attaching the response from McMahons to the Law Society complaint.
On 30 October 2017, Loris and Sonia signed an authority directing Ken to produce the certificate of title for the Bondi property along with the lease and other relevant documents (Bondi Authority). Mr Rumore's evidence is that, in October 2017, Sonia and Loris instructed him to obtain those documents.

[37]

November and December 2017: Demands for documents and more authorities signed by Loris and Sonia

On 6 November 2017, Mr Rumore sent the Bondi Authority to Ken and requested that he produce the documents sought by 4 pm on Thursday, 9 November 2017.
Ken deposes that he disregarded Mr Rumore's demand. In a letter from Mr McMahon to Mr Rumore dated 9 November 2017, Ken denies the validity of the Bondi Authority and asserted that Loris and Sonia had told Ken that they had been made to sign "countless" documents by the siblings which they did not understand and asserts that they did not retain the ability to read.
On 12 November 2017, Marianne sent an email to Ken relating to the bank accounts and funds of Sahab Holdings. According to the email, Loris and Sonia wanted access to the funds of Sahab Holdings in their account as "it's their property, it's there income … All the funds are in [Sonia's] name, not [Marianne's]". Marianne's email attaches an authority to Ken dated 12 November 2017 signed by Loris and Sonia which authorises and gives full authority to Marianne to withdraw funds from their two business accounts in Westpac, trading under Sahab Holdings. The authority also states that, from 29 August 2017 to 6 November 2017, Loris and Sonia gave Marianne authorisation and full authority to transfer funds out of the Sahab Holdings accounts into accounts held by Loris and Sonia at Westpac and that Marianne had authority to transfer the sum of $10,000 from Sonia's Westpac account into one of Sahab Holdings' accounts, with the balance of the latter to remain at $10,000 to cover all current and upcoming expenses.
Ken sent a lengthy response by email to Marianne on 14 November 2017 in which he refers to discussions with Loris and Sonia about the need to restore the gross rents to Sahab Holdings. The email states that, unless the rent payments are restored to the company, Ken would continue to pay the costs and expenses associated with the Northbridge properties from the proceeds of the Strathfield property which meant that none of the siblings (or Ken) would receive their distributions from that property until the "mess is cleared up". Ken's email also identified significant expenses relating to the Northbridge property that needed to be paid in the near future.
On 13 November 2017, Philip sent a demand to Simon Horry of Walker Wayland, Ken's accountant, for the production of documents relating to Sahab Holdings, Kanjian Holdings, the Vasir Superannuation Fund and associated trust documents, relying on the Power of Attorney granted to him by Sonia. There is no response to this letter in evidence.
On 17 November 2017, Ken sent an email to Ms Kolokossian in response to Keypoint Law's demand for documents and Ms Kolokossian's email of 18 October. He did not produce the documents requested but said he was considering taking independent legal advice and that either he or his lawyer would write to her.
Ms Kolokossian responded on 21 November 2017, noting that Ken has refused to release documents notwithstanding the authority signed by Sonia and asserting that he is in a position of conflict. Ms Kolokossian's email refers to Ken informing her that he would not be providing the documents and, on that basis, advises that she will proceed with lodging a complaint against him with the Legal Services Commissioner without further notice. A complaint was lodged by Ms Kolokossian on 5 December 2017 on instruction from Sonia. Ms Kolokossian was informed by the Legal Services Commissioner that the complaint was received on 10 January 2018 and that it was better determined by the Court in a letter dated 2 February 2018.
On 29 November 2017, Ms Kolokossian met with Sonia and Loris. Ms Kolokossian's evidence, which I accept, is that Loris asked Keypoint Law to act for him in relation to his estate planning and instructed her to prepare an authority to obtain documents from Ken on the same terms as she had done so for Sonia. According to her evidence, Loris stated that Ken was "pushing his own agenda" and had drafted his and Sonia's wills but did not properly explain its terms to them and or show Loris' will to him. Ms Kolokossian also deposes that Loris told her that Ken he does not want documents to be released to external lawyers because he does not want them "to find out about family secrets" and that Loris thought that Ken had "abused [his] and Sonia's trust and has done things behind our backs that we would never approved of".
Ms Kolokossian deposes that Sonia stated she did not want Ken to act as her solicitor any longer as "he is not acting in my best interests", the will that Ken had drafted for her is "not what I wanted or asked for", she had "signed documents for Ken for many years without making proper enquiries about what the documents were or reading [them]" because she trusted Ken, and she didn't know if Ken had transferred assets to himself or now has control of assets that he is not supposed to have control of.
Ms Kolokossian prepared a written authority addressed to Ken based on Loris' instructions to her during their meeting which required the transfer of various files and documents relating to Loris to Keypoint Law. The authority was signed by Loris on 19 December 2017 (19 December authority) and received by Ms Kolokossian on 21 December 2017.
Philip deposes that, sometime following his appointment as a director of Kanjian Holdings, he retained Uther Webster & Evans to act on Kanjian Holdings' behalf.
On 20 December 2017, Uther Webster & Evans, acting on behalf of Kanjian Holdings and the siblings, sent letters to Ken and Walker Wayland requesting the production of documents relating to Kanjian Holdings and Sahab Holdings by 22 January 2018.

[38]

January 2018: Ken corresponds with siblings and more meetings with Sonia and Loris

On 8 January 2018, Keypoint Law sent an email to Ken notifying him that they had been retained by Loris in relation to his estate planning and requested production of documents within seven days in accordance with the 19 December authority which was attached.
The following day, Ken visited Loris at the Bupa nursing home. Ken made a file note of the conversation between them. Ken deposes, and his file note records, that Loris told him the following: Ms Kolokossian was engaged for Loris by Philip because Philip wanted Loris to prepare a new will; Loris signed the 19 December authority in Philip's presence when the solicitor was not there; Loris had not discussed his affairs with the solicitor; Loris did not remember what his 2014 will said; that he did not want the solicitor to be involved; and that he was happy to continue relying on Ken because a solicitor who knew nothing about the family history and its structure could not prepare a will of "sufficient sophistication".
On 8 January 2018, Ken also sent two letters to his siblings. One was delivered to Marianne and concerned the two Westpac accounts in the name of Sahab Holdings and the authority signed by Loris and Sonia on 12 November 2017. Ken's letter refers to further unauthorised withdrawals from the accounts and requests that Marianne take steps to restore the funds otherwise legal proceedings would soon be commenced against her.
The other was a seven-page letter to the siblings headed "Family Financial Other Affairs" in which Ken expresses hurt from the loss of Loris and Sonia's trust and affections and his concern they had been made to believe he was dishonest and manipulative. Ken refers to the mid-2017 understanding which he alleges the siblings had breached in several respects and expresses his wish for the "nonsense" to stop. Ken's letter encloses copies of income tax returns and says that he would be prepared to make copies of other documents available upon seven pre-conditions being met. The pre-conditions were for the siblings to resign and promise not to seek re-appointment as directors of Kanjian Holdings; to promise not to change the trust structures, shareholdings and directorships of the trustee companies themselves or via Loris and Sonia; to restore Ken's access to the Macquarie Bank account into which the Bondi rents were paid; for Philip to sign the indemnity in favour of Ken in relation to the NAB loan secured by the Strathfield property; to promise not to require Loris and Sonia to sign any more documents without the four of them agreeing it was in their best interests; for Philip to relinquish the Enduring the Power of Attorney granted by Sonia; and for Marianne to transfer back the moneys taken out of the Westpac accounts relating to Sahab Holdings. Ken's offer was not accepted.
On 19 January 2018, Uther Webster & Evans responded to Ken by letter, notifying him that all future communications should be addressed to them. The letter also asks Ken to produce the previously requested documents requested by close of business on 22 January 2018 and suggested that it was in everyone's interest to resolve the matter without the need for serious legal proceedings.
On 22 January 2018, McMahons, acting for Ken, responded to Uther Webster & Evans' letter. McMahons' letter asserts, amongst other things, that Sonia could not possibly have had "sufficient cognitive understanding" to grant Philip the Enduring Power of Attorney on 10 October 2017, that the siblings were not legitimate and validly appointed directors of Kanjian Holdings as they had procured their directorships through undue influence, duress, unconscionable conduct and misleading and deceptive conduct, and that Ken expects the siblings to comply with the mid-2017 understanding. Another letter was sent by McMahons to Uther Webster & Evans the following day stating that Ken has reservations about the utility of mediation but would give consideration to one that involved a "strictly regulated process" and requested a list of issues for consideration.
On 23 January 2018, Sonia left a message for Ken, a recording of which Ken has kept. Ken deposes that Sonia said Ken "took all my money" and "this practice of yours, thieving my money, is intolerable", she had to bring Ken "to heel" and that all of her "reliance was on" Ken but that he was a "bad child".
Ken deposes that, after listening to the messages on 24 January 2018, he called to Sonia. He deposes, and his file note records, that Sonia repeated that Ken had "stolen all my money", "put all my properties into" Ken's name, was "cheating [his] siblings" who "have no money", was "the devil himself" and she hoped he died "a terrible death". According to Ken's evidence, he told Sonia that he knew for a long time she was "not mentally well" but that what she was now saying is "insane", Sonia repeated that she knew he and Annie were taking all her money and she stated that she was going to tell her friends that Ken was a thief.
Ken did not visit Sonia or Loris for a number of weeks after this conversation and did not resume his weekly visits until sometime in March.
Pausing here, there is no evidence that Ken was "thieving" or "stealing" Sonia or Loris' money. The evidence indicates that Ken had taken control of their personal finances after their accident in 2015 and from then until late July 2017 when he handed over the responsibility of their personal finances to Marianne, he had been giving them $1000 per week, $500 each, and arranging to pay their expenses from their accounts. As noted at [337], Ken had, by this time, arranged for the rents from the Bondi property to be paid into his trust account.
Sometime in January 2018, Ken opened a new account in the name of Sahab Holdings with NAB and directed all tenants of Northbridge Village to pay rent into that account, rather than Loris and Sonia's Macquarie Bank account, from 30 January 2018.
On 24 January 2018, Ken sent a lengthy email to Ms Kolokossian in which he explains why he would not be complying with the 19 December authority. In summary, Ken asserts that Loris did not retain "independent acuity of mind" to issue instructions to lawyers, did not have testamentary capacity, was "genuinely fearful" of the siblings, and signed the 19 December authority as a result of improper influences and pressure by the siblings. Ms Kolokossian's reply which was sent on 7 February 2018 stated that she did not intend to respond to Ken's email but did so without admission of any of the assertions made therein.
By this time, Mr Rumore had ceased acting for Loris and Sonia. After both the Legal Services Commissioner and the Law Society of NSW declined to take action to require Ken to release the documents, he indicated to Loris and Sonia that he was unable to assist any further without taking legal proceedings against Ken.

[39]

Late January/early February 2018: Dr Rosenfeld and new wills

On 29 January 2018, Keypoint Law sent letters to Professor Rosenfeld requesting that he assess Loris and Sonia's testamentary capacity. The letters record that Professor Rosenfeld was to meet with Sonia on 31 January and with Loris on 7 February 2018.
The letter in relation to Sonia refers to discussions which Ms Kolokossian had with Sonia and members of her family in which they informed her that Ken had physically abused and threatened Sonia a few days prior to meeting with Professor Rosenfeld in September and that Sonia was in a poor mental state, distressed and unwilling to speak to anyone as a result of the incident.
In cross-examination, Philip, Victor and Marianne each denied telling Ms Kolokossian that Ken had physically abused Sonia (T801.9-11, T833.2-3, T833.43-5, T961.32-7) and Philip accepted it would be a lie to say that Ken had done so (T963.25-7). Loris also gave evidence that he had never told the siblings that Ken had physically abused he or Sonia (T314.19-21, T314.44-50).
Ms Kolokossian's evidence in cross-examination was that it may have been Marianne, Sonia or Philip that told her about the matters referred to in her letter to Professor Rosenfeld (T166.40-167.2, T168.14-25).
Around this time, Sonia and Loris made new wills that had been drafted for them by Keypoint Law. Prior to the wills being signed, Ms Kolokossian sent a letter to Loris and Sonia dated 23 January 2018 which noted that she had explained to them and to Philip and Marianne that, in the absence of documentation, including the previous wills that Ken holds, the new wills that Ms Kolokossian was preparing may not adequately deal with their assets or meet their estate planning objectives.
Sonia's new will is dated 31 January 2018. Loris' is dated 7 February 2018. They are in similar terms in that they both provide for the siblings (not Ken) to be their executors and trustees and, should either of them predecease the other, their estate was, in essence, to be divided between the siblings and their families and that no provision was to be made for Ken. One notable difference between the new wills is that Loris provides for his interest in the Bondi property to be shared equally between the siblings and Ken, whereas Sonia's leaves the Bondi property to the siblings only.

[41]

March 2018: Loris signs Revocation and new Power of Attorney

On 7 March 2018, Loris executed: Revocations of the Power of Attorney and Enduring Guardian given to Ken, Victor and Marianne in May 2014 (2018 Revocations), and an Enduring Power of Attorney that appointed Philip as his attorney that appointed Philip as his guardian, with Victor and Marianne as substitute attorneys (2018 Power of Attorney).
Loris signed them in the presence of Ms Ross-Maranik. He had discussed what he wanted with her previously. Loris' evidence is that he understood he was cancelling the joint appointment of Ken, Victor and Marianne and did so because he no longer trusted that Ken was acting in his best interests as his attorney.
Ken challenges Loris' 2018 Power of Attorney and Revocations in the Corporation proceedings on the ground that Loris lacked capacity when he signed them by reason of dishonesty, undue influence or unconscionable conduct at the hands of the siblings. He seeks declarations that they are void and of no effect and an order declaring that Loris' 2014 Power of Attorney remains valid.
On 9 March 2018, Keypoint Law sent Ken a copy of Loris' 2018 Revocations.
After receiving the email from Keypoint Law, Ken called Loris and had a conversation with him, the details of which are recorded in a file note prepared by Ken. According to the file note, Loris said he did not want Ken to be involved for Loris anymore, that Marianne and Philip had told Loris that Ken was being obstructive, preventing them from managing the family affairs, refusing to release key family documents to them, and diverting rents from the "Sahab property in Northbridge" to another account.
Shortly after the call, Ken sent an email to Keypoint Law referring to the 2018 Revocations and asking for a copy of the 2018 Power of Attorney which Loris granted in favour of Philip.
On 18 and 31 March 2018, Ken went to visit Loris and Sonia at the Bupa nursing home. As was his practice, Ken prepared file notes following his visits.
Ken deposes, and the file notes record, that Loris was angry with Ken because Marianne had told Loris that Ken had removed Sonia as a director of Sahab Holdings and replaced her with Annie, that the company had received bonus rental from Woolworths of $170,000, and that Ken continued to insist on 16 conditions being met before releasing company documents.
Pausing here, there is evidence that Annie was a signatory to a bank account relating to the Strathfield property and that Sonia and Philip became aware of this in sometime in March. Ken's evidence is that he does not know how Annie became a signatory and it was a mistake.
Loris' evidence is that the conversations that Ken deposes to on 18 and 31 March 2018 did not occur in those terms, that he always provided direct instructions to Ms Ross-Maranik, and that he was given a copy of the 2018 Power of Attorney but refused to provide a copy to Ken.
Ms Ross-Maranik gives evidence, which I accept, that she had discussions with Sonia and Loris in about March 2018 during which they discussed their attempts to get documents back from Ken and instructed her not to sue Ken for the documents "for the moment". Ms Ross-Maranik deposes that Sonia referred to Ken's visit "last Sunday" and him "coming again this Sunday" and had said that she didn't know whether he will return "our documents" and they would see how they go getting those documents from him for the moment. Ms Ross-Maranik also deposes that Loris said that Ken had agreed to give the documents back on conditions which were unacceptable, and he was trying to change Ken's attitude.
Between 19 March and 4 April 2018, further correspondence was exchanged between McMahons, Uther Webster & Evans and Keypoint Law in relation to Loris' 2018 Power of Attorney and the other matters referred to in Ken's file notes.

[43]

18 April 2018: Kanjian Holdings resolution and Sonia signs agreement for lease relating to the Northbridge properties

On the morning of 18 April 2018, Loris and Sonia met with Philip, Victor, Ms Ross-Maranik and a solicitor from Uther Webster & Evans at the Bupa nursing home.
According to Philip and Loris' evidence, Loris, Sonia, Philip and Victor, held a meeting in their capacities as directors of Kanjian Holdings and resolved to appoint Uther Webster & Evans to formally make demands on Ken and Walker Wayland to produce books and records of the company and to commence proceedings if such documents were not forthcoming (18 April Resolution).
Minutes of a resolution of directors of Kanjian Holdings made at 9:30 am on 18 April 2018 are in evidence. The 18 April minutes record that Philip was elected to chair the meeting. In addition to the 18 April Resolution, the minutes record that Victor and Philip were appointed by Kanjian Holdings to provide day to day instructions on behalf of the company with respect to the demand and any proceedings and Uther Webster & Evans were directed to report to Ms Ross-Maranik about those matters who would then provide updates to Loris and Sonia. The minutes are signed by Sonia, Loris, Victor and Philip. There is also a certificate signed by Ms Ross-Maranik that states that Sonia and Loris were provided with independent legal advice regarding the resolution and minutes.
Also on 18 April 2018, Sonia, Loris, Victor and Philip, as directors of Kanjian Holdings, executed an Enduring Power of Attorney pursuant to which Kanjian Holdings appointed Philip and Victor to be its attorneys. Ms Ross-Maranik signed a certificate under s 19 of the Powers of Attorney Act 2003 (NSW) certifying that she had explained the effect of the Power of Attorney to Loris and Sonia as directors of Kanjian Holdings before it was signed. Justine Taylor of Uther Webster & Evans signed a similar certificate in respect of Philip and Victor.
Philip deposes that, at the time Loris executed the Enduring Power of Attorney, Loris said "we will hand it over to you and Victor to deal with Ken. Your mother and I want nothing to do with him".
Ms Ross-Maranik deposes that, on about 18 April 2018, Sonia said that she wanted control and their money and property back, she and Loris were getting over $400,00 a year in income which Ken was now controlling, she and Loris needed to pay the nursing home deposit, Ken took advantage of her and said "just sign here" when Loris was in hospital, and Ken wouldn't listen to her and fights with them.
Ken challenges the 18 April Resolution and the Kanjian Holdings Power of Attorney in the Corporations proceedings and seeks orders for the resolution to be rescinded and the power of attorney set aside.
Between 4 and 5 pm on the afternoon of 18 April 2018, Ken visited his parents at the Bupa nursing home. Ken deposes to what was discussed and made a file note of some of the discussions.
Ken deposes, and his file note records, that Sonia told Ken that she and Loris had been with lawyers that day who made them sign papers for the commencement of legal proceedings against Ken and that Loris said he felt uncomfortable because they were being dragged into litigation, the lawyers wanted documents from Ken, and that he did not know what he signed. According to the file note, Ken had promised Loris and Sonia that he would not initiate legal proceedings against family members but, if proceedings were started, he would defend himself. The file note also records that Sonia asked Loris to call Philip and Marianne to tell them there is to be no court case, to which he agreed, that Sonia said she was "very tired" and her "head is hurting", and that Sonia asked Ken to help them with their finances to which he replied that he could not do so because he no longer controlled any of their accounts.
Loris takes issue with this conversation. He says that he did not, and to his knowledge Sonia did not, discuss their dealings with Keypoint Law with Ken but, during that visit, Loris said to Ken that Ken needs to pay him and Sonia the distributions "from Sahab" and they needed the money.

[44]

Senses agreement for lease

During the visit on 18 April 2018, Ken also asked Sonia to sign an agreement for lease between Sahab Holdings and Senses Northbridge Pty Ltd (Senses) in relation to the Northbridge properties (Senses AFL), which Sonia did.
The Senses AFL provides for Sahab Holdings to grant to Senses a long-term lease of the Northbridge properties conditional on Willoughby Council granting permission for the properties to be used as a childcare centre and ancillary offices and granting development consent to construct the necessary facilities. The lease itself was for an initial term of 20 years, with options to renew that had a potential for the tenancy to run for up to 45 years, and an initial rent of $500,000 per annum (net of GST) which was to increase over the years. Under the Senses AFL, Sahab was required to consent to and sign all documents reasonably required by Senses to enable the development application to be lodged with Council.
The circumstances in which Sonia signed the Senses AFL and Ken's conduct in causing Sahab Holdings to enter into it is the source of significant controversy within the family. Loris makes claims in the Equity proceedings, which are disputed by Ken, that Ken acted without authority by committing Sahab Holdings to the Senses AFL without Sonia's informed consent which supports the company being removed as trustee of the Sahab Trusts. Sahab Holdings' entry into the Senses AFL also led to other proceedings in this Court between Senses and Sahab Holdings and was the subject of a cross-claim by the siblings' which has since been discontinued.
In his affidavit sworn 8 July 2019, Ken deposes that he told Sonia and Loris the Senses AFL was ready to be signed, it was "long and reasonably complicated" and he would explain to them "essentially what it is all about". Ken then deposes to the explanation he gave them, which comprises a lengthy statement referring to a range of matters such as the commencing net annual rent of $500,000, the requirement for Willoughby Council to grant approval for a childcare centre to be built, the initial term of 20 years with two options, the guarantee of Senses' obligations by three directors, and the agreement of Senses to pay rent of certain amounts while waiting for Council approval and through the construction phase. Ken's evidence is that he gave Loris and Sonia an opportunity to ask him questions, which they didn't, Loris and Sonia told him they were happy with the deal and he and Sonia proceeded to sign the document as directors of Sahab Holdings.
Ken also gives evidence that he had spoken to Sonia and Loris about the Senses AFL when he visited them in December 2017 and on other occasions up until 18 April 2018. He deposes that he visited Loris and Sonia about 25 times during this period, provided architectural drawings and explained his negotiations with Senses to them during those visits and that Loris and Sonia always gave the impression of being supportive and did not express any doubt or criticism about the matter. His evidence in cross-examination was that although he did not personally inform the siblings of the Senses AFL, he believed that Loris and Sonia had kept them informed of what was happening (T565.18-43)
Ken was challenged in cross-examination about what was discussed on 18 April 2018 and the absence of any reference to the Senses AFL in his file note of the 18 April visit.
In cross-examination, Ken gave evidence that he leafed through the pages of the AFL and pointed to the relevant terms as he explained them (T547.8-T548.4), that both Loris and Sonia repeatedly said words to the effect "good, good" (T552.35-T553.12), that he told them that two of the individual guarantors were "very substantial individuals" (T549.25-6), and that the rent to be received was "a true net figure" (T550.8-9).
As to why the Senses AFL was not mentioned in the file note, Ken's evidence was that he did not think it was contentious and that Loris and Sonia were "100% for it" since Ken had announced it at their meeting on 15 December 2017 (T533.9-22). He also gave evidence that he had no knowledge of whether the siblings supported or opposed the Senses AFL, he didn't really appreciate that the siblings may not have agreed to it in April 2018, he was aware that Loris had told them about it and that Victor had referred to it as fictitious to Loris (T532.45-7, 533.46-8).
Loris disputes Ken's evidence about what was discussed on 18 April 2018 concerning the Senses AFL. Loris deposes that the Senses AFL was not read or explained to him or Sonia and that they were not given an opportunity to obtain advice on it. He also deposes that, on one occasion, Ken told them about the plan for a child-minding centre to be built on the Northbridge properties with a lease of about $600,000 rent a year, but did not provide them with any plans or tell them of certain details, such as the plans for a swimming pool, the lease term of 45 years or that rent reviews would be conducted after the first 10 years.
In cross-examination, Loris gave evidence that he recalled Ken bringing an agreement for lease between Senses and Sahab Holdings for Sonia and Ken to sign as directors of Sahab Holdings (T59.29-32, T60.39-T61.10), Ken explained that the lease would for 45 years with annual rent of about $500,000 or $600,000 (T61.36-40), Loris understood the agreement concerned a child-minding centre which Senses was going to build and pay for (T62.16-29) and Sonia listened to Ken's explanation (T61.45-6). Loris also gave evidence that, at the time, Loris thought it was a "good proposition" as a long-term lease meant that there would be income for the family and the grandchildren for many years to come (T62.35-46, T63.10-38) and that Sonia thought it was a good thing too (T63.40-44).

[45]

20 and 21 April 2018: Demand by Kanjian Holdings, countermand signed, secret recording and the police are called

On 20 April 2018, Uther Webster & Evans, acting for Kanjian Holdings, sent letters to McMahons (as Ken's solicitor) and Walker Wayland demanding production of the books and records of Kanjian Holdings and any trusts to which the company acts as trustee within 14 days, failing which they were instructed to commence legal proceedings.
On 21 April 2018, Ken and Annie went to visit Loris and Sonia at the Bupa nursing home. They arrived at around 9:50 am and left shortly after lunch was served. Ken deposes to some of what was discussed during the visit and prepared a file note of those discussions later that day, which note is in evidence.
Annie recorded the conversation on her mobile phone from the time she arrived to just before she and Ken left. The translated transcript of the conversation runs for 32 pages. As noted above, I have admitted the recording and translated transcript into evidence.
The translated transcript identifies that a number of topics were discussed, including the state of Loris and Sonia's finances, the 20 April letters from Uther Webster & Evans threatening legal proceedings against Ken, the 12 April Bondi direction and the 13 April letter from Keypoint Law. Amongst other things, it records that Loris and Sonia were concerned they did not have sufficient funds to pay their nursing home charges, that Loris and Sonia did not have knowledge of the money in the term deposits, and that Loris did not want Court proceedings and wished for the issues in the family to be resolved.
In relation to the 12 April Bondi direction, the transcript records Loris saying that he did not want Ken to be dismissed from managing the Bondi property.
The transcript also records Ken making two requests of Loris and Sonia. The first was for them to dismiss the lawyers and sign a document to the effect of "no more action … this family is not going to Court". The second was for Loris and Sonia to sign a document directed to the tenant of the Bondi property that reappoints Ken as manager of the Bondi property.
In relation to these documents, Ken said, amongst other statements to Loris and Sonia: "Are you ready to sign … there's no time to waste talking", "You're either with me today ... and you sign", "I need to stop these lawyers and your money which is being spent needs to stop … If you don't sign these papers today … today I will insist", "I am not forcing you to sign, alright, but if you don't sign…" and "If you don't sign, the family will disintegrate - go up in flames".
The transcript also records that Loris made statements directed to or about the siblings such as: "When I sign something, they are all pouncing on me", "They are not listening … Just "sign here, sign here, sign here", "Victor came and spoke to mum harshly", "As soon as I say that, they will say 'you are not with us. We are going to cut off ties'. That's what they will say", "Yeah, that, that, do you know how that pounced on us - how they attacked us?" and "What will happen, They will attack us. They will beat us". The transcript also records that Sonia made statements such as: "A few weeks ago I was much better but these things have increasingly caused so much pressure on me …" and "… I have not spoken to Philip. The other one, what's his name, he embarrassed me, he screamed and shouted at me".
By the end of the visit, Loris and Sonia had signed the two documents prepared by and as requested by Ken.
The first document is a letter dated 21 April 2018 addressed to Uther Webster & Evans signed by Loris and Sonia as directors and controlling shareholders of Kanjian Holdings. The letter terminates Uther Webster & Evans' retainer and countermands the instructions to issue and act on the 20 April demand for documents and any instructions given by one or more of the siblings. The letter also states that the siblings were acting without Loris and Sonia's authority and against their wishes and states that they do not wish the family to become involved in litigation concerning internal family affairs.
The second is a letter dated 21 April 2018 which is addressed to the tenant of the Bondi property and signed by Loris and Sonia that directs the tenant to disregard the 13 April letter and direction from Keypoint Law.
At around 1:48 pm that day, Marianne contacted the police to report that Loris and Sonia had been forced to sign documents. The police attended the Bupa nursing home later that afternoon and spoke to Philip, Marianne, Loris and Sonia. The police were told that Sonia and Loris were put under duress and made to sign documents. The police explained that this was a civil matter and did not take any further action.
Between 1:13pm and 11:08 pm on 21 April 2018, Sonia left five messages on Ken's office telephone. According to Ken's file note of the messages, which he made on 23 April 2018, Sonia accused him of, amongst other things, stealing and depriving her of money, scheming against her and leaving her in poverty.
Loris deposes that he did not have the conversation on 21 April 2018 which Ken alleges and that if he signed any authorities for Ken, it was because Ken threatened or pressured him to do so and Ken did not allow him to read them. He was cross-examined about the transcript and gave evidence that the siblings have never physically attack him or Sonia (T94.25-T95.13).

[46]

Late April and May 2018: More demands, more authorities and Corporations proceedings are commenced

On 22 April 2018, Ken spoke to Sonia on the phone. Ken deposes, and his file note records, that Sonia asked Ken why he made her sign papers, accused him of taking all her money and told him the police came the previous afternoon and that she had called them.
On 23 April 2018, Ms Ross-Maranik sent an email to McMahons demanding that Ken return originals and provide copies of the documents that Ken had forced Loris and Sonia to sign the previous week by the next day.
Ms Ross-Maranik deposes that, on or about 23 April 2018, she spoke to Loris and he instructed her to do whatever was necessary to cancel the letters he and Sonia signed, which he described to her as being signed "under duress and intimidation by Ken", and that Loris had spoken to the nursing home to stop Ken coming there.
Further correspondence was then exchanged between McMahons and Keypoint Law, and McMahons and Uther Webster & Evans. Suffice to say that McMahons did not produce any documents and Uther Webster & Evans and Keypoint Law took issue with the countermanding authorities signed on 21 April 2018.
On 10 May 2018, Sahab Holdings and Senses entered into the Senses AFL.
On 11 May 2018, Sonia and Loris each signed authorities that directed Ken and Walker Wayland to provide to Keypoint Law all documents relating to their affairs, documents relating to Kanjian Holdings and the Kanjian Settlement Trust and, in respect of Sonia's authority, documents in relation to Sahab Holdings (11 May Authorities).
On 11 May 2018, Sonia and Loris also signed a notice and direction to the new tenant of the Bondi property (the wife of the previous tenant) to pay all rent and other money under the lease to their Macquarie bank account (11 May Bondi Direction).
Ken challenges the 11 May Authorities and the 11 May Bondi Direction in the Corporations proceedings and seeks orders for them to be they be rescinded or declarations that they are void and to no effect.
The 11 May Bondi Direction was sent to the tenant under cover of a letter from Ms Ross-Maranik of Keypoint Law dated 14 May 2018 that advised that Loris and Sonia had terminated Ken's engagement. Ms Ross-Maranik did not receive a response to her letter or the 11 May direction.
On 11 May 2018, Ken went to the Bupa nursing home. Loris and Marianne were in Sonia's room when he arrived. Ken gives evidence about, and the file note he made records, a conversation during which Sonia said they were taking Ken to court and accused him of having left them "all in poverty" and "taken all our money and put everything in your name", Loris said that "All the Sahab money is ours and you are holding it", and Marianne called him dishonest and accused him of keeping the Woolworths rent increase to himself. Ken's evidence was that Loris and Sonia were hostile towards him, which he believes was being led by Marianne.
On 14 May 2018, the Corporations proceedings were commenced in the name of Kanjian Holdings against Ken and Walker Wayland seeking orders that they provide access to business records of the company and declarations that Ken had contravened ss 181 and 182 of the Corporations Act 2001 (Cth) by failing to deliver up its documents. An open offer made by Ken on 16 May 2018 to resolve the proceedings by the production of documents on certain conditions was not accepted by Kanjian Holdings.
On 21 May 2018, Ken went to visit Sonia after speaking to her on the phone that day. Ken's presence with Sonia was noted by the manager of the nursing home and reported to Marianne. Loris and Victor arrived later and there was a discussion about the legal proceedings. According to Ken's evidence and his file note, Sonia and Loris both said there was to be no court case after hearing about the legal costs involved.
Loris deposes that he did not say, and did not hear Sonia say, there was to be no court case. Loris' evidence is that the proceedings were commenced on his and Sonia's instructions as Ken had refused to come to an agreement with them and the rest of the family.
Ken also gives evidence about a telephone discussion with Sonia on 23 May 2018 during which Sonia told Ken she was on a new medication, she had spoken to Marianne and told her there was to be no court case, and that Marianne said "no, the case is going ahead". Ken also deposes, and his file note records, that Sonia referred to the siblings as "aggressive" and "money hungry" and wanting to "get rid" of Ken.
On 29 May 2018, Keypoint Law wrote to Ken and demanded that he and Walker Wayland release the documents they held relating to Sonia and Loris' affairs in accordance with the enclosed 11 May Authorities and threatened legal proceedings against Ken if the documents were not produced by 12 June 2018.
Ken gives evidence that, upon receiving the demand, he called Loris who said that he did not sign the 11 May Authority. Ken's evidence is that he also spoke to Sonia who said that she did not know anything about her 11 May Authority and that Victor had visited yesterday and screamed at her. As was his practice, Ken made a file note of these conversations. Loris denies the conversation deposed to by Ken.
Ken gives evidence about a similar conversation with Loris and Sonia during a visit to them on 3 June 2018. Again, Loris says that the conversation deposed to by Ken did not occur.

[47]

June - December 2018: Ken's Cross-Claim, Equity proceedings commenced, documents produced, and Court appoints expert to assess Sonia and Loris

In June 2018, Keypoint Law, McMahons and Walker Wayland's lawyers, Hall & Wilcox Lawyers, exchanged emails about the 11 May Authorities. Ken refused to produce the documents and Walker Wayland advised it would not respond until the Corporations proceedings had been resolved.
On 26 June 2018, Ken filed his defence and his cross-claim in the Corporations proceedings that joined Loris, Sonia and the siblings to the proceedings.
On 21 July 2018, Ken visited Loris and Sonia at the Bupa nursing home and was asked by staff to leave because Loris and Sonia had signed a direction that Ken was not to visit them. Ken deposes that Sonia asked him not to leave and that she didn't know what she had signed. According to Ken's evidence, which Marianne does not challenge, Marianne arrived, told Ken to leave and called him a "psychopath and a narcissist".
According to Ken's evidence, he has not seen Loris or Sonia at the Bupa nursing home since the 21 July visit.
On 22 August 2018, Loris and Sonia commenced the Equity proceedings against Ken seeking orders that Ken produce documents by reason of him having acted as their solicitor.
Ken produced most of the documents sought in the Corporations and Equity proceedings pursuant to orders made by Lindsay J on 27 and 31 August 2018. The production of documents to Kanjian Holdings and to Loris and Sonia was subject to an undertaking that no step outside the ordinary course of business would be taken by any party in relation to Loris and Sonia's affairs or any company or trust which they have an interest in without giving each party 48 hours prior written notice.
On 29 October 2018, Professor Carmelle Peisah was appointed by the Court as an independent expert to assess the capacity of Loris and Sonia. Professor Peisah produced reports dated 7 December 2018 for each of Loris and Sonia setting out her findings as to their capacity based on examinations which she conducted in the Bupa nursing home on 27 November 2018. It was following receipt of Professor Peisah's report concerning Sonia that the Court made, without opposition, the declaration under s 41 of the NSW Trustee and Guardian Act and appointed the NSW Trustee to manage her affairs.

[48]

2019: Senses litigation, appointment of receivers to Sahab Holdings and claims against Ken relating to the Senses AFL

As noted above, pursuant to the Senses AFL, Sahab Holdings was obliged to consent to and sign all documents reasonably required for Senses to lodge the application to redevelop the Northbridge properties into a childcare centre with Willoughby Council (Senses development application).
On 19 December 2018, Senses commenced proceedings in this Court seeking orders to compel Sahab Holdings to provide its consent to the Senses development application (Senses proceedings).
On 14 February 2019, Loris filed an Amended Statement of Claim in the Equity proceedings to include a claim for removal of Sahab Holdings as trustee of the Sahab Trusts for reasons including Ken's conduct in procuring Sahab Holdings' entry into the Senses AFL.
On 25 February 2019, on an application made by Loris, Lindsay J made orders appointing receivers and managers to the property of Sahab Holdings as trustee for the Metropole and Kanjian Family Trusts (Receivers): Kanjian v Kanjian [2019] NSWSC 166. Lindsay J's reasons for appointing the Receivers refer to the deadlock in Sahab Holdings at the shareholder level, the casual vacancy of Sonia's role as director by reason of her infirmity, the breakdown in the relationship between Loris and Ken and their opposing views about the Senses AFL: at [17], [19], [20]-[21], [28].
The orders appointing the Receivers authorised them to appear on behalf of and defend any claims made against Sahab Holdings in the Senses proceedings. The Receivers defended the Senses proceedings.
On 7 March 2019, Kanjian Holdings as trustee for the Vasir Superannuation Fund filed a cross-claim in the Equity proceedings against Ken alleging that his conduct in relation to Sahab Holdings' entry into the Senses AFL caused loss and sought equitable compensation for Ken's breaches of his fiduciary and other duties to Kanjian Holdings and the Kanjian Family Trust (Kanjian Holdings' Cross-Claim).
On 5 June 2019, the Receivers advised Keypoint Law that they would not bring a cross-claim against Ken in the Senses proceedings arising from his conduct in relation to Sahab Holdings and the Senses AFL and had no standing to bring such a claim in the Equity or Corporations proceedings. In their Reports to beneficiaries dated May and September 2019, the Receivers reserved all rights, to the extent they were able to do so, in relation to the ability of "the Trusts" to bring future claims against Ken arising from his conduct in connection with the Senses AFL.
On 28 June 2019, Loris filed his Second Further Amended Statement of Claim in the Equity proceedings which added another claim against Ken alleging that his conduct in relation to Sahab Holdings' entry into the Senses AFL caused loss and sought an order against Ken for compensation under s 1317H of the Corporations Act.
On 11 September 2019, Emmett AJA delivered judgment in the Senses proceedings in favour of Senses, holding that it was entitled to orders for specific performance: Senses Northbridge Pty Ltd v Sahab Holdings Pty Ltd [2019] NSWSC 1201. His Honour later refused Senses' application for damages under s 68 of the Supreme Court Act 1970 (NSW): Senses Northbridge Pty Ltd v Sahab Holdings Pty Ltd (No 3) [2020] NSWSC 345.
On 17 December 2019, the Receivers were discharged following a notice of motion filed by Ken that was largely resolved by consent. As part of the resolution of the motion, Ken gave an undertaking not to take steps on behalf of Sahab Holdings to deal with the property owned by the Metropole and Kanjian Family Trusts without the unanimous consent of the company board or leave of the Court. It was also agreed that Victor and Mr Le Boursicot would be appointed directors of Sahab Holdings, and Victor would be permitted to have monitoring online access to Sahab Holdings' bank accounts.
In cross-examination, Loris did not recall that the Receivers were appointed to Sahab Holdings on his application. He also gave evidence that Ken had done a good job with Sahab since that time (T600.32-48).

[50]

Other financial matters

As at 22 August 2018, Sonia and Loris had each paid $300,000 towards their $850,000 Refundable Accommodation Deposit (RAD) at the Bupa nursing home. The balance of the RAD remains unpaid and, as a consequence, they have had to pay a higher rate for their recurrent daily charges at the Bupa nursing home, of around $85 each per day. According to Ms Ross-Maranik's evidence, in August 2018, she was instructed by Loris and Sonia that they wanted to sell the Bondi property to pay the balance of the RAD and fund their lifestyle.
The rental income from the Bondi property has been paid into Ken's trust account since some time around November 2017 (at [337]). Between 1 November 2017 and 30 June 2018, Ken transferred $27,725.99 out of his trust account towards payment of Loris and Sonia's recurrent accommodation charges at the Bupa nursing home. Ken did not pay income from the Bondi property to Loris or Sonia or pay expenses on their behalf from June 2018. On 21 November 2018, McMahons requested Keypoint Law to submit third party accounts so that Ken could apply the Bondi property funds towards their payment. There is no response to that letter in evidence.
As to distributions to Loris and Sonia from Sahab Holdings as trustee for the Metropole Trust, the evidence discloses that: 1. for the financial year ending 2018, Ken applied, by way of set-off, Sahab Holdings' claim against Marianne in relation to withdrawals of $402,970.26 from its bank account against the cash distributions to Loris and Sonia and a payment to the Armenian Church on their behalf, with the consequence that no cash was received by Loris and Sonia for that financial year; 2. Sahab Holdings ceased distributions to Sonia and Loris at the end of end of the 2018 financial year; and 3. during the period from February to September 2019, the Receivers made a distribution of $20,000 from Sahab I to Loris in April.
There is no evidence of whether or not any distributions have been made from Sahab Holdings to Loris and Sonia since the Receivers were discharged in December 2019.
Between 1987 to 2018, Ken arranged payment of successive distributions to the siblings in respect of rents and other income from the Strathfield property and from the Carkan Trust. In cross-examination, Ken accepted that he has not made any distributions to Victor and Marianne in relation to their investments held in the Carkan Trust since September 2018 (T628.1-12).

[51]

21 April 2018 secret recording

As noted above, at the start of the hearing, objection was taken by Loris, Kanjian Holdings and the siblings to the admissibility of the sound recording made by Annie on 21 April 2018 and the translated transcript prepared by Ms Evanian, a certified Armenian translator, on 14 March.
Kanjian Holdings and the siblings and Ken provided written submissions during the trial on this issue and Annie was cross-examined about the circumstances of the recording on the tenth day of the hearing.
The objection to the evidence is on the ground that the 21 April recording was obtained in contravention of the Surveillance Devices Act 2007 (NSW). Kanjian Holdings and the siblings also submit that, having regard to the manner in which the evidence was obtained, it should be excluded under s 138 of the Evidence Act 1995 (NSW) and, alternatively, the secret recording is "unfairly prejudicial" within the meaning of s 135(a) of the Evidence Act.
Ken submits that the evidence is admissible as the recording was not obtained improperly or in contravention of the Surveillance Devices Act. Alternatively, if the recording was unlawfully obtained, he submits that the evidence should be admitted as it contains admissions and other statements made by Loris and Sonia that are highly probative of the issues raised in the proceedings.
The first issue raised by the objection is whether the recording was made in contravention of the Surveillance Devices Act.
Section 7(1)(b) of the Surveillance Devices Act renders it an offence for a person who knowingly uses a listening device to record a private conversation to which the person is a party.
Section 7(3) of the Surveillance Devices Act provides for exceptions to the offence. Relevant to this case is s 7(3)(b)(i) which provides: Subsection (1)(b) does not apply to the use of a listening device by a party to a private conversation if - … (b) a principal party to the conversation consents to the listening device being so used and the recording of the conversation - (i) is reasonably necessary for the protection of the lawful interests of that principal party, …
Section 4(1) defines "private conversation" to mean: any words spoken by one person to another person or to other persons in circumstances that may reasonably be taken to indicate that any of those persons desires the words to be listened to only - (a) by themselves, or (b) by themselves and by some other person who has consent, express or implied, of all of those persons to do so, but does not include a conversation made in any circumstances in which the parties to it ought reasonably to expect that it might be overheard by someone else.
"Principal party" is also defined in s 4(1) to mean: … a person by or to whom words are spoken in the course of the conversation.
There is no dispute that Annie's mobile phone is a listening device or that she was a principal party to the conversation within the meaning of s 4(1) of the Surveillance Devices Act. Annie did not tell Ken, Loris or Sonia that she was recording the conversation at the time and I am satisfied that she intended to make the recording.
The recording goes for just under one and a half hours and starts when Annie and Ken arrived at Sonia's room. Most of the recording is of the conversation when Annie, Ken, Sonia and Loris are in the dining room of the nursing home. According to Annie's evidence, the dining room was open to the residents and staff and quite busy at the time of the recording, with residents sitting at the tables next to them and staff members milling about.
Ken submits that, in circumstances where the conversation took place in a busy dining room, Ken, Sonia and Loris ought reasonably to have expected that it might be overhead by someone else such that the recording is not of a private conversation and s 7(1)(b) of the Surveillance Devices Act is not engaged. I am not persuaded by that submission.
A private conversation is one which may reasonably be taken as intended to be confined and listened to by the persons who are a party to the conversation. It may be private even though it occurs in a public place, such as a restaurant, or the participants are at liberty to tell others about it later: Thomas v Nash (2010) 107 SASR 309; [2010] SASC 153 (Thomas v Nash) at [36]-[37], cited with approval in RRG Nominees Pty Ltd v Visible Temporary Fencing Australia Pty Ltd (No 3) [2018] FCA 404 at [23]-[24]; Poland v Hedley [2019] WASC 403 at [33], [36].
As the translated transcript indicates, the matters discussed during the 21 April conversation were, in the main, of a personal nature regarding Loris and Sonia's finances, the family investments, the allegations made against Ken, Annie and the siblings, and legal matters. To my mind, those matters are of a kind which it is reasonable to expect were intended by the participants to be private and confined to the parties to the conversation, and not to be listened to or overhead by others.
Even though the dining room was open to other residents, staff and guests, the evidence is that Annie, Ken, Sonia and Loris were sitting at their own table conversing amongst themselves. There is some evidence to suggest that they may have attracted attention while they were talking; the translated transcript refers to Loris "banging on the table". That said, the recording does not indicate they were speaking loudly or otherwise in a manner that would encourage others to listen, particularly as the conversation was in Armenian. The presence of others milling around could also be expected to have given rise to general hubbub that would make it hard for others to hear what was being said. In my view, considered objectively, these circumstances are such that the parties ought not reasonably to have expected that their conversation would be overhead by others in the dining room, let alone listened to and understood.
Kanjian Holdings and the siblings' primary submission is that Annie's justification for making the recording does not meet the criterion of being reasonably necessary for the protection of her lawful interests as she is not a party to and has no direct financial interest in these proceedings.
In my view, the answer to whether the recording was reasonably necessary for the protection of Annie's lawful interests at the time it was made is not determined by those matters. The legislation does not require Annie to be a party to or have a direct financial interest in the proceedings in which the recording is sought to be admitted. This Court has also recognised that a lawful interest that needs protection may exist in respect of a recording made by a non-party witness in proceedings: Rathswohl v Court [2020] NSWSC 1490.
Kanjian Holdings and the siblings do not advance any particular definition of "lawful interests" but refer to the principle that a finding that a recording is reasonably necessary for the protection of lawful interests depends on the circumstances of a particular case: Sepulveda v R [2006] NSWCCA 379 (Sepulveda) at [125].
Ken submits that an expectation that Annie might be a party to civil or criminal proceedings relating to allegations that had already been made about her conduct and her desire to protect her credibility generally are lawful interests even though Annie is not a party to these proceedings, referring to Chao v Chao [2008] NSWSC 584 (Chao) which was cited in DW v R [2014] NSWCCA 28 at [34].
In Chao, a recording made by a plaintiff of a conversation with the defendant was held to give rise to a lawful interest as, at the time the recording was made, a serious dispute had erupted between the parties prior to the commencement of the proceedings and it was obvious it would be highly contentious as to which party's evidence was to be believed: at [8].
While "lawful interest" is capable of a broad construction, the statutory context suggests it is not open ended. The recording of a private conversation 'just in case' it might prove advantageous in future civil litigation is not enough. The Court is, however, more likely to find that a recording is made in the protection of a person's lawful interests where the conversation relates to an allegation of a serious crime or resisting such an allegation, or where a dispute has "crystallised into a real and identifiable concern about the imminent potential for significant harm to the commercial or legal interests of a person": Alliance Craton Explorer Pty Ltd v Quasar Resources Ltd [2010] SASC 266 at [49]; Thomas v Nash at [45], [48]; Nanosecond Corporation Pty Ltd v Glen Carron Pty Ltd (2018) 132 SASR 63; [2018] SASC 116 at [103]-[105].
The reasonableness requirement imports an objective test: Sepulveda at [118], [139]. To be "reasonably necessary", the recording need not be essential for the protection of the lawful interest; it is sufficient that it is reasonably appropriate for that purpose: Sepulveda at [117].
The nature of the lawful interest asserted may also bear on whether the recording is reasonably necessary. It may be that the more tenuous the interest, the less likely it will be objectively necessary to protect it by recording a private conversation: Dong v Song [2018] ACTSC 82 at [36].
Annie's evidence is that the reason she recorded the conversation was to have some proof of the manner in which she and Ken had been engaging with Sonia and Loris during their visits and to protect herself and Ken against accusations that they had been harassing and intimidating Loris and Sonia or otherwise engaging in overbearing conduct. Annie deposes that she was becoming increasingly concerned that one of the siblings would make a complaint against her or Ken to the police.
In cross-examination, Annie gave evidence that she made the recording "for my own protection and in case they took the … accusation of threats and abuse to the police" and that she "wanted a record in case I was accused as I had been in the past", which I took to be a reference to Victor's email and call following Annie's visit with Sonia in September 2017 (T661.31-5, T671.1).
When asked whether she taped the conversation because she wanted a record of what Sonia and Loris discussed regarding Kanjian Holdings, the Bondi property and the authorities that Ken had prepared, Annie said that she "didn't think so" and that she "didn't record it for any other reason than to protect myself". She later said the recording was for "our protection", meaning the protection of herself and Ken (T709.3-4, T712.24-34). She also gave evidence that the recording was made as a "spur of the moment thing on the day" in circumstances where she could see "things escalating" and Ken had received letters from Uther Webster & Evans (T662.21-4, T663.35-7).
I accept Annie's evidence that she was not trying to bait Loris and Sonia into making comments knowing the conversation was taped (T710.2-7).
I am satisfied that Annie had a lawful interest to protect at the time she made the recording. The evidence makes clear that a significant dispute within the family had emerged by the time of the recording. Although the recent threats of litigation were directed at Ken, Annie had been the subject of previous allegations of harassment and threats by Victor and was an active participant in a conversation that she expected would be contentious. As events transpired, Annie's expectations were justified as the police were called and a complaint was made that Loris and Sonia had been forced to sign documents under duress.
A desire for a reliable record of a contentious conversation to protect oneself against serious allegations of elder abuse in the context of an ongoing and crystallised dispute gives rise, in my view, to a lawful interest for the purposes of the Surveillance Devices Act.
That Annie may have also hoped the recording would serve to protect Ken's interests does not, to my mind, render the recording to be one that was illegally obtained for the purposes of the Surveillance Devices Act. The exception in s 7(3)(b)(i) does not require the recording to be reasonably necessary for the protection of Annie's lawful interests alone.
As to whether the recording was reasonably necessary, I accept that it may have been possible for Annie to have sought to protect her interests in other ways by, for example, relying on the file note that she expected Ken to prepare or by making her own. However, there are limits to what a file note about a long conversation can record and it is reasonable to expect that there would be a challenge to the veracity of a file note or Annie's evidence more generally, as there was in this case.
There was no suggestion that Annie should have approached the police and sought a warrant: cf Sepulveda at [139]. Nor was it submitted that Annie should have sought to obtain the consent of Loris and Sonia at the time the recording was made.
In the circumstance of this case, I am not persuaded that Annie's conduct in recording the conversation, at the time it was made, was not reasonably necessary and find that the recording was not obtained in contravention of the Surveillance Devices Act.
Even if I am wrong in that conclusion, I would, in the exercise of my discretion, have admitted the evidence under s 138 of the Evidence Act. Evidence obtained improperly, in contravention of an Australian law or in consequence of an impropriety is not to be admitted unless the desirability of admitting the evidence outweighs the undesirability of admitting evidence that has been obtained in the way in which the evidence was obtained: Evidence Act, s 138. Section 138(3) of the Evidence Act sets out a range of factors that may be taken into account in determining whether to admit such evidence, which factors include the probative value and importance of the evidence and the nature and gravity of the impropriety or offence.
Having regard to the parts to which I have referred at [414], the translated transcript is, in my view, probative of the question of whether Loris and Sonia were at risk of, and in fact subjected to, undue influence. It provides a candid account of what Loris and Sonia were saying about the conduct of the siblings and an insight into their responses and motivations at the time. The recording also provides the best evidence of Sonia's state of mind at the time and, in my view, is also probative of the issue raised by Loris as to Sonia's signing of the Senses AFL and Loris' knowledge of those matters.
Even though Ken took a file note and deposed to what was discussed during the 21 April meeting, his evidence of the conversation is also challenged by Loris.
Secretly recording one's elderly parents does raise a question about the propriety of the manner in which the evidence was obtained. Even in the context of allegations of elder abuse and undue influence, the Court does not wish to encourage private conversations about family matters to be recorded. The policy underlying the Surveillance Devices Act reflects an aversion to the secret recording of private conversations and suggests the Court should not be too ready to find that the desirability of admitting such evidence outweighs the undesirability of receiving it.
However, given the dispute about the events on 21 April 2018 and the seriousness of the allegations made in this case, the best evidence of what occurred that morning should, in my view, be admitted.
I am also of the view that the recording is not unfairly prejudicial to the siblings. It contains parts, some of which are referred to at [413], that suggest that Ken encouraged Loris and Sonia to sign documents, a matter which is relevant to the question of whether the siblings were subjecting them to undue influence more generally. Further, and as was submitted, in so far as the recording refers to what Loris and Sonia claim was said by the siblings, the evidence is hearsay and no admissions are capable of being made against them: Evidence Act, ss 81, 87.
For these reasons, the recording made by Annie on 21 April 2018, the translated transcript and the related cross-examination are admitted into evidence.

[52]

Keypoint Law file notes

At the hearing, Kanjian Holdings and the siblings sought to tender a bundle of file notes that were produced in response to a call for documents made by Ken's Senior Counsel during the course of Ms Kolokossian's cross-examination (T991.42-9). The tender was objected to by Ken. Parts of the tender were rejected on s 135 Evidence Act grounds and because they were prepared for the purpose of and in connection with proceedings: Evidence Act, s 69(3)(a).
The rest of the tender (pages 3 to 26) comprises three file notes taken by Ms Kolokossian at a meeting she had with Sonia on 17 October 2017 and with Sonia and Loris on 29 November 2017 and 24 January 2018. They were admitted as Exhibit A2 on a provisional basis, with their contents not admitted as proof of the truth of what was said to Ms Kolokossian. The parties were asked to address further on them in closing submissions.
The only reference made to the file notes in closing submissions was by Counsel for Kanjian Holdings and the siblings (T1082.41-9). Noting they were the subject of a provisional ruling, Counsel sought to rely on them as part of the evidence that showed Loris and Sonia were having conversations and providing instructions to solicitors on the basis that "the test enunciated" by Campbell J in Doulaveras v Daher (2009) 253 ALR 627; [2009] NSWCA 58 (Doulaveras) at [64] was said to be made out. The "test" referred to by Counsel was his Honour's comments regarding the ability of a solicitor to assess a person's capacity and the weight to be given to that assessment where the evidence does not disclose the basis upon which that view is formed.
Ken's Senior Counsel had earlier objected to the tender on the bases that the file notes were not admissible as business records, had questionable relevance and would unfairly prejudice Ken if they were admitted in circumstances where the affidavits filed on behalf of Sonia had not been read and no notice had been given as to how the file notes were to be used.
As to the first point raised by Ken's Senior Counsel, I am satisfied that the file notes are business records for the purposes of s 69 of the Evidence Act. They were produced in response to a call for the notes taken by Ms Kolokossian during her attendances on Sonia and Loris, form part of the records of Keypoint Law's business and, based on their dates and contents, were prepared in connection with providing advice regarding the preparation of new wills for Sonia and Loris. They were not produced for the purposes of conducting, in contemplation of or in connection with an Australian proceeding: Evidence Act, ss 69(2)(b), 69(3)(a).
However, I have concluded that the file notes should not be admitted on relevance grounds.
Given their subject matter and timing, the file notes do not seem to me to be probative of whether Loris and Sonia freely and independently decided to pass and sign the impugned documents or whether they did so because they were unconscientiously taking advantage of. There is no challenge in this case to Loris and Sonia's capacity per se or to the new wills, and Counsel for Kanjian Holdings and the siblings accepted that the file notes did not, of themselves, prove that Sonia and Loris were not being subjected to undue influence at the time. Nor was any submission advanced that a particular aspect of or statement recorded in the files notes is relevant to or probative of the issues in dispute.

[54]

Loris

Ken submits that much of Loris' affidavit and oral evidence is highly unreliable which may be due to his advanced years or undue influence or a combination of both. For Loris, it is accepted that aspects of his evidence may have been coloured by his current feelings that Ken cannot be trusted. It is submitted that the Court should assess his evidence, particularly about past events, against the objective evidence.
Due to his age and health, Loris gave evidence for limited periods of around one to two hours over six days. Initially, he gave evidence in person with the aid of a hearing loop. When the hearing resumed and COVID restrictions were in place, Loris gave evidence from the Bupa nursing home by audio-visual link and, due to technology issues, by telephone. An Armenian interpreter was present in person or on the telephone during this part of Loris' evidence to relay questions to Loris in English and, if needed, repeat them in Armenian, and to assist him with the ten-volume court book.
While English is not Loris' first language, my impression is that this did not affect his evidence, although his advanced years and what Professor Peisah describes as "mild patchy deficits in memory" and "subtle cognitive deficits" likely impacted his recall.
Loris answered some questions clearly, had good recall about some matters and was emphatic in his evidence on certain topics, such as his evidence in cross-examination about his and Sonia's decision to appoint Philip and Victor as directors of Kanjian Holdings (T683.43-T684.8, T686.26-42, T689.9-25, T691.27-9). However, there were inconsistencies in and aspects of his evidence that reflected a lack of recall, confusion and misunderstanding of matters. Examples of this are: Loris' evidence regarding his contribution to the purchase of the Northbridge properties from his father's inheritance who had not yet died (at [63]); his oral evidence to the effect that he had not read a part of Ken's affidavit (dated 12 July 2018 at [198]) despite the fact that his own affidavit (dated 21 June 2019 at [8(aa)]) responded to parts of Ken's affidavit (T323.18-37); his evidence that the appointment of the Receivers to Sahab Holdings was independent of him and he had nothing to do with it - the Court record identifies the application was made by Loris (T696.49-T697.16); and his lack of clarity around who had started these proceedings - he gave evidence that it was Ken, not Kanjian Holdings, that commenced the proceedings and that was why he cut Ken off (T40.49-T41.4, T42.48-T43.14).
His initial affidavit evidence that at no time was he and Sonia consulted about the details of the Senses AFL (see [405]) stands in opposition to his later affidavit and oral evidence accepting that they were (T61.26-T63.44). Loris' affidavit evidence was that he did not read or understand his 2014 Will (at [131]-[132]) yet he accepted during cross-examination that particular provisions made in that will reflected his wishes at the time, including in relation to the Bondi property (T389.21-49, T391.38-40), subsequently denied this (T395.45-T396.2) and also gave evidence that he did not understand what was in the document (T391.42-T392.45).
Ken submitted that Loris was unresponsive when, on the second day of the hearing, he was asked about whether he had a disagreement with Victor the night before (T89.28-50). I am not persuaded by that submission. In my view, Loris adequately responded to that questioning, as did Victor when it was put to him in cross-examination (T812.46-T813.40). Although Loris' temperament on the second day of the hearing appeared different to that of the first, I consider that this is likely due to Loris feeling unwell, as he said at the time, and his general desire not to be involved in Court proceedings. To the extent the submission is made to suggest some undue influence or coaching of Loris, I reject it.
That said, I accept that Loris was inconsistent in his approach to questioning about the translated transcript. He described it as a "fabrication" when questioned about parts relating to the siblings' conduct despite answering questions about it without hesitation the previous day (T88.41-T89.21, T91.5-30, T92.16-23).
Loris gave evidence candidly and passionately at times, particularly about his children. He accepted that Philip had caused trouble, challenged Ken, been rude and yelled at Loris and Sonia on many occasions in 2013 and told Loris that he didn't trust Ken (T27.19-45) and that the siblings had told him that Ken had stopped money coming out of his accounts (T84.19-22). He also acknowledged that Ken had been a "model son" over many years who had treated him and Sonia with respect and usually explained things to them (T22.10-1).
However, Loris had a propensity for evading questions the answers to which might have reflected negatively on the siblings and, on occasion, was visibly distressed or said he was feeing unwell when pressed on those issues, which the Court sought to accommodate. See, for example, the exchanges when Loris was asked whether he thought Ken had stolen from him (T85.9-T86.21), about Marianne taking $400,000 from the Sahab Holdings accounts (T74.35-T76.17) and whether the siblings had told him that Ken was stealing from him and Sonia (T702.5-T703.29). At times, Loris' emotional responses during cross-examination also reflected the extent to which his belief that he is a "bankrupt person" because of Ken may have coloured his perception of past events (T321.5-322.43).
Loris also sought to diffuse criticism of the siblings and made clear his current feelings about Ken during cross-examination. He described the siblings as "wonderful people" (T84.17), Victor a "fine human being" (T89.35) and asserted that Marianne had been supporting him financially "all along" (T74.7-10). He also explained that he could not put the blame on them because "Ken has broke me" (T82.37-47) and asserted that Ken had also said "a lot of bad things about us" (T703.11-12). Loris described Ken as "not a good son", referred to Ken's "shameful and deceitful attitude", agreed that Ken had stolen from Loris, blamed Ken for not seeing any income from the Northbridge Village or the Bondi property (T83.1-17, T84.37-T85.13), and said he had taken money away from him and caused him to be bankrupt (T321.33-4).
Overall, I accept that Loris' evidence was honestly given based on his current recollections and what he believes, which is that Ken has done wrong by Loris and Sonia and can no longer be trusted. However, Loris' strongly held belief is based, in part, on a mistaken view that Ken has stolen money from him. That belief together with his lack of recall has, in my opinion, likely led to parts of Loris' evidence being affected by that view and hindsight rather than being based on actual recollection and leads me to conclude that parts of Loris' evidence, particularly as it relates to years past, is unreliable unless it is corroborated by other evidence and is consistent with the apparent logic of events.

[55]

Ken

Kanjian Holdings and the siblings submit that Ken was an unreliable witness whose evidence was tainted by self-interest.
Loris' submissions, which also contend that aspects of Ken's evidence should not be accepted because it is coloured by self-interest and advocacy, focus on Ken's evidence relating to specific conversations that are critical to the issues in the Equity proceedings. I set out my reasons for why I preferred Ken's evidence to Loris' later in these reasons.
For Ken, it is submitted that his evidence was not skewed by self-interest but is motivated, in the main, by his desire to protect his parents and the proper management of the family assets. It is submitted that Ken was clear and direct with his answers in cross-examination and did not contradict his affidavit evidence.
In general, I found Ken to be an honest and, in many respects, reliable witness. His answers in cross-examination were mostly clear and direct although he did, on occasion, stray into argument and submission, similar to some parts of his lengthy affidavit evidence. Ken had a good recall of details regarding the events in issue, although he acknowledged, appropriately, that his recollection from 1984, 1986 and 1987 was "far from perfect" (T435.21-5)
There are aspects of Ken's evidence which do not support his position that his evidence is not impacted by any self-interest. It is apparent from his evidence that Ken was and continues to be concerned about the conduct of the siblings in making Loris and Sonia sign documents because they were being used to "attack" Ken, they were seeking to displace his role within the family and to bring proceedings against him: see for example, his conversation with Sonia on 27 November 2017, the translated transcript and his evidence in cross-examination about the siblings knowing their place and role within the family (T613.25-34 and T614.33-37).
Ken's explanation in cross-examination that his affidavit evidence about Loris' role in managing the Northbridge properties was "correct" but may not be "complete" or "comprehensive" and involved a "degree of understatement" that was not deliberate as it "essentially" set out Loris' involvement seemed to me to be "splitting hairs" (contrary to Ken's contention) (T466.42-T467.24). This suggests that Ken's evidence on the issue was overstated.
For the siblings, it is submitted that Ken's credibility, and that of Annie, suffers because Ken gave evidence that he read Annie's affidavit in these proceedings before it was filed (T621.10-28). On that issue, I make no adverse credit finding against Ken or Annie. While it is somewhat surprising that an experienced solicitor and witness considered it was not imprudent to do so, I do not understand Ken or Annie's evidence to indicate that they conferred about the details of their evidence in a way that gave rise to a risk that their evidence was tainted: Day v Perisher Blue Pty Limited (2005) 62 NSWLR 731; [2005] NSWCA 110 at [30].
There is also the issue of the weight to be placed on Ken's file notes Ken submits that a comparison of his 21 April 2018 file note to the translated transcript indicates that his note is an accurate record of the meeting free of reconstruction, embellishment and obvious inaccuracies.
I accept that Ken's file notes are generally reliable contemporaneous records of what Sonia and Loris said to Ken at the time. The comparison between the translated transcript and his file note of 21 April 2018 supports that conclusion. However, I do approach Ken's file notes with some care. This is primarily because of what is apparent from the translated transcript but absent from Ken's file note of the 21 April meeting, such as the "emotive tone" of the conversation and the degree of informality and lack of clarity in Loris and Sonia's language. The transcript also records matters which are not captured by Ken's file note of 21 April, such as the following: statements made by Ken and Annie that indicate Loris asked Ken to give him more time before signing the documents which Ken refused (38.56-39.10, 42.55-44.12); Ken's concern to have Loris sign the documents to avoid the siblings attacking Ken by suing him (37.55-38.18, 42.12-42.34, 43.41-44.12); and Annie's statements that the siblings had stolen Loris' and Sonia's money (42.55-43.40).
By raising these matters, I do not intend to suggest in any way that Ken's file notes have been purposefully embellished or created in a tactical way. Rather, it is simply to recognise that each of Ken's file notes present part of a picture, need to be considered together with the other available evidence and are unlikely to accurately record all the words said by Loris. In sum, I accept Ken's file notes as generally reliable records of what Sonia and Loris said to Ken at each relevant time.
Where there is a conflict between Ken and Loris' evidence, I have usually preferred Ken's evidence of what was said where his evidence is corroborated by the contents of his file notes and the objective facts at the time.

[57]

Philip

I did not find Philip frank in giving his evidence about Sonia's appointment of him as her attorney in October 2017. His answers about why new lawyers were arranged were implausible (see, for example, T942.25-31 and T943.30-3) and led me to reject his evidence on that issue, which I detail later in these reasons.
Philip was evasive when asked about whether he had ever told Loris that Ken had misappropriated money. He avoided answering a direct question by asking a question in response, denied that he said what was put to him and then seemed to acknowledge that he had by referring to "no other misappropriation" apart from his concern with the Bondi property (T949.49-T950.23). I concluded that it was likely that he had told that Loris something to that effect.
Similarly, he was evasive when asked whether it would be a lie to say to Ms Kolokossian that Ken had physically abused Sonia. He did not answer directly, asked for the question to be repeated more than once, and explained why he took so long to answer as he "wanted to be sure" that he "gave the right answer" to what was seemingly a simply question (T962.42-T963.35). That said, I make no finding that Philip said those words to Ms Kolokossian.
Philip was also not frank when asked about statements made about Ken in his emails to Mr Rumore. For example, during cross-examination about his email dated 6 July 2017, he sought to justify statements attributed to Ken that had not been made by him and other references before accepting he had "gone overboard", although Philip did not accept that they might have been wrong (T969.12-T971.36). I have concluded that many of the statements made by Philip in his emails to Mr Rumore about Ken were untruthful and unsustainable assertions.
Ken made submissions about Philip's evidence concerning the appointment of the siblings as directors of Kanjian Holdings, which he submits involved the creation of a false minute, and his evidence regarding the membership of the Vasir Superannuation Fund. For the reasons set out later, I have not rejected all of Philip's evidence on the issue of the siblings' appointment as directors as I considered it was corroborated by other evidence.
Ken also submits that information provided by Philip to Ms Evans that was included in her affidavit in support of the application for the appointment of Receivers to Sahab Holdings was misleading because it failed to disclose that Sahab Holdings' distributions had ceased due to Marianne's removal of the available cash in the accounts without Ken's consent, which was to Philip's knowledge. Philip's evidence on that aspect was not convincing; he seemed to avoid answering direct questions again (T977.16-42). However, I make no finding that he was involved in misleading the Court.

[58]

Marianne

Marianne came across as argumentative at times and, like Philip, was not always frank. Her explanations about some of the documents put to her were not convincing.
For example, Marianne was not frank when giving evidence about the change of passwords on Sahab Holdings' bank accounts. She avoided accepting what was clear from her 6 July email to Mr Rumore, which is that she had not been open with Ken about why the passwords were changed (TT819.47-T820.40, T821.14-T823.27). As Ken submits, she sought to deny what was obvious which generates doubt about other aspects of her evidence.
Marianne also gave new evidence during cross-examination, on occasion, on issues that she should have dealt with in her affidavit evidence. An example of this was her evidence regarding the signing of Loris and Sonia's wills to the effect that Sonia said she didn't trust Ken and that Ken did not explain the wills to them at the time (T830.33-T831.8). I do not accept that evidence and have not relied on it. There is no evidence from that period to suggest that Sonia did not trust Ken at the time.
Marianne also tended to volunteer information in response to questions that painted Ken in a negative light even though the question did not require that response. See for example, her evidence at [200].
Marianne's evidence that Loris called the police on 21 April 2018 was also not convincing given the police record named her as the informant (T835.19-23, T838.20-36). I am satisfied that Marianne called the police and not Loris.
Marianne's insistence that Ken was "pocketing money" for his own benefit to the detriment of Loris and Sonia (T872.24-T873.23) was also unsupported by any evidence. This and other aspects of her evidence have led me to conclude that she was not truthful about Ken in her emails to Mr Rumore and was likely saying things to Loris and Sonia about Ken that were also inaccurate.
I make no finding that Marianne was concocting stories, as Ken's submissions suggested. However, I have placed little weight on much on her evidence, particularly where it is not corroborated by documents or other witnesses.

[59]

Victor

While allowing for occasions when he genuinely seemed not to understand the questions that were put to him, overall, Victor was not a compelling witness.
There were occasions when he sought to minimise evidence that reflected badly on the other siblings, particularly Philip, and gave new evidence on matters that reflected badly on Ken. For example, he sought to justify his January text message (at [153]) by reference to the indemnity that Ken was seeking from Philip (T730.1-16), which indemnity letter had been sent after Victor's text. Victor also proffered that he had signed the indemnity in favour of Ken "under duress" (T730.13), something that was not referred to in his affidavit evidence. He later sought to explain his text as a "poor choice of words" and a "total exaggeration" (T744.16-38). I place more weight on Victor's text message than his oral evidence.
Victor maintained that he had not looked at the text message before making his affidavit, although his affidavit referred to the text (T734.20-T735.44). He also maintained that he had not read Ken's affidavit before swearing his own, even though his affidavit was responsive to Ken's (T773.23-41). His explanations for this inconsistency included attributing it to his solicitor, that he was "just not on top of things" or his "memory had failed" on him were not convincing (T774.15-T776.2).
Victor refused to agree that Philip's behaviour towards him was aggressive, despite accepting evidence that Ken had recounted an incident in which Philip had shouted at Victor and described Philip as being "out of control" (T742.9-T743.7). Victor also did not accept that Philip said things to Loris and Sonia about Ken that were not complimentary despite accepting that Philip had said to Sonia and Loris that Ken was "ruthless and brutal" to family members (T747.44-T748.2).
I accept Victor's evidence that he did not tell Ms Kolokossian that Ken had physically abused and threatened Sonia. However, he was evasive in cross-examination when asked about whether he would have expected to have been told by Philip or Marianne if Ken had physically abused Sonia in September 2017. He seemed to have difficulty answering the question directly, referred to the time when the police were called in 2018 and could not initially accept that such an allegation would be an utter fabrication. Victor then agreed that Ken would never physically abuse Sonia and became quite emotional, asserting that, while having major problems, it was not in their nature to hit or abuse people (T801.13-T802.43).

[60]

Issues for determination

Kanjian Holdings' claims for relief in the Corporations proceedings have fallen away. It does not seek the production of any further documents or relief in relation to Ken's alleged contraventions of the Corporations Act (Submissions in Response of Kanjian Holdings and the siblings (KHS) at [7], T1187.26-37).
The issues for determination arise out of Ken's ASFCC, the denial of those claims by Kanjian Holdings, the siblings and Loris, and Ken's claim that Victor and Philip's appointment as directors of Kanjian Holdings is invalid. The issues for determination, as agreed between the parties, can be summarised as follows: 1. Was there a meeting of directors of Kanjian Holdings on 27 August 2017 and a resolution passed by Loris and Sonia as directors of Kanjian Holdings to appoint the siblings as directors? 2. Is the issue in (a) within the pleadings and, if not, was an amendment required or should the issue be determined as part of the course of trial? 3. If there was a meeting and resolution passed on 27 August 2017 to appoint the siblings as directors of Kanjian Holdings, whether the resolution is void or voidable because Loris and Sonia lacked capacity or were induced to pass the resolution (and Loris was induced to sign the minutes) by dishonesty, undue influence or unconscionable conduct by the siblings: ASFCC at [35]-[37]. 4. Whether 1. Sonia's 2017 Revocation and Power of Attorney and Loris' 2018 Revocation and Power of Attorney should be declared invalid pursuant to ss 36(3A) and 36(3) of the Powers of Attorney Act 2003 (NSW) for their lack of capacity or as a result of the siblings' dishonesty, undue influence or unconscionable conduct; [2] and 2. Loris' 2018 Revocation of Guardianship should be declared invalid for his lack of capacity or as a result of the siblings' dishonesty, undue influence or unconscionable conduct : ASFCC at [18] and [28]. 1. Whether the 18 April 2018 Resolution, the 11 May Authorities and the 11 May Bondi Direction are invalid or should be set aside because Loris and Sonia lacked capacity or because they were induced to sign by dishonesty, undue influence or unconscionable conduct by the siblings: ASFCC at [29]-[34] and [40]-[41].
As is apparent, issue (b) raises a question about whether a matter arises on the pleadings or should be dealt with as part of the trial. I deal with that issue first. I deal with issues (c), (d) and (e) together as they all concern claims of lack of capacity, undue influence, dishonesty and unconscionable conduct (Undue influence related issues).

[61]

Is the issue of whether there was a meeting of directors and resolution passed raised by the pleadings and, if not, was an amendment required or should the issue be determined as part of the course of trial?

This issue arises in the context where Ken's primary submission is that, on the evidence, there was no meeting of directors of Kanjian Holdings on 27 August 2017 and no resolution appointing the siblings as directors (Ken's Closing Submissions at [3.2] and [3.3]).
Ken contends that, if there was no meeting and resolution, the demand for Kanjian Holdings' documents which triggered the commencement of the Corporations proceedings was not authorised by Kanjian Holdings because the 18 April Resolution authorising that demand was vitiated by the presence of Philip and Victor who were not directors. Ken says the effect of this is that the Corporations proceedings should never have been commenced and should be dismissed, with the siblings being ordered to pay the costs of the proceedings incurred by Ken, Kanjian Holdings and Loris (Ken's Closing Submissions at [3.4] and [3.5]).
Ken submits that the issue of whether there was a meeting of directors and resolution passed appointing the siblings as directors on 27 August 2017 (no meeting issue) is raised by the existing pleadings and, even if it is not, the issue arose during the course of the trial and should now be determined by the Court in his favour.
Ken submits that his Defence to Kanjian Holdings' Statement of Claim puts into issue the validity of the appointment of Victor and Philip as directors without limitation as to the relevant grounds, which he says is sufficient to raise on the pleadings whether there was, in fact, a meeting and resolution passed. He also submits that his ASFCC, which pleads that Loris and Sonia purported to pass the resolution, puts into issue whether there was, in fact, a resolution passed on 27 August 2017 as the ordinary meaning of the word "purport" is "to appear to do something especially falsely".
As to the no meeting issue arising during the course of the trial, Ken refers to the affidavit evidence filed by the parties and the cross-examination of Loris and the siblings to the effect that the meeting never occurred or the conversations said to support the resolution never happened, to which no objection was taken.
Kanjian Holdings and the siblings submit that, on any objective reading, Ken's pleaded case seeks to set aside the appointment of the siblings as directors of Kanjian Holdings on capacity and grounds related to undue influence. They submit that a challenge to the siblings' appointment as directors on the basis that there had been no meeting or resolution involves an allegation that the document recording the resolution was a falsity, which was required to be, but was not, pleaded (T1078.4-31): Uniform Civil Procedure Rules 2005 (NSW) (UCPR), rr 14.14(3), 15.3.
Kanjian Holdings and the siblings also submit that they would be prejudiced if Ken was permitted to advance the no meeting issue as they prepared to and have met the pleaded case. It is said that, if it had been put squarely that no meeting took place as a matter of fact, they could have sought relief under s 1322 of the Corporations Act, referring to Preston v Diaspora Holdings Pty Ltd; Diaspora Holdings Pty Ltd v Owners Corporation of Strata Plan 68608 [2019] NSWSC 651 at [148]ff.
In the ASFCC, Ken pleads that: 1. on or about 27 August 2017, Loris and Sonia as directors of Kanjian Holdings purported to pass a resolution appointing each of the siblings as directors of Kanjian Holdings: at [35]; 2. by virtue of the matters pleaded in paragraphs [13], [14], [21], [22] and [25] of the ASFCC, the purported resolution appointing each of the siblings as directors of Kanjian Holdings was passed in circumstances where: 1. Loris and Sonia did not have the required capacity: at [36(a)] and [36(b)]; 2. Loris and Sonia were induced to pass the purported resolution by dishonesty, undue influence or unconscionable conduct: at [36(c)] and [36(d)]; and 3. Loris was induced to sign the minutes evidencing the purported resolution by dishonesty, undue influence or unconscionable conduct: at [36(e)]; and 1. in the premises, the purported resolution appointing the siblings as directors of Kanjian Holdings is void and to no effect or, in the alternative, should be rescinded and the appointment of Victor and Philip should be set aside: at [37].
I accept the submission of Kanjian Holdings and the siblings that the no meeting issue does not arise on Ken's case as pleaded in the ASFCC.
The ASFCC pleads that Sonia and Loris "purported" to do something on a particular day, namely pass a resolution appointing the siblings as directors of Kanjian Holdings. That allegation is admitted by the defences filed by Kanjian Holdings, the siblings and Loris. It is then pleaded that the purported resolution "was passed" in vitiating circumstances and, in those premises, the purported resolution that "was passed" is of no legal effect and should be set aside. Those allegations are denied.
In my view, the issues raised by those pleadings are whether the resolution appointing the siblings as directors that was passed on or about 27 August 2017 should be set aside for reasons of Sonia and Loris' lack of capacity or because Loris and Sonia were induced to pass the resolution by the dishonesty, undue influence or unconscionable conduct on the part of the siblings. In other words, whether the resolution appears to be something it is not and liable to be set aside, namely a purported resolution, is determined by the issue of whether the pleaded vitiating circumstances existed. The pleadings do no raise as an issue for determination whether the resolution that was passed was false for the reason there was no meeting of directors and no resolution passed at all.
In its Statement of Claim (SOC), Kanjian Holdings pleads that Ken is the brother of Victor and Philip, who were each appointed directors of Kanjian Holdings on 28 August 2017 and that Kanjian Holdings made demands upon Ken to deliver up its business records by letter dated 20 April 2018 from Uther Webster & Evans and by the originating process: SOC at [2(d)] and [6].
In his Defence to the SOC, Ken: 1. admits that Victor and Philip have been recorded in ASIC records as directors of Kanjian Holdings since on or about 28 August 2017 and says that their appointment as directors of Kanjian Holdings is invalid or otherwise liable to be set aside: at [2(d)]; and 2. admits that Uther Webster & Evans sent a letter to McMahon's lawyers dated 20 April 2018 but otherwise does not admit that Kanjian Holdings has made demands upon Ken and Walker Wayland that they deliver up Kanjian Holdings' business records: at [6].
That pleading puts into issue the appointment of Victor and Philip as directors of Kanjian Holdings. Unlike the ASFCC, it does not identify the grounds on which Ken claims the appointment is invalid or liable to be set aside. Nor does it expressly plead that the appointment of Philip and Victor as directors is invalid or is liable to be set aside because there was, in fact, no meeting on 27 August 2017 or resolution passed appointing them as directors.
The word "invalid" has been held to mean "void and unenforceable" and "without legal force": Kooma Aboriginal Corp for Land v Goolburri Regional Council of the Aboriginal & Torres Strait Islander Commission [1999] FCA 82 at [32], citing Brooks v Burns Philp Trustee Company Ltd (1969) 121 CLR 432 at 458; [1969] HCA 4. In this case, invalid means that Ken claims that Victor and Philip's appointment as directors has no force or legal effect but he does not identify whether the invalidity is because of an irregularity, illegality, some other vitiating factor or because the appointment did not occur at all.
As the Court of Appeal observed in Heperu v Belle (2009) 76 NSWLR 230; [2009] NSWCA 252 at [7]: .. the legitimate scope of a pleading takes its content not merely from the textual meaning of the words used by the pleader, but also from the context of how the case was conducted at the trial. Thus, final conclusions about the legitimate reach of the case as pleaded can only be made after any relevant aspect of the conduct of the hearing is examined
The Court also has a discretion as to whether to allow a party to depart from the case as pleaded. In exercising that discretion, it is relevant to consider whether the parties have acquiesced in the widening of a pleaded case. They may do so by failing to object to evidence that raises fresh issues, with the case then being determined on the evidence and not the pleadings, or adopting a course from which it can be inferred that they have chosen a different basis to the pleaded issues for the determination of the rights and liabilities: Mummery v Irvings Pty Ltd (1956) 96 CLR 99 at 112; [1956] HCA 45; Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd [2008] NSWCA 206 at [424]-[428].
As to how the case was conducted, Ken's affidavit evidence (12 July 2018 at [96] and [128]) includes a denial that the siblings were validly appointed as directors (consistent with the Defence), denies the authenticity of the minutes and deposes to a conversation with Loris on 30 August 2017 which might suggest that Ken would be contending that the meeting on 27 August did not occur or that there was no resolution passed on that day. The evidence served by Loris and the siblings in response deals with the alleged meeting and resolution appointing the siblings as directors of Kanjian Holdings on 27 August 2017.
Ken's opening outline of submissions received on 20 March 2020 referred to the remaining issues for determination in the Corporations proceedings as arising from the ASFCC and made no reference to his Defence to the SOC. Relevantly, Ken's only claim in relation to the appointment of Philip and Victor as directors of Kanjian Holdings was described as Loris having been subjected to undue influence and/or unconscionable conduct by the siblings resulting in the appointment of Victor and Philip as directors of Kanjian Holdings (at [22]). His submissions made no reference to a challenge to the occurrence of the meeting, whether the resolution was sought to be passed or the authenticity of the minutes.
Similarly, the list of issues agreed between the parties dated 20 March 2020 identified the only issue for determination in relation to the appointment of the siblings as directors as being whether, for the reasons that Loris and Sonia lacked capacity and/or were induced to sign the minutes of by dishonesty, undue influence or unconscionable conduct by the siblings, a resolution passed on 27 August 2017 by Loris and Sonia qua directors of Kanjian Holdings to appoint the siblings as directors is void or voidable, by reference to ASFCC at [35]-[37].
In the context of the pleadings, opening submissions and agreed issues, I do not think it could be said that the references in the affidavit evidence were sufficiently clear to disclose that the no meeting issue was considered by Ken to be raised by the pleadings or would be pursued by him as an issue at trial. This is particularly as the evidence of the parties was relevant to the issue of whether the siblings' appointment should be set aside for undue influence related reasons.
There is no doubt that questions were asked during cross-examination about the existence of the resolution. In particular, Philip and Loris were questioned at some length about whether Loris and Sonia held a meeting at the Castle Cove property on 27 August 2017, whether they passed a resolution appointing the siblings as directors and about the veracity of the minutes created by Philip. No objection was taken to that cross-examination. That said, the cross-examination was also relevant to the issue of credit, as well as whether the siblings' appointment should be set aside for undue influence related reasons.
The no meeting issue was the subject of debate on 8 April 2020 during a discussion initiated by the Court about what issues remained in dispute by reference to the parties' agreed list of issues. Ken's Senior Counsel referred to "one other thing" in issue, namely whether or not there was in fact any resolution at all on 27 August 2017 for the appointment of directors (T1015.8-10). At the time, he submitted that the no meeting issue arose on the pleadings, in the evidence and in cross-examination, and also said they would apply to amend if an amendment was required (T1015.7-41)
In response, Loris' Senior Counsel submitted that the no meeting issue should be the subject of an amended pleading. He contended that other witnesses might have been called if the issue had been raised, it was a matter where sections of the Corporations Act could have been enlivened and that it was not as simple as saying that it was raised in the course of cross-examination (T1015.47-T1016.8). The Court also observed that the issue did not appear to arise on Ken's pleaded case and asked the parties to provide a revised list of issues prior to closing submissions.
The parties provided a revised list of issues before oral closing submissions that included, as new issues, whether there was a meeting and a resolution passed on 27 August 2017 and whether that issue was raised by the pleadings, required an amendment or arose during the course of the trial.
Ken presented closing submissions as to why the no meeting issue arose on the pleadings or should be determined as part of the trial, as well as detailed written submissions on the substantive issue of whether there was, in fact, a meeting and resolution by reference to the evidence. In contrast, Kanjian Holdings and the siblings limited their submissions (written and oral) to whether the no meeting issue arose on the pleadings and should be determined. They did not respond to the merits of whether there was, in fact, a meeting and resolution based on the evidence as they maintained that it was not necessary to do so as the issue did not arise. Loris adopted the submissions of Kanjian Holdings and the siblings.
Defendants and cross-claimants have an obligation to raise matters that otherwise may take other parties by surprise and plead and give particulars of any fraud, misrepresentation, breach of trust, wilful or undue influence on which a party relies: UCPR, rr 14.14, 15.3. They are also obliged to draw the attention of the Court and the parties to the real issues in the case: Civil Procedure Act 2005 (NSW), s 56.
Ken's allegations that the 27 August meeting did not take place and a resolution was not passed raise matters of fact that are, in my view, material to a defence that Philip and Victor's appointment as directors is invalid and a cross-claim that seeks that the resolution be rescinded and the appointments be set aside. They are also factual matters about which Ken seems to accept he was aware of, and wished to contend, well prior to the hearing.
To my mind, an allegation that there was no meeting or resolution at all also invokes claims of dishonesty and misrepresentation. This is especially where it is coupled with an allegation made by Ken that the minutes of the meeting of directors is a false document and submissions that the Court should find that Philip and Victor knew there had not been a resolution appointing them as directors and dishonestly represented to Sonia and Loris they were entitled to be at the meeting on 18 April 2018: Ken's Closing Submissions at [3.17] and [3.50].
In essence, what Ken now seeks to allege are matters which he says the siblings, and Loris, must have known to be untrue, which matters he did not plead or particularise or refer to in submissions or as an issue in advance of the trial.
When considered in the context of how the case was conducted, the textual meaning of the words used and Ken's obligations under the UCPR and the Civil Procedure Act, I am not persuaded that the no meeting issue arises on the pleadings.
Consistently with his obligations, Ken should have pleaded expressly any part of his case that relied on there being no meeting or resolution at all to avoid surprise and because the allegations are based on elements of dishonesty. At the least, the issue should have been squarely raised in submissions in advance of the trial and the evidence being led.
The parties presented their cases and contested the issues in the Corporations proceedings on the bases of the claims advanced by Ken in the ASFCC and by reference to an agreed list of issues. While the no meeting issue arose during cross-examination, I do not consider that Kanjian Holdings, the siblings or Loris agreed to or acquiesced in the case being widened in that respect. To the contrary, when it was raised as "one other thing" in issue after the evidence was complete, Ken was on notice that an amendment was considered to be necessary. The same point was made by Counsel for Kanjian Holdings and the siblings during oral closing submissions. No amendment application was made.
As Kanjian Holdings and the siblings submitted, conceptually and legally, a claim that a purported resolution is invalid because of factors that vitiate the capacity of the individuals who had the power to hold a meeting and pass the resolution is very different to alleging the resolution is a fiction because there was no meeting or resolution passed at all.
Had the no meeting issue been properly pleaded or raised as an issue in advance of the trial, Kanjian Holdings, the siblings and Loris may have conducted their cases in a different way. They may have sought relief under s 1322 of the Corporations Act on the basis of a procedural irregularity because, for example, the meeting was held and a resolution was passed on a different day, or presented their evidence differently. To allow the issue to be advanced now may cause them prejudice.
For these reasons, I have concluded that the answer to the preliminary issue is as follows: the no meeting issue is not within the pleadings; an amendment was required; and the no meeting issue should not be determined as part of the course of trial.

[62]

Was there a meeting of directors of Kanjian Holdings on 27 August 2017 and a resolution passed by Loris and Sonia as directors of Kanjian Holdings to appoint the siblings as directors?

As it is the subject of Ken's submissions and in case I am wrong about the preliminary issue, I set out my views on the issue of whether there was a meeting of directors and resolution on 27 August 2017 appointing the siblings as directors of Kanjian Holdings. In doing so, I note that Kanjian Holdings and the siblings did not advance submissions on this issue as they and Loris adopted the position that it did not arise on the pleadings.
Ken submits that, on the evidence, there was no meeting of directors or resolution of Kanjian Holdings on 27 August 2017 or at any other time. He points to inconsistencies in documents and between the oral evidence of Loris and the siblings to contend that the 27 August Minutes is a false document and the meeting was a fiction. Ken also alleges that the real impetus for the appointment of the siblings was Philip's desire to enable the siblings to gain control of Kanjian Holdings, demand documents and bring proceedings against Ken.
The first matter raised by Ken concerns the 27 August Minutes. He submits that it is a false document because it includes an incorrect statement that the minutes of the previous meeting of directors were read and confirmed. Ken refers to Philip's acceptance in cross-examination that there were no previous minutes, which Ken says Philip knew at the time he prepared the 27 August Minutes (T907.26-40, T908.1-6). Ken also submits that Loris' failure to raise this discrepancy with Philip reflects a lack of familiarity with the minutes on the part of Loris and is inconsistent with Philip's evidence that he explained the 27 August Minutes to Loris.
The reference to reading and confirming previous minutes that did not exist is irregular, although I am not persuaded it has the significance for which Ken contends. Philip's explanation in cross-examination to the effect that the statement was an "oversight" and based on a "generic report" which he used for "other clients" (T908.20-3) is plausible in my view.
Nor do I consider that Loris' failure to ask about the statement contradicts Philip's evidence that he explained the resolution contained in the 27 August Minutes to Loris. As Philip said, "it wasn't questioned. It's obviously an oversight … the purpose of this minute is to confirm the director's meeting that the three of us were to become directors" (T908.48-50). In any event, I am not persuaded that an inaccurate statement regarding past minutes is indicative of the 27 August Minutes being a falsity or negates the occurrence of the meeting or resolution recorded in them.
I take a similar view in relation to Ken's reliance on the inconsistency in the Form 484, which refers to the appointment of the siblings as directors on 28 August 2017 rather than on 27 August 2017. While Philip's only explanation in cross-examination was that "maybe the consent to act as directors was done that day" (T914.30-34) was incorrect - the consents are dated 30 August 2017 - the Form 484 quite possibly just included an incorrect date.
The next matter raised by Ken are the conclusions to be drawn from the creation of the 28 August direction (requiring Ken to produce Kanjian Holdings' documents) which refers to Sonia and Loris acting as directors for Kanjian Holdings and is signed by each of them in that capacity. Ken submits that the 28 August direction is inconsistent with the resolution recorded in the 27 August Minutes that appointed the siblings as directors from the conclusion of the meeting, as the 28 August direction proceeds on the basis that, at that date, the only directors of Kanjian Holdings were Loris and Sonia.
That submission has some force. Philip's explanation in cross-examination that the inconsistency arose because Loris and Sonia were the only registered directors with ASIC at that time was unconvincing, given he later acknowledged that the siblings' appointments were effective in accordance with the 27 August Resolution whether they had been reported to ASIC or not (T910.23-T911.26).
In cross-examination, Loris was also asked about the 28 August direction and challenged on the meeting the previous day. Loris had "no answer" to the discrepancy, responded that the question was "too technical", maintained that the siblings were appointed directors (consistent with his earlier evidence in cross-examination) and rejected that his evidence was not true (T692.49-T694.6).
The fourth matter raised by Ken is his evidence of the conversation with Loris on 30 August 2017 as referred to at [252]-[254] and recorded in his file note, which I accept is a generally reliable record of what Loris said to Ken. Ken's file note records that Loris said that Philip and Aline visited him the day before and presented him with papers concerning Cremorne, one of which was a resolution appointing the siblings as directors "of Cremorne" alongside Loris and Sonia.
Ken submits that the effect of this evidence is that Loris was first made aware of the siblings' appointment when Philip presented him with the papers to sign, which is also inconsistent with the suggestion that the idea of their appointment came from Loris and Sonia. I disagree. In my view, on a fair reading of Loris' words, it is open to construe them as telling Ken that Loris had signed papers that included a resolution appointing the siblings as directors for the Cremorne property, which is not inconsistent with Loris having previously agreed to appoint them and signing papers to record the resolution on a later day.
Ken submits that Loris' evidence when first asked about the 27 August Minutes in cross-examination is also consistent with Ken's interpretation of the file note, namely that it reflects that Loris knew nothing about the appointment of the siblings as directors until he signed the resolution, referring to the following exchange: Q. This was the document which you thought appointed the siblings as directors, isn't it? A. Exactly. Exactly. Q. You hadn't done anything before you signed this document to appoint the siblings, had you? A. No. No. (T686.16-22)
However, that evidence must be considered in light of the evidence that Loris had previously given in cross-examination and went on to give which explained his position more clearly, which is as follows: Q: Do you recall signing a piece of paper appointing Victor, Philip, and Maryanne directors of Kanjian Holdings? A: Yes, yeah. Q: Do you remember that? A: Can I - Can I ask a ..(not transcribable).. Q: Yes. A: It's quite clear in my mind. I - at one stage, my wife and I decided that the management of the Kanjian estate was - there was no balance and when sort of Ken was doing more, then the other siblings were, you know, left outside. So, Sonia and I decided that we'd give - we'd invite the - Philip, Victor and Maryanne to join in with us as directors and I instructed personally without any pressure - without any pressure. There was no pressure on me to sign that letter to get the ASIC's approval for them to be directors of the Kanjian Holding, which is actually the management of the Cremorne property which was inherited directly from his - her father..(not transcribable)..and so therefore - and - and then it was approved by ASIC and - but then later on, we found out that Maryanne shouldn't be there because it was the - the - the - sorry. Sorry. The directorship was - the..(not transcribable)..the..(not transcribable)..was limited to four people and by Maryanne being as a - as a director..(not transcribable)..so therefore, she resign. She - she - she left, so that's the position. (T683.35-T684.8) Q. Philip came along with this document to you and he asked you to sign it. That's right. A. No. By the way, it's - the way you put it as if there is purpose letter, I signed it. No, we - I called [Philip] in. I said, "Prepare the letter because I - we, Sonia and I have decided you to - to be - to be a - a director of Kanjian Holdings No 1. That was initiated by us, Sonia and I, and I requested to prepare the documents so that I signed it voluntarily. I signed it voluntarily. Q. When did you and Sonia make that decision? A. Pardon? Well, it was - I tell you exactly. That decision was made when we were - was I think a Sunday and we were preparing the - the house ready for sale, the 129 Neerim Road, Castle Cove and - and I had in the morning a bit of discussion with my wife. I said, "What about if we invite the boys to be directors for - you know, that will give them a bit of a boost." She fully agreed. She said, "Fully agree, that's a good idea", and when - about lunch time, Philip came to have a bit of a bite together and I said, "Please, prepare the - a - a letter that we're going to sign and we propose you to be joined with us and to be directors." This is exactly what happened. There was no - no force or pressure put upon us to sign that document. It was - (T686.24-42)
The fifth matter raised by Ken is what he says are the attempts by Loris and the siblings to support the alleged directors meeting on 27 August by reference to a need for the siblings to be able to manage the Cremorne property. In Ken's submission, that need was fanciful as Ken had previously managed the Cremorne property without being a director of Kanjian Holdings. He says that no sensible explanation has been given for the need to appoint the siblings as directors, noting that the siblings had not identified any act they needed to do as directors to manage the Cremorne property. Ken alleges that the motivation for their appointment was the desire to obtain documents, which is evidenced by Kanjian Holdings only having passed one resolution since, being the 18 April Resolution. I am not persuaded by that submission.
In my view, the rationale, perceived need or motive for the siblings' appointment as directors and who first raised the idea are matters that bear on the question of whether the resolution was procured by undue influence, rather than whether the meeting occurred and resolution was passed at all. In that context, I do not consider that Philip's evidence that he considered it a problem that Mr Rumore could not get clear instructions to commence proceedings against Ken (T920.49-T921.5) and his and the other siblings' assertion of their rights as directors of Kanjian Holdings to demand action against Ken is of significance on the issue of whether there was a meeting or resolution passed at all. Similarly, the fact that there has only been one formal resolution of Kanjian Holdings' directors since the siblings were purportedly appointed says nothing about whether Loris and Sonia in fact agreed to appoint the siblings at a meeting on 27 August or some other time.
Ken also raises Philip's failure to advise against the siblings' appointment because of the negative tax consequences for the Vasir Superannuation Fund under the SIS Act as a matter that tends against Loris and Sonia being the instigators of the appointment and, thus, the meeting resolution itself. I accept Ken's submission that Philip's evidence in cross-examination indicates that he did not consider the SIS Act implications at the time of the alleged meeting and did not do so until after the issue had been raised in correspondence by Ken's solicitor. I also accept his submission that Philip's evidence in cross-examination about the SIS Act was unreliable and unconvincing (T918.41-6, T919.1-4). However, to my mind, Philip's failure to recognise and advise on the SIS Act highlights a lack of care and due diligence on his part, rather than proving there was no meeting or resolution passed on 27 August or at any other time.
Further, some of Philip's communications with Mr Rumore tend to support, rather than negate, the existence of the meeting and resolution. His 1 September 2017 email to Mr Rumore (Ex D at 47) refers to Loris and Sonia having authorised the siblings to be directors of Kanjian Holdings "on 27th August 2017". While he refers in another email to Mr Rumore dated 5 September 2017 to the appointment being "effective from 31 August 2017", that reference is qualified by the words "as processed by ASIC" and notes that it is "supported by the minute authorising our appointment".
In his affidavit evidence, Loris deposes that: 1. he took the initiative to appoint the siblings as directors after discussing it with Sonia, who agreed it was a good idea, because he was concerned that Ken was not acting in Loris' interests or disclosing information or documents and he had lost trust in anything Ken did or said; 2. he needed control in the company to be changed because he had been cut off from his income as Ken was not making distributions to him and, for this reason, he was not against a change in directorship; 3. he expressed to Sonia that he thought that giving the siblings management of the Cremorne property by appointing them as directors was "only fair"; and 4. he wanted to give the siblings some input and responsibility as they were not directors of any company in the family at that time.
Loris was cross-examined at some length about the appointment of the siblings as directors of Kanjian Holdings. He maintained that the decision to appoint them was made by him and Sonia and made reference to matters consistent with his evidence at [617(c)] and [617(d)] above. In addition to the extracts referred to above, Loris gave the following evidence: Q. Ken was never a director of Kanjian Holdings, was he? A. No. No. No. No. Q. Philip didn't need to be a director of Kanjian Holdings, did he? A. Yes. I - I proposed-- Q. He didn't-- A. -and the-- … A. Yeah. Yeah. I nominated Philip and Victor. They are presently as directors with the-- (T684.19-35) Q. You and your wife controlled Kanjian Holdings as the directors, didn't you? A. Yes, we were - both of us directors, yeah. Q. You didn't need Philip or Maryanne or Victor as directors of Kanjian Holdings, did you? A. We nominated them-- Q. You didn't need them, did you? A. -as directors. We had the right to nominate other directors in the company. Q. It was Philip's idea, wasn't it? A. No, definitely not. I can vouch for that. No. Q. Did you-- A. No. Q. Did you-- A. I have - I - I'm - I'm not - I'm not telling fibs. I'm not telling you lie-- Q. Did you-- A. --and this was decided between my wife and I to invite both Philip and Victor to join in as directors of the Kanjian Holdings, sir. (T685.18-39) A. Yeah. Yeah, the decision was before lunch and when they came over -- Q What time? A. When they came over - when they came over for lunch, I will announce them and they were quite happy, so - and I asked [Philip], as I said before to prepare the documents that I will sign and to make them as - as directors of Kanjian Holdings No 1. (T687.38-44) Q. Yes. So that was - that was before 12 o'clock, sometime in the morning your wife-- A. Yeah, we decide - yeah. Q. Right. A. And then when they came, I proposed to Philip to prepare the documents that we can sign and then submit it to ASIC for state approval. Q. Did your wife, when you had this discussion decide that they would be appointed-- A. My wife was delighted with the idea because Ken had too much on his plate and managing the estate of the ..(not transcribable)..you see. So we said, just to be fair to other members of the family, which are you know, on equal footing, we decided it would be a good idea that we take that step and it - and I've never been sorry - never been sorry at all. We never-- Q. Did your-- A. --..(fault in audio visual link).. quite happy ..(fault in audio visual link).. Q. When your - when you-- A. That - that decision of ours created a balance between the three of them, and Ken on the other side. (T689.1-22)
Philip's evidence about the meeting on 27 August and the signing of the resolution can be summarised as follows: 1. when Philip was at the Castle Cove property on 27 August 2017, Loris, who had been talking with Sonia in the living room, called out to Philip and asked him to do the paperwork to appoint the siblings as directors of Kanjian Holdings; 2. Loris said the siblings needed to be appointed as directors with him and Sonia as they were "going to be helping to manage Cremorne"; 3. Philip said, if Loris had resolved to do this, Philip could "draw up the minute and the forms and bring it to [Loris] mid-week"; and 4. later that week, Philip visited Loris at the Brookvale nursing home and brought a standard drafted directors minute of Loris and Sonia's resolution to appoint the siblings as directors of Kanjian Holdings, which Loris signed after saying to Philip, "This is what your mother and I have decided".
Victor and Marianne also gave evidence in their affidavits and oral evidence of discussions with Loris and Sonia to the effect that they had expressed a desire for them to be directors of Kanjian Holdings and involved in the company (T804.28-30, T891.30-6).
I accept there are issues with aspects of Loris' affidavit evidence when compared with the objective evidence. For example, Loris' reasoning (at 617(b)) that he needed control to be changed in Kanjian Holdings because he had been cut off from his income sources is not supported by the facts. As at 27 August 2017, the siblings, not Ken, were managing the income from the Cremorne property, Kanjian Holdings and the term deposits and there is no evidence to indicate that Ken had cut off Loris' income from the Bondi property or Sahab Holdings, which he was managing
Nor does the objective evidence suggest that, as at 28 August 2018, Loris was concerned that Ken was not disclosing information or documents or that Loris had lost complete trust in Ken. To the contrary, Loris' own words, as recorded by Ken on 30 August (at [252]-[253]), indicate that Loris trusted Ken and wanted him to remain involved as his lawyer and managing family affairs. The first legal demand for documents from Ken in evidence is the 28 August direction.
The cross-examination of Loris and the siblings also reveal other inconsistencies. Loris' evidence that it was his initiative to appoint the siblings conflicts with Philip's evidence to the effect that Philip suggested the idea to Marianne as part of a discussion regarding management of the Cremorne property (T931.25-9).
There were some other discrepancies between Philip and Loris' evidence about when they were present at the Castle Cove property and the timing of discussions. Loris' evidence was that he and Sonia had a discussion in the morning and was at the property before the siblings arrived; Philip gave evidence that Loris arrived after the siblings (T915.45-8). In cross-examination, Loris also referred to inviting "the boys to be directors … [to] give them a bit of a boost" (T686.36-7), which was seemingly new evidence and inconsistent with his evidence that he had invited all the siblings to be directors, including Marianne.
Ken also draws attention to Loris' evidence in cross-examination in response to a further question about the 28 August direction: Q. The answer is that you've been told to say that you appointed directors on Sunday 27 August‑‑ A. Yeah, yeah, what's wrong with that? Q. When that didn't happen. It didn't happen, did it? A. Well, they're directors now. Q. It didn't happen. You didn't have that discussion with your wife on Sunday, did you? A. Well, the answer is now they're acting as directors. (T693.41-50)
Ken submits that, based on this and the evidence referred to at [611], the Court should find that Loris ultimately could not maintain the fiction that had been suggested to him, most likely by Philip, that there had been a meeting of directors of Kanjian Holdings on 27 August or any other time. I am not persuaded by that submission. During the very next exchange, it was put to Loris that the evidence he was giving was not true, which he plainly rejected: Q. It's just not true, the evidence that you're giving-- A. No. Q. -about that. A. No. Q. It's not true, is it? A. I don't agree with you, sorry. It comes a time - it comes a time that I don't agree with you. I have the right - I have the right to agree or disagree. (T694.1-10)
Further, the evidence at [611] and [625] needs to be assessed against the totality of Loris' evidence in cross-examination which, overall, was to the effect that he and Sonia agreed to appoint the siblings as directors of Kanjian Holdings and asked Philip to prepare the papers to record their appointment on 27 August 2017. That evidence was clearly and emphatically given and, in my view, persuasive.
The essential aspect of Loris' evidence that he and Sonia agreed to the siblings' appointment and asked them to be directors of Kanjian Holdings on 27 August 2017 is corroborated by each of the siblings' evidence, the 27 August Minutes themselves, and the email from Philip to Mr Rumore dated 1 September 2017. I also note that the concept of sharing in "the Directorship" seems to have been contemplated from as early as 23 July 2017, as evidenced by Marianne's email to Ken that recorded the mid-2017 understanding (at [235]).
Even if no formal meeting of directors took place on 27 August 2017, and the resolution appointing the siblings as directors may nevertheless be effectual. In Swiss Screens (Australia) Pty Ltd v Burgess (1987) 11 ACLR 756 (Swiss Screens) at 758, Bryson J (as his Honour then was) said: To my mind any event, even most fleeting, in which two directors who are married to each other and are the company's only directors reach concurrence in taking some course in the company's affairs can be part of their management of the business of the company, and can be described with accuracy as a meeting of the directors and as a proceeding at such a meeting. In the course of human affairs it is not to be expected that a recognisable meeting would often take place in which somebody took the chair, there was a call to order, a resolution was made, seconded, debated and voted on. What does seem to me to be essential is that they should both concur in some decision in the management of the business of the company. If they do, and the event is recorded in a minute which accurately states what they concurred in as their decision, the meeting and the minute are no less effectual because the minute is formally expressed and appears to be an account of a much more solemn event than in fact took place. This passage has been cited with approval in numerous cases including by McLelland CJ in Eq in Roden v International Gas Applications (1995) 18 ACSR 454 at 456 and White J (as his Honour then was) in Hotien Holdings Pty Ltd v Frits Maré [2007] NSWSC 599 at [61].
In light of the various matters raised by Ken, I accept there are discrepancies with the documents. I cannot be satisfied that a decision to appoint the siblings was made by Loris and Sonia on a date other than as recorded by the 27 August Minutes. However, having considered the contemporaneous documents, the logic of events and evidence from Loris and the siblings, I am persuaded that it is more likely than not that Loris and Sonia concurred in a decision to appoint the siblings as directors of Kanjian Holdings at sometime around 27 August 2017, which decision was made in their capacity as the only directors of Kanjian Holdings at the relevant time and was recorded as part of the resolution referred to in the 27 August Minutes.
For these reasons, if the issue had arisen for determination, I would not have been satisfied that Ken had established, on the balance of probabilities, that there was no meeting of directors or resolution passed by Sonia and Loris appointing the siblings as directors of Kanjian Holdings on 27 August 2017 or at any other time.

[63]

Professor Peisah

In her report to the Court, Professor Peisah concluded that, as at November 2018, Sonia lacked financial capacity, was unable to recognise and protect her own interests and, in that respect, did not retain critical facility to resist improper pressure and independently discriminate between competing courses of action, and was very vulnerable to undue influence. She also found that, at the time of the assessment, Sonia lacked capacity to make or revoke a power of attorney, act as a director of Sahab Holdings and Kanjian Holdings or instruct lawyers in the present proceedings .
In Professor Peisah's opinion, the significant decline in Sonia's level of functioning and her dependence in activities of daily living suggested that Sonia suffering from moderately severe dementia.
In contrast, Professor Peisah was of the opinion that there was no evidence Loris suffered from dementia as at November 2018, although she noted that she was limited by a lack of his medical history or a corroborative functional assessment of his daily living beyond financial management. She observed that Loris demonstrated some mild patchy deficits in memory, fluency, language and visuospatial skills, the significance of which was stated to be uncertain.
Professor Peisah concluded that Loris had financial capacity at the time of the assessment, observing that he had a very good understanding of financial concepts, his assets, his income and his current and future needs. However, she noted that given the extremely complex estate, it was up to the Court to set the bar for what constitutes "enough understanding" for financial capacity as she could not herself vouch for his understanding of the estate.
Due to being limited by the factual assumptions, Professor Peisah expressed an inconclusive view on whether Loris' animosity against Ken was the product of undue influence and whether he was able to recognise and protect his own interest so as to resist improper pressure and independently discriminate between competing courses of action. She noted the presence of risk factors for undue influence, including intense family conflict, subtle cognitive defects and a complex estate, as well as mitigating protective factors against such influence, including Loris' relatively intact cognition, his self-perceived strength of will and his ability to use support from legal and financial advisors (assuming they are independent to the family).
In Professor Peisah's opinion, in light of her inconclusive view on undue influence and his freedom of appointment, it was more probable than not that Loris had capacity to appoint Philip Kanjian as his power of attorney and revoke previous powers of attorney as at the date of the report. She also found that he had capacity to act as director of Sahab Holdings and Kanjian Holdings No 1 "with support" and instruct lawyers in this litigation, expressing the view that any deficits in Loris' understanding of his estate and the proceedings due to their complexity can be addressed by proper explanations from legal advisers and other experts.
Professor Peisah was cross-examined at the hearing. She gave evidence that a person may lack capacity because of medical conditions, or by being subject to undue influence, or by a combination of both (T203.8-14). The presence of undue influence affects a person's freedom of decision-making which is part of her methodology towards assessing capacity (T202.17-21).
During Professor Peisah's cross-examination, the Court was referred to excerpts from her book, 'Capacity and the Law' (Ex A), which identifies the following five common indicators that a cognitively impaired person is subject to undue influence: 1. sequestration and isolation of the impaired person such that outside contact is inhibited; 2. previously trusted family members of friends no longer being favoured or trusted by the impaired person; 3. changes to longstanding patterns of formalising such trust; 4. the person of influence instigates changes to legal documents, such as wills or powers of attorney, and is involved in the procurement of such changes; and 5. the lawyer whose professional services are sought is not well-known to the impaired person.
Professor Peisah was questioned as to these indicators and other risk factors for undue influence. She accepted that residing in a nursing home was an example of the first indicator of sequestration (T203.15-23).
Regarding the loss of trust of family members and friends, Professor Peisah gave evidence that this may occur even at the early stages of cognitive impairment, prior to the onset of dementia. She described a process whereby the impaired person is fed information about not being able to trust the previously trusted individual and becomes amenable accepting these distorted views even where they may have previously dismissed them when they were not so impaired (T203.25-44). She observed that in such cases, a previously estranged child may suddenly gain their parent's favour, coincident with the latter developing cognitive impairment, vulnerability or frailty (T205.10-5).
Professor Peisah also gave evidence that it is common for a person being unduly influenced to change documents which had formalised previous longstanding relationships of trust, leading to a domino effect of changes to wills, powers of attorney and guardianship (T203.50-T204.5). She observed that it is rare for somebody to spontaneously change their wills or powers of attorney and that such changes often result from the person exerting influence putting the idea in their mind and organising appointments with solicitors themselves (T2014.7-24).
As to the fifth factor, Professor Peisah's evidence was that it is common in cases of undue influence that a lawyer of longstanding trust is suddenly sacked and replaced by a lawyer who knows nothing about the impaired person's family history (T204.29-35).
Professor Peisah accepted the existence of further risk factors in this case. These included a fear of aggression and the consequences of refusing requests (T220.2-3, T222.7-8), threats to sever ties (T219.41), financial dependency (T207.7-11) and deliberate misinformation (T212.5-7, T212.32-8, T213.33-5).
Professor Peisah agreed with Senior Counsel for Ken that, in this case, Sonia's expression of diametrically opposite opinions about Ken, Loris' expression that his grandchildren were going to be punished because of their father and the children asking Loris to choose between Ken and the other siblings were risk factors of undue influence (T206.7-22, T209.17-45, T219.26-31). Professor Peisah identified Sonia's change in view of Ken "having the devil in him" as a risk factor for the presence of undue influence (T206.8-22).
Professor Peisah gave evidence that it was not uncommon, in her experience, for parents to try and find peace between children in circumstances of sibling rivalry, especially in this family, and agreed that what Loris and Sonia might be saying to Ken might be different to what they were saying to the siblings (T222.38-T223.14). She also accepted that risk factors for undue influence may be negatived if there was a legitimate basis for Loris and Sonia to have a grievance with ken (T225.18-20) and that if it was assumed that Ken, Philip and Victor had received property gifts that Marianne hadn't, it would not be a risk factor if Marianne subsequently received the gift of the Castle Cove property sale proceeds (T225.23-34).
Professor Peisah also agreed that Ken procuring a document signed by Sonia at a time when it was thought she was cognitively impaired is a risk factor of undue influence (T235.2-4).
Professor Peisah's evidence was that the risk factors are intrinsic to each individual such that, where they are present, the individual could be subject to undue influence from more than one person (T238.18-27).

[64]

Ken

Ken's submissions refer to Professor Peisah's evidence of the indicators or risk factors of undue influence for a cognitively impaired person, together with what he refers to as the graphic evidence of the siblings' misinformation, threats, aggression and control of Loris and Sonia.
Ken submits that, as all the risk factors identified by Professor Peisah are present in this case, this is a "textbook example of undue influence". The particular risk factors relied on by Ken are: 1. the loss of trust of a previously trusted family member that might come about where someone feeds information to the impaired person about not being able to trust the previously trusted individual, with the impaired person being more amenable to accepting distorted views, and the re-emergence of a previously estranged family member coming into favour with the impaired person (T203.31-42, T205.10-5); 2. changes to documents which formalised previous longstanding trust, with the person who is exerting undue influence making contact with a new lawyer who knows nothing about the family history on behalf of the impaired person to arrange the changes, often coincident with a lawyer of long-standing trust being suddenly sacked (T204.1-6, T204.29-36); 3. gaining influence over an elderly parent by making them financially dependent (T207.7-11); 4. fear of aggression and consequences of refusing requests and threats to sever or cut off ties (T219.36-41, T220.1-3); and 5. access to someone residing in a nursing home being restricted to only certain members of the person's family (T203.16-24).
Ken highlights the decades of trust by Loris and Sonia in Ken during which he acted as their solicitor and took on the responsibility of assisting with the management of the family companies and the loss of that trust in 2017, which corresponded with Philip's return to the family and intensified after the possibility of selling the Northbridge properties arose.
Ken refers to the engagement of Mr Rumore, the provision of misinformation about Ken to Mr Rumore by the siblings, and the way in which the proceeds of sale of the Castle Cove were dealt with as outward evidence of a pattern of risk factors of undue influence emerging in mid-2017.
Ken submits that the payment of the whole of the Castle Cove sale proceeds to Marianne deprived Loris and Sonia of their financial independence, was contrary to what Loris wanted (as evidenced by Ken's 2 July conversation referred to at [193]-[195]), and objectively speaks of undue influence as it is not explicable on any other rational basis. Ken contends that the appropriate course was for the sale proceeds to be used for Loris and Sonia's expenses, such as payment of their RAD balances.
As further evidence of undue influence risk factors, Ken points to the many changes made and authorised by Loris and Sonia from July 2017 regarding their affairs, such as the changes in directorships, the Revocations and Powers of Attorney in favour of Philip and the making of new wills. Ken submits that these changes came about at the behest of the siblings who were driven by a desire to take control of, and reduce Ken's role in, the affairs of the family. As to the new wills, Ken submits they came about because Loris and Sonia were persuaded by falsity and deception that their existing wills did not reflect their intentions of distributing the assets equally amongst the four children.
Ken submits that the contents of the emails between the siblings and Mr Rumore, Ken's file notes of his conversations with Sonia and Loris and the siblings' own testimony are also powerful evidence from which the Court should conclude that the siblings were dishonestly misrepresenting matters about Ken to Sonia and Loris from as early as 7 June 2017.
Ken submits that the siblings also used fear and aggression by shouting, intimating physical violence and threatening Loris and Sonia if they did not do what the siblings wished. He relies particularly on the translated transcript, parts of which are referred to at [414], and the conversation with Loris about the Castle Cove sale proceeds, referred to at [193]-[195]
Overall, Ken submits that the evidence demonstrates that the siblings were able to gain complete dominance and control over Loris and Sonia by cutting them off from the outside world, taking control of their finances, turning them against Ken by feeding them misinformation and arranging for multiple law firms to meet with them. He contends that, as Loris and Sonia had been subjected to undue influence from early to mid-2017, the Court should conclude that Loris and Sonia did not have capacity to sign the impugned documents by reason of that undue influence.
Ken's written submissions do not address the allegations of unconscionable conduct by the siblings. At the hearing, it was submitted that the same conduct relied on as dishonesty and undue influence was unconscionable conduct in circumstances where none of the allegations made in relation to Ken were true (T1192.36-7).
Ken did not refer to any authorities in his written and oral submissions, but later drew the Court's attention to Thorne v Kennedy (2017) 263 CLR 85; [2017] HCA 49 (Thorne v Kennedy) at [26]-[40] and Fisher-Pollard by her tutor Fisher-Pollard v Fisher-Pollard [2018] NSWSC 500 at [116]-[125].
Submissions were also made in relation to the impugned documents, which I refer to below.

[65]

Kanjian Holdings and the siblings

Kanjian Holdings and the siblings submit that, as Ken's allegations against the siblings concern fear, dishonesty, undue influence and unconscionable conduct, they engage the principles in Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 and s 140(2) of the Evidence Act.
They contend that Ken had the onus of proving his allegations and has failed to do so. They submit that, when regard is had to the evidence, there is no basis to contend that Sonia and Loris were induced to sign the impugned documents by undue influence and unconscionable conduct.
Kanjian Holdings and the siblings also submit that Ken was required to plead and particularise the alleged dishonesty or fraudulent misrepresentations that are said to have influenced or induced Sonia and Loris but that he has not done so. They argue that Ken's claim of dishonesty must also fail because there is no pleading that Ken has suffered loss, an essential element for a claim of deceit: Magill v Magill (2006) 226 CLR 551 (Magill) at 587-8; [2006] HCA 51. During oral submissions, it was emphasised that Ken had failed to specify in the pleadings and in his submissions precisely what conduct is alleged to have been the dishonesty (and undue influence or unconscionable conduct) that induced Loris and Sonia to sign each of the impugned documents (T1091.32-49, T1201.18-T1202.10).
Kanjian Holdings and the siblings also say there is an anomaly with Ken's claims, and his standing to bring them, which is that none of Kanjian Holdings, Loris or Sonia (by the NSW Trustee) make any complaint regarding the impugned documents about which Ken takes issue. Although reference was made to standing, no submission was advanced that Ken has an insufficient interest in or lack of connection to the impugned documents such that he does not have the legal right to advance the claims.
Kanjian Holdings and the siblings place reliance on Professor Peisah's evidence (referred to at [632]-[648]) which they contend is highly informative of the circumstances of the fractured relationship between Ken (and the siblings) qua Loris and Sonia (T222.45-T223.14). Based on Professor Peisah's evidence, they submit that Loris and Sonia knew of the wedge and rivalry between Ken and the siblings by the time the secret recording was made, they might have been saying to Ken things that were different to what they were saying to the siblings and, hence, little if any weight ought to be given to the 21 April translated transcript.
In oral submissions, Kanjian Holdings and the siblings emphasised that the Court should treat the 21 April translated transcript with caution based on Professor Peisah's evidence. In reply to a submission by Ken, they also contended they were under no obligation to put to Professor Peisah specific parts of the transcript for comment or put to Loris that the things he told Ken on 21 April were untrue and a product of his desire to keep the peace (T1088.30-T1090.13).
They also point to the evidence of Professor Peisah and Ken to submit that equality of treatment by generous parents towards their children might be a reason why it was not a risk factor for Marianne to have received the gift of the Castle Cove property (T225.23-34, T621.41-7, T625.19-22).
Reference was made by Kanjian Holdings and the siblings to the close but conceptionally discrete doctrines of unconscionable conduct and undue influence, noting the critical enquiry for undue influence is the quality of the grantor's consent, whereas unconscionable conduct looks primarily to the conduct of the stronger party and whether the latter's conduct is inconsistent with equity and good conscience: Bridgewater v Leahy (1998) 194 CLR 457 at 478; [1998] HCA 66 (Bridgewater v Leahy); Thorne v Kenney at [34]; Dlakic by his tutor Dlakic v Vaughan [2018] NSWSC 1455 (Dlakic v Vaughan) at [279]-[280]; Commercial Bank of Australia Limited v Amadio (1982) 151 CLR 447 (Amadio) at 474; [1983] HCA 14; Louth v Diprose (1992) 175 CLR 621 (Louth v Diprose) at 637; [1992] HCA 61.
Additional submissions were also made in relation to the impugned documents which I refer to below.

[67]

The ASFCC and scope of Ken's claims

As Kanjian Holdings and the siblings submit, the ASFCC does not identify many material facts on which Ken's allegations of undue influence, dishonesty and unconscionable conduct by the siblings in relation to each of the impugned documents are made.
In relation to Sonia, the only facts pleaded concern the decline of her health, cognitive and mental capacity, matters which are not in dispute (ASFCC at [21], [22] and [25]).
As to Loris, in addition to facts regarding the decline of his health and mental state (ASFCC at [13]), it is pleaded that, since about May 2017, Loris' conduct has been influenced by pressure placed on him by the siblings to sign documents and being in fear of them (ASFCC at [14]). The particulars to [14] refer to five occasions on which it is alleged that Loris was fearful of what would happen if he engaged in conduct which the siblings had not approved or did not sign documents as they directed, namely: 1. the signing by Loris of a letter in June or July 2017 authorising the direction of the Castle Cove property sale proceeds: [14(c)(1)]; 2. the signing of the 5 July authority appointing Mr Rumore as Loris' solicitor for the sale of the Castle Cove property: [14(c)(2)]; 3. Loris choosing not to direct his solicitor to pay half of the Castle Cove sale proceeds into a trust account as he originally wished in or about September 2017: [14(c)(3)]; 4. Loris' denial to Philip of signing a document in the presence of Ken in or about September 2017: [14(c)(4)]; and 5. Loris telling Ken on 21 April 2018 that unless he signed documents presented by the siblings, they would become aggressive, he was scared of them and he therefore signed what documents he was given: [14(c)(5)].
The particulars do not concern the occasions on which Loris and Sonia signed any of the impugned documents, other than perhaps the last particular which might be construed as relating to the 18 April Resolution or previous documents.
It is then pleaded that, by reason of the matters referred to in [672] and [673], each of the impugned documents were signed or passed in circumstances where Loris and Sonia did not have the requisite capacity or because they were induced to sign them by reason of dishonesty, undue influence or unconscionable conduct.
The ASFCC contains no particulars of dishonesty or unconscionable conduct and none were included in the Court Book.
In relation to the claim that Loris and Sonia lacked capacity at the time they signed the impugned documents, Ken clarified at the hearing that his claim was only in respect of "capacity" in the sense identified by Professor Peisah (as referred to at [638]). According to Professor Peisah, a person who is subjected to undue influence may lack capacity because the undue influence affects their freedom of decision-making. As his Senior Counsel accepted, Ken does not claim that Sonia and Loris lacked capacity "simpliciter" (T1012.1-T1013.50, T1080.42-T1081.8, T1170.25-39, T1172.45-T1173.9, T1200.40-4). Thus, Ken's capacity claims depend on a finding that Loris and Sonia were subjected to undue influence. He does not seek relief in respect of the impugned documents on the basis that Loris and Sonia were mentally and cognitively incapable at the time they signed them.
In the ASFCC, Ken had also sought orders that Loris and Sonia's estates be subject to management by the NSW Trustee under s 41 of the NSW Trustee and Guardian Act. These orders no longer fall for consideration. Ken's claim in relation to Sonia has been overtaken by the orders made on 14 December 2018 and Ken confirmed that he no longer pressed for financial management orders in relation to Loris' estate during the hearing (T175.1-9).

[68]

Legal principles

The principal enquiry in a claim of undue influence is whether a party's entry into the relevant transaction was an exercise of their free will: Johnson v Buttress (1936) 56 CLR 113 (Johnson v Buttress) at 134 (Dixon J); [1936] HCA 41.
As was said by the plurality of the High Court in Thorne v Kennedy at [32]: The question whether a person's act is "free" requires consideration of the extent to which the person was constrained in assessing alternatives and deciding between them. Pressure can deprive a person of free choice in this sense where it causes the person substantially to subordinate his or her will to that of the other party. It is not necessary for a conclusion that a person's free will has been substantially subordinated to find that the party seeking relief was reduced entirely to an automaton or that the person became a "mere channel through which the will of the defendant operated". Questions of degree are involved. But, at the very least, the judgmental capacity of the party seeking relief must be "markedly substandard" as a result of the effect upon the person's mind of the will of another. (Citations omitted)
Undue influence may be proved by presumption (presumed undue influence) or direct evidence (actual undue influence). A presumption of undue influence may arise where a particular relationship exists between the parties and there is a transaction between them, which commonly involves a "substantial benefit" to one party, that cannot be explained by "ordinary motives" or "is not readily explicable by the relationship of the parties": Thorne v Kennedy at [34].
If undue influence is presumed from a particular relationship, it is not necessary to show that the stronger party exercised actual dominion. The presumption may, however, be rebutted by the stronger party satisfying the Court that the transaction was a result of the weaker party's exercise of free judgment and, in that sense, an independent and well-understood act: Dlakic v Vaughan at [277]; Thorne v Kennedy at [34]; Johnson v Buttress at 134.
Certain relationships give rise to a presumption of undue influence, although the relationship between an adult child and elderly parent is not one of them. No presumption will arise absent evidence of influence and lack of independent judgment or evidence of any greater trust and confidence than ordinarily expected between parents and adult children: G E Dal Pont, Equity and Trusts in Australia (6th ed, 2015, Thomson Reuters) at [7.120].
Actual undue influence requires proof by direct evidence of the circumstances of the particular transaction to show that it was the outcome of such influence over the mind of the grantor or transferor that it cannot be considered their free act: Thorne v Kennedy at [34] (Kiefel CJ, Bell, Gageler, Keane and Edelman JJ); Johnson v Buttress at 134 (Dixon J). More than mere influence must be shown so as to render the influence "undue". It must be established that the person has used their influence to obtain unfair advantage for themselves and so as to cause injury to the person relying upon their authority or aid: Watkins v Combes (1922) 30 CLR 180 (Watkins v Combes) at 193-4 (Isaacs J); [1922] HCA 3.
Like undue influence, unconscionable conduct looks to the effect of influence improperly brought to bear by a party on the mind of another. In a case of undue influence, the will of the innocent party is not independent and voluntary because it is overborne. In a case of unconscionable conduct, the will of the innocent party, even if independent and voluntary, is the result of the disadvantageous position in which they are placed and the other party unconscientiously taking advantage of that position: Amadio at 461 (Mason J).
In Thorne v Kennedy at [38], Kiefel CJ, Bell, Gageler, Keane and Edelman JJ referred to unconscionable conduct in the following terms: A conclusion of unconscionable conduct requires the innocent party to be subject to a special disadvantage "which seriously affects the ability of the innocent party to make a judgment as to [the innocent party's] own best interests". The other party must also unconscientiously take advantage of that special disadvantage. This has been variously described as requiring "victimisation", "unconscientious conduct", or "exploitation". Before there can be a finding of unconscientious taking of advantage, it is also generally necessary that the other party knew or ought to have known of the existence and effect of the special disadvantage. (Citations omitted)
The special disadvantage or disability must be of such a nature that it inhibits the weaker party's ability to make a worthwhile judgment as to what is in their best interests: Amadio at 461 (Mason J), cited in Louth v Diprose at 626 (Brennan J) and Thorne v Kennedy at [38] (Kiefel CJ, Bell, Gageler, Keane and Edelman JJ).
Unconscionable conduct may be established even where the weaker party knew what they were doing and intended to enter into the transaction: Bridgewater v Leahy at [118], citing Huguenin v Baseley (1807) 33 ER 526 at 536. The fact that the stronger party's conduct was dishonest and calculated to induce, and in fact induced, the weaker party to enter into an improvident transaction may demonstrate unconscionability: Louth v Diprose at 626 (Mason CJ).
If the elements of unconscionable conduct are established, the onus is cast upon the party seeking to enforce the dealing to demonstrate that the transaction was fair, just and reasonable: Amadio at 474 (Deane J, Wilson J agreeing), cited in Dlakic v Vaughan at [280] and Tillett v Varnell Holdings Pty Ltd [2009] NSWSC 1040 at [51]-[52].
As was noted in the joint judgment of Gaudron, Gummow and Kirby JJ in Bridgewater v Leahy at [73], despite the overlap between the concepts of undue influence and unconscionable conduct, there is danger in failing to attend to the "conceptual and practical distinctions between them". But it may be noted that the matters which must be considered under each doctrine will fall into three broad categories, namely: 1. those affecting the status, characteristics or situation of the party seeking to resist enforcement of the document or transaction; 2. factors relating to the position of the enforcing party; and 3. the conduct of one party with respect to the other.
The question of a person's capacity to enter into a transaction looks to whether they are capable of understanding the general nature of the transaction when it is explained and is determined by reference to the particular transaction concerned. A person must be capable of understanding the "general purport" and "broad operation" of the transaction but, depending on the transaction in question, not necessarily its precise legal implications: Hanna v Raoul [2018] NSWCA 201 (Hanna v Raoul) at [47]-[50], [57]-[58] (Beazley P) and [161] (Macfarlan JA); Gibbons v Wright (1954) 91 CLR 423 at 437-438; [1954] HCA 17.
In Hanna v Raoul, Beazley P (with whom Macfarlan and White JJA agreed) observed at [53] and [60] that a person's motivation for entering into the transaction, their understanding of the financial implications or improvidence of doing so and their appreciation of available alternatives are not matters that go to determining capacity.
The making of dishonest representations goes to proof of the fraud required in establishing an action in deceit: Derry v Peek (1889) 14 App Cas 337 at 374. In Magill at 587-8, Gummow, Kirby and Crennan JJ set out the elements of deceit as follows: The modern tort of deceit will be established where a plaintiff can show five elements; first, that the defendant made a false representation; secondly, that the defendant made the representation with the knowledge that it was false, or that the defendant was reckless or careless as to whether the representation was false or not; thirdly, that the defendant made the representation with the intention that it be relied upon by the plaintiff; fourthly, that the plaintiff acted in reliance of the false representation; and fifthly, that the plaintiff suffered damage which was caused by reliance on the false representation. Generally, the elements of the tort have been found to exist in cases which concern pecuniary loss flowing from a false inducement and the need to satisfy each element has always been strictly enforced, because fraud is such a serious allegation. (Footnotes omitted).

[69]

Dishonesty allegation

As noted above, the ASFCC pleads that Loris and Sonia were induced to sign the impugned documents by reason of dishonesty but does not include any particulars of that allegation.
Ken's closing written submissions referred to, amongst other matters, the siblings "feeding [Loris and Sonia] misinformation that Ken was cutting off their money and stealing from them", them providing "misinformation" to Mr Rumore, and the "falsity and deception" regarding Loris' and Sonia's wills. Other than in relation to the 27 August Resolution, Ken's submissions did not identify any alleged misrepresentations made to Sonia and Loris at the time of or by way of inducing them into signing any particular impugned document
On the second day of closing submissions, Ken provided the Court and the parties with a document described as an aide memoire and headed "Dishonest misrepresentations by siblings". The aide memoire lists twelve representations and provides references to the evidence that seek to identify the circumstances in which they were made. Many of the representations are contained in emails sent by the siblings to Mr Rumore.
I do not accept the submission of Kanjian Holdings and the siblings that Ken's claim in dishonesty must fail because he has not pleaded or established loss. Ken's dishonesty allegation is not a deceit claim in the sense that he does not seek to recover loss from his reliance on a false representation. Rather, he alleges that dishonesty induced Loris and Sonia to sign the impugned documents. That said, I accept their submission that Ken's claim based on dishonesty must fail. This is for the reason that Ken has not properly pleaded or particularised the dishonesty alleged nor any causal connection between the dishonesty and the signing of the impugned documents. The aide memoire does not cure Ken's failure to comply with the requirement to properly plead and particularise his allegations of dishonesty: UCPR, r 15.3.
As no formal objection was taken to the aide memoire at the time it was provided, I have proceeded on the basis that the alleged dishonest misrepresentations are relied on as part of Ken's undue influence and unconscionable conduct claims rather than a discrete claim of dishonesty and have taken into account my findings below as part of those claims. I consider each of the alleged dishonest misrepresentations on the basis that Ken bears the onus of proof to satisfy the Court by way of clear and cogent evidence that the siblings made the representations to Loris and Sonia in the terms alleged and that the representations were false.

[70]

Representation that Ken was stealing or planning to steal money from Loris and Sonia

Ken denies that he had been stealing or was planning to steal money from Loris and Sonia in 2017 and 2018. There is nothing in the evidence which indicates that Ken was stealing or planning to steal money from Loris or Sonia. Based on Ken's denial and the evidence before the Court, I am satisfied that the alleged representation is false.
Ken relies on three aspects of the evidence to say that the siblings made this representation. The first two are Ken's evidence that, on 5 July 2017, Sonia had expressed to him that she did not want him involved in the sale of the Castle Cove property as he will steal the sale proceeds (at [207]) and Ms Kolokossian's evidence in cross-examination that Sonia had told her that Ken was stealing from Sonia and Loris (T172.35-6, T333.6-8).
The third is Marianne's email to Mr Rumore dated 7 July 2019 (Ex D at 27). Ken did not identify which part of this email he relies on. Presumably, it is the statement in relation to Ken that "there is no accountability with any money taken out of the company bank accounts and no paper work provided". That statement does not, in my view, convey that Ken was stealing money from Loris and Sonia. Rather, it conveys that there had been a lack of regularity and reporting about the manner in which Ken managed and dealt with Sahab Holdings' funds held in its company bank accounts.
The evidence that Ken relies on in support of the alleged representation indicates that Sonia made the representation to Ken and Ms Kolokossian and the siblings made the representation to Mr Rumore. It does not demonstrate that the siblings made the representation to Loris and Sonia. In cross-examination, each of the siblings denied that Philip said to Loris and Sonia that Ken had stolen their money (T827.31-7, T870.37-5, T959.41-4, T748.4-6). Marianne accepted that she told Loris and Sonia that Ken had been "embezzling" money, but then says that they told her this first and she agreed with them (T863.28-31). It was not put to Victor that he made the alleged representation to Loris or Sonia.
I am not satisfied that the evidence referred to by Ken establishes, on the balance of probabilities, that the siblings made the alleged representation to Sonia and Loris.

[75]

Representation that Ken had funds from Sahab Holdings to pay his parents but was deliberately withholding those funds

Ken refers to three matters in support of this representation.
First, he refers to Marianne's evidence in cross-examination that she said to Loris, "you know when Ken deserted you and said I'm not going to look after you anymore and threw the cheque book in your face. Go to Maryanne, she'll look after you" and her assertion that she "did the right thing and … looked after my father financially" (T847.46-9). While this might represent to Loris that Ken had "abandoned" him, in my view, Marianne's statement does not make a representation that Ken was deliberately withholding available funds in Sahab Holdings from Loris and Sonia. Rather, it could be construed as representing that Ken said he would not manage Loris' finances anymore.
Second, Ken refers to Loris' evidence in cross-examination where Loris accepts that the siblings told him that Ken had stopped money coming out of Loris' accounts (T84.19-22). Even if I were to accept that Loris' evidence refers to Ken withholding available funds in Sahab Holdings' accounts from him (which I doubt), I am unable to determine from Loris' evidence when the siblings made that statement and, thus, whether it operated to influence Loris into the signing any of the impugned documents. Further, I am not persuaded that a representation made to Loris at or after that time to the effect that Ken had stopped money coming into his accounts would be dishonest. This is on the basis that the net income from the Bondi property had ceased coming into Loris' accounts from around 1 November 2017 and Ken had arranged for Sahab Holdings' rents to be paid into a new account in January 2018 to which Loris and Sonia did not have access
The third matter is Marianne's email to Mr Rumore dated 11 September 2017 (at [300]) in which she states that Ken had said to Sonia that she would not get her money anymore as he would keep it. I accept Ken's denial of Marianne's allegation although, in my view, a statement by Marianne to Mr Rumore about something Ken said to Sonia does not establish that Marianne made a dishonest representation to the effect alleged to Sonia or Loris.

[76]

Representation that Ken had physically or verbally abused or threatened Loris and/or Sonia and representation that Ken caused Sonia's fall from which she suffered injury

Ken refers to six emails sent by Philip and Marianne to Mr Rumore dated 6 July, 12 July, 13 July, 4 September, 8 September and 9 October 2017 in which statements were made to the effect that Ken had verbally abused, threatened, intimidated or insulted Loris and Sonia and that Sonia's injury from her fall was caused by Ken.
I have seen no evidence that Ken physically abused or threatened Loris or Sonia or was in any way responsible for Sonia's injuries in March 2017. Loris also accepted in cross-examination that Ken has never physically abused him or Sonia (T313.2-4). I am satisfied that a representation to that effect is false.
As to verbal abuse, there is evidence that Ken got angry with Sonia in March 2017, for which he apologised (at [159]-[160]). I would infer from this that Ken shouted at Sonia, which she may have taken to be verbal abuse. I cannot be satisfied that there were no other occasions on which Ken raised his voice to Sonia and Loris.
There is also evidence that suggests that, by 9 October 2017, Ken and Annie had placed some pressure on Loris and Sonia to get Mr Rumore to stop threatening legal proceedings (at [266], [271] and [276]) and to sign countermands at Ken's request (at [254] and [296]).
The emails relied on by Ken comprise statements made to Mr Rumore rather than evidence that the siblings had made the alleged representations to Sonia and Loris. Other than the representation that Ken caused Sonia's fall from which she suffered injury (which, according to Philip's evidence in cross-examination, was based on what Ken said to Victor (T931.49-T932.12)), the statements could be based on exaggerated or false reports of what Sonia had told Marianne and Philip. Accordingly, I cannot find that the siblings made these representations to Sonia or Loris or that they were in all respects dishonest.

[78]

Further factual findings

As the authorities recognise, in any case involving a transaction which is sought to be impugned by undue influence and unconscionable conduct, it is necessary to give close consideration of the facts to ascertain the exact relations between the parties: Thorne v Kennedy at [41]-[43].
I now set out my further findings as to the factual circumstances of Loris and Sonia and their relations with Ken and the siblings. Before doing so, it is appropriate to record a more general observation. It is clear that this is a family whose various members have strong and differing views about each other and express those views freely and forcefully in correspondence and in person. Many assertions and counter-assertions have been made. While the key family members have given evidence, it is not possible to make findings in respect of every factual dispute or conversation about which evidence has been given. The following focuses on those matters raised by the submissions and which are most relevant to the claims made by Ken.
By mid-2017, Sonia and Loris were physically frail but were not unintelligent, illiterate or inexperienced in business. However, Sonia's cognitive capacity was noticeably in decline. In July 2017, she had been observed by Dr Warrier to have mild cognitive impairment from a likely mixture of "Alzheimer's and Vascular" and some short-term recall impairment but appeared to retain capacity to make decisions regarding her financial position and care arrangements.
Ken and the siblings were aware of Sonia's cognitive decline. Ken observed a deterioration in March 2017, Marianne had taken Sonia to be assessed by Dr Warrier and Philip referred to Sonia as being in the early stages of dementia in July 2017.
While Ken refers to doubts about Loris' testamentary capacity in correspondence in early 2018, there is no medical evidence to indicate any decline in Loris' cognitive capacity prior to his assessment by Dr Peisah in December 2018. The evidence from the solicitors did not observe any memory or cognition issues with Loris between mid-2017 and mid-2018.
In early 2018, Professor Rosenfeld opined that Loris and Sonia had capacity to instruct Ms Kolokossian in relation to legal matters and their request for her to obtain information and documents regarding their legal and financial affairs.
Loris and Sonia had a close and happy relationship, although there is evidence they came into some conflict in 2017 regarding the Castle Cove sale proceeds, whether to instruct Mr Rumore and Ms Ross-Maranik to take court action against Ken in 2017 and early 2018 and about who "owned" assets, such as the Northbridge property. I find it likely that they were in a relationship where they were each able to influence the other and did so. Sonia was more focused on financial matters than Loris. Loris gave evidence, which I accept, that he did not get involved in the disputes about the removal of the Sahab Holdings' funds and left that to Sonia as it was "between Marianne and my wife" (T597.33-6, T598.3-7, T599.24-8).
Sonia and Marianne were particularly close. There is evidence that Sonia spent periods of time staying at Marianne's house in August 2017 and relied on Marianne to assist with financial matters, particularly from July 2017, as well as with medical appointments.
Although there were some attempts to keep Ken away from Loris and Sonia in August and September 2017, I am satisfied that Sonia and Loris were not significantly isolated from or inhibited in their contact with Ken until 21 July 2018. The evidence highlights that, up until then, Ken typically met with Loris and Sonia every Sunday and had access to them via phone calls.
It is clear that, up until around March 2017, Sonia and Loris trusted Ken and were grateful for all that he had done for them and the family over the years. They considered Ken to have been a loving, unselfish and model son and were appreciative of Ken's support and work. In cross-examination, Loris acknowledged that he and Ken and had had a close relationship for 50 years and that Ken had shown great courtesy and respect to both Loris and Sonia (T16.20-6, T23.31-8).
Sonia's loss of trust in Ken became manifest from March 2017 when she challenged him about his control of her finances (at [162]-[164]). I am unable to determine the genesis of Sonia's distrust of Ken. I observe that it coincides with Philip making statements to Marianne that Ken was doing things that were "not fair" and what I would describe as Philip's re-emergence in the affairs of the family. I also note that Ken had been managing Sonia and Loris' personal finances since late-2015.
Family relations between Ken and the siblings fractured further in May 2017 as a consequence of Ken's opposition to the offer to purchase the Northbridge properties by way of the put and call option. From that time, Sonia's mistrust in Ken continued to escalate. It is clear that, by then, Victor and Marianne no longer trusted Ken and their 'allegiance' within the family had shifted to Philip who had started to take on a more active role in Sonia's affairs, having arranged for her to instruct Ms Kolokossian in relation to her will in June 2017.
I am satisfied that, on or about 2 July 2017, Loris was influenced and placed under pressure by Sonia, Marianne and Philip to agree to the sale proceeds of the Castle Cove property going to Marianne. I find that Philip raised his voice and shouted at Loris, although I am not satisfied that Philip physically threatened or swore at Loris in the terms recorded in Ken's file note.
I accept Loris' evidence that it was Sonia's wish for Marianne to receive the Castle Cove sale proceeds and that he agreed to that arrangement to accommodate Sonia's choice. On the evidence, I cannot find and do not infer that Sonia was unduly pressured by the siblings into that course of action or that the arrangement struck at the 2 July meeting speaks objectively of undue influence on the part of the siblings at that time. It seems to me to be equally open to conclude that Sonia freely and voluntarily decided that Marianne should receive the Castle Cove sale proceeds based on the longstanding bequest in Sonia and Loris' wills. I am also persuaded that the gift of the sale proceeds to Marianne could be characterised as providing for equality of treatment amongst the children by generous parents given the past gifts involving property to Ken, Philip and Victor.
As at 2 July 2017, Sonia and Loris did not expect to need access to significant funds to pay for accommodation bonds at a new nursing home and had other sources of income and money available to them for their living expenses. In that context, I am not satisfied that the arrangement by which Marianne was to receive the Castle Cove property sale proceeds was made in order for the siblings to gain influence over Loris and Sonia by making them financially dependent on Marianne.
The payment of the whole of the Castle Cove sale proceeds to Marianne exposed Sonia and Loris to an increased financial dependence on her by late 2017. Based on Marianne's email to Mr Rumore dated 5 September 2017, it seems that she was aware that the Castle Cove property sale proceeds were required to pay the Bupa RAD. It is not clear why the balance of the Bupa RAD has not been paid from the sale proceeds. I accept Ken's submission that an arrangement consistent with the prudent conduct of Loris and Sonia's financial affairs would have been to use part of the sale proceeds to pay the whole of the Bupa RAD upon completion.
Despite having significant funds in bank accounts in their names and interests in valuable property assets, Sonia and Loris were reliant on Ken and the siblings to source and manage their income and personal finances which made them vulnerable and, in a sense, financially dependent on them throughout 2017 and 2018. The mid-2017 understanding and the sale of the Castle Cove property saw their financial reliance on Ken diminish and shift to the siblings, particularly Marianne. Loris' lack of understanding of his financial position, as evidenced by his statements which are recorded in the translated transcript, is indicative of his dependence on the siblings and Ken regarding his financial affairs during this time.
I am satisfied that Ken's ability to make distributions to Loris and Sonia from Sahab Holdings was negatively impacted by Marianne's removal of funds from the company's Westpac accounts in mid to late 2017. As they are not the subject of any claim in these proceedings, I make no finding about whether their removal was unlawful or in breach of trust as alleged by Ken in his submissions. I have seen no evidence to indicate that Ken deliberately withheld income that was available for distribution from Sahab Holdings to Loris and Sonia in the period up to June 2018. There is some evidence that suggests that Ken was late in making distributions of income to the siblings and that he later ceased making distributions to them from Carkan and in respect of the Strathfield property in 2018.
The giving of instructions to Ms Kolokossian and Keypoint Law, the engagement of Mr Rumore, and the apparent sacking of Ken as Loris and Sonia's longstanding lawyer in June and July 2017 are indicative of Philip and Marianne being in positions of influence with respect to Loris and Sonia. I am satisfied that Loris and Sonia would not have arranged for independent lawyers to act for them in the absence of encouragement by the siblings.
I do not consider that the engagement of independent lawyers for Loris and Sonia objectively speaks to undue influence in this case. This is because the existing longstanding lawyer was a family member with whom other family members were in dispute. Rightly or wrongly, concerns had been raised about the extent of Ken's control over family assets. Ken's position regarding the offer on the Northbridge properties had caused conflict with the siblings and Sonia, and he had had expressed that he was not in favour of Marianne receiving the Castle Cove property sale proceeds. He had also drafted Loris and Sonia's wills. I note that Professor Peisah's report identified that Loris' ability to use support from legal and financial advisors that were independent to the family mitigates against undue influence.
As Loris and Sonia's wills are not the subject of challenge in these proceedings, I make no findings in relation to them. I simply observe that the terms of the 2018 Wills, which are described at [370], are significantly different to Loris and Sonia's previous wills and it was false to represent that Ken had not provided Loris and Sonia with copies of their wills at or around the time they were made.
It is clear that, from the time Mr Rumore was engaged, Philip and Marianne provided him with misinformation about Ken. I have already referred to the alleged dishonest misrepresentations, many of which are contained in emails from Philip and Marianne to Mr Rumore. On any reading, the emails contain a number of untruths and unsustainable assertions about Ken. It is also apparent from those emails that Marianne and Philip were focused on minimising Ken's role in relation to Sonia and Loris' affairs. Philip, in particular, appeared driven by a mistrust of Ken and a desire to obtain documents from him about the family companies and trusts (see, for example, Ex D at 32-4). I pause to observe that many of the emails were sent prior to the mid-2017 understanding although they recommenced again with vigour in late August 2017.
I find it likely that statements were made by one or more of the siblings to Sonia and Loris that misrepresented matters about Ken and influenced their views of him, such as Marianne agreeing with Loris and Sonia that Ken had been embezzling money (T863.28-31) and Philip suggesting, in relation to the Bondi property rental, that Ken had misappropriated money (T949.49-950.19). Loris' concern, as expressed to Ms Kolokossian in January 2018, that Ken had made unauthorised transactions and may have transferred assets to himself through his company is not supported by the evidence and was accepted by his Senior Counsel to be inaccurate (T1046.10-20).
I also find that one or more of the siblings, most likely Philip, made statements to Sonia and Loris to the effect that Ken was taking an unfair share of the family assets, had stopped money coming out of Loris' accounts (T84.19-47, T828.2-T829.8), was controlling all of Sonia's assets and could not be trusted. It is not possible to determine when and how often these statements were made, but I am satisfied that the making of them was a factor that led to Sonia and Loris' declining trust in Ken.
On occasion, Sonia's growing mistrust of Ken manifested in an emotionally charged manner. Her statements to Ken in January 2018 that he was the "devil himself" and she hoped he died a "terrible death" are examples of this.
The dramatic and sudden decline in Sonia's trust of Ken and the increased trust and reliance on Philip is only explicable by means of influence and misinformation about Ken that she had been told by the siblings or, at the very least, had not been discouraged from when she expressed them. Together with her cognitive decline and frail physical health, I am satisfied that, from at least August 2017, Sonia was in a relationship of influence, partial dependence, trust and confidence with the siblings. I am also satisfied that these matters meant that Sonia had a disadvantage or disability which affected her ability to make judgments as to her own best interests and that the siblings were aware of this.
The position in relation to Loris is different. Although he had expressed some concerns about what Ken had arranged in his and Sonia's wills, I am satisfied that, in or around August 2017, he continued to place trust in Ken. I am also satisfied that he had a sufficiently strong will to enable him to withstand pressure from the siblings and Sonia. Examples of this are Loris' refusal to agree to court action being taken against Ken in September and October 2017 and his instructions to Ms Ross-Maranik in March 2018 to hold off suing Ken for the documents. Loris' dealings with and his instructions to Mr Rumore do not suggest that he was being unduly influenced by or was beholden to the siblings, particularly as Mr Rumore took steps to obtain instructions from him directly (T255.25-6).
I find that Loris signed the 5 July authority appointing Mr Rumore as his solicitor as a result of influence and pressure placed on him by Sonia and the siblings. I prefer Ken's evidence of his discussion with Loris on that day (at [208]-[209]) to Loris' evidence (at [210]). However, I do not accept that Ken's account of the conversation reflects the truth of what Loris said as the objective facts indicate the siblings were not controlling all of Loris' finances and he did not depend on them to pay his nursing home fees at that time.
I find that, on or about 10 September 2017, Loris wanted to direct Mr Rumore to pay one half of the Castle Cove property sale proceeds into a solicitor's trust account for his expenses but did not do so because he was concerned about Marianne's reaction. I also find it likely that Loris had denied to Philip that he signed a document presented by Ken the previous Sunday because he was concerned about Philip's reaction.
I am satisfied that Loris succumbed to the influence and wishes of Sonia and the siblings on some other occasions by signing documents at their request. Examples of this are the 6 Sept authority that demanded the removal of Ken as a director of Sahab Holdings if documents were not produced and the authority dated 12 November 2017 for Marianne to deal with funds in Sahab Holdings' Westpac accounts (at [342]).
I find that one or more of the siblings raised their voices and got angry with Loris and Sonia when they found out Loris and Sonia had signed documents prepared by Ken that purportedly countermanded documents previously signed for the siblings and placed pressure on them not to do so. Loris' statements in the translated transcript and Ken's file notes support this finding. It is not possible to determine each occasion on which the siblings did so. I am, however, not persuaded and make no finding that the siblings physically abused or threatened to physically abuse Sonia and Loris during this period.
I am not satisfied that the evidence establishes that the siblings had dominion, authority or superiority over Loris in respect of all his affairs from mid-2017 to mid-2018, although the evidence indicates that Loris was at risk of influence from all his children during that period.
I find it likely that, from around 7 September 2017, Loris was saying different things to Ken to what he was saying to the siblings and to his lawyers. This is apparent from a review of Ken's file notes, the evidence from Mr Rumore, Ms Kolokossian and Ms Ross-Maranik, the siblings' evidence and the contemporaneous emails. One example of this is the difference between what Loris told Mr Rumore about obtaining documents according to his authority (at [290]) and what he told Ken about that authority (at [295]). Another example is Loris telling Ken that he had not had a discussion with Ms Kolokossian about his affairs despite the evidence that Loris met and spoke with Ms Kolokossian on 29 November 2017 (at [347]). Consistent with Professor Peisah's evidence, which I find persuasive, I find it likely that some of Loris' statements to Ken and the siblings was the result of Loris attempting to keep the peace within the family although I cannot determine which ones were and which ones were not.
Loris continues to believe, incorrectly, that Ken has stolen money from him and caused him to be bankrupt, as evident from his evidence in cross-examination as follows: A. Ten years, I haven't had one cent. I'm the bankrupt person now. You talking to a bankrupt person because of Ken. Sorry. (T321.33-4) Q. Listen to me, Mr Kanjian. Listen to me. Has anyone told you that there is no evidence that Ken stole anything from you or Sonia? A. Well, the evidence is here. If he hasn't stolen, there is - that means that the income is collected is in his bank account and getting interest on it. But we're entitled that after paying all the expenses, all that money should be directed into our joint account, which that never happened. Never occurred. It's - it's a fact. I can't deny it. It's a fact. As clear as the day. (T699.41-7)
I consider that Loris' current view of Ken is likely not reflective of his views of Ken in late 2017 and early 2018. Loris' mistrust of Ken escalated from sometime in early 2018. This is apparent from the evidence, such as Loris describing Ken as a "thief" to Ms Ross-Maranik in around March 2018 (T300.8-10) which was clearly a false impression. Loris' views stemmed, in part, from the influence of and statements made by the siblings to Loris about Ken referred to at [749] and [750].
In my view, Loris' mistrust in 2018 and his current view of Ken also arise from a not entirely irrational reaction to some of Ken's actions. Such actions include Ken's refusal to produce documents in response to requests from lawyers acting for Loris, Sonia and Kanjian Holdings, Ken's decision not to pay the rental income from the Bondi property into Loris and Sonia's Macquarie bank account from November 2017, Ken's decision not to pay the Sahab I rental income into Loris and Sonia's Macquarie bank account from January 2018, and Ken's cross-claims in these proceedings that Loris was unduly influenced and lacked capacity at the time he signed the impugned documents.

[79]

The 27 August Resolution

Ken contends that the Court should find that the 27 August Resolution was procured by undue influence and, as a consequence, Sonia and Loris lacked capacity at the time they signed it. He says that the 27 August Resolution must have been procured by undue influence because there was no rational basis for the siblings to be appointed directors of Kanjian Holdings. It is submitted that the siblings' appointment was not necessary for them to manage the Cremorne property. Instead, Ken says that Philip suggested the idea as part of a plan to gain control of Kanjian Holdings in order to pursue Ken by court process. He also submits that the circumstances in existence at the time demonstrate that Loris and Sonia were put in a position where they could be, and were in fact, the subject of undue influence, relying on the matters which are summarised at [649]-[657].
Kanjian Holdings and the siblings submit that Loris' evidence during cross-examination is a complete answer to Ken's allegation that the 27 August Resolution was procured by undue influence and unconscionable conduct. They say that Loris' evidence makes clear that Sonia and Loris were in full agreement about the siblings' appointment as directors. They also submit that the appointment was objectively rational as it was consistent with the mid-2017 understanding.
The evidence in relation to the 27 August Resolution is set out at [609]-[612], [617]-[620] and [624]-[626]. I accept Ken's submission and Philip's evidence that the initiative to appoint the siblings as directors of Kanjian Holdings emanated from Philip. Despite Loris' evidence in cross-examination that it was his idea, it is more likely that Philip or Marianne raised it with Loris who agreed to it and subsequently adopted the initiative as his own.
On the findings that I have made, it may be accepted that the siblings, particularly Philip, had the capacity to influence Loris into agreeing to the appointment of the siblings as directors of Kanjian Holdings and succeeded in doing so. I am unable to say with certainty what the position was in respect of Sonia, but find it more likely that Sonia discussed the appointment with Loris, rather than the siblings, and that she agreed to it with Loris.
The fact that Loris and Sonia voluntarily agreed to appoint the siblings as directors is not of itself a sufficient answer to all allegations of undue influence and unconscionable conduct. The question is how that agreement and intention was produced, namely, whether the siblings' improper influence or pressure caused Loris and Sonia to subordinate their free will or whether the siblings' conduct seriously affected Loris and Sonia's ability to make judgments in their own best interests. It is also necessary that there be some element of unfairness or disadvantage about the transaction. The basis for equity to intervene is the improper use of the influence or the unconscientious taking advantage of a person with a special disadvantage.
In my view, the evidence does not establish that Philip or the other siblings improperly influenced Loris into agreeing to appoint the siblings as directors and make the 27 August Resolution, such as by putting significant pressure on or coercing Loris to do so. Loris' evidence in cross-examination is clear on that point (T683.43-T684.8, T686.13-42). While I place less weight on it, the evidence of Philip and the other siblings is also not inconsistent with Loris' position.
Ken's evidence of his discussions with Loris on 29 and 30 August 2017 (at [250] and [252]-[254]) does suggest that Loris may have been pressured into signing the 28 August authority (which Loris denies). It also suggests that Loris was concerned to learn that appointing the siblings as directors meant they had control of Kanjian Holdings and that he may have wanted to change his mind about their appointment. However, the key focus of these discussions is the 28 August authority demanding documents from Ken and Loris' agreement to Ken's wish for that demand to be retracted, rather than the appointment of the siblings as directors.
As to the reason for the siblings' appointment, Loris' evidence is that the appointment was for "balance" and is set out at [612]. Philip's evidence is that he suggested the appointment for management of the Cremorne property with authority in July 2017. He maintained this position in cross-examination: Q: And management of the Cremorne property was not the priority in August 2017, wasn't it? A: It was. Mr Bannon, it was. Maryanne said I can't do the administration management for Cremorne. She passed it on to me. I suggested management through authority through July, approach my parents and I suggested that they request our directorship, and they both immediately said yes. That was the priority. It was for no other intent and purposes. (T931.23-9)
Although Philip accepted that the siblings did not need to be directors to manage the Cremorne property, I am not persuaded that it was dishonest of Philip to represent or request directorship for reasons that included the management of Cremorne. As he said in cross-examination, having the authority to manage "does help" (T917.45-6). Further, and accepting Ken's submission that there was no necessity for directorship to manage the Cremorne property as Ken had done so for a number of years without it, it is not necessary that the appointment of the siblings as directors be justified by a business need, which Ken's Senior Counsel acknowledged in closing submissions (T1190.8-11).
There is no doubt that Philip recognised the advantage of the siblings being appointed as directors of Kanjian Holdings. It laid the ground for him to make demands on Ken for Kanjian Holdings' documents and, ten months later, the commencement of the Corporations proceedings, although I accept that was not what Philip, Loris and Sonia ultimately wanted. Philip's emails to Mr Rumore (referred to at [267]-[268] and [280]) and his evidence in cross-examination about the frustrations with Mr Rumore make it clear that Philip was focused on accessing Kanjian Holdings' documents and considered that the siblings' appointment as directors would assist with that (T924.5-43). The evidence also indicates that Philip desired to reduce Ken's control more generally.
However, the 27 August Resolution also needs to be considered in the context of the existing family dispute and the objective evidence which indicates that Loris and Sonia had willingly and freely agreed to provide an opportunity to the siblings to participate in the family affairs by this time. The appointment of the siblings as directors of one of the two family companies is not, in my view, inconsistent with the mid-2017 understanding or an unnatural consequence of the sharing of tasks and equality of treatment given that Ken was a director of Sahab Holdings, the other family company. I have already noted that the 23 July email from Marianne that set out the terms of the mid-2017 understanding made reference to a need to "share the Directorship". While there may have been an advantage to Philip and no real benefit to Loris and Sonia, the siblings' appointment as directors was within Loris and Sonia's power as existing directors and the improvidence of the appointment to them is not, objectively, apparent.
I accept that the 27 August Resolution arose in circumstances where Sonia, and to a lesser extent Loris, had been influenced by statements made by the siblings that engendered a mistrust of Ken. There is also evidence that Loris had, prior to that time, been pressured to sign documents relating to other matters. But the evidence also reflects that Loris and Sonia wanted to be more even-handed with the management roles as between their children, they were seeking greater transparency about their and the family companies' affairs and Sonia had expressed concerns to Mr Rumore about Ken's control of her assets.
The appointment of the siblings as directors of Kanjian Holdings was neither inconsistent with Loris and Sonia's aims or concerns, nor so disadvantageous to Loris and Sonia that it cannot be reasonably accounted for on the basis of the relationships that existed at the time. The appointment may have raised compliance issues under the SIS Act and given the siblings control of the company, but those issues were soon resolved. There is also no evidence that the siblings used their capacity as directors to their own benefit but to the detriment of Loris and Sonia, other than making demands for Ken to produce company documents. The 27 August Resolution does not, in my view, involve a benefit so substantial or improvident that it cannot be explained on the grounds of the parental relationship, nor does the evidence establish that Philip used his influence to obtain an unfair advantage for himself so as to cause injury to Loris and Sonia relying upon his authority.
There is another factor that is relevant to but not determinative of this issue as well as the issues arising from Ken's challenges to the other impugned documents. Loris, the person alleged to have been unduly influenced and taken advantage of but whose mental capacity is not challenged in this case, has clearly affirmed Philip and Victor's appointment as directors of Kanjian Holdings. That Loris' current view of Ken is based, in part, on a misconception that Ken has stolen from him does not, in my view, render Loris' evidence to be so unreliable that it cannot be taken into account or mean that the Court must conclude that the 27 August Resolution was signed by reason of undue influence, unconscionable conduct or a lack of capacity at the time.
Having regard to these matters, and Loris' evidence in particular, I am not persuaded that the 27 August Resolution was procured by any improper influence over Loris and Sonia's mind regarding the siblings' appointment such that it should now be set aside. I am also not persuaded that Loris suffered from a special disability or disadvantage that was unconscientiously taken advantage of by Philip suggesting, and the siblings accepting, appointments as directors, whether on the basis of managing the Cremorne property or otherwise. Even if I were to accept that both Sonia and Loris were at a special disadvantage, for the reasons set out above, I am not satisfied that the circumstances in which Loris and Sonia agreed to appoint the siblings as directors of Kanjian Holdings are such as to make the siblings' conduct prima facie unfair or unconscientious as between them, Loris and Sonia. Nor can I conclude that the transaction was not fair, just or reasonable.
Based on the medical and other evidence to which I have already referred, Ken has not demonstrated that Loris and Sonia were not capable of understanding the general nature and purport of resolving to appoint the siblings as directors of Kanjian Holdings when it was explained to them, although I accept they may not necessarily have understood its precise legal implications, such as the SIS Act issues. It follows that I do not accept Ken's submission that Loris and Sonia lacked capacity at the time they signed the 27 August Resolution by reason of undue influence.

[81]

Sonia's 2017 Revocation and Power of Attorney

As a consequence of the management orders, Sonia's 2017 Power of Attorney has been suspended since 14 December 2018: Powers of Attorney Act, s 50(3). It will continue in suspension until the Court declares that the exercise of NSW Trustee's powers in relation to Sonia's managed estate is not required: Powers of Attorney Act, s 50(11).
Kanjian Holdings and the siblings submit that the Court should decline to grant the relief sought by Ken and dismiss his claims on the basis of the management orders and consequential suspension of Sonia's Power of Attorney. In addition to their submission at [663], they also submit that the Court should decline to grant the relief because no allegation has been made in these proceedings that Philip has used the Power of Attorney for any illegitimate purpose, or indeed that he used it at all.
In closing submissions, Ken's Senior Counsel proposed that Sonia's 2017 Power of Attorney be set aside on a no admissions basis in light of the management orders (T1112.28-36, T1114.15-9). That offer was not accepted.
Professor Peisah opined in cross-examination that the incapacity from which Sonia suffers is the type that will continue after the date of her assessment (T228.4-8). Thus, it may be expected that the management orders will remain in place unless and until an application is made that they are no longer required.
An application to the Court for a declaration that management orders are no longer required may be made by the NSW Trustee or the attorney under the power of attorney that is suspended: Powers of Attorney Act, s 50(11). In other words, the right to make an application is determined by the existence of a valid power of attorney, notwithstanding its suspension. There is, therefore, some utility in determining whether the 2017 Power of Attorney and Revocation are valid. Further, Sonia has lost capacity and cannot assist the Court with information about the exercise of her own interests or wishes, or in response to the serious allegations that have been made. In my view, these matters justify the exercise of the Court's discretion to review the making of Sonia's 2017 Power of Attorney and Revocation.
There is no direct evidence of the circumstances in which Sonia signed the Revocation on 6 September 2017. The emails between Philip and Mr Rumore indicate that Mr Rumore sent revocations to Philip on 1 and 4 September 2017 (Ex D at 49-51). The 2017 Revocation was witnessed by someone who gives their address as the Bupa nursing home address and was sent to Ken by O'Brien Connors & Kennett on 11 October 2017, the lawyers that Philip arranged to see Sonia on 10 October 2017 to execute the 2017 Power of Attorney. On the same day that the Revocation was signed, Sonia and Loris signed the 6 Sept authority.
Sonia's 2017 Power of Attorney is witnessed by a solicitor, Lauren Oatley, from O'Brien Connors & Kennett. Ms Oatley signed a certificate under s 19 of the Powers of Attorney Act certifying that the effect of the Power of Attorney had been explained to Sonia and she appeared to understand its effect. Ms Oatley did not give evidence in these proceedings. The fact that Sonia executed the 2017 Power of Attorney before a solicitor who signed the certificate says nothing about what was explained to Sonia at the time or her reasons for doing so.
Philip's evidence in cross-examination was that he had done tax work for one of the partners at O'Brien Connors & Kennett who recommended Ms Oatley (T943.6-19). When asked why Sonia made the 2017 Power of Attorney with a different set of lawyers (not Mr Rumore or Ms Kolokossian), Philip's evidence was that Sonia needed an independent solicitor and "we just weren't getting much progress with [Mr Rumore]" (T942.25-31 and T943.30-33). That evidence is unconvincing. Philip also could not explain why he alone, rather than the siblings together, was appointed Sonia's attorney apart from this being Sonia's wish and his previous exposure to the family's financial affairs (T943.42-8).
By the time the 2017 Revocation and Power of Attorney were made, Philip was aware that Sonia had given clear instructions to Mr Rumore around 11 September 2017 that she and Loris were, at that time, only prepared to give powers of attorney in favour of each other. Philip had also rejected Mr Rumore's offer to meet with Sonia one further time at his office so that she could be in a neutral space with another partner from Mr Rumore's firm present. In those circumstances, I do not find Philip's evidence that Sonia executed the 2017 Power of Attorney because it was her "wish" or there was a need for an independent lawyer to be credible and I reject it.
Ken's evidence, which I accept, is that Sonia told him on 11 October 2017 that she didn't remember signing the 2017 Revocation or being visited by a solicitor from Dee Why. There is also evidence that Philip raised with Mr Rumore the prospect of revoking the power of attorney in favour of Ken to reduce his control of Sahab Holdings and that Philip had indicated that he was "willing to use [Sonia's 2017 Power of Attorney] to obtain information". Contrary to Kanjian Holdings and the siblings' submission, the evidence indicates that Philip relied on the 2017 Power of Attorney by making a demand on Walker Wayland for Sahab Holdings' documents in November 2017 and suggests that he may have used it as authority to access Sonia's bank accounts as her attorney.
Based on the above evidence, I consider it open to infer that Philip asked and arranged for Sonia to sign the 2017 Revocation and Power of Attorney and that she did so.
I have already found that there was a relationship of trust and dependence between Sonia and Philip sufficient to give rise to the presumption of undue influence between them and that Sonia was at a requisite disadvantage at this time (at [752]). While the appointment of an adult child as an attorney might be explained as the product of parental love, affection and confidence, in the circumstances set out above, I am not satisfied that Kanjian Holdings and the siblings have rebutted the presumption of undue influence.
The 2017 Power of Attorney is in terms that were contrary to Sonia's recent instructions to Mr Rumore and was not made with the benefit of legal advice from her existing lawyers. I am satisfied that the Revocation and Power of Attorney were obtained at Philip's request, seemingly as part of his desire to access information about Sahab Holdings, a company that has nothing to do with the properties he and the other siblings were managing under the mid-2017 understanding, and to reduce Ken's control of that company. There is also evidence that he has used that power, although I have seen nothing to suggest that he obtained a financial benefit in doing so.
In that context, I am satisfied on the balance of probabilities that Sonia's making of the 2017 Revocation and Power of Attorney was procured by actual undue influence or unconscionable conduct on the part of Philip. While I make no finding of actual coercion, it seems to me that, in Sonia's state, little pressure would have been necessary to elicit her consent to executing those documents at Philip's request. He took advantage of Sonia's disadvantaged position in order to bring about a situation in which Sonia was presented with another set of lawyers and executed the 2017 Power of Attorney solely in his favour. The observations of Ward CJ in Eq in Antov v Bokan [2018] NSWSC 1474 (Antov v Bokan) at [553] are apt in this case. The circumstance in which the 2017 Power of Attorney was made is "only too reminiscent of the not uncommon spectacle of elderly people being ferried from lawyer to lawyer by one or more opposing family members in order to execute documents favouring some members of the family over others".
The central concept of a power of attorney is one of complete and lasting delegation to a person enabling that person to have control over the whole of the principal's affairs, including their assets, albeit with the ability to put an end to the delegation while capacity remains: Szozda v Szozda [2010] NSWSC 804 at [34]. In this case, Sonia no longer has capacity and the Court does not have the benefit of evidence of her wishes. While it is apparent from the evidence that she had concerns about Ken in 2017, I am satisfied that Ken is genuinely concerned for Sonia's welfare and he would perform the role of her joint attorney under the 2014 Power of Attorney in her best interests if management orders were no longer necessary.
Accordingly, it is appropriate to exercise my discretion and make orders pursuant to s 36(3)(b)(iii) and s 36(3A)(b)(ii) of the Powers of Attorney Act declaring Sonia's 2017 Power of Attorney to be invalid and the 2014 Power of Attorney to remain valid on the basis that Sonia was induced to make the 2017 Revocation and Power of Attorney by undue influence or unconscionable conduct and I will do so.

[82]

Loris' 2018 Revocations, Power of Attorney and Guardianship

Ken submits that Loris' 2018 Revocations, Power of Attorney and Guardianship could only have come about by reason of undue influence, unconscionability and dishonesty as his reasons for the changes were predicated on a confection manufactured by the siblings that Ken was blocking Loris' money and access to Sahab Holdings' accounts and otherwise being obstructive and unreasonable. Ken also submits that, having been subjected to undue influence by the siblings from early to mid-2017, Loris did not have the capacity to make these instruments.
Kanjian Holdings and the siblings submit that Ken's claim must fail because he has not established that the alleged vitiating circumstances existed at the time that Loris signed the instruments. They also point out that Loris makes no complaint in these proceedings about the instruments and Ken makes no allegations that Philip has used Loris' 2018 Power of Attorney for any illegitimate purpose (or at all), notwithstanding Ken's claim that Philip is a manipulative person who is capable of dishonesty, undue influence or unconscionable conduct.
Having considered the submissions and the evidence, I have concluded that, in the exercise of my discretion, the relief sought by Ken in relation to Loris' instruments should be refused. This is for the following reasons.
First, unlike Sonia, the Court has received the views of Loris. His position is clear. He denies the allegations made by Ken and expressed that he does not want the Court to make the orders sought by Ken which, if made, would have the effect of making Ken one of Loris' joint attorneys and guardians.
At the hearing, Loris presented as an independently minded and proud man. As I have noted, during his cross-examination, I observed some limitations to his ability to recall past events but, overall, he came across as mentally alert and strong willed.
Ken no longer pressed for the management orders under s 41 of the NSW Trustee and Guardian Act in relation to Loris' estate after Loris gave evidence at the start of the proceedings. In other words, Ken no longer claims that Loris is incapable of managing his affairs and did not ask the Court to assess his capacity for that purpose. Ken's claim is that Loris lacked capacity due to undue influence at the time he signed the impugned documents, not that he was cognitively or mentally incapable either at that time or at the hearing (see [677]).
As a matter of principle, a competent person can make whatever decision they choose to appoint someone as their attorney and revoke a power previously given by them. It is not the Court's role to decide what is in Loris' best interests if he is currently in a position to decide that for himself: Re QFC (No 2) [2018] NSWCATGD 49 at [55].
Second, Loris' views and the absence of any claim that Loris is incapable of managing his affairs or is cognitively and mentally incapable of understanding the operation of a power of attorney raises a question about the utility in making any orders under the Powers of Attorney Act and the Guardianship Act which are contrary to Loris' wishes. It seems to me that, even if the orders sought by Ken were made, Loris may be capable of giving instructions and executing a new power of attorney if he wished. In that regard, I note that Loris is ably represented by independent lawyers and counsel who would be in a position to advise him about those matters. This also means that Loris is free to choose to re-appoint Ken, with or without the siblings.
Third, unlike the position with Sonia, there is evidence that Loris was advised about the instruments he signed in 2018 by an existing independent lawyer, Ms Ross-Maranik, prior to and at the time he executed them and that he understood their general operation and effect. Loris deposes that he had discussed what he wanted with Ms Ross-Maranik prior to executing the instruments, they were prepared based on his instructions and he met with her when he signed them. Loris also deposes that he understood he was cancelling the 2014 Power of Attorney that jointly appointed Ken, Victor and Marianne and gives evidence about his understanding of the effect of doing so. I accept Loris' evidence about these matters.
Ms Ross-Maranik certified that Loris appeared to understand the effect of the Revocations. Although the 2018 Power of Attorney is not in evidence, presumably Ms Ross-Maranik also prepared and signed a certificate under s 19 of the Powers of Attorney Act in relation to that instrument. I note that Ms Ross-Maranik does not give evidence about the circumstances in which the instruments were made and was not questioned about them in cross-examination.
Ms Ross-Maranik had been dealing with Loris since October 2017. She and others at Keypoint Law were aware of the undue influence and related claims from correspondence with McMahons. She was, therefore, in a different position to a lawyer who is introduced to a person for the sole purpose of them executing a power of attorney. In my view, her presence is a factor that mitigates the existence of undue influence or unconscionable conduct.
Fourth, I am not persuaded that Loris' reasons for making the changes to the instruments are all predicated on a "confection manufactured" by the siblings as Ken submits. Loris deposes that he appointed Philip as attorney with Victor and Marianne as substitutes because he no longer trusted that Ken was acting, or would act, in his best interests as his attorney. Amongst the reasons given by Loris for this view are Ken's refusal to give documents unless Loris and Sonia agreed to his conditions despite an earlier promise to do so, Ken bringing a cross-claim against Loris and Sonia despite a promise to never sue them, Ken's failure to return the Bondi property income despite Loris' requests, and Loris ceasing to receive the Sahab Trust income despite queries to Ken. Loris deposes that he signed the Revocation of Guardianship and the 2018 Guardianship for the same reason as the 2018 Power of Attorney but that he continues to make all of his own decisions with respect to his healthcare.
Ken's promise not to sue Loris could not have been a relevant consideration as these proceedings had not yet been commenced at the time Loris executed the instruments. That matter is, however, relevant to assessing Loris' current view of Ken.
As to the other matters, by March 2018, Ken had refused to produce documents despite multiple requests by Mr Rumore, Keypoint Law and Uther Webster & Evans. Ken's offers to produce documents in January and February 2018 were also made subject to conditions. While there may not have been 16 conditions as Ken says Loris believed, Ken's initial offer involved seven conditions for releasing the documents and his subsequent offers were also conditional. Ken had also caused the Bondi property rents to be paid into his trust account from November 2017 and, by then, had arranged for the Sahab Holdings rents to be paid into a different account managed by him. While Ken may have had sound reasons for taking these steps, Loris' reasons for his lack of trust in Ken do not, in my view, completely lack factual foundation.
Fifth, while the evidence discloses that Loris had been influenced and subjected to pressure by the siblings, including by statements made to him by the siblings, in my view, it also demonstrates that Loris had a sufficiently strong will such that he was able make his own choices and instruct Ms Ross-Maranik about them. This is reflected by his instructions (with Sonia) not to sue Ken for the documents in March 2018 (at [383]).
Ken's evidence of his discussions with Loris about the changes also do not refer to any pressure, threats or coercion placed on Loris by Philip to agree to revoke the 2014 Power of Attorney and appoint Philip instead. As Ken's file note records, Loris had decided that he did not want Ken involved anymore. In cross-examination, Philip also rejected that he persuaded Loris to give a power of attorney to him (T949.19-20).
Sixth, unlike Sonia, there is no evidence before the Court that Philip has acted on Loris' 2018 Power of Attorney.
Seventh, Loris deposes that he understood he was entrusting Philip, and Marianne and Victor as substitutes, with the responsibility of conducting financial affairs on his behalf which took effect upon execution of the instruments. As to why he appointed Philip, Loris deposes that Philip was an accountant whom he trusted along with Marianne and Victor, Philip had never done anything without consulting Loris first, and Loris believed that Philip would always consult him before acting on the power or conducting any financial affairs on his behalf.
I accept that the appointment of Philip as Loris' sole attorney runs counter to what Loris and Sonia had done previously and represents a significant change in his approach. However, Loris' evidence about his understanding of and reasons for what he was doing, Ms Ross-Maranik's presence as his independent lawyer and the other factors set out above satisfy me that Loris was capable of understanding the general nature and purport of the instruments when he signed them and thus, did not lack capacity at the time. By reason of the above matters, I am also not satisfied that Ken has established, on the balance of probabilities, that Loris signed the 2018 Revocations, Power of Attorney and Guardianship by reason of undue influence or unconscionable conduct on the part of the siblings.

[83]

18 April 2018 Resolution, 11 May Authorities and 11 May Bondi Direction

Ken submits that, having been subjected to undue influence from early to mid-2017 from the siblings, Loris and Sonia were subject to undue influence and did not have capacity to agree to the 18 April Resolution. Ken refers to the contents of the translated transcript and the conversations he had with Loris and Sonia on 18 April (referred to at [394]-[396]) as evidence that they felt pressured into agreeing to a process which would lead to litigation. He submits that, absent the presence of Philip and Victor as directors and pressure from the siblings, the 18 April Resolution would never have been passed and the minutes would not have been signed.
Ken also submits that the fact that Loris and Sonia received an explanation about the 18 April Resolution from Ms Ross-Maranik makes no difference as her solicitor's certificate does not address undue influence and, in any event, it could not rationally do so without a full understanding of the whole of the circumstances to which Loris and Sonia had been subjected.
For the same reasons, Ken submits that the 11 May Authorities and the 11 May Bondi Direction were also procured by undue influence and should be set aside on the basis that Loris and Sonia lacked capacity.
Kanjian Holdings and the siblings contend that there is no basis on which to argue that Loris and Sonia were induced to sign the 18 April Resolution, the 11 May Authorities and the 11 May Bondi Direction by undue influence or unconscionable conduct or that they lacked capacity to do so. They rely on Ms Ross-Maranik's evidence. They also contend that if this was a challenge to retainer by Ken, this is not the appropriate method for such a challenge, referring to Doulaveras v Daher [2009] NSWCA 58 (Doulaveras) at [76] et seq, especially [140]-[141].
Pausing here, if Ken's claim involved a challenge to the retainer of Kanjian Holdings' solicitors then I accept that he needed to raise this issue in advance of or at the trial: Doulaveras at [132]-[139]. However, I am not persuaded that Ken's claims do involve such a challenge. It was not raised in the pleadings or the written or oral submissions. I also note that Ken's Senior Counsel confirmed that no claim was made by Ken that the Corporations proceedings should be set aside or there is an abuse of process (T296.31-45), such as because there was no authority to Kanjian Holdings' solicitors to bring the litigation.
Kanjian Holdings and the siblings also submit that Ken's claims for relief in relation to the 18 April Resolution and the 11 May documents are futile because the demands have been made, the Corporations proceedings have been commenced and the documents have been produced. As was put at the hearing, the issues are spent, the claims are "ancient history" and there is no utility to the relief that is sought (T1098.16-T1099.12).
Turning to the substantive issues raised, the first question is whether Loris and Sonia lacked capacity at the time they signed each of these impugned documents.
As previously noted, the relevant question is whether they had the capacity to understand the general nature of each transaction if it was explained, which is determined by reference to the particular transaction concerned: Hanna v Raoul at [47]. It is relevant to ask whether Loris and Sonia understood that, by the 18 April Resolution, they were authorising Uther Webster & Evans to demand documents from Ken and, if necessary, to commence proceedings to recover them and to appoint Philip and Victor as attorneys to instruct on the proceedings. While there may be some doubts as to Sonia's cognitive state by April or May 2018, the evidence does not support a finding that she lacked capacity by that time.
In relation to the 18 April Resolution, there is evidence that Loris and Sonia were alone with Ms Ross-Maranik for around 45 minutes prior to the directors' meeting commencing and the certificate which she signed confirms that the general nature of the resolution and power of attorney were explained to them. Loris also gives evidence, which was not challenged in cross-examination, that he understood the nature and effect of the power of attorney and remembers signing it of his own free will. Having regard to this evidence, particularly in relation to Ms Ross-Maranik, I do not accept that Ken's file note, which records Loris telling Ken on 18 April that he did not know what he had signed, accurately reflects Loris' state of mind and understanding at the time.
As to the 11 May Authorities and the 11 May Bondi Direction, Loris and Sonia were represented by Ms Ross-Maranik at the time they signed those documents. Ms Ross-Maranik gives evidence that, on multiple occasions from 2017 to August 2018, Loris and Sonia had together and separately requested that she recover documents from Ken. Loris also gives evidence that he instructed Ms Ross-Maranik to have the rent from the Bondi property paid into a Macquarie bank account in his and Sonia's name, which Ms Ross-Maranik gives evidence that she did on 14 May 2018.
Accordingly, I am not satisfied that Ken has established that Sonia or Loris lacked capacity to sign the 18 April Resolution, grant the power of attorney to Victor and Philip on behalf of Kanjian Holdings or sign the 11 May Authorities and the 11 May Bondi Direction at the relevant times.
In determining whether the 18 April Resolution and company power of attorney were induced by undue influence or unconscionable conduct, I accept that Ken's file note of the 18 April discussion and the translated transcript are powerful evidence that pressure and influence had been brought to bear on Loris and Sonia by the siblings to sign documents.
The relevant question is whether Loris and Sonia were improperly influenced in such a way that their decisions to sign the documents were not free and well understood acts or whether their disabilities and special disadvantages were unconscientiously taken advantage of by the siblings in procuring their agreement to the 18 April Resolution. The judgmental capacity of the party seeking relief must be "markedly substandard": Thorne v Kennedy at [32]. Having carefully reviewed the evidence, and the translated transcript in particular, the conclusion I have come to is that I cannot be satisfied on the evidence that they were induced to sign the documents by reason of undue influence or unconscionable conduct in respect of which relief should be granted.
In my view, the presence of Ms Ross-Maranik prior to and at the 18 April meeting is a significant factor that tends against a conclusion of undue influence or unconscionable conduct. Her presence enabled Loris and Sonia to receive independent and competent legal advice on the transactions such that I am satisfied they understood what they were doing at the time. While Ms Ross-Maranik may not have known all the circumstances, she was aware of the issues raised by Ken and had discussed Loris and Sonia's concerns about him and what they wanted on a number of occasions. Thus, she could be expected to have advised Loris and Sonia on the options available to them and the risks in respect of each option.
The authorities recognise that the purpose of independent advice is to guard against improvidence and act as a "reality check" in respect of transactions which might be disadvantageous: Riz v Perpetual Trustee Australia Ltd [2007] NSWSC 1153 at [124]. The ability of Loris and Sonia to readily access independent legal advice prior to, on and after the resolution was made is, in my view, a mitigant for undue influence and unconscionable conduct, although I accept it is not a complete answer.
The translated transcript includes a number of statements that are clearly indicative of pressure and intimidation having been placed on Loris and Sonia by the siblings, as referred to at [414]. However, it also includes statements that, in my view, are indicative of pressure and influence being placed on Loris to sign documents by Ken, as referred to at [413]. Some of the references in that transcript that are suggestive of fear or intimidation by the siblings seemingly relate to documents that Ken asked Loris to sign and the siblings' reaction to Loris signing them. It is difficult to discern how much of what Loris says is responsive to Ken's requests and, how much reflects a genuine fear of the siblings' conduct and undue pressure being placed on him and Sonia.
Further, the transcript does not specifically refer to the meeting and the resolution Loris and Sonia signed that day. Neither Loris nor Sonia say they were pressured into acceding to the 18 April Resolution at the time they signed it.
Loris' expressed desire to stay out of court, particularly his statement that he was going to tell the siblings that he had "judged the situation and decided … there is no need for judges and lawyers anymore because those lawyers are costing us a lot of money", is also not inconsistent with the 18 April Resolution which authorised court proceedings "if necessary". As Loris deposed, he had steadfastly tried to avoid litigation with his children and signed the power of attorney on behalf of Kanjian Holdings so that he did not have to be involved in and distressed by the litigation at the time.
The substance of the 18 April Resolution is also significant. It was a resolution by the directors of a company for it to make demands on a lawyer and an accountant to produce company documents held by them. In my view, there is nothing objectively unreasonable or improvident about such a request. The authorisation to commence proceedings also followed a series of demands being made for documents which had been refused by Ken.
Even accepting that the siblings' conduct could be characterised as involving actual pressure and influence and Loris as well as Sonia suffered from a special disadvantage or disability, the dealing struck by way of the resolution could not, in my view, be described as unfair, unjust or unreasonable in the circumstances or something which obviously provided an advantage to the siblings to the detriment of Loris and Sonia: Amadio at 474 (Deane J, Wilson J agreeing); Watkins v Combes at 194 (Isaacs J).
For these reasons, I am not satisfied that Ken has established that Loris and Sonia were induced to sign the 18 April Resolution and power of attorney by reason of undue influence or unconscionable conduct.
For similar reasons, I have come to the same conclusion in relation to the 11 May Authorities and the 11 May Bondi Direction. Relevantly, they are not transactions to which the siblings are a party or signatory. They comprise demands by Loris and Sonia for their own documents and a direction for the payment of rent in respect of a property they jointly own into their own bank account. They are signed by Loris and Sonia in their personal capacities and, in relation to the Authorities, as directors of Kanjian Holdings, and are objectively reasonable. There is also no evidence that they were prepared or signed at the siblings' request and it is not apparent that the siblings would obtain any benefit from them.
Even if I had been persuaded that the 18 April Resolution, 11 May Authorities or 11 May Bondi Direction had been procured by undue influence or unconscionable conduct, there is a question as to what, if any, relief should be granted. As Kanjian Holdings and the siblings submit, the document demands have been made and the proceedings commenced. There seems to be no utility in granting relief to now have them set aside.
There is another issue which the parties did not address in submissions which raises a question about the nature of the claim for relief, namely the equitable jurisdiction to set aside a direction or authority. As Ward CJ in Eq observed in Antov v Bokan at [575], the established categories where equity will intervene to set aside a transaction for undue influence involve gifts or other dispositions of property and contractual promises. None of the cases to which I was referred concerned the granting of relief in respect of an authority or direction issued to a third party, or a situation where the issuing party makes no complaint about what they have done.
Finally, I note that Ken also submits that the 18 April Resolution is invalid and liable to be set aside because Philip and Victor were not in fact directors at the relevant time and the directors' meeting proceeded on that false basis. He argues that, absent the purported appointment of Victor and Philip as directors, the meeting on 18 April 2018 would not have occurred and the Court should find that Philip and Victor dishonestly represented to Sonia and Loris that they were entitled to be present as directors when they had no such entitlement. Ken also submits that, to the extent the 11 May Authorities flow from and were authorised by the 18 April Resolution, they should also be declared void or rescinded. As these submissions rely on the invalidity of the 27 August Resolution, the issues raised do not arise for determination in light of my findings on that Resolution.

[85]

Sahab A Class Share Claim

Loris pleads that Ken holds the A class share on trust for him, that he has an absolute and indefeasible beneficial interest in that share, and that Ken is obliged to transfer it to him: SFASC at [17]-[23]. He says his interest in the A class share arises by reason of the 1984 Declaration of Trust, the conversion of the ordinary share held by Ken to the A class share on 25 September 1987 and Ken being registered as not holding the beneficial interest in the A class share.
Ken admits that he executed the 1984 Declaration of Trust, that the ordinary share was converted into an A class share which Ken is registered as not holding beneficially and that Loris has called for the transfer of that share. Ken pleads that Loris is estopped from demanding the transfer of legal ownership of the share during Loris and Sonia's lifetime: Defence at [17]-[23].
Ken invokes estoppel by convention in his Cross-Claim: at [57]-[58]. He claims that, since 1987, there has been an agreed or assumed state of affairs between Loris and Ken that: 1. Ken would hold legal title to the A class share during Loris and Sonia's lifetime so that he could exercise the attached voting rights having regard to Ken's personal guarantees for and contributions to purchasing the Northbridge and Strathfield properties, his assumption of primary management responsibilities without remuneration and him relinquishing his role as appointor of the Metropole Trust; 2. Loris would have a beneficial interest in the A class share so that he could derive the benefit of dividends and his interest in the share would be secure in the event of Ken's death; and 3. Loris would not otherwise seek to assert a right or interest in the A class share and would allow Ken to exercise voting rights.
According to Ken's Cross-Claim, it would be unjust for Loris and Sonia to depart from the assumed state of affairs and they ought to be estopped from doing so (1987 estoppel).
Loris denies the 1987 estoppel: Defence to Cross-Claim at [57]-[58].
The issues for determination regarding the Sahab A Class Share Claim, as agreed between the parties, can be summarised as follows: 1. Whether in mid-1987 Ken, Loris and Sonia agreed that Ken should be allowed to retain legal title to the A class share in Sahab Holdings for so long as Loris and Sonia remained alive, with the consequence that Loris (save for the receipt of dividends) would not otherwise assert a right or interest in the A class share and Ken would be allowed to exercise the voting right attached to the share. 2. Whether Ken holds one A class share in Sahab Holdings on trust for Loris. 3. Whether Loris is estopped from asserting a right to or interest in the A class share with the result that Ken is permitted to hold legal title to the A class share for so long as Loris remains alive. 4. Whether Ken is, by reference to calls made on him in October 2018, required to transfer the A class share to Loris according to the principle in Saunders v Vautier.
Ken had also pleaded an estoppel based on the 1984 discussion at [58] which he claimed precluded Loris and Sonia from removing Ken as a director of Sahab Holdings, altering the company's share structure, memorandum and articles of association, and altering the Metropole Trust Deed: Cross-Claim at [59]-[60]. Ken did not press the 1984 estoppel claim at the hearing (T1128.21-33).

[86]

Legal principles

In Legione v Hateley (1983) 152 CLR 406; [1983] HCA 11, Mason and Deane JJ identified three general classes of estoppel: estoppel of record, estoppel of writing, and estoppel in pais. Their Honours described the third class of estoppel in the following terms at 430: Estoppel in pais includes both the common law estoppel which precludes a person from denying an assumption which formed the conventional basis of a relationship between himself and another or which he has adopted against another by the assertion of a right based on it and estoppel by representation which was of later development with origins in Chancery. It is commonly regarded as also including the overlapping equitable doctrines of proprietary estoppel and estoppel by acquiescence or encouragement.
An estoppel by convention may arise where the parties conduct the relations between them on the basis of an agreed or assumed state of facts which they will be estopped from denying: Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Aust) Ltd (1986) 160 CLR 226 at 244; [1986] HCA 14. The elements of conventional estoppel were set out by Brereton J in Moratic Pty Ltd v Gordon (2007) 13 BPR 24,213; [2007] NSWSC 5 (Moratic v Gordon) at [32], and approved in Miller Heiman Pty Ltd v Sales Principles Pty Ltd (2017) 94 NSWLR 500; [2017] NSWCA 106 (Miller Heiman) at [42]-[44], as follows: In common law conventional estoppel, it is necessary for a plaintiff to establish (1) that it has adopted an assumption as to the terms of its legal relationship with the defendant; (2) that the defendant has adopted the same assumption; (3) that both parties have conducted their relationship on the basis of that mutual assumption; (4) that each party knew or intended that the other act on that basis; and (5) that departure from the assumption will occasion detriment to the plaintiff.
The parties' acts or conduct must be plainly, if not unequivocally, explicable on the mutual assumption contended for. Conventional estoppel is not established if the parties' course of dealing is referrable to some other equally plausible assumption: Queensland Independent Wholesalers Ltd v Coutts Townsville Pty Ltd [1989] 2 Qd R 40 at 46, cited in Miller Heiman at [41].
The party claiming the benefit of the estoppel does not need to establish that they acted solely in reliance on the other party's conduct or statements. They must, however, demonstrate that they would have acted differently but for the relevant assumption: Miller Heiman at [45]-[49], [62]; Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19 (Sidhu v Van Dyke) at [71]-[73].
There is no requirement that either party induced or acquiesced in the other's adoption of the relevant assumption or that either party knew that the other may incur detriment in reliance on the assumption. Since the assumption must be common to both parties and may involve a mistaken interpretation of a contract, the possibility that either party might incur detriment by reliance on it will usually not occur to the other: Moratic v Gordon at [37].
The relevant detriment is that which would flow from the change of position if the assumption that led to it is departed from: Grundt v Great Boulder Proprietary Gold Mines (1937) 59 CLR 641 at 674 (Dixon J); [1937] HCA 58.
The need to prove detriment, prejudice or disadvantage was emphasized by Dixon J in Thompson v Palmer (1933) 49 CLR 507; (1933) HCA 61 where his Honour said, at 547, that: The object of estoppel in pais is to prevent an unjust departure by one person from an assumption adopted by another as the basis of some act or omission which, unless the assumption be adhered to, would operate to that other's detriment. Whether a departure by a party from the assumption should be considered unjust and inadmissible depends on the part taken by him in occasioning its adoption by the other party. … [The estoppel will operate if] the other party will have placed himself in a position of material disadvantage if departure from the assumption be permitted.

[87]

Loris

Loris claims that Ken holds the A class share on trust for Loris and is bound to transfer it to him. Loris relies on demands made to Ken for transfer of the share in October 2018 and the principle that he, as a beneficiary who is sui juris and holds an indefeasible interest in the entire trust asset, is entitled to call for the asset to be transferred to them: Saunders v Vautier (1841) 4 Beav 115; (1841) 49 ER 282.
In relation to Ken's claimed estoppel, Loris submits that even if the 1987 discussion is accepted by the Court, Ken cannot establish that he and Loris conducted their relationship on the basis of the alleged mutual assumption to the effect that Ken would have a say in the management of Northbridge Village. Loris submits that this assumption did not have its source in the 1987 discussion. He contends that, even on Ken's own evidence, it is unrealistic to say that Ken only assisted his parents as a result of the alleged promise and would have acted differently but for the assumption for three reasons. First, Ken himself had decided to renounce his office as appointor of the Metropole Trust as he considered it inappropriate to continue in that role. Second, he had been a director since 1984. Third, his existing personal relations and sense of duty to Loris and Sonia meant that Ken would have continued to voluntarily assist them without remuneration in any event.
Loris also points to the fact that the only detrimental reliance pleaded is his ongoing management of the Northbridge Village and Strathfield property.
Loris submits that Ken retrospectively attributes greater significance to his giving up of the right of appointment than the circumstances in 1987 suggest. Loris refers to Ken's evidence in cross-examination that, at the time of the 1987 discussion, nothing in the foreseeable future indicated a need to exercise the right of appointment and Ken's main wish was to continue to have a say and play a role in Sahab Holdings' affairs which was not in jeopardy at the time.
In the alternative, Loris submits that Ken's account of the 1987 discussion should not be accepted by the Court. Loris points to the passage of time, Sonia not being in a position to contradict the discussion, the absence of a contemporaneous document recording the conversation and the variation to the trust, Ken's self-interest in the outcome and the temptation for reconstruction.
Loris also points to other aspects of Ken's evidence which he submits undermine Ken's recollection. They include his evidence regarding whether the siblings were present during discussions about the trust structures (T435.1-25), Ken's failure to put forward his recollection of all relevant discussions (T418.46-T419.5, T422.7-14), and inconsistencies and errors in Ken's evidence about his and Loris' role in managing the Northbridge properties, referring to Ken's evidence in the s 88K proceedings.
Reliance is also placed on Loris' evidence that he was unaware of the trust in respect of the A class share and never discussed the alleged trusts with Ken. It is submitted that the Court is not bound to accept Ken's evidence of the 1987 discussion if Loris' evidence is not accepted: Cubillo v Commonwealth of Australia (No 2) (2000) 174 ALR 97; [2000] FCA 1084 at [119].
Loris also submits that it would not be unjust or unconscionable for Loris to exercise of his right to call for the A class share as Ken's conduct has been inimical to the interests of Loris and Sahab Holdings relying, in particular, on his conduct in relation to the Senses AFL. He refers to the comments of Allsop P (as his Honour then was) in Delaforce v Simpson-Cook (2010) 78 NSWLR 483; [2010] NSWCA 84 (Delaforce) at [3] that the conscionability (or not) of resiling from the encouragement or representation depends on, amongst other things, the conformity with good conscience of keeping a party to any relevant encouragement or representation.
In addition to the principles referred to above, reference was made to the recent work of Michael Barnes QC, The Law of Estoppel (Hart Publishing, 2020) (The Law of Estoppel) at 384 where he says that, in principle, any relevant matter can be taken into account in the application of the test of unconscionability and proposes that there is no reason why unmeritorious conduct by the person asserting the estoppel should not be taken into account in estoppel by convention, as it is in relation to proprietary estoppel.
Loris also submits that an estoppel by convention will operate to prevent a party from resiling from the shared assumption only in respect of actions which occur during the period of the shared assumption. He says that, for that reason, the estoppel may not have permanent effect as it will cease once the common assumption is revealed to be erroneous: The Law of Estoppel 388-9, citing Hiscox v Outhwaite [1992] 1 AC 562 at 575.
Finally, Loris refers to the observations of Barrett J (as his Honour then was) in ING Funds Management Ltd v ANZ Nominees Ltd [2009] NSWSC 243 at [76] that neither abrogation nor variation of the covenant in a deed poll can be achieved except by another covenant created with the same great care and formality. Loris submits that this bears on whether Loris and Ken agreed to vary their respective obligations and entitlements in relation to the share held on trust for Loris in circumstances where the original declaration of trust took the form of a deed poll.

[88]

Ken

Ken accepts that he holds the A class share on trust for Loris but says he does so only on the basis of the 1987 discussion. He submits that the 1984 Declaration of Trust relating to the ordinary share ceased to exist when the A class share was created and, absent the 1987 discussion, there is no applicable declaration of trust in relation to the A class share such that Loris cannot establish any entitlement to the A class share.
Ken accepts that the estoppel he relies on to defend Loris' claim is based on the 1987 discussion and submits that the Court should accept his evidence of the whole of that discussion as it is consistent with the objective facts and ordinary probabilities. He relies, in particular, on the fact that Sahab Holdings' share restructure and changes to the appointor of the Metropole Trust were made with Sonia's knowledge and says that it is inconceivable that Loris was not also aware of and agreed to the changes at the time.
Ken takes issue with the matters raised by Loris as to why the Court should reject his evidence of the 1987 discussion. Ken submits that they are irrelevant, incorrect and do not detract from the substance and plausibility of his evidence about what was discussed and agreed. He says that his evidence in the s 88K proceedings was not inconsistent with his evidence in this case but, in any event, Loris conceded in cross-examination that Ken was managing the Northbridge Village business and Ken's evidence before Robb J related to the period from 1987.
Ken also submits that the Court should accept his evidence of the 1987 discussion as Loris' evidence does not respond to Ken's account of it and his general denials are not supported by the evidence.
As to Loris' submission that Ken would not have acted differently but for the assumption, Ken contends that his evidence makes clear the only basis on which he was prepared to give up the right of appointment was that set out in the 1987 discussion, with which Loris agreed. Ken says that the appointment right was of significant value as it gave him some say in how Sahab Holdings would be run. He submits that he relied on the understanding and arrangement to relinquish his effective control over the assets of the Metropole Trust by surrendering his exclusive power of appointment.
Ken submits that he continued to perform management roles without reward and stand as personal guarantor for the Strathfield property in reliance on the understanding reached in the 1987 discussion. Thus, he says it would be unconscionable to permit Loris to resile from the understanding and arrangement reached in 1987. On his submission, to do so would expose Ken to dismissal as a director of Sahab Holdings, deprive him of his key management role, risk financial loss in the event of mismanagement by those replacing him, and because Loris' loss of confidence in Ken is a direct result of the siblings' deception and unconscionable conduct. Ken also rejects engaging in any misconduct in relation to the Senses AFL.

[89]

Did the 1987 discussion occur?

It is necessary to deal first with Ken's evidence about the 1987 discussion, as set out at [78]. That discussion is the basis of Ken's conventional estoppel defence and also relevant to the issue of whether Loris has established that the A class share is held on trust for him by Ken.
In considering whether the 1987 discussion took place in the terms alleged by Ken (or at all), the context is important. By the time of the alleged discussion, Ken held the ordinary share in Sahab Holdings on trust for Loris, was a director of that company, had contributed to the purchase of Northbridge Village and the Strathfield property and had given personal guarantees in support of those purchases. As referred to at [72]-[73], the Strathfield property was purchased by Sahab Holdings for the benefit of Ken and the siblings. Sonia and Loris did not have a financial interest in it.
I accept Ken's evidence that the 1984 Declaration of Trust arose out of a discussion with Sonia and Loris in which Ken proposed and they accepted a trust arrangement in relation to the ordinary share for Loris for tax-related reasons and because of Ken's financial support and agreement to manage the Northbridge Village, along the lines of the discussion at [58]. Ken's evidence is not inconsistent with aspects of Loris' evidence at [64]. It is also supported by contemporaneous documents (for example, the 1984 Declaration of Trust) and subsequent events (such as Ken's management work in relation to the Northbridge Village), although I accept there must be some doubt about the precise terms of the 1984 discussion given the passage of time.
Ken accepts that, between 1984 and 1987, Loris had a right to call for the ordinary share held on trust by Ken as its beneficial owner (T1130.29-39).
As at mid-1987, the affairs of the Metropole Trust were managed cooperatively between Ken and his parents (T468.5-6). Ken was the sole appointor of the trustee under the Metropole Trust Deed and had that right since the trust was created. Ken's evidence is that he placed significance on that right and thought it was of value despite having no reason to think, at the time, that he would need to exercise the rights vested in him as appointor (T468.1-26).
From 1984 to 1987, Ken assisted his parents out of recognition of the sacrifices they had made for him, a sense of duty to them and without thought of payment or any other form of return (T471.47-9, T472.1-23). He had undertaken a management role in relation to the Northbridge Village from 1984 to mid-1987 and had been solely responsible for managing the Strathfield property since it was purchased for no recompense. As at mid-1987, Ken had been devising structures for the family trusts and companies. Sonia and Loris relied on and accepted Ken's advice about those matters although they found some of the structures he proposed to be complex.
It is in that context that Ken says he met with Sonia and Loris and proposed a share restructure to provide him and the siblings with more rights. The proposal involved converting the ordinary shares held by him and Sonia in Sahab Holdings into two A class shares with voting rights while Loris and Sonia were alive, creating B class shares for him and the siblings with voting rights after the death of Loris and Sonia and changing the articles of association to provide for all major decisions concerning the Metropole Trust to be made by a unanimous vote of B class shareholders after Loris and Sonia died. It also involved Ken giving up his role of appointor in favour of Sahab Holdings. According to Ken's evidence, he formed the view that it was inappropriate for him to remain appointor as he was married, thus creating the possibility that Annie would succeed him as appointor upon his death.
As noted above, Ken says that during the 1987 discussion, he proposed, and Loris and Sonia agreed, that he should be allowed to retain legal title to the A class share in Sahab Holdings for as long as Loris and Sonia remained alive. He made this proposal because Ken would no longer be the appointor but wished to have a say in how the company should be managed given his personal guarantees, continued assumption of management responsibilities without reward and contribution to the initial purchase of Northbridge Village and the North Strathfield.
Loris' affidavits do not directly respond to the 1987 discussion. He denies it in his Defence and deposes that he was unaware of the trust in respect of the A class share until he saw the 1984 Declaration of Trust in 2018 and that, until then, he and Sonia believed they controlled Sahab Holdings at all times. He also gives evidence that he was never consulted about a range of matters relating to trusts, shares and companies and changes to share structures by Ken.
This evidence about Loris' lack of consultation is contradicted by documents signed by him over many years that show he was aware of changes to trust and company structures (see, for example, meeting minutes of Kanjian Holdings dated 23 November 1990 and 3 February 2012, the resolution of Kanjian Holdings dated 7 April 2012, Amending Deed relating to Kanjian Family Settlement Trust dated 3 February 2012 and memoranda relating to Kanjian Holdings dated 3 February 2012, 7 April 2012 and 22 April 2012). This, together with Loris' limited recall and confusion about some aspects of his evidence and his failure to deal directly with the 1987 discussion, leads me to conclude that I can place little weight on Loris' general denials in response to the 1987 discussion.
Ken's evidence of the 1987 discussion is detailed, precise and involves some legal complexity. The passage of time is also significant; the 1987 discussion allegedly occurred over 32 years ago. Ken appropriately acknowledged this in cross-examination when he said, for example, that he "didn't have the clarity of recollection" as it was a "long time ago" (T422.10-4). Ken also accepted in cross-examination that there were "lots of conversations" with Loris and Sonia about the matters referred to in the 1987 discussion which he did not include in his affidavits. While some of his reasons for not doing so were not very convincing (T422.16-35, T423.1-12), I do not accept the submission that the Court should infer from this that Ken has not advanced matters which might prejudice his case. Ken's evidence that the 1987 discussion was "summarising perhaps the most important conversation" and was correct in "terms of the substance, to the best of [his] recollection" (T423.12, T423.45) is plausible in my view.
I am not persuaded by Loris' submission that Ken's evidence regarding discussions in the presence of the siblings and his failure to inform them is significant in assessing the reliability of Ken's evidence of the 1987 discussion. While Ken had to correct some evidence during the course of cross-examination (for example, T408.7-10), in my view, his failure to inform the siblings can be explained by their ages at the time, their lack of involvement in the decision-making process and the fact that the changes were beneficial to them.
As to some of the other matters raised by Loris, Ken's reference in his pleading to his $40,000 payment in relation to the Northbridge Village purchase as a "significant equity contribution" may be overstating the position given his evidence that Loris and Sonia repaid that amount to him within a few years. His evidence in the s 88K proceedings to the effect that, in 1987, Loris and Sonia were proactively managing the Northbridge Village is not, in my view, consistent with Loris' statements in the 1987 discussion that Ken had taken on the "entire management burden of Northbridge". It is also not consistent with Ken's evidence about Loris' role in this case, which he accepted in cross-examination was "not complete" and to a degree "understated" (T466.45-6).
Nevertheless, the concept of management could mean different things to different people, particularly given the various activities that could be said to relate to the management of a shopping village, family companies and trusts. Having considered the evidence of Ken and Loris, I conclude that they were both involved in the management of the Northbridge Village from some time in 1987, with Loris focusing on the day to day operations and dealings with tenants and Ken being responsible for leasing, tax, insurance and other legal and regulatory related matters, including in relation to Sahab Holdings. I find that decisions relating to rents, construction and development of the property were likely made by Ken and Loris together.
Ken presented as someone who took care in documenting important matters. He accepted in cross-examination that an arrangement with Loris about the terms of the trust over the A class share was significant because, on Ken's case, Loris was agreeing not to call for transfer of the share for his lifetime and the understanding involved a variation of Loris' rights in relation to the ordinary share. Ken's evidence is that he prepared the 1984 Declaration of Trust to ensure Loris had an accurate record and to protect him (T428.45-8, T419.31-42).
In that context, the absence of a written record that corroborates what Ken asserts is the basis of the common assumption and the terms of a new trust over the A class share is surprising. That said, Ken's evidence that there was mutual trust between him and his parents such that he did not think recording the understanding was necessary and his explanation that he did not have the presence of mind to document the changes at the time was convincing in the context of the trusting family arrangement at the time (T429.15-21, T431.5-9, T431.25, T431.48, and T432.5-18).
Having weighed up all of the submissions and the evidence, I have concluded that a conversation along the lines of the 1987 discussion likely occurred. In arriving at that conclusion, I have borne in mind the need to feel an actual persuasion of its occurrence, the warning of McClelland CJ in Eq in Watson v Foxman and the submissions regarding Ken's self-interest.
As previously stated, I find Ken to be an honest and generally reliable witness. While the passage of time is significant, the 1987 discussion is inherently likely when considered against the contemporary materials, objectively established facts and the apparent logic of events. The proposal to create the A and B class shares and vary the Metropole Trust Deed are matters that Ken would be expected to raise with and seek agreement about from Sonia and Loris. That Ken discussed the changes with Sonia is confirmed by the passing of special resolutions of Sahab Holdings giving effect to the changes in share capital and her signature on the Deed of Variation. I am also persuaded that Ken likely discussed the proposal with Loris based on the subject matter of the discussion and Ken and Loris' evidence of their other discussions involving Sonia about trust structures and property purchases, including during the period from 1984 to 1987.
It is also logical that Ken wanted an assurance that he would be able to retain the voting rights attached to the A class share for Loris and Sonia's lifetime and thus, be guaranteed of some say in Sahab Holdings' management until his decision-making rights as a B class share holder became effective. By 1987, Ken had an increased interest in Sahab Holdings through his investment in the Strathfield property. Him giving up his lifetime right to appoint a trustee meant that he could no longer control who has the overall management and responsibility for the trust property.
Accordingly, and while there may be doubts about some of the details recorded in 1987 discussion, I am persuaded that Ken's evidence reflects the substance of what was discussed, and I accept it.

[90]

Does Ken hold the A class share on trust for Loris?

Ken accepts that he holds the A class share on trust for Loris by reason of the 1987 discussion, namely on the basis that Ken would retain voting rights to the A class share during Sonia and Loris' lifetime (Closing Submissions at [5.32], T1115.48-T1116.12). The remaining issue in dispute is whether an estoppel arises from that discussion.
There was some debate at the hearing about whether Loris' claim to an indefeasible beneficial interest in the A class share could succeed if the 1987 discussion did not occur. While it is not strictly necessary to do so, I have set out my views on that issue, albeit briefly.
In order to constitute a trust, there must be clarity regarding the intention to create the trust and the property that is subject to the trust and reasonable certainty as to the beneficiary: Legal Services Board v Gillespie-Jones (2013) 249 CLR 493; [2013] HCA 35 at [116] (Bell, Gageler and Keane JJ), quoting Kauter v Hilton (1953) 90 CLR 86 at 97; [1953] HCA 95 (Dixon CJ, Williams and Fullagar JJ).
An intention to create a trust may be express and in writing. It may also be inferred from the terms of conversations, conduct or the surrounding circumstances: Ashton v Pratt (2015) 88 NSWLR 281; [2015] NSWCA 12 at [186]. In order to infer intention, the Court looks to the nature of the transaction and the whole of the circumstances attending the relationship between the parties and known to them: Byrnes v Kendle (2011) 243 CLR 253; [2011] HCA 26 at [105]-[114]; Walker v Corboy (1990) 19 NSWLR 382 at 395-6.
In this case, the property the subject of the claimed trust is the A class share and the beneficiary is Loris. The issue turns on whether the Court can infer an intention to create a trust or vary the existing trust in favour of Loris over the A class share.
The relevant background is that Ken held the ordinary share on trust for Loris by virtue of the 1984 Declaration of Trust. The terms of that trust provided that Ken held the entire interest in the ordinary share for and unto the use of Loris. While Loris disclaimed any knowledge of the 1984 Declaration of Trust, the trust over the ordinary share existed to Loris' benefit even if it had not been communicated to him: Rose v Rose (1986) 7 NSWLR 679 at 686.
According to Ken's evidence, the reason that Loris did not hold legal title to the ordinary share was, in part, for tax reasons. As Ken accepted in closing submissions, between 1984 and 1987, Loris had a right to call for the ordinary share as it was held on trust for him as beneficial owner. In other words, Ken accepted that Loris had an indefeasible and beneficial interest in the trust property during that period.
The ordinary share held by Ken on trust for Loris was converted into an A class share by a resolution of Sahab Holdings dated 25 September 1987. The holders of the two A class shares are recorded as being entitled to the same rights and benefits as the holders of the ordinary shares had been, with the only difference being that the enjoyment of the rights and benefits in relation to the A class shares are limited to Sonia and Loris' lifetime. The reason for the restructure was to give more concrete rights to the siblings and Ken in the context of the Strathfield property purchase. That was done by creating the B class shares which entitled the holders to certain rights and benefits after the death of the survivor of Loris and Sonia.
Ken does not plead in his Defence or Cross-Claim that a new trust was created over the A class share in 1987. He does not deny Loris' claim that he holds the A class share on trust for Loris. Rather, in response to Loris' pleading, he asserts an estoppel based on the 1987 discussion. Ken's evidence in cross-examination did not disclaim any trust or explain the absence of writing by reference to the mode of creation of a trust over the A class share.
Loris submits, and I accept, that what occurred is entirely consistent with a variation to the existing Declaration of Trust in 1984 by way of a change in the trust asset to the A class share in lieu of the ordinary share. Alternatively, if the 1987 discussion had not occurred in the terms deposed by Ken, it seems to me that it may have been open to infer from the circumstances of this case that a new trust over the A class share was created by Ken in favour of Loris on the same or similar terms as the 1984 Declaration of Trust. This is notwithstanding that the Declaration has not been wound up and no new trust deed had been created.
The circumstances that give rise to that inference are the tax reasons for the 1984 trust over the ordinary share which would have continued to apply to the A class share, Ken's acceptance that the 1984 trust did not prevent Loris calling for the ordinary share, the ordinary share having been converted to the A class share, the ASIC record being prima facie evidence that Ken does not hold any beneficial interest in the A class share, Ken not asserting any beneficial interest in the A class share, a family where relationships were based on mutual trust, and the payment of interest and dividends to Loris from 1984 to at least June 2018 which reflects Loris' beneficial interest in the ordinary share and indicates a beneficial interest in the A class share.
In that context, the person who held the beneficial interest in the A class share at the time it was created, and continues to hold it today, must be Loris, as was the case with the ordinary share. The absence of writing in the form of a declaration of trust in relation to the A class share and a finding that the 1987 discussion did not occur would not, in my view, have precluded the existence of a new or varied trust created at the time the ordinary share was converted to the A class share in favour of Loris.

[91]

Is Loris estopped from asserting a right to call for the A class share?

In Ell v Ell [2015] NSWCA 38, Basten JA (with whom Gleeson and Ward JJA agreed) observed that "[b]ecause it is necessary that both parties have adopted the common assumption as the conventional basis of their transaction, at the very least the common assumption should be capable of articulation": at [35]. Not only must the common assumption be articulated, it must also be shown to have been adopted by both Ken and Loris, that they have both conducted their relationship on that basis and that they both knew or intended that the other would do so.
The common assumption that Ken says has been adopted is the agreed or assumed state of affairs as between Ken and Loris which has three elements, as set out at [846(a)]-[846(c)].
I am satisfied that the 1987 discussion provides the basis for the articulation of the common assumption contended for by Ken. During the discussion, it is expressly stated that Ken would hold legal title to the A class share during Loris and Sonia's lifetime so that Ken could exercise the attached voting rights. It is also made clear that this was proposed by reference to Ken's desire to have a say in how Sahab Holdings would be run having regard to his personal guarantees and financial contributions to the Northbridge and Strathfield properties, his continued management of those properties without remuneration and in return for him relinquishing his role as appointor of the Metropole Trust. While not express, the corollary to this is that Loris would have the beneficial interest in the A class share and not seek to assert his right to it during his and Sonia's lifetime, other than by receiving income through distributions as had occurred when Ken held legal title to the ordinary share.
Ken contends that he and Loris adopted this common assumption by reason of the understanding reached in the 1987 discussion and subsequent events.
The subsequent events which Ken relies on are, first, the variation that was made to the Metropole Trust Deed pursuant to which Sahab Holdings became the appointor, the creation of the A and B class shares and the conversion of the ordinary shares into A class shares.
Second, Ken points to his continued management of the Strathfield property, including acting in legal proceedings in relation to that property in 1987 and 2005, and his management of the Northbridge Village in conjunction with Loris. I accept Ken's evidence that, other than fees for work relating the Northbridge Village in June 2009 and 2010 and the preparation and registration of leases since 1994, Ken has not charged for his management, administration and legal work for the Northbridge Village, Strathfield property or Sahab Holdings.
Third, until October 2018, Loris had not asserted his right to call for the A class share.
I accept that Ken has acted and conducted his relationship with Loris in reliance on the common assumption and assumed state of affairs arising from the 1987 discussion. Ken's conduct of renouncing his role as appointer is directly referable to that discussion. His continuation of his management role of the Northbridge and Strathfield properties without reward is also, in my view, referable to the understanding reached during the 1987 discussion and Ken's assumption that he would have an ongoing say in Sahab Holdings during Sonia and Loris' lifetimes. Ken had been undertaking that role prior to 1987 out of familial loyalty, but he did so with a right that would enable him, if needed, to control who was the trustee and have some say as to how things were to be managed.
Further, Ken's evidence of the scale and scope of management work he did for the Northbridge Village and Strathfield properties post-1987 to the benefit of all family members without remuneration goes beyond what might be expected of a dutiful son based on existing personal relations. It also stands in stark contrast to the work undertaken by Philip, as the family accountant, and Victor's role in maintaining some family properties, for which the evidence indicates they were paid. In that context, it could not be assumed that Ken's management commitments would have remained the same and been undertaken on a voluntarily basis in the absence of some comfort that he would retain a say in how the company was to be run.
On the basis of the 1987 discussion, I am also satisfied that Loris adopted the common assumption for the conduct of his and Ken's future relationship in respect of the A class share. Loris did so by agreeing to Ken's proposal. Loris may have considered the proposal to be "all very complicated", but he gave his imprimatur to it by telling Ken to "go ahead". While there is no requirement for Loris to have induced or acquiesced in Ken's adoption of the assumption, the fact is that Loris concurred in an arrangement whereby Ken would retain the voting rights to the A class share during Loris and Sonia's lifetime on the bases set out at [846(a)]-[846(c)], which formed the common assumption upon which their future relationship was to be based.
Loris was aware that Ken was continuing to undertake sole management of the Strathfield property and management activities in relation to the Northbridge Village for little or no reward, which activities were referable to the understanding reached and the mutual assumption put forward as the conventional basis upon which the parties proceeded.
The fact that Loris has not asserted a right to the A class share between 1987 to 2018 might be said to not plainly point to Loris having conducted his and Ken's relationship based on the mutual assumption throughout the whole of that period. On one view, it simply reflects that Loris had no need to assert that right during that time. However, based on my finding that the 1987 discussion occurred, I am satisfied that Loris was aware that he and Ken were going to and did conduct their relationship on the basis of the common assumption and find that Loris' conduct is also referable to the common assumption. The passage of time may also be the reason for Loris' position today. As Ken said in cross-examination, it may be that Loris "was not recalling the arrangement we had reached in 1987" (T421.27--28).
As to the element of detriment, the question is whether Ken acted in reliance on the common assumption to his detriment or whether he would have been in the same position in any event: Miller Heiman at [49].
Ken's evidence of the 1987 discussion identifies that the basis on which Ken was prepared to give up the right of appointment was the understanding reached with Loris about the A class share. As Ken emphasised in submissions, he said: So I am prepared to give up being the appointor but for so long as the two of you are alive, I should be allowed to retain and exercise voting rights attached to the share I hold in Sahab because I believe it is only fair that I be given a say in how the company is run. Don't forget that I will continue to be the manager of the properties, I will not be charging the company for that work, to obtain the loans we have, I have given personal guarantees exposing my assets including my legal practice and I have also made a significant personal financial investment in the company.
Ken was challenged in cross-examination about whether he ever thought it necessary to bargain with Loris and Sonia for any matter in relation to the A class share. It was put to him that he would have been prepared to assist his parents without making any payment to him in return in relation to the A class share. Ken rejected both of those propositions (T472.27-33). It was not put to Ken in cross-examination that he would have acted differently by giving up the right of appointment if the understanding in the 1987 discussion regarding the A class share had not been reached. Ken was also not asked about what other proposal he may have agreed to.
Ken gave up his right of appointment under the Metropole Trust Deed relying on the understanding reached with Loris in the 1987 discussion and the assumed state of affairs, namely that he would have a say in the management of Sahab Holdings by holding the voting rights in the A class share during Loris and Sonia's lifetime. While Ken's appointment right was more confined than the voting rights, the former was of significance and benefit to him. That Ken did not see a need to exercise the right in the foreseeable future in 1987 and did not advert to it in the 1984 discussion does not mean the right had no value when it was renounced. The right gave Ken control over who would be trustee and, thus, some power and say in ensuring the proper management of Sahab Holdings and the Sahab Trusts. He gave up the right under the 1987 arrangement but, in return, maintained his power and say because his consent continued to be required to change the trustee.
In this case, the assumed state of affairs ceased to be mutually held when Loris ceased to hold the assumption to the knowledge of Ken, which was when the demands were made to transfer the A class share to Loris in October 2018. However, the actions taken by Ken in reliance on the shared assumption of renouncing the right of appointment has continuing consequences for him. If there is no estoppel, Ken will be at risk of having no say in the ongoing management of Sahab Holdings. In the context of this family dispute, Ken's financial interest in the Strathfield property, his personal exposure to the NAB loan and the past conduct of the parties, which included the appointment of the Receivers at great cost to the company, I am satisfied that this amounts to a material detriment and disadvantage to Ken.
For these reasons, I do not accept the submission that Ken would be in the same position if the claimed estoppel is not upheld or that there is no real detriment or harm to Ken as a consequence of Loris' assertion of a different state of affairs in relation to the A class share inconsistent with the common assumption.
That leads me to Loris' submission that it would not be unjust or unconscionable to depart from the mutual assumption in the circumstances of this case. Pausing here, I note that Loris' pleading on this issue is responsive to the 1984 estoppel which is no longer pressed by Ken, not the 1987 estoppel. That said, the matters relied on by Loris (Defence at [60(b)]) are not, in my view, sufficient to warrant the conclusion that Ken's conduct has been inimical to Loris and Sonia's interest such that it would be unjust or unconscionable to enforce the estoppel. This is primarily for the reasons set out in my consideration of the Trustee Removal Claim. Further, the estoppel that makes good Ken's right to management of Sahab Holdings is, to my mind, not unjust for reasons that include Ken's financial interests in protecting the underlying assets and his significant contribution to the management of those assets to the benefit of Loris, Sonia and the siblings over many years.
For these reasons, Ken's conventional estoppel defence succeeds and the issue of whether Ken is required to transfer the A class share to Loris according to the principle in Saunders v Vautier does not arise.

[92]

Trustee Removal Claim

Loris seeks orders for the removal of Sahab Holdings as trustee of the Sahab Trusts and appointor under the Metropole Trust Deed.
Loris claims that, as a director of Sahab Holdings, Ken has purported to manage the affairs of Sahab Holdings to the exclusion of Sonia and conducted those affairs in a manner that is disadvantageous to the company and the beneficiaries of the Sahab Trusts (SFASC at [23J]). The particulars at [23J] refer to: 1. Ken acting in legal proceedings without the approval and consent of Sonia and other beneficiaries: [23J(ai)] and [(aii)]; 2. Ken's failure to provide documents and information to Sonia and other beneficiaries, including in relation to the Aldi proposal, the Senses AFL and in response to the 10 October 2017 demand from Keypoint Law: [23J(a)], [23J(bi)], [23J(c)], [26] and [27]; 3. the breakdown of relations between Ken, Loris and the other beneficiaries: [23J(e)]; 4. Ken procuring the entry into the Senses AFL which did not provide the most advantageous use of the Northbridge properties: [23J(b)] and [23J(bii)]); and 5. Ken requiring Sonia to execute documents without attempting to explain them to her or Loris: [23J(f)].
Loris also relies on allegations made in relation to the Senses AFL that: 1. Ken negotiated and executed the Senses AFL without the authority of Sahab Holdings: [23AF]-[23AQ]; 2. Ken breached his fiduciary duty as a director by acting without authority and not in accordance with the instructions of Sahab Holdings in executing the Senses AFL: [23AS]-[23AT]; 3. Ken procured a breach by Sahab Holdings of its duty as trustee of the Metropole Trust because entry into the Senses AFL was not in the interests of beneficiaries and in breach of its obligation to exercise reasonable care and skill in the management of the business of the Trust: [23AV], [23X]-[23AY]; and 4. Ken breached his duties as a director of Sahab Holdings under ss 180, 181 and 182 of the Corporations Act in relation to the Senses AFL: [23AZ]-[23AAE].
Loris had also claimed, but did not press at the hearing, that Ken had coerced and tricked Sonia into signing the Senses AFL and that entry into the Senses AFL caused loss for which Ken should compensate Loris under s 1317H of the Corporations Act or by way of equitable compensation: [23AO], [23AAD(b)], [23AAE(b)], [23AAF]-[23AAG].
Ken denies that Sahab Holdings should be removed as trustee or appointor and rejects the claims made by Loris in relation to the Senses AFL: Defence at [23AQ], [23AT], [23AY], [23AAC]-[23AAE], [23K], [33].
Ken also challenged Loris' standing to bring claims for compensation, noting that they were not brought by Sahab Holdings as trustee and Loris has not obtained leave to bring a derivative suit under the Corporations Act. As Loris no longer presses his claims for any pecuniary relief, the issue of standing does not require resolution.
The issues for determination can be summarised as: 1. Did Ken act without authority and Sonia's informed consent, breach his duties and procure Sahab Holdings to breach its duties by entering into the Senses AFL when there were other opportunities available? (Senses AFL issues) 2. Should Sahab Holdings be removed as trustee of the Sahab Trusts and appointor of the Metropole Trust because of a breakdown in relations, the Court's findings in relation to the Senses AFL and other matters relied on by Loris? (Removal issue)

[94]

Legal proceedings

I find that Ken informed Sonia and Loris about the Right of way proceedings at or around the time they were commenced and am satisfied that Ken discussed the prospect of appeals and the outcomes of each stage of the proceedings with them during their regular meetings. This is based on Ken's evidence which I accept, Loris' evidence which makes clear that he was aware of the proceedings, the evidence that Sonia paid $400,000 towards the costs of the proceedings and the 2014 Bondi conversation, which I deal with at [1063]-[1076]. The absence of any reference to Ken's attendances on Sonia in Ken's invoices does not persuade me otherwise and I accept Ken's evidence that he did not include them as he was also acting as a director (T485.12-24).
Based on that finding, I am satisfied that Ken had approval from Sonia to conduct the Right of way proceedings on behalf of Sahab Holdings.
I also find that Ken informed Sonia and Loris about the s 88K proceedings at that start of the proceedings based on Ken's evidence in cross-examination that he had told them (T488.29-37) and the fact that they knew about the Right of way proceedings, which related to the same issue.
I find that Ken made the decision to abandon the s 88K proceedings during the course of the trial without consulting Sonia or Loris, he likely told them the case "wasn't successful" and he paid the costs of the s 88K proceedings personally. This is based on Ken's evidence in cross-examination (T487.33-8, T488.6-10 and T488.29-T489.2) and the email what Ken wrote to his counsel on 29 October 2015 stating that he would "not be telling my family about the debacle" which "comes at an extraordinary personal cost" (Ex 2 at 39).
I find it likely that Ken did not inform the siblings about the Right of way proceedings. This is consistent with Ken's evidence that he did not tell the siblings about the s 88K proceedings (T486.27-9) and the fact that the Right of way proceedings related to the Northbridge Drycleaner which they had no direct interest in.
I find it likely that Ken informed Sonia and Loris about the Strathfield Vendor proceedings and acted for Sahab Holdings with Sonia's consent based on Ken's evidence that they were thrilled with the outcome of the proceedings and because it enabled the purchase of the Strathfield property to proceed. I find that Ken personally bore the cost of the Strathfield Vendor proceedings based on his evidence, which was not challenged.
I make no finding about the Strathfield Tenant proceedings as the evidence did not address them. For that reason, I am not satisfied Loris has established that Ken acted for Sahab Holdings in the Strathfield Tenant proceedings without the approval or consent of Sonia or the siblings.
I find it likely that Ken informed Loris and Sonia about the applications and legal proceedings he took on their behalf in relation to the Bondi property, such as the application to the Strata Titles Commissioner in 1995 for the making of a special by-law. This is based on Loris and Sonia having signed the application for the making of that order and Ken's evidence on these matters issue, which I prefer to Loris' evidence.

[96]

Senses AFL

I am satisfied that, in or around June 2017, Ken made Sonia and Loris aware that he was speaking to parties who were interested in developing a childcare centre on the Northbridge properties and that Loris and Sonia knew this would likely involve a long-term lease. I am also satisfied that Ken or either of Sonia or Loris made one or all of the siblings aware of this. This is consistent with the reference to the "day care proposal" in Marianne's 23 July 2017 email (at [235]) and Ken's evidence in cross-examination (T615.25-T616.2).
I find that Ken spoke to Loris and Sonia about the proposal which led to the Senses AFL on various occasions from around 15 December 2017 until the time the Senses AFL was signed on 18 April 2018. This is consistent with Ken having told them about the childcare proposal earlier in the year, his affidavit evidence and his evidence in cross-examination that he had discussed the terms of the Senses proposal with them on 15 December 2017 and spoken to them progressively about the proposal up to when it was signed (T533.16-8, T542.39-T543.16). I cannot determine how many times Ken spoke to Loris and Sonia about the Senses proposal during that period, but I consider Ken's evidence in cross-examination that he discussed it with them between 21 and 25 times to likely be an overstatement. Ken's visits to Loris and Sonia ceased for a period from late-January 2018 and his weekly visits did not resume until mid-March 2018.
I find that Ken explained the Senses AFL to Sonia and Loris on 18 April 2018 in the terms deposed by him in his 8 July 2019 affidavit at [43] and as referred to in his cross-examination (T546.33-T548.4, T548.45-T533.12), a summary of which is at [400]-[404].
While Ken's evidence in cross-examination was more discursive than his affidavit evidence, I do not accept that the additional matters about which Ken gave evidence in cross-examination, such as him leafing through pages of the Senses AFL document and showing Loris and Sonia the schedule with the essential terms, Loris and Sonia saying words to the effect of "good, good", and Loris commenting that the proposed rent was a "real net figure" (T546.33-T548.4, T552.39-T553.12, T550.8-9) reveal significant differences in Ken's evidence about what was discussed. In my view, Ken's oral and affidavit evidence of what he said to Loris and Sonia is, in substance, to the same effect, namely that he explained the essential terms and structure of the deal to them. The fact that Ken did not refer to the Senses AFL in his 18 April file note or his first affidavit was, in my view, adequately explained by Ken in cross-examination in that he did not regard it as contentious with Loris and Sonia and he focused his note on the dispute that was in existence and looming (T546.21).
The finding at [948] is also supported by aspects of Loris' oral evidence, a summary of which is referred to at [406], which included evidence that Ken brought a large document for which Loris "turned the page" (T59.29-32).
I place no weight on Loris' affidavit evidence on this issue. Both of his affidavits relevant to the issue are contradicted by his oral evidence in significant respects. In his first affidavit, he deposes that Ken arrived with papers, got angry and said he was not leaving until Sonia signed, and that Loris had never been given an explanation of the Senses AFL. His evidence in cross-examination was that it was a "friendly meeting" and referred to details of the Senses AFL that had been explained to him and Sonia.
Loris' affidavit dated 3 May 2019 is also inconsistent with his other affidavit and oral evidence. He asserts that he did not know whether the Senses proposal involved a lease or sale of the property, the length of the term, the identity of the lessee and, if he had been consulted about it, he would never had agreed to it. In contrast, his oral evidence referred to the matters set out at [406], namely that Loris thought the Senses AFL was a good proposition at the time, he understood that a long-term lease would generate income for the family for many years to come, and that Sonia thought it was a "good thing too" (T62.35-46, T63.10-44).
Loris' oral evidence that Ken gave a brief explanation about the terms and rental adjustment which "wasn't very clear" because he did not want to "go deep into it" and which was the sole conversation after Sonia signed the contract (T61.36-40, T62.7) is not supported by his later evidence in cross-examination and I reject it. Loris subsequently accepted that Ken showed him the "rental and all that" and the matters referred to at [406].
I accept it is possible that Sonia said to Loris "I don't know what I've signed" sometime after signing the Senses AFL, as referred to by Loris in his cross-examination (T60.34-5). However, I do not accept that Sonia said that to him on 18 April 2018. Loris' evidence in cross-examination is inconsistent with his affidavit evidence which does not refer to Sonia saying that on the occasion of her signing the Senses AFL.
My acceptance of Ken's evidence that the Senses AFL had been discussed with Loris and Sonia for some time and that Sonia thought it was a good project after he explained it to her is also supported by the discussion on 21 April 2018, as recorded in the translated transcript. The transcript records the following: that Loris referred to Ken having "brought something to [Loris and Sonia] to our advantage" and as "a project for our financial gain and for theirs. And for their children and grandchildren" with a "50 year estimate"; Ken referring to "That big project is happening"; and Sonia saying that "Those two are very good", referring to the Senses deal and the Bondi property rent increase (at 41.15, 44.22-44.51, 01.23.42.-01.24.08). Relevantly, the translated transcript does not record Sonia or Loris saying to Ken that they did not want him to proceed with the Senses AFL or that he was not authorised to do so.
Based on the above, I am satisfied that Sonia and Loris were informed by Ken that he was dealing with Senses on behalf of Sahab Holdings in relation to the Senses AFL before and after Sonia signed it on 18 April 2018 and so find.
I accept that Sonia did not read the Senses AFL in full on 18 April 2018 nor was she given an opportunity to obtain legal advice on it from an independent lawyer before it was signed. I also accept that Sonia was tired and that her head was hurting on the afternoon she signed the Senses AFL. This is consistent with Ken's file note.
I accept that Ken did not leave a copy of the signed Senses AFL with Sonia after she signed it on 18 April 2018. However, I do not accept Loris' affidavit evidence that he asked Ken to leave the document for him and Sonia to discuss which Ken refused to do. This is because of the unreliability of Loris' evidence on this aspect of the case, Ken's evidence which rejects Loris' evidence, and the statements in the translated transcript to which I have referred.
I accept that Ken did not discuss the Senses AFL with the siblings at around the time it was signed by Sonia, when it was executed with Senses on 10 May 2018 or at other times during 2018. This is consistent with Ken's evidence in cross-examination (T565.14-20, T535.18-25).
I pause here to record that I found Ken's evidence in cross-examination that he relied on Loris and Sonia to tell the siblings to be plausible, along with his evidence that the Northbridge Village was usually a matter between Ken and his parents in contrast to the Strathfield property which they had an interest in (T559.34-9). However, Ken's explanation that he did not give the siblings a copy of the Senses AFL until it was produced in these proceedings because he was "busily engaged" in responding to the Corporations proceedings, preparing his "time consuming" affidavit and it was not on his radar that the siblings would oppose the Senses AFL (T535.11-40) was unpersuasive.

[97]

Loris

Loris' principal submission is that Ken acted outside his authority and instructions by committing Sahab Holdings to the Senses AFL and holding out to Senses that it was properly executed when he knew that Sonia had not given her informed and knowing consent to it. By doing so, Loris contends that Ken acted without authority and improperly used his position as a director in breach of s 182 of the Corporations Act. He relies on the principle that a director is liable for a breach even if they subjectively and honestly believe that their acts were authorised by the company constitution. Reference is also made to the principle that a director who acts without power may make improper use of their position, relying on In re Alma Spinning Company (Bottomley's Case) (1880) 16 Ch D 681 and R v Byrnes (1995) 183 CLR 501 (R v Byrnes) at 515-6; [1995] HCA 1.
Loris' submissions refer to the Duomatic principle, which Loris says Ken invokes in his Defence by referring to "unanimous assent" at [23AK]. Loris submits that the Duomatic principle requires actual, not merely potential, assent by the members which must be informed, referring to comments of Gleeson JA in Hawcroft v Jamieson [2017] NSWSC 1478 at [241] and the need for "full knowledge and consent" in Herrman v Simon (1990) 4 ACSR 81 (Herrman v Simon) at 83 per Meagher JA.
Loris argues that Ken could not simply read the Senses AFL to Sonia but was obliged to explain the consequences of the proposed transaction, including the principal commercial ramifications of entry, which he did not do. Loris submits that Ken bears the onus of proving that Sonia knowingly consented to the transaction. He relies on his evidence that Sonia said to Loris that she did not know what she had signed later that day, which is consistent with Ken's own position in the contemporaneous records that her cognitive abilities were impaired, and says that Ken has not shown that Sonia gave her informed consent to the Senses AFL.
Loris also submits that his other claims, namely that Ken breached ss 180 and 181 of the Corporations Act and procured Sahab Holdings to breach its duty as trustee of the Metropole Trust, are established by the simple reason that a sale of the Northbridge properties would have realised a greater financial benefit than entry into the Senses AFL and was supported by a majority of beneficiaries. Loris relies on the fact that Ken did not obtain expert advice in assessing what should be done for the Northbridge properties to support his claim that Ken procured Sahab Holdings to breach its duty to exercise reasonable care and skill in the management of the Metropole Trust. Loris also refers to the evidence of Mr Brady and Mr Young.
Loris argues that Ken procured a breach of trust by making the transaction his own and subordinating the interests of the Metropole Trust to his desire to retain the Northbridge properties and protect his own investment. Loris says that Ken's position that no rational person could oppose the AFL bespeaks a mind closed to other possibilities.

[99]

Determination of Senses AFL issues

A director is under a duty to act in accordance with the company's constitution and is liable for a breach even if he or she subjectively and honestly believes that the acts were authorised by the constitution: Austin, Ford and Ramsay, Company Directors: Principles of Law & Corporate Governance (2nd ed, LexisNexis Butterworths, 2005) at [11.7].
A director who acts without power may make improper use of their position and breach s 182 of the Corporations Act. Such breach will occur if they act without a quorate board because any such act is invalid: Bottomley's case at 689.
In R v Byrnes, the plurality said at 515-6: If, pursuant to the constitution of a corporation and the manner in which its business is conducted, a director has an authority to execute an instrument so as to bind the company but that authority is conditioned on the approval or concurrence of all or some other directors, it is improper to purport to exercise that authority without that approval or concurrence. Where prior authority is required for the execution of an instrument, the person executing the instrument may knowingly fail to obtain the authority for any of a number of reasons: that person may fail to seek the authority or the authority may be given by directors who, to the knowledge of the alleged offender, cannot effectively give the authority required (for example, where their powers are sterilised by a conflict of interests or duties), or where the authority, for some other reason known to the alleged offender, has not been effectively given by the person or persons empowered to give it. … The test of impropriety is not whether the corporation would be bound by the instrument nor whether a third party would be entitled to rely on it. It is the character of the conduct of the director or officer in relation to the internal management of the corporation that is in question.
The plurality also observed at 515 that impropriety is not restricted to abuse of power but may consist in the doing of an act which a director knows or ought to know that they have no authority to do.
It is common ground that Ken and Sonia, as directors of Sahab Holdings, had the power to make the decision to enter into the Senses AFL. The issue raised by Loris is whether, in the circumstances of this case, Ken negotiated and subsequently executed the Senses AFL without authority, essentially because he committed Sahab Holdings to the Senses AFL without Sonia's knowing consent.
The Duomatic principle is commonly referred to as the doctrine of unanimous assent. It enables a decision taken by all shareholders who provide unanimous assent to be binding notwithstanding that the required procedural formalities have not been observed. In Herrman v Simon at 83, Meagher JA set out the principle enunciated by Buckley J in Re Duomatic Ltd (1969) 2 Ch 365 as follows: What is that principle? That principle is I think this: where it can be shown that all shareholders having a right to attend and vote at a general meeting of a company assent with full knowledge and consent to some matter which a general meeting of the company could carry into effect, that assent is as binding as a resolution in general meeting would be. In other words, it is a doctrine dispensing with the consumptive effect of formalities. It is a doctrine that formalities may be disregarded if they have been waived by all shareholders acting in concert who want the same substantial result.
His Honour went on to state that the doctrine goes to formalities and not to substance. It enables shareholders, acting unanimously, to dispense with any failure to observe formalities, but is not a doctrine which says that substantial rights may be varied: at 83.
In Hawcroft v Jamieson [2017] NSWSC 1478, Gleeson JA considered whether the Duomatic principle applied to enable a company to call a meeting on short notice because all the members of the company had agreed to meet beforehand. His Honour concluded that it did not because the right of shareholders to receive notice of the meeting was a "substantial right" rather than a formality: at [240]. His Honour also observed that the principle requires actual informed assent, which was absent in that case as the shareholders were not aware and had not consented to dispensing with the required notice: at [241]-[242]. Gleeson JA held that informal assent could not be inferred from the fact that the directors had been taken through a proposed Protocol line by line because they were not informed that they were considering a special resolution qua members to vary or amend the constitution of the company, nor were they informed of the inconsistencies between the terms of the Protocol and the constitution: at [243].
In Jarrett v Perpetual Trustee Co Ltd (2007) 64 ACSR 552; [2007] NSWSC 1231, Hall J observed that the Duomatic principle applies where "all director/shareholders are fully informed on a matter and, having duly considered it, give their unqualified consent to a course of action proposed" in the context of a claim that certain disputed dividends were invalid: at [123]. The decisions to declare dividends were ultra vires as they were not declared in accordance with the requirements of the constitutions of the relevant plaintiff companies.
Loris seeks to invoke these principles and submits that, as Ken asserts that Sonia assented to the transaction, he bears the onus of proving knowing consent. I disagree. In my view, the Duomatic principle and test in Hawcroft v Jamieson do not touch on the issue raised by Loris in this case.
One of the matters pleaded by Loris in support of his contention that Ken was not authorised to execute the Senses AFL is that the directors (he and Sonia) had passed no such resolution: SFASC at [23AK] and [23AL]. In response, Ken denies he was not authorised in the absence of a resolution and says, in any event, that the Senses AFL was executed pursuant to the unanimous assent of Ken and Sonia.
Sahab Holdings' Articles of Association includes article 95 which provides that "The management of the business of the Company shall be vested in the Directors who … may exercise all such powers and do all such acts and things as may be expressed or done by the Company …". Article 86 also provides that "The Directors may meet together for the despatch of business, adjourn and otherwise regulate their meetings as they think fit". According to article 88, "Until otherwise determined … the quorum for every meeting of the Directors shall be two Directors".
As Ken's Senior Counsel submitted, article 86 does not require a formal resolution to be passed in order for a decision to be made by the directors in relation to the company's business. It seems that all that was required by the Articles of Association was for Ken and Sonia to meet and concur in some decision in the management of the business of Sahab Holdings in their capacity as directors: Swiss Screens at 758. In other words, the lack of formal resolution does not give rise to any procedural irregularity or lack of formality in respect of which the Duomatic principle of unanimous assent is to be applied.
In my view, the Duomatic principle and its accompanying requirement of informed consent do not arise where the company's only directors reach concurrence in taking some course in the company's affairs as part of the management of the business of the company and they did so in their capacity as directors in accordance with the articles of association: Hotien Holdings Pty Limited v Maré [2007] NSWSC 599 at [65].
In any event, it is Loris who pleads that Sonia did not provide her knowing consent to the Senses AFL or to Ken negotiating and dealing with Senses, a claim that Ken denies and in respect of which he does not assert unanimous assent: SFASC at [23AN], Defence at [23AN]. It follows, in my view, that Loris, not Ken, bears the onus of proof to satisfy the Court that Sonia did not provide knowing consent such that Ken did not have authority to negotiate and execute the Senses AFL.
In this case, Loris claims that Ken is in breach of his duties as he did not have authority to act because Sonia did not give her knowing consent to him entering into the Senses AFL. But there was no duty on Ken to obtain her informed and knowing consent, rather the existence of her informed consent would go to negate what was otherwise shown to be a breach of duty by him in some other way: Maguire v Makaronis (1997) 188 CLR 449 at 467; [1997] HCA 23. It is not alleged, for example, that Ken has breached his duty as a director or fiduciary by entering into the Senses AFL in order to acquire an opportunity for himself which Ken says should be absolved because Sonia gave her fully informed consent to the transaction.
Further, the particulars to Loris' allegation that Sonia did not provide her knowing consent to the Senses AFL are that: Ken did not allow Sonia to review the AFL prior to signing, Ken did not explain the contents of the AFL to Sonia before she signed, and Ken procured her signature without explaining what she was being asked to sign and by impliedly representing it was unimportant: SFASC at [23AN(a)]-[23AN(c)].
As to the first point, to the extent that it is contended that Ken refused a request by Sonia that she wanted to review the Senses AFL before signing, the findings I have made based on the evidence do not support that allegation: at [958].
Based on my findings at [946]-[948] and [956], I do not accept that Loris has established that Ken did not explain the content of the Senses AFL to Sonia or procured her signature to it without explaining what it was. Ken's evidence, which I have accepted, makes clear that he explained to Sonia what she was signing, namely an agreement for a long term lease relating to a childcare centre and redevelopment of the Northbridge properties that would be funded by Senses and was subject to development consent.
Ken may not have referred to every term or taken Sonia through every page of the Senses AFL, but he explained the essential terms of the agreement and the lease that would come into effect if and when consent to the redevelopment was obtained. This included explanation of the term, options, rent and rent reviews, bank guarantee provisions, outgoings that were to be paid by Senses, the different construction phases and financial impacts. Ken was not obliged to tell Sonia about every single term and the possibilities of what might have been realised if the Northbridge Village were instead sold. The question is whether Ken provided Sonia with sufficient information so that she knew that she was signing an agreement for lease and what that involved to enable her to understand and consent to the proposal. To my mind, the evidence is that he did.
While Sonia was elderly, frail and her cognitive capacity was in decline, she had been a commercially astute property investor, was familiar with leases and understood the difference between a lease and sale of a property. Ken had told her about the proposal over a period of months, having introduced the concept of it to Sonia and Loris in December 2017 and explained the key terms to her and Loris on 18 April 2018. Ken described it as a "long-term venture" and the commercial ramifications of having to wait while consent was obtained from council and during the period of construction (T551.15-29). According to Loris' own evidence and the statements in the translated transcript, it was well understood that the project involved a long-term lease of up to 50 years, a redevelopment paid by Senses, rental returns for the future generations and was considered by Loris and Sonia to be a "good deal" and to their advantage.
I also do not accept that the evidence establishes that Ken impliedly represented that the Senses AFL was unimportant when Sonia signed it. The only evidence to that effect is Loris' statement on oral evidence that Ken said he "didn't want to go too deep into it" which I have rejected at [953]. The references to the project in the translated transcript which I set out at [955] also do not support that representation.
In support of his allegation that Ken acted outside his authority, Loris also pleads that Ken procured the signature of Sonia to the AFL in circumstances where Ken considered that Sonia did not have capacity to execute the Senses AFL: SFASC at [23AM].
It is fair to say that Ken's position that he considered Sonia to have the requisite capacity to sign the Senses AFL on 18 April 2018 (T537.28-49) was surprising in the context where he and his lawyers had been asserting in correspondence for some time prior that Sonia had significantly diminished capacity to understand complex commercial documents. His position that Sonia was capable at the time also seems to me to be undermined by some of the claims he advanced when he commenced the Corporations proceedings, less than four months later. Relevantly, he had claimed that Sonia lacked cognitive capacity to sign documents in April and May 2018 (beyond the undue influence grounds) and that financial management orders should be made in relation to her estate.
That said, none of the parties are asserting that Sonia did not have capacity to understand or sign significant documents on 18 April 2108, such as the Senses AFL, a company resolution or a power of attorney. To the contrary, their cases proceeded on the basis she did, and I have already determined that Ken did not establish that she lacked capacity when she signed the impugned documents.
That Ken explained the Senses AFL to Sonia and asked her to sign it on an occasion when she was tired, her head was hurting and Ken was aware that her cognitive state was in decline might raise questions about his conduct. However, in my view, it does not establish that Sonia did not concur in the decision to proceed with the Senses AFL on 18 April 2018 in her capacity as a director or that Ken was not authorised to negotiate and execute it on behalf of Sahab Holdings. As noted at [930], allegations had been made that were withdrawn that Sonia signed the Senses AFL by reason of Ken tricking or coercing her leading to a lack of authority on his part. No allegation is made that Ken induced Sonia to sign the Senses AFL by reason of undue influence or unconscionable conduct.
Loris also pleads that Ken negotiated the Senses AFL pre-signing without authority and made representations to Senses post-signing founding an estoppel: SFASC at [23AI] and [23AP]. These allegations were not referred to by Loris at the hearing or in written submissions.
In any event, as I have found, the evidence demonstrates that Ken informed Sonia and Loris about his negotiations with Senses, made them aware of the nature of the transaction between December 2017 and April 2018 and explained the Senses AFL to them on the day that Sonia signed. It also demonstrates that Sonia and Loris were happy with the deal at that time. No evidence was adduced to indicate that their view changed until after these proceedings were commenced.
In the light of my factual findings and the above matters, I am not satisfied that Loris has established that Ken negotiated and subsequently executed the Senses AFL on behalf of Sahab Holdings without authority and not in accordance with the instructions of Sahab Holdings in breach of his duty as a director or fiduciary. I am also not satisfied that he did so knowing that Sonia had not given her consent to the document as a director.
The other claims raised by Loris are that Ken breached his duty as a director and procured a breach by Sahab Holdings of its duty as trustee by entering into the Senses AFL: [23AX] and [23AAC]. They were advanced as secondary claims to Loris' main claim regarding authority. The parties' submissions did not deal with these claims in detail.
Loris' claim is, in essence, that the execution of the Senses AFL was not in the best interests of the beneficiaries of the Metropole Trust and involved a breach of Sahab Holdings' obligation to exercise reasonable care and skill in the management of the business of the Trust. He says a breach arises because there were other opportunities which may have produced greater benefits to Sahab Holdings. For the same reason, Loris claims that entry into the Senses AFL involved a breach by Ken of his duties under s 180 of the Corporations Act that required him to exercise his powers and duties with a degree of care and diligence as a director.
The primary duty of a trustee, owed to the beneficiaries as a whole, is to act fairly by all the beneficiaries. The duty to act impartially merely reflects a trustee's duty to exercise their powers for the purposes which those powers were conferred, giving proper consideration to relevant matters and excluding irrelevant matters: Heydon and Leeming, Jacobs' Law of Trusts in Australia (8th ed, 2016, LexisNexis Butterworths) (Jacobs' Law of Trusts) at 347.
In managing the business of a trust, a trustee should exercise the same care and skill as an ordinary man of business would in conducting the business as if it were their own: Permanent Building Society (in liq) v Wheeler (1994) 11 WAR 187 at 235. This duty of care and skill, although equitable, has been said not to be a fiduciary duty but like the duty of a company director: Jacobs' Law of Trusts at 356.
Section 180 of the Corporations Act requires that a director of a corporation must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise if they were a director of a corporation in the corporation's circumstances and occupied the office held by, and had the same responsibilities within the corporation as, the director.
The test is an objective one in the sense that the question is what an ordinary person, with the knowledge and experience of the defendant, might be expected to have done in the circumstances if they were acting on their own behalf: Strategic Management Australia AFL Pty Ltd v Precision Sports & Entertainment Group Pty Ltd (2016) 114 ACSR 1; [2016] VSC 303 at [76]-[77].
In Vanguard Financial Planners Pty Ltd v Ale (2018) 125 ACSR 1 at [132]; [2018] NSWSC 314 at [132], Black J cited Brereton J's comments in Australian Securities & Investments Commission v Maxwell (2006) 59 ACSR 373; [2006] NSWSC 1052 at [100] that, in determining whether s 180 of the Corporations Act has been breached, it is relevant to look at the company's circumstances which include: … the type of company, the provisions of its constitution, the size and nature of the company's business, the composition of the board, the director's position and responsibilities within the company, the particular function the director is performing, the experience or skills of the particular director, the terms on which he or she has undertaken to act as a director, the manner in which responsibility for the business of the company is distributed between its directors and employees, and the circumstances of the specific case. (Citations omitted)
A business judgment rule exists in both general law and statute. The statutory business judgment rule is contained in s 180(2) of the Corporations Act which provides as follows: Business judgment rule (2) A director or other officer of a corporation who makes a business judgment is taken to meet the requirements of subsection (1), and their equivalent duties at common law and in equity, in respect of the judgment if they: (a) make the judgment in good faith for a proper purpose; and (b) do not have a material personal interest in the subject matter of the judgment; and (c) inform themselves about the subject matter of the judgment to the extent they reasonably believe to be appropriate; and (d) rationally believe that the judgment is in the best interests of the corporation. The director's or officer's belief that the judgment is in the best interests of the corporation is a rational one unless the belief is one that no reasonable person in their position would hold.
The business judgment rule at general law was set out by Barwick CJ, McTiernan and Kitto JJ in Harlowe's Nominees Pty Ltd v Woodside (Lakes Entrance) Oil Co (1968) 121 CLR 483 at 493; [1968] HCA 37 as follows: Directors in whom are vested the right and the duty of deciding where the company's interests lie and how they are to be served may be concerned with a wide range of practical considerations, and their judgment, if exercised in good faith and not for irrelevant purposes, is not open to review in the courts.
The relevant principle was also stated by the Privy Council in Howard Smith Ltd v Ampol Petroleum Ltd [1974] 1 NSWLR 68 at 74; [1974] AC 821 at 832 as follows: There is no appeal on merits from management decisions to courts of law: nor will courts of law assume to act as a kind of supervisory board over decisions within the powers of management honestly arrived at.
Ken admits that he and Sahab Holdings are subject to the duties pleaded, although he says that his duty as director is prescribed by s 180. The real issue is the way in which Loris' claim has been advanced and its application to the facts in this case.
The allegations that the Senses AFL was not in the best interests of the Metropole Trust and Ken breached his duties are based on particulars that refer to the following: the Aldi proposal; the Northbridge properties being suitable for redevelopment; a property located near to the Northbridge properties being redeveloped; that if the Northbridge properties were sold to a developer, they would realise a very significant amount in immediate funds; the funds would, or may well exceed, the benefits accruing pursuant to the Senses AFL; and despite that, Sahab Holdings did not make inquiries of the benefits to it if the Northbridge properties were sold.
It is common ground that the Northbridge properties are suitable for redevelopment. The Senses AFL and the Aldi proposal make that clear. The issue with Loris' claim is that the allegations that there were other opportunities available to Sahab Holdings from a "sale to a developer" that "would, or may, exceed the benefits under the Senses AFL", is premised on a failure to pursue opportunities that have not been identified. In other words, the claim presumes that there are developers willing to purchase the Northbridge properties at higher values but does not identify who or at what price. Further, and as Ken submits, Loris' claim is also akin to asking the Court to re-exercise the business judgment of a trustee and director where no allegation of dishonesty has been made in relation to Sahab Holdings' decision to proceed with the Senses AFL in terms of whether it was a reasonable decision for the Sahab Trusts.
In any event, I am not persuaded that Loris established by the evidence that "a sale [of the Northbridge properties] would have realised a greater benefit", as Loris submits, or that entry into the Senses AFL resulted in a significantly lower value for the Northbridge properties than should have been expected.
Mr Brady, a certified practising valuer of land and buildings produced an expert report on the market value of the Northbridge properties for Loris. In his report dated 14 May 2019, he provided estimated values of the Northbridge properties on two bases: first, as a development site for sale, with an estimate of $19 million using a direct comparison approach; and second, assuming the Senses AFL is entered into for the development and long term lease of the properties as a childcare centre, with an estimate of $13 million, adopting a capitalisation of net income approach. In the report, Mr Brady also opined that a 45-year lease of the Northbridge properties for development into a childcare centre was a clear undercapitalisation of the site and that the "future" of the properties was in development for residential or mixed use.
However, as was apparent from his cross-examination, Mr Brady's valuations were based on the assumption that the site of the Northbridge properties was not environmentally contaminated, a matter that he accepted would depress the value of the properties if it existed (T362.18-39). Relevantly, there is evidence that the site may be subject to contamination, with Loris and Philip both giving evidence about an unresolved contamination issue relating to underground petrol tanks.
Mr Brady's assessment of a comparable Baringa property that sold for $14,462,625 in March 2016 was also based on what appears to have been an incorrect floor space ratio. This impacts his evidence that the price of that property was comparable with the Northbridge properties, with the latter having a 50% greater site area and thus a greater value (T351.18-36). As Ken's submissions point out, there were other aspects of Mr Brady's evidence that raised doubts about the reliability of his opinion, such as his evidence that his assessment of the market movement was based on "gut feel" and not sales evidence (T351.41-T352.31), the only sales evidence that he identified showed an 8% reduction during that period (T352.49-T353.25), the fact that Mr Brady had not factored into his valuation the Aldi offer at all, and his valuation being at May 2019, not when the Senses AFL deal was struck in May 2018. He also agreed that a reasonable range of capitalisation rates included a higher rate than his report, which would produce a higher valuation of the site with the Senses AFL.
Loris also relied on Mr Young's evidence. Mr Young, a practicing registered architect and managing director of Shellshear Young Pty Ltd, prepared an expert report on behalf of Loris which assesses the development options and the highest use for the Northbridge properties. The report dated 2 May 2019 assesses the options of developing the Northbridge properties into a standalone childcare centre, a combined childcare centre and swim centre, and retail premises with shop top housing. According to Mr Young's report, while the proposed childcare centre and swim centre development represents a more intensive use of the properties than their original use, a combined retail and residential development option may result in a higher potential value for the property. Mr Young was not cross-examined.
Ken did not seek expert assistance in assessing what should have be done in relation to the Northbridge properties, but gave detailed evidence as to his approach and the matters which informed his view that the Senses AFL was a good deal at the time. Those matters included discussions with Loris and Sonia about the prospect of redeveloping rather than selling the properties, the terms of the Aldi offer, the net return from the rentals proposed, the identity of the parties involved, other terms of the deal that meant that Sahab Holdings would not be exposed to financing construction or redevelopment, and the strategic objectives of retaining the properties over the longer term. He also explained that "highest and best" use did not inform the decision.
I accept that Ken's view that "no rational person could oppose the Senses AFL" does suggest a certain mindset. But, objectively, the Senses AFL could not be described as speculative, hazardous or a transaction placing the trust property at risk with no appreciable return to beneficiaries at the time it was entered into. While Ken did not consult with the siblings, the Senses AFL did not involve him seeking to secure a financial benefit for himself to the expense of beneficiaries, including the siblings.
This was a family company and trust that had acquired property with a view to producing income for the beneficiaries and their successors over the long term. Affairs were managed for many years in an informal and co-operative manner with significant commercial decisions being made by Ken in conjunction with Sonia and Loris. Ken had discussed the Senses proposal with Sonia and Loris, who were the primary beneficiaries under the Metropole Trust. They concurred with the decision to move ahead with it at the time, with Loris later acknowledging that a long-term lease meant that there would be "income for the family and the grandchildren for many years to come" and he and Sonia thought it was a good deal.
For these reasons, I am not persuaded that Loris has established that Ken procured a breach by Sahab Holdings of its duty as trustee of the Metropole Trust or that Ken has breached his obligations as a director by reason of Sahab Holdings' entry into the Senses AFL because there were other opportunities available that would have generated a greater reward. I am also not persuaded that no reasonable person in Ken's position would have caused Sahab Holdings to enter into the Senses AFL.

[100]

Loris

Loris accepts that the power to remove a trustee must be exercised cautiously but submits that the circumstances warrant the removal of Sahab Holdings in this case because it has been managed without due regard to its constitution and as Ken's alter ego to the exclusion of the interests of others. He also submits that the removal is justified because there is a complete breakdown in relations between Ken and Victor, and between Ken and the beneficiaries of the other trusts.
Loris relies on his evidence that Ken has not informed Loris of Sahab Holdings' affairs over the years and points to four matters which he says make clear that Ken sees the company as a manifestation of his personal interests and has conducted its affairs to the disadvantage of others.
First, Loris submits that Ken has not understood that he was obliged to tell the siblings of important transactions, including the changes to the trust over Loris' A class share and Sahab Holdings' entry into the Senses AFL.
Second, he points to Ken having declined to provide documents to Loris and Sonia despite repeated requests.
Third, Loris relies on Ken having conducted the s 88K proceedings without informing him, Sonia or the siblings. He says that Ken's sole decision to abandon the proceedings without consulting Loris, Sonia or the siblings demonstrates that Ken assumed the right to determine how trust assets should be used. On Loris' submission, this demonstrates that, unless ordered otherwise, Ken will continue to act in a high-handed way because of his belief that he is Sahab Holdings' de facto managing director, as referred to in cross-examination, even though Ken did not refer to such rights in his affidavit evidence. Pausing here, I note that Ken referred to acting as a de facto managing director in his affidavit sworn 8 February 2019 at [10].
Loris also submits that the Court should find that Ken did not seek instructions in relation to the Right-of-way proceedings given the evidence does not disclose any communication with or taking instructions from Sonia, as his co-director.
Fourth, Loris submits that Ken's conduct has been actuated by a desire to protect his own self-interest at the expense of Loris and the other family members. Loris points to examples of Ken discouraging him from approaching Keypoint Law to make a new will because of a belief that Ken would be disadvantaged (T527.40-3) and an external lawyer would not have detailed knowledge of the family's structures and affairs (T528.25-33). Loris also refers to Ken's evidence that he ceased the distributions in relation to the Carkan investments to Marianne and Victor from September 2018 (T628.1-12), that he was the "odd one out" in not wanting to sell the Northbridge property at the meeting of 28 May 2017 (T612.27-32), and that he did not inform the siblings of the 45-year extent of the lease under the Senses AFL if both options were exercised (T615.45-7).
As noted above, Loris also relies on Ken's conduct concerning the Senses AFL in support of his claim for the removal of Sahab Holdings as trustee.

[101]

Ken

Ken's position is that there is no basis to remove Sahab Holdings as trustee of the Sahab Trusts. He submits that there is no evidence that the board of Sahab Holdings, as currently constituted, is dysfunctional or inoperative, that the efficient management and implementation of the trust is in jeopardy or that the trust property will not be preserved.
Ken contends that there is no breakdown in the relationship between himself and Victor or the other beneficiaries as they are able to "come together" where Sahab Holdings' interests are concerned. Ken points to their December 2019 agreement to orders removing the Receivers and the agreement for Victor and Mr Le Boursicot to join Ken as company directors. He also submits that the Court should infer that Victor considered it was possible to maintain a working relationship with Ken because Victor consented to becoming a co-director with him.
Ken contends that he has been a diligent and faithful director of Sahab Holdings for 36 years and is presently managing the company with Victor and Mr Le Boursicot for the benefit of the beneficiaries. In response to the matters raised by Loris' submissions which are said to demonstrate that Ken has conducted the affairs of Sahab Holdings to the disadvantage of others, Ken makes the following submissions.
First, to the extent there is criticism that Ken did not inform the siblings about the changes regarding Loris' A class share or the Senses AFL, this does not justify removal of Sahab Holdings as trustee because, at all times, Ken acted in consultation with Loris and Sonia.
Second, as to Ken's failure to provide documents, he points to the many offers he made to provide them on the condition that there would be no changes to the company or trust structures without unanimous agreement within the family. Ken says that such conditions were justified in circumstances where the siblings were seeking to oust Ken from any involvement in the management of the family companies and were exerting undue influence over Loris and Sonia.
Third, Ken says that his conduct in relation to s 88K proceedings did not disadvantage the trust or beneficiaries as his evidence that he informed Loris and Sonia about the proceedings should be accepted and he protected the trust property by personally paying the costs of the proceedings.
Fourth, Ken submits that the matters which Loris rely on to say that Ken has sought to protect his own interests relate to Loris' will and Ken's own concerns of improper influence being exerted over Loris which have no bearing on the management of Sahab Holdings.
Finally, Ken submits that the siblings' actions with respect to the dissipation of cash in the Sahab Westpac accounts and the steps that he took to procure the removal of the Receivers, which Loris agreed he was grateful for, demonstrate that Ken cannot be said to be preferring his own interests over those of the other beneficiaries of the Sahab Trusts.

[102]

Determination of Removal of Trustee Issue

The Court has the power to remove trustees in its inherent jurisdiction or pursuant to its power under s 70 of the Trustee Act 1925 (NSW).
The dominant consideration in the exercise of the power to remove trustees is the interests of the beneficiaries and whether the efficient management and implementation of the trust will be facilitated and the trust property preserved. It is not whether the trustee has committed a breach of trust: Miller v Cameron (1936) 54 CLR 572; [1936] HCA 13 (Miller v Cameron) at 579 (Starke J); Aspinall v Aqua Sports Pty Ltd [2018] NSWSC 706 (Aspinall v Aqua Sports) at [18]; Juul v Northey [2010] NSWCA 211 at [239].
In Miller v Cameron at 580, Dixon J (Evatt and McTiernan JJ agreeing) identified the matters relevant to the removal of a trustee: The jurisdiction to remove a trustee is exercised with a view to the interests of the beneficiaries, to the security of the trust property and to an efficient and satisfactory execution of the trusts and a faithful and sound exercise of the powers conferred upon the trustee. In deciding to remove a trustee the Court forms a judgment based upon considerations, possibly large in number and varied in character, which combine to show that the welfare of the beneficiaries is opposed to his continued occupation of the office. Such a judgment must be largely discretionary. A trustee is not to be removed unless circumstances exist which afford ground upon which the jurisdiction may be exercised.
Courts will have no issue removing trustees for misconduct, although not every mistake or neglect of duty, or inaccuracy of conduct of trustees, will induce courts to adopt such a course. The acts or omissions must be such as to endanger the trust property or to show a want of honesty, a want of proper capacity to execute the duties, or a want of reasonable fidelity: Heydon and Leeming, Jacobs' Law of Trusts at 318-9, quoted in Re Reserve Hotels Pty Ltd [2021] NSWSC 376 at [141].
The fact that some or even all of the beneficiaries wish for the removal of a trustee does not necessarily mean that the jurisdiction will be exercised. As Brereton J stated in Fay v Moramba Services Pty Ltd [2009] NSWSC 1428 at [25]: Removal is not inevitable, just because some or even all of the beneficiaries wish it. The court will not remove a trustee for the mere caprice of a beneficiary or without reasonable cause. Friction or hostility between the trustee and the beneficiaries is not of itself a reason for the removal of the trustee, although where the hostility is grounded on the mode in which the trust has been administered, or has been caused wholly or partially by substantial overcharges against the trust estate, it is not to be disregarded. (Citations omitted)
Where the trustee is a company, a deadlock between its directors such that it is not attentive to performance of the trust may also justify the appointment of independent trustees: Aspinall v Aqua Sports at [56]; Rosenbaum v Baidarman (No 2) [2021] NSWSC 574 at [678].
Where past conduct of the trustee is relied upon as a ground for their removal, the Court must assess whether that conduct demonstrates the unsuitability of the trustee continuing in their role, having regard to the interests of the beneficiaries. Past failures do not necessarily justify a prediction that similar failures will occur in the future. All relevant circumstances must be examined before determining whether removal is warranted, such as the reasons for the earlier failures: Titterton v Oates (1998) 143 FLR 467 at 480-1.
Dealing first with the matters raised by Loris' pleading and submissions, as my findings indicate, I do not accept Loris' claims that Ken has acted in legal proceedings without Loris and Sonia's knowledge and approval. Ken may have resolved the s 88K proceedings without reference to Sonia, but he did so in a manner that did not endanger the trust property as he personally took on the burden of the legal costs from the loss.
I am also unpersuaded that Ken's alleged failures to inform the siblings about or obtain their consent to the various legal proceedings, the changes to the trust over Loris' A class share and the Aldi proposal are significant in this case. Apart from the fact that some relate to historical matters, Ken was also acting in consultation with Sonia and Loris about them. He was not obliged to obtain the siblings' consent to act in the proceedings nor inform them about the changes to the A class share and the Aldi proposal. There is no general duty on a trustee to volunteer documents or information to beneficiaries or possible beneficiaries of a trust: Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 at 431. Nor are there any obligations contained in the constituent trust deeds that obliged Sahab Holdings to inform them of matters relating to the trusts.
As to Loris' submission that Ken's conduct has been actuated by a desire to protect his own self-interest at Loris and the siblings' expense, some of the matters identified by Loris relate to conduct as between the family members in other capacities and do not, in my view, bear upon Sahab Holding's conduct (or Ken's) in relation to the Sahab Trusts. That Ken may have discouraged Loris from changing his will or stopped paying Marianne and Victor their distributions from the Carkan Trust is not evidence that Ken has conducted the affairs of Sahab Holdings in a manner disadvantageous to the beneficiaries of the Sahab Trusts or to the exclusion of Sonia as a director.
Based on my findings in relation to the Senses AFL, the decision of whether to accede to Loris' application is not one which involves any findings of breach, misconduct or neglect of duty by a trustee or Ken as one of Sahab Holdings' directors. That said, and noting that I have found that Ken kept Sonia and Loris informed about it, the Senses AFL was another flashpoint for the siblings' and then Loris' conflict with Ken. Ken's explanation in cross-examination that he did not give the siblings a copy of the Senses AFL until it was produced in these proceedings because he was "busily engaged" in responding to the Corporations proceedings, preparing his "time consuming" affidavit and it was not on his radar that they would oppose the Senses AFL (T535.11-40) was not persuasive. The question is how Ken came to believe that it would not be contentious for the siblings given he was aware that they had wanted the Northbridge properties to be sold and prior demands had been made for him to produce documents relating to Sahab Holdings.
Sahab Holdings' entry into the Senses AFL also led to the appointment of the Receivers and the defence of the Senses proceedings. Accepting that these matters occurred over Ken's objections, the current friction within the family is grounded, at least in part, on the manner in which the Metropole Trust was administered by Sahab Holdings. Further, entry into Senses AFL has led to a significant financial impost on the Metropole Trust to the detriment of all the beneficiaries.
Loris also points to Ken's failure to provide documents to him and Sonia. In my view, there is merit to this submission. Irrespective of Ken's concerns about Philip, I find it difficult to see how, as a lawyer and co-director, Ken justified refusing to produce personal, company and trust-related documents to Sonia in response to requests from her lawyers. The many offers made by Ken included various conditions that were unrelated to Sonia and the condition imposed by the Court could have been offered up by Ken much earlier.
That said, I do not accept Loris' submission that "the fault lies with Ken" in respect of the breakdown in their relationship (T1032.13) or the family disputes. My earlier findings and the facts in this case make clear that there was conduct on the part of some or all of the siblings that led to tensions and a break in what had been close and trusting family relations for many years. Ken attributes that break to the siblings turning Loris and Sonia against him, which has some foundation. The siblings and now Loris contend that Ken was too controlling and lacked transparency, perhaps with some justification.
Regardless of where the fault lies, the parties accept that there is a complete breakdown in relations between them. The issue for the Court is whether that breakdown and Ken's conduct warrant the removal of Sahab Holdings as trustee of the Sahab Trusts and appointor of the Metropole Trust because it is in the interests of the beneficiaries to do so. Although finely balanced, the conclusion I have come to is that they do not, and that Loris' application to remove Sahab Holdings as trustee of the Sahab Trusts and appointor of the Metropole Trust should be refused.
Even if Ken could have managed the affairs of Sahab Holdings better in certain respects there is, in my view, no basis to conclude that he has wholly disregarded the welfare of beneficiaries and promoted his own personal interests to their exclusion. Prior to the current family dispute, he had worked to the benefit of the whole family over many years and I have accepted his evidence that he considered the Senses AFL to be in the best interests of the family. It is also significant that both Marianne and Loris expressed support for Ken at the hearing. Marianne stated that she was happy for Ken to stay on as a director of Sahab Holdings (T861.11-8) and Loris acknowledged that, now that the Receivers have been dismissed, Ken is "at the helm of it again" and doing "a good job" in managing the "village business" as he had done before (T600.32-48).
The Sahab Trusts involve the management of property assets and the payment of income and dividends to family beneficiaries. While the conflict may mean that Ken and Victor will have difficulty working in harmony together as Sahab Holdings' directors, there is now a third director on the board, Mr Le Boursicot, who is in a position to break any deadlock and provide what might be expected to be an independent view on matters. The presence of two directors in addition to Ken should mitigate against what Loris relied on as Ken asserting delegated authority by reason of considering himself to have been Sahab Holdings' de facto managing director. Victor's presence will also ensure that the other siblings are informed of matters and their views are taken into account where necessary.
There was also no evidence at the hearing that, since Victor and Mr Le Boursicot's appointments, they and Ken have had difficulty working together to administer the business of the Sahab Trusts, although I note there was some issue with Victor's ability to access online banking records which has presumably been resolved.
I am also not persuaded by the suggestion made by Loris' Senior Counsel at the hearing that the appointment of an independent trustee in place of Sahab Holdings is in the best interests of all beneficiaries or of maintaining the trust properties to their advantage. Such an appointment would be costly and likely lead to further discontent amongst the beneficiaries and a depletion of trust assets. In particular, Loris' oral evidence impressed upon me that he is sensitive to costs and is disappointed about the financial impact of the Receivers' appointment and the job they did (T600.32-T601.9).
As Loris accepts, a trustee is not lightly to be removed. Removal is not inevitable because Loris, as a primary beneficiary of the Metropole Trust, brought the application and may have wished for it. The hostilities in this case have been significant, but I do not consider that the proper and due administration of the Sahab Trusts and the welfare of all beneficiaries requires the removal of Sahab Holdings from office. In coming to this view, I recognise that issues might arise which the Court may have to deal with in the future. However, the removal of Sahab Holdings as trustee would not, in my view, resolve that prospect.

[103]

Bondi Estoppel Claim

Ken's claim to an interest in the Bondi property is based on a promise or, alternatively, a representation allegedly made in April 2014 by Loris and Sonia that they would leave the Bondi property to him. He says that they made this promise by reason of Ken bearing the financial loss suffered by Sahab Holdings in connection with the Right of way proceedings, the legal and managerial work carried out by Ken in relation to the Bondi property since 1982, and Ken's promise to continue managing and undertaking legal work for the Bondi property without fee or remuneration: Cross-Claim at [20]-[21].
The alleged promise and representation are said to arise from the Bondi conversation set out at [122]. Ken says that the promise is also evidenced by the provisions dealing with the Bondi property in the 2014 and 2015 Wills (at [130] and [142]-[143]).
Ken pleads that he acted in reliance on the representation by continuing to manage and carry out legal work for the Bondi property for Loris and Sonia's benefit without remuneration and not seeking reimbursement of the remaining legal costs incurred in the Right of way proceedings. He also pleads that it would be unconscionable for Loris and Sonia to resile from the representation and that they ought to be estopped from doing so: Cross-Claim at [22]-[23].
Ken seeks declaratory relief by way of a constructive trust over the Bondi property or, alternatively, a declaration that Loris and Sonia irrevocably promised for valuable consideration to devise the Bondi property to him in the terms of the 2015 Wills.
Loris denies that the alleged promise or representation was made. He admits that Ken has done some management work in relation to the Bondi property but denies that Ken was entitled to seek reimbursement of the remaining legal costs in connection with the Right of way proceedings from him, Sonia or Sahab Holdings: Defence to Cross-Claim at [22]. In the alternative, Loris pleads that, if the promise or representation was made, it is unenforceable by reason of ss 23C or 54A of the Conveyancing Act and that no unconscionability arises because he and Sonia have already made substantial provision for Ken in relation to his work for the benefit of them and Sahab Holdings: Defence to Cross-Claim at [23].
The issue for determination is whether, in 2014, Loris and Sonia made a promise or representation to Ken that they would leave the Bondi property to him by reference to the remaining costs in the Right of way proceedings (unpaid ROW costs) and Ken's past and future legal and managerial work in relation to the Bondi property from which they are estopped from resiling.

[104]

Factual finding: Bondi conversation

The key factual dispute is whether the Bondi conversation as set out at [122] occurred. The factual background and context to the alleged conversation include, in particular, the facts set out at [108]-[111], [118]-[121], [123]-[124], [130] and [142]-[143].
Ken and Loris made submissions about the credibility of each other's evidence regarding the Bondi conversation. Ken submits that his evidence should be accepted as it is supported by the objective circumstances. He contends that Loris' denial of the Bondi conversation and assertion of a lack of knowledge of the 2014 Wills should be rejected as unreliable.
Loris submits that Ken's evidence about the Bondi conversation is not credible. He argues that Ken's oral evidence differs from his affidavit evidence in material respects and is inconsistent with objective circumstances and contends that Ken's recollection about certain matters is incomplete. He also submits that Ken's position in these proceedings is inconsistent with his evidence in the s 88K proceedings. Loris emphasised that the Court needs to treat Ken's evidence with scrutiny as it involves evidence of conversations involving Sonia who is not available to give evidence: Plunkett v Bull (1915) 19 CLR 544 at 548-9 (Isaacs J); [1915] HCA 14; Tam v Tang [2013] NSWSC 708 at [18]-[19].
Loris denies the Bondi conversation. He deposes that he never promised Ken, or heard Sonia promise to Ken, that he would inherit the Bondi property and says that Sonia reluctantly paid Ken the amount of $400,000 to cover part of the legal costs of the Right of way proceedings. He also deposes that he unaware that he was gifting the Bondi property to Ken in the 2014 and 2015 Wills and asserts that he did not know or approve of this.
I cannot accept Loris' his evidence regarding the bequest to Ken and the Bondi conversation. Loris' evidence that he was unaware about the Bondi property bequest in his wills was demonstrated to be incorrect during cross-examination when he accepted that his 2014 Will and the provision gifting the Bondi property solely to Ken reflected his instructions and his intention at the time (T386.38-T387.19, T388.42-389.38, T390.17-20, T391.38-40). As they are not the subject of challenge in this case, I make no other findings about Loris' claims that he did not read and approve the 2014 and 2015 Wills.
Loris' evidence also suggests that he was aware of the unpaid ROW costs. However, he refers to Sonia having reluctantly paid Ken to cover part of the legal costs in relation to the Right of way proceedings. This suggests that the issue of the unpaid costs had been discussed with Ken, contrary to Loris' denial of the Bondi conversation. Further, Loris' denial that he promised that Ken would inherit the Bondi property as repayment for those costs as he "did not want to reward [Ken]" also appears to tie his rejection of the Bondi conversation to his rejection of any desire to leave the Bondi property to Ken.
I also consider that Loris' evidence concerning the purchase price of the Bondi property was likely incorrect (at [123]), as was his evidence that Ken did not tell him anything about proceedings relating to the Bondi property until they reached the Court of Appeal and High Court (at [125]).
A rejection of Loris' evidence does not lead to the conclusion that Ken's evidence of the Bondi conversation must be accepted: Steinberg v Commissioner of Taxation (Cth) (1975) 134 CLR 640 at 694 (Gibbs J); [1975] HCA 63. However, having considered Ken's evidence in the context of the contemporary materials, objectively established facts and the apparent logic of events, I am persuaded that a discussion to the effect of the 2014 Bondi conversation occurred: Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [31]. This is for the following reasons.
First, the existence of the bequest to Ken of the Bondi property in the 2014 and 2015 Wills, but not the 2011 Wills, is a strong objective indicator that there was a discussion about that matter around the time of the Bondi conversation in 2014. This is supported by the existence of Ken's document that calculates the costs incurred in the Right of way proceedings dated 7 April 2014.
Second, I am not persuaded that the absence of any other document corroborating the detail of the Bondi conversation undermines the existence of that conversation. In the context of the trusting relationship between Ken and his parents at that time, Ken's explanation in cross-examination that he thought the bequest in the 2014 Wills would be sufficient to cover his position is plausible (T511.38-T512.2, T514.15-8). So too is Ken's explanation for the different drafting approaches in those parts of the Wills concerning the exclusionary nature of clauses dealing with Philip compared to the specific property bequests to Ken and Marianne (T514.36-47).
Third, while accepting that Ken's evidence in the s 88K proceedings raises a question as to his position in relation to the costs of the Right of way proceedings, I am not persuaded that his evidence is inconsistent in the manner asserted by Loris. The fact is that Ken had personally paid the party-party costs of the Right of way proceedings at the time he gave evidence in the s 88K proceedings. The ability of Ken to recover costs from Sahab Holdings under the possible indemnity was also limited, given that the Right of way proceedings related to the Northbridge Drycleaner and were brought in the name of Sahab Holdings as trustee for the Kanjian Family Trust, not the "land rich" Sahab Holdings as trustee for the Metropole Trust. Ken's evidence in the s 88K proceedings that there may be an arrangement whereby Sahab Holdings could indemnify him does not, in my view, run counter to his evidence that his parents said they would leave him the Bondi property in return for him bearing the unpaid ROW costs but subject to the qualification that he may be recompensed if and when Sahab Holdings sold some of its assets (T505.25-T506.7).
Fourth, the context and surrounding circumstances support the logic of generous parents offering to gift the Bondi property to Ken in recognition, in part, for the management work he had undertaken on their behalf since 1982 and the substantial legal costs that remained unpaid.
Fifth, I am not persuaded that Ken's recollection about certain matters is incomplete based on his evidence in cross-examination. In my view, his oral evidence setting out his recollection of the Bondi conversation (at T475.8-18) was consistent with the evidence given in the first part of his affidavit. The failure to refer to matters such as the description of "Castle turning the case into Ben Hur", as relied on by Loris, was not significant in my view given it was not a matter of substance. I also do not accept Loris' submission that Ken's remorse about the costs of the Right of way proceedings is not evident in this case. Ken's remorse was highlighted by the terms of the Bondi conversation and reflected in his statement during cross-examination that he "did feel bad that [he] had given advice to commence the proceedings" (T507.46-7).
Finally, and as I have previously said, I find Ken to be an honest and generally reliable witness with a good recall of events.

[105]

Legal principles

In Austotel v Franklins (1989) 16 NSWLR 582 at 612, Priestley JA summarised the principles relating to equitable estoppel by reference to Silovi Pty Ltd v Barbaro (1988) 13 NSWLR 466 at 472 through the following propositions: 1. Equitable estoppel operates upon representations or promises as to future conduct, including promises about legal relations. When certain conditions are fulfilled, this kind of estoppel is itself an equity, a source of legal obligation. 2. Cases described as estoppel by encouragement, estoppel by acquiescence, proprietary estoppel and promissory estoppel are all species of equitable estoppel. 3. For equitable estoppel to operate there must be the creation or encouragement by the defendant in the plaintiff of an assumption that a contract will come into existence or a promise be performed or an interest granted to the plaintiff by the defendant, and reliance on that by the plaintiff, in circumstances where departure from the assumption by the defendant would be unconscionable. 4. Equitable estoppel may lead to the plaintiff acquiring an estate or interest in land; that is, in the common metaphor, it may be a sword. 5. The remedy granted to satisfy the equity (which either is the estoppel or created by it) will be what is necessary to prevent detriment resulting from the unconscionable conduct.
In Delaforce at [21] Handley AJA (with whom Allsop P and Giles JA agreed) described estoppel by encouragement in the following terms: Such an estoppel comes into existence when an owner of property has encouraged another to alter his or her position in the expectation of obtaining a proprietary interest and that other, in reliance on the expectation created or encouraged by the property owner, has changed his or her position to their detriment.
The expectation of a proprietary interest may be induced by encouragement, such as a promise or representation, or acquiescence. The inherent revocability of testamentary dispositions is not a bar to finding that statements of testamentary intention are capable of serving as a basis for proprietary estoppel. Even when the promise or assurance is in terms linked to the making of a will, the circumstances may make clear that the assurance is more than a mere statement of present (revocable) intention and is tantamount to a promise: Delaforce at [36] (Handley AJA, Allsop P and Giles JA agreeing), quoting Gillett v Holt [2001] Ch 210 at 227-8. However, equity does not require a party to satisfy the more stringent requirements set by the law of contract: Giumelli v Giumelli (1999) 196 CLR 101; [2010] HCA 10 at [35] (Gleeson CJ, McHugh, Gummow and Callinan JJ), quoting Riches v Hogben [1985] 2 Qd R 292 at 300-1.
The party asserting the estoppel bears the onus of proving that they had been induced to rely on the promise or representation: Sidhu v Van Dyke at [61] (French CJ, Kiefel, Bell and Keane JJ). They must establish that they believed the promise or representation and, on the faith of that belief, they took a course of action or inaction that would turn out to be to their detriment were the other party to be permitted to depart from the promise or representation. The promisee or representee does not need to establish that the belief to which they were induced by the promise or representation was the sole or predominant cause of the course of action or inaction, but only that it was a contributing cause: Sidhu v Van Dyke at [90] (Gageler J).
The relevant detriment is not the loss flowing from the non-fulfillment of the promise, but the detriment suffered as a result of the original change in position if the expectation which induced it was repudiated by estopped party: Delaforce at [42].
Where a proprietary estoppel is established, the appropriate relief depends on the particular circumstances of each case: Delaforce at [57]; Calvo v Ellimark Pty Ltd [2016] NSWCA 136 at [152] (Leeming JA, Gleeson and Ward JJA agreeing). The Court may take into the account the impact of its orders on third parties as well as the extent to which the plaintiff's equity has been diminished or enlarged by later events: Delaforce at [60]-[61].
There is no governing principle that the relief granted must be the minimum necessary to do justice: Delaforce at [59]; Walsh v Walsh [2012] NSWCA 57 at [31], citing Giumelli v Giumelli (1999) 196 CLR 101; [2010] HCA 10 at [40]-[48]. Where the expectation is undefined or uncertain, equity must fashion its relief from the circumstances. However, where the expectation is defined with certainty by the party estopped, that must be the starting point. As stated by Macfarlan JA (Beazley P and Sackville AJA agreeing) in Milling v Hardie [2014] NSWCA 163 at [55]: Nevertheless, the court should, prima facie, enforce a reasonable expectation which the party bound created or encouraged (Sidhu v Van Dyke at [85]; Delaforce v Simpson-Cook at [63]) but relief should not be "out of all proportion to the detriment" suffered by the plaintiff (Van Dyke ibid and Delaforce at [62]).

[107]

Loris

Loris submits that Ken's claim based on a testamentary promise and estoppel should be rejected as the circumstances of the arrangement do not suggest that the alleged promise would be binding and irrevocable. He argues that the provisions in the 2014 Will do not assist Ken's claim as they merely record the bequest to Ken and contain no indication that Loris and Sonia were precluded from revoking the bequests.
Loris also contends that the premises of the alleged promise should be rejected as Sahab Holdings' alleged inability to pay the outstanding legal costs of the Right of way proceedings is inconsistent with its position as a "land-rich" company receiving good rental income from tenants.
Loris submits that he and Sonia were free, upon giving reasonable notice, to withdraw from the asserted promise because of their right to dispose of their assets as they see fit, referring to Zugic v Vesuvius Australia Pty Ltd [2020] NSWSC 106 at [288]. He says that he and Sonia gave such notice by making it clear to Ken that they wished to change their wills.
He also submits that requirements of proportionality and the demands of good conscience do not require any parties other than Sahab Holdings to bear the unpaid ROW costs in circumstances where Ken instigated the proceedings, he did not tell Loris and Sonia that Sahab Holdings was liable to pay the expenses rather than them personally, the time which Ken spent on the Bondi property since the alleged promise is modest, and the value of the property far exceeds the outstanding legal costs.
Loris submits that Ken has not relied on the alleged promise. He contends that Ken was prepared to manage the Bondi property voluntarily before 2014 and would have continued to do the same thereafter. He also says that Ken has identified no reason why he cannot recover the legal costs of the Right of way proceedings from Sahab Holdings.
In his written submissions, Loris referred to the principles relating to promissory estoppel and contended that Ken must prove that the representation was clear and unequivocal, and that the language was precise and unambiguous: Zugic v Vesuvius Australia Pty Ltd [2020] NSWSC 106 at [273]-[274]. He also relied on the principles in Delaforce concerning testamentary intentions in oral closing submissions.

[108]

Determination of the Bondi Estoppel Claim

Having found that the Bondi conversation occurred, the remaining issues falling for determination are whether the promise or representation was made, whether there was reliance on the alleged representation, whether Ken has suffered or will suffer detriment if Loris and Sonia were permitted to depart from the induced expectation or assumption, and whether it would be unconscionable to depart from the representation.
The case advanced is one of a testamentary promise or representation giving rise to equitable estoppel by encouragement as recognised in Delaforce. Ken did not advance a claim of a binding testamentary contract or promissory estoppel at the hearing. However, I should record that I do not consider that there was a binding testamentary contract in this case. The relationships within the Kanjian family were built on trust and informality which, in my view, suggest that it was unlikely that Ken, Loris and Sonia intended to enter into legal relations as a consequence of the Bondi conversation.
The Bondi conversation also took place with Ken asking for some support and suggesting "perhaps an adjustment to [Loris and Sonia's] wills so that Sahab makes more generous provision for me". The balance of the conversation refers to Loris and Sonia's "proposal" but is not cast in the language of obligation and the testamentary nature of the asserted promise tells against it having contractual effect. There is also nothing in Loris and Ken's evidence to suggest that, in addition to making the 2014 and 2015 Wills, Loris or Sonia were promising not to revoke those wills. That they later purported to do by their new wills in early 2018 indicates that they considered that they remained free to do so.
The non-contractual nature of the promise is also apparent from Ken's evidence in cross-examination to the effect that there was a possibility that he could recover his costs from Sahab Holdings in the future if the circumstances changed (T505.46-8). This was what Ken described in the s 88K proceedings as the "right of indemnity" which, at that date, had not been foreclosed (Ex 2 at T50.2-6). The possibility of an indemnity also gives rise to uncertainty as to the terms on which the asserted promise could change and no attempt was made to document those terms. Considered objectively, the Bondi conversation did not involve a binding contractual promise by Loris and Sonia not to revoke the Bondi property bequests in their wills.
Turning to the estoppel claim, I am satisfied that the Bondi conversation contained a sufficiently clear representation by Loris and Sonia to the effect that they would leave the Bondi property to Ken partly to cover the unpaid ROW costs and partly in recognition of his past management work in the Bondi property. The representation was made on the basis that Ken would continue to manage the Bondi property for them in the future.
I am also satisfied that this amounted to some form of promise in relation to the Bondi property, although I am not persuaded that the 2014 Will contains the promise of the nature contended for by Ken. It is silent as to the reason for the bequest of the Bondi property. As Loris' Senior Counsel submits, the 2014 and 2015 Wills contain the bequest, not the promise, and say nothing about whether that promise could be revoked.
In a case where the relevant promise or representation relates to testamentary intentions, there is invariably a question as to whether a party's reliance on that assurance is reasonable given the inherent revocability of wills. The asserted representation or promise was made in circumstances where Ken was requesting that Loris and Sonia make some future provision for him to meet the unpaid ROW costs, even suggesting an adjustment to their wills. The relevant assurance was made by Sonia and Loris and the bequest was included in the 2014 and 2015 Wills. Ken, as a solicitor, knew that these wills could be revoked at any time. He also acknowledged that Loris and Sonia could depart from their promise, for example, by making "other provision" for him, in which case the Bondi property would revert to a four-way gift rather than a sole gift to Ken (T505.38-41).
Ken deposes that, after the Bondi conversation, he was "satisfied with [the] outcome and thought it to be fair". His evidence is that he "never again raised with [his] parents the question of compensation or reimbursement in connection with the High Court loss and continued to look after the Bondi property for them as they had requested".
While there may be some question about it, I am satisfied that the representation and promise made by Loris and Sonia created or encouraged in Ken an expectation and assumption that their proposal to gift the Bondi property to him in their wills would be performed and he would receive the property in recognition for his past and future work on the Bondi property and in return for him absorbing the unpaid ROW costs. Loris and Sonia's statements to him were clear, and the inclusion of the gift to Ken in their 2014 Wills operated to further encourage that expectation and assumption, accepting that it was subject to the possibility that things might change if, for example, some of Sahab Holdings' assets were sold and company funds became available to repay him.
The more difficult question is whether Ken has established detrimental reliance and shown that departure from the assumption by Loris and Sonia would be unconscionable in the circumstances. The test is not whether Ken would have acted differently if Loris and Sonia had not made the representation and encouraged his assumption or belief. Rather, the question is whether Ken was influenced, in a significant or material way, such that his assumption or belief was a contributing cause to his conduct or made a difference to his action or inaction, so that it would be unconscionable for Loris and Sonia to resile from it because of the detriment he has suffered: Priestley v Priestley [2017] NSWCA 155 (Priestley v Priestley) at [136]-[138].
Ken has continued to manage the Bondi property since 2014. His management work has included procuring an agreement to make a special by-law in relation to the premises, negotiating new long-term leases, dealing with real estate agents and liaising with strata management agents.
The issue with Ken's claim that he has suffered detriment by reason of such work since 2014 is that the evidence strongly suggests and, in my view, makes clear that Ken was prepared to voluntarily aid his parents by managing the Bondi property at no cost to them, and would have been prepared to continue doing so, irrespective of the promise and representation. His own evidence is that he had undertaken several thousands of hours of work in relation to the Bondi property since 1982. Given the family relationships and Ken's past assistance over 32 years, I am not persuaded that Ken was influenced in a significant or material way to change his position in reliance on the representation in respect of the management work he undertook on the Bondi property. Ken may have been grateful for the bequest of the property as recognition for his past and future work but I do not consider that the evidence establishes that the encouragement or assumption arising from the representation or promise was a contributing cause or factor in Ken continuing to undertake the work on the Bondi property. The position in relation to the Bondi property also stands in contrast to Ken's position at the time of the 1987 discussion about the A class share. At that time, Ken had only been undertaking management work for three years and his interests had changed due to the purchase of the Strathfield property.
Accordingly, I am not satisfied that Ken has established detrimental reliance or that it would be unjust to depart from the promise based on his management work for the Bondi property post-2014.
The position in relation to the unpaid ROW costs is less clear, but the conclusion I have reached is the same. In my view, Ken has not established that he altered his position in reliance on the representation or promise to his detriment in relation to those costs such that it would be unjust not to uphold the claimed estoppel.
As Ken's evidence of the Bondi conversation records, his view at the time was that Sahab Holdings, in its capacity as trustee for the Kanjian Family Trust, could not pay the costs of the Right of way proceedings. Even accepting Ken's evidence that he thought nothing more about compensation after the Bondi conversation, the terms of the conversation suggest that Ken did not intend to recover his fees from Sahab Holdings.
Ken's contends that his ability to seek recovery of fees from Sahab Holdings is impacted by the company having suffered significant financial losses from the appointment of the Receivers. But the fact is that Sahab Holdings as trustee for the Kanjian Family Trust was not in a financial position to enable Ken to recover the unpaid ROW costs in 2014 and there is no evidence to suggest that the position was any different over the next few years before the Receivers were appointed. If it was, it is not apparent when that would have been a realistic possibility or whether Ken could have recovered only part or all of his fees. In my view, the evidence indicates that, at the time the promise was made and since then Ken could not recover fees from Sahab Holdings as trustee for the Kanjian Family Trust. Thus, the position Ken is in now is the same position he would have been in had the promise not been made.
A promisor can resile from their promise on giving reasonable notice, which need not be a formal notice, giving the promisee some opportunity of resuming his position: Ajayi (t/a Colony Carrier Co) v RT Briscoe (Nigeria) Ltd [1964] 3 All ER 556; 1 WLR 1326 at 1330. The detriment is assessed at the time a party seeks to depart from the assumption or expectation: DHJPM Pty Ltd v Blackthorn Resources Ltd (formerly called AIM Resources Ltd) (2011) 83 NSWLR 728; [2011] NSWCA 348 at [72].
In this case, Ken was aware that Loris and Sonia sought to review their testamentary affairs in late 2017. The existence of the family dispute at that time might have led him to expect they may make different provision for the Bondi property. That Loris and Sonia wished to change their wills and were departing from their representation and promise must have been known to Ken by October 2018 when Ken first asserted his estoppel claim in these proceedings. Loris' position was confirmed again in March 2019 when he filed his defence denying Ken's Bondi estoppel claim.
Ken says that he has suffered detriment because he can no longer claim the unpaid ROW costs due to the expiration of the limitation period. I accept that he may have been out of time to commence proceedings in respect of his invoices dated 10 June 2010 and 24 April 2012 in relation to the first instance Right of way proceedings and the appeal proceedings. However, Ken's Senior Counsel referred in his written and oral closing submissions to an account rendered in 2013 relating to the High Court proceedings, although that account is not in evidence. Ken also paid the amount in respect of the party-party costs in 2014. Thus, Ken could have sought to recover the unpaid ROW costs that comprised the High Court costs and part of the party-party costs from Sahab Holdings in 2018 and 2019 directly from Sahab Holdings or as part of these proceedings. He chose not to do so. There was no limitation issue in relation to those costs. In other words, from the time he was on notice of Loris and Sonia's change in position, Ken had a reasonable opportunity until 2019 and possible sometime in 2020 to resume his position by making a claim for all or at least the bulk of the unpaid ROW costs. Further, a limitation issue may only arise if Ken has to commence proceedings rather than seek to recover the costs from Sahab Holdings directly.
Accordingly, I am not satisfied that Ken has demonstrated that he has suffered any detriment even if Loris and Sonia's representation or promise created an expectation and assumption that he would receive the Bondi property in their wills.
For these reasons, Ken's Bondi estoppel claim fails.
I should record that, had I been satisfied that Ken altered his position in reliance on the representation or promise to his detriment in respect of the unpaid ROW costs, I was not persuaded by Loris' submission that it was appropriate to grant a different remedy to enforce the estoppel in this case.
Here, the expectation was determined with certainty by the party estopped, namely, the bequest of the Bondi property, which the Court must take as the starting point: Delaforce at [92]. The proportionality principle also applies only in unusual cases where the proprietary relief would be out of all proportion to the detriment: Priestley v Priestley at [164]. There was no evidence to establish that the value of the Bondi property would be out of all proportion to the value of the unpaid ROW costs. The fact that Loris and Sonia offered to bear the costs rather than Sahab Holdings also does not justify application of the principle. It was Sonia and Loris who created and encouraged Ken to believe that their promise would be performed.
It follows that the issue of whether the alleged promise is unenforceable by reason of ss 23C and 54A of the Conveyancing Act does not arise. I simply observe that insofar as Ken asserts an interest in respect of the Bondi property as an equitable interest by way of constructive trust, s 23C does not apply: Conveyancing Act, s 23C(2).

[109]

Conclusion, relief and costs

A summary of my conclusions in relation to the issues and claims that were pressed for determination in each of the proceedings is as follows.
In the Corporations proceedings (2018/150768): 1. I have found that the issue of whether there was, in fact, a meeting of directors of Kanjian Holdings on 27 August 2017 and a resolution passed by Loris and Sonia as directors of Kanjian Holdings is not within the pleadings. In my view, an amendment was required, and the issue should not be determined as part of the course of the trial. Noting that Kanjian Holdings and the siblings did not advance submissions on this aspect, I would not have been satisfied that Ken had established, on the balance of probabilities, that there was no meeting of directors or resolution passed by Sonia and Loris appointing the siblings as directors of Kanjian Holdings on 27 August 2017, or at any other time, if the issue had arisen. 2. In relation to the claims made in Ken's Amended Statement of First Cross-Claim, I have held that Sonia's 2017 Revocation and Power of Attorney are invalid and that her 2014 Power of Attorney remains valid on the basis that Sonia was induced to make the 2017 Revocation as a result of undue influence or unconscionable conduct. I will make declarations to that effect pursuant to ss 36(3A) and 36(3) of the Powers of Attorney Act 2003 (NSW). 3. Ken's other claims for relief in relation to the other resolutions and documents passed and signed by Loris and Sonia are refused. I was not satisfied that the resolution of directors of Kanjian Holdings made on or about 27 August 2017 to appoint Victor, Philip and Marianne as directors of Kanjian Holdings, Loris' 2018 Revocation and Power of Attorney and 2018 Revocation of Guardianship, the 18 April 2018 Resolution of directors of Kanjian Holdings and Power of Attorney, the 11 May Authorities and the 11 May Bondi Direction were void or voidable or should be set aside because Loris and/or Sonia lacked capacity or were induced to pass the resolutions or sign the documents by reason of undue influence or unconscionable conduct.
In the Equity proceedings (2018/258352): 1. In relation to Loris' claim regarding the A class share in Sahab Holdings, I have found that Loris is estopped from requiring Ken to transfer legal title to the A class share that Ken holds on trust for Loris during Loris and Sonia's lifetime. Accordingly, Loris' claim for an order that Ken transfer the A class share held by Ken is refused. 2. I have concluded that Sahab Holdings should not be removed as trustee of the Metropole Trust, Kanjian Family Trust or Kanjian Testamentary Trust or as appointor of the Metropole Trust and have refused Loris' application for orders to that effect. I was also not satisfied that Loris had established that Ken had negotiated and executed the Senses AFL on behalf of Sahab Holdings without authority, procured a breach by Sahab Holdings of its duty as trustee of the Metropole Trust or breached his obligations as a director by reason of Sahab Holdings' entry into the Senses AFL. 3. Ken's claim made in his cross-claim to an interest in the Bondi property has not succeeded.
The parties indicated that they wanted the issue of costs to be dealt with after judgment was handed down. As is apparent, each of the parties experienced some success, although not on all of their claims, which will impact that issue. There are also other aspects of each proceeding that may bear on the question of costs and procedural matters, such as extant undertakings, that may need to be dealt with as part of the final orders.
For those reasons, I have deferred making any orders at this stage. I invite the parties to confer and, within 14 days, notify my Associate as to whether orders dealing with final relief and costs can be agreed and to send though proposed short minutes if they can. If agreement cannot be reached on any aspect of the final orders and costs, the parties should confer and, also within 14 days, advise my Associate whether they are content for the remaining issues to be dealt with on the papers or an oral hearing is needed, with a timetable for the exchange of competing orders and short written submissions.

Kanjian Holdings No 1 Pty Ltd v Kanjian; Kanjian v Kanjian

At a glance

Court

Decision date

Before

Source

Judgment (111 paragraphs)

Legislation Cited (11)

Cases Cited (129)

Cited By (6)