Kekatos v Stafford

Court of Appeal (NSW)|2009-07-13|Before: Allsop ACJ, Giles JA, Campbell JA, Mr P, Brereton J, Allsop P

CITATION: Kekatos v Stafford [2009] NSWCA 219

JUDGMENT OF: Allsop ACJ at 1; Giles JA at 109; Campbell JA at 113

DECISION: 1. Appeal dismissed with costs. 2. Any application to vary the order for costs be made by notice of motion filed and served within 7 days.

Conveyancing Act 1919 (NSW) LEGISLATION CITED: Fair Trading Act 1987 (NSW) Frustrated Contracts Act 1978 (NSW)

Baugmartner v Baumgartner [1987] HCA 59; 164 CLR 137 Coulton v Holcombe [1986] HCA 33; 162 CLR 1 House v The King [1936] HCA 40; 55 CLR 499 CASES CITED: Multicon Engineering Pty Ltd v Federal Airports Corporation (1997) 47 NSWLR 631 Muschinski v Dods [1985] HCA 78; 160 CLR 583 Stafford & Anor v Kekatos & Anor (No 3) [2008] NSWSC 1093 Stafford & Anor v Kekatos & Anor (No 4) [2008] NSWSC 1338 Waltons Stores (Interstate) Limited v Maher [1988] HCA 7; 164 CLR 387

Voula Kekatos (Appellant) PARTIES: Susan Stafford (1st Respondent) Rhonda Stafford (2nd Respondent)

COUNSEL: Mr M Jacobs QC (Appellant) Mr P Hallen SC, Mr E Finnane (Respondents)

SOLICITORS: Carneys Lawyers (Apellant) Uther Webster & Evans (Respondents)

LOWER COURT JURISDICTION: Supreme Court - Equity Division

LOWER COURT DATE OF DECISION: 17 October 2008 13 November 2008

LOWER COURT MEDIUM NEUTRAL CITATION: Stafford & Anor v Kekatos & Anor (No 3) [2008] NSWSC 1093 Stafford & Anor v Kekatos & Anor (No 4) [2008] NSWSC 1338

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL 40394/09

ALLSOP P GILES JA CAMPBELL JA

Wednesday 29 July 2009 KEKATOS v STAFFORD & ANOR Judgment 1 ALLSOP ACJ: This is an appeal from orders made by a Judge of the Equity Division (Brereton J) resolving a commercial dispute between two families over land at Penrose, New South Wales, on which a valuable quarry was located and landfill operations were conducted. (See Stafford v Kekatos (No 3) [2008] NSWSC 1093 and Stafford v Kekatos (No 4) [2008] NSWSC 1338.) 2 The nub of the controversy concerns the capacity in which the appellant (Mrs Voula Kekatos) took an assignment of interests of the respondents (Ms Susan Stafford and Ms Rhonda Stafford) in a charge given by a company called Global Minerals Australia Pty Limited ("Global") and an assignment of interests under a mortgage over the land in question from two companies (Heggies Bulkhaul Limited ("Heggies") and Collex Waste Management Pty Limited ("Collex")) which operated the quarry and the land fill businesses. The respondents (plaintiffs below) asserted (and the primary judge found) that the appellant (defendant below) took these assignments as a trustee for herself and the respondents. The appellant asserted below that she took them absolutely for her own benefit. The product of the assignments were net sale proceeds of the land and royalties collected (before the sale of the land) for the use of the land, to a proportion of which proceeds the respondents asserted they were entitled. 3 In order to understand the controversy and to assess the correctness or otherwise of the primary judge's orders and reasons, it is necessary to set out some background to the central events. For convenience I will often refer to the appellant as Mrs Kekatos and the respondents by name or, as the primary judge did, "the Staffords". Facts

4 Before 8 December 1999, the land was owned by a company called Australian Machinery Equipment Sales Pty Limited ("AMES") which was owned by the Stafford and Kekatos families. In November 1995, AMES leased the land to Heggies for a five year term with three options to renew of 11 years each. Royalties were payable by Heggies under the lease by reference to the operation of the quarry. In December 1995, AMES entered into a joint venture agreement ("the Land Fill Agreement") with Heggies and Collex in relation to the use of the land. Under the Landfill Agreement, AMES granted an unregistered mortgage over the land (in respect of which a caveat was lodged) to secure performance of obligations by it under that agreement. 5 Later, caveats were lodged on the title to the land by Collex, claiming an option to acquire a lease of the land, and by a company called Ostabridge Pty Limited ("Ostabridge") claiming an interest pursuant to a contract for the sale of the land. 6 In December 1999, the Staffords and Mrs Kekatos advanced $1.2 million to Global which purchased the land from AMES, paying off a National Australia Bank mortgage. The Staffords and Mrs Kekatos were shareholders and directors of Global. This money had been raised from the Commonwealth Bank using various securities, including other properties owned by the Staffords (and their husbands) and Mrs Kekatos. The advance to Global by the Staffords and Mrs Kekatos was made pursuant to a deed of loan which included a charge by Global over any freehold or leasehold property and its assets and undertaking and a covenant to execute a registrable mortgage of the land. Global also granted to the Staffords and Mrs Kekatos a fixed charge over the land and an unregistered mortgage over the land, both securing all moneys owing by Global to them. 7 Thus the several loans of the Staffords and Mrs Kekatos to Global were secured by what the primary judge referred to as the Loan Deed, the Global Charge and the Global Mortgage. 8 In May 2001, Heggies commenced litigation over the lease and in September 2003, Austin J ordered that Global grant a new lease to Heggies. 9 In April 2003, a dispute arose between the families over Global's share register and the Staffords commenced winding up proceedings. As part of resolving this dispute Mr Daniel Cvitanovic was appointed receiver and manager of Global's assets and undertaking, pursuant to the Global Charge. 10 Meawhile, Ostabridge, which had commenced proceedings against AMES and Global, had gone into receivership, Mr Kevin Shirlaw being appointed its receiver and manager in July 2000. In January 2003, these proceedings were settled on terms which obliged Global to pay sums to Ostabridge, secured by an unregistered mortgage over the land. Further proceedings were brought by Ostabridge against Global and receivers (Messrs McDonald and Albarran) were appointed to the land under the mortgage by Mr Shirlaw. These further proceedings were settled in May 2003 by an agreement requiring Global to pay $4.65 million to Ostabridge partly secured by the land and payable in instalments up to June 2006. Global defaulted on these payments and it was wound up in October 2003, Mr Michael Jones being appointed liquidator. 11 Meanwhile, in September 2003, Mr Cvitanovic retired as receiver under the Global Charge, but was reappointed in early October of the same year. Under this second receivership, Mr Cvitanovic began to seek buyers for the land. The Staffords and Mrs Kekatos believed the land could be bought at an advantageous price. Mr Cvitanovic held discussions with Mr Wayne Stafford (as agent for the Staffords) and Mr Kekatos (an agent for his wife). Of course, any dealing with the land would necessarily have to involve Mr Shirlaw, the receiver of Ostabridge, and his appointed receivers of the land (Messrs McDonald and Albarran). 12 The Staffords and Mrs Kekatos had, since 2000, made further advances to Global such that by late October 2003 the Global Charge secured $741,561.00 lent by Ms Susan Stafford, $1,370,955.92 by Ms Rhonda Stafford and $1,080,932.20 by Mrs Kekatos (a total of $3,193,449.12). 13 On 30 October 2003, consequent upon the discussions among Messrs Cvitanovic, Stafford and Kekatos, Mr Cvitanovic sent a letter recording an offer to purchase the land for $5,403,213, being cash of $2,209,764 and assignment of the secured debts of $3,193,449. A tender process with other bids was to take place. 14 There was a working paper attached to Mr Cvitanovic's letter setting out: (a) the existing debts owed by Global to the Staffords and Mrs Kekatos (as identified above) and two sums estimated to pay out Ostabridge ($1.7 million) and the receiver's costs (presumably of Mr Cvitanovic, being $509,763) which appeared to be to Mrs Kekatos' account. This working paper indicated that the land would be bought, in effect by Mrs Kekatos (but not the Staffords) paying out Ostabridge and the receiver (by payments totalling $2,209,763.84) and such sums would be added to her secured debt, raising it from $1,080,932.20 to $3,290,696.04. 15 An associate of Mr Wayne Stafford, a Mr Hallinan, made another offer also involving a cash injection, a transfer of the secured debt, payment of Ostabridge and receivers. One important difference was that this proposal involved paying out Mrs Kekatos' secured debt, that is Mrs Kekatos being bought out. 16 By 5 December 2003, Mr Kekatos, Mr Wayne Stafford and Mr Cvitanovic had refined the former proposal. A tender would be lodged on behalf of a unit trust in which the Staffords would hold a 50 per cent interest and Mrs Kekatos a 50 per cent interest, but with voting control lying with Mrs Kekatos. The offer price was $4.893 million being the transfer of the debt under the Global Charge and $1.7 million in cash to be raised by Mrs Kekatos using the land and her Vaucluse home as security. This $1.7 million lying with Mrs Kekatos was to deal with Ostabridge. It was also intended that Mrs Kekatos would, in the first instance, be responsible for paying out the receiver's costs. 17 Steps took place to put this arrangement in place. A unit trust deed was prepared and sent to Mr Wayne Stafford in February 2004. Also a schedule to a pro forma unit trust deed was executed by Mrs Kekatos as "trustee of the Penrose Quarry Unit Trust". Other tenders came forward. 18 For a time in December 2003 it appeared that the proposal under which Mrs Kekatos funded a payout to Ostabridge that was satisfactory to Mr Shirlaw would proceed. On 22 December 2003, Mr Shirlaw gave his consent to the proposal subject to conditions. 19 No trust as yet was established, there being no property subject of the trust and no contract to purchase the land yet exchanged. 20 At this stage in the narrative, it is convenient to interweave the allegations of the parties. Though no trust was yet in existence, the Staffords claimed in their pleading that by this time there was a binding and enforceable agreement, called the "Penrose Trust Agreement" under which Mrs Kekatos agreed to purchase the land as trustee for herself and the Staffords. Paragraph 29 of the Amended Statement of Claim (the "ASC") was in the following terms: "[29] On or about 29 October 2003, or alternatively, in or about December 2003, [Mrs Kekatos] by her agent and attorney [Mr Kekatos] entered into an agreement with the [Staffords], by their agent Wayne Stafford, pursuant to which [Mrs Kekatos] and the [Staffords] would form a trust ("the Penrose Trust"), the terms of which, and the purpose of which, would be a. [Mrs Kekatos] would be the trustee of the trust; b. the property of the trust would be held by [Mrs Kekatos] on trust for the beneficiaries; c. the entitlement to the trust property would be divided 50% and/or a controlling interest (by voting) to the Kekatos' interest (either [Mrs Kekatos] herself or a company associated with the [Kekatoses] "the Kekatos' Interest") and 50% or a non-controlling interest by voting to the [Staffords]; d. That the Penrose Trust would make an offer to Cvitanovic to purchase the Penrose Land for a price up to $4.83 million or such other figure agreed to between the parties. e. The purchase price would be paid by the assignment to the Penrose Trust by Global of the Charge valued at $3,193,449 and the balance by cash. f. The cash component referred to in subparagraph 29 e above and the funds needed to payout Cvitanovic's costs would be funded by way of a registered first mortgage secured over the Penrose land ("the Penrose Funding"), g. the Kekatos' [I]nterest would do all acts and things necessary to raise the Penrose Funding. h. the Penrose Land, when purchased, would constitute property of the Trust. ("the Penrose Trust Agreement") Particulars (i) Discussion on 29 October 2003 between [Mr Kekatos] on behalf of [Mrs Kekatos] and Wayne Stafford on behalf of the [Staffords] in the presence of Cvitanovic, and recorded in a letter from Cvitanovic addressed to George Kekatos dated 30 October 2003. (ii) Alternatively, the Penrose Trust Agreement was agreed by way of a discussion between Wayne Stafford on behalf of the [Staffords] and [Mr Kekatos] on behalf of [Mrs Kekatos] in the presence of Cvitanovic in or about December 2003." 21 In paras 40 and 40A the Staffords pleaded that in about August 2004, the Penrose Trust or Penrose Trust Agreement was varied or the Penrose Trust Agreement was novated to include or to conform with the following proposition: "(a) [Mrs Kekatos] would use her Vaucluse home to raise and offer as additional security to facilitate the Penrose Funding to allow the Penrose Trust to purchase the Penrose Land. (b) That [Mrs Kekatos] on the raising of the Penrose Funding would as trustee of the Penrose Trust do all acts and things necessary to proceed with the purchase of the Penrose Land; (c) in the event that the purchase of the Penrose land did not proceed she would as trustee of the Penrose Trust do all acts and things necessary to recover, at her costs the monies due under the Charge. (d) in consideration for [Mrs Kekatos'] promise as detailed in subparagraph 40a, b and c above, the [Staffords] would assign their interests in the Charge to [Mrs Kekatos] who would then hold the Charge as trustee of the Penrose Trust; (e) that she would on receipt of any monies repaid to reduce the amount secured under the Charge pay such monies to the Penrose Trust ('the Variation'). Particulars Conversation between Wayne Stafford and George Kekatos on or about August 2004." (I will deal with the underlying facts giving rise to these assertions as they arise in chronological order.) 22 The primary judge rejected this contractual case at [18] of his reasons, stating: "[18] … However, in this case, as at December 2003, there was no consideration moving from the Staffords to support any such agreement, let alone had any consideration passed; and although in a sense the parties had 'agreed' that Mrs Kekatos would submit a tender on behalf of the proposed trust - to purchase the Penrose Land, subject to the Global Charge, at a price not exceeding $1.7 million, to be raised on the security of Mrs Kekatos' Vaucluse home and the Penrose Land - there was no 'concluded agreement' in the sense of a binding and enforceable contract to that effect: not only because of the absence of consideration, but also because it is clear enough, from the circumstance that the Staffords were contemporaneously engaged in negotiations with another potential purchaser of the land - High Quality, who also lodged a tender on 5 December 2003, which contemplated the Kekatos interests being bought out - that the Staffords did not then intend to be bound with Mrs Kekatos to the terms of the alleged 'Penrose Trust Agreement'. Had Mrs Kekatos' tender been accepted, she would, upon acquiring an interest in the property, indeed have held it as trustee, but not pursuant to a binding and enforceable agreement - rather, because she purchased expressly as trustee." 23 Because the question arises in the submissions of Mrs Kekatos on appeal it is convenient at this point to note what the primary judge said about the pleading of the Conveyancing Act 1919 (NSW), s 54A to the asserted "Penrose Trust Agreement" at [19] of his reasons: "[19] I mention, only to reject, Mr and Mrs Kekatos' further submission that any such agreement would have been unenforceable by operation of (NSW) Conveyancing Act 1919, s 54A, which provides that no action or proceedings may be brought upon any contract for the sale or other disposition of land or any interest in land, unless the agreement or some memorandum or note of it is in writing signed by or on behalf of the party charged. The alleged 'Penrose Trust Agreement' was not 'a contract for the sale or other disposition of land': it was not an agreement between vendor and purchaser, or disponor and disponee, but an agreement between three people who hoped to become purchasers. An agreement between A and B that they will together purchase land from a third party is not an agreement for the sale or other disposition of land within s 54A. Nor is an agreement between three persons that, in the event that one of them purchases certain land, she will hold it on trust for all three." 24 By the time the Staffords conveyed their agreement to Mr Shirlaw's conditions of 22 December 2003, he was no longer prepared to sell on those terms. Also, Heggies at this time foreshadowed a claim in the order of $600,000 for restitutionary steps taken on the land. Nevertheless, negotiations continued with Mr Shirlaw to acquire the land. 25 In June 2004, further complications arose. Heggies commenced proceedings against Global and Ostabridge and their liquidators and receivers seeking a registered mortgage over the land ("the Heggies Mortgage Proceedings"). The dispute also involved a priority dispute between Heggies and Ostabridge. Mr Cvitanovic brought a cross-claim in these proceedings challenging the validity of the Ostabridge mortgage. 26 At this time, an offer to purchase the land was renewed by the Staffords and Mrs Kekatos through the "Penrose Quarry Trust". Mr Cvitanovic obtained advice which dealt with the difficulties of selling to that trust. Nevertheless, a draft contract was prepared describing the purchaser as the "Penrose Quarry Trust". 27 On 7 July 2004, Mr Shirlaw entered into a contract for the sale of the land to a company called Adelaide Brighton Ltd ("Adelaide Brighton"). At the same time, Mr Shirlaw gave a settlement proposal to Mr Cvitanovic. This was conveyed to the Staffords and Mr and Mrs Kekatos. There was a demand on the two families by Mr Cvitanovic for his fees, a suggestion (rejected by the Staffords) that Mrs Kekatos buy out the Staffords' interest in the Global debt and charge and ultimately a rejection by Mr Cvitanovic of Mr Shirlaw's settlement proposal. 28 As will be referred to in due course, the sale of the land to Adelaide Brighton was eventually completed on 25 September 2005. Between July 2004 and that date there took place events that were central to this controversy. 29 As at 29 August 2004, the debts secured by the Global Charge were, to Ms Susan Stafford: $975,931, to Ms Rhonda Stafford $1,907,162 and to Mrs Kekatos: $1,375,234. On that day, 29 August 2004, a deed was executed assigning the debt owed by Global to, and the interest in the Global Charge of Ms Susan and Ms Rhonda Stafford to Mrs Kekatos (the "Deed of Assignment"). At [27] of his reasons the primary judge succinctly recorded the centrality of the deed and the essence of the parties' contentions about it litigated before him: "[27] … The basis of this transaction - and in particular whether the assignment of the charge was to Mrs Kekatos beneficially or as a trustee - is the fundamental issue in the case. The Staffords contend that there was an agreement to the effect and intent that, in consideration of the Staffords assigning to her, as trustee of the Penrose Quarry Trust, their interests in the Global Charge - with the result that her proportionate interest in the Global Charge, and the debt secured by it, would be increased from 32.25% to 50% (because the Global Charge would be held pursuant to the Penrose Quarry Trust), and the interests of the Staffords correspondingly reduced - Mrs Kekatos would raise the necessary funds for the purchase of the Penrose Land, using her Vaucluse home as additional security for that purpose. (Although this was said to be by way of variation or novation of the "Penrose Trust Agreement", that characterisation is really immaterial). Mr and Mrs Kekatos contend that there was an absolute assignment of the charge to Mrs Kekatos beneficially."

30 Mr Kekatos prepared the deed of assignment and another document, an "Undertaking and Authority", which were both executed by Mrs Kekatos on or about 29 August. The assignment was in the following terms: "WHEREAS A. Rhonda, Susan and Voula are the Lenders pursuant to a Registered Deed of Company Charge Registered No: having provided certain financial accommodation totalling as at 30 th September 2003 $3,929,332.00 ('the Monies') to Global Minerals Australia Pty Ltd (in Liquidation) and (Receiver Manager appointed) ('Global'), ('the Charge'). B. Global having defaulted in the repayment of the monies the Lenders appointed Ferrier Hodgson's Daniel Cvitanovic as Receiver and Manager pursuant to the charge to secure the repayment of the monies. C. The Receiver has requested that the Lenders provide continued funding in order for the Receiver to meet legal and other disbursements incurred by him pursuant to his obligations as Receiver of Global. D. Susan and Rhonda are not able to provide such further funding and have requested that Voula provide such funding and that Voula acquire the land held by Global being Lots 1-5 Hume Highway Paddy's River from the Receiver and on the terms and conditions herein. NOW THIS DEED WITNESSES that in consideration of the premises and of these presents the parties hereto HEREBY MUTUALLY COVENANT ACKNOWLEDGE AND CONFIRM as follows: 1. In consideration of Voula providing the funding required by the Receiver of Global Rhoda and Susan hereby assign and transfer on and from the date hereof to Voula all their right title and interest in the Charge and all monies secured thereunder and all collateral security held by the Receiver of Global. 2. Rhonda and Susan on and from the date hereof authorise and direct Voula to carry out all actions as may be required at her sole discretion and authority under the charge to instruct and deal in her own and unfettered right with the Receiver in relation to all matters and authorities required by the Receiver under the charge and the authority, instructions and written directions of Voula to the Receiver in relation to any matters under the Charge or his action will be sufficient and the only authority required by the Receiver to discharge all his obligations to Rhonda and Susan. 3. This instrument shall be construed in accordance with and governed by the laws of the State of New South Wales and the Courts of New South Wales shall have jurisdiction. AS WITNESS the parties have hereunto affixed their hands and seals on the day and year first hereinbefore written. SIGNED SEALED and DELIVERED by the said RHONDA STAFFORD in the presence of: WAYNE STAFFORD" The Undertaking and Authority was in the following terms: "TO: RHONDA STAFFORD

SUSAN STAFFORD I, Voula Kekatos hereby undertake and acknowledge that I will enter into the Agreement for Sale of Land to acquire Lots 1-5 Hume Highway Paddys River with the Receiver on behalf of the Penrose Quarry Trust signed this day by all the parties and shall apply all monies held by the parties pursuant to the Deed of Charge over Global to each respective party in accordance with the amounts stated in the accounts prepared by Peter Hawketts for 30 September 2003. Dated 29 th August 2004 Voula Kekatos" 31 Before and after 29 August 2004, discussions, in effect, negotiations, took place between Mr Wayne Stafford and Mr Kekatos about how to extract the families from the position they were in. At [30]-[32] of his reasons, the primary judge recorded evidence that he accepted about these negotiations, as follows: "[30] Mr Stafford says that in August or September he had a conversation with Mr Kekatos in which the latter said that the 'only way out' was if he could raise $2.5 million to pay out Mr Shirlaw, so that the trust could then acquire the Penrose Land, which he believed he could achieve using the Kekatos' Vaucluse home as security, but was only prepared to do so if compensated ' for taking the risk and for funding the security to pay out Shirlaw' . He proposed that the Global Charge be assigned to the trust, so that in the end the property and the charge would each be held as to 50% for the Staffords and 50% for Mrs Kekatos, which would be ' compensation for the money that we are putting in to fund the legals and also for raising the security to pay out Shirlaw '. Mr Stafford says that negotiations began with Mr Kekatos seeking a 75% interest in the trust, and that after days of negotiations they agreed on 50%. It is noteworthy that, having regard to the calculations referred to above (at [16]), increasing the Kekatos' interest in the charge to 50% (from 32.25%) would not by any means compensate them for the further expenditure it was anticipated that they would incur - unless that further expenditure were to be recoverable by them in addition to the amounts already secured by the Charge. [31] Mr Cvitanovic says that in August or early September, Mr Kekatos told him that if he was going to fund the litigation he wanted a bigger share of the proceeds, and subsequently that the Staffords would assign their interest under the charge to Mrs Kekatos as trustee, so that each would get 50%, with the Kekatos' interests to have control. Mr Kekatos denies any such conversation - with either Mr Stafford or Mr Cvitanovic - in or about August or September 2004, saying that the only occasion on which anything like that was discussed was in December 2003. Indeed, at one point he suggested that the relationship between him and Mr Stafford had broken down to the extent that they were not then speaking. However, on 8 September, Mr Stafford sent an email to Mr Cvitanovic: Have finally agreed on terms of the deed with George!, I am in Melbourne until Friday AM, Sue and Rhonda will sign the documents that will release your funds and complete the sale. When payment of the royalty is released I would expect you will release the moneys owed to Garry and the $35,000 Williams took from myself. When this is completed George and I would like to have a meeting arranged with HBL and Boral to discuss the transfer and conditions that we want.

I suggest this could be later next week. [32] This contemporaneous communication corroborates Mr Stafford's evidence that he had conversations with Mr Kekatos about the terms of the assignment, and refutes Mr Kekatos' evidence that they were not then on speaking terms."

32 The primary judge rejected Mr Kekatos' evidence and, largely, accepted that of the Staffords and Mr Wayne Stafford. No challenge was made on appeal to his Honour's findings as to the witnesses and their credit and reliability. 33 Importantly, before 14 September 2004, Mr Wayne Stafford made amendments to the deed of assignment by inserting after the word "Voula" in clause 1, the words "as trustee of the Penrose Quarry Trust 2nd Dec 2003". These changes were made to an undated version. This document with annexures being a copy of the schedule to the trust deed and of the undertaking and authority was signed by Susan and Rhonda Stafford. It was sent to Mr Cvitanovic under a coversheet which stated: "Find enclosed the signed authority from Rhonda and Susan for the instructions to Voula as the "Trustee of THE PENROSE QUARRY TRUST" to complete the sale of the property … Please ensure the sale is as per the instructions of the deed enclosed." 34 At [34] of his reasons, the primary judge drew the following conclusions which were not challenged on appeal: "[34] The Fifth Schedule was obtained from the copy of the precedent Penrose Trust Deed already held by Mr Stafford. The significance of the coversheet and the accompanying Fifth Schedule and Undertaking lies primarily in what they say of the intention of the Staffords in September 2004: their forwarding to Mr Cvitanovic in conjunction with the Deed of Assignment makes plain that the Staffords believed that they were dealing with Mrs Kekatos qua trustee."

35 The sequence of signing the document by Rhonda and Susan Stafford was the subject of examination by the primary judge. It would appear that the interlineations were put on a copy of the deed signed by Susan and Rhonda Stafford, after Mr Wayne Stafford had reservations as to the unqualified language. 36 Mr Kekatos did not want the reference to Mrs Kekatos as trustee on the assignment. He told Mr Cvitanovic and Mr Wayne Stafford as much. He cited taxation considerations. In his conversation with Mr Wayne Stafford, Mr Kekatos said (according to Mr Stafford): "Why did you write the hand amendments stating Penrose Quarry? You can't do this. It has to be sent without reference to the Trust. Everyone knows that Voula is doing it for the Trust and Daniel has the Trust Deed. Her actions will be on behalf of the Trust. However, if there is any indication that it is not Voula Kekatos in her own capacity, this would void the tax considerations of the assignment of the debt and other commercial issues. It's important that we just keep it as Voula. There is no need to mention the Trust. If we don't do it this way, we'll be paying a lot more tax."

37 The deed was not then re-executed by Susan and Rhonda Stafford; rather, Mr Wayne Stafford had put the interlineations on a photocopy of the signed original, which (unamended) original was sent to Mr Cvitanivoc on 21 September 2004. 38 Once again, it is convenient at this point to note how the case was put below and how the primary judge dealt with it. Mr and Mrs Kekatos submitted that on the above sequence of events, Susan and Rhonda Stafford did not sign in reliance on Mr Kekatos' representations in his conversation with Mr Wayne Stafford set out at [36] above. In rejecting this (against which there was no appeal) the primary judge said at [42] of his reasons: "[42] Mr and Mrs Kekatos submit that, on the version given by Mr Stafford in cross-examination, there can have been no reliance on any representation by Mr Kekatos, because the alleged conversation took place after execution, and that Rhonda and Susan Stafford signed the document without the interlineations and without reference to the trust. However, this submission overlooks that there had already been conversations between Mr Stafford and Mr Kekatos as to the arrangements prior to 8 September; that Mr Stafford was the relevant decision-maker on behalf of the Staffords; and that the critical act of reliance was delivery to Mr Cvitanovic on 21 September of what became the ultimate operative form of the document."

39 The dating of and registration of the deed of assignment was dealt with by the primary judge at [44] of his reasons as follows: "[44] At some stage, a copy of the Deed of Assignment - without interlineations - was forwarded to or obtained by Mr Kekatos, and registered with ASIC on 25 September 2005, after being certified by Mrs Kekatos on 22 September 2005. On this version, the date 29 August 2004 has been inserted, in Mr Stafford's handwriting. From the circumstance that both versions forwarded in September 2004 to Mr Cvitanovic were undated, I infer that this was inserted subsequently, and probably by reference to the date on the Undertaking. It may well have been forwarded by Mr Stafford."

40 At [54] to [68] of his reasons the primary judge dealt with the deed of assignment in a section of his judgment entitled "Did the Staffords retain a beneficial interest in the Charge?" The title of the section is instructive as to the landscape of the litigation. The Staffords' essential proposition was that the assignment was effective to transfer their interests in the Global Charge to Mrs Kekatos, but she took as trustee for all three, Ms Susan and Ms Rhonda Stafford on the one hand and herself on the other, as to 50:50. Mr and Mrs Kekatos' case was that the assignment was absolute and to Mrs Kekatos beneficially. (No case was put, as it was on appeal, that the assignment was void and a nullity leaving the parties in their respective positions as chargees as if the assignment had not taken place.) At [55] of his reasons, the primary judge recorded one aspect of the Kekatos' case (which was rejected) which sought to give a commercial explanation as to why the Staffords would surrender their respective interests: "[55] … Mr Kekatos contended that the commercial explanation of the assignment was that the Staffords obtained the benefit of exoneration from liability for the receiver's fees in return for surrendering their interest; however, the Deed of Assignment does not have the effect of exonerating or indemnifying them in that respect. Strikingly, Mr and Mrs Kekatos could point to no conversation or communication in which the Staffords, after the meeting on 16 July, were asked or agreed to forego their opposition to an absolute assignment - on their version, the interlineations were omitted without request or suggestion, let alone insistence, on their part. This is entirely implausible."

41 At [56] of the reasons the position was expressed clearly by the primary judge: "[56] It is clear that the Staffords proceeded on the basis that, although everyone knew that Mrs Kekatos was acting as trustee, the Deed could not expressly say so, for taxation and other commercial reasons." The primary judge concluded that this course was taken at the instigation of Mr Kekatos, saying at [59]: "[59] … I conclude that Mr Kekatos, as agent for Mrs Kekatos, personally and through Mr Cvitanovic, represented to the Staffords that Mrs Kekatos was acting as trustee and that it was only for taxation and commercial reasons that express references to the trust should be omitted; and knew and intended that the Staffords would assign their interest in the Global Charge to Mrs Kekatos on the basis that she would hold the Charge as a trustee for herself and for the Staffords each as to a half interest."

42 At [60] of his reasons, the primary judge conveniently summarised the Staffords' pleaded case: "[60] On that basis, the Staffords contend that, despite the Deed of Assignment, they retained a beneficial interest in the Global Charge, the Global Mortgage, the Loan Deed and the moneys owing and secured under those instruments, on various alternative bases, broadly summarised as follows: first, that Mrs Kekatos held the Global Charge as trustee of the Penrose Trust pursuant to an express trust, the trust having been fully constituted when the Staffords assigned their interest in the Global Charge to Mrs Kekatos; secondly, that Mrs Kekatos is estopped from asserting that the assignment to her was absolute or other than as a trustee; thirdly, that Mrs Kekatos held the Global Charge for herself and the Staffords pursuant to a resulting trust arising from the assignment - in circumstances where she was not intended to take a beneficial interest beyond 50%, or upon the consideration for the assignment, or the purpose of the venture (namely the acquisition of the Penrose land for the benefit of the Staffords and Mrs Kekatos), having failed; and fourthly , that Mrs Kekatos held the Global Charge upon a constructive trust arising from the parties' common intention that she hold it in trust for the Staffords as to 50%. Alternatively , if they were not entitled to a beneficial interest in the Charge, notwithstanding the Deed of Assignment, the Staffords contend that by making the representation, through Mr Kekatos, that she would take the assignment as trustee, Mrs Kekatos made a representation with respect to a future matter without reasonable grounds, and thereby engaged in misleading and deceptive conduct in contravention of (NSW) Fair Trading Act 1987 , s 42."

43 At this point the primary judge noted the Kekatos' reliance upon the Conveyancing Act, ss 23C and 54A and the absence of writing to defeat the creation of a beneficial interest in the charge. In answering these pleas and in conveniently analysing the Staffords' claims the primary judge said at [61] of his reasons: "[61] … although the same destination may be reached by other routes, in my view the preferable analysis of the Staffords' case is founded in equitable estoppel, as explained by Brennan J in Waltons Stores (Interstate) Limited v Maher (1988) 164 CLR 387, 428" The primary judge then continued in [61] to set out the passage of Brennan J in Waltons Stores v Maher at 428 and in so doing identified the six elements of equitable estoppel isolated by Brennan J: "[61] … (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise."

44 From [62] to [66] the primary judge examined the evidence and found each element identified by Brennan J satisfied: "[62] The Staffords expected that if they executed the Deed of Assignment of the Global Charge to Mrs Kekatos, they would retain a beneficial interest in it, and that Mrs Kekatos would hold the Charge upon the terms that had been proposed for the Penrose Quarry Trust, namely as to 50% for herself and 50% for the Staffords. (Although the Fifth Schedule that accompanied the Deed of Assignment referred to 51/49, it is clear on the evidence as a whole that all parties accepted that the interests in the Trust upon its being established were to be 50/50, but with the Kekatos interests to have voting control). This expectation is evidenced by Mr Stafford's refusal at the 16 July meeting to agree to an absolute assignment; Mr Stafford's August/September conversation with Mr Kekatos and his 8 September email to Mr Cvitanivoc; the endorsement of the interlineations on the Deed before it was first forwarded to Mr Cvitanivoc; the coversheet forwarding the Undertaking and the Fifth Schedule in conjunction with the Deed following its signature by them; the coversheet reforwarding the Deed without the interlineations (but again with the Undertaking) only after being assured that Mrs Kekatos was acting as trustee and that it was only for taxation and commercial reasons that express references to the trust should be omitted; and their subsequent ongoing interest in and inquiries of Mr Kekatos about developments concerning the Penrose Land.

[63] Mr Kekatos, who for all relevant purposes was Mrs Kekatos' duly authorised agent, induced the Staffords to adopt that expectation. This is established by his presence at the 16 July meeting when Mr Stafford refused to agree to an absolute assignment; the absence of any conversation or communication to which he can point in which the Staffords departed from that position; the conversations between him and Mr Stafford prior to 8 September as to the basis of the assignment; and most significantly by his representation to Mr Cvitanovic and Mr Stafford that Mrs Kekatos was acting as trustee but that there could not be express reference to the trust for taxation and commercial reasons. It is corroborated by his subsequent conduct vis-à-vis the Staffords, in which he continued to treat them (but no-one else) as if they retained a beneficial interest. [64] The Staffords acted in reliance upon their expectation, by executing and delivering the Deed of Assignment in its ultimate form, omitting reference to the Trust. Mr Southwick, for Mrs Kekatos, submitted that when Rhonda and Susan Stafford signed the Deed, the interlineations were not on it - they were subsequently inserted by Mr Stafford - and that as the act of reliance pleaded was the execution of the Deed, reliance at that time could therefore not be established. There are several answers to this. The first is that on a fair reading of the pleading, execution involves signing, sealing and delivery; and the interlineations were made before ultimate delivery, which was effected by forwarding the Deed the second time, with the interlineations omitted, to Mr Cvitanovic. The second is that the presence of the interlineations is only one of several indicia of reliance on the expectation; even at the time of original signature, the 16 July meeting and the 8 September conversations had already taken place, and the act of forwarding the Undertaking and the Fifth Schedule with the Deed speaks volumes as to their then expectation and belief. That there was, and had been since at least April 2003, a level of distrust between the Staffords and Mr Kekatos does not negative reliance on an assumption to the existence of which he had contributed: distrust, even amounting to suspicion, does not negative reliance, and a person can rely on a representation made by another, even though he distrusts him.

[65] Mrs Kekatos, by her agent Mr Kekatos, knew and/or intended the Staffords to so act. This is established by his drafting and forwarding of the Deed to Mr Cvitanovic for execution by the Staffords; by the August/September conversations between Mr Kekatos and Mr Stafford; and again, most particularly, by his representation to Mr Cvitanovic and Mr Stafford to the effect that Mrs Kekatos was to hold as trustee but that there could not be express reference to the trust for taxation and commercial reasons. And again, it is corroborated by his subsequent conduct vis-à-vis the Staffords, in which he continued to treat with them (but no-one else) as if they retained an interest.

[66] The Staffords will suffer detriment if their expectation is not fulfilled, because they would have disposed of their beneficial interest in the Global Charge upon terms to which they would otherwise not have agreed, and for no or inadequate recompense. Far from acting to avoid that detriment by fulfilling the assumption or expectation or otherwise, Mrs Kekatos persists in denying that the Staffords have any interest in the Global Charge or its proceeds."

45 Thus, the primary judge concluded on the basis of equitable estoppel as follows at [67] of his reasons: "[67] In those circumstances, Mrs Kekatos is estopped in equity from denying that the Staffords are entitled to a 50% beneficial interest in the Global Charge, notwithstanding the Deed of Assignment. The absence of writing is no answer to a claim founded on equitable estoppel [ Waltons Stores Interstate Limited v Maher , 408, 431-3, 445-6, 464]. Accordingly, the Staffords retained a one-half beneficial interest in the Global Charge (and its proceeds)."

46 The primary judge then dealt with the alternative basis for relief under the Fair Trading Act, s 42 at [68] of his reasons, saying: "[68] If the Staffords were not entitled - on that or any other of the bases advanced - to a beneficial interest in the Global Charge, notwithstanding the Deed of Assignment, then the same facts would have sustained their further alternative claim, under Fair Trading Act , s 42. Mr Kekatos, who for all relevant purposes was the agent of Mrs Kekatos, represented to Mr Stafford, prior to the Staffords' entry into the Assignment, that Mrs Kekatos would take the assignment as trustee of the Penrose Trust. The Staffords proceeded with the assignment in reliance upon that representation. The representation was in respect of a future matter. In consequence, the representation is taken to be misleading unless Mr and Mrs Kekatos adduce evidence of reasonable grounds for making it: Fair Trading Act , s 41. They have not done so. Accordingly, had the Staffords failed to establish that they retained a beneficial interest in the Global Charge following the assignment to Mrs Kekatos of their interests in it, they would have been entitled to damages against Mr and Mrs Kekatos for breach of Fair Trading Act , s 42 ."

47 On 15 October 2004, the proceedings between Heggies and Global were settled. The settlement provided for $29,300 to be paid by Global to Heggies which would assign the Heggies/Collex mortgage to Global. Mrs Kekatos provided the $29,300 to Mr Cvitanovic and, as nominee of Global, took an assignment of the Heggies/Collex Mortgage, thereby becoming the first ranking secured creditor of Global. Mrs Kekatos also became substituted as plaintiff in the Heggies Mortgage proceedings. 48 From late 2003, Mrs Kekatos and the Staffords had attempted to buy the land from the receiver, Mr Cvitanovic, though obtaining Mr Shirlaw's agreement was a significant obstacle. The primary judge found at [71] that "a prime reason" for the assignment was to facilitate this purchase, saying at [71]: "[71] … A prime reason for the assignment of the Global Charge to Mrs Kekatos as trustee was to facilitate the purchase of the land - by compensating the Kekatos for providing security for raising the requisite funds. Mrs Kekatos had become a trustee by virtue of the assignment to her of the Global Charge, for the purpose of facilitating the acquisition by the trust of the Penrose Land (as made plain by the Undertaking). The opportunity of acquiring that land was a fundamental purpose of the creation of the transfer of the assignment to her upon trust, and as trustee she was bound to pursue it on behalf of the trust. The Heggies/Collex Mortgage was an interest in the Penrose Land, and the acquisition of that mortgage was a step towards the acquisition of the land. As trustee, Mrs Kekatos was bound to exploit the opportunity of acquiring it, if at all, on behalf of the trust."

49 This background was, the primary judge found, integrally connected with Mrs Kekatos obtaining the Heggies/Collex Mortgage, saying at [72] and [73]: "[72] Mr Cvitanovic deposes to a conversation with Mr Kekatos in which the latter said that Mrs Kekatos was acquiring the Heggies/Collex Mortgage in her own right, and it is true that Mrs Kekatos paid consideration to acquire the mortgage in her own right. However, at least without the informed consent of the Staffords, that could not authorise a trustee to exploit an opportunity available to the trust for her own benefit. For Mrs Kekatos' to act in her own interest by purchasing the mortgage in her own right was a breach of her fiduciary duty as trustee, and she held the mortgage upon constructive trust for herself and the Staffords equally.

[73] However, as will become apparent, that conclusion is unnecessary - because on either basis, Mrs Kekatos is entitled to be reimbursed the $29,300 she paid, but no more. If she had acquired the Heggies/Collex Mortgage beneficially, then she would have been entitled to the $29,300 it secured; on the basis that she acquired it as a trustee, then she is nonetheless entitled to be reimbursed the $29,300 expended from her own funds to purchase it."

50 The sum of $29,300 was, the primary judge found, the limit of Mrs Kekatos' entitlement under the mortgage, saying at [74]: "[74] … Moreover, there is no evidence that the mortgage secured any other amount. The suggestion that her ultimate receipt of $1.4 million from the sale of the land shows that that was the value of the Heggies/Collex Mortgage as assigned to her is misconceived: what she ultimately received from a compromise referable to the sale of the land, to which she had multiple claims (including as chargee under the Global Charge), says nothing as to what was secured by the Heggies/Collex Mortgage at the date of its assignment to her."

51 Mrs Kekatos was the first ranking secured creditor of Global by her position as assignee of the Heggies/Collex Mortgage; she was also the assignee of the Global Charge. As first ranking secured creditor she became entitled to receive royalties payable by Heggies to Global under the lease. Her solicitors demanded these royalties from Mr Cvitanovic. These were paid to her, less Mr Cvitanovic's (by this time not inconsiderable) fees. 52 Mrs Kekatos then filed a further pleading in the Heggies Mortgage Proceedings which was described by the primary judge in [77] of his reasons as follows: "[77] .. That pleading was wholly concerned with claimed and disputed interests in the Penrose Land, asserting the existence and assignment to her of the Global Charge and the Global Mortgage (which was said to be collateral to the Global Charge), and the existence and assignment to her of the Heggies/Collex Mortgage. The relief she claimed included a declaration that the Heggies/Collex Mortgage and the Global Mortgage secured a sum equal to, or greater than, $1.7 million."

53 In February 2005, a contract for sale of the land was entered between Mr Cvitanovic and Mrs Kekatos, but it did not proceed because of opposition from Mr Shirlaw. 54 Finally, on 10 March 2005 a settlement of the Heggies Mortgage Proceedings was reached and in September 2005, after further litigation, the sale of the land to Adelaide Brighton was completed, as described by the primary judge at [79] of his reasons: "[79] … Mrs Kekatos reached agreement with the remaining parties to the Heggies Mortgage Proceedings (including Mr Cvitanovic and Mr Shirlaw) that the Penrose Land be sold to a third party, Adelaide Brighton Ltd, and that Mrs Kekatos would receive 38.56% (and Mr Shirlaw 61.44%) of the net proceeds. After yet further litigation, the sale to Adelaide Brighton Ltd was completed on 25 September 2005, when Mrs Kekatos received the Settlement Proceeds of $1,412,500."

55 It is important to recall that the benefit received by Ms Kekatos was from the receipt of sale proceeds of the land from this sale to Adelaide Brighton, not from the purchase of the land, the latter being the express purpose underlying the formation of the Penrose Quarry Trust and reflected in the Undertaking and Authority. 56 Thereafter, the primary judge found that Mrs Kekatos received royalties and settlement proceeds in sums and in circumstances set out in [80] to [83] of the reasons: "[80] Mrs Kekatos thus received payments totalling $1,707,630.35 referable to an interest in the Penrose Land: . $226,000 royalties remitted by Cvitanovic on 1 December 2004; . $8,000 royalties remitted by Cvitanovic on 7 December 2004;

. $27,709 royalties paid by Boral on 7 January 2005; . $5,712.35 royalties remitted by Cvitanovic on 11 January 2005;

. $27,709 royalties paid by Boral on 25 February 2005;

. $1,412,500 Settlement Proceeds on 25 September 2005.

[81] The Royalties and the Settlement Proceeds were proceeds of the use, and then the sale, of the Penrose Land. Mrs Kekatos received them in priority to the liquidator of Global. That could only be justified on the basis of a secured interest in the Penrose Land. Mrs Kekatos had no claim in the Heggies Mortgage Proceedings other than in respect of her interests under the assigned Heggies/Collex Mortgage, and the assigned Global Charge and Mortgage. Mrs Kekatos had only two claims on the Penrose Land, and hence only two claims to any proceeds of its sale, or income from that land: as first encumbrancee (as assignee of the Heggies/Collex Mortgage), and as second encumbrancee (as assignee of the Global Charge). Thus the Settlement Proceeds and the Royalties were proceeds of the Global Charge and the Heggies/Collex Mortgage.

[82] If Mrs Kekatos were entitled to all the Royalties and Settlement Proceeds as mortgagee under the Heggies/Collex Mortgage, because she held that mortgage upon constructive trust she would have held all those receipts upon the same trusts. But - even if she acquired the Heggies/Collex Mortgage beneficially in her own right - nonetheless in her capacity as first mortgagee she was entitled in equity only to the income and proceeds of the Penrose Land to the extent necessary to discharge her security, with any surplus being held by her as trustee for subsequent security holders. The amount secured by the Heggies/Collex Mortgage was only $29,300. The subsequent security holder was Mrs Kekatos herself, but in her capacity as chargee under the Global Charge. The Global Charge was the only basis on which she had any claim to the Royalties or the Settlement Proceeds insofar as they exceeded $29,300. Accordingly, Mrs Kekatos received the Royalties and the Settlement Proceeds, at least insofar as they exceeded $29,300, as trustee for herself as chargee under the Global Charge."

57 The primary judge then dealt with relevant expenditures at [83] of his reasons as follows: "[83] In recovering the Royalties and Settlement Proceeds, Mrs Kekatos expended moneys and incurred liabilities totalling $768,634.42, as follows: . Between 29 September and 5 October 2004, Mrs Kekatos - or at least a company which she controls - paid a total of $180,000 to Mr Cvitanovic in respect of his outstanding receiver's remuneration and expenses (which, at least at one stage, he agreed to treat retrospectively as a deposit under the 5 December 2003 tender); . On 15 October 2004, Mrs Kekatos provided the sum of $29,300 to Mr Cvitanovic, to fund the acquisition of the Heggies/Collex Mortgage;

. On 3 December 2004, Mrs Kekatos paid a further $226,000 to Mr Cvitanovic, from the royalties received by her in the same amount, on account of his outstanding remuneration; . On 24 February 2005, Mrs Kekatos paid a further $15,500 to Mr Cvitanovic on account of receiver's remuneration;

. Mrs Kekatos incurred legal costs of $132,834.42 with MD Nikolaidis, solicitor, between December 2004 and July 2006, in connection with the assertion and enforcement of her rights under the Heggies/Collex Mortgage and the Global Charge; . Finally, Mr Cvitanovic brought proceedings against Mrs Kekatos to recover his outstanding remuneration of $253,000. Those proceedings were ultimately settled for $185,000, for which Mrs Kekatos is liable, in respect of receiver's remuneration and expenses." 58 The primary judge then dealt with the Staffords' claims to the royalties and settlement proceeds. They put their claim on two bases. The first basis asserted the failure of what was said to be a joint venture to purchase the land. This was, it was submitted, the reason for the assignment. Thus, it was submitted, Mrs Kekatos received the proceeds and royalties as trustee, but as a constructive trustee referable to the contributions of the parties. This basis relied on Baumgartner v Baumgartner [1987] HCA 59; 164 CLR 137 at 148 and Muschinski v Dodds [1985] HCA 78; 160 CLR 583 at 620, as to restoration of parties' contributions made to a failed joint endeavour. The working out of that approach and the advantage to the Staffords can be seen in the discussion by the primary judge in the reasons at [89], as follows: "[89] On the basis of failure of the substratum of a joint venture, equity would have sought to return to each of the parties their respective contributions . The contributions of the parties to be repaid, to the extent of the available assets would include the sums secured by the Global Charge at the time of its assignment in August/September 2004 - namely as to Susan Stafford $975,930.56, as to Rhonda Stafford $1,907,161.58, and as to Mrs Kekatos $1,375,233.90. However, the Staffords acknowledge that on this approach, allowance would also have to be made for any other contributions actually made pursuant to the joint venture or undertaking - including the net amount of payments to the receiver by Mrs Kekatos and any payments she has made for legal expenses relevant to the venture, as well as the cost of acquisition of the Heggies/Collex Mortgage - which would have the effect of increasing her contribution to $2,143,867, with the resultant proportionate contributions being 37.94% (Rhonda) Stafford, 19.41% (Susan) Stafford, and 42.65% (Mrs Kekatos), so that on a pro rata return of contributions Rhonda would be entitled to $647,852 and Susan to $331,518, with Mrs Kekatos to retain $728,260."

59 That case of the Staffords was rejected by the primary judge at [90] of his reasons. The essential reason for that rejection was the recognition that the purchase of the land was always going to be problematic and that it was possible, even likely, that the only trust asset would be the Global Charge. The primary judge said at [90]: "[90] … The parties intended that Mrs Kekatos be compensated - through the increase of her interest in the charge from about 35% to 50% - for assuming the risk involved in providing security over her home to raise the funds required by the receiver. In my view, it was intended that she retain that benefit, regardless of whether the land was purchased - it was compensation for agreeing to assume the risk involved, whether or not the purchase was completed. Moreover, although she did not ultimately acquire the land, she did obtain a share of the proceeds of its sale: in those circumstances the substratum of the joint endeavour was not removed; to the contrary it was realised, albeit only in part."

60 The second basis of the Staffords' case was found by the primary judge to be appropriate to found relief: holding the parties (both the Staffords and Mrs Kekatos) to the position made out by the estoppel earlier discussed. The primary judge said at [91] of his reasons: "[91] The alternative … analysis holds the parties to the assumption or expectation upon the basis of which they acted, so that as Mrs Kekatos held her interests in the Heggies/Collex Mortgage and in the Global Charge upon trust for herself and the Staffords in equal shares, she should account to the Staffords for one half of the net benefits she received under those securities."

61 The primary judge then dealt with the relevant expenditures of Mrs Kekatos from [92] to [97], concluding as follows at [96] and [97]: "[96] On this basis, Mrs Kekatos is entitled to be reimbursed:

. the $29,300 paid to Mr Cvitanovic to fund the acquisition of the Heggies/Collex Mortgage, . the $195,500 paid to Mr Cvitanovic in respect of receiver's remuneration and expenses, . the $226,000 reimbursed to Mr Cvitanovic from the royalties received, on account of receiver's remuneration and expenses,

. the legal costs of $132,834.42 paid to MD Nikolaidis, between December 2004 and July 2006, in connection with the assertion and enforcement of her rights as chargee, and . the amount of $185,000 for which she is liable to Mr Cvitanovic pursuant to the settlement of the proceedings brought by him to recover his outstanding remuneration. [97] The deduction of these expenditures and liabilities totalling $768,634.42 from her receipts of $1,707,630.35 results in a net amount received by her of $938,995.90, for half of which (that is, $469,497.95) she must account to the Staffords. Mrs Kekatos having had the benefit of the Settlement Proceeds and the Royalties from the time of receipt by her, she should pay interest in respect of the period from receipt of the Settlement Proceeds on 25 September 2005 (since her earlier receipts from the Royalties did not exceed the amount in respect of which she was entitled to be reimbursed)."

62 The primary judge then, at [98] of the reasons, dealt with the case on the alternative basis of the Fair Trading Act, s 42 that is, in effect, calculating the Staffords' entitlements by reference to their respective interests in the Global Charge assuming a loss of those interests by the misleading and deceptive conduct. Using this approach, he said at [98]: "[98] … In the events that have happened, those interests can be quantified by reference to the proceeds of the Global Charge (the Sale Proceeds and the Royalties, totalling $1,707,630.35), less the costs of realisation (totalling $768,634.42), leaving net proceeds of $938,995.90. Rhonda's damages would have been 44.72% of that, namely $418,918.96; and Susan's 23.03%, namely $215,969.05."

63 This approach gave the same result as the approach based on Baumgartner that his Honour had rejected. In conclusion, the primary judge crisply summarised his conclusions and the monetary consequences thereof at [100] to [104] and [106] as follows: "[100] The Staffords expected that if they executed the Deed of Assignment of the Global Charge to Mrs Kekatos, they would retain a beneficial interest in it, and that Mrs Kekatos would hold the Charge upon the terms that had been proposed for the Penrose Quarry Trust, namely as to 50% for herself and 50% for the Staffords. Mr Kekatos, who for all relevant purposes was Mrs Kekatos' duly authorised agent, induced the Staffords to adopt that expectation. The Staffords acted in reliance upon their expectation, by executing and delivering the Deed of Assignment in its ultimate form, omitting any reference to the trust. Mrs Kekatos - by her agent Mr Kekatos, personally and through Mr Cvitanovic - represented to the Staffords that Mrs Kekatos was acting as trustee and that it was only for taxation and commercial reasons that express references to the trust should be omitted; and knew and intended that the Staffords would assign their interest in the Global Charge to Mrs Kekatos on the basis that she would hold the Global Charge as a trustee for herself and for the Staffords each as to a half interest. The Staffords will suffer detriment if their expectation is not fulfilled, because they would have disposed of their beneficial interest in the Charge upon terms to which they would otherwise not have agreed, and for no or inadequate recompense. Mrs Kekatos is therefore estopped in equity from denying that the Staffords are entitled to a 50% beneficial interest in the Global Charge, notwithstanding the Deed of Assignment. The absence of writing is no answer to an equitable estoppel. Accordingly, the Staffords retained a one-half beneficial interest in the Global Charge (and its proceeds).

[101] If the Staffords were not entitled - on that or any other of the bases advanced - to a beneficial interest in the Charge notwithstanding the Deed of Assignment, then the same facts would have sustained their further alternative claim, that by making the representation, through Mr Kekatos, that she would take the assignment as trustee, Mrs Kekatos made a representation with respect to a future matter without reasonable grounds, and thereby engaged in misleading and deceptive conduct in contravention of Fair Trading Act , s 42.

[102] The opportunity of acquiring the Penrose Land was one that Mrs Kekatos was, as trustee, bound to pursue, if at all, on behalf of the trust. The Heggies/Collex Mortgage was an interest in the Penrose Land, and the acquisition of that mortgage was a step towards the acquisition of the land. For her to act in her own interest by purchasing the mortgage in her own right was a breach of her fiduciary duty as trustee, and she held it upon constructive trust for herself and the Staffords equally. [103] The Royalties and the Settlement Proceeds were proceeds of the use, and then, the sale, of the Penrose Land. Their receipt by Mrs Kekatos was referable to the Heggies/Collex Mortgage and, at least to the extent that they exceeded $29,300, to the Global Charge. Mrs Kekatos is obliged to account for half of the Royalties and the Settlement Proceeds, totalling $1,707,630.35. However, the increase in Mrs Kekatos' interest in the Charge was intended to compensate her for assuming the risk involved in providing the security for the requisite funding in the first instance , and did not exclude her right of reimbursement and indemnity. Mrs Kekatos is entitled to be reimbursed expenditures and liabilities totalling $768,634.42. [104] This results in a net amount of $938,995.90, for half of which (that is, $469,497.95) she must account to the Staffords. Mrs Kekatos having had the benefit of the Settlement Proceeds and the Royalties from the time of receipt by her, she should pay interest in respect of the period from receipt by her. As it was only the receipt of the Settlement Proceeds on 25 September 2005 that resulted in her receipts exceeding the expenditure in respect of which she was entitled to be reimbursed, interest should run from that date and, allowed at 10%, amounts to $143,679.23. … [106] I give judgment that the first defendant pay the plaintiffs the sum of $613,177.18."

64 The primary judge indicated that he would hear the parties as to whether any other orders where necessary and as to costs. The parties took up that opportunity. Mrs Kekatos, by notice of motion, sought leave to reopen her case: (1) to claim credit for interest on amounts paid by her Mr Cvitanovic and others to achieve the payment to her $1.2 million; (2) to claim credit for the prospective settlement sum payable to Mr Cvitanovic, being $250,000 rather than $185,000; and (3) to claim credit for an amount equal to the amount spent in litigating the claim against her by Mr Cvitanovic. She then sought orders adjusting the judgment sum by those amounts or making provision for their ascertainment. 65 The Staffords sought, in addition to the judgment previously given, a number of matters including costs against Mrs Kekatos on an indemnity basis either from the beginning or from 23 June 2008 after an offer of compromise was made.

66 As to the settlement sum payable to Mr Cvitanovic his Honour gave leave for the ascertainment of that sum. This issue does not arise, however, because the lesser sum of $185,000 has been paid and no further sum is due to Mr Cvitanovic. 67 As to the question of interest the primary judge rejected the reopening at [19] and [20] of his supplementary reasons (Stafford v Kekatos (No 4)) in the following terms: "[19] There are numerous difficulties with this submission. First , unlike the issue in relation to the amount of her liability under the Cvitanovic terms of settlement, it was in no way raised, orally or in writing, during the trial, and there is no explanation or apparent reason for it not having been raised inconsistent with fault on the part of Mrs Kekatos' side of the record. Accordingly, there is simply no basis to grant leave to reopen in that respect in the first place. Secondly , as Mr Finnane, who appears for the plaintiffs points out, her entitlement to interest would be a charge not against the plaintiffs but a charge against the trust fund, thus she would be entitled to only one half of the amount claimed. Thirdly , while I did not provide for interest in favour of Mrs Kekatos on those payments, I also did not allow interest to the plaintiffs in respect of the period before 25 September - notwithstanding that Mrs Kekatos had received trust moneys before that date from the royalty distributions - on the basis that she was entitled to retain the moneys so received until the amount of her expenditure had been fully recouped. If I were to allow interest on the sums she had paid out, I would correspondingly have to allow interest on those other receipts in her hands. Superimposed on the reduction just mentioned (of half), this would practically extinguish her interest claim. Fourthly , and in my view decisively, as Mr Finnane again points out, ordinarily when a trustee advances his or her own money to the trust he or she is not entitled to interest thereon [ Sichel v O'Shanassy (1877) 3 VLR (E) 208; Re Jones [1917] St R Qd 74; Jacobs' Law of Trusts in Australia , 5th ed, [2107]; Ford and Lee, Principles of the Law of Trusts , [14.3370]]."

68 The third aspect of the application to reopen concerned the costs incurred by Mrs Kekatos in defending the Cvitanovic proceedings. The primary judge rejected this reopening in [21] of his supplementary reasons, as follows: "[21] The third aspect of the application for leave to reopen concerns the costs incurred by Mrs Kekatos in defending the Cvitanovic proceedings. Again, this issue was never raised, in writing or orally, during or in connection with the trial. There was then, and is now, no evidence of what those costs were. Mrs Kekatos seeks leave to issue and have made returnable a subpoena for production of documents which might elicit evidence of them. To my mind, this is all much too late. If this issue was to be raised, it should have been raised at the trial. There is no explanation why it was not. It is too late to raise it now. I would refuse leave to reopen to claim an allowance or set off for the costs incurred in the Cvitanovic proceedings."

69 On the application of the Staffords, the primary judge enforced a charge against Mrs Kekatos' Vaucluse home, concluding that their claim was traceable into the Vaucluse property. No appeal was brought from this order. 70 The primary judge ordered indemnity costs from 23 June 2008. No appeal was pressed in relation to this.

71 Mrs Kekatos' arguments on appeal involved a significant departure from the conduct of the trial. It was conceded, on the day of the hearing of the appeal, that the respondents retained a beneficial interest in the Global Charge. No attempt was made to challenge the rejection of Mr Kekatos' evidence. No attempt was made to support a case (being the case run below) that the assignment unconditionally vested the beneficial interest in Mrs Kekatos. Rather, the argument on appeal concentrated on the contract asserted by the Staffords to have been made in October 2003 and varied in about August 2004, being referred to in Mrs Kekatos' submissions as the "Joint Venture Agreement" (the "JVA"). 72 The central submission was that the JVA was "void ab initio" and consequently the assignment was of no force and effect. So, it was submitted, the interests of Ms Susan and Ms Rhonda Stafford never left them. There was thus no call, it was submitted, for the primary judge to analyse the parties' respective positions by reference to the assignment having taken place. Rather, the relief to which the Staffords were entitled was said to be limited to restitutionary relief based on the value of the charge as at the date of the purported assignment. In propounding a document encapsulating the relief sought on the appeal senior counsel for Mrs Kekatos put forward alternative dates for the valuation. It was recognised that this relief would require a further hearing. The order sought if the appeal was successful was handed up at the appeal as an amendment or explication of the amended notice of appeal and was as follows: "At such remittal the Learned Judge be required to inquire into and determine the value of the Respondents' interests in the Charge as at the date of the Assignment and/or the date of Judgment (as determined by this Honourable Court) and award to the Respondents the amount determined by his Honour in accordance with the date fixed by this Court." 73 Mrs Kekatos argued that the JVA was void ab initio. Seven bases were put:

(b) it was frustrated either under the common law or the Frustrated Contracts Act 1978 (NSW);

(d) it was impossible of performance because of the sale of the land;

(e) its substructure failed without fault of any party;

(f) it failed because of its conditions precedent; and

Because of the failure or voidness of the underlying JVA, the assignment was said to be void. 74 There are a number of answers to this way of putting the matter, each is fatal. 75 First, no attention was directed at the trial to the value of the charge at the date of the assignment. This was because the matter was not an issue. Mrs Kekatos did not contend a circumstance whereby the assignment was inoperative. This makes good the first objection of the Staffords to this way of putting the matter - it was not raised below where it could have been dealt with in the evidence. It can be accepted that the Staffords propounded an underlying contract and they themselves propounded the failure of the substratum of the trust. It can also be accepted that Mrs Kekatos pleaded the Conveyancing Act, ss 23C and 54A in dealing with the contract as pleaded. Nevertheless, no case was put at trial that any contract was void in the manner put on appeal thereby avoiding the assignment. A case that the assignment was void or a nullity was directly contrary to how Mrs Kekatos put her position below. If it had been ventilated, it might well have led to a body of evidence or at least cross-examination different to that led and undertaken: Coulton v Holcombe [1986] HCA 33; 162 CLR 1. Even if doubt could be cast on this proposition and even if it could be argued that there would have been no effect on how the proceedings were conducted below had this point been raised, it would be neither expedient nor just in a case such as this to permit such a departure from the case run below, a case below sought to be supported by evidence that was rejected: cf Multicon Engineering Pty Ltd v Federal Airports Corporation (1997) 47 NSWLR 631 at 633, 645-646 and 647. 76 Secondly, none of the asserted bases of the voidness of the underlying agreement vitiates, in any way, the effectiveness of the deed of assignment. Lack of consideration in the underlying bargain could not affect the validity of the deed. The frustration of the agreement (whether at common law or under the Frustrated Contracts Act) could not affect the operation of the deed to transfer the interests dealt with by it. It may be that the circumstances giving rise to the making of the deed and any frustration of the underlying mutual endeavour would create an equity to have the assignment set aside; but that was not asserted by Mrs Kekatos (although it was asserted by the Staffords below and rejected by the primary judge). Any operation of the Conveyancing Act, ss 23C and 54A on the underlying agreement could not affect the operation of the deed. Neither provision could avoid the deed. Similarly, even if (as indeed was found by the primary judge) the underlying agreement was void for vagueness or uncertainty, that could not affect the operation of the deed otherwise clear on its face. 77 Thirdly, the underlying agreement was found by the primary judge to be uncertain and not relevantly operative. None of the primary judge's conclusions about the deed, its surrounding circumstances and the estoppel that bound Mrs Kekatos depended upon any certainty or enforceability of the contract pleaded after para 29 of the ASC. 78 Fourthly, the failure of the underlying substratum was relied on by the Staffords in the manner and for the reasons I have already identified. The reasons given by his Honour for not accepting the Baumgartner submission of the Staffords were, with respect, on the facts, not only open, but clearly correct. The purchase of the land by the two families was always problematic. There was a maze of potential difficulties preventing its success. The legitimacy of compensating Mrs Kekatos under the arrangement for the steps she took by increasing her share of the Global Charge to 50 per cent was not invalidated by the failure of the ability to purchase the land. 79 Once it is accepted, as it must be, given that it was common ground among the parties at the hearing, that the deed had operative effect, and once it is accepted, as it was by Mrs Kekatos on appeal, that Mr Kekatos' evidence can be put to one side, the case for the estoppel found by the primary judge is undeniable. The following propositions reflecting the underlying estoppel findings were amply supported by the underlying evidence:

(a) The Staffords expected that if they executed the Deed of Assignment of the Global Charge to Mrs Kekatos, they would retain a beneficial interest in it: [62] and [100] of the reasons. The evidence for this was outlined by the primary judge at [62] (see [44] above) of his reasons as: (i) Mr Wayne Stafford's refusal, at the 16 July 2004 meeting, to agree to an absolute assignment referred to in detail in [25] of the reasons; (ii) Mr Stafford's August/September 2004 conversation with Mr Kekatos referred to in detail in [30] of the reasons; (iii) Mr Stafford's 8 September 2004 email to Mr Cvitanovic referred to in [31] of the reasons; (iv) the endorsement of the interlineations on the Deed of Assignment before it was first forwarded to Mr Cvitanovic: [33] of the reasons;

(v) the coversheet forwarding the Undertaking and the Fifth Schedule in conjunction with the Deed of Assignment following its signature by the Staffords: [33] of the reasons; (vi) the coversheet re-forwarding the Deed of Assignment without the interlineations only after Mr Stafford was assured that Mrs Kekatos was acting as trustee and that it was only for taxation and commercial reasons that express references to the trust should be omitted: [37]-[38] and [40] of the reasons;

(vii) the Staffords' subsequent ongoing interest in, and inquiries of, Mr Kekatos, about developments concerning the land: [48] to [51] of the reasons.

(b) The Staffords expected that Mrs Kekatos would hold the Charge upon the terms that had been proposed for the Penrose Quarry Trust, namely as to 50 per cent for herself and 50 per cent for the Staffords: [62], [64] and [100] of the reasons. The evidence referred to above is relevant, in particular: Mr Stafford's August/September 2004 conversation with Mr Kekatos referred to in detail at [30] of the reasons.

(c) Mr Kekatos, who for all relevant purposes was Mrs Kekatos' duly authorised agent, induced the Staffords to adopt that expectation as evidenced at [63], [65] and [100] of the reasons: (i) There was no dispute, on the pleadings that Mr Kekatos was the duly authorised agent of Mrs Kekatos;

(ii) The presence of Mr Kekatos, at the 16 July 2004 meeting, when Mr Stafford refused to agree to an absolute assignment: [25] of the reasons;

(iii) The absence of any conversation, or communication, to which Mr Kekatos could point, in which the Staffords departed from that position: [58] of the reasons;

(iv) The conversations between Mr Kekatos and Mr Stafford, prior to 8 September, 2004, as to the basis of the assignment: Mr Stafford's August/September 2004 conversation with Mr Kekatos: [30] of the reasons; (v) The representation made by Mr Kekatos, to Mr Cvitanovic, and separately to Mr Stafford, that Mrs Kekatos was acting as trustee, but that there could not be express reference to the trust for taxation and commercial reasons: [36]-[37] to the reasons;

(vi) The subsequent conduct of Mr Kekatos vis-à-vis the Staffords, in which he continued to treat them (but no-one else) as if they retained a beneficial interest [48] to [51] of the reasons.

(d) The Staffords acted in reliance upon their expectation, by executing and delivering the Deed of Assignment in its ultimate form, omitting any reference to the trust: [37], [38], [40], [64], [65] and [100] of the reasons.

(e) Mrs Kekatos - by her agent Mr Kekatos - personally and through Mr Cvitanovic - represented to the Staffords that Mrs Kekatos was acting as trustee and that it was only for taxation and commercial reasons that express references to the trust should be omitted: [36], [37], [63], [100] of the reasons.

(f) Mrs Kekatos - by her agent Mr Kekatos - knew and intended that the Staffords would assign their interest in the Global Charge to her on the basis that she would hold the Global Charge as a trustee for herself and for the Staffords each as to a half interest. The evidence for this was outlined at [65] of the reasons: (i) Mr Kekatos drafting and forwarding of the Deed for Mr Cvitanovic for execution by the Staffords: [28] and [29] of the reasons;

(ii) the August/September 2004 conversations between Mr Kekatos and Mr Stafford - [30] and [65] of the reasons;

(iii) the representation made by Mr Kekatos to Mr Cvitanovic, and separately to Mr Stafford, to the effect that Mrs Kekatos was to hold as trustee, but that there could not be express reference to the trust for taxation and commercial reasons - previously referred to;

(iv) Mr Kekatos' subsequent conduct vis-à-vis the Staffords, in which he continued to treat with them (but no-one else) as if they retained an interest - previously referred to.

(g) The Staffords would suffer detriment if their expectation was not fulfilled, because they would have disposed of their beneficial interest in the Global Charge upon terms to which they would otherwise not have agreed, and for no, or inadequate, recompense: [25], [27] and [66] of the reasons. 80 The above is sufficient to reject the essential thrust of the attack by Mrs Kekatos. Nevertheless it is appropriate to deal with some particular aspects of Mrs Kekatos' submissions. At the outset it should be said that the submissions were detailed and, with respect, not entirely focused upon the thrust of the argument as finally put on behalf of Mrs Kekatos at the appeal. 81 The written submissions filed prior to the appeal being argued dealt substantially with the reasons why the underlying contract lacked certainty. I have dealt with this above. The only further matter that should be addressed is the notion that there was a condition precedent to the operation of the agreement, being that the so called Penrose Trust acquire the land. To the extent that this argument was put in the written submissions as a matter which affected the operation of the deed this argument was not run at the trial. To the extent that the argument was that there was a condition precedent to the operation of the underlying agreement this aspect of the appeal was sufficiently dealt with by the primary judge in his dealing with the rejection of the Staffords argument based on the asserted failure of the substratum of the arrangement. It can also be dealt with at this level by noting that the underlying agreement was irrelevant to how the primary judge resolved the controversy, that is by reference to the Deed of Assignment and the estoppel arising in connection with it. However, to the extent that the argument was put that the condition precedent to the operation of the contract also affected the operation of the deed no such case was put below. It was a matter which could conceivably have been dealt with by cross-examination and further evidence and it is not a matter which should be allowed to be addressed now. 82 If one rejects the attack on the effectiveness of the assignment, then the arguments put forward in relation to the royalties also fall away. There can be no doubt that Mrs Kekatos obtained her position in relation to the Heggies/Collex mortgage by reason of her position as having taken control of the Global Charge and by paying the $29,300. As the primary judge pointed out, holding the Heggies/Collex Mortgage only entitled Mrs Kekatos to the payment of funds due under that mortgage, being $29,300. Thus, the receipt of the royalties was principally related to the entitlement of Mrs Kekatos as the assignee of the Global Charge. The royalties were income from the exploitation of the land. She was entitled as holder of the Heggies/Collex Mortgage to receive these moneys, but only as mortgagee for the money secured under the mortgage ($29,300). Thereafter, Mrs Kekatos held the moneys for the next ranking security which was the Global Charge. 83 Once the case put on appeal that no assignment took place is rejected the fate of the receipt of the royalties becomes bound up with the conclusions of the primary judge as to the estoppel as to the trust relationship. 84 Any debate about the question of the taking of the Heggies/Collex Mortgage is relevant only to the capacity in which Mrs Kekatos held the first $29,300. 85 It was asserted that there had not been a case made out to impugn Mrs Kekatos' taking of the Heggies/Collex Mortgage in her own right. It was submitted by the appellant that it had no relationship to the underlying trust (formed by the estoppel as found by the primary judge) and that she paid for the mortgage with her own funds. I cannot agree. It can be accepted that she paid for the mortgage with her own funds. That is one of the aspects which was anticipated by the underlying arrangement supporting the trust by way of estoppel. But it is factually wrong to assert that the acquisition of the Heggies/Collex Mortgage could not have facilitated the acquisition of the land. As the respondents submitted on the appeal, any incumbrance on the land, including a first mortgage such as the Heggies/Collex Mortgage, was potentially an obstacle to the acquisition of the land by any person. Likewise, the acquisition of an incumbrance such as the mortgage by a potential purchaser might facilitate the acquisition of the land by removing such an obstacle or placing it into the control of the purchaser. 86 The underlying case can be over refined and made more complex than it really is. In large part, with great respect, that is a feature of the appellant's submissions. On the findings by his Honour the case was a tolerably straightforward one. The facts were that, after some competing proposals, Mr Kekatos on behalf of his wife and Mr Wayne Stafford on behalf of Ms Susan and Ms Rhonda Stafford put in place an arrangement, which did not have sufficient certainty to be a binding and enforceable contract, whereby Mrs Kekatos would take up the burden of expenditure, in the first instance, to attempt to obtain the land for the three of them as a means of extricating themselves to the extent they could from the morass of difficulties attending the land and its operation. An essential aspect of this proposal as it fell out was the assignment in the Deed of Assignment of the interests of the Staffords in the debt owed by Global and in the charge of Global's assets including the land. The case fought out at trial was whether this assignment and the rights under it were held on trust by Mrs Kekatos. An important aspect of this question was the extent of the trust. The underlying arrangement, for instance, as reflected in the undertaking and authority, could on one view be seen to be limited to the purchase of the land. What occurred was the land was sold to a third party and proceeds came into Mrs Kekatos' hands together with the royalties from the use of the land. The primary judge found on ample and adequate evidence that Mrs Kekatos was bound by an equitable estoppel that prevented her from dealing with the rights taken under the assignment of the charge otherwise than pursuant to the essential terms of the arrangement of holding on trust the proceeds 50:50. The primary judge also found that the trust which she was estopped from denying extended to receipt of the funds for the sale of the land to a third party. 87 As I have sought to show earlier, the findings of the primary judge in this respect were amply founded in the evidence. Indeed no real effort was made to attack those findings. Rather, the attack was centred upon the failure of the underlying agreement, as a contract, and the asserted effect that had upon the assignment. That attack fails principally because it was not run below, but in any event, must fail because the mechanism for assignment was a deed and capable of assigning and effective to assign to Mrs Kekatos the interests covered by the deed. The fundamental question for the primary judge was the capacity in which those interests were held. 88 Complaint was made as to the choice of remedy identified by his Honour in Stafford v Kekatos [No 4]. It was submitted that the primary judge misdirected himself as to equitable remedies. First, there can be no doubt that if the primary judge was correct in the conclusion that there was an equitable estoppel denying Mrs Kekatos the entitlement to deal with the matter otherwise than on terms of the trust that his Honour made the appropriate remedial choice. Any debate about remedy is limited to the consequences of the argument put on appeal that no assignment of rights took place under the deed of assignment. This would raise issues similar to those raised by the first case propounded by the Staffords based on what they said was the exhaustion of the purpose of the trust. Mrs Kekatos sought to argue (by reference to its new claim put on appeal) that the primary judge should have simply awarded restitution, valued at the time of the purported assignment. 89 This argument has no merit. If the Staffords are to be awarded a restitutionary remedy by reason of the failure of the underlying arrangement and the ineffectiveness of the assignment, there is no reason why it should be limited in time to the date of the purported assignment. The parties continued to act thereafter. Moneys came into the hands of Mrs Kekatos pursuant to events which followed from the attempted execution of the arrangement. By reason of the rejection of Mr Kekatos' evidence, it is clear that the parties had an underlying arrangement even if it failed. In these circumstances, there is no necessary justice in allowing Mrs Kekatos to take the benefit of any restitutionary position other than one that takes into account the receipt by her of the sale proceeds and royalties. 90 In any event, it is far from clear that any valuation of the interest of the Global Charge as at the date of purported assignment would properly take into account later events as they have become known. It is not clear that the events do not simply reflect the true value of the underlying rights in the charge, as at the date of the purported assignment, rather than reflect new events irrelevant to such a valuation task. In any event, that valuation task has never been undertaken because this point was not raised at the trial, it being irrelevant to the cases put forward for resolution by the parties. 91 The minimum equity to do justice and the justice of the case for any restitutionary remedy should, in the light of the rejection of Mr Kekatos' evidence and the behaviour of the parties as detailed in his Honour's reasons, would require and permit Mrs Kekatos to bring to account the moneys that she has received and the expenditures that she has made. As the primary judge showed when dealing with the Baumgartner case, this would put Mrs Kekatos in a worse position than she was under the orders of the primary judgment. 92 Finally, in relation to the primary judgment, I should deal with the asserted factual challenges to the primary judge's reasons. First, it was submitted that the primary judge did not make any findings of fact supporting his conclusion that the assignment of the Heggies/Collex Mortgage was available to the Staffords. This misunderstands the reasoning of the primary judge. His Honour characterised his opportunity to acquire the mortgage as "being available to the trust": [72] of the reasons. That is to say, his Honour found that the opportunity was one which was available to the appellant, but only in circumstances where she was not entitled in equity to it for herself except on behalf of the trust. If the primary judge's conclusions as to the estoppel and trust are maintained (as they are) this conclusion must be correct. 93 Secondly, it was submitted that the primary judge erred when he held at [90] that the joint venture had not entirely failed. With respect, this is misconceived. This finding did contradict the basis upon which the Staffords put their principal case. It was a rejection of that case. Their principal case was not common ground at trial, as Mrs Kekatos' submissions put. Rather, Mr Kekatos and Mrs Kekatos said that the transfer had been complete and absolute without any attendant circumstances of the joint venture binding them. The finding of the lack of complete failure of the joint venture was the that the judge refused the Staffords' contentions to be entitled to more than 50 per cent of the net proceeds and royalties. 94 Thirdly, it was submitted that there was no evidence to support the finding that the payout to the appellant had anything to do with or involved the Staffords' interest in the charge. With respect, this ignores the fundamental structure of the case. His Honour dealt with this at [81] and [82] of his reasons (see [56] above). As the Staffords submitted on appeal, the reasoning in these paragraphs is supported by the following facts which were not seriously in dispute:

(a) Mrs Kekatos received the royalties and the share of the proceeds of sale referred to.

(b) The royalties were the proceeds of the use of the land.

(c) Mrs Kekatos at the time of the receipt of all the moneys was the holder of the Global Charge and the Heggies/Collex Mortgage.

(d) Mrs Kekatos had no claim on the land other the Global Charge and the Heggies/Collex Mortgage.

(e) The share of the proceeds of sale were paid from the sale of land pursuant to an agreement settling proceedings between Mrs Kekatos (as holder of the Heggies/Collex Mortgage) and the other parties to the Heggies Mortgage Proceedings.

(f) The only claims of Mrs Kekatos in the Heggies Mortgage Proceedings were claimed in respect of her interests under the Global Charge and the Heggies/Collex Mortgage.

(g) The Heggies/Collex Mortgage secured the sum of $29,300 and no more. (I will come back to this fact shortly.)

(h) Mrs Kekatos, rather than liquidator of Global, received the moneys referred to it not being suggested that she was not entitled to keep such sums as against the liquidator. 95 It is plain that there was an ample factual foundation for the conclusion that the proceeds and royalties received by Mrs Kekatos were received by her (save for $29,300) by reason of her holding the interest in the Global Charge. 96 Fourthly, it was submitted that the primary judge erred in finding that the respondents expected that if they executed the Deed of Assignment they would retain the beneficial interest in the debt and charge. The findings of the primary judge in this respect were fully supported by the evidence. What drove the Staffords to seek to claim an interest greater than 50 per cent was not their expectation which was the foundation of their conduct in permitting the assignment on an unqualified basis, but the view they took during the litigation that they were able to claim that the trust purpose had been exhausted by the failure of the attempts to buy the land. 97 Fifthly, Mrs Kekatos submitted that the following findings of fact were incorrectly made:

(a) that the acquisition of the Heggies/Collex Mortgage was a step towards the acquisition of the land and that even if it was it was relevant to the claims of the respondents;

(b) that the Mrs Kekatos took the assignment of the Heggies/Collex Mortgage as trustee;

(c) that the Heggies/Collex Mortgage was an opportunity of the trust and should have been taken for the benefit of the trust;

(d) that the taking of the assignment of the Heggies/Collex Mortgage was a step towards the acquisition of the land and the said assignment should have been exploited if at all on behalf of the trust;

(e) that the amounts secured by the Heggies/Collex Mortgage was equal to the amount paid therefor by Mrs Kekatos, that is $29,300;

(f) that the acquisition by Mrs Kekatos of the Heggies/Collex Mortgage entitled her to claim royalties under the lease;

(g) that the settlement amount paid to Mrs Kekatos on the settlement of the Heggies litigation was pursuant only to that mortgage and/or charge and that the amount paid to Mrs Kekatos on the settlement of the Heggies litigation included any part of the loans given by the respondent to Global and secured by the said charge. 98 Most of these findings are matters intimately related to conclusions already expressed rejecting the argument on appeal. 99 No detailed support was put in any submissions as to the assertion that the amounts secured under the Heggies/Collex Mortgage were greater than $29,300. In any event, even if they were for the reasons I have already expressed, I agree with the primary judge's view that the taking of the Heggies/Collex Mortgage was a step that was related to the purpose of the trust, that is the purchase of the land, and was one which could not be taken by Mrs Kekatos other than as trustee. 100 The conclusions of the primary judge were sought to be supported by various methods identified in the notice of contention: by an express trust, by a constructive trust, by an estoppel by convention, by a resulting trust and by the Fair Trading Act, s 42. 101 The resolution of all these matters by way obiter dicta would significantly extend the length of these reasons and the time required for the resolution of this appeal. In my view, given the findings of the primary judge and given that the substantial argument put on appeal was not run below, there is every reason not to deal with these matters. This is reinforced by the recognition that some of these matters would require an exposition of legal principle in areas of some importance; in particular resulting trust, constructive trust and conventional estoppel. 102 In the light of what is, in my view, the clarity of the correctness of the primary judge in his approach, I do not think that this course is appropriate in this case.

Appeal on the second judgment 103 The decision of the primary judge not to permit reopening was a matter of discretion in practice and procedure. An error of the kind in House v The King [1936] HCA 40; 55 CLR 499 is required to be shown. No particular error of principle was identified as having vitiated the exercise of discretion. Rather, it was said that the calculation of interest was something which could have been done by the use of a calculator and so it was unreasonable, in effect, not to permit the reopening of the interest issue. 104 The reasons of the primary judge reveal a close attention to the conduct of the case and the implications of the raising of further matters. I am not persuaded that the question of interest would not have opened up significant issues as to the reciprocal rights and obligations of the parties in relation to moneys that had been paid. In my view, no error of principle has been shown on the part of the primary judge to deny the correctness of his conclusion that there should be no further debate about interest. 105 Likewise, the time for raising the question of the amount spent in litigating the Cvitanovic claim and the reasonable costs of financing the same was during the trial. His Honour was entitled to take the view that the need for finality of this litigation required that the litigation between these parties cease, he having written a judgment quelling the controversy as propounded before him. 106 No error has been shown in the primary judge's refusal in these two respects and therefore this aspect of the appeal fails. 107 On Monday 27 July 2009 the Court received a facsimile from the solicitors for the respondents asking the Court not to deal with costs. Such matters as to the reservation of costs, whether because of offers that have been made or otherwise should as a general rule be at least flagged at the appeal. They should not be the subject of correspondence made without leave. If any party has an application as to costs it should be made on notice by motion with any necessary evidence. The parties should note UCPR Pt 36 rr 36.11 and 36.16 and the time limits therein.

108 The appropriate orders are (1) that the appeal be dismissed with costs; and (2) any application to vary the costs order be made by notice of motion filed and served within 7 days. 109 GILES JA: I agree with the reasons of Allsop ACJ. 110 It is useful to stand back. The appellant submitted that there had never been an assignment of the respondents' interest in the debt Global and charge. If so, she was not entitled to receive the benefit of their interest in the debt and charge. She in fact received it. She said she could keep it. 111 This would be neither sensible nor just, and so is unlikely to be the result in law. For the reasons given by the President, it is not. 112 I agree with the orders proposed by Allsop ACJ. 113 CAMPBELL JA: I agree with Allsop ACJ.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

At a glance

Court

Decision date

Before

Source

Judgment (102 paragraphs)

Parties

Legislation Cited (3)

Cases Cited (9)

Cited By (4)