[1991] HCA 54
Correa v Whittingham (2013) 278 FLR 310[2013] NSWCA 263
David v David [2009] NSWCA 8
Deputy Commissioner of Taxation v Portinex Pty Ltd (2000) 156 FLR 453[2000] NSWSC 99
Fexuto Pty Limited v Bosnjak Holdings Pty Limited & Ors [2001] NSWCA 97(2001) 37 ACSR 672
Fink v Fink (1946) 74 CLR 127156 ER 145
Hawkins v Clayton (1988) 164 CLR 539[1998] FCA 1378
Leary v Federal Commissioner of Taxation (1980) 47 FLR 414[1980] FCA 112
Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp [1979] Ch 384
Port Macquarie Hastings Council v Mooney [2014] NSWCA 156(2014) 201 LGERA 314
Regional Power Corporation v Pacific Hydro Group Two Pty Ltd (No 2) (2013) 46 WAR 281[2013] WASC 356
Sellars v Adelaide Petroleum NLPoseidon Ltd v Adelaide Petroleum NL (1994) 179 CLR 322[1994] HCA 4
Sparks v HobsonGray v Hobson [2018] NSWCA 29361 ALR 115
Uniting Church in Australia Property Trust (NSW) v MillerMiller v Lithgow City Council (2015) 91 NSWLR 752[2015] NSWCA 320
Wagner v International Health Promotions Pty Ltd (1994) 15 ACSR 419
Wallace v Kam [2012] NSWCA 82
Judgment (21 paragraphs)
[1]
Background facts
The plaintiff is currently 73. He came to Australia from Lebanon in 1969. He says that he is a capable businessman but that in 2009 he spoke limited English. [12] He said he had a hearing problem and that he generally could not understand things that were said to him. Most of his business relationships were with Arabic speakers. Despite his extensive period in Australia prior to 2009, he maintains that it was only in the last 10 years that his English has improved significantly. He tended to emphasise when giving evidence that he speaks and reads English much better now than he did back in 2009. There is certainly a significant issue between the parties about this.
He has been engaged in property development both before and after the events the subject of these proceedings. He worked as a builder and also as a project manager.
The plaintiff and the members of the Elias family were long-time acquaintances prior to 2005. In March 2005, Tony Elias approached the plaintiff asking him whether he would join with him in a development at North Narrabeen.
On 8 April 2005, the company was registered for the purposes of undertaking the development. The issued capital in the company comprised 100 shares. The plaintiff and the second plaintiff held 25 shares each. The other 50 shares were held by members of the Elias family.
George Elias was nominated as the licensed builder for the project during the period 2005 to 2008.
The land situated at 11 Gondola Road and 12 Rickard Road in North Narrabeen was successfully developed. At the end of construction in February 2007, a strata plan was registered. The development comprised of two commercial or retail units, eight commercial offices, four residential units and five townhouses. By the time of engagement of the defendants, there remained two residential units and five commercial units available for sale.
By March 2007, a disagreement had emerged between the plaintiff and the Elias Interests as to what to do with the units. The plaintiff says that he was looking for a quick end to the relationship and simply wanted to split the assets in the company so that he and the Elias Interests could go their separate ways. The plaintiff says that Tony Elias would not agree on any of his proposals. He says that in May 2008, he spoke to the solicitor who had undertaken the conveyancing work in respect of the land, Robert Whebe. He says that he told Mr Whebe that he had attempted to work out how to split with Tony Elias but Tony Elias would not listen. [13]
Thereafter, the plaintiff spoke to his neighbour, a barrister who he says is fluent in Arabic, about his problems. The barrister recommended the law firm Eakin McCaffrey Cox.
On 21 May 2008, the plaintiffs instructed Mark Doble of EMC, he says, for the purposes of organising the splitting of the assets of the company and terminating his relationship with the Elias Interests. Tony Elias instructed Grant Butterfield of Marsdens in response.
On 26 June 2008, there was a meeting at the offices of EMC during which there was an altercation between the plaintiff and members of the Elias Interests. The plaintiff says that Tony Elias punched him in the face. The matter was reported to the Police.
On 15 July 2008, EMC wrote to Marsdens setting out that, as the relationship between the parties was such that the Board could no longer effectively function, they were instructed to make an application for the winding up of the company.
On 21 July 2008, the plaintiffs filed proceedings in this Court for the winding up of the company by way of application under ss 461 and 462 or alternatively ss 232, 233 and 234 of the Corporations Act 2001 (Cth).
The plaintiffs pleaded that there was a deadlock in the company management and that it was just and equitable that the Court wind up the company pursuant to s 461(1)(k) of the Corporations Act.
In the alternative, the plaintiffs pleaded that the affairs of the company were being conducted by Tony Elias in an oppressive or unfairly prejudicial and discriminatory manner within the meaning ss 461(1)(f) or 232(e) of the Corporations Act.
On 21 October 2008, the plaintiff attended a mediation before the Registrar with his solicitor and barrister. Tony Elias and his solicitor were also in attendance. An agreement in principle was reached to the effect that either the plaintiffs or the Elias Interests would buy each other's shares but it was up to the Elias Interests to decide which would happen. Following the mediation, Mr Doble circulated a draft deed of settlement.
There was no appearance before the Court when the proceedings were listed on 30 November 2008. The plaintiff says this was because Mr Doble had told him that the matter had settled, albeit the plaintiff had cautioned Mr Doble not to trust the Elias family. The proceedings were dismissed.
However, the proposed settlement fell apart and on learning that the proceedings had been dismissed the plaintiff decided to change solicitors. He subsequently met with the defendant.
On 26 July 2008, the defendant wrote a cold-call letter to the company and Tony Elias noting their involvement in the proceedings and promoting his services to them.
It must be that this letter came to the attention of the plaintiff, as in November 2008, the plaintiff contacted the defendant having recalled the letter of 26 August 2008.
On 15 December 2008, the defendant forwarded a costs agreement to the plaintiffs. On 17 December 2008, Ms Cavill swore an affidavit in support of reinstatement of the proceedings.
On 15 January 2009, the defendant sent an email to Ms Cavill, noting that the plaintiff was coming in on Monday and that she should take some evidence to support an urgent application for the appointment of a provisional liquidator to the company and that Counsel should be retained.
On 15 January 2009, the defendant wrote to the plaintiff referring to a conversation that the defendant had had with Mr Butterfield. Mr Butterfield had apparently advised the defendant that the Elias Interests were still prepared to settle on the terms proposed in the earlier deed of settlement and apologised for the delay on the part of his clients. The plaintiff was asked to contact the defendant to indicate whether he was still prepared to settle the dispute on the basis of the plaintiff buying out the Elias Interests in the company.
On 19 January 2009, the defendant wrote to Marsdens enclosing consent orders in respect of the reinstatement of the proceedings and seeking consent for the appointment of a provisional liquidator. It is notable that the Elias Interests did not indicate their consent to this proposed course at any time prior to 9 February.
On 23 January 2009, Marsdens wrote to the defendant in response to the plaintiffs' offer of $645,000 for Unit 6 suggesting that the plaintiffs had demonstrated that the corporation is well able to function and sell the assets of the corporation without the appointment of a liquidator. Marsdens opposed a provisional liquidator being appointed.
Marsdens sought orders for a timetable to put on evidence in reply to the plaintiffs' evidence on the motion (that is, they were opposing the reinstatement of the proceedings for the appointment of a liquidator). Then on 29 January 2009, Ms Cavill wrote to Mr Butterfield agreeing to Marsdens' approach (for the exchange of evidence) and agreeing to mention Marsdens' appearance when the matter was next before the Court on 3 February 2009. Up to this time, the Elias Interests continued to oppose the appointment of a liquidator to the company.
However, the plaintiffs and the Elias Interests, through their solicitors, then agreed on the appointment of a voluntary liquidator. Consent orders were filed adjourning the proceedings seeking a court-appointed liquidator until 9 February 2009. Having not been able to agree on the appointment of the defendant's original suggestions as to liquidator, the parties then agreed on the appointment of Blair Pleash of HC. A meeting at HC was convened to take place at 9.00am on 9 February. The defendant agreed to stand the proceedings in the list to allow that meeting to go ahead.
Mr Butterfield wrote at 12:02pm on 6 February 2009 as follows:
"The parties have exhausted all attempts to settle and therefore, on the basis that the proceedings are NOT re instituted, we will agree to the VL. … George Elias is the representative for the Director - Tony Elias and the Elias family. I note George and Joe will be joint chairpersons to the extent it matters."
At 1.38pm, Jovan Singh of HC forwarded appointment documents to the defendant, that is, documents to effect the voluntary winding up of the company. The defendant then wrote to Mr Butterfield as well as the representatives of HC confirming that he would have his clients execute that day, being 6 February 2009. Mr Butterfield also sent a group email to the effect that George Elias would just bring the application to Mr Pleash on Monday at 9.00am.
At 2.48pm on 6 February 2009, Ms Cavill sent an email to Mr Pleash and the defendant confirming that she had spoken with the plaintiff and he awaited a call from Mr Pleash. She also sent an email to Counsel retained to appear in Court on the Monday, noting that the parties were signing up to a CVL and thus he would not need to appear on the Monday.
At 4:50pm on Friday 6 February 2009, Mr Singh, an employee of HC, circulated a consent for a provisional liquidator by way of precaution in the absence of an agreement on Monday. Then at 5.00pm, Ms Cavill sent a group email confirming that she had spoken with Tim from HC who had spoken to both directors and that everyone was on-board. She would be going to Court at 9.15am to stand the matter over for six weeks. I take the reference to "Tim" to be Tim Cook and that he had said to Ms Cavill that he had spoken to both directors, being Tony Elias and the plaintiff, and that they were both on board as to the appointment of a liquidator. Contained within the court book is Ms Cavill's handwritten note as to her conversation with Mr Cook.
It is clear that as at 5.00pm on the business day before the meeting of 9 February 2009, all involved had agreed to the course of appointing HC pursuant to a CVL and standing over the proceedings for the appointment of a liquidator whilst that occurred.
A meeting was arranged at the offices of HC on 9 February 2009. The plaintiff was asked by the defendant or a solicitor employed on behalf of the defendant to attend at the meeting. The defendant thought that the plaintiff would be attending for the purposes of signing documents appointing the representatives of HC by way of a CVL.
On 9 February 2009, the plaintiff attended at HC. There is a dispute as to who he met with, who participated in the meetings and whether he attended the offices of the defendant during the day, spoke to anyone on behalf of the defendant during the day or obtained advice from the defendant about signing the documents during the day.
During the course of 9 February, Richard Albarran and Blair Pleash of HC recommended that they be appointed as voluntary administrators. There is a dispute as to whether anyone, being either the defendant or his employed solicitor, Ms Cavill, found out prior to the signing of the documents that HC had recommended a VA rather than CVL.
It is the plaintiff's evidence that it had been suggested to him by HC that the company was unable to pay its debts, with which he did not agree. He did not want to sign the documents but only did so having been told by the defendant through Ms Cavill that he must do so. There are competing versions as to what occurred on that day. The plaintiff says that he would not have signed the documents on 9 February 2009 without the defendant's advice to do so.
On the very day of the meeting with HC, the application to reinstate the winding up proceedings was listed for directions in this Court. Ms Cavill attended and, with the consent of Marsdens, had the matter stood over to 17 February 2009.
I will review in detail what happened between 9 February and 31 March 2009 later in this judgment.
Suffice to say that there is again a dispute as to the instructions and advice provided. There is a dispute as the extent to which the plaintiff relied on the defendant for the drafting of the DOCA and again the extent to which the plaintiff simply took matters into his own hands.
On 31 March 2009, the DOCA was signed. Messrs Albarran and Pleash were appointed deed administrators.
As the DOCA was signed within the required time, the company did not fall into liquidation.
By May 2009, there were issues relating to the administrator's costs, which the defendant was instructed to deal with on behalf of the plaintiff. At the same time, the plaintiff retained the defendant to deal with EMC's costs. An objection to EMC's costs was signed by the defendant on behalf of the plaintiff on 20 May 2009.
On 27 May 2009, there was a further meeting of creditors chaired by Mr Albarran. Tony Elias raised issues as to the conduct of the administrators. Mr Elias maintained that the administrators were never asked to investigate the company but were just there as administrators. Mr Elias maintained that the administrators had made it difficult to implement the deed.
On 11 June 2009, the plaintiffs made a first tranche payment of $250,000 to the deed fund. In accordance with clause 26.4(c)(1) of the deed, in consideration for an executed share transfer of 30% of their shares, Lot 4 was transferred to the plaintiffs. The administrators lodged a caveat over Lot 4.
The Elias Interests also paid their first tranche but reached agreement with the administrators that their Lot (Lot 6) could be transferred to a third party, apparently to avoid stamp duty. As the administrators could not lodge a caveat on Lot 6, the administrators retained the whole of the proceeds of sale of Lot 6 that is, the first tranche payment of $250,000 and the balance of the proceeds of sale being $390,000.
The shareholders were required to make a second tranche payment within 84 days of the DOCA, being 23 June 2009. No one made the payment for the second tranche as required.
On 13 August 2009, the defendant circulated an email specifying that the plaintiff was in a position to pay his additional $150,000 but had concerns as to whether such a payment would create a sufficient fund from which all creditors could be paid. On the defendant's calculations, having regard to the administrative fees, there would be a shortfall of $213,974.60.
By August 2009, the administrators had formed the view that to bring the DOCA to an end, either party could make a payment of $470,849.14 or contribute 50% of that total liability. On receipt of that amount the administrators would transfer the remaining titles to Lots 12 and 15 to the plaintiffs and Lots 16 and 18 to the Elias Interests. The defendants wrote to the plaintiff on 18 August 2009 about this.
There continued to be an issue as to the administrators' fees and the fees of their solicitors.
By September 2009, the plaintiffs were having difficulties with cash flow and were unable to raise the funds for the second tranche which had been payable by 23 June 2009.
On 27 November 2009, the administrators commenced their own proceedings seeking directions from the Court and orders for the termination of the DOCA on the basis that both the plaintiff and the Elias Interests were in breach of their obligations under the DOCA.
In his affidavit sworn 27 November 2009 for the purposes of those proceedings, Blair Pleash refers to receiving a series of complaints from Tony Elias about the fees.
Mr Pleash says that between 9 February 2009 and 31 March 2009 when the DOCA was signed, HC spent 315.545 hours at a total cost of $115,525. During the period 31 March 2009 to 31 October 2009, administrators expended a total of 365.95 hours at a total cost of $129,433.
Unfortunately, the deed administrator's fees continued to escalate thereafter as they became embroiled in litigation with the Elias Interests and the plaintiffs.
By December 2009, the plaintiff (through the defendant) was calling on the administrators to attend a settlement at which the plaintiffs could pay the second tranche.
The administrators did not attend. Instead, by letter dated 9 December 2009, Etienne Lawyers stated that the shareholder groups had been in non-compliance of the DOCA since 23 June 2009 and took issue with the complaints and criticisms of the administrators' conduct.
Whilst all this was taking place, the defendants were endeavouring to deal with the plaintiff's objections to the EMC assessment of costs. When that was concluded and the plaintiffs did not pay, EMC served a bankruptcy notice on the plaintiff in claiming a debt in the amount of $51,149.16.
By January 2010, the defendants were:
1. dealing with the ongoing dispute with the Elias Interests;
2. attempting to stave off EMC's threatened bankruptcy in respect of fees owing to EMC; and
3. continuing to deal with the issues raised by the administrators.
On 2 February 2010, the plaintiff swore an affidavit for the purposes of the proceedings being pursued by the administrators with the company as defendant.
In March 2010, the plaintiffs were joined as second defendants to the proceedings being pursued by the administrators and the Elias Interests were joined as third defendants.
On 7 May 2010, the parties finally reached agreement in respect of the proceedings pursued by the administrators and short minutes of order were filed in Court. The settlement essentially involved the parties acknowledging that the sum of $1,100,000 should be regarded as contributions to the deed fund constituted by the DOCA and that the plaintiffs and the Elias Interests should be regarded as having complied with the obligations under clause 26.8 of the DOCA.
By January 2011, the legal costs incurred by the deed's administrators totalled approximately $600,000. This had been paid entirely from the assets of the company. The plaintiff sought advice from the defendants on challenging that assessment.
On 7 December 2011, the plaintiffs terminated the retainer of the defendants.
In 2012, the Elias Interests commenced proceedings against the administrators.
In 2016, the Elias Interests pursued orders that the company be placed into liquidation.
The proceedings were resolved on 7 February 2017, including terms that the plaintiffs be released from their guarantee to the administrators.
The company was deregistered on 6 July 2018, being 10 years after the plaintiff sought to split the assets held in the company.
It is not surprising that the plaintiff expresses considerable frustration. He seeks to attribute responsibility to the solicitors who acted for him in 2009-2010 and specifically identifies their conduct over a two-month period, February to March 2009.
The plaintiffs commenced these proceedings on 6 February 2015.
[2]
The plaintiff's evidence
The plaintiff initially sought to give evidence through an interpreter. He quickly abandoned the interpreter and chose to answer almost all questions in English. English is not his first language and his vocabulary is not that of a person whose first language is English. In that sense, it might be said that his English is limited or deficient as he maintains.
I formed the view that he had difficulty understanding lengthy questions and tended to answer based on a part of the question or a concept. However, I also formed the view that he understood shorter questions using ordinary English words. There were times during cross-examination when I had the impression that his understanding was very limited and other times when he was quick to answer in a way which demonstrated that he understood the question completely.
He says his English is much better than it was previously and specifically much better than it was in 2009. He could read documents in English when giving evidence although he did not necessarily understand every word.
He refers to generally only dealing with Arabic-speaking people prior to 2009. Although he had been in Australia 40 years and had operated a building and project management company, he says that he used to obtain assistance from other persons when he had to speak in English. He maintains a significant improvement in his English over the past 10 years. That is, he asks the Court to consider his vulnerability, not on how he presents in 2020, but on the basis that his English and general ability to understand English concepts were much more deficient in 2009.
On one view, it is surprising that his English would have improved so much over the past 10 years, that is, between his 40th and 50th year in Australia. However, on his evidence he has been dealing with more English-speaking persons in the past 10 years and thus his English has improved.
Further, he maintained when answering questions in cross-examination that he could read English better than understand it when spoken. He signed documents when told to by a person such as the defendant without reading them. An example of cross-examination is as follows (in respect of an earlier affidavit prepared by EMC):
"Q. And do you remember putting your signature on‑‑
A. WITNESS: Yeah, I sign it. Yeah, I sign it. Actually, as I said before, when the solicitor tell me sign, I don't read, I sign. Because I was trust. I don't know what they do. I was trusting them. I never read anything before. I start reading every sentence and even after I start, no, doing wrong, then I start to read with my dictionary.
Q. So you said you remember putting your signature on your affidavit?
A. WITNESS: Yes.
Q. Do you remember signing every single page?
A. WITNESS: No. I signed, yeah, I signed, but every single, I don't know. I don't remember that. But I signed, yes.
Q. So your evidence is that you were given a typed up affidavit?
A. WITNESS: Yes.
Q. And you just signed it?
A. WITNESS: Whatever they tell me sign I sign.
Q. So you didn't satisfy yourself‑‑
A. WITNESS: Even I don't read them. When we talking, they writing and I don't read it because I was trust everybody before. I was dumb. I know, I say myself I was dumb. Nobody approve that, but this is why.
…
Q. And you did not read‑‑
A. WITNESS: No.
…
Q. Did you tell the lawyers the truth about what was going on at that time?
A. WITNESS: Choice what I was going to do? My choice?
…
Q. I suggest to you, Mr Kossaifi, that what really happened is that you did read a draft of this affidavit before you signed it?
A. WITNESS: Never.
Q. And I suggest to you, Mr Kossaifi, that you read the final version of this affidavit before you signed it?
A. WITNESS: Never. Never I read it. This is the first time I see it. I saw it when I signed it, but I do not know what I signed and now I read. Now maybe I understand most of it, but now I read.
…
Q. Can I ask you to read that, Mr Kossaifi. Would it help if I read it out loud, Mr Kossaifi?
A. WITNESS: "The board of the company can no longer function"‑‑
HIS HONOUR
Q. No, you don't have to read it. Can you read it to yourself?
A. WITNESS: Yeah.
Q. Okay, just read it to yourself?
A. WITNESS: Here he mention my wife and I never, never mention - ".
[3]
The processes of external administration
As the plaintiff seeks to contrast the process of liquidation with voluntary administration, it is necessary to say something about those processes.
Liquidation and voluntary administration are forms of external administration. A company may be placed into liquidation if the company is insolvent but there may be other reasons for liquidation.
The general grounds on which a company may be wound up by the Court are set out in s 461 of the Corporations Act. In the proceedings commenced by EMC and taken over by the defendants, the plaintiffs sought winding up of the company under ss 461 and 462 or alternatively ss 232, 233 and 234. As set out in s 233 of the Corporations Act, the Court can make an order that the company be wound up if it considers it appropriate. If an order is made under s 233, it is as if the order were made under s 461: Corporations Act s 233(2).
In Fexuto Pty Limited v Bosnjak Holdings Pty Limited & Ors [2001] NSWCA 97; (2001) 37 ACSR 672 at [89], Spigelman CJ observed:
"It may be accepted that the existence of irreconcilable differences among persons involved in what is, in effect, a partnership, will destroy the personal relationship involving mutual confidence, that lies at the heart of the partnership analogy. This analogy has been applied both to applications for winding up on the just and equitable ground and also to oppression suits. (Although the differences in form are not immaterial: see Re a Company (No 002567 of 1982) [1983] 2 All ER 854; [1983] 1 WLR 927 at 935-6 per Vinelott J.) Irreconcilable differences may establish a basis for winding up, they do not of themselves constitute oppression or unfair prejudice: see McMillan v Toledo Enterprises International Pty Ltd (1995) 18 ACSR 603 at 604."
Leaving aside the willingness of the Elias Interests to agree to liquidation, the type of breakdown in the relationship between the plaintiffs and the Elias Interests which had occurred prior to 2008 would have been grounds for the liquidation of the company as sought by the plaintiff in the proceedings commenced in 2008.
A Court order for winding up must be distinguished from a voluntary winding up. The company may resolve by special resolution that it be wound up voluntarily. In those circumstances, the winding up is taken to have commenced when the resolution was passed or if immediately before the resolution was passed the company was under administration, the day on which the administration began: Corporations Act s 513B.
[4]
The first allegation of breach
The plaintiff identifies the first breach as occurring before and up to the time of the appointment of the administrators on 9 February 2009. As there appears to be no dispute that, prior to the plaintiff's attendance at HC on 9 February 2009, the defendant thought that the meeting at HC was for the purposes of initiating a CVL, the conduct of the defendant allegedly comprising the first breach happened over a narrow time frame.
[5]
The plaintiff's version
The plaintiff says that in early February 2009, he received a call from either the defendant or Ms Cavill informing him that he needed to go to the offices of HC to sign documents so that they could do the split. He did not know how HC would split the assets of the company but believed that the defendant had sorted everything out for him.
He says that he attended at the defendant's offices at 9.00am and spoke to Ms Cavill. He says he was expecting the defendant to go with him to HC. He says that he wanted to talk to the defendant about what was going to happen and wanted the defendant to go to the meeting with him. He was told by Ms Cavill that he should go to the meeting without the defendant and that he should go upstairs to sign up. The firms were located in the same building.
On attending at HC he was met by Mr Albarran who told him that there was a problem because the company was insolvent. He asked Mr Albarran what he meant. They continued:
"When I arrived at Hall Chadwick for the 9.00am meeting I was met with Mr Albarran. George Elias was also in reception. The three of us went into an office, where a conversation to the following effect took place:
Mr Albarran: "[Speaking to George] We are signing papers for me to take over the company. We have a problem because the company is insolvent."
Me: "What do you mean by "company is insolvent" I want know what is going on."
Mr Albarran: "It means the company does not have any money to pay its debts."
Me: "Wait a minute, what do you mean we have no money. Money was never a problem. We have $100,000 in the cheque account. The problem is I want to split the company and that is it. I don't want to be with them anymore. That is the reason we are here. Why are you only talking to George, talk to me as well."
Mr Albarran: "Shut up, you don't know what you are talking about."
George Elias: "I will ring my brother to see whether I should sign."
Mr Albarran: "Are you going to sign Joe?"
Me: "No"." [14]
On the plaintiff's recollection of what occurred at HC:
1. Mr Albarran must have already discussed the issues with George Elias prior to the plaintiff arriving;
2. The only comment of substance made by Mr Albarran was that the company was insolvent, which he explained as meaning that the company could not pay his debts;
3. Mr Albarran's response to the plaintiff's protest and rejection of this was to tell him to shut up as he did not know what he was talking about; and
4. there was no one else such as Mr Cook in the meeting.
[6]
The defendant's version
The defendant says that after the initial objection from Marsdens to the appointment of another firm, they agreed on the appointment of HC for a CVL.
On 6 February 2009, the defendant wrote to HC as follows:
"Gents,
New job for you.
A CVL (or MVL) required arising from a dispute between the two directors of JOE & JOE DEVELOPMENTS PTY LTD ...
The directors want the company shut down and the properties sold. I just need to check the position regarding the extent of creditors so as to determine whether MVL more appropriate."
Has to happen today, as the matter is back in Court on Monday for the purpose of appointing a provisional liquidator..."
There is an email from Mr Butterfield to the defendant dated 6 February 2009 in the following terms:
"The parties have exhausted all attempts to settle and therefore, on the basis that the proceedings are NOT re instituted, we will agree to the VL.
I note Blair Pleash of Hall Chadwick will send the documents for signature. …
As discussed can you mention the motion subject to the VL confirming the appointment have the matter, as a safety net in case we need to approach the court again …".
The defendant says that he understood from the plaintiff's instructions that the plaintiff wanted immediate displacement of control and realisation of assets. Therefore the company was, in his opinion, a suitable candidate for a CVL. The defendant says that at no time in the lead-up to the appointment of HC did he recommend, advise on or suggest to the plaintiff that he should appoint an administrator to the company. [16]
Further, he did not think a VA would bring about the finality the plaintiffs desired and the VA was inconsistent with the orders sought in the Court process already filed.
Further, he refers to the far greater level of consideration required for a VA than a CVL. [17] He says he had not been engaged to and not considered nor advised upon all the matters that should have been considered prior to the entry into a VA.
He refers to the document produced by HC on the Friday before the meeting which was consistent with his belief that HC would be appointed pursuant to a CVL on the morning of 9 February 2009.
The defendant denies telling the plaintiff that it would only take one month to split the assets and denies having a conversation about the likely costs. [18]
[7]
Ms Cavill
Ms Cavill refers to email exchanges with the defendant and HC on 6 February 2009. Relevantly, she sent an email to the defendant at 5.00pm as follows:
"I sent an email to Farshad at 5pm which relevantly recorded the following:
'I have spoken with Tim (Cook) from Hall Chadwick and he has spoken to both directors and everyone is on board.
The meeting is at 9am at Hall Chadwick offices.
I will be going to Court at 9.15am to stand over for 6 weeks.
Tim asked if we want to go to the meeting?'" [22]
She also refers to a file note dated 6 February 2009, which is in similar terms, and to a response from the defendant at 5:03pm in the following terms:
"We don't. We want all the legal work though."
Ms Cavill says that she attended the directions hearing before the Registrar at approximately 9.00am on 9 February 2009. [23] She refers to her time recording records and a reference to the matter being number five in the list. Her records refer to telephone calls to the liquidator and "Court Appearance Directions Hearing". At 10.19am she received a call from the receptionist asking her to call Tim from HC regarding Joe & Joe Developments. At 10:20am she received an email from the receptionist to the effect that the plaintiff called and asked that his call be returned. She does not recall whether she was actually in the office at the time the email was received.
At 12:39pm she received another email from the receptionist asking that she call Tim from HC, although she does not recall speaking to Mr Cook.
There is a file note dated 9 February 2009 which refers to HC signing them up to a VA and other matters. She has no recollection of speaking to the plaintiff on 9 February 2009, although she acknowledged in cross-examination that it was a possibility. There was no time recording in respect of any conversation with the plaintiff and no fee charged for any conversation with the plaintiff. Bearing in mind that even on the plaintiff's version, the conversations were very brief, I do not consider that the absence of a time record is determinative of the proposition that the conversation did not occur.
[8]
Mr Cook
Mr Cook's evidence is particularly relevant to the plaintiff's claim in respect of the events of 9 February 2009. His affidavit was prepared in 2014, not as part of these proceedings, but he adopted it as his evidence in these proceedings.
He says that on the morning of 9 February 2009 and at some time before 9.00am, he walked into Mr Albarran's office and saw another man in with Mr Albarran who was introduced to him as the plaintiff. In answer to Mr Cook's question whether the meeting was still going ahead, Mr Albarran said:
"Cook: Oh hi Joe, nice to meet you. My name is Tim and I will be helping Richard on this job.
Kossaifi: Hi Tim. Nice to meet you.
Cook: Is the meeting still going ahead this morning?
Albarran: Yeah, Joe was just raising a few things with me which may need to be considered when the other director gets here. He says there is some dispute about misuse of company money and contribution to construction costs.
Cook: Oh right." [24]
Mr Albarran's phone rang and they were informed that Mr Elias was there. Mr Cook then met George Elias. He was taken into Mr Albarran's office and Mr Albarran said, "We need to work out what is going on first before we sign any documents".
According to Mr Cook, there was then a conversation in Mr Albarran's office during which Mr Albarran said that he needed to know more about the solvency of the company and dispute between the shareholders. The conversation is quoted at some length.
According to Mr Cook, George Elias and the plaintiff each made allegations against each other and the conversation continued as follows:
"Kossaifi: That's why we want to sign these documents, to end the partnership.
Albarran: Ok but there are different implications when you put a company into liquidation and the way in which you do it hasn't been settled yet?
Kossaifi: What do you mean?
Albarran: Well a liquidation will have impacts on your insurance and may also affect your ability to be a director in the future.
George: Well does that affect my Home Warranty Insurance?
Albarran: I am not one hundred percent sure but I expect it will.
George: I want this done in some way which there is no effect to my building license.
Albarran: There is an option where we can save the company going into liquidation and we can have a look at the accounts and work out who put in what and who should get what once they are sold.
Kossaifi: That will be good.
George: Yes that will show them how much more money we put in.
Albarran: What you want is a voluntary administration because of the issues with the Home Warranty Insurance, account reconciliation and the final distribution of the assets. A voluntary administration is more expensive than a liquidation but from the sounds of it could bring a resolution to the fight you guys are having because we will look at what each of you have paid in and taken out and work out the split according to an agreement.
George: How much is more expensive?
Albarran: A normal VA usually costs around 50 grand and the standard process takes a month. But it depends on the investigations you want us to do so we will need to get some more details and know more about the company. But saying that it seems that it is what is needed for you both to move on.
Kossaifi: You will have to speak to him. I can't even get access to the property because he won't let me.
George: He has all the financial documents as they are with his accountant.
Albarran: Joseph do you want to speak to Farshad?
Kossaifi: No its ok. I want to show them that I didn't rip them off.
George: I will probably need to speak to my brother.
Kossaifi: Fine go and do that then because we need to get this thing done." [25]
[9]
Determination
The version of events as set out by the defendant, Ms Cavill and Mr Cook was put to the plaintiff in cross-examination. He:
1. denied the meeting with Mr Albarran in Mr Albarran's office before George Elias arrived ever happened;
2. gave inconsistent evidence about whether he ever met or spoke to Mr Cook, referring to things being fabricated;
3. denied raising with Mr Albarran any concern about misuse of company money by the Elias family;
4. denied that he was ever inside a room in a meeting with Mr Cook;
5. denied that Mr Albarran said he needed to know more about the solvency of the company and the dispute between him and the Elias family;
6. denied that there was any oral dispute with George Elias during the meeting as to who had been putting in more money;
7. denied there was any discussion about home warranty insurance or building licence implications or liquidations;
8. denied that he was asked at the meeting with Mr Albarran whether he wanted to speak to the defendant;
9. says he stayed at the meeting only five to ten minutes and then went outside and rang Yates Beaggi and then turned up at Yates Beaggi at 9.15am. He saw Ms Cavill coming out and thought she was in a hurry. He told her what happened and she said he would let the defendant know and ring him back;
10. maintained that he said to Ms Cavill that "this fellow [Albarran] say we have no money and we have money, and he wants me to sign that the company have no money. I didn't sign";
11. denied that he stayed in the offices of HC whilst they prepared papers for administration;
12. said that he had a further conversation with Ms Cavill around 1.00pm, during which he was told to go back and sign the documents. He was at home at the time; and
13. said he signed the documents around 3.00pm at the offices of HC.
The plaintiff responded to the question in cross-examination as to his options as follows:
"Q. Mr Albarran said to you that there is an option where Hall & Chadwick could save the company going into liquidation, they could have a look at the accounts and work out who had put in what and who should get what once they are sold?
A. WITNESS: I deny all things. What I said a few words. What I said and I get out. What happened I don't know. What they fabricate I don't know. Maybe they have a meeting with Elias, he have the book, and never happened. How they did it ‑ and the same day. I read it last week. I get upset what's going on. I met with George and Tony on that day, and I'm telling you in here in front of the Court, if we met, one in the grave and one in the jail, and they say we met. See how they fabricate things."
[10]
The second allegation of breach
The second allegation of breach is described by the plaintiffs in their closing submissions as being that, having been advised that the company was placed into VA, the defendant failed to advise the plaintiffs of the option of taking steps to terminate the VA. This submission is a reference to the particulars of breach pleaded in para 28 of the further amended statement of claim. The plaintiffs' contentions on this point are expanded upon in the closing submissions as follows:
"19. An opportunity arose for the defendants to take action to terminate the administration when the second defendant was told by Ms Gleeson and Mr Cook that Hall Chadwick advised the directors that VA was the best option because the parties would avoid difficulties with their credit rating, builders license and home warranty insurance. Quite apart from the fact that this advice was clearly wrong, a prudent solicitor of the second defendant's experience would have been alerted to the fact the preservation of builder's licenses and insurance is not a valid reason to place the company into administration. It was a purpose extraneous to the provisions of s 436A of the Act, and accordingly invalid.
20. The way was then open for a competent practitioner of the second defendants experience to bring an action under s 447A of the Act to terminate the administration. The second defendant agrees that the company could be taken out of administration if the appointment of the administrator was shown to be invalid."
There are three parts to this allegation being that:
1. there was an option to immediately terminate the VA by way of an action under s 447A of the Corporations Act;
2. the defendant should have advised the plaintiff to do so; and
3. the VA would have been terminated and the company would have been placed into liquidation.
It is important to emphasise that prior to 9 February 2009:
1. the plaintiff had specifically instructed the defendant that he wished to have someone else take control of the company, split the assets and pay the creditors;
2. the defendant had advised the plaintiff that the best way of achieving his aims was to proceed by way of liquidation, that is, to reinstate the proceedings originally commenced by EMC as soon as possible and have a liquidator take control. Although the Elias Interests did not ever agree to a court-appointed liquidator, in the days before 9 February 2009, they did agree on appointing HC pursuant to a CVL;
3. the defendant believed that this was the best course for the plaintiff. Indeed, he says so in his affidavit and sets out the reasons why he considered that liquidation was preferable and did not favour a VA; and
4. the defendant did not ask or arrange for HC to give advice to the plaintiff as to whether VA or CVL would be preferable.
[11]
The third allegation of breach
As identified by the plaintiff, the third period of breach is up to the signing of the DOCA on 31 March 2009 and particularly the defendant's advice to sign the DOCA.
It is necessary to consider what happened between 9 February and 31 March in some detail.
On 11 February 2009, HC prepared its first report to creditors. They also wrote to the plaintiff regarding their role and the obligations of the plaintiff as the director.
On that same day the plaintiff was contacted by the Elias Interests' accountant, Mr Georgiou, regarding doing a deal. There was a meeting involving the plaintiff his accountant, Mr Khoury, Mr Georgiou and George Elias. By 16 February, those persons had worked out an agreement, without any involvement of the defendant.
Independently of what the plaintiff was doing to reach agreement with the Elias Interests, on 16 February 2009, the defendant wrote to Mr Cook confirming that Ms Cavill would attend upon the plaintiff to complete the report to affairs and also confirming that when they last engaged with the plaintiff, he was desirous of a complete realisation of the property held by the company on a forthwith basis and was not in a financial position to interact and entertain any other arrangement. The defendant says that based on his time records, he must have conferred with the plaintiff on 16 February and was informed of the plaintiff's meetings with the Elias Interests to do a deal.
As referred to earlier in this judgment, on 17 February 2009, the plaintiff wrote directly to Mr Albarran (by handwritten facsimile) asking him to freeze everything and stop doing any further work.
It is apparent that within days of the appointment of the VA, the Elias Interests thought they would do a deal with the plaintiff and thus the VA process could just be terminated, without the company being placed into liquidation.
The plaintiff agreed in cross-examination that he did the deal without involving the defendant but that he told him that he had done the deal to do the split. He agreed that it was Mr Georgiou who was preparing the draft document.
On 18 February 2009, HC wrote to Mr Elias, the plaintiff, Marsdens and the defendant in relation to the role of the administrators, the enquiries they were carrying out and requesting details of the agreement referred to (presumably the agreement referred to by the plaintiff in his handwritten facsimile). Mr Cook then sent an email on 19 February noting that the parties were finalising their negotiations for the purposes of settling their dispute.
Again, it is clear that the question of liquidation rather than a DOCA was an issue for consideration. According to HC, proceeding by way of DOCA would result in a better return to shareholders of nearly $500,000. HC estimated that the liquidator's fees would be $100,000 more than fees incurred by the deed administrators.
The plaintiff was cross-examined on the second report to creditors and the second meeting of creditors and events which were happening around that time. His answers were unsatisfactory. He denied attending the meeting and then said he could not remember. He maintained that he did not read documents at all that he must have received. He said he knew nothing. He never understood anything. He said he did not care about the price. He denied some aspects of the proposed agreement which had been settled through his accountants. He denied claiming any additional amount for himself (which is contrary to the letter from the defendant raising the claim for $500,000).
It was put to him that in March 2009 he had a meeting with his own accountant, Mr Khoury to work out the calculations about how things should be done and what financing might look like. He said, "It may be true. I don't remember but I could say it might be true. I don't remember. It's okay." He said he did not care about money. However, he agreed that he asked Mr Khoury to communicate with Mr Georgiou.
It was put to the plaintiff that he told the defendant at the creditors' meeting that he wanted a short adjournment in order to agree to the terms of the DOCA and for the DOCA to be signed over the course of the following weeks. The questioning was met with the same response. For example:
"Q. You were saying to Farshad?
A. WITNESS: No, he wasn't telling me exactly what was going on. I never understood what was going on. Never."
On 5 March 2009, Mr Butterfield of Marsdens circulated an email regarding what needed to be done to hand the company back to the directors. Mr Cook responded, stating that the company could only be handed back to the directors upon execution of a DOCA and that a number of issues needed to be clarified before that happened.
On 6 March 2009, Mr Cook circulated an email noting that the ATO had submitted a proof of debt for the amount of $258,883.67.
On 9 March 2009, he circulated an email requesting further information prior to the forthcoming meeting of creditors, regarding the progress of Mr Elias and the plaintiff's proposal for a DOCA.
[15]
Other issues
Whilst it is not strictly necessary to consider all of the other issues raised by the parties, I will deal briefly with the other issues.
[16]
Contributory negligence and proportionate liability
The defendant alleges that the plaintiff was guilty of contributory negligence and further that:
1. HC is a concurrent wrongdoer having regard to Pt 4 of the CLA; and
2. the plaintiff and Tony Elias, in their capacity as directors of the company, are concurrent wrongdoers.
It is not possible to make alternative findings for the purposes of considering contributory negligence and proportionate liability. It will be plain from this judgment that I have rejected the plaintiff's assertions of complete reliance on the defendant for all purposes and have rejected his assertions that he had no understanding of anything that was happening and could not communicate or understand any advice.
Much of the problem that arose, arose both from the refusal of the Elias Interests to stick to any arrangement, deal or proposal, as well as from the plaintiff's failure to stick to the process (in the sense that he regularly returned to the Elias Interests to seek a deal independently of those who were advising him). However, it does not necessarily follow that in doing so he was failing to exercise reasonable care for his own interests.
It may also be fair to suggest that if the defendant should bear some responsibility for the losses sustained by the plaintiff then HC should bear a similar responsibility. Despite being instructed by the defendant that they were being appointed pursuant to a CVL, HC recommended to the shareholders that they would be appointed as administrators without reference to the lawyers advising the shareholders.
However, again, that is too simplistic an approach. I was not directed to any evidence that HC failed to take care. HC, as the deed administrators, became embroiled in litigation, both because there was a dispute as to the level of their fees and because the plaintiff and the Elias Interests failed to comply with the terms of the DOCA.
Absent a detailed analysis on different alternative factual findings, I am unable to comment further on whether HC or Tony Elias may have been concurrent wrongdoers.
[17]
Damages
The plaintiffs plead that the defendant's advice and conduct caused or contributed to the plaintiffs being deprived of the opportunity to consider alternative, more cost-effective methods of realising the value in their shareholding in the company. The primary claim for loss is based on the diminished value of their shares in the company:
1. they say that if the company had been wound up rather than put into voluntary administration, they would have received a return on their shares of between $1,073,145 and $1,048,525;
2. they say that as a result of the voluntary administration they received a return of $580,000. The loss is thus calculated as the difference between their expected return on their investment minus what they received, being $493,145 to $468,525;
3. secondly, they say that based on the expert report of Phillip Stern, solicitors' fees in respect of winding up proceedings would have been between $4,800 and $7,695. They ultimately paid the defendant $299,020 including an overpayment of $54,250. They thus calculate their loss at $345,575 to $348,470;
4. they also claim loss of rent of $10,600 in respect of the rental loss of Lot 4; and
5. they say that the financial spiral that resulted from the delay in finalising the split of the assets and the requirement that the plaintiffs make payments into the fund meant that the plaintiff was required to obtain a $372,000 mortgage against Lot 4 and liquidate other assets and take out high interest loans. For example, the plaintiff says that he was forced to sell units owned at Mount Pritchard, which he had owned since 1985, due to the financial duress he was suffering in February 2014. He relies on a valuation report from David Bird to the effect that, if he had not sold the properties, in December 2019 there would have been an increase in value of $200,000 in respect of each property. He would have further obtained rental income for the same period of between $240,000 and $245,000.
It is again difficult to assess loss, having regard to the findings that I have made. It is important to emphasise that damages are compensatory but there are limits normally arising through the principles of causation and remoteness.
The plaintiff's approach to loss is based on the assumptions that:
1. the liquidator's fees would have been a fraction of the administrators' fees;
2. there would have been no shareholder disputes;
3. there would have been no dispute between directors;
4. his own lawyers would have charged him less than $10,000 instead of $250,000;
5. he would not have been asked to raise any money or make any payment to any fund;
6. he would have suffered no financial duress in 2014;
7. he would not have sold any of his properties;
8. he would have continued to rent these properties;
9. the value of his properties in 2019 would have been considerably higher (not that he would have sold them); and
10. he would not have borrowed money and even if he did borrow money he would have obtained better interest rates.
[18]
Consequential loss
The losses claimed as set out in [377(5)] of this judgment could be described as consequential losses. They are in addition to the alleged loss in value of the shares in the company and the cost of borrowing to fund the deed payments.
The plaintiff says that he owned other properties that he was forced to sell because of the inability to realise the anticipated profit from the liquidation of the company in 2009. He says that in 2014, he sold a property at Mt Pritchard that he otherwise would have retained. He would have earned regular income from that property and then would have made a capital gain in 2019. He claims both the loss of rental income and the lost capital gain.
He says, further, that as a result of the reduction in return from the development undertaken by the company as a result of the VA process, he did not have the available funds to finance his other developments. He needed to effect interim finance and entered into two loan contracts to do so. He says that he personally incurred fees, interest and other expenses, including litigation expenses in association with loan contracts taken out by another property of which he was a shareholder, Banda Developments Pty Ltd.
In other words, he says that he was continuing to pursue other property development ventures in the years subsequent to 2009 and that finance costs associated with a development undertaken by another company should be paid by the defendants.
As is well known, direct loss is generally the type of loss falling within the first limb in Hadley v Baxendale [42] being the loss arising naturally or in the usual course of things from the breach of contract.
Consequential loss may be losses falling within the second limb of the rule in Hadley v Baxendale, being a type of loss which may reasonably have been in the contemplation of the parties at the time of entry into the contract as the probable result of the breach of the contract.
In Regional Power Corporation v Pacific Hydro Group Two Pty Ltd (No 2), [43] Martin J described consequential loss as "a loss at a step removed from the transaction and its immediate effects."
As was said in Wallace v Kam, [44] the liability for breach of a duty to exercise reasonable care and skill to avoid harm does not extend beyond harm that was foreseeable at the time of breach.
[19]
Conclusion
If the plaintiff had established breach of duty of care or contract then I would be prepared to accept that the plaintiff suffered some loss as a result of loss of opportunity to realise a greater value from his shareholding in the company through the alternative process of liquidation. In a sense, it is difficult to envisage how the process could have turned out any worse or more time-consuming and expensive.
The process of voluntary administration and administration of a DOCA, which required both the plaintiffs and the Elias Interests to make payments into the deed fund in return for transfer of property to them, led to significant dispute whilst all the while requiring the plaintiffs and the Elias Interests to pay more money into the fund just to cover the ongoing accounting and legal expenses.
I have not accepted that this resulted from the defendants' tortious conduct but, if I had, I would have accepted there was a better opportunity to receive a greater return through the liquidation process, originally envisaged and proposed by the defendant. I would have assessed damages in the order of $250,000 plus interest on the loans necessary to fund the deed payments. Interest would then be payable on those sums.
[20]
Orders
I enter judgment for the defendants. I order that the plaintiffs pay the defendants' costs.
I grant liberty to the parties to apply on three days' notice should the parties seek any alternative costs order.
[21]
Endnotes
Leary v Federal Commissioner of Taxation (1980) 47 FLR 414 at 434; [1980] FCA 112.
Hawkins v Clayton (1988) 164 CLR 539 at 544; [1988] HCA 15.
Further Amended Statement of Claim paras 15-18.
Hawkins v Clayton at 544-545.
Sparks v Hobson; Gray v Hobson [2018] NSWCA 29; 361 ALR 115 at [24], [326].
[2009] NSWCA 8 at [76] (Allsop P).
[1939] 1 K.B. 194 at 222.
[1979] Ch 384 at 409 (Oliver J).
David v David at [76].
Uniting Church in Australia Property Trust (NSW) v Miller; Miller v Lithgow City Council (2015) 91 NSWLR 752; [2015] NSWCA 320 at [102]; Port Macquarie Hastings Council v Mooney [2014] NSWCA 156; (2014) 201 LGERA 314 at [52].
Sellars v Adelaide Petroleum NL; Poseidon Ltd v Adelaide Petroleum NL (1994) 179 CLR 332 at 355 (Mason CJ, Dawson, Toohey and Gaudron JJ), 368 (Brennan J); [1994] HCA 4 ("Sellars v Adelaide Petroleum").
Affidavit, Joseph Kossaifi, 5 May 2017 at paras 3-11.
Affidavit, Joseph Kossaifi, 5 May 2017 at para 43.
Affidavit, Joseph Kossaifi, 5 May 2017 at para 75.
Affidavit, Joseph Kossaifi, 5 May 2017 at para 78.
Affidavit, Farshad Amirbeaggi, 6 January 2019 at paras 78-79.
Affidavit, Farshad Amirbeaggi, 6 January 2019 at para 82.
Affidavit, Farshad Amirbeaggi, 6 January 2020 at para 85.
Affidavit, Farshad Amirbeaggi, 6 January 2020 at para 98.
Affidavit, Farshad Amirbeaggi, 6 January 2020 at para 110.6.
Affidavit, Farshad Amirbeaggi, 6 January 2020 at para 110.8.
Affidavit, Danielle Gleeson, 13 December 2019 at para 7.3.
Affidavit, Danielle Gleeson, 13 December 2019 at para 8.1.
Affidavit, Timothy James Cook, 14 March 2014 at para 24.
Affidavit, Timothy James Cook, 14 March 2014 at para 27.
Affidavit, Timothy James Cook, 14 March 2014 at para 33.
Affidavit, Timothy James Cook, 14 March 2014 at para 34.
Affidavit, Timothy James Cook, 14 March 2014 at para 33.
Affidavit, Joseph Kossaifi, 2 February 2010 at paras 28-29.
Sparks v Hobson; Gray v Hobson [2018] NSWCA 29; 361 ALR 115
Uniting Church in Australia Property Trust (NSW) v Miller; Miller v Lithgow City Council (2015) 91 NSWLR 752; [2015] NSWCA 320
Wagner v International Health Promotions Pty Ltd (1994) 15 ACSR 419
Wallace v Kam [2012] NSWCA 82; [2012] Aust Torts Reports 82-101
Category: Principal judgment
Parties: Joseph Kossaifi (First Plaintiff)
Dolly Kossaifi (Second Plaintiff)
ACN 111 804 383 Pty Ltd (First Defendant)
Farshad Amirbeaggi (Second Defendant)
Representation: Counsel:
N J Adams SC (with J Horowitz) (First and Second Plaintiffs)
I R Pike SC (with F T Roughley) (First and Second Defendants)
Later in the cross-examination, the plaintiff again asserted that he never read the affidavits:
"A. WITNESS: How many affidavit I done? I don't understand. As I said again, where they tell me to sign I sign, but number 1, number 2, number 10, I don't know. Now, but this, I said it, yes.
…
A. WITNESS: I never read them. And I want to read them now if I may fresh my memory."
Again, he repeated that he just did what the defendant said and he did not read the documents:
"Q. Never ever seen it?
A WITNESS: As I said maybe I did but I never do anything without Farshad. If he tell me sign, I sign. I never read. I start read after when I saw the monkey business going I start to read to see what is going on.
Q. Your evidence, I want to be very clear about this, your evidence is that you may have received this document but you don't remember?
A. WITNESS: I may, yes."
In his affidavit, he refers to having spoken with the defendant on hundreds of occasions. The defendant does not speak Arabic. Nor does Ms Cavill. He maintains that he rarely understood what he was being told and just relied on the defendant to "make it right". He says he rarely read the letters sent to him by the defendant. Paragraph 63 of his affidavit of 5 May 2017 is indicative of his evidence:
"After I retained Mr Amirbeaggi, he frequently sent me documents by facsimile. Sometimes he mailed me letters. However, I rarely read the letters which he sent me. I almost never read his letters from start to finish. It was too time consuming for me to do so. I usually read the parts of his facsimiles which had numbers and dollar amounts. I couldn't understand his letters without referring to my Arabic/English dictionary."
The defendant and Ms Cavill both gave evidence to the effect that they did not believe that the plaintiff had any difficulty understanding and they did not have any difficulty understanding the plaintiff.
Any suggestion that the plaintiff could not read or write in English in the period 2005 to 2009 is negated by the existence of documents prepared by the plaintiff and in his own handwriting. Whether the plaintiff chose not to read documents such as affidavits before signing them is a matter for him but I do not accept that the plaintiff had no ability to read documents, albeit he might not have understood or recognised some words and legal terms.
When asked to read paragraphs of an earlier affidavit prepared on his behalf he did so (in part aloud), albeit he said he did not read it at the time and said he did not tell the solicitors some of the statements made in the affidavit.
It does not follow that he had a good grasp of legal concepts or a thorough understanding of Court processes and the processes of insolvency, but the same may be said for many persons, irrespective of whether English is their first language.
He demonstrated that his English was adequate for ordinary communications when giving evidence. Similarly he demonstrated that he could read English when giving evidence. However, he says it is a lot better now than in 2009.
It is difficult to assess the adequacy of his English as at 2009. The defendant and Ms Cavill believed that the plaintiff was capable of and did understand them when they spoke to him in 2009 (in English). It would be most surprising if the defendant and Ms Cavill could have recorded the contemporaneous file notes of conversations with the plaintiff, if his English in 2009 was as deficient as he maintains.
Further, on 17 February 2009 the plaintiff forwarded a facsimile directly to Mr Albarran of HC as follows:
"Please freeze everything and stop doing any further work related to Joe & Joe Developments Pty Ltd.
reason we had meeting on 16/2/09
Directors, shareholders and creditors
and we may have a final agreement to satisfy every body.
I will talk to you within couple days
Kind regards"
The document is in the plaintiff's handwriting and signed by him.
Of course, the personal characteristics of the plaintiff might inform the way in which advice is given but I do not accept that the plaintiff was unable to communicate properly with the defendant or generally understand what he was being told. On his own case, he was able to communicate with the defendant on 9 February such that the defendant should have intervened on behalf of the plaintiff both prior to and after the appointment of the administrators.
The plaintiff was an experienced project manager/developer who had been involved in the development of projects in Sydney for many years prior to 2009. He was not a person who would be considered vulnerable in the sense of being incapable of understanding advice given in plain and simple language. That is not to say that he necessarily understood the difference between liquidation and VA but most laypersons would similarly not understand the difference between those processes.
I have some reservations about the way in which the plaintiff gave his evidence and his approach to some questions. Just as there is an emphasis in the early part of his affidavit on his vulnerability and the extent to which he relied upon the defendant (referring to hundreds of conversations with the defendant) and relying on him for everything (when the course of events immediately after 9 February suggests that he did not), he tended to emphasise in oral evidence that he did not read the documents and that he relied on the defendant for everything.
Some of his conduct is inconsistent with such an approach. Some of his evidence was exaggerated. Further his insistence on certain events which are most unlikely to have happened leads me to have some doubt about aspects of his evidence, although I accept that his aims in instructing EMC and then the defendants were as he maintains. He wanted the assets to be split in the quickest way.
He denied having conversations and meetings about which there are contemporaneous records. He denied providing instructions on some matters even though there is no other logical explanation - the only alternative being that persons such as the defendant and Mr Cook must have made up things (not now but back in 2009). He denied reading some documents he was sent, even though the contemporaneous records show that he responded to them in such a way that he must have read and understood them. This was amply demonstrated through cross-examination on some events during the deed administration.
I also consider that he saw litigation as a last resort. As his conduct demonstrated, he believed that he could do a deal with the Elias Interests and was prepared to do so even whilst the lawyers and accountants were pursuing more formal processes.
Having said that, once the decision is taken to wind up the company, whether voluntarily or by order of the Court, the process is similar. The process that the directors had agreed to prior to 9 February 2009 was a creditors' voluntary winding up. In a creditors' voluntary winding up, the Court is generally not involved.
It is notable that a creditors' voluntary liquidation is a process that may be adopted when the company is insolvent. As the name suggests, the creditors have a role in the liquidation process in the sense that they can seek information, determine the liquidator's remuneration, establish committees, agree to oversee the liquidator and vote to remove the liquidator. A creditors' voluntary winding up is governed by Part 5.5 of the Corporations Act.
In the draft documentation circulated for signing by the directors on 6 February 2009, the wording of the resolution was to the effect that the company was being wound up on the grounds that it was insolvent, which the plaintiff disputes.
Voluntary administration is regulated by Part 5.3A of the Corporations Act. As set out in s 435A of the Corporations Act, the objects are to provide for the business, property and affairs of an insolvent company to be administered in a way that:
1. maximises the chances of the company, or as much as is possible of its business, continuing in existence; and
2. if it is not possible for the company or its business to continue existence - results in a better return for the company's creditors and members than would result from an immediate winding up of the company.
The process of voluntary administration generally provides a limited timeframe to achieve the purposes of the administration. For example, the first creditors' meeting under s 436E must be held within eight business days of the appointment.
The DOCA must be executed within 15 days after the end of the second meeting of creditors. If that does not occur, the administration ends and the company will be placed into liquidation: Corporations Act ss 444B, 446A. In the plaintiff's case, this is of some significance.
The role of the administrator is set out in s 437A(1). The administrator has control of the company's affairs and carries on the business and manages the property and its affairs. It may also terminate or dispose of part of the business or property and may perform any function and exercise any power that the company or any of its officers could perform or exercise whilst not under administration.
Section 438A of the Corporations Act specifies a mandatory obligation on the administrator in the following terms:
438A Administrator to investigate affairs and consider possible courses of action
As soon as practicable after the administration of a company begins, the administrator must:
(a) investigate the company's business, property, affairs and financial circumstances; and
(b) form an opinion about each of the following matters:
(i) whether it would be in the interests of the company's creditors for the company to execute a deed of company arrangement;
(ii) whether it would be in the creditors' interests for the administration to end;
(iii) whether it would be in the creditors' interests for the company to be wound up.
An administrator is entitled to be indemnified including in respect of the administrator's remuneration: Corporations Act s 443D(b). An administrator's remuneration was to be determined in accordance with s 449E (which has since been repealed - administrators' remuneration is now regulated by Div 60 of the Insolvency Practice Schedule (Sch 2) of the Corporations Act). Similarly, the deed administrator's remuneration was determined in accordance with s 449E.
Finally, it is possible to challenge the appointment of the administrators or seek to bring the administration at an end: s 447A(1)). It was accepted by the defendant in cross-examination that the plaintiff could have sought orders from the Court bringing the VA to an end (if there was a proper basis to do so). This is, again, important to the plaintiff's alleged second period of breach as identified in the plaintiff's opening submissions.
Voluntary administration might be considered a process whereby creditors and members can consider the best process for achieving the best return to the creditors and members during a limited but protected period. If the aim is not to maximise the chances of the company continuing in existence, the company will inevitably end up in liquidation or deregistration.
He says he refused to sign the document because he did not agree that the company had any financial problems. He says that he was only at HC for 5-10 minutes. He says he went downstairs to talk to the defendant and Ms Cavill was still there. He spoke to Ms Cavill, explaining that they wanted him to sign documents on the basis that the company does not have any money and he did not want to do that. He just wanted to split the assets. Ms Cavill told him that the defendant was not there. He then went home and sometime later he received a call from Ms Cavill to the following effect:
"I then went home. Sometime after I arrived home, I received a call from Ms Cavill and we had a conversation to the following effect:
Ms Cavill: "Farshad told me to tell you that you have to go back and sign the documents. That is the best way to go ahead."
Me: "Have the other party signed?"
Ms Cavill: "Yes, the other parties have already signed." [15]
He says that he then returned to the offices of HC and met with Mr Albarran. No one else was present. Mr Albarran put a document in front of him which he noticed had already been signed by George Elias. Mr Albarran said, "Thank you for coming back Joe, please sign here."
He then signed the notice of appointment of administrators.
He says he did not read it and Mr Albarran did not read it to him or explain what it meant. He says he was not given a copy of the document to take away and he understood the effect of signing the document would be that the company's assets would be split quickly.
Further, the plaintiff stated that the minutes of the directors meeting on 9 February 2009 were not signed until three weeks after the DOCA was signed. In re-examination, he gave the following evidence:
"Q. Now is your opportunity to tell us how it happened?
A. WITNESS: I remember this DOCA after ‑ exact time I don't know ‑ but around three weeks after I signed the DOCA. I was in Farshad's office. He said "you've got to sign this". I said "what is that?" He said "this for the ASIC. You have to sign it". I look at it and he said to me, I ask him "what's that?" ASIC? But what's in it?" He said that "company have meeting, you've got meeting with director and this what we have to do". I said "never happen". He said "no, no, no, no, you've got to sign if to be quick, to split the company". I said "Farshad, the ASIC, they know, you put me in trouble. I be in trouble maybe". He said, "don't worry about it, nobody will see". I sign it and that's it.
Q. I want to take you to the document itself. Can you just read to yourself, or perhaps I'll read it to you but follow on the page, if you would?
A. WITNESS: (Witness nodded).
Q. It says that the people present was Tony Elias and yourself at the offices and it was resolved that Tony Elias was to be appointed the joint chairman. See that?
A. WITNESS: Never happen, never.
Q.
"The directors discussed the financial affairs of the company and considered that if the company was not already insolvent it was likely to become insolvent at some future time. The directors further discussed the consequences of the company's position and the appointment of the administrator under part 5(3)(a) of the Corporations Act."
Now, did you ever, at any time, on 9 February or at any time prior to 9 February, have a meeting where those things were discussed?
A. WITNESS: With?
Q. The things I've just read to you, did you ever have a meeting, you and Tony, where those things that I've just read to you were discussed?
A. WITNESS: Never."
He says that document was signed in the presence of the defendant at a later time. On the document, Mr Cook appears as a witness to his signature. On the plaintiff's evidence, the document was backdated and witnessed by the defendant, not Mr Cook. It might be said that if I accept the plaintiff's evidence about this document, the defendant must have known well after 9 February that the appointment of a VA was invalid. Of course, there would be other consequences if I accept the plaintiff's evidence about this document.
The defendant believed that the plaintiffs did not have money to fund the steps required to prosecute their interests. They continued to fail to meet the defendant's request for a payment of fees or putting money in trust but continued to assure the defendant that, having regard to other real estate sales and developments in which the plaintiff was involved, the money would be forthcoming.
In fact, the plaintiff never made payment of any professional costs and disbursements to the defendant. It was not until two years after their engagement that the defendants took a transfer from the plaintiff of Unit 4 in the development and finally received partial payment of the accrued professional costs and disbursements. Prior to that time, being during the two years for which the defendant had been providing services to the plaintiffs, the plaintiffs did not pay any of the costs or disbursements incurred.
The defendant says that prior to 9 February 2009, either he or Ms Cavill had spoken to the plaintiff about the appointment of a liquidator on a number of occasions. Indeed, in his affidavit, the defendant refers to his usual practice of giving advice, which he says would have been as follows:
"FA: 'A CVL results in the immediate appointment of a liquidator to the company. Upon his or her appointment, the CVL will make inquiry into the affairs of the company, realise its assets, determine and pay its creditors, and pay any surplus to the shareholders.'
AND
FA: 'Whilst we have had some back and forth with Marsdens as to who should be appointed CVL, we have finally agreed on Hall Chadwick.'" [19]
The defendant believed that the sole purpose of the meeting on 9 February 2009 was for the CVL documentation to be executed by the plaintiff and the Elias Interests. He did not consider it was necessary for him to attend that meeting, bearing in mind that it only had one purpose.
The defendant says that he did not speak to the plaintiff during the course of the morning of 9 February. He received two emails from Ms Cavill. The first was at 9:59am, noting that, as the meeting at HC had not yet started at the time that she attended Court, she stood the proceedings over for another week.
He received a further email at 2:59pm from Ms Cavill as follows:
"Hall Chadwick people ended up signing them up to a VA this morning, and they are discussing the possibility of a DOCA."
He says that after he had left his office, he spoke to Mr Cook as follows:
"FA: 'I've been away with clients for most all of the day. I've got an email from Danielle that tells me it ended up being a VA. How come?'
TC: 'Yes, I spoke with Danielle after the appointment was made. It was meant to be a CVL, but the directors spent a couple of hours with Richard talking through it all. Apparently, the directors had spent time over the weekend negotiating and thought they might be able to reach an agreement without a liquidation. They were concerned about a liquidation affecting their credit rating, builder's licenses, and home warranty insurance. Richard told them they could avoid all of that if they reached an agreement through a VA and a Deed. They carried on a bit throughout the meeting arguing with each other but ended up accepting Richard's advice. They wanted to try giving settlement another go and appointed us VA. If they can't agree, then we'll just drop it into liquidation at the creditors' meeting. We talked them through the process, so they know what is involved.'
FA: 'Thanks for letting me know. I'll call the client and discuss next steps.'" [20]
He says he then spoke to the plaintiff either on the evening of 9 February or shortly thereafter in the following terms:
"FA: 'I've spoken with Hall Chadwick. You appointed them as Voluntary Administrators. They've told me but I wanted to understand your thinking. Especially given what you told me of the history with the Elias family. What's the plan?'
JK: 'I talked to Elias over the weekend. He thinks we can settle. Liquidation will have problems for finance, builders' licenses, and insurance. Hall Chadwick said we can settle and have an agreement in a voluntary administration, and then we won't have those problems. So, we appointed them voluntary administrators. They told us if we don't settle, we can put it into liquidation from there.'
FA: 'I suppose you will find out soon enough if you can come to terms with Elias in a VA. If you can't strike a deal within the first 4-5 weeks the company goes into liquidation at a creditors' meeting.'
JK: 'If we can settle, good. If we can't, we go into liquidation.'" [21]
At para 101 of his affidavit, the defendant acknowledges that, whilst there was a change from that which he had recommended, he was not overly concerned because:
1. it appeared to be what the plaintiff and the Elias Interests had negotiated and wanted;
2. both the plaintiff and Mr Cook had represented to him that there had been some thought and discussion with respect to a VA;
3. whilst he considered that a VA would be marginally more time-consuming and expensive, it is of benefit to the standing/credit of the directors;
4. a VA could at any time be terminated by vote at a creditors' meeting or by approach to the Court and thereafter the company could be placed into liquidation; and
5. the VA would terminate and the company would be placed into liquidation in the event the directors did not make a deed proposal.
Mr Cook refers to his concern at the way in which the plaintiff and George Elias were speaking and gesturing vigorously towards each other and he separated them. He left the plaintiff in the office with Mr Albarran and instructed a junior staff member to prepare documents for a VA. He says there was then a conversation between Mr Albarran and the plaintiff as follows:
"Albarran: These are the VA documents that you need to sign if you go down that path. The VA will prevent the company being put into liquidation. Do you want me to get Farshad on the phone for you.
Kossaifi: No its ok. If it will stop the liquidation and you can do a reconciliation of the amounts paid by each of us its ok for me.
Albarran: Yep that's the benefit of the VA.
Kossaifi: Do we all have to sign?
Albarran: Yes, once we have got you to sign we will go and speak with George and find Tony." [26]
He says the plaintiff then signed the documents and he went to the meeting room to discuss them with George Elias as follows:
"Cook: As Tony Elias is a director he must execute the documents and return them to this office.
George: I understand and I will take them to him to sign.
Cook: When do you think that will happen, I mean when will the documents be returned.
George: Tony is downstairs nearby. I will go and come back shortly." [27]
He then observed George Elias leave the office before returning with the documents executed, apparently by Tony Elias.
Mr Cook immediately started the investigations. He had a conversation with Tony Elias regarding a number of issues. He refers to his file notes in this regard.
He had a conversation with Mr Albarran on 10 February 2009 regarding attending a meeting on site. He then attended a meeting on site at the property in North Narrabeen on 11 February 2009. He prepared a file note. He refers to a conversation with Tony Elias on site on 11 February 2009 during which Tony Elias complained about the plaintiff and his conduct and that he was not pulling his weight. Whilst he was there, he came across the valuer who he had instructed to attend the site to value the lots. He then had a further conversation with Tony Elias as to why that was necessary, what was happening and to the effect that Tony Elias did not want to keep paying for all this stuff, as it was too expensive.
Further in answer to the direct propositions being put to him he said:
"Q. Mr Kossaifi I suggest you signed the documents appointing Hall & Chadwick as administrators in the morning of the 9 February?
A. WITNESS: No, afternoon.
Q. I suggest‑‑
A. WITNESS: Afternoon.
Q. I suggest that you signed those documents without having left Hall & Chadwick.
A. WITNESS: No. What I say is million, not hundred, million per cent right what I said. What they fabricate is not my business."
There was limited cross-examination of the defendant on the timing of the events on 9 February. Plainly, having regard to the defendant's affidavit evidence, he would have rejected an alternative version as put forward by the plaintiff.
It was put to the defendant in cross-examination that his conversation with the plaintiff late on 9 February 2009 did not take place. He rejected that proposition. It was not put to the defendant that the conversation with Mr Cook on 9 February did not take place. Indeed, the cross-examination proceeded on the basis that it did take place. There is no file note of the conversation between the plaintiff and the defendant late on 9 February 2009. There is no reference in the invoices or time records to the conversation. The defendant's explanation is:
"No, there's not but as I say - I just said before, not every attendance in a manually‑entered time entry system made the time sheet."
The cross-examination of the defendant focussed more on what he knew and believed should have been happening at the meeting and then what he did after he found out that a VA was effected. The plaintiff established that the defendant considered liquidation to be his preferred course.
The focus of the cross-examination on Mr Cook was more on challenging the accuracy of his recollection. Mr Cook accepted that his recollection in the witness box may not be perfect but he was relying on what he said in his affidavit affirmed on 14 March 2014 and considered that what he said in his affidavit was his best recollection at the time.
Mr Cook did maintain that he had no recollection of the plaintiff refusing to sign the documents. He said that it was possible that he could have been absent from the room. He said he disagreed with the proposition that he was mistaken about the plaintiff signing documents in his presence. He conceded that he was assisted in his recollection of events through a discussion with Mr Albarran, which I took to have taken place prior to the completion of the affidavit in 2014.
When challenged on whether the plaintiff was offered the opportunity to speak to the defendant about signing the VA documents, [28] he maintained that that was his recollection when preparing the affidavit in 2014. He did not accept that he was wrong in his recollection.
It seemed to me that, when giving evidence, Mr Cook had little by way of independent recollection of the events of 9 February 2009 but was really relying on what he said in his 2014 affidavit. He accepted that even that was prepared five years after the event but he maintained that it was prepared based on his recollection at that time. This made cross-examination challenging.
To the extent that matters were not contained in the 2014 affidavit, Mr Cook accepted the possibility of certain things occurring. Having said that, no reason was advanced for Mr Cook to have fabricated a version of events when preparing his 2014 affidavit, which on the plaintiff's evidence he must have done.
Ms Cavill similarly allowed for the alternative possibility in cross-examination but essentially maintained the statement she made in her affidavit. There is a difference between a witness allowing for the possibility that she could not recall or that something might have happened and maintaining a belief to the best of the witness' recollection that that which she referred to did happen.
I did not take Ms Cavill's concessions about possibilities as acceptance that her evidence may have been incorrect. Ms Cavill remembered being able to converse with the plaintiff in English, remembered in general terms the events leading up to the VA but was otherwise relying on her file notes as to the detail.
There is a clear conflict between the plaintiff and those other three witnesses as to what occurred on 9 February 2009. The discrepancy between the evidence of the plaintiff and Mr Cook as to what happened at HC that day is stark. Further, the evidence of Mr Cook is critical because he gives context as to why the directors signed up to a VA rather than a CVL. Fundamental to the plaintiff's claim in respect of the first breach is that he was deprived of the benefit of the defendant's advice prior to signing the documents because the defendant refused to go with him to the meeting and then told him through Ms Cavill to sign the documents.
If I accept Mr Cook's evidence, the plaintiff expressly declined the opportunity to discuss the VA with the defendant prior to signing the documents. This would be quite inconsistent with the plaintiff's evidence that he had wanted the defendant at the meeting to advise him and had left the meeting prior to signing to obtain the defendant's advice.
There is other evidence which impacts on the resolution of the dispute between the parties as to what occurred on 9 February.
Firstly, it seems unlikely that Ms Cavill would have still been in her office at 9.00am when she was number 5 in the 9.15am list in this Court and she was seeking to hand up consent orders. In support of his assertion that he spoke to the defendants immediately on being told by Mr Albarran that the company was insolvent or had no money, the plaintiff refers to a telephone record of a call to the defendant's offices at 9.15am. He says that he went to the defendant's offices after the phone call around 9.15am and that is when he saw Ms Cavill coming out and she was in a hurry and had some books in her hand. He then went home.
Ms Cavill was back in her office by 9.59am as she sent an email to the defendant at that time. It does seem unlikely that Ms Cavill would have been only leaving her office at some time after 9.15am in all of those circumstances.
Secondly, in proceedings commenced by Messrs Albarran and Pleash, naming the company as the defendant, the plaintiff swore an affidavit on 2 February 2010. After referring to the document sent to him on 6 February 2009 for the appointment of a CVL of the company, he referred to the events of 9 February 2009 in the following terms:
"28. On about Monday 9 February 2009 at about 9:00am, I attended the meeting of directors of the Company with George Elias at the offices of Hall Chadwick (without my solicitor). Tony Elias was not present at that meeting and did not sign any documents - they were signed by George. At page 28A of Exhibit JK1 are true copies of the Minutes of Meeting (signed by George for Tony), Declaration of Relationships, and Notice of Appointment of Administrator.
29. After lengthy discussion, Messrs Richard Albarran and Blair Pleash of Hall Chadwick (hereinafter, the Administrators) were appointed as Administrators to the Company. However, I note that Tony Elias (director) never signed the appointment documents - it was George who signed them." [29]
The plaintiff refers to the signing of all of those documents on 9 February. In these proceedings, he maintains that the minutes of the directors meeting on 9 February 2009 were not signed on 9 February but were subsequently signed at different places and backdated.
The plaintiff said under cross-examination that he signed the documents around 3.00pm, which would be inconsistent with emails and file notes of conversations to the effect that the VA had already been effected prior to 3.00pm.
Thirdly, based on Ms Cavill's contemporaneous file note, the version given by the plaintiff in these proceedings is inconsistent with what he said to Ms Cavill when he spoke to her on 4 February 2010. There is a handwritten file note dated 4 February 2010 and then an email that day summarising the conversation.
The precise timeline of events and evidence as to precisely what was said by whom and when impacts on two allegations which are essential to the first complaint made by the plaintiff.
I prefer the evidence of Mr Cook, Ms Cavill and the defendant to the extent that it conflicts with that of the plaintiff as to the events of 9 February 2009.
I am unable to reconcile the plaintiff's evidence with documents such as the file note of 4 February 2010. I am unable to reconcile the plaintiff's evidence with the affidavit of Mr Cook, which was prepared in 2014. The plaintiff's assertion that he left the meeting prior to signing the document so as to obtain advice of the defendant is quite inconsistent with Mr Cook's evidence that the plaintiff was asked on two occasions during the meeting whether he wished to speak to the defendant and declined both offers. The plaintiff's evidence that he was only at HC for 5-10 minutes on the morning of 9 February cannot be reconciled with the evidence of Mr Cook.
The plaintiff's version of events on 9 February, when viewed as a whole, is improbable and inconsistent with other records.
Acceptance of the plaintiff's version would require me to reject much of Mr Cook's evidence as a fabrication, as the plaintiff claims it is. This seems unlikely. I would be required to reject Ms Cavill's file note and email of 4 February 2010 as being contrary to that which the plaintiff said. This seems unlikely.
If I accept the plaintiff's version as to what occurred on 9 February 2009, I must also reject much of the defendant's evidence as being untruthful and that his file notes and correspondence do not reflect the plaintiff's instructions or what happened.
The first complaint has two components being:
1. the defendant should have attended the meeting with the plaintiff; and
2. the defendant was made aware that HC was proposing a VA prior to the plaintiff signing the documents for a VA and should have advised the plaintiff not to sign.
There can be no doubt that the defendant believed that the plaintiff would be attending at HC at 9.00am on 9 February for the purposes of signing documents for a CVL. It was his view that that was the preferred course. He thought it would happen. Indeed, HC also thought on 6 February that there would be a CVL.
Something happened at the meeting at HC on 9 February which altered that course. The defendant considered that the plaintiff understood English in terms of speaking and writing English and he did not believe that the plaintiff had any difficulty understanding what he was saying. Whilst he may not have understood the precise difference between liquidators and administrators, he understood generally that which was proposed. The defendant had arranged with HC on the basis of a CVL. The defendant believed that the plaintiff would be able to speak with HC and understand what was being said.
I do not consider that the defendant, as a competent solicitor exercising reasonable care in the performance of his work, would have considered that he should attend at HC with the plaintiff in all of the circumstances. The defendant had arranged that which was to occur. The Elias Interests' solicitors had confirmed their agreement to the proposed course and Ms Cavill had received confirmation on the afternoon of 6 February that all was in place. Mr Cook had spoken to both directors and confirmed that which was to occur.
Nor do I accept that the defendant told the plaintiff to go back and sign the documents knowing that which had occurred on the morning of 9 February. As put to Ms Cavill, it is possible that the plaintiff might have attended the offices of the solicitor for the defendant shortly before 9.00am before moving onto the offices of HC in the same building. It is possible that the plaintiff asked Ms Cavill whether the defendant would be attending but whether or not that conversation took place is not determinative of any issues. It is unlikely that the plaintiff attended on Ms Cavill in or around her offices after 9.15am and I reject the plaintiff's evidence that after meeting with Mr Albarran at 9.00am for a few minutes, he then went down to the offices of the defendant and spoke to Ms Cavill.
Again, as is apparent from the telephone records, the plaintiff must have spoken to someone at the defendant's offices but he says that after that call at 9.15am, he was in the defendant's offices almost immediately and speaking to Ms Cavill.
I do not accept the factual basis of the second aspect of the complaint. The defendant did not know that HC had recommended a VA until after the plaintiff had signed the documents.
This leaves a consideration of the defendant's conduct after he ascertained that administrators rather than a liquidator had been appointed which, on my finding, was after the administrators were appointed.
Against that background, and assuming that the plaintiff (as he maintains) had no understanding of what HC recommended on 9 February, played no part in any discussions that led to those recommendations and only signed the documents on 9 February because the defendant advised him to do so (even though he did not read them), then there would be merit in the plaintiff's proposition that as soon as the defendant found out that the directors had agreed to a VA rather than a CVL, he should have taken steps to advise against it and change course.
There is really no contest that based on the instructions provided to the defendant prior to 9 February 2009, a competent insolvency practitioner would have recommended that the plaintiffs pursue liquidation rather than VA.
Further, the plaintiff's expert, Mr Linden, opined that a competent solicitor with the defendant's expertise would have considered that seeking the winding up of the company on the just and equitable ground was the most appropriate course. As he said:
"Taking steps to seek the intervention of the Court by seeking the winding up [of] the Company on the just and equitable ground was the appropriate course for a competent solicitor with FA's expertise to adopt taking into account the matters noted above. In the situation of the two directors being deadlocked at board level (meaning that the Company was unable to make any decisions), there being substantial value in the Company's shares and the instructions of JK regarding the urgent need to realise the value of his family's shareholding the Company, there was no alternate course available." [30]
He further opined:
"Once appointed a liquidator is obliged to take control of all the property of the Company to the exclusion of the directors and members and proceed to realise those assets applying the proceeds taking into account inter alia the above matters. That course would remove any further involvement [of] JK and Mr Elias and relevantly would result in resolving the deadlock between the Company's directors, a prompt realisation of the assets of the Company, payment of the creditors and distribution to the shareholders. Additionally each of the shareholders would retain the right to give directions to the liquidator (who is required to have regard to them but is not bound by them) and to cause the intervention of the Court if applicable." [31]
Mr Linden did not consider that the voluntary administration that commenced on 9 February 2009 and the subsequent DOCA was the most cost-efficient method of properly realising the value of the shareholders' interests. As he said, the obligations of a voluntary administrator prescribed by the Corporations Act include additional tasks that a liquidator appointed by the Court on a just and equitable ground would not be required to undertake.
He identified such additional tasks as including:
1. convening an initial meeting under s 436E of the Corporations Act;
2. investigating the company's affairs and considering possible causes of action (s 438A of the Corporations Act);
3. convening a further meeting of creditors to decide the company's future (s 439A of the Corporations Act); and
4. convening the second meeting of creditors and preparing a report relating to the company's affairs and setting out an opinion as to what is in the best interests of creditors (s 439A(4) of the Corporations Act).
Further, Mr Linden highlighted that performing the additional tasks would necessarily result in the administrators incurring additional costs.
He said that there was greater potential for dispute between shareholders following execution of the DOCA than would have been the case if the company had been wound up on the just and equitable ground.
The defendant did not really dispute much of Mr Linden's opinion but stressed that there was also potential for shareholder disputes to manifest themselves during a liquidation.
He was cross examined on this issue including:
"Q. There's greater potential, isn't there, for a shareholders dispute to be magnified under an administration?
A. No, I don't agree with that.
Q. You don't agree with that?
A. I do not agree with that.
Q. You know, don't you, that the directors have to liaise with one another and agree to enter into a deed of company arrangement?
A. Yes, I do know that.
Q. You do know that?
A. Yes.
Q. Given your knowledge of the fact that there had been such a degree of disagreement--
A. Yes.
Q. --and toxicity if I can use that word--
A. Yes.
Q. --you don't agree that there was the potential for that to be made worse in administration because of the need for them to agree to enter into such a deed? No alarm bells were set off at that stage?
A. No. Because they could have had the very same arguments in liquidation.
Q. Yes, but they wouldn't have had those arguments had there been either (a) a consent to a court appointed liquidator or the proceedings for a just and equitable winding up were pursued?
A. No, I don't agree with the proposition. They would have to agree to execute a resolution to appoint a voluntary liquidator. They would have to meet to agree to do that. In the liquidation they would have to deal with each other in relation to debts of the company and to proofs of debt. It's still the ongoing contact and dispute with these two in a liquidation as there would be in a receivership, in an administration, so I don't agree with the proposition for that reason."
As well as:
"Q. Exactly and what I'm putting to you is that if it was pursued on that basis‑‑
A. Yes.
Q. ‑‑that it's taken out of the directors' hands?
A. If a liquidator is appointed through the court process -
Q. Correct.
A. ‑‑the conduct - future conduct and control of the assets the company place in the hands of a liquidator, correct.
Q. Yes.
A. But the liquidator still has to deal with the directors and the directors still have to deal with one another and the directors can still raise all of the disputes that they were raising in the voluntary administration in a liquidation is the point I'm making. In response to you putting that there would be no further dispute between these two if it was put in the hands of a liquidator I am saying that - I don't agree with that.
Q. Look, the point is the potential for dispute is lessened when the process is taken out of the directors hands to that degree.
A. I don't agree.
Q. Surely you agree with that?
A. I don't agree with that.
Q. You don't agree with that?
A. No. I've led enough liquidations to know that that is not the case."
The plaintiff identifies a number of reasons why the defendant should have known immediately that a VA was not an appropriate vehicle for resolution of the issues and that the administrators may not have been validly appointed, being:
1. the defendant should have known that the company was not insolvent or likely to become insolvent at some future time within the meaning of s 436A of the Corporations Act;
2. concern about home warranty insurance, builder's licences and credit ratings is not a proper basis for a VA; and
3. the documents were signed by George Elias rather than the director, Tony Elias.
The plaintiff's point is that even if the defendant had not been made aware that a VA was the proposed course prior to it actually happening on 9 February, he became aware later that day. The plaintiff submits that a competent practitioner would have realised immediately that the appointment of Messrs Pleash and Albarran was or may have been invalid and not in the plaintiff's best interests.
The defendant agreed that the company could be taken out of administration if the appointment was shown to be invalid: s 447A of the Corporations Act. It is thus not in issue that proceedings could have been instituted to seek orders terminating the VA if the appointment of the administrators was invalid in the sense of being contrary to law.
In cross-examination, the defendant agreed that the company was "balance sheet solvent". Indeed he sought advice from counsel later in the year (December 2009) on the basis that the company was abundantly solvent. He agreed that to place the company into VA it was necessary that the directors make a resolution that the company is either insolvent or likely to become insolvent.
However, he said that having regard to his instructions as to the inability of the directors to agree on anything, they were at a deadlock and that satisfied him that if they could not agree then they could not agree on paying creditors. That is, it was the defendant's view (at the time), that s 436A of the Corporations Act was satisfied and that there was a proper basis for the directors resolution that the company was insolvent or likely to become insolvent. I should also add that the documents circulated on 6 February 2009 also make reference to insolvency as the basis for the CVL.
It may be that the administrators took a similar view, since in a letter from the solicitors for the deed administrators, Etienne Lawyers, dated 18 August 2009, the solicitors state:
"The premise for [the] Company entering into voluntary administration was as a direct consequence of the irretrievable breakdown in relations of the Shareholders Groups that would result in the Company not being able to pay its debts as and when they fell due."
In one of the earlier cases arising out of the dispute between the shareholders, In the matter of Joe & Joe Developments Pty Ltd (subject to a Deed of Company Arrangement), [32] Black J observed at [14]:
"It appears, from Mr Cook's evidence, that the Company was placed in voluntary administration rather than liquidation both because of issues raised by the Kossaifi family and the Elias family as to the extent of their respective contributions and in order to seek to avoid any adverse consequences for insurance requirements for builders licences in respect of Messrs Kossaifi and Elias that might have arisen from a liquidation."
However, his Honour went onto say at [23]:
"The proposition that the Company was solvent at that point would not be inconsistent with a valid appointment of an administrator on the basis that the directors believed the Company was likely to become insolvent at some future time. That belief would have been justified by the debt then due, or likely to become due, to the Australian Taxation Office, the delays in the sale of the remaining units and the fact that the directors, Mr Kossaifi and Mr Elias, would plainly not be able to reach agreement as to any other means to realise the Company's assets to pay that debt. That position is consistent with Recital F of the DOCA which recorded that the Company was balance sheet solvent, but did not have the cash resources to pay its debts at the time it was placed into voluntary administration."
I am examining the conduct of the defendants in 2009 for the purposes of the plaintiffs' action against them in 2020. The question I am addressing is whether the defendant should have known that the appointment of the administrators may have been invalid. The defendant says that there was a proper basis for VA, which is consistent with the observations of Black J.
However, when assessing the defendant's position immediately after the appointment, regard must be had to what on his own evidence he had been told. That is set out in his evidence as to his conversations with Mr Cook and the plaintiff on 9 February 2009. There is a strong impression from that evidence that the reason for the VA was that a liquidation might affect the credit rating, builder's licences and home warranty insurance and that the directors wanted to give settlement another chance. According to the defendant, that was confirmed by the plaintiff in his subsequent conversation with the plaintiff. [33]
In my view, based only on what he had been told on 9 February and, based on what he knew, the defendant may have had cause to consider that the appointment of administrators was invalid.
In the matter of Warwick Keneally as administrator of Australian Blue Mountain International Cultural & Tourist Group Pty Ltd (admin apptd), [34] a case in which the administrator had sought to use the process of administration as a means of facilitating the resolution of a dispute between the shareholders, Black J observed at [46]:
"I do not doubt that Mr Keneally genuinely held the aspiration expressed in this letter of seeking to facilitate a settlement between shareholders. There were nonetheless difficulties with the approach which he adopted. The first is that Pt 5.3A of the Corporations Act was not introduced as a mechanism to resolve shareholder disputes and its use for that purpose would tend to expose the Company, its creditors and its contributories to a risk, which these proceedings amply demonstrate, that substantial costs would be incurred and no benefit would be achieved if shareholders could not in fact resolve their differences, or indeed if the costs incurred by the administrator then become an obstacle to such a resolution."
Further, a resolution of the directors to appoint an administrator is not valid if the directors' opinion that the company is insolvent or likely to become insolvent, is not held genuinely or in good faith. [35] Of course, on the plaintiff's version of events, he protested to the defendant on 9 February that he did not consider that the company was insolvent. On this version, it should have been immediately apparent to the defendant that the administrators could not have been validly appointed as the director did not hold the view required by s 436A of the Corporations Act and any resolution could not reflect the view required under s 436A. Instructions from a director that an administrator had just been appointed when the director voting on the resolution did not hold a genuine view as to insolvency would have put any competent insolvency practitioner on notice that the appointment of the administrator may have been invalid.
Having said that, any competent practitioner would also have been required to consider whether the company was likely to become insolvent and the defendant addresses this in his evidence.
Finally, the plaintiff maintains that there was no resolution passed on 9 February 2009. Mr Cook and the defendant dispute this. The plaintiff also raises an issue as to who signed the resolution and whether it might be George rather than Tony Elias. It could not be in dispute that the directors must actually pass a resolution. [36]
Plainly, if there was no resolution and the defendant knew this, then the appointment was invalid. It might also be said that it would have been obvious to the administrators that they had not been validly appointed.
In the discharge of their duty of care, the administrators were required to satisfy themselves immediately after appointment that the resolution of directors under s 436A authorising the appointment appears on the face of the minute which records it to be a valid resolution, and also that the instrument of appointment appears on its face to be valid. [37]
It is not necessary to make any findings about the resolution other than that I do not accept that it was only signed by the plaintiff three weeks later in the presence of the defendant.
I have already considered the other matters raised by the plaintiff as to possible invalidity. In my view, there may have been a reasonable argument to the effect that the appointment of administrators was invalid. That is, if the defendant had turned his mind to the question (as he did later in the year) he might have considered that there was a basis for challenging the appointment.
However, there are perhaps a number of difficulties with the proposition that the defendant should have advised the plaintiff that the VA could and should be set aside in terms of the outcome of this case:
1. The defendant would have been providing advice which, at least in part, he had already provided, being that the plaintiff should be proceeding by way of liquidation.
2. The defendant would have been advising the plaintiff, being the person who attended the meeting on 9 February and accepted the advice of HC, that a VA was not suitable to achieve his aims. The defendant would be advising the plaintiff that, having accepted the recommendation of HC, he should now reverse course. He would have needed to advise the plaintiff that that process would necessarily involve approaching the Court for the appropriate orders and that process would involve some expense and might be opposed by the Elias Interests. Indeed, at least until later when the Elias Interests decided that they did not like the VA process, it would have been likely that the Elias Interests would have opposed any orders that the VA be terminated.
3. The proposition that the plaintiff would have agreed to change course so quickly after appointing the administrators is difficult to accept. This is particularly so in circumstances in which, according to Mr Cook, the plaintiff had been advised by HC at the meeting on 9 February that the process would take about a month and would cost $50,000. Further the plaintiff had been speaking to the Elias Interests over the weekend prior to 9 February and thought he could come to a deal quickly with the Elias Interests. By 11 February, he was back trying to negotiate a deal through his accountant without reference to the defendant.
4. Whilst the plaintiff repeatedly said that he was completely reliant on the defendant and just did what he told him to do, his conduct demonstrates otherwise (as I further discuss later in this judgment). Having decided to pursue a VA, having regard to the better outcome in terms of home warranty insurance, builders licences and credit rating and on the basis that he would be quickly doing a deal with the Elias Interests, I doubt that the plaintiff would have immediately changed his mind and instructed the defendant to pursue Court proceedings to set aside the decision.
The plaintiff bears the onus of proof on causation: CLA s 5E. As set out in CLA s 5D, it is necessary for the plaintiff to establish factual causation, that is, that "but for" the alleged failures of the defendant, he would not have suffered the harm of which he complains.
The plaintiff could only be successful if I accept that, if advised to immediately reverse course (that is, to apply to terminate the VA) by the defendant on 9 February, the plaintiff would have accepted the advice and would have instructed the defendant to challenge the validity of the appointment, that is, by issuing more proceedings in the Supreme Court and the VA would have been terminated.
The proposition seems unlikely. On Mr Cook's version, there were reasons why the plaintiff and the Elias Interests decided to proceed by way of a VA. I do not accept that, having voluntarily appointed HC as administrators on the morning of 9 February, the plaintiff would have simply decided to reverse that decision on the evening of 9 February based only on the advice of the defendant, in circumstances in which that might entail more litigation.
Further the plaintiffs were not the only persons involved in the decision.
There is no evidence which would suggest that the Elias Interests were having second thoughts by the evening of 9 February or were likely to be convinced by any application made by the plaintiffs.
In addition, as is demonstrated by HC's response to the plaintiff's handwritten facsimile of 17 February 2009 asking HC to freeze any further work, HC would not be merely responding to requests from the plaintiff.
In the circumstances, even if the defendant should have recognised that there were grounds for challenging the appointment of Messrs Albarran and Pleash as administrators and should have advised the plaintiff to change course as early as the afternoon of 9 February, the plaintiff has not established causation arising out of the asserted second period of breach.
The plaintiffs thus fail on the second allegation of breach.
On 19 February, the plaintiff attended the creditors meeting with the defendant. The plaintiff says that he did not understand that was going on but was reassured by the defendant that he should let the VA finish and it would only cost $10,000. The defendant denies saying this.
On 23 February 2009, the defendant wrote to Mr Cook and Mr Albarran asking about the meeting planned for the next day and saying he would like to attend. He also said that he had just met with the plaintiff and irrespective of what agreement is reached, they were to administer it under a DOCA but, if no agreement was reached, they were to liquidate. He also referred to the plaintiff's claim of around $500,000 against his opponents and that the plaintiff wanted it ventilated through the administration/liquidation.
It is again notable the plaintiff denied saying he was owed $500,000, suggesting he had no reason to say that. He gave inconsistent evidence about providing instructions to the defendant along the lines set out in the 23 February letter. On the plaintiff's version he did not ask the defendant to raise the $500,000. Of course, on the plaintiff's version, he had never raised any issue with the administrators that required investigation by the administrators. There are a number of documents quite contrary to that assertion, such as the letter from HC dated 18 February 2009 and the email from Mr Cook dated 24 February.
On 23 February 2009, Mr Cook wrote to the defendant confirming that he had spoken to the representative of Mr Elias. He suggested that he was in the process of drafting an agreement as the basis for the DOCA.
On 24 February 2009, Mr Cook wrote to all concerned regarding deferment of the detailed investigations into the affairs of the company on the basis that an agreement would be reached and noting that the administration was subject to strict timeframes such that the administrators must continue with their investigations.
The defendant responded to this email referring again to his meeting with the plaintiff to the effect that in the absence of any written agreement which could form the basis of a DOCA by that day, the administration should continue and if it meant that the company was to be placed into liquidation then it should be. I accept that this document tends to support the defendant's evidence that he had obtained instructions from the plaintiff about the options and that the plaintiff wished to pursue the deed proposal but absent agreement the company would be placed into liquidation. The defendant was plainly aware that one alternative was that the company could slip into liquidation if a DOCA was not finalised.
By this stage, the plaintiff had engaged his own accountant, Mr Khoury and the Elias Interests had engaged Mr Georgiou to assist in drafting an agreement.
Mr Georgiou responded to Mr Cook on 25 February 2009, suggesting that he had fine-tuned an agreement to both shareholders' satisfaction and that could form the basis of a DOCA. The agreement is set out in a letter from Harrington McNamara which is headed "without prejudice" and dated 20 February 2009.
On 25 February 2009 at 9.42pm, Mr Georgiou circulated a copy of the outline of agreement between the shareholders, two copies of which had been signed by the Elias Interests and the plaintiffs. In cross-examination, the plaintiff agreed that he had signed the letter from Harrington McNamara dated 20 February 2009 acknowledging the agreement.
There is an email from Ms Cavill of 25 February to the defendant summarising the position reached having regard to the agreement which includes the following:
"The company will be wound up by a members vol liq or deregistration depending on the company's balance sheet, within three months of today.
The allegation of impropriety has been cleared up between the shareholders and resolved."
On 26 February 2009, Mr Cook wrote to the defendant noting that the plaintiff had signed off on the proposed agreement but, as a matter of caution, he wanted confirmation that the plaintiff was comfortable with the proposal. By email dated 26 February 2009 at 12.46pm, the defendant replied saying that Ms Cavill had spoken with him and he was happy with it.
Mr Cook must have reviewed the proposed agreement because at 6.05pm he circulated an email identifying a number of issues with the proposed agreement. At 6.41pm, he circulated another email stating that, based on the proposal received, it seemed that the directors had generally reached agreement and that a resolution in the form of a deed of company agreement may be possible. Mr Cook identified a number of issues with the proposed agreement and proposed that the forthcoming major meeting of creditors be adjourned to allow these issues to be sorted out.
On 27 February 2009, Mr Cook sent another email, this time providing an estimate of the amount that would be necessary to satisfy all creditor claims. He said funds of $585,000 would be necessary to satisfy all creditor claims. This included the sum of $200,000 for HC's fees and the ATO debt of $260,000. He said that alternative sources of funding should be pursued, being funding by the shareholders as proposed or sale of one unit to fund the creditors' claims.
On 1 March 2009, the defendant responded to Mr Cook querying whether the amount of $50,000 referred to in the estimate of creditor claims included his costs (of $45,000), raising the shareholder loans and then saying, "We agree with the course recommended by Tim in his email below".
This issue was taken up with the plaintiff in cross-examination. The plaintiff said he never saw the proposal set out in the email of 27 February 2009. He was quite clear in stating that he should have been told about it, his solicitor should have done it, it was a good option and he would have accepted it but he did not see it. He said:
"Q. Your evidence would be, as you say in paragraph 94 of the affidavit, that the administrator's proposal was a good option?
A. WITNESS: Yes, now I see. I know in my affidavit was a good option. I could accept that but I didn't see it."
On 2 March 2009, the administrators issued their further report to creditors pursuant to s 439A of the Corporations Act. Included in the report was a table showing the estimated realisable value under a DOCA or a liquidation. It was as follows:
ERV ERV
DOCA Liquidation
$ $
(1) (2)
Assets
Cash at Bank 111,603 111,603
OSR Cheque 2,336 2,336
Plant & Equipment Unknown Unknown
Interest in Land (inc. GST) 2,618,000 2,189,000
Total Assets 2,731,939 2,302,939
On 9 March 2009, Mr Georgiou responded saying that the Elias Interests and Kossaifi parties have been instructed and have commenced discussions with respective banks to obtain a preliminary letter of offer for the raising of $250,000 to meet the expected costs of winding up the company to continue with the DOCA.
On 5 March 2009, Mr Georgiou wrote to the plaintiffs regarding calculations for the receiver, including projections for Joe & Joe Developments.
On 6 March 2009, Mr Khoury wrote to Mr Georgiou making what was termed a final proposal.
On 10 March 2009, there was a meeting of creditors at HC.
The defendant attended the meeting. Mr Georgiou attended on behalf of Tony Elias. It was proposed by the defendant on behalf of the plaintiff that the company execute a DOCA as outlined in the administrators' report to creditors dated 2 March 2009 with the amendments as proposed by Khoury Taxation Services dated 6 March 2009. The resolution was carried unanimously.
On 23 March 2009, Stephen Brown from Etienne Lawyers circulated a draft of the DOCA based on the proposal put to the creditors at that meeting. Mr Brown specified that the deed was based on the proposal that the shareholders would receive the assets of the company in exchange for them placing the company in funds to meet the creditors and that the proposal is based on instructions that the company is solvent on a balance sheet basis.
The defendant responded by email dated 25 March 2009, circulating a marked-up version of the DOCA with amendments. The amendments were generally accepted and a further amended DOCA was provided and circulated on 25 March 2009 by Mr Brown.
On 26 March 2009, Justin Thornton of Marsdens on behalf of the Elias Interests responded with comments on the draft DOCA and requested amendments. It was said that the DOCA should reflect the agreement represented in the letter from Harrington McNamara dated 20 February 2009.
On 30 March 2009 at 10.30am, Stephen Brown circulated an email noting that that day was the last day to sign the DOCA and if not signed by 5.00pm the company would be in liquidation and the administrators would have no option but to take control as liquidators.
The plaintiff attended at the offices of the second defendant on 30 March 2009. He says that he does not recall receiving any advice from Ms Cavill about the DOCA on that day. The defendant circulated responses to the questions and issues raised based upon his clients instructions by email dated 30 March 2009 at 7.14 pm. It was proposed that the parties approach Mr Brown in the morning with amendments with a view to executing the DOCA no later than lunchtime.
On 30 March 2009, the proceedings were again stood over until 25 May 2009 by consent. There is a handwritten file note of the defendants as to the meeting with the plaintiff on 30 March 2009.
On 31 March 2009, there was a further telephone conversation between the plaintiff and Ms Cavill regarding the terms of the DOCA followed by an email from Ms Cavill requesting some further amendments. Marsdens also circulated their own proposed amendments and Ms Cavill again spoke to the plaintiff regarding the amendments.
Later that day on 31 March 2009 the DOCA was signed.
The plaintiff recalls meeting with the defendant the day before he signed the DOCA. He says in his affidavit that he had the following conversation:
"Mr Amirbeaggi: 'This is the agreement we are working on with the Elias Family. This is the DOCA. This is where it sets out that you are to receive residential unit lot number 4 and commercial lots 12 and 15.'
As he said this he pointed to specific wording on the papers. We continued.
Me: 'What do you mean by DOCA?'
Mr Amirbeaggi : 'That is the agreement that you will have with the Elias family. When Lot 4 is transferred to you will have to pay $250,000. When we do the second transfer of lots 12 and 15, you will have to pay another $150,000. The Elias family will have to pay the same amounts when they get their lots transferred to them.'
Me: 'Why do we have to pay so much money. We owe less than $450,000, why do we have to pay $800,000?'
Mr Amirbeaggi : 'If you pay this amount of money to the administrator he can do split and transfer the properties quickly and we can have the surplus back. You have to pay the extra money for him to work quickly. It will take about one month. The DOCA also says that our fees are to be paid by the Company'."
He refers to receiving some advice from the defendant that day but not about a number of important matters in the DOCA. He says that he first read the DOCA a couple of days after he signed it and rang the defendant as follows:
"Me: 'I was reading the agreement last night. I saw something about a share buyback. What does that mean. I don't understand it.'
Mr Amirbeaggi: 'I don't understand it either. But that is the way they do it, so we go with it.'"
It was put to the plaintiff, consistent with the defendant's records, that the lawyers became involved in drafting the terms of the agreement into a final DOCA form (with which he agreed). However, he disagreed with the proposition that he had a very lengthy meeting the day before the DOCA was signed with the defendant and Ms Cavill. He said he never saw the DOCA until he signed it. He denied having a conversation with Ms Cavill on the day that the DOCA was signed.
It is a curious feature of this evidence that the plaintiff is able to be so specific as to what was said to him and not said to him by the defendant on 30 March 2009 when he consistently maintained throughout cross-examination that he did not understand what the was being told and was not given advice.
The question of the company being placed into liquidation was always an option which was at the least considered available during the process of administration. Not only was it referred to in the defendant's email to HC dated 9 March, but it was also considered at the meeting of creditors on 10 March 2019.
A representative of the ATO attended at the meeting and raised various issues. The minutes record:
"The Chairman noted that the other option is that a deed of release be executed and that the Company be wound up so that the ATO has no further issues with lodgements. Mr. Yeo noted that he had no objections to this. The Chairman advised that there are 21 days in which the DOCA is required to be executed following which the Company is automatically wound up if the DOCA execution does not take place. The Chairman also noted that as a tax clearance will be required the ATO will have all possible methods of ensuring that outstanding tax debts are settled.
Mr Amirbeaggi and Mr. Georgiou also noted that they had no objection of the liquidation should the DOCA not be executed."
There does not appear to be any dispute that if the DOCA had not been executed or, more specifically, if the plaintiff's had declined to execute the DOCA, then a liquidator would have been appointed.
Indeed, most recently in In the matter of Antqip Hire Pty Limited (subject to deed of company arrangement) (in liquidation), [38] Rees J had occasion to consider the interplay between the process of administration, a DOCA and liquidation at [42]-[44] as follows:
"Can a company wind up voluntarily notwithstanding a DOCA?
A company can resolve that it be wound up voluntarily as long as the DOCA remains on foot at the time. Part 5.3A of the Corporations Act, 'Administration of a company's affairs with a view to executing a deed of company arrangement', is essentially focussed on three phases in the life of a company under administration. The first phase concerns the administrator investigating the affairs of the company and convening a meeting of creditors to decide the company's future, including whether to enter into a DOCA (Divisions 1 to 9). The second phase is life under a DOCA (Division 10). The third phase is life after, or instead of, a DOCA including automatically transitioning to a creditors' voluntary winding up (Division 12) …
The power to transition from administration to a creditors' voluntary winding up is, unsurprisingly, vested in the creditors. The intention was that, where an administration is incapable of saving a company, the transition from a voluntary administration or DOCA to a winding up should be efficient and not involve a new court process. Division 12 achieves this by deeming steps to have been taken towards a winding up, as soon as a stage is reached in the administration where winding up emerges as the only realistic alternative: [Explanatory Memorandum for Corporation Law Reform Bill 1992] at [614]-[615]."
In my view, the option of allowing the administration to end and a liquidator to be appointed (consistent with ss 435C(2) or (3) of the Corporations Act) was something that a competent insolvency practitioner would have considered, particularly having regard to the original views of the practitioner that the aims of the plaintiffs were ideally achieved through a liquidation. It is plain from the contemporaneous records that the defendant was aware that ending the administration by not executing the DOCA was something that could be done.
Mr Linden opines that the process of VA was not the most cost-effective way of realising the plaintiff's interest in the company. Further, he points to additional costs being incurred by the deed administrators and says that there was greater prospect of shareholder disputes arising during the deed administration. Whether he is correct, HC's own contemporaneous analysis, as set out in the report to the creditors, was to the contrary.
The plaintiff faces the same difficulty as arose earlier in the period. His case is necessarily dependant on his assertions in his affidavits and oral evidence that he relied on the defendant exclusively; that he just did as the defendant advised; that he had little comprehension of what was going on.
The plaintiff denies receiving advice that the contemporaneous records suggest he received. The plaintiff asserts that the defendant failed to advise him about critical aspects of the DOCA, despite the file note to the contrary.
The plaintiff points to deficiencies in the DOCA. There may be some merit in the plaintiff's analysis but the deficiencies are raised just as another reason why a competent insolvency practitioner would have advised the plaintiff not to proceed with the DOCA. It is not necessary to demonstrate any deficiencies with the DOCA for the purposes of establishing that the alternative course was available to the plaintiff. The alternative course had been raised in the defendant's correspondence, had been raised with the plaintiff and was the subject of the report to creditors by HC.
The problem with the plaintiff's approach on the third period of breach is that the proposition that the plaintiff would have accepted advice not to sign the DOCA is inconsistent with almost everything that was happening at the time that the DOCA was signed. In my view, the following points detract from the proposition that the defendant should have advised the plaintiff not to sign the DOCA and the plaintiff would have then accepted that advice with the result that the company would have been placed into liquidation:
1. The critical parts of the agreement were agreed by the plaintiff and the Elias Interests through their accountants and signed off by the plaintiff.
2. The plaintiff relied on his accountant, not the defendant, for advice as to funding the first and second tranche payments. The plaintiff suggests that the defendant should have known that the plaintiff would have difficulty making the payments but the plaintiff must have obtained advice from his accountant about this. He was not relying on the defendant to advise him as to funding difficulties.
3. There is no contemporaneous record or suggestion by the plaintiff to the defendant that he would not be able to comply with his obligations under the DOCA.
4. The defendant believed that the deed administration would quickly come to an end (presumably provided that the parties complied with their obligations under the deed).
5. HC had set out in writing in its report to creditors the benefits of proceeding by way of DOCA rather than liquidation. On the plaintiff's case, just like the alleged first breach, the defendant should have been informing the plaintiff that HC was incorrect and that he should not be accepting what HC was saying (being that there would be a better return through voluntary administration than liquidation).
By this stage, the plaintiff and the Elias Interests had abandoned their counterclaims based on misappropriation of funds. As set out in the DOCA, the process involved equal payment of funds by the shareholders to the deed administrators followed by a transfer of the units to the shareholders. This is what the plaintiff wanted in the first place, that is, a splitting of the assets between the shareholders.
It was the plaintiff who worked out the agreement through his accountants with the Elias Interests. Both the plaintiff and the Elias Interests were keen to bring the administration to an end, no doubt to put an end to the incurring of substantial costs when they believed they could work out their own agreement.
I do not accept that a competent specialist insolvency practitioner would have advised the plaintiff not to sign the DOCA, having regard to the information available to the defendant at the time and the instructions which had been provided by the plaintiff.
As I said at the commencement of this judgment, the plaintiff's general grievance may be understandable because when he first went to see EMC in mid-2008, the debts of the company were small and the value of the assets was high. The main debt was to the ATO (and that ended up being a lot less than originally thought) and some smaller amounts to contractors (which the plaintiff protested were related to the Elias Interests).
There can be no doubt that both the plaintiff and the Elias Interests would have been much better served if the Elias Interests had consented to the appointment of a liquidator as proposed on behalf of the plaintiffs to EMC in mid-2008. However, the Elias Interests never consented to the Court-appointed liquidator process.
Neither the plaintiffs nor the Elias Interests adopted the course which they had agreed upon at the mediation in 2008. The original settlement thus fell over. That left the plaintiff, who was the prime mover in ending the relationship, to apply to reinstitute the proceedings, which he did.
The Elias Interests would not agree to the Court-appointed liquidator but ultimately agreed to a voluntary liquidation which the defendant then organised, except that HC advised an alternative approach. Again, it might be said with hindsight that it is unfortunate that the plaintiff did not act on the suggestion of Mr Cook at the meeting of 9 February and seek the advice of the defendant prior to signing up for a VA.
The plaintiff agreed to the VA without the advice of the defendant. Once that process had commenced, the reversal of the process was not so simply achieved. It would have involved more litigation. The plaintiff thought he could end the process by reaching a deal with the Elias Interests which he set about doing, not through the defendant, but through his accountant. He provided instructions directly to HC to cease all work in the administration but HC responded saying they could not do that.
The plaintiff says that the defendant should have known that the Elias Interests would never do a deal or comply with their obligations, but it was the plaintiff, an experienced property developer who had a long-term relationship with the Elias Interests, who kept going back to them to do the deal. HC recommended a course which proved to be totally unsuitable to achieve the plaintiff's aims. I assume that HC would suggest that it did so based on what it was told by the plaintiff and George Elias on 9 February 2009.
The plaintiff was plainly averse to paying fees to anyone. He refused to pay EMC's fees until, after a lengthy battle, threatened with bankruptcy. He did not pay the defendant's fees for two years. The idea, which is central to the plaintiff's case, that the plaintiff would have instructed the defendant to incur further costs in seeking to reverse the decision he had made on 9 February or that the plaintiff would have instructed the defendant to allow the company to slip into liquidation, contrary to the agreement that he had reached and in the face of the opinion of HC as to whether the DOCA or liquidation would produce the best return, seems an unlikely proposition.
The plaintiff is thus not entitled to succeed on his third allegation of breach.
The plaintiff thus fails on each of his allegations of breach.
The plaintiff relies on expert evidence. The experts were not required for cross-examination and there was no challenge to the content of their reports.
The defendant's response on loss is that the plaintiff has not demonstrated that, had he received the advice that he alleges should have been given, he would have taken a different course. He submits that the only conclusion that the Court could reach is that the counterfactual would have involved the parties taking similar paths to that which they did, involving an open-ended course of contested litigation with no proof that the Elias Interests would have consented to a liquidator or not objected to the decision-making of the liquidator.
It is important not to confuse the issue of causation with the issue of assessment. The plaintiff bears the onus of establishing causation. Once duty, breach and causation are established then the Court will assess damages. The plaintiff also bears the onus of establishing his loss but the Court will not shy away from undertaking the assessment task because of difficulties in estimation. [39]
I have already made factual findings on causation in respect of the second and third period of breach. I am now undertaking a hypothetical assessment of damages on the counterfactual being that the company would have been placed into liquidation rather than a VA. The plaintiff must establish that his claimed losses have been caused by the defendant's tortious conduct or breach of contract.
In assessing damages on the counterfactual, I am really adopting the approach set out in Sellars v Adelaide Petroleum [40] as follows:
"On the other hand, the general standard of proof in civil actions will ordinarily govern the issue of causation and the issue whether the applicant has sustained loss or damage. Hence the applicant must prove on the balance of probabilities that he or she has sustained some loss or damage. However, in a case such as the present, the applicant shows some loss or damage was sustained by demonstrating that the contravening conduct caused the loss of a commercial opportunity which had some value (not being a negligible value), the value being ascertained by reference to the degree of probabilities or possibilities. It is no answer to that way of viewing an applicant's case to say that the commercial opportunity was valueless on the balance of probabilities because to say that is to value the commercial opportunity by reference to a standard of proof which is inapplicable." (Emphasis in original.)
In Commonwealth v Amann, [41] Deane J observed that there are cases where considerations of justice or the limitations of curial method render ultimate findings, about what would have been or will be, impractical and inappropriate. In those cases damages must be assessed on another basis, that is, with reference to the probabilities of the possibilities of what would have happened or would happen, rather than on the basis of speculation that probabilities would have or will come to pass and that possibilities would not or will not.
In a case such as this, the Court is assessing the value of the loss of a commercial opportunity, that is, the value of the prospect of obtaining a better outcome from a liquidation rather than voluntary administration. Unless I consider that such a value is completely speculative such that only nominal damages would be awarded, I would assess the alleged loss having regard to the possibilities and contingencies. Despite the difficulties in assessment, I would still place a value on the loss of opportunity.
On the plaintiff's case, the assessment of damages is simple. I would just have regard to the expert evidence relating to the likely legal and accounting fees associated with the liquidation. I would then assume there would be no other expenses and calculate the difference between what their net benefit would have been compared to what it was, again having regard to the assumptions as to the value of the land in 2009.
There are a number of problems with that approach in this matter, including:
1. the loss that might be sustained must depend upon any findings that are made as to what would have occurred but for the conduct of the defendant or an assessment for the contingencies;
2. it is highly unlikely that any liquidation would have proceeded in the manner suggested having regard to the general attitude of the Elias Interests, the general approach of both the plaintiffs and the Elias Interests to paying any fees and allowing professionals to charge for their services and the likelihood that there would be ongoing shareholder disputes; and
3. the valuations relied on by the plaintiff were undertaken without regard to any possible diminution arising if sold as part of the liquidation process.
It can be said that if EMC had continued to pursue the orders which were sought in the original proceedings filed in 2008, then both accounting and legal fees would be substantially less than they turned out to be. It might also be said that if the defendant had been instructed to continue to pursue a Court-appointed liquidator or voluntary liquidation in early February 2009, the accounting fees and legal fees would be less.
By 31 March 2009, HC had already incurred fees of $115,000. Although there was no focus on what happened after 31 March 2009 on the hearing of the matter, in any damages assessment I must have regard to the contingencies. The plaintiff's case is that legal fees under $10,000 would have been incurred. Even Mr Stern says that this estimate is on the basis that the Elias Interests would have consented to a Court-appointed liquidation and that there would be no disputes.
At no stage prior to 9 February did the Elias Interests consent to a Court-appointed liquidation. They had resisted that idea. They asked that the proceedings be stood over on a regular basis while further attempts were made to resolve the matter. Prior to 9 February, they only consented to a CVL. Further, it was the Elias interests who did not comply with their obligations under the deed in respect of the first tranche payment and sought a variation. It was the Elias Interests who sought to challenge HC. If the Elias Interests had consented to a Court-appointed liquidator either in 2008 or early 2009, it may be that events might have turned out differently.
Having said all of that, I am prepared to accept on the counterfactual that both legal and accounting fees would have been considerably less. After all, according to the plaintiff, not only did HC render fees of around $700,000, but the lawyers appointed by it also incurred a similar sum.
The plaintiff's best case on loss of value may be $493,000 plus interest. That assumes that a Court-appointed liquidator would have quickly and efficiently realised the assets at full market value with minimal legal fees and no dispute leading to an increase in liquidator's fees. I do not accept this would have occurred. There is a real risk that the liquidator would have been forced to incur costs and fees dealing with issues raised by the Elias Interests and the plaintiff.
In his affidavit of 12 February 2019, the plaintiff sets out his view of his 2012 balance sheet. He includes shares in the company valued at $1.4 million. This balance sheet also includes value of other real estate (after deduction of debt secured) in the sum of $1,117,000. Of course, he had not paid the fees owing to EMC. He did not pay those fees until March 2013.
As he says in his affidavit of 12 February 2019, he went on to develop 8 strata units at 12 Freda Place on behalf of Banda Developments. He says he had cash flow problems and the development was stalled because of those cash flow problems. He also says that in 2014 he was forced to sell four units at North Liverpool Road, Mount Prichard for the sum of $1.3 million. He estimates that the land is now worth $2.5 million and thus he has suffered a loss of $1.2 million as a result of being forced to sell.
He then refers to the loan secured against his Earlwood home and over the Banda property and as well as over the Mount Prichard property. He calculates interest and brokers fees in respect of the Earlwood property at $638,219.82 and makes similar calculations in respect of the Banda property in the sum of $111,943.50 and the Mount Pritchard property in the sum of $218,700.
Proceeding by way of a Court-appointed liquidator in 2008 might have been a much simpler process than VA and the DOCA. There were complexities to the DOCA and perhaps some inconsistencies, but the plaintiff's approach to assessment of loss rather ignores everything that happened post 31 March 2009 and attributes the cost of all borrowings to that which occurred in February to March 2009.
I accept that the plaintiff was required to borrow to fund the first tranche of $250,000. I accept that if the matter had proceeded by way of a liquidation and the liquidator had sold the assets as part of the liquidation for the purposes of paying all creditors (which, other than accounting or legal fees, were minimal), then the plaintiff would not have had to pay into a fund and would not have had to borrow to pay that amount. On the counterfactual, as sought by the plaintiff, the plaintiff would be entitled to recover interest on the borrowings but only for a limited period.
Again, it is relevant to understand what happened after 31 March 2009. The plaintiff did pay the first tranche and was in a position to pay the second tranche of $150,000 by August 2009. However, by this time, a problem had emerged in that the Elias Interests had not paid the first tranche in accordance with the terms of the DOCA but had sought a variation. They then considered that the result of that variation was that they had paid both the first and second tranches, which the administrators disputed.
By August 2009, the administrators had formed the view that to bring the DOCA to an end, either party could make a payment of $470,840.14 or contribute 50% of that total liability. On receipt of that amount, the administrators would transfer the remaining titles to Lots 12 and 15 to the plaintiffs and Lots 16 and 18 to the Elias Interests.
The defendant wrote to the plaintiff on 18 August 2009 to that effect. The plaintiff then responded with his own proposal. The defendant then provided further advice to him regarding the discrepancy between his earlier advice to him as to the operation of the DOCA and the plaintiff's instructions as to how he wished to approach the matter.
Ultimately, the administrators commenced their own proceedings against the company, seeking directions and orders for the termination of the DOCA on the basis that both the plaintiff and the Elias Interests were in breach of their obligations under the DOCA.
During the period 31 March 2009 to 31 October 2009, administrators expended a total of 365.95 hours at a total cost of $129,433. The administrators sought confirmation of their fees from the Court.
In December 2009, the defendants called on the administrators to attend a settlement conference for the purposes of enabling transfers of the sum of $772,100 and to enable completion of the DOCA. Etienne Lawyers responded pointing out that the shareholders had been in breach of the DOCA since 23 June 2009 and taking issue with the complaints and criticisms of the administrators' conduct. Whilst all this was taking place, the defendant was endeavouring to deal with the plaintiff's objections to the EMC assessment of costs. When that was concluded and the plaintiff did not pay, EMC served a bankruptcy notice on the plaintiff, claiming a debt in the amount of $51,149.16.
On 17 May 2010, the parties finally reached agreement in respect of the proceedings pursued by the administrators. The settlement essentially involved the parties acknowledging the sum of $1.1 million paid to the administrator should be regarded as contributions to the deed fund constituted by the DOCA and that the plaintiffs and the Elias Interests should be regarded as having complied with the obligations under clause 26.8 of the DOCA.
By January 2011, administrators' legal fees amounted to $600,000. These fees had been paid from the assets of the company. Issues continued to arise into 2012.
The plaintiff terminated its retainer of the defendant on 7 December 2011 and the plaintiff's current solicitors commenced to act for the plaintiffs in late December 2011.
This brief summary of everything that occurred in the years following March 2009 leads to considerable doubt that, if the company had been placed into liquidation, the process would have been over within months with minimal expense. I do not accept that a different process would have led to both the plaintiffs and the Elias interests being entirely compliant and dealing with the liquidator quickly and efficiently.
Further, it is appropriate to compare the plaintiff's land value estimates with that of HC as set out in the report to creditors of 10 March 2009. Notably HC considered the estimated realisable value based on the DOCA and based on liquidation. HC estimated the value of the land at a figure approximate to the Bird opinion relied upon by the plaintiff in these proceedings (if the DOCA process continued), but estimated the land value on a liquidation basis only at $2,189,000.
HC engaged the services of a registered valuer, Murray Liston. Mr Liston informed HC that the properties, if sold separately under auction on a forced sale basis, may realise $1.99 million. That is significantly less than the value of the land as claimed by the plaintiff and valued by HC on sale through the VA process.
The basis of the plaintiff's assessment of damage is the valuation report of Kohler Bird dated 26 July 2018. Mr Bird was retained to provide a retrospective market value of the properties. He defines market value as the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arms-length transaction after profit and marketing and where the parties had each acted knowledgeably, prudently and without compulsion. His approach to market value appears to be the same approach as identified by HC in its report to creditors as to the market value of the land for the purposes of a DOCA.
A difficulty with the plaintiff's assessment is that he relies as a starting point not on the liquidation value but on an estimate made without regard to the fact that the property would have been sold through the liquidator.
The option of buying each other out was agreed to at the mediation and neither party pursued that option. If the matter had proceeded by way of liquidation, the property would likely have been sold in 2009 as a liquidation sale. Of course, this was right in the middle of the GFC.
As such, the plaintiff's assessment of loss based on what would have been the return to shareholders by way of liquidation is based on assumptions which have not been made out and are unlikely.
Doing my best to value the loss of opportunity, I would apply a contingency of 30% on account of the possibilities that disputes would have arisen, and the likelihood that legal and liquidator's fees would be higher. Further, any different approach to the valuation of the assets (such as contained in the creditors' report) must result in a further and potentially substantial discount.
In addition, on the counterfactual to that which I have found, and if the defendant's breach occurred during the third period, then the value of the lost opportunity would be further reduced because by 31 March 2019, HC had already incurred fees of $120,000.
As I have said, it is difficult to assess loss based on the counterfactual when I have rejected a number of elements of the counterfactual. Further it is not possible to be precise even on the counterfactual as so much of the assessment is speculative in the sense that I am considering possibilities. However, doing the best I can, I would assess the loss of opportunity to obtain a benefit in the sum $250,000.
This assumes that substantially less would have been spent on legal and accounting fees, but that there still would have been disputes with the liquidator and disputes as to the liquidator's fees. It allows for the prospect that a sale by a liquidator would not achieve the price that an ordinary market value sale would achieve (as suggested by HC in the second report to creditors). It assumes much higher legal fees than predicted by Mr Stern.
I accept also that the plaintiffs would be entitled to interest on the amount borrowed to pay into the deed fund but interest would be limited to the time when the plaintiff received the benefit of the property which was transferred to him. This would not be a significant sum.
In the end, even on the counterfactual, I do not accept that the plaintiffs would have been entitled to recover any of these amounts. Whether the remedy is in contract or tort, they are too remote. It would not have been in the reasonable contemplation of the defendant that if he failed to comply with his contractual obligations, the plaintiff would have been forced to sell other properties years later and would have difficulty financing other projects through another company, such that he would be forced to borrow at high rates.
Some of the losses are more than a step removed from the transaction. It is difficult to see the basis on which the plaintiffs could recover finance costs associated with a different development company in developing a different property, some years after 2009.
The proposition that the plaintiff could recover a capital gain which may have materialised years after the tortious conduct in respect of another investment property held by him at the time and even for five years after the tortious conduct seems absurd.
Report of Alex Linden, 10 July 2018, para 1.6.
Report of Alex Linden, 10 July 2018, para 1.12.
[2014] NSWSC 1444.
Affidavit, Farshad Amirbeaggi, 6 January 2019 at para 100.8.
[2015] NSWSC 937.
Kazar v Duus (1998) 88 FCR 218; [1998] FCA 1378; In the matter of Lime Gourmet Pizza Bar (Charlestown) Pty Ltd (formerly under administration) [2015] NSWSC 244 at [21]-[22].
Wagner v International Health Promotions Pty Ltd (1994) 15 ACSR 419.
Deputy Commissioner of Taxation v Portinex Pty Ltd (2000) 156 FLR 453; [2000] NSWSC 99; Correa v Whittingham (2013) 278 FLR 310; [2013] NSWCA 263 at [143]-[146].
[2020] NSWSC 487.
Fink v Fink (1946) 74 CLR 127 at 134-135, 143; [1946] HCA 54; Sellars v Adelaide Petroleum at 349; Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 83; [1991] HCA 54 ("Commonwealth v Amann").
(1994) 179 CLR 332 at 355 (Mason CJ, Dawson, Toohey and Gaudron JJ); [1994] HCA 4.
(1991) 174 CLR 64 at 118; [1991] HCA 54.
(1854) 9 Ex 341; 156 ER 145.
(2013) 46 WAR 281; [2013] WASC 356 at [109] (quoting Ryan J in GEC Alsthom Australia Ltd v City of Sunshine (Federal Court of Australia, Ryan J, 20 February 1996, unrep)).
[2012] NSWCA 82; [2012] Aust Torts Reports 82-101 at [24].
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Decision last updated: 03 July 2020