Lykouressis v Lykouresis & Ors [2009] NSWSC 80 | Case summary

14 Dionysios swore two affidavits in these proceedings before he died. They have been read without objection. 15 Dionysios was born in 1930 on the Greek island of Zakynthos. He came to Australia in 1950. He married and had one child, Athena. He was later divorced and never remarried. 16 In 1955, Dionysios purchased two blocks of vacant land at Sanctuary Point in New South Wales. In about 1960, he started to drive taxis and some time later he acquired a taxi cab plate. He drove taxis for about forty-four years until compelled by ill health to cease driving. Thereafter, he leased his taxi to Legion Cabs. As at 2004, Dionysios owned three properties: the two properties at Sanctuary Point and his home at Enmore. All were unencumbered. 17 Dionysios first met Michael, a distant relative, in about 1976 and they became friends. Dionysios was a frequent visitor to Michael's home and was on good terms with Irene, Regina and Joanna. 18 From about 1978, Michael carried on an excavation business through two companies, both of which went into liquidation. From time to time, Dionysios lent money to Michael to help him through financial difficulties. The amounts were not more than $2,000 and Michael repaid the loans to Dionysios over time. 19 In August 2004, Michael established another excavation business under the business name "JL Excavations and Demolitions". The proprietor of that business shown in ASIC's records is Joanna, then a schoolgirl aged sixteen years. Joanna says, and I accept, that the business was in fact carried on by Michael and that she signed whatever he asked her to sign in relation to the business. 20 In August 2004, Dionysios suffered a stroke while in Greece and spent two months in hospital. On his return to Australia he was no longer able to drive safely and was required to surrender his licence. He ceased work as a taxi driver. 21 There is no doubt that Dionysios was somewhat depressed that he was no longer able to work. He was anxious to find another business activity. In that frame of mind, Dionysios began to discuss with Michael going into business together. 22 According to Dionysios, he and Michael agreed that they would form a company to conduct an excavation business. Dionysios would borrow the money for the working capital and Michael would operate the business. Dionysios says that on a number of occasions he discussed with Michael at Michael's house that he would mortgage his Sanctuary Point properties and his house to lend to the excavation company. He says that Michael assured him that the loan to the company would be repaid in three or four years, that he, Michael, would make the repayments on the mortgage until it was repaid, that the company's loan would be repaid first, and that they would then expand the business and buy more machinery. 23 According to Dionysios, he had these discussions at Michael's home almost every weekend in late 2004 and early 2005. He says that Irene was usually present during these discussions. Regina, who was married with two children and lived not far away, was also often present as she was visiting her parents with the children. According to Dionysios, Joanna was also present on some of these occasions but she would "come and go" . All discussions with Michael, according to Dionysios, took place openly with the members of Michael's family present. 24 According to Dionysios, Irene participated in the discussions to the extent that she strongly suggested on a number of occasions that Dionysios and Michael should buy a shop rather than go into the excavation business. He says that Regina and Joanna agreed with this suggestion, saying that a food franchise would be a better business because all of the family could work in it. 25 Dionysios says that he rejected these suggestions for a food business as he had no experience in such a business whereas Michael was experienced in excavation. 26 Irene, Regina and Joanna firmly deny that they were present and heard any of the discussion between Dionysios and Michael about going into business together, setting up a company, and Dionysios borrowing money to lend to the company on the security of his properties. They agree that they came to know of the existence of Enterprises, but they say that as far as they knew Enterprises was a company established by Michael to conduct his excavation business. They say that they did not know that Dionysios was a director of Enterprises or that he had any financial interest in the company. 27 Michael gave no evidence at all as to whether any discussions between himself and Dionysios took place in the presence of his family and as to what, if anything, he had told them about Enterprises. 28 I do not accept Irene, Regina and Joanna as witnesses of credit, for reasons which I shall explain later: see paras [52]-[67]. I am unable to accept anything they say which is not corroborated by other reliable evidence or which is not otherwise inherently probable. 29 All three endeavoured to suggest that they were submissive to the authority of Michael and did not question whatever he said. They endeavoured to suggest that they were not interested in his business affairs. I reject those suggestions. 30 From my observation of their demeanour in the witness box, Irene, Regina and Joanna are each strong-willed and assertive. They had no difficulty in putting forward boldly their own positions, even in the unfamiliar environment of the courtroom. Each of them, particularly Regina, struck me as a person who would want to know whatever was going on in the family and would not be slow to voice, loudly, her own opinion, whether or not asked. 31 For example, Regina said that in April 2005 Joanna told her about the deposit of a cheque for $22,000 drawn on Enterprises' account into the account of JL Excavations. Regina said that she later asked Michael where the money came from: T 85.34-86.11. 32 The evidence of Dionysios that Irene, Regina and Joanna were present at various times during his discussions with Michael and that they participated in those discussions is untested by cross examination and must be treated with caution. However, having regard to the characters of Irene, Regina and Joanna as demonstrated in the witness box, to the admitted frequency of Dionysios' visits to the house in which Irene and Joanna resided at the time and to which Regina was a frequent visitor, I find the evidence of Dionysios inherently probable and the denials of Irene, Regina and Joanna inherently improbable. 33 Accordingly, I find that Irene, Regina and Joanna were at all times aware that Enterprises was a company set up by Dionysios and Michael to conduct an excavation business together, that Dionysios had borrowed a substantial sum of money on the security of his properties to lend to the company, and that that money was to be used for the company's business purposes. In particular, I reject the evidence of Irene, Regina and Joanna that they believed that Enterprises conducted its business for the benefit of Michael alone. 34 Michael had established at least two companies previously in order to conduct his excavation business. Both companies failed. Regina had assisted him with the bookwork of those companies. I am satisfied that Irene, Regina and Joanna have a basic understanding of a company structure and knew that Dionysios, as well as Michael, would be a director of Enterprises. 35 In accepting the evidence of Dionysios on this aspect of the matter, I have not overlooked the criticisms of his credibility made by Mr Spinks. I will come to these criticisms in the course of the narration. 36 From November 2004 to about March 2005, according to Dionysios, Michael drove him around to various building sites and on these occasions told him about the excavation work which he could get for their company. Dionysios does not say that Irene, Regina or Joanna was present on any of these occasions. 37 Enterprises was incorporated in January 2005, the directors being Dionysios and Michael. Dionysios had 40% of the shares and Michael 60%. 38 In early March 2005, Dionysios applied to Perpetual Trustees Australia Ltd for a loan of $640,000, to be secured on his properties. On 11 March 2005, Michael opened an account in the name of Enterprises at the Chester Hill branch of the ANZ Bank. The bank manager gave evidence, which I accept, that by an oversight within the Bank at the time of opening the account, Michael was permitted to be sole signatory to the account, instead of co-signatory with Dionysios as the other director. 39 On 15 March 2005, Dionysios' loan application for $640,000 was approved. 40 On 16 March 2005, Dionysios and Michael attended upon Mr J. Kartsounis, solicitor, in order to have the loan transaction completed. Mr Kartsounis gave evidence which was careful and precise. He had made contemporaneous diary notes from which he had refreshed his recollection in preparing his affidavit evidence. I accept his evidence as entirely reliable. 41 Mr Kartsounis quickly ascertained that it was Dionysios who was the borrower and that he should therefore advise Dionysios separately. Thereafter, Michael was not present when Mr Kartsounis gave advice to Dionysios. Dionysios explained to Mr Kartsounis that he was borrowing in order to lend to Enterprises so that the company could buy the earthmoving equipment which it would need for its business. Mr Kartsounis advised Dionysios to take a charge over the company and a personal guarantee from Michael, in order to secure the loan. Dionysios gave instructions to prepare such documents. 42 On 24 March 2005, Dionysios and Michael attended Mr Kartsounis' office and executed a Deed of Charge and Guarantee. I will return to their provisions in due course. 43 On 30 March 2005, the nett proceeds of Dionysios' loan, $632,927.82, was deposited into Enterprises' account at ANZ Chester Hill. None of this money was used for the company's purposes. Enterprises never commenced any business, nor did it purchase any excavation equipment or any other asset. 44 On 31 March 2005, a cheque for $8,000 on Enterprises' account, drawn to cash, was presented and paid. The sole signatory on the cheque was Michael. No beneficiary of the proceeds has been identified. Michael has not explained the purpose for which the money was used. 45 On 4 April 2005, a cheque for $5,900 on Enterprises' account, drawn to cash, was presented and paid. The sole signatory was Michael. Regina identified the other writing on the cheque as Michael's. No beneficiary of the cash has been identified. It may be assumed the Michael received the cash. No explanation for the payment has been given. 46 On 11 April 2005, a cheque for $22,000, drawn in favour of "JL Excavations and Demolitions" (the business name of which the registered proprietor is Joanna) signed by Michael alone was given by him to Joanna and deposited by her into the account of JL Excavations. Michael gave two inconsistent explanations for the transaction, virtually in the same breath: T 214.6-.33. 47 First, he said that when Dionysios came back from Greece - at a time unspecified - he did not have any money so Michael lent him $22,000, which he drew out of the JL Excavations' account. Then he said that he caused $22,000 to be paid out of Enterprises' account into the JL Excavations' account because Dionysios owed him money and he was in effect repaying himself. In other words, one explanation for the withdrawal from Enterprises' account is a loan to Dionysios, another explanation is that Michael was repaying himself for a loan already made to Dionysios. For reasons which I will explain in more detail later, I regard this contradiction in Michael's evidence as an example of his willingness to say whatever occurs to him on the spur of the moment which he thinks will advance his position. I do not regard him as a witness of any credit. I do not accept either explanation. 48 The evidence does not show what became of the sum of $22,000 after it was deposited by Joanna into the account of JL Excavations. It does not appear to have been used to pay creditors of JL Excavations, as will emerge shortly. It is a fair inference that the money was used for the benefit of Michael and his family. 49 On 14 and 20 April 2005, cheques for $10,000 and $20,000 respectively on Enterprises' account, drawn to cash, were presented and paid. The sole signatory was Michael. No beneficiary of the funds has been identified. 50 Several cash withdrawals from the account of Enterprises were made between 15 and 21 April 2005. The withdrawals were made by use of a credit card. The evidence is that Dionysios did not have a credit card which he could have used to withdraw that money. It is a fair inference that it was Michael who made the withdrawals. 51 On 21 April 2005, Dionysios and Michael left Australia to go to Greece. Dionysios returned on 24 June 2005, and Michael returned in late August 2005. Between 21 April 2005 and Michael's return to Australia, Irene, Regina and Joanna between them withdrew from Enterprises' account cash totalling $70,475. They were able to do so because Michael had left a full cheque book for Enterprises' account with Regina in which he had signed all cheques in blank. He says that he did this so that, while he was in Greece, Regina or Irene could pay any of his creditors who came to his home asking for their debts to be paid. 52 In her affidavit evidence, Regina said only that Michael had left her with a cheque book full of signed blank cheques, that she had drawn and cashed particular cheques on Michael's instructions, that she kept the cash withdrawn, totalling $21,000, and gave it, together with the cheque book, to Michael on his return. 53 Irene, in her affidavit, repeated this evidence of Regina. She said that she cashed cheques on Enterprises' account only when Regina was unable to do so in compliance with a request from Michael. There were ten such cheques cashed by Irene between 19 May 2005 and 2 August 2005, the first for $10,000, the others for $1,000, $1,500 or $2,000. She says that she kept all of this cash "in safe keeping at my residence" and gave it all to Michael on his return from Greece. 54 Joanna in her affidavit evidence repeated this evidence of Irene and Regina. She said that she had cashed cheques on Enterprises' account when Regina had been unable to do so. She said that she kept all the cash at the family home "for safe keeping" , and that she gave it all to Michael when he returned from Greece. 55 Irene, Regina and Joanna did not say anything in their affidavits to explain what they understood to be Michael's purpose in asking them to withdraw cash from Enterprises' account. In their oral evidence, however, they gave a reason for these transactions. 56 Regina said in cross examination that Michael kept ringing from Greece, telling her to withdraw cash from Enterprises' account, using the signed blank cheques, in order to pay his excavation business creditors who would be coming to their home to collect the money. She said that each time she drew and cashed a cheque it was because her father had told her the amount of cash to be withdrawn and said that he was expecting a creditor to come to the house to collect it. 57 There were at least nine occasions on which Regina cashed cheques, which totalled some $21,000. She said that, in fact, no creditor of her father's ever came to collect payment during his absence, and that she gave the whole of the cash back to Michael on his return. 58 Irene, in cross examination, said that she cashed cheques on the company's account because Michael told her that his excavation business creditors would be coming to the house and making threats if they were not paid. In the space of a few moments she gave completely contradictory evidence. She said that while Michael was in Greece, people came to her house, sometimes two or three times a week, asking to be paid. At first, she that she had given them cash; in the next breath she said that she never gave anyone cash and that she was keeping the money "in case" - apparently, in case Michael's creditors wanted payment: T 160.8-161.4. Irene said that she had kept all of the cash withdrawn from Enterprises' account and had given it to Michael on his return from Greece. 59 Irene was giving this evidence in English, which is not her first language. However, she is fluent in English, although not idiomatic or grammatic. I am satisfied that the contradictions in this evidence are not attributable to a language difficulty. I am satisfied that the contradictions - indeed, the absurdities - in the evidence are the result of a deliberate and clumsy endeavour to conceal the truth. 60 Payments out of Enterprises' account received by Irene, so far as they have presently been identified, amount to $26,545. 61 Irene denied that she deposited any money derived from cashing Enterprises' cheques into her own bank account. On 5 May 2005, a cheque for $5,000 on the account of Enterprises, drawn to cash, was presented and paid to Regina. On the same day, $5,000 in cash was deposited in Irene's bank account. Irene was asked whether that cash came from Enterprises' account. She denied it. She was asked where she got the $5,000 cash deposited into her account on 5 May. She was unable to answer. 62 On 19 May 2005, Irene cashed a cheque on Enterprises' account for $10,000. On 25 May 2005, $6,055 in cash was deposited into Irene's bank account. When asked where that cash came from, she said that she won it at the club or a friend gave it to her. Her evidence was unclear - not because of any language difficulty but because, to my observation, Irene was fabricating as she went. 63 The unreliability of the credit of Irena and Regina is further demonstrated by the admission, reluctantly made by Irene in cross examination, that when she and Regina together filled out an application for a credit card from the Commonwealth Bank, they deliberately falsified Irene's financial information in material particulars. 64 Irene admitted that she used cash from Enterprises' account to pay household and other expenses. I am satisfied that a substantial part of the sum of $26,545 withdrawn from Enterprises' account by means of cash cheques presented by Irene was used by Irene for her own benefit. 65 In cross examination Joanna said that she cashed cheques on Enterprises' account when Regina was not able to do so. She said that she gave the cash to Regina. Joanna said that Regina told her that she was going to "store" the money because "my dad was going to come back and take the money, or something like that" : T 192.42. I think that disclosure, probably made inadvertently by Joanna, reveals the truth: that Michael told Irene, Regina and Joanna, before he left for Greece with Dionysios, to withdraw cash from Enterprises' account while he and Dionysios were overseas, using the blank cheques which he had left, and that, apart from using some of it for their living expenses, they were to keep the cash and give it to him on his return. 66 Joanna said that she was present on an occasion when Regina gave the "stored" cash to Michael on his return from Greece. 67 As far as the evidence reveals, payments out of Enterprises' account received by Joanna amount to $22,830. 68 As I have noted earlier, Michael elected not to defend the claims made against him in these proceedings. He did not provide an affidavit in support of the Defendants' case. He would not have given oral evidence had Regina not revealed, in cross examination, that Michael had been living in her home for some time and that there was no reason that he could not give evidence to corroborate the evidence of Irene, Joanna and herself. Doubtless wishing to avoid the drawing of an adverse Jones v Dunkel ((1959) 101 CLR 298) inference, Mr Spinks, with evident reluctance, called Michael as a witness. The reasons for Mr Spinks' reluctance soon became apparent. 69 Michael said that, before his departure with Dionysios to Greece in April 2005, he and Dionysios agreed that the money which Dionysios had lent to Enterprises could be used to pay outstanding creditors of Michael's own excavation business, which he had carried on under the name JL Excavations. Michael said that he owed money in respect of a job at Mona Vale. He identified one outstanding creditor by name and said that he had "a couple more" creditors for that job whose names he could not remember. He said that the total amount he owed to creditors for the Mona Vale was "close to $40,000" . He did not say that he owed any other business debts. 70 According to Irene and Regina, the cash which they and Joanna withdrew from the Enterprises' account, totalling $70,475, was for the purpose of paying Michael's creditors, totalling some $40,000, according to Michael. Yet, Irene and Regina never used that cash to pay creditors and Michael said that, having received the cash from Irene, Regina and Joanna on his return from Greece, he did not use it to pay his creditors. He said that his creditors remain unpaid. 71 Michael admitted that the cash which was drawn by Irene, Regina and Joanna from Enterprises' account during his absence in Greece was used by them to pay expenses and other bills. He said that the use of the company's money in this way was authorised by Dionysios. 72 In short, Michael says that everything done with the money lent to Enterprises by Dionysios was done with Dionysios' consent. I reject that evidence, for reasons explained later. He said that when he returned from Greece, he collected from Irene and Regina the cash which they had withdrawn from Enterprises' account, gave half of it to Dionysios and kept the rest for himself, with Dionysios' consent. 73 Michael gave no reason or explanation whatsoever why Dionysios would agree that money, borrowed for investment in a business on the security of Dionysios' three properties and on which Dionysios was paying interest, should simply be given as a gift to Michael and his family. 74 I find that Michael never intended that the cash withdrawn from Enterprises' account was to be used to pay his creditors and he did not give such an instruction to Irene, Regina and Joanna. On the contrary, I find that Michael intended that the cash withdrawn from Enterprises' account be used for the benefit of himself and his family. I am satisfied that he arranged with his family for the money to be withdrawn while Dionysios was overseas and had less chance of discovering what was happening. 75 On 24 August 2005, Michael procured a transfer of $350,000 from Enterprises' account to an account in Greece with the National Bank of Greece. The account was in the names of Michael and Dionysios Lykouresis. On 15 September 2005, Mr Kartsounis learned of the transfer and informed Dionysios, who knew nothing about it. Mr Kartsounis went with Dionysios to the Sydney branch of the National Bank of Greece and arranged to have the transferred funds "frozen" so that they could be repatriated to Enterprises' account in Sydney. Some further information was required from Dionysios in order to effect the "freeze", so that the bank did not immediately implement it. Later that day, Dionysios told Mr Kartsounis that he had earlier been discussing with Michael the possible purchase of a "bus line" in Greece and that perhaps that was the reason that Michael had transferred the funds to Greece. He said to Mr Kartsounis that perhaps he should let the funds be transferred. Mr Kartsounis said that he would wait for Dionysios' instructions. 76 On 19 September 2005, Dionysios attended the Chester Hill branch of the ANZ and arranged that his signature be required on the Enterprises' account as co-signatory with Michael. Dionysios then instructed Mr Kartsounis that he intended to proceed with an investment in a "bus line" in Greece. In a letter dated 20 September 2005, Mr Kartsounis gave the clear and strong advice that it would be most unwise for Dionysios to proceed with the "investment" in the bus line. However, Dionysios gave no further instructions to Mr Kartsounis and no "freeze" on the funds transferred to the National Bank of Greece was effected. 77 Michael gave evidence that, while in Greece with Dionysios in 2005, he opened a bank account with the National Bank of Greece in the joint names of himself and "Dionysios Lykouresis" . The "Dionysios Lykouresis" who was a signatory to the account was not Michael's co-director in Enterprises, but was a person described by Michael as "a distant relative" of his, a resident of Greece who happened to have the same first and last name. This "distant relative" is, as the evidence shows, a deaf-mute. Michael said that his "distant relative" became a co-signatory to the Greek bank account simply because he "happened to be there" and it was "convenient" . 78 Michael said that all of the money in the National Bank of Greece account was withdrawn by him in cash and deposited into another bank account. When asked why he took the money in cash rather than transfer it by cheque, Michael gave confused answers, the purport of which was that it was "easier" in cash. 79 Michael said that the cash withdrawn by him from the National Bank of Greece account was used by him to buy a restaurant business in his own name in Zakynthos. He said that he paid $150,000 for the business, half of it in cash, and that the remainder of the money transferred out of Enterprises' account into the Greek bank account, some $200,000, was spent in the restaurant business. He said that the restaurant business was closed within a year, so that all the money was lost. He said that he does not have any records of the restaurant purchase in Australia. 80 Michael said that he did not tell Dionysios before withdrawing all the money from the National Bank of Greece account, because Dionysios had told him earlier "you do anything you want [with the money]" . As I have noted, this was Michael's stock answer when queried about the use of the money in Enterprises' account. 81 In his affidavit, Dionysios strongly asserted that he had never authorised Michael to use Enterprises' money to buy a restaurant business nor had he authorised it to be used for the purposes of Michael and his family. He asserted that the money was to be used in carrying on the company's excavation business in Australia. 82 I have paid careful attention to Mr Spinks' submission that the evidence of Dionysios should not be accepted: T 246.16-258.16. However, having regard to Dionysios' evident wish to invest in a business in which he himself could participate - a desire confirmed by the independent evidence of Mr Kartsounis - I find Dionysios' evidence inherently probable. 83 Why would Dionysios go to the trouble of consulting Mr Kartsounis as to his secured borrowing for the new business, setting up Enterprises to conduct the business, and taking a charge over that company's assets and a personal guarantee from Michael to secure his loan to the company if he really was indifferent to how the funds which he had lent to Enterprises were being expended, and was content to see Michael fritter away for his own benefit the money which Dionysios had borrowed, secured over his properties including his house, and upon which he was paying interest? In the end, however, that was the submission which Mr Spinks was driven to make: T 256.28-.36. 84 I appreciate the force of Mr Spinks' submission that Dionysios' evidence should not be accepted because he did not tell Athena or his solicitors before commencing these proceedings that he had consented to the "unfreezing" of the payment of $350,000 to Greece. There are several possible explanations for this omission. One could have been that Dionysios, having discovered that Michael did not invest the transferred funds in purchasing a bus line but apparently used the money to buy a restaurant, regarded the whole transaction of withdrawal and expenditure as a fraudulent scheme by Michael from start to finish, so that the particular steps by which the fraudulent design was effected were of no consequence. 85 It is clear that when Dionysios discovered that $350,000 had been taken from the account of Enterprises at the ANZ Bank, Chester Hill, he was very concerned. It is also clear that at that stage he was still prepared to trust Michael and to give him the benefit of the doubt, at least for the time being, in the hope that the money would be invested in a bus line in Greece. Accordingly, Dionysios did not instruct Mr Kartsounis to effect the re-transfer of the funds to Enterprises' account. Shortly afterwards, he attended the Chester Hill branch of the ANZ and arranged to become a co-signatory on Enterprises' account. He then signed five blank cheques on the company's account, three of which he gave to Michael. Dionysios said in his affidavit that these cheques were to be used in Enterprises' business, if necessary, but not otherwise. Again, it appears that Dionysios was still willing to trust Michael that the money in the company's account would be used for the company's business. 86 Dionysios' willingness to trust Michael to invest Enterprises' money in a genuine business activity for the benefit of the company is very far from evidencing a willingness on his part to authorise Michael to "do anything you want" with the money, such as invest it in a restaurant business in the name of Michael alone or make gifts of it to Michael's family. 87 A mere recitation of the evidence given by Michael is sufficient to demonstrate its gross improbability. Most of the evidence he gave about the opening of an account with the National Bank of Greece and the withdrawal of all the money in that account was self-evident nonsense. I gained the overwhelming impression from the way that Michael gave this evidence that he did not care in the least that his evidence was not believed. 88 In the absence of cross examination of Dionysios, and having regard to the inherent probabilities of all the evidence, I am not prepared to find that Dionysios' evidence is generally unreliable.

118 The only claim in the proceedings for which leave under CA s 237 is not required is the claim in deceit against Michael and judgment will be given against him. However, Michael's evidence strongly suggests that he has taken pains to ensure that whatever assets he has or controls are untraceable or unreachable. 119 The family home is in the name of Irene. It may be that Regina and Joanna also have assets. However, although I have found that Irene, Regina and Joanna acted dishonestly in participating in and receiving substantial benefits from Michael's fraud upon Dionysios, the only claims for recovery made against them in the proceedings must fail because the remedy sought was by means of a derivative suit in Enterprises' name and, on the particular facts of this case, leave to bring such a suit could not be given. 120 It is with considerable regret that I have reached this conclusion. My regret is not that the law affords no remedy against Irene, Regina and Joanna. It is that the Plaintiff's legal advisers have, for some reason, ignored the most obvious and direct remedy in favour of pursuing one which was bound to fail. 121 There is in evidence the deed of charge dated 24 March 2005 which Dionysios took over the assets of Enterprises to secure his loan to the company. Clause 7(7) provides that, upon a default by the company, the "creditor" (now Athena) may appoint a receiver to the "secured property" , which is defined in the widest possible terms and would include a chose in action such as a claim by the company to recover compensation under CA s 1317H and a claim to recover equitable damages or compensation for accessory liability under Barnes v Addy . 122 By clause 8(2)(a)(i), a receiver is given the same rights as are conferred on a receiver under the Corporations Act . By CA s 420(2)(k), a receiver is given power to bring proceedings in the name and on behalf of the company. 123 It would have required only the stroke of a pen for Athena to appoint a receiver to Enterprises. The receiver could then have brought claims for accessory liability against Irene, Regina and Joanna in Enterprises' name and on its behalf, without any leave under CA s 237 being necessary. It will be clear from my findings that such proceedings by the receiver would have succeeded. The proceeds of a judgment recovered from Irene, Regina and Joanna would then have been paid by the receiver to Athena pursuant to the charge. 124 The peril in which Athena's derivative claims stood became apparent as Athena's case began to emerge. On the third day of the trial I raised with Athena's counsel the proposition that there may be a far more direct remedy available to Athena than a derivative claim which required leave under CA s 237. Counsel said that he would seek instructions. As I have noted earlier, on the following day Counsel informed me that he would proceed with the causes of action pleaded. 125 It is a fundamental requirement of justice in our Courts that a judge must not only act impartially in the conduct of proceedings, but must also be seen as acting impartially: see Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337, at [81] per Gaudron J; North Australian Aboriginal Legal Aid Service Inc v Bradley (2004) 218 CLR 146, at [27]; Cesan v The Queen (2008) 83 ALJR 43, at [71]. This has never meant that judge must sit mute throughout a trial. A judge must ensure that the real issues in dispute between litigants are brought forward and contested fairly. However, the extent to which a judge may go in achieving this object is sometimes problematic. 126 The resources and abilities of parties to conduct litigation are not always evenly matched. The imbalance is more stark when one of the parties is a litigant in person and the other has competent legal representation. The Courts have recognised that a trial judge has a duty to ensure that an unrepresented litigant understands what is happening in the trial, but has no duty to advise the litigant how his or her case would best be conducted: Malouf v Malouf [2006] NSWCA 83, at [94]-[95] per Mason P. Still less has the trial judge the duty to give that kind of advice to a party who has legal representation. To give such advice would be to abandon even the appearance of judicial impartiality. 127 It is sometimes difficult in practice for a Judge to discern the dividing line between elucidating the real issues for trial, on the one hand, and, on the other, advising one of the litigants how best to conduct his or her case. One way for a Judge to avoid the difficulty is to maintain resolute silence even in the face of the looming possibility that a meritorious claim may fail for lack of insight on the part of the party's legal advisers. Judicial silence may once have been regarded as "a counsel of perfection" : see per Jacobs J in Reg v Watson; ex parte Armstrong (1976) 136 CLR 248, at 294. However, it is no longer commended. In Vakauta v Kelly (1989) 167 CLR 568, at 571, Brennan, Deane and Gaudron JJ said: "It seems to us that a trial judge who made necessary rulings but otherwise sat completely silent throughout a non-jury trial with the result that his or her views about the issues, problems and technical difficulties involved in the case remained unknown until they emerged as final conclusions in his or her judgment would not represent a model to be emulated."

Lykouressis v Lykouresis & Ors

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