Makrylos v Commissioner of Taxation

LEGAL FRAMEWORK 7 A tax payer's assessable income includes "income according to ordinary concepts, which is called ordinary income": ITAA, s 6-5(1).

Trading stock 8 Section 8-1 of the ITAA is contained in Div 8 of Pt 1-3. It provides: (1) You can deduct from your assessable income any loss or outgoing to the extent that: (a) it is incurred in gaining or producing your assessable income; or (b) it is necessarily incurred in carrying on a business for the purpose of gaining or producing your assessable income. (2) However, you cannot deduct a loss or outgoing under this section to the extent that: (a) it is a loss or outgoing of capital, or of a capital nature; or (b) it is a loss or outgoing of a private or domestic nature; or … 9 Tax payers may also deduct from their assessable income an amount that a provision of the ITAA (outside of Div 8) allows. 10 The phrase "trading stock" is relevantly defined in s 70-10(1) of the ITAA to include "anything produced, manufactured or acquired that is held for purposes of manufacture, sale or exchange in the ordinary course of a business". 11 For the purposes of s 8-1, an outgoing incurred in connection with acquiring an item of "trading stock" is not an outgoing of capital or of a capital nature: ITAA, s 70-25. 12 Section 70-15 specifies the income year in which to deduct an outgoing in connection with an item of trading stock, as follows: … (2) If the item becomes part of your trading stock on hand before or during the income year in which you incur the outgoing, deduct it in that income year. (3) Otherwise, deduct the outgoing in the first income year: (a) during which the item becomes part of your trading stock on hand; or (b) for which an amount is included in your assessable income in connection with the disposal of that item. 13 Section 70-35 determines the amount that may be deductible pursuant to s 8-1: (1) If you carry on a business, you compare: (a) the value of all your trading stock on hand at the start of the income year; and (b) the value of all your trading stock on hand at the end of the income year. (2) Your assessable income includes any excess of the value at the end of the income year over the value at the start of the income year. (3) On the other hand, you can deduct any excess of the value at the start of the income year over the value at the end of the income year. 14 Section 70-30(1) provides: (1) If you start holding as trading stock an item you already own, but do not hold as trading stock, you are treated as if: (a) just before it became trading stock, you had sold the item to someone else (at arm's length) for whichever of these amounts you elect: • its cost (as worked out under subsection (3) or (4)); • its market value just before it became trading stock; and (b) you had immediately bought it back for the same amount. 15 The ITAA came into force on 1 July 1997. It embodies amendments made to the Income Tax Assessment Act 1936 (Cth) (1936 ITAA) by the Tax Law Improvement Act 1997 (Cth). Section 6 of the 1936 ITAA defined "trading stock" to include "anything produced, manufactured, acquired, or purchased for purposes of manufacture, sale or exchange, and also includes live stock". In Commissioner of Taxation (Cth) v St Hubert's Island Pty Ltd (1978) 138 CLR 210 the High Court concluded that the old definition was capable of including land. 16 The tax consequences of the disposal of trading stock was then provided for in s 36(1) of the 1936 ITAA. It provided: (1) Subject to this section, where- (a) a taxpayer disposes by sale, gift, or otherwise of property being trading stock, standing or growing crop, crop-stools, or trees which have been planted and tended for the purpose of sale; (b) that property constitutes or constituted the whole or part of the assets of a business which is or was carried on by the taxpayer; and (c) the disposal was not in the ordinary course of carrying on that business, the value of that property shall be included in the assessable income of the taxpayer, and the person acquiring that property shall be deemed to have purchased it at a price equal to that value. 17 The provisions of the 1936 ITAA differ in important respects from the provisions of the ITAA now under consideration, not only in its definition of trading stock but in the tax consequences of its disposal. Before the enactment of the ITAA as now in force, the focus was on the purpose for which the relevant item was acquired. The provisions as now in force contemplate that an item may be held as trading stock for the first time on a date following its acquisition. 18 An item owned by a person will not meet the description of "trading stock" until the purpose for holding the item arises. If that purpose arises at a time after the item is acquired, its deemed value at the time is to be assessed in accordance with s 70-30(1) of the ITAA. The time at which the requisite purpose arises in connection with the item is also significant for the purposes of s 8-1, which specifies when deductions may be claimed for expenses incurred in connection with its acquisition: ITAA, s 8-1. So much appears to be accepted by Mr Makrylos in the preparation of his tax returns. His case on the objection and on this appeal is that he did not hold the Property as trading stock until nearly five years following its acquisition (on his primary case). 19 The amendment to the definition of "trading stock" in 1997 makes it necessary to approach earlier authorities dealing with the concept with some caution. Authorities such as St Hubert's Island are relevant for some propositions but not for others. To the extent that the earlier authorities focus on the state of mind of the tax payer at the time of the acquisition of the subject property, they are inapplicable to a case to be decided under the amended definition. 20 The word "purposes" in s 70-10(1) refers to the subjective state of mind of the tax payer. It is the reason that the tax payer holds the thing in question. For a thing to be trading stock, the reason for holding the thing must involve not only an intention (relevantly for present purposes) to sell the thing, but an intention to sell the thing in the "ordinary course of a business". Whether something falls within the definition of "trading stock" at a particular time therefore depends in part on the tax payer's future intentions as to what is be done with the thing. As discussed below, that intention may be formed without the tax payer having in contemplation the price at which the thing may be sold, to whom it may be sold, or precisely when it may be sold. Moreover, for the thing to be "trading stock" the tax payer need not have in his contemplation, details as to the terms of the sale nor of the particular form that the thing might take at the time of the sale. I will elaborate on those observations after determining the factual issues on Mr Makrylos' case.

ISSUES ARISING ON THE APPEAL 21 The Objection Decision is in the nature of an assessment of Mr Makrylos' taxable income. Section 14ZZO of the TAA applies to such an appeal. It provides that the appellant has the burden of proving not only that the assessment is excessive or otherwise incorrect, but also "what the assessment should have been". It will not be sufficient for Mr Makrylos to merely establish that the Amended Assessments are affected by an error. 22 The tax returns submitted by Mr Makrylos claimed deductions on the basis that the Property converted to trading stock on 18 May 2011 and therefore had a deemed value as at that date, calculated in accordance with s 70-35(1) of the ITAA. 23 By the Objection Decision, the Commissioner concluded that the Property was held as trading stock from the Acquisition Date. That conclusion had the consequence that fewer deductions could be claimed in the FY 2013 and FY 2014 than those claimed by Mr Makrylos. 24 On appeal, Mr Makrylos maintains the primary position that the date on which the Property first came to be held as trading stock was 18 May 2011. In the alternative, he alleges that the Property was first held as trading stock "some time in April 2010". The significance he places on those dates will be explained later in these reasons. 25 There is evidence before the Court sufficient to prove the value of the Property at each of the two dates for which Mr Makrylos contends. The Commissioner does not dispute those valuations. The effect of the valuation evidence is that if Mr Makrylos were to establish that he first held the Property as trading stock either on 18 May 2011 or in April 2010, then he would be in a position to show that the assessments made by the Objection Decision were excessive. He could also fulfil the additional requirement to show what the assessments "should have been". In that event, the appeal would be allowed. 26 Counsel for Mr Makrylos submitted that in the event that the Court make a finding that the Property was first held as trading stock after the Acquisition Date but before April 2010, then Mr Makrylos should be afforded the opportunity to prepare and adduce valuation evidence to establish what the assessments should have been, with the benefit of the Court's reasons supplying the relevant date. I reject that submission. As the tax payer, it is for Mr Makrylos to give a truthful account to the Commissioner and for that matter, a truthful account to this Court of his own state of mind. On an appeal under the TAA, the Court's task is to determine whether Mr Makrylos has discharged his burden of proof on the particular case he has put forward. Mr Makrylos' case must be confined to the arguments that had been put forward at the time of the Objection Decision: TAA, s 14ZZO. 27 If Mr Makrylos does not succeed in the proof of that case, it would be unnecessary for the Court to determine when the Property was first held as trading stock. To do so would be to conduct an inquiry unmoored from the facts alleged by the tax payer once those allegations were rejected on the evidence, so as to find the next favourable case theory for him. 28 Given the test on this appeal, it will not be sufficient for Mr Makrylos to show that the Commissioner was wrong to identify the Acquisition Date as the date from which he first held the Property as trading stock. 29 Evidence of Mr Makrylos' state of mind as at the Acquisition Date will nonetheless be relevant in assessing the evidence as a whole so as to determine whether or not his case has been established to the requisite standard of proof. On his own case, his subjective purpose for holding the Property changed. It will be necessary to consider whether his evidence and submissions about his state of mind as at the Acquisition Date should be accepted so as to properly consider whether there was any such change of purpose and, if so, whether it occurred at the time he alleges. None of that places any burden on the Commissioner to prove that the Property was first held as trading stock on the Acquisition Date. 30 Mr Makrylos' state of mind as at the Acquisition Date will be relevant on an alternate case put forward by the Commissioner which does not depend on the characterisation of the Property as trading stock. It is convenient to defer my explanation and resolution of that alternate case until the conclusion of these reasons. 31 Even if the Court had the discretion to do so, I would not exercise it in Mr Makrylos' favour. That is because I am not satisfied that he has presented a truthful account to the Commissioner or to the Court itself.

EVIDENCE 32 Mr Makrylos relied on the affidavits of the following deponents: (1) Mr Makrylos' (first affidavit sworn on 5 October 2021 and second affidavit sworn on 20 May 2022); (2) Ms Gina Panagopoulos (sworn 15 October 2021); (3) Mr Joe Librio (sworn 14 October 2021); (4) Mr Anthony Jensen (affirmed 15 October 2021); (5) Mr Jeremy O'Donoghue (sworn 14 October 2021); (6) Mr Kevin Dodd (affirmed 15 October 2021; (7) Ms Colette Pascoe (sworn 13 October 2021); and (8) Ms June D'Rozario (affirmed 15 October 2021). 33 The affidavits are to be read subject to rulings.

MR MAKRYLOS AND THE MAKRYLOS GROUP 34 There are references in the submissions and the documentary evidence to a group of entities known as the Makrylos Group. I will at times use the same name to broadly refer to one or more corporate entities or trust structures of which Mr Makrylos is a director or in which he has a financial interest. The business affairs of the Makrylos Group are messy and opaque in the sense that invoices are issued to companies within the Makrylos Group for services that, at least according to Mr Makrylos were provided to other entities or to him personally. In addition, payments were made from accounts held in the various companies' names in circumstances where, at least according to Mr Makrylos, the expense is a personal one. 35 As explained below, the evidence shows that the personal financial affairs of Mr Makrylos as an individual tax payer are intermingled with those of the companies in the Makrylos Group. Mr Makrylos sought to make use of that intermingling to explain away inferences that might otherwise be drawn from the objective records. 36 The affidavit and documentary evidence otherwise support the following preliminary findings of background fact, much of which is uncontroversial. 37 Mr Makrylos confirmed in evidence that he is an experienced property developer. 38 A document prepared on his behalf states the following facts, which I accept to be true: Since 1982, The Makrylos Group have designed and constructed more than 600 properties within the Darwin region, worth in excess of $400 million. Notable developments include the Brinkin Forest Estate in 1992 the LaGrande Residence in 1996, Sovereign Estate in 2000, Aspect residence in 2005 and Waterline in 2007. … 39 The "Sovereign Estate" development project is a medium density residential development situated in close proximity to the Property under consideration in this proceeding. 40 Mr Makrylos is married to Ms Panagopoulos. They each alleged in their evidence that Ms Panagopoulos was responsible for bookkeeping for the Makrylos Group. 41 Between 1986 and 2006, Mr Makrylos and his wife lived for periods of time on two properties connected with developments undertaken by companies within the Makrylos Group, one of them was situated within Sovereign Estate. 42 Between 1983 and 1984, Mr Makrylos purchased land in and around Darwin for the purposes of development, either alone or in partnership with his brothers, with the land held in the personal names of one or other of them. He owned about nine properties during that period. He told the Court that he experienced financial difficulties in the late 1980s and early 1990s resulting in the forced sale of a home unit he then owned to avoid recovery action on a mortgage. He says that he then started using corporate vehicles to conduct land development activities. He said that he became more educated about his business affairs when "Ernst & Young came into town". 43 From the mid 1990s property development was undertaken by a number of entities promoted and controlled by Mr Makrylos including: (1) Kara Developments Pty Ltd of which Mr Makrylos has been the sole director since its incorporation on 26 September 1996. (2) Kalhmera Pty Ltd as trustee for the Makrylos Family Trust, of which Mr Makrylos has been the sole director since its incorporation on 8 September 2004. (3) BKN Trading Corporation Pty Ltd, of which Mr Makrylos has been a director since 18 May 1995. 44 In cross-examination Mr Makrylos confirmed (correctly) that the Makrylos Group is not a legal entity, but rather a business name used for advertising purposes. He confirmed his understanding that the companies were separate legal entities. His evidence in cross-examination on the topic of the Makrylos Group included the following: COUNSEL: But when you do use the Makrylos Group 'is doing a subdivision', for instance, it's your group of companies that you control? MR MAKRYLOS: Makrylos Group - no, Makrylos Group is more like 'hey, that's Michael Makrylos doing the development'. … COUNSEL: … and that group of companies, that's the group with you in control which you run your development business through? MR MAKRYLOS: That basically is Michael Makrylos. 45 As discussed below, the development of the Property in 2013 and 2014 was undertaken pursuant to a joint venture agreement between Mr Makrylos and Kalhmera as trustee of a Family Trust.

CHRONOLOGY BASED ON DOCUMENTS 46 Before turning to Mr Makrylos' version of events, it is convenient to describe the documents upon which the Commissioner relies. They will be referred to through these reasons by the abbreviated names given below. They evidence dealings with the Property from its original purchase, to its subdivision, development and ultimate sale. The documents are not to be considered in isolation. However, they do create a framework for better understanding the affidavit evidence adduced by Mr Makrylos and the cross-examination of the witnesses.

Real estate brochure 47 A real estate brochure shows that the Property was advertised for sale by auction on 14 June 2006 by the vendor's agent, LJ Hooker. It did not sell on that day. The brochure describes the Property as 7060 square metres or 1.75 acres with improvements of two demountable buildings, a shed and a carport.

First Qantec Report 48 By letter dated 27 June 2006 (before Mr Makrylos executed the contract for the sale of the property), Ms Collette Pascoe of consulting engineering firm Qantec McWilliam prepared a report addressed to Kara Developments Pty Ltd, marked to Mr Makrylos in his capacity as director (First Qantec Report) titled "PROPOSED HOUSING SUBDIVISION, LOT 9327, DICK WARD DRIVE, NIGHTCLIFF MINIMUM BUILDING FLOOR LEVEL FOR CYCLONE/SURGE FLOODING". It refers to a request for advice concerning minimum floor levels for the site. It sets out advice in respect of that topic by reference to Planning Scheme Amendment 06/001 relating to "Site characteristics for Residential Subdivision". It states that the author was provided with contour level information relating to the site and surrounding area. It refers to enclosures including "Extract from 1:2500 photogrammetric detail plan showing contour levels", although that enclosure is not included in evidence. It goes on to specify the minimum proposed floor level "for any housing to be built on the subdivision lots". 49 On 3 July 2006, Qantec issued a tax invoice to Kara Developments describing Kara Developments as the "Customer". It contains a project description "Kara Dev P/L - Subdivision Lot 9327 Nightcliff". A "job number" on the invoice matches a reference number on the First Qantec Report. Kara Developments paid the invoice, and the payment is recorded in its general ledgers.

Contract for sale 50 On 30 June 2006, Mr Makrylos executed a contract to purchase the Property. 51 The contract shows that the purchaser was originally named "Kalhmera Pty Ltd ACN as trustee for the Makrylos Family Trust" on the cover and execution pages. Those references appear crossed out and replaced with Mr Makrylos' name. 52 The contract is not subject to any conditions relating to the grant of a subdivision or development approvals, nor is it expressed to be subject to finance. 53 The contract permitted the vendor to remain in possession of the property until 31 January 2007.

Earl James Concept Plan 54 On 4 July 2006, Mr Makrylos met with Mr Kevin Dodd of Earl James & Associates, a surveying and planning services firm. Mr Makrylos gave Mr Dodd a hand drawn sketch depicting the property divided into eight subdivided lots around a cul de sac (Makrylos Sketch). An 800sqm allotment in the top right of the sketch is marked "MM House". 55 By 7 July 2006 (some five weeks before settlement on the sale), Mr Dodd had prepared a digitised version of Mr Makrylos' hand drawn sketch. The digitised version includes the Property location and has the title "Sanctuary Estate - Concept Plan". It names Kara Developments as the client. I will refer to that document as the "Earl James Concept Plan". 56 In 2016 Earl James provided documents and information to the Commissioner, confirming that it had been instructed to "prepare a subdivision concept plan" based on Mr Makrylos' design and confirming that it had issued an invoice for the work. The general ledger for Kara Developments shows that it paid Earl James' invoice from its accounts.

Settlement on the sale of the Property 57 Settlement on the sale of the Property occurred on the Acquisition Date, 17 August 2006. Accounting records show that the balance owing on the purchase price was paid by Kalhmera ($600,000.00) and Kara Developments ($178,880.82). 58 Five days later, Kara Developments paid rates and outgoings associated with the Property in the amount of $2,090.79.

Second Qantec Report 59 On 22 November 2006 the Northern Territory Minister for Planning and Lands amended the NT Planning Scheme (amendment number PSA 06/0001). 60 On 30 January 2007, Earl James (at Mr Makrylos' request) forwarded the Earl James Concept Plan to Ms Pascoe of Qantec. 61 On 4 February 2007, Ms Pascoe provided a further report on the minimum building floor level referring to the amended planning scheme (Second Qantec Report). Like the First Qantec Report, it is addressed to Kara Developments and refers in its heading to a "PROPOSED HOUSING SUBDIVISION". The report refers to options for floor levels of housing to be at certain levels "if this is set as a requirement for residential subdivision of the lot". The options include filling a part of the site, or raising the floor levels of the habitable levels to be developed on the lots.

Librio Sketches 62 Mr Makrylos engaged interior designer Mr Joe Librio of Librio Associates Pty Ltd to prepare floor plan sketches for ten dwellings on the Property based on the Earl James Concept Plan. 63 Mr Librio prepared a sketch in April 2007. I will refer to it as the "April Librio Sketch". It depicts eight allotments around a cul de sac, with floor plans for 10 dwellings within the allotment boundaries. The dwellings have between two and four bedrooms. Among other things, the diagram depicts a central cul de sac exiting to the street, fencing, patios, carports, trees and some set back measurements. No elevations for the dwellings are depicted. 64 On 28 May 2007, Librio Associates issued an invoice to "Kara Pty Ltd" for "various projects", including three items relating to "Dickward [sic] Drive" undertaken between 10 April to 4 May 2007. That invoice was paid by BKN Trading. 65 Also in evidence is a single page sketch depicting a cul de sac with only one of the eight allotments, that being in rear right hand corner of the Property. I will refer to it as the Undated Librio Sketch. Within the allotment is a sketched floor plan for a four bedroom house situated close to the right and rear boundaries of the Property and with a driveway opening to the cul de sac. The floor plan layout appears to be substantially the same as that depicted on the April Librio Sketch.

Ms D'Rozario Letter 66 On 22 February 2007, Mr Makrylos and Ms Panagopoulos met with Ms June D'Rozario, a consulting town planner. By letter dated 9 May 2007 addressed to "Gina Makrylos" and commencing "Dear Gina and Michael", Ms D'Rozario thanked them for requesting her services. The letter continues: PLANNING SERVICES-PROPOSED DEVELOPMENT OF LOT 9327 TOWN OF NIGHTCLIFF - DICK WARD DRIVE Thank you for requesting my service in this matter. I understand from our meeting on 22 February 2007 that you wish to development Lot 9327 as a residential estate. As you know, Lot 9327 is zoned RR (Rural Residential), in which the minimum lot size is 4,000m2. To develop the land as depicted in the concept plan you showed me, it will be necessary to consider either applying for an Exceptional Development Permit (EDP), or to rezoning the land. I have assumed that you wish to subdivide and develop the subdivided lots, rather than to develop the land as one residential complex and unit title the individual dwellings. If this assumption is correct, I do not think that an application for EDP is appropriate because the ultimate development would involve both subdivision and the construction of houses. Consequently, it will be necessary to rezone the land to undertake the proposed development. I suggest that the application should be to rezone Lots 1, 2, 7 and 8 on Earl James' subdivision concept to MD (Multiple dwelling residential), and the remainder of the lots on that plan to SD (Single dwelling residential). I am suggesting that the MD zone be applied to Lots 7 and 8, and that these two lots be in one parcel, because Lot 8 is too small to qualify as a lot within the SD zone. Decisions on rezoning land are made by the Minister for Planning and Infrastructure. It would be necessary to outline in detail how the land is to be developed because speculative applications are most unlikely to succeed. I suggest that a development plan showing how the land would be subdivided and developed for houses would be necessary as part of the application documents. Earl James' subdivision plan, with some amendments, could be a suitable base, as can Joe Librio's design layout. 67 The letter goes on to explain the process of the Minister's decision making. The letter records that Ms D'Rozario had been asked for a fee proposal. The proposed fees are said in the letter to be unlikely to exceed $14,915.00, not including prescribed fees for a rezoning application. The work to be performed is then summarised. The letter concludes: If you would like me to work on this project, please let me know by 8 June 2007. This will allow time to complete the actions required to lodge the application before 1 July, when the new prescribed fee will come into effect. I hope I have given you the information you require. Please contact me if you would like clarification on anything in this letter.

Clouston Landscape Plan 68 On 18 May 2007, Mr Tony Cox of the landscaping firm Clouston Associates provided a detailed landscaping "master plan" depicting a cul de sac named "Coconut Court" and containing the words "Makrylos Group" (Clouston Landscape Plan). An invoice dated 21 May 2007 for that work was addressed to Kalhmera.

Fist Rezoning Application 69 On 12 June 2007 Ms D'Rozario lodged planning application PA2007/0448, being an application under s 13(1) of the Planning Act 1999 (NT) to amend the Northern Territory Planning Scheme (First Rezoning Application). The application is expressed to be made on behalf of Mr Makrylos as the registered owner of the Property. The purpose of the application was to achieve the rezoning of the Property from Rural Residential "to a zone that would enable the land to be developed as an integrated residential estate of 10 dwellings", including six single dwellings on individual lots and four multiple dwellings. 70 The application states: The proposed development would be an integrated estate, designed and constructed to a single design theme. The design and construction of the dwellings, access road, landscaping and services will be undertaken as one coherent whole, to maintain the development concept. The lots resulting from the subdivision will not be sold as vacant sites. The residential product will be delivered to buyers as complete packages consisting of land, house, landscaping, fencing, all utilities, and the estate's common design features of local access road, streetscapes and boundary fences. The owner has previously developed Sovereign Estate in Coconut Grove in the same manner. 71 The application goes on to mount arguments about the pattern of development in the land surrounding the Property, the design features of the dwellings themselves, the design and dimensions of the cul de sac and the general merits of the rezoning proposal. Enclosures include a survey plan of the surrounding area, aerial photograph, the April Librio Sketch and the Earl James Concept Plan.

2008 invoices 72 On 21 July 2008, Darwin Forklift Hire issued an invoice to Kara Developments to move trees from a nursery to the Property. 73 On 6 November 2008, Complete Crane Hire issued an invoice to Mr Makrylos "of BKN Trading Corp" for crane hire at the Property. 74 Mr Makrylos does not dispute that those invoices were paid by Kara Developments or a related entity.

First Rezoning Application accepted 75 By letter dated 17 January 2008 the Minister for Planning and Lands notified Mr Makrylos that the First Rezoning Application warranted further consideration and requested further information. 76 In December 2008 the First Rezoning Application was considered by the Darwin City Council. The Council informed the Minister that climate impacts of the proposal should be considered. 77 The First Rezoning Application was accepted on 18 November 2009, and Development Permit DP09/0930 was issued. It authorised the Property to be developed for the purpose of creating a subdivision of eight lots, two of which were for multiple dwellings, consistent with the proposal in Ms D'Rozario's advice given in May 2007.

First Planning Application 78 On 31 August 2009 a development application was lodged in relation to the Property naming "Makrylos Group" as the "Owner" (First Planning Application). It sought approval for the subdivision of the Property into eight parcels. It also named "Makrylos Group" and an Australian Company Number (ACN 110 883 237) as the applicant, together with naming Mr Makrylos. The ACN number is that of Kalhmera. The contact details include an email containing the name "Gina". The application contains an 11 page Planning Report authored by Ms D'Rozario bearing a logo for "Makrylos Group of Companies" and titled "Coconut Grove Subdivision" dated August 2009. It commences with the words "This report has been prepared for The Makrylos Group". It goes on to name the past development projects of the Makrylos Group in terms extracted earlier in these reasons. 79 The report describes a proposed development in detail, stating its purpose as enabling "the concurrent re-development of an underutilised site within close proximity of shops, services and facilities for the purpose of 6 ground-level homes and 4 ground-level duplex style dwellings". Indicative floor plans and elevations were attached. The report refers to the earlier amendment to the planning scheme authorising its specific use for residential subdivision and goes on to address the amended requirements of the scheme. The merits include that it would "contribute to the range of housing stock in the locality" and provide "housing choice through a range and mix of dwelling types and size". The attached plans include the April Librio Sketch and the Earl James Concept Plan. In each of them, the parcel of land depicted at a top corner of the page contains a floor plan for a four bedroom dwelling that appears to be no different in size than the dwellings depicted on other larger allotments. The floor plan for that house is similar to those of the other allotments and is the same as that shown in the Undated Librio Sketch and the April Librio Sketch.

Change to setback requirements 80 On 2 December 2009 the planning scheme was amended to alter the permissible setback for residential buildings.

2010 valuation report 81 On 23 April 2010, Mr Makrylos obtained a valuation report relating to the Property. The author of the report: (1) states that he has been instructed by Mr Makrylos to assess the market value of the Property for stamp duty purposes only; (2) notes that the owner of the Property had prepared conceptual plans for the development of 16 freestanding villas on the site; (3) states that the valuation was subject to development approval to construct 16 ground level villas for the site, "consistent with the concept plans supplied to us"; (4) assesses the value of the Property at $5,000,000.00; (5) states that with consent the land can be developed as a residential subdivision with a maximum of eight lots, however the author understood that the owner was seeking "to create a community title type development with 16 separate occupancy areas, to be developed with 16 freestanding villas". 82 Attached to the valuer's report is a concept plan depicting the site occupied by 16 dwellings, together with a "typical villa floor plan". The concept plan is marked "for Michael Makrylos".

Second Rezoning Application 83 On 29 April 2010, Ms D'Rozario lodged planning application PA2010/0417, naming Mr Makrylos as the proponent of the application and as the owner of the Property (Second Rezoning Application). It sought an amendment to the planning scheme so as to substitute the existing permission to subdivide into eight lots with permission to "enable the land to be developed as an integrated residential estate containing 16 multiple dwellings". The proposed dwelling was to be as depicted in attached drawings prepared by Kowalski Architects. 84 The "main driver" for the proposal is said to be "worsening conditions for home buyers" due to rising land prices. The application asserts that modifying the estate envisaged by the earlier permit to a 16 dwelling complex would reduce the cost of the land component for each dwelling and "result in a more affordable product". 85 It appears from planning application PA2011/0192 (discussed below) that the Second Rezoning Application was granted in February 2011. The grant meant that the Property fell within Town Planning Zone SD33 (Specific Use) permitting its development to accommodate 16 residential dwellings.

Undated Joint Venture Agreement 86 There is in evidence an undated and unsigned joint venture agreement prepared by Clayton Utz Lawyers. It relates to a development of the Property referred to as "the Project" and is said by Mr Makrylos to have been entered into "in or around April 2010". I will refer to it as the "Undated JVA" without drawing any conclusion at this stage as to when it was prepared or entered into. The parties are Mr Makrylos and Kalhmera. The background recitals state that Kalhmera intends to carry out the Project on the Property. Clause 2 contains a condition precedent that Kalhmera obtain "the Development Permit". The expression "Development Permit" is defined to mean "the development permit and any variations issued in respect of the Project by the Development Consent Authority". Clause 3 obliges the parties to use their best endeavours to ensure that the Project is conducted successfully. Clause 4 states that Mr Makrylos' sole contribution to the Property (financial or otherwise) was the Property, which the parties agreed had the "Land Value". The definition of Land Value contains the words "$[insert]" and so appears to be incomplete. Clause 5 provides that the sale proceeds from the Project are to be applied first in "repayment to Makrylos for the amount of the Land Value".

Cardno Ullman & Nolan Report 87 On 23 July 2010, Cardno Ullman & Nolan Geotechnic Pty Ltd produced a report on a geotechnical investigation of "proposed courtyard villas" on the Property, addressed to Kara Developments (described elsewhere in the report as "client") and marked to the attention of Mr Makrylos. The report concerns the engineering requirements for the design of footings.

Second Planning Application 88 On 23 March 2011, planning application PA2011/0192 was lodged by Mr Steven Conn, naming "Mr Makrylos Kalhmera Pty Ltd" as the applicant and Kalhmera as the "Landowner". It refers to the Property being situated in Town Plan Zone "SD33 (Specific Use)". The planning report contains a name and logo for Kalhmera. It annexes detailed architectural floor plans, elevations and site layout diagrams bearing the name and logo "Makrylos Group".

Development permit issued 89 On 18 May 2011 the Development Consent Authority issued development permit DP11/0306 approving the land to be developed for the purpose of constructing 16 single storey dwellings on the Property.

Events after 18 May 2011 90 On 4 September 2012, planning application PA12/0645 was lodged by a surveyor naming Mr Makrylos as the applicant to create 16 unit titles. That application was approved on 4 October 2012. 91 Construction of the units took place between 2011 and 2012 and settlement on the sale of the units took place on various dates throughout FY 2013 and FY 2014.

A different joint venture agreement 92 In evidence is a document titled "Development Joint Venture Agreement" naming Kalhmera and Mr Makrylos as parties, prepared by HWL Ebsworth Lawyers. It is unsigned. It bears the year 2013 but is otherwise undated. The agreement establishes and defines a "Venture" for the development of the Property. The venturers are Mr Makrylos and Kalhmera. The "Land Value" is defined in the agreement as $5,150,000.00. 93 Clause 9 provides for the proceeds of the sale of the developed Property to be applied in certain priorities, relevantly including payment of the Land Value to Mr Makrylos and the remainder to Kalhmera. The agreement expressly excludes the creation of any estate or interests in the Property in favour of any of the other venturers.

MR MAKRYLOS' CASE 94 It is Mr Makrylos' case that as at the Acquisition Date he intended to construct his primary family dwelling on the Property and that that intention persisted for some years. He asserts that he did not hold the Property as "trading stock" until the date upon which he became legally obliged to commit the Property to the joint venture upon the fulfilment of the condition precedent in the applicable joint venture agreement. He alleges that occurred when Development Permit DP11/0306 was issued on 18 May 2011. 95 Mr Makrylos' alternate case is that he first held the Property as trading stock in April 2010 when (he alleges) the Undated JVA was entered into. 96 It is convenient to now summarise the affidavit evidence-in-chief, beginning with Mr Makrylos as deponent. My summaries of evidence will refer to the key documents by the abbreviations given to them earlier in these reasons.

Affidavits of Mr Makrylos 97 What follows is a summary of the facts asserted by Mr Makrylos in his first affidavit sworn on 15 October 2021: (1) In 1997 he began living at a property owned by his sister at 21 Makryllos Circuit in Tiwi. He married Ms Panagopoulos in the following year and they then resided together at Makryllos Circuit. (2) Between 1998 and 2006 he and Ms Panagopoulos lived for some periods in properties under development by Kara Developments, but they primarily lived at Makryllos Circuit. The living arrangements at Makryllos Circuit were not ideal because other family members were residing there from time to time. (3) Prior to 14 June 2006 he met real estate agent Mr Jeremy O'Donoghue at an open home inspection and advised Mr O'Donoghue that he was looking to purchase a family home. Mr O'Donoghue was the selling agent for the Property. After the Property passed in at auction on 14 June 2006, Mr O'Donoghue contacted him to ask whether he would be interested in purchasing the Property for the vendor's asking price of $825,000.00. (4) In that conversation, Mr O'Donoghue informed him that the Property could not be developed because it was located in a storm surge area. He told Mr O'Donoghue that would not be a concern for him because he wanted to build a family home there. (5) The Property interested him because of its convenient location and because he would be able to build a large family home with a caretaker's residence which would be suitable for him and his wife and to accommodate visitors. (6) He obtained the First Qantec Report because he considered it prudent to confirm, before purchase, the minimum building floor levels for the family home and caretaker's residence were suitable for a surge/flood prone area. He was intending to construct both the house and the caretaker's residence on the site, which he understood at that time would have required subdivision into two allotments. The reference in the report to "subdivision lots" is a reference to those two allotments. (7) He entered into an unconditional contract to purchase the Property on 30 June 2006. If he had been considering the development of the Property he would have made the contract "subject to rezoning". The contract was unconditional because his intention when entering the contract was to build a family home, not to subdivide it for business purposes. (8) After signing the contract and paying the deposit, he noticed that the purchaser details named Kalhmera as the purchaser. He had not advised Mr O'Donoghue that Kalhmera was to be the purchaser. (9) The same conveyancer was acting for numerous buyers who were then purchasing properties from Kalhmera in another development known as Waterline. (10) Improvements on the Property at the time of purchase included demountable buildings with a roof over one of them, a shed, carport, sewerage, electricity and water. The demountables were clean and air conditioned and the services were working. It was his intention to occupy the demountables from the time of purchase as his main residence until construction began on the larger dwelling as a long term residence. (11) On 30 June 2006 he prepared a hand drawn plan of the family home which he intended to construct (Large Home Plan). His intention was to build a two storey house "in a garden sanctuary-themed setting on a large block". He undertook a preliminary cost assessment, which "confirmed the possibility of overcapitalising by building such a large home in this location on the Property and may have been beyond my budget". (12) He then considered another more affordable option of building a smaller house. He decided that the best place to construct a smaller house would be near the right hand corner of the Property. That location would reduce the home's exposure to traffic noise and an easement on neighbouring properties meant that structures near that boundary could not be erected, so ensuring privacy for the family home. Some of the existing adjoining neighbourhood houses had small setbacks to 1.5m, which he also wanted. (13) Whilst he did not have any plans at that time to build anything other than a family home, he thought the location of the Property was sensible as it "maximised the balanced land area for future use". (14) He then met with a planner employed by the Department of Infrastructure, Planning and Logistics concerning his intention to build a smaller home. The date of the meeting is not specified. He was informed during that conversation that the current zoning of the Property meant that the home would need to be set back five metres from the side and rear boundaries (which he viewed as a waste of land). He was informed that the Property would need to be rezoned to a classification that allowed for smaller setbacks, and it would be beneficial if he prepared a plan showing "where the road enters the site and that demonstrated the potential future use of the entire property", not just the area where he intended to construct the family home. (15) As a result of that conversation he prepared a hand drawn sketch (being the Makrylos Sketch given to Earl James on 4 July 2006 referred to earlier in these reasons). (16) He also met with a member of the Darwin City Council's technical staff, who advised him that the Council would only permit a left in/left out driveway for the Property. The date of that meeting is not specified. (17) During 2006 he was engaged with work on the Waterline development where he came to know a town planning consultant, Mr Anthony Jensen. He discussed with Mr Jensen his draft design for "a two-storey home" for the Property" and he told Mr Jensen that it was intended to be his family home. They discussed the inclusion of the caretaker's residence and a shed on the Property. He sought Mr Jensen's view about whether he would obtain approvals for the plan. The plan shown to Mr Jensen is the Large Home Plan depicting the large family home and caretaker's residence. Mr Jensen told him that because the Property was zoned rural residential it could not have more than one dwelling on it, he would therefore need a development permit to allow for the construction of the caretaker's residence to be built there and there would be no certainty of obtaining the permit. The date of the meeting with Mr Jensen is not specified. (18) On or about 4 July 2006 he provided the Makrylos Sketch (depicting the eight allotments on the Property) to Mr Dodd of Earl James to draw up the Earl James Concept Plan in order to enable him to "design a smaller house within those boundaries". He needed an accurate dimension of the block to proceed with the house design. Earl James had previously done work for Kara Developments. Whilst the plan refers to Kara Developments as the client, the work was done for him personally and not for the company. (19) Following settlement on the sale of the Property the vendors were permitted to remain in occupation under the terms of the contract. The vendors vacated the Property in December 2006. He and Ms Panagopoulos then lived at the Property between December 2006 and 26 April 2007 with their dog. (20) He knew Mr Librio from previous work. Between December 2006 and January 2007 he took the Earl James Concept Plan to Mr Librio and asked him to prepare a floor plan design of a smaller house for him. The house could be designed at that time because the Earl James Concept Plan had accurate boundary dimensions. Mr Librio prepared a sketch for the smaller home. The sketch annexed to the affidavit is the Undated Librio Sketch. (21) In January 2007 he asked Ms Pascoe of Qantec to prepare the Second Qantec Report relating to the Earl James Concept Plan. The Second Qantec Report was provided to him on 4 February 2007. (22) He ceased residing at the Property on 26 April 2007 when he and Ms Panagopoulos moved back into Makryllos Circuit for a number of reasons. Ms Panagopoulos was concerned about security at the Property because of "a number of incidents of trespassers and break-ins that occurred" while they were living there. Ms Panagopoulos felt unsafe and did not like moving between the bedroom in one demountable and the bathroom in another. The Property had become infested with toads and they were concerned for the welfare of their dog. The issues had caused arguments between them. It had been their intention to commence construction of the family home on the Property as soon as possible and to live in the demountables for only a short period. (23) On 22 February 2007, he and Ms Panagopoulos attended a meeting with Ms D'Rozario. He explained to Ms D'Rozario that he wanted to build a family home on the Property. He discussed the setback issue and the benefit of the subdivision to accommodate it. He supplied her with the Earl James Concept Plan and a typical house design. Ms D'Rozario suggested that they prepare a development plan showing the actual housing designs situated on the subdivided blocks. As a result of that discussion, Ms D'Rozario and he decided that the best way to deal with this setback issue to construct the family home was to apply to subdivide the Property. (24) Following that meeting, he instructed Mr Librio to prepare a floor plan layout for dwellings. From his discussions with Ms D'Rozario he understood a design layout for all the proposed subdivided blocks would be required for any application to allow a subdivision. The affidavit annexes a document identical to the April Librio Sketch, with the allotment in the rear right corner highlighted and the words "MM House" added in block letter handwriting, with an arrow pointing to the highlighted allotment. (25) He received Ms D'Rozario's letter of advice dated 7 May 2007. As a result of that advice he understood he would have to submit a detailed subdivision proposal for any rezoning application even though at that stage he was only interested in building his own house and dealing with the setback issue. He instructed Ms D'Rozario to proceed with the First Rezoning Application, which she then lodged on 8 June 2007. (26) During 2008 he and Ms Panagopoulos were still looking forward to constructing their home on the Property. In that regard he: (a) gave instructions to his accountant on 27 March 2008 "to update various ASIC records for businesses with the Property's address"; (b) included the Property's address on his 2007 income tax return on 6 May 2008; (c) hired a forklift in July 2008 to move trees they had purchased for the property with a view to establishing the garden before building the house (being the forklift subject to the invoice referred to at [72] above); and (d) hired a crane on 5 November 2008 to load a container on the Property with building materials for the house with the anticipation of starting construction on it (the invoice for which is referred to at [73] above). (27) During the course of 2009 he and Ms Panagopoulos came to the view that it was unlikely that they would proceed with the plan to build their home on the Property. They felt that they could not manage the stress and costs involved in building their home on the Property as they were at the same time, trying to manage the stress of the IVF process. They decided that it would be better for them to live at Makryllos Circuit while continuing in the IVF program. They came to an arrangement with Mr Makrylos' sister for Kara Developments to build a new house on the Makryllos Circuit site pursuant to an arrangement involving the Makrylos Family Trust. Under that arrangement, he and Ms Panagopoulos had an option to purchase that property should circumstances change or the sister otherwise decide to sell that property. (28) The First Rezoning Application was allowed on 9 July 2009. Following that approval he engaged Mr Jensen to prepare an application to obtain a development permit to subdivide the Property in line with the new planning zone permission. That application was submitted on 31 August 2009 and was approved on 18 November 2009, including provision for two metre setbacks. By that time, he had made the decision not to proceed with the plan to build his own home on the Property and was "looking at taking steps to realise the Property to its best advantage". (29) He entered into the Undated JVA in or around April 2010. (30) He obtained a property valuation from Herron Todd White on 23 April 2010 and Ms D'Rozario lodged the Second Rezoning Application on 29 April 2010 to increase the number of allowable dwellings from 10 to 16. That application was approved on 16 March 2011, and the planning application for the development approval was then lodged on 23 March 2011. (31) Between April 2011 and April 2013, he and Ms Panagopoulos lived in a unit at Lyons whilst the new home at Makryllos Circuit was under construction. A planning application relating to that two storey construction is annexed to the affidavit and has a lodgment date of 23 December 2010. An attached floor plan is dated August 2010. (32) The Undated JVA became unconditional on 18 May 2011 when the Second Rezoning Application was allowed, at which time he became "committed to the development of the Property". (33) He entered into the later joint venture agreement because at the time that he entered into the Undated JVA the sale price for each house was estimated to be higher, but there had been a downturn in the market in 2013. (34) He lodged his income tax returns for FY 2013 and FY 2014 on the basis that he acquired the Property for the purpose of constructing his family home. Later the purpose for which he originally acquired it changed and he commenced holding the Property as trading stock on 18 May 2011. He elected to apply the market value of the Property as at 18 May 2011 as its acquisition cost. He claimed a "main residence exemption" from any capital gain arising from "a CGT Event" occurring at the time that he commenced to hold the Property as trading stock. 98 It emerged in the evidence (and was otherwise not disputed) that a main residence exemption may be claimed in the event of a capital gain made upon the sale of an asset used as a main residence for a prescribed period of time. 99 As to Mr Makrylos' evidence that he would not have purchased the Property for the purposes of development without having the purchase contract made subject to rezoning, the parties have agreed the following facts: (1) An application to rezone, and an application to subdivide the Property, could have been allowed or could have been refused. (2) Subdivision of the Property was not necessary in order to enable a caretaker's residence; although a Development Permit would have been required as this use was defined in the Darwin Town Plan as a use requiring consent. 100 In his second affidavit sworn on 20 May 2022, Mr Makrylos deposed: (1) He wanted to explain some further matters to clarify his communications and dealings with consultants and others in 2006 and 2007. (2) A reason for wanting to have a caretaker's residence on a separate title was to enable him to secure finance using the second title as security and so avoid mortgaging the site of the family home. (3) The First Qantec Report deals with building regulations of a kind that are not required to be assessed as part of a rezoning application. He obtained it because he wanted to be sure about the permitted floor levels for the construction of his house. (4) As a result of his discussions with Mr Jensen, he knew that a separate caretaker's house could be built on the Property without rezoning or subdividing, but he was still interested in creating the separate lot to use as security for the finance. He did not intend to build the caretaker's residence immediately because he did not have the funds, but he considered that he would need the extra accommodation for family and wanted to keep open the option of later building it on a separate title. (5) He signed the contract for the purchase of the Property on a Friday. (6) The large family home he originally designed was in the style of a "Queenslander". He reviewed the costs of that building "over the weekend" after signing the contract and decided then that it was too expensive and overcapitalising. An example of the excess cost was the construction of a boundary fence around the home in the middle of the Property, which would be necessary for security. (7) The rear right corner of the Property was the best location for a single storey residence because it caught the prevailing breezes and was away from traffic noise. He wanted the smallest possible setback because that boundary had the benefit of stormwater easement on adjacent land. (8) His conversation with the town planner took place on Monday, 3 July 2006. During that meeting he drew a sketch at the counter showing two lots with caretaker's residence on the smaller lot. He was told by the town planner that a subdivision with the small and large lots would not be permitted. He spoke to the Darwin City Council on the same day in relation to the driveway. (9) He marked the Makrylos Sketch depicting the eight allotments with the initials MM on the allotment in the rear right corner. (10) The plan prepared by Earl James would be used to obtain a reduced set back "whether by waiver or rezoning application". (11) He was overseas between 9 July 2006 and August 2006. When he returned he visited the area around the Property and saw that neighbouring houses had smaller setbacks than those he was seeking to achieve and it was then that he concluded the preferable option would be to apply for a waiver to reduce the setbacks, instead of submitting a rezoning application which was more costly and time consuming. (12) In his first affidavit he had omitted to mention discussions he had with a government planner about the waiver. (13) As an experienced developer, if it had been his intention to develop and subdivide the Property when he purchased it he would have sought to have the contract made conditional on a successful rezoning application, he would not have bought the Property in his own name and he would have proceeded with a rezoning application without delay after the purchase. (14) From this discussion with the town planner he knew that there were two options available for him to reduce the house setback. The first was to apply for a waiver to reduce the permitted setback in current rural residential zone, but that option did not allow him to have a separate title for a caretaker's residence. The second was to rezone the Property so as to place it into a zone that permitted smaller setbacks "such as the SU (Specific Use) zone that eventually was applied for". (15) He did not proceed immediately with preparations to build the home on the Property because he was committed to the Waterline development until the end of January 2007, and that is why he consented to the vendors remaining in possession. (16) In late January 2007 he had a second conversation with a duty planner "when I went to apply for a waiver of the 5 metre setback". He took with him the Earl James Concept Plan and the Undated Librio Sketch. He was informed that the planning scheme was about to be amended such that from 1 February 2007 setbacks for rural residential properties were going to be 10 metres. He was told that it was very unlikely that he would obtain a two metre setback because it was too great a deviation. (17) The 10 metre setback requirement was subsequently revised again to return to a five metre setback requirement. He would have accepted a five metre setback and proceeded with the construction of the dwelling, but a 10 metre setback was not acceptable because it greatly reduced the amount of usable area that his family could enjoy. To illustrate the point he prepared two drawings to demonstrate the difference in land usage between a two metre and a 10 metre setback. (18) It was the discussion with the town planner and the imposition of the 10 metre setback that sent him on the path of applying for a rezoning. The only way to get the reduced setback for the home was to apply to rezone the property, even though he wanted to build his home on the Property together with a caretaker's residence. (19) The Second Qantec Report was obtained to address the storm surge requirements as against a rezoning proposal in the Earl James Concept Plan, which included "secondary storm surge" issues which were not dealt with in the First Qantec Report. (20) He asked Ms D'Rozario to assist with the application for rezoning on 22 February 2007 because Mr Jensen was not then available to assist. 101 It is convenient to defer my summary and consideration of Mr Makrylos' oral evidence in cross-examination and re-examination until after the evidence of the other witnesses is set out.

Ms Panagopoulos 102 In her affidavit (sworn 15 October 2021), Ms Panagopoulos deposed that: (1) She moved into Makryllos Circuit in December 1998 after marrying Mr Makrylos, and thereafter they also lived for short periods in some properties "that were part of developments done by Michael through one of his property development companies". (2) Living at Makryllos Circuit was not ideal because the house belonged to Mr Makrylos' sister and other family members were there from time to time. She and Mr Makrylos were looking forward to owning their own home and having privacy and financial security. (3) She and Mr Makrylos actively started looking for a family home in 2006. She thought that the Property was an ideal location for a family home because it was large and conveniently located and she was looking for a site that could accommodate children and a visiting family. (4) Their intention was to live in the demountables on the Property until the family home was built. They "very initially" intended to build a tropical two storey house with a large garden "but that proved to be too expensive and we subsequently planned for the construction of a smaller house". (5) She and Mr Makrylos moved into the Property after the vendors moved out. They brought their personal possessions and their dog. They remained there until about 26 April 2007 when they moved back to Makryllos Circuit. The reasons for moving from the Property included that she felt unsafe living there and it was inconvenient moving between the demountables including to use the bathroom. At that time, they were keen to start the process for the new family home to be built there. (6) She attended the meeting with Ms D'Rozario, in February 2007. She recalled there was going to be a delay before construction could commence because of issues relating to zoning and setback requirements. (7) Mr Makrylos oversaw the process to obtain the approvals. Initially she was not concerned with the delay because building the family home how and where they wanted was "an important long term family project". (8) She was still looking forward to the construction of the family home on the Property during 2008. She and Mr Makrylos took steps to establish a garden on the Property in the middle of 2008. (9) During the course of 2009 she experienced health issues and was experiencing stress undergoing IVF procedures, which took her interest away from the plan to build the family home on the Property. It became important to focus on her health rather than "worry about the stress and costs involved with the long drawn out process of building a home on the Property". As a result she and Mr Makrylos decided to abandon the plan to build their family home on the Property "and to live in the Makryllos Circuit [sic] for the foreseeable future focusing on our attempt to start a family through my IVF program". (10) Having made that decision they came to an arrangement with Mr Makrylos' sister to "have a new house constructed on Makryllos Circuit". (11) She and Mr Makrylos continued to reside at Makryllos Circuit until April 2011. When the new house at Makryllos Circuit was constructed in around April 2013, she and Mr Makrylos moved in there. 103 Ms Panagopoulos gave additional oral evidence-in-chief to the effect that the Large Home Plan was prepared by Mr Makrylos and herself "in conjunction" just after they first inspected the site, and that it took them two to three days. She confirmed that she commenced living in the Property in December 2006 but said she could not be precise about the date on which she moved out. 104 Ms Panagopoulos denied that she moved out of the Property because the electricity had been disconnected. She denied that electricity was disconnected when she was living there. 105 Ms Panagopoulos said that Mr Makrylos paid all of the invoices for the business by cheque and that she was not at the time a signatory to the company's accounts. She confirmed that she performed the bookkeeping for the business: COUNSEL: For personal expenses of both of yours, where would that - where would those expenses normally be paid from? MS PANAGOPOULOS ---It's a difficult one because we use the company cheques for personal accounts, and then our accountant allocates accordingly. So we go to the dentist. Michael writes a cheque out of the Kara cheque account, you know, for example. That's what we do. That's what we still do sometimes, so, you know, we - but Michael never had credit cards back then, so that was anything. He used to go to the doctor - the GP. He would use his cheque account - Kara cheque account or Kalimera [sic], or whatever he had at the time. 106 Ms Panagopoulos said that Mr Makrylos received invoices, paid them by cheque and provided her with the cheque buts and she would "type them in". She continued: So I would have typed it in. He wouldn't have - he didn't put details. He just put the name of the company. And we've used some of these contractors or professionals we've used on other projects, so I just assumed they were for those projects. 107 Ms Panagopoulos agreed that under that system there was no way for her to know what was a private expense relating to the Property: COUNSEL: But in terms of this house, 125 Dick Ward Drive, there are a whole lot of expenses which were incurred: paying Earl Jones & Associates, Elton Consulting, Librio, Quantec [sic], McWilliams, June D'Rozario & Associates. All of those expenses were paid by cheque by Michael; is that right? MS PANAGOPOULOS: ---Yes, that's correct. COUNSEL: And all of them would have been recognised by the companies as expenses? MS PANAGOPOULOS: ---Because I saw the cheque butt that just said the company name, unfortunately. COUNSEL: Sure, sure? MS PANAGOPOULOS: ---And I just - and we've used those companies on other projects. So, look, during the audit I've seen other mistakes that I've made and they - you know, that suited the ATO because we didn't claim on some other things and, you know, like, it's me, unfortunately. I'm--- 108 Ms Panagopoulos could not recall precisely how long it was between the preparation of the Large Home Plan and the change of intention to construct a smaller house. 109 When questioned about the events between the preparation of the Large Home Plan and the preparation of the Earl James Concept Plan Ms Panagopoulos claimed not to remember exact dates, but confirmed that as at 30 June 2006 the plan was still to build the larger house. 110 As to the plans for the smaller house: COUNSEL: … Other than that sketch that you were involved with, the one dated 30 June 2006, were there ever any other plans at all drawn up in relation to a single house? MS PANAGOPOULOS: ---I - after we decided to build that house, the smaller house at the back, I did - look, I did - I'm a woman. I sketch. I did do little sketches here and there before I went and saw Joe. COUNSEL: Right. But there weren't any other formal designs drawn up ever again for a house, a single house, after the 30 June 2006 one? MS PANAGOPOULOS: ---Joe Librio drew one up and that was the other one. COUNSEL: We discussed that with your husband yesterday and that's described as just a typical house? MS PANAGOPOULOS: ---No, that's - no. Who - - - COUNSEL: That was specifically drawn for the purpose of your own family house? MS PANAGOPOULOS: ---Correct. 111 It was put to Ms Panagopoulos that the smaller floor plan she referred to looked like the other houses in the same subdivision. She responded: No. Look, I will explain a little. That site - and I - and looking at the rest of the houses, it's - it has got other features in it that the other houses don't have, and I will explain to you. There's four living spaces in this house that we've designed. The - it's the living, the dining, the kitchen and the family room. They're all surrounded by glass and that's what I wanted. I wanted them to be surrounded by glass, so when I'm standing in my kitchen I want to be able to look through that family room and look out. You know, I would like to have a family. That's what we bought the site for, so we can - I can see my children playing. I can see them out, you know, well, play - like, you know, cubby house, sandpit. I could actually see if you were driving up that driveway. The other houses don't have that glass all around each - each space, or the living spaces. And to get that tropical feel, we were going to have louvres everywhere and we were going to have high-set louvres to sort of to have that hot air flow out of the high-set louvre and in sort of the louvres to bring the cool air. So it was that tropical - a low-rise, tropical design. We couldn't do the high-rise, so we decided to do a low-rise tropical, and that's what we're aiming for. But I wanted to be sitting in my kitchen looking out. 112 Apart from the floor plan depicted in the April Librio Sketch, she could point to no other drawings to evidence the preparation of any plans other than saying that she did a few of her own sketches. She said that she told Mr Librio that she wanted a "tropical feel" but could not say what detail she had provided to him. She referred to the features of the proposed house, including "the tennis court, the shed, you know, the caretaker's residence which we were, you know, subdividing out". When asked whether she had briefed Mr Librio about all of the things she wanted for the house design she responded: When I went, I had a few little sketches, so I don't know if I actually said to him, you know, but I had some sketches that I - we was trying to get. But I definitely wanted that tropical feel, so I told him that, I remember that much. 113 Ms Panagopoulos said she could not recall exactly what she said to Mr Librio at the time. She agreed that there were no other sketches that she was able to locate in respect of the family home. 114 Ms Panagopoulos said that she would have been involved in the construction of the home to a degree of detail including the plumbing, choice of tiles, placement of power points to control the project as that was her "style". 115 Ms Panagopoulos denied knowledge about how the new house situated at Makryllos Circuit was to be paid for. 116 Ms Panagopoulos said she specifically recalled telling Ms D'Rozario that she wanted to build a family home on the Property. She said that Ms D'Rozario was told that the application for subdivision was being made for the purpose of decreasing the boundary setbacks for the family home. She could not explain why Ms D'Rozario did not refer to that in her letter of advice. 117 Ms Panagopoulos said that the payment of expenses relating to the Property by the Makrylos Group was a result of her mistake because she only had cheque butts and didn't have details, and because the consultants used had also been engaged for other business dealings. She volunteered evidence about missing a deduction that could have been made to the benefit of the companies. 118 In re-examination, Ms Panagopoulos said that the features of the Property she wanted were not depicted on the April Librio Sketch because: MS PANAGOPOULOS: … to get the setback reduction we couldn't show that. We had to show standard blocks. I think, apparently, that's what the town planner told Michael. … COUNSEL: Yes? MS PANAGOPOULOS: ---You have to show standard blocks to get those reductions in the setbacks. We couldn't show the tennis court. COUNSEL: Okay. And why are there other houses on the diagram, to your knowledge? MS PANAGOPOULOS: ---Look, from what my understanding is, June when we went and saw her she said it's - she said it would be beneficial to help us get an approval, possible approval, for this rezoning application if we showed the full - like, showed houses so the neighbours know the impact. COUNSEL: Yes? MS PANAGOPOULOS: ---And, you know, how much landscaping there is, so people know. The neighbours have a chance to understand what's going to be there. COUNSEL: And was it intended or not intended to build the other houses at the time of putting in the rezoning application? MS PANAGOPOULOS: ---No. COUNSEL: No? MS PANAGOPOULOS: ---It wasn't intended, no. It was just our house - - - COUNSEL: And can I just ask you this? MS PANAGOPOULOS: --- - - - and the caretaker's. 119 Ms Panagopoulos said that once rezoning and subdivision was achieved, there was no obligation to build in accordance with the plans.

Mr Librio 120 In his affidavit, Mr Librio confirmed that he was a qualified interior designer. He said that "Kara Pty Ltd" was a company that Librio Associates had performed work for in the past. He deposed that between 19 April 2007 and 26 April 2007 Mr Makrylos engaged him to prepare an interior sketch, identified as the April Librio Sketch referred to at [63] of these reasons. He said that he could not recall any discussions he had with Mr Makrylos with respect to the preparation of the April Librio Sketch. He made no reference to having any meeting or discussion or other communication with Ms Panagopoulos. 121 Mr Librio also exhibited to his affidavit the Undated Librio Sketch. He confirmed that he had drawn the Undated Librio Sketch but could not recall why or when he had done so or any discussion he had with Mr Makrylos about it. 122 In cross-examination Mr Librio agreed that what he had done was prepare a "concept plan" for the Property. He said that work was done "for Kara". He confirmed that the invoice issued for the work included work for multiple items in addition to work relating to the Property. He agreed with the proposition that Mr Makrylos did not say that the work with respect to the Property was a private project. He confirmed he had no recollection of preparing the Undated Librio Sketch. Mr Librio denied that he had marked the April Librio Sketch with the words "MM House". Mr Librio said that after preparing the April Librio Sketch he had no further involvement in the project. 123 In re-examination, Mr Librio said he had no recollection of any discussion he had with Mr Makrylos about the preparation of the sketches.

Ms Pascoe 124 Ms Pascoe is a consulting engineer. During 2006 - 2007 she was an employee of Qantec. One of Qantec's clients at that time was Kara Developments. She deposed in her affidavit sworn 13 October 2021 that: (1) She met with Mr Makrylos "sometime prior to 27 June 2006" to discuss the minimum building floor levels for the Property. During the meeting, Mr Makrylos provided her with a contour and detail plan of a kind that was publicly available. (2) She provided Mr Makrylos with the First Qantec Report concerning the minimum building level for cyclone surge/flooding for the Property. In preparing the First Qantec Report she considered the Primary Storm Surge Area, but not the Secondary Storm Surge Area as those terms are defined in the relevant planning scheme. She provided the invoice for the First Qantec Report on 3 July 2006. (3) Both the First Qantec Report and the invoice were addressed to Kara Developments and marked to the attention of Mr Makrylos because those were the client details Qantec had used "for Michael" and she assumed that the client details were to be the same in this case. (4) She could not recall any discussions that she had with Mr Makrylos about a proposed subdivision and was unable to provide any information about what the "proposed subdivision" referred to in the First Qantec Report involved. (5) On 30 January 2007 she received the Earl James Concept Plan showing a proposed eight lot subdivision of the Property. (6) On 4 February 2007, she provided the Second Qantec Report which considered both the Primary Storm Surge Area and the Secondary Storm Surge Area. Despite reviewing her historical files, she cannot recall why the First Qantec Report did not deal with the Secondary Storm Surge Area. 125 In cross-examination Ms Pascoe confirmed that the instructions she received on 27 June 2006 were in connection with a potential subdivision being considered for the Property although she did not discuss the details of the subdivision with Mr Makrylos. She confirmed her recollection that Mr Makrylos told her he was interested in acquiring the Property for the purpose of subdivision. She was uncertain whether there was discussion about the job being done for Kara Developments and said that she may have assumed it. She recalled that there was a discussion "in terms of dwellings possibly across the site with regard to the floor level that would be required", but she could not recall the number of lots discussed. She did not recall there being any discussion about the use of the Property for the construction of a family home. 126 In relation to the Second Qantec Report, she said that she had received an email from other consultants and contacted Mr Makrylos to ask what it was about. She said her instructions were to prepare an updated report with the subdivision layout, applying the floor levels to each lot if necessary. She explained that the Primary Storm Surge Area related to a 100 year flood event and the Secondary Storm Surge Area related to a 1000 year flood event. She confirmed she could not say why the Secondary Storm Surge Area was not dealt with in the First Qantec Report. 127 The cross-examination concluded with this exchange: COUNSEL: … You weren't told there had been any change in the intention of what Mr Makrylos wanted to do with the site? MS PASCOE: I don't recall any such discussion. And from the reports, it wouldn't be obvious to me now, looking back, that there was any change to the intention for the subdivision.

Mr O'Donoghue 128 Mr O'Donoghue conducts a real estate business based in Darwin. Between 2001 and 2008 he worked as a real estate agent for LJ Hooker. He deposed in his affidavit sworn 14 October 2021 that: (1) On a date not specified, he met with Mr Makrylos at an open home inspection. Mr Makrylos advised him at that time that he was looking to purchase a house for his family. (2) He was appointed as the vendor's agent for the Property. He knew the vendors to be experienced property developers. The vendor advised him that it was not possible to develop the Property. (3) The Property was passed in at auction on 14 June 2006. Neither Mr Makrylos nor anyone representing Mr Makrylos attended. (4) After the auction, he contacted Mr Makrylos to ask whether he would be interested in purchasing the Property. During the conversation he advised Mr Makrylos it was his understanding that it would not be possible to develop the Property. During the same conversation Mr Makrylos said that the inability to develop the Property was not a concern for him because he wanted to build a family home there. (5) Following the sale, he attended the Property at Mr Makrylos' invitation "several times in early 2007" to discuss a potential engagement as selling agent for the Waterline development. During those visits Mr Makrylos told him about his plans to construct a family home on the Property. Their discussions took place in a canopied area outside of the demountables. He observed that the demountables appeared to have furniture inside them, there were several cars in the shed and there were several pallets of tiles there, which he assumed were for use in the Waterline development. On one occasion Ms Panagopoulos was there and prepared coffee. 129 In cross-examination, Mr O'Donoghue confirmed that the contract for the sale of the Property was prepared by the vendor's conveyancer. He could not say who changed the name of the purchaser. 130 Mr O'Donoghue said that he remembered the discussion with Mr Makrylos about building the family home. He recalled that "it was always going to be big and huge and it was this home for him and Gina and, you know, their forever home". 131 Mr O'Donoghue said that after the sale of the Property he visited there on "a couple of occasions" when he was pitching for work from Mr Makrylos. Mr O'Donoghue said that he recalled he "popped [his] head" into the kitchen. He acknowledged he had not included that recollection in his affidavit.

Mr Jensen 132 Mr Jensen performed town planning work for Elton Consulting between 20 March 2006 and 31 July 2007. Mr Makrylos was one of the clients of Elton Consulting at that time. Mr Jensen deposed in his affidavit affirmed 15 October 2021: (1) It was common for Mr Makrylos to visit him with a property concept sketch or design plan and seek his verbal advice about its viability from a town planning perspective. (2) Prior to June 2007 (but on a date not otherwise specified) he met with Mr Makrylos to discuss a draft design plan for the Property. For the purposes of his affidavit he was shown a copy of the Large Home Plan. He believes the plan discussed at his meeting with Mr Makrylos was "similar in nature" to it. (3) During their discussion Mr Makrylos said that the house in the plan was intended to be his family home. They discussed the inclusion of the caretaker's residence, the shed and the planning applications that would need to be lodged to give effect to the plan. (4) He told Mr Makrylos that because the Property was zoned rural residential it would require a development approval to allow for the caretaker's residence to be built on the Property in addition to the family home to comply with the requirements of the planning scheme, that there would be no certainty of obtaining the development permit because the relevant planning authority took the view that rural residential zoned land should not have more than one dwelling. (5) He was engaged by Mr Makrylos in 2009 to prepare to the point of lodgment an application for a development permit to subdivide the Property. He did not list himself as the applicant on that application because at that time he was working for the Queensland Government which limited his ability to be contacted and it was his long standing practice to name the developer as the applicant. (6) He was engaged by Mr Makrylos in 2011 to prepare the application to construct 16 dwellings on the Property to the point of lodgment. He did not name himself as the applicant for the same reasons given in connection with the 2009 application. 133 In cross-examination Mr Jensen said that he was not able to recall the specific time that he had the conversation with Mr Makrylos about the Property. He said that the conversation related to the drawing Mr Makrylos had prepared depicting the large family home and caretaker's residence and that was the extent of the subdivision discussed. Mr Jensen said that he told Mr Makrylos that he had two options: to subdivide the land or to apply for a caretaker's residence permit. He denied having any broader discussions about subdividing the Property at that time. He said that from his memory he thought Mr Makrylos was leaning toward applying for a caretaker's permit. Mr Jensen said that the drawing annexed to his affidavit was not taken from his own records but was provided by Mr Makrylos' solicitor. He confirmed that the drawing he discussed with Mr Makrylos was similar to it. 134 Mr Jensen confirmed that he prepared the First Planning Application, but said that he did not engage with the planning authorities in the Northern Territory about it. Mr Jensen was vague in his responses as to why that application named "Makrylos Group" as the applicant rather than Mr Makrylos personally, but he said that it was his understanding that it was one of the corporate entities that was applying for the permit at that time, and that he understood that the Makrylos Group was planning to develop the Property into an eight lot subdivision. He said that he first became aware that the Property had been rezoned when he received instructions to prepare the First Planning Application in 2009. He said that that application would have taken between two to three weeks for him to prepare. For the purpose of preparing his report, he was provided with plans of the subdivision dated 2007, but he had no discussions with Mr Makrylos about why that plan had been drawn up so much earlier. 135 Mr Jensen confirmed that he had prepared the Second Planning Application in 2011 on Mr Makrylos' instruction. He said that another rezoning application had been lodged and the change in zoning had permitted the subdivision of 16 dwellings. He could not recall why the land owner was named as Kalhmera, but said there must have been some documentation or an understanding to that effect.

Mr Dodd 136 Mr Dodd is a director the surveying and development services firm Earl James. Mr Makrylos is one of Earl James' clients. Mr Dodd deposed in his affidavit affirmed 15 October 2021: (1) He met with Mr Makrylos on 4 July 2006 to discuss a hand drawn sketch Mr Makrylos had prepared in relation to the Property (being the Makrylos Sketch depicting eight allotments). (2) He recalls that during the meeting Mr Makrylos told him that he intended to build a house on the Property to live in and that he wanted to engage Earl James to prepare a formal digital version of the sketch. After preparing the plan, Earl James did no more work for Mr Makrylos in relation to the Property. (3) In his experience it was not unusual for clients to request assistance with the preparation of subdivision design plans for land that work around an existing or intended main residence. 137 In cross-examination Mr Dodd was referred to the working title "Sanctuary Estate Concept Plan". He could not recall whose working title it was. 138 Mr Dodd confirmed that prior to making his affidavit, he could not recall whether he had checked his own files to see any record of Mr Makrylos providing him with a copy of the sketch to which he referred in his affidavit. He could "not recall" whether the sketch annexed to his affidavit was provided by Mr Makrylos' lawyers. As to Mr Makrylos residing on the Property, the questioning proceeded as follows: COUNSEL: You say that Michael told you he intended to build a house on the property. MR DODD: Yes COUNSEL: Do you remember precisely what he told you? MR DODD: No, I don't remember precisely at all, no COUNSEL: Did he tell you that he wanted to build a house on one of these subdivided lots and live in it? MR DODD: I don't recall … I just have that sketch that he gave us, and we prepared a digital copy based on that. … COUNSEL: But you don't - you don't recall having a discussion with Mr Makrylos around one house being built here and a whole lot of other houses being built for development? MR DODD: No, I don't recall that. I just had Michael's sketch he gave us and we did a plan based on that.

Ms D'Rozario 139 Ms D'Rozario is a town planner carrying on a business through June D'Rozario & Associates Pty Ltd. One of her clients is Mr Makrylos. Ms D'Rozario deposed in her affidavit affirmed 15 October 2021: (1) She met with Mr Makrylos on 22 February 2007 and his wife to discuss rezoning the Property so that it could be subdivided into eight lots. At that meeting Mr Makrylos provided her with documents that she recalls are similar to those attached to her affidavit, namely the Undated Librio Plan and the Earl James Concept Plan. (2) She recalls Mr Makrylos telling her at some point that he intended to build his family home on one of the eight lots. (3) She sent the letter of 9 May 2007 to Mr Makrylos and shortly afterwards was engaged to prepare the First Rezoning Application. (4) Sometime in the first quarter of 2010, she was engaged by Mr Makrylos to prepare and lodge another planning application for the property. She recalls Mr Makrylos telling her around that time that he no longer intended to build is family home on one of the Property's lots. 140 In cross-examination Ms D'Rozario agreed that in lodging a planning application it was important to be truthful about the intended use of the land. She said that she had no independent memory of what was said at the meeting of 22 February 2007, but said that the outline of the discussion was as set out in her letter of advice dated 9 May 2007. 141 Ms D'Rozario said that she was provided with three documents at the meeting of 22 February 2007 which she says were then used by her. They were the April Librio Sketch showing eight dwellings on the Property, the Earl James Concept Plan and a further document depicting the floor plan of a dwelling in the rear right corner of the Property. 142 She could not recall any name being given to the subdivision at that time. When asked whether there were discussions at the 22 February 2007 meeting as to whether one of the lots was to be for a family home for Mr Makrylos, she said "maybe not specifically at that meeting", but she said at some point she was told that. The questioning continued: COUNSEL: And he said that he wanted to make one of the eight lots his family home? MS D'ROSARIO: Look, I don't know whether he was speaking about one or more of the lots. COUNSEL: Right. To the best of your recollection what do you think you were told? MS D'ROSARIO: I can't recall. 143 Ms D'Rozario confirmed the first paragraph of her letter of advice reflected her understanding that Mr Makrylos wished to develop the Property "as a residential estate". She agreed that the letter contained no reference to the Property being used for a family home. She said she was "really only dealing with whether there would be eight lots. I wasn't really interested in who was going to be occupying them". She confirmed she was not told why the subdivision was wanted. 144 Ms D'Rozario agreed that the detailed information contained in the development proposal she prepared, including what was said about the project's merits, and that she believed the development proposal reflected Mr Makrylos' intentions. 145 In re-examination Ms D'Rozario said it was possible that she was only given two documents by Mr Makrylos, not three. She was informed by Mr Makrylos' Counsel that the April Librio Sketch depicting housing floor plans on the whole of the Property was prepared after 22 February 2007. She said that whilst is was possible she was given that diagram later, she said "it's certainly possible". She had no recollection of what conversation was had "on which particular occasion".

Mr Roth 146 Mr Terence Roth is a qualified valuer. He was not required to be cross-examined. His evidence will be accepted to the extent that it bears on any valuation questions that might arise on the found facts.

Oral evidence of Mr Makrylos 147 The whole of the cross-examination of Mr Makrylos must be taken into account. It was in several respects consistent with his evidence-in-chief and I do not propose to summarise the whole of it in these reasons. The following pages focus on key aspects of the evidence going to facts in dispute, and upon those passages that are relevant to my assessment of his reliability and credit more generally. To explain the damaging findings expressed later in these reasons about Mr Makrylos' credit, it is necessary to give a fairly detailed summary of how his evidence under cross-examination unfolded. 148 Mr Makrylos said that in 1983 he had done some property development in his own name because he was "not educated". He referred to a number of property developments undertaken in his own name without having "any education with regards of how to handle it" and that later he learned more "when Ernst & Young came into town". When asked whether or not he considered himself to be one of the largest residential developers in the Northern Territory, he responded that he builds, on average, 10 units a year. 149 Mr Makrylos said that since 1990 the business was conducted through corporate entities. He explained that the Makrylos Group included the companies named earlier in these reasons. 150 He confirmed that a previous property development known as Sovereign Estate, situated at 9 Montgomerie Street, was situated on land that he had purchased in his own name. He said that he had resided at that address for a period of time, treated it as his main residence and claimed the "main residence exemption" when the whole of the development was sold. He also confirmed that he had lived at number 5 Montgomerie Street within the same development in a house that he had purchased and that had subsequently been rented out by him. 151 In relation to the First Qantec Report, Mr Makrylos said that he told Ms Pascoe of his intention to subdivide the property for the purposes of a family home and caretaker's residence. In relation to the Second Qantec Report, he maintained that his intention at the time was to rezone the Property so that he could achieve two metre setbacks for his family home. When asked whether he gave Ms Pascoe instructions about that, he said no. He confirmed that he gave instructions to Earl James to email Ms Pascoe a copy of the Earl James Concept Plan. 152 Mr Makrylos said that he originally believed that to construct the family home and caretaker's residence on the Property it would be necessary to subdivide the land. He agreed that belief was deposed to in his first affidavit. 153 Mr Makrylos said he later realised that was an error, but he "needed to subdivide it anyway for financial reasons". 154 He confirmed that his conversation with Mr Jensen took place before the contract for purchase of the Property was signed. Mr Makrylos was reminded of the content of his second affidavit concerning the advice he claimed to have received from Mr Jensen to the effect that a caretaker's residence could be built on the Property without rezoning and subdivision. The cross-examination continued: COUNSEL: So what's the difference, why did that change? MR MAKRYLOS: ---Originally, the first affidavit is what I thought. But I'm not a town planner. And I had a discussion with Anthony which - and then he actually informed me 'yes, you can get a development permit to do that'. COUNSEL: Yes. But the - but this statement is what you believed at the time, not what the law was? MR MAKRYLOS: ---Yes. COUNSEL: So what did you believe at the time when you asked for the Quantec [sic] report, did you believe that you had to subdivide it or not? MR MAKRYLOS: ---Yes. COUNSEL: You believed you did? MR MAKRYLOS: ---Yes. COUNSEL: Even though you've spoken to Mr Jensen in your second affidavit, you say, and he told you you didn't need to subdivide it? MR MAKRYLOS: ---That's what I believed, but obviously that was in error. You've asked me what I believed, that's what I believed. And then you corrected me. COUNSEL: Right. But he - you had that discussion before you entered into the contract of sale? MR MAKRYLOS: ---It was around about the - around about the same time, before the contract was signed. 155 Mr Makrylos said that whenever he did a development it was not necessary to enter into contracts of sale expressed to be subject to rezoning because "it has always had the zoning on it". He confirmed that past contracts had not been made subject to rezoning because there had always been a policy in place making provision for rezoning. 156 Mr Makrylos was shown a newspaper article in which he is quoted as making comments about property development. He raised no dispute as to whether he had been accurately quoted in it. The article states: Mr Makrylos and his wife Gina, an engineer turned company director, talk of the calculated risk involved in paying about 3 million for lot 80 at Blake Street in the hope it would be rezoned from community purpose to high density residential. 157 Mr Makrylos said that the property there referred to was subject to a "policy", which he described as "a big book on it telling you that you can build units". He described it as the government telling private enterprise "if you get that land, you can". He accepted that a rezoning application would be necessary but said "they just stamp it for you". There's no risk there". After questions on another part of the article, the cross-examination continued: COUNSEL: But the - but in your development business you would buy land which hasn't been rezoned yet on your belief that it would be - that you would be able to get it rezoned? MR MAKRYLOS: ---I never, ever done that in my life. COUNSEL: But isn't that what this is talking about here? You - - -? MR MAKRYLOS: ---No. You've got a policy. I did have the book yesterday, I left it at home. But it's - there's a policy, there's objective policies that have been outstanding since 1994. And they identified that area there for residential and high density. And they encourage people to invest. They beg you. And there's nothing - that's why it's - it's a no-brainer. You buy it, you're going to get it rezoned. COUNSEL: But on many occasions you have bought land for development and then you have to go through the rezoning process, yes or no? MR MAKRYLOS: ---You might go through it because - - - COUNSEL: Yes. Yes or no? MR MAKRYLOS: ---Yes. 158 When asked about his state of mind at the time that the Property was purchased, Mr Makrylos stated that he "always believed" that he could not rezone. When asked whether that belief changed at some point, said yes. When asked when, he said: I would say it changed on the - he has got me working hard, this guy - on 30 January - on the same day that I gave instructions Earl James to email a copy of the plan to [Ms Pascoe]. 159 When asked what made him change the belief, he said that he had a program to start construction between February 2007 and May 2007. He described himself as being on a "tight schedule" and later referred to having 12 weeks to construct the house. He referred back to discussions he had with "the planning department" concerning a "waiver" of setback requirements from five metres to two metres, and to the advice he had received that the required setbacks were due to change to 10 metres. When asked when the town planner told him that Mr Makrylos said: "on the day that I was there", which he then said was around 30 January. He said that before that time he "wasn't going to rezone", but instead wanted to apply for a waiver of the setbacks. He said "anybody can apply for a waiver, do you know". Mr Makrylos said the sketch that he gave to Earl James developed as a result of a discussion with a town planner to the effect that an optimal plan for the site would involve blocks of 800sqm in size. 160 Mr Makrylos acknowledged he had given his own sketch (depicting a subdivision of eight lots) to Earl James on 4 July 2006. He insisted that the sketch was prepared "following instructions and discussions with a town planner in the process of reducing the setbacks for my home". He later repeated that until the end of January 2007 he only wanted to achieve a reduction in setbacks by obtaining a waiver, not by making a rezoning application. 161 Mr Makrylos confirmed that he gave the name "Sanctuary Estate" to Earl James because he was "considering a tropical sanctuary home" and because he was "looking to doing a proper sanctuary". 162 As to the designs prepared by Mr Librio, Mr Makrylos said that he saw Mr Librio sometime between December 2006 and January 2007: … and I said Joe, assist us and Joe had done quite a lot of work for me at that time. I need your input in the house. So - and Joe gave me one house design. 163 Mr Makrylos said that Mr Librio's designs were prepared for the sole purpose of reducing the setbacks for the family home. In response to questioning about why he had suffered expense and delay to engage so many consultants to achieve a three metre reduction in setbacks for a "small house" on a property exceeding 1.7 acres, Mr Makrylos denied that the house plan was small. He said that the reduced setbacks would allow him to use more of the land. 164 Mr Makrylos denied having any knowledge of the Property's previous owner having made a previous unsuccessful attempt to subdivide it until after he had acquired it. He said that he first learned of the prior owner's unsuccessful attempt to subdivide from his solicitors and that he didn't "give a shit". When taken to his affidavit evidence to the effect that he would never take the risk of purchasing the Property for business purposes without entering a contract for rezoning because the previous owners' attempt to rezone the site and was refused, he said "that's after". He denied seeing the record of administrative interests annexed to his affidavit before he bought the Property. He denied that at the time of purchasing the Property he knew it had already been approved for a three lot subdivision. 165 Mr Makrylos said that he did not approach the planning department to enquire about the waiver of the five metre setback until 30 January 2007 because prior to that time he was busy completing an earlier construction project. He confirmed again that he wanted to construct the family home on the Property in February, March, April or May in 2007. 166 Mr Makrylos confirmed that he had received a loan from companies in the Makrylos Group to purchase the Property and that Kara Developments had "paid some of the bills for me … 20 grand or something worth or whatever". He said the expenses might also have been paid by other companies. When asked why a development company would be paying he said "because I have to pay it back". He said that he had repaid the money for the purchase of the Property. He confirmed that Kara Developments had not been repaid the expenses because of an "unintentional error". Mr Makrylos raised an issue about an erroneous failure to claim $100,000 in deductible expenses. Mr Makrylos raised that issue a number of times, usually accompanied with a sense of annoyance directed at the Commissioner. 167 When asked about specific expenses invoiced to and paid for by companies in the Makrylos Group related to the Property, Mr Makrylos said that he did not have his own bank account, that the companies paid his personal expenses and that it was the role of his accountant to allocate the expenses. He acknowledged that Kara Developments' general ledger recorded expenses attributable to the Property and that the general ledger had been used as the basis for claiming tax deductions in its tax return. When it was put to Mr Makrylos that the tax return for Kara Developments was misleading, he claimed he was not very good at accounting and so could not answer the question. He said he first learned about the errors concerning the Property expenses four years ago during the audit process. 168 Mr Makrylos was reminded that he had said in his first affidavit that obtaining the First Qantec Report has "cost me $330", and yet he had learned four year years ago that Kara Developments had met that expense. He responded that he had not seen the ledgers for years, before adding "I don't do accounting, sorry". 169 In response to the payment of other invoices by Kara Developments, Mr Makrylos said "she made an error, my wife". 170 He acknowledged that he had not told the various consultants that they should be invoicing him personally. When asked why some invoices were directed to Kalhmera and some to Kara Developments he said "It depends which chequebook I grabbed". He then acknowledged it was his fault that the invoices were issued in the company names, whilst repeating that he had relied on other people who had made errors. 171 In relation to an expense for the loading of a container on the property in November 2008, Mr Makrylos said that the container was loaded with tools he was going to use to construct the family home. Without prompting, he volunteered that he had "updated some records at that time, because I was hoping to have a house by at least - by mid-2008, I should have had - should have had the house there". 172 The questioning concerning expenses continued: COUNSEL: And there isn't a single invoice that you have been able to produce in this matter which is actually directed to you as opposed to a corporate entity? MR MAKRYLOS: ---Sorry? COUNSEL: There is no invoice which is issued to you personally - - -? MR MAKRYLOS: ---Yes. COUNSEL: - - - as opposed to one of your corporate entities? MR MAKRYLOS: ---Usually my accountant does all this sort of stuff, mate. COUNSEL: Sure? MR MAKRYLOS: ---I'm - I'm - you're asking the wrong person. I'm not very good. I'm not trying to evade your question. COUNSEL: Yes. No. No. I understand. I just - - -? MR MAKRYLOS: ---I'm actually illiterate when it comes to accounting. Sorry, your Honour. COUNSEL: Yes. There are a lot - there are lots of documents that you have produced - tax invoices. But my question is have you ever seen one which is just issued to you personally and not one of your companies? MR MAKRYLOS: ---No. No. COUNSEL: Right? MR MAKRYLOS: ---They always go to the company, and then they do allocations and balance in there under whatever it might be. 173 Mr Makrylos acknowledged that aside from the Large Home Plan drawn by him on or around 30 June 2006, there existed only one plan for a family home - that drawn by Mr Librio which he said was prepared in December 2006 or January 2007. He acknowledged the Librio design showed a house plan on one of eight subdivided lots. Mr Makrylos described it as a "concept plan". Mr Makrylos then interrupted a line of questioning about the non-existence of any other document evidencing the drawing of plans for the family home as follows: COUNSEL: … But there's no - and there's no other document and email or anything else - - -? MR MAKRYLOS: ---Email? COUNSEL: - - - to you or to him or from him - - -? MR MAKRYLOS: ---No. COUNSEL: - - - saying that - - -? MR MAKRYLOS: ---Joe - - - COUNSEL: - - - this - - -? MR MAKRYLOS: ---Joe was doing quite a lot of - lot of work for me. He was actually doing - your Honour, he was doing the gymnasium. He was doing three buildings. He was doing two - he was doing swimming pools. He was doing the landscaping. We go into there, my wife and I, if I - if I remember correctly, saying, 'Joe, help us with this. Put it together,' and I planned - because Joe had done some similar houses for - he knows that - he's very, very - is - is the top gun when it comes to little houses like that. COUNSEL: Sure? MR MAKRYLOS: ---Okay? COUNSEL: Sure? MR MAKRYLOS: ---And Joe did it for us. COUNSEL: Sure. No. The - you've done all this work - - -? MR MAKRYLOS: ---He - he had done that house for us. COUNSEL: I understand. You've done all this work for subdivisions? MR MAKRYLOS: ---Subdivisions? COUNSEL: Sorry. You've done a whole lot of design - had designs drawn up on an eight-lot subdivision. I'm just trying to understand what document exists about a family house, and at the moment, you're saying it's the one you drew in June, and it's this one, and that's it; correct? MR MAKRYLOS: ---This is the family house here. 174 The questioning continued in that vein. Through the interruptions it was eventually put to Mr Makrylos that what Mr Librio had prepared was just an example of a house to be situated on one of the eight subdivided lots. Mr Makrylos responded: This is how Joe works, my friend. This is how you get - this is how you develop beautiful things 175 Mr Makrylos said that he lived at Makryllos Circuit from 1998 to 2011 with the exception of the 14 weeks he spent residing in the demountables at the Property and for the time he spent living at Sovereign Estate. He said that he lived in two properties within Sovereign Estate on three occasions. 176 He said that from 26 April 2007 the electricity meter at the Property had been removed so that from that time there was no electricity connected to the Property. He said that the power was not reconnected until around the time that the development works on the Property commenced. It was pointed out to Mr Makrylos that the reasons given in his affidavit for leaving the Property made no mention of the power on the Property having been disconnected. 177 When asked whether he had ever reported actual or attempted break-ins at the Property to the police, Mr Makrylos responded "Maybe I did, I think, on one occasion. Maybe. I mean, I had a break-in in Darwin when I came here four weeks ago". Mr Makrylos was reminded that during the audit period he had told the Australian Tax Office (ATO) that he had never reported a break-in or trespass on the Property to the police. After some digression, he accepted that he hadn't made any such report, "because I didn't lose anything". 178 Mr Makrylos was questioned on the number of dwellings that had been constructed by various entities in the Makrylos Group over time. He gave evidence about the numbers of units constructed. The numbers far exceeded the 10 units each year "on average" he had mentioned at the commencement of his cross-examination. 179 Mr Makrylos was cross-examined on the letter from Ms D'Rozario and specifically the statement "I understand from our meeting of 22 February 2007 that you wish to develop lot 9327 as a residential estate". When asked about what he had said to Ms D'Rozario about the purpose of the meeting, Mr Makrylos did not at first give a direct response but instead repeated what he had earlier said about learning from his discussions with Mr Jensen and a town planner about setbacks. The questioning, again interrupted by Mr Makrylos, proceeded as follows: COUNSEL: Sure. And you explained all this to her and - - -? MR MAKRYLOS: ---I don't know if I explained it her about this and that. I went to her because I had a bit of a problem with June, you know - - - COUNSEL: Sure. But you - - -? MR MAKRYLOS: --- - - - from 1990. COUNSEL: - - - explained to her that you wanted to build a family house? MR MAKRYLOS: ---I was going to build a house there. COUNSEL: Sure. And you explained that - - -? MR MAKRYLOS: ---And it - - - COUNSEL: - - - what you wanted her to do was - - -? MR MAKRYLOS: ---I wanted her to - - - COUNSEL: - - - put an application - - -? MR MAKRYLOS: ---Yes. COUNSEL: - - - so that you could get a reduced setback? MR MAKRYLOS: ---I don't know if I said that - - - COUNSEL: Okay? MR MAKRYLOS: --- - - - because I want to - I want to motivate - I'm not going to tell a planner, 'Just go there and do this'. COUNSEL: Sure? MR MAKRYLOS: ---I - I would have said to her exactly what she has got here. COUNSEL: Okay. But - - -? MR MAKRYLOS: ---Whatever she has got on this first page sounds correct to me. 180 Mr Makrylos was reminded that he had stated in his affidavit (dated a year prior) that he had explained to Ms D'Rozario that "we wanted to build our family home on the property" and "we discussed the setback issue and the benefit of a subdivision to accommodate the setback issue". He responded that the events had occurred a long time ago and that Counsel for the Commissioner was "trying to get me on one sentence". 181 Mr Makrylos accepted that he had not corrected Ms D'Rozario on statements contained within the letter about the wish to subdivide and develop the land as one residential complex with individual dwellings. He said that the subdivision was "in terms of the two houses". He then said that he could have eight houses approved, but he was only going to build "our family home and the caretaker's unit and the shed and stuff like that". After further digression, he later said that he did remember telling Ms D'Rozario that he wanted to build a house on the Property. The questioning continued: COUNSEL: Which was it? 'I want to build a family house' or 'I want to develop this into eight lots'? What did you tell her? MR MAKRYLOS: ---Well, this is - this is what I'm trying to explain to you. You need to apply for - for development permit. HER HONOUR: Mr Makrylos, just a moment. Can you repeat the question and I ask you to listen carefully and answer the question? MR MAKRYLOS: ---Yes. COUNSEL: Did you tell Ms D'Rozario that you wanted to build a family house, or did you tell Ms D'Rozario that you wanted to subdivide and develop the property? MR MAKRYLOS: ---Both. 182 Mr Makrylos said again that at that time he wanted to subdivide and develop the property "into two - into two house lots" and "in a two lot subdivision". He said that he did not tell Ms D'Rozario "about the two, and that's what I was going to develop". Mr Makrylos did not accept that what he had told the Court was inconsistent with what Ms D'Rozario said she had been told, as reflected in the letter of 9 May 2007. 183 Mr Makrylos was questioned about the timing and purpose of the plans he said were prepared by Mr Librio in April 2007 and Clouston Associates in May 2007. He said that the Clouston Landscape Plan was "just the landscaping": COUNSEL: On 454, this is just the landscaping? MR MAKRYLOS: ---Yes, just the concept landscaping, so that the Minister can see that you - 'If I'm going to rezone your land, you're going to improve the amenity', which I were anyway, and the Minister was happy. COUNSEL: Sure? MR MAKRYLOS: ---And even happier that I only put two houses. COUNSEL: When you said 'only put two houses', what do you mean? MR MAKRYLOS: ---The caretakers and that. COUNSEL: The Minister would be more happy if you only put two houses? MR MAKRYLOS: ---Yes. COUNSEL: Why? MR MAKRYLOS: ---Why? It's less dense for the people. COUNSEL: Then why are you putting an application for eight subdivided lots? MR MAKRYLOS: ---To get a reduction in the setback. COUNSEL: Right? MR MAKRYLOS: ---That's the process you go through. COUNSEL: You didn't tell the Minister that you only wanted a house and a caretakers? MR MAKRYLOS: ---No. 184 When asked whether his accountants had provided advice to him on the project situated at the Property address Mr Makrylos said yes. The questioning then continued: COUNSEL: They provided advice to you all the way from the start? COUNSEL FOR MR MARKYOS INTERJECTING: Your Honour, when is the start? COUNSEL: The start of the project. I apologise, I will withdraw the question. COUNSEL: Did they provide advice to you on the project from 30 June 2006? MR MAKRYLOS: ---Yes. COUNSEL: In 2008 - - -? MR MAKRYLOS: ---2008. COUNSEL: Yes? MR MAKRYLOS: ---Yes. COUNSEL: So this is a year - - -? MR MAKRYLOS: ---Yes. Yes. COUNSEL: Fair enough. MR MAKRYLOS: Yes. COUNSEL: - - after you moved out of the property? MR MAKRYLOS: ---Yes. Yes. (emphasis added) 185 When asked whether it was his accountants who told him to change his address in the records of the Australian Securities and Investments Commission (ASIC) in 2008 to that of the Property, Mr Makrylos said that he couldn't recall. He then said that it "might have been me" because he had been excited to receive a letter from the Minister in the January seeking more information about setbacks and he was "expecting to get approval within you know, a month or so", that he took steps to start the house and he was "hoping to have a house and everything" by April. 186 He agreed that he had certified as true and correct the information contained in the ASIC record. After further digression and interruption, Mr Makrylos eventually acknowledged that the residential address disclosed by him to ASIC was wrong. He said that he gave the Property address because he was looking forward to moving there, that he was trying to get his wife to move back there and live in the demountables, and that he was "hoping to get approval within ... the next six weeks and be - and be there". He then accepted that the approval would only be for rezoning, not for approval of a house design. He said that certification of the house design would take a matter of days. 187 Mr Makrylos was taken to the ASIC record showing that he had also changed the place of business for Kara Developments to that of the Property with a start date of 27 March 2008, the same date on which he changed his personal address on the ASIC records. He asserted the same reasons for that change as that given for the change of his personal address. 188 With respect to the residential address given on 6 May 2008 in his 2007 tax return, the cross-examination proceeded as follows: COUNSEL: And you wanted to tell the Tax Office that you were living at the property, 125 Dick Ward Drive? MR MAKRYLOS: ---Because I was hoping that I would have been living there, but - - - COUNSEL: Sure. At a property which didn't have power, or you hadn't built your house yet? MR MAKRYLOS: ---That's correct. COUNSEL: Were you aware that you were making a false disclosure - - - ? MR MAKRYLOS: ---No. COUNSEL: - - - to the Tax Office? MR MAKRYLOS: ---No. COUNSEL: But you told them you were living there when you knew that you weren't? MR MAKRYLOS: ---It's something that, obviously, I've overlooked, and I should have taken the steps to - to correct it once - once I couldn't - I took a bit of a time duration or timeframe to start the house, and this was all done in anticipation of - of what actually happened with - with the Minister back in January. That actually - I was overenthusiastic. COUNSEL: Sure? MR MAKRYLOS: ---I didn't mean - - - COUNSEL: You accept you made a false disclosure to the Tax Office about your residential address? MR MAKRYLOS: ---I accept I made an error, a human error. 189 Mr Makrylos was taken to his change of address with the Australian Electoral Commission (AEC) made on 18 August 2008. He said "the same error, obviously, has occurred with that". He said again that he changed the address in "anticipation" that he would have "had a house" or he would be "back in demountables while I'm building the house". 190 Mr Makrylos denied changing the addresses more than a year after living at the Property to shore up his ability to claim a main residence exemption. 191 Mr Makrylos agreed that the rezoning of the Property was achieved in July 2009 on an application prepared by Mr Jensen, and there followed in November 2009 an approval for subdivision of the Property into eight lots. He said that his change of mind about using the Property for a family home occurred toward the end of 2009 and that the decision was for reasons related to the IVF process, which occurred in January and February of 2010. He emphasised that the decision was made to avoid the stress of building the home while going through the IVF process, given that the approval processes had taken too long. 192 Mr Makrylos insisted that tiles observed by Mr O'Donoghue on the Property were for use in the construction of his family home. 193 Mr Makrylos said that the Cardno Ullman geotechnical report dated 23 July 2010 was procured "because of a joint venture". He said that the report was procured by Kalhmera and not him personally, "before Kalimera [sic] entered into any unconditionals". He said at that time that he was looking at the company's interests and confirmed that Kalhmera would then engage Kara Developments. When taken to the content of the report concerning "a number of small villa-style apartments over the site" the scope of the investigation being "directed by Michael Makrylos" he confirmed that he was doing so "on behalf of the company". When asked what the small apartments were, he referred to seeking approval to construct 16 two or three bedroom buildings. Mr Makrylos agreed that images attached to the report showed a pile of fill at the Property. He said that the fill was situated there because it was intended to be used to construct the pad for his family home. He said the fill had been put there "probably in 2008 sometime". 194 Mr Makrylos insisted that he had been truthful in the information he had provided to the ATO. 195 When asked about his affidavit evidence about wanting to create a separate title for a caretaker's residence that could be used for security for finance without mortgaging the family home he described that as a "critical reason". 196 Mr Makrylos confirmed that the valuation of the property as at 18 May 2011 was in fact prepared in 2013. When asked whether the joint venture agreement upon which he relied in this case was not drawn up until after 2013 he responded "I'm not too sure. I can't even recollect, but if you say so, okay, I accept that".

Re-examination 197 In re-examination, Mr Makrylos referred to the letter from the Minister he received in January 2008. He said that when he read the letter he was confident that he would get rezoning approval. The letter (dated 17 January 2008) was admitted in evidence. In it, the Minister states that she had decided that the application to rezone the property "warrants further consideration". It goes on to state that before proceeding to public exhibition, Mr Makrylos should liaise with planning officers to develop a "zone schedule" and goes on to set out a number of matters that should be included. The letter states "It will also be appropriate and necessary to include other design criteria relating to subdivision design, building form and the number of dwellings". 198 Mr Makrylos said that he signed the Undated JVA prepared by Clayton Utz "some time back then, 2008 or 2010, or whatever". 199 When asked why he had not told the Minister about his intention to only build two houses and not houses on all of the lots on the eight lot plan he said: Well, I don't have control - first of all, I wasn't even aware of it … because I - I didn't - I can't speculate of what an expert would write in their application. So Mrs D'Rozario assumed - she wrote the application herself. I never had the opportunity to tell the Minister. 200 When asked why he would have Ms D'Rozario put in an application for an eight lot subdivision when he had no intention of constructing all eight houses he gave a discursive answer repeating what he had earlier said about discussions with town planners and the need to optimise the use of the land. 201 Mr Makrylos said that the Large Home Plan had a reference in it to the floor levels taken from the First Qantec Report because his reason for obtaining that report was to ascertain the minimum floor level for the family home. 202 Mr Makrylos retracted his earlier evidence that he had received advice from his accountants about the Property at the time of its acquisition. He said that he "must have misheard the question". The retraction did not extend to his acceptance that he received accounting advice in relation to the project at the Property in 2008. 203 Mr Makrylos gave evidence about his intentions to use the Property in the event of its rezoning and subdivision into eight lots. He said that lot 3 on the April Librio Sketch would be for his house and that lot 8 would have been for the caretaker's residence "and that would have been in - in a two-lot subdivision". The re-examination continued: COUNSEL: Well, this is an eight-lot subdivision plan, isn't it? MR MAKRYLOS: ---Yes. COUNSEL: So what was going to be on lots 1, 2, 4, 5, 6 and 7? What was your intention? MR MAKRYLOS: ---Lot 1 would have had a - I think it's a - it's a tennis court. Lot 6 had the shed. Lot 4 and 5 was all grass area ..... German shepherd - my German shepherd ..... and I - and that's - it's as - as per my affidavit. I've got it detailed, what I was having; tennis court, courtyards, outdoors living areas, we can enjoy the - enjoy the space. COUNSEL: And how did you think you were going to be able to not build on the other lots? MR MAKRYLOS: ---You don't have to . You can just - you - you don't have to build on the other lots. I can just build on those two lots. 204 Mr Makrylos said that he would have no obligation to build on the remaining lots. He said "I mean, that can actually just expire".

FINDINGS 205 I am not satisfied that Mr Makrylos' state of mind was as he professed it to be at critical times. Accordingly, I am not satisfied that the earliest date upon which he held the Property as trading stock is April 2010. The consequence of these findings is that Mr Makrylos has failed to discharge his burden of showing what the assessments ought to have been and the appeal must therefore be dismissed.

Impressions of Mr Makrylos as a witness 206 As a witness, Mr Makrylos variously presented as argumentative, selectively evasive, vague and unresponsive. He had a tendency to launch into evidence about potentially damaging subjects without first being asked questions about them. He often volunteered long "explanations" that were non-responsive to clear questions put to him. When a question called for a "yes" or "no" response, he too often did not provide it. At other times, Mr Makrylos interrupted a line of questioning going to a potentially problematic topic for him, so deferring a straightforward answer. In important respects his oral evidence was inconsistent with his affidavit evidence and his attempts to explain away the inconsistences only serve to reinforce my view that he is an unreliable and most unimpressive witness. 207 In making those observations I have taken into account that the cross-examiner did not keep a tight rein on Mr Makrylos as a witness. However, on two occasions Mr Makrylos was given guidance by the Court itself about the importance of listening carefully to questions and providing frank and responsive answers to them. On another occasion, the Court asked Counsel to repeat a question and required Mr Makrylos to answer it. Mr Makrylos maintained his discursive and argumentative manner notwithstanding that guidance. By those digressions he delayed or avoided the direct confrontation of problems in his factual account. 208 Early in his cross-examination Mr Makrylos gave evidence about the scale of the property development business carried on by entities in the Makrylos Group. His initial evidence that the developments amount to 10 units each year "on average" was far from the truth. The true state of affairs is that the business conducted by the Makrylos Group (as Mr Makrylos himself defines it) has undertaken the development of hundreds of residential dwellings. That is not an issue about which Mr Makrylos could be mistaken. The size of the business enterprise might be regarded as a peripheral issue. However, Mr Makrylos' disinhibition in giving evidence that was plainly false is a matter that reflects poorly on his credit. The initial false response typifies his attempt to present as a naïve family business operator, a theme he returned to over and again in the course of his evidence. 209 It is necessary in all cases to exercise some caution when making adverse findings of credit based on the outward demeanour of a witness. Here, however, the unsatisfactory aspects of Mr Makrylos' outward demeanour arose over and again at times when the subject matter of the questions went to problematic aspects of his case. The impression I have formed is that his evidence was given with an eye to the consequences that might flow from his answers, rather than a desire to give a truthful account. 210 Further observations about Mr Makrylos' manner of giving evidence will be made in the course of dealing with discrete topics below.

Knowledge of the prospects of rezoning 211 Mr Makrylos' affidavit evidence was to the effect that if he had any intention to subdivide the land then he would not have entered into a contact for the purchase of Property without making the contract subject to the grant of rezoning approval, that he would not have purchased the Property in his own name and that he would have proceeded with an application for rezoning immediately after the purchase. Among other things, Mr Makrylos asserted in his affidavit that he was aware, prior to entering the contract, that the vendors had made an unsuccessful application to rezone. That was put forward in support of his assertion that he would have made the contract subject to the relevant approvals if he had subdivision and development in mind. I assess these assertions in light of the evidence as a whole. 212 It emerged in the evidence that Mr Makrylos had previously ventured property in his own name to property development projects undertaken in the course of the business conducted by the Makrylos Group, as he described it. 213 In cross-examination, Mr Makrylos gave evidence that was inconsistent with what he had said in his affidavit about his knowledge of the previous owner's unsuccessful attempt to subdivide. He said that he had first learned of the unsuccessful attempt to subdivide from his solicitors and that he didn't "give a shit". That evidence is to the effect that he learned of the unsuccessful attempt to subdivide after the contract for sale, not before. 214 When asked to explain the inconsistency he said "that's after". A further attempt to clarify went nowhere. 215 Mr Makrylos denied that at the time of purchasing the Property he knew that it had already been approved for a three lot subdivision. I do not accept Mr Makrylos' affidavit evidence on this topic given his experience as a property developer and given what emerged in cross-examination. 216 In addition, there is evidence of an intention to move promptly to rezone, made manifest in conduct engaged in before the contract was signed (particularly the evidence of Ms Pascoe and the First Qantec Report) as well as before the Acquisition Date (particularly the Makrylos Sketch and the instructions to Earl James). The evidence Mr Makrylos has put forward to dispel the inference that arises from that evidence is unconvincing for the reasons already given. Mr Makrylos' actual conduct in taking steps to rezone the Property to permit an eight lot subdivision (irrespective of his stated purpose for pursuing that option) belies his statement that he subjectively believed it could not be done at the time of the contract for purchase. 217 In cross-examination Mr Makrylos acknowledged that he had previously entered into contracts for the purchase of land for development without making the contract subject to rezoning. When confronted with statements he had made to the media about acquiring land without first obtaining approvals, he sought to explain that by reference to there being a government "policy". Once again, it is an objective fact that Mr Makrylos in fact moved to obtain approvals to subdivide and rezone the Property, and with some haste. I infer that he took the view that approvals would be forthcoming, consistent with the view he took with the earlier publicised development. 218 Finally, the project ultimately developed is surrounded by medium density development, including a development, in close proximity, that was undertaken by the Makrylos Group. 219 Mr Makrylos' assertion that the did not believe the Property could be subdivided at the time of the contract cannot be accepted. 220 The circumstance that the contract was in Mr Makrylos' name personally and the circumstance that it was not made subject to relevant approvals is of little weight in determining Mr Makrylos' actual state of mind.

Out of court falsehoods 221 Mr Makrylos claimed to have resided at the Property for a period of 14 weeks ending on 26 April 2007. For immediate purposes, I will proceed on the assumption that he did in fact reside there until that time. It is not in dispute that electricity was disconnected from the property on 26 April 2007, not because he was vacating the Property but because the meter had to be replaced. Any residency on the Property could not have post-dated that time. 222 Months after 26 April 2007, Mr Makrylos made declarations in writing to ASIC, the ATO and the AEC to the effect that he resided at the Property at the times that those declarations were made. The declaration to the ATO was made on 6 May 2008 on the face of his 2007 tax return, more than a year after he says that he ceased residing at the Property. The declarations to ASIC were made on 31 March 2008 and they too included a false declaration of his personal residential address. So too did the information provided to the AEC on 18 August 2008. 223 At the time that he made the declarations, Mr Makrylos knew that he was not residing at the Property. They were intentional falsehoods. The declarations could not have involved any "human error" as Mr Makrylos alleged in cross-examination, nor do I accept that there is anything that he "overlooked". It is not a case of an omission to change a prior true declaration after circumstances changed, nor could he have been mistaken about where he actually lived. It reflects all the more poorly on Mr Makrylos that he should explain away his lies as amounting to human error or in any way referrable to something he might have "overlooked". 224 Mr Makrylos put forward a reason for making the declarations, namely that he was "over enthusiastic" that he would soon be able to again reside at the Property because he believed approvals permitting construction of his family home might be forthcoming after receiving a letter in January 2008. Even if I were to accept the evidence of that motive to be true, it remains that the declarations themselves were knowingly untruthful at the time that they were made. Mr Makrylos' evidence of his motivations for making the untrue statements amounts to little more than an assertion on his part that his lies to the public authorities are justifiable. 225 The explanation given by Mr Makrylos is implausible and I do not accept it in any event. Mr Makrylos' asserted sense of optimism that he might soon again reside at the Property does not logically explain the giving of that address to the particular authorities concerned at a time when there was an absence of rezoning approval, and an absence of planning approval (no planning application having yet been prepared or lodged at all). As discussed elsewhere in these reasons, there is no evidence of completed house plans upon which construction of a family home could proceed promptly after March, May or even August 2008. I do not accept Mr Makrylos' reasons for giving the declarations was as he claimed it to be. 226 For reasons given below, I have rejected Mr Makrylos' general assertions that he is naïve in his personal, financial and taxation affairs. Prior to the events in issue in this proceeding, Mr Makrylos had claimed a main residence exemption with respect to other properties developed by the Makrylos Group on the basis that he had resided in certain dwellings. He did not specifically profess ignorance about the main residence exemption. It may readily be inferred (and I find) that Mr Makrylos made the false declarations for the self-serving reason of supporting a claim for the main residence tax exemption on the basis of his residence at the Property, which he ultimately did claim. 227 In the circumstances described, the Court proceeds with utmost caution when considering evidence of other alleged contemporaneous statements of fact or intention upon which Mr Makrylos relies for the truth of their content or otherwise for their corroborative effect. To the extent that there exists evidence of prior consistent statements made by him to other persons, the statements are not reliable evidence of his true intentions, just as his declarations to the ATO, ASIC and the AEC cannot be relied upon for their truth. For that reason, and others discussed below, the prior "consistent" statements are of limited evidentiary value to Mr Makrylos in the discharge of his burden of proof on this appeal.

Payment of expenses 228 Mr Makrylos' case is that companies in the Makrylos Group paid expenses relating to the subdivision and development of the Property because of mistakes made by others and his own naivety with respect to matters concerning accounting. The asserted naivety was a recurring feature of his cross-examination and took various forms. 229 Mr Makrylos' assertion in re-examination that he had misheard a question about the date on which he first obtained advice from his accountant in relation to the Property is difficult to reconcile with what in fact occurred during cross-examination. The relevant exchange is extracted at [184] of these reasons. There was nothing ambiguous in the rephrased question about first receiving tax advice relating to the Property on 30 June 2006. Mr Makrylos' Counsel had objected to an earlier question on the basis that the phrase "from the start" was ambiguous. The question was then clarified and Mr Makrylos responded to it without any indication that he had difficulty hearing or understanding it. 230 I do not accept his assertion in re-examination that he misheard the question about when he first received accounting advice. I consider the more reliable response is the unguarded answer given in cross-examination to the clearly expressed question. 231 Otherwise, Mr Makrylos' attempt to use his ignorance of accounting in response to some questions was particularly unpersuasive. For example, he was plainly aware that Kara Developments had paid expenses related to the Property and he had personally caused the payments to be drawn from the company's account. He was also aware that Kara Developments had claimed those expenses for tax purposes. However, when it was put to him that Kara Developments' tax returns were thereby misleading, Mr Makrylos fell back on his asserted general ignorance about accounting. He failed to give a direct response to the simple proposition that Kara Developments had claimed deductions that on his own case it was not entitled to claim. 232 Relatedly, Mr Makrylos asserted that other persons had made errors (particularly Ms Panagopoulos and his accountant) and yet there is no evidence of any actual communication from Mr Makrylos to either Ms Panagopoulos or to the accountant sufficient to notify them that the expenses he caused the companies to pay ("depending on which chequebook I grabbed") were personal and not corporate expenses. For the most part the invoices were paid from the accounts of the entity that was named on the invoice, but there are some exceptions. Accepting for present purposes that Mr Makrylos paid the accounts by randomly selecting a chequebook, that practice does not support his claim that others later made errors in failing to dedicate the expenses to him as the appropriate payer and failing to seek their reimbursement. That is because there is no evidence that he gave instructions (whether on a case by case basis or under any formal or informal system) so as to advise his bookkeeper (being his wife) or his accountant that the expenses were personal expenses related to the Property. Mr Makrylos did not explain how a bookkeeper or accountant could work that out for themselves. It is reasonable to infer (and I find) that Mr Makrylos intended the companies to meet the expenses without making any arrangement for their reimbursement. 233 The inference that naturally arises by reference to the payments is that the companies paid the consultants' invoices because at the time the Property was held as trading stock with a view to future subdivision, development and sale in a project of the very kind that in fact occurred some years later. The asserted ignorance of accounting does not overcome that inference.

Alleged design of the family home 234 The evidence of both Mr Makrylos and Ms Panagopoulos is that the construction of the family home was a project of considerable importance to them. Mr Makrylos described himself as being ready and enthusiastic to construct the family home on the Property within a few months between February and May 2007. He said he was on a tight timeframe to construct the house between other projects. He asserted that he had transported materials to the Property to commence construction, including tiles and some rubble for the construction of footing pads. He claimed that he was buoyed by correspondence in January 2008 suggesting that the first rezoning application might be approved. He claimed that once the rezoning approval was obtained, he could obtain approval for the construction of the house itself within a week. 235 The evidence of both Mr Makrylos and Ms Panagopoulos was that the design for their family home was prepared by Mr Librio. The April Librio Sketch was prepared in April 2007. The Undated Librio Sketch depicts the very same floor plan, albeit in a less refined way. It may be inferred that the Undated Librio Sketch predated the April Librio Sketch but little turns on the point. 236 A striking feature of this aspect of Mr Makrylos' version of events is the absence of a single document evidencing the design of any house in readiness for construction beyond the two pages prepared by Mr Librio in or before April 2007 and the Large Home Plan which was abandoned weeks before the Acquisition Date. 237 Both Mr Makrylos and Ms Panagopoulos said that Mr Librio was the person who was briefed to design a family home of such significance to them, however, considered in its totality Mr Librio's evidence did not support the claim that he had been briefed for that purpose at all. He had no recollection of any discussion with Mr Makrylos but he did positively deny that he had been briefed for a personal project. Mr Librio did not make the endorsement "MM house" on the copies of the April Librio Sketch or the Undated Librio Sketch annexed to Mr Makrylos' first affidavit. 238 Mr Librio's stated understanding was that he had performed the work for Kara Developments, an understanding at odds with the idea that he was responsible for designing a family home of personal importance for Mr Makrylos and Ms Panagopoulos. 239 Mr Librio gave no evidence to the effect that he was ever given instructions about such things as to the features any such house should have, what size it should be, what aesthetic style it should have or anything of that kind. He said that he had no discussions with Mr Makrylos after the preparation of the April Librio Sketch. 240 Mr Librio's affidavit contains no evidence of having any conversations with Ms Panagopoulos about any such project and nor were any such conversations deposed to by Ms Panagopoulos in her own affidavit. The first mention of any communications passing between them was that raised by Ms Panagopoulos in cross-examination when pressed to explain the absence of records evidencing the design work for the home. When questioned about what other documents might be in existence to evidence the design for the home, Ms Panagopoulos could point to nothing other than making a vague reference to her having prepared a few sketches, which are not before the Court. She did not say that she provided any such sketches to Mr Librio. 241 Mr Makrylos' response to questioning about the limited number of documents evidencing the process for the design of the family home was even more evasive and wholly unconvincing. The absence of documentary support for the claim that Mr Librio was briefed to design the family home cannot be explained away by a flippant quip about how beautiful things are made. Moreover, Mr Makrylos in cross-examination referred to the Undated Librio Sketch as an example plan, and not as a plan for the family home. On the account given by Mr Makrylos the Undated Librio Sketch came into existence in February 2007 when he first approached Mr Librio. That very same typical house plan is depicted without change, in the April Librio Sketch. That is it. There is nothing more. 242 Ms Panagopoulos on the other hand attempted to explain how the Librio sketches depicted her desires for the layout of four living spaces with glassed views. She embraced the sketch as though it had been fashioned by her in conjunction with Mr Librio. She said that she "went and saw Joe" but as I have said, that assertion was not in her affidavit and finds no support elsewhere in the evidence. If there was any such visit it could only have occurred in or before February 2007 because by that time the design was bedded down and did not later change. I do not accept Ms Panagopoulos' evidence that the April Librio Sketch depicts her preferred design for a family home. It is an implausible account given the other evidence before me. 243 The words "MM House" on the copy of the April Librio Sketch annexed to Mr Makrylos' affidavit are out of court representations by Mr Makrylos and can rise no higher than its source. Not a single consultant deposed to having seen that marking at the time at which they performed their work. Precisely, when that mark came to be applied is not clear on the evidence. I afford it little weight. 244 The natural inference that arises from the evidence on this topic is that Mr Librio was engaged by Mr Makrylos in early 2007 to draw designs for houses to be situated in an eight lot subdivision on behalf of an entity or entities in the Makrylos Group, of which the house depicted in the Undated Librio Sketch and the April Librio Sketch was a typical example. But it is unnecessary to make a positive finding to that effect. It is sufficient to say that the evidence upon which Mr Makrylos relies in support of his stated intention to hold the Property for the purpose of building his family home is insufficient to discharge his onus of proof.

Prior "consistent" statements 245 Mr Makrylos otherwise adduced evidence of out of court statements he made to others that were said to reflect his true state of mind at the time they were uttered. The statements were to the effect that he intended to build his family home on the Property. Subject to what follows, the contemporaneous statements are consistent with Mr Makrylos' in court testimony about the subjective purpose for which he held the Property at the times that the statements were made. 246 The assertion that the statements were made to other persons was partially corroborated by some of those persons, albeit in general terms. I have no reason to question the credibility of the independent witnesses, although the quality of their recollections varied. 247 The corroboration of the other persons assists Mr Makrylos to prove that the prior contemporaneous statements were in fact made. However, on my consideration of the evidence as a whole, I am not satisfied that the statements are reliable evidence of Mr Makrylos' actual state of mind at the time that they were made for three reasons. 248 First, the out of court oral statements must be considered in the context of other prior statements made by Mr Makrylos that have been shown to have been knowingly untrue at the time that they were made. Of particular significance the lie Mr Makrylos told on his 2008 tax return concerning his residential address. That falsehood specifically related to the Property and was relevant to his tax affairs. Mr Makrylos is a person shown to have knowingly made untrue statements relating to the Property at critical times relevant to the present inquiry. In light of that finding, the other out of court statements cannot be regarded as reliable evidence of his true state of mind. 249 Second, I consider the out of court statements to be curiously lacking in detail and unaccompanied by any consequential instructions to the consultants engaged to obtain the relevant approvals, as discussed below. The consultants who prepared the plans and applications (particularly Mr Dodd, Mr Librio, Mr Jensen and Ms D'Rozario) did not depose to having instructions to do anything other than what they did: work toward what they understood would in fact be a multi-dwelling subdivision and development of the Property. For the most part the statement amounted to no more than an outward assertion by Mr Makrylos that he intended to build his own house on the Property. Expressed in such bare terms, the statement is consistent with an intention to reside in one of the developed lots upon the completion of a residential subdivision involving the construction of multiple dwellings in close proximity to each other. From the time that the Large Home Plan was said to have been abandoned (weeks before the Acquisition Date), the bare statement of intent was not made in terms suggesting that the only buildings to be constructed on the Property were the family home and, perhaps at a later time, a caretaker's residence. No person to whom the out of court statements were made deposed to having any knowledge of Mr Makrylos' intention, after the Acquisition Date, not to develop the Property in the manner depicted in the rezoning and planning applications he instructed them to prepare (as discussed below). 250 Third, as will be explained, Mr Makrylos' oral evidence about his prior statements made to Ms D'Rozario was so unsatisfactory that I am compelled to reject both his written and oral testimony about their conversation. The same observation may be made in relation to Ms Panagopoulos' evidence on the same topic. 251 I have not overlooked the importance of considering all of Mr Makrylos' out of court statements and to consider their accumulative weight. In that regard it is necessary to revisit the evidence given by the various persons to whom he made the statements.

Mr O'Donoghue 252 Mr O'Donoghue deposed to statements of intent made prior to the signing of the contract for the sale of the Property. Those statements pre-date the preparation of the Makrylos Sketch on or before 4 July 2006 in which Mr Makrylos first depicted of a multi-dwelling residential subdivision. The Makrylos Sketch pre-dates the Acquisition Date, as does the Earl James Concept Plan. 253 Mr O'Donoghue's evidence is capable of supporting a finding that Mr Makrylos may originally have had an intention to build a family home (and only a family home) on the Property. However, the weight of the evidence is that any such original intention did not exist as at the Acquisition Date, by which time there were early plans drawn depicting an eight lot subdivision. The corroborative value of Mr O'Donoghue's evidence must be viewed in the context of other evidence of Mr Makrylos about his intentions which cannot be accepted, as explained elsewhere in these reasons. 254 In cross-examination Mr O'Donoghue said that he remembered a discussion he had with Mr Makrylos about building his family home. Mr O'Donoghue said "it was always going to be big and huge and it was this home for him and Gina and, you know, their forever home". That conversation is consistent with the Large Home Plan which on Mr Makrylos' case was abandoned before 4 July 2006 when he drew the Makrylos Sketch. The truth of the statements made to Mr O'Donoghue are another thing altogether. 255 The alleged exchange about rezoning, before entering into the contract for sale, I have not accepted Mr Makrylos' evidence on that topic, as explained elsewhere in these reasons.

Mr Dodd 256 As I have mentioned, Mr Dodd confirmed that he had been provided with a copy of the Makrylos Sketch containing the words "MM House". He confirmed that Mr Makrylos had told him that he intended to build a house on the Property but could not precisely recall what was said. Mr Dodd's work was confined to preparing a digitised version of the Makrylos Sketch. His work was complete by 7 June 2006, weeks before the Acquisition Date. 257 As at 7 June 2006, the evidence supports a finding that any original intention to construct a home in accordance with the Large Home Plan had been replaced with an intent to subdivide the Property. Considered together and in isolation of other evidence, the Makrylos Sketch provided to Mr Dodd and the verbal statement made to Mr Dodd, might ordinarily lend support to a finding that Mr Makrylos intended to live in one of the multiple dwellings within a subdivided residential estate with close boundaries. However, that is not the factual case that Mr Makrylos ran on this appeal. His case was that the only dwellings he intended to build on the Property was his family home and the caretaker's residence. No words of that kind were said to Mr Dodd. If that was Mr Makrylos' intention, Mr Dodd was oblivious to it.

Ms Pascoe 258 Ms Pascoe told the Court that she was instructed to prepare the First Qantec Report (dated 27 June 2006) for the purpose of a potential subdivision being considered for the Property, but that she did not discuss the details of the subdivision with Mr Makrylos. That conversation occurred before the contract for the sale of the Property was signed. Ms Pascoe repeated without hesitation that Mr Makrylos told her that he was interested in purchasing the Property for the purposes of a subdivision. 259 In re-examination Ms Pascoe said that she had discussions with Mr Makrylos in terms of there being "dwellings possibly across the site" (although she could not recall the numbers) and relating to the floor levels that would be required. With respect to the Second Qantec Report she said that having the proposed subdivision layout meant that she could look at lots and apply levels to each lot if necessary and so update the First Qantec Report. 260 There was no attack on Ms Pascoe's credit. She was forthright and certain in her recollections. I accept her evidence as to the instructions given to her by Mr Makrylos and otherwise as to the words said by him and the timing of the initial exchange. 261 Ms Pascoe's evidence is supported by the contemporaneous First Qantec Report which expressly refers to there being a subdivision then in contemplation. That document and Mr Makrylos' words predate even the contract for the sale of the Property. It is inconsistent with Mr Makrylos' asserted intention to build a house in accordance with the Large Home Plan and his evidence about when that drawing came into existence. On the topic of Mr Makrylos' subjective intention I prefer the evidence of Ms Pascoe to any evidence given or document created by Mr Makrylos. It is significant that the prior out of court statements to Ms Pascoe about Mr Makrylos' reasons for purchasing the Property were made before the contract for the purchase of the Property was entered into. They are inconsistent with the statements made to Mr O'Donoghue about the purpose of the acquisition itself. They are also inconsistent with Mr Makrylos' evidence that in the lead up to signing the contract he drew up the Large Home Plan which he said was completed on 30 June 2006. They are also inconsistent with his evidence that he first considered the need for subdivision after discussions with town planners and Mr Jensen (which post-dated the drawing of the Large Home Plan). I consider Ms Pascoe's evidence to be reliable and independent and I afford it great weight.

Mr Jensen 262 On Mr Makrylos' case he abandoned his Large Home Plan just days after completing the drawing for it because he considered it was out of his budget and that it may be overcapitalising on the Property. If there was ever a desire to build a home in accordance with the Large Home Plan it must have been abandoned at least as early as 4 July 2006, the date upon which Mr Makrylos went to see Mr Dodd with the Makrylos Sketch in hand. It follows on Mr Makrylos' case that the discussion with Mr Jensen must have occurred in the few days between the completion of the Large Home Plan and the completion of the Makrylos Sketch. Mr Jensen confirmed that he had seen a drawing similar to the Large Home Plan and I accept his evidence. However, he recalled that his discussion with Mr Makrylos took place in June 2007. That undermines the evidence of Mr Makrylos and Ms Panagopoulos as to when the Large Home Plan was drawn and when it was abandoned. 263 In his evidence about later preparing the planning applications in 2009, Mr Jensen made no reference to having any understanding that the planning applications he prepared were for the personal purposes of Mr Makrylos, nor did he profess to having any knowledge of any intention on Mr Makrylos' part to construct only a family home and caretakers residence on the Property at the time that Mr Jensen prepared the First Planning Application. Mr Jensen's own work makes no reference to any such intention. To the contrary, the First Planning Application prepared by Mr Jensen contains statements as to what the Makrylos Group intended to do on the Property. The identification of the developer and the description of the proposed works is inconsistent with Mr Makrylos' case on this appeal. It is for Mr Makrylos to explain that inconsistency. On my consideration of the evidence as a whole, the explanation he provided lacks cogency. 264 Mr Jensen did not give evidence of having any awareness of there being any connection between his discussion with Mr Makrylos in 2007 and the instructions he received in 2009. There is nothing in the evidence given by Mr Jensen to suggest that the true intention of the First Planning Application was to achieve reduced setbacks for a proposed family home or a separate title for a caretaker's residence. That is significant given that it was Mr Jensen who first told Mr Makrylos about the need to either obtain a waiver of setback requirements or to subdivide the land. Any discussion concerning the Large Home Plan in mid 2006 has little significance in the circumstances just described.

Mr Librio 265 In re-examination, Mr Librio said he had no recollection of Mr Makrylos saying that he intended to live in a home on the Property. Having regard to the evidence as a whole, I am not satisfied that any such statement was ever made. Mr Librio positively denied having ever been engaged to design any dwellings for Mr Makrylos personally and I accept that evidence. 266 As discussed earlier, the alleged statement to Mr Librio was not accompanied by evidence of any further words or conduct that would ordinarily occur in the context of a brief to an architect to build a family home with all of the desired features to which Ms Panagopoulos deposed, such as expanses of glass, high set louvres, multiple living spaces with views and a "tropical feel". Neither Ms Panagopoulos nor Mr Librio included any evidence in their affidavits about any discussion between them. To the extent that Ms Panagopoulos gave oral evidence in cross-examination that she had any discussions with Mr Librio, her account is not supported by the evidence of Mr Librio nor by the documentary record. Ms Panagopoulos' evidence was vague and unconvincing on that topic. I formed the impression that she was attempting to avoid giving specific evidence about the alleged design process with Mr Librio because there were no specifics she could give. 267 Considered in conjunction with the body of documentary evidence, the proper inference is that the drawings prepared by Mr Librio were for the purposes of obtaining rezoning approval so as to allow the Property to be used for a subdivision of eight dwellings of which the house depicted in lot 3 was a typical example. 268 Mr Makrylos' evidence about his instructions to Mr Librio was itself ambiguous. He appeared to state that Mr Librio's brief related to achieving the rezoning of the Property, and yet in cross-examination he slipped into a narrative about the "example" house in fact being his private dwelling. His evidence is difficult to reconcile against Ms Panagopoulos' embracement of the Librio Sketches as depicting her dream home. 269 I find that Mr Librio did not prepare any plans for the design of a family home, whether on the instructions of Mr Makrylos or Ms Panagopoulos. The absence of those instructions and the changing nature of Mr Makrylos' evidence on this topic weighs heavily against a finding that there was ever an intention to build a family home whether on a subdivided lot or at all.

Ms D'Rozario 270 Mr Makrylos gave internally inconsistent evidence about his dealings with Ms D'Rozario. In his affidavit he asserted that he had told Ms D'Rozario that he wanted to build his family home on the Property and that they had discussed the setback issue and the benefits of subdivision to accommodate the setback. 271 In cross-examination he appeared to forget what he had said in his affidavit. He acknowledged that the words he said to Ms D'Rozario were correctly reflected the first page of her letter of advice. It is to be recalled that the advice began with the statement "I understand from our meeting of 22 February 2007 that you wish to develop lot 9327 as a residential estate". 272 When confronted with the inconsistency between his affidavit and oral evidence Mr Makrylos complained that Counsel was trying get him on one sentence. He then reverted to a narrative that attempted to accommodate both scenarios. He then said that it was his intention to create a "two lot subdivision" which he did not tell Ms D'Rozario about. He did not accept that the intention to create two lots was inconsistent with what Ms D'Rozario had been told. It is plainly inconsistent. 273 Mr Makrylos gave oral evidence on this topic in a manner that was highly evasive and that varied according to the challenges that arose in the questions. In the circumstances described Mr Makrylos' evidence on this topic is wholly unreliable. 274 As mentioned earlier in these reasons, the stated purpose of the First Rezoning Application as eventually filed was to achieve the rezoning of the Property "to a zone that would enable the land to be developed as an integrated residential estate of 10 dwellings" on eight allotments. The design and construction of the dwellings was to be undertaken "as one coherent whole". I am satisfied that Ms D'Rozario included all of the representations of intention in the First Rezoning Application on the instructions of Mr Makrylos. 275 Ms D'Rozario acknowledged that she had at some point been told that there was an intention to build a family home on the Property, but that intention was understood by her as one involving Mr Makrylos owning one of the houses in the completed multi-dwelling project. As I have said, it formed no part of Mr Makrylos' case on this appeal that he intended to live in a completed home in close proximity to other houses in a multi-dwelling subdivision. 276 Even if at some point it was said that Mr Makrylos would live on the Property, I am satisfied that Ms D'Rozario was oblivious to any intention on his part to obtain rezoning for the purpose of achieving a reduced setback for a family home without proceeding with any other part of the project as represented to the authorities in the First Rezoning Application made on his instructions. 277 Ms Panagopoulos' evidence does little to assist Mr Makrylos' case on this topic. In her affidavit she made a bare reference to having attended the meeting with Ms D'Rozario but did not include any evidence as to what was said to Ms D'Rozario. In cross-examination she said that she specially recalled telling Ms D'Rozario that she wanted to build a family home on the Property. As I have said, that is consistent with Ms D'Rozario's evidence of having been told that at "some point". 278 Ms Panagopoulos then responded to a question that Ms D'Rozario "knew why she was putting together a planning application for a subdivision of eight lots?" with the answer "that's right. It's for - to - to decrease the - the - the side boundary - the boundary and setbacks for our house". However, Ms Panagopoulos did not say how Ms D'Rozario came to have that knowledge and the issue was not pursued in cross-examination. 279 I consider Ms D'Rozario's letter of advice to be the most reliable contemporaneous record of the things said in the meeting. I am not satisfied that Ms D'Rozario was made aware that the First Rezoning Application was made for the purpose only of achieving reduced set backs for the family home, nor am I satisfied that she was made aware that there was no actual intention to proceed with the construction of multiple dwellings on the Property if the First Rezoning Application were to be granted. Accordingly, I find that the statement of Ms D'Rozario of an intention to build a family home on the Property is of little forensic value to Mr Makrylos in proving the particular factual case he presented on this appeal.

Other observations of the evidence of Ms Panagopoulos 280 Considered in context, the question of whether Mr Makrylos and Ms Panagopoulos resided at the Property for a period of 14 weeks until 26 April 2007 is of little significance in and of itself. What is in issue is Mr Makrylos' asserted reason for residing there. Mr Makrylos ultimately claimed a main residence tax exemption with respect to the Property. He had previously claimed that exemption in relation to another property that formed part of a residential development of the Makrylos Group. He did not claim to be ignorant of the tax benefits that might be achieved by residing on land that might later be sold with a gain. 281 Ms Panagopoulos' affidavit evidence was consistent with Mr Makrylos' evidence as to the fact of their residence on the Property and the reasons for it. In her affidavit, she deposed to moving out of the property on 26 April 2007. That is the same date on which the power supply to Property was cut off because of a faulty meter, and yet neither Mr Makrylos nor Ms Panagopoulos mentioned the cutting of the power supply at all. It is significant that in cross-examination Ms Panagopoulos could not recall the date upon which she vacated the Property, notwithstanding the precision about the timing in her affidavit. I do not accept that she had a true recollection of the date at the time that she made her affidavit. That affects my assessment of her reliability as a witness more generally. 282 As I have mentioned earlier, Ms Panagopoulos was not a convincing witness in cross-examination in respect of topics of significance. I was particularly unimpressed with her vague responses with respect to the design of the family home. She was slow to acknowledge that no documents existed to evidence any design process. I am equally unconvinced by her evidence about having made bookkeeping mistakes with respect to the payment of expenses referrable to the Property by corporate entities. 283 Considered in the context of the evidence as a whole, Ms Panagopoulos' assertion about there being a continued intention to build a family home on the Property, persisting for a period of some three years, is an assertion unsupported by corroboration from sources other than herself and Mr Makrylos. Given the issues I have identified, I do not consider her evidence to be sufficiently compelling to overcome the innumerable difficulties in Mr Makrylos' own account or the inference that naturally arises from the contemporaneous records of the companies and the consultants.

The final envisaged development 284 Mr Makrylos acknowledged that by reason of his discussion with Mr Jensen he was aware that it was not necessary to subdivide the Property in order to construct the family home and caretaker's residence there, and that all that was required was a development permit. He claimed that he nonetheless wished to pursue the subdivision so that the caretaker's residence could be situated on a separate title for the purpose of securing finance. His motivations for pursuing the rezoning and subdivision were also related to his desire to construct a family home two metres from the rear corner boundaries so as to make the best use of the land. It is that motivation that is said to explain the considerable efforts and expense he went to with respect to the First Rezoning Application and the First Planning Application. As I have said, those documents contain clear statements of an intention of the Makrylos Group to construct multiple dwellings on the Property. If Mr Makrylos' evidence is to be believed, the planning applications contained false statements of intention and of the identity of the intended developer. 285 It was said by both Mr Makrylos and Ms Panagopoulos that if the First Planning Application was allowed they had no intention at all to develop the Property in accordance with the development described in it. They stated that they had no legal obligation to do so and that if they did not do so, then the approval would merely lapse. Assuming that to be a truthful statement of their understanding of the law, there is curious lacuna in the evidence that remains unexplained and that renders their account incoherent and unconvincing. 286 It has not been explained how allowing the development approvals to lapse could translate into an entitlement to build a family home on the Property with two metre setbacks and a caretaker's residence elsewhere on the Property on a different title (whether for the purposes of securing finance or otherwise) and no other dwelling. 287 The subdivision applied for involved the creation of separate titles all entered from a large road in the shape of a cul de sac, the size and shape of the allotments affected by the cul de sac itself. It has not been explained how the family home situated at the rear of the property on a separate title to (at least) the caretaker's residence could be entered other than by way of that newly created cul de sac. If the approvals were to expire, there is no coherent account given of what the final division or development of the Property would be, both in terms the creation of new titles (if any) and the situation of buildings on them. 288 The case theory is one in which considerable expense and delay was occasioned by obtaining the approvals when at the end of the day there was no intention to build in accordance with the approvals at all. Acceptance of the theory would mean that Mr Makrylos has caused development applications to be made that contain statements of intent that are untrue. On the other hand, if the statements of intent are true, then the development would involve Mr Makrylos' family home being among multiple other houses on the same land around a cul de sac which cannot be reconciled with other aspects of his evidence about his alleged intended use of the land. 289 In the result, it is not necessary to make any finding as to what the actual intention was at any time, at least in respect of the trading stock issue. It is sufficient to find that the unsatisfactory nature of the case presented on the appeal is such that I cannot be satisfied on the balance of probabilities of a coherent state of affairs capable of explaining away the clear inferences that arise from the independent and contemporaneous documentary record. 290 In addition, to the extent that Mr Makrylos and Ms Panagopoulos suggested that they would be entitled to (and intended to) let any approvals "expire" without in fact constructing the multiple dwellings, that particular intention was not disclosed to any of the consultants at any time. Their evidence that they had no intention to proceed with the multi-dwelling subdivision emerged in each case in re-examination. In the case of Ms Panagopoulos it emerged in response to a question so obviously leading that I place little weight on her response in any event. 291 In the final analysis, it is not her understanding and intent that matters. 292 I am prepared to accept that an approval to subdivide and develop land need not be acted upon. I am also prepared to accept that if not acted upon, such an approval may expire. 293 I do not accept Mr Makrylos' assertion that it was ever within his contemplation to let any approval of the First Planning Application to expire. On Mr Makrylos' own case the First Planning Application was pursued at considerable expense so as to achieve his purposes of having a smaller setback as well as a separate title for the caretaker's residence. It was not explained how either of those things could be achieved if approval of the First Planning Application were left to expire. 294 Mr Makrylos' attempts to distance himself from the statements of intent contained in the First Rezoning Application and the First Planning Application were wholly unconvincing in any event. The weight of the evidence is that the consultants did precisely what Mr Makrylos had instructed them to do and that his instructions aligned with his actual intentions which in turn reflect his purpose for holding the Property. To the extent that those documents are inconsistent with Mr Makrylos' testimony, and his prior out of court verbal statements, the documentary records are the more reliable source of evidence with respect to his state of mind. 295 I have not overlooked that an intention to build a family home on the Property (as asserted in the out of court verbal statements) is not inconsistent with an intention to build the home on a newly created allotment (namely lot 3), nor is it inconsistent with an intention to create and develop the remaining lots within a residential development around a cul de sac. From the Acquisition Date that inference may well be open. However, it is not for the Court to say how the evidence might support such an alternate case when it was not a case that Mr Makrylos sought to run. Throughout this proceeding he has maintained that until April 2010 the only dwellings he intended to construct on the Property were a family home and (at a later time) a caretaker's residence. I reject that case. It is unnecessary to postulate what further alternative case could have been run by him based on a different universe of facts.

The ordinary course of a business 296 On this topic it is to be borne in mind that Mr Makrylos is the relevant tax payer. He is a different entity to each of the companies referred to in these reasons and his tax liabilities are separate and discrete. 297 For Mr Makrylos it was submitted that he was not carrying on a business in his personal capacity until he committed the Property to the joint venture. On his primary case, he did not commence his "property development business involving the property" until he was legally obliged to commit the Property to the joint venture, which obligation occurred when a condition precedent to the performance of his obligation arose under the joint venture agreement. That date is 18 May 2011, when the Second Planning Application was granted. Alternatively, Mr Makrylos argues that he did not commence the business until the joint venture agreement became binding upon him, notwithstanding the condition precedent to performance. He alleges that date is April 2010. 298 Mr Makrylos denies that he carried on a property development business in his personal capacity at all. He submits that it would be wrong to conflate the property development activities of companies in the Makrylos Group with his own personal activities. He submits that signing a contract for the purchase of land for the construction of a family home does not constitute the carrying on of a business. 299 Mr Makrylos' case nonetheless embraces the concept that he held the property as trading stock, that is, for the purpose of sale in the ordinary course of a business. The essence of his submission is that any business carried on by him personally was defined by the joint venture and so could not commence until a joint venture agreement came into effect. 300 In Evans v Federal Commissioner of Taxation (1989) 20 ATR 922, Hill J said (at 939): The question of whether a particular activity constitutes a business is often a difficult one, involving as it does questions of fact and degree. Although both parties referred me to comments made in decided cases, each of the cases depends upon its own facts and in the ultimate is unhelpful in the resolution of some other and different fact situation. There is no one factor that is decisive of whether a particular activity constitutes a business. As Jessell MR said in the famous dictum in Eriksen v Last (1881) 8 QBD 414 at 416: There is not, I think, any principle of law which lays down what carrying on trade is. There are a multitude of things which together make up the carrying on of trade. Profit motive (but see cf. IRC v Incorporated Council of Law Reporting (1888) 22 QBD 279), scale of activity, whether ordinary commercial principles are applied characteristic of the line of business in which the venture is carried on (IRC v Livingston (1926) 11 TC 538), repetition and a permanent character, continuity (Hope v Bathurst City Council (1980) 144 CLR 1 at 9; 12 ATR 231 at 236; Ferguson v FCT (1979) 9 ATR 873 at 876; 79 ATC 4261 at 4262), and system (Newton v Pyke (1908) 25 TLR 127) are all indicia to be considered as a whole, although in the absence of any one will not necessarily result in the conclusion that no business is carried on. 301 The High Court approved that statement in Spriggs v Commissioner of Taxation (2009) 239 CLR 1 (at [59]): The existence of a business is a matter of fact and degree. It will depend on a number of indicia, which must be considered in combination and as a whole. No one factor is necessarily determinative. Relevant factors include, but are not limited to, the existence of a profit-making purpose, the scale of activities, the commercial character of the transactions, and whether the activities are systematic and organised, often described as whether the activities are carried out in a business-like manner. (footnotes omitted) 302 As a question of law, it is correct to say that the signing of a contract for the purchase of land for a family home does not constitute the carrying on of a business. However, as question of fact, Mr Makrylos has not proven to the requisite standard that he purchased the Property for a family home. 303 In addition, I am not satisfied that the business of property development undertaken by the "Makrylos Group" is a business conducted only by the corporate entities identified in these reasons. The evidence supports a conclusion that Mr Makrylos personally is a participant among a group of entities whose affairs are so integrated that the business of property development cannot be said to be owned and operated by any one of them in isolation from the other. He has not shown that the Property was held in his own name for reasons independent of the property development business conducted by the "Makrylos Group". The facts of the present case are that Mr Makrylos ventured real property legally held in his own name into a joint venture, and that its ultimate sale was undertaken in the ordinary course of a property development business. The relevant question is when the purpose for holding the Property for that future purpose first arose. As discussed below, on the proper construction of the definition of the expression "trading stock", that purpose may arise without the person having certainty as to the terms on which the thing might be sold, to whom, on what terms, and the form it might take at the time of its sale. 304 If I am wrong in that conclusion, I am not satisfied that the business operated pursuant to a joint venture first commenced operating in April 2010, when Mr Makrylos claims the contract prepared by Clayton Utz came into existence. Four things may be said about that aspect of the appeal. 305 First, I am not satisfied that the document prepared by Clayton Utz came into existence when Mr Makrylos asserted that it did. The only evidence of the date of the preparation of the agreement is Mr Makrylos' own testimony. I have earlier made findings that Mr Makrylos made false and self-serving declarations so as to create an appearance of facts existing at a point in time which did not in fact exist. Given that and other factors affecting his credibility, I do not accept his evidence as to when the document was created can be relied upon. In addition, Mr Makrylos acknowledged that the later joint venture agreement dated 2011 was not drawn up until 2013, after 12 of the 16 houses in the development were sold, although he also professed ignorance as to the retrospective timing. The document itself indicates that it was prepared in 2013. 306 Second, in re-examination Mr Makrylos was taken to the Undated JVA. He volunteered a remark that he had not seen it in years. When asked whether he could tell the Court whether the agreement was signed, he said "No". He then said it was signed, but he could not find the signed version. When asked when it was signed he said "[s]ome time back then, 2008 or 2010, or whatever". In light of that shifting evidence I am not satisfied that a joint venture came into existence for the first time in 2010. 307 Third, the conduct of Mr Makrylos is consistent with him causing the companies to take steps (or participate in the taking of steps) to obtain approvals for the subdivision and the development of a property held in his name, including by spruiking the credentials of the Makrylos Group and the development business in the rezoning and planning applications. As I have mentioned, the cumulative effect of the documents is that the companies were participating in a project for the subdivision and development of the Property including by engaging consultants, paying for their services and representing themselves as the applicant developer. All of that is evidence of a common purpose among the entities of the Makrylos Group to achieve the very thing that ultimately occurred: the creation of a multi-dwelling subdivision in which Mr Makrylos ventured land legally held in his name. The cooperation between Mr Makrylos and the companies is further evidenced by the companies extending loan monies to him for the payment of a significant amount as the balance of the purchase price. In cross-examination Mr Makrylos said that he had repaid the money, but there is no evidence as to when that occurred and on what terms. I have not accepted that Mr Makrylos' personal financial affairs became intermingled with those of the companies by human error or misunderstanding. Rather, I find that the business carried on by the Makrylos Group was a business carried on not only by the corporate entities but also by Mr Makrylos personally in an ongoing commercial enterprise involving the development of property or, at the least, the development of the Property forming the subject matter of this proceeding. The date upon which a written agreement came into existence is of little significance against the facts I have found. 308 Fourth, the Undated JVA refers to there being a development application already on foot. That provides further evidence that the development application was itself a business activity of the Makrylos Group and not something for the benefit of Mr Makrylos personally. 309 Fifth, the activities leading to the ultimate development and subdivision of the Property proceeded as a continuing project consistent at first with the land division depicted in the Makrylos Sketch of 4 July 2006 and later amended to reflect a change in planning requirements making a 16 dwelling project possible. The Second Planning Application adopted referred to the earlier approval and referred to a change in intent by the same developers. 310 Any one of these features is sufficient to reject this aspect of Mr Makrylos' case on the facts. 311 The definition "trading stock" bears repeating: anything produced, manufactured or acquired that is held for purposes of manufacture, sale or exchange in the ordinary course of a business 312 The phrase "held for the purposes of a sale" is not to be equated with "held in the ordinary course of a business". A person may hold land for the purpose of a sale intended to occur some time in the future. The item held will be trading stock if the sale in the person's contemplation is a sale that is to occur in the ordinary course of a business at an undetermined date in the future. The particular business envisaged may change, without altering the purpose for which the item is held. I find that Mr Makrylos held the Property for that purpose well before April 2010. His evidence that he signed that agreement "[s]ome time back then, 2008 or 2010, or whatever" is so vague that I am not satisfied to the requisite standard that the date that the requisite purpose was first formed is April 2010. 313 Even if the purpose first arose in 2008, Mr Makrylos' appeal must be dismissed because there is insufficient valuation evidence to show that the assessments are excessive or to show what they should have been.

Condition precedent 314 For similar reasons, the submission that the requisite purpose could not come into existence until Mr Makrylos became legally obliged to sell the land (that is, on 18 May 2011) may be shortly rejected both on the facts and the law. 315 On the facts, Mr Makrylos held the land for the defined purpose well before he was contractually obliged to proceed with its sale. 316 As a question of law, an item may be held for the purpose of sale in the ordinary course of a business whether or not the person has in their contemplation the form that the item may take when it is sold, to whom it will be sold, at what price and on what conditions.

PROFIT MAKING SCHEME 317 In the circumstances I have described it is unnecessary to consider the Commissioner's alternate case that the Amended Assessments would be the same even if Mr Makrylos could show that the "trading stock" definition was not satisfied. 318 The Commissioner contends that because Mr Makrylos acquired the Property as part of a profit making scheme, he would only have been entitled to a deduction pursuant to s 8-1 of the ITAA for outgoings in the nature of acquisition costs in the financial year of the acquisition and not in either FY 2013 or FY 2014. 319 Unlike the purpose referred to in the "trading stock" definition, for a profit making scheme to arise, it is necessary that the tax payer to have an intention to derive a profit from the relevant property at the time of its acquisition: Federal Commissioner of Taxation v Whitfords Beach Pty Ltd (1982) 150 CLR 355; Federal Commissioner of Taxation v Myer Emporium Ltd (1987) 163 CLR 199; Westfield Ltd v Commissioner of Taxation (1991) 28 FCR 333; Antlers Pty Ltd v Federal Commissioner of Taxation (1997) 35 ATR 64; Evans. 320 If it were necessary to determine the question I would conclude on the whole of the evidence that Mr Makrylos entered into the contract for the sale of the Property with the purpose of developing it in a multi-dwelling subdivision and selling the units within the development with a view to gaining a profit in a commercial venture. 321 It may be unnecessary to go so far, given that the onus remains at all times on Mr Makrylos to show what the assessment ought to have been. The onus necessarily requires him to prove facts that would necessarily result in a different and lower tax assessment. Many of the observations I have made about the deficiencies in Mr Makrylos' "trading stock case" apply equally to the present question, albeit that the focus of the inquiry is on Mr Makrylos' state of mind at the time that he entered into the contract to purchase the Property. 322 I place significant weight on the statements made to Ms Pascoe (which preceded the contract and disclosed the motivation for the purpose) and the Makrylos Sketch. The Makrylos Sketch came into existence in close proximity to the signing of the contract and is highly informative of Mr Makrylos' state of mind attending the acquisition. It is possible that Mr Makrylos at some time considered the construction of a large family home on the Property, however, Mr Makrylos has not established that that consideration persisted at the time that the contract for the purchase of the Property was signed. His evidence is too unreliable to enable a conclusion to be drawn about when the Large Home Plan was drawn. Mr Jensen's recollection of when he saw the Large Home Plan is uncertain, although he did say he thought his discussion with Mr Makrylos occurred in June 2007. That does not assist Mr Makrylos' case on the present issue. Given the concerns I have about the reliability of Ms Panagopoulos' evidence I do not consider that her affidavit or oral testimony should be given weight. 323 Accordingly, if I am wrong in my conclusion that Mr Makrylos has failed to establish that he first held the Property as trading stock on the two alternative dates alleged by him, I would nonetheless conclude that he has failed to establish that the Amended Assessments were excessive, and that he has also failed to establish what the Amended Assessments should have been.

CONCLUSION 324 Before concluding I record here that Counsel for Mr Makrylos made submissions about factual findings that should not be made because of asserted failures on the part of Counsel for the Commissioner to comply with the rule in Browne v Dunn (1893) 6 R 67. 325 To the extent that the submissions involved a criticism of the cross-examination of Mr Makrylos and Ms Panagopoulos I reject it. The Objection Decision involved an outright rejection of the facts asserted by Mr Makrylos which necessarily involved a rejection of the assertions that he had made about this purpose for holding the Property. The whole of Mr Makrylos' factual case was put into dispute in the initiating documents in this proceeding and Mr Makrylos was well aware of the documents the Commissioner intended to tender at the hearing. Counsel for the Commissioner was under no obligation to conclude each topic of cross-examination with a challenge to the veracity or reliability of what emerged. 326 For the most part, my reasons are based on my assessment of the relative reliability of the evidence of the various witnesses and documentary records. In the instances where I have found that Mr Makrylos has lied am satisfied that he was on notice that the veracity of his account would be called into question. 327 I have concluded that the evidence of Ms Panagopoulos was unsatisfactory in several respects and so was insufficient to corroborate Mr Makrylos' account in important respects. I have preferred the evidence of other witnesses to that of Ms Panagopoulos where they bore on the same topic and I have otherwise found that her testimony does not overcome the overwhelming inferences to be drawn from the contemporaneous documentary record. Counsel for the Commissioner was under no obligation to point out to Ms Panagopoulos that her evidence was unreliable, nor to point out how it might be assessed against other evidence before the Court. 328 There will be an order dismissing the appeal. 329 The parties should be heard as to costs. I certify that the preceding three hundred and twenty-nine (329) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Charlesworth.