Marchesi v Apostolou

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

BETWEEN: BRENDAN JOHN MARCHESI AS TRUSTEE OF THE BANKRUPT ESTATE OF ANDREW VASILIOU, A BANKRUPT

AND: VASILIKI APOSTOLOU AS TRUSTEE OF THE VASILIOU FAMILY TRUST

REASONS FOR JUDGMENT 1 The applicant is the trustee of the bankrupt estate of the second respondent, Mr Andrew Vasiliou. A dispute has arisen between them with respect to the nature of Mr Vasiliou's interest in three real properties in suburban Melbourne. Mr Vasiliou is the registered proprietor in each case, but he claims that the beneficial interest is owned by the Vasiliou Family Trust, of which his wife, Ms Vasiliki Apostolou, the first respondent, is trustee. The applicant claims a declaration that the beneficial title of each of those properties has vested in him pursuant to s 58 of the Bankruptcy Act 1966 (Cth). 2 The respondents base their claim that the beneficial interest is held by the family trust upon two circumstances: first, they claim that Mr Vasiliou made a gift, which was perfect in equity, of the properties to the trust in October 1987; and secondly, and probably in the alternative, they claim that the trust obtained the beneficial interest pursuant to an agreement between Mr Vasiliou and the trust in March 1989. 3 The applicant disputes the efficacy in equity of the gift of October 1987 and of the agreement of March 1989. In the alternative, he says that both the gift and the agreement were done to defraud Mr Vasiliou's creditors at the time, and are, therefore, void as against the applicant (as trustee in bankruptcy) pursuant to s 121 of the Bankruptcy Act. 4 In the further alternative, the applicant says that, if Mr Vasiliou held the legal, but not the beneficial, interest in the subject properties as a result of either of the alleged transactions in the late 1980s to which I have referred, he (Vasiliou) was entitled to an indemnity out of the trust property for certain debts which he had incurred in relation to the subject properties, that that right vested in the applicant pursuant to s 58 of the Bankruptcy Act, and that the properties were charged in favour of the applicant with the payment of certain remuneration, liabilities, expenses etc. The applicant has identified thirteen separate items, ex facie liabilities of Mr Vasiliou but which would be liabilities of the family trust if Mr Vasiliou's arguments in equity were accepted, for which Mr Vasiliou would be entitled to an indemnity, the right to which vested in the applicant pursuant to s 58. 5 Mr Vasiliou represented himself at the trial of the proceeding. Ms Apostolou also represented herself, but her command of English was imperfect, and to the extent that she made submissions, she adopted those of her husband, Mr Vasiliou. Ms Apostolou did not call any witness (although she gave some brief supplementary evidence on her own account when called by Mr Vasiliou) and did not cross examine any witness called by another party. I formed the view that Ms Apostolou was heavily dependent on Mr Vasiliou for her understanding of the issues raised in the proceeding, and for the course she adopted in representing herself as trustee of the family trust. 6 This is the second time there has been a trial of this proceeding. The first trial ran before Weinberg J in April 2006. His Honour gave judgment for the applicant, but, in December 2006, a Full Court ordered a retrial: Vasiliou v Marchesi [2006] FCAFC 197. At the retrial before me, both the applicant and the respondents re-read the affidavits upon which they had relied before Weinberg J, in addition to which they read further affidavits. I mention this historical circumstance now because it explains what might otherwise be thought curious, namely, the substantial time interval between the dates of some of the affidavits referred to in these reasons.

THE FACTS IN OUTLINE 7 The case proceeded by affidavit, without pleadings. The applicant's evidentiary case in particular relied substantially on documents. 8 The three properties with which this proceeding is concerned ("the subject properties") are the following: (a) A block of four residential apartments at 10 Claremont Street, South Yarra (Volume 1173 Folio 541), purchased by Mr Vasiliou in 1976. (b) Light commercial or retail premises at 18 St Kilda Road, St Kilda (Volume 4509 Folio 646 and Volume 10088 Folio 011), purchased by Mr Vasiliou in 1979. (c) A residential unit at 5/3 Alfriston Street, Elwood (Volume 9012 Folios 077, 083 and 092), purchased by Mr Vasiliou in 1984. 9 There are two other properties which became relevant in this proceeding. The first was a house at 50 Great Valley Road, Camberwell, which Mr Vasiliou purchased in 1977. That purchase was financed by a loan from The National Bank of Australasia Ltd, which loan was in turn secured by a mortgage dated 18 November 1977. The second was a property at 181-185 St Kilda Road, St Kilda, which one of Mr Vasiliou's companies bought at public auction some time before 1987. The actual timing of that purchase was not revealed, but Mr Vasiliou said that the property had been fully paid for by 1987. 10 In the 1970's, Mr Vasiliou and Ms Apostolou lived together at the unit in Alfriston Street, which they then rented. At some point - the timing of which was unclear - Mr Vasiliou commenced his own photography business in which he would take photographs (at weddings, for example) and perform the subsequent operations of development and the like. At first, Mr Vasiliou conducted this business from the unit in Alfriston Street. After a time, he found the unit too small for his needs, and he considered building a small factory behind the apartments at Claremont Street for the purpose. However, ultimately he decided to purchase separate premises, and purchased those at 18 St Kilda Road. 11 By 1987, the position was, then, as follows. Mr Vasiliou owned two properties from which he received rent: 10 Claremont Street and 50 Great Valley Road. He owned a property which he used for his photography business: 18 St Kilda Road. He owned a property in which he and Ms Apostolou lived, and which he also continued to use for some aspects of his photography business: 5/3 Alfriston Street. And his company owned the land at 181-185 St Kilda Road (the actual use of which was not explained). 12 It seems that Mr Vasiliou had neither filed income tax returns nor paid tax on the income he derived from his photography business or from his rented properties. In each case he contended that, had his liability to tax ever been properly calculated, none would have been owing because of the substantial outgoings associated with that business and those properties. At some point in 1987 - if it matters, I would hold no later than about the beginning of August - Mr Vasiliou was the subject of an investigation by the tax authorities, and he was aware of it. Some time in August, he and Ms Apostolou decided to establish a family trust. In an affidavit sworn on 2 March 2007, Ms Apostolou said of this decision: "… because we have more properties than we need basically we set up this family trust for our children's future and security." In an affidavit sworn on 6 March 2007, Mr Vasiliou said that he and Ms Apostolou decided to place the three subject properties in the family trust to secure their children's future. Ms Apostolou was cross-examined so as to draw her attention to the circumstance that, unless the subject properties were at risk, there was no need to place them into a family trust in order to preserve them for her children (who were then eight and four years old). She appeared unable to follow the gist of what was put to her but, as counsel for the applicant submitted, from that point on there was no further suggestion that the trust had been established to secure the future of the children - either by Ms Apostolou or by Mr Vasiliou (who gave evidence after Ms Apostolou). 13 The corporate vehicle for the family trust was a company called Optquest Pty Ltd ("Optquest"). An historical extract of the records maintained by the Australian Securities and Investments Commission shows that Optquest was registered on 11 August 1987 and that Mr Vasiliou and Ms Apostolou became directors on 1 September 1987. At some point they also became shareholders, although there is no evidence as to the date on which that occurred. I find it to be probable that it occurred on, or immediately before, the date on which they became directors. The solicitor who acted for Mr Vasiliou at this time, Mr Phillip Dwyer of Coady, Dwyer & Associates ("Coady Dwyer"), and who gave evidence, could not recall whether his firm had caused Optquest to be incorporated or had bought it as a shelf company on behalf of Mr Vasiliou. 14 In his evidence, Mr Vasiliou said: My accountant recommend that I should restructure my affairs, and put some property in the trust to eliminate - to make the tax liabilities more affordable and more claimable, and more better for my management of the things. Because the photography business started then to show progress, and such seriously wanted to do something a little bit about it. During that time my accountant has been notified by the Australian Taxation Office that they need to come in and serve me with an amendment of tax. They wanted to serve us with amendments to the tax. And, as I said in my affidavit, they made an appointment. We came to my accountant's office and they brought in about $600,000 amendment statements, and, like, I mean in tax assessments. And it shocked my accountant, it shocked me. I thought it was a joke. 15 The income tax assessments to which Mr Vasiliou referred were not produced in evidence. The only evidence of them was contained in a Supreme Court writ issued by the Deputy Commissioner of Taxation against Mr Vasiliou on 11 March 1988. The assessments were for the years 1981-1986, and, according to the writ, were dated 21 September 1987. The Deputy Commissioner had, apparently, made the assessments by reference to bank records which revealed expenditures which Mr Vasiliou had made. The total amount of income tax for which Mr Vasiliou was assessed was $557,386.23 including additional tax and, in the case of the year to 30 June 1986, provisional tax. Mr Vasiliou found out about those assessments at a meeting at his accountant's office on a day which he distinctly recalls was a Tuesday. Given the date of the assessments, I consider it probable that it was 22 September 1987. Mr Vasiliou said that he had previously feared that he might be assessed for about $60,000.00 tax, but the actual amount, as he stated in evidence, shocked him and his accountant. He said that his accountant's face "turned yellow" and that the accountant was "about to faint". 16 Next in time, it appears, was the execution of a deed of settlement by which the Vasiliou Family Trust was constituted. The settlor was Mr Dwyer. The specified beneficiaries were the children of Mr Vasiliou, and the general beneficiaries were the specified beneficiaries and others, including the parents of the specified beneficiaries (ie Mr Vasiliou and Ms Apostolou). Mr Vasiliou was the appointor under the deed, with power to remove the trustee and to appoint any additional or replacement trustee. The trustee was Optquest. The deed was dated, in one place, 11 August 1987 and, in another place, 12 August 1987. However, going on the word processor date, imprinted on the deed, Mr Dwyer accepted that it was most probably executed on or soon after 22 September 1987. He said that his practice in such matters was often to give the deed a date which was the date upon which he first received instructions. He surmised that that might have occurred in this case, but he had no particular recollection. For whatever reason, the deed was back-dated to the date of incorporation of Optquest. The back-dating of the deed has left me with some disquiet as to whether Mr Vasiliou and Ms Apostolou did become directors of Optquest on 1 September 1987 as noted in the extract from the Commission's records, but the applicant did not suggest otherwise, and probably nothing turns on it. 17 In the deed of settlement, Mr Dwyer's address was given as 324 St Kilda Road. The address of Optquest was given as 2nd Floor, 582 St Kilda Road (then its registered office). Mr Vasiliou's address was given as 18 St Kilda Road. On 28 September 1987, the address of the registered office of Optquest was moved to Level 1, 330 Glen Eira Road, Elsternwick. It remained there until 27 June 1989 when it was moved to 18 St Kilda Road. 18 On 8 October 1987 Mr Vasiliou executed a document in the following terms: I, ANDREW VASILIOU, also known as ANDREAS VASSILIOU of 18 St Kilda Road, St Kilda, in the State of Victoria I make the following gift to a family trust known as :- THE VASILIOU FAMILY TRUST. Gifted certain properties 1. 10 Claremont Street, South Yarra, 3141 in Victoria. 2. 18 St Kilda Road, St Kilda 3182, in Victoria. 3. 5/3 Alfriston Street, Elwood, 3149 in Victoria. I hereby state that: - I make gift all the above properties toghether with chattels, fittings, and accessory Titles (if any) to the Family Trust named above with no consideration. In witness whereof the parties hereto have executed these presents on the day and the year first hereinbefore written. On the same day, Mr Vasiliou made a statutory declaration headed "In the matter of the Stamps Act", in which he referred to the deed of gift which I have set out above, and exhibited a statement of valuation with respect to each of the subject properties. He valued 5/3 Alfriston Street at $52,000.00, 18 St Kilda Road at $65,000.00 and 10 Claremont Street at $170,000.00. At about the same time Mr Vasiliou and Optquest executed a transfer under the Transfer of Land Act 1958 (Vic) ("the TL Act") in respect of each of the subject properties. In each case he was himself shown as the transferor, and Optquest was shown as the transferee. The consideration was said to be "the desire of the transferor to make a gift to the transferee". Mr Vasiliou's signature as transferor was witnessed by Mr Dwyer. The transfers were executed also by Optquest. Mr Vasiliou as director, and Ms Apostolou as secretary, witnessed the placement of the common seal on to each transfer. The transfers were left in the custody of Mr Dwyer. Both of the documents executed on 8 October 1987 carried a word processor identification at the foot which included the figures "25/9". In the light of Mr Dwyer's evidence, this leads me to infer that they were prepared on 25 September 1987. 19 According to Mr Vasiliou, the subject properties were not alone in being transferred from him to Optquest upon the establishment of the Vasiliou Family Trust. He said that the photography business was also transferred, and that thereafter it was Optquest, not himself, which was the proprietor of that business. Indeed, Mr Vasiliou said that the business was transferred to the trust in August 1987 - well before the properties were ostensibly transferred. Since Mr Vasiliou and Ms Apostolou were not directors of Optquest until 1 September 1987, I think it unlikely that any purported transfer of the business occurred before then. Given that it was Mr Vasiliou's contention that the business was transferred not merely to Optquest but to Optquest as trustee of the family trust, it is hard to see how the transfer could have occurred before the creation of the trust which, for the reasons explained above, I think most likely occurred on or soon after 22 September 1987. 20 On 22 October 1987, Mr Dwyer wrote to Mr Vasiliou. He enclosed his firm's account for professional fees and disbursements (amounting to $3,675.00 in total) for "corporate restructuring". The letter itself said that also enclosed was an "estimated Government fee", but no separate document referring to such a fee is in evidence. Rather, the letter asked Mr Vasiliou to "forward a cheque for $16,000.00 so that we can attend to payment once assessments issue." In his evidence, Mr Dwyer said that that would have been a reference to the stamp duty required to be paid on the proposed transfer - evidence which I would accept on the probabilities. Mr Vasiliou said that, soon after the execution of the transfers, he was advised by Mr Dwyer that stamp duty was required to be paid. He said that he wrote a cheque on the Optquest overdraft account with the Bendigo Building Society in the sum of $10,000.00 and gave that to Mr Dwyer. He said that, some time later, he received a large envelope in the mail from Mr Dwyer which contained all the trust documents and a refund cheque. No stamp duty had been paid. He said that he was "rather upset" and visited Mr Dwyer's office to tell him briefly that he was not happy about what he (Dwyer) had done to him (Vasiliou) and to the trust. 21 Ms Apostolou also gave evidence about these transactions. She said that, soon after executing the transfers, there was received at the registered address of Optquest - 18 St Kilda Road - a large envelope which contained all the signed, unstamped, transfers, related statutory declarations and a cheque. She exhibited the envelope to her affidavit. It was a plain manilla envelope, 255 mm x 380 mm, addressed by hand to Optquest at "18 St Kilda Street" [sic]. There was no return address, and no printed matter shown. There was no stamp or franking imprint on the envelope, but there was, towards the top right-hand corner of the face, the impression of a stamp in which the words "POSTAGE PAID AUSTRALIA" appeared inside a rectangular border. This envelope was shown to Mr Dwyer. He said he would be "amazed" if the letter emanated from his former firm, Coady Dwyer. He said that they did not use the system of paying for postage which had apparently been used in the case of that envelope. He said that they would not have hand-written the name and address on the envelope, and would have addressed such communication to the secretary of Optquest. He added that the envelope would have had his firm's address on the back. 22 Ms Apostolou said that Mr Vasiliou was so upset that Mr Dwyer had taken his money and not used it for the payment of stamp duty that "he drove down to his office and blast the hell out of him I was told and he never used him again". Ms Apostolou's evidence was consistent with that of Mr Vasiliou, but not with contemporaneous documentary evidence which is before the court. It is clear that Coady Dwyer did provide a cheque to Mr Vasiliou. There is in evidence a copy of a cheque drawn on the Coady Dwyer Trust Account, dated 23 March 1988, in the sum of $4,182.00, in favour of Mr Vasiliou. I consider it unlikely that that circumstance led to a parting of the ways as between Mr Vasiliou and Mr Dwyer since, on 28 April 1988, Mr Dwyer entered an appearance on behalf of Mr Vasiliou in a Supreme Court proceeding to which I shall refer presently. It is manifest that there had not been a parting of the ways by 1 March 1988. On that date Mr Dwyer wrote to Mr Vasiliou. He enclosed a copy of a letter to him (Dwyer) dated 11 February 1988 from the solicitors for the mortgagees for the property at 18 St Kilda Road. They requested certain documents which they required if Optquest was to take the place of Mr Vasiliou as mortgagor. In his letter of 1 March, Mr Dwyer asked Mr Vasiliou to make an appointment "so that the matter can be finalised". Not only was that before the sending of the cheque dated 23 March 1988 - it was consistent only with the existence of a conventional solicitor/client relationship at that stage. 23 Although it is common ground that the transfers were not stamped or lodged at the Titles Office, Mr Dwyer strenuously resisted the suggestion that he had been paid $10,000.00 to cover the cost of the stamp duty, but applied that money to his own professional fees. I shall return to this matter, and advert to the credibility of Mr Vasiliou, in due course. It is sufficient for present purposes for me to say that Mr Dwyer appeared to be acting in the normal course of his practice as a solicitor, and I have no reason (other than the evidence of Mr Vasiliou and the indirect evidence of Ms Apostolou) to doubt that he handled moneys which Mr Vasiliou had advanced to him in complete obedience to his professional obligations. I think it is likely that, at some earlier point, Mr Vasiliou had provided an advance to cover fees and disbursements. In his letter of 22 October 1987, Mr Dwyer did not ask for a cheque to cover the fees and disbursements to which that letter referred. He sought only the costs of the payments that would be due once the assessments (of duty) issued. I think it likely that Mr Dwyer held sufficient funds in trust to cover his own bill. The payment of $4,182.00 by Coady Dywer to Mr Vasiliou on 23 March 1988 has the appearance of being, and I find on the probabilities that it was, the return of surplus funds held on trust. 24 Mr Dwyer gave evidence that he was instructed by Mr Vasiliou not to proceed with the transfers of land because the stamp duty was too expensive. I accept his evidence in this respect. He could not recall when he received those instructions. Clearly the instructions were given after Mr Dwyer's notification to Mr Vasiliou in October 1987 that the stamp duty would be of the order of $16,000.00. It is also likely, and I find, that they were given between 1 and 22 March 1988. Mr Dwyer's letter of 1 March 1988 is consistent only with a belief on his part that the transfers were to proceed. His cheque dated 22 March 1988 sustains the inference that the transaction, such as it was, had proceeded as far as it was going to go. 25 There is some evidence that, on 24 February 1988, the Deputy Commissioner issued amended assessments of income tax for Mr Vasiliou. A photocopy of each such assessment was exhibited to an affidavit sworn by the applicant, without further comment. Without knowing the meaning of the symbols given to various figures on these assessments, it is not possible to explain what appears to be a very substantial increase in the tax being claimed from Mr Vasiliou. These matters were not adverted to by the parties at trial. However, setting aside the entries in the columns headed "Balances and Adjustments", the tax assessed under those amended assessments appears to have been broadly of the same order as that assessed in the original assessments of 21 September 1987. 26 On 11 March 1988, the Deputy Commissioner commenced proceedings against Mr Vasiliou in the Supreme Court of Victoria claiming payment of the income tax which had been assessed on 21 September 1987, plus certain additional tax and less certain credits which were allowed - a total net claim of $522,996.82, plus interest. There is no evidence as to when the writ was served on Mr Vasiliou, but, as I mentioned above in another context, Mr Dwyer entered an appearance on his behalf on 28 April 1988. 27 On 13 July 1988, the Deputy Commissioner commenced separate proceedings against Mr Vasiliou in the Supreme Court of Victoria claiming payment of sales tax in respect of two periods extending between 1 October 1984 and 30 September 1987 - a total claim of $160,849.43, plus interest. 28 There is indirect, but apparently reliable, evidence of another event which occurred on 13 July 1988. In evidence is a copy of a letter from the Deputy Commissioner dated 12 August 1988, in the following terms: We refer to your statement made to Ms E Stillwell of the Appeals and Review Branch of this office on 4 August 1988, that the order of Hampel J made 13 July 1988, is preventing you from renting out two properties presently untenanted. We draw your attention to the proviso in the order which states that: 'until further Order, the Defendant be restrained from alienating, transferring, selling, leasing, … or otherwise dealing in any manner whatsoever with … the property described in the schedule hereto, without the prior consent in writing of the Plaintiff or its solicitor'. Accordingly, should you wish to lease the properties which are presently untenanted, you should provide full details of the proposed arrangements together with a copy of the draft lease to this office, whereupon priority consideration shall be given to the matter. I infer that the order of Hampel J was made in the income tax proceeding commenced by the Deputy Commissioner on 11 March 1988. 29 On 26 July 1988 in the income tax proceeding, the Supreme Court made orders, on the motion of the Deputy Commissioner, that the Registrar of Titles be joined as a defendant and that the Registrar be restrained from registering any transfer, or dealing with any transfer, with respect to five properties, including the subject properties. Mr Vasiliou did not appear on that motion. There was no evidence (in this proceeding) as to the grounds upon which the Deputy Commissioner relied to obtain that order. 30 On 12 August 1988 the Deputy Commissioner corresponded with Mr Vasiliou in the terms I have set out in par 28 above. 31 By November 1988 Mr Vasiliou had paid off the loan which he took from The National Bank of Australasia Ltd for the purchase of 50 Great Valley Road, and on 17 November 1988 that bank discharged the mortgage which it had over that property. 32 On 22 December 1988, the Deputy Commissioner offered to settle his income tax claims against Mr Vasiliou by accepting a payment of $113,000.00. Mr Vasiliou responded to that offer by letter dated 20 January 1989, and the Deputy Commissioner proposed a series of payments, the first of which was to be due on 31 January 1989. It seems that Mr Vasiliou did not sign the terms of consent to settle the claims as proposed by the Deputy Commissioner. Rather, Mr Vasiliou eventually signed a consent to settle the claims on 10 March 1989. By the terms of that consent, the Deputy Commissioner's claims were settled for the sum of $113,000.00, payable by an instalment of $73,250.00 on 15 March 1989, and by subsequent instalments of $13,250.00 on the 15th day of each of April, May and June 1989. By the terms of the consent, Mr Vasiliou agreed that, in the event that he defaulted upon any of those payments, the Deputy Commissioner would withdraw his settlement offer. 33 In an affidavit sworn on 24 March 2006 for the purposes of the trial before Weinberg J, and again relied upon by the respondents before me, Mr Vasiliou explained the way he approached his dispute with the Deputy Commissioner, and how he structured the finance obtained for the purpose of paying the settlement sum: Soon after the Taxation Office had lodged an investigation against me for amended taxes and in January of 1989 I was offered to settled those amended claims for a payment of $113,000.00 At the same time the Tax Office placed Caveats on all properties that were gifted to the Trust and it has prevented any attempts for registration to take place unless the tax liability it was paid in full to them first. Those people mean business despite the fact that the tax amendments where in fact unfair I had to deal with them pay them or the Tax Office will have attacked the gift being less then two years old and they could go back and undo all the deeds of gift and subsequently sell the properties pay the mortgagees out and keep the equity left over. This tax problem was due for payment attention decision January 1989 and early February that year we had a meeting at our accountants Office to deal with that issue. It was decided that the Family Trust in order to retain its gifted properties the Trustee Optquest Pty Ltd will had to calculate and pay me all the equity that I gifted to the Trust about 15 months earlier being calculated to be a total of $182,000 if the Family Trust wants to secure full own ship of those properties. Optquest Pty Ltd the Trustee Company of the Vasiliou Family Trust has agreed to pay back to Andrew Vasiliou the full equity he gifted earlier to the Family Trust in order to retain ownership of the gifted properties. A calculation of the total equity was done that time and the sum of $182,000.00 was then being paid to Andrew Vasiliou by way of loan with Citibank LTD obtained in March 1989 and paid that amount was then being paid to Andrew Vasiliou between Marchs - June that year in full. In his viva voce evidence given on 15 March 2007, however, Mr Vasiliou gave a somewhat more elaborate and, it must be said, rather different explanation of these transactions, as follows: [The tax office] recommended to me, in '89, to sell a property or two and pay them. … [A]t that time we had to pay them $113,000. Now, my accountant says, if you go - if you sell a property you pay them out. No problem. But if you borrow money, he told me, Andrew, that the interest you pay on the money you are going to borrow, it is not tax deductible. And I said to myself, if I am borrowing $113,000, the interest rate would have been about 20 or $22,000 a year. That is $400 a week that I have to earn and pay tax on it. Before it was not tax deductible. So we have to find a mechanism that the interest will be tax deductible. So we looked towards the trust and we said if we get the trust to borrow the money and pay for my equity that I gifted back then, that way if you purchase the equity, instead of me selling a property … And then I wouldn't lose the property and then I didn't have to worry about interest or anything like this. But if I borrow the money myself, then I really serious consider it about the interest. But at that time, your Honour, I have sold my business to the trust already in '87 - August '87. The trust already start paying the properties out and all that. Spending money on it and all that. How I am going to pay if I borrow the money, how I am going pay the $400 interest per week for the $113,000 anyhow. I didn't have any income. I had no business. I had two properties paid for, but I did not have any other means of cash flow. So I couldn't afford it anyhow to borrow the money. Yet I had to sell a property or I had to use some kind of other means. So we thought that if we have a sale contract and sell my equity that I gifted earlier to the trust, then with that contract in place the trust can apply to a bank and get a loan. Say well, I bought this equity, that is the reason I want this money and it was needed for the trust to buy to get the loan. So with that contract in place, the trust has borrowed $182,000 and gave it to me, …. 34 There is in evidence a copy mortgage of the property at 50 Great Valley Road from Mr Vasiliou to Citibank Savings Limited, dated 20 March 1989. It refers to a "Letter of Approval/Agreement" dated 13 December 1988 between the mortgagee and Optquest (which itself is not in evidence). By a series of covenants endorsed on the mortgage, Mr Vasiliou effectively became guarantor for the performance by Optquest of its obligations under the agreement of 13 December 1988. I infer from these arrangements that, by 13 December 1988 at the latest, Mr Vasiliou expected that he would soon settle his dispute with the Deputy Commissioner, notwithstanding that the latter's formal letter in that regard was dated 22 December 1988. However that may be, Optquest opened a mortgage account with Citibank, the first drawdown from which was in the amount of $75,000 on 17 March 1989. On the same day, Mr Vasiliou wrote a cheque in favour of the Deputy Commissioner in the amount of $73,250, in part performance of the agreement between them made on 10 March 1989. Mr Vasiliou said, and it is clearly established on the probabilities, that the drawdown on the Optquest account was used to fund the payment to the Deputy Commissioner. 35 On 25 March 1989 Mr Vasiliou and Optquest executed a document described as "Heads of Agreement - Sale Contract". This document contained the following operative provisions: 1. Optquest Pty Ltd is the Trustee Company of the Vasiliou Family trust appointed on the 12th August 1987 at Melbourne in the State of Victoria. 2. Andrew vasiliou he is the donor of three properties named bellow vested in the Family Trust since the 8th of October 1987 originated by a deed of gift executed and declared on that day by the donor. 3. The properties that the equity & purchase and payment is made for in this agreement are: a) 5/3 Alfriston, Elwood Vic 3184 b) 10 Claremont, St South Yarra Vic 3141 c) 18 St Kilda Road, St Kilda Vic 3182 4. The equity in those properties at the time of the gift being the 8th October 1987 is calculated and agreed to be of the sum of $182,000.00 (one hundred and eighty two thousand dollars). 5. The parties agree that this is a special payment and is made under special circumstance and is one off such payment and is irrevocable and final and full settlement of the equity amount on all above mentioned properties. 6. The purchaser being Optquest Pty Ltd acting on behalf of the Family Trust will not be responsible for any further demands lodged by any other parties against Andrew Vasiliou from this day onwards. 7. Andrew Vasiliou agrees that he will signed and execute any further documents that deem necessary to pass Title to the Trust on all properties names in this agreement in favour of the Trustee Company or to its any subsequent appointed Trustees of the Vasiliou Family Trust. 8. Further Andrew Vasiliou agrees not to deal with the above mentioned properties without a written consent and permission from the Trustee of the Trust. 9. Existing mortgagers or payments of rates and outgoings are as always has being is the responsibility of Family Trust and all income from those properties or profits it is the full entitlement to the Family Trust. 10. This agreement is enforceable upon the executors of each party in the even of the death of Andrew Vasiliou. 11. The payment of the above mentioned amount by the Trustee Company on behalf of the Family Trust is at no way an interpretation that the gift made by the donor Andrew Vasiliou on the 8th October 1987 is somewhat effected by this payment or made void or withdrawn by the donor in any way. 12. The payment of the equity to Andrew Vasiliou it allows the first name on this contract to enforce its rights and that of the Family Trust if deem necessary to be applied. 13. This agreement allows the bearer to deal with all that is necessary to transfer and to call in mortgagers and pay same surrender all deeds and duplicates of Titles from the relevant Bank or building Society or financier. The affixation of the common seal of Optquest was witnessed by Mr Vasiliou and Ms Apostolou, and Mr Vasiliou's signature as a party was witnessed by an accountant called Athos Foutis. 36 Returning to the Optquest mortgage account with Citibank, a statement of that account shows that drawdowns were subsequently made as follows: 14 April 1989 $25,000 16 May 1989 $20,000 18 May 1989 $20,000 7 June 1989 $10,000 20 June 1989 $15,000 19 July 1989 $5,000 19 July 1989 $4,586 20 July 1989 $734.24 In total (including the $75,000 drawn down on 17 March 1989), by 20 July 1989 Optquest had drawn down the amount of $175,320.24 from its mortgage account. The statement in evidence shows transactions on the account to 13 July 1997, but no further drawdowns appear. 37 By 15 June 1989, when the last of the instalments agreed with the Deputy Commissioner was due to be paid, Optquest had drawn down a total of $150,000 from its mortgage account with Citibank - more than sufficient to cover the $113,000 which Mr Vasiliou was obliged to pay under the agreement. Mr Vasiliou said that, in compliance with its agreement with him on 25 March 1989, Optquest paid the amount of each drawdown to him, and that he used what was required to pay each instalment to the Deputy Commissioner. Having paid the required instalments, he said that he used the rest of the money to take his family on a holiday overseas. There was no documentary evidence of this holiday, or of Mr Vasiliou's expenditure on it. 38 At this point I should refer also to the limited documentary evidence that there is in support of the proposition that the photography business was transferred to Optquest. No Optquest tax return was placed into evidence, but Mr Vasiliou tendered a letter addressed to the Vasiliou Family Trust at 446 Kooyong Road, Caulfield South (the Vasiliou/Apostolou residence) from the Deputy Commissioner of Taxation dated 16 March 2007 (ie during the conduct of the trial). In that letter, the writer referred to a visit to the tax office by Mr Vasiliou, and stated that the records of the tax office showed that the "Vasiliou Family Trust" lodged income tax returns for the years ending 30 June 1988 and 1989. The letter stated that the trust had a tax file number with a registration date of 16 January 1991, but that that was the date upon which the tax office upgraded its "systems", such that all tax file numbers issued earlier were given that date for registration. It appears, therefore, that the trust obtained a tax file number either on or before 16 January 1991. In his evidence, Mr Vasiliou said that his attempts to obtain some evidence from the tax office that Optquest had filed tax returns and/or had a tax file number produced no results because, he claimed, the name of the relevant entity in the records at the tax office was not Optquest, but the Vasiliou Family Trust. 39 Mr Vasiliou also tendered the original of a letter dated 5 September 1988 to Optquest from the Bendigo Building Society. The letter referred to an overdraft account, apparently in the name of Optquest, stated that the account was overdrawn by the amount of $40,650.09, and requested the addressee contact the Society with a view to executing documents to extend the agreement under which the overdraft facility was available (the previous agreement having expired on 4 September 1988). 40 Mr Vasiliou also tendered a bundle of documents which appeared to relate to the operation of the photography business in the period subsequent to its transfer to Optquest. Each was addressed to or concerned with Optquest in terms. Those documents were: (a) A letter dated 12 July 1990 from a supplier known as Australian Moulding Manufacturers giving approval for the establishment of a credit account; (b) A series of invoices, dated from 4 April to 11 September 1990 from a supplier called Marks & Co Pty Ltd; (c) Two statements from Porter-AMM Pty Ltd (trading as Australian Moulding Manufacturers) dated 31 July and 31 August 1990; (d) A quotation dated 23 March 1990 from Geometrics Contemporary Art for the supply of aluminium frames; (e) An invoice dated 30 May 1990 from Geometrics Contemporary Act; (f) The carbon-copy of a document dated 1 June 1990, wholly in hand-writing, headed with the name and address of Optquest, and referring to various items. 41 Nothing of any particular relevance occurred until 1 July 1995, when, exercising his power as appointor, Mr Vasiliou removed Optquest as trustee of the Vasiliou Family Trust, and appointed himself in its place. On 7 July 1995, the registration of Optquest as a company was cancelled pursuant to s 574 of the Corporations Law. 42 On 16 January 1996, Mr Vasiliou executed an "Agreement for Preliminary Works" with Glenvill Homes Pty Ltd ("Glenvill"). Although the agreement does not say so, it related to the property at Claremont Street. In the agreement, Glenvill was described as "builder/designer", and Mr Vasiliou was described as "proprietor". The purpose of the agreement was said to be "To effect preliminary works required for feasibility, planning and town planning permit." Under "Terms and Conditions", the following was set out: The Proprietor authorize Glenville Homes to make all applications, pay fees & undertake the following works where necessary:

1. Discussions with the local Town Planning department.
2. Prepare Town planning drawings, including site plan, elevations, floorplans, site analysis report & all other documentation required
3. Photograph adjoining properties.
4. Attend council for negotiations & meetings as required.
5. Pay all fees & costs.
6. Redesign of application as required
7. Consult engineers, experts, consultants etc.
8. Monthly Statements to be provided. A schedule of fees was set out. 43 In due course a dispute arose between Mr Vasiliou and Glenvill, particularly with respect to the existence and extent of the former's obligation to pay the latter for services provided under the agreement between them. At some stage, Glenvill's entitlement to fees was assigned to Australia's Country Homes Pty Ltd ("ACH"), and it was that company which became an applicant against Mr Vasiliou in the domestic building list of the Victorian Civil and Administrative Tribunal ("VCAT"). On 21 December 1998, VCAT ordered Mr Vasiliou to pay ACH the sum of $31,950.00, plus interest, and struck out a cross-claim which had been filed by Mr Vasiliou. 44 In the VCAT proceeding, Mr Vasiliou was represented, initially at least, by the firm of Tasiopoulos Lambros & Co ("Tasiopoulos Lambros"). It seems that he did not pay their account, since, on 23 June 1999, they filed a complaint in the Magistrates Court of Victoria claiming the sum of $20,831.50, plus interest. Of that, the sum of $10,354.00 related to their representation of Mr Vasiliou in the dispute which was dealt with by VCAT. 45 After the orders made by VCAT, Mr Vasiliou consulted another solicitor, Mr Michael Rickards, about the matter. Mr Vasiliou said that he originally consulted Mr Rickards with a view to taking proceedings against Tasiopoulos Lambros, but Mr Rickards, who had consulted his apparently extensive file of the matter, had no recollection of that aspect, and was quite clear in his evidence that Mr Vasiliou's focus was upon taking steps to appeal against the orders of VCAT. Indeed, according to Mr Rickards, ACH had refused to negotiate a settlement, and was on the point of taking enforcement proceedings. It was, he said, therefore imperative that, if Mr Vasiliou desired to challenge the VCAT orders, he do so as a matter of priority. However, by the time he consulted Mr Rickards, he was out of time to appeal. Represented by Mr Rickards, Mr Vasiliou applied to a Master of the Supreme Court for an extension of time to appeal against the orders of VCAT. That application was refused. Still represented by Mr Rickards, Mr Vasiliou appealed (also out of time) against that refusal, and the appeal came before Beach J on 21 October 1999. His Honour gave judgment in favour of ACH on 26 November 1999: [1999] VSC 462. Beach J was not satisfied that it was arguable that VCAT had made any error of law in its reasons for determination. Mr Vasiliou appealed unsuccessfully to the Court of Appeal. He then sought the special leave of the High Court to appeal again, and on this occasion his appeal was apparently allowed by consent, and the matter was referred back to the Court of Appeal. However, Mr Vasiliou was again unsuccessful in that court. 46 Mr Vasiliou did not pay Mr Rickards for his professional services. Mr Rickards proceeded for recovery in the Melbourne Magistrates Court, and on 5 May 2000 obtained an order against Mr Vasiliou in the amount of $12,515.70, plus $893.75 by way of interest and $606.50 by way of costs. Of the principal recovered, the sum of $10,974.75 related to Mr Rickards' representation of Mr Vasiliou in his Supreme Court challenge to the orders made by VCAT in relation to the property at 10 Claremont Street. 47 On 1 July 2003, exercising his power as appointor under the deed constituting the Vasiliou Family Trust, Mr Vasiliou removed himself as trustee, and appointed Ms Apostolou in his place. 48 On the petition of Tasiopoulos Lambros, on 14 September 2004 the court made a sequestration order against Mr Vasiliou. In his statement of affairs dated 13 October 2004, Mr Vasiliou stated that he did not own any land or buildings in Australia or overseas, but that he was a beneficiary of the Vasiliou Family Trust, which owned a number of assets including the subject properties. It is Mr Vasiliou's claim that he does not beneficially own those properties which has led to the present proceeding.

CREDIBILITY ISSUES 49 The applicant submitted that I should not accept any of the evidence of Mr Vasiliou, save where it was against interest or consistent with contemporaneous documentary records. I do not propose to adopt such an extreme position. Whether any particular oral evidence should be accepted must be determined according to all the circumstances including, most importantly, the nature of the evidence and the factual context in which it must be placed. However, a number of things have given me reservations about Mr Vasiliou's credibility generally, and I think it appropriate to refer to them at this stage. 50 By way of background, I note that Mr Vasiliou is a bankrupt concerned, in this proceeding, to preserve the subject properties for his own family and to prevent them becoming available to his creditors. His interest in the subject-matter of the proceeding is, therefore, direct, personal and intense. As is often the way with self-represented litigants, Mr Vasiliou found it difficult - nigh impossible at times - to make the distinction between giving evidence and making submissions. Often, from the Bar table, he would inform me about matters of fact which were not in the evidence. Counsel for the applicant found it necessary to intervene on a number of occasions by way of protest about that practice. As a result of those interventions, and of observations I made from time to time, I am satisfied that Mr Vasiliou well understood that what he said from the Bar table would not be treated as evidence. But the practice continued notwithstanding. 51 Correspondingly, Mr Vasiliou was a most unsatisfactory witness when under cross-examination. His answers were frequently non-responsive, even after it had been made clear to him that his duty was to answer each question as asked. On a number of occasions, counsel for the applicant - in frustration it seemed to me - effectively withdrew from his attempts to achieve a direct answer to his questions. I am satisfied that Mr Vasiliou's conduct in this regard was not the result of misunderstanding or naivety. I have seen enough of him over the course of the trial for it to be clear to me that he is an intelligent, astute, and worldy-wise man with a complete command of the matters upon which he was questioned. He combines those qualities with a degree of intensity and - it should be said - forensic aggression which is quite exceptional. His non-responsiveness was rather by way of conscious attempts to avoid what might be incriminating answers, and to use the witness box to emphasise a point which he wanted to make, or to demolish the assumption perceived to lie behind the cross-examiner's question. I had the distinct impression that, on such occasions, foremost among his thoughts in the witness box was not the terms of the question being asked, but rather the broader agenda of the applicant and his legal representatives. 52 Although much of what I have said above is based on observation and impression, there was one respect in which it was demonstrated objectively that Mr Vasiliou had given false evidence to the court, and had done so deliberately. He falsified, or caused to be falsified, forms of transfers under the TL Act, and then led them in evidence in this proceeding with a view to bolstering his case. This does not relate to the transfer forms of October 1987, which were genuine. Rather, it relates to documents of which Mr Vasiliou gave evidence in his affidavit of 2 March 2007 as follows: In their current Application the applicant and his solicitors are wrongly saying that there was no further Transfers of land being executed following the ones executed in favour of Optquest Pty Ltd on the 8th October 1987 but the reality is that three transfers where being executed ( the applicant received copies off previously but his playing "dam" and his trying to confuse the Court) on the 1st July 1995 in favour of Andrew Vasiliou the trustee appointed that time EXHIBIT AV 01 and another three transfers of land where being executed on the 1st July 2003 in favour of the new Trustee appointed that time Vasiliki Apostolou. Exhibit "AV 01" consisted of three transfers under the TL Act - one for each of the subject properties. Mr Vasiliou was the transferee and Optquest was the transferor in each case. Each had been executed by Optquest by the affixation of its common seal in the presence of Mr Vasiliou and Ms Apostolou as director and secretary respectively. None had been executed by Mr Vasiliou although, strangely, a witness called Christos Sideris purported to attest to the execution of each by Mr Vasiliou. Each document is dated 1 July 1995. 53 Each of these documents is on a printed form headed "TRANSFER OF LAND". Each has, in the lower left corner, an oval-shaped impression within which are the words "Office of Titles Victoria". At the foot of each document the following appears: "Land Registry, 570 Bourke Street, Melbourne, 3000, Phone 8636 2010". Evidence was led, and I accept, that the Titles Office (or the "Land Registry") was not situated at 570 Bourke Street until about December 2001. In July 1995 - the date which the documents bear and the date sworn to by Mr Vasiliou in his affidavit - the Titles Office was situated at 283 Queen Street. 54 By the time that Mr Vasiliou came to be cross-examined about exhibit AV 01 - as he was bound to be - he had heard the evidence about the date when the Titles Office moved to 570 Bourke Street. In the course of the cross-examination, he was first warned that he need not provide an answer to any question which would incriminate him. He replied: "Well I refuse to answer it then." When it was put to him that the transfers were not signed on 1 July 1995, he replied: "It is irrelevant". While dealing with this subject, Mr Vasiliou was evasive, and, I observed, distinctly uncomfortable. That presented a marked contrast with the determined and self-confident demeanour which he generally displayed, both as a witness and as an advocate. He provided no explanation for the patent inconsistency on the face of the transfers constituting exhibit AV 01. That inconsistency bespeaks emphatically a circumstance in which Mr Vasiliou obtained pro-forma transfers from the Titles Office in late 2001 or subsequently, dated them 1 July 1995 and caused them to be executed by Optquest (albeit by then deregistered). It required the clearest explanation from Mr Vasiliou. As I have said, not only was no explanation forthcoming, the way in which Mr Vasiliou handled the matter under cross-examination tends rather tellingly to confirm the impression conveyed by the documents themselves. 55 It is not only that Mr Vasiliou swore, in his affidavit of 2 March 2007, that the transfers were executed on 1 July 1995. For reasons which I have explained above, I find that evidence to be false. The falsity was not such as could have been accidental; in any event, Mr Vasiliou provided no explanation for how he came to make that false statement in his affidavit. I am left with no choice but to find that Mr Vasiliou not only falsified these forms, but placed them before the court on his oath knowing them to be false. I am obliged to treat these events as a demonstration of Mr Vasiliou's preparedness to falsify his evidence before the court in this proceeding should he consider it to be necessary or desirable to advance his own prospects or those of the interests with which he is associated.

EFFICACY OF THE 1987 GIFT 56 Turning to the issues in the proceeding, I consider first the question whether Mr Vasiliou divested himself of the equitable interest in the subject properties by his deed of gift of 8 October 1987 and the associated transactions to which I have referred in par 18 above. A question of that kind is now to be resolved by reference to the modern statement of the principle in Milroy v Lord (1862) 4 De G F & J 264 in the judgment of Mason CJ and McHugh J in Corin v Patton (1990) 169 CLR 540 at 559: Accordingly, we conclude it is desirable to state that the principle is that, if an intending donor of property has done everything which it is necessary for him to have done to effect a transfer of legal title, then equity will recognise the gift. So long as the donee has been equipped to achieve the transfer of legal ownership, the gift is complete in equity. "Necessary" used in this sense means necessary to effect a transfer. From the viewpoint of the intending donor, the question is whether what he has done is sufficient to enable the legal transfer to be effected without further action on his part. Deane J agreed with Mason CJ and McHugh J, but subject to what he wrote in his own reasons. In those reasons, his Honour said (169 CLR at 582): The test is a twofold one. It is whether the donor has done all that is necessary to place the vesting of the legal title within the control of the donee and beyond the recall or intervention of the donor. Once that stage is reached and the gift is complete and effective in equity, the equitable interest in the land vests in the donee and, that being so, the donor is bound in conscience to hold the property as trustee for the donee pending the vesting of the legal title. Subject only to the need for elaboration on the significance of the phrase "beyond the recall or the intervention of the donor", I consider that the principle as stated by Deane J was effectively the same as that stated in the joint judgment. I agree, with respect, with the view of the NSW Court of Appeal that these statements should be regarded as constituting the "majority approach" in Corin v Patton: see Costin v Costin (1997) 7 BPR 15,167 at 15,171. 57 The facts of Corin v Patton bear some resemblance to those of the present matter, but there are important differences. Mr and Mrs Patton were joint tenants of Torrens system freehold. Desiring to sever the joint tenancy, Mrs Patton executed a transfer of her interest in favour of her brother, Mr Corin. He in turn executed a declaration of trust in favour of Mrs Patton. Both documents were taken by a solicitor, Mr Smallwood, but nothing further had been done with them by the time of Mrs Patton's death a few days later. 58 As here, therefore, in Corin v Patton there was a single solicitor who acted for both parties, and who held a transfer executed by both parties. However, save in the judgment of Toohey J (169 CLR at 592), the circumstances of the transfer were not dispositive. That was because, under the legislation which applied to the proposed transfer, the transfer could not be registered without production of the original certificate of title, which was held by the mortgagee. Only the registered proprietor (Mrs Patton) could call for production of the certificate. By the time of her death, she had not done so. However, in Victoria, a transferee of Torrens system land is entitled to call upon the mortgagee to produce the certificate of title to the Registrar: see TL Act, s 86 and Vasiliou v Marchesi [2006] FCAFC 197. The question which arises in the present case is, therefore, one which the court in Corin v Patton did not need to address: when a solicitor who acts for both donor and donee holds the executed transfer, has the donor done everything necessary for him or her to have done to effect a transfer of the legal title? Or, following Deane J, is the vesting of legal title now in the control of the donee, and beyond the recall or intervention of the donor? 59 In the case of Torrens system land, a donee cannot secure registration of title in his or her own name without a transfer executed by the donor. The execution and delivery of the transfer is, therefore, to be regarded as something necessary to be done by the donor. In Brunker v Perpetual Trustee Co Ltd (1937) 57 CLR 555, Dixon J, with the agreement of Rich J, said (57 CLR at 602-603): That delivery of the transfer to the donee or the donee's agents is a condition which must be fulfilled before such a right will arise, appears to me to be clear. It is only by the control or possession of the instrument that the transferee could effect registration without any liability to interference or restraint on the part of the transferor. Further, I think that the donee must obtain property in the piece of paper itself and property in the paper could pass only by delivery (Cochrane v Moore [(1890) 25 QBD 57). If property in the transfer remained in the transferor, his power of recalling it must also remain. For he would be entitled to possession of the paper, he could refuse to present it for registration, and he could destroy it. But, if by delivery to the donee or someone as bailee for her, the transferor has given her property in the instrument itself, then unless some further condition is expressly or impliedly prescribed by the statute, it would appear that the instrument, assuming it to be registrable, may be registered by the transferee independently altogether of the donor, and in spite of any objection on his part. The judgment of McTiernan J was to like effect: see 57 CLR at 609. 60 In Corin v Patton, Mason CJ and McHugh J rejected the view of Dixon J that the holder of a registrable instrument of transfer had not an equitable interest but "a right of a new description arising under the statute" (169 CLR at 556). But, as I read their reasons, their Honours held that the delivery of an executed transfer - such that the donee had property in the instrument - was an act which it was necessary for the donor to do (albeit that, under the legislation applicable in that case, it was not a sufficient act). They said (169 CLR at 558): The rationale for refusing to complete an incomplete gift is that a donor should not be compelled to make a gift, the decision to give being a personal one for the donor to make. However, that rationale cannot justify continued refusal to recognise any interest in the donee after the point when the donor has done all that is necessary to be done on his part to complete the gift, especially when the instrument of transfer has been delivered to the donee. Just as a manifestation of intention plus sufficient acts of delivery are enough to complete a gift of chattels at common law, so should the doing of all necessary acts by the donor be sufficient to complete a gift in equity. The need for compliance with subsequent procedures such as registration, procedures which the donee is able to satisfy, should not permit the donor to resile from the gift. Once the transaction is complete so far as the donor is concerned, he has no locus poenitentiae. And (169 CLR at 560): Where a donor, with the intention of making a gift, delivers to the donee an instrument of transfer in registrable form with the certificate of title so as to enable him to obtain registration, an equity arises, not from the transfer itself, but from the execution and delivery of the transfer and the delivery of the certificate of title in such circumstances as will enable the donee to procure the vesting of the legal title in himself. In this passage, for the purposes of the present case, references to the delivery of the certificate of title may safely be ignored; what their Honours said about the necessity for the delivery of the executed transfer seems clearly to be uncontroversial as between themselves and Dixon J. Deane J made it clear that he regarded Dixon J's judgment (169 CLR at 582) - … not as establishing a new kind of statutory right but as identifying the test for determining whether the stage has been reached when a gift of Real Property Act land under an unregistered memorandum of transfer is complete and effective in equity. 61 Where the donor has every intention of making a gift, but the only act which he or she has done is to deliver an executed transfer to his or her own solicitor, agent or bailee, he or she will not be regarded as having done everything necessary on his or her part to vest the legal estate in the donee: Brunker. Costin was decided on the same principle, although concerned with the non-production of the certificate of title rather than the non-delivery of the transfer. So long as the donor's own agent holds the transfer, more is required to be done by the donor. 62 Where the same solicitor acts for donor and donee, and has possession of the executed transfer, the question will be whether the point has arrived at which the solicitor now holds the transfer as agent of the donee rather than of the donor. Absent an artificial ceremony of some kind, the delivery of the transfer from the solicitor acting for the donor to the same person acting for the donee will inevitably be notional rather than actual. The timing of this notional event will not be a matter for the solicitor's own choice. The event cannot be assumed to have occurred, it seems to me, until at least he or she has the donor's authority to treat the transfer as the property of the donee, and as being held on behalf of the donee. When that authority arises will, almost inevitably, be a matter of inference from all the circumstances, but I do not think it should be taken as having arisen while the donor still intends to do something apropos the transfer or its registration which requires physical possession of the instrument. To take a clear case, if the donor proposes to pay the stamp duty required on the transfer, and this is clear to the solicitor, the solicitor should be regarded as holding the transfer on behalf of the donor at least until the duty is paid and the transfer is stamped. Not before then at the earliest might it be possible to infer that the notional delivery of the transfer to the donee has occurred. 63 In the present case, there are three bases upon which the respondents urged me to infer that, once the transfers were executed on 8 October 1987, Mr Dwyer retained possession of them as agent for the donee, Optquest: (a) Conventional conveyancing practice in Victoria, under which settlement normally occurs before payment of stamp duty, it being the purchaser's function to pay the duty and then to register the transfer. (b) The fact (as alleged by the respondents) that Mr Vasiliou drew a cheque on an Optquest account for $10,000 and gave that cheque to Mr Dwyer for the purposes of payment of stamp duty. (c) The fact (as alleged by the respondents) that, when at some point it was decided (by whom was a matter of some controversy) that the registration of the transfers would not go ahead, Mr Dwyer returned the transfers and other associated documents to Optquest, not to Mr Vasiliou. 64 I shall consider each of these in turn. According to the evidence of Mr Dwyer, in conventional arms-length conveyancing transactions, the practice was that duty was paid by the purchaser. If anyone were to baulk at the prospect of paying duty because it was too expensive, that would normally be the donee/purchaser. On this view of things, when Mr Vasiliou instructed Mr Dwyer not to proceed, he was acting not on his own behalf but as director of Optquest. And if Optquest were to be regarded as notionally giving those instructions to Mr Dwyer, it must follow that Mr Dwyer was acting for Optquest in relevant respects. When the matter is analysed in this way, the most natural conclusion would be that, at some point, the executed transfers had been notionally delivered to Optquest. However, this was no conventional transaction. The parties were not at arms-length, and there was no overt act by which the transfers were delivered to Optquest. Mr Dwyer made it clear that, as a matter of practice, he would not assume that the normal procedure would be followed in the case of a non-arms-length gift within a family, where the same solicitor was acting for both sides. He explained that it would differ from an ordinary vendor/purchaser situation because - Well, the difference is that I'm acting for them both. I'm acting for the vendor and the purchaser, which is the trust, which … I created. … It's quite a different situation to a vendor, one solicitor, purchaser, another. 65 Turning to the respondents' allegation that Optquest put Mr Dwyer in funds to pay the stamp duty, in one of his affidavits Mr Vasiliou stated: Soon after I have called him to make sure that everything was completed and I asked him if the transactions are being finalised he advised me then that everything was ready to be lodged to the Titles Office but stamp duty needs to be paid so I personally visited his Office that day I wrote a cheque for $10,000.00 from the overdraft business account of the Trustee Company Optquest Pty Ltd that had at the time with Bendigo Building Society and such after that time I was led to believed that the solicitor is in position to finish all that was necessary to register the Titles in favour of the Trust. The applicant submitted that I should reject this evidence. I accept that submission. I reject Mr Vasiliou's evidence that he caused Optquest to pay Mr Dwyer for the stamp duty, and I do so for a number of reasons. 66 First, and perhaps least importantly, there is no documentary evidence of any such payment. Indeed, there is no such evidence that Optquest had a cheque account in 1987 or early 1988. There was a book of cheques for an Optquest account with the Bendigo Building Society put into evidence, but no cheques had been used from that book, and there is nothing that would sustain the proposition that the book was issued at any particular time. I allow for the fact that, with the passage of time, some records may not still be available, but Mr Vasiliou brought to the court a series of cheque butts from accounts of his own dating back into the 1980's. No corresponding records of Optquest were produced. Although Mr Dwyer left the firm of Coady Dwyer soon after the events which are presently relevant, the respondents made no attempt to compel that firm - or its present-day manifestation - to produce any banking or other record as to the receipt into their trust fund of this supposed sum of $10,000. 67 Secondly, the documentary evidence establishes quite clearly that, as early as 22 October 1987, Mr Dwyer sought a payment of $16,000.00, not $10,000.00, from Mr Vasiliou to cover the anticipated duty. That is inconsistent with Mr Vasiliou having written a cheque on an Optquest account for $10,000.00 only. 68 Thirdly, had Mr Dwyer been put in funds by Optquest in the sum of $10,000 to pay the stamp duty, when it was later decided that the transfer would not proceed there would, if Coady Dwyer had observed its fiduciary obligations, have been a corresponding repayment of a like sum to Optquest. It was not part of the respondents' case that there had been any such repayment. To the contrary, Mr Vasiliou alleged that, when he received the sum of $4,182.00 only from Coady Dwyer, he was so angry that he "blasted the hell out of" Mr Dwyer for what he alleged was a misappropriation. As I have noted above, Mr Dwyer had no recollection of this, but strenuously denied the allegation. Had events occurred as Mr Vasiliou alleged, I think it highly unlikely that Mr Dwyer would have forgotten about them. The only other possibility - consistent with Mr Vasiliou's allegation - is that Mr Dwyer was himself lying about the matter. I hold that he was not. The allegation of misappropriation is a very serious one. Mr Dwyer was acting, apparently, in the normal course of his practice as a solicitor. His only interest in the Vasiliou family transaction was a professional one. Other than sheer greed - in itself an unlikely explanation where the amount in question was, even then, relatively modest - I can think of no reason why a solicitor in the position of Mr Dwyer would act as alleged by Mr Vasiliou, especially since, if the allegation was well-founded, there would have been virtually no way in which Mr Dwyer could have escaped detection. Mr Dwyer was called by Mr Vasiliou as a witness in this proceeding. He struck me as a conscientious and honest practitioner who was mortified that such an allegation would be made. I accept his denials without reserve. 69 There is another circumstance which puts the lie to the respondents' allegation that Mr Vasiliou parted company with Mr Dwyer in the acrimonious circumstances alleged by the former. It is that to which I have referred in par 22 above. The date on Mr Dwyer's cheque by which the sum of $4,182.00 was returned to Mr Vasiliou (not Optquest) was 23 March 1988. It was the receipt of that cheque that, according to the respondents, led directly to Mr Vasiliou's angry visit to Mr Dwyer, and, according to Ms Apostolou, to her husband's decision never to use Mr Dwyer again. However, on 28 April 1988 Mr Dwyer entered an appearance on behalf of Mr Vasiliou in the Supreme Court proceedings brought by the Deputy Commissioner. It is inconceivable that they parted company in the period immediately following 23 March in the circumstances alleged by the respondents. 70 Fourthly, I have regard to the general reservations as to Mr Vasiliou's credibility which I have expressed earlier in these reasons. If there were nothing else involved at this level, I would have no hesitation in preferring the evidence of Mr Dwyer to that of Mr Vasiliou. I do not regard Ms Apostolou's evidence as corroborative of that of Mr Vasiliou, as she has, in all matters relevant to this litigation, manifestly been subservient to him. 71 For the above reasons I reject Mr Vasiliou's evidence that he caused Optquest to pay Mr Dwyer the sum of $10,000 on account of duty for the transfers executed in October 1987. I find that no funds for the payment of duty had been provided to Mr Dwyer by the time of his letter to Mr Vasiliou of 22 October 1987 or, indeed, at any time. 72 I turn next to the third of the respondents' bases for the inference which they ask me to draw, namely, that the relevant documents were returned by mail addressed to Optquest. I have referred to the envelope on which the respondents rely in par 21 above. Mr Dwyer expressed his amazement that it might be suggested that his firm had corresponded with Optquest by such means. I can, with respect, understand that reaction. I think it most unlikely that a firm of solicitors would have used such an envelope. It was addressed in hand, it bore no return address and it wrongly referred to St Kilda Road as St Kilda Street. In these respects, it had the appearance of something more informal and amateurish than one would expect from a firm of solicitors. Further, Mr Dwyer said that, in accordance with his firm's practice, if they were corresponding with Optquest, they would be likely to have sent any letter to its registered office. Even 18 St Kilda Road was not Optquest's registered office until much later - June 1989. None of these indications would, alone, be sufficient to justify rejecting the genuineness of the envelope in normal circumstances. But Mr Vasiliou has demonstrated a readiness to falsify documents, in which circumstances I place no weight on, and give no credibility to, the mere fact that the envelope has an existence as a physical item and bears the address which it does. I think that the explanation for that fact is at least as likely to be falsification on the initiative of Mr Vasiliou as any other. 73 Once that fact is effectively removed from consideration or at least neutralised, the other relevant circumstances justify the conclusion that the envelope probably was not addressed and delivered as it purported to be. It is, of course, beyond doubt that Mr Dwyer returned the executed but unstamped transfers to Mr Vasiliou at some stage, since those transfers were in evidence out of the custody of Mr Vasiliou. I think it quite possible that they were sent along with Mr Dwyer's cheque of 23 March 1988. The evidence is insufficient to conclude that the transfers were probably sent then, but the actual timing of the sending is unimportant. I would find on the probabilities that the sending occurred in the period more or less immediately following Mr Vasiliou's indication to Mr Dwyer that he did not wish to proceed with the transfer (which I have held to have been between 1 and 23 March 1988). I likewise find it to be probable that the transfers (and possibly other documents) sent at that time were addressed to Mr Vasiliou himself, as had been the other correspondence emanating from Mr Dwyer (the letters of 22 October 1987 and 1 March 1988). 74 For the above reasons, I would reject the second and third of the respondents' bases for the inference which they ask me to draw. That leaves me with the first. As I have said, that does support the proposition that, at some point, Mr Dwyer became authorised to hold the executed transfers on behalf of Optquest. The analysis is, however, entirely conceptual. It is necessary to look at the actual facts. Mr Dwyer was engaged by Mr Vasiliou. In part, the purpose of that engagement was to establish a family trust and to incorporate, or to purchase, a company to be the trustee. Mr Dwyer acknowledged that, at some point, he must also have been acting for Optquest as well as for Mr Vasiliou. However, all of Mr Dwyer's correspondence was with Mr Vasiliou. Particularly, it was Mr Vasiliou from whom Mr Dwyer sought funds to pay the duty on 22 October 1987. That circumstance sustains the inference that Mr Dwyer expected that Mr Vasiliou would pay the duty, and it is then but a small step to conclude that Mr Dwyer was acting consistently with the instructions which he then received from Mr Vasiliou. Whether or not made explicit, if that inference is sound, those instructions would have been to the effect that Mr Vasiliou would attend to the payment of the duty. That is a view of events which corresponds strongly with the reality of the events of October 1987, particularly since I have found there to be no objective evidence of Optquest having its own cheque account at that time. If Mr Vasiliou were to pay the duty, he (or his solicitor) would necessarily have retained possession of the transfers for the purpose of having them stamped. 75 Next, I accept Mr Dwyer's evidence that it was Mr Vasiliou who instructed him not to proceed with the transfers, because they were too expensive. Theoretically, Mr Vasiliou might have been speaking as a director of Optquest, but, in the light of the circumstances referred to in the previous paragraph, that is the less likely construction of these events. That is to say, when Mr Dwyer had written to Mr Vasiliou asking for the money to pay the stamp duty, and when Mr Vasiliou later told Mr Dwyer that the money would not be provided because the duty was too expensive, prima facie at least Mr Vasiliou should be taken as speaking on his own behalf. It was not, of course, his case that such an instruction was given to Mr Dwyer at any time. In the circumstances, he does not have the advantage of being able to give evidence of the occasion when he gave the instruction, and to assert that it was given on behalf of Optquest. I find that the instruction was given, that it was given by Mr Vasiliou on his own behalf, and that it supports the inference that Mr Vasiliou was the one who would, or would not, pay the duty; and therefore that Mr Dwyer continued to hold the transfers on behalf of Mr Vasiliou until the instruction was given. 76 Finally on this aspect, after Mr Vasiliou instructed Mr Dwyer not to proceed, Mr Dwyer returned the funds which he held on trust to Mr Vasiliou. That is neutral in itself, since those funds had not, I find, been provided to pay for the stamp duty. However, at some point the executed transfers were also returned. Based on the findings set out in par 73 of these reasons, I infer that the transfers were returned to Mr Vasiliou rather than to Optquest, and that Mr Dwyer was, right to the end, holding the transfers on behalf of Mr Vasiliou as donor. 77 For the above reasons, I find that the executed transfers were never delivered to Optquest. They remained in the custody of Mr Vasiliou, or his agent, throughout. Mr Vasiliou as donor did not, therefore, do everything necessary on his part to vest the legal title to the subject properties in Optquest as donee. It follows that equity will not recognise the gift as complete and that, subject only to the transaction of March 1989 to which I shall refer presently, Mr Vasiliou held the full beneficial title to the subject properties at all times.

SECTION 121 APROPOS 1987 GIFT 78 In the alternative to his assertion that there was no effective gift in equity of the three subject properties in 1987, the applicant claims that those transfers are void as against him, pursuant to s 121 of the Bankruptcy Act. For the purpose only of considering this alternative claim, I shall treat the purported gift of the subject properties to Optquest in October 1987 as effective in equity (contrary to my findings in the previous section of these reasons). 79 Subsections (1) and (2) of s 121 are as follows: (1) A transfer of property by a person who later becomes a bankrupt (the transferor) to another person (the transferee) is void against the trustee in the transferor's bankruptcy if: (a) the property would probably have become part of the transferor's estate or would probably have been available to creditors if the property had not been transferred; and (b) the transferor's main purpose in making the transfer was: (i) to prevent the transferred property from becoming divisible among the transferor's creditors; or (ii) to hinder or delay the process of making property available for division among the transferor's creditors. (2) The transferor's main purpose in making the transfer is taken to be the purpose described in paragraph (1)(b) if it can reasonably be inferred from all the circumstances that, at the time of the transfer, the transferor was, or was about to become, insolvent. By reason of item 457 of Schedule 1 to the Bankruptcy Legislation Amendment Act 1996 (Cth), the provisions of s 121 set out above apply to the present circumstances. 80 The first question is that arising under s 121(1)(a), namely, whether the subject properties would probably have become part of Mr Vasiliou's estate, or would probably have been available to creditors, if they had not been transferred in equity to Optquest in 1987. If that transfer had not taken place, the only other event which might have taken them out of Mr Vasiliou's estate, or rendered them unavailable to creditors, was the transaction of March 1989 by which Optquest purported to pay for the equity in these properties. I shall turn to that transaction presently. Subject only to that, I hold that, were it not for the gift in 1987, the subject properties would probably have been part of Mr Vasiliou's estate in his present bankruptcy, and would probably have been available to his creditors. 81 The more difficult question is whether, in making a gift of the subject properties to Optquest in 1987, Mr Vasiliou's main purpose was to prevent them from becoming divisible among his creditors, or to hinder or delay the process of making them available for division among his creditors. Although Mr Vasiliou has denied having such a purpose at the time, particularly in the light of the findings which I have made above about his credibility, the question of his purpose is an objective one to be decided by inference against all the relevant circumstances: Freeman v Pope (1870) LR 5 Ch App 538. 82 According to Mr Vasiliou, in August 1987 he was advised by his accountant to restructure his business affairs, and this led not only to the sale of the photography business to the trust, but also to the gifts of the three subject properties. He and Ms Apostolou originally claimed that the gifts were also to secure their children's future, but, as counsel for the applicant pointed out, Mr Vasiliou placed little or no emphasis on that aspect as the case proceeded. It is clear that the tax investigation, and subsequent assessments, in 1987 led directly to the gifts of the subject properties. Indeed, the timing of the gifts was such as to justify the inference that it was the assessments as such which precipitated them. As I have found earlier in these reasons, it is most probable that the assessments were served upon Mr Vasiliou, at his accountant's office, on 22 September 1987. That is the very day upon which - going by the word processor imprint - the trust deed of settlement was prepared. The deed of gift and the statutory declaration, both executed on 8 October 1987, were - for the same reason - most probably prepared on 25 September 1987. 83 Although Mr Vasiliou knew, from the existence of the tax investigation, that he would probably be assessed for unpaid tax, it was not until 22 September 1987 that he was aware of the amount of the assessment. It came as a great shock to him and to his accountant. He has asked me to accept that he never took the assessment seriously, and, in effect, that he was confident that it would only be a matter of establishing the existence of deductions before the assessments were either eliminated or very substantially reduced (as ultimately occurred). I do not accept that evidence. Although the assessments were ultimately settled for $113,000.00 only, that occurred only in late 1988 and early 1989. When the Deputy Commissioner sued Mr Vasiliou in March 1988, despite the fact that some allowances had been made, in excess of $500,000.00 was still being sought and, according to the Statement of Claim, additional tax was mounting up with the passage of time. In October 1987, I think it most probable that Mr Vasiliou was very concerned about the prospect that he might have to pay an amount by way of income tax and penalties that far exceeded his then available resources. 84 Mr Vasiliou's concerns at being assessed for such a large amount of tax were shared by his then accountant. As I have noted in par 15 above, upon seeing the size of the assessments, the accountant nearly fainted. He said to Mr Vasiliou that he had 60 days to lodge an objection, but then lifted his hands up in the air and said: Look Andrew I can't assist you further with those sorts of amendments you may have to find an accountant that can deal with such a big problem that you are now facing with the tax man … I can't assist you further it's too much for my firm to handle. It is not apparent from the evidence whether Mr Vasiliou in fact engaged another accountant, but he called no accountant to substantiate his version of relevant events, or to attest to the purpose of transferring the subject properties to Optquest in October, notwithstanding a clear warning that his failure to do so might result in the court concluding that there was no evidence which the accountant might have given that would be supportive of his case. He said that the accountant was still in Melbourne although, apparently, no longer practising at the address where Mr Vasiliou consulted him in 1987. Mr Vasiliou said that he would attempt to contact the accountant, but he gave no evidence as to whether such attempts had in fact been made and if so as to the results thereof. In the circumstances, I infer that Mr Vasiliou's general disposition apropos the tax claim in 1987 was not, as he submitted, that of a man who simply did not take the assessments seriously; rather it was, I find, that of a man who considered that desperate measures were required. 85 From what appears in the evidence, in 1987 Mr Vasiliou's resources consisted of five real properties and the photography business. The real properties included the subject properties which, according to Mr Vasiliou, were heavily mortgaged and in which he held very little equity. The property at 50 Great Valley Road was also mortgaged. (In his affidavit of 6 March 2007, Mr Vasiliou said that he had " a clear title" to that property in 1987, but the mortgage in question was not discharged until November 1988.) The property at 181-185 St Kilda Road was held not in the name of Mr Vasiliou himself, but in the name of one of his companies. Indeed, Mr Vasiliou said that, in 1987, this property was still registered in the name of the Road Construction Authority, from whom Mr Vasiliou's company had bought it. Mr Vasiliou said that, in order to avoid the payment of stamp duty, the title was not transferred until 1997. From all of this evidence, I would be prepared to infer that, in 1987, Mr Vasiliou probably had little prospect of raising as much as about $550,000.00 - the amount then claimed by the Deputy Commissioner - on the security of the equity which he had in these real properties. 86 In the mid-1980s, according to Mr Vasiliou, much of the income derived by his photography business was used to service the borrowings which he had undertaken to make his real property investments. This meant that the business had been unable to invest in new plant and equipment for some years, with the result that it did not grow as it might otherwise have done. In other respects, it was Mr Vasiliou's case that normal operating outlays accounted for the revenue of the business. For these reasons, I think it unlikely that Mr Vasiliou could have raised much by way of the sale of that business, even if he had been minded so to proceed. 87 The objective circumstances to which I have referred were confirmed by Ms Apostolou in an affidavit which she swore. With reference to 1987 and subsequent years, she referred to a "major shortage of money and cash-flow during that time". In her viva voce evidence, she said: "When the taxation office asked for a large amount of money from my husband, money which didn't exist, of course I was worried." She said that an accountant eventually advised them to pay some money to the tax office to be left in peace (ie the $113,000.00 for which Mr Vasiliou settled). With reference to his photography business, Mr Vasiliou referred to the funds required to capitalise a new business, and added: "… basically the tax office killed my business at an early stage". Having paid the tax office the $113,000.00 for which he settled, Mr Vasiliou said that he had "no business no property no assets no personal borrowings at all no personal applications for loans nothing". Although this last evidence was no doubt a self-serving statement as to the consequences of Mr Vasiliou having effectually made the transfers to Optquest which are controversial in this proceeding, I must take it also as an indication, against interest, of the impoverishment of Mr Vasiliou's financial situation absent the properties which were involved in those transfers. It is clear from that statement and from the other evidence referred to above that, if Mr Vasiliou was obliged to pay the Deputy Commissioner a sum even approaching that claimed, the subject properties would have been lost. I find that Mr Vasiliou was well aware of that reality in October 1987. 88 The applicant submits that I should not accept that Mr Vasiliou's purpose was the legitimate one of restructuring his business affairs in order to reduce the incidence of tax. He submits that, if the point of the exercise was to bring both the assessable income and the allowable deductions into the tax affairs of Optquest, and to take them out of those of Mr Vasiliou, there would have been evidence, referable to the following years, of good record-keeping by Optquest, of tax returns in the name of Optquest, of deductions claimed by Optquest, and the like. None of this was in evidence. This submission is not altogether well-founded in point of fact. As I have set out earlier in these reasons, there is some evidence of business being done in the name of Optquest, and of Optquest having a bank account. Further, it appears (albeit indirectly) that Optquest had a tax file number, and filed tax returns for 1988 and 1989. On the other hand, there is no evidence of the payment by Optquest of rates and other outgoings on the subject properties. Although there were, it seems, tenants in the property at 10 Claremont Street, rents were always collected in cash. Mr Vasiliou's case is that these rents were barely sufficient to cover the expenses of that and other properties which, he claimed, were beneficially owned by Optquest, and for this reason the cash never found its way into a bank account. There is no suggestion that the Vasiliou/Apostolou family ever paid rent to Optquest for their occupation of the unit at Alfriston Street. 89 The question, of course, is what was Mr Vasiliou's purpose in 1987. That question is not answered by reference to an investigation of the business activities of Optquest in subsequent years, but a demonstrated pattern of activity which took advantage of the legitimate tax benefits said to have been the basis of an accountant's advice in 1987 would have provided a measure of support for Mr Vasiliou's case that the property transfers of that year were done for the purpose of achieving those benefits. There is no evidence of such a pattern of activity. Such slight evidence as exists of the reality of Optquest's trading activities is equally consistent with a perception on Mr Vasiliou's part that, having transferred the business to Optquest, it was necessary for transactions to be done in its name. It is not inconsistent with the position for which the applicant contends. 90 In my consideration of what was Mr Vasiliou's main purpose in making the transfers of the subject properties in October 1987, I have found the following matters to be of significant force. First, there is the sheer size of the assessments, relative to Mr Vasiliou's then resources. It could not but have been obvious to Mr Vasiliou that he faced the prospect of losing at least the subject properties, and probably more. Secondly, there is the timing of the transfers. From the findings I have made, Mr Vasiliou found out about the assessments on 22 September 1987. The deed of settlement for the family trust was prepared in Mr Dwyer's office on that very day. The documentation evidencing the gifts of the subject properties was so prepared three days later. There is a proximity as between these events which bespeaks a sense of urgency on the part of Mr Vasiliou and those advising him. Thirdly, both Mr Vasiliou and Ms Apostolou said, in effect, that the transfers were done to provide for their children's future. Although they later tended to de-emphasise this consideration, I noticed from the tenor of their evidence and the way it was given that their two daughters are of the utmost importance to them, and were in 1987. The Deputy Commissioner's claim had the obvious potential - to say the least - seriously to diminish the capacity of Mr Vasiliou and Ms Apostolou to provide for their daughters. That this should not be allowed to happen was, for them, the highest priority. 91 Fourthly, there is the respondents' failure to call the accountant who is said to have advised them to restructure their affairs in 1987. The whole of their case in relevant respects may be reduced to the simple proposition that they were advised to implement such a restructure for the fiscal benefits it would involve, and that they followed that advice. The respondents, of course, have an intense self-interest in having the court accept that proposition. With respect to the respondents, the proposition is, when stated only by them, altogether too facile. Manifestly, the accountant who is said to have given the advice had to be called. Although the passage of time since may well have created practical problems for the respondents in this regard, I am quite unconvinced that they made any conscientious efforts to locate the accountant and to bring him to court. My concerns in these respects are, of course, reinforced by my serious reservations about Mr Vasiliou's credibility. 92 In the result, there are just too many objective circumstances for the respondents to avoid the inference that Mr Vasiliou's main purpose in making the transfers in October 1987 was to prevent the subject properties from becoming divisible among his creditors (chiefly the Deputy Commissioner) or to hinder or delay the process of making those properties so divisible. Indeed, I find that Mr Vasiliou's purpose was that of prevention, more so than merely hindrance or delay. 93 The applicant relied also on s 121(2) of the Bankruptcy Act. He submitted that I should infer from all the circumstances that, in October 1987, Mr Vasiliou was, or was about to become, insolvent. In contending that it should be inferred that Mr Vasiliou could not pay his debts as and when they fell due, the applicant relied upon the income tax assessments which were served on Mr Vasiliou on 22 September 1987 and upon the sales tax assessments the subject of the Deputy Commissioner's writ on 13 July 1988. 94 With respect to the income tax assessments, as I have held, on 22 September 1987, Mr Vasiliou was served with those assessments, the amount of which was $557,386.23. The applicant relied upon s 204 of the Income Tax Assessment Act 1936 (Cth) ("the ITA Act"), which then provided as follows: (1) Subject to the provisions of this Part, any income tax assessed shall be due and payable by the person liable to pay the tax on the date specified in the notice as the date upon which tax is due and payable, not being less than 30 days after the service of the notice, or, if no date is so specified, on the thirtieth day after the service of the notice. (2) In sub-section (1), "income tax" includes additional tax under Part VII. The applicant submitted that, notwithstanding Mr Vasiliou's protestations that he owed nothing like the amount claimed by the Deputy Commissioner, as a matter of law the amount so assessed was due and payable on the date specified in the Notices of Assessment, which was 26 October 1987 in each case. 95 Subsection (2) of s 121 of the Bankruptcy Act is a deeming provision. The result of the deeming is a finding of purpose for the purposes of subs (1). The circumstance which activates the deeming, however, has nothing to do with purpose. It requires three questions to be answered as a matter of objective fact: what were the transferor's debts, when did they fall due and could the transferor pay them when they did fall due? In the present case, I am prepared to find that, as a result of the issue of the tax assessments, a debt in the sum claimed existed, and that Mr Vasiliou could not then pay it. However, s 204 of the ITA Act provided that the debt was payable on the date specified in the Notice of Assessment or, if no date were specified, 30 days after the date of the assessment. The difficulty with the applicant's position is that the only evidence of the date specified by the Deputy Commissioner for the purposes of s 204 is that contained in the allegations in the Deputy Commissioner's Statement of Claim in the Supreme Court proceedings issued on 11 March 1988. Neither the assessments themselves, nor any copy thereof, were in evidence. The details set out in the Deputy Commissioner's Statement of Claim were allegations only, and I consider that I should require evidence of the assessments themselves to show either what was the date specified for the payment of the tax, or to demonstrate that no such date was specified. That evidence is not before the court. In the circumstances, I am not prepared to find that Mr Vasiliou was insolvent for the reason that, in October 1987, he was not able to pay the amounts of the income tax assessments to which I have referred. 96 The sales tax assessments are in a slightly different position. They too are not before the court, the only evidence of them being the writ on behalf of the Deputy Commissioner to which I have referred. However, in his viva voce evidence, Mr Vasiliou admitted that the sums claimed in the sales tax assessments were due to be paid on 30 October 1987. I infer that there had been an assessment under s 10(3) of the Sales Tax Assessment Act (No 10) 1985 (Cth), and that 30 October 1987 was the date specified in the notice pursuant to s 10(4) of that Act. It follows that Mr Vasiliou was indebted to the Deputy Commissioner in the sum of $160,849.43, plus interest, as at 30 October 1987. When he executed the deed of gift of the subject properties to Optquest on 8 October 1987, he was, in my view, "about to become" so indebted within the meaning of s 121(2) of the Bankruptcy Act. 97 The question, however, is whether Mr Vasiliou was thereby about to become insolvent. Was he able to pay the sales tax so assessed? As Barwick CJ said in Sandell v Porter (1966) 115 CLR 666 at 670 - … [T]he debtor's own moneys are not limited to his cash resources immediately available. They extend to moneys which he can procure by realization by sale or by mortgage or pledge of his assets within a relatively short time - relative to the nature and amount of the debts and to the circumstances, including the nature of the business, of the debtor. The conclusion of insolvency ought to be clear from a consideration of the debtor's financial position in its entirety and generally speaking ought not to be drawn simply from evidence of a temporary lack of liquidity. It is the debtor's inability, utilizing such cash resources as he has or can command through the use of his assets, to meet his debts as they fall due which indicates insolvency. I have only indirect, and fairly unsatisfactory, evidence of Mr Vasiliou's overall financial situation in 1987. I have referred to the real properties which he, or a company under his control, held at the time. There was also his photography business. In November 1988 (ie about 13 months later), he had a clear title to the property at 50 Great Valley Road. He made that property available as security for advances to Optquest which, by the end of July 1989, totalled about $175,000. These circumstances make it difficult for the applicant to succeed on his submission that, in October 1987 or thereabouts, Mr Vasiliou would have been unable to raise the sum of about $160,000.00 if he had had to do so. For these reasons, I am not persuaded that it is a reasonable inference from all the circumstances that, in October 1987, Mr Vasiliou was about to become insolvent because of his inability to pay sales tax.

THE AGREEMENT OF 25 MARCH 1989 98 I consider next the agreement between Optquest and Mr Vasiliou made on 25 March 1989 (see par 35 above). The respondents relied on that agreement, in the alternative, to found their submission that Mr Vasiliou no longer held the beneficial title to the subject properties. 99 My first task in this respect is to understand the agreement of March 1989, and to identify what, if any, contractual obligations arose under it. The first two clauses are in the nature of recitals. So is the third, save perhaps that the reference to "the equity & [sic] purchase and payment" gives an early insight into what may be involved in later operative provisions of the agreement. The fourth clause is also like a recital, but it does contain an "agreement" that the value of the "equity" in the properties is $182,000. The fifth clause contains an agreement too, but not an agreement to do anything. Rather, the provision assumes that there has been or will be a payment of some order. Reading the fourth and fifth together, it seems that there was to be a payment of $182,000 "in final and full settlement of the equity amount"; that is to say, the consideration for the payment of the said sum would be the "equity" in the properties. The sixth clause is of some difficulty, and I shall return to it presently. 100 The seventh clause of the agreement appears to go against the grain of the fourth and fifth. It is in the seventh that one most clearly encounters, for the first time, an obligation upon someone to do something. Mr Vasiliou is thereby obliged to "[sign] and [execute] any further documents that deem necessary to pass Title to the trust…." I put to one side the obvious - that this provision is manifestly inconsistent with the contention that Mr Vasiliou had done everything necessary on his part to pass the legal estate to Optquest in 1987. I concentrate, rather, on the fact that, although cll 4 and 5 of the agreement provide, in effect, for payment to be made in return for the "equity" in the subject properties, when one reaches a concrete obligation, one finds that it relates to the legal, not the beneficial, title. 101 The eighth clause of the agreement contemplates a regime whereunder Mr Vasiliou would, absent that clause, be in a position to "deal with the properties". This could only be in contemplation of Mr Vasiliou remaining as the registered proprietor. Likewise with the ninth clause: only if it were intended that there would be, for a time at least, a split in the holding of the legal and beneficial interests would it make any sense to declare the obligations of Optquest in the way done in that clause. The other notable thing about cl 9 is that it is seemingly inconsistent with cl 6. As between Mr Vasiliou and Optquest, cl 6 declares that Optquest "will not be responsible for any further demands lodged by any other parties against Andrew Vasiliou from this day onwards", while cl 9 makes it the responsibility of Optquest, not Mr Vasiliou, to pay mortgages, rates and outgoing. The possibility that cl 6 refers to demands upon Mr Vasiliou different from those with which cl 9 is concerned is a matter to which I shall return in a related context. 102 The tenth clause of the agreement is another which suggests that the parties contemplated not an immediate transfer of the legal estate but an ongoing situation in which Mr Vasiliou remained as registered proprietor. It assumes, to say the least, that there will not be an early, complete, performance of the agreement. The eleventh clause is another which has a kind of declaratory, rather than operative, effect, and perhaps throws a little more light on what the parties were intending by the agreement. It seems that they intended to confirm the gift in October 1987, but for the donee now to pay for what it then received. The twelfth clause is another which confirms the impression that, upon execution of the agreement as such, it was intended not that either party would come under an immediate obligation to do anything, but, rather, that the agreement would set up a regime under which Optquest, having paid $182,000 to Mr Vasiliou, could "enforce its rights … if deem necessary to be applied" at some time in the future. 103 The thirteenth clause of the agreement seems only to be an attempt to alter the relations between "the bearer" (whoever that may have been) and some unidentified third parties. I doubt that it has any bearing on present question. 104 That question is whether, assuming that Mr Vasiliou held the beneficial title to the subject properties in March 1989 (which is what I have found earlier in these reasons) the execution of the agreement on the 25th of that month had the effect, in law, of passing that title to Optquest; or, more accurately, of imposing upon Mr Vasiliou an equitable obligation to hold the properties for the benefit of Optquest. The question is difficult, for a number of reasons. First, there is the unusual nature and terms of the agreement, to which I have just referred. Secondly, there is the circumstance that the agreement was apparently drawn by someone with an understanding of the distinction between legal and equitable estates, but whose limitations in the relevant area of the law are plain to see. Thirdly, the agreement was not done at arms-length. This need not be a problem in itself, but the whole tenor of the agreement bespeaks a project of some kind other than the normal commercial one of the mutual derivation of benefits by way of exchange. Fourthly, it was the respondents who relied on the agreement, yet their submissions on its legal effect were spare in the extreme. Mr Vasiliou made the following submissions: Well, the '89 agreement, it's an add-on. It does not - that agreement does not take away the gift. It's clear. It's an add-on. It gives more rights to the trust because it gives them two boats to ride on. It gives them a boat of gift, and now they give them extra equity rights because they paid full consideration for the property. … So the '89 agreement, it merely enforces - like having a hook on the wall and you've got a coat on, and what do you do, you put another hook next to it and you just share the weight on it. So it's - the '89 agreement and the payment that they made to me at that time so I can pay my tax, was the reason for that. If wasn't the tax man come around, would be just a gift only. There will be - a lot of people will be out of my life, believe me. 105 Counsel for the applicant constructed their submissions on the basis (albeit implicit) that the case they had to answer was that the execution of the agreement, and the payment of the sum referred to in it, gave rise to a constructive trust of the kind that arises under a normal contract of sale when the full purchase price has been paid. They submitted that this was not such a case at all. They submitted that such a trust is at most a reflection of the fact that a purchaser in such circumstances is entitled to specific performance, and that Optquest (or any subsequent trustee of the family trust) was not so entitled at any time prior to Mr Vasiliou's bankruptcy. They submitted that Optquest had not paid the $182,000 required by the agreement, and had not paid the rates and outgoings as required by cl 9 thereof. 106 In his affidavit of 24 March 2006, Mr Vasiliou said that the full amount of $182,000 had been paid to him by Optquest by June 1989. At the time of swearing that affidavit, he did not have access to the statement of Optquest's mortgage account with Citibank. That statement was obtained from the bank by the applicant only after I had reserved judgment (for the first time) and as a result of certain other evidence which was exhibited to one of the applicant's affidavits but which had, at trial, gone unnoticed by the parties. As noted in par 36 above, the statement shows that $175,320.24 only was drawn down on that account. When it was put to Mr Vasiliou, under further cross-examination, that the objective evidence did not support the assertion in his affidavit that $182,000 had been paid to him by Optquest, he said that at least the additional $6,700 or thereabouts had been paid otherwise than from the Citibank account. The tenor of his evidence was that, at about that time, the photography business (now in the ownership of Optquest) was thriving, that rents were being received from the property in Claremont Street, and that Optquest regularly paid money to him, in cash it seems, from these sources. 107 I do not accept Mr Vasiliou's evidence that a total of $182,000 was paid to him by Optquest under the agreement of 25 March 1989. Originally, his evidence was that this sum was borrowed from Citibank and paid by Optquest to himself. When this evidence was shown to be wrong, he claimed that, by unrecorded transactions, other sums were so paid. Both in its content and in the impression I gained from its giving, the latter evidence had all the hallmarks of a hasty invention to suit the requirements of the respondents' case. In relevant respects, the respondents have conducted their case to a substantial extent in reliance upon the sworn say-so of Mr Vasiliou. Many early documents were not available. When the applicant himself obtained a document - the Citibank statement - that did not support the respondents' case, Mr Vasiliou gave me the impression that he was moulding his own oral evidence to the new factual scenario disclosed by that document. That recent evidence is also quite inconsistent with his earlier evidence - given with a different purpose in mind - that, because of the investment demands of the photography business and the high interest rates which prevailed at the time, Optquest simply did not earn any net revenue such as would have given point to the filing of tax returns. In the circumstances I find that Optquest paid only the sum of $175,320.24 under the agreement of 25 March 1989. 108 Neither did Optquest pay (or, more recently, have subsequent trustees of the family trust paid), the rates and outgoings on the subject properties as required by cl 9 of the agreement of 25 March 1989. In this respect I refer to the debts which have been proved in Mr Vasiliou's bankruptcy set out in pars 136-139 below. Only the most cursory of attempts - during the cross-examination of one of the applicant's witnesses - was made by the respondents to establish that the sums in question were not owing. There is an irony in the circumstance that the non-performance by the family trust of its obligations under cl 9 of the agreement of March 1989, upon which the respondents rely to shield the subject properties from the claims of the applicant, has been in part responsible for Mr Vasiliou's bankruptcy. However that may be, the fact which is presently relevant, and which is clearly established on the evidence, is that that agreement was not performed. 109 I return, then, to the proposition that counsel for the applicant contested, namely, that the agreement was a contract for the sale of land under which the equitable interest passed to the purchaser. If the agreement was such a contract, if the full price had been paid, if Optquest was not otherwise in default under the contract, and if Optquest was entitled to a transfer, Mr Vasiliou, as vendor, would have been a "bare trustee": Hayton, Underhill and Hayton Law Relating to Trusts and Trustees, 16th ed, 2003, p 438; Mowbray et al, Lewin on Trusts, 17th ed, 2000, p 260; Stern v McArthur (1988) 165 CLR 489 at 523. Even then, however, if there were other factors standing in the way of a decree of specific performance in favour of Optquest, the better view would seem to be that no equitable interest would have arisen: Chang v Registrar of Titles (1976) 137 CLR 177 at 181 and 190. 110 But, the purchase price had not (and has not) been paid and Optquest and later trustees have been (and remain) in default under the agreement. There can be no suggestion that Mr Vasiliou was (or is) a bare trustee. In the case of a contract of sale which remains unperformed by the purchaser, whether or not an equitable interest passes depends on whether the purchaser would obtain specific performance. That is to say, to assert that the purchaser has acquired an equitable interest is to go no further than to state the consequences of the circumstance that equity would, in the facts as they exist, grant specific performance: see Brown v Heffer (1967) 116 CLR 344 at 349; Stern at 522-523; Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 at 332-333. Generally, specific performance will not be ordered where the party seeking that relief remains in breach of his or her essential obligations under the contract: Australian Hardwoods Pty Ltd v Commissioner for Railways [1961] 1 WLR 425 at 432-433; Bahr v Nicolay [No 2] (1988) 164 CLR 604 at 619. The way it was put by Mason and Deane JJ in Legione v Hateley (1983) 152 CLR 406 at 449 was that it was "only in exceptional circumstances that specific performance will be granted at the instance of a purchaser who is in breach of an essential condition." 111 On the facts of the present case, I consider that Optquest was in breach of essential conditions of the agreement of March 1989. It had not paid the whole purchase price of $182,000. I do not regard the shortfall as insignificant. De minimus situations aside, when parties agree on a price for the sale of land, the vendor is entitled to be paid that price, and would be perfectly entitled to refuse to settle if there were a shortfall in the amount tendered by the purchaser. Equity would not intervene to require a conveyance at the suit of the purchaser. Likewise with the rates and outgoings. Although they fell due over a period of time well subsequent to the execution of the agreement, the fact is that the agreement had not been fully performed, and, while the subject property remained registered in the name of Mr Vasiliou, the agreement required that Optquest pay the rates and outgoings. That was not done. Indeed, the total sum owing (and admitted by the applicant) in this regard is almost $75,331, not including the $34,745.79 for which the State Revenue Office does not, at this stage, seek to prove. These sums are substantial when measured by reference to the valuation of the properties themselves contained in the agreement. What I have said in this paragraph about Optquest applies equally, of course, to its successors as trustees of the family trust. No trustee ever sought specific performance of the agreement. Had Ms Apostolou done so immediately before Mr Vasiliou's bankruptcy, manifestly she would have been met with the circumstance that she remained in breach of the March 1989 agreement in respects which were, I consider, essential. She would not have obtained that remedy, and did not therefore, have an equitable interest in the subject properties. 112 A second possibility apropos the agreement of March 1989 is that it was not a contract for the sale of land at all, but rather a contract under which an option to purchase arose. For my own part, I think that such a view of the agreement accords more closely with its actual terms, although I accept that the fit is still far from perfect. The hypothesis is that, by the agreement, Mr Vasiliou gave Optquest an option to purchase the subject properties, exercisable by payment of the sum of $182,000 and by calling for the transfer of the legal title pursuant to cll 7, 12 and perhaps 13 of the agreement. 113 Although it is often stated that the grantee of an option to purchase land thereby becomes the holder of an equitable interest in the land, it seems that such an interest is contingent only until the grantee has a right to call for the transfer of the legal estate. At that point, the grantee is in the same position as a purchaser entitled to specific performance, and the unconditional equitable interest which then arises is commensurate with that entitlement (consistently with the authorities to which I have referred above). 114 That "an option to purchase gives the grantee an equitable interest in the land" was the way the proposition was put by Gibbs J (with the assent of Stephen and Jacobs JJ) in Barba v Gas & Fuel Corporation of Victoria (1976) 136 CLR 120 at 137, but his Honour based his statement upon the judgment of Jessel MR in London and South Western Railway Co v Gomm (1882) 20 Ch D 562 at 581, where his Lordship commenced by stating that the "right to call for a conveyance of the land is an equitable interest…." In Barba, Gibbs J referred also, with approval, to Wright v Dean [1948] Ch 686 at 693, where Wynn-Parry J said: The option confers upon its exercise a right to call for a conveyance of the freehold and, therefore, it creates an interest in land. As appears quite clearly from the case of London and South Western Ry. Co. v Gomm, and also the judgment of Warrington J. in Worthing Corporation v Heather, as the contract creates this interest in land, equity if properly invoked will intervene to decree specific performance of the contract. Gibbs J referred also to In re Button's Lease; Inman v Button [1964] Ch 263 at 271 where Plowman J stated that principle in absolute terms, although it seems that his Lordship was not directly concerned with the nature of the grantee's interest in circumstances where specific performance would not be ordered. The third judgment to which Gibbs J referred was that of Latham CJ in Commissioner of Taxes (Qld) v Camphin (1937) 57 CLR 127. With the agreement of Rich and McTiernan JJ, his Honour the Chief Justice said (at 132): When an option to purchase property has been given for value and the option contract is one which would be specifically enforced in equity, a court of equity attaches to it the consequence that it creates an equitable interest in the property which is the subject-matter of the option (London and SouthWest Railway Company v Gomm, (1882) 20 Ch D 562). The contract remains a contract imposing an obligation on the person giving the option, but, when it is an option relating to land and capable of specific performance, the ordinary doctrine of a court of equity results in the person giving the option becoming a trustee of the land for the intended objects of the trust… Camphin is, therefore, authority for the proposition that the equitable interest which arises under an option is a reflection of the availability of specific performance in the circumstances then subsisting. 115 In Griffith v Pelton [1958] Ch 205 at 225 the English Court of Appeal said: An option in gross for the purchase of land is a conditional contract for such purchase by the grantee of the option from the grantor, which the grantee is entitled to convert into a concluded contract of purchase, and to have carried to completion by the grantor, upon giving the prescribed notice and otherwise complying with the conditions upon which the option is made exercisable in any particular case. …The burden of the contract qua contract does not, in the absence of novation, pass to a third party acquiring the land. But inasmuch as the option creates in favour of the grantee of the option a contingent interest in the land, it may, provided that its exercise is limited to a period permissible under the rule against perpetuities, and provided that the appropriate precautions as to registration are taken, be exercised and enforced against the land in the hands of such third party. This was one of the judgments upon which Gibbs J relied in Barba for the proposition that upon the grant of an option, "[t]he equitable interest so created is a contingent interest which will become an absolute interest when the contingency is fulfilled" (136 CLR at 137). See also the judgment of Young J in Beneficial Finance Corporation Ltd v Multiplex Constructions Pty Ltd (1995) 36 NSWLR 510 at 524. That an equitable interest as such does not arise until the point is reached at which the grantee would be entitled to specific performance seems also to have been the basis of the judgment of Lloyd LJ (with whom Ralph Gibson LJ agreed) in Sainsbury PLC v O'Connor (Inspector of Taxes) [1991] 1 WLR 963 at 972. 116 It would be odd of the grantee of an option should be regarded as the holder of an equitable interest in land in the absence of any entitlement to specific performance apropos the obligation of the grantor to convey, while a purchaser is not so regarded apropos the vendor's similar obligation (ie in accordance with Tanwar and the authorities to which I have referred in that regard above). In the specific circumstances of the present case, it would be odd if Optquest should not be regarded as the holder of an equitable interest qua purchaser, but should be regarded as the holder of such an interest qua grantee. I do not think that equity operates so as to produce such oddities. I think that the source of the grantee's interest, when it arises, is the same in principle as that of the purchaser's interest. Each interest arises because the holder thereof has an entitlement to specific performance of the owner's obligations to convey in the circumstances then obtaining. In the present case, if Optquest were to be regarded as the grantee of an option, there would perhaps be no problem created by the circumstance that it had not paid the whole price of $182,000: in the nature of things, the grantee of an option will necessarily pay the price, or the balance of the price, at the point of exercising the option. Even then, however, it might be pointed out that, as at the date of Mr Vasiliou's bankruptcy, the trustee of the family trust had neither purported to exercise the option nor evinced a readiness and willingness to make good the unpaid balance of the agreed price. But more fundamental problems arise in connection with the failure of Optquest and later trustees to pay rates and outgoings on the subject properties. Where an option arises under a contract which imposes obligations of that kind on the grantee during the period which elapses before the exercise of the option, clearly the grantee would have no entitlement to specific performance and, therefore, should not be regarded as the holder of an equitable interest, where those obligations remain unperformed. 117 Perhaps a simpler path to reaching the same conclusion as that set out in the previous paragraph is to say that the basal question whether an option exists (or, if it exists, whether it can be exercised) depends always on the terms of the grant. If the grant were contractual, and the grantee had ongoing obligations under the contract, in a particular case the conclusion may be open that the grantee's unremedied default in relation to those obligations produced the result that, at the time when the grantee sought to exercise the option, as a matter of contract there was no option at all. At best, I consider that the trustee of the family trust (Ms Apostolou) is in the position of such a grantee, and did not, as at the date of Mr Vasiliou's bankruptcy, have an option to purchase the subject properties. I so conclude because of the unpaid rates and outgoings, and regardless of whether there was a readiness and willingness to make good the shortfall in the payment of the $182,000 to Mr Vasiliou. 118 It is not easy to identify any further basis for the proposition that Optquest derived an equitable interest in the subject properties as a result of the agreement of March 1989. I do not accept that the payment of all or most of the $182,000 referred to in the agreement necessarily converted the transaction of October 1987 into something it never purported to be - an exchange for consideration - or made Optquest anything other than a volunteer in relation to that transaction. Neither do I accept that the "equity" in the subject properties was something which could be traded as a commodity, as it were. If, because of incomplete performance on the part of Optquest, equity would not have intervened by specific performance to give effect to Mr Vasiliou's obligation (if there were one) under the agreement to transfer the registered title, manifestly it would not give effect to the agreement as some kind of commercial transfer of the equitable title as such. 119 For the above reasons, I hold that the operation of the agreement of 25 March 1989 did not give rise to a situation in which Optquest held the beneficial title to the subject properties.

SECTION 121 APROPOS 1989 AGREEMENT 120 It was submitted on behalf of the applicant that, if the transaction of 25 March 1989 was otherwise effective in law, it was voidable at the instance of the applicant pursuant to s 121 of the Bankruptcy Act. It was said that Mr Vasiliou's main purpose in entering into that transaction was to prevent the subject properties from becoming divisible among his creditors (especially the Deputy Commissioner) or to hinder or delay the process of making those properties available for division among those creditors. As with the gift of October 1987, for the purpose of only considering this alternative claim, I shall treat the agreement of 25 March 1989, and the payments made under it, as giving rise to an equitable interest in the subject properties in the hands of Optquest. It was implicit in the applicant's case under s 121 that the circumstances giving rise to such an interest would be held to be a "transfer of property" for the purpose of s 121. I think the applicant is correct so to proceed: see Bankruptcy Act, s 121(9)(b) and the definition of "property" in s 5(1). It was also implicit in the applicant's case, and I accept as a matter of fact, that, absent the transfer, the subject properties would probably have become part of Mr Vasiliou's estate and/or available to his creditors (s 121(1)(a)). 121 Turning then to Mr Vasiliou's purpose in March 1989, the respondents submitted that Mr Vasiliou's purpose in entering into the agreement was as stated in his viva voce evidence (as set out in par 33 above), ie that for Optquest to have borrowed money to purchase a beneficial interest in each of three income-earning properties would have made the interest payments tax effective. Mr Vasiliou said that it was in February 1989 that he consulted his accountant about the mechanics of raising funds to pay the Deputy Commissioner, and that the accountant made this suggestion. There is a certain plausibility about the suggestion. 122 In support of Mr Vasiliou's evidence about his purpose in March 1989 is the circumstance that, by then, he had effectively settled his income tax dispute with the Deputy Commissioner. The Deputy Commissioner had offered to settle for $113,000.00 in December 1988, and, during January 1989, the parties moved closer to agreeing to terms for a settlement of the Deputy Commissioner's claims in that amount. The final agreement for the payment of the $113,000.00 was executed by Mr Vasiliou on 10 March 1989. In the circumstances, by the time Mr Vasiliou and Optquest made their agreement on 25 March 1989, Mr Vasiliou no longer faced the prospect of a claim for income tax of the order which had confronted him in September 1987. The respondent submitted that he would not, in the circumstances, have had the need to protect his properties from execution at the behest of the Deputy Commissioner. 123 On the other hand, it was submitted on behalf of the applicant that the agreement between Mr Vasiliou and the Deputy Commissioner made on 10 March 1989 provided that, if Mr Vasiliou defaulted in any of his obligations thereunder, the Deputy Commissioner would withdraw his settlement offer, and Mr Vasiliou would again be exposed to recovery proceedings in relation to the full amounts of the original assessments. I am inclined to give relatively little weight to this consideration, since I think it likely that, having either obtained, or satisfied himself that he could obtain, the funds necessary to comply with the terms of settlement agreed with the Deputy Commissioner, Mr Vasiliou would be unlikely to have anticipated that he might well default upon compliance with those terms, and again be exposed to the original claims. As a matter of considering Mr Vasiliou's purpose at the time, I think it unlikely that the prospect of the original claims, in effect, being revived played any part. 124 Counsel for the applicant were on surer ground when they pointed out that, as at March 1989, the Deputy Commissioner still, apparently, had his sales tax proceeding outstanding against Mr Vasiliou, in which he claimed about $160,000.00. The only reference to this proceeding in the evidence was the writ itself, to which I have referred in par 27 above. The respondents said nothing about the future course of the Deputy Commissioner's proceeding, or about whether it ultimately became necessary for Mr Vasiliou to find further funds in order to settle the proceeding, or to satisfy any judgment. I consider that the respondents effectively carried the evidentiary onus in these respects, and I think that a finding that, as at March 1989, the Deputy Commissioner's sales tax claims, and his proceeding in that regard, remained outstanding would be proper in all the circumstances. Although Mr Vasiliou was able to raise (via Optquest) about $175,000 - more than enough to settle the Deputy Commissioner's income tax claims - raising another $160,000.00 or thereabouts would, I consider, have been a different matter altogether. I find it likely that, notwithstanding his income tax settlement, in March 1989 Mr Vasiliou remained concerned about his sales tax liability, and about the potential exposure of the subject properties to enforcement proceedings in that regard. 125 There are, moreover, serious indications in the evidence which suggest that Mr Vasiliou's main purpose in making the transfers under the agreement of 25 March 1989 was not as he now asserts. For these purposes, it is necessary to understand the history of this proceeding. I referred briefly to that history in my judgment in Marchesi v Apostolou [2007] FCA 254 at pars [2] - [5]. At the time of the trial before Weinberg J, the applicant did not base his case upon s 121 of the Bankruptcy Act, and had foreshadowed no intention to do so. He first raised the relevance of that section on 7 February 2007. That Mr Vasiliou had no reason to be concerned about s 121 is, I consider, relevant to an appreciation of the significance of the paragraphs in the affidavit sworn by him on 24 March 2006 which I have set out in par 33 above. 126 Although he effectively denied it in his evidence before me, the inference is inescapable that Mr Vasiliou's reference in that affidavit to the possibility of an attack by the tax office on a gift less than two years old was based on a concern that s 120 of the Bankruptcy Act might be used against him in relation to his voluntary settlement of October 1987. At the time, s 120 had a relation back period of two years before the commencement of the bankruptcy. I would infer, therefore, that, in March 1989, Mr Vasiliou was concerned that circumstances might occur which would constitute the commencement of a bankruptcy for him, and that the 1987 settlements, because they were voluntary, would then be void as against the trustee of his estate. 127 Such an inference derives support from a consideration of the objective circumstances in which Mr Vasiliou then found himself. Although I have held it to be unlikely that, as at 25 March 1989, Mr Vasiliou realistically feared the revival of the Deputy Commissioner's income tax claims which had been settled on 10 March, those claims did not relate to any year subsequent to that ended 30 June 1986. There was also the sales tax proceeding to which I have referred. At the time, Mr Vasiliou was acutely aware that it would be his real estate holdings to which the Deputy Commissioner would look to satisfy any future judgment; in which respect I refer to the orders made by the Supreme Court on 13 and 26 July 1988, and to the Deputy Commissioner's letter of 12 August 1988. 128 When viewed in the context of a concern on Mr Vasiliou's part about s 120, the agreement of 25 March 1989 makes a deal of sense. The agreement may be seen as an attempt to clothe the transaction of October 1987 with "valuable consideration" or at least to have constituted the transaction in itself a transfer for valuable consideration, with the result that s 120 would not apply. Further, if Mr Vasiliou had the purpose of putting the subject properties beyond the reach of his creditors, clause 6 of the agreement - which provided that Optquest would not be responsible for any further demands lodged by other parties against Mr Vasiliou - becomes intelligible. Absent some such purpose, it is, at least to a substantial extent, in conflict with cl 9. 129 I also consider that Mr Vasiliou's stated justification for the agreement of March 1989 - that it made interest payments tax effective - is not supported by the subsequent conduct of Optquest. Mr Vasiliou's evidence was that, in 1989 and the early 1990s, the photography business was thriving. Eventually, the business failed in the period subsequent to 1995. Mr Vasiliou said that the high interest rates in the early 1990s constituted a severe burden for Optquest as, having taken possession of the subject properties, it was obliged to make the corresponding interest payments. These are the same payments which, according to Mr Vasiliou, would have been more tax effective if made by Optquest. Given the existence of regular income flows from the photography business - now, according to Mr Vasiliou, in the hands of Optquest - and the claimed rationale for the agreement of March 1989, one would expect that Optquest would have lodged income tax returns, claiming all necessary deductions, at least for most of the period while the photography business was being conducted. Not only was there no evidence of returns by Optquest (or by the family trust) subsequent to the tax year ending on 30 June 1989, the evidence to which I have referred in par 38 above makes it tolerably clear, and I would infer, that Optquest (and the family trust) did not in fact lodge any income tax returns after that year. Mr Vasiliou did not suggest otherwise. His explanation for the failure of Optquest to file tax returns was simply that there would have been no tax payable, on the basis that deductions were always so substantial to have produced that result. However, in a period during which the photography business was producing assessable income, the only lawful way in which those deductions could have been brought into account by Optquest would have been by claiming them in tax returns. That is to say, the only lawful way in which the fiscal advantages claimed by Mr Vasiliou for the agreement of 25 March 1989 might have actually been derived, as distinct from merely contemplated, would have been by Optquest filing tax returns in the years in which the photography business returned a gross income. The absence of any such returns beyond the 1989 year significantly undermines Mr Vasiliou's justification for the agreement. 130 The person who witnessed Mr Vasiliou's signature on the agreement of 25 March 1989 was Mr Foutis, his accountant at the time. He was also the accountant who, according to Mr Vasiliou, provided advice about the tax effective means by which the loan necessary to raise the funds to pay the Deputy Commissioner could be serviced. He was not called. Mr Vasiliou said that Mr Foutis had sold his practice and gone overseas. He had told him that he had gone to Europe. When it was put to Mr Vasiliou that he had chosen not to bring Mr Foutis to court, he replied: It was impossible to bring him here. If you want me, I can bring him if you want to. If you want to adjourn the matter, your Honour, I can bring Mr Foutis here. When it was put to Mr Vasiliou that he knew where Mr Foutis was, he replied: "Do you want me to bring him? I will. You pay his air ticket and I will bring him." When the same subject was raised a little later, Mr Vasiliou said: Mr Foutis is overseas. If you want to ring him, we can ring him, your Honour. If you want to adjourn this case I will bring Mr Foutis to come and give evidence. During his cross examination, I told Mr Vasiliou that he should not assume that simply saying "he is in Europe" would necessary be accepted as a satisfactory response. Mr Vasiliou said that he could find Mr Foutis's phone number, and that I could talk to him. I responded: I am not sure how important it will be, and sometimes if something is only very minor, then perhaps I might not worry too much about whether the witness has been called or not. But if something is important, then I might have to worry about that. And I just don't know whether this is an important aspect or not, but I think I should warn you that Mr Peters may say to me, "Look, just to sit in the witness box and say he is in Europe isn't good enough because these days there are all sorts of communications internationally," etcetera. I don't know. 131 It is apparent, therefore, that Mr Vasiliou knew the present whereabouts of Mr Foutis, that he had the means to contact Mr Foutis, and that Mr Foutis would, in all probability, have been a co-operative witness. I do not think that I should accept that Mr Vasiliou has demonstrated any reason for failing to call Mr Foutis as a witness. As I pointed out to him, there are ways in which such things may be arranged, notwithstanding that the witness in question is overseas. Although, when I had my exchange with Mr Vasiliou, it was not apparent to me how important Mr Foutis's absence would be, in the light of the other evidence to which I have referred, that absence is, I consider, significant. Mr Foutis could, I infer, have given evidence about the advice which he proffered in February 1989, about the circumstances surrounding the execution of the agreement on 25 March 1989, and about Optquest's history in relation to the lodging of tax returns. He would, of course, have been exposed to cross examination on these subjects, including the circumstance that no tax returns were in fact lodged by Optquest after the 1989 tax year. The applicant's case apropos Mr Vasiliou's purpose in March 1989 was, necessarily, highly inferential. Although he would not have been permitted to give self-serving evidence of his own subjective intentions at the time, it was very much in the respondents' interests to call all the evidence available to them from which Mr Vasiliou's then purpose might be inferred, and, in the nature of things, they were much better placed to call that evidence than the applicant. I am bound to conclude that, notwithstanding Mr Vasiliou's professed willingness to contact Mr Foutis and to have him give evidence, the respondents were aware that no evidence which Mr Foutis would be likely to have given would have assisted their case. 132 In the light of the considerations which I have discussed above, I consider that Mr Vasiliou most probably explained his purpose in making the agreement of 25 March 1989 in his affidavit sworn on 24 March 2006. That affidavit was sworn before the applicant made any reference to s 121 and, for that reason, is more likely to contain a frank account than Mr Vasiliou's evidence given viva voce when he well knew the significance of purpose. As stated in his affidavit, he considered that the tax office people "mean business" and could have "attacked the gift" as being less than two years old. Thus he and Optquest acted "in order to retain its gifted properties". The affidavit clearly bespeaks a concern that the Deputy Commissioner might yet seek to put Mr Vasiliou into bankruptcy, and to liquidate his assets. That Mr Vasiliou should have had that concern is made the more likely by the existence of the Supreme Court orders of 13 and 26 July 1988. That the subject properties were at risk remained, I consider, uppermost in Mr Vasiliou's mind in February and March 1989. 133 As against these considerations, it will be apparent from what I have said above that the respondents' more recent explanation for the agreement, while plausible, does not withstand close examination. It is inconsistent with the absence of any returns by Optquest beyond 1989, and within Mr Vasiliou's explanation for that circumstance. As in relation to October 1987, so too in relation to February/March 1989, the respondents' failure to call their accountant is significant and, in my view, damaging for them on the matter of purpose. 134 For the above reasons, I find that Mr Vasiliou's main purpose in entering into the agreement of 25 March 1989 was to prevent the subject properties from becoming divisible amongst his creditors, chiefly the Deputy Commissioner. I would hold, therefore, that such transfer as may have been effected by that agreement is void as against the applicant.

MR VASILIOU'S RIGHT OF INDEMNITY 135 The final basis of the applicant's case is that, if the family trust was beneficially entitled to the subject properties at the time of Mr Vasiliou's bankruptcy, and remains so, then Mr Vasiliou, as trustee, is entitled to an indemnity in relation to the outlays which he has made and the liabilities which he has incurred in relation to those properties. Since I have held that Optquest was not, and therefore that the family trust is not, beneficially entitled, the indemnity point is moot. However, the matter was fully argued, and may become relevant again if some or all of the orders I propose to make are the subject of a successful appeal. I shall, therefore, deal with the point. 136 The applicant has admitted 11 debts in Mr Vasiliou's bankruptcy. They fall into four categories. First, there are the rates, taxes and charges associated with the subject properties, namely:

• The State Revenue Office has claimed land tax in the sum of $34,745.79 with respect to all the subject properties. At this stage, the Office does not seek to prove in the bankruptcy, preferring to rely on s 66 of the Land Tax Act 1958 (Vic). However, the applicant submits that the Office may later change its approach, and seeks a declaration in relation to this claim.
• Body corporate No 4269 claims fees in the sum of $5,673.50 with respect to 5/3 Alfriston Street. The applicant has admitted $3,817.35.
• The City of Port Phillip claims rates and municipal charges in the sum of $15,910.89 with respect to 18 St Kilda Road. The applicant has admitted $12,987.01.
• The City of Port Phillip claims rates and municipal charges in the sum of $14,309.92 with respect to 5/3 Alfriston Street. The applicant has admitted $9,524.10.
• The City of Stonnington claims rates and municipal charges in the sum of $50,092.31 with respect to 10 Claremont Street. The applicant has admitted $48,002.51. If Mr Vasiliou held only the legal title to the subject properties, it is clear that each of these debts were incurred by Mr Vasiliou in his capacity as trustee, and relates directly to the trust property. Mr Vasiliou is entitled to be indemnified by the trust for the outlay in each case. 137 Secondly, there is a claim by Bendigo Bank Ltd which the applicant accepts bears no relation to the subject properties. I need say nothing further about that. 138 Thirdly, there are fees and costs which relate to Mr Vasiliou's development activities with respect to 10 Claremont Street. They are:
• Australia's Country Homes Pty Ltd has claimed the sum of $101,735.98, representing the money order made by VCAT on 21 December 1998 (later registered in the Magistrates Court of Victoria) plus interest, a further order for the payment of interest made by VCAT on 5 May 1999 plus penalty interest on that order, an order for costs made by VCAT on 5 May 1999 (taxed on 23 September 2004) plus penalty interest on that order, a further order for costs made by VCAT on 12 August 1999 plus penalty interest on that order, and a costs order made by this court on 1 June 2000 upon the dismissal of a proceeding brought by Mr Vasiliou in which he sought as against Australia's Country Homes Pty Ltd, inter alia, that a bankruptcy notice served on him be set aside. The applicant has admitted $83,499.09.
• Australia's Country Homes Pty Ltd and Glenvill Pty Ltd have claimed the sum of $69,111.92, representing costs orders made in their favour and against Mr Vasiliou by the Supreme Court of Victoria on 5 and 9 July 1999, on 26 November 1999 and on 13 May 2004 in the proceedings brought by Mr Vasiliou to challenge the VCAT orders (before the Master, Beach J and the Court of Appeal). The applicant has admitted $54,245.60.
• Tasipolous Lambros & Co, solicitors, have claimed the sum of $40,320.78 by way of fees for legal services provided to Mr Vasiliou when they acted for him in connection with the VCAT proceedings in 1998. The applicant has admitted $35,867.64.
• Michael Rickards, solicitor, has claimed the sum of $14,015.95 plus interest by way of fees for legal services provided to Mr Vasiliou in connection with the Supreme Court proceedings challenging the VCAT orders. When interest is taken into account, the applicant has admitted $21,172.46. 139 Fourthly, there is a claim by CK Designworks Pty Ltd, architects, planners and interior designers, for the sum of $14,685.00 in connection with the preparation and provision of drawings for a block of serviced apartments at 10 Claremont Street. The whole has been admitted. This work was done pursuant to an engagement in January 1999, and seemingly is unrelated to the claims of Glenvill and ACH. 140 Directly or indirectly, Mr Vasiliou's entitlement to an indemnity from the trust in relation to the outlays and liabilities in the third and fourth categories would depend upon the capacity in which he incurred them and the obligations which equity would impose upon him in relation to the development of 10 Claremont Street. 141 The purpose of the engagement of Glenvill by Mr Vasiliou was to carry out works to facilitate the obtaining of a development permit for 10 Claremont Street. Glenvill was engaged by Mr Vasiliou in his own name, but, in one of his affidavits, he stated that he proposed that the development, if it went ahead, would be done by one of his companies. This aspect does not need to be investigated, since it is clear that Mr Vasiliou's debt to Glenvill (and by assignment ACH) was in his own name. It was accepted by the applicant that Mr Vasiliou was not relevantly acting in his capacity as trustee (either qua registered proprietor as a result of the events of 1987 or 1989 or qua appointed trustee, at the time, of the family trust). The preliminary works for which Glenvill was engaged were wholly an enterprise of Mr Vasiliou in his own personal capacity, notwithstanding that (on the assumption to which I am presently working) the property in question was beneficially owned by another entity. 142 The question thus arises whether Mr Vasiliou, as trustee, would have been entitled to be indemnified by the family trust, as beneficial owner of 10 Claremont Street, for his outlays in connection with the preliminary works, including everything that flowed from his largely unsuccessful litigation with Glenvill and ACH. It is not immediately apparent why he might have been. Counsel for the applicant put their submissions at two levels. First, they referred to the general proposition that a trustee cannot make a profit or derive a benefit from his or her position as such, but must account to the trust estate for any such profit or benefit: see Heydon and Leeming, Jacobs' Law of Trusts in Australia, 7th ed, 2006, pp 411ff. They said that, notwithstanding that he might have been developing the property in his personal capacity, Mr Vasiliou would not be permitted by equity to retain any profit or benefit which came to him from that development, because the opportunity to obtain it would have arisen from his position as trustee. I agree with that proposition. Counsel then said that, as a concomitant of holding Mr Vasiliou to his obligations as trustee in relevant respects, equity would require the trust estate to indemnify him for his debts and outlays properly incurred and expended in the course of obtaining the profit or benefit for which he was accountable. At the general level, I agree also with that proposition. It followed, according to counsel, that Mr Vasiliou was entitled to be indemnified for the debts and outlays incurred and expended as a result of his engagement of Glenvill in the circumstances of the present case. I do not agree with that proposition. It would, of course, be quite different if the engagement of Glenvill had been done by Mr Vasiliou in his capacity as trustee, such that the development itself became, as it were, the enterprise of the trust estate. But that was not the case. The enterprise was wholly that of Mr Vasiliou personally. Had the enterprise succeeded and the development been the engine for a profit for Mr Vasiliou, I accept that he would then have been accountable for that profit, and probably then entitled to an indemnity. However, none of that occurred. Counsel's proposition is, effectively, that a trustee may, in his or her own capacity and without reference to the beneficiaries, undertake a risky development enterprise and then, when the enterprise fails, require the trust estate to indemnify him or her against the losses inevitably incurred for no better reason than that the property to which the development related was owned by the trust. Every instinct suggests that equity does not work in this way, and no reported instance of such an outcome was referred to by counsel. 143 Secondly, counsel referred to the principle stated by Brooking J in RWG Management Ltd v Commissioner for Corporate Affairs [1985] VR 385 at 396: A trustee is … entitled to be indemnified in respect of a liability improperly incurred to the extent to which, acting in good faith, he has benefited the trust estate. His Honour's statement was referred to by Ormiston JA, delivering the judgment of the Victorian Court of Appeal, in Nolan v Collie (2003) 7 VR 287 at 310. Counsel submitted that Mr Vasiliou's development activities were for the benefit of the trust, and that, in accordance with the principle referred to, he was entitled to be indemnified. I do not, however, consider that the principle has any relevance to the present case. It is concerned with acts done by a trustee in that capacity or with intended reference to the trust, and to benefits known to have been obtained. Its application has the narrow focus of identifying one circumstance in which a trustee would be entitled to be indemnified notwithstanding that the liability in question was improperly incurred. It necessarily assumes that the right of indemnity, absent the impropriety, would otherwise exist. The principle is not concerned with a situation in which a person who happens to be a trustee incurs a liability in his or her personal capacity and in relation to which, in some future (but presently hypothetical) circumstances, he or she may make a profit or derive a benefit for which he or she would be accountable to the trust. 144 For the above reasons I hold that Mr Vasiliou would not have been entitled to an indemnity from the family trust in relation to the debts in the third category referred to above. 145 Although otherwise unrelated, I consider that the circumstances of Mr Vasiliou's liability to CK Designworks Pty Ltd are relevantly indistinguishable from those of the liabilities of the third category. This was another development proposal in relation to 10 Claremont Street and, when the liability was incurred, Mr Vasiliou was proceeding in his own right, not as trustee. I hold, therefore, that he would not have been entitled to an indemnity from the family trust in relevant respects.

DISPOSITION OF THE PROCEEDING 146 For the reasons expressed above, I propose to make the declarations sought by the applicant as primary relief in the proceeding, and to order Mr Vasiliou to execute and deliver to the applicant transfers of title under the TL Act in relation to the subject properties. 147 Although the declarations and orders dispose finally of the applicant's claims in the proceeding, on 8 March 2007 (the second day of the trial) Ms Apostolou sought leave to file and thereafter to prosecute a cross-claim against the applicant. I was told that very substantial damages were proposed to be claimed. The applicant raised no objection to the filing of the cross-claim, but resisted any suggestion that it should be heard at the same time as his own application. Ms Apostolou was content to have the cross-claim dealt with after the delivery of final judgment in the proceeding and, in the event that such an approach was taken, counsel for the applicant accepted that their client would be in no position later to contend that it would be an abuse of process for Ms Apostolou not to have made the relevant claims as part of this proceeding. In the circumstances, on 8 March 2007 I made the following orders: (1) The first respondent have leave to file in court a draft counter-claim by her against the applicant, dated 8 March 2007, and an affidavit sworn by her that day, together with the exhibits thereto; (2) That the said draft counter-claim stand as an application for leave to make a counter-claim in the terms thereof and on the grounds set forth in the said affidavit; (3) The said application for leave be adjourned to a time and date not before the delivery of judgment in the proceeding brought by the applicant; (4) The costs of the application for leave to date be reserved. I realise that this approach has the unusual feature of providing for the further hearing of contested matters after final judgment; and on one view may be regarded as inconsistent with the rationale of providing for cross-claims as a convenient means of disposing of claims by respondents at the same time as the claims of those by whom they are sued. However, both parties consented to this course, and it seemed to me to be the most convenient one in the circumstances. 148 I shall list the proceeding for directions, at which time I shall deal with two matters. First, I would expect any application for the costs of the proceeding to date to be made then. Secondly, I shall make Ms Apostolou's application for leave to make her cross-claim returnable then, in accordance with par 3 of my orders of 8 March 2007. I recognise that, in the light of some of the findings I have made in these reasons, Ms Apostolou may ask me to disqualify myself from hearing her application (and, if it be granted, the cross-claim itself), but it is convenient that I make the application returnable before me in the first instance at least, so that any such objection might be raised and matters of procedure generally attended to. I certify that the preceding one hundred and forty eight (148) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jessup.

Counsel for the Applicant: Mr J Peters SC & Mr M Galvin

Counsel for the Respondents: The respondents appeared in person

Dates of Hearing: 7,8,9,15,19 & 20 March, 9 May & 7 June 2007