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:
- Discussions with the local Town Planning department.
- Prepare Town planning drawings, including site plan, elevations, floorplans, site analysis report & all other documentation required
- Photograph adjoining properties.
- Attend council for negotiations & meetings as required.
- Pay all fees & costs.
- Redesign of application as required
- Consult engineers, experts, consultants etc.
- 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.