Deeds - Parties to a purported deed of guarantee - Where purported deed is executed only by obligees and not by obligor - Parties to the purported deed to be determined by objective construction of the deed as a whole including the principal (purported) loan agreement to which the deed of guarantee is supplementary

Deeds - Action for debt - Whether specific performance at common law - Whether deed enforceable in absence of consideration

Contract - Construction of written contract - Whether ambiguity exists - Whether alleged earlier oral agreement in terms which contradict the terms of written agreement can be used to construe the written agreement

Company law - Equity - Fiduciary duties - Duty to act in good faith and for proper purposes - Duty to avoid conflicts of interest - Failure to give independent consideration to the interests of the company - Rescission of transaction

Limitation of actions - Limitation Act 1935 s 38 (1)(e) - Meaning of 'action of covenant or of debt upon any bond or other specialty' - Whether action for enforcement of a debt is an 'action of covenant' - Meaning of 'specialty' - Whether action is an action upon a specialty

Limitation of actions - Limitation Act 1935 s 38 (1)(c)(v) - When cause of action accrues for a debt which is repayable on demand - Effect of a term in purported loan agreement creating a repayment date but providing that the debt is repayable on demand if any breach occurs before repayment date - When loan repayable under a contract of guarantee - Whether statute barred loan is 'due and payable' for the purposes of purported contract of guarantee

Evidence - Alleged iterative oral agreement in 2002 and 2003 - Inconsistency in evidence about oral agreement between principal witnesses for the plaintiff - Dangers in relying upon oral evidence of transactions occurring years ago

Conveyancing Act 1919 (NSW)

Evidence Act 1906 (WA)

Limitation Act 1623 21 Jac 1 c 16

Limitation Act 1935 (WA)

Limitation Act 2005 (WA)

Property Law Act 1969 (WA)

Baker J, An Introduction to English Legal History (4th ed, 2002)

Dworkin, G Odgers' Construction of Deeds and Statutes (5th ed, 1967)

Handford P, Limitation of Actions: The Laws of Australia (3rd ed 2009)

Heydon, JD 'Are the duties of company directors to exercise care and skill fiduciary?' in Degeling and Edelman (eds) Equity in Commercial Law (Lawbook, 2005)

Ibbetson D, A Historical Introduction to the Law of Obligations (1999)

Lobban M, 'Contract' in The Oxford History of the Laws of England (vol XII, 2010)

Mansel G, A Treatise on the Law of Limitation (1839)

Martin K, 'Contractual construction: Surrounding circumstances and the ambiguity gateway' (2013) 37 Australian Bar Review (forthcoming)

Morrison, JA and Goolden, H A Treatise on Deeds by Robert Norton (2nd ed 1928)

Peel E, Treitel: The Law of Contract (13th ed revised, 2011)

Simpson AWB, A History of the Common Law of Contract (1975)

1 The essence of this trial is a claim by Netglory for 'repayment' of a 'loan'. Netglory seeks 'repayment' from the Hocking Land Company even though Netglory admits that no money was ever paid by it to the Hocking Land Company.

2 Netglory's action is based on an undated written document bearing the description 'Loan Agreement' and said by Netglory to have been made on 21 February 2003. Netglory relies on that document and seeks repayment from the Hocking Land Company of $800,000 and interest at 20% compounding monthly.

3 The case began as a simple statement of claim by Netglory in 2010 seeking repayment of the loan under this Loan Agreement. But the case became a little more complex once it was common ground that the Loan Agreement on its literal terms is a fiction.

4 Netglory's case, as opened,[1] was that the meaning of 'advance' in the Loan Agreement is a promise by Netglory to abstain from demanding money which was somehow due from the Hocking Land Company to Netglory. That money was said to be due as a result of an antecedent oral agreement to which the Hocking Land Company was not a party.

5 Netglory also sues Mr Caratti under a February 2003 alleged guarantee of the repayment by Hocking Land Company (the Guarantee). Mr Caratti was said to have guaranteed repayment of money which was never paid to the Hocking Land Company. The first demand was made under the Guarantee in November 2010,[2] more than seven years after the alleged default under the Loan Agreement.

6 Netglory's case ultimately fails for four legal reasons. These are as follows:

(1) The Loan Agreement contains no relevant ambiguity and is dependent upon a loan being made for any obligation to repay to arise: [203] [249].

(2) The Loan Agreement is not a specialty and it is unenforceable due to the Limitation Act 1935 (WA): [250] [307].

(3) Neither the Loan Agreement nor the Guarantee is a deed due to the absence of attestation ([78] [202]) and neither is supported by consideration: [308] [337].

(4) The Loan Agreement involves a breach of duty by its sole director, Ms de Hollander, and it would be rescinded if it were valid: [338] [392].

7 Some of these legal issues involved are not simple. In particular, the requirements for attestation of a deed are matters which have divided courts for more than two hundred years. Other peripheral, but no less difficult, issues such as the nature of directors' fiduciary duties or rules of construction are matters of more recent dispute.

8 The issue concerning attestation in this case is whether the requirement for an attesting signature is met. A purported attesting signature was affixed by Mr Pollock while in jail nearly eight years after his alleged witnessing (but using his previous address and occupation).

9 Apart from these four legal reasons, the claim must fail in any event because I reject the evidence of Mr Pollock, upon which the pleaded oral agreement was based.

10 Netglory's action was orchestrated and controlled by Mr Pollock. Mr Pollock described his position with Netglory as a 'consultant'. In fact he asserted complete influence and control over the director of the company.

11 Mr Pollock's evidence was untruthful, contrived and wholly unreliable. I am not prepared to accept his evidence of oral agreements without clear documentary evidence to support such an agreement. The documentary evidence in this case is, at best, equivocal. And there are numerous circumstances which support the conclusion that the alleged oral agreements are simply incredible: [553] - [616].

12 The initial case for Netglory, as set out in the letter from its solicitors to the solicitor for Mr Caratti, was as follows:[3]

The Loan Amount was advanced by way of transfer by Netglory to Hocking Land Company of the benefit of Contracts of Sale dated 23 April 2002 held by Netglory Pty Ltd with [the Abbonizios]. The Contracts of Sale had a net equity value of $800,000. The transfers of land were dated and registered on 6 January 2003, being the date the consideration of $800,000 was agreed by the Loan Agreement to have been advanced.

13 Although this case was more coherent than the amended pleading ultimately advanced by Netglory, there are serious errors in these allegations.

14 First, Netglory did not hold the benefit of the contracts of sale with the Abbonizios. Those contracts were with the Hocking Land Company.

15 Secondly, the two contracts of sale did not have a net equity value of $800,000. As the case developed at trial, Mr Caratti said that the contracts were worth approximately what the Hocking Land Company agreed to pay for them in April 2002. Mr Pollock's evidence was that he believed that the two lots were valued at $2.2 million, which was $800,000 more than the price which the Hocking Land Company had agreed to pay. But his case at trial focused on value of Lot 81 as well as Lots 82 and 83.

16 Netglory's later pleaded case in its statement of claim, reply, and defence to counterclaim was as follows.

17 At relevant times until 15 November 2010, Ms de Hollander was the sole appointed director, the secretary, and a shareholder of half of Netglory.[4]

18 Around July 2002, Ms de Hollander (the third party in this action, acting through her agent, Mr Pollock), entered an agreement with the first defendant, Mr Caratti.

19 The terms of the July 2002 Agreement were as follows:

(a) Ms de Hollander and Mr Caratti would jointly carry out a subdivisional development of the properties at Lots 81, 82 and 83 Nicholas Road, Hocking.

(b) The second defendant, Hocking Land Company, would be used to carry out this Hocking development. The Hocking Land Company carried on business involving holding and developing land. Mr Caratti was a director of Hocking Land Company and Ms de Hollander was the sole shareholder.

(c) The Hocking development would be funded externally with any internal funding by a shareholder to accrue interest at a rate of 20% per month until repayment.

(d) At that time the net tangible asset value of the Hocking Land Company was $800,000.

(e) Ms de Hollander would transfer half of the issued shares in the Hocking Land Company (50 shares) to Mr Caratti for nominal consideration.

(f) Ms de Hollander and Mr Caratti would cause each other to be appointed as directors of Hocking Land Company.

(g) Ms de Hollander would be paid out the $800,000 net tangible asset value to enable the Hocking development to be funded entirely from external funding.

20 This July 2002 Agreement is said to be 'evidenced' by a Substituted Shareholders' Agreement executed in October 2002 by Ms de Hollander and Mr Caratti.

21 Netglory also pleads two events which occurred pursuant to the terms of the July 2002 Agreement. The first is that Mr Caratti became a director of Hocking Land Company. The second is that Ms de Hollander transferred to Mr Caratti half of the shares in the Hocking Land Company (50 shares) for nominal consideration.

22 Netglory says that around early 2003, Ms de Hollander (again by her agent Mr Pollock) and Mr Caratti agreed to provide for the extraction of the net tangible asset value of the Hocking Land Company. They agreed that this would be accomplished in the following way.

(a) They would cause Hocking Land Company to enter a deed with Netglory (Ms de Hollander's nominee) in which Hocking Land Company would pay $800,000 to Netglory with interest at 20% per annum as long as the principal sum remained outstanding; and

(b) Hocking Land Company would mortgage land to Netglory to secure the $800,000 and interest; and

(c) Mr Caratti and Ms de Hollander would guarantee Hocking Land Company's performance of its obligations under the 'Loan Agreement'.

23 Netglory says that 'pursuant to the [July 2002 Agreement]' the following events occurred:

(a) Hocking Land Company entered a deed with Netglory 'whereby it agreed to pay to [Netglory] upon demand any time after 31 December 2004' $800,000 and interest at a rate of 20% per annum, capitalised monthly. For the sake of clarity, I will use the abbreviation Loan Agreement to describe this deed upon which Netglory sues.

(b) Hocking Land Company mortgaged land to Netglory to secure its payment of the $800,000 and interest (the Mortgage).

(c) Mr Caratti and Ms de Hollander executed a Deed of Guarantee whereby they undertook to indemnify Netglory in respect of any default by the Hocking Land Company in respect of its repayment of the $800,000 and interest.

24 In reply, Netglory pleaded that Netglory (by Mr Pollock) and the Hocking Land Company (by Mr Caratti) agreed to vary the Loan Agreement so that the Hocking Land Company would pay the Loan Amount from the proceeds of sale of the subdivided lots created from Lots 81, 82 and 83 Nicholas Road immediately after the repayment by the Hocking joint venture of its external financiers.[5]

25 On 23 November 2010, Netglory made a statutory demand of the Hocking Land Company for $3,050,794.89. This was the amount said to be owing under the Loan Agreement.

26 The Hocking Land Company did not pay any of the sum demanded. Netglory now claims $3,050,794.89 in a common law action for debt under the Loan Agreement. The Hocking Land Company also claims the same amount against Mr Caratti under the Guarantee. A separate claim is also brought for interest at the rate of 20%, compounded monthly.

1.2 Mr Caratti's and Hocking Land Company's defence and counterclaim

27 The Hocking Land Company and Mr Caratti raise various defences to Netglory's claim. In summary, the defences which were maintained by the defendants, and the paragraphs below where I address each defence, are as follows.

(1) On its proper construction, the Loan Agreement contains no relevant ambiguity and was dependent upon a loan being made for any obligation to repay to arise: [217] [233].

(2) Both the Loan Agreement and the Guarantee are unenforceable due to the Limitation Act 1935 (WA): [250] [307].

(3) Neither the Loan Agreement nor the Guarantee is a deed due to the absence of attestation ([78] [202]) and neither is supported by consideration: [308] [337].

(4) The Loan Agreement involves a breach of Ms de Hollander's director's duties and it should be avoided: [338] [392].

(5) Netglory's claim is for specific performance and a deed cannot be specifically enforced by a volunteer: [728] [736].

(6) Netglory was not a party to the Guarantee: [737] - [752].

(7) Mr Caratti did not sign the Loan Agreement, the Mortgage, or the Guarantee either in his personal capacity or as a director of the Hocking Land Company. Nor did he authorise anyone to do so: [438] [484].

28 Defences (1), (2) (in part), (3), and (4) all succeed. Each is a reason why Netglory's claims must fail and why the counterclaim must be allowed.

29 In any event, Netglory's case also fails on the factual basis that I do not accept that any of the alleged oral agreements were ever made in the terms Mr Pollock asserted.

30 I find Mr Pollock's evidence to be so lacking in any honesty or credibility that I am not prepared to accept any of his evidence. The documents upon which he relied to establish the alleged oral agreement do not unequivocally point to an agreement in the terms he alleged or any clear terms, referable to any oral agreement for a loan.

2. The relevant written terms of the Loan Agreement[6]

31 The Loan Agreement is undated, although it provides for a blank day and month in 2003.

32 The parties to the Loan Agreement are Netglory (as Lender), the Hocking Land Company (as Borrower) and Mr Caratti and Ms de Hollander (as Additional Covenantor).

33 Matters are slightly confused by defined term 'Covenantor' which means Hocking Land Company (as Borrower) and the Additional Covenantor (Mr Caratti and Ms de Hollander).

34 The first part of the Loan Agreement falls under the heading 'Schedule'.

35 After the Schedule, the Loan Agreement then contains recitals. The two recitals are as follows:

This Loan Agreement is made between the Lender [Netglory] and the Covenantor [Hocking Land Company, Mr Caratti, and Ms de Hollander] in the following circumstances:

1. The Lender [Netglory] has or has agreed to advance the Loan Amount to the Borrower [the Hocking Land Company] at the request of the Additional Covenantor [Mr Caratti and Ms de Hollander].
2. The terms of the agreement between the Lender [Netglory] and the Covenantor [Hocking Land Company, Mr Caratti, and Ms de Hollander] are set out below.

36 Recital A, in its literal meaning, is false. At the time of the Loan Agreement, Netglory had not agreed to advance, nor had advanced, the Loan Amount to the Hocking Land Company at the request of Mr Caratti or Ms de Hollander.

37 The Loan Agreement then sets out an 'Operative Part'. Clauses 1 to 25 of the Operative Part are prefaced by the words:

The Lender [Netglory] has advanced or agrees to advance the Loan Amount to [the Hocking Land Company] on the following terms ...

38 The Interpretation section of the Loan Agreement (clause 24) defines 'Loan Amount' as follows:

the amount due by [the Hocking Land Company] to [Netglory] under this agreement and includes the amount specified in the Schedule as the Loan Amount.

39 The amount specified in the Schedule as the Loan Amount is $800,000. The Schedule also provides that this amount 'was advanced to the Borrower on 6 January, 2003'.

40 After having provided that Netglory has advanced or agrees to advance the Loan Amount to Hocking Land Company on the following terms, the Operative Part of the Loan Agreement provides for terms as follows.

41 Clause 1 provides for 'Conditions precedent to Advance'. It provides that Netglory's 'obligation to advance the Loan Amount' or make any further advance to the Hocking Land Company is conditional upon execution of 'securities for repayment of the Loan Amount' (defined as the Securities) which are an unregistered mortgage from the Hocking Land Company and a guarantee from Mr Caratti and Ms de Hollander.

42 The conditions precedent also require Netglory to be satisfied that

(ii) they are capable of registration with relevant authorities; and

(iii) Netglory's enquiries regarding the Securities have not disclosed any material adverse facts which would render the Securities unsatisfactory to Netglory.

43 Finally, there is also a condition precedent that Netglory is satisfied that the Hocking Land Company has paid all costs, fees and charges required by Netglory 'in connection with the matters contemplated by this agreement'.

44 Clauses 2 and 3 provide for the Hocking Land Company to pay interest.

45 Clause 2 provides for interest to be payable on the balance of the 'Loan Amount outstanding from day to day' at the Higher Rate (20% per annum). An exception is made for interest payable at a Lower Rate (also 20% per annum) while Hocking Land Company is not in default.

46 Clause 3 provides for interest to be paid by the seventh day of the following month. Interest which is not paid will be capitalised and will accrue interest as if it were part of the Loan Amount.

47 Clause 4 provides that the Loan Amount and all other money due by Hocking Land Company to Netglory under the Loan Agreement are payable on demand provided that Netglory agrees not to make demand before the Repayment Date as long as there is no breach of Hocking Land Company's covenants.

48 Clause 24 provides that the Repayment Date is the date specified in the Schedule. The Schedule provides for the Repayment Date of the 31st of December 2004.

49 Clause 5 provides for an obligation of the Hocking Land Company to pay all Netglory's reasonable costs in relation to a number of matters including (5.1) preparation, execution, stamping and registration of the Loan Agreement, the Securities and any discharge; (5.2) any exercise or attempted exercise of Netglory's powers; and (5.3) any breach of the Hocking Land Company's covenants.

50 Clauses 7 and 8 provide for the payment of the Loan Amount to be secured by Securities.

51 The Securities must be signed and delivered by the Hocking Land Company to Netglory contemporaneously with the Loan Agreement.

52 Clause 24 defines Securities as 'securities for repayment of the Loan Amount, details of which are specified in the Schedule'. The Schedule provides that the Securities are an unregistered mortgage granted by the Hocking Land Company over all the land in Certificates of Title volume 2530 folio 695 and volume 2530 folio 696 (Lots 81 and 82) and a guarantee granted by Ms de Hollander and Mr Caratti to Netglory.

53 Clause 10 provides for default in various circumstances by Hocking Land Company. These circumstances include if Hocking Land Company breaches a term of the Loan Agreement (10.1.1); or Hocking Land Company fails to pay any money due to Netglory on the due date (10.1.3); or there is a change in the ownership or control of Hocking Land Company (10.6.2).

54 Clause 11 provides that if a default occurs then Netglory may, at any time, demand immediate payment of the outstanding balance of the Loan Amount and any other money payable to Netglory under the Loan Agreement or any Security.

3. The relevant written terms of the Guarantee

55 The Guarantee is also undated. It provides in the opening line for dates to be inserted for a day and month in 1996. Mr Britten's evidence, in crossexamination, was that the reference to 1996 was an error by him when he drafted the Guarantee.[7]

56 The Guarantee is between Netglory (as Lender) and Ms de Hollander and Mr Caratti (as Guarantors). It crossrefers to the Loan Agreement and describes the Loan Agreement as dated '21 day [sic] of February, 2003 made between the [Hocking Land Company] as borrower and [Netglory] as lender'.

57 By a definition section, clause 27, and the Schedule, the term Collateral Security is defined as the Loan Agreement and the Mortgage between Netglory and the Hocking Land Company dated 21 February 2003.

This Deed of Guarantee is made between [Netglory] and [Mr Caratti and Ms de Hollander] in the following circumstances:

1. At the request of [Mr Caratti and Ms de Hollander], [Netglory] has agreed to continue to provide financial accommodation to [the Hocking Land Company] subject to [Mr Caratti and Ms de Hollander] executing this Deed of Guarantee.
2. [Mr Caratti and Ms de Hollander have] agreed to be surety for the obligations of [the Hocking Land Company] under the [Loan Agreement].

59 Following the recitals, the operative part of the Guarantee provides as follows.

60 Clause 1 provides that in consideration of Netglory at the request of Mr Caratti and Ms de Hollander either (i) executing the Loan Agreement or (ii) forbearing from enforcing immediately Netglory's powers in the Guarantee, Loan Agreement or Mortgage, Mr Caratti and Ms de Hollander guarantee the payment to Netglory of all money now or in the future due and payable to Netglory under the Mortgage and the observance and performance of the Hocking Land Company's Covenants.

61 Clause 2 provides that if there is any default in payment of any money due to Netglory under the terms of the Mortgage, Mr Caratti and Ms de Hollander agree to pay to Netglory the amount then due.

62 Clause 3 provides that if there is any breach of the Hocking Land Company's Covenants in the Guarantee, Loan Agreement, or Mortgage then, upon notice from Netglory, Mr Caratti and Ms de Hollander are required immediately to remedy that breach.

63 Clause 5 provides that the Guarantee and the liability of Mr Caratti and Ms de Hollander under the deed will not be affected by a number of matters. Those matters include Netglory failing or neglecting to recover any money owing to it under any Mortgage or otherwise (clause 5.4); and Netglory failing or neglecting to exercise any of Netglory's Powers under the Guarantee, Loan Agreement, or Mortgage (clause 5.5).

If any claim is upheld, conceded or compromised that any transaction affecting in any way any money payable to the lender under any Collateral Security [Loan Agreement or Mortgage] or the observance and performance of the Borrower's Covenants [under Guarantee, Loan Agreement, or Mortgage] is void or voidable then:

11.1 [Netglory] will become entitled against [Mr Caratti and Ms de Hollander] to all rights and respect of any money payable under any Collateral Security [Loan Agreement or Mortgage] or the observance and performance of the other Borrower's Covenants [under the Guarantee, Loan Agreement, or Mortgage] as if that transaction had not taken place.

4. Matters which were not in issue or were abandoned

65 In written opening submissions counsel for Netglory initially made submissions concerning estoppel by deed. Subsequently, at a directions hearing,[8] and then by email to the Court,[9] and again in opening,[10] counsel for Netglory abandoned any claim based on estoppel by deed.

66 In Matthew v Osborne,[11] Williams J explained that '[i]t is fully established, with respect to estoppels by deed and estoppels in pais, that they must be pleaded if the party has the opportunity, or the estoppel is waived'.

67 More recently, in Berry v Wong,[12] Young J explained that

whether estoppel by deed is a rule of evidence or something more, if the point is not taken as soon as practicable after it is raised, it is waived. The Court now having in evidence what the true position was and the point only being taken in closing addresses must mean that if there was any estoppel it has been waived.

68 In the absence of a claim of estoppel by deed, no defence to an estoppel by deed needed to be raised. Nor was there any submission made concerning whether the words in the recital were 'certain, precise and unambiguous'.[13] In particular, if the recital were relied upon to support an estoppel based upon an allegation that money had been lent then questions would arise concerning whether the meaning of 'had advanced or has agreed to advance' was sufficiently precise to support an estoppel. Nor was there any necessity to rely upon or consider the extent of the rule deriving from Chancery that a receipt clause in a deed does not permit an estoppel if the money had not been paid.[14]

69 At no stage in the pleadings or during the hearing did Netglory advance any claim for rectification of the Loan Agreement and Guarantee.

70 Although the draftsman of the documents, Mr Britten, was called, the absence of a plea of rectification meant that he was not asked about his instructions in relation to drafting the Loan Agreement and the Guarantee. He did not say 'what his... instructions were, and that particular words were included in the document by mistake'.[15]

71 In the absence of a pleaded or expressed claim for rectification, none of the possible defences to any claim for rectification of the Loan Agreement was raised.[16]

4.3 Misleading or deceptive conduct, unconscionable conduct and mistake

72 In oral closing submissions, counsel for the Hocking Land Company and Mr Caratti abandoned any reliance on the pleaded counterclaims for misleading or deceptive conduct[17] and unconscionable conduct.[18]

73 Shortly after closing submissions, counsel for the Hocking Land Company emailed the other parties and the Court and abandoned any reliance upon mistake.[19]

74 These claims were understandably abandoned. Mr Caratti's defence that he had not signed the Loan Agreement or Guarantee was, at least, in significant tension with his alternative defence that his signature had been procured by trickery or mistake.

75 There were also evidentiary difficulties with the conclusion that Mr Pollock could have tricked Mr Caratti into signing the Loan Agreement and Guarantee.

76 In 2005 Mr Caratti had four accountants.[20] He also relied heavily on lawyers. And at the time he was said to have signed the Loan Agreement and Guarantee his lawyers were sending him bills of $30,000 to $40,000 a month.[21]

77 The legal difficulties with the pleas of misleading or deceptive conduct and unconscionable conduct also included the absence of any substantial evidence that Mr Caratti, in signing the Loan Agreement and Guarantee, relied on any material matter which could amount to misleading or deceptive conduct or unconscionable conduct.

5. The formal requirements for a deed of Hocking Land Company and Mr Caratti were not satisfied

78 A deed can be unilateral (including by deed poll) or it can be inter partes (between the parties, historically often by indenture).

79 As to a unilateral deed by deed poll, it can be sued upon by any person for whose benefit a covenant in a deed poll is expressed to be made, if named or sufficiently identified in it.[22]

80 As to a deed between parties, the 'ancient [common] law' was that in a deed made between parties only a party could enforce the covenants in the deed.[23]

81 On their proper construction, both the Loan Agreement and the Guarantee purported to be deeds between the parties. Neither was unilateral. The Loan Agreement and Guarantee were bilateral agreements purportedly in the form of deeds. They were not deed polls, although there is one peculiarity in this respect about the Guarantee.

82 The peculiarity of the Guarantee is that its execution section provides that it is 'signed as a deed by the parties' but provides only for a place for execution by the guarantors. There is no place for execution by the lender.

83 In Mr Pollock's witness statement, he said that he witnessed Mr Caratti's signature on the Loan Agreement and on the Guarantee.[24] But then he said: 'I didn't sign as a witness to the deed of guarantee or the loan agreement as a witness until January 2011. For some reason I simply overlooked signing my copy of the documents at the time'.[25] Mr Pollock later explained in crossexamination that he was not sure of the date when he had signed as a witness.[26]

84 It would be sufficient for these reasons for decision to say that the documents are not deeds, and cannot be enforced as deeds at common law, because Mr Caratti's signature was not witnessed. On the balance of probabilities, I am not prepared to accept Mr Pollock's evidence that he was present and observed Mr Caratti's act of signing. But, in deference to the substantial legal arguments about attestation, I explain below the other reasons why the Loan Agreement and Guarantee were not deeds even if Mr Pollock had witnessed Mr Caratti's signature.

85 Mr Pollock said that he signed the documents after his lawyer, Mr Birman, advised him that provided Mr Pollock had, in fact, witnessed Mr Caratti's signature on that occasion nine years ago then there was no difficulty with Mr Pollock subsequently signing as a witness.[27]

86 As I explain below, Mr Pollock signed the two originals of the Loan Agreement and the Guarantee after the statement of claim had been filed. He signed them at a time when it had been made manifest to him that Hocking Land Company and Mr Caratti would deny that they were bound by the Loan Agreement and the Guarantee.[28]

87 The first issue is whether the Loan Agreement and Guarantee are deeds of the Hocking Land Company and Mr Caratti in circumstances in which the signature of a witness is inserted years after the witness claims to have been present and observed the signing.

88 The answer to this question depends upon the meaning of the words in s 9 of the Property Law Act 1969 (WA). That Act implemented dramatic reforms to the law of property. Section 9 provides as follows:

(a) shall be signed by the party to be bound thereby; and

(b) shall be attested by at least one witness not being a party to the deed but no particular form of words is required for the attestation.

(2) It is not necessary to seal any deed except in the case of a deed executed by a corporation under its common or official seal.

(3) Formal delivery and indenting are not necessary in any case.

(4) Every instrument expressed or purporting to be an indenture or a deed or an agreement under seal and which is executed as required by this section has the same effect as a deed duly executed in accordance with the law in force immediately prior to the coming into operation of this Act.

89 Netglory made four submissions concerning the requirement in s 9(1)(b).

90 The first submission was that noncompliance with s 9(1)(b) does not prevent the document from having effect as a deed between the parties.

91 The second submission was that the word 'attest' means that the witness must be present at the signature of the party to be bound but does not require that the witness sign to signify that presence.[29]

92 The third submission was that attestation is satisfied provided that the witness is present at the signature and subsequently, even years later, subscribes his or her signature as an attesting witness.

93 The fourth submission was that the defendants are estopped from denying that the Loan Agreement and Guarantee took effect as deeds.

94 In this section of my reasons I deal with each of these submissions in turn.

5.1 Noncompliance with s 9(1)(b) of the Property Law Act 1969 prevents the documents being deeds of the Hocking Land Company or Mr Caratti

95 Netglory submitted that the Loan Agreement and Guarantee could still be deeds of Hocking Land Company or Mr Caratti even if they did not satisfy the requirement of attestation in s 9(1)(b). This submission should be rejected for three reasons.

96 First, the legislative intention, revealed by the language of the provision and its history, purpose and context, is that noncompliance with the requirements of s 9 should prevent the document becoming a deed.

97 In Project Blue Sky Inc v Australian Broadcasting Authority,[30] the majority observed that an act which is done in breach of a condition which regulates the exercise of a statutory power will not necessarily be invalid. Invalidity will depend upon a legislative purpose to invalidate any act that fails to comply with the condition. The existence of the purpose is ascertained by reference to the language of the statute, its subject matter and objects, and the consequences for the parties of holding void every act done in breach of the condition.

98 The same reasoning applies to legislation that regulates the manner in which a private person is required to exercise a power to affect legal relations. As the majority explained in Project Blue Sky, the 'real issue is whether an act done in breach of the legislative provision is invalid' having regard to the language of the provision and the scope and operation of the statute.[31]

99 The language of s 9 of the Property Law Act is in mandatory terms. The section requires that deeds shall be attested. The exception in the proviso to s 9 emphasises that no particular form of words is required which suggests that the other elements are required.

100 Further, s 9(1)(b) cannot be read independently of s 9(1)(a). If a deed were capable of having valid effect between the parties despite noncompliance with s 9(1)(b) then it would also need to have valid effect between the parties despite noncompliance with s 9(1)(a). There is no basis for treating the legislative intention in relation to each limb differently. This would mean that the deed could be valid despite not having been 'signed by the party to be bound thereby'. Netglory properly did not suggest this absurd consequence.

101 Further still, the history against which Australian legislative provisions such as s 9 were enacted also emphasises the legislative intention to prescribe essential requirements for the validity of a deed.

102 As I explain below at [122] [158], this history involved centuries of protracted litigation at common law involving invalidity of deeds, particularly those which breached requirements of form existing in statutes or powers. The Property Law Act reduced those formal requirements and created a single, unitary regime containing the mandatory minimum requirements for a deed. The explanatory memorandum to the Property Law Bill 1969 described clause 9 as serving the goal of providing 'a simple and uniform method for execution of a deed and dispens[ing] with the necessity for sealing, indenting and formal delivery'.[32]

103 Secondly, judicial decisions on s 9 as well as those in relation to s 38(1) of the Conveyancing Act 1919 (NSW) recognise s 9 as imposing requirements for validity.

104 In Atwell & Atwell v Roberts (No 3),[33] E M Heenan J explained that '[w]itnessing of a deed was not essential for formal execution at common law but it is under s 9 of the Property Law Act'.

105 There have also been decisions in relation to s 38(1) of the Conveyancing Act 1919 (NSW) which have reached this conclusion. That provision adopts a very similar form of words to those in Western Australia: 'Every deed, whether or not affecting property, shall be signed as well as sealed, and shall be attested by at least one witness not being a party to the deed; but no particular form of words shall be requisite for the attestation'.

106 Decisions on the New South Wales equivalent provision are pertinent for interpretation of s 9. The Western Australian Property Law Bill was authored by Mr Adams QC, lecturer in Real Property and Conveyancing at the University of Western Australia. Mr Adams drafted the Bill based upon innovations in overseas jurisdictions and other Australian States including New South Wales.[34]

107 In Mostyn v Mostyn,[35] Young J explained that in s 38(1) of the Conveyancing Act 1919 (NSW):

the legislature was endeavouring to introduce as a statutory requirement what had been in fact done for many years previously, that is, to ensure that with respect to each person signing the document, there would be some independent person who saw the party execute the deed and who himself signed the deed to witness that fact. (Emphasis added).

108 In Mostyn, Young J held that the document could not take effect as a deed because the signatures of seven of the eight witnesses to the deed were not the signatures of independent witnesses.

109 Similarly, in Burns v Lorac[36] Beaumont J considered the meaning and effect of s 216(2) of the Bankruptcy Act 1966 (Cth) which provides that '[t]he execution of the deed by the debtor and by the trustee shall be attested by a witness'. His Honour held that the consequence of failure to comply with the requirement for attestation meant that the deed was invalid:[37]

[W]e are concerned with the initial stage of the valid execution of the deed itself. For the reasons I have given, that execution was defective and it is not possible to regard the defect as merely formal or as not substantial (cf s 222(3)).

110 In Burns, Beaumont J also rejected an argument that the deed could operate independently in equity inter partes notwithstanding its failure to comply with s 216(2).[38]

111 Thirdly¸ properly understood, the cases relied upon by Netglory do not support its submission. Rather, they provide a useful contrast with s 9(1) of the Property Law Act.

112 Netglory relied upon two cases which were cited by Odgers' Construction of Deeds and Statutes[39] for the proposition that '[e]ven where a statute requires attestation, an unattested instrument may, on the true construction of the statute, in some cases be valid between the parties to it, even though it is ineffective as against third parties'.[40]

113 The two cases cited in Odgers are Davis v Goodman[41] and National and Grindlay's Bank Ltd v Dharamshi Vallabhji.[42] Both concern legislation with critically different language and structure from s 9 of the Property Law Act. The first is a 19th century decision concerning English legislation. The second is a decision concerning Kenyan legislation.

114 The decision in Davis concerned s 8 and s 10 of the Bills of Sale Act 1878 41 & 42 Vict c 31_._ The English Court of Appeal held that a Bill of Sale was not void between the grantor and grantee even if it violated the provisions of the Bills of Sale Act. In that case, a deed was not explained to the grantor and also was not attested by a solicitor as required by the Bills of Sale Act.

115 Section 8 required that every bill of sale shall be attested and registered and 'shall set forth the consideration for which such bill of sale was given'. The section then provided that the failure to do so meant that the bill of sale 'shall be deemed fraudulent and void' against various classes of persons such as 'all trustees or assignees of the estate of the person whose chattels, or any of them, [as] are comprised in such bill of sale ...'.

116 Section 10 provided for the mode of attestation and registration of Bills of Sale including (in s 10(1)) that

[t]he execution of every bill of sale shall be attested by a solicitor of the Supreme Court, and the attestation shall state that before the execution of the bill of sale the effect thereof has been explained to the grantor by the attesting solicitor.

117 As Thesiger LJ explained, 'the sole result of not performing the directions contained in [s 8] is to avoid the [bill of sale] against certain specified persons, of whom the grantor is not one'.[43] Further, as Bramwell LJ explained, the provisions in s 10 were inserted for the benefit of the general creditors.[44] Both of these matters, which were essential for the decision in Davis, are critically different from the language and purpose of s 9 of the Property Law Act.

118 There are also critical differences in legislative language and structure that can be seen in relation to the legislation considered in the decision in National and Grindlay's Bank.

119 In National and Grindlay's Bank, the respondents gave a letter of hypothecation to the appellant bank. The letter was neither attested nor registered. Section 15 of the Chattels Transfer Act 1930 (Kenya) required that '[s]ealing shall not be essential to the validity of any instrument but every execution of an instrument shall be attested by at least one witness who shall add to his signature his residence and occupation'.

120 The decision of the majority of the Privy Council was delivered by Lord Pearson, with a powerful dissent by Lord Morris. Lord Pearson emphasised that '[t]he express provisions of the section, its context and the scheme of the Act have to be considered'.[45] An important factor in his Lordship's reasoning was a similar matter to that in Davis: by s 13 and s 14, '[r]egistration is needed in order to make the instrument effective against persons who are not parties to it'[46] and all the surrounding sections to s 15 'show that the absence of registration affects only relations with persons who are not parties to the instrument and does not affect the relations between the parties to the instrument'.[47] Again, this is a basic difference in structure and language from the Property Law Act.

121 For these reasons, any failure to comply with the requirements of s 9(1)(b) of the Property Law Act has the effect that the Loan Agreement and Guarantee are not deeds.

122 The second submission by Netglory was that attestation is effectively a synonym for 'witnessing'. It was submitted that no written signature is required of the attesting witness.

123 The use of 'attested' in s 9(1)(b) is not defined. It is a word with a long history.

124 At common law there was no particular requirement for attestation. But attestation could be required by statute or by a power of appointment. The history and interpretation of the requirement of attestation by statute in cases involving powers of appointment was beset by technical argument. The arguments often involved circumstances in which the words of an attestation clause were not sufficient to cover all of the matters required to be attested.

125 Some technical objections to attestation were ameliorated by legislation in 1814.[48] But that legislation was only retrospective, not prospective.[49]

126 Section 9(1)(b) of the Property Law Act is the Western Australian equivalent of the modern legislation which partly remediated the technical objections concerning the formulation of attestation clauses. But nothing in s 9 of the Property Law Act suggested any deviation from the meaning and timing of an 'attestation' previously required by other statutes and instruments creating powers.

127 This history of litigation concerning attestation clauses remains directly relevant to the issue in this case concerning the meaning and timing of a required 'attestation'.

128 The leading case on attestation at the start of the 19th century was Wright v Wakeford.[50] In that case, a trust power for the sale of lands was required to be executed by being 'attested by two or more credible witnesses'. The trust power was ultimately held to be invalid. It was held that the attestation failed because it was only extended to the sealing and delivery of the deed, not the signature. Twenty years later the witnesses added a fresh attestation to the deed which also attested the signature, but a majority of the Court held that this subsequent attestation could not cure the defect.

129 At first instance in Wright, the Lord Chancellor explained that for an attestation '[t]wo acts are therefore required: one, that he [the obligor] shall subscribe in their [the witnesses'] presence; the other, that they shall attest, that he has done so'.

130 The Lord Chancellor in Wright then directed the case for the opinion of the Court of Common Pleas.[51] In that court, the majority held that the subsequent attestation did not cure the defect. Even the dissentient, Sir James Mansfield CJ (dissenting only on the point concerning timing, addressed below), said that 'in the ordinary use of the word "attest", as applied to the execution of deeds, it is understood that witnesses should attest in writing; the principal end of which seems to be, to preserve evidence of the instruments being executed in the presence of the witnesses required'.[52]

131 In Burdett v Spilsbury,[53] the House of Lords was called upon to consider the decision in Wright. The issue in Burdett concerned the meaning of a phrase in a power of appointment. The phrase was 'in the presence of, and attested by, three credible witnesses'. A writ of error was brought to the House of Lords from the Court of Error which had applied Wright.

132 The House of Lords called upon the Queen's judges for their opinion. The House was comprised of a current, a former, and a future Lord Chancellor. After taking the advice of the Queen's judges, they agreed with the majority of the Queen's judges.

133 Lord Campbell began his speech in Burdett with the unfeigned respect and civility that powerfully marked 19th century English appellate discourse. Although explaining that the House was not bound to follow the opinion of the majority, his Lordship explained his pleasure in reaching agreement with the proffered opinions of the majority of the learned judges: 'it is always a very painful thing to differ from those venerable magistrates, who are always to be looked to with so much reverence and respect'.[54]

134 One of the judges in the majority to which Lord Campbell referred who delivered an opinion to the House in favour of the Plaintiffs in Error was Erskine J. His Lordship spoke of the meaning of the word 'attestation', 'when taken in its ordinary sense, both as applicable to deeds and wills, under the Statute of Frauds'. His Lordship said that the term is 'fully satisfied by the witnesses affixing their signature to the word "witness".' He explained that the object of attestation was 'that the persons whose interests may be affected by the will should have the means of knowing who the parties present were, and of ascertaining, through them' whether there had been compliance with the formal statutory requirements or requirements for the exercise of the power.[55]

135 The House of Lords took a similar approach. Lord Campbell spoke of the requirement of attestation under the power as well as under the Statute of Frauds. His Lordship spoke of the 'simple attestation by witnesses, that is, the subscription of their names'.[56]

136 The Lord Chancellor also said in his opinion upholding the majority view of the Queen's judges that '[t]he party who sees the will executed is in fact a witness to it; if he subscribes as a witness, he is then an attesting witness'.[57]

137 Seven years after the decision in Burdett, in Bryan v White[58] the question which arose concerned the meaning of the words 'shall attest and shall subscribe' in the Wills Act 1837 c 26, 7 Will 4 & 1 Vict. In an ex tempore decision, Dr Lushington said:

It was asked, what is the meaning of 'shall attest?' I feel under no difficulty in answering that question. 'Attest' means the persons shall be present and see what passes, and shall, when required, bear witness to the facts.

138 The principle for which Bryan stands is that an attesting witness need not use any particular form of words. That principle is embodied in the formulation of s 9(1)(b) of the Property Law Act.

139 However, Bryan does not stand for the proposition that signature by an attesting witness is not required. Indeed, in the Wills Act, the word 'attest' was used in addition to 'subscribe'. Nor does Bryan stand for a proposition that a signature subsequent to witnessing is sufficient. The issue in Bryan was whether there had been a failure to comply with the Wills Act because the signature of the two witnesses did not contain words of attestation. If Bryan had stood for these propositions it would have been inconsistent with the explanation of attestation given by the Lord Chancellor five years later in Roberts v Phillips.[59]

140 In Roberts v Phillips, one objection that was taken to the signature of an attesting witness was that there was nothing on the face of the will which could designate him as a witness. The Lord Chancellor said that[60]

[n]othing more is required than that the will should be attested by the witnesses; ie that they should be present as witnesses and see it signed by the testator, and that it should be subscribed by the witnesses in the presence of the testator; ie that they should subscribe their names upon the will in his presence.

141 In Shamu Patter v Abdul Kadir Ravuthan,[61] Lord Shaw, delivering the advice of the Privy Council, said that the interpretation of the words 'attest' and 'attestation' in Roberts v Phillips and in Bryan v White 'had invariably been followed'.[62]

142 In Wickham v Marquis of Bath,[63] Romilly MR discussed the effect of attestation in the context of the Statute of Mortmain which required the deed to be 'sealed and delivered in the presence of two or more credible witnesses'. The Master of the Rolls said:[64]

What is meant by attesting a will or a deed? It means, as I understand it, that one or more persons are present at the time of the execution for that purpose, and that as evidence thereof they sign the attestation clause, stating such execution.

143 In that case, the omission of attestation by the second witness was a violation of the provisions of the Statute of Mortmain which had the effect that the deed was void.[65]

144 In light of these authorities, the 'meaning of attestation' which is offered in Norton on Deeds[66] ought today to be uncontroversial. The editors, after citation of copious authority, explain:

Attestation means "that one or more persons are present at the time of the execution for that purpose" (i.e. for the purpose of attesting the execution) "and that as evidence thereof they sign the attestation clause, stating such execution" ... The witness must sign as witness and for the purpose of attesting the execution ... and consequently a party to the deed cannot be a witness. (Original emphasis.)

145 If more modern authority is required then in HCK China Investments Ltd v Solar Honest Ltd,[67] Hely J said that '[a]ttestation ordinarily requires that a person is present at the time of execution of a document for the purpose of attesting the execution, and as evidence thereof signs the document'.

146 Another modern example is Ellison v Vukicevic.[68] Mrs Ellison entered into a written agreement with a quarrying firm which purported to be a deed. The solicitor who was the purported witness to Mrs Ellison's signature on the deed was not present when the document was executed by Mrs Ellison. The document was, therefore, not a deed. Young J adopted the statement above at [142] from the Master of the Rolls in Wickham v Marquis of Bath that attestation requires that one or more persons are present at the time of attestation and, as evidence thereof, they sign the attestation clause.

147 For these reasons, I reject the submission by Netglory that the attestation does not require the witness' presence to be recorded on the deed as an attesting witness.

5.3 Attestation must be contemporaneous with the signature witnessed

148 The next submission by Netglory was that s 9(1)(b) does not require 'as part of the act of attestation, that the witness signed the document at the time of execution of the document'.[69] Netglory relied upon Mr Pollock's signature on the deed from jail. I consider Mr Pollock's evidence in relation to his purported attestation below at [425] [437]. My conclusion is that Mr Pollock signed each of the documents before the Court, purportedly as an attesting witness, at some time in December 2010.

149 Netglory submitted that the deed became valid when Mr Pollock signed, purportedly as an attesting witness, more than seven years later than the signature which he said (but I reject) that he witnessed.

150 Whether attestation is required at the time of signature is an issue which divided early courts.

151 As I explained above, in Wright v Wakeford[70] one question was the effect of subsequent attestation of a deed purportedly made under a trust power for the sale of land. That trust power required attestation by two or more credible witnesses. At first instance, the Lord Chancellor considered 'the question, whether an attestation, not contemporaneous, but subsequent, would do'. He said that he had 'a very strong opinion, that a subsequent attestation would not do'.[71] The reason for this was that the execution of the power, by deed, was a limitation upon the use so that unless the limitation arose at the time of the use then it could not arise at all. In other words, if the limitation were not valid at the time, it could not subsequently become valid.

152 The Lord Chancellor then directed a case for the Court of Common Pleas, where a majority of the Court (Sir James Mansfield CJ dissenting) held that the attestation was required to be contemporaneous.[72]

153 In a joint judgment, Heath, Lawrence and Chambre JJ held that 'the attestation required to constitute a due and effectual execution of the power, ought to make a part of the same transaction with the signing and sealing ... such being the usual and common way of attesting the execution of all instruments requiring attestation'.[73] Their Lordships did not confine themselves to the circumstance that the party to be bound had died at the time of subsequent attestation.

154 This decision was followed two years later by Lord Ellenborough CJ in Doe v Peach.[74] In that case, the attestation was invalid because it was not expressed to extend to the act of signature. The Chief Justice confined his remarks to the circumstance in which the subsequent attestation by the witness sought to cure the defect in circumstances in which the party had died. Delivering the opinion of the Court, the Chief Justice said:

We think that [the defect in attestation] is not cured by the second attestation made after the death of one of the parties. It is not necessary to enter into the question at what precise time an attestation must be made; but it seems difficult, if not impossible, to say, that an attestation subsequent to the death of one of the parties should give an operation to their act, which it had not during the life of the parties. And upon this point also the case of Wright v Wakeford is an authority.[75]

155 Again, in Doe v Pearce,[76] a power was found to be invalid because the attesting witness did not attest the sealing as well as the signing. Serjeant Copley argued that a subsequent oral attestation by the witness was competent. But Gibbs CJ held that it was impossible to distinguish the case from Wright v Wakeford. The power was held to be invalid.

156 My research suggests that modern authority concerning the timing of the statutory requirement of attestation is very limited. However, as a matter of principle, the approach of the majority in Wright should be preferred in the interpretation of s 9 of the Property Law Act for five reasons.

157 First, this interpretation is consistent with the authority which preceded s 9 in cases which involved a requirement of attestation under other statutes and powers, including the leading case of Wright. As I have explained above, the decision in Wright was approved by the House of Lords in the watershed case of Burdett v Spilsbury,[77] which considered the requirement for written signature of an attesting witness.

158 The assumption of contemporaneous attestation is also embodied in Roberts v Phillips,[78] (which was described by the Privy Council as having 'invariably been followed'[79]): 'it should be subscribed by the witnesses in the presence of the testator; ie that they should subscribe their names upon the will in his presence'.

159 The passage on attestation in the leading work, Norton on Deeds, is also premised upon the assumption that attestation (including signature) is contemporaneous with witnessing: 'Attestation means that one or more persons are present at the time of the execution for that purpose (ie for the purpose of attesting the execution) and that as evidence thereof they sign the attestation clause ... .'[80] (Emphasis in original).

160 Section 9 was enacted against, and ought to be interpreted as incorporating, this historical understanding of the meaning of attestation.

161 Secondly, there is little reason to deny validity to a purported deed where the attesting witness signs after the party who was witnessed has died, as in Doe v Peach, but, at the same time, to permit the attesting witness to sign at any time, possibly many years later, when the party whose signature was witnessed is still alive. Many years after the event the living party might have little or no memory of the event.

162 Thirdly, s 9 of the Property Law Act sought to create uniformity of the requirements for creation of a deed. Parliament cannot have intended to do so in a manner which would undermine the purposes of attestation. If subsequent signature by an attesting witness were permitted then at least one of the purposes of the formality of written signature could be easily defeated.

163 One purpose of the attestation requirement in s 5 of the Statute of Frauds 1677 29 Car 2 was the goal of avoidance of fraud including by a written signature from an attesting witness. This purpose would be undermined if an alleged witness could simply sign the deed, many years later, even immediately before litigation or possibly even in the witness box.

164 Fourthly, s 9 of the Property Law Act was introduced to provide 'a simple and uniform method for execution of a deed and [to] dispense with the necessity for sealing, indenting and formal delivery'.[81]

165 The intended simplicity of the formality in s 9 would be significantly undermined if the signature of an attesting witness were required (as explained above) but that signature could be affixed at any time after the transaction.

166 The consequent complications undermining the intended simplicity of s 9 might be expressed as a series of questions. How could a person wishing to rely upon the deed recall if the deed had been witnessed, especially after the passage of many years? How could any suspected witness be located without any subscription of his or her name? What would be the status of the purported deed which had not satisfied the requirement of signature but might do so in the future? Could a purported deed be invalid due to the absence of an attesting signature (as explained above) but subsequently become valid at an unknown point in time when the attesting witness signs? If so, would the cause of action accrue only when the deed became valid? Would the limitation period run only from that point in time so that the running of time might be indefinitely postponed? How could that point in time be determined if the attesting witness did not date his or her signature?

167 Fifthly, although contemporary authority on this point is slim, one modern reference touching on the issue of timing occurred in Edwards v Skilled Engineering Pty Ltd.[82] In that case, Priestley JA (with whom Kirby P and Meagher JA agreed) considered whether initials or 'a very stylized signature' was sufficient attestation. In finding that it was, Priestley JA said that the 'formalities necessary for the execution of the deed are, on the face of the deed, complied with'.

168 Netglory relied upon the decision in Reid Murray Holdings Ltd (in liq) v David Murray Holdings Pty Ltd.[83] That decision does not support Netglory's submission.

169 In that case, the affixing of the corporate seal of the company to be bound by the deed was not within the express authority of the directors. But the affixing of the seal was subsequently ratified by the directors. The issue was whether there had been proper delivery of the deed. Mitchell J held that there had been proper delivery.[84] There was no issue concerning attestation. No submission was made concerning whether the corporate seal had been properly attested. There was no discussion in the judgment about the requirements of attestation.

5.4 Even if attestation need not be contemporaneous, there was no delivery

170 Even if it were possible for a deed which had not been attested at the time of signature to be attested at a much later point in time this would still fail to create a valid deed in this case. That is because at the time when Mr Pollock attested to the signature of Mr Caratti, the deed could no longer be delivered.

171 'Delivery' of a deed, a concept deriving from the formality of livery of seisin, is now an abstract rule rather than a rule of formality. It requires merely a manifest intention to be bound by the party who it is sought to bind by the deed.[85] As Steytler J explained in Scook v Premier Building Solutions Pty Ltd,[86] the Property Law Act preserved the requirement of delivery; the Act merely dispensed with any form that delivery must take.

172 In Monarch Petroleum NL v Citco Petroleum Ltd[87] Kennedy J said:

Delivery means some conduct indicating that the person who has executed the deed intends to be bound by it. Anything which shows that he treats the instrument as his deed will suffice ... It 'depends upon intention manifested by some words or by some act, either expressly proved or inferred from circumstances.[88]

...

No particular form of words or act is necessary to constitute delivery any words or acts that sufficiently show that it was intended to be finally executed will do ... it is not necessary that the deed be delivered into the possession or custody of the person intended to take the benefit of the deed or to someone on his behalf ... it will frequently be inferred from execution.

173 Even if Mr Caratti and the Hocking Land Company had an intention to be bound by the deed at one time, neither had any intention to be bound many years later when the deed was attested by Mr Pollock.

174 As I explain below, it is likely that Mr Pollock signed the Loan Agreement and Guarantee sometime during December 2010. He is likely to have signed the Guarantee before Mr Gregory conducted his document examination of the Guarantee in December 2010.[89] But, by 1 December 2010 at the latest, Mr Pollock was aware that Mr Caratti denied that he had signed, or was bound by, the Loan Agreement and Guarantee.[90]

175 Netglory argued that, having signed the deed, Hocking Land Company could not revoke its intention to be bound. Netglory submitted that an analogy could be drawn with a deed delivered as an escrow.

176 Netglory's analogy is inapt. The submission must be rejected.

177 There is a fundamental difference between a deed which has no validity due to failure to comply with formalities and a deed which is valid, but subject to a condition subsequent.

178 In Kingston v Ambrian Investment Co Ltd,[91] Lord Denning explained that a deed which is executed as an escrow is executed 'subject to a condition, express or implied, which is thereafter to be fulfilled. As soon as the condition is fulfilled the transfer becomes complete'. The maker of the deed cannot withdraw it in the intervening period because it is complete, and it has been delivered, subject to the condition. But a purported deed which has failed to satisfy formal requirements is no deed at all. It can only be delivered when formal requirements are satisfied.

179 For these reasons, even if attestation could occur other than contemporaneously, in this case the deed was not delivered when the attempted attestation by Mr Pollock occurred.

5.5 Netglory's estoppel argument must be rejected

180 A further argument raised by Netglory in closing submissions was that the defendants are estopped from denying the validity of the deeds on the basis of an absence of attestation. In relation to wholly separate matters not concerned with attestation, Netglory pleaded that a different estoppel arose for the following reasons.[92]

(1) Between February 2003 and 2009, Mr Caratti represented to Mr Pollock (as consultant for Netglory) that the Loan Amount would be repaid from the sale of the Hocking Land Company's subdivided lots after the repayment of the Hocking Land Company's external financiers.

(2) In reliance upon those representations Netglory took no steps to make demand for payment of the Loan Amount or the interest payable pursuant to the Loan Amount during February 2003 until 2009.

(3) Between 2009 and 23 November 2010, Mr Pollock, acting on behalf of Netglory and Ms de Hollander, made repeated oral demands of Mr Caratti for the Hocking Land Company to repay the Loan Amount and account to Ms de Hollander in respect of the sale proceeds of the Hocking Land Company's subdivided lots.

(4) Upon the failure of Mr Caratti and Hocking Land Company to repay the Loan Amount in respect of the sale proceeds of the Hocking Land Company's subdivided lots, Netglory made demand for payment of the Hocking Land Company on 23 November 2010 and of Mr Caratti on 18 November 2010.

181 This asserted estoppel fails for three reasons.

182 First, I do not accept Mr Pollock's evidence concerning any of these particulars of an alleged estoppel. None is supported by any written evidence. Later in these reasons I explain why Mr Pollock was not a truthful witness and why I take such a dim view of his evidence that none of it can be given any weight.

183 Secondly, these facts were pleaded in relation to a different claim of estoppel. The pleaded claim was an estoppel to preclude the defendants from relying upon an absence of demand for payment in relation to a plea (later abandoned) of unconscionable conduct by Netglory and in reply to a limitation plea.

184 Netglory's unpleaded claim for estoppel in relation to the absence of attestation raises wholly separate issues which were not litigated and which the defendants had no opportunity to address in examination and cross-examination of witnesses. For instance, there is no pleading, nor was any submission made, concerning how those four matters listed above gave rise to reliance by Netglory on the absence of attestation. What would Netglory have done about attestation at an earlier point? Would a new deed have been sought? Would litigation have been brought earlier? Further, when did Netglory become aware of the absence of attestation? When did the defendants become aware of the absence of attestation? None of these matters was pleaded. Netglory's closing written submission on this issue was not explored with any of the witnesses in any detail.

185 Thirdly, the authorities cited by Netglory do not support Netglory's estoppel plea.

186 Counsel for Netglory relied upon a decision of the Court of Appeal in England in Shah v Shah.[93]

187 In Shah v Shah, the Court of Appeal was concerned with s 1 of the Law of Property (Miscellaneous Provisions) Act 1989, relating to the execution of deeds. Section 1(3) requires a deed made by an individual to be signed '(i) by him in the presence of a witness who attests the signature; or (ii) at his direction and in his presence and the presence of two witnesses who each attest the signature'. A witness to the signatures of two of the defendants had signed the deed shortly afterwards, but not in their presence.

188 Pill LJ (with whom Tuckey LJ and Sir Christopher Slade agreed) said that the 'delivery of the document constituted an unambiguous representation of fact that it was a deed'.[94]

189 Counsel for Netglory relied upon a lengthy extract from the decision.[95] Counsel omitted from his quotation from this authority (the authorised report of which is identical to the unauthorised All England Report cited by counsel) a relevant paragraph preceding the quotation and a relevant sentence at the end of the quotation. Some relevant words were also omitted from the paragraphs quoted. I have included all those omitted words in italics with the quotation from counsel in plain text.

I bear in mind the clarity of the language of section 1(2) and (3) and also that the requirement for attestation is integral to the requirement for signature in that the validity of the signature is stipulated to depend on the presence of the attesting witness. I also accept that attestation has a purpose in that it limits the scope for disputes as to whether the document was signed and the circumstances in which it was signed. The beneficial effect of the requirement for attestation of the signature in the manner specified in the statute is not in question. It gives some, but not complete, protection to other parties to the deed who can have more confidence in the genuineness of the signature by reason of the attestation. It gives some, but not complete, protection to a potential signatory who may be under a disability, either permanent or temporary. A person may aver in opposition to his own deed that he was induced to execute it by fraud, misrepresentation or (as was unsuccessfully alleged in the present case) duress and the attestation requirement is a safeguard.

I have however come to the conclusion that there was no statutory intention to exclude the operation of an estoppel in all circumstances or in circumstances such as the present. The perceived need for formality in the case of a deed requires a signature and a document cannot be a deed in the absence of a signature. I can detect no social policy which requires the person attesting the signature to be present when the document is signed. The attestation is at one stage removed from the imperative out of which the need for formality arises. It is not fundamental to the public interest, which is in the requirement for a signature. Failure to comply with the additional formality of attestation should not in itself prevent a party into whose possession an apparently valid deed has come from alleging that the signatory should not be permitted to rely on the absence of attestation in his presence. It should not permit a person to escape the consequences of an apparently valid deed he has signed, representing that he has done so in the presence of an attesting witness, merely by claiming that in fact the attesting witness was not present at the time of signature. The fact that the requirements are partly for the protection of the signatory makes it less likely that Parliament intended that the need for them could in all circumstances be used to defeat the claim of another party.

Having regard to the purposes for which deeds are used and indeed in some cases required, and the long term obligations which deeds will often create, there are policy reasons for not permitting a party to escape his obligations under the deed by reason of a defect, however minor, in the way his signature was attested. The possible adverse consequences if a signatory could, months or years later, disclaim liability upon a purported deed, which he had signed and delivered, on the mere ground that his signature had not been attested in his presence, are obvious. The lack of proper attestation will be peculiarly within the knowledge of the signatory and, as Sir Christopher Slade observed in the course of argument, will often not be within the knowledge of the other parties.

190 There are several reasons why this passage, with the omitted parts inserted, does not assist Netglory.

191 One reason is that the words I have italicised from the middle of the quoted part of the judgment (which words were omitted by counsel without ellipsis) emphasise that the estoppel is based on reliance upon the absence of attestation in [Netglory's] presence. That was not pleaded in this case. And there was no evidence in this case of reliance upon an absence of attestation in Netglory's presence.

192 A second reason why this decision does not assist Netglory is because there was no evidence in this case that the lack of proper attestation was 'peculiarly within the knowledge of the signatory [Mr Caratti]'. The opposite was the case. If attestation merely required a subsequent signature from Mr Pollock then it was only Mr Pollock who would know whether that signature had been affixed or not.

193 A third reason why Shah v Shah does not assist Netglory is because it was distinguished by the House of Lords in a later case which has been applied in Australia.

194 In Actionstrength Ltd v International Glass Engineering IN GL EN SpA,[96] Actionstrength asserted that it could enforce a guarantee despite its failure to comply with s 4 of the Statute of Frauds. Actionstrength relied on an estoppel. Actionstrength's claim was dismissed.

195 Lord Walker distinguished Shah v Shah on the basis that what passed between the parties in Actionstrength did not amount to an unambiguous representation that there was an enforceable contract, or a representation that the respondent would not take any point on s 4 of the Statute of Frauds.[97]

196 Lord Walker also emphasised that the deed in Shah v Shah, on its face, appeared to comply with the statutory requirements. It was not apparent from the deed that there had been a failure, by the witness to the signatures of two of the defendants, to sign in their presence.

197 The decision in Actionstrength was applied by the New South Wales Court of Appeal in the context of estoppel as a defensive rule of evidence, rather than a positive cause of action.[98] In Powercell Pty Ltd v Cuzeno Pty Ltd,[99] which has itself been subsequently applied by the New South Wales Court of Appeal,[100] Giles JA (with whom Meagher and Santow JJA agreed) said:

But the respondent relied on nothing more than the making of the July 1996 agreement. I do not accept that the making of the agreement of itself carried a representation or founds an assumption that the agreement would be performed. There was evidence that Mr Ward knew of the requirement of writing. Section 54A of the Conveyancing Act was part of the law of the land, and the making of the agreement was subject to any unenforceability under the law of the land. It could not without more be inequitable or unconscionable to rely on the law of the land, and agreement to take over the contracts with the purchasers did not of itself convey that the respondent would not rely on the law of the land so far as the law bore upon the validity or enforceability of the agreement.

198 The same reasoning applies in this case. Independently of the purported deed, there is nothing which Netglory pleaded, nor any evidence, apart from the making of the agreement itself which was done or omitted to be done in reliance upon attestation.

199 A fourth reason why Shah v Shah does not assist Netglory's argument is because Pill LJ's emphasis on social policy and public interest is of dubious import to both the statutory construction of s 9 and to the principles of the law of estoppel.

200 Whether or not there is a 'social policy which requires the person attesting the signature to be present when the document is signed',[101] the presence of that person is a required statutory formality. With respect to Pill LJ's learned judgment, it is not for the judiciary to determine that a statutory requirement is lacking in social policy or public interest and, for that reason, not to apply it.

201 For these reasons, the estoppel submission must be rejected.

202 I conclude that neither the Loan Agreement nor the Guarantee was a deed binding the Hocking Land Company or Mr Caratti.

6. The first reason why Netglory's claims fail: no money was lent

6.1 Netglory's construction of the Loan Agreement

203 It was accepted by all parties throughout the trial, and it was an admitted fact on the pleadings, that no cash sum of $800,000 was paid by Netglory to the Hocking Land Company.[102] In fact, nothing was ever advanced to the Hocking Land Company by Netglory. Netglory therefore seeks to enforce an obligation to _re_pay an amount which was never paid by Netglory.

204 Netglory submitted that the word 'advanced' in the Loan Agreement is ambiguous. In opening submissions counsel said that 'advanced'[103]

means that [Netglory] made that sum available by way of not seeking earlier payment of it to enable in that period development to proceed so, as a result, not [to] fetter the capacity of [the] Hocking Land Company ... to borrow against its assets without having otherwise to pay out the $800,000.

205 Later, Netglory suggested that 'advanced' should be construed to mean[104]

effectively the forbearance to allow Hocking Land Company for the next two years to deal with its land without having to otherwise pay the $800,000.

206 In other words, Netglory submitted that 'advanced' means 'abstained from enforcing a separate debt arising from an oral agreement'.

207 Although it was clear from the pleadings that the pleaded prior oral agreement had some role, it was unclear from the pleadings what role that was said to be.

208 In opening submissions for Netglory, it was submitted that the role of the alleged prior oral agreement was only as a surrounding circumstance to assist in the construction of the Loan Agreement. This attracted an objection from counsel for the Hocking Land Company and Mr Caratti on the basis that the use of the oral agreement in this way had not been pleaded.[105]

209 It might not have been necessary for Netglory's pleading to contain an additional paragraph making explicit that the legal purpose of the plea of the background circumstances to the Loan Agreement was for construction of the Loan Agreement. But, in any event, counsel for the Hocking Land Company said that he would deal with Netglory's submission about construction.[106] Crossexamination proceeded on that basis.

210 The Hocking Land Company submitted that the words 'advanced' and 'loan' in the Loan Agreement unambiguously bear their ordinary meaning involving a payment of money from a lender to a borrower. In opening submissions, counsel for Netglory accepted that the words of the Loan Agreement were not ambiguous until reference is made to surrounding circumstances.[107]

211 If this concession is correct then, on the authority in this jurisdiction which is binding upon me, that would be the end of Netglory's case for two reasons in combination:

(i) One of the very few matters which was common ground in this trial was the proposition, which might ordinarily be thought to be a statement of the obvious, that if Netglory had not advanced money to the Hocking Land Company then the Hocking Land Company was not obliged to repay any money to Netglory; [108]and

(ii) As I explain below, binding authority in this jurisdiction renders inadmissible any evidence of surrounding circumstances in the absence of ambiguity.

212 As to (ii), in this jurisdiction the approach to contractual construction which has been applied[109] is that deriving from the particular passage from Mason J's judgment in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales[110] that

[t]he true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning.

213 It has been held that 'ambiguous or susceptible of more than one meaning' means any situation in which the scope or applicability of a contract is doubtful. Hence, the concept of ambiguity is not confined to lexical, grammatical or syntactical ambiguity.[111]

214 In Hancock Prospecting Pty Ltd v Wright Prospecting Pty Ltd,[112] McLure P (Newnes JA and Le Miere J agreeing) said the following:

The practical limitation flowing from the Codelfa true rule is that surrounding circumstances cannot be relied on to give rise to an ambiguity that does not otherwise emerge from a consideration of the text of the document as a whole, including whatever can be gleaned from that source as to the purpose or object of the contract.

215 Her Honour reiterated these observations more recently.[113]

216 As Kenneth Martin J has observed extrajudicially, this practical limitation means that evidence of circumstances surrounding a contract is not admissible to show a latent ambiguity.[114]

6.2 There is no relevant ambiguity in the Loan Agreement

217 There are two possible arguments which might be relied upon to suggest that the word 'advance' in the Loan Agreement is ambiguous.

218 I raised the first argument with counsel for the Hocking Land Company in oral closing submissions. The issue is whether a patent ambiguity concerning the word 'advance' might arise from the manner in which the Loan Agreement defines 'Loan Amount'.

219 Clause 24 of the Loan Agreement defines 'Loan Amount' as the amount 'due by [the Hocking Land Company] to [Netglory] under this agreement' and includes the 'amount specified in the Schedule'. The amount specified in the Schedule, and included in the Loan Amount, is 'Eight Hundred Thousand Dollars ($800,000) which was advanced to [the Hocking Land Company] on 6 January, 2003'. But there are other amounts which might be included in the Loan Amount because they become 'due to Netglory' under the Loan Agreement and therefore fall within the definition of 'Loan Amount'. These other amounts might include 'other amounts payable' by the Hocking Land Company to Netglory including for various outgoings, fees and expenses reasonably incurred by Netglory (clause 5).

220 The opening words of the operative part of the Loan Agreement provide that '[Netglory] has advanced or agrees to advance the Loan Amount'. That part of the Loan Amount ($800,000) which 'was advanced' falls within the definition of Loan Amount as the amount which 'Netglory has advanced'. Other amounts falling within the definition of Loan Amount, such as those other amounts payable under clause 5 or amounts which become due under the Loan Agreement, can only be amounts which Netglory 'agrees to advance'. In the context of these clause 5 amounts which become due in the future, the phrase 'advance the Loan Amount' might be construed to mean the liability to repay Netglory for amounts which Netglory has reasonably spent on these clause 5 outgoings.

221 The inclusion of clause 5 expenditures in the definition of Loan Amount might be relied upon to extend the meaning of 'advance' to a situation in which Netglory extends credit to the Hocking Land Company as opposed to paying money to the Hocking Land Company.

222 Another possible argument for ambiguity in the meaning of 'advance' is the provision in clause 1 for 'Conditions Precedent to Advance'. Clause 1 provides for conditions precedent to Netglory's obligation to advance the Loan Amount or to make any further advances. In relation to the $800,000 which the Loan Agreement defines as having already been 'advanced', it is difficult to understand the meaning of conditions precedent to an advance already made. This difficulty might support the submission that the conditions precedent concern the continued extension of credit by the Loan Agreement for $800,000 which '[Netglory] has advanced'.

223 Against these two arguments, there are four reasons why there is no relevant ambiguity which emerges from the Loan Agreement.

224 First, in any sensible use of the word, an 'advance' of money involves an amount paid. Even in relation to amounts which form part of the Loan Amount because they are paid by Netglory under clause 5 there is still a payment by Netglory. And even if the condition precedent suggested that 'advance' was a continued extension of credit, an 'advance' would still involve a continued extension of credit for money paid by Netglory.

225 In other words, even if the two arguments above are accepted as giving rise to some ambiguity in the Loan Agreement, there is no ambiguity concerning whether $800,000 was advanced by Netglory in the sense of being paid by Netglory. Both arguments are consistent with the ordinary meaning of advanced.

226 Secondly, the Loan Agreement also refers to a '_Re_payment Date'. A _re_payment presupposes a payment by Netglory.

227 Thirdly, cases which have considered the meaning of 'advances' in different contexts have also focused upon the meaning as involving a payment. This is a relevant matter because the Loan Agreement was drafted by a lawyer.

228 In Lincolnshire Sugar Co Ltd v Smart,[115] Lord Macmillan said of the word 'advances' in a statute that the word 'may either refer to prepayments of what will become due in future or be a polite euphemism for loan; but when "advances" are declared to be "repayable" ... they certainly lean to the side of loans'.

229 In Reid Murray Holdings Ltd (in liq) v David Murray Holdings Pty Ltd,[116] a deed of guarantee was given by a company to its parent, guaranteeing advances made, and to be made, by the parent to other subsidiaries which had become insolvent. The guarantee was expressed to have been given in consideration of the parent, at the request of the guaranteeing company, having advanced or agreed to advance money to the subsidiaries listed in a schedule to the deed.

230 In the Supreme Court of South Australia, Mitchell J held that there had not, at any time, been a request by the guaranteeing company. Nevertheless, the deed was not invalidated by the fact that the consideration expressed in the deed did not exist.[117] Her Honour then rejected a submission that money already owing after payments from the parent to the subsidiaries could not be described as 'advances'. The expression 'sums of money already advanced' meant 'all moneys paid to the credit of the companies named or described in the first schedule either by cheque or by book entries'.[118]

231 Fourthly, the Loan Agreement uses the words 'loan', 'lender' and 'borrower' throughout. The meaning of 'advance' which Netglory advocated involved Netglory abstaining from demanding money due under a different agreement which did not involve any payment from the purported 'lender' to the borrower or for the benefit of the borrower. This does not describe a 'loan'.

232 There is no relevant ambiguity in the Loan Agreement such that an 'advance' by Netglory could be construed to involve a situation in which no payment has been made by Netglory to the Hocking Land Company or for the benefit of the Hocking Land Company.

233 The evidence of circumstances surrounding the Loan Agreement, which was admitted provisionally,[119] is inadmissible to construe the meaning of 'advance'.

6.3 The alleged oral agreement cannot contradict the written terms of the Loan Agreement

234 Netglory sued on the written Loan Agreement. It did not sue on the alleged antecedent oral agreements.

235 Even if the Loan Agreement were relevantly ambiguous, so that 'advanced' could mean 'abstained from demanding money due from Hocking Land Company to Netglory under a previous agreement', the interpretation of the Loan Agreement which Netglory proposed by reference to surrounding circumstances of the alleged oral agreement would contradict the express terms of the Loan Agreement. Contradiction is not interpretation.

236 First, the oral agreement did not create a debt from the Hocking Land Company.

237 Netglory's pleaded case, from which it never resiled, was that the alleged July 2002 oral agreement was between Ms de Hollander (by her agent, Mr Pollock) and Mr Caratti.

238 It was also pleaded that Ms de Hollander (by her agent, Mr Pollock) and Mr Caratti later orally agreed in 2003 to use their positions as directors and shareholders of the Hocking Land Company to implement this oral agreement by causing the Hocking Land Company to enter into a deed with Netglory (as Ms de Hollander's 'nominee').

239 It was never pleaded, or submitted, and no evidence was led to suggest, that Ms de Hollander or Mr Caratti had contracted on behalf of the Hocking Land Company in these alleged oral agreements. Mr Caratti was not even said to be a director of Hocking Land Company at the time of the alleged oral agreement: it was pleaded that he became a director of the Hocking Land Company 'pursuant to the [oral] Parties' Agreement'.[120]

240 Even on Netglory's own case, if an agreement had been reached by which a debt was incurred on 6 January 2003 the Hocking Land Company had not incurred this debt. Hence, even if 'advanced' were taken to mean 'abstained from enforcing a previously accrued debt', the Hocking Land Company had not incurred any debt and had not 'advanced' anything.

241 Secondly, the alleged agreement did not involve any debt to Netglory. It was an alleged debt to Ms de Hollander. The alleged agreement was that '[Ms] de Hollander would be paid out the net tangible asset value of $800,000 to enable the Hocking joint venture to be funded entirely from external funding'.[121]

242 Netglory's pleading asserts that in early 2003 Ms de Hollander (through her agent, Mr Pollock) agreed with Mr Caratti to cause the Hocking Land Company to enter into a deed with Netglory (as Ms de Hollander's nominee) to pay $800,000 and 20% compound interest.[122] This is pleaded to be the manner of obtaining the extraction of the net tangible asset value from the Hocking Land Company.

243 But even this alleged subsequent agreement does not create a debt to Netglory. At best, it is an obligation upon Mr Caratti and Ms de Hollander to cause such a debt to be created. Even if there were some act by Hocking Land Company it did not create any debt to Netglory.

244 Thirdly, clause 4 of the Schedule to the Loan Agreement referred to $800,000 which 'was advanced to [the Hocking Land Company] on 6 January, 2003'. But the pleaded oral agreement was not an agreement by which any debt was incurred on 6 January 2003.

245 The alleged oral agreement in about July 2002 was an alleged agreement between Ms de Hollander and Mr Caratti that Ms de Hollander would 'be paid out the net tangible asset value of $800,000 to enable the Hocking joint-venture to be funded entirely from external funding'.[123]

246 Even if the Hocking Land Company were a party to this alleged agreement (which Netglory did not plead), any debt from the Hocking Land Company would have been incurred in July 2002, not on 6 January 2003.

247 Netglory pointed to 6 January 2003 as the date when the transfer of Lots 82 and 83 occurred. On 6 January 2003, Hocking Land Company was registered by the Registrar of Titles as the proprietor of Lot 9100 and Lot 9101 (together the former Lot 82).[124] But the date of settlement does not bear any relationship with any debt which could be the subject of an 'advance' by Netglory. It was not even the date on which settlement of the transfer of Lots 82 and 83 occurred.

248 Settlement of Lot 81 had taken place in June 1999, with Hocking Land Company acquiring it for $600,000.[125] On 23 April 2002, Hocking Land Company had entered a contract of sale for Lot 83 for $716,000 with a settlement date as 31 October 2002.[126] Settlement on the purchase of Lots 82 and 83, and the refinance of Lot 81 (provided on 10 December 2002),[127] had taken place on 5 December 2002 as appears from the transfer form. That date is changed on the transfer form to 6 January 2003 which Mr Pollock said was due to DOLA requisitions.[128] On 5 December 2002 the purchase money had been paid to the vendors of Lots 82 and 83.[129]

249 Even if it were somehow possible to ascertain a debt which was owed from the Hocking Land Company to Netglory, on any view the date on which that debt arose, and the date on which anything was 'advanced', would not be 6 January 2003.

7. The second reason why Netglory's claims fail against the Hocking Land Company: time bar

7.1 The relevant Limitation Act is the 1935 Act

250 The Limitation Act 2005 (WA) provides that a cause of action for repayment of a debt accrues when there is a failure to comply with a demand for repayment.[130] However, apart from exceptions not material to this case, the Limitation Act 2005 applies only to causes of action that accrue on or after the commencement day of that Act (15 November 2005).[131]

251 If no cause of action had accrued in relation to the Loan Agreement or the Guarantee by 15 November 2005 then neither action would be time barred since both actions were commenced before 15 November 2011. For that reason, I focus below on the provisions of the Limitation Act 1935 (WA).

7.2 The limitation period for a specialty does not apply

252 If the Loan Agreement and the Guarantee were deeds binding the Hocking Land Company and Mr Caratti then there was dispute between the parties concerning whether the limitation period of 20 years would apply to the action on the deeds. That limitation period applies if an action is an 'action of covenant or of debt upon any bond or other specialty'.[132]

253 There are three requirements in this provision: (i) the action must be an action of covenant or of debt; (ii) the relevant instrument must be a bond or specialty; and (iii) the action must be upon a bond or specialty.

254 For the reasons explained below, this limitation period does not apply because the Loan Agreement and Guarantee are not deeds of the defendants. Further, even if they were deeds, the action would not be upon them as specialties.

255 As to (i), in closing written submissions Netglory submitted that its action, demanding payment of a liquidated sum, was an action of covenant. This is incorrect.

256 E M Heenan J has recently explained that an action of covenant 'was the form of action sought to remedy the breach of an agreement, other than for payment of money, contained in a deed. The claim was for damages for the non-fulfilment of the covenant'.[133] With great respect, this is entirely correct. As Professor Ibbetson observed, '[i]n covenant the plaintiff had to plead that the defendant was in breach'.[134]

257 Netglory's submission that specific performance could be sought in an action of covenant has not been the law since the Year Books. By 1364, with the exception of a lessee who brought covenant to recover his unexpired term,[135] there were already cases which insisted that, in the words of Professor Simpson, 'the action can only lead to the recovery of damages, and not specific performance'.[136]

258 The action brought by Netglory was for payment of a liquidated sum. No breach was alleged. No damages were particularised or claimed.

259 Netglory's claim can only be a common law action of debt.

7.2.2 A contract under seal is a specialty but the Loan Agreement and Guarantee were not deeds

260 Netglory submitted that the Loan Agreement and Guarantee were specialties because they were deeds. I have already explained why the absence of attestation meant that the documents were not deeds of the Hocking Land Company or Mr Caratti.

261 Counsel for the Hocking Land Company and Mr Caratti submitted that Loan Agreement and Guarantee, even if deeds, were not specialties. I do not accept that submission.

262 In R v Williams,[137] Lord Maugham described a specialty in these terms:

The word "specialty" is sometimes used to denote any contract under seal, but it is more often used in the sense of meaning a specialty debt, that is, an obligation under seal securing a debt or a debt due from the Crown or under a statute ... Such an obligation was for centuries treated as very different from an ordinary debt ... Unlike debt it is enforced by an action of covenant ... The deed itself was the foundation of the action and the original debt, if any, was merged. The terms of the deed were conclusive. Specialty debts till recent times conferred special rights ... They were said to be "of a higher nature" than debts by contract.

263 This passage was approved by Williams J in Scott v Carabelas.[138]

264 There are three reasons why specialty in s 38(1)(e)(i) should be construed in the general sense to which Viscount Maugham refers, to mean any contract under seal or 'debt under seal'[139] rather than the sense in which his Lordship suggested that it was 'more often used'.

265 The first reason concerns the history of this provision. That history is discussed in detail by Commissioner Williams QC in State Government Insurance Commission v Teal.[140]

266 Section 3 of the Civil Procedure Act 1833 3 & 4 Wm IV c 42 provided a 20 year limitation period in respect of 'all actions of covenant or debt upon any bond or other specialty'. This provision was adopted in Western Australia in 1836, then repealed and replaced by s 38(1)(e)(i) of the Limitation Act 1935.

267 In Mansel's Treatise on the Law of Limitation in 1839,[141] the limitation period in relation to specialties was contrasted with the period, applicable since the Limitation Act 1623 21 Jac 1 c 16, of six years for '[a]ctions of debt grounded upon a lending or other contract without specialty'. The contrast indicates why the action of covenant or debt upon a specialty should include all actions of debt grounded upon a lending or other contract with specialty.

268 The second reason why 'specialty' in s 38(1)(e)(i) is used in the general sense of any contract under seal or debt under seal is because the subsection speaks of 'bond or other specialty' apparently bringing within the concept of a specialty those obligations on a bond. Bonds were always created by deed.[142]

269 The third reason is that s 38(1)(e)(i) is expressed with a proviso that it is subject to s 38(1)(d). Section 38(1)(d) is concerned with 'actions of debt for rent upon a covenant in an indenture of demise'. This action in an indenture of demise was previously included in the formulation in s 3 of the Civil Procedure Act 1833. But an indenture of demise was not a bond. It was not a specialty in the limited sense to which Viscount Maugham referred.

270 For these three reasons a contract under seal or a noncontractual enforceable debt under seal is a specialty. But the 20 year limitation period does not apply because the Loan Agreement and Guarantee were not obligations binding the Hocking Land Company or Mr Caratti which were under seal.

7.2.3 The action is not 'upon' the Loan Agreement and Guarantee even if they were specialties.

271 In Re Compania de Electricidad de la Provincia de Buenos Aires Ltd,[143] Slade J said the following in relation to the identical words of earlier limitation legislation in England, particularly the word 'upon':

The reference in that section to 'actions of covenant or debt upon any ... specialty' ... can in my judgment only refer to an action to enforce an obligation created or secured by a specialty; on the natural and proper construction of the two sections, such references cannot possibly extend to actions to enforce obligations which are merely acknowledged or evidenced by an instrument under seal.

272 Even if Netglory were correct that the Loan Agreement and Guarantee were deeds, the limitation period for a deed would still not apply. The reason for this is that Netglory's case was that the Loan Agreement and Guarantee acknowledged an earlier agreement by which the Hocking Land Company was said to have become bound to pay $800,000 to Netglory. In other words, Netglory's case was that the Hocking Land Company was already obliged to 'repay' $800,000 with interest to Netglory and the Loan Agreement evidenced this.

273 Even if Netglory's case were accepted, and even if the Loan Agreement were properly in the form of a deed which, as Netglory claimed, evidenced an antecedent obligation to repay, then the limitation period would be six years.[144]

7.3 The limitation period for the Loan Agreement expired prior to the action

274 Since the limitation period for a specialty does not apply, the relevant limitation period for the Loan Agreement and the Guarantee is six years after the accrual of the cause of action.[145]

275 The following principles apply in relation to limitation periods for contractual debts.[146]

(1) If a contract provides for a time for repayment or a condition which will trigger an obligation to repay, then the cause of action will accrue upon the expiration of the time period or the happening of the condition.[147]

(2) If no time for repayment is provided and no condition specified which will trigger the obligation to repay, then the loan will generally be repayable on demand. In such a case, unless the parties have expressly or impliedly agreed that no enforceable debt will arise without an actual demand,[148] the agreement will generally be construed to create an immediate debt and time will run from the date of the loan.[149]

(3) If a contract provides that the principal sum becomes repayable upon default in the payment of any instalment then the time period for the whole debt will run from the first default in relation to any instalment,[150] including instalments of interest.[151]

7.3.1 The action under the Loan Agreement was commenced after expiry of the limitation period

276 The Loan Agreement provides in clause 4 for a date of repayment. That date is 31 December 2004.

277 Although a writ of summons was brought against Mr Caratti in relation to the Guarantee on 29 November 2010, the claim against the Hocking Land Company was only brought on 8 February 2011 when the writ of summons was amended by consent. The amendment to the writ added a new cause of action, against a new party, the Hocking Land Company. These amendments to the writ on 8 February 2011 cannot relate back to the 29 November 2010 original writ.[152]

278 For this reason, even if there had been no default, the limitation period would have expired on 31 December 2010 more than a month before the action against the Hocking Land Company was commenced by Netglory's solicitors.

279 In any event, the limitation period for the Loan Agreement began to run considerably earlier than the due date of repayment under the Loan Agreement on 31 December 2004.

280 On Netglory's case, and according to the Loan Agreement, if money had been lent then the first payment of interest was due on the 7th day of March 2003. Clause 3 of the Loan Agreement provides that interest 'must be paid' by that date. Clause 10 of the Loan Agreement provides that a default occurs if the Hocking Land Company fails to pay any money due to Netglory on the due date.[153]

281 The effect of the default by the Hocking Land Company meant that the Loan Amount, and all money due from the Hocking Land Company to Netglory under the Loan Agreement, became payable on demand on 7 March 2003. Under the Loan Agreement, clause 4, Netglory was no longer required to abstain from making demand before 31 December 2004.

282 As explained at [275(2)] above, once the Loan Agreement required payment of the debt upon demand on 7 March 2003, the six year limitation period began to run. The limitation period expired on 8 March 2009, almost two years before the action was instituted against the Hocking Land Company.

283 Netglory submitted that the causes of action did not accrue in relation to either the Loan Agreement or Guarantee until actual demand was made. This submission is incorrect.

284 The usual principle is that '[a] loan of money payable on request creates an immediate debt'.[154] The High Court of Australia has explained, speaking of a promissory note payable on demand and quoting from Baron Parke, in 'the case of money lent payable upon request, with interest ... no demand is necessary before bringing the action'. In that case, the 'statute begins to run from the time of lending'.[155]

285 Unless it is clear from a contract of loan that 'payable on request' does not bear its usual meaning, then a cause of action will arise immediately. As Fullagar J explained the point:[156]

If A lends money to B, then instantly B is detaining A's money. In order to prevent a cause of action for recovery arising in A instantaneously on paying the money, the parties must expressly contract out of that situation by words clearly inconsistent with that situation.

286 In Central City Pty Ltd v Montevento Pty Ltd,[157] Murphy JA (Buss JA agreeing) reiterated that at common law 'where the loan is stated to be payable "on demand" [this] creates an immediate debt by which the money is repayable immediately without the creditor first making a demand for payment'.

287 There is nothing in the Loan Agreement which could suggest that until a demand there will be no enforceable debt. To the contrary, there are significant reasons why the usual construction of 'on demand' applies to the Loan Agreement:

(i) clause 11 of the Loan Agreement provides for a power for Netglory, upon default by the Hocking Land Company, to make demand for immediate payment of the outstanding balance of the Loan Amount;

(ii) clause 4 provides for the Loan Amount and all other money due to be payable on demand; and

(iii) a professionally drawn agreement, as in this case, will usually be construed in a manner consistent with settled judicial interpretation of a particular term.[158]

288 These considerations are not overcome by the fact that Netglory has the power to issue a statement to the Hocking Land Company which explains the amount due (clause 18) or by provisions concerning the manner in which notices are to be given (clauses 13 16). If demand were a condition precedent then the Loan Agreement might have made the issue of such a statement a precondition to demand. It is not.

7.3.2 Netglory's plea of estoppel must be rejected

289 Netglory repeated a plea of estoppel in several contexts. In the context of the limitation period, Netglory pleaded that this estoppel arose for the following reasons.[159]

(1) In or about March 2003 Netglory, by Mr Pollock, and the Hocking Land Company, by Mr Caratti, agreed to vary the Loan Agreement whereby the Hocking Land Company was to pay the Loan Amount from the proceeds of the sale of the subdivided lots created from Lots 81, 82 and 83 Nicholas Road Hocking immediately after the repayment by the Hocking joint-venture of its external financiers.

(2) Between February 2003 and 2009, Mr Caratti represented to Mr Pollock (as consultant for Netglory) that the Loan Amount would be repaid from the sale of the Hocking Land Company's subdivided lots after the repayment of the Hocking Land Company's external financiers.

(3) In reliance upon those representations Netglory took no steps to make demand for payment of the Loan Amount or the interest payable pursuant to the Loan Amount during February 2003 until 2009.

(4) Between 2009 and 23 November 2010, Mr Pollock, acting on behalf of Netglory and Ms de Hollander, made repeated oral demands of Mr Caratti for the Hocking Land Company to repay the Loan Amount and account to Ms de Hollander in respect of the sale proceeds of the Hocking Land Company's subdivided lots.

(5) Upon the failure of Mr Caratti and Hocking Land Company to repay the Loan Amount in respect of the sale proceeds of the Hocking Land Company's subdivided lots, Netglory made demand for payment of the Hocking Land Company on 23 November 2010 and Mr Caratti on 18 November 2010.

(6) In about March 2003, shortly after the entry into the alleged Loan Agreement, Netglory (by Mr Pollock) and the Hocking Land Company (by Mr Caratti) agreed to vary the Loan Agreement so that the Hocking Land Company would pay the Loan Amount from the proceeds of sale of the subdivided lots created from Lots 81, 82 and 83 Nicholas Road immediately after the repayment by the Hocking joint venture of its external financiers.

290 I reject this plea of estoppel for three reasons.

291 First, as I explain below, I do not consider that any weight can be placed upon any of Mr Pollock's oral evidence, even where his evidence was interpreting the meaning and sequence of written documents. Without documents to speak for his case by themselves, I do not accept any of his claims. None of the matters in (1) to (6) above was documented.

292 Secondly, and in any event, any representation by Mr Pollock (even assuming that as 'consultant' for Netglory he is somehow pleading a case of either actual or ostensible authority) about when the Hocking Land Company would be repaid is a long way from being an unequivocal representation or promise that the Hocking Land Company would not rely upon any limitation period. The contrast with judgments such as those of Deane and Dawson JJ in Commonwealth v Verwayen[160] or cases such as Commonwealth v Clark[161] is stark. As Ashley J said in Wright v Commonwealth,[162] 'the defendant made no promissory representation whether to the plaintiff, or such as might influence him with respect to a limitation defence'.

293 Thirdly, there was no plea, nor any evidence, concerning any detriment which Netglory would suffer if the Hocking Land Company were not precluded from departing from any representation. Unlike in Verwayen or in Clark, for example, there was no evidence of any effect on anyone's psychological health, nor any evidence of anything that Netglory would have done differently due to any reliance (which is not pleaded) upon any alleged promise or representation.

7.4 The limitation period did not expire for the Guarantee

7.4.1 The expiry of the Loan Agreement limitation does not bar the Guarantee

294 Counsel for Mr Caratti submitted that if the Loan Agreement was statute-barred because of the expiry of a limitation period, then the Guarantee could not be enforceable. Counsel pointed to the alleged obligation in the Guarantee concerning 'payment to [Netglory] of all money now or in the future due and payable to [Netglory] under [the Loan Agreement]'. Counsel submitted that since the Loan Agreement was time-barred, there was no money 'due and payable' to Netglory.

296 In Curwen v Milburn,[163] Cotton LJ (Fry and Lopes LJJ agreeing) held that '[s]tatutebarred debts are due, though payment of them cannot be enforced by action'. This passage was described by Diplock J as 'clear law' and 'elementary law'.[164]

297 The provision in the Guarantee for payment to Netglory of 'all money now or in the future due and payable' was expressed in terms sufficiently broad to include amounts to which a defence might be raised which, in the language of the older cases, would 'bar the remedy' on the Loan Agreement, but not the right.

7.4.2 The sums guaranteed were not due until demanded

298 Netglory's pleaded claim for payment under the Guarantee relies upon a demand made by letter on 18 November 2010.[165] No issue arose from the fact that this demand preceded any demand made of the alleged primary debtor, the Hocking Land Company.

299 In the letter of demand,[166] Netglory demanded immediate payment from Mr Caratti of the sum of $800,000, together with accrued interest of 20% per annum with monthly rests, amounting to a total of $3,051,794.89.

300 Netglory submits that time did not begin to run on the debt due under the Guarantee until the letter of demand was sent.

301 A guarantee need not require any demand or notice as a precondition to the guarantor's obligation to pay because that obligation can arise on the debtor's failure to fulfil its guaranteed obligations.[167] However, unlike an ordinary contract of loan, there is no common law approach to the words 'on demand' in a guarantee that treats those words as creating an immediate debt.

302 In In re J Brown's Estate Brown v Brown,[168] Chitty J (as he was then) said that it is a 'general proposition' that where money is lent payable upon request, no demand is necessary before bringing an action but the same was not true of a guarantee:

it is plain that a distinction has been taken and maintained in law, the result of which is, that where there is a present debt and a promise to pay on demand, the demand is not considered to be a condition precedent to the bringing of the action. But it is otherwise on a promise to pay a collateral sum on request, for then the request ought to be made before action brought.

303 The same point was made by Scrutton LJ in Bradford Old Bank Ltd v Sutcliffe.[169] In that case, the Court of Appeal held that the promise of a surety to pay on demand was a 'collateral promise' where, as Scrutton LJ said:

Even if the word 'demand' is used in the case of a present debt, it is meaningless, and express demand is not necessary, as in the case of a promissory note payable on demand ... But it is otherwise where the debt is not present but to accrue, as in the case of a note payable three months after demand ... or where the debt is not a present debt, but a collateral promise.

304 These cases have been referred to with approval in Australia.[170]

305 In every case, the question is one of construction. In Bradford Old Bank Scrutton LJ entertained 'no doubt' that the requirement of demand was a 'real stipulation, and not mere words' since (i) interest was to run from the date of demand; (ii) the surety agreed that he was not entitled to require the creditor to accept payment until the creditor had demanded payment; and (iii) the guarantee was 'against loss' and the surety needed to be informed of the amount he was called upon to pay.[171]

306 In this case, on the proper construction of the Guarantee, no debt was due from the guarantors until it was demanded. The reason why I reach this conclusion is that, unlike in the Loan Agreement, there is no existing obligation under the Guarantee until a demand is made. The terms of the Guarantee are that Mr Caratti provide a joint guarantee of payment to Netglory of 'all money now and in the future payable to [the Hocking Land Company] under [the Loan Agreement]'. But the guarantee obligation is expressed to be an obligation, upon default under the Loan Agreement, and 'upon demand to pay to [Netglory] the amount then due' (clause 2). Or, if there is a breach of the Hocking Land Company's covenants, 'upon notice from [Netglory] immediately to remedy that breach' (clause 3).

307 These references to the money being due upon demand and notice contrast with the Loan Agreement where, independently of any demand for payment, the loan is due and default occurs if the Hocking Land Company fails to pay any money to Netglory on the due date (clause 10.1.3).

8. The third reason why Netglory's claims fail: The Loan Agreement and Guarantee were not supported by consideration

308 Another reason why Netglory's claim must fail is because the Loan Agreement was neither a deed nor a simple agreement. Those are the only two bases upon which it could be binding.

309 I have already explained why the Loan Agreement was not a deed of Hocking Land Company and why the Guarantee was not a deed of Mr Caratti.

310 The reason why neither was a simple agreement is because there was no consideration for Hocking Land Company's entry into the Loan Agreement. Nor was there consideration for Mr Caratti's entry into the Guarantee.

8.1 There was no consideration from the Hocking Land Company

311 The purported consideration for entry into the Loan Agreement, as expressed in the words which preface clause 1 to clause 25 of the Operative Part, is that Netglory 'has advanced or agrees to advance the Loan Amount' to the Hocking Land Company.

312 As I have explained, counsel for Netglory submitted that the 'advance' described in the Loan Agreement means that Netglory agreed to abstain from seeking early payment of $800,000 to enable, in that period of abstention, development to proceed so as not to fetter the capacity of the Hocking Land Company to borrow against its assets without having otherwise to pay out the $800,000.

313 I have explained above why this construction of 'advance' is not possible. I have also explained that, even on Netglory's own case, (i) there was no antecedent debt owed by the Hocking Land Company; (ii) there was no antecedent debt owed to Netglory; and (iii) on any view of 'advance', nothing relevant occurred on 6 January 2003, which is the date of the alleged advance described in the Loan Agreement.

314 The point made in this section of my reasons is that even if the submission by Netglory about the construction of 'advance' or 'advanced' were correct (which it is not), and even if points (i), (ii) and (iii) above could somehow be ignored (which they cannot), there was no consideration moving from Netglory for any promise it allegedly received from the Hocking Land Company.

315 In written submissions, Netglory asserted that[172]

[t]he consideration for the forbearance from immediately taking action was [Mr] Caratti's agreement to charge Hocking's property and give his personal guarantee. Mr Caratti's acts in acknowledging his indebtedness to Netglory and his undertaking to pay were made absolutely and without any condition attaching to them.

316 As between Netglory and the Hocking Land Company the assertion seems to be that the alleged consideration moving from Netglory was its promise to forbear from immediately taking action to enforce the preexisting debt.[173]

317 The immediate difficulty with this submission is that any alleged debt was not owed to Netglory.

318 Even if the alleged oral agreement of early 2003 had taken place and even if it operated to create a debt rather than to cause the Hocking Land Company to enter a deed, no consideration moved from Netglory for any such undertaking. The alleged July 2002 oral agreement (to which the Hocking Land Company was not a party) was that the Hocking Land Company would agree to pay $800,000 to Ms de Hollander. There is no mention of any promise in relation to Netglory in the alleged July 2002 oral agreement.

319 The pleading that there was a further oral agreement in early 2003 does not remedy this fundamental defect: that is, the absence of a debt owed to Netglory. The pleading is that Ms de Hollander and Mr Caratti would cause the Hocking Land Company to enter a deed with Netglory as Ms de Hollander's nominee. Despite early requests from the defendants, at no stage did Netglory explain what 'nominee' meant in its pleading.

320 The term 'nominee' can mean different things in different contexts.[174] Nevertheless, as Fraser JA has explained, by reference to twelve authorities, it is well established that the nomination by one party to a contract for the sale of land of a third party 'nominee' to whom the land is to be transferred does not substitute the nominee as a party to the contract.[175] As Nettle J said in Commissioner of State Revenue v Politis:[176]

Plainly, however, under most nomination clauses the nominee would not acquire any rights as against the vendor, let alone the rights of the purchaser; for most nomination clauses constitute no more than a power in the purchaser to require the vendor to complete the contract by transfer of the land to the purchaser's nominee ... But the nominee does not acquire any rights as against the vendor, because the nominee is not privy to the contract.

321 There is no basis in this case, nor any submission or evidence, to suggest that Netglory was anything other than a nominee in this usual sense of a recipient of a benefit. It was not suggested, nor could it be, that Netglory became an assignee or novatee of any alleged rights under the alleged 2002 oral agreement.

322 For these reasons, even if the pleaded 2002 oral agreement had occurred, and even if it could give rise to any debt from the Hocking Land Company to Ms de Hollander (which it could not), the pleaded 2003 oral agreement was simply a nomination by Ms de Hollander that the money should be paid to Netglory. The pleaded 2003 oral agreement did not substitute Netglory as a party.

323 There was no consideration which moved from Netglory in exchange for entry into the Loan Agreement.

324 The absence of consideration moving from Netglory is sufficient to dispose of Netglory's claim. But, in any event, there was no pleaded consideration which moved from the Hocking Land Company, as promisee, to make any alleged forbearance by Netglory (under an alleged contract to which it was not a party), binding. Without consideration moving from the Hocking Land Company, Netglory would not be bound to adhere to a unilateral forebearance.

325 Not only was there no pleading of this point, but there was no exploration in evidence or submissions of the nature of any consideration that might have moved from the Hocking Land Company under the Loan Agreement. Even on Netglory's own case about the meaning of 'advance', the promise to make an 'advance' which has already been made would be 'past consideration'. Past consideration is insufficient.[177]

326 Nor could it be said that the Hocking Land Company gave consideration by its undertaking to pay 20% interest, compounding monthly. Subject to the myriad of flaws in Netglory's case concerning that earlier agreement, that undertaking to pay interest was also an alleged term of the earlier oral agreement.[178] It would also be past consideration.

327 The Hocking Land Company, understandably, objected in opening submissions,[179] and again in closing submissions,[180] to any new case of consideration being raised by Netglory.

328 To be fair to Netglory, no new case concerning consideration was made because no coherent case concerning consideration was made at all.

8.2 There was no consideration for entry into the Guarantee by Mr Caratti

329 The absence of any consideration for the Loan Agreement has the effect that there is no enforceable Loan Agreement. Therefore there is no debt guaranteed by the Guarantee.

330 In any event, the Guarantee is also without legal effect because it too lacks consideration.

331 The purported consideration for the Guarantee is provided in clause 1. The consideration is expressed to be either (i) executing the Loan Agreement or (ii) forbearing from enforcing immediately Netglory's powers in the Guarantee, Loan Agreement or Mortgage.

332 Since the Loan Agreement itself contained no consideration, the execution of that agreement cannot amount to consideration. The consideration to support a contract of guarantee must be 'real and valuable and not illusory or a sham'.[181]

333 Nor can it be sufficient consideration that Netglory forbears to enforce a purported agreement contained in either of the very documents which lack consideration (the Loan Agreement or Guarantee) or a security given to secure the nonexistent rights under those purported agreements (the Mortgage).

334 There is no consideration outside the terms of the Guarantee either.

335 First, it is not sufficient merely to recite in an agreement that the guarantee is given in consideration for 'advances to be made' or for 'advances made' if no advances are, in fact, made.[182]

336 Secondly, the mere existence of a debt cannot be consideration for the debtor 'doing or giving anything'.[183] This is because '[a] guarantee given to secure a debt already incurred, but unsupported by any further consideration, will fail for want of valuable consideration'.[184]

337 The Guarantee must also fail for lack of consideration.

9. The fourth reason why Netglory's claims fail: The Loan Agreement was voidable and has been avoided

338 Although this was expressed as a further plea, and not merely in the alternative, this plea of breach of director's duties assumed that the Loan Agreement created a debt between the Hocking Land Company and Netglory so that there was a real agreement to rescind. For the reasons expressed above in relation to consideration, that was not the case.

339 This section of my reasons considers this plea by the Hocking Land Company independently of the other reasons why Netglory's claim fails and on the assumption that the Loan Agreement upon which Netglory sued was an enforceable agreement which could be rescinded.

340 I explain below that if an agreement existed as Netglory alleged, then it was created in breach of Ms de Hollander's duties as a director of the Hocking Land Company. It would be rescinded as the Hocking Land Company sought. This is a fourth reason why Netglory's claim fails.

341 At the time that the Hocking Land Company entered into the purported Loan Agreement, Ms de Hollander was one of two directors of the Hocking Land Company and one of two shareholders in the Hocking Land Company. The other director and the other shareholder was Mr Caratti.

342 The Hocking Land Company pleads that Ms de Hollander breached duties that she owed to it as a director.[185] Those duties pleaded were in equity and under the Corporations Act 2001 (Cth), although the relief sought by the Hocking Land Company the avoidance of the Loan Agreement was equitable.

343 The duties which the Hocking Land Company says Ms de Hollander breached are as follows:

(1) to exercise her powers and discharge her duties as a director in good faith in the best interests of the Hocking Land Company and for a proper purpose (s 181 Corporations Act and in equity);

(2) not to use her position as a director of the Hocking Land Company improperly to gain an advantage for herself or someone else or to cause detriment to the Hocking Land Company (s 182 Corporations Act and in equity).

344 The Hocking Land Company says that Ms de Hollander breached these duties in the following ways:

(i) Ms de Hollander caused the Hocking Land Company to enter into the Loan Agreement and Mortgage, or participating in their execution, when she knew that they were detrimental to the interests of the Hocking Land Company.

(ii) Ms de Hollander acted under the instructions of Mr Pollock and did not exercise her own independent judgment.

(iii) As to her conflict of interest, in addition to (i) and (ii) Ms de Hollander acted in a situation of conflict of interest because she was the sole director and a 50% shareholder in Netglory, and Netglory would obtain the Loan Amount without having made any loan to the Hocking Land Company.

345 All of these alleged breaches of directors' duties were described by the Hocking Land Company as breaches of fiduciary duty.

346 It may arguably be an error, on the current state of Australian law, to characterise the breach of prescriptive duties by a director, such as the duties to act in good faith and in the interests of the Hocking Land Company and for proper purposes, as breaches of fiduciary duty.[186]

347 On the other hand there are also reasons why 'fiduciary' might be an appropriate description of the 'proper purposes' 'duty'. Despite the insistence on the proscriptive nature of fiduciary duties, the High Court appears also to have recognised that there may be a fiduciary prescriptive liability to account, when that liability is associated with a proscriptive fiduciary duty.[187]

348 Another reason why the fiduciary description might be apt is that it may be possible to reconcile the insistence on the proscriptive nature of a fiduciary duty by describing the 'proper purposes' duty in negative terms: a duty not to act for collateral purposes.

349 Another reconciliation may be to characterise the whole of the duty (or duties) to act in good faith in the interests of the company for proper purposes as prescriptive conditions upon the exercise of fiduciary power.[188] Powers under a company's articles are generally 'fiduciary powers'.[189]

350 It is not necessary in this case to resolve this issue. The primary reason why it is not necessary to do so is because rescission of a transaction is an available response however the breach of directors' duties are characterised. The epithet 'fiduciary' adds nothing to the nature of the 'duty' in this case, or the available response.

351 There were also no submissions made on this point, or any related point concerning directors' duties. Netglory made very few submissions in response to the plea of rescission for breach of fiduciary duty, or in response to the associated submissions by the Hocking Land Company.

352 Netglory's reply to the allegations of breach of fiduciary duty consisted of a bare denial of the allegation of breach of director's duties as part of a general denial of all defences.

353 Netglory did not address the issue of director's duties in any written submissions.

354 The absence of any substantive response in pleadings, evidence or submissions led the Hocking Land Company to submit that Netglory had offered 'no contest' to these allegations.

355 It is not entirely accurate to characterise Netglory's response as one of 'no contest' although Netglory said very little on this subject. However, one consequence of so little attention being given to this issue by Netglory was that no evidence was led of the constitution of the Hocking Land Company. It is said that the constitution of a company will mould the fiduciary duties which are owed.[190] More broadly, it might also be said that the company constitution will often be the manifestation of the terms of the fiduciary undertaking. In this case, however, the content of the duties owed can only be determined by reference to those duties which equity recognises are generally undertaken by directors.

356 In closing oral submissions, I raised with counsel for Netglory the question of Netglory's response to the allegation of breach of director's duties. Counsel's explanation of why Ms de Hollander was not in breach of her duties was very difficult to understand. I set out that response below so that Netglory's position is not misrepresented, even if it cannot be understood.

357 In oral closing submissions, counsel for Netglory seemed to suggest that there was no breach of any directors' duties because the Hocking Land Company obtained a benefit. Counsel said that the benefit that the Hocking Land Company had obtained prior to the Loan Agreement was as follows:[191]

The benefit that the company had obtained up to the point of the discussion to where Mr Pollock and Mr Caratti were all as a result of provisional arrangements made for its benefit and that provisional arrangement really involved moneys being provided to pay interest bills, moneys being provided to pay deposits, and what this arrangement ultimately struck involved, is that on the realisation of the properties and after discharge of any loans, those moneys, the $800,000, were then to be paid out to the person who had put the company in the position to ultimately carry out these developments.

358 When counsel then clarified the benefit that the Hocking Land Company received in exchange for undertaking to pay $800,000, he explained as follows:[192]

[I]nsofar as the rounded up negotiated figure included $537,000 less the Monte deposits, that's money that was going to have to come back to Ms de Hollander or her company in any event so that the benefit the company got in the same way that the arrangement was struck was to enable the companies to be in a position to proceed to effect developments without having then to repay what it, absent this agreement, would have had to repay to Ms de Hollander, and that then rolled matters forward ...

...

Its capacity to go forward was plainly going to be inhibited by an immediate obligation to pay out a loan in respect of moneys that had been advanced to it so that this arrangement enabled Hocking then to proceed, as it did, to develop the three lots, to produce lots to bring to market, pay off the debt and then be in a position after discharge of that to pay out the $800,000.

359 Netglory's submission appears to be that Ms de Hollander was not in breach of any of her director's duties because:

(1) Ms de Hollander had previously provided $487,000 (ie $537,000 minus $50,000 'Monte deposits') to the Hocking Land Company for interest bills and deposits;

(2) the $487,000 was a debt which was due from the Hocking Land Company to her; and

(3) the Hocking Land Company was not able to repay this debt immediately, so in exchange for a waiver of the $487,000 debt, it undertook to pay $800,000 and 20% interest on a monthly compounding basis to Netglory.

360 There are four reasons why I reject this submission and why I find that Ms de Hollander was in breach of her duties as a director.

361 The four reasons below overlap substantially. This is because, apart from the fourth reason, a reason which concerns a conflict of interest, the elements of (i) acting in good faith, (ii) acting in the best interests of a company (if this is independent of (i) and (iii)), and (iii) acting for proper purposes are overlapping. For instance, the best interests of the company as a whole inform the purposes of the power. It may also be that ultimate basis for setting aside a nonindependent decision as not being for proper purposes is because the substantial object or purpose of such a decision cannot have been to act the interests of the company. In addition the requirement of (i), acting in good faith, must be considered together with the subject matter of the good faith which is the interests of the company.

362 If the decision of Ms de Hollander to cause the Hocking Land Company to enter the Loan Agreement were in the interests of the company it would be mere coincidence. The basis for her decision viewed both subjectively and objectively was to fulfil the wishes of Mr Pollock. Even if the motivation of Mr Pollock were relevant (which it is not) Mr Pollock's acts were also not based on the interests of the Hocking Land Company. They were based on his own selfinterest. This might have been relevant if the Hocking Land Company had agitated any issue that Mr Pollock was a de facto director or a shadow director of the Hocking Land Company.

363 The four reasons why Ms de Hollander was in breach of her duties as a director, causing the Loan Agreement to be voidable at the instance of the Hocking Land Company are as follows.

364 First, where no reasonable board could consider a decision to be within the interests of the company, the making of the decision will be a breach of duty.[193] This objective assessment is relevant to whether the purposes of the power were properly exercised.[194]

365 The matters raised by Netglory in submissions do not establish a factual benefit to the Hocking Land Company from the transaction. It is enough simply to state the proposition to see its absurdity, even if the factual premise were correct. There is no apparent benefit to a company of replacing a debt for $487,000 with a debt for $800,000 at 20% interest, compounding monthly. No reasonable board could consider that such a transaction was in the best interests of the Hocking Land Company.

366 Netglory's submissions appeared to suggest that there was some benefit to the Hocking Land Company because the debt of $487,000 was repayable immediately but the substituted debt of $800,000 with 20% interest was the subject of a deferred repayment until 31 December 2004. It was submitted that this deferral would 'enable the Hocking jointventure to be funded entirely from external funding'.[195]

367 Any alleged benefit is illusory. The alleged $800,000 debt would become immediately due if the Hocking Land Company failed to make one of the interest payments. And the Hocking Land Company did not have the funds to meet the interest repayments.

368 In closing oral submissions, almost as an afterthought, counsel for Netglory suggested that consideration given by Netglory for entry into the Loan Agreement, and consequential benefit to the Hocking Land Company from that transaction, was a second mortgage over Lot 21 East Road.[196]

369 This new suggestion of consideration in closing was a new, unpleaded case by Netglory. It is not a consideration which is referable, in any way, to the written terms of the Loan Agreement or to any pleaded terms of the alleged oral agreements. There was no evidence that this was part of the quid pro quo for any alleged oral agreement.

370 In reply to the limitation defence, Netglory pleaded that in about March 2003, shortly after the entry into the alleged Loan Agreement, Netglory (by Mr Pollock) and the Hocking Land Company (by Mr Caratti) agreed to vary the Loan Agreement so that the Hocking Land Company would pay the Loan Amount from the proceeds of sale of the subdivided lots created from Lots 81, 82 and 83 Nicholas Road immediately after the repayment by the Hocking joint venture of its external financiers.[197]

371 Even if this plea of a subsequent oral variation were supported by any credible evidence (which it is not), it concerns an event subsequent to the entry into the Loan Agreement in breach of Ms de Hollander's duties. The Loan Agreement, which was voidable, would not become valid by a subsequent variation.

372 Secondly, the conduct of Ms de Hollander was not engaged in for a proper purpose. Whether a director has acted for a proper purpose, namely for the benefit of the company, is to be objectively determined.[198]

373 A company is entitled to the unbiased and independent judgment of its directors.[199] The failure of a director to exercise judgment in this way can, as in this case, amount to a failure to act subjectively in good faith. It can also amount to a failure to act for proper purposes where the objective manifested by the director's action is improperly to satisfy the will of another person.

374 An example is the decision in Fodare Pty Ltd v Shearn.[200] In that case, Ms Shearn was a sole director who was found to be in breach of statutory and fiduciary duties including the duty to act in good faith in the best interests of Fodare and for a proper purpose. Mrs Shearn did not record or seek to explain how the dispersal of the moneys entailed any benefit to Fodare. Instead, she made only vague references to the payment of debts and of what was owed to her.[201]

375 Ms de Hollander also did not record any reason for entry into the Loan Agreement. Her evidence about the alleged oral agreement was confused and contradictory. To the extent that she considered the interests of the Hocking Land Company, she said that her recollection was that the Hocking Land Company would get no benefit.[202] She did not have any real regard to the interests of Hocking Land Company when entering the Loan Agreement. Her purpose, both manifestly and subjectively, was merely to fulfil the wishes of Mr Pollock.

376 If Ms de Hollander had given proper consideration to the affairs of the Hocking Land Company she would not have caused the Hocking Land Company to enter the Loan Agreement.

377 Thirdly, as I explain below at [522] [539], Ms de Hollander acted under the instructions of Mr Pollock and did not exercise her own independent judgment.

378 A comparison can be drawn with Blackwell v Moray.[203] In that case, Mr Bullivant was the only director with authority to vote. He voted in favour of a resolution to clear various debts. He voted on the advice of a representative of the majority shareholder. Cohen J held that Mr Bullivant had breached his duty to act in good faith in the interests of the company as a whole because he did not exercise independent judgement. He was required, at least, to engage in 'a consideration of views or of relevant material in order that he may act in a bona fide way'.[204]

379 The failure by Ms de Hollander to give any 'real or actual consideration' to the affairs of the Hocking Land Company placed her in breach of her duties as a director to act in good faith and for proper purposes in the interests of the company as a whole.[205] It is not a subjective exercise of good faith to act only under the instruction of another, without independent consideration.

380 Fourthly, Ms de Hollander had a plain conflict of duty and interest in causing the Hocking Land Company to enter the purported Loan Agreement with Netglory. From 1 July 1999 to 15 November 2010, she was the sole director[206] and shareholder[207] of Netglory. She did not cease being a director until 15 November 2010.

381 A director generally undertakes fiduciary duties which include duties to avoid placing himself or herself in a position in which his or her own interests might conflict with the interests of the company, except with the company's fully informed consent. As the Full Federal Court has explained, the term 'interest' is a term which 'signifies the presence of some personal concern of possible pecuniary value in a decision taken, or a transaction effected, within the scope of a fiduciary's duties'.[208]

382 In Furs Ltd v Tomkies,[209] Rich, Dixon and Evatt JJ said that

except under the authority of a provision in the articles of association, no director shall obtain for himself a profit by means of a transaction in which he is concerned on behalf of the company unless all the material facts are disclosed to the shareholders and by resolution a general meeting approves of his doing so, or all the shareholders acquiesce.

383 Later, their Honours said that a director's 'one resource' if 'he was resolved to adopt the unwise course of acting in the transaction on behalf of his company and yet seeking a profit for himself, was complete disclosure to and confirmation by the shareholders'.[210]

384 Netglory did not plead that Ms de Hollander had made full disclosure to Mr Caratti and the Hocking Land Company of her shareholding in Netglory and the profit she would obtain from the transaction. No clear evidence was led to that effect. There was some crossexamination, understandably incomplete in the absence of this as a pleaded issue, about whether Ms de Hollander would share her profit with Mr Pollock. But the ultimate extent of profit from the Loan Agreement deriving from Netglory to Ms de Hollander, and whether that had been the subject of consent by Mr Caratti or the Hocking Land Company, was not explored.

385 In the absence of any pleading or evidence of informed consent there was, understandably, no submission by counsel for Netglory that the Hocking Land Company, by its nonconflicted director, Mr Caratti, had consented to, or waived, any breach of fiduciary duty. The onus of proof of such consent or waiver was on Netglory.[211]

386 There are also some curiosities in the evidence concerning the nature of the shareholding in the Hocking Land Company at the relevant time.

387 In Ms de Hollander's statement of affairs, which the Pollocks helped to prepare, there is a note that she 'may appear on some company extracts as the owner of 50 shares in Hocking Land Company Pty Ltd (now renamed) however her shares in this entity were transferred to Promenade Investments Pty Ltd in about 2003'.[212] This does not appear in the ASIC current and historical register.[213] Again, in the absence of any issue concerning informed consent, this was not explored. I proceed on the basis, and find, that Ms de Hollander was a shareholder at the relevant times.

388 Each of the pleaded director's duties breached by Ms de Hollander is owed to the Hocking Land Company in equity. The breach in equity is pleaded. These equitable duties are preserved by the Corporations Act.[214] The consequence of each of these breaches of Ms de Hollander's duties as a director is that the Loan Agreement must be set aside.

389 A transaction entered into as a result of a director's conflict of interest will be voidable.[215] The same is true where the substantial object of a transaction entered into by a director is not bona fide in the best interests of the company for proper purposes.

390 In Mills v Mills,[216] Dixon J said that if a director's power 'except for some ulterior and illegitimate object' would not have been exercised, then the exercise of the power will be void.[217] His Honour must have meant 'voidable', as is clear from his remarks in an earlier case.[218] As Mason, Deane and Dawson JJ said in Whitehouse v Carlton Hotel Pty Ltd,[219] Dixon J's use of the word 'void' in Mills v Mills was 'inadvertent'.

391 For these four reasons, the Loan Agreement, to the extent that it had any effect, was voidable and, if it were valid, would be avoided.

392 The avoidance ab initio (from the beginning) of the Loan Agreement would have the effect that no money is 'due and payable' under the Guarantee.

393 A related concern to Ms de Hollander's duties as a director is her potential duties as a trustee.

394 In Mr Caratti's written witness statement he said that Mr Pollock told him that Mr Pollock wanted to avoid stamp duty on the shares in Hocking Land Company transferred to Mr Caratti. So Mr Pollock provided Mr Caratti with a declaration of trust dated 23 May 1999 and stamped 22 June 1999 which declared that Ms de Hollander held her shares on trust for Mr Pollock's daughter and Mr Caratti in equal shares.[220]

395 Exhibit 1/216 is that declaration of trust. The declaration of trust is purportedly by Ms de Hollander. It bears her signature. It concerns shares in a company. The name of the company in the declaration of trust is Mining Plant and Rehabilitation Contractors (Qld) Pty Ltd, which was a previous name of the Hocking Land Company. The declaration concerns 100 shares in that company.[221]

396 On 23 May 1999, Hocking Land Company was not called Mining Plant and Rehabilitation Contractors (Qld) Pty Ltd. Its name was changed on 3 June 1999 to that name, but at 23 May 1999 it was still called KPC Holdings Pty Ltd.[222] However, the declaration of trust was stamped on 22 June 1999 which might explain the name used in the declaration of trust.

397 Another oddity is that the declaration that 50 shares are held on trust for each of Mr Pollock's daughter and Mr Caratti does not correspond with the issued capital of Hocking Land Company at that time, which was 97 shares.[223]

398 Irrespective of any misdescription, there might have been a real issue concerning whether this document evidenced a continuing objective intention by Ms de Hollander, which was never denied in her evidence, that she would hold all of her shares in the Hocking Land Company on trust for Mr Caratti and Mr Pollock's daughter.

399 If this were the case then there may have been real questions about whether Ms de Hollander had complied with her duties as a trustee in causing the Hocking Land Company to enter into the purported Loan Agreement.

400 A trust of half of the shares in the Hocking Land Company for Mr Caratti would also have raised serious questions concerning whether there was, or could be, a promise to transfer half of the shares to Mr Caratti as part of an oral agreement if Mr Caratti, as a beneficiary, would have been entitled to demand distribution of those shares in any event.

401 During opening submissions I raised with counsel the nature and effect of the declaration of trust by Ms de Hollander. Counsel for Netglory submitted that the document was not 'genuine' or 'real'.[224] But counsel for Netglory led no evidence, and asked no questions in reexamination of Mr Pollock or Ms de Hollander, about these matters.

402 On the other hand, nothing was pleaded by the Hocking Land Company in relation to this declaration of trust. It did not crossexamine on the document. No submissions were made on the point by either counsel in closing.

403 It is not possible to adjudicate upon this potential issue.

11. The fifth reason why Netglory's claims fail: there was no oral agreement

404 Although the first four reasons why Netglory's claim must be dismissed, and the counterclaim by the Hocking Land Company and Mr Caratti allowed, are mostly matters of law it is nevertheless necessary to make findings of fact concerning the numerous disputed issues of fact at trial.

405 The effect of my findings of fact below is that Netglory has failed to prove the alleged oral agreements. This is the fifth reason why Netglory's claim must fail.

11.1 Assessment of the credibility and reliability of the witnesses

406 The factual question concerning whether the alleged oral agreements were made requires an assessment of the credibility and reliability of most of the witnesses.

407 In the course of explaining the issues below, I set out my conclusions in relation to each witness. In summary, in relation to the three key witnesses at trial, I conclude as follows.

408 I find Mr Pollock's evidence to be entirely lacking in honesty and reliability. The only matter on which I have been prepared to place any weight is Mr Pollock's admission, against interest, in his witness statement that he only signed the originals of the Loan Agreements and Guarantee as an attesting witness around January 2011.

409 I find that it is not possible to rely upon Ms de Hollander's evidence. Ms de Hollander did not give any independent attention to the affairs of the Hocking Land Company. She was used entirely as the instrument of Mr Pollock and did not have a reliable recollection of the relevant transactions.

410 As to Mr Caratti, I did not form as unfavourable a view of his evidence as that of Mr Pollock. His evidence was confidently given and, independently of the documentary evidence, he appeared, on first assessment, to be a candid witness. But I consider that in a number of respects his evidence was plainly false in light of the documentary evidence. This has led me to take a very cautious approach to Mr Caratti's evidence overall.

411 One example of evidence I consider to be false is that Mr Caratti said that his solicitors did not provide him with a copy of the Guarantee. This evidence is so contrary to the documentary evidence that it must be rejected.

412 Another example is Mr Caratti's evidence that the first time that he saw Exhibit 1/108 was in the trial bundle. As I explain below, that document contained his handwriting on an attached PostIt note and it contained a handwritten fax number which was the fax used in Mr Caratti's home at the relevant time.

413 I have taken into account the long period of time between the date when these documents first came into existence and the trial of these matters. But Mr Caratti's evidence was given confidently and forcefully. His confidence on matters which I consider to be plainly false casts a serious doubt upon his candour and the reliability of his evidence generally. Although I do not consider that all of his evidence should be rejected, I have approached Mr Caratti's evidence with considerable caution.

11.2 Did Mr Caratti sign the Loan Agreement and the Guarantee?

11.2.1 The preparation and retention of the Loan Agreement and Guarantee

414 The Loan Agreement and Guarantee were prepared by Britten Partners Solicitors. This appears on the face of the documents. Mr Michael Britten also gave evidence. I have no hesitation in accepting the evidence of Mr Britten. His evidence impressed me as both truthful and reliable.

415 Mr Britten was admitted as a barrister and solicitor in 1984.[225] Between 1995 and 2003 he maintained a practice and settlement agency called Prestige Settlements.[226] He received regular instructions from Mr Pollock in relation to purchase settlements on behalf of companies and parties associated with Mr Pollock.[227]

416 Mr Britten said that between 1999 and 2002, Prestige Settlements undertook 'purchase' settlements (that is, settlements for a purchaser) on behalf of Netglory, which he understood to be a company associated with Mr Pollock.[228] Between 1999 and 2002 he was speaking with Mr Pollock once or twice every day in relation to purchase settlements, although he only met Mr Pollock in person on around 10 occasions during these three years.[229]

417 Mr Britten said that he prepared the Loan Agreement, the Mortgage and the Guarantee.[230] He was instructed to prepare the documents by Mr Pollock.[231] He prepared the Loan Agreement based upon a summary of what he understood Mr Pollock's instructions to have been.[232] The version of the Loan Agreement he prepared did not have the dates of execution inserted. Mr Britten did not see the document with the dates inserted.[233]

418 When the Loan Agreement and the Mortgage were completed, Mr Britten spiral bound them[234] and advised Mr Pollock that they were available for collection.[235]

419 Mr Britten says that a draft copy of the Loan Agreement was sent by fax to Mr Pollock on 21 February 2003 at 8.38am.[236] A number of amendments were subsequently made to that draft.[237] It is difficult to see how the final spiral bound version was signed by all the parties, as Mr Pollock suggests, and witnessed by Mr Pollock at a meeting of them all on 21 February 2003, the date suggested in the Guarantee.

420 Mr Britten did not recall retaining the original versions of any of the documents.[238] He did retain copies. He later discovered two printed, unsigned copies of the Netglory Loan Agreement in archives at his parents' home. [239]

421 Mr Pollock said that after Mr Caratti had signed the Loan Agreement and the Guarantee, Mr Pollock placed his copy with the Netglory development files in his office in Wattle Grove.[240] As I explain below, no reliance can be placed on any of Mr Pollock's evidence.

422 In July 2003, the solicitors for Netglory's receivers, Mallesons Stephen Jacques, contacted Mr Britten seeking information about the Guarantee, including the date of the Guarantee, a stamped copy of the Guarantee and a copy of the Loan Agreement.[241] The receivers had sent Mr Britten a copy of the Guarantee on 1 July 2003.[242]

423 Mr Britten subsequently provided a copy of the Guarantee to Birman & Ride who were Mr Caratti's solicitors.[243]

424 More than seven years later, Mr Pollock was somehow provided with the originals of the Loan Agreement and the Guarantee while he was in prison.[244] Mr Pollock said in crossexamination that his solicitor, Mr Birman, brought him the Guarantee but he could not remember the day or month and could not say that it was in January 2011.[245]

11.2.2 The absence of an attesting signature from Mr Pollock

425 There is no credible evidence that either of the originals of the Loan Agreement or the Guarantee was signed by Mr Pollock as an attesting witness to Mr Caratti's signature at any time before December 2010.

427 First, in his evidence in chief Mr Pollock said that he did not sign the Guarantee or the Loan Agreement until January 2011, after a meeting with his lawyer, Mr Birman.[246]

428 Mr Birman, his solicitor, gave evidence that in response to a question from Mr Pollock, Mr Birman told Mr Pollock that he (Mr Birman) couldn't see any reason why Mr Pollock should not sign a document as a witness even though he had been a witness a long time beforehand.[247] Mr Birman could not recall when he told Mr Pollock this, although he remembered that it was while Mr Pollock was in jail.[248]

429 In crossexamination, Mr Pollock's evidence on this point became more equivocal, eventually claiming that he could not recall signing more than one document in jail.[249]

430 On the balance of probabilities, I consider that Mr Pollock's statement, against interest, in his witness statement that he didn't sign either the Loan Agreement or Guarantee as an attesting witness until January 2011 is close to the truth, although I conclude that he signed them in December 2010.

431 Secondly, as mentioned above, the receivers had sent Mr Britten a copy of the Guarantee on 1 July 2003. That document was not signed by Mr Pollock as an attesting witness.[250]

432 Thirdly, although, as I explain below, Mr John Caratti's evidence was so heavily tainted with enmity towards Mr Caratti that it was not reliable I do, however, accept Mr John Caratti's evidence, given against the interest of Netglory who he was giving evidence to support, that

(i) Mr John Caratti saw the originals of the Loan Agreement and the Guarantee and gave them to Mr Jamie Pollock[251] (and Mr Kevin Pollock's evidence was that Jamie brought the Guarantee to him in prison);[252] and

(ii) when Mr John Caratti saw the originals of the Loan Agreement and the original of the Guarantee they did not contain the attesting signature of Mr Pollock.[253]

433 Fourthly, on 23 November 2010, Mr Jamie Pollock swore an affidavit as part of a Statutory Demand by Netglory. His affidavit annexed a copy of the Loan Agreement. There was no attesting signature to Mr Caratti's signature on that document.[254]

434 Fifthly, on 23 November 2010, a copy of the Loan Agreement and the Guarantee was provided to Mr Caratti's then solicitor, Ms Edwards, by Netglory's solicitor.[255] Mr Caratti's signature is not witnessed on those documents.

435 I find that the originals of the Loan Agreement and the Guarantee were not signed by Mr Pollock as an attesting witness to Mr Caratti's signature until some time in December 2010.

436 The date on which Mr Pollock signed those documents is more likely to be in December 2010 than in January 2011 because the copy of the Loan Agreement which was provided to Mr Gregory, the handwriting expert, in December 2010 appeared to contain Mr Pollock's signature as an attesting witness.[256]

437 I reject the closing submission by Netglory that the evidence supports a finding that Mr Pollock signed the Guarantee as an attesting witness contemporaneously with Mr Caratti's signature.[257]

438 One of the central disputes of fact at trial was whether Mr Caratti signed the Loan Agreement and Guarantee. Mr Caratti denied that he had signed either document.

439 Section 31 of the Evidence Act 1906 (WA) provides that a witness may give evidence which compares disputed handwriting with any writing which is proved to the satisfaction of the judge to be genuine.

440 An example of such an assessment occurred in Wakeford v Bishop of Lincoln.[258] In that case, a central question was whether the handwriting in a visitor's book of the Bull Inn in Peterborough was the handwriting of Mr Wakeford.

441 Lord Birkenhead, giving the advice of the Privy Council, explained that '[q]uestions depending upon handwriting are in many cases doubtful, and in the past have given, and in the future will give, cause for great anxiety in the Courts of justice'.[259] In that case, the Privy Council heard evidence from a handwriting expert. Lord Birkenhead explained that the handwriting was either done by the appellant or by a very skilful forger. On 'the evidence of their own eyes', Lord Birkenhead held that their Lordships would 'not willingly rest their judgment'. But since the only alternative was a carefully planned forgery, which was 'utterly untenable', the decision of the Consistory Court was upheld.[260]

442 The basis for their Lordships' conclusion would, in Australia, probably be expressed as an application of the approach in Briginshaw v Briginshaw.[261] This 'Briginshaw standard' is sometimes expressed as involving a different standard of proof in cases where evidence of criminal conduct is alleged. But, properly understood, there is no separate standard of proof. The question remains one of proof on the balance of probabilities, although one important factor in deciding whether the fact has been proved is that people are generally taken to be of good character and unlikely to commit crimes. The more serious the allegation against a person the more care ought to be taken before reaching a conclusion on the balance of probabilities which is adverse to that person's character.

443 As I explain below my assessment of Mr Pollock's honesty and truthfulness is so negative, and the view I formed of his character is so dim, that there is little room in this case for the operation of this principle.

444 In all the circumstances, I have found this issue to be finely balanced.

445 There are four reasons which favour a finding that the signature was made by Mr Caratti.

446 First, the conclusion that the signature was made by Mr Caratti is supported to an extent by an assessment of the handwriting.

447 Expert evidence was given from a handwriting expert, Mr Gregory. Mr Gregory microscopically compared the disputed signatures with signatures of Mr Caratti on other specimen documents. Mr Caratti identified his signature on copies of the original documents used for specimen signatures by Mr Gregory.

448 Mr Caratti was asked in cross-examination only about two of those specimen signatures (Exhibits F2 and F4 described by Mr Gregory as S2 and S4). He identified his signature on each of those.[262] I accept that those specimen signatures are genuine signatures of Mr Caratti.

449 In his written report,[263] Mr Gregory concluded that the signatures in the second original Loan Agreement (Exhibit 2B) 'exhibited close similarity to the specimen signatures, albeit with a difference of a close form of letter 'r' present on signature'.[264] However, the signatures in the first original Loan Agreement (Exhibit 2A) and the Guarantee (Exhibit 3) 'exhibited variations in design features not present in the specimen signatures'.[265]

450 In relation to the Guarantee, Mr Gregory said that 'the construction of the majority of the features in the signatures was consistent with the overall design of the specimen signatures'. He assessed that there was no evidence of tracing and no evidence that the signature was written slowly. Mr Gregory concluded that 'the signatures may have been written by the writer of the specimen signatures with accidental variation of letter design being introduced into the signature rather than an attempt by another person to simulate the signature'.[266]

451 Mr Gregory's overall determination was that a definitive conclusion could not be reached but he was 'of the qualified opinion that there is evidence to support the proposition that the writer of the specimen Allen Caratti signatures may have written the questioned Allen Caratti signatures'.[267]

452 In crossexamination, Mr Gregory was asked about his statement that 'a definitive conclusion could not be reached'. He explained that he considered it more likely than not that Mr Caratti had signed the disputed signatures.[268] He also said in crossexamination that the hallmarks of people simulating signatures were not present. He explained that in a complex signature such as Mr Caratti's which is difficult to simulate at speed these hallmarks were telltale signs of hesitation, or patching.[269]

453 Mr Gregory's evidence was, ultimately, little more than what was apparent from viewing the documents. Mr Caratti's signature is clearly 'complex'. It is also clear that it would not be easy to simulate without tracing, or writing slowly and leaving what Mr Gregory described as the telltale signs of simulation.

454 I accept that a skilful imitator, with practice, might be able to imitate the signature to the degree of accuracy which appears in the disputed signatures. I also accept that it is possible that Mr Caratti's signature could have been inserted by another person.

455 In circumstances in which Mr Pollock said (but I do not accept) that he saw Mr Caratti sign the documents, the only realistic possibilities are that the person who imitated the signature was Mr Pollock or someone acting at his direction.

456 There was no indication that Mr Pollock had any skill in imitating signatures. Indeed, when his daughter was shown signatures which Mr Pollock had signed with her name, she had no hesitation in saying that it was not her signature.[270]

457 There was no evidence that Mr Pollock had directed any person to imitate Mr Caratti's signature.

458 These matters militate in favour of Mr Caratti having signed the Loan Agreement and Guarantee.

459 Secondly, the evidence provides a powerful basis for an inference, which I draw, that Mr Caratti saw a copy of, at least, the Guarantee at a time only months after the date of the document (21 February 2003) and that he discussed it with his solicitors.

460 But no complaint or objection was ever made by Mr Caratti of Mr Pollock in relation to that document. Nor was there evidence that Mr Caratti, after seeing a copy of a Guarantee bearing his signature, made any complaint or objection to any person.

461 On 25 July 2003, Mr Paterson from Birman and Ride (Mr Caratti's solicitors) wrote to Mr Britten (Mr Pollock's solicitor). Mr Paterson confirmed that he acted for Mr Caratti. He explained that Mr Caratti was waiting for a copy of the deed of guarantee which Mr Britten had requested from the receivers of Netglory. He asked Mr Britten to provide that guarantee as soon as possible.[271]

462 On 29 July 2003, a copy of the Guarantee was faxed by Mr Britten to Birman & Ride at 11:05 am. The message was 'Following is a copy of the guarantee signed by Mr Caratti'.[272]

463 In a book entry dated the same day, 29 July 2003, Mr Birman recorded that he had a conference with Mr Caratti which lasted 8 hours. The matter was described as 'Pollock Group of companies'.[273]

464 On 7 September 2003, Mr Birman invoiced Mr Caratti for $522.63 for work done in relation to 'Netglory Guarantee'.[274] Mr Caratti paid this bill. He did not make any query why the bill concerned a Netglory Guarantee. He said that he was receiving bills from Mr Birman for $20,000 to $30,000 a month at that time.[275]

465 In summary, Mr Caratti's solicitors had requested a copy of the Guarantee. They had followed up on that request with some urgency. They had received a copy of the Guarantee. They had met with Mr Caratti. They had later billed Mr Caratti for work done in relation to the Guarantee. It was never suggested to Mr Birman that he had not provided the Guarantee to Mr Caratti.

466 I reject, as inherently incredible, the evidence of Mr Caratti that his solicitors never provided him with a copy of the Guarantee.[276]

467 It is a very significant that (i) Mr Caratti had seen the Guarantee, which refers in its terms to the Loan Agreement; (ii) that his solicitors had done work in relation to it; (iii) and that at no time in his many meetings with Mr Pollock did he ask Mr Pollock, in the words of counsel, 'Kevin what's this Netglory guarantee thing all about?'.[277]

468 Thirdly, Mr Caratti's evidence that he did not sign the Loan Agreement or the Guarantee was less than emphatic. Although he disputed signing the Loan Agreement or Guarantee, he said that he knew 'in any event' that he 'never entered into those agreements by signing or otherwise, knowing what they were' (emphasis added).[278]

469 Fourthly, by February 2003, Mr Caratti had the seal of the Hocking Land Company which was affixed to the Loan Agreement.[279] There was no evidence of a second seal of the Hocking Land Company.

470 On the other hand, the following factors militate against Mr Caratti having signed the documents.

471 First, as I explain below, no-one signed as an attesting witness to Mr Caratti's signature on the documents.

472 Mr Beere signed the Loan Agreement and the Guarantee as an attesting witness to the signatures of Ms de Hollander.[280] He had often witnessed Mr Caratti's signature.[281] There was no apparent reason why he would not have attested to Mr Caratti's signature as well as the signature of Ms de Hollander.

473 Nor is there any apparent reason why Mr Pollock, who had also previously witnessed Mr Caratti's signature, would not have attested to Mr Caratti's signature and would, as I find, have waited until many years later to do so. I do not, however, accept Mr Pollock's evidence that he was present when Mr Caratti signed any of the documents.

474 Secondly, I accept Mr Caratti's evidence that he was aware of his obligations as a director and that he 'would get into serious trouble for agreeing that [the Hocking Land Company] pay over ... $800,000 to Netglory for nothing' in circumstances which 'would have very serious implications for its solvency and ability to trade'.[282] For the reasons below, I do not accept Mr Pollock's evidence that any oral agreement in the terms which he alleged was reached with Mr Caratti. There was no apparent quid pro quo for the Hocking Land Company.

475 Thirdly, as I explain below, I reject Mr Pollock and Ms de Hollander's evidence concerning alleged oral agreements which were said to be the basis for the Loan Agreement and the Guarantee. On the evidence before the Court, there is no obvious explanation for why Mr Caratti would sign a Loan Agreement and Guarantee which was based upon a fiction.

476 The assessment of this issue is very finely balanced. A heavily influential factor is my assessment of Mr Caratti's reliability on this issue. Although I did not form anywhere near as negative an assessment of his truthfulness and reliability as I did of Mr Pollock, I do consider that in some essential respects Mr Caratti's evidence was not reliable. The events about which Mr Caratti was asked occurred many years ago. And his emphatic denials that he was ever provided a copy of the Guarantee by his solicitors were, at best, reckless.

477 On balance, the first four factors are sufficiently significant in all the circumstances for a conclusion that on the balance of probabilities that Mr Caratti signed both the Loan Agreement and the Guarantee.

478 It is not necessary to reach a positive determination in this case about why Mr Caratti signed the Loan Agreement and the Guarantee. There are a number of possibilities. I indicate some of those possibilities below merely to emphasise that this is not a case where there could be only two possibilities: either that Mr Caratti signed the documents to give effect to the alleged oral agreements, or that he did not sign.

479 One possibility is that Mr Caratti was provided with the documents in their entirety and then signed the documents without reading them.

480 I consider that this possibility is remote. Mr Caratti said, and I accept, that he signed numerous documents and often did not read the whole document.[283] In many cases, however, he would have been advised by his lawyers about the document he was signing. Mr Caratti was an experienced business man. He had acquired significant wealth.[284] Mr Caratti's lawyers were charging him $20,000 to $30,000 a month for work that they performed for him.

481 Another possibility is that Mr Caratti was somehow deceived by Mr Pollock into signing the documents. But there was insufficient evidence before me to draw this conclusion on the balance of probabilities.

482 Another possibility is that the Loan Agreement and Guarantee might have been sham transactions but related to some other agreement, different from the one which Mr Pollock asserted.

483 For instance, Ms de Hollander gave evidence that a different agreement had been reached. She suggested that Mr Caratti was to pay $800,000 to the Hocking Land Company.[285] She then said that $800,000 would be paid from Hocking Land Company to Netglory.[286] Although I do not accept Ms de Hollander's evidence concerning any detail of the alleged transaction, it does illustrate the possibility that some other, possibly entirely different, agreement might have been reached.

484 There may be further possibilities still. Ultimately, it is unnecessary to speculate on them. For the purposes of these reasons it is sufficient to express below the negative conclusion that whatever the reason why Mr Caratti signed the Loan Agreement and Guarantee, the reason was not because those documents were intended to give effect to either of the oral agreements pleaded by Netglory.

11.3 Findings of fact concerning the alleged oral agreements

485 I find that Netglory has failed to prove, on the balance of probabilities, the terms of any antecedent agreement. As I explain below, I do not accept any of the different versions of the alleged antecedent agreements in Mr Pollock's or Ms de Hollander's evidence. My reasons for doing so are explained by the following sections in these reasons:

11.3.1 Mr Pollock was not a truthful or a reliable witness.

11.3.2 Ms de Hollander did not give independent consideration to the affairs of the Hocking Land Company and was not a reliable witness.

11.3.3 Mr Pollock's evidence concerning the basis for the alleged oral agreements was inconsistent and contradictory.

11.3.4 The alleged oral agreements are inherently incredible.

11.3.5 The documentary support of the alleged oral agreements is, at best, equivocal.

11.3.6 Mr Caratti's account of the joint venture is far more plausible.

11.3.1 Mr Pollock was not a truthful or reliable witness

486 I reject Mr Pollock's evidence concerning an antecedent agreement. I do so for seven reasons, each of which, by itself, would have caused me to reject his evidence.

487 First, was my assessment of his demeanour. Mr Pollock impressed throughout as a completely unbelievable witness who was thoroughly lacking in any credibility. The entire flavour of Mr Pollock's approach to answering questions was evasive and manipulative.

488 Secondly, Mr Pollock's criminal record is a matter which can be taken into account in the assessment of his credibility.[287] He has been convicted of serious offences of dishonesty.

489 Mr Pollock was also evasive in his answers when the details of his offences were raised with him in crossexamination.

490 Mr Pollock professed little knowledge of the details of his offences. He was taken, without objection, to a passage from a decision of the Court of Appeal which summarised his offences. He was then asked whether he 'had produced false invoices to show that you had purchased Komatsu earthmoving material and that, in fact, it was found that the three Komatsu machines had never made their way to Australia?' Mr Pollock replied that he didn't create any invoices.[288] Later, once confronted with the sentencing remarks of the trial judge, Mr Pollock accepted that he was convicted on the basis that the transactions the subject of the invoices were organised with his knowledge and approval.[289]

491 Thirdly, there were other aspects of Mr Pollock's evidence which further illustrated his manipulative character.

492 One example is that Mr Pollock said he signed documents in his daughter's name. He said that he signed 'Romero' or 'Healey' for his daughter because 'at one stage she remarried and changed her name'.[290] By itself, it is not a criminal offence to sign a document with the signature of another.[291] There can also be circumstances in which it is wholly, and morally, appropriate to sign a document with the signature of another as, for instance, an amanuensis. This was not the case with Mr Pollock. Mr Pollock's use of his daughter's signature was, at best, morally questionable and, at worst, fraudulent.

493 Mr Pollock signed a document dated 7 June 2002 with his daughter's signature, using a different surname from his daughter's then current surname.[292] The signature he used was 'Carina Lee Anne Romero'.[293] In another document earlier that year, dated 7 January 2002, Mr Pollock signed 'Carina Healey'.[294] But Ms Healey said that she stopped using the name Carina Romero in 'late 1999. Possibly early 2000'.[295] Ms Healey said she was not using the name Romero on 7 June 2002. At that time she was married to Kevin Healey.[296]

494 When Mr Pollock was asked if he used the names 'Romero' and 'Healey' interchangeably to create the impression of two different people, Mr Pollock said he 'would doubt it, not that I remember'.[297] He did not give any other explanation or reason why this inference should not be adopted.

495 I accept Mr Caratti's evidence that Mr Pollock told him that Mr Pollock would use both of Carina's names to secure more funding from financiers because they would not be able to link the two names as being one and the same person.[298]

496 Fourthly, Mr Pollock's evidence concerning the manner in which he signed the documents in jail as an attesting witness invites a possible inference, which I draw, of deliberate deception. I accept that he signed those documents after being told by his solicitor, Mr Birman, that there was no reason why he could not do so. But Mr Birman did not give evidence that he told Mr Pollock to insert an address and an occupation under Mr Pollock's name which were, at the time of signing, false.

497 I do not accept Mr Pollock's evidence that he inserted an incorrect address and occupation because that was his occupation and his address seven years earlier at the time he said he witnessed Mr Caratti's signature.

498 I consider that Mr Pollock deliberately inserted his address and occupation from 2003 to attempt to create the impression that he had signed the documents at that time. Indeed, despite having acknowledged in his written witness statement that he signed the documents years later while he was in jail, Mr Pollock asserted in cross-examination that he had signed those documents in 2003. This suggestion was even adopted by counsel in closing written submissions.

499 Fifthly, Mr Pollock's evidence was constantly shifting in important respects.

500 One example is that his witness statement initially read as follows:

After [Mr Caratti] had signed the documents I placed them with the Netglory development files in my office at ... Wattle Grove.

501 The two originals of the Loan Agreement and the original of the Guarantee which were produced as exhibits were both discovered in the affidavit of discovery sworn by Mr Pollock's son for Netglory on 29 March 2011.[299]

502 In examination in chief Mr Pollock altered this paragraph from his witness statement to say that he placed only his copy of the documents in his office. The insinuation was that Mr Caratti was given the other copy.

503 A second example of a significant alteration in his evidence was his shifting explanations of the terms of his alleged oral agreement (allegedly on behalf of Ms de Hollander) with Mr Caratti.

504 In his evidence in chief, Mr Pollock said Mr Caratti told him 'he couldn't pay out the 800,000 from his other finance sources'.[300] He said that the proposed agreement was that Hocking would pay out the $800,000 from the profits of subdivisional lots.[301] This was consistent with his pleaded case, in reply. Of course, it was inconsistent with the written terms of the Loan Agreement which required 'repayment' by 31 December 2004. So Mr Pollock's case was that the written Loan Agreement had been orally varied the following month.

505 But when Mr Pollock was asked whether the payment of the $800,000 was conditional on profits being made, the terms of the alleged oral agreement changed again. Mr Pollock said that if there were no profits on Lots 81, 82 or 83, the payment would come out of 'profits of the other lots'.[302]

506 A third example of Mr Pollock's shifting evidence is that in evidence in chief Mr Pollock said that he caused various companies to commence legal proceedings and caused Netglory's solicitors to issue a demand to Mr Caratti under the Guarantee.[303] Mr Pollock accepted that he was effectively running the case for Netglory.[304] But, in crossexamination, Mr Pollock denied he was or is in control of Netglory[305] or that he caused Netglory to enter into the proceedings.[306] Mr Pollock said that his phrase 'I caused Netglory's lawyers' contained in his evidence in chief was just a 'figure of speech'.[307]

507 A fourth example of Mr Pollock's shifting evidence is that in his evidence in chief Mr Pollock said that he did not sign the Guarantee or the Loan Agreement until January 2011, after a meeting with his lawyer, Mr Birman.[308]

508 As I have explained, Mr Birman gave evidence that he told Mr Pollock that he (Mr Birman) couldn't see any reason why Mr Pollock should not sign a document as a witness even if he had been a witness a long time beforehand.

509 In crossexamination, Mr Pollock initially was equivocal about whether he signed one document in prison as an attesting witness or more. He said[309]

I remember there was one that I did at the prison which was the one we had in the writ, and I don't know about the other one. It may have been signed at the time, I just don't know. I only remember signing one, but I can't be sure is the true answer.

510 His evidence in crossexamination then became more certain. He said that he would remember if he had signed more than one in jail, saying 'if I [signed] more [than one] I would have remembered it, and I have no problems in saying it. I just don't remember'.[310]

511 A fifth example of Mr Pollock's shifting evidence concerned his evidence about the terms of the alleged oral agreements. I deal with this point separately below.

512 A sixth example of Mr Pollock's shifting evidence is that Mr Pollock said in crossexamination that he could not recall the number of loan agreements that were initially signed.[311] Later in cross-examination, he said that there were 'definitely three to five copies' which were signed.[312]

513 Sixthly, I find that Mr Pollock's evidence concerning Ms de Hollander was intentionally deceptive and intended to mislead the Court. I discuss Ms de Hollander's evidence below and explain how it is patently inconsistent with Mr Pollock's evidence.

514 Mr Pollock denied that his intimate relationship with Ms de Hollander lasted for 10 years.[313] That was a lie. He initially and tentatively suggested dates from 1993 to 1997 for the relationship, which would have concluded the relationship well before the Loan Agreement and Guarantee. When pressed, he claimed to be 'forgetting what year we're in' and professed not to be sure.[314]

515 Mr Pollock denied that Ms de Hollander was completely reliant on him during their relationship.[315] That was a lie.

516 Mr Pollock denied that during their relationship he made every financial decision and would get his lawyers to draft documents for her to sign.[316] That was a lie.

517 Mr Pollock said that he believed that Ms de Hollander wouldn't sign anything unless she understood what it was, what it was about.[317] That was a lie.

518 Seventhly, independently of Mr Pollock's truthfulness, there are serious questions about the reliability of his recollection of events involving an alleged oral agreement made a decade ago. It is a well known principle, based on human experience, that 'inherent doubts ... must attend oral recollections of events occurring many years earlier'.[318] A commonly cited passage[319] from McLelland CJ in Eq in Watson v Foxman,[320] explains this point:

[H]uman memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.

...

Each element of the cause of action must be proved to the reasonable satisfaction of the court, which means that the court "must feel an actual persuasion of its occurrence or existence". Such satisfaction is "not ... attained or established independently of the nature and consequence of the fact or facts to be proved" including the "seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding".[321]

Considerations of the above kinds can pose serious difficulties of proof for a party relying upon spoken words as the foundation of a cause of action ... in the absence of some reliable contemporaneous record or other satisfactory corroboration.

519 In contrast with Mr Pollock's professed certainty of his recollection of matters such as Mr Caratti having signed the Loan Agreement and Guarantee,[322] Mr Pollock's evidence on other aspects of the signing of loan documents was, at best, vague. This contrast casts serious doubt upon the reliability of Mr Pollock's evidence especially when combined with the period of more than a decade between the alleged oral agreements and this trial.

520 One example of this contrast is that Mr Pollock said that there was a series of documents to sign over a few days to settle a number of properties, but he could not remember how many.[323] He said there were a 'series of people' present at the signing, but he could not remember who.[324] Mr Pollock initially said that Ms de Hollander was at the meeting with Mr Allen Caratti.[325] Later Mr Pollock said that Ms de Hollander may have signed in a separate room without coming into contact with Mr Caratti.[326]

521 For these seven reasons I firmly conclude that there is no aspect of Mr Pollock's evidence that I could say with any confidence was truthfully given or was reliable. Even apart from all the other matters below, I am not prepared to accept any of his oral evidence. Where there is documentary corroboration of his evidence, I remain unprepared to accept Mr Pollock's evidence. The documents must speak for themselves. Any inferences must be drawn directly from those documents rather than from Mr Pollock's evidence which cannot be relied upon in any respect as evidence of truth.

11.3.2 Ms de Hollander did not give independent consideration to the affairs of the Hocking Land Company and was not a reliable witness

522 Ms de Hollander was subjected to vigorous crossexamination. I was left with no doubt that her evidence was not reliable in any respect. A primary reason for this conclusion was my assessment that, as Ms de Hollander had said at her sentencing hearing, she was entirely under the influence of Mr Pollock at all relevant times.

523 It is noteworthy that although Mr Pollock asserted that he reached the oral agreements with Mr Caratti as agent for Ms de Hollander, Ms de Hollander's evidence concerning the alleged oral agreements was materially different from that of Mr Pollock. Although Ms de Hollander was the sole director of Netglory at relevant times until 15 November 2010 (when Mr Jamie Pollock commenced as the director[327]) Mr Pollock controlled her decisions during this period.

524 A number of reasons demonstrate that Ms de Hollander was accustomed to act at the direction of Mr Pollock without giving any independent consideration of her own to the business of the Hocking Land Company.

525 First, Ms de Hollander's personal relationship with Mr Pollock emphasises that she was under the influence and control of Mr Pollock.

526 She met him in 1992 or 1993 when she was 27 years old.[328] She fell immediately in love with him and became infatuated.[329] She agreed that to a certain degree, she never questioned him because she was in love with him,[330] and relied upon him to a certain degree as a father figure and a lover.[331]

527 In all of Mr Caratti's dealings with Ms de Hollander, he never presented any documents to her and never dealt with her directly in relation to any negotiations.[332]

528 Debts that were said to be owed to Ms de Hollander were described by Mr Pollock as owed to him.[333]

529 Mr Caratti provided documents to Mr Pollock and said that he needed Ms de Hollander to sign them.[334] Ms de Hollander accepted that 'to a certain degree', when Mr Pollock came to Ms de Hollander with documents and said 'just sign here', she did.[335] I consider that this 'degree' would have been universal.

530 When Mr Pollock asked Ms de Hollander for cash, she would give it to him, because she believed it was going back into the business.[336]

531 Ms de Hollander also accepted that for more than 10 years, as Mr Pollock's lover, she was 'completely reliant on him emotionally for directions in business'.[337]

532 Ms de Hollander was also unaware of claims put on her behalf for a $167,000 debt alleged to be owed to her by the Hocking Land Company.[338] She said that the Pollocks 'dealt with a lot of [her] issues'[339] while she was incarcerated, until March 2013. The Pollocks had put the claim forward on her behalf.[340]

533 When asked if she was 'totally under [Mr Pollock's] influence' she replied 'to a degree yes, to a degree no'.[341] However, based on the whole tenor of her evidence, I consider that there are no relevant aspects in which it could be said that she was not acting under Mr Pollock's influence. In relation to the Hocking Land Company she made no independent decisions nor gave any independent consideration to company decisions.

534 Secondly, Ms de Hollander's evidence about the Loan Agreement was contradictory, and unclear. It was apparent that she had not given independent consideration to any of the details of the dealings in the Hocking Land Company even after the litigation had commenced. She would not have done so at the time.

535 One example of the contradictions between her evidence and Netglory's pleaded case are that she said that the money was to be repaid when the blocks at 21 East Road were subdivided and sold.[342] The pleaded case, in reply, was that there was a subsequent oral variation to the Loan Agreement which permitted 'repayment' of the 'loan' from the proceeds of sale of the subdivided lots created from Lots 81, 82 and 83 Nicholas Road immediately after the repayment by the Hocking joint venture of its external financiers.

536 A second example of the contradictions between Ms de Hollander's evidence and Netglory's pleaded case was that she said that Mr Caratti agreed to pay $800,000 to the Hocking Land Company.[343] Netglory's pleaded case was that the money would be paid by the Hocking Land Company.

537 A third example of confusion in Ms de Hollander's evidence is that in par 60 of her witness statement Ms de Hollander initially said that it was her 'firm understanding' that the $800,000 would be returned to Hocking Land Company at the end of the development.[344] In her oral evidence she altered this to say that the $800,000 would be returned to Netglory.[345] But she could not explain why that money would be returned to Netglory when it had never been paid out by Netglory.

538 Independently of the lack of independent consideration that Ms de Hollander gave to the affairs of the Hocking Land Company, I do not accept that Ms de Hollander's evidence was reliable. Even if she had been aware of the detail of any oral agreement which Mr Pollock said that he entered on her behalf in 2002 and 2003, I do not accept that she would recall it in any detail.

539 On 18 July 2011, Ms de Hollander spent time in prison for two counts of by deception, dishonestly obtaining a financial advantage from the Commonwealth entity, and defrauding the Commonwealth.[346] She said, and I accept, that being in prison was not 'a good head space' for her.[347] Perhaps understandably, this was a cause of the numerous inconsistencies and contradictions in her evidence.

11.3.3 Mr Pollock's evidence concerning the basis for the alleged oral agreements was inconsistent and contradictory

540 Apart from the complete lack of credibility of Mr Pollock's evidence generally, his evidence concerning the alleged oral agreements was also shifting and inconsistent.

541 It will be recalled that Netglory's pleaded case relied upon a July 2002 oral agreement between Ms de Hollander (by her agent Mr Pollock) and Mr Caratti which included terms that the net tangible asset value of the Hocking Land Company (said to be $800,000) would be paid out to Ms de Hollander to enable the Hocking joint-venture to be funded entirely from external funding.

542 In his witness statement, Mr Pollock gave detailed evidence about this alleged oral agreement. He said that he had told Mr Caratti that he wanted the equity in Lots 81, 82 and 83 'paid out before Hocking was used as the joint venture vehicle'.[348] He said that he considered that the lots were worth $3.3 million with a net equity value of $1.1 million once the debt was deducted. He said that the debt was $800,000 (it was actually $821,000 at this time in June 2002) [349] owed to the RAC for lot 81 and $1.4 million owed to the Abbonizzios for the purchase of Lots 82 and 83.

543 Mr Pollock said that the $1.1 million figure 'did not take into account the $537,333 in direct costs lent to Hocking'.[350] Plainly, if it had taken that debt into account then, even on Mr Pollock's own calculations, and even if his evidence were accepted that he believed that each of Lots 81, 82 and 83 were valued at $1.1 million, his starting negotiating point for his assessed net equity value of the Hocking Land Company could only reasonably have been around $560,000, or $537,000 if the correct amount of the RAC debt on Lot 81 were used.

544 Mr Pollock said that, after negotiations with Mr Caratti, they reached agreement on a figure of $800,000 rather than the $1.1 million that Mr Pollock had claimed to be the net equity value.[351]

545 Mr Pollock again emphasised in his witness statement that the net tangible asset value which was agreed at $800,000 did not take into account the $537,333 in expenses incurred by the Hocking Land Company.[352]

546 Despite the repeated detail in his witness statement that the $800,000 alleged negotiated figure did not include the $537,333, in cross-examination Mr Pollock changed his case. He said that 'I wanted 1.1, which would have negated the loan in the same amount of money, but we agreed it down to 800 ... so de Hollander loan funds applicable to those three lots were zero on that payment'.[353] He said that 'the 800 includes the extinguishment of the loan funds and about a 300 premium for the land'.[354]

547 On what was possibly yet another version of the basis for his negotiations with Mr Caratti, Mr Pollock postulated that his negotiations for $800,000 had nothing to do with the net equity value of Hocking Land Company at all. Mr Pollock said that the $800,000 'was a loan made up of a loan to de Hollander and an agreed figure between [Mr] Caratti and myself for the right to not take those lots across to Netglory'.[355]

548 This suggestion appears to be that Mr Pollock would procure the director of the Hocking Land Company, Ms de Hollander, to transfer, without consideration, the Hocking Land Company's registered title to Lot 81 and to direct, at settlement, the transfer of Lots 82 and 83 to Netglory instead of the Hocking Land Company. In other words, the Hocking Land Company was to pay $800,000 for the right that Ms de Hollander would not breach basic duties which she owed to the Hocking Land Company.

549 An obvious inconsistency with Mr Pollock's revised case that the alleged negotiated basis for the $800,000 included negating all of Ms de Hollander's loans is that Ms de Hollander is still pursuing a claim for the revised amount of $167,000.[356] Although Ms de Hollander was unaware of that claim she said, and I accept, that it was made on her behalf by Mr Pollock and his son, Jamie.[357]

550 Perhaps in an attempt to justify his shifting evidence on this important point, Mr Pollock said that he had 'a little bit' of an understanding of the meaning of net tangible asset value.[358] He said that these were 'accountant terms' and that he was 'not big on that'.[359]

551 This evidence, if accepted, would emphasise that it is inherently unlikely that Mr Pollock would propose, negotiate and agree, on behalf of Ms de Hollander, to terms which included a payment based on an alleged net tangible asset value of the Hocking Land Company when he had little appreciation of the meaning of a net tangible asset value.

552 But, I do not accept Mr Pollock's evidence in any regard and consequently I do not accept this evidence. Although Mr Pollock was a self-made man, I accept Mr Caratti's evidence that Mr Pollock was, in business, 'more than capable ... even though he was selftaught, he could read any document or any agreement better than most lawyers than I've seen'.[360]

11.3.4 The alleged oral agreements are inherently incredible

553 There are eleven reasons why the alleged oral agreements are inherently incredible.

554 First, if the alleged oral agreements had genuinely taken place, and if the Loan Agreement and Guarantee gave effect to a genuine debt then why was that debt not recorded in Netglory's books of account?

555 Mr Vibert is a partner in a chartered accounting firm. He is a chartered accountant and company auditor.[361] He has worked in the accounting profession for more than 33 years.[362] He produced a report in which he considered, amongst other things, the accounts of Netglory.

556 Although there was some crossexamination of Mr Vibert concerning matters such as his discussion of a draft final report with Mr Caratti and his failure to bring working notes to Court, I accept that Mr Vibert was an independent expert and that his evidence was reliable.

557 Mr Vibert examined the accounts of Netglory for 30 June 2003 and 30 June 2004. There is no evidence in those accounts of the alleged debt to Netglory.[363]

558 Mr Vibert also examined the Report as to Affairs which was provided by Ms de Hollander to the voluntary administrators who were appointed to Netglory on 13 October 2003. There is no mention in that report of the alleged debt owed from the Hocking Land Company to Netglory.[364]

559 In contrast, Ms de Hollander, assisted by the Pollocks, lodged a proof of debt for $167,500 in the administration of the Hocking Land Company, which occurred on 23 February 2011.[365]

560 Secondly, why was the debt never demanded by Netglory's voluntary administrators between 2003 and 2011?[366]

561 Netglory was placed in voluntary administration on 7 April 2003.[367] This was very shortly after the 21 February 2003 date of the Loan Agreement and Guarantee and after a default on interest would have occurred according to the literal terms of the Loan Agreement.

562 As I have explained, Mallesons Stephen Jacques, the solicitors for the receivers and managers, investigated the Guarantee and Loan Agreement.

563 I accept the evidence of Mr Caratti that[368]

(1) there was never any discussion between himself and Mr Pollock after the receivers were in place that a loan may be called up if interest wasn't paid by the receivers;

(2) Mr Caratti never received any notice or demand from the receivers of Netglory to him as a director of the Hocking Land Company seeking payment from the Hocking Land Company;

(3) Mr Caratti never received any notice or demand from the receivers of Netglory in relation to the Guarantee because interest under the Loan Agreement had not been paid.

564 Thirdly, if there had been any oral agreements as alleged why was there no evidence of Mr Pollock or Ms de Hollander making any request or complaint of the administrators of Netglory for failure to enforce the alleged loan?[369]

565 Fourthly, why is there no written record between 2003 and 2010 of any demand being made by Mr Pollock or Ms de Hollander from the Hocking Land Company or Mr Caratti?

566 The alleged loan was due to be repaid on 31 December 2004 according to the written Loan Agreement or, according to the alleged oral variation, from the proceeds of sale of Lots 81, 82 and 83 Nicholas Road immediately after the repayment of financiers.

567 But the development of Lots 81, 82 and 83 concluded 18 months after settlement in December 2002.[370] Yet, until 2010 there was no written demand by Mr Pollock, Ms de Hollander or the administrators of Netglory for any repayment of money by the Hocking Land Company or Mr Caratti.

568 I accept that Mr Caratti and Mr Pollock would regularly meet from mid-2001 until Mr Pollock's incarceration in 2010.[371] I also accept that Mr Caratti would, on occasion, provide Mr Pollock with information when Mr Pollock requested it.[372]

569 I accept Mr Caratti's evidence that prior to 2010 Mr Pollock never demanded, either orally or in writing, any repayment from Mr Caratti of any money alleged to be owed to Netglory.[373]

570 Fifthly, why was no record of the debt ever recorded in the books of account for the Hocking Land Company?

571 Mr Vibert examined the financial statements of the Hocking Land Company between 2003 and 2009, as well as the trial balance of the Hocking Land Company in 2003.[374] He found no evidence of the claimed liability ever being recorded in any of Hocking Land Company's accounts.[375]

572 I do not accept that, if the liability genuinely existed, Mr Caratti, who instructed the preparation of the accounts for the Hocking Land Company in 2005, would have omitted information concerning that liability from the 30 June 2003 accounts of the company, including the trial balance of the Hocking Land Company, to which Mr Vibert referred.

573 The accounts prepared for 30 June 2003, which was less than a year after the alleged July 2002 oral agreement and only months after the Loan Agreement, reflected the $537,333 debt to Ms de Hollander that Mr Pollock claimed (in one of the versions of the alleged July 2002 oral agreement) had been negated by the agreement. Information for those accounts was provided by Mr Caratti to Mr Metcalf (Mr Pollock's accountant).

574 I have taken into account the reversals which Mr Caratti made in the accounts of the Hocking Land Company. But, for the reasons explained below, I do not make any finding that any of the reversals was illegitimate.

575 Evidence was given from Mr Metcalf who is an accountant who has worked for Mr Pollock since 1976.[376]

576 Mr Metcalf's firm started preparing the accounts for the Hocking Land Company in about April 2004.[377] The 2003 accounts for the Hocking Land Company were only prepared after April 2005, on Mr Caratti's instructions after he received a letter from the Australian Taxation Office.[378]

577 Mr Pollock never spoke to Mr Metcalf about the accounts of the Hocking Land Company from 2004 until 2007.[379] Mr Metcalf did not provide any financial accounts or records to Mr Pollock or any of Mr Pollock's companies from 2004 until June 2007.[380]

578 Mr Metcalf supervised Marilyn Price who prepared a general ledger for the Hocking Land Company for 2003.[381] Ms Price was provided with information by Mr Caratti's partner (Ms Bazzo), Mr Caratti, and other persons.[382]

579 Mr Caratti gave instructions in 2003 to reverse some of the entries in relation to Ms de Hollander's loan.[383] Those reversals reduced the value of the loan from Ms de Hollander to the Hocking Land Company from $537,333 to the amount of $167,500.[384]

580 The amount of $167,500 was the initial deposit of $130,000 for lot 81, Nicholas Road and the stamp duty of $37,500.[385]

581 The reversals are entries reducing the running balance of Ms de Hollander's loan for reasons including repayments through Greenteak and Soiland ($100,000), return of Monte block deposits ($130,000), and 'reverse interest component $239,833'. There is also an increase in the debt of $100,000 for 'additional deposits' paid by Ms de Hollander.

582 Mr Metcalf gave some evidence which cast some doubt upon the legitimacy of these reversals. But his evidence on this point, although raising some questions about the basis of the reversals, was not sufficiently convincing for any finding of fact that any entry was illegitimate.

583 Mr Metcalf said that he did not post the reversals.[386] They were posted by Ms Price who did all the work.[387] Ms Price was not called as a witness.

584 Mr Metcalf also said that he hadn't checked whether Soiland had received the repayment.[388]

585 Mr Metcalf's evidence was that the $239,833 had initially been posted as a debt due to Ms de Hollander based on a note provided to him and Ms Price.[389] I refer to that note in more detail below at [626] [633].

586 Mr Metcalf confirmed that the amount of the debt corresponded with the amount of interest in the RAC loan account statement dated 25 June 2002 for the loan in relation to Lot 81 Nicholas Road.[390] Of the $239,833 only $162,000 had been paid to the RAC. The rest of the interest had been capitalised by the RAC.[391]

587 As I explain below at [654] [657], Mr Caratti's evidence is consistent with him reversing the interest amount of $239,833 because of a conversation which he says that he had with Mr Pollock in which they agreed that no interest would be accumulated in the loan account.[392]

588 The claim that is being currently pursued by the Pollocks on behalf of Ms de Hollander (although she has no knowledge of her claim)[393] is not for $237,833 but for the amount, after the reversal, of $167,000.[394]

589 Although there are questions which arise concerning the extent of some of these reversals I do not make any finding that any of the reversals was illegitimate.

590 Sixthly, if the 2002 oral agreement had been reached then why were vital terms of that alleged oral agreement not agreed, or recalled, by Mr Pollock? Mr Pollock said that he 'didn't remember' whether he and Mr Caratti discussed how profits would be calculated.[395]

591 Seventhly, what sense is there in the alleged purpose of the proposed payment to Ms de Hollander of the alleged $800,000 net tangible asset value of the Hocking Land Company to enable the Hocking jointventure to be funded entirely from external funding?

592 External funding would be made considerably more difficult by the reduction of the Hocking Land Company's net assets by $800,000. It would not be easier. Mr Pollock also repeatedly denied that formal documentation would make external financing more difficult, in direct contradiction with his earlier evidence.[396]

593 So what was the alleged sense for wanting to pay out the net equity in order solely to fund the joint venture from external finance? A debt to Ms de Hollander remained on the books of the Hocking Land Company. Through the Pollocks, Ms de Hollander is pursuing a claim for the revised amount of $167,000,[397] although she has no knowledge of her claim.[398] This also contradicts the alleged purpose.

594 Eighthly, the basis upon which Mr Pollock says that he suggested a figure of $1.1 million to Mr Caratti makes no sense. As I have explained above, one reason why it makes no sense is the exclusion of $537,333 of debt (which was a liability of the Hocking Land Company) from a net equity calculation.

595 On Mr Pollock's revised version of the oral agreement, if the $537,333 is deducted, and if the correct figure for the RAC debt on lot 81 were used, then Mr Pollock's alleged negotiations with Mr Caratti should have begun around $524,000, not at $1.1 million.

596 Also problematic is the lack of any basis upon which any reasonable person could conclude in June 2002 that the value of Lots 81, 82 and 83 were all $1.1 million. Mr Caratti's assessment of their value at that time was $750,000.

597 Mr Pollock said that he had reached the view that the three blocks were worth $3.3 million because he had had an offer for lot 81 from a company called DTZ for $1.1 million.[399] He multiplied that by three for the three lots to obtain a value of $3.3 million.

598 The offer that Mr Pollock received for Lot 81 was from a company called DTZ Australia. The offer was to purchase jointly Lot 81 together with a nearby property, Lot 21 East Road. The two properties had the attraction of proximity to a purchaser.[400] The price offered for Lot 81 as part of that joint purchase was $1.05 million.[401] The letter of offer is dated 11 April 2002.

599 As Mr Pollock knew, on 23 April 2002[402] the Abbonizios agreed to fresh contracts to sell Lots 82 and 83 to the Hocking Land Company for a combined total of $1,399,256[403] An earlier document recorded the sale prices of those lots as, respectively, $658,000[404] and $416,000.[405]

600 On what reasonable basis could any person, knowing these facts, suggest that (i) Lots 81, 82 and 83 had the same value; and (ii) that the value of each of them was $1.1 million?

601 Despite the obvious difficulty in any justification for multiplying by three the alleged $1.1 million value of Lot 81, Mr Pollock was not crossexamined on this matter and I have not taken it into account in my assessment of his credibility or given it any significant weight in the assessment of the inherent incredibility of the alleged oral agreements. It suffices to say that it is extremely unlikely that Mr Caratti would have agreed with an assessment that the three properties were all worth $1.1 million.

602 Ninthly, Mr Vibert gave evidence that at no time did the Hocking Land Company have any net tangible assets.

603 In one respect, this evidence from Mr Vibert has little weight. That respect is that the evidence was heavily dependent upon the valuation from Mr Murphy, and, as I explain below, Mr Murphy's valuation cannot be given any weight at all.

604 Nevertheless, Mr Vibert's exercise remains useful.

605 Although there is no reliable expert evidence of the valuation of the Lots 81, 82 and 83 Nicholas Road, and although I do not accept Mr Pollock's evidence in any respect, there is documentary evidence of an offer which Mr Pollock received from DTZ Australia in April 2002.

606 Even if the $1.05 million were rounded up to $1.1 million, the following matters are relevant to any assessment of the net equity value of the Hocking Land Company:

(1) As explained above, the DTZ offer was to purchase jointly Lot 81 for $1.05m together with lot 21 East Rd. The two properties had the enhanced attraction of proximity to a purchaser.

(2) the Abbonizios' contracts of sale in April 2002 for Lots 82 and 83 were significantly less than $1.1m each. The combined price accepted by the Abbonizios for both lots was $1,399,256.[406] Mr Caratti's evidence was that he believed that Lots 81 to 83 were worth $750,000 each.

Liabilities (likely to be estimated as at least $2,758,560)

(3) The RAC loan account for the debt in relation to lot 81 in June/July 2002 was 821,227.[407]

(4) The Abbonizios were owed $1.4 million by the Hocking Land Company.

(5) Ms de Hollander/Monte was alleged to be owed $537,333, although it appears $77,833 of this amount represented interest which the RAC had capitalised.

(6) In addition to the amounts in (3), (4) and (5) ($2,758,560), Mr Metcalf said that Mr Jamie Pollock had provided him with documents showing omissions of liabilities from the Hocking Land Company accounts including an alleged June 2002 liability of $50,000.[408] I do not find that Mr Pollock knew of this precise liability in June 2002, or that it existed, but in circumstances in which Mr Pollock had controlled the sole director of the Hocking Land Company, he would have been aware of the possibility of further company liabilities such as this.

608 A reasonable objective assessment of the net equity value of the Hocking Land Company would likely conclude that this value was negligible.

609 Counsel for Netglory submitted that the relevant question to ask was not what was the company's net equity objectively assessed but, instead, what Mr Pollock himself believed.

610 I reject this submission. The objective value of the net equity of the Hocking Land Company is a relevant matter to consider in assessing the credibility of the alleged oral agreements. Mr Caratti was, and is, a very wealthy and astute businessman. At the time of the alleged oral agreements he had four accountants who advised him. By 2003 he was paying $20,000 to $30,000 a month in legal fees. The notion that he might agree to pay out $800,000 from the net equity of a company in which he was to be a shareholder and director and which had little or no net equity strains credulity.

611 Tenthly, the alleged July 2002 oral agreement was that the net tangible asset value of the Hocking Land Company would be paid to Ms de Hollander. Somehow, by early 2003, Ms de Hollander and Mr Caratti agreed that this would be paid to Netglory as Ms de Hollander's 'nominee'. No explanation was given for why Netglory was allegedly substituted as the payee.

612 Even more nonsensical, is Ms de Hollander's alleged oral agreement to guarantee the debt of the Hocking Land Company. If that debt were due to her then why would she guarantee a debt to herself? And why would she agree to substitute Netglory as the payee, a company in which she was the sole shareholder and director, and then provide a guarantee of the payment of that debt to her company?

613 Eleventhly, I accept Mr Caratti's evidence that it would have been irrational for him to enter into a joint venture with Mr Pollock in relation only to Lots 81, 82 and 83 Nicholas Road.

614 Different joint ventures for development within the Hocking area were feasible. Indeed, Mr Pollock had told Mr Caratti that he (Mr Pollock) was involved in a joint venture with another man in relation to Lot 21 East Road which was to the south of Lots 81, 82, and 83 Nicholas Road.[409] The 21 East Road development was being undertaken by Netglory.[410]

615 But Mr Caratti explained that although stage 1 of the Hocking land development started at Lots 81, 82 and 83, those lots could not be developed without purchasing Lot 53 which had a turkey farm which had a 400metre odour buffer. Further, without purchasing Lot 15 of the Monte land there would be no sewer outlet. As Mr Caratti explained of those lots, and I accept, 'you had to buy it as a whole otherwise you couldn't develop any of it'.[411]

616 The effect of these eleven reasons is that the alleged 2002 July oral agreement and the alleged 2003 oral agreement are inherently incredible.

11.3.5 The documentary support for the alleged oral agreements is, at best, equivocal

617 As I have explained, I formed such a poor view about Mr Pollock's honesty and reliability that even where his evidence is consistent with the documentary evidence I am not prepared to accept it.

618 I am not prepared to accept that any oral agreement was reached unless the documentary evidence can speak for itself and establish the alleged oral agreements without any support from Mr Pollock and in spite of all the matters above which make the alleged oral agreements inherently incredible.

619 Below, I consider the documentary evidence relied upon by Netglory. That evidence was relied upon in five respects.

620 First, one aspect of the documentary evidence relied upon by Netglory comprised the Loan Agreement and Guarantee themselves. In particular, Netglory relies upon the false reference in the Schedule to the Loan Agreement that $800,000 'was advanced' to the Hocking Land Company on 6 January 2003. This date was the date on which settlement occurred on Lots 82 and 83.

621 As I have explained above, at [247] [249], on any view of any alleged oral agreement, no debt was incurred, and nothing was 'advanced' on 6 January 2003. Nor is the due date of 31 December 2004 consistent with the alleged terms of the initial oral agreement.

622 Secondly, Netglory pleaded that the July 2002 Agreement was 'evidenced' by a Substituted Shareholders' Agreement executed in October 2002 by Ms de Hollander and Mr Caratti.[412]

623 The Substituted Shareholders' Agreement is between Mr Caratti, Ms de Hollander and the Hocking Land Company. It is dated 28 October 2002.

624 The Substituted Shareholders' Agreement records matters including that:

(i) the shareholders hold all of the issued capital in, and are the directors of, the Hocking Land Company;

(ii) the Hocking Land Company intends to acquire, subdivide, develop and sell land;

(iii) St George Bank has approved a line of credit;

(iv) Ms de Hollander and Mr Caratti are, and shall remain, the joint chief executive and managing directors of the Hocking Land Company;

(v) Mr Caratti shall not be paid nor be entitled to be paid compensation for his services to the company;

(vi) capital is to be raised by loans from St George; then equal, unsecured, interest free loans from the shareholders (shareholder subscription loans); then secured loans from one or other of the shareholders on reasonable terms which might include 20% interest with monthly capitalisation and other terms including security from the company (shareholder loans); and

(vii) bank loans should be repaid before shareholder loans and then shareholder subscription loans.

625 There is nothing in the Supplementary Shareholders' Agreement which supports the alleged oral agreements. The Supplementary Shareholders' Agreement is, at least, equally consistent with Mr Caratti's account of the oral joint venture agreement discussed below.

626 Thirdly, Netglory relied upon exhibit 1/108. That was a handwritten note, not in Mr Caratti's handwriting,[413] which Mr Metcalf used to compile the accounts of the Hocking Land Company.

627 The note is set out as follows on the next page:

628 Mr Caratti said that the first time he had seen this note was when it appeared in the trial bundle.[414] I do not accept this evidence.

629 At the bottom of the note, on a PostIt note attached to the note, in Mr Caratti's handwriting,[415] are the words 'File Hocking Land Co Under Pollock Contribution'. The PostIt note obscures a fax number written on the note.

630 The fax number, which appears on another version of the note without the PostIt note, is Mr Caratti's home fax number from 2002 onwards, in the home in which he still lives.[416] The other version of the document is identical except that it does not contain the reference to RAC next to 'Interest'.

631 Mr Metcalf also said, and I accept, that he had received the note from Mr Caratti's office sometime around April 2004.[417]

632 Independently of Mr Pollock's evidence on this point (although my conclusion is consistent with Mr Pollock's evidence), I infer that this note had been faxed to Mr Caratti in 2002 when Mr Caratti and Mr Pollock were negotiating the terms of their joint venture.

633 By itself, the note of the alleged debt to 'Pollock to date' provides little support for any alleged oral agreement. On the other hand, the note of the alleged debt does provide some support for Mr Caratti's explanation for a fourth category of document upon which Netglory relied very heavily.

634 Fourthly, Netglory relied heavily upon Exhibit 1/92, page 758. That is a page from Mr Caratti's spiral bound diary which contains the following notation in Mr Caratti's handwriting:[418]

H.L.C Pollock not to charge interest on loan of $800,000 @ 13,000 per month.

635 I find that this entry was made some time after April 2003. The reasons for this finding are as follows.

636 Mr Caratti's diary appears to be written sequentially.

637 The relevant entry on page 758 concerning 'H.L.C Pollock not to charge interest on loan ...' is preceded by an entry on page 715 which reads '$10,000 Bain/Deposit'.

638 I accept the submission by counsel for Netglory that this entry was made at or about February 2003. Other exhibits refer to this as the date of the Bain deposit.[419]

639 The relevant entry on page 758 concerning 'H.L.C Pollock not to charge interest on loan' is also preceded by a closer entry on page 753 which refers to 'Taylor Wooding and Michael Joseph Ryan'. Mr Ryan was one of the joint receivers and managers appointed to several of the Pollock companies on 4 April 2003.

640 On the same page there is an entry 'right to inspect the books' which is also consistent with receivership.

641 Mr Caratti accepted in cross-examination that Mr Pollock told him about the receivership and they discussed it.[420]

642 These entries support the inference that the relevant entry on page 758 was made some time after 4 April 2003.

643 Counsel for Netglory submitted that the 'H.L.C Pollock not to charge interest on loan ...' entry supports the existence of the Loan Agreement.

644 Obviously, the entry that interest would not be charged does not support the terms of the Loan Agreement. The terms of the Loan Agreement were that interest would be charged at 20% compounded monthly.

645 This entry in relation to interest is also inconsistent with Netglory's own case that interest payments were deferred. This can be seen by the following sequence.

(i) Netglory's pleaded case in reply, and Mr Pollock's evidence, was that the Loan Agreement was subsequently orally varied so that the Hocking Land Company would pay the Loan Amount from the proceeds of sale of the subdivided lots created from Lots 81, 82 and 83 Nicholas Road immediately after the repayment by the Hocking joint venture of its external financiers.[421] But Mr Pollock said that he had orally agreed with Mr Caratti that 'in the meantime [ie before repayment of the $800,000] Hocking pay interest at 20% per annum compounding monthly'.[422]

(ii) Although Netglory's case was that this oral agreement was somehow binding on the Hocking Land Company, Mr Pollock's evidence was that 'the first instalment of $13,333 was payable by Hocking to Netglory on 6 March 2002 [sic: 2003]'.[423]

(iii) Mr Pollock then said that Mr Caratti asked if the Hocking Land Company could pay no interest on the loan but Mr Pollock refused. Mr Pollock said that he agreed with Mr Caratti that they would defer interest payments to Netglory until the Hocking Land Company's financiers had been paid out and there was surplus money from the subdivided lots.[424]

646 Putting aside the inconsistency between the entry in Mr Caratti's diary and Netglory's case in relation to interest, Netglory submitted that the entry demonstrated the acknowledgement by Mr Caratti of a binding loan to the Hocking Land Company of $800,000.

647 Netglory observed that the rate of interest disclosed by a loan of $800,000 at $13,000 per month is almost 20%. At 20% interest the monthly interest would be $13,333.[425] This is very close to the figure of $13,000 in the diary entry.

648 Netglory submitted that this entry could only be an acknowledgement of the Loan Agreement. The reason why was said to be because

(i) the RAC Finance loan of $800,000 in relation to Lot 81 had been discharged and replaced with the Reliance Finance loan for $2.3 million in relation to Lots 81, 82 and 83. This had been arranged on 2 August 2002;[426] and

(ii) the interest payable under the RAC loan was substantially less than $13,000 a month.

649 Mr Caratti provided an explanation for this document which was consistent with the evidence he gave in his witness statement.

650 In his witness statement, Mr Caratti said that Mr Pollock told him that the RAC mortgage over Lot 81 was approximately $800,000 with monthly repayments of $13,000 per month. Mr Caratti said that he 'learned from company documentation that this was correct'.[427]

651 During their negotiations for a joint venture, Mr Caratti was provided with the note from Mr Pollock which set out an alleged debt of $537,333 to Mr Pollock/Ms de Hollander. One component of that debt was 'Interest. RAC $239,833.'

652 The implication which Mr Pollock must have intended Mr Caratti to draw was that Mr Pollock or Ms de Hollander had paid $239,833 in interest to the RAC (which they had not), and that the Hocking Land Company should recognise this debt to her, as it initially did.

653 I also accept Mr Caratti's evidence that Mr Pollock showed him an RAC interest statement dated 4 June 2002, a date which preceded Mr Caratti's entry into the Hocking Land Company as a shareholder and director. That statement provided as follows:[428]

654 Mr Caratti said that this was what he was shown during a conversation with Mr Pollock. Mr Caratti said that he just looked at the bottom line.[429] Although the total interest on the statement is for two months, not one month, I accept that this is a reasonable error that could be made in the context of being shown a document as part of a conversation or negotiation.

655 In light of (i) the RAC interest statement which refers to an amount of $13,000; (ii) the note of the alleged debt to Mr Pollock/Ms de Hollander including RAC interest; and (iii) Mr Caratti's consistent evidence on this subject, I accept, on the balance of probabilities, his explanation for the entry in his spiral notepad that 'it refers to the 800,000 and it refers to the interest that RAC have charged him'.[430]

656 As I explain below, I do not accept that in the 2002 joint venture discussions, Mr Pollock and Mr Caratti agreed that there would be no charge by Mr Pollock/Ms de Hollander for interest paid on the RAC loan. But I accept that this was the subject of negotiations and that Mr Caratti came to maintain, as he had entered in his diary, that Mr Pollock would not charge the Hocking Land Company for the interest payments alleged to have been made on the $800,000 RAC loan.

657 In this light, a further matter which also supports Mr Caratti's explanation is the reversal, at his direction in 2005, of the amount in the Hocking Land Company's accounts of the $239,833 which was initially posted as due to Ms de Hollander for her payment of interest on the RAC loan for Lot 81. That reversal is discussed above at [574] [589].

658 Fifthly, Netglory also relied upon several contracts of loan from, effectively, the 'Caratti side' to the 'Pollock side'.[431] Each loan was for more than a million dollars. Each was for 20% interest. The loan documents were described as the 'Lakeview Rise loan',[432] the 'Boban/Pineview loan' (or 'Bazzo loan'),[433] and the 'Cityzone loan'.[434]

659 Mr Pollock gave evidence that he had insisted upon the Loan Agreement to be documented in writing because he was 'quite angry' after Mr Caratti presented him, at the same time, with these three loan agreements to be signed.

660 Mr Pollock said that he told Mr Caratti that 'when he was owed money he wanted documentation and security but that when the Pollock family were owed money he didn't want any documents'.[435]

661 Mr Pollock said that the Loan Agreement was drafted by his solicitors as a consequence of that discussion with Mr Caratti. The Loan Agreement was said by Mr Pollock to have been signed on 21 February 2003.

662 Mr Pollock relied on a note which he made, and which Mr Caratti said was in Mr Pollock's handwriting,[436] on one of those three agreements, the Boban/Pineview Agreement.[437]

663 The handwritten note on the front of the Boban/Pineview agreement reads as follows:

Lender : Netglory P/L

Amount: $800,000

Start Date: Settlement 82 & 83 Nichol. Rd

Land Security: 81-82-83

Hocking Land Company: Borrower

G/Tor: A Caratti & JDH

664 I find that two agreements were provided to Mr Pollock in early February 2003. As Netglory's counsel put to Mr Caratti in crossexamination, and Mr Caratti accepted, these were the Boban/Pineview (Bazzo) loan agreement and the Cityzone loan agreement.[438]

665 But the Lakeview Rise loan agreement involved an offer which was dated 21 February 2003[439] in Mr Caratti's handwriting.[440] I do not accept that this was presented to Mr Pollock before 21 February 2003.

666 I also find that at the time after the Boban/Pineview loan agreement was presented to Mr Pollock he made the note on the cover page and sent that page to Mr Britten.

667 Mr Britten's evidence, which I accept, was that he prepared the Loan Agreement from instructions which were provided by the cover sheet of that Boban/Pineview agreement which was faxed to him on 6 February 2003.[441]

668 But the handwritten note by Mr Pollock on the front of the Boban/Pineview agreement does not assist Mr Pollock's case in relation to the alleged oral agreements.

669 The handwritten note does no more than confirm that Mr Pollock gave instructions to Mr Britten to prepare the Loan Agreement and Guarantee, and that those instructions were given shortly prior to other agreements being signed with Mr Caratti.

11.3.6 Mr Caratti's account of the joint venture is far more plausible

670 In contrast with Mr Pollock's alleged July 2002 and 2003 oral agreements, Mr Caratti posited a different oral joint venture agreement. Mr Caratti's allegations of the oral agreement was far more plausible, particularly in light of the matters of inherent incredibility of Mr Pollock's alleged oral agreements discussed above at 11.3.4.

671 Although I consider that important parts of his evidence were either untruthful or unreliable, Mr Caratti's evidence on this issue was much more convincing than Mr Pollock's account of the joint venture including the alleged July 2002 and 2003 oral agreements.

672 Except where I indicate below, I accept Mr Caratti's account of the joint venture agreement.

673 Mr Caratti met Mr Pollock in 2000 at an auction.[442]

674 By early 2002, Mr Caratti and Mr Pollock had engaged in various business enterprises together. Their joint ventures involved (i) them being joint shareholders; (ii) a Carratti family company, Mammoth Investments, generally managing the development; and (iii) Mr Caratti's companies providing all the finance needed above bank finance, at 20% interest.[443]

675 In early to mid2002, Mr Pollock told Mr Caratti that the Hocking area was ripe for development. Mr Pollock said that the Hocking Land Company owned Lot 81, Nicholas Road and that there was a lot of nearby land that could be purchased and developed, including Lots 82 and 83. Mr Pollock explained that he was unable to fund the development and wanted to undertake a joint venture with Mr Caratti.[444]

676 Mr Caratti discussed the Hocking joint venture with Mr Pollock in the context of a wider development of a subdivision which would be called the Belvedere Hills Estate.[445]

677 Mr Caratti and Mr Pollock discussed using the Hocking Land Company as a vehicle for the Hocking joint venture.

678 One difficulty if a different company were used was that double stamp duty would be paid on any properties which had been acquired by Hocking which were then transferred to the new company.[446]

679 Mr Caratti and Mr Pollock orally agreed that they would undertake the Hocking Joint Venture on terms including as follows: [447]

(i) each of them would own 50% of the Hocking Land Company;

(iv) Mr Caratti would arrange the finance from a financier;

(v) if funding from a financier were not available, Mr Caratti or one of his companies would lend the money to the joint venture at 20% interest to be repaid after bank finance;

(vi) Mammoth Investments would undertake the construction and earth works at commercial rates with any costs carried by Mammoth to form part of the Hocking Land Company loan account at 20% interest;

(vii) the profits of the Hocking joint venture would be split 50/50 after payment of the loan account and external financiers;

(viii) Lot 81, and any other lot acquired by the Hocking Land Company, would be reflected in the books at acquisition cost;

(ix) funds that had been contributed to acquisition of Lot 81, such as deposit and stamp duty, would be an unsecured loan to the Hocking Land Company in the name of Ms de Hollander;[448]

(x) the unsecured loan for the cost of acquisition of Lot 81 would be interest free because Mr Caratti considered that the cost of Lot 81 exceeded its market value; and

(xii) the existing mortgage for Lot 81 would be refinanced.

680 Mr Caratti also said that during discussions he agreed with Mr Pollock that no prior interest or holding costs by Mr Pollock would be recognised,[449] and that in relation to the holding costs of Lot 81 he only agreed to recognise a loan of $167,500 to Ms de Hollander.[450] I reject his evidence on this point.

681 Mr Pollock had prepared a note summarising the costs incurred in relation to Lot 81. He had given that to Mr Caratti and Mr Caratti later provided Mr Metcalf with that note. That note, inaccurately, described the amounts owing as $537,333. At least in respect of the interest under the RAC loan, this was a substantial overstatement. But I do not accept that Mr Caratti was aware at the time that the amount had been overstated.

682 Mr Caratti said that Mr Pollock told him that the RAC mortgage over lot 81 was approximately $800,000 with monthly repayments of $13,000 per month. Mr Caratti said that he 'learned from company documentation that this was correct'.[451] As I have explained above, it was not correct. Mr Caratti had misunderstood a letter from the RAC which Mr Pollock had shown him.

683 Mr Caratti said that he told Mr Pollock that since the loan balance was increasing (it was $821,227.65 at 31 May 2002) Mr Pollock must repay the arrears and reduce the loan to $800,000 before Mr Caratti became a shareholder in the Hocking Land Company.[452]

684 Mr Caratti said, and I accept, that he considered that there was no equity in the Hocking Land Company at this time with the RAC loan at $821,000. Mr Caratti said that he was aware, as was the case, that[453]

(i) at this time the Hocking Land Company only owned Lot 81 Nicholas Road;

(ii) the Hocking Land Company was struggling to pay interest on the RAC loan for Lot 81; and

(iii) the previous offers which Mr Pollock had made on Lots 82 and 83 had lapsed because Mr Pollock was unable to settle on those lots.

685 Mr Caratti also considered that the market value for Lot 81 was lower than its purchase cost.[454]

686 After Mr Pollock secured the contracts over Lots 82 and 83 Nicholas Road on 23 April 2002,[455] Mr Pollock asked Mr Caratti to pay the deposits on those lots. Mr Caratti refused because he was not yet a shareholder.

687 Subsequently, Mr Caratti and Mr Pollock arranged for the Hocking Land Company to enter contracts over other properties including:[456]

(i) Lots 15, 16, 17 and 51 Wyatt Road from Mr Monte, offer made and accepted, dated 6 June 2002 and signed by Mr Pollock;

(ii) Lot 20 Avery Road from Mr Monte, offer dated 6 June 2002 and signed by Mr Pollock;

(iii) Lot 53 Wyatt Road from Osborne Cold Stores (WA) Ltd, offer dated 29 June 2002 and signed by Mr Pollock;[457]

(iv) Lot 138 Nicholas Road from Rymon Pty Ltd, offer dated 29 June 2002 and signed by Mr Pollock;

(v) Lot 130 Elliot Road from Mr and Mrs D'Alonzo, offer dated 29 June 2002 and signed by Mr Pollock;[458]

(vi) Lot 148 Nicholas Road from Mr and Mrs Kirby, offer dated 29 June 2002 and signed by Mr Pollock.

688 Lots 81, 82 and 83 Nicholas Road were to be the first stage of the Belvedere Hills Estate. They were the entrance for future stages. But some of the other properties above which were acquired by the Hocking Land Company were essential to the development of Lots 81, 82 and 83 and the wider Belvedere Hills Estate.

689 One example of the importance of other lots is that the physical development of Lots 81, 82 and 83 required the sewer outfall through Lot 15 Wyatt Road, and the owner of that lot, Mr Monte, required the Hocking Land Company to purchase the neighbouring lots because he did not want the run through his properties.[459]

690 Another example of the importance of other lots is that Lots 81, 82, and 83 were across the road from a turkey farm at Lot 53 Wyatt Road. Lot 53 had an odour buffer of 400 m extending around its boundaries. It needed to be purchased so that the turkey farm could be closed, the turkey farm licence surrendered, and the odour buffer removed.[460]

691 The payments for many of the properties above were essential in order for the Hocking joint venture to proceed.

692 Mr Caratti refused to pay the deposits for these contracts until the shares in the Hocking Land Company were transferred to him.

693 Mr Caratti was provided with a share transfer on 7 July 2002.[461]

694 On 8 July 2002 and 24 September 2002, Mr Caratti paid deposits of $150,000 and $100,000 for numerous properties.[462]

695 On 12 July 2002, Mr Caratti was appointed as a director of the Hocking Land Company.[463]

696 On 28 October 2002, Mr Caratti entered the Substituted Shareholders' Agreement.

697 This account by Mr Caratti of the Hocking joint venture is consistent with the documentary evidence. Save where I have indicated otherwise, the evidence was also plausibly given, and was reliable.

698 I have dealt with the evidence of most of the witnesses during the course of these reasons and, in particular, in the course of setting out my findings of fact. For completeness, I record below my findings in relation to other witnesses at the trial.

699 Mr John Caratti gave evidence which was designed to assist Mr Pollock. For instance, in evidence provided without any warning to the defence, Mr John Caratti said that 'Pollock wanted I think he started off he wanted about 1.1 million to put in these blocks into the Hocking deal'.[464] In crossexamination he elaborated on this:[465]

There was three blocks that adjoined the existing subdivision, I think it was Stocklands were doing it and Pollock didn't want to put those three blocks into the Hocking joint venture and there was a discussion between Pollock and Allen but Pollock wanted about 1.1 million to put them in and I think Allen negotiated it down to 800,000 and the bargain they reached was that the joint venture of Hocking would have to pay back to this other structure $800,000.

700 In closing written submissions, counsel for Netglory properly conceded that[466]

it might be said that Mr John Caratti's evidence was influenced by the proceedings in which he is doubtless involved with his brother. There can be no doubt that there is a degree of enmity between them and there can be no doubt that whilst those proceedings remain unresolved it may be difficult to objectively assess the evidence he gave.

701 Although Mr John Caratti denied that relations with his brother Mr Caratti were bitter and acrimonious,[467] the significant animosity between him and his brother was palpable in his demeanour and in his evidence.

702 I do not consider that any of the evidence given by Mr John Caratti in support of Mr Pollock was reliable. My assessment is motivated only in small part by Mr John Caratti's prior criminal convictions for dishonesty. More significant is my assessment of his extremely hostile demeanour in court and the degree of enmity and anger between him and his brother.

703 Mr John Caratti has been, and is, involved in substantial litigation with his brother. He said that he had sued his brother, Mr Caratti, fewer times than his brother Mr Caratti had sued him.[468]

704 Mr John Caratti said that Mr Caratti had sued their mother and Mr John Caratti's son.[469] Mr John Caratti said that this action had been settled but was now being re-litigated.[470]

705 Mr John Caratti accused Mr Caratti of 'terribly fraudulent' actions.[471]

706 Mr John Caratti's evidence in support of Netglory cannot be given any weight.

707 Mr Murphy gave evidence concerning the valuation to be placed on Lots 81, 82 and 83 in July 2002 and again in February 2003.

708 I do not consider that any reliance can be placed on the evidence of Mr Murphy for five reasons.

709 First, in an appendix to his valuation,[472] Mr Murphy made an 'expert opinion statement'. That statement was six paragraphs. It was signed by Mr Murphy. Paragraph 5 read:

I have no prior dealings with the parties to these proceedings.

710 In crossexamination, Mr Murphy admitted that:[473]

(i) he had performed 'possibly 100' valuations for Mr Caratti and his companies; and

(ii) he dealt directly with Mr Caratti to take instructions for the preparation of his report.

711 Mr Murphy said in crossexamination that the statement that he had no prior dealings with the parties to the proceedings was an oversight and that he had used a proforma document to prepare the report.[474] He did not explain why he chose not to disclose his relationship with Mr Caratti in his report. At the least, it shows that he was very careless about the contents of his report.

712 Secondly, Mr Murphy's report did not identify any of the comparative sales upon which he relied.

713 Mr Murphy accepted that the comparative sales methodology has, at its heart, the identification of a basket of sales and that this requires identification of the sales in the basket. But he accepted that in his 'Direct Market Comparison' he did not identify the relevant comparative sales.[475]

714 Thirdly, Mr Murphy accepted that the comparative sales method required identification of adjustment for matters such as variations in area, zoning, location and shape. But there was nothing in his report which showed what adjustments he had made.[476]

715 Fourthly, one of the sales referred to by Mr Murphy in the section on market evidence did not have a sale date. Mr Murphy said that he didn't use that sale. But he accepted that there was nothing in his report which indicated that the sale had not been used.[477]

716 Fifthly, a valuation exercise performed to assess the value of properties at a date a decade earlier is inherently inaccurate. Mr Murphy properly, and frankly, accepted this point.[478]

717 If Mr Murphy's evidence had been extremely reliable then it might have been of some assistance in the exercise of assessing whether Mr Pollock genuinely held the belief that Lots 81, 82 and 83 were all valued at $1.1 million each, or whether Mr Caratti genuinely held the belief that the lots were valued at $750,000 each.

718 Any assistance gained from Mr Murphy's evidence would have been limited. In the circumstances of this report there is no assistance to be gained from it at all.

719 Mr Masel's evidence was also peripheral to the proceedings.

720 Mr Masel was the financier who procured from Reliance Finance the refinance of Lot 81, and the funding for Lots 82 and 83 Nicholas Road.[479]

721 There is one aspect upon which Mr Masel might have given useful evidence.

722 Mr Pollock said that he had encountered problems in securing funding to pay out the alleged $800,000 that he said was owed by the Hocking Land Company to Netglory.

723 Mr Pollock's evidence was that, at Mr Caratti's suggestion, Mr Pollock approached Mr Masel at Reliance Finance to procure the refinance of Lot 81, the financing of Lots 82 and 83 and the payout of $800,000 from the Hocking Land Company.[480]

724 Mr Pollock said,[481] and the documentary evidence establishes,[482] that Reliance Finance lent the Hocking Land Company money for the refinance of Lot 81 and the financing of Lots 82 and 83.

725 But Mr Pollock said that funds had also been sought for the payout of $800,000 from the Hocking Land Company. He said Reliance Finance was only prepared to offer funds for the financing and refinancing of Lots 81, 82 and 83.[483]

726 Mr Masel gave no evidence that these additional funds were sought from him. He was asked no questions concerning whether these additional funds had been sought from him.[484]

13. Other submissions by the Hocking Land Company