Plaintiff v Defendants [2006] VSC 470 | Case summary

Plaintiff v Defendants [2006] VSC 470 | Case summary | Zoe

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Introduction

1 The plaintiff, Westpac Banking Corporation ("Westpac") had two customers in its Private Bank section, Stephen William Vizard and his wife and their companies (collectively referred to as the "PAS Group"), and Roy Charles Hilliard ("the first defendant") who worked as a bookkeeper for Mr Vizard and his companies between 29 July 1991 and about 12 October 2000. Following the cessation of his employment apparent financial irregularities were discovered in PAS Group companies which ultimately led Westpac to accept a claim by Mr Vizard and the PAS Group that it had met PAS Group cheques drawn by Mr Hilliard for amounts in excess of its relevant customer mandate and which were for the benefit of Mr Hilliard rather than for the benefit of the relevant PAS Group customer. In the result, on 19 December 2000 Westpac entered into a settlement agreement with the PAS Group pursuant to which, following investigation, it compensated the PAS Group amounts which including interest totalled $3,067,274.92. Westpac claims that sum from Mr Hilliard on the basis of money had and received, unjust enrichment, or damages. Mr Hilliard denies liability. As I refer below, the amount of $3,067,274.92 was calculated on a basis that differs from the basis of the claim as presented in this proceeding; the effect is to somewhat overstate the amount. I refer to the true basis of calculation of the claim at [38]-[42].

2 Initially there was a second defendant, Information Age Travel Pty Ltd which is referred to as "IAT". The involvement of IAT arose in this way. Mr Hilliard and Christopher Graham Wood were the directors and shareholders of IAT which conducted a specialised travel agency business. In 1991, due to declining fortunes of the business as the result of the first Gulf War, it was necessary for Mr Hilliard to find other employment, which he did with Mr Vizard and the PAS Group. However he continued his bookkeeping, banking and financial statement functions for IAT. He thus retained a cheque book and controlled IAT's bank account. Westpac's case is that a number of the cheques drawn by Mr Hilliard on PAS Group accounts were payable to IAT and cleared to its bank account with the Australia and New Zealand Banking Group Limited ("ANZ"), but that the proceeds were not paid for, or applied to, the purposes of the PAS Group, or in the interest of the PAS Group account holder. The case is, in short, that Mr Hilliard turned the money paid to IAT to his benefit.

3 The case is that in the period of his employment Mr Hilliard stole just over $3M from the PAS Group, as to just over $2.5M by way of payments to IAT and the balance by payments to other parties for the benefit of Mr Hilliard. As mentioned below, the claim is confined to 61 cheques of a lesser aggregate amount.

4 On 14 August 2001 it was ordered by consent that IAT pay Westpac $1,686,036.29, and that there be no order as to costs. These orders were made pursuant to a Deed of Settlement dated 1 June 2001 between Westpac, Mr and Mrs Vizard and PAS Group companies, IAT, Mr Wood, and Dennis Turner who was an investigating accountant appointed by Westpac[1]. In consequence of the Deed and these orders IAT took no further part in the proceeding.

5 The case turns on the application of the facts to established principles of law. A large amount of oral and documentary evidence was given, much of it not being contested. There were, however, significant issues of fact between Mr Vizard and Mr Hilliard each of whom was variously described by counsel as a liar and a thief and much other besides. Neither was a satisfactory witness, as I discuss below. Among the issues of fact arising are the following central issues, namely:

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Deed of Settlement

6 It is convenient to refer at this stage to the agreement by which Westpac settled the claim made upon it by Mr Vizard and the PAS Group as it identifies why it is that Westpac, as distinct from Mr Vizard and the PAS Group, sues to recover loss suffered as a result of Mr Hilliard's alleged theft.

7 As I refer at [167] below, following Mr Hilliard's departure Mr Stevens (who replaced Mr Hilliard as Mr Vizard's bookkeeper) made inquiries as to the acquisition of six paintings recorded in the asset register of The Vizard Foundation Pty Ltd ("the Vizard Foundation"). These inquiries led Mr Stevens to request from Westpac copies of sample cheques following which he reported to Mr Vizard on what he had learned. That led Mr Vizard, on 22 November 2000, to instruct a firm of accountants, Carson & McLellan, to investigate the matter.

8 In December 2000 the investigating accountants reported to Mr Vizard that amounts had been paid to IAT from PAS Group accounts and that the amounts had been recorded in the PAS Group accounts as intragroup transfers. Mr Vizard, with his advisors, then claimed of Westpac that it was liable to compensate Mr and Mrs Vizard and the PAS Group. In a short time, and without seeking explanation from Mr Hilliard or Steven Oliver New, the Westpac employee with responsibility for the relevant accounts, Westpac on the one hand and Mr and Mrs Vizard and certain entities in the PAS Group on the other hand, entered into a Deed of Settlement dated 19 December 2000[2] whereby Westpac agreed to compensate the PAS Group on the basis stipulated in the Deed. The Deed provided the following: Westpac admitted liability to compensate the relevant PAS Group account holders and established a mechanism by which to calculate the compensation. More investigation was required to identify the payments that were relevant for the purpose of the Deed and thus to calculate the compensation payable.

9 It is appropriate to refer to some provisions of the Deed. The Deed commenced with recitals which in summary stated that:

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In the statement of claim Mr and Mrs Vizard and these entities are referred as "the PAS Group" and "the relevant account holders". Performing Arts Services Pty Ltd is referred to as "PAS". It is convenient to also use these definitions in this judgment.

22 The next allegation (in para 3) is that from July 1991 until about 17 October 2000 Mr Hilliard was employed by PAS as a bookkeeper. Terms of the employment are alleged in para 4. In short Mr Hilliard's duties were to perform the accounting function of the PAS Group to the point of preparation of financial statements for review and completion by external advisors, contribute to financial planning and implementation of investment strategies, and other management and administration support as required such as handling correspondence and filing. The accounting function included payment of invoices, banking and reconciliation of income, maintenance of cash books and asset registers, maintenance of insurance, and property and asset management.

23 The statement of claim then proceeded to allegations concerning Mr Hilliard's authority to draw cheques, to his having drawn cheques in excess of such authority and to Westpac having honoured such cheques (paras 5-9).

24 As to Mr Hilliard's authority, it is first alleged in para 5 (to summarise the pleading and particulars) that his authority was to sign cheques (excluding cheques for cash or travellers' cheques) up to a limit of $10,000 (save for effecting transfers between companies in the PAS Group, signing cheques and for the purchase of shares from J B Were and Ord Minnett for the benefit of the PAS Group, where the authority was unlimited) pursuant to authorities set out in a table. The table indicates that in respect of each of the named corporate entities, and various trusts and accounts in the PAS Group, an authority in these terms was granted on a date between 31 July 1991 and 18 May 2000.

25 I interpolate an important point. The pleading of the authority in para 5 is misleading in that the particulars conflate two separate authorities. On the one hand there were several authorities in like terms which authorised Mr Hilliard to sign cheques up to $10,000 while on the other hand there was a single unlimited authority dated 17 November 1992 which authorised Mr Hilliard to sign cheques for the purchase of shares from J B Were and Ord Minnett. This is an important distinction which para 5 ignores. Indeed, the table in para 5 does not include this latter authority. I refer to this later authority at [129], in the chronology of facts and later in the judgment.

26 It is then alleged, in para 6, that between 1 July 1993 and 31 January 1996 Westpac paid 11 cheques listed in Part 1 of Schedule A to the statement of claim which were drawn by Mr Hilliard for more than $10,000 on an account of the PAS Group. The cheques were paid to CS First Boston, Potter Warburg and IAT. It is alleged in para 7 that the relevant account holder had not authorised Westpac to pay the cheques, and that the proceeds of the cheques were not paid to or at the direction of or applied for the benefit of the relevant account holder.

27 The statement of claim then (in para 8) moved to a second authority alleged to have been sent by Mr Hilliard by facsimile to Westpac on or about 2 February 1996 without the consent of the PAS Group. This authority, purportedly signed by Mr Vizard, authorised Westpac to pay cheques up to $50,000 drawn on accounts of the relevant account holders and signed by Mr Hilliard. It is then alleged, in para 9, that between 2 February 1996 and 17 October 2000 Westpac, relying on the authority, paid 50 cheques listed in Part 2 of Schedule A drawn by Mr Hilliard on the account of a relevant account holder for an amount between $10,000 and $50,000 and debited the accounts with the relevant amount. The cheques were payable to ASA (Australians Studying Abroad), IAT, British Airways, Diners and Cunard Line. It is alleged in para 10 that the authority was a forgery and, in addition, that the relevant account holder had not authorised Westpac to pay the cheques and that the proceeds thereof were not paid to or at the direction of or applied for the benefit of the relevant account holder.

28 The next allegation (in para 11) is that "the proceeds" of each of the above cheques were received by Mr Hilliard or applied for his benefit. Particulars to this plea refer to Schedule B to the statement of claim which lists cheques as follows:

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In these premises (para 14) Mr Hilliard was liable to pay Westpac the amount of the proceeds of the cheques as monies had and received to the use of Westpac. Further or alternatively (para 15), Mr Hilliard was liable on the basis that he had been unjustly enriched by the amount of the proceeds which it would be unconscionable for him to retain. In final address Westpac's counsel said that paras 14 and 15 were two ways of saying the same thing, namely that recovery was sought on the basis of unjust enrichment.

31 Then follow, in paras 16 and 17, pleas concerning the allegedly forged authority for cheques up to $50,000.

32 Paragraph 16 alleged that in sending the authority to Westpac Mr Hilliard falsely represented to Westpac that it was authorised to pay cheques of $50,000 or less drawn on the account of a relevant account holder and signed by Mr Hilliard, and induced Westpac to mistakenly pay cheques in reliance on the authority. In these circumstances, Mr Hilliard engaged in conduct in contravention of s 52 of the Trade Practices Act 1974 (Cth) and/or s 9 of the Fair Trading Act 1999 (Vic). As the claim is made against an individual it is to be taken as made under the Fair Trading Act, as I mentioned during final address and Westpac's counsel did not suggest otherwise.

33 Paragraph 17 alleged that Mr Hilliard sent the authority to Westpac knowing it to be a forgery and that he was not so authorised, and intending that Westpac pay cheques in reliance on the authority. This, counsel said, was a plea in deceit. Then followed two pleas as part of that claim. In para 18 it was alleged that by reason of the facts in paras 6, 7, 9, 10 and 17 Westpac had come under a liability to repay the respective account holders the amounts which Westpac had paid without their authority, and (in para 19) that as it had been reasonably entitled to do Westpac had admitted liability to the PAS Group. Extensive particulars were provided to para 19.

34 The statement of claim concluded in para 20 with the statement that as a result of the matters in paras 14-17 and 19 Westpac had suffered loss and damage, namely that it had paid the PAS Group $3,067,274.92 in satisfaction of the liability referred to in para 19 including interest.

35 In the prayer for relief Westpac claimed the sum of $3,067,274.92, damages and interest.

36 It is convenient to make some observations concerning the statement of claim.

37 The first point to note concerns para 19 in which Westpac alleged that it acted reasonably in admitting liability to the PAS Group. In its place in the statement of claim it seemed that this should be read as part of the plea in deceit commencing at para 17. Westpac's counsel said that paras 18 and 19 were not part of the plea of unjust enrichment. Indeed, counsel said, none of the pleaded causes of action had an element of reasonable acting. Hence para 19 was to be understood merely as a statement of what Westpac did. Perhaps for this reason Westpac did not call evidence on all areas of the particulars to para 19.

38 The second point concerns the amount of the claim. Paragraph 20 is an umbrella plea applying to each cause of action. While the amount of $3,067,274.92 is sought on the unjust enrichment claim, being the amount of compensation paid by Westpac to the relevant account holders, no other amount was sought to be quantified as damages payable in respect of any of the other causes of action. The following further points arise concerning the amount claimed.

39 First, the amount of $3,067,274.92 was calculated on a formula agreed by Westpac and the PAS Group in a Deed of Settlement dated 19 December 2000 (referred to above) and under which those parties agreed on compensation as follows: in respect of cheques under $10,000, 15 per cent, and in respect of cheques between $10,000 and $50,000, 75 per cent, plus interest. The amount of $3,067,274.92 was thus produced but it included compensation in respect of cheques under $10,000. On my calculation, the component of compensation referable to cheques under $10,000 (excluding any interest) was $139,762.76[7]. The inclusion of that amount is inconsistent with the schedules to the statement of claim which by amendment exclude from the claim all cheques under $10,000. It was self-evidently an advised decision to so limit the case. The reason may have been because of the undisputed authority to Mr Hilliard to sign cheques for amounts up to $10,000. I cannot otherwise speculate as to the reasons.

40 Secondly, it is not clear to me what amount was paid to the PAS Group on account of interest. Interest was not paid with the progressive payments which were made between January and October 2001 inclusive. Two further payments were made, $731,350.79 on 6 December 2001 and $250,000 on 25 September 2002. The former payment represented interest and was negotiated following the preparation of a calculation by Westpac in October 2001 which showed interest at $945,971.24[8]. The latter payment was said by counsel[9] to be a negotiated amount to finalise the settlement of the compensation. I do not know how these two amounts were calculated. More particularly, I do not know the extent to which if at all the final amount of $250,000 includes interest or compensation in respect of cheques under $10,000.

41 Thirdly, I was informed, and understand, that Westpac compensated the PAS Group in respect of the 61 cheques in the Schedules to the statement of claim.

42 Fourthly, and in consequence of Westpac's loss being measured by and in accordance with the Deed of Settlement, that which Westpac is entitled to recover if it succeeds is the amount being 75 per cent of the face value of the 61 cheques. That is because all of those cheques were for amounts between $10,000 and $50,000.

43 Accordingly, if Westpac succeeds the amount to be recovered must be recalculated.

Defence

44 An amended defence was not filed to the final amended statement of claim. That was because the amendment to the statement of claim only changed details of cheques listed in Schedules A and B. The extant defence had been filed in September 2005 in relation to the statement of claim as amended on 22 October 2001. It was accepted that notwithstanding the statement of claim had subsequently been amended twice it was not necessary to amend the defence.

45 The following pleas are to be noted:

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49 The defence proceeded to deny the remaining allegations in the statement of claim. All that need be referred to is the response to the plaintiff's allegation that it was reasonably entitled to admit liability to the PAS Group. The defence (in para 19) alleged that in fact Westpac acted unreasonably in admitting liability. This was because Westpac accepted the say so of Mr Vizard, failed to make any proper inquiries of its own, and failed to make any or any proper inquiry of Mr Hilliard.

50 It remains to note that in 2001 particulars of the defence were provided. That was by a document (not filed) dated 6 April and a subsequent document filed on 22 June 2001.

Reply

51 Westpac did not file a reply to the defence.

Evidence

52 By the conclusion of the trial evidence had been given by 16 witnesses. In addition, summaries of the evidence of five people were tendered without the need to call the witness. There was also a 10 volume Court Book and some other documentary exhibits.

53 The evidence may be regarded as falling into categories. It ranged from the formal and undisputed to the highly contentious. In the former description was evidence that established documents in the records of a party including in particular documents which pertained to a transaction or transactions to which a subject cheque related. Some, but not all, of the evidence in this area was of Mr Hilliard's accounts with Diners Club, Stanley Gibbons Pty Ltd (purchase of stamps), C S First Boston and Potter Warburg (share dealings) and a Commonwealth Bank of Australia Visa card statement; other such evidence was included in the Court Book without the need to call the relevant third party such as British Airways and Cunard Line. In the area of IAT relevant documents were produced, and established, by its banker ANZ (cheques) and by a partner of the firm Turville Reeve & Associates which was the auditor of IAT at relevant times. In this area also was evidence of a Westpac employee, Desmond Gerald Curtis, whose evidence established relevant entries in the records of Westpac and that certain documents in the Court Book were copies of documents in the records of Westpac.

54 A second category of evidence concerned Mr Hilliard's charges of theft of moneys from the PAS Group. Following a committal hearing in 2003, at which Mr Vizard gave evidence for the prosecution and was cross-examined, and Mr Hilliard gave evidence in his own defence, Mr Hilliard was committed for trial in the County Court on all charges. A presentment was filed containing 78 charges of theft. In circumstances referred to below, when the matter came on for hearing in the County Court on 26 July 2005 another presentment[10] was filed over the original presentment which was permanently stayed[11]. The new presentment charged 14 rolled up counts of false accounting to which Mr Hilliard pleaded guilty. Counsel for Mr Hilliard then made a plea in mitigation. On 12 August 2005 the judge sentenced Mr Hilliard to a total effective term of two years' imprisonment, wholly suspended[12]. This category of evidence included certain pages from the transcript of Mr Hilliard's evidence at the committal, tendered as containing admissions[13]; the transcript of evidence of Mr Vizard at the committal[14], tendered for identification for the purpose of ensuring accuracy of reference to certain questions and answers in Mr Vizard's evidence at the committal which were put to him in cross-examination in the present proceeding; two exhibits tendered by the prosecution at the committal[15]; para 9 of the statement of an accountant David John Warner who also gave evidence at the committal[16]; and the transcript of the Crown prosecutor's opening and submissions at the hearing in the County Court on 26 July[17], which was received on the limited basis of indicating context of a background nature.

55 A third category of evidence was that given by former employees of Westpac concerning their involvement in the Private Bank in relation to the accounts of Mr Vizard and the PAS Group, namely:

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60 I agree with Mr Anderson that the questioned signature on the $50,000 authority is similar to that on the 17 November 1992 authority. That is one point, but the more immediate point is that in fact Mr Vizard did sign the 17 November 1992 authority. He readily agreed that he did so in cross-examination. The concession was not surprising as the fact is that cheques were signed by Mr Hilliard bona fide in payment of share purchases as contemplated by the authority. Moreover, the statement of claim (para 5) acknowledges that Mr Hilliard's authority to sign cheques for the purchase of shares from J B Were and Ord Minnett for the benefit of the PAS Group was unlimited. Such shares were purchased under and by the authority of Mr Vizard. No element of alleged wrongful conduct of Mr Hilliard arose in this area. I found it incomprehensible that Mr Anderson was instructed to assume that Mr Vizard did not recall signing the original of the 17 November 1992 authority. It is reasonable to infer, and I do infer, that the instruction to Mr Anderson was given on the instructions of Mr Vizard. In evidence before me in September 2006 Mr Vizard knew that he had signed the original authority. I do not accept that given serious consideration to the matter he could not have recalled signing the letter. It is apparent that the instruction to assume that Mr Vizard did not recall signing the letter was significant to Mr Anderson's reasoning. The instruction is to be regretted. In short, it excluded from consideration a relevant signature that bore evident similarity to the questioned signature. I do not accept that Mr Vizard had a temporary loss of memory as to signing the letter. Having given careful consideration to the matter I am of the view that at best the instruction (by Mr Vizard) was given carelessly and at worst was designed to deflect a genuine signature from consideration. Whichever it be, and I consider the latter the correct inference, it reflects adversely on the character and integrity of Mr Vizard and the reliability of his evidence.

61 Mr Holland had examined the $50,000 authority at the request of Mr Hilliard's solicitors in November 2002. He described it as an original thermal fax. Counsel for Mr Hilliard called him following and because of an issue raised in the cross-examination of Mr Hilliard. What was put to Mr Hilliard was why the $50,000 authority received by Westpac, which is Exhibit Q, did not bear the date and time of sending or other information. When he gave evidence Mr Holland explained the operation of facsimile machines including that a line of such information appearing at the top (or bottom) of a facsimile is called a "header". The header (and what it contains) is directed by the sending machine. The header mechanism in the sending machine can be turned off. In this case there was one header. Hence the question was, bearing in mind that Mr Hilliard said that he had received the authority by facsimile, why was there not a second header? That is, a header produced when he received it and a header produced when Westpac received it. Mr Holland's opinion was that scan errors in the letters or characters in the letter meant that the letter had been scanned at least twice, and that the top header line had not been scanned at all[19]. The header included the date of receipt at Westpac, 2 February 1996, and was produced at the time of sending to the receiving machine. But the body of the document had been scanned a second time. Mr Holland said that a copy could have been produced prior to sending the fax; when a machine produces a copy it does not print a header as the facsimile function is not used. If such a copy was then sent it would produce a document similar to Exhibit Q. Another scenario might be that the original letter was sent with the header mechanism turned off in the sending machine, and that that document was sent on again from a machine with the header mechanism operating.

62 Finally, Mr Holland said that no definitive opinion could be given as to the genuineness of the signature of Mr Vizard on the $50,000 authority. It had the appearance of being genuine but it was a facsimile and a number of scenarios could have occurred.

63 In cross-examination, to all of which I have regard, Mr Holland was firm in his opinion based on his examination of the facsimile that the body of the document had been scanned twice. He was unable to say if the document had been faxed three or more times, but he could say that it had been faxed twice. He had not seen the original (nor had Mr Anderson and it was not in evidence), but he did not need the original to determine whether it was a one-off fax or had been rescanned. He concluded by saying that he could not tell if a line under the signature was part of the signature or part of the edge of a cut and paste job. As to that, in re-examination he said that there was no forensic evidence "to establish that this was a cut and paste".

64 In summary, having only the facsimile to examine the experts were unable to form an opinion whether or not the signature of Mr Vizard was genuine. Their evidence was inconclusive on the matter. Mr Anderson may have been assisted by knowing that Mr Vizard had signed the 17 November 1992 authority. For one thing he might then have regarded the "flourish under" the signature as within Mr Vizard's normal writing habits and more readily considered the similarity in that signature and the questioned signature.

65 I accept Mr Holland's evidence in particular on the matter of the header and that the body of the facsimile had been copied twice. In the result it falls to me to determine whether Mr Vizard signed the $50,000 authority and that Mr Hilliard, having thus received it, sent it on to Westpac. Those issues fall to be determined on the balance of probabilities in light of all of the evidence and the facts as I find them to be bearing in mind the seriousness of Westpac's contention that Mr Hilliard forged Mr Vizard's signature and intentionally misled Westpac.

66 A fifth category of evidence was that given by the officers of IAT, namely:

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(a) Gregory Robert Lay, a chartered accountant and principal of the firm Clarke & Co (now Clarke Bentleys) who was called by Mr Hilliard. The firm, and Mr Lay in particular, has provided accountancy services for Mr Vizard and his companies. Essentially that involved receiving from the client books and records as prepared and completing them and preparing the annual accounts and financial statements. It has also included tax advice and advice on a range of issues. The firm was also appointed auditor of some of the entities. His evidence covered a range of matters.

(b) Janine Marie Doney, who was employed by PAS as Mr Vizard's senior executive assistant between mid 1998 and late March/April 2001. She also was called by Mr Hilliard. She described the working arrangements at the office including that all contact with Mr Vizard was through her. Basically everything came across her desk. She described the frequency of contact between Mr Vizard and Mr Lay and communication between Mr Vizard and Mr Hilliard and in the ordinary course what accounts went to Mr Vizard. She referred to a time when Mr Vizard was absent from the office and he asked her to sign his name on an important document which needed to be sent that day, and that she refused his request. She observed that in his dealings with others in business Mr Vizard was extremely driven and focussed. He was demanding in the office. I note and take account of the fact that her evidence of being asked to sign Mr Vizard's name on a document, and other evidence as to a backdated document, was not put to Mr Vizard in cross-examination. Nevertheless, her evidence accorded with the impression of Mr Vizard that I had otherwise formed from observing him give evidence.

(c) Barry Thomas Stevens, a retired accountant who was called by the plaintiff. He took over from Mr Hilliard as the internal accountant for Mr Vizard's companies. He commenced in October 2000 a day or so before Mr Hilliard ceased employment, and remained until 2003. Soon after commencing, in the course of checking the location of assets at Mr Vizard's request, he identified six art works in the list of art owned which Mr Vizard said were not owned. He then made inquiries by checking bank records and could not find cheques that matched the cost of the art work. His experience led him to call for five cheques from Westpac three of which turned out to be payable to IAT. That led to the investigation that resulted in this case.

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72 As to this evidence of Mr Wood the course of events at the trial was this. When Mr Wood was about to give evidence counsel for Mr Hilliard objected to the admissibility of paras 33 and 34 of his witness summary on the ground of relevance. I note that counsel also objected to para 35. However, counsel suggested that I receive the evidence subject to objection, and I did so. The particular objection to paras 33 and 34 was said to be that they apparently related to whether Mr Hilliard deceived Mr Wood whereas the issue in the case was whether Mr Hilliard was authorised by Mr Vizard to draw money on the Vizard accounts. At best the evidence of Mr Wood could be similar fact evidence. But in truth it could only be relevant to credit. Hence, counsel submitted, it should not be led. The objection may have seemed to have substance on counsel's identification of the issue but the inquiry on the pleadings was broader than that in that it alleged that Mr Hilliard had had the benefit of monies passed to IAT under cheques drawn by Mr Hilliard. The evidence went to the issue of unjust enrichment and to an understanding of the relevant circumstances. Nevertheless, the evidence having been received, counsel did not cross-examine Mr Wood upon it.

73 Notwithstanding that Mr Wood was not cross-examined on para 33, Westpac's counsel asked Mr Hilliard in cross-examination whether Mr Wood's statement in para 33 as to there being no agreement or arrangement was correct, and Mr Hilliard said it was not. He said that Mr Wood "knew and approved of my purchases ... right from the beginning". He denied that he was trying to accuse Mr Wood "of participation in [his] crimes". He denied a suggestion that his evidence was a fabrication, an attempt to blame his victim. The cross-examiner then turned to other matters.

74 Mr Hilliard was not re-examined on this aspect of his evidence.

75 It is not to be overlooked that this aspect may go to other matters not the subject of the present proceeding and it may have been for that reason and also to seek to limit cross-examination that counsel for Mr Hilliard took objection to paras 33 and 34. And it may be too that having taken the objection there was provided a basis upon which counsel for Mr Hilliard could say that he did not in consequence cross-examine Mr Wood on the matter. I note too that Mr Hilliard did not seek to refuse to answer a question on the ground that to do so may tend to incriminate him. As the defendant, and in all of the circumstances, he was in a difficult position in regard to relying on that privilege.

76 In these circumstances, and taking into consideration the various factors referred to below concerning Mr Hilliard's evidence and the reliability thereof, I accept the evidence of Mr Wood. Yet the evidence should not be taken so far as to preclude the propriety of Mr Hilliard drawing a cheque on IAT's account to reimburse himself in an expenditure truly undertaken on behalf of IAT. But Mr Hilliard's denial of para 33 went further than allowing that possibility as an explanation particularly when the substance of Mr Wood's concern was unauthorised dealings. Further, the denial is to be assessed in light of the absence of elaboration by Mr Hilliard and of cross-examination of Mr Wood on the point. I take account of the point in assessing Mr Hilliard's credit and reliability.

77 I add only this. It was suggested by counsel for Mr Hilliard that Westpac could have sought Mr Wood to return to Court when he could have been further examined in chief on Mr Hilliard's evidence, and cross-examined. In that way the failure of Mr Hilliard's counsel to put his case to Mr Wood could have been rectified. As Westpac did not take that course it was not open to it to rely on the failure of Mr Hilliard's counsel to put his case to Mr Wood. I consider that this submission lacked force and reality in the circumstances. The trial had commenced several days early to accommodate Mr Wood and Ms Hellstrom who were shortly to travel overseas. When Mr Wood gave his evidence counsel had every opportunity to cross-examine and paras 33 and 34 were clearly seen as an area of concern but were not cross-examined on. There has to be reasonableness in the conduct of litigation and in the application of rules of practice. A long and tiring trial was had in which witnesses were examined at varying lengths on the points respectively considered appropriate. In the circumstances I do not consider that Westpac acted inappropriately in not seeking to prolong the trial for the purpose of recalling Mr Wood to enable him to answer Mr Hilliard's evidence or, more accurately, to enable Mr Hilliard's counsel to engage in a cross-examination deliberately not undertaken at the appropriate time.

78 That brings me to the final category of Mr Lay, Ms Doney and Mr Stevens. I can say at once that Ms Doney impressed me as an intelligent principled person and as an honest and reliable witness. I accept her evidence. I also found Mr Stevens an honest witness.

79 Mr Lay gave evidence in a guarded manner that was yet responsive to the terms of the questions. He was not comfortable. He had his own representative in Court who at no stage sought leave to appear. Mr Lay had been involved professionally for Mr Vizard in the Telstra matter referred to below into which, as I explain later, Mr Hilliard's counsel wanted to delve in cross-examining Mr Vizard on matters of credit.

80 At this stage I mention only one particular aspect of Mr Lay's evidence. That concerned his evidence that he recalled that Mr Hilliard made "some complaint" to him about a member of staff who had been looking at movements in the loan accounts being overly persistent. Mr Lay said that Mr Hilliard asked if he (Mr Lay) could speak to her and get her to be a little bit less enthusiastic or words to that effect. The effect of what Mr Hilliard said was that he (Mr Hilliard) was becoming a little bit irritated with the persistence of the staff member. Mr Lay believed that counsel's suggestion was correct that Mr Hilliard was saying, in effect, that the staff member should not take such an interest in the loan account. He said that there may have been other queries as well.

81 I do not accept that this evidence of things said by Mr Hilliard constituted a reflection by him, expressly or inferentially, of guilt over wrongful conduct, or an attempt to deflect inquiry so as to avoid discovery of improper activity. Indeed, I was concerned with the evidence when it was given. Not only was it vague and, I find, suffered from reconstruction, but in its giving, distinct from other parts of his evidence, it had the air of contrivance. It is important to bear in mind that the employee concerned was not called to give evidence of her actual inquiries to Mr Hilliard, and that Mr Lay's interest lay with or in the area of his client Mr Vizard. Further, Mr Hilliard's counsel could not cross-examine Mr Lay. He was cross-examined by Westpac's counsel. Moreover, statements of the type attributed to Mr Hilliard could be made, and understood, in more than one way. Listening to and observing Mr Lay I was quite unpersuaded by the evidence when it was given, and on reflection I remain of that disposition. I do not accept it as reflecting adversely on Mr Hilliard.

Some background matters - Mr Hilliard's criminal proceedings and Mr Vizard's insider trading

82 I now refer to some matters that are central to an understanding of much of the cross-examination and the submissions concerning the honesty of Mr Vizard and Mr Hilliard and the reliability of their evidence.

83 It is logical to commence with the criminal proceedings against Mr Hilliard. For present purposes it is necessary to refer only to certain aspects of the proceedings, commencing with the committal hearing in 2003 before a Magistrate in Melbourne.

84 Mr Vizard gave evidence at the committal on 11 March 2003, the fourth day of the hearing. As mentioned earlier the transcript of his evidence was tendered on the limited basis of ensuring accuracy in reference to certain questions and answers he gave in cross-examination at the committal, as to which before me he was cross-examined as to the truth of those answers. In the course of the cross-examination before me Mr Vizard was asked questions which relevantly concerned the signing of cheques by Mr Hilliard including his authority to do so, about artwork owned by the Vizard Foundation, and about share transactions that he had engaged in which included an allegation of insider trading in respect of dealing in shares using information acquired by him as a director of Telstra Corporation Limited ("Telstra"). In the latter regard there were questions as to the involvement of a company called Creative Technology Investments ("CTI") in making investments in shares. Essentially, at the committal Mr Vizard denied the several allegations.

85 As mentioned earlier Mr Hilliard was committed for trial in the County Court on the theft charges.

86 Subsequently the Australian Securities and Investments Commission ("ASIC") brought a civil penalty proceeding against Mr Vizard in the Federal Court of Australia alleging contravention of s 183(1) and s 232(5) of the Corporations Law. The case was that in purchasing shares in Sausage Software Pty Ltd and Keycorp Ltd and selling shares in Computershare Ltd in 2000 by medium of CTI Mr Vizard used confidential information obtained by him in his capacity as a director of Telstra to the board of which he had been appointed in 1996. This was said to contravene s 232(5) which provided that an officer of a corporation must not make improper use of information acquired by virtue of his position as such an officer to gain, directly or indirectly, an advantage for himself or for any other person. Section 183(1) was to the same effect. Both sections were relevant because s 232(5) was in force when the Sausage Software transactions occurred, whereas s 183(1), which replaced s 232(5), was in force when the other transactions occurred. Mr Vizard did not contest the case which was heard by Finkelstein J on 21 July 2005. The case was conducted on the basis of a statement of agreed facts signed by ASIC and Mr Vizard and other documents provided to the Court. I interpolate that the statement of agreed facts is in the Court Book in the present proceeding[21]. In the Federal Court Mr Vizard did not give evidence deposing to the facts set out in the statement of agreed facts.

87 Finkelstein J published reasons for judgment on 28 July 2005[22]. The judgment records (at [7]), in summary, steps that Mr Vizard took "to avoid publicity surrounding his trading activities". He established CTI as the investment vehicle with Mr Lay as the sole director and shareholder, thus avoiding any observable connection between himself and CTI. Then Brigham Pty Ltd ("Brigham"), a trustee company the shares in which were beneficially owned by Mr Vizard, his wife and their children, they also being beneficiaries of the trust, entered into a loan agreement with CTI. (I interpolate that the loan agreement, dated 10 December 1999, is Exhibit 9 in the present proceeding.) As Finkelstein J further described it, Brigham would make loans to CTI from funds provided by Mr Vizard or related entities for the purpose of purchasing shares. Of the share trading that took place after entry into the loan agreement, the proceeding brought by ASIC concerned only the three transactions referred to. In discussing the matter of punishment for the contraventions Finkelstein J observed (at [43]) that:

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88 In the result his Honour, declaring that the Corporations Law had been contravened, imposed a pecuniary penalty of $130,000 for each contravention, a total of $390,000, disqualified Mr Vizard from managing a corporation for 10 years and ordered him to pay the costs of the application and ASIC's investigation.

89 The next matter to refer to is the hearing of the criminal proceeding against Mr Hilliard before Judge Duggan in the County Court at Melbourne on 26 July 2005. That was after the time when Finkelstein J heard ASIC's application but before he gave judgment. It is necessary to say something about the hearing before Judge Duggan to understand the course and context of events against the background of which the trial in the present proceeding was conducted. The following is taken from the transcript of the hearing before Judge Duggan that I received as Exhibit 3; the transcript so received comprises only the first several pages down to the point (following the Crown prosecutor's address) where counsel for Mr Hilliard commenced a plea in mitigation. As mentioned, I received the transcript on the basis that it provided context.

90 At the outset the Crown prosecutor filed a new presentment over the previously filed presentment which was ordered to be permanently stayed. Mr Hilliard pleaded guilty to each of the 14 counts of false accounting constituted by false entries in the cash books of entities in the PAS Group[23]. The prosecutor then opened the matter. He noted that at a mention on 19 June 2005 it had been announced on behalf of Mr Vizard that he would not refuse to answer questions on the ground that the answers would tend to incriminate him. Since then he had agreed to the imposition of a civil penalty by the Federal Court in relation to the conduct which was largely that about which the questions of self incrimination arose. However, since then Mr Vizard's solicitors had notified the Office of Public Prosecutions that he will claim the privilege "in relation to many matters relating to the proceedings". The breadth of the claim was set out in letters from the solicitors, Arnold Bloch Leibler, that were tendered. In those circumstances the Crown took the view that Mr Vizard could not be advanced as a sufficiently credible witness; I interpolate that the receipt of the transcript does not go to establish that that "view" of Mr Vizard was or is a correct view for the purpose of the present proceeding. It is no more than part of the record of what was said by the prosecutor to aid in understanding the course of events in Court on the day.

91 Then, for completeness, the prosecutor said that those acting for Mr Lay, another Crown witness, had indicated that he also would claim privilege against self incrimination in relation to all matters touching upon CTI transactions.

92 Consequently, the prosecutor said, the matter had been settled on the basis that Mr Hilliard would plead guilty to the presentment charging 14 rolled up counts of false accounting. The prosecutor then proceeded to a summary of the matters. In the course of that he said that the total amount involved in the false accounting was $3,020,072.44 and that Mr Hilliard received identifiable benefits of $438,183.32. As the Crown was not prepared to call Mr Vizard it was submitted that it was not open to conclude that Mr Hilliard had the benefit of the balance. With one exception that balance all went to IAT.

The trial

93 It is appropriate to mention some matters that occurred during the trial.

Refusal of Mr Vizard to answer questions on the ground of self incrimination

94 By leave senior counsel (initially Mr J G Judd QC then he with Mr R Richter QC) appeared for Mr Vizard in respect of questions he may decline to answer in cross-examination on the ground of self incrimination[24]. In fact, Mr Vizard did object to answer some questions relying on the privilege against self incrimination. At several times I heard argument, made rulings, and directed Mr Vizard as I considered appropriate. The questions to which objection was taken were in two areas of concern to Mr Vizard. First, in respect of certain of his evidence at the committal, the truthfulness of which was questioned in cross-examination before me, there was a risk of exposing himself to a charge of perjury in that evidence. This covered a range of matters including evidence relating to the insider trading matter and matters set out in the statement of agreed facts, and artwork of the Vizard Foundation. Secondly, as to questions concerning the matter of insider trading, there was the risk of exposing himself to punishment for a criminal offence pertaining to such insider trading. On this aspect Mr Vizard was also concerned not to give evidence as to the facts stated in the statement of agreed facts. The point here was that the statement was provided to the Federal Court under the protection of s 1317Q of the Corporations Act the effect of which is that the statement would not be admissible in a criminal proceeding where the conduct alleged to constitute the offence was substantially the same as the conduct that constituted the contravention established before Finkelstein J. It is important to note however that the protection is excluded where the criminal proceeding is in respect of the falsity of the evidence so given, that is in the proceeding heard by Finkelstein J. In this case that evidence was relevantly that contained in the statement of agreed facts.

95 Counsel further relied on the proposition that facts admitted in a statement of agreed facts are not of the same character as facts found by a Court on evidence led at a hearing in the normal way, and, as to that, the statement of Finkelstein J in Australian Competition and Consumer Commission v ABB Transmission and Distribution Limited (No 2)[25] that "The general rule is that formal admissions are only binding for the purpose of the particular case in which they are made: Dawson v Great Central Railway (1919) 88 LJKB 1177 at 1181-2", was apposite. See also the discussion in Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 3)[26].

96 Counsel for Mr Vizard submitted that the statement of agreed facts had the status of admissions akin to a pleading and were provided for the purpose only of the ASIC proceeding. Mr Vizard had not deposed to the agreed facts in the way of formal evidence given from the witness box. Furthermore, the statement was provided under the protection afforded by s 1317Q. If, in these circumstances, Mr Vizard was required to answer questions as to the facts in the statement, the evidence thus given, as to which findings could be made, would give to the facts an evidentiary value which the statement of agreed facts did not possess. Moreover, the evidence thus given would not have the protection of s 1317Q. There was thus the risk that the evidence would tend to expose Mr Vizard to a proceeding for the imposition of criminal penalties in respect of the same conduct dealt with by Finkelstein J. There was also the risk of exposing Mr Vizard to punishment for perjury in relation to his evidence at the committal hearing.

97 It remains to mention only that I also had to consider arguments as to whether the privilege had been waived by the provision of the statement of agreed facts and by the giving of evidence at the committal where Mr Vizard had been warned of the risk of perjury. It is not necessary to develop that aspect.

98 Finally, I was provided with materials to substantiate the existence of a real basis for Mr Vizard's apprehension of a risk of a charge in perjury in relation to his evidence at the committal hearing and of ASIC or the Commonwealth Director of Public Prosecutions bringing a criminal proceeding concerning the matters in the statement of agreed facts. As to this it is sufficient to refer to Exhibit AA.

Mr Hilliard's application for a permanent stay of the proceeding

99 At the conclusion of Westpac's case counsel for Mr Hilliard opened his case briefly and then made an oral application for an order that the proceeding be permanently stayed. The following observations are concerned only with the stay application.

100 The basis on which the stay was sought was that the effect of Mr Vizard's refusal to answer questions on the ground of a tendency to self incrimination was to deny Mr Hilliard a fair trial. So much was this so that to permit the trial to continue would bring the administration of justice into disrepute. This was because the taking of the privilege had precluded important areas of questioning on matters of Mr Hilliard's authority to sign cheques and Mr Vizard's credit. This included questions on the issue whether Mr Vizard had given false evidence at the committal, and questions as to his conduct in the insider trading affair. The privilege had erected a barrier which prevented Mr Hilliard's counsel from being able to properly test Mr Vizard as to matters of probative relevance and credit. It was recognised that "it is not permissible to draw any inference adverse to a witness from the reliance of the witness on a claim of privilege against self-incrimination"[27]. For, if such an inference could be drawn, it would destroy the privilege. Further, no inference can be drawn adverse to the party calling the witness. But unfairness in the trial resulting from the taking of the privilege was another matter, and it was unfair of Westpac to proceed with a credit against credit case where one party had his arms tied firmly behind his back. Mr Hilliard was not on an even playing field.

101 I heard substantial argument in the course of which I was referred to several authorities including Walton v Gardiner[28]; Victoria Aircraft Leasing Limited v United States[29]; Batistatos v Roads and Traffic Authority of New South Wales[30]. Beyond having outlined the basis of the application it is not necessary to set out all that counsel said in their submissions. At the conclusion of the argument I refused the application[31], following which Mr Hilliard's counsel commenced to call their evidence. The application was not renewed.

The facts

102 In this section I set out the background facts, following a chronological order as far as possible. Where there are conflicts in the evidence, I resolve them as far as possible in this section. Some issues, however, are merely raised here and will be dealt with later when I deal more particularly with the evidence of Mr Vizard and Mr Hilliard.

103 It is convenient to begin by briefly describing Mr Hilliard's background and the circumstances in which he came to work for Mr Vizard and the PAS Group.

104 Mr Hilliard was born in England in 1949. He migrated to Australia with his family in 1956 and two years later moved to New Zealand. In 1975 he travelled to England where he had various bookkeeping jobs. He returned to Australia in 1984 and came to Melbourne where he worked as a bookkeeper with a funeral parlour and then with a travel agency called Wandana Travel. In 1985 he commenced a relationship with Margaret McCready, which developed into a de facto relationship which ended in 2002. Neither had any children. While working for Wandana Travel, Mr Hilliard met Mr Wood and they eventually set up IAT. Mr Hilliard acquired a 50% interest in IAT and provided some ongoing capital. As mentioned above, in 1991 the IAT business was adversely affected by the first Gulf War. Mr Wood and Ms Hellstrom continued to work full time at IAT, and, while Mr Hilliard continued to be involved in the IAT business, he sought alternative employment.

105 In 1984 Mr Vizard established Performing Arts Services Pty Ltd which carried on the business of providing film and television production services. Mr Vizard subsequently established further companies, including Roxby Park Primary Producers Pty Ltd, which operated a farm and pastoral business at a property near Geelong, and The Vizard Foundation Pty Ltd, which was trustee of a charitable trust known as The Vizard Foundation[32]. By the early 1990s, Mr Vizard controlled at least 10 companies, most of which were trustees of discretionary trusts and unit trusts. The companies and trusts were referred to at the trial as the PAS Group and I do the same[33]. The business of the PAS Group had grown dramatically from 1989 to 1990. In addition to the business of the PAS Group, in 1990 Mr Vizard set up a joint venture production house called Artists' Services Pty Ltd ("Artists' Services"), which was owned by PAS and an unrelated party. Both Artists' Services and the PAS Group were involved in television production and until about 1994 they shared office accommodation in South Melbourne where approximately 50 staff from both entities worked. In this period, Artists' Services became "immensely busy". Mr Vizard said "We would have been one of the largest producers of television in the country at that time. I think we were producing in the order of 1000 hours of television or so a year". Mr Vizard was "almost fully engaged in the creative and production side of the business"[34]. In the period between 1991 and 2000, Mr Vizard would generally spend between three and six weeks per year travelling on business, both domestically and overseas. Further, his family took four to five weeks of vacations during school holiday periods. Mr Vizard said, and I accept, that he and his family were away for between eight and 11 weeks per year, depending on the year.

106 Following advice from his solicitor in about 1990 that new accountants should be appointed to look after the external affairs of the PAS Group, Clarke & Co were engaged in early 1991 to provide accounting advice to the PAS Group and also to Mr Vizard and his family. Clarke & Co prepared the annual accounts for the PAS Group and Mr Vizard's family, and also provided taxation advice. Mr Vizard said that shortly after their appointment Clarke & Co recommended that as he (Mr Vizard) was so busy in the creation and production side of the business, an internal bookkeeper/financial manager be appointed "to look after all of our financial and accounting interests internally and liaise with Clarke & Co, the external accountants". Mr Vizard accepted the recommendation and asked Clarke & Co to assist in finding a bookkeeper. Clarke & Co engaged a "head hunting" firm known as Accountancy Link to assist in the recruitment process.

107 Meanwhile, the declining fortunes of the IAT business in 1991, to which I referred above, led Mr Hilliard to seek alternative employment. He approached an employment agency and left a copy of his curriculum vitae with the agency. The curriculum vitae stated that he had two degrees, a Bachelor of Commerce and a Bachelor of Arts from Auckland University. In fact, he had no tertiary qualifications. He said in evidence that he "invented" those qualifications in order to enhance his prospects of finding employment. He said it was something he had done in England previously in the course of seeking and obtaining bookkeeping jobs and he just kept that up. The agency duly contacted Mr Hilliard and told him that "there was a job for a high profile person" which led to Mr Hilliard attending an interview with Mr Lay of Clarke & Co and Winston Wade who was the financial controller of Artists' Services. Mr Hilliard was informed that the high profile person in question was Mr Vizard. Mr Hilliard expressed an interest in the job. Later, Mr Hilliard had a short interview with Mr Vizard. Mr Hilliard commenced working for the PAS Group on 29 July 1991. He commenced on a salary of about $45,000 per annum. At the time Mr Hilliard left the PAS Group in October 2000, his salary was in the order of $60,000 per annum.

108 As to Mr Hilliard's role in the PAS Group, Westpac's counsel said in his opening, and I find it to be the fact, that Mr Hilliard came to occupy a "very close position of trust" in relation to Mr Vizard and the PAS Group soon after commencing employment. Mr Vizard gave evidence that:

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110 Mr Hilliard said that he initially took instructions (which he described as "sketchy") from Mr Vizard. Thereafter, he took his main instructions from Mr Lay. Mr Lay said in cross-examination that Mr Hilliard was his point of contact within the PAS Group for accounting and annual tax return purposes. Mr Lay instructed Mr Hilliard as to how to do the books and what was entailed. Mr Hilliard completed separate balance sheets and profit and loss statements for each company in the PAS Group. He provided Clarke & Co with the books of account for the companies in the PAS Group to enable annual income tax returns to be completed. He also sent trial balances to Clarke & Co from which annual accounts were prepared[37]. Mr Lay's recollection was that the accounts came to his firm "already in trial balance format ... we would make some general review of it to see if it appeared reasonable. We would then make any adjustments that appeared necessary and from that, complete the final accounts and tax returns ... in most cases they were forwarded care of Mr Hilliard for him to arrange signature by Mr Vizard"[38]. I note that Westpac's counsel said in opening[39] (and it was not disputed) that over time Mr Hilliard's role grew to acting as the public officer for taxation purposes and signing the taxation returns of all the companies in the PAS Group.

111 When Mr Hilliard commenced employment, both he and Mr Vizard were located at the offices shared by the PAS Group and Artists' Services in South Melbourne. Mr Vizard said that in 1991 and into 1992, he and Mr Hilliard would see each other "relatively frequently ... perhaps once every week or once every couple of weeks". Mr Hilliard did not say specifically how often he saw Mr Vizard at this time. Rather, Mr Hilliard said that he attended to the accounts of the PAS Group companies and the private accounts of the Vizard family. This involved checking and paying invoices including some household accounts. Mr Hilliard said that in 1992 the Vizards purchased[40] a property in Toorak which they commenced to renovate, and that he (Mr Hilliard) was involved in managing the invoices for that work. He received from the supervising architect the reports and bills from service providers, and it was his job to check those bills against the reports and the contracts and then go to Mr Vizard to request his approval for payment. Mr Hilliard said that, in terms of the group of companies, Mrs Vizard looked after the household expenses and was employed by Performing Artists Services, but had no hands-on, practical involvement in any of the activities.

112 Mr Hilliard said that in 1993 and 1994 he was required to monitor and facilitate several new business activities being pursued by Mr Vizard. These included Mr Vizard's share portfolio, acquisitions for the wine cellar, and the acquisition of art by the Vizard Foundation. Also, the superannuation funds started to acquire investments. Mr Hilliard said that he saw Mrs Vizard once a week when he came to collect the household bills that were paid and those that had to be paid, but he was scarcely an intimate of their family. During this period he and Mr Vizard would meet often, "weekly, if possible, at least and certainly every couple of weeks. I would bring the bills that he had to authorise for payment along. We discussed any consultancies or any activities that were ongoing and every month I presented him with the management accounts and budget reports and that sort of thing".

113 Mr Vizard said that he did not believe it was the case that Mr Hilliard picked up household bills directly from Mrs Vizard as "I believe Sarah paid a lot of the bills herself". Mr Vizard denied that Mr Hilliard assisted the architect in the way described. He said that after 1992, he and Mr Hilliard saw each other less frequently, "I was working really - almost an 18 hour day and I would see Mr Hilliard infrequently. Sometimes once every few weeks, once a month, sometimes five or six weeks might elapse before we had a significant meeting". Having regard to all the evidence, in particular the evidence of Mr Vizard himself that "our family trusted him with every aspect of the financial management and operation of our affairs. He attended to all of the payment of the invoices and the bills", I am satisfied on the balance of probabilities that Mr Hilliard did assist with the Vizard home renovations, and pay household accounts in the way that he described. I accept that both Mrs Vizard and Mr Hilliard paid household bills. I find it to be the fact that, during this period, Mr Hilliard attended on a regular basis at the Vizard family home to collect paperwork relevant to his bookkeeping role and also to assist the architect.

114 In order to pay the various accounts and invoices Mr Hilliard signed many cheques on the accounts of the Vizards and the companies in the PAS Group. As to his authority to sign cheques drawn on the PAS Group accounts, Mr Hilliard said that:

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115 Mr Hilliard said that Mr Vizard saw all the accounts because Mr Hilliard took them to him. For accounts such as tax bills and PAYE bills, Mr Hilliard would pay them but Mr Vizard would go over them at the end of the month. Otherwise he would approve all the bills. Mr Vizard would do so in person or if he received the bill first he would write "okay to pay". Sometimes he would send a memo asking Mr Hilliard to draw a cheque for something he had purchased or he would get his personal assistant to contact Mr Hilliard by phone and ask for a cheque[41]. That remained the procedure throughout Mr Hilliard's employment. Mr Vizard, on the other hand, generally denied that he authorised Mr Hilliard to sign and pay cheques in excess of $10,000. He said in cross-examination that he had no recollection of discussing with Mr Hilliard the payment of accounts in his office in the years 1991-1993. He denied that Mr Hilliard frequently referred payments to him for approval. I refer to these matters below.

116 In 1994, the PAS Group relocated to offices in Nott Street, Port Melbourne. At all relevant times thereafter, Mr Vizard's office remained at Port Melbourne. Mr Hilliard was located at Port Melbourne until, in 1995, he moved to office premises owned by the Vizard Foundation, in a building called Vizard House, located at Clarendon Street, East Melbourne[42]. From 1995 until he left the PAS Group in October 2000, Mr Hilliard was based at Vizard House in East Melbourne, though he frequently attended at the Port Melbourne office where he collected mail.

117 It is convenient to note at this point that there was some conflict in the evidence as to whether relevant mail, such as correspondence, invoices and accounts, was sent to Mr Vizard or to Mr Hilliard. Mr Vizard said that almost all of the correspondence, invoices and accounts directed to the PAS Group were addressed to "Mr Hilliard at his office wherever that happened to be at various times", that a small number went to Mr Vizard's office but to his (Mr Hilliard's) attention and they went into a tray where he would collect them on a daily or very frequent basis. So almost without exception, all of the invoices and financial correspondence was addressed to and collected by Mr Hilliard. Mr Hilliard's evidence was that, in the period from 1991 to 1993, while originally most accounts were addressed to Mr Vizard, more accounts began to be addressed to him (Mr Hilliard) as it became known he was doing the bookkeeping. Mr Hilliard added that up until 1994, he and Mr Vizard were located at the same office premises, "so they all went to the same place". Mr Hilliard added that a lot of bills were addressed to Mr Vizard "like legal bills ... as I recall ... He was the one who initiated all the work" while "some of the regular bills were addressed to me ... electricity, telephone, that sort of thing". Mr Hilliard qualified this in cross-examination, accepting that some (but not all) bills from the lawyers and accountants were addressed directly to him.

118 To assist in resolving these differences (and others to which I refer below) in the evidence, it is convenient to interpolate that Mr Vizard's senior executive assistant from mid 1998, Ms Doney, gave evidence as to the office arrangements of Mr Vizard and the PAS Group. She said that upon commencing her employment at Nott Street, Port Melbourne, her office was located two doors down from Mr Vizard's office. In late 2000 their offices were refurbished and Mr Vizard's office was expanded so that Ms Doney and Mr Vizard had adjoining offices. Ms Doney's role involved taking incoming telephone calls for Mr Vizard (which were directed to her through the switchboard or her personal line), managing Mr Vizard's diary, and "basically everything for Mr Vizard would come across my desk and it would be how I would prepare it for his briefing or distributing to other people". When people came to the office to see Mr Vizard, they would go through Ms Doney in the first instance. Although she only commenced her employment in mid 1998 - so her observations are confined to the period from that time onwards - her evidence helps to place in a broader context the respective evidence of Mr Vizard and Mr Hilliard as to their interaction, the frequency of their meetings and the practice by which accounts were paid.

119 As to the arrangements for the collection of documents from the Port Melbourne office, Ms Doney said in evidence in chief that she opened mail as it came in. If a document was for Mr Hilliard, she would put it in his tray and call him to instruct him to collect it. If it was a matter of urgency, such as a payment required, she would often send the document to Mr Hilliard by facsimile. She added that "all correspondence and anything that came in, such as requiring a payment, as such, I would forward to Mr Vizard for his comments or direction". Given a hypothetical example by counsel, say an account for $20,000 from a firm of solicitors addressed to Performing Arts Services, she "would most likely open it and show it to Mr Vizard". If the same account were addressed to Mr Hilliard she "would most likely open it and do the same procedure". As to this "same procedure", when asked what, if anything, she would do in relation to Mr Vizard, she said "I would put it in his documentation for reading". As to how such documents went from Mr Vizard to Mr Hilliard's collection tray, Ms Doney said "I would sit with Mr Vizard through the day and we would go through the paperwork. I would take instruction on how it was to be handled if I had not handled it myself directly and therefore, I would then take it out and put it in Roy's [Mr Hilliard's] tray, call him and ask him to come and collect it or fax it to him". Ms Doney accepted in cross-examination that there may have been mail addressed to Mr Hilliard which she did not open and which she simply left unopened in Mr Hilliard's tray. Counsel referred to several invoices from Clarke Bentleys, including a letter addressed to Mr Hilliard attaching a notice from the ATO concerning superannuation surcharge contributions of $517. Ms Doney accepted that she may have put this letter into Mr Hilliard's tray unopened. She agreed that she would not trouble Mr Vizard over an amount of $517. She also agreed with counsel's suggestion that "in your practice the letters which you took to Mr Vizard to discuss with him were those which, first of all, you had opened; and secondly, which when you read them thought they were of sufficient importance to draw to his attention". If she did not consider them sufficiently important, she would act on her own initiative which, in the context of the invoices concerned here, meant putting them in Mr Hilliard's tray for collection. In re-examination, Ms Doney explained the criteria she used to determine which letters to show to Mr Vizard. She said:

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120 As to the nature of the contact between Mr Vizard and Mr Hilliard, Ms Doney said that she would attempt to set up fortnightly meetings between Mr Vizard and Mr Hilliard, which did in fact occur in Mr Vizard's office and lasted an average of one hour on each occasion. Mr Vizard and Mr Hilliard were the only people in Mr Vizard's office during these meetings. Mr Hilliard arrived at the meetings with paperwork, documents, books. In cross-examination counsel suggested to Ms Doney that the meetings were very infrequent during the first half of 2000 when Mr Vizard was living at his farm near Geelong. Indeed, Mr Vizard said in evidence that he attended the office "I would have thought less than 20 times over that six month period" and that he saw Mr Hilliard "very, very infrequently. It would have been a handful of times". Ms Doney agreed that Mr Vizard was not in the office a lot during the first half of 2000, but said that if a meeting did not take place in the office "it would take place at the house" by which she meant the farm house in that Mr Hilliard "would sometimes travel to the farm".

121 As I said earlier, I accept Ms Doney as an honest witness and I accept her evidence. I consider that Mr Hilliard understated the extent to which relevant invoices were addressed to him. I find that many invoices were addressed to Mr Hilliard at the Port Melbourne office, but regardless of who the addressee was, and notwithstanding that Ms Doney would not always open Mr Hilliard's mail and also that she would not trouble Mr Vizard with small amounts of money, I find that the accounts, invoices and correspondence were generally (and especially in the case of large accounts, say for amounts over $10,000) brought to Mr Vizard's attention and that he reviewed such accounts, invoices and correspondence and instructed Ms Doney and Mr Hilliard accordingly. In so concluding, I bear in mind the list of cheques in Exhibit 2, referred to below, which show that Mr Hilliard signed 141 cheques over $10,000 for bona fide expenses of the PAS Group and Mr Vizard in the period 1996 to 2000. I reject Mr Vizard's attempt to distance himself from the invoices and accounts and to say that he did not pay attention to such matters or that such accounts were paid by Mr Hilliard without his express or tacit approval.

122 I am satisfied that Mr Vizard's attention was drawn to such matters during his meetings with Mr Hilliard and, in the period of 1998 to 2000, in discussions with Ms Doney. I find that during the period of 1998 to 2000, Mr Vizard and Mr Hilliard generally met on a fortnightly basis as stated by Ms Doney, although their meetings may have been less frequent during the first half of 2000. As Ms Doney did not accompany Mr Hilliard to the farm, she could not give evidence as to the duration of those meetings, but there is no reason to suppose that they were any different from the meetings at the office, which I accept lasted about an hour. As to the period between 1991 and 1998, I find that notwithstanding the hectic nature of Mr Vizard's schedule, he met with Mr Hilliard on a fairly regular basis. There may have been periods in which six weeks (or more) elapsed between meetings, but this did not alter the fact that the two men had regular meetings to which, I find, Mr Hilliard took paperwork, invoices for Mr Vizard to approve, budgets and monthly balance sheets among other things. In so finding, I reiterate that Mr Vizard himself described Mr Hilliard as being employed to look after all the internal accounting for himself and the PAS Group. As to what this involved, I have referred above to the wide range of tasks performed by Mr Hilliard. I consider that Mr Vizard was a man of considerable business acumen who expected Mr Hilliard to provide him with detailed information as to the financial position of the PAS Group and the status of his investments. I note here that the "employment specification" referred to Mr Hilliard as "being expected to contribute to the financial planning and general management of the group". In these circumstances, it is understandable that there were regular meetings of some substance between Mr Hilliard and Mr Vizard at which a range of financial matters were discussed in some detail. I accept Mr Hilliard's evidence that Mr Vizard required him to present, and he did present to Mr Vizard, monthly reports comparing actual expenditure against budget in addition to monthly reports on assets, including cash and shares[43]. In short, Mr Vizard's evidence - that Mr Hilliard carried out his role in an autonomous fashion and had a very low degree of supervision - understates the position. In my view, Mr Vizard deliberately underplayed the extent to which he exercised control over Mr Hilliard's work.

123 I also reject Mr Vizard's denial that he discussed with, or in the presence of, Mr Hilliard the income generated by the PAS Group and the corresponding tax liability position. I accept that Mr Vizard discussed those matters with Mr Lay at the end of most years, but given Mr Hilliard's role in the financial planning for the PAS Group and the fact that Mr Hilliard was Mr Lay's primary contact within the PAS Group for the purpose of preparing the annual reports, it is inherently plausible, and I find it to be the fact, that all three men discussed together the tax position of the PAS Group. As to this I also note that in the memorandum from Mr Vizard to Mr Lay, dated 5 February 2001[44], concerning loans to CTI, Mr Vizard referred to Mr Hilliard's advice in relation to investing in the technology sector and that following his return from technology briefings in the US as a Telstra director, he "spoke at length" with Mr Lay and Mr Hilliard among others about "my trip, the mood, trends, the particular investor presentations and the growth in US markets and their positivity towards these types of technology stocks". In short, Mr Hilliard was not just Mr Vizard's bookkeeper but also someone with whom Mr Vizard would consult about matters of business and investment.

Banking arrangements for the PAS Group

124 At the time Mr Hilliard commenced his employment, the PAS Group and Mr and Mrs Vizard conducted their banking with Westpac's branch at the corner of Collins and Russell Streets. On 31 July 1991, that is on the third day of his employment, Mr Hilliard was made a signatory on the account of the Vizard Foundation. At this point, there was no monetary limit on Mr Hilliard's authority to sign cheques on this account.

125 Later in 1991 the existing bank manager retired, recommending that Mr Vizard's banking be transferred to the newly created Westpac Private Bank. Mr Vizard agreed to this and, to this end, Mr Hilliard met with Mr Fyfe of the Private Bank to arrange to have the relevant accounts transferred. That process involved the closing of some accounts, the opening of new accounts and the transfer of existing accounts. Mr Hilliard said, and I accept, that he (Mr Hilliard) suggested to Mr Vizard that there should be limits on the amounts for which signatories other than Mr Vizard could sign cheques, and that only Mr Vizard should sign cheques for amounts over $10,000. Mr Hilliard said, and I accept, that Mr Vizard agreed to this suggestion. It is consistent with the letter Mr Hilliard wrote to Mr Fyfe, dated 25 October 1991, which stated:

[90]

The copy of this file note which appears in the Court Book contains handwritten annotations (made by Mr Fyfe's assistant) which marked the two paragraphs set out above and stated "Ledgers please note". Mr Fyfe explained that "ledgers" was the back office team at the Private Bank who looked after all the processing of vouchers and the payment of cheques.

134 As to the practice that was put in place, Mr Fyfe said the following. Up to May 1994 when he left the Private Bank, there was a practice in the Private Bank in relation to cheques over $10,000 generally, not just those of Mr Vizard, whereby the executive managers would receive vouchers that had come in and been paid for that day in excess of $10,000. That was to give the executive managers an idea of possible business development opportunities of clients but also "to verify the legalities, if you like, of the cheques". As to the PAS Group cheques, they were presented to Mr Fyfe to be initialled and those for amounts over $10,000 were then sent to Mr Vizard for confirmation. As to whether a cheque would be cleared before there was confirmation from Mr Vizard, "effectively it would be paid through the bank records and then sent to Mr Vizard for confirmation. Otherwise we would have a great stack of cheques building up". As to the process of confirmation, Mr Fyfe agreed in cross-examination that it was his practice that whenever a cheque was signed by Mr Hilliard for more than $10,000, he referred the matter to Mr Vizard for approval. Approval had to be from Mr Vizard himself, rather than from someone on his behalf. Mr Vizard confirmed payment by written signature. Mr Fyfe used a special covering note that he said would be sent out, signed by him, addressed to Mr Vizard with the actual paid cheque attached[52]. The covering note, entitled "Notice of Irregular Cheque", set out the relevant account details, date and amount of the cheque, and stated "It only has Roy Hilliard's signature". When asked what came back from Mr Vizard, Mr Fyfe said "either the cheque countersigned or the slip on the front countersigned, sent back to us. Then the vouchers. The cheques would be put into the paid vouchers for that day". When asked whether Mr Vizard always responded, Mr Fyfe said "Let's say we had to follow up a lot of those notices". Mr Fyfe could not recall any occasion of being informed that a cheque signed by Mr Hilliard was not to be honoured. There was no need to ask Mr Vizard what the purpose of the cheques was, as he had confirmed payment of the cheques. Mr Fyfe said that if Mr Vizard had advised him that a cheque was not authorised, he would have dishonoured it. However, he conceded that he could not have done anything about it if the cheque had already cleared the bank system. Whether that had happened depended on the number of days elapsed. Mr Fyfe could not recall what the relevant period of grace was.

135 I interpolate that Westpac's counsel suggested to Mr Hilliard in cross-examination that it was highly likely he (Mr Hilliard) had seen all of the notices of irregular cheques, regardless of whether they were addressed to Mr Vizard or somebody else, to which Mr Hilliard said "I can't say that". Counsel further suggested that Mr Fyfe followed up such notices with Mr Hilliard. Mr Hilliard denied this.

136 After Mr Fyfe left the Private Bank in May 1994, Mr Antony became the executive manager responsible for the accounts of the PAS Group and Mr Vizard. As I mentioned above, Mr Antony was not called to give evidence and there was no evidence as to why he was not called. Mr Antony's assistant manager, Mr Birthisel, did however give evidence. He said that Mr Antony was not well and was frequently away from work. He went on sick leave in August 1995 and did not return. Mr Birthisel was involved with the PAS Group accounts until November 1995 when Stephen New took over. During this period, it was a very quiet account as there were no borrowings. Mr Birthisel said he only met Mr Hilliard and Mr Vizard on one occasion each. Mr Birthisel was not aware of any arrangement or practice whereby Mr Hilliard could sign cheques on the PAS Group accounts for more than $10,000 provided those cheques were subsequently confirmed by Mr Hilliard. His job did not require him to look at cheques. No cheques were presented to him for authorisation and he made no enquiries as to what authority different people had to sign cheques on the PAS Group accounts. Mr Hilliard said that after he relocated to the East Melbourne office in about mid 1995, because he was some distance from Mr Vizard it became more necessary for him, on occasion, to sign cheques himself, "relying on the system that had been put in place earlier"[53].

137 In November 1995 Mr New took over as the executive manager responsible for the accounts of the PAS Group and Mr Vizard. He remained in that role until 2002. In that capacity Mr New dealt with Mr Hilliard rather than Mr Vizard. It is to be noted that Mr Hilliard and his de-facto partner were also clients of the Private Bank. Mr New said that he and Mr Hilliard would speak over the phone and meet as required, probably two, three or four phone calls per month. It was not part of Mr New's role to look at all cheques drawn on the PAS Group accounts, although the Private Bank's practice was to circulate to executive managers every few days a folder containing a bundle of cheques (of all the Private Bank clients). But this was done after the cheques had been presented and paid. The managers would have seen cheques for the whole of the Private Bank's clients, not just those of their own clients. The purpose was to give the managers a better understanding of the business activities and banking needs of their clients.

138 As to the verification of cheques, the back office performed the function of looking at the cheques that came in every day. At some time, Mr New thought probably around 1997 or 1998, the task of verifying cheques was moved from the back office to an offsite location. As the Private Bank stopped receiving cheques, the practice of circulating the folders of cheques among the executive managers also stopped. Although he said that he was not sure of the level of scrutiny employed by the back office, Mr New agreed in cross-examination that at least some, if not all, cheques were checked by the back office. Mr New said in evidence in chief that "if a back office assistant had thought that there was something wrong with the cheque then I guess she would have brought it to the attention of the responsible manager"[54]. He agreed in cross-examination that, as the executive manager in charge of the account, he would expect an irregularity or suspected irregularity to be brought to his attention. In late 1995, probably after the Christmas period, a staff member drew Mr New's attention to a cheque drawn on the account of Performing Arts Investments, signed by Mr Hilliard apparently in excess of his authority. The cheque, dated 21 December 1995, was payable to IAT in the sum of $38,000. I interpolate that between June and December 1995 Mr Hilliard signed several cheques drawn on the PAS Group accounts, payable to IAT for more than $10,000, the amounts ranging from $15,000 to $50,000. The staff member told Mr New that the authority held by the Private Bank limited Mr Hilliard to signing cheques up to $10,000 and, as this cheque was for $38,000, it would be appropriate to get an update authority to allow Mr Hilliard to sign that sort of cheque. There was then a discussion between Mr New and Mr Hilliard about this matter. There is a difference in the evidence of Mr New and Mr Hilliard as to what occurred and what was said.

139 Mr Hilliard's evidence was that he told Mr New that "we had this arrangement in place and he said that it was no longer effective. So that we had to find some other way of regularising the arrangement"[55]. Mr Hilliard said in cross-examination that he could not remember whether he did or did not tell Mr New that there was an arrangement. Mr Hilliard's evidence as to telling Mr New they had an arrangement was not put to Mr New in cross-examination with the result, said Westpac's counsel, that the Court should find that Mr Hilliard said no such thing to Mr New because he (Mr Hilliard) knew that the arrangement was no longer being followed by the bank. In my view, given the fact that the evidence was not put to Mr New and bearing in mind Mr Hilliard's doubt expressed in cross-examination, I do not accept that Mr Hilliard told Mr New that they had an arrangement with Mr Fyfe.

140 I prefer Mr New's evidence, which was as follows. Mr New told Mr Hilliard "'We are over the limit here' and as I recall it, he was quite amenable and understood that". Mr New told Mr Hilliard that "we needed to get an updated authority signed by Vizard authorising him to sign cheques up to that sort of - up to an appropriate amount, up to $50,000 or whatever the appropriate amount was". Mr Hilliard said that "he would get that authority from Vizard but it would take a few weeks because Vizard and his family were on holiday at their farm in Geelong"[56]. I interpolate that Mr New made a contemporary note[57], attached to the cheque which had prompted the discussion, which stated:

[92]

141 It is convenient to deal at this point with the status of the arrangement with Mr Fyfe, and what became of the practice of referring cheques to Mr Vizard. Counsel for Westpac suggested that Mr Hilliard knew at the time he spoke to Mr New that the bank was no longer adhering to the arrangement. I do not accept that Mr Hilliard knew that as a fact - after all, the notices of irregular cheque included in the court book were, as I find the fact to be, in most cases sent to Mr Vizard rather than Mr Hilliard, so if those notices ceased being provided to Mr Vizard, Mr Hilliard would not necessarily have known about it - although I would infer that at the least Mr Hilliard suspected that confirmation was not being sought as often as it had been during the period in which Mr Fyfe was executive manager, and not in respect of every cheque in excess of his authority. I do not overlook that Mr Hilliard said that in the period after mid-1995 it became more necessary for him, on occasion, to sign cheques himself, relying on the system that had been put in place earlier. That is, Mr Hilliard said that, during the period where Mr Antony was executive manager, he (Mr Hilliard) was still relying on the arrangement reached with Mr Fyfe. As to this I note that Mr Stevens' evidence, to which I refer below, was that one of the cheques in excess of $10,000 which he received from the bank from the October/November 1995 statement period was endorsed by the bank manager with the words "This amount exceeds Roy's authority. We should get Steven to confirm this when he comes back from holidays". Mr Stevens was not asked to elaborate on how he knew that the cheque had been endorsed by the manager (as opposed to some other member of staff), or as to the identity of the manager, but I note that the cheque pre-dated the 21 December 1995 cheque which was the first such cheque drawn to Mr New's attention. I thus infer that Mr Antony endorsed the cheque. This suggests that during the time that Mr Antony was executive manager, the arrangement was still in place, at least in the sense that the bank considered that confirmation should be sought from Mr Vizard of a cheque ostensibly in excess of Mr Hilliard's authority, but it does not follow that the bank was in fact following up relevant cheques with Mr Vizard. As to what became of the practice after Mr Fyfe's departure, there was a distinct lack of evidence and I bear in mind that such evidence lay peculiarly within the knowledge of the bank. Counsel for Westpac submitted that, in the absence of evidence, it should be inferred that "due to some alteration in its systems, most likely associated with the change in managers, Westpac began to overlook the limitation on its mandate with respect to cheques signed by Mr Hilliard".

142 I find as a fact that some time after the departure of Mr Fyfe, the bank neglected to confirm with Mr Vizard the payment of many cheques signed by Mr Hilliard in excess of his authority. There was no evidence of any such confirmation being sought during the time Mr Antony was executive manager. Then, as to the time after the arrival of Mr New, a cheque for $38,000 to IAT was brought to Mr New's attention, but he did not seek to confirm the cheque with Mr Vizard. Rather, he discussed the matter with Mr Hilliard, which resulted in an increased authority being obtained. I find that none of the 11 cheques sued on in Schedule A were referred to Mr Vizard. Yet, regardless of the (lax) practice actually adopted by the bank, the authority Mr Vizard had previously given to Mr Fyfe to pay cheques signed by Mr Hilliard in excess of his authority remained, at least until the time at which Mr New requested Mr Hilliard to provide an updated authority and such authority was provided.

143 As to that authority, on 2 February 1996 Mr New received from Mr Hilliard a facsimile letter (addressed to Mr New at the Private Bank) on Performing Arts letter head, and dated that day, which stated:

[94]

Mr New said in evidence that he thought that between the time of their conversation and his receipt of the facsimile, Mr Hilliard had called him to say that the updated authority was on its way.

144 It is reasonable to infer, and I do infer, that the $50,000 authority was received and acted on by the bank as superseding the prior $10,000 written authority.

145 I deal below (at [239]-[243]) with the issue whether, as Westpac alleges, Mr Hilliard forged Mr Vizard's signature on the $50,000 authority.

146 When the facsimile was shown to Mr New in his office, he said "That's good. Pass it on to the back office administration for them to process, to do what they do", by which he meant that the facsimile would be "presumably filed, noted". As to his belief about the contents of the facsimile, Mr New said "my feeling at the time was that's good. We are now in order, as it were, and we had achieved our objective of getting an updated authority". Mr New made no further enquiries of Mr Vizard or anybody else at the PAS Group to confirm the instructions or otherwise verify the facsimile. Mr New said that although he did not sight every cheque, he believed that each cheque drawn on the account was a payment on behalf of the account owner which Mr Hilliard was authorised to make. As to whether he believed that the proceeds of the cheques were being paid at the direction of or applied for the benefit of the relevant account holder, he said "Like I say, I didn't see every cheque but that would be the inference, absolutely. I mean, my role wasn't to be a cheque supervisor". Mr New said that if he had had any concern or doubt as to the whether the relevant account holder had authorised the cheques or whether the proceeds of the cheques were being paid at the direction of or applied for the benefit of the relevant account holder, he would have contacted Mr Vizard. The Bank would have paid the relevant cheques if Mr Vizard had so authorised.

Cheques signed by Mr Hilliard

147 Before turning to examine the cheques actually signed by Mr Hilliard, it is important to note that there was no evidence as to the total number of cheques drawn on the PAS Group accounts during the period of Mr Hilliard's employment. Further, there was no evidence as to the total number of cheques signed by Mr Hilliard, nor was there any evidence as to what proportion of the cheques signed by Mr Hilliard were for amounts in excess of $10,000. In the original statement of claim, the plaintiff sued on a total of 186 cheques (listed in Schedule A); 110 cheques were in Part 1 of Schedule A (being from the period 2 July 1993 to 25 January 1996) and 76 cheques were in Part 2 of Schedule A (being from the period 26 April 1996 to 8 June 2000). However, the final amendments to the pleadings removed from the plaintiff's claim those cheques in Schedule A for amounts less than $10,000. The result was that 99 cheques were excluded from Part 1 of Schedule A as being for amounts under $10,000. Only 11 cheques from that period remained in the claim. Of the 76 cheques dated 26 April 1996 to 8 June 2000, 26 cheques were excluded as being for amounts under $10,000, while 50 cheques remained in the claim. Thus the plaintiff's claim was narrowed from 186 cheques to just 61 cheques. But even before the amendments, Schedule A did not purport to list every cheque signed by Mr Hilliard on the PAS Group accounts during the time of his employment. Schedule A was silent as to any cheques signed by Mr Hilliard before 2 July 1993. Further, Schedule A did not include any of the 141 cheques (all for more than $10,000) signed by Mr Hilliard between 15 April 1996 and 13 October 2000, which were in Exhibit 2 to which I refer below. And as Exhibit 2 did not purport to be an exhaustive account of all cheques signed by Mr Hilliard in the relevant period, it is possible that Mr Hilliard signed other cheques. The overall result is that there is a lack of evidence as to the total number of cheques signed on the PAS Group accounts during the period of Mr Hilliard's employment, and what proportion of the cheques (in terms of both number and monetary value) were signed by Mr Hilliard as opposed to Mr Vizard or other signatories. The effect of this is that the Court was not afforded an overall perspective of the conduct of the relevant accounts, within which perspective the conduct of Mr Hilliard must be examined. I bear this matter in mind when assessing the evidence.

148 It is common ground that Mr Hilliard signed cheques on the PAS Group accounts for more than $10,000 during the period that Mr Fyfe was the executive manager at the Private Bank, although the plaintiff does not sue upon any of the cheques signed in this period. In evidence in chief Mr Hilliard was referred specifically to seven cheques he signed between 12 July and 23 August 1993, payable to Ord Minnett and J B Were for amounts ranging from $25,321.40 to $173,345.85. These cheques were actually within Mr Hilliard's authority by virtue of the letter of 17 November 1992 referred to above, which gave Mr Hilliard unlimited authority to sign cheques for share purchases through Ord Minnett and J B Were. Apart from that, Mr Hilliard said that Mr Vizard authorised him to sign and pay each of the seven cheques to purchase shares for Mr Vizard and his companies. The cheques were as follows: dated 19 July 1993, drawn on the account of PAS and payable to Ord Minnett in the sum of $32,079.55; dated 12 July 1993, drawn on the account of PAS and payable to Ord Minnett in the sum of $141,764.10; dated 16 August 1993, drawn on the account of Performing Arts Investments Pty Ltd and payable to Ord Minnett in the sum of $173,345.85; dated 16 August 1993, drawn on the account of PAS and payable to Ord Minnett in the sum of $51,852.97; dated 23 August 1993, drawn on the account of PAS and payable to Ord Minnett in the sum of $40,823.10; dated 16 August 1993, drawn on the account of Performing Arts Investments Pty Ltd and payable to J B Were in the sum of $49,861.55; dated 16 August 1993, drawn on the account of PAS and payable to J B Were in the sum of $25,321.40. Each of these cheques was for the purchase of shares approved by Mr Vizard. Mr Hilliard explained that, in the context of establishing his share portfolio, Mr Vizard had retained a share adviser, Solly Sethner. In consultation with Mr Fyfe and Mr Sethner, Ord Minnett and J B Were had been chosen as the principal stockbrokers through which Mr Vizard would purchase shares. As to the first cheque mentioned above, "I would tell him that there was a cheque required for $32,079.55, for instance to Ord Minnett and he would say 'okay'. I signed it because he was unavailable. He was at the time working on Tonight Live. He was over at the production facilities at Channel 7 which was down the road from the offices that I occupied and during the day he was closeted with his production people. So on occasion I had to write his cheques". As to the cheque paid to Ord Minnett in the sum of $141,764.10, Mr Hilliard said that he was authorised by Mr Vizard to write it, "again, a communication from him, I think perhaps by phone, that there was $141,000-odd worth of shares to be paid for and he said - he authorised me to pay for it". As to the cheque paid to J B Were in the sum of $49,861.55, Mr Hilliard signed it "In the same circumstances as I have just related, upon the authority of Mr Vizard and the agreement and the requirement to purchase shares for his investment portfolio". Mr Hilliard said that the cheques paid to J B Were in the sum of $25,321.40, to Ord Minnett in the sum of $173,345.85, and to Ord Minnett in the sum of $40,823.10, were signed in similar circumstances to those he had already mentioned. When pressed for greater specificity - following an objection from Westpac's counsel - Mr Hilliard said as to the cheque for $40,823.10 that Mr Sethner advised that shares be purchased, that Mr Hilliard told Mr Vizard of Mr Sethner's recommendation, then Mr Vizard said "Yes, go ahead and do it". Mr Hilliard then said that cheques paid to J B Were in the sum of $25,321.40 and to Ord Minnett in the sum of $51,852.97 arose out of recommendations by Mr Sethner to purchase shares, communicated by Mr Hilliard to Mr Vizard, and then approved by Mr Vizard.

149 In the context of explaining how he was authorised by Mr Vizard to sign these seven cheques, Mr Hilliard was shown the copies of the "Notice of Irregular Cheque" in the Court Book relating to each cheque, which Mr Fyfe said were sent to Mr Vizard for follow up. Mr Hilliard said that, with one exception, he did not see these notices until the present proceeding was commenced. The one exception was the note relating to the cheque paid to Ord Minnett in the sum of $173,345.85, which Mr Hilliard saw "when it was issued". It came to him through the Artists' Services internal mail and he passed it on to Mr Vizard for his action. It is apparent from the notices of irregular cheque that, notwithstanding the letter of 17 November 1992, Mr Fyfe referred these cheques to Mr Vizard for approval. Mr Vizard said he had no recollection of receiving these or any other such notices from Mr Fyfe.

150 As to the period when Mr Antony was the executive manager at the Private Bank, Mr Hilliard signed five or six[58] cheques payable to IAT for amounts in excess of $10,000. The plaintiff sues on each of those cheques. I note that it was during this period that Mr Hilliard began to sign cheques payable to IAT for more than $10,000. He had previously been signing cheques payable to IAT for amounts less than $10,000 (typically for $7,500 and $8,500) since at least as early as 1993. The cheques under $10,000 were removed from the claim following the amendment to the pleadings[59]. I note that Westpac's counsel asked Mr Hilliard in cross-examination why he began to write cheques to IAT for more than $10,000 from June 1995, to which Mr Hilliard replied "Because, as I said, I could. I had no problem with it" by which he meant that he had "a cast iron authority for that"[60]. Mr Hilliard expanded on this evidence in re-examination. He said[61]:

[96]

151 In the period when Mr New was the executive manager at the Private Bank, Mr Hilliard continued to sign cheques payable to IAT for amounts in excess of $10,000. There were more than 40 such cheques, ranging in amount from $13,889.26 to $49,612.72. In this period Mr Hilliard also signed nine cheques to Diners Club, British Airways, CS First Boston, Potter Warburg, and Cunard for amounts ranging from $12,598.37 to $28,530.92. The plaintiff sues on all of these cheques. Though not sued upon, Mr Hilliard signed (at least) a further 141 cheques for more than $10,000 drawn on the PAS Group accounts between 15 April 1996 and 13 October 2000, as shown in the list in Exhibit 2[62]. The list contains 15 cheques for amounts greater than $50,000. Accepting as I do Mr New's evidence that he took the 2 February 1996 authority to be genuine and the bank acted on it accordingly, the bank considered Mr Hilliard's cheque signing limit to be $50,000. Yet, during the time that Mr New was executive manager, the bank honoured 15 cheques signed by Mr Hilliard in excess of his authority, that is for amounts in excess of $50,000. Many of these cheques were for amounts in excess of $100,000. The largest cheque, paid to CTI, was for $500,000. I refer to it and some of the other cheques below. As I have said, Westpac does not sue on any of the cheques in Exhibit 2. That is to be explained by the likelihood, which I find to be the fact, that the proceeds of those cheques were applied for the benefit of the Vizards and the PAS Group, in the discharge of liabilities and the payment of legitimate business expenses[63]. For example, the list contains numerous cheques paid to the State Revenue Office and the Deputy Commissioner of Taxation, I infer to discharge tax liabilities of the PAS Group. There are also cheques paid to accountants, solicitors, art galleries and other businesses with which the Vizards and the PAS Group were accustomed to deal.

152 Notwithstanding that the proceeds of the cheques in Exhibit 2 were applied for the benefit of the PAS Group and were not part of Westpac's claim, there was a dispute as to whether Mr Hilliard was authorised to sign those cheques. In effect, Mr Vizard began by saying that Mr Hilliard was never authorised to sign any cheque for over $10,000 for any purpose whatsoever. He ultimately conceded in cross-examination that this was incorrect, at least insofar as he accepted that he (Mr Vizard) had signed the letter to Mr Fyfe which gave Mr Hilliard unlimited authority to write cheques to Ord Minnett and J B Were for share purchases for the benefit of the PAS Group. But that concession came relatively late in his cross-examination. Earlier, he had been shown some of the seven cheques to Ord Minnett and J B Were, drawn during the time of Mr Fyfe, and in each case he denied that Mr Hilliard was authorised to sign those cheques. And Mr Vizard never resiled from his insistence that he did not authorise Mr Hilliard to sign or pay any of the cheques in Exhibit 2[64].

153 Mr Hilliard, on the other hand, said that Mr Vizard instructed him to pay each of the cheques in Exhibit 2, except on some rare occasions where a payment was urgent and Mr Vizard was overseas or otherwise uncontactable, in which case Mr Hilliard signed the cheques without Mr Vizard's authority, and then informed him of that fact after he returned. As to the payment of tax bills and legal bills, Mr Hilliard said that he would attend on Mr Vizard with the relevant paperwork, they would go through the paperwork, and Mr Vizard would either instruct him to pay the bill or instruct him to query it.

154 As to the circumstances in which he signed some of the larger cheques in Exhibit 2, Mr Hilliard said that, with the cheque for $500,000 paid to CTI, dated 17 December 1999, he was instructed by Mr Vizard to draw the cheque and pass it on to Mr Lay. Mr Vizard told him it was for share purchases. Mr Hilliard knew to draw the cheque on the account of Brigham Pty Ltd because there was a loan agreement whereby Brigham was the entity to make loans to fund share purchases through CTI. There was also a cheque for $100,192 to Intersuisse, dated 11 January 2000, drawn on the personal account of Mr and Mrs Vizard, for some shares which Mr Vizard asked Mr Hilliard to purchase. There was a cheque for $450,000 to Multi Media Co, dated 25 February 2000, which Mr Vizard instructed Mr Hilliard to pay to convert options into shares. There were also five separate cheques (each for $150,000) paid to Oakton Computing Ltd Share Offer, each dated 19 May 2000. Mr Hilliard said that they were for the Oakton share offer and that Mr Vizard instructed him to write five separate cheques on the same day and take them to J B Were. Mr Hilliard said that he pointed out to Mr Vizard that his limit was $50,000 but "he said he needed to pay it over so I did". In the case of the cheque for $100,192 to Intersuisse, Mr Hilliard told Mr Vizard that it was in excess of his authority. Mr Vizard told Mr Hilliard not to worry about it, if the bank came back to him, he would authorise it. Mr Hilliard said he did not receive or hear of any query raised by Westpac as to the honouring of any of the 141 cheques in Exhibit 2.

155 Mr New gave no evidence (and was not asked any questions by either counsel) as to how Westpac came to pay cheques signed by Mr Hilliard so far in excess of his authority. There was no evidence as to whether Mr New or somebody else at the bank contacted Mr Vizard to seek his approval to pay such cheques. For his part, Mr Vizard said nothing as to whether the Private Bank contacted him to seek his approval for the payment of cheques in Exhibit 2. Mr Vizard simply denied that Mr Hilliard was authorised to sign any of those cheques. Counsel for Mr Hilliard cross-examined Mr Vizard as to many of the cheques in Exhibit 2. It is not necessary to set out what was said about each cheque, though I note the following. As to a cheque for $58,602.00[65], dated 26 May 1998, drawn on the account of PAS and payable to "Vizard J" (Mr Vizard said this could either be his mother or his sister) the following exchange occurred:

[98]

Mr Vizard said the payment was eight or nine years ago and reiterated that he had no recollection of it. Then, as to the cheque for $500,000 payable to CTI, Mr Vizard said that he did not authorise Mr Hilliard to write the cheque. He refused to answer whether Brigham had transferred $500,000 to CTI, relying on the privilege against self-incrimination. He also refused to answer whether his evidence at Mr Hilliard's committal (that he had loaned money to CTI for the purpose of investing) was correct.

156 I can say at once that I do not accept Mr Vizard's evidence that he did not authorise Mr Hilliard to pay any of the cheques in Exhibit 2. Mr Hilliard's account as to how he came to sign the cheques in Exhibit 2 is inherently plausible and conforms with the earlier evidence and my findings as to Mr Vizard's practice of approving invoices for payment and instructing Mr Hilliard accordingly. In contrast, to believe Mr Vizard is to accept that over a period of four years numerous bills, which Mr Vizard knew to exist, for amounts over $10,000 remained unpaid in circumstances where Mr Vizard did not pay the bills himself and Mrs Vizard did not have authority to sign cheques in excess of $10,000. I note that Mr Vizard suggested at Mr Hilliard's committal that Mrs Vizard may have paid the bills but that is not evidence in this case and, in any event, I consider that answer served to obscure the fact that Mr Vizard knew of and authorised the payments Mr Hilliard made set out in Exhibit 2.

157 I turn now to set out the facts relating to two discrete issues which Mr Hilliard's counsel relied on in closing address. These are (a) the alleged acquisition and false recording of art in the asset register of the Vizard Foundation in order for Mr Vizard to obtain improper tax deductions; and (b) Mr Vizard's loan account. I deal with each issue in turn.

The acquisition and false recording of art in the Vizard Foundation

158 Mr Hilliard said that in 1993 or 1994 Mr Vizard began to acquire a lot of art in the name of the Vizard Foundation. Mr Vizard had a role in the selection of some of the art purchased for the foundation, but there was also committee at the University of Melbourne which made recommendations as to purchases. Exhibit 2 includes numerous cheques drawn on the account of the Vizard Foundation payable to art dealers including Sotheby's, Christies, Anna Schwartz Gallery and Robert Lindsay Gallery. Yet Mr Vizard did no more than accept that a particular payment to Christies appeared to be a proper payment and that other payments to the above art dealers to which he was referred were "probably" or "possibly" for the acquisition of art. He said that he did not know whether the foundation got the paintings represented by those payments. I find as a fact that the Vizard Foundation did acquire art on numerous occasions during Mr Hilliard's employment, and that it received the benefit of the art works purchased with the relevant cheques in Exhibit 2.

159 It was common ground that there were six art works entered in the asset register of the Vizard Foundation, but which the Foundation had never acquired. Counsel for Westpac raised this matter in his opening, not in the sense of accusing Mr Hilliard of creating false entries for the art works in the asset register, but rather in order to explain the process of verifying the asset registers undertaken by Mr Stevens (in the course of which he found discrepancies in the asset registers relating to the art works) which ultimately led to the discovery that funds had been misappropriated. Then, Mr Vizard said in cross-examination that Mr Hilliard was responsible for and benefited from the false entries of art work in the asset register, as it disguised his theft from Mr Vizard and his companies. Mr Hilliard then gave evidence as to his version of events, in the course of which he said that Mr Vizard instructed him to create the false entries. I note that counsel for Westpac objected to this evidence as being a collateral attack on Mr Vizard's credit, however it went to rebut the allegations made by Mr Vizard in cross-examination.

160 In short, Mr Hilliard's version of events was as follows. In about June 1996, Mr Vizard had gone through a rather complex exercise to dispose of a capital gains tax liability he had incurred when he sold 50% of his share in Artists' Services to Fairfax. Mr Vizard and Mr Hilliard looked at the likely position as at the end of June 1996 and there was some income tax that he would have to pay. The usual way of disposing of income tax was to make a distribution to the Vizard Foundation of taxable income. They discussed the tax position and "Mr Vizard was unhappy at the thought of distributing more money to the Foundation. He said it was like giving it away ... he asked me to think of ways that it could be done without actually being given away to the Foundation". Mr Hilliard suggested that they could "just pretend to pass it on to the Foundation". Mr Vizard said "That's a good idea. We will distribute the funds in the form of works of art". Mr Vizard went through a Christies catalogue[66] (from December 1994) which he had in his office and picked out six works of art (valued at around $657,000) that he would like to have. In response to Mr Hilliard's concern that the paintings would not actually exist in the Foundation's assets, Mr Vizard said "I will sort it out later. I will make it good later and I will buy back the paintings and it will be alright". At the instruction of Mr Vizard, Mr Hilliard then entered the six works in the asset register of the Vizard Foundation as though the paintings were acquired in December 1995 by PAS and passed on to the Foundation in lieu of a distribution of money. Together they arrived at a figure for the total purchase price of about $657,000. Mr Hilliard debited the amount to the loan account of the PAS Group, and in turn debited the amount to Mr Vizard's loan account. Mr Vizard told Mr Hilliard that if Clarke & Co queried the purchases to refer the matter back to him. Mr Vizard saw the asset list each month, and he saw the annual figures in the depreciation schedule prepared by Clarke & Co which was used as the asset register. The six paintings were included in both the monthly and annual asset listings shown to Mr Vizard. Mr Hilliard said that from 1996 to 1999 he showed Mr Vizard the asset register whenever there was an addition to it or a sale from it. From time to time, he pointed out to Mr Vizard that something would have to be done about the six paintings but Mr Vizard "kept putting it off", saying "we will attend to it later". Mr Hilliard said that PAS received a tax deduction in relation to this transaction. Mr Hilliard received no benefit from the transaction. To his knowledge, Clarke Bentleys never queried the transaction. In cross-examination Mr Hilliard reiterated that it was Mr Vizard (not he) that picked out the six paintings. He denied that he sought to attribute to Mr Vizard a fraud he had himself committed.

161 I note that Mr Hilliard was referred in evidence in chief to a memorandum he wrote to Mr Vizard, dated 20 January 1998, headed "Strictly Confidential - sensitive audit issues"[67]. Mr Hilliard said that he wrote the memorandum in circumstances where Mr Vizard was concerned that there might be a tax audit of the PAS Group and had instructed Mr Hilliard to prepare a document identifying potential problem areas should an audit occur. I refer more fully below to the evidence as to the possibility of a tax audit. For present purposes, it is sufficient to note that the memorandum stated: "All of the Foundation expenditure is absolutely kosher, however a sensitive area is that a lot of the art works and silver owned by the Foundation has never been anywhere other than Irving Rd" (emphasis added)[68]. The italicised words were crossed out by Mr Vizard and replaced with the words "have never had appropriate public exhibition". As to why he stated that the expenditure was "kosher", Mr Hilliard said that he did not want to mention the six paintings in a document that would probably be run past Mr Lay.

162 Apparently on the basis of the memorandum, Mr Hilliard's counsel suggested to Mr Vizard in cross-examination that he had claimed improper tax deductions in respect of art works purportedly owned by the Vizard Foundation but which had not been on public display as required to attract a legitimate tax deduction. Further, that art works purportedly owned by the Foundation had been displayed in Mr Vizard's home. Mr Vizard denied these allegations. He admitted that a painting known as "Olsen by the Sea" had been displayed at his family home at various points in time, (and he did not believe it had been on public display) but it was "our painting". He only became aware that the painting was listed in the asset depreciation schedule of the Vizard Foundation when the investigating accountants "identified a number of our personal paintings and property that was wrongly identified in asset registers maintained by Mr Hilliard"[69]. Mr Vizard said that the investigating accountants had identified about another 20 works privately owned by his family that were wrongly recorded as belonging to the Foundation. Asked whether he claimed a tax deduction in respect of "Olsen by the Sea", he said "I don't believe so". He denied Mr Hilliard's evidence as to his selecting six paintings from the Christies catalogue and having them falsely recorded in the asset register.

163 As to his knowledge of the records of the Vizard Foundation, Mr Vizard said he did not have a working knowledge of the taxation depreciation schedules. As to whether he had a hands-on role in keeping himself in charge of the assets he owned at all times, Mr Vizard said "In general terms, yes. In particular, no". He had an interest in art but not in the asset registers. He said later that he had a "general familiarity" with what art he did and did not own. Also, he had a "general understanding" of the asset registers and the assets owned by the foundation.

164 At this point it is convenient to deal with the question of the tax audit. It was ultimately common ground that there was no such audit. However, Mr Lay gave evidence that he believed that some time after September 1996 Mr Vizard became part of what the ATO referred to as the "high net worth individuals" division, which meant Mr Lay had to fill out some extra forms. Mr Lay informed Mr Vizard of this fact, as he required Mr Vizard's consent to send the relevant information to the ATO. Mr Hilliard said that Mr Lay had informed both he and Mr Vizard that the ATO had requested additional information in relation to the PAS Group for the previous three years, and that Mr Lay told them that this could be the precursor to a full-on tax audit. Counsel for Mr Hilliard submitted that it was in this context that Mr Vizard requested Mr Hilliard to write the "strictly confidential" memorandum referred to above, and that Mr Vizard knew that an audit would be a problem given the six falsely recorded paintings, and the fact that other works owned by the Foundation had not been properly displayed. Further, Mr Vizard's knowledge of the asset registers and art was such that it was inconceivable that he did not know about the six paintings being wrongly entered as assets of the Foundation.

165 Before making findings about these matters, it is necessary to refer to the evidence of Mr Stevens as to how he uncovered the discrepancies. Soon after commencing his employment, Mr Vizard requested Mr Stevens to "authenticate where the assets were and what they were". Mr Stevens said in evidence in chief that he identified six art works (worth approximately $640,000) recorded in the asset register of the Vizard Foundation which did not appear in a list of art provided by the Ian Potter Museum of Art at the University of Melbourne. Mr Stevens then asked Mr Vizard if he knew anything about the six art works. Mr Vizard told Mr Stevens that he had never owned the art works but wished he had, that he knew nothing about their purchase, and he requested Mr Stevens to investigate the matter further. Mr Stevens made inquiries of various auction houses to see whether they had sold the art works at any time around late 1995, as that was the time at which the asset register stated that the art works had been acquired by the Vizard Foundation. The auction houses confirmed they had not sold those art works. Mr Stevens could not find any financial records relating to the art works. In fact, he could find no financial records[70] at all in the office for any financial years prior to 1 July 2000. Mr Stevens thus asked Westpac for duplicate copies of bank statements. He received bank statements for the period "October/November 1995, from memory". Checking the bank statements, he did not find any payments that coincided with the value of the art works nor anything else to indicate payment for the art works. Further, he observed a number of cheques drawn for amounts that varied from $18,000 to $20,000 which, in light of his 25 years' experience working at the ANZ Bank, seemed to him a little bit unusual and did not make any sense. He then requested, and received, from Westpac copies of five cheques which he picked from the period of the bank statement. Three of these cheques, signed by Mr Hilliard, were payable to IAT and one of the cheques had been endorsed on the rear by the bank manager "This amount exceeds Roy's authority. We should get Steven to confirm this when he comes back from holidays"[71]. Mr Stevens then provided the cheques to Mr Vizard and confirmed that the art works could not be located. As mentioned at [7], on 22 November 2000 Mr Vizard retained the accountants, Carson & McLellan, to investigate the matter.

166 Mr Stevens expanded on, and qualified somewhat, his evidence as to the process by which he identified the relevant assets in the PAS Group, and how it was that he came to identify the six art works as not belonging to the Vizard Foundation. The matter is relevant in the context of what counsel for Mr Hilliard submitted in closing address, namely that it was Mr Vizard who had instructed Mr Hilliard to make the false recording in the asset register of the six art works in order to obtain improper tax deductions, and that Mr Vizard requested Mr Stevens to investigate the matter knowing full well that the asset register falsely recorded art works not owned by the Foundation. In cross-examination, Mr Stevens said that Clarke Bentleys kept in electronic form asset registers printed monthly for each entity in the PAS Group and that they provided him (Mr Stevens) with a printout of each asset register. When asked what was the first thing he did to verify the list of art works in the asset register of the Vizard Foundation, Mr Stevens said "I asked the Ian Potter Gallery to produce a list of all the works that they held which I could then verify against the asset register". Initially, Mr Stevens said that he did not discuss in detail with Mr Vizard the contents of the list and asset register because he (Mr Stevens) was able to verify that from the list from the Ian Potter Gallery. Counsel then took Mr Stevens to answers he had given to similar questions at Mr Hilliard's committal in 2003. After being referred to those answers, Mr Stevens agreed that the matter was fresher in his mind when he gave the evidence at the committal and he accepted that the answers he then gave were correct. That is, he sat with Mr Vizard and went through each item in the asset registers, not just of the Vizard Foundation but also of each entity in the PAS Group[72]. In the case of the Vizard Foundation, Mr Stevens agreed with Mr Hilliard's counsel's proposition that he and Mr Vizard went through every item to identify where it was, including whether it was at the Ian Potter Gallery, and that Mr Vizard was "very familiar" with the form of the documentation they were looking at. Mr Stevens then qualified his answer, saying that Mr Vizard "verified the items which were outside of the Foundation because there were art works at Roxby Park, there were some at home. The actual individual items within the list for the Foundation, he would not have verified every item". Following an objection by Westpac's counsel as to the relevance of the questioning, Mr Stevens said that he did not recall Mr Vizard telling him that certain items in the asset register of the Vizard Foundation were at his home in Toorak or at Roxby Park. Mr Stevens agreed with counsel's suggestion that "there were six items which he (Mr Vizard) was readily able to say he knew nothing of" but immediately qualified this answer by saying "I (Mr Stevens) would have highlighted those six items".

167 Mr Vizard denied in cross-examination that he identified the six paintings as not belonging to the Foundation. Mr Vizard said that it was Mr Stevens who "had already identified a number of issues as to paintings and works of art that he couldn't account for and he wanted my opinion in respect of some of those matters to see if I could be of assistance"[73]. Mr Vizard agreed that he and Mr Stevens went through the asset register together (though not as to every item in it), that he was more familiar with the asset register than Mr Stevens, and that he was able to assist Mr Stevens identify the missing paintings as they were "paintings by famous artists that stuck out prominently"[74].

168 It seems to me somewhat surprising that Mr Vizard was not aware of the presence of six paintings in the asset register in view of his interest in art and his familiarity with the financial statements including the asset register and depreciation schedule. Notwithstanding that, regarding the matter overall, and taking account of the seriousness of the allegations made by both Mr Vizard and Mr Hilliard as to the matter of the six paintings, I find as follows. I am not satisfied on the balance of probabilities that Mr Vizard instructed Mr Hilliard to falsely record the six paintings in the asset register of the Vizard Foundation in order to obtain improper tax deductions, or that Mr Vizard knew that the asset register contained the six falsely recorded art works at the time he instructed Mr Stevens to investigate. I reject the suggestion in closing address by Mr Hilliard's counsel that Mr Vizard asked Mr Stevens to investigate "presumably so as he could justify what was inevitably going to come out, that the six paintings had never relevantly belonged to the Foundation". I also reject Mr Vizard's allegation that Mr Hilliard created the false entries to conceal his theft of money. In the result, it is not established how the false entries came about.

The loan account

169 Mr Hilliard said that throughout his employment, one of his duties was to make entries in a loan account which Mr Vizard maintained with companies in the PAS Group, being PAS in the first instance and then Performing Arts Holdings after 1996. Mr Hilliard said, in essence, that in 1991/1992 Mr Vizard's declared income was only $35,000 per annum whereas his personal expenses far exceeded that. Rather than transfer money to Mr Vizard's bank account, Mr Hilliard was instructed by Mr Lay to arrange the payment of all of Mr Vizard's personal expenses through the relevant company, and to have the expenses debited to the loan account.

170 The level of Mr Vizard's loan account is recorded in a document in the Court Book[75] which contains a summary of the loan account balances of Mr and Mrs Vizard for the years 1991 to 2001. Mr Vizard's position was as follows:

[102]

173 Mr Hilliard said that he discussed the loan account with Mr Vizard on a monthly basis. It formed part of the monthly management accounts and they went through it together "fairly carefully every month and of course, it formed part of the annual accounts that Mr Vizard and Mr Lay would review and approve at the end of each financial year"[78]. Mr Hilliard said that in about June 1993, in the context of discussing his estimate of Mr Vizard's tax position, he specifically pointed out to Mr Vizard that the cash payments he was making to Mr Vizard were included in the loan account. As the monies being paid to Mr Vizard were, in effect, drawn from the PAS Group and paid to him, it "properly belonged in the loan account and that's where I put it, most of it anyway". Some of the payments were put through Roxby Park (as farm expenses) and the Vizard Foundation so that Mr Vizard could obtain tax deductions. Later in his evidence, Mr Hilliard said that Mr Vizard never asked how the loan account got as high as $5M as "it was evident to both of us how that amount built up"[79].

174 Mr Vizard's evidence as to the loan account was as follows. As to Mr Hilliard's claim that the loan account had been set up before Mr Hilliard commenced employment, that Mr Vizard's declared income in 1991/1992 was $35,000, and that his expenses substantially exceeded that amount, Mr Vizard said he could not recall any of these matters. As to whether he had his expenses paid through the PAS Group and therefore created a loan account, he said "That's possible, I just can't recall", as to whether the loans were substantial, "That's possible"[80], and as to whether he was aware that the monies allegedly stolen by Mr Hilliard had been placed in the loan account, he said "It's possible, and the forensic accountants advised that some of the money could have been buried there but I personally couldn't say"[81].

175 As to his knowledge of the accounts, he only had a "very general familiarity" with the accounts of the PAS Group. He signed and approved the annual accounts (in which the loan account figures appeared), but only received management accounts "very, very rarely". He believed that he received summaries of financial position prepared by Mr Hilliard at the end of each year. As to the loan account specifically, the essence of Mr Vizard's evidence is captured in this exchange in cross-examination[82]:

[104]

Later in cross-examination, counsel suggested to Mr Vizard that there were times when he sat down and discussed the amounts of his loan account, to which Mr Vizard responded "Not that I recall". Mr Vizard said that nobody ever drew to his attention the increase in his loan account or asked what the amount of $5M was. He never asked Mr Hilliard to explain the make-up of the loan account[83]. As to the nature of the expenses that contributed to the significant increase in the loan account, he couldn't say. "We ran - the accountants ran intercompany loans and I didn't concern myself with the detail". He did not notice the loan recorded of $5M as "it was just an intercompany loan ... I was only interested in the net position as between all the companies in the whole group"[84].

176 Mr Lay gave evidence that he did not specifically recall discussing with Mr Vizard the level of his loan account[85]. As to whether he made enquiries about the loan account with PAS, he said "I can't specifically answer that. We did make enquiries at times, but whether it was that company or other companies and in what year I can't be specific"[86]. As to whether he knew why the loan account balance was around $5.3M (in 1996), Mr Lay said "I do recollect that around about that time Mr Vizard may have purchased his personal residence and from memory, that money was borrowed from within the private company group to acquire his private residence, and that may account for that, but I cannot offer any other explanation"[87]. I note that Mr Hilliard said it was in 1993 or 1994 that the Vizards purchased the Toorak property from the Performing Arts Services Trust, through the loan account[88].

177 Mr Hilliard's counsel said that Mr Hilliard was not cross-examined on his evidence as to the explanation he gave Mr Vizard of the loan account. Further, it was highly unlikely, objectively, that Mr Lay did not discuss with Mr Vizard the size of or the movements in his loan account. It was the most rudimentary of matters and it was highly likely that any such discussions would have involved Mr Vizard either saying what the purpose was of the loan account or at least putting Mr Lay off enquiries[89]. Further, if Mr Hilliard had stolen money from the PAS Group, why would he put the amounts in a loan account which was to be seen by Mr Lay and Mr Vizard? Counsel submitted that such conduct was consistent with a gullible carrying out of the machinations and instructions of Mr Vizard, rather than with theft.

178 In all the circumstances, and having regard to all that counsel said, I do not accept that Mr Vizard knew that the proceeds of cheques being drawn on the PAS Group accounts were recorded as being in the loan account. I find that Mr Hilliard exaggerated the extent to which he explained the loan account to Mr Vizard for the purpose of bolstering his case. There was a lack of specificity in Mr Hilliard's evidence as to which payments were recorded in the loan account, apart from his saying "most payments" were so recorded. Ultimately, I accept Mr Vizard's explanation that he was not concerned about the detail of the loan account, that he treated that as an intercompany loan, and what concerned him was the PAS Group's overall position. This may reflect a somewhat lax approach by Mr Vizard to the scrutiny of the PAS Group's financial statements, but that is a different matter. In my view, the issue of the loan account is, at best, equivocal. It does not assist Mr Hilliard's case.

The facts, continued

179 Returning then to a chronological sequence of events, at some time before Christmas in 1999, Mr Vizard and Mr Hilliard had a discussion as to whether Mr Hilliard wanted to continue in his role. It seemed to Mr Vizard that Mr Hilliard was not as enthused as he previously had been. Mr Vizard said that Mr Hilliard's role had slightly changed following the sale of Mr Vizard's remaining interest in the Artists' Services business to Granada in 1998. Mr Hilliard said that he would think about it and they agreed to talk again in the New Year. In March or April 2000, they had a brief conversation in which Mr Hilliard said he would like to stay on. But around June 2000 they had another conversation in which Mr Hilliard said that he would like to finish up. Mr Hilliard nominated mid October 2000 as an appropriate time to finish. I refer below to Mr Hilliard's evidence as to the circumstances in which he left the PAS Group.

180 In October 2000 Mr Stevens took over from Mr Hilliard as the internal accountant for the PAS Group. He commenced work a day or so before Mr Hilliard ceased employment, and remained until 2003. There was an initial handover period in which Mr Hilliard showed Mr Stevens the office setup and facilities at Vizard House, East Melbourne. Mr Hilliard and Mr Stevens also drove to Mr Vizard's farm at Roxby Park, taking with them "half a dozen boxes" from the office in East Melbourne[90]. Apart from the day trip to the farm, Mr Stevens said that he spent six to eight hours with Mr Hilliard during the handover period.

181 Mr Stevens' duties were broadly similar to those performed by Mr Hilliard, though there were some differences. Whereas Mr Hilliard had used the office computer to prepare the monthly reports (including final figures, balance sheets, profit and loss accounts, and other registers), Mr Stevens was not computer literate and thus prepared handwritten monthly statements of all transactions, which were then passed to Clarke Bentleys (who had taken over the office computer used by Mr Hilliard) who produced typed monthly reports based on the data provided by Mr Stevens. The monthly reports contained a summary of cash movements for the month, a listing of assets, and then separate accounts for each entity. As to the receipt of the accounts, invoices and correspondence that he was required to work on, Mr Stevens said that "some mail went directly to Mr Vizard's house. The rest of it went to Mr Vizard down at Port Melbourne and I used to go down once or twice a week and pick up the mail and anything that was there. The invoices for the farm were processed by the farm manager once a month and sent up with covering schedules". Mr Stevens added that, initially, a lot of the accounts, invoices and correspondence about financial matters were addressed to Mr Hilliard. It became clear during cross-examination that accounts and invoices were sent to Mr Vizard at both the Port Melbourne and East Melbourne offices. During his three years of employment, Mr Stevens drew all the cheques for signature. They were signed by Mr Vizard, and sometimes by Mrs Vizard. Mr Vizard asked Mr Stevens to sign cheques but, having never signed on other people's accounts in all his working life, Mr Stevens declined. There was a practice of monthly meetings between Mr Vizard, Mr Lay and Mr Stevens. Mr Stevens agreed in cross-examination that, at those meetings, Mr Vizard demonstrated to his observation a high degree of familiarity with the format of the financial accounts of the group. He also agreed that Mr Vizard appeared to his observation to have a close working knowledge of the affairs of each of the companies in the group.

Mr Hilliard's evidence as to his arrangements with Mr Vizard

182 Mr Hilliard said that in late 1991 or early 1992 Mr Vizard told him that he would like to investigate the possibility of setting up a fund in a recognised tax haven. He asked Mr Hilliard to contact Guy Jalland of Herbert Geer & Rundle lawyers to arrange a meeting, which he did. The three men met and discussed options. Mr Jalland came back a few weeks later and presented a proposal. Mr Jalland went away, and Mr Vizard and Mr Hilliard "had a little talk about it". According to Mr Hilliard, the problem Mr Vizard saw was that an overseas entity able to issue invoices for television production work would have to be at arms length, hence Mr Vizard would lose control of the entity. If Mr Vizard kept control of it, he would have to pay tax, but the whole idea was to not pay tax. There was a further meeting at which Mr Hilliard told Mr Vizard he was uncomfortable with it. Mr Vizard said the upside was that "we could get a whole lot of money overseas without paying tax on it. The downside is that if it came out we would go to gaol". Mr Vizard then said "I don't think we will go through with that one". It is convenient at this point to note that in cross-examination Mr Vizard denied that he discussed with Mr Hilliard setting up a fund in a recognised tax haven, or that he asked Mr Hilliard to engage Mr Jalland to advise on that matter. Mr Vizard said that he knew Mr Jalland from working at Herbert Geer & Rundle, but he did not recall any conference in his (Mr Vizard's) office attended by him, Mr Jalland and Mr Hilliard. Mr Vizard, in effect, denied Mr Hilliard's evidence as to their dealings with Mr Jalland[91]. Later in cross-examination, Mr Hilliard's counsel referred Mr Vizard to several documents (two of which Mr Lay later identified as Clarke & Co file-notes, one undated and the other from 1992, handwritten by a member of his staff[92]) which referred to a payment of $26,500 to Herbert Geer & Rundle in relation to "offshore investment investigations - not proceeded with". Counsel asked Mr Vizard whether he recalled discussing the matters in the file-notes with Mr Lay at that time. Mr Vizard said he recalled one of the matters, but said nothing about offshore investments. Then, when Mr Hilliard's counsel sought to tender those documents following the evidence of Mr Lay, Westpac's counsel objected, which led Mr Hilliard's counsel to concede that the document went only to Mr Vizard's credit and that he did not press the tender. Thus, although there are documents tending to suggest that Mr Vizard sought and received advice from Herbert Geer & Rundle as to offshore investments, the substance of the advice remains obscure and it cannot be said (if this was the underlying contention of Mr Hilliard's counsel) that the advice involved a possible illegality. As a matter of substance, the matter comes to nothing.

183 Returning to the Mr Hilliard's version of events, a little while later, in early 1992, Mr Vizard told Mr Hilliard "I still want to pursue the idea of a fund overseas or a stash of money that nobody knows about" and "I would like you to go away and think about it and make some recommendations as to how we would go about it". Mr Hilliard did this and came back to Mr Vizard and said "You could always draw cash out of Performing Arts Services and either keep it in a safety deposit box or, you know, do something with it confidentially that nobody would know about". Mr Vizard said that he did not want to have large cash cheques coming out of the PAS Group "because that would look odd". A few weeks later they had a further discussion (in Mr Vizard's offices at St Kilda Road, South Melbourne) during which Mr Hilliard told Mr Vizard that "I could use my company, IAT ... to channel funds away from PAS and then withdraw those funds in cash and pass them to Mr Vizard, at the same time making the bookkeeping look as though it was ordinary activity". Mr Vizard said "That's a good idea. Let's give it a go".

184 Thus in 1992 Mr Hilliard began to withdraw cash from IAT and give it to Mr Vizard and then draw cheques on the PAS Group to pay back the amounts to IAT. By the middle of 1993, he had withdrawn "hundreds of thousands of dollars" from IAT. He drew from IAT regularly, the amounts being below $10,000. He would put the money in an envelope and give it to Mr Vizard, "at our meetings in his office or perhaps even at his home, but mostly in his office". These meetings were always "one-on-one".

185 As to the money withdrawn from the PAS Group, Mr Vizard told Mr Hilliard that "You will have to account for it as the purchase of antiques, furniture, that sort of thing", or other activities that were already happening, "and disclose it as such"[93].

186 Initially, Mr Hilliard did not seek any additional remuneration, but at the meeting in mid 1993 referred to above (at which Mr Hilliard said he told Mr Vizard that the cash payments made to Mr Vizard were included in the loan account) they discussed how the arrangement with IAT was going and Mr Vizard "expressed himself quite satisfied and then he said to me 'But you can't do all this without getting something for your trouble'". Mr Hilliard replied "Well, how best would we be able to do that?" to which Mr Vizard responded "Well, come to me with some suggestions". Mr Hilliard said "Well, how about if you pay some of my Diners Club bills from time to time?" Mr Vizard said "Well, that's fair enough but I would like to see the bills and we will do it on a case by case basis".

187 Mr Hilliard subsequently asked Mr Vizard "if it would be alright to purchase some shares and also further on I asked him about paying some holiday arrangements". Mr Vizard said it was okay to purchase the shares. From time to time Mr Hilliard came to Mr Vizard with a Diners Club bill which Mr Vizard looked at and said "All right". Mr Vizard also approved Mr Hilliard's share purchases and "the Cunard and British Airways arrangements", saying "That's fine. Go ahead". Approval was given before the relevant expenditure. In the case of the Diners Club bills, Mr Vizard gave his approval after the expenditure[94].

188 Mr Hilliard described in evidence in chief how payments made from IAT were used to provide cash to Mr Vizard and how cheques were drawn on the PAS Group accounts to reimburse money to IAT. Mr Hilliard's "policy" was to take out the money from IAT first and then reimburse IAT from the PAS Group. He did it that way because that was what Mr Vizard wanted and agreed to in early 1992[95]. Mr Hilliard said he drew cheques on the PAS Group "that corresponded to previous amounts that would have been withdrawn from IAT, by and large. It was not a precise exercise and it varied but it was - that was the policy"[96].

189 In order to explain how this occurred, Mr Hilliard prepared some tables[97] which showed in chronological order cash cheques drawn on IAT and the cheques drawn on the PAS Group to reimburse IAT. The payments were cross-referenced to the relevant bank statement, cheque butt or cash book entry in the Court Book. Mr Hilliard accepted that his tables were not complete and accurate, the reasons for the imprecision being that the arrangement with Mr Vizard began in 1992 whereas the records on which the tables were based only go back to 1993; further, Mr Hilliard said he relied only on information discovered by Westpac, provided by IAT or ANZ, and included in the Court Book, some of which was illegible. Also, some of the amounts "were tacked on to cheques for telegraphic transfers", in the sense that when Mr Hilliard asked for telegraphic transfers to pay legitimate expenses to IAT's service providers, he "added on some cash and paid it all in the one cheque"[98]. And, when IAT customers paid in cash, instead of banking the money Mr Hilliard said he would put it in with the money for Mr Vizard. I interpolate that during his evidence in chief, it became apparent that some of the cheques in Mr Hilliard's table in exhibit 13 did not have a corresponding cheque butt in the Court Book.

190 In effect, Mr Hilliard's evidence was that by looking at bank statements issued by the ANZ (starting from 2 June 1993) and cheque butts, he had made an assessment as to which cheques shown on particular bank statements and drawn on the IAT account were likely to be cash cheques. These cheques were typically recorded in the IAT cashbook as having been paid to "ANZ". As to payments in respect of which the cheque butts are blank, Mr Hilliard said that they represented cash payments "because it's in round figures and it accords with my knowledge and recollection of what I was doing"[99]. Mr Hilliard said that he put the cash drawn from IAT cheques in his filing cabinet, and when it reached an amount of $15,000 to $20,000 he gave it to Mr Vizard. Still in evidence in chief, but on the following day, Mr Hilliard said that he accumulated money and put it into envelopes in $20,000 lots and gave it to Mr Vizard. Asked by his counsel whether it was exactly $20,000 or approximately $20,000, Mr Hilliard said "exactly $20,000 most times"[100]. Mr Hilliard never asked Mr Vizard what the purpose of the cash was and Mr Vizard never told him, apart from what he said at the beginning as to wanting a "secret fund".

191 As to the records kept of the transactions, Mr Hilliard said that he had kept computer records of the payments drawn from the PAS Group. Mr Hilliard said that he also used to make a printout of the running total whenever he gave Mr Vizard money and would destroy the printout after Mr Vizard had seen it[101].

192 In June 2000 Mr Hilliard told Mr Vizard that he was feeling uncomfortable with the arrangement, that he had some health problems and he would like to resign. Mr Hilliard told Mr Vizard that if he was going to resign "of course we would have to stop because I [Mr Hilliard] couldn't keep drawing on PAS cheques". Mr Vizard "was not best pleased but he accepted the inevitable"[102]. Mr Hilliard said that he told Mr Vizard the arrangement was going to stop on 30 June 2000. Mr Hilliard had kept computer records of the payments drawn from the PAS Group, but at Mr Vizard's direction he erased those records when the arrangement finished[103]. He also destroyed the hard copy of the computer printouts he had shown Mr Vizard at the time of giving him cash payments. As to the issue of the destruction and/or theft of business records, I note that Mr Stevens said that he could not find any accounting records for the PAS Group for the financial years up to and including 1999/2000. Further, Mr Hilliard admitted in cross-examination that he was dishonest in that he left the PAS Group taking with him business records that did not belong to him[104]. I interpolate that these records included memos to Mr Vizard regarding "sensitive audit issues" and the Vizard Foundation assets, and documents relating to the insider trading. Mr Hilliard agreed with Westpac's counsel's suggestion to him that none of the documents in his affidavit of discovery supported his story of giving cash to Mr Vizard[105]. But Mr Hilliard disagreed with counsel's suggestion that "a document supporting your story of cash that you gave to Mr Vizard would be the very first document that you would want to keep".

193 Mr Hilliard said that the only benefits he received from the arrangements had been approved by Mr Vizard. Apart from these benefits, all the money withdrawn from IAT had been given to Mr Vizard. He denied that he had stolen money from Mr Vizard and the PAS Group, or that he had gambled away money drawn from the PAS Group.

194 As to his asset position, Mr Hilliard said in evidence in chief that it was "precarious. I live on New Start allowance, basically"[106]. He had about $500 to $600 in the bank, a bit of old furniture, and a 1987 Holden Commodore worth about $3000. He lived in rented premises in Castlemaine and was unemployed. He had tried to obtain work but it was difficult given his criminal record.

195 Mr Hilliard was cross-examined as to his assets and income. He said that when he worked as a bookkeeper for the firm of undertakers in 1984 his salary was about $30,000 per year. Working for Wandana Travel between 1985 and 1990 his salary started at $35,000 per year and went up to $40,000. Then in the first half of 1991 IAT had effectively no business which meant that Mr Hilliard sought and found employment with the PAS Group, starting on an annual salary of $45,000 in 1991 which increased to about $60,000 in 2000. Mr Hilliard agreed that between 1984 and 2000 he earned only a modest salary, indeed in the period from 1984 to 1991 his salary was his only source of income but as to the period of 1991 to 2000 he said he had "other sources of income". There was rental income in the form of distributions from a trust which owned a factory in Moorabbin, which one-third interest Mr Hilliard had purchased in about 1995. His partner Ms McCready also owned a one-third interest in the trust. The combined income from their two-third interest in the trust was $2000 per month which went to their joint bank account[107]. There were also directors fees from IAT, which varied but were around $5000 per year. He did not receive directors fees in 1991 or 1992, but from 1993 onwards. Also, there were "bonuses from Mr Vizard and other payments". The amount of the bonuses varied. The largest was $7,500 and there was one of $2,500. Mr Hilliard said the bonuses were regular and "would be in the middle of the year, the financial year end, I think. I really don't know"[108]. There were also share dividends. Mr Hilliard had started purchasing shares with money drawn from IAT in 1992, a little before the arrangement with Mr Vizard started. He agreed that the shares he purchased using IAT's money were "in the hundreds of thousands of dollars"[109]. Also, he paid Diners Club bills with cheques drawn on the IAT account, as to which Mr Wood approved[110].

196 Westpac's counsel referred Mr Hilliard to IAT's financial records for the years 1991 to 2000, to ascertain whether Mr Hilliard had in fact received directors fees, salary or dividends from IAT in that period. In essence, Mr Hilliard said that he had falsified the financial records of IAT for each year. The financial records were false in several ways. First, they did not record purchases Mr Hilliard made (shares, stamps, and paying Diners Club bills) using IAT's funds. Secondly, they did not include payments IAT received from the PAS Group. Thirdly, they did not record any of the cash Mr Hilliard took from IAT's bank account. Fourthly, IAT's income was understated in that drawings that Mr Wood and Mr Hilliard took from the company were not recorded[111]. I note that the financial records show that IAT paid Mr Hilliard a salary of $11,000 in the 1994-1995 financial year but otherwise IAT's financial records did not show any directors fees or dividends having been paid to him. However, he denied that he had lied about having received such fees. "It just wasn't recorded"[112].

197 Mr Hilliard admitted that he provided false information to the Commissioner of Taxation, in that he did not declare in his income tax returns the benefits he received from Mr Vizard and IAT. Also, in the financial years ended 1992 through to 1995 he did not include in his tax return information as to his share trading. He said that from 1996 or perhaps 1997 onwards he began to disclose in his tax return information about share trading.

198 As to his tax return for the year ended 30 June 1997[113] (which Mr Hilliard said he did not think was false), the declared taxable income was $98,528[114] with $32,932.20 as tax payable, giving a net income of $65,596. As to his income for the year ended 30 June 1998[115] (which Mr Hilliard said was true), the declared taxable income was $90,299 with $33,042.53 as tax payable, giving a net income of $57,256. For the year ended 30 June 1999[116] (which tax return Mr Hilliard said was true) the declared taxable income was $93,874 with $34,720.90 as tax payable, giving a net income of $59,153. For the year ended 30 June 2000[117] (which tax return Mr Hilliard said was true) the declared taxable income was $147,933 with $60,130.51 as tax payable, giving a net income of $87,802.

199 As to Ms McCready's income, Westpac's counsel referred Mr Hilliard to evidence she had given in 2001 during an application to vary a Mareva order made in respect of the couple's assets. In effect, she had agreed that in the nine year period between 1991 and 2000 her taxable income was mostly in the $20,000 to $30,000 range. Counsel asked Mr Hilliard if that was correct, to which he replied "I didn't have anything to do with her tax returns, I'm afraid, so I can't swear to it"[118]. Counsel pressed Mr Hilliard as to whether he had any idea of her income over that nine year period. Mr Hilliard repeated his answer that he had not seen her tax returns, and later said that he had no idea what Ms McCready's earnings were[119]. He then qualified this, saying that he "would imagine they were" more than $30,000 in some of those years. Her salary would have been "a lot higher" when she worked as a management consultant for Touche Ross, "but in exact terms even in round terms I really don't know what it was"[120]. Ms McCready was unemployed in 2000. Mr Hilliard said she had been unemployed "for some time between four years and one year. I really don't know. She took jobs and consultancies on an infrequent basis". Mr Hilliard was re-examined on this matter, to which I refer below.

200 As to their net asset position, Mr Hilliard was referred to a personal financial plan[121] dated 9 May 2000, prepared for Mr Hilliard and Ms McCready by an investment adviser employed by Westpac, and based in part on information the couple had provided to the bank. The plan was prepared in the context of the couple seeking advice as to planning for their retirement. As to whether the information in the plan was correct, Mr Hilliard said that "some of the figures may be estimates, but yes, by and large it's correct"[122]. The plan lists the assets owned by Mr Hilliard and Ms McCready as follows:

[105]

The only liability was an investment loan the balance of which was $65,000.

201 Mr Hilliard was cross-examined as to how he was able to pay Diners Club bills of some $515,000 during the period he was working for the PAS Group. As to that, Mr Hilliard was referred to evidence he gave at his committal to the effect that approximately $255,000 of the Diners Club bills was paid using money drawn from the PAS Group, which, the prosecutor suggested, left a shortfall of $274,000. As to how he was able to make up the shortfall, Mr Hilliard had said at the committal "I have no idea. My salary, Margaret's salary". When Westpac's counsel put that same question to Mr Hilliard in the present proceeding, he said that most (by which he meant more than 80%, perhaps all of it, but he could not be sure) of the $274,000 was paid by IAT. In addition to these payments drawn from IAT, Mr Hilliard accepted in cross-examination that he made further purchases using money drawn from IAT. In summary, these included stamps from Stanley Gibbons totalling $78,977[123] (between 1997 and 1999), shares from CS First Boston totalling $292,044.84[124] (between 1992 and 1994), and shares from Potter Warburg totalling $29,204.78[125] (between 1995 and 1997). Counsel suggested to Mr Hilliard that the source of the IAT funds used to pay for his stamps, shares and to pay Diners Club bills was money stolen from the PAS Group, which allegation Mr Hilliard denied.

202 Mr Hilliard was also cross-examined as to how he was able to repay certain loans and accounts. In particular, Mr Hilliard took out a loan for $300,000 in September 1997, which he applied to a Westpac managed fund investment. By 29 January 1999 the loan balance was $114,195. Westpac's counsel asked Mr Hilliard how, on his income, he managed to pay back some $186,000 in 15 months, and further suggested that he used money stolen from the PAS Group to pay off the loan. Mr Hilliard denied this allegation. Counsel then referred Mr Hilliard to several specific loan repayments he made of $25,000 on 7 January 1998, $10,000 on 4 March 1998, $10,000 on 21 May 1998, $5000 on 25 May 1998, $5000 on 2 June 1998, and asked Mr Hilliard how he was able to repay such amounts. Mr Hilliard said in essence that he could not offer an explanation of the source of the funds without seeing the relevant transaction records, as to which he said Westpac had claimed legal professional privilege. Mr Hilliard then said "there were some asset sales but other than that I can't specify", by which he meant he sold some stamps, some wine at auction and "they would be recorded as deposits to this account. Other than that, without the transaction records, I can't be specific. The transaction records are with Westpac"[126]. Counsel then asked Mr Hilliard what the source was of several cash and cheque payments (most of which were in round figures such as $1000, $2000 etc) he had made in 2000 in relation to his Westpac MasterCard account. Mr Hilliard repeated that he could not say, without seeing the relevant transaction records[127]. In re-examination Mr Hilliard reiterated that the relevant deposit slips were not provided to him, as they formed part of the report to Westpac by the investigating accountants, in respect of which document Westpac had claimed legal professional privilege[128]. Counsel for Westpac maintained that the claim for privilege in respect of the copy deposit slips was legitimate, as the claim for privilege went to the accountants' report, and further he said that Mr Hilliard had not been denied the opportunity to inspect the original deposit slips during the discovery process. That may be so, but I am prepared to assume in Mr Hilliard's favour that he did not have access to the relevant deposit slips. As to how these documents would have assisted him to explain the source of his funds, he said in re-examination that "the deposit slips would tell me what the deposits were made up of and where they came from ... it would tell me which of my assets were sold to repay the loan and when and how, basically. It would give a picture of repayment from assets rather than from external sources"[129].

203 Westpac's counsel also suggested to Mr Hilliard that his list of cash payments (Exhibit 13) was a fabrication, demonstrated by the fact that only some of the blank cheque butts in the Court Book were said by Mr Hilliard to represent cash payments. Mr Hilliard denied this. He maintained that it was an estimate, not a precise exercise, based on his assessment that in respect of some of the blank cheque butts he had taken out cash payments whereas in respect of others he had not[130].

204 Mr Hilliard was cross-examined on his evidence as to how he gave the cash to Mr Vizard. He was referred to his evidence at his committal that he provided cash to Mr Vizard "in amounts of about $10,000 to $15,000" in contrast to his evidence in chief in the present proceeding that he gave Mr Vizard "exactly $20,000 most times". Mr Hilliard said his later evidence was correct, and that his evidence at the committal was mistaken[131].

205 Mr Hilliard was asked in re-examination how he and Ms McCready came to have assets worth more than $2M. Mr Hilliard said that he had $60,000 to $70,000 of savings when he arrived in Australia, which was invested and put in a savings account[132]. He also invested money distributed to him from IAT. He invested in a share portfolio, "and then we sold most of the shares and invested in term deposits". The investments were profitable. Mr Hilliard and Ms McCready obtained a loan from Westpac to purchase their share in the factory referred to above, then they sold their jointly owned house in Elsternwick and purchased an apartment[133]. As to the circumstances of Ms McCready at the time the relationship commenced, Mr Hilliard said that she was a departmental manager at the Department of Immigration and Ethnic Affairs. She had a degree in social work, had previously run a shop in Hong Kong, and had also been in New Guinea. Financially, she was "quite comfortable". She lived in an apartment she owned in Elwood. As to her employment, she resigned from the public service in about 1988 and then worked as a management consultant with Touche Ross until about 1989 or 1990. Mr Hilliard said she earned a "six figure salary" with Touche Ross. After leaving Touche Ross, she established her own business as a freelance management consultant. As to her earnings in this period, Mr Hilliard said that "when she first started freelancing she was busy a good deal of the time, pretty much full-time, but as the '90s went on she became more of a part-time consultant but at the beginning she was working very hard and quite successfully"[134]. In the early 1990s, Ms McCready's father died and she inherited a sum of about $150,000, which was invested.

206 Mr Hilliard was asked in re-examination why he took business records from PAS Group when he left. He said he was concerned about his position - in respect of Mr Vizard's tax arrangements (including the failure to publicly display art purportedly donated to the Vizard Foundation) and the insider trading - as he (Mr Hilliard) had been the public officer of Mr Vizard's companies, was privy to most of the arrangements and took part in relevant discussions. "I felt that I would be involved in any action that might conceivably be taken", by which he meant scrutiny from the ATO and the relevant authorities concerning the insider trading matter. "I took those records because I wanted to establish that I was not central to any of these matters in case I was targeted in any investigation"[135]. As mentioned above, however, Mr Hilliard admitted that none of the 36 PAS Group documents listed in his affidavit of discovery supported his story of giving cash to Mr Vizard[136].

[106]

How the case was put

207 Naturally enough, counsel for Westpac commenced his submissions by referring, on the one hand, to the principles concerning the relationship between banker and customer and, on the other hand, the legal basis of a claim against a payee of cheques to restore to the payer the amount paid. There was no issue as to the relevant principles.

208 As to the relationship between banker and customer, in particular to the obligation of a bank to pay its customers cheques, counsel for Westpac was content to refer to Halsbury's Laws of Australia, Banking and Finance at [45-730] and several authorities to all of which I have regard[137]. In summary, if a cheque is drawn in accordance with the instructions or mandate of the customer and funds are available or the account is within agreed limits, the bank is bound to pay the cheque. I interpolate that in the present case the subject accounts were conducted in credit. More pertinent to this case is the question whether the bank upon whom a cheque is drawn is under any obligation to inquire of the customer as to the purpose of the cheque or, to put it another way, whether the cheque is truly drawn for the purposes or benefit of and with the authority of the customer. Generally speaking there is no obligation "to inquire for what purpose monies are drawn out of" the account[138]. If, however, the circumstances are such that "a reasonable and honest banker would consider that there was a serious possibility that the customer was being defrauded or that funds were being misappropriated a bank is under a duty to question the transaction". That is how Westpac's counsel described the obligation, referring in this respect to Lipkin Gorman v Karpnale Ltd[139]. There was no debate between counsel as to whether that statement fairly reflected the legal position. I note that in Bank of New South Wales v Goulburn Valley Butter Co Pty Ltd[140] it was said by Lord Davey for the Privy Council that "in the absence of notice of fraud or irregularity a banker is bound to honour his customer's cheque". There may be a question as to what may constitute notice for this purpose, but, as mentioned, the sufficiency of the proposition expressed above was not questioned by Mr Hilliard's counsel.

209 The second broad issue of law concerns the legal basis of the claim based on money had and received or unjust enrichment. For the present I am concerned only with that basis of the claim. The legal basis of the claim has been established by the decisions of the High Court in Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation[141] and David Securities Pty Ltd v Commonwealth Bank of Australia[142]. In the first of those cases, ANZ v Westpac, it was held that the action of money had and received for recovery of an amount paid under a fundamental mistake of fact lay in restitution or unjust enrichment. In their joint judgment in that case (at 673-674) Mason CJ, Wilson, Deane, Toohey and Gaudron JJ, said of the action that:

[110]

211 Earlier in the joint judgment in David Securities (at 369) their Honours stated that mistake in this sense may be constituted by a positive belief in the existence of something which does not exist but also may include sheer ignorance of something relevant to the transaction in hand.

212 In the present case there are issues as to what authority or mandate Westpac held from the PAS Group. There were, of course, the mandates which authorised Mr Hilliard to sign cheques up to $10,000, and to an unlimited amount in respect of share purchases from Ord Minnett and J B Were. Then there are the questions whether, as Mr Hilliard's counsel submits, there was a mandate by a course of practice to pay cheques signed by Mr Hilliard over $10,000, and whether there was an authentic authority for Mr Hilliard to sign cheques up to $50,000. In short, Mr Hilliard's case is that all of the 61 cheques sued upon were written within the mandate. Westpac contends otherwise.

213 If, as already mentioned, a cheque is drawn within the mandate, and there are funds in the account or an appropriate covering arrangement, the bank is obliged to pay the cheque. If, however, by mistake a bank pays a cheque outside the mandate the amount will be recoverable from the payee upon and subject to the above principles. A simple explanation would be where the customer had countermanded authority to pay the cheque. In that circumstance the bank would have no authority to make the payment and debit the customer's account[143]. If, however, payment of the cheque discharged a debt owed by the customer to the payee, the customer may not recover the amount from the paying bank while also retaining the benefit of the payment[144].

214 It is axiomatic that where a cheque is drawn and paid in fraud on the customer there is no consideration for the payment. Hence, where a bank pays a cheque in ignorance of a fraud, and whether or not the cheque is within a monetary limit of the mandate, the bank has acted under a mistake as to the propriety of the cheque and the proceeds thereof may be recovered from the payee on the basis of unjust enrichment. Recovery may be at the instance of the bank or the customer depending on where the loss has fallen.

215 Westpac submits, with respect to all of the 61 cheques sued upon, and whether or not there were mandates as contended by Mr Hilliard, that Mr Hilliard signed the cheques in perpetration of a fraud upon the relevant account holder in the PAS Group, and that Westpac paid the cheques in ignorance of the fraud. To put it another way, that ignorance or mistake as to the propriety of the cheques was causative of the payment.

216 Mr Hilliard's position in relation to this is that the subject cheques were signed by him, and that he otherwise received benefits, pursuant to the arrangements with Mr Vizard referred to at [5](c) and (d) above. He was thus, or to that extent, authorised by Mr Vizard as a principal of the relevant corporate account holders and, in relation to the account held jointly with his wife, one of the account holders. In response, counsel for Westpac submitted that any such private arrangement between Mr Hilliard and Mr Vizard was irrelevant. The relevant authority or mandate was that held by Westpac. Further, the question whether the cheques were a fraud on the account holder, or whether Mr Hilliard was unjustly enriched, was a separate question.

217 Further and separately, accepting that a cheque apparently regular on its face constituted an implied representation that the cheque was for an authorised purpose of the customer, it was submitted on behalf of Mr Hilliard that the bank had not established, on the balance of probabilities, that in paying the cheques it relied on the representation or, to put it another way, the bank had not established that it relied on a mistaken belief that the cheque was duly authorised by and for the purposes of the customer. To establish such reliance Westpac had to show that it had made a relevant inquiry, but in fact it made none. Insofar as it may be inferred that the bank made inquiry of Mr Vizard as to cheques it is to be inferred that Mr Vizard authorised payment, but the evidence from the bank on this issue was not satisfactory. Even allowing for the bank having referred cheques to Mr Vizard there was no evidence of any inquiry by the bank as to the purpose of the payments. The evidence was that cheques which were within the monetary limit or which otherwise were ratified by Mr Vizard were paid without question. Indeed the evidence made it apparent that the bank considered that the purpose of the cheques was irrelevant. Furthermore, there was no evidence of what a reasonable banker would have done in the circumstances. Senior counsel for Mr Hilliard concluded his final address by saying that the relevant inquiry is whether the bank acted on a relevant mistake and whether it acted reasonably in the circumstances. I should say that counsel referred to no authority that might indicate that in circumstances such as the present a bank in Westpac's position should make inquiries of the nature submitted. Furthermore counsel for Mr Hilliard did not call evidence from a person of appropriate experience as to how a reasonable banker would have acted in the circumstances of the case including as to any inquiry that such a banker would have made as to the purpose of or authority for the cheques. This is perhaps not surprising given that the defence did not plead that the circumstances were such that the bank was under a duty to make enquiries as to the purpose of the cheques, and that the bank had breached such a duty. If that case had been raised on the pleadings, appropriate evidence could have been called. But that was not the case run by Mr Hilliard's counsel. I also note that in a subsequent written submission Mr Hilliard's counsel stated that Westpac had not pleaded circumstances by which a duty of inquiry as to the purpose of or authority for the cheques arose, or that it had failed to make a requisite inquiry thus leading it to pay the subject cheques in the mistaken belief they were drawn with the authority and for the benefit of the account holder. Thus the case did not concern Westpac's duty to inquire and act in accordance with the instructions of its customer.

218 Westpac's counsel submitted in effect that the above submission of Mr Hilliard misapprehended the legal position. It was submitted by Westpac that it did not need to show that it made an inquiry as to the purpose of a cheque before making payment under it. It was sufficient to found recovery under the concept of unjust enrichment that payment was made under a mistake as to the purpose, benefit or authority of the account holder, and that Mr Hilliard had been unjustly enriched as a result of the payments being to him or for his benefit. In other words it was not necessary that the bank have made an inquiry as to the purpose of the cheques. It was implicit that the bank paid the cheques on the basis that they were properly drawn for the purposes or benefit of and with the authority of the account holder. A bank was not obliged to make such an inquiry and there were no circumstances here that could properly have served to impose such an obligation upon Westpac.

219 Finally in the present discussion Westpac submitted that the evidence established that Mr Hilliard had received the benefit of the 61 cheques the subject of the claim. I accept that is the case with the nine cheques (referred to at [28] above) paid to parties other than IAT. As to the cheques paid to IAT it was submitted that effectively he had received the benefit of the money for one or more of the following reasons, namely that the money was shown to have restored to IAT's account money which Mr Hilliard had improperly withdrawn from its account and for which he was liable to account to IAT, or to have been at his sole disposal as though it had been credited to his account even if there were no formal book entry, or to have been paid out by IAT on his behalf as for example to Diners Club and CS First Boston. As to these cheques I say no more at the moment than that on Mr Hilliard's case payments to IAT were made and dealt with pursuant to the alleged arrangements with Mr Vizard.

220 It is Mr Hilliard's case that Mr Vizard was the, or the major, beneficiary of the payments. It is true that Mr Hilliard received a benefit but that was, on his case, his reward for acting as Mr Vizard's agent in effecting the transactions the purpose of which was to benefit Mr Vizard. Hence, the case is that as between them it is Mr Vizard and not Mr Hilliard who is to be seen as enriched by the payments. Hence, Westpac's claim should fail. If that be wrong then Mr Hilliard had not received the benefit of the 61 cheques but only of the nine cheques referred to above and thus had been unjustly enriched only to the extent of the aggregate amount of those nine cheques which was $187,724.93.

221 As Westpac (and Mr Vizard) denies the existence of the arrangements on which Mr Hilliard's case rests it is necessary to consider whether that case is established. That is to say, is it established on the balance of probabilities that monies passed from the PAS Group by way of cheques drawn by Mr Hilliard pursuant to the arrangements alleged by Mr Hilliard? In considering the questions thus raised I have to consider the evidence of Mr Vizard and Mr Hilliard each of whom were subjected to a sustained and severe cross-examination in which they were alleged to have committed serious wrongdoing. Each side submitted that I should accept their version of events as the more probably correct. For Westpac it was said by their counsel in final address that Mr Hilliard had "lied, cheated and stolen for so long that he can no longer tell fact from fantasy" and that fantasy was what he had put in the trial. For Mr Hilliard it was said by his counsel that Mr Vizard had a propensity to be "a lying, thieving humbug". In considering the submissions, and arriving at the findings and conclusions expressed in this judgment I have been mindful of the need to be careful in relation to the evidence in deciding whether an allegation of serious misconduct or moral delinquency has been established on the balance of probabilities[145].

222 By this stage I have sufficiently stated the facts and circumstances of the case, and the issues, to now turn to a resolution of the fundamental issues referred to at [5]. The issues thus presented require consideration of the "credit" of Mr Vizard and Mr Hilliard. As mentioned earlier I found each to be an unsatisfactory witness. I now develop my observations concerning them, commencing with Mr Vizard.

Mr Vizard

223 Mr Vizard was central to Westpac's case. In his evidence he described the activities, structure and operation of the PAS Group, the role of Mr Hilliard, the holding of bank accounts by the PAS Group, and verified Westpac's pleaded case, and denied Mr Hilliard's pleaded case. However in his evidence in chief he did not support Westpac's plea of Mr Hilliard's authority as particularised in para 5 of the statement of claim. As I have referred at [25] the particulars in para 5 conflated two distinct authorities. In his evidence in chief Mr Vizard's verification covered only the several authorities that authorised Mr Hilliard to sign cheques up to $10,000. He did not refer to the separate unlimited authority dated 17 November 1992 whereby Mr Hilliard was authorised to sign cheques payable to J B Were and Ord Minnett for the purchase of shares. In other words, Mr Vizard's evidence was that Mr Hilliard's authority to sign cheques was limited to the $10,000 authorities referred to in the table in para 5 of the statement of claim. Hence, on his evidence, all cheques signed by Mr Hilliard for an amount over $10,000 and not being a transfer between companies in the PAS Group, had been signed without authority. This evidence, together with a deal of evidence pertaining to the cheques, provided a floor from which Westpac mounted its case against Mr Hilliard not merely in relation to the 61 cheques sued upon, the aggregate value of which is $2,060,352.05, but that overall he had stolen from the PAS Group something over $3M in the period of his employment. Hence it is necessary in reading the evidence to keep in mind the pleaded case on 61 cheques, on the one hand, and the case concerning many more cheques opened and conducted by Westpac, on the other hand.

224 One thing not explained to me was how many cheques overall Mr Hilliard signed in the course of his employment, how many of which were outside any and which authority and how many (within or outside an authority) were in payment of a bona fide liability of the PAS Group or otherwise for a purpose authorised by Mr Vizard. If not the actual numbers some approximation could have sufficed. Such information would have aided understanding the role of Mr Hilliard in the conduct of the PAS Group accounts in the course of Mr Hilliard's employment. It would also have borne on the reliability of Mr Vizard's evidence as to Mr Hilliard's lack of authority to sign cheques over $10,000. However, Westpac did not provide me with such an overall contextual understanding. I do not consider that the omission to do so is to be ascribed merely to the fact that the statement of claim confined itself to 61 cheques. It still would have been helpful for Westpac to have placed those cheques in context, bearing in mind that those 61 cheques were some only of those in respect of which compensation was paid let alone of the overall number. Further, the fact that the case was confined to 61 cheques did not restrain Westpac from running a case of theft by means of many more cheques than that. And, knowing Mr Hilliard's defence, why not assist the Court by acknowledging the fact, with sufficient detail thereof to enable a proper contextual understanding, that Mr Hilliard signed many cheques over $10,000 for purposes including the payment of bona fide liabilities of the PAS Group? It may be inferred too that there were such cheques for amounts less than $10,000. The effect was to force Mr Hilliard to bring forward such evidence as he could, and that was Exhibit 2 which I did not understand to be exhaustive. It may be said that Mr Hilliard could have trawled through discovery to produce a more expansive list. But I consider that Westpac and Mr Vizard were well placed to undertake the task. A significant reason for not doing so, and placing the information before me, is to be found in the evidence of Mr Vizard. That is his insistence that Mr Hilliard was not authorised to sign cheques for amounts over $10,000 (save for inter company transfers). Although that evidence was false it was nevertheless Mr Vizard's evidence, as Westpac would have known, and in light of which it presented its case. In not enlightening me as to the cheques signed by Mr Hilliard for more than $10,000 in payment of bona fide liabilities of the PAS Group and other authorised purposes it is seen that Westpac did not place before me information that would have given me a more complete picture of Mr Hilliard's role in relation to paying accounts of the PAS Group and on matters in issue in that respect between Mr Vizard and Mr Hilliard. It would have gone to support a conclusion of falsity in the evidence of Mr Vizard, and it was, I conclude, for such reason, a tactical reason, that Westpac conducted the case as it did in this respect.

225 Of course Westpac was reliant on Mr Vizard in establishing its case and to an extent was in his hands. That must be allowed in fairness to Westpac. The Deed of Settlement had the effect of requiring Mr Vizard to cooperate with Westpac including by giving evidence. That was the price of Westpac agreeing to make compensation. But Mr Vizard was otherwise his own man when he came to give evidence.

226 Mr Vizard was affected by several constraining factors when he gave evidence. There were the matters referred to earlier of the risk of exposure to perjury charges in relation to his evidence at the committal and of possible criminal proceedings in relation to the matter of insider trading. There was also the general need to swear consistently with the PAS Group claim on Westpac and to deal with the difficulty presented by the practical conduct of the accounts, namely the practice established by Mr Fyfe, that Mr Vizard had authorised cheques over $10,000 to be paid, and that he had left Mr Hilliard to sign cheques and that Mr Hilliard had signed cheques for amounts over $10,000 in payment of bona fide liabilities of the PAS Group and other amounts authorised by Mr Vizard. All these matters presented problems, as did the erroneous instruction as to not recollecting signing the 17 November 1992 authority and whether he had not in fact signed the $50,000 authority. There were other matters but these stood out.

227 I had the benefit of observing Mr Vizard give evidence over a long time. I take account of the fact that when he gave evidence he was under pressures of the kind just mentioned and the additional pressure, also borne by Mr Hilliard, of many people including media being in the Court observing him and noting his evidence. That was a pressure combined with the knowledge that what was said might be reported to the public. But in another sense that awareness might have inclined the witness to accuracy in answer. Mr Vizard was evidently an intelligent person who had practised law before Mr Hilliard's employment, and who had succeeded in areas of entertainment and business. He gave the impression of having achieved success and substantial wealth in a relatively short time. As I said earlier at [68](b), Mr Vizard impressed me as a driven and focussed person. He demanded much of those in his employ. That is consistent with the amount of work he was able to do and his success in his business activities. He impressed me as a person alert to the main chance. I consider that he had a far greater awareness of the financial affairs of the PAS Group than his evidence might have indicated, including of the financial statements of the PAS Group and that Mr Hilliard signed cheques over the limit of the written authority held by Westpac. He was alert to the terms of questions and adroit in answering including by the use of words which qualified or limited his answer. He was firm and certain when it suited the case, as in evidence in chief, and in keeping to some basic themes throughout, examples being that the authority limit was $10,000 and not being aware of Mr Hilliard signing cheques for greater amounts. But in cross-examination his approach and demeanour changed. He went from the firm and certain to being defensive and forgetful and even engaged in false denial when it did not suit the case.

228 With these observations I turn to some particular aspects of Mr Vizard's evidence.

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(a) The 17 November 1992 authority. As mentioned already, Mr Vizard did not acknowledge this authority in his evidence in chief. Of course Mr Vizard was embarrassed on this as Mr Anderson (the document examiner) had been instructed that he did not recollect signing it. In fact Mr Vizard had signed it, as he acknowledged in cross-examination. But that acknowledgment came after Mr Vizard had denied that Mr Hilliard had possessed authority to sign cheques over $10,000 to J B Were and Ord Minnett, which evidence I referred to above. That evidence was false, knowingly in my view. What was correct was his evidence that he had signed the authority (which authorised the subject cheques) but which fact he did not admit until the authority was put in his hand in cross-examination. Yet, revealingly, he had given instructions on it prior to trial; that is, the authority had been brought to his attention. Moreover the particulars to para 5 of the statement of claim alleged the existence of such an authority although without referring to the actual 17 November 1992 authority. The episode is an example of the approach Mr Vizard brought to the giving of evidence. He fashioned his evidence to the line he wanted to take, in the present respect to run the line that Mr Hilliard never had authority over $10,000. He would give that line away only to the extent forced upon him.

(b) I reject as false Mr Vizard's generalised evidence to the effect that any cheque signed by Mr Hilliard for an amount greater than $10,000 was signed without authority. Exhibit 2 is sufficient to establish the contrary. I find that each cheque in Exhibit 2 was signed with the actual authority of Mr Vizard whether given specifically in relation to a particular payment required to be made or in accordance with the general authority of Mr Hilliard to sign cheques in payment of liabilities of the PAS Group and including matters of personal expense of Mr and Mrs Vizard and Mr Vizard's mother or sister[146]. In my view, in his evidence in relation to these cheques, Mr Vizard gave evidence that ranged from false denial to obfuscation and feigned forgetfulness. It is not necessary to rehearse the evidence. It is there in the transcript, and has been set out in some detail earlier in the judgment. The performance is to be understood as part of the attempt to deflect the Court from a true understanding of Mr Hilliard's role and authority in writing cheques.

(c) I reject as false Mr Vizard's evidence that he had no memory of the meeting with Mr Fyfe, of the arrangement made with Mr Fyfe or of any subsequent approval to pay cheques drawn by Mr Hilliard in excess of his authority. It is relevant in this context that Mr Vizard had few meetings with a bank officer and that one of the reasons for the meeting with Mr Fyfe was to address the situation of Mr Hilliard signing cheques outside his authority. I find that, possessed as he is of an astute and alert mind, the fact that his bookkeeper had drawn cheques in excess of his authority would have impressed itself on Mr Vizard's mind, and that he would have remembered the incident. The same is true in my view if the meeting arranged that Mr Hilliard was to be given authority to sign such cheques subject to Mr Vizard himself confirming those cheques subsequently.

(d) Further, it is to be noted that of the 141 cheques listed in Exhibit 2, 126 are for amounts between $10,000 and $50,000 while the remaining 15 are for amounts greater than $50,000 and range from a cheque for $50,275.30 for Minter Ellison (solicitors acting for Mr Vizard) dated 22 May 2000 to a cheque for $500,000 for CTI dated 17 December 1999. Further as to these 15 cheques, it is to be noted that they include a cheque for $58,602 payable to Mr Vizard's mother or sister; a cheque for $100,192 payable to Intersuisse and drawn on the account of Mr and Mrs Vizard; and a cheque payable to Sotheby's Australia Pty Ltd for $68,100 drawn on the account of the Vizard Foundation which, I find, was properly for an expense of the Vizard Foundation. They also include 12 cheques for amounts between $100,000 and $500,000 and aggregating $2,457,153.25 all of which were drawn and signed by Mr Hilliard at Mr Vizard's request in connection with the acquisition of shares and which included cheques in respect of transactions that were the subject of the insider trading matter. All of the Exhibit 2 cheques were evidently for the purposes of the Vizards and PAS Group entities and, as I find to be the fact, they were all drawn under and with the authority of Mr Vizard and for the purposes of himself and his family and those entities, as doubtless were other cheques. Yet if possible Mr Vizard would have had it in his evidence that Mr Hilliard did not have his authority to sign any cheques over $10,000, the falsity of which evidence became increasingly apparent as his cross-examination on Exhibit 2 proceeded. For the cross-examiner the process of having Mr Vizard face up to this was like drawing teeth. The net result was, as I find, that Mr Hilliard was telling the truth when he said that the cheques in Exhibit 2 were written under the direction or with the authority of Mr Vizard.

(e) Mr Vizard's evidence describing his working relationship with Mr Hilliard was misleading. The tenor and effect of it was to minimise the contact between them, and maximise the impression that Mr Hilliard was much left to his own devices. I have referred to this evidence earlier, and do not repeat my findings and observations concerning the working relationship. I find however that Mr Vizard fashioned his evidence to suit his line of not being aware that Mr Hilliard was signing cheques over $10,000 and to deflect Mr Hilliard's case of regular meetings with Mr Vizard. In other words it was to cut factual ground from Mr Hilliard. But the evidence did not reflect the fact of the working relationship, as I have found. It was misleading.

(f) The next point is the insider trading matter. Counsel for Westpac referred to this in opening the case pointing out that the three subject transactions were separate from the transactions the subject of Westpac's proceeding. That is true although, as observed above, cheques in Exhibit 2 were drawn for the purpose of Mr Vizard's secret share acquisitions and were for amounts over $50,000 and in that sense were relevant to Mr Hilliard's role and his authority to sign cheques which are issues in this litigation. As to the enterprise of secret share transactions I have the benefit of the judgment of Finkelstein J to which Westpac's counsel referred me (as did Mr Hilliard's counsel), a deal of evidence which bears on the essence of the matter and the manner of its execution, and the statement of agreed facts. It included secrecy to hide what was to be and was done. Mr Lay politely referred to Mr Vizard wanting "a suitable structure to invest in the share market that provided confidentiality" meaning, he believed, from being "publicly revealed". The detail of what was done is set out in his Honour's judgment and otherwise the substance sufficiently appears from the evidence before me. As Finkelstein J held, Mr Vizard's conduct, he having knowingly engaged in wrongdoing for personal gain, was dishonest and a gross breach of trust. In their written closing address counsel for Westpac stated that they did not say that the conduct for which Mr Vizard was dealt with in the Federal Court was not seriously wrong. It was however submitted that such conduct occurred at the end of the eight year period of Mr Hilliard's employment, and that no other wrongdoing by Mr Vizard had been established in the present case. The former proposition is correct, while the latter proposition depends upon the findings I make. As to that, the matters discussed in my above findings reflect adversely on Mr Vizard's character. The consistent strand is a lack of candour.

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229 Counsel for Mr Hilliard referred to other matters as bearing on the credit of Mr Vizard. It was submitted that he had given knowingly false evidence at the committal in relation to CTI, that in the memorandum to Mr Lay dated 5 February 2001 he had attempted to have Mr Lay give a false account of matters relating to CTI and share purchases, that in relation to art and the Vizard Foundation he had offended the tax laws, and that the monies he wrongfully obtained from the PAS Group had been concealed in his loan account. As to the first two matters I have had regard to all that counsel submitted in relation to them. I consider however that bearing in mind the number and nature of the matters on which I have concluded adversely to the credit of Mr Vizard, and that the two matters mentioned go only to credit, it is not necessary to consider those matters and express conclusions upon them. Even if I concluded on them as counsel for Mr Hilliard contend, my overall findings and conclusions would remain the same. As to the art and loan account matters, I have dealt with them above and have taken what I have said into account in expressing conclusions on the matter of credit.

230 In my view, considering all of these matters, I found Mr Vizard to be an unreliable witness. I do not accept his evidence on contentious matters unless it be supported by cogent independent evidence which I accept or as to which I am otherwise satisfied on the balance of probabilities.

Mr Hilliard

231 Mr Hilliard impressed me as an intelligent, articulate and thoughtful person of serious disposition. He attended to questions and answered carefully, maintaining concentration although under very considerable personal stress. He was of course seeking to meet a case that he had engaged in the theft of monies from the PAS Group over a period of years. It was not practically open to him to object to answer questions on the ground of self-incrimination.

232 It is to be noted that acceptance of Mr Hilliard's case that money was removed under an arrangement with Mr Vizard rests on acceptance of Mr Hilliard's account of the matter given at trial. He produced no contemporaneous records that supported his case. It all rested on his oral say-so. Hence, perhaps not surprisingly, at times in cross-examination when he was pressed on a matter he simply answered to the effect that that is how it was or that is what happened.

233 Mr Hilliard suffered the further difficulty of having significant marks against his character. As mentioned earlier, in obtaining employment with PAS he relied on a curriculum vitae which wrongly represented the holding of tertiary qualifications. Then, putting aside his case as to cheques being written under and for the purpose of the arrangements he alleges, he pleaded guilty to the charges of false accounting and was sentenced to two years' imprisonment, wholly suspended. It was conceded by his counsel that Mr Hilliard had misled Mr Wood. Further, he acted contrary to his duties as a director, secretary and public officer. On his own case he "laundered" money, as counsel put it, through IAT for Mr Vizard. And he directed money out of IAT to himself for his benefit, as to which I refer to the discussion concerning evidence of Mr Hilliard and Mr Wood at [71]-[77] above. Further, on his case he drew money out of IAT's account under the alleged scheme for the benefit of Mr Vizard, and directed PAS Group money to IAT in the absence of any genuine commercial relationship. In the undertaking of these events there was also false accounting in the records of IAT from 1992. To put it shortly, on his own case Mr Hilliard participated in activity that constituted a fraud upon the PAS Group and IAT. Further, in cross-examination Mr Hilliard agreed that in the period of his employment with the PAS Group he had been dishonest with the Commissioner of Taxation in that he had not declared income. He also took records of the PAS Group at the completion of his employment.

234 Regarding matters overall I concluded that Mr Hilliard was an unreliable witness whose evidence should not be accepted unless it was supported by evidence of a cogent nature which I accept or which I otherwise consider is established on the balance of probabilities.

Decision

235 The first matter to consider is Mr Hilliard's authority to sign cheques.

236 It is convenient to consider this matter in two stages, first, as to the cheques signed before the time at which Mr New received the $50,000 authority, and, secondly, as to the cheques signed after that time.

237 As to the first stage, I have concluded that, notwithstanding the fact that Mr Hilliard's written authority was limited to $10,000 (with the stated exceptions, irrelevant to the 11 cheques in Schedule A sued upon), there was an overriding authority from Mr Vizard to Westpac to pay cheques drawn by Mr Hilliard in excess of his authority on the PAS Group accounts. Although this was an oral arrangement reached with Mr Fyfe, in my view the bank's authority to pay such cheques did not come to an end upon Mr Fyfe's departure. Nor was it a condition of that authority that the bank in fact confirm each relevant cheque with Mr Vizard. That was so because even if Mr Vizard had disapproved of a payment, the cheque may well have been paid already. The authority given by Mr Vizard effectively put any given cheque beyond the bank's recall. The fact that Mr Vizard was supposed to be kept abreast of the cheques being signed by Mr Hilliard ostensibly outside authority would enable Mr Vizard to monitor the cheque drawing, but did not affect the authority from Mr Vizard, on behalf of himself and the relevant account holders, to the bank. It follows that regardless of any negligence of the bank in not confirming with Mr Vizard his approval of the 11 cheques sued upon in Schedule A, Mr Vizard had previously given an oral authority to the bank to pay those cheques.

238 As to the second stage, and given that (as I conclude below) the bank has not established that the $50,000 authority was a forgery, each of the 50 cheques was signed by Mr Hilliard within the written authority. I note, however, that while they were not sued upon Mr Hilliard signed many cheques in this period, ostensibly in excess of his authority but for legitimate expenses of the account holders. In 1999 and 2000, Mr Hilliard signed cheques for amounts of up to $500,000. There was no evidence that Mr New or anybody else at the bank sought from Mr Vizard confirmation of any cheques signed by Mr Hilliard in excess of his authority, and Mr Vizard denied that he had authorised Mr Hilliard to pay such cheques. Notwithstanding these matters, having regard to the number and dollar amount of the cheques, the overwhelming inference, and the inference which I draw, is that Mr Vizard did confirm with the bank that he approved of many of the payments made by the cheques in Exhibit 2.

239 That leaves for determination the question whether Mr Vizard signed the $50,000 authority. I now deal with that question. Counsel for the plaintiff opened this aspect of the case somewhat cautiously, stating that "Mr Vizard will give evidence that he gave no such authority to Mr Hilliard or to Westpac and that he does not believe he signed the letter dated 2 February 1996"[147]. In his evidence in chief, Mr Vizard was asked whether he had authorised Westpac to pay cheques signed by Mr Hilliard or to make payments he (Mr Hilliard) had ordered in terms of the authority" to which Mr Vizard said "No, I did not". He had no recollection of a discussion with Mr Hilliard regarding an increase in Mr Hilliard's authority on the PAS Group accounts. When asked what he could say about the signature on the authority, Mr Vizard said "It appears similar to my signature but there appear to be - it appears to be a slightly more staccato, jerky version of my signature. It resembles my signature but there appear to be some differences". Mr Vizard said that he did not write the text in the facsimile, that it was not in his style, and finally that he did not sign the document. In cross-examination, Mr Vizard reiterated that the signature appeared to be his signature, then gave the following evidence[148]:

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240 Although Mr Vizard denied signing the authority, his answers were yet ambiguous, guarded and bordered on the disingenuous. For instance, while the case was conducted on the express basis that Mr Vizard accused Mr Hilliard of forging his signature or otherwise improperly applying it to the facsimile, Mr Vizard said that he was "not suggesting any of those things". As I have said earlier, the plaintiff's own document examiner could not reach any conclusion on the matter and further, Mr Vizard's instructions meant that the document examiner was denied the opportunity of comparing the alleged forgery with an original (genuine) signature similar to the alleged forgery.

241 Mr Hilliard's evidence as to the alleged forgery was unambiguous. He did not type or sign the letter setting out the $50,000 authority. He received the letter by facsimile and on-faxed it to Mr New. He did not forge Mr Vizard's signature on it.

242 There is also the evidence of the document examiners which I have dealt with above.

243 Westpac's case is that the $50,000 authority was not authentic, that Mr Hilliard forged Mr Vizard's signature and passed the document on to Westpac without informing Mr Vizard thus (and for the purpose of) avoiding further scrutiny of cheques and enabling him to continue stealing money from the PAS Group by way of cheques drawn for amounts up to $50,000. It is a most serious allegation of forgery as to which there is the rival evidence of Mr Vizard and Mr Hilliard, and the fact (supported by Mr Anderson) that the signature resembled Mr Vizard's genuine signature. Having considered the evidence carefully both in the sense of that particular evidence and in the context of the evidence overall, I conclude that Westpac has not established, on the balance of probabilities, that the $50,000 authority was not authentic. For the sake of clarity, the evidence of Mr Vizard is not to be acted on.

244 For these reasons Westpac's case of unjust enrichment must fail insofar as it is based on a mistake as to the authority of Mr Hilliard to sign cheques. No such mistake as alleged is established.

245 It is a further consequence of my conclusion concerning the $50,000 authority that the claims in paras 16 and 17 of the statement of claim must fail.

246 However there remains for consideration the question whether Westpac has established its claim in unjust enrichment on the basis that it paid the subject cheques under a mistake that they were for the purpose or benefit of the relevant account holder and given with its authority. This involves whether Westpac has established:

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247 In seeking to sustain that case Westpac's counsel submitted that Mr Hilliard drew and signed the cheques in perpetration of a fraud upon the relevant account holder, and that Westpac's ignorance of that fraud caused it to pay the cheques. Mr Hilliard's answer to the allegation of fraud was that he drew and signed the 61 cheques (and other cheques) under the arrangements made with Mr Vizard. That is, what he did was done with the actual or ostensible authority of Mr Vizard. Mr Hilliard's counsel submitted that if Mr Hilliard had authority to sign cheques over $10,000 by reason of the written authorities and practice, and that the $50,000 authority was authentic, then, so far as the issue of authority to sign cheques was concerned, that was the end of the case. (As to the other part of the case concerning the purpose or benefit of the cheques, the bank should fail for want of inquiry, as mentioned earlier in referring to the submissions.)

248 In substance I have found that Mr Hilliard's authority was to the effect contended for. But that alone cannot avail Mr Hilliard for the simple reason that what he seeks to establish as justification is the carrying out of a scheme for the secret removal of funds from the relevant account holders, with no consideration or benefit for those account holders and for the improper purpose of secretly enriching Mr Vizard and Mr Hilliard. It is to be noted that three of the 61 cheques, for an aggregate amount of $144,756.45, were drawn on the joint account of Mr and Mrs Vizard. In the case of the other 58 cheques the account holder was a company in the PAS Group. While doubtless Mr Vizard could do with his own funds what he would, although his wife was a joint holder of their account and there is no evidence that she authorised the withdrawals under and for the purpose of the alleged arrangements or received any consideration therefor, the position is different with the corporate account holders. For, being entities in their own right separate from Mr Vizard, Mr Hilliard's case must meet the difficulty that the arrangement involved the secret removal of the funds of the corporate entity for the personal advantage of Mr Vizard and himself and not for the purpose of the account holder which received no consideration. Mr Hilliard's counsel's submission did not grapple with these difficulties. It seemed to be assumed that it was sufficient to establish that the cheques were drawn under the arrangements with Mr Vizard and to rely on Mr Vizard having an actual or ostensible authority in that regard. Even if Mr Vizard was a director of each company, and the position as to directors is not clear as noted by Westpac's counsel in a supplementary written submission, that is not sufficient to have the consequence in law that each corporate account holder was bound by and to the arrangement alleged by Mr Hilliard for Mr Vizard's (and Mr Hilliard's) private purposes.

249 The preceding paragraph of course presupposes that Mr Hilliard's evidence as to his arrangement with Mr Vizard is accepted. But, as I have said, I regard Mr Hilliard's evidence as unreliable. I have regard to all that Mr Hilliard's counsel said as to why Mr Hilliard's version of events was plausible and should be accepted (and I note that Mr Hilliard's counsel advanced the case with the utmost vigour throughout and said all that could be said on Mr Hilliard's behalf), but ultimately I am not persuaded that arrangements were made as he contends. There being no other evidence upon which it might be concluded that such arrangements were made, it is not established that he and Mr Vizard made the alleged arrangements. As I concluded in relation to Mr Hilliard, and Mr Vizard, I do not accept their contentious evidence unless it is supported by other cogent evidence which I accept or which I may otherwise find established on the balance of probabilities having regard to the evidence as a whole. As the relevant contentious evidence pertains to matters that did or did not pass between them, none of the other witnesses being present, the question as to what is established by the parties must be determined on the balance of probabilities on a consideration of the whole of the evidence. Thus approaching the matter it seems to me to be clear that Westpac paid the 61 cheques in the belief that they were payments for the benefit, and under the authority, of the relevant account holder. Further, I do not accept that on the evidence Westpac was on notice of such matters that acting reasonably it should have inquired of the PAS Group as to the purpose of the cheques or as to whether the cheques were for the benefit of and authorised by the relevant account holder. As I have mentioned, such a case was neither pleaded nor run by Mr Hilliard. The question is whether that belief of Westpac in paying the cheques was mistaken and whether Mr Hilliard received the benefit of the payments. It will be recalled that I have already concluded that he received the benefit of the nine cheques that were paid to entities other than IAT (and ASA), as they paid liabilities of his.

250 It is to a consideration and determination of those issues that I now turn. The following matters are relevant in this regard.

251 There was no commercial or other relationship between the PAS Group and the relevant account holders on the one hand, and IAT on the other hand. The only link was Mr Hilliard as an employee of PAS and a director of IAT, but that was coincidental and was not and did not constitute a commercial or other relationship in which PAS or a member of the PAS Group might have made payments by cheque to IAT. Notwithstanding that, over a period of years the PAS Group made numerous payments by cheque to IAT. While in relation to the 61 cheques sued upon it is readily seen that nine were applied for the benefit of Mr Hilliard, the position with the other 52 cheques is not so apparent. They fall into the area, or "pool" so to speak, of the approximately $2.5M that went to IAT and which Mr Hilliard said he did not receive and does not have, and which Mr Vizard denies having received. Mr Hilliard says that apart from approximately $440,000 (as he agreed at the committal hearing, or $438,183.32 according to the prosecutor in the County Court) which he received as his consideration, he paid the balance to Mr Vizard. Mr Vizard denies any such consideration, the receipt of any money and the existence of the arrangements alleged by Mr Hilliard.

252 There is no evidence, other than Mr Hilliard's say-so, that would support his having given Mr Vizard quantities of cash. For reasons discussed I do not accept the contention that movements in Mr Vizard's loan account were occasioned by and reflect the movement of money under the arrangements alleged by Mr Hilliard. Nor, for reasons discussed, do I accept that such movements were part of a means of building an amount of cash overseas whether or not as a way of avoiding tax. The allegations are not established.

253 The situation is then that the payments by the PAS Group, but in particular the 61 cheques sued upon, cannot be explained on any basis other than that advanced by Mr Hilliard. That is, his position is, and it is the fact, that he wrote and signed cheques which included the 61 cheques which were duly paid. So Westpac paid the cheques according to their tenor and did so, I find, on the basis and in the belief that the cheques were the duly and properly authorised instruments of the account holders for their purposes. The only way in which Mr Hilliard contended that the cheques were authorised by and were for the benefit of the account holders was by submitting in effect that that was the consequence of the arrangements made with Mr Vizard. Even were I to accept Mr Hilliard's evidence in this respect that consequence would not follow. That is because, as already mentioned, the arrangements were for the secret removal of funds from the subject bank accounts not for the purposes of the account holders but for the private purposes of Mr Vizard and Mr Hilliard.

254 The cheques having been paid, I return to the issue of the disposition of the proceeds. There is no evidence to support, and I do not accept, the uncorroborated evidence of Mr Hilliard as to giving Mr Vizard quantities of cash drawn from IAT's account and which withdrawals were covered by subsequent payments to IAT from the PAS Group. Apart from that evidence of Mr Hilliard there is no evidence on which it could be concluded on the balance of probabilities that Mr Vizard received amounts withdrawn from the IAT account or the PAS Group accounts by means of cheques signed by Mr Hilliard. Nor is there evidence from which an inference to that effect could reasonably be drawn.

255 Mr Hilliard said that in executing the alleged arrangement he first withdrew cash from IAT's account, which he gave to Mr Vizard, and then reimbursed IAT's account with cheques drawn on the PAS Group. That was the order in which he implemented the arrangements as agreed with Mr Vizard. In cross-examination Mr Wood agreed that Mr Hilliard drew a lot of cheques on IAT for various purposes. That evidence was non-specific but doubtless correct. So also may his next answer be accepted that he believed that, as counsel put it, a lot of money came back to IAT from companies within the Vizard network. But what is to be understood by his next answer is not clear. The question and answer was:

[118]

The cross-examiner then moved to a different matter and Mr Wood was not re-examined. Hence the subject was not developed. There is some difficulty in the evidence being useful. The premise to the question was Mr Wood's "knowledge" but that was not established, indeed Mr Wood had not been aware of Mr Hilliard's cheque drawing activity, such knowledge as he had acquired was acquired after the event. Secondly, the question contained an unsubstantiated premise that Mr Wood knew that Mr Hilliard had drawn payments for Mr Vizard, a matter surely within the knowledge of Mr Hilliard and not Mr Wood who had not been aware of these matters. At best Mr Wood's beliefs must have been based on supposition or belief based on matters of which he had become aware after the event. In consequence I do not accept that Mr Wood could have known, in a sense reliable enough to be acted on, that all moneys Mr Hilliard drew from IAT "for or in respect of Mr Vizard" came back from a Vizard company. It may be noted that Ms Hellstrom was also unaware of Mr Hilliard's cheque drawing activity and of payments being received from the PAS Group.

256 A further difficulty in finding that the payments from the PAS Group reimbursed the IAT account is that the records maintained by Mr Hilliard did not truly and accurately reflect the transactions. The records did not disclose the nature and purpose of the relevant matter and the parties involved. In addition, Mr Hilliard withdrew money from IAT's account for his own purposes; I referred earlier to Mr Wood's evidence that Mr Hilliard did this without authority. Having regard to these matters it is not established and I do not find that there was a correspondence between the amounts withdrawn from IAT's account and the amount received into that account under cheques of the PAS Group. I note that Mr Hilliard said there was never a direct equivalence, as there could not have been under the arrangements, but nor, in my view, is it established that there was an equivalence when the last PAS Group payment had been made.

257 To clarify this aspect further, I did not understand counsel in final address to demonstrate by analysis that there was or was not such a correspondence.

258 It is relevant to consider whether the funds received into the IAT account under cheques received from the PAS Group were applied for the benefit of IAT. Without overlooking that the funds were paid into IAT's business account, the evidence does not indicate, let alone establish, that the funds were so applied. In addition, of course, it is Mr Hilliard's case that they were not so applied. But I am presently more concerned with what the evidence may establish than Mr Hilliard's statements in evidence.

259 Separately from that consideration is the evidence of Mr Hilliard, which I accept as correct regarding all of the circumstances, that he applied funds he drew from IAT's account for his personal purposes. The further fact, as I find it to be, is that IAT's business prosperity was not at a level that, generally speaking at least, could have enabled such expenditure.

260 Finally, there is the matter of the financial position of Mr Hilliard and Ms McCready. I referred to this earlier. Exhibit O being a personal financial plan prepared for them by Westpac indicates their position at 9 May 2000. It is no understatement to say that the financial position Mr Hilliard had attained by that time represented a remarkable achievement given his employment and income history. I have earlier referred to Mr Hilliard's evidence as to his sources of income apart from his employment with PAS and to assets held prior to commencement of that employment. Even if there was no element of over-statement in the level of his income from IAT or any source other than PAS, Mr Hilliard's evidence did not satisfactorily establish how in the period of his employment with PAS his resources, whether considered alone or in conjunction with those of Ms McCready, enabled the acquisition of assets to the level disclosed in the evidence. I might add that a similar observation might be made as to the lifestyle he enjoyed exemplified by the overseas travel.

261 These seem to me to be factors properly to be taken into account in the context of the evidence generally in deciding whether Mr Hilliard received the benefit of the balance of 52 cheques. That is to be determined on the balance of probabilities assessed in light of the underlying seriousness of the issue. Yet I am concerned only with a conclusion on the balance of probabilities and not with the establishment of a criminal offence.

262 In my view, regarding the matter overall, the likelihood or probability is that Mr Hilliard received the benefit of the cheques in question via the medium of IAT, and I am satisfied and find that that was the case. I conclude that it is established on the balance of probabilities that Mr Hilliard received the benefit of the 61 cheques, none of which were written or paid for the benefit of the relevant account holder, and that in the terms of the case law to which I have referred Mr Hilliard was unjustly enriched thereby.

263 The consequence is that Westpac has established its case that it paid the 61 cheques under a mistake that they were for the benefit of or paid with the authority of the relevant account holder and that Mr Hilliard has received and unjustly had the benefit of the payments.

264 There will accordingly be judgment for Westpac and an order for the amount due. The amount to which Westpac is entitled is the amount being 75% of the face value of the cheques, plus interest. I will hear counsel as to the orders to be made and as to costs.

[119]

[1] Court Book 2470-2503.

[2] Court Book 2128-2152.

[3] I was informed by counsel (transcript 1120) that an application for an Anton Piller order was made to Gray J and refused on 14 December 2000. None of the papers concerning the application are in the Court Book. Mr Vizard said in evidence (transcript 183) that the proceeding was brought by the PAS Group.

[4] At [40].

[5] Court Book 2865-2877.

[6] This company is actually called Roxby Park Primary Producers Pty Ltd and it is so named in para 5 of the statement of claim.

[7] See Court Book, vol 7, 2577, 2579-2582, 2569, 2589/90, 2617 and 2619 and counsel's explanation at transcript 1138-1141.

[8] Court Book 2592-2593.

[9] At transcript 1141.

[10] Court Book 275-277.

[11] See the transcript of the Crown opening in the County Court; Exhibit 3.

[12] Return of conviction Court Book 3078.

[13] Exhibit R.

[14] Exhibit 18.

[15] Exhibit L.

[16] Exhibit P.

[17] Exhibit 3.

[18] Exhibit F.

[19] Mr Holland explained what he meant by "scan errors" and made a diagrammatical representation which became Exhibit 16.

[20] Exhibit A.

[21] Court Book 3166-3193.

[22] Australian Securities and Investments Commission v Vizard [2005] FCA 1037; (2005) 145 FCR 57.

[23] The presentment is at Court Book 275-290.

[24] Evidence Act 1958 (Vic) s 29; and see Cross on Evidence, Chapter 13, Section 2.

[25] [2002] FCA 559; (2002) 190 ALR 169 at 183-184, [51].

[26] [2005] FCA 265; (2005) 215 ALR 301 at 323, [115]- [118].

[27] R v Roberts [2004] VSCA 1; (2004) 9 VR 295 at 328, [83] per Batt JA, Buchanan and Chernov JJA agreeing.

[28] (1993) 177 CLR 378.

[29] [2005] VSCA 76; (2005) 12 VR 340.

[30] [2006] HCA 27; (2006) 80 ALJR 1100; (2006) 227 ALR 425.

[31] Transcript 535-539.

[32] In this judgment the trustee and the trust are referred to as "the Vizard Foundation".

[33] See Court Book 154 for a table showing the PAS Group corporate structure. Though undated, counsel for the plaintiff said the table was from "a little bit later than 1991 ... certainly not later than 1996".

[34] In 1995, 50% of the Artists' Service business was sold to Fairfax. Mr Vizard said (at transcript 263) that he believed the proceeds of sale of his share was in excess of $5M. In 1998 the remaining interest of the PAS Group and Mr Vizard's co-venturer in Artists' Services was sold to Granada Television Group, with Mr Vizard becoming a director of Granada Australia. When asked what effect this had on the level of activity in the PAS Group, Mr Vizard said "the roles that we had and the relationship with Performing Arts Services was simplified, it became much clearer and simpler"; transcript 173.

[35] Transcript 168.

[36] Transcript 171.

[37] Transcript 816.

[38] Transcript 550-551.

[39] Transcript 9.

[40] Mr Hilliard said that the house was initially owned by PAS, the Vizards renting the house from the company, through the loan account. In 1993/1994, the Vizards purchased the property from the company, again through the loan account.

[41] I note that Westpac's counsel did not put the contrary to Ms Doney in cross-examination.

[42] Mr Hilliard said that his move to East Melbourne coincided with the sale in 1995 of 50% of the Artists' Services business to Fairfax.

[43] I note that Mr Vizard agreed that he required monthly reports as to cash, but not as to shares; transcript 296.

[44] Exhibit 4.

[45] Court Book 489. The letter is undated but counsel said in his opening that Mr Vizard provided the letter to the Private Bank in December 1991. Mr Hilliard said, and I accept, that Mr Fyfe drafted the letter for Mr Vizard to sign.

[46] Court Book 556.

[47] Exhibit 6.

[48] Transcript 155.

[49] Transcript 612.

[50] Court Book 3296-3297.

[51] It is not stated on the face of the file note which accounts are referred to, however I infer that the note refers to the 14 accounts on which Mr Hilliard was authorised to sign cheques as at that date.

[52] The covering notes included in the Court Book are addressed to Mr Vizard at Performing Arts Services Pty Ltd at 119 Wells Street South Melbourne, with one exception being the covering note dated 19 August 1993 in respect of a cheque for $173,345.85 paid to Ord Minnett, which is addressed to Mr Hilliard at Performing Arts Services Pty Ltd at 119 Wells Street South Melbourne. See Court Book 3209. Mr Hilliard said he only admitted to having seen those notices which had his name on them, or which were sent to Mr Vizard care of him; transcript 832.

[53] Transcript 613.

[54] Transcript 401.

[55] I infer that the arrangement referred to was that with Mr Fyfe.

[56] Transcript 402-403.

[57] Court Book 913A.

[58] Mr New took over from Mr Antony on an unspecified day in November 1995, thus it is not clear who was the executive manager on 9 November 1995 when the sixth cheque was signed.

[59] Although the money paid by the plaintiff to Mr Vizard pursuant to the deed of settlement did include a component for these cheques, namely 15% of the face value of the cheques under $10,000.

[60] Transcript 890.

[61] Transcript 924.

[62] Exhibit 2 was tendered by counsel for Mr Hilliard during the cross-examination of Mr Vizard. The list did not purport to be an exhaustive statement of every cheque for more than $10,000 signed by Mr Hilliard during the period from 15 April 1996 to 13 October 2000, let alone every cheque he signed for any amount during the whole period of his employment with Mr Vizard, hence the extent of the cheque writing on the accounts may have been even greater than what I have mentioned here, but I cannot speculate further as to these matters.

[63] Counsel for Westpac said in closing address that "All of those cheques in Exhibit 2 were proper expenses. It's not suggested otherwise. Mr Vizard did not seek to suggest otherwise". As to this, counsel referred to an answer Mr Vizard gave in cross-examination, namely that a cheque payable to Christies for $43,700 was signed by Mr Hilliard in excess of this authority, but that "it is a proper expense, I see that"; transcript 431-432. Yet, when Mr Vizard was asked whether he was aware that Westpac's claim did not include the cheques in Exhibit 2, he said "No, I don't know that but that doesn't mean that it was a proper cheque or an improper cheque. It just means that no claim has been made"; transcript 207. Mr Vizard generally denied knowledge of the nature of the payments represented by the cheques in Exhibit 2. In these circumstances, it was inaccurate for Westpac's counsel to say that Mr Vizard did not seek to suggest that the cheques in Exhibit 2 were not for proper expenses. Mr Vizard did the opposite and, I find, for reasons of obfuscation.

[64] None of the 141 cheques in Exhibit 2 were payable to Ord Minnett or J B Were.

[65] This was the first cheque in Exhibit 2 to exceed $50,000.

[66] Exhibit 11.

[67] Court Book 1440.

[68] At that time Mr Vizard lived in Irving Road, Toorak.

[69] Transcript 248.

[70] Mr Stevens explained this to mean cheque books, bank pay-in books, bank statements and invoices.

[71] It is not clear whether the endorsed cheque was one of the three cheques to IAT or whether it was one of the other two cheques.

[72] I note that in the case of the Roxby Park farm, Mr Stevens said that he relied on the farm manager to verify the correctness of the asset register. In this sense, it is unlikely that Mr Stevens went through every item in the farm's asset register, nor is it likely that Mr Vizard did so. Nevertheless, I accept Mr Stevens' evidence that he and Mr Vizard generally went through the items on the asset register of the Vizard Foundation, although they would not have verified every individual item.

[73] Transcript 324-325.

[74] Transcript 326.

[75] Court Book 3194. The summary was prepared by Mr Vizard's solicitors and provided by them in lieu of responding to a subpoena.

[76] Exhibit 8, Document 32.

[77] Transcript 665-666.

[78] Transcript 647.

[79] Transcript 666.

[80] Transcript 345-346.

[81] Transcript 346-347.

[82] Transcript 340.

[83] Transcript 352.

[84] Transcript 347.

[85] Transcript 546.

[86] Transcript 556.

[87] Transcript 545.

[88] Transcript 600-601.

[89] Transcript 1020.

[90] Mr Stevens said that he did not know what was in the boxes. They left the boxes in one of the rooms in the house at the farm. In 2001 Mr Stevens retrieved the boxes from the farm, as he was looking for accounting records. He looked in the boxes but they did not contain accounting records.

[91] See transcript 300-302.

[92] Documents 24 and 26 in the folder which became Exhibit 8.

[93] Mr Hilliard filled out the PAS Group cashbook accordingly, for example in Exhibit 13 it is seen that payments to IAT and Diners Club were written up as payments to Sotherby's, PAS, Christies and other apparently legitimate business expenses.

[94] It was not clear whether expenditure referred to the purchase of items on the card or the paying of the card bill.

[95] Transcript 667.

[96] Transcript 673-674.

[97] Exhibit 5, an updated version of which was tendered as Exhibit 13.

[98] Mr Hilliard gave as an example a cheque for $22,459.72 drawn on IAT from which he took $7,500 as cash; transcript 676. He also referred to an amount of $8,500 cash being taken from a cheque for $53,562.21. Mr Hilliard said "that's the sorts of amounts that I would draw when I took telegraphic transfers"; transcript 682. He said in cross-examination that he would take out $7500 or $8500 in cash whenever he had to send a "large sum" overseas; transcript 785-786.

[99] Transcript 672.

[100] Transcript 712.

[101] Transcript 713.

[102] Transcript 659.

[103] Transcript 675.

[104] There were 36 documents not belonging to Mr Hilliard, items 215 to 251 in Schedule 1 to his affidavit of discovery filed 14 November 2005.

[105] Transcript 887.

[106] Transcript 695.

[107] Transcript 730.

[108] Transcript 731.

[109] Transcript 734.

[110] Transcript 733.

[111] Transcript 779-780. Mr Hilliard said in re-examination that he and Mr Wood had an arrangement to take personal profits from IAT, which were falsely recorded as costs of operating tours, which reduced the taxable income; transcript 914. This evidence was not put to Mr Wood.

[112] Transcript 740.

[113] Transcript 744-745 and Court Book 1055-1063.

[114] This comprised $55,000 salary from PAS, $20,000 from IAT, $9,183 in interest, $11,758 as a distribution from the trust which owned the factory, and $2,587 in dividends.

[115] Transcript 745-746 and Court Book 1419-1427.

[116] Transcript 746-748 and Court Book 1629-1639.

[117] Transcript 747-748 and Court Book 1793-1804.

[118] Transcript 760.

[119] Transcript 760.

[120] Transcript 761.

[121] Exhibit O.

[122] Transcript 763.

[123] Transcript 767.

[124] Transcript 767-769.

[125] Transcript 773-775.

[126] Transcript 798.

[127] Transcript 799-800.

[128] See Exhibit 14 and transcript 896-899.

[129] Transcript 898-899.

[130] Transcript 786.

[131] Transcript 846.

[132] Transcript 899.

[133] Mr Hilliard said the house in Elsternwick had been purchased "from my savings"; transcript 901.

[134] Transcript 904-905. I note that Westpac's counsel objected to the question as to Ms McCready's earnings, on the basis that Mr Hilliard had said in cross-examination that he had no idea what she was earning. I permitted the question, although the weight to be afforded to the answer must be seen in the light of what Mr Hilliard said in cross-examination.

[135] Transcript 909.

[136] Transcript 887.

[137] Lipkin Gorman v Karpnale Ltd [1992] 4 All ER 409; Commercial Bank of Australia Ltd v Younis [1979] 1 NSWLR 444; Barclays Bank Ltd v W J Simms Son & Cooke (Southern) Ltd [1980] 1 QB 677; Bank of New South Wales v Murphett [1983] VicRp 45; [1983] VR 489.

[138] Bodenham v Hoskins (1852) 21 LJ Ch 864 at 869.

[139] [1992] 4 All ER 410 at 418-421.

[140] [1902] AC 543 at 550.

[141] (1988) 164 CLR 662.

[142] [1992] HCA 48; (1992) 175 CLR 353.

[143] Barclays Bank Ltd v W J Simms Son & Cooke Co (Southern) Ltd [1980] 1 QB 677; Bank of New South Wales v Murphett [1983] VicRp 45; [1983] VR 489.

[144] Majesty Restaurant Pty Ltd (in liq) v Commonwealth Bank of Australia (1998) 47 NSWLR 593.

[145] Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336.

[146] This relates to the payment to Vizard J in Exhibit 2.

[147] Transcript 16.

[148] Transcript 292.

Plaintiff v Defendants

At a glance

Court

Decision date

Before

Source

Judgment (119 paragraphs)

Parties

Cases Cited (12)