Plaintiffs v Defendants [2025] VSC 454 | Case summary

EVIDENCE - Whether recording of a telephone conversation should be admitted where one party to conversation unaware of recording Surveillance Devices Act 1999 (Vic) ss 6(1), 11(1); Evidence Act 2008 (Vic) s 38.

Plaintiffs v Defendants [2025] VSC 454 | Case summary | Zoe

[44]

(a) Mr Bertuna purported to act as agent of International Assets (defence [2(a)]);[1]

(b) Mr Bertuna is the spouse of Ms Alebakis, the sole appointed director of International Assets (defence [2(b)]);

(c) Ms Alebakis is and has been at all material times an agent of International Assets (defence [3(a)]);

(d) Mr Di Gregorio is, and was at all material times an agent of Amosa, and the spouse of Antonietta Di Gregorio, the sole appointed director of Amosa (defence [5]);

(e) Mr Rubin is a director of Air Sanz Holdings, iAM International, SCJBT, PPMS Vic, Panache Group, iAM Ventures and ASH Global and former director of Panache PMS (defence [6(2)]);

(f) Ms Poland is the spouse of Mr Rubin, and is a director of Air Sanz Holdings, Panache Group, iAM Ventures and ASH Global, the secretary of Air Sanz Holdings, and a former director of iAM Ventures, Air Sanz Trading and Panache PMS (defence [7]);

(g) Mr Biviano is a chartered practising accountant, a partner of Chambers & Partners, and a director of: Elldon, iAM International from 11 January 2016 to 13 October 2021, ASH Global from 21 April 2020 until 12 October 2021, Air Sanz Trading from 6 May 2019 to 12 October 2021 and iAM Solutions from 6 October 2017 to 16 December 2021. He provided accounting and advisory services to Mr Rubin, Ms Poland, Air Sanz Holdings, iAM International, SCJBT, Panache Group, iAM Ventures, Panache PMS, Air Sanz Trading, iAM Solutions and ASH Global in his capacity as a partner at Chambers & Partners (defence [8]);

(h) Elldon was a shareholder in iAM International from about 11 January 2016 to 6 May 2019, and from about 6 May 2019 in Air Sanz Trading (defence [8B]);

(i) Air Sanz Holdings had its registered office at the office of Chambers & Partners from 25 August 2016 until 16 December 2021 (defence [9(c)]);

(j) iAM International had its registered office at the office of Chambers & Partners from 29 April 2016 to 16 December 2021 (defence [10(b)]);

(k) SCJBT had its registered office at the office of Chambers & Partners from 16 July 2019 to 16 December 2021 (defence [11(b)]);

(l) PPMS Vic had its registered office of the office of Chambers & Partners from 5 June 2019 until 16 December 2021 (defence (12(b)]);

(m) Panache Group had its registered office at the office of Chambers & Partners from 25 August 2016 until 16 December 2021 (defence [13(b)]);

(n) iAM Ventures had its registered office at the office of Chambers & Partners from 25 August 2016 to 16 December 2021 (defence [14(b)]);

(o) ASH Global had its registered office at the office of Chambers & Partners from 7 June 2019 to 16 December 2021 (defence [15(c)]);

(p) Panache PMS went into liquidation on 20 December 2019, and over the period from 25 August 2016 to 26 December 2019, had its registered office at the office of Chambers & Partners (defence [16(a)] and [(b)]);

(q) Air Sanz Trading had its registered office at the office of Chambers & Partners from 6 May 2019 to 16 December 2021 (defence [17(b)]); and

(r) iAM Solutions had its registered office at the office of Chambers & Partners from 16 October 2017 to 16 December 2021 (defence [18(b)]).

[48]

(a) in or around March 2019, Mr Rubin said that $2 million was required for maintaining patents, finishing tools and dies, finishing research and development, and for future costs associated with running the business such as hiring and paying staff and also for Mr Rubin's own living expenses because he was not drawing a salary (defence [36(b)]);

(b) in or around April 2018, Mr Rubin and/or Ms Poland said to Mr Di Gregorio that the V model hand dryer is a full workroom communication system that communicates to the owner when the consumables in the hand dryer need replacing and collects data on usage (defence [36(3)]);

(c) in or around April 2018, Mr Rubin and/or Ms Poland said to Mr Di Gregorio that the V model hand dryer is the only machine in the world that sprays sanitiser whilst drying hands (defence [36(4)]);

(d) Mr Rubin, Mr Biviano and Mr Di Gregorio met multiple times to discuss Mr Rubin's products (defence [37(a)]);

(e) between October 2018 and on or around March 2019, Mr Rubin and Mr Di Gregorio met approximately 2 or 3 times per week, on many occasions accompanied by Mr Biviano (defence [38(a)]);

(f) during some of these meetings, Mr Rubin took steps to demonstrate to Mr Di Gregorio that the development of the V model hand dryer was progressing (defence [38(b)]);

(g) during some of these meetings, Mr Rubin had telephone calls with various people who Mr Rubin said to Mr Di Gregorio were from potential global customers in which Mr Rubin updated the telephone attendee as to matters relating to the development of the 'Airsanz' hand dryers (defence [38(d)]);

(h) Mr Rubin showed Mr Di Gregorio written correspondence between himself, and potential customers of 'Airsanz' (defence [38(e)]);

(i) the meetings between October 2018 and on or around March 2019 were at Sandringham and Donvale. Attendees at the meetings, varied from time to time but included Mr Rubin, Mr Di Gregorio and sometimes one or more of Ms Poland, Mr Biviano, Mr Campbell and Ms Smyth (defence [38](f)]);

(j) in or about March or April 2019, Mr Rubin said to Mr Di Gregorio that he (Mr Rubin) expected that it would be possible to commence production of certain (but not all) products in 12 to 18 months (defence [39(a)(ii)]);

(k) in about March or April 2019, Mr Rubin said to Mr Di Gregorio that a potential customer called Vectair had indicated to Mr Rubin that it was interested in buying the V and the SV hand dryers and the V and SV air purifiers for sale in the UK (defence [39(a)(iii)]);

(l) in or about March or April 2019, Mr Rubin told Mr Di Gregorio that he (Mr Rubin) expected that within 18 months iAM International would be producing certain (but not all) products and making sales (defence [39(a)(iv)]);

(m) in or about March or April 2019, Mr Rubin said to Mr Di Gregorio that 'if you do not believe in me, believe in the product' (defence [39(a)(v)]);

(n) in or about November to December 2019, Mr Rubin told Mr Di Gregorio that one possibility for the future was the listing on the Australian Stock Exchange of an entity within the Air Sanz group (defence [39(a)(viii)]);

(o) in or about November to December 2019, Mr Rubin told Mr Di Gregorio that if in future an entity within the Air Sanz group was to be listed on the Australian Stock Exchange then iAM International would potentially be rolled up with certain other Air Sanz Holdings subsidiary entities prior to that listing (defence [39(a)(ix)]);

(p) in or about March or April 2019, Mr Di Gregorio said to Mr Rubin, Ms Poland and Mr Biviano words to the effect that Amosa was interested in being the corporate vehicle for such an investment (defence [39(b)(i)]);

(q) in or about March or April 2019, Mr Di Gregorio told Mr Rubin that he would be paying for his investment in iAM International with proceeds from the sale of townhouses that he had developed (defence [39(b)(ii)]);

(r) in or about March or April 2019, but prior to 4 April 2019, Mr Rubin said to Mr Di Gregorio that he could make an investment in iAM Solutions, which had the licence to sell consumables (defence [41(a) and (b)]); and

(s) in the same discussion, Mr Rubin said to Mr Di Gregorio that funds should be transferred to Air Sanz Holdings (defence [41(b)(v)]).

[60]

(d) from April 2016, Chambers & Partners and Mr Biviano were aware of Mr Rubin's personal and financial circumstances to the extent that he disclosed those circumstances to them (third party claim defence [7(b)]);

(e) from April 2016, Chambers & Partners were aware of the corporate structure of the Rubin Group including the Air Sanz Group to the extent that the structure was disclosed to them (third party claim defence [7(c)]);

(f) from April 2016 they were aware of the assets and liabilities held by each of the entities in the Rubin Group to the extent that those matters were disclosed to them (third party claim defence [7(d)]);

(g) Mr Biviano and Chambers & Partners provided calculations concerning the amount of interest payable by Eddy Hartento to Air Sanz Holdings under the terms of the Further Settlement Deed based on instructions received from Leonard Warren, of Russell Kennedy, the Rubin's Group solicitors (third party claim defence [9]);

(h) Chambers & Partners was requested by Air Sanz Holdings to provide, and did provide, accounting assistance in implementing the compromise with Eddy Hartanto (third party claim defence [11(a)]);

(i) Chambers & Partners was requested by Air Sanz Holdings to provide, and did provide, accounting and advice concerning the sale of shares by Air Sanz Holdings Trust on Eddy Hartanto's and his nominees' behalf. In many instances the advice that was provided was preliminary advice that required further instructions or further information to be completed and such further instructions or information were often not provided (third party claim defence [11(b)]);

(j) legal advice in respect of these matters was provided to Air Sanz Holdings by Russell Kennedy (third party defence claim [11(c)]);

(k) payments of about $AUD929,127.16 were made to the Rubin Group to provide cashflow support and working capital for the purpose of completing its projects and the development of its products (third party defence claim [14(e) and (f)]);

(l) Mr Biviano introduced to Mr Rubin some potential investors in the Rubin Group (third party claim defence [19(a)]);

(m) Mr Biviano attended some meetings with Mr Rubin and some potential investors in the Rubin Group (third party claim defence [19(b)]);

(n) from about 2003, Chambers & Partners acted as accountants for Mr Bertuna and some of his related entities (third party claim defence [21(a)]);

(o) Chambers & Partners assisted with the incorporation of International Assets (third party claim defence [21(c)]);

(p) Mr Biviano was a director of various entities associated with Mr Bertuna and held shares or other financial interests in entities owned by or associated with him (third party claim defence [21(d) and (f)]);

(q) Mr Biviano or his related entities have guaranteed some business loans of entities associated with Mr Bertuna (third party claim defence [21](h)]);

(r) in or about March 2017, Mr Biviano attended a meeting with Mr Bertuna and Mr Rubin at which an investment in Mr Rubin's product and/or businesses by Mr Bertuna or his associated entities was discussed, and that Mr Rubin did almost all of the talking at the meeting (third party claim defence [23(a)-(b)]);

(s) following the first payment by Mr Bertuna or his related entity, Mr Biviano told Mr Rubin that he had liaised with Mr Bertuna about the proposed purchase by Amosa of shares in iAM International, and that the discussion concerned funding support for the Rubin Group generally, not iAM International specifically (third party claim defence [27(a)]);

(t) Mr Biviano believed that the International Assets payments were principally intended to fund product development and cashflow for the business (third party claim defence [27(a)]);

(u) the meeting on 18 March 2019 at Sandringham was organised by Mr Rubin and attended by Mr Di Gregorio and Mr Biviano. Mr Biviano's role at the meeting was to take notes to give to Mr Di Gregorio and his advisers (third party claim defence [48(b)]);

(v) Mr Rubin, Mr Biviano and Mr Di Gregorio met regularly to discuss how development of the Air Sanz product was progressing (third party claim defence [49(a)]);

(w) Mr Biviano informed Mr Rubin that he had liaised with other investors in the Rubin Group about funding support for the group (third party claim defence [49(c)]);

(x) Mr Biviano may on some occasions have been called into meetings between Mr Rubin, Mr Di Gregorio and others when Mr Biviano was attending Mr Rubin's office for other reasons (third party claim defence [49(d)]); and

(y) Mr Biviano believed that the Amosa payments were principally intended to fund product development (third party claim defence [50(a)]).

[395]

348. Significant acquisitions on or after 29 March 2017 were:

(a) the Paynesville property at 7 Fort King Place, Paynesville on 16 February 2018 purchased for $915,000 by Panache Group Pty Ltd as trustee fpr I T Ventures Trust; and

(b) the Paynesville property at 9 Fort King Place, Paynesville on 18 December 2019 purchased for $430,000 by SCJBT Pty Ltd as trustee for the Childrens Trust.

...

There were also purchases of vehicles and vessels after 29 March 2017 but this was usually done by way of trade in. Further, some of the cars I owned prior to 29 March 2017 were also sold after 29 March 2017. The sequence of purchases and sales was as follows:

(a) on 30 November 2017, a 2018 Seadoo GTX 300 LTD Jetski and trailer for $25,900 distributed to B Rubin;

(b) on 27 September 2018, a 2018 Mercury 460 Ocean Runner Boat purchased by RHRCT for $23,185;

(c) on 22 November 2018, a RCTXRS300 Jetski purchased for a net amount of $7,500 (after the trade-in of the 2016 Seadoo RXTX 300 Jetski for $16,000) and distributed to B Rubin;

(d) on 21 August 2019, a White BMW X1, purchased for $60,809. This was purchased by the RHRCT for my daughter, Tayla Rubin;

(e) on 29 August 2019, Rolls Royce Dawn Convertible, which after applying the trade-in from the sale of the Bentley GT Speed, was purchased for $440,000;

(f) on or about 13 September 2019, a BMW 320d for $80,128. This was purchased by the RHRCT for my son, Braeden Rubin;

(g) on 24 September 2019, a Mastercraft XT25 Vessel for $204,000, which after applying the trade-in of the 2008 Seadoo Wake Boat for $42,000, was purchased for $162,000;

(h) on or about 24 September 2019, a BMW X5 40i Carbon Black, which after applying the trade-in from the SQ5, was purchased for $57,000;

(i) on or about 5 December 2019, a 2020 Seadoo GTX 300 LTD Jetski for $24,000 distributed to B Rubin;

(j) on 15 January 2020, a Rolls Royce Dawn BB, which after applying a trade-in from the sale of the Rolls Royce Dawn Convertible, was purchased for $180,000;

(k) on 23 March 2020, a BMW X6 M50i Mineral White, which after applying a trade-in from the sale of the BMW X5, was purchased for $20,000;

(l) on 23 June 2020, BMW X4 M40i Flamenco Red, was purchased for $95,000;

(m) on 18 July 2020, a Mini was bought for $62,000, and after a trade-in was received for an old Audi owned by my daughter, Candice, for $5,000, the net price was $57,000;

(n) on 30 September 2020, a Bentley Continental GT Orange Flame, which after applying a trade-in from the sale of the BMW X6, was purchased for $300,000;

(o) on 11 December 2020, a black BMW X1, which after applying a trade-in from the sale of the white BMW X1, was purchased for $20,000;

(p) on 12 December 2020, a BMW X5, which after applying a trade-in from the sale of the BMW X4, was purchased for $90,000; and

(q) on 30 June 2021, a Mazda CX5, was purchased by the RHRCT for Joshua Rubin for a net price of $25,040 (after a contribution by iAM Ventures in respect of an insurance claim for damage on another car of $24,960).

351. However, there was also vehicles sold during this period:

(a) on 21 March 2021, the Ferrari Scaglietti was sold for $300,000 and no other vehicle was bought; and

(b) on 19 May 2021, the Rolls Royce Dawn BB was sold for $635,000 and no other vehicle was bought.

The net amount spent on cars and vessels after 29 March 2017 to 19 May 2021, less the amount received for sales of vehicles and vessels (including trade ins), is approximately $732,562. These purchases were for the use of my wife, my 5 children, and where applicable, their partners) and me.

...

356. ...

(c) ...A White BMW X1, purchased by SCJBT for $60,809 and is owned by my daughter, Tayla, not by SCHBT;

(d) ....a BMW X5 was purchased. However the net purchase price was $70,000 not $117,000, because there was a trade-in of an Audi for $47,000, recorded on the very next journal entry. The trade-in amount was not disclosed in the First Nasimi Affidavit. This vehicle is no longer owned by SCJBT, having being traded-in for a later vehicle purchase;

(e) ...A BMW 320e was purchased by SCJBT for my son, Braedon for $80,128.00 on 13 September 2019. Bradeon owns this vehicle, not the SCJBT;

(f) ...a BMW X5 40i Carbon Black was purchased. However the net purchase price was $57,000 not $160,000 because there was a trade-in of a SQ5 for $103,000, recorded in the preceding journal entry;

(g) ...a BMX X6 M50i Mineral White was purchased. However, the net purchase price was $20,000 not $140,000 because there was a trade-in of a BMW recorded in the journal entry;

(h) a BMW X4 M40i Flamenco Red was purchased for $95,000. The vehicle is no longer owned by RHRC, having being traded-in for a later vehicle purchase;

(i) a MINI was purchased for a net price, after trade-in of $57,000 by RHRCT for my daughter, Candice. The car belongs to Candice, not SCJBT;

(j) a black BMW X1 was purchased. However, the net purchase price was $20,000 not $58,000 because there was a trade-in of a white BMW X1 for $38,000, recorded in the following journal entry;

(k) a BMW X5 was purchased. However, the net purchase price was $90,000 not $175,000 because there was a trade-in of a BMW X4 for $85,000, recorded in the following journal entry.

357. ...

(a) there is no journal entry for the purchase of a Mastercraft Boat for $20,4000 on 9 May 2019 - however, from MYOB I believe that this was the deposit for the Mastercraft Boat purchased for the net sum of $162,000 referred to in the following sub-paragraph, and not a separate purchase.

(b) this is partially correct - a Mastercraft vessel was bought for a net price of $162,000 after a trade-in of a SEaDo for $42,000 recorded in the following journal entry. The trade-in amount was not disclosed in the First Nasimi Affidavit; and

(c) the actual date of the journal entry is 22 June 2020, but there was no purchase of a Mastercraft Boat for $13,127. This fee was charged for a service.

...On 30 September 2020, a Bentley Continental GT Orange Flame was purchased for $418,000, which after applying a trade-in from the sale of the BMW X6 for $118,000, the net purchase price was $300,000.

...the actual entry on 30/6/21 records a price of $49,999.99 for the purchase by the RHRCT of a Mazda CX5 for Joshua Rubin, and distributed to him....The net purchase price was $25,040 (after a contribution by iAM Ventures in respect of an insurance claim for damage on another car of $24,960).

[513]

The principles are well established. Determining whether a person has breached s 18 of the ACL involves four steps: first, identifying with precision the 'conduct' said to contravene s 18; second, considering whether the identified conduct was conduct 'in trade or commerce'; third, considering what meaning that conduct conveyed; and fourth, determining whether that conduct in light of that meaning was 'misleading or deceptive or ... likely to mislead or deceive'.

The first step requires asking: 'what is the alleged conduct?' and 'does the evidence establish that the person engaged in the conduct?'. The third step considers what meaning that conduct conveyed to its intended audience. As in this case, where the pleaded conduct is said to amount to a representation, it is necessary to determine whether the alleged representation is established by the evidence. The fourth step is to ask whether the conduct in light of that meaning meets the statutory description of 'misleading or deceptive or ... likely to mislead or deceive'; that is, whether it has the tendency to lead into error. Each of those steps involves 'quintessential question[s] of fact'.

The third and fourth steps require the court to characterise, as an objective matter, the conduct viewed as a whole and its notional effects, judged by reference to its context, on the state of mind of the relevant person or class of persons. That context includes the immediate context - relevantly, all the words in the document or other communication and the manner in which those words are conveyed, not just a word or phrase in isolation - and the broader context of the relevant surrounding facts and circumstances. It has been said that '[m]uch more often than not, the simpler the description of the conduct that is said to be misleading or deceptive or likely to be so, the easier it will be to focus upon whether that conduct has the requisite character'. That said, the description of the conduct alleged and identified at the first step should be sufficiently comprehensive to expose the complaint, because it is that conduct that will ultimately, as a whole, be determined to be or not to be misleading or deceptive.[10]

[592]

(a) the representation was part of a scam by Mr Rubin to attract funds ostensibly to complete Air Sanz products but in reality to be spent how he liked;

(b) in [55] of his affidavit filed 10 September 2021, Mr Rubin stated his view that '[Air Sanz Holdings] could use the money however it liked', and that he needed the sale proceeds to fund his and his family's living expenses as he had no other source of income. He has never retracted his position that he was entitled to spend the money provided by International Assets as he liked;

(c) during his standard pitch to prospective investors he did not disclose that he intended to use invested money for any purpose that he liked, or that he had used most of the money provided by investors to buy luxury assets;

(d) the product development representation was a representation as to future matters. It has not been pleaded or shown that Mr Rubin and Ms Poland had reasonable grounds for making it. In fact, no evidence has been led which might show that there were reasonable grounds for making the representation;

(e) the amounts represented by Mr Rubin and Ms Poland to prospective investors as being necessary for product completion were entirely arbitrary. No attempt has been made by the Rubin parties to demonstrate that any of the various amounts stated by Mr Rubin and Ms Poland were fair and reasonable estimates of the cost of completion. No analysis or calculation has been discovered or provided which might support them;

(f) of the payments made by International Assets between 29 March 2017 and 15 January 2018, totalling $1,510,000, Mr Penkethman found that $1,390,000 was transferred into a bank account in a different name and subsequently used to purchase the Rubin family's holiday home at 7 Fort King Place;

(g) of the payments of $550,000 made by International Assets to Air Sanz Holdings between 17 January 2018 and 7 September 2018, Mr Penkethman calculated that $484,000 was paid into the offset account of PPMS (Vic). This company was controlled by Mr Rubin and Ms Poland and was not part of the Air Sanz group;

(h) of an amount of $205,000 paid by International Assets into iAM's ANZ account between 1 September 2017 and 30 June 2018, Mr Penkethman calculated that $82,000 went into an account in a different name while $51,205 went into the PPMS (Vic) offset account;

(i) the same position obtains as to the monies paid by International Assets over the period from 3 September 2018 until 20 April 2020, and 10 December 2020 to 8 February 2021. Mr Penkethman found that to a very large extent, these monies were diverted to Rubin family purposes, particularly for the acquisition of premium or luxury assets and not used to complete the products; and

(j) in about July 2021, Mr Biviano, the accountant for the Air Sanz entities, prepared a spreadsheet showing the actual expenditure of Air Sanz entities on product development over the period from 1 January 2017 to 31 March 2021. Although the spreadsheet consisted of incomplete internal workings and 'back of the envelope' calculations, it showed that only $736,584 had been expended on product development including suppliers, tooling, consultants, and lawyers over a period exceeding four years. This was only a fraction of the monies received by the Air Sanz group over that period.

[613]

The elements of deceit that a plaintiff must prove are well established.

First, the defendant made a false representation. Ordinarily, this will be determined by how the representation would have been understood by a reasonable person. A false representation may be made by words or conduct, or by active concealment or non-disclosure of a fact which renders a fact disclosed false or misleading. However, merely proving a representation was false is not enough. The differing meanings or senses in which words or conduct were understood by both the representor and the representee must be borne in mind when considering the elements of deceit.

Secondly, the defendant made the representation with the knowledge that the representation was false, or was 'recklessly, careless' as to whether the representation was false or not. Recklessness is a state of mind established by showing an 'indifference to [the] truth or falsity' of the representation. It has alternatively been expressed as the absence of genuine or honest belief in the truth of the statement as it was intended to be understood. Recklessness requires the defendant to have been aware of a risk that the statement was untrue or false and to have consciously disregarded that risk. The second element may also be established where a defendant wilfully shuts her or his eyes to what would result from further enquiry as to the truth or falsity of the statement.

Motive is irrelevant if fraud is proved; it does not matter that there was no intention to cheat or injure the person to whom the representation was made; and prior planning is not required.

Mere carelessness, in the sense of failing to take adequate care, is not sufficient. The absence of reasonable grounds for believing the statement is true is also not enough to satisfy this element. Although this may serve as evidence of recklessness or a lack of honest belief, this evidence can be displaced by showing the representor's genuine belief in the truth of the representation. However, the grounds of belief may be relevant to assessing the credibility of later assertions of belief; if the belief is destitute of all reasonable grounds it may be difficult to persuade the court it was genuinely held.

In respect of a corporate defendant, the plaintiff must identify a natural person with the requisite state of mind and be able to attribute the state of mind of that person to the company. A division of function among company officers responsible for different aspects of a transaction does not relieve the company from responsibility by reference to the knowledge possessed by each of them. This may be established by relying on the principles of actual and apparent authority set out above. Accordingly, it is not necessary for a plaintiff to establish that the person with the requisite state of mind made the representation. A corporation may be liable where a representation is made with authority by a person who did not know it was fraudulent and another person whose knowledge may be attributed to the corporation knew of the making of the representation and knew it was false.

Thirdly, the defendant made the representation with the intention that it be relied upon by the plaintiff, or a class of persons to which the plaintiff belongs. However, it need not be made directly to the plaintiff.

Fourthly, the plaintiff acted in reliance on the false representation. The representation need not be the sole cause of the plaintiff's actions; it is sufficient that the representation played some part, even if only a minor part. This is the case even if another reason for the plaintiff's actions was the plaintiff's own mistake or carelessness. Further, if the representation is made to induce the other party to enter into a contract, and the other party does enter into the contract, an inference arises (which may be rebutted) that the other party was induced to do so by the representation.

Fifthly, the plaintiff suffered damage, which was caused by reliance on the false representation. Generally speaking, a causal connection is established if the plaintiff would not have sustained the loss if not for the defendant's wrongful conduct. However, satisfaction of the 'but for' test is not always necessary, or sufficient, to show causation. The "but for" test results must be tempered by value judgments and policy considerations, and ultimately determined with a common sense approach.

It goes without saying that, as a claim based on deceit involves allegations of fraud, a finding that the claim has been made out is not lightly made.[38]

[644]

(a) I have previously set out why the product development representation was misleading and deceptive or likely to mislead or deceive when made to International Assets, Mr Bertuna and Ms Alebakis.[39] The reasons apply also to the same representation when made to Amosa and investors through Amosa;

(b) of the payments made by Amosa to Air Sanz Holdings between 4 April 2019 and 18 September 2019 which totalled $900,000, Mr Penkethman found that $178,448 of this money was paid to SMG European Cars whilst an amount of $400,000 was paid to Zagame Cars after tracing the money through different bank accounts;

(c) of the $400,000 payment made by Amosa to Air Sanz Holdings on 19 September 2019, Mr Penkethman concluded that $220,000 was paid to Mastercraft Boats after tracing the flow of money through various bank accounts;

(d) of the payments made by Amosa to Air Sanz Holdings between 7 November 2019 and 5 December 2019 totalling $1,050,000, which amount was transferred to the R H Rubin Children's Trust, $363,615 was transferred to a PPMS (Vic) account; $43,000 was paid to Tragear and Harris, Lawyers, who acted in the purchase of the property at 9 Fort King Place for SCJBT, and $411,885.20 to an iAM International bank account. The price for the purchase of 9 Fort King Place, Paynesville on 4 December 2019 was $430,000;

(e) of the payments made by Amosa to Air Sanz Holdings over the period from 13 December 2019 and 22 January 2020 totalling $250,000, Mr Penkethman found that $24,000 was paid to Bairnsdale Boats, $131,000 to Zagame Cars and $42,000 to European Cars;

(f) of the payments made by Amosa to Air Sanz Holdings over the period from 23 March 2020 to 15 May 2020, payments totalling $45,000, and a payment made by Mr Biviano of $100,000 on 27 March 2020 were paid to Air Sanz Holdings' bank account. An additional $120,000 was transferred to the R H Rubin Children's Trust, into an offset account held by PPMS (Vic) with the ANZ Bank. Other payments were made to Mr Rubin personally and to iAM International ANZ account;

(g) of the payments made by Amosa to Air Sanz Holdings over the period from 15 June 2020 to 10 July 2020 totalling $230,000, Mr Penkethman determined that $93,000 was transferred to SMG European Cars whilst the balance was transferred to other Air Sanz group entities;

(h) of the payments made by Amosa to Air Sanz Holdings over the period from 28 July 2020 to 30 September 2020 totalling $1,090,000, Mr Penkethman determined that $300,928 was transferred to Chequered Flag Bentley; $110,000 was transferred to SMG European Cars, whilst the balance was paid to other Rubin entities; and

(i) of the payments made by Amosa to Air Sanz Holdings over the period from 4 October 2020 to 15 December 2020 totalling $30,000, Mr Penkethman determined that $10,000 was paid to the R H Rubin Children's Trust account.

[664]

(a) the representation that the shares in iAM International and iAM Solutions would be rolled up into a single company that would own all of the assets and intellectual property was an incentive or lure to attract Mr Di Gregorio and other investors to pay large sums of money for shares in shelf companies that were fundamentally worthless. The representation permitted Mr Rubin to say as he did that the investors would get value for their money after the rolling-up process was completed;

(b) Mr Rubin lacked a bona fide intention to honour the asset ownership company representation;

(c) Mr Rubin could have issued investors with shares in Air Sanz Holdings at the outset. This would have given them rights in the physical and intellectual property of the Air Sanz group;

(d) as the founder and controlling mind of the Air Sanz group, Mr Rubin was well aware that Air Sanz Holdings held the physical and intellectual property assets of the Air Sanz group. He had set up the Air Sanz group that way. The assets were held on trust under his control. He did not authorise the issue of shares in Air Sanz Holdings to Mr Di Gregorio, or investors at any time;

(e) because Air Sanz Holdings held the rights to the physical and intellectual property of the Air Sanz group, iAM International, iAM Solutions and Airsanz Trading could not sell products or consumables without a licence from Air Sanz Holdings;

(f) while draft licencing agreements were prepared, Mr Rubin did not at any time authorise their execution;

(g) Mr Biviano said that he repeatedly asked Mr Rubin for licence agreements but they were never provided;

(h) when Mr Allan advised that the Air Sanz group should be rolled up into a single company for listing on the stock exchange, Mr Rubin declined to permit this to happen because it would mean that he would lose control over the Air Sanz group. Instead he represented to Mr Di Gregorio that if he could raise another $1 million this would not be necessary. It was Mr Rubin who rejected Mr Allan's proposals and recommendations;

(i) the asset ownership company representation is a representation as to future matters. The Rubin parties have pleaded bare denials in their defence to the allegation of the asset ownership company representation, and have not pleaded that there are any reasonable grounds for the making of the representation; and

(j) it follows under s 4(1) of the ACL and s 12BB(1) of the ASIC Act that the asset ownership company representation is taken to be misleading and deceptive.

[725]

Having established the existence of a fiduciary duty, the Court must then determine whether the gravity of the fiduciary's conduct is such that it can be characterised as "dishonest and fraudulent". Breaches that are well-intentioned, trivial or insignificant do not therefore meet that description.

There is a divergence of opinion amongst the authorities as to the meaning of "dishonest and fraudulent design" of a fiduciary in the context of a knowing assistance claim, as recently recognised by Sifris J in Chickabo v Zphere.

On one view, it is not necessary to demonstrate conscious awareness of wrongdoing or moral iniquity by the fiduciary in order to establish a "dishonest and fraudulent design". It is sufficient if the breach of duty can be characterised as dishonest or fraudulent according to equitable principles. In Westpac Banking Corporation v Bell Group Ltd (in liq) (No 3), Drummond AJA (Lee AJA agreeing) relevantly said that 'a person may be fraudulent in the eyes of equity, even though he acted with subjective honesty', so long as the breach is too serious to be excusable as a matter of discretionary judgment.

Conversely, other authorities have considered that the concept of "dishonest and fraudulent design" as expressed in Barnes v Addy requires an element of actual dishonesty, namely, "a transgression of ordinary standards of honest behaviour". On this view, "dishonest and fraudulent design" requires conduct in the nature of common law (as opposed to equitable) fraud. In Hasler v Singtel v Singtel Optus Pty Ltd, Leeming JA criticised the approach of Drummond AJA in Bell Group (No 3), and found that a 'dishonest and fraudulent design' must involve actual dishonesty contrary to the ordinary standards of honest behaviour.

The weight of subsequent authorities favour the approach of Leeming JA regarding the meaning of "dishonest and fraudulent design" in Hasler. In Ancient Order of Foresters v Lifespan, Gageler J endorsed the formulation of Leeming JA in Hasler, and said that "the requisite element of dishonesty and fraud on the part of the fiduciary is met where the conduct which constitutes the breach transgresses ordinary standards of honest behaviour". Leeming JA's approach in Hasler as endorsed by Gageler J in Forester was also recently approved by the Full Federal Court in Zibara v Ultra Management (Sports). On that basis, it is appropriate to adopt the formulation of Leeming JA of the requisite element of dishonesty and fraud, which is met where the conduct constitutes a "transgression of ordinary standards of honest behaviour".

The Court must next consider whether a third party's conduct, at the time of the implementation of the dishonest and fraudulent design, constituted "assistance" in respect of that scheme. In this regard, the Victorian Court of Appeal in Harstedt noted that whether a third party has so assisted is "plainly" a question of fact, and that the ways in which a third party may provide assistance are "myriad". However, the two principles below are apposite:

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