Scott (Trustee), in the matter of Stolyar (Bankrupt) v Stolyar - [2022] FCA 691 - FCA 2022 case summary — Zoe

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Scott (Trustee), in the matter of Stolyar (Bankrupt) v Stolyar

[2022] FCA 691

Federal Court of Australia|2022-06-16|Before: Markovic J

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Source facts

Court

Federal Court of Australia

Decision date

2022-06-16

Before

Markovic J

Source

Original judgment source is linked above.

Judgment (63 paragraphs)

[1]

Background facts 47 In this part of the reasons I set out the background facts insofar as they are relevant to understanding the transactions the subject of the proceeding.

[2]

4.1 The respondents, Ian, Beth, entities related to them and other relevant events

[3]

4.1.1 Faina 48 Faina was born in 1941 in Odessa, Ukraine. She married Anchel Stolyar (who for ease and without intending any disrespect I will refer to as Anchel) in about 1964 in Ukraine. In August 1979, Faina and Anchel moved to Australia with their son Ian. 49 Faina and Anchel both worked: Anchel worked six days a week in a factory and five nights a week helping Faina in a cleaning job; and Faina worked two jobs seven days and nights each week. However, at some time prior to 2001 Faina ceased paid employment to care for Anchel who had become ill. 50 In 1980, Faina and Anchel purchased an apartment at 6/4 Empress Street, Hurstville New South Wales (Hurstville Property) for $40,000. The purchase of the Hurstville Property was financed by a loan from the Commonwealth Bank of Australia (CBA) secured by a first registered mortgage over that property. By 1982, Faina and Anchel had repaid that loan and the CBA's mortgage over the Hurstville Property was discharged. 51 In 1985 Faina and Anchel purchased an apartment at 5/41 Francis Street, Bondi, New South Wales (Francis Street Property) for $108,000. The purchase price was funded in part by savings and in part by a loan from the CBA of approximately $60,000 or $70,000 secured by a first registered mortgage over that property. Faina and Anchel paid off their loan within about two years. 52 In or about 1983, when Ian was 16 years old, he developed an interest in share trading. Faina and Anchel agreed to give Ian some money so that he could invest in shares on their behalf. They told him that from time to time they would give him funds to buy shares in Faina's name. 53 Faina told Ian to invest in inexpensive shares at a cost of 1 or 2 cents per share and to take any profit earned and invest that money in another company's shares. Faina also insisted that, before Ian bought or sold any shares, he first discuss with her what he proposed to do and then only do so if she agreed. That said, it seems that while Faina wanted to monitor Ian's share trading, she knew little if anything about the stock market and share trading and relied upon Ian's advice about what shares should be bought and when they should be sold. 54 According to Faina nothing has changed; she still relies on Ian's guidance when it comes to share trading but, as has always been the case, before buying or selling any shares on her behalf, Ian first discusses the proposed trade with her and only acts on her instructions. 55 In 1988, Faina and Anchel sold the Hurstville Property for $120,000 and deposited the sale proceeds into a bank account. They placed some of those funds into term deposits from time to time. 56 From about 1988 onwards, Faina and Anchel provided Ian with larger sums of money with which to buy shares, still only in Faina's name and not without Ian first having discussed with Faina what he proposed to purchase. 57 In 1992, following an earlier claim, Anchel received a lump sum payment of $102,000 from the German Government as compensation for having been imprisoned in a Nazi concentration camp from 1941 to 1945 (German Compensation Payment). The German Compensation Payment was deposited into an account in Anchel's name which had been opened for that purpose (Anchel Stolyar Account). From approximately 1993 until his death, in addition to the German Compensation Payment, Anchel received a monthly compensation payment of approximately $500 from the German Government which was also deposited into the Anchel Stolyar Account. 58 Two further amounts were deposited in the Anchel Stolyar Account: in 1993 Anchel's superannuation benefit of $110,000; and in 1999 a damages payout of $125,000 from a medical negligence claim made by Anchel. 59 In about 1997 or 1998 Faina received her superannuation benefit of between $60,000 and $70,000. Faina recalls that this money was used to purchase shares in her name. 60 On 31 December 2000 Faina's brother suddenly passed away. At the time Anchel was also very ill. Following her brother's death Faina contemplated changing her surname from her married name back to her maiden name, Lutsker, so she could feel more connected to him. In about early 2001 Faina told Ian that she wanted any new shares that he purchased on her behalf to be bought in her maiden name. Ian was not in favour of Faina changing her surname. Accordingly, while he bought some shares in Faina's maiden name, he also continued to buy shares in her married name. 61 On 1 June 2001 Anchel passed away and Faina became the sole registered proprietor of the Francis Street Property and the beneficiary of the funds in the Anchel Stolyar Account, the balance of which she transferred into a bank account in her name, and of her and Anchel's other joint assets. 62 The Trustee believes that as at March 2002 Faina was receiving a widow's pension of approximately $402.70 per fortnight. That belief is borne out by: (1) a Centrelink statement dated 20 March 2002 addressed to Faina which records that on 27 March 2002 Faina received a payment for the period 13 March 2002 to 26 March 2002 of $402.70; (2) the fact that on 10 April 2002 Faina received a total allowance of $404.80; and (3) a loan application dated 10 December 2002 made jointly by Beth and Faina (referred to in detail at [119]-[121] below) in which Faina's gross annual income is recorded as $10,540. 63 Since Anchel passed away, Faina has relied upon Ian to assist her with her financial and property matters including: buying and selling shares on her behalf and the opening of share trading accounts; purchasing real estate, leasing her investment properties, preparing her personal and company tax returns and financial statements; and undertaking electronic banking on her behalf, with Ian having authority to operate Faina's bank accounts electronically. Faina does not know how to use a computer. Faina trusts Ian and thus generally does not review any documentation relating to financial matters in any great detail but relies upon what Ian tells her. 64 As Faina's English is not as good as Ian's she often discusses matters with him in Russian.

[4]

4.1.2 Ian 65 Ian was born on 9 February 1967 in Odessa, Ukraine. He moved to Australia in August 1979 with his parents. 66 As outlined above, Ian developed an interest in share trading in about 1983 when he was 16 years old. To assist him with that interest Faina permitted him to trade on the Australian Stock Exchange (ASX) with money from her savings account. Ian described the way it worked as follows: he first discussed with Faina the shares he proposed to buy; he then engaged a stockbroker to carry out the transaction; the shares were only ever bought in Faina's name; any profit made from trading those shares was either returned to Faina or used by Ian to buy more shares on her behalf; and any loss made from trading Faina's shares ultimately sat with her, although Ian would subsequently attempt to recover that loss through further share trades. 67 From 1986 to 1988 Ian studied economics at the University of New South Wales and in 1989 he obtained a Bachelor of Economics. 68 From 1990 to 1992 Ian undertook a Masters of Commerce specialising in Finance at the University of New South Wales. In 1993 he obtained his Masters of Commerce. 69 From 1989 to 1992 Ian was employed by the CBA first as a graduate trainee in the personal lending section and progressing to the role of assistant manager. 70 In about June 1992 Ian entered into a contract to purchase 11/2 Ocean Street for $230,000. That purchase was funded in part by a loan of $200,000 from the CBA which was secured by a first registered mortgage over the property. 71 Between 1992 and 2001 Ian held the following positions: (1) 1992 to 1995 - credit analyst with Standard Charter Bank; (2) 1995 to 2000 - senior underwriter with CGU; and (3) 2000 to 2001 - credit manager with Rams Home Loans. 72 In 2001 Ian joined Royal Guardian as a senior manager in the Commercial and Credit Division. 73 Since the opening of Star City Casino in 1995 Ian has been a member of the Sovereign Room, a "high rollers" room. 74 Once Ian started earning money he began to trade shares in his own name. Over time and, commensurate with his earnings and his ability to obtain a loan or line of credit, his share trades became more frequent and larger in amount. 75 On an increasingly regular basis Ian also continued to trade shares in Faina's name, both in her maiden name from approximately 2004, and in her married name. As before, when trading shares on behalf of Faina, Ian first discussed the proposed trades with her, he used her money to buy the shares and either deposited the proceeds of a sale of shares into one of her bank accounts or left them in one of her share trading accounts with a view to imminent reinvestment. According to Ian this practice continues to date. 76 Since moving out of home, Ian has met with Faina on a weekly basis, usually on a Tuesday or Wednesday, to see her generally and to discuss with her any issues that have arisen in relation to her financial affairs including: share trading; the purchase of real property, investment or otherwise; the leasing of investment properties; other business or investment opportunities; the completion and lodgement of her personal tax returns and the completion and lodgement of her company tax returns and financial statements. If any matter arose before Ian saw Faina he would discuss the matter with her over the telephone. 77 Faina has relied on Ian to assist her with, or undertake on her behalf, the activities described above because she only has a basic command and comprehension of English, she is not computer literate and, beyond making a profit, she has no real interest in share trading or property investment. 78 Since the commencement of electronic banking in the 1990s Ian has also had the authority to operate electronic bank accounts held in Faina's name and in the names of Fanchel and Stoligor Investments Pty Ltd. However, Ian only effected transactions with his mother's knowledge and consent. For well over a decade it has been Ian's usual practice to include a reference such as "Ian" or an abbreviated form thereof for transactions which he has undertaken on Faina's behalf so that, upon review of her bank statements, Faina knows that it was Ian who carried out a particular transaction. Ian said that he has never used those references to indicate a repayment or payment of money by him or by Beth and him.

[14]

4.2.1 Bethian acquires the Carey Street Property 96 In about June 2001 Bethian entered into a contract to purchase the property known as 702/5 Carey Street, Drummoyne, New South Wales (Carey Street Property) for $795,000. Settlement of the purchase of that property took place on 2 August 2001. According to Ian, its purchase was funded by a loan of $500,000 from Perpetual Trustees Victoria Ltd, secured by way of first registered mortgage over the property (Bethian Loan), with the balance of the purchase price being paid by Faina. 97 In cross-examination Ian maintained his evidence that Faina advanced the balance of the purchase price for the Carey Street Property as well as additional funds to cover stamp duty and legal costs, as he recalled in the sum of $300,000. He said that Faina provided those funds as a loan to him and Beth and that they were repaid from Bethian's earnings from Royal Guardian. In cross-examination Faina also said that she recalled loaning $300,000 to Ian and Beth to help them purchase the Carey Street Property. 98 The contemporaneous documents are contrary to Ian and Faina's evidence about the source of the funds for payment of the balance of the purchase price for the Carey Street Property. 99 First, by Royal Guardian loan application dated 29 May 2001 (May 2001 Loan Application) Ian sought a loan of $424,000 for two stated purposes: as to $315,000 for a refinance; and as to $109,000 for an "investment purchase". The May 2001 Loan Application included: (1) as part of Ian's "personal financial statement" a property situated at Birrell Street, Bondi that was subject to a loan from "Wizard" for $315,000. The initials "TBPO", which Ian explained meant "to be paid out", appeared next to that entry; and (2) in "income details" income from a "new purchase" of $18,200 per annum. That equated to a half share of the anticipated rental income from the Carey Street Property as disclosed in the loan application made by Bethian pursuant to which the Bethian Loan was approved. 100 Ian did not accept that the only property being purchased at the time of the May 2001 Loan Application was the Carey Street Property and that the purpose of seeking the loan amount of $109,000 in the May 2001 Loan Application was to finance that property. He gave that evidence notwithstanding that after the May 2001 Loan Application was approved the first drawdown of the approved amount was made on 1 August 2001, the same date on which the Bethian Loan was drawn down. 101 Ian gave two reasons for seeking the sum of $109,000 in the May 2001 Loan Application for investment purposes. First he said that at the time he and Beth had also found a property at 97 Broughton Street, Kirribilli, New South Wales (Broughton Street Property) which was purchased in 2001, implying that was why the additional amount of $109,000 was sought. When it was suggested to Ian that the purchase of the Broughton Street Property did not settle until November 2001, he gave a second and different reason for seeking that part of the loan. He said that in about May or June 2001 he and Beth decided to get married, they were looking for a house and so needed money for a deposit in case they found one. I do not accept either of these explanations. The first is proved to be wrong given the timing of the May 2001 Loan Application, the first drawdown of the amount advanced upon its approval and the purchase of the Broughton Street Property. The second, in light of the other available evidence, is in my view, an attempt by Ian to provide an alternate explanation upon his first being shown to be wrong and is implausible. 102 Secondly, a facsimile dated 31 July 2001 from Galilee & Associates to First Australian Title in relation to a loan from Interstar to Beth directed, among others, a payment of $130,881.10 to Birkenhead Investments Pty Limited, the vendor of the Carey Street Property. Ian did not dispute that these funds obtained by Beth were used for the purchase of the Carey Street Property. 103 Thirdly, a bank statement for National Australia Bank (NAB) account no. 53-059-3587 in the name of Bethian for the period 6 June 2001 to 15 November 2001 shows a withdrawal of $93,618.81 on 2 August 2001. Ultimately Ian conceded that there was no explanation for that withdrawal other than for the the purchase of the Carey Street Property. 104 Ian accepted that Bethian and Beth had contributed $724,499.91 to the purchase of the Carey Street Property. 105 Insofar as the balance of the purchase price and any associated costs are concerned, the only inference to be drawn from the contemporaneous documents is that the loan of $109,000 was obtained for the acquisition of the Carey Street Property and, I infer, the funds so obtained applied for that purpose. The balance of the purchase price (and other costs such as stamp duty and legal costs) was clearly not provided by Faina. Ian's and Faina's evidence to that effect is rejected. 106 Given that finding the respondents cannot rely on this purported advance by Faina to demonstrate her financial capacity as at June 2001.

[15]

4.2.2 Ian and Beth acquire three further properties 107 In or about October 2001, Ian and Beth entered into a contract to purchase the Broughton Street Property for $760,000. That purchase settled on 21 November 2001. According to Ian, in order to acquire the Broughton Street Property he and Beth obtained a loan from the NAB in the amount of $600,000, secured by way of a first registered mortgage over the property and the balance of the purchase moneys came from three sources: an increase in the CBA mortgage secured against 11/2 Ocean Street; an increase of $110,000 in a mortgage secured against a property situated in Bankstown which was owned by Beth; and the proceeds of sale from a car he owned. 108 In or about February 2002, Ian and Beth entered into a contract to purchase a property at 501/40-44 Ocean Street, Bondi, New South Wales (501/40 Ocean Street) for $610,000, which settled on 4 April 2002. The purchase of 501/40 Ocean Street was funded by a loan of $480,000 from the CBA secured by way of a first registered mortgage over that property and the balance was funded from his and Beth's savings. 109 In or about November 2002, Ian and Beth entered into a contract to purchase a property at 4/31A Carabella Street, Kirribilli, New South Wales (Carabella Street Property) for $2.75 million, which settled on 17 January 2003. The purchase of the Carabella Street Property was funded as to $1,787,500 by a loan from Permanent Trustee Company Limited secured by a first registered mortgage over the property, as to $500,000 by a loan from Royal Guardian to Beth and Faina and as to the balance by a redraw of the loan for the Broughton Street Property. 110 On 30 June 2003 Ian and Beth sold the Broughton Street Property for $910,000. 111 In or about November 2003, Ian and Beth entered into a contract to purchase a property at 8/2-4 Benelong Crescent, Bellevue Hill, New South Wales (Benelong Crescent Property) for $2,080,000, which settled on 24 December 2003. That purchase was funded by Ian and Beth drawing down on their home loans.

[16]

4.3.1 Ian and Beth's financial disclosure 112 On 2 December 2002 Ian and Beth completed a Royal Guardian loan application seeking a loan of $2 million for the purchase of an investment property (December 2002 Loan Application), which I infer was the Carabella Street Property. 113 In the December 2002 Loan Application Ian and Beth disclosed under the heading "personal financial statement" assets totalling $5,406,000 and liabilities totalling $1,408,000 giving them a net asset position of $3,998,000. 114 The following assets were included in the December 2002 Loan Application: (1) real property with assigned market values as follows: (a) Broughton Street Property $1.5 million; (b) 11/2 Ocean Street $650,000; (c) 501/40 Ocean Street $750,000; (d) Carey Street Property $1.2 million; and (2) as one of Ian and Beth's "other assets" a private lending portfolio valued at $240,000. 115 The following liabilities were included in the December 2002 Loan Application: (1) a combined "current loan amount" on the first three properties referred to at [114(a)-(c)] above of $980,000; and (2) a "current loan amount" on the Carey Street Property of $500,000. 116 Ian suggested that the asset values included in the December 2002 Loan Application were inflated. In particular he said that: (1) he had purchased 11/2 Ocean Street in or about June 1992 and at the time of settlement had no equity in the property; (2) as at 2002 Bethian essentially had no equity in the Carey Street Property; (3) as at 2002 he and Beth essentially had no equity in the Broughton Street Property and sold it less than two years later; and (4) as at 2002 he and Beth only had a small amount of equity in 501/40 Ocean Street. 117 While no independent valuations were provided, I would accept Ian's evidence as to inflated values for real property assets included in the December 2002 Loan Application at least in relation to the Broughton Street Property which sold only six months later for significantly less than its claimed value and the Carey Street Property which had been purchased for one third less than its claimed value only one year prior. However, that Ian was prepared to inflate values in a document such as this does not reflect well on him. Further, despite the inaccuracies, it is apparent that Ian and Beth held a significant number of assets and had a net asset position of several million dollars. 118 As at 2002 Ian and Beth were both employed by Royal Guardian. According to the December 2002 Loan Application they each earned a gross income of $125,000.

[17]

4.3.2 Faina and Beth's financial disclosure 119 On 10 December 2002 Faina and Beth completed a Royal Guardian loan application for a loan of $500,000 for the stated purpose of raising funds for a share portfolio (Joint 2002 Loan Application), although according to Ian the true purpose of the loan was to partially fund the acquisition of the Carabella Street Property (see [109] above). Under the heading "personal financial statement" Faina and Beth listed total combined assets of $4,678,000 and total combined liabilities of $760,000. Putting to one side cars and personal effects, the remaining assets and their assigned market values included in the Joint 2002 Loan Application were: (1) Broughton Street Property $1.2 million; (2) 501/40 Ocean Street $750,000; (3) Francis Street Property $675,000; (4) Carey Street Property $1.2 million; (5) Savings and term deposits $128,000; (6) Share portfolio $260,000; (7) Private lending portfolio $240,000. 120 Faina said that of the assets listed in the Joint 2002 Loan Application she owned the Francis Street Property, the savings and term deposits, the share portfolio and the private lending portfolio. 121 The private lending portfolio which Faina said formed part of her assets was operated by Reserve Capital Mortgage Corporation Pty Ltd (RCMC), a company of which Ian and Beth were directors, Beth was secretary and Ian and Beth were shareholders. This was the same "private lending portfolio" referred to as an asset in the December 2002 Loan Application (see [114(2)] above). 122 In cross-examination Beth explained that: (1) RCMC was a facility to assist borrowers with short term urgent finance; (2) people would come to them seeking short term finance. In order for Ian and Beth to win their mortgage business they would have to find a way to assist them with their short term needs. Accordingly, they loaned those clients money but only where they could be satisfied that they would be repaid by way of a refinance with Royal Guardian, for whom Beth worked at the time; (3) insofar as any refinance with Royal Guardian was concerned, Beth earned a bonus based on a percentage of the loan amount and, subject to the time at which the refinance was effected, a profit share; and (4) RCMC was a "face", it did not really do anything, they loaned money under it, the money which was lent came from Faina and was then repaid to RCMC. 123 Examples of letters addressed to RCMC by which the signatory acknowledged, among other things, that they owed RCMC a specified amount, the date by which that amount would be repaid and how it was to be repaid were in evidence before me. For example one of those letters dated 21 November 2002 relevantly provides: We, XXX as directors and shareholders of Cmetric Pty Ltd of 19 Bennet Ave, Five Dock NSW 2044 owe Reserve Capital Mortgage Corporation Pty Ltd $22,000 which includes interest and costs by 21 January 2003. Furthermore, I agree that Reserve Capital Mortgage Corporation Pty Ltd may put a caveat over our property at 66 Annandale Street, Annandale NSW 2038 (Lot 68 DP 1341 S35) until the loan amount is fully repaid. I also authorise Royal Guardian Mortgage Management Pty Ltd to deduct the above amount from the sale proceeds of 66 Annandale Street, Annandale NSW 2038. 124 When asked why the private lending portfolio apparently owned by Faina was also included in the December 2002 Loan Application, Beth said that, although the money belonged to Faina, she was going to "gift it" to Ian and Beth. It was included to explain to the lender where the funds were coming from to complete the purchase and when the lender asked for proof of funds and was informed that the private lending portfolio actually belonged to Faina it asked them to obtain "a gift letter", which they did. 125 A letter dated 18 December 2002 from Faina addressed "to whom it may concern" provides: This letter is to confirm that I will be giving my son Ian Stolyar of 97 Broughton Street, Kirribilli NSW 2061 $250,000 for him to complete the purchase of 4/321A Carabella Street, Kirribilli NSW 2061. I confirm that this gift is unconditional and non-repayable. By its own terms this letter could not be the "gift letter" referred to by Beth. It concerns a gift of $250,000, not $240,000 which was the stated value of the private lending portfolio, and the provision of that amount in cash to Ian. 126 Putting that to one side, for the following reasons I do not accept that the "private lending portfolio" was an asset of Faina's. 127 First, the contemporaneous documents demonstrate the loans were made by, and were repayable to, RCMC. Secondly, Faina was neither an officer nor shareholder of RCMC. Thirdly, a facsimile dated 5 December 2002 from Jo Donovan, Royal Guardian, to "Underwriting Department Origin" in relation to a proposed loan to purchase a property in Kirribilli (presumably in support of the December 2002 Loan Application) states that one of the three sources of funds to complete the purchase was "repayment of current outstanding private loans owed to the applicants", namely Ian and Beth. Fourthly, there was no evidence to support the assertion that the funds advanced belonged to or came from Faina or to support Beth's evidence that Faina gifted the private lending portfolio to her and Ian.

[18]

4.4 Faina's financial position: 2003-2007 128 As at 2002 Faina was receiving a widow's pension. She continued to do so in the financial years ended 30 June 2003, 2004, 2005 and 2006. 129 As at 2002 Faina also owned the Francis Street Property and had, after her husband's death in 2001, inherited his share of their unspecified joint assets and the unspecified balance in the Anchel Stolyar Account. 130 Putting to one side real property assets, motor vehicles and "marketable personal effects", the Joint 2002 Loan Application suggested that Faina and Beth had between them liquid assets valued at $628,000. Those assets comprised: (1) savings of $28,000; (2) term deposits of $100,000; (3) share portfolio of $260,000; and (4) private lending portfolio of $240,000. 131 The Joint 2002 Loan Application does not specify to whom each of those assets belong. However, as I have already found to be the case, the private lending portfolio was a business undertaken by RCMC, the shareholders of which were Ian and Beth. That leaves assets valued at $388,000. 132 It is difficult to accept that Faina owned assets of that value at that time given that: (1) as records obtained by the Trustee from Centrelink disclose, Faina received a carer's allowance from 1992 until Anchel's death in 2001 and thereafter until 4 September 2007 she received a widow's pension; (2) welfare entitlements were subject to asset tests which changed each year. As at 1 July 2002 the allowable maximum amount of assets to qualify for Faina's widow's pension was $145,250; (3) in cross-examination Faina accepted that from time to time, while in receipt of the widow's pension, she was required to provide updated disclosure of her assets and would attend Centrelink's offices to do so. She agreed that she provided a full disclosure of her financial position and showed them bank statements and statements of her shareholdings; (4) in the documents obtained by the Trustee from Centrelink there is a record that Faina telephoned on 15 March 2002 about "6mthly wda rvw form" which I understand to be a reference to a six monthly widow's allowance review form. The records indicate that Faina said she would return it by the following week; and (5) while there is no record of what Faina told Centrelink at the time of the regular reviews, given that she continued to receive the widow's allowance until 2007, I would infer that the value of the assets she owned (other than her own home) remained under the allowable threshold. 133 That conclusion is supported by other evidence given by Faina. In an affidavit affirmed on 24 October 2012 for the purpose of the Royal Guardian Proceeding Faina said that the Francis Street Property was her only asset and the only thing she had left; and at the Public Examinations she gave evidence that at the time of her husband's death the only asset she owned was the Francis Street Property. While I would readily accept that Faina had assets other than the Francis Street Property, their combined value was not as stated in the Joint 2002 Loan Application and I would infer that she regarded her most significant asset to be the Francis Street Property. 134 That position did not significantly change in the period up to 2007 when she acquired 27/26 Ocean Street (see [170] below). As noted above, in that period Faina continued to receive the widow's pension and for that purpose reported regularly to Centrelink about her income and assets. That being so, and putting to one side a document titled "Share portfolio for Faina Stolyar as at 26/02/2007" which was prepared by Beth at Ian's request and which records that Faina had a share portfolio valued at $1,215,416.32 as at that date (as to which see [163] below), I would infer that there was no substantial growth in Faina's assets in the period from 2003 to 2007.

[19]

4.5 Ian and Beth's financial position: 2003-2007 135 The evidence established that between 2003 and 2007 Ian and Beth had three main sources of income: commissions paid by Royal Guardian to Bethian; commissions paid by Royal Guardian for referral of customers by Dibelle Finance and DFS; and share trading. 136 In relation to commissions paid by Royal Guardian to Bethian, it was not in dispute that between 1 July 2003 and 30 June 2006 Royal Guardian paid $2,688,237.13 (excl. GST) in commissions. Between 2004 and 2006 Bethian distributed the majority of that income as director's wages or commissions to Ian and Beth: (1) the financial statements for Bethian for the financial year ended 30 June 2004 record total income of $789,523.42 of which $600,000 was paid as "director salaries". Bethian retained $61,533 as profit before income tax; (2) the financial statements for Bethian for the financial year ended 30 June 2005 record total income of $1,197,905.16 of which $771,366.14 was paid as "commissions". Bethian retained $332,455.29 as profit before income tax; and (3) the financial statements for Bethian for the financial year ended 30 June 2006 record total income of $893,507 of which $509,045 was paid as "commissions". Bethian retained $270,943 as profit before income tax. 137 While Bethian claimed the director's salaries and commissions as expenses it is apparent, based on Beth and Ian's tax returns for the same periods, that neither of them declared the amounts received as taxable income. In cross-examination Ian accepted that the amounts received had not made their way into his tax returns although in re-examination, somewhat implausibly, Ian suggested that those amounts were advanced by Bethian as director loans, which would postpone the tax liability, and which were repaid by dividends in later years. 138 Beth gave evidence that at least for the year ended 30 June 2005 the figure recorded by Bethian in its financial statements for "commission" included $200,000 (excl. GST) as commission paid to a third party for granting Royal Guardian (through Ian and Beth) exclusive financing rights over a development. 139 Even assuming in Ian and Beth's favour that their tax liability on directors' salaries and commissions received from Bethian was deferred and that $200,000 of the amount paid as commission in one year went to a third party, Ian and Beth had available to them significant funds, and certainly somewhere in excess of $2 million, as a result of the commission payments from Royal Guardian in that period. 140 The second principal source of Ian and Beth's income in this period was commission paid by Royal Guardian to Dibelle Finance and DFS. 141 In his affidavit sworn on 24 October 2012 for the purposes of the Royal Guardian Proceeding (October 2012 Affidavit) Ian gave evidence about the establishment and operation of Dibelle Finance. This included that: (1) Ms Chahine, who was a beautician, was a good friend of Beth's; (2) she had a shop front in Bondi Beach from which she ran her beautician business which Ian and Beth could use to interview potential customers; (3) an account was opened with St George Bank with Ms Chahine and Ian as co-signatories; (4) Ian witnessed Ms Chahine completing and signing a Royal Guardian accreditation agreement which was later approved by Royal Guardian; (5) Ian did the work required to complete the loan applications for submission to Royal Guardian, including meeting with potential customers, completing the necessary paperwork and submitting the Dibelle Finance application to Royal Guardian; and (6) once the loans introduced by Dibelle Finance settled, Royal Guardian paid it commission. 142 It was not in dispute that in the period from April 2003 to October 2004 Royal Guardian paid Dibelle Finance $1,456,715.95 in commissions. Of that amount the Trustee identified that between May 2003 and October 2004 $630,650 was withdrawn and, save for $25,000 which was paid into an account in Beth's mother's name, deposited into accounts in Ian's name or Ian's and Beth's names or paid at Ian's direction. 143 In addition the Trustee identified five additional withdrawals from Dibelle Finance's account in that same period for a total of $261,054.46 which he contends were applied by Ian to share purchases in his, Bethian's or Faina's names. Of that amount I was satisfied that withdrawals in the sum of at least $252,000 could be verified by contemporaneous documents. 144 At the Public Examinations Ian said that Ms Chahine also received payments from Dibelle Finance but accepted that all of the substantial payments out of Dibelle Finance's accounts, that is those of more than $10,000, "ended up" with him and Beth, or their related entities, and that none of those payments was disclosed in Ian's tax returns, although Ian attempted to explain that was so because Ms Chahine was responsible for preparing the tax returns "for the entity". 145 Ms Chahine swore an affidavit on 24 August 2011 in the Royal Guardian Proceeding (Chahine Affidavit) which the Trustee sought to rely on in this proceeding. The respondents objected to the admission of the Chahine Affidavit on the basis of hearsay. The Trustee submitted that, despite Ms Chahine being deceased, the Chahine Affidavit was admissible under s 63 of the Evidence Act 1995 (Cth). He said that, to the extent the respondents rely on the disadvantage caused by the inability to test Ms Chahine's evidence in cross-examination, that is a matter to be taken into account in weight and not a basis to exclude what the Trustee described as "highly probative evidence". 146 Section 63 applies where a person who made a previous representation is not available to give evidence about an asserted fact. Section 63(2) provides that the hearsay rule does not apply to: (1) evidence of the representation that is given by a person who saw, heard or otherwise perceived the representation being made; or (2) a document so far as it contains the representation, or another representation to which it is reasonably necessary to refer in order to understand the representation. 147 However the exception in s 63(2) does not apply unless the party seeking to rely on the evidence has given reasonable notice in writing of the intention to adduce the evidence and sets out the prescribed matters in the notice: see s 67 of the Evidence Act. 148 There is no evidence before me that the Trustee complied with the strict notice requirements in s 67 and no application was made by the Trustee for a direction under s 67(4) that s 63(2) should apply, notwithstanding the failure to give notice to the respondents. For that reason alone I am disinclined to admit the Chahine Affidavit. The respondents were entitled to the notice in order to consider how they might meet the evidence, in the absence of the ability to cross-examine Ms Chahine. In any event, as the Trustee acknowledged, in the overall factual scheme, the Chahine Affidavit was of little significance. Accordingly, the respondents' objection is upheld. 149 As set out at [86] above, DFS was incorporated in October 2004, Faina was its sole director, secretary and shareholder and she held her shares on trust for Ian and Beth. 150 In his affidavit filed in the Royal Guardian Proceeding Ian said that DFS bought Dibelle Finance's loan book and in November 2004 Faina entered into an accreditation agreement with Royal Guardian. Again Ian carried out most of the work for DFS stating that he interviewed all potential borrowers, found new sources of business and looked after payment of commissions and banking related tasks. 151 Despite the objective documentary evidence to the contrary, Ian denied that the declarations of trust signed by Faina at the time of DFS' incorporation were prepared by the accountant, Mr Kalegerou, on his instructions and asserted that Mr Kalegerou prepared the declarations of trust without instructions and of his own accord. The following exchange took place between counsel for the Trustee, Mr Golledge SC, and Ian: Mr Golledge: Yes, okay. And you understand, because you've read before this morning, the content of the declaration that is typed onto that document - you will see that? Ian: Yes. Mr Golledge: And that reflected your - that document and the declaration that appears on that document reflected your instructions to Mr Callajaro, didn't it? Ian: I categorically deny it. Mr Golledge: You categorically deny that? Ian: Yes. Mr Golledge: I want to suggest to you that that document reflects as well the discussion that you had with your mother and your wife prior to the incorporation of Dibelle Financial Services Pty Limited? Ian: No, categorically deny it. Mr Golledge: Categoric. So should her Honour understand that your evidence is that Mr Callajaro; this accountant who you have been using for a number of years in relation to your personal tax affairs and a person to whom you were having trusted the task of incorporating a company that you say was to be undertaken solely for the benefit and advantage of your mother. Your evidence is that that man, without instructions or authority, went out on a frolic of his own and created this document; had it signed by your mother and duly stamped. Is that your evidence? Ian: That he did it on his own accord? Mr Golledge: Yes? Ian: Yes. Mr Golledge: Without discussing it with you? Ian: There's no - you - I can tell you categorically that that never happened; I never discussed this with him. I note the reference in the transcript to "Mr Callajaro" is a typographical error and should refer to "Mr Kalegerou". 152 In the face of the declarations of trust prepared by Mr Kalegerou, who also attended to DFS' incorporation, and signed by Faina it is impossible to accept Ian's denials and his evidence that Mr Kalegerou would, of his own accord, have prepared and have Faina sign documents of that nature. Ian's evidence that he would do so is fanciful and is rejected. 153 Putting that to one side, DFS' tax return for the financial year ended 30 June 2005 records total income of $582,758 and "contractor, sub-contractor and commission expenses" of $573,636. In cross-examination Ian accepted that he received the latter amount from DFS, or more precisely $576,000, in two payments of $330,000 and $246,000. That that is so is confirmed by cheque butts for DFS' Westpac account no. 18-6647 which were in evidence before me. Ian accepted that he failed to pay any tax on the commission income he received from DFS. 154 It is necessary to pause here to observe that Ian gave a number of different explanations about what became of the sum of $576,000 that he accepted was paid to him by DFS in the financial year ended 30 June 2005. 155 First, in his affidavit filed in the Royal Guardian Proceeding Ian said that, rather than sitting in DFS' bank account, Faina permitted him and Beth to pay those funds into their mortgage account so that they could save on interest. In August 2007 when Faina decided to purchase a property Ian and Beth organised payment of $700,000 from their accounts in payment of the purchase price of Faina's property and in that way the funds loaned to them by Faina and/or DFS had been repaid. 156 Secondly, at his Public Examination Ian said that the sum of $576,000 was paid by Faina to him and Beth for the purchase by Faina of 501/40 Ocean Street from them. But Beth changed her mind and the unit was never transferred to Faina. Eventually that amount was repaid to Faina by the transfer by Ian to Faina of 11/2 Ocean Street. In the course of cross-examination when confronted with certain documents, in particular a transfer without monetary consideration for 11/2 Ocean Street to Faina, Ian once again said that the transfer of that property was in satisfaction of the outstanding debt of $576,000 (see [299]-[301] below). 157 In a letter dated 28 March 2018 from Faina to the Trustee's former solicitor, Faina gave the same explanation stating that she had agreed with Ian and Beth that she would purchase 501/40 Ocean Street from them and she deposited $576,000 into their bank account in two payments for that purpose. However, in November or December 2005 Beth reneged on the arrangement. Faina said that consequently she moved out of 501/40 Ocean Street and purchased 27/26 Ocean Street. In 2012 as the funds were still outstanding Faina asked Ian for her money back. He offered either to sell 11/2 Ocean Street to obtain the funds to repay her or to transfer that property into her name. Faina agreed to the latter, which then occurred. Faina also gave evidence to that effect at her Public Examination. 158 Thirdly, Ian's evidence in this proceeding was that the explanation he gave for the transfer of 11/2 Ocean Street at his Public Examination (see [156] above) was not correct. He said that the reason for the transfer of 11/2 Ocean Street to Faina was to repay moneys ($442,600 from Stoligor and $268,000 from Fanchel) that she had loaned to him and Beth for the purchase of the Point Piper Property. Faina also gave evidence in this proceeding that her explanation for the transfer of 11/2 Ocean Street to her set out in her letter dated 28 March 2018 (see [293]-[294] below) and at her Public Examination was wrong. Like Ian she also said that she now realises that the reason for that transfer was to repay the funds that had been loaned to Ian and Beth (by Stoligor and Fanchel) to assist them in the purchase of the Point Piper Property. 159 Fourthly, in re-examination Ian said that the sum of $246,000 could not have been paid into CBA account no. 801711101 (CBA Home Loan Account 2) as alleged by the Trustee because that account was not opened until 13 days after the withdrawal had been made from DFS' Westpac account. But that evidence cannot be correct in circumstances where, as is evident from the cheque butt which states "B/chq I. Stolyar", the sum of $246,000 was withdrawn by way of bank cheque and that cheque was banked one day after the relevant CBA account was opened on 1 July 2005. 160 Given the changing nature of both Ian and Faina's evidence about the purpose for which the amount of $576,000 was paid by DFS to Ian, and the use to which it was put and the purported repayment, I have little, if any, confidence in that evidence. What is clear from the contemporaneous documents is that Faina held the shares in DFS on trust for Beth and Ian and that DFS paid $576,000 to Ian in 2005 with no attendant obligation for Ian, or Ian and Beth to repay those moneys to DFS or Faina. 161 The third principal source of Ian and Beth's income in this period identified by the Trustee was share trading which Ian engaged in through the Canchel Partnership. Relevantly the Trustee refers to trading by the Canchel Partnership in shares in Allegiance Mining NL (AGM). Based on the evidence before me the following facts were established: (1) in May 2006 Bethian participated in a share placement by AGM, purchasing 15 million shares at $0.31 each; (2) shortly thereafter, Bethian and Ian were listed respectively as AGM's fifth and sixteenth largest shareholders. As at 17 June 2006 Bethian held 13,550,696 shares and Ian held 4,673,048 shares, making a combined total of 18,223,744 shares; (3) it appears that Bethian's AGM shares were transferred to the Canchel Partnership. As at 20 March 2007 the Canchel Partnership owned 12,342,696 AGM shares; and (4) according to a CommSec transaction summary statement for the Canchel Partnership for the period 6 September 2007 to 29 July 2013 the Canchel Partnership sold off 10 million AGM shares in a series of transactions in early 2008 for a total of $10,900,341.29. 162 Assuming a cost base of $0.31 per share the Canchel Partnership made a profit before tax of approximately $7.8 million from the sale of its 10 million shares referred to above. In the capital gains schedule to Ian's tax return for the financial year ended 30 June 2008 (30 June 2008 CGT Schedule) he discloses that he made a gain of $5,860,000 from his sale of AGM shares but that he made an overall capital loss on share trading in the financial year. However, it is apparent, based on the documents in evidence before me, that Ian understated the revenue and profit earned on the sale of his AGM shares. 163 It was in the same period that the Canchel Partnership transferred its share portfolio to Fanchel (see [306] below). In the 30 June 2008 CGT Schedule Ian claims an overall capital loss from the transfer of those shares. Given Ian's evidence (see [316]-[321] below) about the basis on which those shares were transferred and, in particular because they were not transferred for a fixed price, it is difficult to see how Ian could claim any capital loss on their transfer at that time. In any event, the prices recorded for transfer of the shares in question in the 30 June 2008 CGT Schedule are understated when compared to the prices included in the actual transfer forms between the Canchel Partnership and Fanchel in each case. Ian's attempt to explain in cross-examination how he had arrived at the figures included in the 30 June 2008 CGT Schedule and the calculation of the capital losses was difficult to follow but he suggested that at the time the transfer was in fact registered the price had gone down and it was that latter price which was relevant for tax purposes. As the Trustee pointed out, implicit in this evidence is a suggestion that the price of each of the shares the subject of transfer fell dramatically between the date of execution of the transfer forms and the date of registration of the transfers. There was no objective evidence to that effect and I have difficulty accepting that was so. It was another bald assertion made by Ian while in the witness box to attempt to provide some explanation. 164 The claimed capital losses in Ian's tax return for the financial year ended 30 June 2008, more likely than not, are overstated. It is also apparent based on the objective documents that Ian in fact made a more significant profit on at least the sale of the AGM shares in that period and, that as result of his share trading, had significant funds available to him.

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5.1.1 Ian and Faina's evidence 168 In or about early to mid February 2007, Faina and Ian inspected 27/26 Ocean Street which was listed for sale for $975,000. According to Ian, Faina was looking to buy an apartment in which to live, she wished to purchase that apartment and she requested that the contract for its purchase be issued in her maiden name because as at that time she was considering changing her surname from Stolyar to Lutsker and transferring all of her existing assets into, and acquiring any new assets in, the name of Lutsker. However, when Faina subsequently provided the contract for purchase of 27/26 Ocean Street to Marina Casula, a solicitor in the employ of Gadens who was acting for her in relation to the conveyance, she was advised against doing so. Accordingly, Faina changed her name back to her married name. 169 On about 25 February 2007 Ian collated the holding statements for certain shares held in Faina's name that he considered would need to be sold in order to realise the purchase price (and associated costs) for 27/26 Ocean Street. At the time, based on the information he provided, Ian asked Beth to create the document titled "Share Portfolio for Faina Stolyar as at 26/02/2007" (Faina's Portfolio Statement) (see [134] above) which recorded: 170 According to Faina, as at 26 February 2007 she had a share portfolio greater than as set out in Faina's Portfolio Statement which she recalls was valued at more than approximately $2 million. Faina can no longer recall the exact value of, or the shares that comprised, her portfolio at the time but said that Ian prepared Faina's Portfolio Statement and she understood that it only listed sufficient shares to cover the purchase of 27/26 Ocean Street. In the face of her disclosures to Centrelink as at 2007 (see [132] above), and in the absence of any contemporaneous documentary evidence, I do not accept Faina's assertion that she held a share portfolio of that value as at February 2007. 171 On 7 March 2007 Faina entered into the contract to purchase 27/26 Ocean Street for $970,000. The deposit for the purchase was paid by a "deposit power guarantee" issued on 26 February 2007, the fee of $600 for which was paid by a Visa card in Ian's name. Ian said that Faina applied for the deposit guarantee because at the time she did not have immediately available funds to pay the deposit. To expedite the application process, Ian provided his Visa card details for payment of the fee for the deposit guarantee as Faina did not have, and does not have, a credit card. Faina subsequently repaid Ian $600 in cash. 172 The purchase of 27/26 Ocean Street settled on 20 July 2007. The total amount paid for the purchase, including stamp duty, was $1,013,150.52. 173 Ian gave the following evidence about instructions he gave to relevant brokers to sell various parcels of shares in the period 30 March 2007 to 11 July 2007: (1) on 30 March 2007 Ian, on behalf of Faina, instructed Findlay & Co Stockbrokers Ltd to sell 740,000 shares in Jupiter Mines Ltd (JMS) which resulted in net proceeds of $162,132.30. That amount was transferred into an account held by Faina with the CBA which is now closed; (2) on 31 May 2007 Ian, on behalf of the Canchel Partnership, instructed Shaw Stockbroking Ltd to sell 42,696 ordinary shares in AGM. Following that sale an amount of $40,045.94 was credited to account no. S244942 held by the Canchel Partnership with Shaw (Canchel Partnership Shaw trading account); (3) on 1 June 2007 Ian, on behalf of the Canchel Partnership, instructed Shaw to sell 200,000 ordinary shares in AGM. Following that sale an amount of $192,325.95 was credited to the Canchel Partnership Shaw trading account; (4) on 5 July 2007 Ian, on behalf of the Canchel Partnership, instructed Shaw to sell 1.1 million ordinary shares in AGM. Following that sale an amount of $824,681.70 was credited to the Canchel Partnership Shaw trading account. On 10 July 2007 that amount was transferred from the Canchel Partnership Shaw trading account to account no. S271417 held by Vietruss with Shaw (Vietruss share trading account) and which Ian had caused to be opened with Shaw on 24 June 2007. On 13 July 2007 the same amount was transferred from the Vietruss share trading account to a newly opened bank account in Ian's name, being account no. 258462632. According to Ian he used those funds for his own purposes, closed the account once the funds had been exhausted and did not provide any part of the $824,681.70 realised from the sale of the Canchel Partnership's 1.1 million ordinary AGM shares to Faina for the purpose of settling the purchase of 27/26 Ocean Street; (5) also on 5 July 2007 Ian, on behalf of Faina, instructed Berndale Securities Ltd, the settlement agent for Findlay & Co, to sell 1 million ordinary shares in AGM. Ian said that he sold Faina's AGM shares at about the same time that he sold the Canchel Partnership's AGM shares because he considered about $0.75 per share (including brokerage) to be a good price and because the moneys were needed for the settlement of 27/26 Ocean Street. According to Ian the sale of those AGM shares realised approximately $750,000 which was deposited into a CBA account in Faina's name which is now closed; and (6) on 10 and 11 July 2007 Ian, on behalf of Faina, caused Shaw to sell 500,0000 ordinary shares in Uranium Exploration Australia Ltd (UXA) in two parcels of 250,000 each resulting in net proceeds of $92,093.01 and $88,359.51 respectively. On 13 July 2007 Shaw issued a cheque for the former amount to Faina and on 16 July 2007 Shaw issued a cheque to Faina for the latter amount. Both of those cheques were deposited into an account in Faina's name with the CBA which is now closed. 174 On the one hand, the Trustee contends that the purchase of 27/26 Ocean Street was funded by the sale of the 1.1 million AGM shares by the Canchel Partnership (see [173(4)] above) and the 500,000 UXA shares registered in Faina's name (see [173(6)] above) but which were held on resulting trust for the benefit of Ian and Beth. On the other, Ian's evidence is that the moneys for settlement of the purchase of 27/26 Ocean Street came from the following sources: (1) approximately $750,000 came from the sale of 1 million ordinary shares in AGM (see [173(5)] above); (2) $180,452.52 came from the sale of 500,000 ordinary shares in UXA (see [173(6)] above); and (3) $162,132.30 came from the sale of 740,000 ordinary shares in JMS (see [173(1)] above). 175 Faina gave limited evidence about the purchase of 27/26 Ocean Street. She said that she bought the property outright, did not have to borrow any money to fund the purchase and that the full amount of the purchase price and stamp duty was funded by the sale of shares that she held in her name. Ian told her which shares she should sell to fund the purchase and then organised the sale for her.

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5.1.2 Consideration 176 A number of issues arise in relation to Ian's and Faina's evidence about the source of the funds for payment of the purchase price for 27/26 Ocean Street. 177 First, Ian's evidence about the source of the funds to purchase 27/26 Ocean Street is contrary to evidence given by him in the Royal Guardian Proceeding. In the October 2012 Affidavit Ian relevantly said (at [99]): In August 2007 when my mother decided to purchase a property Beth and I organised payment of $700,000 from our accounts for the payment of the purchase price of my mother's property. As a consequence all monies lent to us by my mother and/or [DFS] had been repaid. 178 Ian was cross-examined about that evidence. The following exchange took place between him and Mr Golledge: Mr Golledge: And you say that in August 2007, that is, about five years before this affidavit - before the events described - before this affidavit was sworn and close to 14 or 15 years before today, you said back then that that debt was - that that and any other debt arising between the two of you and your mother was repaid as a result of the advancing of about $700,000 from your account; you see you said that? Ian: Yes. Mr Golledge: And it's said to be referrable for the payment of the purchase price of a property - of "my mother's property"? Ian: Yes. Mr Golledge: And that was a - that reference was made - you were making a reference to the purchase of the property, I think, at 26-27 Ocean Street, weren't you, sir? Ian: Well, that property was settled in July, I believe. Mr Golledge: Yes. Well? Ian: This says in August 2007. Mr Golledge: Sir, did you hear - did you hear my question or didn't you? Ian: I did. Mr Golledge: Right. Now, would you give me the courtesy of an answer? Ian: Well, it can't - it can't possibly Mr Golledge: The question was, was Ian: It can't possibly be the unit at 26-27 Ocean Street. Mr Golledge: Just hold on for a moment, sir. This is - we're talking, though - well, sir, what other property was your mother purchasing to which you made a contribution of $700,000 in August 2007? Ian: I didn't make any contributions. It's Mr Golledge: Sorry, sir? Ian: Well, this statement - the whole paragraph is wrong. Mr Golledge: Right. Well, what property purchase were you - were you referring to when you swore the - swore to the truth of this paragraph in 2012? Ian: There wasn't a property purchase in August 2007. Mr Golledge: Sir, you were referring to the settlement of the transaction of the sale of 26/27 Ocean Street, which took place on 20 July, weren't you? Ian: Well, it doesn't say that, does it? Mr Golledge: Sir, what other property? Ian: Well, there was none. Mr Golledge: No. But, sir, you've given sworn oath - evidence? Ian: Yes. Mr Golledge: that it was used for the purpose and you? Ian: Yes. Mr Golledge: …thought carefully about that evidence before swearing to it? Ian: Well, it's wrong. Mr Golledge: Well, sir, that wasn't my question. Did you think carefully about that evidence before you swore to the truth - its truth? Ian: I probably - I didn't pay attention to this - to this statement. Mr Golledge: You did - well, which part of the affidavit didn't - of the paragraph didn't you pay attention to? Ian: The whole of it. All of it is wrong. There was no $700,000 taken from our accounts. There was no purchase in August 2007 of any property. Mr Golledge: What about the second sentence? Was that wrong as well? Ian: Which one? Which is the second sentence ... no, it hasn't been repaid. Mr Golledge: That's wrong as well, is it? Ian: Yes. Well, the whole paragraph - as I said, the whole paragraph is wrong. 179 On Ian's evidence Faina did not purchase a property in August 2007. However, it was not in dispute that at about that time Faina purchased 27/26 Ocean Street, which settled in July 2007. That being so Ian's evidence in the October 2012 Affidavit supports an inference that he and Beth paid Faina $700,000 (or a sum proximate to that amount) in about August 2007 to purchase that property. 180 Ian attempted to resile from his evidence in the October 2012 Affidavit evidence because it contradicts his (and Faina's) evidence given in this proceeding that Faina funded the purchase of 27/26 Ocean Street from sales of shares in her own name. I do not accept Ian's explanation that his evidence at [99] of the October 2012 Affidavit was wrong. It was given in 2012, at a time closer to the relevant events and when this proceeding could not have been contemplated. 181 Secondly, there are no contemporaneous records to support the alleged sale of 1 million AGM shares by Faina (referred to at [173(5)] above), which is said to be the source of most of the moneys available to Faina to fund the purchase. In contrast to other sales of shares, Ian does not refer to any supporting documents in his evidence. Further, a review of a Berndale Securities client ledger in Faina's name for the period 15 October 2000 to 14 November 2014 (Faina's Berndale Ledger) shows that there were no sales of any shares in July 2007, let alone AGM shares. It records sales of AGM shares on 21 April 2006, 8 December 2006 and 30 January 2007. 182 Thirdly, although 740,000 shares held by Faina in JMS were sold on 30 March 2007 Faina's Berndale Ledger shows that the proceeds of that sale were applied to pay down a margin loan, putting the account into credit with a balance of $158.37. In the face of that evidence, I do not accept Ian's evidence, which is not supported by any contemporaneous documents, that the proceeds of that sale were applied to the purchase of 27/26 Ocean Street. 183 Fourthly, no statements or other documents have been provided in relation to the account which Ian claims was in his name and into which the proceeds of sale of 1.1 million AGM shares in the name of the Canchel Partnership were ultimately transferred. Nor is there any evidence showing how those funds were then disbursed. Ian's assertion that "he used those funds for his own purposes" without providing any detail is unsatisfactory. It is difficult to accept that there would be no records of the receipt of the funds into the relevant account or their payment out or that Ian could not provide any detail about the way in which the funds were expended given the amount involved. 184 It follows from the matters set out above that the only reliable evidence as to the source of most of the funds for the purchase of 27/26 Ocean Street is that given by Ian in the October 2012 Affidavit that he and Beth paid $700,000 to Faina for the purchase of a property. Given the timing that property could only have been 27/26 Ocean Street. While in the October 2012 Affidavit Ian said that those funds were paid to discharge a debt owed by him and Beth to DFS, as set out at [177] above, Ian and Beth were the beneficial owners of DFS given the declarations of trust which were put into place as the time of its incorporation. 185 Based on Ian's evidence the only possible source of those funds could be the sale by the Canchel Partnership of its $1.1 million AGM shares which resulted in the receipt of $824,681.70. Ian could not provide any proper explanation of what became of those funds. His explanation that they were simply spent without providing any detail of how or when is disingenuous and is rejected. 186 There is no dispute between the parties that a part of the purchase price for 27/26 Ocean Street was paid from the proceeds of the sale of the 500,000 UXA shares registered in Faina's name (see [173(6)] above). The factual contest between the parties is whether Faina or Beth and Ian (or Ian alone) were the beneficial owners of those shares. 187 On 5 October 2006 1 million AGM shares were transferred into Faina's Berndale Securities account by way of an off market transfer. As set out at [181] above, Faina's Berndale Ledger shows that those AGM shares were sold off as follows: two parcels of 418,925 and 81,075 shares were sold on 8 December 2006 and a further parcel of 500,000 shares was sold on 30 January 2007. Faina's Berndale Ledger also shows that on 8, 11 and 12 December 2006, immediately following the sale of the AGM shares, Faina purchased a total of 500,000 UXA shares. It is apparent from Faina's Berndale Ledger that the proceeds of sale of those AGM shares were applied to the purchase of the UXA shares. 188 The Trustee contends that all of the shares in the Berndale Securities account were beneficially owned by Ian and Beth or Ian alone, including the 1 million AGM shares transferred into that account on 5 October 2006. 189 The Trustee relied on the following evidence: (1) on 27 and 29 April 2004 Bell Potter Securities Ltd purchased a total of 15 million shares in Imperial One Ltd in Faina's name for $90,495. The tax invoices for those purchases record settlement dates of 30 April 2004 and 4 May 2004 respectively; (2) those shares were paid for with moneys received by Ian from Dibelle Finance. In particular on 3 May 2004 a cheque for $90,501.50 was drawn which equates to the sum payable for the Imperial One shares and a fee of $6.50 for the issue of a bank cheque. Ian denied that that the proceeds of that cheque were applied to this share purchase noting that the cheque was dated after the settlement dates for the trades. However, it was demonstrated that there were other occasions when payment was made for share purchases after their specified settlement date. That fact alone cannot displace the irresistible inference that the purchase of those shares in Imperial One was financed by Ian from moneys paid to him by DFS; (3) Faina's Berndale Ledger shows that on 7, 8 and 9 February 2006 15 million Imperial One shares were sold. While it is not clear when they were transferred to Faina's Berndale Securities account, it is apparent that the shares which were sold at the time were the shares earlier acquired in Faina's name by Bell Potter and which were funded by Ian; (4) Faina's Berndale Ledger shows, and Ian accepted, that the proceeds of sale from the Imperial One shares were applied to the purchase of 750,000 AGM shares on 6 and 7 February 2006; (5) Faina's Berndale Ledger shows that on 24 March 2006 a further parcel of 250,000 AGM shares were purchased at a total price of $57,720. As Ian accepted, those shares were paid for with funds withdrawn on 5 April 2006 from account no. 19-8787 maintained by the Canchel Partnership with Westpac; and (6) accordingly, as at late March 2006 there were 1 million AGM shares registered in Faina's name held in her account with Berndale Securities, which had been acquired with funds provided by Ian. Those shares were sold in four transactions between 21 and 24 April 2006 for a net sum of $375,611.07 which was then withdrawn on 28 April 2006 leaving a zero balance in Faina's Berndale Ledger. 190 The Trustee submitted and I accept that the matters set out in the preceding paragraph show that until the end of April 2006 all of the trading in Faina's Berndale Securities account was funded by Ian and, in effect, carried out on his behalf. However, that does not assist with determining whether the 1 million AGM shares transferred to that account in October 2006, the proceeds of sale of which were in part applied to purchase the UXA shares, was a transfer of shares held by Ian or purchased with funds he provided. 191 Ian said that in or about the end of September 2006 1 million AGM shares were transferred, by way of an off market transfer, from a broker sponsored account in Faina's married name into an issuer sponsored account in Faina's married name, which I understand to be Faina's Berndale Securities account. Although he cannot now recall precisely when, Ian said that at some point before the off market transfer occurred he caused Findlay & Co to buy the 1 million AGM shares on Faina's behalf with her money. The respondents have not provided any documentary evidence to support the latter assertion. 192 Ian also said that as at 17 June 2006 Bethian held 13,550,696 AGM shares and as at 14 November 2006 it held 12.1 million AGM shares. In the intervening months he caused Findlay & Co to sell 1,405,696 AGM shares in various tranches. Ian said that he and Beth used all of the sale proceeds for their living expenses, including overseas travel and mortgage repayments. The respondents have not provided any documentary evidence to support the sale of the shares by Bethian as asserted by Ian. However, evidence which was contrary to that assertion was before the Court: (1) the Berndale Securities Ledger for Bethian for the period 15 October 2000 to 14 November 2014 (Bethian's Berndale Ledger), which was obtained by the Trustee pursuant to s 77C of the Bankruptcy Act, does not record any sales of AGM shares by Bethian in that period (or at all); and (2) neither the statements for: (a) Bethian's account no. 53 059 3587 held with the NAB for the period 6 June 2006 to 5 December 2006; nor (b) a statement for Bethian's account no. MC30.006.000.10071.2552 with Royal Guardian for the period 1 August 2001 to 26 April 2018, show any deposits which might represent the proceeds of sale of those AGM shares. 193 In cross-examination Ian was asked about the sale by Bethian of its shares in AGM between June and November 2006. The following exchange took place: Mr Golledge: You see that the period between June 2006 and 13 November 2006, Findlay Stockbrokers, you say, sold 1.4 million shares; correct? Ian: Mmm. Mr Golledge: So during this period that - at least the period between June 2006 and early November - 5 November two thousand - - -? Ian: No, but you showed me - you - - - Mr Golledge: Sir - - -? Ian: Yes. Mr Golledge: 1.45696 million shares in AGM held by Bethian disappeared from its - or were transferred by it; correct? Ian: Yes. Mr Golledge: And your evidence about it is that those funds were sold and the money was spent on each occasion of sale; you see that in paragraph 72? Ian: Yes. Mr Golledge: And you give an explanation for what happened to that money. You see that in 72? Ian: Yes. Mr Golledge: But you don't produce - or refer to any particular expense, overseas travel or mortgage repayment; correct? I mean, that's the whole of the evidence that you give about what happened to those shares? Ian: Yes. Mr Golledge: I want to suggest to you, sir - - -? Ian: Yes. Mr Golledge: - - - that the reduction in the shares of - held by Bethian in AGM is in part explained by the fact that they were transferred in an off-market transaction occurring at a period between 17 June 2006 and 5 October and which resulted in your mother owning a share - a million shares in that company as at 5 October; do you agree that that's a possibility? Ian: Probably. If you show me something. Obviously, I don't agree at the moment. 194 While Ian did not vehemently deny that a portion of those shares had been transferred to Faina in an off market transfer, he did not agree that was so. He gave a somewhat qualified denial. He was not prepared to agree "at the moment". 195 In the absence of any evidence other than Ian's assertion of their sale, it may be open to infer that those AGM shares were transferred to other persons and entities. The Trustee submitted that there is a powerful inference that they were transferred elsewhere without consideration at a time aligning with the transfer of the 1 million shares into Faina's Berndale Securities account. In other words the Trustee urged me to find that 1 million of the AGM shares which Ian said were sold between June and November 2006 were the subject of an off market transfer to Faina for no consideration. When considered as a whole, on balance, the available evidence leads me to infer that is so. Ian's evidence as to what became of those shares is not supported by the contemporaneous documents obtained by the Trustee and there is no other cogent explanation for what became of those shares. Yet, in the same period Faina became the owner of 1 million AGM shares in an off market transfer. She did so at a time when she was on a widow's pension and thus by her own representations to Centrelink at the time had limited assets. That inference is drawn against the background of how Faina's Berndale Securities account had been operated at least until April 2006. 196 It follows that the UXA shares, which were purchased in Faina's name from the proceeds of sale of the 1 million AGM shares, were beneficially held by Ian or Ian and Beth as were the sale proceeds of those shares when sold and contributed to the purchase of 27/26 Ocean Street.

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5.2.1 Ian and Faina's evidence 201 In his first affidavit, Ian gave evidence about the circumstances in which, first he and Beth, and then Faina entered into a contract to purchase the Campbell Parade Property. That evidence was subsequently changed and expanded upon in Ian's second affidavit after he had the benefit of seeing documents which had been obtained by the Trustee from Gadens Lawyers, the solicitors who acted, first for Ian and Beth and then Faina, on the purchase of the Campbell Parade Property. A summary of Ian's evidence follows. 202 On or about 4 January 2007, Ian and Beth entered into a contract to purchase the Campbell Parade Property off the plan for $6.75 million. At the time, the construction of the Campbell Parade Property was scheduled for completion in early 2009. According to Ian it was intended to be a three bedroom, three and a half bathroom apartment with a balcony, two car spaces and unobstructed views of Bondi Beach. 203 In or about February 2008 Gadens requested Ian and Beth provide a cheque in payment of stamp duty on the purchase in the sum of $412,994. At that time Ian and Beth did not have the funds available to pay the stamp duty and so decided to incur the interest on late payment. However, before embarking on that course, in order to delay the payment of stamp duty, Ian explored the idea of substituting himself and Beth as purchasers with a different/newly formed entity. In that regard Ian relied on: (1) an email sent on 12 March 2008 to Katherine Crook, Gadens informing her the purchase of the Campbell Parade Property would "most probably be made in a different entity name"; (2) an email sent on 18 March 2008 to Ms Casula, special counsel, Gadens informing her that he and Beth were "not going to be buying the proprty (sic) in the personal names and [had] not yet decided on the new structure"; and (3) a file note dated 4 April 2008 made by an employee of Gadens which recorded, among other things, that Ian had informed the employee that they "will be buying in company name". Ian said that at the time he and Beth remained interested in purchasing the Campbell Parade Property and accepted that there was no suggestion that he and Beth would not be the persons standing behind the new structure. 204 In early to mid November 2008 the developer of the Campbell Parade Property contacted Ian and requested a meeting in order to show him changes that they wished to make to the location of the kitchen and to obtain Ian's approval for those changes. 205 A day or so later, Ian met with the developer at the site of the Campbell Parade Property. According to Ian: (1) the developer first showed him on a plan the location to which he proposed to move the kitchen. Ian did not have an issue with the proposal to move the kitchen; (2) the developer then suggested that they go inside the incomplete Campbell Parade Property so that he could see how it would look; (3) once inside the building, Ian realised that he had not seen the entry to the parking area. Thus he asked the developer where the entry would be located. In response, the developer informed him that they were "going to install a car stacker system"; (4) he was disappointed, although he did not mention his disappointment to the developer at the time; (5) they then went to inspect the unfinished Campbell Parade Property. The developer showed Ian the new location for the kitchen; and (6) it was at this point that he noticed that there was no balcony outside the main living area and he asked the developer "what happened to the balcony?". The developer informed Ian that the council had not approved balconies for the building. Ian was extremely disappointed, although again he did not mention his disappointment to the developer at the time. He felt that he was getting a lesser apartment for the price. 206 Later that day Ian told Beth about his inspection of the Campbell Parade Property: that there was a car stacker system, rather than two individual car spaces; and that there would be no balcony. Beth said words to the following effect to Ian: You got us into this. Now you get us out. 207 Either that day or the following day Ian had a conversation with the developer in which he raised his concerns, namely that the unit would not have "two proper parking spaces" and that there was no balcony. 208 I pause to observe that in his first affidavit Ian said that: (1) the inspection at which he learnt that the Campbell Parade Property had a car stacker and no balcony, unlike the plans and drawings he had seen earlier, took place in March 2009; and (2) at that time he and Beth were not in a position to buy a property in which to live and to retain the Campbell Parade Property as an investment property. Accordingly, he spoke to Faina about the possibility of her acquiring the property. Faina decided it was a good investment and that she would purchase it. 209 However, in his second affidavit Ian corrected the evidence set out in the preceding paragraph. First, he said that the inspection undertaken in March 2009 was the final pre-completion inspection which he carried out on behalf of Faina. Secondly, he clarified that his conversations with Faina did not take place in March 2009 but some months earlier. 210 In his second affidavit Ian also gave more detailed evidence about the conversations he had with Faina in about November 2008 following his inspection of the Campbell Parade Property. He said that he went to see Faina and discussed with her the possibility of her buying the Campbell Parade Property as an investment. Over the course of a week or so he had numerous conversations with Faina on this topic. Their final conversation, which was in Russian, was in words to the following effect: Faina: How am I going to buy it? Ian: I'm thinking of arranging a $3 million loan for you against the apartment only and you have the balance of $900,000 in Fanchel's Westpac account. Faina: And how am I going to service the loan? Ian: I think the rental monies will cover the mortgage repayments, so you won't have to pay anything else on top. I believe it's a good investment. Faina: OK. Try and get me a loan. 211 That earlier timing is supported by documents on Gadens' file: (1) a file note dated 19 November 2008 made by Catherine Crooke of Gadens of a conversation she had with "Alicia" records that Alicia "will get instructions re: rescinding contract + entering into new contract with Faina Stolyar"; and (2) a letter dated 1 December 2008 from Gadens to Baron & Associates, the solicitors for the vendors, includes the following: Our clients would like to purchase the property in the name of their mother, Faina Stolyar. We request that you obtain your client's instructions in relation to rescinding the contract entered into on 4 January 2007 and simultaneously entering into a new contract on the same terms and conditions as the current contract. A new deposit bond will be handed over on exchange in the name of the new purchaser. The deposit bond you hold should be returned to us on exchange. We await your urgent reply. 212 In about late January 2009 Ian approached the NAB on behalf of Faina to obtain a loan for her of approximately $3 million for the purchase of the Campbell Parade Property. One of the factual maters that arises for determination is the purchase price paid for the Campbell Parade Property by Faina. On that topic, in cross-examination, Ian gave the following evidence about what he told the NAB at the time of applying for finance on behalf of Faina: Mr Golledge: … And now you recall assisting your mother with the finance application? Ian: Yes. Mr Golledge: And do you recall that in the course of assisting your mother with the finance application it was necessary to inform the bank what the proposed purchase price for the security property was? Ian: Yes. Mr Golledge: And do you recall what price the bank was told? Ian: 6,750,000. I mean, yeah, 6,750,000. Mr Golledge: Which was the price that you had contracted to purchase the property? Ian: Yes. Mr Golledge: And you understood that the bank would be taking that figure into account in making a credit assessment or decision? Ian: Yes. Mr Golledge: In respect of your mother's loan application? Ian: Yes. Mr Golledge: So at the time that you were communicating with the bank about the loan application it was your understanding that the purchase would settle on the same financial terms as had been negotiated between yourself and your wife and the developer back in 2007? Ian: No. Mr Golledge: You didn't? Ian: No, it wouldn't. Mr Golledge: Well is there any - so what; you mispresented to the financier the purchase price of the property? Ian: No. Mr Golledge: Now did you ever write to or make any contact with the financier and explain to the financier, prior to it parting with its money, that contrary to what might have appeared in any loan application, the purchase price was not 6.75 million? Ian: No, pretty sure I did say. Mr Golledge: Sorry? Ian: I'm pretty sure I did say six - seven - 6 million 750 thousand. 213 By letter dated 8 May 2009 the NAB approved a variable rate interest only home loan for Faina in the sum of $3 million to be secured by mortgage over the Campbell Parade Property. 214 According to Ian: (1) on 18 May 2009 the following occurred: (a) NAB Home Loan account no. 89-351-9845 was opened in Faina's name (Campbell Parade Mortgage Account); (b) NAB Gold Banking Account no. 89-349-8685 (Campbell Parade Mortgage Offset Account) was opened in Faina's name; and (c) he attended a Westpac branch with Faina who withdrew $3.1 million from the Fanchel Transaction Account by way of a bank cheque. In his first affidavit Ian said that two bank cheques were issued for this withdrawal, one for $2.2 million and one for $900,000, but in his second affidavit, after having had access to Gadens' file maintained in relation to the purchase of the Campbell Parade Property, Ian changed his evidence and accepted that there was only one bank cheque issued for the full amount of the withdrawal; (2) the following also occurred: (a) on 17 May 2009 the contract entered into by Ian and Beth to purchase the Campbell Parade Property was rescinded and, in Ian's and Beth's presence, but in the absence of her solicitor, Faina entered into and exchanged a new contract for purchase of the Campbell Parade Property. The only other party who was present was the developer. Ian said that Faina paid $3.8 million for the Campbell Parade Property although the contract she entered into specified a sale price of $6.75 million. In his second affidavit Ian clarified that the purchase price of $3.8 million was exclusive of stamp duty and associated costs and that, including stamp duty and associated costs, Faina paid a total of $3.9 million for the Campbell Parade Property; (b) on 18 May 2009 Faina settled the contract for purchase of the Campbell Parade Property; and (c) on 19 May 2009 an amount of $2,999,717.08 was drawn down on the Campbell Parade Mortgage Account for the purposes of settling the purchase of the Campbell Parade Property. 215 On 20 May 2009 a bank cheque for $2.2 million was deposited into the Campbell Parade Mortgage Account, reducing the balance owing to $800,000. Ian said that in the period 24 June 2009 to 2 June 2010 he, on behalf of Faina and Stoligor, redrew that amount over numerous occasions to purchase shares for Stoligor. 216 Faina asked Ian to attend to the leasing of the Campbell Parade Property and he engaged Express Realty to do so. A tenant was found and Ian managed the lease. 217 Faina gave the same evidence as Ian did in his first affidavit about the events which led to her entry into of a contract for the purchase of the Campbell Parade Property and its subsequent purchase. Unlike Ian she made no changes or corrections to her evidence and, in particular, the timing of certain events. She said that: (1) in about April 2009 she had a conversation with Ian in which he raised the opportunity for her to buy the Campbell Parade Property for $3.8 million. According to Faina, Ian said: It would be a god investment. The bank will give you a loan for $3,000,000. The rental monies you would receive cover the mortgage repayments. At the time, Faina agreed it would be good investment; (2) Ian organised a home loan in the amount of $3 million for her from the NAB; (3) on 18 May 2009 she and Ian went to the Bondi Beach Branch of Westpac where she withdrew $3.1 million from the Fanchel Trading Account in two bank cheques, one for $2.2 million and the other for $900,000; (4) on or about 19 May 2009 she entered into a contract to purchase the Campbell Parade Property for $3.8 million which specified her as the purchaser and $6.75 million as the purchase price. Despite what appeared on the face of the contract, she only paid $3.8 million. No one explained to Faina why the contract stated a higher purchase price than she paid for the property and she did not ask why; and (5) exchange and settlement occurred on the same day. 218 Faina said that the source of funds for the purchase of the Campbell Parade Property was the $3 million drawn down on the Campbell Parade Mortgage Account and the bank cheque for $900,000 drawn on the Fanchel Transaction Account. She also said that she deposited the bank cheque in the sum of $2.2 million drawn on the Fanchel Transaction Account into the Campbell Parade Mortgage Account so as to reduce the interest repayments. 219 Unlike Ian, Faina did not change her evidence about the number of cheques which were issued to make up the $3.1 million withdrawal from the Fanchel Transaction Account. Although she appeared to be slightly confused, in cross-examination Faina maintained that two cheques were issued, one for $2.2 million and one for $900,000. The following exchange took place: Mr Golledge: Yes. Well, you've said - you agreed that you already - that you've said this morning that, in fact, there weren't two cheques. There was one cheque. You remember saying that a few moments ago? Faina: I assumed - I assume it was one cheque. Mr Golledge: Right. But if it was one cheque for $3.1 million? Faina: Yes. Mr Golledge: That must mean you've made a mistake when you say at paragraph 38(f) that you took away and had - sorry. You obtained at the Bondi Beach branch a cheque for $900,000. That's a mistake? Faina: I assume so. Mr Golledge: And that's - and the reason why you put that reference to this $900,000 bank cheque in your affidavit is because that is what Ian asked you to put in your affidavit, wasn't it? Faina: No. No. Mr Golledge: It wasn't? And you see at paragraph 39 you say - you then try to explain what happened to this $2.2 million cheque that you mention in paragraph 38(c). Read paragraph 39 to yourself, madam, and tell me when you are finished? Faina: 38? Mr Golledge: Yes. Her Honour: 39. Mr Golledge: Have you read 39? Faina: 39. Yes. Mr Golledge: But by all means go back to 38 if you need to? Faina: 39, yes. ..... yes. I - I put this money to - to my mortgage for reducing interest, and because I have to - next month I have to pay mortgage, because it was empty. Apartment was empty. And I just - I just ..... was in five or six months. Mr Golledge: Madam, do you even now say that you have a recollection of taking a $2.2 million cheque that was collected from the Bondi Beach branch of Westpac and paying it into your mortgage loan account? Do you remember that happening? Faina: No. My son done it. Mr Golledge: Well, did you see him do that? Faina: Yes. Mr Golledge: Well, but don't you say in your affidavit that you did it? Faina: I - I ..... it was him because this cheque always ..... afraid to take it by myself. Mr Golledge: Well, madam, there was no $2.2 million cheque obtained from the Bondi Beach branch at Westpac, was there? Faina: I know - I know ..... put this money in my … Mr Golledge: Madam, there was no $2.2 million cheque taken from the Westpac Bondi Beach branch and deposited into the mortgage loan account, was there? Faina: I don't remember. My - my son ..... Mr Golledge: That's what your son told you to put in your affidavit, didn't he? Faina: No. No. I was ..... my son wasn't ..... 220 Despite Faina's evidence, in the face of the objective documentary evidence found in Gadens' conveyancing file (see [226] below) and Ian's acceptance that only one bank cheque was obtained at the time of withdrawing $3.1 million from the Fanchel Transaction Account, Faina's evidence on this issue is rejected.

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5.2.2 A balcony off the living room? A double garage or a car stacker? 221 As can be seen from the evidence set out above, in particular at [205], at the time of his inspection in November 2008, Ian was concerned about two things: the lack of a balcony off the living room and parking by way of car stacker, rather than two dedicated parking spaces. 222 On 19 December 2006, prior to Ian and Beth's entry into of the contract for purchase of the Campbell Parade Property, Baron & Associates, the solicitors for the vendors, sent a letter to Gadens responding to amendments that had been requested to the contract for purchase of the property on behalf of Ian and Beth. That letter referred to a plan of the property. In cross-examination Ian accepted that he saw the plan prior to exchange of contracts and volunteered that it would have been a part of the contract. The plan in question, which was in evidence before me, shows a single balcony situated outside the area marked as "wintergarden". There is no balcony shown outside or adjacent to the area marked "living". In cross-examination, when asked about the plan, Ian gave the following evidence: Mr Golledge: The plans that you acknowledge were shown to you prior to exchange and then in all probability formed part of the contract did not suggest that there was to be any balcony outside the living area, did they? Ian: Yes, there was. Mr Golledge: Well, sir, the balconies are to be, firstly, outside the master bedroom? Ian: Master bedroom? Mr Golledge: Yes? Ian: No. There's no balcony on the master bedroom. Mr Golledge: Well where do you - do you see the balcony on this plan? Ian: The - you're talking about off the - of the… Mr Golledge: Apartment? Ian: Off the Wintergarden? Mr Golledge: Yes, that's a balcony area, isn't it? Ian: Mmm. Mr Golledge: And then there's another balcony - well is there? How many balconies are shown on this plan? Ian: I thought two. Mr Golledge: The Wintergarden and the? Ian: Wintergarden is not a balcony. Mr Golledge: All right. Well you thought there was a second balcony on this plan, did you? Ian: Yes. Mr Golledge: Outside the curved area of the living room? Ian: Yes. Mr Golledge: Yes? Ian: On the front, of course. Mr Golledge: It doesn't say "balcony" on that plan does it, sir? Ian: It doesn't, but I was told by the developer - I was told that there will be a balcony. Mr Golledge: Well, you don't say that? Ian: That is a balcony. Mr Golledge: You don't say that in your evidence do you, sir, that you were told anything by the developer at the time of exchange? Ian: Well I was talking to the - to the developer about a balcony on the stacker. Mr Golledge: Well, sir - and this was a matter of some importance to you, was it? Ian: Of course. Mr Golledge: And? Ian: You don't buy a unit with no balcony. … Mr Golledge: Now - and did you given any - well, I withdraw that. Now have there been any structural additions to the exterior of this unit since it was purchased? Ian: Yes. Mr Golledge: All right. What were they? Ian: There was a balcony put in. Mt Golledge: A balcony put in, what, in front of the living area? Ian: Yes. Mr Golledge: When did that happen? Ian: Earlier this year. 223 Despite Ian's evidence, it is clear, based on the plan of the Campbell Parade Property, that it was not envisaged at the time that Ian and Beth entered into the contract to purchase that property, that it would have a balcony off the living room. Further, despite Ian's claims in cross-examination, there was no evidence in either of Ian's affidavits of any conversation between him and a representative of the developer to that effect. 224 As for the parking to be provided, as evidenced by cl 33.5 of the contract for purchase of the Campbell Parade Property, it was always envisaged that there would be a car stacker system. That clause relevantly provided: … (v) the vendor discloses that: - … (vi) The specifications of the car parking stacking device has not at the date of this agreement been finalised and the provision of draft By-Law 31 may be amended including but not limited to: (a) varying the number of spaces; (b) varying the dimensions and heights of vehicles that can use it; (c) granting specific lots use of specific spaces with differing dimensions; (d) the manner in which it operates; and (e) the amount payable in accordance with By-Law 31. (Emphasis added.) 225 In cross-examination Ian said that he did not know about this clause in the contract and that the presence of a car stacker system came as a surprise to him. But clearly, given the terms of the contract, the car stacker system was not a new feature or a change to the design. Ian did not strike me as naïve, particularly when it came to property dealings. It is difficult to accept that he was not aware of this important feature of the apartment that he and Beth were to purchase for a not insignificant sum.

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5.2.3 The purchase price 226 Both Ian and Faina gave evidence that, despite the terms of the contract for its purchase, Faina paid $3.8 million, net of stamp duty and associated costs, for the Campbell Parade Property. However, the documents in the conveyancing file maintained by Gadens for the purchase of that property tell a different story and undermine the evidence given by each of Ian and Faina. In addition to those referred to at [203] and [211] above, the documents in evidence before me from the Gadens file included: (1) an email dated 3 February 2009 in which Ms Casula informed Ian that the vendors would only agree to have Faina on the contract if she entered into a contract to be exchanged and settled at the same time. Ms Casula explained that this would mean that the existing contract "would remain on foot until completion is due under it and that right at the last minute just before settlement and simultaneous with settlement the original contract is rescinded, the new contract with Faina is entered into and the contract with Faina is completed there and then". Ms Casula noted that this was possible but that Ian may have to get loan approval on that basis and only provide the mortgagee a form of contract that Faina would enter into rather than the exchanged contract; (2) a letter dated 11 March 2009 from Gadens to Baron & Associates which confirmed that the arrangement described in (1) above was acceptable to Gadens' client and requested a new contract naming Faina as purchaser; (3) a copy of the front page of a contract for sale in relation to the Campbell Parade Property with Faina named as purchaser and a purchase price of $6.75 million and a copy of a deed between the vendors and Ian and Beth rescinding the contract dated 4 January 2007 for the purchase the Campbell Parade Property; (4) a settlement memorandum dated 18 May 2009 prepared by Gadens which provided, among other things, for the following cheques to be given to the vendors' solicitor: 1. St George Bank Limited - $4,171,580.46 2. 152 Campbell Parade Pty Limited - $74,250.00 3. 152 Campbell Parade Pty Limited - $470,000.00 4. Baron & Associates - $2,129.90 5. Baron & Associates - $1,375.00 6. Peter Bain & Associates - $131.00 7. St George Bank Limited - $2,036,968.24 (5) a letter dated 20 May 2009 from Gadens to Ian setting out the amount paid for the purchase of the Campbell Parade Property which relevantly provided that cheques in a total amount of $7,171,296.60 had been provided by Ian and that amount had been paid as to $6,755,059.60 to the vendors at settlement with the balance being paid to the Office of State Revenue for stamp duty, Gadens, Baron & Associates for preparing the new contract and the NAB for cheque fees; and (6) copies of the following bank cheques: (a) CBA bank cheque dated 18 May 2009 in favour of St George Bank Limited in the sum of $1,071,580.46. I pause to note that Ian's evidence is that neither he and/or Beth nor Faina provided the funds for this cheque; and (b) Westpac bank cheque dated 18 May 2019 in favour of St George Bank Limited in the sum of $3.1 million. 227 In addition the registered transfer for the Campbell Parade Property stated that the consideration paid for the property was $6.75 million and at the Public Examinations Faina said that the purchase price was $6.75 million and Ian gave the following evidence: Mr Golledge: I just want to ask you a couple of questions about the property at Campbell Parade owned by your mother? Ian: Mmm. Mr Golledge: Now, that property, according to records available to the trustee, was purchased in May 2009 for a price of $6,750,000? Ian: Mmm. Mr Golledge: You're familiar with that transaction? Ian: Yes. Mr Golledge: And was funded in part by a borrowing of $3 million from the National Australia Bank? Ian: Yes. 228 It is convenient at this point to address the respondents' submission about the way in which I should treat the available evidence about the purchase price and the finding I should make. 229 They submitted that, notwithstanding what is disclosed in the documents about the purchase price and what Faina said in her Public Examination, "things are not always what they seem". They said that the stated purchase price was apparently "paid" and that there was no doubt that three cheques in the right sum total were provided at settlement. However, they submitted that the CBA bank cheque for $1,071,058 provided at settlement and $2.2 million deposited into the Campbell Parade Mortgage Account on the day following settlement both have unknown sources. 230 The respondents submitted that during cross-examination both Ian and Faina maintained their evidence that the purchase price paid by Faina for the Campbell Parade Property was $3.8 million. Senior counsel for the Trustee avoided exploring the issue and instead put to Ian what he had included in, and omitted from, his affidavits in relation to his dealings with the developer and failed to ask Ian how it was that Faina came to pay only $3.8 million for the Campbell Parade Property. 231 The respondents observed that in the Trustee's closing submissions he, in turn, observes that Ian and Faina failed to give any evidence of any discussions with the vendors in which the vendors agreed to a discount on the purchase price and contended that implicit in that submission is a recognition by the Trustee that what Ian and Faina meant by saying Faina paid only $3.8 million is that a "discount was agreed". The respondents said that agreement must have been with the developer/vendors and that, in short, it occurred to the Trustee that "a side deal" may have been done between Faina and the developer. 232 The respondents submitted that such side deals are not unknown in land development and off the plan sales and that typically an incoming first mortgagee will have a lending ratio, particularly where the borrower may have to rely on rental income to pay off the loan. The respondents noted that a discount of the sale price would harm that ratio and potentially stop an advance by a proposed first mortgagee and that in such cases it is not unknown for the vendor to fund purchase cheques and therefore engage in a round robin, referring by way of example to the decision in Lauvan Pty Ltd & Anor v Helen Bega [2018] NSWSC 154; 330 FLR 1 where the vendor and its outgoing mortgagee agreed to a round robin that involved a shortfall being funded by the outgoing mortgagee, which then received its own sourced funds back. 233 The respondents submitted that, at least in Ian's mind, the Campbell Parade Property did not have the features it ought, namely, verandas and simple garage parking, and that the last thing a developer would want would be to have other off the plan sales fall over which would be a possibility if a unit sale terminated or, if renegotiated, the discount became known, as it might if the transfer stated consideration of only $3.8 million. 234 The respondents referred to a letter from the vendors' solicitor agreeing to discount the original asking price by $250,000 in return for the right to publish Ian and Beth as purchasers off the plan which they contended was consistent with the developer/vendors trying to cultivate and maintain its marketing campaign by giving discounts (there on exchange) and is behaviour in tune with a side deal at completion. The respondents submitted that this then is the other possible source of funds, with the unidentified third party being the vendors. They contended that the Trustee should not be heard to submit that the respondents failed to give any evidence of discussions with the vendors in which the vendors agreed to a discount. That being so it is not right for the Trustee to submit that a vendor's discount should not be a possibility. 235 The respondents submitted that "when the simple maths is done", the purchase price of $6,750,000 (subject to adjustments) and stamp duty of $413,010 less the cheque for $1,071,058 and the deposit of $2.2 million into the Campbell Parade Mortgage Account, equals a little over $3.8 million. 236 Finally, they submitted that had Ian been asked questions about a discount agreement with the vendors he would presumably have objected (under the Court's supervision of its witnesses) under s 128 of the Evidence Act. However, they said that the Trustee avoided wanting any such history being disclosed by not asking about it. 237 The respondents' contention is that the purchase price for the Campbell Parade Property was $3.8 million. By these submissions the respondents effectively ask the Court to speculate as to the reason why that is the case and contend their evidence should be believed, despite the objective and contemporaneous documentary evidence supporting a finding that the purchase prices was $6.75 million. The respondents' submissions are rejected for the following reasons. 238 First, there is simply no evidence of any side deal with the developer/vendors or that the developer/vendors were the source of the CBA cheque for $1,071,058 and the deposit of $2.2 million into the Campbell Parade Mortgage Account. It is not open to me to speculate about the evidence that might have been given had the Trustee asked Ian and/or Faina in cross-examination whether they had any discussions with the developer/vendors about the purchase price and what was agreed. 239 Secondly, I do not accept that the Trustee was required to cross-examine Ian or Faina about how they say the purchase price came to be $3.8 million and the assertion made in the respondents' speculative submissions that the source of the two payments referred to in the preceding paragraph was the developer/vendors. It would have been different had Ian and/or Faina given evidence that the developer/vendors had been the source of these payments but they did not. In those circumstances I am not aware of any rule, practice or evidentiary principle that would require the Trustee to take such an extraordinary step. 240 Thirdly, that arrangements have been made between vendors and purchasers of the nature described by the respondents and the subject of the decision in Lauvan does not assist the respondents. They led no evidence of any such arrangement being agreed and implemented in relation to the Campbell Parade Property. Nor does the fact that the developer/vendors were willing to offer a discount on the purchase price in return for Ian and Beth allowing their names to be used in connection with marketing of other units in the development give greater credence to the alternate theory now put by the respondents, without any evidence. 241 Finally, s 128 of the Evidence Act did not preclude the respondents from obtaining any relevant evidence from Ian. That section concerns the privilege against self-incrimination and applies where a witness objects to giving evidence on a particular matter because, relevantly, the evidence may tend to prove that the witness has committed an offence under an Australian law. Where the court determines that there are reasonable grounds for the objection the court is not to require the witness to give evidence and must inform the witness of the matters set out in subs (3) including that if the witness either willingly gives the evidence or is required to give the evidence under subs (4) the court will give the witness a certificate under s 128 of that Act in relation to the evidence. 242 Once again, I cannot speculate about what would have happened had the Trustee asked Ian questions about a discount agreement with the developer/vendors. In any event, as I have already observed, it was not incumbent on the Trustee to do so. There is no basis for the respondents' contention that the Trustee avoided wanting any such history to be disclosed by not asking about it. In any event, the effect of s 128 of the Evidence Act is that it permitted the respondents to seek to lead the relevant evidence from Ian. So much is clear from the decision in Song v Ying (2010) 79 NSWLR 442 in which the Court of Appeal considered the operation of s 128 of the Evidence Act. Relevantly at [28]-[29] Hodgson JA (with whom Giles and Basten JJA agreed) said: 28 In my opinion, having regard to the wording of s 128 and the scope of the common law privilege which it displaced, it is not the case that a party to proceedings who is also a witness, giving evidence in chief in response to questions from the party's own legal representative, and who wishes to give that evidence but is not willing to do so except under the protection of a s 128 certificate, "objects" to giving that evidence within the meaning of s 128(1). This is not because the witness subjectively wishes to give the evidence, but rather because there is no element of compulsion or potential compulsion which makes the expression "objects" apposite. 29 This approach would not mean that a friend of a party (plaintiff or defendant) called to give evidence in the party's case may not "object" to giving evidence within the meaning of s 128(1). Whether or not this friend wishes to support the party, this friend is compellable at the instance of the party and cannot give instructions to the party's legal advisers as to what questions are to be asked. In those circumstances, I would not suggest that the court would need to inquire whether the friend is giving evidence because compellable, or because of a wish to give the evidence to help the party: I would say that the compellability of the witness to give the evidence at the instance of the party (subject to the provisions of s 128), and the lack of legal entitlement to refrain from giving that evidence if compulsion is sought (again subject to the provisions of s 128), is sufficient. See too Construction, Forestry, Mining and Energy Union and Another v Australian Building and Construction Commissioner (2018) 259 FCR 20 at [65] where a Full Court of this Court held that the decision in Song was plainly correct. 243 Had the respondents sought to lead evidence from Ian, it would have been open for Ian to object to responding to the relevant questions on the basis of one of the matters set out in s 128 of the Evidence Act in which case the Court would proceed in accordance with the requirements of s 128. 244 Based on the objective evidence, the only available finding is that the purchase price for the Campbell Parade Property was $6.75 million, not $3.8 million as the respondents contend, and that a total of $7,171,297.54, including stamp duty and adjustments, was paid at settlement of the purchase of the Campbell Parade Property on 18 May 2019. 245 Faina's and Ian's evidence that the purchase price was $3.8 million is rejected. That evidence is not supported by: (1) the contemporaneous documents as described at [226] above; (2) the respondents' defence in which they admit that the amount paid on settlement of the Campbell Parade Property was provided by way of a cheque for $3.1 million drawn from the funds held in the Fanchel Transaction Account and $2,999,717.08 drawn on the Campbell Parade Mortgage Account with the balance provided by way of a CBA bank cheque for $1,071,580.46 which was available to hand over on completion (although they deny that this amount came from Ian and/or Beth); (3) the contract to purchase the Campbell Parade Property entered into by Faina which disclosed a purchase price of $6.75 million; (4) evidence given in cross-examination by Ian who accepted that cheques totalling over $7 million were handed over on settlement of the purchase of the Campbell Parade Property; and (5) perhaps most damningly, the evidence given by each of Ian and Faina at their Public Examinations. In the course of those examinations Ian accepted that the Campbell Parade Property was purchased in May 2009 for $6.75 million and partly funded by a loan of $3 million from the NAB and Faina accepted that she paid $6.75 million for the Campbell Parade Property. 246 Relatedly, and in light of the admission in the respondents' defence and the evidence in the Gadens file and putting to one side the drawdown on the Campbell Parade Mortgage Account, I find that the cheques provided on settlement of the Campbell Parade Property were the Westpac bank cheque for $3.1 million and the CBA bank cheque for $1,071,580.46.

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5.2.4.1 The Westpac bank cheque - $3.1 million 248 There was no dispute that: first, the Westpac bank cheque for $3.1 million was drawn with funds from the Fanchel Transaction Account on 18 May 2009; and secondly, that the amount which was withdrawn represented the proceeds of sale of shares in AGM which had been transferred to Fanchel in early 2008. 249 Ian gave the following evidence about the AGM shares held by Fanchel: (1) in about the beginning of January 2008, on behalf of Faina, he caused 3 million ordinary AGM shares that he had previously bought on her behalf and which she held in her maiden name to be consolidated and then transferred in an off market transfer to Fanchel. A holding statement as at 30 January 2008 issued by Computershare shows that following an off market transfer as at that date Fanchel held 3 million shares in AGM; (2) on 17 March 2008 Zinifex Limited took over AGM; and (3) on about 3 April 2008 Zinifex acquired Fanchel's 3 million shares in AGM for $3.3 million and those shares were transferred to Zinifex by way of an off market transfer. 250 In cross-examination Ian accepted that $3.1 million from the proceeds of the sale of AGM shares went to the purchase of the Campbell Parade Property. 251 The issue that arises between the parties is who transferred the AGM shares to Fanchel in early 2008. The Trustee contends that Ian contributed Fanchel's AGM shares such that he was entitled to be paid the proceeds of their sale. The respondents deny that to be the case and contend that Faina contributed Fanchel's AGM shares, having purchased them in June or July 2006. 252 Relevantly, Ian gave evidence that in or about June or July 2006, when the price of AGM shares slumped to $0.12 to $0.14, he suggested to Faina that she reinvest the money she had received from the sale of her AGM shares only weeks earlier in more AGM shares. Faina agreed and accordingly Ian, on her behalf, caused a number of stockbroking firms with whom Faina had share trading accounts to buy approximately 3 million AGM shares over a period of some weeks in Faina's maiden name. According to Ian it is these shares which were transferred to Fanchel by way of an off market transfer (see [249(1)] above). 253 With the exception of Fanchel's balance sheet as at 30 June 2009, there were no records produced by the respondents to support Ian's evidence about the way in which Faina came to acquire the 3 million AGM shares referred to in the preceding paragraph. 254 Fanchel's balance sheet as at 30 June 2009 recorded: (1) total current liabilities as at 30 June 2008 of $7,765,708 and as at 30 June 2009 of $3,923,642; and (2) note 4 to the accounts showed that those liabilities comprised a loan from each of Faina and Ian with the former being recorded as $3.3 million as at 30 June 2008 and reducing to $200,000 as at 30 June 2009. I infer that this was intended to record the transfer by Faina of the 3 million AGM shares to Fanchel which were subsequently sold for $3.3 million and which, in turn, created a liability to Faina in that amount. That liability was reduced when the sum of $3.1 million was applied to the purchase of the Campbell Parade Property. 255 By contrast, there were documents in evidence before me which showed that: (1) on 2 October 2007 Vietruss, through an account held with Merrill Lynch Equities (Australia) Limited, bought 5.5 million AGM shares for a total of $3,960,000; (2) on 3 October 2007 $3,929,000 was withdrawn from CBA account no. 10756864 held by Ian and Beth (B&I CBA Account) and $31,000 was withdrawn from NAB account no. 53-246-2214 also held by Ian and Beth (B&I Gold Banking Account); (3) on 4 October 2007 Merrill Lynch recorded receipt of $3,960,000 by way of direct deposit in the client ledger for Vietruss; and (4) on 17 October 2007 2.5 million AGM shares were transferred to the Canchel Partnership's CommSec account with a ledger code "TRF3" which means "Issuer Sponsor/CHESS Movement". In cross-examination, Ian, in effect, accepted that these shares were transferred to the Canchel Partnership by Vietruss, leaving Vietruss with 3 million shares. The following exchanges took place: Mr Golledge: … and what I want to suggest to you, sir, is that what that represents is a transfer from Vietruss to Canchel Limited Partnership of 2.5 million shares, do you see that? Ian: Mmm. Mr Golledge: And do you agree with that that's - that explains that transaction? Ian: Maybe. Yes. Mr Golledge: All right. Now, that would leave Vietruss, then, with three million shares? Ian: Yes. And: Mr Golledge: Now - so what we've got so far is evidence establishing that Vietruss held three million shares - or as the residue of an earlier acquisition but held three million shares as at late October 2007; correct? Ian: Yes. 256 Despite the detailed evidence given by Ian in his affidavits about the various share trading transactions undertaken by him on behalf of Faina, Fanchel and the various share trading entities under his control, Ian did not give any evidence about Vietruss' acquisition of the 5.5 million AGM shares referred to above nor how those shares were subsequently dealt with by Vietruss. Nor was there any evidence about what became of the 3 million AGM shares held by Vietruss as at 17 October 2007. When asked in cross-examination what became of them, Ian was unable to say. However, he did not accept that Vietruss transferred those shares to Fanchel by way of an off market transfer on 30 January 2008. 257 The overwhelming inference to be drawn based on the evidence is that of Vietruss' 5.5 million AGM shares acquired in October 2007, 2.5 million shares were transferred to the Canchel Partnership in October 2007 and the remaining 3 million shares were transferred to Fanchel in January 2008. Both of these transactions were off market transfers. Ian accepted as much in relation to the transfer to the Canchel Partnership. That Ian did not agree that the balance of Vietruss' AGM shares were transferred to Fanchel is hardly surprising. However, for the reasons that follow his lack of agreement to that proposition cannot be accepted. 258 First, Ian's alternative explanation as to how Fanchel came to be the owner of 3 million AGM shares (see [249(1)] above) is not supported by any contemporaneous documents or records to which I would give weight. The only available record is Fanchel's balance sheet as at 30 June 2009 which, on its face, appears to have been prepared in May 2010, after the commencement of the Royal Guardian Proceeding. Given the other available evidence and the timing of its preparation, I would give that record little, if any, weight. 259 Secondly, Ian's evidence about the price at which those shares were apparently acquired by him on behalf of Faina, $0.12 to $0.14 per share, is contradicted by the available objective evidence of the AGM share price in June to July 2006: (1) an annual report for AGM for the period June to December 2006 shows that AGM shares traded at a low of about $0.20 per share in June 2006 increasing to about $0.70 per share in December 2006; and (2) a Berndale Securities ledger for the account held by Ian for the period 15 October 2000 to 14 November 2014 shows that he acquired a parcel of AGM shares on 13 June 2006 at $0.28 per share and sold a parcel of AGM shares on 11 July 2006 at $0.305 per share. 260 Thirdly, at the time at which the transactions allegedly took place, Faina did not, based on her own financial disclosures to Centrelink, own any shares (see [132] above). 261 It follows that, based on all of the available evidence, the inference to be drawn is that the 3 million AGM shares transferred to Fanchel came from Vietruss, the general partner in the Canchel Partnership. The funds to acquire those shares came from bank accounts held by Ian and Beth. It follows that Ian and Beth, or more likely Ian, given the arrangements described below, were entitled to any proceeds of sale from those shares. This included the $3.1 million paid towards the purchase price for the Campbell Parade Property. That is the basis on which Faina purportedly transferred the 3 million AGM shares to Fanchel, as is evident from Fanchel's balance sheet which recorded a liability to Faina for the value of the shares (see [254] above). 262 In cross-examination Ian acknowledged that this was also the basis on which he transferred shares held by him, the Canchel Partnership or Vietruss into Fanchel's name and was similarly reflected in Fanchel's balance sheet as at 30 June 2009 which recorded a loan from Ian of $3,723,642 as at that date. That is, as Ian expressly acknowledged when explaining the arrangements with Fanchel in relation to shares transferred to it, albeit in the context of a different transaction: Fanchel would not be liable - okay. You misunderstand this again. Fanchel would not be liable to Ian Stolyar if the shares became worthless. That was the - because the market was very bad at that time so that Fanchel would not be liable to Ian Stolyar if the shares were sold for zero or negligible value. The only - the only thing that Fanchel would be liable for is if those shares were sold and the money - and the money would be going to Ian Stolyar. 263 It follows that I am satisfied that the proceeds of Westpac bank cheque for $3.1 million represented a contribution by Ian, or alternatively Ian and Beth, to the purchase price of the Campbell Parade Property.

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5.2.4.2 The CBA bank cheque - $1,071,580.46 264 The Trustee contends that the amount of $1,071,580.46 paid by way of a CBA bank cheque came from Ian or, alternatively, Ian and Beth. As I have already observed at [245(2)] above, Ian's evidence was that neither he or he and Beth nor Faina provided the funds for this cheque, a position he maintained in cross-examination. The effect of Ian's evidence is that the funds for that cheque came from an unidentified source. 265 It is necessary to resolve this factual contest. I set out the relevant evidence below. 266 On 12 March 2009 the North Sydney CBA branch requested CBA mortgage services to arrange a redraw on four loan accounts (described at [471] and [473] below and referred to as CBA Home Loan Accounts 1, 2, 3 and 4) for a combined amount of $4,405,211.31 (Redraw Sum). The Redraw Sum was to be credited to the "business account Ian Stolyar Canchel Ltd Partnership 221710581769". Although the Trustee accepted in cross-examination that he had been unable to trace the actual source of the CBA bank cheque, he contends that an available inference is that it comes from the Redraw Sum. 267 No bank statements were in evidence for the Canchel Partnership account referred to in the preceding paragraph. However, Ian did not deny that the Redraw Sum was made available and, in light of his evidence about the way in which it was disbursed, at least implicitly accepted that the amount was drawn down. Ultimately, Ian's evidence was that the Redraw Sum was applied as follows: (1) $780,000 was applied to repay corresponding amount which had been credited to the B&I CBA Account on 15 February 2008 as "Loan Funds Loan no. 308021" (February 2008 Loan) and which on 18 February 2008 was then applied as to $550,000 to the purchase of shares in iCash Payment Systems Ltd (as to which see [270]-[272] below); (2) approximately $512,000 was used to purchase a further 11 million iCash shares in Fanchel's name between 22 February 2008 and the end of June 2010; (3) an additional $423,000 was applied towards the purchase of the Point Piper Property. That amount was included in the larger sum of $1,246,548 ultimately drawn from the B&I CBA Account on 31 March 2011 for the purposes of settling the Point Piper Property; (4) at least $923,000 was applied towards the settlement of the Point Piper Property; (5) $765,773 was used to make interest payments on Ian and Beth's home loans and for their living expenses; (6) $500,000 was applied towards the purchase of 1 million WCL shares on 6 April 2009; and (7) it was likely that a further $501,437.28 was also applied to the purchase of the Point Piper Property. 268 In cross-examination it became apparent that aspects of Ian's evidence explaining how the Redraw Sum was applied could not be accepted. 269 First, I address Ian's evidence that $780,000 of the Redraw Sum amount was applied in reduction of the February 2008 Loan. The evidence established that: loan no. 308021 was a CommSec margin loan account in Ian's name; and, as accepted by Ian in cross-examination, that account was closed prior to the drawdown of the Redraw Sum in March 2009. A statement of account for loan no. 308021 for the period 1 July 2008 to 30 September 2008 shows a zero balance. It follows that the February 2008 Loan (see [267(3)] above) could not have been, and clearly was not, repaid by funds from the Redraw Sum. 270 Secondly, Ian gave evidence that about $512,000 of the Redraw Sum was applied to the purchase of 11 million iCash shares in Fanchel's name. But, he provided no contemporaneous documents to show that any purchases of iCash shares had taken place at about the time of, or after, the Redraw Sum was made available. 271 A Shaw and Partners client statement for Fanchel, on whose behalf Ian said that the iCash shares were purchased, for the period 1 January 2000 to 14 May 2020 records that in the period from 11 April 2008 to 5 May 2009 Fanchel purchased, or had transferred to its account, some 6.8 million iCash shares. However, of those shares, only 500,000 were purchased after the date the Redraw Sum became available. On 26 June 2009 11.5 million iCash shares were the subject of a transfer at a zero price, I assume to another account. 272 In light of that objective evidence I reject Ian's evidence that $512,000 of the Redraw Sum was applied to the purchase of 11 million iCash shares. That is clearly not so. 273 Thirdly, Ian's evidence that $423,000 from the Redraw Sum was applied to the purchase of the Point Piper Property is not borne out by the contemporaneous documents. The statement of account for the B&I CBA Account for the period 2 December 2010 to 31 May 2011 includes for 31 March 2011 a series of deposits followed by a withdrawal of $1,246,546. However, none of those deposits is for the sum of $423,000. 274 In cross-examination Ian suggested that a deposit of $211,179.28 made on 11 February 2011 (11 February Deposit) was a part of the $423,000 to which he referred. While he accepted that deposit was substantially depleted by a series of transfers and withdrawals which took place between 14 February 2011 and 9 March 2011, he also explained they included a transfer on 18 February of $173,000 to "xx2306 NetBank". He pointed out that one of the deposits made on 31 March 2011 was a transfer of $271,655 from "xx2306 NetBank" i.e. from the same account into which a significant proportion of the 11 February Deposit had been transferred. 275 Once again Ian's evidence was shown to be wholly unreliable. It became clear, based on a letter dated 9 February 2011 from Gadens to Coutts Conveyancing & Legal Services, that the source of the 11 February Deposit was the sale proceeds of 501/40 Ocean Street. Gadens acted for Ian and Beth in relation to that sale. Its letter directed the purchaser on settlement to provide the proceeds of sale by, among others, a cheque for $211,179.28 in favour of Ian and Beth. Upon being shown that letter Ian accepted that no part of the 11 February Deposit came from the Redraw Sum. 276 Ian's evidence about the application of the Redraw Sum in relation to the above three purported payments is demonstrably wrong and is rejected. That leads me to have concerns about the reliability of the balance of Ian's evidence as to the application of the Redraw Sum, particularly in the absence of contemporaneous documents showing the transfer of funds as suggested by him and my overall impression of him as a witness. I would therefore give the remainder of Ian's evidence about the application of the Redraw Sum no weight. 277 Having regard to the whole of the available evidence I would infer that the source of the CBA bank cheque is the Redraw Sum. It follows that those moneys came from Ian, or in the alternative, Ian and Beth. The respondents provided no evidence as to the source of those funds and the evidence which they did provide about the application of the Redraw Sum has been rejected or given no weight. On the other hand, there is abundant evidence that Ian and Beth held numerous accounts at the CBA, the cheque came from the CBA and it was issued after the Redraw Sum became available. 278 Finally, contrary to the suggestion made by the respondents, that the "Operations Centre Batman Street Melbourne VIC" issued the CBA bank cheque does not mean that Ian was not the source of the funds for it. The cheque was dated 18 May 2009, which was the day that the settlement of the purchase of the Campbell Parade Property took place making it inherently implausible that it was obtained in Melbourne. Further, as Ian accepted in cross-examination, at least one other bank cheque which he obtained himself referred to the Batman Street Operations Centre. As the Trustee submitted the likely explanation is that "Operations Centre Batman Street Melbourne VIC" is pre-printed on CBA bank cheques and is not an indication of the branch at which those cheques are issued.

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5.2.5 Express trust or resulting trust? 280 The final issue to determine is whether the Campbell Parade Property is held on an express trust by Faina for Ian or Ian and Beth or, in the alternative, on a resulting trust in the proportion in which Ian or Ian and Beth contributed to its purchase price. 281 The Trustee relies on the following evidence to establish that the Campbell Parade Property is held by Faina pursuant to an express trust in favour of Ian or Ian and Beth: (1) an email dated 12 March 2008 from Ian to Ms Crooke of Gadens by which Ian informed Ms Crooke that purchase of the Campbell Parade Property "will mostly probably be made in a different entity name"; (2) an email dated 18 March 2008 from Ian to Ms Casula and Ms Crooke informing them that he and Beth were not going to "be buying the property in the personal names and [had] not yet decided on the new structure"; (3) a telephone conversation between Ian and an employee of Gadens which took place on 4 April 2008 and which is recorded in a file note as follows: Sd will be buying in Company name. I sd vendor may require personal G'tee. I sd need consent of vendor. He sd "vendor is ok he said I could change name" Do not do it now - at completion enter into new contract. (4) a letter dated 1 December 2008 from Gadens to Baron & Associates in which Gadens informed those solicitors that their "clients would like to purchase the property in the name of their mother, Faina Stolyar"; (5) a letter dated 20 May 2009 from Gadens to Ian in relation to the settlement of the sale of the Campbell Parade Property and which stated, among other things: Confirmation of settlement Your purchase of the above property was settled on 18 May 2009. … Notification of Change of Ownership A notice of sale will be lodged with Land and Property Information Service which will notify rating and valuation authorities so that future notices relating to the property will be sent to you. We have also notified the Owner's Corporation that you are the new owner of the property and in future the levy notices will be forwarded to you. Payment of rates Council rates have been paid until 30 June 2009. Water Rates have been paid until 30 June 2009. When the new rate assessments issue it will be your responsibility to make payment in full. (6) a settlement adjustment sheet which was enclosed with Gadens' letter dated 20 May 2009 which provided in relation to the provision of the funds for the purchase of that property: BY You, deposit paid to agent Deposit Bond BY You, stamp duty on contract and transfer $413,010.00 BY Mortgagee, National Australia Bank mortgage advance $2,999,717.08 BY You, to complete the purchase $3,755,382.52 BY You, our tax invoice $1,812.00 BY You, to Vendor's Solicitor for preparing new contract $1,375.00

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… 282 The Trustee submitted that the contemporaneous records demonstrate that Ian and Beth, or at least Ian, while purchasing the Campbell Parade Property decided that it was to their benefit to not have it held in their personal names, that they then decided they would use Faina as the "structure" through which they would hold the Campbell Parade Property by buying it in her name and that Faina must have agreed to that proposal since that is what in fact occurred. In support of that submission the Trustee contended that since the Trustee first raised that the Campbell Parade Property was held on an express trust as an alternative argument, the respondents' evidence, given by Ian, did not assist them nor call into doubt the position advanced by the Trustee. 283 I accept that the respondents' evidence in that regard does not assist them: (1) Ian suggested that the Campbell Parade Property be purchased in a new structure because by entering into a new contract in the name of a different purchaser, he and Beth could avoid paying penalty interest that would accrue on stamp duty payable on the contract which was due but remained unpaid. Ian said that they did not have the funds available to pay the stamp duty at the time. That evidence and the subsequent rescission of Ian and Beth's contract and its replacement with a contract in Faina's name is not inconsistent with the Trustee's contention that the Campbell Parade Property is held on trust by Faina for Ian and Beth. In fact it lends some support to the contention; (2) Ian's evidence as to why he and Beth ultimately decided not to purchase the Campbell Parade Property, namely because, contrary to their understanding at the time they entered into the contract for its purchase, there was to be no balcony outside the main living area and because of the use of a car stacker system, has been shown to be incorrect by the contemporaneous documents. At the time Ian and Beth entered into the contract for purchase the plans, which Ian accepted were probably annexed to the contract, did not include any such balcony and the contract itself provided that there was to be a car stacker system; and (3) Ian and Faina both gave evidence that the purchase price for the Campbell Parade Property was $3.8 million and that acquiring the property at that price was a good investment. However, I have rejected their evidence of the purchase price. As I have found to be the case the purchase price of the Campbell Parade Property, both at the time Ian and Beth entered into the contract for its purchase and when Faina entered into a contract for its purchase, was $6.75 million. 284 Despite that being so and despite the evidence in the conveyancing file, I am not satisfied that the Campbell Parade Property is held on an express trust by Faina for Ian and Beth and would not draw that inference. 285 First, the documents in the conveyancing file do not of themselves prove that a trust was settled. Gadens' file notes and correspondence with third parties cannot rise to the level of establishing an express trust and, although it is somewhat curious that Gadens would direct its correspondence following settlement to Ian, it is also apparent that Ian had a significant role in assisting and advising his mother in financial matters. Taken as a whole the documents contained on the Gadens file are not sufficient to persuade me that the Campbell Parade Property was held on an express trust. 286 Secondly, while Ian's evidence summarised at [283] above does not assist the respondents, it is not sufficient, either of itself or taken together with the contents of the Gadens conveyancing file, to establish an express trust. 287 By contrast to the position in relation to the shares in DFS (see [304] below) and as required by s 23C of the Conveyancing Act 1919 (NSW) in relation to a declaration of trust for land, there is nothing in writing evidencing the creation of a trust. 288 Section 23C of the Conveyancing Act does not apply in all cases. For example, relief will be given notwithstanding an absence of writing, where a person acquired property on terms that he or she would hold the property as trustee for the person who transferred the property: see Last v Rosenfeld (1972) 2 NSWLR 923 at 928. Further examples of where equity will not permit the requirements of s 23C to become an instrument of fraud are first, in relation to oral, voluntary declarations of trust of land already held by the declarant; and secondly and relevantly to this case, a person to whom land is conveyed as a trustee, and who knows that it is so conveyed, will not be permitted to deny the trust: see Heydon JD and Leeming MJ, Jacobs' Law of Trusts in Australia (8th ed, LexisNexis Butterworths Australia, 2016) at [7.09]. However, I am not satisfied that the Trustee has established that the Campbell Parade Property was conveyed to Faina as a trustee with her knowledge of that fact and thus that it is held by her on an express trust for Ian and Beth or Ian. 289 On the other hand I am satisfied, given the findings I have made about the provenance of the funds for the Westpac bank cheque of $3.1 million and the CBA bank cheque of $1,071,580 and in the absence of any evidence of a contrary intention, that Faina holds the Campbell Parade Property on a resulting trust for Ian and Beth in the proportion to which they contributed to its purchase price, namely 58.17%.

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5.3 11/2 Ocean Street 290 The third transaction which the Trustee seeks to impugn is the transfer of 11/2 Ocean Street by Ian to Faina. 291 On 20 March 2013, a time proximate to the commencement of the hearing of the Royal Guardian Proceeding, Ian transferred 11/2 Ocean Street to Faina. Ian's evidence in chief is silent as to the reason why he did so. The transfer without monetary consideration signed by Ian as transferor and Faina as transferee states the consideration for the transfer as $560,000 (11/2 Ocean Street Transfer) and, according to Ian, Faina paid stamp duty of $21,590 on the transfer. It was not in dispute that no cash changed hands for this transaction. 292 By letter dated 28 March 2018 from Faina to CCSG Legal, the Trustee's former solicitors, Faina stated the following in relation to the transfer of 11/2 Ocean Street to her (as written): Ian Stolyar & Beth Nguyen bought a property at 501/40-44 Ocean Street Bondi in late 2001. They let me move in there in the beginning of 2002. I lived there and paid them rent. In 2005 myself Ian and Beth got into an oral agreement whereby I would purchase the unit from them. On 30 March 2005 I deposited $330,000 into their CBA mortgage account and on the 17 June 2005 I deposited another $246,000 into the same account. The deal was that by the end of 2005 they would transfer the ownership of the unit to me. However on about November/ December 2005 while we were attending the solicitors office in order to enact the transfer, Beth Nguyen reneged on the deal. She reneged on the deal and did not want to refund the funds that I already paid. I was very upset by her actions and consequently moved out of their apartment and purchased the apartment at 27/26-30 Ocean street Bondi. However the funds were still outstanding. In 2012 I asked Ian Stolyar for my money back. He offered his unit at 11/2 ocean Street Bondi, to either transfer to my name in full satisfaction of funds including interest or he could sell it. As the unit was already tenanted I decided to keep his unit. We did a valuation that from memory came in at $560,000, Ian discharged the mortgage from NAB and arranged the transfer of the unit. I confirm that I am receiving rent for the above unit and the property has no connection to Ian Stolyar or Beth Stolyar.

[36]

5.3.1 Ian and Faina's evidence 293 In her affidavit prepared for the purpose of this proceeding Faina gave evidence about the transfer of 11/2 Ocean Street. She acknowledged her letter dated 28 March 2018 referred to in the preceding paragraph and also that at her Public Examination in 2018 she gave evidence in line with the contents of that letter about the circumstances surrounding the transfer. However, she said that with the benefit of having attended interviews with her solicitors and counsel and reviewing old bank documents and the Trustee's affidavits she "thought about the reason for the transfer of 11/2 Ocean Street" and "went back to scratch". Faina said that it had become clear to her that the transfer occurred for an altogether different reason than that recorded in her letter dated 28 March 2018 and which was the subject of her evidence at the Public Examinations. 294 Faina said that the transfer of 11/2 Ocean Street was in satisfaction of two debts owed by Ian and Beth: the first being an amount of $442,600 owed to Stoligor; and the second being an amount of $268,000 owed to Fanchel. Those amounts were advanced to assist Ian and Beth with the purchase of the Point Piper Property. Relevantly, Faina said that in about the beginning of March 2011 she had a conversation with Ian in Russian about that property to the following effect: Ian: Mama, we're still short in settlement monies. Can you help us? Faina: Yes, of course. I can lend you what you need. 295 Ian also gave evidence about the shortfall in funds required to settle the purchase of the Point Piper Property. He said that there was a shortfall of approximately $1.7 million because the planned sale of the Carabella Street Property did not come to pass and it was unlikely that it could be sold prior to the time for settlement of the Point Piper Property. 296 Ian said that he had a conversation in Russian with his mother to the following effect: Ian: I need another $700,000. I can sell some shares from Fanchel and Stoligor to make up the shortfall. Faina: OK, but it's a loan. I need to get the money back. Ian said that he had forgotten about this conversation until he came to prepare his first affidavit. 297 Ian gave the following further evidence: (1) on or about 29 March 2011 $442,354.36 was deposited into Stoligor's NAB business account in consideration of the sale of certain shares held by Stoligor; and (2) on 31 March 2011, among other things: (a) on behalf of Faina Ian transferred $442,600 from Stoligor's NAB business account; and (b) a bank cheque for $268,000 was drawn on the Fanchel Transaction Account. 298 In cross-examination Faina said that she first became aware that this combined debt of about $710,000 was still owing to her in 2020 when she was preparing her affidavit for the purpose of this proceeding. By that evidence Faina suggests that she was not aware of the outstanding debt at the time of the transfer of 11/2 Ocean Street in 2013. That must be so given the terms of the 11/2 Ocean Street Transfer which, as set out at [291] above, states that the consideration for the transfer is $560,000.

[37]

5.3.2 Did Faina give any consideration for the transfer of 11/2 Ocean Street? 299 Considerable doubt is cast on Faina's recent recollection by a second version of the transfer for 11/2 Ocean Street dated 30 March 2013 which was located by the Trustee pursuant to the powers conferred on him by s 77A of the Bankruptcy Act. That version of the transfer is initialled by Faina and bears an additional handwritten notation made by Ian that states "confirm $576,000 debt fully repaid" (Annotated 11/2 Ocean Street Transfer). The notation, at least in relation to quantum, accords with Faina's letter dated 28 March 2018 to CCSG (see [292] above). 300 When cross-examined about the Annotated 11/2 Ocean Street Transfer, Ian said that the additional combined payment of about $710,000 was not known at the time that the transfer of 11/2 Ocean Street took place and that they only found out about it when they were going through the accounts for the preparation of their affidavits for this proceeding. However, Ian also accepted that in 2013 when Faina initialled the Annotated 11/2 Ocean Street Transfer the notation appearing on it sought to confirm that 11/2 Ocean Street had been transferred in satisfaction of a debt of $576,000 which was said to have been incurred in March and June 2005. 301 It is clear, based on the evidence before me, that 11/2 Ocean Street was not transferred from Ian to Faina in satisfaction of a combined debt of some $710,000 owing to Stoligor and Fanchel. That version of the facts, as recounted by Ian and Faina, was clearly a recent invention and could not have been the basis on which 11/2 Ocean Street was transferred. As Ian said they did not know about the alleged debt of $710,000 at the time of the transfer of 11/2 Ocean Street and both Ian and Faina said they only became aware of that debt when preparing their evidence for this proceeding. It follows that the existence of that alleged debt could not possibly have been the reason for the transfer of 11/2 Ocean Street at the time it took place in 2013. 302 In any event, the respondents acknowledged as much in their closing submissions. They conceded that Faina "was confused about the amount of $710,000 paid by Stoligor ($442,600) and Fanchel ($268,000) to Ian and Beth on 31 March 2011 to assist in the purchase of the Point Piper Property" and that "[t]his amount was not the debt owed by Ian and Beth to Faina that was consideration for the transfer of 11/2 Ocean Street". 303 The respondents otherwise submitted that: Faina accepted that she did not pay any consideration for 11/2 Ocean Street at the time of its transfer; she took 11/2 Ocean Street as repayment of debts owed by Ian and Beth; she now has difficulty recalling precisely which debts were forgiven in this process; and the effluxion of time and lack of surviving documents in relation to the debts she was owed make defending this claim difficult. 304 By their amended defence, Faina's and Ian's evidence given in cross-examination and their submissions, the respondents have abandoned their original explanation for the transfer of 11/2 Ocean Street, namely that it was transferred in satisfaction of a debt of $576,000 arising out of funds drawn by Ian and Beth from DFS. Even if that were not so, I have already found (see [160] above) that the shares in DFS were held on trust for Ian and Beth and that the sum of approximately $576,000 was paid by DFS to Ian with no attendant obligation for Ian or Ian and Beth to repay those moneys to it. 305 There is simply no evidence that any consideration passed from Faina to Ian for the transfer of 11/2 Ocean Street. Indeed given the timing of the transfer, proximate to the commencement of the hearing of Royal Guardian Proceeding, it is open to infer that it was effected at the time because of that proceeding and in order to defeat Ian's creditors.

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5.4 The Transferred Shares, the Share Arrangement and the Loan Adjustment 308 The fourth transaction which the Trustee seeks to impugn arises either out of the arrangements referred to in the amended statement of claim as the Loan Adjustment or, in the alternative, the Share Arrangement. These followed from the transfer of parcels of shares variously owned by Ian, the Canchel Partnership and Vietruss to Fanchel described below. 309 The Trustee contends either that the Loan Adjustment was void against him in that it was an undervalued transaction entered into to defeat creditors or, accepting that the Share Arrangement was put in place, that he is owed several million dollars in respect of shares that were transferred to Fanchel and subsequently sold by it after his appointment and for which he has never been paid. 310 The background facts which give rise to these alternative claims are set out below. 311 It was not in dispute that in early 2008 Ian transferred parcels of shares owned by him, the Canchel Partnership and Vietruss (Transferred Shares) to Fanchel. A letter dated 24 April 2008 from Belinda Reynolds, CHESS Department, to Fanchel records the Transferred Shares which, among others, included: (1) 7,421,000 shares in eBet; (2) 1,400,000 shares in WCL; and (3) 9,083,648 shares in GUL. 312 It appears that the transfer was recorded in Fanchel's financial statements for the financial year ended 30 June 2008 as a debt owed to Ian in the amount of $4,465,708, which according to Ian reflected the value of the Transferred Shares based on the price at which they had last traded. Note 4 to Fanchel's financial statements for the year ended 30 June 2009, which provide comparative figures as at 30 June 2008, stated that Fanchel's current liabilities as at 30 June 2008 included a loan from Ian to Fanchel in that amount. 313 Fanchel's financial statements: (1) for the year ended 30 June 2009 showed total financial liabilities of $3,923,642 and note 4 to those accounts provided that Fanchel owed a debt to Ian in the amount of $3,732,642; and (2) for the year ended 30 June 2010 showed total financial liabilities of $4,192,599 comprising loans from each of Faina and Ian to Fanchel. Note 4 to those accounts explained the make up of this item as follows: 314 In each of the financial years ended 30 June 2009 and 30 June 2010 the loan from Ian to Fanchel which was referrable to the Transferred Shares had reduced from that originally recorded as at 30 June 2008, although there was a slight increase between the year ended 30 June 2009 and the year ended 30 June 2010. 315 Fanchel's financial statements for the year ended 30 June 2011, which were prepared in November 2013, record a nil value for the loan from Ian to Fanchel. Note 4 to those accounts, which explained Fanchel's borrowings, stated: While the loan from Ian to Fanchel had reduced to nil the loan from Faina to Fanchel had increased significantly. In the amended statement of claim the Trustee refers to this change in liability reflected in Fanchel's accounts as the Loan Adjustment. I will adopt the same term for the purposes of these reasons.

[40]

5.4.1 The Loan Adjustment 316 Ian's evidence about the circumstances in which the transfer of the Transferred Shares came to pass and the Loan Adjustment was made is set out below. 317 At about the beginning of January 2008 the Canchel Partnership had a margin loan with CommSec to the value of, and secured by, the 10 million AGM shares that it held at the time (Margin Loan). Ian no longer has a copy of the terms of the Margin Loan and could not recall the facility limit. However he said that, on behalf of the Canchel Partnership and utilising the Margin Loan, he caused CommSec to buy millions of shares in numerous companies and from 16 January 2008 to 10 March 2008 on behalf of the Canchel Partnership he caused CommSec to sell a total of 5.5 million AGM shares over six separate transactions to pay down the Margin Loan. 318 In or about March 2008 the Canchel Partnership's remaining shareholding had decreased in value by approximately $2 million, which was the difference between the price at which the various shares had been bought and the price at which they had last traded. In order to crystallise that loss and offset the capital gain that the Canchel Partnership was likely to make from the sale of its AGM shares in the financial year ending 30 June 2008, the Canchel Partnership needed to sell its remaining shares. However, at the time there was no demand in the market for those shares. Thus Ian raised with Faina the possibility of selling the totality of the Canchel Partnership's shareholding to Fanchel. He and Faina had a conversation in Russian to the following effect: Ian: Canchel needs to sell its remaining shares to Fanchel so that its tax liability can be reduced. Faina: That's fine as long as Fanchel doesn't have to repay that debt. Ian: Don't worry. The amount of the debt will reflect the actual amount Fanchel gets from the sale of those shares, if it can sell them. Ultimately, if the shares aren't worth anything, Fanchel won't have to pay anything. And if Fanchel does sell the shares, then the proceeds should be passed on to Canchel. Faina: OK, Ian. This arrangement said to be struck between Faina and Ian is referred to by the Trustee as the Share Arrangement. I will adopt that term for the purposes of these reasons. 319 According to Ian in the first half of 2011 the Transferred Shares showed no sign of recovery and had dropped in value to such a degree that they were essentially worthless. 320 Consequently, after speaking with his accountant, on behalf of Fanchel he decided to "dump" the Transferred Shares on the stock exchange to crystallise Fanchel's losses to be offset against future capital gains. Ian said that some of the Transferred Shares were sold before, and the balance were sold after, the end of the financial year ended 30 June 2011. 321 In accordance with the Share Arrangement Ian formally released Fanchel from its debt to him by instructing Fanchel's accountant to remove the debt from its financial statements for the financial year ending 30 June 2011 i.e. he instructed the accountant to make the Loan Adjustment. According to Ian in the financial year ended 30 June 2011 Fanchel incurred a loss on the sale of the Transferred Shares of $1,787,340 as reflected in its profit and loss statement for that year. 322 Ian was cross-examined about the Loan Adjustment. He gave the following evidence: (1) consistent with his evidence in chief, he accepted that the extinguishment of his loan account in Fanchel's financial statements for the year ended 30 June 2011 was the result of instructions he gave to Fanchel's accountant, Mr Bennett; (2) he was taken to notes prepared by Mr Bennett of SGB Partners, the accountant for Fanchel, in relation to the preparation of Fanchel's financial statements for the year ended 30 June 2011. Those notes recorded that the loan from Ian to Fanchel as at 30 June 2010 was "transfer as per notes" as at 30 June 2011. However, Ian rejected that was correct, said that his loan had not been transferred and rather that "the shares were sold"; (3) losses were incurred by Fanchel on the sale of the Transferred Shares because those shares, which were owned by Fanchel, were sold by it at amounts which were substantially lower than the amounts at which they had been acquired; (4) notwithstanding that evidence, Ian accepted that Fanchel did not actually pay any money for the Transferred Shares at the time of their transfer to it; (5) Ian also accepted that if nothing was recovered on the sale of the Transferred Shares no amount was payable by Fanchel to him; and (6) Ian attempted to explain the increase in Faina's loan account as necessary to keep the company solvent by offsetting the loss occasioned by the sale of the shares. 323 Ian's evidence that as at 30 June 2011 (or after that date as to an unspecified balance) all of the shares the subject of the Share Arrangement were sold such that nothing further was owed to him, thus justifying the Loan Adjustment cannot, based on other evidence he gives, be accepted. 324 It is apparent from Ian's evidence that the shares the subject of the Share Arrangement included shares in iCash. In Ian's second affidavit, he gave evidence that: (1) in the financial year ended 30 June 2012 Fanchel sold 2.4 million iCash shares at $0.10 per share; and (2) in the financial year ended 30 June 2013 Fanchel sold 200,000 iCash shares at $0.063 per share and a further 200,000 iCash shares at $0.062 per share. That is, in those periods, which post dated the date by which Ian contended that all of the shares the subject of the Share Arrangement had been sold, Fanchel sold 2.8 million iCash shares, being its total shareholding in that company. 325 Ian also gave evidence that: (1) the 2.8 million iCash shares sold in the financial years ended 30 June 2012 and 30 June 2013 included 7 million (pre-consolidation) ordinary shares in iCash that he and the Canchel Partnership transferred to Fanchel in April 2008 i.e. as part of the Transferred Shares which were subject to the Share Arrangement; (2) on 24 September 2014 Faina gave him a cheque made out to Continental Coal Limited (CCC) in the amount of $342,000 which was reimbursement for: (a) $265,000 from the sale proceeds of the 2.8 million iCash shares sold in the financial years ended 30 June 2012 and 30 June 2013; and (b) $71,588.24 for the sale proceeds of 367,000 WCL shares sold in the financial year ended 30 June 2013; and (3) Ian provided the cheque made out to CCC to Peter Landau, a director of CCC, for the purposes of CCC's capital raising. Further detail about Ian's interest in CCC and dealings in its shares is described at [368]-[370] below. 326 Clearly this evidence given by Ian shows that not all of the shares the subject of the Share Arrangement had been sold as at 30 June 2011 or, indeed, shortly after that date. Shares the subject of the Share Arrangement were, on this evidence, still being sold in the financial year ended 30 June 2013. This evidence significantly undermines Ian's explanation for the Loan Adjustment such that I cannot accept it. 327 In cross-examination it was suggested to Ian that a more plausible explanation for the Loan Adjustment was the imminent risk of an adverse outcome in the Royal Guardian Proceeding, which could happen at any time after judgment had been reserved, and that, when instructing Mr Bennett, Ian had been concerned about the implications if Royal Guardian was successful and he and Beth became the subject of enforcement action. Ian's gave a somewhat ambiguous response to that proposition saying: No. We couldn't - there couldn't be a loss. 328 It was then put to Ian that, as a means of insuring against the possibility of a loss in the Royal Guardian Proceeding, however remote Ian might have thought that to be, one strategy adopted was to ensure that if the "worst" outcome eventuated and Royal Guardian pursued Ian in bankruptcy there would be no debt which could be recovered from his estate nor from Fanchel. Ian denied that to be the case. 329 Notwithstanding Ian's denial I would infer from all of the relevant facts and the surrounding circumstances that the explanation proffered by the Trustee is not only plausible but is the likely explanation for the Loan Adjustment. For the reasons explained above, Ian's explanation for its implementation does not stand up to scrutiny and is rejected.

[42]

5.4.2.1 The eBet Shares 330 As set out at [311] above, included in the Transferred Shares was a parcel of eBet shares. Insofar as those shares are concerned: (1) 7,421,000 eBet shares were transferred by Ian and the Canchel Partnership to Fanchel as part of the Transferred Shares; (2) in early 2009 Fanchel purchased further eBet shares, increasing its total holding to 8,171,189 shares; (3) in June 2009 Fanchel's 8,171,189 eBet shares were transferred to Stoligor and in February 2012 Stoligor transferred 8,171,189 eBet shares back to Fanchel; (4) in July 2012 Fanchel acquired further eBet shares, bringing its total shareholding to 8.5 million; (5) Fanchel's shareholding then underwent a 15:1 consolidation thus reducing its shareholding to 566,666 shares. Of that parcel, 494,733 shares were attributable to the Transferred Shares; (6) over a number of transactions, which principally took place in 2016, Fanchel sold down its eBet shareholding to 500,000 shares; (7) on 16 December 2016 Fanchel's eBet shares were bought out as part of a takeover effected by a scheme of arrangement by which Tabcorp Holdings Limited agreed to acquire all of INTECQ Limited (formerly eBet) shares at $7.15 per share; (8) under the scheme of arrangement the amount paid for the 494,733 eBet shares which were part of the Transferred Shares amounted to $3,537,340.95; and (9) on 16 December 2016 the proceeds of that sale were paid into the Campbell Parade Mortgage Offset Account which was an account in Faina's name. 331 The Trustee contends that he is entitled to the sum of $3,537,340.95 as a result of the acquisition of 494,733 eBet shares registered in Fanchel's name pursuant to the scheme of arrangement because those shares were subject to the Share Arrangement and were sold after Ian became a bankrupt. However, the respondents allege that the Trustee is not entitled to those sale proceeds because the eBet shares were excluded from the Share Arrangement and instead were sold by Ian to Fanchel at a fixed price of $0.04 per share. 332 The respondents rely on Ian's evidence which I set out below. 333 Ian said that when he read the allegations at [142D] and [142M] of the amended statement of claim he made himself recall his experience with the eBet shares in 2008. He had not thought about that for over twelve years and he realised that his evidence about the dealings between the Canchel Partnership and Fanchel in April 2008 was incomplete and, in one respect, incorrect. 334 In or about the beginning of April 2008, in anticipation of receiving a cheque for $4.95 million made out to "Ian Stolyar, Canchel Partnership" (April 2008 Canchel Cheque), Ian executed some buy orders for shares in a couple of ASX listed companies. He cannot now remember what shares they were. 335 On or about 6 or 7 April 2008, having unsuccessfully attempted to reverse the deposits into CBA Home Loan Accounts 1, 2, 3 and 4 and transferred into Canchel's Westpac Business Account, Ian approached Faina to see whether she could loan him some money to pay for the buy orders he had executed in the previous days. Ian had a conversation with Faina in Russian to the following effect: Ian: I need about $300,000 to pay for the shares that I have bought until I can sort out with Beth what she did with the [April 2008 Canchel Cheque]. Faina: I don't have any money to loan you. It looks like your marriage is having some issues. I'm not going to loan you any money until you have sorted your issues out and I know that I can get my money back. 336 On 9 April 2008 Ian had a conversation with Faina in Russian to the following effect: Ian: Mum, I'm really desperate for the $300,000 I spoke to you about a couple of days ago. Faina: I told you, I'm not going to lend you any money. Ian: Can Fanchel then pay me for the eBet shares that Canchel is going to transfer to Fanchel? I've also got eBet shares in my own name. Can you also pay me for those if I transfer them on the same day? Faina: how much are they worth? Ian: They're worth over $300,000. Faina: Why eBet? Ian: There was a big investor in eBet shares who needed to liquidate his holdings. This has driven down the price per share from approximately $0.18 to $0.06. From what I understand, the company is solid. It is involved in the operation of poker machines. I believe that it will recover in a couple of years. At the moment, there is a bid price of approximately $0.04 and a last sell price of approximately $0.06. Faina: Why can't you sell them on the market then? Ian: There is no demand for over 7,000,000 shares, even at $0.04 per share. If I wanted to sell them on the market, I would probably only get $0.01 per share. So what I'm proposing is for Fanchel to pay [the Canchel Partnership] and me $0.04 per share which is what the bidding price is at the moment. Faina: OK. If you think Fanchel will make money, then let's do it. 337 On 14 April 2008: (1) Ian, on behalf of the Canchel Partnership, instructed the Canchel Partnership's broker to transfer 1.9 million of the Canchel Partnership's eBet shares to Fanchel; (2) Ian instructed his broker to transfer 5,521,000 eBet shares held in his name to Fanchel; and (3) an amount of $296,020 was debited to the Fanchel Transaction Account. 338 Ian recalls that the sum of $296,020 was paid to his broker. 339 In cross-examination, Ian accepted that there were no records of the agreement he said he struck with his mother to sell her 7,421,000 eBet shares at $0.04 per share. 340 The only record in evidence in relation to the transfer of those shares to Fanchel were two Australian Standard Transfer Forms prepared at the time of the transfer of all of the Transferred Shares: the first for a transfer by Ian to Fanchel of 5,521,000 shares; and the second for a transfer by Ian for the Canchel Partnership of 1.9 million shares with both transfers recording a consideration of $0.061 per share. Thus the transfer forms recorded that the parcels of eBet shares owned by Ian and the Canchel Partnership were transferred for a total consideration of $452,681. Those forms are inconsistent with Ian's evidence that the eBet shares were transferred at an agreed price of $0.04 per share. One would expect that if that was so the transfer forms would reflect the agreement. 341 In cross-examination, Ian was asked about the inconsistency between the price recorded on the transfer forms and his evidence about the price he said he agreed with Faina for the sale of the eBet shares. The following exchange took place: Mr Golledge: Right. So you say that you had come to an agreement with your mother? Ian: Mmm. Mr Golledge: - - - for a sale at four cents a share on 9 April, and you had actually received payment for those shares at - by reference to the $296,000? Ian: And 20 cent - $296,020. Mr Golledge: $296,020? Ian: Yes. Mr Golledge: Now, firstly, if that, indeed, is what had been agreed between you and your mother two weeks earlier - - -? Ian: Yes. Mr Golledge: - - - that would have been the price mentioned in the share transfer form, wouldn't it, sir? Ian: No. Mr Golledge: It wouldn't? Ian: Because when you transfer the shares and you transfer form, the rule - the requirement is you have to quote the price which is last traded as is - as - as at - as reported in the newspaper. Mr Golledge: Sir, that, with respect, is a - - -? Ian: No. Mr Golledge: That answer is incorrect, isn't it, sir? Ian: No. No, Mr Golledge. Mr Golledge: What you were recording in these documents? Ian: This is a rule - this is the rule of the stock exchange. Mr Golledge: Sir, why did you not record the transfer at four cents as a share, as you say was the agreement that you had made? Ian: Because the bit was at four cents for the shares. They were - they were not trading. Right? And the - the seller was at six cents. The last trading price was at six and a-half - sorry, 6.1 cents, and there was no trading. If I - if I tried to sell those shares in the market, I wouldn't get one cent for them. Mr Golledge: Sir, I want to suggest to you that you have just made up that evidence, as you have made up the evidence in your affidavit, because, firstly, a - you could not find in your search for corroborating evidence any transaction in banking or other records that might explain a payment from Fanchel to you of an amount calculated at the price of 6.1 cents a share?--- Ian: You - it wouldn't have to be. Mr Golledge: And? Ian: Mr Golledge - Mr Golledge, hang on a sec. You have to understand how all this works. If you have no knowledge of how it works, you cannot say I was wrong or right. Mr Golledge: Well? Ian: What I'm saying is - is the - is the rules of the - of the Australian Stock Exchange. Mr Golledge: And could you - well, I will ultimately make a submission, just so that you understand it, sir, to her Honour that by reference to these contemporaneous documents, the evidence contained by or given by you in relation to the EBET shares in your affidavit should be rejected? Ian: Well, I don't agree with it, so you can say what - as long as her Honour understands of how the 6.1 cents was worked out and why the rule - why it's - why it's there and - and what actually happened. 342 Ian's suggestion that there is "a rule" that a transfer form is required to quote the last traded price is without foundation and was clearly concocted on the run to attempt to explain away the contemporaneous records and substantiate his evidence about the agreement he reached with Faina about the eBet shares. 343 Further, Ian's tax return for the financial year ended 30 June 2008 did not assist him. In the capital gains schedule annexed to it the consideration Ian received for the eBet shares is recorded as $230,051, not the purportedly agreed price of $296,840. When asked about this inconsistency Ian said that for the purpose of his tax return he was required to use the market price as at the date of the transfer. Once again, this evidence is simply unbelievable. Ian could give no logical, let alone credible, explanation for the consideration recorded for the sale of the eBet shares in his tax return and, more critically, why that price would not reflect the agreement he said he struck with Faina. 344 The contemporaneous document which the respondents rely on is the statement of account for the Fanchel Transaction Account for the period 9 April 2008 to 9 May 2008 which records a withdrawal on 14 April 2008 of $296,020. The respondents submitted that the "plain fact is that Fanchel did make the payment on 14 April 2008 and that is something that cannot be invented". True it is that a payment was made by Fanchel from the Fanchel Transaction Account on 14 April 2008 but it was not in the amount of $296,840, being the consideration which Ian said was paid by Fanchel for the parcel of 7,421,000 eBet shares, assuming a sale price of $0.04 per share. When asked in cross-examination, Ian could not provide any explanation for the discrepancy. Contrary to the respondents' submission, the mere fact of this withdrawal, which is a lesser amount than that which would have been payable for a transfer of these shares at $0.04 per share is not contemporaneous evidence of the agreement which they rely on and of which Ian gives evidence. 345 The respondents submitted that the withdrawal of $296,020 from the Fanchel Transaction Account was the first withdrawal made from that account. That is so. That account was established with an initial deposit of $300,000 on 9 April 2008 which, on Ian's evidence, was part of the proceeds of sale of Fanchel's AGM shares at the time of the takeover of AGM by Zinifex. But, as I have already found to be the case, that parcel of AGM shares in fact belonged to Ian and any proceeds of sale were held on his behalf or, in the alternative, on behalf of Ian and Beth (see [261] above). In those circumstances it is a nonsense to suggest that the sum of $296,020 (which was deducted from the initial deposit into the Fanchel Transaction Account) was consideration for the eBet shares. Ian was in any event entitled to those funds. 346 Finally at his Public Examination Ian gave evidence that Fanchel did not pay any "real money" as consideration for the shares referred to as the Transferred Shares. Rather, the sale was accounted for by way of the creation of a loan account in Fanchel's accounts. Ian did not say that the eBet shares were the subject of any separate arrangement and that there had been a payment to him for those shares. 347 Ian's evidence of his agreement with Faina to exclude the eBet shares from the Share Arrangement is uncorroborated and is rejected. That evidence is a late invention by Ian in an attempt to exclude what ultimately became a valuable parcel of shares from the Share Arrangement and thus from any claim by the Trustee. 348 In their defence the respondents deny the existence of a trust. However, they admit that: (1) save in the case of the eBet shares, the Transferred Shares were received by Fanchel on terms that Ian would be entitled to be paid any amounts received by Fanchel in respect of those shares including in particular any proceeds of sale; and (2) in relation to the parcels of shares in WCL and GUL, which were included in the Transferred Shares and subject to the Share Arrangement (both of which are addressed below), the shares purchased with the proceeds of sale of those shares were held by Fanchel for Ian's benefit. That is, they admit, in effect, that those shares purchased with proceeds of the sale of any of the Transferred Shares were held on trust for Ian. 349 The effect of my rejection of Ian's evidence as to his alleged agreement with Faina about the eBet shares is that those shares and their proceeds of sale are to be dealt with in accordance with the Share Arrangement. That is, Fanchel was and is liable to pay the proceeds of sale from the eBet shares to Ian and, in the meantime, to adopt the respondents' language, holds those proceeds "for Ian's benefit" or on trust for him. 350 As set out at [330(8)] above, the eBet shares were the subject of a sale process effected via scheme of arrangement as a result of which Fanchel received $3,537,340.95. That amount was paid into the Campbell Parade Mortgage Offset Account, an account held by Faina, and not to Ian or, as should have been the case, the Trustee, given that by the time of the sale pursuant to the scheme of arrangement, Ian was a bankrupt. 351 In paying the proceeds of sale of the eBet shares to Faina, Fanchel committed a breach of trust and is liable to account to the Trustee for the full amount paid to Faina. 352 The Trustee also contends that Faina is liable to account to him for those funds because she: (1) received the funds in circumstances where she had no entitlement to them; (2) was a volunteer; and (3) is taken to be aware that she had no entitlement to them because Ian, who was her agent in respect of the payment and all other material matters relating to Fanchel, was aware of that fact. Faina denies that is so. 353 Ian has at all times been responsible for managing Faina's financial affairs and Faina has relied on Ian to assist her in that regard and to undertake activities on her behalf in relation to her financial affairs (see [75]-[78] above). 354 In cross-examination Ian confirmed that: (1) he had acted on behalf of Faina in the purchase and sale of shares since about 1983, that Faina had never met or spoken directly with a stockbroker about her portfolio, that he acted as the conduit between Faina and the broker and that the understanding he has with Faina is that he is authorised to deal on Faina's behalf with stockbrokers; and (2) he carried out internet banking transactions on Faina's accounts, he was the only person to do so and that, to the best of his knowledge, Faina has never effected an internet banking transaction. 355 Faina also gave evidence that since Anchel passed away in 2001 she has relied on Ian to assist her with her financial affairs (see [63] above). In cross-examination Faina confirmed that: (1) she could not recall any occasion on which she had undertaken an internet banking transaction on one of her accounts; (2) she has permitted Ian to undertake share transactions on her behalf and to give instructions to stockbrokers in relation to shares held in her name; (3) Ian has permission to carry out transactions on her bank accounts and share trading accounts; (4) Ian was permitted to speak with solicitors and accountants on her behalf and she has never personally met with an accountant in relation to the preparation of the accounts or tax returns for Fanchel. Ian has done so and brought her any documents to sign; and (5) she left it entirely to Ian to ensure that there was no mixing between Fanchel's shares and the Transferred Shares. 356 There is no suggestion in the evidence that Faina was ever involved in making decisions about the purchase and sale of shares in her or Fanchel's names. Rather, the evidence referred to above demonstrates Faina's significant reliance on Ian to assist her with her financial affairs and to carry out share trades for her and Fanchel. 357 Ian was clearly aware that the eBet shares were subject to the Share Arrangement. His evidence of the alternate agreement relied on by the respondents has been rejected as a fabrication. That being so, the Trustee submitted that Faina received the proceeds of sale of the eBet shares as a volunteer and as a knowing recipient of funds in breach of trust, commonly referred to as the first limb in Barnes v Addy (see Barnes v Addy (1874) LR 9 Ch App 244 at 251-252). The Trustee further submitted that she did so with Ian's knowledge as her agent (and within the scope of his agency) being sufficient to bind her. 358 In support of is submission the Trustee relied on the decision of the High Court in Cassegrain v Cassegrain (2015) 254 CLR 425. That case concerned a transfer of land first from a company referred to as GC&Co and Claude and Felicity Cassegrain (referred to as Claude and Felicity) as joint tenants and then from Claude to Felicity. GC&Co commenced a proceeding to recover the land from Felicity. The transfer to Felicity was for consideration of $1.00 and occurred some two years after the conclusion of a proceeding in which it had been alleged that acts carried out by or on behalf of GC&Co and other companies had been oppressive or unfairly prejudicial to the plaintiffs. In that proceeding, among other things, the Court made a declaration that Claude's conduct in relation to a loan account of $4.25 million was oppressive and unfairly prejudicial to the members of GC&Co. 359 Some years later GC&Co brought a proceeding in the Supreme Court seeking an order requiring Felicity to transfer the title to the land to it and orders for equitable compensation against Claude. The primary judge dismissed the proceeding against Felicity. GC&Co appealed to the Court of Appeal. By majority (Beazley P and Macfarlan JA, Basten JA dissenting) the appeal was allowed. Felicity appealed to the High Court. 360 After referring to the reasoning of the majority of the Court of Appeal, at [35] a majority of the High Court (French CJ, Hayne, Bell and Gageler JJ) summarised the dissenting decision of Basten JA as follows: By contrast, Basten JA held that it should not be inferred that Claude acted as Felicity's agent for the purposes of the transaction which led to their registration as joint tenants. But his Honour held that Claude obtained his title as joint tenant through fraud and that, because Felicity was not a transferee of Claude's interest bona fide for valuable consideration, GC&Co was entitled to an order that she transfer a half share in the Dairy Farm to it. (Footnotes omitted.) Their Honours agreed with Basten JA. 361 In Sino Iron Pty Ltd v Worldwide Wagering Pty Ltd [2017] VSC 101 at [389]-[390] Hargrave J summarised the reasoning of the majority of the High Court in Cassegrain as follows: 389 The majority judgment in the High Court reasoned as follows: (1) The title of a registered proprietor may be invalidated on the ground of fraud 'brought home' to the registered proprietor or to his agents. (2) Whether fraud by an agent will be brought home to the registered proprietor depends upon the 'scope of authority and whether the agent's knowledge of the fraud is to be imputed to the principal [registered proprietor]'. This involves consideration of why the fraudster's knowledge should be imputed to the registered proprietor. (3) It is not sufficient to impute the agent's fraud to the registered proprietor where the registered proprietor is 'no more than the passive recipient of an interest in land'. (4) In order to bring fraud home to the registered proprietor, it is necessary to show that the agent's fraud was within the scope of the agent's authority given by the registered proprietor 390 As there was no authority in the case, Mrs Cassegrain's initial half interest as a registered joint tenant could not be impeached by her husband's fraud. (Emphasis in original.) 362 Here the fraud can be brought home to Faina. That is because: (1) Ian knew that the eBet shares were subject to the Share Arrangement; (2) Ian acted as Faina's agent in relation to the sale and purchase of shares in Faina's and Fanchel's names and more generally in relation to Faina's financial affairs; and (3) Faina received the proceeds of sale of the eBet shares knowing that she was in fact receiving trust property, with Ian's knowledge as her agent.

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5.4.2.2 The WCL shares 363 The Trustee contends that the transfer of the proceeds of sale from the WCL shares that were included in the Transferred Shares was either void against him pursuant to s 120 of the Bankruptcy Act or, in the alternative, void against him pursuant to s 121 of that Act. 364 It was not in dispute that: (1) the Transferred Shares included 1.4 million WCL shares; (2) between 2008 and 2010 Fanchel (and then Stoligor to which Fanchel transferred all of its shareholdings for a period of time) engaged in both buying and selling WCL shares, reaching a minimum balance at one point of 1,308,213 shares; (3) from 2010 onwards Fanchel significantly increased its share holding in WCL, reaching a total of 5,616,333 shares on 30 June 2014; and (4) those shares were acquired from Fanchel in a takeover at $0.40 per share on 18 September 2014 for a total of $2,246,533.20 which, as at September 2014, was deposited into the Fanchel Transaction Account. 365 Ian does not suggest that he received any cash from Fanchel at any time for the 1.4 million WCL shares transferred from the Canchel Partnership to Fanchel pursuant to the Share Arrangement. However, in his second affidavit Ian gave evidence in relation to the way in which those shares were dealt with, including the disbursement of their proceeds of sale, which I summarise below. 366 On 26 June 2009 Fanchel transferred all of its WCL shareholding, at the time 1,859,776 shares, to Stoligor. According to Ian, Stoligor held the following WCL shares on the dates set out below: (1) as at 15 September 2009 - 1,802,220 shares; (2) as at 29 September 2010 - 1.9 million shares; and (3) as at 20 September 2011 - 1.9 million shares. 367 In or about December 2011 or January 2012 Ian, on behalf of Stoligor, transferred all of Stoligor's WCL shareholding, at the time 1.9 million shares, to Fanchel. 368 In or about February 2012, given his interest in investing in the coal sector, Ian was introduced to Mr Landau by a broker at Stonebridge Securities. Mr Landau was visiting Sydney from Perth for a "broker run". Ian described CCC as a Perth based mining and exploration company with mining assets in South Africa. After speaking with Mr Landau Ian became interested in CCC and started following its performance on the ASX with a view to investing in it when the price dropped to an acceptable level. 369 In or about March 2012 the price of WCL shares increased to $0.40 and above per share. Accordingly, between 8 and 16 March 2012, on behalf of Fanchel, Ian sold 1 million WCL shares at between $0.40 and $0.445 per share in 11 separate transactions for a total amount of $417,890.16. 370 Rather than require Fanchel to pay the proceeds from the sale of the WCL shares to him pursuant to the Share Arrangement, Ian decided to leave those proceeds with Fanchel and to reinvest them in CCC shares once he considered the price to be low enough to do so. To that end, Ian said that: (1) in or about May 2012 the price of CCC shares dropped from about $0.36 per share to about $0.10 per share, which he believed represented good value; (2) accordingly, between 21 May 2012 and 19 July 2012 in 10 separate transactions he bought 4 million CCC shares with funds from the Fanchel Transaction Account at between $0.089 and $0.145 per share for a total of $436,155.23; and (3) in order to fund the purchase he used the entirety of the proceeds of sale that Fanchel received for the WCL shares, $417,890.16, and $18,263.07 of his own funds. 371 As to Fanchel's subsequent holdings of shares in WCL, Ian gave the following evidence: (1) as at 24 September 2012 Fanchel held 5.4 million shares in WCL; (2) between 16 May 2013 and 27 May 2013, in four separate transactions, Ian sold 367,000 WCL shares on behalf of Fanchel at between $0.266 and $0.166 per share for a total of $71,588.24; (3) as at 25 September 2013 Fanchel held 5,433,000 WCL shares; and (4) as at September 2014 Fanchel held 5,616,333 WCL shares. 372 The WCL shares held by Fanchel as at September 2014 were sold at the time of the takeover of WCL by Landbridge Energy Australia Pty Ltd. According to Ian this parcel of shares was not (and did not include) the 1.4 million shares transferred by the Canchel Partnership to Fanchel as part of the Transferred Shares. Those shares had all been sold by 27 May 2013. 373 On 24 September 2014 Ian received the sum of $71,588.24 as reimbursement of the proceeds of sale of 367,000 WCL shares between 16 May 2013 and 27 May 2013 (see [325(2)(b)] above). 374 Ultimately the shares in CCC were declared valueless. Accordingly, Ian received no payment from Fanchel for the proceeds of sale of WCL shares that were applied to the acquisition of the CCC shares. 375 The effect of Ian's evidence is that his (or, more accurately, the Canchel Partnership's) 1.4 million WCL shares were sold and their proceeds were applied: (1) as to the sale of 1 million of those shares, to the purchase of CCC shares in Fanchel's name, which subsequently became worthless; and (2) as to the sale of 367,000 of those shares in May 2013, being the bulk of the remainder, by way of payment to Ian of $71,588.24 in September 2014. However the contemporaneous records do not bear out Ian's evidence. 376 I turn first to consider the sale of 1 million WCL shares in March 2012. 377 Contrary to Ian's evidence, that sale did not occur because Ian formed the view that the share price was good or because, at the time, he wished to raise money for the purpose of acquiring CCC shares at some future point. Rather, the following facts are disclosed by the contemporaneous documents: (1) on 8 March 2012 WCL announced a non-renounceable pro rata entitlement offer to raise approximately $25.4 million. Eligible WCL shareholders were entitled to subscribe for two new fully paid ordinary shares in WCL for every five WCL ordinary shares they held at the relevant date at an issue price of $0.25 per share (WCL Rights Issue); (2) thereafter, as Ian said, between 8 and 16 March 2012 Fanchel sold 1 million of its WCL shares for $417,890.16. Of that amount, $377,329.41 was deposited into the Fanchel Transaction Account; (3) on 17 April 2012 1.6 million WCL shares were allotted to Fanchel pursuant to the WCL Rights Issue. In payment of those shares Fanchel drew a cheque for $400,000 on the Fanchel Transaction Account. That portion of the proceeds of sale from the 1 million WCL shares which had been paid into that account was applied for that purpose; and (4) after withdrawal of $400,000 from the Fanchel Transaction Account for the acquisition of the WCL shares pursuant to the WCL Rights Issue, the balance of that account was $419.28. 378 Evidently, the sale by Fanchel of 1 million WCL shares was completely unrelated to the future acquisition of CCC shares. Rather, as disclosed by the contemporaneous documents, those shares were sold for the purpose of acquiring a larger parcel of WCL shares at a reduced price pursuant to the WCL Rights Issue. 379 I turn then to consider the purchase by Fanchel of shares in CCC. It is true, as Ian said, that Fanchel acquired 4 million shares in CCC. However, the transactions to acquire those shares were accompanied by sales of both CCC and other shares. Annexure A to these reasons is an extract from Fanchel's account with Westpac Securities Limited for the period 29 December 2010 to 1 April 2021 showing the sale and purchase of shares between 24 January 2011 and 19 July 2012, noting that the acquisition of the CCC shares occurred between 21 May 2012 and 19 July 2012. 380 Annexure A demonstrates that: (1) on 21 May 2012 Fanchel acquired 500,000 CCC shares but on 22 and 23 May 2012, in two transactions, it sold those shares; (2) on 29 May 2012 Fanchel acquired 500,000 CCC shares but on 5 and 6 June 2012, in two transactions, it sold those shares; (3) between 19 June 2012 and 6 July 2012, in seven transactions, Fanchel acquired 2.5 million CCC shares; (4) on 10 July 2012 Fanchel sold 500,000 CCC shares; (5) on 19 July 2012 Fanchel acquired 500,000 CCC shares; and (6) during that period Fanchel entered into other share trades, including at about the time of acquiring CCC shares, sales of other shares owned by it. 381 Ian was taken to Annexure A in cross-examination. He had the following exchange with senior counsel for the Trustee: Mr Golledge: You will see that the third entry down that page, you will see there's a reference to 21 May 2012? Ian: Yes. Mr Golledge: B in the buy sell is a reference to buying 500,000 shares on that date? Ian: Yes. Mr Golledge: You see that? Ian: Yes. Mr Golledge: And see the next two days, the whole of those 500,000 shares were sold? Ian: Yes. Mr Golledge: And then there was another buy on 29 May? Ian: Yes. Mr Golledge: Of 500,000 shares? Ian: Mmm. Mr Golledge: But then on 5 and 6 June all of those shares were sold? Ian: Right. Mr Golledge: You agree that that's the transaction on 5 and 6 May? Ian: I'm sorry? Mr Golledge: Well, what you had done on 5 and 6 May is to sell the shares you had acquired on the 29 - sorry, 5 and 6 June is to sell the 500,000 CCC shares that you had purchased on 29 May? Ian: Okay. Mr Golledge: You agree with me? Ian: I'm not sure, but Mr Golledge: Well? Ian: I'm not sure if it's exactly the same shares. Mr Golledge: And then you bought some more shares, didn't you, sir, on 19 June? Ian: Yes. Mr Golledge: And is that the - that's the last - pardon me. And then the last purchase occurred on 26 and 27 June, didn't it? Ian: The what? Mr Golledge: Well, I'm just looking at the? Ian: What are you talking about? Can you just be a little bit - Mr Golledge: See the proposition, sir, is that contrary to what you sought to convey by the statement in paragraph 58 of your affidavits? Ian: Yes. Mr Golledge: You're not accumulating triple C shares? Ian: No. Mr Golledge: Of four million during that period at all? Ian: Of course not. I didn't have any triple C shares. Is that what you're - is that what you're trying to say? Mr Golledge: Well, that contrary to your affidavit, during the period from May 2012 to 19 July 2012? Ian: Yes. Mr Golledge: You were not accumulating triple C shares. You were simply trading in them on a day-to-day basis? Ian: Yes. Mr Golledge: But then - but then if you have a look at the same ledger, there's a lot of buys with no - with no sales. So those shares were bought, weren't they? Sir? Ian: I could have got maybe the date wrong or something, but they - but they were definitely bought. Mr Golledge: And what you were doing in 58(a) is to give some credence or explanation to support the proposition you were trying to propound by your evidence that you sold a million of the Fanchel shares for the purpose of investing in triple C when, in fact, what happened is you caused those Fanchel moneys to be immediately reinvested in WCL, didn't you? Ian: I already did that. I left the money with - with - with Fanchel to buy the triple C ..... coal shares. And there's clear evidence here if you look at the - at the ledger on 17890. There's clear - clear ledger there of being - of the shares being bought. Okay. So, Mr Golledge, you're talking absolute nonsense. 382 Despite Ian's insistence in cross-examination to the contrary, his evidence that, on behalf of Fanchel, he applied the proceeds of sale of the 1 million WCL shares to purchase 4 million CCC shares, cannot be accepted. Beyond Ian's assertion, there is no contemporaneous documentary evidence to support that evidence. Rather, as is clear from the documents that are available, Fanchel both bought and sold parcels of CCC shares in that period as well as entering into other share trades. Contrary to Ian's evidence, Fanchel was not acquiring a discrete parcel of CCC shares. It was simply trading in those shares, as it did in other companies' shares. 383 I turn then to consider the parcel of 367,000 WCL shares. There is no dispute that Fanchel sold those shares in May 2013. However, there is no evidence, beyond Ian's assertion, that those shares were held subject to the Share Arrangement, as opposed to simply being a part of Fanchel's shareholdings. That Ian did not receive the proceeds of sale of those WCL shares at the time of the sale (in 2013) tells against Ian's assertion that they were held pursuant to the Share Arrangement. 384 I do not accept Ian's uncorroborated evidence that the parcel of 367,000 shares sold in the financial year ended 30 June 2013 formed part of the 1.4 million WCL shares which were transferred to Fanchel pursuant to the Share Arrangement. I infer that Ian simply picked out that sale as a sale of a portion of the parcel of WCL shares included in the Transferred Shares because it was convenient to do so, particularly as the sale occurred at a relatively low price per share when compared with the price per share received at the time of the WCL takeover. 385 There is also a second basis upon which I have concluded that Ian's evidence about the 367,000 WCL shares is unreliable. 386 According to Ian he received the proceeds from the sale of the parcel of 367,000 WCL shares in September 2014 as part of a cheque provided to him by Fanchel made out to CCC. Ian provided that cheque to Mr Landau of CCC to be applied to a capital raising which, it seems, was undertaken by way of a rights issue (CCC Rights Issue). When the investment failed the loss was Ian's not Fanchel's. Ian confirmed this to be the case in cross-examination: Mr Golledge: Well, you were persuaded to sell those and invest the share proceeds in Continental Coal? Ian: Continental Coal. Yes, this was - this probably happened a couple of months after the sale. Mr Golledge: And then you were not happy with Mr Landow for persuading you to make that investment, were you, sir? You were unhappy with him? Ian: When? At the end? Mr Golledge: After you had lost your money? Ian: At the end? Mr Golledge: Yes? Ian: Of course. Mr Golledge: And you caused some legal proceedings to be taken by Fanchel against him, didn't you? Ian: Yes. Mr Golledge: All right. And do you recall what happened in those proceedings? Ian: Got a judgement against him. Mr Golledge: And that occurred at or about the time that you became a bankrupt, didn't he - the judgment? Ian: No, it didn't happen - I can't remember. Mr Golledge: But? Ian: It happened in 2014, 2015. Mr Golledge: Well, in any event, those proceedings were concerned with recovering your money, rather than any asset or interest on behalf of your mother; is that right? Ian: Yes. Mr Golledge: Now, can I show you a copy of a judgment of this court. Now, is that a reference, so far as you can recall, sir, to the judgment that was obtained? Ian: Yes. Mr Golledge: And this was an obtained in the name of Fanchel Pty Ltd. You see that? Ian: Yes. Mr Golledge: But you understood that to be an attempt to recover money belonging to you, rather than to Fanchel; is that right? Ian: Yes. 387 For the reasons that follow Ian's evidence set out in the preceding paragraph was shown to be completely unreliable. 388 There was a later dispute between Fanchel and its lawyers, Levitt Robinson Solicitors, who acted for Fanchel in the proceeding brought by it against Mr Landau to recover Fanchel's investment of $342,000 in the CCC Rights Issue. Fanchel applied for assessment of Levitt Robinson's fees and, after the assessor made her determination, for a review of that determination. Ian conducted the latter on behalf of Fanchel. The grounds for making the application for review of the determination, which were drafted by Ian, included (as written): 1) Ms Stoylar at no stage authorised Ian Stoylar to act on Fanchel's behalf in prosecuting the claim. Ian Stoylar's involvement was only to the extent of swearing an affidavit against Mr Landau, who stole the funds belonging to Fanchel. … 11) In Conclusion it is very hard for us to find how the assessor came to her conclusions and the need for the appeal. Fanchel was never sent the 30 November 2016 agreement although Levitt Robinson had all the relevant contact details for Fanchel. Ian Stolyar never represented himself as an agent of Fanchel all he was doing was helping his mother to recover her funds from Mr Landau and later from Levitt Robinson. He did not accept any Costs agreements and in fact Fanchel did not receive any. All Ian Stolyar was doing was acting as per Mr Stewart Levitt's agreement with him dated 28 September 2016. Ian Stolyar did not have any other agreements with Stewart Levitt other then agreed on 28 September 2016. 389 In the review application Ian stated that Mr Landau stole Fanchel's funds and that his involvement in the proceeding brought by Fanchel to recover those funds was limited to swearing an affidavit, he was not an agent of Fanchel and he was merely assisting his mother. This was contrary to his evidence to the effect that the investment in CCC was made by Fanchel on his behalf. 390 In cross-examination Ian accepted that the statement in the review application was not true. The following exchange took place: Mr Golledge: You say there that your sole role in these proceedings was to help your mother to recover her funds from Mr Landow? Ian: Yes. Mr Golledge: So the proceedings then, rather than being an attempt to recover your funds from Mr Landow, were they, in truth, an attempt by you to recover your mother's funds? Ian: My funds? No. I mean - sorry - yes, my funds. Not my mother's funds. Mr Golledge: Well, sir, but why then did you allow to go forward an application in a costs assessment that contained that statement? Ian: Yes. Because Levitt Robinson was trying to rob my mother. Golledge: But Mr Robinson was referring - sorry - Mr Levitt was relying, in part, upon discussions with you to justify the recovery of his costs, wasn't he? Ian: Yes. Mr Golledge: And the position taken by Fanchel in this application was that you were not authorised to act on Fanchel's half in prosecuting the claim? Ian: Right. … Mr Golledge: Well, that can't be right, is it, sir? Didn't you always have authority and approval from your mother to conduct the - carry out actions for and on behalf of Fanchel? Ian: No, because they were saying that I was the one who was - anyway, they were making a claim that they spent money on - on me instead of - instead of Fanchel, and they were trying to over - overcharge or whatever it was. … Mr Golledge: Right. And what you say in support of that application is that you had a very limited role in the conduct of those proceedings, don't you? Ian: No, I was - I was a big part of - those proceedings. 391 The statement in the review application and subsequent contradictory evidence given by Ian in this proceeding about it is a clear example of Ian taking a position from which he believes that he (and thus the people or entities associated with him) will obtain most benefit. For the purpose of this proceeding it best suits the respondents' defence (and thus Ian's own position) to maintain that the proceeds of sale from the parcel of 367,000 WCL shares (which were part of the Transferred Shares) were applied to the CCC Rights Issue on his behalf. In other words that it was "his" WCL shares that were sold and thus it was his money that was invested in the CCC Rights Issue. But for the purpose of the costs assessment process in the Supreme Court it better suited Fanchel (and, by association, Ian) to maintain the contrary position. Based on the evidence Ian gave in this proceeding the latter is clearly untrue. 392 In my opinion, in light of Ian's changing and contradictory evidence, I cannot rely on any of his evidence in relation the 367,000 WCL shares. I cannot be satisfied that those shares were subject to the Share Arrangement and that the proceeds of their sale made their way, by way of reimbursement, into the cheque made out to CCC which was then applied by Fanchel for his benefit to the CCC Rights Issue. 393 Given the conclusions I have reached in relation to Ian's evidence about what he asserted became of the 1.4 million WCL shares that were part of the Transferred Shares, I make the following findings: (1) it is presumed that a trustee who mixes his own funds with that of another, thereby creating a mixed fund, will draw out his own money first: see Re Hallett's Estate (1880) 13 Ch D 696. Thus the WCL shares which were part of the Transferred Shares and held by Fanchel subject to the Share Arrangement are presumed to have been disposed of last; (2) based on a schedule prepared by the Trustee of WCL shares held by Fanchel in the period from 17 April 2008, the date of transfer of the Transferred Shares, to 18 September 2014, its minimum holding was 1,308,213 WCL shares as at 6 April 2009; (3) as at the time of the takeover of WCL, Fanchel held 5,616,333 WCL shares which were acquired at $0.40 per share. Applying that amount per share, the value attributable to the 1,308,213 shares referred to in the preceding subparagraph is $523,285.20; (4) the proceeds of sale of Fanchel's WCL shares acquired in the takeover (including the $523,285.20 attributable to the 1,308,213 shares), being $2,246,533.20, were deposited into the Fanchel Transaction Account on 24 September 2014; and (5) those funds were then withdrawn by way of two cheques dated 29 and 30 September 2014, each made payable to Faina and signed by Ian, for $100,000 and $2,146,533 respectively. 394 The transfer of the proceeds of sale of Ian's WCL shares which were part of the Transferred Shares to Faina occurred in the five years prior to the commencement of Ian's bankruptcy and was a transfer for which Faina gave no consideration. The transfer was thus void against the Trustee pursuant to s 120 of the Bankruptcy Act.

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5.4.2.3 The GUL shares 395 The third parcel of shares which was part of the Transferred Shares in relation to which the Trustee makes a claim is the shares in GUL. The Trustee contends that those shares were subject to the Share Arrangement, that Fanchel held them up to and including the date upon which Ian became a bankrupt and that upon selling them it failed to remit the proceeds to the Trustee. 396 Based on the pleadings and the evidence before me it was not in dispute that: (1) the Transferred Shares included 9,083,648 GUL shares which comprised the total portfolio of GUL shares held by Fanchel; (2) on 6 May 2008 those shares were transferred by Fanchel to a third party, Hudson Corporate Limited. That transfer occurred as part of a transaction that resulted in Fanchel owning 4.35 million shares in Tiaro Coal Limited (TCM), which were held subject to the Share Arrangement; (3) in or about December 2009 those 9,083,648 GUL shares were returned by Hudson to Stoligor, which held them on behalf of Fanchel, and Fanchel returned to Hudson 1.8 million TCM shares it held at that time; and (4) a statement of Fanchel's GUL holdings shows that as at 8 February 2012 it held 9,333,648 shares which it then sold between the period 3 August 2017 and 14 September 2018, reducing its balance to zero. The amount realised from the sale of those shares is not disclosed on that statement. However, none of the proceeds of sale have been remitted to the Trustee. 397 Ian addressed the GUL shares in his second affidavit. He gave the following evidence. 398 In about April 2008 Ian was interested in investing in TCM. However, neither he nor Fanchel had the funds to do so. At the same time a director of Hudson, Vincent Tan, with whom Ian was acquainted, was interested in acquiring a substantial shareholding in GUL. 399 Towards the end of April 2008 Mr Tan approached Ian in relation to Fanchel's shareholding in GUL and they had conversation to the following effect: Mr Tan: I understand that one of your companies has a large stake in Gullewa. Ian: Yes, my mother's company does. Mr Tan: I would like to purchase her entire shareholding. Ian: That might be possible if she can invest that money into Tiaro. Mr Tan: I'll come back to you on that. 400 A few days later Mr Tan and Ian and had a further conversation to the following effect: Mr Tan: I've found an investor who is willing to sell his shareholding in Tiaro. Ian: OK. Let's get it done. Ian does not recall consulting Faina in relation to the sale of the GUL shares and the purchase of the shares in TCM. He considered the GUL shares to be his pursuant to the Share Arrangement. 401 On 6 May 2008 Hudson purchased 9,083,648 GUL shares from Fanchel for $999,201.28 and Fanchel purchased 4,350,000 TCM shares from Centrebright Pty Ltd for $1,087,500. According to Ian, Fanchel paid the shortfall owing for the TCM shares (i.e. the difference between the price of the GUL shares that were sold and the TCM shares that it acquired) and he reimbursed Fanchel that amount from the subsequent sale of TCM shares. 402 Ian said that: (1) between 13 May 2008 and 2 April 2009 Fanchel sold or transferred 2,985,000 TCM shares as follows: (a) between 13 May 2008 and 18 March 2009 it sold 665,000 TCM shares and the proceeds of sale were reinvested in other shares by Fanchel; (b) on 26 March 2009 it transferred 2 million TCM shares to another entity. Although Ian could not originally recall to which entity those shares had been transferred, in examination in chief he said that they were transferred to him; and (c) on 2 April 2009 Fanchel sold 320,000 TCM shares; and (2) between 30 July 2008 and 13 March 2009 Fanchel bought 368,077 TCM shares. 403 Initially Ian could not recall what had become of the balance of the TCM shares held by Fanchel. But in examination in chief he said that the balance of 1.8 million TCM shares held by Fanchel were sold by Stoligor (which I assume at that time held them on behalf of Fanchel) to Raffles Equities, a company associated with Mr Tan. 404 On 30 November 2009 Stoligor bought 9,083,648 GUL shares from Hudson. Although at the time of preparing his second affidavit Ian could not recall the amount Stoligor paid for those shares, in examination in chief he said that they were purchased for $306,000. 405 On or about 31 March 2015 TCM entered into voluntary administration. Accordingly, there was no return on any existing shareholding. 406 Ian was cross-examined about his evidence in relation to Fanchel's acquisition of the TCM shares and what became of them. In particular: (1) Ian was asked about the sale of the 2,985,000 TCM shares between 13 May 2008 and 2 April 2009 and the transfer of 2 million of those shares to him. As to that he said that those shares "were sold to Ian Stolyar at 20 cents per share. So for $400,000" and that the money "went to Stolyar" and that "Ian Stolyar spent it"; (2) Ian was asked about the balance of the TCM shares held by Fanchel. He said that those 1.8 million shares were sold for some $300,000 to Raffles Equities. He then clarified that those funds were used to buy the 9,083,648 GUL shares; and (3) in relation to the sale of the balance of the TCM shares held by Fanchel the following exchanges took place between senior counsel for the Trustee and Ian: Mr Golledge: Right. So the shares - a portfolio of 9,083,648 shares were held which were part of the original April 2008 agreement were lost, but? Ian: I'm sorry? What was lost? Mr Golledge: Well, were transformed into TCM shares by the share arrangement? Ian: Yes. Yes. Mr Golledge: And then two million of them were paid - were paid to Ian Stolyar in consideration for the Gullewa shares. That was the market price of the Gullewa shares was at the time. Yes. Yes? Ian: Okay. Mr Golledge: And then? Ian: And then the rest Stoligor kept. Mr Golledge: And then, subsequently, were exchanged? Ian: Repurchased. Repurchased at a lot lower price. Mr Golledge: The exact same of amount? Ian: Yes. Mr Golledge: Of shares that had originally been purchased? Ian: Yes. And: Mr Golledge: Okay. I will just get that - make a note of this, sir. So 1.8 million of which shares do you say are transferred? Ian: Tiaro Coal shares. Mr Golledge: Yes? Ian: Were transferred by Stoligor to Raffles Equities. Mr Golledge: And what did Fanchel get for that? Ian: Stoligor got 9,083,648 Gullewa shares. Mr Golledge: And what happened to those shares received by Stoligor? Ian: They were sold eventually. Mr Golledge: Well, when you say eventually, do you recall - well, they were sold, weren't they, through the Westpac securities account after the date of your bankruptcy? Ian: Yes. Over time. Mr Golledge: And no part of those moneys in respect of those shares were accounted for to the bankrupt estate? Ian: No. No. The 400 - well, I just say to you that as part of 81(j), the two million shares for $400,000 was the full payment to me for the Gullewa shares. 407 For the following reasons I do not accept Ian's evidence in relation to the sale and reacquisition of the GUL shares. 408 First, it was not in dispute that the GUL shares were included in the Transferred Shares and were subject to the Share Arrangement. That meant that Ian was entitled to the proceeds of sale of those shares. 409 Secondly, it was also not in dispute that those GUL shares were transformed into the shares held by Fanchel in TCM. In cross-examination Ian confirmed that the price of the 9,083,648 GUL shares transferred to Hudson was offset by the contemporaneous acquisition by Fanchel of the 4,350,000 TCM shares. That is also pleaded in the respondents' defence (at [142E(f)]). It follows that the TCM shares acquired by Fanchel represented the proceeds of sale of the GUL shares to which Ian was entitled pursuant to the Share Arrangement. 410 Thirdly, Ian's evidence to the effect that the transfer to him of the 2 million TCM shares was "in consideration of the Gullewa shares" as that was the "market price of the Gullewa shares … at the time" is rejected (see [406(3)] above). That evidence is contrary to other evidence given by Ian in relation to that parcel of shares: initially in his affidavit Ian said that no consideration was paid for the transfer of those shares, then in cross-examination he said that he paid $400,000 for those shares and ultimately he gave the evidence referred to here, namely that the 2 million TCM shares were in effect the consideration for the 9,083,648 GUL shares transferred to Fanchel pursuant to the Share Arrangement. 411 Further, the evidence is nonsensical in the face of Ian's own evidence about the terms of the Share Arrangement based on which Ian was entitled to all of the proceeds of sale from the Transferred Shares. It would be contrary to that arrangement if Ian received as consideration for the transfer of the 9,083,648 GUL shares to Fanchel, which were subsequently exchanged for 4,035,000 TCM shares, only a proportion of those TCM shares. 412 Fourthly, this is yet another instance where, given his changing evidence about the GUL shares, apparently to provide a version of events that would be best for the respondents' defence, and my overall view of Ian's credibility as a witness, I would put no weight on Ian's evidence. 413 In my opinion the evidence establishes that: (1) on 6 May 2008 when the GUL shares were exchanged for, or converted into, 4,350,000 TCM shares those latter shares became subject to the Share Arrangement; (2) while Fanchel bought and sold some TCM shares between May 2008 and March 2009 (see [402] above) that did not change the fact that the TCM shareholding was subject to the Share Agreement because: (a) in that period Fanchel sold a total of 2,985,000 of its TCM shares leaving 1,365,000 shares which were directly traceable to the acquisition of the larger parcel of TCM shares in May 2008 and which remained subject to the Share Arrangement; and (b) to the extent that Fanchel purchased TCM shares in that period, on balance, I am satisfied that their purchase would have been funded either by the proceeds of sale of TCM shares or the sale of other shares subject to the Share Arrangement. As at 30 June 2009 Fanchel's assets solely comprised shares contributed by Ian (and the proceeds of sale of those shares). To the extent those accounts record a debt to Faina, that is referrable to the 3 million AGM shares which, as set out at [257] above, were transferred to Fanchel by Ian; (3) by November 2009 Stoligor held the remaining 1.8 million TCM shares on behalf of Fanchel. They were a part of the 4,350,000 TCM shares which had originally been exchanged for the GUL shares and thus remained subject to the Share Arrangement; (4) when that parcel of 1.8 million TCM shares was traded for the return of the 9,083,648 GUL shares, the GUL shares on their return were subject to the Share Arrangement; and (5) accordingly when Fanchel sold the 9,083,648 GUL shares between August 2017 and September 2018 it received the sale proceeds on trust for the Trustee because, by that time, Ian's interest in the Share Arrangement had vested in the Trustee by reason of his bankruptcy. 414 It follows that Fanchel is liable to account to the Trustee for the proceeds of sale of the 9,083,648 GUL shares.

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5.5.1 Ian and Faina's evidence about the purchase of the Point Piper Property 416 Ian and Faina each gave evidence about the acquisition of the Point Piper Property. 417 Ian said that at the time he and Beth decided to proceed with the acquisition of the Point Piper Property they did not have sufficient funds to pay the required deposit of $1.3 million. Accordingly Ian approached Faina for assistance. He requested her to draw down on the Campbell Parade Mortgage Account to guarantee the deposit, but Faina refused. 418 According to Ian, notwithstanding Faina's initial refusal, a couple of days later she changed her mind and agreed to fund the deposit. At the time she said to Ian in Russian: I want a mortgage over the Point Piper Property to make sure I will get my money back. I don't want to find myself in the same position I do with respect to 501 Ocean Street. You will need to sell some of my shares to get the $1,300,000. 419 In October 2010 a few days after the conversation set out in the preceding paragraph he and Faina had a conversation to the following effect: Ian: Mum, I need more money from you. Faina: Why? Ian: The CBA has declined to increase the limits on our mortgages. I'll now need another $700,000 or so. I'll include that money in the second mortgage. Faina: OK, but make sure I get my money back. 420 Faina gave similar evidence about a conversation she had with Ian in about October 2010 (see [432] below) in which he asked her to further assist as he and Beth were about $700,000 short in settlement moneys. According to Faina Ian told her that the advance would be secured by "your second mortgage". Faina agreed to provide the funds and instructed Ian to sell some of her shares. 421 In or about mid October 2010, on behalf of Faina and Stoligor, Ian caused shares held in Stoligor's name to be sold for the purpose of funding the $1.3 million deposit. However, he was only able to realise $1.1 million from the sale of the shares. 422 Towards the end of October 2010 Stoligor received a cheque for $1.1 million (Stoligor Cheque). On or about 26 October 2010 Ian attended the North Sydney branch of the NAB and gave the Stoligor Cheque to Jolanta Wojciechowska, who was also his banker. Ian informed Ms Wojciechowska that Faina required a deposit guarantee for $1.3 million and that he was in the process of selling some more shares to make up the $200,000 shortfall. According to Ian, although Faina would have had $1.3 million in cash to lend to him and Beth for the deposit, he did not trust the vendor with that amount in cash and preferred to provide a bank deposit guarantee. 423 Ian said that a decision was made to split the Campbell Parade Mortgage Account into two separate facilities: a loan facility in the amount of $1.7 million and a guarantee facility in the amount of $1.3 million. However, for reasons unknown to Ian, that did not occur and the Stoligor Cheque was not deposited into the Campbell Parade Mortgage Account. 424 By letter dated 27 October 2010 from the NAB to Faina the NAB offered Faina an "NAB Choice Package Variable Rate Interest Only Home Loan" for $1.7 million with an "NAB 100% Offset arrangement" for the Campbell Parade Mortgage Offset Account. Ian said that on the same day Ms Wojciechowska attended on Faina so that she could sign the documentation giving effect to the split of the Campbell Parade Mortgage Account into two separate loan accounts. 425 On 27 and 28 October 2010, on behalf of Faina, Ian transferred $194,000 and $7,000 respectively from the Stoligor NAB Business Account to the Campbell Parade Mortgage Account to make up the $200,000 shortfall for the deposit guarantee. 426 On 28 October 2010 the NAB issued a deposit guarantee in the amount of $1.3 million (First Deposit Guarantee). Ian said that this was secured against the Stoligor Cheque and the $200,000 credited to the Campbell Parade Mortgage Account following the deposits referred to in the preceding paragraph. 427 Ian subsequently received a call from the real estate agent informing him that the vendor had refused to accept the First Deposit Guarantee because it guaranteed Faina's performance, and not that of Ian and Beth, in paying the deposit. Consequently, the NAB reversed the First Deposit Guarantee and deposited $1.1 million into the Campbell Parade Mortgage Offset Account. 428 On 29 October 2010, on behalf of Faina, Ian transferred $1.1 million from the Campbell Parade Mortgage Offset Account to the Campbell Parade Mortgage Account to reduce interest repayments. 429 On 5 November 2010, on behalf of Faina, Ian effected a drawdown of $1.3 million on the Campbell Parade Mortgage Account, leaving a debit balance of $2,998,224; deposited $1.3 million into the Campbell Parade Mortgage Offset Account; and transferred $1.3 million from the Campbell Parade Mortgage Offset Account to NAB Gold Banking account no. 53-246-2214 held in his and Beth's names (B&I Gold Banking Account). 430 Also on 5 November 2010 Ian and Beth caused to be transferred $1.3 million from the B&I Gold Banking Account to NAB term deposit account no.18-487-7068 in their joint names (B&I Term Deposit) against which a deposit guarantee in relation to payment of the 10% deposit for the Point Piper Property (Second Deposit Guarantee) was secured. The Second Deposit Guarantee was accepted by the vendor. 431 On 8 November 2010 Ian and Beth entered into a contract to purchase the Point Piper Property. 432 Faina also gave evidence about her initial discussions with Ian in relation to the purchase of the Point Piper Property and the events that took place following those discussions. She said that in or about October 2010 Ian told her that he and Beth had found an apartment in Point Piper that they wanted to buy. They had a conversation in Russian to the following effect: Ian: Mum, Beth and I have found an apartment in Point Piper. It's brand new. We need your help. We don't have the money for the deposit because we're having problems selling the Kirribilli townhouse. I've spoken to our banker and she told me that she can split your mortgage into two amounts - one for $1,300,000 and the other for $1,700,000. Faina: Why do you have to buy that apartment? It's so expensive. Ian: It's our dream apartment. If you saw it, you'd die. It's perfect. The position, everything. Faina: If the bank can split my mortgage, then I will help you. But I want a registered second mortgage. 433 Faina said that she was contacted by her banker, Ms Wojciechowska, who came to see her at her home to sign the documents to split the mortgage. Faina understood that the $1.3 million facility would be used for the deposit for the Point Piper Property and that the remaining $1.7 million would remain as a mortgage facility. 434 A deposit guarantee for $1.3 million was issued in Faina's name for the deposit for the Point Piper Property. The funds for the guarantee came from shares that Faina or one of her companies owned that Ian had sold on her behalf. 435 In about December 2010, when Faina received and reviewed the statement for the Campbell Parade Mortgage Offset Account she observed a credit entry on 28 October 2010 for $1.1 million and a corresponding debit entry on 29 October 2010. Upon inquiring of Ian why that was so he informed her that the First Deposit had been rejected and that a deposit guarantee had to be provided in his and Beth's names. 436 Returning then to Ian's evidence, he said that, at about the same time as he and Beth entered into the contract to purchase the Point Piper Property, they put the Carabella Street Property on the market. They intended to sell it before the settlement date for the Point Piper Property and to apply the proceeds of sale to the purchase of the Point Piper Property. 437 In or about the end of February 2011 Ian and Beth realised that they would have insufficient funds to complete the purchase of the Point Piper Property because they had not been able to sell the Carabella Street Property and it was unlikely that it could be sold before settlement. There was a shortfall of approximately $1.7 million. 438 Ian approached the NAB to inquire if it was possible to increase the $7.5 million loan amount, which I infer had been approved, to cover the shortfall. According to Ian the following day he had a telephone conversation with a senior manager from the NAB to the following effect: Senior manager: Ian, I have no authority to increase the $7,500,000 loan for the purchase of the [Point Piper Property]. But your mother has equity in the [Campbell Parade Property] and, if you wish, I can increase the loan in relation to that property by $1,000,000 as that falls within my delegated authority. Ian: If you can do it, do it. 439 In or about the beginning of March 2011, Ian spoke to Faina about getting more money from her for the settlement of the purchase of the Point Piper Property. They had a conversation in Russian to the following effect: Ian: I need another $700,000. I can sell some more shares from Fanchel and Stoligor to make up the shortfall. Faina: OK, but it's a loan. I need to get the money back. Ian said that until he came to prepare his first affidavit for the purpose of this proceeding he had forgotten about this conversation and the borrowings from Fanchel and Stoligor. 440 Faina gave evidence to similar effect, namely that in March 2011 Ian approached her to request her assistance because he and Beth were short on settlement moneys for the Point Piper Property. Faina agreed to lend them what they needed. As a result she loaned Ian and Beth $442,600 from the Stoligor NAB Business Account and $268,000 from the Fanchel Transaction Account. 441 On about 23 March 2011 Ian received an email from the NAB advising him that the increase in the Campbell Parade Mortgage Account from $3 million to $4 million had been approved. That email was not in evidence. Ian said that he no longer has it. 442 On 28 March 2011 Ian and Beth entered into a home loan contract with the NAB for $7.5 million (Point Piper NAB Loan) secured by way of a first registered mortgage over the Point Piper Property, a first registered mortgage over 11/2 Ocean Street and a guarantee for $7.5 million granted by Bethian and Stoligor. 443 On or about 29 March 2011 the NAB increased the loan amount of the Campbell Parade Mortgage Account from $3 million to $4 million thereby making $1,732,000 available for draw down. That amount was available because, as well as the increase in the loan amount, Ian gave evidence that over the course of January 2011 he made a number of deposits, on behalf of Faina, into the Campbell Parade Mortgage Account "for the purpose of accumulating the $700,000 odd shortfall" as follows: (1) on 20 January 2011 Ian transferred $164,000 from the Stoligor NAB Business Account; (2) on 31 January 2011 Ian transferred $151,424 from the Stoligor NAB Business Account; (3) on 23 February 2011 Ian transferred $62,000 from the Stoligor NAB Business Account; and (4) on 28 February 2011 Ian transferred $120,000 from the Stoligor NAB Business Account. 444 Faina also gave evidence about the increase in the Campbell Parade Mortgage Account from $3 million to $4 million. She said that on or about 28 March 2011, she received a telephone call from Ms Wojciechowska, who informed her that she needed to sign some documents. During the course of their conversation they had an exchange to the following effect: Faina: Are the documents to join the loans together? Ms Wojciechowska: Yes. Faina said that Ms Wojciechowska did not mention that the documents would increase her loan facility secured against the Campbell Parade Property by $1 million. 445 On or about 29 March 2011 Ms Wojciechowska and her assistant, Kasia Potozna, attended Faina's apartment at 7.30 am on their way to work. When Faina opened her door Ms Wojciechowska said to her words to the following effect: We are in a hurry, we have to hurry, we have to get to the office. Ms Wojciechowska presented Faina with a bundle of documents in a folder with various pages tagged with different coloured stickers. They sat down at the dining table and Ms Wojciechowska took Faina to each of the tagged pages and directed her to sign. According to Faina Ms Wojciechowska did not explain to her why she was signing the documents, did not give her an opportunity to read them and did not leave her with a copy of the documents. Nor did Faina ask Ms Wojciechowska why she was signing the documents. Faina assumed that they related to the earlier split of the Campbell Parade Mortgage Account. Faina said that Ms Wojciechowska and Ms Potozna left her apartment within about five minutes of their arrival. 446 According to Ian, on 31 March 2011: (1) $7.5 million was drawn down on the Point Piper NAB Loan and $1,732,000 was drawn down on the Campbell Parade Mortgage Account; (2) the B&I Term Deposit was closed; (3) on behalf of Faina he transferred $442,600 from the Stoligor NAB Business Account; (4) a bank cheque for $268,000 was drawn on the Fanchel Transaction Account. That cheque was made out to ING Bank (Australia) Limited; (5) he transferred $271,655 from CBA home loan account no. 409602306 (CBA Home Loan Account 4) to the B&I CBA Account; (6) he transferred $710,000 from CBA Home Loan Account 2 to the B&I CBA Account; and (7) he withdrew $1,246,548 from the B&I CBA Account. 447 On 31 March 2011 the purchase by Ian and Beth of the Point Piper Property settled. The balance of the purchase price payable on settlement was $12,990,585.20. By letter dated 31 March 2011 addressed to Gadens the vendor, Elk Developments Pty Ltd, requested the following bank cheques on completion: 1. Office of State Revenue 850,510.00 2. Land and Property Management Authority 31,000.00 3. Prestige Homes of Australia 266,606.00 4. Kemp Strang 825.00 5. Ing Bank (Australia) Ltd 11,831,644.28 6. LJ Hooker Double Bay 10,000 448 Ian said that most of the settlement moneys for the Point Piper Property came from the sources identified at [446(1), (3), (4) and (7)] and from the sum of $1.3 million which was held in the B&I Term Deposit and had been used to obtain the Second Deposit Guarantee. Ian can no longer recall the precise source of the balance of $501,437.28 other than that it came from one or more bank accounts held in his and Beth's names. 449 Based on the evidence set out above, it is apparent and it was not in dispute that, of the funds applied to the purchase of the Point Piper Property, $3,032,000 came from the Campbell Parade Mortgage Account made up as follows: (1) $1.3 million drawn down on 5 November 2010 and first used to secure the Second Deposit Guarantee before being applied to the purchase; and (2) $1,732,000 drawn down on 31 March 2011.

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5.5.2 The grant of a mortgage to Faina over the Point Piper Property 450 Ian said that shortly after 20 May 2011 Faina received a statement for the Campbell Parade Mortgage Account. Faina was very upset with him and did not speak to him for a couple of months as she thought Ian had "stolen" her money. In or about July 2011, Faina and Ian had a conversation in Russian as follows: Faina: I want all my money back. Ian: The only way I can do that is to give you a mortgage over the Point Piper Property for the $3,000,000 you loaned us and to sell my Ocean Street apartment. Faina: OK. 451 Ian then contacted Galilee Solicitors on behalf of Faina and arranged for those solicitors to draft a loan agreement on commercial terms for the loan of $3 million from Faina to him and Beth for the purchase of the Point Piper Property. 452 Faina also gave evidence to the effect that it came her attention in May 2011, after reviewing a statement she had received, that the balance of the Campbell Parade Mortgage Account had increased from $3 million to $4 million. Faina said that came as a surprise to her and that she had never, prior to that time, had a conversation with Ian about increasing the loan for the Campbell Parade Property. 453 Upon receipt and review of the statement Faina had a conversation with Ian about the increase, sought its repayment and demanded a second mortgage over the Point Piper Property. Thereafter she avoided contact with Ian for several months. In August 2011, after a neighbour let Ian into the apartment block in which Faina lived, she had a further conversation with Ian in Russian to the following effect: Ian: We were $1,000,000 short on the Point Piper apartment, so I decided not to buy it. I told Ms Wojciechowska that we were not going to buy the apartment because we didn't have the money. But she said she could increase your mortgage and I said to her if you can, then do it. Faina: How can you do this? Ian: I was sure she had talked to you. Faina: You need to find me a solicitor. I want to go to a solicitor. I never asked for it and they didn't talk to me about it. I want a registered second mortgage over the Point Piper apartment and I want the money that I gave you towards the purchase of the Point Piper apartment back now. Ian: I don't have any money to repay you that money, but I can sell my Ocean Street apartment and give you that money. Faina: But the property is already tenanted. And what would I do with the money? Buy some more shares or buy another property? If you can transfer the apartment to me instead, then we'll be even. Ian: OK then. 454 According to Ian several weeks after their conversation set out at [450] above, Faina telephoned him in relation to 11/2 Ocean Street and they had a conversation in Russian to the following effect: Faina: There's a tenant in there. Just give me the unit. Ian: OK. 455 In or about July or August 2011, Ian started discussing with the NAB the possibility of releasing 11/2 Ocean Street as an additional security for the Point Piper NAB Loan so that he could transfer it to Faina. That property was the only asset Ian had in his name alone and it was unencumbered. 456 By letter dated 17 October 2011 Galilee solicitors asked Faina to confirm her instructions in relation to a loan advance of $3 million made on 31 March 2011 to Ian and Beth at an interest rate of 10% p.a. to be capitalised and secured over the Point Piper Property and repaid on maturity. 457 On 7 November 2011, among other things, Galilee solicitors provided Ian with a loan agreement and mortgage in relation to the "proposed advance of $3,000,000" for execution by him. 458 On or about 24 August 2012 a second mortgage in favour of Faina was registered on the title of the Point Piper Property. That mortgage secured an advance by Faina of $3 million "together with any other advances" to Ian and Beth. 459 By letter dated 20 September 2012 the NAB informed Ian and Beth, among other things, that it would release as security for the Point Piper NAB Loan its registered mortgage over 11/2 Ocean Street. At that time it appeared that the loan was in arrears. 460 At the time that the mortgage over 11/2 Ocean Street was released as security Ian was informed by the NAB that the certificate of title for that property had been misplaced. Accordingly, on his application, in about mid March 2013 a new certificate of title was issued for 11/2 Ocean Street. 461 As set out at [291] above, on 20 March 2013 Ian transferred 11/2 Ocean Street to Faina. My findings in relation to the transfer of 11/2 Ocean Street are at [305] above. Despite the evidence set out at [450]-[454] above, given that Ian and Beth granted Faina a second registered mortgage to secure an advance of $3 million, the transfer of 11/2 Ocean Street could not have been in reduction of the funds apparently advanced by Faina to Ian and Beth for purchase of the Point Piper Property.

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5.5.4 The dispute on the facts 465 The Trustee disputes that the amount of $3,002,000 drawn down on the Campbell Parade Mortgage Account and applied to the purchase of the Point Piper Property was in fact a loan from Faina. He contended that those funds comprised: (1) the sum of $2.2 million deposited into the Campbell Parade Mortgage Account on 20 May 2009 (see [218] above); and (2) the sum of $1.1 million deposited into the Campbell Parade Mortgage Offset Account on 28 October 2010 and transferred into the Campbell Parade Mortgage Account on 29 October 2010 (see [428] above). The respondents deny that is so. 466 It is convenient first to address the facts relating to the source of the sum of $2.2 million deposited into the Campbell Parade Mortgage Account on 20 May 2009. 467 Initially the respondents claimed that amount was part of the $3.1 million withdrawn from the Fanchel Transaction Account on 18 May 2009. In his first affidavit Ian said that at the time two cheques were issued, one for $2.2 million and one for $900,000 but in his second affidavit Ian withdrew that evidence and accepted that only one cheque was issued for the full amount of $3.1 million (see [214(1)(c)] above). In doing so Ian explained why, in the absence of having been able to obtain a copy of the cheque, he had assumed that two cheques had been issued for those particular amounts. It follows that Ian accepted that the sum of $2.2 million could not and did not come from the Fanchel Transaction Account as he had previously said was the case. 468 Faina also gave evidence, which she maintained in cross-examination, that the withdrawal of $3.1 million from the Fanchel Transaction Account was made by way of two bank cheques, one of which was deposited into the Campbell Parade Mortgage Account to reduce the balance owing. I have rejected that evidence (see [217]-[220] above). 469 In cross-examination the Trustee was asked about his investigations into the source of the $2.2 million. He said that he had not been able to trace the source of the $2.2 million payment into the Campbell Parade Mortgage Account on 20 May 2009, he had not seen the cheque and he had not been able to identify an account from which a cheque, or a combination of cheques, for $2.2 million had been drawn. He said that there was a limit to how far back one could go. 470 In cross-examination Ian was also asked about the source of the cheque for $2.2 million paid into the Campbell Parade Mortgage Account. He accepted that the Fanchel cheque for $3.1 million was not its source and that in his evidence he had provided no explanation about the source of the funds for that cheque. When asked about that he responded "why would I need to provide explanation for that?" and "I didn't think it was required". 471 The Trustee contended that the only reasonable inference to be drawn is that the $2.2 million came from the Redraw Sum, being an amount of $4,405,211.31 which Ian said he withdrew on 12 March 2009 from four accounts that he and Beth held with the CBA as follows: (1) $3,200,300 from CBA home loan account no. 707260009 (CBA Home Loan Account 1); (2) $630,312.17 from CBA Home Loan Account 2; (3) $479,900 from CBA home loan account no. 409602402 (CBA Home Loan Account 3); and (4) $94,699.14 from CBA Home Loan Account 4. 472 Ian said that upon withdrawal, those amounts were credited to a newly opened CBA account no. 10581769 in the name of the Canchel Partnership (New Canchel Partnership Account). 473 According to Ian steps were taken to withdraw the funds that made up the Redraw Sum to reverse earlier deposits that had been made into CBA Home Loan Accounts 1, 2, 3 and 4. In particular: (1) on 3 April 2008 Beth applied the April 2008 Canchel Cheque, being the proceeds of an off market transfer of the Canchel Partnership's remaining 4.5 million AGM shares at the time of AGM's takeover by Zinifex, as follows: (a) $3,2000,497 to CBA Home Loan Account 1; (b) $1,744,503 to CBA Home Loan Account 2; and (c) $5,000 to the B&I CBA Account; (2) on 4 April 2008 Ian and Beth attended the North Sydney branch of the CBA and made the following transfers among their various home loan accounts in order to reduce the interest payable: (a) $1,013,000 was redrawn on CBA Home Loan Account 2 leaving a balance of $731,503; (b) $479,914.85 (of the $1,013,000) was deposited into CBA Home Loan Account 3; (c) $94,000 (of the $1,013,000) was deposited into CBA Home Loan Account 4; and (d) $439,084.15 (being the balance of the $1,013,000) was withdrawn in a bank cheque. 474 Ian's evidence was that no part of the Redraw Sum was used to fund the acquisition of the Campbell Parade Property. He maintained that position in cross-examination. He said that those funds were applied as follows: (1) in his first affidavit he said that: (a) at least $1,747,985 comprised part of the settlement moneys for the purchase of the Point Piper Property; (b) approximately $1.8 million was used to make interest repayments for his and Beth's home loans; and (c) the remainder was used for his and Beth's living expenses, travel and entertainment; and (2) in his second affidavit he said that following a further close review of the documents exhibited to the Trustee's affidavits: (a) he realised that the sums included in his first affidavit were incorrect and that the correct figures were as follows (see [267] above): (i) at least $923,000 comprised part of the settlement moneys for the purchase of the Point Piper Property; and (ii) $765,773 was used to make the interest repayments for his and Beth's home loans; and (b) he identified further purposes for which that amount was applied as follows: (i) $780,000 was used to repay the loan from the CBA of that amount (see [269] above); (ii) approximately $512,000 was used to purchase the majority of 11 million ordinary shares in iCash (see [270] above); (iii) on 6 April 2009, he instructed his broker, Patersons, to acquire 1 million ordinary shares in WCL at $0.50 per share as part of its capital raising at a cost of $500,000; (iv) of the $1,246,548 ultimately drawn from the B&I CBA Account on 31 March 2011 for the purpose of settling the purchase of the Point Piper Property, $423,000 came from this sum; and (v) it is likely that the remaining sum of $501,437.28 funds applied for the purchase of the Point Piper Property (see [418] above) also came from this sum. 475 At his Public Examination Ian said that the funds that had been applied on 3 and 4 April 2008 to CBA Home Loan Accounts 1, 2 ,3 and 4 and which had subsequently been refunded and placed into the New Canchel Partnership Account belonged to Faina. Ian said that when the April 2008 Canchel Cheque was paid into his and Beth's personal accounts and Faina learnt that had occurred, she said that she wanted her money back. Ian's evidence was that he then took steps to have the money refunded to the Canchel Partnership and, although it took some time, that eventually happened. 476 When Ian was taken in cross-examination to that evidence he suggested that at the time he gave it he thought he was being asked about, and his evidence concerned, the sum of $3.3 million received by Fanchel for the sale of its AGM shares. However, given that the proceeds of the sale by Fanchel of its remaining AGM shares in 2008 never went into Beth and Ian's accounts and given the detailed evidence he gave at the Public Examination, I do not accept that Ian was confused thus that his evidence related to the proceeds of sale by Fanchel of its AGM shares. Despite the fact that the amount of $3 million was referred to by the examiner when asking questions of Ian about the events surrounding the April 2008 Canchel Cheque, it is clear from Ian's evidence given in response that he understood that those questions concerned the April 2008 Canchel Cheque, how it was dealt with and the steps Ian said were then taken to reverse the deposits initially made into his and Beth's personal accounts. 477 In cross-examination Ian accepted that Faina did not have an interest in the Canchel Partnership and, to the extent that at his Public Examination he gave evidence that the moneys which were paid to the Canchel Partnership following the reversal of the deposits made from the proceeds of the April 2008 Canchel Cheque were repaid to him and his mother, that evidence was incorrect and he did not know why he mentioned his mother. That evidence given by at his Public Examination was self-evidently wrong. The objective fact is that Faina has no interest in the Canchel Partnership and has no entitlement to its funds. 478 At her Public Examination Beth was asked if she knew what became of the Redraw Sum. She did not know, Ian never told her but she assumed that he lost it on the stock market. She did not think that any of that money went to Faina and said that Ian would have told her if that was the case. 479 Based on the above: (1) it is clear that the $2.2 million deposited into the Campbell Parade Mortgage Account did not come from the $3.1 million drawn from the Fanchel Transaction Account at the time of settlement of the Campbell Parade Property; (2) there is no evidence that Faina had that sum of money available to her and no evidence of any other source for the money; (3) Ian was evasive when asked about the source simply maintaining his denial that it did not come from the Redraw Sum; and (4) I would infer in those circumstances that Ian could not give any evidence that would assist the respondents' case on this issue. 480 The question that remains to be resolved is whether the $2.2 million came from the Redraw Sum. For the following reasons I infer that it did: (1) Ian's evidence as to how the Redraw Sum was expended has changed over time. At his Public Examination he said it was Faina's money but, given his later evidence set out above, that cannot be so. In his affidavits he described how he recalled the funds were spent, changing the amounts spent on each item and adding additional expenditure items in his second affidavit. Although Ian produced some documents to support the payments he said he made, there were no documents which identified the source of the funds used for those payments. His evidence as to the source of the funds for those payments was entirely uncorroborated; (2) further, Ian's evidence about the application of parts of the Redraw Sum was shown to be wholly unreliable: (a) Ian said that $780,000 was applied to the repayment of margin loan no 308021. However, it was clearly established in cross-examination and explained at [269] above, that that loan had been repaid long before Ian had access to the Redraw Sum; (b) similarly, Ian could not have applied $512,000 of the Redraw Sum to the purchase of iCash shares. As was shown to be the case in cross-examination (see [271] above) most of those shares were acquired before Ian had access to the Redraw Sum; and (c) it was also demonstrated in cross-examination, and ultimately accepted by Ian, that the sum of $423,000 which he said was applied to the purchase of the Point Piper Property did not come from the Redraw Sum (see [274] above); and (3) the Redraw Sum became available to Ian only a short time before settlement of the Campbell Parade Property. 481 I turn to consider the sum of $1.1 million. The Trustee contended that sum was deposited by Ian and Beth into the Campbell Parade Mortgage Account on 28 October 2010. The respondents contended that this allegation was not pleaded and that the Trustee ought not be permitted to raise it now. 482 The claim in relation to the Point Piper Property is pleaded at [143]-[156] of the amended statement of claim. In particular: (1) at [143]-[145] the details of the purchase of the Point Piper Property are pleaded including at [145] that: 145. $3,002,000 was drawn from the Campbell Parade Mortgage Loan to fund the said purchase as follows: a. $1,300,000 was drawn from the Campbell Parade Mortgage Loan on 29 October 2010 and paid into a term deposit held by the Bankrupts, which money was then used to secure a deposit bond for Point Piper and then applied towards the purchase: and b. A further $1,732,000 was drawn from the Campbell Parade Mortgage Loan and applied towards settlement of the purchase of Point Piper on 31 March 2011. (2) at [146]-[149] the granting by Ian and Beth of the mortgage over the Point Piper Property in favour of Faina is pleaded; (3) at [150]-[154] the sale of the Point Piper Property and repayment of the moneys said to be owing (i.e. the Point Piper Repayment Amount) is pleaded including an allegation at [153] that as at the date of repayment of the Point Piper Repayment Amount there was no debt owing to Faina; (4) at [155] the Trustee alleges that there was no debt owed by Ian and Beth to Faina as at 19 December 2013 when the Point Piper Repayment Amount was repaid to her and includes the following by way of particulars: As at that date, Faina was indebted to the Bankrupts for at least the following sums: a. The payment of $2,200,000 (or debt of $2,198,000) referred to in paragraph 107 above. b. The following further payments into the Campbell Parade Mortgage Loan account by the Bankrupts (or, in the alternative, Ian): (5) finally, at [156] the Trustee alleges, in the alternative, that if Ian and Beth were indebted to Faina then $452,537.60 of the amount for which they were indebted was repaid by them on 17 June 2012 and the Point Piper Repayment Amount failed to take that repayment into account. 483 As is clear from the particulars to [155] of the amended statement of claim the payment of $1.1 million into the Campbell Parade Mortgage Account was pleaded as a payment made by Ian and Beth, or alternatively Ian, into the Campbell Parade Mortgage Account based on which it was contended that Ian and Beth were not indebted to Faina for the amount purportedly secured by and ultimately repaid pursuant to the Point Piper mortgage granted to Faina. Accordingly, it is not correct to say, as the respondents do, that the allegation was not pleaded and there is no reason why the Trustee ought not be permitted to raise it. 484 As for the payment itself, the following facts are established by the bank statements in evidence before me: (1) on 29 October 2010 $1.1 million was deposited into the Campbell Parade Mortgage Account with narrative "Internet transfer bg ian" reducing the balance of that account to $1,698,224. (2) that payment came from the Campbell Parade Mortgage Offset Account which records first a deposit on 28 October 2010 of $1.1 million with the narrative "Internet Banking Miscellaneous Credit" and then a withdrawal on 29 October 2010 of $1.1 million with the narrative "internet Transfer bg ian"; and (3) the deposit of $1.1 million into the Campbell Parade Offset Account on 28 October 2010 aligns with the following withdrawals each made on 28 October 2010, which total $1.1 million, from bank accounts held by Ian and Beth: (a) $300,000 drawn from CBA Home Loan Account 2 with narrative "Repayment Redraw NetBank"; (b) $340,000 drawn from CBA Home Loan Account 4 with narrative "Repayment Redraw NetBank"; and (c) $460,000 drawn from CBA Home Loan Account 3 with narrative "Repayment Redraw NetBank". 485 The respondents dispute that the transfers identified at [484(3)] above were the source of the $1.1 million deposit into the Campbell Parade Offset Account. 486 Ian's evidence as to the source of the $1.1 million deposit into the Campbell Parade Offset Account is set out at [421]-[435] above. In short he says that that deposit was the result of the cancellation of the First Deposit Guarantee provided for the purchase of the Point Piper Property and for which $1.1 million had been acquired with the proceeds of the Stoligor Cheque. 487 As for the withdrawals referred to at [484(3)] above, in his second affidavit Ian said that he cannot now say with certainty where those funds were deposited. However, he believes that they were deposited into the trust account of the solicitors acting for Maryborough Coal Limited, a company of which he was a director, in anticipation of settlement of a claim by a tenement owner. 488 Maryborough Coal had entered into an agreement to purchase mining tenements from that owner. The agreement contemplated that the owner would not be paid until after the float of Maryborough Coal. Ultimately it was not viable for the float of Maryborough Coal to proceed. The tenement owner commenced a proceeding seeking payment of the cash component of the purchase price. Maryborough Coal sought to negotiate a settlement of the proceeding. It was contemplated that any amount for which the claim was ultimately settled would be paid forthwith. Ian said that as things turned out, the claim was settled without the need for him, Maryborough Coal, or any of the other directors having to pay anything to the owner. Instead, the tenements were transferred back to the owner. 489 Ian recalls that he then used the funds that had been paid into the solicitors' trust account to purchase further shares, including in Panasia Corporation Limited and CCC. 490 Ian's version of events and his evidence of the source of the $1.1 million is rejected for the following reasons. 491 First, the First Deposit Guarantee was dated 1 November 2010. By email dated 1 November 2010 Katherine Cross of Gadens provided the First Deposit Guarantee to Peter El Khouri, a director of the vendor, Elk Developments, informing him that Ms Casula would call him to discuss. 492 In response, by email of the same date, Mr El Khouri raised the following issues in relation to the First Deposit Guarantee (as written): 1. under D it states the agreement is between the beneficiary and customer. There is no agreement with the customer Mrs Faina Stolyar. Please clarify. 2. under D it refers to item 2 of the indemnity - please provide a copy of the indemnity or clarify. 3. although we requested 30 june 2010 as the termination date, the Guarantee states 1 May 2010. If this is to remain, the completion date must be amended to an earlier date (30 april 2010 ) and a term of contract inserted that the vendor shall be entitled to call on the guarantee if completion does not take place by 30 april 2010 and have the amount invested as a deposit. 493 By further email dated 1 November 2010 Ms Casula informed Mr El Khouri, among other things, that she had reviewed his comments with her client who would arrange to have a new bank guarantee issued. 494 Contrary to Ian's evidence, the contemporaneous documents establish that the First Deposit Guarantee was not dated 28 October 2010 but, as set out above, 1 November 2010 and Ian, through his solicitor, was only informed of the issues that arose with it on 1 November 2010. Accordingly Ian's claim that he learnt from the real estate agent on 28 October 2010 that Elk Developments had refused to accept the Deposit Guarantee and that the NAB thus reversed the First Deposit Guarantee and deposited $1.1 million into the Campbell Parade Mortgage Offset Account on that day is incorrect. 495 Secondly, Ian's evidence as to what became of the $1.1 million withdrawn from CBA Home Loan Accounts 2, 3 and 4 (see [487]-[489] above) is not supported by any contemporaneous documents such as, for example, evidence of the deposits into the solicitors' trust account. Nor did Ian provide any contemporaneous documents to support his assertion that, after the proceeding with Maryborough Coal settled, the funds that had been held in the solicitors' trust account were invested in shares in Panasia Corporation and CCC. When it was put to Ian in cross-examination that he had provided no such evidence, he deflected the question in an argumentative fashion responding: "Why do I need to? Am I on trial?". But, ultimately he agreed that he had not done so. 496 Thirdly, Ian and Beth each claimed 50% of the interest paid on the withdrawals from CBA Home Loan accounts 2, 3 and 4, making up $1.1 million, as a deductible expense referrable to the Point Piper Property in their respective tax returns for the financial year ended 30 June 2011. When asked about this entry in his tax return, Ian was evasive and unable to explain for what borrowings the interest could have been payable. 497 Fourthly, a statement of account for CBA Home Loan Account 3, from which the amount of $460,000 was drawn down on 28 October 2010, for the period 1 January 2011 to 18 February 2011 includes a handwritten note made by Beth which records "Funds used for Buckhurst deposit from Oct 2010". The Point Piper Property was located on Buckhurst Avenue (see [5(9)(a)] above). Surprisingly and somewhat disingenuously, despite Ian accepting that note was made by Beth and referred to the Point Piper Property, he denied that the funds were used for the deposit for that property. 498 In the face of the objective evidence Ian's evidence as to the source of the deposit of $1.1 million is rejected. It is mere speculation and fabrication. The evidence allows me comfortably to conclude that the sum of $1.1 million came from Ian and Beth via the drawdowns referred to at [484(3)] above.

[52]

5.6.1 Agreements between Ian, Beth and Faina 504 Before turning to consider the nature of the Rose Bay Contribution and the May Deposits I set out below, by way of background, evidence elicited by the Trustee in cross-examination about draft agreements concerning Ian and Beth's financial affairs. 505 An email sent on 8 May 2015 by Ian to Beth with subject "Deed of family agreement for the Stolyar family" sets out what appears to be a draft agreement between Faina, Ian, Beth and Fanchel. The agreement includes: (1) under the heading "background and purpose": The parties shall enter into this AGREEMENT in order to prevent confusion, to promote harmony between themselves and the family to reduce the possibility of resorting to litigation at a later date. (2) under the heading "operative parts": a) Faina will hold the property at 701/152 Campbell Parade, Bondi Beach NSW 2026 (Lot 2 SP 81899) in trust for Ian Stolyar and Beth Ngoc Stolyar in equal shares. b) Ian & Beth will be responsible for the payment of the NAB loan 082-401 89351 9845 which is secured against the property at [Campbell Parade Property] (Lot 2 SP 81899) up to the loan limit as at the date of the Deed of Agreement. c) Faina will purchase and own the [Rose Bay Property] (Lot A DP 33652 and Lot C DP 33652F) in trust for Ian Stolyar and Beth Ngoc Stolyar in equal shares. d) Ian & Beth will be responsible for the payment of the Commonwealth Bank Loan which is secured against 2C Dumaresq Road, Rose Bay NSW 2029 (Lot A DP 33652 and Lot C DP 33652F) up to the loan limit as at the date of settlement of the purchase of 2C Dumeresq Rd, Rose Bay NSW 2029. e) Faina will hold the property at 11/2 Ocean St, Bondi NSW 2026 (Lot 11 SP 9328) in trust for Ian Stolyar. f) Faina will hold the shares of Fanchel Pty Ltd in trust for Ian Stolyar and Beth Ngoc Stolyar in equal shares. This includes and not limited to the transfer and/or the proceeds from the sale of the assets held by Fanchel Pty Ltd. g) Ian & Beth will be responsible for the repayment of the full cost of the above property namely $11,500,000. 506 An email dated 25 October 2015 from Ian to Beth sets out an "agreement for the purchase of Rose Bay property". That agreement provided that Faina would "purchase and own" the Rose Bay Property but would agree to transfer it to Ian and Beth as joint tenants when: the unit at 5/41 Francis Street, Bondi is unencumbered And: all legal matters with [Royal Guardian] and Gilbert & Tobin is (sic) finalised and there is no further liability against Ian & Beth from these 2 firms. 507 On 18 January 2016 Beth sent an email to Ian (18 January 2016 Email) which, among other things, stated: Can you please arrange this letter to be signed and I will transfer the funds. Ian you have to understand where I am coming from. My family gave me all their life savings with no paperwork because they trust me. I gave them reassurance that everything will be ok as we agreed a letter will be signed. … You signed this letter in front of me and took it so you can get your mum to sign. Then you tell me you left the letter with your mum to read. After you said you want to change the letter and I have the changes you wanted in Oct 15. … You cannot give me an indication how or when you will pay my family back and I don't know what to tell them. ... It is not clear to which "letter" Beth is referring. However, her email attaches Ian's email dated 25 October 2015 referred to in the preceding paragraph. 508 Later on 18 January 2016 Ian sent an email to Beth which stated, among other things, that: From memory we agreed that my mother will sign the letter when you repay your family the money and Francis street property is released. None of this has occurred. In my view the best way to move forward is for you to include the above to happen before any agreements take hold … 509 Ian and Beth were cross-examined about these documents and the 18 January 2016 Email. In relation to the latter, Ian said that he vaguely recalled the email. The following exchange took place: Mr Golledge: And she's troubled by the fact that you haven't provided for its repayment, isn't she? Ian: That she wasn't secured. Mr Golledge: Well, no. She's troubled that the money has not been repaid by you to her relatives; correct? Ian: Yes. Mr Golledge: And that was because the agreement that was made by you and Beth with the relatives back in May 2016 was that they would advance money to you and Beth to enable the purchase of the Point Piper property, wasn't it? Ian: I'm sorry? Point Piper property. Mr Golledge: Sorry. Your Rose Bay property. Wasn't it, sir? Ian: For my mother to purchase Mr Golledge: That was the agreement you had? Ian: For my mother to purchase it. Mr Golledge: Well, no, sir. The suggestion - and I just want you to agree or disagree with it? Ian: Yes. Mr Golledge: was that the agreement that was made in May 2015 between you and Beth is that the two of you, and her acting on your behalf, rather, would seek out and obtain the $780,000 needed to settle the Rose Bay purchase, and to obtain loans from those 10 persons to you and her? Ian: No. 510 In cross-examination Beth gave the following evidence about the 18 January 2016 Email: Mr Golledge: Your email of the 18th of the 1st 2016? Beth: Sorry. Mr Golledge: And read that second paragraph to me and tell me when you are finished? Beth: Starting from, "Ian, you have to." Mr Golledge: No, no. From - yes. Sorry. Yes? Beth: Yes. Mr Golledge: And that was a true statement by you at the time, wasn't it? Beth: I wouldn't call it true statement. I was trying to make him feel bad. Mr Golledge: Well, what you're - I want to suggest to you that it's a true statement, and it's an accurate reflection of the discussions that you had with your family in May 2015? Beth: No. Mr Golledge: Well, it's in fact the case that those moneys were advanced without any paperwork; that's true, isn't it? Beth: Yes, but Mr Golledge: And it's - and it is the truth, isn't it, that that money was advanced because your family members trusted you? Beth: No. Mr Golledge: Well - so you say that this was, what, a false statement or - statement by you? Beth: In terms that they trusted me. It's just to make him feel bad. We were fighting. Mr Golledge: Well, Madam - - -? Beth: Don't you says things, like, to your wife when you're fighting with her, you know? Mr Golledge: Madam, I just want to suggest to you, to be fair, that what you are doing with this evidence is reinventing history so as to assist the case that has been run in these proceedings by Faina? Beth: No, that's not true. Mr Golledge: And that those statements in paragraph 2 were true at the time? Beth: No. Mr Golledge: and reflected what had happened in your discussions in May 2015? Beth: No. When I fight with Ian, I say what I have to say to make him feel bad. 511 The Trustee submitted that his case did not depend on any findings in respect of these documents referred to at [505]-[506] above. I thus do not intend to make any findings. But I accept, as the Trustee submitted, that they demonstrate that, at the very least Beth believed that various assets registered in Faina's name were held on trust for her and Ian.

[55]

5.6.3.1 Ian, Beth and Faina's evidence 515 It is convenient to commence with Ian's evidence. 516 On 23 November 2014 Faina entered into a contract for the purchase of the Rose Bay Property for $10.7 million and on 24 November 2015 Faina paid 5% of the purchase price by way of deposit. The deposit was paid from the Campbell Parade Mortgage Offset Account. 517 On 9 March 2015 Ian accompanied Faina to the Double Bay branch of the NAB where she withdrew $3 million from the Campbell Parade Mortgage Offset Account and deposited that amount into the Campbell Parade Mortgage Account. She did so because that was a basis upon which the CBA was willing to approve a $5 million home loan to her for the purchase of the Rose Bay Property. 518 In or about mid March 2015 the CBA approved Faina's home loan for $5 million, the security for which was to be a first registered mortgage over the Rose Bay Property (CBA Rose Bay Property Loan). 519 On 24 March 2015 Faina opened CBA Pensioner Security Account No. 10259704. 520 On 24 March 2015 Ian again accompanied his mother to the Double Bay branch of the NAB where she withdrew $3,029,000 from the Campbell Parade Mortgage Account and deposited it into the Campbell Parade Mortgage Offset Account. According to Ian this was done because by that time Faina had obtained the CBA Rose Bay Property Loan. 521 The purchase of the Rose Bay Property was scheduled to settle on 31 March 2015. But, because Faina could not source all of the settlement funds by that date, it did not occur until later. 522 In about the beginning of May Beth approached Ian and they had a conversation to the following effect: Beth: Do you want me to ask my family for the money? Ian: Can you find about the maximum amount they can lend my mother? Beth: Okay. 523 Ian said that, given that they were Beth's siblings, she discussed with them whether they were willing to lend any money, and if so, how much and the account into which that money was to be deposited. 524 On 5 May 2015 Ian accompanied Faina to the Bondi Junction Branch of the CBA where she made two deposits of $150,000 and $151,136.06 into the CBA Pensioner Security Account, both of which were the proceeds from CBA term deposits held in Faina's name. 525 On 6 May 2015 Jessica Tuy Doan, Beth's niece, deposited $5,000 by way of electronic transfer into the CBA Pensioner Security Account. 526 On 7 May 2015 the following occurred: (1) Tuy Nguyen deposited, by way of electronic transfer, $5,000 into the CBA Pensioner Security Account; (2) Phuong Tuy Nguyen, one of Beth's older sisters, deposited $4,000 cash into the CBA Pensioner Security Account; (3) Ian attended the Double Bay branch of the CBA and deposited $210,000 into the CBA Pensioner Security Account by way of a cheque and cash which had been provided by PC & TKL Pham, one of Beth's older sisters and her husband; and (4) Tuan Hoang, the husband of one of Beth's younger sisters, deposited, by way of electronic transfer, $269,462.97 into the CBA Pensioner Security Account. 527 According to Ian on 8 May 2015 the following occurred: (1) Phuong Tuy Nguyen deposited, by way of electronic transfer, $2,700 into the CBA Pensioner Security Account; and (2) in Ian's presence Faina entered into a home loan contract with the Bendigo and Adelaide Bank pursuant to which she was granted a loan for $1,480,000, the security for which was a first registered mortgage over 11/2 Ocean Street and her Francis Street, Property (Rose Bay Bendigo Loan). 528 On 11 May 2015 the following occurred: (1) Jessica Tuy Doan deposited, by way of electronic transfer, $3,400 into the CBA Pensioner Security Account; (2) Phuong Tuy Nguyen deposited $440 cash into the CBA Pensioner Security Account; (3) Linda Nguyen, one of Beth's younger sisters, deposited, by way of electronic transfer, $150,000 into the CBA Pensioner Security Account; and (4) Long Nguyen, Beth's younger brother, deposited, by way of two electronic transfers, a total of $120,000 into CBA Pensioner Security Account. 529 On 12 May 2015 Galilee Solicitors, the solicitors for Bendigo and Adelaide Bank, deposited $1,479,081.71 into the CBA Pensioner Security Account which Ian said was the proceeds of the Rose Bay Bendigo Loan. 530 By email sent on 14 May 2015 to Ian, Boskovitz & Associates, the solicitors acting for Faina on the purchase of the Rose Bay Property, requested that a bank cheque for $705,627.06 in favour of the Office of State Revenue be provided. Accordingly on 15 May 2015 Ian accompanied Faina to the Double Bay branch of the CBA where she obtained a bank cheque in the amount of $705,627.06 drawn on the CBA Pensioner Security Account. 531 By email sent on 18 May 2015 to Ian, Boskovitz & Associates requested Ian to provide a bank cheque for $5,252,283.28 made payable to Westpac. Following receipt of that email: $5 million was drawn on the CBA Rose Bay Property Loan; $3.6 million was withdrawn from the Campbell Parade Mortgage Offset Account; and a bank cheque for $1,653,283.28 was drawn on the CBA Pensioner Security Account. 532 As set out above, on 18 May 2015 the purchase of the Rose Bay Property settled. Ian said that the settlement moneys came from the CBA Rose Bay Property Loan, as to $5 million; the Campbell Parade Mortgage Offset Account, as to $3.6 million; and the CBA Pensioner Security Account, as to $1,653,283.28. Faina paid an additional $705,627.06 for stamp duty on the Rose Bay Property. 533 Ian gave the following evidence about the repayments of the May Deposits that he effected on behalf of Faina: (1) on 27 May 2015 Ian transferred $50,000 from the CBA Pensioner Security Account to Long Nguyen's account; (2) on 25 January 2017 Ian transferred $15,000 and then a further $50,000 from the CBA Mortgage Offset Account to account no. 0715138228 in repayment of funds deposited by Long Nguyen into the CBA Pensioner Security Account; and (3) on 27 January 2017 Ian transferred $50,000 and then a further $100,000 from the Campbell Parade Mortgage Offset Account to account no. 0715407961 in repayment of the funds that Linda Nguyen had deposited into the CBA Pensioner Security Account. 534 Ian said there is an apparent shortfall of $58,952.97 in the repayment of the May Deposits to Beth's family which he cannot explain and that neither he nor Beth repaid any member of Beth's family any part of that shortfall. 535 Faina also gave evidence about the purchase of the Rose Bay Property. 536 She said that at about the end of April or the beginning of May 2015 it became apparent to her and Ian that she would not have enough money to pay for the Rose Bay Property. Shortly thereafter she and Ian had a conversation in Russian to the following effect: Ian: I've told Beth that you're short on the settlement monies and she is asking her family if they can help you out. Faina: Tell Beth to tell her family that I will pay them back as soon as possible. 537 Approximately one week before settlement of the Rose Bay Property Ian said to Faina in Russian: Beth's family has agreed to help you out. Everybody is helping as much as they can. They are transferring the monies into your account. 538 Faina said that she and Beth never spoke about the money that her family members deposited into the CBA Pensioner Security Account. 539 On 4 July 2016 Faina attended the Rose Bay branch of Westpac and caused a cheque for $186,050 to be drawn on the Fanchel Transaction Account and deposited into Phoung Tuy Nguyen's account. Faina said she did not know which of Beth's relatives, in addition to Phoung Tuy Nguyen, were being repaid from those funds and, aside from making that repayment, she did not personally attend to making the balance of the repayments. Rather, Ian did so on her behalf. Faina said that she was conscious of having to make the repayments so, as soon as Fanchel had money, she would tell Ian that one of Beth's family members had to be repaid. 540 Faina's understanding is that the May Deposits have been repaid in full. She has not been asked or told to repay any further money and as far as she is aware she does not owe anyone any more money. 541 Finally, despite being silent on most topics, Beth also gave evidence about the May Deposits. 542 Beth said that settlement of the Rose Bay Property was due to occur on 31 March 2015 but did not because shares that Faina intended to sell in order to realise some of the purchase moneys could either not be sold or could only he sold at a loss. Faina thus decided to wait until the share price increased and instead to incur interest on the outstanding amount. 543 Beth was aware, from her conversations with Ian, that Faina had a shortfall in settlement moneys and that Ian's efforts to raise the shortfall from sources other than the sale of Faina's shares were unsuccessful. In or about mid April 2015 Beth and Ian had a conversation to the following effect: Ian: Can you speak to your family and see whether they can help my mother settle on the house? Beth: I'll ask. For approximately how long does she need the funds? Ian: A maximum of six months. Beth: Okay. I'll go and ask. 544 A few days later Ian asked Beth whether she had spoken to her family. Beth said that she initially delayed asking her family whether they would be willing to help because she did not want them involved. However, she subsequently saw emails "lying around at their home" relating to Ian's attempts to obtain further funds secured by a second mortgage over the Rose Bay Property and another of Faina's property's. When she saw the interest rate to be charged she decided to speak to her family. Beth recalls that she said to Ian: That interest rate will kill your mum. It will eat up all her equity. I'll go and talk to my family. 545 Approximately one week later, at a family gathering at Beth's mother's home, Beth spoke to her mother and her siblings. Beth has one brother and five sisters. Beth recalled that at the time she informed them that Faina had bought a property, that she was short of funds to cover the stamp duty and that she needed a short term loan to cover that shortfall. She asked if anyone could help her raise funds to assist Faina to settle. 546 A couple of days later Beth telephoned each of her siblings who had indicated they would be willing to lend Faina some money to see how much and by when they could do so. In those conversations each of Beth's siblings informed her of approximately how much they could lend and how long it would take to realise those moneys. 547 Beth said that, save for Thi Kim Loan and Phu Chau Pham, one of her older sisters and her husband, she emailed her other siblings the account name, BSB and account number into which the moneys were to be deposited. Beth no longer has a copy of this email. 548 On or about 2 or 3 May 2015 at a family gathering at Beth's mother's house Thi Kim Loan gave Beth a cheque for $200,000 made out to Faina and cash in the sum of $10,000. Beth said that Thi Kim Loan and Phu Chau Pham drew down on their mortgage in order to provide those funds. Beth gave the cheque and the cash to Ian. 549 Between 4 and 5 May 2015 there was a chain of email correspondence between Beth, her older sister Phoung Nguyen and her younger sister, Hong Nguyen, regarding the account details for the account into which the moneys were to be deposited. In particular: (1) by email sent on 4 May 2015 at 11.45 am to Beth and Hong Nguyen, Phoung Nguyen relevantly wrote: Email you bank details so I can transfer Jess money into your account. (2) by email sent on 4 May 2015 at 3.51 pm to Phoung Nguyen and Beth, Hong Nguyen wrote: I can only do $50k a day online so give me your bank account. (3) by email sent on 4 May 2015 at 3.52 pm to Hong Nguyen, Beth wrote: You can transfer from your ABL loan and this amount is unlimited did you know that? (4) by email dated 5 May 2015 sent at 8.52 pm to Beth, Hong Nguyen wrote: Okay we hv set the amount to be unlimited. (5) by email sent on 5 May 2015 at 8.54 am to Hong Nguyen, Stolyar@bigpond.com and Phuong Nguyen, Beth relevantly wrote: ... I will email you the account once settlement date is confirmed. Thanks. 550 Beth observed that in her email sent on 4 May 2015 Phuong Nguyen asked her for "your account details" but explained this away by saying that Phuong Nguyen's English was not very good. 551 On or about 5 May 2015 Beth emailed Phuong Nguyen, her younger sister Linda Nguyen and her brother Long Nguyen, with the account name, BSB and account number for the account into which the moneys were to be deposited. Beth no longer has these emails. 552 On 6 May 2015 Jessica, Phuong Nguyen's daughter, transferred $5,000 from her CBA account into the CBA Pensioner Security Account. Beth noted that the transfer has the reference "Beth Nguyen" but said that at the time of the transfer Jessica was 13 years old and that she only ever spoke to Phuong Nguyen about lending the money. 553 On 7 May 2015: (1) Jessica transferred a further $5,000 from her CBA account to the CBA Pensioner Security Account; (2) Phuong Nguyen attended the Ashfield branch of the CBA and deposited $4,000 into the CBA Pensioner Security Account; (3) Ian accompanied Faina to the Double Bay branch of the CBA where she deposited the $200,000 cheque and $10,000 cash (see [526(3)] above) into the CBA Pensioner Security Account; and (4) Beth's brother-in-law, Tuan Hoang, Hong Nguyen's husband, transferred $269,462.97 from their offset account to the CBA Pensioner Security Account. Beth noted that the transfer had the reference "PHUONG" to denote that it was, in fact, Phuong Nguyen's money that had been transferred. Beth explained that at the time Phuong Nguyen was living with her mother and did not have a mortgage. Thus from time to time she would transfer any excess money she had accumulated to the offset account so as to reduce the amount of interest that Hong Nguyen and her husband had to pay. Phuong Nguyen could access the money she had paid into the offset account at any time on request to Hong Nguyen and her husband. 554 On 8 May 2015 Phuong Nguyen transferred $2,700 from her CBA account to the CBA Pensioner Security Account. 555 On 11 May 2015: (1) Jessica transferred $3,400 from her CBA account to the CBA Pensioner Security Account. Again Beth noted that the transfer had the reference "Beth Nguyen"; (2) Phuong Nguyen attended the Ashfield branch of the CBA and deposited $440 into the CBA Pensioner Security Account; (3) Linda Nguyen, transferred $150,000 from her offset account to the CBA Pensioner Security Account; (4) Beth's younger brother, Duc Long, transferred $20,000 and then a further $100,000 from his Adelaide Bank account to the CBA Pensioner Security Account; and (5) Phuong Nguyen sent Beth an email informing her of the details of the various deposits that had been made. Beth forwarded this email to Ian immediately on receipt. 556 Beth said that while she was involved in obtaining the additional funding on behalf of Faina by way of the May Deposits she was not involved in the repayment of those funds but that, as far as she is aware, all moneys were repaid to the various individuals over a matter of weeks, months and years. Beth said that if any of those moneys had not been repaid she would have heard about it from her siblings. Beth said neither Ian nor she repaid any of May Deposits. 557 Beth was cross-examined about this evidence. Beth said that her family knew Faina. The following exchange took place: Mr Golledge: Right. And you say that, as a result of a meeting, you raised with your mother and your siblings this request to lend money to Faina. That's what you say in paragraph 13? Beth: Yes. Mr Golledge: And what I want to suggest to you, madam, is that what you really did was to ask your siblings and your mother whether they would lend money to you and Ian that was needed to cover the shortfall. What do you say about that? Beth: That's not true. Mr Golledge: You don't have any recollection of that? Beth: No. I mean - I mean, recollection of Mr Golledge: Of ever saying that it was you and Ian who were borrowing the money? Beth: No. Mr Golledge: And that that was the means by which the shortfall in the purchase would be obtained. Do you recall ever saying that? Beth: No. Mr Golledge: Well, that was what you said to your siblings, wasn't it? Beth: That Mr Golledge: - - - at the family meeting? Beth: Yes. About Ian's mum buying a property. Mr Golledge: Yes. But what you invited or asked them to do as to lend the money to you so that you and Ian could in turn lend it to your mother. Do you recall that? Beth: No. No. Mr Golledge: Do you ever remember - well, I withdraw that. And so is this the case, that you say that all of this money was raised from your family and was not advanced to you and Ian, but was lent by them to Faina? Beth: To who? Mr Golledge: To Faina? Beth: Faina, yes. Mr Golledge: Faina. That's your evidence? Beth: Yes.

[56]

5.6.3.2 Were the May Deposits loans to Ian and Beth or Beth? 558 The Trustee contends that the May deposits were funds borrowed by Ian and Beth or Beth and contributed by them to the purchase of the Rose Bay Property so as to give rise to a resulting trust or, failing that, a loan or void transfer. The respondents contend that the May Deposits were loans by Beth's family directly to Faina. 559 As is clear from the evidence set out above, the May Deposits were advanced without any formality. Deposits were made into an account nominated by Beth without any attendant documentation or other records. The adoption of that informal process is not sufficient for me to conclude that the May Deposits were thus advances made by Beth's family to Ian and Beth or Beth. 560 Contrary to the respondents' submission, Beth's evidence was tested in cross-examination but she maintained that the May Deposits were an advance to Faina and not to her. She sought to explain the content of the 18 January 2016 Email in which she referred to the family giving her their life savings as an attempt to make Ian feel bad in the context of a fight she was having at the time with Ian. 561 Despite the evidence given by each of Ian, Beth and Faina, including Ian and Beth's insistence that the May Deposits were advances made to Faina, I have come to a contrary view. That is for the following reasons. 562 First, the emails from Beth's family members request Beth's account details and refer to payment to be made to Beth. They make no mention of Faina. Similarly, Beth does not mention Faina in any of her email communications with her family. Further, on a number of occasions, the description used by Beth's family members at the time of making their deposits referred to "Beth Nguyen" and made no mention of Faina. 563 Secondly, in the 18 January 2016 Email, which was written at a time when this proceeding was not on foot, Beth clearly refers to her family giving her all of their life savings "with no paperwork" because they trusted her. In that email Beth also states that it was Ian who was to repay her family. At the time he had not done so. 564 I do not accept that the 18 January 2016 Email was written in the heat of the moment and that Beth made this statement to make Ian feel bad. Rather, given the context in which the email was written, namely her belief that she was to become a beneficial owner of the Rose Bay Property (with Ian), it is more likely that this email reflects the true position. That is, that the May Deposits were an advance to Ian and Beth or Beth and, were in turn, contributed by them to the purchase of the Rose Bay Property. 565 In light of that finding, and in the absence of any evidence of a contrary intention, the contribution constituted by the May Deposits to the Rose Bay Property gave rise to a resulting trust in favour of Ian and Beth in the proportion to which the total of the May Deposits bears to the purchase price of that property. That proportion is 6.6%.

[58]

6.1 Are any of the Trustee's claims statute barred? 568 The respondents rely on a defence under the Limitation Act in relation to the Trustee's claims concerning 27/26 Ocean Street, the Campbell Parade Property and 11/2 Ocean Street. In response to each of those claims the respondents allege that, even if Faina holds (or held) the title to the particular property subject to a resulting trust for Ian and Beth or Ian (which they do not admit), the cause of action accrued more than six and 12 years prior to the commencement of the proceeding (or six years in the case of 11/2 Ocean Street). Thus they contend that the claim in relation to 27/26 Ocean Street and the Campbell Parade Property is not maintainable by reason of s 23, Div 5 and s 63 of the Limitation Act and the claim in relation to 11/2 Ocean Street is not maintainable by reason of ss 23, 48 and 63 of the Limitation Act. 569 Section 23 of the Limitation Act provides: 23 Equitable relief Sections 14, 16, 17, 18, 20 and 21 do not apply, except so far as they may be applied by analogy, to a cause of action for specific performance of a contract or for an injunction or for other equitable relief. 570 Relevantly, s 14 of the Limitation Act provides: (1) An action on any of the following causes of action is not maintainable if brought after the expiration of a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims - (a) a cause of action founded on contract (including quasi contract) not being a cause of action founded on a deed, (b) a cause of action founded on tort, including a cause of action for damages for breach of statutory duty, (c) a cause of action to enforce a recognizance, (d) a cause of action to recover money recoverable by virtue of an enactment, other than a penalty or forfeiture or sum by way of penalty or forfeiture. (2) This section does not apply to - (a) a cause of action to which section 19 applies, or (b) a cause of action for contribution to which section 26 applies. (3) For the purposes of paragraph (d) of subsection (1), enactment includes not only an enactment of New South Wales but also an enactment of the Imperial Parliament, an enactment of another State of the Commonwealth, an enactment of the Commonwealth, an enactment of a Territory of the Commonwealth and an enactment of any other country. 571 Division 5 of the Limitation Act concerns trusts. It relevantly includes s 48 which provides: 48 Breach of trust An action on a cause of action in respect of a breach of trust is not maintainable if brought after the expiration of the only or later to expire of such of the following periods of limitation as are applicable - (a) a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims, and (b) the limitation period for the cause of action fixed by or under any provision of this Act other than this section. 572 Section 63 of the Limitations Act provides: 63 Debt, damages etc (1) Subject to subsection (2), on the expiration of a limitation period fixed by or under this Act for a cause of action to recover any debt damages or other money, the right and title of the person formerly having the cause of action to the debt damages or other money is, as against the person against whom the cause of action formerly lay and as against the person's successors, extinguished. (2) Where, before the expiration of a limitation period fixed by or under this Act for a cause of action to recover any debt damages or other money, an action is brought on the cause of action, the expiration of the limitation period does not affect the right or title of the plaintiff to the debt damages or other money - (a) for the purposes of the action, or (b) so far as the right or title is established in the action. (3) This section does not apply to a cause of action to which section 64 or section 65 applies. 573 Despite pleading a defence based on the Limitation Act in relation to the three transactions referred to at [568] above, the respondents made no submissions, either written or oral, in support of the pleaded defence. In those circumstances it is open to infer that, in each case the defences based on the Limitation Act are abandoned. However, for completeness and despite the precise basis upon which they are put being unclear, I will address them. 574 The Trustee's claim is for recovery of trust property or property into which trust property can be traced. In relation to a claim of that nature s 47(1) of the Limitation Act provides: (1) An action on a cause of action - … (c) to recover trust property, or property into which trust property can be traced, against a trustee or against any other person, or (d) to recover money on account of a wrongful distribution of trust property, against the person to whom the property is distributed or against the person's successor, is not maintainable by a trustee of the trust or by a beneficiary under the trust or by a person claiming through a beneficiary under the trust if brought after the expiration of the only or later to expire of such of the following limitation periods as are applicable - (e) a limitation period of twelve years running from the date on which the plaintiff or a person through whom the plaintiff claims first discovers or may with reasonable diligence discover the facts giving rise to the cause of action and that the cause of action has accrued, and (f) the limitation period for the cause of action fixed by or under any provision of this Act other than this section. 575 There is no suggestion, prior to the time of the Trustee's appointment, that Faina's possession of any trust property was without Ian and Beth's consent or otherwise adverse to them. Accordingly, the limitation period could not have begun to run prior to the date of the Trustee's appointment. 576 Even if that was not so, the earliest transaction in relation to which the Trustee seeks a recovery by way of a claim that the property is held on a resulting trust is in relation to the acquisition of 27/26 Ocean Street. The purchase of that property completed on or about 20 July 2007, which was less than 12 years before the commencement of this proceeding on 31 May 2019. For completeness, I note that the remaining two transactions that are the subject of a limitations defence both occurred less than 12 years prior to the commencement of this proceeding. The Campbell Parade Property was acquired in May 2009 and 11/2 Ocean Street was transferred in March 2013. 577 For those reasons, to the extent the respondents maintain their defences based on the Limitation Act in relation to 27/26 Ocean Street, the Campbell Parade Property and 11/2 Ocean Street, they cannot succeed.

[59]

6.2 Laches 578 The respondents also raise the defence of laches in relation to the same three transactions namely, the acquisition of 27/26 Ocean Street and the Campbell Parade Property and the transfer of 11/2 Ocean Street. As was the case with their defence based on the Limitation Act, the respondents made no written or oral submissions in relation to this defence and thus have failed to provide any explanation or particularisation of how they contend that the Trustee has delayed. It is once again open to me to infer that the defences are abandoned. However, again for completeness, I will address them. 579 A court of equity requires that "those who come to it to ask its active interposition to give them relief should use due diligence, after there has been such notice or knowledge as to make it inequitable to lie by": see Lamshed v Lamshed (1963) 109 CLR 440 at 453. In Lindsay Petroleum Co v Hurd (1874) LR 5 PC 221 at 239 - 240 Sir Barnes Peacock relevantly said: … the doctrine of laches in Courts of Equity is not an arbitrary or technical doctrine. Where it would be practically unjust to give a remedy, either because the party has, by his conduct, done that which might fairly be regarded as equivalent to a waiver of it, or where by his conduct and neglect he has, though perhaps not waiving that remedy, yet put the other party in a situation in which it would not be reasonable to place him if the remedy were afterwards to be asserted, in either of these cases, lapse of time and delay are most material. … Two circumstances, always important in such cases, are, the length of the delay and the nature of the acts done during the interval, which might affect either party and cause a balance of justice or injustice in taking the one course or the other, so far as relates to the remedy. 580 There is no evidence of any relevant delay on the part of the Trustee. As set out in further detail below, he was appointed in 2016 and since that time has taken steps to investigate the circumstances surrounding the relevant transactions. This proceeding was commenced in 2019. In any event, the respondents have not taken any steps to attempt to establish any such delay. Further, there is no reason why one might expect that Ian and/or Beth might have ever taken steps to sue Faina to enforce any of the trusts at an earlier time. 581 Added to that there is no evidence of any relevant prejudice to the respondents and they have not sought to demonstrate any such prejudice. 582 The respondents have not made out the defences based on laches in relation to any of the three transactions.

[61]

6.3.1 Respondents' submissions 583 The third defence pleaded concerns the whole of the Trustee's claim. The respondents allege that the whole of the Trustee's claim for relief in this proceeding ought to be permanently stayed under the principles discussed in Walton v Gardiner. They contend that there is unfairness in allowing the case to proceed to trial when: (1) two important witnesses are deceased, Ms Chahine and Ms Casula; (2) relevant events took place so long ago that normal recollections are probably impaired; (3) relevant events took place so long ago that some relevant business records are no longer available; and (4) the claims made are not primarily intended to satisfy the few creditors of the bankrupts' estates but rather the investments made in this litigation by a financier or financiers. 584 The respondents submitted that the following principles apply: (1) the Court has power under s 23 of the Federal Court Act, and by its implied power to control its own proceedings, to order a permanent stay; (2) the implied power to control the Court's processes includes the power to prevent conduct which, although not inconsistent with the literal application of procedural rules of court, would nevertheless be manifestly unfair or would otherwise bring the administration of justice into disrepute among right thinking people citing, among others, Walton v Gardiner at 393; (3) abuse of process can take many forms including bringing claims that can no longer be determined justly or where there has been destruction of evidence; (4) notions of justice and injustice must reflect contemporary values if the courts and the administration of justice are to continue to enjoy the confidence of the public; (5) abuses of procedure usually fall into one of three broad categories two of which are relevant to this case: (a) where use of the Court's procedures is unjustly oppressive to one of the parties or vexatious; and (b) where use of the Court's procedures in the manner contemplated would bring the administration of justice into disrepute; (6) the onus of proving an abuse of process rests upon the party alleging abuse and is a heavy one. Similarly, the power to stay or dismiss a proceeding on the ground that it is an abuse of process is to be exercised with caution; and (7) the categories where abuse arises are not closed, referring in particular to Batistatos v Roads and Traffic Authority of New South Wales (2006) 226 CLR 256 at [9], [14]: see also Jeffery v Katauskas Pty Ltd v SST Consulting (2009) 239 CLR 75 at [28]. 585 The respondents submitted that this case proves that it is difficult, if not impossible, to have a fair trial when: (1) the events and transactions in question occurred so long ago that it is not possible for any surviving witnesses, in any way, to accurately recall the detail of what happened up to 20 years ago; (2) the presently important transactions amount to a few amongst hundreds or thousands of similar transactions and were of no real moment at the time they occurred, such as to cause a lasting memory; (3) two relevant witnesses are deceased - one a conveyancer who handled the purchase of the Campbell Parade Property and the other the proprietor of Dibelle Finance; (4) there are missing bank statements and other bank records for relevant accounts; (5) there are missing share trading documents. The respondents raised as an example that Faina had a share portfolio in 2002 and following, yet there are no brokers accounts for it; (6) the alleged transactions, if they occurred, were intra-family with no or little formality about them so that documents like company minutes recording important decisions are unlikely to have ever been created, let alone kept safe, if they did exist; (7) between 50 and about 100 bank accounts were used in the 15 years between 2001 and the date of bankruptcy; (8) multiple stockbrokers were used, often at the same time; (9) the public company AGM no longer exists, having been taken over a dozen years ago and its registers are apparently no longer accessible; (10) the Trustee has, on any measure, conducted a very thorough investigation and in the process has put a dragnet through numerous banks, share brokerages and share registries using his extensive powers. Notwithstanding this, vital records necessary to resolve the main disputes have been lost forever probably because of document retention policies of institutions and as a normal incident of archiving (or not archiving) of decades old paper and computer records; (11) it is now impossible to strike a balance of the account between Faina, Dibelle Finance, Fanchel and Stoligor on the one hand and Ian, Beth, the Canchel Partnership, Bethian and Reserve Capital on the other; and (12) even if one could, there is not even a starting balance or starting point in evidence from which to begin an accounting. 586 The respondents submitted that every transaction challenged by the Trustee in this matter suffers in some way from the absence of documents and of witnesses with reliable recall which, in most instances, is caused by the typical effects of the passing of time. They contended that this makes this proceeding oppressive to them and unable to be determined justly.

[62]

6.3.2 Is a defence based on Walton v Gardiner available? 587 Walton v Gardiner concerned three appeals from orders made by the Court of Appeal staying disciplinary proceedings in the Medical Tribunal established under s 32M of the Medical Practitioners Act 1938 (NSW). Those proceedings had been commenced in 1991 by the referral of a complaint against each of the respondents made by the appellant, Ms Walton, as a delegate of the Secretary of the New South Wales Department of Health. They concerned charges for professional misconduct because of events which took place during periods commencing respectively in 1973, 1970 and 1972 and ending in 1978. 588 At 392 Mason CJ, Deane and Dawson JJ endorsed the approach of the Court of Appeal in relation to the extent of its jurisdiction to stay proceedings on the basis of abuse of process. Their Honours observed that Gleeson CJ and Kirby P (as their Honours then were) had considered that the Court of Appeal had power to make an order staying proceedings if it was satisfied "that the continuation of the proceedings would be 'so unfairly and unjustifiably oppressive' as to constitute an abuse of process" and that Mahoney JA had adopted a similar approach, albeit formulating the test in slightly different words. 589 At 392-393 their Honours continued: The inherent jurisdiction of a superior court to stay its proceedings on grounds of abuse of process extends to all those categories of cases in which the processes and procedures of the court, which exist to administer justice with fairness and impartiality, may be converted into instruments of injustice or unfairness. Thus, it has long been established that, regardless of the propriety of the purpose of the person responsible for their institution and maintenance, proceedings will constitute an abuse of process if they can be clearly seen to be foredoomed to fail. Again, proceedings within the jurisdiction of a court will be unjustifiably oppressive and vexatious of an objecting defendant, and will constitute an abuse of process, if that court is, in all the circumstances of the particular case, a clearly inappropriate forum to entertain them. Yet again, proceedings before a court should be stayed as an abuse of process if, notwithstanding that the circumstances do not give rise to an estoppel, their continuance would be unjustifiably vexatious and oppressive for the reason that it is sought to litigate anew a case which has already been disposed of by earlier proceedings. The jurisdiction of a superior court in such a case was correctly described by Lord Diplock in Hunter v Chief Constable of the West Midlands Police as "the inherent power which any court of justice must possess to prevent misuse of its procedure in a way which, although not inconsistent with the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people". (Footnotes omitted.) 590 The categories of conduct that might amount to abuse of process are not closed: see Batistatos (per Gleeson CJ, Gummow, Hayne and Crennan JJ) at [9]. In Batistatos, their Honours went on to observe that the development of the categories continues and, commencing at [10], considered the development that had occurred: A convenient starting point for consideration of the development that has occurred is the statement made by Lord Blackburn in 1885, in a case frequently cited in Australian courts. The causes of action at stake in Metropolitan Bank Ltd v Pooley were in tort. Lord Blackburn said: [F]rom early times (I rather think, though I have not looked at it enough to say, from the earliest times) the Court had inherently in its power the right to see that its process was not abused by a proceeding without reasonable grounds, so as to be vexatious and harassing - the Court had the right to protect itself against such an abuse; but that was not done upon demurrer, or upon the record, or upon the verdict of a jury or evidence taken in that way, but it was done by the Court informing its conscience upon affidavits, and by a summary order to stay the action which was brought under such circumstances as to be an abuse of the process of the Court; and in a proper case they did stay the action. (Footnotes omitted.) 591 At [14] their Honours noted that: In Ridgeway v The Queen, Gaudron J explained: The powers to prevent an abuse of process have traditionally been seen as including a power to stay proceedings instituted for an improper purpose, as well as proceedings that are "frivolous, vexatious or oppressive". This notwithstanding, there is no very precise notion of what is vexatious or oppressive or what otherwise constitutes an abuse of process. Indeed, the courts have resisted, and even warned against, laying down hard and fast definitions in that regard. That is necessarily so. Abuse of process cannot be restricted to "defined and closed categories" because notions of justice and injustice, as well as other considerations that bear on public confidence in the administration of justice, must reflect contemporary values and, as well, take account of the circumstances of the case. That is not to say that the concept of "abuse of process" is at large or, indeed, without meaning. As already indicated, it extends to proceedings that are instituted for an improper purpose and it is clear that it extends to proceedings that are "seriously and unfairly burdensome, prejudicial or damaging" or "productive of serious and unjustified trouble and harassment". (Footnotes omitted.) 592 Taking the respondents' submissions as a whole and, without wishing to oversimplify them, they amount to a contention that it is unfair and/or prejudicial to them to permit this proceeding to continue. That is said to be so because two of the witnesses are deceased, the relevant events took place over a lengthy period commencing some time ago, the transactions in issue involve a large number of documents and, for various reasons, the documentary record is incomplete. In some cases, because of the passing of time, the documentary trail is incomplete and memories have faded. 593 In this proceeding the Trustee seeks to impugn five separate transactions, the earliest of which took place in 2007. Those transactions do not depend on a detailed investigation of events which took place in the distant past. Each of the transactions is to be, and has been, investigated separately. In each case the Trustee relies on facts which he seeks to establish in relation to the transaction in issue. The factual background dating back to 2002, upon which the Trustee relies in terms of providing context, is a separate matter. In effect, as the Trustee submitted, while it may be difficult to prove how a particular property or a share transaction was funded in 2002 that does not make it unfair to allow the Trustee to bring a claim in respect of a voluntary transfer of property many years later. 594 True it is that some of the transactions or events surrounding them are interrelated, adding to the complexity of the factual matrix, but that does not make them unfair or unjustifiably oppressive. Further, that the respondents conducted their financial affairs in a particular way without proper or fulsome documentation, either because they did not contemplate this proceeding or because they were intra-family dealings, is not a factor which would make the proceeding unfair or oppressive. The Trustee is a stranger to the transactions. He has, since his appointment, taken steps to understand the affairs of the bankrupts, including in the ways described at [43] above. He commenced the proceeding within three years of his appointment. He did not unduly delay. Any gaps in the documentary trail are more likely to affect the Trustee, who bears the onus of proof in the proceeding, rather than the respondents. 595 Two witnesses are deceased: Ms Chahine and Ms Casula. But neither could be classified as central to the resolution of the issues in the case. Ms Chahine was involved in Dibelle Finance, which is only of peripheral relevance to the transactions. Ms Casula was a lawyer with Gadens who acted for Ian and Faina in a number of property transactions. Her files are available. In any event, the respondents do not explain how the fact that those witnesses are not available has caused them any unfairness or makes the proceeding unduly oppressive. 596 Finally, there was no evidence before me to support the contention pleaded in the respondents' defence that the proceeding was brought not primarily to satisfy the few creditors of Ian and Beth's estate but rather the investments made in this litigation by a financier or financiers. Nor did the respondents make any submissions in support of that contention. For completeness I note that there is nothing to suggest that the Trustee is acting other than in accordance with the requirements of, and the duties imposed on him by, the Bankruptcy Act. 597 For those reasons the respondents' defence that the proceeding should be stayed because it is unfair in the Walton v Gardiner sense fails.

[63]

Conclusion 598 In summary, for the reasons set out above, I have made the following findings: (1) 27/26 Ocean Street is held on resulting trust for Ian and therefore the Trustee; (2) the Campbell Parade Property is held on a resulting trust for Ian and Beth and thus the Trustee in proportion to the contribution made by them to its purchase price, namely 58.17%; (3) the transfer of 11/2 Ocean Street is void against the Trustee pursuant to s 120 of the Bankruptcy Act; (4) as I have accepted the Share Arrangement: (a) Faina and Fanchel are liable to account to the Trustee for $3,537,340.95 received from the sale of the eBet shares which were the subject to the Share Arrangement; (b) the transfer of the proceeds of sale of the WCL shares that were subject to the Share Arrangement, in an amount of $523,285.20, was void against the Trustee pursuant to s 120 of the Bankruptcy Act; and (c) Fanchel is liable to account to the Trustee for the proceeds of sale of 9,083,648 GUL shares which were the subject of the Share Arrangement; (5) the second registered mortgage granted by Ian and Beth over the Point Piper Property to Faina did not secure any indebtedness and the payment of the Point Piper Repayment Amount to Faina following the sale of that property ought not to have been made. It follows from that finding that the Point Piper Repayment Amount is held by Faina on resulting trust for Ian and Beth and thus the Trustee; and (6) the Rose Bay Property was held on a resulting trust for Ian and Beth and thus the Trustee in the proportion to which they contributed to its purchase price. Their contribution was the sum of $3.6 million, which came for the Point Piper Repayment Amount, (representing 31.5% of the Rose Bay Property) and the May Deposits (representing 6.6% of the Rose Bay Property). 599 As the Trustee submitted, the precise orders to be made by the Court depends on the findings I have made. To that end, the Trustee seeks to be heard on the form of orders following publication of these reasons. The parties also agreed that the question of costs of the proceeding should be reserved. 600 Accordingly, I will make orders for the parties to confer and to provide proposed orders to my Associate within four weeks of the date of publication of these reasons giving effect to the findings I have made and in relation to the relief that should be granted as well as on the question of costs of the proceeding. 601 If the parties cannot agree on any aspect of the proposed orders they should, by the same date, each submit a version of the proposed orders together with submissions, not exceeding 10 pages in length. Thereafter the proceeding will be listed on a date that is convenient to the parties and the Court for case management hearing to resolve any differences that arise in relation to the proposed orders. 602 I will make orders accordingly. I certify that the preceding six hundred and two (602) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Markovic.

Parties

Applicant/Plaintiff:

Scott (Trustee), in the matter of Stolyar (Bankrupt)

Respondent/Defendant:

Stolyar

Legislation Cited (7)

Medical Practitioners Act 1938(NSW)

Bankruptcy Act 1966(Cth)ss 58, 120, 121

Evidence Act 1995(Cth)ss 63, 67

Limitation Act 1969(NSW)ss 23, 48, 68

Federal Court of Australia Act 1976(Cth)

Corporations Act 2001(Cth)

Conveyancing Act 1919(NSW)

Cases Cited (38)

2.1 Void transactions and resulting trusts 8 The Trustee seeks relief in relation to the five transactions identified above either because each transaction is void against him pursuant to s 120 or s 121 of the Bankruptcy Act or on the basis that each asset or a proportion of it, based on the contribution to its acquisition by Ian or Ian and Beth, is held on a resulting trust for him or, in one case, on an express trust. 9 Section 120 of the Bankruptcy Act concerns undervalued transactions it relevantly provides: Transfers that are void against trustee (1) A transfer of property by a person who later becomes a bankrupt (the transferor) to another person (the transferee) is void against the trustee in the transferor's bankruptcy if: (a) the transfer took place in the period beginning 5 years before the commencement of the bankruptcy and ending on the date of the bankruptcy; and (b) the transferee gave no consideration for the transfer or gave consideration of less value than the market value of the property. … (3) Despite subsection (1), a transfer is not void against the trustee if: (a) in the case of a transfer to a related entity of the transferor: (i) the transfer took place more than 4 years before the commencement of the bankruptcy; and (ii) the transferee proves that, at the time of the transfer, the transferor was solvent; or (b) in any other case: (i) the transfer took place more than 2 years before the commencement of the bankruptcy; and (ii) the transferee proves that, at the time of the transfer, the transferor was solvent. … (7) For the purposes of this section: (a) transfer of property includes a payment of money; and (b) a person who does something that results in another person becoming the owner of property that did not previously exist is taken to have transferred the property to the other person; and (c) the market value of property transferred is its market value at the time of the transfer. 10 Section 121 of the Bankruptcy Act concerns transfers to defeat creditors. It relevantly provides: Transfers that are void (1) A transfer of property by a person who later becomes a bankrupt (the transferor) to another person (the transferee) is void against the trustee in the transferor's bankruptcy if: (a) the property would probably have become part of the transferor's estate or would probably have been available to creditors if the property had not been transferred; and (b) the transferor's main purpose in making the transfer was: (i) to prevent the transferred property from becoming divisible among the transferor's creditors; or (ii) to hinder or delay the process of making property available for division among the transferor's creditors. Showing the transferor's main purpose in making a transfer (2) The transferor's main purpose in making the transfer is taken to be the purpose described in paragraph (1)(b) if it can reasonably be inferred from all the circumstances that, at the time of the transfer, the transferor was, or was about to become, insolvent. Other ways of showing the transferor's main purpose in making a transfer (3) Subsection (2) does not limit the ways of establishing the transferor's main purpose in making a transfer. Transfer not void if transferee acted in good faith (4) Despite subsection (1), a transfer of property is not void against the trustee if: (a) the consideration that the transferee gave for the transfer was at least as valuable as the market value of the property; and (b) the transferee did not know, and could not reasonably have inferred, that the transferor's main purpose in making the transfer was the purpose described in paragraph (1)(b); and (c) the transferee could not reasonably have inferred that, at the time of the transfer, the transferor was, or was about to become, insolvent. 11 There was no dispute about the principles applicable to establishing an express trust or a resulting trust. 12 To establish the existence of an express trust there must be an intention to create a trust, a clear identification of the trust property and reasonable certainty as to the identification of the beneficiaries: see Korda v Australian Executor Trustees (SA) Ltd (2015) 255 CLR 62 at [7] (French CJ), [109] (Gageler J) and [204] (Keane J). 13 For a resulting trust, in El-Debel v Micheletto (Trustee) [2021] FCAFC 117 at [7] a Full Court of this Court (Markovic, Derrington and Colvin JJ) set out a summary of the principles as follows: The legal reasoning by the primary judge as to the principles to be applied in determining whether property was held on resulting trust was accepted as being correct by all parties to the appeals. For present purposes they may be stated briefly by adopting the key passages from the uncontested formulations of the primary judge at [78], namely: (1) A presumption of a resulting trust arises where one person provides the purchase price of property which is conveyed into the name of another person. (2) In deciding whether a presumption of a resulting trust has been rebutted the Court must reach a conclusion on the whole of the evidence. (3) The presumption of a resulting trust may be rebutted by evidence which manifests an intention to the contrary, but should not give way to slight circumstances. (4) The extent of the beneficial interest of the parties arising by reason of a resulting trust must be determined when the property was purchased. (5) It is the intention of the person who provides part of the purchase price that is relevant when considering whether the presumption may be displaced by contrary evidence. (6) If part of the purchase price is provided by being borrowed on a mortgage, the presumption of a resulting trust is applied by treating the monies raised by the mortgage as a contribution by the person who is liable to repay that money. 14 More particularly, the Trustee relied on the following two formulations of where a resulting trust is presumed to arise. 15 First, in HCK China Investments Limited v Solar Honest Limited [1999] FCA 1156; 165 ALR 680 at [260] where Hely J, citing In re Vandervell's Trusts (No 2) [1974] 1 Ch 269 at 294, relevantly said: In re Vandervell's Trusts (No 2) [1974] 1 Ch 269 at 294 establishes two categories of resulting trust: 1. where the settlor transfers the legal estate in property to another otherwise than for valuable consideration. If, by construing the document transferring the legal estate, it is possible to discern whether the settlor intended for the transferee to take the beneficial estate, then such intention is conclusive. However, if the document is silent as to the settlor's intentions, a presumption of resulting trust in favour of the settlor arises. … 16 Secondly, where a person funds all or part of the purchase price of a property but causes it to be registered or conveyed into the name of another person. In that case the property is presumed to be held on trust for the person providing the funding to an extent reflecting his or her proportionate contribution to the property: see Calverley v Green (1984) 155 CLR 242 at 246-247. Where that occurs contributions by way of borrowings are taken to be contributed by the person or persons liable to repay the loan: see Calverley at 251 (Gibbs CJ), 257-258 (Mason and Brennan JJ) and 267-268 (Deane J). 17 The exception to these presumptions is where the person transferring the property or funding its purchase does so in favour of his or her wife, child or other person to whom he or she stands in loco parentis: see Calverley at 247. In that case a presumption of advancement arises such that it is to be presumed that the transfer is way by of a gift. This presumption has been held to extend to advances by mothers in favour of their adult children and to an advance in favour of a child and a third party: see Nelson v Nelson (1995) 184 CLR 538 at 548-9 (Deane and Gummow JJ), 576 (Dawson J), 585-6 (Toohey JJ) and 601 (McHugh J); "Lamplugh v Lamplugh (1709) 1 P Wms 111; 24 ER 316. 18 As set out above, the presumption of resulting trust may be rebutted by evidence to the contrary. I pause to note that in this case the respondents did not lead any such evidence in relation to any of the transactions where the Trustee contended that the asset, or a portion of it, was held on trust by one or both of the respondents for Ian or Ian and Beth. Instead, the respondents deny that the transactions occurred in the manner alleged by the Trustee. That being so, if the Trustee's contentions in relation to the purchase of assets by Ian and/or Beth in Faina's name are accepted it will follow that those assets (or any of them, as the case may be) are held by Faina on resulting trust for the Trustee in whom Ian's and Beth's interests are vested pursuant to s 58 of the Bankruptcy Act.

Cited By (14)

Irwin v Pamplin & Ors

Mokhtar v Piscopo

Scott (trustee) v Stolyar, in the matter of Stolyar

Scott (Trustee) v Stolyar, in the matter of Stolyar

Scott (Trustee), in the matter of Stolyar (Bankrupt) v Stolyar

2.2 Approach to the evidence 19 As will become evident from the facts set out below, the Trustee relies substantially upon records obtained by him as a result of compulsory processes available under the Bankruptcy Act or pursuant to the Court's powers to compel production of documents. He has not been able to adduce evidence from witnesses who could speak directly about the transactions the subject of this proceeding. Accordingly, in some cases the Trustee asks the Court to make findings which depend on a process of inferential reasoning rather than direct evidence. 20 In Quintis Ltd (Subject to Deed of Company Arrangement) v Certain Underwriters at Lloyd's London Subscribing to Policy Number B0507N16FA15350 [2021] FCA 19; 385 ALR 639 at [105]-[106] Lee J said the following about inferential reasoning: 105 However, it is also true that where there is no direct evidence of a fact that a party bearing the onus of proof seeks to prove, "it is not possible to attain entire satisfaction as to the true state of affairs": Girlock (Sales) Pty Ltd v Hurrell (1982) 149 CLR 155 (at 169 per Mason J). However, in such a case, the law does not require proof to the "entire satisfaction" of the tribunal of fact: see Transport Industries Insurance Co Ltd v Longmuir [1997] 1 VR 125 (at 141 per Tadgell JA, with whom Winneke P and Phillips JA agreed). Indeed, a party may advance a case relying on circumstantial evidence, on the basis that collectively viewed, a combination of proven facts can provide a sufficient basis for inferring the ultimate fact to be proved. A comprehensive statement as to the sufficiency of circumstantial evidence in a civil case to support proof by inference from directly proved facts was given by the High Court in Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1 (at 5 per Dixon, Williams, Webb, Fullagar and Kitto JJ): Of course as far as logical consistency goes many hypotheses may be put which the evidence does not exclude positively. But this is a civil and not a criminal case. We are concerned with probabilities, not with possibilities. The difference between the criminal standard of proof in its application to circumstantial evidence and the civil is that in the former the facts must be such as to exclude reasonable hypotheses consistent with innocence, while in the latter you need only circumstances raising a more probable inference in favour of what is alleged. In questions of this sort, where direct proof is not available, it is enough if the circumstances appearing in evidence give rise to a reasonable and definite inference: they must do more than give rise to conflicting inferences of equal degrees of probability so that the choice between them is mere matter of conjecture. But if circumstances are proved in which it is reasonable to find a balance of probabilities in favour of the conclusion sought then, though the conclusion may fall short of certainty, it is not to be regarded as a mere conjecture or surmise … (Citations omitted). 106 Furthermore, in assessing a circumstantial case, the question of whether an inference is open and can be drawn as a matter of probability is to be determined by considering the combined weight of all the relevant established facts, rather than by considering each fact sequentially and in isolation: Marriner v Australian Super Developments Pty Ltd [2016] VSCA 141 (at [75] per Tate ACJ, Kyrou and Ferguson JJA). Indeed, as the Full Court of this Court recently stated in Australian Broadcasting Corporation v Chau Chak Wing [2019] FCAFC 125; (2019) 271 FCR 632 (at 674 [134] per Besanko, Bromwich and Wheelahan JJ): In assessing a circumstantial case, it is important to bear in mind that the facts ultimately to be proven are those that are in issue, and not necessarily all the circumstantial facts themselves. As Dawson J observed in Shepherd v The Queen (1990) 170 CLR 573 at 580, "[T]he probative force of a mass of evidence may be cumulative, making it pointless to consider the degree of probability of each item of evidence separately." This invites consideration of the combined weight of circumstantial facts, for it is the essence of a circumstantial case that the combined force of its components should be considered, and proof of some circumstantial facts may be affected by the court's assessment of other circumstantial facts: Chamberlain v The Queen (No 2) (1984) 153 CLR 521 at 535 (Gibbs CJ and Mason J). Courts may fall into error by compartmentalising circumstantial facts, rather than standing back and assessing the broader picture. 21 In In the matter of Hillsea Pty Limited [2019] NSWSC 1152 at [16]-[21] Black J set out the principles which he considered he should have regard to in assessing the affidavit and oral evidence relied on before him, including relevantly as follows: 16. I should have regard to the fallibility of human memory, particularly when disputes intervene, in determining these proceedings. In an often quoted observation in Watson v Foxman (1995) 49 NSWLR 315 at 319, McLelland CJ in Eq observed that: "... human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions of self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience." 17. In Effem Foods Pty Ltd v Lake Cumbeline Pty Ltd (1999) 161 ALR 599 at [15], the High Court similarly approved an observation at first instance in that case that: "[Given the lapse of time] between the events and conversations raised in evidence and the hearing of the evidence before me, the only safe course is to place primary emphasis on the objective factual surrounding material and the inherent commercial probabilities, together with the documentation tendered in evidence. In circumstances where the events took place so long ago, it must be an exceptional witness whose undocumented testimony can be unreservedly relied on. The witnesses in this case unfortunately did not come within that exceptional class. The discussions referred to in evidence were capable of bearing quite opposed meanings depending on subtle differences of nuance and emphasis, and a proper appreciation of the significance of those matters must necessarily be considerably diminished over such a long period of time." 18. In Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 at 129, Gleeson CJ, Gummow and Kirby JJ observed that: "Considerations such as these have encouraged judges, both at trial and on appeal, to limit their reliance on the appearances of witnesses and to reason to their conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events. This does not eliminate the established principles about witness credibility; but it tends to reduce the occasions where those principles are seen as critical." … 20. I summarised the applicable principles in Re Kit Digital Australia Pty Ltd (in liq) [2014] NSWSC 1547 at [7], as follows: "It is important in this context to have regard to the fallibility of human memory which increases with the passage of time, particularly where disputes or litigation intervene: Watson v Foxman (1995) 49 NSWLR 315 at 318-319 per McLelland CJ in Eq; Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) [2008] FCA 810 at [41] per Rares J; Varma v Varma [2010] NSWSC 786 at [424]-[425] per Ward J. To the extent that credit issues need to be determined in respect of particular conversations, I have also had regard to the fact that objective evidence is likely to be the most reliable basis for determining them. I summarised the relevant principles in Re Colorado Products Pty Ltd (in prov liq) [2014] NSWSC 789 at [10], where I noted that the credibility of a witness and his or her veracity may be tested by reference to the objective facts proved independently of the testimony given, in particular by reference to the documents in the case, by paying particular regard to the witness's motives and the overall probabilities: Armagas Ltd v Mundogas SA [1985] 1 Ll R 1 at 57; Camden v McKenzie [2007] QCA 136; [2008] 1 Qd R 39 at [34]; Craig v Silverbrook [2013] NSWSC 1687 at [141]; State of New South Wales v Hunt [2014] NSWCA 47 at [56]." 22 Those principles are equally applicable here in assessing the affidavit evidence relied on by the respondents. 23 The Trustee made detailed submissions about the credit of the respondents' witnesses which I address below. It was not in dispute that where a witness is not believed on a particular topic or issue, an inference may be drawn that the truth would be harmful to them. Further, the rejection of a witness's evidence on a particular topic may be relevant to the Court's assessment of other evidence on the same topic. 24 In Steinberg v Federal Commissioner of Taxation (1975) 134 CLR 640 the High Court (Barwick CJ, Gibbs and Stephen JJ) considered various transactions related to three parcels of land situated in Western Australia. In summary, in issue was the characterisation of those transactions insofar as that determined the basis upon which the owners of the land were liable to pay tax. At first instance the principal witness was the appellant, Mr Steinberg, whose evidence was rejected in relation to the purpose for which shares were acquired in a company that held one of the parcels of land. On appeal one of the questions that arose was whether Mason J was right to conclude that the shares in that company were acquired for the main or dominant purpose of profit making by sale as opposed to the stated purpose given by Mr Steinberg in his evidence which his Honour rejected. 25 On that question at 694 Gibbs J found that the reasons given by Mason J for rejecting Mr Steinberg's evidence were completely convincing. His Honour said: … The fact that a witness is disbelieved does not prove the opposite of what he asserted: Scott Fell v Lloyd (33); Hobbs v Tinling (CT) & Co Ltd (34). It has sometimes been said that where the story of a witness is disbelieved, the result is simply that there is no evidence on the subject (Jack v Smail (1906)(35); Malzy v Eichholz (36); Ex parte Bear; Re Jones (37), but although this is no doubt true in many cases it is not correct as a universal proposition. There may be circumstances in which an inference can be drawn from the fact that the witness has told a false story, for example, that the truth would be harmful to him; and it is no doubt for this reason that false statements by an accused person may sometimes be regarded as corroboration of other evidence given in a criminal case: Eade v The King (38); Tripodi v The Queen (39). Moreover, if the truth must lie between two alternative states of fact, disbelief in evidence that one of the state of facts exists may support the existence of the alternative state of facts: Lee v Russell (40) … (Footnotes omitted. Emphasis added.)