Sheahan (Trustee) in the matter of Frost (Bankrupt) v Frost

THE CLAIMS 24 As foreshadowed above, I will now discuss in more detail the two claims that are made in these proceedings to better inform and place in context the narration and evaluation of the evidence.

The First Issue: The Validity of the Richardson Mortgages 25 In respect of the Mayflower Crescent property, it has been noted above that its current value is $290,000. Since there is ample equity in the Angas Street property to meet the primary AIC mortgage, for practical purposes, the Mayflower Crescent property may be treated as being encumbered only by the Richardson mortgages granted in January 1999 and February 2000. 26 It is those two mortgages which Mr Sheahan wishes to have declared void pursuant to s 121 of the Act, so that he will then, on behalf of the unsecured creditors of Mr Frost's bankrupt estate, recover one half of the value of the Mayflower Crescent property (the other half having been transferred from Ms Frost to Mr Frost). 27 Section 121, at the material times of the granting of the two Richardson mortgages, relevantly provides: Transfers that are void (1) The 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 transferror's bankruptcy if: (a) the property would probably have become part of the transferor's estate or would have been available to creditors if the property had not been transferred; and (b) the transferor's main purpose in making the transfer was: (ii) to prevent the transferred property from becoming divisible among the transferor's creditors; or (iii) 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 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. Refund of consideration (5) The trustee must pay to the transferee an amount equal to the value of any consideration that the transferee gave for a transfer that is void against the trustee. 28 Section 121 was amended by the Bankruptcy Legislation Amendment (Anti-avoidance) Act 2006 (Cth), but those amendments do not apply to transfers prior to 31 May 2006. 29 Both Mr Frost and Mr Richardson contend that the two Richardson mortgages were granted in order to secure payment of Mr Richardson's legal fees incurred to that time. 30 Mr Sheahan claims that the two Richardson mortgages were granted to prevent his interest in the Mayflower Crescent property from becoming available to be divisible amongst the creditors of Mr Frost, or to hinder or delay the process of making that property available for division amongst his creditors, in the event that he became bankrupt. He relies upon s 121(2) to deem that purpose. 31 Mr Sheahan also asserts that there was none at all, or no adequate, consideration for the Richardson mortgages. He contends that, on the evidence, up to the time of the grant of the first Richardson mortgage, Mr Richardson had done no legal work for Mr Frost and, alternatively, such legal work as he had done had been on the basis of a quid pro quo for free accommodation in the Angas Street property for Mr Richardson to conduct his legal practice. 32 Secondly, Mr Sheahan contends that because the two Richardson mortgages were granted to Mr Richardson whilst he was acting for Mr Frost, Mr Richardson was in breach of his fiduciary duty as a legal practitioner to Mr Frost and Ms Frost by not arranging for them to get independent legal advice before the grant of the Richardson mortgages. Mr Sheahan accepts that he does not stand in the shoes of Ms Frost and as she does not complain about the alleged breach of any such duty owed to her by Mr Richardson, Mr Sheahan agrees that he cannot derivatively benefit from any such asserted breach of duty. Hence, it is not necessary to decide whether or not there was a breach of any duty owed to Ms Frost. 33 However, Mr Sheahan maintains that Mr Richardson was in breach of a fiduciary duty owed to Mr Frost by not arranging for independent advice to be provided before the grant of each of the mortgages, and that the right of action which Mr Frost then had against Mr Richardson for that breach of duty vested in him as trustee of Mr Frost's bankrupt estate. He claims that this breach of fiduciary duty enables him now to claim that the grant of the Richardson mortgages should be set aside. 34 Thirdly, Mr Sheahan contends that the two Richardson mortgages are each a sham. The allegation in that regard is, in essence, the same as that made to support the s 121 claim.

The Second Issue: The Status of the Angas Street property 35 The issue as to the status of the Angas Street property is simply one of fact upon the whole of the evidence. 36 ABPH is the registered owner of the Angas Street property. It is presently valued at about $500,000. There is no dispute that Mr Frost's share in ABPH vested in Mr Sheahan upon his appointment as trustee of the bankrupt estate of Mr Frost. Ms Frost holds the other share, although as identified above, by virtue of the property settlement, Mr Frost is now entitled to it. It is subject only to the primary AIC mortgage securing the sum of $185,000. Mr Sheahan claims, therefore, that the share, which he holds in ABPH, is worth about one half of the net equity in the Angas Street property, namely $157,000. Conversely, Mr Frost claims that ABPH holds its interest in the Angas Street property as trustee for the FFT. It is common ground that, if that is the case, then the value of each of the shares in ABPH is nominal only. 37 The parties agree that, depending upon how the issue of fact is resolved, it is appropriate either for a receiver of the Angas Street property to be appointed to sell it and the net proceeds held by ABPH be distributed to its shareholders, or if the Angas Street property is held on trust for the FFT, that Mr Sheahan should simply transfer his share in ABPH to a person or entity nominated by Mr Frost.

The Evidence 38 The resolution of the two issues raised in these proceedings depends in large measure upon what may be inferred from the timing and sequence of events, the documentary evidence, together with those documents which might reasonably be expected to exist but do not, or have not been produced by those who would be expected to produce them. 39 Mr Sheahan relied on his four affidavits and the exhibits. The exhibits included transcripts of the extensive examinations of Mr Frost and Mr Richardson. He was briefly cross-examined, but not on any matter significant to the resolution of the claims. 40 He also called Ms Frost.

Ms Frost's Evidence 41 Ms Frost's evidence was brief. She was aware of a family trust established by Mr Frost shortly after their marriage in 1974. She was not closely involved with it, or indeed with the financial affairs of the family. She signed what documents Mr Frost asked her to sign without any real understanding of the legal nature and effect of those documents. 42 She was not, I find, specifically aware of being a director of ABPH. She did not recall seeing the Deed of Retirement and Appointment of Trustee of 28 August 1998, although she signed it. I accept she did so without fully understanding it, and because Mr Frost asked her to do so. She does not recall the name Ecrosay. At no time did she play any active role as a director of Ecrosay, ABPH (under either name) or Aaronden, whether as trustee for the FFT or in any other way. 43 She was aware that in the early 1990s the Angas Street property was to be purchased with finance partly secured by a mortgage over the Mayflower Crescent property. She was not aware of the purchasing entity. She does not recall any discussion about it being purchased for or by the family trust, or signing any documents in relation to it. She assumed the Angas Street property was held in the names of Mr Frost and herself. 44 Ms Frost became aware that Mr Richardson rented a room in the Angas Street property to operate his legal practice. She was only aware in a very general way of the Supreme Court proceedings. She recalled that in about 2000, and at Mr Frost's request, she signed the two Richardson mortgages. Mr Frost told her that "it was to lessen the value of the property in case anything happens", and that she should not worry as Mr Richardson would never want "to claim them". She was told by Mr Frost the property would then be less attractive in any bankruptcy proceeding. She thought the mortgages were signed by her on the one occasion, but I find she was mistaken about that. Mr Frost later gave her the signed Discharge of Mortgages in relation to each of those mortgages. They were undated. She was told to hold them "in case anything ever happened to [Mr Frost] or Paul Richardson". In May 2005 she unsuccessfully tried to have the Discharge of Mortgages registered. 45 I have no hesitation in generally accepting Ms Frost's evidence. It was frank and credible. I do not entirely accept what she said on all matters of detail, simply because she did not at material times have reason to focus on it. However, her evidence does generally reflect her trust in how Mr Frost was managing the family's financial affairs. It is also generally consistent with the sequence of events regarding the acquisition of the Mayflower Crescent property and the Angas Street property. 46 In two significant respects, I give particular weight to her evidence. 47 The first concerns Mr Frost's state of mind about his solvency at the time of the two Richardson mortgages, which is relevant to the resolution of the first issue identified above at paragraph [2]. Ms Frost's evidence suggests that, at least at about the time of the second Richardson mortgage, Mr Frost was alert to the risk of being declared bankrupt. There is no evidence of any significant indebtedness other than that arising out of the Supreme Court proceedings. Her evidence supports the conclusion that, at about this time, notwithstanding Mr Frost's professed optimism that the High Court would grant special leave to appeal from the orders of the Full Court in the Supreme Court proceedings, he recognised that he was likely to be called upon to pay, but would not be able to pay, debts arising from those judgments. The timing of the relevant events, including the incurrence of the judgment liability and the grant of the Richardson mortgages, suggests that perhaps Mr Frost appreciated that the Richardson mortgages would significantly remove the Mayflower Crescent property from becoming divisible amongst his creditors or would hinder or delay that property from being available to them. 48 The second is that Ms Frost clearly had no awareness of the FFT as the acquirer of the Angas Street property, or indeed of any trust structure relating to it. This is a relevant consideration in the determination of the second issue. I am satisfied that, whilst Ms Frost may not have known the detail, and that she relied heavily on Mr Frost, she was alert and interested enough to have known if there was an active trust structure which owned the Angas Street property. The absence of her awareness of such a structure, or of the existence of a trustee from time to time, even though she was said by Mr Frost to be a director of the relevant trustee companies, in my view tends to suggest that no such structure for the ownership of the Angas Street property in fact existed.

Mr Frost's Evidence 49 Mr Frost qualified as an accountant in 1979. He worked on his own behalf until 1985, and then in a partnership under the name AB Business Consultants between 1985 and 1986, and then subsequently under another partnership with Mr John Viney, in the name Ambrose Baker & Partners. Together they acquired ABPH (previously named Mangana) to be incorporated into the structure of their accounting business. 50 The FFT was also established in 1986, with Ecrosay as the trustee. Mr and Ms Frost were its directors. Because the partnership with Mr Viney lasted only a few months, he says the FFT never became active. However, he continued to work as a sole practitioner accountant. He says he had resigned as a director of Ecrosay in September 1986, and had sold that company "many years before" in 1986 to a client. He also prepared and had executed documents appointing Ms Frost as a director, but they were never lodged. On Mr Frost's own evidence, the FFT was left without a trustee almost from the time it was established. None of those steps are confirmed by documents which should exist: there are no minutes or records of Ecrosay or ABPH and no details of the change of directors or shareholders. Nor are there any financial statements of FFT, Ecrosay, or ABPH in relation to the period from 1986 to about 1990. 51 The next series of steps is difficult to fully understand or accept. On 1 February 1990, Mr Frost says ABPH was appointed trustee of the FFT, through a Deed of Retirement and Appointment of Trustee. In anticipation of that change, he procured the transfer of the share in ABPH allotted to Mr Viney to Ms Frost. The relevant document has not been produced. He says the solicitor who prepared it has lost the file. Some such document was available to Mr Richardson in 1998 but the copy he had access to, has also not been produced. 52 In about April 1991, Mr Frost says he signed a contract to purchase the Angas Street property as "appointor for The Frost Family Trust". The purchase price of $185,000 was paid by funds advanced by AIC, secured by the primary AIC mortgage and the secondary AIC mortgage. The contract has not been produced. I do not place much weight upon its absence, except as to the alleged date of the making of the contract. It seems unlikely that the contract was entered into in April 1991. ABPH did not become the registered owner of the Angas Street property until 9 August 1992, when no doubt the funds under the AIC primary mortgage would have become available. 53 Mr Frost says his fee income as an accountant was largely paid to the FFT by way of rent and under a management fee agreement, and that the FFT paid outgoings on the Angas Street property, accounting practice expenses, and housekeeping to Ms Frost. No management fee agreement has been produced. 54 At some unspecified time, Mr Frost with Ms Frost acquired another company which became Ambrose Baker Accounting Pty Ltd (ABA). ABA became trustee of "the Management Trust" and charged a fee for the administering of his accounting practice. The funds then passing through ABPH should have reduced the rent payable. The structure referred to is common, but the appropriate documentation expected to support its existence has not been produced. There is no "Management Trust" deed, minutes or records of ABA or of any "Management Trust". There are no records, accounts or tax returns of ABA. 55 There are other documents Mr Frost has provided but which are inconsistent with his present claims. In the Supreme Court proceedings, he filed an affidavit on 24 July 1998 deposing to his assets and liabilities, and income. It includes his 1995/96 income tax return showing income from his accounting practice of $29,914 and no deductions (the affidavit refers to $30,000 rent paid to ABPH but that does not appear in the income tax return). A statement to the Australian Taxation Office for the 1995/96 tax year then shows a much higher practice income, and rent expenses of $30,000. The document is undated. The 1996/97 income tax return is similar. Consistent with Mr Frost's contentions as to the status and equitable ownership of the Angas Street property, is that the property and the debt owed by ABPH to AIC are not listed in that affidavit as Mr Frost's personal assets and liabilities. Mr Frost's affidavit also states the FFT as established in 1990, that its then trustee ABPH (under the name ACN 008 102 734 Pty Ltd) holds the Angas Street property on trust, and that the accountancy practice pays rent to the trustee. 56 A further affidavit of 12 August 1998 was filed in the Supreme Court proceedings. It enclosed the profit and loss statements of the accounting practice for the financial years of 1995, 1996 and 1997. The statements referred to above are straightforward: essentially fees, less rent, wages and general expenses. There is no reference to a service company. There are no accounts of any service company, whether as trustee or otherwise and neither for any of the trustee of the FFT, or of the FFT itself. Despite Mr Frost's statement that an arrangement was in place to provide payment to a service company to provide staff and office services, there is no evidence of this contained in the statements. The 1997 statement has the same general detail and attracts the same comment. It has no payment for rent, but an expense of $46,450 for "Professional Publication". I accept Mr Frost's evidence that that particular item should relate to rent. The money payable to AIC, each year, on the information provided by Mr Frost, was about $20,350 so there should have been a substantial income of the FFT each year to be accounted for by its Trustee. There are no contemporaneous income tax returns of ABPH as Trustee, nor other supporting financial returns of ABPH. That same affidavit also enclosed Mr Frost's statement of affairs in his bankruptcy. It too referred to the landlord as ABPH (under the changed name) and a rental payment of $3000 per month, and to the FFT. It is undated and unsigned. The rental specified does not accord with the annual figure of $46,450. Nor does it accord with the only recurrent monthly payment of $1685 appearing in the bank statements. 57 There is also a statement of assets provided in 1997 to the ANZ Bank by Mr Frost. At the time, Mr Frost was applying to the bank for funds to support the acquisition of a property at Cullen Bay, Darwin. Within that documentation he included the value of and borrowings in relation to the Angas Street property as categorised as his personal assets and liabilities. He thought that was appropriate to show his "net worth". Clearly, it was inaccurate to do so. I place some weight on that document as illustrating Mr Frost's looseness of expression about the real state of affairs, and of any arrangements he thought he had put in place or intended to put in place. I do not treat that document as itself constituting an admission by Mr Frost that the Angas Street property was his personal asset. 58 Mr Frost says that from a time prior to the purchase of the Angas Street property, a single bank account for the accountancy practice and the FFT existed. All revenue was paid into that account and all outgoings (including payments made to Ms Frost for housekeeping and other expenses incurred by her) paid from that account. Mr Frost says that account was in the name of ABPH. That arrangement persisted between 13 November 1998 until 17 June 2004. Those dates are significant because there are supporting bank statements. However, there are no earlier bank statements. 59 Mr Frost further says that, by the Deed of Retirement and Appointment of Trustee dated 28 August 1998, ABPH was replaced as trustee of the FFT by Aaronden. Mr Frost signed that document as director for ABPH and Ms Frost as director for Aaronden. The Deed was produced. The recitals noted ABPH replaced the original trustee on 1 February 1990. As already referred to, Mr Frost stated that the replacement of trustee was aimed at somehow distancing the assets of the FFT from a potential claim by a former staff member about alleged underpaid superannuation entitlements. Aaronden purported to open a bank account, until Mr Frost learnt that stamp duty would be payable on the transfer of the Angas Street property to the new trustee. Knowing this, he then chose instead to pay the (lesser) disputed unpaid superannuation entitlement. Mr Frost showed a degree of cunning in his preparedness to change the trustee of the FFT or its name in an endeavour to avoid such a liability. 60 The bank account in the name of Aaronden was closed on 9 June 2000, and a new ANZ bank account in the name of ABPH was opened. 61 ABPH filed annual returns, as required. Its principal activity in those returns between 1990 and 2003 is shown as "Trustee". Mr Frost also produced the financial statements of ABPH for the financial years of 1995 and 1996, including the director's report. They state ABPH as the trustee of the FFT, and that it had no net profit each year. It is necessary to remark upon the absence of other annual financial statements of ABPH, and upon the absence of financial statements or tax returns for the FFT, ABA, and the accounting practice more generally. It appears that whatever real net income was earned by Mr Frost (apart from that he personally declared) it was simply not disclosed and no records or minutes of meetings were kept by the trustees from time to time as to the state of affairs of the FFT, or of any distributions by the trustees, or of any entitlements of the beneficiaries under the FFT. 62 The other documentary evidence includes ANZ bank statements of an account in the name of "Aaronden Pty Ltd as trustee for The Frost Family Trust", commencing on 4 November 1998 and closed on 9 June 2000, and ANZ bank statements of an account in the name of "Ambrose Baker & Partners (Holdings) Pty Ltd as trustee for The Frost Family Trust", commencing on 17 June 1994 and closed on 28 August 1998. The documentary evidence also includes ANZ bank statements of a different account in the name "Ambrose Baker & Partners (Holdings) Pty Ltd A.C.N. 008 102 734 as the trustee for The Frost Family Trust", commencing on 9 June 2000 and extending to 9 February 2001. It was largely inactive. It had only ever a small credit and ended with a small debit due to bank fees. In particular, it did not have any entries indicating it operated as the account of a trustee of the FFT, or any other trust that was active at the relevant time or that it received any rental payments from Mr Frost or any entity in respect of the Angas Street property or that it paid any mortgage interest payments to AIC over that period. 63 The documentary evidence does not disclose the existence of a bank account in the name of ABPH as trustee for the FFT in the period before June 1994. Recalling that the Angas Street property was purchased in August 1992, if there was such an account, it was within the capacity of, and very much in the interests of Mr Frost, to have produced the records relating to that account. They would, or should show the receipt of funds from AIC and their application to the settlement of the Angas Street property, the payment of the other disbursements incurred to acquire that property, and thereafter the amounts received by rent and paid as outgoings on the primary AIC mortgage and for rates and taxes and other outgoings in the period up to 17 June 1994. Alternatively, if those payments were made from a different account in the name of Mr Frost, or ABPH not as trustee, the picture they would tend to create would be to a different effect. 64 Mr Frost has suggested that in 2001 or sometime after that, he handed Ms Frost a folder containing various records of ABPH and other records, and that those documents included the minutes of meetings of ABPH as trustee of the FFT. Other then having earlier received the discharges of the two Richardson mortgages, Ms Frost denies receiving those records. It is unlikely to have occurred following the Family Court proceedings and there is no apparent reason why Mr Frost should have passed the ABPH records to her, especially as he continued to operate and control ABPH and occupy the Angas Street property. In any event, there is no reason why he would not have kept copies of such documents. 65 I do not accept Mr Frost's explanation why, in his Statement of Affairs provided on 29 June 2001 to Insolvency Trustee Services Australia, he answered "No" to the question whether he was the beneficiary of a trust. He said that was because he thought that meant he had to have received a distribution from a trust. However, he was the specified beneficiary of the FFT and so he was one of its eligible beneficiaries. On his own evidence, and by the dealings with ABPH to which he referred, it is clear that he is well aware of the nature of a trust, and of his practical control of ABPH. It reflects adversely to his credit that he avoided disclosure of the FFT or his status under it. 66 Mr Frost in his submissions and evidence pointed out that Mr Sheahan, acting upon information provided to him, reported to the creditors of his bankrupt estate, for a period of time, that the Angas Street property was held by ABPH as trustee of the FFT. He asserts that the information available to Mr Sheahan, including that from Ms Frost, until the Family Court proceedings all supported the existence of that trust. It has not been made clear whether Ms Frost communicated this to Mr Sheahan. I consider that Mr Sheahan's earlier reports to the creditors of Mr Frost's bankrupt estate simply reflect his then understanding and do not create any legal estoppel. 67 Despite Mr Richardson and Mr Frost's shared optimism that the findings adverse to Mr Frost would be overturned on appeal, there is ample material in the transcripts of the examinations of both Mr Frost and Mr Richardson to support the finding that, at least from late 1997, both appreciated that, as a result of the conduct of the Supreme Court proceedings and the anticipated damages assessments if they became payable, Mr Frost had no readily disposable assets and a relatively low cash flow from his accounting practice insufficient to pay such liabilities. This acknowledgment was confirmed in affidavits of Mr Frost in those same proceedings. Noting this, it was during the further conduct of the Supreme Court proceedings that the two Richardson mortgages were granted. 68 Mr Frost said that Mr Richardson in late 1997 agreed to accrue the account for his professional fees, in anticipation of being paid in the future. Mr Frost told him that he could not pay his legal fees sourced from earnings from his accountancy practice as and when those liabilities were incurred, until the proceedings were finalised. He also says Mr Richardson agreed to charge him only scale rates, and to sort out the question of costs later. In the meantime, Mr Richardson had the benefit of modest premises within the Angas Street property, access to clerical and support staff, and access to photocopying facilities for his legal practice at no cost. Mr Richardson says he then considered seeking a mortgage of the Mayflower Crescent property to secure payment of his fees. Mr Richardson was aware that Mr Frost's only substantial asset was his interest in the Mayflower Crescent property. He was also aware that Mr Frost's professional indemnity insurer had declined to indemnify him in respect of any liability determined in the Supreme Court proceedings. 69 It was following the hearing of the appeal to the Full Court of the Supreme Court in January 1999 from the orders made in the Supreme Court proceedings on 3 July 1998 that the first Richardson mortgage was granted as drawn by Mr Richardson. 70 It was dated 27 January 1999 and registered on 14 April 1999. The mortgage says it is: for the consideration of the sum of FIFTY THOUSAND DOLLARS ($50.000.00) (hereinafter called the 'the Principal Sum') and for the better securing to PAUL A. RICHARDSON … the payment of the Principal Sum and interest payable hereon as therein provided (the Principal Sum and interest payable thereon as therein provided all hereinafter called 'the Moneys Hereby Secured'). 71 The Principal Sum was said to have been received by Mr and Ms Frost from Mr Richardson. It bore interest at 10% per annum. Clauses 1(a) and (b) of the covenants of the mortgage acknowledge: 1. (a) that the Principle (sic) sum, the Mortgagee has received from the Mortgagor and acknowledges as having so received the sum of TWENTY THOUSAND DOLLARS ($20.000.00) by way of advance upon the Principle sum and said sum was so received and shall be deemed for the purpose of this instrument and the terms and conditions thereof on 1st of January 1999. (b) That the Mortgagor shall advance to the Mortgagee on or after 1st day of January 1999 funds in or services to the value of the definition of 'the Principal Sum' as hereinbefore set forth and wheresoever in this document the expression 'the Principal Sum' may appear such expression shall be taken to mean and include any advance or advances by the Mortgagor to the Mortgagee of the nature referred to herein. 72 Obviously, the acknowledgment in those covenants does not sit comfortably with the oral evidence of both Mr Frost and Mr Richardson that there was, at 27 January 1999, monies owing by Mr Frost to Mr Richardson for legal fees in excess of $50,000. Moreover, there was no cogent evidence advanced to suggest that between November 1997 and 1 January 1999 Mr Richardson had provided legal fees worth $20,000 nor any cogent evidence that future legal fees were realistically estimated at about $30,000 or at least that amount. 73 The second Richardson mortgage is dated 1 February 2000. It was registered on 8 March 2000. It was similarly expressed as being in consideration of a principal sum of $50,000 "the receipt of which said sum is acknowledged" by Mr and Ms Frost. It also records the consideration in the same terms as set out above. By way of contrast, covenants 1(a) and (b) are in the following terms: 1. (a) that the Principal sum, the Mortgagor has received from the Mortgagee and acknowledges as having so received legal services the sum of FIFTY THOUSAND DOLLARS ($50.000.00) and the said services were so received and shall be deemed for the purpose of this instrument and the terms and conditions thereof to have occurred on or before the 1st of January 2000. (b) That the Mortgagor shall advance to the Mortgagee on or after 1st day of January 2000 funds in or services to the value of the definition of 'the Principal Sum' as hereinbefore set forth and wheresoever in this document the expression 'the Principal Sum' may appear such expression shall be taken to mean and include any advance or advances by the Mortgagor to the Mortgagee of the nature referred to herein. 74 Mr Richardson's evidence at his examination under s 81 of the Act said that the consideration for each of the mortgages were his legal fees. Neither he nor Mr Frost or Ms Frost said that any payment or advance of funds was made by Mr Richardson in respect of covenant 1(a) of the first Richardson mortgage. 75 There is oral evidence that, in August 2000, Mr Frost also gave a Bill of Sale in favour of Mr Richardson pertaining to his interest in his accounting practice, trading as Ambrose Baker & Partners, to secure Mr Richardson's legal fees. There is no executed document in evidence to record that. An unexecuted and undated document records the apparent grant of such a Bill of Sale to Mr Frost "with respect to a series of three Appeals to the High Court of Australia such services and/or advice being agreed" to be valued at no less than $30,000. 76 As noted, Mr Richardson signed Discharges of Mortgages dated 18 May 2005 for "no monetary consideration". In his examination, he said he gave them to Mr Frost in a sealed envelope. Mr Frost in his examination denied having seen them but they clearly came into Ms Frost's possession. In 2005 she attempted to have them registered, but could not as the duplicate mortgages were not produced. On 9 June 2005, Mr Richardson wrote to Ms Frost, asserting that he had provided the discharges to her undated and "in escrow" to be lodged only on payment of the secured sums. It is a curious step to have taken. If they were to be held in escrow on that basis, but neither Mr Frost nor Mr Richardson was comfortable holding them, there must have been an independent third person who could have done so. 77 A matter concerning Mr Frost's credit was raised by Mr Sheahan. It related to his compliance with an order in the Supreme Court proceedings made on 17 July 1998 restraining him from dealing with his assets. The order relevantly was: That the Second Defendant, ALLEN GORDON FROST, be restrained and an injunction is hereby granted restraining him from disposing of, dealing with or encumbering any of his personal and real assets without the prior approval in writing by the Plaintiffs or in default thereof by the Court, save that the Second Defendant may pay the debts of the business of Ambrose Baker & Partners properly incurred in the ordinary course of business. 78 Mr Frost nevertheless proceeded to grant, with Ms Frost, the Richardson mortgages. His view was that liabilities arising out of the Supreme Court Proceedings were characterised as debts of the accounting practice. He stated that advice from counsel and Mr Richardson was given and had suggested that the order specifically allowed him to dispose of assets and/or to mortgage assets to secure funding to permit his representation in the Supreme Court proceedings to continue. I address the significance of this asserted belief later in these reasons. 79 Following the making of the order as mentioned above, Mr Richardson confirmed by letter of 28 July 1998 his charging rates. They were largely based on the Supreme Court Scale fees. He pointed out Mr Frost's right to require a formal bill of costs in taxable format. Mr Richardson also provided him with a "File Note" of the same date, saying "… it is clear that you can dispose of assets to pay my account or I can put a security over your assets to security (sic) my fees". He stated that he would work out a bill in due course and put a mortgage over Mr Frost's half of the Mayflower Crescent for the work done, and will grant a second mortgage over it "if more work is done". He also stated that, without the security, he would be unable to do further work. 80 Given the long and otherwise informally documented personal and professional relationship between Mr Frost and Mr Richardson, the particular timing of the file note tends to suggest it was prepared by Mr Richardson together with Mr Frost. It would be ingenuous to conclude otherwise. It was prompted by the Order made on 17 July 1998. To that time, Mr Richardson had done legal work for Mr Frost without any documented basis. He continued to do so until the first Richardson mortgage was granted on 27 January 1999. Mr Frost also says that the first Richardson mortgage was granted when Mr Richardson's legal fees exceeded $50,000. There was no account rendered for any such amount or any amount at about that time, and no evidence as to the value of Mr Richardson's legal work done either at July 1998 or January 1999. The absence of such documentation is inconsistent with the terms of covenants 1(a) and (b) to the first Richardson mortgage set out in [71] above. Nor was there any such account, or any structured costs assessment, at about February 2000 when the second Richardson mortgage was granted. Mr Frost at about that time requested a draft account, and is said to have received an estimate of legal costs of well in excess of $120,000. Mr Richardson said he did not prompt that request, and had apparently been prepared to continue providing legal services, despite his file note of 28 July 1998 and his letter of the same date. 81 I note that Mr Frost also gave evidence that he and Mr Richardson informally agreed that he would not call in any mortgage securing his fees until the completion of the Supreme Court proceedings and until "all matters" had been finalised. Mr Frost also said that, prior to his bankruptcy, Mr Richardson had further agreed not to render any further accounts for work done until he and Mr Frost had finalised attempts to annul the bankruptcy and had made the claim against Mr Frost's former solicitors in the Supreme Court proceedings. He says: Both my wife and I were aware that at time (sic) Paul Richardson did not intend to either be paid for the work done or alternatively to call in the two mortgages and thus be paid. 82 I understand that refers to an arrangement of a temporary nature existing between Mr Frost and Mr Richardson. He also told Ms Frost that he and Mr Richardson had agreed to: … sort out all financial matters including the rent Paul owed to the family trust '(sic) for the use of the office in the Angas Street property'. 83 In 2002, the two Discharges of Mortgages were given to Mr Frost by Mr Richardson to pass on to Ms Frost. Mr Frost says he does not recall whether he knew what the documents were at the time, as they were in a sealed envelope. He says he and Mr Richardson had reason to fear for their safety at the time. He accepts having discussed with Ms Frost that there was a need to protect her and her daughters in case anything happened to him or Mr Richardson. Those discussions are inconsistent with Mr Frost's asserted lack of awareness of the contents of the envelope. Without that awareness, his comments to his wife had no or little context. I do not accept his evidence about that. In my view, both Mr Richardson and Mr Frost together decided to prepare the Discharges of Mortgages. 84 I do accept that, following Mr Frost's bankruptcy, there were a number of incidents which disturbed both him and Mr Richardson. Those incidents included the theft of Mr Frost's briefcase from his car, left unlocked outside the Angas Street property; the removal of a rubbish bin from outside that property; letters sent to the Mayflower Crescent property which were not apparently delivered; two incidents which they suspected involved the threat of arson of, or the attempted arson of, the Angas Street property; the presence of members of one of the family group plaintiffs at one of his examinations under s 81 of the Act; and the sense of being followed. Those events extended over several years. It is unclear what relevance such evidence has in furtherance of Mr Frost's case. 85 Mr Frost gave his evidence in an unpersuasive manner. He positively avoided any eye contact with counsel for Mr Sheahan and sometimes answered questions in an apparently deliberately unresponsive manner. I discerned very clear animosity on Mr Frost's part to both Mr Sheahan and to the plaintiffs in the Supreme Court proceedings. 86 There are other matters which cause me to doubt the reliability of Mr Frost's evidence on critical issues. Most obviously, there is the clear lack of documentation which should have existed and which should still exist and be recoverable (even in part) from other sources. Mr Frost said he practised as a tax accountant and financial adviser. Therefore he cannot be uninformed about the routine documentation that would come to exist if the FFT was the equitable owner of the Angas Street property, and thereafter on the acquisition of that property by ABPH. There is no such cogent documentation to support his oral evidence. 87 Mr Frost did not offer any persuasive explanation for those deficiencies. He did not impress me in his evidence that, despite the strong adverse findings made in the Supreme Court proceedings in the judgment given on 19 November 1997, he did in fact remain confident that the judgment would be set aside on appeal or that he would obtain special leave to appeal to the High Court. Such a belief is less likely considering his experience and professional accounting background. Neither did he impress me that, in the face of the Supreme Court order of 17 July 1998, he was nevertheless free to grant the two Richardson mortgages. His initially held assertion that he was advised that he could do so was qualified by referring to informal oral advice at no time recorded in writing. Furthermore, Mr Frost was incapable of cogently explaining how or when he took into account the fact that Mr Richardson was indebted to him (or ABPH) for the use of professional space and services at the Angas Street property. 88 I am not prepared to act on Mr Frost's evidence where it conflicts with other evidence, unless confirmed by documentary or other cogent evidence. I think it is largely unreliable on matters the immediate subject of these proceedings.

Mr Richardson's Evidence 89 Mr Richardson has been a legal practitioner since 1987. He has known Mr Frost since about 1988. Since 1995, he has worked from the Angas Street property. 90 He occupied first a modest area at the back of those premises and then a small office. He uses the conference room as required, and has access to storage facilities. He has benefited from the reception services there. He has had, as required, access to administrative and clerical assistance, although his evidence suggests he has not utilised those services greatly. He does not himself employ any administrative or clerical assistance. He has also had access to the office equipment there, other than a photocopier which he owns. It is maintained by or on behalf of Mr Frost. He does not pay separately for power, water or insurance. He has a separate telephone, for which he pays. He has not paid either Mr Frost or any other entity for his occupation of those premises or for the other support he has received. 91 When he commenced acting for Mr Frost in relation to the Supreme Court proceedings in November 1997, there was I suspect some pressure to move that matter forward. He and Mr Frost agreed that they would sort out the question of fees at a later date. That was confirmed by letter. He says that at that time, Mr Frost suggested that, if necessary, a mortgage could be given over the family home to secure those fees. I think he is mistaken on the timing of a conversation on that topic. There is no contemporaneous record of that conversation as expected from a conscientious and competent solicitor would have done. It is not consistent with Mr Frost's evidence. 92 Mr Richardson confirmed that Mr Frost told him that he could not then pay his professional fees. He had read the initial decision of the Supreme Court, so he was aware of the nature of the adverse findings. Mr Frost also told Mr Richardson that his professional indemnity insurer had refused to indemnify him in respect of the claims. 93 By July 1998, when Mr Frost was confronted with an application in the Supreme Court proceedings to restrain him dealing with his assets, Mr Richardson had at that time detailed knowledge of Mr Frost's assets and liabilities. He took instructions concerning those matters to assist in preparation of Mr Frost's affidavit in opposition to the application. In the light of the restraining order then made on 17 July 1998, Mr Richardson considered that such order did not prevent Mr Frost mortgaging the Mayflower Crescent property to secure payment of Mr Richardson's legal fees. Mr Richardson said he had spoken to counsel about that. 94 That counsel was called to give evidence. He was briefed to appear for Mr Frost on the appeal to the Full Court of the Supreme Court, but did not give formal written advice on the topic. He recalled vaguely having spoken to one of Mr Frost or Mr Richardson, and advised that the payment of legal costs to continue to defend the Supreme Court proceedings was incurred in the ordinary course of business of the accountancy practice. It may have been a deductible expense of the accounting practice. Counsel did not recall any specific conversation about whether the order permitted the grant of a mortgage to secure any legal fees. Counsel's evidence was that he would not have provided advice suggesting that conduct as consonant with the restraining order, at least not without researching the point. He said he had not done so. 95 I accept the evidence of that counsel. I was not asked by Mr Frost or Mr Richardson to reject it. I reject their evidence that counsel also said, even informally, that the restraining order permitted Mr Frost to mortgage the Mayflower Crescent property to better secure the payment of legal fees. 96 Such a course of conduct is plainly not authorised by the restraining order. Their evidence is hard to accept as an honest and reasonable held belief. That conclusion holds irrespective of what counsel may have advised orally, even if loosely worded or capable of being misunderstood. It is a matter which weighs adversely to their credit, particularly that of Mr Richardson as a legal practitioner. In Mr Richardson's cross-examination, his attempt to explain how he drew from the concept of paying of debts in the ordinary course of the accountancy business the right to mortgage the Mayflower Crescent property in the face of that order was quite unconvincing. That causes me to doubt the reliability of Mr Richardson's answer to the first claim stated at paragraph [2], that the Richardson mortgages were an attempt to secure payment of his professional fees rendered to Mr Frost. 97 Mr Richardson prepared the draft of the two Richardson mortgages and received Mr Frost's comments on them. If the granting of the Richardson mortgages was in contemplation of securing payment of his costs, and if it was true as stated in cross examination by Mr Richardson that he would cease acting without further security of his legal fees I find it surprising that he made no attempt to prepare a bill of costs, nor did he keep an accurate note of his attendances or work completed at material times. I note that that evidence adduced in cross examination was not stated in Mr Richardson's evidence in chief. Nor was it asserted by Mr Frost. While there was evidence of work completed as documented in a 29 page document for dates of 7 August 1997 and then between 19 November 1997 and 4 January 2000, there is no such document to demonstrate how he estimated his fees in excess of $120,000 at the time of the grant of the second Richardson mortgage. Within that same document, no costing exercise was undertaken, either by reference to the rates specified in his letter of 28 July 1998 or otherwise. 98 Mr Richardson's file note of 27 January 1998 records Mr Frost as telling him that he (Mr Frost) had very little equity in the Mayflower Crescent property. The note records Mr Richardson saying he will need to seek security from "other items". His file note of 31 January 2000 also records that Mr Frost had no equity in his house, but he would proceed with the second Richardson mortgage anyway so that, when the liability of Mr Frost was ultimately set aside, "we can go back to your insurance company and show that the two mortgages exist". It also refers to other security, including a Bill of Sale over the accountancy practice "which is worth even less than the equity in the house without your assistance". He explained that the Richardson mortgages could, in that event, be proof of the debt for legal fees owing by Mr Frost to Mr Richardson (and presumably then recoverable from the insurer). 99 A third possibility, not necessarily inconsistent with the second, is that for which Mr Sheahan contends relevantly in the first claim. 100 I will make findings on the purpose for the two Richardson mortgages later in these reasons. I return to further observations about Mr Richardson's evidence. 101 It was stated, that the optimism shared by Mr Richardson and Mr Frost of the prospect of appealing and setting aside the judgments in the Supreme Court Proceedings, led them to agree that Mr Richardson would not render any accounts until any proceedings to annul Mr Frost's bankruptcy and his claim against his former solicitors were finalised, and that Mr Richardson would not call in the Richardson mortgages until such date. That arrangement is inconsistent with the Discharges of Mortgage provided by Mr Richardson to Ms Frost and the consent arrangement in the Family Court proceedings transferring payment received by Mr Frost as a result of the proceedings against the former solicitors to Ms Frost. At no time did Mr Richardson take action to secure payment of his legal fees, notwithstanding his participation in the Family Court proceedings. Nor was any action taken on the part of Mr Richardson, when it must have been apparent to him and to Mr Frost that Mr Sheahan was carefully exploring the assets available to him as trustee of the bankrupt estate to meet the debts of Mr Frost's creditors. 102 During the time of the Family Court proceedings, Mr Richardson was subpoenaed to produce documents relating to the Richardson mortgages. He first declined to do so, on the specious ground that there were privileged from production. He was ordered to do so, and so produced two original memoranda of mortgage, but no other documents nor any of his files relating to them. 103 The asserted optimism of Mr Frost and Mr Richardson about the prospects of setting aside the Supreme Court proceedings also leads me to further question the reliability of Mr Richardson's evidence, given his experience as a practising solicitor. This view is reinforced when one considers the trial judge's adverse findings that Mr Frost acted dishonestly in his dealings with the two family groups and the unpersuasive evidence of Mr Richardson and his belief that the findings based on the trial judge's acceptance of the expert evidence of one accountant could be overturned. No written legal advice was produced to support that latter assertion. 104 There is another matter which, in my mind, reflects adversely on Mr Richardson's credit. In about 2000, a Deed of Assignment of Chose-in-Action was prepared by external solicitors on the joint instruction of Mr Frost and Mr Richardson. It was an assignment of Mr Frost's rights against his former solicitors and his insurer to Mr Richardson, apparently in exchange for $80,000 worth of unpaid legal services provided to Mr Frost. Mr Richardson did not explain satisfactorily why that document was prepared in 2000 and why it was expressed in such terms. Nor did he satisfactorily explain how the figure of $80,000 was arrived at, having regard to the fact that it was apparently prepared about the same time as or after the second Richardson mortgage and in respect of which he said his outstanding legal fees were then in excess of $120,000. One view put forward by Mr Sheahan is that it was another joint attempt to frustrate the legitimate pursuits of Mr Frost's creditors. 105 Neither was it adequately explained by Mr Richardson why he did not seek to enforce the Richardson mortgages. Mr Richardson conveyed a belief in the importance for both Mr Frost and himself that Mr Frost reach a settlement with Ms Frost in the Family Court proceedings. By then though, the security offered by the Richardson mortgages was not an undisputed route to payment. At that same time, he had also provided the Discharges of the Mortgages to Ms Frost. He stated that the joint plan of himself and Mr Frost, when the payment to Ms Frost following the Family Court proceedings was settled, was still to pursue the appeal of the 19 November 1997 judgment and then to seek to annul Mr Frost's bankruptcy. At that time, I think it simply unrealistic to hold that belief, even if earlier (contrary to my own view) such a belief as to the potential of a successful appeal was reasonably held. 106 A final aspect to Mr Richardson's evidence concerns his knowledge of relevant changes concerning the FFT. He said that he learnt of the FFT only in mid-1998, when taking instructions from Mr Frost for his affidavit detailing his assets in the Supreme Court proceedings. He was not involved in the change of name of ABPH. In August 1998, he prepared the document to replace ABPH with Aaronden as trustee of the FFT. It is likely then that he saw the FFT Deed and the earlier document appointing ABPH trustee of the FFT in lieu of Ecrosay, as he stated that the document he prepared was based upon an earlier document. Apart from orally confirming the existence of those two documents, and the fact of Mr Frost's instructions in 1998 about the FFT, his evidence does not assist on resolving the second issue, namely whether the Angas Street property is held absolutely or on trust. Mr Richardson stated that he had been through his files to ensure that any primary documents relating to matters in issue in this proceeding were produced, but there were no other such documents. He did not know where the precedent (apparently appointing ABPH as trustee of the FFT in lieu of Ecrosay) was, even though he had access to it. It was not produced. 107 I do not place much weight on Mr Richardson's evidence where it unsupported by independent documentation or other independently established acts. He closely associated himself empathetically with Mr Frost's circumstances exhibited by his use of the plural "we" in describing decisions made or points of view held. I do not think he was an untruthful witness, but, for whatever reason, his evidence was not routinely reliable.

The First Issue: The Validity of the Richardson Mortgages 108 For purposes of applying s 121 of the Act, while it is necessary and appropriate to consider each of the Richardson mortgages separately, simply because they were entered into at different times, many of the facts and evidence referred to above are relevant to an assessment of the validity of both of the Richardson mortgages. I will consider the validity of both mortgages concurrently, but will nonetheless flag when considerations are relevant to only one of the two Richardson mortgages. 109 With respect to s 121 of the Act (its terms are set out above in paragraph [27]) there is no dispute about the elements required to be satisfied, nor their substantive content. 110 The grant of a mortgage constitutes a transfer of property for the purposes of s 121 of the Act: Pastro v Official Trustee in Bankruptcy [2000] FCA 744 and Mr Frost is a person who later became bankrupt. 111 Prima facie, both Richardson mortgages are void if the criteria in s 121(1)(a) and (b) are established. For purposes of criteria (a), I am satisfied that the Mayflower Crescent property would probably have become part of Mr Frost's estate and been available to his creditors but for the transfer of that property. 112 The principal question then is whether Mr Frost's main purpose in granting the Richardson mortgages falls within either of the two purposes enumerated in s 121(1)(b). The transferor's main purpose is said to be deemed to be that described in s 121(1)(b) if s 121(2) is satisfied: that is if it can reasonably be inferred from all the circumstances that, at the time of the transfer, Mr Frost was or was about to become insolvent: s 121(2). 113 The formulation of the test expressed in s 121(2) was considered by the Full Court in Re Jury; Ashton v Prentiss (1999) 92 FCR 68 (Ryan, Heerey and Katz JJ). Their Honours at [55] said that the formulation is not synonymous with the expression "if the transferor was insolvent". They continued: The statutory provision, as a matter of ordinary language, leaves open the possibility that it may also reasonably be inferred that the transferor was solvent. In other words, it is sufficient if the inference of insolvency is reasonably open. An analogy is the leaving of a case to a civil jury. If it can reasonably be inferred from all the circumstances that the defendant was negligent, or that the publication complained of was defamatory of the plaintiff, then the matter must go to a jury. Nevertheless, the jury is not required to draw the relevant inference and may not do so. 114 Their Honours continued at [56]: [The] conclusion about the existence of a reasonable inference concerning the bankrupt state of solvency was supported by the conceded inability of the bankrupt to pay current legal expenses or expected future legal expenses in connection with the litigation … Also, in this context, his Honour relied on the large sums being claimed by … which the bankrupt could not pay. Although those claims had not by then merged in a judgment, his Honour held that they represented "a debt which came into existence, no doubt, at the latest when the bankrupt was called upon to pay under his guarantee. That is to say, it was a debt which existed and was due and payable at the time the transaction was entered into". 115 On the appeal, the finding at first instance was not challenged, and it was argued that the presumption created by s 121(2) could be rebutted by direct proof that the transferor's main purpose was other than that prescribed in s 121(1)(b), particularly having regard to a language of s 121(3). That contention was rejected. Their Honours at [59] confirmed that ss 121(2) and (3) have independent spheres of operation. Consequently, because the finding that s 121(2) was enlivened, the transfer in question was void unless s 121(4) was satisfied. That is a contention developed in this matter as well and which will be addressed later in these reasons. 116 Section 121 in its pre-amended form was also the subject of consideration in Prentiss v Cummins (2002) 124 FCR 67 (Prentiss), in particular at [87]-[103]. I respectfully agree and adopt the analysis of Sackville J in that decision. He referred with approval to a passage in Re Jury at [81]. As his Honour there explained, if reliance is placed on s 121(2) the transferor's subjective intention is likely to be irrelevant. If it can reasonably be inferred that the transferor was insolvent at the time of the transfer or was about to become insolvent at the time of the transfer, it does not matter if his or her subjective intention did or did not fall within s 121(1)(b). On the other hand, if there is no reliance upon s 121(2), the trustee would need to establish that the transferor's subjective purpose was that described in s 121(1)(b). 117 His Honour at [96] noted that the expression "main purpose" is not defined in the Act. His Honour adopted a meaning of "main" as a principal or leading purpose, and not necessarily the sole purpose, so that the transfer might be caught by s 121 even though the transferor had other purposes in mind. As is clear enough from the wording, the onus lies upon the party invoking s 121 to show that the terms of s 121(1) have been met: see Prentiss at [97] and Re Williams; Williams v Lloyd (1934) 50 CLR 341 at 372. 118 Since reliance is placed on s 121(2) in this case, I will proceed to address the question of Mr Frost's insolvency at the relevant times of the granting of the Richardson mortgages (namely 27 January 1999 and 1 February 2000), before any further consideration of s 121(1)(b). 119 As noted above, on 24 July 1998, an order had been made restraining Mr Frost from dealing with his assets, other than in the ordinary course of business as an accountant. With the assistance of Mr Richardson, he had prepared two affidavits in relation to that application disclosing the extent of his assets and liabilities. A comparative analysis of Mr Frost's assets and liabilities at the relevant times translates to an unfavourable statement of his financial position. 120 At neither times of the granting of the first and the second Richardson mortgages did Mr Frost have any significant assets capable of realisation at short notice to discharge his liabilities. The evidence indicates that his income stream from his accounting practice was a modest one, apparently allowing him to meet day-to-day expenses, expenses of the accounting practice, and outgoings on the Angas Street property but with little surplus. (It is not presently necessary to consider whether the outgoings on the Angas Street property were ultimately borne by ABPH itself or as trustee for the FFT). No personal income tax returns have been adduced in evidence, nor any other evidence to indicate that Mr Frost was earning sufficient income to pay in any timely manner that liability or accumulate or borrow funds to enable him to do so. His principal equity was his half share in the Mayflower Crescent property, then jointly held with Ms Frost. I find that his equity in that property at that time was not sufficient, even if realised, to meet that liability. It was then valued at about $105,000, so Mr Frost's share was worth about $52,500. Since it was a matrimonial home, it was not a readily realisable asset. As I have found, Mr Frost also owned one of the two shares in ABPH which, in turn, owned the Angas Street property. In 1997 it was valued (as ascribed by Mr Frost) at about $240,000. The AIC primary mortgage was for $185,000. Whilst, there is no independent evidence of its value at January 1999, one half would have been worth in excess of $25,000 after discharge of the mortgage. Allowing for some inflation of property values, I shall assume Mr Frost's share at January 1999 was worth about $40,000. Again, assuming that that asset could be readily realised, it would not have enabled payment of the judgment debt at January 1999. 121 I also do not think Mr Frost's accounting practice was capable of being sold at any significant value. In his Statement of Affairs and application for a loan to support the acquisition of a property in Darwin, Mr Frost estimated its worth at $400,000. However, contrary to this, he stated in his evidence, that the practice had such a client base that it could not be sold for any significant sum. There is no basis for thinking that it had any real saleable value, based upon the little evidence as to its revenue, or any available financial reports, so I accept Mr Frost's own assessment on that matter. That approach is consistent with Mr Frost's affidavit sworn in the Supreme Court proceedings on 24 July 1998, where Mr Frost adhered to the view that the value of his accounting business was not significant. 122 Neither am I of the view that the property at Cullen Bay in Darwin had any significant value to improve his net asset position. It was purchased in October 1997 for $239,950, subject to mortgages of about $219,000, and was sold in 2004 for $230,000. The mortgages were discharged and the net realised profit upon that sale was nearly $27,000. It is apparent that it was not appreciating in value significantly, or at all, at the time of either of the two Richardson mortgages. I think it is realistic to allow a sum of no more than about $30,000 by way of equity. 123 So far as the evidence discloses, Mr Frost's liabilities primarily arose as a result of the Supreme Court proceedings. 124 By January 1999, judgment against Mr Frost (and others) had been given on the issue of liability in the Supreme Court proceedings and in favour of both family groups on 19 November 1997. It was only on 3 July 1998, that quantum had been assessed for a particular and not insignificant sum of $103,734 plus interest on one of the two family claims on 3 July 1998. The second judgment was not quantified in amount, but was obviously to be of not a dissimilar amount. At the time of the first Richardson mortgage, an appeal to the Full Court of the Supreme Court from the judgment of 19 November 1997 had been heard but not yet determined. I have expressed reservations about the optimism which Mr Frost then held as to the likely outcome of that appeal, but for the purposes of s 121(2) of the Act, his subjective assessment of those prospects is irrelevant. The subsection merely requires an objective assessment of all the circumstances. 125 By the time of the granting of the first Richardson mortgage, the solicitors previously acting for Mr Frost (through an insurer) had ceased to act for him and had made a claim against him for reimbursement of legal costs and disbursements in the sum of $160,000. It was apparent at that time that Mr Frost's professional indemnity insurer had declined to indemnify him in respect of the liability in the Supreme Court proceedings. 126 The liabilities at the time of the grant of the first Richardson mortgage were substantial, and obviously in my view were in excess of $200,000 plus interest and costs. I accept that there was some, but no strong prospect of succeeding on the appeal setting aside the judgment against Mr Frost. It was not contended, on behalf of Mr Frost, that I should not take into account in an assessment of his liabilities, the yet to be crystallised judgment debt relating to the second family claim. In those circumstances, and bearing in mind what I have found as to the cash flow and earnings potential of his accounting practice, I am satisfied that it can be reasonably inferred from all the circumstances that at the time of the first Richardson mortgage Mr Frost was, or was about to become, insolvent. Indeed, Mr Frost acknowledged in his cross-examination that from November 1997, when judgment for damages to be assessed was entered against him, he had no ready funds to pay any such judgment debt and interests then, nor subsequently in January 1999, or in February 2000. 127 Consequently, since I am satisfied of s 121(2), I conclude that Mr Frost's main purpose in granting the first Richardson mortgage was that described in s 121(1)(b). 128 Turning to the second Richardson mortgage, it can also reasonably be inferred from all the circumstances that Mr Frost was or was about to become insolvent. This conclusion is readily apparent since at that time the Full Court appeal had been dismissed, and Mr Frost's liabilities arising out of the Supreme Court proceedings were affirmed. The quantum of the second family claim had been fixed in excess of $200,000. He was also liable for the costs of the proceedings. There had been some appreciation in the value of both the Mayflower Crescent property to about $115,000 (the value of Mr Frost's share would be about $55-60,000) and the Angas Street property (after payment of the primary AIC mortgage, but ignoring costs of realisation) increasing his share in ABPH to about $75-80,000. At the time of the grant of the second Richardson mortgage, Mr Frost's asset position described above (relevant to the assessment of the first Richardson mortgage) was about the same, his income potential was no greater, and the liabilities had not been reduced. I am similarly satisfied that s 121(2) applies to the grant of the second Richardson mortgage. 129 In reaching the conclusions on s 121(2) with respect to both of the Richardson mortgages, I have not taken into account any liability on the part of Mr Frost to pay Mr Richardson in respect of legal work completed as at January 1999 or February 2000. On or around January 1999, I am not satisfied that the arrangement between them was such as to give rise to liability for legal costs, rather than a liability contingent upon there being funds available to meet them. I am also not satisfied that there were any such costs outstanding and payable, of approximately, and not less than, $50,000 at that time. I find that the arrangement between Mr Frost and Mr Richardson from 1995 was that Mr Richardson would somehow account for the serviced office facilities he was provided with, and from November 1997 the receipt of services would be offset against his legal fees. It is not possible to quantify the value of the serviced office facilities he used, albeit that they may have been modest. There is no evidence as to their value. 130 By the time of the grant of the second Richardson Mortgage, Mr Richardson's professional fees outstanding are likely to have been substantial, and to have exceeded the amount of any set off to account for the provision of the serviced offices. I am not able to determine a precise amount. That amount would only add to the liabilities of Mr Frost as summarised above. However, my conclusion stands as follows: the arrangement between them, and the recovery of Mr Richardson's legal fees, remained contingent on there being funds available to meet them. 131 As foreshadowed above, and independent of my conclusions based on s 121(2), I return to briefly consider the criteria set out in s 121(1)(b). 132 Mr Sheahan contends that Mr Frost's true purpose behind the grant of the Richardson mortgages was not to secure any legal fees allegedly owing to Mr Richardson, but that the main purpose was to prevent the Mayflower Crescent property from being divisible amongst his creditors, in particular the judgment creditors of the Supreme Court proceedings. 133 I have recorded my findings about the circumstances in which Mr Richardson came to do legal work for Mr Frost, and the arrangements entered into. The arrangement that the precondition to payment for legal work was the completion of the proceedings, followed from a mutual understanding between Mr Frost and Mr Richardson that Mr Frost would not be in a position to meet legal fees as and when they were incurred. There was initially no suggestion that the fees to be incurred would be secured by mortgage over certain property. That intention only arose in January 1999 shortly after the appeal hearing in the Full Court of the Supreme Court (in which judgment was delivered on 2 July 1999). There is some direct evidence, namely the admission by Mr Frost to Ms Frost when he arranged for her to sign the Richardson mortgages that their purpose was to lessen the value of the Mayflower Crescent property in case anything should happen. It remains unclear what circumstances Mr Frost was referring to. Mr Frost also told Ms Frost that she should not worry about the mortgages as Mr Richardson would not want to claim on them, and in fact shortly after the second Richardson mortgage was granted Mr Richardson executed the Discharges of Mortgages. I have accepted generally Ms Frost's evidence on these matters. 134 For the reasons which I have explained, I do not place any weight on Mr Frost's direct evidence as to his reasons for granting the Richardson mortgages. I am also cautious about placing any weight on the evidence of Mr Richardson relevant to the same. 135 Neither do I think Mr Richardson's conduct tends to support the claim that the grants of the Richardson mortgages were a condition of him acting or continuing to act for Mr Frost. In support of this conclusion is the absence of any attempt on the part of Mr Richardson to quantify in formal or reliable terms an estimate of the amount of the legal fees owing by Mr Frost to Mr Richardson leading up to the grant of either Richardson mortgages. There was clearly an arrangement whereby Mr Richardson would, as he did, occupy premises within the Angas Street property and use its facilities without being charged a fee, purportedly as a contribution towards his legal expenses. However, at about the time of either of the grant of the Richardson mortgages Mr Richardson had not estimated the legal costs that had been incurred, nor did he prepare and submit a formal bill of costs in accordance with s 41 of the Legal Practitioners Act 1981 (SA). The failure to do so, suggests a lack of concern for the recovery of his legal fees owing at the time of the grants, in direct contradiction to their contended purpose. 136 Furthermore, I have taken into account the terms of the first Richardson mortgage. The peculiar manner in which the terms are expressed was not explained and does not fit consistently with the claimed purpose said to support the grant of the first Richardson mortgage, with specific regard to the $20,000 purportedly advanced to Mr Frost and Ms Frost, but which in fact had not occurred. Nor do I think either Mr Frost or Mr Richardson satisfactorily explained the purpose of the Discharges of Mortgages. I have accepted that, for whatever reason, they felt threatened by events outside their control, but I do not accept that the perception of being threatened is consistent with the preparation of the Discharges of Mortgages and their handing over to Ms Frost, rather than to some reliable third party. 137 Additionally, the subsequently negotiated terms of the property settlement which included the proceeds of Mr Frost's claim against his former solicitors as transferred to Ms Frost, is conduct on the part of Mr Frost and Mr Richardson which is inconsistent with a pursuit to secure payment of Mr Richardson legal fees. 138 Finally, I discerned in the course of Mr Frost's evidence a firm view on his part that he should not have been found liable in the Supreme Court proceedings, and that he felt cheated by the plaintiffs' success in the same. Consistent with that attitude, Mr Frost's motive for granting the Richardson mortgages perhaps can be implied − not so much an attempt to avoid liability to creditors generally − but to prevent or frustrate, the recovery of judgment debts for reasons associated with the circumstances in which the liability arose. This view accords with what I accept Mr Frost told Ms Frost about the reason for granting the Richardson mortgages. 139 Independent of the deeming operation of s 121(2) (which in these circumstances I have indicated as applicable to both Richardson mortgages), Mr Frost's main purpose in granting the Richardson mortgages was to prevent his equity in the Mayflower Crescent property from becoming divisible amongst his creditors, in particular the two families who had brought the Supreme Court proceedings against him, or alternatively, to hinder or delay the process of making that interest in the Mayflower Crescent property available for division amongst those creditors. I reject the contention that they were to secure the legal fees due to, or which may become due to Mr Richardson. Thus, s 121(1)(b) is satisfied. 140 In my view the two Richardson mortgages are void as against Mr Sheahan, subject to considering the implications of s 121(4), which operates to preserve the transfers if successfully invoked. 141 For the purposes of s 121(4)(a), I regard the value of Mr Frost's equity in the Mayflower Crescent property as being half the "market value of the property". That was about $52,500 in January 1999 and about $57,500 in February 2000. Mr Richardson did not persuade me with any detail that consideration for each of the Richardson mortgages, namely the provision of legal services, equated to those values. He merely asserted that his outstanding legal fees, as at the time of the first Richardson mortgage, were at least $50,000, and so at least as valuable as the market value of the mortgaged property. I do not accept that. The failure of Mr Richardson to provide any detailed costing analysis at the time of that mortgage fortifies that conclusion. 142 I now turn to the application of s 121(4)(a) within the context of the grant of the second Richardson mortgage. As mentioned, Mr Frost's equity in the Mayflower Crescent property on 1 February 2000 was about $57,500. In the space of the 12 months or so, since the grant of the first Richardson mortgage, clearly Mr Richardson had undertaken significant legal work for Mr Frost including in relation to the Full Court appeal and having taken instructions and brought the application to seek special leave to appeal to the High Court. He had also acted for Mr Frost in quantifying the liability relevant to the Supreme Court proceedings, between 2 July 1999 (when the Full Court appeal was dismissed) and 19 January 2010 when those damages were assessed. I am not satisfied that any significant work in the proposed action against the former solicitors of Mr Frost had, by then, been undertaken. The onus of establishing that lies on Mr Richardson: Ashton v Prentice at [67]. Once again, however, there is no attempt to accurately quantify outstanding legal costs as at 1 February 2000. Even allowing for the set off for the provision of serviced offices, I am inclined to think, in the absence of any real costs analysis having been provided, that Mr Richardson's legal fees by that time would have exceeded $57,500. It is an assessment made assuming that the scale of fees was applied to the work done. Mr Richardson has not satisfied s 121(4)(a) in relation to the second Richardson mortgage. 143 Turning to an evaluation of s 121(4)(b), there is also evidence to suggest that Mr Richardson was aware of Mr Frost's main purpose in the granting of both Richardson mortgages. I have referred to that evidence above. It resulted in my findings about the nature of the arrangement between Mr Frost and Mr Richardson concerning the payment of his legal fees and also the existence of the two undated Discharges of Mortgages and Mr Richardson's awareness that they were to be given to Ms Frost. Mr Richardson engaged in those matters with a knowledge of Mr Frost's financial position (as he had prepared the affidavits of Mr Frost filed in the Supreme Court proceedings). I am therefore not satisfied of s 121(4)(b). 144 In light of Mr Richardson's appreciation of Mr Frost's financial circumstances and liability as a result of the Supreme Court proceedings (which had been fully quantified by the time of the grant of the second Richardson mortgage), I am also not satisfied that Mr Richardson could not reasonably have inferred that, at the time of each of the two Richardson mortgages, Mr Frost was, or was about to become insolvent. Section 121(4)(c) is also not made out. 145 The consequence of the findings and conclusions referred to above, is that each of the two Richardson mortgages are void pursuant to s 121 of the Act. As I propose to ask the solicitors for Mr Sheahan to propose the form of orders to give effect to my decision about ABPH holding the Angas Street property in its own right, I will defer making orders on this aspect of the claim at this point. Mr Sheahan's proposed orders concerning the Mayflower Crescent property can be included in that document.

The Second Issue: The Status of the Angas Street Property 146 In respect of the ownership of the Angas Street property, the question to be resolved is whether, as Mr Frost contends, ABPH holds the property as trustee for the FFT or absolutely in its own right. 147 If, as is consistent with Mr Sheahan's view, the property is not held on trust, then following the winding up of ABPH, the proceeds of the Angas Street property are to be distributed equally amongst its two shareholders, Mr Sheahan (as trustee in bankruptcy of Mr Frost's share) and Mr Frost (as trustee of Ms Frost's share, following the consent agreement subsequent to the Family Court proceedings). If ABPH holds the property on trust, ABPH as trustee would have to determine how the trust property is to be appropriated. Mr Frost is an eligible beneficiary, as are his extended family and Ms Frost, as well as a much wider range of persons. 148 Some facts are clear and undisputed. The FFT was established on 1 July 1986. The little evidence adduced, indicates that it was for most part an inactive trust, containing nothing other than the settler's funds at least for a number of years. 149 The FFT Deed is signed by Ms Frost's mother as settler and, although it provides for Ecrosay's common seal to be affixed as trustee, there is no seal apparently affixed. The details about the composition of Ecrosay's directors and of subsequent changes to the trustee of FFT are stated at paragraphs [9]-[10]. I accept that Ecrosay became the first trustee of the FFT. 150 I find that, at least from 1 September 1986 Ecrosay did not operate as trustee for the FFT. The disposition by Mr Frost of any interest in Ecrosay appears to have occurred at about the same time as his professional association with Mr Viney came to an end in 1986. Thereafter, its new directors and shareholders knew nothing about the FFT. 151 There is no apparent reason why Ecrosay was replaced by ABPH as trustee of the FFT on 1 February 1990. At the same time, Mr Frost somehow procured the transfer of Mr Viney's share in ABPH to Ms Frost. I consider that, at about that time, Mr Frost simply realised that Mr Viney was still nominally involved with ABPH as a director and shareholder, and decided to "tidy up" the position. I do not accept that the change was made in anticipation of the acquisition of the Angas Street property as that did not occur until some time later. I note Mr Richardson's evidence that, when he prepared the deed to substitute Aaronden as trustee of the FFT in lieu of ABPH (at Mr Frost's request) in August 1998, he had access to a document apparently dated 1 February 1990 by which ABPH came to be the trustee of the FFT. At that time, the FFT was still an inactive trust. That document has not been produced, notwithstanding its potential significance. It is said that the solicitor from whose file the copy was obtained to provide the template for Mr Richardson's work has misplaced the file. I accept that Mr Richardson looked at some such document. I also accept that on 1 February 1990, ABPH became the trustee of the FFT, that the FFT remained an inactive trust, and ABPH performed no active role as its trustee from 1 February 1990 for some time. 152 The next step in time of significance is the acquisition of the Angas Street property. 153 It has not been made evident that anything was particularly done by ABPH in its capacity as trustee of the FFT or by Mr Frost as the effective controller of the FFT in relation to the acquisition of the Angas Street property as trust property. The Angas Street property was apparently simply acquired in the name of ABPH on 14 August 1992. 154 The FFT Deed contains common provisions, including those requiring the trustee, in respect of each accounting period to determine the net income of the FFT and to distribute it to eligible beneficiaries or to accumulate it in full or in part. There are the usual powers of investment including the buying and selling of real property. Mr Frost as "the Appointor" is empowered to remove and replace the trustee. The trustee is required to keep complete and accurate records of the receipts and expenses of the FFT for each financial year and to prepare financial statements including a balance sheet, a statement of income and expenditure and a list of assets at the end of each financial year. There are no such records in evidence. Nor are there any records of meetings of any of Ecrosay, ABPH or later of Aaronden. Nor, as expected to be, are there any records of any decisions made by any of the putative trustees of the FFT relating to distribution of annual net income of the FFT. In my view the absence of critical documentation and the questionable reliability of Mr Frost's evidence, supports the conclusion that ABPH did not acquire the Angas Street property as trustee for the FFT. 155 The annual returns of ABPH describe it as a trustee. There are no banking records of ABPH for the period prior to 23 June 1994. The ANZ monthly bank statements of ABPH as trustee for the FFT cover the period from 23 June 1994, when the account was apparently opened, to 13 November 1998 when it was subsequently closed. They provide some support for Mr Frost's claim. The monthly credits relevant to this account generally ranged between about $1600 and $6000 and are described as "card entry" deposits, and the monthly debits are of a similar order, so the monthly balance is commonly only a small amount. The debits include ATM withdrawals, and some small cheque debits (by far the largest of which is a regular monthly debit of $1695, which I infer is to AIC to pay the monthly interest on the Angas Street property). In May 1995, there was an abnormal deposit of $65,120, and there are two cheque withdrawals of $10,000 each and one of $25,000 in May and June 1995. The balance of the account, then about $9000, slowly reduced over the next few months as debits thereafter exceeded the credits. The monthly balance subsided again to only several hundred dollars. The card entry credits of each month by September 1995 appear to be in amounts sufficient to keep the balance of the account in credit but no more. They do not have the appearance of income deposits directly, nor of deposits to reflect an agreed rental for the Angas Street premises. 156 Mr Frost's income tax returns for 1995/96 and 1996/97 show a modest income from his accounting business. They do not disclose any distribution of income from the FFT. His profit and loss statements, trading as Ambrose Baker & Partners, for the periods ending 30 June 1995, 30 June 1996 and 30 June 1997 were also provided. They show fee income, less expenses (including general expenses, interest, rent and wages) to reveal a modest net profit. The rent over those three years was shown as $30,000, $37,840 and $46,450 (inaccurately described as professional publication). Such rental expense was not correspondingly credited to the ABPH account referred to in the preceding paragraph. 157 Furthermore, the ABPH "financial statements" for the years ended 30 June 1995 and 30 June 1996 are incomplete. They do not contain any financial reports. The director's report describes the company as a trustee company for the FFT and that in each of those years, there was no net income. However, the director's statement asserts that proper accounting records have been kept and proper accounts have been prepared. The copies produced by Mr Frost, as exhibits to an affidavit, are not signed. He describes them as a copy of the financial statements and reports lodged by ABPH with ASIC for each of those five years. 158 As referred to above, there are no financial accounts of ABPH as the asserted trustee of the FFT at the time of the acquisition of the Angas Street property, nor do the produced accounts relevant to ABPH, subsequent to that date, readily indicate ABPH was operating as the trustee for the FFT with respect to the Angas Street property. There are no financial statements of the FFT. There are no distribution records. There are no taxation returns of the FFT or of ABPH. There are no financial or taxation records which in any coherent way identify income and expenditure related to the Angas Street property. There is no record to support Mr Frost's description of the office arrangement, whereby his accounting practice was said to be operated for some time by a service company on premises owned by ABPH as trustee for the FFT. There is no coherent record of the payment of rent to ABPH by either Mr Frost (or Mr Richardson) or by any service company of the accounting business. Nor is there a record of the application of funds by ABPH to AIC to pay the outgoings on the AIC primary mortgage. There are no statements of AIC to any entity as trustee of the FFT. The absence of those records has not been satisfactorily explained. I do not accept Mr Frost's evidence that, at some uncertain date, he bundled those records together and gave them to Ms Frost. I have given reasons why I do not accept that evidence. As I have said, even if he had chosen to provide her with such records, there is no reason why he would not have retained some of the records, or copies of the same. I infer from the absence of the production of such records that they do not exist. Mr Frost is an experienced practising accountant, as he said, with a significant business advisory role to his clients. In my view, it is inconceivable that, had the structure existed as Mr Frost asserts there would have been no more than the insufficient records to which he has referred. 159 The purported appointment of Aaronden as trustee of the FFT on 28 August 1998 was a contrivance. When Mr Frost decided that the appointment was better not pursued simply for financial reasons, the apparent consequence of the Deed of Appointment of Aaronden was simply ignored. There is no formal documentation by which Aaronden ceased to be the trustee of the FFT and ABPH was re-appointed as its trustee. Nevertheless, that is what Mr Frost says is the case. The Deed of Retirement and Appointment of Trustee of Aaronden as trustee for the FFT made on 28 August 1998 has Aaronden's common seal affixed, verified by the signature of Ms Frost as its director and secretary. She did not occupy those positions in Aaronden, or at least not actively so. I find that he chose simply to ignore that Deed, because it was no more than a contrivance. 160 Aaronden nevertheless had a bank account as trustee of the FFT, operated between 4 November 1998 and 9 June 2000. There are credits of amounts between $2600 and $5150 per month and debits of between $2522 and $5472 per month, but only until December 1999. The credits for the next five months to 4 June 2000 totalled only $5930 and the expenses totalled only $4925. There is a recurrent monthly debit of $1695, paid apparently by cheque until January 2000, which I infer is the interest payment on the primary AIC mortgage. There was a closing balance of $575, but the monthly balance was relatively small. One month it was in debit. In effect, that account was largely inactive from January 2000. That evidence tends to confirm the conclusion that Aaronden was not operating as an active trustee of the FFT. The way the account was operated from January 2000 is not consistent with such a function. There are no credits suggesting the receipt of rent income on a regular basis from Mr Frost or any service company. There are no credits which would accord with the only rental amounts identified in the evidence, namely the rental of between $30,000 and $46,450 between 1995 and 1997 already referred to above. The rental after 1997 would or should have been equal to or higher than $46,450. They were not recorded as having been received by Aaronden, either as a lump sum or as a monthly or other regular amount. There are no other records or accounts. How, for instance, outgoings such as rates and taxes were paid and accounted for, remains unexplained. 161 What occurred after January 2000 in relation to the asserted trust, and its administration of the Angas Street property is not shown on the evidence. There was no trustee which, according to banking records, was administering the affairs of the FFT at least insofar as those affairs were to relate to the Angas Street property as a trust asset. 162 A separate account of ABPH ostensibly as trustee of the FFT was opened between 1 June 2000 and 9 February 2001. It was not an actively operating account. There were no significant credits or debits. The debits, other than the withdrawal of $600 almost immediately after it was deposited, were bank duties and taxes. No payments of $1695 are shown. After that account was closed, there are no other relevant banking records in evidence. 163 The absence of critical documentation and my inability to rely upon Mr Frost's evidence generally suggests that the contended trust relationship does not exist. Overall, I have come to the conclusion that, whilst Mr Frost may have contemplated or had an intention for the Angas Street property to be held by ABPH as trustee for the FFT when it was acquired, or anytime thereafter, he simply did not implement that plan. It may be that Mr Frost was so busy in his professional practice that he simply did not get around to preparing the necessary documentation or it may be that there are other reasons why the loosely conceived intention was not properly recorded and given effect to by the sort of documents to which I have referred. I therefore consider that the Angas Street property was acquired by ABPH in its own right and that at no time thereafter was it held by ABPH as trustee for the FFT. If such a relationship did exist, the inevitable alternative would be that Mr Frost as the guiding mind of ABPH and subsequently Aaronden, failed to fulfil the most primary responsibilities of a trustee under the FFT trust deed including the obligations to prepare financial accounts. In any case, the manipulation associated with the purported appointment of Aaronden, and Ms Frost's total lack of awareness of any such trust, as mentioned above, reinforces my conclusion. 164 As I have found that ABPH did not hold the Angas Street property on trust for the FFT at any time material to these proceedings, it unnecessary to determine whether, if the contrary were the case, there was sufficient evidence of writing to give effect to that trust consistent with s 29(1)(b) of the Law of Property Act 1936 (SA). In any case, I will briefly consider the issue. That subsection provides that a declaration of trust respecting any land must be manifested and proved by some writing signed by some person who is able to declare such trust. 165 It is uncontentious, that the creation of a trust may be oral, provided it is subsequently evidenced in writing. The writing must set out the beneficiaries, the trust property and the nature of the trust. The writing may be in one or a combination of documents, provided the documents together evidence the terms of the trust. The signature must be by the person enabled by law to declare the trust. See Equuscorp Pty Ltd v Manuel Jimenez [2002] SASR 225 per Besanko J at [120]-[123] (Equuscorp); and generally the discussion in S v P [2006] 35 Fam LR 88 at [65]. 166 In this matter, the documentary material, which existed prior to the Angas Street property being acquired by ABPH shows the existence of the FFT and of ABPH itself. There is no direct documentary evidence that ABPH was appointed as trustee of the FFT in 1990 or before, or about the time it acquired the Angas Street property. Nor is there any express statement found in any document which declares that ABPH acquired the Angas Street property as trustee for the FFT. However, the Aaronden Deed of 28 August 1998 does refer to that fact and Mr Richardson has given oral evidence of having based the draft of that deed on an earlier deed of 1 February 1990. The Aaronden Deed is signed by Mr Frost on behalf of ABPH and Ms Frost on behalf of Aaronden (although she was not its director). Mr Frost's affidavits variously refer to a family trust, without naming it, established in 1990 and which owned the Angas Street property. His affidavit of July 1998 in the Supreme Court proceedings stated that he owned one share in ABPH, which is a trustee company for a family trust. His Statement of Affairs more explicitly says the FFT is the landlord for his accounting practice and that ABPH (under its ACN name) was the trustee. 167 In summary the evidence which is consistent with Mr Frost's case includes the existence of ABPH, documentary records which assert that ABPH had been the trustee of the FFT since 1990, the ABPH annual returns to ASIC stating it is a trust company, the banking records which - despite their shortcomings to which I have referred - are titled as accounts of ABPH and later the existence of Aaronden as trustee for the FFT, and the Aaronden Deed. 168 However, to satisfy s 29(1)(b) what was required to be produced was a document signed by ABPH, either as beneficial owner of the Angas Street property or as the trustee of the FFT: Equuscorp at [120]. It follows then that there is a missing link in the chain of documentation precluding the conclusion that the Angas Street property is held by ABPH as trust property of the FFT. The connection is asserted only in Mr Frost's affidavit of 24 July 1998 in the Supreme Court proceedings. That is not a document of ABPH. There is no writing signed by ABPH either as the owner or as the trustee of the FFT which constitutes a declaration of trust, or a recognition of a declaration of trust, over the Angas Street property. As already mentioned, it would have been within the power of Mr Frost to have adduced any such document, but he did not do so. 169 Even if the affidavit was considered in conjunction with the other material to which the Court was referred to on behalf of Mr Frost, I am not satisfied that the collation of material is sufficiently connected to satisfy that subsection. The relevant dates of the documents extend over some 12 years from the establishment of the FFT in 1986 to the Aaronden Deed in 1998. For the reasons given, that documentary evidence does not present a cogent picture of the asserted trust in answer to the second claim subject of these proceedings. Even if contrary to my primary conclusion, ABPH at material times held the Angas Street property on trust, I do not consider that s 29(1)(b) of the Law of Property Act 1936 (SA) is satisfied. 170 The shares in ABPH are held equally by Mr Sheahan and Mr Frost in the circumstances referred to above. Both Mr Sheahan and Mr Frost have an equal interest in maximising the return. I direct that the solicitors for Mr Sheahan draw up orders for the process by which those shares, or the Angas Street property, may be sold to realise their proper value. I will allow 14 days for the proposed orders to be prepared.

Orders 171 As I have indicated in [145] and [170], I direct that the solicitors for Mr Sheahan should now draw up orders to give effect to these reasons. They should do so within 14 days. In respect of the Angas Street property, it would be appropriate to confer with the solicitors on the record for Mr Frost, as he has an equal interest in the value of the shares in ABPH being realised at the best value reasonably obtainable. Similarly, he now has an equal interest with Mr Sheahan in getting the best value reasonably obtainable for the Mayflower Crescent property. 172 Mr Frost and Mr Richardson jointly resisted the claim, but Mr Richardson strictly speaking was interested only in the status of the Richardson mortgages. I order that Mr Frost pay Mr Sheahan's costs of the proceeding, and that Mr Richardson pay one half of Mr Sheahan's costs of the proceeding to the intent that he and Mr Frost will therefore be jointly liable for one half of the costs and Mr Frost solely liable for the other half of the costs. Orders to that effect can be included in the draft orders to be drawn up. I certify that the preceding one hundred and seventy-two (172) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield.