Stafford & anor v Kekatos & anor

4 The advance by the Staffords and Mrs Kekatos to Global was made pursuant to a Deed of Loan dated 8 December 1999 ("the Loan Deed"), which recited that the lenders had advanced certain moneys and provided certain guarantees and would continue to advance further moneys to or for the benefit of Global, in order for Global to purchase the Penrose Land, and by clause 6 of which Global charged, as security for all moneys owing by Global to the lenders, any interest in freehold or leasehold property and all its assets and undertaking, and agreed to execute a registrable mortgage of the Penrose Land to secure all moneys secured and obligations to be performed under the Loan Deed. Global also granted to the Staffords and Mrs Kekatos an equitable charge over all Global's assets - including a fixed charge over real property - dated 10 April 2000 and registered on 18 May 2000 ("the Global Charge"), the effect of which was to charge all Global's assets - including the Penrose Land - with Global's obligation to repay all moneys owing by it to the chargees. Also on 10 April 2000, Global granted to the Staffords and Mrs Kekatos an unregistered real property mortgage over the Penrose Land ("the Global Mortgage"), securing "all moneys" due by it to them. Thus, Global's obligations to repay the advances made to it by the Staffords and Mrs Kekatos were secured by the Loan Deed, the Global Charge, and the Global Mortgage.

5 The term of the lease to Heggies expired in November 2000, but Heggies remained in occupation and continued to pay royalties. In May 2001, Heggies commenced proceedings in respect of the lease, and, for reasons given on 19 September 2003, Austin J, on 13 October 2003, ordered that Global grant a new lease to Heggies.

6 In April 2003, the Staffords were advised that Mrs Kekatos' husband and attorney-under-power, Mr George Kekatos, appeared to have made various irregular alterations to Global's share register, and commenced proceedings for the winding-up of Global. As a means of resolving this dispute, the Staffords and Mrs Kekatos, on 5 May 2003, appointed Daniel Cvitanovic as receiver and manager of Global's assets and undertaking, pursuant to the Global Charge. 7 Ostabridge had previously commenced proceedings against AMES and Global, but had subsequently gone into receivership, with Kevin Shirlaw being appointed its receiver and manager in July 2000. In January 2003, the proceedings brought by Ostabridge against Global had been settled, on terms that obliged Global to make payments to Ostabridge, which were secured by an unregistered mortgage over the Penrose Land. Ostabridge subsequently commenced further proceedings against Global (and others), and pursuant to Ostabridge's mortgage, Mr Shirlaw appointed Geoffrey McDonald and Richard Albarran as receivers of the Penrose Land on 13 May 2003. These further proceedings were settled on 28 May 2003 - during Mr Cvitanovic's term as receiver - by way of variation of the earlier settlement, on terms that required Global to pay Ostabridge $4.65 million - the first $2 million only of which was secured by a charge over Global's assets and a mortgage of the Penrose Land, and a guarantee by the Staffords and Mrs Kekatos - payable in five instalments: $100,000 by 28 May 2003, $300,000 by 30 June 2003, $1,600,000 by 31 December 2003, $1,650,000 by 1 June 2005 and $1,000,000 by 1 June 2006.

8 As at October 2003, $300,000 had been paid; $100,000 was outstanding; and the next instalment of $1.6 million was payable on 31 December 2003. Subsequent to Global's default in payment of the $100,000, Global was wound up on 23 October 2003, and Michael Gregory Jones was appointed liquidator. Meanwhile, Mr Cvitanovic had retired as receiver on 1 September 2003; however, on 9 October 2003 (following the delivery of Austin J's judgment, but prior to the decree that Global execute a new lease to Heggies), Mr Cvitanovic was again appointed receiver of the Penrose Land by the Staffords, under the Global Charge. During his second receivership, he claimed to be entitled to, and received, the royalties payable by Heggies.

9 Upon his second appointment as receiver and manager of Global, Mr Cvitanovic sought purchasers for the Penrose Land. The Staffords and Mrs Kekatos, who believed that the Penrose Land was undervalued, were contemplating making an offer, and to this end Mr Cvitanovic held discussions with Mr Wayne Stafford (as agent for the Staffords), and Mr Kekatos (as agent for Mrs Kekatos). Between December 2000 and October 2003, further advances had been made by the Staffords and Mrs Kekatos to Global, such that, as at 30 October 2003, the Global Charge secured a total of $3,193,449, of which $741,561 had been advanced by Susan Stafford, $1,370,955 had been advanced by Rhonda Stafford, and $1,080,932 had been advanced by Mrs Kekatos. Following a conference on 29 October 2003, on 30 October Mr Cvitanovic sent a letter to Mr Kekatos, which was copied to Mr Stafford, noting that the Stafford/Kekatos interests would make an offer to purchase the Penrose Land, involving a cash injection by the Kekatos interests of $2,209,763.84 and "an assignment of the debts owed by the secured creditors" as detailed above so that "the total offer will be $5,403,212.96, being the cash injection of $2,209,763.84 plus the assignment of the secured creditors' debts of $3,193,449". (The reference to "assignment of the secured creditors' debts" is to be understood as intending to convey that the purchase would be subject to the Global Charge). The letter continued: The above offer is outlined in the attached work paper and I note your comments that the offer is substantially greater than the valuation of the property conducted by Mr Don Reed in April 1995.

10 The letter observed that the offer would have to be submitted via the tender process, and attached a letter of the same date to Mr Pat Hallinan, to which I shall come. The attached working paper contained the following "secured debt ratios " calculation:

Stafford Interests Rhonda Stafford $1,370,955.92 25.37% Susan Stafford $ 741,561.00 13.72% $2,112,516.92 39.10%

Kekatos Interests Voula Kekatos $1,080,932.20 20.01% Add: Pay Out Ostabridge $1,700,000.00 31.46% Pay Out Receiver and Manager's Costs $ 509,763.84 9.43% $3,290,696.04 60.90% Total $5,403,202.96 100.00%

11 This implies that Mrs Kekatos would fund the payout of Ostabridge and the receiver, and in return her interest under the Global Charge would increase - so that she would recover her additional contribution as a secured debt.

12 Mr Hallinan was an associate of Mr Stafford, and the principal of High Quality (NSW) Ltd ("High Quality"). The letter to him noted that he was considering making an offer to purchase the Penrose Land, including a cash injection of $3,409,763.84 and "an assignment of the secured debts owed in relation to" the Stafford interests amounting to $2,112,516.92 (again, meaning subject to the Global Charge to that extent), so as to total $5,522,280.76. The cash injection was to involve:

Pay out Ostabridge (First Mortgagee) 1,700,000.00 Pay out Receiver and Manager's estimated costs 589,663.72 Pay out Kekatos (Secured Creditor) 1,200,000.00 3,489,663.72 Less: Royalties to be received by Receiver and Manager 79,899.98 Cash Injection 3,409,763.84

13 Thus this proposal contemplated that, with the co-operation of the Staffords, Mr Hallinan would buy out Mrs Kekatos' secured interest. The two proposals were obviously inconsistent: both involved the Staffords retaining their secured interest, but the Kekatos/Stafford proposal involved Mrs Kekatos injecting funds and increasing her secured interest and she and the Staffords acquiring the freehold; whereas the Hallinan proposal involved the Kekatos secured interest being bought out, and Mr Hallinan acquiring the freehold (it does not appear that the Staffords were to have any interest in the freehold under this proposal). On either proposal, the Staffords were not to inject any cash; this accords with their position being such that they were unable to do so, being reliant upon Mrs Kekatos or Mr Hallinan for the injection of any further funding. 14 On or about 5 December 2003, Mr Kekatos, Mr Stafford and Mr Cvitanovic refined the Kekatos/Stafford proposal, to the effect that the tender would be lodged in the name of Mrs Kekatos, on behalf of a unit trust in which the Staffords would hold 50% and the Kekatos interests the other 50% but also have voting control, at a price of $4.893 million - payable as to $3.193 million by assuming liability for (or, technically more precisely, by taking a transfer subject to) the Global Charge, and as to the balance ($1,700,000) in cash, to be raised by Mrs Kekatos using the Penrose Land, and her Vaucluse home, as security. (As the $1.7 million would be required to pay out Ostabridge, it is not apparent at first sight how this proposal would have addressed the receiver's costs, but as will emerge it appears that it remained intended that Mrs Kekatos would in the first instance raise the funds for that purpose also).

15 Mr Cvitanovic, at the request of Mr Kekatos and Mr Stafford, instructed an accountant, Mr Hawketts, on or about 11 December, to procure a unit trust deed. Although in due course Mr Hawketts procured a trust deed, of which Mr Cvitanovic was notified on 15 December and which was forwarded to Mr Stafford on 5 February 2004, it was never executed. This is unsurprising because, as will become apparent, the purchase of the property was not proceeding. However, on or not long after 5 December, the Fifth Schedule of a proforma unit trust deed, which named Mrs Kekatos as trustee of the Penrose Quarry Unit Trust was obtained by Mr Kekatos, executed by Mrs Kekatos, witnessed by Mr Kekatos' employee Mr Stubing, and provided to Mr Wayne Stafford - along with the remainder of the proforma trust deed, which contains a number of internal indicia suggestive that the Fifth Schedule was part of it - in particular, the circumstance that the precedent contains no provision for execution by the trustee except in the Fifth Schedule. Mr Kekatos inserted the date 2 December 2003 in the Fifth Schedule, probably some time on or soon after 5 December. Although Mr Kekatos was at a loss to explain the execution and dating of the Fifth Schedule, and sought to assert that it must relate to some other arrangement - since it did not reflect the intent of the parties that the beneficial interests be 50/50 - no other transaction to which it might relate was ever identified; its very name suggests that it was related to the subject transaction; and the discrepancy - that the schedule allocated the units 51/49 and did not refer to voting shares, whereas the common intent of the parties was that the beneficial interest would be 50/50 with the Kekatos interests to have voting control - in the scheme of things is not a significant inconsistency: there is not much difference between 51/49, and 50/50 with voting control. The probable explanation is that Fifth Schedule provided by Mr Kekatos was executed, in order to provide confirmation that Mrs Kekatos would purchase as trustee for the parties in the agreed proportions, in the light of the delay and cost that would be associated with using a trust procured by Mr Hawketts. 16 Still on 5 December, Mr Kekatos then completed and submitted to Mr Cvitanovic a form of tender for the purchase of the Penrose Land (presumably intended, although not expressly stated, to be subject to the Global Charge), by "Voula Kekatos as trustee of Penrose Trust", for a price of $1.7 million. High Quality submitted a conditional tender for $2,250,000; and Adelaide Brighton Ltd a conditional tender for $4,000,000. Mr Cvitanovic wished to accept Mrs Kekatos' tender, and recommended it to Ostabridge's receiver, Mr Shirlaw. On 22 December 2003, Mr Cvitanovic reported to his appointors that Mr Shirlaw had given conditional consent and attached correspondence which outlined the terms of the proposed sale (amended apparently following negotiations between him and Mr Shirlaw), including that the price was $1.8 million, and also a schedule "detailing the debts of the secured creditors based on moneys to be paid by Mr Kekatos following the sale of the property", as follows:

Secured Debts Based on Draft Financial Accounts Prepared by Peter Hawketts Amended to Reflect Payments by Kekatos

Particulars ($) (%) ($) (%) Stafford Interests 1,757,190.49 44.72% 1,757,190.49 23.55% Rhonda Stafford 905,051.07 23.03% 905,051.07 12.13% Susan Stafford Sub Total 67.75% 2,662,241.56 35.68%

Kekatos Interests 2,662,241.56

Voula Kekatos 32.25% 1,267,091.34 16.98% Add: Pay Out Ostabridge on settlement 1,267,091.34 0.00% 1,800,000.00 24.13% Pay Ostabridge Guarantee on Settlement 0.00% 500,000.00 6.70% Pay Ostabridge Guarantee 12 Months Later 535,000.00 7.17% Pay Out Receiver and Manager's Costs 0.00% 696,803.26 9.34% Sub Total 1,267,091.34 32.25% 4,798,894.60 64.32% Total 3,929,332.90 100.0% 7,461,136.16 100.0%

17 It seems to have been assumed, therefore, that the Global Charge would subsist and that the further funding to be provided by Mrs Kekatos - including what was required to pay out Ostabridge, and the receiver's costs - would be treated as further advances by her on the security of the Global Charge. Thus the effect of the tender if accepted would have been that Mrs Kekatos would have acquired the land as trustee for the Kekatos interest and the Stafford interest equally, but subject to the Global Charge, which would secure repayment of the existing advances by the Staffords and by Mrs Kekatos, with interest, and also the further advances to be made by Mrs Kekatos to complete the purchase. This accords with Mr Kekatos' version, which in this respect I accept, that he stipulated that the parties would share 50/50 after repayment of the proposed further advances by Mrs Kekatos of $2 million. 18 No trust was constituted at that stage, because there was no property that could be the subject of the trust: not only did Mrs Kekatos not hold the Penrose Land, but contracts for its purchase by her had not been exchanged. The Staffords contended that there was a binding and enforceable agreement, which they called the "Penrose Trust Agreement", pursuant to which Mrs Kekatos agreed to purchase the Penrose Land as trustee for herself and the Staffords. Where a person promises for valuable consideration in a concluded agreement to assign property of a certain description not then owned by the promisor, and the consideration has passed, equity fastens upon the property once acquired so as to make the promisor a trustee for the intended assignee [Palette Shoes Pty Ltd v Krohn (1937) 58 CLR 1, 26-7; Booth v Federal Commissioner of Taxation (1987) 164 CLR 159; Ford & Lee, Principles of the Law of Trusts, [3240]]. However, in this case, as at December 2003, there was no consideration moving from the Staffords to support any such agreement, let alone had any consideration passed; and although in a sense the parties had "agreed" that Mrs Kekatos would submit a tender on behalf of the proposed trust - to purchase the Penrose Land, subject to the Global Charge, at a price not exceeding $1.7 million, to be raised on the security of Mrs Kekatos' Vaucluse home and the Penrose Land - there was no "concluded agreement" in the sense of a binding and enforceable contract to that effect: not only because of the absence of consideration, but also because it is clear enough, from the circumstance that the Staffords were contemporaneously engaged in negotiations with another potential purchaser of the land - High Quality, who also lodged a tender on 5 December 2003, which contemplated the Kekatos interests being bought out - that the Staffords did not then intend to be bound with Mrs Kekatos to the terms of the alleged "Penrose Trust Agreement". Had Mrs Kekatos' tender been accepted, she would, upon acquiring an interest in the property, indeed have held it as trustee, but not pursuant to a binding and enforceable agreement - rather, because she purchased expressly as trustee.

19 I mention, only to reject, Mr and Mrs Kekatos' further submission that any such agreement would have been unenforceable by operation of (NSW) Conveyancing Act 1919, s 54A, which provides that no action or proceedings may be brought upon any contract for the sale or other disposition of land or any interest in land, unless the agreement or some memorandum or note of it is in writing signed by or on behalf of the party charged. The alleged "Penrose Trust Agreement" was not "a contract for the sale or other disposition of land": it was not an agreement between vendor and purchaser, or disponor and disponee, but an agreement between three people who hoped to become purchasers. An agreement between A and B that they will together purchase land from a third party is not an agreement for the sale or other disposition of land within s 54A. Nor is an agreement between three persons that, in the event that one of them purchases certain land, she will hold it on trust for all three. 20 The consent of the Staffords to Mr Shirlaw's conditions was not forthcoming until 9 February 2004, when they forwarded to Mr Cvitanovic a facsimile recording that "the secured shareholders" of Global "have agreed to sell the property to the successful tenderer of December 5, 2003 to the 'Penrose Quarry Trust' (50% Stafford - 50% Kekatos). Please prepare contracts of sale in the name of this trust". However, by this time, Mr Shirlaw was no longer willing to proceed on the proposed terms. A further impediment to the transaction arose when Heggies foreshadowed a claim for about $600,000 in respect of costs of restitutionary measures on the land, which would have exhausted the royalty income for the next two years and thus jeopardised the suitability of the land as security for borrowings to fund its acquisition.

21 However, ongoing endeavours to negotiate an arrangement acceptable to Mr Shirlaw by which the Staffords and Mrs Kekatos might acquire the Penrose Land continued. In this, the parties continued to refer to the "Penrose Quarry Trust", the "Penrose Quarry Unit Trust", and the "Trust". As no such trust had, at that stage, been constituted, such references are to be understood as contemplating a proposed trust of which Mrs Kekatos was to be trustee and in which she and the Staffords would each have a 50% beneficial interest. 22 In June 2004, Heggies commenced proceedings against Global and Ostabridge and their respective receivers and managers and liquidators, seeking, inter alia, the execution by Global of a mortgage in registrable form over the Penrose Land, which also involved a dispute between Heggies and Ostabridge as to the priority of their respective mortgages, and a cross-claim by Mr Cvitanovic challenging the validity of the Ostabridge mortgage. On 9 June 2004, Mr Cvitanovic wrote to Mr Kekatos, recording: I refer to our telephone conversation on 9 June 2004.

I understand that the Penrose Quarry Trust wish to acquire the Quarry/real property owned by Global Minerals Australia Pty Limited for $2.1 million plus GST if applicable.

23 The letter proceeded to set out a number of proposed special conditions, and to indicate that Mr Cvitanovic would be consulting his lawyers on 16 June. It makes plain that the offer was one on behalf of the "Penrose Quarry Trust". On 15 June 2004, Mr Stafford sent a letter to Mr Cvitanovic, enclosing "Rhonda and Susan Stafford's request for the sale to the Penrose Trust", and asking "Could you please arrange for the Trust Deed to be signed by all parties" - which also indicates that the Staffords then appreciated that no formal trust deed had been executed. The enclosure, dated 11 June 2004, was signed by Rhonda and Susan Stafford, and stated: As the secured Shareholders of Global Minerals Australia Pty Limited we hereby request you to prepare Contracts of Sale for the Property known as "The Penrose Quarry" Located at Lots 1 to 5 Hume Highway Paddy's River NSW 2577 to the successful tender of Dec 5 2003 THE PENROSE TRUST.

50% Voula Kekatos 50% Rhonda & Susan Stafford

24 In a letter of advice to Mr Cvitanovic of 6 July 2004, his solicitors Gordon & Johnstone wrote that a proposed contract for sale of the Penrose Land to the Penrose Quarry Trust for $2.1 million was fraught with danger in the circumstances, but that - noting Mr Cvitanovic's wish to proceed nonetheless - they had prepared a contract, which they were making available to Mr Kekatos, and which they had released to Mrs Kekatos on the basis that it was being forwarded to the receiver for consideration, amendment and approval. The draft contract described the purchaser as "[insert trustee name] in its capacity and as trustee for the PENROSE QUARRY TRUST". Mr Kekatos denied having ever received any such contract, but in light of Mr Cvitanovic's letter of 9 June, as well as other reasons referred to below for reservations about the reliability of Mr Kekatos' evidence, I am satisfied that he conveyed the offer which resulted in the preparation of that draft contract. 25 The undoubtedly serious impediments to such a contract being completed at that time were, however, exacerbated when, on 7 July, Mr Shirlaw entered into a contract for sale of the land to Adelaide Brighton Ltd. Mr Cvitanovic became aware of this the same day, although it is not clear when the Staffords or the Kekatos learnt of it. On or about 16 July 2004, Mr Cvitanovic sent a letter to each of the Staffords and Mrs Kekatos, conveying a settlement proposal he had received from Mr Shirlaw on behalf of Ostabridge, and advising that he would have to accept the proposal (which would leave virtually nothing for the Staffords and Mrs Kekatos), unless his outstanding fees - said to amount to $756,000 - were paid, and security provided for a further $300,000. The Staffords - who were clearly in no position to provide any further funding to Mr Cvitanovic - denied any knowledge of this letter; in the case of Mr Wayne Stafford at least, this is surprising. But whether or not he knew of the letter, I am satisfied that Mr Stafford was aware at least of the requirement to provide further funds to Mr Cvitanovic. In late July 2004, there was a meeting at the offices of Gordon & Johnstone, solicitors who were acting for Mr Cvitanovic, in the course of which Mr Kekatos proposed that Mrs Kekatos would provide the necessary funding and relieve the Staffords of their obligation to fund the receiver in return for an absolute assignment of the charge, but Mr Stafford rejected this proposal, and left the meeting. This is asserted by Mr Kekatos and confirmed by Mr Cvitanovic; and though Mr Stafford does not recall it, it is entirely consistent with his position, and I accept it. Moreover, the receiver's requirements for further funds, and the Staffords' inability to provide them, were recited in the Deed of Assignment of 29 August, to which I shall come. Indeed, the necessity for further funding, and the Staffords' inability to contribute to it, had been a basic element of all that had happened since late 2003.

26 On 23 July 2004, Mr Cvitanovic's solicitors wrote to Mr Shirlaw, rejecting the latter's offer but proposing by way of counter-offer that the chargees under the Global Charge pay Mr Shirlaw $1.85 million in return for an assignment of Mr Shirlaw's claimed secured interest.

27 As at 29 August 2004, the Global Charge secured debts owed by Global to Susan Stafford of $975,930.56, to Rhonda Stafford of $1,907,161.58, and to Mrs Kekatos of $1,375,233.90. A Deed of Assignment of that date between the Staffords as assignors and Mrs Kekatos as assignee records the assignment of the Global Charge to Mrs Kekatos. The basis of this transaction - and in particular whether the assignment of the charge was to Mrs Kekatos beneficially or as a trustee - is the fundamental issue in the case. The Staffords contend that there was an agreement to the effect and intent that, in consideration of the Staffords assigning to her, as trustee of the Penrose Quarry Trust, their interests in the Global Charge - with the result that her proportionate interest in the Global Charge, and the debt secured by it, would be increased from 32.25% to 50% (because the Global Charge would be held pursuant to the Penrose Quarry Trust), and the interests of the Staffords correspondingly reduced - Mrs Kekatos would raise the necessary funds for the purchase of the Penrose Land, using her Vaucluse home as additional security for that purpose. (Although this was said to be by way of variation or novation of the "Penrose Trust Agreement", that characterisation is really immaterial). Mr and Mrs Kekatos contend that there was an absolute assignment of the charge to Mrs Kekatos beneficially.

28 Mr Kekatos prepared the Deed of Assignment on or about 29 August 2004. He says he told Mr Cvitanovic that, if he wanted Mrs Kekatos to fund his costs and expenses, he had prepared a deed of assignment which he would forward to Mr Cvitanovic, to be signed by Rhonda and Susan Stafford "so we can continue on in this matter", and that Mr Cvitanovic replied "Fine get it to me. I'll get it to Wayne. I am sure they are ready to sign the document". Mr Cvitanovic denied the last sentence, saying that he in fact said, "They will need to get independent legal advice". Mr Cvitanovic's version was not challenged and that is sufficient, though not the only, reason for preferring it. Mr Kekatos says that he then had Mrs Kekatos (as assignee) execute and his employee Mr Stubing witness the Deed, which he sent to Mr Cvitanovic.

29 I accept that Mr Kekatos sent the Deed of Assignment, which had been already executed by Mrs Kekatos, to Mr Cvitanovic, who on-forwarded it to Mr Stafford. It was not at that stage accompanied by the copy of the Fifth Schedule to the Trust Deed. Mr Kekatos denied that it was accompanied by an Undertaking and Authority, also executed by Mrs Kekatos and dated 29 August 2004, by which she undertook and acknowledged that she would enter into the Agreement for Sale to acquire the Penrose Land on behalf of the Penrose Quarry Trust, and would apply any moneys held pursuant to the Global Charge to each respective party according to the accounts prepared by Mr Hawketts for 30 September 2003 ("the Undertaking"). Mr Cvitanovic does not believe he saw it before he received it from Mr Stafford on 14 September. However, on the pleadings, Mr and Mrs Kekatos both admitted that the Undertaking was forwarded to Mr Stafford on or about 29 August 2004, and for reasons separately given [Stafford & anor v Kekatos & anor (No 2) [2008] NSWSC 1044] I refused leave to withdraw that admission, on grounds that included that the evidence on the application did not show that it was arguably, let alone plainly, incorrect. The absence of any evidence from Mrs Kekatos, the signatory, was very telling on this point. While there are some apparent inconsistencies in the contents of the Undertaking, no sufficient reason for rejecting the authenticity of the date that appears on it, nor any credible alternative to its having been executed by Mrs Kekatos on or about that date, has been advanced; and as it is known that it was forwarded by Mr Stafford to Mr Cvitanovic on 14 September, it must have been provided by Mr Kekatos to Mr Stafford sometime between 29 August and 10 September 2004.

30 Mr Stafford says that in August or September he had a conversation with Mr Kekatos in which the latter said that the "only way out" was if he could raise $2.5 million to pay out Mr Shirlaw, so that the trust could then acquire the Penrose Land, which he believed he could achieve using the Kekatos' Vaucluse home as security, but was only prepared to do so if compensated "for taking the risk and for funding the security to pay out Shirlaw". He proposed that the Global Charge be assigned to the trust, so that in the end the property and the charge would each be held as to 50% for the Staffords and 50% for Mrs Kekatos, which would be "compensation for the money that we are putting in to fund the legals and also for raising the security to pay out Shirlaw". Mr Stafford says that negotiations began with Mr Kekatos seeking a 75% interest in the trust, and that after days of negotiations they agreed on 50%. It is noteworthy that, having regard to the calculations referred to above (at [16]), increasing the Kekatos' interest in the charge to 50% (from 32.25%) would not by any means compensate them for the further expenditure it was anticipated that they would incur - unless that further expenditure were to be recoverable by them in addition to the amounts already secured by the Charge. 31 Mr Cvitanovic says that in August or early September, Mr Kekatos told him that if he was going to fund the litigation he wanted a bigger share of the proceeds, and subsequently that the Staffords would assign their interest under the charge to Mrs Kekatos as trustee, so that each would get 50%, with the Kekatos' interests to have control. Mr Kekatos denies any such conversation - with either Mr Stafford or Mr Cvitanovic - in or about August or September 2004, saying that the only occasion on which anything like that was discussed was in December 2003. Indeed, at one point he suggested that the relationship between him and Mr Stafford had broken down to the extent that they were not then speaking. However, on 8 September, Mr Stafford sent an email to Mr Cvitanovic: Have finally agreed on terms of the deed with George!, I am in Melbourne until Friday AM, Sue and Rhonda will sign the documents that will release your funds and complete the sale. When payment of the royalty is released I would expect you will release the moneys owed to Garry and the $35,000 Williams took from myself. When this is completed George and I would like to have a meeting arranged with HBL and Boral to discuss the transfer and conditions that we want. I suggest this could be later next week. 32 This contemporaneous communication corroborates Mr Stafford's evidence that he had conversations with Mr Kekatos about the terms of the assignment, and refutes Mr Kekatos' evidence that they were not then on speaking terms.

33 Prior to 14 September, Mr Stafford amended the Deed of Assignment by inserting in it references to the "Penrose Quarry Trust" and the "Penrose Quarry Unit Trust". So much can be deduced from the circumstance that on that date an undated version, with the interlineations, signed by Rhonda and Susan Stafford, and accompanied by a copy of the Fifth Schedule and of the Undertaking, was forwarded to Mr Cvitanovic under a coversheet which stated: Find enclosed the signed authority from Rhonda and Susan for the instructions to Voula as the "Trustee of THE PENROSE QUARRY TRUST" to complete the sale of the property … Please ensure the sale is as per the instructions of the deed enclosed. 34 The Fifth Schedule was obtained from the copy of the precedent Penrose Trust Deed already held by Mr Stafford. The significance of the coversheet and the accompanying Fifth Schedule and Undertaking lies primarily in what they say of the intention of the Staffords in September 2004: their forwarding to Mr Cvitanovic in conjunction with the Deed of Assignment makes plain that the Staffords believed that they were dealing with Mrs Kekatos qua trustee.

35 There are inconsistencies in the evidence of Mr Stafford as to the sequence of events surrounding the signature, interlineation, and forwarding of the Deed. His affidavit version was that he received a draft of the Deed from Mr Kekatos (this must already have been signed by Mrs Kekatos, and it was probably received from Mr Cvitanovic, to whom Mr Kekatos had sent it); that he then inserted the interlineations containing the references to the Penrose Quarry Trust and had it signed by Rhonda and later by Susan; and that he subsequently forwarded it to Mr Cvitanovic (this must have been on 14 September). But in cross-examination, he said that Rhonda and Susan signed the documents before the interlineations were made; that he then had reservations about its apparently absolute terms, made a copy of the signed version on which he made the interlineations, forwarded the interlineated copy to Mr Cvitanovic (on 14 September). Although Mr Stafford says (only in his affidavit in reply - his principal affidavit did not suggest it) that he also forwarded a copy to Mr Kekatos, I am unpersuaded that he ever forwarded an interlineated version to Mr Kekatos. Nor am I persuaded that Mr Cvitanovic forwarded a copy to Mr Kekatos, in the light of his file note of 15 September.

36 However, on 15 September Mr Cvitanovic telephoned Mr Kekatos and informed him, inter alia, that the proposed meeting with HBL could not be organised that week, and that he had received the document from Mr Stafford assigning the secured creditor debt to Voula, but with handwritten amendments referring to the "Penrose Quarry Trust". According to Mr Cvitanovic's contemporaneous file note, Mr Kekatos replied that he would contact Mr Stafford to ensure that the fax was sent stating that it was in the name of Voula Kekatos, "as any other indication would void the tax considerations of the assignment of the debt and other commercial issues concerning the sale". There are some inconsistencies between Mr Cvitanovic's affidavit evidence (although it was not challenged) and his file note; I prefer the contemporaneous file note. Mr Kekatos initially denied any such conversation with Mr Cvitanovic, but ultimately conceded that there may have been a conversation, though he continued to deny that it contained any reference to taxation or commercial reasons for not referring to a trust.

37 Mr Stafford says that he had a conversation with Mr Cvitanovic, in which the latter said that Mr Kekatos had told him that the reference to the trust needed to be removed for tax reasons, and because he was borrowing the money through Mrs Kekatos, "and we all knew she'd be the Trustee". Mr Stafford says that he also had a conversation with Mr Kekatos, who said "Everyone knows that Voula is doing it for the trust, and Daniel has the trust deed. Her actions will be on behalf of the trust. However, if there is any indication that it is not Voula Kekatos in her own capacity, this would void the tax considerations of the assignment of the debts and other commercial issues. It's important that we just keep it as Voula. There is no need to mention the Trust. If we don't do it this way, we'll be paying a lot more tax".

38 On or about 21 September 2004, Mr Stafford forwarded a version of the Deed of Assignment (still undated), omitting the references to the trust, signed by Rhonda and Susan, to Mr Cvitanovic, again accompanied by a copy of the Undertaking, and under cover of a facsimile which recorded: At your and George's request, the Girls have deleted the changes to the document, I hope this satisfies your concerns to complete the sale to the Penrose Trust. 39 Mr Cvitanovic says that after he received that document, he also received a telephone call from Mr Stafford who said that he was only making the deletions "as George has requested them, to protect the trust".

40 Mr Kekatos denied any such conversation as Mr Stafford alleged, but Mr Cvitanovic's file note of 15 September records that Mr Kekatos intended to speak to Mr Stafford on the subject, and Mr Stafford's fax to Mr Cvitanovic of 21 September, and his subsequent telephone conversation with Mr Cvitanovic, tends to confirm that there was such a conversation; for those and the further reasons set out below, I am satisfied that there was. 41 Again, there are inconsistencies in the Staffords' versions as to how this came about. In his affidavit, Mr Stafford said that he then had the documents re-executed by Rhonda and Susan, without the interlineations, having explained to them what Mr Cvitanovic and Mr Kekatos had said; but in cross-examination he agreed that the documents had been signed only once, then copied and interlineated prior to 14 September, and that what he ultimately forwarded on 21 September was the original version without the interlineations. A close comparison of the signatures on the documents transmitted on 14 and 21 September respectively appears to confirm this, the signatures of Susan and Rhonda Stafford and their respective witnesses being identical on each. 42 Mr and Mrs Kekatos submit that, on the version given by Mr Stafford in cross-examination, there can have been no reliance on any representation by Mr Kekatos, because the alleged conversation took place after execution, and that Rhonda and Susan Stafford signed the document without the interlineations and without reference to the trust. However, this submission overlooks that there had already been conversations between Mr Stafford and Mr Kekatos as to the arrangements prior to 8 September; that Mr Stafford was the relevant decision-maker on behalf of the Staffords; and that the critical act of reliance was delivery to Mr Cvitanovic on 21 September of what became the ultimate operative form of the document.

43 Also on 21 September, Mr Cvitanovic forwarded the executed Deed of Assignment, complete with the covering facsimile from Mr Stafford and the Undertaking, to his solicitors Gordon & Johnstone.

44 At some stage, a copy of the Deed of Assignment - without interlineations - was forwarded to or obtained by Mr Kekatos, and registered with ASIC on 25 September 2005, after being certified by Mrs Kekatos on 22 September 2005. On this version, the date 29 August 2004 has been inserted, in Mr Stafford's handwriting. From the circumstance that both versions forwarded in September 2004 to Mr Cvitanovic were undated, I infer that this was inserted subsequently, and probably by reference to the date on the Undertaking. It may well have been forwarded by Mr Stafford. The witnesses

45 Although I have already referred to many indicia tending for and against the competing versions, it is necessary to make some more general observations about the witnesses before resolving the main issue.

46 My impression of Mr Stafford was that he was straightforward and relatively commercially unsophisticated. The inconsistencies that emerged in his version were, it seemed to me, the result of his memory being tested and refreshed by reference to documents which suggested that his original recollection was faulty, whereupon he readily conceded the alternative version. Though he understood that it was important that Mrs Kekatos be known to be acting as a trustee, he did not understand the legal implications of the transactions in depth, and I do not think his recollection of the detail of conversations, particularly in respect of legal concepts, can be considered to be precise. This becomes important when it comes to aspects which might have been peripheral at the time - such as what if anything was said as to whether Mrs Kekatos would be entitled to reimbursement of funds raised on security to be provided by her. Although his evidence was imperfect, I think he was frank, and generally reliable. 47 By the time she came to be cross-examined, Rhonda Stafford had no real recollection of the events - although it is conceivable that her recollection might have been better when she swore her affidavit on 15 September 2006. Susan Stafford also was on the periphery, and reliant on Mr Wayne Stafford. Little significance can be given to their evidence.

48 There are multiple reasons for doubting the accuracy and reliability of the evidence of Mr Kekatos. First, in his affidavit he said that on 8 June 2004 he had not heard of the "Penrose Quarry Trust Syndicate", and that the only trust deed with which he ever had any involvement was one obtained by Mr Hawketts following the 5 December 2003 meeting, at which he asked Mr Cvitanovic to get Mr Hawketts to obtain a "shelf trust". However, the Fifth Schedule was signed by his wife and dated 2 December 2003 by himself, and the precedent trust deed provided to Mr Stafford at about that time had nothing to do with the trust deed procured by Mr Hawketts; it was obtained from Mr Kekatos' office. Secondly, in his affidavit he denied the conversation of 15 September 2004 to which Mr Cvitanovic deposed, and of which Mr Cvitanovic produced a file note; yet in his oral evidence he conceded that there may have been such a conversation, though he continued to deny that it contained any reference to taxation reasons for omitting reference to the trust; but Mr Cvitanovic was unchallenged in respect of his version. Thirdly, while he denied that the only reason for providing a copy of the Fifth Schedule to the Staffords was to convince them of the existence of the trust, he was unable to offer any alternative explanation. While he maintained that the Fifth Schedule did not reflect the parties' intention (because it represented a 51/49 apportionment, rather than 50/50, but with the Kekatos interests to have voting control), he elsewhere slipped into describing their understanding as one involving the Kekatos interests having 51%, which illustrates the absence of material difference between the two concepts from his perspective. Fourthly, when it was first suggested to him in cross-examination that it was in the Kekatos' interests to reach agreement with the Staffords - as Mrs Kekatos was the only participant remaining who had assets and stood most to lose - he denied it; but later he agreed that Mr Cvitanovic had threatened to pursue Mrs Kekatos for his remuneration as she was the only participant with available assets. The Kekatos interests had most to lose, and would benefit from the assignment, first by obtaining control, and secondly by increasing their entitlement from 32.25% to 50%. Fifthly, while he maintained in his evidence that the assignment was absolute, correspondence with the Staffords after September 2004 suggested that he recognised that they had an ongoing interest. On 2 February 2005, Mr Kekatos forwarded to Mr Stafford an email from Boral proposing changes to arrangements for royalty payments. On 20 May 2005, Mr Kekatos forwarded to Mr Stafford indicative offers from Laiki Bank for advances to Mrs Kekatos, and an "Indicative Banking Proposal" from Bankwest for Mrs Kekatos, for a facility of $5.5 million to refinance existing facilities of $2.9 million and provide $2.6 million to acquire the Penrose Quarry. Yet on his version, the Staffords no longer had any interest in these matters. He could offer no explanation for having forwarded them to Mr Stafford. 49 Mr Kekatos did not challenge nor deny, though he did not remember, conversations with Mr Garry Stafford during this period, in which the latter pressed for information about progress with the matter (in which, on Mr Kekatos' version, the Staffords had no further interest). However, he did recall at one stage some "hounding" by Mr Wayne Stafford, but was quite unable to explain why he did not suppress him with a curt reminder that the Staffords had no further interest. 50 On 5 October 2005, in response to a request made that day for information as to progress of the matter and what the Staffords could expect, he sent to Mr Stafford an email, as follows: The matter is in court on 20 October 2005. I am currently in court on an application by Adelaide Brighton to settle and pay the balance of funds into court. Shirlaw wants to take all the funds and has set up the following charges so that we get nothing. There is nothing to report until the hearings are over. I am not going to stand by and lose all the money. So I have to keep fighting.

51 Attached were draft settlement figures, showing Mrs Kekatos as prospectively receiving 38.56% of $510,528.62, namely $196,859.94. However, as described below, the sale to Adelaide Brighton Ltd had already been completed, on 25 September 2005, when Mrs Kekatos received the Settlement Proceeds of $1,412,500. Mr Kekatos conceded that that email was false in many respects, and could offer no sensible explanation for it. In my view, the explanation is that Mr Kekatos knew that Mr Stafford believed that the Staffords retained an interest.

52 The failure of Mrs Kekatos to give evidence authorises, though it does not compel, an inference that her evidence would not have assisted her case, and permits me to draw with greater confidence inferences unfavourable to their case in respect of matters on which she could have given evidence [Manly Council v Byrne [2004] NSWCA 123, [51]]. In this case, I have no hesitation in drawing such an inference. The suggestion that she knew or could recall nothing relevant or could give no relevant evidence is unsustainable. Although Mr and Mrs Kekatos are now divorced, Mr Kekatos remained living with Mrs Kekatos until June or July 2005, after which he "came and went". She attended with him on Senior Counsel on 8 or 9 March and again on 10 March 2005 to give instructions in connection with the Heggies Proceedings. According to Mr Kekatos, a trigger for the proposal to assign the Global Charge to her was her refusal to permit more to be borrowed on her home. According to her solicitor Mr Quintiliani, she attended a conference with Mr Hurley of his firm and gave instructions in connection with her Defence to the Amended Statement of Claim, and verified it, indicating some knowledge, direct or indirect, of relevant facts. She was in court throughout these proceedings. Indeed, she had sworn an affidavit in connection with her defence, but it was decided only a week before the trial that it would not be read. Her position stands in stark contrast to that of Rhonda and Susan Stafford who, although they could give little relevant evidence, at least swore affidavits and ventured into the witness box to say so.

53 Mrs Kekatos' signature appears on three critical documents - the Fifth Schedule, the Deed of Assignment, and the Undertaking. According to Mr Kekatos, he had discussed with her the circumstances of her signature on the Undertaking, a matter on which her evidence would have been most significant. The evidence required of her at least an explanation of the circumstances of her signing the Undertaking, the Fifth Schedule and the Deed of Assignment. She could - if it were true - have denied knowledge of any suggestion that she was to take the assignment of the charge as trustee, which would have been highly material to the case against her, yet did not do so.

Did the Staffords retain a beneficial interest in the Charge?

54 I am satisfied that the Staffords first executed the Deed of Assignment in the belief that Mrs Kekatos as assignee took as a trustee. Mr Kekatos and Mr Cvitanovic both say that Mr Stafford rejected the proposition of an absolute assignment at the meeting of 16 July. Moreover, the interlineations made by him in the Deed of Assignment, and its forwarding on 14 September accompanied by the Undertaking and Fifth Schedule, together with the covering letter, point incontrovertibly to its being their intent that the assignment be to Mrs Kekatos as trustee and not absolutely. 55 It is inconceivable that the Deed would have been re-sent a second time, without the interlineations, without some intervention: someone must have told the Staffords something to cause them to re-forward it, omitting the words that had plainly been intentionally inserted by Mr Stafford for their own protection. It is quite clear that in 2004 Mr Stafford was very conscious of the importance of making it clear that Mrs Kekatos was acting as trustee; it is certain that he would not have agreed to a transfer of the charge absolutely, and therefore that he must have been satisfied, somehow, that removal of the express words of the interlineations would not affect the existence of the trust. Mr Kekatos contended that the commercial explanation of the assignment was that the Staffords obtained the benefit of exoneration from liability for the receiver's fees in return for surrendering their interest; however, the Deed of Assignment does not have the effect of exonerating or indemnifying them in that respect. Strikingly, Mr and Mrs Kekatos could point to no conversation or communication in which the Staffords, after the meeting on 16 July, were asked or agreed to forego their opposition to an absolute assignment - on their version, the interlineations were omitted without request or suggestion, let alone insistence, on their part. This is entirely implausible. 56 It is clear that the Staffords proceeded on the basis that, although everyone knew that Mrs Kekatos was acting as trustee, the Deed could not expressly say so, for taxation and other commercial reasons. In those circumstances, the evidence admits of two possible explanations. The first implicates Mr Kekatos, and is that Mr Cvitanovic upon instructions from Mr Kekatos, and perhaps Mr Kekatos himself also, told Mr Stafford that while everyone knew that Mrs Kekatos was a trustee, that should not be mentioned in the Deed. The alternative is that Mr Cvitanovic told Mr Stafford, independently of Mr Kekatos. 57 The first version is supported by the evidence of Mr Cvitanovic and his contemporaneous file note of 15 September 2004, as well as the evidence of Mr Stafford and his letter to Mr Cvitanovic of 21 September (in which he referred to the alterations having been made "at your and George's request"). Given his predicament in obtaining payment of his considerable outstanding fees, Mr Cvitanovic was not without motive to facilitate documentation that might progress the matter towards the realisation of assets. But this theory would involve the notion that he fabricated a reason for omitting the interlineations, unsolicited by Mr Kekatos, in order to procure prompt payment of his fees. Why he would see such a course as necessary in the absence of at least some indication from Mr Kekatos that the interlineations were unacceptable is not apparent. Moreover, no suggestion that he fabricated a reason for deletion of the interlineations, or that he spontaneously provided any such reason to Mr Stafford, was ever put to him. 58 Although Mr Kekatos denies ever having seen the version of the Deed with interlineations, nor ever having discussed the question with Mr Cvitanovic or Mr Stafford - save for his initial conversation about the assignment with Mr Cvitanovic - not only does he give no evidence of any further conversation with Mr Stafford after the 16 July meeting, but he denies that there was any further conversation between them in respect of the proposed assignment, asserting that by this time their relationship had broken down, that they were not speaking, and that they negotiated through Mr Cvitanovic. On the probabilities, I am unable to accept this. Mr Stafford's email of 8 September tells against it, as does his covering letter of 21 September. Further telling evidence is to be found in the events after 21 September 2004. It is striking that it is only in communications with the Staffords that, after September 2004, there is any reference, in documents generated or communicated by Mr Kekatos, inconsistent with Mrs Kekatos having acquired the charge as beneficial owner. These matters bespeak knowledge on the part of Mr Kekatos that the Staffords entertained the assumption that they retained a beneficial interest in the charge. There are too many of them, for which Mr Kekatos was unable to offer any explanation (other than that advanced by the Staffords, namely that they bespoke an acknowledgement that they continued to retain an interest in the charge, or if not were calculated to leave them in that belief), to be passed off as co-incidence. Together, they are compelling evidence of knowledge on the part of Mr Kekatos of the Staffords' belief that they had not, by the Deed of Assignment, given up all their rights in the charge, but retained a beneficial interest. 59 For all those reasons, it cannot be accepted that Mr Cvitanovic acted independently, and that Mr Kekatos was not implicated. Accordingly, I conclude that Mr Kekatos, as agent for Mrs Kekatos, personally and through Mr Cvitanovic, represented to the Staffords that Mrs Kekatos was acting as trustee and that it was only for taxation and commercial reasons that express references to the trust should be omitted; and knew and intended that the Staffords would assign their interest in the Global Charge to Mrs Kekatos on the basis that she would hold the Charge as a trustee for herself and for the Staffords each as to a half interest.

60 On that basis, the Staffords contend that, despite the Deed of Assignment, they retained a beneficial interest in the Global Charge, the Global Mortgage, the Loan Deed and the moneys owing and secured under those instruments, on various alternative bases, broadly summarised as follows: first, that Mrs Kekatos held the Global Charge as trustee of the Penrose Trust pursuant to an express trust, the trust having been fully constituted when the Staffords assigned their interest in the Global Charge to Mrs Kekatos; secondly, that Mrs Kekatos is estopped from asserting that the assignment to her was absolute or other than as a trustee; thirdly, that Mrs Kekatos held the Global Charge for herself and the Staffords pursuant to a resulting trust arising from the assignment - in circumstances where she was not intended to take a beneficial interest beyond 50%, or upon the consideration for the assignment, or the purpose of the venture (namely the acquisition of the Penrose land for the benefit of the Staffords and Mrs Kekatos), having failed; and fourthly, that Mrs Kekatos held the Global Charge upon a constructive trust arising from the parties' common intention that she hold it in trust for the Staffords as to 50%. Alternatively, if they were not entitled to a beneficial interest in the Charge, notwithstanding the Deed of Assignment, the Staffords contend that by making the representation, through Mr Kekatos, that she would take the assignment as trustee, Mrs Kekatos made a representation with respect to a future matter without reasonable grounds, and thereby engaged in misleading and deceptive conduct in contravention of (NSW) Fair Trading Act 1987, s 42. 61 In answer to the claims to a beneficial interest in the charge, Mrs Kekatos relies inter alia on the absence of writing, invoking Conveyancing Act, 1919, ss 54A and 23C, to which the Staffords in turn advance many responses. In that context, and although the same destination may be reached by other routes, in my view the preferable analysis of the Staffords' case is founded in equitable estoppel, as explained by Brennan J in Waltons Stores (Interstate) Limited v Maher (1988) 164 CLR 387, 428:- In my opinion, to establish an equitable estoppel, it is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise. For the purposes of the second element, a defendant who has not actively induced the plaintiff to adopt an assumption or expectation will nevertheless be held to have done so if the assumption or expectation can be fulfilled only by a transfer of the defendant's property, a diminution of his rights or an increase in his obligations and he, knowing that the plaintiff's reliance on the assumption or expectation may cause detriment to the plaintiff if it is not fulfilled, fails to deny to the plaintiff the correctness of the assumption or expectation on which the plaintiff is conducting his affairs.

62 The Staffords expected that if they executed the Deed of Assignment of the Global Charge to Mrs Kekatos, they would retain a beneficial interest in it, and that Mrs Kekatos would hold the Charge upon the terms that had been proposed for the Penrose Quarry Trust, namely as to 50% for herself and 50% for the Staffords. (Although the Fifth Schedule that accompanied the Deed of Assignment referred to 51/49, it is clear on the evidence as a whole that all parties accepted that the interests in the Trust upon its being established were to be 50/50, but with the Kekatos interests to have voting control). This expectation is evidenced by Mr Stafford's refusal at the 16 July meeting to agree to an absolute assignment; Mr Stafford's August/September conversation with Mr Kekatos and his 8 September email to Mr Cvitanivoc; the endorsement of the interlineations on the Deed before it was first forwarded to Mr Cvitanivoc; the coversheet forwarding the Undertaking and the Fifth Schedule in conjunction with the Deed following its signature by them; the coversheet reforwarding the Deed without the interlineations (but again with the Undertaking) only after being assured that Mrs Kekatos was acting as trustee and that it was only for taxation and commercial reasons that express references to the trust should be omitted; and their subsequent ongoing interest in and inquiries of Mr Kekatos about developments concerning the Penrose Land.

63 Mr Kekatos, who for all relevant purposes was Mrs Kekatos' duly authorised agent, induced the Staffords to adopt that expectation. This is established by his presence at the 16 July meeting when Mr Stafford refused to agree to an absolute assignment; the absence of any conversation or communication to which he can point in which the Staffords departed from that position; the conversations between him and Mr Stafford prior to 8 September as to the basis of the assignment; and most significantly by his representation to Mr Cvitanovic and Mr Stafford that Mrs Kekatos was acting as trustee but that there could not be express reference to the trust for taxation and commercial reasons. It is corroborated by his subsequent conduct vis-à-vis the Staffords, in which he continued to treat them (but no-one else) as if they retained a beneficial interest.

64 The Staffords acted in reliance upon their expectation, by executing and delivering the Deed of Assignment in its ultimate form, omitting reference to the Trust. Mr Southwick, for Mrs Kekatos, submitted that when Rhonda and Susan Stafford signed the Deed, the interlineations were not on it - they were subsequently inserted by Mr Stafford - and that as the act of reliance pleaded was the execution of the Deed, reliance at that time could therefore not be established. There are several answers to this. The first is that on a fair reading of the pleading, execution involves signing, sealing and delivery; and the interlineations were made before ultimate delivery, which was effected by forwarding the Deed the second time, with the interlineations omitted, to Mr Cvitanovic. The second is that the presence of the interlineations is only one of several indicia of reliance on the expectation; even at the time of original signature, the 16 July meeting and the 8 September conversations had already taken place, and the act of forwarding the Undertaking and the Fifth Schedule with the Deed speaks volumes as to their then expectation and belief. That there was, and had been since at least April 2003, a level of distrust between the Staffords and Mr Kekatos does not negative reliance on an assumption to the existence of which he had contributed: distrust, even amounting to suspicion, does not negative reliance, and a person can rely on a representation made by another, even though he distrusts him.

65 Mrs Kekatos, by her agent Mr Kekatos, knew and/or intended the Staffords to so act. This is established by his drafting and forwarding of the Deed to Mr Cvitanovic for execution by the Staffords; by the August/September conversations between Mr Kekatos and Mr Stafford; and again, most particularly, by his representation to Mr Cvitanovic and Mr Stafford to the effect that Mrs Kekatos was to hold as trustee but that there could not be express reference to the trust for taxation and commercial reasons. And again, it is corroborated by his subsequent conduct vis-à-vis the Staffords, in which he continued to treat with them (but no-one else) as if they retained an interest.

66 The Staffords will suffer detriment if their expectation is not fulfilled, because they would have disposed of their beneficial interest in the Global Charge upon terms to which they would otherwise not have agreed, and for no or inadequate recompense. Far from acting to avoid that detriment by fulfilling the assumption or expectation or otherwise, Mrs Kekatos persists in denying that the Staffords have any interest in the Global Charge or its proceeds.

67 In those circumstances, Mrs Kekatos is estopped in equity from denying that the Staffords are entitled to a 50% beneficial interest in the Global Charge, notwithstanding the Deed of Assignment. The absence of writing is no answer to a claim founded on equitable estoppel [Waltons Stores Interstate Limited v Maher, 408, 431-3, 445-6, 464]. Accordingly, the Staffords retained a one-half beneficial interest in the Global Charge (and its proceeds).

68 If the Staffords were not entitled - on that or any other of the bases advanced - to a beneficial interest in the Global Charge, notwithstanding the Deed of Assignment, then the same facts would have sustained their further alternative claim, under Fair Trading Act, s 42. Mr Kekatos, who for all relevant purposes was the agent of Mrs Kekatos, represented to Mr Stafford, prior to the Staffords' entry into the Assignment, that Mrs Kekatos would take the assignment as trustee of the Penrose Trust. The Staffords proceeded with the assignment in reliance upon that representation. The representation was in respect of a future matter. In consequence, the representation is taken to be misleading unless Mr and Mrs Kekatos adduce evidence of reasonable grounds for making it: Fair Trading Act, s 41. They have not done so. Accordingly, had the Staffords failed to establish that they retained a beneficial interest in the Global Charge following the assignment to Mrs Kekatos of their interests in it, they would have been entitled to damages against Mr and Mrs Kekatos for breach of Fair Trading Act, s 42.

69 On 15 October 2004, the disputes and proceedings between Heggies and Global were resolved by a Deed of Settlement and Release, which provided for the payment to Heggies of $29,300, being the amount agreed between Global (by its receiver) as mortgagor and Heggies as mortgagee to be secured by the mortgage - in consideration of which Heggies was to assign the Heggies/Collex Mortgage as directed by Global, the assignee to be substituted as plaintiff in the Heggies Mortgage Proceedings. Although not a party to the Deed of Settlement and Release, Mrs Kekatos provided the sum of $29,300 and, as nominee of Global (by Mr Cvitanovic), took an assignment of the Heggies/Collex Mortgage, thereby becoming first ranking secured creditor of Global. Following the assignment of the Heggies/Collex Mortgage to Mrs Kekatos, she became substituted as plaintiff in the Heggies Mortgage Proceedings.

70 Acquiring the Heggies/Collex Mortgage and becoming the first-ranking secured creditor considerably strengthened the position of Mrs Kekatos vis-à-vis Mr Shirlaw. The Staffords contend that Mrs Kekatos acquired the Heggies/Collex Mortgage as an actual or constructive trustee for herself and the Staffords equally.

71 From late 2003, the Staffords and Mrs Kekatos were endeavouring to find a way to purchase the Penrose Land from the receiver, and a major obstacle to this was Mr Shirlaw's claim under the Ostabridge mortgage. A prime reason for the assignment of the Global Charge to Mrs Kekatos as trustee was to facilitate the purchase of the land - by compensating the Kekatos for providing security for raising the requisite funds. Mrs Kekatos had become a trustee by virtue of the assignment to her of the Global Charge, for the purpose of facilitating the acquisition by the trust of the Penrose Land (as made plain by the Undertaking). The opportunity of acquiring that land was a fundamental purpose of the creation of the transfer of the assignment to her upon trust, and as trustee she was bound to pursue it on behalf of the trust. The Heggies/Collex Mortgage was an interest in the Penrose Land, and the acquisition of that mortgage was a step towards the acquisition of the land. As trustee, Mrs Kekatos was bound to exploit the opportunity of acquiring it, if at all, on behalf of the trust.

72 Mr Cvitanovic deposes to a conversation with Mr Kekatos in which the latter said that Mrs Kekatos was acquiring the Heggies/Collex Mortgage in her own right, and it is true that Mrs Kekatos paid consideration to acquire the mortgage in her own right. However, at least without the informed consent of the Staffords, that could not authorise a trustee to exploit an opportunity available to the trust for her own benefit. For Mrs Kekatos' to act in her own interest by purchasing the mortgage in her own right was a breach of her fiduciary duty as trustee, and she held the mortgage upon constructive trust for herself and the Staffords equally.

73 However, as will become apparent, that conclusion is unnecessary - because on either basis, Mrs Kekatos is entitled to be reimbursed the $29,300 she paid, but no more. If she had acquired the Heggies/Collex Mortgage beneficially, then she would have been entitled to the $29,300 it secured; on the basis that she acquired it as a trustee, then she is nonetheless entitled to be reimbursed the $29,300 expended from her own funds to purchase it.

74 That sum is also the limit of her entitlement under the Heggies/Collex Mortgage. While Mr and Mrs Kekatos submitted that the limitation of the security to $29,300 did not bind Mrs Kekatos as assignee, it is impossible to see how the assignee of the mortgage could have rights greater than those of the assignor (bearing in mind that the obligations secured were those of Global to Heggies under the landfill agreement). Moreover, there is no evidence that the mortgage secured any other amount. The suggestion that her ultimate receipt of $1.4 million from the sale of the land shows that that was the value of the Heggies/Collex Mortgage as assigned to her is misconceived: what she ultimately received from a compromise referable to the sale of the land, to which she had multiple claims (including as chargee under the Global Charge), says nothing as to what was secured by the Heggies/Collex Mortgage at the date of its assignment to her.

Mrs Kekatos receives the Royalties and the Settlement Proceeds

75 As first ranking secured creditor of Global, Mrs Kekatos became, or claimed to become, entitled to the royalties under the Heggies Lease. On 26 October 2004, her solicitors wrote to Mr Cvitanovic and asserted her claim, as first mortgagee, to the royalties under the Heggies Lease, which lease had by that time been assigned to Boral Resources (NSW) Pty Ltd. On 22 November 2004, Mrs Kekatos' solicitors wrote to Mr Cvitanovic and again demanded payment of the royalties, this time on the basis that she was the holder of the Global Charge.

76 As a result, on 1 December 2004, Mr Cvitanovic paid to Mrs Kekatos $226,000, being accumulated royalties he had received as Global's receiver and manager. However, on 3 December, Mrs Kekatos returned $226,000 to him, on account of his fees. On 8 December 2004, Mr Cvitanovic directed Boral to pay all future royalties to Mrs Kekatos as "prior ranking mortgagee". Mrs Kekatos subsequently received further royalties.

77 On 9 March 2005, Mrs Kekatos filed the Second Further Amended Statement of Claim in the Heggies Mortgage Proceedings. That pleading was wholly concerned with claimed and disputed interests in the Penrose Land, asserting the existence and assignment to her of the Global Charge and the Global Mortgage (which was said to be collateral to the Global Charge), and the existence and assignment to her of the Heggies/Collex Mortgage. The relief she claimed included a declaration that the Heggies/Collex Mortgage and the Global Mortgage secured a sum equal to, or greater than, $1.7 million.

78 On 18 February 2005, Mr Cvitanovic and Mrs Kekatos (the Staffords contend as trustee) exchanged contracts for the sale to her of the Penrose Land. However, the sale did not have the consent of Mr Shirlaw, and did not proceed.

79 On 10 March 2005, Mrs Kekatos reached agreement with the remaining parties to the Heggies Mortgage Proceedings (including Mr Cvitanovic and Mr Shirlaw) that the Penrose Land be sold to a third party, Adelaide Brighton Ltd, and that Mrs Kekatos would receive 38.56% (and Mr Shirlaw 61.44%) of the net proceeds. After yet further litigation, the sale to Adelaide Brighton Ltd was completed on 25 September 2005, when Mrs Kekatos received the Settlement Proceeds of $1,412,500.

The Royalties and Settlement Proceeds were received in right of the Global Charge

80 Mrs Kekatos thus received payments totalling $1,707,630.35 referable to an interest in the Penrose Land: · $226,000 royalties remitted by Cvitanovic on 1 December 2004; · $8,000 royalties remitted by Cvitanovic on 7 December 2004;

· $27,709 royalties paid by Boral on 7 January 2005; · $5,712.35 royalties remitted by Cvitanovic on 11 January 2005;

· $27,709 royalties paid by Boral on 25 February 2005;

· $1,412,500 Settlement Proceeds on 25 September 2005.

81 The Royalties and the Settlement Proceeds were proceeds of the use, and then the sale, of the Penrose Land. Mrs Kekatos received them in priority to the liquidator of Global. That could only be justified on the basis of a secured interest in the Penrose Land. Mrs Kekatos had no claim in the Heggies Mortgage Proceedings other than in respect of her interests under the assigned Heggies/Collex Mortgage, and the assigned Global Charge and Mortgage. Mrs Kekatos had only two claims on the Penrose Land, and hence only two claims to any proceeds of its sale, or income from that land: as first encumbrancee (as assignee of the Heggies/Collex Mortgage), and as second encumbrancee (as assignee of the Global Charge). Thus the Settlement Proceeds and the Royalties were proceeds of the Global Charge and the Heggies/Collex Mortgage.

82 If Mrs Kekatos were entitled to all the Royalties and Settlement Proceeds as mortgagee under the Heggies/Collex Mortgage, because she held that mortgage upon constructive trust she would have held all those receipts upon the same trusts. But - even if she acquired the Heggies/Collex Mortgage beneficially in her own right - nonetheless in her capacity as first mortgagee she was entitled in equity only to the income and proceeds of the Penrose Land to the extent necessary to discharge her security, with any surplus being held by her as trustee for subsequent security holders. The amount secured by the Heggies/Collex Mortgage was only $29,300. The subsequent security holder was Mrs Kekatos herself, but in her capacity as chargee under the Global Charge. The Global Charge was the only basis on which she had any claim to the Royalties or the Settlement Proceeds insofar as they exceeded $29,300. Accordingly, Mrs Kekatos received the Royalties and the Settlement Proceeds, at least insofar as they exceeded $29,300, as trustee for herself as chargee under the Global Charge.

Mrs Kekatos' expenditure 83 In recovering the Royalties and Settlement Proceeds, Mrs Kekatos expended moneys and incurred liabilities totalling $768,634.42, as follows: · Between 29 September and 5 October 2004, Mrs Kekatos - or at least a company which she controls - paid a total of $180,000 to Mr Cvitanovic in respect of his outstanding receiver's remuneration and expenses (which, at least at one stage, he agreed to treat retrospectively as a deposit under the 5 December 2003 tender); · On 15 October 2004, Mrs Kekatos provided the sum of $29,300 to Mr Cvitanovic, to fund the acquisition of the Heggies/Collex Mortgage;

· On 3 December 2004, Mrs Kekatos paid a further $226,000 to Mr Cvitanovic, from the royalties received by her in the same amount, on account of his outstanding remuneration; · On 24 February 2005, Mrs Kekatos paid a further $15,500 to Mr Cvitanovic on account of receiver's remuneration;

· Mrs Kekatos incurred legal costs of $132,834.42 with MD Nikolaidis, solicitor, between December 2004 and July 2006, in connection with the assertion and enforcement of her rights under the Heggies/Collex Mortgage and the Global Charge; · Finally, Mr Cvitanovic brought proceedings against Mrs Kekatos to recover his outstanding remuneration of $253,000. Those proceedings were ultimately settled for $185,000, for which Mrs Kekatos is liable, in respect of receiver's remuneration and expenses. 84 In her defence, Mrs Kekatos advanced two further claims - neither of which was apparently pressed in closing submissions. First, she claimed to have incurred a liability of $665,000, being the "Value of the Buffer land (at last sale)". However, the "Buffer Land" was referred to in clause 8 of the 15 October 2004 Settlement between Heggies and Global (by its receiver Mr Cvitanovic) as follows: 8.1 Global agrees to take all necessary steps for its share or the share of Australian Machinery Equipment Sales Pty Ltd (ACN 050 035 053) of the land described as Lot 1 Deposited Plan 810182 to be transferred to Boral Resources (NSW) Pty Limited ABN 53 000 756 507. 85 This involved the incurring of no expenditure or liability by Mrs Kekatos at all. Secondly, Mrs Kekatos claims credit for royalties of $395,387.94 said to have been retained by Mr Cvitanovic. However, the evidence does not establish any such retention. In any event, if certain royalties were received by Mr Cvitanovic from the lessee of the Penrose Land, but not paid to Mrs Kekatos, then they were not an expense incurred by her, but income from a trust asset which Mrs Kekatos did not recover; had it been recovered it would have been for the benefit of the trust and not for Mrs Kekatos alone. The Staffords make no claim against her for failing to get in royalties not remitted to her.

The Staffords' claim 86 Mrs Kekatos has retained, for her own use, both the Settlement Proceeds and the Royalties. The Staffords contend that Mrs Kekatos is obliged to account to them for the Royalties and the Settlement Proceeds, at least insofar as they exceeded $29,300, broadly on two alternative bases. In her defence, Mrs Kekatos asserts an entitlement to an indemnity in respect of the expenditure and liabilities allegedly incurred by her in relation to the trust. The Staffords accept that they must do equity and that the Court ought to make proper allowance in favour of Mrs Kekatos, but say that what is proper for these purposes depends upon the basis on which their claim is determined.

87 The first basis on which the Staffords put their claim is as one for a return of their contributions (being their interests under the Global Charge), on the basis that they assigned their interests to Mrs Kekatos as their contribution to a joint venture or undertaking to acquire the Penrose Land, which has failed, with the consequence that the contributions should be returned, and the benefits retained by Mrs Kekatos are subject to a constructive trust to that effect. This relies on what was said by Mason CJ, Wilson and Deane JJ in Baumgartner v Baumgartner (1987) 164 CLR 137, 148, to be the general equitable principle which restores to a party contributions which he or she has made to a joint endeavour which fails when the contributions have been made in circumstances in which it was not intended that the other party should enjoy them. Their Honours quoted with approval the following passage from the reasons of Deane J in Muschinski v Dodds (1985) 160 CLR 583, 620:

... the principle operates in a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specially provided that the other party should so enjoy it. The content of the principle is that, in such a case, equity will not permit that other party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him so to do: cf. Atwood v Maude (1868) LR 3 Ch App 369 at pp 374-375 and per Jessel MR, Lyon v Tweddell (1881) 17 ChD 529 at p 531.

88 Here, the Staffords contend that there was a joint endeavour between the Staffords and Mrs Kekatos for the acquisition of the Penrose Land; that in furtherance of that joint venture, the Staffords and Mrs Kekatos contributed their and her respective interests in the Global Charge; that the joint venture failed, without attributable blame, by reason of the sale of the Penrose Land to a third party, Adelaide Brighton Ltd; that the parties had not intended that Mrs Kekatos, in such event, should retain, for herself, the benefit of their contributions; that they were each therefore entitled to return of their respective contributions, and in particular their respective interests in the Global Charge; and thus that Mrs Kekatos held the benefits derived by her from her interest in the Penrose Land upon trust to restore to each of the contributories their respective contributions, pro rata if the available assets are insufficient to do so in toto.

89 On the basis of failure of the substratum of a joint venture, equity would have sought to return to each of the parties their respective contributions. The contributions of the parties to be repaid, to the extent of the available assets would include the sums secured by the Global Charge at the time of its assignment in August/September 2004 - namely as to Susan Stafford $975,930.56, as to Rhonda Stafford $1,907,161.58, and as to Mrs Kekatos $1,375,233.90. However, the Staffords acknowledge that on this approach, allowance would also have to be made for any other contributions actually made pursuant to the joint venture or undertaking - including the net amount of payments to the receiver by Mrs Kekatos and any payments she has made for legal expenses relevant to the venture, as well as the cost of acquisition of the Heggies/Collex Mortgage - which would have the effect of increasing her contribution to $2,143,867, with the resultant proportionate contributions being 37.94% (Rhonda) Stafford, 19.41% (Susan) Stafford, and 42.65% (Mrs Kekatos), so that on a pro rata return of contributions Rhonda would be entitled to $647,852 and Susan to $331,518, with Mrs Kekatos to retain $728,260.

90 However, I do not think that the return of contributions on a "failed joint venture" is the appropriate analysis. Such an approach applies only where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specially provided that the other party should so enjoy it. In this case, the acquisition of the Penrose Land, though the object of the exercise, was always fraught, and it was always possible - if not likely - that the only trust asset would be the Global Charge. The parties intended that Mrs Kekatos be compensated - through the increase of her interest in the charge from about 35% to 50% - for assuming the risk involved in providing security over her home to raise the funds required by the receiver. In my view, it was intended that she retain that benefit, regardless of whether the land was purchased - it was compensation for agreeing to assume the risk involved, whether or not the purchase was completed. Moreover, although she did not ultimately acquire the land, she did obtain a share of the proceeds of its sale: in those circumstances the substratum of the joint endeavour was not removed; to the contrary it was realised, albeit only in part.

91 The alternative - and in my view appropriate - analysis, holds the parties to the assumption or expectation upon the basis of which they acted, so that as Mrs Kekatos held her interests in the Heggies/Collex Mortgage and in the Global Charge upon trust for herself and the Staffords in equal shares, she should account to the Staffords for one half of the net benefits she received under those securities.

92 The question then arises, on this basis, to what extent is Mrs Kekatos entitled to be reimbursed the expenditure and liabilities incurred by her. It is common ground that she is entitled to be reimbursed the sum of $29,300 which she paid from her own resources to fund the acquisition of the Heggies/Collex Mortgage. However, the Staffords contend that, as it was a condition of the understanding pursuant to which they assigned the charge that Mrs Kekatos would meet the legal expenses and funding required by Mr Cvitanovic, she should not be reimbursed for her legal costs and other expenses incurred since the assignment of the Global Charge - because assumption by her of responsibility for legal and other expenses of the receiver was a condition of the understanding on which the assignment - the effect of which was to increase her interest from 32.25% to 50% - was made.

93 Prima facie, a trustee is entitled to be reimbursed and indemnified out of the trust assets for all expenses reasonably and properly incurred in and about the execution of the trusts [Hardoon v Belilios [1901] AC 118, 125]. This extends to a constructive trustee, so that in circumstances where a person who renews a lease or purchases the reversion in his or her own name is held to be a constructive trustee, the trustee has a lien on the property for the costs and expenses of the renewal, with interest [Isaac v Wall (1877) 6 Ch D 706; Re Lord Ranelagh's Will (1884) 26 Ch D 590, 600; see and see generally Meagher & Gummow, Jacobs Law of Trusts in Australia, 5th ed, [1342]]. Thus where property developers, to facilitate disposal of the property, vested title in a trustee who incurred liabilities, the trustee was entitled to indemnity [Buchan v Ayre [1915] 2 Ch 474, 477]. And in Re German Mining Co (1854) 43 ER 415, directors who borrowed money from the company's bankers on their own personal guarantee, for the purpose of the company's business, and subsequently repaid the advances to the bank, were held to be in the position of trustees for the company, and entitled to indemnity from their beneficiaries in respect of expenses incurred bona fide. 94 The Staffords do not suggest that the payments made by Mrs Kekatos were other than proper or reasonable, but contend that having regard to the terms of the arrangement between the parties she must bear them herself. The trustee's right of indemnity against beneficiaries can be excluded by implication [Wise v Perpetual Trustee Co Ltd [1903] AC 139], and therefore also by express agreement [see also Hardoon v Belilios]. Seemingly, so too could be the trustee's right to indemnity out of the trust assets [Re German Mining Co; ex parte Chippendale; and see generally Meagher & Gummow, Jacobs Law of Trusts in Australia, 5th ed, [2106]]. The question is whether that has been done here.

95 As already mentioned (see [17]), the arrangements discussed in December 2003 involved that Mrs Kekatos would be reimbursed the additional funding that it was contemplated that she would provide. And as also already mentioned (see [30]), while the discussions of August/September 2004 contemplated that in return for the assignment of the Global Charge to the trust (thus effectively increasing her interest in the Global Charge to 50%), Mrs Kekatos would provide the security and raise the funds to pay the receiver and complete the purchase, increasing the Kekatos' interest in the charge to 50% (being an increase in monetary terms of about $600,000) would not by any means compensate them for the further expenditure it was anticipated that they would incur (in the order of $2.5 million) - unless that further expenditure were to be recoverable by them in addition to the amounts already secured by the Global Charge. The Deed of Assignment admittedly recites that the Staffords had requested that Mrs Kekatos provide the further funding (they being unable to do so themselves), and the assignment is expressed to be in consideration of Mrs Kekatos providing the funding required by the receiver. However, it is entirely consistent with the dealings between the parties since late 2003 that Mrs Kekatos was to provide the funding in the first instance, so that the purchase could proceed, but subject the trustee's usual right of reimbursement. It is inherently improbable that Mrs Kekatos would have accepted open-ended liability for all receiver's remuneration and legal and other expenses that might be incurred in enforcing the charge and acquiring the land. The better view of the objective intention of the parties in context is that the increase in Mrs Kekatos' interest in the charge was intended to compensate her for assuming the risk involved in providing the security to raise the requisite funding in the first instance. In my view, her right of reimbursement and indemnity was not excluded. 96 On this basis, Mrs Kekatos is entitled to be reimbursed:

· the $29,300 paid to Mr Cvitanovic to fund the acquisition of the Heggies/Collex Mortgage, · the $195,500 paid to Mr Cvitanovic in respect of receiver's remuneration and expenses, · the $226,000 reimbursed to Mr Cvitanovic from the royalties received, on account of receiver's remuneration and expenses,

· the legal costs of $132,834.42 paid to MD Nikolaidis, between December 2004 and July 2006, in connection with the assertion and enforcement of her rights as chargee, and · the amount of $185,000 for which she is liable to Mr Cvitanovic pursuant to the settlement of the proceedings brought by him to recover his outstanding remuneration. 97 The deduction of these expenditures and liabilities totalling $768,634.42 from her receipts of $1,707,630.35 results in a net amount received by her of $938,995.90, for half of which (that is, $469,497.95) she must account to the Staffords. Mrs Kekatos having had the benefit of the Settlement Proceeds and the Royalties from the time of receipt by her, she should pay interest in respect of the period from receipt of the Settlement Proceeds on 25 September 2005 (since her earlier receipts from the Royalties did not exceed the amount in respect of which she was entitled to be reimbursed).

98 Alternatively, had the Staffords succeeded on the misleading and deceptive conduct claim, they would have been entitled to damages by reference to the position in which they would have been but for their reliance on the contravening conduct. On the relevant assumption - that they did not retain any equitable interest in the Global Charge - they would have been deprived, by reason of the misleading conduct of Mr and Mrs Kekatos, of their respective interests (Rhonda Stafford 44.72%, Susan Stafford 23.03% and Mrs Kekatos 32.25%) in the Charge and the obligations it secured. In the events that have happened, those interests can be quantified by reference to the proceeds of the Global Charge (the Sale Proceeds and the Royalties, totalling $1,707,630.35), less the costs of realisation (totalling $768,634.42), leaving net proceeds of $938,995.90. Rhonda's damages would have been 44.72% of that, namely $418,918.96; and Susan's 23.03%, namely $215,969.05.

100 The Staffords expected that if they executed the Deed of Assignment of the Global Charge to Mrs Kekatos, they would retain a beneficial interest in it, and that Mrs Kekatos would hold the Charge upon the terms that had been proposed for the Penrose Quarry Trust, namely as to 50% for herself and 50% for the Staffords. Mr Kekatos, who for all relevant purposes was Mrs Kekatos' duly authorised agent, induced the Staffords to adopt that expectation. The Staffords acted in reliance upon their expectation, by executing and delivering the Deed of Assignment in its ultimate form, omitting any reference to the trust. Mrs Kekatos - by her agent Mr Kekatos, personally and through Mr Cvitanovic - represented to the Staffords that Mrs Kekatos was acting as trustee and that it was only for taxation and commercial reasons that express references to the trust should be omitted; and knew and intended that the Staffords would assign their interest in the Global Charge to Mrs Kekatos on the basis that she would hold the Global Charge as a trustee for herself and for the Staffords each as to a half interest. The Staffords will suffer detriment if their expectation is not fulfilled, because they would have disposed of their beneficial interest in the Charge upon terms to which they would otherwise not have agreed, and for no or inadequate recompense. Mrs Kekatos is therefore estopped in equity from denying that the Staffords are entitled to a 50% beneficial interest in the Global Charge, notwithstanding the Deed of Assignment. The absence of writing is no answer to an equitable estoppel. Accordingly, the Staffords retained a one-half beneficial interest in the Global Charge (and its proceeds).

101 If the Staffords were not entitled - on that or any other of the bases advanced - to a beneficial interest in the Charge notwithstanding the Deed of Assignment, then the same facts would have sustained their further alternative claim, that by making the representation, through Mr Kekatos, that she would take the assignment as trustee, Mrs Kekatos made a representation with respect to a future matter without reasonable grounds, and thereby engaged in misleading and deceptive conduct in contravention of Fair Trading Act, s 42.

102 The opportunity of acquiring the Penrose Land was one that Mrs Kekatos was, as trustee, bound to pursue, if at all, on behalf of the trust. The Heggies/Collex Mortgage was an interest in the Penrose Land, and the acquisition of that mortgage was a step towards the acquisition of the land. For her to act in her own interest by purchasing the mortgage in her own right was a breach of her fiduciary duty as trustee, and she held it upon constructive trust for herself and the Staffords equally.

103 The Royalties and the Settlement Proceeds were proceeds of the use, and then, the sale, of the Penrose Land. Their receipt by Mrs Kekatos was referable to the Heggies/Collex Mortgage and, at least to the extent that they exceeded $29,300, to the Global Charge. Mrs Kekatos is obliged to account for half of the Royalties and the Settlement Proceeds, totalling $1,707,630.35. However, the increase in Mrs Kekatos' interest in the Charge was intended to compensate her for assuming the risk involved in providing the security for the requisite funding in the first instance, and did not exclude her right of reimbursement and indemnity. Mrs Kekatos is entitled to be reimbursed expenditures and liabilities totalling $768,634.42. 104 This results in a net amount of $938,995.90, for half of which (that is, $469,497.95) she must account to the Staffords. Mrs Kekatos having had the benefit of the Settlement Proceeds and the Royalties from the time of receipt by her, she should pay interest in respect of the period from receipt by her. As it was only the receipt of the Settlement Proceeds on 25 September 2005 that resulted in her receipts exceeding the expenditure in respect of which she was entitled to be reimbursed, interest should run from that date and, allowed at 10%, amounts to $143,679.23.

105 The evidence does not establish receipt by Mr Kekatos of any amount for which he should account.

106 I give judgment that the first defendant pay the plaintiffs the sum of $613,177.18.

107 I shall hear the parties as to whether any other orders are necessary, and on the question of costs.

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