Sutherland v Woods

Persons Principally involved and to whom Reference was made in the Proceedings 3It is convenient, first, to list, and briefly describe, the persons, or entities, principally involved, and others whose names appear in the evidence. The description of each is intended to be non-controversial. 4David John Sutherland is the Plaintiff in these proceedings and the Defendant in the 2007 proceedings. From 1991, he has been employed as a flight attendant by Qantas Airways Limited ("Qantas") and is a member of the Qantas Superannuation Fund. He was born in April 1963. 5Shane Leonard Woods is the Defendant in these proceedings and the Plaintiff in the 2007 proceedings. He is a medical practitioner who conducted various medical practices whilst the parties were in a domestic relationship. He was born in May 1961. 6Francine Alexandrou is a registered public accountant who carries on practice in Kensington, Sydney. She has been practising since 1996. Mr Sutherland and Dr Woods consulted her firm, in 1999, with a view to her providing advice to them on accounting and tax matters, including superannuation. She gave advice to them about establishing a self-managed superannuation fund in 2001. She gave evidence on behalf of Dr Woods, and was cross-examined. 7Norman Henry Gibson is a solicitor with Messrs Gibsons, which firm now acts for Dr Woods. His affidavit, with annexures consisting of copy documents relevant to some of the events that occurred involving other professionals to whom reference will be made, was read, without objection, in the proceedings. He was not cross-examined. 8Suzanne Cherie Ireland is the sister of Dr Woods. She plays a very limited role in the case. She did not give evidence. 9Scott Koopman is, presently, in a domestic relationship with Dr Woods. His only apparent involvement relates to an email written by him on 17 April 2007. He did not give evidence in the proceedings. 10Margaret McCue was a solicitor with Messrs Smith Reid, which firm acted for Mr Sutherland. Her role was limited and she did not give evidence. 11Neil Matthews is a solicitor, with Messrs Matthews Solicitors, which firm acted for both Mr Sutherland and Dr Woods in a number of relevant conveyancing transactions. Mr Matthews was also involved in providing advice, and he was present, on occasions, when others gave advice to them, in relation to the self-managed superannuation fund. Mr Matthews did not give evidence in the proceedings, although a copy of some of his diary notes were tendered, without objection, in evidence (through Mr Gibson). 12Steven Prassas is a solicitor with Messrs Comino Prassas. He is liaising with the Australian Taxation Office on behalf of Dr Woods. He did not give evidence in the proceedings. 13David Roberts was an officer of Cartwright Insurance Brokers Pty Limited, the documentation agent, who Ms Alexandrou consulted about setting up the self-managed superannuation fund for the parties. In October 2001, he provided, to Ms Alexandrou, what is described as a "Superannuation Trust Deed Register", containing documents that were said to be necessary for the creation of the self-managed superannuation fund. He did not give evidence in the proceedings. 14Shona Joy Sutherland is the mother of Mr Sutherland. There is no dispute that she loaned certain moneys to Mr Sutherland and Dr Woods during their relationship. She did not give evidence in the proceedings. 15Anthony George Valentine is a solicitor practicing with Messrs Smith Reid. He is the solicitor who, from about December 2007, acted for Mr Sutherland in these proceedings and in the 2007 proceedings. He has sworn a number of affidavits, read in these proceedings, in which he explains events that gave rise to what are said to be the admissions made in the 2007 proceedings. He was cross-examined by counsel for Dr Woods. 16Bell Partners Accountants Auditors, Advisers Pty Limited ("Bell Partners") conducted the practice of accountants, advisers and auditors. It acted for what is said to have become the Woodsland Super Fund ("WSF"). The relevant representatives of Bell Partners who provided advice to Mr Sutherland and Dr Woods were Joanna Krawiecz, an Executive Vice-President, Brett Taggart, a consultant financial planner with Charter Financial Planning Ltd, and Alex Cutler, described in the correspondence from that company as "a Manager". 17The partners of Bell Partners have commenced other proceedings against Mr Sutherland and Dr Woods, in the Downing Centre Local Court, for moneys alleged to be owed to Bell Partners for work done and services provided between June 2003 and 2008, as a result of instructions allegedly given by Dr Woods and Mr Sutherland as trustees of the WSF. 18None of the representatives of Bell Partners gave evidence in the proceedings. However, copy correspondence between Dr Woods and Bell Partners, as well as some copy diary notes on its letterhead, were tendered, without objection, in the proceedings. 19Botany Doctors Pty Limited is an Australian proprietary company, limited by shares, which was first registered on 20 November 2006. Its sole director is Dr Woods. It is the entity that pays staff and the other expenses of the medical practice conducted by Dr Woods at a property situated at Bay Street, Botany. 20Foundation Medical Centres (NSW) Pty Limited was the purchaser of the business conducted by Dr Woods under the name and style "South Maroubra Medical Practice", pursuant to a Business Sale & Purchase Agreement dated 31 March 2001. The sale price paid by the purchaser was $1.0 million. 21Woodsland Pty Limited ("Woodsland") (which was formerly Woodsland Properties Pty Limited) is an Australian incorporated company limited by shares. It was first registered in November 1993. Ms Ireland and Dr Woods became its directors in November 1993. The company changed its name on 21 June 1995. It was through Woodsland that Dr Woods conducted his medical practice and he was its controlling mind. 22On 21 June 1995, it was resolved that Ms Ireland held her one ordinary share, and one dividend "V" class share in the company on trust for Dr Woods. On 11 March 1996, Mr Sutherland became a director and secretary of Woodsland, in place of Ms Ireland. On the same date, the shares held by Ms Ireland on trust for Dr Woods, were transferred to Mr Sutherland, to be held on trust, by him, for Dr Woods. On 1 January 2001, two ordinary class $1 shares, and two dividend "V class" shares were transferred from Mr Sutherland to Dr Woods, who, thereafter, became the sole shareholder of Woodsland. 23On 29 March 2001, Woodsland, under Power of Attorney, appointed Dr Woods to be its Attorney. Dr Woods was appointed its director and secretary on 1 June 2001. Thereafter, it remained a single director company, with Dr Woods being its only director. 24On 23 December 2005, Woodsland granted a fixed and floating charge over its assets, to the National Australia Bank, which charge was registered on 17 January 2006. 25The constitution, Memorandum and Articles of Association of Woodsland has not been located and does not form part of the evidence in this case. 26From its commencement, Woodsland was beneficially owned, and controlled by Dr Woods. Its primary role was, and is, as the service company for the medical practice conducted by Dr Woods.

General Matters 27I include below the facts which, I am satisfied, are not in dispute between the parties, or which facts have been clearly established. In part, this statement of facts incorporates, with amendment, an agreed statement of facts, and chronologies, to the extent that the events asserted therein are not in dispute, provided to the court, by the parties, prior to the commencement of the hearing and the affidavit, and oral, evidence of the parties. (a) Mr Sutherland and Dr Woods commenced to live together in late 1986, or early 1987; their relationship ended in about August 2004. (b) During the course of their relationship, Mr Sutherland worked as a flight attendant, employed by Qantas, and Dr Woods worked as a general medical practitioner. (c) In 1991, Mr Sutherland joined Qantas Superannuation Fund and commenced to contribute to that fund. (d) During their relationship, which lasted between 17 and 18 years, the parties acquired, and sold, various items of property, real and personal. (e) In about October 1995, Mr Sutherland and Dr Woods purchased a property situated at Francis Street, Bondi, for $490,000. (f) In about 1998, Woodsland commenced to operate a general medical practice at South Maroubra, trading as "South Maroubra Medical Practice" with medical services provided by Dr Woods. (g) Mr Sutherland did whatever he could to help in the running of the medical practice conducted by Woodsland. He was never a paid employee of Woodsland. He provided that help because of his relationship with Dr Woods, and in order to assist Dr Woods. (h) On 30 November 1999, Dr Woods resigned as a director of Woodsland, leaving Mr Sutherland as its only director. (i) On 2 November 2000, Mr Sutherland appointed Dr Woods as his Attorney, under a General Power of Attorney, limited to purchasing, jointly with Dr Woods, shares in a company known as Glenhurst Gardens Limited (which shares entitled the holder to the use and occupation of a home unit and parking space, situated at Yarranabbe Road, Darling Point). (j) On 3 November 2000, Mr Sutherland and Dr Woods entered into an Agreement to purchase the shares in Glenhurst Gardens Limited. (k) In early 2001, the medical practice conducted by Dr Woods was sold. Completion of the sale of the South Maroubra Medical Practice occurred on 30 March 2001. The net sale proceeds, (after payment out of an equipment hire liability to Lease Development Corporation Limited) were $912,039.08. That amount was paid to Mr Sutherland and Dr Woods jointly, at the direction of Woodsland, following a direction, which Dr Woods gave as the Attorney of its then sole director, Mr Sutherland, and as its sole shareholder. The names of the payees on the bank cheque, dated 30 March 2001, were Dr Woods and Mr Sutherland. (l) The proceeds of sale of the South Maroubra Medical Practice were paid into an account, described as the Rocket Access Equity Loan, in the names of Mr Sutherland and Dr Woods, which account was in overdraft, and which debt was secured over the Yarranabbe Ave, Darling Point property. (m) On 1 June 2001, Mr Sutherland resigned as the sole director of Woodsland and was replaced by Dr Woods, who took office as its sole director. Thereafter, he has remained its sole director. (n) In late June 2001, Ms Alexandrou, following a discussion with Mr Sutherland and Dr Woods, wrote to Phillip Jones, the solicitor for Foundation Medical Centres, requesting: (i) certain amendments to the contract for the sale of the South Maroubra Medical Centre to change the vendors to read "Woodsland and David Sutherland" and to change goodwill to read "shares in Woodsland" and, if not acceptable to the purchaser, (ii) seeking an amendment of the contract for sale to provide for a sale of shares in Woodsland by Dr Woods as vendor; and (iii) alternatively, noting an agreement stating that the purchase price of goodwill was for the purchase of shares in Woodsland. (o) The admitted purpose for writing the letter was to ascertain whether the structure of the sale could be altered, whereby it would not be Woodsland selling the business, but the shareholder (Dr Woods) selling the shares in Woodsland. In this way, it would be possible to reduce the CGT liability that could arise following the sale of the South Maroubra Medical Practice. (p) It was thought to be tax effective to make the vendor an individual taxpayer in respect of his shares, rather than Woodsland as the vendor in respect of its business undertaking. By so doing, Dr Woods would have been entitled to 50% reduction in the CGT on the sale of his shares, together with a few other small business concessions. (q) The request made in the letter was withdrawn when it was pointed out to Ms Alexandrou that the sale of the South Maroubra Medical Centre had been completed almost three months before the date of the letter. (In this regard, I accept that there was no intentional dishonesty, on the part of Ms Alexandrou, but a mistaken belief by her that the transaction had not then been completed.) (r) On 25 June 2001, Dr Woods telephoned Mr Matthews, seeking advice on minimising the tax liability on the sale of South Maroubra Medical Centre. He told Mr Matthews that Ms Alexandrou, on that date, had advised him that the shares in Woodsland should have been sold to Foundation Medical Centres, the purchaser, instead of the business of the medical practice. (s) On 27 June 2001, Mr Matthews and Ms Alexandrou conferred by telephone. Mr Matthews was told about the potential CGT liability on the sale of the South Maroubra Medical Centre and they discussed strategies for enabling the payment of the net proceeds of sale from Woodsland to Dr Woods tax-free (including treating the net proceeds as superannuation fund monies). These discussions continued in early July 2001. (t) Dr Woods signed Woodsland's taxation return, for the financial year ending 30 June 2001, in which it disclosed $820,000, being part of proceeds of sale of the South Maroubra Medical Practice, as a capital gain, and claimed two CGT concessions, namely: (i) small business active asset reduction; (ii) small business roll-over and scrip-for-scrip relief (replacement assets roll-over); in order to qualify for a tax refund in the 2001 year. (u) On 12 July 2001, Mr Sutherland and Dr Woods exchanged contracts to sell the property at Francis Street, Bondi, for $850,000. Settlement of the contract took place on 23 August 2001. Of the sale price, $765,413.94 was paid to Westpac Banking Corporation. Of that amount, $258,724.98 was used to repay the debt secured by mortgage on that property. (v) On 13 October 2002, Mr Sutherland and Dr Woods exchanged contracts to purchase a residential property situated at Underwood Street, Paddington, for a price of $1,250,000. Westpac Banking Corporation loaned the whole of the amount required to complete settlement of the purchase ($1,131,558.77) to Mr Sutherland and Dr Woods. (w) On 25 October 2002, Mr Sutherland and Dr Woods exchanged contracts for the sale of the shares in Glenhurst Gardens Limited (the Yarranabbe Road, Darling Point property) for $1,275,000. Settlement of the sale took place on 6 December 2002. Of the sale price, $1,144,624.96 was paid to Westpac Banking Corporation to discharge the debt secured by mortgage. (x) As at 28 July 2003, there was a debit balance of $621,287 in the Rocket Access Equity Loan. (y) On 11 May 2004, Mr Sutherland and Dr Woods entered into a contract to sell a property at Rutleys Road, Wyee for $255,000. Settlement of that sale took place on 15 June 2004. From the sale proceeds, $117,437.50 was paid to Westpac Banking Corporation to discharge the mortgage debt secured on that property. (z) On about 1 August 2004, the relationship between Mr Sutherland and Dr Woods ended, when Dr Woods left the home in which they lived together at Paddington. (aa) In December 2004, Dr Woods purchased a property at Wylde Street Potts Point, for $1,575,000. (bb) On 12 January 2005, Mr Sutherland and Dr Woods entered into a contract to sell the Paddington property for $1,225,000. Settlement of the sale took place on 11 February 2005. From the sale proceeds, $1,143,684.65 was paid to Westpac Banking Corporation, to discharge the debt secured by mortgage on that property. (cc) In about April 2008, Dr Woods sold the Wylde Street, Potts Point property for $2.1 million. (dd) On 4 October 2007, Dr Woods commenced the 2007 proceedings. (ee) On 13 March 2008, Mr Sutherland filed his defence in the 2007 proceedings. On 10 November 2008, he filed a cross-claim.

The Creation of the WSF 28Next, I set out additional facts, which, on the evidence, I am satisfied have been established, in regard to the creation of the WSF, in October, or November, 2001, and what followed whilst Mr Sutherland and Dr Woods retained Ms Alexandrou: (a) In late June 2001, based upon certain advice from Ms Alexandrou, general discussions took place between Mr Sutherland and Dr Woods concerning the creation of a self-managed superannuation fund. (b) It was believed that Woodland's CGT liabilities, following the sale of the South Maroubra Medical Centre, would be reduced if a superannuation fund was created, and into which some of the proceeds of sale of the Medical Centre would be deposited. (c) In early October 2001, Mr Sutherland and Dr Woods attended at the offices of Ms Alexandrou, where there were more discussions about the creation of a self-managed superannuation fund. (d) Ms Alexandrou advised both Mr Sutherland and Dr Woods that a self-managed superannuation fund should be established, into which fund $410,000 (from the proceeds of sale of the South Maroubra Medical Centre) could be deposited. They discussed, at this time, also, whether the fund could purchase a property (the Patonga property). The self-managed superannuation fund was to be called the WSF. (e) Dr Woods (perhaps with Mr Sutherland) attended at Ms Alexandrou's office, again, on 16 October 2001. (f) On 18 October 2001, Dr Woods telephoned Ms Alexandrou, more than once, but spoke to her, personally, only once on that date. (g) On 19 October 2001, Mr Sutherland telephoned Ms Alexandrou four times, but spoke to her, personally, only once on that date. Ms Alexandrou's diary note of 19 October 2001, records, accurately, that Mr Sutherland telephoned at 4:02 p.m. and said "Yes to Woodsland Super Fund". Ms Alexandrou, correctly, interpreted this as an instruction to proceed to establish the WSF. (h) On 20 October 2001, Dr Woods sent a signed facsimile message (on the facsimile letterhead of Mr Sutherland) to Ms Alexandrou, requesting advice on who should be appointed as the trustees of the WSF. (i) On 22 October 2001, Ms Alexandrou telephoned Mr Sutherland and Dr Woods to confirm their joint instructions in order to establish the WSF. They both instructed her that they would be the superannuation fund's members and trustees. (j) The intention that each of Mr Sutherland and Dr Woods held was, and the instructions that they gave to Ms Alexandrou were, that: (i) One self-managed superannuation fund, called the WSF, was to be created for the mutual benefit of Dr Woods and Mr Sutherland. (ii) There were to be two trustees of the WSF, namely Mr Sutherland and Dr Woods. (iii) There were to be two members of the WSF, one being Dr Woods, who would have an immediate interest in it, because a contribution would be made, to it, on his behalf, by Woodsland, his employer; the other member, being Mr Sutherland, who would not have any immediate right to have Woodsland contribute to the WSF, or to receive any benefits from the WSF, until such time as his employment with Qantas ended, and he was employed by Woodsland. (iv) So long as Mr Sutherland was employed by Qantas, his employer would continue to make superannuation contributions, on his behalf, into the Qantas Superannuation Fund; there would be no contributions made by Woodsland, or by anyone else, on behalf of Mr Sutherland, into the WSF, until such time as Mr Sutherland was no longer a member of the Qantas Superannuation Fund or an employee of Qantas. (v) When Qantas no longer employed Mr Sutherland, any amounts held on his behalf by its superannuation fund, would be rolled over into the WSF. (vi) When Qantas no longer employed Mr Sutherland, he would be a member of the WSF, on whose behalf Woodsland, which would then employ him, would make contributions to the WSF. (vii) Mr Sutherland and Dr Woods each would do what was required on his part to ensure that the WSF was created and when Mr Sutherland was ready, Woodsland would take such steps as were then necessary to make contributions on his behalf to the WSF. (k) When she spoke to Mr Sutherland and Dr Woods, Ms Alexandrou may have referred to Mr Sutherland as "a non financial member" or a "non-contributing member" of the WSF. She was aware that Mr Sutherland was not an employee of Woodsland as she had previously prepared his income tax returns. (l) On 22 October 2001, someone on behalf of Ms Alexandrou was requested to make contact with Mr Roberts to "ask him what details he needs re setting up a super fund". Once that was done, he was to be sent a fax with details. (m) On 23 October 2001, under the letterhead of Alexandrou Taxation Services, there was sent to Mr Roberts, a "Superannuation Order Form". That Order form identified Mr Sutherland and Dr Woods as "the Client"; that the name of the proposed fund was to be the "Woodsland Super Fund"; that the "Principal Employer Company" was to be Woodsland; and the director was "Shane Woods". It also stated "This is urgent." (n) The second page of the document forwarded to Mr Roberts was headed "Particulars of Proposed Members" and identified each of Mr Sutherland and Dr Woods as such. (o) On 25 October 2001, Mr Roberts telephoned Alexandrou Taxation Services to ascertain the date when Mr Sutherland and Dr Woods were employed at Woodsland. Ms Alexandrou informed him that the date should be 21 June 1995. Subsequently, she confirmed the date with Mr Sutherland. (p) On a date not disclosed in the letter, but which I find to be about 26 October 2001, Mr Roberts sent to Ms Alexandrou, what is described as a "Superannuation Trust Deed Register", which contained various original documents "for signature for the establishment of the [Woodland Super] Fund". These documents were identified, as was the person who was to sign the particular document and the place in which the document was to be filed. Included were documents stated to be "Minutes regarding Deed" and "Minutes regarding Trustees and Fund". (q) Of the documents provided, other than one to be signed by Mr Sutherland (the Consent to act as Trustee), all others were to be signed by Dr Woods. There were three copy Trust Deeds, which required completion. There was an "Application to Register for New Tax System - Superannuation Entities", being one "for GST and ABN Registration and Notification of Election under the Superannuation Industry (Supervision) Act 1993 (Cth) ("SIS Act") to become a regulated superannuation fund" also included. Finally, there was a Member Benefit Account for completion, and filing, under "Contribution Section" and "Notice to Members" (to be given to Dr Woods) with additional copies, sent. (r) A signed original, or copy, of the Trust Deed of the WSF has not been located, although an unsigned copy forms part of the evidence. Requests to locate, and searches to obtain, the signed Trust Deed, or a copy of it, have been made, unsuccessfully, to the Australian Taxation Office, to Westpac Banking Corporation and of the General Register of Deeds of the Land & Property Authority. (s) The "Reference Schedule" which appears on page 47 of the Superannuation Trust Deed for the WSF refers to Dr Woods and Mr Sutherland as "the Trustees" and the "Initial Member(s)" being Dr Woods. It was not intended to use a corporate trustee. (t) Mr Sutherland and Dr Woods attended at Ms Alexandrou's office on, or about, 5 November 2001 to sign relevant documents. (u) An undated, and unsigned copy, "Minute of Meeting of Directors or Record of Decision of Sole Director" records that Woodsland resolved to establish a superannuation fund to provide certain benefits for officers and employees of the company; that the trustees of the Fund would be Mr Sutherland and Dr Woods; and that Dr Woods would be invited to become a member of the WSF. (v) An undated Notice of Agreement of Members to the nomination of Dr Woods and Mr Sutherland to act as trustees was signed by each of them. (w) An undated Consent to Act as Trustee of the fund, signed by Mr Sutherland, records his consent to act as a trustee of the WSF. (x) An undated Notice of Approval, records that the trustees of the WSF approved the membership application of Dr Woods. One such document appears to be signed by Mr Sutherland and the other appears to be signed by Dr Woods. (y) On 6 December 2001, each of Mr Sutherland and Dr Woods signed a Notice of Election for Superannuation Funds as trustees of the WSF. (z) On 20 December 2001, the Australian Taxation Office issued a tax refund notice and cheque ($381.32) in favour of the WSF for the year ending 30 June 2001. (aa) On 15 January 2002, Ms Alexandrou forwarded an adjusted application for the New Tax System Superannuation Entities, as requested, to the Australian Taxation Office Registry Division. This document (dated 6 December 2001) referred to the WSF and was signed by both Mr Sutherland and Dr Woods as "trustees" of the fund. The document stated, in a box marked with a cross, "The governing rules provide that the sole or primary purpose of the fund is the provision of old age pensions". (bb) On 8 March 2002, Dr Woods opened an account with Westpac Banking Corporation, at its Coogee Bay branch, under the name and style "Shane Leonard Woods as trustee for the Woodsland Superannuation Fund". Mr Sutherland and Dr Woods were each recorded as being authorised to operate the account. (I am satisfied, that the failure to identify them both as trustees, was not intentional. I accept that the Bank opened the account in that way.) (cc) At some time after 30 June 2002, Mr Sutherland and Dr Woods, as trustees of the WSF, signed a Trustee Declaration in the financial accounts of Woodsland. (dd) On 16 January 2003, Ms Alexandrou completed, and lodged, the income tax return for the WSF, for the year ending 30 June 2002. Each of Mr Sutherland and Dr Woods signed the original. It stated that the WSF had total investments of $47,506 and income of $36,013. (ee) Ms Alexandrou was instructed, for the last time, on 10 June 2003. (ff) On 29 March 2007, Dr Woods obtained from Ms Alexandrou, both oral, and written, advice, or confirmation, to the effect that, in her opinion: (i) following the sale of the South Maroubra Medical Practice by Woodsland in early 2001, the sum of $410,000 was contributed to the WSF by Woodsland, as an employer contribution to the fund, on behalf of Dr Woods, which sum was funded from the proceeds of sale of the medical practice; (ii) at the time of the contribution of $410,000, Dr Woods was the only member of the WSF; (iii) as a result of the payment of $410,000, from the proceeds of sale of the South Maroubra Medical Practice, by Woodsland, a superannuation contribution of $410,000 was made solely for the benefit of Dr Woods to the WSF; and (iv) the Trust Deed for the WSF (at p. 47) recorded Dr Woods as the only validly appointed member of the WSF." (gg) On 22 October 2008, Dr Woods collected from Ms Alexandrou, an unsigned original Superannuation Trust Deed for the WSF, including a copy of 2002 WSF income tax return and correspondence (i.e. faxes and notes) relating to the WSF. 29In making these findings, I note Ms Alexandrou's evidence, oral and documentary, to the effect that her instructions were to create a self managed superannuation fund, not for Dr Woods' sole benefit, to the exclusion of Mr Sutherland, but one in which both Dr Woods and Mr Sutherland would be members. 30I am also satisfied that, to the extent that the documents provided by Mr Roberts do not reflect the intentions of Mr Sutherland and Dr Woods, and the instructions they gave to Ms Alexandrou, the error arose as a result of the professional advisers, and not because of any change of intention, or instructions, by Mr Sutherland and/or Dr Woods. 31In particular, the reference to Dr Woods as the only member of the WSF on some of the documents, in my view, is likely to have been an uncorrected error on the part of the professional advisers, and did not accord with the intention of the parties, or reflect their instructions, to Ms Alexandrou. 32In this regard, it should be noted that whilst the word 'member' (in relation to a superannuation fund) appears frequently throughout the SIS Act and Regulations, the Act does not include a substantive definition of 'member'. Yet, it seems to me that both Mr Sutherland and Dr Woods used the word as meaning a person in respect of whom contributions to the WSF were being, or were to be, made, in anticipation of the payment of benefits in his retirement. 33Neither Mr Sutherland, nor Dr Woods, were told of, or understood, all of the necessary requirements to enable the WSF to be a complying fund within the meaning of the SIS Act. For example, neither had any understanding that if one had a single member fund, the compliance requirements for it, particularly as regards the identity of trustees, were different from a multiple member fund. However, each was told, generally, about the role of trustees and advised that any asset of the fund had to be an income producing asset; that the asset could be renovated and, then, rented; that the asset could not be for personal use; and that the trustees had to act in the best interests of the fund. 34Neither Mr Sutherland nor Dr Woods had a perfect, or precise, understanding of how the WSF was to be structured, or how it was to operate. Each wished the other to be included as a member of the WSF. Each appreciated that Woodsland would make contributions to the fund, on the part of Dr Woods, immediately, but that contributions on the part of Mr Sutherland would not be made until he was employed by Woodsland and no longer employed by Qantas. 35There is little doubt, in my view, that they would have signed any, and all, documents they were requested to sign, in order to ensure that the WSF was created.

The Parties dealings with Bell Partners and the Australian Taxation Office 36It is next necessary to state the facts, which I am satisfied have been established by the evidence, so far as they relate to Mr Sutherland's and Dr Wood's dealings with Bell Partners and the events which occurred during the period it was the professional adviser to Dr Woods and Mr Sutherland. (a) On 17 June 2003, Mr Sutherland and Dr Woods met with Ms Krawiec and Mr Taggart. During this meeting, Dr Woods disclosed to Bell Partners, the following facts: (i) Dr Woods had treated the proceeds of sale of the South Maroubra Medical Practice as a CGT exempt disposal of CGT assets by Woodsland; (ii) Dr Woods had treated an amount of $410,000 of the proceeds of sale of the medical practice, held in his joint bank account with Mr Sutherland, as an asset of the WSF; (iii) Dr Woods, as a trustee of the WSF and its public officer, had represented to the Australian Taxation Office that, for taxation purposes: (a) the Patonga property was an asset of the WSF; (b) the Patonga property was purchased, and partly renovated, using $410,000 of money allegedly held on trust for the WSF; (c) the Patonga property had been held as an investment by the WSF. (b) Ms Krawiec and Mr Taggart provided advice to Mr Sutherland and Dr Woods relating to the WSF, which advice was to the effect that certain steps should be taken to ensure that the WSF was a complying fund. (c) As a result of Bell Partners' advice, certain steps were then taken. There is a Minute of Meeting, held on 17 June 2003, at which Mr Sutherland and Dr Woods are identified as having attended, at which it was resolved to accept Mr Sutherland as a member of the WSF and that his name be entered into the Register of Members and notified accordingly. The Minute of Meeting is signed by Dr Woods. (Accordingly, even if, as a result of an error by the professional advisers, Mr Sutherland was not a member when the WSF was created in October or November 2001, he became a member on the date determined by the trustees as the date of admission.) (d) A Notice to New Member of the WSF, addressed to Mr Sutherland, dated 18 June 2003, and signed by Dr Woods, advised Mr Sutherland that his application for membership of the WSF had been accepted. (e) In a letter dated 19 June 2003, from Mr Taggart to Dr Woods and Mr Sutherland, "the strategy going forward" was stated: "1. Repay $472,500 to the superannuation fund by borrowing the funds using your Paddington residence as security". 2. The Superannuation fund will invest up to 100% into a commercial property that your practice will operate from. 3. The Equity in your properties will be used to secure borrowings to provide additional funds to make the property purchase. 4. Rent and Superannuation contributions received by your self-managed fund will be used to fully acquire the commercial property from you both over time. 5. Wyee to remain as it is. 6. To ensure that your superannuation fund complies with a current legislation, David must be admitted as a member. Documentation to action the above is enclosed. Please complete where marked and return to our office" (f) At a meeting, on 23 June 2003, Mr Sutherland and Dr Woods, as co-trustees of the WSF, received additional advice to take steps to rectify contraventions of the Superannuation Industry (Supervision) Act 1993 ("the SIS Act") in respect of the management of the WSF as its joint trustees. (g) On, or about, 30 June 2003, Dr Woods deposited $472,500 (four transactions of $100,000 and one of $72,500) into the Westpac bank account in the name of the WSF. The source of funds was a joint account of Mr Sutherland and Dr Woods conducted at Westpac Bank. The withdrawal was made on Dr Woods' signature alone. (h) Dr Woods received a Tax Invoice dated 14 October 2003, from Bell Partners, for $550 (incl. GST), which was stated to be for: "Attendance at Meetings with Matthews Solicitors and advice dispensed thereto; Review of Trust Deed of superannuation fund and advice thereto; Disbursements including secretarial services, postage, Photocopying and facsimiles etc" (i) On 12 July 2006, a meeting took place between Dr Woods and Mr Cutler, at the office of Mr Matthews. It appears, from a file note of Bell Partners, bearing that date, that there was a discussion about the WSF, the lease of Bay Street, Botany, and other matters. (j) On 19 September 2007, a meeting took place between Dr Woods and Ms Krawiec. Again, there was discussion about a number of topics, one of which was the WSF and another was Mr Sutherland. (k) In a letter dated 5 November 2007, from Messrs Smith Reid, Solicitors, to Bell Partners, a request was made, on behalf of Mr Sutherland, who was said to be a trustee of the WSF, to inspect the records of the WSF held at its offices. (l) On 30 January 2008, a diary note from Bell Partners (the author of which is not disclosed) refers to Dr Woods and to various matters relating to the WSF and the manner in which the Bay Street, Botany property was held. There is a suggestion that a caveat should be lodged "over super fund's interest". (m) The Australian Taxation Office sent to the WSF a "Lodgement alert - important reminder to lodge overdue returns" dated 22 February 2008. (n) In March 2008, Dr Woods received, from the Australian Taxation Office, a "Final Notice to Lodge Income Tax Returns for Woodlands (sic) Super Fund". The Notice asserted that the Australian Taxation Office had not received income tax returns for the years (ending) 2003, 2004, 2005, 2006, and 2007. (o) By July 2008, superannuation tax returns for the WSF for the years 2003 to 2007 inclusive, as well as Financial Reports for the WSF for the years 2003 to 2007 inclusive were prepared. (p) A Tax Invoice dated 4 June 2008, for $4,400 (incl GST), was sent to Mr Sutherland. The work for which the Tax Invoice was sent included "professional accountancy and taxation services, including preparation, engrossment, audit and lodgement of the income taxation returns and financial accounts" for the WSF, for the financial years ending 30 June 2004 to 30 June 2007 inclusive. (q) Dr Woods wrote to Bell Partners a letter, incorrectly dated 19 January 2008 (which should have been 2009), in which letter he raised some issues concerning the WSF. (r) On 30 January 2009, Bell Partners, in its capacity as the auditors of the WSF, informed Dr Woods, that: (i) due to various contraventions of the SIS Act, for most of its existence, the WSF was a non-complying superannuation fund; (ii) Bell Partners, as the auditors of the WSF, was obliged to lodge a Contravention Report with the Australian Taxation Office Superannuation Compliance Unit as the prudential authority responsible for the supervision of self-managed super funds. (s) On 4 March 2009, Dr Woods obtained the advice of a forensic accountant (Mr Lombardo), who confirmed that, as far as he was able to tell, the WSF was seriously non-compliant with the SIS Act and the SIS Regulations. (t) On numerous occasions, since the lodgement of the Bell Contravention Report with the Australian Taxation Office, it has written to Mr Sutherland and Dr Woods, as the trustees of the WSF, seeking rectification of the WSF in terms of the Compliance Report, and demanding that steps be taken to make the WSF compliant with the SIS Act, or face prosecution, or disqualification, as eligible trustees of super funds. The correspondence has been addressed: (i) to the WSF, at the residential address of Dr Woods since termination of the de facto relationship; (ii) more recently, to Mr Sutherland (as a co-trustee of the WSF). (u) In a letter dated 17 July 2009, from the Australian Taxation Office, addressed to the Trustees of the WSF, the contraventions of the SIS Act are outlined. These appear to include a contravention of s 109 (rent charged to a related party is not at market rate); a contravention of what is said to be paragraph 52(2)(d) of the SIS Act (the fund does not have a separate bank account for the credit of the rental income and that the Bay Street, Botany property is owned by the Fund but is not held in the name of the Fund); a contravention of Regulation 13.14 of the SIS Regulations (that the trustees have used the Bay Street, Botany property as security for the purchase of a personal property at Callala Bay). (v) In a letter dated 18 December 2009, from the Australian Taxation Office, addressed to the Trustees of the WSF, there is outlined the steps required to be taken to rectify the reported contraventions, namely to ensure that the Bay Street, Botany property is held in trust for the WSF; the charge on that property be removed immediately and to ensure that market rent is being collected and paid into the bank account conducted on behalf of the WSF. (w) On 15 February 2010, the Australian Taxation Office advised that it would suspend action against the two trustees of the WSF pending the determination of these proceedings. (x) There is, in evidence, a copy of an undated set of Trustee Minutes, signed by Dr Woods, relating to the investment strategy of the WSF. (It may be that this was one of the documents provided to Ms Alexandrou by Mr Roberts.) 37It seems clear that some of the events, particularly in 2003, that occurred, related to advice given to correct what were perceived to be errors in the original creation of the WSF. The principal issues of concern related to correcting the identity of members of the WSF and ensuring that its funds were disclosed as being, and that they were, held, on its behalf. 38Importantly, bearing in mind the reference to the "review of Trust Deed of superannuation fund and advice thereto" in the Tax Invoice dated 14 October 2003, from Bell Partners, there is nothing in their written advice to Dr Woods that suggests that Woodsland had not taken the steps, on its part, to enable the creation of the WSF, or that the WSF was, in some way, not validly created. There is also no reference to the Trust Deed referred to not having been signed.

The Purchase of the Patonga Property 39As there is an issue regarding the purchase of the Patonga property, I set out the facts, which I am satisfied have been established on this topic. (a) On 11 October 2001, Mr Sutherland and Dr Woods entered into a contract to purchase, as joint tenants, a residential property, in Patonga, New South Wales, for $355,000. The source of the purchase price of the Patonga property was the Rocket Access Equity Loan secured over the Paddington property into which the net proceeds of sale of the South Maroubra Medical Practice had been deposited. (b) Each of Mr Sutherland and Dr Woods gave oral evidence that he anticipated that the Patonga property would be an asset of the WSF. He also identified the Patonga property as being the first asset of the WSF. Ms Alexandrou also noted that she was to record this property as an asset of the WSF. (c) On 18 October 2001, Dr Woods sent a facsimile transmission to Ms Alexandrou enquiring whether he and Mr Sutherland "should purchase the house using the superannuation fund". It is clear that what was being referred to was the Patonga property. (d) Although she could not remember when the conversation occurred, Ms Alexandrou recollected a conversation with Dr Woods in which he told her of the purchase of the Patonga property and the use of the "superannuation fund moneys towards providing the purchase price". Her response was that she would record that property as being owned by the fund." (e) On 23 October 2001, Mr Sutherland and Dr Woods completed the purchase of the Patonga property. It was purchased in joint names of Mr Sutherland and Dr Woods. (f) Following its purchase, the parties renovated the Patonga property. About $100,000 was spent on renovation costs. (g) In about October 2002, Mr Sutherland and Dr Woods sold the Patonga property, for a price of $535,000. The sale was completed on 1 November 2002. The net proceeds of sale were deposited into the Rocket Access Equity Loan account, which, at that time, was secured over the parties' property at Yarranabbe Road, Darling Point. 40I am satisfied that Mr Sutherland and Dr Woods used the Patonga property occasionally on weekends. I am also satisfied that they were not permitted to do this as the Patonga property was an asset of the WSF.

The Purchase of the Bay Street, Botany Property 41As there is an issue regarding the purchase of the Bay Street, Botany property, I set out the facts, which I am satisfied have been established on this topic. (a) In, or about, October 2003, Mr Sutherland and Dr Woods were interested in purchasing this property, with the intention that Dr Woods could conduct a medical practice there. (b) On 1 November 2003, Mr Sutherland and Dr Woods entered into a contract to purchase a property at Bay Street, Botany for $785,000. (c) There is a letter dated 3 November 2003, from L J Hooker, Maroubra, addressed to the WSF, regarding the purchase of the Bay Street, Botany property. (d) There is a letter, also dated 3 November 2003, from Matthews, Solicitors, addressed to Messrs Li & Associates, the solicitors for the vendor of the Bay Street, Botany property, which states that "as Woodsland Super Fund is not a legal entity, the purchaser should, in fact be, the trustee of the Woodsland Super Fund". The letter also identifies Woods and Sutherland as the trustees of the WSF and states that they should be the purchasers as joint tenants. (e) On 6 November 2003, Mr Sutherland and Dr Woods borrowed $350,000 from Shona Joy Sutherland. (f) There is a letter, dated 6 November 2003, from Matthews, Solicitors, addressed to Mr Sutherland and Dr Woods, being an estimate of costs for acting on the purchase of the Bay Street, Botany property. (g) The purchase of the Bay Street, Botany property was completed on 4 December 2003. (h) A letter, dated 8 December 2003, from Matthews, Solicitors, addressed to Mr Sutherland and Dr Woods, notes that "you provided all funds to complete the settlement". (i) The purchase price and associated costs of the Bay Street, Botany property, in fact, was paid as follows: (i) $410,000 by Mr Sutherland and Dr Woods as the trustees of the WSF; (ii) $175,000 by Mr Sutherland (part of the amount borrowed from his mother); (iii) $200,000 by Dr Woods (made up of two payments, one of $175,000, being part of the amount borrowed from Mr Sutherland's mother, and one of $25,000, from his own funds); (iv) $30,815 (stamp duty) by Dr Woods; and (v) $3,155.43 (legal costs) by Dr Woods. (j) There is a letter, dated 9 December 2003, from L J Hooker, Maroubra, addressed to the WSF, regarding the completion of the purchase of the Bay Street, Botany property and stating that " we have directly deposited the amount of $93.75 into your selected Bank Account ". There is a handwritten notation on the copy letter tendered that identifies the Westpac Bank account details of the WSF. Dr Woods stated in evidence that he did not recognise the handwriting and that it was neither his, nor that of Mr Sutherland. However, there does not appear to be any dispute that the amount was placed into the bank account conducted by Dr Woods for the WSF. (k) The Certificate of Title for the Bay Street, Botany property discloses that it is held in the names of Mr Sutherland and Dr Woods as joint tenants. The parties agree, however, that based on contribution to the purchase price and associated costs, the legal title to this property should be held as to 52% by the parties as trustees of the WSF, as to 25.5% by Dr Woods personally and as to 22.5% by Mr Sutherland personally. (l) Dr Woods represented to the Australian Taxation Office that the Bay Street, Botany property was an investment of the WSF and was so held by Mr Sutherland and Dr Woods as its co-trustees. (m) The WSF has not received any rent or occupation fee in respect of the Bay Street, Botany property.

The Purchase of the Callala Bay Property 42As there is an issue regarding the purchase of the Callala Bay property, I set out the facts, which I am satisfied have been established on this topic. (a) On 12 February 2004, Mr Sutherland entered into a contract to purchase a property, situated at Boorawine Terrace Callala Bay. The purchase price was $1.0 million, of which $600,000 was borrowed and secured, by registered mortgage, over the Callala Bay property, in favour of Perpetual Trustees Australia Limited. The purchase of this property was completed on 4 May 2004. (The Loan Contract was in the names of Mr Sutherland and Dr Woods.) (b) Although there was some dispute as to the reasons why this property was purchased in the name of Mr Sutherland, I am satisfied that it was done by agreement of the parties. (c) A Credit Proposal dated 29 January 2004, addressed to the Commonwealth Bank from New Jeneration Finance Pty Ltd, seeks a facility of $450,000 and offers the Bay Street, Botany property as security. A Home Loan Application, dated 29 January 2004, signed by Dr Woods, identifies the Bay Street, Botany property as the "Property to be used as security for the loan". The Loan was funded on 4 May 2004. (d) In, or about, May 2005, the mortgage debt secured on the Callala Bay property was increased to $700,000. Of the additional borrowing ($100,000), $50,000 was used for mortgage repayments by Dr Woods. There is a dispute about how the balance ($49,200) was utilised, although Mr Sutherland may have used it also, for mortgage repayments and for the maintenance and conservation of the Callala Bay property. (e) Mr Sutherland has been meeting, and continues to meet, the instalment repayments of the debts secured on the Callala Bay property.

Digression Re Pleadings 43Having dealt with the narrative of facts, it is next necessary to record a matter concerning the pleadings and an issue relating to what are said to be admissions made in the 2007 proceedings. 44In doing so, I set out various Paragraphs of the statement of claim filed by Dr Woods, the defence and cross-claim filed by Mr Sutherland, in the 2007 proceedings: (a) Statement of Claim: "... 10.15.6 The proceeds of sale of the Medical Practice in Maroubra were utilized as follows:- (a) $410,000.00 was placed in the Woodsland Superannuation Fund. (b) The deposit monies for the purchase of the Paddington property; (c) Setting up costs for the Bay Street Medical Practice. ... 10.18.1 The Plaintiff and Defendant and the Plaintiff and Defendant as trustee for the Woodslands [sic] Superannuation Fund purchased on or about January 2004 the property known as 135 Bay Street, Botany ("Botany property") for $785,000.00. 10.18.2 The purchase price was funded as follows:- (a) Woodslands [sic] Superannuation Fund 52% (b) Plaintiff 25.5% (c) Defendant 22.5% 10.18.3 The property was purchased for $785,000.00. The property was funded as follows:- (a) $410,000.00 from the Woodsland Superannuation fund; (b) Balance by way of loan from the Defendant's mother, Shona Sutherland, approximately $350,000.00. (c) The Plaintiff paid $25,000.00 towards payment of stamp duty and legal fees for the purchase of the Botany property. ... 18.2 The ownership of the Botany property does not reflect the ownership of the Woodsland Superannuation Fund of 52%. 18.3 The mortgage secured on the Bay Street property is in the joint names of the Plaintiff and Defendant. The property is partly owned by the Plaintiff and Defendant as Trustees of the Woodsland Superannuation Fund. The mortgage is incorrectly secured on the Bay Street property. The Defendant has made no payments towards the mortgage." (b) Defence "10.15 In response to the allegations contained in paragraph 15 of the statement of claim, the defendant: ... b. Does not admit the contents of paragraph 10.15.6; c. Otherwise admits the allegations. ... 10.18 In response to the allegations contained in paragraph 10.18 of the statement of claim, the defendant: a. Does not admit the allegations in subparagraph 10.18.2; b. Admits that the defendant's mother loaned $350,000 to the plaintiff and the defendant towards the purchase price of the Bay St, Botany, property but otherwise does not admit the allegations in subparagraph 10.18.3; (c) Cross-Claim 18. The cross claimant contributed to the financial resources of the parties, and to the financial resources of the cross defendant, both directly and indirectly, in the course of the domestic relationship. ... b. the allocation of part of the proceeds of the sale of co-owned properties, and medical practices, to the Woodsland superannuation fund. ... 24. At the date of termination of the relationship in August 2004, the cross-defendant and cross claimant had the following property, financial resources and liabilities: ... 7. Woodsland Superannuation Fund - cross claimant does not know exact value. 45It has been submitted, on behalf of Dr Woods, that the matters set out above in the defence and cross-claim, constitute admissions made by Mr Sutherland, which admissions he should not be permitted to withdraw. 46Counsel for Mr Sutherland dispute that any "admissions", in fact, have been made.

The Credit of Witnesses 47In determining the credibility of the parties, I remember that some of the events that are the subject of evidence occurred 9 years, or more, ago. In addition, most of the important events occurred at a time when they were in a happy relationship with each other. Furthermore, I must assess the evidence without the glare of hindsight. Some of the events would not have seemed significant, to the same degree, at the time. 48Both counsel accepted, and I find, that Mr Sutherland and Dr Woods were not sophisticated commercial people with a depth of, or any, knowledge, of trust and superannuation law. 49In my view, subject to what I shall say hereafter, Mr Sutherland attempted to give his oral evidence truthfully. It is clear, however, that he did not have any real recollection about whether he signed, or did not sign, the WSF Trust Deed and other documents. He repeated, when cross-examined, that he did not believe he had signed the Trust Deed, but the express denial stated in his affidavit was diluted, somewhat, during his cross-examination. He accepted that he would have signed all the documents that were put before him by Ms Alexandrou and which he was asked to sign. 50However, on occasions during his cross-examination, I gained the impression that he was trying to distance himself, as much as possible, from the events that occurred, which events might demonstrate his involvement in the establishment of the WSF. By way of example, he said that he could not recall the first meeting with Bell Partners, when the contemporaneous document produced confirmed his attendance. I find it difficult to accept that he had completely forgotten about this meeting. 51Although I do not think that he was attempting to mislead the court, I also do not accept Mr Sutherland's evidence that he was not present on a number of different occasions when the WSF was discussed with professional advisers. The evidence, overall, convinces me that he did attend, with Dr Woods, and occasionally on his own, on such professionals, including Ms Alexandrou, Mr Matthews and at Bell Partners. Ms Alexandrou gave evidence that he attended, with Dr Woods, and that, generally, they both spoke during the meetings with her. I accept the evidence given by her in this regard. 52Mr Sutherland gave evidence, which I do accept that, during the relationship, he was prepared to do, and, in fact, did, what was asked of him by Dr Woods, without question, and without always understanding the precise reasons for the things being done. For example, he signed the transfer of shares in Woodsland and ceased to be a director of Woodsland without knowing precisely why he was asked to do so. 53Mr Sutherland described his role in the relationship, principally, as that of a homemaker, despite the fact that he had full time employment. I accept that, generally, he did leave the financial and legal decisions, principally, to Dr Woods. He did so, because he believed that Dr Woods' education and experience better equipped him to make such decisions. 54Despite this, I consider that Mr Sutherland and Dr Woods together discussed, generally, the course to be taken following advice by professionals. I do not accept that Mr Sutherland was completely subservient to the wishes of Dr Woods, although he would accommodate those wishes if he could do so. 55Whilst it may be that Mr Sutherland did not completely understand, or follow, all that was being said during such meetings, he had a general understanding of what was being discussed, if not from the conversations that occurred during those meetings, then from his conversations with Dr Woods either before, or after, them. 56By way of example, Mr Sutherland, whilst denying that he was present during any meeting at which the duties of trustees of a superannuation fund were discussed, acknowledged that Dr Woods had told him that the Patonga property, as an asset of the WSF, was not supposed to be used for private purposes and that it would have to be an investment property. 57Paragraph 22 of Mr Sutherland's affidavit sworn on 21 September 2010, was relied upon by him, as it was not the subject of cross-examination. That paragraph was to the effect that he had no idea of the value of his interest in the WSF; that he believed he was a member of the WSF from the beginning as he worked, part-time, for Woodsland; that he was never paid a wage; and that he was content to receive superannuation contributions which were for his benefit in the WSF. 58In Mr Sutherland's affidavit, this Paragraph was stated to be in response to Paragraph 21 of the affidavit sworn 23 August 2010, by Dr Woods, in which he had referred to the combining of the amount that Mr Sutherland held in the Qantas Superannuation Fund with the amount held by the WSF. 59Even though there may have been no specific cross-examination of Mr Sutherland on this Paragraph, I am satisfied that questions he was asked, generally, put part of the contents of that Paragraph in issue. I also bear in mind, in determining whether I should accept that evidence, Mr Sutherland's other evidence that he did not comprehend what the terms "member" and "trustee of the fund" meant. 60Furthermore, he stated, later in the same affidavit, that he believed "I would receive a benefit from the Woodsland Superannuation Fund when I retired from full-time work". 61In my view, Dr Woods attempted to give his oral evidence, truthfully, also. He did not have a specific recollection about whether he signed the WSF Trust Deed. He repeated that he could not state, with certainty, that he had signed that document, because, since late 2001, he had signed many documents provided to him, for signature, by his professional advisers. I accept his evidence that he sought, and usually followed, the advice of his professional advisers. He, too, would have signed what he was asked to sign by Ms Alexandrou. 62I accept also, the evidence of Dr Woods, that he and Mr Sutherland would discuss matters and, together, make decisions that were thought to be in their mutual interests. Whilst, on occasions, he may have resented questions on whether an asset to be purchased could be afforded when this was raised by Mr Sutherland, I do not consider that Dr Woods expected Mr Sutherland to do all that he asked, without some explanation, and consideration, of its consequences. In other words, I do not accept that Dr Woods acted dictatorially in all of the decisions that affected both of them. 63In my view, the transactions entered into by them, were transactions on which Mr Sutherland and Dr Woods, generally, agreed as being in their mutual interests. 64Dr Woods did not have any intention, at the time of the creation of the WSF, to do anything that was intended to financially harm Mr Sutherland. There is no suggestion that, in 2001, there were any problems in their relationship, or that there was any reason to suggest that it was about to end. No reason for so doing was advanced on behalf of Mr Sutherland and I am unable to find any reason stated in the evidence. 65It follows, therefore, that I am satisfied that Dr Woods did not intend to deceive Mr Sutherland in creating, and/or structuring, the WSF in the way in which it was created and, subsequently, structured. I consider that his intention, and the intention of Mr Sutherland, as to the creation of, and purpose for, the WSF, related to their mutual benefit in the future, and that it was understood by each of them, that any direct financial benefit that Mr Sutherland received from the WSF, would occur after the end of his employment with Qantas, and when he ceased to be a member of the Qantas Superannuation Fund. 66At least from June 2001, Mr Sutherland and Dr Woods sought the assistance of accountants and lawyers, to guide them along the path that it was thought best to follow, in order to legitimately minimize income tax, CGT, or other fiscal liabilities of each and/or of Woodsland. 67I have little doubt that Dr Woods, generally, did what he was advised to do, in 2001, and thereafter, by the professionals retained to give advice, with the intention, at that time, that what was being done was for the mutual benefit of Mr Sutherland and himself. 68Mr Sutherland, perhaps to a lesser extent than did Dr Woods, also depended upon, and followed the advice that was given to him and them. It appears, that, at least in relation to the creation and structure of the WSF, they both did so blindly, and without any real understanding. 69In my view, Dr Woods, correctly, described the role that each played, vis--vis the professional advisers, as a "passive" one. In my view, that description was, for the most part, an apt one in describing his, and Mr Sutherland's dealings with those professional advisers. 70Although, in a number of his affidavits, Mr Sutherland denies having signed the Deed of Trust, and Dr Woods cannot say with certainty that any Deed of Trust was signed, I am of the view that it is more probable than not that each did sign the documents presented to them, including the original Trust Deed, forwarded to Ms Alexandrou in the Superannuation Trust Deed Register relating to the creation of the WSF. In this regard, it is to be noted that there is a space for each to sign "in their (sic) capacity as trustee" and an additional space for Dr Woods to sign "in their (sic) capacity as Initial Member". There is also, on the next page, a space for execution for and on behalf of Woodsland, "in its capacity as Principal Employer". 71Dr Woods accepted as a possibility that the minute of Woodsland to resolve to establish the superannuation fund was never signed because he overlooked signing it. He could not recall whether he had ever produced a signed resolution. It is accepted, however, that no signed resolution forms part of the evidence in the case. 72However, despite acceptance of this "possibility", I am satisfied that Mr Sutherland and Dr Woods each was prepared to, and did, sign documents that he was asked to sign by such professionals on occasions, with only a limited appreciation, or understanding, of the contents of the documents or their effect. In the case of Mr Sutherland, on occasions, he would sign documents, at the request of Dr Woods, who, in turn, had been requested to sign, and to have the documents signed. I am satisfied that neither had a clear understanding of the consequences which flowed from the creation and structure of the WSF, other than it would, legitimately, minimise the amount of tax that would otherwise have to be paid by Woodsland and that the moneys contributed would be held in the WSF. 73The conclusion regarding Mr Sutherland signing documents without fully understanding them is relevant also to an issue, to which I shall return, relating to what are said to be admissions made by him in his defence and in the cross-claim. 74Ms Alexandrou was the next witness to give evidence after the evidence of Mr Sutherland and Dr Woods was completed. Whilst she had no specific interest in the result of this case, I do not accept parts of her evidence. Those parts related to the membership of the WSF, to the terms of the Trust Deed, to the execution of the Trust Deed, and to the exclusion of Mr Sutherland, initially, as a member of the Fund. 75Whilst some of the evidence in her affidavit may have been given without the benefit of her contemporaneous records, which had been produced to the court following the service of a subpoena upon her firm, the evidence provided in her affidavit of 23 August 2010 was markedly inconsistent with what she said in her oral evidence and with the events that I find occurred. 76During cross-examination, the following questions and answers appear (at T 181): Q. [Dr Woods] says you said to the two of them that he was the only member of the fund? A. Yes. Q. And it is possible that when you referred to that, you used the term "non financial member" or possibly "non contributing member". Does that sound about right? A. Well, if Shane was the only member of the fund, then there was no other member. Q. I'm asking you, do you agree or disagree that you used those words? A. I disagree that I would have said, "Shane, you are the only member and oh well, by the way David, you might be a member, but you are non contributing". Q. Do you agree or disagree ... A. I disagree. Q. ... with what Dr Woods says there? A. I disagree. Q. He then goes on to say, "Only Shane can be a member of the fund, because you, David, are not an employee of Woodsland or Shane". Did you use those words? A. To the effect. Q. "You get your superannuation from Qantas, in due course you can both pool your funds and if David leaves Qantas and works for Shane or Woodsland either full time or part time, there will be no problems at all", is that right? A. More or less. Q. So you took the view that Mr Sutherland was disqualified from membership in the fund until he resigned from the Qantas fund? A. No, no. Mr Sutherland was not a member of the Woodsland super fund until such time as he was contributing, and he wasn't at that point, and what that refers to is that at any point in time he could roll over his superannuation interest from his Qantas super fund if he wished, or he can contribute to the Woodsland super fund if he wished. ... Q. Now, there was no impediment to Mr Sutherland becoming a member of the fund from its very inception, was there? A. That's correct. Q. And it simply would have been the case that if contributions were made by Woodsland for Dr Woods, but contributions were not made by Mr Woods or some other third party for him, then Dr Woods' entitlement would go up and Mr Sutherland's would remain constant? A. For "him" you mean Mr Sutherland? Q. Yes. A. That's correct. Q. And therefore, the evidence you gave earlier about contributions, can I suggest to you really has no bearing on whether Mr Sutherland is a member at the time of inception of the fund or not? A. Fair enough, yes. Q. And can I suggest to you that that could not explain the 11th hour decision of yourself and Mr Roberts to exclude Mr Sutherland from the fund as a member? A. It was not my decision. It was Mr Roberts and his people that made that decision based on the conversation that I had with him." 77Ms Alexandrou had stated, in her 23 August 2010 affidavit, that the Trust Deed for the WSF, prepared by Mr Roberts, did not accord with the instructions given to her. When asked, in what respects it did not accord with instructions, she said that her instructions had been that the WSF was to be a two trustee, two member, self-managed superannuation fund. The Trust Deed and supporting documents that were received by her was for a two trustees, one member, superannuation fund. 78Ms Alexandrou, in her affidavit of 23 August 2010, acknowledged that the Deed of Trust prepared did not accord with her instructions, and in overseeing its execution, she did not detect the error. This was inconsistent with an earlier affidavit in which she had said that she gave instructions to Mr Roberts that "The two men will be the trustees and Shane will be the sole member." 79Ms Alexandrou confirmed, when cross-examined, that there were no instructions given by either Mr Sutherland, or Dr Woods, in regard to the change in regard to membership; that she had not discussed such a change with Mr Sutherland and Dr Woods, prior to the receipt of the Trust Deed; but she said that she did so at, or about, the time of the execution of the relevant documents. If she did, she did not do so in any clear, or precise, way that would have led to an understanding of the significance of the alteration to the instructions. 80She gave the following evidence (at T 194-195) at the conclusion of the cross-examination by counsel for the Plaintiff: "Q. It seems from the evidence that you haven't heard of both Mr Sutherland and Dr Woods that the intention that each had in relation to the setting up of the Woodsland superannuation fund was as follows: Firstly, that it was to be a self managed superfund? A. Yes. Q. It was to be for the benefit of both of them? A. Yes. Q. Secondly, there were to be two trustees of the fund? A. Yes. Q. Namely, Mr Sutherland and Dr Woods. ... A. Yes. Q. There were to be two members of the fund, one being Dr Woods who would in effect have an immediate interest in the fund? A. Yes. Q. Because contributions had been, or would be, made to the fund on his behalf by Woodsland, his employer? A. Yes. Q. The other member, being Mr Sutherland, who would not have any immediate rights to have Woodsland contribute on his behalf? A. Right. Q. Or to receive any benefits from the fund until such time as his employment with Qantas Airways Limited ended? A. Right. Q. And he was able to be employed by Woodsland? A. Right. Q. So far does that accord with your understanding of what their instructions were? A. Yes. Q. Let me go on. As long as Mr Sutherland was employed by Qantas, his employer would continue to make superannuation contributions, on his behalf, into its superannuation fund? A. Yes. Q. There would be no contributions made by Woodsland or by anyone else on behalf of Mr Sutherland A. Yes. Q. to the Woodsland superannuation fund until such time as he was no longer a member of the Qantas superannuation fund? A. Right. Q. Or an employee of Qantas. Is that what your understanding was of what their instructions were? A. My understanding was broadly that. The specifics with regard to his employment and termination at Qantas wasn't really discussed but Q. He would only be able to become an employee of Woodsland when his full time occupation at Qantas finished? A. Not necessarily, he could have been a part time employee but, yes, broadly speaking. Q. When he was no longer employed by Qantas any amounts held on his behalf by its superannuation would be rolled over into the Woodsland superannuation fund? A. Certainly could be rolled over, yes. Q. When he was no longer employed by Qantas, Woodsland would make contributions if he were employed by Woodsland to the Woodsland superannuation fund? A. Yes. Q. And finally, that both of them would do what was required to enable the superannuation fund, the selfmanaged superannuation fund, to be created, is that right? A. Yes. Q. What is troubling me, Ms Alexandrou, is it possible that an error was made in terms of the form of the trust deed? A. That's possible, your Honour." 81At the conclusion of the questions and answers which I asked, and which are set out above, counsel for each party accepted that the evidence of both Mr Sutherland and of Dr Woods had been "fairly put" to Ms Alexandrou (T 195.30-195.36). 82Counsel for each party accepted that the evidence given by Ms Alexandrou, as to the terms of the superannuation fund, as a matter of superannuation law, was wrong. In particular, there was no dispute that contributions could have been made on behalf of Mr Sutherland to the WSF even though Woodsland did not employ him. Counsel agreed that Mr Sutherland fell within the definition of "employee" in the Trust Deed of the WSF and under the SIS Act. 83Ms Alexandrou's evidence was also inaccurate in her recollection of the date upon which the parties signed documents relating to the superannuation fund. I am satisfied that the relevant date was in early November 2001, and not in October 2001. 84The evidence, in Ms Alexandrou's affidavit of 17 May 2010, in which she identified the first page of the Trust Deed as containing the signature of Dr Woods, and that she recognised that signature is also wrong. 85However, Ms Alexandrou stated that she had a clear recollection of both Dr Woods and Mr Sutherland attending her office and signing all documents necessary to execute all relevant requirements to establish a superannuation fund (T180.20 - T180.25). Whilst some of her affidavit evidence could be criticized, her evidence accords with the evidence of Dr Woods, which I accept, that "We went there to do all things to create a superannuation fund". It would be remarkable if, having gone to her office to sign those documents, they left without actually doing so. 86Ms Alexandrou did not specifically address whether Dr Woods signed the resolution for Woodsland, which had been prepared for him to sign. However, she identified, in her affidavit, the Minutes of Meeting of Director of Woodsland, as one of the documents signed at the time of the parties signing the Trust Deed. 87I accept Ms Alexandrou's evidence that the documents provided by Mr Roberts were signed. It is not surprising that neither Mr Sutherland nor Dr Woods had a specific, or clear, recollection of having signed the documents that Mr Roberts provided to Ms Alexandrou. Firstly, the event occurred 9 years ago; secondly, there were a number of different documents, with the contents of which neither was likely to be familiar; the parties were unlikely to be paying specific attention to what documents were being signed; most importantly, the parties attended at Ms Alexandrou's office specifically to sign the documents. No other reason has been identified for attending in early November 2001. 88I must also give consideration to the events that occurred subsequently, including events involving the Australian Taxation Office and those involving Bell Partners to which I have earlier referred. 89Furthermore, it was not until some years later that Mr Sutherland expressed the view that the WSF had not been validly created. Until that time, the parties, their professional advisers, and the Australian Taxation Office, were all acting upon the basis that the WSF had been validly created. 90I do not accept, merely because a signed original, or a copy which includes a signature, of some of the documents, are not available, and because Mr Sutherland or Dr Woods did not have a specific recollection of actually signing the documents, that the documents had not been signed. 91I find that Mr Sutherland and Dr Woods each did sign such documents as he, or they, were required to sign, that had been prepared by, or on behalf of, their accountant. They did so in the belief that those documents were necessary to enable the WSF to come into being and to operate thereafter. 92I accept Ms Alexandrou's evidence that the executed original documents were given to Mr Sutherland and Dr Woods. The original signed documents not having been produced, I find that they have been lost. 93I also accept Ms Alexandrou's evidence explaining why two copies of the same tax return for Woodsland produced in evidence were different as to the address at which Dr Woods lived. That reason had to do with the computer software used by Ms Alexandrou's firm. 94Finally, there was the evidence of Mr Valentine. His evidence went to the issue of what are said to be the admissions by Mr Sutherland made in the 2007 proceedings. 95It seems to me, that his evidence, which I accept, was to the effect that the defence and the cross-claim were prepared in March 2008. It was only following a mediation, which occurred in May 2008, that his suspicions regarding the creation of the WSF were aroused. These suspicions did not become clear to the point of seeking to amend either the defence (which had already had been filed) or the cross-claim (which was filed some months later) until late 2008 or early 2009. 96I should mention that despite Mr Valentine's evidence that the cross-claim was prepared in, or about, November 2008, it is clear that it was prepared in March 2008 by counsel originally instructed in the matter. It follows that it was prepared at a time when there was no reason for Mr Sutherland, or his legal advisers, to consider that the WSF had not been validly created. 97I shall return to the issue about the statements referred to in the defence and cross-claim upon which the Defendant wishes to rely later.

Issues for Resolution 98Prior to the hearing, the parties provided a list of the issues, both factual and legal, that required resolution by the court. These issues were stated in the form of a series of questions formulated by the parties. They were: (a) Is the WSF valid and effective as an express trust (or alternatively, as a resulting or constructive trust)? (b) If the answer to (a) is 'yes', is the WSF a complying superannuation fund for the purposes of the Superannuation Industry (Supervision) Act , 1993 (Cth) ("the SIS Act")? (c) If the answer to (a) is 'yes' and the answer to (b) is 'no', does the WSF have the status of a non-complying superannuation fund for the purposes of the SIS Act? (d) If the answer to (a) is 'yes', and the answer to either (b) or (c) is 'yes', is Dr Woods liable to indemnify Mr Sutherland for all taxation liabilities and all liabilities for professional fees owed to Bell Partners, auditors of the WSF, by Dr Woods and Mr Sutherland as joint trustees of the WSF? (e) If the answer to (a) is 'no', and the answer to both (b) and (c) is 'no', is Dr Woods liable to indemnify Mr Sutherland for all taxation liabilities or all liabilities for professional fees owed to Bell Partners, auditors of the WSF, by Dr Woods and Mr Sutherland as joint trustees of the WSF? (f) If the answer to (a) is 'yes' and the answer to either (b) or (c) is 'yes', was the Patonga property, prior to its sale, an asset of the WSF, such that all profits arising from its sale are profits of the WSF? (g) If the answer to (a) is 'yes' and the answer to either (b) or (c) is 'yes', is the Bay Street, Botany property an asset of the WSF or is that property held by Dr Woods and Mr Sutherland beneficially as tenants in common? (h) Should the court process, reasons for judgment and the court's final orders in the 2010 proceeding be served on the various taxation authorities and the other third parties referred to in the statement of claim at the conclusion of the 2010 proceeding? (i) What, if any, consequential orders should be made in the 2010 proceeding concerning the further conduct of the 2007 proceeding, in light of the declarations and orders as are be made in the 2010 proceeding, irrespective of whether they be made under the Property Relationships Act , the Court's inherent jurisdiction or under the SIS Act? (j) If the answer to (a) is 'yes', and the answer to either (b) or (c) is 'yes', should Dr Woods, as the only remaining trustee of the WSF, be restrained from taking any steps to dispose of, encumber or deal with, in a manner which affects the value of, the property of the WSF pending final determination of the 2007 proceeding under the Property Relationships Act ? (k) Do the pleadings in the first defence filed by Mr Sutherland in the 2007 proceedings at paragraphs [10.15], [10.18] and [18], constitute admissions as to the existence and validity of the WSF? (l) If the answer to (j) is 'yes', can admissions made by a party in one proceeding (namely, the 2007 proceeding) act as a procedural estoppel in another proceeding (namely, the 2010 proceeding), and if so, do they so operate in the 2010 proceeding? (m) If the answer to (k) is 'yes', should Mr Sutherland have leave to withdraw those admissions to enable him to bring the 2010 proceedings, having regard to the evidence filed in support of his application for leave to withdraw the super fund admissions in the 2007 proceeding? (n) If the answer to (j) and (k) are 'yes', and the answer to (l) is 'no', do the super fund admissions constitute an issue estoppel against Mr Sutherland in the 2010 proceeding? (o) If the answer to (j) and (k) are 'yes', and the answer to (l) is 'no', and/or the answer to (l) is 'yes', do the 2010 proceedings constitute an abuse of process? 99By the end of the hearing, the issues were refined. I shall now deal with the issues identifying where there was refinement to the issue.

(a) Is the WSF valid and effective as an express trust (or alternatively, as a resulting or constructive trust)? 100One must start with the general propositions regarding trusts, succinctly stated by Kenneth Martin J, in Saunders v Deputy Commissioner of Taxation [2010] WASC 261 at [22], about which there cannot be much dispute: "[22] I have already referred to the three critical requirements for a valid creation of a trust: certainty of intention; certainty of subject matter; and certainty of object or beneficiary. The following further principles emerged as relevant.

1. The existence of a trust is to be determined with reference to a declaration of trust by the subjective intention of the settlor, although that intention may be inferred from objective circumstances: Commissioner of Stamp Duties (Qld) v Jolliffe [1920] HCA 45; (1920) 28 CLR 178; Starr v Starr [1935] SASR 263; and White v Shortall [2006] NSWSC 1379; (2006) 68 NSWLR 650, 673 [128]-[129] (Campbell J).
2. Because it is a subjective intention which is at issue, the parol evidence rule does not limit the evidence which may be taken into account in determining whether a trust was validly declared: Starr v Starr (266); Owens v Lofthouse [2007] FCA 1968 [62]-[72].
3. Subjective intention may be inferred from language employed in the written instrument: Re Australian Elizabethan Theatre Trust; Lord v Commonwealth Bank of Australia (1991) 30 FCR 491 at 503.
4. Subjective intent may also be inferred from the conduct of the parties as well as from the surrounding circumstances in a particular case: Cohen v Cohen (1929) 42 CLR 91.
5. Generally speaking, the legal onus of establishing that the intention to create a trust existed at the relevant time remains with the person asserting the existence of the trust: Re Armstrong (Dec) [1960] VR 202 at 206; Hyhonie Holdings Pty Ltd v Leroy [2004] NSWCA 72 [45]; Pascoe v Boensch [2008] FCAFC 147; (2008) 250 ALR 24 [21].
6. Where there is an unambiguous use of language in a written instrument establishing a trust, the evidentiary onus will shift to a contradicting party to show that a trust does not exist through the establishment, if possible, of a contrary intention: Stephens Travel Service International Pty Ltd (recs and mgrs apptd) v Qantas Airways Ltd (1988) 13 NSWLR 331 at 340-343.
7. The evidentiary onus falls upon the party seeking to show the contrary intention and strong evidence is required to do so: Re Steel; Public Trustee v A-G (SA) [1925] SASR 272.
8. The evidence as to a contrary intention may be circumstantial. All relevant circumstances may be examined to determine whether there actually was the intention to create a trust: Kauter v Hilton (1953) 90 CLR 86; Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd [2000] HCA 25; (2000) 202 CLR 588.
9. Subsequent events may be proved to negate a finding as to an intention to create a trust. Circumstantial evidence that will be admissible to be weighed in this process may include the circumstance where an ostensible declarant of a trust nevertheless continues to exercise personal dominion over the property the subject of the declaration of trust: Arthur v Public Trustee (1988) 90 FLR 203 at 209-210; Hyhonie Holdings Pty Ltd v Leroy [2003] NSWSC 624 [34]-[41] (result affirmed on appeal in Hyhonie Holdings Pty Ltd v Leroy [2004] NSWCA 72); Owens v Lofthouse .
10. Evaluations of subjective intention towards the establishment of a trust raise issues of fact which are to be determined by reference to the particular circumstances of each individual case.
11. The word "sham" is an expression carrying a well understood legal meaning: see Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471 [46], where it was observed that a sham "refers to steps which take the form of a legally effective transaction but which the parties intend should not have the apparent, or any, legal consequences" (referring to Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 18 FCR 449)." 101Mr C Bevan, with whom Mr M Heraghty appeared for the Plaintiff, submitted that the acceptance of any one of the following three contentions are sufficient to impeach the validity of the constitution of the WSF as a valid trust: "(1) The trust which the parties intended to constitute as the WSF was different as regards: (a) identity of beneficiaries; (b) nature of the trust purpose (i.e. trust obligations) to be assumed by the trustees, ("the different trust beneficiaries/purpose contention"). (2) The settlor of the trust, Woodsland, did not take the necessary steps as a sole shareholder/director company to constitute a valid trust in the trustees, Dr Wood and Mr Sutherland ("the defective trust settlement contention"). (3) No trust deed constituting an express trust was ever executed ("the unsigned trust deed contention")." 102The thrust of the submission was that if any of the three contentions are upheld no valid express trust came into existence to constitute the legal structure to operate as a superannuation fund. 103In relation to the first contention, it was submitted that the intention of the parties was different in that Mr Sutherland believed that he would receive an immediate financial interest in the fund. What the words "immediate financial interest in the fund" meant, was not fully elucidated, but it seems to be referable to contributions made by Woodsland to the WSF on his behalf, even though he remained employed by Qantas. I do not accept that this was established by either party's evidence. The evidence of both, in my view, was to the contrary. 104If those words were used by Ms Alexandrou, they meant no more than Mr Sutherland was to be a member of the WSF on whose behalf contributions would be made in the future at the time when he was no longer employed by Qantas and when his membership of the Qantas Superannuation Fund was rolled over into the WSF. 105Dr Woods was quite prepared for Mr Sutherland to be a member of the WSF when it was created. He did not intend that the WSF should be created for his sole benefit. Dr Woods, on a number of occasions throughout his evidence, repeated that he intended Mr Sutherland to be a member of the WSF in the future, but in my view, this meant no more than, he intended that, in the future, contributions would be made to the WSF by Woodsland on Mr Sutherland's behalf. 106Both Mr Sutherland and Dr Woods accepted that Woodsland would make no contributions for the benefit of Mr Sutherland, since he was not an employee of Woodsland, and that it was financially beneficial if his employer, Qantas, continued to make contributions, on behalf of Mr Sutherland, to the fund it controlled. This fact provides further support of the inclusion of Mr Sutherland in the decision making process. 107Submissions were put that Dr Woods did not state his purpose for constituting the fund, despite being given several opportunities in cross-examination to do so. Even if this were so, I believe that this had more to do with the lack of understanding by him of how the WSF would operate. Certainly, he understood, as did Mr Sutherland, that a consequence of the creation of the WSF and the contribution by Woodsland on behalf of Dr Woods, would be that Woodland's CGT liabilities, following the sale of the South Maroubra Medical Centre, was reduced. 108Dr Woods accepted that he did not specifically turn his mind to retirement benefits for himself and Mr Sutherland at the time the WSF was created. However, it seemed to me that his evidence had more to do with his lack of understanding about superannuation funds than with the purpose for which the WSF was created. (Of course, as stated earlier, he and Mr Sutherland, as trustees of the WSF, had signed the document sent to the Australian Taxation Office on 15 January 2002.) 109In relation to the first contention, whilst Mr Sutherland may have understood, and intended, that upon the creation of the WSF, he would receive an immediate "financial interest" in it, I do not find that the financial interest was to be by way of immediate contributions made, by Woodsland, for his benefit, in lieu of wages, for the part time work that he did in the medical practice, notwithstanding that he continued to work full-time for Qantas. To the contrary, in my view, Mr Sutherland understood, and intended, as did Dr Woods, that Woodsland would not make any contributions for him until he retired from full-time work with Qantas. 110I also do not find that the WSF was intended by Mr Sutherland and Dr Woods to be a fund for the benefit of any people working for Woodsland. Rather, it was abundantly clear, from all of the discussions in, and around, October 2001, that the contribution Woodsland was to, and did, subsequently, make, was intended to be one for the benefit of Dr Woods alone. 111I have earlier found that the parties intended that the WSF would enure for the benefit of both Mr Sutherland and Dr Woods, and, ultimately, it would provide retirement benefits for them both. This was to be achieved by the initial contribution of $410,000, by Woodsland, to the WSF, and then, when Mr Sutherland was no longer employed by Qantas, by the roll-over of his contributions to the Qantas Superannuation Fund into the WSF, as well as by contributions, if any, made on his behalf, by Woodsland, when he became an employee of Woodsland. The parties did not have "no consensus" as to the nature of the trust that they were to administer. In my view, the understanding of each was precisely the same. I am satisfied that the instructions given to Ms Alexandrou were consistent and were the same for both. 112Relevantly, the object of the SIS Act, as stated in s 3(1), is to make provision for the prudent management of certain superannuation funds. For a superannuation fund (including a self managed superannuation fund) to be eligible for concessional income tax treatment, the fund must be a complying superannuation fund. A fund is a complying fund if it has received notice from the Commissioner of Taxation, under the SIS Act, stating that it is a complying superannuation fund. A fund continues to be a complying superannuation fund until it is notified that its status has changed. 113Counsel for Mr Sutherland submitted that the WSF had contravened ss 62(1) of the SIS Act, which sub-section requires each trustee of a self managed superannuation fund to ensure that the fund is maintained solely for the purposes specified in that subsection. 114Section 62(1) provides that the trustee of a fund must ensure that the fund is maintained for one, or more, of the core purposes, or the ancillary purposes, set out in paragraphs (a) and (b) of that sub-section. The section prohibits the trustee from maintaining a self-managed superannuation fund for purposes other than for the provision of benefits specified in s 62(1). The core purposes specified in that subsection, essentially, relate to providing retirement, or death, benefits for, or in relation to, the fund's members: (s 62(1)(a)). The fund can also be maintained for one, or more, of these purposes, and other specified ancillary purposes, which relate to the provision of benefits on the cessation of a member's employment and other death benefits and approved benefits not specified under the core purposes (s 62(1)(b)). Importantly, the direction in s 62(1) is not as to how a payment from the fund may, or may not, be made, but rather as to the only purposes for which the fund is to be maintained. 115The section ensures that the paramount consideration of superannuation investment is retirement income. In that regard, the "sole purpose test", set out in s 62 of the Act, provides that a fund must operate for the sole purpose of providing benefits for members at retirement. The text of s 62(1) provides no definition of "member". 116In this case, it is submitted that the purpose of creating the WSF (as opposed to "maintaining" it) was the concessional tax deduction that would be available to Woodsland. One's "purpose" is the object that one has in view or in mind. Generally, one will be said to intend the natural and probable consequences of one's acts and one's purpose may be inferred from his, or her, acts. This is a determination of a person's objective purpose, not their subjective intention: Raymor Contractors Pty Ltd v Federal Commissioner of Taxation (1991) 91 ATC 4259, at 4270; (1991) 21 ATR 1410 at 1423. 117This purpose would have been achieved by Woodsland's contribution to the WSF, the benefits of which, in the WSF, would be for Dr Woods. Mr Sutherland was to obtain a benefit from the WSF when he contributed to the capital of the WSF, by rolling over the superannuation benefit from another superannuation fund, namely the Qantas Superannuation Fund, to the WSF. By holding that intention at the time the WSF was created, albeit that it was to be a contribution in the future, by transfer of his benefits from the Qantas Superannuation Fund to the WSF, I am satisfied that the sole purpose of each of Dr Woods and Mr Sutherland was to obtain superannuation benefits from the WSF for him at that time. 118Both Mr Sutherland and Dr Woods understood, and intended, that a consequence of making the contribution would be that Woodsland obtained fiscal relief as an employer of Dr Woods. However, this does not give rise to a breach of the sole purpose test. 119I am fortified in this conclusion by the words of Hill J in Walstern Pty Ltd v Federal Commissioner of Taxation [2003] FCA 1428 at [65]; (2003) 138 FCR 1, albeit that they were written in another context (the phrase considered was 'for the purpose of making provision for superannuation benefits for an eligible employee' under former section 82AAE of the Income Tax Assessment Act , 1936 (Cth)): "While I do not think it makes any difference in the present case either, I am inclined to the view that 'the purpose'' as used in section 82AAE refers to sole rather than dominant or principal purpose. This is the view that was accepted also by Pincus J in Federal Commissioner of Taxation v Roche & Ors [1991] FCA 606; 91 ATC 5024 at 5030; [1991] FCA 606; (1991) 105 ALR 95 at 103. However, I do not think that a deduction would be lost if the directors of a taxpayer/employer took into account in making a contribution, but incidentally, the taxation benefits which the Act makes available where a contribution is made to a fund. The answer may well lie in the fact that the taxation deduction will not, in such a case, be an object of the contribution; rather it will be a consequence of the contribution." 120The context of the issue for determination in that case was whether the availability of tax deductions was the object of a superannuation contribution, or was merely incidental to the purpose of making provision for superannuation benefits. 121Even if Mr Sutherland was not a member at the time of signing the Trust Deed, this was an error on the part of the professional advisers. It was not what the parties, themselves, intended. In any event, the error was rectified. He became a member of the WSF in June 2003. 122I have earlier found that Mr Sutherland and Dr Woods were both to be trustees of the WSF. 123In the light of my factual findings, I do not accept the first contention made on behalf of Mr Sutherland. In my view, the parties did not have different intentions regarding the WSF. 124The second contention ("the defective trust settlement contention") is that Woodsland did not take the necessary steps, as a sole shareholder/director company, to constitute a valid trust. It was submitted that Woodsland did not resolve to constitute a trust at all because no resolution, within the meaning of s 248B of the Corporations Act 2001 (Cth), to establish a superannuation fund was ever made. It was also submitted that without any such resolution, there was no express trust and no valid superannuation fund brought into existence. 125The basis for such a submission is that there is no evidence of any resolution having been passed by Woodsland. An uncompleted resolution was one of the documents provided by Mr Roberts to Ms Alexandrou for signature by Dr Woods. 126Ms Alexandrou believes that all of the documents to enable the creation of the WSF were signed. I have come to the conclusion that her belief accords with what, on the balance of probabilities, did occur, and that the original documents containing the signatures have been lost. 127Should there be any gap in the evidence as to the documents that were signed (and I do not conclude that there is any such gap), that gap may be filled by resort to the presumption of regularity, omnia praesumuntur rite esse acta . The relevant principle was stated by Lindley LJ in Harris v Knight (1890) 15 PD 170 at pp179-180: "The maxim, 'Omnia praesumuntur rite esse acta,' is an expression, in a short form, of a reasonable probability, and of the propriety in point of law of acting on such probability. The maxim expresses an inference which may reasonably be drawn when an intention to do some formal act is established; when the evidence is consistent with that intention having been carried in effect in a proper way; but when the actual observance of all due formalities can only be inferred as a matter of probability. The maxim is not wanted where such observance is proved, nor has it any place where such observance is disproved. The maxim only comes into operation where there is no proof one way or the other; but where it is more probable that what was intended to be done was done as it ought to have been done to render it valid; rather than that it was done in some other manner which would defeat the intention proved to exist, and would render what is proved to have been done of no effect." 128To the extent that there is any gap in the evidence, the rule described by Lindley LJ applies. In those circumstances, I would infer, as a matter of probability, that Mr Sutherland and/or Dr Woods signed each of the documents necessary to give efficacy to their actions. 129I am, therefore, satisfied, that s 249B of the Corporations Act upon which the Plaintiff placed reliance has been satisfied, even though a copy of the signed resolution is no longer available. 130Section 249B provides: "(1) A company that has only 1 member may pass a resolution by the member recording it and signing the record. (2) If this Act requires information or a document relating to the resolution to be lodged with ASIC, that requirement is satisfied by lodging the information or document with the resolution that is passed. Note 1: A body corporate representative may sign such a resolution (see section 250D). Note 2: Passage of a resolution under this section must be recorded in the company's minute books (see section 251A)." 131It is clear that the section requires a resolution; which the sole director or shareholder records; and the record of which the sole director or shareholders signs. Under both sections, "the resolution" itself must be documented. 132The sections were considered by the Court of Appeal in Sheahan v Londish [2010] NSWCA 270. Hodgson JA, Young JA and Lindgren AJA constituted the Court of Appeal . Two of the issues to be determined were the ambit of the operation of s 249B of the Corporations Act and whether the invalidity of the administrator's appointment was by reason of "contravention of the Act" and whether the Court should make an order under s 1322 confirming validity. The Court of Appeal was not required to deal with the issue of a resolution that had been signed but which resolution had been lost subsequently. 133In relation to s 249B, Hodgson JA (at [23]) was of the opinion that satisfaction of s 249B required (1) a resolution; (2) which the sole shareholder records; and (3) the record of which the sole shareholder signs. His Honour added (at [24]) that there may be a fourth requirement, namely that the process must manifest an intention that there be something taking effect as a resolution passed by the company. 134Young JA (at [97]) agreed that the three requirements were necessary. He said that where there is a one-member company, the desire or intention, even if the evidence discloses that it is the final and irrevocable intention of the member, is not the equivalent of a resolution of the company without the recording of that intention. 135Lindgren AJA said (at [209]) that the "the resolution" itself must be documented. He went on, at [214] to note that s 249B performed an important function by insisting on a distinction between the sole member of a company (who may, of course, be a natural person as distinct from a holding company) deciding upon a course of action, and a resolution of the company that is recorded by the sole member, which record is signed by that member. 136All three members of the Court of Appeal favoured allowing the appeal. Hodgson JA would have done so on the ground that each of the two notices was effective as a resolution under s 249B of the Corporations Act . It was not necessary for his Honour to decide other issues. His Honour would have granted leave to appeal, allowed the appeal and set aside the orders below. Young JA and Lindgren AJA, like the primary judge, considered that the notices did not satisfy the description in s 249B of the Corporations Act . Unlike the primary judge, however, Young JA and Lindgren AJA considered that the case fell within s 1322(4)(a) of the Act and that an order should be made under that provision. Hodgson JA expressed the tentative view that he would also have been of that opinion if he had not thought that the notices satisfied s 249B. (This summary has been taken from Sheahan v Londish at [2]-[3]). 137In the present case, what is missing from the documentary mosaic of evidence is the original signed resolution or a copy of it. Otherwise, it is clear that Dr Woods intended to sign the resolution, being one of the documents that he ought to have signed. This is a case where the person (Dr Woods) making up the company (Woodsland) had, following advice from professional advisers, obviously decided upon a course of action for Woodsland, namely the creation of the WSF, and that the formal step of framing, and recording, that decision in the form of a resolution occurred. 138In relation to the third contention, I am satisfied that the WSF Trust Deed was signed. I am, therefore, satisfied that the WSF commenced and came into operation on or about 5 November 2001. 139I am of the view that the evidence, overall, leads to the conclusion that the parties intended to create a valid and effective trust and that they did so. I am persuaded that the events, taken alone, or in aggregate, lead to the view that the answer to the first question should be "yes". 140Although it had been submitted in writing, that the WSF was a sham, at the conclusion of the submissions, counsel for Mr Sutherland specifically disclaimed reliance on that written submission. It is, therefore, unnecessary, for me to consider this aspect.

(b) If the answer to (a) is 'yes', is the WSF a complying superannuation fund for the purposes of the Supervision Industry (Supervision) Act , 1993 (Cth) ("the SIS Act")? 141There is no dispute that the WSF is not a complying fund for the purposes of the SIS Act. It will be for the Commissioner of Taxation, in due course, to consider such application as is made to remedy the non-compliance. No doubt, the Commissioner has a range of options available under the SIS Act to deal with a contravention by the trustees of a self-managed superannuation fund and may use any one or more of the options to deal with a contravention. 142In this regard, I note that there have been a number of letters written by the Australian Taxation Office, headed "Woodsland Superannuation Fund - request for rectification plan" which letters identify contraventions of the SIS Act, and request the recipient "to provide a plan to rectify the contraventions". Thus, the possibility exists for the implementation of such a plan, satisfactory to the Commissioner of Taxation, which would rectify the contraventions. 143It is unnecessary to detail, other than as set out above, the ways in which the WSF is non-complying. The answer to the question posed in (b) is "No".

(c) If the answer to (a) is 'yes' and the answer to (b) is 'no', does the WSF have the status of a non-complying superannuation fund for the purposes of the SIS Act? 144There is no dispute that the WSF is a non-complying superannuation fund for the purposes of the SIS Act. The parties agree that the answer to (c) is "Yes".

(d) If the answer to (a) is 'yes', and the answer to either (b) or (c) is 'yes', is Dr Woods liable to indemnify Mr Sutherland for all taxation liabilities and all liabilities for professional fees owed to Bell Partners, auditors of the WSF, by Dr Woods and Mr Sutherland as joint trustees of the WSF? 145In view of the conclusions to which I have come, the answer to this question is no. Both Dr Woods and Mr Sutherland are, and at all times, were intended to be, trustees of the WSF. The steps taken by them were taken after discussion between them and in the belief that what was being done was for their mutual benefit. 146I have rejected the submission that Dr Woods acted unilaterally and for his own benefit. The parties, as trustees, will be liable for the taxation liabilities and all liabilities for professional fees, if any, owed to Bell Partners, on behalf of the WSF. Such liabilities will be payable out of the surplus proceeds of sale, if any, of the Bay Street, Botany property to which the WSF is entitled, and in this regard, Mr Sutherland and Dr Woods will obtain an indemnity from the WSF.

(e) If the answer to (a) is 'no', and the answer to both (b) and (c) is 'no', is Dr Woods liable to indemnify Mr Sutherland for all taxation liabilities or all liabilities for professional fees owed to Bell Partners, auditors of the WSF, by Dr Woods and Mr Sutherland as joint trustees of the WSF? 147The parties agree that it is unnecessary to answer this question in the light of the answers to the other questions referred to.

(f) If the answer to (a) is 'yes' and the answer to either (b) or (c) is 'yes', was the Patonga property, prior to its sale, an asset of the WSF, such that all profits arising from its sale are profits of the WSF? 148There is really no dispute that the parties intended that the Patonga property was to be the first asset of the WSF prior to its sale. The parties agree that if there was a trust, then the Patonga property was held on trust for the WSF. 149There is also no dispute that the purchase price was paid out of funds held by Mr Sutherland and Dr Woods, as trustees, for the WSF. 150It follows, therefore, that Mr Sutherland and Dr Woods, as trustees, should have received, and held, the net profits arising from the sale of the Patonga property, on behalf of the WSF.

(g) If the answer to (a) is 'yes' and the answer to either (b) or (c) is 'yes', is the Bay Street, Botany property an asset of the WSF or is that property held by Dr Woods and Mr Sutherland beneficially as tenants in common? 151Again, the evidence is clear on this aspect. There is no dispute that the Bay Street, Botany property should be held as to 52 per cent by Mr Sutherland and Dr Woods, as joint tenants as trustees of the WSF, for the WSF; and as tenants in common as to 22.5 per cent for Mr Sutherland legally and beneficially; and as to 25.5 per cent for Dr Woods legally and beneficially. 152The parties agree that the Bay Street, Botany property must be sold, so that orders should reflect this agreement.

(h) Should the court process, reasons for judgment and the court's final orders in the 2010 proceeding be served on the various taxation authorities and the other third parties referred to in the statement of claim at the conclusion of the 2010 proceeding? 153I have been requested to defer answering this question.

(i) What, if any, consequential orders should be made in the 2010 proceeding concerning the further conduct of the 2007 proceeding, in light of the declarations and orders as are be made in the 2010 proceeding, irrespective of whether they be made under the Property Relationships Act , the Court's inherent jurisdiction or under the SIS Act? 154I have been requested to defer answering this question. I propose to adjourn the proceedings to enable the parties to consider the reasons for Judgment and bring in appropriate orders that reflect the reasons. 155I shall then make any directions that are reasonably necessary to enable the 2007 proceedings to continue expeditiously, although, the parties may have to conclude discussions with the Australian Taxation Office and other third parties before making the decision whether it will be necessary to continue those proceedings. 156One would hope that the parties, having spent over 5 days in Court in these proceedings, might be able to resolve the balance of their differences.

(j) If the answer to (a) is 'yes', and the answer to either (b) or (c) is 'yes', should Dr Woods, as the only remaining trustee of the WSF, be restrained from taking any steps to dispose of, encumber or deal with, in a manner which affects the value of, the property of the WSF pending final determination of the 2007 proceeding under the Property Relationships Act ? 157The parties agree that the Bay Street, Botany property must be sold and also that the Callala Bay property be sold. The Short Minutes of Orders prepared by the parties should reflect this agreement and, if possible, how the balance of the proceeds of sale, if any, of both properties are to be held, pending the conclusion of the 2007 proceedings. 158I understand that the parties do not require me to determine the issue, as relevant undertakings are likely to be given by each of them.

(k) Do the pleadings in the first defence filed by Mr Sutherland in the 2007 proceedings at paragraphs [10.15], [10.18] and [18], constitute admissions as to the existence and validity of the WSF? 159Relevant definitions in the Dictionary to the Evidence Act 1995 are as follows: " 'admission' means a previous representation that is: (a) made by a person who is or becomes a party to a proceeding (including a defendant in a criminal proceeding), and (b) adverse to the person's interest in the outcome of the proceeding. 'previous representation' means a representation made otherwise than in the course of giving evidence in the proceeding in which evidence of the representation is sought to be adduced.' 'representation' includes: (a) an express or implied representation (whether oral or in writing) ..." 160A defendant may admit facts pleaded in the statement of claim by an express plea or by a failure to traverse. Where the defendant admits facts in either of those ways, they cease to be in issue in the proceedings and need not be proved at the trial. A traverse may be made by denial, or by a statement of non-admission, either expressly or by necessary implication, and either generally or as to any particular allegation (UCPR r 14.26). 161An admission made under this Part in connection with any proceedings: (a) may not be used in those proceedings except in favour of the party in whose favour it was made; and (b) is taken to have been made for the purposes of those proceedings only. 162As Campbell JA pointed out in The Nominal Defendant v Gabriel [2007] NSWCA 52; (2007) 71 NSWLR 150 at [110] - [111]. "[110] As it is the pleadings that define the issues for trial, if an admission is made in a defence, there is no issue at the trial about the truth of the fact admitted, and therefore no evidence may be led, or submission made, for the purpose of controverting that admitted fact. Similarly, an assumption that underlies the requirement for leave to withdraw a formal admission made in court proceedings by one of the means prescribed by the Rules, other than admission on the pleadings, is that, unless and until leave to withdraw that admission is given, the matter that is admitted cannot be controverted by other evidence in the case. However, pursuant to UCP Rule 17.6, such an admission operates only in favour of the party in whose favour it was made, and is taken to have been made for the purpose of those particular proceedings only. [111] It is only because admissions made by a formal step in proceedings, of the various types I have just mentioned, prevent there being any issue in the proceedings about the correctness of the matter admitted that any question arises about such admissions being "withdrawn". Granting leave for such an admission to be withdrawn is, in effect, granting permission for an issue to be raised in litigation about the correctness of the matter that had been admitted." 163Of course, what are said to be admissions, have not been made in the present proceedings, but in the 2007 proceedings. Accordingly, the short answer to the question is that, even if they do constitute admissions, the admissions have not been made in the present proceedings and would be taken to have been made for the purposes of the 2007 proceedings only. 164However, since some time was spent on this issue, I shall deal with it in a little more detail. 165In Laws v Australian Broadcasting Tribunal [1990] HCA 31; (1990) 170 CLR 70 Mason CJ and Brennan J said: "A defendant is entitled to put a plaintiff to proof of his or her cause of action and to raise alternative matters of defence which may possibly answer the plaintiff's claim, without asserting in an absolute sense the truth or correctness of the particular matters pleaded. Accordingly, we do not regard the defences filed by the Tribunal as constituting admissions on the part of the Tribunal ...(86)." 166In my view, by his non-admission, Mr Sutherland put Dr Woods to proof of the contents of Para 10.15.6(a) of the Statement of Claim in the 2007 proceedings. That does not constitute an admission. In the pleadings, he put Dr Woods to proof on the matters in that Paragraph, as he was entitled to do. Accordingly, the evidence and validity of the WSF was a matter that remained in dispute between the parties. 167Turning then to the assertion made in Para 10.18.1, Mr Sutherland did not refer specifically to this Paragraph. Therefore, there was an admission by him of the contents of Para 10.18.1 since it was not traversed. He otherwise put Dr Woods to proof on the matters in that Paragraph, as he was entitled to do. In view of my findings, it is unnecessary to deal further with this admission. There is no dispute that 52 per cent of the Bay Street, Botany property was paid for using the contribution made to the WSF by Woodsland. 168In relation to the Cross-Claim, what is asserted does not constitute an admission. Even if Dr Woods admitted what was asserted, that constituted an admission made by him, not one made by Mr Sutherland. It was only an assertion made by Mr Sutherland. 169In the circumstances, the answer to this question is that they do not. 170No procedural or issue estoppel arises. Ultimately, counsel for Dr Woods accepted this was so.

(l) If the answer to (j) is 'yes', can admissions made by a party in one proceeding (namely, the 2007 proceeding) act as a procedural estoppel in another proceeding (namely, the 2010 proceeding), and if so, do they so operate in the 2010 proceeding? 171For reasons expressed above, I do not need to answer this question further.

(m) If the answer to (k) is 'yes', should Mr Sutherland have leave to withdraw those admissions to enable him to bring the 2010 proceedings, having regard to the evidence filed in support of his application for leave to withdraw the super fund admissions in the 2007 proceeding? 172Had I found any of the alleged admissions, to be admissions, I would have granted leave to Mr Sutherland to withdraw them. "The over-riding consideration in any curial proceedings must always be that the court should, as far as possible, ascertain the true facts and base its judgment on them" per Rogers J in Coopers Brewery Ltd v Panfida Foods Ltd (1992) 26 NSWLR 738 at 742.

(n) If the answer to (j) and (k) are 'yes', and the answer to (l) is 'no', do the super fund admissions constitute an issue estoppel against Mr Sutherland in the 2010 proceeding? 173The parties accepted that this was not an issue in the proceedings because it was accepted that making an admission could not constitute an issue estoppel.

(o) If the answer to (j) and (k) are 'yes', and the answer to (l) is 'no', and/or the answer to (l) is 'yes', do the 2010 proceedings constitute an abuse of process? 174The parties agree that this is no longer an issue in the proceedings. 175I shall stand the matter over for short minutes. At that time, I shall hear argument on costs, although, I should say that neither party has had success on all matters and each did not succeed on a number of issues advanced on his behalf.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 03 February 2011