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[2026] NSWSC 280
General information, not legal advice.
Supreme Court of NSW
2026-03-27
Hmelnitsky J
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Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Three Corner Group Pty Ltd v La Rocca [2026] NSWSC 280
Hearing dates: 2, 3 and 4 March 2026
Date of orders: 27 March 2026
Decision date: 27 March 2026
Jurisdiction: Equity
Before: Hmelnitsky J
Decision: (1) The proceedings are dismissed.
(2) The plaintiff is to pay the defendants’ costs as agreed or assessed.
Catchwords: AGENCY — Duties of agent to principal — Fiduciary duties — Breach of — Where plaintiff company operates a vineyard — Where sole director (Director) of plaintiff is associated with a winery business — Where second defendant is a debt broker — Where Director caused plaintiff to take out a loan with the assistance of second defendant — Where first advance of loan monies was disbursed partly to Director and surplus funds were disbursed to first defendant — Where second defendant says that surplus funds were disbursed to first defendant in order to fund an investment in cryptocurrency — Where Director says that he was totally unaware that surplus funds were being disbursed to first defendant — Whether second defendant was an agent for plaintiff in the loan transaction — Whether second defendant owed fiduciary duties to the plaintiff — Whether second defendant breached fiduciary duties as agent by failing to inform Director about surplus funds being paid to first defendant
RESTITUTION — Mistake — Restitution of money paid — Whether plaintiff has a claim in money had and received to the use of the plaintiff in respect of the payment of surplus funds to the first defendant —Whether payment of surplus funds was made by mistake as to who the funds were being paid to
Legislation Cited: Nil
Cases Cited: Blackmagic Design Pty Ltd v Overliese (2011) 191 FCR 1; [2011] FCAFC 24
Bonette v Woolworths Ltd (1937) 37 SR (NSW) 142
Breen v Williams (1996) 186 CLR 71; [1996] HCA 57
Chan v Zacharia (1984) 154 CLR 178; [1984] HCA 36
Coshott Family Pty Ltd v Lyons (2022) 110 NSWLR 44; [2022] NSWCA 216
David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353; [1992] HCA 48
Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; [2012] FCAFC 6
Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41; [1984] HCA 64
Maguire v Makaronis (1997) 188 CLR 449; [1997] HCA 23
Scott v Davis (2000) 204 CLR 333; [2000] HCA 52
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52
Xiao v BCEG International Australia Pty Ltd (2023) 111 NSWLR 132; [2023] NSWCA 48
Texts Cited: Nil
Category: Principal judgment
Parties: Three Corner Group Pty Ltd (Plaintiff)
Mariacarmina La Rocca (First Defendant)
Matthew Eid (Second Defendant)
Representation: Counsel:
N Kirby / N Hirst (Plaintiff)
Solicitors:
Benjamin J Horne Lawyer (Plaintiff)
File Number(s): 2024/00151318
Publication restriction: Nil
By early 2023, Warburn Estate was experiencing financial difficulties. It was struggling to generate sufficient revenue to pay its creditors. Of these creditors, Mr Sergi was most keenly concerned about the position of growers, who tended to be local families. He was anxious to find a way of paying them. By March 2023, the total debt to growers was approximately $5 million.
At the suggestion of Mr Jason La Rocca – whom Mr Sergi had known for many years and whom he knew to be a person of bad repute – Mr Sergi approached the second defendant, Mr Matthew Eid, in the hope that he may be able to broker some additional finance for the winery business. Mr Eid is the principal of Bricklane Advisers Pty Ltd (Bricklane), a finance broker based in Sydney. Mr Sergi had not previously met Mr Eid.
Mr Eid was able to assist, although he says he was unable to secure funding for Warburn Estate at this time. The difficulty was said to be that the main Warburn Estate winery properties had been owned by Mr Sergi’s late father, Mr Antonio (‘Tony’) Sergi, whose estate was not yet fully administered, and so the company was unable to offer those properties as security. Mr Eid was however able to secure funding for a different company associated with Mr Sergi, namely the plaintiff. As security, the lender sought personal guarantees from Mr Sergi and his wife, Mrs Mary Sergi, supported by a mortgage over a block of land known as the Three Corner Block, which was co-owned by them.
On 1 March 2023, the plaintiff executed a Deed of Secured Loan (the Deed) with S.A. & R.T. Tesoriero Pty Ltd as trustee of the Tesoriero Family Trust (Tesoriero), as lender. I will refer to the loan as the Tesoriero loan. Mr and Mrs Sergi executed the Deed as guarantors. Under the Deed, the lender agreed to lend the sum of $7,200,000 for a period of six months. Interest was 3% per month, with a default rate of 6% per month. To support their guarantees, Mr and Mrs Sergi granted a mortgage over the Three Corner Block.
The present dispute particularly concerns what happened next. The loan was advanced in tranches, which I will describe in more detail below. What matters for the moment is that on 7 March 2023, there was an advance in the total amount of $2,500,000 which was paid as follows:
$1,500,000 was paid directly to Mr Sergi.
$61,600 was paid to Bricklane.
Sums totalling $23,492 were paid to the lawyers acting for the parties and for some de minimis filing and registration fees.
$914,908 was paid into a Westpac account in the name of Mr La Rocca’s mother, Mrs Mariacarmina La Rocca, who is the first defendant.
The plaintiff’s basic case is that it did not authorise or direct the payment to Mrs La Rocca. Mr Sergi says that Mr Eid, who was the plaintiff’s agent, wrongfully directed the lender to pay the sum of $914,908 to Mrs La Rocca and that he took steps to conceal this misdirection. Mr Sergi denies that he was aware of the payment to Mrs La Rocca at the time it was made. He specifically denies that he intended the payment to Mrs La Rocca to fund an ‘investment’ by him (which, as I will explain, is what Mr Eid says happened) in a shady cryptocurrency venture known as Carbon Dollar X, or CDX, which was being promoted by Mr La Rocca and his associate, Mr Alex Glenn.
The plaintiff’s claims against Mr Eid involve two stages. It first alleges that Mr Eid was its agent in relation to the payment of money advanced under the Deed on 7 March. The plaintiff alleges that the agency was implied from the following three matters:
Mr Eid negotiated the Deed on behalf of the plaintiff.
Mr Eid directed Tesoriero to make payment of the borrowed funds.
Mr Eid directed Tesoriero as to the accounts into which the borrowed funds were to be paid.
The plaintiff next alleges that, as an agent and therefore as a fiduciary, Mr Eid misused his position in the following way:
“In directing or otherwise causing [Tesoriero] to make payment of the [borrowed funds] to Mrs La Rocca …, Mr Eid breached his fiduciary duties to the plaintiff in that he misused his position as the plaintiff’s agent to misappropriate money in which the plaintiff had an interest.”
The plaintiff brings two alternative claims against Mrs La Rocca. The first is on the basis of money had and received to the use of the plaintiff. The pleading merely alleges that the funds paid into her account on 7 March 2023 were funds ‘in which the plaintiff was interested’ and that she has not repaid them on demand. It alleges that she ‘cannot in good conscience retain the [funds] by reason that the [funds were] paid to her without consideration …’. In written submissions, the plaintiff argued that the payment to Mrs La Rocca was made by mistake, namely that he did not authorise any payment to her. The only argument developed in submissions related to the consequences of this alleged mistake.
In the alternative, the plaintiff seeks relief against Mrs La Rocca on the basis that she received the funds ‘with knowledge that [they were] procured by Mr Eid’s breach of duty to the plaintiff’. Her knowledge of this matter was alleged to be based on the fact that she provided no consideration for the funds and had no other entitlement to them.
There is real dispute about some of the key background facts. Some areas of dispute can only sensibly be resolved after a consideration of the evidence as a whole and after determining whether the witnesses’ respective accounts cohere with the contemporaneous documents and with the overall logic of events. I will therefore describe the facts chronologically insofar as they are uncontroversial but, at the same time, I will identify the matters about which there is dispute and explain the parties’ differing positions. I will then return to the question of who to believe about these matters in a later part of these reasons.
The plaintiff was incorporated on 15 January 2002. Mr Sergi has at all times been its sole shareholder and director. The plaintiff operated a vineyard with the aim of growing and selling grapes for profit.
Mr Sergi was also the sole director and secretary of Warburn Estate. The shareholders of that company included Mr Sergi and some other family members. Warburn Estate had been incorporated in 1979 by Mr Sergi’s late father. It operated a wine making and bottling business from Tharbogang, a village just west of Griffith in the Riverina region of New South Wales. Mr Tony Sergi died in 2017 but control of Warburn Estate had passed to Mr Joe Sergi by 2010.
During the period in which Warburn Estate was managed by Mr Joe Sergi, he was assisted by an executive team which usually consisted of a chief executive officer, a national sales manager, a commercial manager, a chief winemaker, an operations manager, a chief financial officer and a firm of external accountants.
One matter that significantly contributed to Warburn Estate’s financial difficulties from late 2017 through to January 2024, when it ceased trading, concerned a nationwide recall of 12 of its products due to consumer complaints about glass damage to the lips of wine bottles. One of the major customers for these products had been Endeavour Group Limited, a company related to the Woolworths supermarket business. Endeavour Group Limited claimed compensation totalling over $8,500,000. Of this amount, it recovered $4,281,399.87 from Warburn Estate by applying credits to invoices for the supply of wine, which diminished the cashflow of Warburn Estate considerably. A dispute between Warburn Estate and the manufacturer of the bottles is apparently ongoing.
In late 2022 and early 2023, the business of Warburn Estate was also adversely affected by a loss of senior management. Many of the executive team left; at least one involuntarily. Mr Sergi hired Mr Graeme Lyons, the company’s principal external accountant, as an interim Chief Financial Officer and Chief Executive Officer, in about March 2023. There is no doubt that early 2023 was a particularly difficult time for the plaintiff and Mr Sergi.
In January 2023, Mr Sergi had a coffee with Mr La Rocca, whom he had known for about 30 years. Mr La Rocca suggested that his friend ‘Matt’ (Mr Eid) might be able to assist Mr Sergi and Warburn Estate with the company’s financial difficulties.
Mr Eid was the principal of Bricklane. He has a Bachelor of Business Property from the University of Western Sydney. He also has a Certificate in Applied Finance from Kaplan Professionals and a Diploma of Finance and Mortgage Broking in Management from AAMC Training Group. His business involves providing ‘property finance debt brokerage services’.
Mr Eid and Mr Sergi spoke for the first time on around 14 February 2023. There is a serious dispute about what was said on this call. According to Mr Eid, Mr Sergi made quite clear that he wanted to obtain finance for the winery and to fund other investments. According to Mr Eid, Mr Sergi said (among many other things):
“I have already invested $50,000 into CDX through Jason La Rocca. Tony, my son, knows of the $50K I have already invested.
I want to want to [sic] ensure if things go bad at the winery that my immediate family will have something else invested moving forward.”
“Also, you cannot tell my wife how I was introduced to you by Jason [La Rocca]. I don’t want my wife knowing of any dealings with Jason whatsoever. All dealings with me will be as the director of the winery or related entities and I need to be very careful how I manage the perception of all staff, family (especially my wife) and people in Griffith as it is a small town and everyone talks – especially growers and the staff at the winery.”
According to Mr Eid, they discussed timing, fees and other matters.
Mr Sergi says that the discussion was not in these terms. He specifically denies the allegation that he sought funding for investing in CDX or any other investment. According to Mr Sergi, it was merely an introductory call that did not go beyond enquiring as to whether Mr Eid could assist him in obtaining finance for Warburn Estate to assist with cash flow shortages.
An aspect of Mr Eid’s case is that Mr Sergi, despite his denials, had in fact already invested in CDX by this point. The evidence included a document purporting to show a ‘deposit’ of $50,000 in CDX in the name of Mr Sergi on 22 July 2021. The document does not identify any particular entity or person who supposedly received this ‘deposit’. It is simply headed ‘CarbonDollarX’. The document is not, on its face, a business record of any person or entity. The document suggests that the deposit relates to a ‘Cryptocurrency’ with a ‘Token Name’, being ‘Carbon Dollar X’, and that the ‘Token Ticker’ (as if referring to some kind of exchange-traded security) was ‘CDX’. It contains three lines of alphanumeric code supposedly signifying (a) a unique token address, (b) a unique ‘Deposit Address’, and (c) a unique ‘Deposit Transaction’.
There is also a dispute about precisely where and when Mr Sergi and Mr Eid first met. According to Mr Sergi, he met Mr Eid for the first time at the Warburn Estate factory during February 2023. He recalls that on this occasion, Mr Eid also met with Mr Lyons and other key staff of Warburn Estate, including members of the finance team. According to Mr Eid, they first met at the offices of Mr James Dahdah, solicitor, of Memcorp Lawyers in Sydney. Mr Sergi says he was introduced to Mr Dahdah by Mr Eid; Mr Eid denies this and says Mr Sergi had already been put in touch with Mr Dahdah by the time they first spoke.
I do not think anything particularly turns on the question of where the two gentlemen first met. There is no doubt that both meetings did occur. I note, however, that according to Mr Eid, Mr Sergi was highly distraught and in tears when he met him at Mr Dahdah’s offices. This is easy evidence to accept. In the large volume of text messages between Mr Sergi and Mr Eid over the period 16 February 2023 to 24 November 2023, there are numerous instances of Mr Sergi describing just how distressed and upset he was about the financial position of Warburn Estate. I think it is highly likely that Mr Sergi was as distressed as Mr Eid says he was when they met in Sydney in February 2023.
In any event, Mr Eid soon became closely involved in Mr Sergi’s affairs. They spoke on the phone every few days from about mid-February 2023. During this period, Mr Eid also spoke to Warburn Estate staff. He told Mr Sergi that he could ‘raise money to assist Warburn’s financial position and help Warburn generally’. He told Mr Sergi that he was speaking with various potential lenders about advancing money to Mr Sergi so that Mr Sergi could pay Warburn Estate’s debts.
On 16 February, Mr Eid wrote to Mr Steve Brown, solicitor, of Etienne Lawyers, who represented a prospective lender (Tesoriero). He sought a $6 million facility for Warburn Estate, to be secured by way of second ranking mortgage over the company’s property, behind ANZ Bank. He proposed a term of six months with interest of 12% over that period. After interest and fees, the net amount to the borrower was to be $5,062,000, which would have been sufficient to meet the growers’ claims.
The evidence includes an email dated 24 February 2023 from a Gmail account in the name of Joe Sergi. The email was addressed to Mr Dahdah. It read:
“This is my email and contact details. I have authorised Jason La Rocca & Matthew Eid to be part of this Loan facility and be able to talk with you about any and all aspects of this loan. Please find attached the signed Shareholders Resolution.
Me and Jason [sic] will be in Sydney on Monday 27th Feb. Matthew has instructed me that we will be meeting with you at around 12pm at your office.
If you need to contact me at all I’m available on [XXXXXXXXXX] anytime.”
I note that the telephone number was Mr Sergi’s actual number.
There is a dispute about whether this email was genuine, which I will deal with below. An aspect of Mr Sergi’s case is that he is not tech savvy and that he simply does not use email. He says that he did not have access to this Gmail account and that he has since attempted to gain access to it but that it has not been possible for him to do so because it is associated with a telephone number that is not his. I note that Mr Sergi has another email address in his name under the Warburn Estate email domain.
On 25 February 2023, Mr Brown raised some difficulties about finalising the security documents for the proposed loan, being the matters referred to at paragraph [4] above. This prompted a rethink. By 27 February 2023, Mr Eid had reverted to the lender with a new proposal, namely that the borrower would be the plaintiff (rather than Warburn Estate) and that security would be the Three Corner Block, which was in the name of Mr and Mrs Sergi.
According to Mr Sergi, it was Mr La Rocca’s idea to use this property as security. Mr Eid wrote to the lender ‘I expect to receive a valuation of no less than $15M ex GST and it may be closer to 20M + GST’. By 28 February, Mr Eid and the lender had reached an in-principle agreement to proceed on this basis, with a loan of $7,200,000 for six months, with interest of 18% over that period (36% per annum). This would yield a net amount of $5,611,400 to the plaintiff as borrower after interest and fees.
Mr Eid says that on 27 February 2023, Mr Sergi gave him a signed document entitled ‘PEXA Settlement Instructions – Remittance of Funds’. I will refer to this as the 27 February PEXA authorisation. This document was curious. It was dated 27 February, a time at which the prospective lender had said they could not proceed and at which Mr Eid had only just made a counter-proposal for the loan to be advanced to the plaintiff – a new proposed borrower – with different security. At this point, neither Mr Eid nor Mr Sergi, nor anyone else, had any idea of whether the loan would eventuate and, if so, how much would be advanced.
The document was drafted by Mr Eid and included the following:
“$1,000,000
WESTPAC
MARIACARMINA LA ROCCA
BSB – [XXXXXX]
ACC – [XXXXXX]
REMAINING FUNDS AFTER ALL DISPERSMENTS [sic]
WESTPAC
GIUSEPPE SERGI
BSB – [XXXXXX]
ACC – [XXXXXX]
ON AUTHORITY OF GIUSEPPE PASQUALE SERGI”
Mr Sergi disputes that he signed this document. In cross-examination, Mr Eid conceded that the document had been drafted by him but he insisted that Mr Sergi had signed it. He produced what looks like an original of the document. I will return to the question of whether Mr Sergi did or did not sign this document later.
Mr Eid claims that on 28 February, he received a call from Mr Stephen Tesoriero, the principal of the proposed lender, who told him that he would only have $2.5 million available on settlement and that the rest of the loan would be provided a short time later. Mr Eid claims to have phoned Mr Sergi to tell him this fact and that Mr Sergi said:
“OK. Of the first $2.5 million, I want $1 million exactly to be directed for investment into CDX through Jason [La Rocca], with all other funds less all fees taken out to be directed into my personal account.”
Mr Sergi denies that this conversation happened.
Mr Sergi says that he signed various documents at the request of Mr Dahdah ‘in late February’. Aside from saying that these documents were ‘for some finance Mr Eid had arranged with [Tesoriero]’, the evidence does not reveal exactly what they were. So far as the loan itself was concerned, Mr Sergi travelled to Sydney to execute the Deed on 1 March. Mr Sergi signed for the plaintiff and on his own behalf, in each case witnessed by Mr Kyle Kutasi, solicitor, of Solve Legal. Mrs Sergi signed in the presence of Mr Dahdah. Mr Sergi says that this also happened on 1 March at their home in Griffith.
Settlement was scheduled to occur on 7 March 2023.
On 6 March 2023, Mr Eid created a new PEXA settlement authorisation (the 6 March PEXA authorisation). Again, it was not an instruction from the borrower but from Mr Sergi. Nor did it refer to the lender. This version of the document stated that funds should be remitted as follows:
$1,500,000.00 to Mr Sergi’s Westpac account.
$4,465.76 to Memcorp Lawyers.
$1,650.00 for Solve Legal.
$61,600.00 to Bricklane.
$16,500.00 to Etienne Lawyers.
It then provided that the ‘[r]emaining [b]alance (approx $915,000)’ was to go to Mrs La Rocca’s Westpac account.
Mr Eid sent a draft of this document to Mr La Rocca on 6 March at 12:55:22PM. At 1:24PM, Mr La Rocca returned the document – which now purported to be executed by Mr Sergi – to Mr Eid, who promptly forwarded it to Mr Brown five minutes later. There is no record of any text or email between Mr Eid and Mr Sergi about the document. According to Mr Eid, Mr Sergi was at this point with Mr La Rocca and asked that the document be sent to Mr La Rocca so that he could print it out and sign it. Mr Sergi denies that he did so. He says he was not with Mr La Rocca on this day.
The role played by Solve Legal and Memcorp Lawyers in all of this is not entirely clear. The bill rendered by Memcorp Lawyers (Mr Dahdah) was to Mrs Sergi for ‘providing independent legal advice’ as guarantor. The bill rendered by Solve Legal was to Mr Sergi for ‘advice on loan guarantee and execution of documents’. No one rendered a bill to the borrower. Nor does either solicitors’ bill refer to the borrower.
Although it may not ultimately matter, it appears that Solve Legal never got instructions to act for the borrower, which would explain why their bill was drafted in the way it was and which would help to explain some of the correspondence. It would also partly explain the content of a file note prepared by Ms Darby on 7 March 2023. That document is headed ‘Loan advance to Pasquale Giuseppe Sergi’ and makes no mention of the borrower at all. In this file note, Ms Darby records that she told Mr Sergi that she was ‘a solicitor attending to the PEXA workspace on his [Mr Sergi’s] behalf’. Mr Eid relies heavily on this note, for reasons that will become clear.
Ms Darby had specifically requested instructions to act for the company but appears never to have received them. At 11:41AM on 6 March 2023, she wrote to Mr Kutasi (also of Solve Legal, being the solicitor who had witnessed Mr Sergi’s execution of the Deed) in relation to the upcoming settlement. She said:
“I will need:
1. A client authorisation form signed by all directors.
Please see attached client authorisation form to be completed and signed by the parties and you. Please complete the name of the company, the property address and Lot and DP as well as the directors [sic] names. Once completed, please have all sign (including yourself) and scan and email back to me.
2. Certified copies of the following identification :
a. Council and water rates notice for the property being financed;
b. Current ASIC search for the company; and
c. Passport, medicare card and drivers licence for all directors.
All the above will need to be certified as true copies and the attached client authorisation form will need to be signed in front of you by all directors.
3. The attached disbursement form to be completed and signed by all directors and witnessed.
4. A certified copy of the bank statement of the bank account into which the loan proceeds will be deposited (being the above account).” (formatting as in original)
The email attached a settlement instruction sheet (which was the disbursement form referred to in the above email) that contemplated duly executed and witnessed instructions on behalf of the proposed borrower.
By 6:17PM, she had not received the requested information and so sent the request again, this time to Mr Dahdah with a copy to Mr Kutasi. In this email, she added:
“Please also ensure the attached client authorisation form is signed by the company and a separate client authorisation form is signed by Pasquale in the capacity as registered proprietor. The details of the property and client in sections 1&2 will need to be completed as well as the ‘Representative Agent’ section which will need to be signed by Kyle [Kutasi].
I will need a phone number to verbally verify account details of the company also.”
“Joe is not providing anything further as these items have been done and overkilled for certification. Kyle [Kutasi] should hold copies of all of these items if not they should not be holding up settlement regardless.”
“I will get Joe to send something across although for the first drawdown he has provided the attached with the balance to be completed within the week. what is available in terms of funds this morning is $2.5M.”
However, he did not get Mr Sergi to send anything. Instead, he simply forwarded to Ms Darby the account details for Mrs La Rocca that had been sent to him by Mr La Rocca and stated ‘[t]his has been provided for the surplus funds account verification’. He did not copy Mr Sergi on this email.
Ms Darby replied. She said she was ‘[j]ust waiting on Joe to call me back and verbally confirm all account details’. Mr Eid wrote back immediately, with a copy to Mr Dahdah, saying:
“Do you mean his account details or all of the others as well as he won’t know the others which I added into the disbursements.”
“I will need to confirm his account details and James [Dahdah] can input Mary’s details.”
Ms Darby’s reference here to ‘Mary’ is concerning because, on one view, it suggests that she did not appreciate that funds were going to be directed to Mrs La Rocca. One possibility is that ‘Mary’ was a reference to Mrs Mariacarmina La Rocca. That, however, would not explain why she saw this as a matter for Mr Dahdah, who was acting for Mrs Mary Sergi. I think the more likely fact is that Ms Darby believed at this stage, which is early on the day of settlement, that the ‘surplus funds’ were going to Mr Sergi’s wife, Mary.
However, at some point in the morning, Ms Darby had a video call with Mr Sergi. It is apparent from Ms Darby’s file note (being the note referred to at paragraph [51] above) that she and Mr Sergi had not previously spoken. The note includes the following:
“I discussed surplus funds payments as per payment direction form signed by Joe – all details confirmed.
I sighted Joe’s licence and watched him sign the CAF [client authorisation form] over audio visual link.”
Mr Eid tendered a client authorisation form for the plaintiff and Mr Sergi, completed and signed by Mr Sergi. He said that this was the form that Ms Darby saw him complete on the video call, but Mr Eid cannot know that because he was not on the call. His only possible source of that knowledge is Mr La Rocca, who was not called. The document is not signed by Mr Kutasi or anyone else from Solve Legal (as Ms Darby had earlier required, see paragraph [54] above), nor was any signed counterpart of this document tendered.
At 11:06AM, Mr Eid wrote to Ms Darby seeking confirmation of settlement. She replied:
“Hi Matt, no source funds have been loaded yet. I have spoken with Joe and have confirmed surplus funds’ payment. Just need source funds loaded to allow me to update surplus funds payment to Mary’s account.”
This again shows Ms Darby’s apparent confusion about where the surplus funds were being directed. On the other hand, her file note suggests that she had by now explained the ‘details’ of the settlement to Mr Sergi, which must have included the details about funds being directed to Mrs La Rocca.
In the meantime, Mr Brown noticed that the account details for Mrs La Rocca on the 6 March PEXA authorisation were different to the details that had been entered into PEXA. He sought confirmation of the correct details from Mr Eid, with a copy to Ms Darby, who confirmed that there had been an incorrect digit on the form in relation to the payment to ‘Maria Rocca’.
Settlement occurred shortly afterwards at 12:41PM. Ms Darby sent a copy of the PEXA settlement record to Mr Eid. This document contained details of the total loan proceeds and their destination. There is no evidence that Ms Darby sent this document or any other settlement confirmation to Mr Sergi. There is no record of Mr Eid showing this document to Mr Sergi, either.
Mr Eid sent Mr Sergi a text to say that the loan had settled.
In her verified defence filed on 27 May 2024, Mrs La Rocca specifically denies that she received the sum of $914,908 on 7 March 2023. This denial is demonstrably false. Her denial is shown to be falsified not only by the PEXA records but by her bank statements.
Immediately following settlement, there was a transfer of $700,000 from Mrs La Rocca’s Westpac account. There is no evidence of how this occurred or where the funds went.
Mr Eid says that the funds directed to Mrs La Rocca were ‘invested’ into CDX in the name of Mr Sergi. He produced a CDX document very like the one described in paragraph [29] above and every bit as peculiar. It purports to show a ‘deposit’ of $914,908 on 7 March 2023 for 15,249 units of CDX cryptocurrency at the ‘token sale price’ of $60. This document also contains a series of alphanumeric codes supposedly identifying (a) a unique token address, (b) a unique ‘Deposit Address’ and (c) a unique ‘Deposit Transaction’. However, these are the identical alphanumeric codes that appeared on the document described at paragraph [29] above.
There was also no evidence as to how a deposit of $914,908 could have been made with the funds paid to Mrs La Rocca on 7 March 2023. Only $700,000 was transferred out of that account by her on that day.
Although the critical issue in dispute concerns the payment of $914,908 on 7 March 2023, there are aspects of the parties’ subsequent dealings that shed considerable light on the veracity of their respective accounts. Most of the evidence about their subsequent dealings was in the form of a bundle of text messages between Mr Sergi and Mr Eid, together with Mr Eid’s evidence in cross-examination about those messages. There were very few other contemporaneous documents.
Mr Sergi says that, on 16 March 2023, Mr Eid sent him a Consultancy Agreement to sign. The agreement was between Warburn Estate and Bricklane. The copy in evidence is signed by Mr Sergi on behalf of Warburn Estate. However, in cross-examination, Mr Eid refused to accept that he had ever signed this document.
On the other hand, Mr Eid insisted that at all points in his relationship with Mr Sergi he had stressed that it was Bricklane representing him, not Mr Eid personally.
It is difficult to square Mr Eid’s evidence about this matter. He gave the following evidence in cross-examination:
“Q. And nine days later, you entered into this [C]onsultancy [A]greement on behalf of your former company, Bricklan[e] Advisors, with Mr Sergi’s company, Warburn Estate; right?
A. If you say.
Q. Well, does it appear that way because that’s what happened?
A. (No verbal reply)
Q. Do you really need to check the document, Mr Eid?
A. No, I don’t need to check the document, if that’s what ‑ if my signature’s on the back, then you ‑ then it is what it is.
Q. No, I don’t think your signature, in fairness to you, is on the back?
A. Okay, well, then, no, I don't know, I don’t know that agreement then. I don't know the full context of that agreement then. If my signature’s not on the back of it and he’s only signed it, your client, your plaintiff or person who’s the director of the plaintiff.
Q. Is that a serious answer, Mr Eid?
A. Is the evidence of that agreement, have I executed it? I haven’t executed ‑ sorry, I’m not mean[t] to ask you questions, sorry, but if I haven’t executed it, then I don’t know what agreement that could be, do I? So that could be whatever you guys decided to put in the court book, I have no clue.
Q. You can take your time and familiarise with it, if you wish?
A. I wish I had plenty of time to be able to familiarise myself with three ‑ 200/300/400 plus pages. I’d love the time.
Q. You know very well that this is an agreement that you provided to Mr Sergi for his signature on behalf of Warburn Estate for a consultancy‑‑
A. No, I do not know because I have one, not signed that, so for all I know, someone else has mucked around with that, I have no clue what that is then if I have not signed it, initialled it on each page.
Q. Putting aside this particular document‑‑
A. Okay.
Q. ‑‑you did perform work as a consultant and advisor to Warburn Estate over the ensuing months, did you not?
A. As a consultant? Bricklan[e] did, I think. Now, again, because I do not have the technical expertise or the legal training, I don’t know, and as I told the Court before, I don’t know. I don’t know. You’re asking very technical questions that you want to have answered, yet as I say to you as a layperson, I’m not sure how you see consultancy as a legal text book of consultancy or definition or how I see it as yeah, he asked ‑ I got asked to do some work.”
This was the tone of much of Mr Eid’s evidence. Notwithstanding his attempts to avoid the issue, there is no doubt that Mr Eid did do work on behalf of Warburn Estate and that Bricklane charged very considerable sums for his services. There is no evidence that Bricklane ever sent a Consultancy Agreement to the plaintiff or to Mr Sergi in his personal capacity in relation to this work.
In the period following 7 March 2023, Mr Eid became deeply involved in Warburn Estate’s attempts to refinance. The text messages between him and Mr Sergi show that Mr Sergi was very distressed about the situation and that he was highly trusting of Mr Eid. There are many texts showing the level of Mr Sergi’s distress, including late night and early morning texts about how upset and worried he was and how he needed Mr Eid’s assistance.
There are also a great many texts revealing the extent to which Mr Eid gave Mr Sergi confidence that the situation could be turned around.
Several things can be said about their relationship during 2023. The first and most important observation is that in the whole of their text correspondence there is no hint of a suggestion that Mr Sergi had invested or wanted to invest in CDX or anything else. The single focus of Mr Sergi’s messages, many of which are quite anguished, was the welfare of Warburn Estate and the urgent need for funds to pay growers.
The second observation is that the tone and content of their texts during 2023 show that Mr Sergi was very trusting of Mr Eid. The texts show that Mr Sergi had a constant need for reassurance from Mr Eid and, in reply, Mr Eid was extremely reassuring. In many texts, Mr Eid can be seen to take charge of Mr Sergi’s concerns, such as by instructing him as to how to deal with people, what to write, and what to say. It is impossible to accept Mr Eid’s description of Mr Sergi as some kind of puppet-master. Mr Sergi was no such thing. He was entirely credulous.
Thirdly, Mr Eid constantly strung Mr Sergi along with promises of finance that never seemed to eventuate. In the early part of the year, this was to some extent understandable because Tesoriero had only advanced $2.5 million of the promised $7.2 million. Of this total loan amount, a sum of approximately $1.5 million had supposedly been ‘advanced’ to the lender on account of pre-paid interest, fees and disbursements at around the time of settlement on 7 March 2023. This meant that, following the advance of the first tranche on 7 March, a sum of about $3.1 million was still available to be drawn by the plaintiff under the Deed.
Even so, the text correspondence between Mr Sergi and Mr Eid shows that Mr Eid made a large number of representations to Mr Sergi about his attempts to obtain other finance for the Warburn Estate business. Nothing came of any of this, except further fees for Bricklane and even a payment to ‘secure’ finance through Bricklane, as I describe at paragraphs [93] to [95] below.
When Tesoriero did eventually advance the balance of funds in May, they went straight to Mr Eid’s Bricklane account. The evidence about how this occurred was as follows.
Mr Eid says that Mr Sergi signed an authority on 19 May 2023 directing that payment of the balance of the loan funds, $3,143,500, be paid to the Bricklane ANZ account and that $16,500 be paid to Etienne Lawyers. A copy of the authority was in evidence. It too had been prepared by Mr Eid. He sent it to Mr Sergi’s Warburn Estate email address at 11:23AM on 19 May. In this email, he said that he needed the Warburn Estate bank details so that he could ‘then make a transfer there today/this afternoon once funds have hit from the lenders [sic] ANZ account’.
There was then an email from Mr Sergi’s Warburn Estate email account back to Mr Eid at 12:13PM attaching the completed authority and setting out the Warburn Estate bank details. Mr Sergi accepts that he sent this email.
There followed an increasingly desperate series of texts from Mr Sergi about when he could expect to receive the funds for Warburn Estate. Eventually, on 26 May, Mr Eid caused $500,000 of the $3,143,500 to be paid to Warburn Estate, notwithstanding that Bricklane had received the $3,143,500 into its account days earlier. He caused a further $150,000 to be paid to Mr Sergi’s personal account. At no point did he mention – in his texts, at least – that Bricklane had in fact received the sum of $3,143,500. There is no suggestion in the text messages that Mr Sergi was aware that anything more than $650,000 had been advanced by Tesoriero.
Mr Eid’s evidence about how he dealt with the balance of the Tesoriero loan funds, being around $2.5 million, was incredible. He said that he just could not recall exactly what he did with it. He says that he dealt with the funds as instructed by Mr La Rocca, and that the funds were sent to multiple different places. He accepted that he did not deal with them on the specific authority or direction of Mr Sergi or the plaintiff. He claims that Mr Sergi had given Mr La Rocca some kind of general mandate to deal with all of his and the plaintiff’s funds.
More incredible, however, is Mr Sergi’s and the plaintiff’s attitude towards these same matters. Although the statement of claim refers to the further drawdown of the Tesoriero loan on 19 May and although it is specifically pleaded that the sum of $3,143,500 was paid to Bricklane on that day, there is no allegation about what happened next. It is no part of Mr Sergi’s case that Mr Eid or Bricklane have, for example, misappropriated or otherwise failed to account for the roughly $2.5 million balance of this drawdown, notwithstanding that it was not paid to the plaintiff and was clearly applied to some other use.
The point is that, of the $7.2 million which Tesoriero agreed to lend to the plaintiff pursuant to the Deed, only $2.15 million was ever actually paid into accounts in the name of Mr Sergi or Warburn Estate. None of the funds were ever paid into accounts in the name of the plaintiff. Leaving aside ‘pre-paid interest’ of about $1,296,000 and professional fees, the balance was paid either to Mrs La Rocca (as to $914,908) or to Mr Eid (as to about $2.5 million). But the only complaint in these proceedings concerns the payment to Mrs La Rocca.
“As discussed I need to write to you to confirm the following so as both Alex Glenn and yourself are covered to what you both have agreed to, and what Brick Lane has done and is doing on behalf of you, Warburn and the family.
From Brick Lane getting involved through Alex, the intent of the introduction was to assist in saving Warburn Estate from complete collapse, allow for the business to operate through a restructure process and come out the other end asap. There is an agreement between yourself Joe, and Alex that the loan monies raised on Three Corners (approx. $7M including interest and fees), which was partially used by yourself to make several payments into Warburn to continue to operate during the circumstances it found itself, had all other funds invested through Alex. As stated, all of these funds were invested through Alex Glenn and the agreement you both had and continue to have is as follows;
- The use of funds to date from the Three Corners loan facility is that Alex will repay this debt in full. This repayment would include the monies used by yourself for Warburn, all interest and fees for the loan facility and all funds that have been used at Alexs’ discretion for investment purposes;
- Ultimately, the loan will be repaid by Alex in full – including any monies used by yourself for Warburn;
- Any funds raised now and moving forward, the agreement is that Alex will pay for all interest costs, fees associated with the loan facility and whatever funds are used for his investment as agreed. The only difference on the loans moving forward is that any money used by yourself is to be repaid.
- TO be clear, if Warburn/yourself or related parties uses funds to pay the ATO $3.8M, then Warburn/yourself is to repay that exact amount only against the loan. NOT the interest incurred when using those funds as it is agreed that Alex will cover total interest costs, fees etc..
It needs to be said that no one outside of this email is privy to the agreement made between Alex and yourself and as such this will remain unless you both want to and agree to make it publicly known.
Further, I need to confirm that Brick Lane has been instructed by both parties to action the above in line with the above agreement that has been made prior to Brick Lane being engaged directly by Warburn Estate.” (emphasis in original)
There is no suggestion in the text messages from about this time that an agreement of the kind referred to in the letter was in place or was being discussed between Mr Eid and Mr Sergi. It is, however, Mr Eid’s case that such an agreement existed.
Things only got worse for Mr Sergi. Mr Eid claims by this point to have established some kind of offshore ‘warehouse’ fund that would allow Bricklane itself to provide $50 million of funding to Warburn Estate at 12% per annum. This would have been sufficient for the plaintiff to refinance all of its bank debt and to pay its creditors, including the ATO, albeit at usurious rates. Mr Eid had so inveigled himself into Mr and Mrs Sergi’s trust by this point that he persuaded Mrs Sergi to pay $450,000 to Bricklane as a ‘facility fee’ or ‘establishment fee’ of some kind to secure this funding. The evidence about this ‘fee’ was murky. A contemporaneous email authored by Mr Eid calls it a ‘loan’ to Bricklane, but Mr Eid said in cross-examination that he only called it a loan for Mrs Sergi’s ‘peace of mind’.
Mr Eid says he cannot really remember what he did with Mrs Sergi’s $450,000, save that he thinks he probably sent it offshore somewhere at the request of the ‘funder’ to secure the funding. The ‘funder’, apparently, was ‘Suria Global’, the company behind the supposed cryptocurrency, CDX.
Despite the payment of $450,000, nothing became of this supposed funding commitment, despite repeated promises by Mr Eid.
But this was not all. On 7 November 2023, Warburn Estate was expecting a significant cash payment from Endeavour Group Limited. Mr Eid also persuaded Mr Sergi to cause Warburn Estate to pay this sum ($800,000) to Bricklane. Mr Eid caused an ‘invoice’ to be raised for this amount. He did not say why he did so. In any event, the money was paid to Bricklane and is now gone. Again, Mr Eid cannot really remember what happened to it but he thinks it went to Mr La Rocca.
All the while, Mr Sergi was becoming more and more distraught about the situation facing Warburn Estate. Creditors had taken action to try to wind the company up. There was significant bank debt and a significant tax debt, neither of which could be managed. The ATO served director penalty notices on Mr Sergi, which his wife was (rightly) distressed about. Incredibly, Mr Eid said to tell her that ‘the ATO is a secured creditor and that the company assets are more than enough to repay all ATO money. Nothing is different from the current position as we wait for the funds’. This was ridiculous advice to give a director who had been served with a director penalty notice.
This was 8 November 2023. Mr Eid had by this point taken receipt of the balance of the Tesoriero loan funds (about $2.5 million), the $450,000 ‘fee’ for the spurious $50 million funding ‘commitment’, and the $800,000 payment from Warburn Estate that he could not really explain. The idea that, at this point, Mr Sergi should just sit tight and ‘wait for the funds’ was frankly absurd.
It will be apparent from the foregoing that I did not find Mr Eid to be an impressive witness. He was indignant about the fact that his adjournment applications were refused and that the trial was proceeding. He declared repeatedly that he could not possibly be of any assistance because he was not a lawyer and that it would, in fact, be against his interests even to attempt to answer questions. He declined to cross-examine Mr Sergi, despite the fact that his defence rests heavily on the proposition that Mr Sergi should not be believed. He took this same petulant attitude into the witness box, where he repeatedly insisted that he had no recollection of any of the key events. Yet as the cross-examination progressed, his recollection seemed to revive, especially when some recollection or other suited his case.
For example, he was asked early in his cross-examination about the mysterious Mr Glenn. Mr Glenn figures significantly in Mr Eid’s case because, according to his 28 September 2023 letter (see paragraph [91] above), Mr Eid had gotten involved with Mr Sergi in the first place ‘through Alex’. According to that letter, there was an agreement between Mr Sergi and Mr Glenn:
“… that the loan monies raised on Three Corners, approximately $7,000,000 including interest and fees, which was partially used by yourself to make several payments into Warburn to continue to operate, during the circumstances it found itself, had all other funds invested through Alex.”
“… I need to confirm that Brick Lane has been instructed by both parties to action the above in line with the above agreement that has been made prior to Brick Lane being engaged directly by Warburn Estate.” (my emphasis)
“Q. When did you first meet Alex Glen[n]?
A. I don’t have any response. I have nothing to say.
HIS HONOUR: You’ve got to answer the questions, Mr [Eid].
WITNESS: Well, I don’t recall.
KIRBY
Q. Is that an honest answer, Mr Eid?
A. I don’t recall.
Q. I’m going to ask you to try to attend to the question a little better than that.
A. If I can’t recall, I can’t recall.
Q. You’re deliberately adopting a combative posture against this cross-examination, aren’t you, Mr Eid?
A. Whether you think it’s combative or not, if I can’t recall, I literally can’t recall. Let alone the name, let alone anything.
Q. Do you think it was closer to 10 years ago, 5 years ago or one year ago?
A. I cannot recall, and I have nothing to say.
Q. Is this going to be the tenor of your evidence in respect of every question that I ask you today?
A. Most likely.
Q. You understand the oath that you just took--
A. Yes.
Q. --was to tell the truth, the whole truth, and nothing but the truth.
A. Yes.
Q. That was an oath you took on the Bible.
A. Yes.
Q. Do you consider yourself an honest man, Mr Eid?
A. Yes.
Q. Are you a god-fearing man, Mr Eid?
A. Raised a Catholic.
Q. It doesn’t really answer the question.
A. Well, if I wasn’t raised a Catholic, I wouldn’t have been a god-fearing man.
Q. When you took that oath to tell the Court the truth, did it mean anything to you?
A. Yeah, of course, it does. It’s on the Bible.
Q. Do you understand that you [are] under a solemn obligation to give his Honour and this Court the best recollection you can in relation--
A. And I don’t--
Q. --to each of the questions I ask?
A. And I do not recall.
Q. No. Attend to the question, Mr Eid. Do you understand that you have a serious obligation to attend to my questions, and give the Court the benefit of your best and true recollection?
A. If you say so.”
This passage shows not only his feigned inability to answer questions about matters that must have been well within his knowledge, but his attitude to the Court process generally. As the cross-examination progressed, however, Mr Eid managed to recall that Mr Glenn was one of the people to whom he was speaking about ‘securing’ $50 million in funding from Suria Global for Warburn Estate. He also claimed to recall that the whole source of his knowledge about the alleged agreement between Mr Sergi and Mr Glenn was Mr Sergi himself, but this detail (along with the supposed agreement) was not mentioned in Mr Eid’s affidavit, despite its obvious centrality to his defence.
There are also aspects of Mr Eid’s evidence that I found inherently implausible. I do not believe that he cannot recall what he did with the roughly $3.1 million balance of the Tesoriero loan funds that were advanced in May 2023. All he was willing to say about this was that he dealt with them on the instructions of Mr La Rocca. It is in my view inherently unlikely that someone in Mr Eid’s position would have no recollection at all about how he dealt with these funds. I also found his evidence that he had himself invested $175,000 into CDX to be implausible. He claims to have made that investment in May 2023 on the basis of discussions with Mr La Rocca and Mr Sergi and after having made no inquiries whatsoever about the nature or quality of the investment. As evidence of his supposed investment, he produced documents in the same form as those described in paragraph [29] above. These documents contain the identical alphanumeric codes as all the others in evidence. As with the other documents of this nature described above, these documents are completely unpersuasive as evidence of a financial investment.
As to how Mr Eid came to make this investment, his evidence was that his brother, Mr Bartholemew Eid, funded the investment by paying $500,000 to Mr La Rocca. However, he said that only $175,000 of this was for CDX. He said that the balance ($325,000) was not for CDX. He did not say what the balance was for. Nor did he say why his brother was involved in these transactions at all.
The plaintiff submitted that Mr Eid was fundamentally dishonest and that I should reject his evidence in its totality. I agree that I should be very cautious about accepting any part of Mr Eid’s evidence. He was obviously selective in choosing what to recall and what not to recall in the witness box. I do not consider that he can be treated as a generally reliable witness.
Be that as it may, I am unable to disregard Mr Eid’s evidence in its entirety. As I will explain, there are aspects of his evidence that do cohere with contemporaneous records and with other evidence that is not in dispute. At the same time, Mr Sergi’s own explanations for these same matters cannot be made to sit comfortably with contemporaneous documents or with the overall logic of events.
It is helpful to recall Mr Eid’s basic case, which is that he was engaged from the outset to raise funds for Warburn Estate and to allow Mr Sergi to invest in cryptocurrency, with the assistance of Mr La Rocca. Mr Eid says that Mr Sergi always had a separate purpose in mind, which he told Mr Eid about from the outset. He says that the sum of $914,908 was paid to Mrs La Rocca for this other purpose with Mr Sergi’s full knowledge and consent. Mr Eid points out that he did not hide the fact that some of the funds advanced on 7 March 2023 were to be used for this other purpose. He especially points to the fact that Ms Darby’s file note makes clear that she discussed the disbursement of the surplus funds with Mr Sergi prior to settlement.
Mr Eid also points out that if, as he claims, Mr Sergi was desperate for funds to pay growers, he cannot possibly have failed to notice that almost $1 million of the 7 March drawdown was missing. He says the Court cannot possibly accept Mr Sergi’s claim that he did not realise these funds had been paid to Mrs La Rocca until it was discovered by his solicitors many months later.
At the same time, it is helpful to recall the plaintiff’s basic case, which is that Mr Sergi only ever engaged Mr Eid for a single reason: to find finance to pay Warburn Estate’s growers. It is central to the plaintiff’s case that Mr Sergi had no interest whatsoever in borrowing for any other purpose, least of all to invest in CDX.
In weighing these competing cases, there are three closely related matters that stand out. The first is that, as Mr Eid says, Mr Sergi made no complaint about the funds paid into Mrs La Rocca’s account on 7 March 2023. Those funds – $914,908 – represented an unmissably large portion of the total funds advanced on that day. Of the total drawings of about $2.5 million, only the sum of $1.5 million was paid into Mr Sergi’s personal account, so he knew exactly how much he had received and how much was supposedly missing.
So far as I can see there are only two possible explanations for Mr Sergi’s failure to complain about the missing $914,908 on 7 March 2023: he either did not know how much had actually been advanced to begin with; or he knew that some of the funds were not paid to him to allow him to pay growers.
“I discussed surplus funds payments as per payment direction form signed by Joe – all details confirmed.”
Ms Darby’s reference to a ‘payment direction form signed by Joe’ can only have been to the 6 March PEXA authorisation. Even if Mr Sergi had not signed it, which is an issue I will come to below, Ms Darby nevertheless discussed that document with him on the day of settlement. That discussion would have made it clear to Mr Sergi that the total amount being advanced on 7 March was $2.5 million. It would also have made clear that, of this amount, the surplus funds remaining after the advance to Mr Sergi and the payment of professional fees were to be paid to an account in the name of Mrs La Rocca. Even if Ms Darby was confused about whether that other payee was Mrs Sergi or someone else, there can have been no misunderstanding on Mr Sergi’s part. If she said that the $914,908 was going to be paid to ‘Mary’ (or ‘your wife’), then it still would not explain why Mr Sergi failed to complain about the supposedly missing funds.
It is therefore impossible to conclude that Mr Sergi did not know that $2.5 million was advanced by Tesoriero on 7 March 2023.
The third matter that particularly stands out concerns the fact that Mr Sergi made no complaint – and continues even now to make no complaint – that of the roughly $3.1 million balance of the Tesoriero loan funds advanced in May 2023, he (or, rather, Warburn Estate and he) only ever received $650,000.
Again, one possible explanation for this is that Mr Sergi simply did not know how much was being advanced by Tesoriero. I cannot however proceed on that basis. In its statement of claim, the plaintiff expressly pleads that $3,160,000 was advanced by Tesoriero on 19 May 2023 and that, of this amount, $3,143,500 was ‘paid to Brick Lane’. Yet neither the balance of the pleadings nor Mr Sergi’s own affidavits say anything about this circumstance, even though it is not in dispute that only $650,000 was paid to him and Warburn Estate.
When taken together, these matters all tend to support Mr Eid’s basic case, which is that Mr Sergi always intended that any loan would only be partly used for paying Warburn Estate’s growers and that Mr Sergi contemplated that some part of it would be dedicated to other uses. There is no other way to explain Mr Sergi’s failure to complain about the disbursement of funds, either at the initial settlement on 7 March or the later drawdown on 19 May. There was obviously something else going on.
This same conclusion is also corroborated by Mr Eid’s 16 February 2023 email to Mr Brown (see paragraph [34] above), in which he said that the purpose of the proposed borrowing was as follows:
“To assist with the payment of accumulated running costs of the business (Paying growers), allow for part equity out and interest and fees associated with the loan facility.”
Mr Eid said that the reference to ‘equity out’ was to Mr Sergi’s desire to make an investment in addition to paying costs of the business. In the context of what was being proposed, namely a borrowing by Warburn Estate, a use of funds by one of the owners to make a separate investment could very well have been so described. In my view, the 16 February email also tends to corroborate Mr Eid’s basis contention about Mr Sergi’s purpose in seeking a loan.
The matters to which I referred above mean that I am unable to accept the plaintiff’s case that all of the borrowed funds should have been made available to Mr Sergi in order to pay Warburn Estate’s creditors. Nor can I accept Mr Sergi’s blanket denials about wanting to borrow funds for making an investment. Even though he was not cross-examined, I must weigh his evidence in the balance along with all other evidence, including the fact that so much of the Tesoriero loan was put to other uses – and paid into accounts that were not in his name – without complaint by Mr Sergi. In my view, it is inherently unlikely in the light of all the evidence that Mr Sergi’s only purpose in borrowing funds on 7 March was to pay Warburn Estate’s creditors, as he claims. He clearly had some other purpose in mind, which he has not explained.
In all of these circumstances, although I am not generally prepared to treat Mr Eid as a reliable witness, I do consider that his evidence about Mr Sergi wanting to borrow funds for purposes unrelated to Warburn Estate is reliable. Much of what happened makes no sense unless Mr Sergi had some other purpose in mind. Given Mr Sergi’s failure to explain his proposed use of the borrowed funds (that is, his failure to say what he wanted to use the funds for apart from paying growers on behalf of the plaintiff), I am inclined to accept Mr Eid’s evidence that Mr Sergi’s other proposed use was to invest with Mr La Rocca.
The pleaded claims against the defendants will need to be considered in the light of these conclusions.
I consider that Mr Eid did act as agent for the plaintiff in arranging the borrowing from Tesoriero and that his actions in communicating with the parties at the time of settlement were done as agent for the plaintiff.
Mr Eid claimed (repeatedly) that he had always insisted in his discussions with Mr Sergi that it was only ‘Bricklane’ that could provide broking services. I do not accept that this was so. It is not corroborated by any written record. To the extent there is any evidence at all about an engagement of Bricklane, it was an engagement by Warburn Estate and not by Mr Sergi or the plaintiff. Even then, Mr Eid did not accept that the draft terms of engagement had ever been entered into.
In Bonette v Woolworths Ltd (1937) 37 SR (NSW) 142 at 150, Jordan CJ said:
“Whether any authority has been given, and if so what is the scope of the authority, are questions of fact to be determined by evidence. Evidence that a person is purporting to do acts on behalf of a principal in some capacity in such circumstances that the knowledge and approval of the principal may fairly be inferred is evidence that the principal has authorised him to act in the particular capacity. If there is evidence justifying such an inference, it justifies the further inference that the person has authority to do such acts as would be done, as a matter of ordinary business practice, by a person acting in such a capacity.”
Here, there is good evidence that the plaintiff gave Mr Eid authority to participate in the settlement and to provide settlement details as its agent. Mr Eid had no business in being involved in the settlement save as a representative of the plaintiff and the guarantors. The things he did in advance of the settlement were done on behalf of, and in the interests of, the borrower and the guarantors, such as corresponding with Ms Darby about settlement requirements. He was a broker engaged by the plaintiff, not the lender.
Although it is not conclusive, it has been held that the question of whether a person authorised another to act on their behalf may be answered by considering for whose benefit or in whose interest it was intended to be done: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52 at [70]. In this case, the provision of account details to Ms Darby and Mr Brown was done in the interests – or purported to be in the interests – of the plaintiff.
In my view, Mr Eid did act as the plaintiff’s agent in connection with the Tesoriero loan, including in connection with the 7 March 2023 settlement.
“Equity supplements the common law respecting principal and agent and adds a further dimension to their relationship by treating the agent as a fiduciary who is disqualified from asserting against the principal rights unconscientiously acquired, and who is also bound to account for profits improperly made and, in some circumstances, to answer as a constructive trustee; further, the principal may have tracing remedies in respect of abuse by the agent of the fiduciary relationship.” (citations omitted)
“… [A] person will be in a fiduciary relationship with another when and insofar as that person has undertaken to perform such a function for, or has assumed such a responsibility to, another as would thereby reasonably entitle that other to expect that he or she will act in that other’s interest to the exclusion of his or her own or a third party’s interest.” (citations omitted)
I have already explained why I cannot accept Mr Sergi’s blanket denial of the notion that he wanted to use the borrowed funds in order to make an ‘investment’ of some kind. He must have wanted to do something else with the borrowed money because, as I have explained, so much of it was put to other uses without complaint (then or now) by him.
Quite apart from these general conclusions about Mr Sergi’s purpose in obtaining the Tesoriero loan, the contemporaneous documents make it very difficult to escape the conclusion that Mr Sergi specifically authorised the payment of $914,908 to Mrs La Rocca on 7 March 2023. Ms Darby’s file note puts beyond doubt that, by the time of settlement, Mr Sergi knew that: (1) $2.5 million was being advanced; (2) of this amount, only $1.5 million would be paid to him; and (3) after paying professional fees, the balance would be paid to an account in the name of Mrs La Rocca. The fact that Ms Darby was not called as a witness by the plaintiff means I am all the more willing to infer that she did in fact explain these things to Mr Sergi, as her file note suggests.
The fact that Mr Sergi was appraised of the details of the proposed payment on the date of settlement but raised no complaint is a very powerful reason to conclude that it was within the scope of Mr Eid’s agency to provide those payment details to Ms Darby and Mr Brown on behalf of the plaintiff in the first place.
These conclusions are a sufficient basis to reject the claim against Mr Eid. However, I will indicate my conclusions as to what was said in the initial discussion between Mr Eid and Mr Sergi referred to at paragraphs [25] to [28] above. I will also indicate my conclusions as to whether Mr Sergi actually sent the various emails he claims not to have sent and as to whether he actually signed the 6 March PEXA authorisation.
As to the content of their initial discussions, I accept Mr Eid’s evidence to the extent that he says Mr Sergi told him that he wanted to make an investment as well as borrow funds to pay Warburn Estate’s growers. I also accept that he told Mr Eid that this investment was to be arranged by Mr La Rocca. I do so despite my serious misgivings about Mr Eid’s general reliability. I only accept his evidence about these matters because it accords with the overall logic of subsequent events, whereas Mr Sergi’s denial does not. It stands to reason that Mr Sergi told Mr Eid that he had some other purpose in seeking a loan because most of the borrowed funds were in fact used for another purpose. At some point Mr Sergi must have told Mr Eid that he had another purpose in mind.
I also note that, throughout 2023, Mr Sergi continued to be in communication with Mr La Rocca. There are various references to him, and to Mr Sergi being with him or speaking to him, in the numerous text messages between Mr Eid and Mr Sergi throughout 2023. Mr Sergi has not sought to either divulge or explain these contemporaneous communications with Mr La Rocca.
At the same time, however, the text messages make no mention at all of the substantial funds advanced by Tesoriero in May 2023 but not used for Warburn Estate. The receipt (by Mr Eid) and disbursement of approximately $3.1 million on 19 May 2023 is a matter that must surely have been discussed between them, yet the text messages do not even hint at how those funds were to be used, beyond the references to the $650,000 that Mr Eid transferred to Mr Sergi and Warburn Estate. I am therefore not prepared to draw too heavily on the text messages in reaching conclusions about the nature of the relationship between Mr Eid and Mr Sergi or about Mr Sergi’s wish to use funds other than for Warburn Estate. It is apparent that there was much more to the relationship than is revealed by these text messages.
Although he was not cross-examined on this issue, I am unable to accept Mr Sergi’s evidence that he had no access to the Gmail account in his name. There are two related reasons for this. The first is that the evidence includes text messages from Mr Eid to Mr Sergi in which Mr Eid tells Mr Sergi to check what can only have been this same Gmail account. For example, on 3 March 2023, Mr Eid said that he was sending correspondence to ‘your new personal email address’, which was this account. Secondly, Mr Sergi did on occasion take screenshots of messages that had come to the Gmail account and forward them to Mr Eid. Mr Sergi must have had access to the Gmail account to do so.
On the other hand, I have no reason to reject Mr Sergi’s evidence that Mr La Rocca set the email account up on his phone and that, as he claims, Mr Sergi no longer has access to it. That being so, I cannot rule out the possibility that at least some of the emails purportedly sent by Mr Sergi from the Gmail account in 2023 were in fact composed and sent by Mr La Rocca.
I have not found it easy to determine whether the 24 February email (paragraph [35] above) was composed and sent by Mr Sergi or Mr La Rocca (or someone else). In the end, however, I give weight to the fact that Mr Sergi said that he did not ever authorise Mr La Rocca to represent the plaintiff and that he did not send the email, propositions on which he was not cross-examined. I also give weight to the fact that there are no contemporaneous documents that would support Mr Eid’s contention that Mr Sergi did send that email. I therefore find that the 24 February 2023 email from Mr Sergi to Mr Dahdah was neither composed nor sent by Mr Sergi. It was, in all likelihood, composed and sent by Mr La Rocca.
It does not however follow that Mr Sergi did not sign the PEXA authorisations.
Dealing first with the 27 February PEXA authorisation, it is difficult to see why such a document would have been created or signed on 27 February 2023. As at that date there was no loan, nor even a lender. Mr Eid had reverted to Tesoriero with a proposal but that was as far as things had progressed. There was no occasion for a settlement authorisation to be prepared at all.
Further, the document makes no mention of the borrower, being the person from whom authority to direct payment was required. It makes no mention of the lender, being the person to whom authority was required to be given. And it contains no authority to direct the other necessary payments at settlement, such as for advisors’ fees.
Mr Sergi denies that he signed this document. He was not challenged on that evidence, but the hard fact is that a signed and dated original was in evidence. Mr Sergi must have executed it at some point. I have no good reason not to conclude that he did so on or about the date it bears. He offered no explanation for the existence of the original signed and dated document.
It is next necessary to consider whether Mr Sergi signed the 6 March PEXA authorisation. In my view, it is far less obvious that this document was ever actually executed by him. No original was in evidence. The email trail shows that a draft was provided by Mr Eid to Mr La Rocca, who returned a signed version shortly thereafter: see paragraph [49] above. Given my conclusion that Mr La Rocca probably sent the 24 February email from Mr Sergi’s Gmail account, I would be quite prepared to find that he also concocted Mr Sergi’s signature on the 6 March PEXA authorisation.
However, despite this and notwithstanding my general concerns about Mr Eid’s evidence, I am not persuaded that Mr Sergi did not sign this document. Mr Sergi denies that he was even with Mr La Rocca on that day, but his denials in relation to executing documents must be assessed in the light of the fact that he clearly did at least execute the 27 February PEXA authorisation, which he also denied. Further, an aspect of the plaintiff’s case, as put to Mr Eid in cross-examination and as submitted to me (although not spelled out in Mr Sergi’s evidence) was that Mr Sergi was the kind of person who was inclined to sign whatever was put in front of him, including PEXA authorisations.
I also note that this is the very same document which Ms Darby discussed with Mr Sergi on their 7 March video call and about which Mr Sergi raised no complaint on that day, which was the day of settlement.
I therefore find that Mr Sergi did execute the 6 March PEXA authorisation.
I also find that the 6 March PEXA authorisation was effective as an authorisation of the plaintiff, notwithstanding that the signature is not expressly stated to be on behalf of the plaintiff. The funds were being advanced pursuant to a loan to the plaintiff and so the plaintiff was the only party who could direct where the funds would be disbursed. The plaintiff did not argue that, even if signed by Mr Sergi, the payment direction was not authorised by it.
In my view, Mr Eid did act as the plaintiff’s agent in connection with the settlement but he did not exceed his authority, nor did he otherwise breach his fiduciary duties, by providing Mrs La Rocca’s account details to the solicitors for the parties. Nor did he do so by directing Tesoriero to pay the sum of $914,908 into her account.
A fiduciary (whether they act as an agent or otherwise) owes two negative or proscriptive duties to the principal, often referred to in short as the ‘no conflict’ and ‘no profit’ rules. The two duties were described by Deane J in Chan v Zacharia (1984) 154 CLR 178; [1984] HCA 36 in the following terms at 198-199:
“The first is that which appropriates for the benefit of the person to whom the fiduciary duty is owed any benefit or gain obtained or received by the fiduciary in circumstances where there existed a conflict of personal interest and fiduciary duty or a significant possibility of such conflict: the objective is to preclude the fiduciary from being swayed by considerations of personal interest. The second is that which requires the fiduciary to account for any benefit or gain obtained or received by reason of or by use of his fiduciary position or of opportunity or knowledge resulting from it: the objective is to preclude the fiduciary from actually misusing his position for his personal advantage.”
The conduct identified by the plaintiff as constituting the purported breach was Mr Eid’s failure to tell Mr Sergi, or to ensure Mr Sergi understood, that a portion of the funds advanced under the Tesoriero loan was being paid into Mrs La Rocca’s account for the purpose of making an investment. The plaintiff submitted that the breach lay in Mr Eid ‘procuring and facilitating’ the transfer to Mrs La Rocca without the plaintiff’s informed consent.
However, as I have found at paragraph [135] above, the evidence shows that Mr Sergi knew that the balance of the $2.5 million being advanced on 7 March 2023 would be paid to Mrs La Rocca. Ms Darby’s file note confirms that she discussed the funds flow with Mr Sergi, and that Mr Sergi had confirmed ‘all details’ (see paragraph [114] above). Further, on the day of settlement, Ms Darby sent an email to Mr Eid noting that she had ‘spoken with Joe and … confirmed surplus funds payment’ (see paragraph [64] above).
As far as Mr Eid was concerned, the plaintiff, through Mr Sergi, was not only aware that funds were being directed to Mrs La Rocca’s account, but had authorised that course and had confirmed the relevant account details with Ms Darby. That informed consent is sufficient to negative any purported breach of fiduciary duty in respect of the disbursement of funds to Mrs La Rocca: Maguire v Makaronis (1997) 188 CLR 449; [1997] HCA 23 at 466-467 (Brennan CJ, Gaudron, McHugh and Gummow JJ); Xiao v BCEG International Australia Pty Ltd (2023) 111 NSWLR 132; [2023] NSWCA 48 (‘Xiao’) at [144] (Gleeson JA, Mitchelmore JA and Griffiths AJA agreeing); Blackmagic Design Pty Ltd v Overliese (2011) 191 FCR 1; [2011] FCAFC 24 at [105] (Besanko J, Finkelstein and Jacobson JJ agreeing).
The further and more fundamental difficulty with the plaintiff’s submission is that it is not at all clear how Mr Eid’s conduct, even if he did fail to obtain Mr Sergi’s informed consent, would constitute a breach of either of the proscriptive fiduciary duties. An agent’s failure to obtain the principal’s informed consent to particular details of a transaction carried out on the principal’s behalf is not, by itself, a breach of fiduciary duty. A fiduciary has no positive duty to obtain the principal’s informed consent to all action taken as agent; rather, the existence of an informed consent serves to negate what might otherwise be a breach of duty: Maguire v Makaronis at 466; see also the discussion in Xiao at [127]-[144].
As to the two proscriptive duties, it was no part of the plaintiff’s case that Mr Eid received a profit by virtue of his role in facilitating the transfer to Mrs La Rocca or that there was any actual or perceived conflict of interest which prevented Mr Eid from fulfilling his duty of undivided loyalty to the plaintiff. There was no evidence about these matters at all.
My conclusion in relation to the claim against Mr Eid means that the only basis on which the plaintiff can succeed against Mrs La Rocca is on the basis of money had and received to the use of the plaintiff.
The general principles relevant to such claims were summarised by Kirk JA (Meagher JA and Griffiths AJA agreeing) in Coshott Family Pty Ltd v Lyons (2022) 110 NSWLR 44; [2022] NSWCA 216 at [19]-[22] with reference to David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353; [1992] HCA 48 (‘David Securities’) as follows:
“[19] … The issue is what more, if anything, the appellant needed to prove in order to make good its claim for money had and received.
[20] That issue was addressed thirty years ago in David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353; [1992] HCA 48. The respondent in that case argued that ‘a plaintiff should be required to prove that retention of the moneys by the recipient would be unjust in all the circumstances before recovery should be granted’ (at 378). That argument was rejected. The plurality stated as follows at 379 (citations omitted):
‘it is not legitimate to determine whether an enrichment is unjust by reference to some subjective evaluation of what is fair or unconscionable. Instead, recovery depends upon the existence of a qualifying or vitiating factor such as mistake, duress or illegality. As this Court stated in Westpac Banking Corporation:
“In other words, receipt of a payment which has been made under a fundamental mistake is one of the categories of case in which the facts give rise to a prima facie obligation to make restitution, in the sense of compensation for the benefit of unjust enrichment, to the person who has sustained the countervailing detriment.” …
The respondent's submission that the appellants must independently prove ‘unjustness’ over and above the mistake cannot therefore be sustained. The fact that the payment has been caused by a mistake is sufficient to give rise to a prima facie obligation on the part of the respondent to make restitution. Before that prima facie liability is displaced, the respondent must point to circumstances which the law recognizes would make an order for restitution unjust.’
[21] Thus it is not necessary for a claimant to establish that in all the circumstances retention of the money is unjust. Rather, the claimant must establish the existence of some qualifying or vitiating factor which gives rise to a prima facie obligation to make restitution. The defendant may then seek to establish some responsive defence which displaces that prima facie obligation, on which the defendant will bear the onus.
[22] The necessity for a claimant to establish some ‘qualifying or vitiating factor’ in order to make out a claim for money had and received has been reiterated a number of times since David Securities by members of the High Court … The presence of such a factor goes to establish that money the defendant received is held to the use of the plaintiff so as to found a claim to restitution. Recognised categories of such factors include mistake, duress, illegality or failure of consideration, but the categories are not closed …”. (in-text citations omitted)
The particular vitiating factor relied on by the plaintiff is that the transfer of funds to Mrs La Rocca was made by mistake. Mistake, in this context, encompasses not only a positive belief in the existence of a fact that does not exist, but also ‘sheer ignorance of something relevant to the transaction in hand’: David Securities at 369.
The mistake is said to lie in either the fact that Mr Sergi never signed the 6 March PEXA authorisation, or the fact that, regardless of whether or not he did sign that authorisation, Mr Sergi did not know or intend that any part of the loan monies was going to be transferred to Mrs La Rocca.
I note the narrow terms in which this aspect of the case was pleaded. The complaint is only as to Mr Sergi’s ignorance of the identity of the account holder into whose account the surplus funds were paid, not as to any subsequent use of the funds.
Mrs La Rocca did not appear at the hearing and her evidence was not read. I have already noted that her defence is demonstrably false insofar as it asserts she did not ever receive the sum of $914,908. Her failure to give evidence means that I will be all the more ready to draw inferences against her if the evidence otherwise permits it.
However, even without any evidence from Mrs La Rocca and even given my readiness to draw conclusions adverse to her, my conclusions at paragraphs [135] and [149] to [152] above, that Mr Sergi was fully informed about the payment to Mrs La Rocca’s account and that he authorised it, mean that the plaintiff cannot succeed on its contention that the payment was made by mistake.
In my view, the plaintiff has not demonstrated that there was ‘qualifying or vitiating factor’ about the payment into Mrs La Rocca’s account. The weight of the evidence suggests that Mr Sergi was labouring under no mistake about where the funds were being directed, including to Mrs La Rocca.
The claim against Mrs La Rocca should be dismissed.
Although Mrs La Rocca did not appear and although Mr Eid represented himself at the hearing, it is appropriate for the proceedings to be dismissed with costs. Both defendants incurred costs of legal representation at an earlier stage of the proceedings and, in my view, it is appropriate for those costs to be recoverable.
The orders of the Court will therefore be:
The proceedings are dismissed.
The plaintiff is to pay the defendants’ costs as agreed or assessed.
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Three Corner Group Pty Ltd
La Rocca [2026] NSWSC 280
(2011) 191 FCR 1
(1996) 186 CLR 71
(1984) 154 CLR 178
(2022) 110 NSWLR 44
(1992) 175 CLR 353
(2012) 200 FCR 296
(1984) 156 CLR 41
(1997) 188 CLR 449
(2000) 204 CLR 333
(2004) 219 CLR 165
(2023) 111 NSWLR 132
Mr Eid fundamentally disputes Mr Sergi’s account of what occurred in relation to the payment to Mrs La Rocca. His case is that from the very outset, Mr Sergi was seeking (a) finance for the winery business but also (b) finance for an investment on his own behalf, which was to be arranged by Mr La Rocca. He points out that all of the parties to the Deed received independent legal advice and that those solicitors conducted the settlement on PEXA. He says that the borrower’s own solicitor confirmed all of the payment details on the day of the transaction, including the details of Mrs La Rocca’s account and the sum to be paid into it. Far from concealing the fact that funds were being paid to her, Mr Eid points out that he wrote to the solicitors for all parties stating his understanding that funds were to be paid into Mrs La Rocca’s Westpac account.
Mr Eid accepts that the source of his knowledge of the proposed payment to Mrs La Rocca and her account details was her son, Mr La Rocca, and not the plaintiff or Mr Sergi. But he says that the proposed payment to Mrs La Rocca was verified by Ms Sophie Darby of Solve Legal, who were the solicitors for the plaintiff and Mr Sergi in relation to the settlement. Mr Eid says that the payment to Mrs La Rocca was made only after the details of the payment were first independently confirmed during a video call between Mr Sergi and Ms Darby on the day of settlement.
The case presents me with starkly divergent accounts of what happened. Complicating the task of deciding who is to be believed is the fact that, shortly before the trial, the solicitor for the defendants ceased to act, having given notice of his intention to do so many months earlier. The defendants spent some considerable time seeking new representation but without success. For a while, their case seems to have been handled on an informal basis by another solicitor who was, in the end, unwilling to go onto the record.
The hearing therefore proceeded without any legal representation for the defendants. Mr Eid twice sought an adjournment to allow him time to find representation but, in circumstances where he had been on notice of his solicitor’s intention to cease acting for so long and where the case was otherwise ready to proceed, I denied those requests.
Mrs La Rocca did not appear at the hearing, which meant that her affidavit was not read. Nor was the affidavit of Mr La Rocca, which had been filed and served by the defendants’ former solicitors. Although I invited Mr Eid to consider issuing a subpoena to compel Mr La Rocca to attend so that Mr Eid could rely on that affidavit, he declined to do so.
Mr Sergi placed enormous trust in Mr Eid. They were friendly and, on occasions, even socialised together.
Shortly after this episode, Mr Eid claims to have written a letter to Mr Sergi which was addressed to his Gmail account, although Mr Sergi says he does not recall ever seeing it. The letter was dated 28 September 2023 and said ‘you need this in writing along with Alex and Brick Lane’. The reference to Alex is to Mr Glenn, who was said to be the promoter of CDX. The letter continued:
Unsurprisingly, their relationship soon came to an end.
As to the idea that Mr Sergi did not know how much had been advanced, the difficulty is Ms Darby’s file note, which is the second matter that particularly stands out. That file note records that Ms Darby explained the funds flow at settlement to Mr Sergi: see paragraph [62] above. Her note says:
The claim against Mr Eid will therefore be dismissed.