Visnic v Sywak & Ors

[2007] NSWSC 701

Supreme Court of NSW|2006-02-24|Before: Brereton J, Mr J

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Source facts

Court

Supreme Court of NSW

Decision date

2006-02-24

Before

Brereton J, Mr J

Source

Original judgment source is linked above.

Judgment (95 paragraphs)

[1]

CITATION : Visnic v Sywak & Ors [2007] NSWSC 701

[2]

HEARING DATE(S) : 21, 22, 23, 24 February 2006; 26, 27, 28 June 2006; 21 August 2006

[3]

DECISION : (1) Declare that plaintiff is entitled at law and in equity to (i) one of two issued shares in capital of fourth defendant, Castlove (ii) nine of eighteen issued shares in capital of fifth defendant, Donovi (iii) two of eight issued shares in capital of each of second defendant, Adellos and third defendant, Parlamartu. (2) Declare that plaintiff is beneficially entitled to further two of the eight issued shares in capital of each of Adellos and Parlamartu, being two of the shares held legally by first defendant, Peter Sywak, in each of those companies. (3) Order that first defendant transfer to Plaintiff two of the shares held by first defendant in each of Adellos and Parlamartu. (4) Order that registers of each of Adellos, Parlamartu, Castlove and Donovi be rectified pursuant to Corporations Act, s 175 to the following effect: (i) Adellos, so that plaintiff be registered as holder of four of eight issued shares and first defendant as holder of four of eight issued shares; (ii) Parlamartu, so that plaintiff is registered as holder of four of eight issued shares and first defendant as holder of four of eight issued shares; (iii) Castlove, so that plaintiff is registered as holder of one of two issued shares and first defendant as holder of one of two issued shares; (iv) Donovi, so that plaintiff is registered as holder of nine of eighteen issued shares, and first defendant as holder of nine of eighteen issued shares. (5) Order that each of second, third, fourth and fifth defendants be wound up pursuant to Corporations Act, s 461(1)(k). (6) Order that Michael Gregory Jones be appointed liquidator of each of second, third, fourth and fifth defendants. (7) Reserve liberty to apply, if it is desired to refer the matter for an inquiry. (8) Order that first defendant pay plaintiff's costs.

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3 Counsel recently communicated to me that urgency now attended the determination of the matter - the delay, which I regret, having been occasioned by the need to review evidence taken and submissions made in three tranches of a hearing which was twice part-heard between February and August last year. Although detailed reasons were in an advanced state of preparation, they were not yet ready for publication when I was about to commence vacation on 15 June 2006, and accordingly I thought it best that day to announce my decision and orders, and a summary of my reasoning, and to publish the full reasons upon my return. These are those reasons; and the outline that I gave on 15 June is incorporated within paragraphs [100] - [125] below. Background 4 Mr Visnic, who was born in Yugoslavia in 1946, migrated to Australia in 1970 at the age of 24. He had by then acquired some experience in the metal trade and construction industry and continued to work in that industry in Australia. In the 1970s, he became involved in business ventures with his uncle Robert Kusic, Peter Kusic, Slavko Zubovic, Frank Juracic and Milos Vasic (the "Business Associates"). Several corporate vehicles were used for the businesses, which were involved in building and formwork, and in property development. The first, Auburn United Formwork and Fixing Pty Limited ("AUFF") was incorporated in the early 1970s. Initially, a friend's farm was used for storing the business equipment, but later in the 1970s, in 1979, a property at Kemps Creek was purchased in the names of all the Business Associates for that purpose. The Kemps Creek property was sold in the early 1980s, when they acquired, again in the names of all the Business Associates personally, industrial property at Wetherill Park. 5 Mr Sywak was born in Ukraine in 1941. He holds a Bachelor of Business from the University of Technology Sydney, and is now a certified practising accountant practising on his own account as Sywak & Associates as 40 Parramatta Road, Homebush. He is a registered company auditor and registered tax agent, and has practised as a CPA on his own account since 1981, when he purchased the accounting practice of the firm Kelly & Staines. 6 Robert Kusic was a client of Kelly & Staines, as was AUFF, when Mr Sywak purchased the practice in 1981. Mr Sywak says he became acquainted with Mr Visnic and his Business Associates at that time, although Mr Visnic says that Mr Sywak's involvement commenced earlier. 7 On 9 June 1981, Mr Visnic and his Business Associates caused to be incorporated a further trading company, Auburn United Form Work Pty Limited ("Auburn"), and on 11 August 1981, Auburn United Concrete Pty Limited ("Concrete"). 8 Donovi was incorporated on 22 August 1984. According to its 1991 annual return, it by then had six shareholders, Frank Juracic holding one share, Robert Kusic two, Mr Sywak one, Milos Vasic one, Slavko Zubovic one, and Mr Visnic one; Mr Visnic having apparently acquired his share in the course of that year. The directors were Frank Juracic, Robert Kusic, Mr Sywak and Slavko Zubovic. Mr Sywak and Robert Kusic were principal executive officers from 3 September 1984. The registered office was the office of Mr Sywak's accountancy practice. At least by the early 1990s, Donovi did not trade, but held valuable land at 406 Old Northern Road, Castle Hill, which could be developed.

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21 Mr Kusic, who is Mr Visnic's uncle, also gave evidence to the effect that the transaction was one on behalf of the Business Associates. He described the transaction as a joint venture between AUFF, Parlamartu and Jarika, involving the purchase of a property in Parramatta from which, if successful, the Business Associates would profit; Mr Visnic used the moneys in Parlamartu for that purpose, but the deal fell through and the money was lost. He denied that he had ever had any other view. But it is clear enough that in late 1995 he did. Not only did he sign and verify financial statements compiled in 1995, which showed "M & N Visnic" as indebted to Parlamartu for $690,000 approximately, but he participated in meetings that sought to amend the articles of Parlamartu so as to attach a lien to shares, specifically for the purpose recovering this supposed debt from Mr Visnic. He told Mr Hor, solicitor, of Champion & Partners who were acting for the Business Associates, that the debt had been included in that year's financial statements by Mr Sywak. He did not handle this part of his cross examination at all well - unsurprisingly, since the documents told a story quite inconsistent with his assertion that he had never believed that Mr Visnic was indebted to Parlamartu. He sought to explain what the documents recorded as "the only way out", namely that the only way he could get out of the company and away from partners with whom he no longer wished to be associated was "to go through the procedure and get Charlie [Mr Visnic] out of the share of sale. That is why we had to lean on him to agree on that, and in the meantime, that anybody else that owed money to companies was wiped clean". Demanding the $700,000 was part of "leaning" on him. 22 Although Mr Kusic denied it, there is force in Mr Stevenson SC's submission that he was determined to be of as much assistance to Mr Visnic's case as he could. He repeatedly stressed that the 30 April 1996 agreement was one which involved all debts being extinguished, even when it was not relevant to say so; and he was unduly reluctant to make reasonable concessions which documentary material compelled. 23 Notwithstanding this, I am inclined to accept that the $700,000 was not, at least originally, regarded as a loan to Mr Visnic, and was not intended to be such. Mr Polito's evidence was not the subject of serious challenge, and suggests that it was not Mr Visnic personally but him and his associates in AUFF who were participants in the venture. So does his contemporaneous note, recording that AUFF was the contributor of the $700,000. Mr Booker's evidence tells against the cheque having been obtained via a personal cheque being first drawn, in the manner alleged by Mr Sywak's. The absence of any reference in the accounts to any debt from Mr Visnic until 1995 is telling. The 1995 dispute 24 Relations between the Business Associates and Mr Visnic deteriorated, and according to Mr Visnic reached the point that he and the others were not on speaking terms (although, in his oral evidence, he suggested that this was only because there was nothing to talk about). Mr Visnic had commercially gone his own way, and there was no relationship worth speaking of between him and the Business Associates. It is clear enough that they wanted him out, and that relations were poor. At least by the second half of 1995, the Business Associates were asserting that Mr Visnic was personally indebted to Parlamartu for the $700,000 advanced for the Jarika project. The Business Associates threatened to amend the articles of association of Parlamartu, to impose a lien on shares for all debts due to the company - the existing articles provided for a lien only on shares that were not fully paid, and there is no reason to suppose that Mr Visnic's share was other than fully paid. In turn, Mr Visnic sought to evade the proposed lien by transferring his share to Mr Sywak.

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47 The transaction was settled by two deeds of 30 April 1996. 48 By Deed for Repayment of Loans and Transfer of Shares, each of Mr Peter Kusic, Mr Zubovic and Mr Vasic agreed to transfer all their shares in Parlamartu and Adellos to Mr Sywak, who agreed to purchase them for $10.00 per share on 30 April 1996. Parlamartu and Adellos agreed to indemnify each of the outgoing shareholders against any past, present and future actions, costs, damages or other claims or liabilities in respect of which the shareholders might have been liable in their capacity as shareholders, directors or other officers of those companies. Parlamartu agreed to pay to each of those shareholders or as directed the sum of $280,000 on 30 April 1996, upon which each of those shareholders released the companies and their present and future directors and officers from all claims except any in respect of which they were to be indemnified under the deed. Mr Sywak and Mr Visnic each jointly and severally guaranteed all the obligations of Mr Sywak and Parlamartu and Adellos under the deed, including but not limited to repayment in full to each of the shareholders of the loan accounts and performance of the indemnities. 49 By deed for deferred repayment of loans and transfer of shares, each of Mr Robert Kusic and Mr Juracic agreed to transfer their shares in Parlamartu and Adellos to Mr Sywak, who agreed to purchase them for $10.00 per share on 30 April 1996. Each of those shareholders agreed to resign as directors and other officers of the companies immediately upon transfer of their shares. The companies undertook to indemnify each of them against any past, present and future actions and claims in their capacity as shareholders, directors or other officers. Parlamartu was to pay Mr Juracic the sum of $100,000 on 30 April 1996. Parlamartu was to repay the balance of the loan owing to Mr Juracic ($180,000) and the whole of that owing to Mr Kusic ($280,000) by no later than 30 April 1998 (a total of $460,000). Parlamartu was to pay interest at 8.5% per annum to each of Mr Kusic and Mr Juracic on the moneys owing to them. Adellos was to secure the obligations of Parlamartu and itself by granting a second mortgage of property owned by it in Cobbitty Road Narellan to Mr Juracic and a third mortgage to Mr Kusic. Mr Sywak and Mr Visnic jointly and severally guaranteed all of the obligations of Mr Sywak, Parlamartu and Adellos under the deed.

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53 Mr Visnic says that the transaction was settled late on 30 April at the Castle Hill office of his solicitor John Boxsell, and that as well as Mr Boxsell, Mr Visnic and Mr Sywak, the Business Associates were present but unrepresented by their solicitor. He supposes, but did not actually see, that cheques payable to the Business Associates were present. He cannot actually confirm that any documents were handed over from one party to another. He has a recollection of being there until late - perhaps 6.00 pm - because some documentation was not yet ready. Mr Visnic says that the only information he ever received about the agreement and the drafting of the documents required for the purchase of the shares in Adellos and Parlamartu from the Business Associates was through Mr Sywak. Mr Visnic thought that John Boxsell was technically acting for him, but Mr Visnic did not speak to Mr Boxsell about the transaction at all; his only contact was with Mr Sywak, who said that he would organise for Mr Boxsell to draw up all the agreements and would let Mr Visnic know when he was needed to sign anything. Mr Boxsell never contacted Mr Visnic or spoke to him. Mr Visnic said he was asked to attend at John Boxsell's office on 30 April 1996 with the Business Associates, along with Mr Sywak and Mr Boxsell. This was the first time Mr Visnic saw Mr Boxsell in relation to the transaction. Mr Visnic says that he did not read any of the documents presented that day, and that Mr Boxsell did not show him any documents or speak to him about what was in the agreements. Mr Visnic says that Mr Sywak and Mr Boxsell handed documents to him and Mr Sywak said, "Just sign here", pointing to the appropriate place in the documents for the parties to sign, where there were crosses in those places where a signature was required. Mr Visnic's recollection is of there being "a lot of documents" and that the whole process was quite rushed. Mr Visnic thought that since Mr Sywak had organised everything and the Business Associates were happy to sign, that he would sign the documents. He says that at that time, he completely trusted Mr Sywak to honour the agreement that they had reached and relied upon him to do what was agreed.

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64 Mr Visnic says that he did not really see how his dealings through Sky Contracting with Civil & Civic would affect AUFF's capacity to obtain further work, but that he was not concerned about resigning as a director as he had previously been involved with and run several companies without being a director. As Mr Sywak was the accountant for the companies and he could give him instructions, he felt that he still retained control. Mr Sywak had his employee Gail Fraser prepare a resignation form as a director of AUFF and she brought the document upstairs. Mr Sywak then asked her to bring up "the other documents" which she did, bringing a bundle of documents about two inches thick. Mr Visnic was handed a form of resignation as a director for AUFF but did not sign it and just placed it on the table. He was also handed a resignation as a director from Concrete. He says that Mr Sywak suggested that as he was a director and everyone in the industry knew it, it made the company vulnerable. Mr Visnic said that this did not make sense to him, but that he was not worried about resigning as a director from AUFF or from Concrete because they were both just shelf companies. Mr Visnic says that Mr Sywak then handed over share transfer forms for all the companies. He says he asked: "What are all these other forms?", and then without an answer: "Leave all that for later". Mr Visnic says that he intended to leave the whole matter for another day, and did not understand why Mr Sywak wanted him to do it and was not interested in it. He wanted time to think about what was going on. He says that he would probably have signed resignation forms as director, but that the share transfer forms made him suspicious. He says that he left the office at about 8.00 pm having been there for two or three hours, and did not sign any documents at all. 65 Mr Visnic says that in June and July 1999 he was very busy with his personal businesses and had not spoken to Mr Sywak since the visit to his office in May. He says that in June or July he received a call from Mr Sywak at his office in Granville, and that Mr Sywak then, at his invitation, arrived at his office. Mr Sywak repeated that it was necessary to cut Mr Visnic's connection with AUFF because of its possible effect on future work with Civil & Civic, but did not mention anything about share transfers. Mr Visnic agreed to resign as a director from AUFF, Concrete, Donovi, Adellos, Castlove and Parlamartu, and signed typed letters of resignation. Mr Visnic says he was not sure why Mr Sywak was so adamant that it was the best course, but trusted him. 66 A few weeks later Mr Sywak telephoned him again and said that he had not signed everything correctly. He again came to Mr Visnic's office, bringing a resignation as secretary for Castlove, which he signed. Again, there was no mention of share transfers. Mr Visnic says that at this time he was busy with his own affairs and was completely relying on Mr Sywak to conduct the company affairs. 67 Mr Sywak's version is, of course, quite different. His initial version was that in about 1999, he had a discussion with Mr Visnic in which he said that as directors they were required to guarantee the refinancing of Castlove's obligations to St George, and that Mr Visnic should contribute the same amount that Mr Sywak had contributed to Castlove. Mr Visnic replied that he was having problems with his other companies, did not want to give personal guarantees, and did not want to pay any money, to which Mr Sywak responded that if Mr Visnic was not prepared to sign as guarantor he should resign as a director and shareholder of the company. He added that the shares were not worth anything, because the company did not have any equity. Mr Sywak says that Mr Visnic agreed to this, and that Mr Sywak added that he would prepare the documents for Castlove, and also for resignation from Adellos and Parlamartu since those companies could now have a single director and shareholder. 68 In a recent affidavit, Mr Sywak has elaborated. He says that when in the United Kingdom in or about February 1999 he received a mobile telephone call from Mr Visnic, who said that Federal Police had arrested another formwork operator for not remitting group tax, and that he was also in arrears and was concerned. Mr Sywak says that as a result he became concerned about his association with Mr Visnic and had some conversations with Mr Visnic concerning the shareholdings in the companies. He says that he had a discussion concerning the transfer of Mr Visnic's share in Donovi, to the effect that he said: "We must tidy up the shareholding in Donovi. If you transfer your shares in Donovi to me, then this will remove my association from you. I may also have a conflict of interest in that I act for various companies where your wife is a director. It may be better for you to take your work away from my practice. The shares in Donovi have no value at the moment and you have potential problems regarding your indebtedness to the tax office. It would be better for both of us if you transferred your shares in Donovi to me", to which Mr Visnic is said to have replied: "That is fine with me. Prepare the documents to transfer my shares in Donovi to you".

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76 On 21 July 2000, Kamper & Co wrote to Mr Sywak, advising that they had been approached by Mr Visnic to take over his accounting and taxation requirements, and continuing: Further, in addition to the Sky group of companies, Mr Visnic has advised of his ownership interests in the following companies: Castlove Pty Limited Donovi Pty Limited Auburn United Concrete Pty Limited Parlamartu Pty Limited Auburn United Formwork Pty Limited, and Adellos Pty Limited In order to be able to form a complete opinion of Mr Visnic's shareholding interests please provide us with a copy of the latest ASIC returns of the above companies. We understand that Mr Visnic has resigned his position as a director but still retains his 50% interest in the above companies. 77 Mr Sywak replied by letter dated 19 August 2000, relevantly as follows: Regarding the matter of Mr M Visnic's holding, we advise that legal proceedings are on foot in the Supreme Court for the recovery in excess of $1 million of personal debts owing by Mr M Visnic. Furthermore, Mr M Visnic has failed to establish how he has acquired these holdings. 78 Kampfer & Co wrote a further letter dated 7 September 2000, relevantly as follows: Thank you for your letter of 19 August 2000. However, our letter of 21 July 2000 requested that we be provided with copies of the annual returns of certain companies which, we understand are partly owned by our client. The "indebtedness" of the Sky group of companies to your firm and/or your decision to take action in the Supreme Court for the recovery of debts owing by Mr Visnic are separate issues and not even remotely connected with our request. Mr Visnic has advised us that he is the holder of a 50% interest in the following companies: Castlove Pty Limited Donovi Pty Limited Auburn United Concrete Pty Limited Parlamartu Pty Limited Auburn United Formwork Pty Limited, and Adellos Pty Limited A recent review of the ASIC records has shown that our client is no longer a shareholder in those companies. Mr Visnic maintains that his shares were never transferred or assigned to other individuals. Since it is not uncommon for errors to occur in the lodgement documents of annual returns, we kindly request your assistance in order to have those issues clarified. We further advise that in the absence of a satisfactory reply within seven working days, we will be left with no other option but to request the ASIC (copy of letter enclosed) to look into the transfer of the shares and the validity of those transactions. 79 Mr Sywak replied on 22 September 2000, relevantly as follows: As previously advised in correspondence. That unless your client can substantiate how he acquired the shareholdings in the above companies, and show proof beyond any doubt the consideration he paid for the alleged acquisition, we are unable to make any further comments on this baseless claim.

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84 First, he claimed that Mr Sywak did not inform him when the sale of the last five blocks of the Glenhaven land owned by Donovi occurred. It became apparent, from financial statements of the company, and from the instruments of transfer which he had signed, that this was not correct. He implausibly endeavoured to explain his position by asserting that it was not uncommon for deals to "fall through". 85 Secondly, he said that he never consented to the creation of mortgages by Adellos securing obligations under the deferred payment agreement. Not only do the terms of the deferred payment agreement signed by him contradict that, so too does the fact that his signature appears on the mortgages themselves. However, if his evidence be accepted, he did not read and may not have been aware of the contents and effect of those documents. 86 Thirdly, Mr Visnic separated from his second wife in about December 2002. Proceedings in the Family Court of Australia ensued, in the course of which a maintenance order was made against Mr Visnic. He made application to have that order reviewed, and swore several affidavits and financial statements (on 27 January and 3 November 2004, and 19 May 2005) in the course of those proceedings. In his evidence before me, he said that he believed throughout that period that he had a valuable interest in the four companies the subject of these proceedings. Yet he did not disclose any such interest in any of the financial statements in the family law proceedings. Nor did he disclose as expenditure, or as a liability, any costs incurred by him in the conduct of these proceedings. Mr Visnic instructed his accountants, Kampfer & Co, to write a letter of 22 December 2003 for the purpose of the Family Court proceedings, which stated that Mr Visnic had requested that Kampfer & Co express an opinion in relation to his "current status of office holdings" as they appeared in the ASIC records; Mr Visnic agreed he had given those instructions, and yet also agreed that, in these proceedings (which had, by then, been commenced), he was asserting that the ASIC records were wrong. Although his affidavit evidence in the Family Court proceedings included passages that cast responsibility for his poor financial straits upon Mr Sywak, he made no reference at all to his alleged entitlements to the shares in the defendant companies, or to Mr Sywak's alleged role in relation to those shares.

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100 Mr Visnic contends that the April 1996 agreement between him and Mr Sywak was one whereby they would acquire the shares of the Business Associates in each of Adellos and Parlamartu, to the intent that upon completion of that acquisition they would be beneficially entitled to equal shareholdings in those corporations, although the shares to be acquired from the Business Associates would be held in the name of Mr Sywak. Mr Sywak says that the agreement was that he would purchase all the shares held by the Business Associates in Parlamartu and Adellos, to the intent that he would own all of the issued shares, save and except for one in each which Mr Visnic would retain nominally, but hold on trust for Mr Sywak (this being necessary, it was supposed, to meet the two shareholder/director requirement). On both versions, Parlamartu was to repay to the Business Associates their loan accounts and forgive any loan that it had made to Mr Visnic, and Mr Visnic and Mr Sywak would both guarantee Parlamartu's obligations. The fundamental issue is whether or not the agreement between Mr Visnic and Mr Sywak was one by which the shares of the Business Associates in Parlamartu and Adellos would be acquired by Mr Sywak beneficially, or rather, by Mr Sywak for himself and Mr Visnic to the intent that they would each be beneficially entitled to half of the shares in each of those companies. On that issue, Mr Visnic bears the onus of proof. 101 As has already been explained, many, though not all, of Mr Stevenson's attacks on Mr Visnic's credit were sustained, and where Mr Visnic bears an onus, it does not much avail him to point out that Mr Sywak's credit has been at least equally tarnished. The safest guide in such a situation is not the oral evidence of either party, but such objective evidence as is available, and its consistency or inconsistency with the cases of each of the parties. 102 Mr Stevenson undertook a careful and helpful analysis of the correspondence and file notes from the file of Champions. I have reviewed that correspondence and those file notes closely, several times, and ultimately, to my mind, despite Mr Stevenson's submissions, they contain nothing that favours Mr Sywak's version over that of Mr Visnic, once it is recognised that it is common ground that the shares were to be acquired in the name of Mr Sywak, and the issue is whether if, as Mr Visnic contends, that was because the Business Associates refused to sell to him (or, at least, that he was told as much by Mr Sywak), or whether, as Mr Sywak contends, it was because Mr Visnic was content to be bought out of the predicament in which he was, when faced by allegations of a large indebtedness to Parlamartu. There is no doubt that extrication from the claimed debt to Parlamartu was a motive for the transaction, but that motive is equivocal as to what were the arrangements between Mr Visnic and Mr Sywak, as distinct from what were the arrangements between them and the Business Associates. 103 There are, however, several matters, some of them slight but some of more substance, which assist in forming a view as to which of the versions is more consistent with the available objective evidence. 104 First, there is the evidence relating to the Jarika transaction, out of which Mr Visnic's alleged indebtedness to Parlamartu arose. Although the evidence on that transaction is far from conclusive, so far as it goes, the evidence of Mr Politi and Mr Booker, and the contemporaneous note made by Mr Politi, tends in favour the version of Mr Visnic over than that of Mr Sywak. As I have said, it is far from conclusive, and acceptance of Mr Visnic's version of that transaction does not advance the case on the ultimate issue very far - because it is not in doubt that, by late 1995, the Business Associates were demanding repayment of the alleged indebtedness, however it arose. Nonetheless, it provides an illustration of a situation that involves a contest between versions offered by Mr Sywak and Mr Visnic, in which Mr Visnic's is more likely to be the correct one. 105 The next, and somewhat more significant matter, is that there were other arrangements between Mr Visnic and Mr Sywak conducted on terms of equality. First, some years before 1996, they had in about 1991 together bought out the other Business Associates in Donovi, with the result that they became equal shareholders in Donovi. That, of itself, would not be of much significance, given that it was years before 1996. But much more telling is the circumstance that, at the very time of these transactions, in April 1996, Mr Visnic and Mr Sywak together entered into a joint and equal shareholding relationship in Castlove. That assumes even more significance when it is appreciated that the function of Castlove was to acquire and hold land at Elizabeth Street, Wetherill Park, upon which the equipment of Parlamartu was stored and to which Parlamartu paid rent. It would be, at least, curious if they were to be equal shareholders in the landholding company, yet not in Parlamartu, which occupied and used that land. 106 The third matter is the role in the transaction of the solicitor, Mr Boxsell. Mr Boxsell was a solicitor who had acted for Mr Visnic in the past, and who continued to act for Mr Visnic after the relevant transaction - and was, indeed, acting for him in an unrelated conveyancing transaction current at the time of or shortly before the hearing. It was Mr Visnic who introduced Mr Sywak to Mr Boxsell. In contemporaneous correspondence to Champions, Mr Boxsell claimed to be acting for Mr Sywak, Mr Visnic, Parlamartu and Adellos. There are a number of contentious facts in the proceedings, of which one would have expected Mr Boxsell to have knowledge and on which one would have expected him to have been able to cast some light. Both parties could have called him and, ultimately, I think Mr Stevenson's suggestion - that the only inference I could safely draw in those circumstances was that there was nothing he could say and no document in his possession that would have advanced the case of either party - is correct. Nonetheless, it is of some slight significance that he claimed to be acting for both Mr Sywak and Mr Visnic. It would be curious if he were acting for both in the context that their interests were disparate rather than concurrent, and it would be surprising if he - as someone who might be viewed up to that time as more closely connected with Mr Visnic than with Mr Sywak, and who was acting in this transaction as a result of an introduction by Mr Visnic - were acting for Mr Sywak if he were the only beneficial purchaser, rather than they being jointly interested. 107 Next, it is clear from the Champions files that Mr Sywak was representing both himself and Mr Visnic in the negotiations with the Business Associates, and that Mr Visnic was not involved in those negotiations, receiving information only through Mr Sywak. In particular, Mr Hor's file note of 26 April 1996, recording a discussion with "Kusic, Juracic, Sywak", in which it was confirmed "Sywak is getting all the shares, nothing to Milan", illustrates this: it is probative of Mr Sywak directing, or at least acquiescing in, a transfer to him alone, in the absence of Mr Visnic; and it is consistent with Mr Visnic's version that the Business Associates refused to sell to him. 108 While these matters tell, to some extent, in favour of Mr Visnic's case, they might, on their own, or even taken together, have been insufficient to satisfy me of it to the requisite standard. However, there are more decisive matters.

[81]

110 On behalf of Mr Sywak, it was submitted that there was significance in the circumstance that he contributed some of the funds required to pay out the Business Associates, while Mr Visnic contributed none. However, under the Deeds of 30 April 1996, Parlamartu was primarily liable to pay the Business Associates. The asset which it had available to satisfy that obligation was its Wetherill Park property. Mr Sywak and Mr Visnic both guaranteed Parlamartu's obligations to the Business Associates. Three of the Business Associates were paid out immediately on settlement. Two of them provided vendor finance and were to be paid out over a period of time. Ultimately, Mr Sywak, to the exclusion of Mr Visnic, appears to have paid out at least some of what was due to the two Business Associates who provided vendor finance. He did so because they sued him. But although he asserts that this is some indication of an intention that he and not Mr Visnic be beneficially entitled, the fact is that Mr Visnic was his co-guarantor, and Mr Sywak had a perfectly good claim for contribution against his co-guarantor to meet that liability. To my mind, far from favouring the view that Mr Sywak alone was to be beneficially entitled, this circumstances tend to favour the view that both were to be beneficially entitled. 111 However, the most decisive and most determinative factor is that on 30 April 2006, following completion of the acquisition of the Business Associates' shares, there was an allotment of additional shares in both Adellos and Parlamartu to Mr Visnic. Up to that point, there were seven issued shares in each of the Adellos and Parlamartu. Mr Visnic held one of those seven shares in each corporation; Mr Sywak held one of the shares in Parlamartu; the Business Associates held five shares in Parlamartu and six shares in Adellos. After the transfers of 30 April 2006, Mr Sywak legally held six of the seven shares in each of Parlamartu and Adellos, and Mr Visnic held one in each. The effect of allotting an additional share on 30 April 2006 was to create an eighth share, and to allot it to Mr Visnic. Mr Sywak says that this was done under the belief that it was necessary that there be two shareholders in the companies, the Articles not having been amended to be single-shareholder companies. But whether or not that was at case, what is telling is, first, that Mr Visnic already held a share and it was quite unnecessary to allot any additional share for that purpose, and, secondly, that this increased from an odd number of shares to an even number, eight, the number of shares in each company - facilitating the allocation beneficially of four to each, given Mr Visnic's existing shareholding of one in each company. I can see no sensible explanation of those allotments other than to provide an even number of shares, reflecting an understanding that the parties would be beneficially entitled to an equal number in each company. This understanding was subsequently reflected, at least in the case of Adellos, though not for Parlamartu, in subsequent annual returns signed by Mr Sywak and lodged on behalf of Adellos, for 1997 and 1998, in which the shareholders were shown as being Mr Sywak as to four, and Mr Visnic as to four. Mr Sywak attributes this to a mistake in his office, but acceptance of that explanation would require acceptance of Mr Sywak's evidence on the issue, which is uncorroborated, where corroboration might have been expected from whomever in his office was responsible for the alleged mistake. 112 To those considerations must be added the course of correspondence, in the early 2000s, when the present dispute arose and accountants, Kampfer & Co, acting for Mr Visnic, wrote on several occasions to Mr Sywak, and then to solicitors acting for him, seeking an account of Mr Visnic's shareholdings and what had become of them. It would have been very easy for Mr Sywak to assert, if it were the truth, that he had acquired them, as to part in 1996 and as to the balance in 1999. But no such explanation was at first forthcoming: the responses, rather than advancing any such explanation, more or less merely put Mr Visnic to proof, to the effect that no further information or explanation would be provided unless Mr Visnic showed how he had acquired and provided consideration for the shares. The failure to advance then the explanation that he now proffers suggests that Mr Sywak was for some reason reluctant to commit to the version that he now propounds, and detracts from the acceptance of that version.

[92]

Order that the registers of each of Adellos, Parlamartu, Castlove and Donovi be rectified pursuant to Corporations Act , s 175 to the following effect: 4.1 The second defendant, Adellos, so that the plaintiff be registered as the holder of four of the eight issued shares and the first defendant as the holder of four of the eight issued shares. 4.2. The third defendant, Parlamartu, so that the plaintiff is registered as the holder of four of the eight issued shares and the first defendant as the holder of four of the eight issued shares. 4.3 The fourth defendant, Castlove, so that the plaintiff is registered as the holder of one of the two issued shares and the first defendant as the holder of one of the two issued shares. 4.4. The fifth defendant, Donovi, so that the plaintiff is registered as the holder of nine of the eighteen issued shares, and the first defendant as the holder of nine of the eighteen issued shares. 121 The result of those orders will be that each of the four corporations is deadlocked, in circumstances where there has been a total breakdown of trust and confidence between the shareholders. No evidence was adduced during the trial on which a "buy-out order" could be made. The plaintiff pressed for a winding-up order, and for the defendant it was recognised that if the conclusion were reached that the shareholdings were equal, there was little that could be said against such an order. In those circumstances, I am satisfied that the appropriate course is to make an order for the winding up of each company on the just and equitable ground. 122 Accordingly, I make the following further orders: 5. Order that each of the second, third, fourth and fifth defendants be wound up pursuant to Corporations Act , s 461(1)(k) 6. Order that Michael Gregory Jones be appointed liquidator of each of the second, third, fourth and fifth defendants. 123 The plaintiff has sought an order that it be referred to an Associate Judge to inquire into and certify the damages allegedly suffered by reason of the first defendant's breaches of fiduciary duty, and that the first defendant be directed to file an affidavit accounting for his dealings with the assets and income of the four corporations. I accept that, at least, in respect of the negotiations with the Business Associates, and as the legal owner of shares of which Mr Visnic was a beneficiary, that Mr Sywak was a fiduciary. However, the Statement of Claim identifies no damage resulting from a breach of fiduciary duty, other than depriving Mr Visnic of his shareholdings. It seems to me that the only damage that could have been occasioned to Mr Visnic is loss of the dividend that he might otherwise have received, but there is no evidence that dividends were declared or paid during the relevant period. Accordingly, as presently advised, it seems to me that there is not the necessary evidence of some damage that would be required to refer the matter for an inquiry. The orders that I have already pronounced will restore to him his shareholding. If there has been some breach by Mr Sywak of some obligation owed by him to any of the companies - whether as their accountant or as a director - prima facie, that is a matter for the liquidator to pursue. Lest I have overlooked something in this respect, however, I will reserve liberty to apply if it is desired to pursue an inquiry as to damages. 124 The plaintiff has succeeded, and there is no reason why the first defendant should not pay the plaintiff's costs. The plaintiff has foreshadowed a claim for indemnity costs, to which I have given consideration. Although it is true that there were serious problems with Mr Sywak's evidence, there were also serious problems with Mr Visnic's evidence. Although I have found that the plaintiff's case prevails - and does so distinctly on the balance of the probabilities - that is by reference not so much to the plaintiff's own evidence, as to external factors to which resort had to be had to resolve the conflict. I do not think that the defence in this case, in substance or in presentation, has descended to such a level of delinquency as warrants an indemnity costs order.