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The background facts 4 The following account of the dealings involving Mr Fuller and St Helier is largely derived from documentary evidence tendered on behalf of Mr Wily and is not substantially in dispute. 5 As at October 1986 the documentary material makes it clear that Sovereign Trustees Limited, as trustee of the Chinook Trust, an offshore trust, was about to receive an amount of $US 3,000,000 from the proceeds of sale of options in Independent Resources Limited, an Australian public company. Just how the Chinook Trust came to be entitled to receive that amount is, however, much less clear. There is reference to the transaction in the transcript of the examination of Mr Fuller under s 81 of the Bankruptcy Act 1966 (Cth) ("the Act") and in the transcript of proceedings conducted in the Administrative Appeals Tribunal pursuant to an application by Mr Fuller brought under s 149Q of the Act. It must be said that Mr Fuller's answers to questions put to him on both occasions were often vague and it is possible to reach the conclusion that he was deliberately elusive. In the result it is difficult to be certain precisely what happened. I have little doubt that Mr Fuller knew a great deal more about the transaction than appears in the transcripts. 6 Mr Fuller and Mr Wilkinson, along with another person, a Mr Cook, were the directors of Gloucestershire Investments Pty Limited ("Gloucestershire"). Gloucestershire was the trustee of a unit trust known either as the Gloucestershire Unit Trust or the Gloucestershire Investment Trust. The units in this unit trust were held by trustees of a number of discretionary trusts the beneficiaries of which were members of the family of Mr Fuller, Mr Wilkinson, an accountant who also acted for Mr Fuller, and Mr Cook. There were six such discretionary trusts, two associated with each of the persons just named. Gloucestershire had previously underwritten the issue of options by Independent Resources Limited. On issue, the options were undersubscribed so that Gloucestershire, as underwriter, was required to take up options to the extent of the undersubscription 7 Although the evidence is far from clear, it seems that Mr Wilkinson arranged for Gloucestershire to sell the options to a company in Guernsey at what was said to be market value. At some stage, when the options had become valuable, they were sold through brokers. In the result there was a profit of $US 3 million. Whether the company which purchased and sold the options was Sovereign Trustees Limited, the trustee of the Chinook Trust, or whether there was some other interposed entity is not known. All that is known is that in some way the Chinook Trust became entitled to the profit. 8 Although the trust deed of the Chinook Trust was not in evidence, it was alleged by Mr Wily and not disputed by either Mr Fuller or the Wilkinsons that the terms of the trust deed constituting the Chinook Trust were similar to the terms of the trust deed constituting the Vilnius Trust, the relevant provisions of which are later set out. Although, as will be seen, the beneficiaries named in the deed constituting the Chinook Trust were charities such as the Swiss Red Cross, the contemplation was, it may be inferred, that by the addition at a later point of time of other beneficiaries the assets of that trust would find their way to benefit four families, including the Fuller, Wilkinson and Cook families as well as the family of a Mr Somes. There is nothing to suggest that Mr Fuller was named as a beneficiary of any of the Australian discretionary trusts or of the Chinook Trust. In the transcripts to which reference has been made Mr Fuller would have one believe that Mr Wilkinson was the guiding mind of the transaction and that he, Mr Fuller, knew little about it until a meeting in October 1986 which he attended and which is dealt with later. I would doubt that Mr Fuller was kept by Mr Wilkinson in such a state of ignorance. 9 In or around September 1986 Pennant Pacific Resources Inc, a United States corporation not in any way associated with the Fuller/Wilkinson interests, entered into an agreement with Gloucestershire under which it was to acquire units in the unit trust and 50% of the shares in Gloucestershire. The transaction took the form of the American company acquiring by subscription inter alia new units in the trust for $5,000,000. Documentation associated with the transaction indicates that prior to September 1986 Gloucestershire had sold all its convertible options and had only shares in Independent Resources Limited. This transaction seems to have nothing to do with the $US 3 million which reached the Chinook Trust. 10 Ultimately, all that is certain is that Mr Fuller, either in his own right or otherwise, had no entitlement to the amount of $US3,000,000 and that the Chinook Trust received the amount. No submission was made on behalf of Mr Wily, or for that matter, any other party, that it was relevant to understand how it came about that the Chinook Trust became entitled to receive the $US3,000,000. 11 Subsequently an agreement was reached by Mr Wilkinson, Mr Fuller, Mr Cook and Mr Somes that the share of trust assets relating to Mr Somes would be segregated from the remaining assets and be held for the ultimate benefit of Mr Somes. Accordingly on 14 October 1986 Sovereign Trustees resigned as trustee of the Chinook Trust so that it could act as the trustee of another trust for the ultimate benefit of the family of Mr Somes. In its place, St Helier was appointed the new trustee of the Chinook Trust. 12 On 15 October 1986, a meeting was held at the offices of St Helier. In attendance at that meeting were Messrs Fuller, Wilkinson and Cook as well as Sheldon Cordell, a solicitor from London who acted for Mr Fuller, and two officers of St Helier, Morris Evans and Sydney Holley. A minute of this meeting records: "It was agreed that four new Declarations of Trust be created and for the assets comprising the Chinook Trust namely, the cash funds and the bearer shares to be appointed out, or advanced to the four new Declarations of Trust as follows: -

1. The Wilkinson Trust - one-third share
2. The Vilnius Trust - one-third share
3. The Cook Trust - one-sixth share
4. The Somes Trust - one-sixth share It is agreed that each of the four new parties will prepare a Letter of Wishes addressed to St Helier Trust Company Limited with regard to their respective trust funds and each party submits a note of their handwritten wishes which will be used as the basis to prepare a formal Letter of Wishes for each to sign." 13 Four trust deeds were signed that day. The trusts constituted by them were styled the Vilnius Trust, the Mutley Trust, the Batman Trust and the Robin Trust. The proceeds of the sale of the options were ultimately distributed to these trusts in the proportions one third to the Vilnius Trust and the Mutley Trust and one sixth to each of the Batman and Robin trusts. The four trusts were, to put the matter in general terms, intended ultimately to benefit the families of Mr Fuller, Mr Wilkinson, Mr Cook and Mr Somes respectively. It is only the Vilnius Trust with which the present proceedings are concerned. It was clearly, although this is not reflected in the terms in which it was written, intended for the benefit of the Fuller family. 14 The trust deed of the Vilnius Trust, adduced in evidence, provided that at the expiration of a period referred to as "the Discretionary Period" (in effect a perpetuity period, 80 years or such earlier date as the trustee might appoint) the trust fund was to be held upon trust for such of the "beneficiaries", living or in existence as the trustees should in writing appoint and in default for such of them as should then be living or in existence and if more than one equally. The deed defined the "beneficiaries" to be the Swiss Red Cross, Lions International, United Nations Children Fund and any person appointed by the trustees in writing. Prior to the expiration of the Discretionary Period the trustees had a discretion to appoint income or capital among the beneficiaries. Subject to such appointment income was to be accumulated. 15 Among the powers of the trustees was a power to resettle for the benefit of any one or more of the beneficiaries or to transfer the whole or part of the capital of the trust to another trust provided that the transfer was for the benefit of all or any one or more of the beneficiaries. The trustees were empowered to make loans with or without interest and with or without security to any beneficiary. 16 In the transcript of the proceedings in the Administrative Appeals Tribunal Mr Fuller suggested that the form of the trust deeds was, at least in part, dictated by income tax considerations. He said that it was his understanding that he could expect discretions of the trustee to be exercised in accordance with his wishes and that that would apply to the wishes of his wife as well, at least so long as the trustees did not have a particular difficulty with a particular request. He conceded that he had an ability to influence the decisions of the trustee "in a way that was positive in terms of whatever he asked them to do". 17 On 20 October 1986 St Helier, according to the ledger account it kept for the Vilnius Trust, exchanged two amounts of $US497,000.00, one for $A778,386.84 and the other for CHF805,637. It did so at the request of Mr Fuller contained in an undated handwritten note which included an "immediate instruction" to "convert US dollars in equal proportions or as near as may be in Australian dollars at call and Swiss Francs 30-60 day at best rate with reputable bank". 18 On 17 November 1986 Mr Fuller sent a fax to St Helier saying that he "would appreciate [St Helier] making as soon as possible" two transfers out of the Australian dollar deposits of the trust. These were, first, a transfer of $A410,000 to the Mutley Trust and, secondly, a transfer of $A150,000 to M J Fuller Services Pty Limited ("Fuller Services") with both transactions "to be recorded as unsecured loans with no fixed term but repayable on demand and for so long as remaining unpaid or satisfied interest shall accrue six monthly in arrears at the rate of 14% per annum". On 24 November 1986, the Trustee resolved to lend $A410,000 to the Mutley Trust and on 26 November 1986 the Trustee resolved to lend $A150,082.75 to Fuller Services. Each loan was made on the terms set out in Mr Fuller's letter. 19 On 19 November 1986, Mr Fuller wrote to St Helier as follows: "This letter is written to you in your capacity as trustee of the Declaration of Trust made by you dated 15 October 1986 and known as the Vilnius Trust… Although I appreciate that the trusts, powers and discretions given to you by the Trust are exercisable by you and that I do not have any legal right to interfere in any way in the manner in which you exercise the same, I am writing to you to set out my wishes as to the future administration of the Trust. I would hope that you will deal with the Trust Fund (as defined in the Trust) and will exercise your powers and discretions in accordance with such wishes, although I realise that you are not legally bound to do so. It is my wish that, during my lifetime, you should have regard to my wishes and that you will exercise the powers and discretions conferred upon you by the Trust in accordance with such wishes. … It is, further my wish that you should appoint me Michael John Fuller as investment adviser to the Trust upon such terms as may be agreed between you and myself." 20 On 2 December 1987 the ledger account of the Vilnius Trust was debited with $A505,589.18 for the purchase of 300,000 shares in the company Jingellic Minerals NL and 400,000 shares in Enterprise Gold Mines NL. A letter from Mr Fuller to Morris Evans of St Helier of 20 November 1987 states that the purchase had been arranged by Sheldon Cordell through Kingston Securities Australia Limited. The letter continues: "Please remit to him funds as requested by him to complete. Shares will become assets of Trust upon completion". It is said that the shares subsequently became valueless. 21 On 22 May 1989 Mr Fuller requested that $A48,730 be remitted to a bank account in the name of GJ and HM Silvy. The funds were for the purchase of 160,000 fully paid shares in Claremont Petroleum NL. 22 On 12 July 1989 Susan Etienne, an officer of St Helier recorded a conversation she had had with Sheldon Cordell in which he advised her that the loan made by the Vilnius Trust to the Mutley Trust (see para 13) "has been repaid in Australia and [that they] are therefore to prepare documentation releasing Mutley from the loan". On 15 September 1989, a letter was received by St Helier from Mr Fuller stating that "it is my wish that you should waive the loan of Australian dollars 410,000.00 together with any accrued interest to date". That day, St Helier passed a resolution waiving repayment of the loan. The resolution noted that "a letter [had] been received from ... [Fuller] requesting that the Trustees waive the loan" and that the loan had been repaid by "alternate arrangements outside of the two Trusts". The resolution then notes that the trustees had discussed the matter and decided to waive repayment of the loan. 23 On 22 December 1989 a facsimile was sent by Mr Fuller to Sheldon Cordell requesting that he have the trustee remit $A50,000 to Maifle Proprietary Limited. A later memorandum from Susan Etienne to Mr Fuller (dated 19 March 1993) notes that "A$150,000 was paid to M J Fuller Services Pty Limited on 28 December 1989 as requested in your fax of 22 December 1989 addressed to Sheldon Cordell. This payment was treated as a loan to yourself". A file note of Susan Etienne dated 16 March 1990 records that Mr Fuller had requested that this loan be written off. In the course of his examination under s 81 of the Act, Mr Fuller said that Maifle was a company that an acquaintance of his, Mr Fleming, had an interest in and that the $A50,000 remittance had been for the purpose of a loan for the benefit of Maifle to provide for additional capital and the discharge of debts. Mr Fuller on being asked if the amount has ever been repaid said: "Yes, not to the trust, I think from memory Fleming has paid some money equivalent to my wife equivalent to that sum." 24 On 16 March 1990 Susan Etienne noted: "Michael Fuller wishes to liquidate some of the Swiss Francs with Vilnius. The fixed deposit matures on Monday, 19th March, and I explained that the bank will have already arranged to re-fix the deposit and that it will cost a fair amount to break it. Mr Fuller is not worried about the costs and wants the fixed to be broken as soon as possible and the following transactions carried out: - 1. The Australian Dollar equivalent of [CHF]50,000 to be telegraphically transferred to: - National Australian [sic] Bank … A/C Of: MJ & LA Fuller … 2. [CHF]150,000 is to be held in cash, in the name of Mrs LA Fuller and Mr Fuller will arrange for this to be collected at some stage later this month… 3. The balance on the Swiss Franc account is to stay on call for the time being." 25 On 19 March 1990, St Helier resolved to appoint Mrs Fuller a beneficiary of the Vilnius Trust with immediate effect. Further, it resolved to create a fund in favour of Mrs Fuller in the amount of CHF150,000 and that a capital distribution of the Australian dollar equivalent of CHF50,000 be also made to her. 26 On 23 March 1990 Ms Simon of St Helier sent a fax to the Royal Bank of Scotland referring to a sum of the Swiss franc equivalent of $A10,000 and advising that this was to be collected by a David Andrew Fleming. This, presumably, is the same Mr Fleming who is referred to earlier in respect of the remittance of $A50,000 to Maifle Pty Ltd. 27 On 23 July 1990 a fax from St Helier confirmed Mr Fuller's instructions that $A50,000 be remitted to a trust account in his name with Baker O'Loughlin, an Adelaide firm of solicitors. At the bottom of the page was written: "treat as a loan to MF for the time being". The file note of 19 March 1993 notes that this amount was paid to Baker O'Loughlin's trust account and was treated as a loan to Mr Fuller. It does not appear that Mr Fuller had ever personally been appointed a beneficiary by St Helier. On 26 July 1990, St Helier resolved to lend to Mr Fuller $A50,000 free of interest and repayable on demand. 28 On 27 July 1990 Susan Etienne confirmed, in a file note, an earlier facsimile dated 24 July 1990 from Mr Fuller instructing that the Swiss Franc equivalent of $A19,000 was to be paid to a Mr Nash in respect of shares that Mr Nash was purchasing on behalf of Mr Fuller. Ms Etienne also recorded that Mr Fuller did not want the shares to be shown as an asset in the trust books so asked that the remittance be recorded as a loan to Mr Nash which would be repaid at a later date. That day St Helier resolved to lend CHF20,482 to Mr Nash. 29 On 15 August 1990 the sum of $A50,000 was transferred to the trust account of Baker O'Loughlin and was treated by St Helier as a loan to Mr Fuller. The transfer followed a request made by Mr Fuller by fax on 10 August 1990. This transfer was additional to the transfer referred to in para 20 of these reasons. 30 On 17 August 1990 Mr Fuller faxed Ms Etienne asking her to remit in Canadian dollars the equivalent of CHF100,000 to the account of the Wilkinsons with the Canadian Imperial Bank of Commerce. On 20 August 1990, St Helier sent a letter to the Royal Bank of Scotland requesting that CHF100,000 be transferred to the Wilkinsons' account with the Canadian Imperial Bank of Commerce. A confirmatory statement from the Royal Bank of Scotland dated 20 August 1990 indicates that a payment order had been issued in relation to the Wilkinsons' account but that settlement would take place on 22 August. On 22 August, St Helier resolved that sum of CHF100,000 was to be loaned to the Wilkinsons on the terms that it was to be free of interest "at present" and repayable on demand. It is this transaction which gave rise to the loan said to have been made to the Wilkinsons from the Fuller Bare Trust. 31 On 17 September 1990 Mr Fuller requested Ms Etienne remit $A46,400 to an account with the State Bank of South Australia in the name of "Australian Formula 1 Grand Prix Board Operating Account",allegedly for the purchase of a corporate box. On 20 September Mr Fuller called Ms Etienne and confirmed to her that the payment was to be treated as a loan to him. The transaction took place on 17 July 1991 and was recorded as a loan to Mr Fuller by St Helier. 32 On 18 September 1990, a further CHF129,736.87 was transferred to the Wilkinsons' account with the Canadian bank. A similar confirmatory statement from the Royal Bank of Scotland to that referred to above was issued in relation to this transaction. It appears that this transaction was carried out on the basis of a facsimile dated 17 September 1990 which was signed by Mrs Fuller. 33 On 15 July 1991 Mr Fuller requested Ms Etienne to remit the Australian dollar equivalent of CHF100,000 to the trust account of Baker O'Loughlin. Again, the memorandum from Ms Etienne to Mr Fuller of 19 March 1993 indicates that the remittance was made on 17 July 1991 and that St Helier treated this as a loan to Mr Fuller. 34 While this was happening, proceedings had been commenced at the suit of Claremont Petroleum NL ("Claremont") and Beach Petroleum NL ("Beach") against Mr Fuller for breach of his obligations as a director under ss 233 and 229 of the Companies (Qld) Code 1981. On 11 September 1992, judgment was delivered by Wilcox J in these proceedings. His Honour ordered that judgment be entered in favour of Claremont against Mr Fuller in the sum of $A493,750. This decision was upheld on appeal to a full Court of this Court. Claremont thereafter issued and served a bankruptcy notice on Mr Fuller in relation to this judgment debt and then, on his failing to comply, filed with the Court a creditors petition on 7 January 1993. After an unsuccessful attempt was made by Mr Fuller to organise his affairs under Part X of the Act, a sequestration order was made by this Court on 20 May 1993. 35 On 21 December 1992, Mr Fuller sent a facsimile to Ms Etienne saying that he would appreciate her transferring all available funds to a bank account in South Australia in the name of Mrs Fuller. On the next day, another facsimile was sent to Ms Etienne saying: "Please convert Sterling and Swiss Francs to $A & remit. OK to deduct fees on winding up of Kingston. I will also wish to close down Vilnius as soon as remaining assets are sold or if not saleable presently can be transferred to LA Fuller." 36 On 22 December 1992, Ms Etienne sent a facsimile reply to Mr Fuller confirming that the Sterling and Swiss Franc currency would be sold. 37 On 25 January 1993 Mr Fuller faxed Ms Etienne as follows: "Dear Susan, While I realise that any expression of a wish by me is not binding on the trustee. In view of the substantial amount of litigation with which I am involved I wish to renounce any capacity I may have to express a wish in favour of my wife Laima Ann Fuller. I would like you to treat with my wife henceforth after responding to the request next following: Please supply as soon as convenient a list of debtors & remaining assets of trusts." At the bottom of the copy of facsimile in evidence, is the notation: "This cancelles [sic] the Letter of Wishes dated 12-11-86." This notation was initialled by Susan Etienne. Further, a facsimile reply sent that day said: "Thank you for your fax advising that the Letter of Wishes dated 12th November 1986 has been cancelled and that we are to look to your wife, Laima Ann Fuller, for guidance regarding the Trust." 38 On 1 March 1993, Mr Fuller sent a facsimile to Ms Etienne stating that "it would be appreciated if Kingston would support the proposed scheme for my creditor". "Kingston", here, refers to Kingston Services Inc, a creditor of Mr Fuller. The following page of that transmission was a memorandum from Laima Fuller to Etienne stating: "I request that you complete proxy form in the estate of the above so as to appoint as proxy. Anthony Bernard Fuller c/o Baker O'Lough[lin] or failing him Greg Parr c/o Andersons And to vote in favour of a composition and in relation to any other matter in the proxy's discretion." 39 In another facsimile to Ms Etienne dated 19 March 1993, Mr Fuller said: "A statement by you on behalf of the administration of the Trust that neither I nor any member of my family has any interest either present or contingent in the Trust or its assets including assets held by Kingston Services Inc would be helpful." To this fax Ms Etienne replied the same day: "The reason I wish to speak to you is that in order to prepare the statement confirming that neither you nor any member of your family has any interest either present or contingent in the trust or in its assets, I would need to remove your wife as a beneficiary from the trust. You may recall that she was appointed a beneficiary on 19 March 1990 and we have distributed funds to her, the latest distributions being on 22 and 23 December 1992 by way of a capital distribution of the remaining cash within the complex. In the absence of speaking to you, I have therefore arranged for the trustees to remove your wife as a beneficiary of the trust and this has been dated 20 January 1993 so as not to appear immediately after the payments to her in 1992 and before receiving correspondence from Andersons Barker Gossling. I trust the action taken meets with your approval." 40 A facsimile from Laima Fuller to Ms Etienne, stamped as received 19 May 1993 stated: "The above entities [the Vilnius Trust and Kingston Services] have outstanding loans on their books to third parties eg L & N Wilkinson, Maifle Pty Ltd, L.G. Nash & Others. I would appreciate the Trust assigning those outstanding loans for a nominal sum in each case to Fidex International Trust Company Limited c/o Volaw Trust of St Helier Jersey." 41 A file note of Ms Simon dated 21 May 1993, records a telephone conversation between herself and Mr Fuller as follows: "Michael Fuller telephoned on 18th May with reference to the residual loans in Kingston/Vilnius. He mentioned that Lynn Wilkinson had a Trust with Volaw and he said he wanted us to assign those loans to Volaw. I said I could do nothing without Lynn Wilkinson's approval and also I would have to check the Deed and speak with Lynn. Lynn subsequently called me at 11:30 a.m. on the 19th May to confirm that he was happy that this was done and he had also sent me a long fax. I asked him who the beneficiaries of his Volaw Trust were and he said it was himself and his family and I therefore told him that, having checked the Deed, there was no way I could assign the loans to that Trust for virtually no consideration as there was no mutual beneficiary. He asked me to recheck the position, which I did and subsequently telephoned him back the same afternoon. I also discussed the case with both Brian and Royan and it was agreed that we would have to be extremely careful and certainly could do nothing while there were no common beneficiaries unless the assignment was made for full value. When I told Lynn this he said he would have to 'think again' and revert to us. One of the worries is that it is being done to maybe defraud Mike Fuller's creditors and we are to ask Lynn the reason for wanting this next time he phones. At the time of dictating this file note I have not heard from him again…" 42 Beach and Claremont took further proceedings against Mr Fuller and others. On 10 June 1993, von Doussa J gave judgment inter alia against Mr Fuller in the sum of a further $A44,450,000.