French v Bremner - [2019] NSWSC 1033

Supreme Court

New South Wales

Summary available

Medium Neutral Citation: French v Bremner [2019] NSWSC 1033
Hearing dates: 6, 7, 8, 9, 10, 13, 14, 15 and 16 May 2019
Date of orders: 15 August 2019
Decision date: 15 August 2019
Jurisdiction: Equity - Commercial List
Before: Parker J
Decision:
See [474]-[477].

Catchwords:
EVIDENCE — Hearsay — Exceptions — First-hand hearsay exceptions – Evidence Act 1995 (NSW), s 63 – application to tender draft affidavit where witness refused to answer questions – adequacy of s 67 notice – whether document “marked” by witness where witness amended draft affidavit and returned by email – whether representation “made” by attaching draft affidavit to email – whether evidence should be excluded under s 135.

CONTRACTS — Formation – whether one party agreed to “buy” other party’s mortgage – whether party breached agreement by failure to indemnify other party against mortgagee’s claim for funds owing.

CONTRACTS — Formation – alleged agreement by one party to undertake European joint venture to exploit a second party’s magnetic coupling invention – incompleteness – parties had not reached concluded agreement on terms of licensing of intellectual property or identity of shareholders – parties to alleged agreement not correctly joined to proceedings.

CONTRACTS — Formation – whether one party agreed for a second party to manage and maintain certain properties acquired with the first party’s funds.

EQUITY — Trusts and trustees — Resulting trusts – whether one party entitled to resulting trusts over properties registered in second party’s name where first party advanced substantial portion of purchase price – presumption of resulting trust rebutted.
LAND LAW — Co-ownership — Statutory trust for sale — Appointment of trustees – jurisdiction of Supreme Court of New South Wales – appointment of trustees for sale pursuant to Property Law Act 1958 (Vic), Part IV.
Legislation Cited: Evidence Act 1995 (NSW), ss 55, 63, 63(2)(a), 67, 135, Dictionary cl 6
Jurisdiction of Courts (Cross-Vesting) Act 1987 (Vic), ss 4(3), 234C
Jurisdiction of Court (Cross-Vesting) Act 1987 (NSW), s 9(a)
Property Law Act 1958 (Vic), Part IV, ss 225, 231, 234C.
Cases Cited: Attorney-General (NT) v Maurice (1986) 161 CLR 475; [1986] HCA 80
Calverley v Green (1984) 155 CLR 242
Caterpillar Inc v John Deere Ltd (No 2) [2000] FCA 1903
Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303; [2013] HCA 46
Great Atlantic Insurance Co. v Home Insurance Co [1981] 2 All ER 485; [1981] 1 WLR 529
Mindshare Communications Ltd v Orleans Investment Pty Ltd [2007] NSWSC 976
Nichia Corporation v Arrow Electronics Australia Pty Ltd (No 3) [2016] FCA 466
Sellars v Adelaide Petroleum NL; Poseidon Ltd v Adelaide Petroleum NL (1994) 179 CLR 332
TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130
Tory v Tory [2007] NSWSC 1078
Vairy v Wyong Shire Council (2005) 223 CLR 422
Watson v Foxman (1995) 49 NSWLR 315
Texts Cited: J C Campbell QC, “The consequences of rebutting a presumption of advancement” (2018) 46 Aust Bar Rev 229
The Hon JJ Spigelman AC, “Truth and the law” (2011) Bar News 99
Category: Principal judgment
Parties: Andrew Boyd French (Plaintiff)
Christopher Bremner (Defendant)
Representation:
Counsel:
A Franklin SC (Plaintiff)
MLD Einfeld QC/A Harding (Defendant)
Solicitors:
Maxwells (Plaintiff)
Johnson Winter & Slattery (Defendant)

File Number(s): 2014/101136
Publication restriction: Nil

Judgment

Andrew Boyd French is somewhat of a polymath. He is an inventor but also has an eye for property. These proceedings are the last act of a drama about three of his business ventures.
The first venture concerned an invention by Mr French in the field of mechanical engineering. The invention was a type of magnetic (that is, non-physical) coupling between rotating drive shafts. It seems that nearly everyone who was introduced to the invention saw its potential. But in the end, Mr French proved unable to commercialise it and the patents which he registered over the invention, and maintained for many years, have now expired.
The second venture concerned the retention, and potential development, of land which Mr French owned on the northern side of Port Stephens on the Central Coast of New South Wales. The third venture also concerned property; it involved the acquisition and improvement of a number of rural properties in Victoria.
The other protagonist in the proceedings is Christopher Piers Julian Bremner. He qualified as a medical doctor but is also something of a polymath. The evidence leaves the course of his career somewhat of a mystery, but it has included research in theoretical physics and working in the London financial markets where he seems to have made large sums of money.
Dr Bremner first met Mr French and his de facto wife, Gabrielle June Bakey, about eighteen years ago. At that stage he provided a long-term loan of $335,000 to Mr French for the further development of his inventions, principally the magnetic coupling. Later, beginning in about 2007, he advanced further large sums to Mr French to fund the development of the magnetic coupling technology and Mr French’s other expenses. The total advanced (including the original loan of $335,000) was more than $3 million.
Separately, in 2009, Dr Bremner took over the management of the debt on the Port Stephens land, which Mr French had mortgaged to a financier, Provident Capital Limited (“Provident”) as security for a $2 million loan. Dr Bremner paid a lump sum off the debt, negotiated the discontinuance of proceedings brought by Provident against Mr French, and took over paying the interest. His eventual outlay was $1.1 million.
Dr Bremner also financed the purchase of the properties in Victoria. Ultimately eight parcels of land were purchased for about $4 million. Substantially all of this was paid by Dr Bremner. Two of the parcels were registered in Dr Bremner’s name as sole proprietor. One (containing a homestead) was registered in Ms Bakey’s name as sole proprietor. The other five parcels were registered in the names of Mr French and Dr Bremner as tenants in common in equal shares. The properties were used for cultivating edible salt marsh plants and running cattle. This was in large part funded out of monies advanced to Mr French by Dr Bremner.
In 2009, Mr French and Dr Bremner agreed to send an acquaintance of Mr French’s, Radu Iliuta, to France to work on commercialising the magnetic coupling invention in Europe. Mr Iliuta established his base at Montpellier. His activities involved not only promoting the invention but undertaking further technical developments. These activities were financed almost entirely by Dr Bremner. Steps were taken in 2010 to set up a company in France involving Mr French, Dr Bremner and Mr Iliuta to carry on the European operations, but this was never finalised. Mr French and Ms Bakey came to believe that Dr Bremner and Mr Iliuta were stealing Mr French’s invention. The final breach between them came in April 2011. Following the breach, Dr Bremner and Mr Iliuta continued the European venture themselves.
Mr French made attempts to commercialise the magnetic coupling technology himself but these came to nothing. His patents over his invention have expired.
In July 2012 Dr Bremner ceased making the interest payments on the Provident mortgage. Mr French was unable to repay the debt to Provident and the property was sold.
Mr French blames Dr Bremner for appropriating the European magnetic coupling venture to himself and Mr Iliuta, and for the loss of the Port Stephens property. He also claims that he is owed money by Dr Bremner to reimburse him amounts expended on the properties in Victoria. The total amount claimed is more than $40 million.

Issues for determination

These proceedings began in April 2014 as a debt recovery action by Provident against Mr French. The proceedings were begun in the Common Law Division. They were transferred to the Commercial List in December 2014. As I will describe in more detail below, Provident obtained judgment against Mr French and has dropped out of the proceedings.
The issues before me arise from cross-claims between Mr French and Dr Bremner. Mr French filed a cross-claim against Dr Bremner in September 2014. Dr Bremner filed his own cross-claim against Mr French and Ms Bakey in October 2015.
The proceedings on the two cross-claims took a long time to come to trial. Provident’s claim against Mr French was dealt with first, and was not finally resolved until the end of 2015. Progress was later delayed for a period while Mr French was subject to bankruptcy proceedings. Another factor was that Mr French’s legal representatives wished to lead evidence from Mr Iliuta, who is still living in France and would not co-operate. Arrangements had to be made with the French authorities to summon Mr Iliuta to a court in France to give evidence by video link.
The hearing took place before me over nine days, beginning on 6 May. I record my thanks to counsel for both parties for the co-operative and efficient approach they displayed in conducting the hearing. In the end, through no fault of either side, the application to obtain evidence from Mr Iliuta by video link ended in fiasco when he refused to answer questions and could not be compelled to do so. I describe this in more detail below.
Initially in his cross-claim Mr French sought relief against Dr Bremner for infringement of copyright, and seeking return of products and prototypes, promotional sales material, drawings and designs associated with the magnetic coupling invention. Those claims have not been pursued. Mr French’s claim against Dr Bremner is now confined to a claim for damages for breach of contract (or monies due under contract); the alternative claim for damages for misleading and deceptive conduct was abandoned in final submissions.
In his cross-claim, Mr French alleges that he made three separate contractually enforceable agreements with Dr Bremner. Mr French claims damages for breach of each of those agreements (or, in the case of the third agreement, payment of monies allegedly due under that agreement).
The first alleged agreement concerned the Provident mortgage. Mr French alleges that Dr Bremner agreed to “buy the mortgage”. On Mr French’s case this meant that Dr Bremner assumed responsibility to discharge the mortgage debt, or at least, keep Mr French indemnified against the mortgage liability. Mr French alleges that Dr Bremner’s failure to indemnify him against Provident’s claim in these proceedings was a breach of this agreement, and claims damages representing the value of the judgment entered against him in Provident’s favour. The claim under this alleged agreement is $3.32 million.
The second alleged agreement concerned the exploitation of the magnetic coupling invention, and in particular its exploitation in Europe. It is referred to in Mr French’s Statement of Cross-Claim as the “joint venture agreement”.
Mr French’s allegation is that Dr Bremner agreed to the incorporation in France of a company to exploit the invention in Europe, with Mr French to hold 51% of the shares, Dr Bremner 44% and Mr Iliuta 5%. Dr Bremner was to fund the company’s costs until it was able to do so from its own earnings. Mr French would license to the company the intellectual property for the inventions, including the patent rights, know-how and copyright. Dr Bremner would fund all of the costs of obtaining and maintaining the necessary patents. Mr French alleges that Dr Bremner breached this agreement by refusing to proceed with the incorporation of the company and then going into business with Mr Iliuta to the exclusion of Mr French. Mr French claims damages on the footing that he lost the profits he would have made from successful exploitation of the technology. The damages are put at more than $39 million.
The third alleged agreement concerned the Victorian properties. It is referred to in the Statement of Cross-Claim as the “property maintenance agreement”. Mr French alleges that Dr Bremner agreed for Mr French, in effect, to manage and maintain the properties and to contribute towards the expenses incurred by Mr French in doing so. The alleged agreement was that Dr Bremner would contribute 100% of the costs associated with the properties which he owned, and 50% of the cost of the properties which were jointly owned. In the course of the hearing, some of the expenses and remuneration which had been claimed were not pursued. The amount now claimed by Mr French under this alleged agreement is $128,000.
In Dr Bremner’s cross-claim, he claims repayment from Mr French of monies he provided to Mr French or paid to third parties allegedly at the request of Mr French. Dr Bremner’s case is that these payments were loans which are now repayable. The amount claimed is $3.15 million.
Initially, there was some dispute about the amount of money which Dr Bremner actually provided to Mr French over the years. But in the course of the trial a Notice to admit Facts was served and an answer was provided, following negotiations between the parties, which greatly reduced the area of dispute. The Notice to Admit called for an admission that Dr Bremner had advanced a total of $3.13 million to Mr French. Ultimately, admissions were made by Mr French that he received $3.10 million. Mr French also admitted that some of these payments, totalling $1.82 million, were made by way of loan. He did not admit that the remainder of the monies had been provided by way of loan. Nor did he admit that any of the moneys, even if initially received by way of loan, were repayable.
In his cross-claim, Dr Bremner also makes a counter claim against Mr French and Ms Bakey over the Victorian properties. Dr Bremner claims that, having provided the funds for the purchase of the properties, he is entitled to a resulting trust over the properties to the extent that they are registered in the name of Mr French or Ms Bakey.
Alternatively, to the extent that Dr Bremner is unsuccessful in establishing the existence of a resulting trust over the jointly owned properties, he seeks orders appointing trustees for the sale of the property. These orders are sought under Part IV of the Property Law Act 1958 (VIC), the Victorian equivalent of Part 4 Division 6 of the Conveyancing Act 1919 (NSW), s 66G.

Summary and analysis of evidence

Mr French was the main witness in his case. He gave evidence and was cross-examined over a period of three days. Ms Bakey also gave evidence, and was cross-examined, at some length.
An affidavit was filed for Dr Bremner in support of his case. Ultimately the affidavit was not read. Counsel for Dr Bremner conceded that as a result, a Jones v Dunkel inference is available on some of the factual issues in the case, although counsel contended that no such inference should be drawn. I address this when considering each of the factual issues in question.
Throughout the time Mr French and Dr Bremner knew each other, Dr Bremner lived overseas. The evidence before me included dozens of email communications between Mr French (and, towards the end of the relationship in 2011, Ms Bakey) and Dr Bremner. From 2009 these email communications included Mr Iliuta who was also overseas. The agreements alleged by Mr French are all oral ones and the emails naturally provide useful contemporaneous context for what was happening, particularly when, as we will see, the affidavit evidence on these questions has reliability problems.
The emails are important for another purpose. The relationships between Mr French and Dr Bremner, and between Mr French and Mr Iliuta, were tumultuous ones marked by angry emails (particularly on Mr French’s side) about one issue or other, following which things would be smoothed over and the parties would be reconciled, at least on the surface. From 2010 onwards these spats appear to have become more frequent and some of the correspondence became more heated. Some of the emails, on both sides, involved a degree of recrimination, referring back to earlier dealings between the parties. Although they must be understood in their immediate context, such emails at least have the advantage of being more closely contemporaneous to the relevant events than the affidavits which have subsequently been prepared.
The Court Book in the present case contained ten volumes of documents and the emails must have represented a substantial proportion of the tender. I have read and considered most of the emails, even though many of them were not referred to in cross-examination or otherwise brought to my attention for the purpose of submissions. I have found some of them illuminating in resolving the factual issues which arise and have relied on them for this purpose. The emails were, after all, in evidence. In relying in this case on emails which were not referred to in cross-examination or submissions, I have, of course, borne that fact in mind.
In the remainder of this section of the judgment, I first set out the background of the main protagonists and comment generally on the credibility of Mr French and Ms Bakey. I then set out the main events in chronological order, as established by documentary evidence or otherwise not in dispute. Then I deal with the admissibility of Mr Iliuta’s affidavits and draft affidavit, and deal with two other evidentiary issues on which I ruled in the course of the trial. Finally, I analyse the evidence on the various disputed issues of fact and give my conclusions on those issues.

Mr French

Mr French was born in March 1962. He left school in 1980 or 1981. It is not clear what other work he has done in the course of his career, but he has been an inventor since early on. He said that he produced his first invention (a device which prevented dogs from knocking over garbage bins) in the summer of his first year out of school. He later invented a snow gun for snowmaking, which he exhibited at the Geneva International Exhibition of Inventions in 1994. The following year he exhibited devices he had invented for fish farms.
Mr French’s technical and scientific abilities as an inventor, and in particular the genius involved in the magnetic coupling invention, were acknowledged by Dr Bremner and Mr Iliuta. According to Mr French, Dr Bremner also once told him that he had a wonderful eye for property. But the evidence in this case suggests that, although an enthusiastic participant in business dealings, Mr French did not have a very businesslike frame of mind.
Mr French’s attempts to commercialise the magnetic coupling invention appear to have been punctuated by long periods of time where his attentions moved to other projects. The purchase of the properties in Victoria and attempts to improve them are an instance of this. Mr French was also chronically short of the money needed to fund his projects. When compared with the amounts outlaid on them, none of the projects generated much money and Mr French does not seem to have had any other source of income.
The tone of Mr French’s emails varies widely. Usually they were friendly. But issues would blow up, resulting in angry emails complaining about the conduct of Dr Bremner or Mr Iliuta. In some cases, these were written late at night and followed soon afterwards (presumably on re-reading) by a much more conciliatory post-script. At other times Mr French might drop his bundle and say he did not care anymore, or adopt a pleading tone to try to get what he wanted. He must have been an exhausting man to deal with.
Counsel for Dr Bremner made a wholesale attack on Mr French’s credibility in closing submissions. Counsel referred in particular to three aspects of Mr French’s evidence.
First, counsel referred to Mr French’s conduct towards Mr Iliuta in trying to obtain evidence from him for the purposes of these proceedings. I refer to this conduct in more detail below when dealing with the admissibility of Mr Iliuta’s affidavits. On Mr Iliuta’s account it extended to making physical threats, although as we will see, I consider that his complaints did not justify Mr Iliuta in refusing to give evidence. Mr French may well have been frustrated by Mr Iliuta’s prevarication and his attempts to extract benefits for testifying. But at best, Mr French’s emails were overbearing and displayed a “whatever it takes” mentality to obtaining Mr Iliuta’s testimony. It is only right that the Court should treat with reservations the evidence of a person who is prepared to behave like this.

Second, counsel referred to the circumstances in which Mr French’s main affidavit was prepared. It emerged from the evidence about the preparation of Mr Iliuta’s draft that the draft was shared with Mr French and Ms Bakey while they prepared their affidavits in chief. They also shared their drafts with each other.
It hardly needs pointing out how unsatisfactory this was. In such circumstances there is an obvious potential, if not likelihood, of cross-contamination of the witness’ evidence.
Counsel also referred to the manner in which Mr French gave his evidence orally. As counsel correctly pointed out, Mr French’s testimony was marred by his failure to answer questions directly. This happened time and again, even after the Court had intervened on many occasions to remind Mr French of his obligation to answer the question, and only the question, asked of him. It is not surprising that Mr French feels strongly about the events which are the subject of his claim. But it was clear for all to see that he was unable to restrain himself and focus on what, as a witness, he ought to be doing: relaying what he could recall in as plain and unvarnished manner as possible.
Counsel also relied on the well-known statement in Watson v Foxman (1995) 49 NSWLR 315 at 319-320 concerning the difficulty facing a plaintiff in seeking to make out a case based on oral dealings. I agree that those principles are of particular application in this case, where the relevant events took place long ago and the parties have now been involved in disputes for many years involving claims for large amounts of money.
I should add that, to the extent that contemporaneous evidence is available, it conflicts in a number of respects with the sequence of events set out in Mr French’s affidavit. This further reduces the confidence which I could have in the reliability of what Mr French now says.
None of this means that all of Mr French’s evidence has to be rejected. But I consider that counsel’s criticisms of Mr French’s evidence have force and I have borne them in mind in evaluating Mr French’s testimony. Overall, I have treated his evidence with considerable caution.

Ms Bakey

Ms Bakey is seven years younger than Mr French. She was brought up and went to school in Melbourne, and studied business at Box Hill Technical School. She completed her studies in 1986.
In 1989, Ms Bakey joined Westpac Banking Corporation. She worked in the bank in “all areas”, including as an assistant manager and also in the legal and securities area. She left the bank early in 1995.
Ms Bakey met Mr French in 1996 in Narrabeen in Sydney. She had moved from Melbourne and was working as a waitress in a local pub. She and Mr French have been in a relationship ever since. They have two sons. The older son, Eon, was born in 1998 or 1999. The younger son, Eden, was born in 2004 or 2005.
The observations I have made about the Watson v Foxman principle apply equally to Ms Bakey’s evidence. The account of events in her affidavit was less detailed than that of Mr French but there was also a similar lack of consistency between some of the things she said and the documentary record, to the extent that it existed. There is also a cloud over her evidence because of the circumstances in which her affidavit was prepared.
There is a further important aspect of Ms Bakey’s evidence. On an objective view of the evidence, whatever Dr Bremner may have done or not done, Mr French plainly bears some responsibility himself for his financial misfortunes. Ms Bakey did not appear to acknowledge this; she blames Dr Bremner for everything which has gone wrong. It was clear from the documents in evidence, and from Ms Bakey’s own testimony, that she never liked Dr Bremner. She has now come to dislike him, intensely.
All of these factors make Ms Bakey’s reliability questionable. I have accordingly treated her evidence with a great deal of reserve.

Mr Iliuta

Mr Iliuta is of Romanian extraction. He was born in Bucharest but when he was 14 years old his parents moved to Sweden. He completed his education in Sweden and is a Swedish citizen. After finishing high school he undertook a three year technical course in aviation technology graduating in 1989. He worked as an aircraft technician but also (in his spare time, apparently) was an inventor. He attended the Geneva International Exhibition of Inventions in 1994 and 1995, and first met Mr French at those two shows.
Afterwards, Mr Iliuta was involved in trying to set up an inventors’ show in Romania and asked Mr French to help. This was through an organisation for which he worked known as the Swedish Young Inventors’ Network.
Mr Iliuta visited Australia in 1996 in an attempt to commercialise one of his inventions. During this period he stayed briefly with Mr French in Manly. He lost contact with Mr French in 1997 when Mr French met Ms Bakey and moved to Port Stephens, but remained in Australia. After living in Europe between 2003 and 2004 he returned to Sydney and completed a Bachelor of Industrial Design Course at the University of Technology Sydney.
In the second half of 2008, shortly before graduating, Mr Iliuta met Mr French again by chance in a manner I describe in more detail below. This led, the following year, to Mr Iliuta travelling to France to set up the distribution operation for Mr French’s magnetic coupling invention.
As will be seen, on his own admission, Mr Iliuta made use of intellectual property belonging to Mr French (or MGT) by copying drawings and prototypes, which he later tried to claim as his own or his own and Dr Bremner’s. I was also unimpressed by the excuse which Mr Iliuta offered (which I do not think should be considered as sworn evidence) for not testifying.
A fundamental question about evaluating the weight of Mr Iliuta’s affidavit and draft affidavit, emphasised by counsel for Dr Bremner, is that Mr Iliuta was not cross-examined on them. Quite apart from that, I think the draft affidavit has serious flaws, to which I refer below.

Dr Bremner

Dr Bremner, of course, did not give evidence. His background and personality could therefore only be evaluated through what I was told by other witnesses and by what can be gleaned from the emails and other documents he wrote which are in evidence.
On the evidence, Dr Bremner appears to have ceased to practice as a medical doctor (if he ever did practice as such) before he met Mr French in 2001. One of Dr Bremner’s emails refer to him undertaking research in the field of theoretical physics for NASA in the United States. Other emails refer to Dr Bremner working in the London financial markets. It appears, however, that all this had ended by the time Dr Bremner met Mr French in 2001. Thereafter, Dr Bremner seems to have operated as an international investor, with particular interest in the commercialisation of scientific discoveries and in property acquisition and development.
By his own estimate, Dr Bremner is a wealthy man. During the period of time which is principally relevant for the purpose of these proceedings (2008-2010) he was living at an address in Cheyne Walk in London. He also had an apartment at Darling Point in Sydney. He visited from time to time, but appears to have been a tax exile from Australia. As the evidence shows, Dr Bremner was capable of lavish displays of generosity, on one occasion buying Mr Iliuta an Audi motor car as a present.
There were also times when Dr Bremner would unpredictably go “off the radar” completely. A recurring theme in the evidence was that Dr Bremner was often uncontactable and it was often difficult to get a response from him about something, even if it was urgent.
Dr Bremner’s self-assessment, as recorded in one of his emails to Mr French, was that he is a similarly remarkable and unusual man. He certainly emerges from the evidence as being mercurial. He seems to have travelled frequently, with his attention flitting between his ventures with Mr French and other ventures, the nature of which is not revealed in the evidence.
Dr Bremner’s email style was quite different from that of Mr French. When he did eventually respond to something by email, he often gave the impression that he had sent his email when he had something else on his mind. His emails were usually terse to the point of being military, and often did not fully respond to what he was being asked.

Chronology of main events

In 1997 Mr French bought a farm at Bulga Creek near North Arm Cove on the northern side of Port Stephens. He and Ms Bakey moved there at some point in the second half of 1997. The farm consisted initially of two lots and a third lot was bought in 2003. The three lots covered 368 acres (149 hectares). The evidence does not reveal how these purchases were financed.
It was after moving to Bulga Creek that Mr French made the magnetic coupling invention which became the subject of these proceedings. The idea behind the invention was to use the attractive and repulsive forces of magnets to transfer power from one drive shaft to another. Traditional methods of power transfer use physical connections or couplings, such as pulleys, chains, gears, discs and cogs. Mr French’s invention did not require any physical coupling. It could be used, for example, to transfer power from a drive shaft inside a boat to a propeller outside the boat without the need for a physical connection between the drive shaft and the propeller.
In September 1999 Mr French applied for a provisional patent from the Australian Patent Office. In October 2001 he made an application under the Patent Co-operation Treaty which enabled him to obtain patent protection in PCT member countries, which included the United States of America, China, India, Japan and major European countries. These applications and patents were managed on his behalf by a firm of patent attorneys, Griffith Hack.
Mr French made various prototypes of magnetic coupling machinery to demonstrate his invention. On New Year’s Eve 1999 Mr French carried out a public launch of his invention by demonstrating a prototype located at Bulga Creek. He later made a portable prototype which could be transported on a pallet. This prototype was known as “Old Girl”. In building the prototype, Mr French was helped by Peter Bradshaw, who was a mechanic, and Adam Donnelly, who was an electrician.
In July 2000, Mr French arranged for a company to be incorporated under the name “The Magnetic Gearing & Turbine Corporation Pty Ltd”, which was referred to in the evidence as “MGT” or “MGT Australia”. The name of the company dates from October 2000; it was initially called The Magnetic Inertia Turbine Corporation Pty Ltd.
Mr French was the sole director and secretary of MGT. It eventually came to have more than 94 million issued shares, of which Mr French held 89 million. Ms Bakey held a further million and so did Eon French, the older son of Mr French and Ms Bakey. Mr Donnelly was issued half a million shares in MGT and Mr Bradshaw one million.
It is clear that MGT was used by Mr French as a vehicle for raising money for commercialising his invention. But there was little evidence about this, apart from a statement in Mr French’s August 2010 promotional report (see [175] below) that he raised $266,000 from “friends and associates”. At all relevant times, Mr French remained the registered owner of the patents.
According to Mr French, he first met Dr Bremner in or shortly before March 2001. This was shortly before the Geneva International Exhibition of Inventions which was held in April 2001 and at which Old Girl was to be demonstrated.
Dr Bremner was introduced to Mr French by a mutual acquaintance as a potential investor in the technology. Dr Bremner visited the Bulga Creek farm at night (apparently because he was shortly returning to the UK where he lived) to see it and was very enthusiastic. Mr French told Dr Bremner that the prototype was to be demonstrated at the Geneva International Exhibition of Inventions.
Old Girl was air freighted to Europe for the purposes of the Geneva Exhibition and was accompanied by Mr French, Ms Bakey, Mr Bradshaw, and Mr Donnelly. Through contacts made at the Geneva Exhibition, Mr French arranged to show the invention at the Hanover Fair at the end of April. According to Mr French, the Hanover Fair is the world’s largest, and probably most important, industrial technology trade fair.
Dr Bremner visited the Geneva Exhibition and saw the invention there. Between the Geneva Exhibition and the Hanover Fair, the party spent a few days in London at a house in which Dr Bremner was living in Battersea. The four later returned to London where Old Girl was entered into a BBC competition called Tomorrow’s World which took place at the end of June. Again they stayed at the Battersea house with Dr Bremner.
According to Mr French, during discussions with Dr Bremner at Battersea in mid-2001, Dr Bremner indicated an interest in buying land in the Port Stephens area and remarked on having seen a “for sale” sign during his visit to the Bulga Creek farm. The land in question was a 100 acre (25 hectare) property which was surrounded by Mr French’s lots. Access was by a right of way over Mr French’s property. Dr Bremner rang the agent and bought the land for $200,000. Mr French was later told by the agent that Dr Bremner made the purchase with his credit card.
At the Hanover Fair in April, Mr French had met representatives of a South African company called Allied Production Industries Pty Ltd (“API”). One of the divisions of API’s business was called Rely Precision Castings (“RPC”). The API executives were interested in developing Mr French’s invention for solar powered water pumps to be used in Africa. In June 2001, Mr French visited South Africa (between the Hanover Fair in April and the London competition in June) and signed what was described as an “option agreement” for entering into a joint venture. The parties were API and MGT. API was to produce a working model of the water pump technology and to pay 600,000 rand to MGT for the purchase of the necessary magnets. At the end of the period API was to have the right to enter into a joint venture with MGT through a new company which was to be 50% owned by MGT and 50% by API.
Although the option agreement referred to API manufacturing the water pump model, according to Mr French he developed the product himself. He said that he visited API’s headquarters in South Africa over the following six months or so on several occasions in connection with this development work.
The first formal document, or attempt at a formal document, concerning the financial dealings between Mr French and Dr Bremner is a loan acknowledgement signed by Mr French in favour of Dr Bremner, in October 2001. The acknowledgement appears on a letterhead with Mr French’s name on it and does not refer to MGT. It states simply:

This is to acknowledge that I have received the sum of $335,000.00 from Dr Chris Bremner as a loan to pursue my inventions.

As will be seen, Mr French used at least $80,000 of this money to pay for patents for the magnetic coupling invention. He also said that some of the money was for another invention, to do with escalator handrail advertising. The document refers to the pursuit by Mr French of his “inventions” which is consistent with this.
According to Mr French, his next contact with Dr Bremner was in early 2002. Dr Bremner visited the Bulga Creek farm with his mother to show her the land he had purchased. After Dr Bremner returned to Sydney Mr French visited him there to ask whether he would be able to help with further money to develop the magnetic coupling invention, and in particular the solar water pump for use in South Africa. Dr Bremner told him that money was tight and that he could not help. After that there was no further contact between them for almost five years.
Mr French visited South Africa again in March 2002 where he presented the product to API. API provided him with a further 200,000 rand. The terms on which this was provided were recorded in a letter from API to Mr French dated 13 March 2002. The letter recorded that due to Mr French’s financial position there was concern about him being made bankrupt and losing the patent rights. API offered to move the patents into a “safe company” so that they would not be under threat. API also indicated that it did not have the resources or expertise to commercialise the project alone and other participants able to provide capital and expertise were needed. API stated that it would not invest further funds into the project until satisfied that such participants had been lined up. API stated that it saw itself as a passive investor.
Mr French does not appear to have taken up the “safe company” option. Instead he put further proposals to API for it to invest more money in developing the invention. Emails between Mr French and the managing director of API, Mr Graham Knight, from June 2002 are in evidence. But as indicated in the letter of March, API’s position remained that it would not invest until the right equity partners and management had been obtained. Mr Knight noted that API had spent about 1.25 million rand and had not even obtained a shareholder’s agreement. The joint venture agreement never seems to have been activated, and there is no further evidence of any dealings between Mr French and API.
In his affidavit, Mr French stated that the total amount he received from API equated to $180,000. This would not have lasted very long. Mr French conceded that after his dealings with API petered out he lacked the money to develop the technology further and he decided to concentrate on farming operations at the Bulga Creek property. He did however set up a small-scale manufacturing operation at Karuah and tried to sell water pumps to farmers in Australia. He also built a lawn mower using the technology which he showed at the Hanover Fair in 2005. He continued to maintain the patents over the invention.
Mr French’s individual banking was done with Westpac. As well as an account in his personal name, he had an account in the business name “Bulga Creek Pastoral Co”. Presumably this business name was for Mr French’s farming activities at Port Stephens. MGT had its own separate bank account with the ANZ.
The bookkeeping for MGT and Mr French were done by Ms Bakey, who appears to have maintained the cash books and ledgers. Tax returns and financial statements would presumably have been prepared by external accountants, but there are none in evidence.
At some stage, Mr French decided to sell 100 acres of the Bulga Creek property to raise funds. He began negotiating with a church organisation known as Victory Mission. The negotiations resulted in a proposal which was recorded in a March 2005 letter from solicitors acting for Victory Mission to solicitors acting for Mr French.
The proposal was for Mr French to sell one of the three lots making up the Bulga Creek property (Lot 3, consisting of 168 acres) to the Church for $2.4 million and buy back 68 acres for $600,000. Mr French was to be responsible for the necessary subdivision. Victory Mission’s solicitors asked Mr French’s solicitors to take instructions and respond, presumably for the purpose of pursuing negotiations along these lines. But there is no documentary evidence of any response.
Mr French took out the loan from Provident which is the subject of these proceedings in May 2006. A signed loan agreement and registered mortgage, both dated 15 May 2006, are in evidence. The loan was repayable after six months. The principal sum was $1.935 million, which included interest in advance. The “normal” interest rate was 17.3%, which was discounted to 11.3% if payment was made on time.
Mr French did not repay the loan on its due date in November 2006. Provident extended the expiry date to February 2007 and the interest rate increased to 17.3%.

According to Mr French he engaged a surveyor to undertake the subdivision which was the subject of the proposal to the Victory Mission, but this was delayed as a result of surveying and boundary definition problems. There is no independent evidence of this. In any event, by the end of 2006 no subdivision had occurred and no sale had taken place.
It was at this point that contact between Mr French and Dr Bremner was renewed. According to Mr French, this happened as a result of a telephone call from Dr Bremner in the United Kingdom. I discuss Mr French’s account of the conversation in more detail below.
Soon afterwards, Dr Bremner provided further monies to Mr French. Dr Bremner deposited $20,000 to Mr French’s bank account on or about 22 December 2006 and a further $50,000 on or about 30 January 2007.
These payments were the prelude to a much bigger payment. This was documented by a “Loan Agreement” which was dated 14 February 2007. The document was prepared and signed by Mr French. The parties were identified as Mr French and Dr Bremner. The document stated:

I Andrew French agree that for the loan of 1 million AUD loaned to me by Christopher Bremner, I will give him an option to purchase Lot 3 Pacific Hwy, Nth Arm Cove for 2 million AUD if the money is not repaid.

On the same day, 14 February, Mr French sent a fax to Dr Bremner in the United Kingdom attaching a copy of the “Loan Agreement”. The fax stated:

I hope this is what you want, let me know if you want any changes or added clauses.
At present the land is 168 acres, with the boundary adjustment we would make 2 blocks out of it by adding the other 32 acres from the block next to it. The R/Estates valuation for this was $1,400,000 for one block & $1,800,000 for the block closest to the water, we have listed it with True Blue R/Estate in Newcastle, but this is a better option. The valuation was done by Du Points in Newcastle, but I don’t have access to it as it was ordered and paid for by the finance company. You could try to contact them or try to get an idea from talking to R/Estates.
…
Thank you for helping out and I am sure we will have success in Germany.

The reference to “success in Germany” was to the Hanover Fair which Mr French was planning to visit again in April that year. Following receipt of the fax, Dr Bremner transferred $1 million into Mr French’s account. The money was received seven days later, on 21 February.
Meanwhile, Mr French and Ms Bakey had become interested in living in Gippsland. A property known as “Corringle Beach Homestead” near Orbost at the mouth of the Snowy River was for sale. The property consisted of two parcels of land on separate titles. One parcel contained the homestead itself; the other was low-lying farm land protected by a levee bank.
The purchase price for the Corringle Beach property was $920,000. Mr French paid a deposit of $92,000 and exchanged contracts to buy the property. The deposit was made up of three payments: $9,100 paid on 3 February, $9,300 paid on 20 February, and $73,600 paid on 17 April.
Mr French travelled to the Hanover Fair in April 2017 with an Australian associate, Mr Hugo Simpson. According to Mr French, after the Fair they travelled, at Dr Bremner’s invitation, to stay with him at a luxurious resort at Marbella in southern Spain. Dr Bremner had to leave after a few days but Mr French and Mr Simpson stayed on. This was all at Dr Bremner’s expense.
Following his return from Marbella, Mr French stayed in touch with Dr Bremner about the magnetic coupling invention. He was receiving expressions of interest from contacts he had made at the Hanover Fair, and forwarded those emails to Dr Bremner.
Presumably as a result of his experience at the Hanover Fair, Mr French wanted to develop the magnetic coupling technology by building magnetic wheels for it. He also wanted to have tests done to confirm the torque which the coupling could generate, and identified a Dutch company to perform the test and certify the results. These tests were performed in the second half of 2007.
Meanwhile, on 14 February, the Provident loan was extended for another three months, with the expiry date being 15 May. On 9 March, Mr French paid $113,000 to Provident out of the monies received from Dr Bremner, reducing the balance to approximately $2 million. On 15 May, there was a further extension to 2 July. On 1 June, Mr French paid a further $200,000 to Provident, reducing the balance to $1.85 million.
On 2 July the Provident loan was extended for another six months to 2 January 2008. In August Mr French entered into a further loan agreement with Provident. This involved borrowing a further amount of $15,000, taking the principal amount of the loan to $1.95 million.
The purchase of the Corringle Beach Homestead property was completed in November 2007. By this stage Mr French had retained a local firm of solicitors known as Wards. Taking into account the deposit already paid, the amount payable on settlement was approximately $890,000. Dr Bremner provided $1 million to Wards to enable the settlement to proceed. I will refer to the ownership details in discussing Dr Bremner’s resulting trust claim below.
When the purchase of the Corringle Beach Homestead property was completed, most of the land was, and had been for some time, flooded with salt water. In this state it could not be used for farming, but apparently that had been part of the attraction to Mr French. He thought the purchase price was cheap because he had worked out a way to drain the land so as to bring it back into production.
According to Mr French, he and Ms Bakey had become interested in the Corringle Beach property because they were contemplating the subdivision and sale of the North Arm Cove properties. Mr French and Ms Bakey appear to have occupied the homestead at Corringle Beach soon after the settlement in November 2017. But they also maintained their residence at the Bulga Creek farm, moving between there and Corringle Beach from time to time. The Bulga Creek farm later seems to have been operated as some sort of bed and breakfast facility.
Since paying the deposit on Corringle Beach Homestead in 2007, Mr French had been looking at other Victorian properties. Six other properties were acquired with the agreement of Dr Bremner, who funded substantially all of the purchases (there was a dispute about whether Mr French paid some small holding deposits). Two other properties were bought at Corringle Beach. Two further properties were acquired at Newmeralla slightly inland of Corringle. Another property was purchased at Cobungra in the Victorian Alps, not far from the ski resort at Mount Hotham. The final property was at Deddick Valley, in the mountains to the east of the Snowy River north of Orbost.
Mr French and Ms Bakey became enthusiastic about using the Corringle Beach farmland to grow samphire, which is a type of succulent which grows in salty environments. They believed that this could be sold to high-end restaurants. Mr French also wanted to run cattle.
Meanwhile work was continuing on Mr French’s invention. The torque test reports were issued in December. Mr French made plans to visit Europe early in 2008.
On 31 January Mr French emailed Dr Bremner with details of “amounts needed” totalling approximately $210,000. Of this, $87,000 was required for deposits on two of the Gippsland properties, one at Newmeralla and the other at Corringle Beach. A further $83,000 was required for works on one of the Corringle Beach properties, which Mr French suggested could then be rented. There was also $40,000 for patent costs coming up, air fares and other travelling expenses. In February 2008 Mr French emailed Dr Bremner updating him on the progress of a machine being built by Mr French and also requesting further money.
Dr Bremner did not provide all the money for which Mr French asked, at least immediately. But he did provide some. In mid-February, mid-March and mid-April 2008 he made three payments to Mr French totalling $50,000. The money needed for the deposits on the Newmeralla and Corringle Beach properties was provided separately: it was paid out of the money left over from the amount sent by Dr Bremner to Wards in November 2007. Dr Bremner presumably gave authority to Wards to allow Mr French to make these payments.
The three payments made by Dr Bremner to Mr French in February, March and April 2008 were the beginning of a series of such payments which ultimately extended until December 2010. Over that period, the payments were roughly made monthly, in multiples of $10,000. In 2008, all of the payments were between $10,000 and $30,000 but in 2009 and the first half of 2010 many of them were much larger. The biggest was $120,000 made in March 2009. The purpose of the payments was to fund Mr French’s ongoing expenditure, and in the rest of this judgment I will refer to them as the “regular funding payments”.
Meanwhile, on 2 January the Provident loan had been extended for a further two months until 2 March. At the end of February it was further extended to 1 May. But Mr French owed arrears of interest. Provident commenced debt recovery proceedings against him in this Court. According to Mr French, this was in March 2008, although in fact the actual proceedings may not have been commenced this early. Mr French retained Mr Greenstein to act for him.
On 3 April, Provident’s solicitors wrote to Mr Greenstein enclosing a loan account statement from Provident. According to the letter, the amount of interest outstanding was approximately $98,000. The following Monday, 7 April, Mr Greenstein forwarded the letter and statement to Mr French. Mr Greenstein recommended that payment of interest be made on a without prejudice basis. Mr French was then overseas. Mr Greenstein asked that Mr French transfer the necessary funds to enable payment to be made. He also asked for a conference when Mr French returned to Sydney “in order to determine a way forward with this unfortunate matter”. Mr French, who was then in Asia, forwarded the email to Dr Bremner along with a request for a further $5,000 or $10,000, apparently for travel expenses.
These events provoked an email from Dr Bremner in response on 18 April:

Dear Andrew, I was shocked and deeply hurt to see of the 1,000,000 dollars I gave to you to pay down the loan on Port Stephens only 200,000 was applied to this, I have acted in good faith, you blatantly lied to me. Why? How can I continue to do business with you? Call me urgently.

In saying that only $200,000 had been applied to the loan on the Port Stephens property, Dr Bremner appears to have overlooked the payment of $113,000 early in March 2007. But it is clear from this email, and from Mr French’s response to it which I discuss below, that Dr Bremner provided his $1 million for the purpose of reducing the debt on the North Arm Cove properties and that most of the money was not used for that purpose.
On 23 April Mr French responded saying that he had only just received Dr Bremner’s email (five days later) and said it was “not like that”. The email continued:

I have paid more than that to the finance company and the mortgage broker.
However when the loan was to be paid down it was past the date and the finance company had rolled it over.
I have paid at least $350,000 and have more money that was given to the mortgage broker which was not paid to the finance company when I was overseas. That was another $110,000, when I found out it was not paid I approached them and they said it would be paid in the next month. I was very upset and they signed a loan agreement with me with 10% interest per month. I have a meeting with the broker and the solicitor when I get back to Australia. It should be about $300,000 now with interest. It was the same company that got the loan for me at the start and they were communicating with the finance company regarding the loan. With the other banks, they would not take on the loan without the guarantee. I was stuck in the middle and was overseas at Hannover when this problem occurred.
I am sorry and I did not intend to lie to you.
Chris this is my stuff up and I told you take all the land in that block up north, which you still can. Apart from that I have offered you 50% of the MGT and most of the money has gone into that.
It is about to go to the market with a lot of positive vibe around it, this will return all the money in the next 2 years.
Please stick by and back me and things will repay you 1,000 fold.
I will ring you soon.

On 6 May Mr French sent a follow-up email providing an estimate of where the $1 million provided by Dr Bremner had gone. This included approximately $200,000 for the invention. That included $80,000 for patents. It also included costs associated with the licence agreements, the torque tests, magnets and moulds, the visit to the Hanover Fair in April 2007 and a second trip to Europe and factory rental for MGT, presumably the premises at Karuah.
There was also approximately a further $200,000 associated with property, including $82,000 for the deposit on the Corringle Road Homestead (the actual deposit was $92,000); a deposit of $6,000 on one of the Corringle Beach Road properties for Dr Bremner; $5,000 for the property at Mt Hotham; $30,000 for a bulldozer and $30,000 for wages at the Bulga Creek farm; and excavator and machinery costs of $50,000 for Corringle Beach.
The remainder included $313,000 for the Provident loan. It also included personal expenses such as tax, an excess payment on a repossessed car, other outstanding personal bills and living expenses.
Mr French continued:

The highlighted amount [which I cannot identify from the copy of the email in the Court Book] is the only amount that has not gone to where it should of. That is my fault, as I trusted the mortgage broker and he has let me down. I can fax you a copy of the agreement that he signed with me, with interest if it is every paid = $300,000. The money was to be paid to the mortgage company whilst I was in Europe $110,000. It was not done so it still incurs 10% interest per month and is secured by property in South Australia. It may never come back, but I have spoken to a solicitor who knows about his position and he says that it is going forward.
The money has been spent on keeping the whole thing rolling – the invention & farms.
The inventions is about to pay off in a big way.
And you have half of the block of land that we were going to sell to the church for $2 million and that was only 100 acres of the 168 acres.
I know you are shocked as you thought it was all going to the land, but how would I have got the invention where it is now.
And I have offered you half of that when you said we would go 50/50 in all the land that I found.
I am not sure what you want to do from here on, but please let me know quickly so that I can arrange some future income and money so that we can live from some other sources or some other means.
…

On Mr French’s account in his emails to Dr Bremner, the story about a payment to the mortgage broker is a strange one which does not make much sense. Mr French twice mentioned the figure of $110,000 but the evidence does not identify a payment of this particular amount. It is hard to see how, even at 10% interest, the amount outstanding could have grown to $300,000 by April-May 2008. Nor, apparently, was anything ultimately recovered, whether from the supposed secured property in South Australia or otherwise. What is clear is that Mr French had spent most of the money provided to him for paying down Provident on other purposes, and had kept Dr Bremner in the dark about it.
In his affidavit, Mr French said that Dr Bremner first became “directly involved” in the magnetic coupling business in 2008. The products which Mr French hoped to sell would of course include magnets. Mr French had lined up a manufacturer at Ningbo in China who was able to produce the magnets needed. In July 2008 Mr French caused a company called Bright Effect Limited to be incorporated in Hong Kong. Mr French and Dr Bremner each held half the shares. It appears that the plan, or part of the plan, was that the Hong Kong company would buy the magnets from the Chinese manufacturer and sell them on to the manufacturer of the magnetic coupling products with a large mark-up. According to Mr French, this was Dr Bremner’s idea.
Mr French was very enthusiastic about the Hong Kong company. He referred to it as a “money tree”. But for the moment the number of magnets required for prototypes and the like was small and the Hong Kong company appears to have remained dormant.
Meanwhile Dr Bremner sent monies to Wards to pay for the settlement of the further Victorian properties purchased by Mr French. Dr Bremner sent $1.7 million at the end of May and a further $800,000 towards the end of July. These monies were paid into Wards’ trust account and mainly used for the settlement of the purchases, but it appears Mr French had been authorised by Dr Bremner to withdraw monies from the trust account and he used this authority to make payments totalling $275,000 for other purposes. These payments included payments to Mr Greenstein’s firm and to himself totalling $165,000 in July and August. He also spent $104,000 on cattle for the Deddick Valley property and paid $6,000 to Dwyers Toyota for a farm vehicle.
By the end of August, the monies in Wards’ trust account appear to have been exhausted. On 10 September Mr French emailed Dr Bremner advising that Wards needed more money to pay for the settlement of the Deddick Valley purchase. Mr French also included a list of other amounts requiring “urgent payment” totalling $123,100. Mr French’s email also said enigmatically that he was “moving forward on the Provident matter”.
The amounts identified in the list were a mixture of magnetic coupling expenses (including $53,400 for Griffith Hack); property expenses; and personal costs. The last category included $20,000 for “farm running costs/living” and $10,000 for two mortgage payments owed by Barrie French, Mr French’s father.
Barrie French lived in a house at Manly in Sydney which was mortgaged to a financier called CKM. He was having difficulties in meeting the mortgage payments and was in poor health. Apparently he had borrowed to put money into the magnetic coupling invention and for this reason Mr French felt a particular obligation to help him with his mortgage.
Following Mr French’s request, Dr Bremner made two regular funding payments totalling $50,000 in September and October. Presumably he also provided the money for the Deddick Valley property purchase settlement, although there is no direct evidence of this.
Between February and December 2008 Dr Bremner made regular funding payments totalling $150,000. He also paid $30,000 directly to Griffith Hack in early July for patent expenses. This was in addition to the $165,000 paid out of Wards’ trust account to Mr French or Greenstein & Associates at Mr French’s direction.
In the last few months of 2008 contact had been renewed between Mr French and Mr Iliuta, who was then getting close to completing his degree at UTS (he completed the degree in December). This came about as a result of a chance meeting between Mr French and Mr Iliuta at a supermarket in Mona Vale, where Mr Iliuta was working. Mr French and Mr Iliuta exchanged contact details.
A few months later, Mr French and Ms Bakey had the idea that Mr Iliuta could help with work needed to develop the magnetic coupling technology further. Mr French contacted Mr Iliuta, who was then living in Queensland. He sent Mr Iliuta some travelling money and Mr Iliuta came down to live with Mr French and Ms Bakey and work on developing the invention.
Meanwhile, the dispute between Mr French and Provident had not been resolved and Mr French was under pressure in the litigation. A defence had been filed. The defence itself was not in evidence, but it appears to have had no substance. In February 2009 Provident moved to have the defence struck out.

Provident’s Notice of Motion was listed on 17 February before the Common Law Registrar but Mr Greenstein was able to defer it until 25 February on the basis that Mr French could not be contacted. The case was referred to the Possession List Judge and adjourned to the next day on the basis that Mr Greenstein was unable to obtain instructions.
At this point, Provident made a formal written offer to Mr French to compromise the proceedings. The offer required Mr French to sign a consent judgment in favour of Provident, but provided that he would have three months to sell the properties and that the consent judgment would be held in escrow until the three month period had elapsed. Mr Greenstein reported in a later letter to Mr French what happened next:

We confirm you having read the letter of 25 February, 2009, referred to above and instructed the writer that you agree to the terms of the offer, on the basis between now and the date by which the offer expires, being Monday, 25 May, 2009, you will take steps to refinance the loan or make other arrangements with your UK based colleague, Chris Bremner, to enable you to retain possession of the properties. We further confirm having had a discussion with Dr Bremner during your attendance at our office in terms of which he requested that he be kept informed of all further developments with regard to the handling of this matter. We confirm your instructions to keep Dr Bremner informed on this basis; …

In mid-March Dr Bremner intervened. He contacted Mr Michael O’Sullivan, the managing director of Provident, directly, to try to negotiate a more favourable settlement. Mr O’Sullivan and Dr Bremner appear to have agreed in principle that Dr Bremner would pay the sum of $2.6 million (a discount from Provident’s figure of $2.75 million) and take an assignment of the mortgage. Dr Bremner would make a down payment of $600,000 and pay the balance after two months. Mr O’Sullivan had a draft deed of assignment to this effect drawn up and sent to Dr Bremner. Dr Bremner made the $600,000 down payment but the negotiations dragged on. The proceedings were adjourned on several occasions. In the meantime, Dr Bremner paid the interest on the loan. The proceedings were eventually discontinued at the beginning of December that year without anything being signed.
All of the negotiations between Dr Bremner and Mr O’Sullivan took place without the involvement of Mr French (or Mr Greenstein). It appears that Mr Greenstein reported regularly to Mr French as the proceedings were adjourned, but Mr French did not give him any instructions. Mr French in effect left the whole matter to Dr Bremner.
In the meantime, Dr Bremner visited Mr French at Corringle. This probably happened in the second half of March. Together with Mr Iliuta, they discussed the exploitation of the technology in Europe. The conversation which took place is relied upon in support of Mr French’s case concerning the exploitation agreement. I will refer to Mr French’s evidence about that conversation in more detail below.
Soon afterwards Mr Iliuta moved to Montpellier. There he began work on exploiting the MGT technology in Europe. He worked on drawings, prototypes and promotional material. On 1 April he wrote an email reporting to Dr Bremner and Mr French on his progress. He was using the MGT Australia email address and describing himself as “European Operations Manager, MGT”.
Mr French visited the Hanover Fair again in April 2009 to display the magnetic coupling technology. He was accompanied by Mr Iliuta.
Mr Iliuta of course needed funding when he moved to Europe to perform his role. According to a later email from Mr Iliuta to Dr Bremner, Mr French had told Mr Iliuta that he would be paid $1,000 per week. Mr Iliuta was also incurring costs for supplies, travel and the like.
Mr French and Ms Bakey made some payments to Mr Iliuta to cover his remuneration and expenses. Some of the payments came out of Mr French’s personal bank account, some from his Bulga Creek Pastoral Co account, and some from the MGT account. Apart from payments of $5,000 on 9 April and $12,000 on 20 May, these payments ranged between a few hundred dollars and a thousand dollars. For the period between the end of March and early June, they totalled only about $4,500.
In early June Mr Iliuta emailed Dr Bremner pointing out that he had not been paid the promised $1,000 per week and that there were also expenses to pay. Mr Iliuta asked Dr Bremner to cover these amounts. On the same day Mr Iliuta wrote to Mr French with a copy to Dr Bremner, suggesting it would be a good idea for him to sign a contract concerning his involvement with MGT. This would deal with ownership of the IP and his remuneration entitlements.
After this point Mr French made a few other small payments to Mr Iliuta out of his and MGT’s bank accounts. But for practical purposes Mr Iliuta’s remuneration and expenses were paid by Dr Bremner. Mr French did not take up Mr Iliuta’s suggestion of signing an employment contract and for the moment this remained in limbo.
Although details of the litigation are not in evidence, it appears that Mr French brought proceedings in this Court in 2004 against a company called Polar Technologies International Pty Ltd, and others associated with it, concerning his snow making invention. Those proceedings were dismissed for want of prosecution by Macready AsJ and in November 2006 an appeal from his Honour’s judgment was dismissed by Hamilton J: French v Polar Technologies International Pty Ltd [2006] NSWSC 1260.
Presumably as a result of being told about this litigation by Mr French, Dr Bremner agreed to fund a review of it. The review was carried out by the large city firm of Blake Dawson, who were retained to provide advice on pursuing the proceedings in light of “new information” obtained since they had been dismissed. Blake Dawson requested a payment on account of $25,000, which Dr Bremner made.
The third formal document concerning the business dealings between Dr Bremner and Mr French is dated 13 September 2009. The document was written out by Dr Bremner and signed by Mr French when he and Ms Bakey were visiting Dr Bremner in Sydney during one of his visits to Australia. It read:

I Andrew French hereby confirms [sic] that Dr Christopher Bremner my generous financial backer of the last 10 years has equal ownership with myself of MGT Magnetic Gearing and Turbine Co incl its associated patents and my patents in the area of magnetics. Dr Christopher Bremner is also confirmed to be my equal partner in the ownership of the 360 acres of land registered to me near North Arm Cove at Port Stephens, NSW Australia after a value of 4 million.

I discuss the circumstances in which this document was prepared in more detail below.
The result of Blake Dawson’s review of the Polar Technologies litigation was not good news for Mr French (or Dr Bremner). Nothing could be done about the dismissal of the proceedings in this Court; moreover, there were District Court proceedings brought by Polar Technologies against Mr French (dating from 2008) where Mr French had been ordered to pay costs amounting to more than $100,000. Blake Dawson advised that there was no alternative but to pay these costs. Dr Bremner eventually paid $108,000 for Polar Technologies’ costs as well as a further $25,900 for Blake Dawson’s fees.
Mr French received a report from Mr Greenstein on the discontinuance of the proceedings by Provident in early December 2009. He took no further action, leaving the matter to Dr Bremner. Dr Bremner continued to remain in touch with Mr O’Sullivan, paying the interest on the mortgage debt, but no deed of assignment was ever executed.
Initially Mr Iliuta had undertaken his magnetic gearing work at a small factory unit in Montpellier. Later he moved to commercial premises at Avenue Albert Einstein elsewhere in Montpellier. This appears to have happened in about October 2009. The premises were leased from a French company called Regus which provided serviced business premises. In December 2009, Mr French wrote to Regus on MGT Australia letterhead confirming the lease on MGT Australia’s behalf.
Between January and December 2009, Dr Bremner made regular funding payments to Mr French of $670,000. In June he also made a direct payment of $32,700 to have power connected to the North Arm Cove properties. This was in addition to the payments to Blake Dawson in connection with the Polar Technologies matter.
In around September 2009 Dr Bremner had retained a man called John Nel, who had previously been a farmer in Zimbabwe, to act as the manager of his Victorian properties. Initially Mr Nel lived in Orbost but work was done on one of the Corringle Beach properties to allow him to live there. The precise scope of Mr Nel’s activities is not revealed in the evidence. Presumably he looked after the two properties which were registered in Dr Bremner’s sole name at Corringle Beach. It is unclear what else he was involved in.
According to Dr Bremner’s email of 12 January 2011, [see [210] below), recruiting Mr Nel was Mr French’s idea. But it seems that Mr French did not get on with him. In around the first quarter of 2010, Mr Nel suffered an injury. The injury was apparently minor but he left and was not replaced. From this point forward, Mr French and Ms Bakey seem to have looked after Dr Bremner’s Corringle Beach properties.
Meanwhile, Mr Iliuta since 2009 had been pursuing leads with potential customers for the magnetic coupling products which had been shown at the Hanover Fair in 2009. He approached companies in Europe. He also visited the United States to present the product to a company there called Lovejoy.
Among the potential customers approached by Mr Iliuta was a Danish company called Technoflex. Technoflex permitted Mr Iliuta to set up a display in its offices in Denmark promoting MGT’s products. Mr Iliuta travelled to Denmark for this purpose.
Technoflex also bought a number of batches of batteries apparently for the purposes of prototypes. These were supplied from Ningbo and the arrangements were made by Mr Iliuta, but Mr French required the purchases to be invoiced through MGT, no European company having been established at that point.
As the development of the European business appeared to be gathering pace, Mr French thought that he should come over to Montpellier to visit. The parties began to talk about this happening in the second half of 2010.
Meanwhile, payments on his father’s mortgage continued to be a problem for Mr French. CKM began possession proceedings in January 2010. Mr Greenstein was retained by Mr French.
By May 2010 the mortgage arrears (including fees) had grown to $60,000 and CKM was at the point of entering judgment. Dr Bremner agreed to take over the management of the proceedings on behalf of Barrie French. Mr Greenstein was instructed by Mr French to take his instructions from Dr Bremner, who arranged to pay the arrears and CKM’s costs. He also arranged to make the future mortgage payments (about $5,000 per month) directly to CKM.
By this stage Mr Iliuta was becoming frustrated. He wanted to proceed with the signing of a distribution agreement with Technoflex and pursue arrangements with other customers. But Mr French wanted the legal structure sorted out first. Mr Iliuta also disapproved of the European customers being invoiced by MGT out of Australia. He saw it as wrong for money being paid by European customers for product development to be pocketed by Mr French.
In late May or early June 2010 Mr French was introduced to the international accounting firm, Pricewaterhouse Coopers (“PWC”). The first contact was with Mr Darren Turner of PWC’s Newcastle office. PWC expressed interest in acting as advisers to Mr French.
On 12 June, Mr French emailed Mr Iliuta (copied to Dr Bremner) about the need to get MGT’s legal and accounting affairs sorted out. He said:

The accountants are asking me what is going on with these sales in Denmark.
Also they want to know how the technology is being licensed by myself? What profit margins are allotted to certain products and how we are running the MGT operations in Europe. (Licensed or Subsidiary)
From here on please allow for a 10% royalty to be added by any licensee to any end price and inform them of this.
—At this stage everything must be run through MGT Australia. Is Technoflex aware of that? Any agreements must be between Technoflex and the company MGT Australia until the we have another licensed vehicle in place. Meaning the formation of another company such as MGT Hong Kong or MGT Europe and that company having the license in place to use the IP. With that in place the company must show that it is paying a proper consideration for these rights or be a subsidiary of a parent company. This must be demonstrated paying an initial fee meaning a lump sum or a income stream from profits with a royalty to the inventor who is licensing the IP.
Chris paying you directly into your account has caused a problem and it looks from here like the decisions are being made by you 2 over in Europe.
Chris is not a shareholder in the Australian Company MGT at present. MGT Australia is the only company registered at the moment.

After referring to his meeting with PWC he continued:

PWC are going to look at the company structure in terms of tax advice and management. I am not sure at this stage if the Hong Kong company will control the world or if it will be run from here in Australia. They want to run a
series of scenarios to test the results of different tax decisions.
This must be done properly, because I am still paying off a $80,000 tax bill to the Australian Government from the Escalator Handrail invention.
Right now we must finalise Chris's input and calculate the amount of money + interest that he has put into this project alone MGT only, excluding all farm expenses.
This then needs to be put into my tax return as a loan to me personally or as me selling shares in MGT to him, which then means I have to pay tax on it.
I have to explain why all this money has gone through my bank accounts here in Australia and show it is not income.

After referring to the history of MGT he continued:

I have spent the most in time and money on this project carrying it for 8 years without Chris's being there.
All the money Chris has paid you directly must be put onto my loan account with him.
Your input has also been very important and could deserves a share of the royalty, this has to be decided by myself as I employed you from MGT Australia.
Can we speak on Skype soon and discuss all this? Then I can give the Australian tax office and the companies accountants some direction.
Anyway the main thing is that we are going well.
Thank you for the great job you have been doing.
But let’s not forget Technoflex came from Hannover, it was the 4th time myself and MGT Australia has exhibited in Germany and has claimed tax expenses on those trips.
We must workout now how this whole international rollout is going to come together.

A few hours afterwards, in the early hours of 13 June, Mr French sent a separate email to Dr Bremner concerning the September 2009 memorandum. The email was headed “Duress agreement 50/50” and stated:

Please let it be understood again.
The agreement you put in front of me in your flat at Darling Point when I was drunk was signed under Duress.
I told you Gabi my partner had to see it and she has not had that chance as of yet.
We have not spoken about that since then and she has on a number of occasions tried to talk to you about –
1/ Our loan account to you.
2/ The agreement you put in front of me relating to 50/50 with no consideration.
3/ A number of farm issues that you decided on behind our backs.
The land is not 50/50 the titles show that.
Please contact me ASAP to discuss things, I have tried to call you.
YOU DO NOT HAVE ANY AUTHORITY TO BE AT ANY MGT MEETINGS.

What prompted this email is not revealed by the evidence. Nor is there any written response from Dr Bremner in evidence.
Initially Mr Iliuta accepted what Mr French said in his email of 12 June. On 20 June he emailed Mr French confirming that the decisions and financial transactions would go through MGT Australia “until we have structured things in Europe”. But it seems that Dr Bremner continued to pay Mr Iliuta directly (clearly Mr French was in no position to do so). Nothing appears to have been done, either, about recording the payments in Mr French’s or MGT’s accounts, or about including a royalty for Mr French in the sales.
In late July 2010 there was a further spat between Mr French and Dr Bremner. Mr French wanted Dr Bremner to finance a new venture. This was a yabby farm which Mr French proposed should be acquired on a 50/50 basis. Dr Bremner consulted a stockbroker he knew in Sydney and turned the proposal down, resulting in an outburst from Mr French.
Dr Bremner responded with his own complaints. He had provided a credit card in his name to Mr French, apparently for the purpose of paying expenses on the Victorian properties, Mr French had put a whole lot of charges on it, and Dr Bremner’s mother had somehow found out and screamed at him. Dr Bremner said that he was being made ill by all of the stress placed on him by Mr French. In due course they both calmed down.
Mr French returned to the charge, however, a week or so later. He wanted to ramp up the samphire business at Corringle. This would include buying more equipment and building a packing shed. His email spoke of sales of $3 million to $4 million and of sitting on a goldmine. Dr Bremner clearly saw this as a distraction. He wanted to conserve money, and for the expansion of the samphire business to wait. Mr French complained about being slowed down and “doing it tough” because he and his family only had the money being provided by Dr Bremner to live on.
At around this time the arrangements for Mr French and his family to travel to Montpellier was confirmed. On 16 August Dr Bremner transferred $20,000 to Mr French to enable him to pay for the trip.
Then problems with Mr Iliuta resurfaced. On 17 August Mr Iliuta wrote to Mr French (with a copy to Dr Bremner):

I am finding it hard to sleep because of stress. The initial deal we discussed has been changed over and over too many times and keeps changing.
I am happy to finish the existing projects. I hope we can still be friends and like I said I’ll finish the production run on the whole range. The events in the last months have caused me a lot of stress and I need to get out of the present business relation with MGT. I feel tired all the time, have insomnia, a rash and it’s getting worse. I have to look after my health.
If MGT needs my services as a designer then we can of course discuss that but I will not work for MGT as an employee. So far my work has been appreciated by MGT’s clients and I feel that the products I have designed for MGT have a large market potential.
I wish you all the best but now we need to discuss my exit strategy.

On 19 August Mr Iliuta followed up with an email to Mr French, with a copy to Dr Bremner, proposing a structure under which he (Mr Iliuta) would work for MGT in Europe. Under this structure parts for European customers would be made in China by MGT and sold to MGT Europe at defined mark-ups. MGT Europe would assemble and test the products and sell the finished products to distributors with a further mark-up. MGT Europe’s operations would be financed by Dr Bremner. The directors of MGT Europe would be Dr Bremner and Mr Iliuta and the shareholders would be Dr Bremner, Mr French and Mr Iliuta at one-third each.
Mr French saw this as too favourable to Mr Iliuta. There was nothing for the MGT shareholders and no licence fee. Mr French said he would pass the proposal on to others involved, but his reaction made his distaste clear. A few hours later Mr Iliuta wrote:

OK do it your way – wow 5 minutes after I sent you that proposal I realized that I almost got sucked into doing business with you again…to be quite honest I am in fact pretty happy that I will not be in your sphere of influence – ever. It keeps me happy.

It seems to me that the most likely explanation for Dr Bremner’s intervention is that Mr French and Dr Bremner wanted the debt to Provident in friendly hands, which would have bought time for Mr French to subdivide and sell his North Arm Cove properties, possibly in conjunction with Dr Bremner’s land. I suspect that this was equally as much, if not more, Mr French’s idea than Dr Bremner’s. But whether this is so or not does not in the end matter. It is sufficient to say that Dr Bremner had no contractual obligation to keep holding the debt indefinitely.
An understanding that the parties would co-operate so as to put the Provident mortgage in friendly hands might have been used as the basis of some sort of claim for equitable relief. It might have been possible to characterise the understanding as a type of joint venture giving rise to fiduciary obligations on Dr Bremner’s part to have regard to Mr French’s interests. Whether that would have extended indefinitely or required by Dr Bremner to bear the debt himself may be doubtful, but is academic in the present case. No such equitable claim is made.

Alleged agreement: exploitation of magnetic coupling invention

The terms of the alleged agreement concerning the exploitation of the magnetic coupling invention, as pleaded, the terms were relevantly:

…
b.   French and Bremner would become partners in the exploitation of French’s inventions which would initially be exploited in Australia through Magnetic Gearing & Turbine Corporation Pty Ltd ACN 093 745 290 (“MGT Australia”) with French to supply the intellectual property, including the initial patent applications and any future patent applications, know-how in relation to the design and manufacture of the products including engineering drawings and specification, product brochures and literature, customer contacts developed by French in relation to the products including Technoflex Denmark, Grundfos, Daimler, Raja Lovejoy, General Electric, Amel Tecnica, MAN Diesel, MBE Holland, NASA and Alfa Laval (the “customers”); and with Bremner to supply financial backing until the business was self-supporting;
c.   A company, Magnetic Gearing & Turbine Europe (“MGT Europe”) would be incorporated in France to exploit French’s inventions with the shareholding to be as follows: French (or nominee) 51%; Bremner (or nominee) 44%; Radu Iliuta (“Iliuta”) 5%.
..
e.   MGT Europe would operate from rented premises in Montpellier and would employ Iliuta as a manager, with Bremner to pay MGT Europe’s establishment costs and rental until such time as MGT Europe was able to do so from its own earnings;
e.1   Iliuta, under employment by French, would continue to make engineering drawings for product components and marketing brochures.
f.   French would license to MGT Europe the intellectual property, including French’s inventions and the know-how and copyright in engineering drawings and marketing brochures in consideration for which he would earn profits from participation as a shareholder in MGT Europe and from director’s fees.
f.1   Engineering drawings and brochures made by Iliuta (the copyright works) using the technology and for the exploitation of the inventions, no matter the owner of copyright in the works, would be used exclusively in the furtherance of the business of the joint venture and, after its incorporation, by MGT Europe.
…

This contractual claim also fails. On my findings, the parties never reached a concluded agreement on the terms of the proposal to incorporate a company to exploit the magnetic coupling technology in Europe. In particular, the parties never reached a concluded agreement on such essential matters as: the terms on which the intellectual property would be licensed to the proposed company, or the identity of the shareholders. Nor was it even clear at that time who the owner or owners of the intellectual property even were.
Even if these problems of uncertainty had been overcome, there would have been a further difficulty with the parties to the contract. As we have seen, Mr French put his case in these proceedings on the basis that he individually and Dr Bremner were the parties to the alleged joint venture agreement. It was necessary for him to take this position because MGT was not made a party to the proceedings.
Consistently with this position, Mr French’s evidentiary case proceeded on the basis that he personally was the owner of the patents and other intellectual property, and the employer of Mr Iliuta. As we have seen, that is quite contrary to the view which Mr French had at the time.
In my opinion, PWC were probably correct in thinking that Mr French raised money from investors in MGT on the footing that MGT was the ultimate owner and controller of the patent and intellectual property rights, and that it would consequently have been a breach of duty on Mr French’s part to arrogate those rights to himself. The same conclusion would flow on to any employment contract with Mr Iliuta and any IP rights derived from that.
Of itself, that does not rule out the claim being made by Mr French in these proceedings. The fact that Mr French held the intellectual property rights effectively as trustee for MGT would not prevent him from contractually dealing with those rights in a legally effective way. It would only give rise to some potential form of breach of trust or director’s duties for which he could be made accountable at the suit of MGT. But it does underline a factual problem with Mr French’s case.
From September 2010 onwards Mr French was clearly alive to the issue and wanted to resolve it by transferring the intellectual property to MGT. Mr French told Dr Bremner (and Mr Iliuta, if he was a party to the putative joint venture agreement) that the intellectual property rights would be licensed by MGT. He presented this as being non-negotiable. He also put forward MGT, not himself, as the shareholder in MGT Europe. In these circumstances, the proper interpretation of any agreement which was reached during the visit to Montpellier in September/October was that the contracting party was MGT, not Mr French personally. His claim in these proceedings fails on this basis also.
In case I am wrong in these views, I will briefly consider the question of damages. As we have seen, as a result of my ruling on the admissibility of the Five Year Business Plan produced in 2013, all of the forensic accounting evidence fell away. Nevertheless, counsel for Mr French submitted that I should still award Mr French damages, difficult though it might be to assess the quantum. Counsel relied on the principle that once damage has been established difficulties in calculation of the quantum of damages cannot prevent the Court from making an award in favour of the successful plaintiff.
But this principle still requires the Court to be satisfied, on the balance of probabilities that the plaintiff has suffered some damage as a result of the breach of contract: Sellars v Adelaide Petroleum NL; Poseidon Ltd v Adelaide Petroleum NL (1994) 179 CLR 332 at 355. That means that in the present case the Court would have to be satisfied that if the European business had been established in accordance with the alleged joint venture agreement Mr French would have derived some substantial financial benefit from it.
It is important to note that this analysis would have to be carried out on the basis that the other party or parties to the relevant agreements would have performed their contractual obligations but not necessarily any more: cf the “Mihalis Angelos” principle discussed in TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130 at 150 ff. As Dr Bremner pointed out, Mr Iliuta was not an indentured servant. Had the European business been established under the control of Mr French, Mr Iliuta might have been restrained from using confidential information for the benefit of a competitor. But he could not have been forced to work for the business. Given Mr Iliuta’s attitude to Mr French by late 2010, there is real doubt about whether he would have wanted to be involved at all.
Similarly, Dr Bremner could not have been forced to do anything more to support the business than comply with the minimum obligations imposed by the joint venture agreement, whatever they were. Although Mr French asserted that the intellectual property produced by Mr Iliuta from 2009 onwards was all completely derivative of his work, I am not convinced that that was actually the case. In assessing damages, it cannot be assumed that the benefit of all of that work would have flowed to Mr French.
The Court has little if any evidence on which to work. What little evidence there is suggests that by late 2010 Mr Iliuta was heartily sick of Mr French and was not prepared to work in any organisation where Mr French had control. Dr Bremner was also reaching, if he had not reached, the end of his tether.
The history of Mr French’s attempts to commercialise the invention up to 2010, and after he fell out with Dr Bremner and Mr Iliuta in 2011, is one of attracting the interest of larger organisations but being unable to follow through with commercialisation. The reasons for this may be to do with limitations in Mr French’s invention, or Mr French’s lack of management skills, or a combination of the two. But it does not inspire any confidence that Mr French would have found the winning formula if only Dr Bremner had signed up to the incorporation of MGT Europe on the terms of the alleged joint venture agreement. I am not satisfied that if he had done so the result would have been any different.

Alleged agreement: Victorian property expenses

The terms of the alleged property maintenance agreement, as pleaded, were as follows:

a.   French would maintain the Victorian properties and pay all expenses in relation thereto, including rates;
b.   in relation to properties jointly owned by French and Bremner, Bremner would be liable to French for his half share of all outgoings incurred in relation to maintenance of the properties and expenses;
c.   in relation to properties owned by Bremner, Bremner would be liable to compensate French for all outgoings occurred in relation to maintenance of the properties and expenses;
d.   Bremner agreed to send French monthly amounts to cover the cost of expenses, renovations and upgrades to his properties.

I have found against Mr French’s case, as particularised, that a general agreement in these terms was made in 2009. Accordingly, the pleaded contractual claim, which covers all expenses incurred by Mr French on any of the properties, fails in that form.
In fact, I think that the agreement between the parties is more likely to have been that the farming activities were entirely on Mr French’s account, and that property expenses such as rates would have been part of this. But if that is wrong, it would make the farming in effect a 50/50 partnership between Dr Bremner and Mr French. However, a partnership claim, even if established, would not have resulted in the order sought by Mr French in these proceedings.
In any partnership action, it would have been necessary to take an account of the partnership dealings as a whole. This would have required Mr French to give credit for monies derived from the operation of the properties and the sale of the putative partnership assets such as the cattle. There is no way of knowing whether the balance would have been in favour of Mr French or Dr Bremner, and the answer is academic because no such claim is made by either party. On my findings, having regard to the way the case was pleaded, Mr French’s expenditure on the jointly owned properties lies where it falls.
This does not deal with the expenditure, if any, on the properties solely owned by Dr Bremner. But there is no evidence that Mr French has been left out of pocket.

Dr Bremner’s loan claim

I have found that $3.15 million was paid by Dr Bremner by way of loan to Mr French, either to third parties or to Mr French himself, and that this debt is still outstanding. The precise figure is $3,148,718. There will be judgment for Dr Bremner accordingly. A claim for interest is pursued and the interest will need to be calculated.

Dr Bremner’s resulting trust claim

Dr Bremner’s claim is for the recognition of what has been called a “purchase money resulting trust” namely a trust which may arise where a person provides money to purchase property, the legal title to which is then put in someone else’s name, or where a number of persons contribute the purchase money and the shares of the legal title do not reflect the respective contributions: see J C Campbell QC, “The consequences of rebutting a presumption of advancement” (2018) 46 Aust Bar Rev 229. A resulting trust in favour of the person who provided the money (or in favour of the persons who provided the money in the shares in which it was provided) is presumed, but the presumption may be rebutted by proof that the actual intention of the payer was otherwise.
Counsel for Dr Bremner submitted that, as Mr French provided the $92,000 deposit on the Corringle Beach Homestead property and Dr Bremner provided the balance, there would be a resulting trust in favour of Dr Bremner and Mr French as joint tenants in shares which reflect their proportionate contributions to the purchase price. Counsel submitted that Mr French made no contribution to the purchase price of the other jointly owned properties and therefore the resulting trust should be for Dr Bremner alone.
There are, in my opinion, two complicating factors, at least so far as the Corringle Beach property is concerned, when it comes to determining whether the presumption has been rebutted by proof of contrary intention. The first is that, where two people have provided the purchase monies, the intention to be determined is their common intention, as determined objectively by reference to words or conduct used by them: Professor Campbell (above at [459]) at p 4 citing Calverley v Green (1984) 155 CLR 242 at 251, 258, 261. This means that it is the “common intention” of Mr French and Dr Bremner which must be discerned for the purpose of determining whether the presumption is rebutted, not merely the intention (or lack of one) of Dr Bremner alone.
The second complicating factor arises from Mr French’s involvement in giving instructions to Wards. Although the contract of sale is not in evidence, it can be assumed from the fact that Mr French paid the deposit that he would have been the purchaser under the contract. On any view, when the transfers of the two parcels of the Corringle Beach Homestead land were registered, Wards were acting for Mr French. They may have been acting for Dr Bremner as well, as the provider of most of the purchase money, but he was not their sole client. In any event, it would seem that the instructions for the registration came from Mr French, albeit under authority from Dr Bremner. Arguably, the relevant intention was that of Mr French as Dr Bremner’s agent.
The point is starkly illustrated by what was done with the title to the parcel of farm land forming part of the Corringle Farm Homestead. That land was registered in Mr French’s name, but subject to a trust for himself and Dr Bremner as tenants in common under an express written declaration of trust. If the argument for Dr Bremner is correct, then at the point of registration Mr French was bound by a resulting trust to hold the whole of the property for the benefit of Dr Bremner. This would be flatly inconsistent with the terms of the express trust.
Of course equity would not permit Mr French to use his authority as Dr Bremner’s agent to confer benefits on himself in breach of his fiduciary duty. If Mr French had instructed Wards to register the properties in a way which was inconsistent with Dr Bremner’s instructions, he would have been guilty of breach of fiduciary duty and would be treated as holding the properties on trust for Dr Bremner. But that would be a constructive trust not a resulting one. No suggestion, of course, has been made in the present proceedings that Mr French actually did act outside his authority.
These complications might be a separate obstacle to Dr Bremner’s resulting trust claim over the Corringle Beach Homestead property. But I propose to put them aside and proceed to consider whether, in the circumstances of the case, the presumption of a trust in favour of Dr Bremner has been rebutted by reference to Dr Bremner’s intention alone.
It is worth noting that often in purchase money resulting trust cases the transaction has happened long ago and the person who provided the money is no longer available to give evidence. That is not so here. Had Dr Bremner wished to tell the Court directly what his intentions were so far as the beneficial ownership of the properties was concerned, he could have. He chose not to do so. Nor, it seems, did he make any effort to obtain any evidence from Wards, either documentary or oral, on the question. This is far from being a situation where the Court must rely on presumptions in the absence of direct evidence.
In this case, there is the direct evidence of Mr French and Ms Bakey that Dr Bremner expressly wanted for the Corringle Beach Homestead parcel to be registered in Ms Bakey’s name, essentially as a gift to her. That evidence may be self-serving but Dr Bremner could have tried to contradict it and he has not. His counsel did not even mount a challenge to it.
There is also Mr French’s evidence, reinforced by contemporaneous emails, and supported by admissions on the part of Dr Bremner in emails, of an agreement to acquire the properties on a 50/50 basis.
In the light of this evidence, I am satisfied that the presumption has been rebutted. Dr Bremner’s resulting trust claim fails.

Sale of jointly owned properties

As I have mentioned, Dr Bremner’s alternative claim for orders for appointment of trustees for sale of the Victorian property is based on the applicable Victorian legislation, Part IV of the Property Law Act1958 (Vic) (“PLA”). PLA s 225 provides that a co-owner of land may apply to the Victorian Civil and Administrative Tribunal (“VCAT”) for such an order. PLA s 231 then provides:

VCAT may order appointment of trustees
(1)   In any proceeding under this Division, if VCAT thinks that the appointment or removal of trustees is necessary or desirable, it may order—
(a)   the appointment of trustees; or
(b)   the removal of trustees.

(2)   In an order appointing trustees for the purposes of the sale of land or goods, VCAT may—
(a)   direct the trustees as to the terms and conditions on which any sale is to be carried out;
(b)   direct the distribution of any proceeds of the sale in any manner specified by VCAT.

(3)   In an order appointing trustees for the purposes of a physical division of land or goods, VCAT may direct the trustees as to the manner in which the division is to be carried out.
(4)   An order under this section may provide for the remuneration of the trustees appointed under the order and—
(a)   if trustees are appointed for the purposes referred to in subsection (2), the order may provide that the remuneration of the trustees be paid from the proceeds of sale; and
(b)   if the trustees are appointed for the purposes referred to in subsection (3), the order may provide that the remuneration of the trustees be paid by such parties to the proceeding as VCAT considers just and fair in the circumstances.

These provisions refer only to applications being made to, and orders being made by, VCAT. Initially, it was contended on behalf of Mr French that the jurisdiction of VCAT is exclusive. But PLA s 234C relevantly provides:

Jurisdiction
(1) Subject to this section, the Supreme Court and the County Court do not have jurisdiction to hear an application under this Part.
…
(4) The Supreme Court and the County Court have jurisdiction to hear an application under this Part if—

(a) in any proceeding which has commenced in the Supreme Court or the County Court (as the case requires), the issue of co‑ownership of land or goods arises in the course of that proceeding; or
(b) in the opinion of the Supreme Court or the County Court (as the case requires), special circumstances exist which justify the Supreme Court or the County Court hearing the application.

(5)   For the purposes of subsection (4), special circumstances means circumstances in which—
(a)   the matter which is the subject of the application is complex; or
(b)   the matter which is the subject of the application, or a substantial part of that matter, does not fall within the jurisdiction of VCAT.

This Court may exercise such jurisdiction as the Supreme Court of Victoria has under Part IV of the PLA: Jurisdiction of Courts (Cross-Vesting) Act1987 (Vic), s 4(3); Jurisdiction of Court (Cross-Vesting) Act 1987 (NSW), s 9(a). On behalf of Dr Bremner it was contended that this Court has cross-vested jurisdiction on two bases. First, the issue of co-ownership of land has arisen in the course of these proceedings (s 4(a)). Secondly, the matter the subject of these proceedings is complex (s 5(a)), and accordingly there are special circumstances (s 4(b)). There may also be special circumstances because the other claims in these proceedings do not fall within the jurisdiction of VCAT (s 5(b)).
The challenge to the Court’s jurisdiction to make an order in favour of Dr Bremner was not ultimately pursued. I am satisfied that this concession was correct and the Court has jurisdiction.
As I have rejected Dr Bremner’s resulting trust claim, the conditions for the exercise of the Court’s power are enlivened. In the case of disagreement between the parties, such an order is made virtually as of course: Tory v Tory [2007] NSWSC 1078 at [42]. It was not suggested on behalf of Mr French that there was any reason not to make an order in this case.
The Court should therefore make an order for the appointment of trustees for sale as sought. But there are various details which need to be sorted out. The identity of the trustees needs to be determined. It is also necessary to consider whether any directions should be made to the trustees concerning the sale of the properties, or whether there should be any ancillary orders covering such matters as when vacant possession should be given.

Conclusions and orders

On Mr French’s cross-claim, I have concluded that:

(1) Mr French’s claim that Dr Bremner was contractually obliged to discharge, or indemnify him against, the liability under the Provident mortgage, fails;

(2) so too does Mr French’s claim of a “joint venture” contract to exploit his magnetic coupling technology through a company incorporated in France;

(3) moreover, Mr French has failed to establish an entitlement to damages for breach of that alleged contract;

(4) Mr French’s claim for reimbursement of expenses based on the alleged property management contract also fails.

On Dr Bremner’s cross-claim, I have concluded that:

(1) Dr Bremner is entitled to judgment against Mr French in the sum of $3,148,718, together with interest;

(2) Dr Bremner’s resulting trust claims over the Corringle Beach Homestead property registered in Ms Bakey’s name, and to the half share of the other five Victorian properties, registered in Mr French’s name, fail;

(3) Dr Bremner is however entitled to an order appointing trustees for sale of the five jointly owned properties.

Mr French’s cross-claim has failed and must be dismissed. Dr Bremner’s cross-claim has largely succeeded. But as against Ms Bakey, the cross-claim has failed and must be dismissed. I will direct Dr Bremner to bring in short minutes of order otherwise to give effect to this judgment, and dealing with costs.
The orders of the Court are:

1. Order that the first cross-claim be dismissed.

2. Order that the second cross-claim be dismissed as against the second cross-defendant.

3. Direct that the cross-claimant to the second cross-claim bring in short minutes of order otherwise to give effect to this judgment, and dealing with costs.

**********

Decision last updated: 29 August 2019

Medium Neutral Citation:	French v Bremner [2019] NSWSC 1033
Hearing dates:	6, 7, 8, 9, 10, 13, 14, 15 and 16 May 2019
Date of orders:	15 August 2019
Decision date:	15 August 2019
Jurisdiction:	Equity - Commercial List
Before:	Parker J
Decision:	See [474]-[477].
Catchwords:	EVIDENCE — Hearsay — Exceptions — First-hand hearsay exceptions – Evidence Act 1995 (NSW), s 63 – application to tender draft affidavit where witness refused to answer questions – adequacy of s 67 notice – whether document “marked” by witness where witness amended draft affidavit and returned by email – whether representation “made” by attaching draft affidavit to email – whether evidence should be excluded under s 135. CONTRACTS — Formation – whether one party agreed to “buy” other party’s mortgage – whether party breached agreement by failure to indemnify other party against mortgagee’s claim for funds owing. CONTRACTS — Formation – alleged agreement by one party to undertake European joint venture to exploit a second party’s magnetic coupling invention – incompleteness – parties had not reached concluded agreement on terms of licensing of intellectual property or identity of shareholders – parties to alleged agreement not correctly joined to proceedings. CONTRACTS — Formation – whether one party agreed for a second party to manage and maintain certain properties acquired with the first party’s funds. EQUITY — Trusts and trustees — Resulting trusts – whether one party entitled to resulting trusts over properties registered in second party’s name where first party advanced substantial portion of purchase price – presumption of resulting trust rebutted. LAND LAW — Co-ownership — Statutory trust for sale — Appointment of trustees – jurisdiction of Supreme Court of New South Wales – appointment of trustees for sale pursuant to Property Law Act 1958 (Vic), Part IV.
Legislation Cited:	Evidence Act 1995 (NSW), ss 55, 63, 63(2)(a), 67, 135, Dictionary cl 6 Jurisdiction of Courts (Cross-Vesting) Act 1987 (Vic), ss 4(3), 234C Jurisdiction of Court (Cross-Vesting) Act 1987 (NSW), s 9(a) Property Law Act 1958 (Vic), Part IV, ss 225, 231, 234C.
Cases Cited:	Attorney-General (NT) v Maurice (1986) 161 CLR 475; [1986] HCA 80 Calverley v Green (1984) 155 CLR 242 Caterpillar Inc v John Deere Ltd (No 2) [2000] FCA 1903 Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303; [2013] HCA 46 Great Atlantic Insurance Co. v Home Insurance Co [1981] 2 All ER 485; [1981] 1 WLR 529 Mindshare Communications Ltd v Orleans Investment Pty Ltd [2007] NSWSC 976 Nichia Corporation v Arrow Electronics Australia Pty Ltd (No 3) [2016] FCA 466 Sellars v Adelaide Petroleum NL; Poseidon Ltd v Adelaide Petroleum NL (1994) 179 CLR 332 TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130 Tory v Tory [2007] NSWSC 1078 Vairy v Wyong Shire Council (2005) 223 CLR 422 Watson v Foxman (1995) 49 NSWLR 315
Texts Cited:	J C Campbell QC, “The consequences of rebutting a presumption of advancement” (2018) 46 Aust Bar Rev 229 The Hon JJ Spigelman AC, “Truth and the law” (2011) Bar News 99
Category:	Principal judgment
Parties:	Andrew Boyd French (Plaintiff) Christopher Bremner (Defendant)
Representation:	Counsel: A Franklin SC (Plaintiff) MLD Einfeld QC/A Harding (Defendant) Solicitors: Maxwells (Plaintiff) Johnson Winter & Slattery (Defendant)
File Number(s):	2014/101136
Publication restriction:	Nil