Gilmore Finance Pty Ltd v Aesthete Pty Ltd atf the Real Money Unit Trust (No 2)

[2022] NSWSC 557

Supreme Court

New South Wales

Medium Neutral Citation:

Gilmore Finance Pty Ltd v Aesthete Pty Ltd atf the Real Money Unit Trust (No 2) [2022] NSWSC 557

Hearing dates:

14-21 and 24 March 2022; further submissions 25 March, 8, 22 and 29 April 2022

Date of orders:

10 May 2022

Decision date:

10 May 2022

Jurisdiction:

Equity - Commercial List

Before:

Stevenson J

Decision:

Proceedings to be dismissed

Catchwords:

CONSUMER LAW – misleading or deceptive conduct – investment in trusts established to develop two properties in Western Sydney – whether defendant trustees through their director and alleged agent made representations concerning the level of investment of other parties – whether plaintiff misled by such representation – where true level of other parties’ investment revealed yet plaintiff maintained and increased its investment

TRUSTS AND TRUSTEES – unit trusts established for purpose of proposed development of two properties in Western Sydney – whether unitholders failed to make required contributions – whether units had been issued at a discount – whether transactions entered without authority – whether proper accounting records maintained – whether trustees should be removed

Legislation Cited:

Competition and Consumer Act 2010 (Cth)

Trade Practices Act 1974 (Cth)

Trustee Act 1925 (NSW)

Cases Cited:

Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; [2004] HCA 60

Gilmore Finance Pty Ltd v Aesthete Pty Ltd atf Real Money Unit Trust [2022] NSWSC 311

Henville v Walker (2001) 206 CLR 459; [2001] HCA 52

Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8

Juul v Northey [2010] NSWCA 211

Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494; [1998] HCA 69

Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514; [1992] HCA 55

Category:

Principal judgment

Parties:

Gilmore Finance Pty Ltd (Plaintiff)
Aesthete Pty Ltd as trustee for the Real Money Unit Trust (First Defendant)
Aesthete No 3 Pty Ltd as trustee for the Hospital Precinct Unit Trust (Second Defendant)
Farshad Amirbeaggi (Third Defendant)
Vashti Elizabeth Conway (Fourth Defendant)
Kate Elizabeth Yates (Fifth Defendant)

Representation:

Counsel:
R D Marshall SC with S W Aspinall and T Arnold (Plaintiff)
D R Pritchard SC with A F Fernon SC and A Macauley (First, Second and Third Defendants)
J P Knackstredt (Fourth and Fifth Defendants)

Solicitors:
Cornwalls (Plaintiff)
YPOL (First, Second and Third Defendants)
Nelson McKinnon Lawyers (Fourth and Fifth Defendants)

File Number(s):

2016/257478

Judgment

1. Between February 2011 and August 2012, the plaintiff, Gilmore Finance Pty Ltd, invested some $7.69 million in development projects relating to two pieces of land purchased by the first and second defendants (“A1” and “A3”) in Western Sydney.

2. The first piece of land was a petrol station site at 198 Great Western Highway, Kingswood which was purchased by A1 in April 2010 for $2 million (the “Kingswood Land”). The second was land adjacent to the Nepean Hospital which was purchased by A3 in August 2012 for $7.7 million (the “Hospital Land”).

3. A1 and A3 were at all material times trustees of unit trusts that I will refer to as the “Kingswood Trust” and the “Hospital Trust” respectively. The two trusts were established for the purpose of the development of the two properties by construction of multi-storey commercial and residential buildings. Ultimately, neither development proceeded. The properties have now been sold.

4. The sole director of A1 and A3 is the third defendant, Mr Farshad Amirbeaggi. Mr Amirbeaggi is a solicitor and the principal of the firm Yates Beaggi.

5. The decisions of Gilmore Finance to invest were made by its director, Mr Lyle Gilmore. Through other companies, Mr Gilmore had engaged in various activities associated with the mining industry. Those activities were profitable. Mr Gilmore established Gilmore Finance as “an investment arm”.

6. The amounts invested by Gilmore Finance were:

Date	Amount	Description
25 February 2011	$1,750,000	Subscription for 25 units in Kingswood Trust
16 March 2011	$1,250,000	Subscription for 5 units in Hospital Trust
22 July 2011	$50,000	Contribution to expenses to A1
30 August 2011	$50,000	Contribution to expenses to A1
26 September 2011	$80,754	Contribution to expenses to A3
7 December 2011	$32,175	Contribution to expenses to A1
25 May 2012	$45,854.55	Contribution to expenses to A1
26 July 2012	$29,766.04	Contribution expenses to A1
8 August 2012	$150,000	Contribution to expenses to A3
8 August 2012	$4,250,000	Subscription for 28 units in Hospital Trust
TOTAL	$7,688,549.59

7. The fourth and fifth defendants, Ms Vashti Conway and Ms Kate Yates held units in the Kingswood and Hospital Trusts. They are the wives of Mr Amirbeaggi and Mr Amirbeaggi’s then business partner, Mr Brenton Yates.

8. Gilmore Finance alleges it made its investments as a result of representations, said to be misleading or deceptive for the purposes of s 18 of the Australian Consumer Law, [1] made to Mr Gilmore by Mr Amirbeaggi, as director of A1 and A3. Gilmore Finance alleges some of those representations were made by Mr Amirbeaggi himself, and others on his behalf by Mr Christopher Wayman, Mr Graham Armstrong and Mr Adam Hollioake. Gilmore Finance contends that, but for those representations, it would not have made the investment: a “no transaction” case.

   1. Competition and Consumer Act 2010 (Cth), Sch 2 – Australian Consumer Law.

9. Gilmore Finance makes other claims concerning the manner in which A1 and A3 conducted the Kingswood and Hospital Trusts, which claims only arise for consideration if it fails to make out its primary “no transaction” claim.

10. As I have said, the proposed development of the Kingswood Land and the Hospital Land did not proceed. A3 sold the Hospital Land in January 2018 for $18 million and paid Gilmore Finance $4 million from the proceeds. A1 sold the Kingswood Land in June 2020 for $3.54 million. No monies were paid from the proceeds to unitholders, although A1 had earlier repaid Gilmore Finance some $215,000.

11. Gilmore Finance claims it has lost the balance of its investment, some $3.5 million, and seeks to recover that loss in these proceedings.

Decision

12. Gilmore Finance has failed to make out any of its claims.

13. The proceedings will be dismissed with costs.

The hearing

14. The hearing took place over seven days between 14 and 24 March 2022.

15. The hearing was conducted with efficiency by all parties. I was greatly assisted by comprehensive written submissions received before and after the hearing. Much of what follows as to the factual background is taken, with gratitude, from those submissions; particularly those made on behalf of A1, A3 and Mr Amirbeaggi, which outlined those matters in helpful detail.

The Kingswood Land

16. On 7 May 2008, A1 entered into an option to acquire the Kingswood Land for a purchase price of $2 million. On 19 June 2009, A1 obtained Development Consent for the redevelopment of the Kingswood Land as a multi storey mixed use residential, commercial and retail development.

17. In April 2010, A1 exercised the option to purchase the Kingswood Land. The purchase price of $2 million was paid by Mr Amirbeaggi and Mr Yates.

18. On 1 September 2010, A1 executed a mortgage over the Kingswood Land in favour of the National Australia Bank Ltd (“NAB”). As I set out below, the loan from the NAB was repaid in full on 25 February 2011, partly from the advance of $1.75 million made by Gilmore Finance on 25 February 2011 that I have set out in the table at [6] above.

19. Thereafter, having obtained a feasibility study in respect of the re-development of the Kingswood Land in accordance with the Development Consent, Mr Amirbeaggi sought to locate parties who would be interested in investing in the re-development of the Kingswood Land in conjunction with A1.

20. Between November 2010 and February 2011 Mr Amirbeaggi received a number of offers from third parties to invest in the development of the Kingswood Land.

The Hospital Land

21. On 4 August 2009, A3 entered into a call option deed in respect of the Hospital Land for a purchase price of, relevantly, $7.7 million.

22. On 3 August 2011, A3 exercised the option to purchase the Hospital Land. Ms Conway and Ms Yates paid the 10% deposit of $770,000.

23. On 17 August 2011, the Department of Planning granted a development consent, subject to conditions, on the Hospital Land for a multi-storey mixed use development.

24. A3 completed the purchase of the Hospital Land in August 2012, in the circumstance I discuss below.

Mr Wayman

25. Mr Christopher Wayman played a major, and highly discreditable and dishonest role, in the events that have led to these proceedings.

26. Although his role in persuading Mr Gilmore to cause Gilmore Finance to invest in the Kingswood Trust and the Hospital Trust was pivotal, neither Gilmore Finance nor A1 and A3 called him to give evidence in the proceedings.

27. On behalf of Gilmore Finance, it was submitted that it was for the defendants to call Mr Wayman and that I should infer from their failure to do so that Mr Wayman could not assist their case. That submission was not pursued orally, although it was revived on written submissions received after judgment was reserved. I do not accept it. It is true that, in response to a question from me, Mr Amirbeaggi said he had spoken to Mr Wayman during the course of these proceedings and following Mr Armstrong’s evidence. However, such implications as might arise from that fact were not explored in cross-examination by Mr Marshall SC, who appeared with Mr Aspinall and Mr Arnold for Gilmore Finance. [2] For the reasons I set out below, my conclusion is that Mr Wayman did make misleading statements to Mr Gilmore but that Mr Amirbeaggi did not authorise them and did not know of Mr Wayman’s dishonesty until June 2011. However, I find Mr Wayman’s absence as a witness to be neutral. Neither side could reasonably be expected to have called him.

    2. For convenience, and without intending any disrespect to Mr Aspinall and Mr Arnold, I will henceforth refer only to Mr Marshall, unless the context otherwise requires.

28. Mr Wayman enlisted the assistance of Mr Armstrong to persuade Gilmore Finance to invest. Gilmore Finance called Mr Armstrong to give evidence in its case. Mr Armstrong’s evidence was critical for Gilmore Finance’s “no transaction” case, as it was to the effect that Mr Amirbeaggi, along with Mr Wayman, importuned Mr Armstrong to misrepresent to Mr Gilmore the level of investment in the Kingswood site project (the “Kingswood Project”). For reasons set out below, I do not accept Mr Armstrong’s evidence on that, or indeed, any matter; save for his own admitted dishonest conduct vis-à-vis Mr Gilmore.

29. Another person who played a less clear role in causing Gilmore Finance to invest was Mr Adam Hollioake. Neither party called Mr Hollioake. No submission was made on behalf of Gilmore Finance that any inference adverse to A1, A3 and Mr Amirbeaggi thereby arose.

The course of events

30. Mr Amirbeaggi first met Mr Wayman in early 2009 when Mr Wayman retained Yates Beaggi to provide legal services not related to these proceedings.

31. In mid-2010, Mr Wayman approached Mr Amirbeaggi and Mr Yates “seeking to meet to discuss … business affairs, and need for provision of legal services”.

32. Mr Amirbeaggi met Mr Wayman over lunch on 16 July 2010.

33. Mr Amirbeaggi said [3] they had this conversation:

    3. Mr Amirbeaggi made a lengthy affidavit in which he gave accounts of conversations with Mr Wayman, Mr Gilmore and others. He agreed that his recollection of conversations was reconstructed from his review of contemporaneous documents. However, his evidence about these conversations was not challenged. In particular, it was not suggested to him that the substance of what he recorded as having been said in these conversations was not correct.

“Mr Wayman:   I have a management team, and a group of investors ranging from individuals of high net worth to local and overseas investment funds. My group will purchase, joint venture, or take over any business opportunities, and all sorts of property development.

Can you and [Mr Yates] let me know if you come across any opportunities? My group will take care of the entire project from funding, marketing, management, construction, to realisation.

We’re already doing a lot of projects here and overseas. We’re setting up a bank in New Zealand at the moment. Doing property deals across Australia.

We’ve got a global solar panel company in China and are setting up Real Estate Investment Trusts in Australia, Hong Kong, and Manhattan originated out of the PRC.

Mr Amirbeaggi:   Sure, I’ll let you know what we come across from time to time. We’re busy ourselves at the moment with two projects west of Sydney that are real estate developments. We’re going through the search for a property developer or builder to partner with one of them.

Seems the profit on that one is worthwhile. Nothing like what you’re involved in though. The other one is in planning. That one appears to have pretty decent profits too, but to be honest is likely out of my and [Mr Yates’] league if approved. It’s something we’re hoping to put a ribbon around and pass onto a large developer.

It’s literally next door to Nepean Hospital so hopefully it’s someone in the medical space, like the private hospital next door. We’re close to JV on the smaller one.

The larger one still has quite a bit of work to do. The larger one is pretty significant for the local area and is being pursued as a Major Project with the Department of Planning. We’ve been looking for a partner on the smaller one that’s ‘value add’ and lets us get on with life and practice whilst it’s managed and build.

Mr Wayman:   Can my group have a look at those? We can get involved, and if the numbers are right, can make them happen for you. Can I also have you and [Mr Yates] do the legal work for my group? We need to set up new structures and put in place agreements with various people we do deals with all the time.”

34. Following that meeting, Mr Amirbeaggi sent to Mr Wayman, by email, documents concerning the Kingswood Project, including architectural drawings. Mr Amirbeaggi’s email stated that gross realisations were anticipated to be $20 million and that anticipated costs, including the cost of the original site acquisition, would be in the order of $15 million.

35. Mr Wayman replied on 19 July 2010, saying:

“…this looks good, very interested, can you please email through the feasibility?”

36. Mr Amirbeaggi then provided Mr Wayman with documents which included an estimated anticipated profit margin in the order of $4.7 million.

37. On 21 July 2010, Mr Amirbeaggi sent Mr Wayman an email with high level detail concerning the Hospital Land.

38. In the meantime, Mr Gilmore was also introduced to Mr Wayman.

39. Mr Gilmore explained how that occurred in his affidavit:

“24. In 2010, my accountant Darryl Camilleri encouraged me to broaden my investments and include property in my investment portfolio. Based on that advice, I started to look at property investment opportunities. I then had discussions with a friend of mine called Desmond. He recommended I speak to Chris Wayman, an agent he had used to purchase property.

25. The first meeting with Mr Wayman that I recall was in 2010. He met with me in person in Mackay. I cannot recall the precise words we used during the meeting, but I recall that Mr Wayman said he was ‘involved in property development’.

26. In 2010, Mr Wayman told me about a property development opportunity in Brisbane, in which Desmond had also invested in, being a unit at Auchenflower, a suburb of Brisbane. Mr Wayman introduced me to this property, which I then purchased.

27. In or around late 2010, I was to meet with Mr Wayman in Brisbane to inspect a second property. It was at this time I was introduced to Graham Armstrong, who informed me words to the effect that Mr Wayman was unavailable. I cannot recall who else was at this meeting. I cannot recall the precise words we used during the meeting conversation, but I recall that we had a discussion to the effect that I was told by Mr Armstrong that he and Mr Wayman were ‘in business together’.

28. In about late 2010, I met with Mr Wayman in Mackay at the Marina. I cannot recall the precise words we used during the meeting, but I recall that he had become aware of a property development in Sydney, at Kingswood and that it had the potential to generate ‘good returns’ and that I should consider investing in it.”

40. At around this time, on 15 October 2010, Mr Wayman wrote to Mr Amirbeaggi:

“I also need to speak to you about the Penrith site and other sites you have on access, can you please call me re this and a few other opportunities we have that we will engage you on including the fund. I am close to getting the confirmation to proceed with the set up of the fund. The funds are committed to set up and for other work on this project. I have a verbal conditional approval on the site for Penrith and will receive it in writing next week, I also have the deposit lined up? Please advise if there is no possibility of getting the deal now so I can stop the process?? We have the ability to move forward on several other projects and I need to discuss this with you urgently.

I have also just formed a JV with a party that has substantial cash to invest and only just this week purchased $3 mil of residential real estate and are looking for us to put forward investment opportunities including development opportunities for investment, the party just had a $40 mil Nett sale of a mining business and is formally engaged with my new company for property, financial services advice.

Can you please call for a catch up? I will also be in Sydney late next week or the week following, however I really do want to bed down a few of these opportunities and catch up prior to getting to Sydney.”

41. The person that Mr Wayman described as having “substantial cash to invest” was, evidently, the person “Desmond” to whom Mr Gilmore referred in his evidence as having recommended to Mr Gilmore that he speak to Mr Wayman. [4]

    4. Mr Gilmore said he was not the person to whom Mr Wayman referred.

42. At around this time Mr Gilmore met Mr Armstrong.

43. Mr Gilmore did not describe in his affidavit evidence the circumstances in which he met Mr Armstrong.

44. However, Mr Armstrong, who as I have said Gilmore Finance called in its case, deposed that he met Mr Wayman in early 2010 and that he met Mr Gilmore later in 2010.

45. Mr Armstrong said:

“I recall that Gilmore had been invited by Wayman to Brisbane to inspect a property, although I cannot recall the precise conversation or how, at the time, I became aware of this invitation. I recall that I took Gilmore to inspect the property, which he subsequently purchased, because Wayman was unavailable at the time.”

46. On 20 January 2011, Mr Armstrong sent Mr Wayman a document called “Wealthy Life Group Partnership Agreement”, expressed to be between entities associated with Mr Armstrong, Mr Wayman and Mr Hollioake.

47. Mr Armstrong wrote to Mr Wayman:

“Attached is the proposed partnership agreement for the various companies.

It will require some finessing but looks quite good to me.

My main concern is to ensure that you and I have control at all times, i.e. a 51% vote is deemed as the ruling vote throughout and we must ensure we maintain a 51% share.

Additionally we require advice on the other agreements required to complete the structures, i.e. licence agreement between the agent and IP company regarding the sale of IP / Assets etc.

Additional to the Wealthy Life companies we need quickly to establish the Property and Development companies etc.

Can you please pass this to Farshad [Amirbeaggi] and Kenny [5] and advise the timing and course to completion.

Would you prefer I liaise with them to speed up the process? (please conf[irm] the spelling of Farshad’s name)?”

5. The identity of “Kenny” was not established in the proceedings.

48. On 25 January 2011 Mr Wayman wrote to Mr Gilmore about the “Nepean Hospital Precinct Development”.

49. His email read:

“Following on from our discussion, please see the attached feasibility prepared for the project.

I will forward the Project Application in the next email, and cost plan from Southern Cross (Builders).

Perhaps you can absorb this material before we talk later today, so we can plan forward.

The DA (Development Approval) is currently on public viewing and we are expecting to have the DA approved by end March / early April. We have a pre-commitment of just over 60% of the completed stock including Commercial, Retail and Residential. The project will take approx. 24-28 months to complete construction and final sale down.

The purchase cost of the site is $30 million, we currently have $5 million in the deal personally and we are looking for $1m as an equity participation. We estimate the valuation will come in around $35-$40 million once the DA has been approved and operational works has been approved.” (Emphasis added.)

50. In this email, Mr Wayman spoke as if he were actively involved in the proposed development of the Hospital Land. Thus, he spoke of “we” having a “pre-commitment of just over 60%”, that “we currently have $5 million in the deal personally” and that “we are looking for $1m as an equity participation”.

51. Mr Gilmore, understandably, took this to mean that Mr Wayman was then directly involved in the proposed development of the Hospital Land and that he had himself made a financial investment in the land.

52. None of this was true.

53. Mr Amirbeaggi said that he did not see this communication until after the commencement of these proceedings and that he did not ask Mr Wayman to send it to Mr Gilmore.

54. I see no reason to doubt Mr Amirbeaggi’s evidence.

55. Mr Wayman was misrepresenting to Mr Gilmore his role in the development. As I describe below, it appears that Mr Wayman’s motivation in doing this was, at least in part, to procure for himself the right to project manage one or both of the Kingswood Land and/or Hospital Land developments.

56. Two days later, on 27 January 2011, Mr Wayman became bankrupt on his own petition.

57. Several days later, on 30 January 2011, Mr Wayman wrote to Mr Gilmore, under the heading “[Hospital] Development Site”:

“Following on from our conversation on Friday, I am looking forward to having you involved in this project and many more in the future. The project is moving along well and we anticipate having the DA out in March/April. We need to get things moving to finalise the funding and remaining equity partners to keep the project proceeding. I will need to get you to transfer the $1,000,000 into the following trust account so we are able to move to the next stage.”

58. Mr Wayman then set out the details of the Yates Beaggi trust account.

59. Again, Mr Wayman was representing to Mr Gilmore that he was involved in the “[Hospital] Development Site” project, saying that “we” need to get things moving to finalise the funding and referring to “remaining equity partners”. He encouraged Mr Gilmore to transfer $1 million into the Yates Beaggi trust account.

60. Mr Amirbeaggi said he did not ask Mr Wayman to send this email and was not aware of it until after he saw it in these proceedings. The evidence did not reveal how Mr Wayman came to know of the details of Yates Beaggi’s trust account, save that Mr Wayman had been a client of the firm. Nothing was made of this in closing submissions.

61. In the email, Mr Wayman referred to his conversation with Mr Gilmore “on Friday”. That was a reference to Friday 28 January 2011, the day after Mr Wayman had become bankrupt on his own petition.

62. On 31 January 2011, Mr Wayman wrote to Mr Amirbeaggi:

“One of my business partners has a base partnership agreement that is required to bind up a few companies and trusts for our finance business, this is the same as we will do for the other development companies. [Mr Armstrong] wants to start using you for all legal matters as per my direction. Can you please note this down to look and discuss, I will get [Mr Armstrong] to come and meet you regarding some other commercial matters ([Mr Armstrong] is a mate of mine that I have started the finance company with and he is Ex Flexi Rent director and was a minor shareholder, he helped float the company approx. 4 years ago.)

We will also get you involved with the fund that we are setting up. I will get [Mr Armstrong] to work with you on this.

Need your thoughts on asset protection etc.”

63. It was by this email that Mr Wayman introduced Mr Amirbeaggi to Mr Armstrong. As the email set out, Mr Wayman described Mr Armstrong as being a former “Flexi Rent director” and a “minor shareholder” in that company that “he helped float” some years earlier.

64. In his affidavit, Mr Amirbeaggi said:

“During 2010 and early 2011, Wayman made various references in written and oral communication to several of ‘his clients’ or ‘his group’ or ‘his investors’. Those references included to parties named HNA Group, CLSA, the Singapore Fund, the UK Funder, the Cheever Corporation, Mr Butani, John Rutherford, and Lyle Gilmore.” (Emphasis in original.)

65. Mr Amirbeaggi said that around that time Mr Wayman told him that:

“My group includes Lyle Gilmore who is a global mining operator worth hundreds of millions of dollars.”

66. This evidence was not challenged.

67. Mr Amirbeaggi also said that in early 2011 Mr Wayman said to him:

“My group are very interested in a joint venture for the development of Kingswood and could bring significant value to the development. We’re happy with the $3.5mil value for the site. We will take care of every aspect of the development. You and Brenton [Yates] can sit back and watch the project being developed, and just attend monthly meetings to receive updated on how it is progressing. I can manage the sales of the apartments off plan through my network. Me and Graham [Armstrong], who as a former owner of FlexiRent knows how to run a business, can project manage the construction works. Adam [Hollioake] will also be involved. He was the former Captain of the English Cricket Team, which is good for public profile. Graham, Adam and I, with a couple of our passive investors, are interested. I have completed investments with that group and am currently carrying out similar developments with them.”

And:

“One of our investors is Lyle Gilmore. He’s in mining. I’ve placed investments and completed projects with him before. I just made him a lot of money buying and selling properties with Meridian, and we are doing 2 developments with him in Western Australia. He doesn’t get involved in the day-to-day. He just places money with my group as an investor, and we manage the return for him.”

68. Mr Wayman was thus representing to Mr Amirbeaggi that he had a “group” of potential investors, including Mr Gilmore, that “my group” was interested in a “joint venture” of the Kingswood Land, that he was “currently carrying out” other developments with those investors and that he, Mr Armstrong and Mr Hollioake, could project manage the construction work on the Kingswood Land and “manage the sales of the apartments off plan”. Mr Wayman was making these representations concurrently with his false representations to Mr Gilmore about his financial commitment in the Hospital Land.

69. Mr Amirbeaggi said that he did not “physically meet Armstrong, Hollioake, or any of the investors Wayman referred to” until 16 February 2011.

70. Mr Amirbeaggi said that:

“In consequences of my discussions with Wayman I believed:

(a)    Wayman was in a business association with Armstrong and Hollioake;

(b)    Gilmore was either a client of or in some form of business relationship with Wayman, Hollioake, and Armstrong; and

(c)    Wayman wanted to acquire the [Hospital] Land from us.”

71. I see no reason to doubt this evidence.

72. During the first week of February 2011, Mr Amirbeaggi said that Mr Wayman said to him:

“We’d like to JV on Kingswood with you and can bring about a complete package. We’ll look after everything, so you and Brenton don’t have to worry about a thing.

You won’t get that with anyone else you’re dealing with.

You know through my experience … and the contacts I have, that Kingswood is a piece of cake for me.

Don’t proceed with anyone else you are dealing with and we’ll exchange on it in the next 7 days.”

73. Mr Amirbeaggi said:

“I accepted what Wayman said, and on that basis A1 withdrew from its negotiations with other parties … to instead proceed with Wayman and his group.”

Commitment to Kingswood

74. On 7 February 2011, under the heading “Funds Transfer”, Mr Amirbeaggi wrote to Mr Wayman:

“Just need the break up of the units – our document is ready for execution.”

75. Thereafter, also on 7 February 2011, Mr Armstrong telephoned Mr Amirbeaggi and said:

“For this project our group will include 1. Me as Graham Armstrong, 2. Adam Hollioake, 3. Lyle Gilmore, and 4. Desirecorp Pty Limited as trustee for Lyndal Wayman. [6]

We’re going to do it through a trust, Great Western Highway Pty Limited. We’ll set that up now. It can hold 50% of the units in your trust that owns the site.

Can you send me an agreement for sale of the units please?”

6. Mr Wayman’s wife.

76. Later on 7 February 2011, at Mr Armstrong’s request, Mr Amirbeaggi drafted and sent to Mr Wayman and Mr Armstrong a draft agreement between A1 and the company to which Mr Armstrong referred, whose full name was 182-190 Great Western Highway Pty Limited (“GWH”). I will call this document the “GWH Unit Subscription Agreement”.

77. From 7 February 2011 Mr Armstrong was the only director and shareholder of GWH. [7] It appears that his and Mr Wayman’s plan was that GWH would be engaged as project manager of the Kingswood Project and would employ Mr Wayman to do the actual project management work.

    7. GWH, originally known as Levdev Pty Limited, was incorporated on 6 April 2010 by Mr Amirbeaggi, evidently as a shelf company; Mr Armstrong became sole director and shareholder on 7 February 2011.

78. The draft GWH Unit Subscription Agreement provided that:

1. A1 would by 1 March 2011 [8] issue to GWH, as trustee of the GWH Unit Trust, 100 units in the Kingswood Trust; [9]

2. in consideration for which GWH would pay A1 $175,000 “by way of a non-refundable deposit” and thereafter $1,575,000 upon Completion” on 1 March 2011; [10] and

3. the parties would negotiate in good faith and execute a “Unitholders’ Agreement” [11] showing that GWH held 100 units in the Kingswood Trust, being 50% of all the issued units in the Kingswood Trust. [12]

   8. The “completion date” defined in the document.

   9. Clause 2.1.

   10. Clause 2.2.

   11. Ultimately executed on 12 May 2011: see [183] below.

   12. Clause 4.1.

79. Mr Amirbeaggi’s email to Mr Wayman and Mr Armstrong read:

“Please review the attached, and execute and return at your leisure.

The company described as 182-190 Great Western Highway Pty Limited has been incorporated with Graham [Armstrong] as the sole Director/Secretary and holder of the 2 shares issued. The company is trustee of the GWH Unit Trust. There will be a separate Unit Trust Deed for you to execute, but the Unit Holders are 25 units to each of the following:

1. Graham Armstrong;

2. Adam Hollioake;

3. Lyle Gilmore; and

4. Desirecorp Pty Limited ATF Lyndall Wayman

Happy to discuss any part of it.

I’ll send the Unit Trust Deed in the next 5 minutes.”

80. Thus, as things then stood, Gilmore Finance was to hold 25 of the 100 units in the GWH Trust which, through GWH, was to hold 50 of the 100 units in the Kingswood Trust; giving Gilmore Finance an indirect 12.5% interest in Kingwood Trust. [13]

    13. One quarter of a one-half interest: 25% x 50% = 12.5%.

81. Later on 7 February 2011, Mr Armstrong, as director of GWH:

1. executed the GWH Unit Subscription Agreement on behalf of GWH and sent Mr Amirbeaggi a copy;

2. executed Unit Certificates showing Gilmore Finance and entities associated with Mr Wayman, Mr Armstrong and Mr Hollioake as each holding of 25 units in the GWH Trust; and

3. caused the $175,000 “non-refundable deposit” referred to in the draft agreement to be deposited into the trust account of Yates Beaggi; representing a 10% deposit on an entry price of $1.75 million for a future interest in the Kingswood Land project, premised upon the assumed land value of $3.5 million.

82. Mr Armstrong said he was the source of the $175,000. There is no evidence showing what funds Mr Armstrong had such as would have enabled him to pay the $175,000. But there is no evidence contradicting Mr Armstrong’s evidence that he was the source of the funds.

83. Mr Amirbeaggi said:

“From what I had been told by Mr Armstrong, I understood that the GWH Trust was established for Wayman’s ‘group’ to hold the Units issued to them in the [Kingswood Trust]. I understood, at that point in time, that Lyle [Gilmore] was part of the Wayman ‘group’ as a Unit Holder in the GWH Unit Trust, which in turn was a Unit Holder in the [Kingswood Trust].” (Emphasis in original.)

84. At around this time Mr Amirbeaggi said that he had a conversation with either Mr Wayman or Mr Armstrong to the following effect:

“[Mr Amirbeaggi]   We’ll discharge the debt on settlement so that the property is unencumbered. The parties are to then contribute their share of the expenses going forward. We’ll have some expenses early on in terms of the marketing campaign, and early works.

[Mr Wayman/Mr Armstrong]   We’ll pay the balance of the purchase price on settlement and allow a top up to meet our share of the expenses going forward.

Our arrangement with the passive investor for this one, Lyle, is that he stumps up $1.75 million, and then sits back as we do all the work and meet all the expenses.

The passive does not get involved in any of it and is never to know about the costs, or what work is required. We take care of the rest from here and just give them a return at the end.

Our investors get a minimum 15% return on their investment. But I have told Lyle that I will double his money on this one, because we’ve also got projects with him in WA.”

85. Mr Amirbeaggi said that around this time he had a telephone conversation with Mr Wayman to the effect:

“[Mr Wayman]   After the purchase is settled, we will be looking after all the management. We’ll meet payments of outlays for our side of the investment. I will be managing all of that directly, and you will be dealing with me or Graham going forward.

We will deal with funding of expenses on our side on a month-to-month basis and we will kick in cash to your trust account to cover those expenses.

You will be dealing with GWH through us. You do not need to deal with anyone else about those matters in our group. They will not want to know and are never to know the day-to-day details. We’re your point of contact. Apart from us being set up that way, it saves us having multiple conversations.”

86. On the following day, 8 February 2011, Mr Amirbeaggi wrote to Mr Armstrong and Mr Wayman:

“Welcome to the development and partnership.

Please send the original Trust Deed back to us so we can complete its execution, and have it stamped etc.

Also, please let me know what your timing is for payment of the balance ie $1,575,000.00, so we can start the pre-sale campaign, and arrange demolition and bulk excavation for the site.”

87. Mr Wayman replied within the hour:

“On to it, we will have the original deed back this week and advise on the timing for the remainder of the funds shortly.”

88. A short time later, also on 8 February 2011, Mr Wayman sent a further email to Mr Amirbeaggi:

“Are you available to come up to the [Gold Coast] this week for the day either on [9 or 10 February] to meet me, Adam [Hollioake] and Graham [Armstrong] on Kingswood and all the other projects, opportunities and work?”

89. Thus, at this stage A1 had secured what appeared to be a binding commitment from GWH, as trustee for the GWH Trust, to pay the balance of the $1.75 million referred to in the Kingswood Trust Unit Subscription Agreement, namely the $1.575 million referred to in that document, and also in Mr Amirbeaggi’s email to Mr Armstrong of 8 February 2011.

90. Later in the morning of 8 February 2011, Mr Amirbeaggi sent an email to Mr Wayman:

“By reference to your query concerning the ownership of the property, and structure proposed, I note that the property is presently owned by [A1].

[A1] is an SPV incorporated by me for our client. Apart from acquiring the property, and pursuing the development consent it has no prior/other dealings, and I can personally vouch for its clean trading history to date. [A1] is the trustee for the [Kingswood Trust] and under that trust there are 200 units issued.

Upon completion of the transaction ie when you have paid the total $1.75 million, 100 of the units under the [Kingswood] Trust will be issued to your group, and relevant members of your group will be invited to take up Directorship in [A1]. The remaining 100 units will be held by Brenton [Yates] and I, and we may allocate half of what we hold to a firm of civil/structural engineers who have worked with us on the project from the beginning.

Whilst [A1] will remain the owner of the property, your group ie [GWH] will be a joint owner of it because they hold half of the units issued (ie like holding 50% of the shares of a company). The property will remain unencumbered upon completion, and we will only encumber it if the incoming funder on construction requires it for security.

When it comes to construction, we will engage our builder through another Aesthete entity so as to keep the liability of the construction contract away from the asset/property.”

91. Mr Amirbeaggi’s email makes clear that he saw Mr Wayman as representing a group of investors in the Kingswood Project. He refers to the transaction completing when “you” have paid “the total $1.75 million” and referred to “your group” becoming a “joint owner” of the Kingswood Project.

92. Later on 8 February 2011, Mr Wayman sent Mr Amirbeaggi, Mr Armstrong and Mr Hollioake what he described as being a “market research report that I have done for the marketing of our project”.

93. There is no suggestion Mr Amirbeaggi had any involvement in the preparation of that document.

The site visit

94. At some time prior to 15 February 2011 Mr Wayman telephoned Mr Yates and said:

“I’ll be down in Sydney with the group who have invested in the Kingswood Project. They want to see the site and meet you and Farshad. I will also need to come and see Farshad.”

95. On 15 February 2011 Mr Yates sent an email to Mr Wayman and Mr Amirbeaggi headed “Run Sheet for today/tomorrow”. He said, under the heading “Tomorrow”:

“9.00am – leave Sydney CBD for site inspections at Kingswood (2 hours)

1.30pm – lunch in Sydney CBD

Brooke can you please book lunch (Glass – close in case we are running late) and arrange a 5 seater hire car – collect today if need be – so he can drive out to Kingswood tomorrow.”

96. Mr Yates had asked Mr Amirbeaggi’s personal assistant, Ms Brooke Maniscalco, to “arrange a 5-seater hire car” as he understood that those engaging in the “site inspections at Kingswood” would be Mr Wayman, Mr Armstrong, Mr Hollioake and Mr Gilmore. Mr Yates said it was his understanding that neither Mr Amirbeaggi nor he would be attending the site inspection.

97. Thus, Mr Amirbeaggi and Mr Yates had this conversation:

“[Mr Yates]   I’ve received a call from Wayman. He wants to do a site inspection of Kingswood with his group. Why do we need to go to Kingswood with him and his group? They’ve already bought into the project. Why can’t they just go out to Kingswood and have a look around themselves?

[Mr Amirbeaggi]   I agree, we don’t. They can go and spend as much time there as they want. Surely Chris has already been out there to inspect it. Go and arrange it on the basis that we are not going. We can meet them here in Sydney before or after they visit it, probably better after they have. We’ve got too much work on to waste a day out at Kingswood.”

98. Mr Amirbeaggi and Mr Yates decided to attend the site visit after Mr Wayman called Mr Amirbeaggi and said:

“It’s hard most times trying to get in to see you cause you’re so busy so if you two can come along it would be good to have your company. And you’re going to be doing a development with this group over the next 2 years, so it might be polite to come along.”

99. Mr Amirbeaggi then said to Mr Yates that “if I have to go, I’d like you to come too”, whereupon Mr Yates arranged for a minibus, rather than a 5-seater hire car, to be arranged to facilitate the visit.

100. On 16 February 2011 Mr Amirbeaggi and Mr Yates met Mr Wayman, Mr Armstrong, Mr Hollioake, Mr Gilmore, and Mr Gilmore’s wife, Mrs Doris Gilmore outside the offices of Yates Beaggi. All those people then boarded the minibus that travelled out to the Kingswood Land.

101. On Mr Amirbeaggi’s account of the journey to the site, apart from exchanging pleasantries, he did not speak to either Mr Wayman, Mr Armstrong, Mr Hollioake or Mr and Mrs Gilmore. Mr Yates gave evidence to the same effect and said that he and Mr Amirbeaggi had limited conversations between themselves about work, but otherwise spent their time on their telephones, and did not participate in other conversations in the minibus.

102. Mr Gilmore and Mr Armstrong had different recollections as to the extent to which Mr Amirbeaggi engaged in conversation with other members of the group about the Kingswood site.

103. It is common ground that while the parties were inspecting the Kingswood Land, it was agreed that they should also travel, in the minibus, to the Hospital Land.

104. Mr Gilmore gave this evidence in chief:

“Q. Was there any discussion at all?

A. Yes.

Q. Where did the discussion take place?

A. There was discussion on the bus, but also at the site.

Q. Who was discussing? Who was making the conversation?

A. There was different banter between all parties, or all the other parties; nothing between my wife and I, but all the other parties had something to say.

Q. Did anyone in particular, do you recall, have something to say?

A. For one, Farshad did a presentation on the land, the development, orientation, proximity to services, et cetera; description of a multiuse – sorry, commercial and residential building being erected; of course, demolishing of the old service station, possible contamination issues

105. Mr Gilmore continued, initially in response to questions from me:

“HIS HONOUR: Mr Gilmore, what you have to do it put the recollection in the form of he said, I said.

Q. No one expects you to remember the exact words that were said 13 years ago or whatever it is, but if you can couch your answers in terms of Mr Amirbeaggi said words to the effect and tell me what your memory is of the effect of what he said.

A. Yep. He said that the land needed to be demolished or the structures needed to be demolished, and there may be contamination issues. The development would be dual purpose, multistorey, commercial and residential. There were numbers thrown around which, at that stage we were new to it, we didn’t absorb too much, and an orientation as to how well the land was positioned, so he did – and that’s been said before, you know, ‘Penrith’s that way, Sydney’s that way,’ across the road was a train station, that was fairly obvious.

Q. Was there a university mentioned?

A. Sorry?

Q. [Was] a university mentioned?

A. I can’t recall the university, but the hospital was – I think it’s a university hospital, but, yes, the hospital was mentioned.

MARSHALL

Q. Did he say anything else that you can recall?

A. No. No, just land description and benefits.”

106. Mr Gilmore said, in relation to the visit to the Hospital Land:

“Q. Was there anything else that was done when you at a Sydney site visit; did you go anywhere else?

A. Yes. From there we went to the second site, which was Barber Avenue, I believe.

Q. Yes, and what was that?

A. That’s adjacent to Nepean Hospital. I think it’s Nepean or Pan – I don’t know.

Q. Yes.

A. Wayman, at the previous site, requested that we go to that site, and again a presentation was done – a mini presentation.

Q. Who was talking when you say ‘presentation’?

A. Farshad.

Q. What did he say? Just remember like a play?

A. A play?

Q. Or something like that; not making it up though.

HIS HONOUR

Q. He said words to the effect.

A. Yes. Essentially it was a very big development, there were several stages to it; my recollection is five, but it was going to be done over several stages. There were, I think, three parcels of land. Again, numbers – Farshad gave some numbers as to what it would cost in and what the benefits would be; over my head at the time.

Q. You can’t recall the numbers now?

A. No. They were documented in later emails. And yeah, there were some big players in it. There were going to be some big players, joint venture, Americans and doctors and the like.

Q. What did he say about that, do you say?

A. What did I say?

Q. What did he say about that?

A. It was a very exciting project.

Q. What did he say about other investors, can you recall?

A. They were the big party, joint venture from the USA, and I think Healthscope might’ve been mentioned. I don’t even know who they are, but--

Q. You can recall Mr Amirbeaggi, can you, saying something about investors from the United States.

A. Yes.”

107. Mr Gilmore qualified this evidence somewhat in cross-examination. I return to this below. [14]

     14. See [390] below.

108. Mr Amirbeaggi and Mr Yates both denied that Mr Amirbeaggi had said anything about any “investors from the United States”.

109. Mr Amirbeaggi gave evidence that, while the group was at the Hospital Land, Mr Gilmore said words to the effect:

“This is way too big a development for us country folk. We’ll stick to the smaller stuff like Kingswood.”

110. In its List Statement, Gilmore Finance alleged that Mr Amirbeaggi had made a total of 18 representations, all said to be misleading or deceptive, during the course of the visits to the Kingswood Land and the Hospital Land.

111. In closing submissions, only five of these representations were pressed, one consequence of which is that the differing recollections as to what Mr Amirbeaggi said during the site visit are less significant than might first appear.

112. I will return to this when considering the detail of Gilmore Finance’s misleading or deceptive conduct claim.

113. In any event, Mr Gilmore said, in answer to a question from me, that his interest in putting money into either of the Kingswood Project or the Hospital site project (the “Hospital Project”) arose after the site visit and because of things said to him individually by Mr Wayman, Mr Armstrong and Mr Hollioake. I return to this below. [15]

Mr Armstrong’s admission of participating in a fraud practised on Mr Gilmore and his evidence as to conversations with Mr Amirbeaggi following the site visits

15. At [405]ff.

114. Mr Armstrong, called in Gilmore Finance’s case, admitted that he had falsely represented to Mr Gilmore that he and Mr Wayman had invested $1.75 million in the Kingswood Project.

115. That is, he admitted he was party to a fraud practised on Mr Gilmore.

116. He asserted that he had done this at the bidding of both Mr Wayman and Mr Amirbeaggi. [16] This is pivotal evidence in Gilmore Finance’s case. It has called an admitted fraudster to prove its case against Mr Amirbeaggi; that Mr Amirbeaggi himself engaged in fraud.

     16. It was not clear from Mr Armstrong’s evidence whether he asserted that Mr Hollioake was also involved in deceiving Mr Gilmore. It is not necessary for me to make any finding about this.

117. Mr Armstrong said that, at around this time, he had “several” telephone conversations with Mr Amirbeaggi in which Mr Amirbeaggi said words to the effect:

“We need to get Lyle to invest in the Kingswood Project or it will fall over.”

118. Mr Armstrong also gave evidence that after the site visit on 16 February 2011, Mr Amirbeaggi said to him words to the effect:

“Lyle should not know that you and Chris have only put in $175,000.”

“You need to speak to Lyle to get him to invest $1,750,000 for a 25% share.”

“Lyle should not think he is the only one putting in cash.”

“Lyle needs to think that all the investors are contributing on the same basis.”

119. Mr Amirbeaggi denied saying any such thing. I am not persuaded that I should accept Mr Armstrong’s evidence that Mr Amirbeaggi said anything to this effect.

120. I explain this conclusion further below. But one reason is that I do not accept that Mr Armstrong has any clear recollection of what Mr Amirbeaggi said at around this time.

121. Mr Armstrong’s affidavit was made on 8 October 2021. Mr Gilmore’s solicitors had approached Mr Armstrong as early as 2018 to give a statement for the purpose of the proceedings.

122. In October 2020, Gilmore Finance’s solicitors served an “Outline of Prospective Evidence of Graham Armstrong” that evidently set out the evidence that Gilmore Finance’s solicitors then anticipated Mr Armstrong would give.

123. That “Outline of Prospective Evidence” is not in evidence before me.

124. In August 2021, Mr Gilmore contacted Mr Armstrong directly to enquire whether he would be willing to provide a statement for the purposes of the proceedings. This led to the preparation of Mr Armstrong’s 8 October 2021 affidavit.

125. In cross-examination, Mr Pritchard SC, who appeared with Mr Fernon SC and Mr Macauley for A1, A2 and Mr Amirbeaggi, [17] asked Mr Armstrong about the process by which that affidavit was prepared.

     17. As with Mr Marshall et al, for convenience, and without intending any disrespect to Mr Fernon or Mr Macauley, I will henceforth refer only to Mr Pritchard, unless the context otherwise requires.

126. So far as concerns the evidence that I have set out at [118] above, Mr Armstrong gave this evidence:

“Q. Just tell me how these quote marks that you don’t recall came to be in this affidavit, Sir?

A. I drafted the – I wrote down all my thoughts and my recollection of the events and I gave it to the lawyers.

Q. And they produced to you these words in quote marks; correct?

A. They produced the document for me, yeah.

Q. They produced for you these words in quote marks; is that right?

A. Yes, I didn’t put the quote marks in it.

Q. No, and then you signed this on the basis that – of what you were provided; is that right?

A. Yes, after I’d read through it. Yes, that is correct.

Q. You made no changes to these words in quote marks, I take it?

A. There was a couple of a changes to the draft, it didn’t – well, the first one certainly wasn’t what I accepted but I made – once I was given the one that I thought represented it correctly, I signed it.

Q. I’m talking about the quote marks, Sir.

A. Oh, the quote marks.

HIS HONOUR

Q. I don’t think Mr Pritchard is asking about the quote marks themselves; he’s asking about the words within the quote marks. So, are those words words in your draft that the solicitors have reproduced, or did the solicitors change?

A. The words, yeah, the words were my words.

Q. In your handwritten draft?

A. No, I – it was typed.

Q. Typed draft?

A. Yeah. But it wasn’t all formal like this.

Q. You remembered then what you don’t remember now about what was said; is that right?

A. I beg your pardon?

Q. You remembered then what you don’t remember now about what was said; is that right?

A. Yes, it was easier when I was sitting at home, writing it down.

Q. Or is it that you didn’t recall then exactly what was said but you set out what you thought might have been said?

A. Yes, that would be a fairer statement, yes. (Emphasis added.)

127. That evidence suggests to me that Mr Armstrong did not, in fact, have a recollection of what Mr Amirbeaggi said to him at or around the time of the 16 February 2011 site visit. As he said, he recorded in his affidavit what he “thought might have been said”.

128. In any event, Mr Armstrong’s evidence concerning what Mr Amirbeaggi allegedly said to him at around this time is impossible to reconcile with what Mr Armstrong said, and did not say, in emails he sent in June and July 2011. I return to this below.

129. Mr Amirbeaggi denied that he said anything to this effect to Mr Armstrong. His later conduct, in emails he sent in June and July 2011, is consistent with this denial. Indeed, as I discuss below, unless those later emails are fabrications by Mr Amirbeaggi, designed to create a trail of communications to conceal his true role in the matter, they are impossible to reconcile with him having said anything to Mr Armstrong to the effect alleged. As will emerge, my conclusion is that I am not satisfied that Mr Amirbeaggi behaved in this way. His conduct, as evidenced by his many written communications to all the stakeholders in this venture, cannot be reconciled with any such conclusion.

130. Mr Armstrong said that he was “told similar things by Wayman at that time too”. Subsequent events suggest that this part of Mr Armstrong’s evidence may well be true.

Completion of investment in the Kingswood Land

131. On 18 February 2011, Mr Amirbeaggi sent an email to Mr Wayman:

“I’ve told NAB we are aiming for a settlement next Friday [25 February 2011] …

Let me know if we are able to complete any earlier. We only have to give NAB 48 hours notice.”

132. On 22 February 2011, Mr Wayman wrote to Mr Gilmore under the heading “Kingswood Petrol Station Site”:

“I am glad to have you on board for both the sites. We have a long [and] successful future on these and many other sites together, I am looking forward to the journey with you.

Following from the discussions regarding the equity for the petrol station site please see below:

   Kingswood Petrol Station (182 Great Western Highway, Kingswood) 18 Month Project Time frame (approx.)

o   The people that are in this deal are Lyle, Farshad, Brenton, Chris, Adam, Graham

o   We have put in $1,750,000 for the site and are also going as the guarantors for the construction facility ($10,500,000) You will not have exposure for the construction facility liability.

o   Your Equity Required $1,750,000 for your equity you will be provided with shareholding in company that owns the site of 25% (ROI – 100% return approx on your funds in 18 months)

All parties will stay in the transactions together for the duration of the projects until completion.”

133. This email contains a number of false statements.

134. First, it was not true for Mr Wayman to say that “we have put in $1,750,000 for the site”. Nor was it true for Mr Wayman to say “we” are “also going as the guarantors for the construction facility”. Nor did Mr Wayman have any basis to say that the “ROI”, that is, presumably, return on investment, would be “100%”; apart from, perhaps, the very high level figures Mr Amirbeaggi had given him during 2010. There is no suggestion in the evidence that Mr Amirbeaggi authorised Mr Wayman to tell Mr Gilmore that he would, in effect, double his money in 18 months.

135. In the email, Mr Wayman said to Mr Gilmore that “Your Equity Required” was also $1.75 million. At the conclusion of his email, Mr Wayman asked Mr Gilmore to send the $1.75 million to Yates Beaggi’s trust account and provided details of that account.

136. Mr Amirbeaggi said that he did not see this email until after these proceedings were commenced; and that he did not ask Mr Wayman to send the email.

137. Ten minutes later, Mr Wayman sent a further email to Mr Gilmore, this time headed “Kingswood Hospital Site”.

138. In that email Mr Wayman said:

“Kingswood Hospital Site (11 Barber Ave, Kingswood) 42 Month Project Time frame (approx)

o   The people that are in this deal are Lyle, USA JV Partner, Farshad, Brenton, Chris, Brenton, Chris, Adam, Graham.

o   We have put in $5,000,000 for the site and are also bringing a further $12,500,000 into the project over the next few months (Total $17,500,000) in order to reach a 50/50 JV with our USA JV Partner on this project who is also a client of Yates Beaggi Lawyers. We will be going as guarantors for the construction ($85,500,000 staged construction). You will not have exposure for the construction facility liability.

o   Your Equity contribution will be $1,250,000. For your equity you will be provided with shareholding in the company that owns the site of 5% (ROI – 100% return approx on your funds in 42 months). The payment in from you will be held in an interest bearing account under the control of Yates Beaggi Lawyers, and only taken once the site is approved by the Department of Planning in the nature of the Application that has been lodged (with say a 10% variance in layout/measure/design). We are expecting approval in the next 6 to 8 weeks, and then completing on the 50% JC deal within a further 6-8 weeks of that ie that in or around 3-4 months time the JV will be underway. If the site is not approved as planned, your funds will be refunded to you with the interest earnt on it over that period.”

139. This email also contained falsehoods.

140. First, Mr Wayman said that “the people that are in this deal” include a “USA JV Partner”. Second, Mr Wayman said that “we” have put in “$5,000,000 for the site” and that “we” are “also bringing in a further $12,500,000” into the project over the next few months”. Third, Mr Wayman said that the contribution would have the effect of reaching a “50/50 JV with our USA JV Partner”. Finally, Mr Wayman falsely said that “we would be going as guarantors for the construction” of the project. None of this was true.

141. As with his earlier email, Mr Wayman asked Mr Gilmore to transfer his “Equity Contribution” of $1.25 million into the Yates Beaggi trust account and provided details for that trust account.

142. Mr Amirbeaggi denied having asked Mr Wayman to send this email or telling him what to say in the email.

143. The following day, 23 February 2011, Mr Gilmore replied to Mr Wayman:

“What structures do we have regarding taking out options on holding onto units at completion of the project – the reason I ask is whether I invest via a trust or via my finance company? The trust may have benefits of holding real estate, but it also may be such that the holding onto units is a completely different transaction anyway.”

144. This email shows that Mr Gilmore understood that Mr Wayman was able to speak on behalf of “the project”: understandable enough bearing in mind the terms of Mr Wayman’s communications to him. But this was not because of anything Mr Amirbeaggi had said to him or authorised anyone else to say to him.

145. The following day, 24 February 2011, Mr Gilmore caused Gilmore Finance to transfer $1.75 million into the Yates Beaggi trust account.

146. The GWH Unit Subscription Agreement called for a further payment on “Completion” of $1.575 million, not $1.75 million.

147. There is no evidence that, at the time, Mr Amirbeaggi realised or acknowledged this apparent discrepancy. Mr Amirbeaggi said his recollection was that, at some point, the $175,000 received into the Yates Beaggi trust account on 7 February 2011 was repaid to Mr Armstrong or GWH, although he was unable to point to any document recording this, whether in the records of the Kingswood Trust or of the Yates Beaggi trust account.

148. Mr Armstrong denied that he had received back the $175,000. However, as I set out below, he did not refer to the $175,000 as being outstanding following his 21 July 2011 agreement to transfer GWH’s 25% interest in the Kingswood Trust to Gilmore Finance. I return to this below. [18]

     18. See [285]-[287] below.

149. Completion of GWH’s acquisition of units in the Kingswood Trust occurred the following day, 25 February 2011. On settlement, A1 used part of the $1.75 million provided by Gilmore Finance to discharge a mortgage of $600,000 to the NAB then secured over the Kingswood Land.

150. On 25 February 2011, Mr Amirbeaggi wrote to Mr Armstrong:

“We have just settled this purchase.

[A1] remains the proprietor of the property, which is now unencumbered. The Unit Certificates in the Trust will be dispatched to you today. Let’s arrange to meet next week to plan:

1. Demolition, excavation and hoarding on site;

2. Pre-sale program;

3. Refinement of Building Contract/Tender.”

151. A short time later on 25 February 2011, Mr Wayman wrote to Mr Gilmore, replying to Mr Gilmore’s 23 February 2011 email, and stating:

“Great thanks for this I will forward this to Farshad now and you will have all the details across to you shortly.”

152. On 28 February 2011, Mr Yates wrote to Mr Wayman and Mr Armstrong enclosing, among other things, a Unit Certificate certifying that GWH, as trustee of the GWH Trust, held 100 units in the Kingswood Trust in which the sum of “$17,500.00 per unit has been paid subject to the terms of the [Kingswood Trust]”.

153. On 1 March 2011, Mr Amirbeaggi sent Mr Gilmore an email that, in its List Statement, Gilmore Finance contended conveyed a representation that the effect of the documentation executed to date was that Gilmore Finance held 25% of the unencumbered Kingswood Land. As that aspect of Gilmore Finance’s claim was not pressed in final submissions, I will not consider it further.

154. On 7 March 2011, Mr Gilmore’s accountant, Mr Darrell Camilleri, telephoned Mr Amirbeaggi and said that he thought it better that Gilmore Finance have a direct interest in the Kingswood Trust, rather than an indirect interest via the GWH Trust. Mr Amirbeaggi agreed to this and caused Gilmore Finance to be issued with 25 units in the Kingswood Trust.

155. During his telephone call with Mr Amirbeaggi, Mr Camilleri handwrote a diagram which, evidently, recorded his understanding of what Mr Amirbeaggi was explaining to him about the current state of the investment by GWH in the Kingswood Trust.

156. A copy of that diagram is attached.   Attachment A - diagram (486621, pdf)

157. The document shows that Mr Amirbeaggi explained to Mr Camilleri that the total amount of GWH’s investment in the Kingswood Trust was $1.75 million, comprising 100 units in the Kingswood Trust at $17,500 per unit.

158. Mr Camilleri must have understood that the $1.75 million referred to was that contributed by Gilmore Finance on 24 February 2011.

159. Later on 8 March 2011, Mr Camilleri’s secretary forwarded a copy of the diagram to Mr Gilmore.

160. The diagram should have made clear to Mr Gilmore that it had not been correct for Mr Wayman to assert, in his 22 February 2011 email, that as at that date “we have put in $1,750,000 for the site” and that “Your Equity Required” was a further $1,750,000.

161. The explanation given by Mr Amirbeaggi to Mr Camilleri, as recorded in his diagram, cannot be reconciled with the proposition that Mr Amirbeaggi was a party to a plan to mislead Mr Gilmore into thinking that GWH had invested more into the project than the $1.75 million provided by Gilmore Finance.

162. On 8 March 2011, Mr Camilleri wrote to Mr Amirbeaggi:

“Thanks for that. I understand there is a heads of agreement that will lead into a unitholder’s agreement, and Lyle would appreciate copies of those as they become available (and indeed may need to sign the latter).

Lyle is also conscious of other contributors and the total advanced by them, would you be sending a weekly update of who has contributed and is a particular unitholder.”

163. The second paragraph of that email appears to bespeak Mr Gilmore’s apprehension, no doubt based on what Mr Wayman had stated in his 22 February and 3 March 2011 emails, that “other contributors” had “advanced” funds for the Kingswood Project.

164. Mr Amirbeaggi appears not to have picked this up, as he replied on 9 March 2011:

“Darryl, thanks for your email.

My partner, Brenton Yates, is drawing the Unit Holders Agreement, and we expect it will be published over the following days.

Chris Wayman has been engaged as Project Manager to start:

1. Project marketing of Pre Sales (in order to procure the 36 presales required before bank will fund construction contract):

2. Refine existing building contract to finalise it, and supervise demolition of existing structures, and site excavation/erection of hoarding.

The Unit Holders are as follows:

1. Kate Yates (Brenton’s wife);

2. Vashti Conway (My wife)

3. Gilmore Finance;

4. GWH Pty Limited (in which Graham Armstrong/Chris Wayman/Adam Hollioake hold units).

We otherwise provide Unit Holders with a monthly circular as to progress, and accounts.”

165. Later that day, 9 March 2011, Mr Gilmore wrote to Mr Camilleri:

“This gets even more confusing, as Chris told me that Graham [Armstrong], Adam [Hollioake], he and I were all 25% shareholders in the land. When I spoke to Adam, he told me that he personally was putting in $2M, so that didn’t make sense.

And it is also weird that everyone that was at the site was all go on it, and keen as hell. Given that I said I would be in for $1M, I am uneasy with why I somehow managed to get 25% of it all.

I am not doubting that the project is a goer, but I am seriously wondering how this all balances out.

And still nothing that advises exactly what other[s] have invested dollar wise

??????????”

166. The evidence does not reveal what response Mr Camilleri gave to Mr Gilmore’s enquiry. Mr Pritchard suggested to Mr Camilleri in cross-examination that Mr Gilmore’s enquiry showed some confusion on Mr Gilmore’s part and should have rung “alarm bells” for Mr Camilleri. This cross-examination was evidently directed to the proposition that Mr Camilleri was a “concurrent wrongdoer” for the purposes of s 87CB(3) of the Competition and Consumer Act, a claim withdrawn in closing submissions.

167. In any event, as I describe below, Mr Camilleri followed the matter up with Mr Amirbeaggi on 29 April 2011.

168. The following day, 10 March 2011, Mr Amirbeaggi wrote to Mr Camilleri, with a copy to Mr Gilmore:

“I spoke to Lyle today concerning this matter.

I mentioned to Lyle at the conclusion of it that you and I would liaise to the extent necessary to ensure you had all of the information/documentation you required concerning the structure and development generally.

Accordingly, if there is anything further you require now or at a later point in time I invite your call.”

Investment in the Hospital Land

169. In the meantime, on 28 February 2011, Mr Wayman telephoned Mr Amirbeaggi. They had this conversation:

“[Mr Wayman]:    Lyle Gilmore would like to take up a 5% investment in the Hospital Site.

I’ve spoken with him about the present feasibility values, and that with a complete pre-sale campaign it will increase.

I’ve told him my group is looking to acquire it from you and develop it through my Chinese contacts, and this is an early entry for him into the development, which is only going to increase in value with the work me and my group are going to do on it.

He wants to take up a 5% share based upon the $25mil val shown in the feasibility and pay $1.25mil. Are you able to take up his investment as one of my clients in your project, or do you want to wait until I take out the site from you and then I’ll include him in my group?”.

[Mr Amirbeaggi]:    We can have him purchase a 5% interest, however, on two conditions. Firstly, if he buys in now and then you acquire the site for the assignment fee of $15mil plus GST we’ve been talking about, then his 5% interest of that margin net of the cost of the underlying land is only $750K, so you’ll have to take him across with your group so he gets a return on his investment, and secondly we won’t validate any purchase until the consent is issued because until we have that it is nothing but an option with potential i.e. there won’t be any life in value, and if we don’t get the consent, then he’ll have a loss.

So, if he wants to do it, we are happy to do it, but his funds have to remain in an interest-bearing account, and the purchase only becomes effective once we have the consent, and then if you take out the site you agree either take him across with your group or refund his money.

We can incorporate that condition at the time you approach for a take-out, but he is your client so you will need to manage that part. If we aren’t issued the consent, then his money with interest earnt is returned to him i.e. assuming you don’t take the site out his purchase of a 5% interest is conditional upon obtaining the consent.

Does that all make sense? We would be happy to proceed on that basis.

[Mr Wayman]:    Yes I understand what you mean and will discuss all that with him.”

170. Several days later, on 3 March 2011, Mr Wayman sent a further email to Mr Gilmore concerning the “Kingswood Hospital Site” in which he repeated the falsehoods in his 22 February 2011 email. Again, Mr Amirbeaggi said he did not authorise Mr Wayman to send this email and did not know of its contents until after the commencement of these proceedings. This email read:

“Great to catch up, this morning as mentioned Adam is in this deal and so are the other members of the team that you have already met.

Following from the discussions regarding the equity for the Hospital site please see below:

   Kingswood Hospital Site (11 Barber Ave, Kingswood) 42 Month Project Time frame (approx)

o   The people that are in this deal are as follows Lyle (5%), USA JV Partner (50%), Farshad, Brenton, Chris, Adam, Graham (45%).

o   We have already put in $5,000,000 for the site and are also bringing a further $12,500,000 into the project (totally $17,500,000) in order to reach a 50/50 JV with our USA JV Partner on this project who has already committed their funds for their 50%. We will also be guarantors for the construction ($85,500,000 staged construction). You will not have exposure for the construction facility liability.

o   Your Equity contribution will be $1,250,000. For your equity you will be provided with shareholding in the company that owns the site of 5% (ROI – 100% return approx on your funds in 42 months). The payment in from you will be held in an interest bearing account under the control of Yates Beaggi Lawyers, and only taken once the site is approved by the Department of Planning in the nature of the Application that has been lodged (with say a 10% variation in layout/measure/design). We are expecting approval in the next 5 to 8 weeks, and then completing on the project. If the site is not approved by the State Govt as planned, your funds will be refunded to you with the interest earnt on it over that period.

All parties will stay in the transactions together for the duration of the projects until completion. We will also facilitate the project management and sale for the developments, ensuring risk management, timely management and execution. Completed project management reports will be provided on a monthly basis and we will also organise several site visits during the project.”

171. Mr Wayman concluded by asking Mr Gilmore to cause $1.25 million to be paid into the Yates Beaggi trust account “this week”.

172. On or around the 14 or 15 March 2011, Mr Wayman telephoned Mr Amirbeaggi again and had this conversation:

“[Mr Wayman]:    I’ve spoken with Lyle, and he wishes to proceed with the 5% investment in the [Hospital] site. Is that still okay? He’s happy to do it on terms you had mentioned.

[Mr Amirbeaggi]:    Yes. We are happy to proceed on that basis. He’ll be purchasing 5 units from Brenton’s wife and my wife in the trust.

[Mr Wayman]:    I’ll let him know and have him arrange a transfer of funds. I’ll let you know once I have spoken with him.”

173. On 16 March 2011, Mr Gilmore caused Gilmore Finance to pay $1.25 million into the Yates Beaggi trust account and sent an email to Mr Amirbeaggi and Mr Wayman:

“Attached is the remittance advice for the payment of my share (5%) into the Hospital site.

Please return mail me the acknowledgement, unit trust certificate, receipt, or whatever, so that I have the correct documentation to appease the ATO.”

174. Mr Amirbeaggi said that Mr Gilmore caused this payment to be made without any prior request for payment from him. In his affidavit he said:

“I did not expect to be paid because there was not yet any documentation in existence with respect to our prospective sale of Units in the [Hospital Trust].”

175. On 21 March 2011 Mr Amirbeaggi sent to Mr Gilmore and Mr Wayman a draft Unit Sale Agreement, providing for the sale by Ms Yates and Ms Conway of five units in the Hospital Trust [19] to Gilmore Finance in consideration of the $1.25 million that Gilmore Finance had already paid into the Yates Beaggi trust account on 16 March 2011.

     19. Two from Ms Yates and three from Ms Conway.

176. Several weeks later, on 5 May 2011, Mr Camilleri sent Mr Amirbeaggi the executed pages of that Unit Sale Agreement, signed by Mr Gilmore on behalf of Gilmore Finance.

Appointment of DevCom as project manager

177. It was a term of the Unit Subscription Agreement made between A1 and GWH on 7 February 2011 that the parties agreed to negotiate in good faith and to complete a unitholders’ agreement, one of the terms of which was to appoint Mr Wayman as project manager to manage the Kingswood Land project at a renumeration of $125,000 per annum.

178. In this context, on 29 March 2011, Mr Yates sent to Mr Wayman by email a draft consultancy agreement between A1 and DevelopmentCom Pty Ltd (“DevCom”), a company associated with Mr Armstrong, in respect of the development of the Kingswood Land. That document was executed on behalf of DevCom by Mr Armstrong and returned to Mr Amirbeaggi on the same day.

179. Pursuant to that agreement DevCom agreed to provide A1 with Mr Wayman’s project management services.

180. Evidently, Mr Wayman did perform some work in the nature of project management for the Kingswood Land.

181. Thus, on 5 April 2011, Mr Amirbeaggi wrote to Mr Gilmore and Mr Camilleri:

“By way of update on the development at 182-190 GWH, Kingswood, I note Chris Wayman as Project Manager has carried out the following tasks since initiation ie over the last 4 weeks:

1. Engaged us to prepare Contracts for Sale of the 36 Pre-Sale Apartments;

2. Appointed 3 selling agents to start the pre-sales program;

3. Registered the URL for the website for the development;

4. Completed marketing materials including sales display/schedule of finishes boards;

5. Engaged [Yates Beaggi Lawyers] to draw the form of construction contract;

6. Worked with the Architect and Engineer to turn out all of the Construction Certificate documentation, so as to tender out the building works for comparative quoting;

7. Progressed and obtained the Construction Certificate for demolition of existing structures, excavation of tanks, and hoarding of site; and

8. Engaged [Yates Beaggi Lawyers] to complete the Unit Holders Agreement.

We expect that over the following 4 weeks the demolition and hoarding of the site will be undertaken/completed, and the pre-sale campaign significantly progressed.”

182. Similarly, on 21 April 2011, Mr Wayman wrote to Mr Gilmore, Mr Amirbeaggi, Mr Armstrong and Mr Hollioake, among others, under the heading “Kingswood Project Update” and setting out detailed notes to “update you all regarding our progress” including that:

1. “The contracts for sale of the 36 Pre-Sale Apartments has been completed”;

2. “We have 6 potential purchasers we are already working with”;

3. He had “[c]ommissioned and received Dilapidation report & Traffic Management report required by council to start demolition”.

The Kingswood Trust Unitholders’ Agreement

183. By 12 May 2011, both GWH and Gilmore Finance had executed the Kingswood Trust Unitholders’ Agreement.

184. That document showed the unitholders in the Kingswood Trust to be:

1. GWH as to 25 units;

2. Gilmore Finance as to 25 units;

3. Ms Yates as to 17.5 units;

4. Ms Conway as to 17.5 units; and

5. Mr Vaughan Williams [20] as to 15 units.

   20. A third party investor, who played no role in these proceedings.

185. This document reflected an implementation of Mr Camilleri’s advice that Gilmore Finance have a direct 25 unit interest, reflecting its $1.75 million investment in the Kingswood Trust, rather than an indirect interest through the GWH Trust.

186. There are terms of the Kingswood Unit Trust Unitholders Agreement that are relevant to a number of the matters Gilmore Finance seeks to raise, assuming it fails in its “no transaction” case. I will return to the relevant terms when considering those matters.

Discovery of Mr Wayman’s misrepresentations

187. On 29 April 2011, Mr Camilleri sent an email to Mr Amirbeaggi making a number of enquiries about the Kingswood Land and the Kingswood Trust. These enquiries may have arisen from the confusion Mr Gilmore expressed in his email of 9 March 2011.

188. Mr Amirbeaggi replied on 1 May 2011.

189. One of the enquires made by Mr Camilleri was:

“There are some clauses dealing with the non-subscription of $ for units. I understand Lyle has already forwarded his subscription, so I assume all others have too so such clause would appear unnecessary.”

190. Mr Amirbeaggi replied:

“Correct”.

191. Another enquiry made by Mr Camilleri was:

“If 25% equates to $1.75m, then the total subscription is $7m, how is the project funded, and should the trustee be given approval to raise funds to a certain threshold or is that canvassed elsewhere?”

192. Mr Amirbeaggi replied:

“Total subscription should be noted at $7mil”.

193. The second of these responses, but not the first, is relied on by Gilmore Finance as constituting a representation by Mr Amirbeaggi that $7 million had in fact been subscribed for units in the Kingswood Trust. I return to this below.

194. Mr Marshall asked Mr Amirbeaggi about his state of mind on 1 May 2011 as to the investment in the Kingswood Trust. Mr Amirbeaggi said:

“I knew that Gilmore Finance have paid in 1.75 and Great Western Highway had not paid in 1.75 and the Mr Gilmore knew those two facts, that he had paid and that Great Western Highway had not paid.”

195. Mr Amirbeaggi then gave this evidence in response to questions from me:

“Q. What was your state of mind on 29 April 2011 as to Mr Gilmore’s knowledge of other investors in the Kingswood Trust?

A. I understand that he had invested 1.75 million. That Conway & Yates were the owners of the site originally so they had transacted a $3.5 million figure. And that Great Western Highway comprising of Hollioake, Wayman and Armstrong had not paid money in because they had [been] putting the deal together and doing the work in relation to it, and meeting expenses, that’s what my understanding was.

Q. You tell me what you thought, Mr Gilmore knew or what do you?

A. That’s what I understood, Mr Gilmore knew.

Q. You recall by what means you had that understanding about Mr Gilmore’s understanding as to … Wayman, Armstrong and Hollioake?

A. My understanding of Mr Gilmore’s understanding was from what I had been told by Mr Wayman and by Mr Armstrong.

Q. What had they told you?

A. What – they told me that their deal with their passive investor, Mr Gilmore, was that he would invest $1.75 million and he would have a return on that investment at, I think initially that he would double his money and then that he had a 25% interest in the A1 Trust.

Q. Are you telling me that Armstrong or Wayman told you that they’d told Mr Gilmore he’d double his money?

A. That’s what I had been told.

Q. When were you told that?

A. I was told that in February and I think in March and then dates after that.”

196. On 5 May 2011 Mr Camilleri wrote to Mr Amirbeaggi and asked two questions. Mr Amirbeaggi replied to those questions on 30 May 2011. In its List Statement, Gilmore Finance relied upon Mr Amirbeaggi’s 30 May 2011 replies as constituting “No Discount Representations”. As that contention was not pressed in closing submissions, I will give it no further consideration.

197. On 23 May 2011, Mr Amirbeaggi sent an email to Ms Jenny McLure, who I was told is Mr Wayman’s mother-in-law, about the purchase of a BMW for Mr Wayman. In the email, Mr Amirbeaggi said that he “located” the car and that “I paid $50k top up” and the car “was driven away and encumbered by Chris”. In cross-examination, Mr Amirbeaggi agreed that he had “negotiated the purchase of the trade” but said that although he said that “I” paid the $50,000, the money was in fact provided by Mr Wayman or his wife. During the hearing Mr Marshall sought to amend Gilmore Finance’s claim to include an allegation that this communication was relevant to whether Mr Wayman was acting as the agent of A1 or Mr Amirbeaggi. I refused that application. [21]

     21. Gilmore Finance Pty Ltd v Aesthete Pty Ltd atf Real Money Unit Trust [2022] NSWSC 311.

A. I had no interest in this.

Q. And assuming this 25 January 11 email is the first one you got, I think your evidence is you weren’t interested in the project at that point?

A. No, I was just – I was being coaxed along all the way to this project and to the other project and I was not paying any attention, and it wasn’t until our bus trip that – that things changed.

PRITCHARD

Q. The bus trip at which you can’t remember what numbers were said; is that the same bus trip we’re talking about?

A. Sorry, what do you mean?

Q. The bus trip, you cannot remember the numbers--

A. Well, there’s only one bus trip.

Q. The bus trip about which you gave evidence yesterday you couldn’t remember what numbers for the development of the project were said.

A. For the hospital project?

Q. Yes.

A. Correct, cause I had no interest in it.

Q. So, is this right: At the site meeting and including the site meeting, you had no interest in the hospital project; is that right?

A. Correct.

Q. Nothing at the site meeting attracted your interest in the hospital development; correct?

A. Correct.

Q. What about in respect of – everything that excited your interest in respect of the hospital investment occurred after the 16th of February; correct?

A. Correct.

Q. That’s from your dealings, is it, with Mr Wayman and Mr Armstrong?

A. And Mr Hollioake.”

410. Mr Gilmore’s evidence, at this point, was focused on the Hospital Land. Mr Gilmore was making clear that during the site meeting he was not attracted to investing in the Hospital Land. Thus, I inadvertently, misstated to Mr Gilmore what he had “told me earlier”.

411. Nonetheless, Mr Gilmore gave the answers recorded in the transcript and the matter was not taken up in re-examination.

412. In that state of the evidence, I am not persuaded that Mr Gilmore made his decision to invest in either of the Kingswood or Hospital Projects based on anything said by Mr Amirbeaggi, or anyone else, during the site visit.

Mr Wayman’s 3 March 2011 email to Mr Gilmore – the “Further Representations”

413. The “Further Representations” are said to arise from the statements made by Mr Wayman in his 3 March 2011 email to Mr Gilmore that I have set out at [170] above and are said to be that:

1. investors in the Hospital Project were, as to 5%, Gilmore Finance, as to 50%, an unidentified United States joint venture partner, and as to 45%, a group constituted by Mr Amirbeaggi, Mr Yates, Mr Wayman, Mr Hollioake and Mr Armstrong;

2. the group constituted by Mr Amirbeaggi, Mr Yates, Mr Wayman, Mr Hollioake and Mr Armstrong had invested $5 million into the Hospital Project and would invest a further $12.5 million to match the contribution of the unidentified United States joint venture partner;

3. Gilmore Finance’s contribution would be $1.25 million for a 5% shareholding in the company that owned the site with a return on investment of 100% in approximately 42 months; and

4. the $1.25 million invested by Gilmore Finance would be held in an interest-bearing account under the control of Yates Beaggi and only taken once development approval from the Department of Planning had been obtained.

414. For the reasons I have set out above, many of the statements made by Mr Wayman in this email were false.

415. But as I have also set out above, I accept Mr Amirbeaggi’s evidence that he did not authorise Mr Wayman to send this email and did not know of it until after the commencement of these proceedings.

416. Further, as I have set out, I am not satisfied that Mr Wayman had any authority of any kind to make any communications on behalf of A1, A3 or Mr Amirbeaggi.

417. Gilmore Finance has thus not established that the representations made by Mr Wayman in this email were made on behalf of any of A1, A3 or Mr Amirbeaggi.

418. In any event, Mr Gilmore did not give evidence that he relied on anything contained in Mr Wayman’s 3 March 2011 email in making his decision to cause Gilmore Finance to pay $1.25 million on 16 March 2011 for five units in the Hospital Trust.

Mr Amirbeaggi’s 1 May 2011 response to Mr Camilleri’s 29 April 2011 enquiry - “the Subscription Representation”

419. This alleged representation arises from Mr Amirbeaggi’s response to Mr Camilleri’s 29 April 2011 question:

“If 25% equates to $1.75m, then the total subscription is $7m, how is the project funded, and should the trustees be given approval to raise funds to a certain threshold or is that canvassed elsewhere?”

420. As I have set out above, [43] Mr Amirbeaggi’s response to that question was:

“Total Subscription should be noted at $7mil …”.

43. At [191]-[192].

421. Mr Marshall submitted that this response “misleadingly represented” that the other investors had already subscribed for the balance of the total”. The effect of Mr Marshall’s submission was that Mr Amirbeaggi’s response conveyed that $7 million had in fact been subscribed for units in the Kingswood Trust.

422. I do see substance in this submission. Mr Amirbeaggi’s response to Mr Camilleri’s question was somewhat oblique.

423. However, there is no evidence that Mr Gilmore knew of Mr Amirbeaggi’s response to Mr Camilleri’s question. There is no evidence that Mr Camilleri forwarded the email to Mr Gilmore or discussed it with him.

424. In any event, as I have set out above, before Gilmore Finance made any further payment in respect to the Kingswood Project, [44] “any ambiguity arising from the above statement … was corrected”. [45]

     44. This payment was made on 22 July 2011 when Gilmore Finance paid $50,000 as a contribution for expenses.

     45. Mr Pritchard’s closing submissions.

425. Thus, even if Mr Gilmore did know of Mr Amirbeaggi’s less than fulsome response to Mr Camilleri’s 29 April 2011 enquiry, the question arises as to whether Gilmore Finance can show that it has suffered damage “because of” that response. [46]

     46. Section 236(1) of the Australian Consumer Law.

426. Where there may be multiple causes of a plaintiff’s loss or damage, the plaintiff may succeed if it establishes that the defendant’s impugned conduct “materially contributed” to the loss or damage suffered. [47]

     47. Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514; [1992] HCA 55 at 525 (Mason CJ, Dawson, Gaudron and McHugh JJ); Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494; [1998] HCA 69 at [41]-[42] (McHugh, Hayne and Callinan JJ); Henville v Walker (2001) 206 CLR 459; [2001] HCA 52 at [95], [130] (McHugh J), [158] (Hayne J); Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; [2004] HCA 60 at [37] (Gleeson CJ, Hayne and Heydon JJ).

427. Thus, in Henville v Walker, McHugh J [48] said, when considering causation under s 82 of the Trade Practices Act 1974 (Cth): [49]

“[97] The common law concept of causation recognises that conduct that infringes a legal norm may be causally connected with the sustaining of loss or damage even though other factors may have contributed to the loss or damage.

…

[106] If the defendant’s breach has ‘materially contributed’ to the loss or damage suffered, it will be regarded as a cause of the loss or damage, despite other factors or conditions having played an even more significant role in producing the loss or damage.”

48. With whom Gummow and Hayne JJ agreed.

49. Which spoke of whether loss had been suffered “by conduct” as opposed to “because of” conduct; I see no material difference between the two expressions.

428. In my opinion, whatever impression Mr Gilmore could have gained from Mr Amirbeaggi’s 1 May 2011 response to Mr Camilleri’s 29 April 2011 question concerning the level of subscription in the Kingswood Trust did not “materially contribute” to Mr Gilmore’s decision to remain invested in the Kingswood Project following revelation of the deceit that had been practised on him by Mr Wayman and Mr Armstrong.

429. As I have set out, Mr Gilmore, with his eyes open, and with the full facts before him, decided to accept Mr Armstrong’s offer to, in effect, surrender GWH’s 25% unitholding in the Kingswood Trust as adequate compensation for the deception that had been practised on him.

430. Accordingly, I do not accept that Gilmore Finance has suffered any loss “because of” the lack of clarity in Mr Amirbeaggi’s response to Mr Camilleri’s question.

Conclusion

431. For these reasons, my conclusion is that Gilmore Finance has failed to establish that Mr Amirbeaggi, as director of A1 and A3, made any of the representations alleged in the List Statement save, perhaps, the “Subscription Representation”, and has, in any event, failed to establish that it was misled by any of the representations alleged.

432. Gilmore Finance has thus failed to establish that it has suffered any loss “because of” any representation allegedly made by Mr Amirbeaggi on behalf of A1 or A3.

433. It has thus failed to make out its “no transaction” case.

434. In those circumstances it is not necessary for me to consider the submissions made on behalf of A1, A3 and Mr Amirbeaggi concerning contributory negligence or concurrent wrongdoers.

The under-contribution claim

435. This claim is based on an alleged breach of cl 5.1(c) of the 5 June 2012 Hospital Trust Unitholders’ Agreement that, as I have set out above, provided that the unitholders in the Hospital Trust would contribute “the funds required for completion … in accordance with the percentage of their Unit Holding”.

436. In its List Statement, Gilmore Finance alleges that A3, Ms Conway and Ms Yates breached that clause by failing to contribute to A3 an equal amount for the purpose of completing the purchase of the Hospital Land.

437. The claim is particularised as follows:

“The purchase of the Hospital Land was completed with the aid of the Gilmore Loan[50] and no contribution from [Ms Conway and Ms Yates]

…

Had [Ms Conway and Ms Yates] contributed cash equally to the amount required to complete the purchase of the Hospital Land [Gilmore Finance] would not have been required to contribute more than one-third of the cost of completion ...”. [51]

50. Being the $2.25 million loan referred to at [315]-[329] above, which loan was secured over the Hospital Land and repaid with interest in the circumstances described at [334]-[338] above.

51. List Statement at C102.

438. This claim takes no account of what Mr Gilmore agreed, in August 2012, should be done in relation to the provision of funds necessary to enable A3 to complete the purchase of the Hospital Land.

439. As I have set out above, [52] Gilmore Finance, by then being independently advised by Mr Coates, agreed that, notwithstanding cl 5.1 of the Unitholders’ Agreement, it would loan A3 $2.25 million to enable A3 to complete the purchase of the Hospital Land. That loan was repaid from the amounts paid by Ms Conway and Ms Yates pursuant to the 2012 Unit Subscription Payment Agreement. [53]

     52. At [316]-[318] above.

     53. See [336] above.

440. Further, by the 5 June 2012 Unit Allotment Agreement, Gilmore Finance agreed to pay $4.25 million for 28 units in the Hospital Trust, giving Gilmore Finance a one-third holding of the units in that Trust. That $4.25 million was a payment to subscribe for units in the Hospital Trust. It did not represent payments pursuant to cl 5.1(c) of the Hospital Trust Unitholders’ Agreement.

441. The implication of Gilmore Finance’s claim appears to be that although it agreed to pay $4.25 million to purchase 28 units in the Hospital Trust, it should only have been required to pay one-third of the funds required to complete the purchase of the Hospital Land or, at least receive back the difference between the amount of its subscription and an amount equal to one-third of the funds necessary to complete that purchase.

442. In effect, by making this claim, Gilmore Finance seeks to rewrite history. With independent legal advice, it agreed to all of the circumstances that led to the funding of A3’s purchase of the Hospital Land. I cannot see how it can now assert that it has suffered damage as a result of the transactions to which it, in terms, agreed in August 2012.

The Discount Units Claim

443. This claim arises from the issue by A3, on 9 August 2012, of 17 units in the Hospital Trust to Ms Conway and Ms Yates.

444. Gilmore Finance’s pleaded case in relation to this claim is that the unit price ascribed by A3 to the units acquired by Ms Conway and Ms Yates on 9 August 2012 “was at a significant discount to the unit price ascribed by” A3 to the units acquired at that time by Gilmore Finance, and that by reason of A3 granting Ms Conway and Ms Yates such “Unit Price Discount”, A3 breached its fiduciary duties to Gilmore Finance because it:

1. preferred the interests of Ms Conway and Ms Yates over the interests of the Hospital Trust; and

2. did not act independently in the collective interest of the unitholders in the Hospital Trust. [54]

   54. List Statement at C131.

445. The only submission made on behalf of Gilmore Finance about this matter was in the final paragraph of its opening submissions:

“[A3] did not act even-handedly towards beneficiaries when, on 9 August 2012 it contrived to sell 33 units in the [Hospital Trust] to [Gilmore Finance] at $166,666.67 per unit, and on the same day to issue 24 units to Ms Conway, and 25 units to Ms Yates, for $62,211 and $58,646 per unit respectively on the strength of an unsecured IOU.”

446. The matter was not referred to at all by Mr Marshall in final written or oral submissions.

447. The figures in Gilmore Finance’s submissions on this point are not correct.

448. As I have set out above, on 9 August 2012, A3 issued:

1. 17 units in the Hospital Trust to Ms Conway and Ms Yates for $132,353 per unit (totalling $2.25 million, being the amount advanced by Gilmore Finance to A3 that day, and thus providing the means by which, in the circumstances I have set out above, the Gilmore Loan would be repaid); and

2. 33 units to Gilmore Finance at $166,665.67 per unit, being the units for which Gilmore Finance subscribed in the 5 June 2012 Unit Allotment Agreement.

449. These unit allotments were part of a series of transactions to which Gilmore Finance, with the benefit of advice from Mr Coates, agreed to as a means by which to fund completion of the purchase by A3 of the Hospital Land and to increase Gilmore Finance’s investment in the Hospital Trust to an equal one-third investment with interests associated with Mr Amirbeaggi and Mr Yates; namely the unitholdings of Ms Conway and Ms Yates.

450. This was not something that A3 “contrived” to do. These were elements in commercial transactions to which Gilmore Finance, independently advised, agreed.

The Proper Financial Records Claim

Failure to provide proper accounts

451. Clause 10.2 of the 12 May 2011 Kingswood Trust Unitholders’ Agreement obliged A1 to prepare “accounts of the Business and the Trust” “as soon as practicable after the end of each financial year”.

452. In closing submissions, Mr Marshall referred to the “dilatory presentation of the accounts” and drew attention to the dates when the financial accounts for the Kingswood Trust were produced. He submitted that:

1. the accounts for FY11 and FY12 were produced during the course of the hearing; and

2. the accounts for FY13, FY14, FY15 and FY16 were not prepared until 1 February 2017.

453. However, as Mr Pritchard submitted:

1. there is in evidence a large number of communications concerning the provision of financial statements, including an email sent by Mr Coates to Mr Amirbeaggi, on 28 May 2014, in which Mr Coates stated that Mr Camilleri “has now been given all the information he was seeking”;

2. Mr Amirbeaggi arranged for Gilmore Finance to have access to A1’s and A3’s external accountant Mr Bland, including in an email of 14 July 2011 to Mr Gilmore, Mr Wayman and Mr Armstrong and an email sent to Mr Camilleri on 7 February 2013, which was copied to Mr Coates and Mr Gilmore;

3. in 2015 Mr Amirbeaggi arranged for A1 to retain an independent accountant, Mr Gino Malacco, from Hall Chadwick, to conduct an independent review of A1’s accounts. Mr Malacco produced a report of 1 July 2015 in respect of A1’s accounts. [55] In his 1 July 2015 report Mr Malacco expressed the opinion that the financial statements of A1 prepared by Mr Bland contained “errors and inconsistencies in the manner in which the accounts should have been prepared” and made various recommendations as to what should be done. Mr Marshall made no reference to Mr Malacco’s reports in closing submissions and did not seek to engage with the defendants’ written submission that, after Mr Malacco’s report was provided to Mr Coates and Mr Gilmore, there was no communicated criticism of the reports or objection of its suggestions; notwithstanding that, in his covering email of 13 July 2015 enclosing the Malacco report, Mr Amirbeaggi stated:

“Please consider the content of Paul Chadwick Report, and provide your commentary within 14 days. Subject to your comments I intend to put in place/heed the recommendation, and take steps towards equalisation of accounts.”

55. And a similar report on 23 December 2016 in relation to A3’s accounts.

454. Further, in closing oral submissions, Mr Fernon, who presented this part of the argument on behalf of A1, A3 and Mr Amirbeaggi pointed out that Gilmore Finance:

1. had not pointed to any request for the accounts for FY11 and FY12 such as would have required their service prior to when service in fact occurred; and

2. has had access to the accounts for FY13 to FY17 since February 2017.

Failure to keep proper books and records

455. It is hard to know precisely what complaint Gilmore Finance maintained in relation to the books of account of A1 and A3.

456. I heard concurrent evidence from accounting experts retained by the parties, being Mr David Hambleton for Gilmore Finance and Mr Clayton Hickey for A1 and A3.

457. Mr Fernon objected to the admissibility of Mr Hambleton’s report on the basis that, although he is a chartered accountant, his background and experience is in acting as a liquidator rather than dealing with accounting standards.

458. I do not find it necessary to come to a conclusion about that submission. That is because the fundamental dispute between Mr Hambleton and Mr Hickey was whether the accounts for A1 and A3 should have been prepared in accordance with accounting standard AASB 101.

459. On behalf of A1 and A3, Mr Fernon developed detailed submissions as to why Mr Hickey’s opinion, that standard AASB 101 was not applicable and why Mr Hambleton’s contentions to the contrary, should not be accepted.

460. However, and strikingly, the closing written submissions on behalf of Gilmore Finance made only fleeting reference to Mr Hambleton and contained the bold submission that:

“Moreover, even if the Court were to accept that the minimum standard required of the financial statements of the trusts was that they present as a true and fair view of the financial position and performance of them (as Mr Hickey contended …) the financial reports which the Trustees produced failed to comply with even this lower standard. Accordingly, whether or not AASB 101 applied with full rigour to the financial reports produced by the Trustee, those reports nevertheless failed to comply with the obligations imposed on the Trustee by the Deed and the Unit Holders’ Agreement.”

461. That submission was not developed. No submission was proffered as to why the relevant accounts did not present a true and fair view of the financial position of the two trusts.

462. Mr Hickey did agree that the loan of $2.25 million made by Gilmore Finance to A3 was wrongly omitted from A3’s financial statements.

463. The explanation for the omission was that A3’s external accountant, Mr Bland, took the view that Gilmore Finance’s loan should be booked as a loan to Ms Conway and Ms Yates, and not to A3; evidently, because he understood that the Gilmore Finance loan would be repaid by Ms Conway and Ms Yates in due course.

464. It appears that Mr Bland was incorrect to book the loan in this way. But this was a decision of an external professional advisor of A3 and not, insofar as the evidence to which my attention has been drawn reveals, as a result of the decision made by Mr Amirbeaggi.

461. In any event, as Mr Fernon pointed out in closing, this loan was repaid from the proceeds of the sale of the Hospital Land and Gilmore Finance points to no prejudice arising from the accounting deficiency.

462. Furthermore, absence of Gilmore Finance’s loan of $2.25 million was equalised by the absence of any receivable for the monies due under the Hospital Trust Unit Subscription Payment Agreement.

Failure to keep accurate unit registers

467. This complaint was not pursued by Gilmore Finance in final submissions.

The Unauthorised Transaction Claim – Kingswood Trust

Engagement of Yates Beaggi

468. Clause 13 of the 12 May 2011 Kingswood Trust Unitholders’ Agreement was headed “Unitholder’s Restrictions” and provided, under the heading “Reserved Items”:

“Any decisions to be made by [A1] regarding the following items must be unanimously approved by the Unitholders (or the Directors appointed by the Unitholders) before the decision is deemed to be made and the matter is implemented.”

469. One of those “Reserved Items” was contained in cl 13.1(b):

“The making of any loan, borrowing of any money, or provision of any guarantee, in respect of amounts over $10,000.” [56]

56. The text of this clause in fact reads “except” in respect of amounts over $10,000; it is agreed that this is a typographical error.

470. Mr Amirbeaggi caused his own firm, Yates Beaggi, to be retained to provide legal and other advice to A1.

471. In that regard, cl 6.1(e) of the Unitholders’ Agreement provided that the unitholders agreed that:

“[T]hat the Trustee shall (through Yates Beaggi Lawyers or other lawyers as approved by the parties) provide the following legal services to the Trust and Trustee the cost of which services shall be capped at an amount of $69,000.00, exclusive of GST:

(i)   acting in respect of 36 conveyances which make up the 60% pre-sales component - $54,000.00;

(ii)    preparation and negotiation of the relevant building and construction contract - $5,000.00;

(iii)   preparation of this Agreement and group structure - $5,000.00; and

(iv)   acting in respect of registration of strata plan of the Development - $5,000.00.”

472. Issues of construction arise in relation to both of these clauses.

473. In relation to cl 13.1, cl 4.1 of the Unitholders’ Agreement provided that “it is agreed”, that is by the Unit Holders, that the initial “director/s” of A1 would be Mr Amirbeaggi, alone.

474. Mr Pritchard submitted that it followed from this that Mr Amirbeaggi should be seen to be the director “appointed by the Unitholders” for the purpose of cl 13.1 and that, “by conscious choice, the unitholders named a single director, Mr Amirbeaggi, to represent them, not a plurality”.

475. Mr Marshall submitted that “directors of the Trustee are not appointed by the unit holders but by members of the Trust corporation”. That may be true, but the Kingswood Trust Unit Holders Agreement is not a shareholders’ agreement and is, rather, an agreement by the unitholders in their capacity as unitholders as to who will be a director of the trustee, A1.

476. It is true, as Mr Marshall pointed out, that there is no specific reference in cl 4 to the unitholders agreeing to Mr Amirbeaggi being a director of A1 for the purpose of cl 13. It is also true that cl 13 speaks of the directors “appointed” by the unitholders, whereas cl 4 speaks only of the unit holders “agree[ing]” that Mr Amirbeaggi be a director. But, when the clauses are read together they appear to bespeak the unitholders’ agreement that Mr Amirbeaggi be the director of A1 for all purposes, including for the purpose of cl 13.

477. It is also true that cl 13.2 provided that:

“For the avoidance of doubt, no individual Director may make a decision in respect of a Reserved Item.”

478. But the unitholders had agreed that the “director/s” be Mr Amirbeaggi, alone. The evident purpose of cl 13.2 was to ensure that were there, contrary to the fact, more than one director, those directors would have to agree about decisions concerning “reserved items”.

479. The point is, in any event, moot, for the reasons that follow.

480. In relation to cl 6(c) of the Unitholders’ Agreement, the issue is whether the cap of $69,000 applied to work other than that specified in sub cll 6(e)(i) to (iv). In my opinion, the fact that the sum of the amounts separately set out in sub cll 6(e)(i) to (iv) total $69,000 makes clear that the cap applies only to work as described in those subclauses.

481. However, notwithstanding these matters, Gilmore Finance was well aware that Mr Amirbeaggi was arranging for his firm to perform work on behalf of the Kingswood Trust.

482. Mr Marshall pointed to the fact that there was no evidence of any costs agreement between A3 and Yates Beaggi and submitted that “accordingly Yates Beaggi Lawyers could only charge for reasonable fees”.

483. There were extensive communications between Mr Amirbeaggi and Mr Coates, on behalf of Gilmore Finance, about the rate at which Yates Beaggi was charging for work done, it being asserted on behalf of Gilmore Finance that some of the work for which Yates Beaggi was charging was not legal work but was more in the nature of property development work.

484. However, that controversy was resolved by an agreement that Yates Beaggi could charge a “blended rate” of $450 per hour (rather than Mr Amirbeaggi’s usual charge-out rate of $600 per hour) for all work done, whether that work was of a legal nature of otherwise.

485. There was extensive communication between Mr Amirbeaggi and those representing Gilmore Finance about that matter including an email from Mr Camilleri to Mr Amirbeaggi dated 12 February 2014, copied to Mr Coates and Mr Gilmore, in which Mr Camilleri referred to the receipt of invoices from Yates Beaggi and stated that the fees “for December and June are at a rate of $450 as agreed with Andrew [Coates].”

486. Indeed, in cross-examination, Mr Gilmore agreed that “it was an agreed rate. Yes. We agreed the rate.”

487. In relation to that evidence, Mr Marshall submitted in closing:

“That concession is not supported by the contemporaneous documents and is incorrect from a legal standpoint. The fact that Mr Gilmore with no training concedes under cross examination there was an agreed rate is not evidence of that agreement. Despite Mr Gilmore’s opinion as a non-lawyer as to legal consequences of what occurred, [it] is not evidence of the legal position created between the parties.”

488. That submission was not developed and no response was given to the detailed submissions made by Mr Pritchard concerning the communications leading to the agreement that Mr Gilmore accepted existed (including Mr Camilleri’s email to which I have referred).

489. Further, Gilmore Finance adduced no evidence to substantiate the proposition implicit in its submissions that Yates Beaggi overcharged A3 for the work it did. Gilmore Finance has not sought to have the fees assessed or to adduce countervailing evidence as to what would have been a reasonable amount to charge.

490. On 15 April 2013 and 11 June 2014 Mr Amirbeaggi wrote to Mr Coates stating that, if final invoicing was not agreed, he was happy to undergo a formal costs assessment. Gilmore Finance did not seek to take up that proposal.

491. In these circumstances, I see no substance in Gilmore Finance’s complaint about Yates Beaggi’s fees.

Unauthorised borrowings

492. Another of the “Reserved Items” requiring approval under cl 13.1 of the Kingswood Trust Unitholders’ Agreement was, as I have set out, any borrowing exceeding $10,000.

493. As I have mentioned above, on 8 September 2015, A3 borrowed $1.725 million from Ares Capital Management Pty Ltd. That loan was secured by a mortgage over the Kingswood Land.

494. In closing submissions, Mr Marshall stated that this money was used to repay the loan of $2.25 million made by Gilmore Finance to A1 in August 2012. That is not correct. The Gilmore loan was repaid in the manner I have set out at [336].

495. In fact, as Mr Pritchard set out in detail in closing submissions, the money was borrowed in order that A1 could implement the recommendations made by Mr Malacco from Hall Chadwick in his report of 1 July 2015 to “correct the number of units on issue and their value as at January 2011”. I have referred above to Mr Amirbeaggi’s retaining of Mr Malacco to review the financial records of both A1 and A3 to determine their accuracy. [57]

     57. See [453(c)] above.

496. A1 borrowed the $1.725 million from Ares Capital Management Pty Ltd to implement Mr Malacco’s recommendations.

497. On 15 September 2015, after A1 entered into the loan agreement with Ares Capital Management Pty Ltd, Mr Amirbeaggi wrote to Mr Coates:

“I have engaged via a finance broker with ANZ to procure finance to meet:

(a)   Repayment of Unit Holder Loan Accounts;

(b)   Early works on the property for bulk excavation and basement works; and

(c)   Construction and completion of the structure/entire project.

Hall Chadwick have updated their reporting since 31 March 2015, ie through to today, which includes the present Unit Holder loan accounts. A copy of their updated schedule is attached. Pursuant to the Circular of 13 July 2015.

Through refinance I will now repay each of the Unit Holder loan accounts down to parity. As per the HC reporting, the Unit Holder loan accounts are as follows:

1.   Conway/Yates $1,431,776.00; and

2.   Gilmore Finance $271,747.00.

…

From the sum procured I will repay to the Unit Holders the following sums to bring about parity in the Unit Holder Loans:

(a)   Conway/Yates $1,374,147.50; and

(b)   Gilmore Finance $214,118.50.

After those payments the Unit Holders will have equal loan accounts of Conway/Yates $57,628.50 and Gilmore $57,628.50. As and when the ANZ facility is operational to take out the short term facility, and provide further capital to meet the ongoing expenses, I will with that facility discharge the Unit Holder Loans to zero. I expect that facility to be in place over the next 4-6 weeks. I will separately meet any upcoming expenses of the trust until that further facility is in place and repay those expenses from that facility once it is funded.”

498. Neither Mr Coates nor Mr Gilmore made any objection to the course proposed by Mr Amirbeaggi and, in due course, as foreshadowed in Mr Amirbeaggi’s email, Gilmore Finance received an amount of $214,118.50.

499. Later in 2015, A1 refinanced its loan from Ares Capital with borrowing of $1,725,000 from St George Bank Ltd.

500. On 20 December 2015 Mr Amirbeaggi sent a circular to unitholders, including Mr Coates, notifying him of his intention to take this step.

501. Mr Coates made no objection to this course.

502. In closing submissions, Mr Marshall made no attempt to engage with the detailed submissions Mr Pritchard made about this matter.

503. My conclusion is that, even if unitholders’ consent was not formally obtained under cl 13.1 of the Unitholders’ Agreement in relation to these matters, Gilmore Finance, through Mr Coates, was well aware of them, raised no objection to them, and obtained a benefit from them.

The Unauthorised Transaction Claim – Hospital Trust

Accounts and records and engagement of Yates Beaggi

504. In relation to the accounts and records of the Hospital Trust and the engagement of Yates Beaggi to do work in relation to the Hospital Trust, Mr Marshall did little more than refer to the submissions he made in relation to these topics so far as concerns the Kingswood Trust.

505. Mr Marshall made no mention of Mr Malacco’s report about that Trust.

Unauthorised borrowings

506. Mr Marshall referred to the fact that on 23 December 2016, A3 borrowed $3 million from Perpetual Trustee Company Ltd as trustee for the Arch Finance Warehouse Trust and granted Perpetual Trustee Company Ltd a mortgage over the Hospital Land to secure that borrowing. Having referred to the borrowing, Mr Marshall did not develop any submission about it save that each required unitholders’ approval under the provision in the Hospital Trust Unitholders’ Agreement equivalent to that to which I have referred in relation to the Kingswood Trust.

507. In opening submissions, Mr Marshall had sought to raise an issue as to how the proceeds of this borrowing were used by A3. Mr Pritchard handed up, as an aide memoire, a document pointing out that these matters had not been pleaded. Evidently in response to that document, Mr Marshall made no submission in closing about the use to which the borrowed funds were put; and did not submit that they had been used for otherwise than the proper purposes of the Hospital Trust.

508. On the other hand, Mr Pritchard pointed to emails from Mr Amirbeaggi to Mr Coates which suggested that the funds were used to meet future expenses in relation to the Hospital Project.

509. For example, on 30 July 2013, Mr Amirbeaggi wrote to Mr Coates with a copy to Mr Yates:

“I expect to incur the following sums in the promotion and marketing of the property over the following 6 month period. Between my approaches, and those of the agents, I expect to incur sums of approximately $20,000.00 to $30,000.00 per month time/marketing and out of pockets.

…

Whilst [Gilmore Finance] has made a unilateral decision to abate meeting capital requirements of the trust for its 1/3 interest, Conway and Yates have continued to meet the entirety of the expenses.

Given the experience in A1, Conway and Yates are approaching a point in time where they too will cease further provision of funding, and have foreshadowed with me to raise capital against the property in order to meet its outlays both past and future. I require some resolution from the Unitholder in order to progress much further on funding the expenses on the Trust. In the absence of some resolution of funding as between the Unit Holders I will approach the funding market to raise capital against the assets of the Trust. I look forward to your early advice in that regard.”

510. On 4 March 2014, Mr Amirbeaggi sent Mr Coates and Mr Camilleri a “Short Form Annual Program & Update” in respect of A3, in which he set out expected outlays concerning legal costs, general consultants, Department of Planning fees, project management fees, and then stated under the heading “Finance”:

“In view of the expected outlay noted above, I will have to approach a financial institution for preliminary funding ranging between $1.8mil to $2.5mil in order to carry into execution the work required.

I have made approach to NAB as a high street lender, and to Winston Capital, as a non bank financial provider. I expect to have terms from each of them over the following 2 to 4 weeks. I have asked each provider for terms based both upon provision of personal guarantees, and without.

I expect to be able to raise preliminary funding against Title to Stage 1 parcel.”

511. Ultimately, the borrowing from Perpetual Trustee Company Ltd were repaid from the proceeds of sale of the Hospital Land.

512. Mr Marshall did not seek to engage with these submissions.

513. In those circumstances, I see no basis upon which I can conclude that the borrowed funds were used otherwise than for proper trust purposes.

Removal of A1 And A3 as trustees

514. Finally, Gilmore Finance seeks orders removing A1 and A3 as trustees of the Kingswood Trust and the Hospital Trust.

515. Both parties developed detailed submissions as to the circumstances in which the Court may remove a trustee under s 70 of the Trustee Act 1925 (NSW) and appoint a trustee “whenever it is expedient” to do so. The Court has, in addition, an inherent jurisdiction to remove a trustee where the Court considers that the continuance of the trustee in the trust will prevent its proper execution. [58]

     58. See, for example, Juul v Northey [2010] NSWCA 211 at [239] (McColl JA; Basten and Campbell JJA agreeing).

516. Gilmore Finance’s submissions concerning the removal of A1 focused on the complaints it made about the delay in the preparation of the trust’s accounts for F13 to F17, concluding with the unhelpful submission that:

“[T]he financial affairs of the Trust are shrouded in an evidentiary twilight and the information which has been provided has been produced in the form of unreliable documents drip fed to the plaintiff over the course of the proceedings and only after putting the plaintiff to the trouble of obtaining orders requiring that production.”

517. Gilmore Finance did not develop any separate submissions in relation to the position of A3 as trustee of the Hospital Trust.

518. In my opinion, Gilmore Finance has not demonstrated any conduct on the part of either A1 or A3 such as would warrant their removal as trustee.

519. In any event, the Kingswood Trust and the Hospital Trust were established for the specific purpose of pursuing identified property developments, neither of which is now proceeding. Both the Kingswood Land and the Hospital Land have now been sold.

520. On behalf of A1 and A3, it was submitted that none of the trusts was in possession of any assets, “save for adverse costs orders against Gilmore Finance”.

521. On the other hand, it was submitted on behalf of Gilmore Finance that “it is not [at] all clear that there are no assets in the trust”.

522. However, Gilmore Finance engaged Mr Hambleton to conduct a close analysis of the accounts of the trusts and, were there evidence that either of the trusts had assets, that is a matter which it could have established.

Conclusion

523. None of the claims advanced by Gilmore Finance has been established.

524. The proceedings should be dismissed with costs.

*********

Endnotes

Decision last updated: 10 May 2022