GJB Building Pty Ltd v AI&PB Property Pty Ltd

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

S ECI 2019 01225

GJB Building Pty Ltd as Trustee for the GJB Building Trust and others (according to the attached Schedule)	Plaintiffs
v
AI&PB Property Pty Ltd and others (according to the attached Schedule)	Defendants

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JUDGE:	Nichols J
WHERE HELD:	Melbourne
DATE OF HEARING:	20 to 22 September 2021; 23 September 2021; 27 September 2021; 29 September to 15 December 2021; 28 February to 4 March 2022
DATE OF JUDGMENT:	22 December 2023 (reasons re-issued 11 January 2024)
CASE MAY BE CITED AS:	GJB Building Pty Ltd v AI&PB Property Pty Ltd
MEDIUM NEUTRAL CITATION:	[2023] VSC 782

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MISLEADING OR DECEPTIVE CONDUCT — Earnings Representations — Representations as to future matters — Written representations — Gross profit and EBITDA — Business sale — Extensive due diligence — Whether the representations were made — Whether each or any of the defendants made the representations — Whether the representations were misleading — Whether each or any of the defendants had accessorial liability — Whether shares were acquired in reliance on representations — Whether plaintiff ‘merely propelled’ by the representations.

MISLEADING OR DECEPTIVE CONDUCT — Sales Representations — Warranties — Business Sale Agreement — Representation that vendor was not insolvent — Representation that vendor would pay all of the ‘excluded liabilities’ — Representation that vendor had paid its taxes — Representation that vendor had reasonable basis to make contractual promises — Whether the representations were made by propounding the transactions — Whether buyer relied on representations — Whether representations were misleading — Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 cited — RCR Energy Pty Ltd v WTE Co‑Generation Pty Ltd [2017] VSCA 50 cited — Viterra Malt Pty Ltd v Cargill Australia Ltd [2023] VSCA 157 cited.

CONTRACTS — Construction — Business Sale Agreement — Sale of building and construction business — Impugned payments — Payments made from Purchaser to Vendor post‑settlement — Alleged debt owed to Vendor in form of “retention moneys” — Whether Vendor entitled to retention moneys under contract — Whether retentions properly characterised as trade debt — Whether director had a reasonably held belief that Vendor was entitled to retentions — Contract to be construed as a whole — Contract specified retention moneys to be an asset of the business — No provision relating to the payment of retentions to Vendor — Asserted entitlement inconsistent with contractual terms — Purchaser not obliged to pay retentions — No sufficient basis for good faith claim.

CONTRACTS — Alleged “Loan Account” — Impugned payments — Loan account ledger — No written loan agreement — Whether an obligation to repay can be inferred — Whether there was a proper basis to make payments — Evidence does not permit inference to be drawn — No proof of a consensual financing arrangement — Onus not discharged — Realestate.com.au Pty Ltd v Hardingham (2022) 406 ALR 678 cited.

FIDUCIARY OBLIGATIONS — Directors Duties — Eighty unauthorised payments made from business account — Whether company directors breached their duties — Whether directors breached duty of due care and diligence — Whether directors breached duty of good faith — Whether directors breached duty to act for a proper purpose — Whether directors misused their position — Finding of numerous breaches — Corporations Act 2001 (Cth) ss 181(1)(a), 181(b), 182, 1317S and 1318 — ASIC v Rich (2009) 236 FLR 1 cited.

CAUSATION — LOSS — Breach of Directors Duties — Contravention of civil penalty provision — Special Referee appointed — Defendants alleged no loss arose — Alleged no net diminution of assets — Cash to debt — Whether a “corresponding benefit” created — Causation of loss established — Quantum of loss equal to amount of each payment made in breach of duty — Corporations Act 2001 (Cth) s 1317H.

COUNTERCLAIM — CONTRACTS — Set off — Breach of loan agreement — Agreement partly written, partly inferred — Implied term that loan repayable on demand — Whether borrower is obliged to repay loan — Whether loan was subordinate to repayment of other moneys.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr RM Garratt QC with Mr A Germano	Corrs Chambers Westgarth
For Peter Breckenridge	Mr AT Strahan QC with Mr P Tiernan	Dentons Australia Pty Ltd
For Silvio Ascenzo	Mr J Tsalanidis with Mr G Lubofsky	Sinisgalli Foster Legal Pty Ltd
For Brett Hartwig and Berkeley Capital Partners	Mr CG Juebner with Mr KR Hickie	Russell Kennedy Lawyers

Contents

I.......... Introduction
A Chronology
B Credit of witnesses

II........ GJB’s acquisition of shares in CornoNero
A           Trimont Earnings Representations
B           Trimont Sales Representations
C           Loss

III....... Trimont’s financial position
IV....... The Impugned Payments
V........ CornoNero’s entry into the Mernda Development and Mernda Loan Agreement
VI....... “Further alleged misconduct”
VII..... Hartwig’s set off and counterclaim

HER HONOUR:

Introduction

In around mid‑2015, Geoff Brady, director of the first plaintiff GJB, decided that GJB would invest in the construction business run by Trimont Pty Ltd by acquiring a majority shareholding in Trimont Australia Pty Ltd, the new entity that was to acquire Trimont’s business. Among other things, this proceeding concerns that decision by GJB, who says that but for misrepresentations about Trimont’s projected earnings and profit and its solvency, it would not have acquired its shareholding.
The proceeding also concerns the internal management of Trimont Australia (which became CornoNero, the second plaintiff), during 2015 and 2016.
CornoNero claims that its directors Peter Breckenridge, Silvio Ascenzo and Brett Hartwig, breached the duties they owed the company by causing or authorising CornoNero to make from its bank account 80 separate payments to third parties, for purposes foreign to its business. The payments occurred over a three‑month period in August to November 2015.
Separately, CornoNero says that the directors breached their duties by causing it to enter a series of transactions connected with the development of land in Mernda in Melbourne’s North. In August 2016, CornoNero entered an agreement to construct and develop a shopping centre on the Mernda Land, and borrowed $1 million in connection with the shopping centre development. CornoNero says that those transactions, caused by directors Breckenridge and Hartwig, were improvident, not authorised by its board, and not undertaken for a proper purpose. CornoNero also says that the directors failed to disclose to its board a development agreement and related guarantee purportedly entered into on its behalf, with the owner of the Mernda Land, Coonwarra Pty Ltd.[1] The directors are said to have engaged in misleading conduct in relation to aspects of those transactions. The defendants deny liability.
[1]This is a broad summary of the claims, which are set our more particularly elsewhere. The claims against each director differ. Not every breach is alleged against each director.
This case was heard together with Coonwarra Pty Ltd v CornoNero Pty Ltd & Ors (the Coonwarra Proceeding), brought by Coonwarra, the owner of the Mernda Land. In 2014, Coonwarra entered into an agreement with Trimont to develop the Mernda Land. In that development project Trimont was represented by its sole director, Ascenzo, and its CEO, Breckenridge. Hartwig (through Berkeley Capital Partners, which is also the fourth defendant in this proceeding) arranged loans to Coonwarra for the purpose of development. Coonwarra alleged that CornoNero took over the agreement with Trimont (by novation) and stepped into Trimont’s role in developing the Mernda Land. Coonwarra claims damages against Ascenzo, Breckenridge, Hartwig’s related company and CornoNero, including for breach of agreement, breaches of fiduciary duty and misleading conduct.[2]
[2]Not all claims are brought against all parties.
In the conduct of the proceeding, the parties focused upon the events surrounding each discrete set of transactions that the plaintiffs contend give rise to the legal claims they pursue. It is convenient then to set out a very brief overall chronology of events in general terms only, and otherwise to focus on the events and factual contests in connection with the particular claims advanced. The principal topics addressed in these Reasons are organised in this way:
(a)Part I – Introduction and context;
(b)Part II – The acquisition by GJB of shares in CornoNero:
(i)GJB’s claim for damages by reason of reliance on the Trimont Earnings Representations;
(ii)GJB’s claim for damages by reason of reliance on the Trimont Sales Representations;
(c)Part III – Trimont’s financial position.
(d)Part IV – The claim by CornoNero against its directors in respect of 80 payments from its bank account (the Impugned Payments claims)
(e)Part V – The claim by CornoNero against its directors Breckenridge, Ascenzo and Hartwig concerning entry into the Mernda Development Agreement and Mernda Loan Agreement;
(f)Part VI – Remaining claims against Breckenridge, Ascenzo and Hartwig; and
(g)Part VII – Hartwig’s set off and counterclaim.
Annexure A depicts in diagrammatic form the principal connections between the people and entities in this proceeding and the Coonwarra Proceeding.

A Chronology

The company which became known as Trimont Pty Ltd (as trustee of the Ascenzo Family Trust)[3] commenced in 1982, initially conducting a concreting and paving business. Trimont is, in many respects, inextricably tied to the events the subject of this proceeding. It is not, however, a defendant. It was placed into liquidation in 2017.
[3]Trimont Pty Ltd is described throughout these reasons as ‘Trimont’. The separate company, Trimont Australia Pty Ltd is described as ‘Trimont Australia’, or, for the most part, ‘CornoNero’, to which Trimont Australia changed its name. For simplicity, the name ‘CornoNero’ is adopted even in respect of the period before the change of name, unless the context otherwise requires.
Silvio Ascenzo[4] was at all relevant times Trimont’s sole director and shareholder. Ascenzo is, by trade, a builder and concreter who has held a building licence since 1995 and who built the Trimont construction business throughout the 2000s. Other Ascenzo‑related entities who are not parties feature in events relevant to this proceeding.
[4]I refer to parties and relevant persons throughout these Reasons by their surnames or by first names as the case requires and mean no disrespect by doing so.
Ascenzo and Breckenridge met in about 2011 when introduced by a mutual acquaintance. Breckenridge had what he described as extensive experience in the property development industry and was a development director and Vice President of Property at McDonald’s Australia. By 2011, Breckenridge had left McDonald’s to become an employee of Ascenzo’s company, AI Project Developments Pty Ltd. He subsequently became general manager of Trimont and later, CEO of CornoNero.
Also in about 2011, Breckenridge introduced Ascenzo to Brett Hartwig (who Breckenridge had known since about 2007). At about that time BCP began assisting Ascenzo to procure finance for his companies, including Ascenzo Industries Pty Ltd (AI) and Trimont. Hartwig has worked in the banking and finance industry for over 40 years. Companies associated with Hartwig, Berkley Capital Partners Pty Ltd (BCP) and Berkley Capital Developments Pty Ltd (BCD) are the fourth and fifth defendants in this proceeding. BCP has, since 1997, operated a mortgage and finance broking business of which Hartwig is the Chief Executive Officer. BCD, of which Hartwig is the sole director, is an investment company.
In 2012, Hartwig and Ascenzo became two of the four directors of Kanyon Pty Ltd, a company in which they each held interests.[5] Kanyon was established to conduct property developments for which Trimont would be retained as the builder. Kanyon was the developer of two projects, at Hunter Street, Newcastle and Dorcas Street, South Melbourne, that were included in the sale of Trimont’s business to CornoNero, on which CornoNero took over construction. Breckenridge became a director of Kanyon in March 2016.
[5]Ascenzo held his interest in Kanyon through Ascenzo Investments Pty Ltd.
Geoff Brady has vast and varied business experience. He incorporated the first plaintiff, GJB, for the purpose of acquiring shares in CornoNero and was, at all relevant times, its sole director and shareholder. Geoff’s daughter Rachael Brady, became involved in the CornoNero business and in February 2020 was appointed a director of GJB.
According to Hartwig, in about 2009, he was introduced to Geoff Brady who then engaged BCP to assist refinancing approximately $36.4 million worth of debt for one of his companies. In 2012 Brady told Hartwig that he was interested in constructing a BMW dealership in Glen Waverley. Hartwig introduced Brady to Ascenzo, with a view to seeing whether Ascenzo could assist in the construction of that development. A commercial relationship between Brady and Trimont commenced, when Brady engaged Trimont to undertake the redevelopment of the property at Springvale Road, Glen Waverley (known as BMW Mulgrave). The redevelopment was completed in 2013, but the relationship continued. When Trimont was undertaking a significant residential property development in Preston in mid‑2013, BCP arranged a $5 million private loan facility for AI from GBSFT Pty Ltd as trustee for the Geoff Brady Superannuation Fund Trust, for the Preston project. In February 2014, GBSFT increased the Preston loan facility with AI by $1 million, to $6 million. It was increased again in September and November 2014.
In early 2014, Breckenridge, by then CEO of Trimont, invited Hartwig to a meeting at Trimont’s offices to discuss the ways in which Trimont could finance a potential shopping centre development on land at Plenty Road, Mernda.
The Mernda Land was owned by Coonwarra. Ascenzo’s entity Ascenzo Industries had entered into an agreement for lease with Coonwarra in 2011, with a view to developing the land into retail premises. Coonwarra and Trimont later (in late 2014) entered into an ‘asset development agreement’ with respect to the Mernda Land. Breckenridge eventually negotiated for the sale to and development of the land by a third party, Mernda Junction Shopping Centre Pty Ltd (MJSC), under a contract with CornoNero. Dealings in respect of the Mernda Land are the subject of several of CornoNero’s claims against Breckenridge and Hartwig.
From May 2014, GBSFT commenced advancing loans to entities connected with Ascenzo, Hartwig and Breckenridge, who were developing projects including at Artarmon in New South Wales and at Ringwood. Those projects, among others, were the subject of the business sale agreement between Trimont and CornoNero.
In October 2014, Ascenzo and Breckenridge met to discuss the course to be taken with Trimont’s business, to improve the capacity of Trimont to fund its projects. In November or December 2014, Ascenzo, Breckenridge and Hartwig together discussed the funding requirements of Trimont and AI, including the availability of capital and funding for their operations moving forward.[6] Hartwig proposed at this time that Trimont needed to transition to a more corporatized structure with external shareholders, noting the significant pipeline of work and the cashflow pressures it would create for Trimont.
[6]The interrelated financial positions of these entities not explained in the evidence.
In January 2015, Ascenzo, Breckenridge and Hartwig had further discussions about financing, growing and restructuring the Trimont business. Hartwig suggested that he might reach out to high net worth clients of BCP, including Geoff Brady, which he did. A meeting was arranged with Geoff Brady for 6 February 2015.[7]
[7]The 6 February meeting is discussed below.
In February 2015, Brady received presentations and related information concerning the proposed investment in Trimont (discussed in detail below). He engaged Maddocks Lawyers and Stannards Accountants to advise him in respect of the opportunity and any potential transactions. Also in February 2015, Hartwig himself became interested in investing in Trimont. Hartwig, Ascenzo and Breckenridge had discussions about the potential value of the Trimont business.
On 18 February 2016, Maddocks told Hartwig that Geoff Brady would proceed with the investment opportunity subject to due diligence. During March to May 2015, due diligence on the proposed investment by Brady, was undertaken by his lawyers and accountants, Maddocks and Stannards. Stannards produced a report dated 1 May 2015.
Trimont Australia Pty Ltd, which later becomes CornoNero, was incorporated on 1 June 2015. Upon incorporation, Trimont was its sole shareholder and Ascenzo was appointed its sole director. That structure remained until the completion of the Business Sale Agreement and Share Sale Agreements that effected the acquisition by Trimont Australia, of Trimont’s business and the investment in Trimont Australia by its new shareholders.
On 29 July 2015, GJB was incorporated. At all times since then, Geoff Brady has been its sole shareholder, and was its sole director until 20 February 2020, when Rachael Brady was appointed a director.
The time at which CornoNero commenced trading was in dispute. As was made clear in the Business Sale Agreement, the effective date for the sale was 1 August 2015, subject to completion. In July 2015, certain Trimont staff were ‘transitioned’ to CornoNero including Breckenridge, Bill Thurgood who became CornoNero’s financial controller (reporting to Breckenridge), Vincent Pretorious and Jevan Clay, who became its Construction Director and General Manager respectively. CornoNero commenced issuing invoices in August 2015.
On 18 August 2015, CornoNero opened its bank account with Westpac (its trading account).
On 8 September 2015, Minc Sallon (Laverton) Pty Ltd, a company associated with Hartwig, advanced $1 million to CornoNero which was paid into its Westpac Bank account. On 9 September 2015, the first of the alleged Impugned Payments out of CornoNero’s bank account, was made. The balance of payments occurred between 9 September and 19 November 2015.
The Business Sale Agreement was completed on 11 September 2015.[8]
[8]The completion date was the subject of some dispute at trial, but the parties ultimately agreed that the agreement was completed on 11 September 2015.
On 15 September 2015, the Share Sale Agreement was completed, with the effect that GJB, BCD and AI&PB Property Pty Ltd become shareholders. It will be recalled that GJB was owned and controlled by Geoff Brady and that BCD was owned and controlled by Hartwig. AI&PB was owned and controlled jointly by Breckenridge and Ascenzo. On the same day, the CornoNero shareholders entered into a Shareholders Agreement (the SHA). The new CornoNero board was appointed on 15 September 2015 and comprised independent chairman Robert McEniry, Geoff Brady, Breckenridge, Hartwig and Ascenzo.
Board meetings of CornoNero were held on 2 December 2015, 3 February 2016, 11 March 2016, 30 May 2016, 25 July 2016, 8 August 2016 and 29 September 2016.
On 9 August 2016, CornoNero entered the Mernda Development Agreement with MJSC, for the development of a retail complex on the Mernda Land. On the same day, a contract of sale of the Mernda Land was entered into between MJSC and Bridgehurst Pty Ltd as purchasers, and Coonwarra as vendor. Also on 9 August 2016, CornoNero entered into a loan agreement with MJSC pursuant to which MJSC advanced the sum of $1 million. The agreement was executed by Breckenridge and Hartwig.

CornoNero issued its first payment claim to MJSC in respect of the development of that land under that contract in 2016 (according to Breckenridge). On 5 October 2016, MJSC issued a tax invoice to CornoNero in the sum of $146,814, which was to be offset against the payment claim. On the same day, MJSC paid $800,000 to CornoNero as part of the first payment claim. On 6 October 2016, it paid $533,532.48 to CornoNero as further part payment of that claim.
On 14 September 2016, Breckenridge made a call for CornoNero shareholder contributions of $2 million to be prepared in proportion to shareholdings (GJB as to $1,020,000, AI&PB as to $680,000 and BCD as to $300,000).
In October 2016, Thurgood told Rachael Brady that Breckenridge and others were involved in the financial mismanagement of CornoNero.
On 24 October 2016, Rachael Brady commenced working at CornoNero full‑time and commenced investigations into various transactions. Rachael instructed Stannards to prepare a review of the accounting records and financial position of CornoNero.
During October 2016, meetings were held between the Bradys, McEniry, Maddocks lawyers, Breckenridge and Hartwig.
In late October 2016 Breckenridge resigned as a director of CornoNero (but continued working at CornoNero until December 2016) and AI&PB transferred 3,400 shares in CornoNero to GJB Building for $1.
During November 2016, Geoff Brady and Philip Jones engaged with Breckenridge about CornoNero’s involvement in the Mernda project on which it was, by then, the builder.
On 23 November 2016, Rachael Brady was appointed a director of CornoNero and on 30 November 2016, Hartwig resigned as a director.
In December 2016, CornoNero repaid the loan advanced by MJSC in full with interest at the instigation of Rachael Brady.
On 12 January 2017, Sean Roberts of Stannards gave advice to Geoff Brady and Rachael Brady concerning the projected profit/loss on the Mernda development project. His advice was, in substance, that the contract was heavily skewed towards the owner with substantial risks and costs falling on CornoNero and that it was Stannards’ recommendation that CornoNero ‘abort this development if possible’. On the same day (seven minutes later), Rachael Brady communicated internally with CornoNero personnel stating that ‘Geoff has decided not to go ahead with Mernda’.
On 1 February 2017, the Amber Property Group Ltd was registered. Its initial sole director was Rachael Brady’s son. Geoff Brady and Rachael Brady commenced as directors on 7 July 2017 and remained as directors thereafter.
In February 2017, correspondence ensued between the solicitors for CornoNero and MJSC regarding the Mernda development contract and MJSC commenced proceedings in this Court against CornoNero.
On 16 March 2017, CornoNero issued a progress payment claim to MJSC for almost $4 million and sought adjudication of the same. On 5 April 2017, a Deed of Settlement and Release between MJSC and CornoNero in relation to the termination of the development agreement was executed.
On 19 April 2017, Kanyon and CornoNero executed a Deed of Settlement in respect of the construction project at Hunter Street, Newcastle. Also on 19 April 2017, various parties including GBSFT and companies associated with Ascenzo, Breckenridge, Hartwig and Brady and Kanyon executed a Deed of Settlement which provided, among other things, for properties at Maroondah Highway, Ringwood; Dorcas Street, South Melbourne; Lygon Street, Brunswick; and Pacific Highway, Artarmon to be acquired by Brady‑related entities.
On 31 May 2017, Trimont was placed into liquidation by order of this Court.[9]
[9]Michael Carrafa was appointed as joint liquidator.
During 2017 and 2018, companies associated with Geoff and Rachael Brady (or one or other of them) replaced CornoNero as builder for developments at Ringwood, South Melbourne and Preston.

B Credit of witnesses

It is convenient at this point to say something about the credit of the witnesses.
The principal actors (Breckenridge, Ascenzo, Geoff Brady, Rachael Brady and Hartwig) were cross‑examined for lengthy periods.
The parties urged somewhat binary assessments – that I generally prefer certain witnesses over others. Binary characterisations are ill‑suited to the assessment of witness evidence addressing a range of inter‑related subjects that traversed not only the occurrence of many events and discussions, but the witnesses’ subjective understandings of the parties’ dealings and the implications of those dealings. Furthermore, despite the lengthy cross‑examination of witnesses on many matters, the factual substratum comprising the events was not truly in contest. Certain conversations were in dispute. Much of the contested evidence comprised the understanding that witnesses had of their dealings at the time.
In assessing the credit of witnesses, I have taken into account the fact the events in question occurred several years before the witnesses gave evidence, and that the parties’ dealings between one another were in many but not all respects, informal. There was little or no documentary record of some significant conversations. Significant agreements were documented. In the circumstances, I have paid particular attention to the coherence of the witnesses’ evidence, and its relationship with objectively ascertainable facts and the documentary record, on the particular subject matter in issue.
Silvio Ascenzo had a very poor recollection of events. When cross‑examined, he also had a poor grasp of some subject matter that had been addressed in his evidence in chief,[10] which was itself extremely limited in scope. He gave evidence in very broad and unspecific terms. He was not argumentative. He mostly answered the questions asked, although in many instances the answers were unrevealing because they were devoid of meaningful content. Some parts of his evidence were internally coherent but several parts were not. Ascenzo frequently sought to shift responsibility away from himself onto others, and asserted a lack of knowledge on an extensive range of subjects. I accept that Ascenzo’s primary day‑to‑day role in his various companies has been ‘on the tools’ as it were, working on building sites, and that his preferred method of communication is conversation rather than writing. Despite those facts, I doubt that his knowledge and understanding of events and circumstances affecting the companies of which he was a director was as limited as he claimed.
[10]The parties gave evidence in chief by witness statement, with evidence of significant conversation and contested events given orally.
Peter Breckenridge’s evidence was problematic in many but not all respects. An aspect of his communication style is to over‑explain and to talk around a subject as it were. It appears that he is not naturally given to precision in his language. I have taken that into account. However, allowing for that tendency to circumlocution, I assessed Breckenridge as frequently argumentative and combative. Often (although not universally) he avoided answering difficult questions and only made concessions after lengthy cross‑examination. When concessions were called for, at times he sought to argue a case, at times adding elaborate and often incredible justifications and explanations for the circumstances about which he was asked. In many (although not all) parts of his evidence, what he said was lacking internal coherence and consistency. As will appear below, I have assessed the evidence on each issue taking into account the totality of the evidence on that issue. The quality of his evidence varied with the subject matter with which it was concerned. On some issues (but not all) it has been necessary to accept Breckenridge’s evidence only where it is corroborated.
Brett Hartwig gave precise evidence. He appeared to have a good recollection of events. He gave direct answers put to him, without arguing. He made concessions where appropriate.
Geoff Brady had a poor recollection of events and candidly admitted to his poor memory. He was frequently confused about events. In many respects his memory appears to have been overlaid with reflections on the issues now being litigated. At times, he was combative and sought to argue a case. At other times he endeavoured to answer the questions put directly, without argument.
Rachael Brady had a poor recollection of events. She explained that she had a medical condition that had affected her memory. She asserted though, that she had a very good recollection of certain events, and also that she could not recall other events. Rachael was often (but not universally) combative in her answers and on certain subjects sought to argue a case.

GJB’s acquisition of shares in CornoNero

A Trimont Earnings Representations

A1 Introduction

GJB’s claim is that it acquired its shares in CornoNero in reliance upon representations that for the financial year ended 30 June 2015:
(a)Trimont’s Gross Profit would be $5,179,008; and
(b)Trimont’s EBITDA would be $1,488,474, revised to $2,461,542 after accounting for personal expenditure of Ascenzo incurred by Trimont.
(together, the Trimont Earnings Representations).
The plaintiff did not allege that the Trimont Earnings Representations included gross profit or EBITDA figures for the financial years ended 30 June 2016 (FY2016) or 30 June 2017 (FY2017) or any gross revenue figures.
The representations are said to have been made in writing in three documents – a letter addressed to Geoff Brady on 10 February 2015 and referred to as the 10 February Letter; a document referred to as the Trimont Business Update Proposal emailed to Geoff Brady on 12 and 16 February 2015, and separately presented at a meeting on 6 February 2015; and in a document entitled, Trimont Australia Forecast, sent by email to Geoff Brady on 16 February 2015.
The representations are said to have been misleading or deceptive (made as to future matters without a proper basis) and it is claimed that Breckenridge, Hartwig, BCP and Ascenzo engaged in conduct contrary to s 18 of the Australian Consumer Law (ACL) by making the representations or being involved the contraventions of others.[11]
[11]GJB alleges that Breckenridge, Hartwig and BCP were principal parties in the contravention by making the Trimont Earnings Representations and that Breckenridge, Hartwig and Ascenzo were accessories and involved in the contravention of the principal contraveners.
The issues for decision are:
(a)whether the representations were made by the relevant communications;
(b)whether each or any of the defendants made the representations or were involved in the contraventions of others who made them, within the meaning of s 236 of the Australian Consumer Law (ACL);
(c)whether the representations were misleading or deceptive or likely to mislead or deceive, contrary to s 18 of the ACL;
(d)whether GJB acquired its shares in CornoNero in reliance on the representations or was merely propelled to conduct its own inquiries; and
(e)whether GJB suffered loss and damage by reason of conduct in reliance on the representations.

A2 Chronology

Brett Hartwig first met Peter Breckenridge in 2007, through their dealings for a McDonald’s franchise project. Breckenridge was then a senior property executive for McDonald’s Australia, but kept in contact with Hartwig even after he left McDonald’s in 2010. In or about 2011, Breckenridge joined Trimont Pty Ltd in the position of general manager.
Breckenridge introduced Hartwig to Silvio Ascenzo, as the director of Trimont and Ascenzo Industries Pty Ltd. Hartwig said that he began to broker finance for Trimont and Ascenzo Industries. He would work with Breckenridge to secure finance for Trimont and Ascenzo Industries in mezzanine lending arrangements from third parties for which BCP would act as broker. Hartwig was the principal contact at BCP, and consequently had purview of Trimont and Ascenzo Industries’ financial information by assisting in financial applications and receiving financial reports from their accountants, Pitcher Partners.
Geoff Brady said that he first met Hartwig in 2009. Brady was dissatisfied with his lender and made enquiries about BCP refinancing his facilities. Hartwig said that it was from this point that he commenced a business relationship with Brady, but placed their first meeting in 2012 when Brady was seeking finance to complete a development project in Burwood. Brady went on to engaged Hartwig and BCP to broker finance for the Burwood project. Consequently, Hartwig and BCP brokered another development project for Brady, the construction of a BMW dealership in Glen Waverley. Hartwig had also proposed that The Brady Group make a foray into mezzanine lending and finance third party projects. Brady and Hartwig continued to work together on 15 mezzanine lending arrangements between 2012 and 2015.
In or about 2012, Brady said that he was in need of builders to develop the BMW dealership in Glen Waverley. Hartwig introduced Brady to Ascenzo and his company, Trimont, as the prospective builder, and to Breckenridge as project manager. Hartwig said that he made the introduction as he knew Trimont had just undertaken a similar project, developing a factory complex. After an onsite meeting and further negotiations, it was agreed that Brady engage Trimont, with Breckenridge as project manager, for the Glen Waverley development. Breckenridge worked on this project for about a year, working on the design process, planning and building approvals.
In or about mid-2013, Ascenzo Industries needed to obtain finance to develop some land in Preston. Trimont was slated as the builder for the development. Hartwig proposed that Brady fund the development and he agreed. Brady provided a loan in the amount of $5 million (through GBFST) to Ascenzo Industries, with BCP acting as agent to manage the facility. Silvio Ascenzo and Trimont guaranteed the loan agreement and it was secured by a general security charge over Ascenzo Industries and a mortgage over the Preston site. During 2014, the loan facility was increased to a total of $9 million over three occasions, 10 February, 18 September and 26 November. By February 2015, Trimont needed a further $3 million to continue development projects. Ascenzo said that Hartwig was the person who dealt with Brady and steered this arrangement.
Breckenridge’s evidence was that he had a number of conversations with Ascenzo towards the end of 2014 where he raised concerns that Trimont was overcommitted and did not have the funding or resources to deliver its projects. Trimont had many projects that had reached construction phase. Breckenridge said he was concerned for his own reputation if Trimont failed to deliver on the projects. He said that Ascenzo would reassure him on each occasion that the company would be able to rely on its overdraft and bank guarantees. Ascenzo gave evidence about his knowledge of Trimont’s financial position at around this time. He said: ‘Trimont had a very big pipeline of work in development. We needed a bigger overdraft facility, bank guarantees, whatever’.
In November 2014, Ascenzo, Breckenridge and Hartwig met to discuss funding requirements for the Trimont business. Trimont had secured over $60 million of work but was concerned about the company’s ability to fund the projects in its pipeline.[12] They discussed the need to professionalise the business to combat cashflow pressures. Breckenridge suggested that Trimont secure a facility to deliver the projects. Hartwig proposed that Trimont should direct fundraising efforts towards external investors and transition the business to a corporatized structure. Hartwig thought that this would ‘unlock the potential growth of the business’ by moving the business away from its traditional family-run model.
[12]Ascenzo’s evidence was that Trimont had $80 million worth of projects in the pipeline.
Hartwig had requested that Clay prepare updated budgets and cash flows for Trimont to support a bank application. On 17 November 2014, Clay sent an email to Hartwig and Justin Vella of BCP. Breckenridge and Ascenzo were in copy. The email read: ‘Brett, As requested we have matched the WIP to the 14/15 budget. Let me know if you need more detail.’ Attached to the email was a spreadsheet entitled Trimont Budget 1415.xlsx including a profit and loss statement and a list of projects and their contract values.
Trimont had an existing overdraft facility with the ANZ Bank. On 2 December 2014, Vella sent an email to the ANZ Bank, with Ascenzo, Breckenridge and Hartwig in copy. Vella attached Trimont financial documents to the email, including actual and forecasted profit and loss, assets and liabilities and cashflow figures for the financial year of 2015.
Funding discussions continued into January 2015 when Hartwig proposed bringing Brady into the fold. Breckenridge had raised the issue again with Hartwig as Trimont still had an inflated pipeline. Hartwig explained that Brady was a ‘high‑net worth client’ and a known quantity as the financial backer of several Trimont developments, including the Preston build. Trimont had also built the Glen Waverley BMW dealership for The Brady Group. Ascenzo and Breckenridge agreed and asked Hartwig to reach out to Brady.
In or about late January 2015, Hartwig called Brady to propose the investment opportunity and invite him to a meeting at BCP’s offices on 6 February 2015. Hartwig told Brady that Trimont needed an injection of capital to fund its work. Brady asked Hartwig for his own assessment of the proposal and Hartwig had said that he felt it was ‘worthy of a meeting’. Brady characterised this conversation in the following terms: ‘He offered [Trimont] up as a good business to buy into and I went to see him on that basis.’ The meeting was scheduled for 6 February 2015.
In the lead up to the meeting, Breckenridge prepared a PowerPoint presentation at the request of Ascenzo and Hartwig. This presentation was known as and referred to throughout this proceeding as the Trimont Business Update Proposal. Breckenridge said that he often prepared such presentations for Ascenzo.
On 3 February 2015, BCP approached Westpac Bank on behalf of Trimont with a proposal to refinance its ANZ loan facility.
On 5 February 2015 at 1.31pm, Trimont’s construction manager, Dane Sanders sent a draft copy of the Trimont Business Update Proposal to Hartwig with Breckenridge in copy, along with spreadsheets that contained profit and loss actuals and projections entitled Trimont 2015 Proj.xls and Trimont.xlsx. Hartwig made handwritten annotations on several pages of the presentation. Hartwig sent the marked-up presentation to Breckenridge and Ascenzo, stating: ‘Looks Good. A couple of small suggestions attached. Also, I think in the Forecasts we should note the [Gross Profit] on a month to month basis’.

6 February meeting

A meeting took place on 6 February 2015 at BCP’s offices in Carlton.
It was accepted that Brady, Hartwig and Breckenridge were present at this meeting, but the parties were in dispute as to whether Rachael Brady or Ascenzo were also in attendance. Geoff Brady said that he took Rachael to the meeting. At the time, Rachael worked in a ‘finance controller/finance manager/financial officer’ type role at The Brady Group, and assisted Geoff in making investment decisions. Hartwig could not recall whether Rachael was present, but noted that he included Rachael in an email on 8 February 2015. He said that it made him question his recollection as to whether Rachael may in fact have attended the meeting. I accept that Rachael attended the meeting.
It was disputed whether Ascenzo was in attendance at the 6 February meeting. Breckenridge and Hartwig said Ascenzo was there. Brady said Ascenzo was not at the meeting. Hartwig, when pressed, was unable to recall anything that Ascenzo said during this meeting. Ascenzo’s own evidence on his attendance was vague. It was a central tenet of Ascenzo’s submissions that he was not at the 6 February meeting, in respect of both the Trimont Earnings Representations and the Trimont Sales Representations claims. However, Ascenzo stated on various occasions in his evidence that he was present. He gave a detailed account of what took place at that meeting, including evidence about his own interactions and contributions. I conclude that Ascenzo was present at the meeting

Brady said that the meeting went for a couple of hours whereas Hartwig and Breckenridge said it lasted for only 45 minutes to 1 hour. Breckenridge did not believe any meeting he attended with Brady ran for two hours and recalled that Brady would often park his car in the 1-hour zone outside of BCP’s offices ‘because the meetings rarely took longer than an hour’.
Brady said that the Trimont Business Update Proposal was presented as a PowerPoint presentation, projected on a screen. Hartwig and Breckenridge said this was not the case; Breckenridge had distributed a printed copy of the PowerPoint slides and handed copies to the attendees. Breckenridge intended to project the presentation onto the screen in BCP’s boardroom, but the cabling was not compatible with his computer and he had not brought an adapter. Breckenridge recalled ‘rushing about printing off multiple copies [of the presentation]’, whereas Hartwig said that he had organised for his executive assistant to print the document. It is likely on the balance of the evidence that the presentation was not projected. Nothing turns on it.
It was not in contention that Brady was taken through the Trimont Business Update Proposal presentation in some way or another. The presentation slides contained information relating to Trimont’s historical performance and structure, financial performance to date, financial projections, and reference to the challenges, business requirements and opportunities facing Trimont. Hartwig’s evidence was that he made handwritten amendments to the PowerPoint presentation and gave his comments to Breckenridge before the meeting. He said that Breckenridge presented the PowerPoint presentation incorporating his handwritten comments.
Brady said that the issue of Trimont’s growth being curbed by cashflow and the availability of a facility was discussed during the meeting. Brady accepted that he had been presented with an opportunity to invest which came with a need to bring funding to the business.
Hartwig said that it was Breckenridge who delivered the presentation. Breckenridge characterised the presentation as ‘very high level’ and said it went for about five minutes. Breckenridge said that he took Hartwig, Brady, and Ascenzo through the projects and the pipeline of projects. He spoke about how ‘the landscape looked like from an industry perspective’ and the requirement for the business to become more professional and transition from a family to corporate structure.
Brady said that Breckenridge was ‘explaining what was on each page’. Similarly, Hartwig said that Breckenridge did a ‘page-turn’ and spoke to each of the pages.
Hartwig gave his own account of what Breckenridge said during the presentation. He said that Breckenridge spoke about the history of the Trimont business, its historical financial performance and projections. He spoke to the company’s growth over the previous four financial years and noted that the figures were supported by documentation prepared by Pitcher Partners. He spoke to the projections for the 2015, 2016 and 2017 financial years and the key drivers of the projected revenue. He spoke about the jobs that Trimont had won and the jobs that were commencing in the specific period. Breckenridge spoke to the key challenges of the business included the provision of working capital as it took on more project contracts. Breckenridge said that the business wanted the additional working capital to address things such as retentions that were being withheld from builder claims by bringing in some bank guarantee support. Breckenridge said that the retention process was proving to be restrictive on Trimont’s cash flow.
Brady said that Breckenridge ‘did most of the talking’ and presented three-quarters of the presentation, ‘supported by Mr Hartwig’. Hartwig, at first, gave evidence that he ‘did not say very much’ and did not say anything about Trimont’s financial performance. Brady contradicted this evidence and said that Hartwig also addressed Trimont’s financial performance and assured Brady that it was a good business. It was put to Brady in cross-examination that Hartwig did not speak to the ‘projections of profit’. Brady disagreed and said that Hartwig had ‘added his words to [the projections of profit] because he had been working with them for some years’. In his own cross-examination, Hartwig conceded that he contributed to the presentation by speaking to investment opportunities within the Trimont business. Breckenridge said Hartwig ‘spoke a little bit about the financial component but spent most of his time talking about potential structures… and investment opportunities that there was [sic] within the Trimont business’.
Hartwig said that Brady did not ask many questions at the meeting but did say that he wanted Breckenridge to invest in Trimont. Breckenridge agreed, saying that Brady wanted him to ‘get some skin in the game’.
Breckenridge said that Ascenzo spoke to the need for a larger overdraft and bank guarantee facility to service Trimont’s contracted projects. As mentioned above, Brady denied that Ascenzo attended this meeting. Brady recalled that Hartwig said that Trimont needed increased funds to grow and was in need of some professionalism as ‘Silvio wasn’t good with money’.
Rachael Brady corroborated this evidence and said that Hartwig and Breckenridge spoke to Ascenzo’s experience being limited to small, family-run business and that the Trimont building pipeline was too big for him to run. Hartwig denied saying Ascenzo was not good with money. He denied that he told Brady that Ascenzo was ill‑equipped to manage a larger business.
Once the meeting concluded, Brady asked Hartwig to give him a call. In a telephone conversation, Brady asked that Hartwig prepare a summary of the investment proposal for his consideration. Brady told his legal and financial advisors at Maddocks and Stannards to expect to receive material from the Trimont camp and to ‘do whatever was necessary to do due diligence on it’.
Hartwig conferred with Ascenzo and Breckenridge as to how they intended to structure the proposed sale and incorporation. They discussed the structure of the shareholdings and the value of the Trimont business, based on the historical financial figures and projections contained in the Trimont Business Update Proposal, and that the value of the business would be based on a multiple of an average of the EBITDA, plus the price for plant and equipment.[13] Hartwig said that Ascenzo and Breckenridge had asked him to act as ‘conduit’ for Trimont and communicate this proposal to Brady.
[13]The average EBITDA over the financial years for 2013, 2014 and the projected revised EBITDA for financial year 2015, equalled $2,198,436. The agreed multiple was 3.5. Hartwig said that Ascenzo wanted an additional $300,000 to cover plant and equipment in the sale, bringing the total value to $8 million for the business.
Hartwig had become interested in investing in the Trimont business himself. He said that he saw value in the Trimont business based on the presentation at the 6 February meeting. Hartwig said that he (through BCD) was prepared to invest approximately $1 million in the business.
On 8 February 2015, Hartwig sent an email to Breckenridge with the subject line ‘Trimont Sale’. The email was signed by Hartwig with his BCP email signature. It read as follows:
Pete,
I have had a look at what we have presented to Geoff and I think that in order to formalise to him what we want we should look at the following:-
Value of the Business:
I think that we should propose an average of EBIDTA Multiple with the add back and that without. From your calculations I would see this as:-
With: $2.562 M; without: $1.835 M; Average EBIDTA: $2.198 Million, $2.2 Million (x) 3.5 equals = $7.7 Million.
Sell 60% Interest: = $4.620 Million (Brady 45% BCP 15%)
Applied and Adjusted as such:
Business Outgoings:
Overdraft pay out:  $1.0 Million.
External Creditors:  $4.25 Million.
Kanyon & Assoc Loans  $3.5 Million.
Payout of Leases/HP:  $1.5 Million.
Allowance Employee Entitlements:   $0.25 Million.
Sale Costs  $0.62 Million
Total  $11.12 Million.
Against:
Assets:
Debtors:  $1.0 Million.
WIP:  $1.0 Million.
Retentions:  $1.2 Million.
Tender Costs (Own WIP)                 $1.9 Million.
Plant & Equipment :  $1.4 Million
Total:  $6.5 Million.
Net to Fund:  $4.62 Million.
Funding Requirements Going Forward:
Overdraft:  $2.0 Million.
Bank Guarantee:  $3.0 Million.
Have a look at this and we can discuss.
Cheers,
[Hartwig’s BCP email signature]
At 10.39am on the same day, Hartwig sent an email to Geoff and Rachael Brady discussing, the Trimont opportunity and the presentation at the 6 February meeting. In this email, Hartwig said:
Dear Geoff & Rachael,
Thank you for your time on Friday, it was good to catch up and review where we are with a number of things.
With regards to the Trimont Proposal, I am currently in the process of bringing together that as run through by Peter on Friday with a view to presenting a Proposal that will cover off the opportunity to purchase an interest in the Company and outline what I would see as the Group’s Funding requirements going forward in order to achieve the Revenue forecasts as specific to the current level of works in hand and that as under Construction. The Trimont Business is a good Business with a good Brand in its segment of the market; the move from Family to Corporate is essential in order to capitalise on the Relationships established over the past 4 years and that as potential under the stewardship of Peter. He has an unbelievable Client and Contact base that have great demands on his time and involvement. He really has the ability to bring all that is forecast together and establish a great Business for the future.
I envisage that I will have a proposal ready for review by Wednesday of this week.
Hartwig went about preparing the summary as requested by Brady. Hartwig had access to the Trimont financial documents as they were held at the BCP offices for the purpose of managing the Trimont ANZ debt facilities. Hartwig said:
When I prepared the letter, I reviewed the financial reports of Trimont which Pitcher Partners had prepared against the financial information which was recorded on page three of the PowerPoint Presentation. I did this to confirm the actual EBITDA figures recorded in the presentation for FY2010 to FY2014 were the same figures contained in the financial statements for Trimont determined by Pitcher Partners. This appeared to me to be consistent. I did not have any information to verify the accuracy of the forecast financial information for FY2015 to FY2017.
The summary was in the form of a letter addressed to Brady and dated 10 February 2015, on BCP letterhead and signed by Hartwig (10 February Letter). I address the contents of the 10 February Letter later on in these Reasons.
On 11 February 2015, Hartwig sent a number of emails to Trimont and its accountants.
At 9.53am, he sent an email to Breckenridge and Ascenzo, attaching a document ‘TPL Sale Summary’. The email body read, ‘Gents, Proposed Transaction flow as discussed. Let me know your thoughts.’ The contents and significance of this document are addressed later.
At 10.22am, Hartwig sent an email to Thurgood and Rob Rigoni of Pitcher Partners, attaching a copy of the TPL Sale Summary. Breckenridge was copied into this email. Hartwig requested a phone conference to ‘run through [the document] with [Thurgood and Rigoni] over the phone in order to expand on the summary as proposed’.
At 11.48am, Hartwig sent an email to Breckenridge attaching a draft version of the 10 February Letter. The email body read, ‘Peter…Let me know your thoughts. Cheers’. Hartwig recalled that Breckenridge told him to proceed with the letter.
Another meeting occurred between Hartwig and Brady on 12 February 2015. The meeting lasted for approximately 30 minutes. The pair spoke about the suggested sale structure and Hartwig expressed his own interest in investing in Trimont. Hartwig said he handed Brady copies of the 10 February Letter and the TPL Sale Summary, and Brady asked him to email the documents to his advisors, Philip Jones of Maddocks and Sean Roberts of Stannards. Brady could not recall that this meeting took place.
Brady had engaged Maddocks and Stannards to undertake legal and financial due diligence for the Trimont business sale. Breckenridge said that Maddocks and Stannards were ‘heavily involved’ in the due diligence process and the sale. That was evidently correct. From 12 February 2015, Jones and Roberts were copied into key correspondence between the Brady and Trimont camps.
On 12 February 2015, Hartwig sent an email to Jones and Roberts, with Geoff Brady, Rachael Brady, Breckenridge and Ascenzo in copy (12 February 2015 email). Attached to this email were various documents. Hartwig said that the financial information attached to this email to Brady’s advisors was consistent with information that BCP had provided in the Westpac proposal submitted late in 2014. The attached documents were as follows:
(a)10 February Letter;
(b)Trimont Business Update Proposal;
(c)TPL Sale Summary;
(d)Trimont.xlsx (a document that contained a table of historical financial figures and projections); and
(e)Trimont 2014 Proj Revised.xls (a document that contained financial figures and projections for both the building and concrete sides of Trimont’s business).
Hartwig sent another email to Jones and Roberts on 12 February, attaching a 13‑page PowerPoint presentation, ‘AI Group Investor Presentation’. Hartwig described to it as a ‘corporate overview of Trimont’ in his covering email. The presentation described Trimont’s current and past projects, including their respective development costs and contract values. It listed Trimont’s key retail clients. The last slide referred to Breckenridge as the ‘key contact’ for AI Group.
On 16 February 2015, a third meeting occurred, this time at the Stannards office. The purpose of the meeting was for Brady’s advisors to hear about the Trimont investment opportunity directly. Hartwig, Breckenridge, Ascenzo, Geoff Brady, Rachael Brady, Philip Jones, Sean Roberts and Jason Wall (of Stannards) were in attendance.
Prior to the meeting, Hartwig sent an email to all attendees as follows:
Dear Jason and Sean,
Thank you for your time on Friday to discuss the Trimont opportunity as presented to Geoff.
As discussed and agreed, I have now received the following Financial Information in further support of that which is being proposed:
·Trading Summary (P&L) for the 7 months to the 31st January 2015.
·Budget for the ensuing 5 months of the 2014/2015 Financial Year.
·Budget for the 2015/2016 & 2016/2017 Financial Years.
In reviewing the documentation as provided, I draw your attention to the following:
·All of the Jobs as detailed in support of the forecast revenue are committed with Fitzroy, Brunswick, Wodonga Homemaker & Newcastle, Muswellbrook, Cheltenham Road, South Melbourne, Preston, Mernda, North Melbourne & Heidelberg under Contract and Construction.
·The overhead going forward is as per the now committed Personnel structure which has been identified to run the Building Business.
Having had the chance to review, I ask that you please feel free to call and discuss as required; alternatively we can review at today’s meeting.
Best regards,
[Hartwig’s BCP email signature]
(16 February 2015 email)
Hartwig explained that where he referred to Trimont’s projects as ‘committed’, he included projects that were in the pre-construction phase but this did not necessarily mean they were under contract.
The Trimont Australia Forecast was attached to the email. This spreadsheet contains three sheets of forecasts over the financial years 2015 to 2017, including total income, gross margin, total expenses and EBITDA.
At the meeting, Hartwig said that Breckenridge introduced himself as the CEO of Trimont. Breckenridge delivered a ‘similar’, ‘nearly identical’ presentation to the one presented to Brady on 6 February. He spoke about the history of the Trimont business and its historical financial performance. He spoke about the forecast financial performance and the challenges that they were trying to address by bringing some investor funds into the business. Breckenridge said that he spoke to the documents sent by Hartwig in the 12 and 16 February emails.
Hartwig said that he ‘did not say anything of substance’ during the meeting, although later he revised his evidence to say that he spoke about the proposed sale structure. He denied speaking to Trimont’s financial performance.
On 17 February 2015, Jones called Hartwig to discuss the investment proposal and told him that Brady was seeking a controlling interest of Trimont Australia. Hartwig sent an email to Breckenridge, attaching a draft email to Jones, and an amended version of the 10 February Letter with revisions to the equity breakdown, goodwill valuation and nominated plant and equipment price. Hartwig went on to send the proposed email to Jones later that day.
On 18 February 2015, Jones sent an email to Hartwig advising that Brady was happy to proceed with the sale, subject to completion of the due diligence process.
Jones was not called to give evidence.
Following confirmation from Jones that Brady wished to proceed with due diligence in anticipation of a sale, Ascenzo asked Hartwig whether Brady would consider advancing $3 million to progress the Preston development and some other projects. Hartwig telephoned Brady and passed on Ascenzo’s request. Brady advised that he would take the request under consideration. Hartwig later received a call from Jones advising that Brady agreed to advance the purchase price provided that the funds were ‘tied’ to the Preston loan facility ‘in case the transaction fell through’. It was proposed that the maturity date for the $3 million advance would be 1 June 2015, in line with the anticipated settlement date. Hartwig communicated the parameters of the arrangement to Ascenzo and Breckenridge and Ascenzo agreed to proceed.
Stannards and Maddocks conducted due diligence between late February and April 2015. Trimont engaged Kelly Hazel Quill Lawyers to act on its behalf in the legal due diligence.
Breckenridge and the Trimont accounts team were responsible for collating material to send onto Maddocks and Stannards. Breckenridge said that he only acted as a conduit in providing due diligence material, and it was Hartwig who managed negotiations. Ascenzo said that he did not have any involvement in this process, and left it to Breckenridge, Clay and the accounts team from Pitcher Partners. Clay said that he only ‘collated’ the documents and did not prepare them. He said that Breckenridge played a larger role than simply collating the documents; Breckenridge ‘controlled’ the due diligence process.
On 2 March 2015, Stannards requested access to Trimont’s records to commence the due diligence process. Jason Wall sent a Financial Due Diligence checklist to Hartwig requesting information and access to a data room. Brady said it was likely that he was aware that Stannards had requested access to a data room at Trimont at the time.
It is unnecessary to set out the communication that occurred in the due diligence process. It is sufficient to say that from time to time, Breckenridge (with Clay and Thurgood) met with Stannards, and provided information at Stannards’ request.
Hartwig said that he met with Brady on seven occasions between May and July 2015. On one of those occasions, on 7 May 2015, Hartwig and Brady also met with Breckenridge and Rob McEniry, a friend of Brady. The group took a tour of a number of Trimont’s development sites. After the settlement of the sale transaction, McEniry was appointment chairman of the new company Trimont Australia.

A3 Alleged Representations

GJB alleges plead that the Trimont Earnings Representations were made in writing, by three documents:
(a)the 10 February Letter, which was said to ‘confirm’ the Trimont Earnings Representations and which enclosed a copy of the Trimont Business Update Proposal, ‘supporting financial forecasts as provided with the presentation’ ad a ‘proposed BCP Sale Summary’.
(b)the Trimont Business Update Proposal, which was emailed to Brady on 12 February 2015 and 16 February 2015, and separately presented at the 6 February meeting. The misrepresentations were said appear on the third page of the document, presented in table format; and
(c)the Trimont Australia Forecast, by which the Trimont Earnings Representations are ‘in substance repeated’. This document was sent by email from Hartwig on 16 February 2015.

Submissions

GJB submitted that the 10 February 2015 Letter refers to, incorporates and endorses the representations. The letter refers to the trading figures presented at the 6 February 2015 meeting (and contained in the Trimont Business Update Proposal) and states that those figures are the basis of the Business ‘Goodwill’ calculation. The letter itself does not set out the figures but they are included in the attached and referenced TPL Sale Summary document. Paragraph 5.0 of the TPL Sale Summary repeats the representations. The table contains rounded figures of those that appear on the third page of the Trimont Business Update Proposal for the 2013, 2014 and 2015 financial years. Accordingly, while the letter does not expressly set out the representations, they are incorporated by reference.
The Trimont Australia Forecast refers to Trimont’s total gross margin and total EBITDA for the 2015 financial year. The total gross margin figure of $5,165,628 is materially the same as the gross profit figure for financial year 2015 of $5,179,008 as alleged to comprise the pleaded representation. The total EBITDA figure of $1,488,080 is materially the same as the total EBITDA figure for financial year 2015 of $1,488,474 alleged to comprise the pleaded representation.
The defendants conceded that the representations were made in the table on the third page of the Trimont Business Update Proposal.
The defendants submitted that the representations were not made in the 10 February Letter. The letter only sets out financial figures for 2016 and 2017 financial years and does not make any representations concerning the 2015 results. It does not repeat, endorse or adopt the representations, by referring to and attaching the Trimont Business Update Proposal to the 12 February 2015 covering email. The letter does not incorporate the representations by reference. The only plausible reference is ‘Building Company “Goodwill” at a factor of 3.5 (x) average EBITDA’ on the bottom of the first page of the letter. This calculation is taken from the TPL Sale Summary. Accordingly, if the representations were incorporated by reference, that was only by a document that was not pleaded. An action for contravention of s 18 of the ACL must precisely identify the conduct said to be misleading or deceptive.[14] It is incumbent on the plaintiff to articulate their case with precision.[15]
[14]Miller and Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357, 364 [5].
[15]Swiss Re International SE v David Simpson (2018) 354 ALR 607, 611 [35].
The representations as pleaded are not precisely replicated in the Trimont Australia Forecast, but the defendants conceded that the differences between the figures were not material. Although the Trimont Earnings Representations are not made in the Trimont Australia Forecast, the document can be regarded as context in which the representations were made.
It was further submitted that the revised EBITDA figure (to include Ascenzo’s personal expenditure) was not included or referred to in the Trimont Australia Forecast. The alleged representations were pleaded by reference to three elements. The add-back amount for Ascenzo’s personal expenditure is the third element, and it does not appear in the Trimont Australia Forecast.

Documents said to convey the representations

Business Update Proposal

The Trimont Business Update Proposal is a PowerPoint document. It bears the Trimont logo on each page of the document. It is referred to as the ‘Trimont Business Overview’ in the 12 February covering email.
The third page of the document contains a table of historical and forecast financial information for Trimont for the years 2010 to 2017, extracted below:
A slide entitled ‘business requirements’ sets out that Trimont needed ‘Bank Guarantees’ and ‘more appropriate Equity Structure and Banking/Funding Facility support’. A slide entitled ‘challenges’, states, amongst other things, that: ‘Balance Sheet restrictions not allowing to [sic]… support an appropriate Banking/OD facility’. Brady recalled that this was the crux of the discussion, that Trimont was restricted by its lack of funding. The slide stated that one of the challenges was ‘Growth curbed by Cashflow/Facility availability’.
The document does not refer to Breckenridge by name, but refers to his role as CEO overseeing building projects. On the second page, it said that as of 2015, ‘All projects run by Director and CEO’. Breckenridge’s position as CEO is depicted in the corporate structure diagram on the eleventh page.
The Trimont Business Update Proposal does not contain any reference to or association with Hartwig or BCP.
As mentioned earlier, the Trimont Business Update Proposal was presented at the 6 February 2015 meeting. Hartwig attached and sent the Trimont Business Update Proposal by email to Brady’s advisors at Maddocks and Stannards on 12 February 2015. Breckenridge and Ascenzo were copied into the email.

10 February Letter

The letter is addressed to Brady and dated 10 February 2015. It bears the BCP logo, business name and contact details, and is signed by Hartwig as the executive director of BCP.
The letter refers to the 6 February 2015 meeting and the Trimont Business Update Proposal presented by Breckenridge. Hartwig wrote that the purpose of the letter was to expand on those discussions and delineate each parties’ financial commitments in the sale of Trimont’s building business and the incorporation of the new entity. The letter outlines a proposed corporate structure for Trimont Australia Pty Ltd, equity arrangement and initial capital contributions and includes financial forecasts. The letter sets out the financial contributions and the equity interest proposed for each investor to buy into the business.[16] It states that the business ‘goodwill’ is valued at $7,694,000 as a 3.5 multiple of the average EBIDTA, including the existing building business, its pipeline contracts and nominated staff, plant and equipment.
[16]The figures in the 10 February Letter as at the date of the 12 and 16 February 2015 emails are different to the figures contained in the final revision provided by email on 17 February 2015 to Brady’s advisors. Hartwig revised the equity split after Jones advised that Brady was agreeable to the purchase if he had a controlling interest in the company. The equity contributions and interests were revised.
Hartwig wrote that AI&PB Property Pty Ltd, an entity owned and controlled by Ascenzo and Breckenridge, would buy a 40 percent interest in the new entity for $3.2 million. Hartwig said in evidence that this was his understanding at the time of writing the letter. Hartwig wrote that The Brady Group’s initial financial commitment would involve a bank overdraft to the total of $2 million and a performance bond bank guarantee facility. The initial investment would meet the ongoing retention commitments of the business on each of its building contracts.
The letter includes a table of forecast figures for financial years 2016 and 2017 (not 2015). It includes the statement, ‘building company “goodwill” at a factor of 3.5 (x) average EBITDA = $7,694,000’. The implied EBITDA was $2,198,436 which was an average of the 2013, 2014 and projected 2015 figures). It states that, ‘in acquiring the Business at the nominated and agreed multiple, we have assumed the following Business Value growth on the basis of these figures’.
The letter variously incorporates singular and plural personal pronouns, throughout.
Hartwig sent the 10 February Letter under cover of his 12 February email to Brady’s advisors. Breckenridge and Ascenzo are copied into the email. The Trimont Business Update Proposal and the TPL Sale Summary are attached. The 10 February Letter refers to both of these documents as relevant attachments.
The TPL Sale Summary was identified in the pleadings as having been attached to the 12 February email. It is a BCP-branded document; the BCP logo appears on every page. It set out, among other things, an EBITDA calculation which included the forecast and adjusted forecast for 2015 in the same amounts as in the Business Update Proposal.
The letter was revised and sent again to Brady’s advisors on 17 February 2015. Hartwig had amended the equity and initial contribution breakdown in the document. Hartwig said that he discussed the amendments with Breckenridge and Ascenzo.

Trimont Australia Forecast

The Trimont Australia Forecast is a spreadsheet containing forecasts of Trimont’s financial performance over the years 2015, 2016 and 2017. The first sheet ‘Sheet FY15’ contains actual and projected financial figures by month and quarter of the 2015 financial year. Income and overhead figures for the first and second quarter and the total financial year were redacted. The gross margin was recorded as $5,165,628. The total figure for EBITDA was recorded as $1,488,080.
Brady described the spreadsheet as ‘a more detailed breakdown of Trimont’s estimated income, gross profits an EBTIDA than the information in the Trimont Earnings Presentation delivered by Brett and Peter’.
As noted earlier, Breckenridge sent the Trimont Australia Forecast to Hartwig on 16 February 2015. Hartwig then emailed the spreadsheet to Breckenridge, Brady and his advisors in anticipation for their meeting scheduled for later that day. In the covering email, Hartwig stated that he had received and reviewed the spreadsheet. Hartwig highlighted relevant sections of the spreadsheet and provided clarification in his email. He invited Wall and Roberts to call him to discuss the spreadsheet.

Did the documents contain the representations?

The defendants admitted that the Trimont Business Update contained the alleged representations.
As to the 10 February 2015 Letter, I do not consider that the representation is made in the body of the letter. The pleaded representations are that Trimont’s gross profit for 2015 would be $5,179,008 and that its EBITA for 2015 would be $1,488,474 revised to $2,261,542 after accounting for personal expenditure. Nowhere in the letter do the EBITDA or profit figures for 2015 appear. They are not incorporated by reference into the average EBITDA figure on which the goodwill calculation is based. That calculation was based on an average of 2013, 2014 and 2015 figures, which is not a representation that Trimont would return an EBITDA of a particular value in 2015. That statement is indicating the basis on which the proposed valuation has been prepared. It is not a prediction (i.e. a representation as to future matters) about 2015.
The remaining question is whether the representation was made by the 10 February 2015 Letter, by reason of the referenced Sales Summary. The Sales Summary is referred to in the Letter by the words, ‘In accordance with that as detailed within this correspondence I have attached the following information/documentation:- a copy of the Trimont Business Presentation; supporting financial forecasts as provided with that presentation; the Proposed BCP Finance Sale Summary’. The defendants said that the Sales Summary document was not incorporated by reference. I consider that it was. It is explicitly referred to. It is said to be in accordance with what is discussed in the letter. It is a BCP branded document (not a stranger’s document) and it contains material on the same subject matter as addressed in the letter. I consider that it was sufficiently pleaded by reference to the Letter, because it is a specifically identified attachment to the Letter, of the kind described.
The attached Sales Summary document sets out a table with EBITDA actual and forecast values for 2013, 2014 and 2015. The forecast figure for 2015 is materially the same as that included in the Trimont Business Update Proposal. However it appears in a particular context. It is presented together with the figures for the other years for which the average is calculated. The average is then multiplied by the chosen multiple, to obtain the valuation. The 2015 EBITDA figure then, is included within an average calculation as a basis on which a simple valuation has been arrived at. The figures are set out to show the basis of the valuation. I do not consider that the 2015 EBITDA figure, in that context, can be read as a statement that in 2015 Trimont would return a specific EBITDA value.
The Trimont Australia Forecast sets out with supporting detail, the EBITA figure for 2015 substantially as reported in the Trimont Update Proposal. On the basis that the defendants have accepted that the Update Proposal conveys the alleged representations[17] I consider that the Trimont Australia Forecast does make the pleaded representation, in respect of EBITDA.

A4 Representors

[17]A better reading of the documents would be that the EBITDA figure had been forecast or predicted. However given the defendants’ position I consider it appropriate to treat like representations in other documents in the same way.

GJB alleged that Hartwig and BCP, and Breckenridge made the Trimont Earnings Representations.
Separately, GJB alleged that Ascenzo was involved in the making of the Trimont Earnings Representations pursuant to s 236 of the ACL, and was an accessory to the contravention of s 18 of the ACL. The same claim was made against Breckenridge in the alternative to the claim that he was a principal contravener, and against Hartwig on the basis that BCP made the representations.

Principles

Whether a representation was made is to be determined on all the facts of the case. Relevantly:
(a)It is recognised that a person may function in dual capacities, as an individual, and in their capacity as an agent, director or employee of a company. It must be determined whether a person, in making a representation, is merely acting as a ‘corporate organ’ or acting in their individual capacity.[18]
(b)In deciding whether a person made a representation, it is important to consider whether the person has assumed responsibility for, or adopted, or endorsed, the information so that it would be reasonable for a recipient to rely on the confirmation.^[19]
(c)In any given can there can be more than one person who engaged in the relevant impugned conduct. The degree of involvement of each person must be separately assessed. Where one person purports to represent another, it will be important to ask whether, considered as a whole, the agent did no more than communicate what the seller is representing, without adopting or endorsing it.[20]
[18]Australian Securities and Investments Commission v Narain (2008) 169 FCR 211, 225 [94]-[97].
[19]Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592, 605 [38]-[39]
[20]Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592.

Accessorial liability

Within the meaning of s 2 of the ACL, a person that is ‘involved’ in the making of misleading or deceptive conduct is a person that has:
(a)aided, abetted, counselled or procured the contravention;
(b)induced, whether by threats or promises or otherwise, the contravention;
(c)been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; or
(d)conspired with others to effect the contravention.[21]
[21]Australian Consumer Law, s 2 (definition of ‘involved’).
Where contravening conduct involves a representation it is necessary to establish that the accessory knew of the essential matters constituting the contraventions.[22] In addition to knowledge of the essential facts there must be established a practical connection between the person said to be knowingly concerned, and the contravention.[23]
[22]See, e.g. ACCC v IMB Group Pty Ltd [2003] FCAFC 17.
[23]Rural Press Ltd v ACCC (2003) 216 CLR 53, [48].
An accessory to a misleading representation must have actively or intentionally participated in the contravention by performing a positive act to either aid or abet or induce the principal contravener to make the representation. The person involved must also have actual knowledge of the essential elements of the contravention, being knowledge of the impugned conduct and knowledge of its falsity.[24]
[24]Yorke v Lucas (1985) 158 CLR 661, 670.

The Hartwig Parties

It was alleged that BCP and Hartwig made the Trimont Earnings Representations by:
(a)sending Geoff Brady the 10 February Letter;
(b)sending the Business Update Proposal to Brady by email on 12 February 2015;
(c)providing to Geoff Brady the Trimont Australia Forecast by email on 16 February 2015.
GJB submitted that the Hartwig Parties made the Trimont Earnings Representations by Hartwig’s attendance on, contribution to, and endorsement of the Trimont Business Update Proposal at the 6 February 2015 meeting. Hartwig had arranged for Brady to attend. Hartwig did not disassociate himself from the accuracy or reliability of the figures put forward by Breckenridge during the presentation. Hartwig endorsed the figures by distributing the Trimont Business Update Proposal as an attachment to the 12 February 2015 email.
The Hartwig Parties variously made and endorsed the Trimont Earnings Representations by authoring and referring to them within the 10 February Letter. BCP was associated with the representations as the letter was on BCP letterhead. The representations were again made by way of the Trimont Australia Forecast attached to Hartwig’s email to Roberts and Wall on 16 February 2015.
It was submitted that the Hartwig Parties’ conduit defence (as discussed later) should be rejected. The evidence established that Hartwig devised the transaction, and collated, reviewed and endorsed the relevant financial information. The author of the document is an irrelevant consideration; the receiver of the representations is entitled to assume that the person who disseminates a document is associated with that document. It was relevant that there were no disclaimers of any kind in relation to the Trimont Earnings Representations. It was also significant that, Hartwig was known to Brady as the ‘Trimont financier’, and due to his association and past dealings with Trimont (as known to Brady).
Further, it was said that Hartwig acted in his capacity as a director of BCP, such that his conduct is BCP’s conduct. In the alternative, the plaintiff contended that Hartwig aided the contraventions of BCP and was knowingly concerned in or a party to them, in the sense required by s 236 of the ACL.
The Hartwig Parties submitted that they were merely conduits in passing on financial information. Hartwig was not an employee of Trimont and was not in a position to verify the information provided.
Hartwig said that he did not prepare the Trimont Business Update Proposal. He provided minor suggestions by way of handwritten annotations on the draft document, but did not suggest any amendments to the financial information contained on the third page. The document did not bear the BCP logo or Hartwig’s name or any other feature that would indicate that the Hartwig Parties had approved or endorsed the Trimont Earnings Representations. The 12 February 2015 email was not a personal endorsement of its attached documents or the financial figures and forecasts contained therein.
It was submitted that the Trimont Earnings Representations were not made in the 10 February Letter and so it follows that neither Hartwig or BCP made the representations by way of this document.
Hartwig did not prepare the Trimont Australia Forecast and had himself received the document and was passing it onto Brady’s advisors. The contents of the 16 February 2015 email did not constitute a personal endorsement of the misrepresentations. Hartwig did not express a belief in the truth or falsity of the Trimont Earnings Representations and merely passed on the information by way of the 16 February email and the Trimont Australia Forecast.
Alternatively, the Hartwig Parties said that GJB had not articulated its case with precision, failing to clearly identify the conduct said to be misleading or deceptive.[25] GJB alleged that Hartwig confirmed and endorsed the accuracy of the personnel overheads and project revenue referred to within the Trimont Australia Forecast as ‘committed’ figures. However, these figures only form a part of the EBITDA calculation for the 2015 financial year. GJB did not assert that the personnel overheads and project revenue figures were misrepresented.
[25]Miller and Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357, 364 [5].

Rachael’s recollection of the email was that Hartwig had resigned and said ‘…something along the lines that he wasn't expecting his $600,000 back until Geoff's money was repaid’. Geoff Brady said that at 31 October 2016, it was clear that GJB would have to make substantial loans to CornoNero in order to pay for its debts. He considered that the $600,000 was ‘fully subordinated’ to the amounts payable by CornoNero to the Brady interests.
Hartwig said that Brady had advised that he wanted Hartwig to resign over a 10 to 15-minute discussion in or about late October. Hartwig said he could not recall why he tendered his resignation effective immediately in the email dated 31 October but did not resign until late November 2016. He said that his resignation may have been ‘slowed’ because Philip Jones was seeking his assistance with Breckenridge’s decision to exit CornoNero. He said ‘there wasn’t any pressure being brought on me to sign documents or walk away. It was a decision I made myself. Geoff Brady said that he considered it appropriate to allow Hartwig resigned instead of requiring his summary removal.
On 23 February 2017, Rachael sent an email to Cameron Hunter with the subject line ‘Brett information’. Attached to the email was the Request Letter, a copy of CornoNero’s Westpac bank account statement, and payment claims made out to Kanyon Pty Ltd for works completed on the Newcastle Development. Rachael noted in the email that the Request Letter had been sent by Breckenridge to Hartwig and Geoff Brady. She confirmed the following deposits had been made:
I have attached the shareholders letter that Peter Breckinridge sent to both Brett and Geoff. You will see from the attached bank account that Geoff deposited $1,000,000 on the 16th September 2016, Brett deposited $600,000 (Ringwood Property Account) on the 20th September 2016 and Peter deposited $400,000 on the 14th September 2016 (this money was borrowed from an employee who borrowed it from other people, Geoff has paid this back to the employee).
…
BCD’s advance appeared in both the balance sheets of the CornoNero FY2017 and FY2018 financial statements. It is listed as an unsecured loan under CornoNero’s borrowings. In both statements the loan appears in the same of $599,330.
BCD demanded repayment of the loan on 23 July 2021. Hartwig, Rachael Brady and Geoff Brady gave evidence that that occurred. Geoff Brady said that no settlement agreement had been reached in relation to BCD’s repayment demand. He said ‘it comes in line after mine so – and mine has not been settled’.

E Consideration

For the reasons advanced by BCD:
(a)BCD lent to CornoNero the sum of $600,000 by payment into its bank account on 20 September 2016.
(b)The loan was repayable on demand.
(c)The letter of Hartwig dated 31 October 2016 was not an agreement of any kind in respect of the loan, or a variation of it. It was an offer in respect of the financial relationship between Hartwig and his interests and the Brady interests. There was no evidence that it was supported by any consideration.
(d)The loan has not been repaid despite demand.
(e)BCD is entitled to damages in the sum of $600,000.

ANNEXURE A – Connections between people and entities

ANNEXURE B

Impugned Payments – Conclusions

Hartwig was briefly referred to in the evidence concerning Impugned Payments No. 12 and 63. That evidence was insufficient to establish that he caused or authorised the payment.

The following table summarises the conclusions concerning Breckenridge and Ascenzo for each of the Impugned Payments.

Payment No.	Sub‑part of Part K	Amount	Special Referee finding that payment to a CornoNero creditor or meeting a debt or liability of CornoNero (loan balance)	Purpose	Breckenridge		Ascenzo
Payment No.	Sub‑part of Part K	Amount		Involvement	Breach of duty	Involvement	Breach of duty
1	B.4	$455.57	No.	Pay wages to newly hired employees of Trimont, who worked in a café before Brunswick East permits were approved.	Authorised.	Yes.	Requested payment on behalf of Trimont.	Yes (1 to 5 inclusive).
2		$1,047.88
3		$1,067.82
4		$182.47
5		$2,291.86
6	B.5	$11,071.51	No.	Pay outstanding amounts to SPL Security on behalf of Trimont in relation to Brunswick East, to respond to requests and maintain relationship for CornoNero.	Authorised.	No.	Requested payment on behalf of Trimont.	No.
7	B.4	$5,500	No.	Pay amount owing to House of Bricks’ 4 October 2015 invoice on behalf of Ascenzo Industries.	Authorised.	Yes.	Requested payment on behalf of Ascenzo Industries.	Yes.
8	B.1	$9,744.99	No.	Pay the amount on behalf of Trimont, in order to avoid the removal of material from a CornoNero project site (Lygon Street) and threatened legal action, which would have caused issues for ongoing works at that site.	Authorised.	No.	Requested payment on behalf of Trimont.	No.
9	B.4	$11,500	No.	Payments to Katia Ascenzo.	Authorised.	Yes.	Requested payment on behalf of Trimont.	Yes.
10	B.4	$10,000	No.	Pay outstanding sum to American Express on behalf of Trimont.	Authorised.	Yes.	Requested payment on behalf of Trimont.	Yes.
11	B.6	$480.02	Yes–loan balance.	To pay Origin’s overdue notice on behalf of Trimont in relation to South Melbourne.	No specific evidence of involvement.	No.	No specific evidence of involvement.	No.
12	B.2	$243.43	No.	To pay, in part, the debt owed to the ATO by Trimont (as trustee for the Ascenzo Family Trust), to avoid the threatened enforcement action against Trimont.	Authorised.	Yes.	Requested payment on behalf of Trimont and developed payment plan for settling ATO debts which involved using CornoNero money to pay the debts.	Yes.
13	B.2	$12,984	No.	To pay, in part, the debt owed to the ATO by Trimont (as trustee for the Ascenzo Family Trust), to avoid the threatened enforcement action against Trimont.	Authorised.	Yes.	Requested payment on behalf of Trimont and developed payment plan for settling ATO debts which involved using CornoNero money to pay the debts.	Yes.
14	B.2	$145,645.48	No.	To pay, in part, the debt owed to the ATO by Trimont (as trustee for the Ascenzo Family Trust), to avoid the threatened enforcement action against Trimont.	Authorised.	Yes.	Requested payment on behalf of Trimont and developed payment plan for settling ATO debts which involved using CornoNero money to pay the debts.	Yes.
15	B.2	$46,700	No.	To pay, in part, the debt owed to the ATO by Trimont (as trustee for the Ascenzo Family Trust), to avoid the threatened enforcement action against Trimont.	Authorised.	Yes.	Requested payment on behalf of Trimont and developed payment plan for settling ATO debts which involved using CornoNero money to pay the debts.	Yes.
16	B.2	$13,382	No.	To pay, in part, the debt owed to the ATO by Trimont, to avoid the threatened enforcement action against Trimont.	Authorised.	Yes.	Requested payment on behalf of Trimont and developed payment plan for settling ATO debts which involved using CornoNero money to pay the debts.	Yes.
17	B.2	$339,839.46	No.	To pay, in part, the debt owed to the ATO by Trimont, to avoid the threatened enforcement action against Trimont.	Authorised.	Yes.	Requested payment on behalf of Trimont and developed payment plan for settling ATO debts which involved using CornoNero money to pay the debts.	Yes.
18	B.5	$30,000	Yes – loan balance.	Pay Stay Tru amount outstanding in relation to the Newcastle site.	Authorised.	No.	No specific evidence of involvement.	No.
19	B.1	$80,000	Yes – loan balance.	Pay the invoices on behalf of Trimont and at least in part, ensure that work by Amis Ceramics continued on projects acquired by CornoNero (including Heidelberg, Newcastle, Brunswick East).	Authorised.	No.	Requested payment on behalf of Trimont.	No.
20	B.4	$10,890	No.	To pay the amount owed to Breese Pitt Dixon on behalf of Trimont Builders, in circumstances in which if not paid, CornoNero’s ability to complete works on its project would be impacted.	Authorised.	No.	Requested payment on behalf of Trimont.	No.
21	B.4	$23,254	No.	To pay the outstanding invoices of DA Signs on behalf of Trimont.	Authorised.	Yes.	Requested payment on behalf of Trimont.	Yes.
22	B.1	$8,813.65	Yes – loan balance.	Pay the demand on behalf of Trimont and avoid Royal Wolf repossessing site containers and commencing legal proceedings. However, not linked to a particular CornoNero project.	Authorised.	Yes.	Requested payment on behalf of Trimont.	No.
23	B.3	$25,077.66	Yes – loan balance.	Pay invoices of Coates Hire that were outstanding 60 days or more on behalf of Trimont.	Authorised.	No.	No specific evidence of involvement.	No.
24	B.1	$26,359.85	No.	Pay a Hardie Plumbing invoice on behalf of Trimont to respond, in part, to Hardie Plumbing’s threat of not returning to the Newcastle site.	Caused.	No.	No specific evidence of involvement.	No.
25	B.1	$7,552.27	No.	To pay Impact Concrete on behalf of Trimont to ensure that Impact Concrete continued to work at the Newcastle site.	Authorised.	No.	Requested payment on behalf of Trimont.	No.
26	B.4	$35,000.00	No.	To respond to the demands of A3 Design and pay, in part, the amount outstanding on behalf of Trimont Constructions.	Authorised.	Yes.	Requested payment on behalf of Trimont.	Yes.
27	B.4	$80,000.00	Yes – loan balance.	To pay, in part, the outstanding debt to B & B Joinery on behalf of Trimont.	Caused.	Yes.	Requested payment on behalf of Trimont.	Yes.
28	B.3	$6,311.65	Yes – loan balance.	To pay in part, outstanding debt due to NHS Plaster & Timber on behalf of Trimont in relation to the Newcastle site.	Authorised.	No.	No specific evidence of involvement.	No.
29	B.3	$30,000	Yes – loan balance (partially).	Not established on the evidence.	No.	No.	No specific evidence of involvement.	No.
30	B.5	$6,595.60	Yes – loan balance.	Not established on the evidence.	Not established.	No.	No specific evidence of involvement.	No.
31	B.1	$20,000	Yes – loan balance.	To pay, in part, SAS Fire’s most overdue invoice on behalf of Trimont, to avoid the Newcastle project timeline being delayed or occupation requirements impacted	Authorised.	No.	No specific evidence of involvement.	No.
32	B.1	$100,000	Yes – loan balance.	At least in part, to pay outstanding Grant Fire Services invoices on behalf of Trimont, so that work could recommence on CornoNero sites (including North Fitzroy, Brunswick and Preston).	Authorised.	No.	Requested payment on behalf of Trimont.	No.
33	B.1	$25,457	No.	Pay part of the outstanding amount on behalf of Trimont and ensure that Zontos Roofing completed rectification work at the Newcastle project site.	Authorised.	No.	Requested payment on behalf of Trimont.	No.
34	Duplicate of IP 20
35	B.1	$100,000	No.	To pay, in part, outstanding amounts on behalf of Trimont and ensure that Telwin continued work on the Newcastle site.	Authorised.	No.	No specific evidence of involvement..	No.
36	B.1	$100,000	Yes – loan balance.	To settle Trimont debts to McIntyre and Cross and avoid the imposition of interest charges to Trimont’s account.	Authorised.	Yes.	Evidence did no establish Ascenzo’s involvement.	No.
37	B.1	$20,134.34	Yes – loan balance.	Clearing outstanding Trimont debts at least in part to ensure that Tract would continue working on CornoNero projects Mernda, Preston and South Melbourne.	Authorised.	No.	No specific evidence of involvement.	No.
38	B.5	$8,885.25	No.	Not established.	Authorised.	No.	No specific evidence of involvement.	No.
39	B.4	$9,009.80	No.	Pay the remaining balance owed to Modec on behalf of Trimont in relation to the Brunswick East project.	Not established.	No.	Not established.	No.
40	B.2	$6,905.80	No.	Pay Trimont’s outstanding debt in relation to Anderson Road and avoid the legal action threatened by Acoustic Logic.	Authorised.	Yes.	No specific evidence of involvement.	No.
41	B.5	$1,292	No.	Not established.	No specific evidence of involvement.	No.	No specific evidence of involvement.	No.
42	B.2	$10,450	No.	To settle an outstanding debt of Trimont and avoid threatened legal action by Omnii regarding Taylor Street, Armidale, where there was no evidence that payment was required to prevent work stopping on the project.	Authorised	Yes.	No specific evidence of involvement.	No.
43	B.4	$6,500	No.	To pay outstanding debt owed to EZ Painting on behalf of Trimont, in relation to painting at McCabe’s offices.	Not established.	No.	Not established.	No.
44	B.1	$8,651.50	No.	Clear outstanding Trimont debts at least in part to ensure that Combined Safety Services would certify work at the Newcastle project.	Authorised.	No.	Requested payment on behalf of Trimont.	No.
45	B.5	$11,345	No.	Pay outstanding amount to EZ Painting.	Authorised.	Yes.	Requested payment on behalf of Trimont.	Yes.
46	B.5	$8,059.95	No.	Pay amount to APOL on behalf of Trimont for items at Darebin Street Heidelberg.	No.	No.	No.	No.
47	B.3	$17,219.40	No.	Pay, on behalf of Trimont, an Epping Timber Invoice printed 11 August 2015 in relation to Fitzroy North.	Authorised.	No.	Requested payment on behalf of Trimont.	No.
48	B.5	$19,200.50	No.	Pay, on behalf of Trimont, the amount demanded by Easy Tower.	Authorised.	Yes.	Requested payment on behalf of Trimont.	Yes.
49	B.4	$7,596.60	No.	Respond to Phoenix Air’s demands and pay outstanding invoice on behalf of Trimont.	Caused.	Yes.	Requested payment on behalf of Trimont	Yes.
50	B.4	$39,584.95	No.	Pay wages of Trimont employees on behalf of Trimont.	Authorised.	Yes.	Requested payment on behalf of Trimont.	Yes.
51	B.1	$30,000	No.	Pay part of the outstanding debt Trimont owed to Best Group at least in part so Best Group would continue to work on the East Brunswick project.	Authorised.	No.	Requested payment on behalf of Trimont.	No.
52	B.3	$9,613.09	No.	To pay the overdue balance owing to Kilimanjaro on behalf of Trimont. However, $5,841.72 related to services provided to CornoNero.	No specific evidence of involvement.	No.	No specific evidence of involvement.	No.
53	B.1	$350,000	No.	Respond in part, to the demands of Straightline and pay, in part, Trimont’s outstanding debts to ensure that Straightline continued works at Preston and Brunswick.	Authorised	No.	Knowledge of Straightline’s demands only.	No.
54	B.4	$11,219.12	No.	Pay an invoice of Golden Coating on behalf of Trimont.	Caused.	Yes.	Requested payment on behalf of Trimont.	Yes.
55	B.4	$23,199.73	No.	Respond to the SRO demand and pay, in part, the outstanding payroll tax on behalf of Trimont.	Authorised.	Yes.	Requested payment on behalf of Trimont.	Yes.
56	B.4	$40,124.33	No.	Pay wages of Trimont employees on behalf of Trimont.	Authorised.	Yes.	Requested payment on behalf of Trimont.	Yes.
57	B.4	$8,712.81	No.	To pay Colin Twisse interest and fees on loans on behalf of Trimont.	Authorised.	Yes.	Requested payment on behalf of Trimont.	Yes.
58	B.4	$5,000	No.	Pay Harvey Norman in accordance with payment plan on behalf of Trimont	Not established.	No.	Not established.	No.
59	B.2	$9,929.60	No.	Avoid legal proceedings being commenced against Trimont.	Conceded that he authorised. Inference from evidence that caused.	Yes.	Requested payment on behalf of Trimont	Yes.
60	B.1	$190,000	No.	Pay, in part, outstanding debts that Trimont owed Straightline, at least in part to ensure that Straightline would continue work on the transferred projects.	Caused.	No.	No specific evidence of involvement.	No.
61	B.4	$43,838	No.	Pay the remaining balance owed to B & B Joinery on behalf of Trimont.	Authorised.	Yes.	Requested payment on behalf of Trimont.	Yes.
62	B.4	$4,400	No.	Pay Lovelight’s invoice on behalf of Trimont so that installation could occur at Brunswick	Authorised.	No.	Requested payment on behalf of Trimont.	No.
63	B.2	$38,458.90	No.	To pay Trimont’s outstanding debt and avoid the repossession of goods and enforcement action threatened by Doors n Knobs in relation to Trimont’s project at Wodonga.	Authorised	Yes.	Requested payment on behalf of Trimont	Yes.
64	B.2	$7,880.58	No.	Avoid legal action by Telstra, against Trimont, in relation to the Newcastle site.	Conceded that authorised. Inference from evidence that caused.	Yes.	Requested payment on behalf of Trimont.	Yes.
65	B.6	$2,198.40	Yes – CornoNero creditor.	To respond to Australian Access Hire’s threat and pay for expenses incurred after 1 August 2015 in relation to the Newcastle project.	Caused.	No.	No specific evidence of involvement.	No.
66	B.1	$34,793.30	No.	Pay the outstanding debt that Trimont owed Best Group to avoid enforcement action against Trimont and removal of signage that had been installed by Best Group at the East Brunswick Hotel.	Authorised.	No.	Requested payment on behalf of Trimont.	No.
67	B.3	$838.94	Yes – CornoNero creditor (partially).	Pay Trimont’s outstanding debt to Telstra. However, the service was shared and costs were split equally between CornoNero and Trimont.	No specific evidence of involvement.	No.	No specific evidence of involvement.	No.
68	B.6	$258.16	Yes – CornoNero Creditor.	Pay Allianz WorkCover NSW in respect of insurance invoiced after 1 August 2015, for a period commencing 31 August 2015.	No specific evidence of involvement.	No.	No specific evidence of involvement.	No.
69	B.4	$10,000	No.	To make payment on request of Ascenzo.	Yes.	Yes.	Requested payment to Katia Ascenzo.	Yes.
70	B.4	$37,977.68	No.	Pay the wages of Trimont employees on behalf of Trimont.	Authorised.	Yes.	Requested payment on behalf of Trimont.	Yes.
71	B.3	$11,437.94	No.	Part pay Brian Sockalingum’s redundancy.	Authorised.	No.	Requested payment on behalf of Trimont.	No.
72	B.6	$1,686.80	Yes – CornoNero creditor (as to $1,124 of the $1,687 invoice total).	Pay City of Darebin the first quarterly instalment of council rates for High Street, Preston. However, only $1,118.42 was in respect of expenses from 1 August 2016.	No specific evidence of involvement.	No.	No specific evidence of involvement.	No.
73	B.1	$38,500	No.	Clear outstanding debts of Trimont owed to Doctor Damp, in response to its demands, in part to ensure that Doctor Damp would continue to work on the Newcastle site.	Caused	No.	Requested payment on behalf of Trimont	No.
74	B.6	$179.40	Unable to determine if payee was a creditor of CornoNero Yes – loan balance. (partially).	Pay Uberglobal in respect of use of the domain name, after 1 August 2015.	No specific evidence of involvement.	No	No specific evidence of involvement.	No
75	B.4	$5,000.00	No.	Payment made on behalf of Trimont to reduce money owing on credit card.	Authorised.	Yes.	Requested payment on behalf of Trimont.	Yes.
76	B.2	$3,529.44	Unable to determine whether payment to a CornoNero creditor. Yes – loan balance.	To pay, in part, the outstanding debt owed to Incolink and avoid the legal action it threatened, which was relevant to both Trimont and CornoNero.	Authorised, noting that the difficulties with Incolink more broadly were considered by the Board.	No	Initially told Boyko to make the payments, but this was superseded by Board.	No
77	B.3	$64,128.87	Yes – loan balance. (partially).	To pay HL Mulllane outstanding invoices dated prior 1 August 2015 on behalf of Trimont.	Authorised.	Yes.	Requested payment on behalf of Trimont.	Yes.
78	B.4	$4,242.62	No.	To make payment for Brian Sockalingum’s redundancy.	Not established.	No.	Not established.	No.
79	B.4	$5,060.00	No.	To respond to the requests of SMS Constructions and pay the outstanding invoice on behalf of Trimont in relation to High Street, Kew.	Caused.	Yes.	No specific evidence of involvement.	No.
80	B.7	$3,286.99	Yes – loan balance.	Pay Australian Environmental Auditors’ June 2015 invoice for work done in relation to Preston, in part at least to ensure that work continued.	Authorised	No.	No specific evidence of involvement	No.

SCHEDULE OF PARTIES

GJB BUILDING PTY LTD (ACN 607 342 343)

as trustee for the GJB BUILDING TRUST

First plaintiff

and

CORNONERO PTY LTD (ACN 606 176 069)

Second plaintiff

and

AI&PB PROPERTY PTY LTD (ACN 167 992 323)

First defendant

and

SILVIO ASCENZO

Second defendant

and

PETER BRECKENRIDGE

Third defendant

and

BERKELEY CAPITAL PARTNERS PTY LTD (ACN 078 247 319)

Fourth defendant

and

BERKELEY CAPITAL DEVELOPMENTS PTY LTD (ACN 116 121 665)

Fifth defendant

and

BRETT HARTWIG

Sixth defendant

[2023] VSC 782

22 December 2023