Jaken Properties Australia Pty Ltd v Naaman - [2022] NSWSC 517

Supreme Court

New South Wales

Medium Neutral Citation: Jaken Properties Australia Pty Ltd v Naaman [2022] NSWSC 517
Hearing dates: 16–19, 23–27 November 2020; Final written submissions received 16 December 2020
Decision date: 29 April 2022
Jurisdiction: Equity - Real Property List
Before: Kunc J
Decision:
Defendant/Cross-claimant entitled to relief

Catchwords:
EQUITY — Trusts and trustees — Powers, duties, rights and liabilities — Indemnity, lien and reimbursement — Obligations of new trustee to former trustee — Nature and extent of trust creditor’s subrogation to former trustee’s rights against new trustee

Legislation Cited:
Conveyancing Act 1919 (NSW)
Corporations Act 2001 (Cth)
Property Law Act 1958 (Vic)
Trustee Act 1925 (NSW)

Cases Cited:
Agusta Pty Ltd v Provident Capital Ltd [2012] NSWCA 26
Barnes v Addy (1874) LR 9 Ch App 244
Bruton Holdings Pty Ltd (In Liquidation) v Commissioner of Taxation of the Commonwealth of Australia (2009) 239 CLR 346; [2009] HCA 32
Carnemolla v Adelaide Bank [2013] NSWCA 122
Carter Holt Harvey Woodproducts Australia Pty Limited v The Commonwealth of Australia (2019) 268 CLR 524; [2019] HCA 20
Claudia Leung in her capacity as Executrix of the Estate of the Late Robert Ho v Paul Mervyn Fordyce t/as PMF Legal Trading [2019] NSWSC 18
Deputy Commissioner of Taxation v Peter Sleiman Investments Pty Ltd as trustee for the Sleiman Family Trust [2016] NSWSC 1657
Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296: [2012] FCAFC 6
Jones v Dunkel (1959) 101 CLR 538; [1959] HCA 9
Lemery Holdings Pty Ltd v Reliance Financial Services Pty Ltd (2008) 74 NSWLR 550; [2008] NSWSC 1344
McLean v Burns Philp Trustee Co Pty Ltd (1985) 2 NSWLR 623
Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360; [1979] HCA 61
Peter Sleiman Investments Pty Ltd as trustee for the Sleiman Family Trust v Deputy Commissioner of Taxation [2017] NSWCA 81
Rockcote Enterprises Pty Ltd v FS Architects Pty Ltd; Carelli v FS Architects Pty Ltd [2008] NSWCA 39
Ron Kingham Real Estate Pty Ltd v Edgar [1999] 2 Qd R 439
Rothmore Farms Pty Ltd (in provisional liquidation) v Belgravia Pty Ltd & Ors [1999] FCA 745
Rothmore Farms Pty Ltd (In liq) v Belgravia Pty Ltd [2005] SASC 117
Smith v The Queen (2001) 206 CLR 650; [2001] HCA 50
Standard Chartered Bank v Antico (Nos 1 and 2) (1995) 38 NSWLR 290

Category: Principal judgment
Parties:
Jaken Properties Australia Pty Ltd ACN 123 423 432 (Plaintiff and First Cross Defendant)
Peter Sleiman (Second Cross Defendant)
Tony Sleiman (Third Cross Defendant)
Superior Family Investments Pty Ltd (Fourth Cross Defendant)
O’Malley’s Hotel Pty Ltd ACN 608 025 636 (Fifth Cross Defendant)
PSJK Holdings Pty Ltd (Sixth Cross Defendant)
Powerhouse Corporation Pty Ltd (Seventh Cross Defendant)
Anthony Naaman (Defendant and Cross-claimant)
Representation:
Counsel:

J Kelly SC and A Maroya (Plaintiff and Cross-defendants)

P Afshar and N Wootton (Defendant and Cross-claimant)

Solicitors:

Norton Rose Fulbright Australia (Plaintiff and Cross-defendants)
KB Legals Pty Ltd (Defendant and Cross-claimant)

File Number(s): 2019/24203
Publication restriction: Nil

Judgment

Overview

For all the factual and legal complexities over several years, these proceedings are essentially about a creditor of a former trustee seeking to enforce a judgment debt. In this overview, I will identify the parties and the issues, and give a summary of the Court’s conclusions. It is intended to help the reader orient themselves before descending into those factual and legal complexities. This overview must be read with, and is not a substitute for, the Court’s detailed reasons which follow. For the sake of readability, I will use the various defined terms as they are later set out in these reasons.
Although he is nominally the defendant/cross-claimant, the moving protagonist in these proceedings is Mr Anthony Naaman. Although he is nominally the second cross-defendant, the defending protagonist is Mr Peter Sleiman. The other cross-defendants are Peter Sleiman’s brother, Tony Sleiman, and companies associated (using the term loosely) with them or Peter Sleiman’s wife, Samantha Sleiman. The most important of these companies is Jaken, which is the trustee of the Sly Fox Trust.
Jaken was not always the trustee of the Sly Fox Trust. The initial trustee was JPG, which is now in liquidation. In 2016, by which time Jaken had succeeded JPG as the trustee of the Sly Fox Trust, Mr Naaman obtained a judgment in this court for $3,446,755.55 against JPG. The Court declared that JPG was entitled to be indemnified for that judgment from the assets of the Sly Fox Trust and that Mr Naaman was subrogated to JPG’s right of indemnity.
At all material times, the assets of the Sly Fox Trust have been subject to mortgages to the National Australia Bank (NAB) and the main asset of the Sly Fox Trust has been O’Malley’s Hotel, a public house operated on the Kings Cross Property. However, other assets of the Sly Fox Trust have included the Granville Land and the Victorian Properties.
The underlying dispute between the protaganists is that, according to Peter Sleiman, there is little or nothing of the assets in the Sly Fox Trust available after satisfying NAB as a secured creditor to satisfy Mr Naaman’s judgment debt. Mr Naaman says that to the extent that may be the Sly Fox Trust’s position, it has been brought about by Peter Sleiman over a number of years directly or indirectly causing Jaken to enter into impermissible transactions including the transfer of the Granville Land and the Victorian Properties, and Jaken increasing its secured indebtedness to NAB by the $3.6 Million Drawdown (the Impugned Transactions).
By the end of the hearing, it was clear that Jaken’s summons had no work to do. It sought a declaration about the ownership of the King’s Cross Property that Jaken conceded was based on a wrong premise. It also sought the removal of a caveat lodged by Mr Naaman over the Kings Cross Property which Jaken ultimately accepted Mr Naaman had a caveatable interest to maintain.
The case really became about the relief sought in Mr Naaman’s amended cross-claim. The Court has concluded that, in general, the various cross defendants are liable in equity, as Mr Naaman contended. However, not least because NAB has appointed a receiver to the Kings Cross Property and O’Malley’s Hotel the quantification of that liability will have to be reserved for further consideration.
The Court’s conclusions may broadly be summarised as:

As a former trustee of the Sly Fox Trust, JPG is entitled to indemnity for Mr Naaman’s judgment debt from the assets of the Sly Fox Trust. That entitlement is given effect by an equitable lien over the assets of the Sly Fox Trust and confers a proprietary interest in those assets from time to time on JPG.

As the successor trustee of the Sly Fox Trust, Jaken owes a fiduciary duty to JPG not to deal with the assets of the trust in a way which destroys, diminishes or jeopardises JPG’s right of indemnity from those assets.

Mr Naaman is subrogated to JPG’s right to enforce that fiduciary duty owed by Jaken to JPG.

While Tony Sleiman was the nominal director of Jaken, Peter Sleiman was the de facto and shadow director of Jaken and the architect of the Impugned Transactions.

Each of the Impugned Transactions was undertaken with the intention, or at least had the effect, of destroying, diminishing or jeopardising JPG’s right of indemnity from the assets of the Sly Fox Trust and, among other things, is liable to be set aside (subject to the rights of secured creditors) pursuant to s 37A of the Conveyancing Act 1919 (NSW) or, in the case of the Victorian Properties, its Victorian equivalent).

The transfer of the Granville Land to Superior (a company controlled by Peter Sleiman’s wife, Samantha Sleiman) for no apparent commercial purpose and no consideration gives rise to liability on various bases to JPG enforceable by Mr Naaman in Jaken, Peter Sleiman, Tony Sleiman and Superior.

The transfer of the Victorian Properties to PSJK, also a company controlled by Samantha Sleiman, for no apparent commercial purpose and no consideration gives rise to liability on various bases to JPG enforceable by Mr Naaman in Jaken, Peter Sleiman, Tony Sleiman and PSJK.

The $3.6 Million Drawdown for no apparent commercial purpose and no consideration, insofar as it increased Jaken’s liability to NAB as a primary debtor and involved paying away $3.6 million to Powerhouse, gives rise to liability on various bases to JPG enforceable by Mr Naaman in Jaken, Powerhouse, Peter Sleiman and Tony Sleiman.

Furthermore, the $3.6 Million Drawdown was in breach of certain consent freezing orders made by Rein J. However, Mr Naaman’s action for tortious interference with the contract underlying those consent orders fails for want of proof of damage.

Peter Sleiman and Tony Sleiman are not liable to Mr Naaman under the Corporations Act 2001 (Cth) for his judgment debt.

The parties’ agreed a set of questions for the Court’s determination. These appear at the end of these reasons with summary answers.
Mr J Kelly of Senior Counsel appeared with Mr A Maroya of Counsel for the plaintiff and cross-defendants. Mr P Afshar of Counsel appeared with Ms N Wootton of Counsel for the defendant and cross-claimant.

Structure of these reasons

These reasons are divided into the following sections and page numbers:

Overview [3] to [6];

Structure of these reasons [6] to [7];

Relevant persons and definitions [7] to [10];

Facts [10] to [58];

Some common ground [58] to [60];

Peter Sleiman’s credit and his role as a de facto and shadow director [60] to [73];

Jaken’s other witnesses [73];

Jaken’s absent witnesses [73];

Mr Naaman’s witnesses [73];

Some impugned documents [74] to [88];

Mr Naaman’s standing [88] to [104];

Other applicable legal principles [104] to [109];

The transfer of the Granville Land [109] to [117];

The $3.6 Million Drawdown [117] to [131];

The Victorian Properties [131] to [141];

The business of O’Malley’s Hotel [141] to [142];

Liability under the Corporations Act [142] to [144];

Conclusions [144] to [145];

Agreed questions and the Court’s answers [145] to [154].

Relevant persons and definitions

The persons relevant to these proceedings are:

Anthony Naaman (Defendant/Cross-claimant).

Three brothers and two sisters:

Peter Sleiman (Second Cross Defendant);

Tony Sleiman (Third Cross Defendant);

George Sleiman;

Najette Michael; and

Hilda Saab.

Samantha Sleiman or Samantha Panetta (Peter Sleiman’s wife).

Ashleigh Panetta or Ashleigh Sleiman (Peter Sleiman’s daughter).

Jake Sleiman (Peter Sleiman’s son).

Tony Ghalbouni (married to Hilda Saab), and their children:

Rita Saab; and

Raymond Saab.

Tony Michael (married to Najette Michael), and their daughters (Peter Sleiman’s nieces):

Angela Michael or Angela Siviero, married to Daniele Siviero; and

Alissia Michael.

Chris Saab (Peter Sleiman’s nephew, son of Hilda Saab).

Stefano Laface, a solicitor.

Evan Spiegel, a person the Court is satisfied was a fiction.

Joe Nasr, a solicitor.

In these reasons:

‘JPG’ means Jaken Property Group Pty Ltd and for the period after 28 February 2007 Jaken Property Group Pty Ltd (In Liquidation).

‘Jaken’ means Jaken Properties Australia Pty Ltd (Plaintiff/First Cross Defendant).

‘First O’Malley’s’ means ACN 150 830 087 (formerly known as O’Malley’s Hotel Pty Ltd ACN 150 830 087).

‘Second O’Malley’s’ means O’Malley’s Hotel Pty Ltd 608 025 636 (Fifth Cross Defendant).

‘Powerhouse’ means Powerhouse Corporation Pty Ltd.

‘First Logan Fox’ means Exclusive Sports Management and Fitness Pty Ltd (formerly known as Logan Fox Lawyers Pty Ltd).

‘Second Logan Fox’ means Logan Fox Lawyers Pty Ltd ACN 161 353 153.

‘Kingsht’ means Kingsht Pty Ltd (formerly known as Kings Head Tavern Pty Ltd).

‘Stallones’ means Stallones Group Pty Ltd.

‘Superior’ means Superior Family Investments Pty Ltd (Fourth Cross Defendant).

‘PSJK’ means PSJK Holdings Pty Ltd.

Any other company not referred to above will be described by its full company name.

The facts

What follows are the Court’s findings of fact based upon public records and contemporaneous documents.
On 28 November 2003, Jaken Group Pty Ltd (Jaken Group) was registered.
On 18 December 2003, Jaken Property Group Pty Limited (JPG) was registered. It was originally known as Sleiman Property Group Pty Limited. At various times its sole director and secretary has been Najette Michael, Peter Sleiman and Raymond Saab.
On 2 February 2005, Stallones Group Pty Limited (Stallones) and Powerhouse Corporation Pty Ltd (Powerhouse) were registered.
By a discretionary trust deed made on 21 June 2005, the Sly Fox Family Trust (Sly Fox Trust) was settled with JPG as trustee. Peter Sleiman was noted in the schedule as the specified beneficiary, the default beneficiary and appointor.
By discretionary trust deed made on 23 June 2005 (upon which duty was paid on 28 June 2005), the PeteJake Family Trust (PeteJake Trust) was settled with Powerhouse as trustee. Mr Peter Sleiman was recorded in the schedule to that deed as the specified beneficiary, default beneficiary and appointor.
On 1 July 2005, Sleiman Property Group Pty Ltd changed its name to JPG. Peter Sleiman was the sole director and secretary of JPG between March 2004 and January 2006.
On 15 July 2005, JPG entered into a Deed of Guarantee and Restraint with Mr Naaman, from which the parties’ dispute arose.
By transfer dated 24 August 2005 and registered on 30 August 2005, Unit 261 and Unit 191 at X Cavanagh Street, Southbank in Melbourne were transferred to JPG for $640,000 (Victorian Properties).
By mortgage dated 24 August 2005 and registered on 30 August 2005, JPG granted a mortgage over the Victorian Properties to St George Bank Limited (St George).
By contract dated 7 October 2005, JPG purchased the property at X William Street, Kings Cross (Kings Cross Property) and the plant, goodwill and licences of the O’Malley’s Hotel which was located on the Kings Cross Property. The purchase price for the Kings Cross Property was $8,900,000.
On 29 November 2005, JPG’s purchase of the Kings Cross Property settled.
By mortgage dated 29 November 2005, JPG granted a mortgage over the Kings Cross Property to St George.
Also on 29 November 2005, JPG granted a fixed and floating charge to St George to secure a maximum amount of $17,000,000. The property charged was “all of JPG’s rights, property and undertaking of whatever kind, wherever situated whether present or future including all [JPG’s] right, title and interest in all licences, liquor licences and gaming machine entitlements (as defined in the charge) held by [JPG] in respect to the businesses known as O’Malley’s Hotel and all [JPG’s] rights of indemnity as trustee of the Sly Fox Family Trust”.
By contract dated 14 February 2006, JPG (recorded on the face of the contract as acting in its capacity as trustee for the Sly Fox Trust) agreed to purchase a property at X Cowper Street, Granville for $750,000 (Granville Land).
JPG’s purchase of the Granville Land settled on 5 April 2006. By mortgage of that date, JPG mortgaged the Granville Land to St George.
In August 2006, JPG commenced proceedings in the Equity Division of this Court against Mr Craig Wheeler and Mr Naaman (First 2006 Proceeding).
In the course of the First 2006 Proceeding, on 11 August 2006, orders were made that JPG should pay Mr Naaman’s costs in relation to a notice of motion which the Court infers sought injunctive relief against Mr Wheeler and Mr Naaman.
On 18 August 2006, Bergin J (as her Honour then was) made orders to give effect to JPG discontinuing the First 2006 Proceeding by consent. The orders made on that day included:

“4. The defendants expressly reserve their rights to bring proceedings against the plaintiff or any other party arising out of the facts or circumstances alleged in these proceedings including, and without limitation, to bring a claim for damages and/or other relief for breach by the plaintiffs of the Share Sale Agreement entered into on or around July 15, 2005, Deed of Guarantee and Restraint entered into on or around July 15, 2005 and a Services Agreement entered into on or around July 15, 2005. The parties expressly agree that the doctrine of anschun estoppel does not apply.
5. The plaintiffs expressly reserve their rights to bring proceedings against the defendants or any other party arising out of the facts or circumstances alleged in these proceedings including, and without limitation, to bring a claim for damages and/or other relief for breach by the defendants’ of the Share Sale Agreement entered into on or around July 15, 2005, Deed of Guarantee and Restraint entered into on or around July 15, 2005 and a Services Agreement entered into on or around July 15, 2005. The parties expressly agree that the doctrine of anschun estoppel does not apply.”

Sometime between August and December 2006, Mr Naaman lodged an application for the assessment of his costs of the First 2006 Proceeding.
By statement of claim dated 6 November 2006, Mr Naaman commenced proceedings in the Common Law Division of this Court against JPG for judgment in the sum of $2,000,000 relying upon, among other things, the Deed of Guarantee and Restraint (Mr Naaman’s Common Law Proceedings). JPG did not file a defence to those proceedings.
On 12 January 2007, Jaken Properties Australia Pty Ltd (Jaken) was registered with Mr Tony Sleiman as its sole director, secretary and shareholder.
Also on 12 January 2007, a change to company details form in respect of JPG was filed. According to the form, nearly one year earlier on 16 January 2006 Peter Sleiman had resigned as a director of JPG in favour of his nephew Mr Raymond Saab, and as at the same date Mr Sleiman had purportedly transferred the one share in JPG from himself to Mr Saab.
Peter Sleiman accepted in cross-examination that the reference to 16 January 2006 in the form was a back dating. Furthermore, the form recorded Mr Saab as having signed it on 11 August 2006, which was the date on which the costs order had been made against JPG in favour of Mr Naaman. This was the first of a number of examples of corporate events occurring at or about the time of significant litigation events.
By a deed of appointment made on 13 February 2007 between JPG, Jaken and Peter Sleiman, JPG retired as trustee of the Sly Fox Trust in favour of Jaken. The deed included:

“1.3   Discharge of Retiring Trustee
On and from the date of this deed the Retiring Trustee is discharged from further performance of its obligations and duties as trustee of the Trust.
1.4   Assignment of Trust’s debts
The Retiring Trustee must give notice to each person or entity owing moneys to the Retiring Trustee as trustee of the Trust and do all such things as may be necessary for the assignment to the New Trustee of any debt or chose of action.
1.5   Indemnity
The New Trustee indemnifies the Retiring Trustee against all debts which the Retiring Trustee has incurred and which are unpaid at the time of execution of this deed by all parties, while acting under and in terms of the Trust Deed and undertakes and agrees that the New Trustee will pay and discharge all such debts out of the assets of the Trust in accordance with the terms of credit or otherwise under which such debts were incurred.”

By transfer dated 13 February 2007 (but not registered until 5 February 2008), the Victorian Properties were transferred from JPG to Jaken.
On 14 February 2007, JPG’s solicitor, Mr Joe Nasr then of CPC Lawyers, wrote to Mr Naaman’s lawyers (KB Legals) indicating that they no longer acted for JPG in relation to Mr Naaman’s Common Law Proceedings. On the same day, JPG’s lawyers also wrote to the costs assessor in relation to the costs of the First 2006 Proceedings confirming they no longer acted for JPG in relation to that matter.

On 25 February 2007, a costs assessment was issued against JPG in favour of Mr Naaman for $19,012.98 for his costs of the First 2006 Proceeding and $5,771.99 for the costs of the costs assessment.
On 27 February 2007, Mr Christopher Darin was appointed liquidator of JPG in a voluntary winding up by creditors. In a report as to affairs of the same date prepared by Raymond Saab, the only asset or liability recorded was a $2,500 unsecured debt described as admitted as owing to Kostas Augerinos and Associates. That firm had been the Sleiman family accountants and Mr Augerinos was the settlor of the Sly Fox Trust.
The winding up of JPG had the result that Mr Naaman’s Common Law Proceedings were stayed.
On 6 March 2007, the Court’s manager of costs assessment sent the certificate of determination of Mr Naaman’s costs in the First 2006 Proceeding to the parties.
On 29 March 2007, Mr Naaman lodged a caveat over the Kings Cross Property and the Granville Land. The caveat did not specify the nature of the estate or interest in the land, but specified that it was by virtue of “an agreement between the Caveator and the Registered Proprietor [JPG] under which the Registered Proprietor agreed to charge its rights to and interest in the land”.
By letter dated 10 May 2007, CPC Lawyers (who had previously acted for JPG) informed Mr Naaman’s solicitors that they now acted on behalf of Jaken as the trustee of Sly Fox Trust.
On 1 June 2007, Mr Darin as liquidator of JPG lodged a caveat over the Kings Cross Property and the Granville Land. The interest claimed was as either owner or chargee:

“1. The Caveator is the registered proprietor and is beneficially entitled to the land, or in the alternative,
2. The Caveator is a trustee of the land and is entitled to a charge over the Land to the extent of its indemnity for any liabilities incurred by the Caveator in its capacity as trustee.”

Between 17 April 2007 and 13 June 2007 there was correspondence between Mr Naaman’s solicitors, Mr Darin and Jaken’s solicitors in relation to lapsing notices that had been issued by Jaken in relation to the caveat that had been lodged by Mr Darin.
In its tax return for the year ended 30 June 2007, the Sly Fox Trust represented that it had a total income of $1,800,940 and gross assets of $13,684,438, describing its main business activity as “renting/leasing of non-res prop as owner/leaseholder”.
In its tax return for the year ended 30 June 2007, Stallones recorded its business address as that of O’Malley’s Hotel, described its main business activity as “Hotel operation mainly drinking place”, that it paid rent of $900,000 and had a gross income of $3,813,308.
On 11 February 2008, Peter Sleiman made a statutory declaration in which he stated that the Kings Cross Property and the Granville Land were properties of the Sly Fox Trust.
On 9 April 2008, a hotelier’s licence was issued to Galea Jamie Percival in respect of O’Malley’s Hotel.
On 30 April 2008, Tony Sleiman as the sole director of Jaken in its capacity as trustee of the Sly Fox Trust, gave written undertakings to Mr Darin not to encumber further the Granville Land and O’Malley’s Hotel in return for Mr Darin’s consent as liquidator of JPG to register Jaken as the registered proprietor for the properties of the Sly Fox Trust. Mr Darin’s consent was given on 1 May 2008.
In its annual report for the year ended 30 June 2008, the Sly Fox Trust represented that it had:

received rent of $992,000 and owned land and buildings to the value of $13,565,827; and

gross income of $1,021,360 and declared that it had total assets of $14,478,361.

In its annual report for the year ended 30 June 2008, Stallones reported that it paid $900,000 in rent. In its tax return for the same period, Stallones also reported that it had paid rent of $900,000 and that it had generated gross income of $3,968,430.
In its annual report for the financial year ended 30 June 2008, the PeteJake Family Trust (of which Powerhouse was trustee) represented the value of the Kings Head Tavern to be $15,586,113. In its tax return for the same period, the PeteJake Family Trust recorded total assets of $17,234,207.
On 15 September 2008, PSJK Holdings Pty Ltd (PSJK) was incorporated with Peter Sleiman as its sole director, secretary and shareholder.
On 9 October 2008 (and subsequently relodged after payment of duty), applications to record Jaken as the new registered proprietor of the Granville Land and the Kings Cross Property were lodged, after which title to those properties was transferred to Jaken as trustee for the Sly Fox Trust.
On 29 October 2008, Jaken applied to lapse JPG’s caveat (filed by its liquidator Mr Darin) from the Kings Cross Property and the Granville Land.
On 5 November 2008, Mr Darin’s solicitors wrote to Mr Naaman’s solicitors, including:

“In accordance with our client’s undertaking to you, you are hereby notified that my client was served today with a Notice of Lapsing Caveat. If no application is made to extend the caveat, the liquidator’s caveat will lapse. My client does not have funds to make that application. It is unlikely he will be in a position to make an application, unless your client funds the application, and provide the necessary security to indemnify my client. The application has to be made urgently, if it is to be made at all.”

No application to extend Mr Darin’s caveat over the Kings Cross Property and the Granville Land was ever made, so that the caveat lapsed.
On 17 March 2009 at 2.18pm, Stefano Laface of HPL Lawyers purportedly emailed Peter Sleiman saying “When did you want me to come over, this afternoon or tomorrow morning?”. The subject line was Sly Fox Deed. Mr Sleiman purportedly replied by email on the same date at 4.46pm “Morning mate say 10.00am on Friday I’m flat chat next couple of days”. I have used the word “purportedly” because these emails were only located by Peter Sleiman in September 2019 and were tendered in Jaken’s case to corroborate the authenticity of the deed referred to in the next paragraph. The authenticity of these emails was not accepted by Mr Naaman.
On 20 March 2009, a deed of variation of discretionary trust deed was purportedly entered into in relation to the Sly Fox Trust by Jaken as trustee, Peter Sleiman as the resigning appointor and Tony Sleiman as the new appointor, with amendments to the Sly Fox Trust including to change the specified beneficiaries and default beneficiaries from Peter Sleiman to Tony Sleiman. This purported deed of variation had never been produced to Mr Naaman until it was provided by Jaken’s solicitor on 5 September 2019.
On 17 April 2009, Mr Scott Robertson prepared a valuation for St George of the freehold and business of O’Malley’s Hotel as a going concern for first mortgage purposes of $15,250,000.
In its annual report for the year ended 30 June 2009, the Sly Fox Trust represented it had property assets valued at $14,565,827 and received rent in the sum of $992,000.
In its tax return for the year ended 30 June 2009, the Sly Fox Trust declared that it had received gross business income of $992,200 and that its total assets were valued at $15,922,333.
In its annual report for the year ended 30 June 2009, Stallones represented that it had paid rent of $900,000.
In its tax return for the year ended 30 June 2009, Stallones represented that it had received gross total income of $3,778,870 and that it had paid rent of $900,000.
In its annual report for the year ended 30 June 2009, the PeteJake Family Trust represented that the value of the Kings Head Tavern was $18,318,310.
In its tax return for the year ended 30 June 2009, Powerhouse as trustee of the PeteJake Family Trust represented that it had total assets to the value of $19,763,158.
By statement of claim filed in this division of the Court on 6 July 2009, Mr Naaman commenced proceedings against Peter Sleiman and Jaken as trustee of the Sly Fox Trust seeking, among other things, judgment against Jaken as trustee for the Sly Fox Trust in the sum of $2,000,000 (2009 Proceeding).
On 28 October 2009, Joe Nasr (now describing himself as corporate legal counsel of Jaken) served on Mr Naaman’s solicitors a sealed copy of Jaken’s defence in the 2009 Proceeding.
By letter dated 23 December 2009, Mr Naaman’s solicitors notified Peter Sleiman and Jaken of the categories for discovery that were sought in the 2009 Proceeding, including documents in relation to the change of trustee for the Sly Fox Trust.
On 8 February 2010, Peter Sleiman was replaced as sole director, secretary and shareholder of PSJK by his wife Samantha Sleiman.
In its annual report for the year ended 30 June 2010, the Sly Fox Trust represented that it held land and buildings to the value of $14,565,827 and that it had received rent of $992,000.
In the Sly Fox Trust’s financial report for the year ended 30 June 2010 signed by Tony Sleiman, the trust represented that it held property, plant and equipment to the value of $15,231,031 and that it had received revenue in the sum of $998,002.
In the Sly Fox Trust’s tax return for the year ended 30 June 2010 signed by Tony Sleiman, the trust declared that it had received business income of $997,940 and that the value of its total assets was $15,739,541.
In its annual report for the year ended 30 June 2010, Stallones represented that it paid rent of $900,000 and that its gross sales income was $4,564,852.
In its financial report for the year ended 30 June 2010, signed by Peter Sleiman, the PekeJake Family Trust reported that it owned land and buildings to a value of $18,933,512.
It its annual report for the year ended 30 June 2010, the PeteJake Family Trust represented that the value of the Kings Head Tavern was $18,308,810.
Shortly after 14 July 2010, Mr Naaman received a lapsing notice in respect of his caveat over the Kings Cross Property.
By letter dated 17 September 2010, the Commonwealth Bank wrote to Peter Sleiman to inform him that the bank refused his loan application to refinance moneys owed by various trusts including the PeteJake Family Trust and the Sly Fox Trust. The letter included “As discussed, given the outstanding litigation involving AVS [AVS Group of Companies Pty Ltd], and potential reputation and commercial impacts, we are unable to consider the application further.”
By email dated 22 September 2010, Stefano Laface (the solicitor for the defendants in the 2009 Proceeding) served a verified list of documents in response to Mr Naaman’s discovery categories. The list was verified by an affidavit of 22 September 2010 sworn by Peter Sleiman in his own right and by Tony Sleiman as a director of Jaken.
By a deed of variation of discretionary trust purportedly made on 30 September 2010 between Peter Sleiman Investments Pty Limited and Peter Sleiman, the Sleiman Family Trust Deed (originally entered into in 1999) was purportedly amended by deleting Peter Sleiman as the primary beneficiary and replacing him with his brother George Sleiman.
By a deed of variation of discretionary trust purportedly made on 15 October 2010 between AVS Group Australia Pty Ltd and Tony Sleiman, the AVS Group Australia Trust (originally entered into in 2006) was varied in relation to its revocation and amendment provisions.
By a deed of variation of discretionary trust purportedly made on 15 October 2010 between Jaken as trustee and Tony Sleiman, the trust deed for the Sly Fox Trust was purportedly amended by changing the definition of general beneficiaries to include the specified beneficiaries, their spouse and descendants.
By its tax return for the year ended 30 June 2010, apparently completed on 21 September 2011, the PeteJake Family Trust declared that it had total assets of $19,054,988.
On 24 November 2010, Peter Sleiman met with Tony Owen of Owen Property Valuations Pty Limited in relation to the valuation of the Kings Cross Property and the Kings Head Tavern.
On 29 November 2010, Peter Sleiman met again with Mr Owen in relation to the valuation of the Kings Cross Property and the Kings Head Tavern.
On 1 December 2010, Mr Owen emailed Peter Sleiman a tax invoice for an upfront fee of $2,200 “to provide indicative verbal valuations on the two hotels” [O’Malley’s Hotel and the Kings Head Tavern]. The evidence included a tax invoice of $1,100 addressed to Stallones c/- O’Malley’s Hotel for “part valuation fee O’Malley’s Hotel, XXX William Street, Kings Cross”. Although not in evidence, the Court assumes that there was an invoice in the same amount in respect of the upfront fee for the Kings Head Tavern valuation because Mr Owen’s covering email refers to a total of $2,200.
On 3 December 2010, Mr Owen emailed Ms Louise Keenan of the National Australia Bank (NAB) saying that he had not yet received from Peter Sleiman the information which he (Mr Owen) had requested to enable him to undertake the valuations.
On 15 December 2010, Mr Owen emailed Peter Sleiman that “to undertake a valuation that will be relied on for first mortgage security purposes I would require the full Financial Statements for Stallones Group Pty Ltd and Jakes Place Pty Ltd, prepared by your external accountants for tax reporting purposes for the financial years 2007/2008, 2008/2009 and 2009/2010”.
As at 31 December 2010, a St George statement of account for “Jaken Property Group atf the Sly Fox Family Trust” on the maturity of a bank bill shows that JPG owed St George $8,250,000.
By deed dated 17 February 2011 between Powerhouse as trustee and Peter Sleiman as the appointor, the PeteJake Family trust was varied to include a definition of general beneficiaries which included the specified beneficiary or their descendants.
In April 2011, Kings Head Tavern Pty Ltd (Kingsht) replaced Jakes Place Pty Ltd as the operator of the Kings Head Tavern.
On 10 May 2011, O’Malley’s Hotel Pty Ltd (First O’Malleys) was registered with Peter Sleiman as its sole director, secretary and shareholder and then replaced Stallones as the operator of O’Malley’s Hotel.
Acting on the instructions of Peter Sleiman, on 18 May 2011 Scott Robertson valued the freehold and business as a going concern of O’Malleys Hotel at $14,500,000, the purpose of the valuation being recorded as “First Mortgage”.
On 2 June 2011, Peter Sleiman ceased to be a director of First O’Malleys and Tony Sleiman was appointed as a director and received Peter Sleiman’s one share in the First O’Malleys.
On 17 June 2011, Jaken purportedly leased the Kings Cross Property to First O’Malley’s for ten years commencing on 20 June 2011 at a base rent commencing at $300,000 per annum plus GST. For the reasons set out in [318] to [321] below, this lease could not possibly have been entered into on the date it bears.
In its annual report for the two months ended 30 June 2011, First O’Malleys recorded that it paid rent in the amount of $90,000 (equivalent to $540,000 per annum).
In its profit and loss statement for the two months to 30 June 2011 that was provided by First O’Malleys to NAB (being a document dated 22 September 2011), First O’Malleys represented that it had total income of $737,095.94 and that it had paid rent of $150,000 (being $900,000 per annum).
In its balance sheet for the year ended 30 June 2011 that was provided to NAB, Powerhouse as trustee of the PeteJake Family Trust represented the value of its land and equipment to be $18,933,512.
On 6 July 2011, a St George account styled JPG atf the Sly Fox Family Trust received “settlement proceeds” of $970,921.35.
On 13 October 2011, Peter Sleiman lodged an ASIC change to company details form noting the appointment of Tony Ghalbouni as director and secretary of Stallones with effect from 18 February 2011.
Also on 13 October 2011, Tony Ghalbouni purportedly lodged an ASIC change to company details form noting the cessation of Peter Sleiman as a director and secretary of Stallones with effect from 18 February 2011.
By letter dated 17 October 2011, NAB wrote to Jaken as trustee of The Sly Fox Trust and Jaken in its own right enclosing a letter of offer to Jaken as trustee of the Sly Fox Trust for a facility of up to $8,750,000 with an expiry date of 31 December 2014.
By a report dated 18 October 2011, Scott Robertson issued a valuation to NAB of the O’Malley’s Hotel freehold and business as a going concern of $14,500,000.
NAB’s offer was accepted on behalf of Jaken on 26 October 2011 by Tony Sleiman.
On 21 October 2011, NAB also sent an offer of finance to Powerhouse as trustee for the PeteJake Trust for a facility of up to $13,250,00 with an expiry date of 31 December 2014. This was accepted by Peter Sleiman on 26 October 2011.
By a declaration made on 26 October 2011, Tony Sleiman confirmed to NAB on behalf of Jaken as trustee of the Sly Fox Trust that the full unencumbered market value of its property was $18,000,000. Tony Sleiman made a similar declaration insofar as NAB had approved finance for Powerhouse as trustee of the PeteJake Trust.
On 26 October 2011, Jaken as trustee for the Sly Fox Trust instructed NAB to draw down and disperse $8,750,000, nearly all of which was to be applied to pay out the St George loan to Jaken.
By deed of guarantee and indemnity signed by both Tony Sleiman and Peter Sleiman on 27 October 2011, various persons and entities including Peter Sleiman, Tony Sleiman, Powerhouse, First O’Malley’s and Kingsht guaranteed Jaken’s loan from NAB to the limit of $8,750,000. That limit never changed.
By another deed of guarantee and indemnity also dated 27 October 2011, Jaken and other parties including Peter Sleiman, Tony Sleiman, First O’Malley’s and Kingsht, guaranteed the NAB loan to Powerhouse to the limit of $13,250,000.
St George’s mortgage over the Kings Cross Property was discharged on 31 October 2011.
On 22 November 2011, NAB’s mortgage was registered over the Kings Cross Property and the Granville Land.
On 7 March 2012, Superior Family Investments Pty Ltd (Superior) was incorporated with Samantha Panetta (Peter Sleiman’s wife) as the sole director, secretary and shareholder.
On 7 March 2012, a deed of variation for the Superior Family Investments Trust (apparently created by deed of the same date) was purportedly entered into to vary the identity of the general beneficiaries.
On 4 April 2012, Peter Sleiman sent the financial statements for First O’Malley’s and the Kingsht for the two months ended 30 June 2011 to NAB.
On 12 April 2012, Peter Sleiman sent the financial statements for Kingsht for the 9 months ended 31 March 2012 and for First O’Malley’s for the nine months ended 31 March 2012 to NAB.
On 7 May 2012, a valuation obtained on the instructions of NAB valued the Granville Land at $700,000. The valuation noted that the land had been purchased on 26 March 2012 for $1,500,000. The purpose of the valuation was “first mortgage security purposes” and Superior was referred to as the applicant.
On 11 May 2012, Tony Sleiman ceased to be a director of First O’Malley’s.
In its trading profit and loss statement for the year ended 30 June 2012 provided to NAB, First O’Malley’s recorded that it had paid rent in the sum of $720,000.
On 23 August 2012, the Victorian Properties were transferred from Jaken to PSJK for recorded consideration on the face of the transfer of $500,000.
On 6 September 2012, the St George home loan to Jaken in respect of the Victorian Properties was paid out in the sum of $451,261.21.
By motion filed on 28 September 2012, Peter Sleiman and Jaken applied for Mr Naaman’s statement of claim in the 2009 Proceedings to be summarily dismissed. By letter of the same date, Mr Naaman’s solicitors sought an explanation from Peter Sleiman’s solicitors as to the basis of the application.
On 5 October 2012, Jaken’s mortgage to NAB over the Granville Land was discharged and the Granville Land was transferred to Superior for a consideration of $500,000.

On 8 October 2012, a mortgage apparently executed on 24 July 2012 over the Granville Property to NAB from Superior was registered and stamped as securing up to $6,015,000.
On 22 November 2012, Logan Fox Lawyers Pty Ltd (First Logan Fox) was registered with Samantha Panetta and Charles Parisi as its founding directors.
On 5 December 2012, Charles Parisi of Parisi Lawyers, who had been acting for Peter Slieman and Jaken, sought to explain the basis of the notice of motion referred to in [125] above.
On 6 December 2012, Mr Naaman’s lawyers responded to Parisi Lawyers including that they may be instructed to seek leave to proceed against JPG, which would entail the re-registration of that company.
On 14 March 2013, Black J made orders in the 2009 Proceeding reinstating the registration of JPG and appointing Mr Mark Cooper as its liquidator. His Honour also made directions for Mr Naaman to file a motion for leave to commence proceedings against JPG.
On 19 March 2013, Peter Sleiman sent financial reports for First O’Malley’s and other companies for the six months ending 31 December 2012 to NAB.
On 9 May 2013, Stallones was voluntarily wound up and Mr Ozem Kassem was appointed as its liquidator.
On 10 May 2013, Black J made these orders by consent in the 2009 Proceeding:

“1.   The plaintiff [Mr Naaman] is granted leave to file the amended statement of claim … to join Jaken Property Group Pty Ltd (in liquidation) as a defendant.
2.   Leave is granted to the plaintiff to proceed against Jaken Property Group Pty Ltd (in liquidation) …
2A   That no step be taken to enforce judgment against Jaken Property Group Pty Ltd (in liquidation) without leave of the Court.
3.   The defendants’ [Jaken as trustee for the Sly Fox Trust and Peter Sleiman] notice of motion filed 28 September 2012 be dismissed.”

In its annual report for the year ended 30 June 2013 that was provided to NAB, the Sly Fox Trust represented that it held property to the value of $15,065,827 and received rent in the sum of $1,353,258.
In its annual report for the year ended 30 June 2013 that was provided to NAB, First O’Malley’s represented that it had paid rent in the sum of $720,000 and that its income had increased from $4,028,797 to $4,064,383.
The annual report for the PeteJake Family Trust for the year ended 30 June 2013 represented the value of the Kings Head Tavern to be $18,308,810.
On 25 July 2013, NAB wrote to Jaken (addressed to Tony Sleiman) stating that the facility limit for its loan to NAB was $8,400,000 and gave notice of a revised interest rate.
A record of the Independent Liquor and Gaming Authority for the liquor licence details for O’Malley’s Hotel as at 11 October 2013 records the business owner as First O’Malley’s and the premises owner as Jaken.
By letter dated 26 November 2013 addressed to Peter Sleiman of the “AVS Group of Companies”, Mr Christopher Batten advised that various properties held on trust should each be the subject of a “Deed of Declarations” so that each would become held by a fixed unit trust. The advice records that it “is provided solely for the use of Mr Peter Sleiman”.
In the annual report for the six months ended 31 December 2013 for First O’Malley’s that was provided to NAB, it was represented that the company had paid rent in the amount of $360,000 and that its gross income was $2,303,608.
On 3 March 2014, Pembroke J determined part of the 2009 Proceeding by entering judgment against JPG in the sum of $2,000,000 together with interest for the period from July 2006 to March 2014 in the sum of $1,291,246.58 and ordered JPG to pay Mr Naaman’s costs. His Honour adjourned the balance of the proceedings “with the intention that the claim against Peter Sleiman and [Jaken as trustee for the Sly Fox Trust] proceed on another date”.
By letter dated 10 March 2014, the solicitors for the liquidator of JPG wrote to First Logan Fox (who were acting for Peter Sleiman and Jaken), referred to Pembroke J’s judgment and said:

“Our client in his capacity as the liquidator of the former corporate trustee of the Sly Fox Family Trust, demands that your client, Jaken Properties Australia Pty Ltd, the new trustee, indemnify and discharge our client’s costs of liquidation and judgment out of the Trust assets, pursuant to our client’s right of indemnity set out at 1.5 of the Deed of Appointment dated 13 February 2007.
Our client has lodged the attached caveat .. over the Trust asset, being the property at XXX William Street, Kings Cross, …, pursuant to our client’s equitable right of interest over the land arising from the former trustee’s right of interest over the land arising from the former’s trustee’s right of indemnity.
Unless your client is able to discharge the costs of liquidation and judgment, or make arrangements for their satisfaction by 27 March 2014, we will obtain our client’s instructions in respect of seeking to enforce that indemnity.”

On 11 March 2014, the liquidator of JPG registered a security interest over all present and after acquired property of Jaken on the Personal Property Securities Register.
On 12 March 2014, the caveat lodged by the liquidator of JPG over the Kings Cross Property was registered.
By notice of motion filed on 17 March 2014 in the 2009 Proceeding, Peter Sleiman and Jaken sought to set aside Pembroke J’s judgment against JPG.
By notice of motion filed on 27 March 2014, Mr Naaman brought an application in the 2009 Proceeding for restraining and freezing orders against Jaken in relation to the Kings Cross Property.
On 7 April 2014, Mr Andrew Soo of NAB emailed Peter Sleiman confirming the loan balances of Jaken as trustee for the Sly Fox Trust as $8,400,000 and Powerhouse as trustee for the PeteJake Family Trust as $10,900,000. The email urgently sought various financial information.
On 14 April 2014, a caveat by Mr Naaman over the Kings Cross Property was registered, claiming a right of subrogation to JPG’s right of indemnity against Jaken.
By summons filed on 8 May 2014, Jaken commenced proceedings against JPG and Mr Naaman for the removal of their respective caveats over the Kings Cross Property.
On 16 May 2014, Joe Nasr (describing himself as managing director and corporate legal counsel of Jaken) emailed Mr Phil Rennie of Phil Rennie Valuations:

“Peter Sleiman has provided your email as well as discussed the need for us to obtain the valuation/market appraisal for O’Malley’s Hotel at XXX William Street Woolloomooloo [Peter Sleiman denied this in the course of his evidence].
Attached is a copy of the current lease.
Please note that the owner of the property is Jaken Properties Australia Pty Limited in its capacity as trustee. The owner owns the land and the building. Please note that for the purposes of the valuation this is all we require valued. Please exclude the business, Hotel Licence, Poker Machine Entitlements and the Fitout as these are not owned by us and owned by a third party that operates the business from the Premises.
Please let me know if there is anything else you require.
Your urgent assistance in this matter would be appreciated.”

By email dated 16 May 2014, Mr Rennie sought further information from Mr Nasr in relation to O’Malley’s Hotel. Mr Nasr provided that information to Mr Rennie by email dated 19 May 2014.
On 21 May 2014, Mr Rennie issued a valuation as at that date of $4,500,000 as the “current market value of the lessor’s interest” in O’Malley’s Hotel: “the interest being valued as the encumbered fee simple subject to the existing tenancy, of the real estate only, excluding the hotelier’s licence and attached poker machine entitlements, the business/good will (for the remaining lease term), lessee’s plan, equipment, furniture and furnishings etc and stock”.
In support of the proceedings to remove JPG’s and Mr Naaman’s caveats (see [150] above), Peter Sleiman swore an affidavit dated 8 May 2014. That affidavit had attached what purported to be a lease for the Kings Cross Property said to have been entered into between Jaken and First O’Malley’s on 17 June 2011. On 27 May 2014, Mr Naaman’s solicitors wrote to the Registrar General concerning that lease. On 21 May 2014, Land and Property Information responded by confirming that the form of lease used had not been released until 5 September 2013.
On 31 May 2014, a new NAB bank account (8943) was opened for the Sly Fox Trust shown fully drawn at $8,400,000.
By motion dated 4 June 2014, Mr Naaman applied to have the various applications in the 2009 Proceeding expedited and heard together with Jaken’s summons in relation to the withdrawal of caveats.
The parties’ various applications were fixed for hearing before Rein J on 18 June 2014. They were resolved by consent orders of that date (the Rein J Orders) which included:

“1. The Court orders that orders numbered 1, 2 & 4 of the orders of Pembroke, J made on 3 March 2014 and entered on 5 March 2014 be set aside.
2. That upon the plaintiff, through his counsel giving the usual undertaking as to damages, the Court makes orders in accordance with paragraphs 1 and 2 (as amended in writing) of the Amended Notice of Motion filed by the Plaintiff and annexed to these orders.
3. The plaintiff is to serve on the first and second defendant by Friday 27 June 2014 an affidavit as best as he can of his assets and liabilities.
4. The Court notes that the first and second defendant will not assert any defence based on the proposition that the plaintiff must take all of the steps of first obtaining judgment and exhausting its remedies and right of execution against the third defendant. …
Amended Notice of Motion
Pursuant to Rule 25.11 and/or 25.14 UCPR:
1. An order that the second defendant [Jaken] (the Respondent) be restrained from disposing of, dealing with other than in the usual course of business, or further encumbering or diminishing the value of the property [known] as 'the O'Malley's Hotel' Lot X DP XXXXX X and having street address XXX Williams Street Kings Cross (the Kings Cross Property) until further order of this court.
2. An order that the Respondent by 27 June 2014 serve on the plaintiff and the third defendant an affidavit setting out, as best it can:
(a) The amount of any indebtedness secured by the Kings Cross Property;
(b) Any assets of the Slyfox Family Trust (the Trust);
(c) The circumstances of the transfer of the property at Lot XX DP XXXXX X being XX Cowper Street Granville (the Granville Property) from the second defendant to Superior Family Investments Pty Ltd (Superior) including the manner of payment of the consideration received in respect of the sale of that property;
(d) The circumstances of the indebtedness of the second defendant to NAB that gave rise to the lodgement of the PPSR security interest registered on 24 January 2014 in favour of the secured party National Australia Bank Ltd (Registration Number XXXXX X);
(e) In the event the hotel business operating from the Property and known as O’Malley’s Hotel (the hotel) has been sold, transferred, licensed or leased by the Respondent, the circumstances of that transaction, including to whom it was sold, transferred, licensed or leased and the consideration received and attaching a copy of the relevant contracts, lease or deed evidencing the transaction; and
(f) annexing:
(i)the tax returns, balance sheets and profit and loss statements of the Trust for financial years ending 30 June 2010, 2011, 2012 and 2013;
(ii) copies of all bank statements for any loan account or deposit account held in a bank or financial institution in the name of the Respondent in its own capacity or as trustee for the Sly Fox Family Trust for the period 1 January 2011 to date;
(iii) copies of:
- any bank guarantee or bank statement or deposit slip showing the receipt of a security deposit; and
- all bank statements and remittance slips showing the payment of rent,
pursuant to the June 2011 lease.
To (Jaken Properties Australia Pty Ltd and its directors). If (Jaken Properties Australia Pty Ltd) disobeys paragraph (1) of this order, then (Jaken Properties Australia Pty Ltd) and its directors will be liable to sequestration of property and the said directors to imprisonment.”

Also on 18 June 2014, Peter Sleiman met with, among others, Mr Peter Hartley of NAB to discuss a “plan” proposed by Peter Sleiman to increase Jaken’s facility with NAB to $12,000,000 and reduce the Powerhouse facility. The fact of this meeting and the “plan” was confirmed in an email from Mr Hartley to Peter Sleiman and others dated 20 June 2014 in which Mr Hartley said “Just confirming from our meeting on Wednesday the plan you suggested was”..
On 26 June 2014, Peter Sleiman emailed to Andrew Soo of NAB various financial documents which Mr Hartley had sought, including the Sly Fox Trust’s annual report for the year ended 30 June 2013 which valued the trust’s land and buildings at $15,065,827 and recorded rent received of $1,353,258.
On 26 June 2014, Peter Sleiman swore an affidavit in response to the Rein J Orders which included that “Presently, the funding from the NAB is through commercial bank bills. At present the amount due under the bank bills is approximately $8.75 million … At present a figure in the vicinity of $13.25m remains owing by Powerhouse to the NAB”.
In relation to O’Malley’s Hotel, Peter Sleiman’s affidavit annexed a 10 year lease (with a further 10 year option) from Jaken to First O’Malley’s dated 17 June 2011. However, the affidavit said nothing about the sale or transfer of the O’Malley’s hotel business.
In its profit and loss statement for the year ended 30 June 2014, First O’Malley’s represented that it had gross income of $4,453,054 with an operating profit of $691,685, and that it had paid rent of $724,511.
In its financial statements for the year ended 30 June 2014 and provided to NAB, the Sly Fox Trust represented the value of land and buildings held by it was $15,065,827.
On 2 July 2014, Mr Hartley emailed Peter Sleiman referring to a “structure…we were talking about recently” of Jaken having a facility of $12 million and Powerhouse a facility of $3 million.
By letters dated 21 August 2014 to Jaken as trustee for the Sly Fox Trust and to Powerhouse as trustee for the PeteJake Family Trust, NAB offered to vary their respective facilities. Jaken’s facility was increased from $8,400,000 to $12,000,000, with NAB’s offer accepted by Tony Sleiman on 22 August 2014. Powerhouse’s facility was reduced from $10,600,000 to $7,000,000. This was just over two months after the Rein J Orders had been made, including an asset preservation order.
In a declaration made on 22 August 2014, Tony Sleiman, on behalf of Jaken as trustee for the Sly Fox Trust, confirmed that the highest amount of financial accommodation provided by the Bank to Jaken was $12,000,000, while the guarantee given by various people and companies including Powerhouse, Tony Sleiman, Peter Sleiman and O’Malley’s Hotel remained limited to $8,750,000. In the same declaration, Tony Sleiman asserted that the full unencumbered market value of Jaken’s property was $100.
In a declaration made on 22 August 2014, Peter Sleiman, on behalf of Powerhouse as trustee for the PeteJake Trust, also confirmed that the highest amount of financial accommodation provided by the Bank to Jaken was $12,000,000, while the guarantee given by various people and companies including Powerhouse, Tony Sleiman, Peter Sleiman and O’Malley’s Hotel remained limited to $8,750,000. In the same declaration, Tony Sleiman asserted that the full unencumbered market value of Powerhouse’s property was $100
On 8 September 2014, several transactions occurred:

Jaken drew down $12,000,000 on its new facility which was contained in a newly established NAB account.

The $12,000,000 was paid into an account held by Powerhouse with the description “Debt reallocation”.

$10,525,000 was paid from the account held by Powerhouse to Powerhouse’s loan account, which reduced the latter to zero.

The amount of $1,422,954.86 was paid from the account held by Powerhouse to a business cheque account held by Jaken.

An additional $7,000,000 was deposited into Jaken’s cheque account with the description “debt reallocation”. While the source of that funds is not identified in the bank statements, the Court infers that amount was debited to a loan account of Powerhouse and is the $7,000,000 limit and balance referred to in the correspondence set out in [171] below.

$8,400,000 was then deposited into Jaken’s loan account to clear it.

The final result of the transactions referred to in the previous paragraph was that Jaken then had a loan account of $12,000,000 and Powerhouse’s loan account had been reduced to $7,000,000.
On 10 September 2014, Peter Sleiman emailed Peter Hartley and others at NAB:

“PETER I need you to call me. My accounts are all over the place since we relocked the facility. $12m was supposed to be JAKEN not PWH.”

On the same day Andrew Soo of NAB replied to Peter Sleiman confirming that the limit and balance for Jaken was $12,000,000 and the limit and balance for Powerhouse was $7,000,000. Mr Soo also sent an email confirming that the amounts were fully drawn and included payment of a break cost.
On 24 October 2014, Mannellis Pty Limited was incorporated with Logan Fox Lawyers as its registered office and Ashleigh Panetta (Peter Sleiman’s daughter) as director and secretary. According to an ASIC search, Samantha Sleiman was a director and secretary of Mannellis Pty Limited for one day (28 November 2014). Samantha Sleiman and Ashleigh Panetta were equal shareholders in the company.
On 17 November 2014, Mr Naaman filed a further amended statement of claim in the 2009 Proceeding. This added a prayer for judgment against JPG as trustee of the Sly Fox Trust for $2 million and declarations that JPG was entitled to be indemnified out of the assets held by Jaken, and that the transfer of the Sly Fox Trust assets from JPG to Jaken was voidable as a fraud on creditors.
On 26 November 2014, the defendants in the 2009 Proceedings filed their defence to the further amended statement of claim. In that defence, the defendants admitted that:

On 15 July 2005, JPG in its capacity as trustee of the Sly Fox Trust incurred a liability to pay the instalments of purchase price under the “Guarantee Agreement and the Share Sale Agreement’ and that Peter Sleiman was the sole director of JPG as at that date; and

At all material times up to and including the date of the defence, JPG was entitled to indemnity out of the assets of the Sly Fox Trust for any liability to Mr Naaman as alleged in the 2009 Proceeding.

On 3 December 2014, there was an attempt by Jaken to transfer the assets of the Sly Fox Trust to two trusts of which Jaken was also to be trustee. At the hearing before me, the cross-defendants accepted this transaction was ineffective such that Jaken continues to hold the Kings Cross Property as trustee of the Sly Fox Trust.
The 2009 Proceeding was heard by Stevenson J on 15, 17 and 18 December 2014.
On 16 December 2014, NAB issued a business letter of offer to Trojan Marketing and Consultants Pty Ltd for a facility of $1,500,000.
On 17 December 2014, NAB issued a letter of offer to South Street Properties Pty Ltd as trustee for the South Street Unit Trust for a facility of $2,315,000.
On 24 December 2014, Stevenson J delivered judgment dismissing Mr Naaman’s claims in the 2009 Proceeding.
On 11 January 2015, Jaken entered into a lease with Mannellis Pty Limited for the Kings Cross Property for 10 years, commencing on 1 January 2015 at a rent of $180,000 per annum including reference to the liquor licence.
On 13 January 2015, Logan Fox Lawyers served a lapsing notice in respect of JPG’s caveat over the Kings Cross Property on JPG’s liquidator, Mr Cooper.
On 16 January 2015, Mr Naaman served his notice of intention to appeal against the decision of Stevenson J.

On 20 January 2015, a deed of change of trustee was purportedly executed appointing AVS Group Australia Pty Limited as the trustee of the Sly Fox Trust.
On 27 January 2015, Mr Cooper, as liquidator of JPG, applied to extend that company’s caveat over the Kings Cross Property.
On 4 February 2015, Peter Sleiman filed an affidavit in opposition to Mr Cooper’s application, stating that he had been authorised to do so on behalf of Jaken by Tony Sleiman. In that affidavit, Peter Sleiman continued to assert that the funding for the original purchase of the Kings Cross Property remained through commercial bank bills, with the “present amount” owing of approximately $8.75 million.
On 6 February 2015, Bergin CJ in Eq heard Mr Cooper’s application for the extension of the caveat over the Kings Cross Property. The application was resolved by her Honour making the following orders:

“1.   Note the undertaking in paragraph 1 of the short minutes of order initialled and dated today.
1.1   The trustee of the Sly Fox Family Trust undertakes not to sell the property known as XXX William Street, Woolloomooloo NSW Folio XXXX, O’Malley’s Hotel, without 28 days prior written notice to Mr Mark Cooper, liquidator.
2.   Dismiss the amended summons.
3.   Each party to pay their own costs.”

On 10 March 2015, Stevenson J delivered his costs judgment in the 2009 Proceeding and dissolved the freezing orders that had been made by consent as part of the Rein J Orders on 18 June 2014.
On 9 April 2015, Stevenson J delivered a further judgement in relation to the costs of the 2009 Proceeding.
On 25 June 2015, Logan Fox Lawyers ceased to act for Peter Sleiman and Jaken in the appeal from Stevenson J in the 2009 Proceeding.
In the annual report for the Sly Fox Trust for the year ended 30 June 2015, the land and buildings of the Sly Fox Trust were valued at $15,454,333 and reported having received rent of $1,461,742.
In its annual report for the financial year ended 30 June 2015, which like the report in the previous paragraph, was provided to NAB, First O’Malley’s reported that it had gross income of $4,697,416 and that it had paid rent of $757,114.
On 22 July 2015, NAB valued the Granville Land at $1,000,000, with the land component being valued at $700,000.
On 11 August 2015, the day before the Court of Appeal hearing, O’Connor Legal began acting for Jaken and Peter Sleiman in Mr Naaman’s appeal against Stevenson J’s judgment.
On 1 September 2015, the Court of Appeal delivered its judgment, allowing Mr Naaman’s appeal against JPG and Jaken. The proceedings were remitted to the trial division for an assessment of damages.
On 1 September 2015, First O’Malley’s resolved to change its name to ACN 150 830 087 Pty Ltd.
On 3 September 2015, O’Malley’s Hotel Pty Ltd (Second O’Malley’s) was registered with George Sleiman as the sole director, secretary and shareholder.
On 11 September 2015, copies of the deeds for the Sly Fox 1 Unit Trust and the Sly Fox 2 Unit Trust were certified by a solicitor, Mr Zachary Jones. These were the trusts referred to in [175] above. The deeds were stamped on 13 September 2015. This was les than two weeks after the Court of Appeal judgment.
On 18 September 2015, Angela Michael emailed NAB:

“Can we please open a new account named O’Malley’s Hotel – I know its probable (sic) confusing but it’s not the same one – ACN is different.”

On 3 December 2015, O’Connor Legal filed a notice of ceasing to act for the defendants in the remitted 2009 Proceeding.
On 7 December 2015, the details of the liquor licence for O’Malley’s Hotel were updated to reflect the details of Second O’Malley’s.
On 14 December 2015, Mr Naaman’s solicitor emailed Peter Sleiman and Tony Sleiman informing them that Slattery J had fixed 22 and 23 February 2016 for the hearing of the quantification of damages in the 2009 Proceeding.
On 11 and 13 February 2016, change to company details forms were signed which recorded the purported appointment of a Mr Evan Spiegel as a director of First O’Malley’s with effect from 1 July 2015 including a notation “meeting for Evan to purchase the company from 01-07-2105”. The first of these forms gave the company’s registered office as being Mr Spiegel’s address in South Australia with effect from 1 July 2015. The second form gave that as the company’s registered address but with effect from 11 May 2012, which was also given as the date on which Tony Sleiman ceased to be a director.
On 15 February 2016, Mr Naaman’s solicitor sent various documents to the Associate to Slattery J copied to Tony Sleiman and Peter Sleiman.
On 17 February 2016, Peter Sleiman responded “Please do not include me in your correspondence as I have nothing to do with this matter and you are breaching the director’s privacy”.
Also on 17 February 2016, Mr Naaman applied for orders to restrain Jaken from dealing with the Kings Cross Property.
That same day, a process server attempted to serve a number of documents on Jaken at Parramatta Road, Granville. The process server’s affidavit records:

“3.   On 17 February 2016, I served JAKEN PROPERTIES AUSTRALIA PTY LIMITED ACN 123 423 432 AS TRUSTEE FOR THE SLY FOX FAMILY TRUST, the Second Defendant, with the following documents:
•   Letter from KB Legals - Solicitors dated 17 February 2016
•   Notice of Motion filed on 17 February 2016
•   Copy of Email from the Associate of Slattery J confirming the listing of the matter before Slattery J on 23 February 2016 sent 17 February 2016
•   Affidavit of Karl Alexander Burnett sworn on 17 February 2016
•   Exhibit “KB 27 February 2016” in the Affidavit of Karl Alexander Burnett sworn on 17 February 2016
4.   I served the documents by affixing them to the front door of the premises at the given address of XX Parramatta Road, Granville NSW 2142. [Another point of access to Jaken’s premises at Cowper St, Granville.]
5.   At the time of service, I was unable to gain access into the building as the doors were locked. I noted signage which advised that the office is always closed and provided a contact number of 9XXXXX XX. I telephoned the number 9XXXXX XX and spoke with a female employee in or to the following effect:
I said:   “I have some documents for Jaken Properties Australia Pty Limited as Trustee for the Sly Fox Family Trust. Will you accept service?”
The female replied:   “Yes, I will come down to accept the documents.”
A short time later, a female person opened the front door.
The female said,   “There is no one here to accept the documents.”
I said,    “The documents may be left here and you can pass them on to the appropriate person.”
The female replied,    “I will not accept them.”
The female then closed the door.”

By an ASIC change to company details form signed by Tony Sleiman on 18 February 2016, the registered office of Jaken was purportedly changed from 3 December 2014 from Cowper Street, Granville to a firm of accountants in Templestowe, Victoria.
Also on 18 February 2016, Andrew Soo of NAB emailed Peter Sleiman with the subject line “change of trustee for O’Malley’s” and asking Peter Sleiman to send him “a copy of the new trust deed and transfer for O’Malley’s”. Shortly afterwards, Peter Sleiman replied to Mr Soo:

“Hey mate so you required a new Trustee PJKL Property Holdings P/L and the trust deeds for Sly Fox 1 and Sly Fox 2 Unit Trust and an unsigned transfer for XXX William Street so they can get veted (sic).
Just confirming. Chris will send that to you shortly.”

Mr Soo replied to Peter Sleiman on the same day “Yes can you send them all through. I’ve ordered a copy of the loan documents for you”.
The quantification of damages hearing proceeded not before Slattery J, but before Young J on 22 February 2016 in the absence of the defendants. On that day his Honour made orders (the Young J Orders) (which were entered on 25 February 2016) which included:

“3. Order the 2nd defendant [Jaken] pay the plaintiff’s [Mr Naaman’s] costs of the whole proceedings other than the costs specifically dealt with by the Court of Appeal.
4. That judgment be entered for the plaintiff against the third defendant [JPG] in the amount of $3,446.755.55.
5. Declare that the third defendant is entitled, as against the second defendant and generally, to be indemnified out of the assets of the Sly Fox Family Trust for liabilities incurred by it in its capacity as trustee of the Sly Fox Family Trust, including in respect of the judgment entered against the third defendant in these proceedings.
6. Further declare that the plaintiff is subrogated to the rights of the third defendant for its entitlement to be indemnified from the assets of the Sly Fox Family Trust for its liability to the plaintiff in respect of the judgment to be entered in these proceedings, subject only to the costs and expenses of the liquidator of the creditors’ voluntary winding up of the third defendant and the claim of $2,500 which has been referred to in the evidence.
7. Vacate the listing of the Notice of Motion on 23 February 2016.
8. Vacate the listing of the hearing on 23 February 2016.
9. Liberty to apply.
NOTICE OF MOTION
1. The Second Defendant (Respondent) be restrained from disposing of or dealing with other than in the usual course of business, or further encumbering or diminishing the value of the property known as O'Malley's Hotel, Lot X DP XXXXX X and having street address XXX Williams [sic] Street Kings Cross (the Kings Cross Property) until further order of this Court.
2. That the Respondent within 7 days of being served with the orders, serve on the Plaintiff and the third defendant an affidavit setting out, as best it can:
(a) The amount of any indebtedness secured by the Kings Cross Property;
(b) The assets of the Sly Fox Family Trust, giving their value, location and details (including any mortgages, charges or other encumbrances to which they are subject) and the extent of the Respondent's interest in the assets;
(c) In the event it is asserted that the hotel business known as O'Malleys Hotel, operating from the Kings Cross Property has been sold, transferred, licensed or leased by the Respondent the circumstances of that transaction.
To (Jaken Properties Australia Pty Ltd as trustee for the Sly Fox Family Trust and its directors). If (Jaken Properties Australia Pty Ltd as trustee for the Sly Fox Family Trust) disobeys paragraph (1) of this order, then (Jaken Properties Australia Pty Ltd as trustee for the Sly Fox Family Trust) and its directors will be liable to sequestration of property and the said directors to imprisonment.

On 23 February 2016, (being the day after the hearing before Young J but before the Young J Orders were entered) Christopher Batten (who had prepared the earlier advice to Peter Sleiman on trust structures to hold property – see [140] above) emailed Mr Soo of NAB (copied to Peter Sleiman) at 7.31am with a number of attachments saying:

“Please find attached the certified trust deeds for the Sly Fox 1 Unit Trust and Sly Fox 2 Unit Trust together with a deed for change of trustee and variation for each trust and a Real Property Act transfer.
Should you have any questions or wish to discuss this further please do not hesitate to contact me.”

These were the documents referred to in [197] above, and included an unsigned and undated transfer form for the transfer of the Kings Cross Property from Jaken to PSJK.
By an ASIC change to company details form signed on 26 February 2016, Raymond Saab certified that he had been appointed a director of Logan Fox Lawyers Pty Limited with effect from 25 May 2015, being the date on which Samantha Panetta ceased to be a director and transferred her shares in the company to Mr Saab.
By letter dated 2 March 2016 addressed to Jaken at its Victorian registered office (being the office of accountants Bilias & Associates), Mr Naaman’s solicitors enclosed by way of service a copy of the Young J Orders as entered. On the same day the orders were emailed to Tony Sleiman and to Bilias & Associates.
On 3 March 2016, Tony Sleiman made this affidavit in response to the Young J Orders:

“1.   I am the sole director of Jaken Properties Australia Pty Limited (Jaken Properties).
2.   Jaken Properties is no longer the trustee of the Sly Fox Family Trust.
3.   The trustee of the Sly Fox Family Trust is AVS Group Australia Pty Limited.
4.   Jaken Properties is the trustee of Sly Fox 1 Unit Trust and Sly Fox 2 Unit Trust (Unit Trusts),
5.   The Unit Trusts are the beneficial owners in equal shares of the property known as XXX William Street, Kings Cross (Kings Cross Property).
6.   Annexed hereto and marked with the letter “A” is a true copy of a letter dated 2 March 2016 from KB Legal to Jaken Properties, serving a copy of the orders made by this Honourable Court on 22 February 2016 (Orders).
7.   In order to comply with Order 2 of the Orders under the heading “NOTICE OF MOTION”, 1 set out the following;
(a)   The amount of indebtedness secured by the Kings Cross Property is approximately $12,000,000 in favour of the National Australia Bank.
(b)   The Sly Fox Family Trust has no assets. Jaken Properties holds the Kings Cross Property in trust for the Unit Trusts, subject to a mortgage to the National Australia Bank.
(c)   The hotel business known as O'Malleys Hotel has been operated by a company known as O'Malleys Hotel Pty Limited, as lessee of the Kings Cross Property, since about August 2015 when my niece Alissia Michael took over the day to day operation of the hotel from me. The lessee now pays its rent to the Unit Trusts and that rent is used to pay interest to the NAB under the mortgage. The Kings Cross Property has a current market value which I estimate to be less than $5 million and that estimate is subject to the on-going negative effect of the "lock-out” laws which have had a severely depressing effect on the value of the hotel property in Kings Cross. Members of the Sleiman family and their related entities provide ongoing support for the Unit Trusts by contributing the difference between the rent paid by the lessee and the interest which is payable under the mortgage.”

On 13 March 2016, Mr Naaman lodged the caveat AK XXXXX G which is the subject of these proceedings over the Kings Cross Property (the Naaman Caveat) claiming “equitable right of interest or equitable lien” supported by a lengthy annexure setting out the facts relied upon in support of his claim to be subrogated to JPG’s right of indemnity from the assets of the Sly Fox Trust.
On 22 March 2016, Evan Spiegel as the sole member and director of the First O’Malley’s purportedly resolved to place the company in voluntary liquidation and Andrew Wily was appointed liquidator. There was in evidence before the Court an envelope produced under subpoena by Mr Wily addressed to Evan Spiegel at the address for him in South Australia that had been notified to ASIC. The envelope was marked Return to Sender and “Not at this address – no current address”. To the extent it is a necessary finding, the Court finds that there was no “Evan Speigel”.
In the profit and loss statement for the quarter ended 31 March 2016 that was provided to NAB, Second O’Malley’s represented that it had made gross sales of $1,469,508 for that quarter and had paid rent in the amount of $239,089.
On 7 April 2016, Mr Wily was formally appointed liquidator of First O’Malley’s.
On 26 April 2016, Peter Sleiman emailed Mr Soo of NAB urgently requesting accounts to be opened for Powerhouse as trustee of the PeteJake 1 Trust and PeteJake 2 Trust and for Jaken as trustee for the Sly Fox 1 Unit Trust and Sly Fox 2 Unit Trust.
On 27 April 2016, Mr Soo responded to Peter Sleiman to say that two of the O’Malley’s accounts would have to remain frozen as they were linked to First O’Malley’s which was in liquidation. On the same day two new accounts were opened with NAB in the name of Second O’Malley’s.
On 16 May 2016, Mr Soo emailed Peter Sleiman and informed him “Old O’Malley’s accounts have been closed and the funds have been credited to” an account of Second O’Malley’s.
On 19 May 2016, Five Clover Hotels Pty Ltd was registered with George Sleiman as the sole director, secretary and shareholder.
On 14 June 2016, Peter Sleiman sent Mr Soo the quarterly profit and loss statements for the period ending 30 March 2016 for the Kings Head Tavern and for Second O’Malley’s.
On 15 June 2016, Peter Sleiman emailed Mr Soo:

“Hi Andrew can we open theses (sic) accounts Urgent please.
FIVE CLOVER HOTELS PTY LTD T/A O’Malley’s Hotel
2 accounts please, a General Account and a Gaming Account please.”

Notwithstanding George Sleiman was the director of Five Clover Hotels Pty Ltd, he was not copied on this email. The two accounts were opened on 16 June 2016.
On 12 October 2016, Mr Naaman’s solicitors sent to Mr Soo a letter enclosing a copy of the Naaman Caveat, a copy of Young J’s orders of 25 February 2016 and a copy of the title search for the Kings Cross Property.
On 26 October 2016, Mr Stuart King of NAB emailed Peter Sleiman proposing a meeting for the following Monday, 31 October to discuss what were described as “current items of concern”. In an attached schedule setting out those matters, one of them identified the Naaman Caveat. A response to that query recorded as coming from Peter Sleiman’s solicitors includes:

“Dispute against Mr Naaman relates to a breach of contract of sale where Mr Sleiman purchased Mr Naaman’s company [exact company details not noted]. The caveat was lodged on the wrong entity [?]. New proceedings need to be commenced in order to remove the caveat. Estimate legal costs will be $350K. The intention is to bankrupt Mr Naaman [as he won’t be able to pay the legal fees] and have the caveat removed.”

NAB’s response is recorded as:

“It is unclear from the Court orders made on 22 February 2016 whether Anthony Naaman has a right to lodge a caveat over the property. However, the orders contemplate Mr Naaman will be subrogated to the rights of Jaken out of the assets of the Sly Fox Family Trust, noting that the O’Malley’s Hotel is (or was) an asset in the trust. This suggests that Anthony Naaman has a caveatable interest in the property. While not impacting NAB, it will impact the customer’s ability to deal with property.”

On 15 November 2016, Angela Michael emailed Mr Soo (copied to Peter Sleiman) requesting the monthly repayments for both hotels be debited from the new accounts created for Powerhouse and Jaken as the trustees of the PeteJake 1 Unit Trust and the Sly Fox 1 Unit Trust.
On 17 November 2016, Peter Sleiman sent Mr Soo the management accounts for O’Malley’s Hotel and Kings Head Tavern for the period January 2016 to June 2016. In the profit and loss statement for Second O’Malley’s that was provided to NAB, it was represented that it had gross income of $1,897,196.87 and that it had paid rent of $198,818.18 for the period.
On 24 November 2016, Black J delivered his decision in Deputy Commissioner of Taxation v Peter Sleiman Investments Pty Ltd [2016] NSWSC 1657 (“DCT”) in which, among other things, his Honour made orders for the winding up of Peter Sleiman Investments Pty Ltd.
In a profit and loss statement prepared for Second O’Malley’s on 2 December 2016 for the period January 2016 to June 2016, it was represented that Second O’Malley’s had a total income of $1,897,196.87 and had paid rent of $198,818.18.
On 13 December 2016, legal counsel for NAB wrote to Peter and Tony Sleiman’s solicitors referring to “The subsequent request from your clients to refinance some of their facilities with Westpac. We note that Andrew Soo is liaising directly with your clients regarding the proposed refinance.”
Also on 13 December 2016, George Sleiman ceased to be the sole director, secretary and shareholder of Second O’Malley’s and was replaced in those roles on 14 December 2016 by Alissia Michael, Peter Sleiman’s niece.
In balance sheets dated 19 December 2016 for Jaken as trustee for the Sly Fox Trust as of September 2016, and which were provided to NAB, it was recorded that the value of O’Malley’s Hotel “at cost” was $15,500,000, the O’Malley’s Hotel poker machines “at cost” was $2,000,000” and the O’Malley’s Hotel goodwill was $500,000, with total fixed assets being $18,245,446.07.

The Victorian Properties – consideration

It is convenient first to deal with the argument that Peter Sleiman has a 16.92% interest in the Victorian Properties. The only admissible evidence on this point was an email of 24 August 2005 from a senior account executive at St George Corporate Banking to Peter Sleiman with the subject matter “Settlement – Kavanagh Street, Southbank” which stated:

“Peter,
As instructed, we have withdrawn $108,297.72 from your account styled: Peter Sleiman (Call Deposit Account XXX XXX XXX), to complete the settlement of Lots XXX and XXX, XX Kavanagh Street, Southbank, Vic.
Settlement is scheduled for 3.00pm today. …”

Although the email does not indicate precisely how the amount withdrawn from Peter Sleiman’s account was to be applied to complete the settlement, I will assume in his favour that he did in fact contribute that amount towards the purchase price of the Victorian Properties.
It is uncontroversial that any presumption concerning the parties’ intention where a party contributes to the purchase price of real property without being recorded on the title is rebuttable. In the present case, the Court accepts Mr Naaman’s submission that any such presumption is rebutted by the fact that the Victorian Properties were purchased by JPG to hold on trust as part of the Sly Fox Trust (of which at the time Peter Sleiman was the primary beneficiary). The Court infers that it was the intention of both Peter Sleiman and JPG that the Victorian properties would be held by JPG upon the terms of the Sly Fox Trust so as to rebut any suggestion that Peter Sleiman was to have any interest outside the terms of that trust by reason of his having contributed to the purchase price.
Turning to the question of whether consideration was ever paid by PSJK, the starting point must be that Mr Naaman assumed the burden of proving a negative. Jaken relied on the consideration recorded in the transfer to PSJK. As I have already noted in [418] above in relation to the Granville Land, in the ordinary course the statement of consideration in a transfer which is the product of an arm’s length transaction between unrelated parties will be accepted as at least prima facie evidence that the consideration was paid. In this case, however, the transfer is not between unrelated parties and, on any view, was at an undervalue, being even less than the price for which the properties had been purchased seven years earlier. Taking those matters into account, I am unable to be satisfied on the balance of probabilities to the level of actual satisfaction by the transfer alone that any consideration actually moved from PSJK to Jaken.
That conclusion does not end the inquiry. I respectfully adopt these observations on proving a negative made by J C Campbell JA (with whom McColl JA and Handley AJA agreed) in Rockcote Enterprises Pty Ltd v FS Architects Pty Ltd; Carelli v FS Architects Pty Ltd [2008] NSWCA 39:

78 If a plaintiff has the onus of proving a negative proposition, the fact that the defendant has greater means to produce evidence which contradicts that negative proposition, does not mean that the plaintiff ceases to have the onus of proof of that negative proposition. However, once the plaintiff establishes sufficient evidence from which, if that evidence is accepted, the negative proposition may be inferred, an evidential onus shifts to the defendant to adduce evidence that tends to show that the negative proposition is incorrect. If a defendant adduces such evidence, the plaintiff must then, as part of its overall burden of proof, deal with that evidence either by submission or argument. See generally Apollo Shower Screens Pty Ltd v Building and Construction Industry Long Service Payments Corporation (1985) 1 NSWLR 561; Hampton Court Ltd v Crooks [1957] HCA 28; (1957) 97 CLR 367 at [1]-[2], 371-2; Baiada v Waste Recycling & Processing Service of NSW [1999] NSWCA 139; (1999) 130 LGERA 52 at [55], 64-65. As Hunt J put it in Apollo at 565:
“… provided that the plaintiffs have established sufficient evidence from which the negative proposition may be inferred, the defendant carries what has been called an evidential burden to advance in evidence any particular matters with which (if relevant) the plaintiffs would have to deal in the discharge of their overall burden of proof …. [T]he plaintiffs’ burden of proof of the negative proposition for which they contend is not as difficult in this case as it might otherwise have been because of the defendant’s greater means to produce evidence which contradicts that proposition.” …

84 Ms Olsson SC submitted that if the evidence adduced by a plaintiff was such that one inference that was open was that the negative proposition of which the plaintiff bore the onus of proving is correct, but another inference is equally open that did not involve the truth of the proposition, the evidential onus still shifted to the defendant. Put in the concrete terms of this case, she submitted that if the poor standard of the workmanship, and other matters to which she pointed in the evidence, might be explained by Update not being an approved applicator, or might equally be explained by Update being an approved applicator who ought never have been approved by Rockcote, that is sufficient to shift the evidential onus. I do not accept that proposition. Before an evidential onus shifts from a plaintiff, the plaintiff must have adduced enough evidence for the court to infer, if the evidence that the plaintiff adduced was accepted by the court and was the only evidence on that topic in the case, that the proposition concerning which the plaintiff had the onus of proof was more likely than not true. In that situation, one says that an onus of adducing evidence shifts to the defendant because the defendant is then in a situation in which, if the defendant does not adduce evidence concerning that proposition, the plaintiff might succeed in establishing that proposition. Counsel for a defendant has to decide whether to adduce evidence on a topic at a time in the course of the trial when counsel necessarily cannot be absolutely sure of two matters that are of critical importance to whether the onus of adducing evidence has actually shifted – will the judge accept the plaintiff’s evidence on the topic, and if so will the judge regard that evidence, if no other evidence is adduced, as enough to make it more likely that the plaintiff’s contention concerning that topic is correct. The type of “onus” that the defendant is then under is one of practical necessity – either adduce evidence, or risk losing on that issue. But before a defendant is in that situation, the evidence that the plaintiff has put forward on the topic must be such that, if accepted and the only evidence on the topic, it would justify the court in deciding it is more likely than not that the proposition for which the plaintiff bears the onus of proof is true. If the evidence that a plaintiff adduces is equally consistent with that proposition being true, or that proposition not being true, so that the plaintiff would fail to discharge its onus of proof if that were the only evidence on the topic, the defendant does not come under the sort of practical compulsion that I have been describing.”

I also sought to summarise the relevant principles in Claudia Leung in her capacity as Executrix of the Estate of the Late Robert Ho v Paul Mervyn Fordyce t/as PMF Legal Trading [2019] NSWSC 18:

“233. As a starting point, in civil proceedings, the standard of proof is on the balance of probabilities: Evidence Act, s 140. In making a finding, the Court must feel an “actual persuasion of the occurrence or existence” of facts in issue and may take into consideration “the nature of the cause of action or defence, and the nature of the subject-matter of the proceeding, and the gravity of the matters alleged”: Evidence Act, s 140(2); see, e.g., Warner v Hung, in the matter of Bellpac Pty Limited (Receivers and Managers Appointed) (In Liquidation) (No 2) (2011) 297 ALR 56; [2011] FCA 1123.
234. The Uniform Civil Procedure Rules 2005 (“UCPR”), rr 14.14, 15.3 and 15.4 relevantly provide that allegations in the nature of fraud must be pleaded specifically and with particularity by the claimant, and where any condition of mind is alleged, which includes fraudulent intent, the claimant must give “particulars of the facts on which the party pleading relies”: see Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563, 573; [1995] HCA 68; Forrest v Australian Securities and Investments Commission (2012) 247 CLR 486; [2012] HCA 39, [26]; Nadinic v Drinkwater (2017) 94 NSWLR 518; [2017] NSWCA 114, [46].
235. It is helpful to repeat the entire passage from Neat Holdings at 450–451 referred to above (citations omitted):
“The ordinary standard of proof required of a party who bears the onus in civil litigation in this country is proof on the balance of probabilities. That remains so even where the matter to be proved involves criminal conduct or fraud. On the other hand, the strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what it is sought to prove. Thus, authoritative statements have often been made to the effect that clear or cogent or strict proof is necessary “where so serious a matter as fraud is to be found”. Statements to that effect should not, however, be understood as directed to the standard of proof. Rather, they should be understood as merely reflecting a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct and a judicial approach that a court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct.”

236. The relevant legal principles were conveniently summarised by Gleeson J in Binetter:
“122 Where a plaintiff has the onus of proving a matter, and “relevant facts are peculiarly in the knowledge of the defendant or where the defendant has the greater means to produce evidence relating to those facts”, then if the plaintiff provides sufficient evidence from which the matter may be inferred, “the defendant then comes under an evidential burden, or an onus of adducing evidence”: Krstic v Brindley [2006] NSWSC 1414 at [26].
123 Where a fact is peculiarly within the knowledge of a party to litigation, slight evidence of that fact may suffice to prove the fact unless that evidence is explained away by the party with the knowledge of the fact: Hampton Court Ltd v Crooks [1957] HCA 28; (1957) 97 CLR 367 at 375; TyCo Australia Pty Ltd v Optus Networks Pty Ltd [2004] NSWCA 333 at [121]; Parker v Paton (1941) 41 SR (NSW) 237 at 243; Ex parte Ferguson; Re Alexander (1944) 45 SR (NSW) 64 at 67, 70.
124 A failure by respondents to deny or explain facts when it was in the respondents’ exclusive power to do so allows increased strength or weight to be given to primary facts favourable to the applicants and allows inferences favourable to the applicants to be more confidently drawn: United Group Resources Pty Ltd v Calabro (No 5) [2011] FCA 1408; (2011) 198 FCR 514 at [75]–[76]. The silence of a party may serve to resolve a doubt or an ambiguity regarding the existence of a fact, especially where the facts are peculiarly within the knowledge of the silent party: Transport Industries Insurance Co. Ltd v Longmuir [1997] 1 VR 125; (1996) 9 ANZ Insurance Cases 61-385 at 142.
125 All evidence “is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted”: Coshott v Prentice [2014] FCAFC 88; (2014) 221 FCR 450 at [80], quoting Blatch v Archer (1774) 1 Cowp 63 at 65; 98 ER 969 at 970. This maxim also bears upon the appropriateness of deciding whether a fact has been proved when only limited evidence is available. In Ho v Powell [2001] NSWCA 168; (2001) 51 NSWLR 572 at [14]–[15], Hodgson JA (with whom Beazley JA agreed) said:
[I]n deciding facts according to the civil standard of proof, the court is dealing with two questions: not just what are the probabilities on the limited material which the court has, but also whether that limited material is an appropriate basis on which to reach a reasonable decision …
In considering the second question, it is important to have regard to the ability of parties, particularly parties bearing the onus of proof, to lead evidence on a particular matter, and the extent to which they have in fact done so …”

237. Evidential burden is not to be confused with the legal onus. Relevant here are the observations of Heydon J in Strong v Woolworths Limited (2012) 246 CLR 182; [2012] HCA 5 (citations omitted):
“[52] In the first sense, “evidential burden” refers to the duty of one party (usually the party bearing the legal (ie persuasive) burden, who in most instances will be the plaintiff) to call sufficient evidence to raise an issue as to the existence or non-existence of a fact in controversy. This must be done to prevent a no case submission succeeding (or if the relevant evidential burden rests on the defendant, to prevent the issue otherwise being withdrawn from the jury). The Privy Council (Lord Hodson, Lord Devlin, Viscount Dilhorne, Lord Donovan and Lord Pearson) criticised the expression “evidential burden of proof” as follows:
It is doubtless permissible to describe the requirement as a burden, and it may be convenient to call it an evidential burden. But it is confusing to call it a burden of proof. Further, it is misleading to call it a burden of proof, whether described as legal or evidential or by any other adjective, when it can be discharged by the production of evidence that falls short of proof.
However that may be, this is what Wigmore called the duty of producing evidence.
[53] In the second sense, “evidential burden” refers to circumstances in which a plaintiff calls evidence sufficiently weighty to entitle, but not compel, a reasonable trier of fact to find in the plaintiff’s favour. There is then said to be an “evidential burden” in the sense of a “provisional” or “tactical” burden on the defendant: if the defendant fails to call any or any weighty evidence, it will run a risk of losing on the issue — that is, a risk that at the end of the trial the trier of fact will draw inferences sufficiently strong to enable the plaintiff to satisfy the legal (ie persuasive) standard of proof. The “provisional” or “tactical” burden raises the question whether a defendant should as a matter of tactics “call evidence or take the consequences, which may not necessarily be adverse”.
[54] The third sense in which the expression “evidential burden” is employed arises where a plaintiff, in discharging the evidential burden in the first sense, calls evidence so strong that a reasonable trier of fact would be bound to decide the issue in the plaintiff’s favour if the defendant calls no evidence. It is sometimes said that an “evidential burden” rests on the defendant which, if not discharged, will cause the defendant to lose and which, if discharged so as to cause the trier of fact either to reject the plaintiff’s evidence or to be undecided, will result in the legal (ie persuasive) burden on the plaintiff not being satisfied.”

238. In respect of drawing inferences, Beazley ACJ (as her Honour then was) recently stated in Rail Corporation New South Wales v Donald; Staff Innovations Pty Ltd t/as Bamford Family Trust [2018] NSWCA 82 at [76]–[78]:
“76 … An inference may only be drawn if there is evidence to support it. In Luxton v Vines (1952) 85 CLR 352; [1952] HCA 19 the plurality, Dixon, Fullagar and Kitto JJ at 358 approved the High Court’s explanation of the principle in the then unreported decision of Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1 as follows: “… where direct proof is not available, it is enough if the circumstances appearing in evidence give rise to a reasonable and definite inference: they must do more than give rise to conflicting inferences of equal degrees of probability so that the choice between them is mere matter of conjecture ... But if circumstances are proved in which it is reasonable to find a balance of probabilities in favour of the conclusion sought then, though the conclusion may fall short of certainty, it is not to be regarded as a mere conjecture or surmise.””

Applying those principles to the present case, whether or not consideration was actually paid by PSJK to Jaken is a matter peculiarly within the knowledge of those two entities. In those circumstances, relatively slight evidence is required to have been adduced by Mr Naaman from which the Court can draw the inference that no consideration was in fact paid. What Mr Naaman has established, and the Court finds, at least meets the description of “slight evidence” and, in my assessment is more than that:

The purported consideration was at a gross undervalue to the market price of the Victorian Properties, being even less than the price that had been paid for them seven years earlier.

This was in substance a related party transaction given the family relationship between the directors of the two companies.

Mr Naaman has established an overall pattern of conduct on the part of Peter Sleiman and his related entities over an extended period of time, to have the effect of depleting the assets of the Sly Fox Trust in the face of Mr Naaman’s claim. This included the other Impugned Transactions considered above which appear to be gratuitous and have no commercial purpose.

Those three matters are sufficient, without more, for the Court to find, as it does, on the balance of probabilities, that no consideration was paid. They are also sufficient to move the evidential burden on to Jaken and PSJK, in whose camp material must have existed to demonstrate the payment and receipt of consideration if in fact that had occurred. No admissible material going to the question was forthcoming from either Jaken or PSJK. Moreover, neither of the directors who executed the transfer – Tony Sleiman for Jaken and Samantha Sleiman for PSJK – was called to give evidence.
The Court therefore draws a Jones v Dunkel inference that neither the evidence of Tony Sleiman or Samantha Sleiman would have assisted the relevant defendants in demonstrating that any consideration was paid or received in relation to the transfer of the Victorian Properties out of the Sly Fox Trust. This fortifies the Court in drawing the inference, based on the evidence to which I have referred above, more easily that no consideration was received by Jaken for transferring the Victorian Properties to PSJK. If, contrary to that conclusion, $500,000 was in fact paid, then the liability of the various defendants which I find in the following paragraphs is reduced from being a liability in respect of the entire Victorian Properties to the difference between their market value of $1,035,000 and $500,000.
Having regard to the Court’s conclusions by reason of the matters set out in [491] to [493] above, the Court accepts these contentions made on behalf of Mr Naaman in relation to the Victorian Properties:

The transfer of the Victorian Properties by Jaken to PSJK was an alienation of those properties with the intention to defraud creditors pursuant to s 172 of the PLAV and should be voided accordingly.

Jaken’s transfer of the Victorian Properties was in breach of its fiduciary obligation owed to JPG (which are enforceable by Mr Naaman by subrogation) and, Jaken is liable in equitable compensation to JPG to the extent of any shortfall.

Jaken was engaged in a dishonest and fraudulent design to divest itself of property which it held subject to fiduciary duties for JPG and was knowingly assisted in that dishonest and fraudulent design by both Peter Sleiman as shadow or de facto director and Tony Sleiman as the named director. As with the other transactions considered in these reasons, in my view it is not necessary to go so far as to find accessorial liability in the case of either man, given the Court’s view that for all intents and purposes they were the alter ego of Jaken. On either basis, they are liable in equitable compensation to JPG (and by subrogation to Mr Naaman) for any shortfall.

PSJK holds the Victorian Properties on constructive trust for JPG (enforceable by Mr Naaman but subject to the rights of NAB) such that JPG can require the reconveyance of the Victorian Properties to Jaken for these reasons:

PSJK was a volunteer;

PSJK, through Samantha Sleiman, knowingly assisted in Jaken’s dishonest and fraudulent design to breach its fiduciary duties to JPG and knowingly received the Victorian Properties given that there was no consideration paid and no explanation was proffered by anyone for either Jaken or PSJK for the transaction.

It also follows that PSJK is liable to JPG (and Mr Naaman by subrogation) for any shortfall to the extent the Victorian Properties are not available to meet Jaken’s obligations to JPG.

The business of the O’Malley’s Hotel

At various points in the hearing and Mr Naaman’s final submissions, references were made to the possible or apparent impermissible severing of the ownership of the assets and undertaking of O’Malley’s Hotel from the assets of the Sly Fox Trust. However, the question was not pursued with any precision on behalf of Mr Naaman. Mr Kelly SC’s response for Jaken was that the assets and undertaking of O’Malley’s Hotel (including, for example, its liquor licence) had been leased by Jaken (either formally or informally) to operating companies at various times, as might be expected.
Notwithstanding, for example, Peter Sleiman seeking a valuation of the Kings Cross Property excluding the assets and undertaking of O’Malley’s Hotel (see [151] above), the result of the Court’s review of the evidence is that it accords with Mr Kelly SC’s submission. Putting the matter another way, Mr Naaman refrained from pointing to any specific evidence that demonstrated there had been such an impermissible severing.
Perhaps the most powerful point in support of the proposition that Mr Naaman though JPG has no actionable complaint of the kind suggested is that the receivers appointed by NAB have clearly been appointed to both the King’s Cross Property and the assets and undertaking of the O’Malley’s Hotel business operating on the King’s Cross Property. That is to be expected given that the commercial intention is to attempt to realise NAB’s security by selling the land and business as a going concern. There has been no suggestion by any party (including NAB who have participated in the proceedings insofar as the appointment of receivers is concerned) that funds realised by the sale would not be applied in reduction of Jaken’s debt to NAB incurred in Jaken’s capacity as trustee of the Sly Fox Trust.

Liability under the Corporations Act

Given the view to which the Court has come, this aspect of Mr Naaman’s claim can be dealt with in relatively short compass.
It was submitted for Mr Naaman that each of Peter Sleiman and Tony Sleiman was jointly and individually liable for Mr Naaman’s judgment debt pursuant to s 197 of the Corporations Act. That section relevantly provides:

“197. Directors liable for debts and other obligations incurred by corporation as trustee
(1)   A person who is a director of a corporation when it incurs a liability while acting, or purporting to act, as trustee, is liable to discharge the whole or a part of the liability if the corporation:
(a)   has not discharged, and cannot discharge, the liability or that part of it; and
(b)   is not entitled to be fully indemnified against the liability out of trust assets solely because of one or more of the following:
(i)   a breach of trust by the corporation;
(ii)   the corporation's acting outside the scope of its powers as trustee;
(iii)   a term of the trust denying, or limiting, the corporation's right to be indemnified against the liability.
The person is liable both individually and jointly with the corporation and anyone else who is liable under this subsection.s.197(1).”

It was submitted for Mr Naaman that his judgment debt was a liability which had been incurred by JPG for the purposes of s 197(1) when the Young J Orders were made on 22 February 2016 or entered on 25 February 2016. The Court accepts Mr Kelly SC’s submission that this was not the occasion when JPG “incurs a liability while acting, or purporting to act as trustee”. In my respectful view, both as a matter of ordinary construction and applying Hodgson J’s “matter of substance and reality” test from Standard Chartered, the relevant liability which ultimately became an ascertainable sum by the judgment was incurred when JPG breached its contract with Mr Naaman on or about 20 June 2006 and Mr Naaman’s entitlement to damages arose.
“Incurs” for the purpose of s 197 must be understood in the context of the following words “while acting, or purporting to act as trustee”. This means that the liability is relevantly incurred as a result of some action on the part of the corporation. So understood, having a judgment entered against it is not to “incur” a liability because the judgment is not the product for some action or purported action by the corporate trustee. The relevant action in this case was JPG acting in breach of its contractual obligations to Mr Naaman and incurring a liability to him in damages accordingly. There was no dispute that as at 20 June 2006, neither Peter Sleiman nor Tony Sleiman was a director of JPG.
Second, the Court accepts Mr Kelly SC’s submission that s 197(1)(b) is not satisfied because in this case JPG has the benefit of a declaration that it is entitled to be fully indemnified against the liability out of the assets of the Sly Fox Trust.
Third, assuming in favour of Mr Naaman that JPG was “not entitled to be fully indemnified against the liability out of trust assets”, Mr Naaman has not identified any evidence which enables the Court to find that the lack of entitlement is “solely” because of one of the matters listed in paragraphs (i) and (iii) of s 197.
For these reason, Mr Naaman’s claim pursuant to s 197 of the Corporations Act fails.

Conclusion

The parties will be given an opportunity to consider these reasons and to make submissions about the next steps. In the absence of some resolution, it is clear this will not be the last first instance hearing.
As occurred in the Rothmore Farms litigation, it seems inevitable that there will have to be a second hearing. This is because the Court will reserve consideration of the quantum of the equitable compensation for which the various cross-defendants have been found liable.
Insofar as there may be a shortfall in Mr Naaman’s recovery by subrogation to JPG between what would have been the outcome if the Impugned Transactions had not occurred and the final position after NAB’s receivership and other steps, the Court is satisfied that shortfall is the result of the breaches of fiduciary duty identified in this judgment. The reservation of consideration extends to the parties putting submissions as to how any compensation is to be calculated, a matter not addressed so far in any detail by anyone. What is clear is that quantum cannot be sensibly addressed until such matters have been addressed as the NAB receivership of the King’s Cross Property and O’Malley Hotel, whether it will be necessary to appoint receivers to the Victorian Properties and the Granville Land, the rights of NAB as a registered mortgagee over those assets, and no doubt other issues which will be identified by the parties.
Agreed statement of questions for determination and Court’s answers:

Does the cross-claimant have standing to seek the relief listed in paragraph 123 of the Further Amended Defence filed on 17 November 2020 having regard to the matters set out in that paragraph?

Mr Naaman's standing in relation to sham has been assumed in his favour without deciding. Otherwise the answer to this question is yes.

Does a creditor's right of subrogation to a former trustee's right of indemnity out of trust property effect an assignment to the creditor of any right of action that forms part of the trust property and thereby entitle the creditor to sue on that cause of action as though it were his or her own property?

It is not necessary to answer this question. The rights sought to be enforced by Mr Naaman are JPG's rights and not rights that form part of the trust property.

If not, are Orders 5 and 6 of the orders made by Young AJ on 22 February 2016 properly construed to extend any such right to Mr Naaman?

No.

Does the Deed of Assignment dated 1 September 2020 operate to give Mr Naaman the standing to sue the cross defendants or any and if so, which of them, in relation to any and if so, which of the causes of action pleaded against the cross defendants?

It is not necessary to answer this question. Mr Naaman has the necessary standing to maintain all of the causes of action he maintains independently of the effect of the Deed. His standing in relation to sham has been assumed in his favour without deciding.

Was the transfer of the Granville Land:

Voidable pursuant to 37A of the Conveyancing Act?

Yes.

A sham transaction?

No.

In breach of trust?

It is not necessary to answer this question given the answer to 5(d).

In breach of fiduciary duties?

Yes.

Did Superior:

Receive the Granville Land for no consideration or inadequate consideration?

Yes.

Knowingly receive the Granville Land in breach of trust?

It is not necessary to answer this question given the answer to 6(c).

Knowingly assist in the transfer of the Granville Land in breach of trust?

Yes, but in breach of fiduciary duty.

Does Superior hold the Granville Land on trust for the Trust and/or JPG and/or on resulting trust for Peter Sleiman or any of them and if so, in what proportion?

Superior holds the Granville Land on constructive trust for JPG as to 100%.

Did Peter Sleiman and Tony Sleiman knowingly assist in the transfer of the Granville Land to Superior in breach of trust?

Yes.

Are Peter Sleiman and Tony Sleiman liable for:

Equitable compensation for the value of the Granville Land; or

Reserved for further consideration.

Alternatively, equitable compensation for the value of unpaid consideration for the transfer of the Granville Land?

Reserved for further consideration.

Were the Rein J orders a contract between Jaken, Peter Sleiman, and the defendant?

Yes in the sense they were the subject matter of such a contract.

Were Tony Sleiman and Peter Sleiman aware, at all material times, of the Rein J Orders?

Yes.

Did Jaken further deal with, encumber or diminish or dispose of the value of the Kings Cross Property in August 2014 otherwise than in the usual course of business, by drawing down a further $3.6m and/or paying that sum to Powerhouse (Draw Down)?

Yes.

Did Peter and Tony Sleiman cause Jaken to effect the Drawn Down?

Yes.

Was that Draw Down in breach of the Rein J Orders? If yes, is the Drawn Down void for illegality?

Yes.

Was that Draw Down in breach of contract? If yes, are Peter Sleiman and Tony Sleiman liable for tortious interference with Jaken and the defendant's contractual relations?

No because even if there was tortious interference, damage has not been proven.

Was the Draw Down:

Voidable pursuant to s 37A of the Conveyancing Act?

Yes.

A sham transaction?

No.

In breach of trust?

It is not necessary to answer this question given the answer in 16(d).

In breach of fiduciary duties?

Yes.

Did Powerhouse:

Receive the $3.6m Draw Down for no consideration or inadequate consideration?

Yes.

Knowingly receive the $3.6m Draw Down in breach of trust?

Yes, but in breach of fiduciary duty rather than trust.

Knowingly assist in the $3.6m Draw Down in breach of trust?

Yes, but in breach of fiduciary duty rather than trust.

Does Powerhouse hold the $3.6m on trust for the Trust and/or JPG?

Yes, subject to an accounting.

Did Peter Sleiman and Tony Sleiman knowingly assist in the $3.6m Draw Down in breach of trust?

Yes, but in breach of fiduciary duty rather than trust.

Are Peter Sleiman and Tony Sleiman liable for equitable compensation for the value of the $3.6m Drawdown?

Reserved for further consideration.

Does Jaken hold the Kings Cross Property on resulting trust for Peter Sleiman and if so, in what amount?

No.

Does Mr Naaman have a caveatable interest in the Kings Cross Land?

Yes.

Should the Caveat be removed?

No.

Was the Hotel Business (as defined in paragraph [3] of the Amended Cross-claim) separated from the Kings Cross Property?

No.

If no, does the Hotel Business remain property of the Trust in that it has never been validly transferred out of the Trust?

Yes, but it has been leased rather than absolutely transferred.

If the Hotel Business does not remain the property of the Trust, was transferred out of the property of the Trust:

Is the transfer voidable pursuant to s 37A of the Conveyancing Act

N/A

Was the transfer a sham?

N/A

Was the transfer in breach of trust?

N/A

Was the transfer in breach of fiduciary duties?

N/A

Does the purported transferee hold the Hotel Business on trust for the Trust and/or JPG and/or on resulting trust for Peter Sleiman or any of them and if so, in what proportions?

N/A

Was the transfer of Unit 191 and Unit 261:

Voidable pursuant to 37A of the Conveyancing Act

Yes.

A sham transaction?

No.

In breach of trust?

It is not necessary to answer this question given the answer to 26(d).

In breach of fiduciary duties?

Yes.

Did PSJK:

Receive Unit 191 and Unit 261 for no consideration or inadequate consideration?

Yes.

Knowingly receive Unit 191 and Unit 261 in breach of trust?

Yes, but in breach of fiduciary duty rather than trust.

Knowingly assist in the transfer of Unit 191 and Unit 261 in breach of trust?

Yes, but in breach of fiduciary duty rather than trust.

Does PSJK hold Unit 191 and Unit 261 on trust for the Trust and/or JPG and/or on resulting trust for Peter Sleiman or any of them and if so, in what proportions?

PSJK holds Unit 191 and Unit 261 on constructive trust for JPG and the Trust.

Did Peter Sleiman and Tony Sleiman knowingly assist in the transfer of Unit 191 and Unit 261 to PSJK in breach of trust?

Yes, but in breach of fiduciary duty rather than trust.

Are Peter Sleiman and Tony Sleiman liable for:

Equitable compensation for the value of Unit 191 and Unit 261, or

Reserved for further consideration.

Alternatively, equitable compensation for the value of unpaid consideration for the transfer of Unit 191 and Unit 261?

Reserved for further consideration.

Was Jaken in a trust or fiduciary relationship with JPG?

Yes, a fiduciary relationship.

Did Jaken cause the property of the Trust to be dealt with in breach of trust and in breach of fiduciary duties?

Yes, in breach of fiduciary duties.

Is the Granville Land, Unit 191 and Unit 261, the proceeds from the Draw Down, the Kings Cross Property and the Hotel Business held on constructive trust by the respective cross-defendants for JPG, and the defendant?

Yes as to the Granville Land, Unit 191 and Unit 261 and (subject to accounting) the proceeds of the Draw Down. The Kings Cross Property and the Hotel Business are subject to JPG’s equitable lien.

Have each of the cross-defendants knowingly assisted in breaches of trust and/or breaches of fiduciary duties and are each of them liable for equitable compensation and damages to JPG, and the defendant?

Yes.

Have each of the cross-defendants knowingly received property in breach of trust and/or breaches of fiduciary duties and do each of them hold that property on trust for JPG, and the defendant?

Yes.

Are Peter Sleiman and Tony Sleiman liable for the Judgment Debt to the defendant pursuant to s 197 of the Corporations Act?

No.

Was Peter Sleiman at all relevant times a shadow director of JPA?

Yes – a shadow director and a de facto director.

Is the Deed of Variation dated 20 March 2009 authentic?

No.

Causation.

Yes, in relation to breach of fiduciary duty.

Quantum.

Reserved for further consideration.

Account.

Reserved for further consideration.

What relief if any should be granted pursuant to the Amended Cross-Claim?

Parties are to consider these reasons and make submissions.

On what terms should any relief be granted?

Parties are to consider these reasons and made submissions.

**********

Decision last updated: 29 April 2022

Medium Neutral Citation:	Jaken Properties Australia Pty Ltd v Naaman [2022] NSWSC 517
Hearing dates:	16–19, 23–27 November 2020; Final written submissions received 16 December 2020
Decision date:	29 April 2022
Jurisdiction:	Equity - Real Property List
Before:	Kunc J
Decision:	Defendant/Cross-claimant entitled to relief
Catchwords:	EQUITY — Trusts and trustees — Powers, duties, rights and liabilities — Indemnity, lien and reimbursement — Obligations of new trustee to former trustee — Nature and extent of trust creditor’s subrogation to former trustee’s rights against new trustee
Legislation Cited:	Conveyancing Act 1919 (NSW) Corporations Act 2001 (Cth) Property Law Act 1958 (Vic) Trustee Act 1925 (NSW)
Cases Cited:	Agusta Pty Ltd v Provident Capital Ltd [2012] NSWCA 26 Barnes v Addy (1874) LR 9 Ch App 244 Bruton Holdings Pty Ltd (In Liquidation) v Commissioner of Taxation of the Commonwealth of Australia (2009) 239 CLR 346; [2009] HCA 32 Carnemolla v Adelaide Bank [2013] NSWCA 122 Carter Holt Harvey Woodproducts Australia Pty Limited v The Commonwealth of Australia (2019) 268 CLR 524; [2019] HCA 20 Claudia Leung in her capacity as Executrix of the Estate of the Late Robert Ho v Paul Mervyn Fordyce t/as PMF Legal Trading [2019] NSWSC 18 Deputy Commissioner of Taxation v Peter Sleiman Investments Pty Ltd as trustee for the Sleiman Family Trust [2016] NSWSC 1657 Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296: [2012] FCAFC 6 Jones v Dunkel (1959) 101 CLR 538; [1959] HCA 9 Lemery Holdings Pty Ltd v Reliance Financial Services Pty Ltd (2008) 74 NSWLR 550; [2008] NSWSC 1344 McLean v Burns Philp Trustee Co Pty Ltd (1985) 2 NSWLR 623 Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360; [1979] HCA 61 Peter Sleiman Investments Pty Ltd as trustee for the Sleiman Family Trust v Deputy Commissioner of Taxation [2017] NSWCA 81 Rockcote Enterprises Pty Ltd v FS Architects Pty Ltd; Carelli v FS Architects Pty Ltd [2008] NSWCA 39 Ron Kingham Real Estate Pty Ltd v Edgar [1999] 2 Qd R 439 Rothmore Farms Pty Ltd (in provisional liquidation) v Belgravia Pty Ltd & Ors [1999] FCA 745 Rothmore Farms Pty Ltd (In liq) v Belgravia Pty Ltd [2005] SASC 117 Smith v The Queen (2001) 206 CLR 650; [2001] HCA 50 Standard Chartered Bank v Antico (Nos 1 and 2) (1995) 38 NSWLR 290
Category:	Principal judgment
Parties:	Jaken Properties Australia Pty Ltd ACN 123 423 432 (Plaintiff and First Cross Defendant) Peter Sleiman (Second Cross Defendant) Tony Sleiman (Third Cross Defendant) Superior Family Investments Pty Ltd (Fourth Cross Defendant) O’Malley’s Hotel Pty Ltd ACN 608 025 636 (Fifth Cross Defendant) PSJK Holdings Pty Ltd (Sixth Cross Defendant) Powerhouse Corporation Pty Ltd (Seventh Cross Defendant) Anthony Naaman (Defendant and Cross-claimant)
Representation:	Counsel: J Kelly SC and A Maroya (Plaintiff and Cross-defendants) P Afshar and N Wootton (Defendant and Cross-claimant) Solicitors: Norton Rose Fulbright Australia (Plaintiff and Cross-defendants) KB Legals Pty Ltd (Defendant and Cross-claimant)
File Number(s):	2019/24203
Publication restriction:	Nil