Kanjian Holdings No 1 Pty Ltd v Kanjian; Kanjian v Kanjian (No 3)

[2021] NSWSC 839

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Kanjian Holdings No 1 Pty Ltd v Kanjian; Kanjian v Kanjian (No 3) [2021] NSWSC 839

Hearing dates:

18 and 19 December 2019, 23, 24, 25, 26 and 27 March 2020, 30 and 31 March 2020, 1, 2 and 3 April 2020, 6 April 2020, 8 April 2020, 9 and 10 July 2020 and 21 August 2020.

Decision date:

12 July 2021

Jurisdiction:

Equity

Before:

Henry J

Decision:

See paragraphs [1118] and [1119].

Catchwords:

EVIDENCE – Exclusion of evidence – Improperly or illegally obtained evidence – where non-party recorded a conversation between parties without their knowledge or consent – whether recording unlawful under s 7(1)(b) of the Surveillance Devices Act 2007 (NSW) – whether probative value of recording outweighs undesirability of its admission into evidence – recording admitted

EQUITY – Undue influence – where elderly parents’ making of directors’ resolutions, authorities, directions, powers of attorney, guardianships and revocations challenged by eldest son but not by the parents – where independent legal advice received on some of the documents – where unconscionable conduct and dishonest misrepresentations also alleged – whether actual undue influence established – whether presumption of undue influence rebutted – whether lack of capacity by undue influence – where dealings not objectively improvident – undue influence established in relation to one power of attorney but not established for other documents

ESTOPPEL – Estoppel by convention – Mutual assumption – where party asserting estoppel over right to hold share in family company gave up right of appointment of trustee and undertook management of properties – where said party continued holding voting share on trust – whether parties adopted common assumption that beneficiary would not call for share transfer during his lifetime – whether detrimental reliance established – beneficiary estopped from calling for share transfer

ESTOPPEL – Equitable estoppel – Proprietary estoppel – Encouragement – Detrimental reliance – where alleged promise or representation to leave property to in a will – where promisee and representee continued to manage property and did not seek reimbursement of other costs – whether detrimental reliance established – no estoppel found

EQUITY – Trusts and trustees – Court’s supervision of – Appointment and removal of trustees – where director of trustee company procured entry into agreement for lease against wishes of some beneficiaries – where breakdown of relations between two of three directors and between one director and the beneficiaries of trustee company – whether director breached duties or procured trustee company to breach duties – trustee not removed

Legislation Cited:

Civil Procedure Act 2005 (NSW), s 56

Conveyancing Act 1919 (NSW), ss 23C, 54A, 88K

Corporations Act 2001 (Cth), ss 180, 181,182, 1317H

Evidence Act 1995 (NSW), ss 135(a), 138, 140(2)

Guardianship Act 1987 (NSW), s 6L

NSW Trustee and Guardian Act2009 (NSW), s 41(1)(a)

Powers of Attorney Act 2003 (NSW), ss 19, 35(1), 36(1), 36(3), 36(3A), 50(3), 50(11)

Supreme Court Act 1970 (NSW), s 68

Surveillance Devices Act 2007 (NSW), ss 4(1), 7(1)(b), 7(3)(b)(i)

Trustee Act 1925 (NSW), s 70

Uniform Civil Procedure Rules 2005 (NSW), rr 14.14, 15.3

Cases Cited:

Ajayi (t/as Colony Carrier Co) v RT Briscoe (Nigeria) Ltd [1964] 3 All ER 556; 1 WLR 1326

AllianceCraton Explorer Pty Ltd v Quasar Resources Ltd [2010] SASC 266

Antov v Bokan [2018] NSWSC 1474

Ashton v Pratt (2015) 88 NSWLR 281; [2015] NSWCA 12

Aspinall v Aqua Sports Pty Ltd [2018] NSWSC 706

Austotel v Franklins (1989) 16 NSWLR 582

Australian Securities & Investments Commission v Maxwell (2006) 59 ACSR 373; [2006] NSWSC 1052

Bridgewater v Leahy (1998) 194 CLR 457; [1998] HCA 66

Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34

Brooks v Burns Philp Trustee Company Ltd (1969) 121 CLR 432; [1969] HCA 4

Byrnes v Kendle (2011) 243 CLR 253; [2011] HCA 26

Calvo v Ellimark Pty Ltd [2016] NSWCA 136

Castle Constructions Pty Ltd v Sahab Holdings Pty Ltd (2013) 247 CLR 149; [2013] HCA 11

Castle Constructions Pty Ltd v Sahab Holdings Pty Ltd (No 2) [2013] HCA 44

Chao v Chao [2008] NSWSC 584

Chetwynd v Rose [2020] NSWSC 111

Commercial Bank of Australia Limited v Amadio (1982) 151 CLR 447; [1983] HCA 14

Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Aust) Ltd (1986) 160 CLR 226; [1986] HCA 14

Cubillo v Commonwealth of Australia (No 2) (2000) 174 ALR 97; [2000] FCA 1084

Day v Perisher Blue Pty Limited (2005) 62 NSWLR 731; [2005] NSWCA 110

Delaforce v Simpson-Cook (2010) 78 NSWLR 483

Derry v Peek (1889) 14 App Cas 337

DHJPM Pty Ltd v Blackthorn Resources Ltd (formerly called AIM Resources Ltd) (2011) 83 NSWLR 728; [2011] NSWCA 348

Dlakic by his tutor Dlakic v Vaughan [2018] NSWSC 1455

Dong v Song [2018] ACTSC 82

Doulaveras v Daher [2009] NSWCA 58

DW v R [2014] NSWCCA 28

Ell v Ell [2015] NSWCA 38

Fay v Moramba Services Pty Ltd [2009] NSWSC 1428

Fisher-Pollard by her tutor Fisher-Pollard v Fisher-Pollard [2018] NSWSC 500

Fox v Percy (2003) 214 CLR 118; [2003] HCA 22

Gibbons v Wright (1954) 91 CLR 423; [1954] HCA 17

Giumelli v Giumelli (1999) 196 CLR 101; [2010] HCA 10

Grundt v Great Boulder Proprietary Gold Mines (1937) 59 CLR 641; [1937] HCA 58

Hanna v Raoul [2018] NSWCA 201

Harlowe's Nominees Pty Ltd v Woodside (Lakes Entrance) Oil Co (1968) 121 CLR 483; [1968] HCA 37

Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405

Hawcroft v Jamieson [2017] NSWSC 1478

Heperu v Belle (2009) 76 NSWLR 230; [2009] NSWCA 252

Herrman v Simon (1990) 4 ACSR 81

Hiscox v Outhwaite [1992] 1 AC 562

Hotien Holdings Pty Ltd v Frits Maré [2007] NSWSC 599

Howard Smith Ltd v Ampol Petroleum Ltd [1974] 1 NSWLR 68; [1974] AC 821

Huguenin v Baseley (1807) 33 ER 526

In re Alma Spinning Company (Bottomley’s Case) (1880) 16 Ch D 681

ING Funds Management Ltd v ANZ Nominees Ltd [2009] NSWSC 243

Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd [2008] NSWCA 206

Jarrett v Perpetual Trustee Co Ltd (2007) 64 ACSR 552; [2007] NSWSC 1231

Johnson v Buttress (1936) 56 CLR 113; [1936] HCA 41

Juul v Northey [2010] NSWCA 211

Kanjian v Kanjian [2019] NSWSC 166

Kauter v Hilton (1953) 90 CLR 86; [1953] HCA 95

Kooma Aboriginal Corp for Land v Goolburri Regional Council of the Aboriginal & Torres Strait Islander Commission [1999] FCA 82

Legal Services Board v Gillespie-Jones (2013) 249 CLR 493; [2013] HCA 35

Louth v Diprose (1992) 175 CLR 621; [1992] HCA 61

Magill v Magill (2006) 226 CLR 551; [2006] HCA 51

Maguire v Makaronis (1997) 188 CLR 449; [1997] HCA 23

Miller Heiman Pty Ltd v Sales Principles Pty Ltd (2017) 94 NSWLR 500; [2017] NSWCA 106

Miller v Cameron (1936) 54 CLR 572; [1936] HCA 13

Milling v Hardie [2014] NSWCA 163

Moratic Pty Ltd v Gordon (2007) 13 BPR 24,213; [2007] NSWSC 5

Mummery v Irvings Pty Ltd (1956) 96 CLR 99; [1956] HCA 45

Nanosecond Corporation Pty Ltd v Glen Carron Pty Ltd (2018) 132 SASR 63; [2018] SASC 116

Parker v Higgins [2012] NSWSC 1516

Permanent Building Society (in liq) v Wheeler (1994) 11 WAR 187

Plunkett v Bull (1915) 19 CLR 544

Poland v Hedley [2019] WASC 403

Preston v Diaspora Holdings Pty Ltd; Diaspora Holdings Pty Ltd v Owners Corporation of Strata Plan 68608 [2019] NSWSC 651

Priestley v Priestley [2017] NSWCA 155

Queensland Independent Wholesalers Ltd v Coutts Townsville Pty Ltd [1989] 2 Qd R 40

R v Byrnes (1995) 183 CLR 501; [1995] HCA 1

Rathswohl v Court [2020] NSWSC 1490

Re QFC (No 2) [2018] NSWCATGD 49

Re Reserve Hotels Pty Ltd [2021] NSWSC 376

Riches v Hogben [1985] 2 Qd R 292

Riz v Perpetual Trustee Australia Ltd [2007] NSWSC 1153

Roden v International Gas Applications (1995) 18 ACSR 454

Rose v Rose (1986) 7 NSWLR 679

Rosenbaum v Baidarman (No 2) [2021] NSWSC 574

RRG Nominees Pty Ltd v Visible Temporary Fencing Australia Pty Ltd (No 3) [2018] FCA 404

Saunders v Vautier (1841) 4 Beav 115; (1841) 49 ER 282

Senses Northbridge Pty Ltd v Sahab Holdings Pty Ltd [2019] NSWSC 1201

Senses Northbridge Pty Ltd v Sahab Holdings Pty Ltd (No 3) [2020] NSWSC 345

Sepulveda v R [2006] NSWCCA 379

Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19

Silovi Pty Ltd v Barbaro (1988) 13 NSWLR 466

Steinberg v Commissioner of Taxation (Cth) (1975) 134 CLR 640; [1975] HCA 63

Strategic Management Australia AFL Pty Ltd v Precision Sports & Entertainment Group Pty Ltd (2016) 114 ACSR 1; [2016] VSC 303

Swiss Screens (Australia) Pty Ltd v Burgess (1987) 11 ACLR 756

Szozda v Szozda [2010] NSWSC 804

Tam v Tang [2013] NSWSC 708

Thomas v Nash (2010) 107 SASR 309; [2010] SASC 153

Thompson v Palmer (1933) 49 CLR 507; (1933) HCA 61

Thorne v Kennedy (2017) 263 CLR 85; [2017] HCA 49

Tillett v Varnell Holdings Pty Ltd [2009] NSWSC 1040

Titterton v Oates (1998) 143 FLR 467

Turner v O’Bryan-Turner [2021] NSWSC 5

Vanguard Financial Planners Pty Ltd v Ale (2018) 125 ACSR 1

Walker v Corboy (1990) 19 NSWLR 382

Walsh v Walsh [2012] NSWCA 57

Watkins v Combes (1922) 30 CLR 180; [1922] HCA Watsonv Foxman (1995) 49 NSWLR 315

Zugic v Vesuvius Australia Pty Ltd [2020] NSWSC 106

Texts Cited:

Austin, Ford and Ramsay, Company Directors: Principles of Law & Corporate Governance (2nd ed, LexisNexis Butterworths, 2005)

Barnes, The Law of Estoppel (Hart Publishing, 2020)

Dal Pont, Equity and Trusts in Australia (6th ed, 2015, Thomson Reuters)

Heydon and Leeming, Jacobs’ Law of Trusts in Australia (8th ed, 2016, LexisNexis Butterworths)

Category:

Principal judgment

Parties:

Proceedings No 2018/150768

Kanjian Holdings No 1 Pty Ltd (ACN 002 862 660) (Plaintiff/First Cross-Defendant)
Kenneth Kanjian (First Defendant/First Cross-Claimant)
Walker Wayland Services Pty Ltd (ACN 611 272 569) (Second Defendant)
Phillip Kanjian (Second Cross-Defendant)
Victor Kanjian (Third Cross-Defendant)
Marianne Yaghljian (Fourth Cross-Defendant)
Loris Sarkis Kanjian (Fifth Cross-Defendant)
Sonia Kanjian (Sixth Cross-Defendant)

Proceedings No 2018/258352

Loris Sarkis Kanjian (Plaintiff/First Cross Defendant)
Kenneth Kanjian (First Defendant/Cross-Claimant)
Kanjian Holdings No 1 Pty Ltd (ACN 002 862 660) (Second Defendant)
Sahab Holdings Pty Ltd (ACN 002 728 216) (Third Defendant)
Sonia Kanjian (Fourth Defendant)

Representation:

Counsel:

Proceedings No 2018/150768

M Sneddon with T Phan (Plaintiff/First to Fourth Cross-Defendants)
A Bannon SC with M Davis (First Defendant/First Cross-Claimant)
M Condon SC (Fifth Cross-Defendant)

Proceedings No 2018/258352

M Condon SC (Plaintiff)
A Bannon SC with M Davis (First Defendant)
M Sneddon with T Phan (Second Defendant)

Solicitors:

Proceedings No 2018/150768

Bull Son & Schmidt (Plaintiff/First to Fourth Cross-Defendants)
McMahons Lawyers (First Defendant/First Cross-Claimant)
Benjafield & Associates Lawyers (Fifth Cross-Defendant)
Office of the NSW Trustee and Guardian (Sixth Cross-Defendant) (No appearance)

Proceedings No 2018/258352

Benjafield & Associates Lawyers (Plaintiff)
McMahons Lawyers (First Defendant)
Bull Son & Schmidt (Second Defendant)
Office of the NSW Trustee and Guardian (Fourth Defendant) (No appearance)

File Number(s):

2018/150768 and 2018/258352

Publication restriction:

Nil

Judgment

Overview of the proceedings, the hearing and the evidence

The hearing

The evidence

Facts

The Kanjian family

Kanjian Holdings

Sahab Holdings

1984: The Metropole Trust and the purchase of the Northbridge Village

1987: Purchase of the Strathfield property

Mid-1987: Changes to Sahab Holdings’ share structure and to the Metropole Trust

2002 and 2003: Redevelopment of 347 Sailors Bay Road property

2006-2008: The Kanjian Family Trust and purchase of the Northbridge Drycleaner

2009-2010: Philip ceases to be the family accountant

2011 and 2012: New wills, Sonia and change to the Kanjian Settlement Trust

2013–2014: Outcome of the Right of way proceedings and the Bondi conversation

Mid-2014: New wills and powers of attorney

2014: Refinance and indemnity to Ken

2015–2016: New wills and car accident

2016: Aldi proposal and Loris moves into the Brookvale nursing home

Early 2017: Changes in the family dynamics

May 2017: Offer to purchase the Northbridge properties

June 2017: External lawyers get involved

July 2017: Sale of Castle Cove property, referral of Sonia to geriatrician and more signed authorities

Mid-July to mid-August 2017: Understanding to share management responsibilities of family assets

27-31 August 2017: Appointment of siblings as directors of Kanjian Holdings and removal of Sahab Holdings’ funds

September 2017: More authorities and directions signed and countermanded

October 2017: Power of attorney by Sonia in favour of Philip and more demands for documents

November and December 2017: Demands for documents and more authorities signed by Loris and Sonia

January 2018: Ken corresponds with siblings and more meetings with Sonia and Loris

Late January/early February 2018: Dr Rosenfeld and new wills

February 2018: Correspondence regarding Kanjian Holdings’ document request

March 2018: Loris signs Revocation and new Power of Attorney

12 and 13 April 2018: Bondi rent direction

18 April 2018: Kanjian Holdings resolution and Sonia signs agreement for lease relating to the Northbridge properties

20 and 21 April 2018: Demand by Kanjian Holdings, countermand signed, secret recording and the police are called

Late April and May 2018: More demands, more authorities and Corporations proceedings are commenced

June – December 2018: Ken’s Cross-Claim, Equity proceedings commenced, documents produced, and Court appoints expert to assess Sonia and Loris

2019: Senses litigation, appointment of receivers to Sahab Holdings and claims against Ken relating to the Senses AFL

2020: Termination of Senses AFL

Other financial matters

Deferred evidentiary rulings

21 April 2018 secret recording

Keypoint Law file notes

Evidence: credibility of principal witnesses

Loris

Ken

The siblings

Corporations proceedings

Issues for determination

Is the issue of whether there was a meeting of directors and resolution passed raised by the pleadings and, if not, was an amendment required or should the issue be determined as part of the course of trial?

Was there a meeting of directors of Kanjian Holdings on 27 August 2017 and a resolution passed by Loris and Sonia as directors of Kanjian Holdings to appoint the siblings as directors?

Undue influence and related issues

Professor Peisah

The parties’ submissions

The ASFCC and scope of Ken’s claims

Legal principles

Dishonesty allegation

Further factual findings

The 27 August Resolution

The 2017 and 2018 Powers of Attorney and Revocations

18 April 2018 Resolution, 11 May Authorities and 11 May Bondi Direction

Equity proceedings

Sahab A Class Share Claim

Legal principles

Submissions

Did the 1987 discussion occur?

Does Ken hold the A class share on trust for Loris?

Is Loris estopped from asserting a right to call for the A class share?

Trustee Removal Claim

Further findings

Senses AFL issues

Should Sahab Holdings be removed as trustee?

Bondi Estoppel Claim

Factual finding: Bondi conversation

Legal principles

Submissions

Determination of the Bondi Estoppel Claim

Conclusion, relief and costs

Judgment

1. These reasons deal with two proceedings involving disputes between members of a family over who should have management and control of family companies and trusts and the affairs of elderly parents.

2. Loris and Sonia Kanjian are the parents of four adult children: Kenneth (Ken) Kanjian, Victor Kanjian, Philip Kanjian and Marianne Yaghljian. Without intending any disrespect, I refer to them by their first names and to Victor, Philip and Marianne together as the siblings.

3. The Kanjian family have a portfolio of commercial and residential property from which they have been able to derive income. Some of the properties are held by two trustee companies, Kanjian Holdings No 1 Pty Ltd (Kanjian Holdings) and Sahab Holdings Pty Ltd (Sahab Holdings). Sonia and Loris own other real property.

4. From the early 1980’s, Ken was entrusted by Loris and Sonia to act as their solicitor. Ken also took on responsibility for setting up and managing many of the commercial and legal affairs of the various Kanjian family trusts and companies.

5. In 2017, issues arose within the family about whether property owned by Sahab Holdings should be sold and the extent of Ken’s management and control of the family companies, trusts and assets. This led to a schism between the siblings on the one hand and Ken on the other and a change in Loris and Sonia’s attitude towards Ken. It also led to disputes about various documents signed by or on behalf of Loris and Sonia which, amongst other things, appointed Philip and Victor as directors of Kanjian Holdings, appointed Philip as Loris and Sonia’s sole enduring attorney and demanded that Ken produce to new lawyers documents relating to the affairs of Loris, Sonia and Kanjian Holdings.

6. The disputes culminated with the commencement of two sets of proceedings against Ken in mid-2018, multiple cross-claims and a concurrent hearing over many days.

Overview of the proceedings, the hearing and the evidence

7. The first proceedings (2018/150768) were commenced on 14 May 2018 by Kanjian Holdings against Ken and a firm of accountants, Walker Wayland, (Corporations proceedings) seeking access to documents relating to Kanjian Holdings most of which have been produced by Ken.

8. The issues for determination in the Corporations proceedings arise, in the main, out of Ken’s Amended Statement of First Cross-Claim filed on 7 August 2018 (ASFCC) against Kanjian Holdings, the siblings, Loris and Sonia.

9. Ken seeks to set aside or declare invalid ten resolutions, instruments, directions and authorities signed by Loris and Sonia in 2017 and 2018 as directors of Kanjian Holdings and in their personal capacities (which I refer to collectively as the impugned documents). He seeks this relief on the basis that the impugned documents were passed or signed in circumstances where Loris and Sonia lacked capacity and/or by reason of dishonesty, undue influence or unconscionable conduct at the hands of the siblings.

10. Ken also claims that the Corporations proceedings should never have been commenced as they were authorised by Philip and Victor who were not validly appointed as directors of Kanjian Holdings on 27 August 2017.

11. The second proceedings (2018/258352) were commenced by Loris and Sonia on 22 August 2018 against Ken, Kanjian Holdings and Sahab Holdings (Equity proceedings) seeking access to documents relating to Loris and Sonia’s affairs. Again, most of the documents sought have been produced by Ken.

12. The issues for determination in the Equity proceedings arise out of Loris’ Second Further Amended Statement of Claim (SFASC) and Ken’s Cross Claim.

13. Loris contends that he has an absolute and indefeasible beneficial interest in one of the two A class shares in Sahab Holdings that is held by Ken and seeks relief that compels Ken to transfer the share to Loris. Loris also claims that Sahab Holdings should be replaced as trustee of three Kanjian family trusts for reasons that include Ken’s past management of the affairs of Sahab Holdings, the breakdown in relations between Ken and the beneficiaries of those trusts, and Ken’s conduct in causing Sahab Holdings to enter into a long term lease over certain real properties.

14. Ken denies Loris’ claims. He argues that Loris is estopped from demanding that Ken transfer legal title to the A class share based on an alleged agreement or assumed state of affairs that arose out of a conversation in 1987 and contests the removal of Sahab Holdings as trustee. Ken also rejects any allegation that he has acted otherwise than as a diligent and faithful director of Sahab Holdings for the past 36 years.

15. In his Cross-Claim, which is brought against Loris and Sonia, Ken also asserts an interest in some commercial property jointly owned by Loris and Sonia in Bondi by reason of an estoppel and seeks declaratory relief in relation to that interest and to the A class share. Loris and Sonia have denied Ken’s claims.

16. Although a party to both proceedings, Sonia has not played an active role since 14 December 2018 when the Court made a declaration under s 41(1)(a) of the NSW Trustee and Guardian Act2009 (NSW) and appointed the NSW Trustee and Guardian (NSW Trustee) to manage her affairs (management orders). As a consequence, Sonia was removed as the second plaintiff in the Equity proceedings and joined as the fourth defendant. The NSW Trustee has filed a submitting appearance and did not attend the hearing.

7. Due to the disputes in these proceedings, there was no appearance on behalf of Sahab Holdings, the third defendant in the Equity proceedings.

The hearing

18. The hearing was originally listed for 10 days. Unfortunately, due to a range of factors, the hearing did not complete within that timeframe. Issues regarding some of the claims were not finally resolved until September 2020.

19. The onset of the COVID pandemic required most of the hearing to be conducted remotely through the use of audio-visual technology and presented some challenges. Technical issues led to some delays, concerns about the quality of the transcript and witnesses having to give part of their evidence over the telephone. Despite this, the parties were united in wanting the hearing to proceed and I was satisfied that it was in the interests of justice and not unfair to the parties to do so. I had an opportunity to observe the key witnesses closely through the audio-visual link, observed Loris in person for part of his evidence, and could see and hear from counsel on their submissions.

20. It is appropriate to record my gratitude to the parties and their legal representatives, the witnesses and the Court staff for their co-operation, flexibility and the manner in which they participated in the hearing. I have also been greatly assisted by the parties’ detailed written submissions.

The evidence

21. Kanjian Holdings and the siblings read affidavits from Marianne and Victor, both dated 6 May 2018, and from Philip dated 8 May 2018. They also read affidavits from Vivian Evans dated 14 December 2018 and 18 February 2019. Ms Evans, a Partner at Uther Webster & Evans, was previously the solicitor for Kanjian Holdings and the siblings in these proceedings.

22. Loris read five of his own affidavits dated 17 August 2018, 29 August 2018, 18 February 2019, 3 May 2019 and 21 June 2019.

23. Loris also read affidavits from Monica Ross-Maranik dated 22 August 2018, 18 February 2019 and 23 March 2020, Lara Kolokossian dated 30 August 2018 and 22 March 2020, Anthony Rumore dated 30 August 2018, Philip Diviny dated 18 February 2019, Freya Luick dated 6 April 2019 and Hiroshi Takei dated 3 May 2019. Ms Ross-Maranik, a Consulting Principal at Keypoint Law, had been the solicitor for Loris and Sonia prior to and for a period during the proceedings. Ms Kolokossian, a solicitor at Keypoint Law, had dealings with Loris and Sonia in 2017 and 2018. Mr Rumore, a Consultant at Colin Biggers & Paisley, was also retained by Loris and Sonia in 2017.

24. Loris also read affidavits and expert evidence from Matthew Young and Nicholas Brady.

25. Ken read all or part of eight of his own affidavits dated 12 July 2018, 29 August 2018, 24 October 2018, 8 February 2019, 18 February 2019, 3 May 2019 and 8 July 2019, 20 March 2020. He relies on affidavits from his wife, Annie Kanjian, dated 8 July and 25 September 2019, and an affidavit of Marie Evanian, an Armenian translator, sworn 13 September 2019. Ken also read an affidavit of Zorik Avakian dated 13 June 2019.

26. Loris and the siblings objected to parts of Annie’s 8 July 2019 affidavit and to Ms Evanian’s affidavit as they comprise evidence about a discussion between Loris, Sonia, Ken and Annie that was secretly recorded by Annie on her mobile telephone on 21 April 2018. The parties were content for the hearing to proceed on the basis that the witnesses would be cross-examined on that evidence and for these reasons to deal with its admissibility. I have admitted the secret recording, translated transcript and related evidence as evidence for the reasons set out at [465]–[504].

27. Expert evidence from Professor Carmelle Peisah was also tendered. Professor Peisah was appointed by the Court to assess the capacity of Loris and Sonia. Her opinion that Sonia lacked financial capacity and the capacity to instruct lawyers was the catalyst for the financial management order made in December 2018.

28. The siblings, Ken, Loris and Annie were cross-examined and submissions were made about their credit and the reliability of their evidence. This issue is significant as some of the claims rely on oral communications from many years ago (which are denied) and other claims seek to set aside documents on the grounds of undue influence about which Loris, a party alleged to have been unduly influenced, makes no complaint. At this point, I simply note that I did not unreservedly accept the evidence of any of the parties. In view of the timing of certain events, the frailty of human memory and the parties’ self-interest, I have placed greater weight on the contemporaneous documents: Watsonv Foxman (1995) 49 NSWLR 315 at 319.

29. As Sonia was not capable of giving evidence, I have also carefully considered and treated with caution the evidence given about conversations with her where that evidence is not corroborated and is in the personal interest of the witness: Turner v O’Bryan-Turner [2021] NSWSC 5 at [216].

30. Professor Peisah, Mr Rumore, Ms Kolokossian, Ms Ross-Maranik and Mr Brady were also cross-examined. No issues of credit were raised in respect of their evidence, although submissions were made as to the accuracy of the conclusions in Mr Brady’s report, which I refer to below.

Facts

31. The following is a narrative of facts and chronology of events drawn from the affidavit, oral and documentary evidence. It is necessarily lengthy. The events in issue span a period of 36 years and the allegations of undue influence, dishonesty or unconscionable conduct rely on many detailed communications and relate to multiple resolutions passed and documents signed over a period of 10 months.

32. Many of the facts are uncontroversial or are supported by objective evidence. Unless indicated otherwise, I am satisfied of the following matters.

The Kanjian family

33. Loris was born on 3 November 1926. Sonia was born on 15 December 1934. Both of them are of Armenian descent. They migrated to Australia in the 1950s and have been married since 1956.

34. Loris is a trained architect and was a Professional and Technical Officer at Sydney University prior to his retirement in 1981. Sonia did not work in external employment but had a keen interest in identifying and managing property investments for her, Loris and their family.

35. Since October 2017, Loris and Sonia have lived in separate rooms in a Bupa-operated nursing home in Willoughby where they remain permanent residents. Loris is confined to a wheelchair and wears a hearing aid. Professor Peisah’s assessment of Sonia suggests that she has a moderately severe dementia.

36. Over the years, Loris and Sonia built wealth by buying and developing property. They are the registered proprietors as joint tenants of commercial premises located on Brighton Boulevard, North Bondi (Bondi property) which they bought in 1982. Sonia is the registered proprietor of a block of eight apartments located at 347 Sailors Bay Road, Northbridge (347 Sailors Bay Road property) and commercial premises located at 50 Sailors Bay Road, Northbridge (50 Sailors Bay Road property). They have interests in other properties via family trusts and companies which are detailed below.

37. Loris and Sonia lived in a property they owned at Neerim Road, Castle Cove (Castle Cove property) until their move into a nursing home. The Castle Cove property was sold in 2017.

38. Ken (sometimes referred to as Vasken) was born on 5 October 1956. He is married to Annie and has three adult children. Ken was admitted as a solicitor in 1980 and, since 1981, has practised on his own account, generally as a commercial lawyer.

39. Victor (sometimes referred to as Vidgen) was born on 9 January 1960. He is married with two adult children. He is a painter by trade and does not have any financial or legal background. Until 2017, Victor had a very close relationship with Ken.

40. Philip was born on 7 May 1964. He is married to Aline and has two adult children. He is an accountant with his own practice in Dee Why. Philip was the accountant for the family companies and trusts until sometime in early 2010.

41. Marianne was born on 4 January 1975. She is married with two adolescent daughters. She is not in external employment. Until 2017, Marianne and Ken had a close relationship.

Kanjian Holdings

42. Kanjian Holdings was incorporated on 22 July 1977 to act as trustee for the Kanjian Family Settlement Trust No 1 (Kanjian Settlement Trust).

43. The Kanjian Settlement Trust was established by Sonia’s father. He settled two properties on Kanjian Holdings as trustee for the Kanjian Settlement Trust. One property is a block of four apartments located on Cremorne Road, Cremorne Point (Cremorne property) which, from 1977, was managed by Sonia and continues to be owned by Kanjian Holdings. The other property was Sonia’s parents’ home at Weetawa Road Northbridge, which was transferred to Victor in around May 1997 for $1.

44. The primary beneficiaries of the Kanjian Settlement Trust are Ken and the siblings. The secondary beneficiaries are Sonia and Loris and the children and spouses of Ken and the siblings.

45. Kanjian Holdings is also the trustee of the Vasir Superannuation Fund which was set up in 2007.

46. The shareholders of Kanjian Holdings are Loris and Sonia, who each hold an A class share, Ken, Philip and Marianne who each hold a B class share, Victor who holds one C class share, and Sahab Holdings, in its capacity as trustee of the Metropole Trust, holding one D class share.

47. Loris and Sonia are the directors of Kanjian Holdings. According to the ASIC records, Philip and Victor are also directors of Kanjian Holdings although, as noted above, there is a dispute in the proceedings about the validity of their appointment.

Sahab Holdings

48. Sahab Holdings is the trustee of the Metropole Trust, the Kanjian Family Trust and the Kanjian Testamentary Trust (Sahab Trusts).

49. Sonia and Ken each hold one A class share in Sahab Holdings, with Sonia registered as beneficial owner and Ken registered only as the legal owner of their respective A class shares. Each of Ken, Philip, Victor and Marianne also hold one B class share in Sahab Holdings.

50. Ken and Sonia, until the latter’s incapacity, were the directors of Sahab Holdings. Since early 2019, Ken, Victor and Bernard Le Boursicot have been the company’s directors. Ken is also the company secretary.

51. As trustee of the Metropole Trust, Sahab Holdings owns:

1. 59–67 Strathallen Avenue, Northbridge, a property that comprises a number of retail shops and a commercial office (Northbridge Village, also referred to as Sahab I); and

2. 145–149 Concord Road, North Strathfield, which comprises retail premises leased to Woolworths (Strathfield property, also referred to as Sahab II).

52. The Kanjian Family Trust was established as a unit trust by trust deed on 21 December 2006. The sole unit holder of the Kanjian Family Trust is Kanjian Holdings, holding the units as trustee of the Vasir Superannuation Fund. Sonia is the only member of the Vasir Superannuation Fund.

53. As trustee of the Kanjian Family Trust, Sahab Holdings owns real property at 69 Strathallen Avenue, Northbridge which adjoins the Northbridge Village (Northbridge Drycleaner).

54. The Kanjian Testamentary Trust was established by the will of Loris’ late mother who died on 8 November 2001. The beneficiaries of the Kanjian Testamentary Trust are Loris, Sonia, Ken, the siblings, the latter two’s spouses and children, and various companies.

55. According to Ken’s evidence, Loris settled an inheritance of around $750,000 from his mother who died in 2011 on Sahab Holdings as trustee for the Kanjian Testamentary Trust, which funds were subsequently lent to Sonia to finance part of the cost of redeveloping the 347 Sailors Bay Road property.

1984: The Metropole Trust and the purchase of the Northbridge Village

56. The Northbridge Village was purchased by Sahab Holdings as trustee for the Metropole Trust in mid-1984.

57. There is a contest on the evidence as to whether Sonia or Ken identified the Northbridge Village as a suitable property for the family to purchase. It is unnecessary to resolve that dispute. I accept Ken’s evidence that he commenced the negotiations which resulted in an agreement on the price and general terms being reached by the end of March 1984 and that Ken set up the trust and company structures associated with the purchase.

58. Ken deposes that, in early 1984, he had numerous discussions with Loris and Sonia about the best way to proceed with the purchase of the Northbridge Village. As it is relevant to Ken’s claim in relation to the A class share in Sahab Holdings, the terms of the key conversation about which Ken gives evidence is set out below in full:

Ken: We should buy the property in the name of a shelf company which then acts as trustee of a family trust. A trust structure gives us a lot of flexibility. What I propose is this – the shelf company can have two shares issued; one for mum and one for me. It will effectively be a $2 company. Mum and I will be directors of the company. The trust deed will name all family members as beneficiaries but you (referring to my parents) will be the primary beneficiaries because if all goes according to plan, you will eventually receive all income produced by the company. I propose that dad not be director of the new company nor the legal owner of any shares. I say this for two reasons. First, you are both already directors and shareholders of Kanjian Holdings No 1 Pty Ltd. If you were to be directors and shareholders of the new company, aggregation provisions under the Land Tax Management Act would cause the unimproved capital value of the Cremorne property and the Northbridge property to be added to one another resulting in land tax liability to be greater than it would otherwise be if the two properties were taxed separately. Instead, I propose to hold the single ordinary share issued to me in trust for dad. As dad will not be a director, the aggregation provisions will not apply. There is also another reason. We will be borrowing a lot of money to purchase the Northbridge property and I will be required to give my personal guarantee to the lenders. I have already made tentative enquiries. In my estimation we will need mortgage advances totalling $750,000. I have saved $40,000. That is all I have and to support you, I will put it into the property to help us buy it. As I will be managing the property and as I will be investing in it and as well giving my personal guarantee on the borrowings, I would like to hold one share in my name but because at the end of the day this property will hopefully produce income for your benefit, I believe that I should secure dad’s position in two ways. First, I will declare that I hold my share on trust for him so that if dividends are one day declared, the income will go to him or if something happens to me, dad’s interest in the company will be secure. Second, dad will be named in the trust deed as a primary beneficiary. So the primary beneficiaries will be the two of you and Victor, Philip, Marianne and I will be secondary beneficiaries. I know that it is a little bit involved but I think it will all work. How does it sound to you?

Loris: I will be guided by you. It sounds good to me. It looks like you have done quite a bit of thinking about the matter.

Sonia: I am fine with all of that. We will be relying on you to manage the six tenancies. My only concern is that three of them are a little unsteady at the moment. I hope we will be successful. There is quite a bit of risk involved here.

59. On 28 February 1984, Sahab Holdings was acquired as a shelf company in connection with the proposed purchase of the Northbridge Village. Sonia and Ken were appointed the directors and the shareholders holding one ordinary share each.

60. On 17 April 1984, Ken executed a deed by which he declared that he held the one ordinary share in Sahab Holdings as trustee as to the entire interest for the benefit of Loris (1984 Declaration of Trust). Loris is not a party to the 1984 Declaration of Trust.

61. On 14 May 1984, the Metropole Trust was established by a trust deed that provided for Sahab Holdings to be the trustee (cl 2). Under the Metropole Trust Deed, Ken was, for his lifetime, the Appointor with the power at any time and in his absolute discretion to remove the trustee and appoint any other person, apart from himself, a beneficiary or the settlor, as trustee (cl 10). The primary discretionary beneficiaries under the Metropole Trust were, and continue to be, Loris and Sonia, with each of Ken and the siblings a secondary discretionary beneficiary in the sense that any rights to the corpus of the trust arise only on the death of the survivor of Loris and Sonia. Loris and Sonia are both parties to the Metropole Trust Deed.

62. Sahab Holdings purchased the Northbridge Village for $1,050,000 with first and second mortgages from the Public Trustee and Westpac respectively totalling about $750,000. The balance of the purchase price was funded by Sonia and Ken, with Ken contributing $40,000 from his life savings. Ken and Sonia gave personal guarantees to support the mortgages which were paid out over time from funds generated from rents. Sonia and Loris repaid Ken his contribution of $40,000 by around 1988 (T412.38–41).

63. Loris deposes that he contributed about $28,000 to $30,000 towards the purchase of the Northbridge Village from the inheritance he received from his father who died in 1986. I reject this evidence as Loris accepted in cross-examination that his father left his estate to his mother and that Loris did not receive any inheritance at that time (T704.26–30).

64. Loris accepts that Ken discussed with him and Sonia that Northbridge Village would be purchased by a company which would act as trustee and that the trust deed would name all the Kanjian family members as beneficiaries, with Loris and Sonia as the primary beneficiaries. He deposes that Ken told him and Sonia they should set up trusts and companies as it was “better for tax”, that Loris understood the Metropole Trust was established for that reason and, although there was a trust, he believed that “it belonged” to Loris and Sonia, by which I understood Loris to mean he believed the Northbridge Village belonged to them. Loris also gives evidence that he believed that he and Sonia held one share each at the time Sahab Holdings was established and that he had not seen the 1984 Declaration of Trust or knew that Ken held the ordinary share in Sahab Holdings on Loris’ behalf until he gained access to the legal documents in these proceedings.

65. Ken’s evidence is that he became the manager of the Northbridge Village and its tenancies after its purchase in 1984 and that, from 1987 until a car accident in 2015, Loris assisted Ken in management and administration of the property by doing basic bookkeeping and liaising with tenants and tradesmen, including in relation to routine maintenance and repairs.

66. Loris gives evidence that he and Sonia agreed that Loris would oversee the day to day management of the Northbridge Village after its purchase, which he did from 1984, and that Ken’s responsibilities were primarily dealing with legal matters and lease agreements.

67. Loris and Ken were both cross-examined about the role each of them played in relation to the management of the Northbridge Village over the years. I return to that issue later in these reasons. At this point, I note that I am satisfied that Loris was involved in the day to day operations and administration of the Northbridge Village from at least November 1987 until his accident in 2015. Mr Takei and Ms Luick, who were tenants in the Northbridge Village from November 1997 and around 2002 to 2011 respectively, give evidence that Loris was frequently at the Northbridge Village, around three to four days per week, that he often checked in with them about their business and was the point of contact for issues relating to their shops. In contrast, their evidence is that they had limited contact or interaction with Ken.

59. Ken’s evidence, which I accept, is that he did not charge any management fees for the time he spent on matters relating to the Metropole Trust and the Northbridge Village, other than on two occasions in June 2009 and June 2010 with the approval of Loris and Sonia.

60. Loris and Sonia received the net income from the Northbridge Village by way of distributions from Sahab Holdings which, for the period up to June 2018, was arranged by Ken.

61. Ken deposes that he has been the de facto managing director of Sahab Holdings since its inception in 1984. Ken’s evidence is that, since that time, he has assumed primary responsibility for all of the affairs of the company, including the negotiation and implementation of commercial initiatives such as acquisitions, financing and leasing transactions. Loris disputes this. His evidence is that Ken was not responsible for the commercial initiatives undertaken by Sahab Holdings, but that Sonia, in consultation with Loris, was responsible for sourcing and acquiring property with respect to the Northbridge Village.

62. It is not in dispute that the siblings played no role in setting the strategic direction or in the management and administration of Sahab Holdings, save for the years up to late 2009 or early 2010 when Philip was its accountant.

1987: Purchase of the Strathfield property

72. In early 1987, Sahab Holdings acquired the Strathfield property for $680,000 in its capacity as trustee of the Metropole Trust. Ken’s evidence is that he identified the property. Loris’ evidence is that Sonia found it.

73. It is common ground that the Strathfield property was purchased by Sahab Holdings for the benefit of Ken and the siblings. $435,000 was borrowed from the Public Trustee and secured by personal guarantees given by Sonia and Ken for the purchase price. Each of Ken and the siblings contributed to the balance of the purchase price in equal shares, with Marianne’s share being funded by one or both of her parents as she was around 11 years old at the time.

74. Before completion on 19 February 1987, Sahab Holdings, as purchaser, commenced proceedings in this Court against AMP, as vendor, and succeeded in obtaining judgment that the Public Trustee had to sign a certain deed before completion so the sale could occur (Strathfield Vendor proceedings).

75. Ken’s Cross-Claim in the Equity proceedings also refers to him having acted for Sahab Holdings in 2005 in proceedings commenced in the New South Wales Supreme Court against a tenant of the Strathfield property (Strathfield Tenant proceedings). Loris claims that Ken did not advise him and Sonia about the Strathfield Vendor and Tenant proceedings and relies on this failure in support of his claim for Sahab Holdings to be removed as trustee of the Sahab Trusts. There does not appear to be any evidence adduced about the Strathfield Tenant proceedings.

76. Ken has managed the Strathfield property without remuneration from the date of completion of its purchase and has also been responsible for making the distributions of income from the net rental to the siblings, which Ken did until around mid-2018.

Mid-1987: Changes to Sahab Holdings’ share structure and to the Metropole Trust

77. Ken deposes that, midway through 1987, he had a discussion with Loris and Sonia about Sahab Holdings and the Metropole Trust during which he proposed a regime to make more concrete the rights of Ken and the siblings and to give up his role as Appointer of the trustee of the Metropole Trust (1987 discussion).

78. As the 1987 discussion is key to Ken’s estoppel claim in relation to the A class share in Sahab Holdings, I have set out Ken’s evidence of what he says was discussed in full:

Ken: I’m pleased with the performance of Northbridge Village. It has taken a lot of work but we are now on an even keel and I have sorted out the tenants. We have a better mix now and they are paying rent more or less on time. We are on course to reduce debts secured by the property and I hope there will be good income for you. However, I have been thinking about succession. I think that Northbridge Village has sound prospects and I would like to be able to hold it for long enough so that it benefits Victor, Philip, Marianne and me in the future. At the moment, Victor, Philip, Marianne and I are secondary beneficiaries of the trust and we do not have concrete rights. I have been thinking on how, after you, our interests can be secured on a more certain basis. I spoke earlier this week to the Stamp Duties Office and was told that if I were to vary the trust deed to make the four of us default beneficiaries, that would be a resettlement of the trust and would attract very high stamp duty. We don’t want that. The trust has a life of 80 years or so. Therefore, I was thinking that what we should do is something like this. The two ordinary shares presently on issue – one to me and one for mum – should be converted to A class shares. They will have voting rights but only for as long as you remain alive. Then we should issue B class shares – one to each of Victor, Philip, Marianne and me. Those shares will only have voting rights after your death. But we will change the articles of association of Sahab so that all major decisions concerning the Metropole Trust will have to be by unanimous vote of all B class shareholders and if there is no unanimity, the status quo will continue or, as a default outcome, all income and capital distributions must be equal between the four of us. I think that will work. I have looked at the law on this and the cases and I see no impediment to it working. We won’t have stamp duty problems. It won’t be a resettlement of the trust and each of us will eventually then have an equal say in the management of the company in connection with assets of the trust which include both Northbridge Village and the North Strathfield property.

Loris: You are doing a great job for us at the moment. You have taken the entire management burden of Northbridge and North Strathfield properties onto yourself and they are both performing well. If you think that what you are proposing is a good idea so that after us, you all have equal rights, I’m all for it. I trust you to look after your brothers and sister.

Sonia: Me too. We are very pleased with the way Northbridge Village is going and are so grateful to you for your careful management of it. Your father and I would like to pass the Northbridge property to you (referring to me and to my siblings) after we are gone. It is a good investment. The shops were constructed in 1982 and have a fair amount of life in them. Please go ahead with your plan.

Ken: Thanks, that’s great. There is one other thing I should mention. You know that the trust deed names me as the appointor of the trust and after me my executor. The appointor can decide who will be the trustee. That was okay while I was still living at home and was not married but if something were to happen to me, Annie (referring to my wife) would become the appointor and that is not appropriate. I think we should change the appointor. My proposal is that Sahab should have the right to appoint another company in its place as trustee. So during your lifetimes, mum and I will have the vote on the matter and it will have to be unanimous. After you, all B class shareholders will have to agree if the trustee is to be changed. In this way, Sahab can be guaranteed to remain trustee of the Metropole Trust and the power of appointment limited unless everyone wants a new trustee to be appointed. I think that this fair. It dovetails with the plan I have in mind for succession, for the proposed rights of B class shareholders and for keeping the Northbridge and North Strathfield properties in the family on a long term basis. After all, the trust itself has a long life. So I am prepared to give up being the appointor but for as long as the two of you are alive, I should be allowed to retain and exercise voting rights attached to the share I hold in Sahab because I believe it is only fair that I be given a say in how the company is run. Don’t forget that I will continue to be the manager of the properties, I will not be charging the company for that work, to obtain the loans that we have, I have given personal guarantees exposing my assets including my legal practice and I have also made a significant personal financial investment in the company. What do you think?

Loris: It’s all very complicated for me but if you think that that is in the best interests of the family, go ahead

Sonia: I agree. It sounds quite complicated but dad and I trust you to do everything properly and fairly for the whole family.

79. On 25 September 1987, Sahab Holdings passed a special resolution that amended the articles of association to create A class shares with voting and other rights that attached during Loris and Sonia’s lifetime, create B class shares that entitled the holders to the same rights after Loris and Sonia’s lifetime, and convert the two ordinary shares (held by Sonia and Ken) into two A class shares. It also passed a resolution to allot one fully paid up B class share to each of Ken and the siblings.

80. On the same day, Ken caused Sahab Holdings to execute a Deed of Variation in its capacity as trustee of the Metropole Trust (Deed of Variation) which varied cl 10 (Removal and Appointment of Trustee) and cl 11 (Decisions by Corporate Trustees) of the Trust Deed to provide that the Trustee may remove any Trustee from office and appoint another person as trustee other than any beneficiary, itself or the Settlor. This had the effect of removing Ken’s right, as the Appointer, to remove and appoint a new trustee and to confer that power on Sahab Holdings.

81. Ken gives evidence that, after 25 September 1987, he continued with the management and administration of the Northbridge Village and Strathfield properties although he delegated more tasks relating to the Northbridge Village to Loris due to Ken’s legal practice commitments and Loris’ availability in retirement.

82. Loris admits that Ken provided some management services in relation to Northbridge Village such as undertaking leasing work, operating bank accounts and undertaking rent reviews but that he and Sonia otherwise undertook the management of the Northbridge Village.

83. In or about 1989, Sonia and Loris funded the construction of additional offices at the Northbridge Village at a cost to them of around $250,000.

2002 and 2003: Redevelopment of 347 Sailors Bay Road property

84. In 2002, plans were underway to redevelop the 347 Sailors Bay Road property into eight apartments.

85. According to Ken’s evidence, around that time, he discussed a proposal to fund the $2.3 million cost of construction with the siblings that had been approved by Loris and Sonia. The proposal involved Sonia and Loris funding $1.1 million with the balance of $1.2 million to come from the siblings. Ken proposed that Sahab Holdings would borrow $1.2 million on the security of the Strathfield property, use it to repay loans owed by Sahab Holdings to Ken and the siblings of $300,000 each, and then for him and the siblings to lend the money to Sonia interest free to fund the construction. He also proposed that the rental from the apartments be made available for an education fund and that the apartments themselves would be left for the children of Ken and the siblings in the future. Ken’s evidence is that the siblings agreed to that proposal. Philip disputes this.

86. In evidence are minutes of a meeting of the directors of Sahab Holdings dated 6 August 2003 that are signed by Ken and record that Sahab Holdings would borrow $1,200,000 from the Public Trustee on the security of the Strathfield property with the proceeds to be applied to repay the amount of $300,000 to a company associated with Ken and to each of the siblings.

87. On 1 September 2003, a mortgage over the Strathfield property in favour of the Public Trustee was registered for $1,200,000.

88. Also in evidence is a loan agreement dated 7 September 2003 between Kancorp Pty Ltd (Kancorp), Victor, Philip and Marianne as lenders and Sonia as borrower. The loan agreement is signed by Ken and Annie as director and secretary of Kancorp, the siblings and Sonia. It records that Kancorp and the siblings agree to advance the amount of $1.2 million to Sonia to finance the construction of the apartments.

89. Philip says that he knew there was a mortgage over the Strathfield property but was not aware of the matters referred to in Sahab Holdings’ minutes of meeting and did not consent to a loan taken out for that purpose. Having regard to its contents and the fact that he is a signatory to the agreement, I do not accept Philip’s evidence that he did not consent to the loan for the purpose referred to.

2006-2008: The Kanjian Family Trust and purchase of the Northbridge Drycleaner

90. The Northbridge Drycleaner was purchased on 5 April 2007 by Sahab Holdings in its capacity as the trustee for the Kanjian Family Trust.

91. Ken deposes that, prior to the purchase of the Northbridge Drycleaner, he had a discussion with Sonia during which he recommended that it be purchased through a superannuation fund that would be set up for Sonia in the name of a trustee company, and that she agreed.

92. Kanjian Holdings paid the purchase price and expenses of $950,000 relating to the acquisition of the Northbridge Drycleaner by subscribing for 950,000 units in the Kanjian Family Trust as trustee for the Vasir Superannuation Fund.

93. The ground floor of the Northbridge Drycleaner was, and continues to be, occupied by a drycleaner. The first floor is unoccupied and there is no physical access to it from the street. The rear one-third of the Northbridge Drycleaner is an uncovered courtyard which is landlocked. An easement by way of a right of way in favour of the Northbridge Drycleaner had been removed from title in 2001 on application by Castle Constructions Pty Ltd, the owner of the servient tenement. Ken’s evidence in cross-examination was that, shortly after the purchase was settled, Sonia had the idea that they should seek to recover or reinstate the right of way (T483.19–23). He deposes that he became aware that the cancellation of the easement was irregular many months after completing the purchase of the property.

94. On 7 November 2008, Sahab Holdings commenced proceedings in this Court against the Registrar-General, with Castle Constructions being later joined, seeking judicial review of the 2001 decision to extinguish the right of way (Right of way proceedings).

2009-2010: Philip ceases to be the family accountant

95. Philip had acted as the accountant for the family from the early 1990’s and Kanjian Holdings and its associated trusts from around 2001.

96. In late 2009 and early 2010, there were tensions in the family, primarily between Philip and Ken. Philip was raising questions about the structures that Ken had put in place as well as concerns that Loris and Sonia were being asked to sign misleading declarations to the Australian Tax Office (ATO) and were not properly advised about the capital gains tax (CGT) implications of certain transactions. He also raised concerns about the lack of documentation and the status of his and the other siblings’ investments in the Strathfield property and shares in Transurban Roads that were held via the Carkan Trust, a trust that Ken had established (Carkan).

97. Philip raised these issues in a letter to Sonia dated 22 January 2010 which begins with the statement “reasons why I am unhappy with family structure and the total control by Ken”. Ken deposes that he has never seen that letter and, having read it, says he would “dismiss most of [the issues and complaints] as either lacking in substance, irrelevant or just querulous” and describes the letter as “self-righteous in tone”.

98. Ken was, however, aware of some of the concerns as, on 27 January 2010, he sent a letter to the siblings about “the family investments” in which he sought to address and allay concerns by providing some formal advice about their investments in the Strathfield property via Sahab Holdings and in Carkan Pty Ltd as trustee for Carkan.

99. Tensions between Ken and Philip reached a tipping point around February 2010 during a family meeting at the Castle Cove property. While there is a dispute as to what was said and who caused matters to come to a head, it is common ground that Philip got upset and frustrated, accused Ken of misleading Sonia and Loris, and the police were called. Philip believes that Ken called the police and made false statements about him. Ken believes that Philip had threatened to strike Ken (which Philip denies), Sonia called the police and Ken saved Philip from a criminal record by not pressing charges for assault.

100. I find it likely that, at or around the time of the family meeting, Philip ceased as the family accountant. Philip notified Ken of that fact in a letter dated 11 March 2010 in which Philip also set out his wishes to liquidate his interests in Carkan and the Strathfield property. Ken later caused the Transurban shares in Carkan to which Philip was entitled to be sold with the proceeds accounted to Philip directly.

101. On 29 September 2010, Uther Webster & Evans, a firm of solicitors instructed by Philip, wrote to Ken asking for information and documents regarding Sahab Holdings, Kanjian Holdings and Carkan.

102. Ken responded by a letter dated 11 October 2010 in which he indicated that he would put the request to his parents in a meeting. Ken’s evidence is that, at a meeting with Loris and Sonia, they told him they did not want external lawyers to get involved or the documents to be released and that he did not reply to the letter in accordance with Sonia’s instructions.

103. Ken deposes that Loris and Sonia formed the view that it would be unwise to allow Philip to have a role in the future management of what Ken describes as the “family’s collegiate assets”. Ken also deposes that he believes Philip abandoned the family and that his withdrawal as the family accountant meant that Ken had to take charge of managing the family investments and accounting matters.

104. Philip deposes that, rather than engaging in unhelpful arguments with Ken, he thought it best to cease acting as the family accountant.

105. Loris’ evidence is that, at the time Philip began to distance himself from the family, he did not understand Philip’s reasons for doing so. In his evidence, Loris refers to the “falling out” that Philip had with the rest of the family and a period of tension, but says that there was no estrangement. In cross-examination, Loris gave evidence that, in about 2012,  Philip was causing problems in the family by making accusations about the work Ken was doing for the family, stating that he didn’t trust Ken, yelling at Loris and Sonia and not attending family functions (T27.12–T29.5).

106. It is apparent that, from early 2010, there was significant distrust and a lack of familial relations between Philip and Ken. At that time, Loris and Sonia had sided with Ken and Philip no longer played a role in relation to the family investments, trusts and companies or Loris and Sonia’s affairs until sometime in early to mid-2017.

2011 and 2012: New wills, Sonia and change to the Kanjian Settlement Trust

107. According to a note made by Sonia’s general practitioner, Dr Telan, and a letter from Sonia’s psychologist, Kathi Pauncz, to Dr Telan, dated 7 January 2011, around that time, Sonia was “having issues with [her] son”, has a “very difficult husband” and “a son who has cut off from Sonia. This causes her extreme distress…”. Based on the evidence at [99]–[105], I infer that the reference to Sonia’s son in those documents was to Philip.

108. On 23 January 2011, Loris and Sonia each made new wills (2011 Wills). The 2011 Wills were prepared by Ken and were witnessed by Ralph Selwyn, a retired solicitor who lived next door to Loris and Sonia.

109. The 2011 Wills are in similar terms. Loris and Sonia each appointed the other as their executor and beneficiary of the whole of their estates. If they predeceased one another, Annexure A to their wills were to take effect. Annexure A appointed Ken, Victor and Marianne as joint executors and trustees and were also in similar terms. The differences relate to assets held separately by Sonia and Loris.

1. In relation to the claims made in Ken’s Amended Statement of First Cross-Claim, I have held that Sonia’s 2017 Revocation and Power of Attorney are invalid and that her 2014 Power of Attorney remains valid on the basis that Sonia was induced to make the 2017 Revocation as a result of undue influence or unconscionable conduct. I will make declarations to that effect pursuant to ss 36(3A) and 36(3) of the Powers of Attorney Act 2003 (NSW).

2. Ken’s other claims for relief in relation to the other resolutions and documents passed and signed by Loris and Sonia are refused. I was not satisfied that the resolution of directors of Kanjian Holdings made on or about 27 August 2017 to appoint Victor, Philip and Marianne as directors of Kanjian Holdings, Loris’ 2018 Revocation and Power of Attorney and 2018 Revocation of Guardianship, the 18 April 2018 Resolution of directors of Kanjian Holdings and Power of Attorney, the 11 May Authorities and the 11 May Bondi Direction were void or voidable or should be set aside because Loris and/or Sonia lacked capacity or were induced to pass the resolutions or sign the documents by reason of undue influence or unconscionable conduct.

1119. In the Equity proceedings (2018/258352):

1. In relation to Loris’ claim regarding the A class share in Sahab Holdings, I have found that Loris is estopped from requiring Ken to transfer legal title to the A class share that Ken holds on trust for Loris during Loris and Sonia’s lifetime. Accordingly, Loris’ claim for an order that Ken transfer the A class share held by Ken is refused.

2. I have concluded that Sahab Holdings should not be removed as trustee of the Metropole Trust, Kanjian Family Trust or Kanjian Testamentary Trust or as appointor of the Metropole Trust and have refused Loris’ application for orders to that effect. I was also not satisfied that Loris had established that Ken had negotiated and executed the Senses AFL on behalf of Sahab Holdings without authority, procured a breach by Sahab Holdings of its duty as trustee of the Metropole Trust or breached his obligations as a director by reason of Sahab Holdings’ entry into the Senses AFL.

3. Ken’s claim made in his cross-claim to an interest in the Bondi property has not succeeded.

1120. The parties indicated that they wanted the issue of costs to be dealt with after judgment was handed down. As is apparent, each of the parties experienced some success, although not on all of their claims, which will impact that issue. There are also other aspects of each proceeding that may bear on the question of costs and procedural matters, such as extant undertakings, that may need to be dealt with as part of the final orders.

1121. For those reasons, I have deferred making any orders at this stage. I invite the parties to confer and, within 14 days, notify my Associate as to whether orders dealing with final relief and costs can be agreed and to send though proposed short minutes if they can. If agreement cannot be reached on any aspect of the final orders and costs, the parties should confer and, also within 14 days, advise my Associate whether they are content for the remaining issues to be dealt with on the papers or an oral hearing is needed, with a timetable for the exchange of competing orders and short written submissions.

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Endnotes

Amendments

14 July 2021 - 14 July 2021 - Various typographical and definitional errors fixed

[70]: “acquitting” replaced with “acquiring”

Heading “2015–2016: New wills, car accident and the s 88K proceedings”: amended to “2015–2016: New wills and car accident”

[243]: insert “or” before “at all” in last sentence

[280]: replace “today” with “that day”

[294]: replace “Alexander” with “Brookvale”

[346]: replace “the” with “it”

[381]: replace “because” with “became”

[514] and [516]: updated cross-references

[521]: insert additional cross-reference

[562(d)(ii)]: moved footnote to [562(d)(i)]

[623]: removed incorrect cross-reference

[743]: replace “financial” with “financially”

[957]: replace “2019” with “2018”

[1102]: italicise “would have” and insert “Loris and Sonia had not” before “made the representation” in second sentence

02 November 2021 - Various typographical errors and abbreviations fixed

Decision last updated: 02 November 2021