Melbourne Orthopaedic Group Pty Ltd v Stamford Aus-Trade & Press Pty Ltd

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2014 0119
MELBOURNE ORTHOPAEDIC GROUP PTY LIMITED	Appellant
v
STAMFORD AUS-TRADE & PRESS PTY LIMITED	First Respondent
and
ALOYSIUS DAVID PTY LIMITED	Second Respondent

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JUDGES:	ASHLEY and SANTAMARIA JJA and DIGBY AJA
WHERE HELD:	MELBOURNE
DATES OF HEARING:	11 & 13 MARCH 2015
DATE OF JUDGMENT:	18 June 2015
MEDIUM NEUTRAL CITATION:	[2015] VSCA 150
JUDGMENT APPEALED FROM:	[2014] VSC 324 (Daly AsJ)

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TRUSTS – Creation – Transfer of moneys into a bank account – Intention to create trust – Onus of proof – Necessity for clarity – Whether parties had adduced evidence from which the Court could find objective evidence of intention to create trust – Evidence of parties’ subjective intentions inadmissible.

EQUITY – Resulting trust – Transfer of moneys into a bank account – Intention of parties – Whether presumption of resulting trust rebutted – Evidence that transfer either repayment of a loan or the making of a loan – Presence of evidence effected displacement of presumption.

EVIDENCE – Presumptions – Resulting trust – Advancement – Rebuttal – Circumstantial evidence – Inferences – Proper approach in evaluating circumstantial evidence – Necessity of proof – Inadmissibility of conjecture.

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APPEARANCES:	Counsel	Solicitors
For the Appellant	Mr M R Pearce SC with Mr A R Kirby	Kelly Hazell Quill Lawyers
For the First Respondent	Mr M J Hoyne	Lennon Mazzeo Lawyers

ASHLEY JA:

I agree in the reasons of Santamaria JA and with the order which his Honour proposes.

SANTAMARIA JA:

Introduction

Aloysius David (‘David’) migrated to Australia in the late 1980s or early 1990s from Singapore. For over 35 years, he has been associated, with Mr Ramanathan Theyvendran (‘Theyvendran’) who resides in Singapore.[1]
[1]Theyvendran is also known as ‘Dr Denan’. He was referred to as such by the trial judge.
In November 2000, David became the practice manager for a group of surgeons who traded under the name of Melbourne Orthopaedic Group Pty Ltd (‘MOG’). He remained in that position until February 2012, when it became redundant. In early 2012, he established Aloysius David Pty Ltd (‘the company’).
Theyvendran owned all the shares in Stamford Press Pty Ltd which was the ultimate holding company of the Stamford Group, which has a total workforce of 150 employees with an annual sales turnover of more than $20 million and is involved in the fields of printing and publishing, logistics, trading, consultancy and technology, and multimedia. He has business ventures in England, Australia, India and Sri Lanka. He is a management consultant. He is engaged in a co-operative movement. He is an office holder in and patron of several sporting and charitable organisations.
In 1999, Theyvendran incorporated Stamford Aus-Trade & Press Pty Ltd (‘Stamford’). Stamford operated three bank accounts with the United Overseas Bank (‘UOB’) in Sydney.
On 5 January 2012, David sent an email to Theyvendran in which he said:

‘As discussed, please note bank details for the return of my monies’. A reply email was sent, as if from Theyvendran, which said: ‘OK - Thanks’. On the same day, David established a bank account in the name of the company at the National Australia Bank (‘NAB’). On 26 January 2012, Theyvendran instructed UOB to transfer $500,000 to the NAB account in the name of the company. On 31 January 2012, Theyvendran received confirmation that these transfers had been effected. Thereafter, the company account at the NAB had a credit balance.

On 14 February 2012, David’s position at MOG became redundant and his employment was terminated. On 22 March 2012, MOG retained Mr Peter Morris (‘Morris’) of PPB Advisory, a chartered accountant and an experienced fraud investigator, to investigate certain financial irregularities thought to involve David. After Morris made his report, MOG applied to the Supreme Court for a freezing order in respect of the assets of David.[2] On 30 March 2012, the Court made the freezing order. On 31 March 2012, Morris interviewed David. During the interview, David referred to the funds in the company’s name and made several statements to the effect that that the money was the repayment of a loan,[3] statements that were consistent with the substance of the email he had sent to Theyvendran on 5 January 2012.
[2]Proceeding No S CI 2012 0164 (‘initial proceeding’). On 13 April 2012, MOG entered judgment against David in default of an appearance for the sum of $454,402.31.
[3]See [29] below.
On 3 April 2012, in compliance with a direction of the Court, David swore an affidavit of his assets. In it, he made no reference either to his ownership of the shares in the company or to the funds held in its name in the NAB. On 4 April 2012, MOG made an application for a variation of the terms of the freezing order. On that day, the Court varied the order extending it to the assets of the company.
After the extension of the freezing order, David and Theyvendran had a conversation. On 10 April 2012, David swore a further affidavit in which he said that the funds in the company’s account (at that point $503,035.41) ‘was deposited therein by [Stamford] ($500,000) and is held in trust for that company by Aloysius David Pty Ltd’, a statement that was inconsistent with his email of 5 January 2012 and his statements to Morris.
On 17 May 2012, solicitors acting on behalf of Stamford wrote to the solicitors then acting for MOG indicating that Stamford would be seeking a variation to the freezing order to seek the release of the funds in the company bank account on the basis that those funds were held by the company on trust for Stamford.
On 5 July 2012, a sequestration order was made against David. Mr Kenneth Lamb was appointed as his trustee in bankruptcy (‘trustee’). As a result of that order, David’s shares in the company vested in the trustee. On 30 July 2012, Theyvendran swore an affidavit in which he described his association with David and explained why Stamford retained the beneficial interest in the funds in the company’s account (‘the explanation’).
On 24 August 2012, Stamford commenced the present proceeding against the company.[4] MOG applied to be joined as a defendant.[5] In its originating motion, Stamford claimed, first, that the moneys transferred by it to the company were held by the latter on trust for it and, second (and in the alternative) that the payment was made for the exclusive purpose that the money were to be invested in a suitable company and that purpose having been frustrated (by the freezing orders), the moneys were repayable to Stamford. Particulars of the claim were said to be included in an affidavit that Theyvendran had sworn on 30 July 2012 and which had been filed in the initial proceeding (‘the 30 July 2012 affidavit’).
[4]Proceeding S CI 2012 4855. The present appeal is from the orders made in this proceeding.
[5]On 6 August 2012, Stamford made an application to the Court seeking leave to intervene in the initial proceeding and to vary the freezing order. On 21 August 2012, the Court (Beach J) made orders granting leave to Stamford to intervene in the initial proceeding. However, he said that it would be desirable for Stamford to issue a fresh proceeding in order to pursue its claim for the funds in the company bank account. Thus, the present proceeding. It seems that the company itself played no part in the trial. It did not take part in the appeal. Its solicitor explained that, apart from the funds in dispute, it had no assets. At trial, the only contradictor was MOG. As the trial judge explained, MOG’s role as contradictor was no doubt motivated by its position as the main creditor of David’s bankrupt estate. By reason of the orders made on 13 April 2012 in the initial proceeding, MOG has a judgment in its favour of $454,402.31 against David, plus an unquantified claim for interest and costs in that proceeding.
On 30 May 2013, the matter came on for hearing before the trial judge. During the trial, the emails of 5 January 2012 became of great significance. On 30 May 2013, Theyvendran was being cross-examined by counsel for MOG. Theyvendran accepted that he had exchanged emails with David on 5 January 2012. Thereupon, counsel moved to ask him about them. Before he could do so, counsel for Theyvendran protested that the emails were discoverable documents that had not been discovered by MOG and that he needed an adjournment to seek instructions from Theyvendran about them.[6] The hearing was adjourned.[7] Before it was resumed, affidavits were filed by David and Theyvendran’s secretary in Singapore. David told a story similar to the explanation given by Theyvendran in the 30 July 2012 affidavit. The secretary said that she had answered David’s email of 5 January 2012 in Theyvendran’s name as a matter of administrative formality, without having received any instructions from him.
[6]The trial judge considered that the emails were discoverable both by MOG and Stamford. When his cross-examination was resumed, Theyvendran was asked to explain why Stamford had not discovered them.
[7]During the adjournment, Stamford filed points of claim. These repeated the allegations contained in the indorsement on the originating motion, save that there was an additional allegation that ‘… the Transfer was a loan to the company repayable on demand’.
The hearing resumed before the trial judge on 29 July 2013. All witnesses were subjected to intensive cross-examination in which they gave inconsistent evidence. On 30 July 2013, the matter was reserved for judgment. However, Stamford immediately sought leave to file further submissions. In those submissions, it advanced a further alternative claim that, as David and his company had provided no consideration for the funds, they were held by the company on a resulting trust for Stamford. On 30 August 2013, the trial judge granted the leave sought. Further written submissions were exchanged and, on 13 September 2013, the matter was finally reserved for judgment.

On 24 July 2014, the trial judge published her reasons.[8] The reasons are striking in that, despite upholding Stamford’s claim that the moneys in the account in the company’s name were trust moneys, the trial judge largely disbelieved the evidence of Theyvendran and David as to the circumstances of the transfer of funds in January 2012. In particular, she found that the central parts of Theyvendran’s explanation as to the reason for the transfer of the funds were false or implausible. However, she considered various hypotheses that might have explained the transfer of the funds and, having eliminated those hypotheses that were consistent with the funds belonging to either David or the company (such as a gift or a loan or the repayment of a loan), she concluded that the beneficial interest must have remained with Stamford and Theyvendran. In reaching that conclusion, the trial judge was affected by her conclusion that, despite there being some contemporaneous evidence that the funds represented the repayment by Theyvendran of a loan to David, Theyvendran, a wealthy man, had never borrowed from David, someone of much more modest circumstances. In the event, the trial judge was left to speculate as to what was the true purpose behind the transfer, and thought, without making any positive finding, that the true explanation for the transfer was that Theyvendran was concealing some of his assets from his putative creditors. But, the fact that she was not persuaded of the allegations in the points of claim did not deter her from holding that, when the funds were transferred to the company, Stamford retained the beneficial interest in them.
[8]Stamford Aus-Trade & Press Pty Ltd v Melbourne Orthopaedic Group Pty Ltd [2014] VSC 324 (‘Reasons’).
MOG has appealed from the decision below. The present appeal is by way of re-hearing on the transcript of the evidence taken below. Two considerations made the case a difficult one to decide: (a) the oral evidence was not consistent with the contemporary documentary evidence, and (b) the oral evidence itself was largely unbelievable. It is apparent from the reasons given by the trial judge that her holding that the funds were held in trust for Stamford was affected by her belief that Theyvendran had transferred the funds to David to avoid the scrutiny of Theyvendran’s wife. However, she did not make any finding in respect of her belief. The case should have been resolved, in the first place, by asking whether Stamford had discharged the onus of proof cast upon it.
For the reasons that follow, in my opinion, the appeal should be allowed. In this case, the onus was upon Stamford to establish that the funds in the account were trust funds. In doing so, it was necessary for it to adduce evidence that permitted the Court to find facts and circumstances that showed an objective intention of the participants to establish a trust. Theyvendran and David did adduce evidence which, if accepted, would have provided a basis for the necessary findings of fact. But, that evidence was implausible and was rightly rejected by the trial judge. In the event, the trial judge found no primary facts of what any of the participants had either said or done from which the existence of the necessary intention could be established either directly or by inference. Rather, she gave weight to what was nothing more than evidence of the subjective intention of Theyvendran that the beneficial ownership of the funds was to remain with him and his company. In doing so, she fell into error. And, in holding that there was ‘no objective ascertainable intention that the parties intended that the beneficial interest in the funds pass to Mr David or the company’,[9] she effectively reversed the onus of proof in that there was no onus upon MOG to establish anything.
[9]Reasons [124].
The trial judge also accepted Stamford’s alternative argument that the funds should be declared to have been held by the company on a resulting trust for Theyvendran or Stamford as it had given no consideration for them. This argument should also have been rejected. Where there has been a transfer of property or a chose in action and there is no evidence as to whether the transferor intended the transfer of the beneficial interest in the property or chose in action, questions of beneficial ownership may be resolved by resort either to the presumption of a resulting trust or the presumption of advancement. Presumptions give way to evidence. In the present case, there was direct evidence that the transfer was the repayment by Theyvendran of a loan from David and there was other evidence from which an inference could be drawn that it represented the provision of a loan by Theyvendran to David to assist the latter when his circumstances had become necessitous. In all the circumstances, the latter was probably the case. In all likelihood, Theyvendran was lending funds to David and, by transferring them to the company rather than to David, had attempted to ensure, unsuccessfully as it turns out, that they were not available to his creditors.
Theyvendran and David
Theyvendran was a Singaporean-based businessman who conducted business across a number of continents. In 1992, he began business operations in Australia when he invested in an Australian company which was involved in the redevelopment and operation of a medical centre in the Sydney. In 1999, the Stamford Group established Stamford as a wholly owned Australian subsidiary. It established several bank accounts at the Sydney branch of UOB. In addition, Theyvendran lent money to R & R Publications Pty Ltd (‘R & R Publications’). In 2004, Theyvendran ceased his involvement in the medical development company. In consideration of transferring his shares to him, Theyvendran’s former partner in that business agreed to make payments to Theyvendran. Between 2007 and 2008, $300,000 was paid into one of the UOB bank accounts in Sydney. Further payments were made into the UOB accounts by R & R Publications.
The relationship between Theyvendran and David was described by Theyvendran in his 30 July 2012 affidavit. They had known each other since the late 1970s. They were both involved in the Singapore co-operative movement, and David was involved in the establishment of new co-operative businesses. David was also the assistant registrar of the Co-operative Societies within the government of Singapore, and involved in the enactment of the Singaporean Co-operative Act in 1987. During this time, Theyvendran was honorary secretary of the Singapore Mercantile Co‑operative Thrift and Loan Society Ltd. Theyvendran and David had numerous dealings on matters relating to the co-operative movement, and became friends. They kept in touch after David moved to Australia, meeting up from time to time when David visited Singapore.
David was employed by MOG from 6 November 2000 to 14 January 2012. Unknown to his employers, he engaged in large scale misappropriation of his employers’ funds. It is an almost irresistible inference that he would have known that the misappropriation was capable of being detected and that, upon its being detected, he was liable to meet any claim in respect of it.
On or about 5 January 2012, David arranged for his company to establish a bank account at the NAB in Melbourne. During January 2012, he took part in an arrangement with Theyvendran pursuant to which the latter transferred $500,000 from an account that Stamford maintained at UOB in Sydney to the bank account of the company at the NAB in Melbourne.
The circumstances of that arrangement was the principal issue in the present case.
January 2012
On 5 January 2012, several significant emails were exchanged.[10] The first email was from Chris Demaria, an accountant retained, it seems, by David. It appears that he was complying with an urgent request for advice from David. The email suggested that he had supplied a constitution for a company to David, which had acquired the name ‘Aloysius David Pty Ltd’. An officer from the NAB, Denise Paolucci, emailed David and told him that she had opened an account in the name of the company, and she supplied the account details. David forwarded that email to Theyvendran with his own message. His email appeared to have been acknowledged by Theyvendran. When Theyvendran prepared his 30 July 2012 affidavit, it appears that he was unaware of or had forgotten the emails and their content. The email chain was as follows (the bottom email being the first in time):
[10]The emails now discussed do not form a seamless chain. Demaria emailed David. Somehow, that email was forwarded to Paolucci. And, Paolucci’s email was forwarded to Theyvendran.
Subject:         RE: FW: Aloysius David Pty Ltd
Date:Thursday, 5 January 2012 1:40:50 PM Australian Eastern Daylight Time
From:           MD
To:                Aloysius David
O.K. – Thanks.
Dr Denan
_____________________________________________________________________
From:           Aloysius David
Sent:              Thursday, 5 January, 2012, 7:57 AM
To:                MD
Subject:         FW: FW: Aloysius David Pty Ltd
Hi Denan,
As discussed, please note bank details for return of my monies
Regards
AA David
_____________________________________________________________________
From:           Denise.X.Paolucci
Sent:              Thursday, 5 January 2012 10:44 AM
To:                Aloysius David
Subject:         Re: FW: Aloysius David Pty Ltd
Hi Al
As per our discussion, we have today opened a new Business Cash Manager account in the name of Aloysius David Pty Ltd, with details being:
Bank:             National Australia Bank
BSB:               [XXX-YYY]
Account No:   [AA-BB-CCCC]
Could you please print the attached Account Authority Card, sign page 2 and return it to us by mail for our records.
Regards
Denise
Denise Paolucci
Partner
nab Health
National Australia Bank
_____________________________________________________________________
From:            Chris Demaria
Sent:              Thursday, 5 January 2012 10:18 AM
To:                 Aloysius David
Cc:                 Jason Lee
Subject:         Aloysius David Pty Ltd
Al,
Considering the urgency of your request I recommend we open a bank account in the company’s name, Aloysius David Pty Ltd.
It has the following;-
Tax File Number (TFN) – 728 264 194
ABN – 59 085 471 236
I have also attached the bank pack and a copy of the constitution.
Anything else give me a buzz.
Cheers,
Chris Demaria CA
Accountant
_____________________________________________________________________

Between 8 January 2012 and 11 January 2012, Theyvendran visited Melbourne to attend the wedding of David’s daughter.[11] (This chronology immediately throws doubt on Theyvendran’s evidence that transfer of the funds to Melbourne originated in conversations that took place between him and David on that weekend.)[12]
[11]Theyvendran’s account of what took place on that weekend is contained in [50] below.
[12]It will be noticed that the first manifestation of any intention that funds be transferred to Melbourne is found in the exchange of emails on 5 January 2012. In his affidavit dated 30 July 2012, Theyvendran says that the initiative arose out of discussions he had with David in Melbourne between 8 January 2012 and 11 January 2012. In that affidavit, he made no reference to the email exchange. Its existence was revealed during his cross-examination. As with other evidence of Theyvendran, his evidence on this point was not consistent. In the 30 July 2012 affidavit, he said: ‘I visited Melbourne between 8 January 2012 and 11 January 2012. I met with Mr David and we discussed my intentions and I said that I would like him involved in any new business that Stamford Australia undertook and I would like him to investigate such businesses. (Whenever I invest in an overseas jurisdiction I have a resident whom I trust in control of the operations). I told Mr David that R & R Publications was a possibility. I also told him that I had set aside $500,000 to fund this and that I wanted to transfer that money into his bank account and that he should leave it there until I told him what to do with it. Mr David knew the business managers of the National Australia Bank and he could arrange an interest bearing cash maximiser account with monies available on call.’ (See [50] below.) In his cross-examination, he was asked about his presence in Melbourne for the wedding of David’s daughter and he denied that he told David at the wedding that he was proposing to transfer $500,000 to him.
On 14 January 2012, Theyvendran instructed the UOB to transfer the balance of an account which Stamford held with the bank ($53,836.19) to his account at the NAB at Mascot in New South Wales.
By fax dated 26 January 2012, Theyvendran instructed the UOB to transfer funds to David. His fax reads as follows:
Further to my letter dated 14th January 2012, please transfer the Fixed Deposit balance inclusive of all interest less bank charges which matures on 31^st January 2012 to the following:-
1.        Mr A. A. David  A$500,000.00
          C/o National Australia Bank
          BSB [XXX-YYY]
          Account No. [AA-BB-CCCC][13]
[13]The account details were identical to those supplied by Paolucci to David which he forwarded to Theyvendran in the email of 5 January 2012.
2.        Dr R. Theyvendran, PBM  Whatever the balance is.
C/o National Australia Bank
Account No. …
Kindly acknowledge receipt.
(It will be noticed that, although Theyvendran had directed the funds to be paid to ‘Mr A. A. David’, he had used the account details in the NAB (i.e. that of the company) that were forwarded to him by David in the email of 5 January 2012.) On 31 January 2012, Theyvendran received confirmation from UOB that the transfers had taken place.
The freezing order and interview with Morris
On 30 March 2012, MOG commenced a proceeding by writ against David. A statement of claim was filed in the initial proceeding alleging that David had breached the duties owed by him to MOG by converting the sum of $454,402.31 for his own use. On MOG’s application made ex parte, an order was obtained the same day freezing David’s assets.
On 31 March 2012, David permitted himself to be interviewed by Morris, the fraud investigator retained by MOG. The interview occupies some 36 pages of closely typed transcript. During the interview, David was asked about the funds that had been transferred to his company by Stamford in late January 2012. The relevant part of the transcript is as follows:
David:And a friend of mine from Singapore has put in $500,000 as a holding account in NAB SL. He did it in first of February.
Morris:First of Feb, there’s $500,000 gone into a NAB account in who’s name?
David:           In my Pty Ltd company name.
Morris:  OK, so that’s Aloysius David Pty Ltd?
David:Yep. I put it in the account because it was, we go a long way back in Singapore anyway, he’s in the printing business that I was involved with security company and all that, and this is money that he actually owed me when I was in the early days, those days, and I sold my house and he has invested some in Australia, some in Sydney, and …
Morris:So he’s repaying that money to you. So that $500,000 in the Aloysius David Pty Ltd is yours.
David:           Yes. It’s in Pty Ltd to pay less tax, that’s all.
Morris:OK. I understand. And that money is return from investment from some time ago …
David:           Long time ago.
Morris:  OK, and that’s in a NAB account. Right. OK.
David:Because you see, I’m keeping that separate from all that, because I can use it to pay off line of credit debts.
Morris:  I understand.
David:           It’s all for different purposes.
As can be seen, what David said to Morris is consistent with what was implied in the email of 5 January 2012: the money paid by Stamford to the company was the repayment of a loan. If that was so, the consequence would be that the money was available for distribution amongst David’s general creditors, which may not include Theyvendran in so far as the payment was the ‘repayment of a loan’.
On 3 April 2012, in compliance with a direction in the freezing order, David swore an affidavit of his assets. In it, he made no reference either to his ownership of the shares in the company or to the funds held in its name in the NAB. In that affidavit he swore he had a half interest in a house at Wantirna, which was subject to a mortgage of $160,000, approximately $140,000 in various bank accounts, 4251 Telstra shares, a 2004 Mercedes Benz sedan, and approximately $85,000 in a superannuation account. In that affidavit, he made no reference either to the shares he held in the company or to the $500,000 in the NAB account of the company.
Review of the objective circumstances
Before proceeding with the narrative of events, it may be worth considering the ‘objective circumstances’ as they can be seen to exist before (a) the freezing order was amended to catch the funds in the company’s account and (b) Theyvendran and David sought to explain on oath the circumstances surrounding the transfer.[14] Some of these facts and circumstances formed part of the matrix in which particular things were said and done.
[14]The subject of ‘objective circumstances’ will be discussed below. Briefly, in deciding whether there is an express trust, courts are required to consider the ‘objective circumstances’ in the same way that they consider such circumstances in determining whether there is a contract and, if so, what are its terms.
By January 2012, David’s circumstances would have become desperate; he had been misappropriating large amounts of his employers’ money and this fraud stood to be discovered. At best, his own means were modest. He was close to Theyvendran. Their association went back over 35 years. Theyvendran came out to Australia for the marriage of David’s daughter. In early January 2012, David opened a bank account in the name of his company at the NAB and provided the details to Theyvendran. At the time, Stamford (Theyvendran’s company) had in excess of $500,000 in its bank account in Sydney. In late January 2012, it transferred $500,000 to the account of the company at the NAB in Melbourne.
If these were the only facts known, it would not have been clear what the transfer represented. Without knowing anything more, several possibilities can be hypothesised. First, Theyvendran might have been making a gift of $500,000 to David, through his company. Second, Theyvendran might have been making a loan of that amount to David. Third, Theyvendran might have been repaying David moneys that he had borrowed from him. (In each of the first three possibilities, the payment to David’s company was carried out in such a way that, if David was to become bankrupt, the funds would become available to his company.)[15] Fourth, Theyvendran might have been transferring $500,000 to David for the latter to hold that amount in trust for Theyvendran. Fifth, Theyvendran may have been transferring funds to David such that the funds were to be used only for a specific purpose (or so that the funds were to be made available to particular persons but that, if the payment could not be paid to them, the funds were to be held in trust for Theyvendran).[16] The contemporaneous circumstances and what was said by the parties either to each other or to others at the time of the transfer would help establish which of these possible explanations was the more probable. No doubt, the friendship of Theyvendran and David might suggest that the former was moving to assist the latter in his necessitous circumstances, even if he was unaware of how those circumstances had come about.
[15]Because David’s shares in the company would be sequestrated and vest in his trustee in bankruptcy.
[16]In Twinsectra Ltd v Yardley [2002] 2 AC 164, Lord Millett said (at 185[73]):
A Quistclose trust does not necessarily arise merely because money is paid for a particular purpose. A lender will often enquire into the purpose for which a loan is sought in order to decide whether he would be justified in making it. He may be said to lend the money for the purpose in question, but this is not enough to create a trust; once lent the money is at the free disposal of the borrower. Similarly payments in advance for goods or services are paid for a particular purpose, but such payments do not ordinarily create a trust. The money is intended to be at the free disposal of the supplier and may be used as part of his cash flow. Commercial life would be impossible if this were not the case.
In Raulfs v Fishy Bite Pty Ltd [2012] NSWCA 135, Campbell JA said (at [51]):
In my respectful view, this statement by his Lordship has the potential to mislead in two respects. The first is in its assumption that there is such a thing as ‘a Quistclose trust’. Rather, consistently with Byrnes v Kendle, and the remarks of Gummow J in Australian Elizabethan Theatre Trust, one needs to analyse an individual fact situation for the purpose of deciding whether there is an intention to create a trust, and, if so, on what terms. Quistclose recognises that sometimes there can be a trust whose terms are that the trust property is to be paid to particular people, and if it is not paid to those people, it is to be held for someone else. That is a matter arising from analysis of the facts of the particular case in accordance with well established principles for identifying when there is a trust, not because there is any separate legal institution known as a ‘Quistclose trust’. Further, it is a gloss upon the law concerning identification of the terms of a trust to say that the ‘question in every case is whether the parties intended the money to be at the free disposal of the recipient’. That suggests that being at the free disposal of the recipient marks a dividing line between a ‘Quistclose trust’ and something else. Facts about the intention with which a person has parted with an item of property cannot usefully be categorised in such a cut and dried fashion. (emphasis in original).
However, the 5 January 2012 emails, the fact that Stamford transferred its funds to the account of the company at the NAB in Melbourne which was identified in those emails and the disclosure to Morris meant that the probable explanation for the transfer was that Theyvendran was repaying a debt to David. As will appear below, both Theyvendran and David disavowed any such explanation. They both told a story, which, if believed, would mean (a) that there was no antecedent debt to be repaid so that (pace the 5 January emails and the interview disclosure) the transfer was not a repayment and (b) that, upon receipt of the funds, David was not to use them except on Theyvendran’s instructions such that the transferee was to hold the funds on trust for the transferor.
It would be open to the parties to adduce further evidence of the ‘objective circumstances’. However, evidence of their subjective intentions (what each meant by what he said and each thought he was doing when he behaved in a particular way) would not be admissible evidence of those objective circumstances. When Theyvendran and David proffered their explanation for the transfer, several further hypotheses were opened.
In order to resolve these possibilities judicially, it is necessary to bear in mind that (a) only one party bears the burden of proof, (b) facts may be found only upon the evidence (or upon inferences from the primary facts found) and not upon speculation, and (c) although the standard of proof is the balance of probabilities, in the present case there is a need for clarity as the holding that there is a trust will work to defeat the interest of creditors.

The amended freezing order

On 4 April 2012, as indicated above, the Court extended its order in the initial proceeding to capture all the assets of the company, including the $500,000 in the bank account at the NAB.
The phone conversation and the second David affidavit
Soon after the making of the amended freezing order, Theyvendran and David had a telephone conversation about the order.
On 10 April 2012, David swore a further affidavit. In his second affidavit, he changed his story that the payment represented a repayment to him. His email of 5 January 2012 had contemplated the repayment of moneys owed to him; his explanation to Morris had been that the moneys were a repayment: ‘this is money that he actually owed me’.[17] Now, he deposed:
I also attach hereto a copy of the bank statement of Aloysius David Pty Ltd. This company has no assets and is not trading …
The amount of $503,035.41 currently in this account was deposited therein by Stamford Aus-Trade and Press Pty Ltd ($500,000) and is held in trust for that company by Aloysius David Pty Ltd. The further sum of approximately $3,000 in that account is accrued interest belonging to Stamford Aus-Trade and Press Pty Ltd.
[17]See [29] above.
On 13 April 2012, MOG entered judgment against David in default of an appearance for the sum of $454,402.31.
David provides his affidavits to Theyvendran
On 27 April 2012, David sent to Theyvendran the affidavits that he had sworn on 3 April 2012 and 10 April 2012. He wrote to Theyvendran: ‘You may take note of these when making your affidavit with regards to the reason why the $500k was deposited with me.’
In his later cross-examination, Theyvendran was asked about these emails. The transcript is as follows:
Q:When you swore that affidavit, you did it after taking note of Mr David's affidavits of 3 April and 10 April?
A:The truth is there was nothing to take note. These moneys were mine, I have proved it, how it came into my Sydney account, every single document which shows that it went into a Sydney account and when I want wanted to wind that up, there is nothing to take note. I don't know what lies he said. That's all he wanted to make sure.
Q:Did you read the affidavits of Mr David that he sent to you dated 10 April and 3 April?
A:                 Yes.
Q:Did you read them before swearing your affidavit in the other proceeding on 30 July?
A:Even without the affidavit, my notes were facts. I only thought that A. David, as I see it, he was just telling a bunch of untruths. These moneys were mine. I was able to account for every cent of it, I have a trail of it.
Court:           [Counsel] is asking you whether you read those affidavits?
A:                 Yes, yes.
Q:You did read his affidavits before swearing your own affidavit on 30 July?
A:                 Yes.
Q:You took account of what was in those affidavits before swearing your own affidavit?
A:No, I did not have to take any because I'm swearing an honest affidavit and I did my affidavit according to my facts.
It should go without saying that it is thoroughly undesirable for one witness to be providing copies of his affidavit or proof of evidence to other witnesses. The forensic work of the courts in finding the facts is compromised by such collaboration.
Theyvendran claims the moneys are held on trust
On 17 May 2012, solicitors acting on behalf of Stamford wrote to the solicitors then acting for MOG. In that letter, they said that Stamford would be seeking a variation to the freezing order to seek the release of the funds in the company bank account on the basis that those funds were held by the company on trust for Stamford.
On 25 May 2012, the solicitors for Stamford and MOG exchanged correspondence in which Stamford sought to substantiate its ownership of the funds in the company’s account. MOG rejected those claims.
Theyvendran offers to lend David $250,000
On 30 June 2012, Theyvendran wrote to David as follows:
Dear David
Thanks for your draft letter reference. ZZ/SC dated 29^th June 2012.
As discussed, the loan to be granted shall be up to A$250,000/- and not the total sum.
I am not wanting to apply pressure but will help where I can.
My Company has lost substantially and my wife is putting a dagger in my head by wanting 50% of my assets.
Can I therefore know how you intend to return this money as if need be, I have to take a loan from the bank?
I trust you will instruct your lawyers accordingly.
Best wishes.
The purpose of this email was not immediately clear. However, it was revealed during the cross-examination of Theyvendran. In effect, Theyvendran was proposing that, if he could recover the $500,000 (and that would require David’s cooperation), he would lend David half of the recovered sum. In giving his explanation, he introduced a theme that the trial judge found telling: he said he had matrimonial difficulties. The transcript is as follows:
Q:                 Did you send that email personally to Mr David?
A:                  30 June, yes.
Q:And the email refers to the possibility of you lending Mr David $250,000, doesn't it?
A:Because he wanted to clear - he wanted to keep his dignity I think and he said whether I could loan him the $500,000, whether I could loan him to settle MOG straightaway and get out of this problem. He wanted to get out of the problem immediately so his name is not tainted in Singapore with all his friends but he borrowing money right, left and centre and he had a lot of money. Why should he ever say this money is his? He was asking part of my money to repay the loan — I mean, as a loan, which he will settle immediately to settle the matter.
Court:           Right?
A:My money was there really $500,000 which was supposed to be in joint ventures. Then he wanted the whole of the $500,000. He said he had committed in some interrogation that that money was his. I said how could you say that, this money is not yours, I told you never had and if I owed you any money I would have said look, take this money now in settlement but that was not the case. I sent it to him much earlier thinking he could be my investment advisor because I never had cause to doubt him. He would have asked me settle my money now, settle my money now, he never said anything like that. There’s no trail of him at all. He asked me for — let him use that $500,000, I said no I need that money as well, so I said I can lend you up to $250,000, that was the honest story.
Q:You were considering lending him money in June 2012 so he could repay some of the money he had stolen from MOG and that was the situation?
A:No, because the bankruptcy office wanted to seize his house so I thought as old friends, okay, everybody makes a mistake in life, this is nothing. If I wanted to play around with $500,000 — I have donated more than $3 million of my own money in Singapore and I can give you all the evidence on it, so why should I be playing around.
Court:Can I just ask, the loan you were talking about, were you talking about that in addition to the money that was already in the account or using some of that money?
A:I told him if this $500,000 is clear then I will use some of this money to settle the bankruptcy office. He was already a bankrupt I think by then. He was chasing to settle, the house was in both the wife and his name, so he was trying to settle the money at least to keep the house over himself and keep his dignity.
Court:           Right?
A:If this money is a loan from him, then I would say, look you better deduct the loan or take back the money. That was the honest truth. I don’t know why all this confusion. Please believe me, I am a man of standing in Singapore and this $500,000 is nothing, nothing at all compared to my wealth. I don't cheat over money, you ask anything. I wouldn't be getting two doctorate degrees from foreign universities if I am delving in this petty money, please understand that.
Q:What I want to understand is this, Mr Theyvendran, your evidence to this court is that if your title to this $500,000 we are fighting about is made clear, if that title is made clear, the freezing order it's made clear doesn't apply to the $500,000 and you can get your hands on that $500,000 you are willing to give some of it to Mr David so he can clear some of his bankruptcy debts?
A:                  And problems, yes.
Q:                 That's your evidence to this court?
A:                  Yes.
Q:                 You've just said it's a trivial matter $500,000?
A:                  To me.
Q:Why do you say in this email: ‘My company has lost substantially and my wife is putting a dagger in head by wanting 50% of my assets’?
A:I was going through some pressure from my wife and my company at the time had lost substantially but not that substantially that I cannot afford it.
Q:                 Not that substantially that you wouldn't miss $500,000?
A:                  Yes.
Q:When you say in that email: ‘Can I therefore know how you intend to return this money’, your reference there to this money is the prospective loan of $250,000 that you were talking about earlier, isn't it?
A:I would tell you very frankly, I needed no loan from the bank but I wanted Aloysius David to know that I was also hoping that the money would come back to me, ultimately when he clears all his problems. I was just hoping, I mean, I just put that statement, please be assured that you can check with any banks, I don't have any loans, personal or otherwise, outstanding. I always believe in cash reserves, in all the organisations, from Temple, from everywhere, I'm a man of great standing and wealth and this was — I'm not going to say further, my lawyers will probably testify to that.
Q:So when you told Mr David you would have to take a loan from the bank so that you could lend him the money, let me ask you about that. I don't understand that because I thought the loan was going to come out of the $500,000 when it was unfrozen?
A:                 Yes, but I expected it to be repaid.
Q:                 Why then would you have had to take a loan from the bank?
A:I was just trying to use that word to apply pressure on David that some day he has to pay me this money and not take for granted, as he has this, this is a loan, it cannot be. A. David thought this was his money he would have said refund my loan, but that was not so.

On 5 July 2012, a sequestration order was made against David. Mr Kenneth Lamb was appointed as his trustee in bankruptcy (’the trustee’). As a result, the ownership of David’s shares in the company vested in the trustee.
Theyvendran’s affidavit dated 30 July 2012
On 30 July 2012, Theyvendran swore his affidavit in support of an application to be made by Stamford that it be given leave to intervene in the initial proceeding. In his affidavit, Theyvendran described the circumstances in which he transferred the money from Sydney to Melbourne. He deposed:
In 2008, a former director, Mr Sabapathy had resigned as a director of Stamford Australia and I asked Mr David if he would be interested in going on to the board of Stamford Australia but, he was then employed by the plaintiff, and suggested his brother, Xavier David, who had his own business and who could devote more time to assisting me. As a result, I appointed Xavier David to the board and he remains a director of the Plaintiff. Nonetheless, the board had little to do as Stamford Australia was not trading.
Nonetheless, I was looking to new business ventures that the Stamford Group could invest in within Australia and, in particular, in Melbourne. I was looking for any business that fitted into our model — that is, a business that was in distress but which had potential and which we could buy cheaply and then turn around. However, we were primarily interested in businesses in the publishing area or involved in trading. (For example, one entity that we considered was a company that manufactured towels).
One of the companies that Stamford Australia had dealt with, R & R Publications (which is a company that publishes book (sic), including cooking books) was based in Melbourne. It owed money to the companies in the Stamford Group. At one point I became a director of that company with the intention that, ultimately, the Stamford Group would take an interest in the company behind that business, Far Valley Publishing Pty Ltd. R & R Publications was one company that I believed Stamford Australia may be able to invest in as it seemed to fit our business model.
I wanted to move the moneys in the United Overseas Bank accounts out of those accounts. Those accounts were based in Sydney and, with Mr Sabapathy’s retirement from the business, I no longer had any links to Sydney and I was looking at Melbourne as being the place where I would undertake the investment. Further, with at least some of the monies being in fixed term deposits, it needed someone to look after the money in those accounts (for example, to ensure that the fixed term deposits were rolled over or withdrawn as required) and it meant that it was difficult to get access to the money quickly (which may have been required).
I visited Melbourne between 8 January 2012 and 11 January 2012. I met with Mr David and we discussed my intentions and I said that I would like him involved in any new business that Stamford Australia undertook and I would like him to investigate such businesses. (Whenever I invest in an overseas jurisdiction I have a resident whom I trust in control of the operations). I told Mr David that R & R Publications was a possibility. I also told him that I had set aside $500,000 to fund this and that I wanted to transfer that money into his bank account and that he should leave it there until I told him what to do with it. Mr David knew the business managers of the National Australia Bank and he could arrange an interest bearing cash maximiser account with monies available on call.[18]
I trusted Mr David completely. We had had a long relationship and I saw him as a competent and honest person.
Mr David said that he was happy to help.
We did not get as far as discussing what, if anything, he might be paid but I anticipated him becoming a minority shareholder (perhaps 20% as that it (sic) what I usually do in these circumstances) in any new business we may have purchased in return for his efforts.
I did not want the money repatriated to Singapore because I would then have been subject to currency fluctuations and it would also have made it more difficult to transfer the money quickly if that was required. It was easier for the money to remain in Australia and I wanted the money to be easily and quickly available. In my view, the easiest and best way was for the money to be transferred into Mr David at call account.
After my discussion with Mr David I moved to close down the United Overseas Bank accounts of Stamford Australia completely. By fax dated 14 January 2012 I directed the United Overseas Bank to send $53,836.19 into my National Australia Bank account and by fax dated 26 January 2012 I directed the United Overseas Bank to transfer $500,000 into Mr David’s National Australia Bank account and the remainder into my bank account. (The remainder was to be used to pay lawyers). … I note that the bank account details that I provided to the United Overseas Bank were for the bank account of Aloysius David Pty Ltd, Mr David’s company.
On 31 January 2012 the United Overseas Bank confirmed by email that the amounts have been paid as directed. …
The $500,000 that was deposited into the account of Aloysius David Pty Ltd remained money that belonged to Stamford Australia. The Defendant — and Aloysius David Pty Ltd — was not permitted to do, and would not have, done anything with this money unless I permitted it. Further, he (and it) was required to do whatever I told him to do with the money.[19]
The prospective arrangement with R & R Publications did not eventuate because R & R Publications has serious cash flow problems and were not paying the debts they owed to the Stamford Group companies. (Ultimately, in April 2012 Far Valley Publishing Pty Ltd went into liquidation. I understand that the business of R & R Publications has been taken over by another company.)
[18]This particular paragraph was [26] in Theyvendran’s affidavit. It assumed great significance in the oral argument on the hearing of the appeal.
[19](Emphasis added). This paragraph of his affidavit was objected to, and not pressed. However, it appears in the Reasons [46].
On 6 August 2012, Stamford applied for leave to intervene in the initial proceeding. That application was returnable on 21 August 2012 in the Practice Court. On that occasion, the judge suggested that Stamford should bring its own proceeding in support of its claim.
The commencement of the present proceeding
On 24 August 2012, by originating motion between parties, Stamford commenced the present proceeding against the company. The originating motion was indorsed with the nature of Stamford’s claim. In its originating motion in the proceeding that it commenced against the company, Stamford alleged:
The Transfer was on terms that the Funds (plus any interest on such Funds) was to be held by [the company] on trust for [Stamford].

Particulars of this allegation were as follows:

The particulars of the Transfer are set out in the affidavit of Ramanthan Theyvendran sworn 30 July 2012 …[20]
[20]When the hearing was adjourned on 31 May 2013, the Court directed Stamford file and serve points of claim. The points of claim largely repeated the allegations in the originating motion.

The originating motion contained an alternative allegation as follows:
Alternatively …
(a)If (which is not admitted but is denied) the Transfer was a loan from [Stamford] to [the company]:
then
(b)such loan was for the exclusive purpose of being used to locate a suitable company or business in which [Stamford] and/or [the company] could invest;
(c)it was the intention of the parties that if the purpose of the loan could not be achieved then the Funds would be held by [the company] on trust for [Stamford]; and
(d)the purpose referred to in paragraph (b) was rendered unachievable upon:
(i)the freezing order made in proceeding no SCI 2012 01854 in this Court being made against [David] on 30 March 2012 and/or 4 April 2012; and/or
(ii)A sequestration order being made against [David] on or about 5 July 2012.
(e)By reason of the matters set out in this paragraph; upon the events set out in sub-paragraph (d) or any of them, the [the company] then held the Funds on trust for [Stamford].
The particulars provided of the alternative allegation similarly took the reader to the affidavit of Theyvendran sworn 30 July 2012.
On 16 October 2012, the trustee indicated that he did not intended to take part in the present proceeding.
On 16 May 2013, MOG was joined as a defendant to the proceeding. MOG was the sole contradictor.
The original hearing
The hearing commenced on 30 May 2013. When he opened his case, counsel for Stamford made no reference to the emails of 5 January 2012. Although he was aware of what David had said to Morris in the interview, it transpired that he was unaware of the emails.
Theyvendran was cross-examined on the contents of his 30 July 2012 affidavit.[21] During his cross-examination, he was asked about his evidence that he proposed to invest in R & R Publications. He said that he had had an involvement with that company; he had lent it money in previous years. In 2011, he had entered into a deed of settlement with it. However, it had not complied with the terms. While he had said that there was a possibility of his investing in that company, he accepted that, between January and April 2012, he had had no discussions with anybody associated with R & R Publications about investing directly in that company. On the contrary, he was not prepared to invest in that company so long as it owed him or his companies any money.
[21]On 29 May 2013, Theyvendran swore a further affidavit that corrected some details in his 30 July 2012 affidavit.
Theyvendran had deposed that he had visited Melbourne between 8 January 2012 and 11 January 2012. He had said that he had come to Melbourne to attend the wedding of David’s daughter. He was asked a series of questions that were designed to reveal when he had decided to transfer the money to the company in Melbourne. The following exchange took place:
Q:You were thinking about investing in R & R in January 2012 in your mind?
A:Yes.
Q:                 But you never said anything to anyone at R & R about that?
A:                 No.
Q:When R & R went into liquidation, you made no offer to buy it?
A:                  No.
Q:You decided you wanted to leave $500,000 sitting in a bank account somewhere in Australia?
A:Yes.
Q:So that if you decided to invest that money in R & R it would be readily available?
A: Yes.

Theyvendran was then asked to explain why it was necessary for him to transfer funds from their Sydney accounts to Melbourne. He said that, as he was going to be more involved in Melbourne, he wanted the account located in Melbourne. He said that it had never occurred to him that somebody in Melbourne could operate an account in Sydney.

The disclosure of the 5 January emails

It was at this stage that the cross examiner moved to the email of 5 January 2012. It needs to be appreciated that that email had not been discovered by either party and, it appears, that counsel for Theyvendran was unaware of it. The transcript is as follows:
Q:Mr Theyvendran, I will tell you exactly what happened in this case?
A: Yes.
Q:                 On 5 January you corresponded with Mr Aloysius David, do                 you remember that?
A:                  Yes.
Q:You exchanged emails with Mr Aloysius David on 5 January, didn't you?
A: Yes.
Q:On 5 January he sent you an email saying, ‘Please return my moneys to me,’ or words to that effect, didn't he?
[Counsel for Theyvendran]: Your Honour, I object to this: I mean, if these emails exist they have never been discovered, I've never seen them and this is all magic.
The application for an adjournment
Counsel for MOG conceded that MOG had been in possession of the email for about a month. It seems that it had emerged when a search had been carried out on David’s email account using the computers at the practice that he had previously managed. Counsel agreed that the document had not been discovered. He contended rather that the discovery obligation lay with Theyvendran.
Counsel for Theyvendran applied for an adjournment in order to take instructions from his client with respect to the email. A short adjournment was granted.
On the following day,[22] the application for a more extensive adjournment was renewed. Counsel for Stamford said that his instructions were that Theyvendran had never seen the 5 January 2012 email. He said:
… following on from the receipt of the email yesterday we, not surprisingly, then spent a good part of last evening and this morning making enquiries in both Australia and Singapore. There is an explanation for the email. It's quite an innocent explanation, one which could have been easily given had the document been discovered at the relevant point in time.
…
It's highly problematic because the explanation can't come from the witness who is currently in the witness box because his evidence will be he has never seen that email. The evidence would need to come from three other witnesses, at least one of whom is in Singapore. Another witness, and this won't come as any surprise, would be Mr David.
…
We don't yet concede the veracity or the authenticity of the emails. Having said that, Your Honour, if it is authentic, we were unaware of its existence. One can only provide discovery of those documents which one knows exists or which after one goes searching discovers exists. This is not a document which we had any knowledge of whatsoever. I can tell you this, Your Honour: there is no doubt that my client saw it for the first time yesterday.
[22]31 May 2013.
Whether Theyvendran had seen the email previously became a significant matter when his cross-examination resumed.[23]
[23]On 31 May 2013, counsel for Stamford said that it had always been their intention to object to the admission of the transcript of what David had said to Morris on the grounds of hearsay. Before the disclosure of the 5 January 2012 emails, there was no proposal that David give evidence.
The adjournment and the points of claim
Accordingly, the hearing of the matter was adjourned. The hearing would eventually resume on 29 July 2013. During the adjournment, Stamford procured two further affidavits. The first was from David; the second was from Mary Tan Jer Tin (‘Tan’) who was the senior administration executive of Theyvendran in Singapore.
In compliance with directions made by the trial judge, Stamford filed points of claim. The points of claim simply replicated the indorsement contained in the originating motion, save for the addition of a further alternative allegation to the effect that the transfer was a loan to the company payable on demand. At the hearing of the appeal, the Court was told that this alternative allegation was not pressed before the trial judge.
The further evidence: David and Tan
On 22 July 2013, David swore an affidavit that sought to explain the circumstances in which Theyvendran had transferred the funds to him in January 2012.[24] In that affidavit, he deposed:
[24]David had already sworn an affidavit that was filed in the initial proceedings. It was sworn 10 April 2012. See [40] above. In that affidavit, he had deposed that the funds were held by the company in trust for Stamford. His second affidavit purports to have been prepared for filing in the initial proceeding: it bears the Court file number of that proceeding, rather than the file number of the present proceeding.
Dr Theyvendran and I have been friends for a number of years. We initially became friends when we both lived in Singapore. We initially met each other when I worked for the Singapore government in matters relating to co‑operatives and their establishment. Dr Theyvendran was active in that area also. We maintained a relationship after I came to Australia.
In or around the end of 2011 and the beginning of 2012 Dr Theyvendran told me that he was interested in investing funds which he had in Sydney into a possible venture in Melbourne. He said that he wanted to transfer the funds to me so that if he needed to move urgently in terms of investing the funds then those funds would be available. He said that he would tell me how this sum was to be used for any business venture. When he came to Australia in January 2012 we discussed various companies that he was considering investing in including R & R Publications but no decision was made.[25]
I did not know precisely when the funds would be available but in early January 2012 Dr Theyvendran told me that he was closing down the Sydney accounts and I understood that the moneys could be sent soon. I spoke to Chris Demaria at SY Group accountants about this. I told him that I had a friend who wanted to invest funds and that I needed to set up a bank account to hold those funds. I explained that the funds could be arriving any time. By email dated 5 January 2012 he advised me to set up a bank account in the name of Aloysius David Pty Ltd given the urgency. He also explained to me in my conversation with him that interest on any amount invested would attract a lower rate of tax if it was in the name of the company.
I had already spoken to Denise Paolucci at the National Australia Bank and told her that I needed to set up a bank account for a friend that wanted to invest funds in a trading venture in Melbourne. I told her that I needed the funds at call and she advised me that it would make most sense to have a business cash management account rather than a term deposit in those circumstances. On 5 January 2012 I forwarded on the email from Chris Demaria to Ms Paolucci. Ms Paolucci then set up the bank account and emailed me back almost immediately.
I also forwarded the email from Ms Paolucci to Dr Theyvendran almost immediately so that he would have the bank account details of where to send the money. In that email I referred to the ‘return of my monies’. This was incorrect.
…
Dr Theyvendran paid $500,000 into the account on 30 January 2012.
In the evening of 30 March 2012, I was served with the freezing order obtained by Melbourne Orthopaedic Group Pty Ltd (MOG). This came as a shock to me and I was extremely stressed. About half an hour after being served I received a telephone call from Peter Morris asking me to be interviewed by him the next day (that is, a Saturday). At first I said I needed time and could not get legal advice as it was now the weekend but he rang me back about an hour later and I agreed to the interview. I was still very stressed and was not thinking clearly when I had the interview with him. At one point during that interview I said that the money in the bank account of Aloysius David Pty Ltd was my own money and represented the repayment of an old loan from a friend of mine. At the time that I said this, I was not thinking straight. It was my intention to ask Dr Theyvendran to be able to use the money to pay back any money which MOG claimed was owed. I wanted the whole issue to be over with as soon as possible. I thought that the easiest way to do was to say that the money was mine so that MOG would understand that I had the ability to pay them back.
I understand that MOG alleges that the money in the account of Aloysius David Pty Ltd does not belong to the Plaintiff or Dr Theyvendran but belonged to me or Aloysius David Pty Ltd. This is not true. It was always Dr Theyvendran’s money (or that of his companies). At the time of the payment my wife and I had debts including a line of credit over our home and a car loan. I had taken out the line of credit in order to assist my daughter who had had a premature baby on 20 December 2010 and was not able to work full time. Further, shortly after this time, I was made redundant. If the money in the account of Aloysius David Pty Ltd belonged to me I would have used that money to pay off the debts and to further assist my daughter and grandchildren.
… If [Dr Theyvendran] owed me that money ... I would have required him to pay it back. I did not ask for repayment of the money because no money was owed.[26]
[25]This particular paragraph was number 3 in David’s affidavit. Together with paragraph 26 of Theyvendran’s affidavit, it assumed great significance in the oral argument on the hearing of the appeal. There is a close coincidence in the substance of the two paragraphs. However, Theyvendran’s paragraph 26 situates the involvement of David in Theyvendran’s investment plans in conversations that took place ‘between 8 January 2012 and 11 January 2012’. When that affidavit was sworn, there was no reference to the 5 January 2012 email exchange. By the time David swore his affidavit, the existence of that exchange had been disclosed. David’s paragraph 3 situates his involvement ‘[i]n or around the end of 2011 and the beginning of 2012’.
[26]Some self-serving material was ruled inadmissible.

On 19 July 2013, Tan swore an affidavit in which she sought to explain how it was that she, and not Theyvendran, had responded to David’s email of 5 January 2012. In her affidavit, she deposed:
I am the Senior Administration Executive to Dr Theyvendran in Singapore.
The computer system in the office is set up so that I receive on my computer all emails sent to Dr Theyvendran’s email address. Dr Theyvendran receives the same emails on his laptop. Dr Theyvendran’s email address is [an email address with a Singaporean ISP was given]. This is Dr Theyvendran’s only email address of which I am aware. This allows me to keep track of Dr Theyvendran’s emails as he can receive many hundreds of emails and he doesn’t have time to deal with them all.
The system that I have with Dr Theyvendran is that I will respond to any simple emails, acknowledging receipt, and leave the more complex ones for him to answer. I send the reply emails, acknowledging receipt, in Dr Theyvendran’s name (such as Dr Dennan) as I am sending the emails from his email address and on his behalf.
On 5 January 2012 I received an email on my computer from Aloysius David. [She exhibited a copy of the email sent from David to Theyvendran’s email address dated 5 January 2012].
I responded to Aloysius’s email on 5 January 2012 at 1:40pm, as can be seen in the [above mentioned exhibit]. I did not read the email in detail. I knew that Dr Theyvendran was travelling to Australia and would be meeting with Aloysius David. I have overheard him talking on the phone with about picking up alcohol at the airport and I assumed that the email from Mr David related to that. I sent that email, acknowledging receipt, as part of the system referred to above and as I have done on hundreds, if not thousands, of occasions in the past.
At no other time have I ever heard conversations, or seen emails, in which it was said that Dr Theyvendran or his companies owed money to Aloysius David or any of his companies.
The resumed hearing
At the resumed hearing, the cross-examination of Theyvendran continued. In addition to a series of unresponsive answers, he gave further evidence in which he equivocated as to whether he had read the 5 January 2012 email from David.
It will be recalled that, before the adjournment, Theyvendran had given evidence that he had exchanged emails with David.[27] By the time of the resumed hearing, Theyvendran was able to give evidence about the 5 January 2012 emails.
[27]See [59] above.
Theyvendran’s evidence was often contradictory. It will be recalled that he asked for an adjournment of the trial when he was confronted by the 5 January 2012 emails. In applying for that adjournment, his counsel said (presumably on his instructions) that he had never seen the email.[28] When the trial resumed, Theyvendran said contradictory things about the email. He was asked whether he had received and personally read the email. In answer to this question, he gave a long and largely unresponsive answer. When the question was repeated, he said ‘I did not read this at all’. It was not in contest that he hesitated for about a minute before answering that question. Later, he said that he must have missed it. Then, he said that he could not remember the exchange of emails. Asked to explain an answer given before the adjournment that he had exchanged emails with David, Theyvendran said: ‘Specifically, I don’t remember this but when I read the contents I was shocked’. He said that he must have been mistaken in his earlier evidence. Later he said that:
[28]See [62] above.
One of the emails where there was only a one liner I would have thought after that, after my secretary had replied I go to emails and this was an email of no consequence as I see it and I couldn't believe that David could write a letter, I thought it was my moneys, I didn't expect — ask David why he put the word ‘my’, it was not his moneys, I can’t believe that he would have written this as his moneys, I would have thought he would have written your moneys.
Then, he said that he has ‘skimmed’ the email: ‘When I skimmed the email I didn't see the word ‘my’, that's my explanation’. And: ‘When I skimmed it I thought it was a simple matter. I went through it and I didn't expect a person like David to have written the word ‘my’. It is our moneys — have always been saying it's our moneys …’. The transcript continues:
Q:That's your evidence to this court. You read the email but you completely misunderstood?
A:The word ‘my’ did not - because at that point of time of reading I can't imagine that my, he was referring to himself.
Q: Let’s go back over it, do you think you read the word ‘return’?
A:                  I don’t remember.
Q:                  But you do remember you did didn’t read the word ‘my’?
A:                  No, I don’t remember the word ‘my’, I skimmed it I told you.
Q: Let's be clear, is it you just don’t remember whether you read these words or do you have a positive recollection that you did not read these words?
A:                  I just don't recall that, sir.
When asked about his answers before the adjournment, Theyvendran said he could have explained everything, but that his counsel had asked for an adjournment.
Q:Your counsel, said on 31 May … he said your evidence will be that you have never seen that email of 5 January, that's just incorrect, isn't it?
A:You see, you are asking me something that has happened so long, so many emails have gone through. The honest fact is, I just said yes, I could have seen it, I really do not know.

Theyvendran was asked to explain how it was that his counsel had told the Court that he had been instructed by him that he had never seen the email. He was unable to answer the question and said: ‘I’m not going to give an answer to suit your case, I am going to give an answer to what is the truth. The truth is the moneys are mine.’

Cross–examination of David (30 July 2013)

In his cross–examination, David accepted that Theyvendran had agreed that, if he could recover the $500,000, he was prepared to lend David $250,000. He also agreed that he had spoken to Theyvendran after the freezing order had been extended. He was told by Theyvendran that he wanted to invest in Australia, but did not want to use Stamford, his existing company, to do so. David said that he just accepted Theyvendran’s decision not to use his own company but to use David’s company instead. David accepted that he knew the difference between a trust account and other accounts. He said that Theyvendran had asked him to deposit some moneys in the company’s account to be held in trust. He was asked to explain why he had not established a ‘trust account’. He said:
Your Honour, can I explain that? The way we do business in Singapore is with a handshake. The reason I used the word ‘trust’ is that he trusted me with his money, not for the purpose of opening up a trust account for that purpose. If he lends me $100, he lends me $100 in trust. That's how the word ‘trust’ came into being, not for the purpose of setting up a legal entity with the word ‘trust’ in it. That is how we do business in Singapore, in Asia. If he wants to put $500,000 into my account, it’s in trust, trust not in a legal sense but the trust of one person trusting me and I trusting him.
Asked to explain why, in his interview with Morris, he had claimed the money to be his own, he said:
At 6.30 I got a call from Peter Morris to say he wants me to come in for an interview and I told him I just got this amount of papers that I had to go through, not knowing what it's all about. My daughter and my wife were at home. My daughter was three months pregnant. Her first child was two months premature born. She was crying, hyperventilating, my wife was crying and I was in a distressed state. I was not myself. Mr Morris called me back in one hour's time said he wanted to see me on Saturday which was the 31st. I ask that I see him on the 1st. At the time of the interview I had no chance to get any legal advice or speak to anybody else. The reason why I went across to see Mr Morris and listen to what he has to say was whether I could close the matter if I could. That money that was lying in my account was not mine. I offered, because the impression Mr Morris gave me was that if I can show an effort to repay the money back, the directors would accept it and may close the matter, that's the impression I got. That's the reason I said that money was mine, not for any other reason, and here I was in a distressed state. If you look at it, I was not clear thinking. I was traumatised, I was rattled on a Sunday afternoon at 1 o'clock.
Later, David conceded that he had attended the meeting with Morris with his brother and that no pressure had been exerted upon him.
When asked about the 5 January 2012 email and its reference to the return of his moneys, David said:
That was an honest mistake. If you look at the email you just produced to me when I prepared the affidavit, it was all done on the same day within different hours. I was doing it in a rush. It should have stopped, ‘Here is the bank account details’, full stop, an honest mistake
…
The actual email said - it was a tracing of emails from the accountant advising me it's best for me to open a bank account in a proprietary limited company's name so that any interest that you earn in that account has got less tax implications and he gave me also a bank package which I could produce to the bank to open a bank account, which I did with NAB bank, and I opened an account on the same day within a couple of hours or one hour or so. The same email, I sent it across on the same day to Mr Theyvendran to say, here are the bank account details, it should have been full stop. It was just sending off something which was an error on my part and he responded by saying ‘Okay, thank. Noted’, or something to that effect. That is what that whole email was all about. That money, the reason why it was put into the bank account was on the advice of the accountant and in a cash management account by the bank to say that you can have money on call for anything you use it for and not in term deposits which would be tied up for one or two years. It's not so much as earning interest but to minimise the tax implications if it's in a proprietary limited company as opposed to a personal name.
David denied that, after the freezing order was amended, he had hatched a plan with Theyvendran to put the money beyond reach of his trustee in bankruptcy. He said: ‘That's not true because the money was not mine. The money — it’s still — it’s not mine then, it’s not mine now’.
Cross–examination of Tan
In her evidence, Tan said that, notwithstanding that she did not handle matters involving financial matters or complex matters, she responded to the 5 January 2012 email that David had sent to Theyvendran.[29] She said: ‘But, I overheard them talking that they were going to buy liquor and wine and all that, so I assume it was a wedding or something he was going to buy so I just said okay, thanks. I didn’t go into the details of it’. She was asked how she had thought that the email had something to do with the wedding of David’s daughter and duty-free liquor. She said: ‘It’s just a courtesy to acknowledge. It’s just an acknowledgment, that’s all. I didn’t know it would create such a big fuss and I would get into trouble, my boss into trouble. I wouldn’t want to do that. I would lessen his work, just to acknowledge it, that’s all’. And, a short time later: ‘Because all along they are talking about some wedding and picking up liquor and all that, so I just had that in mind and just replied, that's all’. She said that she had not read the email before she responded to it. She did tell Theyvendran about the email ‘verbally’: ‘Not that very day, the next day’.
[29]Tan gave her evidence on 29 July 2013. She was interposed during Theyvendran’s evidence.
The reasons of the trial judge
The trial judge was not impressed with the evidence of the various witnesses. Her reasons traverse their cross-examination. David’s evidence about what Theyvendran had told him was the reason for the transfer was ‘vague, and frankly confusing’.[30] His explanation for not opening an account styled as a trust account (to receive the funds said to be trust funds) was again ‘vague and confusing’.[31] Theyvendran‘s evidence that he transferred the funds for the purpose of making an investment ‘lack[ed] credibility’.[32] David’s evidence that his reference in his 5 January 2012 email to the ‘return of my monies’ was an ‘honest mistake’ was ‘quite implausible’.[33] The credibility of both of them was ‘somewhat tarnished’.[34] At times, the evidence of Theyvendran was ‘confused and confusing’.[35] And, David’s ‘evidence under cross‑examination was often vague and confusing, and his demeanour was hesitant ...’.[36] The trial judge said of both Theyvendran and David that certain aspects of their evidence ‘lack credibility’: ‘In particular, the proposition that [Theyvendran] decided, apparently out of the blue, to shift the funds in Stamford’s UOB bank accounts to the company bank account for the purpose of making an investment in a business venture, and for no other reason, is not entirely consistent with [the] oral evidence of the parties and the contemporaneous documents’.[37]
[30]Reasons [86].
[31]Reasons [87].
[32]Reasons [118].
[33]Reasons [119(f)].
[34]Reasons [124].
[35]Reasons [140].
[36]Reasons [141].
[37]Reasons [118].
MOG identified seven contentious matters that were raised at the trial. It contended that, in respect of each of them, the evidence relied upon by Stamford was either rejected by the trial judge or was inherently implausible. The matters were:[38]
(1)there being no real likelihood that Stamford would be making an equity investment in R & R Publications;
(2)the reason for the funds being transferred to an account in Melbourne rather than remaining in an account in Sydney;
(3)the question of why the funds were transferred to an account controlled by David rather than his brother, Xavier David (a director of Stamford and the person responsible for Stamford in Australia);
(4)the 5 January 2012 emails;
(5)whether the reference by David to the ‘return of my monies’ in his email was an ‘honest mistake’;
(6) the disclosure to Morris; and
(7)the telephone conversation between Theyvendran and David after the freezing order was amended.
[38]See generally, Reasons [110]–[117].
Investment in R & R Publications
Theyvendran said in his affidavit that he was considering investing in a company such as R & R Publications. He was cross-examined about that proposition. The trial judge held that his evidence did not bear ‘close scrutiny’. She said:
[W]hile it is not beyond the realms of possibility, it is highly unlikely that [Theyvendran] would have been looking at making a cash injection into R & R Publications around late 2011 or early 2012. By that time [Theyvendran] had become quite impatient with the failure of R & R Publications to pay its debts to the Stamford Group, and, to the extent that any investment in R & R Publications was a possibility, it would most likely have been in the form of a debt for equity swap. In any event, most of the Stamford Group’s dealings with R & R Publications were through its Singapore based executives, not through Mr David or Xavier David, as evidenced by Mr David’s apparent lack of knowledge about these dealings.[39]
[39]Reasons [119(b)].
Why the funds had to be transferred from Sydney to Melbourne
Theyvendran said in his affidavit that he wanted to transfer his funds from its accounts in Sydney to Melbourne given that he no longer had any links to Sydney and was looking at Melbourne as being the place where he would undertake investment. Again, the evidence did not withstand close scrutiny. The trial judge said:
[W]hile I accept that it is quite possible that [Theyvendran] would be looking for business opportunities in Australia (as he does elsewhere), there was no coherent explanation from either [Theyvendran] or Mr David as to why it was necessary to suddenly alter Stamford’s long term banking arrangements in Australia to shift funds into an account controlled by Mr David, noting that one of the messages in the 5 January email chain refers to the ‘urgency of the matter’;
[T]he suggestion that the funds needed to be transferred from the UOB accounts to the company bank account because [Theyvendran] was looking to shift his Australian business interests from Sydney to Melbourne is somewhat implausible. [Theyvendran] had no particular difficulty in operating the UOB accounts from Singapore. The correspondence between [Theyvendran] and the UOB showed that he was trying to arrange for the balance of the funds in the UOB accounts after the transfer to the company bank account to be transferred to a NAB bank account in Mascot, New South Wales. That account was apparently dormant, but [Theyvendran’s] instruction indicates he contemplated no difficulty in operating a Sydney bank account at that time.[40]
[40]Reasons [119(c)-(d)].
Why the funds were transferred to David
Theyvendran was asked to explain why the funds were transferred to David, rather than his brother, Xavier David, who was a director of Stamford and the person responsible for Stamford in Australia. The trial judge said of his explanations:
[T]here was no real explanation for why the funds were transferred to an account in the name of an entity controlled by Mr David. The evidence is that when [Theyvendran] first approached Mr David about pursuing business opportunities in Australia Mr David suggested that Xavier David be approached instead, as Mr David was busy with his responsibilities at MOG. By January 2012, nothing had changed: Mr David was still employed at MOG, and it was apparent from his evidence that Mr David had given no particular attention to what business opportunities [Theyvendran] might pursue in Melbourne. [Theyvendran’s] evidence in that regard was equally vague. However, I do accept that [Theyvendran] trusted Mr David: indeed, that trust has been borne out by Mr David giving evidence in this proceeding which is arguably inconsistent with his own interests.[41]
[41]Reasons [119(e)].
The 5 January 2012 emails and the ‘honest mistake’
The trial judge pointed out the many inconsistencies in the evidence of Theyvendran in relation to the emails. Despite his evidence that he read all emails from David and emails about financial matters, he said that he had not read the email of 5 January 2012. Later, he said that he had ‘skimmed’ the email, but that the words ‘return’ and ‘my’ had not registered with him.[42] Despite the evidence that neither Theyvendran and Tan had read the email, a fax was prepared directing the transfer of the moneys. Theyvendran assumed that his secretary had prepared that fax.[43]
[42]See [70] above.
[43]Reasons [70]–[79].
The trial judge rejected outright David’s evidence that the reference in the email to ‘return of my monies’ was an ‘honest mistake’.[44] She considered that:

However, the conclusion that the transfer of the funds to the company bank account was not in repayment of a debt must be reconciled with Mr David’s statements in the 5 January email chain, and the interview disclosure. In short, I largely accept Mr David’s evidence that the statements in the interview disclosure were made in an atmosphere of panic and desperation on his part. However, I doubt Mr David’s reference to ‘the return of my monies’ in the 5 January email chain was an honest mistake. Other written correspondence by Mr David in evidence does not indicate carelessness or sloppiness on his part. Indeed, I believe this statement may have been quite deliberate, in order to provide documentary support if needed down the track, for an arrangement made between him and [Theyvendran], probably in late 2011, not to hide Mr David’s assets from his potential creditors, but to shield Stamford’s Australian assets from the view of potential claimants, possibly in the context of his marital difficulties, which were evident from some of the email correspondence between [Theyvendran] and Mr David tendered into evidence.

Similarly, Theyvendran’s explanations of his need to transfer moneys to Melbourne from Sydney are implausible. There was no evident need to change the location of his accounts. He had businesses in several countries that he controlled from Singapore. From Singapore, he had operated accounts in Sydney. Accounts located in a bank in Melbourne would confer on him no advantage. If he wanted his funds controlled by his resident representative, then the obvious choice was Xavier David, who was the director of Stamford and was resident in Melbourne.
In addition, some of the evidence given by Tan appears far-fetched. First, she said that she did not handle communications of a financial nature; but, she did reply to the email of 5 January 2012. Second, she said that she thought that the emails of 5 January 2012 had something to do with the purchase of duty-free liquor. That evidence made little sense: it might have been reasonable for David to be sending Theyvendran money to purchase liquor for the wedding; but, this case deals with money going in the opposite direction: from Theyvendran to David.[106] Further, the trial judge found that Tan had ‘read and replied to the 5 January email chain’.[107] But, her evidence was that she had not read it before she replied to it.
[106]At the hearing of the appeal, the respondent said that this Court should exercise restraint when it came to the evidence of Tan. The trial judge believed her, and her evidence was not ‘glaringly improbable’; Fox v Percy (2003) 214 CLR 118, 128[29] (Gleeson CJ, Gummow and Kirby JJ).
[107]Reasons [134].
It is also true that David was not made bankrupt until 5 July 2012.[108] However, the prospect of bankruptcy must have been evident to him at least by the time the freezing order was made, if not well before then.
[108]See [11] and [49] above.
The dilemma facing the trial judge, and this Court, is that the case alleged in the points of claim and propounded in the evidence of Theyvendran and David that the transfer of the moneys was an initial step in a proposed investment in Melbourne is implausible.
The question becomes: how do the authorities on the creation of an express trust relate to the evidence as it stands?
In fact, there was no objective evidence of facts and circumstances that the parties intended to create an express trust. The extant facts and circumstances (the friendship, the emails, the transfer and so forth) have been described above. It was open to Theyvendran and David to give evidence of things that were said or done that added to or amplified or explained those extant facts and circumstances. They gave evidence. But the evidence that they gave was conclusory; their evidence, to the extent that any of it was believable, was about their subjective intentions and beliefs; it was not evidence of ‘objective facts and circumstances’ that is required by the authorities.
The trial judge made findings as to the intentions of Theyvendran: ‘Both [Theyvendran] and Mr David were unswerving in their evidence that the fund belonged to Stamford, and could only be dealt with by Mr David upon the instructions of [Theyvendran]’;[109] ‘Having found that it was the intention of both [Theyvendran] and Mr David that Stamford retain beneficial ownership of the funds in the company bank account’;[110] ‘[T]he evidence of [Theyvendran] establishes the intention to create a trust’;[111] ‘Both [Theyvendran] and Mr David are adamant that the funds in the company bank account were only to be utilised in accordance with [Theyvendran]’s instructions’.[112] However, these findings are of his subjective intentions; they are not findings of what he said and did at the relevant time.
[109]Reasons [125].
[110]Reasons [143].
[111]Reasons [147].
[112]Reasons [157].
The onus was upon Theyvendran to adduce evidence that located the 5 January 2012 email into the context of his proposed business collaboration with David. In his affidavit, he traced that collaboration to conversations that they had had when Theyvendran came to Melbourne from 8 January to 11 January 2012 for the wedding of David’s daughter. Yet, the email from David to Theyvendran that prompted the transfer of funds, spoke of urgency and gave the banking details was dated 5 January 2012. In his cross-examination, Theyvendran was asked about his presence in Melbourne for the wedding of David’s daughter. He said that that was the only meeting that he had on that occasion with David. And, he denied that he told David at the wedding that he was proposing to transfer $500,000 to him, although he did suggest that he did speak to David and his brother about investments before the wedding. In final submissions, counsel for the respondent was asked whether there was any evidence that Theyvendran and David had had discussion about their proposed collaboration in an investment in Melbourne before Theyvendran came to Melbourne for the wedding. The evidence to which counsel directed the Court was unconvincing.[113]
[113]The evidence was extracted in-chief:
QYou had a conversation with him about the $500,000?
A          Yes.
QDid you have any discussions with him about what he could or could not do with that $500,000?
A          The money was transferred to him to explore any ventures which came along.
QMy question to you though is specifically about the discussions you were having with him?
A          Yes, yes.
QMy question to you is did you have discussions with him about what the moneys could be used for?
A          I had discussions with him. The money ---
Q          When did you have those? Did you have more than or just the one discussion?
AAround this date, yes, probably one or two discussions on what possible ventures we could go into.
QWhat did you say could or could not be done with the money? What was the nature of the discussion?
AHe said that he could not do anything as he was working and therefore his brother who was in business could assist me in that regard.
QYes, but specifically about the money, did you have a discussion with him about what could or could not be done with the money?
A          The money could only be used for possible joint venture business activities.
Q          Did you have a discussion with him to that effect?
A          Yes, I had a discussion with him.
Although the trial judge correctly stated where the onus of proof lay,[114] it appears to be the case that, as a practical matter, she reversed the onus. She said:
However, while the inconsistencies in and implausibility of the propositions advanced and evidence given on behalf of Stamford detracts from the credibility of the persons concerned, and makes Stamford’s task of discharging its burden of proof that the funds in the company bank account are held on trust for it more difficult, they are not, ultimately, fatal. While senior counsel for MOG is correct in submitting that there is no obligation upon MOG to advance or prove a credible alternative explanation as to the beneficial ownership of the funds in the company bank account, the practical reality of a factual enquiry such as this is that it cannot be carried out in a vacuum. The evidence itself throws up only one alternative hypothesis: that the funds were transferred to the company bank account to repay a longstanding debt owed by [Theyvendran] to Mr David. As discussed further below, this alternative hypothesis is almost certainly incorrect, and in my view there is an alternative credible explanation open upon the evidence as to why Mr David made the statements he made which gave rise to the suggestion that the funds were paid to him as repayment of a loan.[115]
…
There is certainly no objective ascertainable intention that the parties intended that the beneficial interest in the funds pass to Mr David or the company.[116]
The reasoning will be noticed. Although the onus was on Stamford to establish the existence of the express trust, the trial judge is not saying that it has succeeded in doing so; rather, she is saying that there is no evidence that Stamford intended the company to become beneficially entitled to the funds.[117] That conclusion would only be relevant if there were an onus upon MOG to prove that the company was beneficially entitled to the funds. The company held the funds. It was Stamford’s case that it held those funds on an express trust. This called for positive proof of that express trust.[118]
[114]The trial judge correctly said that it was necessary for ‘Stamford to establish that the funds are held on trust for Stamford’; Reasons [121].
[115]Reasons [120].
[116]Reasons [124].
[117]In Reasons [166], the trial judge was dealing with the question of the rebuttal of a resulting trust. She said: ‘… it is not possible, on the basis of the evidence before me, to reach a conclusion that Stamford intended that the beneficial ownership of the funds in the company bank account pass to either the company or Mr David, such as to rebut the presumption of a resulting trust’. MOG said that this was another example of an effective reversal of the onus.
[118]During argument, counsel for MOG suggested that the trial judge reasoned in this way, ‘I don't know what Mr Theyvendran said or did in respect of this payment of money and I don't know why he did it, though I suspect he did it to conceal money from his creditors, probably his wife. Whatever he said or did and for whatever reason he did it, but especially because I think he was trying to conceal money from his wife, I'm satisfied that the money was to be held on trust.’
MOG said that all the trial judge had done was to eliminate other relevant possibilities and, then, to adopt the one remaining possibility.
It is to be recalled that the question is ‘what the settlor or settlors did, not what they intended to do’.[119] It was necessary for Stamford to adduce evidence of what Theyvendran said or did or of what David said or did that manifested an intention to create a trust. In my opinion the contention of MOG that the trial judge did not make any finding of primary fact to support the conclusion that there was a trust should be accepted.
[119]See [110] above.
The respondent contended that the trial judge had impliedly made the necessary findings in that she accepted the essential gravamen of what they said had taken place. However, the evidence was of what each might have personally believed: their subjective intentions. Stamford relied on the evidence in [26] of Theyvendran’s affidavit of 30 July 2012 in which he said, in effect, that he had had discussions with David in Melbourne 8 January 2012 and 11 January 2012 at which he said in effect to David: I want you to take this money and hold it for investment.[120] But, the trial judge rightly rejected the evidence of what they claimed to have said and done.[121] While she did not make an affirmative finding that the point of the transfer was to conceal money from Theyvendran’s creditors, her repeated references to it make plain that she thought that was likely explanation for it.[122]
[120]See [50] above.
[121]As counsel for MOG contended such a conclusion would also have been inconsistent with the trial judge’s suspicion that the true explanation for the transfer was to conceal funds from Theyvendran’s (putative) creditors.
[122]See, eg Reasons [131]–[136].
In the event, in my opinion, the trial judge was in error in holding that Stamford had discharged its burden of proof to establish by clear evidence that, when it transferred the funds to Melbourne, the company was to hold them on an express trust for Stamford.
Resulting trust
As indicated above, the trial judge accepted Stamford’s alternative contention that, as the company (or, for that matter, David) had given no consideration for the transfer of funds into the bank account of the company, it held that chose in action on resulting trust for Stamford.[123]
[123]See [97] above. The contention that the company held the funds on a resulting trust for Stamford seems to be anomalous. Resort to the presumptions of resulting trust or of advancement are used by the courts where evidence is wanting as to whether a transferor intended a transferee to enjoy the beneficial interest in the property the subject of the transfer. In the present case, Stamford had adduced evidence to establish that the company held the chose in action on an express trust for it. That evidence was rightly rejected as unbelievable (although, as indicated above, the rejection of that evidence did not prevent the trial judge from holding that the chose in action was held on trust).
Although Stamford made no reference to a resulting trust either in its originating motion or in its points of claim and, during either the original or the resumed hearing, made no reference or submission about there being any such trust, some two days after the completion of final submissions, it sought leave to make a further submission to the effect that the payment by Stamford of $500,000 to the company gave rise to a resulting trust in its favour which MOG had failed to rebut. Stamford relied on Russell v Scott.[124] MOG opposed the grant of leave on the basis that there were no extraordinary circumstances that warranted the exercise of the judicial discretion to grant such leave after the close of argument. In the event, the trial judge granted leave for the submission to be made. Moreover, she accepted the submission and decided that there was a presumption that the company held the moneys on a resulting trust for Stamford and that the presumption had not been rebutted.
[124](1936) 55 CLR 440.
On the hearing of the appeal, MOG maintained, albeit faintly, that leave should have been refused as there were no extraordinary circumstances justifying the grant of leave and because acceptance of the submissions operated to impose a burden on MOG to rebut the presumption of a resulting trust and MOG never had an opportunity to do so.[125]
[125]MOG referred to Eastman v DPP (ACT) (2003) 214 CLR 318, 329-30 (McHugh J); 368 (Heydon J) and Stockdale v Alesios [1999] 3 VR 169, 171 (Brooking JA); 179 (Phillips JA); 183 (Buchanan JA).
The contention that the trial judge should not have granted leave to Stamford to raise the issue of a resulting trust should be rejected. It is true that ‘that (resulting trust) case had not been pleaded, it had not been opened and had not been the subject of closing address’ and that it ‘did not surface until after conclusion of the trial’. However, leave to make the submission was made promptly, less than 48 hours, after the matter had been reserved for judgment.[126] After a contested hearing, on 30 August 2013, the trial judge gave Stamford leave to make its further submission.[127] On 9 September 2013, MOG filed and served its written submissions on the new point. In a covering email, it said that it did not seek to make any further oral submission.
[126]In Eastman v DPP (ACT) (2003) 214 CLR 318, McHugh J said (at 330[29]): ’Parties to matters before the Court need to understand that, once a hearing in the Court has concluded, only in very exceptional circumstances, if at all, will the Court later give leave to a party to supplement submissions. Parties have a legal right to present their arguments at the hearing. If a new point arises at the hearing, the Court will usually give leave to the parties to file further written submissions within a short period of the hearing - ordinarily seven to fourteen days. But a party has no legal right to continue to put submissions to the Court after the hearing. In so far as the rules of natural justice require that a party be given an opportunity to put his or her case, that opportunity is given at the hearing’. See also Heydon J at 368. In that case, a submission had been filed after the end of argument in circumstances in which no leave had been given to file it. Similarly, in Stockdale v Alesios [1999] 3 VR 169, a submission had been filed, after the end of argument, without leave.
[127]The case was reserved for judgment on 30 July 2013; notice of the application to make the further submission was given on 1 August 2013. On 22 August 2013, the application for leave was heard; it was opposed by MOG on the grounds that there were no ‘extraordinary circumstances’ justifying leave and because the point had no merit. On 30 August 2013, the trial judge gave Stamford leave to make its further submission.
At the hearing of the appeal, MOG simply said that there were no ‘extraordinary circumstances’ justifying the grant of leave. However, the decision whether to grant leave is a judicial discretion. It will be reviewed by an appellate court according to the principles in House v The King.[128] In the present case, MOG did not identify any error of case management by the trial judge. It was not able to point to any further evidence that it would have called. It had every opportunity to make any submission it wished. It made a written submission; it did not seek to make any further oral submission. In the circumstances, there was no prejudice to MOG. As Stamford correctly pointed out, if it would have been open to this Court to have considered the new point without its having been considered below, it was only sensible that it first be considered by the trial judge.
[128](1936) 55 CLR 499.
Disputes over the ownership of property, both real and personal, are resolved by the application of principles to the facts that are found. In many cases, the evidence is so attenuated that the finding of facts is difficult. Where the available evidence demonstrates only that A has transferred property into the name of B in circumstances in which B has provided no consideration, the evidence does not indicate whether A intended B to enjoy the beneficial ownership as well as holding the legal interest in the property. The circumstances in which this can occur are many but, commonly, either the transferor is dead and the estate is making a claim to the beneficial interest in the property or the transferor is alive and the transferee is resisting a claim that the transfer was only of the legal estate. The presumptions themselves also operate in cases of greater complexity. So, where two or more persons contribute to the purchase of property which is conveyed to them in their joint names, the equitable presumption is that they hold the legal estate in trust for themselves as tenants in common in shares proportionate to their contribution.[129]
[129]Calverley v Green (1984) 155 CLR 242. In that case, Gibbs CJ said (at 250-251): ’… it seems natural to conclude that a man who puts property in the name of a woman with whom he is living in a de facto relationship does so because he intends her to have a beneficial interest, and that a presumption of advancement is raised.’ But, that presumption will give way to evidence of a contrary intention.
In the absence of evidence of the intention of the transferor, the law relies on presumptions.[130] Where property has been transferred[131] without consideration to a stranger, the law presumes that the stranger holds the property on trust for the transferor (the so called ‘resulting trust’); where the property has been transferred without a consideration to a member of the transferor’s family, the law presumes that the transferee is to enjoy the beneficial interest in the property (the so called ‘presumption of advancement’).[132]
[130]‘The presumptions operate to place the burden of proof, if there be a paucity of evidence bearing upon such a relevant matter as the intention of the party who provided the funds for the purchase’; Nelson v Nelson (1995) 184 CLR 538, 547 (Deane and Gummow JJ). And, ‘the presumption of advancement may be of practical importance only if the evidence, including that of the actual relationship between the parties, does not enable the court to make a positive finding of intention’; Ibid 549.
[131]The transfer may be the result of a purchase from a third party or a voluntary transfer from B.
[132]‘The third “presumption”, usually called the “presumption of advancement”, is not, if viewed in isolation, strictly a presumption at all. It is simply that there are certain relationships in which equity infers that any benefit which was provided for one party at the cost of the other has been so provided by way of “advancement” with the result that the prima facie position remains that the equitable interest is presumed to follow the legal estate and to be at home with the legal title or, in the words of Dixon CJ, McTiernan, Fullagar and Windeyer JJ. in Martin v Martin, that there is an “absence of any reason for assuming that a trust arose”. “The child or wife has the legal title. The fact of his being a child or wife of the purchaser prevents any equitable presumption from arising”’. (Ibid, quoting Ashburner's Principles of Equity); Calverley v Green (1984) 155 CLR 242, 267 (Deane J) (citations omitted).

In Napier v Public Trustee(WA),[133] Aickin J (with whom Mason, Murphy and Wilson JJ agreed) said:
The law with respect to resulting trusts is not in doubt. Where property is transferred by one person into the name of another without consideration, and where a purchaser pays the vendor and directs him to transfer the property into the name of another person without consideration passing from that person, there is a presumption that the transferee holds the property upon trust for the transferor or the purchaser as the case may be. This proposition is subject to the exception that in the case of transfers to a wife or a child (including someone with respect to whom the transferor or purchaser stands in loco parentis) there is a presumption of advancement so that the beneficial as well as the legal interest will pass. Each of the presumptions may be rebutted by evidence. It is, however, well established that no presumption of advancement arises in favour of a de facto wife: see Rider v Kidder; Soar v Foster and Allen v Snyder.

As Dixon CJ said in Wirth v Wirth: ‘Where a purchase was made in the name of a stranger who provided none of the purchase money the law was clear from a very early time that a resulting trust was presumed and the stranger could take beneficially only if he proved affirmatively that it was so intended.’[134]
[133](1980) 55 ALJR 1.
[134]Ibid 3–4 (citations omitted). See also Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669, 708 (Lord Browne-Wilkinson).

As is the case with all presumptions, they give way in the presence of evidence to the contrary and the resolution of the disputes will then depend upon questions of the onus of proof and the sufficiency of evidence in all the circumstances.[135] The strength of the presumption varies from case to case.[136] In Charles Marshall Pty Ltd v Grimsley,[137] Dixon CJ, McTiernan, Williams, Fullagar and Taylor JJ approved a statement of Viscount Simonds in Shephard v Cartwright[138] where he said:[139] ‘… it is clear that the presumption may be rebutted but should not … give way to slight circumstances’.[140] In Calverley v Green[141] Deane J referred to the presumptions as ‘the starting point for the determination of the extent of the respective beneficial interests‘ of the parties.[142] He doubted the statement of principle of the majority in Charles Marshall Pty Ltd v Grimsley and said that it could ‘no longer properly be accepted as an unqualified rule’. He said:
Indeed, in a case where a presumption of resulting trust or a ‘presumption’ of advancement applies in circumstances where the relationship between the parties does not, as a matter of modern experience, provide any firm rational basis for presuming either intention to retain the beneficial interest or an intention to confer it on the other party, the presumption may be found to be of practical importance only in those cases where the evidence, including evidence of the actual relationship between the parties, does not enable the court to make a positive finding of intention (cf. per Gibbs J. in Napierv Public Trustee (WA), and per Lord Upjohn, Pettitt v Pettitt).[143]
[135]‘The presumption of resulting trust does no more than call for proof of an intention to confer beneficial ownership; and in the present case satisfactory proof is forthcoming that one purpose of the transaction was to confer upon the nephew the beneficial ownership of the sum standing at the credit of the account when the aunt died.’; Russell v Scott (1936) 55 CLR 440, 451 (Dixon and Evatt JJ).
[136]Calverley v Green (1984) 155 CLR 242, 255 (Mason and Brennan JJ).
[137](1956) 95 CLR 353.
[138][1955] AC 431.
[139]Ibid 445.
[140](1956) 95 CLR 353, 365.
[141](1984) 155 CLR 242.
[142]Ibid 269.
[143]Ibid 270. In Nelson v Nelson (1995) 184 CLR 538, McHugh J said (at 602): ‘A presumption is a useful aid to decision making only when it accurately reflects the probability that a fact or state of affairs exists or has occurred’.
On the hearing of the appeal, there was considerable discussion as to what Russell v Scott[144] decided. An elderly woman had transferred sums of money from her own account into an account in the joint names of her nephew and herself. The nephew had made no contribution to the joint account. The account was kept solely for the aunt’s needs. Withdrawal slips were signed by both aunt and nephew. It was found that the aunt had said to the nephew that, upon her death, the balance of the account would be his. On her death, the nephew succeeded at law by way of survivorship. He also claimed the beneficial interest in the balance. The High Court held that the presumption of a resulting trust in favour of the (estate of the) aunt was rebutted. During the hearing of the appeal, Theyvendran contended that Russell v Scott was a conventional application of the presumption of a resulting trust, albeit one in which the presumption was displaced by evidence to the contrary. For its part, MOG said that the case concerned only the disposition of funds in a joint account.
[144](1936) 55 CLR 440.
MOG’s contention that Russell v Scott concerned only joint accounts should be rejected. In the simple case, A has transferred money into the name of B. However, A may have transferred property into the joint names of A and B. At law, the property will be held by the survivor. However, equity has always disliked joint tenancies: ‘a joint-tenancy is an odious thing in equity’.[145] Little by way of evidence is required for a court to hold that a joint tenancy in law has been severed in equity.[146] In Russell v Scott, there was evidence that the aunt had told a bank clerk that, ‘any money remaining in the account at her death would be her nephew’s’.[147]
[145]York v Stone (1709) 1 Salk.158; 91 ER 146.
[146]See the discussion in Mischel Holdings Pty Ltd (in liq) v Mischel [2013] VSCA 375.
[147](1936) 55 CLR 440, 447 (Starke J).
In the present case, the presumption would apply only if there was evidence that David had supplied no consideration for the transfer of the funds to him or there was otherwise no explanation for the transfer. The contemporaneous evidence suggests that he had given consideration and the transfer was by way of a repayment of a loan. In those circumstances, the presumption was displaced and the matter stood to be decided on the whole of the evidence.
There was direct evidence that the transfer was the repayment of a loan. If there was reason to think that the content of the emails was a sham, there was other evidence from which an inference could have been drawn that Theyvendran was transferring funds to David in response to the latter’s request for assistance. The circumstances of David (although they had yet to be publically exposed) were known by him to be desperate. There was evidence that there was a degree of urgency about the transfer. There was a long-standing and intimate friendship between him and Theyvendran. Even when David’s affairs had become known, Theyvendran was offering to lend him a good portion of the money if Theyvendran could recover control of it. Far from the money being a gift to David, there was evidence of primary facts from which an inference could be drawn that it was a loan. There was no suggestion that the money was a gift to David such as would have made the presumptions relevant in the resolution of disputed ownership. The money was not lent to David directly; to do so would only have made it available to his creditors. Theyvendran did not want the funds to go to anyone other than David. So, it was arranged that the funds were lent to his company. However, it seems not to have been appreciated that, by reason of David’s ownership of the shares in the company, the funds would also become available to his creditors. As between Theyvendran and David’s creditors (particularly MOG), one can accept Theyvendran’s insistence that the moneys were his. But, because of the way he chose to make the funds available, as a matter of law, that was no longer the case.
I would allow the appeal, set aside the orders made by the trial judge and dismiss the claim.

DIGBY AJA:

I agree with Santamaria JA, for the reasons his Honour gives, that the appeal should be allowed and that the orders made by the trial judge should be set aside and that the claim should be dismissed.

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[2015] VSCA 150

18 June 2015