Salmon v Albarran

[2023] NSWSC 1238

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Salmon v Albarran [2023] NSWSC 1238

Hearing dates:

28 – 31 August 2023; 1 September 2023; 5 September 2023; 12 September 2023; 15 September 2023

Date of orders:

19 October 2023

Decision date:

19 October 2023

Jurisdiction:

Equity

Before:

Nixon J

Decision:

(1) Orders that the Fourth Further Amended Statement of Claim be dismissed.

(2) Directs that, by 4pm on 2 November 2023, the parties bring in short minutes of order that deal with costs, if they can be agreed.

(3) Directs that, if the parties cannot agree on the form of orders in relation to costs:

(a) the Defendants file and serve any written submission, limited to 5 pages, in respect of the terms of the order for costs, together with any affidavit in support, by 4pm on 2 November 2023; and

(b) the Plaintiffs file and serve any written submission in response on costs, limited to 5 pages, together with any affidavit in support, by 4pm on 9 November 2023.

Catchwords:

EQUITY – Fiduciary duties – Fiduciary relationships – Solicitor and client – Retainers – Retainers may be express or implied from contemporaneous documentation – Solicitor disputed that he acted for each of the defendants in legal proceedings – Retainer established

EQUITY – Fiduciary duties – Whether privately appointed receiver and manager owes fiduciary duties to appointor – Privately appointed receiver is in a fiduciary relationship with the appointor – No prescriptive duty is owed to keep appointor informed about progress of receivership

EQUITY – Fiduciary duties – Breach – Whether solicitor or receiver acted in a position of conflict – Whether solicitor or receiver pursued an unauthorised benefit – Whether there was informed consent – Whether breach was dishonest – No dishonest breach of fiduciary duties established

EQUITY – Rule in Barnes v Addy – Whether there was knowing assistance in dishonest breach of fiduciary duties – No liability established

DEEDS – Whether receivers and managers were appointed under a deed – Objective intention of the parties – Appointment instruments entered at same time as deeds of indemnity – Appointment instruments were not deeds – Whether receivers and managers breached any duties arising under appointment instruments – No breach established

EQUITY – Equitable Remedies – Equitable compensation – Causation – Loss of opportunity – No loss of a valuable opportunity established

LIMITATION OF ACTIONS – Equity – Whether relevant limitation period had expired – Laches – Unnecessary to decide whether claims statute barred or relief ought to be barred by laches where no claims of wrongdoing have been established

CIVIL PROCEDURE – Amendment of pleadings – Power to amend pleadings under ss 64 and 65 of Civil Procedure Act

Legislation Cited:

Civil Procedure Act 2005 (NSW), ss 64, 65

Conveyancing Act 1919 (NSW), s 38

Corporations Act 2001 (Cth), ss 558FE, 558FF

Evidence Act 1995 (NSW), s 140(2)

Limitation Act 1969 (NSW), s 23

Partnership Act1892 (NSW), s 10

Cases Cited:

400 George Street (Qld) Pty Ltd v BG International Ltd [2010] QCA 245

Almona Pty Ltd v Parklea Corporation Pty Ltd [2019] NSWSC 1868

AMP Services Ltd v Manning [2006] FCA 256

Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd (2018) 265 CLR 1, [2018] HCA 43

Anderson v Canaccord Genuity Financial Ltd [2022] NSWSC 58

Atanaskovic Hartnell v Birketu Pty Ltd (2021) 105 NSWLR 542; [2021] NSWCA 201

Aussie Ideas Pty Ltd v Tunwind Pty Ltd [2006] NSWCA 286

Australian Securities and Investments Commission v Albarran (No 2) [2008] FCA 386

Badenach v Calvert (2016) 257 CLR 440; [2016] HCA 18

Bank of Western Australia Ltd v Abdul & Anor [2012] VSC 222

Barnes v Addy (1874) LR 9 Ch 9

Beach Petroleum NL v Abbott Tout Russell Kennedy & Ors (1999) 48 NSWLR 1; [1999] NSWCA 408

Beesly v Hallwood Estates Ltd [1961] 1 All ER 90; [1961] 1 Ch 105

Berry v CCL Secure Pty Ltd (2020) 271 CLR 151; [2020] HCA 27

Break Fast Investments Pty Ltd v Rigby Cooke Lawyers [2022] VSCA 118

Breen v Williams (1996) 186 CLR 71; [1996] HCA 57

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

Brisbane South Regional Authority v Taylor (1996) 186 CLR 541; [1996] HCA 25

Canson Enterprises Ltd v Boughton & Co (1991) 85 DLR (4th) 129

Castel Electronics Pty Ltd v Toshiba Singapore Pte Ltd (2011) 192 FCR 445; [2011] FCAFC 55

Comptroller of Stamps v Associated Broadcasting Services Ltd [1990] VR 335

Comptroller of Stamps v Associated Broadcasting Services Ltd [1990] VR 345

Downsview Nominees Ltd v First City Corp Ltd [1993] AC 295; [1993] 2 WLR 86

ET-China.com International Holdings Limited v Cheung [2021] NSWCA 24

Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22

Finance Ltd and Others [1988] 1 WLR 1231; [1989] 1 All ER 261

Friend v Brooker (2009) 239 CLR 129; [2009] HCA 21

Gan v Xie [2023] NSWCA 163

Gerace v Auzhair Supplies Pty Ltd [2014] NSWCA 181

Girotto v Phillips Fox (a firm) & Anor [2011] VSC 293

Gomba Holdings UK Ltd v Homan [1986] 1 WLR 1301; [1986] 3 All ER 94

Gomba Holdings UK Ltd and Others vMinoriesFinance Ltd and Others [1988] 1 WLR 1231; [1989] 1 All ER 261

GM & AM Pearce & Co Pty Ltd v Australian Tallow Producers & Ors [2005] VSCA 113

Greater Lithgow City Council v Wolfenden [2007] NSWCA 180

Greater Pacific Investments Pty Ltd (in liq) v Australian National Industries Ltd (1996) 39 NSWLR 143

Haines v Australian Broadcasting Authority (1995) 43 NSWLR 404; [1995] NSWSC 136

Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609; [2014] NSWCA 266

Herron v McGregor (1986) 6 NSWLR 246

Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41; [1984] HCA 64

Howard v Federal Commissioner of Taxation (2014) 253 CLR 83; [2014] HCA 21

Kane’s Hire Pty Ltd v Anderson Aviation Australia Pty Ltd [2023] FCA 381

In re Magadi Soda Company Limited (1925) 41 TLR 297

In the matter of Kit Digital Australia Pty Limited (in liq) [2014] NSWSC 1547

Independent Print Media Group Publishing Pty Ltd v Estate Agents Co-operative Ltd [2007] NSWSC 1098

Jaken Properties Australia Pty Ltdv Naaman [2023] NSWCA 214

John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19

Law Society of New South Wales v Harvey [1976] 2 NSWLR 154

Lewis Securities Ltd (in liq) v Carter [2018] NSWCA 118

Longman v The Queen (1989) 168 CLR 79; [1989] HCA 60

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

Mal Owen Consulting Pty Ltd v Ashcroft (2018) 97 NSWLR 1163; [2018] NSWCA 135

Malec v J C Hutton Pty Ltd (1990) 169 CLR 638; [1990] HCA 20

McGee v Yeomans [1977] 1 NSWLR 273

Meerkin & Apel v Rossett Pty Limited [1998] 4 VR 54

Modena Imports Pty Ltd (in liq), In the matter of; Leveraged Capital Pty Ltd (R&M app) (in liq) v Modena Imports Pty Ltd (in liq) [2010] NSWSC 739

Moubarak by his tutor Coorey v Holt (2019) 100 NSWLR 218; [2019] NSWCA 102

Mudgee Dolomite & Lime Pty Limited v Robert Francis Murdoch; In the matter of Mudgee Dolomite & Lime Pty Limited [2020] NSWSC 1510

Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449; [1992] HCA 66

Norberg v Wynrib [1992] 2 SCR 226

O’Halloran v RT Thomas & Family Pty Ltd (1998) 45 NSWLR 262

Orr v Ford (1988) 167 CLR 316; [1989] HCA 4

Parker, In the matter of Purcom No 34 Pty Limited (In Liq) (No 2) [2010] FCA 624

Pegrum v Fatharly (1996) 14 WAR 92

Pilmer v Duke Group Limited (in liq) (2001) 207 CLR 169; [2001] HCA 31

Pittmore Pty Ltd v Chan; Chan v Tan (2020) 104 NSWLR 62; [2020] NSWCA 344

Qantas Airways Ltd v Gama (2008) 167 FCR 537; [2008] FCAFC 69

Ramsay v BigTinCan Pty Ltd [2014] NSWCA 324

Re B Johnson & Co (Builders) Ltd [1955] Ch 634

Re Colorado Products Pty Ltd (in prov liq) [2014] NSWSC 789

Re FAL Healthy Beverages Pty Ltd [2017] NSWSC 476

Re Just Juice Corporation Pty Limited (recs and mgrs apptd); James v Commonwealth Bank of Australia and Others (1992) 109 ALR 334

Rippon v Chilcotin Pty Ltd (2001) 53 NSWLR 198, [2001] NSWCA 142

Rottenberg v Monjack [1993] BCLC 374

Sangha v Baxter [2009] NSWCA 78

Segboer & Anor v A J Richardson Properties Pty Ltd & Anor [2012] NSWCA 253

Sellars v Adelaide Petroleum NL (1994) 179 CLR 332; [1994] HCA 4

South Johnstone Mill Ltd v Dennis and Scales [2007] FCA 1448

State Bank of NSW v Kit Cheng Chia and Peng Tin Chia; Peng Tin Chia v Kenneth John Rennie and Anor (2000) 50 NSWLR 587; [2000] NSWSC 552

Taouk v Ho [2019] NSWCA 156

Trajkovski v Simpson [2019] NSWCA 52

Vincent v Premo Enterprises (Voucher Sales) Ltd [1969] 2 QB 609

Visbord v Federal Commissioner of Taxation (1943) 68 CLR 354; [1943] HCA 4

Watson v Foxman (1995) 49 NSWLR 315

Watson & Ors v Ebsworth & Ebsworth (a firm) & Anor [2010] VSCA 335

Wily v Terra Cresta Business Solutions Pty Ltd [2006] NSWSC 1042

Wily v Terra Cresta Business Solutions Pty Ltd (No 2) [2006] NSWSC 1102

Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484; [2003] HCA 15

Texts Cited:

H Picarda, The Law Relating to Receivers, Managers and Administrators (2nd ed, 1990, Butterworths)

P Finn, “Contract and the Fiduciary Principle” [1989] UNSWLJ 76

Category:

Principal judgment

Parties:

Owen Salmon (First Plaintiff)
TCBS Group Holdings Pty Ltd (Second Plaintiff)
Richard Albarran (First Defendant)
Geoffrey McDonald (Second Defendant)
Steven Brown (Third Defendant)
Joseph Elliott, Anthony Townsend, David Kenney, Luigino Malacco and Andrew Leroy (Fourth, Fifth, Sixth, Seventh and Eighth Defendants)

Representation:

Counsel:
H K Insall SC and J Simpkins (Plaintiffs)
M R Elliott SC and N Simone (First, Second, Fourth, Fifth, Sixth, Seventh and Eighth Defendants)
M A Karam (Third Defendant)

Solicitors:
James Legal (Plaintiffs)
Hall & Wilcox (First, Second, Fourth, Fifth, Sixth, Seventh and Eighth Defendants)
Gilchrist Connell (Third Defendant)

File Number(s):

2016/373218

Publication restriction:

Nil

Judgment

1. These proceedings, which were commenced by a Statement of Claim filed on 13 December 2016, relate primarily to a hearing that occurred in this Court on 18 and 19 September 2006 before Young CJ in Eq.

2. One of the parties to that litigation was a company known as Terra Cresta Business Solutions Pty Ltd (TCBS). All of the shares in TCBS were held by TCBS Group Holdings Pty Ltd (the Second Plaintiff in these proceedings), and all of the shares in TCBS Group Holdings Pty Ltd were held by Owen Salmon (the First Plaintiff), either personally or through entities controlled by him.

3. In August 2006, TCBS appointed Richard Albarran (the First Defendant) and Geoffrey McDonald (the Second Defendant) as the receivers and managers (Receivers) in respect of two related companies, Business Australia Capital Mortgage Pty Limited (BACM) and Business Australia Capital Finance Pty Limited (BACF). This appointment was pursuant to charges which had been given by each of BACM and BACF to TCBS in early 2005.

4. At the time of their appointment, the Receivers were, together with the Fourth to Eighth Defendants, partners in the firm Hall Chadwick.

5. BACM and BACF were members of what was described as the “BA Group” of companies. Prior to the Receivers’ appointment, Andrew Wily had been appointed as liquidator of BACM and BACF (the Liquidator), and of other companies in the BA Group.

6. Shortly after the appointment of the Receivers, the Liquidator commenced proceedings in this Court numbered 4200/06 against TCBS and the Receivers, seeking declarations that the charges granted to TCBS and the appointments of the Receivers to each of BACM and BACF were invalid (the 2006 Proceedings).

7. The Third Defendant, Steven Brown, was the principal of Etienne Lawyers, and was retained to act in the 2006 Proceedings. There is an issue as to whether Mr Brown was retained by TCBS and the Receivers, or by the Receivers alone. Nonetheless, Mr Brown was the solicitor on the record for both TCBS and the Receivers in the 2006 Proceedings, and signed numerous documents in that capacity.

8. On 13 September 2006, shortly before the 2006 Proceedings were due to come on for hearing, persons representing the Liquidator raised allegations about payments that had been made to Etienne Lawyers by Mr Albarran and Mr McDonald when they were acting as Deed Administrators of a company known as Given Form Pty Limited (Given Form), which was subject to a Deed of Company Arrangement. Given Form had owed moneys to companies within the BA Group, and the Deed Administrators had, in accordance with irrevocable assignments given by those BA companies, paid moneys out of the deed fund to Etienne Lawyers. Those moneys were paid in respect of unpaid legal fees for work which Mr Brown had performed for the BA Group. The specific allegations raised regarding the Given Form payment, and the persons with whom they were raised, are addressed below.

9. On 18 September 2006, at the end of the first day of the hearing before Young CJ in Eq, the parties to the 2006 Proceedings agreed to settle their dispute “in principle” for the sum of $1.3m, to be paid to TCBS out of moneys which the Liquidator was expecting to receive from the settlement of another dispute. The “in principle” settlement of the 2006 Proceedings was subject to the parties entering into a settlement deed, such that there would be no binding settlement unless and until a deed was agreed and executed.

10. On the evening of 18 September 2006, Mr Brown prepared a draft deed of settlement. The draft deed included a proposed release in the following terms: “The Liquidator releases the BA Companies in respect of the money paid to them jointly and severally by the Deed Administrator of Given Form” (the Given Form release).

11. The Given Form release was included in the draft deed following a discussion between Mr Brown and Mr Albarran. It was not suggested that any instructions had been sought from TCBS in respect of the inclusion of the Given Form release in the draft deed before it was sent to the Liquidator’s solicitor, Mr Nikolaidis.

12. Mr Brown sent the draft deed to Mr Nikolaidis, by an email at 7.38pm on 18 September 2006. The email was also addressed to Mr Albarran, Mr Salmon and the Chief Executive Officer of TCBS, Mr Myers, and was copied to counsel for TCBS, Mr Julian O’Sullivan. The email stated that the draft deed was sent to Mr Nikolaidis “at the same time as it is being sent to our clients for their instructions”, and asked the addressees to review the draft deed.

13. On 19 September 2006, the Liquidator’s representatives indicated that they would not agree to a settlement deed that included the Given Form release. There is a substantial factual dispute as to what then occurred. The Plaintiffs contend that the Receivers and Mr Brown refused to remove the Given Form release from the draft deed, while the Defendants contend that Mr Albarran immediately gave instructions to Mr Brown for the Given Form release to be removed, and another draft was prepared which was provided to the Liquidator’s solicitor for his review.

14. It is common ground that, after the Liquidator’s representatives had indicated that the Given Form release was not acceptable, the hearing of the 2006 Proceedings continued; and that, in the afternoon of 19 September 2006, the Liquidator’s solicitor indicated to Mr Brown that, as a result of the events in court that day, the Liquidator was no longer willing to settle for the amount of $1.3m.

15. On 21 September 2006, judgment was delivered in the 2006 Proceedings. Young CJ in Eq found that the BACM charge was invalid, and upheld the BACF charge. Subsequently, the Liquidator was awarded 80% of his costs of the two-day hearing.

16. The 2006 Proceedings remained on foot to determine the amount of moneys owing to TCBS and secured under the BACF charge. The proceedings continued for another two years without coming on for hearing on that issue. Meanwhile, the costs order in respect of September 2007 was assessed at some $90,543. TCBS was unable to pay this costs order. The Liquidator petitioned for the winding up of TCBS, and was supported by Hall Chadwick.

17. TCBS was placed into liquidation, and its liquidator agreed to settle the claim in respect of BACF for $177,902, inclusive of costs.

18. Mr Salmon became bankrupt in 2009. TCBS was deregistered on 28 April 2012.

19. After Mr Salmon was discharged from bankruptcy in September 2014, steps were taken to re-register TCBS. In September 2016, the liquidator of TCBS entered into a deed, effective 15 December 2015, by which TCBS assigned all of its choses in action to Mr Salmon and TCBS Group Holdings Pty Ltd. The Plaintiffs bring these proceedings as assignees of those claims. The Defendants had, in their pleadings, raised an issue about the validity of the assignment, and the Plaintiffs’ standing to bring the claim against them, but no such issue was pressed at the final hearing.

20. The Statement of Claim in these proceedings has gone through numerous iterations, which included a variety of claims, many of which have now been abandoned. On the first day of the hearing, I granted leave for the Plaintiffs to file the current version of the pleading, being the Fourth Further Amended Statement of Claim (FFASOC). In closing submissions, the Plaintiffs pressed three main claims, all of which related primarily to the conduct of Mr Albarran and Mr Brown in respect of the events of 13 to 19 September 2006, namely:

1. First, that Mr Brown dishonestly breached his fiduciary duties to TCBS, by continuing to act when he was in a position of conflict and by pursuing a benefit for himself and the Receivers (the Given Form release), and that Mr Albarran knowingly assisted in that breach;

2. Secondly, that Mr Albarran dishonestly breached his fiduciary duties to TCBS, by continuing to act when he was in a position of conflict and by pursuing a benefit for himself, Mr McDonald and Mr Brown (the Given Form release), and that Mr Brown knowingly assisted in that breach; and

3. Thirdly, that the Receivers breached their duties under the instrument by which they were appointed, which was said to be a deed. The deed was said to be breached by Mr Albarran by reason of his conduct in respect of the Given Form release, with Mr McDonald being jointly liable for that breach.

21. The losses said to flow from those breaches included not only the loss of the opportunity to settle the 2006 Proceedings for $1.3m, but also the loss of the opportunity for TCBS to avoid liquidation and to continue to trade.

22. As well as disputing breach and causation, the Defendants argued that the claims brought against them were barred by limitation periods.

23. Before turning to consider those issues, I set out below some preliminary comments on the evidence in this case, followed by the findings I have made regarding the extensive factual contests concerning the course of events leading up to the conclusion of the hearing on 19 September 2006.

A. PRELIMINARY COMMENTS ON EVIDENCE

Relevant Principles

24. In deciding whether I am satisfied that the Plaintiffs’ case has been proved on the balance of probabilities, I must take into account the nature of the cause of action, the nature of the subject-matter of the proceeding, and the gravity of the matters alleged: Evidence Act 1995 (NSW), s 140(2).

25. In these proceedings, the Plaintiffs are making serious allegations that a solicitor and an insolvency practitioner breached their duties to their client and did so dishonestly. Any finding that those matters have been established could have serious consequences for their ability to practice in their respective professions.

26. In Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34, Dixon J (at 361-362) observed that “when the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found”, and continued:

“The seriousness of the allegation made, the inherent likelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding, are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters ‘reasonable satisfaction’ should not be produced by inexact proofs, indefinite testimony or indirect inferences”.

27. In Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449 at 449-450; [1992] HCA 66, Mason CJ, Brennan, Deane and Gaudron JJ referred to this passage from Dixon J’s judgment and explained that:

“the strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what it is sought to prove. Thus, authoritative statements have often been made to the effect that clear or strict proof is necessary ‘where so serious a matter as fraud is to be found’. Statements to that effect should not, however, be understood as directed to the standard of proof. Rather, they should be understood as merely reflecting a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct and a judicial approach that a court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct.” (citations removed) 

28. To similar effect, in Qantas Airways Ltd v Gama (2008) 167 FCR 537; [2008] FCAFC 69 at [126], French, Branson and Jacobson JJ noted that:

“Dixon J did not [in Briginshaw] purport to identify any particular standard; rather his Honour made plain that before accepting the truth of evidence of a particular allegation, the tribunal should give consideration to the nature of the allegation and the likely consequences which will follow should it be accepted.”

29. Much of the oral testimony at the hearing concerned events, including disputed conversations, that occurred some 17 years ago. When a trial occurs so long after the event, it is inevitable that the memories of those involved will be affected by the passage of time, by the materials which have been reviewed for the purposes of preparing to give evidence, and by the arguments being advanced at the hearing.

30. This is a case in which the well known observations of McClelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 318-319 are particularly apt:

“… human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.”

31. In Moubarak by his tutor Coorey v Holt (2019) 100 NSWLR 218; [2019] NSWCA 102, Bell P referred to those comments of McClelland CJ in Eq (at [77]), and also a number of observations by McHugh J (at [78]-[83]), as highlighting the “corrosive effect of the passage of time and its consequences for the quality and integrity of the trial process”: see Herron v McGregor (1986) 6 NSWLR 246 at 253-255; Longman v The Queen (1989) 168 CLR 79 at 107-108; [1989] HCA 60; and Brisbane South Regional Authority v Taylor (1996) 186 CLR 541 at 551; [1996] HCA 25.

32. In Girotto v Phillips Fox(a firm) & Anor [2011] VSC 293 at [18]-[19], Hollingworth J, when discussing the impact of the passage of time on the recollection of witnesses, added some observations which are particularly relevant to the situation where claims are made regarding the conduct of professional persons in respect of a matter which concluded many years before the trial is heard:

“The evidence of the witnesses for both sides suffered to some degree, due to the fact that they were being asked to recall events which had occurred some 11 or 12 years before the trial, and in respect of which most of them had not kept notes. I have no doubt that the passage of time meant that memories were affected to some degree, and the evidence of most of the witnesses involved some degree of reconstruction (even when it was honestly engaged in).

Furthermore, for the professional witnesses on both sides, such as lawyers and accountants, this was obviously just one of many transactions they had been involved with over the years.” 

33. The defendants are busy professionals. Mr Albarran deposed that he had accepted (as of 2019) more than one thousand appointments as a liquidator, administrator or receiver since the events in question. The ability to recall events in detail in respect of any one matter is significantly and understandably impaired in such circumstances.

34. Black J has described the approach that should be adopted to the assessment of oral evidence in a trial heard well after the events in issue (In the matter of Kit Digital Australia Pty Limited (in liq) [2014] NSWSC 1547 at [7]), as follows:

“…It is important in this context to have regard to the fallibility of human memory which increases with the passage of time, particularly where disputes or litigation intervene: Watson v Foxman (1995) 49 NWLR 315 at 318-319 per McLelland CJ in Eq; Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) [2008] FCA 810 at [41] per Rares J; Varma v Varma [2010] NSWSC 786 at [424]-[425] per Ward J. To the extent that credit issues need to be determined in respect of particular conversations, I have also had regard to the fact that objective evidence is likely to be the most reliable basis for determining them….in Re Colorado Products Pty Ltd (in prov liq) [2014] NSWSC 789 at [10] … I noted that the credibility of a witness and his or her veracity may be tested by reference to the objective facts proved independently of the testimony given, in particular by reference to the documents in the case, by paying particular regard to the witness’s motives and the overall probabilities: Armagas Ltd v Mundogas SA [1861] LRSC 1; [1985] 1 Ll R 1 at 57; Camden v McKenzie [2007] QCA 136; [2008] 1 Qd R 39 at [34]; Craig v Silverbrook [2013] NSWSC 1687 at [141]; State of New South Wales v Hunt [2014] NSWCA 47 at [56].”

Plaintiffs’ witnesses

35. The main witnesses called by the Plaintiffs were Mr Salmon, Mr Byrnes and Mr Wily.

36. Mr Salmon is plainly aggrieved by the course of events which lie at the heart of these proceedings. It is common ground that, within the space of a day, a settlement in principle for $1.3m which had been the subject of a handshake ‘deal’ was off the table. As matters transpired, TCBS’s charge over BACM’s assets was set aside soon afterwards, with costs; TCBS could not meet that adverse costs order and went into liquidation; and its claim regarding its charge in respect of BACF was settled some two years later for some $177,000. Subsequently, Mr Salmon was declared bankrupt, and was imprisoned.

37. Mr Salmon regards the critical change in his fortunes as being the loss of the “in principle” settlement in September 2006, and he has, over the course of the intervening years, raised serious allegations about the conduct of all those involved. He has blamed the loss of the settlement on Mr Wily and Mr Byrnes, accusing them in a complaint to NSW Police of having engaged in “blackmail” and “stand over tactics” by their conduct in the 2006 Proceedings. In a letter to the Chairman of ASIC in March 2008, Mr Salmon alleged that Mr Wily’s conduct in this period included “perjuring himself many times over in affidavits and testimony (can find 20-30 separate items)”, “Vote rigging in creditors meetings”, “Lying to creditors (can list many of these)”, and “acknowledging debts only to later lie about them in court”. Mr Salmon has also blamed the loss of the settlement on the Receivers and Mr Brown, including making a complaint to the Office of the Legal Services Commissioner in respect of Mr Brown, and making a complaint to ASIC seeking to have Mr Albarran and Mr McDonald removed as registered liquidators.

38. As the attribution of blame, and the focus of his attack has shifted, Mr Salmon’s account of events has also changed. There are multiple earlier statements in evidence concerning the events that lie at the heart of these proceedings and, as identified below when dealing with those events, Mr Salmon’s various accounts conflict in multiple ways and are often irreconcilable.

39. Mr Salmon’s own counsel recognised that there are “legitimate criticisms that can be made of Mr Salmon’s credit in some respects”; that he has “clearly been traumatized by and become obsessed by the events in the years 2006 to 2009”, leading to his “subsequent lashing out and attack on professionals”; and that his “desire to exact a remedy for TCBS for the wrongs done to it may have caused him to overstate matters in his affidavits and to avoid including matters negative to his case in limited respects”.

40. However, the Plaintiffs contended that these matters do not justify any general rejection of Mr Salmon’s evidence, referring to the comments of Basten JA in Sangha v Baxter [2009] NSWCA 78 at [155]-[156] (Handley AJA agreeing):

“There are risks in making global findings about credibility of any particular witness. Because a witness has not told the truth with respect to a particular matter does not mean that other parts of his or her evidence are untruthful. Where possible, an assessment should be made of the reasons for the untruthfulness in order to see if other aspects of the evidence are likely to be infected by the same concern. Further, evidence may be rejected because it is apparently unreliable, possibly mistaken or deliberately untruthful or capable of being categorised in a variety of ways which are unlikely to be capable of clear delineation in some cases.

Further, findings of credibility are not usually findings with respect to factual issues in the case, but are rather subsidiary findings on the way to determination of issues. Like many aspects of the evidence in a trial, the evidence of a witness who is believed to have lied in a particular respect, will nevertheless be able to bear some weight and should be placed into a balance, with other material evidence, before a conclusion is reached in relation to a critical fact. The rejection of a witness in total, absent corroboration is likely to mean that, even where corroborated, little attention will be paid to the evidence of the witness and less to the possible consequences which might flow from the fact that particular evidence is shown to be truthful: see generally, King v Collins [2007] NSWCA 122 at [44].”

41. The Plaintiffs submitted that, in making findings on disputed issues of fact, the Court should focus upon the contemporaneous documents, the objectively established facts, the apparent logic of events, the existence and nature of corroborative evidence, and the effect of the evidence as a whole: referring to the observations of Bell P (Bathurst CJ and Leeming JA agreeing) in ET-China.com International Holdings Limited v Cheung [2021] NSWCA 24 at [24]-[29] and the cases there cited.

42. That is the approach I have adopted. I have not rejected Mr Salmon’s evidence as a whole, despite having serious reservations about his credit, but have instead evaluated his evidence regarding particular events in light of the whole of the evidence and the overall probabilities.

43. One particular feature of Mr Salmon’s affidavit evidence is that it contains multiple accounts of lengthy conversations that occurred some 17 years ago. Those are expressed in the conventional (or what had been conventional) formula of recounting “words to the effect of” those which were spoken. I have treated such evidence not as evidence of the actual words spoken, but as Mr Salmon’s recollection of the gist of the conversation. In this regard, I refer to the remarks of White JA in Gan v Xie [2023] NSWCA 163 at [118]-[122] (Simpson AJA and Basten AJA agreeing), citing Kane’s Hire Pty Ltd v Anderson Aviation Australia Pty Ltd [2023] FCA 381 at [121]-[129] per Jackman J.

44. However, even when Mr Salmon’s evidence is read in that way, it is inherently improbable that Mr Salmon could recall, so long after the event, the gist of multiple conversations in this level of detail, sometimes extending over several pages. For example, Mr Salmon gives evidence of a lengthy conversation with Mr McDonald, in which Mr McDonald agreed with Mr Salmon’s key allegations regarding the conduct of the Receivers, including acknowledging the wrongfulness of such conduct and its causative effects. I find it inherently unlikely that any such conversation in the nature of an extended confession took place, and note that it is not referred to in any contemporaneous documents. It is perhaps unsurprising that, in Mr Salmon’s closing submissions, no reliance was placed on this conversation or on any of Mr McDonald’s alleged admissions made in the course of this conversation.

45. The other main witness for the Plaintiffs was Mr Byrnes. He acknowledged in cross-examination that he has a number of convictions for serious criminal offences, and that he has been banned from managing corporations. One of those bans, for a period of five years, was imposed in September 2006, in the same month as the matters in issue in these proceedings. He accepted that his general role in matters in which he was involved, including the dispute between the Liquidator and TCBS, was to “cause chaos”, and to do so with the objective of getting a financial return for one of the parties, on the basis that he would then be financially rewarded. For example, he agreed in cross-examination that in one of the letters he sent in relation to the 2006 Proceedings, on 23 November 2007, he was prepared to make statements even though they might be untrue, in order to persuade the Receivers to settle “for the minimal amount [he] could get”. In his own affidavit, Mr Byrnes stated that: “I am the same person who unfortunately and regrettably took a baseball bat to [a solicitor’s] office during the course of dealings with him” at around the same time as the matters in issue in these proceedings, due to a dispute about moneys which Mr Byrnes claimed to be owing to him.

46. In a 2008 complaint to NSW Police, Mr Salmon described Mr Byrnes as “well known to NSW Police”, and attached a newspaper article which reported a number of serious allegations that had been made against Mr Byrnes, as well as the banning order which ASIC had imposed on him based on, among other things, “a lack of commercial morality”. In 2011, Mr Salmon made a complaint to ASIC that Mr Byrnes had attempted to arrange a deal to bring about a settlement of matters, including TCBS’s dispute with the Liquidator. Mr Salmon said, in cross-examination, that he regarded this conduct of Mr Byrnes as “very dishonest”. He also described Mr Byrnes’ conduct as threatening, and said that as a result, he feared for his life and for his family.

47. In a letter to the Chairman of ASIC in March 2008, Mr Salmon claimed that Mr Byrnes was a “well known standover man and Sydney identity” who had, in his work for Mr Wily, engaged in “blackmail” and had employed “standover tactics” on his behalf. In 2010, Palmer J described Mr Byrnes as having “a notorious reputation as a stand-over man and associate of major criminals”, of which no judge in this State could be unaware: Modena Imports Pty Ltd (in liq), In the matter of; Leveraged Capital Pty Ltd (R&M app) (in liq) v Modena Imports Pty Ltd (in liq) [2010] NSWSC 739 at [2].

48. Mr Byrnes is not on trial, and it is not necessary for me to determine whether his reputation is deserved or not. The issue in this proceeding is whether his evidence of conversations and events can be accepted or not. I have adopted the same general approach as for Mr Salmon’s evidence. That is, I have not rejected his evidence as a whole, despite having serious reservations about his credit, but have instead evaluated the reliability of his evidence of particular events having regard to the available documentary evidence, the objectively established facts and the overall probabilities. Mr Byrnes, like Mr Salmon, gives extensive recollections of conversations which are said to have occurred some 17 years ago, including a number of conversations in which Mr McDonald is said to have made a series of admissions. I approach such evidence with caution, and on the basis that such detailed recollections are improbable, and are of little weight where they are not supported by contemporaneous evidence.

49. A matter of particular concern is that, as acknowledged by Mr Salmon in cross-examination, he and Mr Byrnes have had “many discussions” over the past seven years about this case. As discussed below, there are instances where Mr Salmon’s evidence of the key events of September 2006 has changed after 2016, that being the point in time when he started having discussions with Mr Byrnes about those events. Having regard to those matters, while I acknowledge that generally the evidence of one witness is rendered more plausible where corroborated by the independent recollection of another, I have not accepted the evidence of Mr Salmon or Mr Byrnes where the sole support for their version of events is found in each other’s affidavit, and where their version of events is not consistent with the other available evidence.

50. Mr Wily was also called by the Plaintiffs. His credit was not at issue in these proceedings. However, there is a dispute regarding the weight that can be attached to his counterfactual evidence as to whether, absent the inclusion of the Given Form release, a settlement would have occurred.

Defendants’ evidence

51. Each of the First to Third Defendants gave evidence. Each claimed only a limited recall of events, and essentially relied on documents.

52. It was suggested to Mr Albarran and Mr Brown in cross-examination that their limited recall was a convenient way to avoid dealing with inconvenient questions. However, a more likely explanation for their limited recall is the passage of time, particularly given the many other matters on which each has been engaged in the interim.

53. The Plaintiffs sought to make much of the fact that Mr Albarran has previously been found to have wilfully failed to answer questions in proceedings against one of his partners before the Companies Auditors and Liquidators Disciplinary Board: see Australian Securities and Investments Commission v Albarran (No 2) [2008] FCA 386 at [24], [28], [35], [46]-[47] per Jacobson J. However, Mr Albarran did not refuse to answer any questions asked of him in cross-examination in the current proceedings, and my evaluation was that he sought, appropriately, in giving evidence to take care to understand precisely what he was being asked, and to indicate the extent to which he could, given his limited memory, respond to the particular proposition that was being put to him.

54. Nonetheless, I have treated the evidence of the Defendants with the same caution as I have treated the evidence led by the Plaintiffs. Insofar as the Defendants have given evidence of conversations or regarding their state of mind many years ago, I have evaluated such evidence in the light of the available contemporaneous documents, and the evidence of other witnesses, and formed a view as to its probability against that background.

55. For example, I consider Mr Brown’s evidence about his state of mind in respect of his retainer to be implausible. The substance of Mr Brown’s evidence was that, despite multiple contemporaneous documents indicating that he regarded himself as the solicitor for TCBS in the 2006 Proceedings, he in fact never regarded himself as such, and all of these documents were in error (to his knowledge at the time). It is inherently unlikely that Mr Brown would have signed in 2006 multiple documents which he knew to be incorrect at the time that he signed them, including documents provided to the Court and to other solicitors. It is far more likely that the statements made in 2006 record his state of mind at the time, and that Mr Brown did regard himself as TCBS’s solicitor in 2006.

51. As for Mr McDonald, there is no allegation of dishonesty made against him in these proceedings, and the Plaintiffs accepted that he had a relatively limited part to play in the events in question.

Documentary evidence

57. In placing reliance on contemporaneous documentary evidence, I am conscious of the fact that the available documentary record is incomplete in significant respects. In particular, Mr Brown’s hard copy files are no longer available; many of Hall Chadwick’s records are no longer available (including their hard copy files and all of Mr Albarran’s emails prior to 2008); and there are only a relatively limited number of documents available from TCBS, the BA Group, and Given Form. Further, there are, on the face of the documents which are in evidence, gaps in the documentary record. There are numerous examples of emails in evidence, which refer to an attachment that is no longer available; or which respond or refer to an earlier communication that is now unavailable; or which ask for, or would likely provoke, a response, but no such response is in evidence.

58. The documents which are available are largely those which have been retained by Mr Salmon. In those circumstances, while it is appropriate given the passage of time to focus on objective documentary evidence, it is also important to recognise that there may well have been an element of subjective decision-making regarding the documentary material that has been retained. I do not mean the following remarks to suggest any conscious dishonesty on behalf of Mr Salmon. However, when a person with a grievance is reviewing documents in order to formulate an argument about how events unfolded, it is natural that he or she will retain those documents which support and advance the narrative that is thought best to explain those events, and not others which are regarded as adverse, neutral or irrelevant to that narrative.

59. I have borne this in mind when drawing inferences from the documentary evidence, and in particular inferences from the absence of documents. By way of illustration, it is difficult to draw an inference that a person to whom an email or attachment is sent did not pay attention to the document, or had nothing to say about its contents, simply because there is no response from them. An alternative inference is that the addressee did review the document and did provide a response (whether approving, rejecting or qualifying what was set out in the original document), but the response has been lost. The determination of which inference is more likely requires an evaluation of the competing inferences in light of all the other evidence.

B. THE EVENTS IN ISSUE

TCBS, Mr Salmon and Mr Myers

60. Mr Salmon was the sole director of TCBS.

61. TCBS carried on a business that involved the provision of management, accountancy, consulting and bookkeeping services. Mr Salmon did not himself have any accounting training or experience. Mr Salmon had a Master of Business Administration (MBA) which he obtained from Southern Cross University in 2004 or 2005.

62. John Myers, who was the Chief Executive Officer of TCBS, was Mr Salmon’s business partner. In July 2004, Mr Myers introduced Mr Salmon to Mr Ian Lazar, who controlled the BA Group of companies.

BA Group retains TCBS

63. The BA Group of companies included BACM and BACF, as well as two companies known as BACF Investments Pty Limited (BACF Investments) and Bondedge Pty Limited (Bondedge). Mr Lazar was the sole director and shareholder of BACM and BACF, and George Markos was the sole director and shareholder of Bondedge.

64. According to Mr Salmon, the BA Group obtained funds from investors, who in turn received units in the BACF Investments Unit Trust. Those funds were then used to make loans, with BACM acting as mortgage manager, and BACF preparing the loan and security documents for such transactions.

65. TCBS began providing services to the BA Group in the second half of 2004. This included providing the services of Mr Salmon who, by September 2004, was appointed as General Manager of the BA Group.

66. It was around this time that Mr Salmon met Mr Brown, whom Mr Lazar introduced as the BA Group’s solicitor. Mr Brown was the principal of Etienne Lawyers.

67. As general manager, Mr Salmon’s role was to manage the day-to-day affairs of the companies in the BA Group. He accepted that, in order to perform this role, he needed a certain degree of knowledge about the affairs of the BA companies, and he gained this information from employees of the companies and Mr Lazar. He attended management meetings of the companies, which were held twice a week. He was also on call on weekends, and Mr Lazar came to his house every Sunday.

68. On 24 February 2005, TCBS entered into separate letter agreements with BACM and BACF, each described as a “Management Service Agreement”. The letters, in relevantly identical terms, related both to services previously provided by TCBS to BACM and BACF, as well as to the “continuing services” specified in the letter. Each letter was signed by Mr Lazar and addressed to Mr Myers.

69. The “Services to be provided by TCBS” in relation to each of BACM and BACF included: inputting supplier invoices into MYOB; raising customer invoices in MYOB; completing daily bank reconciliations; completing weekly cash flow management reports; completing monthly management reports; liaising with suppliers; raising payments for and organising payments with suppliers; attending two management meetings weekly and taking minutes at them; dealing with staffing issues and recruitment; liaising with tax agents and year-end auditors; liaising with the Australian Tax Office (ATO), Australian Securities and Investments Commission (ASIC), ASX and other regulatory authorities where required to do so; and liaising with, and project managing legal teams in relation to, various property purchases, settlements and DA applications, as well as coordinating loan agreements and security documents in relation to them.

70. Each of the agreements acknowledged that TCBS’s fees for the services detailed in the letters, including for past services, would exceed $1m excluding GST. Each of the agreements further stated that, in consideration for TCBS providing those services, Mr Lazar, in his capacity as sole director of each of BACM and BACF, agreed to “offer full security over the assets and undertakings of [BACM and BACF respectively] … by way of a fixed and floating charge to secure such indebtedness to TCBS”.

71. On 18 March 2005, each of BACF and BACM executed a “Deed of Charge”. By those deeds, each purported to grant a fixed and floating charge over its assets in favour of TCBS. Each of the charges recorded a “maximum prospective liability” of $1.5m (Schedule, item 3; cl 21), and each gave TCBS the right to appoint a receiver and manager of the Secured Property in an Event of Default (cl 13). On 7 April 2005, each of the charges was registered with ASIC.

Given Form

72. Given Form was a company that had received loan funds from companies in the BA Group. Those companies were secured creditors of Given Form.

73. On 3 November 2004, Mr Albarran and Mr McDonald were appointed to act as administrators of Given Form.

74. In late 2004, Etienne Lawyers was owed fees of around $200,000 to $300,000 for legal work that Mr Brown had performed for BA Group. Mr Lazar, on behalf of the BA companies, agreed with Mr Brown that these outstanding fees would be paid from moneys that Given Form owed the BA group. This arrangement was recorded in an email which Mr Brown sent to Mr Lazar on 6 December 2004, and which Mr Lazar forwarded to Mr Salmon on the same day. Relevantly, the email contained the following “Status” report in relation to Given Form:

“Under Administration and under Receivership. Ian [Lazar] 22/11/04 advised willing to have matter settled for $300,000 from which Hall Chadwick [the Deed Administrators] are to be paid and Etienne Lawyers receive funds for this matter and other outstanding files. At present first $170,000 to go to Hall Chadwick and Etienne Lawyers.”

75. On 6 December 2004, the Administrators of Given Form issued a report to creditors, which contained a proposal that had been put forward by Given Form’s directors, for the company to execute a Deed of Company Arrangement (DOCA). The proposal involved, in general terms, the following elements: a sum of $250,000 would be paid into a fund, which would be held by Mr Albarran and Mr McDonald as Deed Administrators; the Deed Fund would be available for distribution to all creditors on a pro rata basis; and a condition precedent for the DOCA would be that BACF Investments would vote in favour of the DOCA, would accept the proposed dividend in full and final settlement of any claim against Given Form or its directors, and would release any security it held over any asset of Given Form.

76. On 14 December 2004, there was a meeting of creditors of Given Form. Mr Brown attended this meeting as the representative of BACF Investments and proposed a resolution, which was carried, that the creditors accept the DOCA proposal.

77. On 20 December 2004, the DOCA was executed. The parties to the DOCA included, among others, BACF Investments and Bondedge. Clause 4.5 of the DOCA provided for the Deed Administrators to distribute the Administration Fund in the following order of priority: firstly, in payment of any claim by the Deed Administrators with respect to their expenses and disbursements; secondly, in payment of any claim by the Deed Administrators with respect to their costs; thirdly, in payment of the claims of priority creditors that are admitted to proof; and fourthly, by distribution among the remaining participating creditors pro rata. Clause 6.1 of the DOCA provided that if the Deed Administrators have paid any participating creditor its full entitlement under the DOCA, its debts or claims arising before the Commencement Date are extinguished. By Clauses 7.1 to 7.5, each of BACF Investments and Bondedge:

1. warranted that no other member of the BA Group had any encumbrance over any asset of, or was owed any money by, Given Form;

2. released and discharged Given Form from any claim it had against Given Form, arising from its securities or otherwise; and

3. released any encumbrance it held over any asset of Given Form.

78. On 22 December 2004, Mr Markos, as sole director of BACF Investments and Bondedge, signed an “irrevocable assignment of monies due” for each of those companies, addressed to the Deed Administrators of Given Form. By those documents, each of BACF Investments and Bondedge agreed to irrevocably assign “the following amount to be paid to Etienne Lawyers … for the payment of legal fees due and owing in the amount of $125,000.00 to be paid from the money due under the [DOCA]”.

79. There was also a third irrevocable assignment, in the name of “Business Australia Corporate Mortgage Pty Limited”, which was signed on the same day by Mr Lazar. There is no such entity. I find it likely that this was a typographical error for “Business Australia Capital Mortgage Pty Limited” (that is, BACM), of which Mr Lazar was director. In any case, nothing turns on this error, as each of the other two irrevocable assignments was for the sum of $125,000, and the amount ultimately paid to Etienne Lawyers was less than their combined total. Further, there is no pleaded issue that there was any defect in any of the assignments; and the Liquidator did not, when raising issues in relation to Given Form in 2006, raise any allegation of any such defect.

80. On 22 February 2005, the Deed Administrators made a distribution of $125,000 from the Deed Fund in favour of BACF Investments, which was paid, in accordance with the irrevocable assignments, to Etienne Lawyers. On 24 May 2005, a further sum of $34,573.37, representing a further distribution from the Deed Fund was paid to Etienne Lawyers in accordance with the terms of the irrevocable assignments.

81. Separately, payments were made from the Deed Fund in a total amount of some $59,252 to Hall Chadwick for the fees of Mr Albarran and Mr McDonald as Deed Administrators of Given Form, and in an amount of $11,000 to Etienne Lawyers for the fees of Mr Brown, who provided legal services to the Deed Administrators of Given Form.

82. The allegations which were subsequently raised by the Liquidator in the 2006 Proceedings solely concerned the amounts that had been paid to Etienne Lawyers in respect of the outstanding legal fees owed by the BA Group. I deal below with the precise issues that were raised at that time. At this point, it should be noted that there was no allegation raised in September 2006 that the amounts paid for the fees of the Deed Administrators of Given Form, or the fees for legal services provided by Mr Brown to the Deed Administrators, were not properly paid. As set out above, the terms of the DOCA expressly provided for such amounts to be paid.

83. Mr Albarran and Mr McDonald ceased to be administrators of Given Form on 23 June 2005.

84. It is likely that, by early 2005, Mr Salmon was aware of the arrangement between Mr Lazar and Mr Brown for Etienne Lawyers to receive payment for its outstanding legal fees from the moneys that would be paid to the BA Group by way of dividend from the Given Form administration. As I have noted above, this arrangement was explained in Mr Brown’s email which Mr Lazar forwarded to Mr Salmon in December 2004. Mr Salmon suggested in cross-examination that it was his practice to ignore emails sent to him by Mr Lazar, unless there was a specific request to him. Given Mr Salmon’s role as General Manager of the BA Group and Mr Lazar’s role as principal of that group, I find this evidence implausible, particularly where, as here, Mr Lazar sent a document about the BA Group’s operations to Mr Salmon alone (rather than to a list of people which included him). Further, the finding that Mr Salmon reviewed this document is supported by the fact that TCBS retained a copy of this document, and later produced it in the 2006 Proceedings (as recorded in Mr Brown’s email of 13 September 2006, which is discussed below).

85. In addition, TCBS’s role under its retainers with BACM and BACF included liaising with ASIC. In 2005, while Mr Salmon was General Manager of the BA Group, ASIC was conducting an investigation into the group’s affairs and, in particular, whether it was operating an unregistered managed investment scheme. Mr Salmon confirmed that both he and TCBS assisted ASIC with its requests. Given his role and TCBS’s role at the time, as well as the very significant sums which the BA Group was said to owe TCBS in early 2005, it is likely that Mr Salmon would have been keenly interested in this investigation. That is particularly so where he was of the view that Mr Lazar was being very secretive about what information ASIC was being given. Mr Salmon agreed that he read at this time an affidavit prepared by Ms Taneski, an officer of ASIC. This affidavit sets out a conversation with Mr Melluish, a consultant to BACF, in which he stated that the funds owed by Given Form “have been assigned to Steve Brown (BACF’s solicitor)”.

86. There was some suggestion in the Plaintiffs’ closing submissions that the moneys payable by Given Form to the BA companies were either payable to the BA companies as moneys to be held on trust for specific investors in the BACF Investments Unit Trust, or payable by Given Form directly to the investors. No such allegation was pleaded. Instead, the Plaintiffs pleaded that the payments in question “were at risk of clawback or being set aside as uncommercial transactions or as preferential payments following the appointment of Mr Wily as liquidator of Bondedge and BACF Invest on 8 June 2005” (FFASC, paragraph 43). In his own affidavit, Mr Wily indicates that the issue which he, as Liquidator of the BA companies, identified was that the payments made to Etienne Lawyers at the direction of the BA Companies were “preferential payments” which were potentially recoverable by him. What matters for the present claim is the nature of the allegations that were in fact made in September 2006, and how the Defendants responded to those allegations. I deal with those matters below. In those circumstances, it is unnecessary for me to consider the source of the moneys that were loaned by the BA companies to Given Form, or the nature of any arrangements between any BA company and any investor or investors regarding those funds.

Appointment of the Liquidator

87. On 17 May 2005, BACM went into voluntary liquidation, and Mr Wily was appointed as its liquidator. On 16 November 2005, he was appointed liquidator of BACF, when it was wound up on insolvency grounds. He was also appointed liquidator of Bondedge and of BACF Investments on 8 June 2005.

88. On 12 October 2005, Mr Wily sent a letter to the directors of Given Form, in which he claimed that a loan amount of $100,000 was owing from Given Form to BACM and BACF, together with a “Default Fee” of $540,000 (calculated as $20,000 per month for 27 months), and requested payment within seven days. On 30 October 2005, a letter in relevantly identical terms was sent to the Deed Administrators of Given Form.

89. The Plaintiffs pleaded that, by his 30 October 2005 letter, the Liquidator “made demand on [the Receivers] and [Mr Brown] for repayment of the amounts paid to [Mr Brown]”. That is incorrect. The only claim made was that Given Form had “borrowed money from [BACM/BACF] which has not been repaid. There was no mention of any payment by the Deed Administrators to Mr Brown, let alone any claim in respect of any such payment. Further, the claim outlined in Mr Wily’s letters of October 2005 made no reference to the fact that a DOCA had been entered with the support of the BA group, and that the Deed Administrators had, pursuant to the DOCA, declared and paid dividends in return for the release by the BA group of claims against Given Form, including in respect of the debts owing to them. It may be inferred that the Liquidator was unaware of those matters.

90. There is no evidence of any response, or of any follow up letter. So far as the evidence reveals, no other email or letter appears to have been sent by Mr Wily about Given Form at any time during the liquidation of the BA companies.

91. Mr Wily retained Mr Byrnes to assist him in relation to debt recovery for the BA companies. According to Mr Byrnes’ affidavit, Mr Wily arranged for him to be appointed to the committee of inspection, even though he was not a creditor, so that he could “keep the committee in check”: “Essentially I was placed onto the committee to do what I do best – cause chaos.” Mr Wily also entered into a litigation funding agreement with Mr Byrnes’ company, Australian Litigation Funding. Pursuant to the agreement, the funder was to fund the costs of any recovery action and, after payment of any expenses incurred, the funds recovered would be paid on a pro-rata basis (50:50) to the funder and the Liquidator.

92. One set of proceedings in which Mr Wily, as liquidator of the BA companies, became involved was a long running dispute in the Federal Court in relation to claims by the BA companies and various other entities against the Nauru Phosphate Royalties Trust and the Republic of Nauru Finance Corporation (Nauru Proceedings). On 10 September 2004, those entities, including BACM and BACF, had entered into a Heads of Agreement. The Liquidator, following his appointment, sought to recover funds pursuant to that agreement, but the Nauruan entities contended that the agreement could be set aside. On around 8 December 2005, the Nauru Phosphate Royalties Trust paid the sum of $6.5m into Court, with the rights of competing claimants to be determined in the Nauru Proceedings. Those competing claimants included a company called HLBC Pty Ltd (HLBC). Mr Byrnes acknowledged that, at the same time as working for the BA companies in relation to the Nauruan funds, he had also agreed to assist HLBC in advancing its claim to the same funds, in return for a payment in the event of a successful outcome. In his affidavit, Mr Byrnes stated that, in acting for two competing claimants for the same fund, “I was aware of my own conflict but had no obligation otherwise as the professionals did”.

Initial advice by Mr Brown and Appointment of Receivers

93. On 1 August 2006, Mr Brown provided an advice to TCBS on the validity of the BACF and BACM charges “based upon the facts as we understand them”. The advice referred to various provisions of the Corporations Act 2001 (Cth), and observed that, so far s 588FE was concerned, until such time as the Liquidator obtained a court order that voided a charge as a preference or uncommercial transaction, the charge was valid. The advice concluded as follows: “There not being any orders voiding the charges of TCBS at this time the charges are on their face valid and enforceable”. Mr Brown recommended that it would be better for TCBS to act through a receiver rather than by itself as a mortgagee in possession. Mr Brown’s advice did not, contrary to Mr Salmon’s evidence, express any view about the quantum secured by the charge. Nor did a short supplementary advice provided by Mr Brown on 9 August 2006 express any such view.

94. On 4 August 2006, Mr Salmon, Mr Albarran, Mr McDonald and Mr Brown met at Mr Brown’s offices. The fact of the meeting is uncontroversial, but there is substantial disagreement as to what was said. Mr Salmon’s evidence of the conversation extended over some three pages of his affidavit. In particular, he gave evidence that Mr Brown advised at this meeting that TCBS would receive $3m from the BA companies. I do not accept this evidence, which is unsupported by any contemporaneous documents, and is improbable, since Mr Brown had at this stage been given no documents beyond the charges, and therefore could not express any view on quantum. Significantly, it was not put to Mr Brown in cross-examination that he expressed any such view. Further, as noted above, neither of his written advices expressed any such view.

95. Mr Salmon’s assertions that Mr Brown gave advice that TCBS had a valid claim for $3m were likely advanced in support of a narrative, which was developed by Mr Salmon in his affidavit, to the effect that the Defendants had advised Mr Salmon that he would recover $3m until the Given Form issue was raised, and then quickly changed their tune and pressured him into accepting a much lower sum by way of settlement. Instead, as the documentary evidence which I summarise below plainly shows, TCBS made a series of offers to the Liquidator, at figures well below $3m, prior to the Given Form issue first being raised on 13 September 2006. I find no support for any suggestion that Mr Brown and the Receivers changed advice on quantum or settlement, or pressured Mr Salmon to accept a figure well below their genuine estimates of the value of his claim, let alone that they did so because they were pursuing their own self interest. The Plaintiffs confirmed in their opening address that they were not pursuing any allegation to the effect that the Receivers or Mr Brown breached their duties by pressuring TCBS to settle the 2006 Proceedings.

96. Following this initial meeting, TCBS appointed Mr Albarran and Mr McDonald as Receivers in respect of BACM and BACF.

97. Each appointment was effected by a separate document headed “Appointment of Receivers & Managers”, one in respect of BACM as Mortgagor and the other in respect of BACF as Mortgagor. Each document provided that Mr Albarran and Mr McDonald were appointed “to be Receivers and Managers of the property of the Mortgagor referred to in the Schedule”, and authorised them “so far as the law provides, to act jointly and severally”. The Schedule referred to “All of the assets and undertakings of the Mortgagor”. The instruments of appointment further provided that: “The Receivers and Managers shall be invested with and have all the powers, authorities and discretions available to a Receiver and Manager or Receiver under the provisions of the Charge”.

98. Each of the instruments of appointment provided that the Receivers were appointed as the agent of each of BACM and BACF respectively, and not as the agent of TCBS; and provided that “The Receivers and Managers hereby accept this appointment”.

99. Each document was executed by Mr Salmon, Mr Albarran and Mr McDonald. The signature blocks stated that the documents were “signed sealed and delivered” by each of the Receivers and by TCBS.

100. On 4 August 2006, the Receivers and TCBS also entered into a deed of indemnity in relation to each appointment. By each of these deeds, TCBS undertook as follows:

“1. To indemnify the Receivers and keep them indemnified against any and all claims, demands, suits, actions, proceedings, costs or debts of whatsoever nature and wherever made or instituted, incurred or claimed pursuant to Sections 419 and 419A of the Corporations Act or any provision in any Statute which may replace that Act or otherwise arising out of or in the course of or relating to their receivership.

2. To indemnify the Receivers and keep them indemnified for all payments made or liabilities incurred by them arising out of their acceptance of appointment or during the course of or incidental to their receivership including any monies properly payable to them, their partners and staff by way of remuneration calculated at the rate charged by Hall Chadwick Sydney and to the extent that the same shall not have been otherwise recovered from the assets of the Company.

3. To indemnify the Receivers as aforesaid notwithstanding that the Deed of Charge for any reasons whatsoever may be or deemed to be void, unenforceable or inoperative or in any way defective and whether or not the Receivers are deemed to have been duly and validly appointed or whether or not they shall have had the power to act as such.

4. Notwithstanding anything contained in this Deed it is confirmed that the indemnities hereby granted shall not extend to any claims, demands, suits, actions, proceedings, costs or debts arising out of any wilful (sic) default or wilful (sic) neglect of the Receivers or any person for whose actions or omission they are responsible.”

2006 Proceedings commenced by the Liquidator

101. On 7 August 2006, Mr Albarran informed the Liquidator that he and Mr McDonald had been appointed as receivers and managers of BACF and BACM.

102. On 10 August 2006, the Liquidator commenced the 2006 Proceedings against TCBS (as first defendant) and the Receivers (as second defendant) by way of a summons, together with a supporting affidavit sworn on the same date.

103. The summons sought declarations that TCBS was not entitled to appoint receivers and managers with respect to either BACF or BACM until after the Liquidator had received the proceeds of any settlement or verdict in the Nauru Proceedings; an order for the removal of the Receivers; interim relief restraining the Receivers from taking steps in the Nauru Proceedings; and costs.

104. The Liquidator’s affidavit outlined various matters, including that the BACM charge was voidable, having been created within six months of the commencement of winding up; that TCBS had made representations that it would not act on the charges until funds were recovered by the Liquidator in the Nauru Proceedings; that the Liquidator relied on those representations in entering funding arrangements as well as indemnity and costs agreements conditional on a successful recovery in the Nauru Proceedings; and that the Receivers had been appointed shortly prior to a hearing on 9 October 2006 in the Nauru Proceedings. The Liquidator deposed that he had, as at 10 August 2006, incurred legal expenses in excess of $900,000 and had incurred his own professional costs in running and managing the litigation in excess of $600,000, those sums being exclusive of GST.

Mr Brown acts as solicitor for defendants in the 2006 Proceedings

105. On 11 August 2006, Mr Brown filed an appearance for each of TCBS and the Receivers in the 2006 Proceedings.

106. Despite having taken that step, Mr Brown gave evidence that he was not in fact retained as solicitor for TCBS, but only for the Receivers, and that he did not regard TCBS as his client.

107. Mr Brown’s evidence is at odds with an extensive array of contemporaneous documents. For example, the documentary record includes: other Court documents signed by Mr Brown which expressly stated that he was “solicitor for the First and Second Defendant” (that is, TCBS and the Receivers); the s 347 Certificate which Mr Brown signed in relation to TCBS’s defence; various affidavits sworn by him in which he deposed that he was the solicitor who had carriage of the 2006 Proceedings on behalf of TCBS and the Receivers; and an email he drafted on 7 September 2006 which stated “We act for TCBS and the Receivers and Managers”. In addition, there are various documents in evidence in which Mr Brown reports to TCBS in relation to the 2006 Proceedings, and seeks, and acts on, instructions from TCBS in the 2006 Proceedings.

108. Mr Salmon gave unchallenged evidence of a conversation with Mr Brown in which Mr Brown proposed, and Mr Salmon agreed, that he would act for both TCBS and the Receivers, and would act in the 2006 Proceedings on a speculative basis with his fees being paid by the Receivers on a recovery from BACM and BACF.

109. This evidence is consistent with the documentary record that I have summarised above. Further, the existence of such an arrangement is supported by an email which Mr Brown sent to Mr Salmon on 23 March 2007, in which he stated:

“There are two clients in this matter the Receivers and Managers and the company [TCBS].

Both clients are receiving excellent assistance and legal service.

While we cannot take away the way you feel the service that this matter is getting given we are looking after Messrs Albarran and McDonald as well as TCBS is not lessened by the matter being on spec.”

110. Having regard to those matters, I find that an express retainer was entered, as a result of the conversations to which Mr Salmon deposes, whereby Mr Brown would act for both the Receivers and TCBS in the 2006 Proceedings “on spec”, that is, on the basis that his fees would be billed to the Receivers and would be paid only in the event of, and from, any successful recovery by the Receivers.

111. On 7 August 2006, Etienne Lawyers sent a written retainer to the Receivers, setting out the work that Mr Brown would perform on their behalf in the 2006 Proceedings, the charges for his work, and an estimate of the total fees for the matter. The fact that a written retainer was sent only to the Receivers does not detract from, but is consistent with, the finding I have made regarding the basis on which he acted in the 2006 Proceedings. There was an evident advantage for Mr Brown in an arrangement whereby the Receivers would be liable for all of the fees payable to Etienne Lawyers in respect of work done by Mr Brown in the 2006 Proceedings, since this arrangement would give rise to a priority for the payment of those fees from any funds recovered in the receivership.

112. Even if I had rejected this evidence of an express retainer, I would have found that a retainer to act for TCBS in the 2006 Proceedings is implied from conduct. The relevant conduct of Mr Brown included, in the period prior to the critical events of 18 and 19 September 2006, the following matters: filing a notice of appearance for TCBS on 11 August 2006; obtaining instructions to make, on 11 August 2006, an offer to settle the proceedings against TCBS; proposing a timetable for the service of TCBS’s evidence; swearing an affidavit on 29 August 2006 which was filed for TCBS and the Receivers, in which he deposed that he was “the solicitor who has carriage of these proceedings”; instructing counsel who appeared for TCBS at a hearing on 31 August 2006; signing the defence in the 2006 Proceedings as solicitor for TCBS; signing the s 347 Certificate in respect of TCBS’s defence; signing a Notice of Motion on 31 August 2006 as solicitor for TCBS; attending Court on 30 and 31 August 2006 on behalf of TCBS, and reporting to TCBS on the hearing; confirming on 31 August 2006 instructions from TCBS to make an offer on its behalf to resolve the 2006 Proceedings, and acting in accordance with those instructions by making an offer on 1 September 2006; and signing an Amended Defence on 17 September 2006 that was filed for TCBS, as well as signing a further s 347 Certificate in respect of that pleading.

Settlement proposals in August 2006

113. On 11 August 2006, being the day after the Liquidator commenced proceedings, Mr Brown sent an email to the Liquidator’s solicitor, Mr Nikolaidis, stating that he had instructions to make an offer to settle the proceedings for a sum of $2.2m, with TCBS potentially receiving a further $600,000 depending on the extent of the Liquidator’s recovery from the Nauruan funds. Mr Salmon accepted in cross-examination that TCBS was willing to settle for this amount at this time.

114. This offer was not accepted. Instead, Mr Brown was approached by Mr Byrnes about resolving the 2006 Proceedings. In response, Mr Brown wrote to Mr Byrnes on 15 August 2006 proposing that the 2006 Proceedings could settle on one of the following alternative bases: the Liquidator acknowledges the validity of the charges, and pays $2.2m to the Receivers in cleared funds; or the Liquidator arranges for $2m to be placed into a joint trust account, with the current proceedings being “amended to resolve the validity of the charges and the quantum to be paid to TCBS”. It is likely that Mr Salmon was aware of these proposals, and that TCBS was willing to resolve the proceedings on this basis.

115. On 16 August 2006, Mr Byrnes responded with a settlement proposal on terms which would limit the maximum exposure of BACF and BACM to $1.5m in total, with this sum to be set aside and fought over. On 17 August 2006, Mr Ekes, who was solicitor for HLBC (which, as noted above, was a claimant in the Nauru Proceedings) wrote to Mr Brown stating that the Liquidator had “instructed” him, “no less than 30 minutes ago”, to put forward an offer which included $1.5m being paid into Court on a without admissions basis, to enable the Receivers and the Liquidator to argue the charges and the value of the charges. In a further email later on the same day, Mr Ekes clarified that he was not acting for the Liquidator, but had spoken to the Liquidator, who had indicated that these were terms which he believed the committee of inspection would approve.

116. On the evening of 17 August 2006, Mr Nikolaidis telephoned Mr Brown and stated that the Liquidator had no offer to put to the Receivers and TCBS, either orally or in writing (as recorded in an email of that date from Mr Brown which was copied to Mr Salmon).

117. It is not clear what position was being adopted by the Liquidator at this time. It might be the case that he did indicate to Mr Byrnes and Mr Ekes that he was willing to make an offer to TCBS and the Receivers along the lines proposed, or it might be that these offers were made without his knowledge, and the true position was as stated by Mr Nikolaidis. Or it might be that the Liquidator was indicating different positions to different people. Whatever the position, it does seem that differing and inconsistent messages were coming from the Liquidator’s camp about settlement.

118. In August 2006, Mr Salmon learnt that there had been a finding of professional misconduct against Mr Nikolaidis for deliberately charging “grossly excessive amounts”. Mr Salmon indicated that, in August 2006, he was unable to know whether or not Mr Nikolaidis was telling the truth about the Liquidator’s position on settlement. Mr Salmon gave evidence that Mr Nikolaidis was later imprisoned for crimes of dishonesty. Mr Byrnes, who was in the Liquidator’s camp in August and September 2006, described Mr Nikolaidis as an “aggressive bully”, stating that “every time he opened his mouth he could not be trusted”, including by his own clients: “I can tell you that Mr Nikolaidis was fast and loose, loose with the truth and fast to try and get money”. These matters assume significance when it comes to considering Mr Nikolaidis’ strategy in respect of the potential settlement on 18 and 19 September 2006 and, in particular, whether he was genuinely committed to reaching a settlement at the earliest available opportunity, or was pursuing a strategy that involved delaying in committing to a position on settlement until the evidence was concluded in the hearing before Young CJ in Eq.

Amended Statement of Claim and Further settlement discussions

119. On 29 August 2006, the Liquidator served an Amended Statement of Claim in the 2006 Proceedings. The pleading expanded the relief sought, including adding declarations pursuant to s 588FF of the Corporations Act 2001 that the BACF and BACM charges were void and unenforceable; a declaration that the BACM charge had been satisfied; and a declaration that the amount outstanding with respect to the BACF charge was no more than $300,000. The pleading contained statements that, at all times since November 2005, the only substantial asset of BACM, BACF and Bondedge was their interest in the settlement sum in, or alternatively their claim in, the Nauru Proceedings, and that they had insufficient funds to meet the legal costs of taking any proceedings to enforce payment of the settlement sum; that TCBS had represented that it would not appoint a receiver to BACM and BACF until some time after the Liquidator had received moneys from the Nauru Proceedings; that the Liquidator had relied on this representation in entering into a funding agreement and causing the claim to be prosecuted in the Nauru Proceedings; and that TCBS was estopped from relying on its rights to appoint a receiver to BACM or BACF.

120. On the same day, the Liquidator also swore a further affidavit, that put in issue the accuracy of the general ledgers of BACM and BACF, which had been prepared by TCBS pursuant to its retainer, and the quantum secured by the charges. In addition, the Liquidator expressed the view that BACF and BACM were insolvent from at least December 2004.

121. Mr Salmon read this material, and understood by the end of August 2006 that there was a substantial claim being advanced by the Liquidator, the outcome of which depended on a range of controversial legal and factual issues.

122. On 31 August 2006, Mr Brown wrote to the Receivers and to Mr Salmon and Mr Myers of TCBS, reporting on the proceedings in Court that day. Mr Brown contrasted the clear position of the Receivers and TCBS (“We have always indicated our willingness to settle”) with the lack of clarity from their opponents (“However, when Wily was willing HLBC wasn’t and now we understand it is vice versa or a combination of both”). Mr Brown confirmed in this email that his instructions “from TCBS and Hall Chadwick” were to “focus the minds of the others on settling” by making an offer. The offer was framed in terms of two alternative options: the first was that BACM and BACF would receive $2.3m from the Nauru settlement moneys, with the Liquidator acknowledging the validity of the charges, and TCBS and the Receivers limiting their claims to that $2.3m fund; and the second was that the parties in the Nauru Proceedings settle with the Nauruan entities, and then the Liquidator, HLBC, the Receivers and TCBS all argue about who is entitled to what percentage of those settlement moneys.

123. This offer was sent to Mr Nikolaidis and Mr Ekes on 1 September 2006.

124. Given the terms of Mr Brown’s email to the Receivers and TCBS, it is likely that the purpose of putting forward this proposal to the Liquidator was to obtain some clarity from the Liquidator about his position, and to elicit some counteroffer, in circumstances where there were mixed messages from the Liquidator’s camp and no confirmed offer had yet been made, despite a number of approaches from TCBS.

125. On 6 September 2006, each of Mr Myers and Mr Salmon swore an affidavit in the 2006 Proceedings. Mr Salmon stated in his affidavit, notwithstanding the terms of TCBS’s retainer with the BA Group, that TCBS “did not do the accounts at all” for the BA companies, and that the only work done by TCBS was in relation to the preparation of the weekly cash report. This pointed to a tension in the position of TCBS which, on the one hand, was seeking substantial amounts said to be owing in respect of the fees for its work under the retainer with the BA group and, on the other, was arguing that it had performed a much narrower set of tasks for the BA group than was specified in its retainer.

422. No expert evidence was led in these proceedings to support any contention that TCBS’s claim against BACF had a value higher than that which the liquidator of TCBS had ascribed to the claim after his investigations. Nor did the Plaintiffs, in closing submissions, point to any material capable of establishing such a contention. Given that Mr Salmon was the controller of TCBS and the General Manager of the BA Group, it can readily be inferred that, if such material had been available, the Plaintiffs would have been able to identify it.

423. For those reasons, the Plaintiffs have failed to establish on the balance of probabilities that, by the alleged failure of Mr Brown and the Receivers to disclose their conflict, TCBS lost a substantial, and not a merely speculative, prospect of continuing the 2006 Proceedings with new solicitors and receivers and thereby recovering moneys owed by BACM and BACF.

Loss of opportunity to settle for $1.3m

429. It is common ground that a settlement “in principle” for $1.3m was reached on the afternoon of 18 September 2006 in respect of the 2006 Proceedings and that, by the afternoon of 19 September 2006, a settlement for that sum was no longer on the table because the Liquidator’s team had formed the view that the day’s events in Court had been in his favour.

430. The issue that arises is whether a valuable opportunity to achieve a binding settlement for the sum of $1.3m was, on the balance of probabilities, lost by the inclusion of the Given Form release in the first draft of the settlement deed that was sent by Mr Brown to the Liquidator at 7.48pm on 18 September 2006.

431. The description of the deal struck between the parties as being a settlement “in principle” involves an acknowledgement that no binding agreement had been concluded. Instead, there was to be no binding agreement unless and until terms for the settlement were agreed, documented and signed.

432. As Brereton J observed in Independent Print Media Group Publishing Pty Ltd v Estate Agents Co-operative Ltd [2007] NSWSC 1098 at [33]:

“An agreement ‘in principle’ is, in the vernacular, usually a Clayton’s agreement: the agreement one has when there is not an agreement. It is terminology well-familiar to lawyers as indicating that consensus has been reached on the main terms, but the parties do not intend yet to be bound, because that consensus needs to be properly recorded, documented and approved. Accordingly, the references in the evidence given on behalf of IPMG to agreement in principle tend to detract from rather than to assist the case that a final binding agreement had been made.”

433. From the moment that the draft deed was sent, at 7.48pm on 18 September 2006, there was, in effect, a period from then until around 2.30pm on the following day (when Mr Salmon’s cross-examination commenced) in which the terms of the proposed deed might potentially be agreed, so that a binding settlement for $1.3m could be concluded. The question is whether the opportunity to reach a binding settlement for $1.3m in that window of some 18 hours was lost because of the decision by Mr Brown and Mr Albarran to insert the Given Form release into the first draft deed that was proffered after the conclusion of the “in principle” negotiations.

434. There is some suggestion that the window of opportunity for a settlement may have been even less than 18 hours. The Plaintiffs plead in their Reply to the Third Defendant’s Amended Defence (paragraph 4) that by the time that the morning session of Court concluded on 19 September 2006, the hearing of the 2006 Proceedings had gone in the Liquidator’s interest and he was “no longer willing, as he had been that morning, to settle the case on the terms agreed by the parties on the previous afternoon”. If that is so, then the window in which the 2006 Proceedings could have settled might have lasted until only 10am on 19 September 2006.

435. The deed was not a complicated document. On Mr Wily’s evidence, the task of considering the Given Form release did not take any time at all. He deposed in his affidavit that, as soon as he was told that it had been proposed (without having even seen the text), he responded: “You’ve got to be kidding. I’m not having anything to do with that.” If there was an urgency and a desire to get the matter settled, it would be expected that this would be immediately relayed.

436. Whether the conversation between Mr Nikolaidis and Mr Wily occurred in the evening of 18 September or the morning of 19 September (which was not clear on Mr Wily’s evidence), the Liquidator’s position was not communicated to the other side until shortly before Court resumed on 19 September 2006.

437. Mr Brown had indicated he was waiting in his office for a response on the evening of 18 September, and told Mr Nikolaidis he was willing to come to his home that night to discuss the draft deed. But Mr Nikolaidis did not, assuming he reviewed the deed that evening, communicate any position to him.

438. Further, Mr Albarran, together with Mr Myers of TCBS and Mr Davis of Etienne Lawyers, went to the Liquidator’s offices on the morning of 19 September at around 7.45am, on the understanding that Mr Wily had agreed to meet them at that time to discuss the settlement. But when they arrived, Mr Wily denied agreeing to the meeting, and it did not go ahead.

439. It was a simple matter for Mr Nikolaidis or Mr Wily to indicate to Mr Brown or Mr Albarran that the Given Form release was not acceptable, and that a new deed would need to be prepared for review which did not include that release. Yet, for reasons that are unexplained, this position was not conveyed until shortly before Young CJ in Eq came on the bench for the resumption of the hearing.

440. The reason that those matters are unexplained is, in part, because there is no evidence from Mr Nikolaidis, who was best placed to address the strategy adopted on behalf of the Liquidator on 18 and 19 September 2006. The Liquidator himself played a limited role in the negotiations on 19 September 2006. He does not appear to have reviewed the draft deed, but relied on Mr Nikolaidis to review it and communicate with the other side. He was busy in the morning finalising his affidavit and preparing for Court, and he does not seem to have said anything to Mr Brown or the Receivers, other than to cancel the proposed meeting at 7.45am on 19 September 2006. Likewise, after giving evidence in Court during the morning, he appears to have left matters in the hands of Mr Nikolaidis.

441. The unexplained delay of some 13 hours (from 8pm on 18 September to 9am on 19 September) in communicating to Mr Brown the rejection of the Given Form release supports an inference that Mr Nikolaidis was pursuing a strategy of delaying in responding to the Receivers and TCBS on the proposed settlement terms.

442. The conclusion that the Liquidator’s team had no real desire to press on with negotiating the terms of a settlement is supported by their conduct in the afternoon of 19 September. When presented at around the end of the luncheon adjournment with a draft deed without the Given Form release, the Liquidator’s counsel indicated that his client’s preference was to press on with the cross-examination of Mr Salmon. When an adjournment was taken at the conclusion of the cross-examination, for the stated purpose of settlement negotiations, the Liquidator’s representatives went into a meeting room for the whole of the adjournment and did not discuss any part of the deed with the Receivers and Mr Brown.

443. It was on the basis of those matters that Mr Brown formed the view, as expressed in contemporaneous documents, that the Liquidator and Mr Nikolaidis were playing games, and stalling for time, and had no genuine intention to progress a settlement. That perception is consistent with the views of the witnesses who were called by the Plaintiffs, Mr Salmon and Mr Byrnes (who were on either side of the 2006 Proceedings), to the effect that Mr Nikolaidis was a person who could not be trusted.

444. Having regard to the course of events on 18 and 19 September 2006, I consider that there is a basis to infer that Mr Nikolaidis was not genuinely committed to seeking, if at all possible, to achieve a settlement before Court resumed on 19 September 2006, and that instead he regarded it as in his client’s interests to delay in committing to a position on the particular terms of settlement proposed by the Receivers and TCBS. This view may have been bolstered by his perception that there was, even leaving aside the Given Form release, a lack of consensus on the terms of implementation of any settlement (as shown by the changes between the draft deeds of 18 and 19 September, and Mr Nikolaidis’ rejection of the latter), and it was unlikely that any such consensus would be reached.

445. The Plaintiffs argued that it could be inferred, from the fact that objection was raised only to the Given Form release, that the remainder of the terms were acceptable to the Liquidator.

446. There are a number of difficulties with any such inference.

447. First, the fact that the inclusion of the Given Form release was identified by the Liquidator and Mr Nikolaidis as a matter which was unrelated to the TCBS dispute and therefore was off the table in the context of the TCBS settlement negotiations does not mean that each of the other terms put forward in the draft deed was considered to be acceptable. Although the Plaintiffs called Mr Wily to give evidence on the causation issue, it does not appear that he read the proposed settlement terms, and he did not express any view on the acceptability of those terms. That was a matter on which Mr Wily was plainly well placed to give evidence.

448. Secondly, as I have identified, there were aspects of the 18 September draft deed which, on the evidence, had not been the subject of any discussion between the Liquidator and the Receivers, or between Mr Nikolaidis and Mr Brown, and which would likely, or may, have raised concerns for the Liquidator. One of those was the proposal that the Liquidator assign to the Receivers $1.3m of all money recovered by him in the Nauru Proceedings. There is no evidence that any such term had been discussed prior to the 18 September draft being circulated. It can be inferred, from the fact that it was deleted in the 19 September draft, that this proposal was unacceptable as far as the Liquidator was concerned. In addition, there is no evidence of the Liquidator’s attitude to the proposal that he give up the statutory priority for his fees and costs in favour of TCBS (clause 3.1.2), which would place him at risk in the event the funds recovered in the Nauru Proceedings were insufficient to cover both the TCBS payment and his own fees and costs. There is nothing in Mr Wily’s evidence to indicate that he was aware that this term was proposed, or that he would have agreed with it.

449. Thirdly, there is unchallenged evidence from Mr Brown that Mr Nikolaidis indicated to him that, even after the Given Form release was removed, the draft settlement deed remained unacceptable. Consistently with that evidence, the statements made in Court by Senior Counsel for the Liquidator on 19 September 2006 make clear that even after there was agreement to the removal of the Given Form release, there remained issues regarding the terms of the settlement proposed by the Receivers and TCBS. The statements made included that, although there had been “agreement in principle” on “the dollars”, there remained “problems” with “matters of implementation”, and what was being negotiated was “a matter of complexity”. Those statements are borne out by the extent of the changes between the 18 and 19 September drafts, and the lack of any evidence of negotiation or agreement regarding the amended terms of the 19 September draft. For example, there is no evidence of any discussion between the parties regarding the proposal in the 19 September draft deed that receivers and managers might be reappointed by TCBS in the event that the Liquidator proposed to settle the Nauru Proceedings on some basis other than equal distribution, and TCBS disagreed with the proposed settlement (cl 4).

450. Fourthly, the terms of the correspondence which was subsequently sent in relation to the Liquidator’s reduced offer of $650,000 (in respect of the BACF charge only) show that the parties had not, after the removal of the Given Form release, reached any consensus on the terms of settlement. In his letter setting out this offer, Mr Nikolaidis indicated that the terms of the settlement still needed to be worked out, stating that those terms “are to be more fully set out in a Deed”, and confirming that “there is no settlement of this matter until such time there is a signed document”. In response to the offer, Mr Brown told Mr Nikolaidis (as recorded in his 20 September email to TCBS and the Receivers) that “if Wily was serious about settling we would have a deed and none has turned up”. The parties understood that there could be no settlement without the terms of a deed being agreed and that, after the removal of the Given Form release, it remained the case that there were no agreed terms.

451. Finally, the Plaintiffs in closing submissions contended that it was a relatively simple matter to make amendments to the draft deed to remove the Given Form release. However, if that were so, it must follow that it would have been a simple matter for Mr Nikolaidis, to whom the draft had been sent, to make amendments removing the Given Form release, and to send it back to the other side, indicating that the Liquidator was prepared to sign a deed in that amended form. That step was not taken. I consider that is either because the Liquidator did not agree to the other terms in the draft deed, or because the Liquidator’s representatives were stalling for time on settlement to see how events unfolded in the course of the day, or perhaps both. In any case, the submission by the Plaintiffs fails to address the extent of the changes made by the 19 September draft deed, which suggest that the disagreements concerning the 18 September draft went beyond the Given Form release, and the rejection by Mr Nikolaidis of the terms of the amended draft.

452. The Plaintiffs’ case on causation rested primarily on Mr Wily, who did not review or express any view on the terms of the draft deed, and who deposed as follows:

“I believe had it not been for the actions of Mr Brown and Mr Albarran in inserting clauses into the settlement deed with TCBS in an attempt to avoid my further recovery of preferential payments from Given Form the TCBS matter would [have] settled on the morning of 19 September 2006.”

453. That evidence is of limited weight. It amounts to an expression by Mr Wily, in June 2019, of a belief as to how matters would have unfolded on 19 September 2006, without apparently having been shown the terms of the 18 September draft deed proposed by the Receivers and TCBS, or for that matter the terms of the 19 September draft deed, and without indicating the basis for his belief.

454. Shortly after the relevant events, Mr Nikolaidis identified, from his point of view, the reason why the settlement did not proceed. He did not state that the settlement fell over because Mr Brown had inserted the Given Form release into the draft deed. Instead, in his letter of 28 September 2006, he stated that the problem was that “Mr Brown tried to re-negotiate our client’s offer in the hope of achieving a better result for his client, but failed to do so”. That is, Mr Nikolaidis’ perception was that the problem was not that Mr Brown was pushing hard to achieve a benefit for himself, but was pushing hard to achieve a better deal for his client on the terms of settlement. Mr Nikolaidis also stated that the “counter offers made” (the plural apparently referring to the two forms of the draft deed put forward by Mr Brown, with and without the Given Form release) had the effect of rejecting the Liquidator’s offer. That evidence tells against the proposition, which is central to the Plaintiffs’ case, that the settlement terms were agreed, or were capable of being readily agreed, with the single exception of the Given Form release. Instead, the terms of Mr Nikolaidis’ letter, read in the context of the changes made between the draft deeds of 18 and 19 September 2006, and his rejection of the latter, are consistent with there being, irrespective of the Given Form release, a lack of consensus between the parties on the terms of any settlement.

455. For those reasons, and having regard to the findings of fact outlined in section B of this judgment, the Plaintiffs have not established on the balance of probabilities that the insertion of the Given Form release caused TCBS to lose a substantial, and not merely speculative, opportunity to settle the 2006 Proceedings on 19 September 2006 for a sum of $1.3m.

456. Similarly, the Plaintiffs have not established any loss flowing from the alleged failure of Mr Brown or Mr Albarran to cease to act for TCBS on the evening of 18 September 2006. The Plaintiffs contended that “at the latest, once Mr Brown and Mr Albarran agreed to pursue the benefit [by inserting the Given Form release into the 18 September draft deed], Mr Brown and the receivers should have ceased to act”, since they were at that point “acting in a position of conflict”; and that their “continuing to act caused the loss of the opportunity to settle for $1.3m before court”. Given the matters I have outlined above, and in particular the lack of consensus between the parties on the terms regarding the settlement and its implementation, and the delay by Mr Nikolaidis in committing to any position on the settlement terms, the Plaintiffs have not established on the balance of probabilities that, if Mr Brown and Mr Albarran had ceased to act on the evening of 18 September 2006, there was a substantial, and not merely a speculative, opportunity for TCBS and the Liquidator to agree on settlement terms before court resumed at 10am on 19 September 2006.

457. If, contrary to these findings, I had determined that an actionable breach of duty had caused the loss of the opportunity for TCBS to settle the 2006 Proceedings for $1.3m on 19 September 2006, it would not have followed that TCBS was entitled to the sum of $1.3m by way of equitable compensation.

458. If a settlement had been achieved at that figure, TCBS would have been liable to pay the Receivers’ fees and costs, which included the fees of Etienne Lawyers, from that sum. There is evidence that, by early November 2006, the costs of the receivership were some $459,000. It may be inferred that at a point in time some eight weeks earlier (that is, as at 19 September 2006), those fees were probably in excess of $300,000, such that the net amount which would have been received from any settlement was likely less than $1m.

459. Further, the amount that TCBS would have received may have depended on whether the Liquidator was willing (as proposed in the draft deed) to accept that the statutory priority not apply in respect of moneys received from the Nauru Proceedings, such that the amount to TCBS be paid in priority to his own costs and fees. That is because, as outlined in paragraph 262 above, the accounts prepared in the liquidation of BACM and BACF indicate that substantially all of the funds received from the Nauru Proceedings were expended on meeting the Liquidators’ fees and costs. The fact that the Plaintiffs did not, through Mr Wily’s evidence, indicate whether or not he was prepared to agree to the proposed priority of payments in the draft deed is a matter which, as discussed above, goes to the issue of causation, and also raises significant doubt on the issue of quantification.

Loss of Opportunity to Continue to Trade

460. The Plaintiffs claim that, as a result of having lost the opportunity to settle the 2006 Proceedings for the sum of $1.3m on 19 September 2006, TCBS lost the opportunity to avoid liquidation and to continue trading.

460. Given the findings made above, this claim also fails.

461. Further, even if I had determined that an actionable wrong on the part of the Defendants caused the loss of the $1.3m settlement, I would have concluded that this claim for loss of an opportunity to avoid liquidation and to continue to trade was not established. That is for several main reasons which are identified briefly below.

462. First, by late 2006, the business partnership between Mr Salmon and Mr Myers had broken down. As a result, TCBS effectively ceased trading actively at that time, with each of Mr Salmon and Mr Myers becoming involved in other businesses. There was no evidence that this strained relationship was caused by the loss of the settlement. Accordingly, whether or not the settlement funds had been received, TCBS would likely not have continued to trade from late 2006.

463. Secondly, given that terms were not agreed for settlement, it is unclear when the settlement sum would have been paid (and this would, as identified above, likely depend on what was agreed in respect of priority). The Plaintiffs have not led evidence of TCBS’s cash position at various points in time from late 2006 onwards, or its creditors in late 2006. Nor have the Plaintiffs explained, by reference to any such cash position, the basis on which it is contended that, if the settlement sum had been received by a particular point in time, it would have provided TCBS with the opportunity to avoid liquidation. Without knowing those matters, it may have been the case that the receipt of an amount less than $1m (after the Receivers’ fees and costs) would not have changed TCBS’s fortunes, but would only have meant that TCBS received a sum which would have been wholly expended on decreasing, but not eliminating, the shortfall in payments to creditors.

464. Thirdly, the Plaintiffs have not led any expert evidence regarding the question of TCBS’s solvency, or regarding the profits that could have been earned from its trading. Instead, they have relied on evidence of the profits disclosed by TCBS’s accounts as at 2006, and Mr Salmon’s evidence, often without supporting documents, of plans for the business and the earnings that could have been achieved.

465. In particular, the figures claimed by the Plaintiffs for TCBS’s loss of the opportunity to trade from 2006 onwards are based on the fact that TCBS’s accounts disclose that its net profit before tax for the 2006 financial year was $673,737.79. That profit figure is extrapolated for future years through to the date of trial, with an increase applied year-on-year, such that a company which was, as a matter of fact, unable to pay a costs order of some $90,000 is said to have lost the opportunity to make profits of some $48.75m (excluding interest). This claim does not grapple with the fact that the liquidator of TCBS concluded, following his investigations, that one of the reasons for the company’s failure was that, although TCBS had engaged in the business of making loans, it "was not satisfactorily capitalised for that purpose”. Further, the liquidator concluded that “TCBS had a history of failing to pay its obligations to the ATO when due and payable (or at all)”.

466. Finally, the 2006 accounts of TCBS were unaudited and the liquidator of TCBS, following his investigations, concluded that revenues were overstated, and that TCBS had in fact incurred trading losses in 2006 as well as 2007. In those circumstances, I do not consider that those accounts provide any sufficient basis (assuming TCBS would have continued to trade) for estimating its maintainable earnings, and no other basis was identified for any such estimation.

Conclusion on causation and loss

468. For those reasons, even if (contrary to my findings) Mr Brown or the Receivers had dishonestly breached their fiduciary duties, or had knowingly assisted in such a breach, or that the Receivers had breached their duties under the “deed” by which they were appointed, the Plaintiffs have not established that any such breach caused the losses which they claim by way of equitable compensation and damages.

I. LIMITATION ISSUES

Equitable Claims

469. Given my findings on the issues of breach and causation, the remaining issues concerning limitation periods, the dates on which amendments take effect, and the defence of laches can be dealt with briefly.

470. I have already addressed above Mr Brown’s contentions regarding the amendments to the pleading which were made in order to raise, in the alternative to the existing allegation of an express retainer, an allegation of an implied retainer. If necessary, I would have allowed such amendments to be made, and to take effect from the date of commencement of the proceedings (see paragraphs 276-277 above).

471. Whether or not those amendments took effect from the date of the commencement of the proceedings, I have found that Mr Brown did not dishonestly breach his fiduciary duties. I have made a similar finding against Mr Albarran. The Plaintiffs accepted that, if I did not find a dishonest breach, the claim for breach of fiduciary duties was statute-barred pursuant to s 23 of the Limitations Act 1969 (NSW).

472. The Defendants argued that, even if I had made a finding of dishonest breach of fiduciary duty, such a claim would have been statute-barred by application of that provision. In that regard, the Defendants relied on the observations by Handley JA (Giles and Bryson JJA agreeing) in Aussie Ideas Pty Ltd v Tunwind Pty Ltd [2006] NSWCA 286 at [22]-[24]:

“The claims were for compensation for breach of fiduciary duty, even if the breaches involved elements of dishonesty. The analogy in such a case, as the Judge found, is with actions for breach of professional duty in contract or in tort where the applicable period is 6 years.

The question is covered by the decision in Cia de Seguros Imperio v Heath Ltd [2000] EWCA Civ 219; [2001] 1 WLR 112 which neither counsel cited. The Court of Appeal there applied the statute by analogy to claims by a client against its insurance broker for dishonest breaches of fiduciary duty. Waller LJ said (121):

‘… equity would have taken the view that it should apply the statute by analogy to a claim for damages or compensation for a dishonest breach of fiduciary duty. I say that because what is alleged against Heath’s as giving rise to the dishonest breach of fiduciary duty are precisely those facts which are also relied on for alleging breach of contract or breach of duty in tort.’

Clarke LJ said (125):

‘… the essential nature of the pleaded case is the same whether it is put as damages for breach of contract, damages for breach of duty or damages (or compensation) for breach of fiduciary duty.’”

473. In response, the Plaintiffs submitted that there is, for the purposes of section 23 of the Limitations Act 1969 (NSW), no analogous limitation period where it is claimed that the breach of fiduciary duty formed part of a dishonest and fraudulent design and, a fortiori, no analogous limitation period where a claim for knowing assistance is made. In this regard, the Plaintiffs relied on Lewis Securities Ltd (in liq) v Carter [2018] NSWCA 118 at [34]-[35], [60]-[65], [70]-[71] per Leeming JA (with whom Sackville AJA agreed at [98]) and at [216]-[217] per Emmett JA.

474. Given that this raises a legal question, which is unnecessary to decide having regard to the findings I have made, I do not express any views on the issue.

475. Similarly, it is unnecessary to decide whether, if the Plaintiffs had established a claim for dishonest breach of fiduciary duty or a claim for knowing assistance in any such dishonest breach, and had established that TCBS’s claim in respect of such breach was not statute-barred, relief should be refused by reason of the delay in bringing that claim.

476. There is evidence that Mr Salmon was of the view in around 2008 that there was a claim available against the Receivers and Mr Brown for the loss of the $1.3m settlement as a result of the Given Form release being inserted into the settlement deed. Further, TCBS investigated and considered bringing such a claim in 2008, but no such claim was pursued at any time before December 2016. In addition, as I have already observed, there is evidence that substantial documentary records relevant to the matters in issue (such as the files of Etienne Lawyers and most of the files of Hall Chadwick) are no longer available.

477. Nonetheless, the issue whether relief in respect of particular wrongdoing should be barred by laches is difficult to determine in the abstract, in circumstances where no claims of wrongdoing have been established. The doctrine of laches is directed to the question “whether, as between the parties, it would be practically unjust to give relief which otherwise would be just”: Gerace v Auzhair Supplies Pty Ltd [2014] NSWCA 181 at [73] per Meagher JA (Beazley P and Emmett JA agreeing). Any assessment of this question of practical injustice should be made against the background of the particular matters which support an entitlement to relief “which otherwise would be just”, with a specific focus on whether, by reason of the passage of time, evidence may have been lost which would have been relevant to those particular matters. The question which then arises is whether the delay in pursuing the claim has caused prejudice to the Defendants such that it would be inequitable to grant the relief sought: Orr v Ford (1988) 167 CLR 316 at 341 per Deane J; [1989] HCA 4.

478. Having determined that none of the Plaintiffs’ claims of wrongdoing have been established, I do not consider that it is useful or desirable to embark on any such analysis.

Claims founded on ‘deed’

479. As set out in section F of this judgment, I have determined that the Appointment instruments were not deeds. The Plaintiffs accepted that, if that was the position, it necessarily followed that all claims based on a breach of those instruments were statute-barred.

480. The amendments by which the Plaintiffs raised the allegation that the appointment instruments were “deeds”, and that the Receivers breached duties arising under those deeds, were made by the Second Further Amended Statement of Claim, which was filed on 22 October 2021. The Receivers submitted, and the Plaintiffs did not dispute, that this amended pleading was permitted to be filed so that the new claims could be set out along with the date of their inclusion, with the question as to whether those new claims could or should be allowed to form part of the proceedings, and the date from which they were to commence if added, being reserved for the trial judge (referring to the transcript of the hearing before Parker J on 7 December 2020).

481. The Receivers submitted that there was no power to allow these amendments; and, if there was such power, I should refuse leave for these amendments, or alternatively I should order that such amendments take effect from the date of the order granting leave, rather than from the date of the commencement of the proceedings (with the effect that, even allowing for the 12-year limitation period in respect of claims founded upon a deed, the claims would be statute-barred).

482. The Receivers contended that the conditions for the power to amend a pleading under s 65(1) of the Civil Procedure Act 2005 (NSW) were not satisfied. That section provides as follows:

“This section applies to any proceedings commenced before the expiration of any relevant limitation period for the commencement of the proceedings.”

483. The Receivers submitted that at the time these proceedings were commenced in December 2016, the “relevant limitation period” had already expired in respect of each of the causes of action which was pleaded against the Receivers in the initial Statement of Claim. In response, the Plaintiffs submitted that the issue for s 65(1) of the Civil Procedure Act is whether the “relevant limitation period” for the cause of action proposed to be added by the amendments (here, a claim under a deed) had expired at the time of the commencement of the proceedings in December 2016; and, because the limitation period for a claim founded upon a deed is 12 years (Limitation Act, s 16), it had not expired at that time.

484. That is, the parties were in dispute as to whether the “relevant limitation period” in s 65(1) of the Civil Procedure Act was the “relevant limitation period” in respect of each cause of action in the pleading at the time that the proceedings were commenced; or the “relevant limitation period” in respect of the cause of action to be added by the proposed amendment.

485. I do not need to resolve this issue because, irrespective of whether the conditions for the exercise of the power in s 65(1) were satisfied, there was a power to amend the pleading under s 64 of the Civil Procedure Act. Section 65(4) stipulates that s 65 does not limit the powers of the Court under s 64.

486. Section 64(1) provides as follows:

“At any stage of proceedings, the court may order –

(a) that any document in the proceedings be amended, or

(b) that leave be granted to a party to amend any document in the proceedings.”

487. The power under s 64 is available where the conditions for the exercise of the power under s 65 are not satisfied: Greater Lithgow City Council v Wolfenden [2007] NSWCA 180 at [12]-[18] per Handley AJA (Campbell JA and Young CJ in Eq agreeing). In that case, the Court held that the Parliament must be taken to have endorsed, as applicable to ss 64 and 65, the settled construction of the similarly worded predecessor rules that was outlined by Glass JA in McGee v Yeomans [1977] 1 NSWLR 273 at 280, namely, that the effect of these provisions is to provide “a general discretion to allow an amendment, notwithstanding that it raises a barred cause of action, whenever justice so requires”.

488. Section 64(2) provides that:

“Subject to section 58, all necessary amendments are to be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings, correcting any defect or error in the proceedings and avoiding multiplicity of proceedings.”

489. At the time that the twelve-year limitation period in respect of claims founded on a deed expired, the existing pleading was the Further Amended Statement of Claim (FASC), which was filed on 25 May 2017. It included allegations that the Receivers had been appointed by TCBS as receivers and managers in respect of BACM and BACF pursuant to the Appointment instruments (FASC, [22], [23]); that, in the course of performing that role, the Receivers owed duties to TCBS (FACS [87]); and that they breached those duties, inter alia, by inserting the Given Form release into the draft settlement deed, by insisting on the release remaining when the Liquidator objected to its inclusion, and by concealing from Mr Salmon that this was the reason for the settlement failing to occur (FASC [88(a)-(d)]). I consider that the allegations made in respect of the Appointment instruments by the October 2021 amendments arise from substantially the same facts as those previously pleaded claims.

490. For those reasons, I would have been minded to exercise the discretion under s 64 of the Civil Procedure Act to allow the amendments, with effect from the date of the commencement of the proceedings. However, having determined that the Appointment instruments are not deeds and any claim in respect of them is statute-barred, and having determined that in any case the Receivers did not breach any duty arising under those instruments, and no loss has been suffered by any such breach, I am of the view that such amendments would be futile.

CONCLUSION

491. The Plaintiffs have not established their claims against any of the Defendants.

492. It follows that the proceedings must be dismissed with costs. In the event that the terms of the costs order are not agreed, I will give directions for the parties to make submissions regarding that issue.

493. Accordingly, I make the following orders. The Court:

1. Orders that the Fourth Further Amended Statement of Claim be dismissed.

2. Directs that, by 4pm on 2 November 2023, the parties bring in short minutes of order that deal with costs, if they can be agreed.

3. Directs that, if the parties cannot agree on the form of orders in relation to costs:

1. the Defendants file and serve any written submission, limited to 5 pages, in respect of the terms of the order for costs, together with any affidavit in support, by 4pm on 2 November 2023; and

2. the Plaintiffs file and serve any written submission in response on costs, limited to 5 pages, together with any affidavit in support, by 4pm on 9 November 2023.

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Amendments

19 October 2023 - Amended the text in the Decision where Julian O'Sullivan is mentioned - removed SC from after his name.

19 October 2023 - Removed 'Senior' from references to Mr O'Sullivan as Senior Counsel

20 October 2023 - Issues with paragraph numbering amended

Decision last updated: 20 October 2023