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NGI Savannah Living Communities Pty Ltd v Dunne[2023] QSC 273

NGI Savannah Living Communities Pty Ltd v Dunne[2023] QSC 273

SUPREME COURT OF QUEENSLAND

CITATION:

NGI Savannah Living Communities Pty Ltd v Dunne & Ors [2023] QSC 273

PARTIES:

NGI SAVANNAH LIVING COMMUNITIES PTY LTD

ACN 613 046 290

(Plaintiff)

v

NEVILLE MARTIN DUNNE

(First Defendant)

SANAKO PTY LTD ACN 610 575 070

(Second Defendant)

ETARIP PTY LTD ACN 164 972 029 (IN LIQUIDATION)

(Third Defendant)

ANTHONY PRESTON PTY LTD ACN 143 487

(Fourth Defendant)

ANGELINE DIMPLE BASSI (ALSO KNOWN AS ANGE BASSING)

(Fifth Defendant)

NEWPORT DESIGN AND CONSTRUCT PTY

LTD ACN 622 632 660

(Sixth Defendant)

MP01 PTY LTD ACN 169 614 993

(Seventh Defendant)

LANDAC HOLDINGS PTY LTD ACN 139 037 933

(Eighth Defendant)

FILE NO/S:

BS 11263 of 2018

DIVISION:

Trial Division

PROCEEDING:

Trial

ORIGINATING COURT:

Supreme Court

DELIVERED ON:

1 December 2023

DELIVERED AT:

Brisbane

HEARING DATE:

20, 21, 22 and 29 March 2023

JUDGE:

Sullivan J

ORDER:

  1. The first defendant pay the plaintiff $2,278,293.38 for damages pursuant to s 236 of the Australian Consumer Law (Queensland), together with interest of $697,969.09, pursuant to s 60 of the Civil Liability Act 2003 (Qld);
  2. The seventh defendant pay the plaintiff $237,500 for damages pursuant to s 236 of the Australian Consumer Law (Queensland), together with interest of $95,608.69, pursuant to s 60 of the Civil Liability Act 2003 (Qld).
  3. The counterclaim brought by the seventh defendant be dismissed.

CATCHWORDS:

TRADE AND COMMERCE – COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION – ENFORCEMENT AND REMEDIES – LIABILITY OF CORPORATION DUE TO CONDUCT OF DIRECTOR, SERVANT OR AGENT – MISLEADING AND DECEPTIVE CONDUCT – where there is a claim by the plaintiff against the first defendant constituted in part by misleading and deceptive causes of action brought under the Australian Consumer Law (Queensland) – where there is a claim by the plaintiff against the seventh defendant for damages pursuant to s 236 of the Australian Consumer Law (Queensland) for being involved in the first defendant’s misleading and deceptive conduct

EQUITY – GENERAL PRINCIPLES – FIDUCIARY OBLIGATIONS – FIDUCIARY DUTY – ACCOUNT FOR BENEFITS GAINED – where there is a claim by the plaintiff against the seventh defendant for knowing receipt of funds obtained pursuant to breaches of fiduciary duties owed by the first defendant to the plaintiff

BANKRUPTCY – ADMINISTRATION OF PROPERTY – PROOF OF DEBTS – WHAT DEBTS PROVABLE – LIABILITY UNDER COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION – where the first defendant had gone into bankruptcy prior to the commencement of the trial – where the contractual causes of action were stayed in the absence of a grant of leave by the Federal Court of Australia due to the causes of action being ones for provable debts – whether the misleading and deceptive conduct causes of action are also ones in respect of provable debts within the meaning of s 82 of the Bankruptcy Act 1966 (Cth) – where the misleading and deceptive conduct causes of action advanced against the first defendant are found not to be ones in respect of provable debts

Australian Consumer Law (Queensland), s 18, s 236

Bankruptcy Act 1869 (UK), s 49

Bankruptcy Act 1966 (Cth), s 58, s 82, s 86, s 153

Civil Liability Act 2003 (Qld), s 60

Fair Trading Act 1989 (Qld), s 42

Manufactured Homes (Residential Parks) Act 2003 (Qld)

Aliferis v Kyriacou (2000) 1 VR 447, considered

Ashala v Featherstone [2016] QSC 121, cited

Auto Group Ltd v England [2008] NSWSC 402, considered

Barnes v Addy (1874) LR 9 Ch App 244, considered

Barewa Oil & Mining NL (in liq) v Isim Mineral Development Pty Ltd (1981) 38 ALR 288, cited

Briginshaw v Briginshaw (1938) 60 CLR 336, cited

Britter v Sprigg (1900) 26 VLR 65, cited

Charter Pacific Corporation Ltd v Belrida Enterprises Pty Ltd & Ors [2003] QCA 375, cited

Chittick v Maxwell (1993) 118 ALR 728, cited

Cornelius v Barewa Oil & Mining NL (in liq) (1982) 42 ALR 83, cited

Coventry & Ors v Charter Pacific Corporation Limited & Anor (2005) 227 CLR 234, considered

Cummings v Claremont Petroleum NL (1996) 185 CLR 124, considered

Emma Silver Mining Company v Grant (1880) 17 Ch D 122, considered

Ex parte Llynvi Coal and Iron Co; In re Hide (1871) LR 7 Ch App 28, cited

Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22, cited

Grimaldi v Chameleon Mining NL (ACN 098 773 785) (No 2) and Another (2012) 287 ALR 22, cited

Health Services Union v Jackson (No 3) [2015] FCA 694, cited

Jones v Dunkel (1959) 101 CLR 298, cited

Kitay (Liquidator) v Trenfield (Trustee) [2021] FCA 508, cited

Lovell v Penkin, in the matter of the bankrupt estate of Kevin Michael Penkin [2008] FCA 637, considered

Manny v David Lardner Lawyers (No 2) [2021] ACTSC 289, cited

Mercedes Holdings Pty Ltd v Waters (No 3) [2011] FCA 236, cited

Nelson v Thompson [2021] FCA 1055, cited

Owners - Strata Plan 80647 v WFI Insurance Limited T/as Lumley Insurance (2015) 299 FLR 77, cited

Re MacFadyen: Ex parte Vizianagaram Mining Co Limited [1908] 2 KB 817, cited

Re Pyramid Building Society (in liq) (1991) 6 ACSR 405, cited

Re Sharp; Ex parte Tietyens Investments Pty Ltd (in liq) [1998] FCA 1367, considered

Ritchie v Woodward (executor of the estate of the late Brian Patrick Woodward); Rujo Pty Ltd v Same [2016] NSWSC 1715, considered

SBA Music Pty Ltd v Hall (No 2) [2014] FCA 1116, cited

Waldon Properties Ltd v Beaver Properties Pty Ltd & Anor [1973] 2 NSWLR 815, cited

COUNSEL:

M Hodge KC and P Williams for the plaintiff

Mr L McMahon (sol) for the 1st and 7th defendants

SOLICITORS:

GRT Lawyers for the plaintiff

Enyo Lawyers for the 1st and 7th defendants

TABLE OF CONTENTS

Introduction6

Evidence7

Mrs Goodridge8

Mr Gelski12

Mr Stansfield15

Mr Battistin17

Mr Guthrie17

Mr Dunne17

Factual Findings17

Pre-acquisition of Savannah17

Acquisition of Savannah24

Post-acquisition of Savannah28

Legal Principles30

Fiduciary duty claim30

Accessorial liability for breaches of fiduciary duty31

Misleading and Deceptive Conduct and liability from being knowingly concerned in a s 18 contravention31

MP01 - Barnes v Addy Claim32

The initial fiduciary duty owed by Mr Dunne to NGI32

Mr Dunne’s initial breaches of fiduciary duties34

MP01 received property on notice35

Mr Dunne - Misleading and Deceptive Conduct Claim35

Contravention of s 18 of the ACLQ by Mr Dunne35

MP01 - knowingly concerned claim pursuant to the ACLQ37

The seventh defendant’s counterclaim38

Effect of Mr Dunne’s Bankruptcy39

Introduction39

The position of Fiduciary Duty Claims: The first issue41

The position in respect of Misleading and Deceptive Conduct Claims: The second ....

issue48

Coventry48

Proper construction of s 82(2)50

The position in respect of co-extensive contract and tortious claims52

Application of proper construction of s 82(2) of the Bankruptcy Act to the coexistent breaches of fiduciary duty and misleading and deceptive conduct causes of action57

Application of proper construction of s 82(2) of the Bankruptcy Act to the misleading and deceptive conduct causes of action which are not co-existent with breaches of fiduciary duty58

Final Relief58

Introduction

  1. [1]
    The trial of this matter ultimately involved the plaintiff, NGI Savannah Living Communities Pty Ltd (“NGI”), pursuing claims against only two of the eight originally named defendants.
  2. [2]
    The first claim by NGI is against the first defendant, Neville Martin Dunne, (“Mr Dunne”) and is constituted, in part, by misleading and deceptive conduct causes of action brought under the Australian Consumer Law (Queensland) (“ACLQ”).
  3. [3]
    NGI had also been pursuing separate causes of action against Mr Dunne for breaches of contract and breaches of fiduciary duties.  However, as emerged on the first day of trial, Mr Dunne had gone into bankruptcy on the Friday of the week prior to the trial commencing.  As a result, at least the contractual causes of action were stayed in the absence of a grant of leave by the Federal Court of Australia (which NGI did not have) due to the causes of action being ones for provable debts.  The parties contended that the position was the same for the causes of action founded on breaches of fiduciary duties.  I have concluded that those causes of action are ones in respect of provable debts and, as a result, are stayed in the absence of the requisite leave of the Federal Court of Australia, which, again, NGI did not have.
  4. [4]
    A further consequence of Mr Dunne’s bankruptcy is that there is a jurisdictional issue for determination as to whether the misleading and deceptive conduct causes of action are also ones in respect of provable debts within the meaning of s 82 of the Bankruptcy Act 1966 (Cth) (“Bankruptcy Act”).  If it were found that those causes of action were ones for provable debts, then they would be stayed as well.
  5. [5]
    Ultimately, I have concluded that certain of the misleading and deceptive conduct causes of action advanced against Mr Dunne are not ones in respect of provable debts.  As a consequence, that part of the proceeding is not stayed by operation of the Bankruptcy Act.  However, I have concluded that other misleading and deceptive conduct causes of action are for provable debts, and, as a consequence, the parts of the proceeding based on those causes of action are stayed.  I will deal with the detail of this jurisdictional issue at the end of these reasons, but I will make clear at earlier points in the reasons which causes of action are and are not stayed.
  6. [6]
    The second claim by NGI is against the seventh defendant, MP01 Pty Ltd (“MP01”). It is for two separate causes of action, namely, for knowing receipt of funds obtained pursuant to breaches of fiduciary duties owed by Mr Dunne to NGI, and for damages pursuant to s 236 of the ACLQ for being involved in Mr Dunne’s misleading and deceptive conduct.
  7. [7]
    The substantive orders as currently sought by NGI on its various causes of action are:
    1. judgment for NGI against MP01 in the amount of $250,000 pursuant to s 236 of the ACLQ, together with interest, or in the alternative the amount of $225,000 for knowing receipt, together with interest; and
    2. judgment for NGI against Mr Dunne in the amount of $3,628,293.38 pursuant to s 236 of the ACLQ, together with interest.
  8. [8]
    NGI’s claim for knowing receipt by MP01 is only for the amount of $225,000 as that was all that MP01 received from the proceeds which had first passed through the hands of a company called Lection Pty Ltd (“Lection”).  NGI’s claim pursuant to s 236 of the ACLQ for knowing involvement in Mr Dunne’s misleading and deceptive conduct is for the full $250,000 amount which NGI paid out in respect of the transaction to which the misleading and deceptive conduct related to.
  9. [9]
    There are three sub-components to the $3,628,293.38 sought by NGI against Mr Dunne, namely:
    1. the payment to a building company known as Battistin Builders Pty Ltd (“Battistin Builders”) of $1.1 million on 11 July 2016;
    2. the payment to a real estate company, Lection, of $250,000 on 11 July 2016; and
    3. five payments either to Newport Design and Construction Pty Ltd (“Newport”), or alternatively to Landac Holdings Pty Ltd (“Landac”), between 7 November 2017 and 3 April 2018 in the cumulative sum of $2,278,293.38.
  10. [10]
    In respect of each of the seven payments adding up to the $3,628,293.38, NGI alleges that Mr Dunne misled and deceived Mrs Goodridge, the sole director of NGI, as to the nature of the payments and the need for, and obligation of, NGI to make the payments.  
  11. [11]
    Battistin Builders and Lection are third party companies in the sense that Mr Dunne had no ownership or corporate control of them.  However, it is alleged that Mr Dunne had made secret arrangements with the relevant directors in control of those companies for the large part of the monies paid to them to be on-paid to other companies which were under the control of Mr Dunne. 
  12. [12]
    NGI’s case at its simplest is that Mr Dunne used misleading and deceptive conduct to obtain financial benefits indirectly for himself via companies of which he had control.  The loss claimed is calculated by the amount paid out by NGI because of the conduct in each instance.  
  13. [13]
    NGI accepts that the Briginshaw standard[1] should be applied when findings are made in this proceeding.  I have applied that standard when making the findings, given the seriousness of the allegations.
  14. [32]
    It is relevant at this point to note that MP01 has brought a counterclaim against NGI for damages for breach of contract.  As will be identified later in these reasons, MP01’s counterclaim was always misconceived.  In addition, no evidence in support of it was led by MP01 at trial. The evidence from NGI’s witnesses did not support the counterclaim. It serves no purpose in these introductory paragraphs to say any more about this subject.

Evidence

  1. [15]
    The evidence in this proceeding canvasses the events surrounding the acquisition by NGI on 11 July 2016 of a retirement village known as Savannah[2] and the subsequent management of Savannah on behalf of NGI.  Mr Dunne and one of his companies were intimately involved in that subsequent management of Savannah.
  2. [16]
    NGI called five witnesses.  Their evidence-in-chief was delivered by way of affidavits.  There was limited cross-examination, the extent of which varied between witnesses.  There was an attack on the credibility of three of the witnesses, being Mrs Goodridge, Mr Gelski and Mr Stansfield.
  3. [17]
    It is necessary for me to make findings as to my assessment of the credibility and reliability of each of the witnesses and the extent to which I accepted their evidence.

Mrs Goodridge

  1. [18]
    The first witness was Mrs Eleanore Goodridge, the sole director of NGI.
  2. [19]
    Mrs Goodridge gave evidence that she was 83 years of age.  She clarified in short oral evidence-in-chief that her recollection of relevant events was reducing, which she attributed to her age.  She also gave oral evidence that her recollection was not what it had been when she swore her affidavits.  Nonetheless, Mrs Goodridge stated that she would give evidence of the truth, and that is what she had done when she had sworn her affidavits.
  3. [20]
    My assessment of Mrs Goodridge is that she was careful and considered when giving her answers in cross-examination.  In that respect, I do not accept the submission of the defendants that Mrs Goodridge’s evidence was evasive, or, on important issues, contradictory to her affidavit.  There was one topic where there was contradictory evidence, but that contradiction has not caused me to doubt or reject her other evidence.
  4. [21]
    First, it was said in effect that she was evasive about her knowledge of a draft management agreement and about its terms, or that the management agreement had ever become operative as a contract.  I reject this criticism.  Mrs Goodridge had solicitors acting for her prior to the settlement of the Savannah transaction. Those solicitors were involved in reviewing a draft management agreement put forward by Mr Dunne.  No party suggested that that draft document ever reached a form which was to be executed by Mrs Goodridge.  The evidence does not support that she had been involved in the drafting or detailed review process of the draft. That Mrs Goodridge did not have a detailed understanding of the individual items of the draft management agreement was hardly surprising.
  5. [22]
    Secondly, the defendants sought to criticise Mrs Goodridge for what was said to be inconsistent evidence as to whether there was a contractual agreement in the form of an email exchange on 23 June 2016.  The Statement of Claim did plead that a contract existed based, at least in part, on this email exchange.  On this issue, Mrs Goodridge was asked in cross-examination if the 23 June 2016 email exchange was the only written agreement that she agreed to in respect of the payment of $48,000 a year for the management of Savannah.  Mrs Goodridge answered, “It is”.  That evidence was similar to evidence given in one of her affidavits.  Mrs Goodridge later gave evidence that there was no agreement by the email exchange as it had not been signed by her.  The latter position was inconsistent with NGI’s pleaded case and the prior evidence Mrs Goodridge had given. 
  6. [23]
    Whilst I accept that there was an inconsistency in the evidence, the latter of Mrs Goodridge’s evidence on this issue was given in the context of Mrs Goodridge identifying she had a positive recollection that there had been discussions that she (ultimately via NGI) would get a 20 per cent per annum return.  An earlier version of the Statement of Claim had alleged a term in the contract to this effect. That allegation was later removed from the Statement of Claim. 
  7. [24]
    Mrs Goodridge’s recollection that there had been communications of a 20 per cent per annum return was accurate. It had been proposed by Mr Dunne on 4 May 2016 that there be a 15-20 per cent per annum return. On 12 May 2016, Mr Gelski, on behalf of Mrs Goodridge, sought a 20 per cent per annum return, which Mr Dunne concurred with on that day. However, the 23 June 2016 emails which the plaintiff relied upon for its contractual case did not expressly state that there was to be a 20 per cent return per annum.
  1. [25]
    It was in this context that Mrs Goodridge then, in effect, gave evidence that there was not an agreement by the 23 June 2016 email exchange as she had not signed it. 
  2. [26]
    Whether there was a contract and what its terms may have been are ultimately matters for this Court to determine based on an objective assessment of the evidence. My view on this inconsistency in Mrs Goodridge’s evidence is that it did not reflect evasiveness or unreliability but reflected that the 20 per cent per annum return was important to her, and she had a clear recollection of Mr Dunne having agreed to it. Her later evidence was best understood as reflecting a rationalisation that the 23 June 2016 email exchange was not an agreement as it did not have the 20 per cent per annum term expressly stated.  Whilst I acknowledge her inconsistent evidence on this issue, it has not caused me to otherwise doubt her evidence generally.
  3. [27]
    Thirdly, it was said that Mrs Goodridge was evasive in respect of whether or not Mr Gelski was her lawyer, and it is submitted that she belatedly admitted that he and his firm were acting for her.  I did not find the evidence of Mrs Goodridge on this issue evasive at all.
  4. [28]
    In her initial affidavit, Mrs Goodridge, at paragraph 5, identified that Mr Gelski had at various times acted as her legal adviser, but also had privately assisted her in relation to her business and investment transactions.  This later role included Mr Gelski communicating with third parties on behalf of her and her companies.  Mrs Goodridge’s evidence was to the effect that Mr Gelski’s firm, Johnson Winter and Slattery (“JWS”) had been acting for her at some time during the relevant transaction involved in this proceeding.[3] Mrs Goodridge gave evidence that Mr Gelski was sending all the work to a Mr Colenso of JWS in that respect.  She identified that Mr Colenso was a solicitor at JWS.  Mrs Goodridge was unsure how to classify Mr Gelski in respect of whether he was acting as her lawyer.[4]  She gave oral evidence that over the years she had from time to time engaged Mr Gelski and JWS as her lawyers. In my view, there was no confusion in the evidence as it was to the effect that JWS was acting as her (and ultimately NGI’s) lawyers in this transaction, and that possibly Mr Gelski was acting in that capacity as well.  I do not regard this evidence as evasive.
  1. [29]
    Mrs Goodridge’s evidence under cross-examination was that it was possible Mr Gelski had rendered an invoice in relation to this particular deal, but she just did not remember.  On being shown an invoice from JWS in respect of the acquisition of Savannah, which had amongst the bill particulars the initials of Mr Gelski for some discrete items of timed costs, Mrs Goodridge accepted that it was obvious that JWS and Mr Gelski were acting for her in relation to the Savannah transaction.[5]
  2. [30]
    I do not regard that last evidence as inconsistent with her prior evidence.  She had always given evidence that at times Mr Gelski acted in a personal capacity as her lawyer, but at other times had acted more as an adviser, inferentially in a non-legal sense.  She gave evidence that JWS, at least through Mr Colenso, had acted as her (and by implication NGI’s) lawyer during the transaction involved with the acquisition of Savannah.  Her uncertainty of the role of Mr Gelski was entirely consistent with her perception of the different roles he had played in the past.  Rather than being evasive and inconsistent, Mrs Goodridge was being careful and cautious. Having been shown the bill particulars with Mr Gelski’s initials, an answer that it was obvious that Mr Gelski was acting for Mrs Goodridge, again, was hardly surprising.
  1. [31]
    Fourthly, comment was made on Mrs Goodridge’s evidence where she had accepted that Mr Dunne had done significant works and incurred certain expenses in managing Savannah post-settlement, all for $4,000 per month.  
  2. [32]
    The $4,000 per month was the management fee payable to Mr Dunne’s company, Sanako Pty Ltd (“Sanako”), which equated to the sum of $48,000 per annum for three years for the management of Savannah.  The yearly management fee of $48,000 was an express term provided for in a 23 June 2016 email written by Mr Gelski on behalf of NGI.  Mr Dunne had expressly responded to that email by the words, “[Y]es concur”.  Those words were in respect of the whole content of that email.  As part of the attack on the evidence of Mrs Goodridge, this particular attack front was founded on the proposition that $4,000 per month was inadequate remuneration for all that was done in the management of Savannah.  The submission made on behalf of Mr Dunne was that “this seems to put it mildly, [to be] unlikely”.  “This” being a reference to the $4,000 per month supposedly being adequate remuneration.
  3. [33]
    I reject that criticism.  There is no ambiguity in the 23 June 2016 email.  It identified $48,000 per annum as the management fee.  Mr Dunne had unambiguously concurred with that term.  Sanako had been identified prior to this date as the company which would provide the management services.  It was, at all relevant times, Mr Dunne’s company.
  4. [34]
    Far from being unlikely, the $4,000 per month management fee was reflective of a $48,000 per annum fee which had been expressly agreed to.  For completeness, I note that the $4,000 per month management fee was also reflected in the subsequent draft management agreement, which was originally drafted at the behest of Mr Dunne. As I have previously recorded, no one asserts in evidence that the draft agreement ever became operative as a contract.
  5. [35]
    In any event, it is an incorrect characterisation of the evidence to conclude that Mrs Goodridge was purporting to say that this was the only reward that Mr Dunne (via Sanako) was receiving from the overall transaction.  
  6. [36]
    In cross-examination, Mrs Goodridge identified that the $4,000 per month was only part of the deal, and that the deal included that Mr Dunne (again, via Sanako) had the potential to participate in a portion of the profit on an ultimate sale of Savannah.[6]  The 23 June 2016 email contemplated a sale at the end of three years with Sanako participating in profits once a particular financial indicator was reached.
  7. [37]
    Fifthly, in relation to the Battistin Payment, it was submitted as a criticism that Mrs Goodridge in her evidence said that she knew nothing of it.  This submission could be understood as intending to communicate that Mrs Goodridge had some understanding that the payment made at settlement to Battistin Builders was going to be redirected to Mr Dunne or one of his companies.
  8. [38]
    That criticism cannot be maintained.  Mrs Goodridge had clearly given evidence that she understood that at the settlement of Savannah a payment of approximately $1 million was being made to Battistin Builders for what she was told was for fast tracking of the building work at Savannah by that builder.[7] The documentary evidence clearly corroborates that she had been told this by Mr Dunne.
  9. [39]
    In cross-examination, Mrs Goodridge was taken to clause 5.4 of the draft management agreement.[8]  Clause 5.4 of the draft agreement stated as follows:-
  1. “5.4
    Disclosure by Manager to Owner

The Manager discloses to the Owner that the Manager may, on an ongoing basis, be paid fees by Battistin Builders Pty Ltd ACN 117 660 616 (Battistin) in relation to services previously provided and future services to be provided by the Manager to Battistin in connection with the construction, delivery and installation of relocatable homes on the Land by Battistin under the Building Contract.”

This was the document which Mrs Goodridge could not now recall having seen at the time it was being reviewed.  Questions were put to her in cross-examination to the effect that clause 5.4 disclosed to her and NGI that the Battistin Payment was to be paid to Mr Dunne or one of his companies.  The following exchange occurred as part of that cross-examination:[9]

“Q:No, it’s the disclosure.  The clause 5.4 that I took you to          earlier?--

A:Where does it say that it was – was a payment to Mr Battistin?”

  1. [40]
    Mrs Goodridge’s evidence was entirely consistent throughout that she understood that an amount of approximately $1 million was to be paid at settlement to Battistin Builders for that builder to fast-track building work at Savannah. Clause 5.4 in the draft management agreement had nothing to do with NGI paying Battistin Builders $1 million (plus GST). What Mrs Goodridge denied in her evidence was that she had knowledge of the fact the Battistin Payment was never a payment for fast-tracked building work, and that in fact the $1.1 million was simply to be immediately paid on by Battistin Builders to Mr Dunne or a company which he controlled.
  2. [41]
    Mrs Goodridge was neither evasive nor inconsistent in this evidence.  As my findings will record, she and NGI were deliberately misled about this particular payment by Mr Dunne.  
  3. [42]
    Sixthly, because Mrs Goodridge was 83 years of age and conceded that her recollection had deteriorated over time, including since swearing her affidavits, it was submitted that I should treat her recollection of events as being severely impaired.  I reject that submission.  My assessment is that Mrs Goodridge gave her recollection truthfully and to the best of her ability. She sought to do so carefully in my view.  Her evidence was consistent with other witnesses called and with contemporaneous documents which formed part of the evidence.  None of the matters I have dealt with above have caused me to doubt her general truthfulness as a witness. 
  4. [43]
    Seventhly, it was submitted that I should treat with caution her evidence-in-chief by affidavit, which was described as polished, because they were in a tone markedly different from her oral evidence.  I reject that submission.  As I have said, my assessment is that Mrs Goodridge gave her evidence truthfully and to the best of her ability.  Whilst the affidavits may have been drafted in clear and concise terms, I did not have reason to conclude that the substance of the affidavits was other than the recollection or understanding of Mrs Goodridge.  I also reject the allied submission by the defendants that Mrs Goodridge refused to make even minor concessions.  A review of her cross-examination provides many examples where Mrs Goodridge made concessions by agreeing to answers put to her by the legal representative for the defendants.  However, where she disagreed with a matter, Mrs Goodridge made this clear in her response.  Where she did not have a recollection in respect of a matter, she also made that clear in her response. 
  5. [44]
    Eighthly, a criticism was made by the defendants about Mrs Goodridge not considering herself bound by the terms of the draft management agreement, which followed the 23 June 2016 email exchange, despite the performance of managerial work.  That was an extraordinary submission to make in relation to Mrs Goodridge.  It was never part of the defendants’ pleaded case that the draft management agreement had ever been entered into as a binding contract between NGI and Mr Dunne’s company, Sanako.  Indeed, a quite different contract under the descriptor, “The Ultimate Agreement” was pleaded by the defendants in the Amended Defence and Counterclaim. The submission is rejected.

Mr Gelski

  1. [45]
    The second witness was Richard Gelski.  There were two areas where I had some concern as to Mr Gelski’s evidence.  Ultimately those two areas of concern do not lead me to the conclusion that I should reject his other evidence, which was largely supported by other witnesses and contemporaneous documents which were in evidence.  
  2. [46]
    The first issue of concern involved the subject of whether Mr Gelski had acted in the capacity as a legal adviser for Mrs Goodridge (and NGI) in relation to NGI’s investment in Savannah.  In his initial affidavit, he identified at a general level that at various times he had assisted Mrs Goodridge with investments, and had at times acted for Mrs Goodridge in his capacity as a taxation lawyer at JWS.  He identified that Mrs Goodridge was a personal friend.  
  3. [47]
    In relation to the particular transaction involving Savannah, in his initial affidavit he gave evidence to the effect that he did not charge Mrs Goodridge (and, inferentially, NGI) for his time spent assisting her in that transaction and he did not enter into a written agreement with her for the provision of legal services.  He gave evidence that he assisted Mrs Goodridge in relation to the relevant transaction by:
  1. “(a)
    attending meetings with Mr Dunne in relation to Mrs Goodridge’s investment in Savannah;
  2. (b)
    communicating on Mrs Goodridge’s behalf about the terms of her investment in Savannah; and
  3. (c)
    reviewing correspondence from Neville Dunne for Mrs Goodridge.”
  1. [48]
    In his reply affidavit, Mr Gelski did change that evidence in light of an invoice numbered 1891165, which had been issued on 7 July 2016 by JWS to NGI.  This particular invoice was later reissued at the request of Mr Dunne so that it was redirected to Mr Dunne’s company, Sanako.  The initial invoice for $8,602.50 (plus GST) has bill particulars which include six entries of chargeable time next to Mr Gelski’s initials.
  1. [49]
    The initial affidavit was incorrect on the issue of whether Mr Gelski had charged for his time as a lawyer for NGI, but I do not regard this change in evidence as a basis for generally not accepting the evidence of Mr Gelski.  Ultimately, the extent of the role of Mr Gelski in respect of Mrs Goodridge was not critical to this case.  It was always apparent on his and Mrs Goodridge’s evidence that he was acting as some type of trusted adviser for Mrs Goodridge and NGI.
  2. [50]
    The second concern involved a $25,000 payment received by a family company of Mr Gelski from one of Mr Dunne’s companies shortly after the settlement of the Savannah transaction.
  3. [51]
    That payment was not mentioned in Mr Gelski’s initial affidavit.  It was dealt with by him in a reply affidavit. 
  4. [52]
    Mr Gelski’s evidence in his reply affidavit was that he had received a telephone call from a Mr Patkin, who was a director in the company, Vesta Living Communities Pty Ltd (“Vesta”).  Mr Gelski had a small shareholding in Vesta and Mrs Goodridge had previously been involved in a transaction with Vesta.  The 23 June 2016 email exchange between Mr Gelski and Mr Dunne identified that Vesta was the entity which was to be the subject of a put and call option at the end of the three-year period after NGI purchased Savannah.  
  5. [53]
    Mr Gelski gave evidence in the reply affidavit that Mr Patkin from Vesta contacted him around July 2016 and said words to the effect:

“Neville has offered to pay me $50,000 for due diligence work I conducted in relation to Vesta and given your assistance with Vesta, I would like to share 50% of that with you.” [Underlining added]

  1. [54]
    ‘Neville’ was a reference to Mr Dunne.
  2. [55]
    Mr Gelski deposed that he said “ok” in response to this offer.  He further deposed that he did not understand this $50,000 sum to form part of the funds taken by Mr Dunne from Mr Battistin (and ultimately from NGI).[10]  Mr Gelski said he understood the offer to be paid $25,000 was for prior assistance given by Mr Gelski to Mr Patkin, and that Mr Patkin told him to render an invoice to Sanako and call it an “Introduction Fee”.  On 13 July 2016, Mr Gelski caused his family company Vicruth Pty Ltd to send an invoice to Sanako (Mr Dunne’s company) for an “Introduction Fee” as instructed by Mr Patkin.
  3. [56]
    Under cross-examination, Mr Gelski stated:[11]

“This invoice, unfortunately, arose because Mr Patkin called me out of the blue, told me that Mr Dunne was proposing to pay him $50,000 out of the due diligence fees that he had earned and in respect of which Mr Patkin had provided assistance and Mr Patkin called me and said look, I’d like to share that with you, Richard, because you’ve lost money through Vicruth with me in Shell Villages and in Vesta.  And without thinking about it, I said yes.” 

  1. [57]
    Mr Gelski gave evidence in cross-examination that he subsequently told Mrs Goodridge about the $25,000 only after Mr Dunne had sworn an affidavit in the current proceedings.
  2. [58]
    Amongst other evidence he gave on this topic, Mr Gelski said:[12]

“…I didn’t give it – unfortunately, I didn’t give it enough thought at the time.  I should not have done it, I shouldn’t have accepted Mr Patkin’s offer, and I disclosed it to her much later.  Her reaction was, well, you know, she wasn’t happy.  And I said, well, look, I had – I shouldn’t have done it, and I want to give you the money.  She said, no, I don’t want the money, just give it to charity if you want.  So I gave it to one of the charities that she supports.”

  1. [59]
    On the subject of his recollections of the $25,000 payment over time, Mr Gelski’s evidence was that he had forgotten about it, and it was an affidavit of Mr Dunne which caused him to go and look at it.  He stated in part:[13]

“I hadn’t given it another thought since the time that Mr Patkin had made the call and suggested that I do – that I send an invoice to Sanako.  And I did.  And I said, well, I’m not sure what I’m sending him an invoice for.  He said just call it an introduction fee.  And, rather foolishly, I did.” 

  1. [60]
    Finally, in cross-examination at two separate points Mr Gelski identified that he believed the $25,000 was coming from what he understood to be a due diligence fee payable to Mr Dunne, and that he recalled there was a due diligence fee of $125,000.  I should note here that the evidence establishes that at settlement there was a due diligence fee of $125,000 paid to Sanako, Mr Dunne’s company.  
  2. [61]
    I accept Mr Gelski’s evidence that this is where he thought the $25,000 was coming from.  More importantly, there was no evidence led at trial that supports a finding that Mr Gelski was somehow privy to the fact that both the Battistin Payment and the Lection Payment, which were made at the settlement of the Savannah transaction, were being redirected to companies controlled by Mr Dunne.  I am satisfied on the evidence, and find accordingly, that Mr Gelski did not have such knowledge.
  3. [62]
    Further, the defendants’ legal representative in oral closing submissions clarified that the evidence concerning the receipt of the $25,000 was a matter which only went to Mr Gelski’s credit, as opposed to any of the substantive issues in the case.
  4. [63]
    The receipt by Mr Gelski’s family company of the $25,000 in the circumstances described in his evidence raised the possibility that Mr Gelski may have received a benefit contrary to a fiduciary duty he may have owed to Mrs Goodridge and NGI.  On the evidence, he was acting as a trusted adviser and as the agent of Mrs Goodridge (and NGI) in respect of aspects of the Savannah transaction, contemporaneously with the receipt of the $25,000.  It would also appear that he personally, and his firm JWS more generally, were acting as legal representatives of, at least, NGI, if not Mrs Goodridge herself.
  5. [64]
    Mr Gelski is not a party to this proceeding and has not had an opportunity to address whether or not the transaction was one which could be impugned in equity. I make no finding on that question.
  6. [65]
    Nonetheless, Mr Gelski’s evidence in cross-examination was that this receipt of funds was not one which, on reflection, he ought to have entered into and he was foolish to have done so.  I would agree with that frank concession.
  7. [66]
    However, I have formed the view that his receipt of the $25,000 does not lead to the rejection of his evidence at large.  This is for a number of reasons.
  8. [67]
    First, Mr Gelski’s evidence on matters directly relevant to matters in issue in this proceeding was generally consistent with contemporaneous documents and the evidence of other witnesses such as Mrs Goodridge, who I accept as credible and honest.
  9. [68]
    Secondly, even assuming that Mr Gelski had indirectly received $25,000 contrary to a fiduciary duty, this would not automatically have led me to reject his evidence on matters directly relevant to the issues.  As conceded by the defendants, the evidence surrounding the $25,000 payment is only relevant to an attack on the credit of Mr Gelski.
  10. [69]
    Thirdly, whilst Mr Gelski was obviously embarrassed about the $25,000 payment, Mr Gelski otherwise gave his evidence on issues directly relevant to the issues in the case in a clear and logical way, consistent with contemporaneous documents.  I accept his evidence on these issues and I find him to be a witness of truth.
  11. [70]
    In doing so, I reject the submission made by the defendants that his evidence at large should be given zero weight.  I also reject the submission that Mr Gelski had and has an incentive to push the wrongdoing onto Mr Dunne from himself.  As I have said, Mr Gelski’s evidence is otherwise in accordance with other witnesses whose evidence I accept, and with contemporaneous documents. Further, NGI has called in this case two witnesses who were involved with secret dealings with Mr Dunne and the companies which they controlled.  They have given direct evidence of how Mr Dunne brought about the Lection Payment and Battistin Payment.  There is nothing in their evidence which supports in any way that Mr Gelski knew of those secret dealings.

Mr Stansfield

  1. [71]
    The third witness is Warwick Stansfield.  Mr Stansfield was a real estate agent.
  2. [72]
    The attack on Mr Stansfield’s evidence is based on the fact that it emerged in crossexamination that Mr Stansfield had entered into a settlement agreement with NGI associated with his giving evidence in the proceeding.
  3. [73]
    The gravamen of the submissions made by the defendants is twofold.  
  4. [74]
    First, the settlement agreement was said to be an inducement to Mr Stansfield to give his evidence in this proceeding, and consequently it is said that this detrimentally affected the credit of Mr Stansfield. 
  5. [75]
    Secondly, an inconsistency in Mr Stansfield’s evidence was alleged.  Recital C of the settlement agreement recorded that the Stansfield parties[14] had asserted that they had at some stage provided services at the request of Mr Dunne in assisting with locating potential properties for a client of Mr Dunne’s to purchase, which the Stansfield parties undertook for several months at their own expense.  It was submitted that recital C recorded a factual position which was said to be inconsistent with the evidence of Mr Stansfield in the proceeding to the effect that Lection had provided no services in respect of the Savannah transaction.
  1. [76]
    I reject both submissions.  
  2. [77]
    The settlement agreement is entirely consistent with the fact that Mr Stansfield had been involved in a transaction designed by Mr Dunne whereby Mr Dunne was seeking to deceive Mrs Goodridge and NGI as to the existence of a properly incurred real estate agent’s commission.  Mr Stansfield, and his company, would obviously have been concerned that they may have been exposed civilly and criminally as a result of their involvement in what I regard as the deceptive conduct of Mr Dunne.
  3. [78]
    The only “inducement” to be found in the settlement agreement was in the form of releases from civil liability and undertakings not to report the matters to authorities.  As will emerge, all that Mr Stansfield’s company had obtained from its participation in the scheme devised by Mr Dunne was $12,500 from the $250,000 payment made by NGI.  Indeed, under the settlement agreement, Mr Stansfield and his company ultimately agreed to pay $12,500 back to NGI.  As a result of the settlement agreement, he and his company ended up receiving no financial benefit for their participation in Mr Dunne’s scheme. In that context, the settlement agreement was not an inducement in the sense of providing some monetary, or monies worth, reward, but rather it was merely attempting to be prophylactic of any potential civil and criminal exposure of Mr Stansfield and Lection as a result of Mr Dunne’s scheme.
  4. [79]
    Secondly, I reject the criticism arising from any perceived inconsistency between the sworn evidence of Mr Stansfield in the proceeding and Recital C of the settlement agreement.  Recital C should not be read out of context in the settlement agreement.
  5. [80]
    Recitals B, C and H provided as follows:-

“B:The Stansfield Parties were approached by Mr Neville Dunne (“Mr Dunne”), after originally being introduced by Michael Dunne, an acquaintance and family member of Mr Dunne, Michael Dunne.

C:Mr Dunne requested the Stansfield Parties’ assistance with locating potential properties for a client of Mr Dunne to purchase, which the Stansfield Parties undertook for several months at their own expense.

…

H:The Stansfield Parties contend that the $12,500.00 payment received constitutes payment for the services rendered to Mr Dunne and outlined in paragraph C.”

  1. [81]
    The content of Recitals B, C and H are broadly similar to what Mr Stansfield deposed to in paragraphs 13, 14 and 15 of his affidavit.[15] In those paragraphs, Mr Stansfield deposed as follows:
  1. “13.
    Neville said words to the effect of: “Don’t worry about it. You’ve been helping me out.”
  2. 14.
    I understood Neville’s comments to be a reference to the work I had been doing investigating potential purchases by Vesta for which I had received no commission as there had been no sales. I said: “Thanks very much”.
  3. 15.
    I called Michael Dunne on or about the same day and said to him words to the effect of: “Neville hasn’t invoiced me for the full amount of the $250,000 and says I can have $25,000. I wouldn’t have got this money unless you’d introduced me to him. So, if you give me an invoice for half the amount, I will give half to you.”’
  1. [82]
    There is no material inconsistency in Mr Stansfield’s evidence on the one part, and Recitals B, C and H of the settlement agreement on the other part.  The services referred to in Recital C and paragraphs 13 to 14 of the affidavit were not in respect of the Savannah transaction. 
  2. [83]
    The existence and content of the settlement agreement does not cause me to doubt the evidence of Mr Stansfield.  I find that he gave his evidence truthfully and to the best of his ability.

Mr Battistin

  1. [84]
    The fourth witness is Mr Serge Battistin.  He is the director of Battistin Builders.  In effect, there was no real challenge to Mr Battistin’s evidence, and no submissions were made in relation to his credit.  I accept the evidence of Mr Battistin.  I find that he gave his evidence truthfully and to the best of his ability.

Mr Guthrie

  1. [85]
    The final witness was a Mr Scott Guthrie, who was a solicitor from Thomson Geer.  He was called simply to put into evidence certain invoices which Mr Dunne had provided and there was no contest in respect of his evidence.  His evidence was uncontroversial and should be accepted.

Mr Dunne

  1. [86]
    It should be noted that Mr Dunne did not give evidence in this trial.  It was a proceeding about which he would have been uniquely in a position to give evidence in respect of the great majority of issues which were alive on the pleadings.  He elected not to give evidence, despite his evidence having been opened on two occasions during the trial.  He was obviously available to give evidence at trial.
  2. [87]
    The relevant Jones v Dunkel[16] inference is available in respect of matters upon which it could have been expected that Mr Dunne could have been able to have given evidence.  That principle, of course, requires that an inference must first be open on evidence which has otherwise been led in the trial.  The failure to call the witness means that the otherwise available inference is more readily able to be drawn by the Court.

Factual Findings

  1. [88]
    I make the following factual findings based on the evidence led in the proceeding.

Pre-acquisition of Savannah

  1. [89]
    In January 2016, Mr Dunne’s cousin, Michael Dunne, contacted Mr Battistin.  Michael Dunne told Mr Battistin that he acted for an Australian investor, currently overseas, who was interested in purchasing Savannah.  Savannah was a “residential park” under the Manufactured Homes (Residential Parks) Act 2003 (Qld).  The real property and the business of Savannah was owned at that time by a company, Savannah Lifestyle Resorts Pty Ltd (“NCS”).  Mr Battistin was a director and shareholder of NCS at that time.  Some of the documents in the sale of Savannah referred to a separate company, FNQ Developments Pty Ltd, as being a joint owner of the Savannah business.  Those references were in error.  I accept the evidence of Mr Battistin on this issue.
  2. [90]
    Mr Dunne and Michael Dunne visited Savannah on 20 January 2016, and, over the course of the following weeks, Mr Dunne emailed Mr Battistin three offers to purchase Savannah on behalf of a corporation, being Vesta.
  3. [91]
    In around 2015 or 2016, the directors of NCS had agreed to consider any offers made to purchase Savannah. NCS had two other directors apart from Mr Battistin, being Mr Carlo Amerio and Mr Noel Mewett.  Mr Battistin required their consent to accept any offer to purchase Savannah.
  4. [92]
    On 26 February 2016, NCS accepted the third of Mr Dunne’s offers.  The offer contained a purchase price of $6.8 million plus a $3 million convertible note in Vesta.  Mr Battistin thereafter understood that an agreement for sale existed between Vesta and NCS.
  5. [93]
    From Mr Battistin’s viewpoint, Mr Dunne appeared to be a director of Vesta.
  6. [94]
    Mrs Goodridge had first met Mr Dunne in the context of an investment which she had made in around 2015, in a company which had been a subsidiary of Vesta.
  7. [95]
    Around 30 March 2016, Mrs Goodridge went to Coomera in Queensland in response to an invitation she had received to hear about an investment opportunity in Coomera.  That meeting was with Mr Dunne and a Ms Fran Wolff, who was a director of Vesta.  At the time of the Coomera meeting, Mrs Goodridge was also acquainted with Ms Wolff from the earlier investment which had involved the Vesta subsidiary.
  8. [96]
    In April or May 2016, Mr Dunne and Ms Wolff then met Mrs Goodridge at Mr Gelski’s offices at JWS. During that meeting, Mr Dunne gave a presentation to Mrs Goodridge about an opportunity to purchase Savannah.
  9. [97]
    By Mr Dunne’s “opportunity”, Mrs Goodridge would:
    1. purchase Savannah;
    2. receive immediate and consistent returns from Savannah through the sale of manufactured homes on the property;
    3. develop Savannah; and
    4. sell Savannah to Vesta in three years’ time for a profit.
  10. [98]
    Mr Dunne said that he would:
    1. manage and develop Savannah on Mrs Goodridge’s behalf so that she would not need to be involved; and
    2. prepare contracts and settlement statements on Mrs Goodridge’s behalf in relation to the acquisition of Savannah.
  11. [99]
    Mr Dunne also said on this occasion that Mrs Goodridge would need to advance approximately $1 million to fast-track the construction of houses in order to guarantee immediate returns.
  12. [100]
    On 3 May 2016, Mr Dunne sent Mrs Goodridge an email attaching a 26-page presentation.  The following observations can be made about that document:
    1. on a page entitled “What we do”, Mr Dunne’s company, Sanako (previously the second defendant in this proceeding) is described as:
      1. researching and identifying superior development locations;
      2. securing those locations;
      3. developing and building gated lifestyle communities;
    2. on a page entitled “Investment opportunity”, the following details are listed:
      1. the title details of Savannah;
      2. the words: “Investment - $12 million”;
      3. the words: “Return – TBA per annum”;
      4. the words: “Investment Term – 3 years”;
      5. the words: “Contract to sell Asset - $16 million”;
      6. the words: “Contracted to sell to Vesta Living Communities in July 2019 for $16,000,000”; and
    3. on a page entitled “Legal team”, the words “Thomson Geer Lawyers” and headshots of three Thomson Geer lawyers appeared.
  13. [101]
    The following day, on 4 May 2016, Mrs Goodridge received a further email from Mr Dunne.  The email stated:

“I have set out below a summary table of the cash flows and income for Savannah Lifestyle communities. We will as part of the due diligence and before we move to an unconditional status on the project, provide a full report of all financial and legal matters to you and your accountant and lawyer.”

  1. [102]
    Mr Battistin’s evidence is that Mr Dunne never enquired about Savannah’s financial position, nor did he seek financial documents in respect of the business.
  2. [103]
    Mr Dunne’s email of 4 May 2016 provided detail about the purchase price and probable returns from Savannah.  It stated:
    1. the total return over three years would be $7.32 million or between 15-20 per cent of the investment price for each of the three years (TBA between the parties)[17]; and
    2. the total price for Savannah would be $12 million, comprised of:
      1. $10 million for the purchase;
      2. $544,000 in stamp duty;
      3. legal costs;
      4. due diligence; and
      5. $1.1 to fast track the house construction and get residents in faster which would increase profits and the valuation of the village.
  3. [104]
    It is contextually clear from the prior presentation and the nature of what was being discussed in the email that the last figure was supposed to read as $1.1 million.  
  4. [105]
    Over the same period, Mr Dunne continued to assure Mr Battistin that the sale of Savannah was proceeding with Vesta.
  5. [106]
    On 12 May 2016, Mr Gelski communicated to Mr Dunne a counterproposal, on behalf of Mrs Goodridge.  Mr Gelski’s email stated:

“Dear Nev

Proposal for your consideration 

Nora Goodridge Investments (NGI) will buy the land $10m plus meet costs of stamp duty and legals.

NGI advances $1.1m as required to fast track building

All rent and home sale proceeds go to NGI

Senaco [sic] receives an agreed management fee each year

NGI agrees to advance money from sales of homes for more fast tracking of home building.

NGI will earn 20 % pa on all money advanced (with reductions for money coming in from sales).

On the third anniversary of purchase by it, NGI will sell the property to Vesta for $16m and will agree to pay a commission to Sanaco [sic] equal to 90 % of the difference on the one hand between balance of funds advanced which are then outstanding plus its 20 % return and net sale proceeds of the entire land on the other, ie. the profit

If Vesta is unable to complete a purchase within 90 days of the third anniversary of purchase by NGI, then NGI can retain the property & do with it what it chooses.”

  1. [107]
    Mr Dunne replied that day: “I concur, and have expanded your proposal in a more detailed structure for your review”.  Mr Dunne requested that Thomson Geer in Brisbane be used to draft the contracts in relation to the purchase.
  2. [108]
    Mr Dunne’s response attached a document resembling a draft term sheet.  That document had the following relevant features:
  1. (a)
    under a heading “Purchasing Contracts” the following documents were listed:
  1. at 2.1.1, Land Purchase Contract;
  2. at 2.1.2, Business Purchase Contract; and
  3. at 2.1.3, Management Service Contract;
  1. (b)
    at 2.3.1, an item described as “Sale agreement to Vesta”;
  2. (c)
    at 4.1, the words:

“Sanako will present the following contracts to JWS for review

4.1.1. Purchase Contracts:

4.1.1.1Land Purchase contract – (90 % complete – Thomson Geer) $4,500,000.00.

4.1.1.2Business Contract – (90 % complete – Thomson Geer) $4,500,000.00.

4.1.1.3Management services Contract – (90 % complete – Thomson Geer) $1,000,000.00.”;

  1. (d)
    at 6.1, the words:

“Settlement statement pro-forma

Purchase price       $10,000,000.00 

Stamp duty (estimate)     $450,000.00

Due diligence (fixed)     $125,000.00

Legals JWS        N/A

Legals Thomson Geer     $15,000.00

Purchase agents fee 2.5%    $250,000”;

  1. (e)
    at 7, the words:

“7.1Sanako will undertake day to day management of Savannah MHE - (management contract) 

7.2.Sanako will project manage the construction and development of the new homes (project management contract)”;

  1. (f)
    at 8, the words:

“8.1NGI will receive:

8.1.1all surplus funds, i.e. net profit after operating expense (EBITDA) until

8.1.1.1NGI has received a return equal to 20 % per annum of the principal amount, and

8.1.1.2NGI receives all of the principal investment back

8.1.2NGI receives 10 % of the net sale proceeds after point 8.1.1 has been completed.”; and

  1. at 9, the words: “Sanako will receive 90% of the profit after point 8.1.1 and 8.1.2 have been satisfied”.
  1. [109]
    Mrs Goodridge has no recollection of agreeing to, or even negotiating, a management contract with Mr Dunne or Sanako in the sum of $1 million.  Mrs Goodridge’s evidence is that she would never have agreed to such an arrangement. 
  2. [110]
    The appearance of a proposed $1 million management contract coincided with the omission of the fast-tracking payment that Mr Dunne had previously mentioned on at least two occasions.
  3. [111]
    On about 21 May 2016, during a visit to Savannah, Mr Dunne told Mr Battistin that the sale price could be raised to $9 million in cash.  However, if Mr Battistin wanted the sale, the price had to “appear as $10 million for internal reasons”.  Mr Dunne prohibited Mr Battistin from telling the other directors of NCS of the arrangement and explained that he would create a document recording a loan from Mr Dunne to Battistin Builders in the amount of $1 million that would justify and secure the payment of $1 million from Battistin Builders to Mr Dunne after settlement.  The loan was only to take effect if settlement actually occurred, and would require the payment of the $1 million by Battistin Builders to Mr Dunne within seven days of the settlement date.
  1. [112]
    The evidence does not support that Mr Dunne in fact intended to loan $1 million to Battistin Builders, nor that he (or anybody else) ever did so.  I find that this loan agreement was a sham, in that it purported to record a legal transaction that neither Mr Dunne nor Mr Battistin intended to be performed or believed to represent the true legal position.  This finding includes the compelling inference I draw as to Mr Dunne’s state of mind, which inference arises from the direct evidence of Mr Battistin as to the secret arrangement, and how the Battistin Payment was ultimately made and passed on to a company controlled by Mr Dunne.  That inference can more readily be drawn in the absence of Mr Dunne being called as a witness in the trial.
  2. [113]
    On 25 May 2016, Mr Dunne emailed Mrs Goodridge with a “Proposed Time Line for Savannah” that included the presentation of a due diligence report by 14 June 2016, the drafting of sale contracts to Vesta by 4 July 2016, and the execution of the Vesta sale contracts by 24 July 2016.
  3. [114]
    On 15 June 2016, Mr Dunne met with Mrs Goodridge at Mr Gelski’s offices.  I accept the evidence of Mr Gelski that Mr Dunne advised Mrs Goodridge on this occasion that the acquisition of Savannah would be easier and simpler if Mr Dunne could instruct Thomson Geer on Mrs Goodridge’s behalf without having to involve Mrs Goodridge. 
  4. [115]
    Mrs Goodridge signed an authority in favour of Mr Dunne at that time.  That document authorised Mr Dunne to instruct Thomson Geer Lawyers “on all matters relating to the acquisition of Savannah…”.  I find that Mr Dunne at this point was acting as the agent of Mrs Goodridge, and ultimately NGI, in providing those instructions to Thomson Geer.
  5. [116]
    Mrs Goodridge did not subsequently instruct Thomson Geer other than by authorising Mr Dunne to instruct them on her behalf, and by later authorising Thomson Geer to release funds on the day of the Savannah settlement.  Mrs Goodridge relied on Mr Dunne to carry through the acquisition of Savannah on her and, ultimately, NGI’s behalf.
  6. [117]
    On 16 June 2016, NGI was incorporated, with Mrs Goodridge as its sole director.  The shares of NGI were initially owned by Mrs Goodridge directly but were later owned by another one of her companies. Mrs Goodridge at all times remained the ultimate decision-maker for NGI.
  7. [118]
    Over 22 and 23 June 2016, Mr Dunne circulated a number of draft agreements to Mrs Goodridge in respect of Savannah. 
  8. [119]
    On 23 June 2016, Mr Dunne sent an email to Mrs Goodridge attaching draft contract documents, including a draft construction contract (entitled a “formal instrument of agreement”) between Battistin Builders and NGI.
  9. [120]
    On 23 June 2016, Mr Gelski sent an email to another JWS partner, David Colenso, copied to Mr Dunne and Mrs Goodridge, with the subject line: “Nev, do you agree?”.  The email contained the following statements:

“The village is producing income of $450,000.00 per annum and will increase by $100,000.00 per annum

NGI buys the property, management agreement & assets (house designs and equipment)

NGI gets all rent while it is owner

NGI gets all profits on sales of houses (about $90k each) while it is the owner

Call Option to Vesta Ltd to buy the lot on 3rd anniversary of the acquisition and Put Option exercisable by NGI within 30 days of the 3rd anniversary.

Exercise price is market value or $16m whichever is the higher

Development/Management Agreement (we to draft) between Sanako P/L and NGI terms:

  1. Sanako manages the village for $48k p.a. for the next 3 years
  2. NGI will make available approx. $1.2m for fast track building of houses (so that total outlay on purchase, stamp duty, legals etc = $12m)
  3. NGI agrees to pay fee to Sanako on settling sale to Vesta equal to 90% of the profit above $7.2m
  4. NGI’s profit will be made up of 100% of all net rental return, 100% of profit on all house sales and the sale to Vesta.

Richard Gelski | Partner

Johnson Winter & Slattery”

  1. [121]
    Mr Dunne responded by email with 2 words later that day: “Yes concur”. 
  2. [122]
    After that date, JWS, for NGI, engaged in some negotiation with Thomson Geer in respect of a draft management agreement for Savannah.  That document was never finalised or agreed.  Mr Gelski’s evidence is that he was never authorised by Mrs Goodridge or NGI to agree to any of the terms of the draft management agreement.  I accept that evidence.  Mrs Goodridge’s evidence is that she never signed such a management agreement.  I accept that evidence.  As I have said earlier in these reasons, no party pleaded that the draft management agreement was at any point in time effective as a contract.
  3. [123]
    On about 28 June 2016, Mrs Goodridge and Mr Gelski visited the Savannah site, accompanied Mr Dunne, where she met Mr Battistin for the first time.
  4. [124]
    During the visit, Mr Dunne told Mr Battistin that NGI was a new trading entity that had been set up.  Mr Battistin at that time wrongly understood that NGI was a subsidiary of Vesta.

Acquisition of Savannah

  1. [125]
    Over two days, between 29 and 30 June 2016, Mr Dunne facilitated the execution of three separate sets of transaction documents, all of which were produced at the instruction of, and provided to the relevant parties by, Mr Dunne.
  2. [126]
    Contracts for the sale of the land and business of Savannah were emailed by Mr Dunne to NGI.  They were executed by NGI and NCS on 29 and 30 June 2016.
  3. [127]
    A construction contract (entitled ‘Formal Instrument of Agreement’) was executed between NGI and Battistin Builders.  That document was provided to Mrs Goodridge on 29 June 2016 by email from Mr Dunne.  In the covering email, Mr Dunne requested Mrs Goodridge to sign the construction contract.  The contract provided for the payment of $1 million (plus GST) by NGI to Battistin Builders.  It did not obligate Battistin Builders to carry out any defined construction works in return.  The payment was recorded in the construction contract to be in consideration for:
  1. “(i)
    enter into and perform its obligations under this Contract;”
  1. provide the fixed pricing provided for under this Contract for the term of this Contract; and
  2. undertake an expanded role to obtain all required lawful certifications and occupancy certificates in respect of all relocatable home dwellings and deliver a “turnkey” product in relation to each relocatable home,…”
  1. [128]
    Mr Battistin and Battistin Builders had not requested the preparation of this construction contract.  Battistin Builders had not sought and, at this time, was not seeking a payment of $1 million (plus GST) for any purpose, including for purported fast-tracking of building works, or the purposes recorded in the construction contract in the description of the consideration.
  2. [129]
    On 29 June 2016 Mr Battistin received from Mr Dunne the sham deed of loan.  That document formed part of the secret arrangement reached earlier between Mr Dunne and Mr Battistin.  The parties were Battistin Builders and Mr Dunne’s company, Anthony Preston Pty Ltd, previously the fourth defendant in this proceeding.  The document purports to record a $1 million loan to be made from Anthony Preston Pty Ltd to Mr Battistin.  That purported recording of a loan to be made was false.  No such loan was ever made or intended to be made by the parties to that loan document.  Mr Battistin signed the document on behalf of Battistin Builders and returned it to Mr Dunne on the same day.
  3. [130]
    In about July 2016, Mr Dunne had a conversation with Mr Stansfield.  Mr Dunne said that he was acting in the purchase of Savannah and that NGI was going to pay Mr Dunne $250,000, but would only do so through a licensed agent.  Mr Stansfield was a real estate agent and operated a real estate business through his company Lection, which traded as ‘Property Brisbane’.  He requested Mr Stansfield to “invoice” NGI for the $250,000 payment and then transfer the funds after receipt to Mr Dunne.  Mr Stansfield agreed.  The explanation given by Mr Dunne to Mr Stansfield was false.  Mrs Goodridge on behalf of NGI had not intended or agreed to pay Mr Dunne or one of his companies the $250,000, whether through a real estate business or otherwise.
  1. [131]
    Mr Stansfield rendered an invoice, dated 8 July 2016, to NGI from his company Lection, in the sum of $250,000.00.  That invoice described the services as “professional negotiation and consulting fees for the purchase of the property and business known as Savannah Lifestyle Communities”.  He sent the invoice by email to Mr Dunne that day.  In truth, Lection had never been engaged by NGI or Mrs Goodridge to act as NGI’s or Mrs Goodridge’s real estate agent in the purchase of Savannah.  Indeed, Lection had not been purportedly engaged by anyone (including Mr Dunne) to act on NGI’s behalf in the purchase of Savannah.  The description on the invoice was accordingly false, and no commission was payable at law to Lection by Mrs Goodridge or NGI for the sale of Savannah.
  2. [132]
    On 6 July 2016, Mr Dunne sent Mrs Goodridge and Mr Gelski an email:

“Hi Nora and Richard please find attached a statement of costs to be paid at settlement. There is no significant variance from the settlement costs I email [sic] through previously. We expect total costs at settlement after adjustments to be approximately $850,000 therefore Nora if you could please transfer $10.9 million to the trust account of Thomson Geer (see below) that will be more than necessary and the surplus will be transferred back to you immediately after settlement with the final Settlement statement for your records.

Also Nora could you please authorise Thomson Geer by return email to make the necessary payments at settlement. If you have any questions please do not hesitate to call me. Nev.” 

  1. [133]
    The email attached a draft settlement statement that recorded payments to be made by NGI as follows:
    1. Savannah Resorts $9,000,000.00;
    2. Battistin Builders $1,000,000.00;
    3. Stamp Duty $498,250.00;
    4. Due diligence (Sanako) $125,000.00;
    5. Legals Thomson Geer TBA; and
    6. Purchase agent’s fee Warwich [sic] Stansfield Real Estate $250,000.00.
  2. [134]
    Mrs Goodridge emailed Chris O'Shea at Thomson Geer later that day, copying her bank manager, and stated that she authorised the “necessary payments at settlement” and that the $10.9 million would be paid to the trust account of Thomson Geer on  11 July 2016. 
  3. [135]
    On 7 July 2016, Mr Dunne emailed Mrs Goodridge and requested her to sign a second authority for Mr Dunne to instruct Thomson Geer in relation to “construction matters with Savannah”.  It was an authority given by Mrs Goodridge, on behalf of NGI, in favour of Mr Dunne and directed to Thomson Geer Lawyers.  It authorised Mr Dunne personally to give instructions on all matters relating to the building contract that NGI “had entered into, or proposes to enter into”, with Battistin Builders for the future construction of relocatable homes on Savannah.  
  4. [136]
    He also requested Mrs Goodridge to sign a letter of engagement with Thomson Geer for legal services in relation to the acquisition of Savannah and a proposed building contract with Battistin Builders.  The letter of engagement expressly contemplated the second authority being signed.  The email attached unsigned versions of each document.  The letter of engagement was dated 22 June 2016.
  1. [137]
    Later that day, Mrs Goodridge executed the second authority in favour of Mr Dunne and the letter of engagement with Thomson Geer.
  2. [138]
    A file note made by Roberta Bozzoli of Thomson Geer Lawyers on 8 July 2016 records that Mr Dunne was advised that the payment to Battistin Builders by NGI at settlement would be a taxable supply subject to GST.  Following that advice, the amount payable by NGI at settlement to Battistin Builders was revised from  $1 million to $1.1 million.
  3. [139]
    On 11 July 2016, Mrs Goodridge, for NGI, executed a document entitled “Authority to disburse trust funds”, which had been provided by Thomson Geer. The document itemised the exact payments to be made at settlement, relevantly as follows:
    1. $4,488,839.00 for the business of Savannah;
    2. $4,443,535.84 for the land on which Savannah was situated;
    3. $1,100,000.00 (incl GST) to Battistin Builders;
    4. $498,025.00 in stamp duty;
    5. $125,000.00 to Sanako;
    6. $250,000.00 to Lection;
    7. $14,606.00 to the Department of Natural Resources and Mines;
    8. Total = $10,920,005.84
  4. [140]
    The funds arrived in the Trust account of Thomson Geer, and settlement occurred, on 11 July 2016.
  5. [141]
    On 12 July 2016, Mr Stansfield collected a cheque in the sum of $250,000 from the offices of Thomson Geer.  Mr Dunne sent Mr Stansfield an invoice from MP01 later that day.  The invoice issued by MP01 was in the amount of $225,000.  Mr Dunne told Mr Stansfield that the $25,000 which was reserved to Mr Stansfield recognised that “you’ve been helping me out”.  Mr Stansfield offered at this time to pay $12,500 to Michael Dunne.  Mr Stansfield told Michael Dunne at the time words to the effect: “I wouldn’t have got this money unless you’d introduced me to him.  So, if you give me an invoice for half the amount, I will give half to you.”  Shortly thereafter, Michael Dunne invoiced Mr Stansfield for the sum of $12,500 (inclusive of GST) for “consulting fees”. Mr Stansfield caused $12,500 to be paid to Michael Dunne, thereby leaving only $12,500 in Lection’s hands.
  6. [142]
    On 12 July 2016 at 9.21am, Mr Dunne sent an invoice to Roberta Bozzoli at Thomson Geer, purportedly issued by Battistin Builders, in the amount of $1.1 million. That invoice was a fabrication.  Mr Battistin exhibited to one of his affidavits an example of what Battistin Builders’ actual invoices looked like.  The invoice sent by Mr Dunne on this occasion bore no resemblance to the example invoice which Mr Battistin exhibited.  I accept Mr Battistin’s evidence that the invoice sent by Mr Dunne on this occasion was not created by Battistin Builders.  The available and compelling inference is that it was created by Mr Dunne (“First Fake Battistin Invoice”).  That available inference can be more readily drawn in light of the failure of Mr Dunne to give evidence on this issue.
  7. [143]
    Ms Bozzoli responded to Mr Dunne’s email that attached the First Fake Battistin Invoice and identified deficiencies in that invoice.  On 12 July 2016 at 8.29 pm, Mr Dunne replied to Ms Bozzoli and attached a second version of an invoice purportedly issued by Battistin Builders to NGI in the amount of $1.1 million (including GST).  That second invoice was also a fabrication.  Again, it bore no resemblance to the example invoice which Mr Battistin had exhibited.  I accept Mr Battistin’s evidence that this second invoice sent by Mr Dunne was not created by Battistin Builders.  The available and compelling inference is that it was created by Mr Dunne (“Second Fake Battistin Invoice”).  That available inference is more readily able to be drawn in light of the failure of Mr Dunne to give evidence on this issue.
  8. [144]
    On 12 July 2016, $1.1 million was credited by Thomson Geer to a bank account held by Battistin Builders. 
  9. [145]
    On 13 July 2016, Mr Dunne called and sent text messages to Mr Battistin multiple times demanding that Mr Battistin immediately remit the $1.1 million to his account.
  10. [146]
    Mr Battistin, on behalf of Battistin Builders, made payment at Mr Dunne’s direction later that day.  Mr Battistin made a withdrawal of $1.1 million from the Battistin Builders account at the Mareeba branch of the Westpac Bank and deposited that sum into the bank account designated by Mr Dunne at 12.35 pm.  The account to which Mr Dunne directed payment was in the name of Mr Dunne’s company Etarip Pty Ltd (now in liquidation), the former third defendant in this proceeding. 
  11. [147]
    Mrs Goodridge and Mr Gelski had no knowledge of the ultimate receipt by Mr Dunne’s companies of the payments made by NGI to Lection and Battistin Builders.  Mrs Goodridge, on behalf of NGI, relied on Mr Dunne to calculate and direct NGI in respect of the settlement figures. 
  12. [148]
    Mrs Goodridge’s evidence (which I accept) is that, if she had known the $1.1 million payment to Battistin Builders was going to be on paid to Mr Dunne (or any company of his), or that Battistin Builders was not providing NGI and Savannah with fast-track building for that payment, she would not have agreed to pay the money.  More specifically, she says (and I accept) that she would not have:
    1. deposited the full $10.9 million into Thomson Geer’s Trust account (and specifically the $1.1 million of that sum being for the Battistin Builders payment); or
    2. executed the construction contract with Battistin Builders and sent it to Mr Dunne; or
    3. authorised Thomson Geer to pay the $1.1 million to Battistin Builders at settlement.
  13. [149]
    Mrs Goodridge’s evidence (which I accept) is that if she had known that:
    1. NGI was under no legal obligation to pay $250,000 to Lection or its director, Mr Stansfield; or
    2. those parties had not, in fact, provided any services to NGI; or 
    3. any of the $250,000 would be received by, or directed to the benefit of, Mr Dunne (or one of his companies), she would not have deposited the full $10.9 million (and specifically the $250,000 of that sum being for the Lection payment) into Thomson Geer’s trust account, or authorised Thomson Geer to pay $250,000 to Lection at settlement.

Post-acquisition of Savannah

  1. [150]
    Sanako commenced activities in managing Savannah immediately after NGI acquired Savannah.  Sanako, under Mr Dunne’s control and personal involvement, undertook those activities in a broadly autonomous way and with no effective oversight from Mrs Goodridge or anyone else on behalf of NGI.  
  2. [151]
    On the evidence led at trial and by reference to the pleaded case, I conclude that the contract for the management of Savannah was with Sanako, and not with Mr Dunne personally.  Paragraph 15(a) of the Third Amended Statement of Claim (as particularised) pleads that the express management and development contractual obligation is to be found in the 23 June 2016 email exchange between Mr Gelski and Mr Dunne.  That email exchange has been set out previously.  The email exchange is only consistent with Sanako, and not Mr Dunne personally, being the contracting entity for the delivery of the post-settlement management services.  If there was ambiguity on the matter (which I do not accept), the course of the prior negotiation is consistent with this conclusion.  Whilst Mr Dunne had initially spoken in terms of his providing those management services, that later changed, in the course of precontractual discussions to Sanako providing the services. 
  3. [152]
    Whilst a more formal written management agreement was contemplated to be entered into in the future, I find that a contract for management had come into being in terms of the email exchange, at least by the date management commenced after the settlement of Savannah. 
  4. [153]
    On 2 November 2017, Newport, previously the sixth defendant in this proceeding, was incorporated.  Mr Dunne was at all material times the shadow or de facto director of Newport.  This is admitted in the defence.
  5. [154]
    On 6 November 2017, Mr Dunne sent to Mrs Goodridge an invoice dated 3 November 2017, issued by either Newport or Landac (another one of Mr Dunne’s companies) for $409,075.59 (including GST).  The invoice was described in a covering email from Mr Dunne as being for “stage 3 civils”.  NGI paid the invoice on 7 November 2017. 
  6. [155]
    Mr Dunne later sent to Mrs Goodridge four further invoices addressed to NGI from either Newport or Landac which were paid as follows:
    1. sent on 20 November 2017, in the sum of $409,075.59 (including GST), with NGI paying the invoice on 24 November 2017; 
    2. sent on 12 December 2017, in the sum of $318,760.20 (including GST), with NGI paying the invoice on 18 December 2017;
    3. sent on 6 February 2018, in the sum of $493,482.00 (including GST), with NGI paying the invoice on 13 February 2018; and
    4. sent on 26 March 2018, in the sum of $647,900.00 (including GST), with NGI paying the invoice on 3 April 2018, (together, with the first Newport invoice, collectively “the Newport Invoices”).
  1. [156]
    Each of the five Newport Invoices contained a description of specific civil works which were purportedly performed and for which each invoice amount was expressed to be issued.  Each invoice was sent by Mr Dunne.  Each payment was then authorised by Mrs Goodridge on NGI’s behalf.
  1. [157]
    Mr Dunne never disclosed to Mrs Goodridge, on behalf of NGI, the following matters, which are admitted in the defence:
    1. Mr Dunne was the sole director and shareholder of Landac;
    2. Mr Dunne exerted control over Newport; 
    3. Mr Dunne’s girlfriend, Angeline Bassi (also known as Ange Bassing), the previous fifth defendant in this proceeding, was the director of Newport; and
    4. the bank account details to which NGI was making payments under the Newport Invoices were for an account held by Mr Dunne’s company, Landac.
  2. [158]
    Further, while the Newport Invoices included amounts purportedly allocated to GST, neither Newport nor Landac were registered for GST.  The Newport Invoices each contained ABNs.  Those ABNs were false and invalid for the purpose of the purported supplies of work to which they were supposedly linked, and for which a GST amount was included as part of the total invoiced amount. 
  3. [159]
    It is admitted in the defence that none of the works as described in the Newport Invoices had ever been provided to NGI at Savannah by Newport or Landac.  Rather, the defendants by their pleading, in addition to their relevant admissions, alleged that the descriptions in the works sections of the Newport Invoices were recorded in error. The defence goes on to allege that the payments of the Newport Invoices were in respect of some alleged oral agreement by NGI to pay 10 per cent of the total construction costs to a company nominated by Mr Dunne.  No evidence of such an agreement was led at trial.  Mrs Goodridge and Mr Gelski denied on oath that any such agreement ever existed.  I accept their evidence.
  4. [160]
    Mrs Goodridge in authorising, on behalf of NGI, the making of the payments on each of the invoices, relied on Mr Dunne for her understanding that the Newport Invoices were due and payable.
  5. [161]
    Mrs Goodridge’s evidence (which I accept) is that she would not have caused NGI to pay the Newport Invoices if she had known any of the following in the context of what occurred:
    1. that the works described in the Newport Invoices had not been carried out; 
    2. that Newport or Landac were controlled by Mr Dunne;
    3. that Mr Dunne’s girlfriend was the director of Newport;
    4. that Mr Dunne caused the Newport Invoices to be rendered (in the sense of having them created);
    5. that the bank account referred to in the Newport Invoices was owned by Landac;
    6. that the ABNs on the Newport Invoices were false; or
    7. that the company that had rendered the Newport Invoices was not registered for GST.
  6. [162]
    It seems that well after the settlement of Savannah, the Australian Taxation Office carried out an investigation or audit of, at least, certain payments made by NGI in relation to Savannah.  As a result, Mrs Goodridge sought certain information from Mr Dunne, including financial documentation.
  7. [163]
    On 8 August 2018, Mr Dunne provided, at NGI’s request, what purported to be an invoice from Lection in respect of the $250,000 payment made to Lection on 11 July 2016.  That invoice was a fabrication and had not been created by Mr Stansfield or Lection (“Fake Stansfield Invoice”).  Mr Stansfield gave evidence to this effect. I accept Mr Stansfield’s evidence on this issue. The available and compelling inference is that Mr Dunne had fabricated the Fake Stansfield Invoice.  That available inference is more readily able to be drawn in light of the failure of Mr Dunne to give evidence on this issue.
  8. [164]
    On 17 August 2018, Mr Dunne provided, at NGI’s request, what purported to be an invoice from Battistin Builders dated 16 June 2016 in respect of the $1.1 million payment made to Battistin Builders on 11 July 2016. That invoice was a further fabrication and had not been created by Mr Battistin or Battistin Builders (“Third Fake Battistin Invoice”).  Whilst this invoice has the same layout as the example invoice exhibited by Mr Battistin in one of his affidavits, the date 16 June 2016 immediately makes no sense in terms of the timeline of the factual findings I have made above.  As part of Mr Battistin’s affidavit material, he exhibits the first invoice that Battistin Builders issued to NGI.  This first invoice was number NGI_001 and was issued on 6 September 2016.  I accept Mr Battistin’s direct evidence that the Third Fake Battistin Invoice sent by Mr Dunne on 17 August 2018 was not created by Battistin Builders.  I accept Mr Battistin’s direct evidence that he did not issue or cause Battistin Builders to issue any invoice to NGI as part of the Savannah transaction settlement, whether for $1.1 million or for any other sum.  The available and compelling inference is that Mr Dunne had fabricated the Third Fake Battistin Invoice.  That available inference is more readily able to be drawn in light of the failure of Mr Dunne to give evidence on this issue.

Legal Principles

Fiduciary duty claim

  1. [165]
    The critical feature of a fiduciary relationship is that the fiduciary undertakes to act for or on behalf of, or in the interests of, another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense. Fiduciary duties arise when, in acting for another, the circumstances give rise to a relationship of trust and confidence.
  2. [166]
    A person may undertake the role of a fiduciary by an arrangement less formal than a contract. A limited fiduciary role may be expanded in scope by reason of the subsequent performance of the role.
  3. [167]
    A fiduciary owes duties to the other party within the fiduciary relationship: (a) not to gain an unauthorised benefit from the relationship; and (b) not to be in a position of conflict.
  4. [168]
    The fiduciary may not, without informed consent, promote its personal interests by making or pursuing a gain in circumstances where there is a conflict, or a real or substantial possibility of a conflict, between its personal interests and the interests of the person to whom the duty is owed.
  5. [169]
    The existence and scope of an individual’s fiduciary duties can be influenced by the terms of any underlying contract between the parties.  However, a fiduciary relationship cannot be superimposed upon a contract in a manner that alters the contract’s operation.
  6. [170]
    Not all agents are fiduciaries, although in certain circumstances the nature and scope of an agent’s functions will be consistent with, and support the existence of a fiduciary relationship.  

Accessorial liability for breaches of fiduciary duty

  1. [171]
    A person is liable under the first limb of Barnes v Addy[18] if that person receives trust property with notice that the property was being dealt with in a manner that involved a breach of trust or fiduciary duty.
  2. [172]
    The relevant state of mind (actual or imputed) is to be determined at the time of the receipt of the payments.
  3. [173]
    Where the advantage of a fiduciary’s wrongdoing accrues to a third party (whether as a knowing recipient or an assistant), and the third party is the alter ego/nominee (usually corporate) of the fiduciary, its liabilities will be joint and several with that of the fiduciary.[19]
  4. [174]
    Where a director of a third-party recipient company has knowledge of a fiduciary’s wrongdoing, that knowledge can be imputed to the company.

Misleading and Deceptive Conduct and liability from being knowingly concerned in a s 18 contravention

  1. [175]
    Conduct is misleading or deceptive within the meaning of s 18 of the ACLQ if it leads or has a tendency to lead into error.
  2. [176]
    It is for the Court to determine objectively as a matter of fact whether the conduct complained of is misleading or deceptive, or likely to mislead or deceive.
  3. [177]
    There will then need to be an inquiry as to whether the loss was suffered because of the conduct.
  4. [178]
    There must be a sufficient causal link between the misleading and deceptive conduct and the error on the part of the person exposed to it.  However, the conduct does not need to be the sole cause of the loss.
  5. [179]
    A claimant that has suffered loss or damage because of the conduct of another person in contravention of s 18 of the ACLQ may recover the amount of loss or damage from that person or any other person involved in the contravention.
  6. [180]
    A person is involved in a contravention under s 18 of the ACLQ if they, inter alia, have been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention.  There has to be a proved connection between the conduct of the person with that of the primary contravenor.
  7. [181]
    The concepts of “knowingly concerned” and “party to” carry with them the requirement that the person must appreciate that the conduct of the primary contravenor is misleading and deceptive.  It is for this reason that the concepts of “knowingly concerned” and “party to” have at times been referred to as akin to fraud. That is of course not to transpose the element of deceit onto the statutory elements.

MP01 - Barnes v Addy Claim

The initial fiduciary duty owed by Mr Dunne to NGI

  1. [182]
    Mr Dunne was a fiduciary of NGI in relation to the acquisition of Savannah.  Mr Dunne stated from the very earliest stage that he would manage the acquisition of Savannah on behalf of Mrs Goodridge and, consequently, NGI as the special purpose vehicle which was later incorporated for the purposes of the acquisition.  Mr Dunne then undertook this role and inhabited a position which involved NGI’s trust and confidence.  The tasks to be undertaken were extremely broad and involved the giving of instructions to NGI’s solicitors on almost every aspect of the transaction.  
  2. [183]
    Mr Dunne was also the agent of NGI, although it was not an agency created by the contract as pleaded in the Third Amended Statement of Claim.  The relevant plea at paragraph 15(a) alleged, inter alia, that Mr Dunne had a contractual obligation to arrange the purchase of Savannah for and on behalf of NGI.  The particulars to this allegation identified that this express contractual term was found in the 23 June 2016 email exchange between Mr Gelski and Mr Dunne.  I have set out that 23 June 2016 email exchange previously.  There is no express term in that exchange to the effect pleaded.  
  3. [184]
    A fiduciary duty does not require a contract in order for it to arise.  The absence of a contract here is no impediment to the existence of the fiduciary relationship which I have found.  Equally, an agency can arise in the absence of contract.[20] Whilst not every agency arrangement is accompanied by a fiduciary relationship, the breadth of the agency and the absence of contractual restraint on the obligations owed contribute to a fiduciary relationship existing here.  
  4. [185]
    Relevantly, the fiduciary relationship was established by at least the following:
    1. during the meeting between Mr Dunne and Mrs Goodridge in April or May 2016, Mr Dunne stated that he would acquire Savannah on Mrs Goodridge’s behalf and prepare the contracts associated with the sale;
    2. by force of the first written authority executed by Mrs Goodridge (at Mr Dunne’s request), Mr Dunne was authorised to instruct Thomson Geer on all matters in relation to the acquisition of Savannah; 
    3. Mr Dunne, in fact, instructed Thomson Geer in relation to the acquisition of Savannah and thereby acted as Mrs Goodridge’s, and later, NGI’s, agent;
    4. Mr Dunne was uniquely positioned within this broad agency arrangement to have knowledge of matters which were likely to be central to NGI’s interests, for example, whether and what services had been provided prior to the settlement of the transaction, or what the underlying purposes were for a particular contract which was sought to be entered into in aid of the transaction;
    5. upon NGI’s incorporation and assumption of the role as the special purpose vehicle for the Savannah acquisition, the prior circumstances which were relevant to a fiduciary duty to Mrs Goodridge became relevant to a fiduciary duty to NGI;
    6. Mr Dunne sent NGI by email a draft settlement statement of his creation on  6 July 2016 for the settlement of Savannah;
    7. Mr Dunne requested by email that NGI transfer $10.9 million to the Trust account of Thomson Geer for the purposes of settlement in accordance with amounts he had promulgated;
    8. Mr Dunne requested by email that NGI authorise Thomson Geer to release  $10.9 million at the settlement of Savannah in accordance with the settlement statement Mr Dunne had prepared;
    9. Mr Dunne requested and obtained from Mrs Goodridge, on behalf of NGI, a second written authority to instruct Thomson Geer in respect of the construction contract(s) with Battistin Builders which he was promulgating;
    10. Mr Dunne, on behalf of NGI, was involved in the preparation of a suite of contracts associated with the Savannah transaction, in particular, this included the construction contract with Battistin Builders; and
    11. Mr Dunne was effectively the principal point of contact between NGI on the one part, and a series of third-party entities on the other part for the purported purpose of bringing about the transaction, relevantly, including Battistin Builders and Lection.
  5. [186]
    Mr Dunne thereby exercised power and discretion in a way that affected NGI’s legal rights.  He instructed Thomson Geer on NGI’s behalf.  He acted in a broad and general fashion in arranging the purchase of Savannah (including having prepared or caused to be prepared the construction contract with Battistin Builders).  He was entrusted on behalf of NGI with the task of determining what funds were to be paid at settlement and to whom.  He positioned himself as an agent with unique knowledge of transactional matters which directly affected NGI’s financial interests.  NGI made payments in accordance with Mr Dunne’s recommendations.  Mrs Goodridge (and thereby NGI) had placed him in a position of trust and confidence.
  6. [187]
    The existence of this initial fiduciary duty is to be contrasted to the alleged fiduciary duty which is said to be owed by Mr Dunne after settlement in respect of the management of NGI.
  7. [188]
    I have previously found that the contract for the management of Savannah was with Sanako.  I have no doubt that Sanako equally owed NGI fiduciary duties in its role as manager.
  8. [189]
    Relevantly, the fiduciary relationship with Sanako was established by at least the following:
    1. the breadth of the management obligation recorded in the 23 June 2016 email exchange, which provided that “Sanako manages the Village for 48k p.a. for the next three years”;
    2. that management role involved managing the day-to-day business of Savannah, managing construction and development at Savannah, maintaining the land, facilities and utilities at Savannah, and marketing the Savannah business;
    3. after settlement, Sanako did manage Savannah in this broad way on behalf of NGI;
    4. Sanako was acting as the agent of NGI and was, amongst other things, incurring liabilities in the name of NGI with third parties, via its position as agent; and
    5. Mrs Goodridge and NGI did not supervise Sanako in relation to any of the tasks it was performing in that contractual management role, and, as Mrs Goodridge stated in her evidence, she simply trusted that those tasks were being carried out appropriately.
  9. [190]
    Sanako thereby exercised power and discretion in a way that affected NGI’s legal rights.  Sanako acted in a broad and general fashion in undertaking the management tasks previously referred to, which covered a broad spectrum, including the incurring of liabilities in NGI’s name.  Sanako was entrusted, as agent for NGI, with those broad management tasks.  Sanako positioned itself as an agent with unique knowledge of the management tasks which directly affected NGI’s financial interests.  NGI made payment in accordance with Sanako’s directions.  NGI had therefore placed Sanako in a position of trust and confidence which was sufficient to give rise to fiduciary duties beyond the contractual obligations which Sanako owed to NGI.
  10. [191]
    I find that the fiduciary relationship which existed was between NGI and Sanako.  I find that there was not a separate fiduciary relationship which existed between NGI and Mr Dunne in relation to the performance of the management obligations.
  11. [192]
    Mr Dunne was, at that stage, a representative of and in control of Sanako, but he did not owe individual contractual obligations or individual fiduciary duties to NGI in respect of the management duties.
  12. [193]
    It is necessary to make this finding because it is directly relevant to the finding that is being sought by NGI that the misleading and deceptive conduct causes of action relating to the Newport Payments are not provable debts.
  13. [194]
    In finding that this primary fiduciary relationship did not exist between NGI and Mr Dunne in respect of the management tasks undertaken by Sanako, it should not be understood that I am indicating that there will be no provable claims against Mr Dunne in respect of breaches of the fiduciary duties which were owed by Sanako to NGI.  Given the findings that I have made in this proceeding, there may well be debts provable in the bankrupt estate of Mr Dunne if it can be shown that any proceeds of the Newport Payments were received by Mr Dunne or applied to the use of Mr Dunne directly.  Such circumstances may well give rise to an equitable debt which the authorities have recognised is a provable debt pursuant to s 82(1) of the Bankruptcy Act.  Further, there may be an ability to trace into assets held by the bankrupt estate of Mr Dunne any monies, which represent in whole or in part, the proceeds of the Newport repayments.

Mr Dunne’s initial breaches of fiduciary duties

  1. [195]
    It is necessary to make findings in respect of potential breaches by Mr Dunne of his fiduciary duties to NGI in respect of the Lection payment.  This is because those findings underpin part of the relief sought against MP01. 
  2. [196]
    Mr Dunne breached his fiduciary duties to NGI by making the secret arrangement with Mr Stansfield and then procuring NGI to make the Lection Payment of $250,000 at the settlement of Savannah in circumstances where:
    1. NGI received no benefit for the payment;
    2. NGI suffered a loss of $250,000; and
    3. Mr Dunne, indirectly through MP01, gained a benefit by the payment of the $225,000.
  3. [197]
    In procuring the Lection Payment, Mr Dunne preferred his own interests to those of NGI and gained an indirect benefit not authorised by NGI. Mr Dunne did not have NGI’s consent, let alone informed consent, to the indirect benefit constituted by the Lection Payment.
  4. [198]
    By the manner in which Mr Dunne procured the Lection Payment, the compelling and available inference on the evidence is that Mr Dunne acted intentionally, for his own indirect benefit, and in the knowledge that this benefit would come at NGI’s detrimental expense.  That available inference can more readily be drawn in light of the failure of Mr Dunne to give evidence on this matter in circumstances where he was uniquely placed to give that evidence.
  5. [199]
    Mr Dunne accordingly breached his fiduciary duties:
    1. not to place himself in a position where he was in conflict between the fiduciary duty to act in the best interests of NGI and his own interests, including his indirect interests via MP01, being a company he controlled; and
    2. not to gain an unauthorised benefit from the fiduciary relationship by the benefiting of MP01, which was a company he controlled. 

MP01 received property on notice

  1. [200]
    The finding of the fiduciary relationship and the breach by Mr Dunne of fiduciary duties provides the foundation for the equitable relief sought from MP01.
  2. [201]
    The Lection Payment was first paid by NGI at the direction of its fiduciary, Mr Dunne, into the Trust account of Thomson Geer.
  3. [202]
    Mr Dunne breached his fiduciary duties by causing Mrs Goodridge, on behalf of NGI, to make the payment to Lection, who at that time received the money as a volunteer, having provided no benefit or consideration for it.
  4. [203]
    By the pre-existing secret arrangement[21] that Mr Dunne had with Mr Stansfield, MP01 received most of the Lection Payment from Lection, being the sum of $225,000.  MP01 was fixed at all times with the knowledge of Mr Dunne by reason of the fact that Mr Dunne was its controlling mind in respect of all aspects of the request by MP01 for payment from Lection, and the ultimate receipt of this payment.
  5. [204]
    MP01 received NGI’s traceable property pursuant to breaches of fiduciary duties by Mr Dunne.  MP01 was a knowing recipient of trust funds within the meaning of the first limb of Barnes v Addy.[22] MP01 is, accordingly, amenable to an order for equitable compensation in the sum of $225,000.  NGI is entitled to that relief.

Mr Dunne - Misleading and Deceptive Conduct Claim

Contravention of s 18 of the ACLQ by Mr Dunne

  1. [205]
    I have concluded that the misleading and deceptive conduct causes of action against Mr Dunne that concern the Battistin Payment and the Lection Payment are in respect of provable debts.  Accordingly, the parts of the proceeding which concern those misleading and deceptive conduct causes of action in respect pf the Battistin Payment and the Lection Payment are stayed by reason of s 58(3) of the Bankruptcy Act.
  2. [206]
    I have concluded that the misleading and deceptive causes of action to the extent that they concern the Newport Payments are not provable debts and accordingly those parts of the proceeding are not stayed.
  3. [207]
    My reasoning for these conclusions is set out later in these reasons.
  4. [208]
    Despite the stays identified above, I am nonetheless required to make findings as to the misleading and deceptive conduct of Mr Dunne concerning the Lection Payment for the purpose of the cause of action against MP01.  It is on that basis that I make the findings concerning the Lection Payment under this sub-heading.
  5. [209]
    In respect of the Lection Payment, Mr Dunne:
    1. sent NGI an email on 6 July 2016 attaching a draft settlement statement that recorded a liability of $250,000 owed by NGI to Lection at settlement; 
    2. by the email sent on 6 July 2016, requested NGI to pay the sum of  $10.9 million to Thomson Geer which included payment of the $250,000 to Lection; 
    3. by the email sent on 6 July 2016, requested NGI to authorise the release of the $10.9 million at the settlement of Savannah, which included the payment of the $250,000 to Lection; and (d) omitted to disclose to NGI:
      1. that there had never been a legal obligation on anybody to pay Lection the $250,000 in respect of the Savannah transaction, as was known by Mr Dunne; and
      2. that the true purpose of the payment was for the immediate redirection of the bulk of the sum to a company controlled by Mr Dunne, as was known by Mr Dunne. 
  6. [210]
    In respect of the Newport Payments:
    1. Mr Dunne personally caused to be prepared and then sent the Newport Invoices to NGI, and requested NGI to make payments in accordance with the Newport Invoices; and
    2. omitted to disclose to NGI that there was no legal obligation to pay the Newport Invoices as none of the works described in them had been undertaken and delivered to NGI, as was known by Mr Dunne.
  7. [211]
    All of the above conduct was in trade or commerce.
  8. [212]
    Mr Dunne’s conduct in relation to the Lection Payment was misleading and deceptive. It falsely conveyed to Mrs Goodridge and, thereby, NGI that:
    1. NGI had received a service from Lection;
    2. the purpose of the Lection Payment was to pay Lection for the service NGI had received from Lection;
    3. NGI was under a legal obligation to pay the Lection Payment to Lection at the settlement of Savannah; and
    4. the Lection Payment would be paid solely for the benefit of Lection for the purpose of discharging a legal obligation, and not, by necessary implication, for a separate purpose of benefiting someone else, and in particular a company controlled by Mr Dunne.
  1. [213]
    Mr Dunne’s conduct in relation to the Newport Payments was misleading and deceptive. It falsely conveyed to Mrs Goodridge and, thereby, NGI that:
  1. the works described in the Newport invoices had in fact been carried out by Newport (or, alternatively, Landac) at Savannah for NGI’s benefit;
  2. the Newport Payments were in fact payable to Newport (or, alternatively, Landac) for the works provided by Newport (or, alternatively, Landac) to NGI;
  3. NGI was under a legal obligation to pay the Newport Payments;
  4. Mr Dunne was not associated with Newport or Landac in terms of having control of them; and
  5. the Newport Payments would be paid solely for the purpose of discharging legal obligations, and, by necessary implication, not for a separate purpose of benefiting companies controlled by Mr Dunne which had not provided the works described in the Newport Invoices.
  1. [214]
    In respect of each impugned payment, NGI paid the monies because Mrs Goodridge relied upon the matters falsely conveyed by the misleading or deceptive conduct. That was evidently Mr Dunne’s purpose in engaging in the conduct. The logical and compelling inference as to Mr Dunne’s intentions when he engaged in the various forms of conduct set out above is that he intended to mislead and deceive NGI into making the Lection Payment and Newport Payments in order to obtain an indirect financial benefit for himself. This available inference is more readily able to be drawn due to Mr Dunne not being called as a witness in this proceeding in circumstances where he was in a position to give evidence on those issues.
  2. [215]
    Because of the misleading and deceptive conduct of Mr Dunne set out above:
    1. NGI originally suffered a loss of $250,000 in respect of the Lection Payment; and
    2. NGI has suffered a loss of $2,278,293.38 in respect of the Newport Payments.
  3. [216]
    Mr Dunne is amenable to an order pursuant to s 236 of the ACLQ for damages in the sum of $2,278,293.38 in respect of the Newport Payments.

MP01 - knowingly concerned claim pursuant to the ACLQ

  1. [217]
    The starting point for MP01’s liability is the findings of contravention of s 18 of the ACLQ by the misleading and deceptive conduct of Mr Dunne in respect of the Lection Payment, and the further finding of the original loss suffered by NGI as a consequence.
  2. [218]
    MP01 is imputed with Mr Dunne’s knowledge by reason of Mr Dunne being its controlling mind in relation to every aspect of the Lection Payment. 
  3. [219]
    MP01 was knowingly concerned in the contravention by Mr Dunne because it was MP01 that was the vehicle that Mr Dunne used to receive the monies from Lection.  MP01’s role was a necessary element of the secret arrangement that Mr Dunne made with Mr Stansfield.  
  4. [220]
    I find that Mr Dunne knew at all times of the misleading and deceptive conduct set out above which concerned the Lection Payment, and he knew that such conduct was misleading and deceptive for the reasons set out above.  As a result of Mr Dunne’s knowledge, MP01 also had this knowledge at all times.  
  5. [221]
    I find that it may be inferred that MP01 had this knowledge prior to settlement of the Savannah transaction and that MP01 was the intended vehicle for receipt of the proceeds from the Lection Payment prior to settlement of Savannah.  This inference is available by reason of:
    1. the fact that the Lection Payment had been planned to be secretly funnelled to somewhere associated with Mr Dunne for some time before settlement; 
    2. for each of the Lection Payment, the Battistin Payment and the Newport Payments, Mr Dunne used corporate vehicles which he controlled as the destination for the funnelling; and 
    3. MP01 issued its invoice to Lection very shortly after the settlement.  
  6. [222]
    This available inference is more readily able to be drawn due to Mr Dunne not being called as a witness in this proceeding in circumstances where he was in a position to give evidence on this issue.
  7. [223]
    Unlike the knowing receipt case, the liability of MP01 is not limited by the amount that MP01 received. It was a knowing participant in the contravention, and accordingly, it is liable for the full loss caused by the contravention. 
  8. [224]
    The award for compensation should however be reduced by an amount of $12,500. It emerged during the trial that Mr Stansfield and Lection had agreed by a settlement agreement to payment of an amount of $12,500 to NGI and Mrs Goodridge.  Subrecital L(c) of the settlement agreement recorded that the Stansfield Parties (which were Lection and Mr Stansfield) identified that if they were liable (which they denied), it was only to the extent of $12,500. 
  9. [225]
    Whilst direct evidence of the repayment of this sum was not led, counsel for NGI accepted that it was open for me to act on the inference that the payment had been made. I intend to do that. It is the obvious inference given that Mr Stansfield and Lection entered into the settlement agreement to seek, inter alia, to protect themselves from the civil liability which was threatened by NGI.  I find that the payment was made on 6 July 2020 as anticipated by the settlement agreement.  
  10. [226]
    Further, I do not accept that the $12,500 ought to be notionally attributed to Mrs Goodridge’s and NGI’s unidentified costs (including legal costs) to the date of settlement.  The settlement agreement did not appropriate the payment for costs and it ought to be construed as a payment attributable to compensation for the amount received by Lection.  As the $250,000 had flowed from NGI and the settlement agreement was settling all claims which NGI and Mrs Goodridge had against the Stansfield Parties, I am of the view that it is appropriate to treat the payment as compensation to NGI in respect of the Lection Payment.  That this payment was directed to Mrs Goodridge and NGI does not alter my view on this.  It could have been directed to any entity.  The substantive causes of action which were compromised for the payment would seem to be NGI’s, not Mrs Goodridge’s.  

The seventh defendant’s counterclaim

  1. [227]
    The seventh defendant’s counterclaim in this case should be dismissed.
  2. [228]
    First, it was brought by MP01 claiming loss on the basis of the breach of a contract called the “Ultimate Agreement”. There was no evidence led at trial in support of the existence of the Ultimate Agreement.  As such, it is simply a pleaded allegation, which was denied by NGI.  
  3. [229]
    Secondly, MP01 was not alleged in the counterclaim to have been a party to the Ultimate Agreement. Rather, the Ultimate Agreement was alleged to contain a term permitting Mr Dunne to nominate an entity to receive a particular component of monies said to be payable under the contract. It was not pleaded that Mr Dunne had ever in fact nominated MP01 to receive this component. Rather, it was pleaded that Mr Dunne would have (at some unidentified future time) nominated MP01 to receive these benefits.  It was then further pleaded that the Ultimate Agreement had been repudiated by NGI and that the repudiation had been accepted by MP01.  Accordingly, even on MP01’s pleaded case, no such nomination could subsequently have taken place as the contract was discharged.  Whether such a nomination would have provided standing to sue in any event is moot.
  4. [230]
    In the absence of MP01 being a party to the agreement, or some other justifiable basis to assert a right to contractual damage (say, by way of a valid assignment) the counterclaim was always misconceived as a pleaded case.
  5. [231]
    For all of these reasons the counterclaim must be dismissed.

Effect of Mr Dunne’s Bankruptcy

Introduction

  1. [232]
    As averted to earlier, on the first day of trial the Court was informed that Mr Dunne had gone into bankruptcy on the Friday of the previous week.
  2. [233]
    This development raised a number of jurisdictional issues.  These were not issues which the parties could avoid by way of consent or agreement.  If causes of actions are ones in respect of provable debts under s 82 of the Bankruptcy Act then such causes of action are mandatorily stayed in the absence of leave to proceed granted by the Federal Court of Australia.  However, this Court may make necessary findings in order to determine whether a cause of action for which judgment is sought, is or is not for a provable debt in order to determine jurisdiction to proceed.
  3. [234]
    The provisions of the Bankruptcy Act relevant to these issues are ss 82, 86 and 153.  They provide, inter alia, as follows:

“82Debts provable in bankruptcy

  1. Subject to this Division, all debts and liabilities, present or future, certain or contingent, to which a bankrupt was subject at the date of the bankruptcy, or to which he or she may become subject before his or her discharge by reason of an obligation incurred before the date of the bankruptcy, are provable in his or her bankruptcy.
  1. (1A)
    Without limiting subsection (1), debts referred to in that subsection include a debt consisting of all or part of a sum that became payable by the bankrupt under a maintenance agreement or maintenance order before the date of the bankruptcy.
  1. Demands in the nature of unliquidated damages arising otherwise than by reason of a contract, promise or breach of trust are not provable in bankruptcy.
  2. Penalties or fines imposed by a court in respect of an offence against a law, whether a law of the Commonwealth or not, are not provable in bankruptcy.

…

86Mutual credit and set-off

  1. (1)
    Subject to this section, where there have been mutual credits, mutual debts or other mutual dealings between a person who has become a bankrupt and a person claiming to prove a debt in the bankruptcy:
  1. an account shall be taken of what is due from the one party to the other in respect of those mutual dealings;
  2. the sum due from the one party shall be set off against any sum due from the other party; and
  3. only the balance of the account may be claimed in the bankruptcy, or is payable to the trustee in the bankruptcy, as the case may be.
  1. (2)
    A person is not entitled under this section to claim the benefit of a set-off if, at the time of giving credit to the person who has become a bankrupt or at the time of receiving credit from that person, he or she had notice of an available act of bankruptcy committed by that person.

…

s 153  Effect of discharge

  1. Subject to this section, where a bankrupt is discharged from a bankruptcy, the discharge operates to release him or her form all debts (including secured debts) provable in the bankruptcy, whether or not, in the case of a secured debt, the secured creditor has surrendered his or her security for the benefit of creditors generally

…

  1. The discharge of a bankrupt from a bankruptcy does not:

…

  1. (b)
    release the bankrupt from a debt incurred by means of fraud or fraudulent breach of trust to which he or she was a party or a debt of which he or she has obtained forbearance by fraud…”.
  1. [235]
    All parties submitted that the consequence of Mr Dunne going into bankruptcy was that any causes of action based on breach of contract by Mr Dunne were stayed by operation of s 58(3) of the Bankruptcy Act.  This was because such causes of action would be demands in the nature of unliquidated damages arising by reason of contract and as such would be claims for provable debts.  That position may be accepted.
  2. [236]
    A similar submission was made in respect of causes of action based on breaches of fiduciary duties owed by Mr Dunne, namely that they were stayed by operation of s 58(3) of the Bankruptcy Act.  This was said to be because such causes of action would be demands in the nature of unliquidated damages arising by reason of contract or breaches of trust, and as such they would not be caught by the exception within s 82(2) and would thus be claims for provable debts.  The correctness of this submission was less clear.  There is currently a divergence of judicial opinion on the correctness of this submission.  This is the first jurisdictional issue.
  1. [237]
    It is against this background that a second and separate jurisdictional issue emerges, namely whether the misleading and deceptive conduct causes of action under the ACLQ brought against Mr Dunne are also ones for provable debts, as demands in the nature of unliquidated damages arising by reason of contract or breaches of trust.
  2. [238]
    By reference to s 82(2) of the Bankruptcy Act, NGI contends that its misleading and deceptive conduct causes of action are not provable in the bankruptcy of Mr Dunne.  It submits they are demands in the nature of unliquidated damages arising otherwise than by reason of a contract, promise or breach of trust.  NGI submits that because it is a statutory cause of action it arises independently of contract, promise or breach of trust, and accordingly, it is not caught.
  3. [239]
    NGI’s contentions on this second issue were sought to be supported by the High Court’s decision in Coventry & Ors v Charter Pacific Corporation Limited & Anor (2005) 227 CLR 234.  
  4. [240]
    In the context of the first issue, I raised with the legal representatives the reasoning found in a number of first instance decisions which touched on whether the equitable compensation claims for breaches of fiduciary duties in this case were demands for unliquidated damages arising otherwise than by reason of contract or breach of trust.  In the context of the second issue, I also raised with the legal representatives the reasoning found in a number of first instance decisions which dealt with co-extensive duties of care in contract and tort. Further submissions were subsequently received from the parties on these issues.  

The position of Fiduciary Duty Claims: The first issue

  1. [241]
    The first jurisdictional issue concerns the operation of the words “demands in the nature of unliquidated damages arising…by reason of contract…or breach of trust” as they appear in s 82(2).  The issue concerns in particular whether a breach of fiduciary duty unaccompanied by a contract or trust is a demand arising by reason of “contract…or breach of trust”.  
  2. [242]
    NGI submitted that for all scenarios a cause of action for a breach of fiduciary duty giving rise to unliquidated damages, falls within the meaning of a demand arising by reason of a contract or breach of trust.  In making that submission, NGI relied upon the observations of Brennan CJ, Gaudron and McHugh JJ in Cummings v Claremont Petroleum NL as follows:[23]

“As a claim arising from breach of fiduciary duty is classified as a claim arising by reason of contract or breach of trust for the purposes of s 82(2) the damages for which the judgment was entered against the appellants are a provable debt in their bankruptcies.”[24]

  1. [243]
    Those observations were obiter dictum, but they were still observations made by three members of a five-member bench of the High Court.  Given the observations referred to above, it might be thought that this issue was free from uncertainty.  Regrettably, this is not the case.  There is a divergence in the subsequent judicial opinion on the matter.
  2. [244]
    Two years after Cummings, Weinberg J in Re Sharp; Ex parte Tietyens Investments Pty Ltd (in liq) [1998] FCA 1367, made obiter dictum observations which were consistent with those in Cummings.  However, it is not apparent that his Honour did so in reliance on Cummings as no reference to it appears in his Honour’s reasons.  
  3. [245]
    Re Sharp involved claims against three individuals which relevantly included breaches of statutory duty contrary to the then s 232 of the Corporations Law, and breaches of their duties under common law and in equity, as directors and fiduciaries.
  4. [246]
    His Honour found that all of the causes of action were provable debts because they had arisen by reason of a contract.  In obiter dictum his Honour stated that breaches of fiduciary duty were also provable because they were demands that had arisen by reason of “breaches of trust”.[25]
  5. [247]
    His Honour observed, inter alia, as follows: 

‘…[t]he claims which have been foreshadowed in the draft statement of claim, though demands in the nature of unliquidated damages, seem to me to be “provable debts” as defined in subs 82(1) and subs 82(2) of the [Bankruptcy] Act.  These claims are based in part at least upon the contractual relationship which existed between those individuals and those who ultimately lost their investments.  They therefore arise “by reason of a contract”.

They also appear to me to involve allegations of “breach of trust”.  In Chittick v Maxwell (1993) 188 ALR 728 Young J at 738-739 explained the operation of s 82 of the Bankruptcy Act.  His Honour emphasized the width to be accorded to the concept of a debt or liability provable in bankruptcy in that section.  His Honour’s analysis of Ex parte Llynvi Cole and Iron Co; Re Hide (1871) LR 7 Ch App 28 at 31-32 per James LJ; Britter v Sprigg (1900) 26 VLR 65 at 82… provides a cogent rationale for the modern tendency to give a narrow interpretation to the exclusionary aspect of s 82(2).  Claims of the type which are presently contemplated in the draft statement of claim involve allegations of moral turpitude and breach of fiduciary obligation on the part of each of the three prospective defendants.  There are, therefore, allegations of “breach of trust” within the meaning of that expression in s 82(2).’[26]

  1. [248]
    Some ten years after the decision in Re Sharp, Bryson AJA in Auto Group Ltd v England [2008] NSWSC 402 had cause to consider the issue of whether breaches of fiduciary duty were also demands for unliquidated damages arising by reason of “breaches of trust”.  His consideration of this issue, whilst in-depth, was nonetheless also obiter dictum.  
  1. [249]
    His Honour rejected, in part, the conclusion of Weinberg J in Re Sharp.  
  2. [250]
    The reasoning involved the identification of the varying situations in which a fiduciary duty may come into existence and operate.  In respect of fiduciary duties which existed in the absence of a trust, his Honour concluded that certain breaches of fiduciary duties would be provable debts.  These were found in at least two instances.  
  3. [251]
    The first instance was where a fiduciary misappropriates monies such that the fiduciary had received the monies.  In that particular situation, the fiduciary would be liable for restitutory relief in the nature of an equitable debt.  Such a claim would be a provable debt under s 82(1) of the Bankruptcy Act.  As it was not a claim for an unliquidated amount, s 82(2) of the Bankruptcy Act had no application.  This particular part of his Honour’s reasoning has been repeatedly cited with approval and is uncontroversial.
  4. [252]
    The second instance where a breach of a fiduciary duty gave rise to a provable debt in the absence of a trust, was where the fiduciary relationship had come about by reason of a bilateral contract.  In such a case, the cause of action giving rise to unliquidated damages for a breach of fiduciary duty, was one which arose “by reason of a contract”.  It was said that this was so even if the claim can also be placed within another category of claim.  In respect of that last proposition, his Honour relied on both Britter v Sprigg[27] and upon part of Weinberg J’s reasoning in Re Sharp.  It should be noted that this is very similar to the post-Coventry reasoning underlying the coextensive tortious and contractual duties causes of action, which I will address later in these reasons.
  5. [253]
    His Honour’s reasoning in Auto Group then turned to a different scenario, being one where the fiduciary duty did not arise out of contract.  It is here that Bryson AJA departed from Weinberg J’s reasoning.  It concerned breaches of fiduciary duties which did not involve the creation of equitable debts and did not arise out of bilateral contractual relationships.  His Honour concluded that this category did not fit within the concept of an unliquidated demand arising by reason of “contract or breach of trust”.  
  6. [254]
    As with Re Sharp, it is not apparent that Bryson AJA had been directed to the statement in Cummings relied upon by NGI in this case.  Cummings is not referred to in Auto Group.
  7. [255]
    His Honour’s reasoning involved a careful analysis of the authorities which Weinberg J had relied upon.  As a result of the analysis of the authorities, Bryson AJA concluded that none of them provided support for the proposition that the words “breach of trust” were wide enough to encompass claims which simply involved allegations of moral turpitude and breaches of fiduciary obligation.[28]  In his Honour’s opinion, the words “breach of trust” were to be construed as relating to breaches of trust in the “strict” or “correct” meaning of those words.  His Honour concluded that the words did not extend and were not appropriate to extend, according to the ordinary meaning of language, to a liability arising for breach of a fiduciary duty by a person who is not also a trustee.  It was observed that not every fiduciary was a trustee.[29]
  8. [256]
    The uncertainty which arises by reason of the inconsistent obiter dictum statements in these two first instance decisions has been recognised in a number of subsequent first instance decisions, albeit none of them have resolved the issue.
  9. [257]
    In Mercedes Holdings Pty Ltd v Walters (No 3) [2011] FCA 236, Perram J was dealing with an argument that there ought to have been an indemnity costs order because it was beyond argument that a breach of fiduciary duty came within the breadth of the expression “breach of trust” in s 82(2).  His Honour did not accept that submission.  In doing so, he stated as follows:[30]

‘There is a debate as to the breadth of the expression “breach of trust” in s 82(2).  In Re Sharp; Ex parte Tietyans Investments Pty Ltd [1998] FCA 1367 Weinberg J considered whether a claim against a firm of solicitors for, in effect, a breach of fiduciary duty was a claim for a breach of trust within s 82(2).  In what Bryson AJ subsequently considered to be an obiter dictum, Weinberg J suggested if the claims made involved “allegations of moral turpitude and breach of fiduciary obligation” then this would suffice to constitute a “breach of trust” within the meaning of s 82(2).

In the Supreme Court of New South Wales a different view holds sway.  In Auto Group Ltd v England (2008) 6 ABC(NS) 72 Bryson AJ at 76 [11] thought Weinberg J’s conclusion unsupported by the authorities and to “involve a striking departure from the ordinary natural meaning of ‘breach of trust’”.

On the views of Weinberg J, the applicants’ claims are provable debts and hence barred by s 229(1); on Bryson AJ’s they are not.

Mr Ash submits that the approach of Weinberg J was supported by the High Court’s decision in Cummings v Claremont Petroleum NL (1996) 185 CLR 124 at 136-137 where Brennan CJ, Gaudron and McHugh JJ said:

As a claim arising from breach of fiduciary duty is classified as a claim arising by reason of contract or breach of trust for the purposes of s 82(2) the damages for which judgment was entered against the appellants are provable in their bankruptcies.

This provides some support for Mr Ash’s position but it is not sufficient support to make the applicants’ position untenable.  This is because many claims for breach of fiduciary duty arise in a contractual context and thus can be seen as arising out of a contract; because it is not plain to me that the High Court was not using the expression “claim arising by reason of contract or breach of trust” as a portmanteau phrase without any particular emphasis on “breach of trust”; and, because on any view, the statement is not the ratio decidendi of the decision and, at least on this point, not a considered dictum otherwise binding on me: Farah Constructions Pty Ltd v SayDee Pty Ltd (2007) 230 CLR 89 at 150-151 [134] per the Court. 

Further, as Mr Martin SC correctly points out, the statutory claims against the directors and the claims in deceit and conspiracy were held not to be provable debts in Cummings.

Given that ambiguity and the conflict between this court and the Supreme Court of New South Wales I am unable to characterise the applicants’ persistence with the claim against Mr King as being in defiance of known law and there can be in that circumstance no order that costs be paid on an indemnity basis.’

  1. [258]
    At least on my research, this seems to be the first time that the relevant passage in Cummings was referred to on this issue.  
  2. [259]
    In the decision of Kitay (Liquidator) v Trenfield (Trustee) [2021] FCA 508, Jackson J had cause to give some considerations to the matter in the context of a leave to proceed application made under s 58(3) of the Bankruptcy Act.  His Honour stated at [24] as follows:

“The status of other claims as claims in respect of provable debts is less certain. For example, it may be doubted whether the claims for breach of fiduciary duty are claims for 'breach of trust' within the meaning of s 82(2), so that even if they are claims to unliquidated damages, they are still provable debts: see Re Sharp; Ex parte Tietyens Investments Pty Ltd (in liq) [1998] FCA 1367 at 4; and Health Services Union at [15]; but, contra, Auto Group Ltd v England [2008] NSWSC 402 at [21]; and Mercedes Holdings Pty Ltd v Waters (No 5) [2011] FCA 1428 at [158].  It may be that a claim for breach of fiduciary duties can be provable if it can be characterised as a claim for an equitable debt: see Auto Group at [4], [23].  Similarly, as I have already indicated by reference to SBA Music, there is doubt about whether claims for damages for breach of statutory directors' duties are provable.  There are similar doubts about unfair preference claims:  see eg Ashala v Featherstone [2016] QSC 121; [2017] 2 Qd R 1 at [2]-[8].  But it is not necessary for the court on an application for leave to finally determine complex questions of fact and law which may thus arise; it is appropriate for the court to proceed on the assumption that leave is required...”

  1. [260]
    In Health Services Union v Jackson (No 3) [2015] FCA 694 at [15] Tracey J, in the context of a leave to proceed application stated inter alia, “[l]eave is required under s 58(3) in respect of claims for breaches of fiduciary duties.”  His Honour cited no authority on this issue.
  2. [261]
    In Manny v David Lardner Lawyers (No 2) [2021] ACTSC 289 at [442], Murrell CJ stated: 

“The second claim alleges breach of fiduciary duty.  While it is not a claim in contract, it is a claim “by reason of” a contract or breach of trust and it is a debt provable in bankruptcy: Cummings v Claremont Petroleum NL (1996) 185 CLR 124 per Brennan CJ, Gaudron and McHugh JJ at 136-7.”

  1. [262]
    The learned Chief Justice’s comments were made in circumstances where the relevant claims were against a solicitor who had a contractual retainer with the plaintiff.  Even on the Auto Group approach, such a breach of fiduciary duty claim would be one for a provable debt as it would arise by reason of contract. 
  1. [263]
    If this were a question arising afresh, I would be attracted to the construction of  s 82(2) of the Bankruptcy Act identified by Bryson AJA in Auto Group.  There is, in my view, force in the proposition that the use of the words “contract” and “breach of trust” ought to be given their “strict” or “correct” meanings.
  2. [264]
    There is also much to be said for the analysis by Bryson AJA in Auto Group at paragraphs [5]-[23] of the authorities relied upon by Weinberg J.  Although I should note that I do have a reservation as to the observation in the final sentence in paragraph [8] of the analysis.  On my reading of Chittick v Maxwell (1993) 188 ALR 728, Young J’s decision was not based on the case before him arising out of contract. His Honour found that there was no contractual retainer for the provision of legal services.  Rather, Young J did ultimately find that the demand in that case arose out of a very broad interpretation of the word, “promise” as it appears in s 82(2) of the Bankruptcy Act.  On Young J’s construction, the word “promise” included a promise not supported by consideration and not otherwise legally enforceable as a deed.  I note that this broad construction of “promise” was itself disapproved of by the Victorian Court of Appeal in Aliferis v Kyriacou (2000) 1 VR 447.  That intermediate appellate Court’s view was that the word “promise” referred only to a promise which was legally enforceable by deed.[31]  This particular part of the reasoning in Aliferis was not the subject of consideration in the appeal before the High Court in Coventry.
  3. [265]
    Adopting the construction advanced by Bryson AJA would not be inconsistent with the reasoning of Coventry, which recognised that not all debts and liabilities were intended to be provable in bankruptcy.  Section 82(2) of the Bankruptcy Act has to be given an operation which draws a line at a particular point.  Adopting a strict and usual construction of “breach of trust” would appropriately draw a relatively clear line as to what the legislature was intending to capture by that terminology.
  4. [266]
    The term “breach of trust” is used elsewhere in the Bankruptcy Act at s 153, which deals with the release of debts and liabilities upon a person’s discharge from bankruptcy.  Section 153(2)(b) provides an exception to the general release.  It relevantly states that there will not be a release from a debt “incurred by means of fraud or a fraudulent breach of trust”.
  5. [267]
    In Emma Silver Mining Company v Grant (1880) 17 Ch D 122 Jessel MR dealt with a situation where two promoters of a company were found to be fiduciary agents in that capacity.  The promoters caused the company to purchase a mine for £1 million.  They did so in circumstances where they had agreed with the vendors of the mine for the provision of some £200,000 of the purchase price to be divided between themselves.  One of the promoters, a Mr Grant, received £100,000 of that sum.  The statutory provision in issue at that time was s 49 of the Bankruptcy Act 1869 (UK).  It was a predecessor of s 153 of the Bankruptcy Act which used the term “breach of trust”.  The section relevantly provided:

“An order of discharge shall not release the bankrupt from any debt or liability incurred by means of any fraud or breach of trust, nor from any debt or liability whereof he has obtained forbearance by any fraud.”[32]  

  1. [268]
    The submissions advanced in Emma Silver Mining Company were, in part, that the words “breach of trust” was a reference to a breach of an express trust and not a breach of a constructive trust.  That submission was rejected.  
  2. [269]
    The Master of the Rolls stated as follows:[33]

“There does not appear to me any reason in the world for not giving the words “breach of trust” in the Bankruptcy Act their proper technical legal meaning.  If an agent, either buying or selling, misuses or abuses the confidence reposed in him with a view to retaining the profits for himself, he commits a breach of trust.”

  1. [270]
    Despite the attractiveness of the construction advanced by Bryson AJA in Auto Group, as a Judge at first instance I ought to give significant weight to the obiter dictum observations of three members of the High Court, who formed the majority in Cummings.  Whilst their relevant observations were brief, they were phrased as being ones of general application to causes of action founded on breach of fiduciary duties.
  2. [271]
    Importantly, the footnote to the observations made by their Honours included the citation of an extract from the first instance decision of Barewa Oil & Mining NL (in liq) v Isim Mineral Development Pty Ltd (1981) 38 ALR 288 at 292 per Brinsden J, and an extract within the separate reasons of Kennedy J on appeal in Cornelius v Barewa Oil & Mining NL (in liq) (1982) 42 ALR 83 at 90-91.
  3. [272]
    Justice Brisden observed in the first instance decision:

“So far as the claim for breach of fiduciary duty is concerned, the authorities suggest that that is a claim arising out of contract or analogous to it and is also provable in bankruptcy.”[34] (Underlining added)

  1. [273]
    In support of that broader meaning of “contract”, Brisden J referred with approval to, inter alia, an excerpt from the English decision of Re MacFadyen: Ex parte Vizianagaram Mining Co Limited [1908] 2 KB 817 where Farwell LJ, at page 822, stated as follows:

“…[i]t is plain that contract lies at the root of the liability of every person of whom it can be rightly predicted that he stands in a fiduciary relation to another, whether such person be called trustee, promoter, fiduciary agent or otherwise.”  

  1. [274]
    In SBA Music Pty Ltd v Hall (No 2) [2014] FCA 1116, Wigney J also expressed the view that the two Barewa Oil & Mining NL authorities suggested that a claim for breach of fiduciary duty arises “by reason of contract”.[35]
  2. [275]
    As Cummings was not apparently referred to by Bryson AJA, there was accordingly no separate analysis in Auto Group of the relevant portions of Barewa Oil & Mining NL[36] at first instance, which were effectively approved of in the reasons of Kennedy J on appeal. 
  3. [276]
    Whilst the observations in Cummings are very short, this does not mean that they were not ones which were seriously considered by the majority.  The footnoting to specific excerpts of the cited authorities suggests that their Honours had turned their minds to whether those authorities supported the general application of the construction being articulated.
  4. [277]
    In those circumstances, and in the absence of subsequent appellate authority on the point, I should act consistently with the majority’s obiter dictum observations on this issue in Cummings.[37]  
  5. [278]
    I find that the breaches of fiduciary duties causes of action pleaded in the current proceeding against Mr Dunne in respect of the Lection Payment and the Battistin Payment arise by reason of contract or breach of trust, that the exception in s 82(2) is not thereby engaged in respect of them, and accordingly they are therefore provable debts.  The proceeding in respect of those causes of action against Mr Dunne are therefore stayed.

The position in respect of Misleading and Deceptive Conduct Claims: The second issue

  1. [279]
    Having found that the breaches of fiduciary duties causes of action for the Lection Payment and the Battistin Payment are ones for provable debts, the next issue is whether the misleading and deceptive conduct causes of action in respect of those payments are also demands for unliquidated damages arising by reason of contract or breach of trust, and are therefore provable debts.  In my view, in this case, they are.  It will also be necessary to determine if the misleading and deceptive conduct causes of action in respect of the Newport Payments are also demands for provable debts.  In my view, in this case, they are not. 
  2. [280]
    The structure of these reasons on this second issue will be as follows:
    1. first, the decision of Coventry will be discussed;
    2. secondly, the proper construction of s 82(2) of the Bankruptcy Act will be discussed;
    3. thirdly, the post-Coventry first instance authorities dealing with co-extensive contractual and tortious duty of care causes of action will be examined in light of the proper construction of s 82(2);
    4. fourthly, the proper construction of s 82(2) will be applied to the facts of this case as they concern the co-existent breaches of a fiduciary duty and misleading and deceptive conduct causes of action;
    5. finally, the proper construction of s 82(2) will be applied to the facts of this case as they concern the misleading and deceptive conduct causes of action which are not co-existent with breaches of fiduciary duty.

Coventry

  1. [281]
    I agree with counsel for NGI that the starting point for consideration of the second jurisdictional issue is an examination of the reasoning in Coventry.  The following points may be made about Coventry.
  2. [282]
    First, Coventry marked the rejection[38] by the High Court of a test for s 82(2) of the Bankruptcy Act which had been articulated in the Victorian Court of Appeal decision of Aliferis v Kyriacou (2000) 1 VR 447.
  1. [283]
    The rejected test was to the effect that a particular cause of action would only be a demand for unliquidated damages that arose by reason of contract if the pleading of a contract was necessary as an essential element of the cause of action.[39]  The application of the test therefore revolved around an analysis of the pleading of the causes of action, having regard to what were the essential elements of the causes of action as a matter of law.  This test had been accepted and applied in a number of subsequent authorities, including by the Queensland Court of Appeal in the decision which had ultimately gone on appeal in Coventry.
  2. [284]
    Secondly, the rejected test had in part relied upon the long-established right to elect between alternative causes of actions which were available on the facts.  The test was said to be consistent with a party being able to elect in a given proceeding between a provable debt claim and a non-provable debt claim.  The non-provable debt claim could thereby be run as it was not stayed.  The obvious example being co-extensive duties of care in contract and tort.  
  3. [285]
    The majority in Coventry, in effect, rejected that the doctrine of election somehow supported the test promulgated in Aliferis.  Their Honours observed that the framing of a claim as a claim in tort did not conclude the question of whether the demand arises by reason of a contract or promise.[40]
  4. [286]
    Thirdly, it was accepted in Coventry that s 82(2) of the Bankruptcy Act and its predecessors had stopped short of providing that the bankrupt is to be a freed man from contracts, liabilities, engagements and contingencies of every kind.  Some claims stood outside the reach of the statute.  The words of s 82 were not to be stretched to encompass every other kind of claim which a person may have against a bankrupt.[41]
  5. [287]
    Fourthly, s 82(2) of the Bankruptcy Act clearly contemplated the inclusion as a provable debt of a cause of action constituted by Party A against Party B for a breach of contract between Parties A and B.  The contract in that case would be bilateral.   
  6. [288]
    Fifthly, it was found that s 82(2) of the Bankruptcy Act also extended to include as a provable debt a situation where Party A may have, for example, by the tort of deceit, caused Party B to enter into a contract with Party A.  In that case, the conduct would have been causative of the creation of a bilateral contract, but would not involve a breach of contract, per se.  An analysis of historical authority supported that causes of action based on deceit had been found to be demands for unliquidated damages arising by reason of contract in circumstances where the product of the deceit was the creation of a bilateral contract.  By analogy it was accepted the same result would arise where the bilateral contract was entered into by reason of misleading and deceptive conduct within the framework of a statutory cause of action.  
  7. [289]
    The majority in Coventry acknowledged that from a modern eye, at least, claims in the tort of deceit or via a statutory claim for misleading and deceptive conduct would not naturally seem to be a demand arising by reason of a contract.  Despite this, it was found that this is how the words in s 82(2) of the Bankruptcy Act had come to be construed.
  1. [290]
    Sixthly, this construction of s 82(2) of the Bankruptcy Act was, in part, supported by the existence and operation of s 86 of the Bankruptcy Act, which provided for a statutory set off for mutual credits, mutual debts or other mutual dealings between a person who had become bankrupt and a person claiming to prove a debt in the bankruptcy.  The Court acknowledged that a set off provision like s 86 should be given the widest possible scope.[42]
  2. [291]
    The set off can occur where the debts, credits or other dealings are genuinely mutual as a matter of substance.  The concept of ‘mutual dealings’ within the set off section included commercial transactions and the negotiations leading up to them, and accordingly would include deceitful statements or misleading and deceptive conduct made in the course of such negotiations which would be mutual dealings giving rise to a bilateral contract.[43]  
  3. [292]
    Finally, in contrast to the bilateral situation, the High Court rejected the proposition that a similar situation would exist in the context of a tripartite situation.  The facts of Coventry involved such a tripartite situation.  Namely, a situation where, as a result of deceitful conduct or misleading and deceptive conduct, Party A induces Party B to enter into a contract with Party C.  In that situation, Party A is never in a contract with Party B, either originally or as a product of the conduct.  Accordingly, there could be no set off under s 86 of the Bankruptcy Act in respect of the deceit claim or the misleading and deceptive conduct claim which Party B might have, and liabilities Party B may owe to Party C under the contract. 
  4. [293]
    It was acknowledged by the Court that this was an anomalous result.

Proper construction of s 82(2)

  1. [294]
    Prior to the decision in Coventry, there had been a debate in the authorities for some time as to whether the exception articulated in s 82(2) ought to be given a wide ambit, or alternatively, a narrow ambit of operation.  The wide ambit of operation for the exception was ultimately represented by the test articulated in Aliferis v Kyriacou.[44] As discussed above, it included that a demand in the nature of unliquidated damages would only arise by reason of a contract, promise or breach of trust, if the contract, promise or breach of trust was an “essential element” of the cause of action underlying the demand.  
  2. [295]
    One of the factors that supported the adoption of the Aliferis test was its apparent certainty of operation. Another was that it was said to be consistent with the doctrine of election between alternative causes of action which were present. 
  3. [296]
    A number of the cases which had accepted the Aliferis test had, in equal measure, rejected a construction of s 82(2), which resulted in a narrow operation.  
  4. [297]
    The narrow operation has been described as follows: the expression ‘by reason of’ indicates that it is not necessary to establish more than an appropriate nexus between the damages claimed and the contract or promise.  While the claim has to be causally connected to a contract or promise so that it could be said to have arisen by reason of the contract or promise, it is not required that a breach of contract or undertaking be proved.[45]
  1. [298]
    A narrow operation for the exception had been reflected in the first instance authorities of Re Pyramid Building Society (in liq) (1991) 6 ACSR 405 per Vincent J, Chittick v Maxwell (1993) 118 ALR 728 per Young J and Re Sharpe: Ex parte Tietyens Investments Pty Ltd [1998] FCA 1367 per Weinberg J.  All of those first instance decisions had been disapproved of in Aliferis on this issue.
  2. [299]
    The critical question then is, as a result of the High Court majority rejecting the broad operation as articulated in Aliferis, does it follow that a construction which results in a narrow operation of the exception in s 82(2) ought to be treated as the correct interpretation of the section.
  3. [300]
    In my view, the answer to this question should be in the affirmative.
  4. [301]
    This is so for a number of reasons.
  5. [302]
    First, Coventry clearly rejects the Aliferis test, which was one which resulted in a broad operation of the exception in s 82(2).  
  6. [303]
    In rejecting the broad operation, the High Court, by necessary implication, indicated that some narrower operation for the exception was called up by the language of s 82(2) of the Bankruptcy Act.  
  7. [304]
    More specifically, by the rejection of both the “essential element” criteria and the concept that all that may be necessary was the pleading of a cause of action with a separate theoretical legal foundation from contract, promise or breach of trust, the High Court was implicitly endorsing some narrower operation of the exception. However, I accept the Court in Coventry did not seek to articulate what this narrower operation may have been, and what were its boundaries.  The Court emphasised that there should be a focus on the language of s 82(2).  
  8. [305]
    Secondly, each of the wide operation and narrow operation of the exception, in my view, were open on the language of the relevant section. Neither of the opposing constructions did violence to the language of the section. 
  9. [306]
    In this respect, the narrower construction of the operation of the exception contained in s 82(2) would mean that a greater number of causes of action would be provable.  Nonetheless, each of these additional causes of action would only be provable if the appropriate causal nexus with a contract, promise or breach of trust were present.  This does not offend against the observations of the majority of the High Court in Coventry that s 82(2) stops short of providing that the bankrupt is to be a freed man, “not only from debts, but from contracts, liabilities, engagements and contingencies of every kind.”  
  10. [307]
    Thirdly, a construction resulting in a narrow operation of the exception of s 82(2) is not one which could be described as arbitrary or capricious in its operation.  
  11. [308]
    While the authorities have cautioned against courts expressing the existence of potential underlying policies for sections of the Bankruptcy Act where those policies are not apparent from either the language of the Act itself or suitable extrinsic material, a number of observations can be made about the bankruptcy regime.
  1. [309]
    The scheme for proving debts within a bankruptcy regime is one which allows relevant unsecured creditors to participate in a distribution of the realised assets of the bankrupt’s estate on a pari passu basis.  There is nothing arbitrary or capricious in constructing the exception in s 82(2) in a narrow way so that causes of action for contract, promise or breach of trust are provable together with causes of action which nonetheless have an appropriate causal nexus to them.
  2. [310]
    Further, part of the operation of the Bankruptcy Act is to provide that provable debts, subject to certain exceptions such as those identified in s 153 of the Bankruptcy Act, are released on the discharge of the bankrupt.  Again, there is nothing arbitrary or capricious in a bankrupt being able to be released at his or her discharge from all clams which have the appropriate causal nexus to causes of action based on contract, promise or breach of trust, which are themselves being released.  Whilst s 82(2) has been described as a section known for its anomalous results, the narrower operation of the exception contained in s 82(2) would be unlikely to result in an expansion of such anomalous results.
  3. [311]
    Fourthly, the construction for the narrow operation of the exception, in my view, is not so vague or uncertain in its application as to warrant its rejection as an available construction of the wording of s 82(2).  
  4. [312]
    I note that Kirby J in Coventry[46] was highly critical of what his Honour saw as the inappropriate uncertainty of the narrow operation.  Whilst I recognise that one of the significant strengths of the broad operation of the exception was the relative certainty that its application involved, I do not accept that a narrow operation of the exception would be so vague and uncertain as to indicate a construction which is not fairly open on the language of the section.  The Courts are often asked to construe statutory criteria expressed in broad language.

The position in respect of co-extensive contract and tortious claims

  1. [313]
    It is relevant to inquire how the Courts have dealt with this construction issue post Coventry.  The obvious starting point is authorities which have subsequently involved co-extensive contractual and tortious duties to exercise reasonable skill and care.  The classic examples of such scenarios arise from professional contractual retainers with solicitors, accountants, valuers, etc.
  2. [314]
    The test as articulated in Aliferis dictated a position that a co-extensive tortious duty should be treated as a demand for unliquidated damages arising otherwise than from a contract, if the cause of action could be pleaded without a reference to contract as an essential element of the cause of action.[47]  Since Coventry, a series of decisions at first instance have suggested, with varying degrees of confidence, that both the contractual duty and the tortious duty to exercise reasonable skill and care can be demands for unliquidated damages which arise by reason of a contract.  For example, in Lovell v Penkin, in the matter of the bankrupt estate of Kevin Michael Penkin [2008] FCA 637, the issue arose in relation to a pleaded tortious duty of care.  After reviewing the authorities up to and including Coventry, McKerracher J made the following obiter dictum observations:
  1. “[24]
    From this, does it follow in the present circumstances that Chittick 118 ALR 728 and Re Sharp [1998] FCA 1367 are to be taken as establishing that although Mr Lovell pursues his claim in tort, it is nevertheless a claim which arises by reason of the contract (the retainer) or even a promise (express or implied)?  The High Court in Coventry 227 CLR 234 rejected the process of reasoning which examines whether or not reliance on a claim in contract is an essential element of the claim.  Does it follow that the law reverts to that as stated in Chittick 118 ALR 728, namely, that although the claim is pleaded in tort, it is also a claim rising by reason of the contract of retainer?  If so, then it would [be] a provable debt and leave would be required under s 58(3)(b) of the [Bankruptcy] Act.”
  2. [25]
    In short, I take Coventry 227 CLR 234 to emphasise that the historical development of the Act and its predecessors is such that the class of claims that are provable will be very wide and conversely, the exceptions under s 82(2) of the Act cover a class of claims that is narrow.  While Coventry was not dealing with a claim like the present which is in negligence alone against a solicitor, the rationale developed in the decision would appear to me to support a conclusion that such a claim is provable.
  3. [26]
    The Official Trustee’s submission to the effect that a claim in tort would not be provable carries some weight.  But this is a claim which has a contractual nexus by virtue of the retainer.  It also involves mutuality of dealings and a set-off (by virtue of the contest between Mr Lovell and Mr Penkin having originated in Mr Penkin suing for outstanding unpaid fees) and finally, arises from a one-on-one or bilateral rather than tripartite relationship.  All those elements, in light of the High Court’s rejection of the ‘essential element’ test, would cause me to have doubts as to the submission by the Official Trustee that no leave is required.”

…

CONCLUSION

  1. [31]
    Although the High Court overruled the ‘essential element’ test relied upon in Aliferis 179 ALR 477, there remains some uncertainty at present as to whether the words in s 82(2) of the Act ‘…by reason of the contract, promise or breach of trust’ dictate that a direct claim in negligence only - not in contract - by one client against his or her solicitor is provable. That outcome may be ‘anomalous’ as the High Court accepted its conclusion was as to the proper construction of s 82(2) in Coventry 227 CLR 234. But the emphasis in Coventry on the narrow basis of exceptions to provable claims may well support the conclusion that such a claim is provable.  Further, if there is insurance cover - and there has been no suggestion to the contrary - then the effect of s 117 of the Act is now that the benefit of that cover would still be received by the claimant rather than the estate as a whole…”[48]
  1. [315]
    In Ritchie v Woodward (executor of the estate of the late Brian Patrick Woodward); Rujo Pty Ltd v Same [2016] NSWSC 1715, Emmett AJA, in statements which were also strictly obiter dictum, dealt with the issues at paragraphs [461] through to [475].  Those statements included the following:
  1. “[466]
    Framing a claim as a claim in tort does not conclude the question whether the demand arises by reason of a contract or promise.  Further, it is incorrect to say that a claim arises by reason of contract or promise only if a contract or promise is an element or essential element of the cause of action.  Such a test does not satisfactorily reflect the meaning to be given to s 82(2).  That test does not give any weight to the need to read s 82(2) in the light provided by the set-off provisions of s 86 and does not distinguish between “bilateral and tripartite” cases.  Such a test treats, as the critical question, whether the claimant must plead the existence of a contract and treats as irrelevant whether the bankrupt was a party to the contract.  Further, too heavy emphasis should not be placed upon the way in which a particular claim is or could be pleaded.  Formulation of the test by reference to whether a contract was an element, or essential element, of the claim shifts attention away from the statutory test.

…

  1. [469]
    While too close attention to the formulation of a claim in pleadings is not calculated to resolve the question of whether the claim falls within s 82(2), it must nevertheless be appropriate to have regard to the way in which a claim is pleaded in order to ascertain what claim is actually being pressed against a bankrupt or former bankrupt. The mere absence of reference to a contract in the pleaded formulation of the claim will not necessarily lead to the conclusion that the claim does not arise out of a contract or promise. On the other hand, the fact that the pleaded formulation of a claim itself entailed reference to a contract or promise may be material to the question of whether or not the claim being pressed can be characterising by reason of a contract or promise.
  2. [470]
    While it is necessary to direct attention to the question raised by the language of s 82(2), namely whether the claim arises by reason of a contract or promise, it is necessary to determine just what claim is being made. The claim being made is that formulated in the pleadings. The fact that the pleadings do not mention a contract or promise will not be decisive if, as a matter of substance, the claim, on proper analysis, does in fact arise only by reason of a contract or promise, s 82(2) will have no application. On the other hand, if the claim formulated in the pleadings is shown to arise by reason of a contract or promise, that must be sufficient to exclude the operation of s 82(2).”
  1. [316]
    In that case there was an analysis of the actual pleading which included that there had been a retainer to provide professional accounting advice.  His Honour then stated at [475], in part, as follows:

“[475]… However, it is clear that the duty is said to arise in relation to the provision of services because Tony Woodward provided those services in the ordinary course of carrying out the business of the Partnership, in circumstances where the Partnership professed expertise in the provision of certain services. On that basis, the plaintiffs do not allege that a duty of care was owed by the Partnership to Mrs Ritchie that arose otherwise than by reason of the contractual relationship between them. It may be, therefore, that the claims based on breach of the duty of care alleged in Mrs Ritchie’s statement of claim were released by the compromise….”

  1. [317]
    In Manny v David Lardner Lawyers (No 2) [2021] ACTSC 289 at [443], Murrell CJ expressed the position as follows:

“[443]The third claim alleges breach of a tortious duty of care.  As Burns J observed in Read at [210], “it is the nature of the task or tasks the legal practitioner is retained to undertake, which principally determines the scope and content of their duty of care to their client.”  Further, the acts that are pleaded as constituting the breach of the tortious duty are also pleaded as breaches of the retainer agreement.  The tort claim arises because of the existence of— “by reason of” —the retainer: see Lovell v Penkin (a bankrupt) [2008] FCA 637; 101 ALD 335 at [26]; Ritchie v Woodward (executor of the estate of the late Brian Patrick Woodward) [2016] NSWSC 1715 at [461][475].”

  1. [318]
    It should fairly be pointed out that it has been recognised in other decisions that this issue remains a complex one.[49] At least one judge has expressed the view that it remains debatable whether claims brought against solicitors in tort for negligence are provable, even where there is a contract between the claimant and the bankrupt.[50]  
  2. [319]
    There is an absence of High Court and intermediate appellate authority on the issue post-Coventry.  What can be observed is that the first three authorities referred to above provide support for the proposition that where there are co-extensive contractual and tortious duties to exercise reasonable skill and care, the tortious duty of care should generally be regarded as a demand for unliquidated damages arising by reason of contract.  This seems to be because, as a matter of substance, the contract is the foundational occasion for the tortious duty of care arising.  The contract may dictate the services to be supplied (whether specifically or at a more generalised level) and may modify the scope and effect of the tortious duty to the extent one is owed.  In those cases, the contract has the appropriate causal nexus to the tortious claim. This is so, even though the cause of action in tort has a separate theoretical legal foundation to the contractual claim.
  3. [320]
    There has been at least one first instance decision which has given some consideration as to whether a similar position should be adopted where there is a professional contract and during the performance of the contract misleading and deceptive conduct is alleged.  In Ritchie v Woodward,[51] Emmett AJA made the following observations obiter dictum:[52]

“In relation to the claims under s 42 of the Fair Trading Act, the plaintiffs allege that Tony Woodward and the Partnership made representations about investment in the Oxford Hotel and the valuation figures and cash flows for the Oxford Hotel, which were representations as to future matters made without any reasonable grounds. The position in relation to those claims must be distinguished from the claims based on negligence.

That is to say, if the claims based on the statute, as formulated in the pleadings, do not, as a matter of substance, depend upon the existence of a contract or promise, s 82(2) will be enlivened. Where contravening conduct leads to loss by reason of a contract made with the bankrupt, which constitutes the loss suffered by the contravention, it is apparent that s 82(2) will not be enlivened. On the other hand, where the claim against the bankrupt under s 42 of the Fair Trading Act does not, on proper analysis, depend in any way upon a contract with or promise by the bankrupt, s 82(2) will be enlivened. The mere fact that the loss or damage occasioned by the contravening conduct may be the entry into a contract by the victim of the conduct or the making of a promise by the victim of the contravening conduct, is not sufficient to exclude s 82(2). The present case falls somewhere between those two cases.

The statement of claim alleges that, “in the premises”, Tony Woodward and the Partnership engaged in conduct that was misleading or deceptive in contravention of s 42 of the Fair Trading Act. The “premises” must include the allegations that the Partnership professed expertise in the provision of certain services and that Tony Woodward, in the ordinary course of carrying out the business of the Partnership, provided services to Mrs Ritchie.

The allegation that the representations were misleading or deceptive because they were made in the provision of services to Mr and Mrs Ritchie in the ordinary course of carrying out the business of the Partnership suggests that any liability is dependent upon the existence of a contractual relationship. That is understandable, because the alleged representations were made in circumstances of the existence of the contractual relationship between the Partnership, on the one hand, and Mrs Ritchie, on the other. In those circumstances, where there was a contract between the Ritchies and the Partnership, and where there was sufficient mutuality between the parties, it may follow that, so far as the claim under the Fair Trading Act is a demand in the nature of unliquidated damages, it arises by reason of the contract made between the Partnership and Mrs Ritchie and, accordingly s 82(2) is not enlivened. However, I do not have to decide the question.”

  1. [321]
    The reasoning in that decision is supportive of a misleading and deceptive conduct cause of action being a demand which can arise by reason of contract in an appropriate case. 

Application of proper construction of s 82(2) of the Bankruptcy Act to the coexistent breaches of fiduciary duty and misleading and deceptive conduct causes of action

  1. [322]
    Turning then to the particular circumstances of this case, the fiduciary duties and their breaches are not pleaded as essential elements of the misleading and deceptive conduct causes of action. Of course, the textual question which is posed by s 82(2), is not answered by asking whether the fiduciary duties or their breaches (which are the “contract” or “breach of trust” for the purposes of the section) need to be pleaded as essential elements of the misleading and deceptive conduct causes of action.  
  2. [323]
    The existence of the fiduciary duties here are co-existent with and closely connected to the statutory cause of action.  An analysis of the pleaded case shows that the same factual bases which underly the breaches of fiduciary duties causes of action also underly the misleading and deceptive conduct causes of action.  In this respect, I note, inter alia, the following:
    1. For the Battistin Payment, both the misleading and deceptive causes of action and the fiduciary duty causes of action relied on a level of common facts, pleaded in paragraphs 25 to 29 of the Statement of Claim, when read with paragraphs 50 and 62 of the Statement of Claim;
    2. For the Lection Payment, both the misleading and deceptive causes of action and the fiduciary duty causes of action relied on a level of common facts, pleaded in paragraphs 30 to 33A of the Statement of Claim, when read with paragraphs 54, 66 and 68 of the Statement of Claim. 
  3. [324]
    I acknowledge that the type of foundational connectivity which a contract exhibits apropos a co-extensive tortious duty of care cause of action is not identical to the present circumstances.  Nonetheless, the fiduciary relationship between Mr Dunne and NGI was not just co-existent with the misleading and deceptive conduct.  It was the foundational factual setting in which the misleading and deceptive conduct then occurred.  The relationship of trust and confidence which underpins the fiduciary relationship clearly provides the occasion for, and frames the conduct of, Mr Dunne.  It also informs Mrs Goodridge’s (and thereby NGI’s) reliance on the conduct of Mr Dunne.  This is not mere co-existence.  It was Mr Dunne’s acts and omissions as a fiduciary that constituted the misleading and deceptive conduct.
  4. [325]
    In those circumstances, I find that each of the misleading and deceptive conduct claims arise out of the breaches of fiduciary duties in respect of the Lection Payment and the Battistin Payment.  They are accordingly demands for unliquidated damages which arise by reason of contract or breach of trust.  The exception in s 82(2) of the Bankruptcy Act is therefore not engaged and the misleading and deceptive causes of action are provable debts in Mr Dunne’s bankruptcy.  The proceeding is stayed in respect of those causes of action.

Application of proper construction of s 82(2) of the Bankruptcy Act to the misleading and deceptive conduct causes of action which are not coexistent with breaches of fiduciary duty.

  1. [326]
    In accordance with my findings earlier in these reasons, the contract for management of Savannah was with Sanako and not Mr Dunne.  Further, after the settlement of Savannah Mr Dunne was not in a personal fiduciary relationship with NGI in respect of the management of Savannah.  In contrast, Sanako had both a contractual obligation to manage Savannah and was in a fiduciary relationship with NGI in relation to that management. Accordingly, Mr Dunne’s misleading and deceptive conduct which concerned the Newport Payments did not occur within a bilateral contract, or fiduciary relationship, between himself and NGI.  
  2. [327]
    I am satisfied that Coventry stands for the proposition that in the absence of such bilateral positions, then the exception in s 82(2) of the Bankruptcy Act will be enlivened and the misleading and deceptive conduct causes of actions concerning the Newport Payments will not be provable debts.  That is, they will be demands for unliquidated damages arising otherwise than by reason of contract, promise or breach of trust.
  3. [328]
    Whilst the result may appear to be anomalous, it is a function of how s 82(2) has been interpreted as operating.

Final Relief

  1. [329]
    NGI is entitled to judgment against Mr Dunne pursuant to s 236 of the ACLQ for $2,278,293.38 for his misleading and deceptive conduct associated with the Newport Payments.
  2. [330]
    NGI is entitled to judgment against MP01 pursuant to s 236 of the ACLQ for $237,500 for its involvement in Mr Dunne’s misleading and deceptive conduct associated with the Lection Payment.  NGI would have in the alternative been entitled to judgment against MP01 for $225,000 for equitable compensation. As the damages for misleading and deceptive conduct is for a greater sum than the equitable compensation, I have used the larger sum to frame the grant of relief.
  3. [331]
    NGI seeks interest on those sums pursuant to s 60 of the Civil Liability Act 2003 (Qld).  No reason has been advanced as to why NGI should not have its interest for the full period.  Quite separately, the nature of the findings I have made in respect of the conduct of Mr Dunne and MP01 in respect of the transactions would also support that NGI should be awarded interest for the full period.
  4. [332]
    The usual practice of this Court is to apply the rates of interest prescribed in the Practice Directions for default judgments.  I see no reason to depart from that practice in this case.  Annexure “A” to these reasons are the calculations of that interest using the Court’s publicly available interest calculator.  I have allowed interest on the s 236 damages of $250,000 up to 5 July 2020 and allowed interest on the s 236 damages at $237,500 from 6 July 2020 to judgment to reflect the payment of the settlement amount of $12,500 on 6 July 2020 by Mr Stansfield and Lection.
  1. [333]
    Accordingly, the judgment is as follows:
    1. The first defendant pay the plaintiff $2,278,293.38 for damages pursuant to s 236 of the Australian Consumer Law (Queensland) together with interest of $697,969.09 pursuant to s 60 of the Civil Liability Act 2003 (Qld);
    2. The seventh defendant pay the plaintiff $237,500 for damages pursuant to s 236 of the Australian Consumer Law (Queensland) together with interest of $95,608.69 pursuant to s 60 of the Civil Liability Act 2003 (Qld).
    3. The counterclaim brought by the seventh defendant be dismissed.
  2. [334]
    I will hear the parties on costs.

ANNEXURE “A”

INTEREST CALCULATION SCHEDULE

NGI Savannah Living Communities Pty Ltd v Dunne & Ors

Item /

Principal

Amount

Period

Basis of Calculation

Interest

Lection

Payment:

$250,000.00 

11.07.2016

to

06.07.2020

(1457 days total) 

NGI Savannah Living Communities Pty Ltd v Dunne [2023] QSC 273

 

$53,848.18

Balance of

Lection

Payment:

$237,500.00

07.07.2020

to

01.12.2023

(1243 days total)

NGI Savannah Living Communities Pty Ltd v Dunne [2023] QSC 273

 

$41,760.51

First Newport Invoice:

$409,075.95

07.11.2017

to

01.12.2023

(2216 days total)

NGI Savannah Living Communities Pty Ltd v Dunne [2023] QSC 273

 

129,749.95

Second

Newport Invoice:

$409,075.95

24.11.2017

to

01.12.2023

(2199 days total)

NGI Savannah Living Communities Pty Ltd v Dunne [2023] QSC 273

 

 

$128,702.04

Third

Newport Invoice:

$318,760.20

18.12.2017

to

01.12.2023

(2175 days total)

NGI Savannah Living Communities Pty Ltd v Dunne [2023] QSC 273

 

$99,134.45

Fourth

Newport Invoice:

$493,482.00

13.02.2018

to

01.12.2023

(2118 days total)

NGI Savannah Living Communities Pty Ltd v Dunne [2023] QSC 273

 

$149,234.38

Fifth Newport Invoice:

$647,900.00

03.04.2018

to

29.09.2023

(2069 days total)

NGI Savannah Living Communities Pty Ltd v Dunne [2023] QSC 273

 

$191,148.27

TOTAL INTEREST

$793,577.78

Footnotes

[1]See Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-362, per Dixon J.

[2]Savannah is a reference to the property and the business operating at 36 Anzac Avenue, Mareeba, Qld 4880.

[3]T2-40 ll 39-47.

[4]T2-44 ll 14-43.

[5]T2-44 ll 31-32.

[6]T2-47 ll 15-24.

[7]T2–45 ll 32-37.

[8]T2-45.

[9]T2-45 ll 39-40.

[10]This was a reference to the Battistin Payment.

[11]T2-66 ll 1-6.

[12]T2-67 ll 21-26.

[13]T2-67 ll 22-28.

[14]A reference to Mr Stansfield and his company, Lection Pty Ltd.

[15]Affidavit of Warwick Stansfield dated 16 October 2018, para [13]-[15].

[16]Jones v Dunkel (1959) 101 CLR 298 at 320-321.

[17]TBA obviously stood for “to be agreed”.

[18]Barnes v Addy (1874) LR 9 Ch App 244, 251-252.

[19]Grimaldi v Chameleon Mining NL (ACN 098 773 785) (No 2) and Another (2012) 287 ALR 22 at [556].

[20]Waldon Properties Ltd v Beaver Properties Pty Ltd & Anor [1973] 2 NSWLR 815 at 833 per Hope JA, with whom Kerr CJ agreed. See also Dal Pont, GE Law of Agency 3rd ed LexisNexis, Australia, 2020 at [4.14] to [4.20].

[21]That is, secret from Mrs Goodridge and NGI.

[22]Barnes v Addy (1874) LR 9 Ch App 244 at 251-252

[23]Cummings v Claremont Petroleum NL (1996) 185 CLR 124 at [136]-[137]. There were five members of the Court, and the other two members made no comment on this issue.

[24]Emma Silver Mining Co v Grant (1880) 17 Ch D 122 at 129-130; Britter v Sprigg (1900) 26 VLR 65 at 82; Barewa Oil & Mining NL v Isim Mineral Development Pty Ltd (1981) 59 FLR 451 at 456; 38 ALR 288 at 292; on appeal sub nom Cornelius v Barewa Oil & Mining NL [1982] WAR 311 at 318; (1982) 64 FLR 287 at 295-296; 42 ALR 83 at 90-91.

[25]Re Sharp; Ex parte Tietyens Investments Pty Ltd (in liq) [1998] FCA 1367.

[26]Re Sharp; Ex parte Tietyens Investments Pty Ltd (in liq) [1998] FCA 1367.

[27](1900) 26 VLR 65.

[28]Auto Group Ltd v England [2008] NSWSC 402 at [11].

[29]Auto Group Ltd v England [2008] NSWSC 402 at [22].

[30]Mercedes Holdings Pty Ltd v Walters (No 3) [2011] FCA 236 at [116]-[121].

[31]Aliferis v Kyriacou (2000) 1 VR 447 at [2], [18] and [43].

[32]Emma Silver Mining Company v Grant (1880) 17 Ch D 122 at 124.

[33]Emma Silver Mining Company v Grant (1880) 17 Ch D 122 at 129.

[34]Barewa Oil & Mining NL v Isim Mineral Development Pty Ltd (1981) 38 ALR 288 at 292.

[35]SBA Music Pty Ltd v Hall (No 2) [2014] FCA 1116 at [19].

[36]Barewa Oil & Mining NL v Isim Mineral Development Pty Ltd (1981) 38 ALR 288.

[37]Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22 at [154]-[155] per the Court.

[38]Coventry at [66]-[69] per Gleeson CJ, Gummow, Hayne and Callinan JJ.

[39]Coventry at [65] per Gleeson CJ, Gummow, Hayne and Callinan JJ.

[40]Coventry at [16] per Gleeson CJ, Gummow, Hayne and Callinan JJ.

[41]Coventry at [70] per Gleeson CJ, Gummow, Hayne and Callinan JJ.

[42]Coventry at [56] and [86].

[43]Coventry at [58].

[44](2000) 1 VR 447 at [51].

[45]This articulation of the narrow construction of the exception is paraphrased from the decision of McMurdo P in the intermediate appeal of Charter Pacific Corporation Ltd v Belrida Enterprises Pty Ltd & Ors [2003] QCA 375 at [35]-[36], which referred, in turn, to the decision in Re Pyramid Building Society (in liq) (1991) 6 ACSR 405 per Vincent J.

[46]See particularly paragraph [124] of Coventry.

[47]Aliferis v Kyriacou (2000) 1 VR 447 at [51].

[48]Lovell v Penkin, in the matter of the bankrupt estate of Kevin Michael Penkin [2008] FCA 637 [24]-[26] and [31].

[49]See, for example, Nelson v Thompson [2021] FCA 1055 at [21] per Downes J.

[50]See Owners - Strata Plan 80647 v WFI Insurance Limited T/as Lumley Insurance (2015) 299 FLR 77 at [58] per Darke J.

[51]Ritchie v Woodward (executor of the estate of the late Brian Patrick Woodward); Rujo Pty Ltd v Same [2016] NSWSC 1715.

[52]Ritchie v Woodward (executor of the estate of the late Brian Patrick Woodward; Rujo Pty Ltd v Same [2016] NSWSC 1715 at [476]-[479].

Close

Editorial Notes

  • Published Case Name:

    NGI Savannah Living Communities Pty Ltd v Dunne & Ors

  • Shortened Case Name:

    NGI Savannah Living Communities Pty Ltd v Dunne

  • MNC:

    [2023] QSC 273

  • Court:

    QSC

  • Judge(s):

    Sullivan J

  • Date:

    01 Dec 2023

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Aliferis v Kyriacou (2000) 1 VR 447
6 citations
Jump To
Cite 1 - (2000) 1 VR 447
Cite 2 - (2000) 1 VR 447
Cite 3 - (2000) 1 VR 447
Cite 4 - (2000) 1 VR 447
Cite 5 - (2000) 1 VR 447
Cite 6 - (2000) 1 VR 447
Ashala Model Agency Pty Ltd (in liq) v Featherstone[2017] 2 Qd R 1; [2016] QSC 121
3 citations
Jump To
Cite 1 - [2016] QSC 121
Cite 2 - [2016] QSC 121
Cite 3 - [2017] 2 Qd R 1
Barnes v Addy (1874) L.R. 9 Ch. App. 244
3 citations
Jump To
Cite 1 - (1874) L.R. 9 Ch. App. 244
Cite 2 - (1874) L.R. 9 Ch. App. 244
Cite 3 - (1874) L.R. 9 Ch. App. 244
Briginshaw v Briginshaw (1938) 60 C.L.R 336
2 citations
Jump To
Cite 1 - (1938) 60 C.L.R 336
Cite 2 - (1938) 60 C.L.R 336
Britter v Sprigg (1900) 26 VLR 65
4 citations
Jump To
Cite 1 - (1900) 26 VLR 65
Cite 2 - (1900) 26 VLR 65
Cite 3 - (1900) 26 VLR 65
Cite 4 - (1900) 26 VLR 65
Charter Pacific Corporation Ltd v Belrida Enterprises Pty Ltd [2003] QCA 375
2 citations
Jump To
Cite 1 - [2003] QCA 375
Cite 2 - [2003] QCA 375
Chittick v Maxwell (1993) 118 A.L.R 728
4 citations
Jump To
Cite 1 - (1993) 118 A.L.R 728
Cite 2 - (1993) 118 A.L.R 728
Cite 3 - (1993) 118 A.L.R 728
Cite 4 - (1993) 118 A.L.R 728
Cornelius v Barewa Oil & Mining N.L. (1982) 64 FLR 287
1 citation
Jump To
Cite 1 - (1982) 64 FLR 287
Coventry v Charter Pacific Corporation Limited (2005) 227 CLR 234
5 citations
Jump To
Cite 1 - (2005) 227 CLR 234
Cite 2 - (2005) 227 CLR 234
Cite 3 - (2005) 227 CLR 234
Cite 4 - (2005) 227 CLR 234
Cite 5 - (2005) 227 CLR 234
Cummings v Claremont Petroleum NL (1996) 185 CLR 124
4 citations
Jump To
Cite 1 - (1996) 185 CLR 124
Cite 2 - (1996) 185 CLR 124
Cite 3 - (1996) 185 CLR 124
Cite 4 - (1996) 185 CLR 124
Emma Silver Mining Company v Grant (1880) 17 Ch D 122
5 citations
Jump To
Cite 1 - (1880) 17 Ch D 122
Cite 2 - (1880) 17 Ch D 122
Cite 3 - (1880) 17 Ch D 122
Cite 4 - (1880) 17 Ch D 122
Cite 5 - (1880) 17 Ch D 122
Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22
2 citations
Jump To
Cite 1 - [2007] HCA 22
Cite 2 - [2007] HCA 22
Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89
1 citation
Jump To
Cite 1 - (2007) 230 CLR 89
Grimaldi v Chameleon Mining NL (2012) 287 ALR 22
2 citations
Jump To
Cite 1 - (2012) 287 ALR 22
Cite 2 - (2012) 287 ALR 22
In Re P Macfadyen, Ex Parte The Vizianagaram Mining Co Ltd [1908] 2 KB 817
2 citations
Jump To
Cite 1 - [1908] 2 KB 817
Cite 2 - [1908] 2 KB 817
Jones v Dunkel (1959) 101 CLR 298
2 citations
Jump To
Cite 1 - (1959) 101 CLR 298
Cite 2 - (1959) 101 CLR 298
Lovell v Penkin [2008] FCA 637
4 citations
Jump To
Cite 1 - [2008] FCA 637
Cite 2 - [2008] FCA 637
Cite 3 - [2008] FCA 637
Cite 4 - [2008] FCA 637
Mercedes Holdings Pty Ltd v Waters [2011] FCA 236
3 citations
Jump To
Cite 1 - [2011] FCA 236
Cite 2 - [2011] FCA 236
Cite 3 - [2011] FCA 236
Mercedes Holdings Pty Ltd v Waters (No 5) [2011] FCA 1428
1 citation
Jump To
Cite 1 - [2011] FCA 1428
Pyramid Building Society (in liq) (1991) 6 ACSR 405
3 citations
Jump To
Cite 1 - (1991) 6 ACSR 405
Cite 2 - (1991) 6 ACSR 405
Cite 3 - (1991) 6 ACSR 405
Re Sharp; Ex parte Tietyens Investments Pty Ltd (in liq) & Anor [1998] FCA 1367
8 citations
Jump To
Cite 1 - [1998] FCA 1367
Cite 2 - [1998] FCA 1367
Cite 3 - [1998] FCA 1367
Cite 4 - [1998] FCA 1367
Cite 5 - [1998] FCA 1367
Cite 6 - [1998] FCA 1367
Cite 7 - [1998] FCA 1367
Cite 8 - [1998] FCA 1367
Willmott Growers Group Inc v Willmott Forests Ltd (in liq) (1871) LR 7 Ch App 28
2 citations
Jump To
Cite 1 - (1871) LR 7 Ch App 28
Cite 2 - (1871) LR 7 Ch App 28

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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