FEDERAL COURT OF AUSTRALIA

Pleash v Bezel Pty Ltd [2024] FCA 1440

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to r 30.21(1)(b)(i) of the Federal Court Rules 2011 (Cth), the proceeding continue generally against the first respondent.

2.    Order 1 is to take effect nunc pro tunc.

3.    Judgment in favour of the second applicant in the sum of $338,015 against the first respondent.

4.    Judgment in favour of the second applicant in the sum of $520,500 against the second respondent.

5.    The cross-claim dated 9 October 2023 be dismissed.

6.    Subject to orders 7 to 9, the first and second respondents pay the applicants’ costs of the proceeding.

7.    In the event that a party wishes to seek an alternative costs order, that party is to file and serve by 4 pm, 17 December 2024 written submissions (limited to two pages) addressing the alternative costs order that is sought.

8.    In the event that an application is made for an alternative costs order by filing and serving submissions in accordance with order 7, any party seeking to oppose the making of the alternative costs order is to file and serve written submissions (limited to two pages) addressing the basis of their opposition to the alternative costs order by 4 pm, 19 December 2024.

9.    Any application for an alternative costs order will be determined on the papers.

10.    Any submissions filed and served pursuant to orders 7 to 8 are to be emailed to the Associate to Cheeseman J at the time they are served.

11.    In the absence of an application being made in accordance with orders 7 to 8 above, within the timeframes stipulated, order 6 will take effect.

12.    The proceeding in so far as it relates to the third respondent be listed for case management on 20 December 2024.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

CHEESEMAN J:

INTRODUCTION

1    The applicants, Etarip Pty Ltd (in liquidation) and its liquidator, Blair Alexander Pleash, seek to recover two loans which Etarip made to Bezel Pty Ltd and MP01 Pty Ltd. Mr Pleash was appointed as liquidator of Etarip upon its winding up on 19 February 2020. Bezel and MP01 are related companies of Etarip. They shared the same sole director and shareholder, Neville Martin Dunne. The existence of the Bezel Loan and the MP01 Loan, that demand has been made for repayment, and that no repayment has been made, is admitted.

2    MP01 was the only respondent which appeared and defended the proceeding.

3    Bezel and MP01 originally shared legal representation. They filed a joint concise response which raised two substantive defences to the debt claims, based respectively on forgiveness of the relevant debts and estoppel. The defences predicated on the forgiveness of the debts arising under the Bezel and MP01 Loans are based on two documents, styled as deeds of forgiveness, each dated 14 February 2018, the Bezel Forgiveness Deed and the MP01 Forgiveness Deed respectively.

4    After the joint concise statement was filed and served, Bezel and MP01 ceased to be commonly represented. Bezel then ceased to participate in the proceeding. Bezel did not file or serve evidence. It did not appear at the hearing. Upon being satisfied that Bezel was on notice of the hearing, I indicated that I would make an order that the proceeding continue generally against it in its absence pursuant to r 30.21(b) of the Federal Court Rules 2011 (Cth). Although Bezel did not appear at the hearing, aspects of the evidence otherwise led in the proceeding bear upon the defences raised by Bezel in the joint concise response. Accordingly, to the extent that is so, I will consider that evidence in determining whether the applicants have established their claim against Bezel.

5    MP01 continued to be represented and defend this proceeding. MP01 subsequently filed an amended concise response and a cross-claim. By its amended response, MP01 added to its existing defences by alleging, in the alternative, that the applicants lacked standing to recover the loans and/or that Etarip has waived its right to recover the loans.

6    MP01’s defence based on an allegation that Etarip lacked standing is predicated on Bezel having replaced Etarip as trustee of the Etarip Trust (established by the Etarip Discretionary Trust Deed executed on or about 5 August 2013 and discussed in further detail below). MP01 alleges that the MP01 Loan was made by Etarip in its capacity as trustee of the Etarip Trust. Accordingly, the debt chose was the property of the Etarip Trust. Further, that Etarip was replaced as trustee of the Etarip Trust by Bezel pursuant to the execution of a “Deed of variation of discretionary trust” between Etarip, Bezel and Mr Dunne (Etarip Variation Deed) which on its face is dated 21 April 2019. Accordingly, Etarip, having been replaced as trustee, lacked standing to recover the debt, which is the property of the Etarip Trust.

7    MP01’s defence which challenges Etarip’s right to recover the loans based on the debt having been forgiven or otherwise waived, is predicated on the MP01 Forgiveness Deed and the circumstances in which it was executed. MP01 contends that upon the proper construction of the MP01 Forgiveness Deed, the MP01 debt has been forgiven. Alternatively, MP01 seeks rectification of the MP01 Forgiveness Deed with a view to effecting that outcome. MP01 further asserts that by reason of the circumstances in which the MP01 Forgiveness Deed came to be executed, Etarip has waived any entitlement to recover the MP01 debt.

8    To counter the allegation that Etarip lacked standing because the debt choses were trust property, the applicants extended their claim for relief by seeking to have Mr Pleash appointed as a receiver of the two debt choses. In further response to MP01’s defence based on an allegation that the applicants lacked standing, the applicants contend that certain of the documents on which MP01 relies should be declared void pursuant to s 228 of the Property Law Act 1974 (Qld) as an alienation of property with the intent to defraud creditors.

9    There is another phalanx to this proceeding which is presently stayed. The applicants bring alternative claims in which they seek to recover the payments made by Etarip to Bezel and MP01 as voidable preferences and to recover damages for breach of director’s duties against Mr Dunne. That part of the proceeding which is brought in the alternative to the debt claims was stayed by consent on 13 May 2022 pending the determination of proceedings in the Supreme Court of Queensland or further order of the Court. I will refer to the proceeding in the Supreme Court of Queensland as the Queensland Proceeding or the NGI Proceeding.

10    On the last day of the hearing, the applicants informed the Court that judgment had been delivered in the Queensland Proceeding on 1 December 2023: NGI Savannah Living Communities Pty Ltd v Dunne & Ors [2023] QSC 273 (Sullivan J) (NGI v Dunne).

11    Mr Dunne and MP01 were the defendants in that proceeding. They had common legal representation which differed from MP01’s representation in the present proceeding.

12    Etarip was also a defendant in the Queensland Proceeding. NGI Savannah Living Communities Pty Ltd caused default judgment to be entered against Etarip on 27 March 2019. The default judgment entered against Etarip informs the proof of debt lodged by NGI in the liquidation of Etarip.

13    Mr Dunne was declared bankrupt on Friday, 17 March 2023 very shortly before the commencement of the hearing of the Queensland Proceeding on Monday, 20 March 2023: NGI v Dunne at [3],[8]. This raised several jurisdictional issues which were considered by Sullivan J in NGI v Dunne commencing at [232]. In the result, Sullivan J found that some of the claims pleaded by NGI against Mr Dunne were provable debts in his bankruptcy under s 82 of the Bankruptcy Act 1966 (Cth) and were therefore mandatorily stayed unless leave to proceed was obtained from this Court. NGI did not obtain such leave and does not appear to have taken steps to do so. For this reason, only those claims which Sullivan J was satisfied were not provable debts in Mr Dunne’s bankruptcy, namely the claims for misleading and deceptive conduct which were not based substantially on the same allegations as the claims for provable debts were the subject of the orders made in NGI v Dunne. Mr Dunne was found to have engaged in misleading and deceptive conduct for which he was liable to NGI in the sum of $2,278,293.38 plus interest of $697,969.09 pursuant to s 236 of the Australian Consumer Law (Qld) (ACLQ) and s 60 of the Civil Liability Act 2003 (Qld). MP01 was ordered to pay damages in the sum of $237,500 plus interest of $95,608.69 to NGI for its involvement in Mr Dunne’s misleading and deceptive conduct. The remaining claims in the Queensland Proceeding appear to continue to be stayed.

14    The applicants have not applied to lift the stay of their alternative claims in this proceeding but have foreshadowed such an application as a potentiality.

15    Notwithstanding that MP01 was represented in this proceeding, the Court has not been informed of whether there is any appeal or intention to appeal on foot in respect of the judgment given in the Queensland Proceeding. It will be necessary to return to the subject matter of the Queensland Proceeding below.

16    On 24 October 2023, on the application of the applicants, I ordered that Christopher Baskerville in his capacity as the trustee in bankruptcy for Mr Dunne be joined to this proceeding as the fourth respondent. Mr Baskerville neither opposed nor consented to his joinder in his capacity as trustee of Mr Dunne’s estate in bankruptcy and MP01 did not oppose his joinder.

17    Mr Baskerville has not lodged an address for service. He has not taken any active steps in the proceeding.

EVIDENCE

18    Mr Pleash was called for the applicants. The applicants relied on two affidavits of Mr Pleash affirmed on 24 February 2022 and 5 September 2023 and the documents exhibited thereto. When Mr Pleash gave his oral evidence, he swore an oath and adopted the contents of his affidavits. He was cross-examined.

19    MP01 submits that “although not an impressive witness, Mr Pleash’s evidence was largely a vehicle for tendering documents which speak for themselves and thus no credit issues arise.” For present purposes, it suffices to note that MP01 does not directly challenge Mr Pleash’s credit. Mr Pleash was prepared to make concessions where appropriate in the course of his cross-examination.

20    The applicants also relied on an affidavit of Emma Theresa Boyce affirmed on 13 February 2024 in support of its application that the proceeding continue generally against Bezel in its absence.

21    MP01 relied on affidavit evidence from Mr Dunne and from its solicitor, Jay Jih-Hui Tseng. Mr Tseng was not required for cross-examination. On 24 October 2023, I granted leave to MP01 to rely upon paragraphs 1 to 12, 16 and 18 to 25 of Mr Tseng’s affidavit affirmed on 16 October 2023 and pages 1 to 63 and 442 to 572 of exhibit JJT-7 thereto, subject to any final determination as to relevance. Mr Tseng’s evidence concerns various ASIC company searches of Etarip, MP01 and Bezel; documents filed and judgments entered in the Queensland Proceeding; and reports prepared in relation to the liquidation of Etarip. I was subsequently satisfied as the hearing unfolded that Mr Tseng’s evidence was relevant. Accordingly, it will be admitted.

22    As mentioned, Mr Dunne was called by MP01 as a witness. Although this proceeding includes a claim against Mr Dunne for damages pursuant to s 1317 of the Corporations Act 2001 (Cth), that part of the proceeding is presently stayed as mentioned above.

23    MP01 read affidavits affirmed by Mr Dunne on 4 November 2022, 17 February 2023, 9 October 2023 and 17 October 2023.

24    On 13 July 2022, I made orders that any evidence filed or served by the respondents after 22 July 2022 could not be relied upon by the respondents without leave. On 7 June 2023, I made orders granting leave to MP01 to rely on the affidavits of Mr Dunne affirmed on 4 November 2022 and 17 February 2023. Mr Dunne’s affidavit affirmed on 9 October 2023 was filed in accordance with orders made on 5 October 2023. Mr Dunne’s affidavit affirmed on 17 October 2023 sets out clarifications to his affidavit affirmed on 9 October 2023.

25    Similarly to Mr Pleash, when Mr Dunne gave his oral evidence he took an oath and adopted the contents of his affidavits which he had affirmed on his oath. He was cross-examined. His cross-examination occupied most of the hearing. The applicants submit that:

(1)    Mr Dunne was a very unimpressive witness;

(2)    Mr Dunne was not a witness of truth;

(3)    Mr Dunne intentionally misrepresented matters concerning the financial affairs of Etarip to the liquidator; and

(4)    none of Mr Dunne’s evidence should be accepted unless otherwise proved by contemporaneous records.

26    MP01 counters by submitting that while Mr Dunne was not a particularly persuasive witness, his evidence should not be rejected in its entirety because there are cogent explanations which explain the criticisms the applicants make of Mr Dunne’s evidence.

27    It is necessary for me to assess and make findings in relation to Mr Dunne’s credit and reliability and the extent to which I accept his evidence. I found Mr Dunne to be a singularly unimpressive witness. I have concluded that he was not a witness of truth. In his dealings with the liquidator, and in this Court, Mr Dunne intentionally misrepresented matters concerning the financial affairs and operation of Etarip. I do not accept his evidence except where it is supported by independent evidence or is otherwise against his interest. I have not reached this conclusion lightly. My reasons for reaching this conclusion are addressed below.

28    No evidence was filed or read by Bezel.

BACKGROUND

29    Based on the evidence, I make the following findings relevant to the issues in dispute in this proceeding.

Etarip

Incorporation

30    Etarip was incorporated on 24 July 2013. At that time and until 8 September 2015, the sole director and sole shareholder of Etarip was Frances Margaret Wolff. Ms Wolff at that time was in a personal relationship with Mr Dunne. Mr Dunne replaced Ms Wolff as the sole director and sole shareholder from 8 September 2015. At all times relevant to this proceeding, Mr Dunne has owned and controlled Etarip, in his capacity as sole director and sole shareholder.

31    In their joint concise response dated 23 December 2021, Bezel and MP01 allege that prior to its entry into liquidation in or around February 2020, Etarip was the trustee of a discretionary trust known as the Etarip Trust and had limited operations, largely confined to the making of the Bezel Loan and the MP01 Loan and the receipt of $1.1 million from Battistin Builders Pty Ltd. In their joint concise response, Bezel and MP01 make no reference to Etarip having been replaced as trustee of the Etarip Trust on 21 April 2019 by reason of the Etarip Variation Deed.

The Etarip Trust

32    On or about 5 August 2013, Ms Wolff executed on behalf of Etarip the Etarip Discretionary Trust Deed (Etarip Trust Deed) which established the Etarip Trust. The copy of the Etarip Trust Deed in evidence is undated. Mr Dunne deposes to the deed being executed on or about 5 August 2013. The applicants do not contend to the contrary. Etarip was appointed as the trustee of the Etarip Trust. Mr Dunne was named as the Principal as defined in the Etarip Trust Deed. The Etarip Trust Deed creates two classes of beneficiary. Class A beneficiaries comprise the Principal and categories of person related to or through him or otherwise appointed as beneficiaries by him as Principal. Class B beneficiaries comprise companies in which any Class A beneficiary is a director or shareholder and their related bodies corporate, trusts in which any Class A beneficiary is a beneficiary and partnerships in which any Class A beneficiary is a partner.

33    The Etarip Trust Deed confers the power to lend and to borrow money on the trustee. Clause 9.6 provides as follows:

(Power to Lend) to lend by way of a secured or unsecured loan or loans to any person firm or corporation which may be made at call or for a period of time, at a rate of interest or no interest and with or without security.

34    Clause 9.17 provides as follows:

(Power to Borrow Money) to raise or borrow any money in any manner whatsoever either alone or jointly with another or others (including but without limitation by way of overdraft account, letters of credit or bill acceptance and discounting facility) from the Trustee in the personal capacity of the Trustee or from any other person or from any bank, financial institution, company or trust on terms and conditions and for purposes as the Trustee may in its absolute discretion decide and to secure the repayment of any moneys so raised or borrowed or raised by or for any other person including the Trustee in the personal capacity of the Trustee by way of mortgage, charge or other security of the whole or any part or parts of the Fund with or without power of sale and no mortgagee advancing money on any mortgage charge or other security purporting to be made under this power shall be concerned as to the necessity for any such borrowing or as to the purpose for which it is required or to see to the application thereof;

35    Pursuant to the Etarip Trust Deed, Etarip as trustee was required to maintain control over the books, records and financial information of the trust: cl 13.2. This is consistent with its equitable duty to account and statutory obligations as a corporate trustee under s 286 of the Corporations Act. There is no evidence of Etarip maintaining the usual records that one would expect a corporate trustee to maintain, including for example, copies of all resolutions of Etarip as trustee, detailed statements of assets and liabilities, tax returns and trust accounts. There is no record of any distributions made from the trust. I infer that Etarip did not maintain any trust records. This finding is significant when I come to consider whether in fact Etarip operated exclusively as trustee of the Etarip Trust, which is an essential integer of MP01’s defence.

Transfers from Etarip’s account to MP01 and Bezel

36    So far as is revealed in the evidence, it appears that Etarip operated three bank accounts, each of which was styled by name as a trust account. Each account was opened with the Commonwealth Bank of Australia (CBA) in the name of “Etarip Pty Ltd as trustees for Etarip Trust”. Each account was closed prior to Mr Pleash’s appointment. The account details were as follows:

(1)    account number ending in 6046, opened on 29 July 2016 and closed on 10 September 2018;

(2)    account number ending 4154, opened on 30 March 2015 and closed on 10 September 2018; and

(3)    account number ending 5090, opened on 26 August 2013 and closed on 3 December 2013.

37    There is no evidence that Etarip had any other bank accounts. The relevant account for the purpose of this proceeding is the account ending 4154.

38    MP01 and Bezel admit that the following payments were advanced to them respectively from Etarip’s bank account ending in 4154:

Transfer from Etarip to Bezel

Transfer from Etarip to MP01

39    The advances made by Etarip to Bezel and MP01 are not in the subject of any loan documentation. Similarly, payments made from the Etarip bank accounts to or at Mr Dunne’s direction, are not supported by any distribution statements. Indeed, as mentioned above, there are no trust records in relation to the Etarip Trust other than the purported constituent documents and the bank statements.

Forgiveness Deeds

40    As mentioned, there are two deeds of debt forgiveness and release from contractual obligations in evidence, both dated on their face 14 February 2018: the Bezel Forgiveness Deed and the MP01 Forgiveness Deed (together, the Forgiveness Deeds). It will be necessary to consider the Forgiveness Deeds and Mr Dunne’s evidence in relation to them in detail. At this stage, it suffices to set out in brief terms some of the essential findings about the Forgiveness Deeds.

41    The Forgiveness Deeds were drafted by Mr Dunne and executed by Mr Dunne on behalf of all parties to the deeds.

42    Mr Dunne’s evidence in relation to the Forgiveness Deeds evolved over time. He has given evidence in respect of the Forgiveness Deeds on numerous occasions — in his affidavits of 17 February 2023, 5 October 2023 and 17 October 2023 (despite making no reference to the Forgiveness Deeds in his first affidavit of 4 November 2022) and in his cross-examination. Curiously his evidence on this topic evolved and improved over time. I will return to Mr Dunne’s evidence on this topic below.

43    I now turn to the Forgiveness Deeds themselves. The Forgiveness Deeds have substantially similar if not identical operative clauses and recitals under the heading “background” and define the relevant parties as “creditor” and “debtor”. The singular feature of both Forgiveness Deeds is that Etarip is defined as the debtor and not the creditor of Bezel and MP01.

44    On the face of each of the Forgiveness Deeds:

(1)    Etarip entered each in its capacity as trustee of the Etarip Trust;

(2)    Etarip is described as the debtor on the first page, the schedule to the deed and the execution blocks in each deed;

(3)    Bezel is described as the creditor in the Bezel Forgiveness Deed;

(4)    MP01 is described as the creditor in the MP01 Forgiveness Deed;

(5)    Each deed has been executed for Etarip by:

(a)    Mr Dunne in his capacity as the sole director and company secretary, purportedly in accordance with s 127 of the Corporations Act; and

(b)    Mr Dunne on behalf of the respective creditor with the notation “signed on behalf of Neville Dunne by its duly appointed agent…”.

45    The effect of each of the Forgiveness Deeds on its face is to forgive loans owed by Etarip in its capacity as trustee of the debtor to MP01 and Bezel respectively.

46    As mentioned, in this proceeding, MP01 seeks to have the MP01 Forgiveness Deed either construed or rectified to accord with the construction posited by MP01 and what MP01 contends was the common intention of the parties, namely, to forgive the debt owed by MP01 to Etarip.

47    When active in this proceeding, Bezel sought to rely on the Bezel Forgiveness Deed. It did not seek relief in the form of rectification of the Bezel Forgiveness Deed.

Appointment of Mr Pleash as liquidator of Etarip

48    As mentioned, Mr Pleash was appointed liquidator of Etarip on 19 February 2020. At the time of Mr Pleash’s appointment, Mr Dunne was the sole director and sole shareholder of Etarip. Mr Dunne deposes to having signed a form 6010 for the “voluntary deregistration of a company” in respect of Etarip on 4 October 2018. He says that as at 4 October 2018, he was under the impression that Etarip had been deregistered. However, Etarip was not deregistered.

The Queensland Proceeding

49    On 16 October 2018, NGI commenced the Queensland Proceeding against eight defendants, including Mr Dunne, Etarip and MP01. Etarip did not file a defence in the Queensland Proceeding. Relevantly for the purpose of this proceeding, an issue in the NGI Proceeding was the receipt by Etarip of $1.1 million from Serge Battistin of Battistin Builders. The claim against Etarip in the Queensland Proceeding was framed as a claim for knowing assistance in and/or receipt from Mr Dunne’s alleged breach of fiduciary duty and/or a claim for being knowingly concerned in or party to Mr Dunne’s misleading and deceptive conduct in breach of s 18 of the ACLQ. The $1.1 million received by Etarip was paid into a bank account operated by Etarip on 14 July 2016. The evidence in the present proceeding concerning this payment is that it was paid into the CBA account ending 4154 on 14 July 2016 with a transaction description on the account statement of “WBC Credit”. In Etarip transaction sheets, versions of which Mr Dunne prepared in the 2018 and 2020, he described this transaction as “consultancy fee Serg Battistin”. I will return to the significance of the Etarip transaction sheets below.

50    In the Queensland Proceeding, Justice Sullivan made findings concerning the circumstances in which a larger payment was made to Battistin Builders by NGI and also in relation to the subsequent payment of the $1.1 million by Battistin Builders to Etarip: NGI v Dunne, [142]-[146]. The fact that Etarip received the $1.1 million payment from Battistin Builders is not in dispute in this proceeding. In this proceeding, Mr Dunne gives evidence as to the circumstances in which he says the $1.1 million payment was made to Etarip. In his evidence in this proceeding, Mr Dunne disputes that the facts relating to the $1.1 million payment were as found in the Queensland Proceeding. Although he was a defendant in the Queensland Proceeding, Mr Dunne did not give evidence in the Queensland Proceeding. As mentioned, he declared bankruptcy shortly before the hearing of the Queensland Proceeding commenced.

51    There was no determination on the merits of the claim against Etarip in the Queensland Proceeding because on 27 March 2019, judgment was entered against Etarip by default. The default judgment is relevantly in the following terms:

[Etarip] not having filed a Notice of Intention to Defend,

THE JUDGMENT OF THE COURT IS THAT:

1.    ...

2.    [Etarip] pay to the plaintiff damages to be assessed upon the plaintiff’s Statement of Claim, and that the damages be assessed by the District Court.

This judgment is conditional on the damages being assessed.

52    For present purposes, it suffices to observe that the allegations made against Etarip in the Queensland Proceeding concerned the $1.1 million payment to Etarip by Battistin Builders which formed the basis of NGI’s claim for compensation in the form of damages against Etarip.

Etarip Variation Deed

53    MP01 contends that on 21 April 2019, Etarip was replaced as the trustee of the Etarip Trust by Bezel. MP01 relies on Mr Dunne’s evidence and the Etarip Variation Deed. Mr Dunne’s signature appears in the execution clauses for each of the parties to the Etarip Variation Deed. The only change addressed in the Etarip Variation Deed is the replacement of Etarip as trustee, effective from the date of execution of the deed. The terms of the original Etarip Trust Deed were otherwise not purported to be altered by the Etarip Variation Deed.

54    As mentioned, in the joint concise statement dated 23 December 2021 filed by Bezel and MP01 at the time when both companies were controlled by Mr Dunne, no reference was made to the Etarip Variation Deed and it was positively asserted that Etarip was the trustee of the Etarip Trust.

55    Contextually it is significant that the Etarip Variation Deed is dated on its face shortly after default judgment was entered against Etarip.

56    Mr Dunne claims that he was advised of serious health problems between February and March 2019. He says in his affidavit of 5 October 2023 that:

I undertook a review of all of my business activities which I had, at the time. I decided (at a point prior to my major heart operation), to appoint a new trustee of the Etarip Trust (as I had lodged paperwork to deregister Etarip on 4 October 2018), and then vest the trust as at this stage, I wanted to wind down the affairs of Etarip and the Etarip Trust. This was just one of a number of decisions regarding my personal affairs which I had made at the time.

57    I will return to Mr Dunne’s account in detail below.

NGI’s statutory demand

58    Mr Pleash gives evidence that on 15 August 2019, after failing to receive payment of the judgment debt from Etarip, NGI issued a creditor’s statutory demand for payment of the debt to Etarip. In his report to creditors dated 29 April 2020, Mr Pleash reported that:

Ordinary Unsecured Creditors

Upon appointment I received a copy of the Statutory Demand for Payment of Debt (“the Statutory Demand”) filed against the Company by NGI Savannah Living Communities Pty Ltd (“NGI”), the petitioning creditor, on 15 August 2019.

A signed affidavit to the Statutory Demand by Eleanor Goodridge, the Director of NGI, indicates that the Company was indebted to NGI for $1,100.000. I note that this outstanding NGI debt was also disclosed in the Director’s ROCAP.

59    In describing what happened to the business of the company Mr Pleash noted that:

The Director, Neville Martin Dunne, advised in the ROCAP that the Company was not carrying on a business prior to my appointment. The Director has advised that the Company had no employees.

I understand that the Company was an asset holding Company.

Upon appointment I was advised by the petitioning creditor’s representative that the Company received proceeds from a loan in the amount of $1,100,000 from NGI, the petitioning creditor, from the purchase of the Mareeba residential retirement village owned by NGI.

Eleanor Goodridge, the Director of NGI, indicated in NGI’s Statutory Demand for Payment of Debt dated 15 August 2019 that payment of $1,100,000 towards the outstanding debt has been demanded since at least 16 October 2018.

As noted previously, the ROCAP provided by the Director indicates that the Company transferred a $1,119,194.03 business loan to MB01, a related party, for the purchase and operation of The Coffee Club Bulimba, at an interest rate of 5% per annum.

60    Mr Pleash further stated in his report to creditors:

Loaned Funds

As detailed earlier in this report, I am conducting investigations in the $1,100,000 loaned by NGI and dispersed through various CBA bank accounts.

As detailed earlier, the Director has provided documents indicating these funds were utilised to pay for the purchase and operation of The Coffee Club Bulimba by MB01.

61    The description of the debt in NGI’s statutory demand is as follows:

Description of the debt

$1,100,000 (One Million One Hundred Thousand dollars) being funds received by Etarip Pty Ltd, being proceeds of a sham loan between Anthony Preston Pty Ltd and Battistin Builders Pty Ltd, payment of which was demanded on the 16th October, 2018, payment of which has not been received.

62    The ROCAP referred to in the Report to Creditors is the Report on Company Activities and Property which Mr Dunne completed in respect of Etarip and which is dated 6 March 2020 (the Etarip ROCAP).

63    Etarip did not obtain an order setting aside the statutory demand nor did it pay the sum claimed in the statutory demand.

64    On 20 November 2019, NGI filed an originating process in this Court seeking orders that Etarip be wound up on the ground of insolvency and, as mentioned, Mr Pleash deposes to his appointment on 19 February 2020 as the liquidator of Etarip.

65    On 10 July 2020, NGI lodged a proof of debt in the sum of $1.1 million in the liquidation of Etarip with the following details of the debt claimed:

66    In Mr Pleash’s Statutory Report to Creditors dated 29 April 2020, NGI’s Statutory Demand for Payment of Debt is acknowledged as a liability owing to an unsecured creditor of Etarip.

67    There is however no evidence to suggest that damages have been assessed by the District Court in Queensland in accordance with the default judgment against Etarip.

68    In early March 2021, Mr Dunne was served with an examination and document production summons. Mr Dunne was publicly examined on 27 May 2021 and 22 July 2021. NGI entered into an agreement with the liquidator to fund the examination process.

Etarip Deed Poll

69    In evidence is a “Deed Poll of Amendment” of the Etarip Trust dated 12 July 2021 which on its face appears to have been entered into by Bezel with the consent of Mr Dunne (Etarip Deed Poll). The Etarip Deed Poll is signed by Mr Dunne as the sole director and secretary of Bezel and on his own behalf personally. By the Etarip Deed Poll, Bezel purportedly as trustee of the Etarip Trust appoints the vesting day of the Etarip Trust as 12 July 2021 and acknowledges that it wishes to distribute the entirety of the Trust Property of the Etarip Trust to Mr Dunne.

70    In his evidence under cross-examination, Mr Dunne gave inconsistent evidence on this topic.

71    He first asserted that he understood that the “vesting documents were done in 2019”. There is no independent evidence to support Mr Dunne’s assertion — the only document in evidence answering the description of a vesting document is the Etarip Deed Poll which is dated 12 July 2021. Mr Dunne said that he had given instructions for the vesting documents to be prepared in late 2018 and only became aware in or around May 2021 that the Etarip Trust had not vested. He says he then took steps to have the necessary documents drawn up. He said that he understood vesting the trust to mean to “Finish the trust up”.

72    He next asserted relatively quickly after his first account that because he had caused Etarip to be deregistered in early October 2018, he understood that “when you deregister the trustee, the appointer agrees, then the trustee is vested” and he subsequently came to understand that that was incorrect. Despite his assertion, Etarip was not deregistered in October 2018.

73    Another implausible feature of Mr Dunne’s evidence on this topic was that on his version of events, including the circumstances surrounding the Forgiveness Deeds, as at 2019, the Etarip Trust had no assets and no creditors. Accordingly, it was put to him that there would be no reason to change the identity of the trustee. Mr Dunne said that he caused Bezel to be appointed as trustee in Etarip’s place because he “then made the decision that because the previous trustee was being deregistered, that it would be correct and proper to appoint a new trustee that was still registered, so I appointed Bezel”. He then said that he appointed Bezel to vest the trust, but Etarip had not been deregistered and was capable of taking the steps necessary to cause the trust to vest. I will return to Mr Dunne’s evidence on this topic below.

74    As with the purported change in the identity of the trustee of the Etarip Trust, there is no reference in the joint concise statement dated 23 December 2021 filed by Bezel and MP01 to property of the trust having vested in Mr Dunne on 12 July 2021.

75    Before turning to Bezel and MP01 it is convenient to first say a little more about Mr Dunne.

Mr Dunne

76    Mr Dunne is about 57 years old. Mr Dunne has a bachelor’s degree in business and deposes to having taken some law subjects as part of his business degree.

77    Mr Dunne described his occupation as “a consultant to a property development group”.

78    Mr Dunne’s primary residence is a residential property in Bulimba, Brisbane, Queensland. He lives with his adult son, Braddon Dunne, and current partner. He has lived at the Bulimba property since 2018. The registered owner of the property is MP01. Mr Dunne contends that MP01 holds the property as trustee of a trust known as the MP Trust.

79    Mr Dunne’s residential address (or the property adjacent to it) is nominated as the place of business of many of the companies of which he is or was a director including Bezel, Lifestyle Resorts Pty Ltd, Resorts Lifestyle Developments Pty Ltd, Phantom Cigar Pty Ltd, Lifestyle Resorts 685 Pty Ltd, Lifestyle Resorts Albert Pty Ltd and MP01. The personal name searches that are in evidence for various forms of Mr Dunne’s name and birthdate reveal that he has been director and secretary of many companies. Mr Dunne is, or has been, the director in many instances, the sole director, of over 40 companies (by my count on the evidence in these proceedings). Mr Dunne himself acknowledges that he has been a director of approximately 35 to 40 companies.

80    As mentioned above, Mr Dunne deposes to a number of health issues which he says occurred between October 2018 and May 2019. Much of this evidence was admitted subject to a s 136 limitation as to Mr Dunne’s understanding of the nature of the medical issues he claims to have suffered, there being no medical evidence in support. It will be recalled that it was in mid-October 2018 that the Queensland Proceeding was commenced against Mr Dunne and others, including Etarip and MP01. It is unproductive to recite Mr Dunne’s evidence regarding his health issues in full other than to observe that Mr Dunne describes himself as having a major heart operation in early May 2019. No independent supporting documentation was annexed to Mr Dunne’s affidavit in support of his claimed medical issues. Mr Dunne repeated some of his health-related claims during his cross-examination. He also claimed to have suffered from brain seizures in 2020. He did not refer to suffering brain seizures in his affidavit evidence. Mr Dunne first referred to brain seizures when attempting to explain why he had difficulty recalling the answers he had given when examined as part of the liquidator’s examinations in July 2020 and in recalling a balance sheet for Etarip which he prepared and sent to Mr Pleash in March 2020 which is described in further detail below.

81    As I have identified at paragraph 27 above, I consider it unsafe to place any reliance on Mr Dunne’s evidence unless it is corroborated by contemporaneous documentation. Accordingly, I do not accept Mr Dunne’s evidence in relation to the medical issues he claims to have experienced between October 2018 and May 2019 or his claim to have suffered brain seizures in 2020. Even if I were to accept that Mr Dunne had experienced some health issues, which I do not, I reject Mr Dunne’s attempts to rely on his claimed medical issues to excuse the inconsistencies and implausibility inherent in many parts of his evidence. I do not accept that his asserted medical issues were what motivated him to take steps to remove Etarip as trustee of the Etarip Trust and cause Bezel to vest the Etarip Trust. The steps that Mr Dunne caused to be taken in relation to Etarip were undertaken in the shadow of the default judgment which had been obtained against it in the Queensland Proceeding. It was in Mr Dunne’s interest for Etarip to appear to be an empty shell with no assets and no creditors.

82    Mr Dunne declared his bankruptcy on 17 March 2023. As mentioned earlier, Mr Dunne did this very shortly before the commencement of the hearing of the Queensland Proceeding.

Bezel

83    Bezel was incorporated on 4 December 2017. The most recent company search in evidence records that Mr Dunne is the sole director, secretary and shareholder of Bezel. By reason of his bankruptcy, Mr Dunne is now disqualified from acting as its director.

84    As mentioned above, the applicants seek to recover the sum of $338,015 from Bezel. The fact of the loan, that demand for repayment has been made and that there has been no repayment are not in issue.

85    As mentioned, in its concise response in this proceeding, Bezel contends that on 14 February 2018, it entered into the Bezel Forgiveness Deed which had the effect of forgiving the debt it owed to Etarip. I will address this issue below.

86    The applicants seek a declaration that the Etarip Variation Deed and Etarip Deed Poll are void under s 228 of the Property Law Act. If the Etarip Variation Deed and Etarip Deed Poll are not declared void, then the effect of those documents is that Bezel became the trustee of the Etarip Trust from 21 April 2019 and will be discharged from that office upon the property of the trust being vested in Mr Dunne pursuant to the Etarip Deed Poll.

87    ASIC has commenced an action to deregister Bezel but has delayed that action pending finalisation of these proceedings.

MP01

88    On 19 May 2014, MP0l was incorporated, the MP Trust was established and MP0l was appointed as the trustee of the MP Trust.

89    On 23 May 2014, Mr Dunne was appointed as sole director of MP01. On 18 February 2016, Mr Dunne was appointed as sole secretary of MP01. Mr Dunne was also the sole shareholder .

90    The MP Trust was settled by Jonathan Joseph Farrah by a trust deed dated 19 May 2014. As noted above, Mr Dunne asserts that MP01 as trustee for the “MP01 Trust” purchased the Bulimba property. Mr Dunne asserts that MP01 used monies loaned to it by Etarip for inter alia the construction of a house on the Bulimba property, a house in which Mr Dunne and his family reside.

91    The MP Trust includes a power to lend and borrow monies: cll 9.6 and 9.17.

92    As mentioned, MP01 contends in its amended concise response that on 14 February 2018, it entered into the MP01 Forgiveness Deed which had the effect of forgiving the relevant debt. I will address this issue below.

93    In March 2023, upon his bankruptcy, Mr Dunne ceased being sole director and shareholder of MP01. He was replaced as sole director and shareholder by his son, Braddon. Mr Dunne continued providing instructions to the solicitors for MP01 in relation to this proceeding after he ceased his directorship of MP01. In his cross-examination Mr Dunne volunteered that he was contracted as a consultant to “a group of companies”. Upon further questioning, he said that it was his son Braddon and not him who answered questions regarding MP01’s conduct of this proceeding. Mr Dunne said that he himself had observed in some meetings with Braddon and MP01’s solicitors that Braddon provided instructions as to the conduct of this proceeding. Mr Dunne said that Braddon mostly did so “autonomously”. Braddon Dunne was not called as a witness and did not give evidence by affidavit in this proceeding.

Related Companies

94    Although the following companies are not parties to this proceeding, they are relevant as a result of their dealings or purported dealings with Etarip.

MB01

95    Mr Dunne was the sole director and shareholder of MB01 Pty Ltd. Shortly after Mr Dunne completed the Etarip ROCAP (which is dated 6 March 2020) Mr Dunne took steps to appoint a liquidator to MB01, with the requisite resolution being passed on 20 March 2020.

96    In Part B of the Etarip ROCAP, Mr Dunne identified MB01 as the only debtor of Etarip as at the date of its winding up. He identified a “business loan” from Etarip to MB01 in the amount of $1,119,194.03 for the purposes of “purchase and run coffee club”. I note that this amount is very close to the amount that Etarip received into the 4154 account on 14 July 2016 with a transaction description on the account statement of “WBC Credit” and elsewhere described by Mr Dunne as “consultancy fee Serg Battistin”. As mentioned, I am satisfied that Mr Dunne misrepresented the position in relation to the MB01 Loan for the purpose of obscuring the position in relation to the MP01 Loan.

97    In Part A of the Etarip ROCAP, in response to the question “is the Company owed money?”, Mr Dunne selected the “yes” cross box and said that the relevant information in respect of the debt was disclosed in the “attached report sent to HC”. “HC” is a reference to Hall Chadwick, the law firm acting for the liquidator and the “attached report” was a reference to an email from Mr Dunne to Mr Pleash dated 4 March 2020 which attached documents described as “etarip full transactions list and balance sheet” (the March 2020 email). The attached transaction lists record both “trans from etarip 154” and “trans to etarip 154”. The attached Etarip Balance Sheet as at March 2020 (the 2020 Etarip Balance Sheet) was prepared by Mr Dunne.

98    In his report to the creditors of Etarip, Mr Pleash said that:

…MB01 is a related party to the Company, as the sole Director and Shareholder of the Company, was also the sole director and shareholder of MB01.

On 20 March 2020, the Director resolved in his capacity as the sole member that MB01 be wound up and that Mohammed Shahin Hussain of H&H Advisory (“H&H”) be appointed as Liquidator of MB01.

On 26 March 2020, I submitted a Proof of Debt (“POD”) in the MB01 Liquidation for $1,119,194.03.

As detailed in my previous Report, I previously sought the removal of Mr Hussain as Liquidator of H&H via a request for a meeting of creditors. To date, Mr Hussain has not convened a meeting of creditors as requested and has disputed the Company's claim in the Liquidation of MB01.

On 16 June 2020, I received a copy of the Statutory Report to Creditors for MB01 (“Statutory Report”). A review of the Statutory Report identifies that it is not anticipated there will be a dividend to creditors of MB01,

As detailed later in this report, a review of further information received by this office identifies that not all funds initially characterised by the Director as a loan to MB01 were actually transferred to MB01.

It appears that a portion of these funds may have been transferred to another related party being MP01 Ply Ltd (“MP01”).

A review of the further information provided identifies that a revised figure of approximately $609,209 may have been transferred to MB01. I am currently conducting further investigations to determine the actual quantum on funds transferred to MB01 Once these investigations are finalised I will revise the Proof of Debt lodged in the Liquidation of MB01.

99    The transfers from Etarip’s bank account to MB01 were significantly less than $1,119,194.03, which was the amount that Mr Dunne represented to Mr Pleash had been lent by Etarip to MB01. Based on the evidence before me it appears that the total amount advanced by Etarip to MB01 and characterised as related to the coffee club business was close to $176,000. It is not necessary for the purpose of this proceeding to make a definitive finding on this issue. It is sufficient to note that the representation made by Mr Dunne to Mr Pleash was false in that it significantly overstated the MB01 Loan. Viewed in context, I am satisfied that Mr Dunne overstated the amount lent to MB01 as a means of obscuring the true position in relation to the MP01 Loan. At the time he did so, Mr Dunne was on the verge of appointing a liquidator to MB01 and given he was the sole director and shareholder would have known that MB01 was unlikely to provide any return to creditors.

Anthony Preston Pty Ltd

100    In addition to being a director of Etarip, Bezel, MP01 and MB01, Mr Dunne was also the sole director of the company known as Anthony Preston Pty Ltd, which was incorporated on 5 May 2010 and deregistered on 30 September 2018.

101    In NGI’s statutory demand to Etarip dated 15 August 2019, it is stated that Etarip owes NGI the amount of $1.1 million being “funds received by Etarip Pty Ltd, being proceeds of a sham loan between [Anthony Preston] and [Battistin Builders], payment of which was demanded on 16th October, 2018, payment of which has not been received”.

ISSUES TO BE DETERMINED

Claim against Bezel

102    It is common ground that Etarip advanced $338,015 to Bezel which has not been repaid. There were only two issues raised on the basis of Bezel’s concise response between the applicants and Bezel. As mentioned, Bezel did not participate in the hearing and did not lead any evidence in support of its contentions.

Issue 1: Was the loan from Etarip to Bezel forgiven?

103    The first Bezel issue is whether the loan to Bezel was forgiven by Etarip as a result of the Bezel Forgiveness Deed.

Issue 2: Is Etarip estopped from recovering the loan from Bezel?

104    The second Bezel issue is whether Etarip is estopped from recovering the loan from Bezel. In the joint concise response, Bezel alleges that it conducted its affairs on the basis that the Bezel Loan had been forgiven or that it was and would not otherwise be liable to repay the loan. Bezel alleges that Etarip induced it to adopt these assumptions, and that Etarip also adopted the same assumptions, or alternatively acquiesced in these assumptions, knowing that they had been adopted by Bezel. Bezel further contends that because a departure from these assumptions would cause detriment to Bezel, Etarip is now estopped from denying them.

Claim against MP01

105    The following issues arise for determination between the applicants and MP01.

Issue 1: Is the debt property of the Etarip Trust?

106    The first MP01 issue which arises is whether the loan to MP01 from Etarip was made in Etarip’s capacity as trustee of the Etarip Trust. Issues 2, 3 and 4 only arise if this issue is determined in favour of MP01 with the result that the debt chose is trust property.

Issue 2: Appointment of Mr Pleash as a Receiver of the property of the Etarip Trust

107    The second MP01 issue is whether Mr Pleash should be appointed as a receiver to the property of the Etarip Trust. This issue involves determination of the following sub-issues:

(a)    Is it necessary for Etarip to establish that it has a liability in respect of which it has a right to be indemnified from the assets of the Etarip Trust?

(b)    If so, does Etarip have a liability in respect of which it has a right to be indemnified from the assets of the Etarip Trust?; and/or

(c)    Is it otherwise just and convenient for Mr Pleash to be appointed receiver?

108    This issue only arises if the MP01 debt chose is property of the Etarip Trust.

Issue 3: Standing

109    The third MP01 issue related to the applicants’ standing. There are three related sub-issues. First, whether the effect of the Etarip Variation Deed and the Etarip Deed Poll is that Etarip does not have standing to recover any debt owed by MP01 to Etarip.

110    If that issue is determined against Etarip, then the next issue which arises is whether Etarip has standing to seek to have the Etarip Variation Deed and the Etarip Deed Poll declared void under s 228 of the Property Law Act. That turns on whether Etarip is a “person prejudiced by the alienation of property” for the purpose of s 228 of the Property Law Act and whether each of, or either of, the two deeds effected an alienation of property with “intention to defraud creditors” within the meaning of s 228 of the Property Law Act.

111    If both those issues are determined in favour of Etarip, then the next issue which arises is whether either or both of the deeds should be declared void pursuant to s 228 of the Property Law Act. If so, does it follow that Etarip has standing to recover the loan made to it by MP01?

112    Issue 3 only arises if Issue 1 is determined against the applicants. That is to say, if the MP01 Loan (and by extension, the Bezel Loan) were made by Etarip in its own right and not as trustee, then no question arises as to Mr Pleash’s standing as Etarip’s liquidator to recover those debts.

Issue 4: Forgiveness of the MP01 Loan

113    The fourth MP01 issue is whether the loan from Etarip to MP01 has been forgiven. This issue requires consideration of whether the MP01 Forgiveness Deed should be construed so that it operates to forgive loans owing by MP01 to Etarip and if not, whether the MP01 Forgiveness Deed should be rectified so that it operates to forgive loans owing by MP01 to Etarip. The final sub-issue is whether the deed is valid as a deed and if not, whether it takes effect as an agreement.

114    It is important to note that the rectification sought by MP01 will only assist MP01 if it establishes that Etarip advanced the MP01 Loan in its capacity as trustee of the Etarip Trust. That is made clear by the fact that MP01 does not seek in its claim for rectification to rectify the description of “Etarip Pty Ltd ACN 164 972 829 ATF Etarip Trust” to be rectified so that it reads “Etarip Pty Ltd ACN 164 972 829”. Senior Counsel for Etarip acknowledged that the claim for rectification, even if made out, will not assist MP01 in establishing that the MP01 Forgiveness Deed covers the MP01 Loan if it was made by Etarip in its own right and not in its capacity as trustee. For this reason, this issue only substantively arises if the first issue is determined against the applicants and MP01 establishes that the loan was made by Etarip in its capacity as trustee of the Etarip Trust.

Issue 5: Estoppel or waiver

115    The final MP01 issue is whether recovery of the loan to MP01 by Etarip is precluded as a result of an estoppel or waiver.

116    MP01 relevantly alleges in its amended concise statement that on or around 14 February 2018, Mr Dunne decided to cause Etarip to forgive the MP01 Loan and Etarip thereby released MP01 from any liability to repay the loan and waived any right to repayment. Further or alternatively, MP01 alleges that from on or around 14 February 2018, MP01 assumed or expected, and conducted its affairs on the basis that, the MP01 Loan had been forgiven or that it was and would not otherwise be liable to repay the loan. MP01 contends that Etarip induced MP01 to adopt these assumptions, and that Etarip itself adopted the same assumptions, or alternatively acquiesced in these assumptions, knowing that they had been adopted by MP01, such that a departure from these assumptions would now cause detriment to MP01. Accordingly, MP01 submits that Etarip is now estopped “by representation, convention or promissory estoppel” from denying these assumptions.

CONSIDERATION

117    Before turning to consider the issues raised for determination, I will address Mr Dunne’s evidence.

Mr Dunne’s evidence

118    Mr Dunne was the key witness called by MP01. His evidence necessarily assumes prominence because he controlled all of the corporate actors involved in the transactions at the heart of this proceeding.

119    MP01 read four affidavits given by Mr Dunne. He was also cross-examined on an affidavit that he had affirmed in the Queensland Proceeding.

120    Mr Dunne was an unimpressive witness. His evidence was inconsistent and changeable. I have concluded that critical parts of his evidence were not reliable. He often dissembled. He frequently failed to answer direct questions notwithstanding that the questions were framed in clear terms. On occasion, his evidence was marked by long pauses. His reluctance to answer straightforward questions gave me the strong impression that he was buying time as he tried to ascertain where the cross-examiner’s line of questioning was going and or trying to conjure a favourable answer. I found it necessary to repeatedly direct him to answer the question he had been asked.

121    When he perceived it to be beneficial to do so, Mr Dunne feigned not being familiar with various legal processes and concepts. A striking example of this was his purported lack of understanding as to the effect that his bankruptcy would have on his creditors’ ability to recover debts owed to them from his assets. The context for Mr Dunne’s evidence on this topic was as follows. Prior to his bankruptcy, Mr Dunne was the sole director and the sole or majority shareholder of a large number of companies, including MP01. Very shortly before he voluntarily entered bankruptcy on 17 March 2023, his 19-year-old son, a university student, took over as the sole director of many of these companies. Mr Dunne was vague about the details of his shareholding in the various companies with which he was associated and which he had controlled over a significant period of time. He asserted that he was not sure because “the accountants usually – well the lawyers set it up”.

122    Mr Dunne did however admit that he transferred his shares in MP01 and resigned as a director of MP01 “because [he] was declaring bankruptcy”. It was put to him that he had declared bankruptcy shortly before the commencement of the hearing of the Queensland Proceeding, resigned as the sole director of MP01 and transferred his shares in that company to avoid the house he lived in being used to repay his debts. He repeatedly avoided answering directly what had been put to him. He claimed to not really be familiar with the bankruptcy process because he himself had not been bankrupt before. When pressed for an answer, he paused for a significant period of time before smirking and saying that he found it difficult to answer yes or no. He ultimately agreed it was a possibility that he might suffer judgment against him in the Queensland Proceeding and that someone might seek to recover that judgment from his assets, including the shares he owned. His concession, such that it was, was faintly made — he said he “presumed” that was correct. This section of Mr Dunne’s evidence underscored the lack of solemnity with which he approached giving evidence before the Court.

123    When Mr Dunne perceived it to be in his interest, he sought to present himself as a person without financial, legal or accounting knowledge, despite having studied a Bachelor of Business. When faced with contemporaneous records which did not accord with his current explanation of events, he feigned commercial naivety.

124    A striking example of this aspect of Mr Dunne’s evidence is his evidence in relation to the 2020 Etarip Balance Sheet that he had prepared in 2020 and submitted to Mr Pleash. This evidence is addressed in detail below but for present purposes it is sufficient to note that the 2020 Etarip Balance Sheet included loans made by Etarip as extant loans as at 2020 which were purportedly forgiven by the Forgiveness Deeds which were executed by Mr Dunne in February 2018. Mr Dunne attempted to explain this by asserting that the 2020 Etarip Balance Sheet did not record the assets and liabilities of Etarip as at the date he prepared it but rather represented some of the loans made by Etarip on what he described as a “life to date” basis regardless of whether the loans were outstanding as at 2020. When pressed on the implausibility of this evidence, he repeatedly sought to take recourse in the fact that he was not an accountant. The information on which Mr Dunne was challenged concerning the composition of a company’s balance sheet was basic in nature. I do not accept, given his asserted tertiary qualification and his experience over many years as the sole director of many private companies, that his answers on this topic were truthful. It was clear that in truth Mr Dunne was not prepared to disclose the extent of his understanding of financial concepts and corporate structures when giving his evidence. His feigned naivety was readily contrasted by reference to the fact that he had no difficulty in explaining his understanding of “four-times the risk-free rate of return” and his readiness to distinguish between the way in which he would ex post facto characterise payments from Etarip as disbursements and not dividends in aid of his contention that Etarip operated exclusively as trustee of the Etarip Trust.

125    A further illustration of Mr Dunne tailoring his evidence with an eye to MP01’s defence in this proceeding is his evidence in relation to MP01’s activities purportedly undertaken acting in its capacity as trustee of the MP Trust. In response to his assertion that MP01 acted as trustee of the MP Trust, he was confronted with his use of the MP01 bank account to pay personal expenses including, for example, a $36 food delivery. He was adamant in his response. He said that to the extent he spent MP01 company funds on his personal expenses, this was a “dividend or distribution”. He then corrected himself to say that “I don’t think it was a dividend. The company didn’t itself operate. So it would have been a distribution from the trust”. Similarly, his evidence on the critical issue of Etarip’s activities purportedly as trustee was clearly reconstructed with an eye to MP01’s defence of this proceeding. His assertions in the witness box as to Etarip acting as a trustee are to be contrasted with his responses in the ROCAP he completed and submitted to Mr Pleash. As the sole director of Etarip, he answered “No” to the question “Does the company hold property on trust?”. Mr Dunne refused to accept in cross-examination that Etarip made at least one loan to Mr Dunne personally. When Mr Dunne was shown a transfer from Etarip’s account ending in 4154 on 3 July 2017 which was described as “Transfer to CBA A/c NetBank loan nd”, he attempted to explain this away as a trust distribution but accepted that there were no records of any distributions from the Etarip Trust. There are no resolutions by Mr Dunne as the director of the Etarip resolving to make distributions from the trust property.

126    Similarly, I interpolate to note that this was an occasion on which Mr Dunne demonstrated his understanding of commercial matters, distinguishing between the character of payments as to whether they were distributions or dividends by a process of reasoning about whether the company itself was undertaking activities in its own right. In his evidence, he sought to explain this by asserting that “Well, my understanding is the company didn’t hold property on trust. It was trustee, but my understanding is that is two different things.” He then speculated that although he could not recall what he had thought when he completed the ROCAP, he now wondered if there was a distinction between holding property “on trust” and holding property “in a trust”. He did not offer any explanation as to what he understood the distinction to be. He said that he did not study trust law in his business studies. Mr Dunne’s speculation on this topic was an attempt to muddy the waters in respect of his clear answer in the ROCAP that Etarip did not hold property on trust. That statement did not suit the position he wished to advance in his evidence in this proceeding. In giving his answers in the witness box it was clear that he was not constrained by answering the questions he was asked directly, and on many occasions, truthfully.

127    Another example of Mr Dunne's propensity to seek to draw distinctions of form over substance in order to avoid questions was in the context of his present role in relation to MP01. When asked about his involvement in providing instructions to MP01’s solicitors in this proceeding after he ceased to be a director of MP01, he initially admitted that he provided instructions on behalf of MP01 both before and after his bankruptcy. Later, he sought to qualify his evidence by volunteering that he was “contracted to the group – the companies – to assist – the group of companies as a consultant” and he was “not acting as director” but “in a role of a consultant”. His evidence made clear that he continued after his bankruptcy to be concerned in MP01’s affairs and in liaising with MP01’s solicitors in this proceeding notwithstanding that by his bankruptcy he was disqualified from acting as its director. Mr Dunne’s evidence on this issue as a whole reflected that he was seeking to disguise the fact that he, as he initially in substance admitted, continued, and continues, to be the person who substantively controls MP01.

128    Mr Dunne’s evidence was central to the critical issue of whether the MP01 Loan (and by extension the Bezel Loan) were advanced by Etarip in its capacity as trustee. On this issue, Mr Dunne gave evidence in relation to documents that he prepared at various points in time and submitted to Mr Pleash. The picture that emerges is that Mr Dunne’s evidence cannot be relied on — it was riddled with irreconcilable inconsistencies and reveals his preparedness to craft documents to suit his interests and to change those documents to better suit his interests as his interests changed over time.

129    I accept that in most cases, contemporaneous documents furnish a generally reliable reference point from which to assess the reliability of the oral evidence: see ET-China.com International Holdings Ltd v Cheung [2021] NSWCA 24; 388 ALR 128 at [25]-[29] (Bell P, as his Honour then was). In cases where there is inconsistency in the documents which strictly speaking are not contemporaneous to the critical matter in dispute but which were nonetheless prepared prior to the commencement of proceedings, the documentary evidence warrants careful scrutiny. In the present case, there is an absence of many of the contemporaneous documents that one would expect to see to support MP01’s contention that the MP01 Loan was made by Etarip as trustee. The material inconsistencies in the documents created by Mr Dunne subsequent to the making of the MP01 Loan raise another flag. The variability and inconstancy in his oral evidence on many topics which I have addressed above is yet another flag. Taking all of these things into consideration, Mr Dunne’s evidence that Etarip made the MP01 Loan (and by extension the Bezel Loan) as trustee for the Etarip Trust must be rejected. My conclusion is bolstered by my observation of Mr Dunne’s demeanour in the witness box and the manner in which he gave his evidence.

130    I now turn to address the critical documentary evidence.

Schedule of transactions

131    Mr Dunne was cross-examined on two documents styled as Etarip transactions schedules (or sheets) that he had prepared in 2018 and 2020 in which he purported to describe transactions on Etarip’s bank account, relevantly the account ending 4154. It will be recalled that Etarip’s bank statements are the only contemporaneous documents that record the payment of the advances that make up the Bezel and MP01 Loans.

132    The first document was annexed to an affidavit affirmed by Mr Dunne on 13 December 2018 in the Queensland Proceeding. Mr Dunne deposes that he inspected the bank records of the defendants to the Queensland Proceedings and created a schedule of all transactions with a value of $5,000 or more between 1 July 2016 and 2 November 2018 and annexed it to his affidavit. Relevantly, the annexure included schedules for each of MP01 and Etarip. Each schedule included four columns with titles of “Date”, “Payment”, “Receipt” and “Description”. In respect of Etarip, the entries run from 14 July 2016 to 8 December 2017 for the Etarip account ending in 4154 and from 3 August 2016 to 8 December 2017 for the account ending in 0046. I will refer to this document as the 2018 Etarip Transaction Sheet.

133    The second document was attached to the March 2020 email. The covering email was in the following terms (as written):

Hi Blair

Please find attached etarip full transactions list and balance sheet.

FYI

•    Etarip had no employees

•    No phone accounts

•    No lease agreements

•    no accounts payable or due and payable

•    yet to complete tax returns

•    intention was to complete tax returns in 2018 and then close company down when this dispute with Nora started from then it has been in limbo.

•    I don’t have any other records for the company i.e. register I guess I can obtain that from ASIC if you wish me to do that let me know and I will chase ASIC for the company information.

All the Best

Nev Dunne

134    The reference to “Nora” is a reference to Eleanore “Nora” Goodridge, the sole director of NGI.

135    There are two attachments to this email. First, a schedule referred to as the “etarip full transaction list” in the covering email and secondly, a balance sheet for Etarip for 2020 (the 2020 Etarip Balance Sheet).

136    The “etarip full transactions list” is in the same format as the 2018 Etarip Transaction Sheet — it has four columns “Date”, “Payment”, “Receipt” and “Description”. Sums included in the Payment column reflect sums which have been paid by Etarip and sums in the Receipt column reflect sums received by Etarip. There are two Etarip transaction sheets, one for each of Etarip’s bank accounts. The transaction sheet for one of the accounts appears to reflect mostly transactions to and from the 4154 Etarip bank account with entries from 3 August 2016 to 8 December 2017. The transaction sheet for the Etarip bank account ending in 4154 has entries from 14 July 2016 to 8 December 2017. Because this document was attached to Mr Dunne’s email of 4 March 2020, I will refer to it as the 2020 Etarip Transaction Sheet to differentiate it from the 2018 Etarip Transaction Sheet.

137    When cross-examined as to how he prepared the 2020 Etarip Transaction Sheet, Mr Dunne initially stated that he could not recall whether he had prepared it from scratch but suggested that he could have prepared a new spreadsheet. He proceeded to describe how he would go about this. When confronted with an obvious error in the date of three consecutive entries in the 2018 Etarip Transaction Sheet which was replicated in the 2020 Etarip Transaction Sheet, Mr Dunne eventually accepted that he had used the 2018 Etarip Transaction Sheet to create the 2020 Etarip Transaction Sheet. He was compelled to accept that to the extent the entries in the 2020 version were different to those in the 2018 version it was because he had changed them when he prepared the 2020 version.

138    The changes between the 2018 Etarip Transaction Sheet, which was prepared before Etarip went into liquidation, and the 2020 Etarip Transaction Sheet, which was prepared for the purpose of providing it to Etarip’s liquidator, are telling.

139    First, there are over 20 entries in the 2018 Etarip Transaction Sheet for payments from the Etarip bank account ending in 4154 to MP01 with the description “trans mp01”. There were also five entries which were described as “coffee club”. As noted in Mr Pleash’s report to creditors, it appears that MB01 was involved in the purchase of “The Coffee Club”, a café in Bulimba. In the 2020 Etarip Transaction Sheet, there is not a single entry which refers to MP01 in its description. The entries which correspond to the entries which were described as “trans MP01” in the 2018 Etarip Transaction Sheet, have the description “coffee club – loan” in the 2020 iteration. The sum of the entries which are described as “trans mp01” in the 2018 Etarip Transaction Spreadsheet and as “coffee club – loan” in the 2020 Etarip Transaction Sheet is $520,500, which is also the sum of the amount which MP01 admits it received from Etarip as a loan. For completeness, I note that some entries in the 2018 Etarip Transaction Sheet which previously did not have any description included have been described in the 2020 Etarip Transaction Sheet as “coffee club” transactions.

140    The inference which I draw, based on a comparison of the 2018 Etarip Transaction Sheet and the 2020 Etarip Transaction Sheet and on the evidence given by Mr Dunne, is that Mr Dunne deliberately altered the transaction descriptions in the 2020 Etarip Transaction Sheet in order to disguise the fact that Etarip had advanced funds to MP01. In doing so, he appears to have been motivated to protect against the potential for recovery against MP01 because MP01 is the registered proprietor of the Bulimba Street property in which he resides. I do not accept that the differences between the 2018 and 2020 iterations of this document are the product of an inadvertent or innocent mistake.

141    Secondly, the 2018 Etarip Transaction Sheet records a payment of $338,015.00 on 8 December 2017 and is described as a “Loan payment to Bezel”. In the 2020 Etarip Transaction Sheet, the only entry with that date and payment value is now described as “repay landac loan”. There is no reference to “Loan payment to Bezel”. When confronted with the change in the description given for the Bezel Loan transaction, Mr Dunne said that the description in the 2020 Etarip Transaction Sheet was incorrect and that he had “put the wrong description in”. Mr Dunne did not accept that he had changed the description to hinder the liquidator from identifying and attempting to recover the loan from Bezel. By way of explanation, he said that the liquidator had access to the affidavit that Mr Dunne had provided in the Queensland Proceeding. That may be so, but it does not alter the fact that the information provided directly by Mr Dunne to the liquidator was, again, not true and served to obscure the payment of funds from Etarip to a company controlled by Mr Dunne. When the Liquidator commenced this proceeding and alleged that Etarip had made the Bezel Loan, Bezel admitted that allegation in the joint concise statement dated 23 December 2021. The inference that I draw from the fact that Mr Dunne removed the reference to the Bezel Loan from the 2018 Etarip Transaction Sheet when customising it for the liquidator in 2020 is that Mr Dunne was concerned not to inform the liquidator early on in his investigation into Etarip’s affairs that Etarip had loaned money to Bezel.

142    Thirdly, the 2018 Etarip Transaction Sheet records an entry dated 23 November 2016 with a receipt value of $16,000 and the description “nd loan”. The description “nd loan” appears to be a reference to a loan from “nd” — neville dunne — to Etarip. In the 2020 Etarip Transaction Sheet, the description for that entry has been changed to “repay landac loan” and the reference to “nd loan” has been removed. Mr Dunne was cross-examined on the change which he made to this entry in the 2020 version of the Etarip Transaction Sheet. He was ultimately compelled to accept that the description of this amount as a personal loan from himself to Etarip in the 2018 Etarip Transaction Sheet was more accurate than the description “repay landac loan” which Mr Dunne introduced in the 2020 Etarip Transaction Sheet which he provided to the liquidator. The change to the description in respect of this entry is a further example of Mr Dunne seeking to obscure the true nature of the transactions on Etarip’s bank account from its liquidator.

143    In respect of the 2018 and 2020 Etarip Transaction Sheets, I find that:

(1)    Mr Dunne used the 2018 Etarip Transaction Sheet as the base document from which he prepared the 2020 Etarip Transaction Sheet;

(2)    Mr Dunne changed the description of payments made by Etarip to MP01 so that the entries did not refer on their face to MP01 and instead referred to a “coffee club – loan”;

(3)    In making the changes to the descriptions to the payments by Etarip to MP01, Mr Dunne sought to obscure from Mr Pleash during the early stage of the investigation into Etarip’s affairs the potential for any recovery from MP01, which was the registered proprietor of the Bulimba property at which he and his family resided;

(4)    Mr Dunne changed the description of the payment of $338,015.00 from “Loan payment to Bezel” to “repay landac loan”;

(5)    Mr Dunne changed the description of the payment made by Etarip to Bezel in order to hinder Mr Pleash from exploring the possible recovery of the Bezel Loan, in circumstances where Bezel was still at that time a company controlled and owned by Mr Dunne; and

(6)    Mr Dunne further changed the description of the entry for “nd loan” to obscure the true nature of that transaction on the Etarip bank account from Mr Pleash even though the effect of doing this was to mask a relatively small claim which Mr Dunne could presumably have claimed as a creditor of Etarip.

The 2020 Etarip Balance Sheet and ROCAP

144    I turn now to consider the 2020 Etarip Balance Sheet which Mr Dunne attached to the March 2020 email. The balance sheet in full reads as follows:

145    Mr Dunne was cross-examined on the 2020 Etarip Balance Sheet. At times his evidence on this topic was non-responsive and evasive. The substance of his answers evolved somewhat as his evidence progressed. Mr Dunne accepted that as the sole director he prepared this balance sheet for the purpose of providing it to the liquidator of Etarip.

146    He was first asked about the inclusion of a liability of $1.1 million to NGI. Mr Dunne said that at the time he created this balance sheet and presented it to Mr Pleash he did not accept that Etarip owed such a liability to NGI. Mr Dunne asserted that although he included the $1.1 million liability to NGI in the 2020 Etarip Balance Sheet, he did not accept that Etarip in fact owed that debt to NGI. He began by maintaining that he included this liability on the 2020 Etarip Balance Sheet because he was told to do so by Mr Pleash. Mr Dunne, upon being pressed, acknowledged that he made no mention of his alleged reservation about the inclusion of this liability in the balance sheet in his covering email to Mr Pleash. He accepted that the liability to NGI existed at the time he created the balance sheet but qualified his acceptance by saying that his acceptance of the existence of the liability was based on what Mr Pleash had said to him. Mr Dunne’s assertion about what he says Mr Pleash said is not supported by any contemporaneous record. It is not addressed in his covering email. Had Mr Dunne included the liability in the balance sheet at Mr Pleash’s insistence, it is likely, given his general level of assertiveness, that he would have included a caveat to that effect in his covering email or as a note to the balance sheet. He did not do so. To the extent that Mr Dunne said that he communicated his disagreement with the existence of this liability in a telephone call with Mr Pleash, I reject his evidence. A file note taken by Mr Pleash recording his conversation with Mr Dunne on 2 March 2020 does not suggest Mr Pleash told Mr Dunne to include Etarip’s liability of $1.1 million to NGI on the Etarip balance sheet. To the contrary, Mr Pleash’s file note includes the following (as written):

When I asked how the debt arose he advised “good question” but he then said the Vender of Savannah had paid Etarip a consulting fee which NG was endeavoring to recover by way of the winding up proceedings.

147    I infer NG is a reference to NGI.

148    I find that at the time he created the 2020 Etarip Balance Sheet, Mr Dunne understood that Etarip owed a liability to NGI of $1.1 million. I find that Mr Dunne’s acknowledgement of this liability was not based on what Mr Pleash allegedly told Mr Dunne but rather that the inclusion of the liability of $1.1 million to NGI reflected what Mr Dunne accepted to be true at the time he prepared the 2020 Etarip Balance Sheet.

149    Mr Dunne was next cross-examined on the reference in the 2020 Etarip Balance Sheet to an asset in the form of a $1.1 million loan to MB01. Mr Dunne said that he intended for the reference to MB01 to be a reference to loans to “MB01 and MP01”. Mr Dunne says that he only realised his error when reviewing the balance sheet in the witness box. Mr Dunne states that the correct description of the asset should have been a loan to MB01 and MP01 in the combined sum of $1.1 million. Mr Dunne said the loan to MP01 was approximately $500,000.

150    When confronted with the proposition that the acceptance of such an asset existing at the time of the creation of the 2020 Etarip Balance Sheet meant that MP01 continued to owe Etarip money under that outstanding loan notwithstanding the purported entry into the MP01 Forgiveness Deed in February 2018, Mr Dunne immediately sought to deny that proposition by qualifying his previous evidence. Mr Dunne asserted that the loan recorded in the 2020 Etarip Balance Sheet was a record of amounts which had been owed “life to date” and was not a record of the outstanding amount at the time the balance sheet was prepared.

151    I accept the applicants’ submission that Mr Dunne’s attempt to qualify or recast the contents of the 2020 Etarip Balance Sheet must be rejected. I find that Mr Dunne’s evidence was malleable and shaped by belated self-serving statements when he realised that his evidence as to the continued existence of a loan from Etarip to MP01 in the 2020 Etarip Balance Sheet undermined MP01’s case that the loan had been forgiven in 2018.

152    Mr Dunne’s contention that the 2020 Etarip Balance Sheet was intended to and did record what he described as “life to date” liabilities as opposed to extant liabilities was not plausible. Even if Mr Dunne could identify a sensible rationale for including “life to date” liabilities in the balance sheet which he provided to Mr Pleash, it is clear that he did not prepare the balance sheet on this basis. Had he done so the “life to date” liabilities would also have included reference to the Etarip loan to Bezel, which on Mr Dunne’s account had also been forgiven, but it did not.

153    Mr Dunne did not give any explanation for why loans expressed on a so called “life to date” basis would be categorised as assets on Etarip’s balance sheet. By definition, a loan which has been repaid, or on MP01’s and Mr Dunne’s evidence forgiven, is no longer an asset. I am satisfied that Mr Dunne appreciated this given his background as company director, his commercial experience and in light of his tertiary studies. I reject MP01’s submissions to the contrary, including that Mr Dunne was “simply mistaken” and “confused” when he indicated that the liability to MB01 on the 2020 Etarip Balance Sheet was related to MP01 and that Mr Dunne “ultimately clarified” that the balance sheet referred to a loan to MB01 only. MP01’s submissions rely upon Mr Dunne’s testimony when he was cross-examined on the answers made in the ROCAP to which I turn below.

154    In respect of the 2020 Etarip Balance Sheet, I find that:

(1)    Mr Dunne included a liability of $1.1 million to NGI because at that time he as sole director of Etarip, recognised that Etarip owed that amount to NGI;

(2)    Mr Dunne did not include the $1.1 million liability to NGI merely because he was allegedly told to do so by Mr Pleash even though he denied the existence of such a liability;

(3)    Mr Dunne included a loan amount of $1,119,194.03 as an asset because he believed that was the total of the loans owed to Etarip from various parties, including from MP01 at that time. Mr Dunne only included MB01 as the relevant debtor to hinder Mr Pleash from exploring recovery options against MP01 and Bezel during the early stage of Mr Pleash’s investigations; and

(4)    Mr Dunne sought to obscure the debt owned by MP01 to Etarip because MP01 was the registered proprietor of the residential property in which he and his family lived.

155    Mr Dunne was also cross-examined on the ROCAP dated 6 March 2020 which he completed in respect of Etarip.

156    In response to question B19 on the ROCAP — “In the last four years, has the Company lent money that the borrower has not paid in full?” — Mr Dunne answered “yes” and gave “mb01 pty ltd” as the name of the borrower and stated that $1,119,194.03 has been advanced for the purpose of “purchase and run coffee club”.

157    When asked whether, as with his contention concerning the 2020 Etarip Balance sheet, the reference to MB01 should in fact be a reference to the total amount owed to Etarip by MB01 and MP01, Mr Dunne sought to retract his earlier evidence and advance yet another explanation. He contended that in fact the reference to MB01 in the 2020 Etarip Balance Sheet was correct on its face in only referring to MB01. I do not accept Mr Dunne’s attempt to retract his assertion that the reference should be to both MB01 and MP01. I reject MP01’s submission that Mr Dunne was “simply mistaken when he initially indicated that the reference to “loan MB01 1,119,194.03” had something to do with MP01.” Mr Dunne’s evidence that MB01 should instead refer to MP01 and MB01 in the 2020 Etarip Balance Sheet was given in clear and unequivocal terms. It was not until Mr Dunne was confronted with the notion that this would result in an outstanding debt owing from MP01 to Etarip being recognised on the 2020 Etarip Balance Sheet that he sought to qualify or retract his evidence. In respect of the ROCAP, I find that Mr Dunne included a loan amount of $1,119,194.03 because he believed that was the total of the loans owed to Etarip from various parties, including from MP01. As with the 2020 Etarip Balance Sheet, Mr Dunne only identified MB01 as the debtor in order to hinder Mr Pleash in exploring recovery actions against MP01 and Bezel.

158    There are other significant aspects of Mr Dunne’s evidence in relation to the ROCAP which I will address in my substantive consideration below.

Conclusion in respect of Mr Dunne

159    Mr Dunne’s interests are closely aligned to MP01’s interests. MP01 is the registered proprietor of the Bulimba property, which is where Mr Dunne resides with his partner and son. Mr Dunne was the sole director and shareholder of MP01 until he declared bankruptcy. The sole director of MP01 is now Mr Dunne’s 19-year-old son, who was not called by MP01 to give evidence. Mr Dunne revealed in his oral evidence that notwithstanding that he is precluded from acting as a director of MP01, he continues to be involved in its affairs, including in relation to the conduct of this proceeding.

160    Based on my findings above and for the reasons I have given, I do not place any reliance on Mr Dunne’s evidence unless that evidence is otherwise proved by independent contemporaneous records or is against his interest. In reaching this conclusion, I am conscious of the seriousness of making a finding to this effect against Mr Dunne and am satisfied it is warranted on the whole of the evidence before me.

161    For completeness, I note that MP01 advanced submissions that sought to avoid findings being made that were not in accordance with the evidence given by Mr Dunne on certain confined issues for the reason that Mr Dunne was not squarely challenged on the particular issue by the cross-examiner. I reject MP01’s submission. It is misconceived. I am satisfied that there was no procedural unfairness in the way in which Mr Dunne’s cross-examination was conducted. Mr Dunne was squarely on notice of the manner in which the applicants were advancing their claim against the respondents (of which he is one) and fully appreciated what was being put to him.

162    I will first address the claim against Bezel before turning to the claim against MP01.

The claim against Bezel

163    As mentioned above, although Bezel filed a joint concise response with MP01, it did not take any part in the hearing and filed no evidence in support of its concise response. The orders I made on 7 June 2023 granting leave to rely on the affidavits of Mr Dunne dated 4 November 2022 and 17 February 2023 were confined to MP01 (7 June Orders).

164    As further mentioned above, only two issues were raised by way of defence in Bezel’s concise response. It was not in issue that Etarip advanced the amount of $338,015 to Bezel and that upon demand being made, Bezel has not repaid the loan.

Issue 1: Was the loan from Etarip to Bezel forgiven?

165    The first Bezel issue is Bezel’s contention that the loan to Bezel was forgiven by Etarip as a result of the Bezel Forgiveness Deed. The Bezel Forgiveness Deed is in evidence, only as a consequence of having been tendered as part of exhibit NMD-2 to the affidavit of Mr Dunne dated 17 February 2023. As a consequence of the 7 June Orders, Bezel is unable to rely on the Bezel Forgiveness Deed and the statements made by Mr Dunne in his affidavits dated 4 November 2022 and 17 February 2023. Accordingly, I am not satisfied that the Bezel Loan was forgiven.

166    However, as the Bezel Forgiveness Deed is in evidence in this proceeding in any event, it is appropriate for me to note that even had Bezel been granted leave to rely upon the Bezel Forgiveness Deed, having regard to the terms of that deed, I would be compelled to reach the same conclusion.

167    As mentioned above, the Bezel Forgiveness Deed by its terms is directed to the forgiveness of loans owed by Etarip in its capacity as trustee (as debtor) to Bezel (as creditor). The Bezel Forgiveness Deed does not operate to forgive loans advanced by Etarip as trustee (or at all) to Bezel. Bezel when active in the proceeding sought in its concise response to rely on the Bezel Forgiveness Deed, but has never sought relief in the form of rectification of the Bezel Forgiveness Deed. In these circumstances, Bezel’s defence based on forgiveness of the Bezel Loan by Etarip must fail.

Issue 2: Is Etarip estopped from recovering the loan made to Bezel?

168    Bezel led no evidence in support of its contention that Etarip is estopped from recovering the loan to Bezel. For completeness, I note that in the evidence relied upon by MP01 in this proceeding, there is an account given by Mr Dunne which is directed to, inter alia, establishing detrimental reliance on the part of Bezel. Had Bezel taken part in the proceeding and obtained leave to rely on that evidence, it would not have assisted it in defending the applicants’ claim. The evidence comprises Mr Dunne’s account of what happened at the relevant time and what he would have caused Bezel to do on a counterfactual basis. Mr Dunne’s evidence is not supported by objective, independent evidence. In the event that Bezel obtained leave to rely on Mr Dunne’s evidence in this respect, for the reasons I have already given, and consistently with my conclusions in relation to this evidence in the context of the claim against MP01, I would reject Mr Dunne’s evidence.

169    Bezel’s defence based on estoppel is not made out.

Conclusion regarding the claim against Bezel

170    I am satisfied that the applicants have established their claim against Bezel and accordingly, I will enter judgment against Bezel.

The claim against MP01

171    I will consider the claim against MP01 by reference to the parties’ agreed list of issues.

Issue 1: Is the chose comprising the MP01 Loan property of the Etarip Trust?

172    The first issue is whether the chose in action comprising the debt owed by MP01 to Etarip is property of the Etarip Trust. For the purpose of considering this issue it matters not whether this debt was later forgiven or whether Etarip is otherwise precluded from enforcing the obligation to repay against MP01.

173    The answer turns on whether the loan was made in Etarip’s capacity as trustee of the Etarip Trust. The importance of this issue is that it forms the basis for MP01’s challenge to Etarip’s standing to recover the loan. MP01 relies on the Etarip Variation Deed as having removed Etarip as Trustee of the Etarip Trust and installed Bezel as trustee in its place in April 2019. MP01 contends that because on its case Etarip is no longer trustee it cannot recover the MP01 Loan, if that loan is property of the trust.

174    It is common ground that by a series of bank transfers in the period from 1 October 2016 to 20 October 2017, Etarip transferred to MP01 a total of $520,500 and that in the face of demand for repayment, MP01 has not repaid Etarip any part of the loan. The transfers were made when Mr Dunne was the sole director and shareholder of Etarip and Etarip was wholly under his control. The account from which the transfers were made was held with the CBA in the name “ETARIP PTY LTD AS TRUSTEES FOR ETARIP TRUST”.

175    The loan was not documented. The advances comprising the loan are evidenced only by Etarip’s bank statements. No contemporaneous documentation exists recording or referring to the terms of the loan or the purpose for which the loan was advanced.

176    Etarip operated three bank accounts, each of which was styled by name as a trust account.

177    In his affidavit dated 4 November 2022, Mr Dunne asserted that:

(1)    Etarip was initially intended to be used to loan money to other companies that Mr Dunne established which companies would then provide secured loans to people for the purpose of purchasing Manufactured Estate Homes (MEH);

(2)    As he was unable to obtain an Australian Financial Services Licence he gave up on his original intention as to the purpose that Etarip would serve and accordingly Etarip did not trade; and

(3)    all activities in fact undertaken by Etarip were performed in its capacity as the trustee of the Etarip Trust.

178    In his oral evidence, Mr Dunne’s description of Etarip’s activities was given in broad and general terms. He said that “all the activities were undertaken by Etarip Trust and the activities were only commenced in 2016 and that was to loan money”. He said “all the activities were through the Etarip Trust.” He said that this “was the structure that was recommended and that’s the structure that – that I used to run all the activities through the trust”. He was vague about who had recommended that structure to him – when asked he said “various lawyers over time”. He said that Etarip made two loans only, one to “MP Trust and one to Bezel”. Mr Dunne said that the funds Etarip lent to MP01 were applied to the construction of the Bulimba property, being the address at which he resided. Mr Dunne said in his affidavit of 4 November 2022 that his intention was to use Bezel to import luxury cars into Australia and to earn a profit.

179    In support of its contention that Etarip made the MP01 Loan in its capacity as trustee, MP01 relies on three things. First, that Etarip was at the relevant times, the trustee of the Etarip Trust. Secondly, Mr Dunne’s “unequivocal evidence” as the sole director of Etarip that the MP01 Loan was made in that capacity, which MP01 submits was not squarely challenged in cross-examination. Thirdly, that the transfers were made from an account in the name of Etarip as trustee.

180    MP01 submits that the Court should be satisfied that in advancing the loans to MP01 and Bezel Etarip acted as trustee of the Etarip Trust.

181    The first matter relied on by MP01 is neutral unless it is established that Etarip exclusively conducted itself as a trustee. Mr Dunne’s evidence was that it acted exclusively as a trustee. He repeatedly injected into his answers that all of Etarip’s activities were undertaken in its capacity as trustee. He did not provide any detail in relation the nature of Etarip’s activities other than to assert that its only activity was to loan money. For the reasons given above, I do not place weight on Mr Dunne’s evidence unless it is corroborated by other evidence or is against interest. On this issue, I find Mr Dunne’s evidence to be particularly unsafe and patently self-interested (given the alignment between his own interests and those of MP01).

182    In the Etarip ROCAP which Mr Dunne completed on 6 March 2020 he answered questions as follows:

(1)    Question: “Did you operate the Company’s business through a trust?” Answer: “No”;

(2)    Question: “Does the Company hold property on trust?” Answer: “No”; and

(3)    Question: “Is the Company owed money?” Answer: “Yes”.

183    The first question and answer is directly contrary to the evidence Mr Dunne gave in this proceeding. He said Etarip’s only activity was to lend money. If I accept that as correct, then his answer to the first question makes it plain that Etarip did not lend money through a trust.

184    Taking the second and third questions together, a further inconsistency emerges. On MP01’s case, Etarip had been replaced by Bezel as trustee of the Etarip Trust on 21 April 2019. Assuming for the purpose of testing Mr Dunne’s evidence on this point that Etarip had been replaced as trustee by the time that Mr Dunne completed the ROCAP then it may conceivably be correct that as at 6 March 2020, Etarip did not hold property (being the debt choses) on trust but in that case query whether the third question would sensibly be answered in the affirmative without expressly qualifying that the loan was made as trustee. Mr Dunne’s affirmative answer to the third question is also inconsistent with Mr Dunne’s purported execution of the Forgiveness Deeds on 14 February 2018. If those deeds had been executed and were intended to apply to the MP01 Loan and Bezel Loan in the way in which Mr Dunne now contends, that would have necessitated an answer in the negative to the third question.

185    I reject MP01’s submission to the effect that Mr Dunne's answers to these three questions are equally consistent with a finding that Mr Dunne's perspective that Etarip did not operate its business through a trust or hold assets on trust because it did not operate a business or have any assets.