Federal Court of Australia

Special Gold Pty Ltd (in liq) v Dyldam Developments Pty Limited (subject to a Deed of Company Arrangement) (No 2) [2025] FCA 825

ORDERS

THE COURT ORDERS THAT:

1.    Judgment against each of the fifth defendant (Sam Fayad) and the sixth defendant (Fayad-Lee Fayad) in the amount of $44,282,453.79 plus interest under s 51A(1)(a) of the Federal Court of Australia Act 1976 (Cth) (the FCA Act) at the rate specified in para 2.2 of the Interest on Judgments Practice Note (GPN-INT) (the Interest Rate).

2.    Judgment against the seventh defendant (Remon Fayad) in the amount of $7,221,192.49, plus interest under s 51A(1)(a) of the FCA Act at the Interest Rate.

3.    Judgment against the eighth defendant (Parklea Markets Corporation Pty Ltd) in the amount of $14,450,000 plus interest under s 51A(1)(a) of the FCA Act at the Interest Rate.

4.    Judgment against the ninth defendant (Rainbow North Rocks One Pty Ltd) in the amount of $816,235.79 plus interest under s 51A(1)(a) of the FCA Act at the Interest Rate.

5.    The originating process otherwise be dismissed.

6.    The second, third and fourth defendants file and serve any affidavits and written submissions on the question of costs by 1 August 2025.

7.    The plaintiff file and serve any affidavits and written submissions on the question of costs by 15 August 2025.

8.    The second, third and fourth defendants file and serve any affidavits and written submissions in reply on the question of costs by 22 August 2025.

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

REASONS FOR JUDGMENT

JACKMAN J:

Introduction and Parties

1    The hearing of these proceedings began as a hearing of two sets of proceedings concerning a number of people and companies associated with Dyldam Developments Pty Ltd (subject to a Deed of Company Arrangement) (Dyldam), which operated a business in property development and building and construction services. Dyldam is the first defendant in proceedings number NSD369/2025, and the plaintiff in proceedings number NSD340/2025. The plaintiff in proceedings NSD369/2025 is Special Gold Pty Ltd (in liq) (Special Gold), which was a special purpose vehicle that purchased the property at 27–31 Argyle Street, Parramatta, NSW (the Argyle St Property) for $2.6 million in 1998 and sold it for $73.97 million in late 2020. On the third day of the hearing, I was informed that the dispute as between Dyldam and Special Gold had been settled on terms which would in due course be set out in a deed (now Exhibit 1), and I have made orders by consent in proceedings number NSD340/2025 to dismiss those proceedings, and in NSD369/2025 to dismiss the proceedings as against Dyldam.

2    A number of the natural persons involved in the proceedings are members of the Fayad family (the Fayads). For convenience, I will use their first names without intending any disrespect. Sam is married to Maria, and they have two sons, Fayad-Lee and Remon. Maria’s brother, Joseph Kattar, is married to Sam’s sister, Chahida (the Khattars). The affairs of Dyldam and its related group of companies were conducted by members of the Khattar and Fayad families. A rupture in relations between those families led to proceedings being commenced on 20 May 2020 (CB4/2320) by Joseph Khattar and others against Sam Fayad and others in the Supreme Court of New South Wales (the Supreme Court Proceedings), which were ultimately compromised by a Deed of Settlement in November 2022 (CB11/6696 and see T70.45 for the month and year). Under the Deed of Settlement, a number of companies and trusts passed to the control of the Khattars, and others (including Special Gold and Golden Mile (defined below)) passed to the control of the Fayads. In addition, the Fayads covenanted to cause Special Gold to pay the remaining balance of the proceeds of sale of the Argyle St Property to meet its outstanding tax liabilities to the Australian Taxation Office (ATO) (cl (12)).

3    Sam was made bankrupt on 14 September 2023, and Fayad-Lee and Remon were made bankrupt on 3 July 2025 (in the week before the hearing). At the outset of the hearing, I granted leave to Special Gold to proceed against Sam, Fayad-Lee and Remon pursuant to s 58(3)(b) of the Bankruptcy Act 1966 (Cth): see Special Gold Pty Ltd (in liq) v Dyldam Developments Pty Limited (subject to a Deed of Company Arrangement) [2025] FCA 765. None of those persons appeared at the hearing.

4    Special Gold was incorporated on 15 May 1997. From 3 November 2016 to 14 September 2023, Sam was a director of Special Gold. Sam’s son, Fayad-Lee, was a director from 14 November 2017 to 25 November 2022. Raymond Khattar was also a director from 20 May 1997 to 4 November 2022 and the company secretary from 1 May 2001 to 4 November 2022. From 16 October 2023, Mr Leslie Galbraith was Special Gold’s sole director. Mr Thyge Trafford-Jones was appointed administrator of the company on 6 December 2023, ceasing on 22 January 2024 when he became the liquidator of the company and he remains so.

5    Dyldam was incorporated on 5 November 1987. It had as its directors Sam, from 13 February 1994 to 14 September 2023, and Maria (Sam’s wife), from 17 December 2009 to 8 December 2020. Fayad-Lee held the position of Chief Executive Officer of Dyldam from May 2018. Remon held the position of Chief Operating Officer of Dyldam from May 2018. On 18 January 2022, Messrs Andrew Blundell and Simon Cathro were appointed voluntary administrators of the company. They ceased that role on 20 May 2022, when they became the deed administrators of the company (the Deed Administrators).

6    Golden Mile 1888 Pty Ltd (in liq) (Golden Mile) had Sam and Fayad-Lee as directors. Kingland Holdings Pty Ltd (in liq) (KH22) had Sam and Remon as directors. Parklea Markets Corporation Pty Ltd (Parklea Markets Corp) had Remon as its sole director. Rainbow North Rocks One Pty Ltd (Rainbow North Rocks) had Fayad-Lee as director from 14 November 2017 to 13 July 2022 and from 6 February 2023 to 15 November 2023, and Sam as a director from 14 July 2022 to 6 February 2023. Parklea Markets Corp and Rainbow North Rocks are the eighth and ninth defendants but did not appear at the hearing.

7    Three other defendants are companies controlled by Mr Rami Ayoub, namely ABS Agri Pty Ltd (ABS Agri), I Properties Pty Ltd (I Properties) and ACN 616 965 390 Pty Ltd (ACN 390), each of which was represented by senior and junior counsel at the hearing.

8    ABS Agri was incorporated on 3 March 2021. Mr Ayoub has been its sole director, secretary and shareholder since incorporation. Mr Ayoub incorporated this company to replace ACN 390 as a trustee company and it “has always been a non-trading entity, except for being a payments intermediary from time to time” (Mr Ayoub’s affidavit of 16 June 2025 at [10]).

9    I Properties was incorporated on 29 April 2020. Mr Ayoub has been its sole director, secretary and shareholder since 29 April 2020. I Properties was a company “focused on providing lending solutions to various industries but primarily focused on the property development and construction space” and raises money from private lenders and provides loans (Mr Ayoub’s affidavit of 16 June 2025 at [7]).

10    ACN 390 was incorporated on 23 January 2017 (as admitted in its Defence at [1]; contrast Mr Ayoub’s affidavit of 16 June 2025 at [8] which says it was incorporated in January 2021). Mr Ayoub has been its sole director, secretary and shareholder since 21 January 2021. This company is a “non-trading entity” incorporated to be a trustee (Mr Ayoub’s affidavit of 16 June 2025 at [8]).

11    Mr Ayoub’s relationship with Dyldam was in part governed by a “Master Confidentiality Deed” signed by Mr Ayoub on 20 August 2021 (CB6/3796). Although it was not signed on behalf of Dyldam, its acceptance was acknowledged in an “Appointment & Retainer Letter” of the same date (CB6/3810, cl 2(a)). The Deed required that Mr Ayoub maintain the confidentiality of information and only use “Confidential Information” for the “Authorised Purpose”, being namely Mr Ayoub to “assist with negotiations with the Australian Taxation Office for [Dyldam] and its Related Entities and the Directors in their individual capacity” (CB6/3799, cl 1.1). The term “Director” was not defined. “Related Entity” was broadly defined, as including “an associated entity”.

12    Mr Ayoub’s relationship with Sam was also governed by the Appointment & Retainer Letter dated 20 August 2021 (CB6/3810). That letter stated that the terms of engagement by Mr Ayoub included “collation of all necessary financial and related information and documentation; undertaking searches related to real property, credit files, and company information… and any other such matters required in undertaking the restructuring of your entities”. By that letter, Sam authorised Mr Ayoub to search and locate outstanding debts and receivables from “the company” (presumably Dyldam) and any “related company”. The letter extended to an engagement to “assist in restructuring” in the companies referred to in “Annexure 1” (which included Dyldam and Special Gold).

13    Between 1 October 2021 and 1 December 2022, Mr Ayoub charged an entity called “SFF Projects Pty Ltd” (which was also referred to in Annexure 1) $22,000 a month for the provision of his services.

Salient Facts

The financial positions of Dyldam and Special Gold

14    The Dyldam financial statements for the year ended 30 June 2018 (CB4/2217), show a loss for that year of $9,022,947 and accumulated losses of $37,638,775. The Balance Sheet disclosed net liabilities of $37,633,775. Among the non-current assets were loans to related parties of $49,821,167, and the non-current liabilities included loans from related parties of $109,049,489. Sam (but not Maria) signed the directors’ declaration to those financial statements (CB4/2227).

15    The Special Gold financial statements for the year ended 30 June 2018 (CB4/2229), show a profit after income tax of $541,309 and retained earnings of $4,471,238. Its revenue was attributed to rent and outgoings, which I infer were generated from tenants of the Argyle St Property. The Balance Sheet shows net assets of $38,730,956, with non-current assets including the Argyle St Property in the amount of $49,644,455. Loans between Special Gold and associated entities are stated in the net amount of $16,362,309 in Special Gold’s favour, including loans to Dyldam (in the total amount of $14,351,307) and Golden Mile (in the amount of $40,000) (CB4/2237). There is no reference to any loan to or from KH22. (I note, however, that on 2 May 2019, KH22 as lender entered into a Deed of Loan with Dyldam as borrower, up to a facility limit of $15 million: CB4/2240.)

The Group Tax Debt Deed

16    On 24 May 2019, Sam, Dyldam, Special Gold and a series of other entities entered into a “Deed of Agreement, Guarantee and Indemnity” with the Commonwealth “as represented by the Commissioner of Taxation” (the Group Tax Debt Deed) (CB4/2246). By clause 4 of that deed, the “Taxpayers” agreed to be liable for the “Total Taxation Debt” jointly and severally. In clause 1.1, the “Taxpayers” were defined as the following entities, with debts plus general interest charged from May 2019 inclusive, as:

(1)    Sam (and the “Sam Fayad Taxation Debt” was defined as $1,448,946.69);

(2)    Joseph Khattar (and the “Joseph Khattar Taxation Debt” was defined as $1,175,418.55);

(3)    Dyldam (which, at the time had Sam and Maria as its directors; and the “Dyldam Developments Taxation Debt” was defined as $10,192,967.50);

(4)    C88 Project Pty Ltd (which, at the time, had Chahida Khattar and Sam as directors; the “C88 Project Taxation Debt” was defined as $6,995,119.68);

(5)    Belle Peninsula Pty Ltd (which, at the time, had Remon as its sole director; the “Belle Peninsula Taxation Debt” was defined as $2,450,846.46);

(6)    NR Lydbrook Pty Ltd (which, at the time, had Sam and Remon as its directors; the “NR Lydbrook Taxation Debt” was defined as $1,450,721.19);

(7)    Merfad Capital Pty Ltd (which, at the time, had Fayad-Lee as its sole director; the “Merfad Capital Taxation Debt” was defined as $1,924,048.38);

(8)    NR Complex Pty Ltd (which, at the time, had Sam as its sole director; the “NR Complex Taxation Debt” was defined as $1,268,943.63);

(9)    NR Developers Pty Ltd (which, at the time, had Sam, Fayad-Lee and Remon as its directors); the “NR Developers Taxation Debt” was defined as $10,768.08);

(10)    Special Gold (and the “Special Gold Taxation Debt” was defined as $818,020.94);

(11)    Rainbow North Rocks (and the “Rainbow North Rocks One Taxation Debt” was defined as $522,749.79);

(12)    Oscar 1888 Pty Ltd (which, at the time, had Remon and Maria as directors; the “Oscar 1888 Taxation Debt” was defined as $439,168.67); and

(13)    CBD 88 Pty Ltd (which, at the time, had Sam and Fayad-Lee as its directors; the “CBD 88 Taxation Debt” was defined as $2,708,828.32).

17    The “Total Taxation Debt” was defined in cl 1.1 as being the combined total of the Sam Fayad Taxation Debt, the Joseph Khattar Taxation Debt, the Dyldam Developments Taxation Debt, the C88 Project Taxation Debt, the Belle Peninsula Taxation Debt, the NR Lydbrook Taxation Debt, the Merfad Capital Taxation Debt, the NR Complex Taxation Debt, the NR Developers Taxation Debt, the Special Gold Taxation Debt, the Rainbow North Rocks One Taxation Debt, the Oscar 1888 Taxation Debt, and the CBD 88 Taxation Debt. The Total Taxation Debt was required to be paid in instalments, with the final payment due by 30 August 2019 (cl 4).

18    Thus, prior to entry into of the Group Tax Debt Deed, Special Gold owed the Deputy Commissioner of Taxation, as recorded in that deed, $818,020.94. In entering into that deed, it assumed a liability of $31,406,547.88. Special Gold, along with the other Taxpayers, obtained the benefit of the Commissioner’s forbearance for a maximum of about three months to refrain from using any of the enforcement powers in respect of the Total Taxation Debt provided there was no Event of Default. Special Gold also obtained the benefit of other Taxpayers becoming liable for the Special Gold Taxation Debt. However, Special Gold submits, and I accept, that those benefits were relatively minor when set against Special Gold’s increased indebtedness under the deed, and in circumstances where it would appear to have been relatively straightforward for Special Gold to have borrowed $818,020.94 on the security of the Argyle St Property if it did not have sufficient cash available to pay that amount at the time.

19    Further parties to the Group Tax Debt Deed were the Guarantors, Grange Road Properties Pty Ltd (Grange Road Properties) and Diamond 88 Pty Ltd (Diamond 88). Pursuant to clause 3.1 of the deed, they each granted “Securities” in favour of the Commissioner of Taxation. One of them included a mortgage over property described as Folio 503/714753, Lot 503 in Deposited Plan 714753, located at 6 Grange Road, Leumeah, New South Wales 2560, which was granted by Grange Road Properties.

20    The Group Tax Debt Deed appears to have been ignored in the financial statements for each of Dyldam and Special Gold for the year ended 30 June 2019. As to Dyldam (CB4/2292), the Income Statement shows a net loss for the year of $18,766,920 and accumulated losses of $56,405,695. The Balance Sheet shows net liabilities of $56,400,695, including a non-current asset by way of loans to associated entities of $49,061,412 and a non-current liability by way of borrowings from related parties of $83,240,134.

21    As to Special Gold, for the year ended 30 June 2019, its Income Statement shows a profit after income tax of $497,246 and retained earnings of $4,968,484 (CB4/2306). The Balance Sheet for Special Gold shows net assets of $40,228,202, including the Argyle St Property which was accounted for as a non-current asset at $50,029,868 (CB4/2307). The loans to and from associated entities are shown in the net amount of $18,005,490 in Special Gold’s favour, including loans to Dyldam totalling $15,595,027 and to Golden Mile in the amount of $154,000, and a loan by KH22 in the amount of $90,462.

22    There is also in evidence a Balance Sheet for Special Gold as at June 2020, which appears to have been prepared by the company’s management (CB4/2316–7). It shows net assets of $41,936,064, including the fixed assets comprising the Argyle St Property at $49,992,375. Loans to and from associated entities appear in the net amount of $21,685,094, including loans to Dyldam totalling $15,404,489 and to Golden Mile in the amount of $418,318, and a loan from KH22 in the amount of $90,462.

23    On 3 June 2021, the Commissioner of Taxation appointed receivers to the property of Grange Road Properties and Diamond 88 (CB6/3739). The gross amount of assets realised by the receivers of Grange Road Properties was $4,542,852.66, being repayment of a loan to Special Gold (CB6/3773 and 3777). The receivers’ costs were $33,212.63.

24    Special Gold made payments in the total amount of $10,577,852.66 pursuant to the Group Tax Debt Deed on:

(1)    17 June 2021, in the sum of $6 million;

(2)    28 June 2021, in the sum of $17,419.27; and

(3)    29 June 2021, in the sum of $4,560,433.39.

Sale of the Argyle St Property and Disbursal of Proceeds

25    On 15 October 2020, Special Gold entered into a contract for sale of the Argyle St Property in the sum of $73,970,000 (CB5/2681). On 28 May 2021, PricewaterhouseCoopers (who had been engaged by Special Gold) calculated the net capital gain on the sale of the Argyle St Property to be $59,232,243, and after taking into account other profits and the utilisation of tax losses, estimated that the tax payable by Special Gold would be $18,163,216 (CB12/7575–8).

26    On 2 November 2020, Special Gold entered into a loan agreement (signed by each of Sam and Fayad-Lee as its directors) with Suncorp-Metway Pty Ltd (Suncorp) in the amount of $30,000,000, comprising two facilities of $25,000,000 and $5,000,000 (CB6/3662) (the Suncorp Facility). As security, Special Gold provided a registered mortgage over the Argyle St Property in favour of Suncorp (the Argyle Mortgage). In addition, as consideration for the facility, Special Gold entered into a General Security Agreement over all of its present and after-acquired real and personal property.

27    In addition, as consideration, Sam, Fayad-Lee, Raymond Khattar, Golden Mile and Dyldam each granted a guarantee and indemnity in favour of Suncorp. Golden Mile granted a registered mortgage over the property at 72 and 74 Macquarie Street, Parramatta NSW and entered into a General Security Agreement over all of its present and after-acquired personal and real property. The directors of Golden Mile at that time were Sam, Fayad-Lee, Chahida and Raymond.

28    At the time of entry into the Argyle Mortgage, the Argyle St Property was subject to a mortgage in favour of Westpac granted on 12 December 2007 for an original principal sum of $35 million. In 2016, that amount was refinanced in the sum of $30 million, with further security being a General Security Agreement in respect of Special Gold and personal guarantees by Sam, Raymond and Joseph. In 2017, the $30 million facility was split into two facilities of $25 million and $5 million, with the addition of a further guarantee by Raymond and an ISDA Master Agreement.

29    On 17 December 2020, Fayad-Lee and Sam passed a directors’ resolution of Special Gold to open a bank account (SBI Account) with the State Bank of India (SBI) (CB6/3688).

30    On the same day, in the Supreme Court Proceedings, Black J made freezing orders restraining Special Gold, its servants and agents, from applying or otherwise dealing with the proceeds of sale of the Argyle St Property other than paying costs, ordinary rates, the Argyle Mortgage, the Deputy Commissioner of Taxation pursuant to a garnishee order dated 7 December 2020, any amount set aside on account of any taxation liability, creditors in the ordinary course of Special Gold’s business and a consultancy fee of $20,000 per month to Raymond Khattar (the Freezing Orders) (CB6/3697).

31    On 22 December 2020, the sale of the Argyle St Property was completed (CB6/3706–9). The settlement adjustment sheet allocated sums of $25,657,811.45 and $5,008,539.72, which were paid to Suncorp (CB6/3709).

32    On 31 March 2021, by consent, Black J varied the Freezing Orders relevantly to permit an agreed sum of $10,559,489.34 to be paid to the Deputy Commissioner of Taxation (CB6/3729). That amount was paid in June 2021 (T63.13–15).

33    Special Gold did not lodge any income tax returns following the sale of the Argyle St Property, for the financial years ending 30 June 2021 and 30 June 2022.

34    The liquidator of Special Gold, Mr Trafford-Jones, inquired about these matters with the Australian Taxation Office. As a result, the ATO lodged a revised proof of debt in the external administration of Special Gold dated 4 October 2024 for $32,047,816.63 (CB9/5743). Income tax for the year ended 30 June 2021 was stated to be $14,826,293. That is the amount of the notice of assessment issued by the ATO (CB12/7708).

35    The settlement adjustment sheet for the sale of the Argyle St Property also records a payment of $6,009,674.07 (CB6/3709). On 23 December 2020, that sum was paid into a loan facility account of Golden Mile with Suncorp bank which was a “loan finalisation” payment (according to the language used in the Suncorp bank statement in respect of that account: CB2/1077), reducing the sum owing to nil (the Golden Mile Mortgage Payment). Special Gold received no benefit from that payment, which was directed by Sam and Fayad-Lee. The Special Gold Balance Sheet as at June 2021 prepared by management shows a loan from Special Gold to Golden Mile of $6,472,023.49 (CB4/2319).

36    On 23 December 2020, Special Gold received $28,109,960.01 from the sale of the Argyle St Property into the SBI Account. It also received a second payment in the sum of $6,584,318.01 (which was the deposit less the agent’s commission on the Argyle St Property) into that account. Then, Special Gold opened a term deposit account for $18,000,000 with the State Bank of India and obtained a loan facility in the amount of $16,200,000 secured against that term deposit (CB6/3714). It also opened a second term deposit in the amount of $9,000,000 with the State Bank of India and obtained a loan facility in the amount of $8,100,000 (CB6/3710). The money for the term deposits was transferred out of the SBI Account into which the proceeds from the Argyle St Property had been deposited. The loan facilities were then drawn down and paid into that SBI Account.

37    Also on 23 December 2020, $15,047,500 was paid out of the SBI Account to KH22 (then known as Kingland Holdings Pty Ltd). Sam was a director and shareholder of KH22 at that time. Remon was also a director of KH22 at that time. The next day, on 24 December 2020, a further $8,100,000 was paid out of the SBI Account to KH22. Between 24 December 2020 and 17 March 2021, a series of payments were made out of the SBI Account (none of which were to the Deputy Commissioner of Taxation, to the creditors in the ordinary course of Special Gold’s business, nor the $20,000 monthly amount to Raymond permitted by the Freezing Orders).

38    On 10 May 2021, $8,993,934.25 was paid from one term deposit into the SBI Account. Then, sums of $8,100,000 and $29,136.73 were paid from the SBI Account to one of the loans, reducing it to nil. On 26 May 2021, $17,988,263.01 was paid from the other term deposit into the SBI Account. Then, a sum of $16,223,390.14 was paid out of the SBI Account to reduce the other loan to nil. The net effect of the transactions was that Special Gold’s loans with the SBI were paid out, it no longer had the benefit of term deposits with the SBI, and the proceeds of sale of the Argyle St Property were no longer in the SBI Account. Those payments left Special Gold unable to pay its debts, including tax liabilities, which in turn led to penalties and interest liabilities. The payments from the SBI Account, and the loans by SBI secured by the term deposits appear to be in breach of the Freezing Orders.

39    On 23 December 2020, $13,250,000 of the $15,047,500 paid out of the SBI Account to KH22 was paid to BAAS Technology Limited (formerly Volt Corporation Limited) (Volt) for the purpose of a purchase of shares in Volt by Parklea Markets Corp (of which Remon is the sole director and shareholder) (CB9/5847).

40    On 26 May 2021, a further $1.2 million was paid out of the SBI Account to Volt, at the express request of Sam by email covering a formal application to the SBI (CB6/3734–5). The purpose of this payment was for a further application of shares in Volt by Parklea Markets Corp (CB9/5873).

41    On 7 December 2023, a liquidator was appointed to Volt. On 15 October 2024, Parklea Markets Corp received a distribution in the liquidation of Volt in the amount of $405,424.49 (CB9/5920).

Other payments by Special Gold to various other entities

42    Between 23 December 2020 and 20 February 2023, Special Gold made payments of $28,977,281.99 to KH22 (the KH22 Payments) and received payments of $21,008,807.51 from KH22. As at June 2021, the Balance Sheet for Special Gold prepared by management shows a loan by Special Gold to KH22 of $26,512,338.04 (CB4/2319). The basis of the payments is unexplained. Relevantly, KH22 gave no consideration for the KH22 Payments, other than insofar as the payments to and from KH22 have been practically set off. As a result, Special Gold paid to KH22 $7,968,474.48 more than it received from KH22 in that period. Mr Trafford-Jones has not been able to identify any benefit to Special Gold in making the KH22 Payments.

43    On 9 February 2021, Special Gold made a payment of $2,000,000 from the SBI Account to “GPST Investment”. Mr Trafford-Jones has not been able to identify any benefit to Special Gold in making this payment (Mr Trafford-Jones’ affidavit of 11 March 2025 at [220]).

44    On 5 March 2021, Special Gold made a payment of $900,000 from the SBI Account to Aphrodite Plutus Funding Pty Ltd. Fayad-Lee was a director of that company from 12 December 2018 onwards, and Sam was a director from 12 March 2019 to 14 September 2023. Mr Trafford-Jones has also not been able to identify any benefit to Special Gold in making this payment (Mr Trafford-Jones’ affidavit of 11 March 2025 at [224]).

45    On 5 March 2021, Special Gold made a payment of $1,000,000 from the SBI Account to SIBC International Australia Pty Ltd. Mr Trafford-Jones has not been able to identify any benefit to Special Gold in making this payment (Mr Trafford-Jones’ affidavit of 11 March 2025 at [226]).

46    On 26 May 2021, Special Gold made a payment of $570,000 from the SBI Account to Gable Australia Pty Ltd. On 17 June 2021, Special Gold made a further payment of $250,000 from the SBI Account to Gable Australia Pty Ltd. Mr Trafford-Jones has not been able to identify any discernible benefit to Special Gold in making these payments (Mr Trafford-Jones’ affidavit of 11 March 2025 at [230]).

47    On 12 December 2022, Special Gold made a payment of $1,000,000 to ACN 390 (the ACN 390 Payment). Mr Trafford-Jones has not been able to identify any benefit to Special Gold in making this payment (Mr Trafford-Jones’ affidavit of 11 March 2025 at [234]).

48    Mr Ayoub says that ACN 390 received that payment and that later that day, he arranged for ACN 390 to pass a resolution (although it is unclear on the face of the document whether it was a meeting of shareholders or directors: CB8/5008), referred to as an “Agency Payment Resolution” in his affidavit. The Agency Payment Resolution stated:

IT WAS RESOLVED the Company will act as a ‘Conduit’ or ‘Third Party Payment Business’ in respect of various transactions relating to Mr Sam Fayad and/or his related entities. The Company may receive funds under direction and/or instruction, and under same direction and/or instruction will subsequently make payment of those funds to suppliers and/or creditors of Mr Sam Fayad.

IT WAS RESOLVED to recognize the $1,000,000.00 of funds received on 12 December 2022, from Special Gold Pty Ltd (ACN 078 553 321) under direction and/or instruction of Mr Sam Fayad or his advisors, will be paid to suppliers and/or creditors of Mr Sam Fayad or his related entities.

49    ABS Agri made Agency Payment Resolutions to the same effect in relation to the payment of $2,500,000 received on 19 January 2023 (CB8/5020), the payment of $545,000 received on 22 February 2023 (CB8/5164), the payment of $1,000,000 received on 10 March 2023 (CB8/5188), the payment of $100,000 received on 23 March 2023 (CB8/5192), the payment of $180,000 received on 30 March 2023 (CB8/5197) and the payment of $200,000 received on 12 April 2023 (CB8/5221).

50    Mr Ayoub then transferred money at the direction of Sam. A total of $850,000 of that money was paid by ACN 390 to I Properties, in respect of which two Agency Payment Resolutions were made by Mr Ayoub, acknowledging the receipt of the money at the behest of Sam (CB8/5010–11), which was ultimately paid onwards at the behest of Sam to a nominee of Sam. I Properties made a further Agency Payment Resolution in relation to the amount of $2,200,000 received on 20 January 2023 (CB8/5022). Further Agency Payment Resolutions were made by I Properties for the following payments which it received from ABS Agri: $95,000 on 24 March 2023 (CB8/5194), $100,000 on 12 April 2023 (CB8/5225), $45,000 on 19 April 2025 (CB8/5229), and $500,000 on 23 May 2023 (CB8/5249).

51    On 27 January 2023, Special Gold made a payment of $1,500,000 from the SBI Account to Paramonte Legal Pty Ltd. On 6 April 2023, Special Gold made a further payment of $318,500 from the SBI Account to Paramonte Legal Pty Ltd (the two are referred to as the Paramonte Legal Payments). The trust account statement of Paramonte Legal Pty Ltd records that the first payment was “Received from: Parkmeng Pty Ltd”. This payment was, on the same day, paid out of the trust account under the description “Parkmeng”. The same trust account statement also records that the second payment was “Received from: Sam Fayad”. Mr Trafford-Jones has been unable to discern from the trust account statement how these funds were applied other than a withdrawal on 20 April 2023 with the description “Sams Invest PEXA239557681S03F01” in the sum of $120,132.17. Mr Trafford-Jones has not been able to identify any benefit to Special Gold in making these payments (Mr Trafford-Jones’ affidavit of 11 March 2025 at [243]).

52    Between 22 December 2020 and 29 March 2023, Special Gold made payments totalling $10,092,595.98 to Golden Mile (including $6,009,67.09 in respect of the Golden Mile Mortgage Payment) and received $640,000 from Golden Mile (the Golden Mile Payments). Mr Trafford-Jones has not been able to identify any benefit to Special Gold in making these payments (Mr Trafford-Jones’ affidavit of 11 March 2025 at [248]).

53    Between 19 January 2023 and 12 April 2023, Special Gold made payments totalling $4,525,000 to ABS Agri (the ABS Agri Payments). Mr Trafford-Jones has not been able to identify any discernible benefit to Special Gold in making these payments (Mr Trafford-Jones’ affidavit of 11 March 2025 at [267]).

54    ABS Agri received the following sums on the following dates from Special Gold:

(1)    on 19 January 2023, $2,500,000;

(2)    on 22 February 2023, $545,000;

(3)    on 10 March 2023, $1,000,000;

(4)    on 23 March 2023, $100,000;

(5)    on 30 March 2023, $180,000; and

(6)    on 12 April 2023, $200,000.

55    Mr Ayoub’s evidence is that on 20 January 2023, he received an instruction from Sam to pay $2,200,000 into the Pope & Spinks Solicitors trust account (Pope & Spinks Trust Account) from ABS Agri (Mr Ayoub’s affidavit of 16 June 2025 at [46]). Pope & Spinks Solicitors, the law firm acting for Remon and Fayad-Lee until the week before the hearing, confirmed receipt of these funds in an email to Mr Ayoub, which were expressly stated to be for “Fayad matters” and further indicated that it understood $2,000,000 was “earmarked” for a Deed of Company Arrangement (see below), but that it required instructions as to where the balance should be distributed as “There [were] currently funds due in a number of matters” (CB8/5023).

56    ABS Agri and I Properties admit that $740,100 of the ABS Agri Payments was paid on to I Properties on the following dates and in the following amounts (the I Properties Payments):

(1)    on 24 March 2023, $95,000;

(2)    on 12 April 2023, $100,000;

(3)    on 19 April 2023, $45,100; and

(4)    on 23 May 2023, $500,000.

57    As to how each of those payments was used:

(1)    on 24 March 2023, I Properties paid $50,000 into the Pope & Spinks Trust Account with the description “SF 021221 legal Pope & Spinks Trust Acco” and on 27 March 2023, I Properties paid a further $50,000 to that same trust account with the description “SF 031221 ongoing legal Pope & Spinks Tr”;

(2)    on 12 April 2023, I Properties paid $50,000 into the Pope & Spinks Trust Account with the description “Ongoing legal SF031221 Pope & Spinks Tru” and a further $50,000 into the same account with the description “CVA Gateway Hall Chadwi Pope & Spinks Tr”;

(3)    on 19 April 2023, I Properties paid $50,000 into an unknown account with the description “Gateway Parramatta SF ongoing 041221 Hal”; and

(4)    on 23 May 2023, I Properties paid $40,000 to the Pope & Spinks Trust Account with the description “SF ongoing legal 031221 Pope & Spinks Tr” and $450,000 to the same account with the description “TRANSFER TO A/C” and, on 25 May 2023, $7,191 to the same account comprising a larger payment of $32,219.79 described as “M73 Deposit 28 McCourt Pope & Spinks Tru”.

58    Mr Trafford-Jones has been unable to identify a benefit to Special Gold of any of these payments by I Properties (Mr Trafford-Jones’ affidavit of 11 March 2025 at [261], [263], [264] and [267]). His evidence is that the payment on 27 March 2023 of $50,000 with the description “SF 031221 ongoing legal Pope & Spinks Tr” appears to have been in connection with the external administration of a group of companies known as the Gateway Parramatta Group of Companies, of which Sam was the director (Mr Trafford-Jones’ affidavit of 11 March 2025 at [264]).

Deed of Company Arrangement in respect of Dyldam

59    On 18 January 2022, Messrs Cathro and Blundell were appointed as voluntary administrators of Dyldam. On 29 April 2022, the creditors of Dyldam resolved to accept a proposal to enter into a Deed of Company Arrangement with a deed contribution of $8,000,000 (CB7/4773). Mr Ayoub attended the meeting as proxy for nine creditors and voted in favour of the resolution on the instructions of Sam or one of his sons (T96.12–24). On 20 May 2022, Dyldam, Messrs Blundell and Cathro, and Maria and Sam (as the Proponents) entered into the Deed of Company Arrangement (the Dyldam DOCA) (CB7/4792). The purposes of the Dyldam DOCA were expressed in cl 2.2 as being to:

(a)    maximise the chances of the Company, or as much as possible of its business, continuing in existence;

(b)    enable all creditors to receive more than they would than if the Company was wound up;

(c)    enable existing employees to remain employees of the Company; and

(d)    provide that upon this deed achieving its purposes and objectives, the Claims of the Creditors that are bound by this deed, will be released and forever barred.

60    Pursuant to cl 3.1 of the Dyldam DOCA, Sam and Maria, as the Proponents, had an obligation to make four payments of $2,000,000 to the Deed Administrators (being on 20 May 2022, 20 September 2022, 20 January 2023 and 20 May 2023; the third and fourth of these payments are referred to as the Third Dyldam DOCA Contribution and the Fourth Dyldam DOCA Contribution respectively).

61    The Dyldam DOCA also required Sam and Maria to procure that the Deed Administrators be granted mortgages over seven properties defined as “Secured Properties” (cl 3.3(a)). Upon the payment of the four instalments of $2 million each under cl 3.1, the Deed Administrators were obliged to discharge or release the mortgages unless, in their reasonable opinion, the total equity in the “Secured Properties” secured by the mortgages was less than the amount of any unpaid component of a DOCA contribution (cl 3.5).

62    The Dyldam DOCA also provided that the shareholders of Dyldam would transfer their shares to the Proponents (cl 4.1). Control of Dyldam would not revert to the directors until effectuation of the Dyldam DOCA (cl 10), including payment of the $8 million by Sam and Maria, transfer of the shares in Dyldam and distribution of the Deed Fund (cl 13.3). If the Proponents failed to comply with their obligations in cl 3, the Dyldam DOCA would be terminated with immediate effect and Dyldam would be wound up (cl 13.4).

63    The Third Dyldam DOCA Contribution was paid out of the Pope & Spinks Trust Account on 2 February 2023. Prior to that occurring, on 19 January 2023, Special Gold transferred $2,500,000 from the SBI Account to ABS Agri. Then, that day, ABS Agri transferred the sum of $2,200,000 to the Pope & Spinks trust account. As noted above, correspondence from Pope & Spinks confirmed that $2,000,000 of that sum was “earmarked” for the Dyldam DOCA (CB8/5023).

64    The Fourth Dyldam DOCA Contribution was paid out of the Pope & Spinks trust account on 5 June 2023. Prior to that occurring, on 3 April 2023, by request signed by Sam and Fayad-Lee, Special Gold transferred $2,000,000 from the SBI Account to the Pope & Spinks trust account.

65    As a result, $8,000,000 was paid or procured by the Proponents pursuant to the Dyldam DOCA. It is presently held in a Macquarie Bank account for Dyldam (the Deed Administration Account).

66    Special Gold lodged a Proof of Debt with the Deed Administrators of Dyldam on 31 January 2024 in the amount of $17,413,048.67, attaching the entries in the Special Gold general ledger for its loan account with Dyldam since 1 July 2019 (CB8/5389–90).

Legal Principles

67    Company directors owe a fiduciary duty to the company to exercise their powers bona fide in the interests of the company as a whole: Harlowe’s Nominees Pty Ltd v Woodside (Lakes Entrance) Oil Company NL [1968] HCA 37; (1968) 121 CLR 483 at 492–4 (Barwick CJ, McTiernan and Kitto JJ). That principle has sometimes been said to be determined by the subjective state of mind of the directors, namely whether they were honestly acting in discharge of their powers in the interests of the company: Howard Smith Ltd v Ampol Petroleum Ltd [1974] AC 821; [1974] 1 NSWLR 68 at 77B–C (Lord Wilberforce, delivering the judgment of the Privy Council). However, it has long been recognised that directors must act both honestly and rationally in exercising their powers bona fide in the best interests of the company: Australian Securities and Investments Commission v Lewski [2018] HCA 63; (2018) 266 CLR 173 (ASIC v Lewski) at [71] (Kiefel CJ, Bell, Gageler, Keane and Edelman JJ); citing Hutton v West Cork Railway Company (1883) 23 Ch D 654 at 671 (Bowen LJ). That is a matter to which I return below.

68    That duty appears to have been overlooked, but not overruled, in a series of High Court judgments to the effect that fiduciary duties are proscriptive, namely not to obtain any unauthorised benefit from the relationship and not to be in a position of conflict, and that the law does not otherwise impose a positive duty on the fiduciary to act in the interests of another: Breen v Williams [1996] HCA 57; (1996) 186 CLR 71 at 113 (Gaudron and McHugh JJ), 137–8 (Gummow J); Pilmer v The Duke Group Ltd (in liq) [2001] HCA 31; (2001) 207 CLR 165 at [74] (McHugh, Gummow, Hayne and Callinan JJ); Youyang Pty Ltd v Minter Ellison Morris Fletcher [2003] HCA 15; (2003) 212 CLR 484 at [41] (Gleeson CJ, McHugh, Gummow, Kirby and Hayne JJ); Friend v Brooker [2009] HCA 21; (2009) 239 CLR 129 at [84] (French CJ, Gummow, Hayne and Bell JJ); Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd [2018] HCA 43; (2018) 265 CLR 1 at [67]–[69] (Gageler J). However, intermediate appellate courts, including the Full Federal Court, have held that those statements by the High Court are not to be taken to mean that the fiduciary duty of directors to act bona fide in the interests of the company as a whole (being prescriptive rather than proscriptive in nature) no longer exists: BCI Finances Pty Ltd (In Liq) v Binetter [2018] FCAFC 189; (2018) 362 ALR 597 at [596]–[598] (Allsop CJ, Moshinsky and Colvin JJ); Xiao v BCEG International (Australia) Pty Ltd [2023] NSWCA 48; (2023) 111 NSWLR 132 at [111]–[114] (Gleeson JA, with whom Mitchelmore JA and Griffiths AJA agreed). Faced with two inconsistent lines of authority by the High Court, I regard myself as bound by the way in which the Full Federal Court dealt with the inconsistency, which I respectfully regard as entirely correct as a matter of principle.

69    Under the two limbs of the rule in Barnes v Addy (1874) LR 9 Ch App 244 (Barnes v Addy), a third party who (i) has knowingly received property as a result of a director’s breach of fiduciary duty, or (ii) has knowingly assisted in the director’s breach of fiduciary duty, will be liable as a fiduciary. While the principle was originally formulated in relation to the law of trusts, it applies to company directors by reason of the fiduciary character of the directors under whose control the company’s assets are held, even though the company is the beneficial owner and not the trustee of its own assets: Grimaldi v Chameleon Mining NL (No 2) [2011] FCAFC 6; (2012) 200 FCR 296 (Grimaldi) at [275] (Finn, Stone and Perram JJ). In the case of the second limb, namely knowing assistance, the breach of fiduciary duty must involve a dishonest and fraudulent design on the part of the trustee or other fiduciary: Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89 (Farah v Say-Dee) at [160]–[164] (Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ).

70    As to the requirement of knowledge, the High Court in Farah v Say-Dee at [174]–[178] held that the knowledge necessary for knowing assistance under the second limb of Barnes v Addy comprises any of the following four categories: (i) actual knowledge; (ii) wilfully shutting one’s eyes to the obvious; (iii) wilfully and recklessly failing to make such inquiries as an honest and reasonable person would make; and (iv) knowledge of circumstances which would indicate the facts to an honest and reasonable person. However, the High Court held that it is insufficient merely to prove knowledge of circumstances which would put an honest and reasonable person on inquiry. The same principles have been held to apply to the first limb in Barnes v Addy: Grimaldi at [268]–[269].

71    In relation to the first (or knowing recipient) limb of Barnes v Addy, there is ample authority for the proposition that a person is not to be treated as a recipient where the person acts:

(a)    in the capacity of an agent rather than receiving money or other property for the person’s own benefit: Agip (Africa) Ltd v Jackson [1990] Ch 265 at 292B (Millett J); cited with approval in Robb Evans of Robb Evans & Associates v European Bank Ltd [2004] NSWCA 82; (2004) 61 NSWLR 75 (Robb Evans) at [171] (Spigelman CJ, with whom Handley and Santow JJA agreed); McNally v Harris [2008] NSWSC 659 at [84] (White J);

(b)    in the ministerial role of a “mere depositary” or “channel”: Robb Evans at [175]; or

(c)    without acquiring the beneficial receipt of the relevant asset: El Ajou v Dollar Land Holdings plc [1994] 2 All ER 685 at 700 (Hoffmann LJ); cited with approval in Turner v O’Bryan-Turner [2022] NSWCA 23; (2022) 107 NSWLR 171 at [93] (White JA, with whom Meagher and McCallum JJA agreed).

72    There was no dispute that equitable compensation is an available remedy for loss caused to a company by a breach of the director’s fiduciary duty to act in good faith in the best interests of the company and for liability under both limbs of Barnes v Addy.

73    Special Gold also relies on a number of statutory duties under the Corporations Act 2001 (Cth) (the Act). Section 180(1) provides relevantly that a director must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise if they were a director of a corporation in the corporation’s circumstances, and occupied the office held by, and had the same responsibilities within the corporation as, the director. Section 181(1) provides relevantly that directors must exercise their powers and discharge their duties (a) in good faith in the best interests of the corporation and (b) for a proper purpose. Section 182(1) provides relevantly that directors must not improperly use their position to (a) gain an advantage for themselves or someone else, or (b) cause detriment to the corporation. A person who is “involved” in a contravention of s 181(1) or s 182(1) also contravenes those sections respectively: ss 181(2) and 182(2).

74    Section 79 provides relevantly that a person is “involved” in a contravention if the person (a) has aided, abetted, counselled or procured the contravention, (b) has induced the contravention, (c) has been in any way knowingly concerned in or party to the contravention, or (d) has conspired with others to effect the contravention. A person is involved in a contravention only if the person has knowledge of the essential facts constituting the contravention, but the person need not know that those elements could or would be characterised as a contravention: Productivity Partners Pty Ltd v Australian Competition and Consumer Commission [2024] HCA 27; (2024) 419 ALR 30 at [82] (Gageler and Jagot J), [146]–[149] (Gordon J), [266] (Edelman J) and [339] (Beech-Jones J).

75    The Court may order a person who contravenes any of ss 180, 181 or 182 to compensate the corporation for damage suffered by the corporation which resulted from the contravention: s 1317H(1).

76    The principles concerning those statutory provisions were not in issue in the present case, except in one respect. The exception concerns the longstanding controversy as to whether a breach of the good faith obligation in s 181(1) requires that it be established that a director engaged deliberately in conduct which he or she knew was not in the company’s best interests, or put differently, whether the good faith obligation is complied with if the directors honestly believed that they acted in the company’s best interests. The competing view is that a contravention of the good faith obligation can be established if the Court considers objectively that the director’s conduct was improper even if the director subjectively believed that he or she was acting in the company’s best interests. In Re Colorado Products Pty Ltd (in prov liq) [2014] NSWSC 789; (2014) 101 ACSR 233 at [420], Black J (with his Honour’s characteristic thoroughness) referred to the rival phalanxes of authority on this question. Recent decisions in this Court have referred to the case law as remaining unsettled: Hanwood Pastoral Co Pty Ltd v Kelly (No 2) [2022] FCA 850 at [142] (Halley J); Australian Securities and Investments Commission v Bettles [2023] FCA 975; (2023) 169 ACSR 244 at [441(2)] (Markovic J). It was not in dispute that, in the context of a group of companies, the transactions undertaken by a particular company must be viewed from the standpoint of that company as a separate and independent legal entity and judged according to the interests of that company: Walker v Wimborne [1976] HCA 7; (1976) 137 CLR 1 at 6–7 (Mason J, with whom Barwick CJ agreed).

77    The New South Wales Court of Appeal has recently criticised the use of the labels “subjective” and “objective” in relation to s 181(1) as unhelpful and distracting: Sunnya Pty Ltd v He [2025] NSWCA 79 at [29] (Basten AJA, with whom Bell CJ and Leeming JA agreed). Basten AJA recognised that the provision requires the honest pursuit of the corporation’s best interests (at [24]), but distinguished between dishonesty and an absence of good faith (at [29]). I respectfully agree that the question of honesty does not necessarily determine the question of good faith, and that the labels “subjective” and “objective” should be avoided.

78    In my view, the preferable approach is to identify the elements which constitute the concept of good faith. That task requires that one turn to first principles concerning the fundamental fiduciary obligation which requires a person to act in good faith in the best interests of another or others, as developed under the general law and now embodied in various statutory provisions. As I set out below, that analysis leads to the conclusion that the duty of good faith of a director under s 181(1)(a) requires that the director act in accordance with what he or she honestly and rationally believes to be in the best interests of the corporation.

79    As indicated at the outset of this part of the judgment dealing with legal principles, company directors owe to the company a fiduciary duty to act bona fide in the best interests of the company as a whole. That is the intellectual predecessor to the good faith obligation in s 181(1)(a) of the Act. Cognate obligations are imposed on responsible entities of managed investment schemes and their officers to act in the best interests of the members under ss 601FC(1)(c) and 601FD(1)(c) of the Act (although I note that those provisions do not expressly use the words “in good faith”). Similarly, trustees of superannuation funds and their directors are under an obligation to perform the trustees’ and the directors’ duties and exercise their powers respectively in the best financial interests of the beneficiaries: ss 52(2)(c) and 52A(2)(c) of the Superannuation Industry (Supervision) Act 1993 (Cth) (the SIS Act). These are all instances of a party being obliged to act in the interests of another or others.

80    What are the elements which constitute the duty to act bona fide in the interests of another? The late Professor (and subsequently Justice) Paul Finn, in his outstanding seminal work on fiduciary obligations, conceptualised the duty of a fiduciary to serve the interests of the principal or beneficiaries as a general over-arching duty: see Paul Finn, Fiduciary Obligations (The Law Book Company, 2011) at [27]–[30] (Fiduciary Obligations). Professor Finn referred to judicial review of a fiduciary’s exercise of power as ultimately raising the question whether the fiduciary has failed in some way to act in the beneficiaries’ interests, and said that that is based on two inquiries (at [86]). The first inquiry is whether the fiduciary intended to act in the beneficiaries’ interests or for some other reason, which cases stemming from Viscount Finlay’s reasons in Hindle v John Cotton Ltd (1919) 56 Sc LR 625 at 630–1 indicate depends on the subjective state of mind of the fiduciary. That line of inquiry is sometimes deployed in cases involving the tactics used by company directors in resisting hostile takeovers, as cases such as the Privy Council’s decision in Howard Smith Ltd v Ampol Petroleum Ltd [1974] AC 821; [1974] 1 NSWLR 68 at 77 illustrate. The second inquiry is whether the fiduciary has in fact acted otherwise than in the beneficiaries’ interests, by gauging the objective consequences which the decision occasions to the beneficiaries, as reflected in Lindley LJ’s decision in Hampden v Earl of Buckinghamshire [1893] 2 Ch 531 at 544 (Bowen and Lopes LJJ agreeing). The point was made colourfully by Bowen LJ in Hutton v West Cork Railway Company (1883) 23 Ch D 654 at 671 that bona fides “cannot be the sole test, otherwise you might have a lunatic conducting the affairs of the company, and paying away its money with both hands in a manner perfectly bona fide yet perfectly irrational”. As I have indicated above, that passage was approved by the unanimous High Court in ASIC v Lewski at [71] in considering the statutory duty of the responsible entity (and its directors) of a managed investment scheme to act in the best interests of members.

81    Justice Jagot’s reasoning in Australian Prudential Regulation Authority v Kelaher [2019] FCA 1521; (2019) 138 ACSR 459 at [54]–[65] concerning s 52(2)(c) of the SIS Act bears a close similarity, arrived at independently of Professor Finn’s reasoning, with those two inquiries: namely (1) has the fiduciary subjectively intended to act in the beneficiaries’ interests; and (2) has the fiduciary acted otherwise than in their interests, viewing the consequences of the relevant decision objectively? Justice Jagot said that a trustee will breach the best interests duty if the trustee’s subjective purpose or object is contrary to the best interests of the beneficiaries (at [63]). Further, Jagot J said that a decision which is “not reasonably justifiable” as in the best interests of beneficiaries, assessed objectively by reference to the circumstances as they in fact existed at the time, will be in breach of the duty (at [64]). In that regard, Jagot J emphasised that the best interests duty did not impose a standard of perfection on trustees (at [65(1)]). The decision is to be assessed prospectively, that is, from the position of the trustee at the time of the decision, without impermissible hindsight (at [55]), and the relevant question is whether the course of action taken was one of the courses of action that may be described as being in the best interests of the beneficiaries (at [65(7)]).

82    One can then take that analysis a step further in order to identify the meaning of a trustee’s (or other fiduciary’s) decision being “not reasonably justifiable”. The standard of reasonableness in the context of trustees’ decision-making has been developed more extensively in the United States than in Australia or the United Kingdom. In Mark Ascher and Austin Scott’s Scott and Ascher on Trusts (5th ed, Aspen Publishers, 2007) at §18.2.6, reasonableness is analysed as a ground of judicial review of a trustee’s exercise of power in terms which indicate that the relevant question is whether a reasonable person in the position of the trustee could possibly have made the decision in question. That bears a striking resemblance to the standard of rationality referred to as “Wednesbury unreasonableness” in the context of judicial review of administrative decisions in Australia. As Professor Finn remarked in introducing his analysis of the fiduciary office (Fiduciary Obligations at [26]), there is a close resemblance between the fiduciary who holds a position for the benefit of others, and the public ministerial officer who, while entrusted with duties and discretions by statute or statutory instrument, discharges those duties and exercises those powers in the interests of the public. Hence, the obligations imposed on a fiduciary in the exercise of his or her discretions mirror to a large degree the obligations imposed on the public officer in exercising his or hers.

83    The same point has been made in the United Kingdom in a number of appellate decisions. The following statement of principle as to the proper bounds of decision-making by trustees of a pension fund, and the concomitant limits of judicial review of that decision-making, was made by Glidewell LJ (with the agreement of Waite and Evans LJJ) in Harris v Lord Shuttleworth [1994] ICR 991 at 999:

(a) the trustees must ask themselves the correct questions; (b) they must direct themselves correctly in law, in particular they must adopt a correct construction of the pension fund rules; and (c) they must not arrive at a perverse decision, i.e., a decision to which no reasonable body of trustees could arrive, and they must take into account all relevant but no irrelevant factors.

84    The Court of Appeal in Edge v Pensions Ombudsman [2000] Ch 602 (Edge v Pensions Ombudsman) at 627–8 quoted that passage with approval, commenting that the language was almost identical to the grounds of judicial review in public law, and said that it is no coincidence that courts considering the exercise of discretionary powers by those to whom such powers have been entrusted (albeit in different contexts) should reach similar and consistent conclusions, and should express those conclusions in much the same language. In Equitable Life Assurance Society v Hyman [2002] UKHL 39; [2002] 1 AC 408 at [17], Lord Woolf MR drew attention to the marked similarities between the two discretionary situations and added (at [20]) that this should cause no surprise when it is remembered that Lord Greene MR, who encapsulated the essence of the court’s role in judicial review in the Wednesbury case (Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223), was a distinguished Chancery lawyer, as was Lord Wilberforce, who was described as “one of the patriarchs of English administrative law”. Implicit in that observation is the insight that the principles concerning judicial review of administrative action have been built on an analogy with the principles concerning judicial review of trustees’ decision-making. That said, the question is one only of analogy and not identity in all respects. That corrective position was stated by Lord Walker in Pitt v Holt [2013] UKSC 26; [2013] 2 AC 108 at [11], in saying that the analogy cannot be pressed too far, and pointing out important differences as to the discretionary nature of relief in judicial review in public law, a different approach to nullity, and strict time limits (drawn from Lightman J’s judgment in Abacus Trust Co (Isle of Man) v Barr [2003] Ch 409 at [29]).

85    In the New Zealand case of Craddock v Crowhen (1995) 1 NZSC 40,331, Tipping J in the High Court said that a discretionary exercise of power by trustees is subject to judicial review if it is made unreasonably in the Wednesbury sense; that is, such that no reasonable trustee could rationally have made it in all the circumstances, relying on the analogy with judicial review of the exercise of public powers. His Honour added that “It is … time for private law to catch up with public law in this respect”. Similarly, Gummow J as a judge of the Federal Court said in Fares Rural Meat and Livestock Co Pty Ltd v Australian Meat and Live-Stock Corporation (1990) 96 ALR 153 at 167 that Lord Greene’s concept of Wednesbury unreasonableness was rooted in the law as to misuse of fiduciary powers, which aligns with Lord Woolf’s similar suggestion a decade later. In addition, Markovic J recently cited with apparent approval the passage from the English Court of Appeal’s decision in Edge v Pensions Ombudsman to which I have already referred: Brady v NULIS Nominees (Australia) Ltd in its capacity as trustee of the MLC Super Fund (No 4) [2024] FCA 1374 at [717]. However, I note for completeness that, the Victorian Court of Appeal in Owies v JJE Nominees Pty Ltd [2022] VSCA 142 at [84] (Kyrou, Niall and Walker JJA) said that the similarities between the authorities in the two areas are superficial and there is no ready analogy between public law decisions and the exercise of trustees’ powers, which I respectfully regard as a missed opportunity.

86    As a matter of principle, the analogy between judicial review of decisions by fiduciaries and judicial review of administrative decisions is illuminating. For present purposes, the point of the analysis is to explain why a standard of rationality applicable to whether fiduciaries (such as company directors) have discharged their duty to act in good faith in the best interests of their principal (such as the company) corresponds to the standard of Wednesbury reasonableness which is applicable in administrative law. Put another way, Jagot J’s test of whether a decision is “reasonably justifiable” should be treated as permitting a wide range of decision-making bounded by the principle that the decision must be one which a reasonable trustee or other fiduciary could have made. I regard that as consistent with (although not expressed in precisely the same way as) the distinction drawn by the High Court in Attorney-General for the Commonwealth v Breckler [1999] HCA 28; (1999) 197 CLR 83 at [7] between an exercise of discretion by a trustee which is arbitrary, capricious and irresponsible and therefore liable to be impugned, and a decision which is merely “unfair or unreasonable or unwise” and cannot be impugned.

87    Accordingly, in my view, the duty of directors under s 181(1)(a) of the Act to exercise their powers and discharge their duties in good faith in the best interests of the corporation is satisfied if the directors honestly and rationally believe that their conduct is in the best interests of the corporation, with the word “rationally” meaning that the decision must be one which a reasonable director in the position of the directors of the particular corporation could have made.

Liability of Sam and Fayad-Lee for payments by Special Gold up to June 2021

88    As indicated above, Sam was a director of Special Gold relevantly in the period 3 November 2016 to 14 September 2023, and Fayad-Lee was a director of Special Gold from 14 November 2017 to 25 November 2022. In the period from 24 May 2019 to June 2021, Special Gold undertook liabilities and made payments in relation to which there does not appear to be any significant benefit for Special Gold, despite Mr Trafford-Jones having investigated Special Gold’s books and records in an effort to seek to identify some such benefit. I set out below the relevant transactions which are the subject of Special Gold’s allegations.

89    On 24 May 2019, Special Gold entered into the Group Tax Debt Deed. Sam and Fayad-Lee signed that deed as directors of Special Gold. The deed expressly acknowledged Special Gold’s tax debt to be $818,020.94, and the tax debts of 12 other parties under the deed totalled $30,588,526.70. Under that deed, Special Gold undertook a liability, jointly and severally, for the debts of all of these entities. The only benefits to Special Gold in doing so were the forbearance of the ATO to enforce the tax debts of all 13 Taxpayers for a period of about three months up to 20 August 2019, provided that the required instalments were paid to the ATO, and the joint and several liability of the other Taxpayers for its debts. However, there was no need for Special Gold to obtain that forbearance for itself, as there was ample equity in the Argyle St Property for Special Gold to have borrowed the sum of $818,020.94, if it did not have sufficient cash available to it at the time. Nor was there any need for Special Gold to have the other Taxpayers undertake liability for Special Gold’s own debt. The relatively minor benefits which Special Gold may be thought to have obtained were very substantially outweighed on any honest and rational view of the matter by the increase in liabilities to the ATO which Special Gold undertook.

90    In my view, the entry into the Group Tax Debt Deed was a clear breach of Sam and Fayad-Lee’s fiduciary duty to act bona fide (that is, honestly and rationally) in the interests of Special Gold. It also constituted a breach of their statutory duties under each of ss 180(1), 181(1) and 182(1) of the Act. The total amount paid by Special Gold pursuant to the Group Tax Debt Deed is $10,577,852.66, from which Special Gold’s liability to the ATO (which arose independently of the Group Tax Debt Deed) of $818,020.94 should be deducted. Sam and Fayad-Lee are liable to pay Special Gold the difference of $9,759,831.72 as equitable compensation and as compensation under s 1317H of the Act.

91    As a separate matter, the conduct of Sam and Fayad-Lee in causing Special Gold to enter into the Group Tax Debt Deed exposed Special Gold to the cost of the appointment of receivers and managers to Grange Road Properties, in the amount of $33,212.63, that appointment having been made pursuant to the rights granted pursuant to the Group Tax Debt Deed. Those costs follow from the breach of the deed by Special Gold (and other Taxpayers) in failing to pay the amounts due under the deed. That is a recoverable head of loss.

92    Following the sale of the Argyle St Property, Sam and Fayad-Lee failed to cause Special Gold to lodge a tax return for the year ended 30 June 2021, and also for the year ended 30 June 2022. It was readily apparent that, upon the sale of an asset purchased for $2.6 million and sold for $73,970,000, a capital gains tax liability would arise, and indeed Special Gold obtained an estimate as to what that tax liability would be from PwC in the amount of $18,613,216.

93    By failing to cause Special Gold to lodge tax returns and pay tax, Sam and Fayad-Lee exposed Special Gold to a substantial ongoing liability, both to pay the tax and for penalties and interest. That liability could have been met (or in relation to penalties and interest, avoided) had money not been paid away to various third parties as discussed below. The risk of the liability is an obvious one of which any ordinary citizen or taxpayer would be aware. In my view, the conduct involves a breach of the fiduciary duty owed by Sam and Fayad-Lee to act bona fide in the best interests of Special Gold, and also involves breaches of their statutory duties under ss 180, 181 and 182 of the Act.

94    As at 2 July 2025, Special Gold’s income tax debt to the ATO, including general interest charges and penalties, was in the amount of $31,986,209.68 (CB12/7714). Of that amount, Special Gold is liable under a notice of assessment for the year ended 30 June 2020 of $84,576.12 and under a notice of assessment for the year ended 30 June 2021 of $14,826,293 (CB12/7706–9). The amount of those two notices of assessment overlaps with other claims considered below in relation to wrongful payments by Special Gold, which were made instead of paying Special Gold’s tax liabilities. The balance of $17,075,340.56 is therefore the amount of the independent claim against Sam and Fayad-Lee for failing to cause Special Gold to lodge tax returns, reflecting the general interest charge and penalties which resulted from that failure.

95    As indicated above, on 23 December 2020, Sam and Fayad-Lee caused Special Gold to deposit funds from the SBI Account, into which the proceeds of sale of the Argyle St Property had been deposited, into two term deposits with the SBI. On the same day, they caused $15,047,500 to be drawn down from the SBI Account and paid to KH22. About a week earlier, the Supreme Court of New South Wales had made the Freezing Orders which prohibited such a dealing with Special Gold’s assets.

96    As I discuss below, the making of the payment to KH22 was in itself wrongful, there being no benefit to Special Gold on any honest and rational view of the matter on the part of Sam and Fayad-Lee in making that payment. It was therefore a breach of fiduciary duty and a contravention of ss 180, 181 and 182 of the Act. Moreover, Sam and Fayad-Lee exposed Special Gold to the risk of proceedings for contempt of court in breaching the Freezing Orders. Those orders expressly stated that failure to comply could expose Special Gold to sequestration of property or other punishment. The breach of the Freezing Orders was itself a breach of the fiduciary duty to act in the best interests of Special Gold, and a contravention of the duties under ss 180, 181 and 182 of the Act. However, there does not appear to be any loss which was caused by the breach of the Freezing Orders, other than the payment away of $15,047,500 which I deal with below.

97    On 23 December 2020, the Golden Mile Mortgage Payment of $6,009,674.09 was made with the proceeds of sale of the Argyle St Property. Sam and Fayad-Lee caused that payment to be made on settlement of the sale of the Argyle St Property in that they coordinated a payment of proceeds from the sale directly to Golden Mile. There was no discernible benefit on any honest and rational view to Special Gold in doing so; rather, there was a detriment being the loss of those funds. In addition, in the period from 2 December 2019 to 10 June 2020, Special Gold made a total of $103,202.32 in payments to Golden Mile, with no discernible benefit to Special Gold having been able to be identified by Mr Trafford-Jones (Mr Trafford-Jones’ affidavit of 11 March 2025 at [246] and [248]). That evidence also indicates that on 29 November 2022, Special Gold received a payment of $640,000 from Golden Mile. The net effect of those payments is that Special Gold paid a net amount to Golden Mile of $5,472,876.39. That amount is a liability of Sam and Fayad-Lee for breach of their fiduciary duty to act in the best interests of Special Gold, and for contravention of their duties under ss 180, 181 and 182 of the Act.

98    On 26 May 2021, Special Gold paid $1,200,000 from the SBI Account to Volt, at the direction of Sam and Fayad-Lee. The payment was for an application for shares in Volt by Parklea Markets Corp. The payment was not for the benefit of Special Gold but for a third party, namely Parklea Markets Corp, which at the time was controlled by Remon (being Sam’s son and Fayad-Lee’s brother). There was no benefit that Special Gold received in exchange for the payment or application for shares in Volt. The payment was a breach of the fiduciary duty to act bona fide in the best interests of Special Gold, and a contravention of Sam and Fayad-Lee’s duties under ss 180, 181 and 182. It follows that Sam and Fayad-Lee are liable for the amount of $1,200,000 as equitable compensation and under s 1317H of the Act.

99    A number of other payments were made by Special Gold in favour of third parties, without any benefit to Special Gold, in the period up to June 2021. In relation to KH22, from 23 December 2020 to 14 May 2021, Special Gold paid to KH22 the total amount of $27,030,000 (including the amount of $15,047,500 paid on 23 December 2020). In the period 24 June 2021 to 8 December 2021, KH22 repaid to Special Gold the total amount of $21,008,807.51 (Mr Trafford-Jones’ affidavit of 11 March 2025 at [202]). Accordingly, the balance was a net amount of $6,021,192.49 paid by Special Gold to KH22. In addition, the following payments were made: on 9 February 2021, $2,000,000 to GPST Investment; on 5 March 2021, $900,000 to Aphrodite Plutus Funding (when Sam and Fayad-Lee were also directors of that company); on 11 March 2021, $1,000,000 to SIBC International; on 26 May 2021, $570,000 to Gable Australia Pty Ltd; and on 17 June 2021, $250,000 to Gable Australia Pty Ltd (Mr Trafford-Jones’ affidavit of 11 March 2025 at [217]–[230]). That is a total amount of $10,741,192.49.

100    Those payments were all made without any benefit accruing to Special Gold on any honest and rational view on the part of Sam and Fayad-Lee. They were thus made in breach of Sam and Fayad-Lee’s fiduciary duty to act bona fide in the best interests of Special Gold, and in contravention of their statutory duties under ss 180, 181 and 182 of the Act. Accordingly, Sam and Fayad-Lee are liable to make equitable compensation and compensation under s 1317H of the Act to Special Gold in the amount of $10,741,192.49.

101    The total amount of the loss suffered by Special Gold by reason of the breaches of fiduciary and statutory duties by Sam and Fayad-Lee is the sum of $9,759,831.72, plus $33,212.63, plus $17,075,340.56, plus $5,472,876.39, plus $1,200,000, plus $10,741,192.49, being a total of $44,282,453.79.

102    Special Gold also alleges (Amended Statement of Claim at [188]) that from 24 May 2019 (being the date of the Group Tax Debt Deed) or from 2 November 2020 (being the date that Special Gold entered into the Suncorp Facility), Sam and Fayad-Lee agreed to participate in a scheme (the Scheme) whereby:

(a)    the equity in, or the net proceeds from the sale of, the Argyle St Property would be utilised for their personal benefit, or the benefit of companies or persons to which they were associated;

(b)    they would sign documents, give directions, provide instructions and/or cause transactions to occur, with respect to those assets of Special Gold, such that:

(i)    Special Gold would become liable for liabilities and debts of related entities of, or third parties controlled by, the Fayad family; and

(ii)    the equity in, or the net proceeds from the sale of, the Argyle St Property would be transferred to various related entities of, or third parties controlled by, the Fayad family to dissipate the assets of Special Gold (and in some instances, there would be many transactions);

(c)    they would not cause Special Gold to meet its statutory taxation lodgements or otherwise report on the sale of the Argyle St Property to the ATO;

(d)    they would instruct solicitors or other recipients receiving those assets of Special Gold to receive the funds in the name of an alternate entity; and

(e)    they would place Special Gold, and various related corporate entities of (or controlled by) members of the Fayad family, including those which received assets of Special Gold, into external administration.

103    The purpose of the Scheme is alleged (Amended Statement of Claim at [189]) to have been to:

(a)    remove the assets of Special Gold for the personal benefit of Sam and Fayad-Lee and their related entities;

(b)    conceal the improper uses of Special Gold’s assets from and to the exclusion of the Khattar Family;

(c)    avoid Special Gold paying its statutory liabilities to the ATO;

(d)    conceal the ultimate beneficiary of the assets of Special Gold, including from any subsequently appointed liquidators; and

(e)    enable the Fayad family and the entities controlled by its various family members or associates to have the benefit of Special Gold’s assets as well as funds which ought to have been paid to the ATO.

104    Each of the impugned payments to which I have referred above, as well as the Group Tax Debt Deed itself, is alleged to have been made as a result of the Scheme, which is also alleged to have had the effect of Special Gold being unable to meet its liabilities to the ATO (Amended Statement of Claim at [190]).

105    The existence of the Scheme is consistent with the various transactions from 24 May 2019 until June 2021, and provides the most plausible and probable explanation for those transactions. I accept that Sam and Fayad-Lee did agree upon the Scheme from a date no later than 24 May 2019, and each of the payments to which I have referred above in the period up to June 2021 (and the Group Tax Debt Deed itself) was made in implementation of the Scheme. In my view, the Scheme constituted a dishonest and fraudulent design within the meaning of Farah v Say-Dee. The existence of the Scheme, however, does not affect the quantification of pecuniary remedies against Sam and Fayad-Lee.

Alleged liability of Sam and Fayad-Lee for payments by Special Gold from November 2022

106    Mr Trafford-Jones gave evidence that the web of relationships between the various entities in the Dyldam group of companies was complex and difficult to understand (T49.1–6). He accepted that he has little confidence in the accuracy and reliability of the financial records of entities in the Dyldam group that he has been able to locate (T49.12–13). In particular, Mr Trafford-Jones has grave reservations as to the reliability of the Special Gold financial statements for the financial year to June 2021 (T49.15–21). I accept his evidence that, since his appointment, he has been provided with little to no assistance with his investigations (Mr Trafford Jones’ affidavit of 11 March 2025 at [26]). Nonetheless, Mr Trafford-Jones has conducted an impressive exercise of collating material and analysing the material available to him, and drawing the conclusion that Special Gold did not receive any benefit from the various transactions and payments to which I have referred above in the period up to June 2021.

107    Mr Trafford-Jones accepted that after the Deed of Settlement was entered into in November 2022 to compromise the Supreme Court Proceedings between the Fayad and Khattar families, there would have been a newly found set of relationships arising from that deed (T72.5–8). As noted above, the entities in the Dyldam group were divided into those which would be controlled by the Fayads and those which would be controlled by the Khattars. Mr Trafford-Jones accepted that he had not examined what was involved in the newly formed interrelationship between Dyldam and Special Gold (T72.10–11). Although Mr Trafford-Jones did not give evidence as to whether he had examined what newly formed relationships there may have been between Special Gold, on the one hand, and Golden Mile or KH22, on the other hand, I cannot see any basis in his evidence to prove that he did in fact examine what their newly formed relationships may have been under the control of the Fayads after the Deed of Settlement was entered into in November 2022. In light of his concession that he did not examine the new financial relationship between Special Gold and Dyldam after the Deed of Settlement was entered into, and although Mr Trafford-Jones has expressed conclusions in relation to payments made to KH22 and Golden Mile as to his inability to identify any discernible benefit to Special Gold in making those payments, which in their terms include payments made in and after November 2022 (Mr Trafford-Jones’ affidavit of 11 March 2025 at [204] and [248]), that conclusion does not appear to be based on any examination directed to the relevant relationships in the period from November 2022. Similarly, there does not appear to have been any examination of the financial and other relationships between Special Gold and Sam himself after the Deed of Settlement was entered into. It is therefore difficult to infer that the reasons for the transactions and payments up to June 2021 applied equally to those made from November 2022 onwards, given the length of the intervening period of at least 16 months, as well as the new circumstances of the Dyldam DOCA and the Deed of Settlement. In those circumstances, I do not regard Special Gold as having discharged its onus of proving the lack of any benefit to Special Gold from the transactions and payments of which it complains from November 2022 onwards. Those payments include the following:

(a)    the ABS Agri Payments totalling $4,525,000 made from 19 January 2023 to 12 April 2023 from which further transfers were made to I Properties, which in turn made payments;

(b)    the ACN 390 Payment of $1,000,000 made on 12 December 2022;

(c)    the Paramonte Legal Payments totalling $1,818,500 made on 27 January 2023 and 6 April 2023;

(d)    the Third Dyldam DOCA Contribution of $2,000,000 made on 2 February 2023;

(e)    the Fourth Dyldam DOCA Contribution made on 5 June 2023;

(f)    further payments to KH22 made in the period 30 November 2022 to 20 February 2023 in the total amount of $1,947,281.99 (Mr Trafford-Jones’s affidavit of 11 March 2025 at [202]); and

(g)    further payments to Golden Mile in the period 29 November 2022 to 29 March 2023 in the total amount of $3,979,719.59 (Mr Trafford-Jones’ affidavit of 11 March 2025 at [246]).

108    I note that Fayad-Lee ceased to be a director of Special Gold on 25 November 2022, and accordingly, these payments are alleged only against Sam as a director of Special Gold. I do not regard Special Gold as having discharged its onus of proving that Sam breached his fiduciary duty to act in the best interests of Special Gold or contravened his statutory duties under ss 180, 181 and 182, in the period from November 2022. Special Gold submits that Sam should be found liable in the absence of any benefit to Special Gold from those payments having been identified. I accept that where one party bears an onus of proving a negative proposition as to the absence of a justification for a transaction and the other party has the knowledge or greater means to produce evidence relating to the relevant facts, then provided the party with the onus adduces sufficient evidence from which the negative proposition may be inferred, then the other party bears a practical or evidentiary onus of raising some explanation for the transaction: Hawksford v Hawksford [2005] NSWSC 463; (2005) 191 FLR 173 at [54] (Campbell J); Crowe-Maxwell v Frost [2016] NSWCA 46; (2016) 91 NSWLR 414 at [89]–[91] (Beazley P, with whom Macfarlan and Gleeson JJA agreed). However, Special Gold cannot raise an inference as to the absence of benefit to Special Gold without at least having proved that it has examined or investigated the financial and other relationships between Special Gold as payer and the various payees at the time.

Liability of Remon and Parklea Markets Corp

109    Remon knew by 3 September 2020 that the Argyle St Property was to be sold by Special Gold, as he was given the draft contract for sale that day in answer to a request he made to Special Gold’s solicitors (CB5/2676–7). He was subsequently copied in on emails relating to the negotiations for the sale (CB5/2678–9), and on emails relating to the use of the net proceeds on settlement (CB6/3700–4). He was familiar with the Group Tax Debt Deed, having executed it on behalf of a number of entities.

110    At the time of the KH22 Payments which were made up to May 2021, Remon was a director of KH22. From that money, $13,250,000 was paid to Volt to acquire shares issued to Parklea Markets Corp (of which Remon was also the sole director, secretary and shareholder). In addition, Special Gold paid $1,200,000 directly to Volt for the issue of shares in Volt to Parklea Markets Corp. Remon executed the applications for shares in Volt by Parklea Markets Corp and therefore would have known that KH22 received the money from Special Gold which was used to subscribe for the shares. There is no evidence which suggests that there was any benefit to Special Gold arising from those transactions and Mr Trafford-Jones has not been able to identify any such benefit. I infer from the direct evidence of what Remon knew, that Remon knew that there was no such benefit to Special Gold. Accordingly, Remon knew that the payments from Special Gold which were used to acquire shares in Volt were made in breach of Sam and Fayad-Lee’s fiduciary duty to act in the interests of Special Gold, and in contravention of their duties under ss 180, 181 and 182 of the Act. Further, the payments by Special Gold for those share purchases were transactions made pursuant to the Scheme, which constituted a dishonest and fraudulent design on the part of Sam and Fayad-Lee, to the knowledge of Remon.

111    Accordingly, Remon is liable for knowingly assisting in Sam’s breach of fiduciary duty to Special Gold in causing or permitting Special Gold’s money to be applied (either directly or via a payment to KH22) for Parklea Markets Corp to acquire shares in Volt. Further, Remon was knowingly involved in Sam and Fayad-Lee’s contraventions of ss 181 and 182 of the Act.

112    Remon is therefore liable to make equitable compensation and compensation under s 1317H of the Act. There are two amounts in question. The first is the net amount of the payments made by Special Gold to KH22 in the period up to May 2021 after deducting repayments by KH22 to Special Gold from 24 June 2021 to 8 December 2021, being $6,021,192.49. The second is the amount of $1,200,000 paid directly by Special Gold to Volt for the issue of shares in Volt to Parklea Markets Corp. The total of Remon’s liability is $7,221,192.49.

113    As against Parklea Markets Corp, Special Gold seeks an order pursuant to the first (recipient) limb of Barnes v Addy for payment of $14,450,000 (being the total of the amounts of $13,250,000 and $1,200,000 paid directly or indirectly by Special Gold for the shares in Volt). In my view, that claim is well founded given my finding as to Remon’s knowledge of Sam and Fayad-Lee’s breach of their fiduciary duty to Special Gold, which knowledge is to be attributed to Parklea Markets Corp. It is a claim in effect for an account of profits, rather than for equitable compensation, and is therefore not affected by the repayments made by KH22 to Special Gold.

Alleged liability of ABS Agri, ACN 390 and I Properties

114    Special Gold alleges that ABS Agri, ACN 390 and I Properties (together the Ayoub Companies) are liable as accessories to Sam’s breaches of fiduciary duty under both limbs of Barnes v Addy, and as having been knowingly involved in his alleged contraventions of ss 181 and 182 of the Act. The transactions in question all occurred after 25 November 2022, and thus Fayad-Lee was no longer a director of Special Gold at the relevant time. As I have found that Special Gold has not discharged its onus of proving Sam’s breaches of fiduciary and statutory duty from November 2022 onwards, the claims against the Ayoub Companies must fail. In any event, even if I had found that Special Gold had established breaches of the primary duties owed by Sam to Special Gold, the claims against the Ayoub Companies would have failed for the following additional reasons.

115    As to the first (recipient) limb of Barnes v Addy, I have referred above to the authorities to the effect that a person is not to be treated as a recipient where the person acts as an agent, or in the ministerial role of a mere depository or channel, or does not acquire the beneficial receipt of the relevant asset. In the present case, the analysis undertaken by the legal representatives for the Ayoub Companies (and shown in MFI 2) demonstrates that the Ayoub Companies received a total of $5,525,000 from Special Gold and disbursed a total of $5,477,289.79, leaving a balance which is unaccounted for of only $47,710.21. In effect, the Ayoub Companies acted as payment intermediaries.

116    That is consistent with the Agency Payment Resolutions which Mr Ayoub made to record the basis on which the particular Ayoub Company was holding and dealing with the money, namely as a “conduit” for funds to be disbursed on instructions from Sam. Mr Ayoub’s cross-examination revealed a considerable number of mistakes in those Agency Payment Resolutions, such as the ones dated 20 January 2023 (CB8/5022 and T105.4–39), 3 March 2023 (CB8/5180 and T108.5–18), 22 January 2023 (CB8/5024 and T109.7–26), and 21 May 2023 (CB8/5248 at T115.8–39). However, I do not regard those mistakes as undermining the proposition that the Agency Payment Resolutions reflect the role of the Ayoub Companies as mere depositories or channels for payments from Special Gold to be disbursed on Sam’s instructions. Further, I accept Mr Ayoub’s denial that he made up these documents after the event to try to justify the receipt and disbursal of the payments for the purpose of these proceedings (T109.37–39, 115.41–43). I note in that regard, that the one example which might have given some direct support to that allegation (namely the Agency Payment Resolution wrongly dated 12 April 2024 rather than 12 April 2023: CB8/5224) was not put to Mr Ayoub in cross-examination.

117    I also accept Mr Ayoub’s evidence that the role of the Ayoub Companies as payment intermediaries initially came about due to the lack of trust expressed by creditors of Sam or related entities in promises of payment made by Sam or his related entities, and hence there was a perceived need for a third party which would commit to making the agreed payments (T84.25–31, T84.39–85.6). I accept that the purpose was not simply to obscure the source of the money (T84.33–34, T102.11), although Mr Ayoub appeared to accept that that was one of the purposes (T102.17–23). I also accept Mr Ayoub’s evidence that the purpose was not to seek to ensure that the payments could not be recovered as a preference (T84.36–37). I accept that, over time, the role of the Ayoub Companies as payment intermediaries “just became a practice” (T104.41), which explains why it was adopted even in cases where payments would flow through the Ayoub Companies to the Pope & Spinks Trust Account before being disbursed to their ultimate intended recipient. I am satisfied that the Ayoub Companies did in fact act as a conduit and in the ministerial role of a mere depository or channel (other than in relation to funds disbursed to pay Mr Ayoub’s own fees as agreed in his retainer letter of 20 August 2021, which Special Gold accepts was legitimate: T151.15–22). That is fatal to the claim under the first limb of Barnes v Addy.

118    As to the claim under the second (assistant) limb of Barnes v Addy, the pleaded and particularised allegation is that the Ayoub Companies knew that the payments to them were made in breach of Sam’s fiduciary duty as director to act bona fide in the interests of Special Gold, because there was no benefit to Special Gold or no adequate consideration given by the Ayoub Companies in question (see Amended Statement of Claim at [223] and [224], which cross-refer to [156]–[169] and [142]–[145] respectively). The allegation is not pleaded as a dishonest and fraudulent design, and in any event, I have found that the alleged breaches by Sam from November 2022 have not been established. The dishonest and fraudulent design which is alleged is the Scheme (see [228]) and I do not regard the Amended Statement of Claim as alleging that the Scheme was an aspect of the Ayoub Companies’ liability. Special Gold accepted that the particulars to [223] did not pick up the Scheme (T137.7–46) and in my view, the same conclusion is appropriate for [224]. Special Gold then sought to contend that it could rely on a single aspect of the Scheme, namely that payments were made to the personal benefit of Sam and Fayad-Lee or their companies (T138.37–140.44). However, the Scheme, as pleaded, involves the aggregation of six integers, and in my view Special Gold cannot isolate one of those integers and claim that that integer alone constituted the Scheme without having pleaded that. An allegation of knowing participation in a dishonest and fraudulent design must be pleaded and particularised: Farah v Say-Dee at [170]. Accordingly, the second (assistant) limb of Barnes v Addy must also fail.

119    Even if Special Gold’s claim had surmounted those obstacles, it would still have failed for want of proof of the requisite degree of knowledge (as discussed as a matter of legal principle above) on the part of the Ayoub Companies. It is common ground that the relevant person whose knowledge is to be attributed to the Ayoub Companies is Mr Ayoub. My reasons for this conclusion are as follows.

120    I should begin by making some observations as to Mr Ayoub’s credit. There were aspects of Mr Ayoub’s evidence which were unsatisfactory. At times, Mr Ayoub was evasive in dealing with relatively straightforward questions in his cross-examination (see, for example, T84.1–31, T89.18–90.37, and T94.40–96.24). There were also occasions on which Mr Ayoub contradicted his own evidence. One such occasion concerned whether he understood, as at 20 August 2021, that it was likely that some companies in the Dyldam group would go into external administration (contrast T86.25–26 with T87.7–8). Another occasion concerned whether he understood, as at 20 August 2021, that the Dyldam group was under severe financial pressure (contrast T86.28–30 with T93.32–33). Significantly, Mr Ayoub gave evidence in his affidavit of 16 June 2025 that by early 2022 he understood that Special Gold conducted a treasury function for other entities in the Dyldam group (at [19] and see also [40]), but insisted in his cross-examination that he was not aware of that until October 2023 (T92.6–15). I have already referred to the numerous mistakes in the Agency Payment Resolutions, although I regard those as showing carelessness in the documentation of transactions rather than as reflecting any lack of integrity on the part of Mr Ayoub. Overall, I regard Mr Ayoub as relatively unsophisticated, and as a person who was inclined to accept his client’s instructions without bringing a sceptical or inquiring mind to bear upon them.

121    I therefore approach Mr Ayoub’s evidence with considerable caution. However, questions relating to Mr Ayoub’s credibility have less significance than might generally have been expected, given that, as I will demonstrate below, his cross-examination was largely directed to establishing his ignorance, rather than his knowledge, of the position and affairs of Special Gold. Mr Ayoub readily accepted the cross-examiner’s propositions as to his almost complete ignorance of the circumstances of Special Gold. In relation to the matters of significance which Mr Ayoub denied, I regard his denials as being inherently plausible in light of that almost complete ignorance of Special Gold’s circumstances, which was effectively common ground between the cross-examiner and the witness.

122    Mr Ayoub first met Sam on 17 August 2021 (Mr Ayoub’s affidavit of 16 June 2025 at [13]). As at 20 August 2021, when Mr Ayoub was first retained by Sam, he did not know that there were any companies in the Dyldam Group which were in external administration, but he understood that it was likely that some companies in the group would go into external administration because he knew the whole group (including Dyldam itself) was under severe financial pressure at that time (T86.21–30, T86.43). I prefer that evidence to his subsequent evidence that he did not know at that time that some companies in the group were likely to go into external administration (T87.7–8) and did not know by the end of 2021 that the other companies in the group were also in financial distress (T93.32–33). Mr Ayoub said, and I accept, that he did not know as at 20 August 2021 that Special Gold in particular was under severe financial pressure (T86.35–36). At that time, he understood that the group was “intertwined” and that the affairs of the companies in the Dyldam Group were so complex that “working them out was like spaghetti” (T86.38–41 and see Mr Ayoub’s affidavit of 16 June 2025 at [20]).

123    By early 2022, Mr Ayoub was not aware that Special Gold had previously owned the Argyle St Property (T91.6–7). He did not know what Special Gold’s business was, if any (T91.9). He only became aware of what Special Gold’s business was in about October 2023 (T91.14–20).

124    By December 2022, Mr Ayoub did not know where Special Gold obtained its money from (T91.22–23). Importantly, Mr Ayoub accepted the cross-examiner’s proposition that as at 12 December 2022, Mr Ayoub knew nothing about Special Gold other than the fact that Special Gold had been a creditor of Dyldam and was part of the Dyldam group (T97.17–24, T103.20–21). As at 12 December 2022, Mr Ayoub did not know that in the Supreme Court Proceedings, the Khattar family had alleged that Special Gold had not lodged tax returns (T97.29–30).

125    After October 2023, Mr Ayoub became aware that Special Gold received money recorded as loans in its Balance Sheet from companies in the Dyldam group from time to time (T91.25–32). Before October 2023, Mr Ayoub was not aware of what Special Gold did with its money (T91.34–35). Mr Ayoub accepted the cross-examiner’s proposition that as at October 2023, the only knowledge he had about Special Gold was that it was recorded as a creditor of Dyldam in the Dyldam DOCA (T91.37–92.4). Mr Ayoub also accepted the cross-examiner’s proposition that by October 2023, it would be quite wrong to suggest that Mr Ayoub thought that Special Gold performed a treasury function within the Dyldam group (T92.6–15). The cross-examiner thus succeeded in establishing that Mr Ayoub was even more ignorant of the affairs of Special Gold than his affidavit of 16 June 2025 (at [19]) had indicated. Mr Ayoub also accepted the cross-examiner’s proposition that he only learned that Special Gold paid Dyldam to manage the finance facilities it conducted for other members of the Dyldam group in or after October 2023 (T92.27–30, contrary to [19(d)] of his affidavit).

126    Mr Ayoub was then asked about the particular payments which were made on and after 12 December 2022. Reference to paragraph numbers in this part of the judgment are to Mr Ayoub’s affidavit of 16 June 2025. The first of them was a payment by Special Gold to ACN 390 of $1 million on 12 December 2022 (at [30]). From the $750,000 transferred to I Properties (at [33]), an amount of $500,035 was paid to Gilbert & Tobin (at [35]), in partial payment of a creditor of Sam’s who was owed about $5 or 6 million, and had issued a creditor’s petition (T99.43–T100.11). Mr Ayoub accepted the cross-examiner’s propositions that Sam did not tell Mr Ayoub whether Special Gold received any benefit from that payment, and that Mr Ayoub did not inquire about that, and he knew nothing about Special Gold’s finances at that time (T100.13–18, 100.30–34). Mr Ayoub accepted the cross-examiner’s proposition that he “had no knowledge of any benefit to Special Gold in making the payment”, which was not a loan by Special Gold (T100.37–41). Mr Ayoub also accepted the cross-examiner’s proposition that the reason that he thought the payment was being made via his company was because the creditor did not trust Sam (T100.43–44).

127    On 14 December 2022, I Properties made a further payment of $250,035 to Pope & Spinks (at [36]). Mr Ayoub did not know the ultimate purpose of this payment (T101.31–36) and was simply following Sam’s direction (T101.20, T102.8–9). Mr Ayoub denied that the purpose of the money being paid via the Ayoub Companies was simply to obscure the source of the money (T102.11) and denied that it was a means of stripping money out of Special Gold for Sam’s benefit (T102.13–15). As far as Mr Ayoub was aware, the benefit of the payments of 12 December 2022 was across the whole group, of which Special Gold was a part, and Mr Ayoub was unable to say whether Special Gold received a benefit or not (T102.40–43, T103.12–14). On 21 December 2022, I Properties made a payment of $100,000 to Austral Bricks (at [38]) which Mr Ayoub knew was a creditor of Sam’s (and not of Special Gold), and Mr Ayoub understood that the payment was being made because Austral Bricks was seeking to support the creditor’s petition against Sam (T103.39–104.9). Mr Ayoub understood the payment was for the benefit of Sam, but did not know whether it was solely for his benefit (T104.11–13). I accept Mr Ayoub’s evidence in these respects.

128    On 19 January 2023, ABS Agri received $2.5 million from Special Gold (at [43]). Sam instructed Mr Ayoub to pay $2.2 million to the Pope & Spinks Trust Account, which he did (T104.26–29). Mr Ayoub did not know that the purpose was for a contribution of $2 million by Sam and Maria to the Dyldam DOCA (T104.31–33 and [46]).

129    On 22 February 2023, Special Gold paid ABS Agri $545,000 (at [51]), which ABS Agri then paid to the Pope & Spinks Trust Account on 24 February 2023 (at [53]). That was done at Sam’s direction and Mr Ayoub knew that the money had come from Special Gold (T106.10–12). Mr Ayoub knew that the payment was to be made to Austral Bricks, being one of Sam’s creditors (T106.14–16). Mr Ayoub understood that the money was to come through his company because that was what was directed by Sam and Mr Ayoub did not regard it as being his call (T106.22–24). Mr Ayoub accepted the cross-examiner’s proposition that there was no benefit that Mr Ayoub knew of to Special Gold in that payment being made (T106.29–30). Pausing there, that proposition is different from the crucial question as to whether Mr Ayoub knew that there was no benefit to Special Gold in the payment being made, in that the proposition which was actually put is consistent with Mr Ayoub not knowing one way or the other whether Special Gold received a benefit from the payment being made. Mr Ayoub was then asked about a further payment of $30,000 to Pope & Spinks on 22 February 2023 for payment of ongoing legal fees for Sam (T106.32–37). The following question was put and answer given (T106.39–40):

And again, to your understanding, there was no benefit to Special Gold? –– Correct. As far as I understood.

The question was this time the crucial question, and if read literally and in isolation, it elicited an admission by Mr Ayoub. However, the prefatory words “And again” were confusing, in that three questions earlier the question which was put was that “there was no benefit that you knew of to Special Gold in that payment being made”, with which Mr Ayoub agreed (T106.29–30). In my view, Mr Ayoub misunderstood the question posed at T106.39–40 as being the same question as that with which he had agreed at T106.29–30, and did not realise that the cross-examiner had now shifted his ground to what was the crucial question. Accordingly, I do not accept that Mr Ayoub intended to agree that he understood at the time of making the $30,000 payment that there was no benefit to Special Gold to his understanding. That conclusion is consistent with the fundamental proposition, which was common ground between the cross-examiner and the witness, that until October 2023, all Mr Ayoub knew about Special Gold was that it was a member of the Dyldam group and had been a creditor of Dyldam. The general theme of Mr Ayoub’s evidence (which I accept) was that he did not know one way or the other if there was a benefit to Special Gold from the payments. As Mr Ayoub said in an answer which was not challenged, he did not know who in the group benefited and who did not and was not privy to any accounts or financial documents (T111.33–35). When asked directly whether he understood that only Sam benefited or that there was no benefit to Special Gold from particular payments, Mr Ayoub either said that he did not know, or that he was not aware who benefited and who did not (T104.13, T112.12–13).

130    On 10 March 2023, Special Gold paid ABS Agri $1 million (at [55]) which was then paid to the Pope & Spinks Trust Account on 13 March 2023 (at [57]) for the purpose of paying out a private lender to Sam or to the Dyldam group generally (T109.46–110.15). Mr Ayoub could not say if there was any benefit to Special Gold in making that payment as the Fayads kept a lot of information from him and there was a lot of things he did not know (T110.17–23).

131    On 23 March 2023, Special Gold paid $100,000 to ABS Agri (at [59]), of which $95,000 was paid on 24 March 2021 (at [61]) to the Pope & Spinks Trust Account (T110.30–42). The following exchange took place in cross-examination (T110.44–45):

Again, you didn’t understand there to be any benefit to Special Gold in that payment being made? –– No, not at all.

Mr Ayoub then clarified that by his answer, he was agreeing with the cross-examiner (T111.1–2). That answer was consistent with the theme of Mr Ayoub’s evidence that he did not have an understanding one way or the other as to whether there was any benefit to Special Gold, noting that the proposition is different from the crucial question as to whether Mr Ayoub understood that there was no benefit to Special Gold in the payment being made.

132    Mr Ayoub was also asked about two payments of $50,000 each made by I Properties to the Pope & Spinks Trust Account for ongoing legal services on 24 and 27 March 2023 (at [64]–[65]). Mr Ayoub accepted that he was not aware of any benefit to Special Gold from those payments, as he did not know which entity in the group benefited and which did not, and he was not privy to any accounts or financial documents (T111.33–35).

133    On 30 March 2023, Special Gold paid ABS Agri $180,000 (at [67]), from which $60,000 was paid to I Properties (at [69]), and in turn that was paid to the Pope & Spinks Trust Account for the “Helm CVL” (at [69]), being a reference to a company which was going into creditors’ voluntary liquidation (T112.5–10). When it was put to Mr Ayoub that there was no benefit to Special Gold, Mr Ayoub replied that he was not aware of who benefited and who did not (T112.12–13).

134    On 12 April 2023, Special Gold paid $200,000 to ABS Agri (at [70]), from which ABS Agri paid I Properties $100,000 (at [72]), and on 19 April 2023, I Properties withdrew $50,000 to pay Hall Chadwick for the proposed creditors’ voluntary liquidation of the Gateway Parramatta Companies (T113.1–3 and [77]). When it was put to Mr Ayoub that there was no benefit that he could identify to Special Gold, Mr Ayoub replied that, “as [he had] said before, it [was] the group” (T113.5–6). Finally, Mr Ayoub was asked about various payments on 23 and 25 May 2023, in relation to which Mr Ayoub was unable to recall what the payments were for (at [84]). It was then put to him in cross-examination that it followed from that evidence that Mr Ayoub could not point to any benefit to Special Gold in those payments, to which Mr Ayoub replied that he could not say “it does or doesn’t” (T116.3–5).

135    The upshot of Mr Ayoub’s evidence, which I accept in this regard, is that he simply did not know one way or the other whether there was a benefit to Special Gold in the making of the various payments which passed from Special Gold through the Ayoub Companies. On the few occasions when the crucial question was put to Mr Ayoub, namely whether he knew or understood that there was no benefit to Special Gold in the payments, he denied the proposition in ways which I regard as inherently plausible given the common ground between the cross-examiner and Mr Ayoub to the effect that Mr Ayoub knew nothing about Special Gold at the relevant times other than the fact that it was a member of the Dyldam group and had been a creditor of Dyldam. I have dealt separately above with what may be thought to be an admission as to a $30,000 payment if the evidence is read literally and taken out of context. Accordingly, Special Gold would have failed to establish that the Ayoub Companies had the requisite knowledge for the purpose of liability under either limb of Barnes v Addy, or for knowing involvement in contraventions of ss 181 and 182 of the Act, even if I had found that Sam had relevantly breached his fiduciary and statutory duties after November 2022.

Special Gold’s claim for equitable contribution against Rainbow North Rocks

136    Special Gold seeks equitable contribution against Rainbow North Rocks arising out of their coordinate liability for the same debt in their capacity as Taxpayers pursuant to the Group Tax Debt Deed. Where several parties are subject to a coordinate liability for the same loss, the party which discharges that liability may claim contribution in equity from the others who share that liability: Albion Insurance Co Ltd v Government Insurance Office of NSW [1969] HCA 55; (1969) 121 CLR 342 at 351–2 (Kitto J, with whom Windeyer J agreed). As indicated above, the evidence establishes that Special Gold paid $10,577,852.66 pursuant to the Group Tax Debt Deed, and a further amount of $33,212.63 in respect of the receivers’ expenses and remuneration. As there were 13 Taxpayers who were jointly and severally liable under the Group Tax Deed, Special Gold has a valid claim against Rainbow North Rocks for 1/13 of $10,611,065.29, being $816,235.79. If it matters, then I accept Special Gold’s submission that the entire debt under the Group Tax Debt Deed was in fact discharged, that being a natural inference from the fact that the proof of debt lodged by the ATO in the winding up of Special Gold does not include any amount due under the Group Tax Debt Deed (CB9/5743).

Costs

137    Special Gold has succeeded against Sam, Fayad-Lee, Remon, Parklea Markets Corp and Rainbow North Rocks. Accordingly, Special Gold would ordinarily be entitled to an order for costs against those entities.

138    Special Gold has failed against the Ayoub Companies, which would ordinarily be entitled to an order for costs in their favour.

139    However, I have not heard the parties on costs, and it is conceivable that there will be applications for special costs orders, either by way of indemnity costs (arising from offers of compromise) or lump sum orders or both. Accordingly, I will set a timetable for the filing and service of affidavits and written submissions on the question of costs, which I anticipate deciding on the papers.

Associate:

Dated:    22 July 2025

SCHEDULE OF PARTIES