FEDERAL COURT OF AUSTRALIA

Page v Conneely, in the matter of Shyzi Pty Ltd [2025] FCA 1646

ORDERS

THE COURT ORDERS THAT:

1.    By 19 January 2026, the parties are to confer and email to the Associate to Cheeseman J proposed short minutes of order to give effect to these reasons including as to relief, marked up to show any areas of disagreement.

2.    The matter be listed for a case management hearing on a date to be advised.

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

ORDERS

THE COURT ORDERS THAT:

1.    By 19 January 2026, the parties are to confer and email to the Associate to Cheeseman J proposed short minutes of order to give effect to these reasons including as to relief, marked up to show any areas of disagreement.

2.    The matter be listed for a case management hearing on a date to be advised.

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

REASONS FOR JUDGMENT

CHEESEMAN J:

1.    INTRODUCTION

1    These reasons consider two related proceedings which were heard together on the basis that evidence in each proceeding be evidence in the other. The first proceeding is directed to challenging the appointment of receivers to three entities under three separate general security agreements each related to separate loan facilities (the Receivership Proceeding). The second proceeding concerns the distribution of surplus proceeds following the sale of property including real property held on trust which was subject to an unregistered mortgage (the Distribution Proceeding).

1.1    The Receivership Proceeding

2    In the Receivership Proceeding, Fiona June Page and Harmat Nominees Pty Ltd, the first and second plaintiffs respectively, challenge the appointment of receivers by CL Asset Holdings Pty Ltd (CLAH) to:

(1)    Shyzi Pty Ltd (Receivers and Managers Appointed) on 11 September 2020;

(2)    Ohmut Pty Ltd (Receivers and Managers Appointed) on 30 July 2020; and

(3)    Tallywalker Pty Ltd (Receivers and Managers Appointed) on 30 July 2020.

3    The defendants in the Receivership Proceeding are:

(1)    Kate Conneely and Rahul Goyal in their capacity as Receivers and Managers of Shyzi as trustee for the Phillem No. 1 Trust and the Phillem No. 2 Trust, the first defendants (the Shyzi Receivers);

(2)    Shyzi in its own right and in its capacity as trustee of the Phillem No. 1 Trust and the Phillem No. 2 Trust, the second defendant;

(3)    Ms Conneely and Mr Goyal in their capacity as Receivers and Managers of Ohmut as trustee for the One Hundred Mile Unit Trust (the Ohmut Trust), the third defendants (the Ohmut Receivers);

(4)    Ohmut as trustee for the Ohmut Trust, the fourth defendant;

(5)    Tony Miskiewicz and Mr Goyal in their capacity as Receivers and Managers of Tallywalker, the fifth defendants (the Tallywalker Receivers);

(6)    Tallywalker, the sixth defendant; and

(7)    CLAH, previously known as B&P Investments (NSW) Pty Ltd, the seventh defendant.

4    The following parties shared legal representation: Ms Page in the Receivership Proceeding; and Harmat in both the Receivership Proceeding and the Distribution Proceeding. Harmat is generally aligned with the interests of Ms Page. In these reasons, I will refer to these parties as the plaintiffs notwithstanding that Harmat is a respondent in the Distribution Proceeding.

5    On the opposing side of the record, the following parties shared legal representation: CLAH in both the Receivership Proceeding and the Distribution Proceeding; the Shyzi Receivers in the Receivership Proceeding; the Ohmut Receivers in the Receivership Proceeding; and the Tallywalker Receivers in the Receivership Proceeding. These parties were generally aligned with Mr Baker, the moving force behind CLAH. I will refer to these parties as the defendants.

6    Each of the companies who were properly parties to the Receivership Proceeding were not separately represented and did not take an active role in proceedings.

7    Andrew John Scott is the liquidator of Parkway One Pty Ltd (in liquidation) and the Court-appointed receiver and manager of the Parkway One Unit Trust. Mr Scott is the applicant in the Distribution Proceeding. Mr Scott was separately represented. I will refer to him as Mr Scott or the Liquidator in these reasons.

8    The plaintiffs ultimately refined their claims to seek the following relief:

(1)    a declaration that CLAH’s appointment of the Shyzi Receivers, the Ohmut Receivers and the Tallywalker Receivers (collectively, the Receivers) was invalid on the ground that no debt was owed by each of the relevant entities to CLAH as at the date of the purported appointments pursuant to s 418A of the Corporations Act 2001 (Cth) and pursuant to the Court’s inherent power to grant declaratory relief;

(2)    an order for the taking of accounts as between CLAH and Shyzi, Ohmut and Tallywalker; and

(3)    in the alternative, an order pursuant to ss 418A and 599 of the Act reversing or setting aside the decisions of the relevant Receivers to enter into possession and to dispose of the assets respectively of Shyzi, Ohmut and Tallywalker.

9    The plaintiffs did not move on their claim for relief under s 423 of the Act directed to taking of accounts as the parties agreed it was unnecessary for the Court to do so at this stage. I will convene a case management hearing to address relief after the parties have had opportunity to consider these reasons.

10    The plaintiffs obtained an interlocutory injunction restraining, until the determination of the Receivership Proceeding, the Receivers from selling or disposing or otherwise dealing with the assets of Shyzi, Ohmut and Tallywalker to satisfy the debts claimed by CLAH.

11    In each of the receiverships there are multiple financing facilities and related securities in issue. CLAH contends that pursuant to these facilities, it advanced significant sums to companies associated with Ms Page (and for whom her former husband, Lemuel Page, is alleged to have acted as an agent). CLAH contends that the advances were either made to, or secured through various means by, Shyzi, Ohmut and Tallywalker.

12    Since 2006, CLAH claims to have operated a business that, amongst other things, provided short-term financial accommodation for commercial purposes. Evidence led by CLAH suggested that when extending loans for commercial purposes, in addition to taking mortgages against real property, corporate security interests and personal guarantees from directors, CLAH might also negotiate and be granted an equity position in the corporate borrower as a form of what was described by one of the defendants’ witnesses as “added risk return”.

13    Shyzi was incorporated by Ms Page and Mr Page in 1995 to hold and manage various property investments and developments that they were undertaking at the time. Ms Page is the sole director and shareholder of Shyzi. Mr Page was a director of Shyzi from 25 October 1995 to 1 November 2013. He previously held one share in Shyzi.

14    Shyzi subsequently obtained a motor vehicle dealer licence and conducted a used motor vehicle trading business over a period of years.

15    Shyzi is the trustee of the Phillem No. 1 Trust and the Phillem No. 2 Trust.

16    The asset position of the Phillem No. 1 Trust is that unpaid present entitlements are negated by corresponding distributions owed to beneficiaries of the trust and the assets of the trust do not include any real property.

17    The assets of the Phillem No. 2 Trust include:

(1)    real properties situated as follows:

(a)    55 Lower Washington Drive, Bonnet Bay, New South Wales (the Bonnet Bay Property);

(b)    728 Parramatta Road, Petersham, New South Wales;

(c)    2/55-71 Throsby Street, Wickham New South Wales; and

(d)    5/2-12 Reef Street, Port Douglas, Queensland; and

(2)    a 2015 Ferrari 458 Speciale motor vehicle.

18    The Bonnet Bay Property was the principal asset legally held by Shyzi. The Bonnet Bay Property was Ms Page’s family home. She gave evidence that it was built by her father.

19    Ohmut was incorporated in 2014 to act as trustee of the Ohmut Trust and to manage the property at 60 Harriet Street, Waratah, New South Wales, which Ohmut operates as a 32-room boarding house on behalf of the Ohmut Trust. Ms Page is the sole director and shareholder of Ohmut. 60 Harriet Street is the sole asset of the Ohmut Trust.

20    Tallywalker was incorporated in 2014 by Nathan Brooks and his father, Henry Wilson, to hold intellectual property associated with a mining tool, described as a reverse circulation drill bit, which Mr Brooks had invented and for which Tallywalker held the patent.

21    The shareholders of Tallywalker during the period relevant to these proceedings were Harmat, Pegasus Corporation Pty Ltd, CLAH and Mango Cobar Pty Ltd. Mr Brooks’ shareholding in Tallywalker was transferred to Mango Cobar, an entity associated with him. The Tallywalker shareholders are corporate vehicles through which Ms Page (through Harmat), Mr Page (through Pegasus), Mr Baker (through CLAH) and Mr Brooks (through Mango Cobar) held their respective interests in Tallywalker.

22    There is considerable controversy between the parties as to who were the director or directors of Tallywalker during the relevant period.

23    CLAH maintains that it is owed substantial debts by Shyzi, Ohmut and Tallywalker pursuant to various facilities and that these debts are secured by various means including by guarantees, mortgages and a series of general security agreements. By way of overview, the facility agreements, security documents and other alleged oral agreements relevant to CLAH’s claims are as follows.

1.1.1    Facilities and security documents relevant to CLAH’s claims against Shyzi (Issues 2 to 7)

24    The first tranche of issues relate to the plaintiffs’ challenge to the validity of the appointment of the Shyzi Receivers. The relevant facilities and security documents are:

(1)    Facility Agreement between Carrabolla Pty Ltd as borrower, Ms Page and Shyzi (in its own capacity and as trustee of the Phillem No. 1 Trust and the Phillem No. 2 Trust) as guarantors and CLAH as financier. Ms Page executed this facility in her capacity as sole director and company secretary of both Carrabolla and Shyzi and in her own right (Carrabolla Facility);

(2)    General Security Agreement between Carrabolla as grantor and CLAH as the secured party (Carrabolla GSA). Ms Page executed this agreement in her capacity as sole director and company secretary of Carrabolla;

(3)    Mortgage over a farm property located at Boonabilla Road in Carrabolla, NSW (the Carrabolla Property) between Carrabolla as mortgagor and CLAH as mortgagee (Carrabolla Mortgage). Ms Page executed this mortgage in her capacity as sole director and company secretary of Carrabolla;

(4)    General Security Agreement between Shyzi (in its own capacity and as trustee of the Phillem No. 1 Trust and the Phillem No. 2 Trust) and CLAH (Shyzi GSA). Ms Page executed this agreement in her capacity as sole director and company secretary of Shyzi; and

(5)    Mortgage over the Bonnet Bay Property between Shyzi as mortgagor and CLAH as mortgagee (Shyzi Mortgage). Ms Page executed this mortgage in her capacity as sole director and company secretary of Shyzi.

25    Although the above documents are undated, the evidence establishes that each of these documents were executed on or around 30 June 2016. That is reflected in the parties’ amended joint updated chronology and the parties’ closing submissions. The counterparts of the above documents executed by CLAH are not in evidence.

26    The facilities, guarantees, mortgages and other securities relating to Shyzi are not challenged. Ms Page declared that she executed the various facilities, guarantees, mortgages and other securities in respect of Shyzi voluntarily, after reading them and obtaining the advice of a solicitor. I will return to the substance of Ms Page’s declarations in part 10.5 of these reasons.

27    CLAH claims a secured debt of $1,910,330.93 under the Carrabolla Facility, which is purportedly secured by:

(1)    a second registered mortgage (being the Shyzi Mortgage);

(2)    a general security interest given by Shyzi in its own right and as the trustee of the Phillem No. 1 Trust and the Phillem No. 2 Trust over all present and after-acquired property (All PAAP); and

(3)    a further All PAAP given by Carrabolla.

28    Each of the security interests were registered by CLAH on 5 July 2016.

29    A central point of contention between the parties in relation to the facilities and security documents relevant to CLAH’s claims against Shyzi is that the plaintiffs contend that in addition to the documented agreements, there is a further relevant oral agreement between the parties.

30    The plaintiffs allege that Ms Page executed the documented agreements on the understanding between her and Mr Baker that the agreements did not reflect the reality of what was agreed but rather were designed to facilitate Mr Baker in shepherding the arrangement past the board and auditors of CLAH, noting that CLAH was a public company and Mr Baker was an undischarged bankrupt at that time.

31    The alleged overlay of undocumented oral agreements and understandings on top of executed written agreements for which there is little in the way of reliable contemporaneous corroborative evidence is a recurrent theme in these proceedings. The applicable legal principles are addressed in detail within, but two points bear immediate emphasis. First, it is well recognised that having executed the written loan documents, and not having been induced to do so by fraud, mistake, or misrepresentation or reliance on a defence of non est factum or rectification, the parties cannot say that they are not bound by the agreement recorded in writing: Equuscorp Pty Ltd v Glengallen Investments Pty Ltd [2004] HCA 55; 218 CLR 471 at [31]-[41] (Gleeson CJ, McHugh, Kirby, Hayne, and Callinan JJ). Second, the burden of proving to the civil standard that a legally enforceable oral agreement was entered into, the identity and capacity of the parties to the agreement and the terms on which the agreement was made with requisite certainty is a significant undertaking. See further discussion in paragraphs [411]-[412] below.

32    As to the alleged oral agreement that the plaintiffs allege supplants the documented agreements, the plaintiffs submit that on or about 21 September 2016, Mr Baker for CLAH on the one part, and Ms Page and Mr Page for Shyzi on the other, agreed that Shyzi would provide financial assistance to Moto Prestige Pty Limited and CLAH would credit any financial assistance which Shyzi provided to Moto Prestige by making a commensurate reduction to any amounts then owing by Shyzi to CLAH (the Shyzi Offset Agreement). Moto Prestige was a motor vehicle trading business venture involving Mr Baker’s son, Jonathan Baker, and Mr Baker’s brother-in-law, Charlie Comino.

33    The plaintiffs contend that Shyzi provided financial assistance to Moto Prestige from time to time when requested to do so by Mr Baker by sourcing and transferring to Moto Prestige used motor vehicles for Moto Prestige to trade. CLAH denies the existence of the Shyzi Offset Agreement and contends that the true position was that in or about September 2016, CLAH advanced $241,400 to Shyzi and Mr Page for the purpose of Shyzi and/or Mr Page supplying motor vehicles to Moto Prestige. Further, CLAH contends that between 23 September 2016 and 29 January 2018, Shyzi and/or Mr Page supplied motor vehicles in the amount of $231,768.68 to Moto Prestige. Accordingly, CLAH contends that the amount of $9,631.32 is still due to it by Shyzi and/or Mr Page in connection with the motor trading arrangements between them. CLAH contends that this debt is a separate obligation of Shyzi to its obligations to repay advances made by CLAH to Shyzi under the Carrabolla Facility. CLAH relies on this amount amongst other debts as informing the total of Shyzi’s indebtedness to CLAH. CLAH further contends that the effect of the general security agreements is that Shyzi’s indebtedness to CLAH, whether or not arising under the Carrabolla Facility, is captured as part of the all moneys securities by which CLAH is conferred a contractual right to appoint receivers upon the occurrence of an Event of Default (as defined in the relevant GSAs).

1.1.2    Facilities and security documents relevant to CLAH’s claims against Ohmut and Parkway One (Issues 8 to 19)

34    The second tranche of issues relate to the plaintiffs’ challenge to the validity of the appointment of the Ohmut Receivers. The facilities and security documents relevant to CLAH’s exercise of the power to appoint the Ohmut Receivers are as follows (collectively, the Ohmut/Parkway Documents):

(1)    Facility Agreement dated 15 August 2016 between Parkway One (in its own capacity and as trustee for the Parkway One Unit Trust (the Parkway One Trust)), Ohmut (in its own capacity and as trustee for the Ohmut Trust) and Harmat (in its own capacity and as trustee for the Harmat Trust) as co-borrowers, Ms Page as guarantor and CLAH as the lender (Ohmut/Parkway Facility). Ms Page executed this facility in her capacity as sole director and company secretary for each of Parkway One, Ohmut and Harmat and for herself;

(2)    General Security Agreement between Parkway One (in its own capacity and as trustee for the Parkway One Trust) as grantor and CLAH as the secured party (Parkway GSA). Ms Page executed this agreement in her capacity as sole director and company secretary of Parkway One;

(3)    General Security Agreement between Ohmut (in its own capacity and as trustee for the Ohmut Trust) as grantor and CLAH as the secured party (Ohmut GSA). Ms Page executed this agreement in her capacity as sole director and company secretary of Ohmut;

(4)    General Security Agreement between Harmat (in its own capacity and as trustee for the Harmat Trust) as grantor and CLAH as the secured party (Harmat GSA). Ms Page executed this agreement in her capacity as sole director and company secretary of Harmat;

(5)    Mortgage over 82 Parkway One Avenue, Cooks Hill NSW 2300 (the Cooks Hill Property) between Parkway One as mortgagor and CLAH as mortgagee (Parkway Mortgage). Ms Page executed this mortgage in her capacity as sole director and company secretary of Parkway One; and

(6)    Mortgage over 60 Harriet Street between Ohmut as mortgagor and CLAH as mortgagee (Ohmut Mortgage). Ms Page executed this agreement in her capacity as sole director and company secretary of Ohmut.

35    Although the above security documents are undated, the evidence established that each of these documents was executed between 15 August 2016 and 17 August 2016. The counterparts of the above documents executed by CLAH are not in evidence.

36    The facilities, guarantees, mortgages and other securities relating to Ohmut are not challenged. Ms Page declared that she executed the various facilities, guarantees, mortgages and other securities in respect of Ohmut voluntarily, after reading them and obtaining the advice of a solicitor.

37    CLAH claims a secured debt of $3,486,461.98 under the Ohmut/Parkway Facility. CLAH relied on the power of appointment under the Ohmut GSA to appoint the Ohmut Receivers. As mentioned, Ohmut’s principal asset is 60 Harriet Street, over which CLAH also holds an unregistered mortgage. On 19 August 2016, CLAH registered an All PAAP in respect of property owned by Parkway One in its own right and in its capacity as trustee of the Parkway One Trust, pursuant to the Parkway GSA. CLAH did not, despite being entitled to do so, separately register its security interest on the Personal Properties Securities Register (PPSR) in relation to the Parkway One Trust.

38    A point of contention between the parties concerns the effect of another alleged oral agreement which the plaintiffs allege was entered into in or about January 2017 between Ms Page and Mr Baker. The plaintiffs allege that CBD Sydney Investments Pty Ltd, a company controlled by Mr Baker, agreed to acquire units in the Parkway One Trust and the Ohmut Trust (the Trust Investment Agreement). The plaintiffs contend that the Trust Investment Agreement is relevant to the assessment of CLAH’s claims against Ohmut and Parkway One. The plaintiffs maintain that CLAH wrongly debited to the Ohmut/Parkway Facility amounts which it advanced between 13 January 2017 and 7 June 2018. The plaintiffs contend that these amounts were “Investment Payments” pursuant to the alleged Trust Investment Agreement (Trust Investment Payments). The plaintiffs contend that the Trust Investment Payments were made in consideration for the acquisition by CBD Sydney Investments of units in the Parkway One Trust and the Ohmut Trust. CBD Sydney Investments is not a party to these proceedings. Ms Page claims that she understood CBD Sydney Investments was being funded by CLAH. CLAH denies the existence of the Trust Investment Agreement.

39    Echoed in the plaintiffs’ application to remove the Ohmut Receivers is the same allegation that is made in the application to remove the Shyzi Receivers. The plaintiffs allege that Ms Page executed the documented agreements on the understanding between her and Mr Baker that the agreements did not reflect the reality of what was agreed but rather were designed to facilitate Mr Baker in shepherding the arrangement past the board and auditors of CLAH, again at a time when CLAH was a public company and Mr Baker was an undischarged bankrupt. The two points which I have emphasised above in relation to the first iteration of this argument by the plaintiffs apply equally in the present context: see paragraph [31] above and see further paragraphs [411]-[412] below.

1.1.3    Facilities and security documents relevant to CLAH’s claims against Tallywalker (Issues 20 to 32)

40    The third tranche of issues relate to the plaintiffs’ challenge to the validity of the appointment of the Tallywalker Receivers. Before listing the facilities and security documents relevant to CLAH’s claims against Tallywalker, I will make some general observations about the required approach to these documents. I find the circumstances surrounding, and timing of, the purported execution of these documents to be highly suspicious for reasons I will develop in greater detail in the substantive consideration of Issues 20 to 32. To presage what follows, I note the following features of the claim to remove the Tallywalker Receivers.

41    Unlike the facilities and security documents which are relevant to the appointment of the Shyzi Receivers and the Ohmut Receivers, the validity of the execution of the facilities and securities which are relevant to CLAH’s claims against Tallywalker is hotly contested. Whereas the validity of the transaction documents relevant to the appointment of the Shyzi Receivers and Ohmut Receivers is not contested and indeed Ms Page accepts that she signed those documents after reading them and receiving legal advice, the other stakeholders in the Tallywalker business deny knowledge of the Tallywalker transactions at the time the transactions are alleged to have been entered into and there is a serious contest as to whether Tallywalker really assented to entry into these transactions.

42    A key point of difference between the Tallywalker transaction documents, on the one hand, and the Shyzi transaction documents and the Ohmut/Parkway One transaction documents, on the other hand, is that the individuals who executed the Tallywalker transaction documents for the relevant corporate parties were all connected to CLAH and Mr Baker. For the Shyzi transaction documents and the Ohmut/Parkway One transaction documents, the transactions were generally between corporate entities associated or controlled by the Page interests on one side of the transaction and CLAH controlled by Mr Baker on the other side of the transaction. As my consideration of CLAH’s claims against Tallywalker will demonstrate, both sides of the purported Tallywalker transactions were effectively controlled by Mr Baker. The dispute as to the validity of the Tallywalker transaction documents extends to, or perhaps more accurately derives from, the plaintiffs’ contentions that the individuals who purported to execute critical documents were not in fact directors of the companies who they purported to bind by assenting to the documents at the date the documents purport to have been executed and further that the transactions were not executed in accordance with s 127 of the Act or in accordance with Tallywalker’s constitution.

43    Relatedly, the evidence as to the date of execution of these documents is as mercurial as it is opaque. What is clear is that these documents were, to use a neutral description, put in place in anticipation of Mr Baker being discharged as a bankrupt and CLAH’s corporate status being changed from that of an unlisted public company to a proprietary company, one consequence of which was that CLAH would no longer be required to have its accounts audited.

44    The final general point of distinction is that the purported Tallywalker transactions: (1) did not include real property mortgages; and (2) involved successive amendments to, and a restatement of, the contested agreements after they were purportedly executed. The validity of the latter amendments and restatement is also contested.

45    A theme which is common to the plaintiffs’ claims to remove the Receivers is that there are competing allegations of undocumented oral agreements that the parties respectively contend represent the true dealings between them. The alleged oral agreement relevant to the underlying claims against Tallywalker is an alleged oral agreement made in October 2016 between Mr Brooks (on behalf of Tallywalker) and Mr Baker (on behalf of CLAH) pursuant to which the plaintiffs contend that CLAH agreed to invest $1 million in Tallywalker in exchange for 25% of the shares in Tallywalker (the Tallywalker Investment Agreement). The defendants deny that CLAH entered the alleged Tallywalker Investment Agreement. I will address the Tallywalker Investment Agreement in part 12.

46    Against those caveats, I will now summarise the documented agreements which are relevant to this part of the claim. What follows is based on what appears on the face of the documents and is subject to determination of whether the documents were in fact validly executed and/or backdated.

47    The facilities and security documents relevant to the plaintiffs’ claim to remove the Tallywalker Receivers are described on their face (in terms of the date on which the document was purportedly executed and the purported capacity of the signatories) as follows:

(1)    Loan Agreement dated 8 February 2017 between Overland Mining Services Pty Ltd as borrower and CLAH as lender (Overland Facility). This facility was signed by Maria Comino (Mr Baker’s sister) in her capacity as sole director and company secretary of Overland , Craig Watson in his capacity as director and company secretary of CLAH and Peter Mitropoulos in his capacity as director of CLAH;

(2)    General Security Agreement dated 8 February 2017 between Overland as grantor and CLAH as the secured party (Overland GSA). This agreement was signed by Ms Comino in her capacity as sole director and company secretary of Overland, Mr Watson in his capacity as director and company secretary of CLAH and Mr Mitropoulos in his capacity as director of CLAH;

(3)    Loan Agreement bearing the date of 6 April 2017 between Tallywalker as borrower and CLAH as lender (Tallywalker Facility). This facility purports to be executed by Ms Comino in her capacity as sole director and company secretary of Tallywalker, Mr Watson in his capacity as director and company secretary of CLAH and Mr Mitropoulos in his capacity as director of CLAH. The date of execution of the Tallywalker Facility is in issue. Mr Baker gave evidence that the Tallywalker Facility was executed on 1 July 2017. The Tallywalker Facility is alleged to have been subsequently replaced by the Amended Tallywalker Facility bearing the date 27 March 2018 (defined and described in subparagraph (6) below);

(4)    General Security Agreement bearing the date of 6 April 2017 between Tallywalker as grantor and CLAH as the secured party (Tallywalker GSA). This agreement was purportedly executed by Ms Comino in her capacity as sole director and company secretary of Tallywalker, Mr Watson in his capacity as director and company secretary of CLAH and Mr Mitropoulos in his capacity as director of CLAH;

(5)    also allegedly on 6 April 2017, the following additional transactions were entered into between CLAH, Overland and/or Tallywalker:

(a)    Deed of Guarantee between Overland as guarantor, CLAH as beneficiary and Tallywalker as borrower which was executed by Ms Comino ostensibly in her capacity as sole director and company secretary of each of Overland and Tallywalker and by Mr Watson and Mr Mitropoulos ostensibly in their capacity as directors and in Mr Watson’s case, also as company secretary of CLAH (the Overland Guarantee);

(b)    Deed of Guarantee between Tallywalker as guarantor, CLAH as beneficiary and Overland as borrower which was executed by Ms Comino ostensibly as sole director and company secretary of each of Overland and Tallywalker and by Mr Watson and Mr Mitropoulos ostensibly as directors and in Mr Watson’s case, also as company secretary of CLAH (the Tallywalker Guarantee); and

(c)    an agency agreement between Tallywalker and CLAH whereby CLAH was appointed as the agent and representative of Tallywalker for four transactions identified in that agreement (the Tallywalker Agency Agreement). The Tallywalker Agency Agreement was executed by Ms Comino ostensibly as sole director of Tallywalker and Mr Dainton, as director and company secretary, and Mr Mitropoulos, as director, for CLAH;

(6)    Facility Agreement bearing the date 27 March 2018 between Overland and Tallywalker each as a borrower and together as borrowers and CLAH as financier (Amended Tallywalker Facility). This agreement was purportedly executed by Prudence Pickstone (Mr Baker’s domestic partner) in her capacity as sole director of Overland and ostensibly as sole director of Tallywalker and Mr Baker in his capacity as sole director of CLAH. The Amended Tallywalker Facility varied the terms of the Overland Facility and the Tallywalker Facility, purportedly at the request of Tallywalker and Overland, by making further advances and by consolidating and restating the Overland Facility and Tallywalker Facility. The evidence establishes that the date which is recorded on the face of the Amended Tallywalker Facility is not the date on which the document was purportedly signed. My findings on this issue are in part 12 of these reasons;

(7)    Deed of Amendment of Facility Agreement bearing the date 28 August 2018 between Overland and Tallywalker as borrowers and CLAH as financier (Further Amended Tallywalker Facility). This facility was purportedly executed by Ms Comino in her capacity as sole director of Overland and Tallywalker and Mr Baker in his capacity as sole director of CLAH. The Further Amended Tallywalker Facility purportedly varied the terms of the Amended Tallywalker Facility, supposedly at the request of Tallywalker and Overland, by extending the date of final repayment. As with the Amended Tallywalker Facility, the evidence establishes that the date which is recorded on the face of the Further Amended Tallywalker Facility is not the date on which the document was purportedly signed. My findings on this issue are in part 12 of these reasons;

(8)    Deed of Amendment of GSA bearing the date 28 August 2018 between Tallywalker as grantor and CLAH as the secured party (Amended Tallywalker GSA). This agreement was purportedly executed by Ms Comino in her capacity as sole director of Tallywalker and Mr Baker in his capacity as sole director of CLAH. As with the Amended Tallywalker Facility and the Further Amended Tallywalker Facility, the evidence establishes that the date which is recorded on the face of the Amended Tallywalker GSA is not the date on which the document was purportedly signed. See part 12 of these reasons;

(9)    General Security Agreement dated 29 October 2018 between Overland as grantor and Tallywalker as the secured party in connection with two equipment hire agreements between Overland as hirer and Tallywalker as owner (Overland/Tallywalker GSA). This agreement was executed by Allan Platcher in his capacity as sole director of Overland and Ms Comino purportedly in her capacity as sole director of Tallywalker;

(10)    Deed of Loan dated 19 November 2018 between Tallywalker and Overland collectively as the borrower and DMXS Holdings Pty Ltd as the lender (DMXS Deed of Loan). CLAH was not a party to the DMXS Deed of Loan. The DMXS Deed of Loan was purportedly executed by Ms Comino in her capacity as sole director and secretary of Tallywalker, Mr Platcher in his capacity as sole director and secretary of Overland and Dr Munro in his capacity as sole director and secretary of DMXS; and

(11)    Security Deed dated 19 November 2018 between Tallywalker and Overland collectively as the grantor and DMXS as the secured party (DMXS GSA). The DMXS GSA was purportedly executed by Ms Comino in her capacity as sole director and company secretary of Tallywalker, Mr Platcher in his capacity as sole director and company secretary of Overland and Dr Munro in his capacity as sole director and company secretary of DMXS.

48    The plaintiffs allege that the various facilities, guarantees and general security agreements are liable to be set aside because they were not validly executed by Tallywalker in accordance with s 127 of the Act or Tallywalker’s constitution. The plaintiffs contend that CLAH knew, through Mr Baker, that neither Ms Comino nor Ms Pickstone held the relevant office described in each of the transaction documents at the time of the purported execution of the documents and as a consequence CLAH is not entitled to the benefit of the assumption in s 129(5) of due execution under s 127(1) of the Act by Tallywalker of the various facilities, guarantees, and other securities signed by Ms Comino or Ms Pickstone: s 128(4). The plaintiffs contend that CLAH is not entitled to rely on the assumption in s 129(5) of the Act if CLAH knew or suspected that the assumption was incorrect at the time of the dealing: s 128(4). To the extent that it is relevant, the same contention applies mutatis mutandis to the assumption in s 129(2) of the Act.

49    The plaintiffs further contend that the purported execution of the various Tallywalker facilities and securities in the way in which they appear to have been executed based on the face of the documents was not otherwise in accordance with Tallywalker’s constitution.

50    A facet of the plaintiffs’ argument on this issue is directed to proving that Mr Brooks was in fact a director of Tallywalker as at the dates on which the relevant agreements are alleged to have been executed notwithstanding that he is not recorded as a director of Tallywalker in the Australian Securities and Investments Commission (ASIC) register. Proof of that issue forms part of the plaintiffs’ argument as to invalidity based on the provisions of the Tallywalker constitution. The plaintiffs allege that Mr Brooks does not appear on the ASIC register because Mr Baker (or Ms Comino at Mr Baker’s direction) undertook to notify ASIC of Mr Brooks’ appointment but did not do so. The plaintiffs maintain that Mr Brooks was a director of Tallywalker at all times after 12 March 2017. The defendants deny that Mr Brooks was a director of Tallywalker and contend that Mr Brooks played an active role in making decisions about the structure and operations of Tallywalker through his position as the general manager of Tallywalker and that he was also involved in the negotiations that led to the relevant Tallywalker Facility. The defendants submit that Mr Brooks gave the “go ahead” to Mr Baker in respect of the proposed changes in Tallywalker’s shareholding and in effecting the appointment of Ms Comino as sole director of Tallywalker.

51    CLAH claims a secured debt of $3,618,303.59 under the Amended Tallywalker Facility.

1.1.4    CLAH’s status as a secured creditor and entitlement to appoint receivers

52    In the Receivership Proceeding, each of the three receiverships involve a dispute as to the proper construction of the all monies general security agreements under which CLAH as the secured party has purported to exercise a right, arising on the occurrence of an Event of Default (as relevantly defined), to appoint receivers to the property of each of Shyzi, Ohmut and Tallywalker. In relation to Tallywalker, there is an anterior issue as to whether the relevant general security agreement was in fact valid.

53    Connected to the dispute as to the proper construction of each of the relevant general security agreements, the parties have engaged in a fact-dense contest directed to whether, and if so, the extent to which, CLAH is a creditor of each of Shyzi, Ohmut and Tallywalker. Relatedly, there is an expansive dispute as to whether CLAH is secured in respect of any debt which it is found to be owed which is not debt arising under one of the relevant facility agreements which was entered into as part of the three suites of commercial agreements which included the general security agreements under which each appointment right has been purportedly exercised. I will not attempt to summarise here the finer strands of this part of the dispute across the three parts of these proceedings. In one way or another, this part of the dispute is directed to making good the plaintiffs’ challenge to the appointment of each of the Receivers under s 418A of the Act, which in each case is premised on the specific ground that the company to whom the receivers have been appointed was not indebted to CLAH as at the date of the appointment.

54    Relevant to the determination of the plaintiffs’ no debt thesis is the role played by Mr Page, the former husband of Ms Page, and whether he had authority, actual or ostensible, to bind Ms Page and the companies of which she was relevantly sole director, being Carrabolla, Shyzi, Ohmut, and Harmat.

55    The defendants contend that the facilities relevant to the claims against Shyzi and Ohmut and Parkway One were negotiated between Mr Baker on behalf of CLAH and Mr Page, acting as an agent of Ms Page, Shyzi, Parkway One and Ohmut with implied authority, or alternatively with ostensible authority. Mr Page is alleged to have played a similar role in relation to negotiations and dealings between the Page interests and CLAH and Mr Baker in relation to the dealings involving Tallywalker.

56    The defendants contend that Ms Page left all aspects of the negotiation of the relevant facilities to Mr Page. Ms Page denies this. Mr Page initially denied negotiating with financiers on Ms Page’s behalf, but he later qualified his denial by saying he was “not directly involved” in negotiations on Ms Page’s behalf when it came to documenting the agreement that had been reached.

57    The plaintiffs deny that Mr Page acted as alleged so as to bind Ms Page and her relevant companies. The plaintiffs contend that any involvement that Mr Page may have had in the negotiations of the relevant documents was ultimately superseded by the subsequent execution by Ms Page as the sole director of the companies. The plaintiffs maintain that Mr Page did not enter into any binding agreements as agent for Ms Page’s companies. That submission in many ways elides what emerged as the real issue in connection with the plaintiffs’ no debt thesis, which was whether Mr Page was authorised to transact on the relevant facilities by drawing on those facilities with the result that the Page related parties were liable to repay those drawdowns.

58    The defendants contend that through their friendship with Mr Baker, Ms Page and Mr Page have had the use and benefit of millions of dollars which would not otherwise have been available to them. Further, that through access to this funding, they have been able to maintain a portfolio of valuable assets, including substantial interests in a range of real properties and the Ferrari.

1.2    The Distribution Proceeding

59    The Distribution Proceeding is a priority dispute between competing claims to the surplus proceeds of sale of the Parkway One assets after it was placed in liquidation (the Parkway Fund). The Distribution Proceeding was transferred to this Court from the Supreme Court of New South Wales in April 2021.

60    Mr Scott initially sought orders for the whole, or alternatively cascading amounts, of the Parkway Fund to be paid to him. By the time of closing submissions, Mr Scott had refined his position. Mr Scott’s ultimate position was that he did not contend for a particular outcome and submitted that he adopted a position of neutrality in the proceeding.

61    The common question arising in each of the Receivership Proceeding and the Distribution Proceeding is whether any debt is owed by Parkway One and Ohmut to CLAH.

62    Parkway One was incorporated in 2012 to act as the trustee of the Parkway One Trust and to manage the Cooks Hill Property, a 55-room boarding house, beneficially owned by the Parkway One Trust. Parkway One also held several other real properties as investments. Ms Page is the sole director and shareholder of Parkway One. Harmat asserts that it is the sole unit holder in the Parkway One Trust.

63    Parkway One was placed in liquidation upon orders being made in the Supreme Court on 19 August 2019. On 2 March 2020, Mr Scott was appointed as liquidator.

64    After Parkway One was placed in liquidation, its assets were sold. The distribution of the Parkway Fund is in issue in the Distribution Proceeding.

65    Mr Scott has obtained orders for payments to be made to him from the Parkway Fund in his capacity as receiver and manager of the Parkway One Trust. In this proceeding, Mr Scott ultimately sought directions as to the proper distribution of the balance of the Parkway Fund. The competing claimants are CLAH and Harmat.

66    CLAH, the first respondent in the Distribution Proceeding, claims an interest in the Parkway Fund as a secured creditor of Parkway One pursuant to the Ohmut/Parkway Facility, under which Parkway One was a joint borrower. CLAH maintains that it is secured pursuant to the Parkway Mortgage in respect of the proceeds of the sale of the Cooks Hill Property which is part of the Parkway Fund. The Parkway Mortgage was given as security for the indebtedness of Parkway One and Ohmut as co-borrowers under the terms of the Ohmut/Parkway Facility. CLAH did not register the mortgage under the provisions of the Real Property Act 1900 (NSW) and accordingly relies on the mortgage as an equitable mortgage. CLAH claims that it is entitled to the Parkway Fund insofar as the fund is comprised of the sale proceeds of the Cooks Hill Property because it has priority derived from the equitable mortgage.

67    Harmat, the second respondent, challenges the existence of the equitable mortgage upon which CLAH relies in effect adopting the role of contradictor. Harmat makes a competing priority claim to the surplus funds based on its contention that it is the sole unit holder in the Parkway One Trust. Harmat contends — as per its position in the Receivership Proceeding — that CLAH does not have priority to the surplus proceeds because there is no indebtedness on the part of Parkway One and/or Ohmut under the Ohmut/Parkway Facility to which the equitable mortgage attaches. Harmat acknowledges that if CLAH succeeds in establishing that there is a debt owed, then Harmat otherwise does not dispute the validity of the equitable mortgage upon which CLAH relies. Further, and as a fall back, if Parkway One is found to be indebted to CLAH, Harmat by its submissions seeks an order for the taking of accounts to establish the extent of the respective entitlements of CLAH and Mr Scott to the Parkway Fund. Harmat does not move on its claim directed to taking of accounts at this stage. Should it be necessary, I will convene a case management hearing to address this issue after the parties have had opportunity to consider these reasons.

2.    OVERVIEW OF THE COMPETING INTERESTS

68    As I have referred to above, the contest in the Receivership Proceeding is between two competing camps.

69    The first camp comprises Ms Page and persons and entities associated with her. The parties in the first camp are Ms Page and Harmat. Harmat is also a party in the Distribution Proceeding whereas Ms Page is only a party in the Receivership Proceeding. Ms Page and Harmat shared common legal representation. Although Mr Page is not a party to either proceeding, he was a significant witness called by the Page camp. The corporate respondents, being Shyzi, Ohmut and Tallywalker, did not play an active role in the Receivership Proceeding.

70    The second camp comprises CLAH and the Receivers appointed by it, being the Shyzi Receivers, the Ohmut Receivers and the Tallywalker Receivers. They shared common representation. Like Harmat, CLAH is a party to both proceedings. Mr Baker is not a party to either of the proceedings. Mr Baker was involved with CLAH during the relevant period and for reasons given below was in control of CLAH throughout, including in the period when he was bankrupt and precluded from holding office as a company director. The nature of his involvement is addressed below.

71    Mr Baker was subpoenaed by the CLAH camp. He objected to giving particular evidence on the ground that his evidence may tend to prove that he had committed an offence against, or arising under, an Australian law or was liable to a civil penalty: Evidence Act 1995 (Cth) s 128(1). After he received the benefit of a s 128 certificate, he gave evidence which was relied on by the CLAH camp. My reasons for granting Mr Baker a certificate under s 128 of Evidence Act are set out in part 6.2 of these reasons.

2.1    The central protagonists and their related entities

72    Across the two proceedings, the principal individual protagonists are Ms Page, Mr Page and Mr Baker. These three individuals had close personal and business relationships spanning over 20 years. They are no longer friends. All three gave evidence in the proceedings. The issue of each of their credit as witnesses looms large. The disparate range of agreements, understandings and transactions that are relevant in these proceedings involved the three protagonists over the many years in which they were close. The nature of the three protagonists’ involvement was varied. In some cases, it was direct personal involvement. In other cases, it was indirect involvement through their various corporate alter egos, or companies over which they exercised de facto control. As mentioned, the key agreements in issue comprise documented transactions and agreements as well as alleged oral agreements. As I will come to, the protagonists are at odds as to whether the documented agreements reflect the true position as between them or whether the documented agreements are a deliberate veneer which they entered in order to give the appearance of legitimacy to the real dealings that underlie the documented arrangements. The protagonists are also at odds over whether the exercise of rights arising under the documented transactions is constrained by, amongst other things, the existence of various alleged oral agreements said to exist between them. The existence of the alleged oral agreements is also disputed.

73    A difficult feature of the proceedings is that the parties chose to contest their respective claims on an issue-by-issue basis, with neither side seeking to establish in comprehensive or comprehensible terms the true extent and nature of their dealings with and against each other over the relevant period. Many aspects of the commercial interactions between them as individuals and through their corporate alter egos were left opaque.

74    The evidence, both witness evidence and documentary evidence, was shifty in the colloquial sense and constantly shifting as accounts were revised and reconstructed in the witness box to fit the evidentiary landscape as the witnesses perceived it to be evolving. The evidence did not have a clarity and consistency that would enable me to make findings based on commercial common sense or what may be expected in legitimate arm’s-length dealings, even allowing for the overlay of the personal friendships in the relevant period.

75    I am left in the unsatisfactory position of determining the overarching disputes on an issue-by-issue basis with only a limited body of reliable evidence against which to test the plausibility of the parties’ respective competing theses as to the true position. The difficulty inherent in that task is increased by three things. First, the evidence of the three protagonists is unreliable. None of them presented as witnesses of truth. My reasons for reaching that conclusion in respect of each of them are in part 7 of these reasons. Second, a significant body of the contemporaneous records in evidence were deliberately falsified or reconstructed at or about the time they were created or in anticipation of these proceedings. Third, the parties’ competing theses as to what in fact was the true position has been recast repeatedly resulting in a proliferation of the issues that the parties have jointly identified for determination. In these circumstances, findings in relation to credit and onus loom large in the determination of the joint issues identified by the parties.

76    As mentioned, Ms Page is the sole director and shareholder of the following entities who are parties in one or other of the proceedings: Harmat; Shyzi; Ohmut and Parkway One.

77    Ms Page is also the sole director and shareholder of Elefteria Pty Ltd, a company that is relevant to an alleged loan by CLAH to Elefteria made for the purpose of paying an amount that was due to settle a legal dispute in relation to two properties owned by Elefteria. Elefteria has since been deregistered.

78    Ms Page had an interest in Tallywalker through Harmat. Harmat held 1,000 fully paid ordinary shares in Tallywalker, being a third of the issued share capital of Tallywalker. Ms Page claims that she is an unsecured creditor of Tallywalker and thereby has standing to seek relief under s 418A of the Act. Ms Page contends that she incurred charges in the amount of about $6,000 on her credit card in relation to Mr Brooks’ expenses in connection with Tallywalker’s business, which she recorded in an expenses document sent to Mr Baker. Harmat is a unit holder in the Ohmut Trust and the Parkway One Trust. The defendants sensibly dropped their contention that the plaintiffs did not have standing to challenge the validity of the appointment of the Tallywalker Receivers in closing submissions.

79    Mr Page became friends with Mr Baker in 1998. Through Mr Page, Ms Page was introduced to Mr Baker, and they too became close friends. Mr Page, Ms Page and Mr Baker for a period shared close personal friendships and business relationships. The nature of the business dealings between the three protagonists and the entities they each controlled, directly or indirectly, is in issue.

80    In 2001, Ms Page married Mr Page. They separated in 2003 and divorced in 2014. After their separation, Ms Page by her own account remained “very close friends” with Mr Page. The evidence establishes that they remained closely involved in each other’s lives. They continued to have a close business relationship and their commercial affairs were intertwined. Ms Page described Mr Page as her business partner. She also described Mr Baker in this way.

81    Mr Baker and Mr Page established B&P Investments in 2003, which as mentioned was the original name of CLAH. The company’s name was drawn from the first initial of each of their surnames. B&P Investments was formed as a vehicle through which Mr Baker and Mr Page would pursue a property development in Newcastle.

82    When B&P Investments was established, the directors were Mr Baker and Mr Page. Mr Baker continued as a director until 15 June 2013. He has subsequently been reappointed as a director on a number of occasions. By the time CLAH appointed the Receivers, Mr Baker was the sole director of CLAH. Mr Page was only a director of CLAH for a short period. He ceased to be a director on 19 August 2003 at around the time that Mr Baker and Mr Page agreed that the company should take steps to list as a public company. The company was listed over a year later on 19 November 2004.

83    The company changed its name several times. When it listed as a public company, it was under the name Community Life Limited. It changed its name to CL Asset Holdings Limited with effect from 27 May 2009. The directors upon listing were Anthony Curt Rendall (appointed 15 September 2004 and ceased 17 June 2005), Gregory Francis Robinson (appointed 15 September 2004 and ceased 17 June 2005) and Michael Richard Milman (appointed 15 September 2004 and ceased 17 June 2005). It remained a publicly listed company until 7 November 2016. Between 8 November 2016 to 22 June 2017, the company continued as a public company but was unlisted. From 23 June 2017, the company reverted to being a proprietary company under its present name — CL Asset Holdings Pty Ltd.

84    Both Mr Page and Mr Baker have been bankrupt. They were each bankrupt during significant parts of the relevant period.

85    Mr Baker was declared bankrupt on 16 April 2014. He was discharged from bankruptcy on 17 April 2017. While he was an undischarged bankrupt, he was employed by CLAH in a role that he described as procurement manager and business development manager. Many of the relevant events in issue in these proceedings occurred during the period when Mr Baker was bankrupt.

86    Mr Page became bankrupt on 22 September 2015. His bankruptcy was annulled on 8 December 2016 in circumstances to which I will return.

87    As bankrupts, Mr Baker and Mr Page were each disqualified from acting as a company director for the period during which they were bankrupt. In the period of their respective bankruptcies, they arranged for their joint business affairs to be conducted through at least one company in which their domestic partners and/or family members acted as directors. The relevant company was Yipeeo Pty Limited. Yipeeo is not a party to these proceedings.

88    Yipeeo was incorporated on 7 May 2015. It appears to have been a shelf company with which Mr Page and Mr Baker became involved in about April 2016. They used Yipeeo for a property development in Newcastle when they were both bankrupt. Ms Page’s evidence was that Yipeeo was a vehicle for Mr Page and Mr Baker to pursue their joint business dealings through Renay Bull, Mr Page’s domestic partner who held Mr Page’s interest, and Maria Comino, Mr Baker’s sister who held Mr Baker’s interests. From April 2016, Yipeeo had two directors. Ms Bull has been a director since 11 April 2016. Ms Comino was first appointed as a director on 4 April 2016, she ceased to be a director on 15 March 2018 and was then re-appointed on 30 April 2018. During the short period when Ms Comino was not a director, Ms Pickstone, Mr Baker’s domestic partner and a friend of Ms Bull’s, served as a director of Yipeeo.

89    The shares in Yipeeo are held evenly between interests associated with Mr Page and Mr Baker. Half the shares are held by Pegasus. Mr Page gave evidence that Pegasus is a company that Ms Bull set up to invest in property. Pegasus was incorporated on 16 March 2010. Ms Bull is the sole director and shareholder. The other half of the Yipeeo shares are held by CBD Sydney Investments, a company associated with Mr Baker and his family trust.

90    Ms Page gave evidence on this topic, which I accept. She said that:

What is it?---[Yipeeo] is Pegasus Corporation, [Renay] Bull, and CBD Sydney Investments Mary Comino.

…

So what do you mean by saying that that was the new direction that he was taking? What does that mean?---Well, Lemuel and Theo were looking at property development in Newcastle and Theo had [Mary], of CBD Sydney Investments, looking after his share and Lemuel had Renay Bull of Pegasus Corporation looking after his share. So it was Lemuel and Theo through Renay and Mary.

91    Mr Page gave evidence to similar effect.

92    Mr Baker gave evidence that Yipeeo was formed for property investment purposes for both his and Mr Page’s benefit and acknowledges that because he was bankrupt, he could not be a director of a company. Mr Baker denied that Ms Comino acted in accordance with his directions and instead took the view that she acted as a director of the company and that “we made collective decisions”. He agreed that it was he and Mr Page who decided whether to “go ahead with an investment”. It was put to Mr Baker that he effectively acted as a director and guiding mind of Yipeeo, which he denied.

93    Mr Page gave evidence that Yipeeo acquired properties at Devonshire Street, Newcastle; Robertson Street, Carrington; Spruce Street, North Lambton; Kings Road, Hamilton South; and Samdon Street, Hamilton. Mr Baker said that the Spruce Street and Robertson Street properties were acquired from Elefteria and that it was Mr Page who drove the purchase of these properties. Mr Baker was cross-examined about the removal of caveats lodged by or on behalf of Andrew Pitsis over the Spruce Street and Robertson Street properties as being to his advantage, given Yipeeo’s interest in acquiring the properties. Mr Baker denied that he looked at the removal of the caveats in that light at the relevant time.

94    Mr Page said that he was involved “generally across the board on everything that went on with [Yipeeo]” including sourcing the real property that Yipeeo acquired and negotiating with the National Australia Bank (NAB) to set up the mortgages for that company. He was also involved in the town planning aspects of Yipeeo’s property development projects.

95    On the evidence before me, I find that Yipeeo was a company that was controlled by Mr Page and Mr Baker and through which they conducted some of their joint property investments. This is an issue on which I accept Ms Page’s evidence, extracted above, that Yipeeo “was Lemuel and Theo through Renay and Mary”. Yipeeo features in some of the evidence in relation to funds being transferred out of CLAH purportedly on account of various loan facilities between CLAH and Ms Page’s companies.

96    Through his role at CLAH, Mr Baker was involved in the relevant loan facility agreements to which CLAH was a party and which are in issue in these proceedings. The nature and extent of Mr Baker’s involvement in the CLAH facilities is in issue in these proceedings.

97    Mr Page was involved in many of the dealings relevant to the present proceedings. A critical issue in the proceedings is whether Mr Page acted as an agent of Ms Page, Carrabolla, Shyzi, Parkway One, Ohmut and Harmat.

98    I will next address a range of other persons and entities who are of contextual relevance and to whom I will refer in determining the issues in dispute in the proceedings.

2.2    Other relevant persons and entities

2.2.1    Entities associated with Ms Page

99    I have already mentioned, Ms Page’s connection with Harmat, Shyzi, Ohmut, Parkway One, Carrabolla and Elefteria, and through Harmat, her connection with the Parkway One Trust and the Ohmut Trust. Ms Page is also associated with one more company that is touched on in the evidence in the proceedings.

100    Anoif One Pty Ltd (Ms Page’s first name spelt backwards) was incorporated on 21 November 2016. Ms Page and Ms Comino (Mr Baker’s sister) are the directors. Harmat and CBD Sydney Investments each held 50% of Anoif One’s shares. Anoif One is the trustee of the Anoif One Trust, a unit trust with the issued units being distributed to accord with the respective shareholding in Anoif One of the Page and Baker interests. Notwithstanding that there are references in the evidence to an entity named “Anoif Pty Ltd”, the ASIC company search that has been tendered is in relation to “Anoif One Pty Ltd” and there was no company search in evidence for an entity named “Anoif Pty Ltd”.

2.2.2    Entities related to Mr Page

101    Mr Page’s connection with CLAH and Yipeeo (including through Ms Bull and her company, Pegasus) is addressed above.

102    Through his partner, Ms Bull, and her company, Pegasus, Mr Page also had an interest in Tallywalker and Overland. The circumstances surrounding the establishment of Overland and its relationship to Tallywalker form part of the dispute about the validity of the appointment of the Tallywalker Receivers.

2.2.3    Entities related to Mr Baker

103    Mr Baker’s connection with CLAH and Yipeeo is outlined above.

104    The plaintiffs contend that Mr Baker directed and controlled the affairs of CLAH at all material times, even during his bankruptcy and the periods in which CLAH was a public and a publicly listed company. The only other officers of CLAH called to give evidence were his sister, Ms Comino, and Mr Mitropoulos, a long-term friend of Mr Baker’s. Ms Comino’s evidence was, in the main, reconstruction based on a selection of documents that were created under the direction of Mr Baker. Mr Mitropoulos’ evidence did not accord with the documentary evidence produced by CLAH in the proceedings. Neither Ms Comino or Mr Mitropoulos had a genuine grasp of the affairs of CLAH. They each in their different roles performed tasks that were essentially directed by Mr Baker. Other persons who were directors of CLAH at the relevant times were not called to give evidence. The documents relied on by CLAH in support of its debt claims are not of the type that one would expect a public company to maintain and the records said to record transactions and the accrual of interest in relation to the relevant loans contain significant anomalies and gaps. There have been repeated attempts to reconstruct the alleged underlying loan ledgers for the relevant facilities at various points in time.

105    Between 15 March 2018 and 6 January 2020, Mr Baker was the sole director of CBD Sydney Investments which is the trustee of the AJCN Family Trust, Mr Baker’s family trust. The beneficiaries of the AJCN Family Trust are Mr Baker’s domestic partner, Ms Pickstone, and his four children. The name of the trust is a combination of the first initial of each of Mr Baker’s children’s names.

106    CBD Sydney Investments was incorporated on 12 September 2013. Ms Pickstone was the sole director from the date of incorporation until 21 September 2015. Ms Comino was the sole director between 21 September 2015 and 13 March 2018. Mr Baker then became the sole director and continued as such until 6 January 2020. From 6 January 2020, Ms Pickstone has been sole director. CBD Sydney Investments’ shareholding in Yipeeo and Anoif One is addressed above.

107    The plaintiffs allege that the Trust Investment Agreement reached between Ms Page and Mr Baker in early January 2017 provided for Mr Baker’s nominee, CBD Sydney Investments, to acquire 50% of the units in the Ohmut Trust and the Parkway One Trust and in exchange, for Mr Baker to transfer 58 Harriet Street, Waratah into the Ohmut Trust once its rezoning application had been approved and to contribute $2 million in capital for the use of Ohmut and Parkway One. The plaintiffs allege that the amount of $2 million was intended to reflect the difference in value between the Cooks Hill Property development on the one hand and the 58 Harriet Street development on the other. The plaintiffs contend that the Ohmut/Parkway Facility was forgiven or set off as a term of the Trust Investment Agreement. The balance owed by Mr Baker following the Trust Investment Agreement was said to be $1.5 million. The defendants deny the existence of any such agreement.

108    Through his sister, Ms Comino, Mr Baker also has or had a connection with the following companies of which Ms Comino was a director at different times: Carrabolla, Overland, Overland Holdings Group Pty Ltd, Tallywalker and Yipeeo.

109    As mentioned briefly above, Mr Baker was involved in setting up a motor vehicle trading business, Moto Prestige, as a business venture for his son Jonathan and Ms Comino’s husband, Charlie. It was originally incorporated in 2009 under the name Cash 4 Cars Pty Ltd and later changed to Moto Prestige by Mr Baker on 30 August 2016. Moto Prestige obtained a motor dealers licence in New South Wales and Queensland around this time. On the evidence before me, the dealings between Shyzi and Moto Prestige which are relevant in these proceedings were between around September 2016 and January 2018. During this period, the directors of Moto Prestige were Ms Comino between 4 May 2016 and 15 March 2018 and Catherine Baker (Mr Baker’s daughter) between 18 April 2017 and 20 June 2018. Jonathan Baker has been the sole director of Moto Prestige since February 2020.

110    Ms Page and Mr Page gave evidence that they provided assistance to Moto Prestige to establish its motor trading business through their relationships with dealers in the motor trading industry. They say that they sourced vehicles which they purchased for Moto Prestige to build up Moto Prestige’s inventory and that the vehicles so sourced were then sold by Moto Prestige. Notwithstanding the collection of tax invoices in evidence issued by Shyzi to Moto Prestige in respect of various vehicles, the plaintiffs maintain that Moto Prestige did not pay for any of the vehicles it received from Shyzi. As mentioned, an issue in these proceedings is whether the Shyzi Offset Agreement was in place such that any funds advanced by CLAH to Shyzi would be offset by the financial assistance provided by Shyzi to Moto Prestige by sourcing and transferring vehicles. The evidence concerning the dealings between Shyzi and Moto Prestige is addressed in part 10 of these reasons.

111    Mr Baker established Powerlan Technologies Pty Ltd in around 1999, which later became publicly listed. Mr Baker used Powerlan as the entity through which he invested in a small technology company. Investors in Powerlan included Mr Page and Dr Munro.

2.2.4    Maria Comino

112    As mentioned, Ms Comino is Mr Baker’s sister. Ms Comino was a director of CLAH from 30 June 2017 to 23 January 2018 and was reappointed as director on 17 December 2020 after the Receivership Proceeding was commenced. She was an employee of CLAH from 6 June 2005 and as at the date of giving evidence, was still employed by CLAH.

113    Ms Comino also relevantly held directorships with:

(1)    Carrabolla (from 3 March 2017 to 16 March 2018);

(2)    Overland (from 7 February 2017 to 16 March 2018 and 1 June 2018 to 1 October 2018);

(3)    Overland Holdings Group (from 13 April 2017 to 16 March 2018 and 1 June 2018 to 27 December 2018); and

(4)    Tallywalker (from 5 April 2017 to 11 December 2017 and 1 June 2018 to 18 March 2019).

114    A live issue in these proceedings is whether Ms Comino was in fact validly appointed as a director of Tallywalker during the periods when she is recorded on the ASIC register as being the director of Tallywalker. Ms Comino purports to have executed transaction documents in her capacity as a “sole director” of Tallywalker. These issues are addressed in part 12.4.

2.2.5    Renay Bull

115    As mentioned, Ms Bull was Mr Page’s domestic partner after his separation from Ms Page. Mr Page’s interest in Yipeeo was managed by Ms Bull acting as a director of Yipeeo and her company, Pegasus, owning half the shares in Yipeeo.

116    Ms Bull did not give evidence in the proceedings. Mr Page conceded in his evidence that he was involved in every aspect of Yipeeo’s business dealings. The limited documentary evidence that is available demonstrates that Yipeeo’s affairs were conducted by Mr Page and Mr Baker, as opposed to Ms Bull or Ms Comino.

2.2.6    Nathan Brooks

117    Mr Brooks was called by the plaintiffs and gave evidence. During the relevant period, Mr Brooks was a friend of Ms Page, Mr Page and Mr Baker. He also had business dealings with the three of them. Mr Brooks was also friendly with Dr Munro, another of their friends with whom they had business dealings.

118    Mr Brooks’ evidence was central to the plaintiffs’ challenge to the appointment of the Tallywalker Receivers.

119    Mr Brooks is the general manager of Tallywalker. He has acted in that role since Tallywalker was incorporated on 14 April 2014. Mr Brooks’ father, Mr Wilson, was the sole director of Tallywalker from its incorporation until 5 April 2017 when he resigned and Ms Comino became the director.

120    Mr Brooks and Mr Wilson were the original shareholders of Tallywalker. The shareholdings in Tallywalker were redistributed on 27 March 2017, at which time each of Mr Baker, Ms Page and Mr Page took up shares in Tallywalker through their respective corporate vehicles and Mr Brooks ceased to hold his share personally but took up shares through his company, Mango Cobar. Shortly before the redistribution of the shares in Tallywalker, a general meeting of the company was held on 12 March 2017 at which resolutions were passed to adopt a constitution and to appoint Mr Brooks as a director. Mr Brooks’ appointment as a director was not notified to ASIC and he does not appear on the ASIC register which is in evidence. The issues concerning the directorships of Tallywalker are addressed in part 12.4 of these reasons.

121    Mr Brooks was involved with Mr Baker, Mr Page and Dr Munro in the business ventures involving Tallywalker and Overland, the circumstances of which are highly contentious. These issues are relevant to the challenge to the validity of the appointment of the Tallywalker Receivers and are addressed in part 12 of these reasons.

122    Mr Brooks is also the sole director and shareholder of Mango Cobar, the entity through which he came to hold his shares in Tallywalker. Mango Cobar is the trustee of the Mango Cobar Trust. The relevant trust deed is not in evidence and the details in relation to the Mango Cobar Trust are sparse.

123    Overland was involved in the drilling-related business venture that is the subject of the claims against Tallywalker. The defendants maintain that the venture involved Overland purchasing and refurbishing second-hand blast drilling rigs which would then be hired or leased out to mining companies (the Drilling Rig Venture). The plant and equipment used in the Drilling Rig Venture was owned by Tallywalker whereas the drilling business was conducted through Overland, with Overland being the entity that received the income generated from the business.

124    Overland was placed into voluntary liquidation on 13 February 2019. At the time Overland was placed into voluntary liquidation, its sole director was Mr Platcher, an associate of Mr Baker’s, who had been appointed as the sole director of Overland in contentious circumstances relatively shortly before passing the resolution to wind up the company.

125    The circumstances surrounding the Drilling Rig Venture and the dealings between the Baker interests and those of the Pages, Mr Brooks and Dr Munro are addressed to the extent required to determine the relief in these proceedings in part 12 of these reasons.

2.2.7    Allan Platcher

126    Mr Platcher is a management consultant and an associate of Mr Baker. Mr Platcher was the director of Overland from 23 October 2018, replacing Ms Comino as the sole director.

127    Mr Platcher was relevantly the director at the time Overland was placed in liquidation on 13 February 2019. On 7 February 2019, a week before putting Overland into voluntary liquidation, Mr Platcher caused Overland to pay to CLAH $819,600, being in substance almost the entirety of the final payment received from South32 Limited for mining services. Before causing this payment to be made by Overland to CLAH, Mr Platcher commissioned legal advice from Mr Carkagis of Diamond Conway (the solicitors who had acted for CLAH on the relevant financing transactions) as to the validity of the transaction documents. Mr Carkagis opined that CLAH had a valid and enforceable facility and security against Overland. These issues are addressed in part 12.

128    Mr Platcher was not called to give evidence.

2.2.8    Prudence Pickstone

129    As mentioned, Ms Pickstone is Mr Baker’s domestic partner. Ms Pickstone relevantly held directorships with:

(1)    CBD Sydney Investments (from 12 September 2013 to 21 September 2015 and from 6 January 2020);

(2)    Overland (from 16 March 2018 to 4 June 2018); and

(3)    Tallywalker (from 16 March 2018 to 19 June 2018).

130    As with Ms Comino, there is a live issue as to whether Ms Pickstone was validly appointed as a director of Tallywalker during the period when she is shown on the ASIC register as holding this office. Ms Pickstone purports to have executed transaction documents in her capacity as a “sole director” of Tallywalker. These issues are addressed in part 12.4.

131    Ms Pickstone was not called to give evidence.

2.2.9    Charlie Comino

132    Charlie Comino was Ms Comino’s husband and Mr Baker’s brother-in-law. He was described as being involved with Jonathan Baker in the motor vehicle trading business venture involving Moto Prestige and Shyzi. He is also recorded on the ASIC register as having been briefly a director of Tallywalker. He did not however purport to execute any of the documents in issue in these proceedings as a director of Tallywalker.

133    Charlie Comino was not called to give evidence.

2.2.10    Donald Munro

134    Dr Munro, a medical practitioner, is recorded on the ASIC register as the sole director of Tallywalker. He is recorded as having been appointed on 18 March 2019 and was continuing in that position as at the date of the ASIC register in evidence. Dr Munro was also the sole director and shareholder of DMXS.

135    He was called by the plaintiffs and was cross-examined.

136    Dr Munro’s evidence was that he had known Mr Page and Ms Page for over 30 years. He says he met Mr Baker through Mr Page over 20 years ago. In addition to being friends, Dr Munro has been Mr Page’s general practitioner for many years. He has also been Mr Baker’s general practitioner and has treated Ms Page at times as well.

137    Dr Munro has been involved in various business dealings with Mr Page and Mr Baker. Relevantly, for the purpose of these proceedings, Dr Munro’s evidence touched on matters pertaining the claims challenging the appointment of the Shyzi Receivers, the Ohmut Receivers and the Tallywalker Receivers.

2.2.11    Jamie Arratoon

138    Jamie Arratoon is the director and sole shareholder of Aranik Investments Pty Ltd. Aranik is a property investment, development and construction company operating in Newcastle. Aranik is a combination of the names of Mr Arratoon and his business partner, John Nikolovski. The relevance of Aranik in these proceedings is in connection with the challenge to the appointment of the Shyzi Receivers and an advance of $300,000 to Aranik which the defendants allege was an advance under the Carrabolla Facility.

2.2.12    Peter Mitropoulos

139    Petros (Peter) Elias Mitropoulos was a director of CLAH from 20 June 2005 to 30 June 2017. Mr Mitropoulos was called by the defendants and gave evidence via an affidavit and was also cross-examined. Mr Mitropoulos agreed that Mr Baker was “a close friend”, having known him since they were high school classmates. For a period, he was his business partner in an ink cartridge company called Cartridge World Australia and New Zealand. I have referred briefly above to Mr Mitropoulos’ evidence in relation to the affairs of CLAH. Mr Mitropoulos’ evidence is principally addressed in part 4.2 of these reasons.

2.2.13    Taylor Linton

140    The plaintiffs sought and obtained leave on the first day of trial to file an outline of evidence for Taylor Linton. Notwithstanding that leave was granted, the plaintiffs ultimately elected not to call Mr Linton. No explanation was given by the plaintiffs. Mr Linton is referred to in the evidence in relation to payments made by CLAH which are claimed to be debts of Shyzi in part 10.15.7 of these reasons.

2.3    Parkway One and the Parkway One Trust

141    As mentioned, Parkway One was incorporated in 2012 to act as the trustee of the Parkway One Trust and to manage the Cooks Hill Property (which was described in the evidence as being operated as a boarding house). Parkway One also held several other real properties as investments. Ms Page is the director and sole shareholder of Parkway One. Harmat is a unit holder in the Parkway One Trust. It is in dispute whether Harmat is the sole unit holder.

142    The Parkway One Trust was established on 29 November 2012. Recital B of the Parkway One Trust deed provides that “[i]t is intended by these presents to establish a Fixed Unit Trust, which shall be administered for the benefit of the persons as herein provided.” Recital D of the Parkway One Trust deed provides that “[t]he Foundation Unit Holders have agreed to become the first Unit Holders of the Trust”. The foundation unit holders of the Parkway One Trust were: Potencia Holdings Pty Ltd as trustee for the Potencia Unit Trust, Harmat as trustee for the Harmat Trust and DMXS as trustee for the DMXS Trust. They each held shares equally. Potencia ceased to have an interest in Parkway One and the Parkway One Trust in about August 2014. DMXS ceased to have an interest in the Parkway One Trust in about July 2015.

143    An issue in the proceeding which arises in part 11 concerning CLAH’s claims against Ohmut and Parkway One is whether in January 2017, Mr Baker through CBD Sydney Investments acquired 50% of the units in the Parkway One Trust and the Ohmut Trust pursuant to the alleged Trust Investment Agreement between Ms Page and Mr Baker’s nominee, CBD Sydney Investments.

144    As mentioned, Mr Scott is the Court-appointed receiver and manager of the Parkway One Trust as well as the Liquidator of Parkway One.

2.4    Ohmut and the Ohmut Trust

145    As mentioned, Ohmut was incorporated in 2014 to act as trustee for the Ohmut Trust, and to manage 60 Harriet Street, which was acquired by the Ohmut Trust in around 2010 and was its sole asset. Harmat is a unitholder of the Ohmut Trust. There appear to have been other unitholders when the trust was first established, but by the time of the proceeding, Harmat was the sole unitholder. It is in dispute whether CBD Sydney Investments is a unitholder in the Ohmut Trust, but on the evidence it was never issued with units.

2.5    Elefteria

146    As mentioned, Ms Page is the sole director and shareholder of Elefteria. Elefteria is now deregistered.

147    In May 2016, Elefteria brought a claim against Mr Pitsis in the Supreme Court seeking the withdrawal of caveats that Mr Pitsis had lodged over a number of real properties owned by Elefteria. The dispute was settled in August 2016 pursuant to a deed of settlement and release whereby Mr Pitsis was obliged to discharge his equitable charge over the properties and remove the caveats on the properties and Elefteria was obliged to pay a sum of $500,000 to Mr Pitsis. An issue in the Receivership Proceeding is whether CLAH advanced the relevant funds to Elefteria in order to enable Elefteria to make the payment to Mr Pitsis and if so, whether the funds were advanced pursuant to the Ohmut/Parkway Facility. This is addressed in part 11 of these reasons.

3.    ISSUES FOR DETERMINATION

148    The parties agreed an extensive list of issues for determination. After the evidence completed, the list of issues did not materially reduce but the parties recognised that the manner in which some issues were ultimately determined was capable of rendering it unnecessary to decide some other issues. The issues to be determined, as jointly identified by the parties in their Amended Joint List of Issues filed 25 August 2022, are as follows (updated to incorporate defined terms and particulars):

3.1    Agency

(1)    Was Mr Page an agent of Ms Page, Carrabolla, Shyzi, Parkway One, Ohmut and Harmat?

3.2    CLAH’s claims against Shyzi

(2)    On the proper construction of relevant security documents, did the discharge by CLAH of the Carrabolla Mortgage and the release of the Carrabolla GSA upon repayment of the sum of $686,481.87 on 26 July 2016, have the effect in law of discharging the security provided by Shyzi?

(3)    Do the Shyzi GSA and the Shyzi Mortgage secure liabilities other than Shyzi’s liabilities as guarantor of the Carrabolla Facility?

(3A)     Was it a condition to the exercise by CLAH’s rights to appoint the Receivers under cl 14.1(a)(ii) of the Shyzi GSA and/or cl 12 of the Shyzi Mortgage to first deliver a demand to Shyzi as guarantor of the obligations of Carrabolla pursuant to cl 17.2 of     the Carrabolla Facility?

(4)    Were any of the following amounts wrongly debited to the Carrabolla Facility account:

(a)    amounts paid for the acquisition of motor vehicles;

(b)    amounts of $30,000 and $62,000 paid to Shyzi on 15 July 2016 and 11 August 2016 respectively;

(c)    an amount of $56,100 paid to Aranik on 8 August 2016;

(d)    an amount of $1,000 paid to Andco 1970 Pty Limited (trading as Mosman Toyota) on 26 July 2016;

(e)    amounts paid to DMXS between 22 January 2019 and 24 April 2019; and

(f)    other miscellaneous amounts?

(5)    What amounts, if any, has CLAH failed to credit, by offset or otherwise, to Shyzi’s loan account?

(6)    Did Shyzi owe any money to CLAH as at the date of the appointment of the receivers?

(7)    In relation to Shyzi:

(a)    is the Receivers’ appointment invalid within s 418A of the Act on the ground that Shyzi is not indebted to CLAH?

(b)    is there a sound evidentiary basis to support the proper exercise of the discretion of the Court to grant an inquiry into the Receivers’ conduct pursuant to s 423 of the Act?

(c)    are there any decisions or actions that have been taken by the Receivers that may be the subject of an appeal pursuant to s 599 of the Act?

(d)    are the parties in this proceeding in an accounting relationship in respect of the indebtedness of Shyzi?

3.3    CLAH’s claims against Ohmut and Parkway One

(8)    Was the advance of $500,000 by CLAH in August 2016 a loan to Elefteria or Ohmut?

(9)    What advances, if any, did CLAH make to Ohmut under the Ohmut/Parkway Facility?

(10)    Did Mr Baker and Ms Page enter into the Trust Investment Agreement in or about January 2017 in relation to the acquisition by CBD Sydney Investments of units in the Parkway One Trust and the Ohmut Trust?

(11)    If so, was the liability to repay $500,000 to CLAH (whether it was a liability of Elefteria or Ohmut) discharged, forgiven or set off under the terms of the Trust Investment Agreement?

(12)    Were other amounts, paid by CLAH between 13 January 2017 and 7 June 2018, payments pursuant to the Trust Investment Agreement and wrongly debited to the Ohmut/Parkway Facility account?

(13)    If Mr Baker and Ms Page did enter into the Trust Investment Agreement, did the parties to the Trust Investment Agreement nevertheless abandon or abrogate the Trust Investment Agreement?

(14)    Were the following further amounts wrongly debited to the Ohmut/Parkway Facility account:

(a)    an amount of $112,344.99 paid to Andco on 22 August 2016;

(b)    amounts of $20,000 and $15,010.39 paid to the trust account of Geoffrey McDonald in or around November 2016;

(c)    amounts of $250,000 and $200,000 paid to Anoif One on 17 January 2017 and 7 February 2017 respectively;

(d)    an amount of $31,714 paid to Travelplan Australia on 7 February 2017;

(e)    amounts totalling $65,000 paid to Gavin Parsons & Associates between 14 November 2019 and 11 December 2019; and

(f)    an amount of $5,000 paid to the trust account of JHK Legal on 21 February 2020?

(15)    Were the following amounts wrongly credited to the Ohmut/Parkway Facility account:

(a)    an amount of $100,000 paid on 15 February 2017;

(b)    an amount of $90,000 paid on 15 February 2017;

(c)    an amount of $120,000 paid on 28 February 2017;

(d)    amounts totalling $50,000 paid between 20 December 2019 and 21 February 2020; and

(e)    an amount of $33,50 paid on 3 June 2020?

(16)    Did Ohmut or Parkway One owe any money to CLAH as at the date of the appointment of the Ohmut Receivers?

(17)    Was CLAH’s security interest in the property of Parkway One unperfected as at the date of the winding up of Parkway One? If so, did the security interest vest in Parkway One by operation of s 267 of the Personal Property Securities Act 2009 (Cth) (PPSA)?

(18)    Does CLAH have a first ranking priority, as a secured lender, to the balance of the proceeds of sale in respect of the Cooks Hill Property, and if so, are the relevant parties to the Receivership Proceeding in an accounting relationship in respect of such proceeds of sale?

(19)    In relation to Ohmut:

(a)    pursuant to the terms of the Ohmut GSA, did the liquidation of Parkway One provide a lawful basis for the valid appointment of the Ohmut Receivers pursuant to s 418A of Act?

(b)    is there a sound evidentiary basis to support the proper exercise of the discretion of the Court to grant an inquiry into the Ohmut Receivers’ conduct pursuant to s 423 of the Act?

(c)    are there any decisions or actions that have been taken by the Ohmut Receivers that may be the subject of an appeal pursuant to s 599 of the Act?

(d)    are the parties to the Receivership Proceeding in an accounting relationship in respect of the indebtedness of Ohmut?

3.4    CLAH’s claims against Tallywalker

(20)    What were the terms of CLAH’s agreement to invest in Tallywalker?

(21)    What amounts did CLAH contribute to Tallywalker and Overland by way of equity and what amounts did it advance by way of loan?

(22)    Do the plaintiffs have standing to complain that the appointment of Ms Comino, Ms Pickstone and Mr Platcher as directors of Tallywalker was in breach of the Tallywalker Agreement?

(23)    Was the shareholding in Tallywalker altered with the knowledge of all shareholders, and otherwise is this relevant to any remedy sought in this proceeding?

(24)    Were the shareholders of Tallywalker prevented from having, or otherwise denied access to, the books and records of Tallywalker, and otherwise is this relevant to any remedy presently sought?

(25)    Do the plaintiffs have any standing to complain about any alleged agreement (which is denied) between Tallywalker and Dr Munro, and otherwise is this relevant to any remedy presently sought?

(26)    Do the plaintiffs have any standing to complain about any of the Tallywalker facility agreements, and otherwise is this relevant to any remedy sought in this proceeding?

(26A)     Were the Tallywalker facility agreements validly entered into?

(27)    Was there an enforceable agreement made on or about February 2019 between CLAH and Dr Munro (that is, the Juice Bar Agreement), which included terms that CLAH would forgive its loans to Tallywalker and Overland?

(28)    Do the plaintiffs have any standing to complain about the alleged Juice Bar Agreement, and otherwise is this relevant to any remedy sought in this proceeding?

(29)    Do the plaintiffs have any standing to complain about the unauthorised grant application made through the Pattens Group in December 2019 in respect of a R&D AusIndustry Application made on behalf of Tallywalker, and the unauthorised payment of grant monies received by Tallywalker from this application to CLAH in January and February 2020, and otherwise is this relevant to any remedy sought in this proceeding?

(30)    Did Tallywalker owe any money to CLAH as at the date of the appointment of the Tallywalker Receivers, and if so pursuant to the terms of Tallywalker facility agreements, does this indebtedness provide a lawful basis for the valid appointment of the Tallywalker Receivers pursuant to s 418A of the Act?

(31)    Pursuant to the terms of Tallywalker facility agreements, did the liquidation of Overland provide a lawful basis for the valid appointment of the Tallywalker Receivers pursuant to s 418A of the Act?

(32)    Are the parties to the Receivership Proceeding in an accounting relationship in respect of the indebtedness of Tallywalker?

4.    EVIDENCE

4.1    Witness evidence and documentary tender

149    Notwithstanding they had served some affidavits, the plaintiffs did not read or tender any written evidence of Ms Page, Mr Page, Mr Brooks, Dr Munro or Mr Arratoon. The plaintiffs called oral evidence from Ms Page, Mr Page, Mr Brooks and Dr Munro, each of whom was cross-examined, and Mr Arratoon, who was not cross-examined. As mentioned, the plaintiffs were granted leave to rely on an outline of evidence for Mr Linton, but ultimately did not call Mr Linton.

150    The oral evidence of the central protagonists traversed a myriad of issues in dispute in the proceedings. The oral evidence given by the plaintiffs’ additional witnesses was more confined. Mr Brooks gave evidence about the formation of Tallywalker and Overland, including the creation of the drill bit technology which comprised the intellectual property owned by Tallywalker, and the proposed shareholding arrangements discussed with Mr Baker and Mr Page. Mr Brooks recounted various meetings with Mr Baker and Mr Page in 2016 about sources of funding for Tallywalker and in 2018 about the level of indebtedness of Tallywalker and Overland. Dr Munro gave evidence about financial assistance his company DXMS gave to Mr Baker at various points in time and his involvement with Tallywalker, including acquiring vehicles for Tallywalker which were leased to Overland. Mr Arratoon gave evidence as to conversations with Mr Baker in relation to investment in Aranik and its property developments.

151    CLAH read the affidavits of:

(1)    Ms Comino, affirmed 18 December 2020 and 16 March 2021; and

(2)    Mr Mitropoulos, affirmed 29 August 2022 (save for the first sentence of paragraph 21).

152    CLAH relies on the oral evidence of Mr Baker, Ms Comino and Mr Mitropoulos. They each gave oral evidence and were cross-examined.

153    In support of an interlocutory application to file further amended pleadings and additional outlines of evidence made at the start of the first day of the hearing, the plaintiffs read the affidavit of David Evan Phillips, solicitor, sworn 2 September 2022 and the defendants read the affidavit of Matthew James Hudspeth, solicitor, affirmed 5 September 2022.

154    Before moving to consider the evidence for the purpose of making findings on the central matters in dispute, there are a further two problematic aspects of the evidence that must be kept steadily in mind.

4.2    CLAH’s record keeping practices in relation to each of the facilities in issue

155    It is convenient at this point to address a particular feature of the evidence in these proceedings concerning CLAH’s record keeping practices in relation to each of the facilities in issue. Before turning to the evidence given by Mr Baker, Ms Comino and Mr Mitropoulos, I note that CLAH did not call evidence from the directors who were ostensibly in control of CLAH during much of the relevant period. The principal persons called to give evidence on behalf of CLAH about the transactions purportedly made pursuant to the facilities in issue were Mr Baker and Ms Comino.

156    As mentioned, Mr Baker was a bankrupt during the relevant period (16 April 2014 to 17 April 2017) and as a consequence was precluded from acting as a director. Mr Baker was a director of CLAH for the following periods only: from 22 April 2003 to 15 June 2013; from 23 January 2018 to 1 February 2020; and from 27 July 2020 and continuing as at 6 September 2022, being the date of the most recent ASIC company search in evidence.

157    Mr Baker’s sister, Ms Comino, was an employee of CLAH whose work included dealing with CLAH’s accounting systems. As mentioned, she was also intermittently a director during the relevant period for the following periods: from 30 June 2017 to 23 January 2018 and from 17 December 2020 and continuing as at 6 September 2022, being the date of the most recent search in evidence.

158    Mr Baker’s close friend and close business associate, Mr Mitropoulos, was a director of CLAH between 20 June 2005 and 30 June 2017. Mr Mitropoulos ceased to be a director of CLAH a few days after CLAH converted to being a proprietary company again (on 22 June 2017). Mr Mitropoulos says that during the period he was a director, he was remunerated as a non-executive director and at times he was contracted or employed for various tasks by CLAH or related entities. He provided no evidence in relation to the various tasks he says he was contracted or employed to do.

159    At the same time as Mr Mitropoulos ceased to be a director of CLAH, so too did Gary Dainton (who had been appointed on 20 June 2005) and Craig Watson (who had been appointed on 29 May 2013). Neither Mr Dainton nor Mr Watson gave evidence in the proceedings. Mr Baker said in his cross-examination that the person who chaired the CLAH directors’ meetings varied, but that “most often” it was Mr Dainton or Mr Watson. Mr Baker described Mr Dainton as a non-executive director. Mr Mitropoulos said that Mr Watson, who he described as the “MD”, which I take to mean managing director, “looked after the meetings … and the minutes”.

160    I will start with Mr Mitropoulos’ evidence as to CLAH’s practices relevant to the facilities in issue.

161    Mr Mitropoulos provided an affidavit and was cross-examined. Exhibited to his affidavit were a number of documents that he identified as CLAH documents relating to each of the facilities in issue in these proceedings. Mr Mitropoulos said that he had access to CLAH’s books and records and to files maintained by CLAH’s solicitors for the purpose of making his affidavit. He said that he was authorised to make his affidavit on behalf of CLAH. He further said that he used the documents which he exhibited to his affidavit to refresh his memory for the purpose of providing his affidavit.

162    Mr Mitropoulos’ evidence as to CLAH’s practices relevant to the facilities in issue is in the main based on describing or reciting the contents of the documents that he has exhibited to his affidavit. The limited exceptions in his affidavit evidence are instances where he asserts that CLAH followed particular practices or that he had a vague memory of a meeting of directors of CLAH. Mr Mitropoulos’ answers in cross-examination made plain that where he was purporting to have a recollection, he was in fact reconstructing on the basis of what he believed would have been the position. He did not expose why he held a belief that things would have been so. Importantly, the contentious parts of his evidence were unsupported by any contemporaneous documentary evidence. That is particularly significant in circumstances where he did not suggest that he did not have complete and unfettered access to CLAH’s records and the files maintained by CLAH’s solicitors for the purpose of preparing and giving his affidavit. Indeed, in his affidavit, he suggests to the contrary.

163    Mr Mitropoulos’ evidence about CLAH’s practices was vague. It was not accompanied by contemporaneous documents that would support the existence of the business practices that he asserted were followed. Similarly, he did not give evidence with a level of detail that would suggest that at the time he was a director of CLAH he had personal knowledge of that to which he deposed. His evidence in his affidavit was in large part reconstructed based on documents he had obtained from CLAH and its solicitors for the purpose of his affidavit. To the extent that Mr Mitropoulos gave evidence on the basis of his recollection of events, his evidence was very vague. He himself described his memory of one alleged CLAH board meeting as being a “very general and unspecific” recollection. He said that this meeting occurred in June 2016 and “the directors agreed to proceed with the proposed loan to Ohmut, and to make an offer of finance to Carrabolla”. In his cross-examination when he was asked a number of questions about the Carrabolla Facility, he did not demonstrate other than the most high-level general understanding about what he described as CLAH’s commercial lending business. When asked about the Carrabolla Facility, he said:

You can see that this is a short-term loan, can’t you?---As were most of our loans.

Yes?---You know, they were shortish-term, you know, not 20-year type loans. Yes.

This one is only for a few months, isn’t it?---Obviously, yes.

You see items 2 and 3 of the schedule?---Yes, yes, yes.

And do you recall whether or not the board approved an extension of this loan facility?---Look, I can’t remember specifically. It – it would – it, probably, is in the minutes, and we also did have schedules of our loan book. It was common for these loans – I – I – in fact, I don’t think there was any loan that actually came in on time. It was just part of the business.

So if a loan like this continued beyond its expiry term, 30 September 2016, say, to 2020, would you expect interest payments to be made in the meantime?---Most of our loans were capital loss, the type of loan that it was and the interest rate that they commanded. Hard – look, I – I can’t remember – I can’t remember many loans that had any interest or principal payments during the term of the loan. Loans would have been extended if there was adequate security or further security was added to it.

And the board would approve that extension; is that right?---Yes. Yes.

164    Mr Mitropoulos claimed that the CLAH board met every month or second month, that meetings were minuted and that resolutions were in some way recorded, but he did not include in the exhibit to his affidavit any such documents. CLAH did not tender any such documents in evidence. While he was keen to say that most of CLAH’s commercial loans were short-term and that most were extended beyond the initial term, his evidence on this topic was at the level of mere assertion. When pressed, Mr Mitropoulos said in relation to the Carrabolla Facility that he had no specific recollection, he would presume it was extended but he would have to look at the “minutes and all that sort of thing to – to ascertain, you know, specific dates”.

165    I have placed very little weight on Mr Mitropoulos’s evidence in relation to CLAH’s practices having regard to the matters I have outlined above.

166    As I have mentioned, the other former directors of CLAH, including Mr Dainton and Mr Watson, were not called notwithstanding that they are persons whom one might expect to be best placed to give evidence on critical matters, including:

(1)    the CLAH board’s initial approval of the relevant facilities;

(2)    the apparent absence of drawdown notices under the facilities;

(3)    the absence of any demands for repayment and CLAH’s alleged granting of extensions of the relevant facilities;

(4)    the CLAH board’s awareness of arrangements with respect to the payment or deferral of interest alleged to be due or accruing under the facilities;

(5)    the absence of evidence of any minutes of board meetings or documented resolutions in relation to the facilities; and

(6)    Mr Baker’s role and authority, particularly during the period of his bankruptcy.

167    The defendants did not explain why they did not call Mr Dainton and Mr Watson to give evidence. Mr Baker was cross-examined on when he had last seen Mr Dainton and Mr Watson and whether they were available to give evidence. Mr Baker said he last saw Mr Dainton “probably three or four months ago” and Mr Watson “possibly a year ago”. Mr Baker gave evidence that Mr Dainton is based in Sydney and that Mr Watson would often travel from Adelaide to Sydney to visit the CLAH office for a week at a time and oversee the operation of the business. I infer that both Mr Dainton and Mr Watson were available to give evidence and that CLAH could have issued subpoenas for them to attend to give evidence. In these circumstances, I infer that their evidence had they been called would not have assisted CLAH’s case.

168    Ms Comino’s evidence with respect to the relevant transactions was, at best, vague.

169    Both Mr Baker and Ms Comino gave evidence that CLAH maintained a loan ledger within the accounting system MYOB which had separate “books” for each corporate borrower, even when the companies were co-borrowers. Their evidence is that CLAH’s practice was to record in the MYOB system amounts advanced under a particular facility in what they describe as the relevant “loan ledger”. Ms Comino gave evidence that part of CLAH’s record keeping practice was to collate and file in CLAH’s records for each loan the supporting documentation in relation to each advance. Most commonly, that evidence comprises internal communications emanating from Mr Baker instructing a CLAH accounts employee to queue a payment and to code it to a particular facility or loan (the internal coding emails). What is largely missing from the evidence are documents emanating from or on behalf of the relevant borrowers requesting that an advance be made under the relevant facility whether in the form of a formal drawdown notice or an informal written communication. The exception is the Advance Facility Drawdown Notice that was executed on the same day as the Carrabolla Facility but that tends against the defendants’ contentions in relation to the advances made under that facility. The facilities which are relevant to the determination of the issues in dispute in these proceedings provided for drawdown notices in writing. I will refer to these notices as Drawdown Notices and according to context, the reference to Drawdown Notice will be to the drawdown notice under the particular facility.

170    Critically, there are no CLAH loan ledgers in evidence in these proceedings. The evidence that has been tendered is limited to Excel spreadsheets created by Ms Comino and/or CLAH’s internal accountant purportedly using information that they say was stored in MYOB as the source from which they prepared the spreadsheets. Mr Baker accepted in cross-examination that while in some instances a copy of an Excel spreadsheet had been tendered, a copy or export of what he described as the “loan ledger” sitting within the MYOB system had not been.

171    Turning then to the isolated examples of Excel spreadsheets that are in evidence, the process of creating these documents was described as follows. Both Mr Baker and Ms Comino gave evidence that there was a limitation to the functionality of the MYOB system that precluded them from calculating and recording running interest on loans in the MYOB system. Instead, the data was exported to Excel and an Excel spreadsheet was used to generate loan statements with interest. Ms Comino gave evidence that she would generate a spreadsheet “every couple of months or every month” and that she would “just double check that we had allocated to the correct loan ledger”. Ms Comino explained that once the spreadsheet was created, Ms Comino and other employees at CLAH would identify the primary documents as part of the verification process that she says occurred. According to Ms Comino, the documents included in the court book comprise the totality of the relevant primary documents available to CLAH at the time the spreadsheet was prepared supporting the amounts claimed under the facilities in issue. A further version of the verification exercise was undertaken after these proceedings were instituted. This later verification process informed the preparation of a schedule of particulars of debt pursuant to an order made by O’Bryan J on 9 October 2020 (the Debt Particulars). It appears that on each occasion a verification of some type has been undertaken, adjustments may have been made to the details of the advances alleged to have been made under the relevant facilities. The basis upon which such changes, if any, were made and the extent of the changes, if any, is not revealed with any precision in the evidence. There are no primary source documents against which to compare the Excel spreadsheets upon which CLAH relies.

172    CLAH contends that the loan balances that appeared on CLAH’s balance sheet (which were included in the CLAH Annual Reports) only ever showed the amount of principal of the advances and did not show any accrued interest. CLAH submits that when Ms Comino prepared her evidence in this proceeding she used an Excel spreadsheet and reconciled the entries that appeared in the loan ledger with a physical file maintained by CLAH in respect of the relevant facility. CLAH maintained that loan statements with interest were generated separately by exporting data from the MYOB accounting system and creating spreadsheets in the Excel computer program. Ms Comino said that as part of her role as the administration manager of CLAH, each month she would reconcile the loan statements against the MYOB loan ledger. When it came to preparing her evidence setting out all of the debits and credits against the Carrabolla Facility, Ms Comino took the ledger generated from MYOB and reconciled the entries that appeared there with the actual physical file maintained by CLAH in respect of this facility. The primary contemporaneous documents were not tendered. The physical file that Ms Comino alleges that she maintained was not tendered. The monthly reconciliations that Ms Comino says she did were not in evidence. There was not a single example of a monthly reconciliation. I do not accept Ms Comino’s evidence as to the source documents she says she used to prepare her evidence and the Debt Particulars.

173    The defendants’ failure to tender in evidence the loan ledgers or other primary accounting records generated from MYOB including the alleged monthly reconciliations presents several issues. At relevant points in time when the alleged advances were made, CLAH was either a public or publicly listed company. It is expected that CLAH would, in the ordinary course of its business, create and maintain records of the systematic and contemporaneous debiting and crediting to its loan amounts, including advances, repayments and the accrual and payment of interest. Without the relevant documentary source being exposed in evidence, the extent to which, if at all, the Excel spreadsheets are the product of manipulation by CLAH once the raw data has been exported from MYOB into Excel is neither ascertainable nor adequately explained where it has occurred. The Court’s ability to ascertain the real extent of advances and drawdowns purportedly made under the facilities in issue on these proceedings (and the extent to which interest accrued thereon which remains outstanding) is hindered by the absence of contemporaneous loan ledgers in circumstances where it is clear that the limited number of Excel spreadsheets in evidence were produced after the event and allegedly by reference to documents that appear not to have been tendered in the proceedings and which were certainly not referred to in submissions. A further complication is that some of the Excel spreadsheets have been created for the purpose of the proceedings and in particular in order to prepare the Debt Particulars. In cross-examination, Mr Baker acknowledged the significance of the loan ledger as an alleged point of truth in ascertaining the date and the amount of each advance allegedly made under the disputed facilities:

If an auditor, Mr Baker, wanted to understand what drawdowns had been made pursuant to this agreement, what document would they look at?---They would look at the loan ledger in the accounting system.

174    Taking all of the above into account, the evidence in relation to the advances allegedly made under the relevant facilities is inadequate in a number of respects which I will address in considering the defendants’ claims under each facility. The difficulties with the substantial gaps in the evidence in relation to CLAH’s accounts was compounded by the fact that the CLAH directors who, on Mr Baker’s evidence, were purportedly in control of CLAH (including Mr Watson who is said to have acted as CLAH’s managing director during most of the relevant period) were not called. The paucity of the evidence is underscored by the fact that the minutes of the meetings of directors and resolutions of the board of CLAH (which Mr Baker contended were kept) were not tendered. I have already explained why I attach very little weight to Mr Mitropoulos’ evidence, which was vague, internally contradictory and largely reconstructed from a selection of documents.

175    The evidence gives rise to the strong inference that CLAH was a public company in the relevant period in name only, and that it operated under the de facto control of Mr Baker during the whole period, including the periods when others were its de jure directors. I reject Mr Baker’s evidence as to the role played by the de jure directors of CLAH during the relevant period. To the extent that Mr Baker created an internal documentary trail within CLAH (which included the internal coding emails and the loan purpose descriptions in the facilities), I find that this was more likely directed to reducing the risk of queries being raised by CLAH’s auditors. I am not satisfied that it was done for the purpose of obtaining board approval. On the whole of the evidence, I am not satisfied that during the relevant period the CLAH board was active in the way that Mr Baker alleges. The internal documentary trail was directed to concealing the fact that CLAH was under Mr Baker’s de facto control throughout, including the period when he was disqualified from being a company director by reason of his bankruptcy.

176    I have provided an overview of the particular evidentiary difficulties that bedevil the fact-finding task in these proceedings. The evidence on this topic is a prime example of the problem. The paucity of reliable contemporaneous evidence about the advances made under the facilities which are in issue and/or under alleged oral agreements intersects head on with the unreliable evidence given by each of the central protagonists which is beset with serious concerns as to their respective credit. In these proceedings, the evidence did not rise to the standard where according to the civil standard, I can be satisfied that CLAH’s alleged systems and practices comprised normal or regular practice so as to prove that it was probable that they had been followed in the circumstances of these proceedings: Olga Investments Pty Ltd v Citipower Ltd [1998] 3 VR 485 at 486-487 (Ormiston JA) and 496-498 (Charles JA); Palios Morgan & Nicholson Holdings Pty Ltd v Shore [2010] SASCFC 21; 108 SASR 31 at [74]-[85] (Gray J); TS & B Retail Systems Pty Ltd v 3Fold Resources Pty Ltd (No 3) [2007] FCA 151; 158 FCR 444 at [100] (Finkelstein J).

4.3    Disguised payments

177    The documentary evidence which has been tendered in relation to requests for payments from CLAH cannot be accepted as reliable without careful scrutiny. It cannot be assumed that the way in which the documents were prepared at the time reflected the true position. This may be illustrated by two categories of documents.

178    The first category comprises the requests for “disguised payments” sent by Mr Page to Mr Baker. Mr Baker referred in his evidence to Mr Page requesting payments to be made in a way that he described as “disguised payments”. Mr Baker said that Mr Page requested for various payments to be transferred to ostensibly third party accounts of various motor vehicle dealers but which were, in fact, accounts held by Shyzi and “other bank accounts”. Mr Baker claims he only subsequently discovered that these payments were being directed into accounts held by Page related companies. Mr Page maintains that Mr Baker knew at the time and asked Mr Page to use false account holder names in the directions. Mr Page points to a communication in the relevant period from Mr Baker in which Mr Baker comments that the account holder’s name does not need to match the details provided. In evidence, there are a range of documents that appear to be disguised payments. Whether the disguised payments were requested in this way because Mr Page was seeking to mislead Mr Baker or whether Mr Baker was complicit in the deception is contested on the evidence.

179    The second category comprises CLAH’s internal coding emails. The majority of these documents appear to have been created in the form in which they were in order to provide a veneer of legitimacy within CLAH’s records. There are emails in evidence sent by Mr Baker to CLAH’s accounts team containing requests for payments to be made from CLAH to BSB and account numbers belonging to an ostensible third party account holder, when in fact the BSB and account number provided correspond to a bank account held by a Page related company. These emails are addressed in detail in parts 10.8.2.3 and 10.15.3.

180    As to whether Mr Baker was complicit in Mr Page’s deception in providing the false account information to facilitate the “disguised payments” and whether he knew the account details provided were bank accounts held by Shyzi or Ohmut is addressed to the extent it is relevant to the determination of the issues raised in these proceedings in part 10 (Shyzi) and part 11 (Ohmut).

181    The reality is that Mr Baker may have been aware at the time that some of the requests were designed to be misleading, for others he may have discovered well after the payment was made. It is difficult to determine. Relatedly, there is a question as to whether documents which included false account holder identification served to mask the fact that CLAH, during a period which it was a public company and subject to regular audits, was paying out money that was not the subject of formal loan agreements or security as would ordinarily be required. A complicating factor is that Mr Page gave evidence that some of the money advanced in this way was directed to be utilised in Yipeeo’s business endeavours, which as I have said was the joint business operated in truth by Mr Baker and Mr Page.

5.    STRUCTURE OF THESE REASONS

182    I have structured these reasons to reflect the way in which the parties presented their respective cases. Although as mentioned there were a myriad of issues for determination identified by the parties in their Amended Joint List of Issues, the issues fall into the following broad groups.

183    First, an overarching issue is whether Mr Page relevantly was an agent or acted with ostensible authority so as to bind Ms Page, Carrabolla, Shyzi, Parkway One and Harmat (Issue 1).

184    Second, the issues arising in relation to the validity of the appointment of the Shyzi Receivers (Issues 2 to 7).

185    Third, the issues arising in relation to the validity of the appointment of the Ohmut Receivers (Issues 8 to 19).

186    Fourth, the issues arising in relation to the validity of the appointment of the Tallywalker Receivers (Issues 20 to 32).

187    Fifth, the issues arising in relation to the Distribution Proceeding.

188    In part 6 of these reasons, I will provide reasons for orders made during the hearing in respect of which I said that I would provide reasons in this judgment. Those orders concerned a late and broad ranging amendment application pressed by the plaintiffs and the grant of a certificate under s 128 of the Evidence Act in relation to evidence given by Mr Baker.

189    The parties rely on a voluminous court book which was arranged in discrete sections. The first section of the court book related to claims relating to or arising in connection with Shyzi and Carrabolla and the appointment of the Shyzi Receivers. The second part related to claims relating to or arising in connection with Parkway One and Ohmut and the appointment of the Ohmut Receivers. The third part related to claims relating to or arising in connection with Tallywalker and the appointment of the Tallywalker Receivers. Each of these three sections of the court book was supported by its own joint chronology prepared by the parties. There was no overarching joint chronology of the whole of the events relevant to the proceedings or the three receiverships. The remaining sections of the court book related to the pleadings, affidavits and selected ASIC searches. In addition, on the first day of the hearing, the plaintiffs tendered a single volume supplementary court book which contained documents referred to in the supplementary witness statements of Dr Munro, Mr Brooks, Mr Page and Ms Page, each dated 12 August 2022 and supplementary documents tendered by the parties during the course of the hearing. There were also a series of stand-alone documentary tenders.

190    The proceedings were conducted on the basis that apart from the issue of agency, each group of claims although broadly similar in terms of the relief sought were essentially independent. These proceedings are concerned with independent and separate receiverships in relation to a series of independent facilities and related securities, each receivership having its own independent chronology of events. I have adopted a similar approach in the way in which I have structured these reasons, but in doing so I have not overlooked the fact that the dealings between the Page interests and the Baker interests are central to the resolution of the issues raised in each of the receiverships. The taint of the dishonest dealings involving Mr Baker, Mr Page and Ms Page permeates the whole of the proceedings.

191    Before turning to the determination of the numerous issues raised in these proceedings, I will address the submissions made in relation to the credit of each of the central protagonists, namely Ms Page, Mr Page and Mr Baker. I will also make some preliminary observations in relation to other witnesses whose credit was sought to be impugned to the extent that it is relevant to the determination of the relief sought in these proceedings.

6.    ORDERS MADE IN COURSE OF PROCEEDINGS

6.1    Interlocutory application – late amendments

192    By an interlocutory process dated 2 September 2022 and affidavit in support sworn by the plaintiffs’ solicitor, the plaintiffs sought leave at the commencement of the hearing to file a further amended statement of facts and contentions, amended opening submissions and additional outlines of evidence. The application was in the main opposed, with some minor parts of the proposed amendments agreed. In opposing the application, the defendants relied on an affidavit from their solicitor and pointed to specific prejudice that would flow if leave was granted. After a brief adjournment, I made orders that the application for leave to file and serve a further amended statement of facts and contentions be refused, except to the extent the proposed amendments were not opposed, and refused the application to file amended opening submissions and a witness statement of Ms Page. I otherwise granted leave for the plaintiffs to file outlines of evidence of Mr Arratoon and Mr Linton. My reasons for doing so are as follows.

6.1.1    Legal principles

193    The principles relevant to applications to amend pleadings shortly before trial are discussed by the plurality of the High Court in Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; 239 CLR 175 (Gummow, Hayne, Crennan, Kiefel and Bell JJ). The party making an application for leave to amend bears a heavy burden to show why leave should be granted: Aon at [4] (French CJ). In Tamaya Resources Limited (in liq) v Deloitte Touche Tohmatsu [2015] FCA 1098 at [127] (affirmed on appeal: Tamaya Resources Limited (in liq) v Deloitte Touche Tohmatsu (A Firm) [2016] FCAFC 2 at [125] (Gilmour, Perram and Beach JJ)), Gleeson J provided a summary of the considerations relevant to the Court’s exercise of discretion to grant leave for late amendments:

(1)    the nature and importance of the amendment to the party applying for it: Aon at [102] (Gummow, Hayne, Crennan, Kiefel and Bell JJ);

(2)    the extent of the delay and the costs associated with the amendment: Aon at [102] (Gummow, Hayne, Crennan, Kiefel and Bell JJ);

(3)    the prejudice that might be assumed to follow from the amendment, and that which is shown: Aon at [5] (French CJ), [100] and [102] (Gummow, Hayne, Crennan, Kiefel and Bell JJ);

(4)    the explanation for any delay in applying for that leave: Aon at [108] (Gummow, Hayne, Crennan, Kiefel and Bell JJ);

(5)    the parties’ choices to date in the litigation and the consequences of those choices: Aon at [112] (Gummow, Hayne, Crennan, Kiefel and Bell JJ); Luck v Chief Executive Officer of Centrelink [2015] FCAFC 75 at [44] (Collier, Griffiths and Mortimer JJ);

(6)    the detriment to other litigants in the Court: Aon at [93], [95] and [114] (Gummow, Hayne, Crennan, Kiefel and Bell JJ); Luck at [44]; and

(7)    potential loss of public confidence in the legal system which can arise where a court is seen to accede to applications made without adequate explanation or justification: Aon at [5], [24] and [30] (French CJ).

194    The weight to be given to the various factors identified in Aon may vary depending on the facts in the individual case: Tamaya Resources at [128]; Cement Australia Pty Ltd v Australian Competition and Consumer Commission [2010] FCAFC 101; 187 FCR 261 at [51] (Keane CJ, Gilmour and Logan JJ).

195    Case management considerations also inform the exercise of discretion in applications of this nature. The Court may have regard to the duty on parties to conduct proceedings diligently and in a manner consistent with the overarching purpose of s 37M of the Federal Court of Australia Act 1976 (Cth) (FCA Act): see Cement Australia at [43]-[44]; Hong v Liew [2014] FCA 40 at [17] (Murphy J).

6.1.2    Reasons for orders made

6.1.2.1    Proposed further amendments to the statement of facts and contentions

196    Very shortly before the commencement of the hearing, the plaintiffs sought leave to file a further amended statement of facts and contentions, amended opening submissions and additional outlines of evidence.

197    The plaintiffs’ proposed further amendments to the plaintiffs’ amended statement of facts and contentions are broadly directed to bringing the pleadings in line with the supplementary evidence filed by the plaintiffs in August 2022. In the main, the plaintiffs sought to provide alternate characterisations of certain payments based on a further wave of reflection by Ms Page and matters raised in Mr Page’s witness statement. By their proposed amendments, the plaintiffs sought to cast a different characterisation on certain payments by introducing a series of new alleged oral agreements which were not previously raised in the proceedings in what stands as the pleadings and which the defendants have not responded to in terms. The plaintiffs also sought to make corrections to dates and figures in respect of several transactions.

198    In broad terms, the proposed amendments were as follows.

199    First, the plaintiffs alleged that four payments had been wrongly attributed to the Carrabolla Facility and were instead the subject of an oral agreement between Mr Baker and Ms Page in around early September 2016 that CBD Sydney Investments would acquire a 50% interest in Carrabolla. This was the first time the alleged Carrabolla investment agreement had been raised as an issue in the pleadings. It was first raised in Mr Page’s supplementary witness outline filed on 12 August 2022. The plaintiffs alleged that the following payments were made by CBD Sydney Investments to Carrabolla as consideration for the acquisition of shares in Carrabolla: $75,000 paid on 12 September 2016; $35,000,00 paid on 3 February 2017; $100,000 paid on 10 February 2017; and $20,000 paid on 8 March 2017. Another aspect of the alleged oral agreement was that Ms Comino would be appointed as co-director of Carrabolla. Steps appear to have been taken in the performance of the alleged oral agreement from 12 September 2016 through to 8 March 2017, including the appointment of Ms Comino as a director of Carrabolla and CBD Sydney Investments being issued one share in Carrabolla on around 3 March 2017. The defendants submitted that this was a significant change in the legal characterisation of these payments from a debt to a capital investment pursuant to an alleged agreement which must have been known to Ms Page throughout this entire period. Prior to the proposed further amendment, Mr Page had identified, in his evidence, an agreement described differently and only referred to one payment made thereunder, being the payment of $75,000 on 12 September 2016. The new proposed allegations culminated in the assertion that by reason of this alleged agreement, amongst others, there is no indebtedness of Shyzi and Carrabolla to CLAH.

200    Second, the plaintiffs alleged that the payment of $30,000 on 15 July 2016 for potential development transactions was made to Ohmut, not Shyzi as previously pleaded, and in any event, that this payment had been wrongly attributed to the Carrabolla Facility. The plaintiffs submitted that Ms Page had originally believed this payment to be a payment to Shyzi, however upon reflection, Ms Page later recalled that the payment was to Ohmut and described this payment as a repayment of the deposit on a property development transaction which did not proceed. The plaintiffs alleged that the payment was made by CLAH to Ohmut pursuant to an oral agreement reached between Mr Baker and Ms Page on around 15 September 2016 in relation to a property development opportunity at 12 Kemp Street, The Junction, New South Wales for which Parkway One had paid $47,500 as a deposit. On Ms Page’s account, the alleged oral agreement provided that the development would be acquired by Yipeeo and that Mr Baker would arrange for the deposit amount, which was paid by Parkway One, to instead be paid to Ohmut to assist with Ohmut’s liabilities.

201    Mr Page provided a different recollection of the circumstances for the payment to Ohmut, which the plaintiffs have sought to plead in the alternative. On Mr Page’s account, the $30,000 payment was made for the benefit of Yipeeo and comprised a deposit that was payable to Yipeeo to acquire a different property located at 1 Muriel St, Newcastle, New South Wales. The plaintiffs alleged that this payment was made to Ohmut, rather than the real estate agent Walkom Real Estate, at Mr Baker’s suggestion and for the purpose of protecting the deposit from being forfeited in the event that Yipeeo did not proceed with the property development opportunity.

202    On either Ms Page or Mr Page’s account, the plaintiffs contended that the $30,000 payment to Ohmut had no connection to Carrabolla.

203    Third, the plaintiffs sought to allege that $112,000 which CLAH paid to Shyzi on 8 March 2017 was wrongly credited to the Carrabolla Facility because it was made pursuant to an unrelated agreement between Mr Page and Mr Baker for Mr Baker to fund costs associated with Mr Page seeking to have his bankruptcy annulled. This allegation was raised notwithstanding prior admissions made by Mr Page that these funds were advanced to Shyzi in respect of car transactions. This was the first occasion on which allegations concerning an alleged additional oral agreement made between Mr Baker and Mr Page in respect of Mr Page’s bankruptcy annulment were sought to be introduced. This payment was said to be in addition to two other payments already raised by the plaintiffs which were made to the trustee in bankruptcy in relation to the annulment of the bankruptcy which the plaintiffs contended were made with the assistance of Mr Baker. The two other annulment payments were pleaded in the plaintiffs’ amended statement of facts and contentions and referred to in Mr Page’s outline of evidence. It was not expressly pleaded in the plaintiffs’ amended statement of facts and contentions that the payments were made by Mr Baker for the purpose of annulling the bankruptcy. When pressed about the existing claims, the plaintiffs submitted that there was no prior pleading of any agreement that the payments were made by Mr Baker for the purpose of annulling the bankruptcy, but that it was “implicit that there was an agreement underlying those transactions”. These payments involved Ms Comino insofar as she effected the payments at the direction of Mr Baker pursuant to the new agreement.

204    For completeness, the plaintiffs also sought to amend their earlier pleading that the payment of $120,000 from Ohmut to CLAH on 28 February 2017 was made under the Ohmut Facility. The plaintiffs’ revised position was that the payment was made on behalf of Anoif to repay amounts which CLAH had advanced to Anoif and that Ohmut’s bank account was merely used as a conduit at a time when Anoif did not have its own bank account. The plaintiffs pleaded that this payment was wrongly credited to the Ohmut Facility. This revised pleading was not supported by any alleged oral agreement. The defendants submitted that there was no pleading and no evidence of this issue prior to the delivery of the supplementary witness statements.

205    The plaintiffs also sought to make corrections to dates and figures in respect of several transactions which featured in the claim concerning the appointment of the Tallywalker Receivers, the effect of which was to put in issue the dates attributed to the relevant facilities and securities. These amendments were not opposed and were reflected in the plaintiffs’ Further Amended Statement of Facts and Contentions filed 12 September 2022 (PFASOFC).

206    The plaintiffs submitted that the defendants would not suffer any real prejudice as a result of the proposed amendments, despite their lateness, on the basis that the transactions were the subject of the proceedings for an extended period of time and it was merely the characterisation of the payments that had changed. In circumstances where the relevant transactions occurred over many years between closely related parties and it was accepted that the transactions took place, the dispute was confined to differences about the purpose or intent of the relevant payments. The plaintiffs acknowledged that the defendants would need to obtain instructions, but submitted that these were matters which could be responded to while evidence was being given and there was no prejudice to Mr Baker in responding to the amendments.

207    I considered the interlocutory application in the context of the protracted procedural history of delay and an earlier round of revisions to the plaintiffs’ statement of facts and contentions and the parties’ chronologies to deal with new matters raised in supplementary statements, which arose as a result of consent orders on which the parties collaborated. Those amendments were made pursuant to a detailed timetable in the lead up to the hearing which was intended to refine the ambit of the matters in dispute across the three receiverships. None of the further amended allegations which appeared in the proposed further amended statement of facts and contentions were agitated by the plaintiffs in the earlier revisions which were made broadly pursuant to the timetable that was put in place. The plaintiffs did not offer a satisfactory explanation for why these new allegations were not identified and incorporated into their earlier amendments and did not explain why they should be permitted to rely on them in circumstances where they were not raised until three business days before the start of the hearing.

208    Case management orders have previously been made in this proceeding for the service of evidence, contentions, submissions and many other interlocutory steps. By way of background, on 10 November 2021, this proceeding was set down for hearing commencing on 5 September 2022. On 11 August 2022, at a case management conference, the plaintiffs notified the Court and the defendants for the first time that they proposed to amend their case and file four new witness statements to address two matters which had been raised in the plaintiffs’ written submissions filed on 27 February 2022. Accordingly, on 24 August 2022, the defendants filed a further amended concise statement (the defendants’ Further Amended Concise Statement (DFACS)) and on 25 August 2022, the parties filed an updated Amended Joint List of Issues. These documents do not address the new issues raised by the proposed further amendments and proposed additional evidence. Indeed, the defendants were not on notice of them.

209    The plaintiffs have had ample opportunity to identify the issues that they sought to agitate in this proceeding and the additional evidence they sought to call. There has been a general lack of diligence demonstrated by the plaintiffs in prosecuting and preparing this proceeding for hearing. The amendments sought to be introduced very shortly before the commencement of the hearing, if based on genuine recollection, must have been within the knowledge of the plaintiffs when they filed the last round of supplementary evidence on 11 August 2022, if not earlier. The defendants submitted that I should infer that there was some tactical reason in the plaintiffs not raising these proposed amendments at that time: see Aon at [4]. I would not go that far. If it was intended to be tactical, it has misfired. The risk that the amendments would be refused must have been appreciated by the plaintiffs.

210    The defendants opposed the grant of leave on the basis that there was insufficient time in advance of the trial to attend to filing a new defence and revising evidence, opening submissions and cross-examination to address the proposed amended contentions. The defendants submitted that the proposed amendments were substantial recalculations of amounts said to have been paid and/or owing in respect of the Tallywalker transactions. The defendants contended that they were not able to work out how the recalculated amounts were reached based on the material available in Mr Brooks’ supplementary statement.

211    I accepted that to allow the plaintiffs to introduce further amendments, both in respect of the new asserted agreements and the calculation of the Tallywalker debt, at such a late stage would cause prejudice to the defendants. It would place a significant burden on the defendants at the commencement of a trial to allow the introduction of new characterisations of that which is alleged to have occurred. It may have required amendments to the defence. It would undoubtedly affect the planned course of cross-examination. The defendants were only provided a draft copy of the proposed amended documents three days before the hearing and did not have the opportunity to review the material and seek instructions in relation to the new agreements, particularly given logistical difficulties in speaking to Mr Baker, who was giving evidence under subpoena and who had obtained independent legal representation to address the potential for his evidence to be incriminating or to otherwise expose him to a civil penalty. The defendants are entitled to have a fair opportunity to defend the allegations made against them, including a fair opportunity to take instructions and receive advice on new allegations and to consider the implications of the plaintiffs’ changed course.

212    If the amendments were allowed, the defendants anticipated that the hearing would not completed within the allocated hearing dates and the parties would have required additional time to prepare prior to cross-examination of the first witness, Ms Page. Given the nature of the allegations, there would also have been an impact on the preparation for Mr Page’s cross-examination and Mr Baker’s evidence in chief.

213    A timely application for leave to rely on additional claims and evidence should have been made. That would have permitted directions to be given which would have minimised disruption to the orderly conduct of the hearing, and mitigated any unfairness to the defendants in responding to the new case sought to be advanced if leave was granted. The timing of the application means that an order for costs thrown away by reason of the late amendments would not undo the prejudice which would be suffered by the defendant if the amendments were allowed.

214    Accordingly, for these reasons and consistently with the requirements of s 37M of the FCA Act, I refused leave for the plaintiffs to further amend the plaintiffs’ amended statement of facts and contentions, except to the extent that objection was not taken to the further amendments. On 7 September 2022, I made orders granting leave to the plaintiff to amend those paragraphs.

6.1.2.2    Proposed amendments to plaintiffs’ opening submissions

215    The plaintiffs sought to amend their opening submissions to bring their submissions in line with the new evidence in the supplementary witness statements filed in accordance with the grant of leave on 17 August 2022 and proposed further amendments to the statement of facts and contentions. The proposed amendments were substantially identical to the proposed further amendments to the plaintiffs’ amended statement of facts and contentions.

216    For the same reasons as I have outlined above for the proposed further amendments to the plaintiffs’ amended statement of facts and contentions, leave to amend the plaintiffs’ opening submissions was refused.

6.1.2.3    Filing of additional evidence

217    The plaintiffs sought to introduce additional outlines of evidence of Mr Arratoon and Mr Linton for the purpose of corroborating the evidence of Mr Page and Ms Page and to avoid any potential Jones v Dunkel inference. The plaintiffs submitted that the evidence was not filed in accordance with the existing timetable because the plaintiffs had not appreciated that a Jones v Dunkel inference might be made in respect of those two individuals. The additional outlines of evidence did not introduce any new facts.

218    The plaintiffs also sought to introduce a second witness statement of Ms Page to further supplement her evidence in chief in relation to the Carrabolla and for these matters to be led by Ms Page viva voce during the hearing.

219    The defendants submitted that the additional outlines of evidence would not be relevant and have very little forensic utility insofar as Mr Arratoon and Mr Linton’s dealings are not with CLAH. Further, the potential to call evidence from these witnesses arose within the time provided for the filing of evidence. Mr Arratoon had been identified in Ms Page’s first affidavit filed on 7 October 2020 in support of the injunction and Mr Linton was identified in Ms Comino’s affidavit sworn on 21 February 2021.

220    As to Ms Page’s evidence, the defendants submitted that it should be refused on the basis that it was contrary to the plaintiffs’ obligation to provide a sufficient opportunity for the defendants to advance their case and to avoid litigation being conducted by ambush or surprise: Aon at [112]; Tamaya Resources at [130]-[131]; Kendrovski v Ardent Leisure Ltd t/as D’Albora Marinas [2022] NSWSC 1114 at [41] and [54] (Schmidt AJ).

221    I was satisfied that in the circumstances, it was appropriate that leave be granted to file and serve the outlines of evidence of Mr Arratoon and Mr Linton. Leave was refused for the further supplementary statement of Ms Page to stand as an outline of further evidence to be led from Ms Page.

6.2    Section 128 certificate

222    As I have mentioned, Mr Baker objected to giving particular evidence on the ground that his evidence may tend to prove that he had committed an offence against, or arising under, an Australian law or was liable to a civil penalty: Evidence Act, s 128(1). Over the plaintiffs’ objection, I issued a certificate pursuant to s 128 in respect of parts of Mr Baker’s evidence. My reasons for doing so are as follows.

6.2.1    Legal principles

223    Section 128 of the Evidence Act applies if a witness objects to giving particular evidence, or evidence on a particular matter, on the ground that the evidence may tend to prove that the witness either: (a) has committed an offence against or arising under an Australian law or a law of a foreign country; or (b) is liable to a civil penalty. If a witness takes the objection in reliance on the section, the Court must determine whether there are reasonable grounds for the witness’ objection: s 128(2).

224    If a s 128 certificate is issued by the Court, the evidence given by the witness which is covered by the certificate, and any evidence obtained as a direct or indirect consequence, may not be used against that person in any proceeding in an Australian court: s 128(7).

225    In Construction, Forestry, Mining and Energy Union v Australian Building and Construction Commissioner [2018] FCAFC 4; 259 FCR 20 (CFMEU v ABCC) at [62], Bromwich J (with whom Kenny and Tracey JJ agreed) said:

An objection to giving evidence is, in history and context, directed to resisting compulsion, and is not merely a means of electing for the protection of a certificate to advance a forensic desire. This much is reflected in the ordinary meaning of “objects” as used in s 128(1).

226    The Full Court in CFMEU v ABCC at [53]-[54] relevantly considered the proper construction of the expression “objects” in s 128 by reference to key authorities. The Full Court adopted the obiter dicta observations of the majority of the High Court in Cornwell v The Queen [2007] HCA 12; 231 CLR 260 at [111]-[112] (Gleeson CJ, Gurnrnow, Heydon and Crennan JJ) as to the meaning of the word “objects” in s 128(1):

[111]    This characterisation raises a question whether s 128(1), and hence s 128 as a whole, applies where a witness sets out to adduce in chief evidence revealing the commission of criminal offences other than the one charged. A criminal defendant might wish to present an alibi, the full details of which would reveal the commission of another crime. A civil defendant might wish to prove the extent of past earnings, being earnings derived from criminal conduct. This raises a question whether witnesses who are eager to reveal some criminal conduct in chief, because it is thought the sting will be removed under sympathetic handling from their own counsel or for some other reason, are to be treated in the same way as witnesses who, after objection based on genuine reluctance, give evidence in cross-examination about some crime connected with the facts about which evidence is given in chief.

[112]     The view that the accused’s claim of privilege in all the circumstances answered the requirements of s 128(1) has difficulties. It strains the word “objects” in s 128(1). It also strains the word “require” in s 128(5) – for how can it be said that a defendant-witness is being “required” to give some evidence when his counsel has laid the ground for manoeuvres to ensure that the defendant-witness’ desire to give the evidence is fulfilled? And it does not fit well with the history of s 128(8). For one thing, s 1(e) of the 1898 Act and its Australian equivalents provided that an accused person called pursuant to the legislation could be “asked any question in cross-examination notwithstanding that it would tend to criminate him as to the offence charged”, which implies that the protection of the accused’s position in chief or in re-examination was a matter between the witness’ counsel and the witness. For another thing, the Australian Law Reform Commission, in summarising the pre-s 128(8) law, assumed that s 1(e) and its Australian equivalents were to be construed as applying to questions in cross-examination only.

227    The Full Court in CFMEU v ABCC also followed the approach taken by the New South Wales Court of Appeal in Song v Ying [2010] NSWCA 237; 79 NSWLR 442 (Hodgson JA, Giles and Basten JJA agreeing). In Song, the Court of Appeal considered that the availability of s 128 was not confined to questions in cross-examination and specifically acknowledged that special considerations might arise where the witness being called is a director of a party to the proceeding. Relevantly, Hodgson JA (with whom Giles and Basten JJA agreed) said at [28]-[31]:

[28]    In my opinion, having regard to the wording of s 128 and the scope of the common law privilege which it displaced, it is not the case that a party to proceedings who is also a witness, giving evidence in chief in response to questions from the party’s own legal representative, and who wishes to give that evidence but is not willing to do so except under the protection of a s 128 certificate, “objects” to giving that evidence within the meaning of s 128(1). This is not because the witness subjectively wishes to give the evidence, but rather because there is no element of compulsion or potential compulsion which makes the expression “objects” apposite.

[29]     This approach would not mean that a friend of a party (plaintiff or defendant) called to give evidence in the party’s case may not “object” to giving evidence within the meaning of s 128(1). Whether or not this friend wishes to support the party, this friend is compellable at the instance of the party and cannot give instructions to the party’s legal advisers as to what questions are to be asked. In those circumstances, I would not suggest that the Court would need to enquire whether the friend is giving evidence because compellable, or because of a wish to give the evidence to help the party: I would say that the compellability of the witness to give the evidence at the instance of the party (subject to the provisions of s 128), and the lack of legal entitlement to refrain from giving that evidence if compulsion is sought (again subject to the provisions of s 128), is sufficient.

[30]     Similarly, witnesses called by the prosecution in a criminal case could, if the requirements of s 128 are otherwise satisfied, obtain a s 128 certificate.

[31]     This approach could raise difficulties where the party is a company, and the witness is a director of the company. The witness then is compellable at the instance of the company, and (at least unless the witness is the alter ego of the company) the witness may not be in a position either to prevent the company compelling the witness to give evidence or to give instructions as to what evidence is to be given. I would leave that question to be determined in a case when it arises.

228    The protection against self-incrimination afforded by s 128 does not extend to the incrimination of a corporation: Evidence Act, s 187; see Lewis v Nortex Pty Ltd (In Liq) [2002] NSWSC 1192; 217 ALR 719 at [7] (Hamilton J). In Song at [31], Hodgson JA recognised the difficulties where a party is a company and the witness is a director of that company who may not be in a position to prevent the company compelling the witness to give evidence or to give instructions as to what evidence is to be given. This issue was not relevantly addressed by the Full Court in CFMEU v ABCC.

6.2.2    Reasons for orders made

229    The plaintiffs opposed the application for a s 128 certificate by Mr Baker in relation to the topics on which it was proposed to ask him questions in chief or re-examination. For the purpose of the application for a s 128 certificate, Mr Baker was represented by independent counsel, Mr Raftery.

230    The plaintiffs submitted that there was no sound basis to find that Mr Baker was properly to be regarded as a witness giving evidence reluctantly or under compulsion in this proceeding and that Mr Baker’s application for the issue of a s 128 was an abuse of process. The plaintiffs further submitted that there was no basis to believe that Mr Baker, as a director of CLAH, was not able to prevent CLAH from compelling him to give evidence or to give instructions as to what questions were to be asked of him by the plaintiffs’ counsel.

231    The plaintiffs contended that as Mr Baker was, on any view, the alter ego of CLAH for the whole of the relevant period, which they submitted was from when these proceedings were commenced and at all times thereafter, including during the period commencing on 17 December 2020 when Ms Comino was appointed as an additional director of CLAH. Mr Baker was the sole director of CLAH at the time CLAH appointed the Shyzi Receivers, Ohmut Receivers and Tallywalker Receivers. He remained the sole director when a notice of address for service was filed in this proceeding on behalf of CLAH on 21 October 2020. He was the sole director at the time the Debt Particulars were served upon the plaintiffs on 26 October 2020. He was the sole director of CLAH when orders were made by O’Callaghan J on 10 December 2020 (varying the orders made by O’Bryan J on 9 October 2020) providing a timetable for the filing of evidence, including for CLAH to file and serve its evidence by 18 December 2020.

232    Ms Comino was appointed as a second director of CLAH on 17 December 2020, the day before CLAH was to file the evidence upon which it intended to rely at the hearing. The timing of this appointment is noteworthy as Ms Comino was the director who swore the affidavit evidence which was then filed in this proceeding on behalf of CLAH. No affidavit evidence was sworn by Mr Baker.

233    The plaintiffs submitted that Ms Comino’s appointment was made predominantly, if not solely, for the purpose of enabling her to attest to the evidence which CLAH filed and served in these proceedings. Until the appointment of Ms Comino, CLAH had been a single director company controlled by Mr Baker during the currency of these proceedings. Mr Baker did not cease to be a director of CLAH following the appointment of Ms Comino as a co-director on 17 December 2020. Mr Baker continued to be a director of CLAH throughout the duration of the hearing. The plaintiffs submitted that it is a contrivance that Mr Baker was the sole director of the company, then on the eve of his outline of evidence being due, his sister was appointed to effect a situation where Ms Comino would give evidence on behalf of CLAH in the ordinary course and a subpoena would be issued to Mr Baker to give evidence in order to bolster him claiming the benefit of a s 128 certificate.

234    In his capacity as director of CLAH, Mr Baker continued to cooperate with CLAH and CLAH’s solicitors in preparation for the hearing, arranged a time to accept service of a subpoena to give evidence and attended court. The plaintiffs relied on the following iterations of the defendants’ materials served in the proceedings which they submit were based on evidence and/or instructions which could only have been provided by Mr Baker.

235    On 22 December 2020, CLAH (together with the Receivers) filed a List of Documents upon which they intended to rely at the hearing which made reference to numerous texts messages between Mr Baker and Mr Page which could only have been provided to CLAH by Mr Baker. Some of these text messages were used by the defendants in cross-examination of Ms Page, Mr Page and Mr Brooks.

236    On 10 March 2021, CLAH (together with the Receivers) filed a further List of Documents upon which they intended to rely at trial by way of reply, which also made reference to text messages between Mr Baker on the one hand and Mr Page or Ms Page on the other, and a file note written by Mr Baker in relation to a 5 December 2018 meeting, which could only have been provided to CLAH by Mr Baker. Mr Baker’s file note was used by the defendants in cross-examination of Mr Page and Mr Brooks.

237    On 2 September 2022, CLAH (together with the Receivers) provided the plaintiffs’ solicitor with further documents for inclusion in the Supplementary Court Book, including “a screenshot of text messages between Theo Baker and Fiona Page dated 31 July 2018”. The plaintiffs submit that this document could only have been provided to CLAH by Mr Baker willingly upon request and that no compulsion was involved. The screenshot was used by the defendants in cross-examination of Ms Page in this proceeding.

238    The plaintiffs submitted that Mr Baker was not genuinely under compulsion to give evidence because he instructed the issue of a subpoena to himself and accordingly his objection to giving evidence was not on the product of “genuine reluctance”: Cornwell at [111]. Shortly after the filing of Ms Comino’s evidence, the solicitors for CLAH indicated to the plaintiffs that they intended to make an application for the issue of a subpoena to Mr Baker. The plaintiffs submit that in circumstances where Mr Baker was a director of CLAH, the board of CLAH at that time comprised Mr Baker and his sister Ms Comino, and the subpoena could not have been issued by CLAH without the authority or instructions of its board, I should infer that Mr Baker instructed the solicitors for CLAH to cause the issue of the subpoena to him.

239    A voir dire was conducted in which Mr Baker was questioned in relation to the issue of whether Mr Baker was acting under compulsion and to identify who was responsible for giving the relevant instructions on behalf of CLAH. Mr Baker maintained that if a subpoena had not been issued requiring him to give evidence as a witness in this proceeding, he would not have voluntarily elected to give evidence as a witness.

240    Mr Baker gave evidence that the process or procedure in place for CLAH to provide instructions to its lawyers in this proceeding was “all handled through Maria Comino”. Mr Baker denied giving instructions to CLAH’s lawyers to serve a subpoena on him. Mr Baker also denied giving instructions generally in these proceedings. He later qualified his answer by saying that he initially gave instructions to CLAH’s solicitors until an issue was identified and he was advised by CLAH’s solicitors to seek his own independent legal advice. He said that from that point forward, he had no further involvement in the matter, including instructing CLAH’s lawyers. Mr Baker maintained this position despite accepting that he willingly gave instructions for the preparation of his outline of evidence, which included visiting the solicitors’ offices on multiple occasions, in the period up to 4 October 2021. He agreed that he was happy to prepare his outline of evidence and no one was forcing him to do it. Mr Baker was also cross-examined in relation to his text messages with Mr Page and Ms Page that have been adduced in evidence. He admitted that he agreed to provide those text messages because he knew (or believed, at least) it would assist CLAH’s case in this proceeding. He accepted that he complied with a request to provide the text messages and that nobody compelled him to provide them.

241    Mr Baker was cross-examined on his recollection of being served with the subpoena. He did not know the name of the person who gave him the subpoena. Mr Baker confirmed that the subpoena was not served by a process server and that his solicitor had arranged for Mr Baker to meet with someone in the city to serve the subpoena on him. When asked whether the only reason he might have objected to giving evidence is because he wanted to ensure that he was protected by the privilege against self-incrimination, Mr Baker’s response was “[t]hat would be good, yes”.

242    The plaintiffs submitted that by reason of Mr Baker’s not insignificant involvement in the lead up to this proceeding, it follows that it cannot be accepted that Mr Baker is an unwilling witness and that his attendance at Court to give evidence on behalf of CLAH was only secured through use of the coercive powers of the Court in issuing a subpoena. The plaintiffs contend that the issuing of a subpoena to Mr Baker was not for the purpose of securing Mr Baker’s attendance at Court to give evidence, but rather for the purpose of providing Mr Baker with protection in the form of a s 128 certificate for incriminating evidence which Mr Baker is willing to give in chief but only under the cover of a s 128 certificate. In such circumstances, the plaintiffs submit that Mr Baker is not truly under compulsion to give evidence and does not “object” to the giving of evidence within the meaning of s 128 of the Evidence Act as described in Cornwell, Song and CFMEU v ABCC.

243    The determination of the application for a s 128 certificate in the circumstances as they stood during the running of the hearing was not straightforward. I found the plaintiffs’ arguments to have some force. However, having regard to the evidence on the voir dire, I was satisfied that on the evidence as it then stood, Mr Baker had established that he did object to giving evidence unless compelled. Further, that as an individual who was not a party to the proceedings, he was entitled to refuse to give evidence unless compelled in circumstances where to do so carried a not insignificant risk that he would be incriminated or expose himself to a civil penalty.

244    The fact that Mr Baker co-operated with the defendants in supplying information and documents which he considered would advance the defendants’ interests is not to the point. Whether in truth he influenced the manner in which Ms Comino gave instructions to the defendants’ solicitors is also a side issue. The protection afforded by a s 128 certificate is directed to oral testimony in court by a natural person and not to documentary production or co-operation outside court. The evidence in respect of which the certificate was sought was clearly evidence that may tend to prove that Mr Baker had committed an offence against or arising under an Australian law or which would expose him to a civil penalty. There was no serious submission to the contrary.

245    Mr Baker attended Court under the compulsion of a subpoena. He said that he would not have attended Court to give oral evidence unless he was compelled to do so. He took the objection to giving evidence in reliance on s 128 and he had reasonable grounds for taking the objection. I accept Mr Baker’s evidence that he would not have given evidence in circumstances where he was at serious risk of exposing himself to prosecution or personal liability for a civil penalty. That is not to say that Mr Baker did not want to assist the defendants and further the defendants’ case. He clearly did. However, he would not have sacrificed his own interests in order to do so had he not been under compulsion and had the opportunity to object to answering questions on incriminating topics. Seen in this light, whether he played any part in the decision for CLAH to cause the subpoena to be issued does not change the conclusion I have reached that Mr Baker would not have given evidence unless he was under compulsion. To do otherwise would have been to place himself personally at risk and he was assiduous in protecting his own interests. Accordingly, I am satisfied that he objected to giving evidence in the relevant sense.

246    The relevant parts of Mr Baker’s evidence related to correspondence which was sent and relied upon in the proceedings before the Supreme Court for the termination of a winding up application in respect of Parkway One and an earlier episode in which Mr Baker in substance admitted to giving false evidence in proceedings in the Supreme Court of Victoria. I accept that these parts of his evidence could evidence a breach of ss 181 or 184 of the Act, or the general offence of perverting the course of justice under s 319 of the Crimes Act 1900 (NSW). Mr Baker’s solicitor prepared a draft s 128 certificate in carefully confined terms for evidence given by Mr Baker in examination in chief on 12 September 2022 concerning correspondence he authored or sent relating to debts or loans owed by Parkway One to CLAH and evidence given by Mr Baker in cross-examination on 14 September 2022 concerning the giving of false evidence in prior proceedings.

247    Being satisfied that Mr Baker objected to giving evidence unless compelled and had established that there were reasonable grounds for the objection on the topics identified in the certificate on the grounds that it might incriminate him or expose him to a civil penalty, I made orders granting a s 128 certificate relevantly limited in its scope. The certificate was signed and sealed on 20 September 2022.

7.    CREDIT

7.1    Applicable Principles

248    The principles applicable to making findings of credit are well-established. It is convenient for present purposes to extract the following survey of the relevant authorities from Re Hillsea Pty Limited [2019] NSWSC 1152 at [16]-[21] (Black J):

[16]    I should have regard to the fallibility of human memory, particularly when disputes intervene, in determining these proceedings. In an often quoted observation in Watson v Foxman (1995) 49 NSWLR 315 at 319, McLelland CJ in Eq observed that:

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

[17]     In Effem Foods Pty Ltd v Lake Cumbeline Pty Ltd (1999) 161 ALR 599 at [15], the High Court similarly approved an observation at first instance in that case that:

“[Given the lapse of time] between the events and conversations raised in evidence and the hearing of the evidence before me, the only safe course is to place primary emphasis on the objective factual surrounding material and the inherent commercial probabilities, together with the documentation tendered in evidence. In circumstances where the events took place so long ago, it must be an exceptional witness whose undocumented testimony can be unreservedly relied on. The witnesses in this case unfortunately did not come within that exceptional class. The discussions referred to in evidence were capable of bearing quite opposed meanings depending on subtle differences of nuance and emphasis, and a proper appreciation of the significance of those matters must necessarily be considerably diminished over such a long period of time.”

[18]     In Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 at 129, Gleeson CJ, Gummow and Kirby JJ observed that:

“Considerations such as these have encouraged judges, both at trial and on appeal, to limit their reliance on the appearances of witnesses and to reason to their conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events. This does not eliminate the established principles about witness credibility; but it tends to reduce the occasions where those principles are seen as critical.”

…

[20]     I summarised the applicable principles in Re Kit Digital Australia Pty Ltd (in liq) [2014] NSWSC 1547 at [7], as follows:

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

249    In cases involving disputed facts from years ago, the evidentiary value of contemporaneous, or relatively contemporaneous, documents has been consistently recognised. Contemporaneous documents, where available, will often be probative of the true position, more so than accounts based on the recollection of persons with an interest in the outcome of the litigation which may be flawed, even if given earnestly: see Bathurst Regional Council v Local Government Financial Services Pty Ltd (No 5) [2012] FCA 1200 at [1247] (Jagot J).

250    I adopt and apply these principles in assessing the evidence of the witnesses called in these proceedings. I echo the lament expressed by Tamberlin J in Lake Cumbeline Pty Ltd & Ors v Effem Foods Pty Ltd & Anor [1995] FCA 451 (cited with approval by the High Court in Effem Foods Pty Ltd v Lake Cumbeline Pty Ltd [1999] HCA 15; 161 ALR 599 at [15] (Gleeson CJ, Gaudron, Kirby and Hayne JJ) — the witnesses in this case did not fall within the exceptional class of witness whose evidence can be relied on without reservation even where the events took place many years ago and their testimony is not supported by contemporaneous documents. Far from it. In fact, in this case, for the reasons I will elaborate on, even the contemporaneous documents had to be approached with considerable caution.

7.2    General observations on the evidence

251    Much of the evidence in this case, called by both sides, displays many of the features repeatedly identified in the authorities as necessitating care when assessing oral evidence. Critical parts of the evidence were given by persons with an interest, direct or indirect, in the outcome, and their testimony was affected, consciously or unconsciously, by disputes between them in the intervening period. Substantial sections of the evidence concerned oral communications and alleged agreements dating from years earlier. The evidence was given well after the relevant events in circumstances where substantial parts of the oral testimony was not supported by contemporaneous documents or objective factual surrounding material. In addition, many of the assertions made in the oral evidence do not readily accord with the inherent commercial probabilities that would be expected in the context of commercial dealings at arm’s-length. An added layer of complexity arises because the commercial dealings in issue involve the three central protagonists, and those in their wider social orbit, who were, during the relevant period, longstanding and close personal friends. The evidence demonstrates that they sometimes operated as between themselves with a lack of formality notwithstanding the commercial nature of their dealings.

252    A further and more vexing complication in the present proceedings is that the evidence reveals that the three central protagonists were not constrained by truth when it came to documenting commercial arrangements in which they were involved. If their evidence in these proceedings is to be believed, then it follows that they deliberately misrepresented in the documents which they generated or executed the position that they now contend, or accept, to be the true position. Documents of this kind were used to advance their immediate self-interest in their contemporaneous dealings with others. Of significant concern is the fact that misleading and untrue documents of this kind were deployed not only in their commercial dealings as between each other, and with third parties, but also in court proceedings in which they were involved at different times. The evidence in relation to the different versions of events that Mr Baker, Ms Page and Mr Page advanced in the proceedings in the Supreme Court in which Ms Page was seeking to terminate the winding up of Parkway One is but one example. This evidence is addressed in parts 7.3, 11 and 13 of these reasons. The evidence in these proceedings thus requires particularly careful scrutiny when assessing not only whether the oral testimony should be accepted but also as to what may reliably be taken from the documentary record, even where the documents are relatively contemporaneous. In this regard, the short point is that I cannot assume that many of the contemporaneous records in these proceedings are necessarily “a safer repository of reliable fact” than the oral evidence: cf Hughes v St Barbara Mines Ltd (No 4) [2010] WASC 160 at [157] (Kenneth Martin J).

253    Another aspect of the relationship between the three protagonists is that the evidence reveals that at different points in time, they were not open and transparent in their dealings with each other. There are thus occasions on which it is necessary to assess which of them is telling the truth on a particular issue where the contest in the evidence is as between two or more of the three of them, against a background of there being reason to doubt the reliability of the evidence they each give when it is not supported by independent evidence.

254    That said, I have borne steadily in mind the need to exercise care in being specific when making findings about the credibility of the individual witnesses. I remind myself of the observations of Basten JA (with whom Handley AJA agreed) in Sangha v Baxter [2009] NSWCA 78 at [155]-[156]:

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

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

255    And to similar effect, I bear in mind what was said by Lord Pearce said in Onassis v Vergottis [1968] 2 Lloyd’s Rep 403 at 431:

Credibility involves wider problems than mere ‘demeanour’ which is mostly concerned with whether the witness appears to be telling the truth as he now believes it to be. Credibility covers the following problems. First, is the witness a truthful or untruthful person? Secondly, is he, though a truthful person, telling something less than the truth on this issue, or, though an untruthful person, telling the truth on this issue? Thirdly, though he is a truthful person telling the truth as he sees it, did he register the intentions of the conversation correctly and, if so, has his memory correctly retained them? Also, has his recollection been subsequently altered by unconscious bias or wishful thinking or by overmuch discussion of it with others? Witnesses, especially those who are emotional, who think that they are morally in the right, tend very easily and unconsciously to conjure up a legal right that did not exist. It is a truism, often used in accident cases, that with every day that passes the memory becomes fainter and the imagination becomes more active. For that reason a witness, however honest, rarely persuades a Judge that his present recollection is preferable to that which was taken down in writing immediately after the accident occurred. Therefore, contemporary documents are always of the utmost importance. And lastly, although the honest witness believes he heard or saw this or that, is it so improbable that it is on balance more likely that he was mistaken? On this point it is essential that the balance of probability is put correctly into the scales in weighing the credibility of a witness, and motive is one aspect of probability. All these problems compendiously are entailed when a Judge assesses the credibility of a witness; they are all part of one judicial process and in the process contemporary documents and admitted or incontrovertible facts and probabilities must play their proper part.

256    Those observations are particularly apposite here. The problems with the evidence of the three protagonists involved the wider problems of the type identified by Lord Pearce. In terms of demeanour, each of these witnesses presented in the main as being confident and self-assured in giving evidence.

257    I now turn to consider the credit of the principal witnesses. It will be necessary to address some of the attacks on their credit in the context of addressing the broader evidence in relation to the determination of particular issues identified in the Amended Joint List of Issues.

7.3    The plaintiffs’ witnesses

258    The defendants challenge the credit of the following of the plaintiffs’ witnesses.

7.3.1    Ms Page

259    Ms Page gave oral evidence over four days and was cross-examined. As mentioned, although she had made a number of affidavits and a witness statement prior to being called, the plaintiffs did not rely on them. She was however cross-examined on parts of them. She was also cross-examined on the affidavit she gave in the proceeding in the Supreme Court where she sought, unsuccessfully, to have the appointment of the Liquidator of Parkway One terminated.

260    CLAH urges the Court to reject Ms Page’s evidence except where it is supported by contemporaneous records. CLAH submits the Court should reach that conclusion for the following reasons, some of which CLAH particularly emphasises and which I highlight below. There is some overlap between the separate criticisms that CLAH makes of Ms Page’s evidence. In my consideration of Ms Page’s evidence, I will not repeat CLAH’s articulated complaints seriatim but will address the substance of CLAH’s submissions.

261    The plaintiffs seek to rebuff the criticisms made of Ms Page on the basis that the language used by the cross-examiner was “not helpful” when putting questions to Ms Page because she “is clearly an unsophisticated person”, “has year 10 schooling”, “worked in car trading” and has “engaged in property development”.

262    The plaintiffs’ submission concerning Ms Page’s formal education and commercial experience, while rooted in fact, does a disservice to Ms Page. The evidence that she herself gave in these proceedings emphasised that she has for many years been involved in substantial commercial pursuits both in relation to property development, running and refurbishing large boarding houses and also conducting a motor trading business with Mr Page. Questions were put to her in cross-examination on the express basis that she was an experienced businesswoman. She did not demur from that proposition.

263    Ms Page did finish school in year 10. She then attended secretarial college for one year. Ms Page’s first job out of school was in the mobile phone industry. Ms Page then worked at three car dealerships over a period of 20 years. Her principal role was in stock control. She also had customer service roles. Ms Page continued to work in the motor trading industry through Shyzi, which relevantly held and continues to hold a motor dealership licence. Ms Page does not have any formal qualifications in property development, but she has been involved in property development for many years commencing with her experience working with her father, Mr Peter Lukinik, who was a builder. In her own estimation, she has “made a career of it”.

264    Ms Page gave evidence that while Shyzi was originally incorporated by her and Mr Page for the purpose of property development, it was subsequently used to operate a motor trading business. Her part in managing corporations involved in significant property development projects is longstanding, as was demonstrated by the evidence.

265    Ms Page’s experience extends to serving as the sole director of various corporate trustees which held real property on trust for the benefit of trusts in which she held units. Ms Page incorporated Elefteria, with the assistance of her accountant Philip Joannou, for the purpose of “property investments”. Ms Page incorporated Harmat in around 2010 and arranged for Harmat to hold units in the Parkway One Trust and the Ohmut Trust. Ms Page describes Harmat as “my entity”. When asked whether Harmat was a trustee or acted in its own right, she said “Harmat Nominees is my entity. … It – it holds units in Parkway. It holds units for me in Ohmut”. She said that “Harmat Nominees is me”. Ms Page’s evidence demonstrated that she understood the corporate structures through which she operated and held her property development and investment interests. Ms Page acknowledged she was involved in the purchase of 60 Harriet Street using a company that she then operated with two other people, One Hundred Mile Property Pty Ltd. She says that in around 2014, she bought out her two business partners because she “wanted a long-term vision for that property” and arranged for Ohmut to replace One Hundred Mile Property Pty Ltd as trustee of the Ohmut Trust, which was the owner of 60 Harriet Street. This was another indication that Ms Page was familiar with and understood the way in which her business interests were structured, including through the use of corporate trustees and unit trusts.

266    For these reasons, I do not accept that Ms Page’s evidence should be assessed on the basis that she was unsophisticated in the sense of lacking commercial acumen. I do not accept that she did not grasp the essential commercial and corporate concepts which informed the way in which her related entities and business affairs were structured.

267    The plaintiffs also submit that the cross-examiner used language that was bound to confuse “a witness like [Ms Page]”. Accordingly, that though her answers may appear to be unresponsive, I should not conclude that she was deliberately refusing to answer what she was being asked. The plaintiffs contend that I should infer that Ms Page simply did not understand the questions being put to her.

268    I accept the plaintiffs’ submission but only to a very limited extent. There were instances in which Ms Page may have been confused by the language used by the cross-examiner but these were few and far between. Attending carefully to her answers on particular topics, I was repeatedly struck by how evasive her answers were. She regularly sought to deflect certain lines of inquiry that were being put to her by giving a non-responsive statement which accorded with her stance on the topic of the question but not answering the question asked of her.

269    The high point of Ms Page’s cross-examination on which the plaintiffs rely to contend that she simply did not understand the questions being put to her concerned questions around the “consideration” paid for various motor vehicle trading transactions. The evidence on this topic is addressed in detail in the discussion of Issue 5 at part 10.14 below. For present purposes, I am addressing the plaintiffs’ submission in relation to Ms Page’s credit based on this evidence.

270    When Ms Page was asked about the quantification of the “consideration” or “full consideration” payable for various vehicles, Ms Page was repeatedly able to confidently answer the question by reference to the “agreed price” which she said was set by herself and Mr Baker for each vehicle. She identified the “contribution” that she said that Shyzi and Mr Baker had each made to the purchase of vehicles by Shyzi. Ms Page was able to distinguish between the original purchase price of the vehicles and the price for which the vehicles were on-sold or transferred. Ms Page’s responses were consistent regardless of whether the cross-examiner used the word “consideration” or “entitlement” to describe the amount payable to Shyzi pursuant to the invoice. Further, the cross-examiner’s use of the word “consideration” was almost always illustrated by reference to an invoice for a motor vehicle identifying the relevant stock number and the specific dollar amounts referable to the acquisition or transfer of that vehicle. In respect of at least five different stock numbers, Ms Page recalled the vehicle in question and responded to the questions by asserting the agreed amount payable to Shyzi for the sale of the vehicle.

271    In her re-examination, Ms Page was asked if she knew what the word “consideration” or the phrase “full consideration” meant. Ms Page claimed that she did not know what the word meant in the way she was asked during cross-examination and “struggled with that yesterday to completely understand it”. I do not accept Ms Page’s evidence given in re-examination that she did not understand the questions she was asked in cross-examination concerning the purchase and sale prices recorded in the relevant motor vehicle trading invoices. She clearly did understand what she was being asked. Her evidence in re-examination was self-serving and reflected a belated appreciation that the relevant invoices were not consistent with the alleged oral Shyzi Offset Agreement, which I consider in the context of Issue 5 at part 10.14.4 below.

272    On the whole, Ms Page’s evidence was often non-responsive and evasive. Ms Page’s refusal to answer questions she perceived as hostile to the plaintiffs’ case was not borne of an inability to comprehend that which she was being asked. This significantly undermined her credit as a witness.

273    On several occasions, the same question had to be put to Ms Page repeatedly to elicit a responsive answer from her. Even so, she did not always give answers that were in fact responsive even though the question was asked repeatedly. She repeatedly avoided giving responsive answers when she perceived that to do so would be adverse to the plaintiffs’ position in the litigation. Instead, she responded with answers that deflected the question by making an assertion that she perceived to be to the plaintiffs’ advantage, instead of answering the question. She used repeated formulaic non-responsive answers to avoid answering questions she did not wish to answer.

274    A stark example of this feature of Ms Page’s evidence is provided by the way in which she responded to questions about whether she provided the bank account details for Shyzi, Parkway One and Ohmut to Mr Page so that he could transact on behalf of these companies with CLAH. The questions she was asked on this topic were clearly framed and directly put. The questions were capable of a clear and concise response. It was apparent that Ms Page appreciated that the questions she was being asked went directly to one of the critical issues in the proceeding, namely, whether Mr Page was her and relevantly her companies’ agent, or otherwise able to bind them, in his dealings with CLAH.

275    In reaching this conclusion, I have not overlooked Ms Page’s evidence given in re-examination on this topic, which was as follows:

Ms Page, yesterday my learned friend Mr Jackman asked you some questions about agency. Do you remember that?---Agency?

Yes. Agency. Do you recall questions about agency?---Could you refresh - - -

No. Just do you recall questions about agency or not?---Agency. No, I don’t.

All right. Do you know what the [word] agency means?---No.

276    Ms Page was correct in not recollecting being asked questions about “agency”. She was not asked about “agency”. She was however repeatedly asked about whether Mr Page was her “agent”. She had no difficulty in following the question and giving a strident though tortuous answer on the topic:

And so it made sense for you to have appointed Lemuel Page as your agent to deal with the sale of these properties; correct?---He’s not an agent. He’s a friend. He’s someone I’ve known for 30 years. As I said, Andrew Walker, myself and Lemuel all know each other. I’ve known Andrew for over 10 years. He has handled just about every single property I’ve ever developed.

And Lemuel Page was acting on your behalf, was he not, in relation to sales of these properties; correct?---If I’ve asked him to do something in relation to it, I’ve asked him to do something. Yes.

You never disagreed, did you, with Mr Andrew Walker’s description of Lemuel Page as being your representative in Newcastle, did you?---He was handling matters for me if I needed something handled, and he knows Andrew Walker. I know Andrew Walker. We all know each other, so if I needed something done, I could ask Lemuel to do it for me. Yes.

277    Ms Page’s responses to questions she was asked in relation to whether Mr Page was her agent demonstrated that she was not prepared to respond directly to questions where she understood, or perceived, that a direct response would be detrimental to the plaintiffs’ case.

278    Returning to the topic of her companies’ bank account details and whether Ms Page relevantly gave Mr Page authority to transact on behalf of her companies with CLAH, the essential proposition on this topic was put to Ms Page repeatedly before she gave an answer of sorts in which she agreed that she had done so, but qualified her answer by asserting “[i]f I’ve needed to, yes” and by adding that Mr Baker also had the relevant account information “if he required it”.

279    As to the proposition that her purpose in providing the account information to Mr Page was to enable him to transact on behalf of the relevant companies with CLAH, Ms Page deflected by saying “Theo, Lemuel and myself were business partners and friends”. She then responded to further questions directed to extracting a definitive answer by limiting her answers so that she referred only to Mr Baker, and not to Mr Page. She did not address squarely, or at all, what was being put to her, namely that she authorised Mr Page to transact on behalf of her companies with CLAH:

And, now, you gave Lemuel Page the bank account details for Shyzi, Parkway and Ohmut; correct?---If I’ve needed to, yes.

Thank you. And you did that so that Lemuel Page could conduct transactions on behalf of those companies; correct?---I’ve given the details to both Theo and Lemuel if required, yes.

And, in particular, you wanted to enable Lemuel Page to be able to transact with CLAH on behalf of those three companies; correct?---Theo, Lemuel and myself were business partners and friends.

Yes, yes?---We had funds transfers going backwards and forwards. Lemuel had bank accounts information if he required it and Theo had the bank account information if he required it.

And Lemuel Page had your authority to deal with that bank account information on behalf of Shyzi, Ohmut and Parkway in transactions with CLAH; correct?---I dealt with Theo with CLAH, funds coming in and out, so I’ve given details to Theo. Theo knows of the Shyzi bank account. Theo knows of the Ohmut bank account, the Parkway bank account. These were things that we spoke daily of, weekly of. We spoke a lot, either by email or by phone.

And you wanted Lemuel Page to be able to conduct transactions with CLAH on behalf of those three companies: Shyzi, Ohmut and Parkway, using their bank accounts; correct?---I dealt with Theo in reference to CLAH with funds transfers to Shyzi, to Parkway, to Ohmut, to Carrabolla, to wherever if it was requested, if it was needed. We had a lot of business going on. It was property, there was moto trading; there was all sorts of things.

280    If it was the true position that she did not authorise Mr Page to transact with CLAH on behalf of Shyzi, Ohmut and Parkway One, she was given ample opportunity to deny that proposition directly. She did not do so. Notwithstanding that Ms Page did not directly and squarely respond, I am satisfied that Ms Page did authorise Mr Page to transact with CLAH on behalf of Shyzi, Ohmut and Parkway One. In refusing to answer the questions on this topic directly, I find that Ms Page appreciated that to concede that she had so authorised Mr Page may be against the plaintiffs’ interest in relation to the determination of the agency issue. I will return to Ms Page’s evidence on this topic in my consideration of the agency issue (Issue 1) at part 9.3 below.

281    Other examples of Ms Page’s prevarication and evasiveness occurred when she was cross-examined on the topic of the alleged offset arrangement in respect of Shyzi’s motor trading (Issue 5). It was put to Ms Page four times that Shyzi was deliberately operating at a loss in respect of its alleged Shyzi Offset Agreement, without Ms Page ever providing a responsive answer. Similarly, it was put to Ms Page at least seven times that she did not claim Shyzi was entitled to an additional $3,000 in respect of a particular vehicle. It was a question that was readily capable of a “yes” or “no” response. Ms Page doggedly refused to give a responsive answer even when the cross-examiner chided her that she knew she was not answering the question. It was made plain that the question was capable of being answered “yes” or “no” and that Ms Page was equipped to give such an answer when I intervened repeating the question and directly asked for a “yes or no” answer, Ms Page immediately answered the question in the negative.

282    Another feature of Ms Page’s evidence to which I have already alluded was her recourse to defensive stock phrases when she did not wish to answer a question. Her evidence, given in this way, was manifestly shaped by self-interest and was not informed by telling the truth. On at least 12 occasions, Ms Page described Mr Baker as her “friend and business partner” (or variations of that phrase) when she was asked about her understanding of certain matters relating to loans from CLAH. Ms Page repeatedly used versions of this talismanic phrase to avoid directly answering questions when she perceived a responsive answer would not assist her case. I have already addressed the way in which Ms Page deployed this phrase to avoid directly answering questions going to whether she authorised Mr Page to transact on her companies’ bank accounts with CLAH. The following extract is another illustration of Ms Page’s repeatedly deflecting the question by asserting that she and Mr Baker were “business partners and friends” instead of answering what she was asked:

You’re not suggesting that you understood this to be a gift by CLAH to Carrabolla, are you?---We were business partners and friends. It was not that I said to Theo, “Could I please have a loan with you today for $10,000 and put a Carrabolla facility loan in place.” It was not like that at all.

You’re not suggesting this was a gift by CLAH to Carrabolla of $10,000, are you?---It was Theo helping me pay the ATO Carrabolla’s payment, the goodwill payment, so I could put a payment arrangement into place. It was not a loan. It was not requested as a loan by me to Theo.

At the moment, Ms Page, I am asking you whether you agree that you did not understand this $10,000 payment to be a gift by CLAH to Carrabolla. What’s the answer to that?---I didn’t request a loan for - - -

No, no. What’s the answer to my question, Ms Page?---What is the question?

You did not understand the payment of $10,000 by CLAH to the ATO as a gift to Carrabolla, did you?---I didn’t request a loan for $10,000 - - -

No, no. Answer my question, Ms Page?--- - - - from CLAH - - -

No, no?--- - - - to pay the ATO.

Answer my question. You didn’t regard it as a gift by CLAH, did you?---It was my business partner and my friend helping me out with the ATO for Carrabolla. It was not that I asked for a loan from CLAH for $10,000. Not at all.

I’m going to be – Ms Page, I’m going to be putting a submission to her Honour that your evidence is unreliable because you evade questions instead of dealing with questions directly. Now, in fairness to you, that’s the submission I’m going to put. I will give you one more opportunity. You did not understand the $10,000 paid by CLAH to the tax office to be a gift by CLAH to Carrabolla, did you?---It’s my business partner and my friend helping me with the goodwill payment to the ATO for Carrabolla so I can install a payment arrangement.

283    A further example is provided by the following exchange:

And can you explain to her Honour why a vehicle purchase by Dr D Munro Proprietary Limited for $57,000 was onsold to Moto Prestige for only $40,000?---It was discussed between Theo and myself. That was the agreed purchase price for Moto Prestige.

And did you regard yourself as obliged to sell that to Moto Prestige for $40,000 and incur a loss of 17,000?---We were friends and business partners.

And does that explain to your mind why you incurred a loss of $17,000 on that vehicle?---Again, we were business partners and friends.

That’s the best you can do to explain the loss of 17,000?---That’s the reality. That’s the truth.

284    Ms Page’s answers in this extract typify her refusal to answer that which she was asked. When asked to explain, she makes a generalised assertion as to the fact of an outcome between her and Mr Baker but does not attempt to explain. She does not say that she does not remember. When asked if she regarded herself as obliged to sell at a loss to Moto Prestige, she does not respond but takes refuge in the assertion that she and Mr Baker were “business partners and friends”. She does not attempt to give a meaningful answer or an explanation.

285    I accept the defendants’ submissions that Ms Page’s evidence was not reliable in many respects. That is not to say that there are not parts of Ms Page’s evidence that I accept on the basis that her evidence on a given topic is to be preferred to say, Mr Baker’s, when viewed in context. I address findings of this nature in my substantive considerations of the issues identified for determination.

286    Another feature of Ms Page’s evidence which was both unsatisfactory and in my view significant was her evidence in relation to her understanding of important documents, which she acknowledged that she had read and signed at the relevant time. Her evidence as to her purported understanding was often inconsistent with a plain reading of the documents. She maintained that she read the documents, that she confirmed that they conformed to her understanding at the relevant time and then she signed the documents. However, in her evidence, she asserted that some documents which she had read, understood and signed, did not accord with what she maintained was the true position in relation to the relevant transactions at the relevant time. Ms Page gave evidence along these lines in relation to the circumstances surrounding the entry into the facility agreements at issue in these proceedings. This aspect of Ms Page’s evidence is illustrated by the answers she gave in cross-examination on documents that she had signed. The cross-examiner followed a familiar line of attack to great effect.

287    Relevant to Issue 2, Ms Page was asked whether she remembered signing the Carrabolla Facility. Her first response was to ask to be shown the page on which her signature appeared. Ms Page then agreed that she remembered signing it. She said that prior to signing the Carrabolla Facility, she had read and made sure that she agreed with its terms. She was then taken to specific parts of the agreement and asked about specific terms of the agreement. Her answers given to questions targeting the specific parts of the agreement were redolent with hindsight reconstruction coloured by the plaintiffs’ position in these proceedings. As the following extract illustrates, many of Ms Page’s responses were given not in terms of what she remembered but rather in terms of what she thought she would have done based on her review of documents in the witness box and her speculation in real time as to whether she would at the time of giving evidence accept what she had signed was true and correct.

You see there the cover page for a facility agreement by Carrabolla as borrower - - -?---Yes.

- - - you and Shyzi, and then CLAH as financier?---Yes.

And you recall signing this document on about 30 June 2016, don’t you?---Is – which page shows my signature?

Well, are you able to answer that question without going to the signature page? Do you recall it?---Can I go to the page number to see my signature, please?

I’m just testing your memory, Ms Page. Do you remember signing this document?

HER HONOUR: Ms Page - - -?---Yes.

- - - you’re being asked a question. Leave the document alone while you’re being - - -?---Yes.

- - - asked the question?---Yes.

You do remember signing this document, do you?---Yes.

Thank you. And before signing it, may we take it, as an experienced businesswoman, that you read it and made sure that you agreed with its terms?---Yes.

And can I ask you, please, to turn to page 376?---Yes.

When you read this before signing it, may we take it you checked the facility details in schedule 1, which you see on pages 376 and 377?---377. Yes.

And item 1 referred to the advance facility limit of 860,000, and you agree that that - - -?---Yes.

- - - was correct. Yes?---Yes.

And item 8 set out the purpose?---Yes.

And you agree, don’t you, that the statement of the purpose of the loan facility in item 8 corresponded to your understanding at the time?---No, actually. I’ve just read it. “Applying funds to invest in a development opportunity with Aranik Investments” is not true. To pay out the Family Joliffe Settlement is true.

Thank you. And the third bullet point of payment of fees and legal expenses: was that true or false?---I’m sorry.

Was that true or false, the third bullet point?---

Payment of fees, legal expenses, stamp duty and disbursements in connection with the facility agreement with any surplus funds as directed by the borrower

Was that part of the purpose?---Well, I – I – I’m – from memory, there was legal fees, Diamond Conway fees for the Joliffe Family Settlement, so I – I – I would presume that relates to that, so I agree.

Now, you read item 8 before you signed this document, didn’t you?---I would say yes.

And you agreed at the time you signed the document that it was a correct statement of the purpose of the loan facility as you understood it, correct?---No, the “applying funds to investment in a development opportunity with Aranik Investments” is not true.

And can you explain to her Honour why you signed this document if you regarded the first bullet point in item 8 as not true?---The day before I signed the Carrabolla loan, I signed a document from CLAH – sorry, a CLAH document from Theo for $200,000 payable to Aranik Investments Proprietary Limited, and I was – Theo asked me, “Could I pay the 200 – are you okay if I pay the $200,000 direct to Aranik.” I said yes.

Is that the best you can do to explain why you signed a document where you regarded – you claim to have regarded the first bullet point of the purpose in item 8 as false?---I didn’t invest in a development opportunity with Aranik Investments at all.

Have you now given all the evidence you wish to give in answer to my question, which was to explain to her Honour why you signed this agreement when, according to your evidence today, the purpose stated in the first bullet point was false?---The $200,000 Amy – to Jamie Arratoon of Aranik Investments was added onto the Joliffe Family Settlement Carrabolla loan, not for a development opportunity. But it was funds to Jamie to pay to the Newcastle City Council for land subdivision fees so he could sell the lots off. It had nothing to do with me investing with Jamie or Theo investing with Jamie or any development opportunity at all.

Thank you. And that’s the evidence you wish to give in answer to my question, is it?---Yes.

Thank you?---I did not invest in that development with Jamie Arratoon. It was me saying to Theo that I agree to add the $200,000 onto the Joliffe Family Settlement for Jamie so Jamie could complete a subdivision at Warners Bay. He required the fees for council. It wasn’t my development. I wasn’t developing that particular development with Jamie. I had nothing to do with the development. It was just funds that I approved for Theo to give Jamie Arratoon that he had put onto the Joliffe Family Settlement Carrabolla loan.

288    Relevant to Issue 8, Ms Page was similarly challenged about her execution of the Ohmut/Parkway Facility agreement. Ms Page was shown her signature on the document. Ms Page agreed that prior to signing the Ohmut/Parkway Facility agreement, she read the document carefully and she ensured that it corresponded to her understanding of the transaction that she intended Parkway One to enter into with CLAH. She agreed that she read Schedule 1 of the Ohmut/Parkway Facility which set out the facility details and that she satisfied herself that it corresponded to her intention in entering into the agreement. She was then taken to Item 8 in the Ohmut/Parkway Facility which provides that the purpose of the agreement was to fund refurbishments of the Cooks Hill Property and 60 Harriet Street. It was then put to her that the purpose as stated corresponded to her intention in entering the contract. Ms Page responded that the “$500,000 was for Elefteria to settle a legal dispute with Andrew Pitsis”.

289    Ms Page asserted that:

Theo said to me that CLAH wasn’t able to lend $500,000 to a company to settle a legal dispute. And, to get it past the board in time to make the deadline, he needed to put something together, like, let’s put Ohmut and Parkway up, two well income generating properties. That will get past the board with no questions asked, and we will be able to make the deadline. I will have to put it down as refurb works so it can get past. I agreed to do this so I could settle the matter for Elefteria.

290    Ms Page could not point to any document that recorded the conversion she contends took place between her and Mr Baker before she executed the Ohmut/Parkway Facility. She did not suggest any note of the conversation existed. She adhered to her evidence as to her conversation with Mr Baker. A troubling feature of the evidence in this case to which I have already alluded is that the central witnesses displayed a willingness to execute agreements which operated as a veneer to disguise their private understanding of the true agreements. If Ms Page’s evidence about the Ohmut/Parkway Facility is to be believed, then it follows that Ms Page and Mr Baker agreed between themselves that the Ohmut/Parkway Facility would deliberately include false information as to the purpose of the loan in order to ensure that the CLAH board would approve of funds which would not otherwise have been approved. Ms Page explained the situation as follows:

Can you explain to her Honour why it is that you signed this facility agreement, including item 8 dealing with purpose, if you thought that that description on the purpose was wrong?---I agreed with Theo for the funds – of the $500,000 that I was getting to pay the legal dispute – have it – the loan to CLAH as Parkway and Ohmut, and the purpose of the loan was to be for refurbishment works, because he wasn’t able to put the real loan in as funds to an entity to settle a legal dispute. The only way he could put it through was this way. I agreed to it between Theo and myself. I don’t think there’s anything written. It’s verbal. I did agree to it. I did sign it. Yes.

And do you adhere to your evidence a few minutes ago that, before signing this agreement, you satisfied yourself that it corresponded to your intention in entering into the contract?---I signed it that way because I needed the $500,000, and it was the only way that Theo could put it through CLAH through the board and to get it signed and approved in time.

…

You never said that the loan of $500,000 was to enable your companies to buy properties from Elefteria, have you?---Lemuel went to Theo when the Elefteria matter was happening. I had a time crunch. I think it was 15 August. And he mentioned to Theo that there was a few properties under the Elefteria portfolio that would be good for [Yipeeo]. Theo rang me, and he said, “I understand that the Elefteria situation. I’m very interested in buying Spruce Street and Robertson Street,” which he did. And he said, “I understand that there’s a charge on them.” And he said, “Do you mind if my lawyers talk to your lawyers to see what we can do?” And I said yes, because I either need to sell the properties or borrow against them. I was grateful. And he came back to me in a few days, and he said, “Look, I’ve talked to my lawyers. I can’t be lending money to an entity to settle a legal dispute, and it’s too hard to lift the charges,” which is when he said to me the only way we can do it is if I – if I put up Ohmut and Parkway as security, which I was surprised at because I said, “Wouldn’t Ohmut just be enough?” And he said, “Look, if you want to get this done quick, past the board, no questions asked, just put both up. And I said, “Okay. Well, if that’s what you need to do, go ahead and do it.”

291    There is no contemporaneous document recording or referencing this conversation between Mr Baker and Ms Page. Mr Baker denies the account given by Ms Page. He maintains that he never had a conversation with Ms Page in relation to the loan or the properties and that Mr Page was “the driving force” behind promoting the two properties owned by Elefteria as potential acquisitions for Yipeeo. Mr Baker maintains that he understood the purpose of the loan to be funding refurbishment costs of 60 Harriet Street and the Cooks Hill Property, as set out in Schedule 1 of the Ohmut/Parkway Facility. It will be necessary to return to the purpose of the Ohmut/Parkway Facility in considering Issues 9, 14 and 15 below. For present purposes, in assessing whether Ms Page’s evidence can be accepted, it is significant that she has demonstrated that she is a person ready to either make, or join in, false representations to obtain a benefit for herself and her companies.

292    Another instance of Ms Page engaging in such conduct was revealed when she was cross-examined on the issue of the alleged oral Trust Investment Agreement which she alleges existed between her and Mr Baker (Issue 10). Ms Page signed an application for units in the Parkway One Trust made by Mr Baker’s related company, CBD Sydney Investments, which recorded that the consideration for the subscription of those units was $1.00. This was inconsistent with the alleged Trust Investment Agreement on which the plaintiffs rely in these proceedings and which Ms Page contends she agreed with Mr Baker.

293    Ms Page instructed her solicitor, Mr Foate, to prepare the relevant application:

And you instructed him that the consideration for the subscription moneys for those units was $1, correct?---I’m not sure how it’s all written and the correct, you know, “We enclose cheque for $1.” I don’t understand all that terminology. I just know that I gave permission for Anthony Foate to deal with Theo Baker to organise our agreement paperwork.

Right. And that paperwork didn’t require the payment of any more than $1 for the units in Parkway One Unit Trust, correct?---No, that’s not correct.

But there’s no document that you know of that refers to any consideration in an amount other than $1 for the issue of those units, is there?---I just know I’ve signed documents. The documents were there. I’ve signed them. They were co-signed by Mary. And Theo has taken the documents.

294    This is another example where if Ms Page’s evidence is to be believed, the necessary consequence is that the Court is faced with a witness who admits to knowingly signing documents that she understood to be false at the time she signed them and claims she signed other documents but did not keep copies and did not seek to adduce in evidence by issuing a subpoena to her solicitor or to Mr Page and/or CLAH .

295    In addition to signing legal documents which she maintains she knew were false at the time, Ms Page also created false documents. In the witness box, she refused to acknowledge, despite numerous opportunities to do so, that documents she had created were not accurate and falsely recorded the relevant details of the underlying transactions. This was illustrated by her cross-examination on invoices issued in the course of motor vehicle trading between Shyzi and Moto Prestige. This evidence is addressed in detail in connection with Issue 5. For present purposes, I note that Ms Page acknowledged that she created the tax invoices for the motor trading business conducted by Shyzi which were sent to Moto Prestige.

296    Her answers to questions on this seam of documents were, in the main, not responsive. She resolutely stuck to her repeated assertion that the purchase prices were agreed between her and Mr Baker, but she could not provide any cogent reasons to explain why Shyzi repeatedly on-sold to Moto Prestige at a substantial loss. As she was cross-examined on these documents, it was clear that Ms Page did not actually have a recollection of the motor vehicle transactions or how the Shyzi Offset Agreement, which she contended had been agreed and was being implemented, in fact operated.

297    Ms Page’s preparedness to put forward documents which are false in material respects extends to documents she was aware were prepared for the purpose of providing to a court. I address the evidence that supports that conclusion in the context of considering the events relating the applications to terminate the winding up of Parkway One in which Ms Page was involved.

298    In her affidavit made on 4 September 2019 in support of the application to terminate Parkway One’s winding up, Ms Page deposes that Parkway One was renovating the Cooks Hill Property “using funds which I’ve advanced to the company”. That is contrary to her evidence in these proceedings, although her evidence under cross-examination about who was funding the Cooks Hill Property renovations was somewhat difficult to follow. She first said that CLAH was not providing funds to Parkway One for the work. She then said that she “was requesting the funds from Theo, and Theo was covering the expenses for the refurb works at Parkway, at Harriet Street, as per our agreement”, by which I understand she meant the Trust Investment Agreement. When it was put to her that she did not want to disclose to the Supreme Court that CLAH was a creditor of Parkway One because that may have been adverse to her application to bring it out of liquidation, she said: “CLAH is not a creditor of Parkway One. Theo was my business partner”. She was asked whether she regarded those two things as being mutually exclusive. She did not answer. She asserted that Mr Baker, not CLAH, was her “business partner” and Mr Baker was providing funds “as per [their] agreement”. There is a general but not complete correlation in the documentary evidence between requests from Ms Page for funds to meet expenses associated with work on the properties and fund transfers from CLAH in corresponding amounts, Ms Page’s cross-examination revealed that her affidavit in the Supreme Court proceeding was misleading — even on her own evidence, Parkway One was a creditor of either Mr Baker or of CLAH. In her affidavit made on 8 February 2021 in the Supreme Court proceeding, Ms Page deposes that it was Mr Baker’s idea to “dress up” the loan documents to record the payment as an advance to Parkway One from CLAH, that he had told her “just leave it up to me” and that Mr Baker had drafted a letter to the Liquidator of Parkway One on Ms Page’s behalf in September 2019 asserting that Parkway One had “repaid all moneys due to [CLAH], however security remains over the company in favour of [CLAH] should [Ms Page] need to borrow funds sometime in the future”.

299    Ms Page’s evidence in the Supreme Court proceeding was that there were “minimal records” in respect of the relevant renovation expenses. She was then taken to a considerable number of emails in the court book which did in fact record those expenses and which Ms Page did not disclose to the Supreme Court. These included weekly emails sent from Ms Page to Mr Baker between March 2017 and May 2017 which list payments attributed to invoices from various tradespeople to be made to Parkway One’s bank account with the NAB. There are also Parkway One bank accounts in evidence which show payments made by CLAH to Parkway One at relevant times throughout 2017, 2018 and 2019. The thrust of the cross-examination was that Ms Page well knew that to disclose these emails would have revealed that CLAH was a significant creditor of Parkway One, notwithstanding the position that CLAH and Mr Baker adopted in the Supreme Court proceeding. Ms Page’s response was repeatedly to retreat to an assertion that Mr Baker was her business partner.

300    Ms Page denied that her affidavit evidence in the Supreme Court proceedings was untrue. When it became clear that she could no longer deny that the content of her affidavit was not true, she sought to shift the blame to others, namely her then barrister Geoffrey McDonald, her then solicitors Gavin Parsons & Associates, Mr Page and Mr Baker:

Let me put this squarely to you, Ms Page: you didn’t disclose those emails between yourself and Mr Baker concerning expenses of the Parkway renovations because you thought it would be against your interests in applying to terminate the Parkway One liquidation for the court to be aware of the debts that you owed – that Parkway One owed to CLAH; correct?---I signed the affidavit. I was guided by Geoffrey, by Gavin, by Theo, by Phillip. I signed what I signed. I’m happy I signed what I signed; that’s fine with me.

301    Ms Page’s readiness to sign documents prepared by others where she perceives the representations made therein to be in her interest regardless of whether they are true is further demonstrated by the way in which she put her name to letters that were prepared in connection with the attempts to remove the Liquidator from Parkway One. When confronted with inconsistencies between what she represented to be the true position at that time and what she now contends is the true position, Ms Page attempted to shift responsibility for draft letters prepared on 11 September 2019 and 24 September 2019, which were prepared in her name, onto her then barrister, Mr McDonald, as well as to Mr Page and Mr Baker. The contents of these draft letters, including to the extent that they contain information that is inaccurate and untrue, is relevant to Issue 10 and addressed in detail in part 11.9.1 below.

302    When asked why she had not annexed or exhibited the loan facility from CLAH to Parkway One and Ohmut in any of her affidavits in the Supreme Court proceeding, she said:

I was just guided by Geoffrey, by Gavin, by Theo, by Phillip. I signed what I signed. And whatever got sent by Geoffrey or whatever Geoffrey submitted was what was done.

303    The reference to “Phillip” is to Philip Joannou, her accountant. Whether her legal advisors and accountant “guided” her in this respect as she asserts does not change the fact that she was willing to put forward materially false and misleading material to the Supreme Court in furtherance of her objective of removing Mr Scott.

304    The path that Ms Page navigated in her evidence on this topic was circumlocutory. She would not answer questions directly. She refused to make reasonable concessions. It was obvious that she knew the information she supplied in her affidavit in the Supreme Court proceeding was not true and was not relevantly complete. It was also obvious that the account she put forward to the Supreme Court was directed to misleading the Court in relation to Parkway One’s liabilities in order to secure Ms Page’s then objective, which was to remove Mr Scott as the Liquidator of Parkway One. Ms Page did not act alone. Relevantly for the purpose of this application, both Mr Page and Mr Baker were also involved in the conduct that was directed to ending the winding up of Parkway One by whatever means necessary, including by misleading the Court.

305    Mr Baker’s role in supplying the misleading letter that was exhibited to Ms Page’s affidavit also impacts his credit. Ms Page acknowledged that she knew that the letter prepared on behalf of Mr Baker to Mr Joannou dated 25 September 2019 misrepresented the true position, but nonetheless she exhibited that letter to her affidavit in support of her application to end the liquidation of Parkway One. The letter Mr Baker provided to Ms Page and that Ms Page supplied to the Court represented that the $500,000 which CLAH advanced to Parkway One under the Ohmut/Parkway Facility was a personal loan from CLAH to Ms Page “for her to use on behalf of Elefteria to pay out Mr Pitsis.” In addition, Mr Baker represented in his letter that CLAH had provided funds to Parkway One to purchase properties from Elefteria. Neither of those assertions were in fact true.

306    As I have already said, the purpose that Ms Page now says was one of the true purposes of the loan were not reflected in the loan documentation. It is clear that Ms Page and Mr Baker were prepared to advance whatever account they thought was best suited to getting Mr Scott removed, whether true or not. They were not constrained by having to explain the position by reference to the relevant facility agreement, because they both knew that Ms Page had not placed that document before the Supreme Court.

307    In cross-examination, Ms Page accepted that the CLAH $500,000 advance was to Parkway One, not to her personally. She refused to concede that the purpose of the CLAH advance was misrepresented in the information that she placed before the Court. By placing Mr Baker’s letter before the Court, she represented that the CLAH advance was for the purpose of purchasing real properties. Yet she herself asserted in her evidence that the $500,000 was for the purpose of and was used to settle a legal dispute with Mr Pitsis. When she was challenged on her refusal to concede that it was untrue to represent to the Supreme Court that Parkway One used the $500,000 to acquire real property, Ms Page dug her heels in. She asserted that it was not untrue because the $500,000 was used to settle a legal dispute and it was necessary to settle that dispute in order to have certain charges removed from the title of the relevant real property to enable the properties to be sold and they were later sold, or so she asserted, to Parkway One and Yipeeo. Ms Page knew at the time that the information in Mr Baker’s letter which she put before the Court was misleading and at best incomplete if not absolutely untrue. She expressed no remorse for her conduct in this respect. Ms Page’s evidence on this topic was another example of her refusal to make appropriate concessions. It is yet another reason for why her evidence must be approached with great caution and another demonstration of the lack of solemnity in the way in which she gave her evidence.

308    Ms Page was an assertive witness who introduced qualifications into her answers, as and when she thought it necessary, or from her perspective, desirable, to do so. I am satisfied that apart from on very limited occasions, she understood what was being put to her. When she did not, she said so, and the cross-examiner regrouped to clarify as necessary and then continued the relevant line of questioning. I reject the plaintiffs’ submission that sought to excuse Ms Page on the basis that she was confounded or confused by the way in which the questions were asked and that she simply did not understand what she was being asked. Her evidence displayed many of the classic features which often inform an adverse credit finding. The observations made by Heydon JA (as his Honour then was) in Textralian Enterprises Pty Ltd v Perpetual Trustees Victoria Ltd [2000] NSWCA 176 at [85] in relation to the evidence of a Mr Slattery resonate with the way in which Ms Page gave evidence:

There were other grounds for the trial judge’s conclusions about Mr Slattery’s credibility. In many places he did appear argumentative, evasive and prone to volunteer material not responsive to the question. Under cross-examination he sometimes gave potentially important evidence which would appropriately have appeared in his affidavits if it proceeded from genuine recollection. Mr Slattery also appeared to lack genuine recollection in other respects and to be defensive about answering without first having access to whatever document might help. …

309    Ms Page did not endeavour to be truthful in the whole of her evidence in these proceedings. I will treat Ms Page’s evidence with caution. I do not accept her evidence unless it is against her interest or otherwise supported by reliable contemporaneous records, the objective factual context or the commercial probabilities.

7.3.2    Mr Page

310    Mr Page was called as a witness by the plaintiffs and was cross-examined.

311    CLAH submits that while on the whole Mr Page’s evidence was not as problematic as Ms Page’s, it must also be regarded as unreliable and treated with caution.

312    Mr Page was less prone than Ms Page to be evasive. He was generally responsive in his answers. However, like Ms Page, his evidence was coloured by his motivation to assist Ms Page with the plaintiffs’ case. Mr Page agreed in cross-examination that he was “heavily involved in assisting Ms Page in preparing her evidence in these proceedings”. Mr Page was also involved in Ms Page’s attempt to terminate the winding up of Parkway One. Mr Page was involved in the preparation of the application and in providing instructions in relation to the application for and on behalf of Ms Page. He was heavily involved in engaging Mr McDonald to act for Ms Page on the application.

313    Mr McDonald, as I have mentioned, was practising as a barrister. He was well known to Mr Page having also acted as Mr Page’s trustee in bankruptcy in the period of Mr Page’s bankruptcy. He later acted for CLAH on Mr Baker’s instructions in advising on means by which CLAH could ensure that it was fully secured and positioned to pursue Overland for debts owing by Tallywalker. This latter topic is addressed in part 12 of these reasons.

314    Mr Page was involved in liaising between Mr McDonald, Ms Page and Mr Baker during the intense preparation that took place over the few days before the application seeking to remove Mr Scott and terminate the winding up of Parkway One. I infer based on his close involvement in both the underlying events and the preparation of the application that he knew that the information which was being prepared for the purpose of being provided to the Court was misleading and was deliberately crafted to omit information that would detract from the objective of removing Mr Scott. As with Ms Page and Mr Baker, Mr Page’s involvement in this episode weighs heavily against his credit.

315    A further deeply troubling feature of Mr Page’s evidence, which was common to the evidence of Ms Page and Mr Baker, was his involvement in creating false invoices in connection with the motor vehicle trading between Shyzi and Moto Prestige. I will address this evidence in considering Issue 5 at part 10.14.4 below. Mr Page acknowledged that the sale price recorded on the motor vehicle tax invoices was deliberately understated, however he refused to make the reasonable concession that the invoices were false in this respect, and thus false invoices. Mr Page maintained that the invoices were not false. He said the invoices were not false because the sale prices were recorded to reflect what he said Mr Baker wanted to be recorded as the sale price. For present purposes, it is significant in terms of Mr Page’s credit that on his own evidence, Mr Page understood that Mr Baker and Moto Prestige would reimburse Shyzi for the whole of the purchase price of each vehicle, but that Shyzi would produce tax invoices which understated the amount which Shyzi received from Moto Prestige for each vehicle. Mr Page did that knowing that the tax invoices were primary tax records, and as such, important documents. He was content to arrange for false invoices to be issued on Mr Baker’s direction. He admitted that it was him, and not Ms Page, that agreed with Mr Baker what purchase price would be nominated on the tax invoice. This directly contradicted Ms Page’s evidence that it was her and not Mr Page that discussed and agreed the price for every vehicle transferred from Shyzi to Moto Prestige.

316    On this issue, I prefer Mr Page’s evidence, which accorded with the limited email correspondence on this topic. I find that Mr Page was the principal person involved in the Shyzi motor vehicle trading business. His evidence was detailed relative to the evidence given by Ms Page, which was by contrast, rote and formulaic. Mr Page sought in his evidence to minimise the extent of his continuing involvement with Ms Page in relation to the commercial activities in which she and her related companies were engaged. However, he was unable to deny the contemporaneous documents which plainly demonstrated his active participation in the commercial and related activities undertaken by her and her related companies. Mr Page was the primary point of liaison between Ms Page and Mr Baker in respect of many of the dealings between them and their associated entities that are in issue in these proceedings. I accept Mr Page’s evidence on this issue of the real nature of his involvement in the business dealings of Ms Page’s companies over Ms Page’s evidence. That is significant in relation to my findings on Issue 1 (Agency) in part 9 of these reasons.

317    Mr Page, although calm and deliberate in his initial responses to lines of questions, was prone to changing his answers and contradicting himself as the lines of enquiry were developed by the cross-examiner. That happened repeatedly when he was confronted in cross-examination with documents that he did not anticipate as he crafted his evidence. There were a number of occasions in his cross-examination when he was pressed on matters which he initially denied and then came up with implausible responses when he was confronted with documents that he did not remember, and which undermined the position he had adopted in the witness box. One example of this was Mr Page’s evidence in relation to the Shyzi invoices issued to Moto Prestige. Other examples were Mr Page’s communications with Mr Baker in relation to CLAH advancing funds for the ostensible purpose of paying moneys into the trust accounts of various real estate agents in connection with the acquisition of real property. I will address this evidence in considering CLAH’s claims against Shyzi in part 10 of these reasons. For present purposes, I note that the evidence in relation to these topics further undermined Mr Page’s general credit and the reliability of his evidence where it was not supported by contemporaneous and reliable documents or by any other disinterested witness.

318    Mr Page initially denied being involved in negotiating the loan between CLAH and Parkway One in August 2016 which became the Ohmut/Parkway Facility, however upon further questioning, his evidence revealed that he was in fact closely involved in negotiating the loan and that the real limit to his involvement was that when it came time to document the arrangements that had been agreed, Mr Page was not a named party to the agreements as documented. Mr Page first said:

You were involved in negotiating a loan of $500,000 from CLAH in August 2016, weren’t you?---I told Fiona, and Fiona dealt directly with Theo to put this loan in place. I was not directly involved.

I see. So the discussions relating to this loan occurred directly between Theo Baker and Fiona Page; is that right?---It – part of it was with me, but, once the documents started to have to be signed off and done, they were directly with Fiona and Theo. The loan documents themselves, and all those documents were between those two.

319    Later, Mr Page accepted some involvement in discussions about the loan and the purpose of the loan as described in the facility agreement:

First of all, you were aware that that was one of the purposes of this loan, weren’t you?---100 per cent not.

I see. So if that was a purpose of the loan, then that was a matter not discussed in your presence; is that right?---No. Theo Baker put that on there to get it past his board - - -

But you said - - -?--- - - - and the auditors.

Well, you said that there were many discussions about this but directly between Theo Baker and Fiona Page; correct?---Yes.

And you weren’t present in those discussions; correct?---Not all the discussions, no.

320    Mr Page then volunteered answers which, if accepted, would suggest that, despite his denials, he clearly understood the purpose of the loan, the circumstances in which it was negotiated and the claimed obstacles to board approval if the purpose disclosed in the loan documentation was to settle the Pitsis dispute. Mr Page also acknowledged that the loan was a loan directly to Parkway One and Ohmut for which they gave security. He denied the purpose of the loan was as recorded in the document, which he maintained that he did not see at the relevant time. He said that although the purpose of the loan was documented as for Parkway One and Ohmut to fund refurbishments and that the companies were undertaking property refurbishments at the relevant time for which they required funds, the purpose of the loan was not to fund the refurbishments but was rather to fund the Pitsis settlement.

321    Notwithstanding that Mr Page is not a party to these proceedings, he is one of the central protagonists. He is aligned with the plaintiffs’ camp. He fully appreciated that a central plank of the defendants’ defence was the allegation that he was an agent of Ms Page and Carrabolla, Shyzi, Parkway One, Ohmut and Harmat. He appreciated the apparent importance of the defendants establishing that he was an agent or otherwise able to bind Ms Page and her companies to the defendants securing a favourable outcome in the proceedings. He appreciated that the resolution of the issue concerning agency turned on the role that he played in respect of the relevant facilities. His evidence was crafted with an eye to minimising the true extent of his involvement. He sought to portray the limit of his involvement as being that of a mere conduit between Ms Page and Mr Baker. The contemporaneous evidence painted a different picture. I address the agency issue in my consideration of Issue 1 in part 9 below. For present purposes, it suffices to note that Mr Page’s evidence was coloured by his attempt to hold the line that his role was merely facilitative and always subject to Ms Page exercising authority independently of him, but he was repeatedly confronted with contemporaneous evidence which undermined his primary position, and on occasion he conceded that his role was both more significant and extensive than he first acknowledged.

322    In addition to shaping his evidence to serve the plaintiffs’ case, another reason to approach Mr Page’s evidence with caution is that it was comprehensively demonstrated during his cross-examination that during the relevant period he was involved in creating a range of false documents that did not reflect the commercial reality of the dealings in which he was involved. He did so in order to obtain either an advantage for himself or for those with whom he was then aligned. At times, and on particular issues Mr Page was aligned with Mr Baker and Mr Baker benefitted from Mr Page’s conduct in this regard. At other times, Mr Baker was disadvantaged by Mr Page’s conduct. At other times, and for most of the time, Mr Page’s interests were aligned with those of Ms Page. Their commercial interests were closely intertwined throughout the whole of the relevant period. I have concluded that Mr Page is a witness whose evidence must be approached with caution.

7.3.3    Dr Munro

323    Dr Munro gave evidence for the plaintiffs by affidavit, which was supplemented by oral evidence in chief, and he was cross-examined.

324    Dr Munro’s recollection of significant events and transactions was often vague. He expressed himself in relation to core events at a high-level of generality. CLAH submits that his evidence was “ponderous” and that his evidence in relation to alleged commercial agreements which required him to commit significant sums of money did not descend into the detail that one would expect given the significance of the alleged agreements to Dr Munro’s own affairs. There is considerable force in that submission and the description of Dr Munro’s evidence as “ponderous” is apt.

325    Dr Munro’s evidence had an unreal quality. It was exceedingly curious. It did not readily accord with any notion of commercial commonsense. Even allowing for the overlay of friendship and trust that Dr Munro asserts existed between him and Mr Page, and him and Mr Baker, Dr Munro’s evidence was implausible. If Dr Munro’s evidence is to be accepted, he blindly advanced large sums of money or acquired significant assets for the benefit of others on terms that he did not require to be documented and which were not the subject of any oral agreement that he himself could express with any precision. It appears that Dr Munro, though DMXS, did advance moneys to the three protagonists and to the businesses with which they were involved, but except to the extent that there are documented agreements in evidence, the evidence as to the terms on which he provided the financial assistance that he did is insufficient to be satisfied to the civil standard of what, if any, agreement was in place.

326    In addition, when he signed documents that he appreciated were formal legal documents, he now maintains that he did not read them and that the documents do not represent that to which he understood he had agreed. The unlikelihood of this being the true position is underscored by the fact that even by reference to his vague understanding of the loose arrangements he maintains were in place, he made no complaint or demand and took no action to protect his asserted entitlements when the time came where it must have been plain that his understanding of what had been agreed was not being honoured.

327    Dr Munro’s evidence of conversations he asserts took place with Mr Page, Mr Baker and Mr Brooks was lacking in detail, given years after the event, unaided by any contemporaneous documentary records and uncorroborated by other witnesses. It was exceedingly vague. I accept Dr Munro’s evidence only to the extent it is supported by contemporaneous documents that are independently established to be reliable.

328    Dr Munro, as I have said, is not a party to these proceedings. His evidence is only relevant to the plaintiffs’ contention that the companies to whom receivers were appointed were not indebted to CLAH as at the date the relevant receivers were appointed. I will address his evidence only to the extent necessary to determine the relief sought in these proceedings.

7.3.4    Mr Brooks

329    The plaintiffs submit that Mr Brooks was a co-operative, responsive witness who had a good recollection of all the events about which he gave evidence.

330    CLAH submits that Mr Brooks’ evidence in relation to the Tallywalker Investment Agreement and his purported directorship of Tallywalker is at odds with the contemporaneous documents and should not be accepted.

331    Mr Brooks was not a dispassionate witness. He was clearly angry about the events leading to the demise of Overland and the failure of Tallywalker’s business. He blamed Mr Baker. On the issues in this proceeding, Mr Brooks was broadly aligned with Mr Page and Ms Page.

332    Mr Brooks’ evidence answered the description given by Lord Pearce in Onassis v Vergottis at 431 (extracted above) in that he tended to be emotional and a witness who thought that he was “morally in the right”. That being so, there were instances where Mr Brooks’ evidence tended “very easily and unconsciously to conjure up a legal right that did not exist … that with every day that passes the memory becomes fainter and the imagination becomes more active”. To this extent, I agree with Lord Pearce’s conclusion in Onassis v Vergottis at 431 that:

a witness, however honest, rarely persuades a Judge that his present recollection is preferable to that which was taken down in writing immediately after the accident occurred. Therefore, contemporary documents are always of the utmost importance.

333    Further to Lord Pearce’s conclusion, Mr Brooks was in the fortunate position of being able to produce authentic contemporaneous documents that strongly supported fundamental pillars of his evidence, namely that he was a director of Tallywalker at the relevant times and that the other purported directors of Tallywalker had not been appointed in accordance with the Tallywalker constitution. I address Mr Brooks’ evidence in part 12 of these reasons. In the main, on the issues that it was necessary to decide in relation to Tallywalker, I accept Mr Brooks’ evidence.

7.3.5    Mr Arratoon

334    Mr Arratoon gave evidence for the plaintiffs. He was not cross-examined. The plaintiffs rely on Mr Arratoon’s evidence in chief to corroborate Ms Page’s evidence in relation to the alleged Aranik investment in connection with the Carrabolla Facility. Mr Arratoon’s evidence was not challenged. I accept the evidence that he gave. Mr Arratoon was able to produce authentic contemporaneous records that were consistent with the oral evidence that he gave.

7.4    CLAH’s witnesses

7.4.1    Mr Baker

335    Mr Baker did not give any evidence on affidavit. He was, however, subpoenaed by the defendants and gave oral evidence after receiving the benefit of a certificate pursuant to s 128 of the Evidence Act. The s 128 certificate extended to Mr Baker’s evidence on the following topics:

(1)    correspondence he authored or sent relating to debts or loans owed by Parkway One to CLAH; and

(2)    the giving of false evidence in prior proceedings.

336    CLAH submits that Mr Baker gave truthful evidence and made appropriate admissions or concessions, even where it was against his personal interest to do so.

337    The plaintiffs submit that Mr Baker presented as an unreliable witness who doggedly adopted and adhered to positions that were patently untenable. Further, that he was defensive and evasive when confronted with facts or documents detrimental to CLAH’s position or his own credit. The plaintiffs submit that Mr Baker was on occasions deliberately untruthful and was inclined to shape his evidence according to what he regarded as being most expedient and beneficial to serve his interests at the time he was giving evidence. Mr Baker often avoided giving direct answers when to do so would likely prove to be unfavourable to CLAH. In this regard, the plaintiffs contend that Mr Baker was the person who directed and controlled the affairs of CLAH at all material times, even during his bankruptcy and the periods in which CLAH was a public and a publicly listed company. At times, he delayed giving an answer and explained that he was “trying to answer it in the best possibl[e] way”.

338    The most difficult aspect of assessing the extent to which it is safe to rely on Mr Baker’s evidence is that his evidence is often untethered by the existence of reliable contemporaneous documents by which his evidence could be assessed. I have already illustrated this difficulty by reference to Mr Baker’s evidence as to the involvement of the directors of CLAH during the relevant period and the fact that Mr Baker’s assertions are not supported by contemporaneous documents or by independent credible testimony. Unfortunately, that illustration is not an isolated instance.

339    A number of significant documents which on their face appear to have been executed or created at a particular date were established by the evidence to in fact date from later periods and to have been backdated. The most telling examples are the Tallywalker facility and security agreements, which are addressed in part 12 of these reasons. That Mr Baker conceded that these documents, which he had arranged to be prepared and signed, were not executed on the date shown as the date of the document does little to dispel my concerns about Mr Baker’s credit. It underscores the need to exercise caution not only in relation to Mr Baker’s oral evidence but also the primary documents on which CLAH relies in so far as Mr Baker has had a role in the creation of those documents or in directing the content of those documents.

340    As I have mentioned many of the internal records of CLAH relating to advances purportedly made by CLAH under the relevant facilities were made at Mr Baker’s direction and in the main are not supported by any written record of request being made by or on behalf of a borrower under a particular facility. On occasion, advances that were purportedly made under particular facilities which by their terms had expired at the time the alleged advances were made.

341    The plaintiffs contend that the most unbelievable and unconvincing aspect of Mr Baker’s evidence was his evidence to the effect that Mr Page made specific requests for funds by identifying the relevant facility under which the advance was to be made. The plaintiffs emphasise the following aspects of Mr Baker’s evidence in this regard. First, Mr Baker’s answers in which he purported to quote what he had said to Mr Page on each of the particular occasions where Mr Page is said to have asked for funds was formulaic, not supported by any contemporaneous note and unlikely to be the product of actual recollection. Second, and more tellingly, the plaintiffs emphasise that when it was pointed out to Mr Baker that the Carrabolla Facility had expired before one of the purported conversations in which he said that Mr Page requested an advance specifically under that facility, Mr Baker adjusted his previous evidence by introducing an even more improbable recollection (which he had not mentioned in his evidence in chief) to the effect that Mr Page also asked at that same time to extend the term of the loan by saying “I would like to draw down on the facility and I would like to continue using the facility”. Mr Baker’s evidence to the effect that Mr Page made specific requests for further advances under particular facilities from time to time was especially unconvincing and unlikely. When asked what Mr Page actually said to him on these occasions, he purported to quote Mr Page’s request that a particular sum be drawn down, for example, on the “Carrabolla/Shyzi Facility”. Leaving aside the fact that there never was such a thing as the “Carrabolla/Shyzi” facility (only the Carrabolla Facility, supported by a guarantee from Shyzi), it is improbable that such requests were made in such formulaic terms or that Mr Baker had a reliable recollection of such conversations. Moreover, there is absolutely no reliable independent documentary evidence to support that such requests were made apart from documents such as the internal coding emails that were produced on direction from Mr Baker and which were not copied to or provided to Ms Page or Mr Page.

342    Mr Baker was asked questions in cross-examination concerning a proceeding in the Supreme Court of Victoria to which he and a person named Mr Voukidis were parties. Mr Baker acknowledged that he had given evidence in the proceeding. The proceeding gave rise to a judgment in which adverse findings were made concerning Mr Baker’s and Mr Voukidis’ credit: Ambridge Investments Pty Ltd v Baker & Ors [2010] VSC 59 at [328], [329] and [462] (Vickery J). For present purposes, the relevant documents in issue in the Ambridge Investments proceeding were deployed in aid of Mr Baker’s attempt to establish the ownership structure of a company in which he claimed to have a beneficial interest at an earlier point in time. Mr Baker was cross-examined in the present proceedings and gave the following evidence under the cover of a s 128 certificate:

Now, Mr Baker, there was a proceeding involving Ambridge. Do you remember Ambridge?---I do. Yes.

And you and Mr Voukidis were parties to that proceeding; is that right?---That’s correct.

And you gave evidence in the proceeding?---I did.

There were certain emails that were tendered in the proceeding which purported to be emails sent between you and another person. Do you recall that?---Yes.

And those were not authentic, were they?---Well, there was a falsified email created and submitted by Mr Voukidis, and I, regretfully, suggested that it was a true email.

And in that proceeding, you adhered to a position that the emails were, in fact, authentic; is that right?---Well, it was one email. Yes.

343    Mr Baker admitted in his cross-examination in the present proceedings that in giving evidence in the Supreme Court in Victoria, he had suggested that a falsified email was a true email and that he adhered to his evidence that the document was authentic in his evidence in that Court. Mr Baker’s admission was cloaked in an expression of regret. While I accept that Mr Baker expressed regret and made an appropriate admission when confronted with this topic in cross-examination, his admitted willingness to lie and rely on false documents to bolster his claim to have a beneficial interest in the company the subject to the Ambridge Investments decision is nevertheless alarming. The evidence in these proceedings leaves me in no doubt that Mr Baker’s acknowledged dishonesty in his evidence before the Supreme Court of Victoria was not an isolated episode. As I address in the consideration which follows, Mr Baker’s conduct which has been exposed by the evidence in these proceedings demonstrates that he was not an honest witness and was not honest in his commercial dealings with others.

344    The nature of the attack on Mr Baker’s credit requires that it be addressed when considering the detail of the evidence in relation to a number of the issues in dispute between the parties. It is only when Mr Baker’s evidence is viewed in context and in detail, that it is possible to assess whether it should be rejected in its totality or in part only. For the reasons I have outlined (which I will develop in addressing the substantive determination of the issues between the parties), I have concluded that Mr Baker’s evidence cannot be accepted unless it is corroborated by independent and reliable contemporaneous documentation or is against his own interests (which are aligned with CLAH’s interests in these proceedings).

7.4.2    Ms Comino

345    The defendants rely on two affidavits of Ms Comino sworn 18 December 2020 and 16 March 2021. Ms Comino gave oral evidence and was cross-examined.

346    CLAH submits that Ms Comino’s evidence in chief was not the subject of any objections and was largely unchallenged. I do not accept that Ms Comino’s evidence should be accepted for that reason. Whatever the deficiencies in the cross-examination of Ms Comino, what was manifest in her evidence was that she acted on Mr Baker’s direction throughout the relevant period including in relation to compiling the various iterations of the formulation of the debts claimed by CLAH in these proceedings against the various Page related companies. Her evidence was largely a reconstruction based on documents that reflected instructions given by Mr Baker to CLAH staff in the relevant period. Ms Comino’s evidence was not supported by reliable contemporaneous records passing between CLAH as lender and the relevant Page related companies as borrowers, such as drawdown requests or loan statements. The absence of direct challenge in her cross-examination did not give rise to any procedural unfairness. The defendants were well on notice of the plaintiffs’ position and were not taken by surprise. In any event, query the necessity to cross-examine when large parts of the evidence given by Ms Comino was limited to reciting her understanding of the effect of piecemeal documents from CLAH’s records and saying what would have happened based on those documents.

347    The plaintiffs submit that Ms Comino’s answers in cross-examination were “contrived and formulaic”. Ms Comino described payments as having been made “on account of” the Carrabolla Facility. In her affidavit under the subheading “Carrabolla Facility”, she describes several transfers of funds of various amounts by CLAH in anticipation of the settlement of the loan to Carrabolla. Some of these payments did not appear in Schedule 2 of the Debt Particulars. If the advances were in fact made on account of the Carrabolla Facility, they would have been secured by the Shyzi Securities. Similar discrepancies arose in respect of transactions described by Ms Comino as “on account” of the Ohmut/Parkway Facility, without any explanation as to why such amounts should have been debited to the relevant loan account. The plaintiffs submit that no weight should be given to Ms Comino’s evidence insofar as she purports to attribute payments to particular facilities.

348    In contrast, CLAH suggests that when Ms Comino was challenged as to the systems and records maintained by CLAH in respect of the various loan accounts the subject of these proceedings, her answers were measured and reasonable and entirely consistent with the evidence she had set out in her affidavits.

349    Having regard to the whole of the evidence, I have concluded that Ms Comino did not act independently of her brother in her conduct on behalf of CLAH. Instead, Ms Comino acted according to the wishes and instructions of Mr Baker in all relevant respects. Her dealings with Mr Page and Ms Page were limited and administerial in character. For that reason, I have concluded that her evidence must be approached with caution unless it is corroborated by independent and reliable contemporaneous documentation or is otherwise against CLAH’s interests in the proceeding.

7.4.3    Mr Mitropoulos

350    Mr Mitropoulos was called to give evidence by the CLAH camp who read an affidavit from him. He was cross-examined. I have addressed the reasons why I place very little weight on Mr Mitropoulos’ evidence in part 4.2 of these reasons. Although he was one of three directors of CLAH for a critical period of time in relation to the events in issue in these proceedings, Mr Mitropoulos’ evidence was vague, reconstructed, internally contradictory and he appeared to have only the most general understanding of CLAH’s lending business. There was a dearth of contemporaneous documents to support Mr Mitropoulos’ account of the internal CLAH procedures in relation to board approvals and considerations of loan facilities and the servicing of those loans.

8.    CONSIDERATION

351    I now turn to the consideration of the enumerated issues identified by the parties in the proceedings.

9.    AGENCY (ISSUE 1)

9.1    Introduction

352    The first issue in dispute concerns whether by reason of implied agency or ostensible authority, Mr Page was relevantly the agent of Ms Page and her related companies. The issue is framed in the Amended Joint List of Issues, which was the latest iteration of the parties’ joint list of issues, as follows: “Was Lemuel Page an agent of Ms Page, Carrabolla, Shyzi, Parkway One, Ohmut and Harmat?”

353    The determination of this issue is relevant to CLAH’s claims in relation to debts that it alleges are owed by or for which Shyzi, Parkway One and Ohmut are liable. It is to be understood in the context where the articulated ground on which the plaintiffs challenge the validity of the appointment of each of the Shyzi Receivers, the Ohmut Receivers and the Tallywalker Receivers is that none of the companies were indebted to CLAH as at the date that CLAH purported to appoint the respective receivers. The nub of this issue is that CLAH alleges that Mr Page was authorised to call for advances under the relevant facilities between the various Page related companies and CLAH. CLAH thus claims that funds advanced by CLAH as a result of requests made by Mr Page to Mr Baker are funds which are drawn on the relevant Page related company facility and secured under the associated Page related company security.

354    The defendants contend that at all relevant times Mr Page was the agent of Ms Page, Carrabolla, Shyzi and Parkway One in their dealings with CLAH. The defendants further contend that Mr Page negotiated Harmat’s participation in the Drilling Rig Venture (which gives rise to the advances for which CLAH contends Tallywalker is responsible). The defendants’ primary position is that Mr Page was acting as agent with authority for each of Ms Page, Carrabolla, Shyzi, Parkway One, Ohmut and Harmat. The defendants’ alternative position is that Mr Page was acting with ostensible authority.

355    The agency issue is significant because apart from the initial drawdown of $680,000 on the Carrabolla Facility and the initial drawdown of $500,000 on the Ohmut/Parkway Facility, Ms Page, as the sole director of Carrabolla, Shyzi, Ohmut and Parkway One, did not herself request any further drawdowns upon either of these facilities. That much is common ground. The defendants contend that further drawdowns were made under these facilities at the request of Mr Page acting as agent of Shyzi and Ohmut or alternatively with the ostensible authority of Shyzi and Ohmut.

356    The plaintiffs raised a pleading issue, for the first time in their closing written submissions, as to the adequacy of the defendants’ pleadings of the alleged agency of Mr Page in respect of Carrabolla. The plaintiffs contend that although CLAH submitted in closing that Mr Page was an agent who could bind Carrabolla or could seek drawdowns under the Carrabolla Facility or that could bind Parkway One, that allegation was not pleaded and the defendants should be confined to their pleaded case. The plaintiffs submitted that if CLAH had pleaded that Mr Page had authority to act on behalf of Carrabolla, they would have led different evidence and their approach to cross-examination would been different. In contrast, the defendants expressly pleaded in their Concise Statement that Mr Page was an agent of Shyzi and Ohmut. This pleading remained unchanged from its original form in the Concise Statement throughout various iterations of the defendant’s pleadings, culminating in a Further Amended Concise Statement filed on 24 August 2022.

357    CLAH responds by submitting that the issue of Mr Page’s agency was clearly identified in the defendants’ Concise Statement (at [7]), the parties’ Amended Joint List of Issues (as Issue 1) and the parties’ written opening submissions. CLAH refers to the defendants’ Concise Statement which pleads in the alternative that Mr Page had implied authority in relation to the Carrabolla Facility and the Ohmut/Parkway Facility to request advances: Concise Statement, [7(d)-(e)], [26], [28(a)]. The Amended Joint List of Issues states as the first issue to be determined “Was [Mr Page] an agent of Ms Page, Carrabolla, Shyzi, Parkway One, Ohmut and Harmat?”. The defendants, in their written opening submissions, submitted that Ms Page, in her capacity as the sole director of, inter alia, Carrabolla and Parkway One, acted in such a way that authorised Mr Page impliedly or ostensibly as an agent of these entities. The defendants made submissions about Ms Page’s awareness of Mr Page acting as an agent generally as well as specific references to each of Carrabolla and Parkway One. The defendants draw attention to the fact that the plaintiffs in their written opening submissions contested the issue of whether Mr Page had implied or ostensible authority to request advances under the Carrabolla Facility. The plaintiffs relevantly submitted:

None of Carrabolla, Shyzi or [Ms Page] expressly authorised [Mr Page] to request any advances pursuant to the Carrabolla Facility. There is a complete dearth of evidence - and the defendants bear the evidentiary burden of establishing agency and scope of authority - that [Mr Page] was conferred with any authority on behalf of Shyzi or any other entity associated with [Ms Page]. …

358    Where a case proceeds upon the pleadings, the pleadings serve three purposes: (1) to state with sufficient clarity the case that must be met; (2) to ensure that a party has an opportunity to meet that case; and (3) to define the issues for determination: Banque Commerciale SA, En liquidation v Akhil Holdings Ltd [1990] HCA 11; 169 CLR 279 at 286 (Mason CJ and Gaudron J); Oztech Pty Ltd v Public Trustee of Queensland [2019] FCAFC 102; 269 FCR 349 at [28]-[30] (Middleton, Perram and Anastassiou JJ).

359    In the context of this proceeding, the pleading point raised by the plaintiffs falls to be determined by reference to the Originating Process, the PFASOFC, the DFACS and the parties’ Amended Joint List of Issues. By analogy with the following authorities, I will read these documents together in order to ascertain the true scope of the issues tendered for trial and whether any procedural unfairness is occasioned by reason of the plaintiffs’ pleading point: Australian Securities and Investment Commission v Westpac Securities Administration Limited [2019] FCAFC 187; 272 FCR 170 at [185] (Allsop CJ), quoted with approval by the majority of the Full Court in Allianz Australia Insurance Limited v Delor Vue Apartments CTS 39788 [2021] FCAFC 121; 287 FCR 388 at [142] (McKerracher and Colvin JJ) (reversed on appeal in Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 [2022] HCA 38, but not on this point); see also Allianz at [430] (Derrington J).

360    Following a close review of the pleadings, concise statements, Amended Joint List of Issues and the parties’ opening submissions, I am satisfied that the plaintiffs were on notice of and engaged with the allegation that Mr Page was either the agent of, or had authority to bind, Carrabolla.

361    The agency issue was cast in broad terms in the Amended Joint List of Issues which squarely identified Mr Page’s relationship with Carrabolla as an issue for determination in this proceeding. The defendants bear the evidentiary burden of establishing Mr Page’s agency and the scope of his alleged authority to act as an agent. The proceeding was opened, run, and evidence was given on the issue of whether Mr Page was authorised, either expressly, impliedly or ostensibly, to request any advances pursuant to the Carrabolla Facility. I am not persuaded that the way in which the defendants have proceeded on this issue gives rise to any procedural unfairness to the plaintiffs. I have had regard to principles applicable to the Court’s power to grant leave to amend pleadings as summarised by Wigney J in KTC v David [2022] FCAFC 60 at [110]-[111] (with whom Anastassiou and Jackson JJ agreed on the relevant principles at [329] and [418] respectively). I will not repeat them here, other than to highlight that the Court’s power is broad and has the remedial objective of ensuring that any defect in the pleadings is cured and that the real questions in the controversy are properly agitated: Caason Investments Pty Ltd v Cao [2015] FCAFC 94; 236 FCR 322 at [20] (Gilmour and Foster JJ); Aon at [14] (French CJ). I reject the plaintiffs’ contention that they are relevantly prejudiced by the fact that this issue was not formally pleaded.

362    I will now turn to the applicable legal principles in relation to the determination of Issue 1.

9.2    Applicable principles

363    The principles relating to the establishment of an agency relationship are well-established and were not in dispute, save as to their application to the facts in issue.

364    An agency relationship exists between two parties when one, the agent, is authorised by the other, the principal, to do acts on behalf of the principal which affect the principal’s rights and duties with respect to third persons.

365    An agency relationship may arise:

(1)    by agreement, whether contractual or not, between the principal and the agent. The agreement may be express or may be implied from the conduct of the parties, having particular regard to what was said and done at the time that the alleged agency was created;

(2)    by the principal ratifying the acts done by the agent on the principal’s behalf;

(3)    by operation of law; or

(4)    by the principal being estopped by reason of apparent or ostensible authority.

366    The defendants first contend that Mr Page was Ms Page’s agent as a result of an agreement arising from the conduct of Mr Page and Ms Page. The defendants’ alternative contention is that Ms Page (and the relevant entities of which she was sole director) are estopped from denying that Mr Page was their agent on the basis of apparent or ostensible authority.

9.2.1    Implied Agency

367    Where an agency arises by reason of an agreement that is implied from the conduct of the parties, the parties’ agreement to the creation of an agency relationship and the scope of the agent’s authority are by reference to the conduct determined of the parties and not by reference to any express agreement. An implied agency may arise from the conduct of the parties towards each other. Relevantly, the conduct may comprise acquiescence on the part of persons who have actual authority to delegate a course of behaviour by another who, by the agreement implied from the whole of the conduct, becomes their agent. An intention to create an agency “may be manifested simply by placing another in a situation, in which, according to the ordinary rules of law, or… according to the ordinary usages of mankind, that other is understood to represent and act for the person who has so placed him”: GE Dal Pont, Law of Agency (4th ed, LexisNexis Australia, 2020) at p 87, citing Pole v Leask (1863) 8 LT 645 at 648 (Cranworth LJ).

368    An agent may be appointed on the basis of an agreement that is implied even if the agreement is not itself legally enforceable, for example for lack of consideration. That is not to say that an absence of consideration is not a relevant consideration when determining whether an agreement between the principal and agent arises by implication. Depending on the whole of the context, it may weigh against an agency agreement being implied. 

369    Consent or assent of both principal and agent are required for an implied agency. The manifestation of assent of the respective parties may be made in any way: Field v Shoalhaven Transport Pty Ltd [1970] 3 NSWR 96 at 103 (Asprey JA, with whom Mason JA agreed). Assent on the part of the principal can be established if the principal’s words and conduct, known to the agent, lead to the reasonable inference that the principal is authorising the agent to act for the them: Technology Leasing Ltd v Lennmar Pty Ltd [2012] FCA 709 at [158] (Cowdroy J), citing Field v Shoalhaven Transport at 103 and Pole v Leask at 648. Acquiescence or silence may be evidence of assent where there is a duty to speak: see City Bank of Sydney v McLaughlin [1909] HCA 78; 9 CLR 615 at 625 (Griffith CJ and Barton J) and 633 (Isaacs J). A mere assertion by the alleged agent that he or she is acting for the alleged principal is not enough to prove the existence of the alleged agency.

370    It does not matter whether the parties have used the formal language of agency to describe their relationship – it is sufficient if what they have agreed to is a state of fact that amounts in law to such a relationship: Lennmar at [158]; South Sydney District Rugby League Football Club Ltd v News Ltd [2000] FCA 1541; 177 ALR 611 at [132]-[135] (Finn J); Branwhite v Worcester Works Finance Ltd [1969] 1 AC 552 at 587 (Lord Wilberforce). Parties cannot avoid what is in substance an agency relationship by declaring in their contractual dealings or otherwise that it is not intended to be an agency relationship, notwithstanding it will be a consideration: Dal Pont, Law of Agency at [1.6], citing South Sydney at [161].

371    When an agency agreement is implied, the Court must also consider the scope of the agency (both as to the extent of the agent’s express and implied authority) on the basis of the conduct of the parties.

9.2.2    Apparent or ostensible authority

372    The second and distinct basis on which the defendants rely is that Ms Page is estopped from denying that Mr Page is her agent on the basis of apparent or ostensible authority. An estoppel of this kind may protect a third party dealing with the agent but, without more, the internal relationship of agency as between the principal and the agent will not arise. To establish an estoppel based on apparent or ostensible authority, the third party must prove: (1) that the representation was made from the principal to the relevant third party – whether by words or conduct, intentionally or negligently; (2) that the third party relied on the representation by the principal and that the third party’s reliance was reasonable; and (3) that the third party changed its position in reliance on the representation: see Freeman and Lockyer (a firm) v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480 at 503 (Diplock LJ); Pole v Leask; Robinson v Tyson (1888) 9 LR (NSW) 297 at 308 (Windeyer J). The onus of establishing that an agent had ostensible authority to act on behalf of a principal is on the third party seeking to establish the existence of the authority: Lysaght Bros & Co Ltd v Falk [1905] HCA 7; 2 CLR 421 at 428 (Griffiths CJ).

373    When an estoppel arises in this context, a third party is entitled to assume that the relationship between principal and agent exists, and that the agent has authority to bind the principal when, in fact, the agent has no actual authority. The person sought to be bound as the principal may have incurred obligations, but only through representations made as to, or omission to correct misapprehensions regarding, the status of the agent of which they are aware. Representations by the principal giving rise to the apparent authority may be conveyed in a variety of ways, the most common representation being by conduct, namely by permitting an agent to act in a particular manner in the conduct of the principal’s business: Freeman and Lockyer at 503. The estoppel which arises protects third parties who rely on the principal’s representations but, without more, will not give rise to rights and duties between the principal and agent. Where an estoppel arises, the question is whether the third party is entitled to assume that the agent had authority.

374    This is in contradistinction to where an agency is established on the basis of an implied agreement between the principal and the agent and the relationship of principal and agent actually exists between them giving rise to rights and duties as between themselves. As mentioned, the process of determining whether an agency agreement may be implied requires examination of the conduct of both the principal and the agent.

375    Agency by estoppel or ostensible authority arises out of the principal’s conduct. It requires words or action on the part of the principal that is relevantly acted on by the third party. The conduct of the agent is not irrelevant to the representation, but the principal’s conduct must be the source of the representation: Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; 218 CLR 451 at [36] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ). The nature of a transaction may be such that the third party seeking to establish the estoppel is put on inquiry as to the agent’s authority, such that ostensible authority is not established: Northside Developments Pty Ltd v Registrar General [1990] HCA 32;170 CLR 146 at 160 (Mason CJ); Pacific Carriers at [36].

9.3    Consideration

376    The evidence demonstrates that Mr Page was at least acting with ostensible authority on behalf of Ms Page, Carrabolla, Shyzi, Parkway One, Ohmut and Harmat in the commercial dealings and associated communications he had with CLAH and Mr Baker relating to these entities. Based on the totality of the evidence, I am satisfied that the evidence goes further and that CLAH, which bears the onus on this issue, has established that there was relevantly an implied agency agreement between Mr Page and each of Ms Page, Carrabolla, Shyzi, Parkway One, Ohmut and Harmat. My detailed factual findings that support my conclusion that Mr Page was relevantly the agent of Ms Page, Carrabolla, Shyzi, Parkway One, Ohmut and Harmat are addressed in my consideration of the remaining issues which arise for determination.

377    By way of summary, I find that Mr Page was at all material times the agent of Shyzi and Ohmut and that the agency extended to Mr Page requesting the payment of funds from Mr Baker as an advance by CLAH under the secured facilities which were in place with CLAH on which the Page related companies were designated as borrower or co-borrowers. I do not accept Ms Page’s evidence that throughout 2016 to 2018, Mr Page was not authorised to handle matters on behalf of Ms Page or Carrabolla, Shyzi, Parkway One or Ohmut with CLAH. I find that Mr Page was directly and substantially involved in negotiating the Carrabolla Facility and the Ohmut/Parkway Facility as the agent of Ms Page, Carrabolla, Shyzi, Ohmut and Parkway One. Ms Page knew that Mr Page was negotiating these facilities with Mr Baker, and provided instructions and documents to Mr Page for that purpose. She repeatedly described Mr Page as her business partner.

378    I further find that Mr Page was authorised by Ms Page as the sole director of Carrabolla, Shyzi, Parkway One and Ohmut, to transact on the bank accounts of those companies and that to Ms Page’s knowledge, Mr Page used those accounts to receive deposits from CLAH. Ms Page, by her own admission, operated these bank accounts herself as well and never raised any concern with Mr Page or Mr Baker or anyone else at CLAH about CLAH making deposits into these accounts. I find that Ms Page represented by her conduct that Mr Page was her agent and was authorised to operate her companies’ bank accounts and that CLAH relied on those representations in advancing funds to Ms Page’s companies at Mr Page’s direction. I do not accept Mr Baker’s evidence that Mr Page made specific requests for advances under specific facilities on each occasion on which he asked Mr Baker for money. Likewise, I do not accept that Mr Page expressly requested the extension of the Carrabolla Facility and the Ohmut/Parkway Facility. I did not find Mr Baker’s evidence on this issue credible for the reasons I have given in relation to this evidence in part 7.4.1 above.

379    Both Mr Page and Ms Page accepted that Mr Page initiated the discussions with Mr Baker concerning what became the Carrabolla Facility. The Carrabolla Facility was a short-term loan facility in the nature of a bridging facility that was required to enable Carrabolla to retire longstanding vendor finance in respect of the Carrabolla Property pending Carrabolla obtaining a long-term loan from NAB. Mr Page used the Carrabolla Property and had a relationship with George Joliffe, the vendor who was in ill health and whose family were seeking to have Carrabolla discharge the vendor financing.

380    In relation to the Ohmut/Parkway Facility, Ms Page gave evidence that Mr Page was talking to Mr Baker concerning the $500,000 advance that came to be made under this facility. I infer that Mr Page was keenly interested in raising the $500,000 that was necessary to resolve the long running dispute that he had with Mr Pitsis and which had resulted in caveats being lodged on properties held by Elefteria which Yipeeo was interested in acquiring.

381    Mr Page also negotiated the terms of Harmat’s participation in the Drilling Rig Venture (which gave rise to the alleged Tallywalker and Overland facilities and securities which CLAH alleges bound each of Tallywalker and Overland).

382    At the relevant time, Ms Page was aware of Mr Page’s conduct. She did not object to it and did not inform Mr Baker on behalf of CLAH that Mr Page was not authorised to represent her and her companies in the way in which he did in relation to the above facilities. Instead, after Mr Page negotiated the various facilities and other arrangements with CLAH, Ms Page co-operated in putting the agreements which had been negotiated into effect by attending on her lawyers to obtain advice and execute the relevant documents. Ms Page did not seek to renegotiate those deals before signing the relevant documents. Her involvement in the negotiation of the facilities and security arrangements was minor. It was Mr Page that represented the Page interests in dealing with Mr Baker who controlled CLAH.

383    There are many examples in the evidence which demonstrate that Ms Page was directly aware that Mr Page was requesting funds to be advanced by CLAH. I will address these in context as I consider the particular funds transfers that are relevant in the determination of the remaining issues.

384    As a counterargument, the plaintiffs submit that one factor which weighs against the conclusion that Mr Page was an agent of Ms Page, Shyzi, Carrabolla, Parkway One or Ohmut is that because drawdown notices were required, one would expect to see an agent with the power to seek drawdown to be appointed by a written instrument. I do not agree. Having regard to the way in which the parties dealt with each other, I would not draw an inference from the absence of a written agency instrument appointing Mr Page that he did not act as an agent in the way that is alleged. The evidence overwhelmingly demonstrates that he did.

385    Taking into consideration all of the circumstances, a reasonable person would consider that there in fact existed a relationship of principal and agent between Ms Page, Carrabolla, Shyzi, Parkway One, Ohmut and Harmat, on the one hand, and Mr Page, on the other, in respect of the dealings with CLAH relating to the Carrabolla Facility, the Ohmut/Parkway Facility and in relation to the Drilling Rig Venture. Accordingly, I find that an agency relationship between Ms Page and her entities and Mr Page may be implied from the circumstances.

386    If I had not been satisfied that CLAH had established the existence of an implied agency between Mr Page and Ms Page, Carrabolla, Shyzi, Parkway One, Ohmut and Harmat as it contends in this proceeding, I would have found that Mr Page had ostensible authority for the following reasons.

387    First, Ms Page represented through her express words and conduct since at least 2016, whether intentionally or otherwise, that Mr Page was authorised to act on her behalf and on behalf of Carrabolla, Shyzi, Parkway One, Ohmut and Harmat in their dealings with CLAH. I have found that Ms Page knew of the substantial advances that were deposited into their various bank accounts and was aware of the transactions that they each entered into by her assenting on their behalf during the period that the transactions were being negotiated. I have also found that Ms Page never made any complaints about the substantial advances or informed CLAH that Mr Page was not authorised to act in the way that he was.

388    Second, the evidence demonstrates that on several occasions, Ms Page told Mr Baker that he should deal directly with Mr Page. On the whole of the evidence, I find that it was part of the patina of the dealings between Ms Page, Mr Page and Mr Baker that Mr Page had authority to make use of the bank accounts held by Ms Page’s companies and to request payments from CLAH on their behalf. In circumstances where Ms Page knew that substantial advances were being deposited into the bank accounts of Carrabolla, Shyzi, Parkway One and Ohmut, and did not enquire, investigate or complain about why that was so, I readily infer that Ms Page had authorised Mr Page to act in the way that he did and that it was reasonable for CLAH to rely on Ms Page’s representations, by express words but also by her conduct.

389    Third, it is plain that CLAH had advanced substantial amounts on the basis of the Ms Page’s representation that Mr Page was authorised to deal with CLAH in respect of the facilities made available to Carrabolla, Shyzi, Parkway One and Ohmut: see Freeman and Lockyer at 503.

390    I now turn to consider the plaintiffs’ challenge to the validity of the appointment of the Shyzi Receivers.

10.    CLAH’S UNDERLYING CLAIMS AGAINST SHYZI (ISSUES 2 TO 7)

10.1    Overview

391    On 11 September 2020, CLAH purported to appoint the Shyzi Receivers under the Shyzi GSA. The plaintiffs seek a declaration under s 418A of the Act that the appointment of the receivers and managers was invalid. Section 418A of the Act provides that where there is doubt on a specific ground about whether the purported appointment of a person as receiver of property of a company is valid, the Court may, on application, declare whether or not the appointment was valid, whether on the ground specified in the application or some other ground. The concept of “doubt” that is relevant in an application under s 418A of the Act has been described as involving “a feeling of uncertainty”: Action Scaffolding & Rigging Pty Ltd v Citadel Financial Corporation Pty Ltd [2019] FCA 327 at [6] (Gleeson J). Provided that the plaintiffs establish that “doubt” exists on specific grounds so as to question the validity of the appointment, the onus then shifts to the defendants to prove the validity of its conduct: Action Scaffolding at [7].

392    The specific grounds on which the plaintiffs rely for the relief they claim under s 418A of the Act are somewhat opaque. They allege that the Shyzi Receivers’ appointment to Shyzi was invalid on the specific ground that Shyzi was not indebted to CLAH. They also submit that for various reasons, CLAH’s reliance on certain alleged Events of Default as enlivening the power to appoint receivers under the relevant security agreements is misplaced.

393    The defendants maintain that CLAH’s power to appoint the Shyzi Receivers falls to be determined by reference to the terms of the security agreements and that proof of indebtedness is not essential to establish that the appointment of a receiver was valid for the purposes of s 418A(1) of the Act. The defendants maintain that it is not the law that where no present debt is owed that a receiver cannot be appointed: Sue Dwyer Real Estate Pty Ltd v Histcote Pty Ltd [2001] QSC 153; 161 FLR 413 at [18] (Mullins J); Canberra Advance Bank Ltd v Benny [1992] FCA 823; 38 FCR 427 (Neaves, Miles and O'Loughlin JJ); Paul Kennedy Transport Pty Ltd v ANZ Banking Group Ltd (1993) 6 BPR 13,883 (Young J). Further, that upon the proper construction of the relevant agreements between CLAH and Shyzi, CLAH had the right to appoint the Shyzi Receivers by reason of the occurrence of Events of Default that preceded the appointment of the Shyzi Receivers.

394    The way in which the parties have engaged with each other in relation to CLAH’s claims against Shyzi gives rise to a number of false issues, some of which have been distilled into the Amended Joint List of Issues. Before determining Issues 2 to 7, I will first make some of the necessary findings of fact that are relevant to the determination of these issues and also address the proper construction of the suite of commercial documents that are relevant to the determination of Issues 2 to 7.

395    The plaintiffs contend that the defendants’ claim is confined, because of the way in which the defendants have conducted this case, to a claim that Shyzi is liable to CLAH as a surety in respect of debt liabilities arising solely under the Carrabolla Facility and not otherwise. That is not a correct characterisation of the basis on which the defendants have defended the plaintiffs’ claims.

396    While it is true that the defendants contend that there were extant debt liabilities arising under the Carrabolla Facility for which Shyzi is liable as a surety, the defendants’ claim is not limited to that contention as the sole justification for the appointment of the Shyzi Receivers. The defendants also rely on Shyzi receiving advances in its own right from CLAH. That is made plain by the allegation made in the DFACS that “further advances pursuant to the Carrabolla Facility and/or advances to Shyzi were made at the request of Lemuel Page, who was at all relevant times authorised to request such advances” (emphasis added): DFACS, [26]. It would be more accurate to describe CLAH’s case as alleging that the relevant debt claims arise principally, although not exclusively, from debts incurred under the Carrabolla Facility.

397    This is another one of a number of pleading points taken in these proceedings. Having regard to the purpose served by pleadings, as identified by the High Court in Banque Commerciale SA, I am satisfied that the plaintiffs were on notice of and engaged with the challenge to the appointment of the Shyzi Receivers. In the circumstances where the parties have approached the sweeping canvas of issues identified for determination in the proceedings in several iterations of pleading, this dispute between the parties is not properly to be disposed of on the basis of technical and unmeritorious pleading points.

10.2    The relevant commercial agreements

398    CLAH alleges that its debt claims, both pursuant to the Carrabolla Facility and otherwise, are relevantly secured pursuant to two securities, namely, the Shyzi GSA and the Shyzi Mortgage. I will refer to the Shyzi GSA and Shyzi Mortgage collectively as the Shyzi Securities. These documents, together with the Carrabolla GSA and the Carrabolla Mortgage (the Carrabolla Securities), form part of a suite of agreements that although undated appear to have been executed on or about 30 June 2016. The fact that these documents were executed on or about 30 June 2016 is common ground between the parties. I will refer to these documents collectively as the Carrabolla Documents. The Carrabolla Documents comprise the Carrabolla Facility and the Carrabolla Securities and the Shyzi Securities (collectively, the Carrabolla and Shyzi Securities).

399    The Carrabolla Documents were executed in contemplation of the documents being executed together and with the full limit of the Carrabolla Facility being drawn at the time of execution of the Carrabolla Documents. Together, the Carrabolla Documents were described as the “Transaction Documents” in each Carrabolla Document. The requirement for the Carrabolla and Shyzi Securities was a condition precedent of the Carrabolla Facility.

10.3    Applicable principles of construction

400    Each of the Carrabolla Documents is to be construed in accordance with the principles generally applicable to the construction of commercial contracts, requiring consideration not only of the text, but also of the surrounding circumstances known to the parties and the commercial purpose or objects of the transaction and they must be given a businesslike interpretation: Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; 256 CLR 104 at [47] (French CJ, Nettle and Gordon JJ); Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5; 240 CLR 45 at 52-53 [10] (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ).

401    The approach to construction of contracts generally is set out by the High Court in Mount Bruce (French CJ, Nettle and Gordon JJ) at [46]-[51] as follows (citations omitted):

[46]     The rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose.

[47]     In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable businessperson would have understood those terms to mean. That inquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract.

[48]    Ordinarily, this process of construction is possible by reference to the contract alone. Indeed, if an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning.

[49]     However, sometimes, recourse to events, circumstances and things external to the contract is necessary. It may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding “of the genesis of the transaction, the background, the context [and] the market in which the parties are operating”. It may be necessary in determining the proper construction where there is a constructional choice. The question whether events, circumstances and things external to the contract may be resorted to, in order to identify the existence of a constructional choice, does not arise in these appeals.

[50]    Each of the events, circumstances and things external to the contract to which recourse may be had is objective. What may be referred to are events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties were operating. What is inadmissible is evidence of the parties’ statements and actions reflecting their actual intentions and expectations.

[51]    Other principles are relevant in the construction of commercial contracts. Unless a contrary intention is indicated in the contract, a court is entitled to approach the task of giving a commercial contract an interpretation on the assumption “that the parties … intended to produce a commercial result”. Put another way, a commercial contract should be construed so as to avoid it “making commercial nonsense or working commercial inconvenience”.

402    The plurality stated at [52] that its summary is not intended to depart from the existing principles as set out in Codelfa Construction Pty Ltd v State Rail Authority (NSW) [1982] HCA 24; 149 CLR 337 and Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; 251 CLR 640. In Woodside, the majority (French CJ, Hayne, Crennan and Kiefel JJ) stated at [35] (citations omitted):

[T]his Court has reaffirmed the objective approach to be adopted in determining the rights and liabilities of parties to a contract. The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. That approach is not unfamiliar. As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding “of the genesis of the transaction, the background, the context [and] the market in which the parties are operating”. As Arden LJ observed in Re Golden Key Ltd, unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption “that the parties … intended to produce a commercial result”. A commercial contract is to be construed so as to avoid it “making commercial nonsense or working commercial inconvenience”.

403    The principles of construction must be applied so as to give effect to the purpose and object of the transaction: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; 219 CLR 165 (Toll v Alphapharm) at [40] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ). The proper approach to determining the rights and liabilities of the parties to a contract is to construe the contract by reference to the principle of objectivity as stated by the High Court in Pacific Carriers at [22] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ) and Toll v Alphapharm at [40].

404    A document forming part of a composite transaction is to be construed in the context of the transaction as a whole so as to avoid “making commercial nonsense or working commercial inconvenience”: Woodside at [35].

405    Here, it is uncontroversial that the Carrabolla Documents formed part of a suite of commercial documents executed on the same date by the same parties. The Carrabolla Documents must be read together in order to ascertain the proper construction and legal effect of the individual documents. The Carrabolla Documents together set out interrelated obligations and rights arising under or in connection with each of the Carrabolla Documents, which together are defined in the Carrabolla Facility as the Transaction Documents. In these circumstances, the proper approach in construing the documents is to read together the whole of each of the documents encapsulating the transaction between the parties: Zhu v Treasurer of New South Wales [2004] HCA 56; 218 CLR 530 at [82] (Gleeson CJ, Gummow, Kirby, Callinan and Heydon JJ); EDW Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2010] WASCA 78; 41 WAR 23 at [104] (Buss JA; Owen and Newnes JJA agreeing); Zhang v BM Sydney Building Materials Pty Ltd [2016] NSWCA 166 at [45] (McColl JA; Ward JA and Sackville AJA agreeing). The Transaction Documents, which were executed pursuant to the obligation imposed by and at the same time as the Carrabolla Facility, in their proper construction must be conformable with the Carrabolla Facility: see Zhu at [82]. The Carrabolla Facility expressly provided for the Carrabolla Facility to prevail over the other Carrabolla Documents to the extent of any inconsistency: cl 43.

406    The Transaction Documents must be construed so as to avoid “commercial nonsense or working commercial inconvenience”: Woodside at [35]. The court approaches its task by striving to avoid a capricious, unreasonable or inconvenient construction: Acorn Consolidated Pty Ltd v Hawkslade Investments Pty Ltd [1999] WASC 218; 21 WAR 425, affirmed in Acorn Consolidated Pty Ltd v Hawkslade Investments Pty Ltd [2000] WASCA 322.

407    Each of the documents should be given a reasonable, businesslike meaning and should not be construed in an overly fine or theoretical way: Woodside at [35]; Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd [2017] HCA 12; 261 CLR 544 at [17] (Kiefel, Bell and Gordon JJ); McCann v Switzerland Insurance Australia Ltd [2000] HCA 65; 203 CLR 579 at [22] (Gleeson CJ), [81] (Kirby J), [197] (Callinan J).

408    Concepts of fairness, justice or reasonableness, such as may be relevant to issues arising under for example the Contracts Review Act 1980 (NSW) or in equity in claims of unconscionability, are not relevant to questions of contractual construction: Olympic Holdings Pty Ltd v Windslow Corporation Pty Ltd (In Liq) [2008] WASCA 80; 36 WAR 342 at [29] (Buss JA, with whom Steytler P agreed) citing Re Bankrupt Estate of Murphy; Donnelly v Commonwealth Bank of Australia [1996] FCA 858; 140 ALR 46 at 54-55 (Hill J).

409    As to the proper construction of securities in a commercial contract, Buss JA (with whom Steytler P agreed) in Olympic Holdings at [46] observed that in construing the term “Secured Money” in an all moneys clause in a general security agreement, it falls to be determined “not only by reference to the language of the definition of “Secured Money”, but also by reference to the language of the Securities as a whole and, further, the purpose and object which the security transaction was apparently intended to achieve”. Further, Buss JA stated at [46] that the proper construction of the securities must be determined as at the date of their execution, and the common intention to be objectively ascertained is that of the contracting parties.

410    As to the construction of guarantees and indemnities in a commercial contract, a guarantee or indemnity should first be construed according to the ordinary principles of construction. Where there is a doubt as to the construction of provisions of a guarantee, the doubt should be resolved in favour of the surety or indemnifier: Bofinger v Kingsway Group Ltd [2009] HCA 44; 239 CLR 269 at [53] (Gummow, Hayne, Heydon, Kiefel and Bell JJ); see also Andar Transport Pty Ltd v Brambles Ltd [2004] HCA 28; 217 CLR 424 at [17]–[23] (Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ); Ankar Pty Ltd v National Westminster Finance (Aust) Ltd [1987] HCA 15; 162 CLR 549 at 561 (Mason ACJ, Wilson, Brennan and Dawson JJ); Chan v Cresdon Pty Ltd [1989] HCA 63; 168 CLR 242 at 256 (Mason CJ, Brennan, Deane and McHugh JJ). Doubt may arise both from the uncertain meaning of an expression or the apparent width of application of the guarantee or indemnity: Bofinger at [53].

411    A written document executed by the parties is presumed to be the true record of their agreement, subject to limited categories of exceptions: Equuscorp at [31]-[41]. In Equuscorp, the issue before the High Court was whether the loan agreements between the parties were wholly oral or wholly written. In those circumstances, where there is both a written agreement and an earlier oral consensus, the general proposition is that the oral agreement is taken to be discharged and the Court will hold the parties to the obligations they have assumed by entry into the written agreement. In Equuscorp at [34]-[36], the High Court observed that:

[34]     There are reasons why the law adopts this position. First, it accords with the “general test of objectivity [that] is of pervasive influence in the law of contract”. The legal rights and obligations of the parties turn upon what their words and conduct would be reasonably understood to convey, not upon actual beliefs or intentions.

[35]     Secondly, in the nature of things, oral agreements will sometimes be disputable. Resolving such disputation is commonly difficult, time-consuming, expensive and problematic. Where parties enter into a written agreement, the Court will generally hold them to the obligations which they have assumed by that agreement. At least, it will do so unless relief is afforded by the operation of statute or some other legal or equitable principle applicable to the case. Different questions may arise where the execution of the written agreement is contested; but that is not the case here. In a time of growing international trade with parties in legal systems having the same or even stronger deference to the obligations of written agreements (and frequently communicating in different languages and from the standpoint of different cultures) this is not a time to ignore the rules of the common law upholding obligations undertaken in written agreements. It is a time to maintain those rules. They are not unbending. They allow for exceptions. But the exceptions must be proved according to established categories. The obligations of written agreements between parties cannot simply be ignored or brushed aside.

[36]     The conclusion that the respondents are bound by the written loan agreements may leave open the possibility that an earlier consensus reached by the parties was in each case a collateral agreement (made in consideration of the parties later executing the written agreement), but that has never been the respondents' case. In another case it may leave open the possibility that the contract is partly oral and partly in writing. But that cannot be so here. The oral limited recourse terms alleged by the respondents contradict the terms of the written loan agreement. If there was an earlier, oral, consensus, it was discharged and the parties' agreement recorded in the writing they executed. It is the written loan agreement which governed the relationship between Rural Finance and each respondent.

412    As mentioned, the High Court in Equuscorp at [33] and [39] recognised that there are well-established, limited categories of exceptions to this general approach such as where entry into the agreement has been induced by fraud, mistake, or misrepresentation or the agreement was a sham. It was not said that the parol evidence rule, the limited operation of the defence of non est factum and the development of the equitable remedy of rectification were pleaded or relied on. In Equuscorp, the respondents made no complaint about the written loan documents when they were received, nor did they suggest the documents failed to record the oral agreements that, on their case, had been reached much earlier: at [38]. The High Court also noted the possibility that an earlier oral agreement could be a collateral agreement, or that a contract could be partly oral and partly in writing, which did not arise on the evidence in that case and in any event, the earlier oral agreements were inconsistent with the later written agreements: at [39].

10.4    Background facts

413    In June 2016, Carrabolla required funding of $680,000 to repay vendor finance which had been advanced to it to fund its acquisition of the Carrabolla Property some eight years earlier. The Carrabolla Property was acquired from Mr Joliffe in 2008 on the basis of what appears to have been (or become) a long-term vendor finance arrangement. As mentioned earlier, Ms Page arranged for Carrabolla to be incorporated on 6 September 2007 for the purpose of purchasing the Carrabolla Property from Mr Joliffe with vendor finance in or around 2007 or 2008. The plaintiffs did not tender documents that confirmed the relevant date of the exchange of contracts for the purchase of the Carrabolla Property. For the purpose of these proceedings, the approximation as to the date is sufficient.

414    The evidence suggested a friendship between Mr Page, Ms Page and Mr Joliffe. The evidence further demonstrates that Mr Page had knowledge of, and a longstanding practice of making use of the Carrabolla Property. He had a connection to Mr Joliffe and was aware of the circumstances of his declining health that led to the Joliffe family pressing Ms Page to repay the vendor finance that had been advanced many years earlier. The role that he played as Ms Page’s and Carrabolla’s agent is reflected in the fact that the genesis of the Carrabolla Facility was that a deal for CLAH to provide to Carrabolla bridging finance that was struck between Mr Page and Mr Baker. Both Mr Page and Ms Page sought to minimise the role that Mr Page had played in this regard. I reject their evidence on this issue. It was self-serving and directed to resisting the conclusion that Mr Page was relevantly acting as agent for Ms Page and Carrabolla.

415    It is not in issue that a purpose of the Carrabolla Facility was to provide finance in the nature of bridging finance to enable Carrabolla to pay out the extant vendor finance in advance of the NAB approving finance which was to be used for that purpose amongst other things. There is an issue as to whether this was the singular substantive purpose of the Carrabolla Facility or whether the facility was also to be used for the purpose of funding an investment opportunity with Aranik, a property development company. The defendants maintain that the Carrabolla Facility was also for the purpose of funding a $200,000 investment opportunity with Aranik. The plaintiffs deny this. They maintain that the Carrabolla Facility was documented to refer to, and allow for in the applicable limit, $200,000 for the Aranik investment. This served as a way for Mr Baker to create a paper trail within CLAH for an interest free, unsecured, short-term loan that he arranged for Aranik using CLAH’s funds despite the loan not being formally documented.

416    It is clear on the evidence that the Carrabolla Facility was conceived as a specific short-term facility to cover the period before Carrabolla obtained approval for long-term finance from the NAB, in respect of which Carrabolla was offering amongst other things, security over the Carrabolla Facility.

417    That the Carrabolla Facility was to serve as a form of bridging finance pending Carrabolla securing long-term finance is reflected in the fact that there was a very limited period during which the advance was available to be drawn. The Carrabolla Facility was executed on 30 June 2016. The advance was only available to be drawn before 5 July 2016: cl 2.1. Any balance of the facility limit that was not drawn by that date was cancelled on that date: cl 2.4. There was no right to redraw any amounts repaid without CLAH’s permission: cl 2.3. The Carrabolla Facility included an express expiry date of 30 September 2016, three months after it was executed, and it was repayable in full on that date: cl 8.2. All of these features of the Carrabolla Facility are consistent with the facility being short-term finance which was directed to providing a narrow window for draw down (five days) and for full repayment and expiration of the facility within three months.

418    To presage what occurred, the NAB approved finance on 26 July 2016 which was used to make a substantial payment on the Carrabolla Facility. On 27 July 2016, Carrabolla repaid CLAH $688,712.53 on the Carrabolla Facility. On the making of this payment, CLAH discharged and released the Carrabolla Securities. Upon discharge of the Carrabolla Securities, the NAB took, amongst other security, a first ranking mortgage over the Carrabolla Facility.

419    The plaintiffs contend that the funds advanced by the NAB were used to repay the Carrabolla Facility in full. The defendants contend that the payment was a partial payment only and that the Carrabolla Facility not only remained on foot but was extended beyond the date on which it was set to expire, being 30 September 2016. The defendants further contend that additional funds were advanced under the Carrabolla Facility, secured by the Shyzi Securities, on an ongoing basis after the payment that was made on 27 July 2016. The defendants contend that this occurred notwithstanding the Carrabolla Facility included a confined window during which funds could be drawn, which terminated on 5 July 2016, and in circumstances where there was no redraw as of right in respect of any amounts that had been repaid. As I have already mentioned, the defendants submit that the requests for further advances and for the Carrabolla Facility to be extended were made orally by Mr Page to Mr Baker. Mr Page denies he said what Mr Baker attributes to him in relation to specifically obtaining advances under the Carrabolla Facility and requesting an indefinite extension of the term of the facility. I have already addressed why I do not accept Mr Baker’s evidence on this issue. I will now address the circumstances in which the Carrabolla Documents came to be executed in the form in which they were executed.

420    By mid-2016, Mr Joliffe appears to have suffered a significant decline in his health. His family were pressing for the balance owing on the vendor financing on the Carrabolla Property to be paid as a matter of urgency. Ms Page said in her evidence that the Joliffe family were looking for an “immediate settlement”. Ms Page had applied to the NAB for finance for this purpose among others. In circumstances arising from a meeting at the NAB attended by Mr Baker and Mr Page but notably not Ms Page, Ms Page sought interim bridging finance from Mr Baker pending approval of her application for long-term funding from the NAB (see part 9.3 above). Through Mr Baker, CLAH agreed to advance a short-term loan to Carrabolla to repay the vendor finance in advance of Carrabolla obtaining approval for the NAB finance. That much is essentially common ground.

421    The circumstances in which CLAH, through Mr Baker, required Shyzi to provide a guarantee of Carrabolla’s repayment obligations are contentious. The contentious issue relates to whether part of the funds made available under the Carrabolla Facility were for the purpose of Carrabolla investing in a development opportunity with Aranik, which as I have mentioned was a purpose identified among others in the loan offer and in the Carrabolla Facility as executed and of which Ms Page was aware at the time she executed the relevant documents.

10.4.1    The significance of Aranik to CLAH’s claims against Shyzi

422    The dealings between the three protagonists and the companies they each controlled in relation to a $300,000 payment made by CLAH to Aranik on 29 June 2016 is relevant in assessing what funds were in fact advanced under the Carrabolla Facility. It is necessary to determine that issue in order to determine whether the payment made on 27 July 2016 was a full or partial repayment of the Carrabolla Facility. The plaintiffs contend that the Carrabolla Facility was fully paid out. The defendants contend that the payment was a partial repayment only.

423    As mentioned, Aranik is a property investment, development and construction company operating in Newcastle. The name Aranik derives from a combination of the names of Mr Arratoon and his business partner, Mr Nikolovski. Mr Page described Mr Arratoon as a “very successful developer in Newcastle”. Mr Page said he was “really good friends” with Mr Arratoon, trained with him at the gym on a daily basis, and had known him for over 20 years.

424    Mr Page and Mr Baker each acknowledged in their evidence that they regarded it as being to their advantage in their own property development endeavours, including through Yipeeo, to establish a favourable commercial relationship with Mr Arratoon and Aranik. I accept their evidence in that regard. They both said that Mr Arratoon had introduced them to development opportunities in relation to properties that were smaller than those in which Aranik was interested. I accept their evidence on this topic. Their evidence is supported by Mr Arratoon’s evidence. They each acknowledged that at the relevant time, in and around 2016, they regarded Aranik as likely to be a continuing valuable contact for them in this regard. Again, I accept this evidence. I find that Mr Page and Mr Baker were keen to curry favour with Mr Arratoon at this time.

425    As mentioned, Mr Arratoon gave evidence. He was called by the plaintiffs. More so than the other witnesses who gave oral evidence in these proceedings, he presented as essentially being an independent witness in the sense that he was disinterested in the outcome of these proceedings and did not appear to be swayed by his personal friendship with Mr Page. His evidence accorded with commercial common sense and was supported by contemporaneous records. I accept his evidence including that which he gave in relation to the transfer of $300,000 by CLAH to Aranik. The payment of $300,000 was made on 29 June 2016, the day before the Carrabolla Facility was executed. It was to be, and was, repaid in full by Aranik on 16 November 2016. It was advanced by CLAH on interest-free terms and was not secured. This loan between CLAH and Aranik was not formally documented.

426    I make the following findings in relation to the circumstances in which Aranik sought this loan and the basis on which it was made.

427    In 2016, Aranik was developing a property in Warners Bay, Newcastle. Aranik required funds to pay the section 94 development contribution to the council in respect of the development (the Council Fee). The Council Fee had to be paid before the relevant subdivision could be registered. Registration of the subdivision was required before Aranik could commence sales of the individual lots in the Warners Bay development. Mr Arratoon said that Aranik was experiencing a cashflow difficulty at this time and in effect required short-term funding to pay the Council Fee. Mr Arratoon initially thought the Council Fee would be $200,000, but Aranik ended up borrowing $300,000 from CLAH. I will refer to this loan as the Aranik Loan. The change in the amount of this loan from $200,000 to $300,000 occurred in the space of a few days and appears to have only been confirmed in an email sent by Mr Arratoon to Mr Baker on 28 June 2016, the day before the loan was made. Mr Page and Ms Page were not copied to this email. Both Mr Page and Ms Page maintain that they were not aware that the loan was increased. I accept their evidence in this regard.

428    On 28 June 2016, Mr Arratoon sent an email to Mr Baker with the subject line “Loan” in which he provided Aranik’s bank account details and said:

Hi Theo,

Thank you for the offer of borrowing funds can you please deposit into below account the sum of $300k it will be for 8 weeks and then back paid in full.

Both John and I are very appreciative and thank you very much for your trust and generosity.

429    Mr Baker responded, “You’re welcome” and confirmed that he would have the funds transferred the next day.

430    Mr Arratoon’s evidence, which I accept, was that before this exchange of emails, he had a discussion with Mr Baker. He said that he asked Mr Baker about the terms applicable to the advance of the $300,000 and that Mr Baker had confirmed that Aranik did not have to provide security and that the loan would be interest-free. Mr Arratoon says that Mr Baker said to him “No. It’s only a short-term loan. Lemuel has vouched for you.” Mr Arratoon’s expression of gratitude for Mr Baker’s “trust and generosity” is consistent with his understanding that the loan was being made on an interest-free and unsecured basis. Mr Arratoon had the impression at the time that Mr Baker had “obviously researched the development” and that he knew about it. Mr Arratoon’s evidence was that Mr Baker said to him “it’s fine”.

431    It is common ground that CLAH transferred to Aranik the sum of $300,000 on 29 June 2016 and that Aranik repaid this amount in full on 16 November 2016.

432    Within days of the Shyzi Receivers being appointed on 11 September 2020, Mr Arratoon emailed Mr Page attaching a stamped deposit slip showing that the full amount was repaid on 16 November 2016. In his email of 14 September 2020, Mr Arratoon recorded his understanding of why the Aranik Loan was made on interest-free terms. He said it was “due to Aranik introducing [CLAH] to a[n] off market property in in [sic] Kemp St The Junction (Newcastle).” This assertion by Mr Arratoon is consistent with Mr Page’s and Mr Baker’s evidence about their prior dealings with Mr Arratoon in the context of their Yipeeo pursuits.

433    The defendants contend, relying on Mr Baker’s evidence, that the Aranik Loan was wholly unrelated to the Carrabolla Facility and is separate from the $200,000 investment referred to as an approved purpose for use of the funds advanced under the Carrabolla Facility. Mr Baker said that the Aranik Loan was not documented and was unsecured and interest-free. I accept that is so.

434    Mr Baker said that he had daily discussions with the board members of CLAH about what he was “up to” but could not recall any discussion with the board about the Aranik Loan. Mr Baker asserted in cross-examination that he did not disclose the Aranik Loan to the board of directors because it was below CLAH’s “threshold” level of materiality. The Aranik Loan occurred at a time when CLAH was a public company and during a period when Mr Baker was not a director of CLAH and was bankrupt. For the reasons I have already given, I do not accept that Mr Baker had daily discussions with CLAH board members about what he was up to. To the contrary, I find that Mr Baker was at all times the de facto controller of CLAH. Given the findings I have made in relation to the part played by the directors in relation to the operations of CLAH, I infer that it is more likely that Mr Baker’s subterfuge in this respect was directed to concealing the true position from CLAH’s auditors. I accept Mr Baker’s evidence that he did not inform the CLAH directors about the Aranik Loan, but do not accept that was for the reason he gave under cross-examination, namely that the Aranik Loan was below what he claimed to be the relevant materiality “threshold”.

435    Mr Baker claimed that independently of the Aranik Loan, Carrabolla sought via the Carrabolla Facility to obtain in addition to the amount required to pay out the Carrabolla Property ($680,000), a further $200,000 for the purpose of investing in a development opportunity with Aranik. The defendants contend that this amount formed part of the principal sum of $860,000 made available under the Carrabolla Facility. Further, that this was reflected in one of the approved purposes included in both the loan offer and the Carrabolla Facility as executed.

436    By contrast, the plaintiffs contend that the Aranik Loan was discussed between Mr Baker, Mr Page and Ms Page prior to Ms Page executing the Carrabolla Facility. Further, that although the Aranik Loan was not connected with Carrabolla, Shyzi or Ms Page, Mr Baker told Ms Page that he needed to record the Aranik Loan as an advance under the Carrabolla Facility because at the time of entering into the Aranik Loan, CLAH was a listed public company and the making by CLAH of an unsecured and interest-free loan to Aranik would be queried by the directors and any future auditors of CLAH. I accept that Mr Baker told Ms Page that the purpose of the subterfuge was at least in part directed to getting the Aranik Loan past the board of CLAH. Ms Page says that she agreed to this. She appears to have done so because she accepted based on what Mr Page told her that Mr Baker had said to him that:

Well, we’re already doing the Carrabolla loan. I don’t really want to ask Jamie for a formal one. It will take too long. I don’t want to really ask him for security. Do you want to see if Fiona is happy to help Jamie and we just add the $200,000 onto her Joliffe family settlement?

And on that basis she was happy to help Mr Arratoon:

I’m fine to help Jamie. Tell Theo “yes”

437    She did this against the background of her longstanding relationships with Mr Baker and Mr Page, her business dealings with each of them and in the context of Mr Page’s friendship with Mr Arratoon. I infer that she also understood that Mr Baker and Mr Page perceived that it would be to their mutual benefit in their property development dealings to assist Mr Arratoon. It was readily apparent that Ms Page was not particularly concerned about whether the documents she signed represented the true position if she regarded the documents as being to her and/or Mr Page’s advantage. She was, as she repeatedly said, “happy” to oblige.

438    Mr Baker asked Ms Page to provide additional security over Shyzi’s Bonnet Bay Property under the Carrabolla Facility to cover the Aranik Loan. She agreed. She said that it was for that reason that Shyzi (as the registered proprietor of the Bonnet Bay Property) was named as a guarantor in the letter of offer dated 27 June 2016 (the Carrabolla Facility Offer). At that time, Ms Page understood that the Bonnet Bay Property was securing “the Carrabolla loan and Jamie’s loan, kind of amalgamated into one”. On the whole of the evidence it is clear that Ms Page’s reference to “Jamie’s loan” was a reference to what was ultimately $300,000 (not $200,000) advanced to Aranik and not a standalone investment by Carrabolla (or another Page-related entity) in Aranik.

439    I accept that the requirement for the Shyzi Securities to be added to the suite of documents comprising the Carrabolla Documents was represented by Mr Baker to be necessary to provide sufficient security coverage for the Aranik Loan as well as the Carrabolla bridging finance.

440    It is not disputed that Ms Page on behalf of Shyzi executed the Shyzi Securities in circumstances where she received independent legal advice and where she appreciated that the Carrabolla Facility referred to a purpose of the advance being for use in making an investment of $200,000 with Aranik. The documentation of the Shyzi Securities did not include an express limitation to reflect that the security was in respect of only the “the Carrabolla loan and Jamie’s loan, kind of amalgamated into one” as Ms Page said she understood. In accordance with the legal principles which I have identified, the Shyzi Securities are enforceable against Shyzi in accordance with their terms, which I will address below when considering the proper construction of the Carrabolla Documents.

441    In addition to the Carrabolla Documents, there is another document that the defendants rely on to support their contention that $200,000 was advanced under the Carrabolla Facility from CLAH to be applied to the purpose of investing in a development opportunity with Aranik. In her re-examination, Ms Page was taken to a deed between CLAH, Shyzi (as Borrower) and Ms Page (as Guarantor) dated 27 June 2016 (the Shyzi Deed), which became Exhibit 3.

442    Ms Page said that she was required by Mr Baker to sign a document confirming that CLAH was authorised to advance $200,000 to Aranik before the Carrabolla Facility was executed. I infer that the Shyzi Deed was the document which Ms Page recalls signing at this time.

443    The Shyzi Deed provided that on 27 June 2016, CLAH would advance to Shyzi as Borrower $200,000 on the following terms (as written):

2.    [Shyzi] acknowledges and agrees to pay to [CLAH] the sum of Two Hundred Thousand Dollars ($200,000.00) plus interest on the sum at 2% per month compounded monthly and capitalized (hereinafter referred to as the “Amount Owed”) until such time as the Amount Owed is paid to [CLAH] and should [Shyzi] not pay [CLAH] the Amount Owed within eight weeks of today's date then [Shyzi] acknowledges and agrees that [CLAH] may commence legal proceedings against [Shyzi] for the payment to [CLAH] of the Amount Owed and [Shyzi] further agrees to pay the legal costs of [CLAH] in any proceedings against [Shyzi] on an indemnity basis (hereinafter referred to as “Legal Costs”).

3.    [Shyzi] acknowledges that [CLAH] has a caveatable interest over all of [Shyzi’s] properties, including the [Bonnet Bay Property] and any other property owned by a private company of which [Shyzi’s] directors are directors or any property owned by a private company of which [Shyzi] or its directors are shareholders (hereinafter referred to as the "[Shyzi’s]Properties"), for the Amount Owed and Legal Costs and [Shyzi] acknowledges and consents to the granting of a charge over the [Shyzi’s] Properties in favour of [CLAH] until the Amount Owed and Legal Costs are paid in full to [CLAH] and [Shyzi] authorises [CLAH] to register a caveat over any or all of [Shyzi’s] Properties in favour of [CLAH], noting [CLAH's] interest in [Shyzi’s] Properties and preventing any dealings on the title of [Shyzi’s] Properties until the Amount Owed and Legal Costs are paid in full to [CLAH].

4.    [Ms Page] hereby jointly and severally, absolutely, unconditionally and irrevocably guarantees the due and punctual payment by [Shyzi] of the Amount Owed and Legal Costs owing to [CLAH] by [Shyzi] from time to time (“the Guaranteed Money”) and undertakes that if [Shyzi] does not pay to [CLAH] any of the Guaranteed Money when due, [Ms Page] will pay the Guaranteed Money to [CLAH] immediately on demand.

5.    At [CLAH's] request, [Shyzi] and [Ms Page] must do all things necessary and required, including executing any document, to make sure that [CLAH’s] security interest in respect of [Shyzi’s] Properties is a perfected.

(Emphasis in original).

444    Attached to the Shyzi Deed was a payment direction executed by Ms Page on her own behalf and on behalf of Shyzi which authorised CLAH to pay $200,000 to Aranik. There is no evidence of CLAH making a payment of $200,000 to Aranik in accordance with this direction to pay. The only payment made to Aranik by CLAH at this time was the Aranik Loan of $300,000. That was a loan made directly between CLAH and Aranik.

445    The following features of the Shyzi Deed bear noting. First, Carrabolla is not a party to this deed. Second, the Shyzi Deed requires that the $200,000 be repaid “within eight weeks”. Third, the security provided for in the Shyzi Deed is over Shyzi’s assets with a principal focus on the Bonnet Bay Property and also an unspecified “private company” of which Shyzi or its “directors” are shareholders. Fourth, the loan is guaranteed by Ms Page in her personal capacity. Fifth, Shyzi and Ms Page are required to do all things required by CLAH to perfect the security interest conferred under the document. Finally, there is a binding direction given by Shyzi and executed by Ms Page to pay the $200,000 to Aranik. The focus of the Shyzi Deed in relation to security is on the assets of Shyzi. This is consistent with the evidence of Ms Page and Mr Page that Mr Baker told them that Shyzi had to put up the Bonnet Bay Property to get the Aranik Loan past CLAH’s board.

446    On the same day as the Shyzi Deed was signed, CLAH made a written offer to lend Carrabolla $860,000 (the Carrabolla Finance Offer). The limit of $860,000 included, in addition to the amount required to repay vendor finance on the Carrabolla Property and related expenses and a small surplus, an amount of $200,000 the purpose of which was described as being to invest in a development opportunity with “Jamie and John”. Jamie is a reference to Jamie Arratoon and John is a reference to John Nikolovski, together the principals of Aranik.

447    The Carrabolla Finance Offer attaches a “loan offer schedule form” last updated at 4.57 pm on 27 June 2016 which, amongst other things, provides as follows:

(1)    Proposed Lender: CLAH;

(2)    Borrower/s: Carrabolla;

(3)    Guarantor/s: Shyzi (in its own right and as trustee for the Phillem No. 1 Trust and the Phillem No. 2 Trust) and Ms Page;

(4)    Security:

(5)    Loan Amount: $860,000;

(6)    Monthly standard interest rate: 2%;

(7)    Monthly concessional interest rate: 1%;

(8)    Minimum loan period: 2;

(9)    Maximum loan period in months: 3;

(10)    Early repayment fee (post minimum loan period) in month: 0;

(11)    Interest payment cycle in months: 1;

(12)    Estimated date of advance:1 July 2016;

(13)    Estimated date for full repayment: 30 September 2016;

(14)    Permitted usage of funds:

(15)    Loan exit strategy: “From receipt of funds from the sale of other investment property; and Loan from NAB”.

448    I find that the reference to $200,000 being advanced for the purpose of investing in a “development opportunity with Jamie and John” was inserted to provide some cover for CLAH making an essentially undocumented, unsecured and interest-free loan to Aranik. I find that each of Mr Baker and Ms Page knew this at the time the Carrabolla Documents and the Shyzi Deed were executed. The Aranik Loan was made two days after the Shyzi Deed was executed and the day before the Carrabolla Documents were executed. The Aranik Loan was in fact in the sum of $300,000, although Ms Page understood that it was to be a loan for $200,000. Mr Baker knew that in fact $300,000 was loaned to Aranik, but he did not update the Carrabolla Documents to reflect this and did not inform Mr Page or Ms Page that the sum loaned to Aranik had increased from $200,000 to $300,000.

449    Ms Page admits that she executed the Carrabolla Facility on 30 June 2016 which recorded that an approved purpose for that facility was to invest $200,000 in a development opportunity with Aranik. She was evasive in her evidence as to why she executed the document when on her own evidence she knew that it did not represent what she maintains she understood at the time to be the true position. She repeatedly said that she was happy to sign the facility and that she was happy to help Mr Arratoon. But she would not confront in terms the fact that she had signed a legal document that did not represent what she maintains was the true position at the time she signed it. Instead of answering questions directed to this issue, she repeatedly asserted that at no time did she invest $200,000 in a development opportunity with Aranik. I accept that Ms Page and her companies did not in fact invest in a development opportunity with Aranik at this time. I further accept that Ms Page and her companies did not have an intention to invest in a development opportunity with Aranik at the time they executed the Carrabolla Facility.

450    I find that Ms Page signed the Carrabolla Facility knowing that the first of the identified purposes for the loan did not reflect the true position. In making the findings that I have concerning the purported advance of $200,000 under the Carrabolla Facility for an investment opportunity with Aranik, I have placed considerable weight on the evidence of Mr Arratoon. I find that Ms Page, like Mr Baker, was prepared to execute significant legal documents knowing them to be false in material respects and that this is one of the many reasons both her and Mr Baker’s evidence must be approached with great caution.

451    Mr Arratoon denied having any conversation with Ms Page in around June 2016 regarding an investment opportunity with Aranik. He also denied having any discussions with Mr Page regarding a $200,000 investment by Ms Page, or companies associated with her, in a development opportunity with Aranik. He said that in June 2016, Aranik was not inviting third party investment in any development opportunity it was undertaking at that time. I accept Mr Arratoon’s evidence.

452    Returning to Ms Page’s evidence, I find that Ms Page read and understood the approved purposes to which use of advances made under the Carrabolla Facility could be applied. In this regard, I note that the purposes were also included in the Carrabolla Facility Offer. Further, that the purposes are clearly stated in the Carrabolla Facility itself and referenced in the short Drawdown Notice which Ms Page signed on the same date as she executed the Carrabolla Facility. I find that she signed the documents in this form (referring to an investment opportunity with “Jamie and John”) because she regarded it as a favour for Mr Page, Mr Baker and ultimately, although unbeknownst to him, Mr Arratoon. Mr Baker and Mr Page both saw an opportunity to ingratiate themselves with Mr Arratoon and believed that it would be to their mutual benefit through their property development business which they were operating through Yipeeo.

453    I accept Mr Page’s evidence that he understood from Mr Baker that Mr Baker wanted Ms Page to agree to the inclusion of the reference to an investment with Aranik in order to get the funds for Aranik past CLAH’s board. I infer that Ms Page understood this. That was one of the reasons why she was content to sign the documents even though she knew that they did not reflect the true position. I also infer that Ms Page’s preparedness to do this was because she understood through Mr Page that it was a temporary cashflow impediment that Aranik was experiencing and that Aranik would repay the advance to CLAH within eight weeks.

454    Ms Page executed the Carrabolla Facility, notwithstanding that it falsely recorded that $200,000 purportedly to be drawn upon execution was for an investment with Aranik, because she understood that this would assist Mr Baker in concealing the true position from the directors and/or auditors of CLAH. Ms Page asserts that she received independent legal advice from her own solicitors on the effect of the documents. That Ms Page was prepared to execute a document that did not represent what she regarded to be the true position in order to assist Mr Baker in duping the board and/or auditors of CLAH is one of the matters which informs the adverse conclusion I have reached in relation to Ms Page’s credit and reliability. The execution of the Carrabolla Facility by Ms Page knowing that the documents were important legal documents that on her own evidence did not represent the true arrangements documented therein was not an isolated occurrence. Ms Page was similarly prepared to execute a document that she now maintains did not represent the true position in the context of the Ohmut/Parkway Facility, which I will address in considering CLAH’s claims against Ohmut and Parkway One.

455    That Mr Baker requested Ms Page to join with him in documenting transactions in this way informs the caution with which I approach Mr Baker’s evidence. In the main, the transaction documents on which CLAH relies in this proceeding were prepared by solicitors instructed by Mr Baker, although at times Mr Baker claims responsibility for drafting some of the documents. It is another illustration of the dishonesty of Mr Baker and Ms Page that taints their dealings with each other, directly and indirectly, and with others, in the relevant period.

456    On the totality of the evidence on this issue, CLAH has not established that the $200,000 advance described in the Shyzi Deed was made. I find that the direction to pay as documented in the Shyzi Deed was not actioned. This direction to pay was overtaken by the $300,000 transfer from CLAH to Aranik that I have addressed above. CLAH has not established that it advanced $200,000 under the Carrabolla Facility to Carrabolla to make the Aranik Investment. While this purpose was documented as an approved purpose in the Carrabolla Facility, it was not actioned by the making of an advance to Carrabolla. In this instance, I accept Ms Page’s evidence as to her dealings with Aranik in relation to the Carrabolla Facility. I do not accept Mr Baker’s evidence on this topic. In addition to Mr Baker’s evidence being contradicted by Mr Arratoon’s evidence, I find his evidence on this topic to be wholly implausible for the following additional reasons.

457    The evidence demonstrates that Mr Arratoon was seeking short-term finance on a fairly urgent basis and that he expected on reasonable grounds to be able to make full repayment within eight weeks given that upon paying the Council Fee, individual lots in the development could be marketed for sale. Mr Arratoon expected that would result in cash inflows with which he could repay the short-term loan. Mr Arratoon initially thought that Aranik required short-term finance of $200,000 but within a short time revised his estimate to be $300,000. As I have mentioned above, Mr Page and Ms Page were not privy to the increase in the proposed amount of the Aranik Loan from $200,000 to $300,000. Mr Baker agreed to it without recourse to either of them. That is a further matter that is consistent with the Carrabolla Facility being used as a financial fig leaf to quell any queries being raised within CLAH or by its auditors.

458    Mr Page conveyed to Ms Page and to Mr Baker that Mr Arratoon was seeking short-term finance in the sum of $200,000. I accept Mr Page’s and Ms Page’s evidence to the effect that Mr Baker suggested that he could cause CLAH to advance the sum of $200,000 to Aranik if Ms Page agreed to document the Carrabolla Facility in a way that included this amount and included additional security over the Bonnet Bay Property, owned by Shyzi, in support of the Carrabolla Facility. Ms Page agreed to this. Mr Baker then asked her to execute the Shyzi Deed to facilitate the advance of funds prior to the execution of the Carrabolla Documents, which she did.

459    Mr Baker was cross-examined on the Shyzi Deed. He prepared the document. Mr Baker denied that the document was prepared for the purpose of advancing the amount of $200,000 to Mr Arratoon in effect to pay the Council Fee. Instead, he insisted that the Shyzi Deed related to the “Carrabolla loan, the $200,000 that Carrabolla wanted to loan to invest with Arratoon” and that it had nothing to do with the Aranik Loan. I do not accept that Mr Baker gave truthful evidence on this issue. I reject his evidence.

460    I find that Mr Baker prepared the Shyzi Deed, the Carrabolla Facility Offer and gave instructions to CLAH’s solicitors in relation to the preparation of the Carrabolla Facility at a time when he understood that Aranik was seeking a short-term loan of $200,000 for the purpose of paying the Council Fee. I infer that Mr Baker appreciated that obtaining additional security could be advantageous to CLAH at a future date. It does not appear that any steps were taken to discharge the Shyzi Securities in the period after payments were made respectively by Carrabolla on 27 July 2016 and by Aranik on 16 November 2016. At this time, Mr Page, Ms Page and Mr Baker were still on good terms, enjoyed a close relationship, and were involved in mutual business dealings with each other, including through the companies they each controlled. Further, I find that Mr Baker’s understanding that the quantum required by Aranik was limited to $200,000 for the payment of the Council Fee changed after Ms Page had executed the Shyzi Deed and, I infer, after he had sent the Carrabolla Facility Offer and given final instructions in relation to the preparation of the Carrabolla Documents. For that reason, these documents refer to $200,000 and not $300,000 as the principal of the Aranik Loan.

461    By, at the latest, 28 June 2016 when he received Mr Arratoon’s email, Mr Baker knew that Aranik was seeking a short-term loan in the sum of $300,000, not $200,000. Mr Baker responded to Mr Arratoon’s email. By that exchange of emails, CLAH agreed that it would advance to Aranik an amount of $300,000 for an eight-week term. I infer that the loan was to be on an interest-free basis and that Aranik was not required to provide security – that being the effect of Mr Arratoon’s evidence and also being consistent with the contemporaneous communications between Mr Arratoon and Mr Baker.

462    Mr Baker did not seek board approval in respect of the Aranik Loan. When challenged on this he claimed that the Aranik Loan did not meet CLAH’s threshold for materiality. I do not accept that was the reason that Mr Baker did not disclose the Aranik Loan to the directors of CLAH. Mr Baker had orchestrated the documentation of the Carrabolla Facility so that if the payment to Aranik was questioned, the Carrabolla Finance Offer would provide an explanation of sorts. In addition, for the reasons I have already given, I find that CLAH was under Mr Baker’s control at the relevant time. The evidence does not support an inference that the directors played an active role in CLAH’s operations at the relevant time. It was put to Mr Baker in cross-examination that his conduct was dishonest. He countered saying that his conduct was “absolutely not” dishonest and reprised his claim that the arrangement documented in the Shyzi Deed was “part of the Carrabolla loan”. I reject Mr Baker’s evidence. I do not accept that he was telling the truth.

463    Mr Baker arranged for the Carrabolla Documents and the Shyzi Deed to be prepared with references to the $200,000 payment to, or in connection with, Aranik with a view to avoiding the payment to Aranik being queried by CLAH’s auditors.

464    Another feature of Mr Baker’s evidence that I find to be incredulous is that he sought to explain the necessity for the Shyzi Deed being entered into only a few days before the Carrabolla Documents were executed on the basis that there was “some urgency” about the alleged proposed investment with Aranik and that Carrabolla (by which he must have meant Shyzi given the terms of the deed) may have wanted to draw down the $200,000 prior to the Carrabolla Facility being executed. He said that the document was “an internal one that I prepare in the event of urgent loan draw-downs”. He sought to explain why he did not follow his asserted usual practice of identifying the purpose of the finance in this document because “it was done on the basis that it was an urgent requirement for funding”. Mr Baker did not undertake any due diligence in relation to the alleged investment that he maintains was the purpose of the payment under the Shyzi Deed. He asserted that he instead relied on his knowledge of the assets that were being offered as security in support of the Carrabolla Facility. The coincidence as to the amount and timing of the advance with the initial request for what became the Aranik Loan is telling. There is a dearth of evidence as to the nature of the purported investment with Aranik, why it was urgent and how it was to be repaid within eight weeks. Critically, Mr Baker’s evidence is directly contradicted by Mr Arratoon’s evidence. CLAH has not established that the payment was in fact made as per the direction to pay and has not established that this amount was advanced under the Carrabolla Facility.

465    Finally, on its face, the Shyzi Deed refers to a term of eight weeks – that coincides precisely with the term of the Aranik Loan. The eight-week term of the Aranik Loan is explained by the cashflow obstacle presented by the need for Aranik to pay the Council Fee before the sale of individual lots in the Warner Bay development could commence. That is more than a coincidence. Taken in conjunction with the surrounding evidence and particularly having regard to Mr Arratoon’s evidence on this topic, it is another indication that Mr Baker’s evidence about $200,000 being made available to Carrabolla under the Carrabolla Facility for the purpose of investing in a development opportunity with Aranik was a fabrication introduced by Mr Baker into the documentation of the Carrabolla Facility. It was a lie in which Ms Page was complicit. It was a lie in which Mr Baker persisted when giving his evidence in these proceedings, but which Ms Page now eschews.

466    I find that the Aranik Loan was made in the sum of $300,000 on 29 June 2016 and was fully repaid on 16 November 2016. The Aranik Loan was interest-free and was unsecured. It was not an advance made to Ms Page or her companies or at their direction. It was not made under the Carrabolla Facility. I further find that CLAH has not proved that Shyzi has any liability arising as a consequence of $200,000 being paid to Aranik in accordance with Shyzi’s direction pursuant to the security referred to in the Shyzi Deed. Similarly, CLAH has not established that $200,000 was advanced under the Carrabolla Facility for the purpose of the Aranik investment.

467    I will now address the Carrabolla Documents to the extent that they are relevant to the claim against Shyzi. In doing so, I apply the principles which I have identified as to the approach to construction of a commercial suite of documents.

10.5    The Carrabolla Documents

468    As mentioned, it is common ground that the Carrabolla Documents were executed on 30 June 2016. In evidence there are various emails between the solicitors for the parties to the Carrabolla Documents forwarding the final form of these documents as well as various certificates and declarations as to Ms Page receiving independent legal advice prior to executing the Carrabolla Documents.

469    In evidence, there appear to be two tranches of certificates signed by Ms Page on 30 June 2016. The first tranche of certificates contain a declaration that Ms Page, in her capacity as a guarantor, received independent legal advice in respect of the Carrabolla Facility, the Carrabolla GSA and the Shyzi GSA prior to signing each of these documents. Identical declarations are given by Ms Page in her capacity as sole director of Shyzi in respect of legal advice received in relation to the Carrabolla Facility and the Shyzi Securities and as the sole director of Carrabolla in respect of legal advice received in relation to the Carrabolla Facility and the Carrabolla Securities. The second tranche of certificates contain a declaration that Ms Page, in her capacity as a guarantor, decided not to obtain independent financial advice in respect of the Carrabolla Documents. An identical declaration is given by Ms Page in her capacity as sole director of Shyzi. When Ms Page was asked about these certificates in cross-examination, she said she was “happy to sign” them and confirmed their accuracy. I am satisfied that Ms Page signed the Carrabolla Documents after receiving legal advice as to the effect of each of the documents and after declining the opportunity to receive financial advice in respect of the Carrabolla Documents.

470    Ms Page’s oral evidence demonstrated that she was not really concerned about what the documents said because she understood that she was signing them in a form which she knew not to reflect the true position. She did this because she believed that to do so would help Mr Baker and Mr Page in advancing their relationship with Mr Arratoon. She was happy to sign the documents on that basis. It was common ground that the Carrabolla Documents are legally binding agreements and that Ms Page was authorised to sign them in her capacity as the director of each of Carrabolla and Shyzi.

471    It will be necessary to address in detail the evidence concerning the transactions purportedly made on the Carrabolla Facility. One of the issues that falls to be determined in relation to CLAH’s claims against Shyzi is whether the payment on 26 July 2016 was a full repayment of what was then owing under the Carrabolla Facility and whether any subsequent advances were made under the Carrabolla Facility after 26 July 2016. Before I come to consider the evidence in relation to those matters, I will first address the proper construction of the Carrabolla Documents as relevant to the validity of the appointment of the Shyzi Receivers. In doing so, my principal focus will be on the Carrabolla Facility and the Shyzi Securities. That is because it is common ground that the Carrabolla Securities were discharged in order to facilitate settlement of a Markets Loan facility between Carrabolla and the NAB (the NAB Loan). The NAB took security over Carrabolla’s assets in support of the loan that NAB advanced to Carrabolla. Funds advanced under the NAB Loan were used by Carrabolla to make the payment to CLAH on 26 July 2016.

472    The defendants do not rely on the Carrabolla Securities as justifying the appointment of the Shyzi Receivers – the defendants seek to justify the appointment of the Shyzi Receivers on the basis of the power afforded to CLAH under the Shyzi GSA.

473    The plaintiffs argue that the discharge by CLAH of the Carrabolla Mortgage and the release of the Carrabolla GSA upon repayment made on 26 July 2016 had the effect in law of discharging the Shyzi GSA and the Shyzi Mortgage. For the reasons to which I will come, I reject the plaintiffs’ contention that the discharge and release of the Carrabolla Securities resulted in the discharge and release of the Shyzi Securities. On the proper construction of the Shyzi Securities, that does not follow. It is also inconsistent with the fact that whereas steps were taken in relation to the discharge and release of the Carrabolla Securities, no such steps were taken in relation to the Shyzi Securities. The fact is that the Shyzi Securities were not discharged at the time the Carrabolla Securities were discharged. That was in the context where the discharge of the Carrabolla Securities was necessary for the settlement of the NAB Loan but the discharge of the Shyzi Securities was not necessary for that settlement to proceed. It was also in the context where the Aranik Loan was not due to be repaid until November 2016. To the extent that Mr Baker was concerned to have some cover for CLAH making the Aranik Loan if queries were raised by CLAH’s auditors, there was a continuing utility for the Shyzi Securities to be in place.

10.5.1    The Carrabolla Facility

474    The parties to the Carrabolla Facility are described in part 1.1.1 of these reasons. Carrabolla was defined as the Borrower. Ms Page and Shyzi, in its own capacity and as trustee of the Phillem No. 1 Trust and as trustee of the Phillem No. 2 Trust, were defined as “each a Guarantor”. CLAH was defined as the Financier.

475    The sole recital records that:

BACKGROUND

A     The Transaction Parties have requested [CLAH] to provide [Carrabolla] with the Advance Facility [Carrabolla Facility] under which financial accommodation may be made available to [Carrabolla] under the terms of the Transaction Documents.

476    The Transaction Parties are Carrabolla and Shyzi. Carrabolla was the sole Borrower. The Advance Facility is defined as the Carrabolla Facility. The Transaction Documents relevantly include the Carrabolla Documents (see definitions extracted below). Recitals can be used to construe the operative provisions: Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407; 76 NSWLR 603 at [379]-[390] (Campbell JA, Allsop P and Giles JA agreeing).

477    Clause 1 is addressed to definitions and interpretation. Relevantly cl 1.1 provides as follows (emphasis in original):

(d)     Advance means each loan drawn down under the Advance Facility in accordance with this document or, as applicable, the outstanding principal amount of that Advance (including capitalised interest) at the relevant time;

(e)     Advance Facility means the provision of Advances to the Borrower as provided in this document;

(f)     Advance Facility Limit means the amount specified in Item 1 of Schedule 1;

(g)     Advance Facility Outstandings means at the relevant time the Principal Outstanding and all interest and fees owing or accrued in relation to the Advance Facility;

478    The relevant amount specified in Schedule 1, Item 1 is $860,000.

479    Clause 1.1 relevantly continues:

(l)     Authorised Officer means:

(i)     in relation to a Transaction Party, any director or company secretary of the Transaction Party, any lawyer acting for the Transaction Party or any person nominated by the Transaction Party by a notice to the Financier as an authorised officer on behalf of the Transaction Party to sign notices or documents in connection with any of the Transaction Documents; and

(ii)     in relation to the Financier, any person whose title or office includes the word director, associate director, manager or company secretary, or any person acting in any of those offices, or any person appointed as an Authorised Officer by the Financier or any lawyer acting for the Financier;

480    There is no suggestion in the evidence that Mr Page was nominated in writing as an Authorised Officer by any of the Transaction Parties. The defendants’ contention that Mr Page was relevantly the agent of the Transaction Parties is not predicated on there being a nomination in writing making him an Authorised Officer for the purpose of the Carrabolla Facility.

481    Clause 1.1 defines the Availability Period for the Carrabolla Facility:

(m)     Availability Expiry Date means the date specified in Item 2 of Schedule 1;

(n)     Availability Period means the period commencing on the date all Conditions Precedent have been satisfied (or waived in writing by the Financier) and expiring on the Availability Expiry Date;

482    The relevant date specified as the Availability Expiry Date in Schedule 1, Item 2 is 5 July 2016. On 29 June 2016, CLAH’s solicitor, Diamond Conway, wrote to Ms Page’s solicitor, Bartier Perry, requiring that the Carrabolla Facility be returned in executed form and all other conditions precedent to be satisfied by 3pm on 30 June 2016. The relevant Conditions Precedent are set out in Schedule 5. I find that the Availability Period for the Carrabolla Facility commenced on 30 June 2016 and expired on 5 July 2016. Clause 2 engages these definitions and is addressed to the availability and limits of the Carrabolla Facility.

483    Clause 1.1 relevantly continues:

(r)     Collateral Security means any Security Interest, Guarantee or other document or agreement at any time created or entered into as security for any Secured Money;

484    The definition of “Security Interest” is extracted below.

485    Clause 1.1 relevantly continues:

(y)     Drawdown Notice means a notice under clause 4.1;

(z)     Drawing means each utilisation of the Advance Facility by means of a drawdown under the provisions of this document;

…

(dd)     Event of Default means any event described in clause 15 or otherwise specified in this document as an Event of Default;

(ee)     Expiry Date means the date in Item 3 of Schedule 1;

486    The relevant Expiry Date specified in Schedule 1, Item 3 is 30 September 2016.

487    Clause 1.1 relevantly continues:

(ff)     Financial Indebtedness means any indebtedness or other liability (present or future, actual or contingent) relating to any financial accommodation including indebtedness or other liability:

(i)     for money borrowed or raised;

…

…

(kk)     Guarantee means any guarantee, indemnity, letter of credit, performance bond, legally binding letter of comfort or suretyship, or any other obligation or irrevocable offer (whatever called and of whatever nature):

(i)     to pay or to purchase;

(ii)     to provide funds (whether by the advance of money, the purchase of or subscription for shares or other securities, the purchase of assets, rights or services, or otherwise) for the payment or discharge of;

(iii)     to indemnify against the consequences of default in the payment of, or

(iv)     to be responsible otherwise for,

an obligation or indebtedness of another person, a dividend, distribution, capital or premium on shares, stock or other interests, or the insolvency or financial condition of another person, but does not include a guarantee provided by a subparticipant of the Financier to the Financier;

(ll)     Guarantor means each party to this document named as a Guarantor and any other person who gives a Collateral Security or any of them;

…

(nn)     Insolvency Event means the happening of any one or more of the following events:

(i)     an application (not being an application that is being contested in good faith and that is withdrawn or dismissed within 5 Business Days of its commencement) is made to a court for an order or an order is made that a body corporate be wound up or that a liquidator or provisional liquidator be appointed to a body corporate;

(ii)     except to reconstruct or amalgamate while solvent on terms approved in writing by the Financier, a body corporate enters into, or resolves to enter into, a scheme of arrangement, deed of company arrangement or composition with, or assignment for the benefit of, all or any class of its creditors, or it proposes a reorganisation, moratorium or other administration involving any of them;

(iii)     except to reconstruct or amalgamate while solvent upon terms approved in writing by the Financier, a body corporate resolves to wind itself up or otherwise dissolve itself, or gives notice of intention to do so, or is otherwise wound up or dissolves;

(iv)     a body corporate is unable to pay its debts as they fall due or is or states that it is insolvent or is treated as or presumed insolvent under any applicable legislation;

(v)     a receiver, receiver and manager, trustee, administrator or similar official is appointed over any or all of the assets or undertaking of a body corporate;

(vi)     a body corporate takes any step to obtain protection or is granted protection from its creditors, under any applicable legislation;

(vii)     a Liquidation occurs in relation to a person; or (viii) anything analogous or having a substantially similar effect to any of the events specified above happens under the law of any applicable jurisdiction;

…

(pp)     Interest Period means each interest period for an Advance described in clause 6.2;

(qq)     Interest Rate means 1% per month;

(rr)     Liquidation includes provisional liquidation, administration, receivership, compromise, arrangement, amalgamation, reconstruction, winding up, dissolution, assignment for the benefit of creditors, arrangement or compromise with creditors, bankruptcy or death;

…

(iii)     Secured Money means all money that each Transaction Party (whether alone or with another person) is or at any time may become actually or contingently liable to pay to or for the account of the Financier (whether alone or with another person) for any reason whatever under or in connection with a Transaction Document. Secured Money includes money by way of principal, interest, fees, costs, indemnities, Guarantees, charges, duties or expenses or payment of liquidated or unliquidated damages for which a Transaction Party is or at any time may become liable under or in connection with a Transaction Document, or as a result of a breach of or default under or in connection with a Transaction Document. Where a Transaction Party would have been liable but for its Liquidation, it will be taken still to be liable;

(Italics emphasis added.)

488    I pause to note that the definition of Secured Money while undoubtedly broad is constrained by the repeated use of the qualifying phrase “under or in connection with a Transaction Document”. The definition of Transaction Document is extracted below.

489    Clause 1.1 relevantly continues:

(jjj)     Securities means:

(i)     the Security Documents; and

(ii)     any Collateral Security;

(kkk)     Security Documents means:

(i)     the securities and other documents referred to in Schedule 4; and;

(ii)     any other security or document incidental, collateral or supplementary to the securities or documents referred to in paragraph (i) as required by the Financier;

490    The relevant securities referred to in Schedule 4 are the Carrabolla Securities and the Shyzi Securities and all “forms, declarations and ancillary documents as required” by CLAH.

491    Clause 1.1 relevantly continues:

(lll)     Security Interest means any interest held as security for the payment of a monetary obligation or the performance of any other obligation, including:

(i)     a mortgage, charge, encumbrance, lien, pledge or hypothecation;

(ii)     a bill of sale, assignment, title retention arrangement, trust or power held as security; and

(iii)     any ‘security interest’ for the purposes of the Personal Property Securities Act 2009 (Cth);

…

(qqq)     Transaction Documents means:

(i)     this document;

(ii)     the Securities;

(iii)     any document or agreement entered into or provided under or in connection with, or for the purpose of amending or novating, any of the above;

(iv)     any undertaking by or to a party or its lawyers under or in relation to any of the above; and

(v)     any other document that the Financier and the Borrower agree is a Transaction Document;

492    On the evidence before me, the Transaction Documents as defined under the Carrabolla Facility comprised the Carrabolla Documents, that is the Carrabolla Facility and each of the Carrabolla and Shyzi Securities.

493    Returning to the relevant definitions in cl 1.1:

(rrr)     Transaction Party means the Borrower and each Guarantor or any one or more of them;

(sss)     Trust means the trust (if any) described in Item 7 of Schedule 1, and Trust Deed means the deed of trust or settlement described in that item; and

(ttt)     Undrawn Commitment means at the relevant time, the Advance Facility Limit less the aggregate of the Principal Outstanding, at that time.

494    Schedule 1, Item 7 lists the details of the Phillem No. 1 Trust and the Phillem No. 2 Trust and names Shyzi as the relevant trustee.

495    For the present analysis, the following terms are important.

496    Clause 2, to which I have already referred, provides:

2    Availability and limits

2.1    Availability of [Carrabolla] Facility

Subject to this document the Financier agrees with [Carrabolla] to make available the [Carrabolla] Facility to [Carrabolla] during the Availability Period.

2.2     Limit of [Carrabolla] Facility

[Carrabolla] will not be entitled to give a Drawdown Notice for an Advance and [CLAH] will have no obligation to comply with any request contained in a Drawdown Notice for an Advance if the Drawing would result in the aggregate of the Principal Outstanding exceeding the [Carrabolla] Facility Limit.

2.3     No redrawings

Subject to this document unless otherwise agreed to by [CLAH], [Carrabolla] will not be entitled to redraw Advances repaid.

2.4     Cancellation

On the Availability Expiry Date, any Undrawn Commitment under the [Carrabolla] Facility will be cancelled.

497    The following features of the agreement may immediately be noted.

498    First, cl 2 provides amongst other things that CLAH agrees with Carrabolla to make available the Advance Facility to Carrabolla during the Availability Period. The Availability Period expired on 5 July 2016. As will be seen, many of the claimed “advances” which CLAH maintains were made under the Carrabolla Facility were made after the expiry of the Availability Period. Mr Baker gave oral evidence about Mr Page asking to extend the Expiry Date for the Carrabolla Facility, which Mr Page denied, but did not suggest that the Availability Period was varied. The extension of the Expiry Date by itself would not result in funds being made available for additional Advances under the Carrabolla Facility, it would simply extend the date for repayment of the principal outstanding. In any event, Mr Baker’s evidence on this topic was redolent of ex post facto reconstruction in the witness box. As I have said, I do not accept that he was telling the truth on this issue. I do not accept that Mr Page made the request for the Carrabolla Facility to be extended. The fact that the Carrabolla Facility was in the nature of bridging finance and that CLAH was described as being in the business of providing short-term financial accommodation are consistent with the conclusion that CLAH did not agree to vary the terms of the Carrabolla Facility to provide long-term financing in response to Mr Page’s series of requests made from mid-2016 onwards.

499    Second, cl 2.3 provides that unless otherwise agreed by CLAH, Carrabolla is not entitled to redraw Advances which have been repaid. In this respect, to the extent that repayments were made in the period before 30 September 2016, being Carrabolla Facility’s Expiry Date, Carrabolla was not entitled to redraw the repayments which on CLAH’s case totalled $690,739.35 without CLAH’s agreement. There is no suggestion in the evidence that Carrabolla sought or obtained CLAH’s approval to redraw the amounts that it had repaid under the Carrabolla Facility. No submission was made to suggest that the payments which the defendants contend were made under the Carrabolla Facility after the repayment on 26 July 2016 were made as a consequence of CLAH agreeing to permit funds to be redrawn after the expiration of the Availability Period on 5 July 2016.

500    Third, cl 2.4 provides that on the Availability Expiry Date (5 July 2016) any Undrawn Commitment under the Carrabolla Facility will be cancelled. The Facility Limit was $860,000. A Drawdown Notice (as provided for in cl 4) was executed by Ms Page on 30 June 2016, the same day the Carrabolla Documents were executed. That Drawdown Notice was for the full sum of $860,000. It purportedly included the $200,000 to be used to invest in Aranik. Mr Baker maintained that this was the true position and that those funds were advanced. I do not accept his evidence as truthful on this issue. I infer that his evidence was directed to supporting CLAH’s position that the repayment which was made upon the NAB facility being approved was only a partial repayment of the Carrabolla Facility.

501    If Mr Baker’s evidence is accepted, then the whole of the Advance Facility was drawn within the Availability Period. The Availability Period expired and was not extended. As I have already said, I reject Mr Baker’s evidence concerning the Aranik Loan. I have found that this amount was not drawn under the Carrabolla Facility. I find that despite the Drawdown Notice being for $860,000, that only $680,000 was in fact advanced to Carrabolla under the Carrabolla Facility pursuant to the Drawdown Notice. I further find that the undrawn part of the Facility Limit was cancelled on 5 July 2016 and was not available to be drawn thereafter.

502    If Mr Baker’s evidence is put to one side, and the position is assessed based on the documents that CLAH relies on as particularising the transactions on the Carrabolla Facility, that gives rise to a different picture. I will address these documents in detail below. For present purposes it suffices to note that these documents were created for the purpose of litigation. Taking these documents at their face, as at the Availability Expiry Date, the sum of $701,285.40 had been drawn leaving an undrawn commitment of $158,714.60. On the plaintiffs’ case, the undrawn commitment was $180,000. In either event, that which was undrawn as at 5 July 2016 was cancelled on that date by operation of cl 2.4.

503    Any extension of the Availability Period would require an amendment or variation in writing and to be signed by the parties: cl 28. The defendants have not adduced any evidence of a written and executed variation having the effect of extending the Availability Period or reinstating in whole or in part the Facility Limit after 5 July 2016.

504    As I have mentioned, Mr Baker gave some oral evidence when he was confronted in cross-examination with the proposition that the Carrabolla Facility had expired at the time when he claimed further advances were made. In response, he claimed that Mr Page specifically asked for money to be advanced under the Carrabolla Facility and for the Carrabolla Facility to be extended. Mr Page denied he did either of these things. I do not accept Mr Baker’s evidence on this issue. There is no credible evidence to support Mr Baker’s assertion.

505    I find that the Availability Period expired on 5 July 2016 and was not extended. Further, that there is no evidence of any requests made or approvals given to permit redraw of amounts repaid under the Carrabolla Facility. The Carrabolla Facility expired in accordance with its terms on the Expiry Date, being 30 September 2016. I reject Mr Baker’s evidence that the Carrabolla Facility was extended.

506    Clause 3 provides:

Purpose

[Carrabolla] may only use the Facilities for the purposes described in Item 8 of Schedule 1 or any other purposes [CLAH] agrees to in writing.

507    There is no evidence of any other purposes being approved in writing by CLAH in the way contemplated by this clause.

508    Although capitalised, the word “Facilities” is not defined and appears only once in its plural form. The only facility referred to in the Carrabolla Facility is the Advance Facility which is the Carrabolla Facility.

509    Schedule 1, Item 8 provides:

Purpose (clause 3)

•    Applying funds to invest in a development opportunity with Aranik Investments Pty Ltd

•    To payout mortgage to George Darrell Joliffe

•    Payment of fees, legal expenses, stamp duty and disbursements in connection with the Facility Agreement with any surplus funds as directed by the Borrower which may be used only for legal purposes and for genuine bona fide commercial purposes that do not contravene the Transaction Documents.

510    Clause 4 provides for Drawdown Notices which Carrabolla is required to give to CLAH in respect of all “Drawing of an Advance”. The Drawdown Notices must be “substantially in the form of Schedule 2”: cl 4.1(a). Clause 4.2 requires that each Drawdown Notice must be signed by an Authorised Officer of Carrabolla (as defined in cl 1.1(l)) and the signature must be witnessed.

511    Pursuant to cl 4.2, the Drawdown Notice must specify:

(a)     the purposes for which the Drawing is to be applied, which must comply with clause 3;

(b)     the requested Drawdown Date, which must be a Business Day during the Availability Period;

(c)     the bank account in Australia to which the proceeds of the Advance are to be paid or other payment instructions acceptable to the Financier;

(d)     the amount in A$ of the proposed Advance; and

(e)     the initial Interest Period in respect of the proposed Advance.

512    Schedule 2 comprises a template for Drawdown Notices, which is substantially pre-populated and which is framed in a way that suggests it was to be completed and delivered at or around the same time as the Carrabolla Facility was executed. The Drawdown Notice is for the whole of the Principal Amount ($860,000) and includes an express statement that:

5     The accommodation requested is to be applied for the following purposes:

Amount     Purpose

A$200,000    Invest in development opportunity with Aranik Investments Pty Ltd

A$650,000    Payout mortgage to George Darrell Joliffe

A$10,000    Payment of fees, legal expenses, stamp duty and disbursements in connection with the Facility Agreement with any surplus funds as directed by the Borrower

[Note: The amounts and purposes must comply with clause 3].

513    Clause 5 provides that whenever Carrabolla requests an Advance, CLAH will pay the amount of the Advance to Carrabolla by direct payment in accordance with payment instructions acceptable to CLAH as specified in the Drawdown Notice.

514    There is only one executed Drawdown Notice in evidence. It is dated 30 June 2016. It is signed by Ms Page as authorised officer of Carrabolla and each Guarantor. It is substantially in the form of Schedule 2 of the Carrabolla Facility including in respect of the items which were prepopulated in the version annexed as Schedule 2 to the Carrabolla Facility. In this Drawdown Notice, it is expressly stated that the accommodation requested of the principal amount of $860,000 is to be applied in the proportions designated for the particular uses specified, each of which falls within the approved purposes specified in cl 3 and Schedule 1, Item 8 of the Carrabolla Facility (extracted and quoted above). On its face, this Drawdown Notice is for the whole of the Facility Limit ($860,000) but $860,000 was not in fact advanced under this Drawdown Notice. The Drawdown Notice specifies the “Initial Interest Period” is “30 Days”. Both these details were included in the Schedule 2 template of the Drawdown Notice. There are no Drawdown Notices in evidence which correlate to the miscellany of advances that CLAH maintains were drawn on the Carrabolla Facility. CLAH did not adduce any evidence to suggest that these advances were supported by Drawdown Notices. The Drawdown Notice dated 30 June 2016 is addressed in detail in part 10.5.3 of these reasons.

515    Clause 6 makes provision for the payment of interest. Interest accrues daily on each Advance for a period of 30 days, or any other period agreed by CLAH: cll 6.1 and 6.2. Interest relevantly accrues on each unpaid amount that is due and payable by a Transaction Party “under or in respect of any Transaction Document”: cl 6.3. Unpaid interest that is past due may be capitalised at CLAH’s election: cl 6.5.Capitalised interest is captured by the definitions of “Advance” [under cl 1.1(d) of the Carrabolla Facility: “each loan drawn down under the Advance Facility in accordance with this document or, as applicable, the outstanding principal amount of that Advance (including capitalised interest) at the relevant time”]; “Principal Outstanding” [under cl 1.1(yy): “the aggregate principal amount of all outstanding Advances (including capitalised interest)”] and “Secured Money” [under cl 1.1(iii): “includes any money by way of principal, interest, fees, costs, indemnities, Guarantees, charges, duties or expenses or payment of liquidated or unliquidated damages”].

516    I interpolate to note that CLAH claims interest in its Debt Particulars which is initially calculated at what is described as the “lower rate” (being 1% per month) at various intervals between the initial drawdown on 1 July 2016 and the expiration of the Carrabolla Facility on 30 September 2016. Following 30 September 2016, CLAH claims interest calculated at what it describes as a “higher rate”, which equates to an interest rate of 2% per month. In CLAH’s Debt Particulars, interest is claimed at the higher rate at least once a month, between October 2016 and September 2020.

517    Clause 7 is important. It provides for voluntary prepayments by Carrabolla on at least five business days’ notice. Carrabolla could elect to prepay “all or part of the Principal Outstanding on the last day of an Interest Period for the Advance prepaid or subject to clause 7.2 on any other Business Day”: cl 7.1(a). Where a partial prepayment is made the prepayment must be made in a multiple of $50,000 unless CLAH agrees otherwise: cl 7.1(b). In making a prepayment, Carrabolla was required to pay interest accrued on any amount prepaid including break fees where the prepayment was made on a day other than on the last day of an Interest Period: cl 7.2.

518    The prepayments which CLAH contends were made under the Carrabolla Facility were necessarily prepayments because they were made before the Expiry Date, being 30 September 2016. Clause 8 provides for a Repayment Schedule which is detailed in Schedule 3. The Repayment Schedule does not provide for repayments at defined intervals. Instead, by cl 8.2, Carrabolla was required on the Expiry Date, that is 30 September 2016, to repay the whole of the Principal Outstanding and accrued interest and fees on that amount and all other money then payable by Carrabolla under the Carrabolla Facility which was unpaid.

519    I now turn to address the provisions of the Carrabolla Facility that address default and the consequences that flow from default.

520    Clause 15 addresses the issue of default. Clause 15.1 introduces a list of events that comprise Events of Default (whether or not the event is in the control of any Transaction Party). There are 22 events specified: cll 15.2 to 15.23. The “Events of Default” specified include the following:

(1)    a Transaction Party’s failure to pay or repay any part of the Secured Money when due in accordance with an obligation under the Transaction Documents: cl 15.2(a);

(2)    where an “Insolvency Event occurs in relation to a Transaction Party”: cl 15.5. Insolvency Event is defined expansively in cl 1.1(nn) (extracted above); and

(3)    where “a Security Interest becomes enforceable or is enforced”: cl 15.6(b).

521    Clause 16 is addressed to CLAH’s rights on default. The rights specified in cl 16 are cumulative and are in addition to any other rights provided by law or any Transaction Document. After an Event of Default, CLAH “may do all or any” of the things provided in cl 16.1(a) to (e). Relevantly, after an Event of Default, CLAH may:

(1)    by notice to Carrabolla “declare all Secured Money (or any part of that money as specified by [CLAH] in the notice) actually or contingently owing under this document or any other Transaction Document immediately due and payable, and [Carrabolla] must immediately pay to [CLAH] the Secured Money … (or any part of that money as specified by [CLAH] in the notice) ”: cl 16.1(a);

(2)    by notice to Carrabolla, terminate the obligations of CLAH under the Carrabolla Facility: cl 16.1(b);

(3)    “enforce any or all of the Security Documents”: cl 16.1(d); and

(4)    take any action whatsoever that CLAH (or any person acting on CLAH’s behalf) is authorised or entitled to take under the Carrabolla Facility or any other Transaction Document on the occurrence of an Event of Default: cl 16.1(e).

522    The requirement for a notice to be given if CLAH chooses to declare the Secured Money immediately due and payable is reinforced by cl 16.2 which provides for all money received by CLAH “at any time after any Secured Money has become immediately due and payable under a notice given under clause 16.1” to be paid into a suspense account (or like arrangement) and applied in accordance with the priorities outlined in cll 16.2 and 16.3.

523    Unlike the rights conferred on CLAH by cl 16.1(a) and (b), the right to enforce pursuant to cl 16.1(d) does not specify that a notice must be given to Carrabolla before CLAH can exercise that right. That said, if the Secured Moneys are not due and payable, then CLAH has the option of issuing a notice to declare the Secured Moneys to be immediately due and payable, and then if the Secured Moneys are not paid CLAH could take steps in reliance on, for example, an Event of Default comprising non-payment under cl 15.2(a).

524    In the absence of a notice being served declaring the Secured Money immediately due and payable, the Secured Money together with any accrued interest and fees was repayable upon the Expiry Date, that is 30 September 2016: cl 8.2.

525    Clause 17 is addressed to the Guarantee given by each Guarantor. Relevantly, the Guarantor is Shyzi.

526    By cl 17.1, each Guarantor unconditionally and irrevocably guarantees the due and punctual payment of the “Secured Money”. Clause 17.1 also provides that each Guarantor enters into the Carrabolla Facility for valuable consideration, which includes CLAH entering into the Carrabolla Facility at that Guarantor's request.

527    The Guarantor’s obligation to make payment is provided for in cl 17.2 which provides:

17.2     Payment

If the Borrower fails to pay any of the Secured Money when due, on demand the Guarantor must pay an amount equal to that Secured Money in the same manner and currency that the Borrower is required to pay that money under the relevant Transaction Document (or would have been but for its Liquidation).

528    Shyzi’s liability to pay under cl 17.2 is predicated on two conditions. First, that Carrabolla has failed to pay any of the Secured Money when due. Second, that a demand is made for Shyzi to pay.

529    The relevant non-payment by Carrabolla must be in relation to Secured Money. Similarly, the demand made of Shyzi as Guarantor must be in relation to Secured Money. “Secured Money” means all money for which a “Transaction Party” may become liable to pay to CLAH “for any reason whatever under or in connection with a Transaction Document”. Transaction Party means the Borrower and each Guarantor or any one or more of them. Shyzi, being a Guarantor, is a “Transaction Party”. Relevantly, the “Transaction Documents” to which Shyzi is a party are the Carrabolla Facility and the Shyzi Securities.

530    Similarly, pursuant to cl 17.8, Shyzi is required to indemnify CLAH and must pay CLAH upon demand:

17.8     Indemnity

If any of the Secured Money (including money that would have been Secured Money if it were recoverable) is not recoverable from [Carrabolla] for any reason (including any legal limitation, disability, incapacity or thing affecting [Carrabolla]) [Shyzi] must indemnify [CLAH] and must pay that money to [CLAH] on demand. …

531    Clauses 17.9 and 17.10 provide as follows:

17.9    Continuing guarantee and indemnity

This clause 17:

(a)    is a continuing guarantee and indemnity;

(b)    will not be taken to be wholly or partially discharged by the payment at any time of any of the Secured Money or by any settlement of account or other matter or thing; and

(c)    remains in full force until the Secured Money has been paid in full and the [Shyzi] has completely performed its obligations under [the Carrabolla Facility].

17.10    Variations

This clause 17 covers the Secured Money as varied including as a result of:

(a)     any amendment to any Transaction Document; or

(b)     the provision of further accommodation to [Carrabolla],

and whether or not with the consent of or notice to [Shyzi] and does not limit any other provision.

532    Pausing here, the effect of cl 17.9(c) is that if the Secured Money is paid in full and Shyzi has completely performed its obligations under the Carrabolla Facility, its obligation to guarantee and indemnify under cl 17 will cease. Anything short of those two circumstances will not wholly or partially discharge Shyzi’s obligations under cl 17. If there was no Secured Money outstanding and Shyzi had discharged its obligations as at 30 September 2016 when the Carrabolla Facility expired, then Shyzi has no continuing obligation as a result of its status as a guarantor and indemnifier under the Carrabolla Facility.

533    Clause 43 provides that in the event of any inconsistency between the Carrabolla Facility and the provisions of any other Transaction Document, the provisions of the Carrabolla Facility will govern and apply to the extent of the inconsistency.

534    Finally, the parties did not address the following clauses of the Carrabolla Facility. Clause 24 provides CLAH with a right to set off in respect of any debts it may owe to a Transaction Party against any debt owed by that Transaction Party. Clause 31 provides that CLAH may maintain records specifying payments made by it for the account of any Transaction Party (cl 31(a)), payments made by any Transaction Party for the account of the financier under any Transaction Document (cl 31(b)) and interest, fees, charges, costs and expenses payable in relation to the Transaction Documents (cl 31(c)). The records listed in cl 31(c) will, as against the Borrower, constitute conclusive evidence, in the absence of manifest error, of the matters set out in them. The documents relied on by CLAH in this proceeding are largely reconstructions prepared for or in anticipation of the litigation. The evidence does not establish that CLAH maintained records of the type contemplated by cl 31. CLAH did not place reliance on cl 31 of the Carrabolla Facility in this proceeding.

10.5.1.1    Proper construction

535    Applying the principles I have identified above, I find that in its proper construction, construed objectively and in context, the effect of the Carrabolla Facility was as follows.

536    First, unless varied or amended in writing and signed by the parties, the Carrabolla Facility provided for CLAH to advance funds to Carrabolla up to a specific limit ($860,000) before a specified date (5 July 2016). Any part of the loan limit that was undrawn as at 5 July 2016 was cancelled and no longer available to be drawn. Interest was payable at a rate of 1% calculated daily for periods of 30 days. Unless repaid early, the Carrabolla Facility was to be repaid in full by 30 September 2016.

537    Second, the funds drawn were to be used for the purposes specified in cl 3 and Schedule 1, Item 8.

538    Third, the Carrabolla Facility does not provide for the advance of funds by CLAH to Shyzi as Borrower. The Carrabolla Facility provides for advances from CLAH to Carrabolla in accordance with payment instructions provided by Carrabolla and acceptable to CLAH, as specified in a Drawdown Notice provided for under cl 4.1.

539    Fourth, before funds were advanced, Carrabolla was required to sign and deliver to CLAH a Drawdown Notice, which confirmed that the funds advanced were to be used for the purposes provided in the template Drawdown Notice in Schedule 2 (cll 4.1(a) and 5.1) and specify the initial Interest Period for each such Advance.

540    Fifth, Carrabolla could, on the giving of notice, repay the whole or part of the Carrabolla Facility at a time that was earlier than the date for repayment, being the Expiry Date. If an early repayment was for only part of the amount outstanding, then the amount had to be in an amount rounded to a $50,000 increment of what was then outstanding.

541    Sixth, unless varied or amended in writing signed by the parties, Carrabolla could not redraw any amounts which it repaid early.

542    Seventh, “Secured Money” is expansively defined but is limited to money advanced “under or in connection with a Transaction Document”.

543    Eighth, on expiration of the Facility on 30 September 2016, Secured Money including interest and other moneys due under Carrabolla Facility had to be repaid in full.

544    Ninth, on the occurrence of an Event of Default, CLAH could by notice to Carrabolla declare that Secured Money is immediately due and payable. An Event of Default did not of itself render the Secured Moneys due and payable.

545    Tenth, Shyzi’s obligation as Guarantor to pay Secured Money was conditioned on Carrabolla’s failure to pay any of the Secured Money when due and on CLAH making a payment demand on Shyzi: cl 17.2.

546    Eleventh, Shyzi’s obligations as Guarantor were not affected by anything that but for cl 17.3 might operate to release, prejudicially affect or discharge Shyzi or in any way relieve it of its obligations, including relevantly the discharge or release of any person (including Carrabolla) and the release or discharge of any Transaction Document (which included the Carrabolla Securities).

547    Twelfth, if the Secured Money was not recoverable from Carrabolla, Shyzi was obliged to indemnify CLAH and to “pay the money on demand”: cl 17.8.

548    Thirteenth, Shyzi’s obligations are pursuant to a continuing guarantee and indemnity and will not be taken to be wholly or partially discharged by the payment at any time of any of the Secured Money or by any settlement of account or other matter or thing, and will remain in full force until the Secured Money has been paid in full and Shyzi has completely performed its obligations under the Carrabolla Facility: cl 17.9.

549    Fourteenth, on the occurrence of an Event of Default, CLAH is entitled to exercise powers conferred under cl 16. These powers do not include the power to appoint a Receiver.

550    Fifteenth, any amendment or variation of the terms of the Carrabolla Facility is required to be in writing and signed by the parties: cl 39.

551    I now turn to the Shyzi Securities that were executed contemporaneously with the Carrabolla Facility.

10.5.2    The Shyzi Securities

10.5.2.1    Shyzi GSA

552    As I have said, on 11 September 2020, CLAH purported to appoint the Shyzi Receivers under the Shyzi GSA. In considering the plaintiffs’ application under s 418A of the Act as to the validity of the appointment of the Shyzi Receivers, the focus is necessarily on the terms of the Shyzi GSA.

553    The Shyzi GSA was executed by Shyzi, in its own right and in its capacity as trustee of the Phillem No. 1 Trust and the Phillem No. 2 Trust, in its capacity as Grantor of security in favour of CLAH as the Secured Party.

554    Clause 2 of the Shyzi GSA is the clause by which Shyzi grants to CLAH a security interest in “Collateral” (as defined) to secure payment of the Secured Money: cl 2.1(a). Shyzi acknowledges and confirms that CLAH has given value for its security interest, including by its promises “under any Transaction Document or by providing or continuing to make available any financial accommodation to a Transaction Party”: cl 2.3(a).

555    The nature of the security interest is set out in cl 2.1(b) – to the extent any Collateral is not transferred, the security interest is a charge:

2.1    Grant of security

…

(b)     This security interest is a transfer by way of security of Collateral consisting of:

(i)     accounts and chattel paper (each as defined in the PPSA) which are not, or cease to be, Revolving Assets; or

(ii)     a Material Contract.

To the extent any Collateral is not transferred, this security interest is a charge. If for any reason it is necessary to determine the nature of this charge, it is a floating charge over Revolving Assets and a fixed charge over all other Collateral.

556    “Collateral” is relevantly defined as all of Shyzi’s present and after-acquired property: cl 1.1(g).

557    Clause 2.3 provides for attachment of the Security Interest with Shyzi acknowledging that CLAH has given value for CLAH’s Security Interest in the Collateral and that nothing in any Transaction Document is intended as an agreement that a Security Interest under the Shyzi GSA attaches at a later time than the time specified in section 19(2) of the PPSA. Section 19(2) relevantly provides that a security interest attaches to collateral when the grantor has rights in the collateral and value is given for the security interest.

558    The Shyzi GSA creates a first ranking security interest over the Collateral in favour of CLAH: cll 2.4 and 2.5.

559    “Secured Money” is broadly defined in cl 1.1 as follows:

(xx)     Secured Money means all money and damages:

(i)     that now or in the future are owing or payable (actually or contingently) by a Transaction Party to the Secured Party;

(ii)     that having now or in the future become owing or payable (actually or contingently) by a Transaction Party to the Secured Party, cease to be owing under any Law relating to Insolvency and remain unpaid by a Transaction Party and unreleased by the Secured Party; and

(iii)     that now or in the future there is a prospect may become owing or payable (actually or contingently) by a Transaction Party to the Secured Party,

for any reason or on any account whatsoever at any time under or in connection with the Transaction Documents, including but not limited to money and damages payable:

(iv)     by a Transaction Party under any Transaction Document;

(v)     by a Transaction Party alone or jointly or separately with any other person;

(vi)     by a Transaction Party in its own right or in any capacity;

(vii)     to the Secured Party in its own right or in any capacity;

(viii)     to the Secured Party under any assignment or other disposition by any person in favour of the Secured Party of a debt or other obligation payable by a Transaction Party to that person, irrespective of whether:

(A)     any Transaction Party consented to or was aware of the assignment or other disposition;

(B)     the assigned or disposed of debt or obligation was secured; or

(C)     the assignment or other disposition took place before or after the delivery of this document;

(ix)     by a Transaction Party because of any relationship between a Transaction Party and the Secured Party, including that of banker or financier (if applicable) and customer;

(x)     by a Transaction Party as liquidated or unliquidated damages caused or contributed to by any breach by a Transaction Party of any obligation owed by a Transaction Party to the Secured Party, any tort by a Transaction Party or any other act or omission of a Transaction Party; and

(xi)     by a Transaction Party under any Guarantee,

and where that Transaction Party would have been liable but for its Insolvency, it will be taken to remain liable;

(Italics emphasis added).

560    As with the definition of Secured Money in the Carrabolla Facility, the definition of Secured Money in the Shyzi GSA is broad but is constrained by the phrase “under or in connection with the Transaction Documents”. Relevantly, the liability to pay money must arise under or in connection with the Transaction Documents. The converse is that any obligation of a Transaction Party to pay CLAH that does not arise under or in connection with the Transaction Documents is not Secured Money for the purpose of the Shyzi GSA.

561    Clause 1.1 relevantly includes the following definition of Collateral Security:

(h)     Collateral Security means any document that grants a Security Interest to the Secured Party, any Guarantee in favour of the Secured Party or other document or agreement at any time created or entered into in connection with or as security for any Secured Money;

562    The definition of Collateral Security is in turn subject to the constraint that it must be “in connection with or as security for any Secured Money”. The use of the defined term “Secured Money” introduces the requisite connection with the Transaction Documents that is a requirement of the Secured Money definition to the definition of Collateral Security.

563    “Transaction Documents” is defined in cl 1.1 as follows:

(ddd)     Transaction Documents means:

(i)     this document;

(ii)     the Facility Agreement;

(iii)     the Collateral Security;

(iv)     a financing statement or financing change statement;

(v)     any agreement relating to the priority of this document or any Security Interest that is a Collateral Security;

(vi)     any other document that the parties agree is a Transaction Document under the Facility Agreement or for the purposes of this document,

and any agreement or instrument created under any of them;

564    On the evidence before me, the Transaction Documents (as defined under the Shyzi GSA) comprise the Carrabolla Facility, the Shyzi GSA, the Shyzi Mortgage (as a Collateral Security) and the Carrabolla Securities (as Collateral Securities). As mentioned, the Carrabolla Securities were discharged on 26 July 2016 upon the NAB providing finance to Carrabolla and payment being made to CLAH.

565    Transaction Party is defined in cl 1.1 as:

(eee)     Transaction Party means the Grantor, the Debtor and each other person who gives a Collateral Security, or any one or more of them and where a Transaction Party is a partnership, it includes the persons who carry on the business in the name of the partnership or under the name in which the business of the partnership may be conducted;

566    The Grantor is Shyzi. Debtor is defined in Schedule 1, Item 2 as Carrabolla. Each of Shyzi and Carrabolla would otherwise have been captured as the givers of Collateral Security.

567    Facility Agreement is defined in Schedule 1, Item 3 as follows:

Facility Agreement means any document that sets out the terms of payment of Financial Indebtedness by [Shyzi] or [Carrabolla] to [CLAH] and includes the [Carrabolla Facility]

568    The parties do not rely on any document other than the Carrabolla Facility as constituting a “document that sets out the terms of payment of Financial Indebtedness by [Shyzi] or [Carrabolla] to [CLAH]”.

569    Clause 3 sets out Shyzi’s obligation to pay the Secured Money to CLAH. Shyzi is required to pay either in accordance with any agreement that obliges Shyzi to pay it: cl 3.1(a)(i), or if there is no agreement or there has been no Event of Default (whether continuing or not), then “on demand” in accordance with cl 3.1(a)(ii)(A) to (C). It provides that:

3     Grantor must pay Secured Money

3.1     Pay Secured Money

(a)     The Grantor must pay the Secured Money to the Secured Party:

(i)     in accordance with any agreement that obliges the Grantor to pay it; or

(ii)     if there is no agreement or no Event of Default has occurred (whether continuing or not):

(A)     on demand, at a place and in a manner, reasonably required by the Secured Party;

(B)     by 11.00 am local time in the place where payment is to be made; and

(C)     in immediately available funds and without set-off, counter claims, conditions or deductions or withholdings unless required by Law.

570    This clause must be read with cl 13.1 which is addressed to the rights of the Secured Party following default. By cl 13.1(b), CLAH has an option that is exercisable at any time after an Event of Default has occurred to declare Secured Money to be due and payable immediately or as specified in the notice given by CLAH. Clause 13.1(b) would be unnecessary if cl 3.1(a)(ii)(A) in its proper construction had the effect of Secured Money becoming immediately due and payable upon an Event of Default occurring. Properly construed, cl 3.1(a)(ii) is addressed to the circumstance where there is no loan agreement and no Event of Default. The effect of the clause is in accordance with the general law where a debt is repayable on demand unless agreed otherwise. Clause 13.1(b) is addressed to the circumstance where there has been an Event of Default. In both scenarios, CLAH must make a demand in order for the debt to become immediately due and payable.

571    The Carrabolla Facility is an agreement that obliges Shyzi to pay the Secured Money – as noted, that obligation arises under cl 17.1 of the Carrabolla Facility and is conditioned on Carrabolla’s failure to pay any of the Secured Money when due and on CLAH making a payment demand on Shyzi: cl 17.2.

572    Clause 4.1 requires Shyzi to pay interest on that part of the Secured Money owing by Shyzi to CLAH. Clause 4.2 provides for the interest rate and cl 4.3 provides for the capitalisation of interest.

573    Clause 5 limits the away in which Shyzi can deal with the Collateral, including among other things restricting Shyzi’s ability to create or allow another interest in the Collateral: cl 5.1(a).

574    Clause 7 provides that Shyzi’s obligations and undertakings in cl 7 “remain in full force from the date of [the Shyzi GSA] for so long as the Secured Money or any other amounts are outstanding under any Transaction Document”: cl 7.1. By cl 7.2, Shyzi must comply with all of its obligations and undertakings as contained in the Transaction Documents. Shyzi’s undertakings are listed in cl 7.3 and include an undertaking not to “cause or permit any Event of Default to occur”: cl 7.3(m).

575    By cl 8.3, to the extent permitted by law, Shyzi waives any right it has to receive notice of CLAH or any receiver appointed by CLAH, exercising any right, power or remedy:

8.3     No notice required unless mandatory

To the extent the Law permits, [Shyzi] waives:

(a)     its rights to receive any notice that is required by:

(i)     any provision of the PPSA (including a notice of a verification statement); or

(ii)     any other Law before [CLAH] or a Receiver exercises a right, power or remedy; and

(b)     any time period that must otherwise lapse under any Law before [CLAH] or a Receiver exercises a right, power or remedy.

If the Law which requires a period of notice or a lapse of time cannot be excluded, but the Law provides that the period of notice or lapse of time may be agreed, that period or lapse is 1 day or the minimum period the Law allows to be agreed (whichever is the longer).

However, nothing in this clause prohibits [CLAH] or a Receiver from giving a notice under the PPSA or any other Law.

576    Clause 10.1 of the Shyzi GSA lists the events which constitute an Event of Default (whether or not it is in the control of Shyzi). Relevantly, the defendants rely on the following three events of default.

577    First, cl 10.1(d) which provides that it is an Event of Default if a Transaction Party, which includes Carrabolla, becomes “Insolvent”. The definition of “Insolvent” in cl 1.1(dd)(i) includes when an application is made in relation to any Transaction Party for it to be wound up (cl 1.1(dd)(i)(E)) or it has failed to comply with a statutory demand (cl 1.1(dd)(i)(F)).

578    Second, cl 10.1(i) provides that it is an Event of Default where “a Security Interest becomes enforceable or is enforced”.

579    Third, cl 10.1(a) provides that it is an Event of Default if a Transaction Party, which includes Shyzi, fails to pay or repay any part of the Secured Money when due.

580    Clause 11 is triggered if an Event of Default has occurred. It provides for the collection and transfer of Collateral.

581    Clause 12 provides that if CLAH considers that an Event of Default has occurred, whether or not it is subsisting, CLAH may institute an investigation of the Collateral, financial affairs and condition and viability of the business of Shyzi. Clause 12.1 empowers an investigator to inspect the records of the Collateral and assets of Shyzi, value any Collateral, assets or business of Shyzi and report on those circumstances to CLAH. By cl 12.2, Shyzi agrees to cooperate fully with any investigator appointed by CLAH.

582    Clause 13 provides for enforcement by CLAH following default. If an Event of Default occurs, each Security Interest arising under the Shyzi GSA or any Collateral Security becomes immediately enforceable: cl 13.1(a). By this clause, CLAH is empowered to act swiftly to protect its interests with a view to recovering the Secured Money, in the event that Carrabolla defaults on payment of the Secured Money once due. The occurrence of an Event of Default does not render the payment obligation in respect of Secured Money immediately due and payable. Rather, the occurrence of an Event of Default gives CLAH an option whereby it may “declare all or any part of the Secured Money to be due and payable immediately, on demand or at a later date as [CLAH] may specify in the notice”: cl 13.1(b). If CLAH does not exercise that option, then the Secured Money will not be rendered immediately due and payable if it was not already so.

583    In addition, after an Event of Default, CLAH may do anything that Shyzi could do in relation to the Collateral: cl 13.1(c)(i) and (ii). Critically, at any time after an Event of Default has occurred, CLAH is empowered by cl 13.1(c)(iii) to appoint one or more Receivers, and to do anything that a Receiver may do under cl 14. The right to appoint a receiver is not dependent on the Secured Moneys being due and payable. Rather this is another aspect of CLAH being empowered to act swiftly to protect its interests with a view to recovering the Secured Money, in the event that Carrabolla defaults on payment of the Secured Money once due. CLAH’s option to declare the Secured Money immediately due and payable after an Event of Default may be exercised in conjunction with the power to appoint a receiver but the Secured Money being immediately due and payable (whether by the making of a declaration under cl 13.1(b) or otherwise) is not a precondition to exercising the power to appoint a receiver under cl 13.1(c)(iii).

584    Clause 14 confers powers on CLAH to appoint a receiver to any part of the Collateral in addition to and without prejudice to any of its other rights that are additional to the power conferred by cl 13.1(c)(iii). Clause 14.1(a) expressly provides that CLAH may:

appoint any one or more persons as Receiver to any part of the Collateral in addition to and without prejudice to any of its other rights:

(i)     if [Shyzi] requests [CLAH] to do so;

(ii)     at any time after an Event of Default occurs; or

(iii)     if [CLAH], in its sole discretion, believes that any Collateral is at risk of being seized, becoming subject to a Security Interest or otherwise being dealt with in a manner inconsistent with the terms of [the Shyzi GSA].

585    An Event of Default continues until it has been waived in writing by CLAH (as the Secured Party) or remedied to CLAH’s satisfaction: cl 1.2(h).

586    Once a receiver is appointed under cl 14.1(a), the receiver has the right to do everything that Shyzi may lawfully authorise an agent to do on its behalf. Clause 14.3(b) sets out, without limitation, the general powers of the receiver in relation to any property in respect of which they are appointed as follows:

(b)     Without limitation, a Receiver may in relation to that property exercise:

(i)     the rights capable of being conferred on receivers and receivers and managers by the Corporations Act and the Law of any applicable jurisdiction;

(ii)     the rights set out in clause 14.4;

(iii)     the rights of [Shyzi] and, if [Shyzi] is a corporation, the directors of [Shyzi];

(iv)     if the Grantor is not a corporation to which the Corporations Act applies, the rights that the Law would allow a Receiver to do if the Grantor was a corporation incorporated under the Corporations Act; and

(v)     any other rights [CLAH] may by notice to a Receiver lawfully give to a Receiver.

587    CLAH is not obliged to resort to any Collateral Security or enforce any rights against any other person before it resorts to enforcement of the Shyzi GSA: cl 15.5(b).

588    Clause 18.1 provides that Shyzi’s obligation to pay the Secured Money is a primary obligation and that CLAH is not obliged to proceed against or enforce against any other person before making a demand for payment by Shyzi of the Secured Money.

589    Clause 18.2 preserves Shyzi’s obligations and CLAH’s rights against anything that “might abrogate, prejudice or limit them or the effectiveness of” Shyzi’s obligations and CLAH’s rights under the Shyzi GSA. Clause 18.2 introduces a list of circumstances that but for their inclusion in cl 18.2 might have this effect. The circumstances relevantly include any variation of a right of CLAH (cl 18.2(a)), an arrangement, composition or compromise with, or absolute or partial discharge or release of any person (cl 18.2(c)) and any variation, release or discharge of any Transaction Document (cl 18.2(f)). This clause in effect is parallel to cl 17.3 of the Carrabolla Facility.

590    CLAH relies on cl 18.2 of the Shyzi GSA as preserving the obligations of Shyzi to CLAH, despite discharge of the Carrabolla Securities. I accept CLAH’s submission in that regard. The carve-out in cl 18.2(c) is broad. The fact that CLAH released and discharged the Carrabolla Securities does not preclude CLAH relying on Shyzi’s principal obligation under the Shyzi GSA: cl 18.2(c); see also Perry v National Provincial Bank of England [1910] 1 Ch 464 at 473 (Cozens-Hardy MR); Bank of Adelaide v Lorden [1970] HCA 59; 127 CLR 185 at 191–193 (Barwick CJ, Windeyer & Gibbs JJ).

591    On 5 July 2016, CLAH registered a PPSA security interest for the Security Interest granted under the Shyzi GSA.

10.5.2.1.1    Proper construction

592    Applying the principles I have identified above, I find that in its proper construction, construed objectively and in context, the effect of the Shyzi GSA was as follows.

593    First, Shyzi granted to CLAH a security interest in its “Collateral” being all of Shyzi’s present and after-acquired property to secure payment of the Secured Money: cl 2.1(a).

594    Second, “Secured Money” is broadly defined in the Shyzi GSA but must satisfy the description of being money or damages that are owing or payable “for any reason or on any account whatsoever at any time under or in connection with the Transaction Documents”. Secured Money expressly includes “money and damages payable… by [Shyzi] under any Guarantee”. To fall within the definition of Secured Money, the liability to pay must arise under or in connection with the Transaction Documents. On the proper construction of cl 3.1 of the Shyzi GSA, Shyzi’s obligation to pay to CLAH the Secured Money, includes all moneys owed by Shyzi to CLAH under, or in connection with, the Shyzi Mortgage because the Shyzi Mortgage is relevantly one of the documents within the definition of Transaction Documents. A liability to pay money that does not arise under or in connection with the Transaction Documents will not be captured by the definition of Secured Money. The definition of Secured Money is broader in the Shyzi Mortgage than in the Shyzi GSA and the phrase “in connection with” in cl 3.1 of the Shyzi GSA directed to the Transaction Documents, which includes the Shyzi Mortgage, imports the more extensive reach of the term Secured Money in Shyzi Mortgage to the Shyzi GSA.

595    Third, the Shyzi GSA creates a first ranking security interest over the Collateral in favour of CLAH: cl 2.5. A liability to pay money that does not arise under or in connection with the Transaction Documents will not be captured by the definition of Secured Money and will not be subject to the Security Interest in the Collateral that is the subject of the Shyzi GSA unless that liability is a liability that is captured by the broader definition of Secured Money in the Shyzi Mortgage and in turn captured by the phrase “in connection with the Transaction Documents”, the Shyzi Mortgage being one of the Transaction Documents.

596    Fourth, upon the occurrence of an Event of Default, CLAH had the option under cl 13.1(b) of by notice declaring all or any part of the Secured Money to be due and payable:

(1)    immediately;

(2)    on demand; or

(3)    at such later date as [CLAH] may specify in the notice.

597    Fifth, an Event of Default does not without more render Secured Money to be due and payable but a failure to pay Secured Money that is due will constitute an Event of Default.

598    Sixth, Shyzi’s obligation to pay the Secured Money to CLAH is addressed in cll 3 and 13.1. Shyzi is required to pay either in accordance with any agreement that obliges Shyzi to pay the Secured Money: cl 3.1(a)(i), or if there is no agreement or there has been no Event of Default (whether continuing or not), then “on demand” in accordance with cl 3.1(a)(ii)(A) to (C). CLAH has an option that is exercisable at any time after an Event of Default has occurred to declare Secured Money to be due and payable immediately or as specified in the notice given by CLAH: cl 13.1(b).

599    Seventh, upon the occurrence of an Event of Default, each Security Interest becomes immediately enforceable, and CLAH is empowered to appoint Receivers to Shyzi: cl 14.1(a). This clause empowers CLAH to act swiftly to protect its interest in the Collateral with a view to recovering the Secured Money once due (whether by declaration following an Event of Default or otherwise). 

600    Eighth, CLAH is not obliged to resort to any Collateral Security or enforce any rights against any other person before it resorts to enforcement of the Shyzi GSA: cl 15.5(b).

601    Ninth, Shyzi’s obligation to pay the Secured Money is a primary obligation and CLAH is not obliged to proceed against or enforce against any other person before making a demand for payment by Shyzi of the Secured Money: cl 18.1.

602    Tenth, Shyzi’s obligations and CLAH’s rights under the Shyzi GSA are preserved against anything that “might abrogate, prejudice or limit them or the effectiveness of” Shyzi’s obligations and CLAH’s rights under the Shyzi GSA including any variation, release or discharge of any Transaction Document which expression includes the Carrabolla Securities: cl 18.2(f).

10.5.2.2    Shyzi Mortgage

603    I now turn to the Shyzi Mortgage. The definition of Secured Money in each of the Carrabolla Facility and the Shyzi GSA includes the requirement that the liability to pay must arise “under or in connection with the Transaction Documents”. The Shyzi Mortgage is a Transaction Document as defined by the Carrabolla Facility and the Shyzi GSA. If an obligation arises for a Transaction Party to pay money to CLAH under or in connection with the Shyzi Mortgage, that obligation will be within the definition of Secured Money in the Carrabolla Facility and the Shyzi GSA.

604    The Shyzi Mortgage was signed for Shyzi by Ms Page in her capacity as sole director and secretary. Shyzi, in its own capacity and in its capacity as trustee for the Phillem No. 1 Trust and the Phillem No. 2 Trust, is defined as the Mortgagor. CLAH is defined as the Mortgagee.

605    The recitals to the Shyzi Mortgage are an acknowledgement of debt:

Acknowledgment of debt

1.     [CLAH] has lent, or has agreed to lend, $860,000 (plus fees, charges, and (if applicable) capitalised interest) to [Shyzi] or at the request of [Shyzi]. This amount together with any further advances and financial accommodation (including, but without being limited to, any capitalised interest or fees), is called the principal sum.

2.     [Shyzi] acknowledges indebtedness to [CLAH] for the principal sum and agrees to pay to [CLAH] the principal sum together with interest and all other money due to [CLAH] at the times agreed with [CLAH], or failing agreement on demand. For the avoidance of doubt, the principal sum forms part of the Secured Money.

606    It is common ground that the $860,000 referred to is the available limit under the Carrabolla Facility which designated Carrabolla as the sole borrower.

607    The reference schedule which follows the acknowledgement of debt recitals defines the “Debtor” as Carrabolla (Item 1). This definition is then picked up in the definition of “Debtor” in cl 1.1(15) which provides:

Debtor means the person (other than [Shyzi]) named as a Debtor in Item 1 of the Reference Schedule and any person that [CLAH] and [Shyzi] agree in writing at any time is a Debtor for the purpose of this document;

608    There is no evidence that any person other than Carrabolla was ever agreed between CLAH and Shyzi to be a Debtor for the purpose of the Shyzi Mortgage.

609    The reference schedule defines the “Facility Agreement” to include the Carrabolla Facility and “any document that sets out the terms of payment of Financial Indebtedness by any Transaction Party to [CLAH]” (Item 2). This definition is then picked up in the definition of “Facility Agreement” in cl 1.1(22) which provides:

Facility Agreement means the document described as a Facility Agreement in Item 2 of the Reference Schedule and any other document that [CLAH] and [Shyzi] agree in writing at any time is a Facility Agreement for the purpose of this document;

610    There is no evidence that any other document other than the Carrabolla Facility was ever agreed between CLAH and Shyzi to be a Facility Agreement for the purpose of the Shyzi Mortgage.

611    Clause 1.1 relevantly includes the following definitions:

(51)     Transaction Documents means:

(a)     this document;

(b)     the Facility Agreement;

(c)     any Collateral Security;

(d)     any document or agreement relating to the priority of this document or any Security Interest that is a Collateral Security;

(e)     any other document that the parties agree is a Transaction Document or a Finance Document for the purpose of this document; and

(f)     any agreement or instrument created under any of the documents described in (a) to (e);

(52)     Transaction Party means the Mortgagor, the Debtor (if any) and each other person who gives a Collateral Security or Guarantee or any one or more of them;

612    On the evidence before me, the Transaction Documents relied on by the parties were the Carrabolla Facility, the Carrabolla Securities and the Shyzi Securities. The term Transaction Party includes both Shyzi and Carrabolla.

613    Clause 2 defines the scope of the mortgage given by Shyzi as “all of its interest in the Mortgaged Property to [CLAH] to secure the payment of the Secured Money”. “Mortgaged Property” is defined in cl 1.1(36) by reference to the Bonnet Bay Property and Shyzi’s estate and interest in the Land, including any improvements and ancillary rights.

614    “Financial Indebtedness” is relevantly defined in cl 1.1(23) as follows:

Financial Indebtedness means any indebtedness or other liability (present or future, actual or contingent) relating to any financial accommodation including indebtedness or other liability:

(a)     for money borrowed or raised;

(b)     …

or

(g)     under any Guarantee relating to any financial accommodation;

615    “Secured Money” is expansively defined in cl 1.1(45) as follows:

Secured Money means all money and damages:

(a)     that now or in the future are owing or payable (actually or contingently) by a Transaction Party to [CLAH];

(b)     that having now or in the future become owing or payable (actually or contingently) by a Transaction Party to [CLAH], cease to be owing under any Law relating to Liquidation and remain unpaid by a Transaction Party and unreleased by [CLAH]; and

(c)     that now or in the future there is a prospect may become owing or payable (actually or contingently) by a Transaction Party to [CLAH],

for any reason or on any account whatsoever, including but not limited to money and damages payable:

(d)     by a Transaction Party under any Transaction Document;

(e)     by a Transaction Party alone or jointly or separately with any other person;

(f)     by a Transaction Party in its own right or in any capacity;

(g)     to [CLAH] in its own right or in any capacity;

(h)     to [CLAH] under any assignment or other disposition by any person in favour of [CLAH] of a debt or other obligation payable by a Transaction Party to that person, irrespective of whether:

(i)     any Transaction Party consented to or was aware of the assignment or other disposition;

(ii)     the assigned or disposed of debt or obligation was secured; or

(iii)     the assignment or other disposition took place before or after the delivery of this document;

(i)     by a Transaction Party because of any relationship between a Transaction Party and [CLAH], including that of banker or Mortgagee (if applicable) and customer;

(j)     by a Transaction Party as liquidated or unliquidated damages caused or contributed to by any breach by a Transaction Party of any obligation owed by a Transaction Party to [CLAH], any tort by a Transaction Party or any other act or omission of a Transaction Party;

(k)     under any Guarantee relating to any financial accommodation or other obligations;

and where the Transaction Party would have been liable but for its Liquidation, it will be taken to remain liable;

616    Unlike the definition of Secured Money in the Carrabolla Facility and the Shyzi GSA, the definition of Secured Money in the Shyzi Mortgage does not include the constraint that the liability to pay the Secured Money must “arise under or in connection with a Transaction Document”. Instead, for the purpose of the Shyzi Mortgage, the liability in relation to the Secured Money may arise “for any reason or on any account whatsoever”. The list of subparagraphs in the latter part of the definition of Secured Money in the Shyzi GSA is in substance the same as the Shyzi Mortgage. The Carrabolla Facility definition of Secured Money, as set out in part 10.5.1 above, differs in form to the Shyzi GSA and Shyzi Mortgage in that it does not list to the same level of specificity the types of moneys included within the definition of Secured Money, but is otherwise similar in substance.

617    The breadth of the phrase used in the Secured Money definition in the Shyzi Mortgage provides a significantly different introduction to the subparagraphs which follow from that used in the Secured Money definition in the Carrabolla Facility and the Shyzi GSA. In the Secured Money definition in the Shyzi Mortgage the liability in relation to the Secured Money may arise “for any reason or on any account whatsoever including but not limited to money and damages payable” within the circumstances described in subparagraphs (d) to (k). The first of the subparagraphs includes but does not limit the liability in relation to Secured Money to money that is payable “by a Transaction Party under any Transaction Document”: cl 1.1(45)(d). The liability in relation to the payment of Secured Money includes but is not limited to money payable “under any Guarantee relating to any financial accommodation or other obligations”: cl 1.1(45)(k).

618    By cl 1.1(45) of the Shyzi Mortgage, Secured Money means, amongst other things, all moneys that now or in the future are owing or payable by Shyzi or Carrabolla to CLAH for any reason or on any account whatsoever, whether under a Transaction Document or otherwise, or whether alone, or jointly or separately, or whether in their own right or capacity. Pursuant to cl 4.1 of the Shyzi Mortgage, Shyzi is obliged to repay the Secured Money to CLAH.

619    Clause 3 provides that Shyzi “may only use the Secured Money for the purposes as agreed by [Shyzi and CLAH] in writing and any other purpose that [CLAH] agrees in writing”. There is no suggestion in the evidence that other purposes were agreed in writing in the way contemplated by this clause.

620    Shyzi is required to repay the Secured Moneys to CLAH in accordance with the terms of the Transaction Documents or any other written agreement between CLAH and Shyzi, or if no payment is described in such documents, then on demand by CLAH: cl 4.1. The Shyzi GSA is relevantly a Transaction Document as defined in the Shyzi Mortgage. If Shyzi is obliged to pay the Secured Money under cl 3.1 of the Shyzi GSA, then an obligation to pay will also arise under cl 4.1 of the Shyzi Mortgage. Conversely, on the proper construction of cl 3.1 of the Shyzi GSA, Shyzi is obliged to pay to CLAH the Secured Money, which includes all moneys owed by Shyzi to CLAH under or in connection with the Shyzi Mortgage.

621    Clause 5.1(1) provides that Shyzi must pay interest to CLAH in accordance with any agreement requiring interest to be paid on the Secured Money. If any Secured Money is owing but there is no agreement as to the payment of interest, then interest accrues daily at a rate calculated based on any Transaction Document and must be paid on demand: cl 5.1(2).

622    The Events of Default for the purpose of the Shyzi Mortgage are provided for in cl 9. Relevantly, the Events of Default include a Transaction Party’s failure to repay any part of the Secured Money when it falls due in accordance with its obligations under any Transaction Document (cl 9.2(1)), when a security interest becomes enforceable or is enforced over all or any of the assets and undertaking of a Transaction Party (cl 9.6) and an Insolvency Event occurs in relation to a Transaction Party (cl 9.5). Insolvency Event is defined to include in some circumstances applications made to a court for an order, or the making of an order, that a body corporate be wound up or that a liquidator or provisional liquidator be appointed to a body corporate and where a company takes any step to obtain protection or is granted protection from its creditors under any law. Clause 9.18 provides that it is an Event of Default under the Shyzi Mortgage if an Event of Default occurs under a Transaction Document.

623    An Event of Default subsists until it has been waived in writing by CLAH or remedied to the satisfaction of CLAH: cl 1.2(8). Clause 35.1 clarifies that the occurrence of an Event of Default can only be waived by a written instrument signed by CLAH and no other act, omission or delay of CLAH will constitute a waiver.

624    Clause 10.1 provides that if an Event of Default occurs, all of the Secured Money is, at the option of CLAH, immediately due for payment and Shyzi must pay it to CLAH on demand by CLAH, irrespective of any term to the contrary in any Transaction Document. In this way, the Shyzi Mortgage is consistent with the Shyzi GSA in that CLAH has the option of making the Secured Money immediately due for payment upon making a demand.

625    Clause 12 sets out CLAH’s rights on the happening of an Event of Default. CLAH “may, at its option: sue for, recover and receive the Secured Money as a debt due under the Transaction Documents, whether the power of sale or any other power has been exercised” (cl 12.1(1)); “appoint one or more receivers” (cl 12.1(2)); and “do anything that a Receiver may do under cl 14” (cl 12.1(3)). CLAH’s power to appoint receivers following an Event of Default occurring is not conditioned on a requirement for CLAH to give notice in advance of exercising that power: cll 12.1, 12.5.

626    Clause 13.1 confers various powers on CLAH following an Event of Default. CLAH may exercise these powers concurrently with a Receiver: cl 13.8. There is no requirement for CLAH to give notice prior to exercising the powers in cl 13.

627    The defendants rely on Events of Default having occurred so as to enliven the power to appoint a Receiver under cl 12.1(2). In addition to the Events of Default relied on as constituting Events of Default under the Shyzi GSA and therefore Events of Default under the Shyzi Mortgage (cl 9.18), the defendants rely on an Insolvency Event having occurred in relation to a Transaction Party (cl 9.5).

628    Clause 17 deals with the preservation of CLAH’s rights. Clause 17.1 provides that Shyzi unconditionally guarantees the due and punctual payment by Carrabolla of the Secured Money and will keep CLAH indemnified against all losses, damages, costs, charges and expenses that CLAH may incur by reason of or arising out of any default or failure for any reason on Carrabolla’s part in the payment of the Secured Money or in the performance of Carrabolla’s obligations to CLAH.

629    Clause 17.2 provides that the Shyzi Mortgage is a continuing security for the whole of the Secured Money and is not limited to any transaction or other thing.

630    Clause 17.3 provides that Shyzi’s obligation to pay the Secured Money is a primary obligation and that CLAH is not obliged to proceed against any other person “before making demand for payment by [Shyzi] of the Secured Money”.

631    Clause 17.4 preserves Shyzi’s obligations and CLAH’s rights under the Shyzi Mortgage against anything that might abrogate, prejudice or limit the effectiveness of the Shyzi Mortgage. Clause 17.4 of the Shyzi Mortgage is drafted in relevantly similar terms to cl 18.2 of the Shyzi GSA and lists similar circumstances, including an arrangement, composition or compromise with, or absolute or partial discharge or release of any person (cl 17.4(3)) and any act or omission by Shyzi or another person in relation to any Transaction Document including any variation, release or discharge of any of them (cl 17.4(6)). It also clarifies that in the context of cl 17.4, a reference to any person includes any Transaction Party.

10.5.2.2.1     Proper construction

632    Applying the principles I have identified above, I find that in its proper construction, construed objectively and in context, the effect of the Shyzi Mortgage was as follows.

633    First, Shyzi acknowledges that CLAH has lent, or has agreed to lend, “$860,000 (plus fees, charges, and (if applicable) capitalised interest” to Shyzi or at the request of Shyzi. I interpolate to note that there is no suggestion on the evidence that this is other than a reference to a loan made to Carrabolla pursuant to the Carrabolla Facility.

634    Second, Shyzi acknowledges “indebtedness” to CLAH for the “principal sum”. Principal sum is acknowledged to mean “$860,000 (plus fees, charges, and (if applicable) capitalised interest” together with any further advances and financial accommodation (including, but without being limited to, any capitalised interest or fees). The term “financial accommodation” is used in the definition of Financial Indebtedness and extends to a liability for money borrowed and to a liability under any Guarantee.

635    Third, Shyzi acknowledges that it is obliged to pay to CLAH the principal sum together with interest and all other money due to CLAH at the times agreed with CLAH, or failing agreement on demand.

636    Fourth, the Debtor under the Shyzi Mortgage is Carrabolla. While the Shyzi Mortgage contemplated that other persons may be agreed to be Debtors under the Shyzi Mortgage, the evidence does not demonstrate that any other person was agreed to be a Debtor under the Shyzi Mortgage.

637    Fifth, the Facility Agreement referred to in the Shyzi Mortgage is the Carrabolla Facility. While the Shyzi Mortgage contemplated that other facility agreements may be agreed to be a Facility Agreement under the Shyzi Mortgage, the evidence does not demonstrate that any other facility agreement was agreed to be a Facility Agreement under the Shyzi Mortgage.

638    Sixth, the definition of Secured Money under the Shyzi Mortgage relevantly extended to all money that now or in the future is or becomes payable actually or contingently by Carrabolla or Shyzi to CLAH which is unpaid by the relevant Transaction Party and unreleased by CLAH. Further, the definition extends to money in respect of which there is a prospect that it may now or in the future become payable by Carrabolla or Shyzi to CLAH. As noted above, debts that fall within the definition of Secured Money under the Shyzi Mortgage are in turn picked up by the definition of Secured Money in the Shyzi GSA, because they are debts that arise in connection with the Transaction Documents.

639    Seventh, the definition of Secured Money under the Shyzi Mortgage expressly provides that the liability to pay Secured Money may arise “for any reason or on any account whatsoever” and includes but is not limited to money that is payable by Carrabolla or Shyzi under any Transaction Document or under any Guarantee relating to any financial accommodation or other obligations.

640    Eighth, the Shyzi GSA is relevantly a Transaction Document as defined in the Shyzi Mortgage. If Shyzi is obliged to pay the Secured Money under cl 3.1 of the Shyzi GSA, then an obligation to pay will also arise under cl 4.1 of the Shyzi Mortgage. Conversely, on the proper construction of cl 3.1 of the Shyzi GSA, Shyzi is obliged to pay to CLAH the Secured Money, which includes all moneys owed by Shyzi to CLAH under or in connection with the Shyzi Mortgage.

641    Ninth, the Events of Default include a Transaction Party’s failure to repay any part of the Secured Money when it falls due in accordance with its obligations under any Transaction Document (cl 9.2(1)), an Insolvency Event occurs in relation to a Transaction Party (cl 9.5) and when a security interest becomes enforceable or is enforced over all or any of the assets and undertaking of a Transaction Party (cl 9.6). An Event of Default under the Shyzi Mortgage occurs if an Event of Default occurs under a Transaction Document: cl 9.18.

642    Tenth, if an Event of Default occurs, CLAH has the option of making all the Secured Money immediately due for payment and if CLAH exercises that option Shyzi must pay the Secured Moneys to CLAH on demand by CLAH, irrespective of any term to the contrary in any Transaction Document. The Shyzi Mortgage is consistent with the Shyzi GSA in that CLAH has the option of making the Secured Money immediately due for payment upon making a demand but an Event of Default will not without more cause Secured Money that is not otherwise due and payable to become immediately due and payable.

643    Eleventh, on the occurrence of an Event of Default, CLAH is empowered to appoint one or more receivers to Shyzi: cl 12.1(2). CLAH may further “do anything that a Receiver may do under cl 14”: cl 12.1(3). CLAH’s power to appoint receivers following an Event of Default occurring is not conditioned on a requirement for CLAH to give notice in advance of exercising that power or affording Shyzi a period of time to remedy the default: cll 12.1, 12.5. Like cl 14.1(a) of the Shyzi GSA, this clause empowers CLAH to act swiftly to protect its interest in the Collateral with a view to recovering the Secured Money once due (whether by declaration following an Event of Default or otherwise).

644    Twelfth, Shyzi unconditionally guarantees the due and punctual payment by Carrabolla of the Secured Money and will keep CLAH indemnified against all losses, damages, costs, charges and expenses that CLAH may incur by reason of or arising out of any default or failure for any reason on Carrabolla’s part in the payment of the Secured Money or in the performance of Carrabolla’s obligations to CLAH.

645    Thirteenth, the Shyzi Mortgage is a continuing security for the whole of the Secured Money and is not limited to any transaction or other thing.

646    Fourteenth, Shyzi’s obligation to pay the Secured Money is a primary obligation and CLAH is not obliged to proceed against any other person “before making demand for payment by [Shyzi] of the Secured Money”.

647    Fifteenth, Shyzi’s obligations and CLAH’s rights under the Shyzi Mortgage are preserved against anything that might abrogate, prejudice or limit the effectiveness of the Shyzi Mortgage. Clause 17.4 of the Shyzi Mortgage is drafted in relevantly similar terms to cl 18.2 of the Shyzi GSA which I have addressed above.

10.5.3    The Carrabolla Drawdown Notice

648    As I have mentioned, contemporaneously with the execution of the Carrabolla Documents, Ms Page executed an Advance Facility Drawdown Notice on behalf of Carrabolla. This is the only Drawdown Notice for the Carrabolla Facility that is in evidence. Some of the details that one would expect to have been completed are not completed. The details that are completed, save for the handwritten details included in the execution clause, were included in the template form of the Drawdown Notice that comprised Schedule 2 to the Carrabolla Facility. The pre-populated details in the Drawdown Notice included the following:

Under clause 4 of the Facility Agreement:

1    We give you irrevocable notice that we wish to draw under the Advance Facility on ____________________ (Drawdown Date).

[Note: Drawdown Date is to be a Business Day.]

2     Particulars of the Drawing requested are as follows:

Principal amount:

A$ 860,000

Initial Interest Period:

30 days

and:

5     The accommodation requested is to be applied for the following purposes:

Amount     Purpose

A$200,000    Invest in development opportunity with Aranik Investments Pty Ltd

A$650,000    Payout mortgage to George Darrell Joliffe

A$10,000    Payment of fees, legal expenses, stamp duty and disbursements in connection with the Facility Agreement with any surplus funds as directed by the Borrower

[Note: The amounts and purposes must comply with clause 3].

649    The reference to clause 3 is to clause 3 of the Carrabolla Facility.

650    Ms Page understood at the time she signed the Carrabolla Facility and the Drawdown Notice that the purpose identified in relation to Aranik did not represent the true position. She was “happy” to sign these documents even though they were not true in this respect.

10.6    Transactions under the Carrabolla Facility

651    On 1 July 2016, an initial drawdown was made on the Carrabolla Facility in the sum of $680,000 (the Initial Drawdown). That is essentially common ground.

652    The $680,000 Initial Drawdown answers the description of the approved purpose in the second and third bullet points of Schedule 1, Item 8 of the Carrabolla Facility. The use of the Carrabolla Facility to make the Ferrari Payment is not expressly sanctioned by cl 3 but in so far as the Ferrari Payment was paid from “surplus funds” pursuant to a direction given by or on behalf of Carrabolla and answered the description of being “for legal purposes and for genuine bona fide commercial purposes that do not contravene the Transaction Documents” the Ferrari Payment would potentially come within the third bullet point identified in Schedule 1, Item 8. The purported advances that are alleged to have occurred after the expiration of the Availability Period would, if made under the Carrabolla Facility, similarly have been required to come within the third bullet point identified in Schedule 1, Item 8.

653    The defendants contend that in addition to the Initial Drawdown, an earlier drawdown of $21,285.40 was made under the Carrabolla Facility on 30 June 2016, although this is described in CLAH’s documentation as a “further drawdown”. The plaintiffs deny that this payment was an advance under the Carrabolla Facility. My factual findings in relation to this payment are at part 10.8.2.1 of these reasons.

654    It is common ground that there were no further advances made under the Carrabolla Facility in the period after 30 June 2016 and before 5 July 2016. That is significant because on its proper construction, the Carrabolla Facility provided that the loan limit of $860,000 could only be drawn during the Availability Period which expired on 5 July 2016 and any undrawn principal as at 5 July 2016 was cancelled and was no longer available to be drawn.

655    The Carrabolla Facility had an Expiry Date of 30 September 2016 and was required to be fully repaid by that date. The Carrabolla Facility provided that the facility could be repaid in full or in part on certain terms.

656    The plaintiffs contend that the Carrabolla Facility was fully repaid on 26 July 2016, that no further advances were made under that Facility after 26 July 2016 and that the Facility was not extended beyond 30 September 2016.

657    The defendants while accepting that a payment was made on 26 July 2016, contend that the Carrabolla Facility was not fully repaid on 26 July 2016. The defendants deny that the payment of $686,481.87 was in full repayment of all amounts then owing under the Carrabolla Facility. The defendants further contend that further advances were made under the Carrabolla Facility after the expiration of the Availability Period on 5 July 2016 and after the payment made on 26 July 2016. Relatedly, the defendants contend that the Carrabolla Facility was relevantly extended conformably with this state of affairs. I have rejected Mr Baker’s evidence on this issue.

658    Although not framed as a separate issue in the Amended Joint List of Issues, a preliminary issue arises as to what, if any, further advances were made on the Carrabolla Facility after the Initial Drawdown on 30 June 2016. I make factual findings in relation to this issue before addressing the issues as framed by the parties in the Amended Joint List of Issues. I first make findings in relation to advances alleged to have been made under the Carrabolla Facility in the period before 26 July 2016, being the date on which Carrabolla paid CLAH $686,481.87 in relation to the Carrabolla Facility, in consequence of which the Carrabolla Securities were discharged.

659    The plaintiffs submit that on the proper construction of the relevant security documents, the discharge and release by CLAH of the Carrabolla Securities had the effect in law of discharging the Shyzi Securities. This question of construction is the subject of Issue 2.

660    Relatedly, the plaintiffs next contend that, on their proper construction, the Shyzi Securities do not secure debts other than debts arising under the Carrabolla Facility. This question of construction is the subject of Issue 3.

661    I address Issue 2, commencing at part 10.10 of these reasons, and Issue 3, commencing at part 10.11 of these reasons, drawing on the conclusions I have already made as to the proper construction of the relevant Carrabolla Documents (see Carrabolla Facility at part 10.5.1.1; Shyzi GSA at part 10.5.2.1.1 and Shyzi Mortgage at part 10.5.2.2.1 of these reasons).

662    The plaintiffs next submit in the alternative, that any liability on the part of Shyzi arising from its guarantee of the Carrabolla Facility arises only upon CLAH making a demand of Shyzi. The plaintiffs submit that the defendants admit that CLAH had not made a demand of Shyzi as at the date the Shyzi Receivers were appointed. The plaintiffs further submit that by reason of a demand not having been made on Shyzi, that as at 11 September 2020, Shyzi had no liability to CLAH pursuant to its guarantee of the Carrabolla Facility. This issue is framed as Issue 3A in the Amended Joint List of Issues. I address this issue commencing at part 10.12 of these reasons.

663    The parties frame Issue 4 as being whether specified amounts which CLAH advanced to companies associated with Ms Page, including Shyzi, were wrongly debited to the Carrabolla Facility. There are two aspects to Issue 4. First, whether after 26 July 2016, CLAH continued to make advances under the Carrabolla Facility and secondly, whether the facility was relevantly extended. I make findings in relation to advances alleged to have been made under the Carrabolla Facility in the period after 26 July 2016 at part 10.13 of these reasons. As to the second aspect, I reject Mr Baker’s evidence on this issue and his assertion that Mr Page (as agent for Ms Page, Carrabolla and Shyzi) requested and Mr Baker (on behalf of CLAH) agreed to extend the Carrabolla Facility.

664    For reasons which I explain below, as a matter of legal analysis, the issue of whether payments made from CLAH to Shyzi are properly characterised as advances under the Carrabolla Facility is somewhat of a side issue if Issues 2 and 3 are determined against the plaintiffs. That is to say that whether payments made from CLAH to Shyzi are properly characterised as advances under the Carrabolla Facility is beside the point if, first, on the proper construction of the Shyzi Securities, Secured Moneys included any money for which Shyzi was liable to CLAH, and, second, the Shyzi Securities were not discharged by the discharge of the Carrabolla Facilities.

665    Relatedly, the plaintiffs contend that CLAH has failed to credit, by offset or otherwise, to Shyzi’s loan account certain amounts which CLAH was obliged to credit or offset. This is Issue 5, which I address in part 10.14 of these reasons.

666    Issue 6 is directed to the issue of whether Shyzi owed any money to CLAH as at the date of the appointment of the Shyzi Receivers. If the defendants establish that Shyzi was indebted to CLAH and that debt came within the meaning of Secured Moneys under the Shyzi GSA by reference to the effect of the Shyzi Mortgage, a debt owed to CLAH by Shyzi will constitute an ongoing obligation, namely the obligation of Shyzi to repay the Secured Moneys, that was secured. I address this in my consideration of Issue 6 in part 10.15 of these reasons.

667    I will lastly address Issue 7 based on the findings I have made in relation to Issues 1 to 6.

10.7    Evidence in relation to the Carrabolla loan account

668    I refer to the findings I have made above in relation to CLAH’s record keeping practices in relation to the Carrabolla Facility, including as to the absence from the evidence of a reliable and contemporaneous loan ledger: see part 4.2 of these reasons. The documents relied on by CLAH in relation to the facilities in issue are not contemporaneous loan ledgers prepared in accordance with a regular, consistent or reliable practice.

669    Ms Comino deposes that for the purpose of making her affidavit, she “reviewed the records maintained by [CLAH] in the ordinary course of its business as they relate to the advances that were made under the various debt facilities” including the Carrabolla Facility. She exhibited to her affidavit what she described as “true copies of documents forming part of the business records of [CLAH] as they relate to the advances made under the various debt facilities which are the subject matter of these proceedings.” The records that Ms Comino attaches do not include any primary loan ledgers. No documentary reproduction of a primary electronic record of a loan account, created and maintained in the ordinary course of CLAH’s business was tendered. In cross-examination, Ms Comino maintained that the documents included in the court book comprise the relevant primary documents supporting CLAH’s claims. Where the contemporaneous documents that have been tendered refer to, or attribute, particular payments as having been drawn on the Carrabolla Facility, that information derives from information provided by Mr Baker.

670    As I have mentioned, Mr Baker’s testimony was that, on each occasion Mr Page requested funds, Mr Page expressly asked that the funds be drawn on the Carrabolla Facility. Mr Page denies this. For reasons I have given, I reject Mr Baker’s evidence on this issue. I accept the plaintiffs’ submission that apart from the facility agreements, the documents in the court book do not include any contemporaneous records of any direction or authority by Carrabolla or Shyzi to debit or credit any particular amount to any particular loan account. Internal email directions by Mr Baker to CLAH’s staff to “code” a particular payment as an advance to Carrabolla do not evidence any such direction or authority. Moreover, there is no evidence to suggest that Carrabolla or Shyzi were informed of this internal coding or treatment of advances by CLAH. More importantly, there is no documentary evidence of any request by or on behalf of Carrabolla or Shyzi for a payment or advance to be so coded or treated.

671    In terms of oral requests made for monies from CLAH, I accept as I have said that Mr Page was authorised by or on behalf of Ms Page and the relevant Page-related entities to make requests of Mr Baker on behalf of CLAH and that funds were advanced pursuant to such requests. I do not accept Mr Baker’s evidence that when Mr Page made such requests that he did so by requesting that the advance be made pursuant to the Carrabolla Facility (or for that matter, the other documented loan facilities that CLAH had extended to Page-related entities).

672    In evidence are two CLAH documents styled as “statement of loan account” for the Carrabolla Facility that purport to reflect the amounts drawn and otherwise due under the Carrabolla Facility over time. The second document is an updated statement of loan account which also includes payments to the Shyzi Receivers. A third document of this type was included in the court book but was not tendered. The provenance and veracity of these documents in terms of their content and their creation date is not clear on the evidence. They are riddled with inconsistencies. The evidence of both Mr Baker and Ms Comino confirms that these documents are the product of retrospective reworking at various points in time, including for the purpose of litigation. I do not consider these documents to be reliable. To the extent that the documents attribute advances as having been made under the Carrabolla Facility, the totality of the evidence demonstrates that this was done on Mr Baker’s instruction and is not supported by drawdown notices or other contemporaneous documentation emanating from either Carrabolla or Shyzi or from Mr Page as their agent which specify the request as being made under the Carrabolla Facility.

673    The earliest iteration of a “statement of loan account” for the Carrabolla Facility bears a date on its face of 1 August 2016 (the 1 August 2016 Document). The second iteration of a “statement of loan account” for the Carrabolla Facility has an issue date of 31 January 2021 (the 31 January 2021 Document).

674    In addition to the two “statement of loan account” documents, the defendants provided the Debt Particulars, which I have described in part 4.2 of these reasons. The Debt Particulars were provided pursuant to instructions provided by Mr Baker on behalf of CLAH. Ms Comino was involved in preparing the spreadsheets that formed the basis of the schedules attached to the Debt Particulars. Mr Baker and Ms Comino say that they, together with others, undertook a reconstruction of the loan accounts that are in issue in these proceedings at about this time.

675    Having regard to my earlier findings in relation to the creditworthiness of each of the three protagonists, and for the reasons I have given above, I place very little weight on their oral evidence in relation to amounts advanced, interest accruing and payments made in relation to the Carrabolla Facility. I base my findings on the contemporaneous documents to the extent that I am satisfied that the documents are reliable. Some of my findings are consistent with some parts of the evidence of one or other of the central protagonists. That does not cause me to have greater confidence that they as individuals told the truth on the particular issues where I have made findings consistent with their evidence. It is equally possible that these parts of their individual evidence were consistent with the documents that I accept to be reliable because they crafted their testimony to accord with some of the documents.

10.7.1    Drawdown of $680,000 - 1 July 2016

676    On about 1 July 2016 CLAH advanced $680,000 at Carrabolla’s direction for the purpose of completing the purchase of the Carrabolla Facility. This is the advance that I have referred to above as the Initial Drawdown. Notwithstanding the fact that CLAH has not tendered into evidence a loan ledger relating to the Carrabolla Facility, the evidence establishes that CLAH made this advance and attributed it as a drawdown under the Carrabolla Facility.

677    The Initial Drawdown was applied as follows. The settlement instructions in evidence show that a total of $676,762.52 was to be paid at the settlement of the Carrabolla Property on 1 July 2016 comprised as follows:

678    This document stands out in that it is a contemporaneous document that reflects a direction emanating from Carrabolla in relation to the payment of an advance under the Carrabolla Facility. The implementation of the directions as to payment in this document is supported by other contemporaneous documents.

679    CLAH paid $680,000 to its solicitors’ trust account on 30 June 2016 in anticipation of the settlement on 1 July 2016. The funds were dispersed from the solicitors’ trust account on 1 July 2016 in accordance with the settlement instructions, leaving a balance of $3,257.48 in CLAH’s solicitors’ trust account. The relevant statement of CLAH’s solicitors’ trust account is in evidence.

680    The 1 August 2016 Document records that the drawdown on 30 June 2016 was for $680,000. It includes the following details (as written):

Statement Issue Date: 01-Aug-16

Statement Starts: dd-mmm-yy

Statement Ends: dd-mmm-yy

Statement Number: 1

Loan Number: Carrabolla

Facility Limit: $700,000.00

…

Closing Balance $683,224.39 DR

681    While I attribute little weight to this document because the details included in it as to the facility limit and payments made in the relevant period are not consistent with other relatively contemporaneous records, I note that it is a representation in CLAH’s documents that the amount drawn under the Carrabolla Facility as at 1 August 2016 was limited to the Initial Drawdown of $680,000 made on 1 July 2016 and not a drawdown of the full limit of $860,000.

682    Schedule 2 of the Debt Particulars sets out the particulars of each advance that CLAH contends it made “in accordance with the Shyzi Transaction Documents”, which it defines to mean the Carrabolla Facility and the Shyzi Securities. Importantly, CLAH made the following representation in relation to Schedule 2, noting that the term Carrabolla Transaction Documents is not defined and occurs only once in the Debt Particulars:

6.     Schedule 2 sets out as at 23 October 2020 the amount owed by Shyzi to CL:

a.     being:

i.     any unpaid principal advances made;

ii.     any unpaid accrued interest calculated at the lower rate pursuant to the terms of Carrabolla FA. Interest calculated at the lower rate is calculated on the basis of clause 6 of the Carrabolla FA; and

iii.     any unpaid accrued interest calculated at the higher rate pursuant to the terms of Carrabolla FA. Interest calculated at the lower rate is calculated on the basis of clause 6 of the Carrabolla FA;

iv.     any other unpaid fees, costs and expenses which are owing pursuant to the Carrabolla FA,

under or in connection with the Carrabolla Transaction Documents;

b.     but excluding any other indebtedness of Shyzi to CL not arising from the Carrabolla Transaction Documents in respect of which CL reserves its rights.

683    In this document prepared for the purpose of these proceedings, the defendants record that four advances each described as “Initial Drawdown” were made in the cumulative sum of $680,000 said to have been drawn on 1 July 2016, which date accords with the settlement date in respect of the Carrabolla Property:

684    I find that $680,000 was drawn down on the Carrabolla Facility on 1 July 2016 and applied to discharging the vendor finance on the Carrabolla Property.

685    As I have said the circumstances in which the Carrabolla Documents were executed included that the Carrabolla Facility was to be a short-term loan in the form of bridging finance pending finance being obtained from the NAB. It was contemplated that this amount would be repaid upon the NAB finance being made available and this was reflected in the exit strategy that was recorded in the Carrabolla loan offer. More importantly, it was reflected in the Carrabolla Facility as documented as I have noted. The Carrabolla Facility expressly provided for a relatively short-term during which advances under the facility could be drawn (and in fact was documented in such a way as to suggest that the whole of the available limit was drawn on the same day the Carrabolla Documents were executed). It was an express term of the Carrabolla Facility that the loan limit was to be available to be drawn for a confined period ending on 5 July 2016. The Carrabolla Facility provided for a loan with a relatively short-term with full repayment due on 30 September 2016.

10.7.2    The NAB Loan and payment of Carrabolla Facility on 26 July 2016

686    In July 2016, Carrabolla secured the NAB Loan. The account into which the NAB Loan funds were deposited was opened on 26 July 2016.

687    In anticipation of the settlement of the NAB Loan there was an exchange of correspondence which variously involved Mr Baker, his solicitors, Mr Page, and NAB representatives. Settlement of the NAB Loan occurred on 26 July 2016. In evidence is a NAB account balance summary for the “NAB Markets – Flexible Loan Rate” account held by Carrabolla for the period 26 July 2016 to 14 September 2016. The first entry is that the account was opened on 26 July 2016. The account statement records the following transactions:

688    There is a gap in the evidence as to the account number ending in 877 (the 877 Account).

689    The account number ending in 437 (the 437 Account) is an account held by Carrabolla with the NAB. The disbursements made to this account are discussed further below.

690    On 26 or 27 July 2016, Carrabolla repaid an amount to CLAH. At the settlement, CLAH supplied discharge documents for the Carrabolla Securities to the NAB. The discharge of the Carrabolla Securities was registered on the PPSR on about this date.

691    It is basically admitted between the parties that a repayment was made on the Carrabolla Facility on about 26 July 2016. I say the repayment is basically admitted because there are several misstatements of the amount that was paid on this date in the pleadings and in the witnesses’ evidence. The more reliable evidence in relation to the repayment is the Westpac deposit slip that is in evidence which bears a bank stamp and which records the deposit of a cheque in the sum of $686,481.87 for the credit of CLAH into the BSB and account number that match the Westpac account details for CLAH’s “Daily Account” and the Westpac account statement that records that those accounts were credited on 26 July 2016. The plaintiffs pleaded, and the defendants admitted, that the amount paid was $686,481.47. There is an immaterial minor error in the amount stated in the pleading.

692    As mentioned above, the substance of the dispute between the parties is as to whether the payment made on 26 July 2016 was a full repayment of all amounts then owing under the Carrabolla Facility. The plaintiffs maintain that the amount owing under the Carrabolla Facility was fully repaid on 26 July 2016. The defendants maintain that it was not.

10.8    Amount outstanding under the Carrabolla Facility as at 26 July 2016

693    The defendants contend that between 30 June 2016 and 26 July 2016, CLAH advanced $741,474.75 under the Carrabolla Facility: DFACS, [24(d)]. The plaintiffs deny that CLAH advanced more than the initial advance of $680,000 under the Carrabolla Facility at any time.

694    To be clear, the defendants also contend that additional amounts were advanced under the Carrabolla Facility after 26 July 2016. The plaintiffs deny this. I will address the parties’ positions in relation to the Carrabolla Facility after 26 July 2016 separately below. Before addressing the defendants’ contention — that CLAH advanced additional amounts under the Carrabolla Facility after the Initial Drawdown — I will first address the evidence in relation to calculation of the amount that Carrabolla repaid to CLAH under the Carrabolla Facility on 26 July 2016. The amount that Carrabolla paid ($686,481.87) exceeded the “payout amount” that had been communicated by Mr Baker to Mr Page ($683,224.39).

695    By an email dated 22 July 2016 with the subject line “Carrabolla Loan”, Mr Baker wrote to Mr Page and said (as written):

Hi Lemuel,

Please find attached for your records:

1.     Solicitor's Trust Account Statement showing how the funds were disbursed at the time of settling the original owner;

2.     Solicitor's Invoice, which has been paid;

3.     Solicitor's email outlining his fee for attending to the discharge, which we will pay; and

4.     Summary spreadsheet show how we came to the payout amount of $683,224.39.

Let me know if you have any questions.

Regards,

Theo Baker

696    The email was not copied to Ms Page.

697    On its face (in the attachment field in the email header), the email attaches: (1) a copy of CLAH’s solicitors’ trust account showing how funds were disbursed at the settlement on 1 July 2016 (which I have addressed in part 10.7.1 of these reasons); (2) Diamond Conway’s Tax invoice dated 11 July 2016 in the total of $5,931.87; and (3) a document titled “Carrabolla – Page 01.xlsx”. Notwithstanding that the covering email is dated 22 July 2016, the document included in the court book with the description “Carrabolla – Page 01” and tendered in evidence is in the form of a statement of loan account for “Loan Number: Carrabolla” and bears a “Statement Issue Date” of 1 August 2016. This is the document to which I have referred in part 10.7.1 of these reasons as the 1 August 2016 Document. I infer that an earlier print out of a statement of loan account in the same form as the 1 August 2016 Document is the document that Mr Baker describes in his email to Mr Page as the summary spreadsheet that shows how the payout amount of $683,224.39 was calculated. There is a gap in the evidence as to the content of this document as at 22 July 2016. I would not infer that the content as at 22 July 2016 was the same as the content as at 1 August 2016. The entries in the 1 August 2016 Document include line items for 31 July 2016, which post-date 22 July 2016.

698    On the assumption that the information included in the 1 August 2016 Document may shed some light on the manner in which the “payout amount of $683,224.39” for the Carrabolla Facility was calculated, I make the following observations as to what appears may have been done:

(1)    the starting point used was the initial drawdown of $680,000 – attributed as having occurred on 30 June 2016;

(2)    an amount of $0.00 is recorded on 11 July 2016 for “Interest – Lower Interest”;

(3)    an amount for legal fees in the sum of $5,931.87 is then added;

(These are fees and disbursements incurred by CLAH itemised in an invoice dated 11 July 2016 which was also attached to Mr Baker’s email to Mr Page);

(4)    an amount of $3,257.48 is then subtracted;

(This was the residual balance that was still in CLAH’s solicitors’ trust account);

(5)    an amount of $0.00 is recorded on 31 July 2016 for “Interest – Lower Interest”;

(6)    an amount of $550 for legal fees is then added; and

(The line item on the 1 August 2016 Document describes this as “Legal Fees for Partical [sic] Repayment”. This is the amount that CLAH’s solicitors indicated that they would charge for attending to the discharge of the Carrabolla Securities in their email correspondence with Mr Baker dated 21 July 2016. CLAH’s solicitors forwarded an email from the NAB in relation to the upcoming settlement of the Carrabolla Property to Mr Baker seeking, amongst other things, confirmation of “your partial payout figure (as you had indicated circa $680,000.00) so we can advise the NAB” and confirmation as to payment of discharge fees (“I assume our discharge fees will be paid by the borrower through the NAB refinance. If not please let me know”). Mr Baker replied by asking for “the breakdown of how the $680,000 was disbursed and your fees for attending to the discharge then I’ll be able to calculate a partial payout amount”. CLAH’s solicitors replied attaching the trust ledger report and indicating that subject to Mr Baker’s instructions, their “fees for the discharge will be $550.00 (inclusive of GST)”. Mr Baker indicated in his email that the fees would be paid by CLAH, presumably on the basis that Carrabolla repaid that amount in due course);

(7)    the end point is a balance owing of $683,224.39 as at 31 July 2016 with no allowance for interest.

699    As I have mentioned, the Westpac deposit slip shows that Carrabolla deposited a cheque in the amount of $686,481.87 in one of CLAH’s account on 26 July 2016. This is the amount that is recorded in CLAH’s Debt Particulars as a repayment made on 26 July 2016. This amount represents about $3,257.48 more than the payout amount specified in Mr Baker’s email of 22 July 2016. The amount of the excess is the same as the residual amount of the Initial Drawdown that remained in CLAH’s solicitors’ trust account. In the 1 August 2016 Document, this amount is shown as being credited to the Carrabolla loan account on 11 July 2016, in effect as a repayment. There is no explanation for why this amount was treated as a credit on 11 July 2016 and not 1 July 2016. In reality, this amount had been in CLAH’s solicitor’s trust account throughout – it was not remitted to Carrabolla on 1 July 2016. Taking that into account, the amount repaid by Carrabolla in July 2016 was in total $689,739.35, being $3,257.48 plus the repayment of $686,481.87.

700    Notwithstanding the difficulties I have identified with the primary documents, I have concluded that the repayment that was made on 26 July 2016 was a repayment of the whole of the amount owing under the Carrabolla Facility as at 26 July 2016 including costs and interest. I will address the defendants’ submissions to the contrary and my reasons for rejecting the central premise of their argument that additional funds were drawn on the Carrabolla Facility over and above what was described as the “Initial Drawdown” of $680,000 and associated fees and charges.

701    The starting point is the proper construction of the Carrabolla Facility itself.

702    The Carrabolla Facility provided for a facility limit of $860,000, which was available for drawdown during a time limited Availability Period that commenced on 30 June 2016 and expired on 5 July 2016. The evidence demonstrates that the only amount drawn during this period was the sum of $680,000. Any undrawn balance as at 5 July 2016 was cancelled and not available to be drawn thereafter. Any amount which was repaid under the Carrabolla Facility could not be redrawn as of right. The payment made on 26 July 2016 was not due until 30 September 2016. If the payment made on 26 July 2016 was a partial prepayment and not a full repayment then it was required to be in an amount that was rounded to a $50,000 increment of what was then outstanding. The payment made on 26 July 2016 was not rounded in this way.

703    The repayments which were made before the Expiry Date did not comply with the regime applicable for the making of partial repayments in that they were not made in increments of $50,000. In so far as the repayment of $686,481.87 on 26 July 2016 is concerned, that tends to suggest that the amount repaid was in full discharge of the amount then outstanding rather than as a partial prepayment. Had it not been so, under the Carrabolla Facility, Carrabolla was required to round the amount of its partial prepayment either down to $650,000 or up to $700,000. It did not do so.

704    In reaching the conclusion that the Carrabolla Facility was fully repaid by the payment made on 26 July 2016, I have rejected the defendants’ evidence as to the alleged variation and extension of the Carrabolla Facility. Similarly, there is no credible evidence that Carrabolla requested and obtained CLAH’s agreement to enable it to redraw that which it had repaid on 26 July 2016.

705    Before moving to each of the alleged advances on which the defendants rely, I will address the references in contemporaneous documents to the 26 July 2016 payment being a partial payout, variously expressed. There is a reference to “Partical Repayment” in the 1 August 2016 Document. This is a typographical error – it should read “Partial Repayment”. The line entry date and transaction descriptions read “31-Jul-16 Legal Fees for Partical Repayment”. The solicitors’ tax invoice does not refer to partial repayment. There are references in correspondence around 22 July 2016 between Mr Baker and his solicitor in which reference is made to a “partial payout figure” and “partial payout amount”. Some of this correspondence was subsequently forwarded to Mr Page. The defendants place great stock on these references.

706    I do not regard these documents as compelling support for the proposition that the payment made on 26 July 2016 was in truth a partial payment as opposed to a full repayment of the Carrabolla Facility. My reason is that the description of the payment as “partial” is introduced by Mr Baker. At this time, the Aranik Loan was on foot, it was not due for repayment (and was not in fact repaid) until November 2016. As I have already said, Mr Baker documented the Carrabolla Facility in such a way as to provide a cover for causing CLAH to make an essentially undocumented, unsecured, interest-free loan to Aranik. He used the Carrabolla Documents as a means to avoid the Aranik Loan being queried by CLAH’s auditors. Seen in this light, Mr Baker’s description of the payment being a partial payout of the Carrabolla Facility is not evidence to which I would attach much weight in ascertaining whether the payment which was made was in fact a partial payment. On the whole of the evidence, I find that it was not a partial payment. The documents that include reference to the payment being a partial payment are examples of the need to exercise caution in attributing the usual weight that one would attach to a contemporaneous document to the documents relied on by CLAH where the content of the documents was dictated by Mr Baker, in circumstances where he was deliberately creating a false narrative to deflect any queries being raised by CLAH’s auditors.

10.8.1    Changes in the way in which CLAH frames the debt claim that informs its claim against Shyzi

707    The defendants’ claims in respect of what they contend were advances made under the Carrabolla Facility have changed a number of times. In closing submissions, senior counsel for the plaintiffs described the defendants’ process of identifying and allocating debts owed to CLAH to one or other of the facilities in issue as a “moveable feast”. That description was apt. Taking the various iterations of the defendants’ claims alleged to arise under the Carrabolla Facility in chronological order, the relevant documents are as follows:

(1)    the 1 August 2016 Document to which I have already referred;

(2)    the Debt Particulars which were filed pursuant to Court order on 26 October 2020, and purports to address the position as at 23 October 2020, to which I have referred in part 4.2 of these reasons;

(3)    the 31 January 2021 Document to which I have briefly referred; and

(4)    the defendants’ Concise Statement dated 27 May 2021 (which appears to be based on the 31 January 2021 Document and was subsequently amended to become the DFACS).

10.8.1.1    Debt Particulars

708    In the Debt Particulars dated 26 October 2020, the defendants claim that the amount owing as at 26 July 2016 was $721,662.62. The Debt Particulars were prepared after the appointment of Receivers and at the time when Mr Baker was the sole director of CLAH and was instructing CLAH’s solicitors in relation to these proceedings. As I have mentioned, the particulars were provided in response to an order made by O’Bryan J in the context of Ms Page’s application for an urgent injunction.

709    By its Debt Particulars, CLAH claims that in the period 30 June 2016 to 26 July 2016 the following transactions were made in accordance with the Carrabolla Facility and the Shyzi Securities (which together are defined in the Debt Particulars as the “Shyzi Transaction Documents”):

710    The Debt Particulars do not include a claim in respect of an alleged advance on 30 June 2016, the day the Carrabolla Facility was executed, of $21,285.40 for the Ferrari registered in Ohmut’s name (the Ferrari Payment). A claim in respect of the Ferrari Payment was first introduced in the defendants’ Concise Statement. It is also included as a line item in the 31 January 2021 Document (which post-dates the commencement of these proceedings). The Ferrari Payment is referred to in the 31 January 2021 Document curiously as a “Further Advance” although on CLAH’s case thesis, this payment was first in time. There is also no reference in the Drawdown Notice to Carrabolla applying the advance to the making of the Ferrari Payment on behalf of Ohmut. The Ferrari Payment was a payment by CLAH to Italian Automobiles. It was made during the Availability Period. I will address the Ferrari Payment further below.

711    The four transactions described as “Initial Drawdown” in the Debt Particulars on 1 July 2016 all occurred before the expiration of the Availability Period. In the 31 January 2021 Document, there is a single line item for these advances in the total sum of $680,000, described as “Further Advance” and dated 1 July 2016.

712    In the Debt Particulars, the following additional debits are particularised after the transactions which together comprise the “Initial Drawdown” in the sum of $680,000:

(1)    “Interest – Lower Rate”:

(a)    $3,129.86 on 15 July 2016;

(b)    $2,364.04 on 25 July 2016; and

(c)    $236.85 on 26 July 2016 (together the Accrued Interest as at 26 July 2016);

(2)    “Legal Fees” to payee Diamond Conway in the sum of $5,931.87 on 15 July 2016 (the Diamond Conway Legal Fees);

(3)    “Further Advance” to payee “Walkom Real Estate” in the sum of $30,000 on 15 July 2016 (the Walkom Payment); and

(4)    “Further Advance” to payee “Andco (1970)” in the sum of $1,000 on 26 July 2016 (the Andco Payment).

713    The following repayments are particularised:

(1)    $1,000 on 25 July 2016; and

(2)    $686,481.87 on 26 July 2016.

714    The $1,000 paid on 25 July 2016 is recorded in CLAH’s bank account statement as “DEPOSIT Player Property Player Property”.

715    The Diamond Conway Legal Fees were invoiced by Diamond Conway on 11 July 2016 and paid by CLAH on 15 July 2016. Both dates fall after the end of the Availability Period. The subsequent debits made in the period before the payment to CLAH on 26 July 2016 are described as “Further Advances” in both the Debt Particulars and the 31 January 2021 Document. These “advances” were made after the expiration of the Availability Period. The Walkom Payment and the Andco Payment are both alleged to have occurred after 5 July 2016.

716    The refund of $3,257.48 from CLAH’s solicitors’ trust account to CLAH is omitted from Schedule 2 of the Debt Particulars. The 1 August 2016 Document suggests that this was treated as a repayment. There is a reliable contemporaneous document emanating from CLAH’s solicitors from which I infer that this amount was transferred to CLAH. Taking this into account as a repayment which is additional to those particularised, the total repayments made on the Carrabolla Facility by 26 July 2016 based on CLAH’s various formulations of the alleged transactions on the Carrabolla Facility totalled $690,739.35 (being $3,257.48 + $1,000 + $686,481.87). If the repayment of $1,000 was not in fact a repayment but a way of reversing out of the accounts the purported Andco Payment, then the total amount of repayments as at 26 July 2016 would reduce by $1,000 to $689,739.35.

717    At this point, I also interpolate to note that CLAH claims interest in its Debt Particulars which is initially calculated at what is described as the “lower rate” (being 1% per month) at various intervals between the initial drawdown on 1 July 2016 and the expiration of the Carrabolla Facility on 30 September 2016. Following 30 September 2016, CLAH claims interest calculated at what it describes as a “higher rate”, which equates to an interest rate of 2% per month, at least once a month between October 2016 and September 2020.

10.8.1.2    Defendants’ Concise Statement

718    The defendants contend in their Concise Statement dated 27 May 2021 that between 30 June 2016 and 26 July 2016, CLAH advanced $741,474.75 under the Carrabolla Facility. That figure appears to have been calculated roughly in accordance with entries made in the 31 January 2021 Document, which I address more fully below:

(1)    “Further Advance” of $21,285.40 on 30 June 2016;

(2)    “Further Advance” of $680,000.00 on 1 July 2016;

(3)    “Legal Fees” of $5,931.87 on 15 July 2016;

(4)    “Further Advance” of $30,000.00 on 15 July 2016; and

(5)    “Further Advance” of $1,000.00 on 26 July 2016,

resulting in a cumulative total of $738,217.27. Each of the above amounts appear as debits in the 31 January 2021 Document. To arrive at the total of $741,474.75 claimed in the defendants’ Concise Statement, it appears that the amount of $3,257.48, which was the amount that remained in credit in CLAH’s solicitors’ trust account after settlement of the Carrabolla Property, has been added to the other advances in subparagraphs (1) to (5). That appears to involve an element of double counting because this amount was part of the Initial Drawdown of $680,000 and it has been treated as a separate advance as well.

719    Pausing here, four observations may be made.

720    First, the above amounts are alleged to comprise “advances” or “legal fees” and do not include claims for accrued interest.

721    Second, the advances claimed are on a gross basis and do not allow for any repayments made, including as a result of the remission of the credit balance of $3,257.48 from CLAH’s solicitors trust account, which was treated in the 1 August 2016 Document as a repayment by Carrabolla.

722    Third, the total said to have been advanced includes what is described as a “Further Advance” of $21,285.40 alleged to have been made on the day the Carrabolla Documents were executed which payment represents the Ferrari Payment. This payment was not included in the Debt Particulars nor in the 1 August 2016 Document, but is alleged in the defendants’ Concise Statement as a transfer made to Italian Automobiles Group Pty Ltd “on account of the Carrabolla Facility”. CLAH did not tender a bank statement that covered this transfer. Tendered in evidence is a Westpac payment detail report dated 30 June 2016. The information included in documents of this type was sourced from instructions given by Mr Baker to CLAH employees who then entered the information when transacting electronically on the relevant Westpac bank account. On the payment detail report as generated by the Westpac banking interface there is no reference to Carrabolla – both the account details and beneficiary summary refer only to Italian Automobiles. Handwritten on the printed copy of the payment detail report are the words “Loan to Carrabolla”. The handwritten description is undated and the author is not identified. I find it probable that the handwriting was added during the process of reconstruction that took place at or around the time of the 31 January 2021 Document, which informed the way in the defendant’s Concise Statement was formed. It is another indicia of the defendants’ approach being one of ex post facto reconstruction rather than contemporaneous record-keeping.

723    Fourth, the “Further Advances” identified include: that which was previously described as the “Initial Drawdown” totalling $680,000 but is here described as a “Further Advance’; the Diamond Conway Legal Fees; the Walkom Payment; and the Andco Payment.

724    Fifth, only two of the four alleged “Further Advances” in the period before 26 July 2016 are alleged to have occurred during the Availability Period specified in the Carrabolla Facility.

725    Sixth, there are no drawdown notices as required by the Carrabolla Facility in respect of any of the alleged Further Advances, other than for the Initial Drawdown of $680,000, which Drawdown Notice I have addressed in part 10.5.3 of these reasons.

10.8.1.3    The 31 January 2021 Document

726    As I have said, on its face this document is described as a “Statement of Loan Account” addressed to Carrabolla with a statement issue date of 31 January 2021, the amount owing as at 26 July 2016 is said to be $743,130.41. That sum is calculated as follows:

727    On the basis of this document, the “Customer Repayment” of $686,481.87 on 26 July 2016, reduced the balance owing under the Carrabolla Facility to $56,648.54. This debit balance includes a total of $5,913.14 accrued interest ($7.00 + $3,227.87 + $2,434.36 + $243.91) which has been calculated on the basis that the Ferrari Payment was an advance made under this facility on 30 June 2016.

10.8.2    Balance owing under Carrabolla Facility as at 26 July 2016

728    In order to ascertain the true position as to what was owing under the Carrabolla Facility at 26 July 2016, I will first consider the defendants’ claims in relation to the Ferrari Payment, the Diamond Conway Legal Fees, the Walkom Payment and the Andco Payment. I will then address the facts in relation to Accrued Interest as at 26 July 2016 by reference to the findings I make in relation to each of the earlier alleged debits to the loan account.

10.8.2.1    The Ferrari Payment

729    CLAH contends that on 30 June 2016, it advanced $21,285.40 under the Carrabolla Facility. These funds were used to make the Ferrari Payment, which was the last payment due from Ohmut as the registered owner of the vehicle pursuant to vehicle financing. The plaintiffs contend that CLAH has wrongly debited this payment to the Carrabolla Facility.

730    Before turning to the relevant payment, I will briefly address the documentary evidence relating to the ownership and financing arrangements in relation to the Ferrari. The contract for purchase between Ferrari Maserati Sydney and Ohmut has a deal date of 24 March 2015 and a total settlement amount of $600,000.01. The special conditions which are partly illegible appear to include that the sale is subject to approval, which I infer to mean that the sale was subject to finance approval.

731    In a letter dated 23 June 2015 addressed to Ohmut, Alphera Financial Services (which was the trading name of BMW Australia Finance Ltd) confirmed the details of the chattel mortgage over the Ferrari. The letter included a summary of the finance contract as follows (as written):

Payment Due Date: Monthly Commencing 22/06/2015;

Monthly Payment: $5,935.14;

Contract Term: 48 months;

Amount Financed: $402,826.60;

Residual/Balloon Amount: $210,000; and

Final Payment Due Date: 22/06/2019

732    Italian Automobiles is identified as the Alphera Business Manager for the purpose of the contract.

733    Roughly four years later, on 22 July 2019, Ms Page in her capacity as sole director and secretary of Ohmut executed a chattel mortgage agreement securing what appears to be the financing of the residual balloon payment. The loan amount is in the sum of $211,999.99, of which $211,752.99 is identified as having been disbursed to purchase the vehicle, $239 of which was disbursed to cover an establishment fee (reduced by $200 on account of loyalty bonus) and $8 was disbursed to pay PPSR registration fees. Ms Page “as trustee for Ohmut Trust” is listed as a guarantor and she separately executes the chattel mortgage in her capacity as guarantor.

734    Although included in the original iteration of the court book, two certificates of registration and a compulsory third party insurance schedule pertaining to the Ferrari were not ultimately tendered.

735    A Certificate of Currency dated 23 July 2019 issued by the MB Insurance Group in respect of the Ferrari names Shyzi as the insured in the period of cover ending on 19 June 2020. The same details are recorded on the insurance renewal for the following year.

736    In her evidence, Ms Page said that the Ferrari was an asset belonging to Shyzi. She was taken to the contract for purchase of the Ferrari and shown that the relevant purchaser was named as Ohmut. She said that was because the finance company said that “Ohmut had a good income generating property and would do better for the finance”. She was cross-examined on these documents and on the chattel mortgage that she had executed on 22 July 2019, none of which referred to Shyzi. She was adamant that notwithstanding this, Shyzi was the owner of the Ferrari. She said the payments were coming out of Shyzi “from day one, always”. She was challenged on how the financier could enforce the chattel mortgage if the Ferrari was owned by a company that was not named in the chattel mortgage. Her retort was to say that the finance was in place under the name of Ohmut, but the monthly payments were coming out of the Shyzi account. She claimed to have registered the car in Shyzi’s name after arranging for an asset transfer from Ohmut to Shyzi. She did not say when that occurred and the plaintiffs did not tender any registration certificates from the relevant time, or at all.

737    This is another example of Ms Page executing documents which on their face do not reflect what she now claims was the true position at the relevant time. On the strength of the documentary evidence relating to the acquisition financing of the initial purchase of the Ferrari and the further finance in relation to the residual balloon payment, I infer that at the time the Ferrari Payment was made, the Ferrari was registered in Ohmut’s name. Further, that Ohmut had obtained finance and granted a chattel mortgage over the vehicle in favour of the financier in order to secure both advances.

738    The evidence establishes that Kylie Webster of Ateco Group sent an email to Mr Page on 30 June 2016 at 1.55pm AEST with the subject line “Final Payment for Ferrari 458”. In the email Ms Webster requested the transfer of “final funds outstanding for payment of the [Ferrari]” and stated that the outstanding amount was $21,285.40, payment of which was required to clear the account. The email was not copied to Ms Page. Minutes later Mr Page forwarded the email to Mr Baker without any covering message. At 2.57pm, 30 June 2016, Mr Baker emailed Ms Webster and Mr Page, in an email that incorporated Ms Webster’s earlier email to Mr Page, and which said it attached a payment confirmation in respect of the Ferrari Payment. The email header does not include a line item for any attachment. There is however in evidence the Westpac payment detail report that I have referred to above. The payment detail report bears the date and time stamp of “30 June 2016 14.34 AEST” and records that CLAH queued for payment on that day the sum of $21,285.40 to Italian Automobiles. The Westpac payment detail report does not contain any reference to Carrabolla, Shyzi, Ohmut, Mr Page, Ms Page or the Carrabolla Facility in the typewritten content. In an undated handwritten note at the foot of the copy of the Westpac payment detail report that is in evidence, it is written “Loan to Carrabolla”. I have referred to this above. As I have noted above, the 1 August 2016 Document and the Debt Particulars do not include any reference to this payment.

739    Ms Page says that the reason that CLAH came to make the Ferrari Payment was that:

It was coming up to end of financial year, and I reminded Lemuel that we needed to make the final payment for the Ferrari, and I said, “Could you organise that, please,” and he said yes. He spoke to Theo, and between Lemuel and Theo, Theo paid the final payment for the Ferrari.

Lemuel and I spoke a few days later, and he said, “That’s fine.” He said, “Theo has given me the money for the final payment,” and I said, “That’s great.”

740    When it was put to her that she had asked Mr Page to find someone who could lend her the money to complete that purchase, she deflected:

I just reminded him that the final payment was due before the end of financial year and, “Could you sort it out.”

741    She repeatedly asserted that she had just asked Mr Page to sort it out – she had not asked him to “go and get a loan with a bank or from CLAH or from anybody”. She said that Mr Page told her that Mr Baker had made the final payment and that he had agreed to lend the money to Mr Page. When asked if she consented to that arrangement she said “I was happy for that. That was great. Theo helped Lemuel. Yes.”

742    Mr Page’s evidence was consistent with that given by Ms Page. He maintained that he had obtained a personal loan from Mr Baker in the sum required to complete the purchase. Further, that Mr Baker had said to him that he was “happy to lend you the money”. He denied that he had asked Mr Baker for CLAH to lend the money to make the final payment as part of the Carrabolla Facility. When he was asked if he told Mr Baker that the Ferrari was owned by Shyzi he responded:

I didn’t even – we didn’t discuss the Ferrari. I just asked him to borrow the money.

743    Mr Baker’s evidence was that Mr Page had approached him, indicated that he had a final payment due in relation to a vehicle that he had purchased and asked if he could make a further drawdown on the Carrabolla/Shyzi facility to pay that outstanding amount. Mr Baker says that he said, “Yes, please send me the details and I will arrange for the drawdown to be paid.”

744    Apart from his contention that Mr Page expressly requested that the Ferrari Payment be funded as an additional advance on the Carrabolla Facility, Mr Baker’s evidence is supported by the contemporaneous email chain comprising the email emanating from Ms Webster, which was forwarded to Mr Baker, and culminated in Mr Baker’s email to Ms Webster and Mr Page confirming payment. That email chain weighs against Mr Page’s evidence that he did not discuss the Ferrari Payment with Mr Baker. I find that Mr Page did discuss the purpose of making the Ferrari Payment with Mr Baker. I further find that Mr Page understood that the funds to make that payment were to be supplied by CLAH and that was confirmed when he was copied to Mr Baker’s email to Ms Webster, which I find attached the payment confirmation.

745    To be clear I find that the copy of the payment confirmation that was attached to Mr Baker’s email did not include any handwritten annotation. As I have said, there is a lacuna in the evidence as to by whom and when the handwritten annotation was added to the payment confirmation. The handwritten note on the version of the Westpac payment confirmation that is in evidence is the only documentary evidence which references the Carrabolla Loan in connection with the Ferrari Payment. I place little weight on the handwriting because I find that it was not made contemporaneously to the time the Ferrari Payment was made. I find it probable that the handwriting was added during one of the ex post facto “audits” of the facilities in issue in this litigation that was undertaken by Mr Baker and Ms Comino for the purpose of CLAH defending these proceedings. I find it likely that it was added after the Debt Particulars were provided and after the proceedings were on foot. Even if the handwritten annotation was made at or around the time the Ferrari Payment was made, I would not attach weight to it as a reliable contemporaneous record. My reason for that is that I have found that Mr Baker was engaged at the time in creating a documentary trail that was directed to deflecting any queries that may be made by CLAH’s auditors in relation to the flow of funds from CLAH rather than recording the true position in relation to his dealings with the Page interests.

746    For completeness, I note that Ms Comino gave evidence in her affidavit in relation to this payment. Ms Comino’s evidence does little more than recite the contents of the documents which she includes in the exhibit to her affidavit, which are documents that she does not appear to have been involved with at the relevant time. She then concludes without explanation that the Ferrari Payment was made “on account of the Carrabolla Facility”. Ms Comino’s affidavit was the source for the Westpac payment detail report with the handwritten annotation referring to Carrabolla. She does not explain the provenance or the timing of the handwritten comment on the report. Given her role and the fact that I have found that she took direction from Mr Baker in all relevant respects, her evidence stands or falls with Mr Baker’s on whether these funds were advanced under the Carrabolla Facility.

747    I accept Mr Baker’s evidence that Mr Page asked him to make the Ferrari Payment. I have placed weight on the email chain between Ms Webster, Mr Page and Mr Baker in this regard. I do not accept Mr Baker’s evidence that Mr Page asked him to make the Ferrari Payment as an advance under the Carrabolla Facility. The request for the payment was made on the very day that the Carrabolla Facility was executed and the Drawdown Notice was signed. There is no documentary trace to support Mr Baker’s oral assertion that the Ferrari Payment was expressly made as an advance under the Carrabolla Facility. The requirement for advances to be made in accordance with the approved purposes and supported by written drawdown notices would have been fresh in Mr Baker’s mind at this time. Given Mr Baker’s desire to ensure that the Carrabolla Facility and the transactions surrounding it did not excite the interest of the auditors, I find it highly improbable that he was genuine in his evidence that the Ferrari Payment was advanced at this time under the Carrabolla Facility. To have done that would have undercut the utility of the facility limit of the Carrabolla Facility serving as a cloak for the undocumented, interest-free and unsecured Aranik Loan. If the Ferrari Payment was really an advance under the Carrabolla Facility, Mr Baker would have attended to the relatively simple task of requiring Ms Page to execute a written drawdown notice or of incorporating reference to it in the Drawdown Notice that he required Ms Page to sign. Mr Baker knew that Ms Page had signed every document that he had asked her to sign in connection with the Carrabolla arrangements and the Aranik Loan. Yet, he did not do so. In reality, the paper trail that he had already laid represented that the Carrabolla Facility had been fully drawn and applied according to the proportions and purposes set out in the signed Drawdown Notice dated 30 June 2016.

748    Having regard to the evidence of Mr Page and Ms Page that I have referred to above, and which I accept, as to their understanding based on what Mr Baker told them about the inclusion of the reference to A$200,000 for investment with Aranik, I infer that they each understood that the available limit under the Carrabolla Facility was in effect fully drawn as a result of this Drawdown Notice on 30 June 2016. I say in effect because Ms Page understood that this was the artifice to which she had agreed for the purpose of facilitating what became the Aranik Loan. In circumstances where Ms Page, and to the extent relevant, Mr Page, understood that the Carrabolla Facility was in effect fully drawn upon execution, I do not accept Mr Baker’s evidence that Mr Page on behalf of Carrabolla requested that the Ferrari Payment be made under the Carrabolla Facility on the very date on which the Carrabolla Documents were executed. To have done that would have rendered their joint artifice in relation to the Aranik Loan nugatory.

749    In addition, there is no separate Drawdown Notice in respect of the Ferrari Payment. There is no reference in the Drawdown Notice to the making of the Ferrari Payment on behalf of Ohmut, which was the company in whose name the Ferrari was registered, or otherwise advancing the money to or at Ohmut’s direction. I infer that at this point in time when documentation of what they were doing was front of mind that Ms Page and Mr Baker were both aware that an advance under the Carrabolla Facility had to be supported by a Drawdown Notice. Ms Page had executed both the Carrabolla Facility and the Drawdown Notice on the very day that the Ferrari Payment is alleged to have been made. Mr Baker was responsible for giving instructions to CLAH’s solicitors in relation to drafting and execution of the suite of documents comprising the Carrabolla Documents and was involved in the execution of the Shyzi Deed and the Drawdown Notice. I infer that as at 30 June 2016, Mr Baker was attuned to the need to document transactions under the Carrabolla Facility to quell unwelcome attention from the auditors. I do not accept that the Ferrari Payment was an advance under the Carrabolla Facility made at the request, or on behalf, of Carrabolla. I am fortified in this conclusion by the evidence in relation to the Ferrari Payment that I have already addressed in this section of my reasons.

750    Another factor weighing against Mr Baker’s evidence is that if the Ferrari Payment was expressly made as an advance under the Carrabolla Facility, then in all likelihood it would have been included in the 1 August 2016 Document and in the Debt Particulars. I do not accept Mr Baker’s purported recollection in the witness box of a conversation with Mr Page in which Mr Page expressly asked for the Ferrari Payment to be made as an advance under the Carrabolla Facility some six years after the alleged conversation took place but did not recall the conversation at the time he and Ms Comino were actively involved in preparing the schedules which form part of the Debt Particulars some two years earlier. I reject Mr Baker’s evidence on this issue.

751    For completeness, the Ferrari Payment is not expressly sanctioned by the purposes described in cl 3 or Schedule 1, Item 8 of the Carrabolla Facility, but could potentially come within the purpose articulated in the third bullet point in Schedule 1, Item 8 in so far as the Ferrari Payment was paid from “surplus funds” pursuant to a direction given by or on behalf of Carrabolla, provided it answered the description of being “for legal purposes and for genuine bona fide commercial purposes that do not contravene the Transaction Documents”. While I accept that it is possible that the Ferrari Payment could fall within the third bullet point in the purpose clause, I do not accept that this advance was made pursuant to the Carrabolla Facility given that there was no Drawdown Notice and that it is not reflected in the contemporaneous documents relating to the facility.

752    The defendants have not established that the Ferrari Payment was an advance under the Carrabolla Loan. It was a payment that Mr Baker caused CLAH to make at Mr Page’s request. Ohmut appears at that time to have been the registered owner of the Ferrari and the borrower under the vehicle finance contract. The evidence does not establish the basis on which that Ferrari Payment was made and by whom it was to be repaid. I would infer that the advance was subject to an obligation to repay on demand. Based on the evidence before me I would have found that the advance was repayable by Ohmut, not Shyzi. However, the plaintiffs’ concede that this was an amount that CLAH advanced to Shyzi albeit not under the Carrabolla Facility: PFASOFC, [31]. Accordingly, this is an amount which Shyzi is liable to repay CLAH on demand. Given that the plaintiffs admit that this payment was a payment by CLAH to Shyzi, it would fall within the definition of Secured Money under the Shyzi Securities. I will address this advance as part of my consideration of Issue 6.

753    Mr Page was acting as Ms Page’s and Ohmut’s agent or with their ostensible authority in requesting that CLAH loan the money required for the Ferrari Payment. Mr Page was authorised by Ms Page in her role as the sole director of Ohmut to make the request of Mr Baker. Ms Page was made aware that Mr Baker had caused the Ferrari Payment to be made. Mr Page informed Ms Page that the payment came from CLAH. I reject the evidence given by Mr Page and Ms Page to the effect that funds required to make the Ferrari Payment were advanced by CLAH as a personal loan to Mr Page.

10.8.2.2    Diamond Conway Legal Fees

754    The Diamond Conway Legal Fees of $5,931.87 are variously attributed debit dates of 11 July 2016 and 15 July 2016. It is not suggested there were two payments. Mr Baker provided a copy of Diamond Conway’s invoice to Mr Page and said that these fees had been paid in his email of 22 July 2016. A Diamond Conway receipt dated 15 July 2017 records receipt of $5,931.87 from CLAH. The payout figure was expressly calculated on the basis that Carrabolla would pay an amount which included reimbursing CLAH for these fees. The plaintiffs do not dispute that Carrabolla was liable to pay these fees under the Carrabolla Facility: cll 3, 19 and Schedule 1, Item 8. These fees were not invoiced until 11 July 2016, it was paid by CLAH and then recouped from Carrabolla. As at the date of this invoice, Carrabolla did not have an available credit limit against which to drawdown these funds. The Availability Period had expired on 5 July 2016 and any undrawn credit was cancelled at that time. The present relevance of the Diamond Conway Legal Fees is that Carrabolla’s liability to pay these fees, or more accurately to reimburse CLAH in respect of these fees, was discharged when Carrabolla made the payment on 26 July 2016.

10.8.2.3    The Walkom Payment

755    The next component of the debt that the defendants claim as an advance under the Carrabolla Facility is the so called Walkom Payment. The defendants claim that this amount was drawn under the Carrabolla Facility on 15 July 2016. The Walkom Payment does not appear in the 1 August 2016 Document. It is included in the 31 January 2021 Document and the Debt Particulars. Walkom Real Estate is listed as the payee in the Debt Particulars. In the 31 January 2021 Document, the debit is described as a “Further Advance”. It is common ground that the payment was in fact deposited to Ohmut’s bank account (and not Shyzi’s bank account). The circumstances in which the transfer came to be made are controversial. For the reasons which follow, I am not satisfied that the defendants have established that this payment was an advance drawn under the Carrabolla Facility or otherwise a loan to Shyzi within the meaning of Secured Money under the Shyzi Securities.

756    First, the timing of the relevant transfer and the supporting documents do not suggest that the advance was made in accordance with the terms of the Carrabolla Facility. The advance is alleged to have been made after the end of the expiry of the Availability Period, at which time the terms of the Carrabolla Facility did not permit advances to be drawn under the facility. Further, any undrawn portion of the loan limit was by operation of the terms of the Carrabolla Facility cancelled at the time this advance was allegedly made. There is no Drawdown Notice in respect of this purported advance. The Carrabolla Facility required that advances were to be supported by a Drawdown Notice. Although the advance may fall within the approved purposes for which advances under the Carrabolla Facility could be used, if it is accepted for present purposes as potentially coming within the purpose articulated in the third bullet point in Schedule 1, Item 8, there is no suggestion of this approval being given in writing.

757    Second, the balance of the evidence in relation to the Walkom Payment, including that relied on by the defendants, does not support an inference that the Walkom Payment was an advance under the Carrabolla Facility or to Shyzi.

758    By way of context, at the time of this payment, Mr Page and Mr Baker were both undischarged bankrupts. Mr Baker, being precluded from acting as a company director by reason of his bankruptcy, was ostensibly employed by CLAH in a role that he described as procurement manager and business development manager. The evidence called by CLAH is such that I infer that notwithstanding the impediment posed by Mr Baker’s status as a bankrupt, he was in fact throughout the relevant period in de facto control of CLAH. Based on my assessment of Mr Mitropoulos’ evidence and allowing for the absence of minutes of directors’ meetings and resolutions of the board, I infer that the board of CLAH did not play a meaningful role in CLAH’s operations so far as the facilities in issue in these proceedings are concerned. The defendants’ failure to call the other two relevant CLAH directors gives rise to an inference that their evidence would not have assisted CLAH. I have already addressed the reasons why I place very little weight on Mr Mitropoulos’ evidence. Putting Mr Mitropoulos’ evidence to one side, there is a dearth of evidence as to the CLAH board’s involvement in the events giving rise to this proceeding. I am not satisfied that the CLAH board was involved in any relevant way in the approval or oversight of the facilities in issue in these proceedings. Viewed as a whole, the evidence demonstrates that CLAH was at all material times controlled by Mr Baker, including in the relevant period when it was a public company. During all relevant times for the purpose of these proceedings, the de jure directors were directors in name only, and Mr Baker effectively controlled the company.

759    The evidence establishes that at this time Mr Page and Mr Baker arranged for their joint business affairs to be conducted through Yipeeo with their domestic partners and/or family members acting as directors. As mentioned earlier, Yipeeo was incorporated on 7 May 2015. From about April 2016, Mr Page and Mr Baker used Yipeeo for their joint activities in relation to property development in and around Newcastle. The evidence led in these proceedings does not provide other than a general description of Yipeeo’s activities in the relevant period and is largely based on the oral evidence of Mr Page and Mr Baker which must be approached with caution unless it is against interest for the reasons I have already given.

760    There are some contemporaneous documents that are relevant to the Walkom Payment but they do not provide a satisfactory basis on which to make findings by inference as to the true position. The difficulty with relying on the contemporaneous documents is that the documents emanate in one way or another from Mr Baker and/or Mr Page and must therefore be approached with considerable caution.

761    The first of the contemporaneous documents is a Westpac payment detail report in respect of CLAH’s bank account. The information recorded in the Westpac payment detail report was derived from information inputted by CLAH employees in accordance with directions given to them by Mr Baker.

762    The relevant details for the Walkom Payment are as follows: the description for the transfer was entered as “Loan to Carrabolla”, the beneficiary details recorded the “Beneficiary” as “Walkom Real Estate – Sal” and the account details are the Ohmut account details (that were included in the forwarded email chain as purportedly being the details for Walkom Real Estate).

763    The transfer description of “Loan to Carrabolla” demonstrates no more than that at the time of the payment, Mr Baker gave instructions to one of CLAH’s employees to record in the information submitted to Westpac that the transfer was for this purpose. I do not accept that Mr Baker’s contemporaneous direction that the transfer be described in this way reflects the true position. In reaching that conclusion I have taken into account that Mr Baker was actively producing a documentary footprint that did not reflect the true position and that appears to have been, amongst other things, for the purpose of avoiding the transfers between CLAH and the Page interests being queried by CLAH’s auditors, given that at this time CLAH was a public company.

764    The second category of contemporaneous documents is an exchange of emails between Mr Page and Mr Baker which describe the payment of a holding deposit to Walkom Real Estate in relation to an offer on a property at 1 Muriel Street. Mr Page maintained this was an offer made by him with a view to Yipeeo completing the purchase. The email included the details of a bank account into which the holding deposit was to be paid. Under cross-examination, Ms Page says she did not recall a transaction concerning the property at 1 Muriel Street and that she was not involved in purchasing this property. There is no document that connects Ms Page or her companies with the dealings concerning the property at 1 Muriel Street.

765    The email chain between Mr Page and Mr Baker begins with an email from Mr Page to Mr Baker, the subject line suggests that this email was sent using the forward function within the mail program to send to Mr Baker an email which Mr Page had received earlier from Stephen Henderson, Walkom Real Estate:

From:         lemuel page [mailto: [xxx]@hotmail.com]

Sent:         Thursday, 14 July, 2016 5:57 PM

To:        Theo Baker <[xxx]@cl.com.au>

Subject:    Fw: 1 Muriel Street

______________________________________________________________

From:         Stephen Henderson < [xxx]@walkom.com.au>

Sent:         Thursday, 14 July 2016 3:45 PM

To:        [xxx]@hotmail.com

Subject:    1 Muriel Street

Hi Lem,

Your offer

$600,000

5% deposit

2 weeks due diligence period

Then an unconditional exchange

6 month settlement period

Sales Trust

BSB 082748

ACC [XXXXXX]519

Kind Regards

Stephen Henderson

Walkom Real Estate

766    Mr Baker responds:

From:        Theo Baker

Sent:         Thursday, 14 July 2016 6:27 PM

To:        'lemuel page'

Subject:     RE: 1 Muriel Street

Thanks Lemuel,

He hasn't stated that the 5% deposit is refundable should our due diligence inquires be unsatisfactory.

Following are the solicitor's details:

Peter Carkagis | Partner

Diamond Conway Lawyers

…

Regards,

Theo Baker ______________________________________________________________

CL Asset Holdings Limited

767    In his cross-examination, Mr Page initially denied forwarding the email which he had received on 14 July 2016 from Mr Henderson to Mr Baker. Mr Page then admitted during cross-examination, with a significant qualification, that he had indeed forwarded the email to Mr Baker:

And you passed that on to Mr Baker, correct?---No. I read it to Mr Baker, and Mr Baker said to me, “We can’t pay the funds to the trust account until we know that the funds are refundable.”

Just deal with my question. Go back to page 32. You forwarded that email to Mr Baker, didn’t you?---He asked me to change it and then I forwarded it.

No, no, no, you forwarded that email to Mr Baker?---Yes, I did.

Right. Thank you. That’s what you denied a moment ago, wasn’t it?---Okay.

Right. Now, and when you were confronted with the document and you realise that you can’t go anywhere except to agree, then you’re prepared to agree, correct?---No.

768    The salient point about this email (and which I infer Mr Page apprehended he was about to be asked) is that the BSB and account number reproduced in the email that appear to have emanated from Mr Henderson were not in fact the relevant bank details for Walkom Real Estate. They were instead the banking details for an account operated by Ohmut. Mr Page asserted that Mr Baker had told him to change the account details. If Mr Page’s evidence is to be accepted, it is clear that he was happy to oblige Mr Baker in creating a false document. If Mr Page’s evidence is not accepted as to being instructed by Mr Baker, then it is clear that Mr Page was content to deceive Mr Baker in order to extract funds from CLAH. Either way, it does not reflect well on Mr Page’s integrity or on the reliability of his evidence.

769    After receiving Mr Page’s email, Mr Baker caused a transfer of $30,000 to be made from CLAH to the Ohmut account identified in the forwarded email. He did this by sending an email to a CLAH employee in which he directed as follows:

Please queue for payment $30,000 to the following account. Please code as loan to Carrabolla Pty Ltd.

Walkom Real Estate - Sales Trust

BSB 082748

ACC [XXXXXX]519

770    As I have said, I do not accept that Mr Baker’s contemporaneous direction that the transfer be coded as “loan to Carrabolla” reflects the true position.

771    Returning to Mr Page’s claim that he was instructed by Mr Baker to falsify the forwarded email. Mr Page attempted to explain this in cross-examination by saying that Mr Baker had instructed him to manipulate the payment details and to then forward the email from Walkom Real Estate to Mr Baker.

772    Mr Page’s explanation as to his understanding of why Mr Baker had done this did not ring true. He said that Mr Baker said, “I don’t want to lose the deposit like we did on Glendale, so put the money to Ohmut, and then once we have got confirmation from Stephen Henderson, we can pay the money across. I will get it out of [CLAH].” It was put to him that if the money was being paid to Walkom Real Estate’s trust account, there would not have been a problem with recovering the deposit. In response, Mr Page asserted that Mr Baker “wanted to be sure, because we lost $50,000 on another deal before Glendale”. It was put to Mr Page that he was just making up his evidence on this issue. Mr Page denied that he was. On Mr Page’s version of the communications there would be no need for Mr Baker to send the responsive email, also extracted above. The content of that email repeats what Mr Page says Mr Baker had already said to him. In addition, and more tellingly, there is also no obvious legitimate explanation given for why Mr Baker could not have waited to obtain the confirmation he wanted before getting the money out of CLAH. Similarly, as I address below, there does not appear to be a legitimate reason why transferring the funds from CLAH to Ohmut would assist in securing the arrangement with Walkom Real Estate in respect of the 1 Muriel Street property.

773    Before moving to Mr Baker’s cross-examination on this topic, I note that prior to the Walkom Payment, Mr Baker had previously given directions to a CLAH employee to transfer funds from CLAH’s bank account to Ohmut’s bank account. In doing so, he identified the same BSB and account number that was falsely attributed to Walkom Real Estate in Mr Page’s email. This payment – in the sum of $87,500 – was made on 31 March 2016, which was some months before the Carrabolla Facility was contemplated. I infer that Mr Baker had knowledge of the Ohmut account details before he caused the Walkom Payment to be made. Although I have found that Ms Page was evasive in her evidence when asked about Mr Page being authorised to transact on her companies’ bank accounts, I accept her evidence that she had relevantly provided both Mr Page and Mr Baker with the details of her companies’ bank accounts to use as they needed. In so far as Mr Page is concerned, the fact that he was authorised to transact on Ohmut’s account is a matter that supports the finding I have made in relation to agency in part 9 of these reasons.

774    When Mr Baker was cross-examined, he was taken to a text message he had sent Mr Page some years after the Walkom Payment in which he instructed Mr Page in the following terms:

12 Feb 2019, 9:26am

And I need bank details

Bank account does not need to match company name. Just a valid bsb and account no. And contact details, telephone number and email address.

775     Mr Baker also referred in his evidence to Mr Page requesting payments to be made as “disguised payments”. I have addressed the topic of the so called “disguised payments” in part 4.3 of these reasons. This theme in the evidence is one of the reasons why the contemporaneous documents that are in evidence which have passed through the hands of Mr Baker and or Mr Page or Ms Page are not necessarily a reliable resource for making findings of fact and must be approached with caution.

776    The evidence of “disguised payments” being requested and made was given in relation to payments that were deposited to Shyzi bank accounts but which were documented in emails and payment detail reports as being paid to various real estate agents, motor vehicle dealers and Dr Munro’s company, DMXS. Mr Baker said that Mr Page requested that various payments be transferred to various motor dealer bank accounts but which were, in fact, accounts held by Shyzi and “other bank accounts”. The defendants submit that CLAH only became aware of Mr Page’s deception in May/June 2020 when preparing its Debt Particulars. CLAH relies on the evidence of Mr Baker and Ms Comino in this respect. Mr Page maintains that Mr Baker was aware at the time and complicit in the deception. The evidence in relation to so called disguised payments is addressed in my consideration of Issue 6 below.

777    It is difficult to ascertain a legitimate commercial explanation for why Mr Baker would instruct Mr Page to supply false bank account details to him instead of the account details for Walkom Real Estate if in fact this payment was connected with a potential real estate purchase. There would seem to be no legitimate purpose achieved in relation to the proposed acquisition of the relevant property by paying a “holding deposit” to an account other than that of the real estate agent. The real estate agent would presumably not “hold” the property until the required holding deposit was received into its account. That Mr Baker was concerned to recover the holding deposit if their due diligence was not satisfactory is evident from his email to Mr Page but that does not supply a reason for transferring the funds to Ohmut’s bank account. Neither Mr Page nor Mr Baker explained any utility in, in effect, parking the funds in Ohmut’s account. The more ready explanation is that the false paper trail was to cover a transfer to Ohmut that may otherwise have been questioned by CLAH’s auditors. The evidence does not permit me to feel the requisite level of satisfaction to conclude on the civil standard as to the true position.

778    The other aspect of Mr Baker’s email that is noteworthy is that he refers to “our” due diligence, which would appear consistent with Mr Page’s evidence that the property was being pursued as an acquisition opportunity for Yipeeo, Mr Baker and Mr Page’s joint investment vehicle. Mr Page was not challenged in his evidence that the property to be acquired by this payment was intended to be owned by Yipeeo. That may have been as a consequence of the fact that this evidence would appear to be directed in part to the plaintiffs’ amendment application that I rejected at the commencement of the hearing. Mr Baker’s use of the possessive adjective, “our”, is not consistent with CLAH being an arm’s-length lender. However, causing CLAH to pay the deposit to Ohmut instead of to the real estate would not serve the function of obtaining a hold over the property while due diligence was undertaken. Consistent with this, on 6 September 2016, Mr Baker sent an email to Mr Page, with the subject line “Reminder – Things to Do – Updated 06 09 2016”, which again indicated that the $30,000 deposit was paid by Mr Baker and Mr Page (“we”), likely through Yipeeo:

Follow up due diligence for the 5 townhouse site, which will be substituted for the property for which we paid $30,000 deposit.

779    Doing the best that I can in circumstances where I cannot be satisfied that Mr Baker or Mr Page are telling the truth, I find it likely that this episode is an example of Mr Baker and Mr Page collaborating in creating a false documentary trail that would provide an ostensible explanation for why CLAH was transferring funds to what was in reality Ohmut’s account. Ms Page had supplied to Mr Page and Mr Baker the necessary details so that they could use that account as they wished. Having regard to the content of Mr Page’s answers and the surrounding documents, I do not accept Mr Page’s evidence on this issue. I find that he spoke to Mr Baker and that he subsequently changed the bank account details to ensure that the $30,000 was paid to Ohmut and not to the Walkom Real Estate’s trust account. Whether that was at Mr Baker’s suggestion or whether Mr Page duped Mr Baker is not necessary to decide.

780    I do not accept Mr Baker’s assertion that Mr Page requested CLAH to transfer the $30,000 as a drawdown on the Carrabolla Facility. I find that Mr Baker’s instruction to code the advance as a loan to Carrabolla, although made proximate to the payment, did not reflect the true position. The evidence establishes that on a separate and later occasion Mr Baker instructed Mr Page to misrepresent the destination account for transfers made by CLAH. What is clear is that Mr Baker and Mr Page collaborated in creating a false paper trail in relation to transfers from CLAH’s account to disguise the true destination account, which on some occasions proved to be Ohmut’s account. In these circumstances, the evidence does not satisfy me that this transaction was an advance made under the terms of the Carrabolla Facility or was relevantly an advance to Shyzi so as to come within the definition of Secured Money in the Shyzi Securities.

781    That Mr Baker was engaged in conduct that was directed to creating a false documentary trail contemporaneously to provide an appearance of legitimacy is demonstrated by reference to the manner in which he caused the approved purposes in the Carrabolla Facility Offer, the Carrabolla Facility and the Carrabolla Drawdown Notice to be documented. This is most likely another instance of the same conduct which is designed to deflect inquiry by CLAH’s auditors.

782    Taking all of the above into account, I am not satisfied that the defendants have established that the Walkom Payment was an advance under the Carrabolla Facility or that it was a payment to Shyzi that would fall within the definition of Secured Money under the Shyzi Securities. Pursuant to the terms of the Carrabolla Facility, a drawdown notice was required. There is no evidence of such a notice. In any event there were no available funds under the Carrabolla Facility at the date the Walkom Payment was made.

10.8.2.4    The Andco Payment

783    The next component of the debt that the defendants claim as arising under the Carrabolla Facility is the Andco Payment. Andco appears to have operated under the trading name, Mosman Toyota. The defendants claim that this amount was drawn under the Carrabolla Facility on 26 July 2016. It does not appear in the 1 August 2016 Document. It is included in the 31 January 2021 Document and the Debt Particulars. “Andco (1970)” is listed as the payee in the Debt Particulars. In the 31 January 2021 Document the debit is described as a “Further Advance”.

784    The defendants allege that on 26 July 2016, at the request of Mr Page, CLAH transferred the sum of $1,000 to Andco on account of the Carrabolla Facility. The Westpac payment detail report for this transaction includes the description “Loan to Carrabolla”. As noted above the descriptions included in the payment detail reports was the product of information provided by Mr Baker to CLAH staff. This payment by CLAH was preceded by a deposit of the same amount made the day before, which the defendants attributed – both in the 31 January 2021 Document and the Debt Particulars – as a repayment on the Carrabolla Facility. The direction to make the payment and add it to the “Carrabolla Loan” was given by Mr Baker in an email to Ms Sun, copied to Ms Comino, at 5.40pm on 25 July 2016.

785    Ms Page explained that these payments related to the acquisition of a Toyota vehicle from Andco by Ben Player. She said that Mr Player deposited $1,000 with CLAH and that CLAH then paid $1,000 to Andco. She denied that the $1,000 was a loan to Shyzi or Carrabolla.

786    Mr Page said that Mr Player was a valuer in Newcastle who had “worked a lot with all of us over the years”. He said the $1,000 was a deposit for a Toyota LandCruiser that was acquired by Mr Player. Mr Page said that Mr Player asked him to help Mr Player get a LandCruiser using his contacts in the motor industry. He then spoke to Andco and made the arrangements. Mr Page said he spoke to Mr Baker and gave the following account of what happened:

What did you say to Theo?---I said to Theo, “Look, Ben Player wants to buy a LandCruiser, but if we buy the LandCruiser, we’ve got to pay for it first, and then Ben can organise the finance through the bank, but we would have to buy it outright from Mosman Toyota to then be able to bring it into stock and then be able to sell it at the discount.”

What did Theo say?---Theo said, “That’s fine. I’m happy to help, but get Ben to transfer the deposit into CLs account, and then I will make the payment across to Mosman Toyota directly.”

What did you do then?---I then contacted Ben and told him what Theo said and told him that Theo was happy to help do – do the deal. Ben transferred $1000 across to CL and then Theo paid Mosman Toyota.

787    Mr Page gave evidence that a tax invoice issued by Andco that was addressed to Ms Page related to the above arrangement for the purchase of the LandCruiser for Mr Player. The invoice records that a discount of $6,979.43 has been applied to the original sale price of the vehicle. There are two copies of the itemised invoice in evidence. The invoice is dated 8 August 2016. A copy was annexed to a chain of emails passing between Mr Page and Mr Baker on 17 August 2016 and with Ms Page on 8 August 2016. This version does not have any annotations. There is another copy of the invoice in evidence that bears handwritten annotations. It has been produced by the defendants in this litigation. On the first page, a handwritten note states “Loan Parkway One”. On the final page, the final balance payable has been adjusted in handwriting to deduct $1,000. Mr Page said he did not recognise the handwriting on this document. The date on which the handwritten annotation was added is not established by the evidence. It will be necessary to return to this document in assessing CLAH’s claims against Ohmut and Parkway One. CLAH claims that the balance owing on this vehicle of $112,344.99 was paid by CLAH on account of the Ohmut/Parkway Facility.

788    Mr Baker accepted that $1,000 was received from Mr Player the day before CLAH made the transfer to Andco. He claimed it was done on Mr Page’s instructions and that this was a transaction requested by Mr Page under the Carrabolla Facility. He maintained that Mr Page instructed him that the $1,000 received from Mr Player was to be treated as a loan repayment under the Carrabolla Facility and the transfer from CLAH was to be received as a further advance under that facility.

789    The defendants have not established that the Andco Payment was an advance drawn under the Carrabolla Facility. Relatedly, I do not accept that the deposit by Mr Player of $1,000 was a repayment on the Carrabolla Facility. It is another indication of the inherent unreliability of the 31 January 2021 Document and the Debt Particulars. It supports the conclusion I have drawn that these documents are the product of an ex post facto reconstruction informed by the lens of the present proceedings as the claims have been framed and reframed as the defendants’ claim has evolved.

790    As with the Walkom Payment, the timing of the transfer and the supporting documents do not suggest that the advance was made under the Carrabolla Facility. The advance was made after the end of the expiry of the Availability Period and at a time when there was not any loan limit available to be drawn. Again, there is no Drawdown Notice.

791    In terms of the oral evidence of the main protagonists, I accept Mr Page’s evidence as to Mr Player’s connection with Mr Page, Ms Page and Mr Baker. I infer that given their respective interests in property development in the Newcastle area, Mr Player was an important contact for Mr Page and Mr Baker and through them, for Yipeeo. I accept Mr Page’s evidence as to the conversation that he had with Mr Baker about facilitating this payment. I infer that it was done in this way as a means of obtaining a better deal on the LandCruiser for Mr Player. The evidence establishes that Mr Page and Ms Page had a commercial relationship with Andco as a result of their motor trading activities. I infer that the discount on the original sale price reflected that relationship. I infer that Mr Page and Mr Baker took the steps they did because they perceived there to be utility in doing a favour for Mr Player, the favour being that he acquired the vehicle at a better price than he otherwise would have. Their decision to assist Mr Arratoon in relation to Aranik’s cashflow difficulties was similarly motivated by cultivating relationships with persons that they regarded may be of benefit to their future activities including those conducted through Yipeeo.

792    I reject Mr Baker’s evidence that Mr Page asked for the payment to be made on account of the Carrabolla Facility and for the sum received from Mr Player to be treated as a repayment on the Carrabolla Facility. There is no documentation in respect of the alleged repayments as would be required under the terms of the Carrabolla Facility and the sum of $1,000 is well less than the requirement of minimum increment of $50,000 for prepayments. As to the contemporaneous direction given by Mr Baker to code the advance to the Carrabolla Loan, I find this is another instance of Mr Baker creating a false documentary trail within CLAH’s records during the period that it was a public company and subject to audit. I do not place weight on it as a reliable indication of the true position. Even allowing for the manner in which the parties approached their dealings with each other under the Carrabolla Facility, the evidence does not establish that this payment was made under the Carrabolla Facility or that it was a payment to Shyzi that would fall within the definition of Secured Money under the Shyzi Securities.

10.8.2.5    Accrued Interest as at 26 July 2016

793    The evidence led in relation to the transactions on the Carrabolla loan account up to and including 26 July 2016 is unsatisfactory. The evidence in relation to advances made under the Carrabolla Facility is riddled with inconsistencies. There is no coherent basis on which I can conclude on the balance of probabilities that there was any interest that was outstanding as at the date on which the Carrabolla Facility was repaid in circumstances where the amount repaid exceeded the payout amount that Mr Baker had given to Mr Page. There is no contemporaneous demand for such interest to be paid. There are no contemporaneous records maintained by CLAH which demonstrate in a reliable way whether interest was accruing on the account or whether it was offset against the funds that were treated as drawn on the facility but which remained standing to CLAH’s credit. I do not accept Ms Comino’s evidence as to calculating interest on the Carrabolla Facility on a monthly basis. CLAH conceded that interest on this facility was not recorded in its accounts. CLAH bears the onus on this issue. CLAH has not discharged that onus.

794    Doing the best I can based on the evidence before me, I find that Carrabolla paid CLAH the sum of $686,481.87 on 26 July 2016 by making a deposit into CLAH’s Westpac account. In addition, the amount of $3,257.47 (which was in CLAH’s solicitors’ trust account, but which was treated as having been drawn by Carrabolla as part of the Initial Advance) was paid back to CLAH. That resulted in a total repayment by Carrabolla to CLAH of $689,739.34. The payment was made within a month of Carrabolla receiving the Initial Advance. The payout amount which Mr Baker communicated to Mr Page was $683,224.39. The payment made by Carrabolla (inclusive of the trust fund transfer to CLAH’s benefit) exceeded the payout amount by $6,514.95. I infer that the excess amount of the payment was sufficient to cover any accrued interest and any breakage fees pursuant to cll 7.2 and 21 of the Carrabolla Facility. In making this inference I note that while the payout amount communicated by Mr Baker did not include an allowance for interest, the Debt Particulars included interest in the period to 26 July 2016 to be in the sum of $5,730.75. That calculation will be overstated to the extent it includes in the principal sum the Walkom Payment. For present purposes, the evidence being what it is, provides the requisite level of satisfaction necessary to conclude that the Carrabolla Facility was paid out on 26 July 2016.

10.9    Discharge of the Carrabolla Securities

795    CLAH discharged the Carrabolla Mortgage and its security interest under the Carrabolla GSA upon receipt of $686,481.87 on 26 July 2016. That is common ground.

10.10    Issue 2 – On the proper construction of the relevant security documents, did the discharge by CLAH of the Carrabolla Mortgage and the release of the Carrabolla GSA upon repayment of the sum of $686,481.87 on 26 July 2016 have the effect in law of discharging the security provided by Shyzi?

796    As briefly mentioned above, I have rejected the plaintiffs’ contention that the discharge and release of the Carrabolla Securities resulted in the discharge and release of the Shyzi Securities. My reasons are as follows.

797    For the reasons I have given I have found that the Carrabolla Facility was fully repaid on 26 July 2016 and that further drawdowns were not available under that facility thereafter. I have rejected the defendants’ contention that the Carrabolla Facility was relevantly extended such that it was used to make further advances at Mr Page’s request in the period after 26 July 2016.

798    There is some ambiguity in the way in which Issue 2 is expressed. The ambiguity is in relation to what is meant by the phrase “the security provided by Shyzi”. That phrase in context comprehends three things, two of which may be addressed together. First, the guarantee given by Shyzi that is embodied in the Carrabolla Facility itself: cl 17, Carrabolla Facility. Second, the security given by Shyzi that is the subject of the Shyzi GSA, which is a registered on the PPSR and which was relied on by CLAH to appoint the Shyzi Receivers. Third, the security that is given by Shyzi that is the subject of the Shyzi Mortgage. I will address Issue 2 as it relates to the Shyzi GSA and the Shyzi Mortgage together, after I address the guarantee given by Shyzi in cl 17 of the Carrabolla Facility.

10.10.1    The guarantee given by Shyzi in cl 17 of the Carrabolla Facility

799    The guarantee is provided for in cl 17 of the Carrabolla Facility. It is necessary to construe that clause as a whole and in the context of the whole of the Carrabolla Facility as part of a suite of commercial documents and consistently with the principles I have identified above.

800    The obligation which is guaranteed in cl 17.1 is “the due and punctual payment of the Secured Money”. The Secured Money is defined in cl 1.1(iii) to extend to “all money that each Transaction Party (whether alone or with another person) is or at any time may become actually or contingently liable to pay to or for the account of [CLAH] (whether alone or with another person) for any reason whatever under or in connection with a Transaction Document.” Shyzi is a Transaction Party. The Shyzi Mortgage is a Transaction Document. Under the Shyzi Mortgage, Shyzi is liable or may become liable to pay Secured Money as defined under the Shyzi Mortgage. The definition of Secured Money under the Shyzi Mortgage is not constrained by the requirement that the relevant liability arise “under or in connection with a Transaction Document”. Reading the Carrabolla Facility together with the Shyzi Mortgage, Shyzi’s guarantee of the due and punctual payment of Secured Money under cl 17.1 of the Carrabolla Facility may potentially be covered by the guarantee in cl 17.1. However, cl 17.1 must be read with cl 17.2.

801    Clause 17.2 provides the circumstance in which, relevantly, Shyzi will be required to pay an amount equivalent to the Secured Money. The payment obligation imposed on Shyzi under cl 17.2 is confined to the payment of Secured Money that “the Borrower” has failed to pay when due. Shyzi’s obligation in this respect is triggered by demand being made of Shyzi by CLAH: cl 17.2, Carrabolla Facility. The only Borrower under the Carrabolla Facility is Carrabolla. Carrabolla’s obligation to repay under the Carrabolla Facility was on the Expiry Date. As it happened, and as I have found, Carrabolla repaid the Carrabolla Facility in full before it was due. Any potential liability that Carrabolla may have had under the Carrabolla Securities ceased to be relevant upon the release and discharge of the Carrabolla Securities.

802    If as I have found it is established as a matter of fact that the Carrabolla Facility was paid in full and that Shyzi had completely performed its obligations under the Carrabolla Facility when the Carrabolla Facility expired on 30 September 2016, then Shyzi’s obligation to guarantee and indemnify CLAH under cl 17 will cease to have effect by operation of cl 17.9(c).

803    For these reasons, Issue 2 must be answered yes in relation to the security provided by Shyzi that is embodied in cl 17 of the Carrabolla Facility.

804    I note that in any event, this is something of a non-issue because the defendants admit that CLAH had not complied with the requirements of cl 17.2 of the Carrabolla Facility and that Shyzi had no liability to CLAH under the Carrabolla Facility or its guarantee of that facility: DFACS, [51C].

10.10.2    The Shyzi Securities

805    Issue 2 as it relates to the Shyzi Securities is whether the repayment in full of the amount outstanding under the Carrabolla Facility and the related discharge of the Carrabolla Securities had the effect in law of discharging the Shyzi Securities, notwithstanding that no formal steps were taken to effect the discharge of the Shyzi Securities at this time.

806    The discharge of the Carrabolla Securities was necessary for the settlement of the NAB Loan, the discharge of the Shyzi Securities was not. There was a contextual utility in the Shyzi Securities not being discharged at this point in time over and above the ordinary commercial advantage accruing to a financier who has the benefit of an all moneys security continuing in force to support future financial accommodation covered by the security.

807    The contextual utility arises from the following combination of circumstances. First, the Carrabolla Facility was still on foot, the Expiry Date had not been reached, even though there was no right to draw on the facility after 5 July 2016. Second, the Aranik Loan was still on foot – it was not due to be repaid until November 2016. Third, to the extent that Mr Baker was concerned to have some cover if queries were raised by CLAH’s auditors in relation to CLAH making the Aranik Loan (which was not formally documented, unsecured and interest-free), he could point to the Carrabolla Facility, the Drawdown Notice and the Shyzi Securities as ostensibly supporting the making of the Aranik Loan.

808    The plaintiffs submit that the obligations of Shyzi as guarantor under the Carrabolla Facility were brought to an end because the Carrabolla Facility was paid out in full and that there was therefore no extant obligation under the Carrabolla Facility from that time forward that was secured by the Shyzi Securities. The plaintiffs submit that cl 18.2 of the Shyzi GSA and cl 17.2 of the Shyzi Mortgage require an ongoing extant obligation that is secured for these clauses to have effect. The defendants note that the plaintiffs do not cite any authority in support of that contention.

809    As the plaintiffs’ submission evolved, I understood the plaintiffs to ultimately be making a submission directed to the fact of whether there was a relevant direct liability owed by Shyzi to CLAH. The plaintiffs’ case on this issue reduced to a submission that on the defendants’ own case, there were no amounts advanced by CLAH directly to Shyzi apart from some car trading payments, in respect of which the plaintiffs raise a number of counter-contentions. The factual issue in relation to whether Shyzi has any direct liability to CLAH is addressed in my determination of Issues 4 to 6 below.

810    I did not take the plaintiffs to adhere to the position that they had earlier taken that on the proper construction of the Shyzi Securities, the securities secured only repayment of amounts which CLAH might lend under the Carrabolla Facility. Issue 3 is addressed to this aspect of the proper construction of the Shyzi Securities – see part 10.11 below. In my consideration of Issue 3, I have concluded that on their proper construction, the Shyzi Securities secure debts in addition to Shyzi’s liabilities as guarantor of the Carrabolla Facility. My reasons for reaching this conclusion are set out in my determination of Issue 3. In any event, as I have said, the plaintiffs ultimately accepted that as “all moneys” securities the Shyzi Securities in their proper construction, also secured any money that CLAH may advance directly to Shyzi.

811    Issue 2 is directed to a different aspect of construction, namely, whether in their proper construction, the Shyzi Securities survive the discharge of other security held by CLAH.

812    In support of their contention that discharge by CLAH of the Carrabolla Mortgage and the release of the Carrabolla GSA upon repayment of the sum of $686,481.87 on 26 July 2016 had the effect in law of discharging the Shyzi Securities, the plaintiffs make the following submissions.

813    The first is in the nature of another pleading point. The plaintiffs submit that whilst the defendants seek to rely upon provisions of the Shyzi GSA and Shyzi Mortgage as preserving the obligations of Shyzi to CLAH despite discharge of the Carrabolla Securities, the only pleaded ongoing extant obligations are the obligations that Shyzi has under the Carrabolla Facility. I do not accept that is correct on a proper understanding of the way in which the case is exposed through the concise statements and the statements of facts and issues in contention.

814    The second is a matter of the proper construction of the Shyzi Securities. The plaintiffs contend that properly construed the Shyzi Securities do not survive the discharge and release of the Carrabolla Securities (and by extension to expiry of the Carrabolla Facility). In considering this issue I have applied the principles which I have identified above in relation to the proper construction of commercial contracts, including those which apply to a suite of commercial documents that are interrelated, and which were executed contemporaneously and in contemplation of each other.

815    As a matter of proper construction of the Shyzi Securities, it is clear that they each survive the discharge of other security held by CLAH, including the Carrabolla Securities and the guarantee of the Carrabolla Facility embodied in the Carrabolla Facility itself.

816    First, cl 18.2 of the Shyzi GSA expressly preserves Shyzi’s obligations in particular circumstances. The chapeau of cl 18.2 provides:

18.2    Preservation of Grantor's obligations

The Grantor's obligations and the Secured Party's rights under this document will not be affected by anything that, but for this clause 18.2, might abrogate, prejudice or limit them or the effectiveness of this document including:

817    The chapeau introduces a list of circumstances that, but for their inclusion in cl 18.2, “might abrogate, prejudice or limit” Shyzi’s obligations and CLAH’s rights under the Shyzi GSA. Included in that list are the following:

(c)     an arrangement, composition or compromise with, or absolute or partial discharge or release of any person;

…

(f)     any act or omission by the Secured Party or another person in relation to any Transaction Document or any negotiable instrument, judgment, order or award relating to the Secured Money, including any:

(i)     failure by that person to take or perfect any Transaction Document;

(ii)     variation, release or discharge of any of them; or

(iii)     any other act or omission to the prejudice of the Grantor;

818    I accept the defendants’ submission that pursuant to cl 18.2 of the Shyzi GSA, Shyzi’s obligations and CLAH’s rights under the Shyzi GSA are not affected by anything that might abrogate, prejudice or limit them or the effectiveness of the Shyzi GSA including any variation of a right of the Secured Party, namely CLAH. Accordingly, Shyzi’s obligations and CLAH’s rights under the Shyzi GSA are not affected by CLAH’s act of accepting the discharge and release of the Carrabolla Securities, if such obligations and rights are otherwise established under the terms of the Shyzi GSA. That latter point is the subject of Issue 3.

819    Second, cll 17.2 and 17.4 of the Shyzi Mortgage expressly preserves Shyzi’s obligations under the Shyzi Mortgage in particular circumstances. Clause 17.2 provides:

17.2    Continuing security

This document is a continuing security for the whole of the Secured Money and is not limited to any transaction or other thing.

820    Clause 17.4 of the Shyzi Mortgage is similar in nature to cl 18.2 of the Shyzi GSA. Relevantly, it provides:

17.4     Preservation of Mortgagor's obligations

The Mortgagor's obligations and the Mortgagee's rights under this document will not be affected by anything that might abrogate, prejudice or limit them or the effectiveness of this document including:

(1)     any variation of a right of the Mortgagee or variation (whether material or not), termination or replacement of any agreement giving rise to the Secured Money or any agreement between the Mortgagee and any person including any increase in the Secured Money;

(2)     …

(3)     an arrangement, composition or compromise with, or absolute or partial discharge or release of any person;

(4)     …

(5)     …

(6)     any act or omission by the Mortgagee or another person in relation to any Transaction Document or any negotiable instrument, judgment, order or award relating to the Secured Money, including any:

(a)     failure by that person to take or perfect any Transaction Document;

(b)     variation, release or discharge of any of them; or

(c)     any other act or omission to the prejudice of the Mortgagor;

(7)     …

(8)     the rescission, repudiation or other termination of any agreement between the Mortgagee and any Transaction Party relating to the Secured Money, or the acceptance of any rescission, repudiation or termination by the Mortgagee;

(9)     …

(10)     …

(11)     any failure by the Mortgagee to:

(a)     give any Transaction Party or any other person notice of any default by the Debtor, or not include in any demand in relation to the Secured Money particulars of that default;

(b)     make demand on any Transaction Party for the payment of the Secured Money;

…

(f)     recover the Secured Money by the enforcement of any rights against any Transaction Party or any other person or under any Transaction Document; or

(12)     any delay, laches, acquiescence, mistake, negligence or other act or omission of the Mortgagee.

In this clause 17.4 a reference to any person includes any Transaction Party.

821    Pursuant to cl 17.4 of the Shyzi Mortgage, Shyzi’s obligations and CLAH’s rights under the Shyzi Mortgage are not affected by anything that might abrogate, prejudice or limit the effectiveness of the Shyzi Mortgage, including any discharge of any Transaction Document, which included the Carrabolla Mortgage and the Carrabolla GSA.

822    Each of the Shyzi Guarantee and the Shyzi Securities, include express clauses which preserve the rights of CLAH and the obligations and liabilities of Shyzi, in the event that CLAH may release or discharge some other security that it holds in respect of the same principal obligation. There is no ambiguity in the expression of these clauses so as to invoke the contra proferentum rule. The discharge and release of the Carrabolla Securities did not on the proper construction of the Shyzi Securities discharge the Shyzi Securities.

823    Accordingly, Issue 2 must be answered no in relation to the Shyzi Securities.

10.11    Issue 3 – Do the Shyzi GSA and the Shyzi Mortgage secure liabilities other than Shyzi’s liabilities as guarantor of the Carrabolla Facility?

824    The construction question posed by Issue 3 is whether, as a matter of construction, the Shyzi Securities secure liabilities other than Shyzi’s liabilities as guarantor of the Carrabolla Facility.

825    The plaintiffs opened their case on this issue by asserting that, on the their proper construction, an advance made to Shyzi is not caught by the security granted by the Shyzi Securities, because an advance to Shyzi is not an advance to Carrabolla under the Carrabolla Facility, and that in the absence of the advance being one to Carrabolla, the obligation to repay the “Secured Money” (whether under the Shyzi GSA or the Shyzi Mortgage) only arises upon demand being made of Shyzi. However, as I have mentioned in the course of addressing Issue 2, I did not understand the plaintiffs to ultimately contest that in their proper construction the Shyzi Securities secure liabilities other than Shyzi’s liability as guarantor of the Carrabolla Facility. Instead, as I apprehend it, the plaintiffs now confine themselves to the factual contest as to whether Shyzi was indebted to CLAH as at the date that the Shyzi Receivers were appointed.

826    The plaintiffs are correct to belatedly accept that as a matter of construction, the Shyzi Securities secure liabilities other than Shyzi’s liability as guarantor of the Carrabolla Facility. Applying the principles of construction which I have identified above, Issue 3 must be answered yes. My reasons are as follows.

827    As discussed in part 10.5.2.1.1 of these reasons, pursuant to the Shyzi GSA in its proper construction, Shyzi granted a security interest to secure payment of the “Secured Money”: cl 2.1(a). Secured Money, as defined by cl 1.1(xx), means all money that is now or in the future owing or payable by a Transaction Party to CLAH for any reason or on any account whatsoever at any time under or in connection with the Transaction Documents. For the purposes of the Shyzi GSA, the Shyzi Mortgage is a Transaction Document and Shyzi is Transaction Party: see cl 1.1(ddd), 1.1(eee) and 1.1(h) of the Shyzi GSA.

828    As discussed in part 10.5.2.2.1 of these reasons, pursuant to the Shyzi Mortgage in its proper construction, Shyzi mortgaged all of its interest in the Mortgaged Property to CLAH to secure the payment of the Secured Money: cl 2. Secured Money, as defined by cl 1.1(45), means, amongst other things, all moneys that now or in the future are owing or payable by Shyzi or Carrabolla to CLAH for any reason or on any account whatsoever, whether under a Transaction Document or otherwise; or whether alone, or jointly or separately, or whether in their own right or capacity.

829    On the proper construction of cl 3.1 of the Shyzi GSA and cl 4.1 of the Shyzi Mortgage, Shyzi is obliged to pay to CLAH the Secured Money, which includes all moneys owed by Shyzi to CLAH under or in connection with the Shyzi Mortgage.

830    Accordingly, the plain and ordinary meaning of the relevant clauses of the Shyzi Securities means that the Shyzi GSA is not restricted to funds advanced pursuant to the Carrabolla Facility. The security interest granted to CLAH by the Shyzi GSA applies to all moneys owing now or in the future for any reason whatsoever, whether under or in connection with the Shyzi Mortgage. The Shyzi Mortgage itself also grants security to CLAH for all money that is now or in the future payable by Shyzi for any reason or on any account whatsoever.

831    For completeness, I have not overlooked that the plaintiffs sought to make something from the fact that the Shyzi Securities are not themselves loan agreements. It is uncontroversial that the Shyzi Securities do not of themselves provide for the making of further advances by CLAH to Shyzi. The plaintiffs contend that the “only document in evidence under which Shyzi might have incurred a liability to CLAH (as distinct from providing security for such a liability) is the Carrabolla Facility agreement.” That does not lead to the conclusion that the Shyzi Securities only secure the repayment of amounts which CLAH advanced under the Carrabolla Facility. As “all moneys” securities, the Shyzi Securities secure other debts for which Shyzi is liable to CLAH however arising, it does not matter whether those debts, if proved, arise under the suite of documents of which the Shyzi Securities were part.

832    For these reasons, Issue 3 must be answered yes.

10.12    Issue 3A – Was it a condition to the exercise by CLAH’s rights to appoint the Receivers under cl 14.1(a)(ii) of the Shyzi GSA and/or cl 12 of the Shyzi Mortgage to first deliver a demand to Shyzi as guarantor of the obligations of Carrabolla pursuant to cl 17.2 of the Carrabolla Facility?

833    Issue 3A raises another contest in relation to the proper construction of the Shyzi Securities. The issue is framed by the parties as whether it was a condition to the exercise of CLAH’s rights to appoint the Receivers under cl 14.1(a)(ii) of the Shyzi GSA and/or cl 12 of the Shyzi Mortgage to first deliver a demand to Shyzi as guarantor of the obligations of Carrabolla pursuant to cl 17.2 of the Carrabolla Facility. In appointing the Shyzi Receivers, CLAH relied on the power conferred by the Shyzi GSA. The parties have chosen to also address the parallel power to appoint receivers conferred by the Shyzi Mortgage. That is a pragmatic approach. I will consider both sources of the power to appoint a receiver in my consideration of Issue 3A.

834    In the PFASOFC, the plaintiffs allege that:

CLAH not having made any demand on Shyzi under the guarantee, as at 11 September 2020:

a)     CLAH had not complied with the requirements of clause 17.2 of the Carrabolla Facility;

b)     Shyzi had no liability to CLAH under the Carrabolla Facility or its guarantee of that facility; and

c)     CLAH further had no entitlement to appoint the Receivers to Shyzi pursuant to either the Shyzi GSA or Shyzi Mortgage, as none of the necessary preconditions to enliven CLAH’s power to appoint receivers, as set out in clauses 14.1(a) of the Shyzi GSA or clauses 12.1 of the Shyzi Mortgage existed.

835    In response, the defendants admit that CLAH had not complied with the requirements of cl 17.2 of the Carrabolla Facility and Shyzi had no liability to CLAH under the Carrabolla Facility or its guarantee of that facility but deny that CLAH was not entitled to appoint the Receivers to Shyzi pursuant to either the Shyzi GSA or Shyzi Mortgage on the basis that the necessary preconditions to enliven the power to appoint receivers in cl 14.1(a)(ii) of the Shyzi GSA or cl 12.1 of the Shyzi Mortgage had been met: DFACS, [51C]. The defendants further say in response to the contention that CLAH was not entitled to appoint receivers under the power in each of the Shyzi Securities, that the power was enlivened by the occurrence of one or more Events of Default under each of the Shyzi Securities.

836    The Events of Default on which the defendants rely are summarised in part 10.5.2.1 (Shyzi GSA) and part 10.5.2.2 (Shyzi Mortgage) of these reasons.

837    The plaintiffs’ submissions on this issue are somewhat discursive in that they stray from what is properly the construction issue raised by Issue 3A. In my consideration of this issue, I will focus on the construction issue, before addressing the additional matters raised by the plaintiffs to the extent it is necessary to do so.

838    The plaintiffs’ essential contention is that CLAH was not entitled to appoint receivers to Shyzi under either of the Shyzi Securities because they did not first deliver a demand to Shyzi as guarantor of the obligations of Carrabolla pursuant to cl 17.2 of the Carrabolla Facility.

839    On the proper construction of the Shyzi Securities, the plaintiffs’ contention must be rejected.

840    Clause 14.1(a)(ii) of the Shyzi GSA provides that CLAH may appoint any one or more persons as Receiver to any part of Shyzi’s present and after-acquired property in addition to and without prejudice to any of its other rights at any time after an Event of Default occurs.

841    The plaintiffs acknowledge that cl 14.1(a) of the Shyzi GSA states that CLAH may appoint receivers “at any time after an Event of Default occurs”.

842    On the proper construction of cl 14.1 of the Shyzi GSA, the express trigger for the appointment of Receivers to the property of Shyzi is not, as the plaintiffs contend, that a demand be made under the Carrabolla Facility, but that there has occurred an Event of Default under cl 10.1 of the Shyzi GSA.

843    While Issue 3A directs attention to a demand to Shyzi as guarantor of the obligations of Carrabolla pursuant to cl 17.2 of the Carrabolla Facility, I would add that the power to appoint a receiver under cl 14.1(a) of the Shyzi GSA is not conditioned on making of any demand to Shyzi, whether under the Carrabolla Facility or not. I repeat the conclusions I have reached in relation to the proper construction of the Shyzi GSA in part 10.5.2.1.1 of these reasons.

844    There is a subsidiary submission made by the plaintiffs which is to the effect that CLAH is not entitled to rely on the Events of Default which they allege enliven the power to appoint a receiver under cl 14.1(a). Before addressing this issue, I will first address the proper construction of cl 12.1 of the Shyzi Mortgage.

845    Clause 12.1 of the Shyzi Mortgage in its proper construction leads to the same conclusion. Clause 12.1 of the Shyzi Mortgage provides that if an Event of Default occurs, then CLAH may at its option appoint one or more Receivers. The trigger for the appointment of a receiver under cl 12.1 is that an Event of Default has occurred, not that a demand has been made under the Carrabolla Facility.

846    The plaintiffs acknowledge that under cl 12.1 of the Shyzi Mortgage, if an Event of Default occurs, CLAH may, at its option, appoint one or more receivers.

847    As with the power to appoint a receiver under cl 14.1(a) of the Shyzi GSA, the power to appoint a receiver under cl 12.1 of the Shyzi Mortgage is not conditioned on the making of any demand to Shyzi, whether under the Carrabolla Facility or not. Again, I repeat the conclusions I have expressed at paragraph [625] above.

848    The plaintiffs’ submissions elide the real issue, which is whether as at 11 September 2020, CLAH was empowered to appoint the Shyzi Receivers under the Shyzi GSA. While it is true that there is no evidence of CLAH making a demand for Shyzi to pay the Secured Money (as that term is defined in the Shyzi GSA) before CLAH appointed the Shyzi Receivers, CLAH’s power to appoint receivers under the Shyzi GSA was conditioned on an Event of Default having occurred, not on a demand having been made on Shyzi and Shyzi thereby rendering the Secured Money immediately due and payable. The same analysis applies mutatis mutandis to the Shyzi Mortgage.

849    On the proper construction of cl 14.1 of the Shyzi GSA and cl 12.1 of the Shyzi Mortgage, CLAH’s exercise of the power to appoint a receiver to Shyzi was not conditioned on it first serving a demand on Shyzi. Construing the Shyzi Securities in this way accords with the principles of construction that I have identified including that this construction reflects what a reasonable businessperson would have understood the terms to mean having regard to the language used, the surrounding circumstances known to them and the commercial object served by the suite of agreements comprising the Carrabolla Documents. The construction that I have arrived at does not result in a commercial nonsense and operates coherently to achieve the protective purpose I have identified.

850    The plaintiffs’ contention that the defendants are not entitled to rely on the Events of Default which they have identified as enlivening the relevant power to appoint the Shyzi Receivers is in part based on the plaintiffs’ submissions as to the proper construction of cl 1.2(h) of the Shyzi GSA and cl 1.2(8) of the Shyzi Mortgage.

851    Clause 1.2(h) of the Shyzi GSA and cl 1.2(8) of the Shyzi Mortgage each provide that “[a]n Event of Default continues until it has been waived in writing by [CLAH] or remedied to [CLAH’s] satisfaction”.

852    The plaintiffs submit that these clauses should be construed in circumstances where a Secured Party (or Mortgagee) only subsequently becomes aware of the Event of Default as being subject to an implied limitation that constrains the reference to “remedied” to mean a remedy to the standard of what the Secured Party would have required at the time, acting reasonably. The plaintiffs submit that it is necessary to construe these clauses in this way to “give the contract business efficacy.” Having regard to the express language used, in the context of the whole suite of agreements and allowing for the fact that the particular agreements are contracts of surety, I do not accept that in their proper construction, these clauses should be confined in this way. The plaintiffs’ preferred construction is not necessary to give the Shyzi Securities, and in particular these clauses, the efficacy that the parties must have objectively intended.

853    Moreover, the defendants submit that there is, as a matter of principle, nothing unusual about parties to a contract who are unaware of historical breaches subsequently relying on such breaches to support termination of the contract or the exercise of some right under the contract: see Shepherd v Felt & Textiles of Australia Ltd [1931] HCA 21; 45 CLR 359 at 370-371 (Rich J), 373 (Starke J) and 377-378 (Dixon J); Thompson & Morgan (United Kingdom) Ltd v Erica Vale Australia Pty Ltd [1995] FCA 245; 31 IPR 335 at 347 (Lockhart, Gummow and Hill JJ); Downer EDI Ltd v Gillies [2012] NSWCA 333; 92 ACSR 373 at [131]-[138] (Allsop P, Macfarlan and Meagher JJA agreeing). The analogy drawn by the defendants is apposite.

854    The balance of the submissions made by the parties in relation to this issue is addressed in the main to whether there was a subsisting Event of Default as at the date the Shyzi Receivers were appointed, not strictly to the construction issue identified in Issue 3A. I will address the factual aspect of this issue as the final part of my consideration of whether the plaintiffs are entitled to the relief they seek under s 418A of the Act.

855    For these reasons, the answer to Issue 3A is no.

10.13    Issue 4 – Were any amounts wrongly debited to the Carrabolla Facility account?

856    In light of the conclusions that I have reached as to the proper construction of the Carrabolla Facility and the findings of fact I have made in relation to whether the Carrabolla Facility was relevantly varied in such a way as to permit advances to be made after 5 July 2016 and/or funds to be redrawn after 26 July 2016, the answer to this issue is necessarily yes.

857    By way of recap, I will briefly summarise the conclusions I have reached and the findings I have made that are relevant in relation to this issue.

858    I have reached the following conclusions in relation to the proper construction of the Carrabolla Facility. The only Borrower permitted to draw on the Advance Facility Limit was Carrabolla. Shyzi was not a Borrower under the Carrabolla Facility. Funds could only be drawn on the Carrabolla Facility during the Availability Period which expired on 5 July 2016. Upon expiration of the Availability Period, any undrawn part of the Advance Facility Limit was cancelled and not available to be drawn thereafter. Prepayments, if made, were not available to be redrawn as of right. Carrabolla’s obligation to repay the full amount advanced under the Carrabolla Facility together with accrued interest was due and payable on 30 September 2016. In certain circumstances, Carrabolla was entitled to make prepayments, which could be made in relation to whole or part of its liability under the facility. A partial prepayment could only be made in an amount rounded to a $50,000 increment of what was then outstanding. The Carrabolla Facility expired on 30 September 2016, being the Expiry Date.

859    I have made the following findings of fact. First, the only advance made under the Carrabolla Facility during the Availability Period was the advance of $680,000. Second, the undrawn portion of the Advance Facility Limit of $860,000 was cancelled on 5 July 2016 and was not available to be drawn thereafter. Third, the Carrabolla Facility was not relevantly varied so as to permit any advances to be made after 5 July 2016. Fourth, the Carrabolla Facility was fully repaid as a result of the payment made on 26 July 2016 and the application of the amount standing in credit in CLAH’s solicitors’ trust account as a repayment by Carrabolla. Fifth, the parties did not at any time before the expiration of the Carrabolla Facility agree that Carrabolla could redraw the funds which had been used to prepay in full the Carrabolla Facility. Sixth, the Carrabolla Facility expired by effluxion of time on 30 September 2016. Seventh, the parties did not at any time prior to 30 September 2016, agree that the Carrabolla Facility be varied to extend the Expiry Date as defined.

860    In relation to the dealings between Mr Page and Mr Baker that the defendants rely on in relation to the Carrabolla Facility, I have concluded as follows. First, Mr Page was relevantly the agent, or was acting with the ostensible authority, of Ms Page and Shyzi in requesting loans to be made by CLAH to Shyzi. Second, on the occasions on which Mr Page made requests of Mr Baker to make payments, I do not accept Mr Baker’s evidence to the effect that Mr Page requested that those payments be made as drawdowns or advances on the Carrabolla Facility. Third, as to the contemporaneous references in the internal coding emails that various payments be coded or otherwise recorded as advances on the Carrabolla Facility, I do not regard these documents as reliable indications of the true position. That is because they are internal CLAH communications which emanate from Mr Baker. They are not supported by documents emanating from or on behalf of Carrabolla (including from Mr Page acting relevantly as agent or with ostensible authority) requesting that an advance be made under the Carrabolla Facility, whether in the form of a formal drawdown notice (as was required under the facility) or an informal written communication. My conclusion that these documents are unreliable is underscored by the fact that at the time Mr Baker gave the relevant instructions, he was actively engaged in producing a paper trail that would deflect CLAH’s auditors from raising queries in relation to the way in which he was transacting on CLAH’s accounts. I do not regard contemporaneous documents that are predicated on Mr Baker’s instructions at the relevant time to attract the weight that one would usually afford to contemporaneous document: ET-China.com International Holdings Ltd v Cheung [2021] NSWCA 24; 388 ALR 128 at [25]-[29] (Bell P, as his Honour then was). Fourth, I find Ms Comino’s evidence in relation to the relevant payments being payments on the Carrabolla account to be unreliable for the same reason, that is, that her understanding was predicated on what Mr Baker instructed her to do at the time. She did not in her evidence relevantly rely on any primary business records or documents that were not ultimately based on what Mr Baker had communicated.

861    The defendants have not established that CLAH made any advances under the Carrabolla Facility other than the Initial Drawdown of $680,000.

862    I have addressed separately the advances that the defendants contend were made under the Carrabolla Facility in the period before 26 July 2016 and concluded that the only advance made under the facility was the Initial Drawdown: see part 10.8 of these reasons.

863    It is not necessary to make findings in seriatim in relation to each of the categories of alleged advances that the defendants contend were advances on the Carrabolla Facility in the period after 26 July 2016 for two reasons. First, the defendants’ claims that these payments were made as advances under the Carrabolla Facility are based on Mr Baker’s evidence, which I have rejected. Second, given the conclusion that I have reached on Issue 3 as to the proper construction of the Shyzi Securities, the validity of the appointment of the Shyzi Receivers does not turn on whether or not moneys advanced to Shyzi by CLAH were advanced under the Carrabolla Facility or not. To the extent that payments that are the subject of Issue 4 were made by CLAH to Shyzi, it is convenient to address those payments as part of my consideration of Issue 6, which is addressed to whether Shyzi owed money to CLAH as at the date the Shyzi Receivers were appointed.

864    In conclusion, Issue 4 is answered yes - all amounts debited to the Carrabolla Facility apart from the Initial Drawdown of $680,000 were wrongly debited to that facility.

10.14    Issue 5 – What amounts, if any, has CLAH failed to credit, by offset or otherwise, to Shyzi’s loan account?

10.14.1    Overview

865    This issue recedes in significance given my conclusion as to the proper construction of the Shyzi Securities being that the definition of Secured Money comprehended money which Shyzi was liable to repay to CLAH independently of Shyzi’s obligations as guarantor of the Carrabolla Facility. I will address the issue of Shyzi’s debt to CLAH which arises independently of the Carrabolla Facility and which is secured under the Shyzi Securities in my consideration of Issue 6.

866    Issue 5 comprises two distinct sub-issues. Both of which proceed on the basis that Shyzi was indebted to CLAH and was entitled to have the benefit of credits or offsets with the result that any debt owed by Shyzi to CLAH was set off by the debt that CLAH owed to Shyzi as at the date on which the Shyzi Receivers were appointed.

867    The first issue is as to whether Shyzi had reduced its debt by making repayments. The defendants contend that Shyzi made a series of payments to CLAH in the total amount of $430,000 in the period 25 October 2016 and 30 November 2017 (collectively, the Shyzi Repayments).

868    The defendants admit that CLAH received $430,000 from Shyzi and that these payments were separate to any obligation of Shyzi to repay advances made by CLAH under the Carrabolla Facility. The defendants further say that they have taken these repayments into account in determining Shyzi’s indebtedness to CLAH. The receipt of $430,000 being admitted, the onus shifts to the defendants to demonstrate that the debt that CLAH claims from Shyzi is calculated after crediting this amount.

869    The second issue concerns the plaintiffs’ claimed entitlement to set off any balance owing by Shyzi to CLAH against financial assistance rendered by Shyzi to Moto Prestige, a company related to CLAH. The plaintiffs allege that Shyzi had a right to set off pursuant to the alleged Shyzi Offset Agreement, to which I have already referred. The plaintiffs bear the onus of establishing to the civil standard that the Shyzi Offset Agreement was made and the terms in which it was made.

870    These two sub-issues feed into Issue 6 which is addressed to whether Shyzi owed any money to CLAH as at the date of the appointment of the Shyzi Receivers. By way of overview, the plaintiffs claim that CLAH received $430,000 from Shyzi through the Shyzi Repayments (which is admitted) and that Moto Prestige received the benefit of $231,768.68 in vehicle value (which is admitted) which must be set off against any debt owed by Shyzi to CLAH pursuant to the Shyzi Offset Agreement (which is denied). The plaintiffs contend that if both the sub-issues that I have identified are determined in their favour, then the total amount of $661,768.68 must be taken into account as a credit or set off in determining Shyzi’s indebtedness to CLAH. The plaintiffs contend that the net effect if they prevail on both these issues is that Shyzi was not indebted to CLAH as at the date the Shyzi Receivers were appointed.

10.14.2    The fact-finding task in context

871    Before moving to consider each of these sub-issues, I note that there are considerable difficulties which attend the fact-finding task required by Issue 5 and Issue 6.

872    In assessing the evidence on this topic, I apply the principles I have identified at paragraphs [31] and [411]-[412] above as to the approach to finding oral contracts, particularly in light of inconsistencies between evidence of the three central protagonists. I again refer to the principles set out by the High Court in Equuscorp at [31]-[41], in particular that oral evidence of an alleged consensus is required to be “sufficiently certain to admit of enforcement” and “definite about who agreed what, with whom” with a degree of precision: Equuscorp at [37].

873    I remind myself that what is required in the fact-finding task is that the plaintiffs must prove upon a reasonable basis the existence of the occurrence or the thing (including the Shyzi Offset Agreement) such that I feel an actual persuasion that the agreement was made and the terms on which it was made. As to the fact-finding process, see: Jones v Dunkel (1959) 101 CLR 298 at 308 (Dixon CJ); Warner v Hung, in the matter of Bellpac Pty Ltd (in liq) (No 2) [2011] FCA 1123; 297 ALR 56 at [48] (Emmett J, as his Honour then was); Watson v Foxman (1995) 49 NSWLR 315 at 318-319 (McLelland CJ in Eq); John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451 at [94] (Hammerschlag J, as his Honour then was).

874    As with other battle fronts in the series of disputes between the parties, this is an area where the plaintiffs contend that in addition to the documented agreements comprising the Carrabolla Documents, there existed between the parties various other undocumented arrangements, including the Shyzi Offset Agreement. As with the other alleged oral agreements relied on by the plaintiffs, there is a dearth of contemporaneous documents which unequivocally demonstrate the existence of the alleged arrangements.

875    The three protagonists gave their evidence, purportedly based on recollection, years after the event, unaided by definitive contemporaneous notes or records. The inherent unreliability of evidence given in such circumstances is particularly problematic in this case because it is exacerbated by the manifest reconstruction that the parties have engaged in. The reconstruction of the events as they occurred is patently skewed by the prism of this litigation. This is compounded by serious issues of credit that attend the evidence of each of the three protagonists, including in relation to the way in which they documented their dealings at the time, with the result that credit issues are not confined to oral evidence but also bleed into the contemporaneous documents.

876    Ms Comino’s evidence must be considered in the context where she, with Mr Baker, has been involved in numerous attempts to particularise the defendants’ allegations concerning Shyzi’s indebtedness to CLAH, purportedly by reference to contemporaneous source documents. I infer that Ms Comino’s contribution in this regard was directed by Mr Baker, consistently with the fact that at all times during the relevant period in her role in accounts at CLAH, Ms Comino essentially acted on the basis of what she was told by Mr Baker. I find that Ms Comino’s evidence in which she purports to give evidence as to the transactions which involved CLAH and Ms Page’s companies and/or Mr Page based on source documents, is essentially a reconstruction that she has crafted to “fit” the select range of contemporaneous documents that she has exhibited to her affidavit evidence. Ms Comino, to her credit, was candid in admitting when asked that she had no personal knowledge of the Shyzi Offset Agreement.

877    Ms Comino prepared tables that she included in her affidavit evidence that are relevant to determination of the Shyzi Repayments issue and the Shyzi Offset Agreement issue. The documents that she exhibited to her affidavit as the relevant “source documents” do not support the defendants’ allegation as pleaded. Some of the “advances” were made to Shyzi or Mr Page. Others are recorded as being made to third party motor vehicle dealers, Ohmut or Mr Linton. Some of the advances included in Ms Comino’s table were made in 2019, well after Shyzi had supplied the last of the vehicles to Moto Prestige in January 2018. There is no contemporaneous written record that demonstrates that the advances that did not go directly to Shyzi were payments made to others at Shyzi’s direction, whether through Mr Page as agent or otherwise.

878    In classifying these payments as loans to Shyzi at the time the Debt Particulars were prepared, the defendants presumably rely on Mr Baker’s assertion that Mr Page gave directions to make these payments to persons and entities other than Shyzi in his capacity as agent for Shyzi, as opposed to in his alleged capacity as agent for one of the other Page related companies. The basis for allocating these payments in this way is not established by evidence. I have rejected Mr Baker’s evidence to the effect that on each and every occasion Mr Page sought money from CLAH, Mr Page identified that the request was being made under the Carrabolla Facility. I have found that no advances were made under the Carrabolla Facility after 5 July 2016. The defendants have not established by reliable or cogent evidence that Shyzi is obliged to repay amounts that CLAH paid to persons and entities other than Shyzi.

879    One of the principal limitations of the documents relied on in aid of the defendants’ position is that the relevant information reproduced in the documents, even where the documents are relatively contemporaneous, is based on instructions given by Mr Baker. That is problematic for the reasons I have given.

880    In addition, there was generally a lack of coherence in each of the purported versions of what the true arrangements were alleged to be – the explanatory accounts that were overlaid on the bare threads supplied by the sparse contemporaneous documents did not have a consistent or coherent commercial logic, even allowing for the fact that the commercial dealings were between parties who at the relevant time were friends and engaged in various joint business endeavours which involved two or more of the three protagonists.

881    Having addressed the difficulties presented in relation to the evidence at a general level, I now turn to the specific evidence in relation to each of the sub-issues raised by Issue 5.

10.14.3    The Shyzi Repayments

882    It is admitted on the pleadings that between 25 October 2016 and 30 November 2017, Shyzi made a series of payments to CLAH in the total amount of $430,000 and that these payments were not made pursuant to the Carrabolla Facility: PFASOFC, [46]; DFACS, [41].

883    The plaintiffs contend that these amounts must be taken into account in determining the state of accounts between CLAH and Shyzi: PFASOFC, [47]. The defendants deny that these amounts must be taken into account in respect of the Carrabolla Facility, and contend that these amounts have already been taken into account in determining Shyzi’s indebtedness to CLAH that is separate to the any obligation Shyzi has as Guarantor of the Carrabolla Facility: DFACS, [41]-[42].

884    None of the relevant amounts are listed in Schedule 2 of the Debt Particulars as credits to Shyzi, notwithstanding the payments fall within the relevant period covered by Schedule 2 which is 1 July 2016 to 30 September 2020. The Debt Particulars were prepared based on material and/or instructions provided by Mr Baker, on behalf of CLAH, to CLAH’s instructing solicitors. As I have said, Ms Comino was involved in the preparation of the Debt Particulars. The defendants’ position in relation to Schedule 2 of the Debt Particulars is that it pertains only to transactions on the Carrabolla Facility and for this reason, the $430,000 Shyzi Repayments are not recorded in Schedule 2.

885    I will refer to the individual Shyzi Repayments using the following numbering:

(1)    25 October 2016     $95,000;

(2)    31 January 2017    $100,000;

(3)    9 February 2017     $20,000;

(4)    28 February 2017     $120,000;

(5)    7 March 2017         $30,000;

(6)    22 May 2017         $25,000;

(7)    26 September 2017     $20,000; and

(8)    30 November 2017     $20,000.

886    Ms Comino’s evidence reflects that a number of attempts were made to arrive at a coherent particularisation of the defendants’ allegations concerning Shyzi’s indebtedness to CLAH.

887    Ms Comino has prepared a table that is said to summarise “the amounts that were advanced to either Shyzi or Lemuel Page or paid to others at his direction that pertained to motor vehicles and the amounts repaid”. I refer to this table as Ms Comino’s table. It was incorporated in her affidavit evidence. It was supplemented by an analysis included in the defendants’ closing submissions in reply. In calculating the net sum of $241,400 that the defendants contend CLAH advanced to Shyzi for motor vehicle trading, CLAH claims that the amount of $241,400 is the net sum advanced to Shyzi after giving credit for: six of the eight payments made by Shyzi which form part of the Shyzi Repayments, namely, Shyzi Repayments (2), (3), (5), (6), (7) and (8). The defendants specifically address in their evidence and in their closing submissions Shyzi Repayment (2) as a credit towards Shyzi’s debt to CLAH, even though it is not included in Ms Comino’s table. The repayment is included as a credit in the defendants’ summary form table of advances and repayments which the defendants submit fall within the meaning of Secured Moneys under the terms of the Shyzi GSA and the Shyzi Mortgage. Accordingly, this payment has been accounted for in the defendants’ calculation of Shyzi’s debt to CLAH (which arises independently of the Carrabolla Facility).

888    The remaining two Shyzi Repayments, being Shyzi Repayments (1) and (4), are treated by the defendants as repayments and credit is given for them but as repayments applied in reduction of Ohmut’s debt to CLAH.

889    The defendants contend that Shyzi Repayment (1) was paid by Shyzi through Ohmut and has been duly accounted for against the Ohmut/Parkway Facility. The defendants characterise this payment of $95,000 on 25 October 2016 as a partial repayment of funds advanced by CLAH on 22 August 2016 to Shyzi on account of the Ohmut/Parkway Facility (totalling $112,344.12) for the purpose of purchasing a motor vehicle from Andco that Shyzi was in the process of on-selling to Mr Player.

890    As mentioned earlier, Mr Player is a property valuer in Newcastle and friend of Ms Page, Mr Page and Mr Baker. Mr Player also had a professional working relationship with Ms Page, Mr Page and Mr Baker.

891    Ms Page gave evidence that Shyzi paid $95,000 to CLAH as a repayment “for the Ben Player vehicle”, which is supported by evidence of a cheque stub dated 25 October 2016 from Shyzi to CLAH with a handwritten description which appears to read “INITIAL REFUND OF LOAN PURCHASE TOYOTA” and a CLAH bank statement evidencing the receipt of $95,000. Ms Page described the arrangement with Mr Player as follows:

Well, Ben was going to get some NAB finance, but that might take, I don’t know, a couple of months. I think we started talking about it in July and Ben paid Theo the thousand dollars deposit and then Theo paid the thousand dollars deposit to Mosman Toyota. Then the car was ordered. And I think it took maybe two months – July, August – I think three months, actually, for the car to arrive. And then the car arrived, the NAB finance came through for Ben, so that was paid to Shyzi, 95,000, and I think it might have been not even a week, maybe four days after I got the NAB finance through to Shyzi, I paid CLAH the 95,000.

892    On the basis of such evidence as there is before me, I find it more likely that this repayment was made by Shyzi in reduction of Shyzi’s liability to CLAH, which liability arises independently of the Carrabolla Facility for the reasons I have already given. In the absence of any explanation as to why this repayment should be credited to any debt owed by Ohmut other than a bare assertion that it was paid by Shyzi through Ohmut, Shyzi Repayment (1) is properly attributable as a repayment of Shyzi debt to CLAH.

893    The defendants contend that Shyzi Repayment (4) should also be treated as a repayment of debt owed by Ohmut. Notwithstanding that the defendants admit this was a repayment from Shyzi to CLAH, the documentary evidence prepared by the defendants suggests this payment is properly attributable as a repayment under the Ohmut/Parkway Facility. As with Shyzi Repayment (1), this repayment relevantly appears in Schedule 3 of the Debt Particulars as a credit to Ohmut. It is included in the defendants’ reply closing submissions as part of a summary table of the net debt for which the defendants contend that Ohmut is liable under the Ohmut GSA.

894    The plaintiffs submit that this payment should not have been credited to the Ohmut/Parkway Facility account because it has no connection with Parkway One or Ohmut. There was no cross-examination in relation to this payment. There is no oral evidence led as to the circumstances surrounding this repayment.

895    Having regard to the available documentary evidence which I have addressed in part 11.10.2.2 below, I am satisfied that Shyzi Repayment (4) is properly attributable as a repayment made by Shyzi in reduction of Ohmut’s debt to CLAH. Accordingly, I will treat it as a reduction of Ohmut’s indebtedness to CLAH and not as a credit towards any debt Shyzi may have to CLAH.

896    Separately to the Shyzi Repayments, the defendants include a payment of $87,500 on 24 March 2016 which they credit as a repayment in the calculus to arrive at the net figure of $241,400. That same amount is the subject of what is described as a “Further Drawdown” on 31 March 2016 in Ms Comino’s table. The drawdown is described in CLAH’s bank statement as “withdrawal for 9364661 [Ohmut]”. In the corresponding payment transaction detail report, the description of the transaction and of the beneficiary details both reference Ohmut, not Shyzi. Mr Baker’s email instruction to Ms Sun, copied to Ms Comino, similarly gives Ohmut’s account details and the reference as Ohmut – there is no reference in this email to Shyzi. The defendants do not explain what this was a repayment for or why it has been included as an advance to and repayment by Shyzi. I address this repayment and the subsequent advance in my consideration of Issue 6.

10.14.3.1    Conclusion

897    My conclusion on this sub-issue is that to the extent that the evidence establishes that transfers were made from CLAH to Shyzi and conversely, that Shyzi made the Shyzi Repayments, then these are properly taken into account when calculating Shyzi’s indebtedness to CLAH.

898    In relation to the payments from CLAH to Shyzi, the evidence does not establish that these transfers were the subject of a specific loan agreement, written or oral. In these circumstances, I infer that Shyzi was under an obligation to repay these advances to CLAH and there being no time specified for repayment, the debt is repayable on demand: Young v Queensland Trustees Ltd [1956] HCA 51; 99 CLR 560 at 566 (Dixon CJ, McTiernan and Taylor JJ); Ogilvie v Adams [1981] VR 1041 at 1043 (Fullagar J).

899    I will address Issue 6 on the basis that Shyzi’s indebtedness as at the time the Shyzi Receivers were appointed is to be assessed taking into account the Shyzi Repayments in the way I have reasoned above.

10.14.4    Shyzi Offset Agreement

900    In essence, the plaintiffs’ pleaded allegation is that on or about 21 September 2016, Mr Baker, for CLAH on the one part, and Ms Page and Mr Page, for Shyzi on the other, agreed that Shyzi would provide financial assistance to Moto Prestige, and in return CLAH would credit any financial assistance which Shyzi provided to Moto Prestige by making a commensurate reduction to any amounts then owing by Shyzi to CLAH: PFASOFC, [49].

901    The agreement is pleaded as follows:

49.     On or about 21 September 2016, at a meeting at Juicy Bean Café in Newcastle, attended by Theo, Fiona, and Lemuel, it was agreed that:

a)     Shyzi would provide financial assistance to Moto Prestige from time to time when requested to do so by Theo by sourcing and transferring to Moto Prestige used motor vehicles for Moto Prestige to trade; and

b)     CLAH would credit any financial assistance which Shyzi provided to Moto Prestige by making a commensurate reduction to any amounts then owing by Shyzi to CLAH.

902    By way of recap to the introductory references to this issue, Moto Prestige operated a motor vehicle trading business. On the evidence, that business was described as a business in which Jonathan Baker, Mr Baker’s son, and Charlie Comino, Ms Comino’s husband (who is also Mr Baker’s brother-in-law), were involved. At the time of the alleged agreement, its sole director was Ms Comino.

903    It is admitted on the pleadings that Moto Prestige is related to CLAH. The directorships in Moto Prestige were as follows:

(a)    Mr Baker was its sole director from 16 March 2018 and 31 May 2018;

(b)    Ms Comino was director between 28 September 2009 and 12 June 2015, 4 May 2016 and 15 March 2018, and 31 May 2018 and 5 February 2020; and

(c)    Catherine Baker (Mr Baker’s daughter) was a director between 18 April 2017 and 20 June 2018.

904    Since 5 February 2020, its sole director has been Jonathan Baker. CBD Sydney Investments is currently its sole shareholder: PFASOFC, [48]; DFACS, [43].

905    As at 21 September 2016, CLAH was a listed public company and Mr Baker was not one of its directors. As mentioned, Mr Baker was bankrupt from 16 April 2014 to 17 April 2017.

906    The plaintiffs allege that the Shyzi Offset Agreement was an oral agreement. It is alleged to have been made during a conversation that is said to have taken place on 21 September 2016, at a meeting at the Juicy Bean Café in Newcastle. Ms Page and Mr Page each gave evidence about the conversation they say they had with Mr Baker during which they say the Shyzi Offset Agreement was made. Ms Page and Mr Page gave their evidence, purportedly based on recollection, some years after the event, unaided by any contemporaneous note or record. As mentioned, the inherent unreliability of evidence given in such circumstances is particularly problematic.

907    The defendants deny the existence of the alleged Shyzi Offset Agreement. Mr Baker denied the agreement. As mentioned, Ms Comino, who was the director of Moto Prestige at the time the agreement was allegedly made, gave evidence that she had no personal knowledge of the alleged agreement. The defendants contend that the true position was that in or about September 2016, CLAH advanced $241,400 to Shyzi and Mr Page for the purpose of Shyzi and/or Mr Page supplying motor vehicles to Moto Prestige. The defendants did not produce contemporaneous documents that establish the allegation as pleaded. Instead, the defendants rely on a miscellany of CLAH internal emails and selected bank statements over a period of some three years that they say demonstrate a net outflow of funds from CLAH to Shyzi in the sum of $241,400.

908    One of the principal limitations of these documents is that the relevant information in relation to the fund transfers on which the defendants rely can be sourced to instructions given by Mr Baker. The contemporaneous documentary evidence, such that it is, does not record that these alleged advances were payments CLAH made to Shyzi for it to purchase motor vehicles for Moto Prestige. The contemporaneous documentary evidence does not even hint that these alleged advances were payments CLAH made to Shyzi for it to purchase motor vehicles for Moto Prestige. That allegation rests entirely on the credibility of Mr Baker, which is problematic for the reasons I have given, and which does not supply a foundation upon which I am able to form the requisite level of satisfaction necessary to find in accordance with Mr Baker’s assertions.

909    The other compounding factor is that there was a lack of coherence to the defendants’ contention that CLAH had in effect prepaid $241,000 in September 2016 and yet Mr Baker continued to make financial contributions towards the acquisition of specific cars instead of requiring the alleged prepayment to be used for this purpose. That makes some sense if as the plaintiffs contend the tax invoices issued to Moto Prestige were not paid. But even so, that would give rise to a debt as between Moto Prestige and Shyzi, it does not follow that Shyzi’s debt to CLAH would reduce commensurately as Moto Prestige’s debt increased unless an enforceable agreement to that effect is proved.

910    As I have mentioned, Ms Comino prepared a table she said summarises “the amounts that were advanced to either Shyzi or Lemuel Page or paid to others at his direction that pertained to motor vehicles and the amounts repaid”. The documents that she exhibited to her affidavit as the “source documents relating to these advances” do not support the defendants’ allegation as pleaded. Although the defendants plead that this sum was advanced “in or about September 2016”, Ms Comino’s evidence is that $241,000 is the net amount advanced by CLAH in the period commencing 24 March 2016 and concluding on 16 March 2019. Further, that the payments were made by means of eight individual payments ranging in amount from $7,000 to $94,025.98 over this period of some three years. Some of the advances included in Ms Comino’s table were made in 2019, over a year after Shyzi had supplied the last vehicle to Moto Prestige in January 2018. The reasons why payments were made directly to Mr Page and Mr Linton is not explained by Ms Comino, other than the assertion that the payments were made at the direction of Mr Page, presumably alluding to the defendants’ global contention that Mr Page was acting as agent for Shyzi in directing all such payments. Ms Comino does not assert personal knowledge of the basis for allocating the payments in the way that she has – other than to annex what she describes as source documents. The source documents in the main demonstrate that the relevant payments were made, but do not evidence the characterisation that the defendants now seek to attribute to them which is arbitrary and based on bare assertion.

911    As I have said, the defendants deny the existence of the Shyzi Offset Agreement: DFACS, [44].

912    In the alternative, if the Shyzi Offset Agreement is established, the defendants maintain that between 23 September 2016 and 29 January 2018, Shyzi and/or Mr Page supplied motor vehicles to a value of about $231,768.68 to Moto Prestige but that CLAH advanced $241,400 to Shyzi and Mr Page for the purpose of Shyzi and/or Mr Page supplying motor vehicles for Moto Prestige resulting in an amount of $9,631.32 being owing to CLAH by Shyzi and/or Mr Page: DFACS, [44(b)].

913    In their alternative argument, the defendants rely on this amount as informing the total of Shyzi’s indebtedness to CLAH: DFACS, [44(b)]. The defendants contend that the debt of $9,631.32 is a separate obligation of Shyzi to its obligations to repay advances made by CLAH to Shyzi under the Carrabolla Facility. In their alternative argument, the defendants rely on this amount as informing the total of Shyzi’s indebtedness to CLAH: see DFACS, [44]. The defendants’ alternative argument is predicated on the Court accepting the plaintiffs’ contention that pursuant to the alleged Shyzi Offset Agreement, Shyzi had a right to set off any debt it owed to CLAH against any debt owed by Moto Prestige to Shyzi pursuant to the tax invoices for motor vehicles issued by Shyzi to Moto Prestige.

914    In their opening submissions, the plaintiffs disputed the defendants’ assertion that CLAH advanced Shyzi or Mr Page $241,400 in September 2016 for the purpose of funding Shyzi’s financial assistance of Moto Prestige. As I have said, the evidence did not support the defendants’ allegation as pleaded. In closing submissions, the parties engaged on this issue at a transactional level rather than on the premise that there was a singular payment of $241,400 from CLAH to Shyzi in or about September 2016. I will address this evidence in my consideration of Issue 6.

915    The plaintiffs allege that in reliance on the Shyzi Offset Agreement, Shyzi provided financial assistance to Moto Prestige by sourcing and transferring to Moto Prestige used motor vehicles “including” the motor vehicles invoiced in eight Shyzi Stock Cards which are dated from 23 September 2016 to 29 January 2018: PFASOFC, [50]. For some but not all of the Shyzi Stock Cards there is in evidence a corresponding tax invoice issued by Shyzi to Moto Prestige and bearing a number which corresponds to the related Shyzi Stock Card (the Shyzi Tax Invoices).

916    The defendants admit these motor vehicles were supplied to Moto Prestige but otherwise deny that by the supply of the vehicles, Shyzi provided financial assistance to Moto Prestige pursuant to the alleged Shyzi Offset Agreement: DFACS, [45].

917    The plaintiffs allege, and the defendants deny, that Shyzi has not received payment for these vehicles and the Shyzi Tax Invoices remain outstanding: PFASOFC, [51]; DFACS, [46].

918    The plaintiffs contend, and the defendants deny, that by operation of the terms of the Shyzi Offset Agreement, the “financial assistance” Shyzi has provided Moto Prestige by transferring the vehicles to Moto Prestige must be taken into account in determining the state of accounts between CLAH and Shyzi: PFASOFC, [52]; DFACS, [46].

10.14.4.1    The oral evidence of Ms Page and Mr Page

919    The evidence given by Ms Page and Mr Page in respect of the alleged Shyzi Offset Agreement was not consistent as between themselves.

920    Ms Page’s evidence was vague and superficial. Her answers bordered on formulaic in that she stuck to vague general responses in relation to what she said had been agreed. She did not appear to have any understanding of how the agreement was intended to operate. Her lack of understanding of the agreement that she maintained was in place was exposed when she was cross-examined on the Shyzi Stock Cards and the Shyzi Tax Invoices, which she was responsible for preparing. When asked about the reason for the agreement, she said that she and Mr Baker were business partners and friends. Although the following extract is lengthy it is illustrative of the way in which Ms Page gave evidence on this topic:

Why was Shyzi supplying this vehicle to Moto Prestige?---Well, prior to the September meeting that we had about Johnathan losing his way and Theo wanting him to work with Charlie to do a venture to get, you know, real, Theo said that he had in his mind a few – a few times that we had spoken, he was going to get this venture going for Jonathan and Charlie. And he said that he would like us to look out for vehicles when the time came for Moto Prestige to run, that any assistance that we can give him in regards to sourcing cars, finding cars, trading cars with him, that he would offset any funds that CLAH gave to Shyzi in that regard.

What about this vehicle? Do you recall what – whether there was any discussion in relation to this particular vehicle, the Volkswagen Golf?---I’m sure that I’ve spoken to Theo.

Don’t worry about looking at the documents?---Yes.

Just see if you can remember any particular conversations?---Yes. I would have been involved in the conversations between Lemuel, myself and Theo. Yes.

But you don’t have any specific recollection. Is that what you’re saying?---I – no. It would be around the dates of when the invoice was created, when the deposits were made, transferred.

…

[D]id you prepare this document?---Yes, it’s a Shyzi stock card, so it’s only me that does it, yes.

All right. Do you recall this vehicle?---Yes.

What do you remember about it?---Just it was a vehicle that came in.

Did you know what became of it?---I’m pretty sure it went to Moto Prestige.

What makes you say that?---I remember 740 – I remember doing a BMW 740 to Moto. I’m certain.

And how would you know to send it to Moto Prestige?---Just discussions with Theo.

And did Moto Prestige or CLAH or Theo pay Shyzi for the vehicle?---Not necessarily pay. We just did trading together, between each other.

Can you explain what you mean by that, please? How did these transactions with Theo, in relation to cars, work?---It was just an agreement between Theo, myself and Lemuel and Theo was wanting to get the Moto Prestige business up and running, like I said, because Jonathan had lost his way and he wanted Charlie to – I don’t know – navigate him, help him. And he said, “When I get the licence through and it gets going, can we do some trading together. If you can source some cars, look out for some cars, send them my way,” and any funds that CLAH has given to Shyzi can be offset from our Moto trading – from our motor trading between Shyzi and Moto.

I see. Sorry. Just repeat that again, please. I just want to make sure I’ve got it right?---So funds from CLAH to Shyzi would be offset from the financial assistance that Shyzi gives to Moto through motor trading between Shyzi and Moto Prestige.

So what funds are you talking about going from CLAH to Shyzi?---So when – because Theo’s got the board and the auditors and what-not, he just says, “When funds become available to me, I will shoot them across to Shyzi, and park it in there and if a motor vehicle comes up that you think might be good, we will have a discussion, we will transfer them between each other and we will do it that way.

So what was the reason for Shyzi paying the money to – sorry. For CLAH paying money to Shyzi? What was the purpose of that?---For that reason that I just explained: we were business partners, we were friends, and he was trying to, like I said, get Moto Prestige business going.

921    Mr Page’s evidence was different to Ms Page’s as to the terms of the agreement:

Now, do you recall having a meeting with Mr Baker to discuss Moto Prestige, in particular, in Ms Page’s presence?---Yes.

What do you – when was that meeting?---That meeting, I believe it was in September - - -

What year?--- - - - of 2016.

Yes. Where was the meeting?---It was at Juicy Bean Café in Newcastle.

…

Who was at the meeting?---Theo, Fiona, myself.

And what did you discuss at the meeting?---We discussed Moto Prestige, Charlie and Jonathan being able to trade or sell cars.

What did Theo Baker say about Moto Prestige at that meeting?---He wanted - - -

No, what did he say?---He said that he wanted Charlie and Jonathan to be able to have a business of their own and to be able to build relationships to buy and sell cars.

Did you know who Charlie and Jonathan were at that time?---Yes.

Who were they?---Charlie is Mary’s husband and Jonathan is Theo’s son.

And when Mr Baker said that to you, did you or Ms Page reply?---Yes.

What did you say - - -?---Fiona said, “Look, I’m happy to help. I can teach them how to do all the paperwork to book the cars in and to book the cars out.” And I said to Theo, “I suggest that they start with cheap cars first to build the relationships and actually learn how to sell properly. And then as time goes on, get involved and come around to meet the dealers that I was getting the cars off.”

What did Theo say?---Theo said to me, “That would be great. I’m happy to assist. I will move funds across to Shyzi so Shyzi is able to buy cars for itself and also for us when we, Moto Prestige, when there’s opportunities.”

Anything further said at that meeting about Moto Prestige or Shyzi?---That cars that were bought via Shyzi would be offset on the money that CLAH put forward.

All right. Let’s – who said that?---Theo.

What exactly did he say to the best of your recollection?---The best of my recollection was that, “Any funds that I put into Shyzi and I get the cars paid – or the cars get transferred across to Moto Prestige will be set off against those funds and then if I want funds transferred back, I will direct or I will ask you, Fiona, to move them back to CL or Moto Prestige.”

And what did you – well, did you reply to that or did Fiona reply to it?---I didn’t really say too much about it. Fiona said, “That’s fine. I’m happy. That works for me.”

922    The evidence of Ms Page and Mr Page as to the essential terms of the agreement they contend was reached was not consistent as between them, but the effect of the evidence was that the agreement that they claim was struck with Mr Baker was narrower than the pleaded allegations concerning the Shyzi Offset Agreement. The pleaded allegations are premised on the assertion that any “financial assistance” will be set off against any funds advanced by CLAH to Shyzi. The first part of Ms Page’s evidence approximates this type of arrangement. Both the pleaded allegation, and Ms Page’s evidence, is expressed at a high level of generality. But as Ms Page was pressed to provide more detail, her evidence became narrower and more consistent with Mr Page’s evidence. The effect of the evidence of both Ms Page and Mr Page was ultimately that any motor vehicles that Shyzi traded to Moto Prestige would be set off against funds which CLAH advanced to Shyzi for the purpose of Shyzi acquiring motor vehicles.

923    Ms Page was unable to explain the reason why CLAH was paying money to Shyzi. Her assertion that she and Mr Baker were business partners and friends and that he was trying to get the Moto Prestige business going does not explain why CLAH was paying money to Shyzi. Mr Baker was bankrupt for part of this period. CLAH was a public company. Ms Page understood Mr Baker “had a board and auditors and what-not” to deal with. Yet she acknowledged (using the language which she used to describe the arrangements) that he was periodically shooting funds across to Shyzi to be parked in Shyzi as a fund for Shyzi and Moto Prestige to acquire and trade vehicles between each other.

924    On the version of the agreement given in oral evidence by Ms Page and Mr Page, the alleged agreement did not operate as a set off against funds advanced by CLAH under the Carrabolla Facility or to Shyzi generally. It was a specific offset arrangement the operation of which was confined to being applied against the debt occasioned by funds being transferred from CLAH for the purpose of motor trading activities of Shyzi and Moto Prestige.

925    The agreement was put to Mr Baker in cross-examination. He denied it, but the way in which it was put to him was a further variation on the broader version of the alleged agreements:

Now, I’m going to suggest to you that what – an agreement was reached at this meeting you had with Fiona and Lemuel in about September 2016 to the following effect: that CLAH would provide funds to Shyzi to enable Shyzi to acquire vehicles both for its own trading purposes, that is, Shyzi’s own trading purposes, and for the trading purposes of Moto Prestige. Do you agree that that was part of an agreement reached on that occasion?---No.

You agreed, I’m putting to you, that if CLAH at any point in time required the return of any of those funds, then it could notify Fiona Page, who could cause Shyzi to repay the amount that CLAH required?---Not - - -

Do you accept that?---Not correct.

Do you accept that you agreed that any amount which Moto Prestige – sorry, I withdraw that. In instances where Shyzi supplied a vehicle to Moto Prestige, the agreement was that any amount which Moto Prestige was liable to pay to Shyzi was an amount which could be set off against Shyzi’s liability to repay money advanced to it by CLAH from time to time?---No.

That’s the evidence that Mr and Mrs Page have both given. You say that they’re wrong about that?---Very much so.

Now, I suggest to you that that was the agreement, and that via that agreement or because of that agreement, it would enable Moto Prestige – sorry, as a result of that agreement, Moto Prestige would not actually have to pay any money in cash to Shyzi?---Moto Prestige had already made payments in April and May of 2016 to Shyzi, and they had not delivered vehicles.

Thank you for that. Can I just ask you to go back to my question, please, which was at the time of the striking of this agreement - - -?---Yes.

- - - in around September 2016, one of the terms of the agreement was that Shyzi – sorry, that Moto Prestige would not actually have to pay in cash the amount which it was invoiced for by Shyzi?---Not correct.

926    The plaintiffs bear the onus of establishing on the civil standard that the Shyzi Offset Agreement was made and the terms on which it was made. In the absence of some reliable contemporaneous record or other satisfactory corroboration, the plaintiffs face serious difficulties of proof. The absence of documents that support the existence of the alleged arrangement or the consistent application of the alleged agreement is stark. That is particularly so in circumstances where Ms Page prepared for each motor vehicle traded between Shyzi and Moto Prestige a stock card and a corresponding tax invoice, but there is no document which records the state of accounts between the parties applying the alleged set off. I address the evidence in relation to the Shyzi Stock Cards and the Shyzi Tax Invoices below.

927    For the plaintiffs to prevail on this issue, they must prove to the civil standard that the conversation occurred and the substance of what was said, that a consensus was reached, that what was agreed was sufficiently certain to be capable of forming a binding contract, and that the parties intended that they would be legally bound. In John Holland at [95], after reviewing the seminal authorities, Justice Hammerschlag (as his Honour then was) captured what is required by emphasising the need for a “sensation of feeling an actual persuasion, after a contest, that an event has happened or that something exists”.

928    The plaintiffs’ evidence does not engender a feeling of actual persuasion that the oral agreement alleged to have been made at the Juicy Bean Café and styled as the Shyzi Offset Agreement was in fact made. In addition to the problems, I have identified in the oral evidence above, my conclusion in that regard is cemented by evidence in relation to the Shyzi Stock Cards and the Shyzi Tax Invoices, which I will now address.

10.14.4.2    Shyzi Stock Cards and related Shyzi Tax Invoices

929    The plaintiffs allege that Shyzi supplied the following vehicles with a total value of $231,768.68:

(1)    Stock Card No 023 for a 2016 Volkswagen Golf GTI at a cost to Shyzi of $19,000.00 on 23 September 2016;

(2)    Stock Card No 024 for a 2003 Holden Commodore at a cost to Shyzi of $3,000.00 on 23 September 2016;

(3)    Stock Card No 027 for a 2012 Toyota Hilux SR5 at a cost to Shyzi of $32,000.00 on 16 January 2017;

(4)    Stock Card No 028 for a 2005 BMW 740Li E66 at a cost to Shyzi of $10,000.00 on 10 February 2017;

(5)    Stock Card No 029 for a 2007 Honda Jazz Upgrade at a cost to Shyzi of $6,500.00 on 10 February 2017;

(6)    Stock Card No 030 for a 2017 Volkswagen Golf GTI 2.0 Turbo at a cost to Shyzi of $48,405.76 on 14 May 2017;

(7)    Stock Card No 035 for a 2017 Toyota Hilux 4x4 SR5 2.8L at a cost to Shyzi of $57,000 on 29 January 2018; and

(8)    Stock Card No 037 for a 2017 Toyota Hilux 4x4 SR5 2.8L at a cost to Shyzi of $55,862.92 on 29 January 2018.

930    The plaintiffs allege that by providing these eight vehicles to Moto Prestige, Shyzi provided “financial assistance” to Moto Prestige, which has not been taken into account in determining the state of accounts between Shyzi and CLAH but which must be: PFASOFC, [50]-[51].

931    The defendants admit that Shyzi provided Moto Prestige with these vehicles and further admit that the value of the vehicles was $231,768.68: DFACS, [44(b)], [45].

932    The defendants submit that the evidence of Ms Page and Mr Page did not explain how the value of any of these eight vehicles was to be set off against the funds advanced by CLAH to Shyzi pursuant to the alleged Shyzi Offset Agreement. Further, that the Pages’ evidence concerning these transactions was evasive, opaque, unhelpful and had the flavour of both witnesses saying whatever they thought was necessary to advance the plaintiffs’ case on this issue. I accept the defendants’ submissions on this issue.

933    The effect of the plaintiffs’ evidence is that Shyzi purchased motor vehicles at a certain price and would then sell them on to Moto Prestige at a loss. Mr Page and Ms Page said they did this because Mr Baker asked them to do it to facilitate Moto Prestige making a profit on the vehicles when Moto Prestige came to sell the vehicles and in this way Mr Baker’s son and brother-in-law would enjoy some ostensible success in the fledgling business, which curiously neither of them had a direct interest in and of which neither was an officer at the relevant time. Shyzi now seeks to recover the shortfall or loss it incurred by selling these motor vehicles at a loss to Moto Prestige by asserting that the difference between what Shyzi in fact paid and what it sold the vehicle to Moto Prestige for was the “financial assistance” Shyzi gave to Moto Prestige pursuant to this alleged Shyzi Offset Agreement. No cogent or legitimate explanation is given for why Shyzi issued tax invoices which did not reflect the total price which it received for each vehicle, namely, the amount invoiced to Moto Prestige and the amount credited by CLAH against its debt owed to CLAH. Both Mr Page and Ms Page maintained that the purchase prices included in the Shyzi Tax Invoices were dictated to them by Mr Baker. There is no coherent pattern as to the relationship between the purchase price specified in the Shyzi Tax Invoices and the Shyzi Stock Cards by reason of the application of the alleged Shyzi Offset Agreement.

934    The evidence given in relation to eight relevant motor vehicle transactions is as follows.

935    Stock Card No 023 is a business record of Shyzi created by Ms Page concerning a Volkswagen Golf that Shyzi purchased from Italian Motori for $44,000 (inclusive of GST) on 11 August 2016. This vehicle was subsequently traded to Moto Prestige on 23 September 2016.

936    Shyzi Stock Card No 023 identifies that the vehicle was purchased by the following payments being made to the vendor, Italian Motori: (1) $25,000 by Mr Baker (comprised of $1,000 and $24,000); and (2) $19,000 by Parkway One, which is described as a “loan to Shyzi P/L”. On the plaintiffs’ case, pursuant to the alleged Shyzi Offset Agreement, the $19,000 paid in respect of this vehicle on behalf of Shyzi represents Shyzi extending “financial assistance” to Moto Prestige for which CLAH assumed responsibility under the terms of the alleged Shyzi Offset Agreement.

937    In an email from Mr Baker to Mr Page dated 6 September 2016, Mr Baker included on a list of “Reminders – Things To Do – Updated 06 09 16” as an action item “Transfer the VW Golf GTI to Moto Prestige”. That was subsequently done, as evidenced by Shyzi Tax Invoice 023 which relates to the same vehicle. The Shyzi Tax Invoice 023 is dated 23 September 2016. It is issued by Shyzi to Moto Prestige. The tax invoice records a purchase price (inclusive of GST) of $25,000 (as opposed to the full amount of $44,000 that is recorded on the corresponding stock card as the purchase price paid to Italia Motori). It was prepared by Ms Page.

938    Ms Page was cross-examined on how the purchase price of $25,000 was calculated in the context of alleged Shyzi Offset Agreement:

And the purchase price on the sale from Shyzi to Moto Prestige was $25,000 inclusive of GST, correct?---Yes, correct.

And how was that purchase price calculated?---It was a figure that Theo and I came up with. We discussed every transaction.

It was precisely the amount that Mr Baker had paid for Shyzi’s acquisition of the motor vehicle from Italia Motori, wasn’t it?---Yes, that’s correct.

And the $25,000 was the full consideration payable to Shyzi for that transfer of the motor vehicle, correct?---That was the sale price that we came up with between me and Theo for the vehicle.

And to your understanding, there has never been an obligation on the part of Moto Prestige or on the part of CLAH to pay you an additional $19,000 for that motor vehicle, correct?---It would be involved in our transactions and tallied up at the end.

But this tax invoice, to your understanding, had to set out the full consideration payable for the transfer of that motor vehicle, correct?---The 25,000 is the sale price between Shyzi and Moto for that vehicle, I agree, yes, correct.

And it was the full consideration payable to Shyzi for that motor vehicle, correct?---That is what Moto contributed to the purchase price of the vehicle, yes, I agree.

Thank you. And there was no further amount of $19,000 payable by anyone to Shyzi for the acquisition of that motor vehicle by Moto Prestige, correct?---That’s correct. The – the vehicle was purchased as we discussed; the vehicle was onsold to Moto, as we discussed. I agree.

Thank you. And the full consideration was $25,000 and nothing more, correct?---Correct.

Right. Thank you. And that’s consistent, isn’t it, with you never having told Mr Baker about any additional $19,000 paid by Parkway One towards the acquisition of that car, correct?---Theo and myself discussed every transaction, and he was fully aware that the purchase price of the vehicle was 44,000 and who was contributing what to the – to the purchase price of the vehicle.

So on your evidence - - -?---Yes.

- - - Shyzi was operating at a loss on this vehicle to the tune of $19,000; is that right?---Shyzi was providing assistance to Moto to build their stock to help their business, to grow it.

And you were deliberately running your motor trading business at a loss, on your evidence; is that right?---I was providing financial assistance to Moto from Shyzi.

And losing money in the process, correct?---We were business partners, and this was our agreement.

That you would lose money on motor trading with Moto Prestige; is that your agreement?---Our agreement was we were business partners and we were doing moto trading between Shyzi and Moto, and any financial assistance that Shyzi gave to Moto to grow their business was an agreement between me and Theo, and – and funds that were advanced by Theo to me would be offset by any financial assistance that Shyzi gave Moto.

And looking at the tax invoice on page 87, can you now tell her Honour how this so-called offset agreement actually produced a figure of $25,000?---It is the sale amount agreed between Theo and myself for the vehicle.

But how did you calculate it by reference to any offsetting?---There were many vehicles. It wasn’t just one. We were helping Theo grow the business for Johnathan and Charlie, helping them to get stock for their business to have a business venture for them to work together in.

And which other vehicles were you offsetting in order to reach a figure of $25,000 on this tax invoice?---I really don’t understand the question.

939    Mr Page was cross-examined on this transaction. His evidence was that it was him, and not Ms Page, that discussed the tax invoices, including this one, with Mr Baker. Mr Page’s evidence was that in return for the supply of this vehicle to Moto Prestige, Shyzi was entitled to receive a total of $44,000 made up of $25,000 paid by Mr Baker to Motori Italia and $19,000 pursuant to the alleged Shyzi Offset Agreement:

Right. So you’re saying Shyzi was going to receive – from the on sell to Moto Prestige – a total of $44,000, correct?---Which it never received.

But that’s your evidence, that - - -?---Yes.

- - - that Shyzi was entitled to $44,000 for the transfer of this vehicle to Moto Prestige?---Yes.

940    Mr Page conceded in cross-examination that he knew that a tax invoice had to set out the amount which is being paid for the goods or services being provided and could not explain why the tax invoice which he claimed to have agreed with Mr Baker did not refer to $44,000, and instead referred to a purchase price of $25,000. The content of Mr Page’s evidence under cross-examination was combative and evasive:

Right. Now you understood, didn’t you, that a tax invoice has to set out the amount which is being paid for the goods or services being provided, correct?---Correct.

Right. So this tax invoice, on your evidence, should have provided for a purchase price of $44,000, correct?---Theo asked for it to be - - -

No, no, no, on your evidence, this tax invoice should have set out a purchase price of $44,000, correct?---Theo was aware of the – the number.

But if this tax invoice was going to be consistent with the legal requirement that it set out the consideration to Shyzi for the goods being supplied, then, on your understanding, it should have referred to a purchase price of 44,000?---No, I don’t agree.

Well, why not?---Because Theo had – knew the purchase – knew how much the car – we paid for the car.

Yes?---He asked for the invoice to be at a reduced rate so Charlie and his son, Johnathan, could make a profit in Moto Prestige.

But Mr Page, that means that Shyzi would be making a loss of $19,000 on this transaction, doesn’t it?---The – the agreement with Theo was that Shyzi would – CLAH would cover the difference of the $19,000.

In other words, you’re saying, Shyzi was going to receive a total of $44,000 for this – for the supply of this motor vehicle?---Well, 25,000 was already paid directly to Italia Motori by Theo, so Shyzi was getting $19,000 credited, that’s was the – all it was.

Right. And this tax invoice doesn’t show the $19,000 credit to Shyzi, does it?---No, it doesn’t.

But it was part of what you – on your evidence – part of what Shyzi was entitled to for supplying this motor vehicle, correct?---Correct.

So the tax invoice must have been false, on your evidence, correct?---This was the way Theo wanted it done.

Yes, but it was false on your evidence, wasn’t it?---I – I don’t agree.

What, you think $25,000 was all that Moto Prestige had to pay Shyzi for this vehicle, is that your evidence?---On Theo’s side, that was what we agreed to.

So on that understanding, Mr Page, Shyzi is not entitled to a further 19,000, correct?---No. The agreement that I had with Theo was that Theo would cover the – the total price of the car, which was 19,000 would be for Shyzi’s benefit and that he would accept Moto Prestige the car at 25,000, and then when they sold the car, they would retain the profit.

Tax invoices are important legal documents, to your understanding, aren’t they?---I understand.

Right. They’re the primary documents of record for GST purposes, correct?---For – for Motor Prestige’s side, yes.

And they’re primary documents of record for income tax purposes, correct?---Yes.

Right. And on your evidence – I will just put it to you one more time – on your evidence this tax invoice is false because your understanding, you claim, was that Shyzi was entitled to $44,0000 for this vehicle, not 25,000?---I say that Shyzi was entitled to the $19,000 difference, yes.

Right. And that’s not on the tax invoice, is it?---No, it’s not.

And the tax invoice is therefore false, correct?---Well, it – Theo asked for this, so this was what was provided.

Mr Page, that – you’re making up this evidence that Theo asked for a tax invoice in the amount of $19,000 less than you had paid for the vehicle, correct?---No, I’m not. I’m not.

To your understanding, Mr Baker never asked – was never told about the $19,000 that Parkway One was paying to Italia Motori, correct?---He knew. He was told.

What, do you claim you told him yourself?---Yes.

I see. And do you claim that it was Mr Baker who came up with the idea of creating a false tax invoice, is that what you’re saying?---It was Mr Baker who asked that the tax invoices were reduced to Moto Prestige so his son and Charlie could make the profit in Moto Prestige.

And if that were the case – well – and you don’t accept at all, do you, that it was Ms Page who discussed this transaction with Mr Baker, not you?---No, it was always –Theo and I would talk all the time.

941    Pausing here, I find that the motor vehicle trading that took place between Shyzi and Moto Prestige was the product of dealings between Mr Page and Mr Baker. Ms Page’s involvement was administrative in that she was responsible for preparing the Shyzi Stock Cards and the Shyzi Tax Invoices. I do not accept Ms Page’s evidence that she discussed the prices included in the Shyzi Tax Invoices with Mr Baker. I accept Mr Page’s evidence that it was always him and Mr Baker that dealt with each other in agreeing what the invoices would record and that one of them, likely Mr Page, told Ms Page what to include on the invoices. Mr Page’s role in conducting the motor trading business of Shyzi is another part of the evidence that supports the finding I have made of Mr Page being an agent of Shyzi, or at the least acting with the ostensible authority of Shyzi in his dealings with Mr Baker, and through Mr Baker, CLAH.

942    Although he refused to concede it directly in respect of this invoice, Mr Page participated in the creation of tax invoices that he understood at the time were false in material respects. Although he equivocated and sought to backtrack in his subsequent evidence, he directly admitted that in relation to some of the stock cards and tax invoices, including Stock Card No 024 and Shyzi Invoice No 024:

Right. Okay. Let me take you to page 76. Again, that is a vehicle stock card prepared by Ms Page, not by you; correct?---That’s correct.

And Mr Baker paid $5000 to that vehicle, and Ohmut paid $3000; correct?---Correct.

And then at page 88, you will see the tax invoice by Shyzi to Moto Prestige for 5000?---Yes.

Do you see that?---Yes.

And that was the amount which Mr Baker had paid for the vehicle; correct?---Yes.

Thank you. And, on your evidence, that tax invoice is false because the amount which Shyzi was entitled was, in fact, 8000; is that right?---That’s correct.

All right. Thank you. And it was Ms Page who prepared that false tax invoice; correct?---Ms Page prepared the invoice because I asked her to, so that was what Theo wanted supplied to Moto Prestige.

And the discussion, in fact, if any, was between Mr Baker and Ms Page, not with you; correct?---No. It was between myself and Theo Baker.

943    Mr Page’s evidence in relation to the other stock cards and tax invoices on which he was cross-examined was consistent with his evidence on Stock Card No 023 and Shyzi Invoice No 023 including as to the admissions he made and his subsequent equivocation and denial.

944    Stock Card No 024 was a business record of Shyzi created by Ms Page concerning a 2003 Holden Commodore that Shyzi purchased from Our Town Automotive for $8,000 (inclusive of GST) on 24 August 2016. The bottom of stock card identifies that the vehicle was paid for by two payments: (1) $5,000 by Mr Baker on 5 September 2016; and (2) $3,000 by Ohmut on 17 February 2017. The corresponding Shyzi Tax Invoice 024, being a Shyzi business record created by Ms Page, states that the total consideration payable by Moto Prestige for this vehicle was $5,000 (inclusive of GST). She was cross-examined on these documents and her evidence as to the application of the alleged Shyzi Offset Agreement was again vague and evasive in content. She could not explain how the alleged offset worked:

And you don’t claim, do you, that Shyzi is entitled to an additional amount of $3000 for the transfer of that motor vehicle to Moto Prestige?---Shyzi’s contribution to the vehicle was $3000.

But you’re not claiming that Shyzi is entitled against Mr Baker or Moto Prestige or CLAH to an additional $3000 for that vehicle, are you?---Theo and I had agreement on motor trading and this is one of the vehicles, of many, that we traded between ourselves, but purchase prices and the sale prices were agreed between Theo and myself and nobody else. Thank you.

Are you or are you not claiming in these proceedings that Shyzi is entitled to an additional $3000 on top of the $5000 purchase price for that vehicle?---Shyzi’s contribution towards this vehicle was $3000 and Theo’s contribution was $5000.

Do you accept that Shyzi is not entitled to any amount above $5000 for the transfer of that motor vehicle to Moto Prestige?---It – the – there was more than one vehicle between Theo and myself, Shyzi and Moto, traded.

Do you accept that Shyzi is not entitled to any amount additional to the $5000 for the transfer of that vehicle to Moto Prestige?---Shyzi has contributed 3000 and Theo has contributed 5000 to the purchase of the vehicle and the vehicle was sold between Shyzi and Moto for $5000.

Yes. And you accept, don’t you, that Shyzi is not entitled to any amount above $5000 for the transfer of that motor vehicle; correct?---There were many motor vehicles traded and whatever financial assistance that Shyzi provided Moto would be offset from the funds that CLAH paid to Shyzi for motor trading activities.

You know that’s not an answer to my question, don’t you, Ms Page?---There was more than one vehicle traded between Shyzi and Moto.

You’re claiming in these proceedings that Shyzi is entitled to a further amount of $3000 for the transfer of that motor vehicle, aren’t you?---Again, Shyzi has contributed 3000 to the purchase price of the vehicle and Theo has contributed $5000 to the purchase of the vehicle and then the vehicle was sold from Shyzi to Moto for $5000.

945    After I intervened to require Ms Page to answer the question directly, her answer was to the effect that the plaintiffs did not claim to be entitled to offset $3,000 in respect of this motor vehicle from CLAH in these proceedings. Her response contradicted the plaintiffs’ pleaded case on the Shyzi Offset Agreement.

946    Stock Card No 027 concerned a Toyota Hilux purchased from Shannon John Sullivan for $32,000 (no GST). The plaintiffs did not adduce in evidence a corresponding Shyzi Tax Invoice for the transfer of this vehicle to Moto Prestige.

947    The bottom of Stock Card No 027 identifies that Mr Baker paid $20,790.80 to Shannon John Sullivan and that Shyzi paid $11,209.20 towards the purchase price. Despite this, the plaintiffs claim to be entitled to a set off of $32,000: PFASOFC, [50(c)]. Again, when asked as to how this transaction would be treated within the terms of the alleged Shyzi Offset Agreement, Ms Page could not answer. She asked to see the corresponding Shyzi Tax Invoice, which as I have said was not produced by the plaintiffs. It was put to Ms Page that there was no conceivable justification for Shyzi to be claiming $32,000 in relation to the vehicle in Stock Card No 027. Ms Page said that if she could not see the Shyzi Tax Invoice to Moto Prestige then she could not answer.

948    The evidence given in relation to Stock Card No 028 concerning a BMW 740Li E66 purchased from Kloster for $10,000 and on-sold to Moto Prestige for $5,000 was to similar effect. The bottom of Stock Card No 028 records that this vehicle was paid for by Ohmut with a notation “loan to Shyzi”. By Shyzi’s Tax Invoice 17028, Shyzi then on-sold this vehicle to Moto Prestige for $5,000. Ms Page acknowledges that this sum is what Moto Prestige paid for the vehicle. Despite this acknowledgment, the plaintiffs claim that Shyzi is entitled to set off $10,000 from all advances made by CLAH to Shyzi: PFASOFC, [50(d)]. Ms Page could not, beyond mere assertion as to the alleged existence of the Shyzi Offset Agreement, explain how the set off allegedly provided for under the agreement applied to this transaction.

949    Stock Card No 029 concerned a Honda Jazz purchased from Our Town Automotive for $6,500. The bottom of Stock Card No 029 records that this vehicle was paid for by Shyzi. By Shyzi’s Tax Invoice 17029, Shyzi then on-sold this vehicle to Moto Prestige for $3,000. Ms Page acknowledges that this sum is what Moto Prestige paid for the vehicle. Despite this acknowledgment, the plaintiffs claim that Shyzi is entitled to set off $6,500 from all advances made by CLAH to Shyzi: PFASOFC, [50(d)]. When asked to explain how the set off agreement applied to this transaction, Ms Page was unable to provide an explanation and answered simply asserting the existence of the alleged Shyzi Offset Agreement. Ms Page’s evidence in relation to Stock Card No 029 culminated in the following response:

And, once again, to your understanding, this so called offset agreement you had with Mr Baker required you to – or required Shyzi to operate at a loss in relation to motor vehicle transactions; is that right?---We were business partners. We had an agreement for motor trading, as I said. If CLAH – when Theo became available to funds, he put it into Shyzi for Shyzi to source vehicles, trade vehicles. Some vehicles that we discussed he wanted for Moto; other vehicles he didn’t, so Shyzi would trade them to either Moto or other dealers. And, in the end, Shyzi has paid back CLAH the motor trading agreement.

950    The last of the stock cards relied on is Stock Card No 030 concerning a Volkswagen Golf GTI purchased from Sutherland Volkswagen for $42,983. The bottom of the stock card records that Shyzi paid $1,000 as a deposit and that NAB was providing finance in the sum of $41,983 which was paid by monthly debits drawn on Shyzi.

951    By Shyzi’s Tax Invoice 17039, Shyzi on-sold this vehicle to Moto Prestige for $25,000 (inclusive of GST). Despite this, the plaintiffs claim that Shyzi is entitled to a set off of $48,405.76 in respect of this transaction: PFASOFC, [50(f)]. The pleaded claim for set off in respect of this vehicle is different from the amounts stated in the corresponding stock card and tax invoice.

952    Ms Page asserted under cross-examination that she informed Mr Baker that the vehicle was being financed by the NAB and that at the time this vehicle was sold to Moto Prestige, she told Mr Baker that this vehicle was subject to an encumbrance in favour of the NAB. Mr Page gave similar evidence of having confirmed with Mr Baker that this vehicle was encumbered. I find that both Mr Page and Ms Page were untruthful in their evidence on this subject.

953    Tendered in evidence was an email sent on 27 March 2018 from Mr Baker to Mr Page in which Mr Baker complained that this vehicle was encumbered notwithstanding he had paid for it — Mr Baker said “This is completely dishonest … You have a lot of explaining to do”. When Ms Page was confronted with the email, she clung to her earlier responses:

And it would be wrong for you to claim that Shyzi was entitled to an amount of $48,405.76 for stock number 30; do you agree?---The sale price was 25,000. Theo knew that I had finance on the car. We were friends and we were business partners.

It would be wrong – if $25,000 was the full consideration on the tax invoice …, it would be wrong for you to be claiming that Shyzi is entitled to more than $48,000 for that vehicle?---Shyzi has contributed whatever it was at the sale of the price of the vehicle. The vehicle was sold to Theo at a – at an agreed price between Theo and myself as part of our moto trading agreement.

954    Mr Page’s evidence was that Mr Baker sent this email at a time when he and Mr Baker were arguing about other things and that Mr Baker sent the email even though Mr Baker had prior knowledge of the encumbrance on the vehicle. He said he spoke to Mr Baker after receiving this email and that Mr Baker accepted it when Mr Page said to him “you were aware of this, Theo”. Mr Page pointed to the fact that he and Mr Baker continued doing business for another two years after this email.

955    I do not accept the evidence of Mr Page and Ms Page on this topic. Mr Baker’s contemporaneous email sent directly to Mr Page is the best evidence of the true state of affairs. In the context of the issue with which I am presently concerned, this episode highlights the shifting sand on which the plaintiffs attempted to build the edifice of the Shyzi Offset Agreement.

956    If the Shyzi Offset Agreement was in fact in place and being implemented in respect of the Shyzi Stock Cards and Shyzi Tax Invoices that are in evidence, then one would expect that tax invoices issued by Shyzi in relation to each of the eight vehicles would in one way or another reflect the full value of the consideration that was payable on these vehicles. The lack of clarity in the evidence does not permit the formation of a concluded view about whether the implementation of the arrangement should properly have been documented by the issue of separate tax invoices to Moto Prestige and to CLAH consistent with their respective contributions to the purchase price or by way of a single tax invoice to Moto Prestige that itemised both what Moto Prestige was required to pay and the “financial assistance” being rendered to Moto Prestige by Shyzi in respect of that vehicle. The plaintiffs’ allegation that CLAH was reimbursing (or setting off) “financial assistance” that Shyzi had provided to Moto Prestige suggests that CLAH would have been informed of the amount that it was required to offset in relation to each vehicle supplied to Moto Prestige on this basis. Alternatively, or in addition, one would expect that there would have been some other ledger that tracked how the arrangement was being implemented. The plaintiffs’ evidence that the relevant amounts were agreed with Mr Baker orally and not recorded in writing is not credible. I reject it.

957    Ms Page claimed to be the person to have reached the agreement with Mr Baker in relation to the Shyzi Offset Agreement and who was responsible for preparing all the relevant Shyzi Stock Cards and Shyzi Tax Invoices in relation to the vehicles said to be the subject of the Shyzi Offset Agreement. If that be accepted, she should been in a position to explain the way in which the agreement was implemented. She could not do so. Instead of preparing tax invoices in a way that was in some way referrable to the alleged agreement, Ms Page created tax invoices that in the main significantly under-represented the full consideration for the vehicles that Shyzi sold to Moto Prestige. In doing so, she created a series of false documents. As I have said, I find that Ms Page’s role was largely administrative and the substantive dealings were between Mr Page and Mr Baker.

958    The creation of tax invoices for consideration below what the apparent true value of the vehicles was does not appear to have been in performance of an offset agreement of the kind alleged by the plaintiffs. Ms Page’s repeated assertion that she discussed each and every vehicle with Mr Baker and worked out the price for the vehicles when sold to Moto Prestige and a different price to be “offset” against Shyzi’s debt to CLAH was wholly unbelievable. It is telling that Mr Baker’s email of complaint about the dishonesty of selling him an encumbered vehicle without disclosing that fact is sent directly to Mr Page, and not even copied to Ms Page.

959    Mr Page likewise could not give a rational explanation of the relationship between the available documents and the alleged agreement. He clung to the explanation that documents were prepared to show purchase prices that were dictated by Mr Baker.

960    The plaintiffs offer no coherent or legitimate explanation for why Shyzi did not issue tax invoices to reflect the true price (or the total consideration), being the amount it received from Moto Prestige, plus whatever amount it received by way of offset from debts it owed to CLAH.

961    The Shyzi Stock Cards and Shyzi Tax Invoices in evidence do not disclose a coherent pattern by which one might infer that the invoices form part of the implementation of the alleged Shyzi Offset Agreement. In some cases, Shyzi seeks to set off the difference between what was in truth paid and what the true value of the vehicle was. Stock Card No 023 is an example of this. In other cases Shyzi made no claim at all – see Stock Card No 024. In other cases, Shyzi seeks the full face value of the purchase price as recorded in the corresponding stock card even though Mr Baker is recorded as contributing to the payment of the motor vehicle or Moto Prestige has paid for the vehicle – see Stock Cards No 027 and No 028. Finally, sometimes Shyzi seeks to recover by way of set off amounts that are different to what is stated in the stock card – see Stock Card No 030.

962    This lack of a coherence between the plaintiffs’ pleaded entitlement to offset in relation to the eight vehicles, the documents tendered in evidence and the evidence of Mr Page and Ms Page weighs strongly against a finding that there was any Shyzi Offset Agreement. The evidence relating to the Shyzi Stock Cards and Shyzi Tax Invoices cements the conclusion I have reached that the plaintiffs have not established that the alleged Shyzi Offset Agreement was made.

963    I will address in my consideration of Issue 6 the impact of the motor trading activities on the position as between CLAH and Shyzi as at the date of the appointment of the Shyzi Receivers.

10.14.4.3    Conclusion – Shyzi Offset Agreement

964    The plaintiffs have not established that the alleged Shyzi Offset Agreement was made. I do not accept Ms Page’s and Mr Page’s evidence on this topic for the reasons I have given. Accordingly, it follows that the debt owed by Shyzi to CLAH should not be reduced to accommodate any right of set off alleged to arise under the alleged Shyzi Offset Agreement.

10.15    Issue 6 – Did Shyzi owe any money to CLAH as at the date of the appointment of the Shyzi Receivers?

965    One of the principal areas of contest between the parties in relation to the appointment of the Shyzi Receivers is as to the existence of debt owing by Shyzi to CLAH as at the date the Shyzi Receivers were appointed. This issue arises in the context of the conclusions I have reached as to the proper construction of the Shyzi Securities which includes that the power to appoint receivers conferred by those securities is not conditioned on the making of a demand in respect of debt that is, or upon demand becomes, immediately due and payable under the Carrabolla Facility.

966    I have reached the conclusion that Issue 6 must be answered in the affirmative – Shyzi did owe money to CLAH as at the date of the appointment of the Shyzi Receivers. Those of the contemporaneous records which I regard as being reasonably reliable demonstrate that, notwithstanding the pervasive dishonesty of the three principal protagonists, CLAH directly advanced a greater amount of money to Shyzi than Shyzi repaid to it. I have included in my analysis funds which were advanced directly to Carrabolla after the expiration of the Carrabolla Facility which Shyzi admits on the pleadings were to, by which I infer for, it. The consequence is that Shyzi was in debt to CLAH as at the date the Shyzi Receivers were appointed. For this reason, the plaintiffs must fail on the specified ground on which they challenge the appointment of the Shyzi Receivers under s 418A of the Act.

967    The advances made by CLAH to Shyzi, which were made outside the Carrabolla Facility, were not the subject of a documented loan agreement. I infer that the advances were made on the basis that the funds were payable on demand. In making this finding, I do not accept that Ms Page and Mr Baker were “partners” in any legitimate sense that would displace the inference that the funds advanced by CLAH to Shyzi were subject to an obligation that the funds be repaid by Shyzi to CLAH. Even if I was satisfied that Ms Page and Mr Baker were as between each other engaged in some joint business activities, I am not satisfied that any such arrangement between the two of them operated to in some way mitigate Shyzi’s obligation to repay on demand loans made to it by CLAH.

968    The plaintiffs contend that Shyzi was not in debt to CLAH at the time when CLAH appointed the Shyzi Receivers on 11 September 2020. The plaintiffs’ position is based on offsetting the sum of $231,768.68 from any advances made by CLAH to Shyzi on the basis of the alleged Shyzi Offset Agreement and that Shyzi has through the Shyzi Repayments repaid CLAH in the sum of $430,000 making a total amount of $661,768.68 as having been paid by Shyzi. The plaintiffs contend that any liability Shyzi might have for the other three categories of claims by CLAH, namely: (1) the motor vehicle payments; (2) the potential property development payments; and (3) the miscellaneous payments (addressed in part 10.15.5 below), amounts to a total of $524,573.40. The plaintiffs submit that on this basis, Shyzi was not in debt to CLAH at the time the Shyzi Receivers were appointed.

969    The defendants have included an analysis of the contemporaneous records by which they contend that as at the date the Shyzi Receivers were appointed, Shyzi was indebted to CLAH to the tune of $829,081.83. That figure represents a net figure that includes all advances for which the defendants contend Shyzi is liable, including those which the defendants contend were made under the Carrabolla Facility, and also gives credit for certain specified repayments, including the payment made on 26 July 2016 in relation to the Carrabolla Facility.

970    I have made findings in relation to the advances that were made under the Carrabolla Facility to Carrabolla and the repayment of that facility in parts 10.6 to 10.9 of these reasons. I have also found that the payments that the defendants allege were made under the Carrabolla Facility prior to 26 July 2016 were not made pursuant to the Carrabolla Facility. To the extent that there is reliable evidence which demonstrates that this later group of payments was made from CLAH to Shyzi, or the plaintiffs admit that the payments were made to or for Shyzi, then I infer that the payments were made on the basis that the funds advanced were repayable on demand. I address each of these payments in assessing whether Shyzi was indebted to CLAH at the time the Shyzi Receivers were appointed.

971    Based on the findings I have made and my review of the contemporaneous records, to the extent I regard them as reliable, my findings as to Shyzi’s debt to CLAH as at the date the Shyzi Receivers were appointed are as follows.

10.15.1    Transfers to third parties

972    Both the above payments are claimed by the defendants to be payments made by CLAH which Shyzi is liable to repay. The defendants allege that each of these amounts is an advance to Shyzi which forms part of the funds flowing between CLAH and Shyzi in relation to motor vehicle trading. Both payments have been included in Ms Comino’s calculation of the net amount of $241,400 said to have been provided by CLAH to Shyzi for the purpose of motor vehicle trading. They are distinct from the other advances said to relate to motor trading activities in that Shyzi was not the payee on either of these transfers. I will address these two transactions separately.

973    There are three documents relating to the payment of $94,025.98 which are included as source documents by Ms Comino in her calculation of the net amount of $241,400. None of these source documents refer to Shyzi.

974    There are two internal CLAH emails in which Mr Baker requests the payment to be readied for transfer and a CLAH bank statement that shows the payment was made on 24 March 2016.

975    The payment appears to have been made directly to a car dealership referred to as the Porsche Centre Willoughby. Mr Baker’s own email of 22 March 2016 sent to himself records bank details and a reference number for the Porsche Centre Willoughby. Mr Baker did not give any evidence about this payment by CLAH directly to the Porsche Centre Willoughby on 24 March 2016.

976    While Mr Baker did not give any evidence in relation to this particular payment, he gave evidence in relation to what he alleged was an advance of $100,000 requested by Mr Page pursuant the Ohmut/Parkway Facility for payment to the Porsche Centre Willoughby in about January 2017. In this context, Mr Baker said that Mr Page bought his Porsche vehicles from the Porsche Centre Willoughby. Having regard to the source documents on which Ms Comino relies, this is a topic on which Mr Baker was in a position to give evidence. He did not do so. I infer that his evidence on this topic would not have assisted the defendants.

977    The plaintiffs accept that CLAH advanced money to Shyzi to fund Shyzi’s acquisition of motor vehicles prior to execution of the Carrabolla Facility without a written facility agreement or security agreement being in place, but dispute that this payment was a payment made by CLAH on behalf of or at the direction of Shyzi. Accordingly, the plaintiffs do not accept that Shyzi is liable to repay this amount.

978    Ms Page’s evidence was somewhat equivocal on this – she did not deny that CLAH advanced funds to Shyzi for the purpose of motor vehicle trading, but said that she could not remember “the dates exactly”. Ms Page was however firm in her denial that this payment was a payment that she requested.

979    Mr Page did not give any evidence about this payment – he was not cross-examined on it.

980    The defendants have not established on the evidence that the payment of $94,025.98 from CLAH to the Porsche Centre Willoughby was a payment that Shyzi is liable to repay.

981    The second payment is a payment of $30,000 which Ms Comino describes in her table as a “Further Drawdown”. This payment is not included in the table summarising the alleged debt owing by Shyzi to CLAH that the defendants include in their closing submissions. There was no oral evidence given in relation to this payment and no submission was made in respect of this payment in the parties’ closing submissions.

982    There are three relevant contemporaneous documents in evidence. The documents are essentially internal CLAH records. The first two comprise an email exchange between Mr Baker and Ms Comino in which Mr Baker asks Ms Comino to make a payment from “FSL”, which I infer to be FSL Services Pty Limited, to “Lygo”. In the context of a transaction on 8 March 2017, which I address below, Mr Baker gave evidence that FSL was a related company to CLAH. The third document is a printout of a “payment submission” receipt that demonstrates that the payment was made from FSL to Lygo on 31 January 2018. The payment description is “Golf R”. In light of these documents, Mr Baker was in a position to give evidence in relation to this payment. He did not do so. I infer that his evidence on this topic would not have assisted the defendants. The inclusion of this payment in Ms Comino’s calculation of the net amount of $241,000 said to have been advanced from CLAH to Shyzi for car trading is not supported by the evidence on which she relies.

983    For completeness I note that whereas other payments made by FSL to Shyzi were addressed in the PFASOFC and admitted to have been made by CLAH to Shyzi, albeit wrongly debited to the Carrabolla Facility, this payment was not conceded by the plaintiffs to have been made by FSL on behalf of CLAH.

984    The defendants have not established on the evidence that the payment of $30,000 from FSL to Lygo was a payment that Shyzi is liable to repay.

985    The evidence in relation to this payment is similar to the evidence in relation to the payment to the Porsche Centre Willoughby. The defendants allege that $80,974.02 is an advance to Shyzi which forms part of the funds flowing between CLAH and Shyzi in relation to car trading. It is included in Ms Comino’s table but not in the consolidated Shyzi debt table which is included in the defendants’ closing submissions.

986    There are three documents relating to this payment included as source documents on which Ms Comino relies to arrive at the calculation of CLAH having paid the net amount of $241,400 to Shyzi for the purpose of motor vehicle trading. None of the source documents relied on make reference to Shyzi.

987    Mr Baker did not give any evidence about this payment by CLAH directly to Italian Automobiles on 29 March 2016. One of the source documents on which Ms Comino relies as a source document in respect of this payment is an email that Mr Baker sent to himself on 24 March 2016, which includes this amount and the bank details for Italian Automobiles. This is a topic on which Mr Baker was in a position to give evidence. He did not do so. I infer that his evidence on this topic would not have assisted the defendants.

988    The plaintiffs accept that CLAH advanced money to Shyzi to fund Shyzi’s acquisition of motor vehicles prior to the execution of the Carrabolla Facility without the need for a written facility agreement or security agreement in place, but dispute that this payment was a payment made by CLAH on behalf of Shyzi. Ms Page was cross-examined on this payment. She denied any knowledge of it and denied that she had requested that CLAH advance these funds for Shyzi’s benefit. The plaintiffs do not admit on the pleadings that this payment was made by or on behalf of Shyzi.

989    There is insufficient evidence on which I can conclude that the payment from CLAH to Italian Automobiles was a payment that Shyzi is liable to repay.

990    The defendants allege the amount of $87,500 was paid by Shyzi to CLAH on 24 March 2016 and a few days later that same amount was advanced by CLAH to Shyzi. Ms Comino includes these two transactions in her analysis of the funds she understood to have flowed between CLAH and Shyzi in relation to motor vehicle trading. Neither of these amounts are included in the consolidated Shyzi debt table. These payments in effect cancel each other out if they are to be treated as the defendants contend as payments between CLAH and Shyzi that have been factored in to the calculation of the net advance of $241,400 from CLAH to Shyzi for motor vehicle trading purposes.

991    The source records on which Ms Comino relies make no reference to Shyzi. CLAH’s bank statement describes the first credit payment as “deposit Warners Bay NSW”. The corresponding debit payment is described as withdrawal “for Ohmut”. The payment detail report for the withdrawal also refers only to Ohmut and includes Ohmut’s bank account details. The information in the payment detail report mirrors the information in Mr Baker’s email sent to Ms Sun and Ms Comino directing that the payment be made.

992    There was no oral evidence about these transfers. I infer that Mr Baker’s evidence on this topic would not have assisted the defendants.

993    Despite the opacity of the documentary record, the defendants implicitly admit in their pleading of the debt of $241,400 and reliance on Ms Comino’s analysis that the payment of $87,500 on 24 March 2016 was a payment to CLAH from Shyzi. This is an admission against interest by the defendants. On this basis I am satisfied that this amount of $87,500 should be credited as a payment by Shyzi in the calculation of any debt between CLAH and Shyzi.

994    The position in relation to the advance of $87,500 is different. This is a matter which the defendants bear the onus – it is not capable of resolution by an admission against interest. The defendants have not established that this is a payment by CLAH to Shyzi. Such documentary evidence as there is suggests this was a payment to Ohmut. There is insufficient evidence on which I can conclude that Shyzi is liable to repay the $87,500 that CLAH advanced to Ohmut on 31 March 2016.

995    This transaction is the Ferrari Payment which I have addressed above. The defendants have not established that the Ferrari Payment was an advance under the Carrabolla Loan. It was a payment that Mr Baker caused CLAH to make at Mr Page’s request. Ohmut appears at that time to have been the registered owner of the Ferrari and the borrower under the vehicle finance contract. As I have said, based on the evidence before me, but for the plaintiffs’ concession that this was an advance from CLAH to Shyzi, I would have found that it was more likely than not that the Ferrari Payment was repayable on demand by Ohmut, not Shyzi. However, given the plaintiffs’ concession, I find that this was an amount that Shyzi is liable to repay CLAH on demand: PFASOFC, [31].

996    This transaction is the Andco Payment which I have addressed above in part 10.8.2.4 of these reasons. The evidence does not establish that these payments were made under the Carrabolla Facility or were otherwise payments for which Shyzi was liable. These payments appear to have been in furtherance of Mr Baker’s and Mr Page’s relationship with Mr Player who they perceived as being a useful contact for the purposes of their property development activities, including through Yipeeo. In any event, the amount advanced is minimal and was repaid within one day.

997    This payment from CLAH to Aranik forms part of the defendants’ consolidated Shyzi debt table. The primary documents in evidence demonstrate that the payment was made by CLAH on Mr Baker’s instruction directly to Aranik. It is common ground that the payment was made at the request of Mr Page. The dispute between the parties is as to whether the payment was made under the Carrabolla Facility. This payment was made at a time after the end of the Advance Availability Period stipulated by the Carrabolla Facility. It is not supported by a drawdown notice as was required for advances made under the Carrabolla Facility. Mr Baker contends that Mr Page requested this payment as a payment under the Carrabolla Facility by saying to him “You recall the Carrabolla facility provides for an advance to Aranik. I would like you to advance $56,000 to that account or to Aranik.” Mr Page denies that he made any such request in relation to the Carrabolla Facility. The defendants rely in addition on an internal CLAH email from Mr Baker to CLAH’s accounts personnel which directs that the payment be made to Aranik’s bank account and coded as a “Loan to Carrabolla”.

998    Mr Page asserts that the payment from CLAH to Aranik reflected that he personally sought and obtained a loan from Mr Baker which he used to pay back a personal debt that he owed to Mr Arratoon.

999    In evidence is a text message that Mr Page forwarded to Mr Baker which states:

Lemuel

Aranik Investments
NAB
BSB xxx748

ACC xxxxxx030

$56,100.00

Thanks

1000    The form of the text message suggests that Mr Page received this text message from Mr Arratoon and forwarded it to Mr Baker. The salient point is that when forwarded by Mr Page to Mr Baker there is no reference to the Carrabolla Loan in the text message.

1001    I approach Mr Page’s evidence with caution but in this instance, it is corroborated by Mr Arratoon, whose evidence I accept for the reasons I have given. Mr Arratoon was not cross-examined. Mr Page’s evidence is also consistent with an email sent by Mr Baker to Mr Page copied to Mr Arratoon on 8 August 2016 in which Mr Baker attached the payment detail report for the transfer to Aranik. Mr Baker makes no reference to the transfer being a drawdown on the Carrabolla Facility. The subject line of the email to Mr Page from Mr Baker is “Payment to Aranik Investments”. It is only in some of the internal CLAH documents that this advance is described as a “Loan to Carrabolla”. The payment detail report does not make any reference to the Carrabolla Facility, Carrabolla or Shyzi.

1002    For the reasons I have given, I do not regard Mr Baker’s internal coding emails to be reliable as evidence of the true position. Moreover, there were no available funds that could be drawn as at the date of Mr Baker’s email, which is dated 8 August 2016, and there is no drawdown notice in respect of the making of this advance under the Carrabolla Facility.

1003    Mr Baker was briefly cross-examined on an email he sent to Mr Page on 6 September 2016 in which he set out a list of “Reminders – Things To Do”. One of the entries states “Following up due diligence for the site being reviewed by Jamie for which we paid $56,000 deposit”. It was put to Mr Baker that this was a reference to the $56,100 payment by CLAH to Aranik. He agreed. It was put to him that the $56,100 payment was a deposit which Yipeeo paid in respect of a property owned by Mr Arratoon. Mr Baker denied that Yipeeo had anything to do with the deposit. He maintained it was an investment made at Mr Page’s request under the Carrabolla Facility. Mr Baker’s evidence does not reconcile with the language he has used in his “To Do” list email. Mr Baker accepted his reference was to the Aranik payment of $56,100. In that circumstance, Mr Baker’s relatively contemporaneous description of the money which “we paid” speaks against this being an advance to Carrabolla for which Shyzi is liable.

1004    Ms Page said she had no knowledge of this payment.

1005    There is insufficient evidence on which I can conclude that Shyzi is liable to repay the $56,100 that CLAH advanced to Aranik on 8 August 2016. The defendants have not established that Shyzi is liable to repay this amount to CLAH.

10.15.2    Potential property development payments

1006    These payments were made to Shyzi for the purposes of acquiring potential property development sites, in Merryweather and Kotarah, which ultimately did not proceed.

1007    This transaction is the so called Walkom Payment which I have addressed above. The defendants include it in their consolidated Shyzi debt table. In doing so, they acknowledge the payee is Ohmut. For the reasons I have already given, the evidence does not satisfy me that this transaction was an advance made under the terms of the Carrabolla Facility or relevantly an advance to Shyzi so as to be a liability of Shyzi’s to CLAH within the definition of Secured Money in the Shyzi Securities.

1008    This payment from CLAH to Shyzi forms part of the debt the defendants allege in their consolidated Shyzi debt table. The controversy concerning this payment is as to whether Mr Page represented to Mr Baker that the payment was in fact being made to Streets Real Estate, ostensibly a third party real estate agent, when in fact the payment was made from CLAH to one of Shyzi’s bank accounts. The documentary evidence demonstrates that the payment went from CLAH to Shyzi’s bank account.

1009    It is not possible to reconcile with anything approaching an actual satisfaction whether on this occasion it is Mr Baker or Mr Page who is telling the truth about this transaction. Both men are not witnesses of credit. Their dealings as between each other are far from transparent and cannot be assumed to be honest. Further, the evidence demonstrates that on many occasions they worked together to create a false veneer in the contemporaneous documents to justify extracting funds from CLAH. On other occasions, they acted to similar effect, independently of each other. The payment to Streets Real Estate is one of the “disguised payments” that was made from CLAH to one of the Page related entities but which was documented as being made to a third party payee.

1010    The state of the evidence before me is such that the best evidence available is the contemporaneous evidence that demonstrates that CLAH paid $62,000 to Shyzi on 11 August 2016. CLAH documented the advance as being on the account of the Carrabolla Facility. I do not accept that the payment was made on account of the Carrabolla Facility given the time it was made, the absence of any drawdown notice and the fact that the only reference to the advance being made on the Carrabolla Facility derives from Mr Baker’s assertion.

1011    I do however find that by whatever led to this payment being made, CLAH did in fact advance the sum of $62,000 to Shyzi. In the circumstances, I am satisfied that these funds were loaned to Shyzi and repayable on demand. It is not necessary for me to determine whether these funds were obtained from CLAH by deception and if so, what the implications are in relation to whether the deception involved Mr Page only or Mr Page and Mr Baker. Shyzi was at all times obliged to repay the funds to CLAH. The role played by Mr Page vis-à-vis Shyzi in relation to this transaction and more broadly in relation to Shyzi and operating its bank accounts is such that Mr Page’s knowledge regarding this payment is properly attributed to Shyzi. Similarly, the role played by Mr Baker vis-à-vis CLAH in relation to this transaction and more broadly in causing funds to be transferred from CLAH to Shyzi is such that Mr Baker’s knowledge regarding this payment is properly attributed to CLAH.

10.15.3    Motor vehicle payments

1012    It is common ground that CLAH advanced money to Shyzi to fund Shyzi’s motor vehicle trading activities: PFASOFC, [31]. Funds were advanced prior to the creation of the Carrabolla Facility, without any formal written facility agreement or security agreement being in place: PFASOFC, [32]. The motor vehicle payments that the plaintiffs accept were made by CLAH to Shyzi but which the plaintiffs allege were wrongly debited to the Carrabolla Facility are as follows (excluding the Ferrari Payment which I have addressed above):

1013    The transfers listed in the above table were made from CLAH or FSL to a bank account operated by Shyzi or Carrabolla as indicated in the payer and payee columns of the table. Based on the plaintiffs’ concession that these transfers were all made by CLAH and were all made to Shyzi, I infer that: (1) payments made by FSL were made at the direction of CLAH; and (2) payments that were made by transfer to Carrabolla’s bank account are debts that Shyzi is liable to repay CLAH on demand.

1014    But for the plaintiffs’ concession against interest, I would have found that the payments that came from FSL were not made by CLAH and that payments that went directly to Carrabolla’s bank account were payments to Carrabolla made after the expiration of the Carrabolla Facility, and for which Shyzi was not directly liable. As it is, the plaintiffs positively allege that all of the above payments were made by CLAH to Shyzi. That being so, each of the above payments must be taken into account in assessing whether Shyzi was indebted to CLAH at the time the Shyzi Receivers were appointed.

1015    The defendants contend that each of the eight payments were made after Mr Page expressly asked Mr Baker to advance money pursuant to the “Carrabolla-Shyzi facility”. Mr Page denies making requests for the payments to be advanced under the Carrabolla-Shyzi facility as alleged. Similarly, Ms Page denies that these payments were advances under the Carrabolla Facility. The plaintiffs’ position in relation to these payments is that the advances were made pursuant to the alleged Shyzi Offset Agreement, which I have addressed in my consideration of Issue 5.

1016    In relation to six of the eight payments, the defendants maintain that Mr Page represented to Mr Baker that the payments were being made to the bank accounts of third party motor vehicle dealerships and that Mr Baker did not appreciate that Mr Page had in fact supplied him with the BSB and account numbers for various Shyzi bank accounts and not the relevant bank account details in relation to the third party motor vehicle dealerships. Mr Baker maintains that he only became aware that the fund transfers were made to Shyzi accounts during an audit that he says he and Ms Comino undertook in around May or June of 2020.

1017    Mr Page was not cross-examined on all of these payments. He was specifically cross-examined on one of them. When cross-examined, Mr Page appeared to maintain that he did tell Mr Baker that the payments were to be made to Shyzi and that Mr Baker knew the payments were made to Shyzi. His answer was somewhat speculative, but I infer based on the next question and answer that he was attempting to assert that Mr Baker knew the transfer was going to Shyzi. When it was put to him that he did not tell Mr Baker that the transfer was going to Shyzi, Mr Page said:

If I – if I told him that we were transferring money to Shyzi, I would have told him it was to Shyzi

You never told Mr Baker that, did you? --- No I did. I would have told him it was Shyzi.

1018    The primary documents in evidence in relation to these payments are limited to internal documents of CLAH or FSL, by which I include banking transaction records that are based on information entered by CLAH employees on Mr Baker’s instruction. The documents are all based on Mr Baker’s instructions. They are not documents that emanate from Mr Page and the evidence does not establish that Mr Page saw CLAH’s internal documents in relation to these payments at the relevant time.

1019    A further compounding factor in assessing this evidence is that there are other instances where CLAH’s internal records in relation to the transfer of funds from CLAH to Page related entities have been prepared in a way that the account holder’s name is misrepresented. I have already referred to the email Mr Baker sent to Mr Page on 12 February 2019 where Mr Baker said that the bank account did not need to match the company name, he just needed a valid BSB and account number.

1020    The upshot is that it is not clear whether these six payments were made on the basis of Mr Page concealing from Mr Baker that Shyzi was the account holder or whether Mr Baker was complicit and knew that the payments were really being made from CLAH to Shyzi. That is not a matter that I need to determine. What is clear is that CLAH made the payments to Shyzi. That is essentially admitted. I infer that the payments were repayable on demand and fall within the broad definition of Secured Money.

1021    I find that each of the motor vehicle payments which I have identified must be taken into account in calculating any debt owed by Shyzi to CLAH.

10.15.4    Shyzi Repayments

1022    This is the first of the Shyzi Repayments, which I have addressed in Issue 5 above. For the reasons, I have given I am satisfied that this payment must be credited against the debt owed to CLAH by Shyzi.

1023    This is Shyzi Repayment (2), which I have addressed in Issue 5 above. It is common ground that this amount was repaid by Shyzi to CLAH. The defendants include it as a credit in their summary table of Shyzi’s indebtedness to CLAH relied upon in their written closing submissions.

1024    These are Shyzi Repayments (3), (5), (6), (7) and (8), which I have addressed in Issue 5 above. It is common ground that these amounts were repaid by Shyzi to CLAH. In calculating the net sum of $241,400, Ms Comino has deducted these repayments when performing her calculation.

1025    This is Shyzi Repayment (4), which I have addressed in Issue 5 above. For the reasons, I have given I am satisfied that this payment must be credited against the debt owed to CLAH by Ohmut.

10.15.5    Payments on behalf of Carrabolla (post expiration of Carrabolla Facility)

1026    It is convenient to address these payments together. The evidence establishes that invoices addressed to Carrabolla in respect of each of these amounts were paid by CLAH to ASIC and the ATO respectively. I infer that CLAH made each of these payments for Carrabolla’s benefit. The defendants contend the payments were made pursuant to the Carrabolla Facility. Mr Baker’s oral testimony was that Mr Page expressly requested in respect of each of these payments that CLAH pay the invoices and treat the payments as drawdowns on the Carrabolla Facility. I do not accept Mr Baker’s evidence.

1027    I do not accept that these advances were made under the Carrabolla Facility. They were made well after the end of the Advance Availability Period and the expiration of the facility. The defendants have not established that Shyzi is liable to repay CLAH these amounts.

10.15.6    DMXS payments received by Shyzi

1028    The ten payments in the above table are funds transferred by CLAH to one of Shyzi’s bank accounts in the period from 22 January 2019 to 24 April 2019. In the nomenclature of these proceedings, these payments are referred to as the DMXS payments or the DMXS Transactions. Each of these payments is included in the defendants’ tally of the total debt owed by Shyzi to CLAH as at the date of the appointment of the Shyzi Receivers.

1029    Dr Munro has been the sole director and shareholder of DMXS at all material times. DMXS is the trustee of the DMXS Trust.

1030    The plaintiffs do not dispute that the payments were made by CLAH to a bank account “associated with” Shyzi: PFASOFC, [40]-[43]. The evidence demonstrates that all of the DMXS payments were made by transfer of funds into Shyzi’s bank account ending in 555.

1031    The plaintiffs complain that CLAH has wrongly debited the DMXS payments against the Carrabolla Facility. Given the findings I have made in relation to the Carrabolla Facility, that complaint is well made. These payments were not made pursuant to the Carrabolla Facility.

1032    However, the fact that these payments were not advances made under the Carrabolla Facility does not mean that Shyzi is not liable to repay these amounts to CLAH.

1033    The parties’ competing explanations about the circumstances relating to the DMXS payments are irreconcilable. They turn in the main on the evidence of the three protagonists. This is a topic on which I find the evidence given by each of Mr Baker, Ms Page and Mr Page to be entirely unreliable. I do not accept their evidence unless it is against their respective interests. The other relevant evidence given on this topic is given by Dr Munro. I will first outline the parties’ respective versions of the relevant circumstances pertaining to the DMXS payments before considering Dr Munro’s evidence.

1034    The defendants rely in the main on Mr Baker’s evidence and contemporaneous documents based on instructions given at the relevant time by Mr Baker. The defendants allege that the DMXS payments were made at the request of Mr Page who represented that the destination account was an account held by DMXS. The defendants allege that it was not until 2020 that Mr Baker and Ms Comino discovered that the DMXS payments were in fact transferred into Shyzi’s bank account ending in 555. CLAH and its staff obviously knew that they were making the transfers to the designated BSB and account number, but the defendants maintain that in doing so, CLAH and its staff acted on the basis that the account details with which they had been supplied pertained to an account held by DMXS. The defendants say they did this notwithstanding that CLAH had regularly made payments into Shyzi’s bank account ending in 555 over a prolonged period of time. The defendants maintain that Mr Baker and Ms Comino did not appreciate that the payments that CLAH was making into this account were being made to Shyzi and not DMXS. As I have mentioned above, Mr Baker makes similar assertions in his evidence in relation to some other payments made by CLAH to Shyzi’s accounts.

1035    In his oral evidence, Mr Baker unfurled an elaborate account of how these payments allegedly related to various expenses of Tallywalker. Mr Baker referred to receiving invoices from Mr Page in relation to some of these alleged expenses. The defendants did not tender any documents which corroborated Mr Baker’s evidence that these payments related to expenses for which Tallywalker was liable. Ms Comino recited the payment transaction details for these payments in her affidavit, but did not give evidence to explain the rationale for these payments being made. That is of particular significance in circumstances where on the defendants’ case, Ms Comino was the sole director of Tallywalker during the period when the first six of the DMXS payments were made. I infer that Ms Comino’s evidence as to the connection between these payments and expenses incurred by Tallywalker would not have assisted the defendants and accordingly was not led from her.

1036    I interpolate to note that there is considerable controversy between the parties as to the validity of the appointment of Ms Comino as a director of Tallywalker and her alleged status as a sole director of Tallywalker. This dispute is addressed in part 12 of these reasons.

1037    A striking feature of the evidence that suggests that Mr Baker’s version of events concerning the DMXS payments (which he gave in his evidence in chief) is the product of recent invention is that the essential propositions that underpinned Mr Baker’s evidence were not put to Mr Page, Dr Munro or Mr Brooks during their cross-examination. That suggests that experienced senior counsel cross-examining these witnesses was not instructed at the time of the cross-examination of the effect of the evidence that Mr Baker would give.

1038    In a similar vein, the defendants did not allude to Mr Baker’s late-breaking thesis in the latest iteration of their concise statement. Instead, they made a bare denial and said further that “these amounts were advanced to bank accounts held or controlled by Carrabolla or Shyzi and were for the use and benefit of Carrabolla and/or Shyzi”: DFACS, [36]-[39].

1039    There was nothing in the defendants’ pleading or in the cross-examination of the plaintiffs’ witnesses that serves as a harbinger of the account given by Mr Baker in oral evidence of the circumstances in which he ultimately contended the DMXS payments were made.

1040    Mr Baker’s explanation for why he did not question that these amounts which were ostensibly being paid to DMXS, and not to Tallywalker who allegedly was liable to pay the invoices, was as follows:

And can you tell her Honour why it was that CLAH was advancing money, you believed to DMXS rather than, say, to Tallywalker or Overland directly?---Yes.

What was that explanation?---So in late 2018 and January 2019, at this stage, there were a number of outstanding Overland creditors. So we were unable to obtain any further credit from those creditors. Mr Page has also said to me that my name – my name in the industry was mud, and we couldn’t refer to anything by reference to my name or the CLAH name or the Overland name. So rather than using any of those names, we will use Dr Munro’s company, being DMXS, to effect the transactions.

1041    Mr Baker’s evidence was that CLAH was advancing funds for Tallywalker to obtain equipment or services in relation to its equipment, in some cases (according to Mr Baker) after it had already received an invoice. He did not give any evidence that Tallywalker was seeking to obtain these items or services on credit, or pursuant to a credit facility. There was no evidence that these suppliers were existing creditors of Overland. He said that his name was “mud” in the industry and similarly CLAH’s name and “the Overland name”, but he did not identify the same taint in relation to Tallywalker’s name. Mr Baker’s evidence did not make sense even if accepted at face value. His explanation did not explain why the alleged payments which he maintained were really for Tallywalker could not have been made transparently by Tallywalker, even allowing for the likely need for Tallywalker to be put in funds by CLAH given that it did not itself generate any income (this is addressed in part 12). I do not accept Mr Baker’s evidence on this topic as truthful. I reject his account of his understanding as to the involvement of DMXS.

1042    No credible explanation was given in the defendants’ case to explain why CLAH attributed these payments as drawings on the Carrabolla Facility. To the contrary, the attribution of the DMXS payments as drawings on the Carrabolla Facility appears to have been an arbitrary reconstruction informed by nothing more than that the transfers were in fact made to Shyzi, a fact of which the defendants decry awareness before they say they discovered the true position in mid-2020.

1043    The defendants have not established that the DMXS payments were drawings on the Carrabolla Facility. Again, there is no evidence to support the defendants’ opportunistic attribution of the DMXS payments to the Carrabolla Facility. Moreover, the DMXS payments were made years after the Carrabolla Facility had expired and the DMXS payments are not supported by drawdown notices.

1044    I now turn to the plaintiffs’ version of the story of the circumstances in which the DMXS payments were made.

1045    The plaintiffs seem to allege that Mr Baker was indebted to DMXS in an amount of $213,000, in respect of a forfeited deposit relating to a property at Bulls Garden Rd, Whitebridge, and an additional amount of $50,000, which DMXS lent to Mr Baker in November 2017 to purchase appliances for his home in Clovelly. As is evident from the evidence outlined below, the basal allegation in the evidence is that Mr Baker is liable for one-third of the forfeited deposit, that is $71,000, plus $50,000 for appliances, resulting in a total of $121,000, which is well less than the total of the payments from CLAH to Shyzi described as the DMXS payments.

1046    The forfeited deposit arises from a failed property investment in late 2017 in the Bulls Garden property which on the plaintiffs’ case involved a joint investment between Mr Baker, Mr Page and Dr Munro. The plaintiffs maintain this allegation notwithstanding that the purchaser on the relevant contract of sale was Frontier Investments Pty Ltd as trustee for Frontier Investments Unit Trust, a company of which Dr Munro was the sole director and shareholder. There is no documentary evidence as to any agreement between Frontier and Dr Munro, Mr Page and Mr Baker. Equally there was no oral evidence given in relation to arrangement between the three men and Frontier. Mr Page’s evidence was vague. He said that Dr Munro was in a position to obtain finance. He also suggested that Mr Baker was responsible for arranging the finance.

1047    Mr Baker denies that he was involved at all, confidently pointing to the fact that his name is not on any contract.

1048    The plaintiffs allege that prior to the purchase of the property, Mr Baker, Mr Page and Dr Munro agreed that they would invest equally in the Bulls Garden property and that they would each contribute equally in relation to the deposit and the whole of the purchase price.

1049    A contract for sale with the vendor was entered into by Frontier as trustee for Frontier Investments Unit Trust on 21 December 2017. Mr Page gives evidence that Dr Munro set up a specific vehicle for the purpose of purchasing the property, but could not recall the name of the company or the trust. The contract for sale is not in evidence. There is no documentary evidence of the alleged agreement between the three men to invest equally in the purchase of the Bulls Garden property through Frontier. The oral evidence in relation to the arrangement is vague. Mr Page said that part of the arrangement was that Mr Baker was responsible for arranging finance to fund the purchase of the property.

1050    From early 2018, Dr Munro appears to have started making instalment payments towards the deposit on the Bulls Garden property. Dr Munro’s ANZ lodgement receipts are in evidence and indicate that payments were made from Dr Munro to Street Residential Newcastle Pty Ltd with the reference “Bullsgarden”. Dr Munro describes these advances as being from DMXS. If that is correct, I infer that the payments were being made on behalf of Frontier, which was the designated purchaser of the Bulls Garden property.

1051    Dr Munro gave evidence that in around May 2018, prior to settlement, Dr Munro, Mr Page and Mr Baker had a phone call in which Mr Baker said that he was not able to contribute funds to the deposit due to cash flow issues arising as a result of the mining business. Dr Munro said that he had funded Mr Page’s contribution to the deposit and that Mr Page acknowledged that he owed him money for that. He also said that Mr Baker said that he would pay Dr Munro “one-third of what [Dr Munro] had already paid” at a “later” time.

1052    Mr Page gave evidence that he and Mr Baker mentioned the property investment to Dr Munro and that it was agreed that “it would be three ways”. Mr Page gave evidence that Dr Munro had paid the deposit for the Bulls Garden property “because [Mr Baker] was unable to get the finance”. Mr Page said that Mr Baker said that he was not able to arrange finance to complete the purchase of the property, but would repay Dr Munro one third of the amount of the deposit when he had the funds.

1053    In total, Dr Munro paid $213,291.41 of what was due by way of deposit on the Bulls Garden property, leaving a shortfall of $173,708.59. As Frontier defaulted, it forfeited that which had been paid by way of deposit and was also exposed to a claim by the vendor. The evidence does not establish whether a claim was subsequently made against Frontier and if so, whether Frontier settled or paid any such claim.

1054    Mr Baker accepted that there was a property investment opportunity in relation to the Bulls Garden property, but denied that he agreed to invest jointly with Dr Munro and Mr Page. Mr Baker said it “never came to that point” and that if he had agreed to invest, that “there would be an agreement. I would appear on some contract”. Mr Baker also denies agreeing to contribute one third to the deposit that was forfeited.

1055    Based on the evidence led on this topic, I find that Frontier as purchaser exchanged a contract for the purchase of the Bulls Garden property, paid $213,291.41 of what was due by way of deposit leaving a shortfall of $173,708.59 and ultimately defaulted on the purchase and as a consequence lost its deposit. The evidence is insufficient to conclude what if any agreement existed between Dr Munro, Mr Page and Mr Baker in relation to whether and if so how they would each participate in relation to the proposed purchase and development and in any event it is not necessary to make such a finding for the purpose of these proceedings. The plaintiffs’ evidence at its highest is that Mr Baker agreed to pay one-third of the funds forfeited by Frontier. Dr Munro and Mr Page assert that is the case. Mr Baker denies that he did so. In the absence of any supporting contemporaneous record, having regard to lack of specificity and detail in Dr Munro’s account, I am not persuaded that the plaintiffs have established that an agreement to this effect was reached. In any event, even if I had been satisfied that Mr Baker agreed to pay Dr Munro $71,000 in respect of the forfeited deposit, there is no evidence which establishes that CLAH was liable to make this payment.

1056    The explanation given for Dr Munro’s involvement in Mr Baker acquiring high end appliances for his home was that Dr Munro had a relationship with the principal of an appliance retailer having been his doctor and was in a position to get a better deal than Mr Baker could obtain directly from the retailer. The documents relied on in this respect are all between Mr Baker and Mr Page, not Dr Munro.

1057    Dr Munro gave evidence that when it came time for Mr Baker to pay for the appliances, Mr Baker was experiencing cashflow difficulties and Dr Munro paid for the appliances for Mr Baker on the basis that Mr Baker would repay him. Dr Munro’s evidence on this issue was vague but the documents in evidence support a finding that Dr Munro did in fact obtain a quote for appliances at Mr Baker’s request and further that Dr Munro ultimately paid the appliance retailer for the appliances which were delivered to Mr Baker. There is no documentary evidence concerning the basis upon which Dr Munro did this. Senior counsel for the plaintiffs had considerable difficulty in extracting Dr Munro’s evidence in chief. I will not extract all of the relevant passages of transcript. The critical part of Dr Munro’s evidence was as follows:

All right. What happened then?---I forwarded the list I was given to Mr Winnings. He forwarded the list to a salesperson, Mr Brentnall, who then did a quote, which he forwarded to me, which then I forwarded to Mr Baker by email.

All right. And what happened then?---That was back in – that was back in May, I think it was, and then it came around to November when the appliances needed to be picked up. That’s when Mr Baker contacted me.

And what did he say to you when he contacted you?---That he had cashflow issues, and if I could help out with funding the appliances.

I see?---And a – and – and a loan.

And a loan. Did you – was there then a loan?---Yes. I - - -

Who made the loan?---DMXSs account paid him 50,000.

50,000?---Yes.

1058    The plaintiffs further allege that in late December 2018, Dr Munro and Mr Baker agreed that the debts owed by Mr Baker to DMXS would be repaid by way of transfer of money to Ms Page when she needed it, in lieu of repayment being made to DMXS. I will first address the evidence given by Mr Page and Ms Page.

1059    Mr Page identified the DMXS payments as being made pursuant to the agreement reached between Dr Munro and Mr Baker that Mr Baker would repay DMXS by making payments to Ms Page (through Shyzi). He gave evidence of having spoken to both Dr Munro and Mr Baker about the agreement, and that Mr Baker had told him, when he was in a position to transfer money across, to “[s]end through the bank account details and how much money Fiona needs.”

1060    On the plaintiffs’ case, the first text that Mr Page sent in relation to the DMXS payments was sent on 22 January 2019. Mr Page sent the following text message to Mr Baker:

DMXS

BSB:xxx621

ACC:xxxxxx555

1061    Two minutes after this text message, Mr Baker sent an email to Ms Comino in which he copied the information he had received by text from Mr Page to Ms Comino.

1062    The account details supplied in Mr Page’s text message and Mr Baker’s email are Shyzi’s account ending in 555, which features in other parts of the evidence.

1063    Mr Page maintained that even though there was no reference to Shyzi in the text message, Mr Baker knew this was Shyzi’s bank account, not DMXS’s. Mr Page also sent an identical text message to Mr Baker on 1 February 2019.

1064    There are further requests for payment in evidence that identified the payment as being made for DMXS, but the account details which were supplied were the account details for Shyzi.

1065    Ms Page also identified the DMXS payments as payments made pursuant to the agreement reached between Dr Munro and Mr Baker. When Ms Page was cross-examined on this agreement, Ms Page said:

But you gave Mr Lemuel Page the bank account details because you wanted him to be able to operate those accounts, correct?---It was information being relayed to Theo in relation to Theo that owed Don money, and Theo was paying back Don via Shyzi.

Ms Page, you gave Mr Lemuel Page Shyzi’s bank account details because you wanted Lemuel Page to be able to operate that account in Shyzi’s dealings with CLAH, correct?---Lemuel did not operate my bank accounts. I did give him the information. It was Theo paying Don some money that Theo owed Don, and there was an arrangement between Don and Theo that the funds going to Don would come via Shyzi to me, because - - -

Ms Page, you’ve – Ms Page, just deal with my question?---I have dealt with it.

And - - -?---I said that Lemuel - - -

- - - you knew – you knew, didn’t you, that Lemuel Page was providing Shyzi’s bank account details to CLAH in order for CLAH to make advances to or for the benefit of Shyzi, correct?---That’s not true.

I see?---It was Lemuel providing Theo information for Theo to pay Don via Shyzi. It was an arrangement between Don and Theo. Theo owed Don money and Don knew that, in ’18, I was under some financial stress. He spoke to me. We spoke.

1066    Ms Page denied that the payments were loans to Carrabolla or Shyzi.

1067    Against that overview, I turn to Dr Munro’s evidence. I have addressed the issue of Dr Munro’s credit generally in part 7.3.3 of these reasons. His evidence on this topic was similarly vague. The alleged indebtedness between Dr Munro and/or DMXS (on the one hand) and Mr Baker (on the other) was not documented. No one suggested in the evidence before me that there had been any attempt to document the arrangement.

1068    On Dr Munro’s account, Mr Baker was personally indebted to DMXS in respect of two separate tranches of debt. The first is the alleged obligation of Mr Baker to pay DMXS one third of the forfeited Bulls Garden deposit, which equates to an obligation to pay the sum of $71,000. The second is the alleged obligation to reimburse DMXS for the $50,000 which DMXS paid for the supply of appliances for Mr Baker’s new house at Clovelly. Taking Dr Munro’s evidence at its highest, Mr Baker’s personal indebtedness to DMXS is in the total sum of $121,000.

1069    Dr Munro gave the following account in relation the alleged arrangement whereby Mr Baker would repay DMXS by transferring funds to or at Ms Page’s direction:

What I will do is I will ask you – I just want you to focus now on the matters of the – the [Bulls Garden] deposit and the $50,000 and the appliances?---Yes.

The $50,000 that was provided, all right. Just addressing those only. Were those amounts repaid to DMXS?---They were repaid to – to Fiona Page.

What do you mean by that?---Around 2018, late – I think it was December, Fiona contacted me and – and Lemuel contact me regarding – they were having cashflow issues or money problems.

Who said that to you?---Fiona and Lemuel.

All right. And what did you say?---They were requesting some assistance.

That’s what they were requesting?---Yes.

Yes. What did you say in response?---I said I was happy to help out. At that stage, money was – the amount of money that we’re talking about was owed to me by Mr Baker. So an agreement was – would try and talk to Mr Baker to try and get the money that he owed me to be paid to Fiona.

Did you have a conversation about that?---Yes, late December 2018.

What exactly did you say to him?---I said, “Look, Theo, you owe me some money on the appliances and the property. Fiona needs some money. Can you please transfer the money to her when she needs it as – in lieu to pay me or DMXS.”

What did he say in reply?---He said yes.

1070    It is not necessary for me to determine whether Dr Munro’s evidence is confected. That is for two reasons. First, as I have mentioned above, even if I were to accept that Mr Baker was indebted to DMXS in the way in which Dr Munro asserted in his evidence, which was echoed in Mr Page’s and Ms Page’s evidence, there is no evidence to support the contention that CLAH was responsible for the repayment of any such indebtedness on the part of Mr Baker to DMXS. Second, the amount of the DMXS payments was well in excess of the alleged total amount of the debt which Dr Munro claimed that Mr Baker owed personally to DMXS. That is significant for two reasons. First, it tends against the DMXS payments being made by CLAH to Shyzi in respect of the alleged lesser indebtedness of Mr Baker to Dr Munro and second, even if the plaintiffs’ contention was accepted it would not account for the totality of the DMXS payments.

1071    Doing the best I can on the evidence before me, I find that each of the DMXS payments were made by CLAH to Shyzi. These funds were either loaned to Shyzi and repayable on demand or obtained by deception from CLAH. I do not make a finding as to the second alternative. It is not necessary for me to do so. On either scenario, Shyzi is liable to repay the amounts to CLAH. I find that Shyzi was at all times obliged to repay the funds which it accepts were advanced to it by CLAH.

10.15.7    Payments to Mr Page and Mr Linton

1072    Each of the above payments are included in Ms Comino’s table which she relies on to calculate the net amount of $241,400 advanced by CLAH to Shyzi for motor vehicle trading. Each of these payments are described as “Further Drawdowns”. The source documents on which Ms Comino relies in respect of these payments are payment detail reports that do not refer to Shyzi. It will be recalled that Ms Comino disclaimed any personal knowledge of the arrangements between CLAH and Shyzi in relation to motor vehicle trading.

1073    In relation to the payments made to Mr Page, the evidence does not support a finding that these payments were made to Mr Page at the direction of, or for and on behalf of, Shyzi such that Shyzi would be liable to repay CLAH for these three advances. The first two payment detail reports describe the payments simply as “transfers” and the beneficiary is named as “Lemuel Page”. The third does not include a transaction description. The beneficiary is named as “Lemuel Page”. All three payments are made to the same account which ends in 4324. There is no evidence that this account is an account of Shyzi’s. It is the same account as was used to pay some legal fees that Ms Page says that Mr Page paid for her. I infer that the account is indeed an account of Mr Page’s and the payments were made to him.

1074    In relation to the payment made to Mr Linton, the description field reads simply “T. Linton”. The payment type is “New beneficiary” and the account number is labelled “New”. The evidence does not support a finding that these payments were made to Mr Linton at the direction of, or for and on behalf of, Shyzi such that Shyzi would be liable to repay CLAH for this advance.

1075    These payments were not the subject of oral evidence given by Mr Page, Ms Page or Mr Baker.

1076    The defendants have not established that Shyzi is liable to repay to CLAH these payments which were made to Mr Page and Mr Linton, in circumstances that are not explained in the evidence.

10.15.8    Conclusion

1077    For the reasons I have given, funds which CLAH advanced directly to Shyzi were captured by the definition of Secured Money in the Shyzi Mortgage and in turn captured by the Shyzi GSA. On the plain meaning of the Shyzi GSA and Shyzi Mortgage, in particular cl 3.1 of the Shyzi GSA and cl 4.1 of the Shyzi Mortgage, Shyzi is liable in respect of the Secured Money – which is relevantly defined to include any amounts that Shyzi owes to CLAH. Further, Shyzi’s obligation to repay the Secured Money (stated in cl 3.1 of the Shyzi GSA and cl 4.1 of the Shyzi Mortgage, respectively) is then secured by cl 2.1 of the Shyzi GSA and cl 2 of the Shyzi Mortgage respectively.

1078    Based on the findings I have made above, which I summarise in the following table, I find that Shyzi was indebted to CLAH in the sum of $435,763.83 as at the date the Shyzi Receivers were appointed. That sum has been calculated net of any repayments from Shyzi to CLAH.

Summary of findings in relation to debt owed by Shyzi to CLAH