Alexander Leeper, D.D. Dublin, 1887. Catalogue of the Scottish National Portrait Gallery. Edinburgh, 1890. From the Author: Defoe's Journal of the Plague Year, with introduction and notes. London, 1891. Hartshorne, Esq.,. Fire & All Risks Insurance Co Ltd v Pioneer Concrete Services Ltd - (1986) 10 ACLR 760. Inland Revenue Commissioners v Crossman -  AC 26. In these circumstances, I do not regard his uncorroborated word as sufficient to discharge an onus of proof, save concerning matters that, by reference to other. Harold J Cleworth Artist Signed Corvette Grand Sport Racing Print, Honda Push Mower, Ammo, Colt Mustand 380, Vintage Coca Cola Pop Machine, Collectibles, Advertising, Tools, Longaberger Baskets, Coins, Furniture, Gold/Sterling Jewelry and much more.
Judgment by: 1. This is primarily a claim for damages for breach of a contract relating to transfer of shares, and to enforce a trust over those shares. It raises the following issues:- (a) Did the plaintiff make seven loans of money to the defendant, on the basis that they would be secured by certain shares that the defendant would hold in trust for her? I conclude that the plaintiff made the seven payments of money to the defendant that she asserted she made, that the first five of them were not loans when originally made, and that the parties came to agree that the amounts of money that the plaintiff had provided to the defendant would be treated as in effect the purchase price of shares that the defendant would hold in trust for the plaintiff. (b) Did the parties contract that 222,000 shares would be transferred to the plaintiff on the plaintiff's request after 1 August 2003?
I conclude that they did. (c) Independently of that contract, did the defendant show an intention to declare a trust of 222,000 shares for the plaintiff, on terms that they were transferable to the plaintiff after 1 August 2003? I conclude that he did.
(d) Did the plaintiff request transfer of the shares soon after 1 August 2003? I conclude she made such a request soon after 11 August 2003.
(e) Did the plaintiff tell the defendant in January 2005 that she did not want to receive the shares? I conclude she did not.
(f) What damage has the plaintiff sustained by reason of the defendant's breach of contract? I conclude $548,452. (g) Is the trust that the defendant purported to declare one that is invalid because it has insufficient certainty of subject matter? I conclude it is valid. (h) What equitable compensation is payable to the plaintiff by reason of the defendant's failure to transfer the shares to her when asked? I conclude that, subject to issue (j) below, the quantum is the same as the damages for breach of contract.
(i) Has the plaintiff established that certain shares held by Roger Williamson or Merkaba Limited are held on trust for the defendant? I conclude she has not established this. (j) Does the fact that the shares in relation to which the trust was declared were restricted securities at the time of declaration of the trust, under which the shares could not be transferred from the defendant until after 1 November 2004, affect the remedy to which the plaintiff would be entitled for breach of trust? I conclude that it does, by requiring the quantum of the equitable compensation payable to the plaintiff to be measured by reference to the value of the shares held on trust, at a time after the expiry of the restriction. (k) Does the fact that, after declaration of the trust, the defendant imposed a ' voluntary holding lock ' on his shareholding, affect the remedy to which the plaintiff would be entitled for breach of trust? I conclude it does not.
(l) Has the plaintiff made out any breach of fiduciary duty, independently of a breach of trust? I conclude she has not. (m) Has the plaintiff established an estoppel by convention concerning the existence of a trust?
I conclude she has not. PART A - FACTS The Relationship Between Plaintiff and Defendant 3.
In 1999 the plaintiff was either divorced or separated from her husband, and had the care of their two children, Jackson and Maverick, then aged about five and seven. Throughout the time that is relevant to this case, she has had few financial resources of her own.
In the course of 1999, she developed a relationship with the defendant, a man with considerably more financial resources than the plaintiff had. He arranged, in August 1999, for the plaintiff to move out of the old house that she had been living in, that was in a state of disrepair, and into more suitable accommodation at Mermaid Beach. The defendant paid the rental for that new accommodation, and various other household expenses. In January 2000 the defendant moved into that rented house at Mermaid Beach. After a brief separation, the plaintiff and the defendant began living together once again at Alcorn Street, Suffolk Park in March 2002.
By the end of June 2002 the defendant was making arrangements to acquire an option to purchase a property in Cooper's Shoot Road, Byron Bay. By this time, the defendant wished to marry the plaintiff. The location of the land at Cooper's Shoot Road was influenced by the plaintiff's desire to live somewhere near her parents. Over the period from August 1999 until May 2005 the defendant paid large sums of money towards the household and general living expenses of the plaintiff. He paid the rental of the premises in which she lived, paid approximately $20,000 of the purchase price of a new car that was registered in the plaintiff's name, paid telecommunications bills and electricity bills, paid medical expenses for the plaintiff and her sons, and paid numerous other household expenses. He took the plaintiff on a holiday to Mexico, London and Hong Kong for a month in December 1999/January 2000, and on another holiday to the Maldives from 30 July 2003 to 11 August 2003.
He is able to provide vouchers demonstrating expenditure on such items of the order of $230,000 over the period from August 1999 to May 2005. It is likely that his actual expenditure exceeded that amount. The Launch of Unitract Limited 9.
The defendant was a shareholder in a company called Unitract Pty Limited. That company had the benefit of a patent application relating to a syringe, the needle of which would retract automatically and permanently inside the barrel once the syringe had been used. That was thought to be advantageous in preventing spread of infection arising from re-use of syringes or needlestick injuries.
The shareholders in Unitract Pty Limited set about arranging for a public share capital raising by a company that would exploit the patent. The chosen vehicle for making the initial public offering was Musgrave Block Holdings Pty Limited (' Musgrave '), a company that was already listed on the Stock Exchange, but whose shares were suspended. On 11 July 2002 an agreement was entered between Musgrave and Unitract Pty Limited, under which Musgrave would acquire from the shareholders in Unitract Pty Limited all their shares. In return Musgrave would issue shares in itself to the former shareholders in Unitract Pty Limited and certain other people nominated by Unitract Pty Limited. That agreement was conditional upon Unitract issuing shares in itself to raise $400,000 by 19 July 2002, a further capital raising (by means of an issue of 11,000,000 shares at 20¢ each) occurring no later than 11 October 2002, Musgrave issuing a prospectus by no later than 12 September 2002, and reinstatement of quotation of the shares occurring on or before 15 October 2002. The agreement provided for the defendant selling the 1.5 million shares he held in Unitract Pty Limited, and being issued with 1.5 million shares in Musgrave.
At the time of completion of the agreement, Musgrave would change its name to Unitract Limited. I will sometimes refer to Musgrave as ' Unitract '.
ASX imposed a condition on Unitract's shares being quoted. That condition required that the defendant's 1.5 million shares (as well as certain other shares of promoters and people connected with the promotion) would be restricted securities. In broad terms, that restriction prohibited dealing in the shares to which it applied, meant that the particular shares to which it applied were not quoted on the stock exchange (and so could not be sold by an on-market transfer), and were subject to a ' holding lock ' that was designed to prevent any transfer of the shares being registered. (I consider it in more detail at paras  ff below). For the defendant's shares, that restriction would be for two years from the date of listing. Quotation of Unitract's shares was in fact achieved on 1 November 2002. Hence the restriction on the defendant's 1.5 million shares expired on 1 November 2004.
From 1 November 2004 to 1 May 2005 all 1.5 million of the defendant's shares, and from 1 May 2005 to 1 November 2005, 500,000 of the defendant's shares have been subject to a ' voluntary escrow '. The First Six Payments by the Plaintiff to the Defendant 13. The plaintiff had a cheque account with the ANZ Bank at Bundall. She asserts that seven amounts drawn on that account were lent to the defendant. Those amounts are. Date $ Agreed by defendant 1 21 March 2001 1000 x 2 11 April 2001 5000 3 11 April 2001 5000 4 11 April 2001 5000 x 5 31 July 2001 1600 x 6 2 September 2002 10,000 x 7 17 March 2003 20,000 Total 47,600 As well, she says that the defendant agreed to make good to her a loss of around $10,000 that she sustained when she arranged for shares in Peptech Limited to be sold to raise funds to enable her to make loan No. One way the plaintiff put her case was that the defendant had borrowed these amounts from her, and promised that the loans were secured by shares in Unitract.
The defendant agrees that payments 1, 4, 5 and 6 were made to him. He does not agree that payments 2, 3 or 7 were made to him. Further, he disputes that any of the payments were loans. He says that those payments that he admits the plaintiff made, were made as contributions to their joint living expenses, not as loans. Bank statements of the plaintiff establish that her account was debited, on or very soon after the date of each alleged loan, with the amount of each alleged loan. The only alleged loans concerning which either party tenders a photocopy of the cheque, or the cheque butt, are payments 1, 4, 5, 6 and 7.
When there is a payment of money by A to B, and the sole question for decision is whether that payment is a loan or a gift, the onus of proving it is a loan lies on the person who so asserts: Heydon v Perpetual Executors, Trustees and Agency Company (WA) Ltd ( 1930) 45 CLR 111; Coshott v Sakic ( 1998) 44 NSWLR 667 at 671. The plaintiff's evidence about the first alleged loan is: 'The defendant wrote the cheque out and said to me words to the effect of: 'I need $1,000.00. Sign this cheque for me'. I do not know the purpose for which he used this money.' I accept the plaintiff's evidence concerning the writing of this cheque, and what was said at the time. However, that does not, in my view, establish a loan.
There are no words of loan. By that time, the parties had been living in a de facto relationship for over one year. The defendant had been paying the vast bulk of the household expenses. There is nothing surprising or unlikely in the plaintiff having made money available to the defendant when he asked for it, without there being a loan.
I am not satisfied, concerning this transaction, that at the time the payment was made there was any intention to enter legal relations at all. The plaintiff's evidence about the circumstances in which the second, third and fourth alleged loans were made is as follows: 'On 11 April 2001 I made three payments of $5,000.00 each to the Defendant. The first payment was by way of an ANZ cheque from my account being cheque number 500015, which was written on 9 April 2001. The second payment was by way of cashing an ANZ cheque number 500016 in the amount of $5,000.00 for the Defendant.
The third payment was by way of ANZ cheque number 500017 which was drawn in favour of the Defendant's WA Bank Visa card. At the time the Defendant said words to the effect of: 'I need $10,000.00 in cash but I do not want a cheque for this amount. Sign 2 cheques for $5,000.00 each. I do not want to have to fill out the disclosure forms required if I cash a cheque for $10,000.00' To the best of my recollection, I was with the Defendant when he cashed the two cheques for $5,000.00 each, although I do not know the purpose for which the Defendant used this money.' It is the payment of $5,000 to the defendant's Visa card account that the defendant admits receiving.
By April 2001 the plaintiff was an additional cardholder on the defendant's Visa card. It is not established to what extent, if at all, the plaintiff actually used that card. I accept the plaintiff's evidence about the making of these three payments. For the same reasons as I have given concerning the first alleged loan, I am not satisfied that the plaintiff has discharged the onus of establishing that any of the payments made on 11 April 2001 were loans. Initially, the plaintiff's evidence about the making of the fifth loan was: 'On 31 July 2001 I made a payment of $1,600.00 to the Defendant by way of cashing ANZ cheque number 001081 which was written on 25 July 2001, for the Defendant. The Defendant wrote out the cheque and said words to me to the effect of: 'I need $1,600.00.
Sign this cheque for me.' ' After the defendant had denied in his affidavit that he had written out that cheque, and exhibited a copy of the four cheques that he admitted receiving, the plaintiff accepted that it was her handwriting on the cheque, ' and that I made an error in paragraph 4(iv) of my affidavit sworn 28 August 2006 '. If the plaintiff wrote out the cheque herself, that makes implausible the words she attributed to the defendant on that occasion. I do not accept that the defendant said such words. Further, even if the plaintiff's initial version had been correct, that would not have been enough to establish that it was agreed that there would be a loan, for the same reasons as I have given concerning the first alleged loan. On 14 and 16 November 2001, soon after the plaintiff had received $20,000 from her former husband, the plaintiff's parents purchased two parcels of shares in Peptech Limited, 4,800 shares in all, for a total outlay of $19,972.31. The shares were purchased through a broker, Mr David Missen, of Bell Securities.
He is the same broker who acted for the defendant. These shares were treated as though they were the plaintiff's. The plaintiff's account, in her affidavit of 28 August 2006, of how the payment on 2 September 2002 came to be made is as follows: 'Prior to me making this payment to the Defendant, the Defendant said to me words to the effect of: 'I need $10,000.00 for payment of part of the deposit on land which I am purchasing at Coopers Shoot. I know that you bought $20,000.00 worth of Peptech shares.
If you let me sell them and lend the proceeds of sale to me, I will repay you the $20,000.00 which you originally used to purchase the shares so that you do not make a loss. I will make this repayment to you by way of $20,000.00 worth shares in Unitract at 20 cents per share'.' In her affidavit in reply of 31 October 2006 she confirmed her earlier account, and added: '. He said 'I need this for the purchase of the Cooper's Shoot property' and he said 'I will treat the loss on your shares as a loan which will make your loans to me total about $40,000.00'.' The cheque by which this payment was made was filled out by the defendant, and signed by the plaintiff. The defendant originally wrote that the cheque was payable to ' Underline Pty Ltd ', but above that the defendant wrote ' Please pay cash ' and the plaintiff signed the alteration. The broker's contract note establishes that the 4,800 Peptech shares were sold on 21 August 2002, and produced total net proceeds of $10,586.26.
By July 2002 some difficulties had re-emerged in the relationship between the plaintiff and the defendant. Around 31 July 2002 the plaintiff first attended a Consulting Psychologist, Mr Kieran Riordan, about various difficulties she was encountering, including in her relationship with the defendant. She continued to see Mr Riordan from time to time until May 2005.
The defendant paid the fees associated with those consultations, at least so far as consultations occurring after 16 September 2002 are concerned. At a time she puts at ' before August 2002 ' she had told the defendant that she did not want to marry him, but in September 2002 she was still wearing an engagement ring he had given her, and she was still contemplating an ongoing domestic relationship with him. The defendant denies the plaintiff's account of the circumstances of payment of $10,000 in September 2002.
According to him, at the time of handing over the cheque the plaintiff said: ' I would like to contribute towards the cost of the land and the house so that I can feel it is my home and not just yours. ' He says he did not need $10,000 from the plaintiff. The cheque account of Underline International Pty Ltd, that he used to fund ordinary living expenses, had a deposit of $10,000 made to it on 2 September 2002.
This might be the plaintiff's cheque, but it is not possible on the evidence to make a positive finding, and if it was the plaintiff's cheque one wonders why the defendant had the cheque altered to be payable to cash. That account of Underline International Pty Ltd on 2 September 2002 also had another amount, of $59,500, deposited to it. The trust account ledger of the solicitor who acted for the defendant concerning acquisition of the Cooper's Shoot Road property shows one amount of $19,982.80 identified as ' deposit monies ' passing through the trust account in July 2002, and a further amount of $49,980.80 identified as ' deposit ' passing through the trust account in March 2003, but nothing passing through the trust account between those times. The defendant was incurring architectural fees in connection with the proposed house at Cooper's Shoot Road, but the evidence does not disclose when those fees became due. At least some of the architectural fees were paid, but the evidence does not disclose when.
In this situation, it is not possible to make any positive finding about what the defendant did with the $10,000 he received in September 2002. I will defer making findings about the basis on which the $10,000 was paid in September 2002 until other factual matters have been recounted. The relationship between the plaintiff and the defendant broke down in October 2002.
Around that time, they concluded that they should separate, but they did not separate immediately. They discussed the defendant providing some form of financial assistance to the plaintiff, because she did not have any income to support herself and her two sons. It was he who offered to provide support - it is not as though she had to drag a promise out of him. He told her he was willing to pay for the rent on the home for a period of time, and some other expenses such as medical expenses, and the boys' tutoring and sports expenses.
He also indicated his willingness to continue to pay for her counselling with Mr Riordan. At no time during those discussions did the plaintiff assert that the defendant owed her the various amounts that she had paid him prior to that time, and which she now alleges were loans. That the defendant made this offer of financial support is consistent with his treatment of the plaintiff throughout the relationship - concerning financial matters, he was considerate and generous. Various of the notes that Mr Riordan made in the course of counselling sessions were admitted as business records.
Some care needs to be exercised in using those notes, because Mr Riordan himself makes clear that he was not trying to maintain a complete record of things said to him in the course of consultations, and he recognises that sometimes - particularly when emotions were running high in the consultations - the notes might be simply inaccurate. Even so, some of his notes assist in clarifying the facts.
On 24 August 2002 Mr Riordan made some notes at a conference with the plaintiff. He said concerning them: 'Louise White came to me hysterical and deeply distressed and very - it was like in a hysterical or distressed manner, described me money that was outstanding with Alan. And I jotted down some notes which have absolutely no - well, to my mind I wouldn't guarantee their accuracy in terms of those numbers there on the page, okay? When the notes were made under those circumstances, I would not draw anything from them beyond the fact that on that day the plaintiff asserted that the defendant owed her money, that an amount of $10,000 was at least part of it, and that it had something to do with the Cooper's Shoot land. I note that this conference was three days after the Peptech shares were sold.
On 16 September 2002 the plaintiff told Mr Riordan that she wanted financial support - a solid commitment, written down. On 28 September 2002 Mr Riordan made a note, in the course of a consultation with the plaintiff ' my $10,000 invested in the land now '. After cross-examination of both the plaintiff and Mr Riordan, I am satisfied that the import of that note is not that the plaintiff told him that she had made an investment of $10,000 in the land. Rather, it is that she had told Mr Riordan that she had provided $10,000 to the defendant, and that he had invested it in the land.
In her affidavit in reply, of 31 October 2006, the plaintiff gives many details, that she had not previously given, concerning conversations about money or shares that she had with the defendant. That evidence includes: 'From as early as August 2002, the Defendant would say words to the effect of: 'I will hold shares in trust for you' 'You are going to be a wealthy woman when you get your shares' 'You will be able to buy a house for you and the boys with the money that you will receive from the shares'.' 'At various times when the Defendant asked me for money, before the float of Unilife he would say words to me to the effect of: 'I need your money so that I can buy shares in the company before it floats. I am able to buy shares at the promoter's rate of four cents per share.' Since floating Unitract has changed its name again, to Unilife Medical Solutions Limited. It is Unitract that the plaintiff refers to as ' Unilife '.
She says that at the time of handing over the cheque for $10,000 in September 2002 he said to her: 'I am holding the shares in trust for you and once the company is floated, I will transfer the shares to you.' 'The Defendant at about October 2002 rarely talked of anything else other than the subject matter of Unilife shares, as the company was about to float. The Defendant often said words to the effect: 'You will be a rich woman when you get your $40,000.00 worth of shares. You will be able to buy a house.' Later on in about the middle of November, he said to me words to the effect of: 'I made five million dollars last Friday from the shares'.' She also says that: 'When discussing the shares with me, the defendant would always say, 'I am holding these in trust for you Louise'.' And 'The defendant had said to me about his calculation of about $40,000 in loans to him, that 'I will be able to get in before the float and buy shares at four cents each'.
In November 2002 the defendant and plaintiff moved to a different residence, at unit 25, The Links, 76 Broken Head Road, Byron Bay. These premises were rented, with the defendant still paying the rent. On 6 January 2003 the plaintiff and the defendant separated. Pursuant to leave to give oral evidence on a topic that her affidavit of 28 August 2002 had dealt with in inadmissible form, the plaintiff said that around Christmas 2002 she received a $20,000 payment from her former husband.
In early January 2003 she says that she had a conversation with the defendant as follows: 'He said. 'I want you to think about a deal I'm going to propose to you.
If you give me the $20,000 I will, in turn, give you shares at 90 cents a share and I want you to think about this because it is a good deal for you as the shares are trading at a dollar twenty so you are making a profit' and he brought up that conversation a number of times, what a deal it was for me, telling me - he said - Alan said, 'you know this is a good deal for you'. And when you say he brought up that again was that in person or over the telephone? Stressed in person but it was reiterated over the phone.' Mr Riordan's notes of a session with the plaintiff on 5 February 2003 include the entry: '$40,000 [200,000 shares] In Alan's name until he can sell [July 2003/4].? Anytime as needed?' Also on 5 February 2003, immediately below the note just quoted, Mr Riordan wrote, ' Tax issues?
Centrelink issues?' Mr Riordan's evidence concerning the topic of that note was: 'Louise is concerned about money, amongst other issues she is bringing to this session, roughly, I am not sure if it was 200 or more than that, but at least around 200,000 shares. She is saying in Alan's name until she can sell in July 2003/4 anytime as needed.
I am not sure what the tax issues are or Centrelink issues are if I cash these shares or achieve ownership of these shares in that tax year. That is one of her worries. That is what I think it means. Does the figure $40,000 bring back any memory in calculation of the 200,000 shares? It is obvious to me that Louise associates - she checks in with me that the $40,000 equates to 200,000 shares held in Alan's name on her behalf.
That is what she is saying to me in this session.' Mr Riordan had earlier explained: 'Q. Can I just ask you were the tax issue and Centrelink issues concerning Louise White? Yeah, recently separated single mum, wondering how she's going to get her life together and considering tax and Centrelink issues, around when she has access to it is written 200,000 shares in July. I think the dates after July are 2003/2004? Yes, she was working out what earnings were in the tax years in 2003/2004. I remember in this and other sessions saying go to your accountant and get advice about this.
Obviously it is of stress, it is causing anxiety for you and it an issue you need to take to the appropriate professional advisor.' I accept that evidence of Mr Riordan. After the plaintiff and the defendant had separated, but prior to 17 March 2003, the plaintiff wrote the defendant an undated letter that asked the defendant for assurance that he would honour an agreement she said he had made in an earlier session with Mr Riordan, concerning payment of the first year's rent, and for the next two years half the rent, providing particular types of benefits for the boys, and paying for her ongoing sessions with Mr Riordan. She said: 'Please re-affirm your stated commitment as I need asurety [sic] & a basis for budgeting and planning right now.' That letter says nothing about shares held on trust, or any alleged loans, but I do not regard that as something that detracts from the plaintiff's case. The letter had one topic, namely seeking reassurance about a particular agreement previously made about the defendant assisting with her ordinary household expenditure, when there was an immediate need for the plaintiff to know what income would be available to her for those purposes in the immediate future. Some indication of the state of relations between the plaintiff and the defendant at that stage comes from the ending of the letter: 'Maverick & Jax send their love.
Hoping you are well and not too jetlagged. Love to you always Louise X' 51. At the plaintiff's request, the defendant agreed to attend one counselling session with Mr Riordan. That counselling session took place on 17 March 2003, at Mr Riordan's office.
Early in the session he asked each to state their goals for the session. For the plaintiff, he recorded: ' clarity re Alan's $ support post separation and question of shares held by him that are 'mine': no security.
No paperwork. ' His note about the defendant's goal was: ' Ditto re above ', plus a topic relating to the emotional side of their relationship. He records, at one stage, the plaintiff saying ' want support with boys, rent, 'transition' and ' what you owe me and when I can get it '.' His notes of 17 March 2003 also record: '[Alan] + [Louise] agree roughly on a few issues: 1.
$25,000 shares to each boy from July '03 2. [Louise] to ring [Alan] for big bills with boys up to Uni age.
Then [Alan] deal direct with boys, 3. [Alan] agrees - 100% rent up to 450 p.w. 1yr + 50% rent two further years. Medical tuition sports education expenses [Alan] happy to contribute significantly. [Louise] 'Nervous re no security with my shares' 'They are in your name - I have no security.
What if you die?' [Alan] Agrees to write letter indicating what shares are held in trust for Louise. Explains available in August '03.' Mr Riordan amplified that note in oral evidence, saying: 'Louise was concerned there was no paperwork with shares held by him on her behalf. That is one of Louise's major goals, was for that session to clarify that and achieve paperwork on that.'
The defendant gives a lengthy account, extending over approximately three pages of his affidavit, of the events of 17 March 2003. It is to the following effect. The plaintiff was very distraught through the meeting with Mr Riordan, and the defendant was also very upset. The plaintiff at various times expressed concern that he would abandon her and not pay her rent or help her, and that she would end up on the street. He tried to reassure her, by pointing to the way that he had provided for her during the relationship. Mr Riordan then said ' yes but what happens if you die, she has nothing in writing to give her security that the rent would continue to be paid for a reasonable time '.
Up to that time there had been no mention of Unitract shares. The defendant said that he would be willing to put something in writing to give the plaintiff some level of comfort. Mr Riordan then suggested ' why not agree to issue shares to cover the level of funding that would give Louise some comfort if you died? Then the executor will have something in writing. ' The defendant enquired how many shares the plaintiff would expect, to which Mr Riordan said ' Well I understand Louise contributed some money to the household while you were in a relationship, so why not use the amount of shares that are of similar value to that?'
When the defendant said he had no record of how much she might have contributed, the plaintiff then said ' It's about $40,000, I estimate it would be approximately 222,000 shares '. Mr Riordan enquired whether the defendant would be willing to put that in writing for Louise, and he agreed. The defendant continues: 'At that time I was aware that Unilife shares were trading at approximately $0.90 per share. At the time, however, I was upset, and this conversation was taking place in an emotionally charged atmosphere. I desired to assist the plaintiff with some expenses for a reasonable time given her financial circumstances and apparent distress. For those reasons, together with the statement to the effect that any document concerning the shares was to be some form of comfort to her, I agreed with this proposal.' The defendant says that he did not calculate the figure of 222,000 shares, and that he adopted that figure because that was the number that the plaintiff suggested to him.
He says he did not consider that he was undertaking any legally binding obligation, and 'I did not give any thought to the fact that the value of 222,000 at that time was some $200,000, well exceeding the figure given to me as being the approximate total of the plaintiff's contributions. Nor did I consider how the value of those shares might compare to the total of my expected future contributions for the plaintiff's rent and other expenses.
I was aware, although I cannot recall thinking of it at the time, that I would not be able to transfer any of my shares to the plaintiff after 1 August 2003 but before 1 November 2004 because of the mandatory escrow applying to my shares.' According to the defendant, Mr Riordan virtually dictated the terms of a document, which the plaintiff signed then and there. According to the plaintiff, at Mr Riordan's office 'Alan said - I am holding $40,000 worth of shares at 20 cents a share and $20,000 at 90 cents a share - and Alan calculated that - I calculated that to be 222,000 shares. When you used the words 'I calculated that to be 222,000 shares' were you referring to Alan or yourself? At that stage had you paid him the $20,000 that was mentioned there? No I had not.' She says no letter was written at Mr Riordan's office.
According to the plaintiff, she and the defendant then returned home, to the Links. There, the defendant said he would not write the letter until she signed a cheque for $20,000 over to him. The defendant then wrote out, in the plaintiff's chequebook, a cheque dated 17 March 2003, marked ' Please pay cash ', in the sum of $20,000. The cheque is in evidence, and it is common ground that all of the writing on the face of the cheque, apart from the signature, is that of the defendant.
The cheque butt relating to the cheque is also in evidence. It is entirely in the defendant's handwriting, and reads: '17/3/03 Alan $20,000' 60. The face of the cheque bears a stamp showing it as being processed by the bank on 18 March 2003.
The plaintiff's cheque account pass sheet also records the cheque as being presented on 18 March 2003. According to the plaintiff, it was when she had signed and handed over the cheque on 17 March 2003 that the defendant wrote out a document that is of central importance to the plaintiff's case. That document is undoubtedly in the handwriting of the defendant, and signed by him. Now, it reads as follows: 'Louise White, 25 THE LINKS BYRON BAY NSW 2481 17/3/03 Dear Louise, THIS LETTER IS TO CONFIRM THAT I AM HOLDING IN TRUST FOR YOU 222,000 UNITRACT SHARES. THESE SHARES WILL BE TRANSFERRED TO YOUR NAME AND CONTROL, AT ANY TIME THAT YOU REQUEST, AFTER 1/AUGUST/2003.
IN THE CASE OF MY DEATH, THE ABOVE TRANSFER OF 222,000 UNITRACT, TO YOUR NAME, WILL BE AUTHORISED BY MY EXECUTOR, STEVEN SHORTALL. I FURTHER COMMITT TO MAKE AVAILABLE 25,000 UNITRACT SHARES, FOR FINANCIAL SUPPORT FOR [AS] EACH [AS] BOTH MAVERICK AND JACKSON, ON OR AFTER 1/AUGUST/2003. [ALAN SHORTALL] ALAN DENIS SHORTALL 18/3/03 [AS] 62. The plaintiff says that the defendant wrote that letter when she had just signed the cheque made out to the defendant for $20,000. She says that as originally written, the final sentence included the phrase ' for each Maverick and Jackson ', that on 18 March 2003 the defendant amended that phrase to read ' for both Maverick and Jackson ', and that on 18 March 2003 he initialled that alteration, on either side of the ' each ' that he had crossed out, dated the document ' 18/3/03 ' at its end, and also initialled that dating. The defendant left the original of the letter with the plaintiff, and she has had possession of it ever since. Mr Riordan, in evidence, denied that he was present when the document came into existence, denied that he suggested the wording to Mr Shortall, and says that the first time he saw the document was when the plaintiff brought a photocopy of it to his attention, in distress, in about August 2003.
He says that in the course of the counselling session on 17 March 2003 the defendant: '. Expressed a sincere desire to offer a generous level of support to Louise whilst she made a transition into independence as a sole mother.' Mr Riordan says: 'My clear recollection in that session, I asked both parties to get independent legal counsel for any financial agreement they would come to post separation.' After his suggestion, on 17 March, of legal advice: 'Q.
Was there any response from either of the parties? I do recall Alan saying that won't be necessary because he's CEO or director and he's got lots of experience in these matters and they can sort that out for themselves.'
Digression Re Procedure 66. I interrupt the narrative to record here some matters concerning the procedural history of this case, that are relevant to assessments of credit. The proceedings were begun on 12 May 2006 with the filing of a Summons in court, and the seeking of short service of it. An application for expedition was made, that resulted in Young CJ in Eq on 29 September 2006 fixing it for hearing before me for one day on 24 October 2006. At that stage his Honour noted: 'No amendment to the Statement of Claim is proposed. Note that all the evidence is filed.' By that stage, the plaintiff had filed two affidavits in chief, one made on 11 May 2006, and the other on 28 August 2006.
Both affidavits contained material that was clearly inadmissible concerning critical parts of the plaintiff's case. At that stage, the defendant had filed only an affidavit that was ultimately not read at the trial. On 20 October 2006, after advice from counsel who had only recently been briefed, the defendant swore another, and more detailed, affidavit. When the matter came on for hearing before me on Tuesday, 24 October 2006, the defendant sought leave to read the affidavit of 20 October 2006.
It was necessary to seek that leave, because Brereton J, on 25 August 2006, had directed that the defendant not be entitled to rely, without leave of the court, on any affidavit evidence that had not been served by 21 September 2006. I granted the leave, on the basis that it was necessary for the late affidavit to be read to enable the real issues to be decided. That resulted in an adjournment, during which the plaintiff swore, on 31 October 2006, an affidavit in reply to the defendant's affidavit of 20 October 2006. In that affidavit in reply she gave evidence of numerous matters relevant to her case for the first time.
As was inevitable as soon as objection was taken, central parts of the plaintiff's affidavit in chief were struck out. I then granted leave for the plaintiff to give evidence on those topics orally. As well, oral evidence was also received from the plaintiff on some topics on which she had not given affidavit evidence at all.
Frequently, it is very damaging to the credibility of a plaintiff's case if important evidence relating to it emerges only late in the course of evidence. The reason for this is that the Court is usually justified in assuming that the legal representatives of a plaintiff embarking on something as significant and potentially expensive as Supreme Court litigation will properly proof their client, obtain from their client all relevant details of the story relevant to the case, and include that material in affidavits in chief. I cannot make that assumption in the present case. The plaintiff's evidence in chief was so clearly inadequate it could not have been properly prepared. The Statement of Claim pleads evidence (contrary to UCP Rule 14.7), and claims something unknown to the law, namely an interlocutory declaration. Notwithstanding the assurance given to Young CJ in Eq, in the course of the trial the plaintiff sought, and was granted, leave to amend her Statement of Claim in significant ways. At the end of the trial the plaintiff sought leave to make yet another amendment to the Statement of Claim which leave was refused.
The case was originally set down for one day. The first day's hearing concluded at 2:30pm, because of the adjournment that I have mentioned.
When the hearing resumed, it continued for a further three days. On each of those three days the hearing concluded after ordinary Court hours - at 4:30pm, 4:50pm and 5:25pm. Even with those extended hours, the plaintiff's counsel needed to make his submissions in reply in writing.
The plaintiff's counsel sought to call Mr Riordan to give oral evidence, as a witness in reply, when on at least some topics he should have been a witness in chief. The evidence of Mr Riordan that was really in chief was ultimately received only because the defendant could not point to any prejudice in its having been given out of the usual order. In fairness to the plaintiff's lawyers, though, I should say that the reason why no affidavit from Mr Riordan was filed, was because he felt that his obligations of confidentiality to his clients precluded him from giving an affidavit or statement when there was no legal compulsion for him to do so. Even taking into account that part of the extra length of the trial arose from the defendant's late affidavit, I have difficulty in seeing how a lawyer who understood what was involved in the case could have thought it would have been concluded in one day. The plaintiff was cross-examined about why she had not included in any of her affidavit evidence mention of the defendant asking for $20,000 at any time prior to the counselling session on 17 March 2003.
Her answer was, in substance, that she did not have an answer, and didn't realise it was important to put it in the affidavit. I accept that her response is truthful.
Findings on Central Factual Matters 75. I accept the plaintiff's evidence in para  above about the circumstances in which the payment of $10,000 was made on 2 September 2002.
While the defendant talked about that $10,000 being ' lent ', the conversation makes clear that what he was proposing was not a ' loan ' of the conventional type. Rather, what he was proposing was that if she paid him the money, he would in return cause her to have $20,000 worth of shares in Unitract at twenty cents per share. That is in substance a purchase, even though he called it a loan.
I accept that, possibly at the time of making the advance of $10,000 from the Peptech shares, and more likely than not prior to the time of the float on 1 November 2002, the defendant told the plaintiff, in substance, that all the money she had provided to him, which he quantified at $40,000, would be treated as loans -- and that he made clear that what he meant was ' loans ' of the same type and on the same basis as he had proposed concerning the proceeds of sale of the Peptech shares. At some stage, and prior to 5 February 2003, the defendant had stated to the plaintiff the result of the calculation that was involved in applying that basis to $40,000, namely, that he would hold 200,000 shares in trust for her. I do not accept the defendant's account of the meeting on 17 March 2003, nor his account of how the document sued on came into existence. I accept the evidence of Mr Riordan and the plaintiff on those matters. At Mr Riordan's office, on 17 March 2003, the defendant clearly stated that the shares he held in trust for the plaintiff were ones that could be transferred in August 2003. I am not prepared to accept uncorroborated evidence of the plaintiff about the precise date that particular conversations occurred - she has demonstrated, and herself admits to, some unreliability concerning dates.
However apart from the precise dating, I accept that conversation of the general type that she deposes to, about shares (in general), and 200,000 shares in particular, being held in trust for her, occurred. In general, I find her a credible witness. I also accept that, in the early months of 2003, the defendant proposed to the plaintiff that if she would provide him with another $20,000 he would hold shares for her on the basis that they cost 90¢ each. The defendant gave evidence with clarity, precision, and confidence. Unfortunately some of it is inconsistent with other independent evidence that I accept.
Other parts of it are unusual, and tell the sort of story that requires very close scrutiny before it is accepted. In these circumstances, I do not regard his uncorroborated word as sufficient to discharge an onus of proof, save concerning matters that, by reference to other established facts, have a very real possibility of being correct.
The defendant's evidence (para  above) that at 17 March 2003 the price of Unitract shares was approximately 90¢ is wrong. On that day, the closing price of the shares was $1.23. The lowest closing price they had achieved during the whole of March 2003 was $1.12, on 7 March 2003. By contrast, in January 2003 the shares ranged between a closing price of 62¢ on 2 January 2003 (a day of comparatively low trading volumes, hardly a surprise at that time of the year) to a high of 91¢ on 14 January 2003. On all days bar two in January 2003 their price was below 90¢. Thus it seems to me unlikely that the defendant would have said, in January 2003, ' it is a good deal for you as the shares are trading at $1.20 ', as the plaintiff contends (para  above). The shares (which had been offered in the float at 20¢) had closed at 24¢ on the first day of listing, 1 November 2002.
Thereafter, the trend of share prices was steadily up. I accept that, before he would sign an acknowledgement of holding 222,000 shares in trust, he insisted on being paid the $20,000 that was needed to notionally pay for the additional 22,000 shares. He actually signed the letter only after he had her cheque for $20,000. Events After Execution of the Document of 17/18 March 82. Relations between the plaintiff and the defendant continued to be cordial, even affectionate, after the letter of 17/18 March 2003 was signed. The defendant continued to visit the plaintiff and stay with her from time to time.
He took her on a holiday in the Maldives between 30 July 2003 and 11 August 2003. That holiday cost him of the order of $40,000, and his itemisation of the expenses suggests it was quite luxurious. During their stay in the Maldives, the defendant said to the plaintiff words to the effect of: 'You are a rich woman now Louise' 'You will be able to set yourself up in a home for you and the boys when we get back' 'Trust me Lou, I'll take care of everything for you' 'Have you thought about where you would like to buy a house' 'There is no need to worry about anything Louise, I will sort out the transfer of shares when we get home.' After their return, the defendant spoke to the plaintiff about the shares, and said words to the effect of: 'I will look after things with your shares' 'I will make sure that they are transferred to you, you will be a rich woman and can buy a house, Trust me.' Soon after their return from the Maldives, the plaintiff asked him to transfer the shares to her, but he did not do so. The following conversation ensued: DEFENDANT: 'It's not the right time to transfer the shares now Louise.' PLAINTIFF: 'But I need these shares as you have promised so that I can sell them.
I need this money' DEFENDANT: 'I can't transfer the shares to you now, I will give you some money for Christmas.' That response was not an indication of a permanent inability, or an unwillingness to transfer the shares.
Rather, as the plaintiff said in oral evidence, the theme of his reply was ' I can't do it right now, I am too busy, I have too much going on, don't worry you will get your shares. The defendant continued to subsidise the plaintiff's rental, and pay other expenses connected with her and her children, in the way he had said he would. An indication of the state of relations between them is that in September 2003 he gave her a new mobile phone. He responded, on 22 September 2003, to a message in which she thanked him for it, saying: 'I miss you and no matter what we will always be soul mates, in my mind. You still have a large part of my heart in your hands. Love, Alan' While in the Maldives, though, he had told her he would be taking another woman to his son's wedding.
On 29 October 2003 an electronic transfer of funds to the plaintiff's bank account occurred, in the sum of $5,000, accompanied by the message ' love Alan Shortall '. On 12 December 2003 another electronic transfer of $5,000 was made to her account, this time accompanied by the message ' happy Christmas Alan Shortall '. These were amounts additional to the financial benefits he had promised in March 2003. In about the middle of January 2004 the defendant rang the plaintiff and told her that there would be a newspaper story published which would be critical of him. He said, ' if Ben Hills contacts you, you are to deny everything. I cannot transfer the shares to you now as everyone is watching me. ' He also said to her ' tell anyone who asks not to sell their shares, the price will probably drop, but it will go up again.
' Ben Hills is the journalist who wrote the newspaper story. On the weekend of 17-18 January 2004 the article that the defendant had been talking about appeared in the Sydney Morning Herald.
It was critical of both the defendant, and of Unitract. It raised allegations that Roger Williamson, who held about 24% of the shares in Unitract, was someone about whom very little was known or could be found out. The plaintiff continued to make requests, through 2004, for the transfer of the shares. By January 2005 the plaintiff had discovered that a form of transfer of shares could easily be downloaded from the Internet. She downloaded one, filled out her own name and address on it, signed it, and posted it to the defendant with a letter saying: 'Dear Alan, Here is the form I said I would send down to you for the transfer of my shares. Not sure if you are going to give me the boys their shares as promised or not.
I am thinking that it would be easiest to only go through this process once. But as it really is up to you I am unsure where I stand on this matter.
My account number with Commsec is [account number]. I hope you can get to this soon. Also hope your trip to the States was fun. Love Louise' Did the Plaintiff Say She No Longer Wanted the Shares?
The defendant did not reply in writing to that letter. He says he telephoned the plaintiff, expressing surprise about her asking for a transfer of shares. When she reminded him that he had signed a letter for her previously, he says he told her that he had only provided it on the basis that it would provide some comfort that he would continue to pay the rent and her expenses for a reasonable period of time, or in case he died. According to him, he said it was never considered to be in any way additional. He also asserts that the plaintiff then said to him: 'My circumstances have changed since I sent the letter and I no longer want anything from you because I am being investigated for social security fraud.' I do not accept any of that evidence of the defendant.
Even after January 2005, the defendant continued to pay certain expenses of the plaintiff. He paid amounts that she debited in the period 21 March 2005 to 19 April 2005, to a Visa Gold Card. He continued to pay fees to Mr Riordan for consultations the plaintiff had between 26 January 2005 and 1 May 2005. The plaintiff denies that there was any mention of fraud by Centrelink to her, and denies that she said anything about fraud to the defendant.
I accept those denials. She accepts that she ' had been queried ' by ' the Department ' (who I take to be Centrelink), but the only letter she received was one that said ' your Parenting Payment Single will stop after 8 February 2005 because you are now a member of a couple and no longer want to receive this payment from Centrelink ', and went on to tell her about her appeal rights concerning that decision.
Four passages in Mr Riordan's notes were cross-examined on concerning this topic of whether the plaintiff told the defendant that she was being investigated by Centrelink for fraud. One of them was his note on 5 February 2003 ' tax issues? Centrelink issues?' I have already made findings about the circumstances of the making of that note at paras - above. The second is a note he made on 4 November 2003 ' Centrelink not sorted out '.
The third is a note made on 15 June 2004 ' 5 letters from Centrelink '. The fourth is a note made 13 February 2005 ' rang Allan - explained being investigated.
Don't want to involve Allan. Mr Riordan explains the second and third of these entries by saying: 'There was an ongoing issue in counselling with regards to the standing firm and persistent in order to achieve from the Child Support Agency (CSA) in relation to her ex-partner Steve in coming up with the money in, income in terms of support for her children.' And, 'It reached a head in late 04 with Louise and the Child Support Agency and what - actually, I remember now. It was what Steve was saying he was giving to her, Louise, was far more than what she was actually getting and that affected her Centrelink payments. There was some argy bargy with Centrelink which related to her, yeah, the lack of financial support from her partner.'
Mr Riordan's explanation of the note of 13 February 2005 is 'I think that note is saying: I rang Alan. I have explained to him that Centrelink are asking me some difficult questions and Louise is explaining to Alan I don't want to drag you into this. That would be a reasonable interpretation.'
I accept this evidence of Mr Riordan. The plaintiff's evidence, when cross-examined about ' 5 letters from Centrelink ', was ' it is actually child support agency, not from Centrelink ', that she did not write any letters to Centrelink in about January/February 2005, but that ' I went into Centrelink and filled out the appropriate form the day after the gentleman rang me '. I accept that the plaintiff told the defendant, in around February 2005, that she had been queried by Centrelink, to which he replied ' I can't transfer them to you now as I don't want to get mixed up in any investigation '. The plaintiff did not agree that the shares should not be transferred. A Final Request for Transfer 104.
It is common ground that the plaintiff and the defendant saw each other in Sydney on the day of Unilife's Annual General Meeting, in November 2005. I accept that, after the meeting, the plaintiff telephoned the defendant and asked when he would transfer the shares, to which the defendant replied ' I will do it first thing tomorrow morning '. He did not do so. On 15 November 2005 a solicitor who the plaintiff had engaged wrote to the defendant saying: 'Dear Mr Shortall, Declaration of Trust - Louise White I act for Louise White who has sought my advice regarding Unilife shares. These shares are held in Trust by you, and owned beneficially by her in accordance with the Declaration of Trust signed by you on 18 March 2003.
Pursuant to the provisions of that Declaration, Ms White now requires that you transfer 247,000 shares in Unilife to her. 222,000 of these shares she will hold as beneficial owner, and the remaining 25,000 she will hold as Trustee for Maverick and Jackson White. I look forward to receiving a Standard Transfer Form executed in favour of Ms White.' The defendant did not reply to that letter. Would the Plaintiff have Sold the Shares? The plaintiff asserts that if she had received the shares in August 2003 she would have sold them with the exception of $60,000 worth at that time.
She says that she would have sold them all after the defendant called her in January 2004, and the Sydney Morning Herald article appeared. Mr Curtin, counsel for the defendant, submits that I should not accept that evidence. First, Mr Curtin reminds me that evidence given by a person, about what he or should would have done if some event in the past had happened differently, needs to be looked at with caution. In Cackett v Keswick [ 1902] 2 Ch 456, a case about a material omission from a prospectus, Farwell J, at 463-4, said: 'Now, it cannot be enough for a man to swear that he would not have entered into the contract if he had known something that was concealed from him.
It is easy to be wise after the event, and many men can honestly persuade themselves when a company has failed that they would have been influenced by a circumstance which in all probability would have made no impression whatever on their mind when considering an investment or speculation.' Farwell J is not there saying, however, that such testimony should not be accepted. Rather, he is saying it is not sufficient in itself.
He goes on to say, at 464: '. If the court sees that the fact omitted is of such a nature that it might reasonably deter, or tend to deter, the ordinary investor from entering into the contract, this is sufficient. It is in great measure an inference of fact to be drawn by the Court or a jury from the circumstances of the case. It would no doubt be a matter of comment if a plaintiff was not called nowadays to swear that the fact omitted would have deterred him from contracting; but neither his testimony nor his absence is conclusive.' That decision was upheld by the Court of Appeal (the judgments commencing at  2 Ch 471), on grounds that did not depend upon how the plaintiff's evidence of how he would have reacted in a hypothetical situation should be treated.
Mr Curtin also reminds me that in Rosenberg v Percival ( 2001) 205 CLR 434, a medical negligence case concerning failure to warn of a slight but foreseeable risk, McHugh J, at 444,  said: '. Human nature being what it is, most persons who suffer harm as the result of a medical procedure and sue for damages genuinely believe that they would not have undertaken the procedure, if they had been warned of the risk of that harm.' Mr Curtin also points out that Kirby J, in Rosenberg v Percival at 486,  referred to his own remarks in Chappel v Hart ( 1998) 195 CLR 232 at 272-3. There, in considering whether in a medical negligence case the court should adopt a ' subjective ' approach to causation of damage which looked at what the particular patient's response would have been had proper information been given, or an ' objective ' approach, which looked at the response of a reasonable person in the patient's situation, Kirby J said: 'The subjective criterion involves the danger of the ' malleability of the recollection ' even of an upright witness. Once a disaster has occurred, it would be rare, at least where litigation has commenced, that a patient would not be persuaded, in his or her own mind, that a failure to warn had significant consequences for undertaking the medical procedure at all (where it was elective) or for postponing it and getting a more experienced surgeon (as in this case).
Yet, these dangers should not be overstated. Tribunals of fact can be trusted to reject absurd, self-interested assertions.' McHugh J in Chappel v Hart at 246, footnote 64, made similar remarks. In Seltsam Pty Ltd v McNeill [ 2006] NSWSCA 158 at - Bryson JA, with whom Handley and Tobias JJA agreed, held that evidence by a witness of what he or she would have done, if some aspect of the past had occurred differently to the way it in fact occurred, is admissible, though its weight should be carefully assessed because [at 121]: 'Observations on the limited value, and self-serving and hindsight nature of evidence of this kind have considerable force.' One objective circumstance that Mr Curtin points to concerns the way in which the plaintiff acted concerning some Unitract shares in a superannuation fund that she and her former husband were involved in.
That superannuation fund obtained around 520,000 shares in Unitract when it floated. The plaintiff and her former husband were the trustees of that fund.
The former husband made all the decisions in relation to that fund, and was the sole signatory on the bank accounts. The plaintiff did not obtain control of the fund by herself until September 2005.
Unitract shares in the superannuation fund were not sold until 16 June 2005 (when 130,000 were sold), 10 August 2006 (when a further 378,000 were sold) and 11 August 2006 (when 10,500 were sold). The plaintiff contacted her former husband in January 2004, after the Sydney Morning Herald article, and discussed the movement in the share price of Unitract. However, she did not suggest, or ask, that he sell the shares in Unitract that the fund held. At that time relations between the plaintiff and her former husband were difficult, and she was reluctant to say anything to him at all. As well, the plaintiff explains her reason for not asking her former husband to sell the Unitract shares as being that the fund bought the shares as a long-term investment.
If the defendant had transferred 222,000 shares to the plaintiff in August 2003, it cannot be concluded that the plaintiff would have dealt with those shares in the same way that the superannuation fund dealt with its shares in Unitract. In the last few months of 2003, the situation that the plaintiff was in was that of a single mother, with two children to look after. While the defendant had said he would pay the whole of the rent for a year, and half of the rent for two years, on her premises, she was close to the end of the time when his full rental subsidy would expire. She and the defendant had previously discussed a possibility that, when she got her shares, she would buy a house for herself and the boys.
Housing was her single greatest need. The price of Unitract shares had trended upwards in the first half of 2003. On 3 January 2003, the first day on which the volume of trades exceeded 100,000 in the year, the closing price was 65¢. From 9 April 2003 the price was consistently above $2.00, and reached its highest point at $2.93 on 18 August 2003.
Thereafter, the trend was down until the end of 2003, but not markedly so - the lowest price achieved in that period was $2.06 on 9 October 2003 (a day when an unusually large number of shares traded) and in December prices were in a range from $2.23 to $2.55. The appearance of the Sydney Morning Herald article coincided with the price dropping from $2.17 on 16 January 2004 to $1.87 on 19 January 2004. Thereafter, the trend of prices was down until 17 March (when it reached $1.35), but the price then recovered somewhat, to $2.12 by 4 May 2004. After that, the trend has been continually down. The share price had sunk below $1.00 by 26 October 2004, below 70¢ by 18 March 2005, below 60¢ by 23 June 2005, below 50¢ by November 2005, and have continued a general downward trend until, on 1 November 2006 the price was 22¢.
The agreement between Musgrave and Unitract Pty Ltd (para  above) provided for the company to have an issued capital of over 66 million shares. The entire on-market trading history of the company since flotation is in evidence, and suggests that even if a sale of 222,000 shares occurred on a single day, that would not have a significantly depressing effect on the share price. If the plaintiff had received 222,000 shares in August 2003, and the share price had been rising from its high on 18 August 2003, I think it possible that the plaintiff may have held onto the shares at least for another few months. Her need for money would be acute when the defendant's full rent subsidy ceased, in January 2004. However, when the trend of the price was down, and the time when the plaintiff's need for money would become particularly pressing was only a few months away, it seems to me likely that if she had received the shares on 1 August 2003, or promptly after she first asked for them, she would have sold them by mid-September 2003. There was some volatility in the market price around that time. $2.55 is a fair estimate of the amount she would have received for the shares, taking into account that a small amount of brokerage would have been payable.
I see no reason to reject the plaintiff's admission that she would not have sold $60,000 worth of the shares at that time. No explanation was given in evidence of where that figure came from, but I note that it is approximately equal to the amount of money that she paid to the defendant in the course of the relationship, and up to 17 March 2003, including the loss made on sale of the Peptech shares. Thus, it is approximately equal to what amounts to the purchase price of the 222,000 shares that the defendant agreed to hold on trust.
It seems to me that the plaintiff was likely to have sold such Unilife shares as she kept within a few days of appearance of the Sydney Morning Herald article. The defendant had told her before the article had published that the share price would probably be detrimentally affected.
He had also told her that the price was likely to recover, but in my view it is likely that the plaintiff would not have seen herself as able to afford the risk that it might not recover. As well, if the share price recovered, there were shares in the superannuation fund that had been bought at the float price, and that would benefit from any such recovery. In my view, the remaining shares would be likely to have been sold by the end of January 2004. Given the range of prices over the period from 19 January 2004 to 30 January 2004, a fair estimate of the price that would have been realised is $1.80 per share. PART B - INTENTION TO ENTER LEGAL RELATIONS 125. The defendant submits that there was no intention to enter legal relations in the execution of the document dated 17 and 18 March 2003, or in any of the conversations that immediately preceded its execution. In assessing that submission, one needs to bear in mind that (as Mr Ryan put it in address) there are ' two limbs of the plaintiff's case, the declaration of trust and the promised transfer of the shares after the 1 August '.
Mr Ryan submits that ' we have this declaration of trust sitting on top of a contract or promise to transfer the shares for consideration '. When one considers whether there is an intention to enter legal relations, the objective theory of contract formation has the consequence that those objective circumstances from which an observer would reach a conclusion about whether contractual relations were intended or not, play a significant, and possibly exclusive, role. The reason for putting it that way is that subjective intention can be relevant to whether a contract is formed, in the sense that it can stop what would otherwise be a contract from being a contract - as when there are words which on their face are sufficient to amount to a contract, but both parties know that the other does not intend to contract, as happens with playacting. As well in Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd ( 1985) 2 NSWLR 309 at 330-331 Mahoney JA says that it is ' relevant ' that parties intend to enter a contract, although his Honour gives no guidance as to how or by reference to what principles that relevant information is applied. So far as the type of intention that is needed to create a trust is concerned, the law is settled, for a judge of first instance in New South Wales, by the decision of the Court of Appeal in Hyhonie Holdings Pty Ltd & Anor v Leroy & Anor [ 2004] NSWCA 72. In that case Hodgson JA (with whom Mason P and Handley JA agreed) accepted, at  the following statement made by Bray CJ in In Re Lamshed [ 1970] SASR 224 at 239: 'It is clear law that despite the unambiguous words of the declaration the trust apparently created by them can be rebutted by evidence of a contrary intention (Commissioner of Stamp Duties (Qld) v Jolliffe ( 1920) 28 CLR 178).
But the onus is on those who seek to prove such an intention and strong evidence is required for the purpose (In Re Steele [ 1925] SASR 272). Many cases were cited to me where this had been done successfully. In some of these cases the depositor was alive and gave evidence of his own intention and was believed (Jolliffe's case; Starr v Starr [ 1935] SASR 263).
In other cases when the depositor was deceased there was evidence of specific declarations made by him during his life time (Winter v Grady ( 1921) SR (NSW) 686 at 691), though sometimes these related to the interest only and the trust stood as to the principal (Kauter v Hilton ( 1953) 90 CLR 86; Re Armstrong (Deceased) [ 1960] VR 202 at 206). And in some cases the trust was held to be rebutted after the death of the depositor by evidence entirely or largely circumstantial (In Re Appleby's Estate ( 1930) 25 TasLR 126; Re McGuire, Deceased ( 1937) 41 WALR 120; Teasdale v Webb ( 1940) 57 WN (NSW) 151; Abbot v Miles ( unreported, Supreme Court of South Australia, Napier CJ, 12 May 1952); Jeffrey v Miles ( unreported, Supreme Court of South Australia, Mayo J, 10 December 1952).' In other words, so far as declaration to create a trust is concerned, it is the subjective intention of the settlor that is critical. Even so, frequently the subjective intention is ascertained, as a matter of evidence, by inference from objective circumstances. In my view, there was both an intention to contract, and an intention to declare a trust, in the present case.
During the relationship, the defendant had been particularly generous to the plaintiff. Even though it was in October 2002 that they decided to separate, they did not actually separate until January 2003, and in the period before separation they discussed in some detail, and with assistance from Mr Riordan, what their future relations would be, including financial relations.
It was during that period that the float of Unitract occurred. The evidence provides no basis for believing that the defendant's view was anything other than that the company would be a success. There is nothing unusual in the defendant putting to the plaintiff the proposition that he would treat the money that she had caused to be invested in Peptech shares as a loan to him, in return for which she would have some Unitract shares. Throughout the relationship, the plaintiff had been sensitive about the fact that she could make no financial contribution. The defendant had said to her ' your place is in the home Louise.
It is your job to stay at home ', and ' if you get a job, it will be the end of our relationship ', but she was still concerned that she was not making a financial contribution. Even though he had, before they actually separated, made promises to her about providing her with future support, by the time she wrote the letter referred to in para  above the plaintiff was apprehensive about her financial future, and wanted a more solid assurance.
I see nothing unusual, when the time came for them to talk about how they would separate their lives, in the defendant agreeing, in substance, that the amounts that she had given him in the course of the relationship would be treated as loans (with some rounding up of the total of the sums paid), and applied in the acquisition, at a favourable rate, of shares in Unilife. Indeed, agreeing to wind up their financial affairs on that basis was considerate and sensitive on his part, and it allowed him to confer a benefit on her in a way that did not yet again draw attention to her lack of financial resources.
An agreement to provide the shares was confirmed in substance in front of Mr Riordan, in a session where they had both stated, at its outset, that they shared a goal of arriving at ' clarity re Alan's $ support post separation and question of shares held by him that are ' mine '.' That was in a context where the plaintiff said one of the problems about them was ' no security. No paperwork '.
Mr Riordan says that at that meeting the defendant: '. Expressed a sincere desire to offer a generous level of support to Louise whilst she made a transition into independence as a sole mother.' Even though there was agreement in principle on some of the topics that were discussed at the meeting - the various periodical payments that the defendant would make, and assistance with particular types of bills that he would provide - the plaintiff did not seek, and the defendant did not offer, any written agreement concerning those topics. However, concerning the shares, the defendant agreed '. To write letter indicating what shares are held in trust for Louise. Explains available in August '03 '. The defendant gives evidence, which seems to me inherently likely, that ' I had, in my business career, become aware of trusts '.
He accepts that his business experience '. Would include the meaning of the word trust in terms of its legal significance. On 29 September 2002 he had written a letter to the architect that he had engaged in connection with the Cooper's Shoot house, Mr Ian McKay. It said: 'Dear Ian, Further to our recent conversation and also refering to your invoice 19/02.
I wish to confirm that 200,000 shares in the company Unitract Ltd, soon to be listed on the ASX, will be held in trust for you. These shares will be tradable by you at any time after the listing. This document is to also acknowledge the transfer of title of the 200,000 Shares in Unitract to you. A deed of execution will be issued to you in the not too distant future, confirming your right and entitling you to execute the sale of such shares at a time of your choice.
I hope that this meets with your approval.' I infer that this is a letter that the defendant drafted without legal assistance. It shows an understanding of one of the common features of a trust, namely the right of the beneficiary to call on the trustee to transfer the trust property, and the ability of the beneficiary to sell the shares held on trust when such transfer has occurred. The first sentence of the document the defendant signed on 17/18 March 2003 on its face is clearly indicative of an intention to hold 222,000 shares on trust. On its face it is not itself a declaration of trust made for the first time, but rather a confirmation that a trust already exists. It is unnecessary to decide whether any of the conversations that the plaintiff and defendant had prior to or on 17 March 2003 are themselves declarations of trust - the letter is on its face a clear statement of intention that thenceforth 222,000 shares were held on trust. When the letter says that the transfer will be authorised by the defendant's executor if the defendant were to die, that is a powerful indication of an intention to enter legal relations, as an executor can part with property of a deceased only for purposes of administration, to give effect to a provision of the Will, or in discharge of a legally enforceable obligation that the deceased has entered during his lifetime.
It is only the last of those possibilities that could apply here. ' Achieving paperwork ' concerning the shares was one of the plaintiff's stated objectives at the counselling session. A written statement of a purely moral obligation is of little use while the person making the statement is alive, and no use if that person has died (except possibly as an admission relevant in Family Provision Act 1982 proceedings - but that possibility was not one that these parties had in mind.) 140. That the defendant left the letter with the plaintiff is also indicative of an intention to enter legal relations. I do not accept the defendant's evidence that he did not intend to declare a trust, or that he did not intend to enter into a binding obligation to transfer 222,000 Unitract shares to the plaintiff at any time she requested after 1 August 2003.
Part of what the defendant told the plaintiff, both at the counselling session with Mr Riordan and previously, was that the shares would be able to be transferred after 1 August 2003. It was in that context that the plaintiff paid $20,000 in return for an extra 22,000 shares. In my view there was a contractual obligation for the defendant to transfer 222,000 shares after 1 August 2003, when the plaintiff requested. PART C - THE BREACH OF CONTRACT CASE 143. The contractual requirement to transfer the shares upon request, after 1 August 2003 was one in which, from the nature of the subject matter of the contract, the common law would have regarded time as essential.
Listed shares in a newly listed company with no established business operations are the sort of thing whose price can be quite volatile: cf Claydon v Green ( 1868) LR 3 Cp 511; Tadcaster Tower Brewery Co v Wilson [ 1897] 1 Ch 705 (sale of licensed premises as a going concern); Harrington v Browne ( 1917) 23 CLR 297 (sale of livestock); Lindgren, Time in the Performance of Contracts, 2nd edition, 1982 page 49-50. The defendant breached his contractual obligation to transfer 222,000 shares in Unitract to the plaintiff upon her request. For the purposes of assessing damages for that breach of contract, it does not matter whether the defendant ever declared a valid trust over 222,000 Unitract shares. Nor does it matter whether all the shares that the defendant held were, on 1 August 2003, subject to a restriction on transfer - the shares that he promised to transfer were 222,000 Unitract shares, not 222,000 Unitract shares that were subject to a restriction on transfer. The plaintiff did not know, on 17 March 2003, that the shares of which the defendant was the holder were the subject of a restriction on transfer until 1 November 2004.
(Indeed, she did not know that they were subject to a restriction on transfer of any kind, just that she could not have the shares until 1 August 2003.) Nor does it matter whether Roger Williamson held any shares in Unitract on trust for the defendant, that the defendant could have used to transfer shares to the plaintiff, or sold to acquire other Unitract shares in the market. The measure of damages for breach of contract is that sum of money that would place the plaintiff into the position she would have been in if the contract had been performed. The plaintiff never articulated precisely what she meant when she said that, if the shares had been transferred to her, she would have sold them all ' except for $60,000 worth '. The only realistic meaning, it seems to me, is $60,000 worth of shares, at the unit value that the shares had around the time of transfer. The only other alternative is shares that had a cost price to the plaintiff of $60,000 - but that would be all of the shares, and that is clearly not what she meant. At the price of $2.55 per share that I have adopted in para  above, $60,000 worth of shares equates to approximately 23,530 shares.
Thus, if the defendant had performed his agreement, the plaintiff would have sold 198,470 shares at $2.55 (thereby receiving $506,098) and a further 23,530 shares at $1.80 (thereby receiving $42,354). The total loss she has suffered in consequence of the defendant's breach of contract is $548,452. PART D - WAS THERE A VALID TRUST? In case the Court of Appeal decides that I was mistaken in concluding that there was a valid contract that had been breached, I turn now to consider whether, even if there had been no contract between the plaintiff and the defendant, there was nonetheless a valid trust. There is no doubt that a share can be held on trust.
Lord Shaw said in Lord Strathcona Steamship Co Ltd v Dominion Coal Co Ltd [ 1926] AC 108 at 124: 'The scope of the trusts recognised in equity is unlimited. There can be a trust of a chattel or of a chose in action, or of a right or obligation under an ordinary legal contract, just as much as a trust of land.'
At the time the letter of 17/18 March 2003 was written the defendant was registered as the holder of 1.5 million ordinary shares in Unitract. Mr Curtin submits that it is impossible to have a trust of some only of the shares of a particular class registered in the name of a particular shareholder. In Kauter v Hilton ( 1953) 90 CLR 86 at 97 Dixon CJ, Williams and Fullagar JJ reiterated: '. The established rule that in order to constitute a trust the intention to do so must be clear and that it must also be clear what property is subject to the trust and reasonably certain who are the beneficiaries.' Those ' three certainties ' that are necessary for the existence of a trust arise from the sort of thing that an express trust is. Mr Curtin submits that in the present case trust property is not adequately identified by saying that it is 222,000 of the 1.5 million shares that the defendant held in Unitract.
Rather, the defendant submits, before one can identify the property with certainty, it is necessary to be able to state which 222,000 shares were held on trust, and which were the remaining shares that were not held on trust. Hunter v Moss 153. On 21 December 2003 the English Court of Appeal (Dillon, Mann and Hirst LJJ) delivered an ex tempore judgment in Hunter v Moss [ 1994] 3 All ER 215;  1 WLR 452. That case concerned a company that had 1,000 issued shares, all of one class. The defendant held 950 of those shares.
The Court of Appeal treated the trial judge as having in substance found that the defendant had declared that he held 50 of those 950 shares on trust for the plaintiff. The Court did not accept a submission that that purported trust was ineffective because its subject matter was uncertain. Thus, Hunter v Moss is directly against the contention that Mr Curtin puts. However, Mr Curtin points out that, as a decision of the English Court of Appeal, Hunter v Moss is not binding on me, and is useful only to the degree of the persuasiveness of its reasoning: Cook v Cook ( 1986) 162 CLR 376. He submits that the reasoning in Hunter v Moss is not persuasive, and the conclusion it arrived at mistaken in principle. The Reception Accorded to Hunter v Moss 155.
Very promptly after the decision in Hunter v Moss was delivered, Professor Hayton (as his Honour then was) criticised it as erroneous: Hayton, ' Uncertainty of Subject-Matter of Trusts ', (1994) 110 LQR 335. Professor Hayton later repeated that criticism in other publications: Underhill and Hayton, Law of Trusts and Trustees, 16th edition, 2003 page 78-79; Hayton and Marshall, Commentary and Cases on the Law of Trusts and Equitable Remedies, 12th edition, 2005, para 3-82 - 3-85.
Professor Hayton is not the only critic of the decision. Professor Birks, in an article predominantly devoted to the Privy Council decision in Re Goldcorp Exchange Ltd (in receivership) [ 1995] 1 AC 74 says in passing, ' One inference is that the Court of Appeal's decision in Hunter v Moss must be wrong. ' (' Proprietary Restitution: An Intelligible Approach ' (1995) 9 (2) Trust Law International 43, at 45).
Ford & Lee, Principles of the Law of Trusts, page 4-4054 to 4-4055 in para  accepts Professor Hayton's criticisms, at least in a situation where no value has been given for the purported creation of the trust. Ockelton, ' Share and Share Alike?'  5 CLJ 448 criticises Hunter v Moss, saying, at 450, ' My claim to ownership, whether legal or beneficial, is a nonsense unless I can say what it is that I own, and, in consequence, that you don't '. Hunter v Moss is also criticised in PJ Clarke, ' Land Law and Trusts ' in All ER Rev 1994 at 249-251.
Jacobs', Law of Trusts in Australia, 7th edition, 2006, at  says: '. If there is no property upon which the trust can take effect, or if it is so described by the settlor that it cannot be identified, there can be no trust. For example if a settlor leaves a $1,000 to A and requests that if anything of it remains at A's death, it be left to the Sydney Hospital 'what remains of it' is too vague a description to enable the court of enforce any trust in respect of it' [citations omitted] Likewise, where the subject matter is an undifferentiated portion of a parcel of shares (Herdegen v Federal Commissioner of Taxation ( 1988) 84 ALR 271), or of a deposit in a bank account (Re Appleby's Estate ( 1930) 25 Tas LR 126).' In that same paragraph, Jacobs refers to Hunter v Moss as a ' strongly criticised decision '. The same passages appeared in Jacobs, 6th edition (1997) at . However, the decision in Hunter v Moss has its defenders.
Jill Martin, ' Certainty of Subject Matter: A Defence of Hunter v Moss '  The Conveyancer 223 deals with some of the criticisms of Hunter v Moss in a fashion Martin substantially repeats in Hanbury & Martin, Modern Equity, 17th edition, para 3-023. Support also comes from Professor Goode in ' Are Intangible Assets Fungible?'  LMCLQ 379, and from Sarah Worthington, ' Sorting Out Ownership Interests in a Bulk: Gifts, Sales and Trusts ',  JBL 1, at 13-21. Hunter v Moss was relied on without criticism in Sarah Worthington, ' Proprietary Remedies: The Nexus Between Specific Performance and Constructive Trusts ' (1996) 11 JCL 1 at 22. Dal Pont & Chalmers, Equity and Trusts in Australia, ( 3rd edition, 2004) para [16.65] supported Hunter v Moss, concluding that specific items need not be identified or separated from any pre-existing bulk held by the settlor where intangibles such as shares, money or debt are the subject matter of the trust. The discussion of Hunter v Moss in Moffatt, Trusts Law Text and Materials, 4th edition 2005 at 166-7 appears favourable to Hunter v Moss.
Lewin On Trusts, 17th edition, (2000) at 3-06 does not say outright that the decision is wrong - rather that it ' should perhaps be treated with reserve ', and that, 'Until the question is considered again by the Court of Appeal, however, the safest course must remain precision, and segregation of the settled assets. Alternatively, shares can easily be given to the trustees by transfer and delivery of the certificate.' Theresa Villiers, ' Certainty of Subject Matter in Trusts: The Controversy Continues ' (1998-9) 9 Kings College LJ 112 is also cautious without being outright condemnatory. Heydon & Loughlan, Cases and Materials on Equity and Trusts, 6th edition, 2002, page 520 refer to Hunter v Moss with no hint of criticism.
The decision has been followed by Neuberger J in Re Harvard Securities Ltd (in liq), Holland v Newbury & Anor [ 1997] 2 BCLC 369. As a first instance judge in the English judicial hierarchy, Neuberger J would in any event be found to follow Hunter v Moss. It has also been followed by Yuen J in the Court of First Instance, Hong Kong Special Administrative Region, in Re CA Pacific Finance Ltd (in liquidation) and Anor [ 2000] 1 BCLC 494.
An application for leave to appeal to the House of Lords from the decision in Hunter v Moss was dismissed. The dismissal of that application occurred on 29 March 1994: Hunter v Moss [ 1994] 1 WLR 614 (Lord Templeman, Lord Goff of Chieveley and Lord Woolf). Some academic commentators have pointed out that this dismissal was before the Privy Council gave its decision in Re Goldcorp Exchange Ltd (in receivership) [ 1995] 1 AC 74, on 25 May 1994. However, the dismissal was after the argument in Goldcorp had concluded, on 30 November 1993. While the advice of the Privy Council in Goldcorp was delivered by Lord Mustill, who was not a member of the Appeal Committee that dismissed the application for leave to appeal in Hunter v Moss, Lord Templeman was a member of the Board in Goldcorp, and also of the Appeal Committee that dismissed the application for leave to appeal in Hunter v Moss.
No Australian court appears to have considered the decision, or to have decided the question with which it deals. In those circumstances, I must consider the matter on the basis of general principle. Is the Reasoning in Hunter v Moss persuasive? In this part of the judgment I will refer to pages in Hunter v Moss by their pagination in WLR. The part of the judgment in Hunter v Moss dealing with the present point runs from 457B to 459F. 14-06-02 Balance brought forward 28,353.67 14-06-02 Int. Rte changed to 1.45% 28,353.67 14-06-02 T/f to JMcDonald Trust 20,000.00 8,353.67 14-06-02 Int.
Rate changed to 1% 8,353.67 14-06-02 US$4000 to ATM card 7,050.00 1,303.67 14-06-02 Wire fees 200.00 1,103.67 14-06-02 R W fee on above 700.00 403.67 24-06-02 T/f from ADS 27,000.00 27,403.67 24-06-02 Int. Rate changed to 1.45% 27,403.67 25-06-02 T/f to Unitract 27,000.00 403.67 25-06-02 Int. Rate changed to 1% 403.67 25-06-02 Wire fee 100.00 303.67 25-06-02 R W fee on above 337.50 -33.83 25-06-02 Int. Rate changed to 0% -33.83 28-06-02 T/f from ADS 49,000.00 48,966.17 28-06-02 Int. Rate changed to 1.45% 48,966.17 28-06-02 T/f to Unitract 48,000.00 966.17 28-06-02 Int. Rate changed to 1% 966.17 28-06-02 Wire fee 100.00 866.17 28-06-02 R W fee on above 600.00 266.17 277. The ' bank statement ' debits the $20,000 transferred to J McDonald Trust on 14 June 2002, not 19 June 2002.
19 June 2002 was the date the $20,000 was said, in the letter, to have been debited to the R & E Williamson account with Standard Chartered Bank in Jersey. Further, it appears that each time a debit is made to the ' bank account ' a ' wire fee ' of $100 is charged for each amount, and as well the account is debited with an ' R W fee '. For the amounts transferred on 25 June 2002 and 28 June 2002, the ' R W fee ' is exactly 1.25% of the amount transferred.
However, for the amounts transferred on 14 June 2002 the ' R W fee ' is greater than 1.25%. I also note, however, that the transfers on 14 June 2002 appear to include an amount in US$, that has been debited to the account in an amount stated in A$.
If the ' bank statement ' was indeed a bank statement of a bank account in the name of R & E Williamson, one wonders why Mr Williamson (who I infer is ' R W ') would be debiting fees to his own account. I note that the entries include $27,000 transferred from ' ADS ' (which I infer is in some way connected with the defendant) on 24 June 2002, and transferred out the next day to Unitract, and a further $49,000 transferred from ' ADS ' on 28 June 2002 of which $48,000 was transferred out the same day to Unitract. When the defendant was cross-examined about these entries, he said: 'Well, 'ADS' doesn't necessarily refer to me. I can't confirm it.' That answer is typical of many the defendant gave, where he says he ' can't confirm ' a proposition put to him, when there is no documentary back-up for the proposition available in court.
Other cross-examination on that ' bank statement ' was: 'Q. And I suggest to you that the only explanation for that is that that $76,000, no doubt plus other transfers which we don't have, was used by Roger Williamson to purchase shares in Unitract Limited? To my knowledge I have never transferred money to Roger Williamson.'
That evidence could be correct, if the entry ' t/f from ADS ' did not mean that the defendant personally had transferred the money, but rather that there had been a transfer from an account maintained in the name of, or belonging to, or in some other way connected with, the defendant, even though it was not the defendant who caused that transfer to be made. Other explanations might also be possible. However, the evidence does not enable a conclusion to be made.
The trust account records of John McDonald & Partners show that, in connection with the defendant's acquisition of the Cooper's Shoot property, an amount of $19,982.80 was received on 8 July 2002 from ' International Funds Management ', and disbursed the same day in payment of the deposit. The plaintiff and the defendant lived together at 39 Alcorn Street, Suffolk Park from March 2002 until November 2002. During that time the defendant told the plaintiff that he was going to put money into the initial capital raising of the company, and that he could buy shares at 4¢ per share. He explained to her that the capital raising was raising a certain amount of money before the company could float as a public company. No direct documentary evidence of the defendant ever putting money into the initial capital raising has been tendered. On some occasions the defendant would complain to the plaintiff that ' I have lost a large amount of money because of the change in the exchange rate between when I transferred the money, and when I received it in Australia '.
The evidence discloses nothing specific about the money being talked about, the time or circumstances when it was transferred from Australia, or the time or circumstances in which it was later received in Australia. The reader will recall that Unitract came to be floated through an unlisted company, Musgrave, acquiring all the shares in Unitract Pty Limited in return for the issue of shares in Musgrave. Musgrave then changed its name to Unitract Limited. The agreement dated 11 July 2002 between Musgrave Block Holdings Limited and Unitract Pty Limited does not state at the outset that anyone other than those two companies are parties to it.
However, at the end, after the words ' EXECUTED by the Parties ' there is provision for not only Musgrave and Unitract Pty Ltd to sign, but also for each person who is named as either an existing shareholder in Unitract Pty Ltd or an intended shareholder in Musgrave, to also sign. There are multiple copies of each of the execution pages, some of which have been signed by only one or two people, as though execution pages have been executed in different geographical locations, and then collected.
There is an execution page on which a signature appears opposite the place for Roger Williamson to sign, that signature purporting to be witnessed by ' Mr F R Owen 293 Apartado de Corres Roges Girona Spain retired '. That agreement contains a warranty that at the date of the agreement the capital structure of Unitract Pty Limited is. Shareholders Number of Shares Craig Stephen Thorley 7,950,000 Joseph Hermes Kaal 7,950,000 Alan Dennis Shortall 1,500,000 Roger Williamson 9,600,000 George Sim 3,000,000 Grange Consulting Group Pty Ltd 1,250,000 Seed - Roger Williamson 5,250,000 TOTAL 36,500,000 287. Thus, the defendant is shown as holding 1.5 million shares, and Roger Williamson is shown as holding a total of 14,850,000 shares, of which 5,250,000 are ' seed '. The shares that Musgrave agreed to issue, under that agreement were as follows: '(a) Craig Thorley - 7,950,000 Shares; (b) Joseph Kaal - 7,950,000 Shares; (c) Alan Shortall - 1,500,000 Shares; (d) Roger Williamson - 19,600,000 Shares; (e) George Sim as trustee for the ELM Unit Trust - 3,000,000 Shares; (f) Grange Consulting Group Pty Ltd - 1,250,000 Shares; (g) ASP - 3,000,000 Shares; and (h) Andrew Hart - 5000,000 Shares.' Thus, the defendant's number of shares in Unitract was to be the same as the number of shares he had held in Unitract Pty Limited, while Roger Williamson would hold 4,750,000 more shares in Unitract than he had held in Unitract Pty Limited.
The agreement made provision for the obligations of the parties being subject to various contingencies, one of which was ' the Seed Capital Raising occurring by 19 July 2002 '. The ' Seed Capital Raising ' was defined to be ' an issue of shares by Unitract [Pty Ltd] to raise $400,000 '. A ' Project Summary ' dated July 2002 relating to the Unitract retractable syringe came to be in the hands of the defendant's architect, Mr McKay.
That document set out the proposed capital structure for ' FY 2003 '. It stated that 10 million shares would be issued as seed capital, with the seed raised at 4¢. As it happens, the 5,250,000 shares that Roger Williamson is shown as holding as ' seed ' in the agreement between Musgrave and Unitract Pty Limited, plus the additional 4,750,000 shares that Roger Williamson would be allotted in the listed vehicle, total 10 million. When Unitract floated, Roger Williamson was shown as holding a total of 19.6 million shares, and a further 500,000 options. Of the shares, 2 million were not restricted. The remaining shares were subject to a restriction stated to be ' 12 months from date of issue (15-07-03) '. On 1 July 2003 Unitract made application to ASX for quotation of ordinary fully paid shares which were due to be released from escrow on 19 July 2003.
That application included the 17.6 million restricted shares held in the name of Roger Williamson. I infer that that application was granted. On 12 September 2003 Unitract lodged with ASX a Notice of Change of Interests of Substantial Shareholder lodged by Roger Williamson. It showed that Mr Williamson's relevant interest in shares had changed in three respects - by an off market purchase on 11 June 2003 of 285,714 shares, an on market purchase attributed to the date ' 04/12/02-21/05/03 ' of 343,348 ordinary shares, and an on market sale, attributed to the period ' 23/12/02-05/09/03 ' of 1,044,749 shares. That form identified Mr Williamson as holding 1,285,714 shares registered in his own name, and as being the beneficial owner of a further 17,948,599 shares registered in the name of ' Merkaba Limited '.
The evidence discloses nothing about the place of incorporation, directors or shareholders of Merkaba Limited. On 24 December 2004 Unitract lodged another Notice of Change of Substantial Shareholding with ASX.
It related to a sale by Mr Williamson of a total of 1,441,606 shares. The column headed ' Date of Change ' was not filled in. Individual sale prices were not stated, only '$ 1.26 average '.
After those sales, the shares in which Mr Williamson held a relevant interest decreased to 633,653 held in his own name, and 17,159,054 held in the name of Merkaba Limited, of which he was said to be beneficial owner. Unitract lodged a further Notice of Change in Substantial Shareholding with ASX on 4 October 2005.
It showed that Mr Williamson had, on 21 September 2005, sold a further 2,840,478 shares, and, on an unstated date, had purchased 358,998 shares. By then, according to the form, Mr Williamson had a relevant interest in 291,138 shares held in his own name, 14,170,670 shares held in the name of Merkaba Limited, 50,000 shares held in the name of Prism Nominees Ltd,, 530,000 held in the name of Prism Nominees Ltd, and 269,419 held in the name of Bell Potter Nominees Ltd. Bell Potter Securities was a firm of brokers through which the defendant had transacted business. In all these forms, the address of Roger Williamson is given as ' 410 Langham House, 29/30 Margaret Street London UK W1W85A ' and the address of Merkaba Limited is given as ' Suite 401, 302 Regent Street London UK W183HH '.
For the purpose of proving the quantum of expenditure he had made for the benefit of the plaintiff and her family, the defendant placed into evidence certain bank statements of Underline International Pty Limited. He gives evidence that this company was incorporated in or around April or May 2001.
He says: 'This company did not trade, but was a vehicle by which I, through a. Cheque account. Would pay certain personal expenses. That account was only used by me to pay expenses for the joint benefit of myself, the Plaintiff, and her children. On occasions I would use other accounts to pay for similar expenses, but this account was the one I primarily used. I would deposit funds into that account from time to time from other assets available to me.
There were no withdrawals or debits from this account other than ones made for the joint benefit of myself the Plaintiff and her children, other than insignificant amounts.' He exhibited the bank statements for that account relating to the period from 1 June 2001 to 2 July 2003, then from 2 April 2004 to 4 January 2005. In the bank statements prior to 2 July 2003, no deposits are shown as emanating from Merkaba Pty Limited or Roger Williamson. Three amounts totalling a little less than $115,000 and identified on the statements as ' offshore telegraphic transfer received ' appear in the statements on 3 January 2003, 21 March 2003 and 22 May 2003. There is no other identification of the source of those monies. In the statements that commence on 2 April 2004, there are transfers into the account identified on the face of the bank statement as ' from Merkaba Pty Ltd R Williamson '.
The deposits so made are. 9 July 2004 100,000 12 July 2004 80,000 TOTAL 180,000 304. The trust account ledger of John McDonald & Partners shows, in the account relating to the defendant's proposed acquisition of the Cooper's Shoot Road property, a telegraphic transfer of $102,000 into the account on 8 December 2003 identified as ' Kerkaba P/l - s/duty '. I infer that that is a misprint for Merkaba Pty Ltd, or Merkaba Limited. The trust account ledger shows that on 8 December 2003 an amount of $100,994 was paid out of the account to the Office of State Revenue, for stamp duty on the purchase. That same trust account ledger also shows that on 17 March 2006 the Office of State Revenue refunded the stamp duty. The amount refunded was applied partly in payment of the costs and disbursements of John McDonald & Partners, and the balance, $92,552.20 was paid to Underline International Pty Ltd.
It was not refunded to Merkaba. The defendant had various specific propositions put to him concerning his financial relations with Roger Williamson: 'Q. I am putting to you now that you used money that you had borrowed from various friends, including Louise, the plaintiff in this case, and you used that to buy shares in Unitract on the float in the name of Roger Williamson? What I am putting to you is that you used the money that you had got together in 2002 to buy shares in Unitract Limited in the name of Roger Williamson? I am putting to you that you borrowed money from some of those people and used that money to buy shares in the name of Roger Williamson in Unitract Limited? That's not correct. And between you and Roger Williamson had a lot of shares you could sell?
That is not correct. And indeed a lot of them were sold? That is not correct. And that is where the continuing flow of money has come to you from Roger Williamson into your account Underline? (I interpolate that that ' Yes ' was in the nature of ' I'm following you ', rather than ' I agree with you '.) Q.
Is representing sale of shares which had been released were escrow at that period and sold? That's not correct. I may have asked you the other day - I can't remember - can you give any explanation as to where this flow of money is coming from Roger Williamson into your Underline account which as you agreed last week, or which I put to you was over 700,000 in that period up to August '04. Can you tell the Court where that is coming from other than the sale of Unitract shares during that boom period in '03?
I couldn't say. Mr Shortall, what I am suggesting to you is that after the 1 August '03 you had various opportunities of honouring your promise to transfer 222,000 shares to Louise, didn't you? I would have had, yes.
Why didn't you? My shares were restricted and there wasn't an obligation to do so. Now I have already put one of those options to you, and that was the fact that you had money flowing in from Merkaba, Roger Williamson into your account with Underline, you could have used that? I would have just the one, yes. And you could have prevailed upon Roger Williamson to give you 222,000 out of $19,600,000 to satisfy your promise, couldn't you?
I could have. Any reason why you didn't? I would consider it inappropriate as an officer of the company to suggest something like that to a major shareholder. If Roger Williamson exists you actually are in a very intimate business relationship with him, a relationship out of which you can influence him in that prevail upon him to do your bidding? Um, I would not be in a position to what I consider influence Roger Williamson. And I would suggest to you that due to that relationship between you and him that you could have quite easily got him a measly, meagre 222,000 shares out of shareholding of 19 million 600? Now, I agree.'
I do not regard the defendant's answers to these questions as sufficient to dispose of the submission that Mr Williamson or Merkaba Limited held shares in Unilife in trust for the defendant. But the topic was not fully explored in cross-examination.
In particular, the topic of whether any of the money that Mr Williamson contributed as seed capital to Unitract Pty Ltd (not Unitract Ltd) came in some fashion from the defendant was not explored. When that topic has not been explored, the rule in Browne v Dunn ( 1893) 6 R 67 precludes there being any finding on it. It is of particular importance that this topic was not put to the defendant, when the defendant had manifested in his answers a punctilious attention to the precise detail of questions that he was asked. The plaintiff served on the defendant's solicitors a Notice to Produce the bank statements of Underline International Pty Ltd for the period 3 July 2003 to 1 April 2004.
That is the period in which at least some of the seed capital was subscribed to Unitract Pty Ltd, and also the period in which the flotation of Unitract occurred. That Notice to Produce was first called on on 3 November 2006. I was informed from the Bar table that those documents were in the physical possession of accountants connected with the defendant, where they were ' in storage ', and the accountants had other work commitments which meant that they were not able to remove them from storage. I made clear that, when a Notice to Produce had the force of a Subpoena, it was not satisfactory for the accountants to take the attitude that they were too busy to comply with it. The Notice to Produce was called on on each of the subsequent hearing days, with the same response. In those circumstances, the groundwork is laid for the drawing of a Jones v Dunkel ( 1959) 101 CLR 298 inference against the defendant.
However, what Jones v Dunkel does is to permit an inference that is otherwise available to be more strongly, or more readily drawn. In the present case there are many unusual and unexplained features of the relationship between the defendant and Mr Williamson concerning Unitract. While one possible explanation of the evidence might be that Mr Williamson or Merkaba Limited holds some shares in Unitract on trust for the defendant, there are many other structures, besides a trust, through which an Australian resident can arrange for there to be assets offshore that he or she can in practical terms get the benefit of. If an Australian resident wanted to arrange to have assets held offshore in that fashion, a simple trust that gave the Australian resident a present right to have the assets transferred to him would be a fairly crude and ineffective way of doing it, at least partly because, unless that person was simply prepared to lie about it, any income or capital profits arising from those assets would be included in the calculation of the assessable income, for Australian tax purposes, of that person. In all the circumstances, I do not infer that any of the shares held in the name of Mr Williamson or Merkaba Limited are held on trust for the defendant.
PART G - EFFECT OF RESTRICTED SECURITIES 312. Mr Curtin submits that the plaintiff's case is affected by illegality. The relevant illegality is a contravention of the Stock Exchange Listing Rules relating to shares the subject of an escrow. The illegality is said to affect the plaintiff's case in two separate ways. The first is that it prevents there having been a valid declaration of trust at all. The second is that, if a trust was validly established, the Listing Rules would have prevented there being an actual transfer of the shares to the plaintiff, and hence she is unable to make out the means by which she seeks to quantify her remedy. To consider those arguments, it is necessary to examine in more detail the circumstances in which these restrictions on transfer arise, their terms, the sorts of legal obligation to which they give rise, and the manner in which any contravention is enforced.
I turn first to how the restrictions arise. No rule in the Listing Rules specifically states that the only circumstance in which an entity seeking quotation of any of its securities can issue securities to a person involved in its promotion or flotation is if the securities issued are restricted securities. However it seems to be a fairly clear assumption running through the Listing Rules that an entity seeking quotation can issue securities to a person involved in its promotion or flotation only if the securities issued are restricted securities, to the extent set out in Appendix 9B. In any event, Listing Rule 2.9 provides: 'Quotation of an entity's securities is in ASX's absolute discretion. ASX may grant quotation on any conditions it thinks appropriate.
ASX may grant or refuse quotation without giving any reasons.' And in the present case restriction agreements were in fact entered, relating to the 1.5 million ordinary fully paid shares of the defendant.
Chapter 19 of the Listing Rules contains the following definition of ' restricted securities ': '(a) securities issued in the circumstances set out in Appendix 9B (b) securities that, in ASX's opinion, should be treated as restricted securities.' Appendix 9B sets out various descriptions of people who might be associated with a corporation, and states in relation to each the number of securities that are to be restricted, and the period for which the restriction is to apply. It was pursuant to Appendix 9B that the number of shares in Unitract in relation to which ASX required a restriction, and the period of that restriction, came to be ascertained. Chapter 2 ASX Listing Rule sets out the requirements for quotation of any of the securities of a listed entity. The float of Unitract involved both obtaining quotation of its securities that were suspended, and the issue of new securities, of the same class as the existing ones.
Listing Rule 2.4 provides: 'An entity must apply for quotation of all securities (except restricted securities and securities issued under an employee incentive scheme that are subject to restrictions or transfer) that are in a class of securities that is to be quoted, or that is already quoted.' Thus, it was a requirement of the Listing Rules that Unitract would apply for quotation of the new securities that it proposed to issue as part of the float, except that Rule 2.4 did not require Unitract to apply for quotation of new securities that it issued that were restricted securities. However, Listing Rule 2.12 removes the apparent freedom that Rule 2.4 gives for an entity to choose whether or not to apply for quotation of restricted securities.
Rule 2.12 provides expressly: 'Restricted securities will not be quoted during the escrow period'. Listing Rule 2.8.2 requires a listed entity to apply for quotation of restricted securities within 10 business days after the end of the escrow period. Chapter 9 of the ASX Listing Rules contains, so far as is relevant to the present case, the following provision: ' Application of restrictions and entry into restriction agreements 9.1 An entity which issues restricted securities, or has them on issue, must do each of the following 9.1.3 Apply the restrictions in Appendix 9B. 9.1.4 Enter into a restriction agreement with the holder. When restriction agreements must be entered 9.3 An entity must make sure that all completed restriction agreements are given to ASX before any person gets the restricted securities or any rights in relation to them. This rule does not prevent the person getting the right to receive restricted securities on condition that restriction agreements are entered into. Enforcement of restrictions 9.4 An entity must comply with, and enforce, a restriction agreement, and enforce its constitution, to ensure compliance with the requirements for restricted securities.
Escrow of restricted securities 9.5 An entity must get one of the following undertakings. The entity must give the undertaking to ASX within 2 business days after the issue of the restricted securities.
(a) A bank's or recognised trustee's undertaking to hold the certificate of a restricted security held on the certificated subregister for the escrow period, and not release the certificate without ASX's written consent. (b) An undertaking from the provider of registry services to the entity to impose a holding lock to a restricted security held on the issuer sponsored subregister and not remove the holding lock without ASX's written consent. I interpolate that Unitract's shares were not certificated.
Thus the undertaking under Rule 9.5 that was relevant to it was the undertaking from the provider of registry services to impose a holding lock. Other provisions of Chapter 9 are: Changes of restriction during escrow 9.7 During the escrow period, an entity must not do either of the following. (a) Change an executed restriction agreement. (b) Ask for, or agree to, the following.
This restriction does not apply if ASX has given written consent to the release of the certificate or removal of the holding lock under rule 9.5 or rule 9.17. Release of a certificate held on the certificated subregister by a bank or recognised trustee. Removal of a holding lock on restricted securities held on the issuer sponsored subregister. Holding of restricted securities 9.14 An entity must do one of the following. (a) Issue certificates for restricted securities. The certificate must state that the securities are restricted securities, are not quoted on ASX and the date on which they will cease to be restricted securities. (b) Enter restricted securities on the issuer sponsored subregister.
Chapter 19 of the Listing Rules defines ' holding lock ' as having ' the meaning in section 2 of the ASTC Settlement Rules. ASTC is ASX Settlement and Transfer Corporation Pty Ltd. It is a subsidiary of ASX.
It is an approved CS facility for settlement of securities transactions. The ASTC Settlement Rules Section 2 provides: 'Holding Lock' means, in relation to a Holding on either the CHESS Subregister or an Issuer Operated Subregister, a facility that prevents Financial Products from being deducted from, or entered into, a Holding pursuant to a Transfer or Conversion.'
The ASTC Settlement Rules 8.15.18 provides: 'If an Issuer receives a Message requesting authorisation of a Transfer or Conversion of Financial Products in a Locked Holding that is an Issuer Sponsored Holding: (a) the Issuer must reject the Message and notify ASTC of the rejection and the reason for the rejection; and (b) on receipt of a notification under Rule 8.15.18 (a), ASTC must notify the Participant that initiated that Transfer or Conversion of the rejection' 327. Thus, in the case of an uncertificated holding that is issuer sponsored, the responsibility for not registering a transfer of shares subject to a holding lock lies with the issuer of the securities. It is because in practice an issuer of securities engages a provider of registry services to operate its share registry that ASX requires from the provider of registry services the undertaking referred to in Rule 9.5 (b). The holding lock is an administrative arrangement whereby the provider of registry services will not add to or deduct from the balance of securities shown in the register as held by a particular person. Thus, the restrictions on transfer of restricted securities are of three distinct types. First, the fact that they are not, and cannot be, quoted means that there is no practical opportunity to sell them by an on-market sale while the restriction lasts. Second, the existence of the ' holding lock ' places a practical obstacle in the way of any transferee of the shares becoming registered as holder of them, no matter how the transferee's claim to be registered might have arisen.
Third, the terms of the restriction agreement itself gives rise to legally enforceable restrictions. The Restriction Agreement 329. The Restriction Agreement required by Listing Rule 9.1.4 was entered into, on 28 October 2002, between the defendant and Unitract. It was executed as a deed.
In it, the defendant was referred to as ' the holder ', and Unitract was referred to as ' the entity '. The escrow period was stated to be 24 months from the date on which re-quotation of the entity's ordinary fully paid shares commences on ASX. The document contained covenants that: 'ESCROW RESTRICTIONS 1. During the escrow period, the holder will not do any of the following. (a) Dispose of, or agree or offer to dispose of, the restricted securities. (b) Create, or agree or offer to create, any security interest in the restricted securities.
(c) Do, or omit to do, any act if the act or omission would have the effect of transferring effective ownership or control of the restricted securities. We will comply with chapter 9 of the listing rules. If any of us is not a listed entity, we will comply as if we were a listed entity. Each of us will take any steps we are able to take that are necessary to enable any of the others to comply.' The final clause of the Restriction Agreement incorporates into it definitions of terms contained in the Listing Rules.
Chapter 19 of the Listing Rules includes, in Rule 19.12, a definition of ' dispose ' as meaning: 'to dispose or agree to dispose directly or through another person by any means, including the following. Granting or exercising an option Using an asset as collateral Decreasing an economic interest Disposing of part of an asset.'
In my view, it would be a breach of Clause 1 of the Restriction Agreement for the defendant to declare a trust of any of those 1.5 million securities. The Restriction Agreement is not one to which ASX is a party. However, if there were to be a breach of the Restriction Agreement, Unilife would owe an obligation, under Listing Rule 9.4, to enforce the Restriction Agreement and ensure compliance with the requirements for restricted securities.
By virtue of its admission to the official list, Unitract would owe ASX a contractual obligation to comply with the listing rules. It is not necessary for present purposes to consider whether Unitract would also owe a contractual obligation to comply with the rules to other market participants (cf Clarke v Earl of Dunraven [ 1897] AC 59; Forbes & Bundock v Australian Yachting Federation Inc., Booth & Landenberger ( 1996) 131 FLR 241). The legal effect of the Listing Rules is not confined to the law of contract. As well, section 793C Corporations Act 2001 provides: 'Enforcement of Operating Rules (1) If a person who is under an obligation to comply with or enforce any of a licensed market's operating rules fails to meet that obligation, an application to the Court may be made by: (a) ASIC; or (b) the licensee; or (c) the operator of a clearing and settlement facility with which the licensee has clearing and settlement arrangements; or (d) a person aggrieved by the failure. (2) After giving an opportunity to be heard to the applicant and the person against whom the order is sought, the Court may make an order giving directions to: (a) the person against whom the order is sought; or (b) if that person is a body corporate-the directors of the body corporate; about compliance with, or enforcement of, the operating rules.
(3) For the purposes of this section, a body corporate that is, with its acquiescence, included in the official list of a licensed market, or an associate of such a body corporate, is taken to be under an obligation to comply with the operating rules of that market to the extent to which those rules purport to apply to the body corporate or associate. (5) For the purposes of this section, if a body corporate fails to comply with or enforce provisions of the operating rules of a licensed market, a person who holds financial products of the body corporate that are able to be traded on the market is taken to be a person aggrieved by the failure. (6) There may be other circumstances in which a person may be aggrieved by a failure for the purposes of this section.'
Section 761A Corporations Act 2001 contains a definition of ' operating rules ' that has the effect that the Listing Rules of ASX are ' operating rules ' for the purpose of section 793C. As well, section 1101B Corporations Act 2001 provides: '(1) The Court may make such order, or orders, as it thinks fit if: (a) on the application of ASIC, it appears to the Court that a person. (iii) has contravened a provision of the operating rules.
Of a licensed market or of the operating rules of a licensed CS facility;. (b) on the application of a market licensee, it appears to the Court that a person has contravened the operating rules. Of a licensed market operated by the licensee; or (c) on the application of a CS facility licensee, it appears to the Court that a person has contravened a provision of the operating rules of a licensed CS facility operated by the licensee; or (d) on the application of a person aggrieved by an alleged contravention by another person of a provision of the operating rules. Of a licensed market, it appears to the Court that: (i) the other person did contravene the provision or condition; and (ii) the applicant is aggrieved by the contravention.
However, the Court can only make such an order if the Court is satisfied that the order would not unfairly prejudice any person. Note: For examples of orders the Court could make, see subsection (4). (2) For the purposes of paragraph (1)(d), if a body corporate contravenes a provision of the operating rules of a licensed market, a person who holds financial products of the body corporate that are able to be traded on the licensed market is taken to be a person aggrieved by the contravention. (3) Subsection (2) does not limit the circumstances in which a person may be aggrieved by a contravention for the purposes of paragraph (1)(d). Examples of orders the Court may make (4) Without limiting subsection (1), some examples of orders the Court may make under subsection (1) include. (b) an order giving directions about complying with a provision of the operating rules. Of a licensed market or of the operating rules of a licensed CS facility to a person (or the directors of the body corporate, if the person is a body corporate) who contravened the provision; and.
(e) an order restraining a person from acquiring, disposing of or otherwise dealing with any financial products that are specified in the order; and. (g) an order appointing a receiver of property (see subsection (9)) of a financial services licensee; and (h) an order declaring a contract relating to financial products or financial services to be void or voidable; and (i) an order directing a person to do or refrain from doing a specified act, if that order is for the purpose of securing compliance with any other order under this section; and (j) any ancillary order considered to be just and reasonable in consequence of the making of an order under any of the preceding provisions of this subsection.'
Some of the history of such provisions is traced in Latimer, ' Legal Enforcement of Stock Exchange Rules ' (1995) 7 (2) Bond LR 1. When Young J decided Fire & All Risks Insurance Co Ltd v Pioneer Concrete Services Ltd ( 1986) 10 ACLR 760 sections 14 and 42 of the Securities Industry Code (NSW) contained provisions conferring powers on the Court analogous to those now conferred by sections 793C and 1101B Corporations Act 2001. Young J said, at 765: 'The listing requirements are, as they state themselves, standards which govern the conditions upon which a company can remain on the official list. Ordinarily the remedy for gross breach of those requirements will be de-listing, if other factors do not indicate that such is not in the public interest, and it seems to me that the powers of the court under ss 14 and 42 of the Securities Industry Code are a supplement to the powers of the exchange, a supplement that is similar to the powers which traditionally equity had in respect of the common law. The traditional role of equity in those cases was to intervene where the common law remedy was insufficient or where there was some equitable fraud or oppression or unfairness in the way in which the rules were being administered in the common law action. Likewise, under s 42 the court, to my mind, will ordinarily only interfere in analogous cases, though in so saying I do not intend to shut out the exceptional case that will arise from time to time, which may be outside these guidelines. This analysis seems to me to be consistent with what little authority there is on s 42 or its predecessor; see eg Devereaux Holdings Pty Ltd v Pelsart Resources NL ( 1985) 9 ACLR 879 and Repco Ltd v Bartdon Pty Ltd [ 1981] VR 1 at 9; 4 ACLR 787 at 796: note too Boomalli Ltd v Hake ( 1982) 7 ACLR 516 at 525; Designbuild Aust Pty Ltd v Endeavour Resources Ltd ( 1980) 5 ACLR 610 at 634 and NCSC v Industrial Equity Ltd [ 1982] 1 NSWLR 42 at 49; 6 ACLR 1 at 9.'
Though some aspects of this decision of Young J were disapproved by the Court of Appeal (Street CJ, Kirby P and Samuels JA) in FAI Insurances Ltd & Anor v Pioneer Concrete Services Ltd & Ors (No 2) ( 1986) 10 ACLR 801, the paragraphs that I have quoted were not amongst those criticised. Similarly, in Re Delta Gold Ltd [ 2001] FCA 1817; (2001) 40 ACSR 347 at , Allsop J said, concerning the then analogue of section 793C: 'The terms of s 777 make it plain that a breach of the listing rules is not an unlawful act. The legislation provides for a method of enforcement of those rules; but breach of the listing rules is not to be equated with breach of a statute or acting in a contravention of a statute. Section 777(2) provides for the satisfaction of the opening words of s 777(1) in relation to listed companies: that it is a person who is under an obligation to comply with the business rules or listing rules.' If the defendant were to declare a trust of his restricted securities, and Unitract were to fail to take action to enforce the restriction agreement, it would be in breach of its obligation under Rule 9.4 of the Listing Rules, but that is different to the defendant being in breach of them.
No argument was put that there was any implied obligation arising under the Listing Rules, that the defendant would be in breach of by declaring a trust, so that the defendant personally could be the subject of an order that the court might make under section 793C or 1101B. When no argument was put on that topic, and whether there is any such obligation might be a matter of some general importance, I prefer not to make any finding about whether there is any such implied obligation. Rather, I hold that, even if it were the case that the defendant would also be in breach of the Listing Rules by declaring a trust of any of his restricted securities, that would mean only that the court would have a discretionary power to make an order relating to those securities, which it might or might not exercise. In these circumstances, in my view, it is not illegal for the defendant to declare a trust of restricted securities that he holds. That conclusion seems to accord with the result in DiLucia v Clemens 541 A 2d 765 (1988), a case considered at Para  above. The securities over which a trust was declared in that case were restricted transfer shares, but this did not prevent the creation of a trust, because it was unnecessary for the shares to be transferred, as the Settlor already owned them.
Without a fuller understanding of the precise transfer restrictions that were involved in that case than is obtainable from the report, I do not, however, rely on DiLucia v Clemens in reaching my conclusion that it is not illegal for the defendant to declare a trust of restricted securities that he holds. A different, but related argument is whether the fact that the Restriction Agreement, on its true construction, contains a contractual obligation by the defendant not to declare a trust of his shares in itself makes them incapable of being held on trust. In my view it does not. A valid trust can be declared of a policy of life insurance which contains a covenant that it is not assignable: In Re Turcan ( 1888) 40 Ch D 5.
As well, the contractual restriction on alienation contained in the Restriction Agreement is in a separate agreement, and is not part of the chose in action that constitutes the share. Nor did the contractual obligation of the defendant to Unitract not to dispose of the restricted securities create any property rights in Unitract, that might have priority over any property rights that the plaintiff acquired through a declaration of trust. Our commitment to you We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations. If you follow our information and it turns out to be incorrect, or it is misleading and you make a mistake as a result, we will take that into account when determining what action, if any, we should take. Some of the information on this website applies to a specific financial year. This is clearly marked.
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