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Supreme Court of Western Australia |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION : ESPERANCE CATTLE COMPANY PTY LTD -v- GRANITE HILL PTY LTD [2014] WASC 279
CORAM : MARTIN CJ
HEARD : 17 FEBRUARY 2014
DELIVERED : 5 AUGUST 2014
FILE NO/S : CIV 1594 of 2013
BETWEEN : ESPERANCE CATTLE COMPANY PTY LTD
Plaintiff
AND
GRANITE HILL PTY LTD
First Defendant
NAVARAC PTY LTD
Second Defendant
MAMMOTH INVESTMENTS PTY LTD
Third Defendant
BOTT LIVESTOCK PTY LTD
Fourth Defendant
BOTT CROPPING PTY LTD
Fifth Defendant
(BY ORIGINAL ACTION)
AND
GRANITE HILL PTY LTD
Plaintiff
AND
ESPERANCE CATTLE COMPANY PTY LTD
First Defendant
NAVARAC PTY LTD
Second Defendant
MAMMOTH INVESTMENTS PTY LTD
Third Defendant
ALLEN BRUCE CARATTI
Fourth Defendant
MADDELEINE CARATTI
Fifth Defendant
(BY COUNTERCLAIM)
AND
GRANITE HILL PTY LTD
Plaintiff
AND
NAVARAC PTY LTD
First-named Third Party
MAMMOTH INVESTMENTS PTY LTD
Second-named Third Party
ALLEN BRUCE CARATTI
Third-named Third Party
MADDELEINE CARATTI
Fourth-named Third Party
(FIRST DEFENDANT'S THIRD PARTY CLAIM)
AND
NAVARAC PTY LTD
First Plaintiff
MAMMOTH INVESTMENTS PTY LTD
Second Plaintiff
MADDELEINE CARATTI
Third Plaintiff
AND
GRANITE HILL PTY LTD
First Defendant
ESPERANCE CATTLE COMPANY PTY LTD
Second Defendant
ALLEN BRUCE CARATTI
Third Defendant
(BY SECOND, THIRD AND FIFTH DEFENDANTS BY COUNTERCLAIM'S COUNTERCLAIM)
Catchwords:
Torts - Trespass - Requirement of occupation or control
over land prior to alleged trespass before a claim can be brought for trespass
-
Meaning of occupation or control - Nature of relief - Nature of award of mesne
profits - Whether plaintiff entitled to account
of profits
Trusts law -
Effect of appointment of new trustee on shares held by previous trustee in that
capacity - Whether new trustee member
of companies pursuant to shares which are
trust property regardless of whether transfers are executed or
effective
Corporations law - Effect at law of notation of beneficial
shareholding on company register of members - Reference in company register
of
members to shareholding as beneficial or on trust
Corporations -
Management and administration - Directors - Indoor management rule - Person
'having dealings with a company' - Statutory
assumptions - Sublease signed by a
person not named as a director in records held by ASIC - Whether company can
rely on the assumptions
Trade practices - Conduct likely to mislead or
deceive - misleading and deceptive conduct in relation to capacity to execute
and honour
lease
Legislation:
Acts Interpretation Act 1901 (Cth), s
15AA
Australian Consumer Law (WA), s 18
Companies (New South
Wales) Code 1981 (NSW), s 68A
Companies and Securities Legislation
(Miscellaneous Amendments) Act 1983 (Cth)
Companies Act 1961
(WA), s 140(3)
Companies Act 1981 (Cth), s 68, s 80, s 68A, s
68D
Company Law Review Act 1998 (Cth)
Corporations Act 1989
(Cth), s 164
Corporations Act 2001 (Cth), s 127, s 128, s 129, s
130, s 169, s 231, s 249A, s 250D, s 1071B
Corporations
Regulations 2001 (Cth), r 7.11.14, r 7.11.22, sch 2A
Transfer of Land
Act 1893 (WA), s 138B
Trustees Act 1972 (WA), s 7(6), s 10
Result:
The lease between Esperance Cattle Company Pty Ltd and
Navarac Pty Ltd executed on 10 December 2012 is valid and enforceable, and
Esperance Cattle Company Pty Ltd are entitled to an order for possession and a
declaration to that effect
Esperance Cattle Company Pty Ltd is entitled
to damages for trespass from Granite Hill Pty Ltd, but is not entitled to an
account
of profits, nor to declaratory relief against Bott Cropping Pty Ltd or
Bott Livestock Pty Ltd
Granite Hill Pty Ltd is entitled to assume that
Mammoth Investments Pty Ltd duly executed a sublease in its favour, and Mammoth
Investments
Pty Ltd is prevented from denying that assumption, and Granite Hill
Pty Ltd is entitled to declaratory orders to that effect
Granite Hill Pty
Ltd is entitled to damages from Mammoth Investments Pty Ltd for breach of the
sublease
Granite Hill Pty Ltd is entitled to damages from Mr Allen
Caratti for misleading and deceptive conduct
The claim by Granite Hill
Pty Ltd against Mammoth Investments Pty Ltd and Ms Maddeleine Caratti for
misleading and deceptive conduct
is dismissed
Mammoth Investments Pty Ltd
is entitled to damages for misleading and deceptive conduct from Mr Allen
Caratti
Category: A
Representation:
Original Action
Counsel:
Plaintiff : Mr D J O'Callaghan QC & Ms H Tiplady
First Defendant : Mr J A Thomson SC & Mr J C Yeldon
Second Defendant : Mr D R Ryan SC & Ms P M Tantiprasut
Third Defendant : Mr D R Ryan SC & Ms P M Tantiprasut
Fourth Defendant : Mr J A Thomson SC & Mr J C Yeldon
Fifth Defendant : Mr J A Thomson SC & Mr J C Yeldon
Solicitors:
Plaintiff : Lavan Legal
First Defendant : Pacer Legal Pty Ltd
Second Defendant : Lemonis & Tantiprasut Lawyers
Third Defendant : Lemonis & Tantiprasut Lawyers
Fourth Defendant : Pacer Legal Pty Ltd
Fifth Defendant : Pacer Legal Pty Ltd
Counterclaim
Counsel:
Plaintiff : Mr J A Thomson SC & Mr J C Yeldon
First Defendant : Mr D J O'Callaghan QC & Ms H Tiplady
Second Defendant : Mr D R Ryan SC & Ms P M Tantiprasut
Third Defendant : Mr D R Ryan SC & Ms P M Tantiprasut
Fourth Defendant : Mr J W K Burnside AO QC & Mr A Metaxas
Fifth Defendant : Mr D R Ryan SC & Ms P M Tantiprasut
Solicitors:
Plaintiff : Pacer Legal Pty Ltd
First Defendant : Lavan Legal
Second Defendant : Lemonis & Tantiprasut Lawyers
Third Defendant : Lemonis & Tantiprasut Lawyers
Fourth Defendant : Arthur Metaxas & Co
Fifth Defendant : Lemonis & Tantiprasut Lawyers
First Defendant's Third Party Claim
Counsel:
Plaintiff : Mr J A Thomson SC & Mr J C Yeldon
First-named Third Party : Mr D R Ryan SC & Ms P M Tantiprasut
Second-named Third Party : Mr D R Ryan SC & Ms P M Tantiprasut
Third-named Third Party : Mr J W K Burnside AO QC & Mr A Metaxas
Fourth-named Third Party : Mr D R Ryan SC & Ms P M Tantiprasut
Solicitors:
Plaintiff : Pacer Legal Pty Ltd
First-named Third Party : Lemonis & Tantiprasut Lawyers
Second-named Third Party : Lemonis & Tantiprasut Lawyers
Third-named Third Party : Arthur Metaxas & Co
Fourth-named Third Party : Lemonis & Tantiprasut Lawyers
By Second, Third and Fifth Defendants by Counterclaim's Counterclaim
Counsel:
First Plaintiff : Mr D R Ryan SC & Ms P M Tantiprasut
Second Plaintiff : Mr D R Ryan SC & Ms P M Tantiprasut
Third Plaintiff : Mr D R Ryan SC & Ms P M Tantiprasut
First Defendant : Mr J A Thomson SC & Mr J C Yeldon
Second Defendant : Mr D J O'Callaghan QC & Ms H Tiplady
Third Defendant : Mr J W K Burnside AO QC & Mr A Metaxas
Solicitors:
First Plaintiff : Lemonis & Tantiprasut Lawyers
Second Plaintiff : Lemonis & Tantiprasut Lawyers
Third Plaintiff : Lemonis & Tantiprasut Lawyers
First Defendant : Pacer Legal Pty Ltd
Second Defendant : Lavan Legal
Third Defendant : Arthur Metaxas & Co
Case(s) referred to in judgment(s):
Summary
1 Young River Station is a rural property situated 90 km west of Esperance. It has a combined area exceeding 7,000 ha and is well suited to mixed farming (cropping and grazing). Each of Esperance Cattle Company Pty Ltd (Esperance Cattle) and Granite Hill Pty Ltd (Granite Hill) claims to be entitled to possession of Young River Station.
2 Esperance Cattle claims to be entitled to possession by virtue of a lease granted by Navarac Pty Ltd (Navarac). Navarac is the registered proprietor of the land comprising Young River Station. Granite Hill claims to be entitled to possession by virtue of a sublease granted by Mammoth Investments Pty Ltd (Mammoth). Mammoth was the lessee of Young River Station pursuant to a lease granted by Navarac at the time Granite Hill asserts that Mammoth executed a sublease in its favour.
3 Navarac and Mammoth are both companies controlled by members of the family of the late Sergio (Mick) Caratti. Sergio Caratti was survived by his wife, Maddeleine, and their two sons John and Allen. Since at least 2002 there has been an internecine dispute between the members of the Caratti family with respect to the management and control of the various companies which together comprise the Caratti group, and the very substantial assets owned by the companies within that group. The major protagonists in that dispute are Ms Maddeleine Caratti and Mr John Caratti on the one side, and Mr Allen Caratti on the other.
4 The events which have given rise to the dispute between Esperance Cattle and Granite Hill are a manifestation of the longrunning battle for control of the companies within the Caratti group. For reasons which will be explained, determination of the competing claims for possession of Young River Station turns to a large extent upon the determination of issues with respect to the entitlement to control of Navarac and Mammoth. Those issues are raised in counterclaims and third party proceedings to which Ms Maddeleine Caratti and Mr Allen Caratti are parties.
5 There was a contest for physical occupation of Young River Station between representatives of Esperance Cattle and representatives of Granite Hill in the early hours of 1 March 2013. Following that contest, Granite Hill ended up in possession, and Esperance Cattle commenced these proceedings in which it claims an order for possession of Young River Station and, as against Granite Hill, mesne profits or damages or an account of profits.
6 If Granite Hill is not entitled to possession of Young River Station, it claims damages from Mammoth for breach of the sublease which it claims, and from Mammoth, Mr Allen Caratti and Ms Maddeleine Caratti for misleading and deceptive conduct. Mammoth also claims damages from Mr Allen Caratti for misleading and deceptive conduct.
7 It was common ground that the competing claims of Esperance Cattle and Granite Hill would be mitigated by the early determination of the question of which of them was entitled to possession of Young River Station, especially if that question could be determined prior to the commencement of the 2014 cropping season. For that reason, a case management timetable was set by reference to a trial taking place in February 2014. At the conclusion of the hearing on 27 February 2014, the parties agreed with my suggestion that I should announce my conclusion with respect to the entitlement to possession of the property for reasons to be published later. Accordingly, on 7 March 2014, I announced my conclusion that Esperance Cattle was entitled to possession of the property, and orders were made to give effect to that conclusion.
8 My reasons for that conclusion follow, together with the reasons for my conclusion that:
(a) Esperance Cattle is entitled to damages from Granite Hill for trespass, but not to an account of profits;
(b) Granite Hill is entitled to damages from Mammoth for breach of the sublease, and to damages from Mr Allen Caratti for misleading and deceptive conduct;
(c) Granite Hill is not entitled to damages for misleading and deceptive conduct from Mammoth and Ms Maddeleine Caratti;
(d) Mammoth is entitled to damages from Mr Allen Caratti for misleading and deceptive conduct.
9 A more detailed description of the complex web of issues that required determination in these proceedings depends upon a detailed description of the facts giving rise to those issues. I will commence by setting out my findings of fact. Those findings span events which took place over more than 20 years and are derived from a substantial body of documentary evidence, together with the evidence of various witnesses.
10 For reasons which I will develop, I have very serious reservations with respect to the testimony given by Ms Maddeleine Caratti and Mr Allen Caratti, and reject their evidence in a number of material respects. However, generally speaking, I have no such reservations with respect to the evidence given by the other witnesses. In particular, the evidence given by Mr John Caratti and Mr Aaron Caratti was, in each case, plausible and generally consistent with the documentary evidence, except for some of the documents filed with the Australian Securities and Investments Commission (ASIC) which I find were prepared and submitted without attention to detail. I accept their evidence generally. Although I found Mr Bott to be somewhat evasive during crossexamination as to the extent of his knowledge of the difficulties within the Caratti family during February 2013, and in his attempts to explain his repeated failure to provide a copy of the sublease upon which Granite Hill relied despite repeated request, in the result, the incontrovertible documentary evidence with respect to communications which took place during that month provides a quite sufficient basis for any necessary findings with respect to Granite Hill's knowledge at that time, at least for present purposes.
The facts
The family
11 Sergio (Mick) Caratti and his wife, Maddeleine, had two sons, John and Allen. John Caratti was born in January 1950, and Allen Caratti was born in February 1956. Maddeleine Caratti was born in April 1929 and was almost 85 years old at the time she gave evidence. Sergio Caratti died in May 1992.
12 Sergio Caratti was a very successful farmer and property developer. He was assisted in the development of his business by his wife and by his sons when they came of age. The family business has been carried on through a series of related corporate entities since at least 1960 when Caratti Holding Co Pty Ltd was incorporated. Since then, related corporate entities have been used to buy and sell farming and other properties throughout Western Australia. During the 1980s and 1990s, various farming properties were acquired near Esperance, using those related corporate entities.
The Family Court proceedings
13 In 1991, Mr Allen Caratti was involved in contested Family Court proceedings against his ex wife, Ms Marcia Spargo, who was seeking a property settlement. Ms Spargo was endeavouring to establish Mr Allen Caratti's interest in the companies within the Caratti group for the purposes of those proceedings. In early 1991, according to Mr John Caratti, Mr Allen Caratti advised him that he wanted to move 'everything' out of his name in order to protect himself and the group from Ms Spargo's claims. In February 1991, Mr Allen Caratti resigned as a director of Caratti Holding Co Pty Ltd, Harvard Nominees Pty Ltd (Harvard), Mammoth, Robinswood Pty Ltd, Tercon Holdings Pty Ltd, Tosman Pty Ltd (Tosman), and Venetian Nominees Pty Ltd (Venetian), all of which are companies within the Caratti group.
Zel Nominees Pty Ltd and the Maddeleine Caratti Trust
14 Zel Nominees Pty Ltd (Zel) was incorporated in 1973. In 1991, one of the two issued shares in Zel was transferred to each of Mr Allen Caratti and Mr John Caratti, who have remained its only shareholders at all material times. In 1991, the only directors of Zel were John and Allen Caratti. However, during 1992, according to records filed with the Australian Securities Commission, the composition of the board was altered, such that the only directors were Ms Maddeleine Caratti and Ms Maria Panizza, who is Ms Maddeleine Caratti's mother.
15 By an undated deed stamped in December 1991 between Ms Maria Panizza and Zel, the Maddeleine Caratti Trust was created. Ms Maddeleine Caratti was, and has at all material times, remained the appointor of the trust. Zel was named as trustee in the trust deed. The appointor of the trust has the power to remove the trustee and appoint another or others in its place. The Maddeleine Caratti Trust is a discretionary trust, in that the trustee has the power to allocate and distribute both income and capital as between the beneficiaries of the trust. The capital beneficiaries of the trust are, and at all material times have been, Mr John Caratti and Mr Allen Caratti.
The transfer of shares to Harvard and Zel
16 According to Mr John Caratti, during 1991, in the context of the proceedings in the Family Court, Allen stated that he wished to move any shares in companies within the Caratti family group out of his name. However, Allen was concerned that John Caratti might disavow his interest in the companies later on. According to Mr John Caratti, he (John) proposed that shares in the family companies held by either of them should be transferred across to the S Caratti Family Trust and the Maddeleine Caratti Trust, because he and Mr Allen Caratti were both beneficiaries of those trusts. The S Caratti Family Trust was a unit trust, but Mr Allen Caratti and Mr John Caratti were beneficiaries of the trusts which sat underneath the unit holders who were Venetian as trustee of the J M Caratti Family Trust, and Kelena Nominees Pty Ltd as trustee of the M Caratti Trust.
17 In his first witness statement, which became part of his evidence in chief, Mr Allen Caratti made no reference to these matters, other than to baldly assert that in 1991, when the Maddeleine Caratti Trust was created, he did not transfer any shares to Zel as trustee for that trust. Significantly, he does not deny a transfer to Zel in its own right, as beneficial owner and he expressly pleads that Zel was the beneficial owner of shares which he previously held.
18 In his second witness statement, in which he responds directly to a number of assertions made in Mr John Caratti's first witness statement, and which also formed part of his evidence in chief, after referring to the relevant paragraphs in Mr John Caratti's statement, Mr Allen Caratti does not deny the conversation asserted by Mr John Caratti in relation to the Family Court proceedings, or endeavour to explain his resignations as a director in 1991, but instead asserts that the share which he owned in Zel was owned by him beneficially and had never been transferred into the Maddeleine Caratti Trust. Plainly, that assertion does not respond directly to the evidence given by John Caratti with respect to their conversation, as the relevant role of Zel was as trustee of the Maddeleine Caratti Trust, and Ms Maddeleine Caratti as appointor had power to remove Zel as trustee if and when she wished. Accordingly, the ownership of shares in Zel is not to the point of the conversation described by Mr John Caratti, which was directed to the ownership of shares in companies which held assets beneficially in their own right.
19 During crossexamination, Mr Allen Caratti denied any conversation with his brother relating to moving assets out of his name to protect them from Ms Spargo's claim. However, he admitted that he resigned as a director at the time of her claims in order to distance himself from the companies concerned, and it is clear from other evidence, including his own later admissions, that he was at some pains to conceal his true worth from Ms Spargo, and that he initially succeeded in that objective.
20 As will be seen, subsequent events relating to the ownership of shares in relevant family companies are entirely consistent with the evidence given by Mr John Caratti with respect to his conversation with his brother, and I accept that evidence, and reject Mr Allen Caratti's evidence on that subject.
21 Mr John Caratti gave evidence to the effect that at some time after this discussion with Mr Allen Caratti, instruments were prepared and executed which had the effect of transferring shares in Caratti group companies which were held in his name or in the name of Mr Allen Caratti to either Zel, in its capacity as trustee of the Maddeleine Caratti Trust, or to Harvard in its capacity as trustee of the S Caratti Family Trust. Mr John Caratti has searched for those transfer documents but has been unable to find them. He thinks that they may have been provided to Mr Allen Caratti for his use in the Family Court proceedings in which he was engaged, or perhaps kept in a folder in an office occupied by Mr John Caratti at 524 Hay Street, Perth, when he was preparing his defence of criminal proceedings brought against him. When Mr John Caratti was convicted of those offences and incarcerated, that office was cleaned out, and he has not seen the share transfers since that time.
22 In his second witness statement, Mr Allen Caratti denies Mr John Caratti's evidence to the effect that the shares were transferred to Zel, in its capacity as trustee of the Maddeleine Caratti Trust, and points to the fact that transfer documents having that effect have never been produced. In the context of his pleaded case to the effect the shares were held by Zel beneficially and not as trustee, this evidence must be construed as not denying that the shares were transferred to Zel, but as only denying that they were transferred to Zel in its capacity as trustee of the Maddeleine Caratti Trust.
23 Mr John Caratti's evidence to the effect that shares in Caratti group companies were transferred by him and Mr Allen Caratti to Harvard and Zel is corroborated by the annual returns for each of Mammoth, Venetian and Tosman filed from 1993 onwards, in which Harvard and Zel are reported as the only shareholders in those companies, whereas Sergio Caratti and John Caratti had been previously reported as the only shareholders in Mammoth and Venetian, and John Caratti and Allen Caratti had previously been reported as the only shareholders in Tosman. The annual returns of Harvard from 1993 onwards reported Ms Maddeleine Caratti and Zel as the only shareholders in that company, in place of Mr Allen Caratti and Mr John Caratti. It is to be remembered that Harvard acted as the trustee of the S Caratti Family Trust. As I have noted, no change was reported in the shareholders of Zel, who have been reported as Mr Allen Caratti and Mr John Caratti at all material times.
24 There is no evidence to suggest that Mr Allen Caratti made any complaint or demur with respect to the repeated lodgement of annual returns showing Harvard and Zel as the only shareholders in Mammoth, Venetian and Tosman, and Ms Maddeleine Caratti and Zel as the only shareholders in Harvard. This seems most unlikely unless, as I find, he acquiesced in the transfer of the shares. Further and in any event, as he expressly pleads that the shareholdings in each of Mammoth, Venetian, Tosman and Harvard were as depicted in the annual returns of those companies, he cannot be heard to deny that the transfers took place.
Were the shares transferred to Harvard and Zel as trustees?
25 The annual returns filed with ASIC on behalf of Mammoth, Venetian and Tosman are not consistent with Mr John Caratti's evidence to the effect that the shares were transferred to Harvard and Zel in their capacities as trustees. That is because, in each relevant annual return, in answer to the question 'Are shares beneficially owned? (Y/N)', the letter 'Y' has been placed on the relevant form. Many of the annual returns were signed by Mr John Caratti. His evidence was to the effect that he did not notice that the returns incorrectly asserted that the shares were beneficially owned by the relevant shareholder at the time he signed them. His evidence was that the returns were prepared by an accountant employed by the Caratti group, Mr Isaac Ellison.
26 Mr Ellison gave evidence in which he confirmed that he was responsible for the preparation of the relevant annual returns. His evidence, which was not challenged, was to the effect that in October 1993 he took the relevant annual returns for that year to Mr John Caratti, who advised that the shareholders in the companies needed to be changed not just because of the passing of the late Mr Sergio Caratti but also 'because Marcia is attacking Allen in the Family Court'. According to Mr Ellison, Mr John Caratti instructed him to cross out the names of the previous shareholders and to write in the names of Zel and Harvard as the shareholders in Mammoth, Tosman and Venetian, and in the case of Harvard, the shareholders were to be Zel and Ms Maddeleine Caratti. According to Mr Ellison, when he asked where the documents relating to the change in shareholding were, and who was transferring shares to whom, he was told not to worry about it, and to just write the new shareholders in. According to Mr Ellison, he specifically asked Mr John Caratti whether Zel and Harvard were to own the shares beneficially, to which he received an affirmative response.
27 As I have noted, Mr Ellison's evidence, which was given in the form of the tender of a written witness statement, was not challenged. Notwithstanding the lack of challenge to that evidence, I nevertheless entertain a doubt as to his capacity to recall conversations with Mr John Caratti which took place more than 20 years ago in the level of detail reported in his statement, given that the subject matter of those conversations was unlikely to have been of great moment to Mr Ellison. However, it does not seem to me to matter whether or not Mr John Caratti told Mr Ellison to report Harvard and Zel as the beneficial owners of the shares in the relevant companies given that there is no doubt that he signed many annual returns which contain that assertion. That is because I have concluded, for the reasons which follow, that the assertions contained in the annual returns with respect to the beneficial ownership of the shares held by Harvard and Zel in the relevant Caratti group companies, and any direction given by Mr John Caratti to Mr Ellison to prepare the annual returns in that form were a mistake, and did not reflect the true intentions of the parties to the transactions for the transfer of the shares to Harvard and Zel. Those parties were relevantly Mr John Caratti and Mr Allen Caratti in their personal capacities and as agents for the relevant corporate entities (Mammoth, Tosman and Venetian).
28 There can be no doubt that the purpose of Mr Allen Caratti's resignation as a director of various companies within the Caratti group, and the purpose of the various transactions which resulted in the alterations to the shareholding in relevant companies within that group, was to attempt to shield Mr Allen Caratti, and the companies within the group, from the claims being made by Ms Spargo in the Family Court proceedings involving Mr Allen Caratti. No other possible explanation for those events has been proffered in the evidence or in submissions on behalf of Mr Caratti. Indeed, during crossexamination, counsel for Mr Allen Caratti put to Mr John Caratti that this was the purpose of the changes in shareholdings in the family group of companies during 1992, and that Mr Sergio Caratti was the instigator of the scheme to protect the companies within the group from claims by Ms Spargo, though he denied this latter proposition.[1]
29 It seems clear that the attempts to conceal Mr Allen Caratti's worth from Ms Spargo were successful, at least at first. In 1992, she commenced proceedings to set aside the property settlement initially ordered by the Family Court in late 1991 on the ground that Mr Allen Caratti had not fully disclosed his wealth, and in 1995 succeeded in obtaining another order for property settlement, substantially increasing the value of the property which Mr Allen Caratti was ordered to provide to her.
30 As I will explain below, Mr Allen Caratti asserts that certain steps and transactions which were undertaken in 2002 were invalid because Zel did not own the share which it held in each of Harvard, Mammoth, Venetian and Tosman in its capacity as trustee of the Maddeleine Caratti Trust, but beneficially, in its own right. He relies upon the entries in the annual returns to which I have referred in support of that assertion. However, it is an assertion which would entirely defeat the purpose of the various steps which were taken between 1991 and 1993 in an attempt to defeat Ms Spargo's claim against Mr Allen Caratti and is therefore inconsistent with the intention which should be imputed to the parties to those transactions.
31 Essentially that is because Mr Allen Caratti has at all material times held one of the two issued shares in Zel. The annual returns for Zel report that he holds that share beneficially and, as I have noted, in his evidence Mr Allen Caratti asserted, 'The share I owned in Zel was owned by me beneficially'. Accordingly, if Zel held a share in each of Mammoth, Venetian and Tosman beneficially, and not as trustee of the Maddeleine Caratti Trust, Mr Allen Caratti would have held, in effect, a beneficial interest in half of that share, through his beneficial interest as the holder of one of the two shares issued in Zel. Further, if the annual returns were correct, and the shares held by Harvard in each of those companies were held by it beneficially, and not in its capacity as trustee of the S Caratti Family Trust, once Zel became the holder of one of the two issued shares in Harvard, Mr Allen Caratti would have held, in effect, a 25% interest in Harvard through his 50% shareholding in Zel. So, if the annual returns were correct, and all the shares held by Harvard and Zel were held beneficially, and not as trustees, Mr Allen Caratti's 50% shareholding in Zel would have given him, in effect, an interest equivalent to 25% in Harvard, and an interest equivalent to 37.5% of each of Mammoth, Venetian and Tosman.
32 On the other hand, if Mr John Caratti's evidence as to the conversation which he had with Mr Allen Caratti is accepted, and their common intention was to transfer the shares to Harvard in its capacity as trustee of a unit trust in which the units were held ultimately by other trusts in favour of Mr John Caratti and Mr Allen Caratti, and by Zel in its capacity as trustee of a discretionary trust, the beneficiaries of which were Mr John Caratti and Mr Allen Caratti, the objective of depriving Mr Allen Caratti of any immediate beneficial interest, and rendering the achievement of any such interest subject to the exercise of a trustee's discretion in his favour was achieved. Mr Allen Caratti did not have apparent control of either trustee - by 1992 he was not a director Zel and was only one of three directors of Harvard, and by 1993 he was not a director of either Harvard or Zel.
33 It is significant that Mr Allen Caratti's pleaded case expressly asserts that the shares were held as depicted in the annual returns - including by Harvard and Zel as beneficial owners. However, he provides no evidence as to how or why the shares (some of which were his) were transferred to Harvard and Zel as beneficial owners, nor has any explanation for that course been suggested in submissions on his behalf. His evidence on these issues ultimately comes down to nothing more than a bald denial of John's evidence to the effect that the shares were transferred to Harvard and Zel as trustees, without proffering any evidence as to what actually took place.
34 During crossexamination, Mr John Caratti readily accepted that he had previously described the transfer of shares in the family group companies out of Mr Allen Caratti's name as a 'sham' in a statement which he gave to Ms Marcia Spargo's solicitors after she commenced proceedings in the Family Court to reopen the orders made with respect to the settlement of property as between her and Mr Allen Caratti.[2] However, he denied using the word 'sham' in the sense in which it is used by lawyers - that is, to denote a transaction which is not intended to have any effect or an effect different to its terms.[3] What he meant to convey by the word 'sham' was the proposition that despite the transfer of shares to Zel and Harvard, they were still effectively held on behalf of him and Mr Allen Caratti, through their interests as beneficiaries in the trusts which sat under those companies. Although Mr John Caratti accepted in crossexamination that Mr Allen Caratti was not named as a beneficiary in the deeds of settlement creating the J M Caratti Family Trust and the M Caratti Trust, his evidence was that Mr Allen Caratti was named as a beneficiary by deeds altering the trusts after they were executed.[4] He was not asked when those alterations took place and the evidence does not establish it. In any event, it is clear that Mr Allen Caratti has always been a named beneficiary in the Maddeleine Caratti Trust.
35 The evidence given by Mr John Caratti in relation to these matters is plausible, consistent with the undoubted objective of the various steps which were taken in an attempt to defeat Ms Spargo's claim, and is also consistent with such documents as have been adduced in evidence, with the exception of the entries on the annual returns relating to the beneficial ownership of the shares, which I find to be mistaken. I accept his evidence on this subject and reject that given by Mr Allen Caratti.
Share trading in Zel
36 In that portion of Mr Allen Caratti's witness statement in which he responds to Mr John Caratti's evidence with respect to the transfer of shares to Zel, he asserts that he used Zel to trade shares during the 1990s. In crossexamination he accepted that his evidence was intended to convey the impression that the shares in which he traded were not held on behalf of the Maddeleine Caratti Trust. He also accepted that he borrowed $638,000 from Leveraged Equities in order to finance the share trading which he undertook through Zel, and that Leveraged Equities took security over the shares acquired with those funds. Mr Allen Caratti also accepted that an accountant from Ernst & Young, who were the accountants for Zel and the Maddeleine Caratti Trust, had informed Leveraged Equities that the shares were held by the trust and not by the company (Zel) in its own right.
37 The profit and loss account prepared for the Maddeleine Caratti Trust for the year ended 30 June 1993 was tendered in evidence. Those accounts record a secured loan in favour of Leveraged Equities in an amount of $638,850 as one of the noncurrent liabilities of the trust.
38 Also in evidence is a copy of the income tax return lodged on behalf of the Maddeleine Caratti Trust for the financial year ended 30 June 1994. A manuscript addition to that copy of the income tax return records an adjustment to losses for the year ended 30 June 1993 'to reflect transfer to Zel Nominees of Shares (dividends) + Leveraged Equity Account (interest) on advice from client'.
39 The accounts for the Maddeleine Caratti Trust for the year ended 30 June 1994 were also tendered in evidence. Those accounts show that the secured loan of $638,850 shown in the 1993 accounts for the trust was not recorded in the 1994 accounts. A manuscript addition on the relevant page of the accounts reports, 'this loan transferred to Zel Nominees'.
40 During crossexamination, Mr Allen Caratti asserted that the loan to Leveraged Equities, and the share trading should never have been recorded in the accounts of the trust, as those activities were undertaken by Zel in its own right. However, in crossexamination he accepted that accountants would know the difference between the correction of an error in past accounts, and a transfer of a loan.[5] He also accepted that he had never disclosed an interest in shares in listed companies in the course of his Family Court proceedings with Ms Spargo,[6] consistently with his earlier acceptance of the proposition that it was in his interests to conceal his true financial interests from her. Those concessions support my conclusion that Mr Allen Caratti conducted share trading in 1993 using Zel as trustee of the Maddeleine Caratti Trust with a view to concealing his interest in the shares in which he was trading from Ms Spargo, and that the only reason those arrangements were altered during the financial year ending 30 June 1994 was because the financier of that share trading, Leveraged Equities, discovered from the accountants for the trust that the shares were held in the trust and insisted that the arrangements be changed, in order that Zel could provide good security for the funds advanced, through its interest in the share purchases financed.
41 This finding of fact significantly reinforces the findings which I have made in relation to the objective of the restructure which was implemented following the discussions between Mr Allen Caratti and Mr John Caratti in 1991, and my rejection of Mr Allen Caratti's evidence to the effect that he did not transfer shares to Zel in its capacity as trustee for the Maddeleine Caratti Trust.
Purchase of Young River Station
42 In 1995, Navarac purchased Young River Station. As Navarac was incorporated in 1995, it seems a fair inference that it was acquired as a vehicle for the acquisition of Young River Station. Navarac has two issued shares, one of which has been held at all material times by Venetian and the other by Tosman.
The Torradup fraud
43 In early 2000, farming land adjoining Young River Station known as 'Torradup Farm' became available for purchase. Torradup Nominees Pty Ltd (Torradup) was incorporated by Allen and John Caratti in order to acquire Torradup Farm and to form part of the Caratti group of companies. The directors and shareholders of Torradup were Mr Allen Caratti and Ms Maddeleine Caratti. As Mr John Caratti had by then been convicted of tax offences, he was not permitted to be a company director.
44 At this time, the National Australia Bank (NAB) was the principal financier to the Caratti group. Banking transactions were conducted through the Perth office of NAB. Mr Allen Caratti was advised by representatives of NAB that the group had reached its lending limit, and that no further funds would be made available unless and until an information memorandum relating to the group had been prepared by a top tier firm of accountants.
45 Mr Allen Caratti concocted a scheme to circumvent NAB's requirements in conjunction with Mr Viv Jenaway, the manager of the Kewdale branch of NAB. The essence of the scheme involved an advance of around $2 million to Torradup, organised through the Kewdale branch of NAB, while concealing the fact that Torradup was a Caratti group company. For some reason not explained by the evidence, another component of the scheme involved an advance of $600,000 to Mr Kevin Pollock, who was a business acquaintance of Mr Allen Caratti.
46 Torradup's connection with the Caratti group was concealed by Mr Allen Caratti, who altered the annual return which had been prepared for Torradup to lodge with ASIC by crossing out his own name and the name of his mother as directors and inserting the name of Mr Peter Drayton as sole director, and by completing the form so as to assert that Mr Peter Drayton was the sole owner of the two issued shares in the company. Mr Peter Drayton was a close personal friend of Mr Allen Caratti, who had worked as a farm hand on the Caratti farms. Mr Allen Caratti also prepared, signed and lodged with ASIC another form advising that Mr Drayton had replaced him and his mother as directors of Torradup. At the same time, Mr Allen Caratti prepared a written agreement with Mr Drayton, signed by each of them, which provided a put and call option in relation to the shares in Torradup - pursuant to which Mr Allen Caratti had the right to call for the shares at a price of $1 each, and Mr Drayton had the right to put the shares to Mr Allen Caratti at the same price. The agreement provided that in the event Mr Allen Caratti exercised the call option, a fee of $300,000 would be paid to Mr Drayton. Obviously this was Mr Drayton's reward for participating in the scheme to deceive the bank. Mr Caratti conceded in crossexamination that the $300,000 to be paid to Mr Drayton was effectively a fee for his services.[7]
47 Mr Jenaway requested Mr Allen Caratti to provide documents which would establish that Torradup had a sufficient income stream to service the funds which were to be advanced. In order to satisfy that requirement, Mr Allen Caratti photocopied a letter agreement between Mammoth and a third party, YYH Holdings Pty Ltd (YYH), recording an agistment agreement under which YYH would pay Mammoth $260,000 over one year in order to agist stock on Torradup. Mr Allen Caratti altered the photocopy so as to show that the agreement was between YYH and Torradup, not Mammoth, to provide for a term of four years, not one, and to impose the obligation to fertilise the property upon YYH, not Mammoth. The forged letter was provided to NAB.
48 Plainly, this scheme was both corrupt and dishonest, as was Mr Allen Caratti's involvement in it. However, in crossexamination and in his responsive statement, Mr Allen Caratti denied that characterisation of the scheme or his conduct and sought to implicate his mother in the scheme, when there is no other evidence to sustain that assertion.[8] Mr Allen Caratti's involvement in this fraudulent scheme, and his denial of its dishonesty under oath are amongst the reasons why I approach all of his evidence with extreme caution.
Another scheme to deceive the bank
49 Mr John Caratti gave evidence to the effect that Mr Allen Caratti had also concocted a scheme for the transfer of earthmoving and farming machinery owned by members of the Caratti group to a company apparently controlled by Mr Peter Drayton. The earthmoving equipment was then mortgaged to NAB to secure additional loan funds. In the implementation of this scheme, Mr Allen Caratti sent letters to NAB on the letterhead of Mammoth asserting that contracts had been entered into with Mr Drayton for the hire of the equipment in question which would provide a revenue stream which would enable Mr Drayton to service the loans. According to Mr John Caratti, the letters were false, as the equipment referred to was never owned by Mr Drayton or any company associated with him and was never hired by Mammoth, nor required at the projects referred to in the letters.
50 As I have noted, Mr Allen Caratti's second written statement responded to a number of the assertions made in, inter alia, Mr John Caratti's first written statement, which contained the evidence of the matters to which I have just referred. Mr Allen Caratti did not respond to those assertions in his responsive statement, nor in his oral evidence, nor was Mr John Caratti's evidence with respect to these matters challenged in crossexamination. There is therefore no reason why Mr John Caratti's evidence with respect to these matters should not be accepted. This is further evidence of Mr Allen Caratti's dishonesty and provides another reason why I approach all of his evidence with great caution.
The bank's response
51 In the result, Mr Jenaway committed suicide and the scheme was discovered. In the responsive statement to which I have referred, Mr Allen Caratti asserted that Mr Jenaway was the architect of the Torradup scheme and that it was he who suggested that the documents which were ultimately submitted to NAB be prepared. Mr Allen Caratti also asserted in that statement that the agreement with Mr Drayton for a put and call option was Mr Jenaway's suggestion. Of course, Mr Jenaway is unable to contradict these assertions, which I consider to be inherently implausible, given that it was Mr Allen Caratti who was to obtain the substantial benefits from the scheme, not Mr Jenaway. In his responsive statement, Mr Allen Caratti attempted to diminish his role in the scheme by asserting that, 'Mr Jenaway ... was not misled or deceived by any of the documents submitted to him', as if that assertion somehow diminished the deception of NAB, on the basis that Mr Jenaway was an officer of NAB. Mr Allen Caratti's attempt to attribute primary responsibility for this scheme to Mr Jenaway, and to diminish his own role in its propagation are also matters which reflect adversely on his credit.
52 After Mr Jenaway's death, NAB conducted an investigation into its dealings with the Caratti group which revealed the matters to which I have referred. Unsurprisingly, NAB advised Mr John Caratti that it had decided that in due course it would call up all the facilities it had extended to the Caratti group. Mr John Caratti and his mother then engaged in negotiations with NAB, the thrust of which was to establish that neither had any knowledge or involvement in the fraudulent transactions to which I have referred. At the conclusion of those negotiations, they were advised that NAB would renew its credit facilities to the group but only on condition that Mr Allen Caratti ceased to be a director of relevant companies within the group, and ceased to be a signatory to any of the bank accounts.
53 That advice was incorporated as a condition of NAB's offer to provide credit facilities to companies within the Caratti group, as evident in a letter from NAB dated 1 May 2002 relating to the facility in favour of Navarac. A specific condition of the approval of that facility was:
Allen Caratti is to step down as a director of all group companies, apart from Tosman Pty Ltd as trustee for the AB Caratti Family Trust No 1., with advice from a legal firm acceptable to the Bank to be provided to the Bank by 15/5/2002. Allen Caratti must not have any signatory capacity in relation to any Group accounts.
Similar conditions were attached to the offer of facilities to other companies within the group.
54 After receiving the letters from NAB, Ms Maddeleine Caratti and Mr John Caratti asked Mr Allen Caratti to resign as a director of the group companies. He refused. Despite repeated requests that Mr Allen Caratti resign, he remained intransigent and suggested that finance be obtained from another lender.
55 As a consequence of the position adopted by Mr Allen Caratti, steps were taken to effect his removal as a director from various companies within the Caratti group. As the validity of those steps is at issue in these proceedings, it is necessary to set them out in detail, and in logical sequence.
Mr John Caratti replaces Zel as trustee of the Maddeleine Caratti Trust
56 As I have noted, Ms Maddeleine Caratti is the appointor of the Maddeleine Caratti Trust, with power to remove and appoint the trustee of that trust. That power was exercised by a deed dated 13 May 2002, executed by Ms Maddeleine Caratti and Mr John Caratti. The effect of the deed was to remove Zel as trustee of the trust, and to appoint Mr John Caratti as trustee of the trust. The deed also purports to convey the legal interest in all the property and assets of the trust from Zel to Mr John Caratti, although it seems doubtful that such a provision was either necessary or effective, because legal title to the assets in the trust would have passed in any event by virtue of the appointment.[9]
57 Forms recording the transfer of one share in each of Harvard, Mammoth, Tosman and Venetian from Zel as trustee of the Maddeleine Caratti Trust to Mr John Caratti as trustee of the Maddeleine Caratti Trust were also executed on 13 May 2002, by Ms Maddeleine Caratti on behalf of Zel as transferor, and Mr John Caratti as transferee. By this time the directors of Zel were Ms Maddeleine Caratti and Mr Allen Caratti. In each form the consideration for the transfer was expressed to be 'Deed made 13 May 2002'.
58 I digress to observe that s 10 of the Trustees Act 1962 (WA) relevantly provides:
(1) Where a new trustee is appointed, the execution of the instrument of appointment vests, subject to the provisions of this section, the trust property for which the new trustee is appointed in the persons who become and are the trustees, as joint tenants for the purposes of the trust, without any conveyance.
...
(3) Subsections (1) and (2) do not apply -
(a) to land conveyed by way of mortgage for securing money subject to the trust, except land conveyed on trust for securing debentures or debenture stock; or
(b) to any property, including property subject to the operation of the Transfer of Land Act 1893, which is transferable only in books kept by a company or other body or in manner directed by or under an Act of Parliament.
(4) In the case of any property referred to in subsection (3), the execution of the instrument of appointment of a new trustee or of the instrument of discharge, as the case may be, for the purposes of the trust vests in the persons who become and are the trustees or in the continuing trustee, as the case may be, the right to call for a conveyance of the property and to sue for and recover the property.
59 Although the matter was not debated at any length in the course of argument in this case,[10] it is at least arguable that s 10(3)(b) applies to shares in companies, with the consequence that a written conveyance of the share from Zel to Mr John Caratti was required in order to perfect the transfer of legal title, notwithstanding s 7(6) and s 10(1) of the Trustees Act. There is a contrary argument, deriving from s 1071B(5) of the Corporations Act 2001 (Cth), which provides that s 1071B(2), which prohibits a company from registering a transfer of shares unless a proper instrument of transfer has been delivered to the company, does not prejudice the power of a company to register as the holder of shares a person to whom the right to the shares has devolved by operation of law. In any event, if a written conveyance was required to effect the transfer of legal title in the shares, s 10(4) of the Trustees Act conferred upon Mr John Caratti a right to call for the written conveyance from Zel, and Zel was obliged to execute such a conveyance, either by implication from s 10(4) of the Trustees Act, or by operation of the general law.
60 Attached to Mr John Caratti's first witness statement are documents which he describes as true copies of the register of members for each of Mammoth, Harvard, Tosman, Venetian and Navarac as at 13 May 2002. His oral evidence was to the effect that he caused those documents to be prepared.
61 In the case of Harvard, the document described as 'register of members' records that Zel, in its capacity as trustee for the Maddeleine Caratti Trust, ceased to be the holder of one ordinary share on 13 May 2002, and Mr John Caratti as trustee for the Maddeleine Caratti Trust became the holder of that share with effect from 13 May 2002. The document also records that Ms Maddeleine Caratti remained the holder of one ordinary share.
62 In the case of each Mammoth, Venetian and Tosman, the documents entitled 'register of members' record that Zel as trustee of the Maddeleine Caratti Trust ceased to be the holder of one ordinary share in the company on 13 May 2002, and that Mr John Caratti as trustee for the Maddeleine Caratti Trust became the holder of that share on that date. In each case, Harvard Nominees is recorded as the holder of the other issued share in the company.
63 As I have found that the shares held by Zel in each of Harvard, Mammoth, Venetian and Tosman were held in its capacity as trustee of the Maddeleine Caratti Trust, and that the appointor of that trust removed Zel as trustee appointing Mr John Caratti as trustee in its place, and that instruments recording the transfer of the shares from Zel to Mr John Caratti were executed, there is no reason to doubt the accuracy of the documents entitled 'register of members' produced by Mr John Caratti.
64 In the case of Navarac, the document entitled 'register of members' bears no date, but is said by Mr John Caratti to be a true copy of the register as at 13 May 2002. The document records that Venetian and Tosman each hold one of the two ordinary shares issued in Navarac. There is no reason to doubt the accuracy of this document, which corresponds with Mr Allen Caratti's pleaded case.
The circulating resolutions removing Mr Allen Caratti as a director, and appointing Mr Aaron Caratti
65 Documents dated 14 May 2002, each described as 'Memorandum of Circulating Resolution signed pursuant to CORPORATIONS ACT 2001 SECT 249A' were executed in respect of each of Harvard, Mammoth, Tosman, Venetian and Navarac. Each document was executed by Mr John Caratti and Ms Maddeleine Caratti, and appears to have been witnessed by Ms Valerie Oddie, who is a neighbour of Ms Maddeleine Caratti, except in the case of Navarac, where the document is executed only by Ms Maddeleine Caratti and also apparently witnessed by Ms Valerie Oddie.
66 In the case of Harvard, the document records that the sole shareholders of Harvard are Mr John Caratti in his capacity as trustee of the Maddeleine Caratti Trust, he having been appointed to that office by deed made 13 May 2002, and Ms Maddeleine Caratti. The document records unanimous resolutions to the effect that Mr Aaron Caratti (who is one of the sons of John Caratti) be appointed a director of the company, and that Mr Allen Caratti be removed as a director of the company, and that Ms Maddeleine Caratti be appointed as the corporate representative of Harvard, to exercise all of any of its powers at meetings, or relating to resolutions to be passed without meetings, pursuant to s 250D of the Corporations Act.
67 I digress to observe that it is common ground that the Articles of Association of each company (or in more contemporary terms, the Constitution of each company) empowered the shareholders to remove a director of the company, and to appoint new directors of the company. It is also common ground that the Articles (or Constitution) of each company contain no express provision as to the manner in which the power to appoint a corporate representative conferred by s 250D of the Corporations Act is to be exercised.
68 In the case of each of Mammoth, Tosman and Venetian, the documents record that the sole shareholders are Mr John Caratti in his capacity as trustee of the Maddeleine Caratti Trust, having been appointed to that office by deed made 13 May 2002, and Harvard, represented by Ms Maddeleine Caratti as its duly appointed corporate representative, by appointment made that day. Each document records resolutions to the effect that Mr Aaron Caratti be appointed as a director of the company, and that Mr Allen Caratti be removed as a director, and that Ms Maddeleine Caratti be appointed as the corporate representative of the company for the purposes of exercising all or any of its powers at meetings or with respect to resolutions to be passed without meetings, pursuant to s 250D of the Corporations Act.
69 In the case of Navarac, the document records that the only shareholders of the company are Venetian and Tosman, and that Ms Maddeleine Caratti, as authorised representative of each company, has resolved that Mr Aaron Caratti be appointed as a director, and Mr Allen Caratti be removed as a director, and that Ms Maddeleine Caratti is appointed as the corporate representative of Navarac for the purposes of exercising all or any of its powers at meetings or with respect to resolutions to be passed without meetings pursuant to s 250D of the Corporations Act.
The advice to NAB
70 It will be recalled that NAB required advice from a legal firm acceptable to it confirming Mr Allen Caratti's removal as a director of all group companies (other than Tosman) by 15 May 2002, as a condition of the facilities which were offered on 1 May 2002. In satisfaction of that condition, Davies & Co, solicitors, wrote to each of NAB and Ms Maddeleine Caratti confirming that in their view, the resolutions of various companies within the Caratti group, including Harvard, Tosman, Venetian, Mammoth and Navarac, each made on 14 May 2002, had removed Mr Allen Caratti from the office of director in each company.
Tosman
71 I digress to observe that the condition of approval required by NAB did not require the removal of Mr Allen Caratti as a director of Tosman, apparently on the basis that Tosman was the trustee of the AB Caratti Trust. However, it is clear that the same steps were taken in relation to his removal from Tosman as were taken in relation to his removal from each other relevant company. In crossexamination, Mr John Caratti justified that course on the basis that Tosman was a guarantor to the facilities provided by NAB, and NAB refused to deal with Mr Allen Caratti, so he needed to be removed.[11] He denied that the reason Mr Allen Caratti was removed as a director of Tosman was because Tosman was a shareholder in Navarac and Mr Allen Caratti's removal as a director of Tosman was necessary to enable him to be removed as a director of Navarac. I accept Mr John Caratti's evidence in this respect, as it is entirely plausible. Mr Allen Caratti's removal as a director of Navarac was achieved by a written resolution executed by Ms Maddeleine Caratti as the corporate representative of each of Venetian and Tosman. Her appointment as corporate representative of Tosman was secured by resolution of its shareholders who were, at the relevant time Harvard, also represented by Ms Maddeleine Caratti, and Mr John Caratti as trustee of the Maddeleine Caratti Trust. The composition of the board of Tosman had no bearing upon the steps that were taken to remove Mr Allen Caratti as a director of Navarac, as those steps all depended upon the resolution of the members of the relevant companies, not their boards of directors.
The documents lodged with ASIC
72 On 17 June 2002, documents were lodged with the ASIC in respect of each relevant company, reporting that Mr Aaron Caratti had commenced as a director, and that Mr Allen Caratti had ceased to hold office as a director, in each case with effect from 14 May 2002. The forms were signed by Ms Maddeleine Caratti.
73 Mr Allen Caratti did not, and still does not, accept that he had been validly removed from office as a director of the relevant companies within the Caratti group. On 26 July 2002, he took matters into his own hands, and lodged a document with ASIC purporting to record his appointment as a director of Mammoth with effect from 14 May 2002. He signed the document. There is no suggestion that he had the authority of either the board of directors or the shareholders of Mammoth to lodge that document, or that in fact he was appointed as a director of Mammoth on 14 May 2002.
74 On 5 August 2002, Mr Allen Caratti lodged a similar document with ASIC in relation to Navarac, purporting to record his appointment as a director with effect from 14 May 2002. The document is signed by him. Again, there is no suggestion that Mr Allen Caratti had the authority of either the shareholders or the board of directors of Navarac to lodge that document, or that in fact he was appointed as a director of Navarac on 14 May 2002.
75 Mr Allen Caratti's actions in lodging documents at ASIC without the authority of the companies in respect of which the documents were lodged, and which falsely assert that he was appointed a director of these companies on 14 May 2002, also reflect adversely on his honesty and credit.
The 2002 proceedings
76 On 22 August 2002, Mr Allen Caratti commenced proceedings in this court against his mother and Mr Aaron Caratti seeking, amongst other things, declaratory relief to the effect that he remained a director of relevant companies within the Caratti group, who were also named as defendants to those proceedings.
77 Those proceedings were compromised by a deed executed by Ms Maddeleine Caratti, Mr John Caratti and Mr Allen Caratti on 26 September 2002. As the proper construction and effect of the deed is one of the issues in the case, it is necessary to set out its relevant terms in some detail.
78 The deed recites that the parties either jointly or severally control various entities including Harvard, Mammoth, Navarac, Tosman and Venetian, each of which are given a number between one and seventeen in the clause of the deed entitled 'Background'.
79 The operative terms of the deed record Ms Maddeleine Caratti's covenant to appoint John and Allen Caratti jointly to be joint appointors of any trust of which she is appointor with effect from her death, and another covenant by her to make a will bequeathing any assets other than personal effects to John and Allen Caratti in equal shares. The deed includes a further covenant by Ms Maddeleine Caratti to exercise any powers she has a director or shareholder of any of the corporations named in the document so as to further the terms of the agreement.
80 Relevant clauses of the agreement include the following:
5.1 Caratti Holdings
5.2 Jamesway
5.3 Navarac
5.4 Mammoth
5.5 Harvard
5.6 Venetian
...
...
...
15.1 Mammoth
15.2 Navarac
The 2002 annual returns
81 The 2002 annual returns for each of Harvard, Mammoth, Venetian and Tosman were all lodged in November 2002. Relevant entries in the returns appear to have been written in hand by Mr Isaac Ellison. However, although Mr Ellison was called, he gave no evidence as to the circumstances in which those entries were made. The returns do not reflect the transfer of the share in each company from Zel to Mr John Caratti, and report Zel as a shareholder in each company. The returns continue to erroneously report Harvard and Zel as beneficial owners of the shares held in Mammoth, Venetian and Tosman. The returns appear to reflect the state of the records maintained at ASIC with respect to the directors of each company, and report Ms Maddeleine Caratti, Mr Aaron Caratti and Mr Allen Caratti as directors of each of Mammoth, Venetian and Tosman, and Ms Maddeleine Caratti and Mr Aaron Caratti as the directors of Harvard. However, there is no evidence to suggest that any action was taken to appoint Mr Allen Caratti as a director of Mammoth, Venetian or Tosman following his removal on 14 May 2002. The evidence generally leads me to the conclusion that the members of the Caratti family were less than punctilious in ensuring the accuracy of the information provided in the annual returns of the many companies within the Caratti group.
Attempts to enforce the deed of compromise
82 The evidence does not disclose what, if anything, occurred following the execution of the deed of compromise in September 2002. The evidence to which I will now refer gives rise to an inference, and I find, that nothing occurred with respect to the implementation of the 2002 deed, and in particular, neither Ms Maddeleine Caratti, nor Mr Aaron Caratti resigned as directors of any companies within the Caratti group. Nor does the evidence provide any reason for the apparent failure to take any immediate action to implement the settlement agreement.
83 By letter dated 15 March 2004, Mr Allen Caratti wrote to his mother and his brother referring to the compromise agreement made in September 2002, and enclosing a copy of that agreement. The letter asserts:
3.1 the appointment of Jeremy Birman as my nominee as a director of the various companies;
3.2 the removal of other directors so that there will be two directors only;
3.3 allocation of shares to achieve equality as between John and me.
84 The letter then contains a detailed series of instructions with respect to the steps to be taken in each company which were said to effect implementation of the deed. Relevantly to these proceedings, the letter proposed that Mr Aaron Caratti should resign as a director of each of Harvard, Mammoth, Navarac, Tosman and Venetian, and that Mr Jeremy Birman should be appointed as a director of each. The letter also proposed that share transfers should occur to secure the result that Mr John Caratti and Mr Allen Caratti each held one of the two issued shares in those companies.
85 On 30 March 2004, solicitors acting on behalf of Mr Allen Caratti wrote to Ms Maddeleine Caratti demanding that she comply with the requests made in his letter of 15 March 2004. The letter foreshadowed convening extraordinary general meetings of the various companies in order to remove Mr Aaron Caratti as a director if he did not resign voluntarily. The letter also foreshadowed the commencement of proceedings if the steps demanded were not taken within seven days of the date of the letter.
86 On 6 April 2004, solicitors acting on behalf of Mr Allen Caratti wrote to Mr John Caratti referring to Mr Allen Caratti's letter of 15 March 2004 and demanding that Mr John Caratti take such steps as were within his power to give effect to the terms of the deed of compromise. A copy of the letter to Ms Maddeleine Caratti was enclosed with that letter.
87 On 22 April 2004, Mr Allen Caratti commenced proceedings in this court against his brother, his mother, Mr Aaron Caratti, and named various companies within the Caratti group, including all companies relevant to these proceedings as additional defendants. In a statement of claim endorsed on the writ, the deed of compromise dated 26 September 2002 was pleaded, together with the correspondence in March and April 2004 demanding implementation of that deed. The relief sought included specific performance of the deed of compromise and various mandatory injunctions requiring the parties to take various steps which were said to implement the deed of compromise.
88 In May 2004, Mr Allen Caratti issued a chambers summons in the proceedings to which I have referred, seeking interlocutory injunctive relief including an order restraining Mr John Caratti from acting as a director of any of the companies in the group (relying upon his conviction and subsequent disqualification from acting as a director for a period of five years following conviction), and seeking the appointment of Mr Jeremy Birman as a director of each of the companies in the group.
89 The evidence does not establish what, if anything, occurred in these proceedings, or how they were resolved, but it seems clear that Mr Jeremy Birman was never appointed as a director of any of the companies within the Caratti group.
90 On 6 September 2005, Ms Maddeleine Caratti wrote to ASIC on the letterhead of Mammoth, and in her capacity as company secretary of both Mammoth and Tosman. In the letter she asserts:
Allen Bruce Caratti, a family member who is not but often pretends to be a director of the company Mammoth Investments Pty Ltd has apparently lodged false forms with respect to the appointment of his daughter Nicole to the board of both companies.
This has been done without any consultation with the directors and without any proper meetings being held or resolutions to either make or ratify any such appointment being passed.
...
We have only just become aware of this and have reported it promptly.
...
The documents have been falsely lodged and we believe that this constitutes an offence under the regulations.
91 The evidence does not establish what, if anything, occurred as a consequence of this letter.
Execution of documents on behalf of Caratti group companies
92 Mr Allen Caratti has produced and tendered in evidence 57 documents bearing dates between 14 June 2002 and 19 March 2010 which appear to have been executed by him and his mother purportedly in their capacity as directors of one or more of Mammoth, Harvard, Tosman, Navarac, Venetian and Zel.
93 It is clear that from time to time Mr Allen Caratti simulated his mother's signature in documents purportedly executed by Caratti group companies. Mr Allen Caratti admitted as much. It will be necessary to review the evidence on that topic in detail as a result of the controversy relating to the execution of the two versions of the sublease from Mammoth to Granite Hill. For present purposes it is sufficient to note that without detailed inquiry and investigation, it is impossible to know which of the 57 documents produced by Mr Allen Caratti were in fact signed by him and his mother, and which were signed only by him, by applying his signature and simulating his mother's signature at the appropriate point in the document.
94 It is, however, clear that a significant number of these documents were in fact signed by Ms Maddeleine Caratti and Mr Allen Caratti purporting to act in their capacities as directors of the various groups within the Caratti group, including the companies relevant to these proceedings. By at least 2004, issues had arisen with respect to the authenticity of Ms Maddeleine Caratti's signature on company documents. I infer that those issues had arisen as a result of Mr Allen Caratti's practice of simulating his mother's signature on company documents from time to time. These issues had become known to those dealing with the Caratti group, including the financiers to that group. As a consequence, some of the parties dealing with the Caratti group required documents that were to be executed by Ms Maddeleine Caratti on behalf of a company within the group to be signed by her in the presence of a solicitor who would then attest to her execution of the document.
95 In order to comply with this requirement, from time to time between June 2004 and January 2006, Ms Maddeleine Caratti and Mr Allen Caratti travelled together to the offices of Birman & Ride, solicitors, where they would execute documents on behalf of Caratti group companies in the presence of a solicitor employed by that firm. The usual practice was that the solicitor who had witnessed the execution of the document would then verify execution to solicitors acting for the other parties to the document. The documents executed by Ms Maddeleine Caratti and Mr Allen Caratti in this manner include documents purportedly executed in their capacities as directors of various companies within the group, including the companies relevant to these proceedings. These facts have been established by statements provided by Mr Neale Paterson and Mr Michael Hodgkins, both of whom were solicitors employed by Birman & Ride at the relevant time and each of whom witnessed documents executed in this manner. Those statements were tendered by consent and neither Mr Paterson nor Mr Hodgkins was required for crossexamination.
96 Ms Maddeleine Caratti has provided no satisfactory explanation for these matters in either her written statement or her oral evidence. She asserts in her pleaded case, and in her evidence, that Mr Allen Caratti has not been a director of any of the relevant companies within the Caratti group since May 2002. She must have been aware of Mr Allen Caratti's contentions to the contrary, given that she was a defendant to the proceedings which were commenced in August 2002 and which resulted in the deed of compromise which she signed in September 2002, was a defendant to the proceedings which Mr Allen Caratti commenced to enforce that deed in 2004, and given that she wrote to ASIC in September 2005 asserting that Mr Allen Caratti was falsely purporting to be a director of Mammoth. In that context, her actions in executing company documents with her son, Allen, in circumstances in which it must have been clear to her that he was holding himself out as a director of companies within the group is inexplicable. As no meaningful explanation for her conduct has been proffered in either evidence or submissions, any attempt by me to derive an explanation by inference would be speculative.
Young River Station - leasing arrangements
97 Following the acquisition of Young River Station by Navarac in 1995, it was farmed under the supervision of Mr Allen Caratti until at least 2001. According to him, in 2001 he decided to lease out Young River Station, and the property was leased to E G Green & Co. However, it seems possible that he may have been slightly mistaken in relation to the date, as the evidence establishes that a lease document between Navarac and Mammoth was prepared, conferring a leasehold interest in Mammoth for a 10year term commencing on 28 March 2002. It seems likely that this lease would have been put in place prior to, or contemporaneously with, a sublease from Mammoth to E G Green & Co.
98 Two copies of the lease from Navarac to Mammoth have been tendered in evidence - one attached to the written statement of Ms Maddeleine Caratti, and another attached to the witness statement of Mr Ronald Cummings. The execution pages of each version are different. Each appears to have been signed by Mr Allen Caratti and Ms Maddeleine Caratti on behalf of Navarac and Mammoth. The signatures purporting to be those of Ms Maddeleine Caratti are the same on each page of the two versions, but are different as between the two versions. Mr Allen Caratti admits, and I find, that he simulated his mother's signature on the version of the lease attached to Mr Cummings' statement, whereas Ms Maddeleine Caratti signed the version of the lease attached to her statement. It will be necessary to review Mr Allen Caratti's evidence as to the circumstances in which he simulated his mother's signature in detail in due course.
99 E G Green & Co went into administration prior to the expiry of the term of its lease (or more probably sublease) from Mammoth, and in March 2006 Mr Allen Caratti negotiated a sublease of Young River Station (and two other properties, Torradup and Stuart Downs) to Elders Ltd for a term of three years. However, two years into that term, Elders Ltd was in financial difficulty, and Mr Allen Caratti negotiated a surrender of its sublease of Young River Station and in its place a sublease from Mammoth to Mr Ronald Cummings, for a term of five years commencing on 1 March 2008.
100 As the term of that sublease extended beyond the term of the head lease between Navarac and Mammoth, it was necessary to extend the term of the head lease. There are two versions of a deed of extension of lease between Navarac and Mammoth, each dated 4 February 2008, which have been tendered in evidence. One is attached to the written statement of Mr Allen Caratti, and another is attached to the statement of Mr Ronald Cummings. As with the original lease executed in 2002, the two versions of the deed of extension of lease have different execution pages. As with the original lease, each appears to have been signed on behalf of Navarac and Mammoth by Mr Allen Caratti and Ms Maddeleine Caratti. As with the original lease, the signatures appearing to be those of Ms Maddeleine Caratti are the same on the relevant page of each version, but different as between the two versions. Mr Allen Caratti admits, and I find, that he simulated his mother's signature on the version of the extension of lease attached to Mr Cummings' statement. It will be necessary to review Mr Allen Caratti's evidence as to the circumstances in which he came to simulate his mother's signature on that document in due course. However, it seems clear, and I find, that the version of the extension of lease attached to Mr Allen Caratti's statement was executed by Ms Maddeleine Caratti in 2008. This is another one of those documents which she has executed jointly with her son, Allen, purportedly in his capacity as a director of each of Navarac and Mammoth. It seems reasonable to infer, and I do infer, that she must have known that the document was to be executed by Allen purporting to act in that capacity at the time she executed it herself. Again I note that no plausible explanation for her conduct in this regard has been proffered, given her stance that Mr Allen Caratti was not a director of either Navarac or Mammoth at any time after May 2002.
101 During 2012, Mr Cummings advised Mr Allen Caratti that he would not seek an extension of the sublease from Mammoth which was due to expire at the end of February 2013 for health reasons. Upon receiving that advice, Mr Allen Caratti started looking for other prospective lessees of Young River Station.
The lease of Young River Station to Esperance Cattle, and the sublease of Young River Station from Mammoth to Granite Hill
102 Mr Stephen Blair is the company secretary of Esperance Cattle and has at all material times been responsible for the actions taken by Esperance Cattle which are relevant to these proceedings. He first became acquainted with Mr Allen Caratti in about 1995 when Mr Blair was a director of Rural and Agricultural Management Pty Ltd, which was the manager of the Rural Property Trust which owned agricultural land throughout Australia, principally in Western Australia. Between 1995 and 2012, Mr Blair worked in the agricultural livestock industry in a number of different capacities.
103 In April 2012, Mr Blair and Mr Allen Caratti renewed their acquaintance. Thereafter they met regularly to discuss prospective business ventures and also met socially.
104 In about May 2012, Mr Blair and Mr Allen Caratti discussed the possibility of Mr Blair, or a company associated with him, leasing land owned by the Caratti group in the Esperance area. In the months that followed there were extensive negotiations between Mr Blair and Mr Allen Caratti with respect to the prospective lease of farming properties in the Esperance area, including Young River Station. A significant body of evidence has been adduced in respect of those negotiations. However, it is unnecessary to review that evidence or make findings in relation to it as it is not relevant to the issues which have to be determined in these proceedings.
105 The negotiations reached the point at which Mr Blair instructed a solicitor to prepare a draft lease of Young River Station to Esperance Cattle, which had by then been incorporated. That solicitor prepared a draft lease by reference to title searches which he conducted, which showed Navarac to be the registered proprietor of the property. That appears to be the explanation for the preparation of the lease from Navarac to Esperance Cattle, rather than a sublease from Mammoth. At all events, various drafts of the lease were prepared and exchanged between the solicitor acting on behalf of Esperance Cattle, and Mr Darryl Kipping, a solicitor instructed by Mr Allen Caratti to represent the interests of the lessor.
106 On 3 October 2012, Mr Blair attended Mr Allen Caratti's office at Wickham Street, East Perth in order to sign the lease from Navarac to Esperance Cattle. Mr Kipping also attended. As Esperance Cattle no longer asserts that the document signed that day confers any right to possession, it is unnecessary to review the circumstances of its execution in detail.
107 For present purposes it is sufficient to record that Mr Allen Caratti signed the lease purportedly as a director of Navarac, after which the document was provided to Mr Blair, who signed on behalf of Esperance Cattle. Mr Blair left, taking both copies of the lease document with him, in order that they could be countersigned by his son, Angus, on behalf of Esperance Cattle. It was agreed that the deposit of $50,000 would not be paid until the document had been properly executed.
108 Mr Blair took the lease documents with him to Melbourne, where his son signed them on behalf of Esperance Cattle.
109 On 12 October 2012 in the course of a telephone conversation between Mr Blair and Mr Allen Caratti, Mr Caratti advised Mr Blair that Rural Bank would not approve the lease because 'they hate your guts' and so the deal was off.
110 On 25 October 2012, Mr Blair sent both copies of the lease documents to his solicitor, together with a bank cheque for $50,000 in respect of the deposit and instructed his solicitor to send one copy of the lease and bank cheque to Mr Allen Caratti. The solicitor did so, but the cheque and the lease were returned by Mr Kipping. Mr Blair then instructed his solicitor to lodge a caveat against the titles to Young River Station in order to protect Esperance Cattle's interest under the lease which it then claimed. However, it was clear from the lease documents that at this time nobody other than Mr Allen Caratti had signed or purported to sign the lease on behalf of Navarac.
111 In the meantime, in early October 2012, Mr Andrew Bott, who is a director and secretary of Granite Hill, expressed interest in leasing Young River Station to an agent who had been engaged by Mr Allen Caratti. Mr Bott and his wife, Elizabeth, have conducted farming operations through Granite Hill, which they control, on properties in and around the area of Munglinup, which is approximately 100 km west of Esperance. Mr Bott and Mr Allen Caratti were known to each other.
112 In about the second week of October 2012, Mr Allen Caratti and Mr Bott had a telephone conversation in which they discussed the possible lease of Young River Station to Granite Hill. They agreed the basic terms of a lease, and Mr Allen Caratti advised Mr Bott that he would instruct Mr Brian McCormack of WA Property Lawyers to prepare a draft lease for his consideration.
113 In his first witness statement, Mr Allen Caratti asserts that on 9 October 2012, he 'instructed WA Property Lawyers to prepare a lease from Navarac to Granite Hill'. However, whatever were the terms of his instructions, it is clear that the document which was prepared by Mr McCormack was a lease from Mammoth to Granite Hill for a term of five years commencing on 28 February 2013. Although the document is not described as a sublease, Special Condition 9(c) acknowledges that the registered proprietor of the land is Navarac and that there is a head lease between Navarac and Mammoth.
114 The lease was sent by Mr Allen Caratti to Mr and Ms Bott by email on 15 October 2012 and another copy was sent by WA Property Lawyers on 17 October 2012. The next day Mr Allen Caratti sent an email to Mr Bott inquiring whether the lease had been received and asking to advise when it had been signed. Mr Bott replied by email of the same day advising that the leases would be signed that night and returned by post the following day. Ms Bott returned two copies of the lease which she and her husband had signed to WA Property Lawyers, and on 23 October 2012, the leases were collected from WA Property Lawyers by Mr Allen Caratti. That afternoon, Mr Allen Caratti sent an email to Mr Bott in the following terms:
Hi Andrew, the lease is signed. I have given a copy to Brian McCormack to send to you.
115 No evidence was adduced from Mr McCormack. However, an email from Mr McCormack to Mr and Ms Bott dated 6 November 2013 has been tendered in evidence. In that email Mr McCormack states:
I confirm the following information regarding the above lease:
116 The first sentence of the paragraph numbered 5 in this email is ambiguous, in that it is not clear whether the date of 16 November 2012 refers only to the date upon which the lease was provided to Bott, or refers also to the date upon which it was provided to WA Property Lawyers by Mr Allen Caratti. Although an inference might be drawn from the second sentence of the paragraph, to the effect that the lease document was not returned until 16 November 2012, because it admits the possibility that the documents may have been signed up to that date, it is also consistent with WA Property Lawyers having no record of the date upon which the document was returned to them, other than a record of them being sent to Mr and Ms Bott on 16 November 2012. The terms of the email from Mr Allen Caratti to Mr and Ms Bott of 23 October 2012 are consistent with that construction of Mr McCormack's email. However, in the absence of evidence from Mr McCormack, in my view it is unsafe to make any finding with respect to the precise date upon which the document that was sent by WA Property Lawyers to Mr and Ms Bott on 16 November 2012 was provided to WA Property Lawyers by Mr Allen Caratti, other than a finding that it was provided some time between 23 October and 16 November 2012.
117 Mr Allen Caratti's first witness statement was made and served on or about 23 December 2013, at a time when:
(a) the trial had been set to commence on 17 February 2014; and
(b) Mr Allen Caratti and his legal advisers were well aware that Ms Maddeleine Caratti asserted that she had never signed the sublease to Granite Hill, and that Mr Allen Caratti had simulated her signature on that document.
118 In that context, the only references to the execution of the Granite Hill sublease contained in Mr Allen Caratti's first statement are:
I received a draft lease on 16/10/2012. The lease for execution was sent to Bott on the following day and sent it [sic] back on 23/10/2012. The lease was signed by mother and me at Redcliffe between 23/10/2012 and 16/11/2012.
119 For reasons which will become clear, the terms in which this evidence is expressed are significant to the assessment of Mr Allen Caratti's veracity on the contentious subject of the execution of the Granite Hill sublease. For present purposes it is sufficient to note that the evidence corresponds exactly with the terms of the email from Mr McCormack to Mr and Ms Bott of 6 November 2013, which had by then been discovered in these proceedings. It was put to Mr Allen Caratti that he used the dates in Mr McCormack's email in his first statement, by his counsel, but he answered that he did not recall how he arrived at the particular dates asserted.[12] However, there is a clear inference available, and I find, that the terms of Mr Allen Caratti's first witness statement were taken from that email.
120 No version of the Granite Hill sublease was attached to Mr Allen Caratti's first statement. This is also a matter of some significance to the assessment of his veracity with respect to its execution. For present purposes it is sufficient to note that at least by the time of trial, and perhaps inferentially from the time Mr Allen Caratti served his responsive witness statement in January 2014, he has accepted that he simulated his mother's signature on the version of the Granite Hill sublease which was sent by WA Property Lawyers to Mr and Ms Bott on 16 November 2012, and which was provided by him to WA Property Lawyers at some time prior to that date. However, notwithstanding that Mr Allen Caratti and his legal advisers must have been well aware of an allegation to that effect prior to the service of his first witness statement, no reference was made to it, or to the existence of another version of the Granite Hill sublease which was attached to his responsive witness statement as ABC79, prior to the service of that witness statement in late January 2014.
121 During the trial, the parties referred to the version of the sublease which was provided to Mr and Ms Bott in November 2012 as the GH version (Granite Hill version), and referred to the version of the Granite Hill sublease which was attached to Mr Allen Caratti's responsive witness statement as the ABC version (Allen Bruce Caratti version). It is convenient to maintain that nomenclature. The provenance of the ABC version of the sublease is contentious and will be addressed below. The earliest date upon which its existence can be established by noncontentious evidence is 1 March 2013.
Alteration of the ASIC records with respect to Mr Allen Caratti's directorships
122 In the meantime, on 9 October 2012, steps were taken to amend the records maintained by ASIC with respect to Mr Allen Caratti's directorship of Navarac and Mammoth. Minutes recording a meeting of the directors of each of those companies, namely, Mr Aaron Caratti and Ms Maddeleine Caratti, have been tendered in evidence. Each minute is in identical form. Each recites the removal of Mr Allen Caratti as a director of the company on 14 May 2002 and asserts that he filed at ASIC forms which falsely show his name as a director of the company as and from 14 May 2002 without any permission or authority. The minutes further assert that Mr Allen Caratti has from time to time held himself out as a director of the company and that an undertaking has been given to the Australian Tax Office to the effect that the records at ASIC would be corrected to show that Mr Allen Caratti is not a director of the company.
123 The minutes record resolutions to the effect that such forms as are necessary to correct the records at ASIC to show that Mr Allen Caratti ceased to be a director on 14 May 2002 are to be lodged, and that Mr John Caratti is to be appointed as an alternate director with the same powers and duties as the directors during any period when a director is overseas.
124 Forms dated 9 October 2012 were provided to ASIC notifying ASIC of changes in the details relating to each company. The forms do not correspond with the minutes of the board meeting in each company in two respects. First, although the form notifies ASIC that Mr Allen Caratti ceased to be a director of each company, the date of cessation is said, in each case, to have been 9 October 2012, not 14 May 2002. Second, although each form notifies ASIC of the appointment of Mr John Caratti as an office holder of each company, in each case the form notifies ASIC that Mr John Caratti is to serve as a director, when in fact the board resolved that he was to serve as an alternate director.
125 These discrepancies are not material, because nothing turns upon the question of whether or not Mr Allen Caratti was a director of either Navarac or Mammoth prior to 9 October 2012, nor does anything turn upon Mr John Caratti's status as an office holder in either company after that date. However, the discrepancies reinforce my conclusion that the members of the Caratti family could not be described as assiduous in ensuring the accuracy of the records maintained by ASIC with respect to companies within the family group.
126 In the statement of Mr Aaron Caratti, he asserts that these actions were undertaken following the raising of concerns by the Australian Taxation Office (ATO) as to the integrity of the ASIC Register for Caratti group companies. However, no mention is made of this in Ms Maddeleine Caratti's statement, nor was any letter or statement from the ATO tendered in evidence. In any event, nothing turns upon the motivation for the lodgement of those forms. It is most unlikely that their lodgement had anything to do with the leasing of Young River Station, as there is no evidence to suggest that any of Ms Maddeleine Caratti, Mr John Caratti or Mr Aaron Caratti were aware of the steps that Mr Allen Caratti was taking around this time to secure replacement tenants for the property.
127 Mr Allen Caratti became aware of the steps which had been taken to alter the records at ASIC relating to his directorship of the Caratti group companies by at least 26 October 2012. On that day, his solicitors sent an email to solicitors acting on behalf of the other members of the Caratti family, complaining of the alteration of the ASIC records relating to his directorship of Harvard and Jamesway Nominees Pty Ltd. The solicitors for the other members of the family replied by email of the same date, advising Mr Allen Caratti's solicitors that steps had been taken to alter the records maintained by ASIC with respect to his directorship of various companies, including Mammoth, Navarac and Venetian. These communications prompted a sequence of correspondence dealing with a broader range of issues more pertinent to other proceedings between members of the Caratti family which are before the court, and culminated in an application by Mr Allen Caratti for interlocutory relief in those proceedings, including the appointment of receivers to some of the entities within the group, and the appointment of Mr Allen Caratti as a director of various companies within the group. It is unnecessary to chart the history of that interlocutory application, and sufficient to observe that those proceedings have no direct bearing upon the issues that must be determined in these proceedings.
128 Nevertheless, the correspondence between the solicitors for the parties to which I have referred, and which was conducted in terms of increasing vehemence in the last week of October and the first week of November 2012, provide a context for the evaluation of Mr Allen Caratti's evidence to the effect that his mother executed the ABC version of the Granite Hill lease in his presence at the Redcliffe office on the afternoon of either 1 or 2 November 2012.
The telephone call on 1 November 2012
129 A telephone call which took place between Mr Allen Caratti and his mother during the morning of 1 November 2012 is also relevant to the context in which his evidence as to the execution of the ABC version of the Granite Hill lease has to be assessed. It seems that the telephone call was triggered by a reference to the family in the 'rich list' published by a media outlet. Mr Allen Caratti spoke to his mother on speakerphone, and part of the telephone call was recorded by his partner, Ms Tina Bazzo, apparently without Ms Maddeleine Caratti's knowledge. The audio recording and a transcript of that recording have been tendered in evidence.
130 In the recorded portion of the telephone call, Ms Maddeleine Caratti refers to her son's threat to put a receiver into Navarac. In the course of the conversation, Mr Allen Caratti called his mother a liar on at least three occasions, and on one of those occasions he called her a 'fucking liar'.
131 The terms in which this conversation was conducted strongly suggest that Mr Allen Caratti and his mother were not then on good terms. Given the language that each used, such demeanour as can be gleaned from the audio recording of the conversation is surprisingly calm. However, I am reluctant to draw any inferences from such demeanour as might be gleaned from a limited audio recording of part of a telephone conversation, especially given the long and sporadically fractious history of dealings between Mr Allen Caratti and his mother.
Further dealings with Esperance Cattle
132 On 31 October 2012, Mr Kipping wrote to Esperance Cattle's solicitors asserting that it was agreed between Mr Stephen Blair and Mr Allen Caratti that any lease between Navarac and Esperance Cattle was subject to approval of the proposed lease and its terms by all directors of Navarac, and approval of the proposed lease and its terms by Rural Bank, the mortgagee of the property. Mr Kipping advised that neither condition had been satisfied, with the result that the proposed lease would not proceed, and returned the lease document and bank cheque.
133 Mr Allen Caratti sent an email to Mr Stephen Blair on 2 November 2012 conveying similar information - namely, that 'the other directors of Navarac will not agree to the lease with you as they don't believe you have the financial capacity to perform' and 'the bank will not give consent to you as a tenant'. It is clear from the evidence that no other member of the Caratti family had any knowledge of Mr Allen Caratti's dealings with Mr Blair, or of the proposed lease to Esperance Cattle. Mr Allen Caratti's false attribution of views to 'the other directors of Navarac' provides another example of the liberties which he takes with the truth.
134 By letter dated 9 November 2012, the solicitors acting on behalf of Esperance Cattle responded to Mr Kipping's letter of 31 October 2012. In that letter, the solicitors conveyed Esperance Cattle's instructions to the effect that the lease was not subject to any preconditions, and that Mr Allen Caratti had represented to Mr Blair that he had authority to bind Navarac to any deal which he negotiated.
135 On 3 December 2012, Mr Kipping again wrote to the solicitors for Esperance Cattle reiterating his earlier assertion that the lease from Navarac had failed by reason of the failure of conditions to which the lease was subject and advising that an application had been made for removal of the caveat lodged by Esperance Cattle.
136 Mr Kipping filed an application pursuant to s 138B of the Transfer of Land Act 1893 (WA) at the office of Land Titles on 3 December 2012. The effect of the application was to require the Registrar of Titles to give notice to Esperance Cattle, as caveator, that the caveat would be removed unless an order of this court was obtained extending its operation within 21 days of the date of the notice. The application was made in the name of Navarac and was signed by Mr Allen Caratti, purportedly as a director of Navarac, and appears to have been signed by Ms Maddeleine Caratti in the same capacity.
137 In her witness statement which was served in December 2013, Ms Maddeleine Caratti denied signing the application, and asserted that her signature on the document had been forged. She also denied giving anybody authority to sign her name on that document.
138 In his responsive witness statement, Mr Allen Caratti stated, in response to his mother's assertions on this topic:
I agree that I wrote my mother's name on the document. At about the end of November or early December 2012 I telephoned my mother and said to her: I need to get you to sign another document. She said: What is it? I said: It's an application to remove a caveat from Young River Station. Why don't you call past and sign it. She said: No way with Tina there. You sign it for me.
139 Mr Allen Caratti's evidence on this topic is utterly implausible and I reject it. There is no evidence to suggest that Ms Maddeleine Caratti was aware of any caveat over Young River Station at the time Mr Allen Caratti asserts that the telephone conversation took place. In that context, and in the broader context of the legal proceedings which Mr Allen Caratti had initiated during November 2012, it is highly unlikely that she would have given authority to Mr Allen Caratti to simulate her signature on a document at all, let alone without inquiry as to the nature of the document or the circumstances which had given rise to the need for the document. It is to be remembered that during November, there were contested proceedings between Mr Allen Caratti and his mother relating to his position as a director of, inter alia, Navarac, and he had applied for the appointment of receivers to part of the Caratti group. Less than two months earlier, Ms Maddeleine Caratti had signed the forms which were sent to ASIC to record the fact that Mr Allen Caratti was not a director of Mammoth or Navarac, and it was more than two and a half years since Ms Maddeleine Caratti had signed any documents in which Mr Allen Caratti held himself out to be a director of any of the companies within the Caratti group (leaving out of consideration, for the moment, the ABC version of the sublease to Granite Hill).
140 For these reasons I accept Ms Maddeleine Caratti's evidence that the writing which purports to be her signature on the application to the Land Titles Office is a forgery perpetrated by her son Allen without her authority. My conclusion that Mr Allen Caratti forged his mother's signature on a document lodged with the Registrar of Titles relating to the lease of Young River Station in early December 2012, and that he has endeavoured to mislead the court as to the circumstances in which he came to simulate her signature on the document are relevant to my assessment of the veracity of his evidence with respect to the execution of the ABC version of the Granite Hill lease.
141 On 5 December 2012, Mr Blair attended the public auction of cattle owned by Mr Cummings at Young River Station. The cattle were being sold in anticipation of the expiry of Mr Cummings' lease. At the conclusion of the auction, the auctioneer made a reference to Mr Andrew Bott and the Bott family, in terms which connoted that they were to take over the lease of Young River Station. According to Mr Blair, he then had a brief conversation with Mr Bott in which he advised that Esperance Cattle had a lease over the property. According to Mr Blair, Mr Bott did not respond and walked away.
142 Mr Bott does not accept this version of events. Nothing turns upon what in fact occurred between the two men. It is sufficient for present purposes to note that by 5 December 2012, Mr Blair was aware that Navarac was denying that Esperance Cattle had any lease over the property, and had apparently taken steps to lease the property to others.
143 On 10 December 2012, Mr John Caratti received a letter from Landgate addressed to Navarac at the Caratti group offices in Great Eastern Highway, Redcliffe. The letter notified Navarac of the caveat that had been lodged by Esperance Cattle against the titles to Young River Station in October 2012. Mr John Caratti caused a search to be undertaken of the caveat and discovered that the caveat had been lodged by Mr Richard Payne, the solicitor acting on behalf of Esperance Cattle. He immediately telephoned Mr Payne and asked what was going on, as neither he nor the directors of Navarac knew anything about the matters asserted in the caveat.
144 Mr Payne responded with words to the effect that he had been instructed to lodge the caveat by Mr Stephen Blair on behalf of Esperance Cattle, and that, as it happened, Mr Blair was present with him in his office. Mr Payne then put Mr Blair on to the telephone, and he briefly outlined Esperance Cattle's claim to Mr John Caratti. Mr John Caratti suggested that Mr Blair come to the Redcliffe office to discuss the matter further.
145 About an hour later, Mr Blair attended the Redcliffe office of the Caratti group. He spoke with Mr John Caratti and produced the lease document which had been signed by Mr Allen Caratti on 3 October 2012. Mr Blair advised Mr John Caratti that if the lease did not proceed, he would have to sue Navarac because he had spent a lot of money preparing to take up occupancy under the lease.
146 Mr John Caratti then called Ms Maddeleine Caratti and Mr Aaron Caratti into his office and Mr Blair essentially repeated to them what he had earlier told Mr John Caratti.
147 Mr Blair was then asked to wait while John, Aaron and Maddeleine Caratti considered what to do. Together they went through the terms of the lease for about an hour or so and concluded that the lease looked like a good deal and should be signed, given that it appeared that Mr Allen Caratti had induced Mr Blair to believe that he had a lease. Mr John Caratti then crossed out Mr Allen Caratti's signature on the lease document, and Maddeleine and Aaron Caratti executed the document as directors of Navarac. A copy of the lease was then given to Mr Blair, who handed over a bank cheque payable to Navarac in the amount of $50,000, being the deposit under the lease. The cheque was banked the following day.
148 During crossexamination, Mr John Caratti stated that at the time he was dealing with Mr Blair, neither he nor his mother nor his son had any knowledge of the dealings between Mr Allen Caratti and Mr Bott.[13] Although Mr Blair accepted in crossexamination that he may have mentioned his conversation with Mr Bott at the cattle sale to Mr John Caratti on 10 December, he did not accept that he mentioned Mr Bott specifically.[14] Given this, I accept Mr John Caratti's evidence to the effect that he was unaware of the dealings between Mr Allen Caratti and Mr and Ms Bott. He also stated in evidence that at the time his mother and son agreed to execute the lease in favour of Esperance Cattle, they thought they were simply regularising what Mr Allen Caratti had previously done, but failed to complete. Again, there is no evidence to suggest otherwise, and I accept that evidence. In this context, Mr John Caratti stated in crossexamination that Mr Allen Caratti had the authority of Navarac and Mammoth to negotiate the terms of leases in respect of properties owned by those companies, and to arrange for leasing documentation to be prepared, but had no authority to execute such documents as a director of either Navarac or Mammoth. There is ample evidence to sustain the conclusion that Mr Allen Caratti had authority to negotiate the terms of the leases in respect of properties owned by those companies (at least those mortgaged to Rural Bank, which includes Young River Station), and I so find. Whether or not he was a director of those companies in late 2012 and early 2013 is, of course, one of the issues which must be determined.
149 On 12 December 2012, Esperance Cattle lodged a further caveat over the titles to Young River Station in order to protect its interest in the lease which had been executed on 10 December 2012. This is the lease which Esperance Cattle propounds in support of its claim to possession of Young River Station.
January 2013
150 On 4 January 2013, Mr Allen Caratti sent an email to Rural Bank, the mortgagee of Young River Station, attaching a copy of the Granite Hill sublease requesting the mortgagee's consent. Curiously, he also attached a copy of the lease from Navarac to Esperance Cattle which only he had signed. Significantly, the copy of the Granite Hill sublease enclosed with that email was the GH version, not the ABC version. This is relevant to my assessment of the time at which the ABC version of the sublease to Granite Hill came into existence and strongly suggests that the ABC version was not in existence in early January 2013. That is because the evidence is to the effect that only two copies of the Granite Hill sublease were executed by Granite Hill. One of those copies was sent to them by WA Property Lawyers on 16 November 2012, leaving Mr Allen Caratti with the remaining copy. The expert evidence establishes that the ABC version of the sublease is in fact one of the original documents executed by Granite Hill, except that one page, page 21, has been replaced. That is clear from the fact that page 22 of the ABC version bears the impressions made when Mr and Ms Bott executed the document.
151 It follows that at any point of time Mr Allen Caratti only had one copy of the Granite Hill sublease, being either the GH version or the ABC version. He cannot have had both, as the ABC version is in fact the GH version with only one page changed.
152 It also follows that if Mr Allen Caratti caused the copy of the Granite Hill sublease which was in his possession on 4 January 2014 to be scanned for the purpose of sending it to the bank, as seems likely, the only version which he then had was the GH version, and the ABC version cannot then have been in existence. This tells strongly against his assertion that the ABC version was executed by his mother in early November 2012.
153 Of course, there is a theoretical possibility that the scanned version of the Granite Hill sublease which Mr Allen Caratti sent to the bank on 4 January 2014 had been scanned or photocopied earlier, but there is no evidence to that effect, and it seems most unlikely that the document would have been scanned or photocopied prior to 1 or 2 November, which is when Mr Allen Caratti asserts that the ABC version was created.
154 When Mr Allen Caratti was asked about the provenance of the scanned copy of the Granite Hill sublease in crossexamination, he did not suggest that the document had been scanned two months earlier. To the contrary, he suggested that he had two copies of the sublease, the GH version and the ABC version, and that an assistant scanned the wrong one. For the reasons I have given, that evidence must be false. I will refer in more detail to that evidence below.
155 At around this time, or perhaps even in late December 2012, Mr John Caratti was advised by Mr Blair of rumours to the effect that Mr Allen Caratti had leased Young River Station to Mr Andrew Bott. Mr John Caratti telephoned Mr Bott on two occasions during January 2013 and advised him that the property had been leased to Esperance Cattle and requested a copy of any lease upon which Mr and Ms Bott relied to sustain their claim to possession. However, Mr Bott did not provide Mr John Caratti with a copy of the GH version of the sublease which he held in response to these requests.
156 On 25 January 2012, Mr Allen Caratti sent an email to Mr Bott attaching an invoice from Mammoth in respect of rental for Young River Station for the period 28 February 2013 to 27 August 2013. The amount of the invoice was $357,500, being $325,000 plus GST. The annual rental to be paid by Esperance Cattle under its lease from Navarac, and by Granite Hill under its sublease from Mammoth was identical - namely, $650,000.
February 2013 - the war of words
157 On 1 February 2013, Mr Payne, the solicitor for Esperance Cattle, sent an email to Mr McCormack of WA Property Lawyers inviting Mr McCormack to call him urgently because he understood that Mr McCormack had a client who purported to have a leasehold interest in the property on the basis of dealings with Mr Allen Caratti and Mammoth. Mr McCormack responded to that email two days later by advising Mr Payne that he had no instructions in the matter, and suggesting that he contact either Mr Kipping or Mr Metaxas, both of whom are solicitors for Mr Allen Caratti.
158 On 12 February 2013, Stephen Blair sent an email to Richard Payne, copied to John Caratti and others, expressing concern that Andrew Bott, through an entity that Mr Blair was unsure of, was still operating under the misapprehension that he had a lease on Young River Station, presumably a sublease from Mammoth, commencing on 1 March 2013. Later that day, Mr Allen Caratti forwarded that email to Mr Bott advising Mr Bott, 'Don't worry he doesn't have a leg to stand on'.
159 On the same day, Mr John Caratti again called Mr Andrew Bott, and again requested a copy of any lease agreement upon which Mr and Ms Bott relied to sustain any claim to possession of Young River Station.
160 On 13 February 2013, Mr Payne sent an email to Mr Bott in which he advised that he acted on behalf of Esperance Cattle and outlined the circumstances in which his client had obtained a lease of Young River Station signed by the current directors of Navarac. The email expressed concern that Mr Bott or an entity associated with him purported to have a lease or sublease of the property commencing 1 March 2013 on the basis of some agreement with Mr Allen Caratti and Mammoth. The email requested Mr Bott to advise by return email if he claimed any leasehold interest in the property and if so, what interest and on what basis. The email concluded by advising that the directors of Navarac consented to the email and had no knowledge of any dealings with Mr Bott or any entity owned or controlled by him, or of any sublease to him or any entity owned or controlled by him, and that they did not approve of any sublease to Mr Bott. The latter assertion was correct, as the thrust of the email had been approved by Mr Aaron Caratti and Ms Maddeleine Caratti. A copy of the email was sent to Mr John Caratti.
161 Ms Elizabeth Bott forwarded the email to Mr Allen Caratti shortly after it arrived. On 18 February 2013, Mr Allen Caratti sent an email to Mr Andrew Bott attaching a document on the letterhead of Mammoth, signed by Mr Allen Caratti. The text of the letter was:
Navarac Pty Ltd, the Registered Proprietor and Mammoth Investments the Head Lessee hereby indemnify Granite Hill Pty Ltd against any loss it may suffer from any action taken by EEC Pty ltd or Stephen Blair as to the lease of Young River Station.
162 It is of some significance that Mr Allen Caratti did not proffer the indemnity of his own behalf, but purported to proffer the indemnity on behalf of Navarac and Mammoth. Given that the question of the validity of Granite Hill's sublease turned to a significant extent upon the extent of his authority to bind Navarac and Mammoth, it seems unlikely that Mr Bott would have taken any real comfort from the letter, or that Mr Allen Caratti intended to confer any meaningful indemnity against loss, as the loss would only arise if he did not have the authority to bind Mammoth or Navarac.
163 About this time, Mr and Ms Bott instructed Pacer Legal to act on behalf of Granite Hill. On 20 February 2013, Pacer Legal sent an email to Mr McCormack of WA Property Lawyers advising that they acted on behalf of Granite Hill, noting that Navarac was not a party to the sublease and requesting a copy of the head lease between Navarac and Mammoth, and documentation confirming Navarac's consent to the sublease to Granite Hill. As soon as the email was received, Mr McCormack sent it to Mr Allen Caratti, with a request that he provide the head lease urgently.
164 On 22 February 2013, Mr Aaron Caratti and Ms Maddeleine Caratti executed a deed of surrender of the head lease of Young River Station from Navarac to Mammoth in their capacities as directors of each company. The surrender was to take effect from midnight on 28 February 2013.
165 On 25 February 2013, Granite Hill deposited $357,500 into Mammoth's bank account at the Rural Bank. That account was under the control of Mr Allen Caratti, consistently with the arrangements that were made many years earlier, under which Mr Allen Caratti assumed responsibility for dealing with Rural Bank in relation to properties over which they held mortgages, while other members of the family dealt with NAB in respect of properties over which it held mortgages.
166 The effect of the deposit was to bring Mammoth's account with Rural Bank within its overdraft limit. None of Ms Maddeleine Caratti, Mr Aaron Caratti or Mr John Caratti were aware of the deposit into Mammoth's account at the time it occurred, but each became aware of the deposit following receipt of the bank statement for that account at the Redcliffe office some weeks later. No attempt was made to return the funds to Granite Hill. As will be seen, by that time Granite Hill was in physical occupation of Young River Station.
167 On 27 February 2013, Mr Payne sent another email to Mr Bott noting that he had not received any response to his email of 13 February, nor had any response been received from solicitors acting on his behalf. The email further advised that Esperance Cattle would be taking possession of the property on 1 March 2013 in accordance with its lease from Navarac and that the lease of the property from Navarac to Mammoth had been surrendered with effect from midnight on 28 February 2013. The email repeated the advice that the directors of Mammoth and Navarac had no knowledge of, nor any documentation relating to any purported sublease of the property to Mr Bott or any entity owned or controlled by him and denied that any such sublease existed. The email further asserted that at all relevant times Mr Allen Caratti had not been and was still not a director of either Navarac or Mammoth, and had no authority to deal with the property on behalf of Navarac or Mammoth. The email further demanded that all livestock and cattle on the property be removed prior to 1 March 2013 and advised that Esperance Cattle would take whatever steps were necessary to enforce its interest in the property from 1 March 2013.
168 Later that day, Mr Kipping sent a letter to Mr Payne. In that letter Mr Kipping asserted that Mr Allen Caratti maintained that he was and had at all relevant times been a validly appointed director of both Mammoth and Navarac. The letter also asserted that Mammoth, with the knowledge and consent of Navarac, had entered into a valid sublease of Young River Station with a company associated with Mr Bott. The letter asserted that the sublease had been 'duly executed by two directors of Mammoth and Navarac' who were said to be Mr Allen Caratti and Ms Maddeleine Caratti. However, no copy of the sublease to Granite Hill was enclosed with the letter. This is of some significance, given the issues which arise in the case, and Mr John Caratti's repeated requests to Mr Bott for a copy of the lease document upon which he relied.
169 The letter went on to advise that rent had been paid and accepted under the Bott sublease. The letter concluded by asserting that if Esperance Cattle did not immediately remove the caveat which it had lodged over the property, and cease making claims and assertions to a leasehold interest in Young River Station, or made any attempt to interfere with Mr Bott's entitlement to quiet possession of the land, legal proceedings would be instituted.
170 Mr Payne prepared a document entitled 'Notice of Possession' at the request of Mr Blair. Mr Blair intended to post the document at various points around Young River Station at the time he took possession. The document declares that Esperance Cattle had taken exclusive possession of the property with effect from 1 March 2013 'as lessee from the registered proprietor under a longterm lease', and that entry to the property was not permitted without the consent of Esperance Cattle.
The battle for possession of Young River Station
171 On 27 February 2013, Mr Blair left Melbourne in order to drive to Young River Station, accompanied by his daughter. He had with him a number of lengths of heavy chain and padlocks which he proposed to use to secure Young River Station after he had taken possession. He also had with him some plastic sleeves into which he proposed to insert the notice which Mr Payne was to prepare for him, prior to affixing these notices to the gates on the property.
172 Mr Blair arrived at Esperance early on the evening of 28 February 2013 and checked into a motel in Esperance. He noticed Mr Allen Caratti's car parked in front of the motel. He printed the notices which had been sent to him by Mr Payne.
173 Mr Blair and his daughter drove from Esperance to Young River Station arriving shortly before midnight. They discovered a gate at the western end of the property to be chained and locked. At one minute past midnight, Mr Blair cut the chain from the gate and replaced it with one of the lengths of chain and padlocks which he had brought with him. He then fixed one of the notices of possession which he had brought with him to the gate with masking tape. He and his daughter then repeated that process at each of the other nine gates on the three public roads which surround Young River Station. They then opened the main gate to the property on South Coast Highway and entered the property.
174 Mr Blair and his daughter noticed that a floodlight on a shed near one of the houses was illuminated and subsequently turned it off. Apart from the light being illuminated, they saw no sign that the house was occupied. No cars were visible, and there were no signs of recent human activity. Mr Blair and his daughter continued to move around the property. According to Mr Blair, they drove along all the tracks and laneways, across Stokes Inlet Road, down past another house and returned out on to the South Coast Highway, having been on the property for an hour or an hour and a half at least. They observed cattle on the property.
175 Mr Blair and his daughter checked all the locks which they had placed on the gates and none appeared to have been disturbed. On their way back to Esperance, they checked the main house on the property, which is situated at its eastern end. They observed a utility parked outside the house, but otherwise saw no sign of anyone being there. They did not see anyone at all during the time they were on the property, and there is no evidence to suggest that anyone was in fact present. It seems clear, and I find, that the cattle which Mr Blair observed were the property of Granite Hill, being the cattle which had been acquired by Granite Hill from Mr Cummings at the public auction in December the previous year.
176 Mr Blair and his daughter returned to Esperance, arriving around 2.30 am, and had a few hours sleep before leaving at about 5.30 am to return to Young River Station. They arrived at the property at around 6.30 am. When they arrived they noticed that one of the chains which they had placed on a gate earlier that morning had been cut. They then spent some time driving around the property, and again observed cattle which Mr Blair recognised as the cattle which Mr Bott had purchased at the auction held the previous year.
177 According to Mr Blair, at about 7.30 am he received a telephone call from Mr Allen Caratti. Mr Caratti asked him where he was to which he replied that he was at Young River Station. Mr Allen Caratti suggested that he come to the yards which were just south of the main gate.
178 Mr Blair and his daughter drove to the yards, where they saw Andrew Bott and a number of other men who appeared to be loading and unloading cattle from trucks. Two cars pulled up shortly after they arrived. Mr Allen Caratti and his daughter, Christina, were in one of those cars. Words were then exchanged between Mr Blair and Mr Allen Caratti. The evidence contains differing versions of what precisely was said and what occurred. It is unnecessary to resolve the conflict between the differing versions, as nothing turns upon it. It is sufficient to note that Mr Blair asserted an entitlement to possession of the property, and that each of Mr Bott and Mr Allen Caratti denied that entitlement, and Mr Allen Caratti told Mr Blair to leave in emphatic terms.
179 After a telephone conversation with Mr John Caratti, Mr Blair and his daughter left the property and returned to Esperance. Granite Hill remained in physical occupation of Young River Station thereafter, until effect was given to the orders which I made on 7 March 2014.
180 According to Mr Allen Caratti and his daughter, Christina, during the morning of 1 March 2013, while they were driving around Young River Station, Mr Allen Caratti telephoned his mother using the speaker phone in his vehicle. According to them, Mr Allen Caratti asked his mother what she was doing with Mr Blair, after which she denied knowing what he was talking about. According to Mr Allen Caratti and his daughter, he then said that Mr Blair was 'a bum and has no money' and that Mr and Ms Bott had moved in and paid rent six months in advance. According to them, Ms Maddeleine Caratti responded by saying, 'That's good. Where has the rent gone?' to which Mr Allen Caratti replied, 'To the bank for the mortgage'.
181 In her written statements Ms Maddeleine Caratti emphatically denies that this conversation took place. It must be noted that her answers in crossexamination on this subject were less than emphatic.[15] Ms Christina Caratti is equally emphatic that the conversation occurred, and asserts that she recorded it on her phone and replayed it to herself many times before the phone was lost in May 2013.
182 Plainly the conversation is of no significance in itself. However, Mr Allen Caratti relies upon its terms to support an inference that his mother was aware of the arrangements he had made with Mr and Ms Bott, which is in turn said to support an inference that she gained that awareness by signing the ABC version of the Granite Hill sublease.
183 Even if there was a telephone conversation in the terms asserted by Allen and Christina Caratti, I would not draw the series of inferences posited. Ms Maddeleine Caratti is of advancing years and it was clear from her oral evidence that she is easily confused. The brief conversation recounted by Allen and Christina Caratti would not, in my view, have been sufficient to give her a clear understanding of what had occurred at Young River Station earlier that morning, or of its implications. Further and in any event, it seems highly likely that she was aware of the rival claims being promoted by Mr and Ms Bott and Mr Blair during the preceding month as a result of conversations with her son, John, and from the fact that she was consulted in relation to Mr Payne's correspondence to Mr Bott of 13 February 2013. She executed the surrender of the lease from Navarac to Mammoth on 22 February 2013, which was a significant step in favour of Esperance Cattle in the contest between it and Granite Hill. Accordingly, any awareness of Mr Bott's claim to possession on 1 March 2013 cannot be attributed to her execution of a sublease in his favour, but may well have come from other sources of information.
184 On 1 March 2013, Mr Kipping sent a letter to Mr Payne by email. The letter asserted that earlier in the morning Esperance Cattle had purported to take possession of Young River Station, and reiterated that Esperance Cattle had no leasehold interest in Young River Station or any entitlement to possession.
185 Later on 1 March 2013, Mr Payne wrote to Mr Kipping inquiring as to the identity of his client and reiterating Esperance Cattle's claim to be entitled to possession of the property and foreshadowing the commencement of legal proceedings to enforce that right.
186 On 2 March 2013, Mr Blair sent an email to Mr Bott copied to various others, including Mr Allen Caratti, Mr John Caratti and Mr Aaron Caratti. The letter enclosed a copy of the letter which Mr Payne had sent to Mr Kipping the previous day, and foreshadowed an ex parte application to this court early in the next week for orders removing Mr Bott and his entities from the property. The email purported to confirm that Esperance Cattle had taken possession of the property and foreshadowed the delivery of 400 cows and 4,000 sheep the property over the weekend or early the following week. In fact, none of those things occurred.
The first confirmed sighting of the ABC version of the Granite Hill sublease
187 As I have mentioned, programming orders were made to enable these proceedings to be tried in February 2014. Those programming orders included directions for the exchange of witness statements and expert reports during December 2013. By that time, all parties were aware that Ms Maddeleine Caratti denied signing the sublease to Granite Hill, and claimed that her signature on that document had been simulated by her son, Allen, without her knowledge or authority. As part of the process for the exchange of evidence during December 2013, solicitors acting on her behalf served a report, prepared in September 2013, from an expert in the field of document analysis, Mr McGinn, the thrust of which was to the effect that the signature appearing to be that of Ms Maddeleine Caratti on the GH version of the Granite Hill sublease was not written by the same person who had written various specimen signatures which had been verified as the signature of Ms Maddeleine Caratti.
188 On 28 January 2014, a few weeks prior to the scheduled commencement of the trial, solicitors acting on behalf of Mr Allen Caratti provided a copy of the execution page of the ABC version of the Granite Hill sublease to the solicitors acting for the other parties in the action. At about the same time, Mr Allen Caratti's responsive witness statement was served, in which he referred, for the first time, to the execution of this version of the sublease to Granite Hill. It will be necessary to review his evidence on that subject in detail in due course. For present purposes, it is sufficient to note that the very late disclosure of the ABC version of the document in these proceedings, and Mr Allen Caratti's failure to make any reference whatever to that document in his first witness statement, at a time when he knew that the authenticity of Ms Maddeleine Caratti's signature on the sublease to Granite Hill was an issue are matters which are relevant to the assessment of the veracity of his evidence on this topic and his evidence generally.
189 At about the same time as Mr Allen Caratti's responsive witness statement was served in late January, a witness statement from Mr Kipping was also served. Attached to that statement was a copy of an email which he sent to Pacer Legal, solicitors who had been engaged to act on behalf of Granite Hill, unbeknown to Esperance Cattle. Attached to that email was a scanned copy of the ABC version of the sublease to Granite Hill. This was the first occasion upon which a complete copy of that version of the Granite Hill sublease was disclosed in the course of the interlocutory processes relating to this case, and it was around this time that the existence of this version of the Granite Hill sublease was first disclosed to the solicitors acting for the various other parties.
190 There is a clear inference, and I find, that Pacer Legal had not noticed that the version of the Granite Hill sublease attached to the email sent to them by Mr Kipping on the evening of 1 March 2013 contained a page bearing the apparent execution of the document by Mammoth which is different to the corresponding page in the GH version of the sublease until the matter was drawn to the attention of the solicitors for all parties by the solicitor for Mr Allen Caratti in late January 2014.
191 In his witness statement dated 28 January 2014, Mr Kipping stated, in relation to the copy lease attached to the email:
I received the copy lease attached to my email from Mr Caratti. I scanned the attachment on that date and on that basis believe that was the date upon which I received the document from Mr Caratti.
192 However, on the day Mr Kipping was due to give evidence, a supplementary witness statement signed by him was served on all parties. In that statement he provided a different explanation as to the provenance of the ABC version of the Granite Hill sublease. According to Mr Kipping's supplementary statement, at 6.46 pm on 1 March 2013, he received the email from Richard Payne to which I have already referred. He was at his office at 48 Wickham Street, East Perth, which is the same building in which Mr Allen Caratti has offices. At 7.02 pm he telephoned Mr Allen Caratti. They spoke for 13 minutes and discussed Mr Payne's letter.
193 During the course of the conversion, Mr Allen Caratti told Mr Kipping to get the sublease for Young River Station and to send a copy of it to Mr and Ms Bott's lawyers. Mr Kipping was using his mobile phone to speak to Mr Allen Caratti, so he went from his office to a downstairs storeroom where he knew the farm leases were kept in a metal cabinet, while continuing his conversation with Mr Allen Caratti. Mr Kipping has always had access to that storeroom since he commenced his practice from those premises. He located a manila folder entitled 'Young River' and in the folder found a sublease to Granite Hill. There were other documents in the folder. Mr Kipping took the sublease to Granite Hill to a copier/scanner, took the binding off the document and scanned the document to his computer. After scanning the document, he attached it to the email which he sent to Pacer Legal at 7.16 pm.
194 Mr Kipping was not aware that there were two versions of the sublease to Granite Hill at this time, and as I have noted, no one other than Mr Allen Caratti became aware of that fact until late January 2014, a few weeks prior to the commencement of the trial of these proceedings.
More requests for a copy of the Granite Hill sublease
195 On 5 March 2013, Pacer Legal wrote to Richard Payne advising that they had been instructed to act on behalf of Granite Hill and requesting a copy of 'the alleged lease' to Esperance Cattle.
196 By letter of the same date, Mr Kipping wrote to Richard Payne advising that he acted for Mr Allen Caratti, and that his instructions were to the effect that there was a valid sublease of Young River Station to Granite Hill. Although Mr Payne had clearly stated in his letter of 1 March 2013 that those who instructed him had never seen any copy of any sublease to Mr Bott, no copy of either version of the sublease to Granite Hill was enclosed with Mr Kipping's letter of 5 March 2013 to Mr Payne.
197 By email sent on 6 March 2013, Mr Payne provided a copy of the lease from Navarac to Esperance Cattle to Pacer Legal, and requested a copy of the head lease and sublease that were said to support Granite Hill's claim for possession of the property.
198 On 7 March 2013, each of Ms Maddeleine Caratti and Mr Aaron Caratti faxed a letter to Mr Bott in substantially similar terms, advising that each was a director of Navarac and Mammoth, expressing concern that Mr Allen Caratti had purported to grant Mr Bott or one of his entities a sublease of Young River Station and asserting that the directors of Navarac and Mammoth had not discussed or approved any sublease of the property to Mr Bott or any of his entities, nor had they signed any sublease having that effect.
199 On 14 March 2013, Mr Payne sent an email to Pacer Legal, referring to his email of 6 March 2013, to which he received no response, and reiterating his request for a copy of the head lease and sublease upon which Granite Hill relied in order to sustain its claim to possession. As Mr Payne does not practise in the field of litigation, Esperance Cattle engaged other solicitors to represent them in these proceedings. On 10 April 2013, those solicitors wrote to Pacer Legal reiterating the earlier requests for copies of the head lease and sublease upon which Granite Hill relied in order to sustain its claim to possession.
200 On 21 May 2013, Pacer Legal wrote to Esperance Cattle's solicitors providing, for the first time, a copy of the sublease between Mammoth and Granite Hill. The copy enclosed was a copy of the GH version of the sublease, not the ABC version. As I have noted, although the ABC version was first provided to Pacer Legal on 1 March 2013, it is clear that noone other than Mr Allen Caratti was aware that there were two versions of the sublease to Granite Hill until late January 2014.
201 No satisfactory explanation has been provided for the repeated failure of Mr Allen Caratti and Mr Bott, and the solicitors acting on their behalf, to provide a copy of the sublease upon which Granite Hill relied to sustain its claim to possession, notwithstanding the many requests of the other parties. In the case of Mr Allen Caratti, there is a clear inference, and I find, that it was because he had simulated his mother's signature on the document without her authority. It is not clear why Mr Bott refused to provide a copy of the GH version of the sublease in his possession when the dispute first arose, although it is clear that by at least mid February 2013, he must have been aware that there were doubts relating to the authenticity of the execution of the sublease.
The second instalment of rental
202 As I have noted, Granite Hill remained in occupation of Young River Station until effect was given to the orders which I made on 7 March 2014. On 29 July 2013, Mr Allen Caratti caused a further invoice to be sent to Granite Hill claiming rental for the period 28 August 2013 to 27 February 2014, in the amount of $357,500 (including GST). The invoice was headed 'Mammoth Nominees Pty Ltd', but requested payment to the account of Mammoth at Rural Bank.
203 On 6 August 2013, Granite Hill filed and served a reply and defence to counterclaim in which it was pleaded that Mammoth had claimed rental for Young River Station by an invoice dated 29 July 2013. As a consequence of that pleading, solicitors acting on behalf of Mammoth wrote to the solicitors acting on behalf of Granite Hill denying that an invoice had been issued by Mammoth claiming rental for the station and asserting that Mammoth had not in the past, and did not presently demand payment of any rent for Young River Station from Granite Hill. The letter reiterated Mammoth's assertion that Granite Hill had no right to possession of Young River Station, and expressly acknowledged Esperance Cattle's entitlement to possession of the property pursuant to its lease with Navarac.
204 Despite the terms of that letter, on 26 August 2013, Pacer Legal wrote to the solicitors acting on behalf of Mammoth enclosing a copy of the invoice which Mr Allen Caratti had caused to be issued the previous month, and confirming that Granite Hill was ready, willing and able to tender payment of the amount claimed in the invoice. The solicitors acting on behalf of Mammoth responded by letter of the same date reiterating their earlier assertion that Mammoth had not claimed payment of rent for Young River Station in the past, nor did it presently claim payment of rent. No reference is made in this sequence of correspondence to the fact that the first instalment of rental had been deposited into Mammoth's bank account, to the knowledge of John, Maddeleine and Aaron Caratti, or to the fact that those funds had been retained.
205 On 28 August 2013, Granite Hill caused $357,500 to be deposited in Pacer Legal's trust account, and those funds were used to acquire a bank cheque in the same amount payable to Navarac. That cheque was enclosed with a letter from Pacer Legal to Mammoth's solicitors dated 28 August 2013, by way of tender of payment of the rent relating to Young River Station. On 29 August 2013, the solicitors acting for Mammoth responded to Pacer Legal, refusing the tender of the rent, and proposing that the cheque be returned to Pacer Legal on the basis that the funds would be deposited into that firm's trust account to be held pending the determination of these proceedings and, in the event that the Granite Hill sublease was found to be valid, paid to Navarac or Mammoth. However, the proposal was conditional upon Granite Hill agreeing not to take the point that Mammoth had accepted payment of rent or that the acceptance of payment gave rise to an acknowledgement of the sublease or some form of estoppel preventing Mammoth from denying the existence of the sublease. Another condition was proposed, whereby Navarac and Mammoth would not take the point that Granite Hill had failed to pay rent under the alleged lease.
206 By letter dated 3 September 2013, Granite Hill's solicitors wrote to Mammoth's solicitors rejecting their proposal and proposing that the bank cheque either be accepted in payment of rental or returned to Granite Hill. By letter dated 10 September 2013, solicitors acting on behalf of Mammoth rejected the tender of the payment of rental and returned the bank cheque to Pacer Legal.
207 By emails dated 11 and 12 September 2013, the solicitor acting on behalf of Mr Allen Caratti in these proceedings sent an email to Pacer Legal demanding that the second instalment of rental be deposited into Mammoth's bank account at Rural Bank. Pacer Legal responded to those emails, referring to the stance which Mr Allen Caratti had adopted in these proceedings, and advising that, on that basis, rental would be tendered to Navarac. By letter of the same date addressed to Navarac at the Caratti group offices in Redcliffe, Pacer Legal enclosed the bank cheque in the amount of $357,500. On the same day, the solicitors acting on behalf of Mr Allen Caratti in these proceedings sent an email to Pacer Legal reiterating their demand that the rental be paid into the bank account of Mammoth.
208 By letter dated 19 September 2013, the solicitors acting on behalf of Navarac in these proceedings wrote to Pacer Legal advising that Navarac rejected the tender of the payment of rent, and asserting that it had been agreed between Mr Park of Pacer Legal and Mr John Caratti that the cheque would be deposited into Pacer Legal's trust account pending resolution of the proceedings. The cheque was then returned to Pacer Legal.
209 On 31 October 2013, the solicitors acting on behalf of Navarac in these proceedings wrote to Pacer Legal reiterating that their clients denied the validity of any sublease to Granite Hill, but proposing that the amount of $357,500 should be paid from Pacer Legal's trust account to Navarac's account on essentially the same terms as had been proposed in the letter from Navarac's solicitors of 29 August 2013.
210 By letter dated 31 October 2013, Mr Allen Caratti wrote to Granite Hill asserting that he was a director of both Navarac and Mammoth, and demanding that the instalment of rental be deposited directly into Mammoth's bank account at Rural Bank.
211 By letter dated 20 December 2013, Pacer Legal wrote to the solicitors acting for Navarac in these proceedings rejecting the proposal that rent be paid to Navarac on condition that no point be taken in these proceedings arising from the acceptance of payment. During crossexamination Mr Bott confirmed that the funds had been returned from Pacer Legal's trust account to Granite Hill.[16]
Granite Hill's farming operations at Young River Station
212 At an early stage of the trial I made an order reserving for subsequent determination all questions relating to the quantum of any damages due from one party to these proceedings to another, or the amount of any profits for which one party is liable to account to another. However, in these proceedings it is necessary to identify the principles by which any such damages or profits would be assessed. For that reason it is necessary to make general findings with respect to Granite Hill's occupation and use of Young River Station.
213 In the first half of 2013, Mr and Ms Bott restructured their commercial operations. As a consequence, since 1 June 2013, Bott Livestock Pty Ltd, as trustee of the Bott Livestock Trust, has acted as the agent of Granite Hill in relation to the conduct of both cropping and livestock operations on Young River Station. Any profit derived from those operations after the deduction of costs and expenses will be remitted to Granite Hill. Bott Cropping Pty Ltd, in its capacity as trustee of the Bott Cropping Trust has conducted some of the cropping activities on Young River Station and as a result has received the proceeds generated from the barley crop grown on the property during 2013 and has incurred some of the cropping expenses relating to cropping operations during 2013. That income, and those expenses, will be transferred to Bott Livestock, and thereafter to Granite Hill.
214 When Esperance Cattle became aware of the involvement of Bott Livestock Pty Ltd and Bott Cropping Pty Ltd in the farming operations conducted on Young River Station, each of those companies was joined as defendants to Esperance Cattle's claim. As against those companies Esperance Cattle seeks a declaration that they are liable to account to Granite Hill for income received by them as a result of livestock and cropping operations on Young River Station.
Who executed the ABC version of the lease and when?
215 The only remaining factual issue which requires determination is the contentious question of who endorsed Ms Maddeleine Caratti's signature on the ABC version of the Granite Hill sublease, and when. Before addressing the expert evidence given by experienced document analysts on that topic, I will first address the evidence given by Ms Maddeleine Caratti and Mr Allen Caratti, who are the only people who might have executed that version of the sublease. Before addressing the evidence given by each bearing specifically on this issue, it is appropriate to first set out the reasons why I harbour serious reservations with respect to the veracity of their evidence generally.
The evidence of Ms Maddeleine Caratti
216 As I have already noted, Ms Maddeleine Caratti was almost 85 years of age at the time she gave evidence. It was clear from her evidence generally that she had difficulty comprehending at least some of the questions which were put to her, and in remembering the events about which she was asked, many of which had taken place many years earlier.
217 During crossexamination she was asked a number of questions about the numerous occasions upon which she and Mr Allen Caratti attended the offices of Birman & Ride, solicitors, in order to execute documents. She asserted that although Allen accompanied her, he did not sign in her presence, but signed the documents some time later.[17] That evidence is contradicted by the fact that Mr Allen Caratti's signature has been witnessed by the same solicitor as Ms Maddeleine Caratti on many of the documents. Ms Maddeleine Caratti's evidence to the effect that she told Allen that he should not be signing the documents on behalf of the various companies, and that Mr Aaron Caratti should be signing them instead[18] is inherently implausible, given the number of occasions upon which she attended the solicitor's office with Allen, and must have known that he was signing documents as a director of the relevant companies.
218 During crossexamination she was asked about a statutory declaration which she and Mr Allen Caratti signed in the presence of Mr Paterson, who witnessed each signature. The statutory declaration was required by a bank in connection with the provision of financial accommodation. The first paragraph of the statutory declaration attests that Ms Maddeleine Caratti and Mr Allen Caratti are directors of Tosman. When the document was put to her, Ms Maddeleine Caratti denied that she read the document before signing it.[19] In my view that answer was given in an attempt to avoid the possible consequences of her affirmation that Mr Allen Caratti was a director of Tosman. When it was put to her that she had affirmed that fact by her signature, she repeatedly evaded the question by asserting that Mr Allen Caratti was not a director of Tosman.[20] At another point she asserted that she had been forced to sign the statutory declaration by Allen.[21] That assertion is inherently implausible, given that she was in the presence of a solicitor at the time she signed the document.
219 Ms Maddeleine Caratti was then crossexamined about a similar statutory declaration which she and Allen had signed in the presence of Mr Paterson in their capacity as directors of Navarac. Again, when it was put to her that the document was a declaration by her to the effect that Allen was a director of Navarac, she effectively refused to answer the question first by asserting that Allen was not a director of Navarac, and then by asserting, many times, that she was not shown the document.[22] She also asserted that Mr Paterson did not explain the document to her, which is inherently implausible, given that he was a solicitor charged with the responsibility of ensuring that the document was properly executed by Ms Maddeleine Caratti.[23]
220 After a luncheon adjournment, Ms Maddeleine Caratti was asked about the extent of her contact with her son, John, over the course of the adjournment. Her answers to those questions were initially evasive.[24] At a number of points in her evidence, I concluded that she was using apparent confusion with respect to the questions being asked in crossexamination in order to avoid directly answering those questions.
221 At another point in crossexamination with respect to the documents which she signed in the presence of solicitors, she denied that she had signed a statutory declaration which was witnessed by Mr Hodgkins, a solicitor.[25] There is no reason to doubt that Mr Hodgkins witnessed her signature, and her evidence on that topic must be rejected.
222 At another point, Ms Maddeleine Caratti said that a letter had been received from NAB requiring Allen to be removed as a director of Tosman.[26] However, there was no such letter, as the letter from the bank expressly exempted Tosman from the group companies from which Mr Allen Caratti had to be removed as a director.
223 At another point in her crossexamination, she described the deed of surrender of Mammoth's lease which she signed on 22 February 2013 as a lease to Stephen Blair.[27] Plainly she was confused about the document.
224 At a number of points during her crossexamination she was unable to recall what she had asserted in the witness statement which she had affirmed as her evidence in chief. At another point she was unable to recall signing the responsive witness statement which she had signed a little less than two weeks before giving evidence.[28] At another point she denied having seen the ABC version of the Granite Hill sublease, which is annexed to and is one of the topics addressed in her responsive witness statement.[29] At another point she had trouble remembering signing her first witness statement, and asserted that she had not read it before signing it, on the basis that it was explained to her by her son, Mr John Caratti.[30]
225 At another point in crossexamination, the document entitled 'Register of Members' relating to Venetian was put to her. When asked when she had first seen that document, she first said it was in 1991.[31] She then said that she saw it on the date which it bears, namely, 13 May 2002, and then said that she could not remember when she had first seen the document.[32] She then asserted that Parker & Parker had created the document,[33] when it seems clear that the document was created by her son Mr John Caratti. When she was shown the equivalent document relating to Tosman, she again asserted that she had first seen it in 1991, when plainly it did not exist until at least May 2002.[34] She then asked whether it was a document that her mother had signed[35] - which was presumably a reference to her anticipation that she would be asked questions about the creation of the Maddeleine Caratti Trust by the deed of settlement signed by her mother in December 2001.
226 At a more general level, on a number of occasions I noticed that her evidence on critical topics was given with great emphasis and in terms which were favourable to Navarac and Mammoth. I gained the distinct impression that she had been made aware of the significant issues in the case, and of the position that would best suit the interests of Navarac and Mammoth in the litigation.
227 For these reasons, I do not attach significant weight to any evidence given by Ms Maddeleine Caratti, including her emphatic assertion that she never signed the ABC version of the sublease to Granite Hill. Of course, that is not to say that I would use my general reservations about her credibility to bolster a conclusion that she did in fact sign the ABC version of the Granite Hill sublease, but merely that any conclusion that she did not sign that document is more safely derived from evidence other than her testimony.
The evidence of Mr Allen Caratti
228 As I have mentioned, Mr Allen Caratti made no mention of the ABC version of the Granite Hill sublease in his first witness statement. In the circumstances of this case, that omission is extraordinary and tells against the veracity of his evidence on this topic.
229 In his responsive witness statement served in late January 2014, Mr Allen Caratti stated that the lease documents were returned to him after being executed by Mr and Ms Bott in late October 2012. According to Mr Allen Caratti in that statement:
Bott told me at about that time that he needed a copy of the lease duly executed and accordingly I signed it as a director of Mammoth and I also signed on behalf of my mother and then I sent that document either to WA Property Lawyers or to Bott. I then telephoned my mother on 1 or 2 November 2012. The call was made from my mobile phone ... to the Redcliffe office. ... I said to my mother as best as I can recall: 'I need for you to sign something. When will you be there?' She said that she would be at Redcliffe at about 3pm and I told her I would see her then. At about 2pm I went to the Redcliffe office. I called into the workshop to see what was happening and then walked to the office which is adjacent to the workshop. I went to my mother's office. She was seated at her desk. I said: 'I need you to sign this'. She said, 'Ok what is it?' I said: 'It's a lease for Young River'. She said: 'Ok' and signed the lease.
230 This description of events clearly infers that Mr Allen Caratti simulated his mother's signature on one document without prior reference to her, which was then sent to WA Property Lawyers. According to this version of events, it was only after that document was sent to the lawyers that Mr Allen Caratti took the other copy of the sublease which had been executed by Mr and Ms Bott to his mother, who then signed it without demur. No reference is made to any prior alteration to the document signed by his mother, so as to remove a page which had been signed earlier and replace it with another.
231 The obvious difficulty with this version of events is that the expert evidence establishes unequivocally that the ABC version of the Granite Hill sublease is an amalgam of the version which was originally signed by both Mr and Ms Bott and Mr Allen Caratti, simulating his mother's signature, because the impressions of those signatures remain on the page below the execution page. The expert evidence establishes unequivocally that the execution page was removed from that document and replaced with another page, sometime after the document was first executed.
232 Mr Allen Caratti makes no reference whatever to any of these matters in his responsive witness statement. Of course at the time that the statement was served, the expert evidence relating to the ABC version of the document had not been obtained or exchanged because the existence of the ABC version of the Granite Hill sublease was not known to anybody other than Mr Allen Caratti prior to the service of his responsive witness statement. The fact that Mr Allen Caratti's responsive witness statement provides a version of events which makes no reference to the objective facts established by the expert evidence tells strongly against the veracity of his evidence on this topic.
233 At another point in his responsive witness statement Mr Allen Caratti asserts that if Mr John Caratti had contacted him to discuss the allegations made by Mr Stephen Blair on 10 December 2012, he would have 'told John that mother had signed with me a lease for YRS to Bott in late November 2012'. The reference to the execution of the lease in late November 2012 is, of course, inconsistent with the earlier portion of the same statement in which he asserts that execution took place on the afternoon of either 1 or 2 November 2012.
234 The inconsistency of Mr Allen Caratti's evidence with respect to the date upon which the ABC version of the Granite Hill sublease was executed by his mother was compounded during crossexamination, when in answer to a nonleading question posed by counsel for Granite Hill as to the circumstances in which the document was executed, he replied:
I went to her on 2 December, and I had her execute a copy annexed to my statement.[36]
235 Counsel queried the date and Mr Allen Caratti confirmed that it was 2 December. Counsel then asked if in fact it was November, and Mr Allen Caratti then amended his evidence in accordance with that suggestion.[37]
236 In his responsive statement Mr Allen Caratti identified a number of documents on which he had simulated his mother's signature. In respect of each of those documents he asserted that he had his mother's specific authority to write her name on the document before he did so. However, during crossexamination by counsel for Granite Hill, Mr Allen Caratti asserted, for the first time during these proceedings, that he had his mother's general authority to write her name on documents. He asserted:
It was a general authority. It happened on a number of occasions, so I never rang her on every occasion, and when it came to dealing with the leases or deals to do with myself, it was an authority that she gave me to - to be able to do it, so it didn't have to hold things up.[38]
237 This evidence is utterly implausible, and I reject it. As Mr Allen Caratti accepted during crossexamination, there have been other proceedings pending in this court for a number of years in which allegations have been made to the effect that he forged his mother's signature.[39] In those proceedings Mr Allen Caratti has never alleged that he had his mother's general authority to write her signature on documents as and when he chose. Nor was that assertion made in either of the witness statements he served in these proceedings, and the first time it emerged was during crossexamination by counsel for Granite Hill. It is an assertion which flies in the face of the allegations of forgery which Ms Maddeleine Caratti has been making for about a decade, and which prompted the adoption of the elaborate procedure for the execution of documents by her in the presence of a solicitor who would then verify her signature. The evidence given by Mr Allen Caratti in which he claimed to have his mother's general authority to sign documents on her behalf is one of the many examples which has led me to conclude that he is dishonest, that his evidence in these proceedings was given dishonestly, and that he was willing to and did say on oath anything that he thought would advance his cause, without regard to the truth.
238 During crossexamination it was put to Mr Allen Caratti that on his evidence the ABC version of the Granite Hill sublease was the first document he and his mother had signed since 2010.[40] In response he repeatedly denied any recollection of the last prior occasion upon which he and his mother had together signed a company document. That denial is implausible, as it is clear from both his witness statements that he has undertaken an extensive trawl through many company documents for the purpose of identifying all those signed by him and his mother. They are presented in chronological order in his first witness statement, the truth of which he affirmed at the commencement of his oral evidence. I do not accept that he would have overlooked or forgotten the fact that the latest of those documents is dated 2010, some 2 1/2 years prior to the alleged execution of the ABC version of the Granite Hill sublease by his mother. His feigned lack of awareness of that fact was an attempt to avoid a substantive response to the questions that were being put to him.
239 During crossexamination it was pointed out to Mr Allen Caratti that earlier in the proceedings a defence had been filed on his behalf admitting that the Granite Hill sublease was executed by Mammoth on or about 16 October 2012.[41] Mr Allen Caratti responded that that date accorded with his memory at the time. Additionally, Mr Allen Caratti was asked how it was that in his first witness statement he had suggested that the document had been executed sometime between 23 October and 16 November, whereas by the time his responsive statement was produced a month later, he was able to say that the document was executed shortly after 2.00 pm on 2 November 2012. Mr Allen Caratti had no explanation. This evidence exacerbated the inconsistencies to which I have referred already in relation to Mr Allen Caratti's evidence as to the date upon which the Granite Hill sublease was executed.
240 At another point in his crossexamination Mr Allen Caratti asserted that at the time he simulated his mother's signature on the Granite Hill sublease he had her authority to do so.[42] However, that assertion is inconsistent with his description of events in his responsive witness statement, which makes clear that his mother had no knowledge of the Granite Hill sublease until after he had simulated his name on the copy of the sublease and returned it to WA Property Lawyers.
241 Also during crossexamination Mr Allen Caratti asserted that at the time he simulated his mother's signature on the Granite Hill sublease he intended to procure her signature to the document later.[43] However, he accepted that he simulated his mother's signature on both copies of the Granite Hill sublease. When it was put to him that simulation of his mother's signature on both copies of the sublease document was entirely inconsistent with an intention to procure her signature on one of those copies later, he was unable to proffer any reasonable or plausible explanation. That is because his evidence is inexplicable and I reject it.
242 Prior to crossexamination Mr Allen Caratti had given no evidence in chief as to the provenance of the ABC version of the Granite Hill sublease, and in particular, how the execution page had been removed from the executed copy of the sublease and replaced by another. During crossexamination he asserted that he asked a receptionist to remove the binding from the executed Granite Hill sublease, photocopy the execution page, white out where his mother had signed on that page and then photocopy it again, and then replace that copy of the page in the rebound document for him to take to his mother.[44] Obviously, this elaborate process could have been avoided if Mr Allen Caratti had not simulated his mother's signature on both copies of the sublease document. His actions in simulating her signature on both copies of the sublease document without prior reference to her are not consistent with an intention that she would later be called upon to execute the document, and I find that Mr Allen Caratti had no such intention at the time he simulated his mother's signature.
243 It is also significant that according to this version of events, at the time the bound version of the sublease was taken by Mr Allen Caratti to his mother's office for her to sign, the photocopy of the altered version of the earlier execution of the page had been rebound into the original document. However, the expert evidence establishes conclusively that there is no impression of the second signature which purports to be that of Ms Maddeleine Caratti on the page which is below the execution page in the bound copy of the ABC version of the Granite Hill sublease. It is fair to conclude, and I find, that when Ms Maddeleine Caratti's name was written on the execution page of the ABC version of the Granite Hill sublease, it was not on top of the page which is now below it in the bound version of the document.
244 Of course, it is theoretically possible that Mr Allen Caratti could have presented the bound sublease document to his mother with all the pages above and below the execution page on the left hand side of the bundle, with only the execution page on the right hand side. However, that is most unlikely. It is much more likely that the document would have been presented by Mr Allen Caratti to his mother open at the execution page, with the other pages and backing sheet below that page.
245 The fact that the execution page of the ABC version of the Granite Hill sublease was not on top of the page which is below it in the bound version of that document at the time Ms Maddeleine Caratti's name was written on the execution page strongly suggests, and I find, that the page was not part of the bound document, or otherwise combined with it, at the time that Ms Maddeleine Caratti's name was written on it, and that the page was not presented together with the other pages of the sublease in any manner.
246 When these matters were put to Mr Allen Caratti in crossexamination he stated on two occasions that he had not read the expert reports provided by the document analysts.[45] However, he later admitted that he knew the thrust of those reports and he denied that the proposition put by his counsel, to the effect that the document was presented to his mother with only the execution page on the right hand side, and all other pages on the left hand side, was a deliberate but false attempt to explain his version of events in the context of the evidence given by the handwriting experts. However, that is what I find.
247 Mr Allen Caratti accepted in crossexamination that the ABC version of the Granite Hill sublease was never sent to WA Property Lawyers, and that no copy was sent to Mr and Ms Bott until Mr Kipping sent it to their lawyers on 1 March 2013.[46] He also accepted that all the pages of the ABC version of the Granite Hill sublease were original, except the execution page.[47]
248 Mr Allen Caratti also admitted in crossexamination that he had made serious allegations against his mother during the course of their telephone conversation on 1 November 2012.[48] The correspondence written by his solicitors around this time, which also contained allegations and threats of legal proceedings, was also put to Mr Allen Caratti in crossexamination.[49] Notwithstanding this correspondence, he denied that relations with his mother were strained at this time.[50] That denial is implausible and I reject it.
249 An affidavit which Mr Allen Caratti had sworn in March 2013 in the course of other proceedings was put to him. In that affidavit he deposed that over the past 12 months he had seen his mother on three occasions only, being 25 December 2011, 28 April 2012 and 19 May 2012, and that on none of those occasions had he discussed business with his mother. He also deposed to the fact that he had perhaps four telephone conversations with his mother over the same period and business matters were not discussed in any of them. Those assertions are obviously inconsistent with the evidence which he gave in these proceedings.
250 Mr Allen Caratti's simulation of his mother's name on the application to remove the caveat over Young River Station was put to him in crossexamination. He reiterated his assertion that his mother had authorised him to sign her name on the document, but for reasons already given, I reject that evidence.[51] It was put to him that even if he had his mother's authority to sign her name on the document, it was wrong to lodge such a document with Landgate, given that he lacked a duly executed power of attorney to execute such documents on his mother's behalf.[52] Mr Allen Caratti denied that obvious proposition, which reinforces my view that Mr Allen Caratti lacks any sense of the importance of honesty and propriety in business dealings.
251 Mr Allen Caratti did not deny that the scanned version of the Granite Hill sublease sent to the bank attached to his email of 4 January 2013 was the GH version.[53] When asked how that occurred, he replied, 'The girls scanned the wrong one into the email'.[54] It was then put to him that the ABC version did not exist at the time, and he asserted that it did exist.[55] It is clear from these answers that Mr Allen Caratti was suggesting that on 4 January 2014, there were two versions of the Granite Hill sublease in his office, one being the GH version and other being the ABC version, and that the office girls scanned the wrong one for the purpose of attaching it to the email to the bank. For the reasons I have already given, that evidence must be false, as Mr Allen Caratti can never have had both a full copy of the GH version and the ABC version at the same time, because, as he admitted in crossexamination, the ABC version is in fact the GH version but for one page which he altered.
252 Mr Allen Caratti accepted that he received a copy of Mr Richard Payne's email of 13 February 2013 from Ms Bott. He accepted that from at least that date, he knew that Esperance Cattle claimed to have a lease over Young River Station.[56] There is no evidence to the effect that Mr Allen Caratti had any knowledge of the execution of a lease in favour of Esperance Cattle on 10 December 2012 prior to this time.
253 Mr Caratti also accepted that Mr and Ms Bott made him aware of the assertions made in the email which they received on 27 February 2013, to the effect that the directors of Mammoth and Navarac had no knowledge of any purported sublease of the property to Mr and Ms Bott.[57]
254 It was put to Mr Allen Caratti that his awareness of the assertions that were being made on behalf of Navarac and Mammoth provided the stimulus for his production of the ABC version of the Granite Hill sublease, because he had become aware that the authenticity of the execution of that document was likely to become an issue. He denied that proposition.[58] However, I accept that this is precisely what occurred.
255 Mr Allen Caratti's evidence to the effect that the ABC version of the Granite Hill sublease came into existence in early November 2012 is highly improbable. It is inconsistent with the obvious tension in the relationship with his mother at that time, and with his simulation of his mother's signature on both copies of the sublease. His evidence as to the manner in which the document was presented to his mother for signature is highly improbable, and I reject it.
256 Further, for the reasons I have given, it is highly improbable that the ABC version of the Granite Hill sublease was in existence on 4 January 2013 when Mr Allen Caratti sent a scanned copy of the GH version of the Granite Hill sublease to the bank. Prior to Mr Allen Caratti becoming aware that Esperance Cattle claimed possession under a lease executed by Navarac, and that Navarac's directors denied any knowledge of the Granite Hill sublease, there would have been no reason for Mr Allen Caratti to go to the trouble of manufacturing the ABC version of the Granite Hill sublease. Accordingly, it is more likely than not, and I find, that the ABC version of the Granite Hill sublease was not created until sometime after 13 February 2013. Further, given the possible legal significance of the question of whether the ABC version was created before or after the surrender of the Mammoth lease to Navarac on 22 February 2013, I find that it is more likely than not that Mr Allen Caratti created the ABC version of the Granite Hill sublease relatively close in time to the date upon which possession was to be taken, most likely after becoming aware of the assertions made on behalf of Esperance Cattle in the email which was sent to Mr and Ms Bott on 27 February 2013. This would have been around the time Mr Allen Caratti was making preparations to travel to Esperance to be present at the handover of possession, no doubt because he expected that there may be trouble. For that reason I find it is more likely than not that the ABC version of the Granite Hill sublease came into existence a few days prior to 1 March 2013 and, more likely than not, after 22 February 2013.
257 In making these findings I take into account the other matters to which I referred in the course of addressing the factual issues chronologically and which reflect adversely on Mr Allen Caratti's credit, including his participation in the various attempts to deceive NAB with the assistance of Mr Drayton. Other matters not already mentioned which reflect adversely on his credit are his admitted simulation of his mother's signature on a hire purchase agreement between a company associated with Ms Bazzo and Orix Australia Corporation Ltd which was guaranteed by Caratti group companies. Although he asserted in crossexamination that he had his mother's authority to simulate her signature,[59] that evidence appears to be most unlikely, given the apparent state of relations between Ms Maddeleine Caratti and Ms Bazzo.
258 Another matter which reflects most adversely upon Mr Allen Caratti's credit is his alteration of that document in relation to a guarantee provided by one of the companies within the group, Robinswood, which was being wound up by the ATO at the time, so as to insert Mr Aaron Caratti as director of that company, and to remove his own name. In crossexamination he accepted that his actions were cynical and dishonest.[60] He also accepted that he forged Mr Aaron Caratti's signature without his authority.[61]
259 Mr Allen Caratti also admitted that he had simulated Mr Peter Drayton's signature on this document. Additionally, in the context of earlier proceedings in which it had been asserted that those signatures on the hire purchase guarantee had been simulated, he instructed his solicitor to deny that assertion, with the result that the solicitor wrote a letter on his behalf in which it was stated:
My client denies that he has signed the name of Maddeleine Caratti and his nephew Aaron as a director of several of the third defendant companies to guarantees by those companies for borrowings from Orix Australia [.][62]
Mr Allen Caratti accepted in crossexamination that this assertion was untrue.[63]
260 Mr Allen Caratti also admitted that he had been convicted of an offence arising from his alteration of the speedometer on a vehicle, and that he was also convicted of giving a false name to an environmental protection inspector.[64] He also admitted that on another occasion he had given a false address to police.[65]
261 Putting all these matters together, I have no doubt that the evidence given by Mr Allen Caratti in these proceedings was given dishonestly, and that he was prepared to state, and in fact did state, anything that he considered was likely to advance his cause without regard for the truth. For that reason, I give no weight to the evidence which he has given in relation to Ms Maddeleine Caratti's execution of the ABC version of the Granite Hill sublease. However, as with my rejection of Ms Maddeleine Caratti's evidence on this topic, it does not necessarily follow that Ms Maddeleine Caratti did not in fact sign the execution page which forms part of the ABC version of the Granite Hill sublease, given her somewhat erratic and inconsistent attitude towards the execution of company documents in conjunction with her son, Mr Allen Caratti, at least between 2004 and 2010. It is therefore appropriate to assess the expert evidence given by the document analysts for the purpose of ascertaining whether it sheds any light on the question of whether the signature on the execution page of the ABC version of the Granite Hill sublease was in fact applied by Ms Maddeleine Caratti. However, as I have noted, even if it was applied by her, for the reasons I have given, I find that the execution page in the ABC version of the Granite Hill sublease did not form part of a document bound or presented together as the Granite Hill sublease at the time Ms Maddeleine Caratti's name was written on that page. For reasons that I will develop below, that finding is of itself sufficient to sustain the conclusion that the Granite Hill sublease was not validly executed by Ms Maddeleine Caratti on behalf of Mammoth.
The evidence of the document analysts
262 The Navarac and Mammoth parties adduced expert evidence from Mr John McGinn who is a wellqualified and experienced document analyst. Two reports were produced by Mr McGinn. The first, dated 10 September 2013 compared the purported signature of Ms Maddeleine Caratti on the GH version of the Granite Hill sublease with a number of verified signatures of Ms Maddeleine Caratti. For the reasons identified in that report, Mr McGinn confidently concluded that the signature of Ms Maddeleine Caratti on the GH version of the Granite Hill sublease was not written by the same person who had written the verified signatures of Ms Maddeleine Caratti. As Mr Allen Caratti ultimately admitted that he simulated his mother's signature on that version of the document, it is unnecessary to consider that report in any detail.
263 Mr McGinn provided a further report dated 7 February 2014, following examination of the ABC version of the Granite Hill sublease.
264 Evidence was led on behalf of Mr Allen Caratti from Mr Stephen Dubedat, who is also a wellqualified and experienced document analyst. A report from Mr Dubedat dated 17 February 2014 was tendered in evidence dealing with his comparison of the purported signature of Ms Maddeleine Caratti on the execution page of the ABC version of the Granite Hill lease with various other signatures attributed to Ms Caratti.
265 No challenge was made to the expertise or qualification of either expert witness, and I have no hesitation in accepting that each is qualified to express the opinions which were expressed in their reports and during the course of their oral evidence. The experts gave their evidence concurrently, which I found to be advantageous in identifying the real points of distinction between them. That process was also enhanced by the significant time which they spent conferring during the day prior to giving their evidence. However, the evidence of each was affected by the fact that they were provided with a much greater number of specimen signatures against which the disputed signature could be compared for the purposes of their conferral just prior to that conferral which, as I have mentioned, was only one day before they gave evidence and was after they had each prepared their written reports.
266 Despite this disadvantage, I am satisfied that each expert did his best to assist the court, and each took some pains to endeavour to be as objective and as impartial as possible notwithstanding the source of their instructions. It was however clear that Mr McGinn had something of an advantage over Mr Dubedat, in that Mr Dubedat had only been instructed shortly before preparing his report and giving evidence, and had not been given as much time to undertake his analysis as Mr McGinn.
267 Following the conferral to which I have referred the experts produced a summary of the matters upon which they were agreed.[66] In that summary they referred to the ABC version of the Granite Hill sublease as 'the questioned document' and I will use the same nomenclature. Their matters upon which they were agreed include the following:
(a) on page 21 of the questioned document (the execution page) there is an original ink signature and handwritten entry associated with the name Maddeleine Caratti;
(b) all other signatures and handwritten details on that page are nonoriginal and were created by a laser photocopier or printer;
(c) impressions of handwritten entries and signatures are present on page 22 of the questioned document, which provide evidence that a document was positioned above page 22 when four original signatures and associated handwritten entries were written on the overlaying document;
(d) the impressions on page 22 of the questioned document can be aligned with the signatures and handwritten entries that appear on page 21 of the document with the exception of those associated with Maddeleine Caratti. This provides evidence that the original page 21 was used to create the current page 21;
(e) the impression of the Maddeleine Caratti signature found on page 22 of the questioned document does not have the appearance of a genuinely executed signature based on the specimen signatures that were available for comparison;
(f) there are a number of pictorial similarities between the questioned signature and the collective specimen signatures of Ms Maddeleine Caratti provided to each expert;
(g) if the questioned signature is a simulation, it is of high quality, and further, as the signature has been applied to a photocopied document, the author of the simulated signature could have had any number of attempts at producing the signature; and
(h) if the signature is a simulation, then it is likely that the tracing method of simulation was used.
268 However, the experts disagreed on the critical question of the likelihood of the questioned signature having been written by the writer of the specimen signatures provided for the purpose of analysis, Ms Maddeleine Caratti. Mr Dubedat was of the opinion that it is more likely than not that the questioned signature was written by the same person as the author of the specimen signatures. On the other hand, Mr McGinn was of the view that it was more likely than not that the questioned signature was not written by the same person who had written the specimen signatures and that it was most likely that the questioned signature had been simulated by some other person but that it was not possible to identify that person from the signature itself.
269 Each expert gave detailed reasons for arriving at their differing ultimate conclusion as to the authorship of the questioned signature. Each undertook a detailed analysis of minute portions of the questioned signature and compared those portions to the specimen signatures provided for analysis. As I have mentioned, this process was complicated by the significant expansion of the number of specimen signatures provided only a day before their evidence was given.
270 In his written report Mr McGinn identified nine points at which the questioned signature was, in his view, dissimilar to the specimen signatures which had been provided for the purposes of analysis. He also identified a number of points of similarity. The points of dissimilarity were related to the downward stroke of the letter 'c', the space between the letter 'c' and the remainder of the signature, the connecting stroke between the 'a' and the 'r', the presence of a small eyelet formed at the location of the 'r', the presence of a loop in the first 't', the maintenance of constant pressure in the stroke between the two 't's', the downward stroke for the second 't', the tapered termination of the signature, and the crossbar to the two 't's. However, as a result of the expansion of the range of specimen signatures provided to Mr McGinn, during his evidence he indicated that the views he expressed in his report with respect to at least three of those points of dissimilarity were not held as strongly as expressed in his report, because the expanded range of specimen signatures included signatures which had similarities to some of those features.[67] However, ultimately Mr McGinn's opinion was that the combination of these points of dissimilarity led him to conclude that it was more likely than not that the questioned signature had not been written by the same person who was the author of the specimen signatures, and he noted that on the whole the additional specimen material strengthened this view.[68]
271 Mr Dubedat did not agree with Mr McGinn in relation to all of the points of dissimilarity suggested by Mr McGinn. He did however identify some points of dissimilarity between the questioned signature and the specimen signatures. However, he noticed significant similarities between the questioned signature and the specimen signatures including the design and construction of most letter forms, the spatial relationship of the letters to one another, the slope, size and proportion of the letters, the letter spacing and connections and the line quality. In Mr Dubedat's view those similarities were unlikely to have been produced by a freehand simulation and most likely would have had to have been produced by a tracing process. Generally, if tracing is used, there are features which one expects to see, including slowness and deliberation in the writing, pen lifts in places where pen lifts would not be expected to occur, blunt line endings, the lack of fluency in the writing, tremor or hesitation in the writing, subtle touching or retouching of strokes, similarities in the more obvious features of genuine signatures but lack of detail in the minutiae and differences in construction and form. Mr Dubedat did not consider that many of those features were present in the questioned signature, which led him to the conclusion that it was more likely than not that the author of the questioned signature was the same person as the author of the specimen signatures.
272 The resolution of these competing contentions is not an easy task. Each expert expressed their opinion logically and convincingly. However, features of their evidence that I found to be significant included Mr McGinn's evidence that none of the specimen signatures showed the degree of continuous pressure applied to create the questioned signature, which raises the prospect of simulation.[69] Mr Dubedat accepted that most of the specimen signatures showed a more dynamic quality than the questioned signature but nevertheless considered simulation to be unlikely because of the lack of many of the usual features which accompany simulation.[70]
273 Mr McGinn also placed emphasis upon the formation of the letters 't' in the questioned signature, which were unlike anything in the specimen signatures which had been provided.[71] Although Mr Dubedat accepted that some of the features of simulation might be present, including the feature relating to the pressure used to effect the signature, if it was a simulation it would be the best he had seen and it would have to have been modelled from another signature, which had not been identified in the specimen signatures provided to him.[72] Mr McGinn agreed that the simulator of the signature would have had to have been skilful.[73]
274 For the reasons I have given, I find that Mr Allen Caratti created the ABC version of the Granite Hill sublease in late February 2013, at a time when he had reason to expect that the authenticity of Ms Maddeleine Caratti's signature on that document would be called into question. Prior to the creation of that document he had simulated his mother's signature on each version of the Granite Hill sublease without a great deal of care and attention, presumably in the expectation that the authenticity of the signature was unlikely to be questioned. Accordingly, at the time the ABC version of the document was created, Mr Allen Caratti had every reason to take considerable pains to either improve the quality of the simulation by using a technique such as tracing, or by procuring her signature to the document by a trick that is, by presenting the single execution page to her, and representing to her that the document was innocuous. I note in this context that there is nothing on the execution page which would reveal the nature of the document to which it relates.
275 I find that on the balance of probabilities Mr Allen Caratti used one or other of these techniques to procure the ABC version of the Granite Hill sublease. Taking into account the points of dissimilarity between the signature on that page and the specimen signatures identified by Mr McGinn, and the distinct possibility that a sophisticated simulation technique may have been used, I think it slightly more likely than not that Mr Caratti simulated his mother's signature on that page, but with much greater care and attention than on the earlier version of the sublease. That course appears to me to be slightly more likely than Mr Allen Caratti having procured his mother's signature on the single execution page, mainly because there is no evidence that Ms Maddeleine Caratti signed any document at the request of her son Allen after the middle of 2010, and relations between them had plainly deteriorated as a result of the litigation in which they were engaged, and the various allegations each was making against the other. In that context, it seems to me to be improbable that Ms Caratti would have signed a single page document produced to her by her son Allen, but given her erratic and somewhat inconsistent behaviour in this regard over the years, I could not exclude the possibility.
Summary of findings in relation to the ABC version of the Granite Hill sublease
276 For the reasons I have set out above, I find that the ABC version of the Granite Hill sublease was produced by Mr Allen Caratti in the last few days of February 2013, most likely after 22 February 2013, and that the execution page of that document was not bound with or presented with the other pages of the document at the time the signature purporting to be that of Ms Maddeleine Caratti was applied to that page. I also find that Mr Allen Caratti either simulated his mother's signature on that page or procured her signature on that page by a trick, and that of those two alternatives, the former is a little more likely than the latter.
277 For the reasons given above, I reject entirely Mr Allen Caratti's evidence to the effect that the ABC version of the Granite Hill sublease was signed by his mother in his presence during the afternoon of 2 November 2012. I find that evidence to be a complete fabrication, dishonestly concocted in an endeavour to advance his cause in these proceedings.
The issues
The pleadings
278 This is not one of those cases in which the parties or the court acquiesced in issues outside the scope of the cases pleaded by the parties being insinuated into the case. To the contrary, the management of the case prior to trial and the trial itself were conducted on the basis that the issues would be confined to those expressly enunciated by the parties in their pleadings. Applications to amend pleadings were made before and during the trial on that basis and objections were taken during the trial to issues that were not within the pleadings. After reviewing the pleadings as they stood at the conclusion of the trial I will briefly refer to the unsuccessful applications to amend that were made on behalf of Mr Allen Caratti, and the successful objection that was taken to issues which counsel appearing on his behalf tried to raise during the course of closing submissions, for the purpose of identifying issues which I have expressly excluded from determination.
Esperance Cattle's claim
279 Esperance Cattle pleads that Navarac granted to it a lease of the land comprised in six Certificates of Title by a lease executed by Esperance Cattle on 3 October 2012, and by Navarac on 10 December 2012 (Young River Station). It further asserts that it took possession of the property leased to it by Navarac on 1 March 2013. It further asserts that on a date unknown to it, Granite Hill entered upon and took possession of the property, and despite demand, remained in possession and refused to vacate. Esperance Cattle further pleads that Granite Hill was using the property to grow crops and graze cattle pursuant to an agreement, arrangement or understanding between it and Bott Livestock Pty Ltd and Bott Cropping Pty Ltd, who are joined as defendants to Esperance Cattle's claim. Esperance Cattle asserts that those companies have received income in respect of the livestock and cropping operations conducted on the property and are under an obligation to transfer that income to Granite Hill.
280 Esperance Cattle further pleads that Granite Hill's occupation and use of the property is wrongful and that Granite Hill has been unjustly enriched by that occupation and use. Particulars of that plea assert that the enrichment derived by Granite Hill from its unlawful occupation and use of the property is the value of the benefit which it has received from such occupation, including the profit derived by it from conducting the farming operations on the property.
281 Esperance Cattle asserts that it has suffered loss and damage by reason of Granite Hill's wrongful occupation of the property including the opportunity to use the property for farming purposes, costs incurred in relation to stock purchased in preparation for occupation of the property including agistment fees paid in respect of that stock, and the depreciation of and interest payable on equipment purchased in anticipation of occupying the property.
282 Esperance Cattle claims, as against Granite Hill, an order for possession, mesne profits, or alternatively damages, or alternatively an account of profits. As against Bott Livestock Pty Ltd and Bott Cropping Pty Ltd, Esperance Cattle claims a declaration that they are liable to account to Granite Hill for the income received by them as a result of livestock and cropping operations conducted on the property. Although Esperance Cattle joined each of Navarac and Mammoth as defendants to its claim, no relief is sought against them.
Granite Hill's defence and counterclaim
283 Granite Hill pleads the head lease from Navarac to Mammoth executed in 2002, the deed of extension of that lease executed in February 2008, and the deed of surrender of that lease executed on 22 February 2013.
284 In answer to Esperance Cattle's claim, Granite Hill pleads that Esperance Cattle's lease from Navarac was subject to conditions precedent which were never satisfied. However, those assertions were (wisely) abandoned during the course of the trial.
285 Granite Hill asserts that on or about 16 October 2012, or alternatively in early November 2012, Mammoth granted to it a sublease of its leasehold interest in the land comprised in five Certificates Title, being identical to those the subject of Esperance Cattle's lease, with the omission of Lot 5 on Diagram 90834 (Lot 5). For present purposes nothing turns upon the fact that the land leased to Esperance Cattle by Navarac was slightly larger in area than the land leased to Granit Hill by Mammoth by the inclusion of Lot 5, although that may become relevant to the assessment of the quantum of liability.
286 Granite Hill pleads that the deed of surrender executed by Navarac and Mammoth on 22 February 2013 did not deprive its sublease of force and effect because the surrender was pursuant to an agreement between the landlord and the head tenant extraneous to the provisions of the head lease, rather than in accordance with its terms. This plea reflects the principle enunciated by Lord Neuberger in PW & Co v Milton Gate Investments Ltd.[74]
287 This legal proposition was not contested by any party. Accordingly, the case was conducted on the basis that if Granite Hill succeeded in establishing that Mammoth granted it a sublease prior to 22 February 2013, the sublease remained in force and effect notwithstanding Mammoth's surrender of its leasehold interest on 22 February 2013. That common assumption did not apply if the only basis upon which Granite Hill established the grant of the sublease was by the operation of assumptions which it was entitled to make pursuant to the Corporations Act. In that circumstance, the parties differed as to the effect of the statutory assumptions upon parties other than Granite Hill and Mammoth.
288 Of course different legal principles govern the priorities given to the competing proprietary claims of Granite Hill and Esperance Cattle if both succeed in establishing their claimed interests. In the application of those principles, the relevant date is 10 December 2012, rather than 22 February 2013, because that is the date upon which Esperance Cattle acquired any proprietary interest in the property. However, in the result, nothing turns on the difference between these dates for two reasons. First, neither Granite Hill nor Mr Allen Caratti assert that the Granite Hill sublease was created at some time between 10 December 2012 And 22 February 2013. To the contrary, each asserts that the Granite Hill sublease was created no later than early November 2012. Second, there is no doubt that the GH version of the Granite Hill sublease was created not later than 16 November 2012, and I have found that the ABC version of the Granite Hill sublease was created after 22 February 2013.
289 In its pleading and in the course of submissions Granite Hill places emphasis upon the fact that its sublease commences as and from 28 February 2013, whereas Esperance Cattle's lease does not commence until 1 March 2013. However, as all parties accept the principle enunciated in PW & Co v Milton Gate Investments Ltd, nothing turns on this distinction. That is because all parties accepted that if Granite Hill succeeds in establishing that it acquired an interest in the land as sublessee by a sublease executed in early November 2012, its interest as sublessee remains valid and enforceable notwithstanding the later grant of a leasehold interest to Esperance Cattle on 10 December 2012, or the surrender of Mammoth's head lease on 22 February 2012. It was also common ground that subject to whether Mr Aaron Caratti was a director, which I have found, if in fact Mammoth granted a sublease to Granite Hill after 22 February 2013 (and I have found that the ABC version of the Granite Hill sublease was created after that date), it does not confer a proprietary interest upon Granite Hill because by that time, Mammoth had no leasehold interest to convey, although Mammoth would be liable to Granite Hill for breach of the contractual obligation to convey an interest as sublessee. It follows that the fact that the term of Granite Hill's sublease commences one day earlier than Esperance Cattle's lease is irrelevant to the competing priorities of the two interests.
290 Granite Hill admits that it was using the property for farming purposes pursuant to arrangements with Bott Livestock Pty Ltd and Bott Cropping Pty Ltd, and that the former would have paid any net profit from cropping operations to Granite Hill but asserts that there was no net profit from such operations during 2013.
291 Granite Hill's counterclaim incorporates the matters asserted in its claim in the third party proceedings which it has brought against Navarac, Mammoth, Mr Allen Caratti and Ms Maddeleine Caratti.[75] Accordingly, Granite Hill seeks the same relief against those parties as sought in the third party proceedings, plus a declaration that Esperance Cattle has no leasehold interest in the property.
The defence of Navarac and Mammoth to Esperance Cattle's claim
292 In their defence to Esperance Cattle's claim, Navarac and Mammoth admit Granite Hill's assertions with respect to the grant, extension and surrender of Mammoth's leasehold interest in the property, and assert that Navarac granted a lease to Esperance Cattle on or about 10 December 2012 and admit that Esperance Cattle is entitled to exclusive possession of the property pursuant to the terms of that lease. They further assert that Mr Allen Caratti has not been a director of Navarac since 14 May 2002, and that any document signed by him on behalf of Navarac was not binding on Navarac.
Granite Hill's third party proceedings against Mammoth, Navarac, Ms Maddeleine Caratti and Mr Allen Caratti
293 In its third party proceedings Granite Hill repeats its assertions with respect to the grant of a sublease in its favour by Mammoth. It further pleads that rent was paid to Mammoth pursuant to the sublease in the amount of $357,500 on 25 February 2013, and that it entered into possession of the subleased property on 28 February 2013 and farmed the property since that date.
294 After referring to Esperance Cattle's claim, Granite Hill asserts that Mr Allen Caratti was a director of Navarac and Mammoth between 14 May 2002 and 9 October 2012, and that after 9 October 2012 the directors of Navarac were Maddeleine and Aaron Caratti, and the directors of Mammoth were Maddeleine, Aaron, Nicole and John Caratti.
295 In its third party claim Granite Hill makes the same allegations with respect to failure to satisfy conditions precedent to Esperance Cattle's lease as are made in its defence to Esperance Cattle's claim, and which were ultimately abandoned.
296 Granite Hill asserts that by executing the sublease and accepting rent, Mammoth represented to it that it had no present intention to cause the determination of Mammoth's estate in the subleased property, and that it would not, in future, cause that estate to be determined, and that those representations were misleading and deceptive contrary to s 18 of Australian Consumer Law (WA). Granite Hill asserts that it suffered loss and damage by reason of its reliance upon those representations.
297 Granite Hill further asserts that by executing the sublease in its favour, Mr Allen Caratti represented to it that he was a director of Mammoth, that he was authorised to sign on its behalf, that by his signature he was binding Mammoth to the terms of the sublease and that the sublease would take effect as between Mammoth and Granite Hill. Granite Hill further pleads that each of those representations was false, and misleading and deceptive contrary to s 18 of the Australian Consumer Law, and that it suffered loss and damage by reason of its reliance upon those representations.
298 Granite Hill further asserts that by providing the Granite Hill version of the sublease to it, Mr Allen Caratti represented that the sublease had been signed by the signatories whose names appeared on it, and that this representation was false, by reason of which it suffered loss and damage.
299 Granite Hill makes essentially the same claims against Ms Maddeleine Caratti as are made against Mr Allen Caratti, with the additional claim that by signing the sublease Ms Maddeleine Caratti represented that she had no present intention to take any action, and would not in the future take any action to determine the sublease, which is also said to be false, misleading and deceptive.
300 By its third party claim Granite Hill seeks declaratory relief against Navarac and Mammoth to the effect that either Esperance Cattle does not have a leasehold estate in the property, or alternatively, to the effect that any estate which it has in the property is subject to Granite Hill's estate as sublessee. In addition, Granite Hill claims damages from Mammoth, either for breach of the sublease or for misleading and deceptive conduct or both. Granite Hill also claims damages for misleading and deceptive conduct from each of Mr Allen Caratti and Ms Maddeleine Caratti.
The defence of Navarac, Mammoth and Ms Maddeleine Caratti to Granite Hill's third party claim
301 By their defence to Granite Hill's third party claim, Navarac, Mammoth and Ms Maddeleine Caratti (the Navarac parties) reiterate their admission of the grant, extension and surrender of Mammoth's leasehold interest in the property. They deny that Mammoth entered into the sublease alleged by Granite Hill and assert that each of the GH version and ABC version of the Granite Hill sublease are invalid because Mr Allen Caratti was not a director of Mammoth, Ms Maddeleine Caratti's signature on each document was a forgery and not made by any person with her authority, or alternatively, in the case of the ABC version, if it was signed by her, her signature was obtained by a trick or, in the further alternative, was signed by her in late February 2013.
302 The Navarac parties admit that Granite Hill paid $357,500 to Mammoth on or about 25 February 2013, and assert that it went into possession of the property on 1 March 2013 and remained in possession thereafter. They further assert that on 13 February 2013 Esperance Cattle notified Granite Hill, with the knowledge and consent of Navarac and Mammoth, that Esperance Cattle had a lease over the property commencing on 1 March 2013 and that Navarac had not had any dealings with Granite Hill nor any knowledge of any sublease of the property to Granite Hill. They further assert that on 27 February 2013 Esperance Cattle notified Granite Hill, with the knowledge and consent of Navarac and Mammoth, that Esperance Cattle intended to take possession of the property on 1 March 2013, that neither Navarac nor Mammoth had any knowledge of any sublease to Granite Hill and that they denied that any such sublease existed, and further asserted that Mr Allen Caratti was not a director of either Navarac or Mammoth and had no authority to deal with the property on behalf of either company. They further assert that the payment of $357,500 was made into Mammoth's account without the authority or knowledge of the directors of Navarac.
303 The Navarac parties further plead that on 14 May 2002, Mr Allen Caratti was removed as a director of Navarac and Mammoth and Mr Aaron Caratti was appointed as a director of each company, and that notice of those changes was given to ASIC on or about 17 June 2002.
304 The Navarac parties also plead the proceedings which were commenced by Mr Allen Caratti in 2002, and the settlement of those proceedings by the deed dated 26 September 2002, by reason of which it is said that Mr Allen Caratti is estopped from asserting that his removal as a director on 14 May 2002 was unlawful or ineffectual.
305 The Navarac parties further assert that on 26 July 2002, Mr Allen Caratti lodged a notice with ASIC asserting that he had been appointed a director of Mammoth without the authority of Mammoth, and that on 5 August 2002, Mr Allen Caratti lodged with ASIC a notice asserting that he had been appointed a director of Navarac without the authority of Navarac. They further assert that on 9 October 2012, pursuant to a resolution of the Board of each company, Navarac and Mammoth lodged with ASIC such forms as were necessary as to notify ASIC that Mr Allen Caratti was not a director of either company, and that Mr John Caratti had been appointed as an alternate director of each company. They further assert that at all material times after 14 May 2002, the directors of Navarac and Mammoth were Maddeleine and Aaron Caratti, and that Mr John Caratti became an alternate to the other directors of each of Navarac and Mammoth from 9 October 2012, although in the case of Navarac, he resigned as an alternate director on 1 November 2012.
306 The Navarac parties plead the grant of the leasehold interest to Esperance Cattle on 10 December 2012 and deny that Granite Hill is entitled to the declaratory relief which it seeks.
307 The Navarac parties deny the representations attributed to Mammoth by Granite Hill and further assert that Mammoth first became aware of Granite Hill's claimed interest in the property after Navarac had entered into the lease with Esperance Cattle on 10 December 2012. They similarly deny the representations attributed to Ms Maddeleine Caratti and assert that she first became aware of Granite Hill's claimed interest in the property after she had entered into the lease with Esperance Cattle on 10 December 2012.
308 By counterclaim in the third party proceedings, the Navarac parties seek declaratory relief against Granite Hill to the effect that its claimed sublease is invalid. As against Mr Allen Caratti, the Navarac parties assert that if Mr Allen Caratti engaged in misleading and deceptive conduct by making the representations attributed to him by Granite Hill, or by obtaining the signature of Ms Maddeleine Caratti to the ABC version of the sublease by a trick, any liability which Mammoth may have to Granite Hill constitutes loss and damage occasioned by Mr Allen Caratti's misleading and deceptive conduct, together with the costs which have been incurred defending Granite Hill's claims. The Navarac parties claim damages from Mr Allen Caratti in respect of those amounts.
Mr Allen Caratti's defence to Granite Hill's third party proceedings
309 In his defence to Granite Hill's third party claim, Mr Allen Caratti admits Granite Hill's allegations with respect to the grant and surrender of the head lease to Mammoth, and Mammoth's grant of a sublease to Granite Hill. He asserts that he has been a director of Navarac and Mammoth since 14 May 2002 by reason of the alleged nullity of events which took place on that date, because of the matters specifically pleaded in pars 6 24 of his defence. Those matters include the incorporation of Zel in 1973, the ownership of the shares in Zel at various times, the creation of the Maddeleine Caratti Trust by the deed of settlement dated 9 December 1991, and the appointment of Mr John Caratti as trustee of that trust in place of Zel on 13 May 2002.
310 In par 10 of his defence, Mr Allen Caratti pleads that as at 14 May 2002:
(a) each of Tosman and Venetian was the beneficial owner of one of the issued shares in Navarac;
(b) each of Zel and Harvard was the beneficial owner of one of the two issued shares in Tosman;
(c) each of Zel and Harvard was the beneficial owner of one of the two issued shares in Venetian;
(d) each of Zel and Ms Maddeleine Caratti was the beneficial owner of one of the two issued shares in Harvard;
(e) each of Zel and Harvard was the beneficial owner of one of the two issued shares in Mammoth.
311 Mr Allen Caratti further pleads that on 14 May 2002, Ms Maddeleine Caratti purported to remove him as a director of Navarac, Mammoth and other corporations. In respect of Navarac, Mr Allen Caratti pleads that this removal was pursuant to a memorandum of circulating resolution of Navarac dated that day, executed by Ms Maddeleine Caratti as the authorised representative of each of Tosman and Venetian. He further pleads that Ms Maddeleine Caratti's authority to sign that memorandum as the authorised representative of Venetian was derived from a memorandum of circulating resolution of that company made on the same day by Mr John Caratti, in his capacity as trustee of the Maddeleine Caratti Trust and purporting to be the beneficial owner of the issued share in Venetian owned by Zel, and by Ms Maddeleine Caratti as the appointed representative of Harvard. Identical assertions are made in respect of Ms Maddeleine Caratti's authority to sign the Navarac memorandum as the authorised representative of Tosman.
312 Mr Allen Caratti further pleads that Ms Maddeleine Caratti's authority to sign the Tosman memorandum as the authorised representative of Harvard was derived from a memorandum of circulating resolution of that company made on 14 May 2002 by Mr John Caratti, in his capacity as trustee of the Maddeleine Caratti Trust and purporting to be the owner of the issued share in Harvard that was owned by Zel, and by Ms Maddeleine Caratti in her own right. He then asserts that the Navarac memorandum was a nullity by reason that:
(a) the Venetian memorandum was not signed by all the members of the Venetian as required by s 249A of the Corporations Act because John in his capacity as trustee of the Maddeleine Caratti Trust was not a member of Venetian and Zel was, and continued to be, a member of Venetian and Mr John Caratti had no authority to sign for Zel, and Maddeleine Caratti had no authority to sign as the corporate representative of Harvard (because of the matters in (c) below);
(b) the Tosman circulating memorandum was not signed by all the members of Tosman as required by s 249A of the Corporations Act for the same reasons as asserted in relation to the Venetian circulating memorandum; and
(c) the Harvard circulating resolution was not signed by all the members of Harvard as required by s 249A of the Corporations Act because Mr John Caratti in his capacity as trustee of the Maddeleine Caratti Trust was not a member of Harvard and Zel was and continued to be a member of Harvard, and John had no authority to sign for Zel.
313 Mr Allen Caratti also pleads that his purported removal as a director of Mammoth was pursuant to a memorandum of circulating resolution of that company dated 14 May 2002 signed by Mr John Caratti in his capacity as trustee of the Maddeleine Caratti Trust and Ms Maddeleine Caratti as the authorised representative of Harvard. He asserts that the circulating resolution of Mammoth was a nullity because Ms Maddeleine Caratti had no authority to sign that memorandum as the authorised corporate representative of Harvard (because of the matters in [312(c)] above) and in addition, Mr John Caratti, in his capacity as trustee of the Maddeleine Caratti Trust, was not a member of Mammoth and that Zel was, and continued to be, a member of Mammoth.
314 It must be conceded that these pleas are a little difficult to follow. However, in essence, they contain the following central features:
(a) the shareholding in each relevant company is as reflected in the records maintained at ASIC, and all shares were held beneficially by their legal owners (as reflected in the annual returns lodged with ASIC);
(b) accordingly, Zel held its shares in Tosman, Venetian, Harvard and Mammoth as beneficial owner and not as trustee for the Maddeleine Caratti Trust;
(c) accordingly, Mr John Caratti's appointment as trustee of the Maddeleine Caratti Trust in place of Zel had no effect upon the beneficial ownership of the shares held by Zel in each of those companies;
(d) accordingly, Zel remained a shareholder in each of Tosman, Venetian, Harvard and Mammoth;
(e) Mr John Caratti had not been appointed as the corporate representative of Zel for the purpose of exercising its powers as a shareholder in Tosman, Venetian, Harvard or Mammoth;
(f) accordingly, as Zel remained a shareholder in each of Tosman, Venetian, Harvard and Mammoth, and Mr John Caratti was not authorised to sign the circulating resolutions in each of those companies on behalf of Zel, those resolutions were not signed by all members of the company as required by s 249A of the Corporations Act, and were therefore ineffective; and
(g) because the circulating resolutions in each of Tosman and Venetian purporting to appoint Ms Maddeleine Caratti as the authorised representative of those companies were each ineffective, the circulating resolution of Navarac which she purported to sign on behalf of each of Tosman and Venetian was also ineffective.
315 Expressed in this way, it can be seen that Mr Allen Caratti's assertion that he remained a director of Navarac and Mammoth notwithstanding the events of 14 May 2002 depends critically upon:
(a) Zel having held the shares in each of Tosman, Venetian, Harvard and Mammoth as beneficial owner in its own right, rather than as trustee of the Maddeleine Caratti Trust;
(b) the transfer of Zel's share in each of those companies to Mr John Caratti being ineffective, presumably because the transfers are expressed to be pursuant to the deed by which Ms Maddeleine Caratti, in her capacity as appointor of the Maddeleine Caratti Trust, removed Zel as trustee of that trust and appointed Mr John Caratti in its place.
316 The second of these propositions is to be inferred from the pleading, as the validity or effectiveness of share transfers from Zel to Mr John Caratti are not specifically addressed. However, the fact that Mr John Caratti was not a member of any of Tosman, Venetian, Harvard or Mammoth at the time he signed the circulating resolution of each company is critical to the process of reasoning evident in the plea, from which it must necessarily follow that the plea depends upon the transfers of Zel's share in each of those companies to Mr John Caratti being ineffective. The assertion to that effect which is implicit in the plea was made explicit in the written opening submissions served on behalf of Mr Allen Caratti.
317 By reason of these matters, Mr Allen Caratti asserts that he has at all material times been a director of each of Navarac and Mammoth, and that the notices lodged with ASIC in October 2012 purporting to record his removal from office are ineffective. He asserts that the other directors of Mammoth after 9 October 2012 were his mother and his daughter, Nicole, and that the other director of Navarac after that date was his mother.
318 In his defence, Mr Allen Caratti asserts that Mammoth granted a sublease to Granite Hill 'on about 2 November 2012'. Mr Allen Caratti purports to admit Granite Hill's claim against Mammoth for misleading and deceptive conduct and also admits that his conduct in signing the Granite Hill sublease gave rise to the representations alleged by Granite Hill, but asserts that those representations were true, although he does not admit that Granite Hill relied upon those representations or that it suffered loss and damage as a consequence.
319 Mr Allen Caratti admits in his defence to Granite Hill's third party claim that by delivering the GH version of the Granite Hill sublease to Granite Hill he represented that it had been signed by the signatories named on the document, and that such representation was misleading and deceptive because it had not been signed by Ms Maddeleine Caratti. However, he denies that Granite Hill relied upon such representation, or suffered loss and damage by reason of such reliance.
Mr Allen Caratti's defence to the Navarac parties' counterclaim
320 In Mr Allen Caratti's defence to the Navarac parties' counterclaim against him, he essentially reiterates his assertion that he was a director of Navarac and Mammoth at all material times, and that Mr Aaron Caratti was not a director of either company at any relevant time. The defence contains no factual basis for those assertions. However, in response to a request for particulars of all facts, matters, acts or things relied upon in support of those assertions, Mr Allen Caratti specifically reiterated the assertions contained in his defence to Granite Hill's third party claim, and which are said to result in the inefficacy of the circulating resolutions which purported to remove him as a director of the relevant companies, and to appoint Mr Aaron Caratti as a director.
321 In his defence to the Navarac parties' counterclaim, Mr Allen Caratti also asserts that since the deed of compromise was executed on 26 September 2002, he has, with his mother's knowledge, executed documents as a director of each of Navarac and Mammoth and other companies identified in the deed. Particulars of those documents are given which correspond exactly with the 57 documents to which Mr Allen Caratti referred in his first witness statement, and which are attached to that statement.
Granite Hill's reply to the Navarac parties' defence and defence to the Navarac parties' counterclaim
322 In its response to the Navarac parties' defence and counterclaim in the third party proceedings, Mammoth asserts that it was entitled to assume that the GH version of the sublease was duly executed by Mammoth pursuant to s 127 - s 129 of the Corporations Act. In relation to the ABC version of the sublease, Granite Hill asserts that if that document was executed after 22 February 2013 and Mammoth had no ability to grant such an interest to Granite Hill, Mammoth has breached its obligation to convey the interest promised to Granite Hill by reason of which it is liable to Granite Hill in damages.
323 Granite Hill further asserts that each of Mammoth and Navarac are estopped from denying the validity of its sublease by reason of accepting the payment of $357,500 on or about 25 February 2013, by retaining those funds without offering to repay them, and by sending an invoice to Granite Hill in late July 2013 claiming a further rental payment in respect of the property, and by failing to take any step to require Granite Hill to vacate the property until 31 July 2013 when the Navarac parties served a counterclaim against Granite Hill seeking a declaration that the sublease was null and void.
The directorship of Ms Nicole Caratti
324 Both Granite Hill and Mr Allen Caratti assert in their pleadings that Ms Nicole Caratti was a director of Mammoth after 9 October 2012. However, in these proceedings nothing turns on that assertion. The only evidence on the subject was to the effect that in late September 2005, Ms Maddeleine Caratti wrote to ASIC asserting that Mr Allen Caratti had filed documents purporting to appoint Ms Nicole Caratti to the board of Mammoth without the authority of the directors of Mammoth. Attached to that letter was the first page of that form, dated 10 May 2005, apparently lodged by Allen Caratti, and, somewhat curiously, signed by Ms Nicole Caratti as director, despite the fact that it was by that form that she was being appointed. At all events, this was after the dealings in relation to the shares owned by Zel, and the removal of Mr Allen Caratti as director. Ms Nicole Caratti has not, at least in relation to these proceedings, purported to act on behalf of Mammoth. In the absence of more evidence on the topic it is unnecessary to make any finding on it, given that nothing in these proceedings turns on whether or not Ms Nicole Caratti was a director of Mammoth.
Mr Allen Caratti's unsuccessful attempts to introduce new issues at trial
325 As I have noted, it was common ground that the claims to which the parties were exposed would be mitigated if the question of which of Esperance Cattle or Granite Hill was entitled to possession of the property could be determined in advance of the 2014 cropping season. For that reason, during the last half of 2013, a timetable was set with a view to a trial in February 2014, and trial dates were fixed commencing on Monday 17 February 2014.
326 There were a number of directions hearings in the period leading up to trial. The last of those took place on Monday 10 February 2014. During the course of that hearing orders were made with respect to amendments to pleadings, including orders arising from the joinder of Bott Livestock Pty Ltd and Bott Cropping Pty Ltd as parties to Esperance Cattle's claim. At that hearing I also directed, by consent, that the parties exchange written outlines of their opening submissions at 4.00 pm on Wednesday 12 February 2014.
327 Mr Allen Caratti did not comply with that direction. However, on Friday 14 February 2014, being the last business day prior to the commencement of the trial, he filed and served a written outline of his opening submissions in which it was asserted on his behalf, for the first time, that, contrary to his pleaded case, in fact Zel was not a shareholder in any of Harvard, Mammoth, Venetian or Tosman in May 2002. It was also asserted on his behalf, for the first time in these proceedings, that if Zel did own shares in those companies, that the transfers of the share in each of those companies held by Zel to Mr John Caratti were ineffective because Ms Maddeleine Caratti did not have the authority of Zel to execute those transfers. No additional evidence was served or foreshadowed in support of those assertions.
328 At the commencement of the trial on Monday 17 February 2014, the legal representatives for Mr Allen Caratti distributed to the representatives of the other parties a minute of proposed amendment to Mr Allen Caratti's defence to Granite Hill's third party claim which was said to give effect to the assertions contained in the written outline - namely, by asserting, contrary to Mr Allen Caratti's then pleaded case, that in fact Zel was not a shareholder in any of Harvard, Mammoth, Venetian or Tosman, and that if it was, the transfers of its shares in those companies to Mr John Caratti were ineffective because Ms Maddeleine Caratti did not have authority to execute those transfers on behalf of Zel.
329 Counsel for each of the parties then presented oral opening submissions. Later in the day I heard argument in relation to various procedural issues, including the application by Mr Allen Caratti to amend his pleading. Towards the end of the day I dismissed that application. The reasons for my decision to disallow the amendment are separately recorded, but essentially turned upon the fact that the amendments, if allowed, would raise factual issues with respect to events that took place between 1991 and 1993, and would also raise issues with respect to the governance of Zel in 2002. Those issues had not previously been raised, nor had they been addressed by evidence served by any party. Procedural fairness to the parties affected by the proposed amendment would necessitate the trial being adjourned for a not insignificant period in order that inquiries could be conducted in relation to those matters, and evidence prepared and presented. It was my firm view that it was not in the interests of justice[76] for the trial to be adjourned for various reasons, not least of which was the probability that one or other party to the proceedings would suffer significant commercial prejudice as a result of the court's inability to make a determination with respect to the entitlement to possession in time for the 2014 cropping season, as arrangements for that season had to commence during March 2014. I also took into account the fact that no justification for the lateness of the amendment was proffered, nor was any evidence adduced to explain why the amendments were proposed so late.
330 Following my ruling, counsel for Mr Allen Caratti indicated that there were other noncontentious amendments contained within the minute of amendment which he wished to press, and that a revised minute containing only those amendments would be produced the following day.
331 During the course of argument on the first day of trial, counsel for Mr Allen Caratti referred to the evidence of his joint execution, with his mother, of the 57 documents, and to which I have referred. Counsel suggested that this evidence should lead to the conclusion that Mr Allen Caratti was a de facto director of the companies within the Caratti group, even if he was not a director de jure. Alternatively he suggested that the evidence may sustain the conclusion that Mr Allen Caratti had been authorised by companies within the group to act as their agent for the purpose of executing documents on their behalf.
332 When these propositions were advanced, counsel for the Navarac parties objected on the basis that they formed no part of Mr Allen Caratti's pleaded case, nor were they included within the minute of proposed amendments which had been provided earlier that day. In response to that objection, I made it clear to counsel for Mr Allen Caratti that I would not entertain contentions that went beyond his pleaded case.
333 Shortly before the commencement of the hearing on the second day of trial, the legal representatives of Mr Allen Caratti delivered another minute of proposed amendment to his pleading, which included not only the noncontentious amendments foreshadowed the previous day, but also an assertion that Mr Allen Caratti was a de facto director of the relevant companies within the Caratti group. Although reference had been made to this proposition by counsel for Mr Allen Caratti the previous day, to which objection was taken, that was the first occasion upon which this assertion had been made in any pleading or proposed pleading. No additional evidence in support of the assertion was proffered or foreshadowed. No explanation for the lateness of the amendment was proffered, nor was any evidence adduced to justify the lateness of the proposed amendment. Because the evidence which was to be adduced that day would not be effected by the proposed amendment, it was agreed that Mr Allen Caratti's application to amend in the terms proposed would be heard the following day.
334 That day, after hearing argument in relation to the application to amend, I dismissed the application. Again, my reasons for disallowing the amendment are separately recorded, but in essence they turned upon the fact that the amendment, if allowed, would necessitate a substantial inquiry into the arrangements that had been made for the governance of the various companies within the Caratti group between 2002 and 2013. Procedural fairness to the parties affected by the amendment would necessitate an adjournment of the trial for a significant period to enable inquiries into those matters to be made, and evidence prepared and presented. In my view it was not in the interests of justice for the trial to be adjourned, for the same reasons I had given on the first day of trial.
335 On the fourth day of trial counsel for Mr Allen Caratti put to Ms Maddeleine Caratti that Zel had remained the trustee of the Maddeleine Caratti Trust at all times. Counsel for the Navarac parties objected to that line of questioning on the basis that it was contrary to Mr Allen Caratti's pleaded case, in which it was asserted that Mr John Caratti was appointed trustee of the Maddeleine Caratti Trust in May 2002. In answer to that objection counsel for Mr Allen Caratti moved to amend his pleading to withdraw the assertion that Ms Maddeleine Caratti appointed Mr John Caratti as trustee of the Maddeleine Caratti Trust on 13 May 2002, and to replace it with an allegation that on 13 May 2002 she purported to appoint Mr John Caratti trustee of the trust.
336 By this time the deed dated 13 May 2002 in which Ms Maddeleine Caratti, as appointor of the Maddeleine Caratti Trust, removed Zel as trustee of that trust and appointed Mr John Caratti as trustee in its place had been produced in evidence. I asked counsel for Mr Allen Caratti what the proposed amendment was intended to convey in relation to the efficacy of that document. The answer was less than pellucidly clear, but appeared to foreshadow a proposition that the deed appointing Mr John Caratti as trustee of the trust was ineffective because either:
(a) Ms Maddeleine Caratti did not know what she was signing at the time that she signed the deed (that is, a plea of nonest factum); or
(b) Ms Maddeleine Caratti was misled into signing the deed; or
(c) Ms Maddeleine Caratti did not in fact sign the deed, and her signature on the document was forged.
337 I suggested to counsel for Mr Allen Caratti that if any or all of those cases were to be put, they would need to be specifically pleaded. In response to that suggestion counsel withdrew the application to amend the pleading by alleging a purported appointment of Mr John Caratti as trustee of the trust, and moved to amend the pleadings so that it asserted that on 13 May 2002 Ms Maddeleine Caratti did not appoint Mr John Caratti as trustee of the trust.
338 When I suggested to counsel for Mr Allen Caratti that a plea in those terms was rather odd, he moved to amend in different terms, in order to assert that 'at no time did Maddeleine Caratti appoint John Michael Caratti as trustee of the trust'.
339 It was then noted that such an amendment would have significant consequences for various other portions of the pleading, which would have to be amended to withdraw the assertion that Mr John Caratti was acting in his capacity as trustee of the Maddeleine Caratti trust, and instead assert that he was purporting to act in that capacity.
340 After hearing argument I disallowed the proposed amendment. Again, those reasons are separately recorded but in essence turned upon my conclusion that the amendments, were embarrassing and evasive, and if allowed, would obscure and would not identify in any meaningful way any of the cases which counsel for Mr Allen Caratti had proposed might be run, and that in any event, introduction of those fresh issues into the case, after Mr John Caratti had completed his evidence, and during the crossexamination of Ms Maddeleine Caratti, would have been a significant departure from procedural fairness and would again have necessitated the adjournment of the trial for a significant period, contrary to the interests of justice.
341 Following my ruling, crossexamination of Ms Maddeleine Caratti by counsel on behalf of Mr Allen Caratti resumed. When objection was taken to a question which was asked, counsel for Mr Allen Caratti foreshadowed that he wished to pursue a line in crossexamination to the effect that the memoranda of circulating resolutions which Ms Maddeleine Caratti signed in respect of the various companies in the Caratti group during May 2002 did not reflect her intention. When I asked counsel for Mr Allen Caratti whether those questions were in support of a nonest factum case, or some other case, he advised that he wished to run a case to the effect that the documents that were signed in May 2002 were a sham. In response to that assertion I pointed out to counsel for Mr Allen Caratti that no case to that effect had ever been pleaded on his behalf and, to the contrary, his pleaded case relied entirely upon the proposition that those documents were what they purported to be, but were ineffective, essentially because Zel held the shares in Harvard, Mammoth, Venetian and Tosman as beneficial owner in its own right, and not as trustee of the Maddeleine Caratti Trust. In answer to that contention, counsel for Mr Allen Caratti foreshadowed an amendment to his pleading to assert that the documents which had the effect of removing Mr Allen Caratti as a director were a sham and were not real. However, no terms of an amendment which would have had that effect were provided.
342 I inquired whether counsel wanted an adjournment in order to formulate a minute of amendment. Counsel declined that offer and indicated that he would consider the position during the luncheon adjournment. In fact the matter was not revisited following the luncheon adjournment, and no application to amend Mr Allen Caratti's pleading to assert that the documents executed by Ms Maddeleine Caratti in May 2002 were a sham was ever made.
343 I made no directions requiring the parties to serve a written outline of their closing submissions, although some chose to do so. Mr Allen Caratti did not. At the commencement of his oral closing submissions, counsel for Mr Allen Caratti submitted that Mr John Caratti was not a shareholder in any of Harvard, Mammoth, Tosman or Venetian at the time he executed the memoranda of circulating resolutions of those companies because the forms of transfer relating to those shares were not executed by two directors of Zel, but only Ms Maddeleine Caratti, and had not been registered by the relevant companies. Unsurprisingly, given the previous unsuccessful attempt to amend Mr Allen Caratti's pleading to attack the efficacy of the transfer of the shares from Zel to Mr John Caratti on other grounds, and given that this was the first occasion upon which these grounds for attacking the efficacy of the transfers had been mentioned at any point in the trial, counsel for the Navarac parties objected. During the course of argument relating to that objection, it became clear that the propositions which counsel sought to advance on behalf of Mr Allen Caratti were to the effect that the share transfers were ineffective because they were not signed by two directors of Zel, and Ms Maddeleine Caratti had not been authorised by the board of Zel to sign the transfers on behalf of that company, and to further submit that the documents entitled 'register of members' relating to each company and which had been tendered in evidence were not in fact what they purported to be. Counsel for the Navarac parties maintained their objection to each of these propositions.
344 In the course of argument counsel for Mr Allen Caratti did not move any amendment to his pleading, but submitted that these propositions were open under the pleading as it stood. I rejected that submission. The reasons for rejecting that submission are separately recorded, but in essence turned upon my conclusion that the case disclosed by Mr Allen Caratti's pleading was the case I have outlined above, and that when the Navarac parties sought particulars of all facts, matters or things which were relied upon for the assertion that Mr Allen Caratti was not lawfully removed as a director of Navarac and Mammoth, no particulars were given of the propositions which counsel now sought to advance on his behalf. I relied also upon my conclusion that allowing Mr Allen Caratti to put those propositions in closing submissions without prior notice to the Navarac parties, and without the propositions having been put to either Mr John Caratti or Ms Maddeleine Caratti during their evidence would constitute a denial of procedural fairness.
345 For these reasons the various attempts made by Mr Allen Caratti introducing new issues during the course of the trial all failed, and his case is to be determined by reference to the issues raised in his pleadings.
Issues for determination
346 It can be seen from the analysis of the pleadings set out above, that the following issues require determination:
(1) was Mr Allen Caratti a director of Mammoth and Navarac between October 2012 and February 2013?
The answer to this issue turns upon the resolution of the following subissues:
1(a) Were the shares which Zel held in Mammoth, Harvard, Venetian and Tosman held by it as beneficial owner, or in its capacity as trustee for the Maddeleine Caratti Trust?
1(b) Was the appointment of Mr John Caratti as trustee of the Maddeleine Caratti Trust and the transfer of Zel's share in each of Mammoth, Harvard, Venetian and Tosman effective to make him one of the two members of each of those companies?
1(c) Even if Zel did not hold its share in Mammoth, Harvard, Venetian and Tosman in its capacity as trustee of the Maddeleine Caratti Trust, and held each share as beneficial owner, were the transfers of shares from Zel to Mr John Caratti in his capacity as trustee of the Maddeleine Caratti Trust effective?
1(d) Were the memoranda of circulating resolutions in respect of each of Harvard, Venetian and Tosman effective, with the consequence that the memoranda of circulating resolutions executed in respect of Mammoth and Navarac were effective to result in the removal of Mr Allen Caratti and the appointment of Mr Aaron Caratti as a director of each company?
(2) Does the deed of compromise executed on 26 September 2002 preclude Mr Allen Caratti from disputing the efficacy of his removal from the office of director of the various companies relevant to these proceedings in May 2002?
(3) Was the lease to Esperance Cattle validly executed by Navarac on 10 December 2012?
(4) Was the deed of surrender of lease validly executed by Navarac and Mammoth on 22 February 2013?
(5) Did Mr Allen Caratti have either the general or specific authority of his mother to endorse her name, in her capacity as a director of Mammoth, on the GH version of the Granite Hill sublease at the time he simulated her signature on that document?
(6) How did the signature purporting to be that of Ms Maddeleine Caratti come to be on the ABC version of the Granite Hill sublease and when was that signature applied to that version of the Granite Hill sublease?
(7) Is Granite Hill entitled to make any, and if so which, of the assumptions to which reference is made in s 128 and s 129 of the Corporations Act in relation to Mammoth's execution of the Granite Hill sublease and if so, what is the effect of that entitlement:
7(a) as between Mammoth and Granite Hill;
7(b) as between Granite Hill and the other parties to these proceedings?
(8) Is Esperance Cattle entitled to an order for possession of Young River Station?
(9) Did Esperance Cattle take possession of Young River Station in the early hours of 1 March 2013?
(10) Is Esperance Cattle entitled to:
10(a) mesne profits, or
10(b) damages, or
10(c) on account of profits,
as against Granite Hill, and if so what is the appropriate measure of each?
(11) Is Esperance Cattle entitled to declaratory relief against Bott Cropping Pty Ltd and Bott Livestock Pty Ltd?
(12) Are Mammoth and Navarac estopped from denying the efficacy of the Granite Hill sublease?
(13) Is Granite Hill entitled to damages from Mammoth for breach of the Granite Hill sublease?
(14) Is Granite Hill entitled to damages from Mammoth for misleading and deceptive conduct and if so, what is the appropriate measure of those damages?
(15) Is Granite Hill entitled to damages from Mr Allen Caratti for misleading and deceptive conduct and if so what is the appropriate measure of such damages?
(16) Is Granite Hill entitled to damages for misleading and deceptive conduct from Ms Maddeleine Caratti, and if so, what is the appropriate measure of such damages?
(17) Is Mammoth entitled to damages for misleading and deceptive conduct from Mr Allen Caratti, and if so, what is the appropriate measure of such damages?
Issue 1: was Mr Allen Caratti a director of Mammoth and Navarac between October 2012 and February 2013?
Issue 1(a): were the shares which Zel held in Mammoth, Harvard, Venetian and Tosman held by it as beneficial owner in its own right, or in its capacity as trustee for the Maddeleine Caratti Trust?
347 For the reasons I have already given, I find that the shares held by Zel in each of Mammoth, Harvard, Venetian and Tosman, were held by it in its capacity as trustee of the Maddeleine Caratti Trust. Essentially, that is because I have found that it was the common intention of Mr John Caratti and Mr Allen Caratti, at the time shares which they held in family group companies were transferred to each of Harvard and Zel, that those shares should be held by those companies as trustees and not as beneficial owners, consistently with the underlying purpose of those transactions,[77] which was an attempt to protect Mr Allen Caratti, and the companies within the family group, from claims being made by Ms Marcia Spargo in the Family Court.
Issue 1(b): was the appointment of Mr John Caratti as trustee of the Maddeleine Caratti Trust and the transfer of shares in each of Mammoth, Harvard, Venetian and Tosman to him in that capacity effective to make him a member of each of those companies?
348 Because I have found that each of the shares held by Zel in Mammoth, Harvard, Venetian and Tosman were held by Zel in its capacity as trustee of the Maddeleine Caratti Trust, it follows that Mr John Caratti's appointment as trustee of that trust had the effect of transferring legal title of the shares to him,[78] with the consequence that each company was empowered to register him as a holder of those shares pursuant to s 1071B(5) of the Corporations Act. At the very least, the appointment of Mr John Caratti as trustee of the Maddeleine Caratti Trust conferred upon him the right to call upon Zel to execute a written conveyance of each share in his favour pursuant to s 10(4) of the Trustees Act, and by implication, imposed a corresponding obligation upon Zel. The instruments of share transfer signed by Ms Maddeleine Caratti on behalf of Zel constituted performance of that obligation. The documents entitled 'Register of Members' which were prepared in respect of each company show that Mr John Caratti was registered as the holder of a share in each company, either pursuant to the power conferred by s 1071B(5) of the Corporations Act, or consistently with the company's power to register a proper instrument of transfer delivered to it, which is recognised by s 1071B(2) of the Corporations Act.
349 For these reasons, by reason of the events which took place on 13 May 2002, Mr John Caratti became a member of each of Mammoth, Harvard, Venetian and Tosman, in his capacity as trustee of the Maddeleine Caratti Trust.
Issue 1(c): even if the shares held by Zel in each of Mammoth, Harvard, Venetian and Tosman were held by it as beneficial owner in its own right, were the transactions which took place on 13 May 2002 nevertheless effective to make Mr John Caratti a member of each of those companies?
350 For the reasons which follow, there are at least two reasons why the events which took place on 13 May 2002 were effective to render Mr John Caratti a member of each of Mammoth, Harvard, Venetian and Tosman, with the consequence that his execution of the memoranda of circulating resolution of each company the following day was effective, even if the shares held by Zel in each of Mammoth, Harvard, Venetian and Tosman were held by it as beneficial owner in its own right and not in its capacity as trustee of the Maddeleine Caratti Trust.
351 First, s 249A of the Corporations Act authorises proprietary companies to pass resolutions without a general meeting being held if all the members entitled to vote on the resolution sign a document containing a statement that they are in favour of the resolution set out in the document. Section 231 provides that a person is a member of a company if, among other things, they 'agree to become a member of the company after its registration and their name is entered on the register of members'. The constitutions (articles) of each of Mammoth, Harvard, Venetian and Tosman make provision for the maintenance of a register of members, as does s 169 of the Corporations Act. That section provides that the register of members must contain the name and address of each member, and the date upon which the member's name was entered in the register. The documents which have been produced in evidence entitled 'Register of Members' in respect of each relevant company satisfy those requirements. As between Mr Allen Caratti and the Navarac parties, it was agreed that those documents had been produced to Mr Allen Caratti by at least 2008, in connection with proceedings commenced that year. However, as I have noted, in these proceedings, Mr Allen Caratti did not plead a case or advance any evidence in support of the contention that the documents described as the 'Register of Members' in each company were not what they purported to be. To the contrary, his pleaded case relied upon the purported transfer from Zel in its capacity as trustee of the Maddeleine Caratti Trust to Mr John Caratti in his capacity as trustee of that trust being ineffective, through the process of reasoning which I have set out above.
352 However, that process of reasoning overlooks the fact that Mr John Caratti's execution of the forms transferring a share in each company to him on 13 May 2002 provides clear evidence of his agreement to become a member of each company. It follows that the entry of his name in the register of members maintained by each company satisfied the requirements of s 231 of the Corporations Act and was, in itself, sufficient to render him a member of each company with authority to sign a memorandum of circulating resolution pursuant to s 249A of the Corporations Act on 14 May 2002.
353 The scheme reflected in the provisions of the Corporations Act to which I have referred, and in other sections of the Act which it is unnecessary to specify, to the effect that a person who has agreed to become a member of a company and whose name has been entered on the register of members is, without more, a member of the company for all relevant purposes, is consistent with long established practice and usage.[79]
354 There is no reason to doubt that the documents which have been tendered in evidence as the register of members in each of Mammoth, Harvard, Venetian and Tosman are what they purport to be. They show that Mr John Caratti became a member of each company on 13 May 2002. Although he is described in each case as the trustee of the Maddeleine Caratti Trust, that description has no bearing upon the efficacy of the entry of his name into the register of members on that date.[80] That entry was, of itself, sufficient to render him a member of each company for the purpose of executing the memoranda of circulating resolution of each company the following day.
355 Second, on 13 May 2002, Ms Maddeleine Caratti executed on behalf of Zel a transfer form in relation to each of Mammoth, Harvard, Venetian and Tosman, transferring the share held by Zel in each company to Mr John Caratti. Mr John Caratti executed each form as transferee. There is no reason to suppose that each form was not executed on that date, as each bears the stamp of the State Revenue Office showing that each form was lodged for assessment of duty on 14 May 2002.
356 Each form contains the details required by the regulations to the Corporations Act.[81] It follows that the forms were each 'a proper instrument of transfer' for the purposes of s 1071B(2) of the Corporations Act, with the consequence that each company was authorised by that section to register the transfer and to make corresponding entries in the register of members.
357 As I have noted, at all times prior to the commencement of the trial of these proceedings, Mr Allen Caratti pleaded that Zel was the holder of a share in each of Mammoth, Harvard, Venetian and Tosman. His attempts to withdraw those assertions and to run a fundamentally different case at trial were rejected by me for the reasons I gave at the time, and which have been summarised above. His various attempts to mount a case challenging the efficacy of the transfer forms on grounds other than those which he had pleaded, were also rejected by me for the reasons given at the time and which I have summarised above.
358 The case pleaded by Mr Allen Caratti challenged the efficacy of the transfers to which I have referred on the basis that Zel was the beneficial owner of each share in its own right, and did not hold the shares as trustee of the Maddeleine Caratti Trust. Each form of transfer describes the transferor as Zel 'as trustee for the Maddeleine Caratti Trust', and each describes the transferee, Mr John Caratti, as acting in the same capacity. However, no authority was provided in the written or oral submissions advanced on behalf of Mr Allen Caratti to support the proposition that the transfers were ineffective if those descriptions were erroneous and, in fact, Zel held each share as beneficial owner in its own right. During the course of closing submissions, counsel for Mr Allen Caratti was invited to expand upon the proposition that the transfers were ineffective if, in fact, Zel held each share as beneficial owner in its own right. Apart from an oblique reference to a possible lack of consideration, the invitation was, in effect, declined, and once again no authority was proffered in support of the proposition.[82]
359 I am unaware of any principle of law or any previously decided case which would lead to the conclusion that the transfer of property held by a party both legally and beneficially is somehow any the less effective because the transferor and transferee mistakenly believed that the transferor only had legal title and was only transferring the legal interest, and not the beneficial interest. It is possible in some circumstances that such a transaction might not be legally enforceable by one party as against the other because of a lack of consideration. It might also be that one party could have the transaction set aside by a court on the basis of mutual mistake as to the subject matter of the transaction. However, neither of these possibilities has any effect upon the efficacy of the transfer of property unless and until one or other of the parties moves to set it aside. Neither Zel nor Mr John Caratti has taken any action to set aside the transfer of the relevant shares. Accordingly, there is no reason to conclude that the transfers were ineffective even if Zel did not hold each share in its capacity as trustee of the Maddeleine Caratti Trust but as beneficial owner in its own right.
360 In this context it is important to remember that the purpose of creating a regime for the registration of transfer of shares in a company by that company, and for the maintenance of a register of members by each company, is to regulate and define the relationship between a company and its members in relation to the rights and obligations of membership, such as the right to a dividend, the right to vote at general meetings of the company, and the obligation to pay calls upon unpaid capital. The cases to which I have already referred [83] make clear that in registering the transfer of shares and maintaining its register of members, a company need not be concerned with an inquiry into the party or parties who may or may not hold a beneficial interest in the relevant shares. The process of registering a transfer, and entering a person's name into the register of members, creates, of itself, legal rights as between the member whose name is entered, and the company by virtue of the constitution of the company reinforced by the Corporations Act. The process is not concerned with or directed to the recognition or regulation of the relationship between the member whose name has been entered into the register of members, and others who may claim a beneficial interest in the rights conferred by membership.[84]
361 So, in summary, Zel was a member of each of Mammoth, Harvard, Venetian and Tosman on 13 May 2002. It executed a proper instrument of transfer in respect of each share, transferring it to Mr John Caratti. Neither Zel nor Mr John Caratti has taken any step to set aside the transfer. Each transfer was delivered to the relevant company and entries were made in the register of members pertaining to that company in accordance with the transfer. The efficacy of that process, and in particular, the question of whether Mr John Caratti became a member of each company, is not affected by the determination of the question of whether Zel held only legal or both legal and beneficial title to each share.
362 For these reasons, the steps which were taken on 13 May 2002 were effective to render Mr John Caratti a member of each of Mammoth, Harvard, Venetian and Tosman.
Issue 1(d): were the memoranda of circulating resolutions of each of Harvard, Mammoth, Tosman, Venetian and Navarac effective?
363 It follows from the determinations I have made in respect of each of the other aspects of this first issue, that the memoranda of circulating resolutions executed on 14 May 2002 in respect of each of Harvard, Mammoth, Tosman, Venetian and Navarac were valid and effective resolutions of each company in accordance with s 249A of the Corporations Act. At the risk of some repetition, it may be desirable to set out the logical sequence in which those resolutions operated.
364 The appropriate starting point is the circulating resolution relating to Harvard. The members of that company were Ms Maddeleine Caratti and Mr John Caratti. Each executed the circulating resolution which had the effect of removing Mr Allen Caratti and appointing Mr Aaron Caratti as a director of the company, and of appointing Ms Maddeleine Caratti as the corporate representative of Harvard for the purpose of exercising all or any of its powers.
365 By virtue of each circulating resolution, the power to appoint a corporate representative was purportedly exercised by the members of each company on the basis that the power could otherwise be exercised by the members in general meeting.[85] As I have noted, the constitutions of the relevant companies make no reference to the power to appoint a corporate representative, nor does the delineation of the powers of the board of directors and the powers of the members in general meeting provide any clear indication as to whether the power can only be exercised by one or other of those mechanisms of corporate governance. Nor does s 250D of the Corporations Act make any reference to the manner in which the power of appointment is to be exercised, by contrast to an earlier version of the section[86] which required the appointment to be by 'resolution of the [body corporate's] directors or other governing body'.[87]
366 In the absence of stipulation of the manner of appointment in either the constitution of the company or s 250D, there is no reason to suppose that the exercise of the power was beyond the competence of the members in general meeting, and therefore not a power which could be exercised by a circulating resolution signed by all members. In any event, no party to these proceedings has challenged the efficacy of the appointment of the corporate representatives in each company on the basis that it was beyond the powers of the members in general meeting, and so it is unnecessary to make any determination on the point.
367 In the case of each of Mammoth, Tosman and Venetian, the members of those companies were Harvard and Mr John Caratti. Ms Maddeleine Caratti was appointed as the corporate representative of Harvard pursuant to the circulating resolution to which I have just referred. She exercised that power by executing, with Mr John Caratti, circulating resolutions in each company which had the effect of removing Mr Allen Caratti and appointing Mr Aaron Caratti as a director, and of appointing Ms Maddeleine Caratti as the corporate representative of each company for the purpose of exercising all or any of its powers.
368 In the case of Navarac, the only members were Venetian and Tosman. By reason of the circulating resolutions to which I have referred, Ms Maddeleine Caratti was appointed as the corporate representative of each of those companies. She exercised the powers conferred upon her by executing, on behalf of each of Venetian and Tosman, a circulating resolution which had the effect of removing Mr Allen Caratti and appointing Mr Aaron Caratti as a director, and of appointing herself as the corporate representative of Navarac for the purposes of exercising all or any of its powers.
369 By reason of the efficacy of these resolutions, it follows that Mr Allen Caratti was removed and Mr Aaron Caratti was appointed as a director of each of Mammoth and Navarac on 14 May 2002. Plainly, Mr Allen Caratti did not have the authority of either company to resume office as a director of either at the time he lodged notices to that effect with ASIC in July and August 2002. It therefore follows that he was not a director of either company between October 2012 and February 2013, and Mr Aaron Caratti remained a director of each company over that period.
Issue 2: is Mr Allen Caratti precluded from challenging the efficacy of his removal as a director of each of Mammoth and Navarac by reason of the deed of compromise made on 26 September 2002?
370 As I have noted, in August 2002, Mr Allen Caratti commenced proceedings against his mother and Mr Aaron Caratti in this court. In those proceedings he asserted that he had not been removed by the shareholders of any relevant company by reason of the events which took place in May 2002, and asserted that he 'has been since his appointment and continues to be a lawfully appointed director' of each of those companies.[88] He asserted that the notices that had been lodged with ASIC in June 2002 recording his removal as a director were 'all filed without lawful authority'.[89]
371 In those proceedings, Mr Allen Caratti sought a variety of relief, including a declaration that he remained a lawfullyappointed director of relevant companies within the group, a declaration that Mr Aaron Caratti was not and never had been a director of those companies, and an order requiring Ms Maddeleine Caratti to file notices with ASIC reflecting the declarations made by the court.
372 On 26 September 2002, each of Maddeleine, John and Allen Caratti signed a deed compromising those proceedings. There is no doubt that this was its purpose and effect. In his first witness statement, Mr Allen Caratti asserts that 'the action was compromised by a deed dated 26 September 2002'. As I have noted, cl 18 of the deed required the proceedings to be discontinued with no order as to costs, and that clause of the deed was implemented when Mr Allen Caratti discontinued his claim seeking a declaration to the effect that he had not been removed, and remained a director of relevant companies within the group.
373 I have set out above the relevant clauses of the deed of compromise. In essence they provide for adjustments to the shareholdings in various companies within the group, and for the nomination of persons who are to serve as directors of the companies within the group. Another provision requires Ms Maddeleine Caratti to pass her interests in 13 companies to her sons, John and Allen, by her will, and another clause makes provision for the division of John and Allen Caratti's beneficial interests in the group upon John Caratti attaining the age of 60 years.
374 Plainly, the deed of compromise was intended to be, and had effect as an accord and satisfaction. As Dixon J observed:[90]
The essence of accord and satisfaction is the acceptance by the plaintiff of something in place of his cause of action. What he takes is a matter depending on his own consent or agreement. It may be a promise or contract or it may be the act or thing promised.
375 It is clear from the terms of the deed of compromise that Mr Allen Caratti had agreed to take something in place of the causes of action which he asserted arose from the actions taken by his mother and others purporting to remove him as a director of companies within the family group. Counsel on his behalf did not contend otherwise. When I put to counsel for Mr Allen Caratti that it followed that his client had agreed to forego all rights and causes of action arising from his purported removal as a director of relevant companies in 2002, in return for the rights conferred upon him by the deed of compromise, counsel submitted that the deed remained an 'accord executory' and did not therefore extinguish his right to assert that the steps which were taken in May 2002 did not have the effect of removing him as a director of the relevant companies.[91] This submission relies upon the distinction between an accord executory and an accord and satisfaction succinctly explained by Dixon J in these terms:
The accord is the agreement or consent to accept the satisfaction. Until the satisfaction is given the accord remains executory and cannot bar the claim. The distinction between an accord executory and an accord and satisfaction remains as valid and as important as ever. ... [O]f accord and satisfaction there are two cases, one where the making of the agreement itself is what is stipulated for, and the other, where it is the doing of the things promised by the agreement. The distinction depends on what exactly is agreed to be taken in place of the existing cause of action or claim. An executory promise or series of promises given in consideration of the abandonment of the claim may be accepted in substitution or satisfaction of the existing liability. Or, on the other hand, promises may be given by the party liable that he will satisfy the claim by doing an act, making over a thing or paying an ascertained sum of money and the other party may agree to accept, not the promise, but the act, thing or money in satisfaction of his claim. If the agreement is to accept the promise in satisfaction, the discharge of the liability is immediate; if the performance, then there is no discharge unless and until the promise is performed.[92]
376 Counsel on behalf of Mr Allen Caratti submitted that the deed of compromise fell into that category of accord in which the satisfaction agreed to be taken in substitution for the cause of action asserted was the performance of the deed, and not merely the provision of the promises contained within in. In the case of contracts for the compromise of legal proceedings, the question of whether the causes of action asserted in those proceedings are discharged by the provision of the promises contained within the agreement of compromise, or only upon the performance of those promises, is to be resolved by construing the agreement, in accordance with conventional principles of contractual construction.[93]
377 In this case, there can be no doubt that, on the proper construction of the deed of compromise of 26 September 2002, Mr Allen Caratti agreed that the causes of action which he had asserted in CIV 2188 of 2002, arising from the steps that were taken in purporting to remove him from office as a director of various companies within the Caratti group were discharged in return for the promises made by his mother and his brother in the deed. The terms of the deed contain a number of clear indications to that effect. First, Mr Allen Caratti accepted an unqualified obligation to discontinue the proceedings. The obligation to discontinue was not contingent upon performance by his mother or his brother of any of the promises contained within the deed.
378 Second, a number of promises made by Mr Allen Caratti's mother and brother did not fall to be performed until a very considerable time after the deed was executed. The promises relating to the distribution of assets upon Mr John Caratti attaining the age of 60 did not fall to be performed until almost eight years after the deed was executed. Ms Maddeleine Caratti's promise to convey her interest in the companies to her sons by her will has not yet fallen for performance. Many, if not most, of the other promises contained within the deed are of a continuing nature and operate indefinitely. In those circumstances it would be most unreasonable to attribute to the parties an intention to the effect that the causes of action asserted by Mr Allen Caratti in the proceedings then on foot would only be extinguished if and when, at some time which could not be predicted with certainty but which would necessarily be many years into the future, all promises contained within the deed on the part of Mr John Caratti and Ms Maddeleine Caratti had been performed by them.
379 Third, there is a clear inference arising from the nature of the rights conferred and the obligations assumed by the parties to the deed of compromise that they were to be in substitution for the rights asserted by Mr Allen Caratti in the legal proceedings then on foot. The deed contains provisions relating to the adjustment of shareholdings in relevant companies, and mechanisms for the appointment of directors to those companies. There is a clear inference from the regime created by the deed of compromise that it was intended to govern the operation of the companies within the Caratti group indefinitely, in substitution for previous arrangements which had resulted in the dispute manifest in the legal proceedings which were compromised by the deed. There would be an obvious inconsistency between Mr Allen Caratti taking the rights and assuming the obligations conferred under the agreement, while reserving the capacity to assert rights claimed contrary to that agreement. It would not be reasonable to attribute to the parties an intention to achieve such an inconsistent and potentially problematic outcome to their agreement.
380 There is some controversy as to the extent to which the subsequent actions of the parties to an agreement can be used as an aid to determine the proper construction of the agreement[94] in accordance with the usual rules for the receipt of that evidence.[95] If and to the extent that the actions of the parties to the deed of compromise provide evidence of its proper construction in this case, they are consistent with the construction which I have placed upon the agreement. Mr Allen Caratti discontinued the proceedings which he had commenced without first requiring performance of the terms of the deed by his mother and his brother. In 2004, solicitors acting on his behalf wrote to his mother and his brother seeking to enforce the terms of the deed of compromise. When the demands contained in that correspondence were not met, proceedings were commenced by Mr Allen Caratti seeking to enforce the terms of the deed of compromise, rather than to assert the causes of action which had been asserted in the 2002 proceedings.
381 For these reasons I have no hesitation in concluding that by his execution of the deed of 26 September 2002, Mr Allen Caratti agreed to discharge the causes of action asserted by him in the legal proceedings then on foot, and to forego the rights asserted in those proceedings, which included his right to assert that he had been unlawfully removed as a director of relevant companies within the group earlier that year, and to accept the rights conferred by the deed of compromise in place of those rights. It follows that the deed of 26 September 2002 had the effect that Mr Allen Caratti surrendered his right to assert that he had been unlawfully removed as a director in various companies within the family group earlier that year. This provides another reason why his claim to that effect in these proceedings must be dismissed.
Issue 3: was the lease to Esperance Cattle validly executed by Navarac?
382 It follows from my conclusion that Mr Aaron Caratti was a director of Navarac on 10 December 2012 that the execution of the lease in favour of Esperance Cattle by him and his grandmother on that date was effective to confer a leasehold interest on Esperance Cattle.
Issue 4: was the deed of surrender of Mammoth's sublease executed on 22 February 2013 effective?
383 It also follows from my conclusion that Mr Aaron Caratti was a director of Mammoth and Navarac on 22 February 2013 that the deed of surrender of Mammoth's sublease executed on that date by him and his grandmother was effective to result in the surrender of Mammoth's interest in the property as sublessee.
Issue 5: did Mr Allen Caratti have the general or specific authority of his mother to endorse her name, in her capacity as a director of Mammoth on the GH version of the Granite Hill sublease?
384 Mr Allen Caratti does not assert that he had the specific authority of his mother to endorse her name on the GH version of the Granite Hill sublease at the time he simulated her signature as a director of Mammoth. However, in the course of his oral evidence and for the first time, he asserted that he had his mother's general authority to simulate her signature on company documents as and when he chose. For the reasons I have given, I reject that evidence. It follows that at the time Mr Allen Caratti simulated his mother's signature on the GH version of the Granite Hill sublease, he had neither her specific nor her general authority to do so.
Issue 6: is Granite Hill entitled to make any, and if so, which, of the assumptions to which reference is made in s 128 and s 129 of the Corporations Act, and if so, what is the effect of those assumptions as between Mammoth and Granite Hill on the one hand, and as between Esperance Cattle and Granite Hill on the other?
385 Neither the GH version nor the ABC version of the Granite Hill sublease bear the common seal of Mammoth. However, s 127(1) of the Corporations Act provides that a company may execute a document without using the common seal if the document is signed by two directors of the company.
386 Section 128 and s 129 of the Corporations Act are in the following terms:
(1) A person is entitled to make the assumptions in section 129 in relation to dealings with a company. The company is not entitled to assert in proceedings in relation to the dealings that any of the assumptions are incorrect.
(2) A person is entitled to make the assumptions in section 129 in relation to dealings with another person who has, or purports to have, directly or indirectly acquired title to property from a company. The company and the other person are not entitled to assert in proceedings in relation to the dealings that any of the assumptions are incorrect.
(3) The assumptions may be made even if an officer or agent of the company acts fraudulently, or forges a document, in connection with the dealings.
(4) A person is not entitled to make an assumption in section 129 if at the time of the dealings they knew or suspected that the assumption was incorrect.
Constitution and replaceable rules complied with
(1) A person may assume that the company's constitution (if any), and any provisions of this Act that apply to the company as replaceable rules, have been complied with.
Director or company secretary
(2) A person may assume that anyone who appears, from information provided by the company that is available to the public from ASIC, to be a director or a company secretary of the company:
(a) has been duly appointed; and
(b) has authority to exercise the powers and perform the duties customarily exercised or performed by a director or company secretary of a similar company.
Officer or agent
(3) A person may assume that anyone who is held out by the company to be an officer or agent of the company:
(a) has been duly appointed; and
(b) has authority to exercise the powers and perform the duties customarily exercised or performed by that kind of officer or agent of a similar company.
Proper performance of duties
(4) A person may assume that the officers and agents of the company properly perform their duties to the company.
Document duly executed without seal
(5) A person may assume that a document has been duly executed by the company if the document appears to have been signed in accordance with subsection 127(1). For the purposes of making the assumption, a person may also assume that anyone who signs the document and states next to their signature that they are the sole director and sole company secretary of the company occupies both offices.
Document duly executed with seal
(6) A person may assume that a document has been duly executed by the company if:
(a) the company's common seal appears to have been fixed to the document in accordance with subsection 127(2);
and
(b) the fixing of the common seal appears to have been witnessed in accordance with that subsection.
For the purposes of making the assumption, a person may also assume that anyone who witnesses the fixing of the common seal and states next to their signature that they are the sole director and sole company secretary of the company occupies both offices.
Officer or agent with authority to warrant that document is genuine or true copy
(7) A person may assume that an officer or agent of the company who has authority to issue a document or a certified copy of a document on its behalf also has authority to warrant that the document is genuine or is a true copy.
(8) Without limiting the generality of this section, the assumptions that may be made under this section apply for the purposes of this section.
387 These provisions displace the rule in the Royal British Bank v Turquand,[96] often called the indoor management rule. The statutory provisions differ from that rule in a number of respects, including in their application to forgeries.
388 Because of s 128(3), my finding that Mr Allen Caratti forged his mother's signature on both versions of the Granite Hill sublease does not of itself prevent Granite Hill making the assumption that Ms Maddeleine Caratti signed those documents, or prevent Mammoth being bound by the obligation imposed by s 128(1) which prevents it from asserting in proceedings relating to the relevant 'dealings' that any of the assumptions to which reference is made in s 129 are incorrect.
389 The only assumption for which provision is made in s 129 that is relevant to this case is that provided by s 129(5), relating to the due execution of a document which appears to have been signed by two directors of the company in accordance with s 127 of the Act. The assumptions to which reference is made in subsections (1), (4) and (7) of s 129 are not relevant because there is no issue in the case concerning compliance with Mammoth's constitution or the performance of duties owed to Mammoth by its directors or the authority of any person to issue a document or certified copy of a document on behalf of Mammoth. The assumption to which reference is made by s 129(2) is not relevant because from 9 October 2012, the information provided by Mammoth that was available to the public from ASIC did not disclose Mr Allen Caratti to be a director of Mammoth, although it did disclose, as was the fact, that Ms Maddeleine Caratti was a director of Mammoth. The assumption to which reference is made by s 129(3) does not apply because there is no assertion that Mammoth held out Mr Allen Caratti to be a director of Mammoth, or to have its authority to execute a sublease on its behalf. To the extent that any such representations were made, they were made by Mr Allen Caratti without Mammoth's authority. The assumption to which reference is made in s 129(6) does not apply because Mammoth's company seal was not affixed to either version of the Granite Hill sublease.
390 The Navarac parties accept, correctly in my view, that Granite Hill can rely upon the statutory assumption to which reference is made in s 129(5) whether or not it actually made the assumption at the time of the relevant dealings, and whether or not it made any enquiry, subject to s 128(4) which precludes Granite Hill from relying upon that assumption if, at the time of the relevant dealing, its officers knew or suspected that the assumption was incorrect.[97] That is essentially because s 128(1) prohibits the company from asserting in proceedings relating to any relevant dealing that the assumption was incorrect, irrespective of whether or not the assumption was actually made.
391 Because of the structure of s 128, it is necessary to identify the relevant 'dealings' to which the assumption relates, not only because the prohibition upon the company challenging the assumption is limited to proceedings 'in relation to' those dealings, but also because it is the knowledge or suspicion of the party seeking to rely upon the assumption 'at the time of the dealings' that is relevant for the purposes of the s 129 assumptions.[98]
392 In this case, the relevant dealings are the dealings between Mr Allen Caratti as representative of Mammoth, and Mr and Ms Bott, as representatives of Granite Hill, in relation to the sublease of Young River Station. There is no doubt that Mr Allen Caratti had the authority of Mammoth to conduct those dealings as its representative pursuant to the longstanding arrangement with his mother and other members of the family whereby he assumed responsibility for the management of farming properties mortgaged to Rural Bank, including responsibility for negotiating the terms of leases or subleases with respect to those properties. However, for the reasons I have given, his actual authority did not extend to executing agreements he had negotiated as a director of Mammoth.
393 In this context it is now relatively well established that 'dealings' must be taken to include purported dealings, for which the relevant agent of the company had no actual authority. That is because the express statutory provisions extending the assumption to cases involving fraud or forgery would be largely pointless if the statutory provisions only applied to cases in which the agent of the company had actual authority to undertake the relevant dealing.[99] It follows that for the purposes of this case, the relevant 'dealings' extend to and include the dealings between Mr Allen Caratti and Granite Hill in which Mr Allen Caratti purported to proffer each version of the sublease as a sublease duly executed by Mammoth.
394 As I have noted, the only statutory assumption relevant to this case relates to the execution of each of the two versions of the Granite Hill sublease. It follows that the relevant 'dealings' are those in which Mr Allen Caratti proffered those documents to Granite Hill as documents which had been duly and properly executed by Granite Hill.
395 In point of time, the first of those documents was provided to Granite Hill on 16 November 2012. The Navarac parties properly accept that the fact that I have found that Ms Maddeleine Caratti's signature on that document was forged by Mr Allen Caratti does not, of itself, prevent Granite Hill from relying upon the statutory assumption, as there is no evidence to the effect that Granite Hill knew or suspected that Mr Allen Caratti had forged his mother's signature at that time. However, they submit, and I accept, that the situation was different by 1 March 2013, when Mr Kipping sent the ABC version of the Granite Hill sublease to Granite Hill's solicitors. By then, Mr and Ms Bott had received the emails of 13 and 27 February 2013 in which Mr Payne asserted that Mr Allen Caratti was not a director of either Navarac or Mammoth and that the directors of Mammoth and Navarac had no knowledge of any purported sublease of the property to Mr and Ms Bott or any entity associated with them. Mr Payne represented that the emails were sent with the authority of the directors of Navarac, and Mr and Ms Bott had no reason to doubt those assertions. Had they caused a search of the records maintained at ASIC to be undertaken, they would have discovered that Mr Allen Caratti was not recorded as a director of either Navarac or Mammoth in those records and that the directors were Ms Maddeleine Caratti and Mr Aaron Caratti, although curiously, no such search was undertaken. In addition, by the time Granite Hill received the ABC version of its sublease, there had been a confrontation with Mr Blair and his daughter at Young River Station on the morning of 1 March 2013, and the officers of Granite Hill were well aware that Esperance Cattle were claiming an entitlement to possession of the property, and were asserting that Mr Allen Caratti did not have authority to sign documents as a director of either Navarac or Mammoth.
396 Taking all of these matters into account, it is reasonable to infer, and I find, that by the time Granite Hill's solicitors received the ABC version of the sublease from Mammoth, the officers of Granite Hill, relevantly Mr and Ms Bott, suspected that the document may not have been signed in accordance with s 127(1) of the Corporations Act because by then they must have suspected that Mr Allen Caratti may not have been a director of Mammoth. This finding is sufficient to prevent Granite Hill from relying upon an assumption that the ABC version of the sublease was properly executed in relation to its dealings with Mr Allen Caratti in respect of that sublease, irrespective of whether or not Mr and Ms Bott by then suspected that Ms Maddeleine Caratti had not signed the document (as they may well have).
397 This process of reasoning directs attention to the first critical question which must be addressed in relation to this aspect of the case. That question is whether Granite Hill is entitled to rely upon a statutory assumption to the effect that Mammoth had duly executed the GH version of the Granite Hill sublease in that it had been signed by two directors of Mammoth, notwithstanding that a search of the records held at ASIC and made available to the public with respect to Mammoth would have shown that Mr Allen Caratti was not then a director, as in fact he was not. In other words, is the presumption of due execution to which reference is made in s 129(5) only applicable if the document appears to have been signed by two persons who are in fact directors of the company, or who can be assumed to be directors of the company pursuant to s 129(2) because they appear as such from information provided by the company which is available to the public from ASIC (as the Navarac parties submit), or is it sufficient that the document appears to be signed by two persons who purport to have signed in their capacities as directors of the company (as Granite Hill submits). Alternatively, there may be an intermediate position in which the statutory assumption applies if the document appears to have been duly executed because the names of the persons purporting to have signed are indecipherable, and therefore may correspond to the persons who are directors of the company or who appear from information provided by the company available to the public from ASIC to be a director of the company, but the statutory assumption does not apply if it is clear from the face of the document that it has been signed by a person who is not a director of the company nor a person who appears from the information provided by the company available to the public from ASIC to be a director of the company.
398 I have not found this to be an easy issue to resolve. The issue is, of course, an issue of statutory construction. It follows that primary attention must be directed to the words used in the relevant provisions, viewed in the light of other related provisions and in the context of the Act as a whole.[100] There are a number of aspects of the terminology used in s 129(5) which merit attention in the endeavour to resolve this difficult question.
The assumption
399 The assumption which may be made if the conditions of the provision are satisfied is 'that a document has been duly executed by the company'. The assumption thus extends to all necessary facts, matters and circumstances necessary to establish 'due execution' by the relevant company. In the ordinary case those facts would include compliance with the constitution of the company, and that the document has in fact been executed by a person or persons who do in fact have the authority of the company to execute documents on its behalf.
The conditions upon which the assumption may be made
400 The condition which must be satisfied in order to enable the assumption to be made is that:
[T]he document appears to have been signed in accordance with subsection 127(1).
401 Section 127(1) stipulates various ways in which a company may execute a document without using a common seal. Those ways include execution by two directors of the company, or a director and a company secretary of the company, or in the case of a proprietary company that has a sole director who is also the sole company secretary - that director. The latter mechanism for execution by the company explains the second section of s 129(5) which provides that for the purposes of making the assumption to which reference is made in the first sentence, a person:
[M]ay also assume that anyone who signs the document and states next to their signature that they are the sole director and sole company secretary of the company occupies both offices.
402 The second sentence of s 129(5) is capable of supporting two competing contentions with respect to the proper construction of the subsection as a whole. The first contention derives from the fact that the legislature has expressly stipulated that a person may assume that a person who signs in the manner specified in that sentence occupies the offices claimed, but has made no equivalent provision to the effect that a person may assume that anyone who signs the document and states next to their signature that they are a director of the company in fact occupies that office. So, in accordance with the maxim expressio unius, exclusio alterius, by making express provision for one circumstance, arguably the legislature has impliedly excluded the other.
403 The alternative contention to which the second sentence of s 129(5) gives rise derives from the fact that the assumption which may be made pursuant to that section is an assumption of occupancy of office derived merely from an assertion to that effect in the document executed. In other words, if a person asserts that they are the sole director and sole company secretary of the company in the executed document, their occupancy of each office may be assumed without reference to the facts or the information available to the public from ASIC. This argument posits that there is no reason why the legislature would have intended to limit an assumption of occupancy of office only to the case in which the putative officeholder asserts that they are the sole director and sole company secretary, thereby excluding the circumstance in which two putative officeholders each claim to be directors of the company.
404 Each of these competing contentions has their weaknesses. On the one hand it has been observed a number of times that the principle embodied in the maxim expressio unius, exclusio alterius is a particularly weak guide to the intention of the legislature.[101] On the other hand, it can be argued that the legislative purpose evident in the second sentence of s 129(5) is to obviate the need to check that the constitution of the relevant company provides for a single director and company secretary in cases in which a document has been purportedly executed on that basis. It can be argued that such an objective is not inconsistent with a construction of the subsection which requires that, in the case of a document executed by two officeholders of a company, the document must at least appear to have been executed by persons who either are in fact directors of the company, or who appear to be directors from information provided by the company available to the public from ASIC, and not someone else. This argument draws support from the observation that the assumption that may be made pursuant to s 129(2) is only to the effect that a person is a director. That subsection does not extend to an assumption that a person is the sole director and sole company secretary.[102] On this argument, the purpose of the second sentence of s 129(5) is to enable an assumption of sole directorship to be made if there is an assertion to that effect in the document, thus obviating the need for the recipient of the document to inquire into the constitution of the company to ascertain whether provision is made for a sole director. If this proposition is correct, the second sentence of s 129(5) does not diminish the significance of the assumptions derived from the information available to the public from ASIC, but to the contrary, underscores the significance of those assumptions by, in effect, extending them in a circumstance in which the person signing on behalf of the company appears to be a director on the basis of the information available to the public from ASIC, and asserts that he or she is the sole director and sole company secretary.
405 Section 130 of the Corporations Act may provide some indication of legislative intent. Section 130 provides:
A person is not taken to have information about a company merely because the information is available to the public from ASIC.
406 So, because of s 130, a person is not taken to know that an assumption is incorrect, and to be thereby disentitled from making that assumption by the operation of s 128(4), merely because records available to the public from ASIC would show the assumption to be incorrect. This tends to suggest, but does not establish, that the legislature did not intend that the assumption of due execution to which reference is made in s 129(5) can only be made if the information apparent on the document conforms to the information available to the public from ASIC.
407 There are other possible indicators of legislative intention to be derived from the terms used to describe the condition which must be satisfied before the assumption of due execution can be made. The document must 'appear' to have been signed in one or other of the ways specified by s 127(1). Thus, the condition is to be satisfied by reference to the appearance of the document, not by extraneous facts or circumstances. This observation could be said to support the proposition that it was not the legislative intention that a person relying upon the assumption must inquire as to whether the person whose signature purports to be on the document is in fact a director or appears from the information available to the public from ASIC to be a director of the company. On the other hand, it might be asserted that a document cannot 'appear' to have been signed by officeholders of the company unless there is some basis for that appearance - namely, that the document appears to have been signed by a person who is in fact a director or who appears from the information available to the public from ASIC to be a director. That approach to the construction of the section could be said to be consistent with s 128(3) which provides that the assumption may be made even if the signature has been forged, provided that it appears to have been signed by a person who is in fact a director, or appears on the information available to the public from ASIC to be a director. On the other hand, it might be argued that s 128(4) is intended to prescribe the only circumstances in which a person is precluded from making any of the assumptions to which reference is made in s 129, and limits those circumstances to actual knowledge or suspicion that the assumption is incorrect. That approach to the section is reinforced by s 130, to which I have referred above. On that view, s 129(5) would not be construed as requiring the person seeking to rely upon the assumption to have any basis for a belief that the signatures on the document are those of officeholders in the company other than the fact that the document purports to be signed by such persons, and the assumption would only be excluded in the event of actual knowledge or suspicion that the assumption was incorrect. This approach to the construction of the subsection would provide for the hypothetical example given by counsel for Navarac, in which a document was purportedly signed by an obviously fictitious person such as 'Mickey Mouse'. In that circumstance, s 128(4) would apply and the assumption would be excluded, because at the time of the relevant dealings a person would suspect that Mickey Mouse was not a director of the company.
The dealings to which the assumption relates
408 Guidance to the proper construction of s 129(5) might also be derived from the ambit of the dealings in relation to which the assumption may be made, pursuant to s 128(1). As I have noted, the cases establish that the assumptions may be made in relation to purported dealings with the company which are not in fact authorised - otherwise those assumptions would have no effective operation. On the other hand, it seems unlikely that the legislature can have intended that the assumptions apply in circumstances in which a company gave neither actual nor apparent authority to any person in relation to the dealings in respect of which the assumption is asserted. Put another way, it seems unlikely that the legislature can have intended that the assumption would apply to dealings undertaken by a complete fraudster acting entirely unbeknown to the relevant company and without any actual or apparent authority. If that view of the section is correct, the consequential requirement that a party will only be entitled to reply upon the assumption if there have been some dealings with a person acting with the actual or apparent authority of the company provides an implicit constraint upon the ambit of the circumstances in which the assumption will apply, making it more likely that the legislature did not intend that the assumptions would only apply in respect of execution by persons who are in fact officeholders, or who appear from the information available to the public from the ASIC records to be officeholders in the company, and that the assumptions will apply unless the person knows or suspects that the relevant assumption is incorrect.
The legislative history of the provisions
409 When the Companies Act 1981 (Cth) was first passed, the statutory modifications to the indoor management rule created by Turquand's Case were quite modest.
410 Section 68, entitled 'Ultra vires transactions' provided:
(1) No act of a company (including the entering into of an agreement by the company), and no conveyance or transfer of property to or by a company, is invalid by reason only of the fact that the company was without capacity or power to do the act or to execute or take the conveyance or transfer.
(2) Any such lack of capacity or power may be asserted or relied upon only in -
(a) proceedings against the company by a member of the company or, where the company has issued debentures secured by a floating charge over all or any of the property of the company, by the holder of any of those debentures or the trustees for the holders of those debentures to restrain the doing of any act or acts or the conveyance or transfer of any property to or by the company;
(b) proceedings by the company, or by a member of the company, against the present or former officers of the company; or
(c) an application by the Commission to wind up the company.
(3) If the unauthorized act, conveyance or transfer sought to be restrained in any proceedings under paragraph (2) (a) is being, or is to be, performed or made pursuant to any contract to which the company is a party, the Court may, if all the parties to the contract are parties to the proceedings and if the Court deems it to be just and equitable, set aside and restrain the performance of the contract and may allow to the company or to the other parties to the contract (as the case requires) compensation for the loss or damage sustained by either of them that may result from the action of the Court in setting aside and restraining the performance of the contract, but anticipated profits to be derived from the performance of the contract shall not be awarded by the Court as a loss or damage sustained.
411 Section 80 of that Act provided for limited assumptions as to the proper execution of documents either sealed or executed by a person acting with the express or implied authority of a company. It provided:
(1) In so far as the formalities of making, varying or discharging a contract are concerned, a person acting under the express or implied authority of a company may make, vary or discharge a contract in the name of or on behalf of the company in the same manner as if that contract were made, varied or discharged by a natural person.
(2) The making, variation or discharging of a contract in accordance with sub-section (1) is effectual in law and binds the company and other parties to the contract.
(3) A contract or other document executed, or purporting to have been executed, whether before or after the commencement of this Act, under the common seal of a company is not invalid by reason only that a person attesting the affixing of the common seal was in any way, whether directly or indirectly, interested in that contract or other document or in the matter to which that contract or other document relates.
...
(7) A document or proceeding requiring authentication by a company may be authenticated by the signature of an officer of the company and need not be authenticated under the common seal of the company.
(8) A company may, by writing under its common seal, empower a person, either generally or in respect of a specified matter or specified matters, as its agent or attorney to execute deeds on its behalf, and a deed signed by such an agent or attorney on behalf of the company and under his seal or, subject to sub-sections (10) and (11), under the appropriate official seal of the company, binds the company and has the same effect as if it were under the common seal of the company.
(9) The authority of an agent or attorney empowered pursuant to subsection (8), as between the company and a person dealing with him, continues during the period (if any) mentioned in the instrument conferring the authority or, if no period is so mentioned, until notice of the revocation or termination of his authority has been given to the person dealing with him.
(10) A company the objects of which require or comprise the transaction of business outside the Territory [or State as the case may be] may, if authorized by its articles, have for use outside the Territory [or State as the case may be] in place of its common seal one or more official seals, each of which shall be a facsimile of the common seal of the company with the addition on its face of the name of every place where it is to be used.
(11) The person affixing such an official seal shall, in writing under his hand, certify on the instrument to which it is affixed the date on which and the place at which it is affixed.
(12) A document sealed with such an official seal shall be deemed to be sealed with the common seal of the company.
412 These sections were amended in 1983, by the Companies and Securities Legislation (Miscellaneous Amendments) Act 1983 (Cth). The amendments significantly expanded the scope of the protection given to 'outsiders' dealing with companies, and introduced provisions which correspond in a number of respects to s 128 and s 129 of the Corporations Act. They became s 68A and s 68D of the then operative legislation. They provided:
68A Persons having dealings with companies, etc.
(1) A person having dealings with a company is, subject to sub-section (4), entitled to make, in relation to those dealings, the assumptions referred to in sub-section (3) and, in any proceedings in relation to those dealings, any assertion by the company that the matters that the person is so entitled to assume were not correct shall be disregarded.
...
(3) The assumptions that a person is, by virtue of sub-section (1) or (2), entitled to make in relation to dealings with a company, or in relation to an acquisition or purported acquisition from a company of title to property, as the case may be, are -
(a) that, at all relevant times, the memorandum and articles of the company have been complied with;
(b) that a person who appears, from returns lodged with the Commission under section 238 or with the Registrar of Companies under the corresponding provision of a previous law of the Territory, to be a director, the principal executive officer or a secretary of the company has been duly appointed and has authority to exercise the powers and perform the duties customarily exercised or performed by a director, by the principal executive officer or by a secretary, as the case may be, of a company carrying on a business of the kind carried on by the company;
(c) that a person who is held out by the company to be an officer or agent of the company has been duly appointed and has authority to exercise the powers and perform the duties customarily exercised or performed by an officer or agent of the kind concerned;
(d) that an officer or agent of the company who has authority to issue a document on behalf of the company has authority to warrant that the document is genuine and that an officer or agent of the company who has authority to issue a certified copy of a document on behalf of the company has authority to warrant that the copy is a true copy;
(e) that a document has been duly sealed by the company if -
(i) it bears what appears to be an impression of the seal of the company; and
(ii) the sealing of the document appears to be attested by 2 persons, being persons one of whom, by virtue of paragraph (b) or (c), may be assumed to be a director of the company and the other of whom, by virtue of paragraph (b) or (c), may be assumed to be a director or to be a secretary of the company; and
(f) that the directors, the principal executive officer, the secretaries, the employees and the agents of the company properly perform their duties to the company.
(4) Notwithstanding sub-section (1), a person is not entitled to make an assumption referred to in sub-section (3) in relation to dealings with a company if -
(a) he has actual knowledge that the matter that, but for this sub-section, he would be entitled to assume is not correct; or
(b) his connection or relationship with the company is such that he ought to know that the matter that, but for this sub-section, he would be entitled to assume is not correct, and where, by virtue of this sub-section, a person is not entitled to make a particular assumption in relation to dealings with a company, sub-section (1) has no effect in relation to any assertion by the company in relation to the assumption.
...
68D. Section 68A operates -
(a) to entitle a person to make the assumptions referred to in subsection (3) of that section in relation to dealings with a company; or
(b) to entitle a person to make the assumptions referred to in subsection (3) of that section in relation to an acquisition or purported acquisition (whether direct or indirect) of title to property from a company, notwithstanding that a person referred to in paragraph 68A (3) (b), (c) or (e) or an officer, agent or employee of the company referred to in paragraph 68A (3) (d) or (f) -
(c) has acted or is acting fraudulently in relation to the dealings, or in relation to the acquisition or purported acquisition of title to property from the company, as the case may be; or
(d) has forged a document that appears to have been sealed on behalf of the company, unless the person referred to in paragraph (a) or (b) of this section has actual knowledge that the person referred to in paragraph 68A (3) (b), (c) or (e), or the officer, agent or employee of the company referred to in paragraph 68A (3) (d) or (f), has acted or is acting fraudulently, or has forged a document, as mentioned in paragraph (c) or (d) of this section.
413 The explanatory memorandum for the Companies and Securities Legislation (Miscellaneous Amendments) Act, explained the rationale for these changes in the following terms:
A person dealing with a company, or with a person who has acquired title, or purports to have acquired title, to property from a company, will be entitled to make certain assumptions which will be binding on the company in any proceedings in relation to those dealings ... . The purpose of these provisions is to make clear: (a) who may make and rely upon the assumptions set out in proposed s-sec. 68A(3); and (b) that a company will not be able to deny the validity of an assumption made under proposed ssec. 68A(3). A person dealing with a company or with a person who has acquired, or purports to have acquired, title to property from a company, will be entitled to assume:
...
(b) that a person described as a director, principal executive officer or secretary, of a company in a relevant return, has been duly appointed and has authority to exercise the powers normally exercised by such a person ...
...
(e) that a document has been duly sealed by the company if it bears what appears to be the seal of the company attested by two persons, one of whom may be assumed to be a director, and the other a director or a secretary of the company...The purpose of this provision is to make it clear that a company will not be able to escape liability for fraudulently sealed documents.[103]
414 It will be observed that s 68A expressly provided that the assumption of due execution would only apply if the document appeared to have been executed by persons who could be assumed to be officers of the company by reason of one or other of the statutory assumptions, including the assumptions arising from information contained in returns lodged with the then corporate regulator. The requisite nexus was reinforced by the terms of the explanatory memorandum.
415 The applicable statutory provisions remained largely unchanged until 1998,[104] when the Company Law Review Act 1998 (Cth) was passed. That Act, which amended the Corporations Act 1989, introduced provisions which correspond to s 128 and s 129 of the Corporations Act 2001. The 1998 amendments were part of a wave of corporations law reforms enacted in order to simplify and modernise laws which had remained largely static for a decade. One of those reforms was the abolition of a requirement for documents to be executed with a company seal.
416 Consistently with this change the statutory assumptions relating to the execution of documents were also amended, providing an assumption relating to the execution of documents with a seal, and another relating to documents executed without a seal. So, the Explanatory Memorandum for the Company Law Review Act explained the amendments in these terms:
Historically, company seals have performed an important security function. However, over time the importance of this function has diminished. The Bill will remove the requirement for companies to have a seal ... Companies will be able to execute documents (including deeds) without the application of a seal and outsiders will be able to make appropriate assumptions of regularity in relation to the execution of documents (Bill ss 127(1) and 129(5)).[105]
Later in the memorandum, the changes to the assumptions are described as being introduced 'to facilitate' the execution of documents without a seal.[106]
417 When the provisions relating to the assumption of due execution were amended to reflect this change the express nexus between these assumptions and the statutory assumptions relating to the authority of persons apparently executing on behalf of the company was also removed. So, unlike the provisions introduced in 1983, since 1998 the relevant assumptions pertaining to execution have not been limited to documents apparently executed by persons to whom one or other of the other statutory assumptions refer. There is no reference to this change in the Explanatory Memorandum or any other extrinsic materials which I have identified.[107] It is possible that this aspect of the amendments was inadvertent although that seems unlikely.
418 This aspect of the 1998 amendments did not go unnoticed. In Understanding Company Law,[108] the authors observed that the amendments had strengthened the position of outsiders, and had broadened the assumptions:
These assumptions [s 127(1) and s 129(5)] appear to strengthen the position of a person dealing with a company compared with their position prior to the amendments introduced by the Company Law Review Act 1998. The now repealed s 164(3)(e) assumption of valid sealing could only be made if the persons witnessing the fixing of the company seal appeared to be directors or director and secretary by virtue of having been held out by the company as the relevant officers or named in the company's lodged documents. Under the assumptions contained in s 129(5) and (6), there is no requirement that the persons signing the document or witnessing the fixing of the seal were held out or named by the company as relevant officers. It is sufficient if the document appears on its face to have been signed or the company seal witnessed, by the required officers.
419 This review of the legislative history of the relevant provisions suggests, but does not unequivocally establish, that in 1998 the legislature removed the previous requirement to the effect that the assumptions of due execution would only apply if the document appeared to have been executed by persons to whom one or other of the other statutory assumptions applied. If that is correct, it suggests that it was the intention of the legislature that the assumption in s 129(5) would apply irrespective of whether or not the person who had apparently signed the document was a person who, on the information available to the public from ASIC, was an officer of the company. It is appropriate now to turn to see if any guidance as to the proper construction and effect of s 128 and s 129 can be derived from the previously decided cases.
The cases relating to the statutory assumption
Story v Advance Bank Australia Ltd
420 In Story v Advance Bank Australia Ltd the directors and shareholders of the relevant company were husband and wife. The husband forged his wife's signature on a mortgage over land owned by the company. As the wife was in fact a director of the company at the relevant time, the critical question which arises in this case did not arise. Further, the case related to the provisions which preceded the 1998 amendments. Nevertheless, observations made by the court on the subject of the 'dealings' to which the statutory assumptions relate are of assistance.
421 Gleeson CJ observed that because the relevant statutory provision[109] extended, by hypothesis, to dealings with purported company agents who lack actual authority, and extends to forged instruments, the concept of having dealings with a company must embrace, subject to the qualifications contained in the legislation, purported dealings.[110] As his Honour pointed out, if the provision only extended to cases where the person representing the company had actual authority, it would be largely otiose.
422 After agreeing with the reasons of Gleeson CJ, Mahoney J reserved for further consideration the question of whether the section would apply in a circumstance in which the company had given no actual or apparent authority to the person who had purported to deal on its behalf in respect of the 'dealings' in which the entitlement to rely upon the assumptions are asserted. In that context Mahoney J observed:
The section was directed, exclusively or primarily, to remove the inconveniences of proving, in the context of dealings between parties, the formalities necessary to the proper and valid carrying out of the dealings. It was related to 'internal management' and other matters of this kind. It is not necessary for present purposes to attempt to define the limits of the operation of the section apt to be imposed by 'dealings'. However, I would reserve for consideration the question whether there are such limits and what they are.[111]
Soyfer v Earlmaze Pty Ltd
423 The limitation imposed by the restriction of the assumptions to 'dealings' with the company was a significant factor in the conclusion of Hodgson J in Soyfer v Earlmaze Pty Ltd to the effect that a document bearing two signatures purportedly as office holders of the company gives rise to the statutory assumption of due execution even if the document does not reveal the identities of the persons signing. The case concerned the enforceability of an option agreement purportedly executed on behalf of a company. The execution page of the document bore the seal of the company and two signatures, one above the word 'director', and another above the word 'secretary'.
424 Hodgson J found that the signature adjacent to the word 'director' bore some similarities to the signature of a director of the company, but was in fact forged. The signature adjacent to the word 'secretary' was that of a person who was neither a director nor secretary of the company at the time he signed the document. Each signature was illegible, and accordingly the identity of the persons who had purported to sign the document on behalf of the company was not apparent on the face of the document. It followed that the document did not 'appear' to have been signed by persons who were known to be directors of the company in fact, or who were known to be persons identified as directors of the company in information available to the public from ASIC. All that appeared from the document was that two unidentified persons who purported to be a director and a secretary of the company respectively had signed the document. The question was whether that gave rise to the statutory assumption of due execution.
425 Because the company seal had been applied to the document, the question arose in the context of the assumption to which reference is made in s 129(6), rather than the assumption in s 129(5). However, nothing turns upon that distinction, as the subsections are substantively identical, and in particular, each contains a specific provision relating to the assumption that may be made in the case of a signature on a document which states that the person signing is the sole director and sole company secretary of the company.
426 In Soyfer Hodgson J referred to an article by Professor James O'Donovan.[112] In that article, Professor O'Donovan observed:
It is evident that the document must appear to have been signed by two directors of the company or a director and a company secretary or the sole director and secretary, as the case may be. A document will not appear to have been signed by these persons if it is signed by persons bearing names other than these office holders. A document could appear to be signed by these office holders even if it was a forgery but that will not disentitle a third party from making the assumption in s 129(5). (original emphasis)
427 It is to be noted that in Soyfer, unlike this case, the relevant document did not appear to have been signed by a person other than an office holder of the company as disclosed in information available to the public from ASIC. Rather, the document did not disclose the identity of the persons who had signed it. Accordingly, on the face of the document, it could not be said that it was signed by a person who was not one of the persons disclosed as an office holder in the information available to the public from ASIC. However, in Soyfer, the information available to the public from ASIC would have revealed that a Mr Matar's signature was necessary, as he was one of the two office holders of the company, and it appeared from the document as a whole that he had not signed the execution page on behalf of the company, as he had signed the document elsewhere, and it was clear that his signature was quite different to those who had purported to execute on behalf of the company.
428 Hodgson J referred to many of the countervailing arguments of statutory construction which I have set out above. He concluded 'with some hesitation' that the affixation of signatures apparently as office holders of the company was, of itself, sufficient to create the appearance that the document had been executed in accordance with s 127 of the Corporations Act, with the result that the assumption in s 129(6) would apply unless the person dealing with the company knew or suspected that the assumption was incorrect.[113]
429 Hodgson J referred to the issues of public policy arising from this conclusion in the following terms:
It might be said that all this makes it too easy for persons dealing with companies to establish the liability of the company under a sealed document. However, if such a person is dealing with persons associated with a company who execute documents honestly but mistakenly on behalf of the company, I do not see that the company should benefit from discrepancies with its published documents; while if, as in this case, the person is dealing with persons associated with the company who are apparently prepared to be fraudulent and to forge signatures, it gives little more protection to a company to require that a forger state a name on the document which is the correct name of a director or secretary shown in information given through ASIC.
In fact, some protection to the company is given by the requirement that the person must be engaged in dealings with the company in the first place; which in my opinion means that there must be dealings (in the sense of negotiations or other steps in relation to a contemplated transaction) with someone on behalf of the company which are dealings authorised by the company, and the document in respect of which the assumptions may be made must be a document which is 'in relation to' those authorised dealings (and I take this to extend to a document arising out of authorised negotiations or other steps). I note that in Story at 733, Gleeson CJ suggested that the concept of having dealings with a company must embrace purported dealings, because if the provisions only applied where the person representing the company had actual authority, they would be largely unnecessary. I take this as meaning that it is not necessary that the person representing the company have authority from the company to commit the company to the relevant transactions or execute the relevant documents; but in my opinion, it is necessary that the person have authority to undertake some negotiation or other steps, so that the dealings, in relation to which the document is executed, are properly considered to be dealings with the company.[114]
430 In the latter of these paragraphs, Hodgson J addressed the question left open by Mahoney JA and Story v Advance Bank Australia Ltd, and concluded that the assumptions will only apply if there are some authorised dealings with the company, so that the dealings in relation to which the document is executed are properly considered to be dealings with the company. This view precludes the possibility of a company being bound as a result of acts purportedly undertaken on its behalf by a person entirely lacking in any actual or apparent authority from the company.
431 I would also observe, with respect, that there is force in Hodgson J's observation to the effect that a construction of the statutory provisions which would not bind the company to a document in which a name other than that of one of its office holders is written would not appear to provide any greater protection to the company, in practical terms, than the clear words of the provision which bind the company to a document in which the name of one of its office holders is forged unless the other party knew or suspected the forgery.
MDN Mortgages Pty Ltd v Caradonna
432 The decision of Hodgson J in Soyfer v Earlmaze Pty Ltd was followed in MDN Mortgages Pty Ltd v Caradonna.[115] In that case, Kirby J held that a document which bore two signatures, each over the words 'signature of director' appeared to have been executed in accordance with s 127(1) of the Corporations Act even though one of the signatures was illegible.[116]
Errichetti Holdings Pty Ltd v Western Plaza Hotel Corporation Pty Ltd
433 As far as I am aware, neither Soyfer v Earlmaze Pty Ltd nor MDN Mortgages Pty Ltd v Caradonna have been disapproved. In Errichetti Holdings Pty Ltd v Western Plaza Hotel Corporation Pty Ltd,[117] Master Newnes[118] observed:
Whether or not, in order to enliven s 129(6), there must be a holding out by the company, in my view it must at least appear that the person who signed the document, or in whose name it was signed, was a director (or secretary) of the company as they purported to be.
434 However, that observation must be read in its context, which was an application to set aside a statutory demand on the basis that there was a genuine dispute with respect to the debt claimed in the statutory demand. The affidavit evidence which had been filed in support of the application to set aside the demand showed that there were significant contentions with respect to the validity or otherwise of the appointment of the person who was known to have signed the document on behalf of the company as a director and which were known to the party seeking to invoke the assumption. It was sufficient for the Master to find that there was a genuine dispute as to whether the document appeared to have been witnessed by a person who appeared to be a director of the relevant company in order to set aside the demand, without it being necessary for the Master to determine that question. It seems that the decision in Soyfer v Earlmaze Pty Ltd was not referred to or cited by the Master. For these various reasons I would not place any significant reliance upon the decision in Errichetti.
435 Of course I am not bound to follow the decision in Soyfer v Earlmaze Pty Ltd by the doctrine of precedent. Nor is the principle enunciated by the High Court in Australian Securities Commission v Marlborough Goldmines Ltd[119] relating to the construction of legislation forming part of a national scheme by intermediate courts of appeal applicable, as the question to be resolved has not yet been addressed by an intermediate court of appeal, as far as I am aware. Nevertheless, in a scheme of national corporate regulation the decision of Hodgson J in Soyfer v Earlmaze Pty Ltd has stood without disapproval for more than a decade. It has been followed in at least one other decision. Because of my view that the countervailing arguments derived from the language of the statutory provisions are finely balanced, I do not consider that Hodgson J was plainly wrong and have noted that there is force in the reasoning which he applied. Further, my review of the legislative history of the provisions tends to support his conclusion. For these reasons, with some of the same hesitation expressed by Hodgson J, I will follow his decision.
436 This has the consequence that Granite Hill can rely upon the assumption that the GH version of the sublease from Mammoth was duly executed by Mammoth, notwithstanding that it was evident that it had been signed by Mr Allen Caratti, who was neither a director of Mammoth, nor a person who appeared to be a director of Mammoth from information available to the public from ASIC. At the time of Granite Hill's dealing with Mammoth through the agency of Mr Allen Caratti in October and November 2012, it could not be suggested and was not in fact suggested that any person acting on its behalf (namely, Mr and Ms Bott) either knew or suspected that Mr Allen Caratti was not a director of Mammoth. Further, at that time, it could not be suggested, nor was it in fact suggested, that Granite Hill or any person acting on its behalf either knew or suspected that the signature of Ms Maddeleine Caratti had been forged on the GH version of the sublease. It follows that Granite Hill is entitled to assume that the GH version of the sublease was duly executed by Mammoth, and in these proceedings Mammoth is not entitled to assert, in relation to its dealings with Granite Hill, that the assumption of due execution of that document by Mammoth is incorrect.
437 The next question which must be determined is whether any party to these proceedings other than Mammoth is prevented from denying Granite Hill's entitlement to make the assumption of due execution. That question is much easier to resolve. For the reasons which follow I have no hesitation in concluding that in these proceedings the statutory assumption of due execution of the Granite Hill sublease only applies to regulate the legal rights and obligations as between Granite Hill and Mammoth, and has no application to the rights and obligations of other parties to these proceedings.
438 The first reason for that conclusion is that it follows from the natural and ordinary meaning of the language used in the statutory provisions. It is clear from the terminology used that it has been carefully crafted so as to ensure that, with one exception, the assumption only applies to the legal relationships between the parties to the relevant dealings. Section 128(1) expressly limits the entitlement to make the assumption to the person who dealt with the company. The section does not suggest that any other person is entitled to make the same assumption. Similarly, the prohibition upon the company expressed in s 128(1) is limited to assertions made 'in proceedings in relation to the dealings'. Further, it is clear from s 128(2) that the assumption, and the corresponding prohibition upon denying the assumption, only extend to parties not included within the dealings in the circumstance for which provision is made by that subsection - namely, in dealings with a person who has, or purports to have directly or indirectly acquired title to property from the relevant company. That is not this case.
439 This approach to the operation and effect of the statutory assumptions relating to the 'indoor management' of companies is supported by authority. In Australian Television Pty Ltd v Minister for Transport and Communications[120] Gummow J held that the assumptions for which provision was made by s 68A of the Companies (New South Wales) Code did not prevent a third party from making assertions which the company was precluded from making. So, in this case, neither Esperance Cattle, nor Navarac are precluded from contesting the assertions which Mammoth is precluded from making in relation to its dealings with Granite Hill.
440 Similarly, in Story v Advance Bank Australia Ltd, Mahoney JA observed, in the context of proceedings between the company and the person entitled to rely upon the assumption:
The section, in terms, restricts the right of a company to assert to the contrary the assumption there referred to. The assumptions do not, as such, validate an instrument to which they are directed but, in a practical sense, they prevent the invalidity of it being successfully asserted.[121]
441 Further, in ASIC v Hallmark Gold NL,[122] Lee J observed:
Sections 128 and 129 are provisions to assist persons who deal at arm's length with a company on the assumption that the company has complied with the Law and with the constitution of the company. The provisions do not apply in rem by making valid acts of a company that are invalid.[123]
442 This observation provides the answer to Granite Hill's submission that the effect of the assumption was to confer upon it a proprietary right good as against third parties such as Esperance Cattle and Navarac. Contrary to that submission, it is clear from the terminology of the provisions that the assumptions only apply to regulate the legal relations between the parties to the dealings and do not create rights and obligations enforceable against third parties. Section 128(2) is only explicable because otherwise a company could deny the assumptions and assert its title as against anybody who had acquired title from a person entitled to make the statutory assumptions. If, as Granite Hill contends, the entitlement to make the assumptions has the effect of conferring an interest in rem, good as against the world, s 128(2) would be otiose.
443 For these reasons, my conclusion that Granite Hill is entitled to assume that Mammoth duly executed the sublease in its favour entitles Granite Hill to rely upon the contractual rights and obligations created by the sublease in its claim against Mammoth in these proceedings, and Mammoth is prevented from denying the execution of the sublease in its opposition to those claims. However, Granite Hill's entitlement to rely upon the statutory assumption as against Mammoth has no effect upon Esperance Cattle's claim to a leasehold interest arising from its dealings with Navarac. Esperance Cattle is entitled to assert that Mammoth never executed a sublease in favour of Granite Hill in its claim against Granite Hill, and Navarac and Ms Maddeleine Caratti are entitled to make the same assertion in defence of Granite Hill's claims against them. Further, Mammoth is not prevented from asserting the due execution of the Granite Hill sublease in its claims against Mr Allen Caratti.
Issue 8 - is Esperance Cattle entitled to an order for possession?
444 I have found that Navarac granted a valid lease of Young River Station to Esperance Cattle when it executed the lease document on 10 December 2012. I have also found that Mammoth effectively surrendered its interest as sublessee of Young River Station when it and Navarac entered into a deed to that effect on 22 February 2013, prior to the commencement of Esperance Cattle's term as lessee. Although I have held that Granite Hill is entitled to rely upon an assumption to the effect that the GH version of its sublease was validly executed by Mammoth at some time prior to 16 November 2012, and therefore prior to the creation of Esperance Cattle's interest as lessee, and that Mammoth is prevented from denying the due execution of that sublease in these proceedings, I have also held that none of the other parties to these proceedings are bound by that assumption. As I have found, as a fact, that Mammoth did not execute a sublease of Young River Station in favour of Granite Hill, Granite Hill has failed to establish any proprietary interest in the land which takes priority over the interest of Esperance Cattle. It follows that there is no reason why Esperance Cattle is not entitled to an order for possession of Young River Station, and I made orders to that effect on 7 March 2013.
Issue 9 - did Esperance Cattle take possession of Young River Station on 1 March 2013?
445 It is necessary to determine whether Esperance Cattle took legal possession of Young River Station on 1 March 2013, prior to the commencement of these proceedings. That is because there is a line of previously decided cases to the effect that mesne profits, or damages for trespass are only available to a plaintiff who has been deprived of the right to legal possession of the land in question.[124] Consistently with that line of authority, the plaintiff must first obtain legal possession of the land, either by taking physical occupation, or by obtaining an order of the court for possession prior to commencing the proceedings in which mesne profits or damages are claimed. If the plaintiff entered into lawful occupation, it is not necessary for the plaintiff to remain in physical occupation throughout the period in respect of which mesne profits or damages were claimed, because of the legal fiction to the effect that the plaintiff was deemed to have been in occupation since the right to possession accrued and was exercised.[125]
446 I have set out above my findings with respect to the events which took place at Young River Station on 1 March 2013. There is a clear inference to the effect that Granite Hill was in physical occupation of the land prior to the arrival of Mr Blair and his daughter, as agents for Esperance Cattle, at around midnight on 28 February 2013. The term of the purported sublease in favour of Granite Hill commenced on 28 February, cattle which it had acquired at auction the previous year were grazing on the property, and Mr Blair had to cut a chain which had been affixed to a gate, presumably by somebody acting on behalf of Granite Hill, in order to obtain access to the property. Although there is no evidence to the effect that there was anybody present on the property on behalf of Granite Hill at the time Mr Blair and his daughter arrived, nevertheless, Granite Hill had done all that was reasonably necessary to take physical occupation of the land, to the exclusion of all others, and I so find.
447 The question then is whether the steps which were taken by Mr Blair and his daughter, by entering the property and travelling across its terrain, and in particular by chaining and locking nine gates which would otherwise have permitted access to the property, and by affixing notices to the effect that possession had been taken, were sufficient to constitute the taking of legal possession, at least until such time that as they were physically excluded from possession as a consequence of the severance of the chains which they had installed, and the verbal confrontation which took place later in the day.
448 The legal principles applicable to this issue are not in doubt. They are set out in a passage in the decision of Maule J in Jones v Chapman[126] which has been cited with approval in many subsequent decisions:
[A]s soon as a person is entitled to possession, and enters in the assertion of that possession or, which is exactly the same thing, any other person enters by command of that lawful owner, so entitled to possession, the law immediately vests the actual possession in the person who has so entered. If there are two persons in a field, each asserting that the field is his, and each doing some act in the assertion of the right of possession, and if the question is, which of those two is in actual possession, I answer, the person who has the title is in actual possession, and the other person is a trespasser ... [T]he question as to which of the two really is in possession is determined by the fact of the possession following the title that is by the law, which makes it follow the title.
449 This passage has been cited, and the principle applied many times in both England and Australia.[127] In the application of this principle it does not matter whether Granite Hill was in possession at the time Esperance Cattle took possession through the agency of Mr Blair and his daughter, because Granite Hill's occupation of the land was unlawful, whereas Esperance Cattle was entitled to the possession which it claimed.[128]
450 Mr Blair and his daughter entered Young River Station acting as agents for Esperance Cattle as soon as Esperance Cattle's entitlement to possession arose. They asserted that right on its behalf, and did all that could reasonably be done to exclude occupation of the property by others. The fact that the steps which they took were later undone by others acting on behalf of Granite Hill, and the fact that Granite Hill took occupation of the property to the exclusion of Esperance Cattle, thereby trespassing upon the land in question, does not prevent it being found, and I find, that Esperance Cattle was in legal possession of the property prior to Granite Hill's trespass.
Issue 10 - is Esperance Cattle entitled to mesne profits, or damages, or an account of profits as against Granite Hill and if so what is the appropriate measure of each?
451 As I have noted, Esperance Cattle claims mesne profits, or in the alternative, damages from Granite Hill in trespass, or in the alternative, an account of profits arising from an allegation to the effect that Granite Hill has been unjustly enriched by its unlawful occupation and use of Young River Station. It is convenient to deal first with Esperance Cattle's claim for a remedy in tort, and then to address its restitutionary claim arising from the allegation of unjust enrichment.
The claim in tort
452 Esperance Cattle's pleading appears to assume that there is some distinction between the award of mesne profits and the award of damages for trespass. However, any such distinction appears to lie only in the nomenclature used rather than in the substance of the remedy. In Lollis v Loulatzis[129] Kaye J observed:
Damages awarded for trespass to land are sometimes described as 'mesne' profits.[130]
453 Esperance Cattle has not identified any material difference between the measure which would apply if mesne profits are awarded, in respect of Granite Hill's trespass, as compared to the measure which would apply if damages are awarded. As might be expected, in the older English authorities on the topic, in which the terminology of 'mesne profits' is invariably used, there are from time to time references to principles which might be thought to influence the quantification of the award in particular circumstances. However, without a detailed and comprehensive historical analysis, it is difficult to assess whether the suggestions that might be derived from those cases are to be explained by particular principles governing the award of mesne profits, or, perhaps more likely, are to be explained by the fact that they derived from a time which preceded the development of the coherent body of principle embodied in the contemporary law of tort. At all events, as the parties to these proceedings have not identified any material distinction in principle which would apply if Esperance Cattle's claim against Granite Hill is to be quantified as mesne profits, as compared to damages, I can safely proceed on the basis that, at least in the circumstances of this case, the quantification of Esperance Cattle's claim against Granite Hill for trespass is not materially affected by describing the claim as for mesne profits on the one hand, or for damages on the other. I will therefore use the more contemporary language of damages.
Damages for trespass - compensatory or restitutionary?
454 As I have noted, damages for trespass are awarded on the basis that because the defendant has deprived the plaintiff of the right to legal possession of the land during the period over which the trespass was committed, the usual measure of damage is the value of the right to legal possession of which the plaintiff has been deprived - often assessed by reference to the market value of the rent which the trespasser would have paid during the period of occupation.[131] However, there have been a number of cases in which it has been submitted that market rental of the property during the period under occupation is an inappropriate measure of the damage properly awarded to the plaintiff. A common circumstance in which that submission is made is the circumstance in which there is a difference in the rental value of the property to the plaintiff and either its rental value to the defendant, or the market value. So, in Ministry of Defence v Ashman,[132] Ministry of Defence v Thompson,[133] and Hampton v BHP Billiton Minerals, trespassers remained in possession of premises which had previously been made available to them by the owner at subsidised rentals significantly below market rate. Similarly, in Bunnings Group Ltd v CHEP Australia Ltd,[134] damages were claimed for the conversion of wooden pallets which the plaintiff had offered to hire to the defendant at 40% of the market rate. In those cases there has been jurisprudential debate as to whether the proper characterisation of the award of damages for trespass is compensatory, assessed by reference to the value of what the plaintiff has lost, or restitutionary, assessed by reference to the value of what the defendant has gained.
455 It is unnecessary to enter upon that interesting jurisprudential debate in this case. That is because in the circumstances of this case there is no difference between the value of the right to possession of Young River Station irrespective of whether that value is viewed from the perspective of Esperance Cattle, or Granite Hill, or by reference to market value. Each of Esperance Cattle and Granite Hill entered into agreements which required them to pay $650,000 per annum by way of rental for the property. Each of those agreements was entered into following unrelated armslength negotiations. Those agreements can be relied upon as providing reliable evidence of the market value of the property, assessed in terms of annual rental. It follows that in the quantification of Esperance Cattle's claim against Granite Hill for damages for trespass, it makes no difference whether the damages are quantified by reference to the value of the possession of which Esperance Cattle was deprived by reason of Granite Hill's trespass viewed from the perspective of Esperance Cattle, or from the perspective of Granite Hill, or from the perspective of market value. Whatever perspective is taken, the value of possession of Young River Station can be safely quantified at $650,000 per annum.
456 Of course in order to enjoy possession of Young River Station Esperance Cattle had to pay $650,000 per annum rental to Navarac. During the period Esperance Cattle was held out of possession of the property, it did not pay rental to Navarac nor did Navarac demand such rental (perhaps on the basis that Navarac was itself in breach of the covenant of quiet enjoyment). At all events, it seems clear that when assessing Esperance Cattle's claim against Granite Hill for trespass, to the extent that the value of the possession of which Esperance Cattle was deprived forms a component of those damages, the cost to Esperance Cattle of acquiring the right to possession would also have to be brought to account. There was also evidence that Navarac has offered to extend Esperance Cattle's lease for a term equivalent to the period during which Esperance Cattle was held out of possession by Granite Hill. The parties did not provide any submissions on the question of whether that offer should be taken into account in assessing the damages payable by Granite Hill to Esperance Cattle, and so that issue is best reserved for the next phase of these proceedings.
Losses other than the loss of the value of possession
457 Esperance Cattle claims that it has suffered losses other than the loss of the value of possession of Young River Station by reason of Granite Hill's trespass. Those losses include costs incurred in relation to stock and equipment purchased in anticipation of taking up possession on 1 March 2013, expenses incurred in relation to the cost of agisting such stock during the period in which it was deprived of possession, depreciation on the equipment unused during the same period, and the lost opportunity to derive profit from the use of the property by grazing stock, growing crops, and charging agistment fees to those permitted to graze their stock on the property. Although the quantification of any net loss suffered by Esperance Cattle in relation to matters of this kind is a matter for another day, the question which now needs to be addressed is whether, as a matter of principle, losses of that character can be recovered against Granite Hill as damages for trespass.
458 Although there was a tendency for the parties to refer to Esperance Cattle's claims of this character as 'consequential losses' in the course of submissions, I did not understand any party to contend that the character of the losses claimed by Esperance Cattle was anything other than losses which were the natural and probable consequence of it being excluded from possession of Young River Station. So, although the losses claimed by Esperance Cattle are said to be the 'consequence' of its exclusion from the property by Granite Hill, the losses claimed are not 'consequential' in the sense in which that term is sometimes used in the legal parlance to connote losses which are not the direct or immediate consequence of the relevant unlawful act.
459 It is possible to address this question by reference to a detailed historical analysis of the older English cases on the subject with a view to identifying the character of the claims which have been allowed as and by way of damages for trespass. However, I prefer the approach enunciated by Spigelman CJ (Mason P and Grove J agreeing) in TCN Channel Nine Pty Ltd v Anning[135] where, after undertaking such an analysis, his Honour observed:[136]
The reconciliation of the results in these cases is not to be found in attempting to categorise heads of damage which, a priori, are not recoverable because the cause of action is, primarily, designed to protect a property interest in land. What is required is a principled approach to when damage, other than that primarily protected by a tort, is to be regarded as consequential upon damage within the protection and, accordingly, recoverable under that tort.
The High Court has recently explained recovery for consequential loss in the case of intentional torts by invoking a general test. Damages can be recovered for harm that is intended or that is the natural and probable consequence of the tortious act: see Palmer Bruyn & Parker Pty Ltd v Parsons [2001] HCA 69 ... Damage that is the 'natural and probable consequence' of conduct is within the 'presumed intent' of the actor ... Although this case involved injurious falsehood, the High Court's reasoning is of more general application to intentional torts. The issue in the present case is best approached on this more general test.
...
In the light of the reasoning in Palmer Bruyn & Parker, the relevant test for recovery of consequential loss after an intentional tort in terms of 'natural and probable consequence' is the preferred formulation in Australia.
...
What is a natural and probable consequence arising from a trespass to land must depend on all the circumstances of a case. It is essentially a question of fact.
460 Consistently with this approach, it is sufficient at this stage of these proceedings to rule that any and all losses suffered by Esperance Cattle which are established to be the natural and probable consequence of Granite Hill's trespass are recoverable as and by way of damages. Of course those losses will have to be quantified by reference to the net loss caused by dispossession. So, to take an example, Esperance Cattle's claim for the costs incurred agisting stock which could not be placed on Young River Station will have to be quantified taking account of the fact that Esperance Cattle would have had to pay rental in order to graze that stock on Young River. So, the net loss suffered by reason of dispossession would be assessed by reference to the difference between the cost of agisting the stock on property owned by others, and the cost of grazing the stock on Young River Station.
Esperance Cattle's claim for an account of profits
461 Esperance Cattle claims, in the alternative to its claim for damages, an account of the profits earned by Granite Hill during its unlawful occupation of Young River Station. Esperance Cattle accepts that it cannot receive an account of profits in addition to damages for trespass, and that the two are alternative rather than cumulative remedies, but also asserts that it is entitled to elect the alternative which it wishes to pursue after all the evidence is in, including the evidence relating to quantum.[137]
462 Esperance Cattle does not contend that an account of profits is a remedy ordinarily granted in respect of trespass. Indeed, it cites no case in which an account of profits has been ordered in an action for trespass. Rather, it places reliance upon general principles pertaining to unjust enrichment and claims an entitlement to an account of profit pursuant to those general principles.
463 Although the House of Lords has recognised the availability of an account of profits as a possible remedy for breach of contract,[138] it recognised that such a remedy would only be appropriate in exceptional circumstances.[139] Esperance Cattle has not cited any authority to the effect that an account of profits has been recognised as a remedy available in tort, and, of course, Esperance Cattle's claim is essentially a claim in tort. The grant of such a remedy in tort would appear to be inconsistent with the general principles underpinning the award of damages for tort, which are directed to compensating the plaintiff for the loss suffered because of the commission of the tort. According to those principles, the fact that the tortfeasor may have derived a benefit from the commission of the tort is irrelevant to the plaintiff's remedy, which is assessed by reference to the plaintiff's loss, rather than the defendant's gain.[140]
464 However, it may be that torts relating to the misuse of the property of another, such as trespass or conversion, constitute an exception to this general principle. As I have noted, the authorities relating to the assessment of damages for trespass acknowledge that, in some circumstances, a restitutionary approach may be appropriate, under which account may be taken of the value derived by the defendant from the commission of the tort. However, even in those cases, the award is one of damages assessed by reference to the benefit derived by the defendant, not an account of profits.
465 As I have noted, Esperance Cattle's claim for an account of profits proceeds by reference to an assertion that if Granite Hill is not ordered to account for profits which it has made by its unlawful occupation of Young River Station, it will thereby be 'unjustly enriched'. The question posed by that plea is whether Granite Hill would be unjustly enriched unless it was required to disgorge to Esperance Cattle any profits which it derived from its occupation of Young River Station. In the circumstances of this case, any such profits were derived by Granite Hill as a result of its reliance upon the validity of a sublease which I have found was forged by Mr Allen Caratti, unbeknown to Granite Hill. Any such profits will also have been derived from its investment of capital and the application of Granite Hill's skill, labour and resources to the conduct of farming operations on the property. On the other hand, I have held that Esperance Cattle is entitled to damages which will include any and all losses which it has suffered which are the natural and probable consequence of Granite Hill's trespass, including losses flowing from Esperance Cattle's inability to remain in possession of the property after 1 March 2013.
466 Presumably Esperance Cattle would only elect an account of profits if the amount to be derived from such a election exceeded the damages recoverable from Granite Hill, to be assessed as I have proposed. In such a circumstance, allowing Esperance Cattle to elect an account of profits would have the potential to confer upon it a windfall gain in excess of its losses, and to unjustly deprive Granite Hill of profit derived from the application of its capital and labour. For that reason I conclude that, at least in the circumstances of this case, Granite Hill would not be unjustly enriched by its retention of any profits derived from the farming operations conducted on Young River Station during the period it was in occupation of the property, given its obligation to pay damages to Esperance Cattle which will compensate Esperance Cattle for all losses which it suffered as the natural and probable consequence of Granite Hill's trespass.
467 So for these reasons, Esperance Cattle is entitled to damages from Granite Hill to be assessed by reference to any loss which Esperance Cattle has suffered as the natural and probable consequence of Granite Hill's trespass. However, Esperance Cattle is not entitled to an account of Granite Hill's profits.
Issue 11 - is Esperance Cattle entitled to declaratory relief against Bott Cropping Pty Ltd and Bott Livestock Pty Ltd?
468 There are two reasons why Esperance Cattle is not entitled to declaratory relief as against Bott Cropping Pty Ltd and Bott Livestock Pty Ltd. The first is that I have found that Esperance Cattle is not entitled to an account of profits from Granite Hill, so that the grant of declaratory relief would be of no assistance or utility to Esperance Cattle. The second reason is that on the evidence, there has never been any controversy as to the obligation of Bott Cropping Pty Ltd and Bott Livestock Pty Ltd to account to Granite Hill for any profit derived from their activities on Young River Station. Accordingly, there is no live controversy sufficient to justify the grant of declaratory relief.
Issue 12 - are Mammoth and Navarac estopped from denying the efficacy of the Granite Hill sublease?
469 Granite Hill pleads that each of Mammoth and Navarac are estopped from denying the validity of the Granite Hill sublease by reason of:
(a) Mammoth admitting that Granite Hill paid $357,500 to it on or about 25 February 2013;
(b) Mammoth having been aware since about 2 November 2012 that Granite Hill claimed that it had entered into a sublease, and that Granite Hill was acting in reliance upon that sublease;
(c) Mammoth retaining the amount of $357,500 without offering to repay it;
(d) Mammoth sending a tax invoice to Granite Hill dated 29 July 2013 claiming a further rental payment for Young River Station;
(e) Mammoth not taking any step to require Granite Hill to vacate the property prior to 31 July 2013;
(f) Navarac and Mammoth having common directors with the result that the directors of Navarac have at all material times been aware of the matters upon which Granite Hill relies as against Mammoth; and
(g) Navarac not taking any steps to require Granite Hill to vacate the property until 31 July 2013.
470 However, in closing submissions a rather narrower case was advanced, focusing largely upon Mammoth's acceptance of the rent paid by Granite Hill on 25 February 2013. Granite Hill accepts that if, by this time, Mammoth had effectively surrendered its interest as lessee to Navarac, the estoppel which it asserts could not create a proprietary interest as Mammoth had no capacity to create such an interest. In that circumstance, Granite Hill accepts that the most that could be created by the estoppel which it asserts is a contractual claim to damages against Mammoth for breach of the sublease.
471 I have found that Mammoth effectively surrendered its interest as lessee to Navarac by the deed which was executed on 22 February 2013. I have also found that in these proceedings Granite Hill is entitled to rely upon the due execution of the GH version of the sublease, and that Mammoth cannot deny the execution of that document. It follows that Granite Hill is entitled to damages from Mammoth for breach of the sublease in any event, and that the estoppel argument which it asserts is otiose. However, for the sake of completeness I will briefly express my reasons for concluding that neither Mammoth nor Navarac are estopped from denying the Granite Hill sublease (except, in the case of Mammoth, by reason of s 128(1) of the Corporations Act).
472 Neither Mammoth, nor Navarac made any representation to Granite Hill to the effect that Granite Hill had a valid sublease of Young River Station. To the contrary, Mr John Caratti repeatedly requested Mr Bott to verify his claim to a sublease, and by at least mid February, Mr Aaron Caratti and Ms Maddeleine Caratti had authorised solicitors acting on behalf of Esperance Cattle to expressly deny that Granite Hill had any proprietary interest in Young River Station. Although money was paid into Mammoth's bank account on 25 February 2013, Mr Bott was then aware that the account was under the control of Mr Allen Caratti. Two days later, on 27 February 2013, the directors of Navarac again authorised the solicitor acting on behalf of Esperance Cattle to advise Granite Hill that any claim by it to a proprietary interest in Young River Station was denied.
473 Granite Hill took possession of Young River Station in the knowledge that the registered proprietor of the property denied its claimed interest. Although the directors of Mammoth, Mr Aaron Caratti and Ms Maddeleine Caratti, became aware that funds had been paid into its bank account by Granite Hill some time after the funds had been received, as a result of seeing the bank statement for that account, and took no action to reimburse the funds, in the circumstances the failure to offer to return the funds cannot have induced a reasonable belief on the part of Granite Hill to the effect that either Mammoth or Navarac accepted the validity of its sublease. Further, later that year when Mr Allen Caratti caused an invoice to be sent claiming the second instalment of rental due under the sublease to Granite Hill, before any funds were tendered in response to that invoice, each of Mammoth and Navarac filed pleadings in these proceedings in which it was made abundantly clear that they disputed the validity of the Granite Hill sublease and denied Mr Allen Caratti's authority to act on behalf of either company.
474 Having regard to the findings of fact which I have made, neither Mammoth nor Navarac made any representation to Granite Hill to the effect that the sublease upon which it relied was valid. Nor could it be said that either company stood by, taking no action, in the knowledge that Granite Hill was acting in reliance upon its assumption that it had a valid sublease, such that it would be inequitable for either company to resile from the assumption which Granite Hill had made. To the contrary, during February 2013, Navarac's directors, who are, of course, the same as Mammoth's directors, expressly authorised the solicitor acting on behalf of Esperance Cattle to advise Granite Hill that the interest which it claimed in Young River Station was denied. In those circumstances, apart from the statutory assumption of due execution of the Granite Hill sublease which Mammoth is prevented from denying, neither Mammoth nor Navarac are estopped from denying the validity of the Granite Hill sublease.
Issue 13 - is Granite Hill entitled to damages from Mammoth for breach of the Granite Hill sublease?
475 It follows from my conclusion that Granite Hill is entitled to rely upon the assumption of due execution of the GH version of the Granite Hill sublease that it is entitled to damages from Mammoth for breach of that sublease. The conventional measure of damages will apply to the quantification of that claim, with the result that Granite Hill will be entitled to damages from Mammoth equal to the amount required to put Granite Hill in the position it would have been in if the Granite Hill sublease had been performed and it had been entitled to possession of Young River Station in accordance with the terms of that sublease.
Issue 14 - is Granite Hill entitled to damages from Mammoth for misleading and deceptive conduct, and if so, what is the appropriate measure of those damages?
476 As I have noted, Granite Hill's claim against Mammoth for misleading and deceptive conduct is cast narrowly. Granite Hill pleads that by executing the sublease in its favour and by accepting rent paid under the sublease, Mammoth represented to it that it had no present intention to cause the determination of its estate in the subleased property, nor would it cause the determination of that estate at any time in the future.
477 There are a number of reasons why this claim must fail. First, although s 128 of the Corporations Act prevents Mammoth from denying its execution of the GH version of the sublease, that is the only fact which Mammoth is prevented from denying by operation of that section. Mere execution of the sublease does not give rise to any representation as to Mammoth's intention with respect to its interest as lessee, given that the consensual termination of that interest would have had no effect upon the validity of the sublease, consistently with the principles enunciated in Pennell v Payne and PW & Co v Milton Gate Investments Ltd.[141] Second, by the time Granite Hill paid the amount tendered in respect of rent into Mammoth's bank account, it was aware that the validity of its sublease was disputed by the registered proprietor of the land, and that the bank account into which the funds were paid was under the control of Mr Allen Caratti. The only actions of Mammoth which could be said to have given rise to any representation to Granite Hill in respect of that payment was its failure to offer to repay those funds, but by then Granite Hill was well and truly aware that the validity of its interest in the land was disputed, as a result of the email which was sent on 27 February 2013, with the authority of Navarac, and by reason of the confrontation which took place on the property on the morning of 1 March 2013, together with the correspondence that was exchanged in the weeks that followed.
478 The conduct upon which Granite Hill relies did not give rise to the representations asserted and this aspect of Granite Hill's claim must be dismissed.
Issue 15 - is Granite Hill entitled to damages from Mr Allen Caratti for misleading and deceptive conduct, and if so, what is the appropriate measure of such damages?
479 As I have noted, Granite Hill claims that by executing the sublease in its favour, Mr Allen Caratti represented, in trade or commerce, that he was a director of Mammoth, that he was authorised to sign on behalf of Mammoth, that by his signature he was binding Mammoth to the terms of the sublease and that the sublease would take effect and would bind Mammoth. Granite Hill further asserts that by providing the GH version of the sublease to it, Mr Allen Caratti represented that the lease had been signed by the signatories who appeared on the face of the lease.
480 In his defence Mr Allen Caratti admits the representations alleged by Granite Hill, and, in the case of the representation relating to the execution of the GH version of the sublease, admits that it was misleading or deceptive. Although he denies the misleading and deceptive character of the representations made with respect to his capacity to act on behalf of Mammoth, it follows from the findings I have made that those representations were also misleading and deceptive. I make that finding notwithstanding my conclusion that Granite Hill is entitled to rely on the statutory assumption of due execution by Mammoth because, as I have also found, the benefit of that statutory assumption is not equivalent to actual execution by Mammoth, which was the representation effectively made by Mr Allen Caratti.
481 There is no doubt that the representations attributed to Mr Allen Caratti were made by him in trade or commerce. Nor is there any doubt that Granite Hill acted in reliance upon those representations. The precise extent of Granite Hill's reliance upon those representations will be a matter to be determined in the course of the quantification of its claim for damages, if it pursues that claim having regard to its entitlement to damages from Mammoth in an amount equivalent to the amount required to put it in the position it would have been in had the sublease been performed. If it does wish to pursue its claim for damages against Mr Allen Caratti for misleading and deceptive conduct, the conventional measure will apply to the quantification of those damages, which will be assessed by reference to the amount required to put Granite Hill in the position in which it would have been if Mr Allen Caratti had not engaged in the misleading and deceptive conduct which I have found.
Issue 16 - is Granite Hill entitled to damages for misleading and deceptive conduct from Ms Maddeleine Caratti, and if so, what is the appropriate measure of such damages?
482 Granite Hill's claim for misleading and deceptive conduct against Ms Maddeleine Caratti is based upon representations said to arise from her execution of a sublease in its favour. As I have found that she did not execute that sublease, that aspect of Granite Hill's claim against her must be dismissed. Granite Hill further claims that she is liable for having aided Mammoth's misleading and deceptive conduct or, alternatively, was knowingly concerned in its misleading and deceptive conduct. As I have found that Mammoth did not engage in the misleading and deceptive conduct asserted by Granite Hill, it follows that this claim must also be dismissed, and that Granite Hill's claim against Ms Maddeleine Caratti for misleading and deceptive conduct generally must be dismissed.
Issue 17 - is Mammoth entitled to damages for misleading and deceptive conduct from Mr Allen Caratti and, if so, what is the appropriate measure of such damages?
483 Mammoth asserts that the representations made by Mr Allen Caratti upon which Granite Hill relies were misleading and deceptive. It also asserts that if the purported signature of Ms Maddeleine Caratti on the ABC version of the Granite Hill sublease is in fact her signature, it was obtained by a trick and that the trick was misleading and deceptive. As I have found that it is slightly more likely than not that Ms Maddeleine Caratti's signature on the ABC version of the Granite Hill sublease was forged by Mr Allen Caratti, this aspect of Mammoth's claim against Mr Allen Caratti does not arise.
484 However, as I have found that the representations made by Mr Allen Caratti, at the time he executed the Granite Hill sublease and provided it to Granite Hill, were misleading and deceptive, it follows that Mammoth is also entitled to claim damages if it suffered loss by reason of that conduct. As I have found that Mr Allen Caratti's purported but unauthorised execution of the GH version of the Granite Hill sublease has rendered Mammoth liable to Granite Hill in damages for breach of that sublease, it follows that Mammoth's liability to Granite Hill was relevantly caused by Mr Allen Caratti's misleading and deceptive conduct, and it is entitled to recover those damages from Mr Allen Caratti, together with its costs of defending Granite Hill's claim and any costs it is ordered to pay Granite Hill.
Summary
(a) the lease between Esperance Cattle and Navarac executed on 10 December 2012 is valid and enforceable, and declaratory orders can be made to that effect in addition to the order for possession already made;
(b) Esperance Cattle is entitled to damages for trespass from Granite Hill, but is not entitled to an account of Granite Hill's profits, nor to declaratory relief against Bott Cropping Pty Ltd or Bott Livestock Pty Ltd;
(c) although Granite Hill is entitled to assume that Mammoth duly executed a sublease in its favour, and Mammoth is prevented from denying that assumption, Granite Hill has no proprietary interest in Young River Station, and declaratory orders can be made to that effect;
(d) Granite Hill is entitled to damages from Mammoth for breach of the sublease;
(e) Granite Hill is entitled to damages from Mr Allen Caratti for misleading and deceptive conduct;
(f) Granite Hill's claim against Mammoth and Ms Maddeleine Caratti for misleading and deceptive conduct must be dismissed; and
(g) Mammoth is entitled to damages for misleading and deceptive conduct from Mr Allen Caratti.
486 In more general terms, Esperance Cattle will recover damages from Granite Hill in respect of any losses which it suffered which are the natural and probable consequence of Granite Hill's trespass. However, Granite Hill is entitled to damages from Mammoth in the amount necessary to put Granite Hill in the position in which it would have been if the sublease from Mammoth had been performed. On the face of it, that amount will include any and all of Granite Hill's liability to Esperance Cattle. Mammoth is in turn entitled to damages for misleading and deceptive conduct from Mr Allen Caratti which, on the face of it, would extend to and include all of its liability to Granite Hill. In addition, Mr Allen Caratti is liable to Granite Hill in damages for misleading and deceptive conduct.
487 So, in general terms, subject to the continuing solvency of all relevant parties, Esperance Cattle will recoup its losses from Granite Hill, Granite Hill will recoup its losses from Mammoth, and Mammoth will recoup its losses from Mr Allen Caratti. Given Mr Allen Caratti's role in the causation of those losses, and the manner in which he has conducted his defence of these proceedings, that outcome appears to me to be both just and appropriate.
[1]
ts 395.
[2] ts
400 401.
[3]
ts 401.
[4]
ts 402.
[5] ts
676.
[6] ts
677.
[7] ts
681.
[8] ts
686 687.
[9] Trustees
Act 1962 (WA), s 7(6), s10(1); subject to title, in respect of the
shares owned, being perfected by amending the register of members:
s 10(3); [59].
[10] See
ts 824, 839.
[11] ts
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[12]
ts 639.
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428.
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ts 526 527.
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ts 331.
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ts 489.
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ts 489.
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ts 489.
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ts 490 491.
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ts 491 493.
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ts 498 500.
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ts 500.
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ts 508.
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ts 510.
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ts 518.
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ts 531.
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ts 529 530.
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ts 532.
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ts 543.
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ts 544.
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ts 544.
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ts 544.
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ts 544.
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623.
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623.
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ts 624.
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ts 628.
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ts 632.
[42] ts 634.
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[62]
Exhibit 12.
[63] ts
687.
[64] ts
687 689.
[65] ts
689.
[66] Exhibit
19.
[67] ts
744 755.
[68] ts
789.
[69] ts
748 749.
[70] ts
749.
[71] ts
757.
[72] ts
790.
[73] ts
791.
[74] PW & Co v
Milton Gate Investments Ltd [2004] Ch 142 [72], see also Barrett v
Morgan [2000] UKHL 1; [2000] 2 AC 264, 270 274 (Millett LJ),
Pennell v Payne [1995] QB 192, 202 (Simon Brown LJ),
Andrews v Hogan [1952] HCA 37; (1952) 86 CLR 223, 248
(Fullagar J).
[75] See
[293] [300].
[76] As
the concept is described in AON Risk Services Australia Ltd v Australian
National University [2009] HCA 27; (2009) 239 CLR 175 [98] (Gummow,
Hayne, Crennan, Kiefel &
Bell JJ).
[77] To which
reference can be made in construing commercial transactions: Toll (FGCT)
Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 [40]
(Gleeson CJ, Gummow, Hayne, Callinan & Heydon JJ); Pacific
Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451, 462
[22].
[78] Trustees Act 1962
(WA) s 7(6), s 10(1).
[79]
Burmine Ltd v Mt Edon Gold Mines (Aust) Ltd (No 2) [1994] FCA
971; (1994) 13 ACSR 60; Avon Downs Pty Ltd v Federal Commissioner of
Taxation [1949] HCA 26; (1949) 78 CLR 353, 363 365;
Dalgety Downs Pastoral Co Pty Ltd v Federal Commissioner of
Taxation [1952] HCA 54; (1952) 86 CLR 335,
341 344.
[80]
Yara Australia Pty Ltd v Oswal [No 2] [2013] WASCA 187
[61] [63] (McLure P); Glennon v Federal Commissioner of
Taxation [1972] HCA 52; (1972) 127 CLR 503, 511 512 (Walsh
J).
[81] Corporations
Regulations 2001 (Cth) r 7.11.22, r 7.11.14,
sch 2A.
[82] ts
932 937.
[83]
Burmine; Avon Downs; Dalgety
Downs.
[84] Yarra
Australia v Oswal [61] (McLure P); Kopilovic v Gatley
[2005] WASC 62; (2005) 53 ACSR 64 [48]
(EM Heenan J).
[85]
Corporations Act 2001 (Cth) s
249A.
[86] Companies Act 1961
(WA) s 140(3).
[87]
Carpathian Resources Ltd v Hendriks [2011] FCA 41; (2011) 81 ACSR
542 [154] (Gilmour J).
[88]
Statement of claim: CIV 2188 of 2002,
pars 4 5.
[89]
Statement of claim: CIV 2188 of 2002,
par 8.
[90] McDermott
v Black [1940] HCA 4; (1940) 63 CLR 161,
183 184.
[91] ts
929 928.
[92]
McDermott v Black
(184).
[93] Scott v
English [1947] VicLawRp 67; [1947] VLR 445, 453 (Fullagar J); Scaffidi v Perpetual
Trustees Victoria Ltd [2011] WASCA 159; (2011) 42 WAR 159
[28] [33].
[94]
Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407; (2009)
76 NSWLR 603 [306] [335] (Campbell JA); Dayeian v
Davidson [2010] NSWCA 42; (2010) 76 NSWLR 572 [64] (Campbell JA); cf
Lederberger v Mediterranean Olives Financial Pty Ltd [2012] VSCA
262 [26] [31].
[95]
Western Export Services Inc v Jireh International Pty Ltd [2011]
HCA 45; (2011) 282 ALR 604 [4]; Royal Botanic Gardens and Domain Trust v
South Sydney City Council [2002] HCA 5; (2002) 240 CLR 45 [71]
(Kirby J); Codelfa Construction Pty Ltd v State Rail Authority of New
South Wales [1982] HCA 24; (1982) 149 CLR 337, 352
(Mason J).
[96] Royal
British Bank v Turquand [1856] EngR 470; (1856) 6 El & Bl 327; (1856) 119 ER 886
(Turquand's
Case).
[97] Correa
v Whittingham [2013] NSWCA 263; (2013) 278 FLR 310 [115]
(Gleeson JA); Soyfer v Earlmaze Pty Ltd [2000] NSWSC 1068
[78] (Hodgson CJ in Eq); Eden Energy Ltd v Drivetrain USA Inc
[2012] WASC 192; (2012) 90 ACSR 191 [83]
(Corboy J).
[98]
Corporations Act 2001 (Cth) s
128(4).
[99] Australia and
New Zealand Banking Group Ltd v Frenmast Pty Ltd [2013] NSWCA 459
[39] [45]; Story v Advance Bank Australia Ltd (1993) 31
NSWLR 722, 733; Soyfer v Earlmaze
[82].
[100] Acts
Interpretation Act 1901 (Cth) s 15AA; Project Blue Sky Inc v
Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355
[69] [70]; Edwards v Attorney-General [2004] NSWCA 272;
(2004) 60 NSWLR 667, 681; Carr v Western Australia [2007] HCA 47;
(2007) 232 CLR 138, 143; Newcastle City Council v GIO General Ltd
[1997] HCA 53; (1997) 191 CLR 85,
113.
[101] Houssein v
Under Secretary, Department of Industrial Relations and Technology (NSW)
[1982] HCA 2; (1982) 148 CLR 88, 94; Ainsworth v Criminal Justice
Commission [1992] HCA 10; (1992) 175 CLR 564,
575.
[102] Though this
assumption can be made pursuant to s 129(2) and s 129(1) in
conjunction with one
another.
[103] Explanatory
Memorandum, Companies and Securities Legislation (Miscellaneous Amendments)
Act 1983 (Cth)
pages 90 93.
[104]
While the Companies Act was replaced by the Corporations Act 1989
(Cth), the provisions relating to outsider assumptions remained largely the same
(s 68A Companies Act, cf s 164 of the Corporations Act
1989).
[105] Explanatory
Memorandum, Company Law Review Bill 1997 (Cth) page 22
[7.16].
[106] Explanatory
Memorandum, Company Law Review Bill 1997 (Cth) page 25
[8.8].
[107] Though that
absence is by no means determinative: Telstra Corporation Ltd v
Hurstville City Council [2002] FCAFC 92; (2002) 118 FCR 198,
216 217; Fischer v Secretary, Department of Families, Housing,
Community Services & Indigenous Affairs [2010] FCA 441; (2010) 185
FCR 52 [51] [54].
[108] P
Lipton and A Herzberg, Understanding Company Law (1999,
9th ed).
[109]
In that case s 68A of the Companies (New South Wales) Code 1981
(NSW).
[110] Story v
Advance Bank Australia Ltd
(733).
[111] Story v
Advance Bank Australia
(742).
[112] O'Donovan J,
'Corporate Insolvency: Recent Developments Relating to Pre-Receivership
Contracts' (2000) 18 Company and Securities Law Journal 50,
52.
[113] Soyfer v
Earlmaze Pty Ltd
[78].
[114] Soyfer v
Earlmaze Pty Ltd
[81] [82].
[115]
MDN Mortgages Pty Ltd v Caradonna [2010] NSWSC
1298.
[116] MDN Mortgages
Pty Ltd v Caradonna
[235].
[117] Errichetti
Holdings Pty Ltd v Western Plaza Hotel Corporation Pty Ltd [2006] WASC
113; (2006) 201 FLR 192
[85].
[118] As his Honour then
was.
[119] Australian
Securities Commission v Marlborough Gold Mines Ltd [1993] HCA 15; (1993)
177 CLR 485, 492.
[120]
Australian Capital Television Pty Ltd v Minister for Transport and
Communications (1989) 86 ALR
119.
[121] Australian
Capital Television Pty Ltd v Minister for Transport and Communications
(741) - although the reference to 'preventing the invalidity being successfully
asserted' is capable of bearing a wider meaning,
in the context in which the
observation was made, it is clear that his Honour was referring only to the
assertion of invalidity by
the company. That is clear from his Honour's
later observation that the assumption 'in effect prevents the company contending
that
the mortgage was not in fact validly
executed'.
[122]
Australian Securities and Investments Commission v Hallmark Gold
NL [1999] FCA 360; (1999) 30 ACSR
688.
[123] ASIC v
Hallmark Gold NL
[36].
[124] Minister of
State for the Interior v RT Co Pty Ltd [1962] HCA 29; (1962) 107 CLR 1;
Hampton v BHP Billiton Minerals Pty Ltd [No 2]
[2012] WASC 285; Broadway Pty Ltd v Lewis [2012] WASC
373.
[125] Fleming on
Torts (1957) 47, 53; Sappideen C and Vines P (ed) Fleming's the
Law of Torts (10th ed 2011) 54; Lightwood JM, A Treatise on
the Possession of Land (1894) 7 8; Ocean Accident and
Guarantee Corporation v Ilford Gas Co (1905) 2 KB 493,
498 499; Hampton v BHP Billiton Minerals
[311].
[126]
Jones v Chapman [1849] EngR 746; (1847) 2 Exch 803,
821.
[127] Lows v Telford
& Westray (1876) 1 App Cas 414, 426; Swan v Rawsthorne
[1908] HCA 23; (1908) 5 CLR 765, 786 787; Clement v Jones [1909] HCA 11; (1909) 8 CLR
133,144 145; Kynoch Ltd v Rowlands (1912) 1 Ch 527,
533 534; Hemmings v Stoke Poges Golf Club Ltd (1920) 1
KB 720, 742; Canvey Island Commissioners v Preedy [1922] 1 Ch 179,
190; Toyota Finance Australia Ltd v Dennis [2002] NSWCA 369;
(2002) 58 NSWLR 101 [54] [56],
[63].
[128] Ebbels v
Rewell [1908] VicLawRp 39; [1908] VLR 261,
266 267.
[129]
Lollis v Loulatzis [2007] VSC
547.
[130] Lollis v
Loulatzis [219], citing Wilson v Kelly [1957] VicRp 19; [1957] VR 147,
152.
[131] Lollis v
Loulatzis [219].
[132]
Ministry of Defence v Ashman (1993) 25 HLR
513.
[133] Ministry of
Defence v Thompson (1993) 25 HLR
552.
[134] Bunnings Group
Ltd v CHEP Australia Ltd [2011] NSWCA 342; (2011) 82 NSWLR
420.
[135] TCN Channel
Nine Pty Ltd v Anning [2002] NSWCA 82; (2002) 54 NSWLR
333.
[136] TCN Channel
Nine Pty Ltd v Anning [99] [100],
[103] [104].
[137]
Relying upon LED Builders Pty Ltd v Eagle Homes Pty Ltd
(No 3) (1996) 70 FCR
436.
[138]
AttorneyGeneral v Blake [2000] UKHL 45; (2001) 1 AC
268.
[139]
AttorneyGeneral v Blake (285)
(Nicholls LJ).
[140]
Hospitality Group Pty Ltd v Australian Rugby Union Ltd [2001] FCA
1040; (2001) FCR 157 [159] [162]
(Emmett J).
[141]
[286].
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