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SCI 2016 05138







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MR M. O'CONNOR appeared on behalf of the Plaintiff.

MR M. STERLING appeared on behalf of the Defendant.

DTI Corporation Australia Pty Ltd Telephone: 8628 5555

4/190 Queen Street Melbourne Facsimile: 9642 5185
1 MR O'CONNOR: If the court pleases, I appear on behalf of the

2 plaintiff.

3 HIS HONOUR: You are a long way away, both of you, so you have

4 to speak up.

5 MR STIRLING: If the court pleases, I appear for the

6 defendants.

7 HIS HONOUR: Thank you.

8 MR STIRLING: Your Honour, we're here at our instance.

9 HIS HONOUR: On a mea culpa.

10 MR STIRLING: Admittedly, and our short answer to that is, yes,

11 we were at fault in putting forward that proposed pleading

12 late. That was my fault, it wasn't the fault of the

13 clients, but our real point is, well, they hadn't done

14 anything either. So what consequence really flowed from

15 the provision of our pleading; so, what happened was, we

16 provided the pleading informally for, if you like,

17 objections because sometimes that happens and it probably

18 should in a case like this because it's got its

19 complications and its history, and for our opponents to

20 say whether they could take on those new parties and deal
21 with those new proposed issues and deal with the matter.

22 And the answer to that, without criticism of Mr O'Connor,

23 the answer to that was no. So here we have it.

24 So, I think, in essence from our side, we are

25 seeking to put on that pleading either in its current form

26 or substantially the same form. We would say that because

27 of the inactivity of both sides on the interlocutory

28 orders the matter can't go ahead and if the pleading goes

29 forward it can't go ahead anyway. I think what

30 Mr O'Connor - I will let Mr O'Connor speak for himself,

31 but for Your Honour to understand the matter there's some


Priest Consulting 17-1795
1 history to it. I'm not sure how much you want to know.

2 HIS HONOUR: I have ascertained that everybody's been involved

3 in Priest Consulting in one form or another over the

4 period. Is that right?

5 MR STIRLING: Yes. Yes. Can I hand up a chronology and would

6 you permit me to speak to it for ten minutes, because

7 I think it's necessary to have at least some limited

8 understanding of what's happened over the years to form a

9 view about whether or not the proposed pleading should go

10 ahead.

11 If we see the first group of entries down to 1996,

12 essentially what we have here - I beg your pardon, sorry,

13 Your Honour, - we have Glenn Jones as a building

14 consultant, and by building consultant I mean he - I think

15 at various times he's had building licences, and he also

16 assists people in relation to their building litigation

17 with VCAT, domestic building litigation. Mr Jones had

18 various companies with the name "Boston".


20 MR STIRLING: And he was also the originator, if you like, of

21 the company, SSA Transport, which is now Priest

22 Consulting. The second thing that happened, if we go to

23 1998, is that Rod Wallace, my first client, became the

24 owner of 60 Mathiesons Road. I think he bought it from

25 his uncle. The third thing that happened was, if you

26 like, phase one between Wallace and Glenn Jones, and there

27 are two phases; one was back in 2004, and the other was in

28 2013. Under each phase Wallace went to Jones with a

29 company which was in financial trouble, and under each

30 phase Jones acted for Wallace or his company, or both, as

31 a consultant and entered into consultancy agreements, and


Priest Consulting 17-1795
1 on each occasion Jones would have - would advise Wallace

2 to have assets out of his name or shares in companies out

3 of his name, or to have agreements executed showing

4 security over properties, which were really not the case.

5 I am not going full - fully into the extent of saying

6 though frauds on creditors.

7 HIS HONOUR: Well you say it's a sham.

8 MR STIRLING: We would say it was a sham, and we would also say

9 that Jones was the advisor, the specialist advisor in

10 those instances, and he was advising Wallace what to do in

11 those circumstances. So under phase one Your Honour will

12 see that back in 2004, on 18 June, there's a Boston Group

13 letter to Wallace confirming the consultancy arrangement.

14 At that stage the Rod Wallace company that was in trouble

15 was Rod Wallace & Associates Pty Ltd. And then we have

16 the transactions on 12 August which are at the heart of

17 this case, which are the loan agreement under which

18 Janice Necine agreed to lend Boston Properties No.1, and

19 so by that stage SSA Transport had become Boston

20 Properties No.1.
21 HIS HONOUR: My understanding, looking at the documents, was

22 that the 250 was a maximum amount, rather than the actual

23 advance.

24 MR STIRLING: That's right.

25 HIS HONOUR: Okay.

26 MR STIRLING: So it was an agreement to lend from time to time,

27 as it were.


29 MR STIRLING: For the purposes of the business at Priest

30 Consulting, and there was a deed of charge on the same

31 day. The context is that at that time Jones was in charge


Priest Consulting 17-1795
1 of Boston Properties No.1, which is now Priest Consulting.

2 So it wasn't a Wallace company - a Wallace company back

3 then, it was a Jones company. So, in a sense, there was

4 an agreement by Jones' wife, Janice Necine is her maiden

5 name, and that was probably purposely used so as not to be

6 Janice Jones, over to Boston Properties No.1. I think at

7 that stage I would suspect that the property at

8 60 Mathiesons Road had come to the ownership of Boston

9 Properties No.1. Well, in fact we see the entry there on

10 13 September 2004. Wallace did nothing about those

11 transactions at that stage.

12 What then happens is sometime later, Wallace - I beg

13 your pardon - Jones, if you like, says to Wallace, "All of

14 the troubles are now over. You can have that company,

15 Boston Properties". So Wallace has always paid for

16 60 Mathiesons Road and if Jones is has made any payments

17 on his behalf he's got them back. So Jones gives Wallace

18 the corporate vehicle which owns the property

19 60 Mathiesons Road.

20 HIS HONOUR: Did Boston Properties actually provide any

21 consideration for the purchase in the first instance?


23 HIS HONOUR: Okay.

24 MR STIRLING: He says in an affidavit in the Supreme Court

25 proceeding that he did, but on our case he never did. And

26 we go a step further and say the proof is in the pudding,

27 because when all of the disputes were settled between the

28 parties on 6 February 2015 under the deed of settlement,

29 at that time Jones had the shares in Priest Consulting;

30 that is why he had bought that first possession

31 proceeding.


Priest Consulting 17-1795

2 MR STIRLING: He said he was owed untold amounts by Peter

3 Wallace or his entities, we paid him nothing, and we got

4 all the shares back in Priest Consulting, and that's what

5 happened under that deed of settlement. So, we would say

6 Jones effectively acknowledged by that deed that he had no

7 rights to the property at 60 Mathiesons Road. Of course

8 that was later.

9 In 2013, this is phase two, Wallace gets into

10 trouble with a company again, and the company at that

11 stage was Refurb- Refurb Solutions, I think it was, a

12 building company. It had some financial trouble and it

13 also had some litigation with some people called the

14 Muston's. Once again Jones comes and says, "I'll look

15 after everything for you"; takes over Wallace's financial

16 affairs, gives him consulting advice, gives him almost

17 legal type advice in the preparation of the claim at VCAT

18 with the Muston dispute. And then what happens, we see in

19 2013 under this consulting agreement, Jones once again is

20 retained as a consultant in the building project and

21 prosecution of claims and Wallace agrees to transfer his

22 shares in Priest Consulting to Jones.

23 So what we say is a critical thing in all of this is

24 each time Jones effectively gets the client to make his

25 position look as if it's bare of assets or that there are

26 encumbrances over those assets; that's his modus operandi.

27 And so that's how Jones came in possession of the shares

28 or to be a transfer of the shares in Priest Consulting

29 under that agreement dated 1 February 2013.

30 Meanwhile, up at 60 Mathiesons Road, if you go

31 there, a beautiful property with an orchard, it's in


Priest Consulting 17-1795
1 Eagle Point, near Paynesville. There are - a very large

2 house built on it with verandas, which is in fact two

3 houses. In half of it lives Rod Wallace's mother,

4 Gwen Wallace, she's probably 87, she's gone ahead two

5 years since the deed of settlement, and in the other half

6 of the house Rod Wallace and Amanda Wallace, his wife,

7 lives behind there, Amanda Tien. They use that as a

8 weekender.

9 Then what happens is, do you see on 26 August 2014

10 Priest Consulting brings the possession claim for

11 60 Mathiesons Road. Why? Because Wallace has transferred

12 those shares to Priest Consulting under those consultancy

13 arrangements and things done under it when Wallace was in

14 trouble. But we say effectively nothing's ever for

15 consideration; when Jones took the shares in Priest

16 Consulting under those arrangements, which was effectively

17 he was advised to make Wallace look bare of assets, he

18 never paid any money either under phase one or phase two.

19 So what happened? The claim for possession by

20 Priest Consulting came on before Associate Justice

21 Lansdowne. We said, "The matter is horribly complicated.

22 You can't possibly give judgment for possession". She

23 gave judgment for possession. We then made a decision.

24 An appeal won't get us anywhere enough because it's only

25 going to do a possession of the land. We wanted to get

26 rid of Jones once and for all. So we issued proceedings

27 on 2 February 2015 in which we effectively said - and

28 bearing in mind at this stage we were dealing with phase

29 two; we didn't know about this earlier loan agreement or

30 this earlier deed of charge. There had been no - 11 years

31 had elapsed by that stage. Necine had never said to


Priest Consulting 17-1795
1 Priest Consulting, "By the way there's $77,000

2 outstanding", or made a demand for it or mentioned it.

3 Not once. So we brought those 2015 proceedings to square

4 Jones and all of his companies away once and for all, and

5 to say we want the shares back in Priest Consulting, we

6 want possession back of 60 Mathiesons Road, and we want

7 declarations that all of the agreements under which you

8 say you were owed these huge slabs of money, we want them

9 all declared void and declarations that we don't owe you a

10 cent.

11 HIS HONOUR: But you have been in control of Boston Properties

12 since 2004, have you not?

13 MR STIRLING: Yes, until - - -

14 HIS HONOUR: Wouldn't the books of accounts show those

15 liabilities?

16 MR STIRLING: I don't think so. I don't think so.


18 MR STIRLING: But the point is, yes, you're right, in the

19 interim between maybe sometime in 2007 and 08 and 2013,

20 but then Jones becomes the controller of Priest Consulting

21 again when Wallace gets into trouble under phase two, if

22 that makes sense.

23 HIS HONOUR: It doesn't quite to me, because I thought we were

24 dealing with - - -

25 MR STIRLING: So, - - -

26 HIS HONOUR: Priest Consulting is a new name for Boston

27 Properties No.1 is it not?



30 MR STIRLING: That's right. That's right. So, if we can just

31 go forward for a moment we might then come back to Your


Priest Consulting 17-1795
1 Honour's concern. We issued those Supreme Court

2 proceedings to get possession back of the property.


4 MR STIRLING: Bearing in mind at this stage Associate Justice

5 Lansdowne has ordered that Priest Consulting had

6 possession of 60 Mathiesons Road and at that time Jones is

7 the sole shareholder in Priest Consulting. So, on the

8 paperwork and at an asset level and at a Supreme Court

9 orders level we were right out of court. And we enter

10 into a deed of settlement and Jones gives us back the

11 shares of Priest Consulting; we remain in possession there

12 and that's no longer to be disputed. He pays us no money

13 - I beg your pardon - we agreed to pay him no money at all

14 in relation to any of his consultancy agreement claims or

15 mediator test and all manner of things which he's gone on

16 and on about in his affidavits and, in effect, by getting

17 the shares we get the property back. And in fact he had a

18 costs order under Associate Justice Lansdowne's possession

19 order and that was, if you like, okay under the deed. So

20 it was a wholesale victory for the Wallace entities.

21 HIS HONOUR: Well it was a settlement.

22 MR STIRLING: Yes. Had a victory within a settlement.

23 HIS HONOUR: I am not sure if I'd close it at this stage

24 though, Mr Stirling.

25 MR STIRLING: Or so we thought, or some might have thought at

26 the time. And then what Jones did at that mediation is

27 that he handed over some documents which listed the

28 payments which are the foundation of the receiver acting

29 under the deed of charge; these advances of $77,000 made

30 back in 2004. We now know none of them were made by

31 Necine. They say, "Oh, that doesn't matter, it was made


Priest Consulting 17-1795
1 by one of the companies, the Boston Corporation

2 (indistinct)". All of those payments were tabulated under

3 documents which Jones tabled at the mediation. They

4 weren't dealt with in the deed of settlement. So, in

5 other words, Jones - and I can provide the documents if

6 it's necessary, you'll have- I'm not sure if there are

7 exhibited copies or not. So, in effect, Jones had

8 documents saying, "Here's my reconciliation of losses and

9 amounts due by Wallace to me; 2004 payments and all these

10 payments under (indistinct)" et cetera et cetera.

11 HIS HONOUR: It is the sum of payments direct to NAB, aren't

12 they?

13 MR STIRLING: Yes, I think that's right. And we said, "We're

14 not paying you a cent for all of that", and that's under

15 the deed of settlement; he got no money for any of his

16 claims or supposed monetary entitlements. We don't rely

17 on evidence about that, we can just look at the deed and

18 we can see that Jones got no money and we can see from the

19 documents that he tabled what amounts he said he was owed.

20 HIS HONOUR: Well, eventually I'd be interested to look at the

21 releases in the deed.

22 MR STIRLING: Yes, well we have it here. But at that stage

23 Wallace knows nothing about the loan agreement, so-called

24 from Necine's presence, so he knows nothing about the deed

25 of charge. But the deed of charge is on the ASIC search.

26 Now, as lawyers, neither my instructor nor I were

27 instructed about the fact that there was this earlier loan

28 agreement or this deed of charge. Nothing had happened in

29 the 11 years since. There was no claim by Necine that she

30 was owed moneys under this loan agreement. So, if you

31 like, did it slip through the cracks; were the lawyers


Priest Consulting 17-1795
1 negligent? That's another question, but we didn't know

2 about it and that was the end of it.

3 So then what happens is on 25 November, if Your

4 Honour goes to the chronology of 2015, Aughtersons' demand

5 for 628,000. Then there's some correspondence, Hibbert &

6 Hodges effectively set out the sort of history I've set

7 out before Your Honour, to - they've got to be kidding,

8 I mean this has been going on for years, we've never heard

9 about this; there's been all those other proceedings, it's

10 never been mentioned; we weren't given any - answers being

11 made, et cetera, et cetera. Then on 3 February 2016

12 Aughtersons say, "No, well we've advanced $108,000", and

13 I think now their position is they've advanced $77,000.

14 So, when we came to court, Associate Justice Gardiner -

15 it's a complicated matter, there's no doubt about it -

16 when we came before Associate Justice Gardiner a few

17 months ago his words were, "Yes, well I started doing a

18 diagram and then". So, in essence, as you can see from

19 our proposed amended defence, or in our case is if you

20 turn to paragraph 8, I think it is, or 11 is better, so

21 going to the bold headings, firstly 11C, Necine hasn't

22 advanced any moneys to Priest Consulting because when we

23 look at Shilton's affidavit in this case - - -

24 HIS HONOUR: Well that's in the original pleading isn't it?


26 MR O'CONNOR: Yes.

27 MR STIRLING: That's right.

28 HIS HONOUR: So they're really only changes with this double

29 claim, which is referred to in a way.

30 MR STIRLING: Yes, in a way; 11D and E, the advances are made

31 by some other company, not made by the seniors or - - -

.OK:LL 28/11/17 T1KK 10 DISCUSSION

Priest Consulting 17-1795
1 HIS HONOUR: Well that may or may not be relevant.

2 MR STIRLING: Well, that's right, there might be factual - - -

3 HIS HONOUR: My associate could enter into a loan agreement

4 with you and I could make all the advances on her behalf.

5 MR STIRLING: Well, - - -

6 HIS HONOUR: Not that I'm - - -

7 MR STIRLING: Well, it would very unwise of your associate to

8 do that.

9 HIS HONOUR: Undue influence.

10 MR STIRLING: But it's hypothetically possible.


12 MR STIRLING: So the third point is that those alleged

13 advances, whatever status they have, they've effectively

14 claimed in that - - -

15 HIS HONOUR: The amendments mainly focused on the settlement

16 agreement and the ramifications from that, isn't it?

17 MR STIRLING: That's right - that's right. That's right, and

18 what we've - - -

19 HIS HONOUR: And I've taken it that you really need at least

20 Mrs Jones in on that and probably Mr Jones as well.

21 MR STIRLING: That's right.

22 HIS HONOUR: But you also need Mrs Jones as the appointor,

23 don't you?


25 HIS HONOUR: Although there's no reason why the service

26 couldn't uphold the appointment, but they're at risk as to

27 costs if they lose.

28 MR STIRLING: That's right - that's right, and really the whole

29 - the case I would've thought will be decided before we

30 get to the receivers, in the sense that if the

31 transaction's no good, or it's not accepted by the court

.OK:LL 28/11/17 T1KK 11 DISCUSSION

Priest Consulting 17-1795
1 that anything - - -

2 HIS HONOUR: Then they're trespassers.

3 MR STIRLING: That's right, then they're - there's no basis for

4 the deed of charge to be operated under. So, Mr O'Connor

5 has some criticisms of our proposed pleading and one that

6 he's voiced, and he might be right about it, is to say,

7 "Well, it's not enough to say that Priest Consulting was

8 the recipient of these representations. You need Wallace

9 there too", and he - not that he's running that case, he's

10 not telling us. What he's saying is - - -

11 HIS HONOUR: No, he's just - - -

12 MR STIRLING: Efficiency about the proposal. So we'll need to

13 reflect on that. And the essence of it is that we have an

14 estoppel case on the basis of misrepresentations or

15 non-disclosures; a like excluding and deceptive conduct

16 case; and then finally - - -

17 HIS HONOUR: Is Mr Wallace privy to the settlement agreement?


19 HIS HONOUR: In his own capacity?

21 HIS HONOUR: Okay.

22 MR STIRLING: Yes, he must be. Yes, he was the first plaintiff

23 in the Supreme Court proceeding we issued in

24 early February 2015.

25 HIS HONOUR: And I assume Priest Consulting was sort of an

26 object of the settlement, rather than an active party.

27 MR STIRLING: Yes. Who was going to get it?

28 HIS HONOUR: Yes, so it sounds as though Mr Wallace does need

29 to be a party, doesn't he?

30 MR STIRLING: To this case?

31 HIS HONOUR: M'mm.

.OK:LL 28/11/17 T1KK 12 DISCUSSION

Priest Consulting 17-1795
1 MR STIRLING: And as a - well, he's the first defendant and,

2 yes, I think he probably does need to be a counterclaim.


4 MR STIRLING: Now, whether - well let's not worry about what

5 consequences there might be - - -

6 HIS HONOUR: Well, subject to Mr O'Connor's projections,

7 I understand how you're putting the pleading.

8 MR STIRLING: Well, I think I can sit down for the moment.

9 HIS HONOUR: Yes. Can you just deal with one issue before we

10 get further; and I reflected on the orders I made

11 14 July, and in the end I wasn't too happy about how it

12 was going to be conducted, this trial, because normally

13 this sort of proceeding you do by affidavit. But it also

14 struck me that there's probably some credit issues on

15 conversations that might need to be viva voce, but - - -


17 HIS HONOUR: Is witness statements the way to go?

18 MR STIRLING: Well, - - -

19 HIS HONOUR: I'm saying that with some hesitation.

20 MR STIRLING: We'll be raising credit matters against Jones at

21 the end of the day.

22 HIS HONOUR: And vice versa I assume.

23 MR STIRLING: Possibly they - they don't need to go into

24 credit. Mr O'Connor would say there's a debt claim,

25 there's a debit charge on the asset register that doesn't

26 precede it.


28 MR STIRLING: So it is on the facts, if he insists, if there's

29 going to be credit attacks on one side of it.

30 HIS HONOUR: All right, well we'll have a think about that a

31 while.

.OK:LL 28/11/17 T1KK 13 DISCUSSION

Priest Consulting 17-1795
1 MR STIRLING: But I think the current orders were for outlines.


3 MR STIRLING: And no one's done outlines, no one's done - - -

4 HIS HONOUR: Court books, anything.

5 MR STIRLING: Court books, no. So, yes, when Your Honour said

6 well it looks a bit like a mark-up, it is a mark-up.

7 HIS HONOUR: Well, it is. I understand the plaintiff not

8 progressing it if they think you're not going to defend

9 it.

10 MR STIRLING: Well, they always knew we were going to defend

11 it.


13 MR STIRLING: There's a healthy list of defence.


15 MR STIRLING: And a contest between the parties. So,

16 effectively our position is that, well, you weren't ready

17 either, so maybe we're lucky at a costs level

18 (indistinct).

19 HIS HONOUR: Well, that's right. But if you put your house in

20 order, how long do you need?

21 MR STIRLING: To put our house in order?


23 MR STIRLING: Well, we can get a final pleading done within a

24 week, and then it's really a question of what - if leave

25 was permitted, what Mr O'Connor needs to do. Obviously we

26 would need to put in defences from any new counterclaims,

27 but we take up Your Honour's observation that the heart of

28 the case was really there. These are legal - - -


30 MR STIRLING: Additional legal complexions on a long factual

31 history, if you like.

.OK:LL 28/11/17 T1KK 14 DISCUSSION

Priest Consulting 17-1795
1 HIS HONOUR: Do I need any material to join parties, or can

2 I do it on the pleadings?

3 MR STIRLING: Well I think - - -

4 HIS HONOUR: I need a consent, don't I, from Mr Wallace to be a

5 counterclaimant? I'm not sure, I'm just fishing.

6 MR STIRLING: I don't think so.

7 HIS HONOUR: All right.

8 MR STIRLING: He can come forward and make that application.

9 This application might be getting a little bit heavy, as

10 it were, to be done by an email to the court.


12 MR STIRLING: So we're happy - we're happy within that seven -

13 seven day period to put on a formal summons in an

14 affidavit, and that might sit with Your Honour a little

15 bit more comfortably. We can certainly do that.

16 HIS HONOUR: Okay, let's hear from Mr O'Connor.

17 MR O'CONNOR: Thank you. Thank you, Your Honour. I suppose

18 there's a - just briefly in response to some of the

19 matters from my learned friend. The proposal is to name

20 both Ms Necine and Mr Jones.


22 MR O'CONNOR: It would appear that it would probably mean legal

23 representation because the claim is on just - - -

24 HIS HONOUR: Well, I was going to ask you that. You are really

25 acting on behest of Mrs Jones, aren't you?

26 MR O'CONNOR: I'm acting on behalf of the receiver.

27 HIS HONOUR: Who is appointed by Mrs Jones.

28 MR O'CONNOR: And he's appointed by Mrs Jones, that's right.

29 HIS HONOUR: And if she were a plaintiff you could sit back and
30 say, "We'll just abide by the order of the court, as

31 receivers".

.OK:LL 28/11/17 T1KK 15 DISCUSSION

Priest Consulting 17-1795

2 HIS HONOUR: But you are now propounding a particular course.

3 But why should there be separate representation?

4 MR O'CONNOR: Just in terms of the proposed order, the order is

5 sought in the proposed pleadings, declaration one, "The

6 charges indeed are void and unenforceable". That would

7 flow that the caveat be removed. None of that would

8 really be controversial in the current proceeding.

9 HIS HONOUR: Well, it would all follow the event, wouldn't it?

10 MR O'CONNOR: That's right, an order that the receiver be

11 invalid and no effect. But actually it's not in the -

12 it's in the first part of the - seeking damages under the

13 Australian Consumer Law and an indemnity in relation to

14 any liability which Priest has to Necine, either pursuant

15 to the loan agreement or deed of charge of receiver. So,

16 I - - -

17 HIS HONOUR: So you're saying those sorts of matters just don't

18 concern me?

19 MR O'CONNOR: Those, yes, and we would say it's a matter that

20 should get to another occasion really. But if it was to

21 be joined to these proceedings, it would have to - I would

22 imagine going through (indistinct) own legal

23 representation. We also would say, just in response

24 briefly, Wallace - - -

25 HIS HONOUR: But it's relevant that it be in this proceeding

26 because it goes to the validity of the appointment,

27 doesn't it?

28 MR O'CONNOR: Well, it goes to a separate claim about the

29 misrepresentation, that there was - - -

30 HIS HONOUR: But the consequences go to the validity of the

31 appointment, whether there's a charge there that ought to

.OK:LL 28/11/17 T1KK 16 DISCUSSION

Priest Consulting 17-1795
1 be - - -

2 MR O'CONNOR: I don't think it does, because it would be

3 saying, "Well, I was misled about the - into signing this

4 deed of release".


6 MR O'CONNOR: And whatever damages flow from that. The charge

7 itself being - - -

8 HIS HONOUR: But don't I have power to do something about the

9 terms of settlement? I'm not limited to damages, am I?

10 MR O'CONNOR: No, certainly you could - the terms of settlement

11 could be - - -

12 HIS HONOUR: Rewritten to exclude the charge or something, or

13 include the charge.

14 MR O'CONNOR: Possibly, yes, so there's - - -

15 HIS HONOUR: Yes. So that's why I'm saying, it's not so remote

16 that it ought to be dealt with at some other time. It's

17 really appropriate to deal with this all in one lump,

18 isn't it?

19 MR O'CONNOR: To the extent that it's relevant to the deed and

20 the loan agreement, I would agree. To the extent that

21 it's relevant to a claim that Wallace was - there was a

22 misrepresentation with Wallace and it induced him to enter

23 into a deed and he suffered some sort of financial loss,

24 - - -

25 HIS HONOUR: Can I just stop you for a moment. Anu, can you

26 just see if you can close the blind behind Mr O'Connor.

27 If they do close, that is. It's just Mr O'Connor's aura

28 is over-powering at the moment.

29 MR O'CONNOR: We don't want that occurring. We had better

30 close that blind then, Your Honour.

31 HIS HONOUR: We may not be able to; I'll have to put up with it

.OK:LL 28/11/17 T1KK 17 DISCUSSION

Priest Consulting 17-1795
1 I think. Don't worry. Good, brilliant, thank you.

2 MR O'CONNOR: Yes, and I suppose it's - as it's currently

3 couched, the pleadings are difficult because we think that

4 they would benefit from being reconsidered, but - - -

5 HIS HONOUR: Well, Mr Stirling will have the opportunity.

6 I propose to give him longer than a week because I think

7 he needs to think about a few things. Certainly what

8 you've raised, and then what remedies might be available

9 under the Australian Consumer Law or the Fair Trading Act,

10 other than damages.

11 MR O'CONNOR: Yes. And that would raise the issue that -

12 I mean if leave is granted to amend, there would be - if

13 Jones does need separate representation - - -

14 HIS HONOUR: It is almost start again, isn't it?

15 MR O'CONNOR: It's close to start again. The background, Your

16 Honour, is - and I've prepared an outline which I'm not

17 sure that - and it's attached to the general outline of

18 argument of the case.


20 MR O'CONNOR: If I could hand that up, that might be of

21 assistance.

22 HIS HONOUR: Mr O'Connor, the reason why I'm not so horrified

23 at the amendment at this late stage is that my

24 understanding is that you're reasonably protected as far

25 as equity in the property goes, and should be able to

26 realise your judgment if you obtain it.

27 MR O'CONNOR: There is - - -

28 HIS HONOUR: There is a first mortgage and that's it, isn't it?

29 MR O'CONNOR: Yes, but there's been a - there's a cross

30 securitised loan in respect to another property in

31 (indistinct).

.OK:LL 28/11/17 T1KK 18 DISCUSSION

Priest Consulting 17-1795
1 HIS HONOUR: But that was also for the advances by the NAB,

2 wasn't it?

3 MR O'CONNOR: No, that was done - that was done more recently.

4 For the purchase of a more recent property in Bentleigh by

5 Mr Wallace and the second defendant, which raises issues

6 as to - - -

7 HIS HONOUR: Priorities and things like that.



10 MR O'CONNOR: The background I think, Your Honour, is that

11 - - -

12 HIS HONOUR: My understanding is you put one of the secured

13 creditors on notice of this application, did you not?

14 MR O'CONNOR: Yes, they are on notice.

15 HIS HONOUR: Both, or just the one? Or is it the same one?

16 MR O'CONNOR: The same one.

17 HIS HONOUR: Okay.

18 MR O'CONNOR: There are two, but it's one.


20 MR O'CONNOR: They are happy to abide by - - -

21 HIS HONOUR: Whatever happens, yes.

22 MR O'CONNOR: And there's correspondence to my instructor to

23 that effect.

24 HIS HONOUR: Okay.

25 MR O'CONNOR: So, the prospect of a counterclaim was raised in

26 correspondence in January of this year by Hibbert &

27 Hodges.

28 HIS HONOUR: It was raised in July when I made the order, so

29 there's been a full pace in reverse has there not?

30 MR O'CONNOR: Yes, it was raised in - the defence itself

31 actually refers to a counterclaim in paragraph 2 of the

.OK:LL 28/11/17 T1KK 19 DISCUSSION

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1 current defence. Then there were a number of orders

2 granting leave to amend, and the amendments and the

3 counterclaims have not been forthcoming.


5 MR O'CONNOR: There is a history where my instructor has -

6 there's correspondence between my instructor and the

7 defendants' instructor about trying to get the court book

8 prepared. My instructor provided a draft court book and

9 requested the discovered documents from the defendants

10 because the defendants wanted all the discovered documents

11 in the court book.

12 HIS HONOUR: I know. I hope you heard that. I can't stand

13 court books that have got everything in them.

14 MR O'CONNER: I did hear that, Your Honour.


16 MR O'CONNER: And I made that point to my instructor, that it's

17 perhaps not a wise policy, but in any event, they were –

18 at least some of those, presumably, the defendants will

19 want in the court book.


21 MR O'CONNER: So my instructor was seeking copies of the

22 defendants' discovered documents. It was promised. It

23 was promised by way of a stick, which then didn't come

24 forward in October, because of course we had the previous

25 trial date, which was vacated, so the parties were trying

26 to prepare the court book at that point in time. My

27 instructor followed up about the stick with the discovered

28 documents, so they could complete the court book.

29 HIS HONOUR: Is it still an issue?

30 MR O'CONNER: It is, because as of Friday, we were advised that

31 most of the discovery was in the possession of counsel, my

.OK:LL 28/11/17 T1KK 20 DISCUSSION

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1 learned friend, and it's got scribble over it, prepared in

2 relation to a - - -

3 HIS HONOUR: Aide-memoires, rather than scribble.

4 MR O'CONNER: Aide-memoires. Very important notes, but made in

5 previous proceedings, so - - -

6 MR STIRLING: (indistinct).

7 MR O'CONNER: which was presumably some of the discovery.


9 MR O'CONNER: So the response from my learned friend's

10 instructor was that he will have to now search the file to

11 uplift clean copies of these documents - - -

12 HIS HONOUR: Why can't we just produce the file?

13 MR STIRLING: I think my solicitor has called for that and the

14 court has written back saying, "It's available and we'll

15 wait for you to come and look at it." I think that did

16 happen on Friday. I've seen an email saying that.

17 HIS HONOUR: All right. Mr O'Conner, if you had your wish

18 list, how would you proceed from now?

19 MR O'CONNER: Well, I suppose my learned friend has set out a

20 very complicated and detailed history, which he's familiar

21 with. From our perspective, it's a fairly straightforward

22 case. There's an affidavit from the receivers setting out

23 his appointment, the charge, the loan agreement - - -

24 HIS HONOUR: Books.

25 MR O'CONNER: - - - and indebtedness, books, and other than –

26 there's not a lot of additional material that would be

27 presented on behalf of the plaintiff.


29 MR O'CONNER: It's a very straightforward claim. The

30 complexity arises from - - -

31 HIS HONOUR: Well, you're facing a counterclaim now, so how do

.OK:LL 28/11/17 T1KK 21 DISCUSSION

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1 you want to proceed?

2 MR O'CONNER: If that's an indication from Your Honour that

3 leave will be granted at this stage, obviously there will

4 be a significant timeframe that will be required for

5 the - - -

6 HIS HONOUR: Well, do you want to come back for directions or

7 do you want to set it down or do you want to see whether

8 you've got separate representation or what? I think you

9 almost need directions, don't you?

10 MR O'CONNER: I would say that given that the counterclaim has

11 been a long time in coming and it is currently in a form

12 which is not the final form - - -


14 MR O'CONNER: - - - I would say that there should be a

15 directions and the provision of a proposed counterclaim

16 and proposed parties that would be joined, so we're

17 clearer as to matters.

18 HIS HONOUR: All right. Let's say it's done in 14 days.

19 MR O'CONNER: There is one – if I can ask Your Honour, before

20 you go to those matters, there is, we say, an issue in

21 relation to a potential conflict of interest, which my

22 learned friend (indistinct) to have in relation to

23 continuing to act. They have been put on notice of this,

24 and it relates to – well, the proposed - - -

25 HIS HONOUR: Because they acted for the companies?

26 MR O'CONNER: Well, it's said that a misrepresentation – well,

27 there's a deed of settlement that's clear on its

28 face - - -

29 HIS HONOUR: Well, it's drawn by Aughtersons, wasn't it?

30 MR O'CONNER: The deed of settlement was drawn by counsels

31 involved. The loan agreement was drawn by Aughtersons,

.OK:LL 28/11/17 T1KK 22 DISCUSSION

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1 but the deed of settlement that's relied upon by the

2 defendants - - -

3 HIS HONOUR: I haven't seen the deed. Yes.

4 MR O'CONNER: Yes. That was drawn by my learned friend and

5 another counsel acting. It's now - - -

6 HIS HONOUR: He may have to give evidence.

7 MR O'CONNER: Well, that's the problem. That is the problem,

8 and that's the issue, that we can see this is not going to

9 go away. If I might hand up a correspondence that was

10 sent on this issue, because it might be of assistance in

11 planning the progress of the matter.

12 HIS HONOUR: Yes. I wouldn't decide the issue today, but I'll

13 certainly make noises if I understood it.

14 MR O'CONNER: Yes. It might assist all parties involved in

15 ensuring that it progresses and that this issue doesn't

16 come up again. It's just one letter from my instructor

17 and a response that was sent in May.

18 HIS HONOUR: Does Mr Stirling want to see it before I do?

19 MR STIRLING: No, no, that's all right. That's all right. So

20 the issue - - -
21 HIS HONOUR: Sit down, Mr Stirling.

22 MR STIRLING: That's all right. The issue as I understood it,

23 on the conflict was whether we – there were two aspects to

24 it. One was, "Are you saying there were things said at

25 the mediation as opposed to just the tabling of the

26 documents?".

27 HIS HONOUR: Well, I can't go into what's said at the

28 mediation. I can only look at the result, can't I? Or is

29 it necessary - - -
30 MR STIRLING: You might be able to, depending on – sometimes

31 parties say, "Well, yes, there's a written agreement, but

.OK:LL 28/11/17 T1KK 23 DISCUSSION

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1 there were some more things said which were (indistinct)

2 contract." We're not saying that.

3 HIS HONOUR: Yes. I'm not accepting that I can go behind the

4 mediation privilege, even if you two want to.

5 MR STIRLING: Yes. Now, there's a second aspect, which is the

6 deed of settlement and does that pose conflict-type

7 problems with my instructor and I, and I don't think that

8 issue has been put in that way before, so we'll need to

9 take that on board and give it consideration.

10 HIS HONOUR: Well, this is the letter of 24 May.

11 MR STIRLING: No, I don't have a problem with that.

12 HIS HONOUR: "In order that … (reads) … the amended defence."

13 So it's been around for a while, this issue.

14 MR STIRLING: Yes. We gave it consideration and we concluded

15 that we were okay. I'm not sure whether Mr - - -

16 HIS HONOUR: It's really something vis-à-vis your own clients,

17 isn't it?


19 HIS HONOUR: Rather than anything that affects Mr O'Conner.

20 MR STIRLING: I think so.

21 HIS HONOUR: Is that right, Mr O'Conner?

22 MR O'CONNER: In one sense, yes, but in another sense, if we

23 approach a trial and we lose a trial because this issue

24 becomes relevant in the running of the hearing, then it's

25 a matter that's - - -

26 HIS HONOUR: Yes, I understand.

27 MR O'CONNER: So that's – I mean, I've raised it with my

28 learned friend, and it's not an issue which – they're on

29 notice for that reason, really.

30 HIS HONOUR: You would not wish them to embark on a technical

31 process.

.OK:LL 28/11/17 T1KK 24 DISCUSSION

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2 HIS HONOUR: All right. So then there's the issue of conflict.

3 Just before we deal with that, so say 14 days for the

4 proposed document. Are you going to be around in January?

5 MR O'CONNER: I probably won't be until the latter part.

6 HIS HONOUR: When would you like to look at the proposed

7 amendment?

8 MR O'CONNER: If it is 14 days, I can - - -

9 MR STIRLING: Your Honour, we'd really like to put it on in

10 seven days, give them the proposed document is seven days,

11 and come back to the court to get things bedded down

12 before Christmas, if possible. It might be that a lot of

13 it can be agreed.

14 HIS HONOUR: Well, you'd only come back before me if you

15 couldn't agree.


17 HIS HONOUR: Wait a moment. We've got real problems. I can

18 offer you 9 o'clock on the 14th, the Thursday.

19 MR STIRLING: Thank you, Your Honour, for that.

20 MR O'CONNER: Yes, Your Honour.

21 HIS HONOUR: I'm starting a special fixture at 10.30.

22 MR STIRLING: Thank you, Your Honour.

23 HIS HONOUR: All right. Now, what are we doing on the 14th?

24 We're only dealing with the amendments if there's

25 resistance to them, aren't we?

26 MR STIRLING: I think we really should – Mr O'Conner and

27 I should have a healthy discussion about the whole thing

28 and how it's going to pan out.

29 HIS HONOUR: Well, you need to.


31 HIS HONOUR: And the ball is in our court, Mr Stirling, having

.OK:LL 28/11/17 T1KK 25 DISCUSSION

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1 delayed it.


3 HIS HONOUR: But Mr O'Conner needs the opportunity to seek

4 instructions about representation as well - - -


6 HIS HONOUR: - - - assuming that your counterclaim goes

7 through.

8 MR STIRLING: And that's why if he can have his document by

9 next Wednesday the 5th, or whatever that is, 5th or 6th,

10 he's got a good week then in between (indistinct).

11 HIS HONOUR: All right, so you provide it by 4 pm on the 5th.


13 HIS HONOUR: Mr O'Conner, could you do a list of objections by

14 4 pm on the 12th perhaps?

15 MR O'CONNER: 12th? Yes, that would be fine.

16 HIS HONOUR: That's two days before, or a day and a bit.

17 MR O'CONNER: Yes, I can.

18 HIS HONOUR: So basically on the 14th, we'd be looking at

19 whether the pleading goes ahead, and if it does, what are

20 the consequential directions. Is that right?

21 MR STIRLING: Yes, Your Honour.

22 HIS HONOUR: Now, which court? Court 5. Just leaves costs of

23 today, doesn't it?

24 MR O'CONNER: Yes, it does. Also with the conflict issue, if

25 my learned friend reconsidered his position in relation to

26 the conflict that would present a difficulty in terms of

27 the amendments being done. I'm not sure whether, Your

28 Honour, the best way of looking at that issue, whether it

29 should be looked at now or - - -

30 MR STIRLING: That sounds right. That sounds right, but that

31 issue best be addressed by our side first before the

.OK:LL 28/11/17 T1KK 26 DISCUSSION

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1 further propose pleadings put forward. That sounds right.

2 HIS HONOUR: So you're going to ventilate it now?

3 MR STIRLING: Not as in argue it, but as in give it

4 reconsideration on an aside.

5 HIS HONOUR: All right.

6 MR STIRLING: Your Honour, I don't think we need to trouble the

7 court about it.

8 HIS HONOUR: Well, I'm just letting you know just in case you

9 do. All right. Well, Mr Stirling, it's something you've

10 got to give primary consideration to, and I think you

11 ought to let Mr O'Conner know what's going on.


13 HIS HONOUR: Then I'm free on the 4th or the 5th because if the

14 trial has gone off, if that matter needs to come back

15 before me.

16 MR STIRLING: Thank you, Your Honour.

17 MR O'CONNER: Your Honour, just by way of background in

18 relation to that issues, without going into the issue per

19 se, what's been pleaded in the defence is that so as to

20 give creditors of Wallace the impression that the property

21 interests which Wallace had under the Mallisons Road

22 property was encumbered, the charge and loan agreement

23 were entered into and they're a sham. So that's the - - -

24 HIS HONOUR: Well, I'd use the word "fraud".

25 MR O'CONNER: Well, I would use the word "fraud", which is a

26 very very serious allegation to be made.

27 HIS HONOUR: Well, there's another issue that raises from that,

28 is that why should I assist a party that relies on its

29 own, I'll use the words charitably, conspiracy?

30 MR O'CONNER: Indeed. On the best analysis, it's Mr Wallace's

31 attempt to avoid creditors, but it goes further than that

.OK:LL 28/11/17 T1KK 27 DISCUSSION

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1 because it was represented that there was no consideration

2 for the transfer of the property. We would say there was

3 valuable consideration. There was a 500 odd thousand in

4 discharging Mr Wallace's debts. The property was

5 transferred into the name of the company. There was a

6 refinance at that time. To get the refinance, Ms Necine

7 provided financial comfort by way of the charge and loan

8 agreement. She then paid the mortgagees for a period.

9 She then assisted in the refinance with the Commonwealth

10 Bank, and then she paid the Commonwealth Bank over that

11 two- or three-year period.

12 So to suggest that the loan agreement and the

13 charge, prepared by lawyers, are a fraud, and I'm not sure

14 whether that's - - -

15 HIS HONOUR: I'm not really suggesting the lawyers are privy to

16 that.

17 MR O'CONNER: No, and for that reason – so it's a bit unclear

18 from the pleading, but I would accept the inference is

19 it's not suggested that the documents per se are a sham or

20 a fraud, but the - - -

21 HIS HONOUR: It's the underlying transaction.

22 MR O'CONNER: The underlying, yes, intention. It's difficult

23 to maintain when Wallace is no longer the owner of the

24 property as at that time, or close to that time, in any

25 event, because he's already sold it to the company,

26 and - - -

27 HIS HONOUR: No, but – no, I'll keep out of it.

28 MR O'CONNER: So that's the background we say to that issue.

29 Then we have a deed which Ms Necine is not a party to.

30 There's a registered charge. The deed itself – nor is the

31 Boston Corporation party to, and it's said that somehow,

.OK:LL 28/11/17 T1KK 28 DISCUSSION

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1 even though on its surface it doesn't release this debt,

2 somehow you have to go behind this deed by going into

3 presumably what occurred at the mediation, so it's highly

4 – the proposed pleadings, we say, are problematic. It

5 doesn't necessarily mean that the party doesn't get locked

6 out.

7 HIS HONOUR: Well, that's why I said I'll be assisted by your

8 objections and the way you argue it.


10 HIS HONOUR: But I'm not going to give up off the cuff.

11 MR O'CONNER: No. But it certainly focuses the mind as to what

12 is being said about the deed, because the deed – Ms Necine

13 is not named as a party to the deed.

14 HIS HONOUR: To the settlement deed?

15 MR O'CONNER: To the settlement deed.


17 MR O'CONNER: She was not party to any earlier litigation. At

18 all times, her registered charge is sitting there from

19 2004 onwards.


21 MR O'CONNER: They then enter into a deed where Mr Wallace has

22 transferred into his name the shares in the company, so he

23 has full knowledge of the existence of the charge,

24 although my learned friend suggested that at some point in

25 time, their lawyers did know about it, but there are

26 company searches performed by my learned friend's

27 instructors that show the charge on the - - -

28 HIS HONOUR: But what you're putting to me now may well go to a

29 good defence rather than a fault in the pleading. It

30 might be both, but - - -

31 MR O'CONNER: It might be, but my main concern is that it

.OK:LL 28/11/17 T1KK 29 DISCUSSION

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1 really circles around the issue of what is being said.

2 The deed is clear on its terms. It's said that the deed

3 doesn't reflect what was agreed at that deed of

4 settlement, and if that's what's being alleged, then my

5 learned friend is a witness to the – and signed, in fact,

6 this deed of settlement, which on its surface is clear.

7 On its surface, doesn't in any way release these moneys

8 and doesn't name Ms Necine or the Boston Corporation as

9 parties to the deed, doesn't contemplate these payments,

10 so my real concern is that - - -

11 HIS HONOUR: Whether Mr Stirling will have to notify his

12 insurer.

13 MR O'CONNER: Yes, and to avoid these issues continuing if they

14 can be avoided, because if we got to a point in the – if

15 the matter was to have proceeded on Friday, this would

16 have been a matter which would have potential resulted in

17 a mistrial, so - - -

18 HIS HONOUR: All right. Well, as - - -

19 MR STIRLING: There's a (indistinct) to all of that, which was

20 that when the deed was entered into, Jones was telling us
21 that all of these payments, all these advances, they were

22 made by Necine – not by Necine, but they were Boston Group

23 payments.


25 MR STIRLING: We didn't know that there was a Necine loan or

26 that Necine was saying that she loaned moneys to Priest

27 Consulting.

28 HIS HONOUR: But doesn't that highlight the fact that you might

29 need to give evidence?

30 MR STIRLING: That second aspect, yes, that's what we were

31 saying, Your Honour, before, that we hadn't looked at that

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1 angle earlier in the year. We looked at the other angle

2 on it, which was whether or not the case when just in

3 terms of oral representation as being – or things said

4 (indistinct).

5 HIS HONOUR: Yes. It's sounding very much like it would be a

6 lot safer for you to bow out, irrespective.

7 MR STIRLING: Well, once it starts to get murky - - -


9 MR STIRLING: - - - and there's a healthy discussion about it,

10 that's a good suggestion, but - - -

11 HIS HONOUR: Well, Mr O'Conner has been very helpful. He

12 hasn't been beating around the bush.

13 MR STIRLING: No. No, no, we appreciate that.


15 MR STIRLING: And there's only one important person in these

16 discussions, and it's not the lawyers at the bar table.

17 It's the client.

18 HIS HONOUR: No, it's the clients.

19 MR STIRLING: That's right. So we appreciate all that.

20 HIS HONOUR: Yes. All right. It's not going to be as

21 straightforward as I thought.

22 MR O'CONNER: And if my learned friend reconsiders his

23 position, then - - -

24 HIS HONOUR: You getting fresh counsel and may require further

25 time.

26 MR STIRLING: And so Your Honour may only want to go so far

27 as - - -

28 HIS HONOUR: I'm not sure if it's appropriate if you draw the

29 amended pleading, Mr Stirling, if you think that you ought

30 to bow out.

31 MR STIRLING: Absolutely. That's what I was going to say.

.OK:LL 28/11/17 T1KK 31 DISCUSSION

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1 Your Honour might want to only go so far today as saying

2 that the defendants' lawyers inform the court within seven

3 days whether they're going to continue to act.

4 HIS HONOUR: Well, let's keep the orders as they are with that

5 rider in as well.


7 HIS HONOUR: If that's the case, then I'd require the amended

8 pleading to be provided by the end of January, say,

9 because Mr O'Conner is very anxious for his day in court,

10 and he ought not to be delayed much more really, should

11 he?

12 MR STIRLING: No. No, that's right, Your Honour.

13 HIS HONOUR: Mr O'Conner, how about that as a fall-back

14 position?

15 MR O'CONNER: Yes, Your Honour. Happy with that.

16 HIS HONOUR: I'm just a bit nervous about whether anybody will

17 be around of Mr Stirling's seniority to deal with it

18 over January. All right. We've got the 4th or the 5th

19 available, by which time, Mr Stirling and his instructors

20 will notify their position. If there needs to be some

21 application to the court about the conflict, then that

22 should be returnable on one of those two days. Let's make

23 it the 5th, and if I'm notified by the 5th that you're out

24 of it, Mr Stirling - - -


26 HIS HONOUR: - - - then we'll vacate the 14th, and I'll liaise

27 with Mr O'Conner's - see, you don't even know if you'll

28 have new solicitors, will you, by the – because I assume

29 if you're in a conflict of interest, your instructor will

30 be also.


.OK:LL 28/11/17 T1KK 32 DISCUSSION

Priest Consulting 17-1795
1 HIS HONOUR: The only other way out of it might be if you

2 determine not to pursue that claim. That will be a matter

3 in your client's best interests, won't it, rather than

4 yours?

5 MR STIRLING: Yes, that's right, but the decision on that

6 aspect shouldn't be a decision made by me.


8 MR O'CONNER: That certainly removes the conflict, yes.

9 HIS HONOUR: I was once involved in a matter where Justice

10 McMillan was said to have had a conflict, and the parties

11 agreed that I resolve the matter while I was still

12 counsel, and everybody was satisfied that way. Is there a

13 possibility that you can get somebody else to look at it

14 very quickly, or not, rather than you making decisions?

15 MR STIRLING: Well, as I understand it, we've got two issues.

16 Issue one is if the defendants, which we say we're not,

17 are suggesting there's oral evidence to be given of what

18 happened at the mediation, then I can't be acting in the

19 matter because I'm a potential witness. No doubt about

20 that.

22 MR STIRLING: So far, the case hasn't gone so far as oral

23 representations at the mediation. I mean, (indistinct)

24 about it. The other issue is whether there's difficulty

25 because of what we're seeking to do in relation to the

26 breadth or the lack of breadth of the deed of settlement.

27 It might be that the lawyers on our side, Your Honour,

28 simply take the view that, "Well, there are the four

29 corners of the document. We're stuck with that." There's

30 been a third issue, and this has been addressed on our

31 side, which is, "Well, even though the lawyers weren't

.OK:LL 28/11/17 T1KK 33 DISCUSSION

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1 told about that Necine transaction or the deed of charge,

2 they had no instructions to that effect, the client didn't

3 know about it, the lawyers didn't know about it, because

4 it was on an ASIC search, should it have been picked up,

5 et cetera?"


7 MR STIRLING: That might be an independent device for the

8 matter to go to another desk in any event, for the

9 security of the client. So it's not free of complication.

10 I don't think Your Honour can go any further today

11 than - - -

12 HIS HONOUR: No, it can't. I was just looking at the pleading

13 in relation to the estoppel claim, which seems to be based

14 upon the failure to provide details rather than the actual

15 conversation.

16 MR STIRLING: What we're really saying as against Jones is,

17 "You told us these events - - - "

18 HIS HONOUR: Well, hang on. You're saying, "You told us."

19 MR STIRLING: No, no. Told is probably not a provision of the

20 document.
21 HIS HONOUR: All right.

22 MR STIRLING: So there's a document that's written - - -

23 HIS HONOUR: Yes. Just out of interest, how do you get a duty

24 to disclose when you're opposing parties?

25 MR STIRLING: Just bear with me for a moment while I call up a

26 – and then I'll address Your Honour's question. Your

27 Honour might appreciate this. I don't have a further copy

28 of it, but I can address it. On attachment 4, Your Honour

29 – so those two documents, attachment 4 and attachment

30 5 - - -

31 HIS HONOUR: Hang on. This is a document produced for the

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1 mediation, isn't it?


3 HIS HONOUR: Well, should I be looking at it?


5 MR STIRLING: Well, I'm not so sure about (indistinct).

6 HIS HONOUR: No, I'm not going to look at it today, but - - -

7 MR STIRLING: All right. Can I tell you about it?

8 HIS HONOUR: No. If I don't look at it, you can't tell me

9 about it. All right. Well, all I'm saying to you is it's

10 another issue you've got to think about.

11 MR STIRLING: Yes, we'll deal with that.

12 HIS HONOUR: And finally, why shouldn't I crucify you as to

13 costs today?

14 MR STIRLING: I think go for it, Your Honour. The only reason

15 you shouldn't is that if the court at the end of the day

16 agrees with the substance of what we are saying, that

17 Jones is a wholly worthless plaintiff in this case. When

18 I say Jones, I mean his wife, Necine. I must say his

19 wife, Necine, I mean, (indistinct), Your Honour, the deed

20 of charge. The court might be best informed of the merits

21 and worth of everybody.

22 HIS HONOUR: Mr Stirling, this is a matter where I made orders

23 in July.


25 HIS HONOUR: We're here today just before the trial.

26 MR STIRLING: Yes. Well, that's the reason why you should.

27 I'm trying to give a good reason why you shouldn't. What

28 happened was, we tried to do it a neat way, and then when

29 we grappled with it in the lead up to trial, we realised

30 we couldn't do it in a neat manner.

31 HIS HONOUR: All right.

.OK:LL 28/11/17 T1KK 35 DISCUSSION

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1 MR STIRLING: That's really what's happened. They changed

2 their mind.

3 HIS HONOUR: Yes. No, you pay the costs of today, please.

4 MR STIRLING: Thank you, Your Honour. And, Your Honour, that

5 order ought to be – I don't know how this happens. Is

6 that an order made directly against the client, because it

7 really ought to be made - - -

8 HIS HONOUR: No, just the defendants.

9 MR STIRLING: All right, and then it can be dealt with in other

10 ways.


12 MR STIRLING: Yes. We're content with that order, Your Honour.

13 HIS HONOUR: Yes. I'm not saying anything about who bears the

14 responsibility.

15 MR STIRLING: No, no. Well, it's clear it won't be the client.

16 HIS HONOUR: Well, that's a matter for you and the client.

17 MR STIRLING: Yes, yes. It's not a - - -

18 HIS HONOUR: No, I don't want to go into privilege matters.

19 All right.

20 MR O'CONNER: And, Your Honour, that would be costs of and

21 associated with this application and the vacation of the

22 trial.

23 HIS HONOUR: Well, what have you done to prepare for the trial?

24 MR O'CONNER: Well, we have attempted to get the court book

25 together. We've got witness statements that are ready.

26 HIS HONOUR: Well, you'll have all that later on.

27 MR O'CONNER: And the outlines are simply fairly – Mr Shilton

28 has a detailed affidavit.

29 HIS HONOUR: It's a conformity affidavit, isn't it? It's just

30 formal proofs.

31 MR O'CONNER: It is, but that's - - -

.OK:LL 28/11/17 T1KK 36 DISCUSSION

Priest Consulting 17-1795
1 HIS HONOUR: Which will be needed anyhow, so it's just today

2 I'm going to order the costs of.

3 MR O'CONNER: In your hands, Your Honour, but I would say that

4 the matters to be proven in this case are within the

5 confines of that affidavit. Ms Necine gives very similar

6 evidence. My instructor has attempted to get the court

7 book and we don't even have discovery from the other side,

8 which is - - -

9 HIS HONOUR: Well, that's something that might need to be

10 raised on the 14th as well, if we're going ahead on the

11 14th.

12 MR O'CONNER: We say it's a reason why we should get the costs

13 and vacate the trial date, Your Honour.

14 HIS HONOUR: Yes. I'm not satisfied anything is going to be

15 thrown away, the way it's been prepared.

16 MR O'CONNER: (indistinct) trial, my brief that will be thrown

17 away, Your Honour.

18 HIS HONOUR: What have you actually done?

19 MR O'CONNER: Our witness statements are together and our

20 clients' (indistinct) are together and our list of

21 documents to be - - -

22 HIS HONOUR: Tendered.

23 MR O'CONNER: - - - tendered has been prepared, but - - -

24 HIS HONOUR: But, Mr O'Conner, your point of view is it's just

25 a lay down misère, isn't it?

26 MR O'CONNER: Our point of view is, yes, unless we hear

27 something from the defendant, the case is - - -

28 HIS HONOUR: Can I verbal you? Can I assume that you haven't

29 done anything about the validity of your appointment as

30 yet?

31 MR O'CONNER: In what sense, Your Honour.

.OK:LL 28/11/17 T1KK 37 DISCUSSION

Priest Consulting 17-1795
1 HIS HONOUR: Well, the validity is raised in the old defence.

2 Can I assume that you haven't dealt with that issue at the

3 moment?

4 MR O'CONNER: We say we have, yes. We say that the appointment

5 in the sense that it's based upon the - - -

6 HIS HONOUR: Deed of charge.

7 MR O'CONNER: - - - deed of charge and the appointment and

8 Shilton will give that evidence and Necine will give that

9 evidence.


11 MR O'CONNER: And the only basis for saying it's not valid is

12 to say there's no underlying debt, I understand.


14 MR O'CONNER: And then of course if there's no underlying, no

15 basis for the appointment.


17 MR O'CONNER: So it all goes to the arguments that spiral

18 towards this deed of settlement, which is not a matter

19 which we have even received the documents to address, but

20 our case is confined and could be almost proven on the

21 existing sworn affidavits.

22 HIS HONOUR: All right. Now, is counsel having to conduct at –

23 how many hours have you put in so far in prep for the

24 trial?

25 MR O'CONNER: In terms of being involved in the preparation of

26 the witness statements?

27 HIS HONOUR: No, for the trial.

28 MR O'CONNER: For the trial. I'll have a look. Well, I've

29 prepared the outline. Probably about a day in preparing

30 the outline.

31 HIS HONOUR: Per page or - - -

.OK:LL 28/11/17 T1KK 38 DISCUSSION

Priest Consulting 17-1795
1 MR O'CONNER: Sorry?

2 HIS HONOUR: Per page of the outline?

3 MR O'CONNER: No, the outline would have been about a day's

4 work, and the witness outlines would have been another

5 day. But that won't be thrown away, obviously, the

6 current outlines.

7 HIS HONOUR: I want to know what you've done that you'll have

8 to duplicate. Forget about the outlines of witnesses

9 because they're all pretty straightforward.

10 MR O'CONNER: In terms of preparation, it's all probably - - -

11 HIS HONOUR: In this witness - - -

12 MR O'CONNER: - - - something that needs to be done and has

13 been done. That is – although, well, changes. There's

14 dramatic changes in the pleadings, but - - -

15 HIS HONOUR: Well, there's going to be, I think.

16 MR O'CONNER: Yes. So for our current case, our outlines would

17 be the same.


19 MR O'CONNER: Our outline of argument will be the same.


21 MR O'CONNER: Our list of documents tendered will be the same.

22 HIS HONOUR: So it's really addressing the counterclaim and

23 defence, isn't it?

24 MR O'CONNER: Yes, it will be.

25 HIS HONOUR: All right. I'm going to be hard. I'll just order

26 the costs of today.

27 MR O'CONNER: And the trial fee thrown away for Friday?

28 HIS HONOUR: Yes, fair enough.

29 MR O'CONNER: If Your Honour pleases.

30 MR STIRLING: Your Honour, the problem with that is, they

31 haven't complied with the court orders either, and these

.OK:LL 28/11/17 T1KK 39 DISCUSSION

Priest Consulting 17-1795
1 documents that they speak of, the outlines, the outline

2 submission, the outlines of evidence, hasn't been done.

3 All we got was that document that Your Honour might be

4 familiar with, the court book index document was provided

5 which was that. That's all they've done. It's an awful

6 document, so - - -

7 HIS HONOUR: Mr Stirling, I've been your best advocate so far.

8 I'd be careful.

9 MR STIRLING: Yes. We'll leave it at that.

10 HIS HONOUR: How much is the fee?

11 MR O'CONNER: Four four.

12 HIS HONOUR: Yes. All right. I'll leave it to both of your

13 sense to let me know what's going on on the 5th and we'll

14 work out what's going on from there.

15 MR O'CONNER: Yes, Your Honour.

16 MR STIRLING: We'll do that, Your Honour.

17 MR O'CONNER: There is one other matter that I might – which

18 I press for leave. The amended pleading proposes an

19 action by Priest as the plaintiff with the receiver - - -

20 HIS HONOUR: Whether they've got residual powers.

21 MR O'CONNER: Whether there's any residual powers for the

22 directors to be bringing an action on behalf of Priest.

23 I raise that just for the assistance of the court and for

24 my learned friend to consider. It would mean that the

25 counterclaim would be Rod Wallace and not Priest,

26 but - - -

27 HIS HONOUR: This case that I was involved in – I'm not sure if

28 it was reported, where we set aside the appointment of a

29 receiver and got consequential orders that they were

30 trespassers, et cetera. For the life of me, I can't

31 remember if I did it on behalf of the directors or on

.OK:LL 28/11/17 T1KK 40 DISCUSSION

Priest Consulting 17-1795
1 behalf of the company. I suspect on behalf of the

2 directors because 420, isn't it, that - the first powers

3 on the receivers.

4 MR O'CONNER: Yes, 420 sets out fairly wide-ranging powers.

5 HIS HONOUR: Which I can't remember if they suspend the powers

6 of the directors, save for the residual powers that

7 complain about the appointment, or whether they co-exist.

8 But I suspect the 420 supplants the powers. There

9 certainly residual power to complain about the

10 appointment.

11 MR O'CONNER: Indeed.


13 MR O'CONNER: But this is going further than that. It's

14 positively agitating a claim alongside the receiver acting

15 for Priest and bringing its claim, so - - -

16 HIS HONOUR: Yes, but I view the counterclaim as really going

17 to the heart of the appointment rather than whether they

18 want damages or whatever.

19 MR O'CONNER: And to the extent it goes to the appointment,

20 that's – yes, I wouldn't have an objection, but it goes

21 further than that. But I just raise that for this - - -

22 MR STIRLING: It's the money (indistinct). It's just - - -

23 MR O'CONNER: Well, it is - - -

24 HIS HONOUR: Well, it's something you've got to just take on

25 board, what are the powers of Priest Consulting.

26 MR O'CONNER: Yes.

27 HIS HONOUR: Because it may be that you've got no power to

28 bring it as a plaintiff by counterclaim unless you get

29 some sort of derivative order.


31 HIS HONOUR: And you might need to just deal with it in the

.OK:LL 28/11/17 T1KK 41 DISCUSSION

Priest Consulting 17-1795
1 name of the directors.

2 MR STIRLING: There will be a divisive somewhere, because there

3 has to be, because if Priest Consulting - - -

4 HIS HONOUR: Not always.

5 MR STIRLING: - - - are giving up the charge, if you like, it's

6 subject to the charge, but the if underlying transaction,

7 which is the loan agreement is no good, it's got to be a

8 device to settle it.

9 HIS HONOUR: Yes. I'm not making any comment, but it's an

10 issue.

11 MR STIRLING: Yes, that's right.

12 HIS HONOUR: Enough?

13 MR O'CONNER: Thank you, Your Honour.

14 HIS HONOUR: Thank you.

15 MR O'CONNER: As Your Honour pleases.


.OK:LL 28/11/17 T1KK 42 DISCUSSION

Priest Consulting 17-1795