Transcript Boston Group Wallace Randall Hodges Stirling PriestConsulting - 28nov17-3

TRANSCRIPT OF PROCEEDINGS
SCI 2016 05138

SUPREME COURT OF VICTORIA
CIVIL DIVISION
MELBOURNE
TUESDAY 28 NOVEMBER 2017
BEFORE THE HONOURABLE ASSOCIATE JUSTICE RANDALL
PRIEST CONSULTING PTY LTD Plaintiff
- and -
RODNEY GEORGE WALLACE Defendant
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
.OK:LL 28/11/17 T1KK 1 DISCUSSION

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".
19 HIS HONOUR: Yes.
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

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.
28 HIS HONOUR: Yes.
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

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?
22 MR STIRLING: No.
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.

1 HIS HONOUR: Yes.
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

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

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.
17 HIS HONOUR: Oh.
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?
28 MR STIRLING: Yes.
29 HIS HONOUR: Yes.

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

1 Honour's concern. We issued those Supreme Court
2 proceedings to get possession back of the property.
3 HIS HONOUR: Yes.
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

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

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.
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 - - -

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.
11 HIS HONOUR: Yes.
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.

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

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?
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.

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.
3 HIS HONOUR: Yes.
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.
27 HIS HONOUR: Yes.
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.

1 MR STIRLING: But I think the current orders were for outlines.
2 HIS HONOUR: Yes.
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.
12 HIS HONOUR: Yes.
13 MR STIRLING: There's a healthy list of defence.
14 HIS HONOUR: Yes.
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?
22 HIS HONOUR: Yes.
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 - - -
29 HIS HONOUR: Yes.

30 MR STIRLING: Additional legal complexions on a long factual
31 history, if you like.

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.
11 HIS HONOUR: Yes.
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.

21 HIS HONOUR: Yes.
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".

1 MR O'CONNOR: Yes.
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

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".
5 HIS HONOUR: Yes.
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

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.
19 HIS HONOUR: Yes.
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).

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.
8 MR O'CONNOR: Yes.
9 HIS HONOUR: Yes.
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.
18 MR O'CONNOR: There are two, but it's one.
19 HIS HONOUR: Yes.
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.
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

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.
4 HIS HONOUR: Yes.
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.
15 HIS HONOUR: Yes.
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.
20 HIS HONOUR: Yes.

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

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.
8 HIS HONOUR: Yes.
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.
28 HIS HONOUR: No.
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

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 - - -
13 HIS HONOUR: No.
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,

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

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.

1 MR O'CONNER: No.
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

1 delayed it.
2 MR STIRLING: Yes.
3 HIS HONOUR: But Mr O'Conner needs the opportunity to seek
4 instructions about representation as well - - -
5 MR STIRLING: Yes.
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

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.
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

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,

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.
9 MR O'CONNER: Yes.
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.
16 HIS HONOUR: Yes.
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.
20 HIS HONOUR: Yes.

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

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.
24 HIS HONOUR: Yes.
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

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 - - -
8 HIS HONOUR: Yes.
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.
14 HIS HONOUR: Yes.
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.

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.
6 MR STIRLING: Yes.
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.

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.
7 HIS HONOUR: No.
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.
21 HIS HONOUR: Yes.
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

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?"
6 HIS HONOUR: Yes.
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.
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

1 mediation, isn't it?
2 MR STIRLING: Yes.
3 HIS HONOUR: Well, should I be looking at it?
4 MR O'CONNER: No.
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.

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.
11 HIS HONOUR: Yes.
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 - - -

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.

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.
10 HIS HONOUR: Yes.
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.
13 HIS HONOUR: Yes.
14 MR O'CONNER: And then of course if there's no underlying, no
15 basis for the appointment.
16 HIS HONOUR: No.
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 - - -

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.
18 HIS HONOUR: Yes.
19 MR O'CONNER: Our outline of argument will be the same.
20 HIS HONOUR: Yes.

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

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

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.
12 HIS HONOUR: Yes.
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

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.
16 ADJOURNED TO A DATE TO BE FIXED


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TRANSCRIPT OF PROCEEDINGS

SCI 2016 05138

TUESDAY 28 NOVEMBER 2017

BEFORE THE HONOURABLE ASSOCIATE JUSTICE RANDALL

PRIEST CONSULTING PTY LTD Plaintiff

RODNEY GEORGE WALLACE Defendant

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

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

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

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

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

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

.OK:LL 28/11/17 T1KK 1 DISCUSSION

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

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".

19 HIS HONOUR: Yes.

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

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

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

29 company which was in financial trouble, and under each

31 a consultant and entered into consultancy agreements, and

.OK:LL 28/11/17 T1KK 2 DISCUSSION

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.